United Airlines Holdings, Inc. (UAL) Earnings Call Transcript & Summary

Good morning, everybody. Jamie Baker and Mark Streeter with JPMorgan. Welcome back. It's a pleasure to welcome Scott Kirby, CEO of United Airlines. We're also joined in the background by Mike Leskinen and Gerry Laderman as well. Scott, you stole the show last year. You were the only manager to really confront what was happening to bookings at the time. I'm tempted to not ask any questions today and just let you do your thing. So -- I have plenty but let me turn it over to you.

Okay. Well, thanks, Jamie, and I hope to steal the show in a good way again this year. But first, thanks to the M&A reductions and permanent cost cuts that we've had at United Airlines, I am the one that has to read our forward-looking statements today, which will be scintillating. So here we go. The remarks made during this conference call may contain forward-looking statements, which represent the current -- company's current expectations or beliefs concerning future events and financial performance. All forward-looking statements are based upon information currently available to the company. So with that -- and Mark, I love the Baby Yoda in your background there. So good morning, everyone, and it is remarkable to think back to talking to all of you at this conference 1 year ago. I do remember how starkly different and more negative my comments about the impact of COVID-19 were than all the other presenters. And sadly, it turned out that the impact from COVID-19 was even worse than we were forecasting. And while I wish we weren't doing this virtually, I do think we're near the end of the virtual world. But here we are, 1 year later, and we're once again talking to you about a unique and more clear-eyed view of the future than others. Only this time, our perspective is unique because more than others, we have long-term optimism and confidence in the strength, durability and velocity of the recovery. Last April, I talked to our leadership team and said that the decisions we were making then were going to define where we would be 5 to 10 years into the future. And with that perspective, it was critical, despite the uncertainty, to form an objective and most importantly realistic view of what the COVID downturn would look like but also what the recovery would look like. To put it more succinctly, as I did back then, hope is not a strategy. Our view gelled back in April of 2020. Our best guess then was that the real inflection point for sustained demand was probably sometime in the second half of '21, which was dramatically different than every other opinion at the time. But even then, we thought that the consensus view that business and international travel would be permanently impaired were simply wrong. So while our short-term perspectives then and throughout 2020 may have been more negative than others', our long-term perspective has been consistently optimistic. That unique perspective allowed us to not only take steps to get through the crisis but also to take actions to help set us up to be the world's leading airline on the other side. We've talked in the past about the industry-leading safety, health, financing and cost initiatives we took in the last year, and those were important. But equally important were the steps that we took to prepare for what we still think will ultimately be a full recovery in business and international travel demand, including a deal with our pilots' union to maintain current flying status to enable a quicker ramp-up in capacity as demand returns. Given our already simplified global fleet, United was also unique in not retiring international wide-body aircraft or -- and actually now have more wide-body aircraft than when the pandemic began, taking action to permanently reduce $2 billion of structural costs, being opportunistic in our route and cargo network to best take advantage as demand returns. And once we have more confidence on the real timing of the recovery, we accelerated narrow-body deliveries into 2022 and '23 to be primarily used in our domestic network. And despite the crisis, we did not cut back on technology CapEx. And in fact, we've actually doubled down on technology investments that will pay large dividends for our customers and shareholders, like expanding our COVID testing offerings, creating the Travel-Ready Center to allow customers to singly integrate vaccination and testing status into the United app and work on all kinds of efficiency-enhancing systems like virtual agents. And it's working. We've already seen the impact of our work in 2020, with Net Promoter Scores up more than 30 points, the highest in United's history by a wide margin. That's a testament to our United team of whom I could not be more proud. They know better than anyone that this is not the old United Airlines, and it truly feels different across the board. And while we've accomplished a lot during the crisis, today, I want to take you about the steps we've already begun to take that are critical to the different kind of airline we'll be 5 years from now. At the forefront of this vision is changing the way customers feel about United. Customer-centric policy changes like removing change fees, investments in our hard product, technology that now gives customers more information and more proactive options than ever before, and all the little things about changing our processes and our culture really are making a difference in how our customers feel and giving them reasons to choose the United brand instead of just shopping on price. The United of the future will also be the acknowledged industry leader in real climate change action, not greenwashing, which we've made early progress towards through initiatives like our planned investment in a sequestration project with Occidental and 1PointFive and our investment in Archer Aviation. While some investors with a shorter investing horizon are perhaps not yet focused on this area, for investors with a longer-term horizon, we believe change is coming and those companies that are prepared and taking real action are going to be in a much better position. In addition to our 100% green commitment announced in December, United has taken tangible steps for making real change in diversity, equity and inclusion, including following through on our commitment to the Board challenge to add more diversity to our Board of Directors, our pledge to increase gender equality in leadership roles and much more to come. Number four, our plan to expand the mid-continent hubs was working before the pandemic. And all of our indicators, hub connectivity, PRASM, profitability, et cetera, were hitting on all cylinders. Nothing about that has changed. We kept our fleet and pilot ranks intact throughout the crisis precisely because we're preparing to get back on track with the plan that was already working. We've taken the crisis as an opportunity to become more efficient and taken steps to permanently reduce our fixed cost structure by $2 billion. As just one example of the sign of our commitment to making those changes permanent, we even returned 3 floors back to the lessor at our global headquarters because there is no going back for us on these cost reductions. And sixth, all of that leads to our commitment and confidence that we'll return to 2019 EBITDA margins by 2023 at the latest, and we expect margins to grow from there. In summary, United had a plan that was exceeding expectations before the pandemic, strengthening our mid-con hubs and focusing on improving the customer experience. While the COVID crisis was terrible, we've taken advantage of it to accelerate the structural changes that needed -- that we needed to make to emerge stronger on the other side. And one more thing, Mark and Jamie, before we turn to Q&A. I know that my comments today have all been focused on the longer-term and that's where I'm squarely focused, but I also acknowledge that there's great interest for many in the short term. And so today, I'm happy to announce that we've achieved an important milestone. United expects our core cash burn to be positive in March. And assuming the current bookings trajectory continues, we'd also expect cash burn to be positive -- core cash burn to be positive going forward. We know that we can't yet put COVID in the rearview mirror and there's still a lot of hard work to first return to actual profitability then return to 2019 margins, again paying all the debt that we've taken on in the last year and then getting on back on track with expanding margins from where they were in 2019, but I wanted to end with thanking and congratulating the entire United team on reaching this important milestone. Jamie?

That's great, Scott. Thank you very much, and congratulations on the cash burn.

Thank you.

You touched on a number of issues in your prepared remarks, but let's drill it down to 3. What are the 3 things that makes United unique relative to your competitors, 3 things where you think you're truly differentiated?

Well, I'll talk -- I'll certainly focus this from an investor perspective today. One is the potential of our route network. And we've talked about having the 7 best hubs. We've talked about that they were undersized in the past, and we've talked about the potential to grow them. And we have an incredible opportunity ahead at United. I mean I think it's remarkable to take our network, which was hit the hardest from COVID, for sure. We have the biggest business network of any U.S. airline, the largest coastal exposure in the coastal hubs, the largest international network. And those were all headwinds. And yet amazingly, if you take our cash burn relative to our 2019 revenue and size throughout the crisis, we've led the industry in terms of minimizing cash burn. And as we always thought, we are now the first airline to return to cash -- core cash burn positive. And the things that have been headwinds in the crisis are going to become tailwinds going forward. All of the things that are headwinds now are going to flip. International is going to be strong. I think we'll talk about -- business demand is going to come back. And so our network is set up to be the best. The second one I would think is -- that I'll say is we have had a real change at United and focusing on the brand and focusing on getting customers attracted to United for reasons other than price to really make United an airline that customers like and want to choose to fly. And we've seen huge improvements as we've gone through the crisis. Every time you hear me talk about kind of the future, number one is customer. And our customers are feeling it. Our employees are feeling -- really is different. And I know that's hard for people to put into a spreadsheet -- that are listening to this call today. But there are going to be more and more and more customers that are choosing to fly United because they like United. They like the experience. But it's bigger than that. I mean what we're doing in terms of climate change, that is unique and different not just within aviation but unique compared to what -- most companies around the world. We're standing for something and that makes a difference to a lot of consumers. It's number two. And number three, I'll actually say, is the culture. We were headed down this path before, but we used the COVID-19 prices to truly change the culture at United. I started joking at the beginning, a little tongue-in-cheek, that we didn't -- because of M&A head count, that we didn't have an army of people on to help me read the forward-looking statements. But look, that's sort of not tongue-in-cheek. We've become more efficient. We move faster. Like the number of firsts -- we just had a Board meeting a couple of weeks ago. We went through -- our technology and our customer teams were presenting. Like the number of -- not only first that we were doing, own ways that we were doing at United, from big things to little things, are really different. And we're happy to copy our competitors when they do something good, but boy, it's far, far, far more frequent now that others are copying the kinds of things -- whether it was the financing initiative to the customer initiative, safety and health throughout, that culture change -- again, it's another one that's hard to put in a spreadsheet, but that culture change of moving fast, being fast-paced, innovative and creative, I'll call the third real advantage that is going to differentiate United.

Now let me flip the same question on its head. Where are 3 areas that you lag your competitors? And what are the plans to improve on that?

Well, first, I'll say because of COVID, over the -- still over the near to medium term, our -- the demand environment is going to be tougher for United than it is for anyone. I think as soon as international borders -- they're going to open up. Would you rather go to the Rock & Roll Hall of Fame? Or would you rather go to Paris? I'm betting on Paris. But right now, you can't go to Paris, and so you don't. And so in the near term, that's clearly a headwind. I'll say a second one has been United hasn't had a long history, been through a lot, been a lot of challenges over the decades, have become a kind of rules-based organization, and our likability with customers isn't where we wanted it to be. J.D. Power, we've not been at the top of the range. We want to be at the top of the rankings and others like that. And we -- and it's true. The reason -- the biggest reason, by the way, that we eliminated change fees permanently back in -- whenever we did it, June or so, is not just about what that means for customers. It's about the culture. And we tell our employees that we want them to do the right thing and take care of customers every day. And yet, we put them on the front line. You've been there for 30 years, and you've had to see a customer come up and says, "Hey" -- or call, "My grandmother passed away, and I need to change my flight." And you say, "Well, thank you, sir, but you can, sir, but you got to pay $200." And it didn't feel right for you to do it, but you were forced to defend the indefensible. We forced our employees to defend the indefensible. And that creates a jaded environment, a tough culture. We would -- any of us would have become jaded. And so we've got to change who we are. I mentioned it as the #2 of my opportunities because it's coming from a negative to what can be a positive. And I'll just leave it at 2.

Okay. That's fair enough. Since you brought up change fees, I was under the impression -- not because of anything you've had to disclose, but I kind of figured, in Denver in particular, you were potentially losing some corporate share to the competition there, small, midsize businesses. As a JPMorgan employee, Mark and I have never been hit up for bag fees because the contract negates for that. Was that part of the calculus? And have you seen any change? It's still too early with most business travelers being grounded.

Well, look, it's just the right thing to do. And in a place like Denver, I do think it was probably our biggest competitive disadvantage. I've wanted to get rid of change fees for over 20 years. I can remember back in 1998 or so, talking to a friend of mine playing golf in Phoenix, Arizona when I was at America West, and I was either the VP of network planning or scheduling or something. And my -- he always flew Southwest and, "Why don't you fly America West? And we got a bigger presence," blah, blah, blah. And he owned a used car lot. And he's like, "Look, I go to Southern California, San Diego, Los Angeles, Orange County, every week. And I go to car auctions. And sometimes, I buy one car. Sometimes, I buy 0. Sometimes, I buy 10. And if I buy 10, it takes me 6 hours to do the paperwork. If I buy 0, it takes me not. And I want to be able to just go back to the airport and get on the next flight and come home. And if I do it on you, I got to pay a change fee." And he flew 52 round trips a week, and it was totally logical. And so ever since then, I've wanted to change it. I also say we collect close to $1 billion a year in change fee. So it's a $1 billion decision and almost have to be the CEO to make a $1 billion decision. And so I had to get to this point. And look, I think in the very short term -- well, in the short term, I don't know if it's affecting consumer behavior because our -- that kind of business travelers aren't traveling right now and -- but even in a normal environment, I think it will take a little bit of time to recover market share, to recover that amount of change fee revenue in terms of market share, but I don't think it will take very long. I think it's absolutely -- the only way, in the long term, we can be successful with customers was to eliminate change fees. That's why we did it permanently.

And does that -- you've never minced words in terms of the interplay between your airline operating model and that of ultra low-cost carriers. How is that evolving as we move through the pandemic? I asked Delta a similar question. Those carriers are obviously at the tip of the recovery sphere. They're all leisure. They don't have international. But they're hungry. They want to take more share. So why should we not assume that, that means they also take margin from United going forward?

Well, first, I'd say I've been amazed that kind of the #1 and #2 airlines in terms of minimizing cash burn -- I'd measure daily cash burn and try to make it apples to apples as a percentage of daily 2019 revenue -- have been United and Delta. Despite the fact that we've got the largest international -- we have the largest international exposure at United with the coastal gateways. Like I've looked at the data in the last week, and these numbers will be approximately right because I'm just getting it from memory. But even in the most recent trailing data, which I think goes through March 3 or some for industry data, the large business hubs, Washington, New York, New York, Chicago and San Francisco, I think domestic revenue was down 78%, and the rest of the country is down 55%. Florida and the Caribbean are almost back to 100%. And the rest of the country is down dramatically. And so for us to be having lower cash burn than our low-cost competitors now, I think it tells you something about what the future is going to be. And the things that are going to -- that are headwinds for us today, international in particular, is going to be a massive tailwind. And business demand is going to come back. And that's -- so we already start a little bit ahead, and we've got the tailwinds yet to come. I do think the domestic environment is going to be tougher than the international environment. Another difference is one of your competitors wrote a report and talked about one of the great things that happens is that when fuel prices go up or when there's a recession or whatever, the legacy carriers push back from the table and let the low-cost carriers eat the table scraps. And he was right. That's how they got fat. That's how they grew. I can promise you United Airlines is not going to push back from the table at this time.

So Andrew Nocella set me straight on your last earnings call, citing an international to domestic margin gap that was narrower than what I had expected. I actually got a fair degree of pushback from investors on our thesis that international margins down the road, let's call it 3-plus years, could eclipse those of the domestic. One client actually said that it made them throw up in their mouth to read that, which I welcome the feedback, but it sounds like United agrees with me. Why do you expect to be right? And far more importantly, why will I be right?

Yes. Well, look, you are -- well, I won't speak for the whole industry. I'll speak for United. I mean we're already there before. We have a phenomenal international franchise and the -- and international environment, in totality, is going to be better than the domestic environment. The domestic environment is going to have -- is going to be -- supply is going to be ahead of demand for a while, and it's going to be slower to recover. The borders have to open up. My guess is that Europe will open up before Asia. And when it does, I think there's going to be huge demand once you can go without quarantine to go to Europe. And it's going to be a different environment. But there were these experimental ultra low-cost carriers flying across the Atlantic. And it was -- by the way, even before COVID, it was just a matter of time until those businesses went away. But they were going to do an awful lot of damage in the interim. They had a business model. It didn't work. They never made money. They never had a chance to make money. But they were doing a lot of damage along the way. And they're gone. Look at how many airplanes are -- domestic wide-body airplanes or domestic competitors have retired. Look at how many airplanes, the European carrier -- the 380s are basically not flying anymore. The 747s are not flying anymore. It's just going to be a different supply-and-demand environment. So I have a hard time even coming up with the argument when anyone disagrees with that because it seems so straightforward to me.

Okay. That helps. So every airline has a plan to get back to 2019 ex fuel CASM, put on less capacity. Some of these plans are ambitious. Some are a little bit less so. Obviously, for airlines, you've got highly advantageous cost structures coming into the downturn. There's less they can do to shed weight. United has not been as vocal as some of its competitors on this topic. Why is that? I mean you were the one, I think, that said, "Never let a good crisis go to waste."

Well, I guess I would have said we have been vocal. And I think actions speak louder than words. As we went through the crisis, we also weren't the ones saying, "We think the recovery is 2 to 3 months away." And then 2 to 3 months later, same, "We think the recovery is 2 to 3 months away," and 2 to 3 months later saying the same thing. So we're trying to let actions speak louder than words. And we're also trying to get there in a real way, not accounting, not taking massive write-offs and -- anyway, we're trying to get there in a real way. And our $2 billion of cost reduction, the way I think of it is that we really -- we will have covered all the way up to 2023. We'll have covered the normal kind of inflationary increase in expenses. And so at 100% capacity, we would be basically flat on CASM ex to 2019, real CASM ex, without write-downs or anything like that. Real CASM ex would be flat in 2023 as compared to 2019. And then what we haven't really talked about today and one of the things actually I should have said on the first question when I talked about the network is we have a massive gauge opportunity. Everyone in the industry had it, but United is just the last to achieve it. In the next 2 years, we're going to take delivery of, at the moment, 94 large narrow-body aircraft. And you kind of sort through how the dominoes fall. Essentially, you can think of it, of those 94 airplane, are we going to replace a similar number of 50-seaters? And so we have this big gauge tailwind, which has got to also help our CASM. And the marginal cost of our -- those growth airplanes is not much -- is basically the same as the marginal cost at ULCC. It's just embedded within a bigger airline. And I think we're going to lead on real profitability. I'm thinking by the time we get to the summer of 2023, United is going to have the best margins in the industry of the U.S. airlines. That's predicated on we're going to actually be real. Our cost reductions are going to be real. We're going to stick to them. I mean look, I know I said it in the opening, but it matters, doing things like getting rid of floors at headquarters. I can remember conversations that we had at United before the crisis of, "As we're growing, we need more floors." And like it's kind of burning the bridge behind you. We're getting rid of floors at headquarters because we're not going to bring the headcount back. And that's just one example of many that are going to be real. But the culture has changed. They're different. I talked about the technology investment. Like we don't talk as much about that because a lot of that is more behind the scenes. But the amount of productivity and efficiency that we're driving is incredible. And a bunch of the stuff that we're doing, I'm almost certain no one else is doing it because I can walk around an airport and see that they're not doing it. And I think we're going to be the leader in both CASM and profitability indices.

And just a quick CASM follow-up and then I want to let Mark ask a couple of questions here. But the 5% pay bump that the pilots are going to receive, that's after 2 consecutive quarters? Or is it more a...

It's trailing 4 quarters over 5% pretax margins.

Got it. Got it. That's helpful. Mark, let me turn it over to you.

Scott, great news on the cash burn for margin going forward. So as we think about liquidity now, you have the CARES Act loan reserve. Do you need it given the outlook?

More to come. Gerry won't let me tell you the answer to that yet.

Okay. But just to be clear, you have until the end of May, I think, if you want to draw down the remainder.

We do, yes.

Okay. And we'll look forward for some update on that. But along that same lines though, right, when you think about where you're running with liquidity, obviously very high. Now that you've turned the quarter on cash burn and so forth, how do you start to prioritize here? Are you going to start paying cash for airplanes? Are you going to go aggressively at debt repayment and so forth? How should we think about what you're going to do with your cash flow position going forward?

Well, first, as Gerry talked about on the last earnings call, we do think of the world differently than we did before. I used to always tell people never say worst-case scenario because there's always something worse, and my God, did that turn out to be prophetic. But what we've learned from this is that, one, we can't count on ATL balances. That was a clear lesson. Two, we had more collateral than we thought. But what that means is -- going forward, is that paying down debt is going to be a priority. And I suspect we will pay down debt before we pay cash for -- I don't know. We will pay down debt before we pay cash for airplanes. And what we'd ultimately like, to get to a world where we've unencumbered some of the assets that we've taken on debt for now. And then that is kind of our -- I think of it as credit line, or I think it's like a credit line that we have for future crisis. But we'd like to completely unencumber some of those really good assets. It's probably the first step that we will take with cash flow once we're back to positive.

And one of the items that Jamie and I hear from investors about United, one of the flaws, if you will, is that investors like to point out that prepandemic, you had a big CapEx spend and so forth and that going forward, what is going to be your true free cash flow? So when we think about the fleet renewal and so forth, you're doing a lot of great things on the carbon front that others aren't doing, but you also have a fleet renewal program, your partnership with Boeing mostly. So how should we be thinking about sort of the level of CapEx spend going forward? And what can sort of flow to the bottom line?

Yes. We will be taking delivery of new aircraft. And the way I've always thought about it at any airline is think of airplanes have 25-year lives. And so whatever the total fleet size is, the real normalized amount that you need to spend on aircraft CapEx replacement is about 4% of that. And then you got growth that potentially comes on top of that, and that's part of being an airline. And I think we're going to generate a fair bit of cash flow in the future. Obviously, that's one of those things that depends on what the recovery looks like. I think that we're going to have a full recovery in international demand. I think we're going to have a full recovery in business demand. International environment is going to be better. And so we kind of put all that into the model, and it gets us to a world where we're able to start paying down debt despite the deliveries that we anticipate. But we've got 94 narrow-bodies coming in the next 2 years and it just is what it is. We're going to be taking some deliveries of airplanes.

And just on the carbon front, right? You mentioned some of the initiatives that I know Mr. Leskinen has been intimately involved with, right, whether it's the air taxis and what you're doing again on the fuel side and other carbon initiatives. How does that fit into the fleet strategy, right? Because you have all these carbon initiatives outside of the fleet, if you will, and then you have the fleet strategy itself. So how are you trying to balance how you're going to be making progress in that regard going forward?

So I think of the fleet renewal as the normal evolutionary change where engines and aircraft get more efficient. You replace them. You'd burn less per mile that you fly on the airplane. And so that is just normal evolutionary change that people were doing and airlines were doing 50 years ago before anyone was talking about climate change or even contemplated climate change. So we'll continue to do that. But I think of the other stuff that we're doing as more revolutionary than evolutionary. We'll continue to do the evolutionary modernization of the fleet, but we're more focused on the revolution because the only way to truly solve climate change for society as a whole, not just for aviation, is through revolutionary change. The evolutionary is just going to continue. Look, we get 2% more efficient per year, but aviation around the world is growing, what, 4%, 5% a year. So the total carbon emissions are going up 2% to 3% a year and certainly not going backwards. And so the only way we're going to actually, as a global aviation industry, get carbon to start going -- carbon emissions to start going backwards is through the kinds of evolutionary change. Sustainable aviation fuels are important. New technologies like electric aircraft can play a role where they can [ fly all day ]. And I'm a firm believer, not just for aviation but for industries in totality and society as a whole, we are going to have to use sequestration, carbon sequestration because it offsets passenger greenwashing and they're not going to solve the problem.

Great. Yes. Thanks, Mark. Scott, I've got one from the audience here. Did Scott say United has more wide-body planes than prepandemic? Yes, you did. Can you explore this topic a bit more?

We've taken delivery of, I think, 6 or 7 airplanes since the pandemic started, and we haven't retired any. I'm not sure what else to say.

Yes. No. That's fair. And probably one for Gerry. Is the priority to pay down and unencumber the slots, gates and routes or loyalty first? In the future, which assets will you use for financing needs?

Well, I don't think Gerry is actually on and able to speak. So that is a good question that I suspect Gerry will tell you the answer to, but I'm certainly not going to tell you the answer and get in trouble with Gerry by telling you the answer that he didn't want me to say.

All right. No worries, no worries. What margin environment do you see in the recovery? How do you think about the offsetting nature of increased maintenance costs, some increased domestic competition for leisure as business lags, and you hopefully improve your structural cost? What's the margin trajectory look like?

Yes. So this is going to be hard to predict precisely, but I'll give you my best guess and I'll call it a guess instead of a forecast, which is I think we're going to hit -- I mean business demand probably won't really start recovery in earnest until 2022 and is not going to really recover back to 2019 levels until, call it, summer of 2023. Leisure demand, I think, will over-index when borders -- international demand really depends on when borders open. It's possible some could open this summer. It's also possible that it takes another 6 or 9 months. So that's impossible for me to accurately forecast. But I think margins in 2022 broadly will be lower -- and I'll talk EBITDA margins to start. EBITDA margins will be lower in 2022 than they were in 2019 but will be positive, and we'll be getting closer to that. We'll be back to profitability in 2022. And by the summer of 2023, in particular, I think we'll be at higher EBITDA margin. I actually -- my personal guess is that we, at United, will actually be back to pretax margins despite the higher interest expense. But that's just a guess. And that's really predicated -- I think domestic margins will be lower than they were for everyone, but international margins will be meaningfully higher by the time we're out to the summer of 2023. And I -- if I was guessing, in 2024, I think United Airlines will have higher margins than we had in 2019, both EBITDA and pretax margins. Again, just a guess, not an official forecast. That one is a guess. But I just look at the kind of trajectory of where things are headed. I know a lot about where our costs are. I think I'm reasonably good at forecasting what the revenue environment is going to be like in the future, and that's what it would support.

And that was 2024 over '19 or -- yes.

Yes.

Yes. Okay.

So 2023, I think, will be about 2019 levels. And 2024, I think, will be above.

Got it, got it. Another question from the audience. One cost of PSP is that it further handcuffs you in terms of capital returns and it resets the clock on executive comp. Is this an issue that is even on United's mind?

It is. Although the -- we have to do the right thing for the company and the business. And particularly the shareholder returns, stock repurchases or dividends, we have to pay down debt before we're even going to contemplate those. So that's not really the issue. And we still have to make the right decision if it's the most efficient financing, then we have to figure out how to keep the executive team motivated and -- at United. But the good news is the private markets are also open. So like everyone, I think that this was important to get us through this part of the crisis, but there are obviously options in the private market, which are, at the moment, I guess, probably better.

And then, Scott, I've got a question on pricing and really the mechanics of pricing. So I want to ask it in a way that you're comfortable answering, but I've been kind of going down this rabbit hole of the role that automation plays because presumably, I mean if you're just looking at the TSA numbers, if you're looking at Chase credit card data, week-on-week spend at United is presumably rising at a rate that is well in excess of what your revenue management systems are accustomed to witnessing. Doesn't that force the systems to be more -- to close off the lower buckets more quickly and push people up the ladder? Or is there a human intervention? I'm just -- I see it as the straight answer as to whether automation itself plays a positive role in terms of helping yields recover. Let's put it that way.

I think the conclusion is probably right, but I think it's less about the automation and more about humans. I mean essentially, during the pandemic, we've almost turned off the yield management system and reverted the heuristics because the yield management system is -- doesn't -- it's based on here's how much business demand is going to come later. Like it doesn't work right now. But seeing stronger demand, we have a number of, I think, pretty effective heuristics, where we are doing yield management. We're yield managing far less than we did before because there are just fewer opportunities at lower load factors, but we are yield managing more. That is more heuristic management and I think -- but your conclusion is right. As you see stronger demand, it becomes easier to close off inventory buckets and prices go up. And we actually track what's happening not just at United but at our competitors as well. And you look out to the summer, and there are far more inventory closures across the board at airlines than there would have been for March. So I think your conclusion is right. Pricing is going to go up as a result of that. It's still not going to catch up to 2019 levels, I don't think, particularly because of the lack of business travel. So it's just a mix issue. But yield management should have a -- should be a positive tailwind as demand accelerates to driving higher yields.

Another one from the audience, and I know we're coming up on this hard stop here. How long do you expect revenge travel to last? That was a phrase that I've used...

I don't know what that is.

Okay. Or the -- well, the pent-up demand, the surge, if you will. Would it be a onetime bump? Or has consumer travel structurally changed as a result of the pandemic?

I think that there's going to be more travel going forward, just period. There is -- it's not just there's pent-up demand. There's also like -- at least for several years, I think, if you go dig into the data on retail spend, it's -- retail spend has been up but durables are way, way up, and things like travel and leisure are down 70%. I think all that durable expense that would have been happening in 2022, 2023, 2024, you've already bought a new washing machine. You don't have to buy another one. People already bought a new car, did a home repair. That money that got spent was pull forward. And it's going to mean a lot more available to spend in '22, '23, '24 for leisure demand. And once people get a taste of that, the reason I think structurally it stays higher longer, it's because it's fun. It's a good thing to spend your money on, and people are going to do it. So I'm actually really optimistic about the long term of demand.

Scott, that's great. Let's wrap there. You couldn't have struck a sharper contrast to last year.

I was happy to do that.

Let's hope we're...

We're just trying to say what we think. We tried to be honest last year, being honest this year. We've been honest throughout the quarter, I think.

We appreciate it. And congratulations on the cash burn metric. Obviously...

Thank you.

That's the biggest headline of the day or event. So congrats to you and the team. Hope to see you in person before too long.

I look forward to it.

All right. Take care.

Bye, Jamie. Bye, Mark.

Thanks a lot.

Stay safe.