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

It's my pleasure to turn the podium over to the team from United Airlines. We've got SVP and Chief Operating Officer, Andrew Nocella; SVP and CFO, Gerry Laderman; and then also the Head of United Ventures, Mike Leskinen, back up here on the podium for the first time in a couple of years. Mike, it's good to see you again. Welcome back to the house of Morgan. And let me turn it over to the team. Thank you.

Just some brief forward-looking statements. We will be making forward-looking statements. They're based on our best expectations and views today, and we're under no obligation to update them.

Thank you, Mike. Thanks, Jamie. Thanks for having us today. We did issue an 8-K earlier this morning, updating our first quarter and fiscal guidance. Please refer to that for any other additional information you may need. I wanted to start off today and talk about a few really good quick highlights about how our business is doing today. Mike, can you flip to number -- yes, past that one. First, very strong leisure demand. I think you've heard this from other presenters today, but really unprecedented demand. People want to get back out. They want to connect. They want to see their friends, family. And in fact, they actually want to start traveling for business. Business traffic is booming. We still have a long way to go. But we've made so much more progress than we thought earlier in Q1. So we're well on our way. We'll talk about that more in a little bit. Cargo yields continue to be very strong. United has really done incredibly well on the cargo front for the last 2 years. We anticipate that continue in 2022. MileagePlus redemption levels are strong. We've seen some record days over the last few weeks as people start to redeem their miles again, which is great to see. And most importantly, border restrictions are finally starting to fall, allowing for more travel to happen easier and more conveniently. With that being said, we see -- we clearly also recognize that we have a few new obstacles to overcome in 2022 with higher fuel prices and a war close to Europe. And this is causing some CASM-ex issues due to lower completion factors in Q1 and lower asset utilization for the remainder of the next few quarters. United's full recovery is delayed a bit due to these issues, but 2022 was always going to be a year of transition. And we now expect that it will be probably likely until Q4 before we transition to a more stable environment, where our aircraft and asset utilization is starting to approach normal levels. Turning to the revenue environment. As I said just a few minutes ago, the -- things are really strong. The pandemic really does seem to be behind us here in the U.S., and bookings across most of the network are at normal levels, particularly given our planned capacity. Each wave of the pandemic, move to the next slide, Mike, has had a smaller and smaller impact on the business. We don't know if there'll be another variant or how severe it will be. But when you look at this trend, it's clearly, I think, from our perspective, showing that each variant is having a smaller and smaller impact on the business. Strong pent-up demand. Well, that's really good for revenue management. We're finally starting to flip back on the revenue management machines and manage our yield. And I think you'll see that in the results for the next few quarters. We didn't presell the summer at lower yields, we saved the seats, and we're now selling them at much higher yields. So we're pretty happy about that. Most importantly, business revenue, which we talk about a lot, business revenue is now close to 75% versus 2019. Business demand is about 70%. So in fact, that means yields for business traffic are up, and we're great to see that. We expect business traffic will continue to grow closer and closer to 2019 levels, with an another step-up occurring in the fall when the kids go back to school. Stronger business traffic in March absolutely helped our outlook versus where we thought we'd be in January, and we're now going to hit the upper end of our revenue guidance in Q1 even as capacity is now expected to be down 19% or about 2 points lower than our early guidance. Matching capacity to demand has always been our focus, and we have and will continue to adjust as necessary. There's no better example than our leading industry TRASM during the entire pandemic. So flip 2 more slides, Mike. And what you can see on this slide is our relative capacity to our legacy peers. We ran a smaller airline the entire time, purposely. We didn't think market share was durable during this time period. But we also led the legacies in TRASM the entire time other than, I guess, 1 quarter, in 4Q '20. So we're pretty happy with this performance, and we're pretty happy with the agility we showed throughout the entire pandemic. While we do expect fuel prices to be high, we are recapturing a large chunk of that. I don't -- I'm not going to say, today, we're capturing 100%, but we are capturing the majority of it. And we've adjusted our capacity going forward just a bit to make sure we can capture all of it this year. As we look beyond the recovery, we remain committed to our CASM-ex targets of being down 4% when capacity is up 20% versus 2019. United CASM-ex is linked to our gauge and our asset productivity in our ASMs, just like any other airline. And we'll expect that by Q4, we'll be back to some normal asset utilization. We continue to assess exactly how many ASMs will fly in 2023. It's likely that some of our new aircraft deliveries will be late given the track record from Boeing recently. And so we are a bit frustrated by that, but we'll continue to work and figure out exactly where we need to be for 2023. Our Pratt & Whitney-powered 777s, which we have 52, are close to being able to fly. We anticipate later this month or early April them returning to the air. And that's really great for us to see. We really do have the best network in the world, and it has a lot of premium demand. And Mike, if you can flip to the network slide. This is the heart of United Airlines at the end of the day. And you can see our hubs are in top markets in the United States. Our long-haul passenger demand is in our hubs and most importantly, premium passenger demand is in our hubs. And as we reflect on where we're going as a company and the outlook for United Next, we're building a plan that monetizes on this and will be incredibly successful. The other thing we've seen recently, which has been really great to see, is margins for our global long-haul flying are now in excess of our domestic. This is something we've talked about a lot, how the setup for international flying will be different. As we go forward and already for the last 6 months, again, our international margins have been in excess of our domestic, and we intend to continue managing our systems so that, that continues to be true. So it's a really nice setup for United given where we are globally and where our hubs are and what our plan is for the future. So we remain committed to the United Next plan. We're going to transition to a modern, fuel-efficient and customer-friendly fleet, where we can segment demand, differentiate ourselves and drive higher customer satisfaction and focus on our 7 hubs. United's 7 hubs continue to be undersized relative to others on just about any measurement you look at. It was -- prepandemic, it was margin accretive to close those gaps, and we believe the same is postpandemic, and we will close those gaps. We will finish United Next with our gauge up about 30% from where it was in 2019 to about 134 seats, and that's consistent with the demand and revenue potential of our hub cities, and we'll operate the largest and most profitable global network. And importantly, our CASM-ex when we reach the end of United Next will be down 8% versus 2019. Many of our competitors have made these type of gauge changes already. And therefore, we're harvesting CASM benefits that are going to be very, very unique to United going forward. Our relative CASM-ex is going to be fundamentally changed versus our competitors. Our industry will look different. Most importantly, United will look different, meeting the challenges of a very, very highly competitive domestic market. So returning to the near term, really, the first slide, demand is incredibly strong, leisure. Business demand is bouncing back very quickly, and we have adjusted capacity a little bit for the remainder of the year to make sure we can recapture 100% of the price of oil. We continue to remain cautious on capacity, but we are following geopolitical events very, very carefully, obviously, and we'll make the right decisions for our network and our business. So with that, I'll turn it over for questions. Everybody is quiet. Jamie, please.

So Andrew, let's unpack your international margin commentary because that's been an issue that I've been interested about. It has formed the basis of many of our conversations, several of my conference call questions and what have you. What's driving the improvement? Does it speak more to China, which I believe was a margin laggard being turned off? Or are you seeing the structural transatlantic rationalization that we've discussed in the -- I mean, what are the building blocks for international margins to have overtaken domestic?

It's across a whole range of issues. First, there's been a structural change. There are certain airlines that are not flying. The airlines that are flying are flying different aircraft types. They're flying with much smaller business class cabins, which is significantly helpful. For United, you have to remember, in 2019, we are only just beginning the launch of our Premium Plus-type cabin. That's now fully rolled out, almost every wide-body aircraft we have. And there's a good chance that it is our most profitable cabin on the aircraft when this is all said and done, based on everything we're seeing today. Our sophistication with monetizing all the other seats on the aircraft and our mix. We've successfully, for example, launched service to South Africa, something we didn't do prior to the pandemic in any meaningful way. And our hubs are just so well positioned with premium demand and leisure demand to fly all over the world with a partner hub or a non-partner hub. And so the world has changed. The dynamics are very different globally than they are within here in the United States, and we're going to take full advantage of it.

Help me understand -- so earlier in the day, Delta, when speaking about higher fuel prices and revenue recapture, cited the need for their average fare to be up high single digits, $15 to $20 on a one-way basis. I'm curious if you have similar figures in terms of United, but the question that I've been inundated with really just for the last week is the question of demand destruction and when too much price is put to consumers, and at what point does the model break and all that kind of stuff. I was relieved to hear, I think you caught some of Doug Parker's comments and some of the data and my view skew very closely to his. But how do I answer investor questions on the topic of demand destruction? How do you look for it? How do you identify it internally? And do you also need order of magnitude $15 to $20 each way?

Well, we measure it in TRASM. And we definitely need TRASM to be up, I think, in the magnitude of high single digits, which I think is the same answer maybe somebody else gave. And I have to say thanks for Doug Parker for endorsing buying United Airlines stock. Highly recommend, Doug is a smart guy, so -- on that front. I think when I look at price points out there today, they're actually relative to 2019 lower. What we are doing today is revenue managing differently, and that's allowing us to achieve some higher fares on the aircraft, and you can see it in our business yields already because 0 to 3 published fares are lower than they were in 2019, yet our business yields today are higher. I tend to think -- I don't want to talk a lot about pricing for all the obvious reasons. But we have opportunities here. And in particular, what we're doing at United with the introduction of these new aircraft, we're going to be able to better segment our revenue across a bunch of different product types that allow us to monetize that in a really effective way. And the good example has been our ability to upsell into premium seats, both in the coach cabin and in the first [ floor ] Polaris cabin, which we're doing in really unprecedented levels in our history. And the ability to monetize that is really, really key. The one thing that you'll see shortly, for example, from United is our best seat in the coach cabin are going to be displayed on united.com as a separate column. This has always been like hidden in the background as an ancillary opportunity versus presented on a shelf for customers to buy. And there are things like that, that we're just getting smarter and more sophisticated at, that are going to allow us to achieve a lot of those targets. So at this point, there is no demand destruction. In fact, it's the exact opposite. There's a lot of demand to fly for leisure customers, and business is catching up quickly, although we have a ways to go.

It's Mark. I'll jump in with a couple of questions for Gerry and Mike. So Andrew, you're off the hook. Gerry, the biggest pushback I get from investors on United, right, is the refleeting, United Next, the CapEx plan, the aircraft you have on order. So 2 things I want to ask you about that. Number one is, has anything changed from the pandemic with your flexibility that, especially last week when the oil was at $4 and people were worried about where we could be headed in a variety of ways, is there anything that's changing your ability to, if you don't need those aircraft or you don't want them on the schedule that they're currently slotted for, do you still have all the flexibility you've always had with that order book if you were to renegotiate that?

So we actually have more flexibility. We talked about this last year when we introduced United Next and the aircraft order for the MAXs and the neos. So just going back over the last few decades in working with Boeing, in particular, we have found that Boeing and, to some degree, Airbus too, I just have more experience with Boeing, they don't like building an aircraft that a customer doesn't really want. So they haven't yet started to implement the aircraft. Regardless of what the contract says, historically, the manufacturers have worked with customers to reschedule aircraft. We took that one step further with the last order and put into the contract some flexibility. Because one of the things we learned from the pandemic going back to when we had to cut costs quickly back in 2020 is that for any project that we're doing, the more off-ramps we have, the better. And so that applies to the new aircraft order as well.

Great. And then we were both in San Diego last week with all the aircraft leasing community and so forth, obviously, big news overnight in Russia. And one of the things I'm thinking of is, as the global lessors don't do business in Russia and probably ascribe a higher risk premium to certain countries, U.S. airlines are going to be in even more demand for the lessors. And traditionally, we've had a lot of conversations over the years about how you finance aircraft. You traditionally like to own them, finance them with EETCs and so forth. But do you see the role of operating leasing continuing to grow? Because I got to think you're a -- you've always been a preferred customer, but even more so going forward for these global lessors would love doing business with United. Does that maybe change the math or the calculus for you?

You should ask them how they feel and how aggressive they want to get. There is a point at which leasing would make sense or they can offer structures that work for us. We've done some leases in the last few years where, for instance, we had attractive fixed-price purchase options that we could look at that as, if we exercise those options, we look at it like a debt deal compared to the EETC with a little bit of flexibility because we don't have to exercise that option. And those transactions were very attractive to us. It's also true, as you pointed out, we haven't done much leasing. It's fair to say that virtually every leasing company has room for United capacity if we chose to go that route.

And then, Mike, for you. We're all friends, and we've loved watching you arrive at United and all of your pet projects, which aren't really pet projects, they're big projects, right? I mean Boom, Vertical, the Pilot Academy and so forth. I'm wondering if you can just give us an update on maybe some of the technology at Boom and Vertical and how that's progressed? And maybe on the Pilot Academy, which I remember when you announced it, we went right into the pandemic and so forth, but now we're on the other side, and it looks to be something that could be very strategic for United. So maybe just talk about those.

Yes. Thanks, Mark. Look, as an investor in the sector, it was apparent to me that the airlines as a whole, as an industry, we don't -- we're not leading edge in innovation, and we're not participating in a lot of the economics of that innovation. And so United Ventures is all about trying to get a seat at the table in doing that. The bigger theme, and I want to talk about the academy because you'd asked about that specifically, but the bigger theme is how do we decommoditize this business? How do we offer a product at United that is different than what our competitors can offer. And what we invested in was Archer Aviation and in Archer, when that comes about being able to...

Archer, [ wrong ] one.

Yes, being able to get in and out of congested cities, I think, will be really, really important for us. Boom Supersonic, when that occurs -- there are a lot of hurdles. But when that occurs, flying that in the North Atlantic from New York to London is going to be a competitive advantage for United to be there in that leading seat. And so everything that we do with Ventures is going to have that adjacency to try to further decommoditize this business that is now in a much better structure than it was 10 years ago, 20 years ago, and this is about continuing that theme. Now the Aviate Academy, this was about our foresight. We had some very thoughtful -- some thought leaders at United looking into the future and seeing a pilot shortage, 1,500-hour role providing some constraints, also trying to create more diversity among our pilot ranks. And so Aviate is our attempt to help solve both of those problems.

Jamie is not going to live -- let me live that down same vertical when it was Archer. But on Archer and on Boom, is the technology progressing on the path that you thought it would? Or have there been any major roadblocks there? I know it's a multiyear path for both.

Absolutely, it is. The technical development is firmly on track. The winners are going to be the players that have deep enough pockets to get through the aircraft development. All of us that are observers of the aerospace industry, it takes longer and it takes dollars to get there. With eVTOL, I think the biggest constraint is not going to be the technology itself. It's going to be FAA and it's going to be adoption of that technology, consumer adoption of technology, number one. And I think for trips, 20 to 30 miles, right, battery -- the energy density in batteries is there today with off-the-shelf technology needs to be integrated, and we need to figure out how to work with air traffic control to work through that. For longer trips than that, you're going to need to see advances in the energy density batteries. I think that's going to happen. The automotive industry is going to push that in any event without aerospace pushing it. But that's more -- that's further into the future. But thinking about how to get from here in Manhattan out to Newark, I think that is absolutely real with technology we have today, and we've got to figure out how to integrate that in the system.

Question over there?

Just had a question on MileagePlus. There was a report like a month ago, you're looking at maybe selling a minority stake. Is that liquidity-driven or just the fact that people know more about those programs now and better valuation, or if that was just nothing to report?

I would describe that as a rumor that we don't comment on.

Just back to the fuel discussion. I know there's been a lot of commentary today about comfort of passing fuel in at current levels and probably levels a little bit higher than we see today. But on the demand destruction piece, if Brent was $250 a barrel or $200 a barrel, like what percentage of fuel do you think you've passed through? So is there a way to think about it like you can pass through 100% up to $125 and then 50% thereafter? Like any way to frame that for us in the disaster scenario where Russia cuts off gas, et cetera?

Disaster scenarios. Well, I think maybe where I'd start from is that, a, oil is, I think we're actually below $100 a barrel today. So -- and oil does move around. And we have felt really comfortable within all the ranges over the last few years that we could pass through 100%, and we could do it very quickly. And I think prior to the pandemic, we said that with great accuracy and with results. And so did something change post pandemic within reasonable numbers? I don't think so. All that being said, our business is very dynamic. It is always changing. As the price of oil changes, we will react to it in the appropriate ways based on what we see for demand and the ultimate desire to produce profit margins. And so oil at $250 -- so many other things will have happened at that type of price range. It's hard to predict the future. Other than my own personal perspective, I manage to TRASM and to our margin. And you can see that throughout the entire pandemic, we were very, very careful to not think we're managing for market share. We were managing to make sure we did the best for our business that we could. And we'll do so in all those scenarios, including fuel doing crazy things like that. But I would just go back to at those type of price points, something that's really significant has happened. That means a lot of other things have changed in our business and in our world. And hopefully, that helps a bit. We are not seeing any demand destruction today. We're passing through a majority of the cost of oil. And in fact, as some of my colleagues before me that got up here tell you, demand is just incredibly strong right now, and we're really bullish on the future and the setup for the next 6 months and beyond.

Just one other question on the fuel. When you -- I know you don't hedge, but do you buy your fuel sort of in sort of steady increments? Or with the fuel price up last week, you held off and then you start buying now because it's below $100. How does that exactly work?

So there's only so much room in fuel storage tanks at various airports. So once you fill up those tanks, there's not much more you can do. There generally is a little bit of a lag. So the fuel price is, let's say, this week kind of flow into sort of the price, let's say, next week and the week after and then you have to burn off inventory. So there is a lag from when the current spot price actually translates into the price that effectively we're paying for fuel measured in, let's say, a couple of weeks domestically, maybe more like a month internationally.

Gerry, does that mean that you'll never actually pay $4 stock because it was that fast? Or does that eventually catch up to you, Monday's peak?

So whatever the average was last week and last week was a great example of it being all over the place, $3.50, Monday; $4.09, Tuesday; $3.20 -- that average will flow into the price for a given week. So think of it that way.

The point is we're not speculating and filling the tanks up more one week than we are the other, right? It's a lag based on a steady pace of buying fuel.

Speaking of your reactions to the movement in fuel, has any of it involved discussions about potentially hedging?

Sorry, I couldn't hear you. Can you try again?

Has any of your reactions to the movement in fuel prices involved discussions potentially hedging?

That's a good question for me. So it's been many, many years since we've hedged. When the industry did hedge, the industry lost a lot of money. There are probably people in this room that made money off the backs of the industry hedging. So we prefer a world in which the majority of airlines are not hedged.

We have a natural hedge. Prices go up when fuel prices go up.

Mr. Baker.

So on loyalty, being in the first inflationary environment [ for most of my ] adult life, if you were to just look at your economics related to card swipes on Chase co-branded credit cards, I assume an inflationary environment is best for those economics. Are they large enough that it moves the needle, the fact that it's now costing me $100 as opposed to $60 to fill a tank multiplied by how many millions of Chase cards you have in circulation, does that matter to United? Or is it just sort of a nice thing that happened, but it's not really...

Well, it's definitely nice. I will say that. But it also matters, yes. Based on how we get paid in the co-brand world, inflationary stuff passes right on through to United, which it should. And Gerry has certain costs to cover that are inflating as well, and that's just part of the equation. So would we expect revenues across the board to like go with inflation? Absolutely, particularly co-brand. And co-brand, as I think many people know, has been incredibly steady throughout the entire crisis relative to core passenger revenues, which have been highly volatile.

And then a question on pilot hiring and not withstanding efforts with the Academy, and I'm just trying to sort of think through the hiring process. So are you obligated to only hire from regionals where you have flow-through agreements? I'm thinking back to the old Express Jet days because what I'm really wondering, and I'm not sure if you'd be willing to comment on this, but why don't the larger airlines in need of pilots deliberately choose the airlines from whom they poach? Isn't there a competitive aspect there? Because I know it works the other way. I remember years ago, GOL saying that they wouldn't hire anybody with VARIG on their resume because of whatever reason. You fast forward to today, wouldn't there be a competitive benefit to United of perhaps hiring out of that pool as opposed to that pool?

We look at all the pools very carefully and look for great pilots to fly for United Airlines. And we really don't have any problem sourcing pilots for United Mainline at this point. Express is a little bit different. But we recognize the opportunities in hiring and how we do so, and we do it very, very carefully to answer your question.

And one thing that I'll add to Mike's comment about the Aviate Academy. When we said that our goal is to have at least half the students be diverse, what's embedded in that is something that I don't think a lot of people have picked up on, which is there is an enormous pool of qualified candidates that will make excellent pilots that haven't had the opportunity to go to flight school because it costs money. So one of the things we've done with Aviate, with the help of some banks we've worked with, is to ensure that we can make loans available and also working with partners on scholarships so that qualified candidates have the resources to go to flight school.

Some banks. One would be Chase, supporting you in that regard.

Thank you for that.

Thank you very much.

[indiscernible] out there. Gerry, so 2 things. Number one, Delta this morning mentioned $2 billion ATL inflow with the build of the curve and so forth. Is there any reason to think that for United with skewing a little bit more international, a little bit more business and so forth versus Delta, are you seeing the same level of build, if you will? Is there any difference between what your experience and say, I know you don't know exactly what Delta's experience, but they mentioned $2 billion for the quarter.

I would expect that we're all seeing something similar. I don't have the number today, so I can't tell you over the last 2 weeks. But from the start of the year through the end of February, I think our build was close to $1.5 billion, so similar.

Our booking trends like the record days, we're having -- we can give the same exact speech that the other airlines have given in terms of bookings that we see right now.

And then, Gerry, 2 quotes from the pandemic on my list are quotes attributed to you. I think one I read and one I heard in person and...

I'm sure I was misquoted.

And I forget which one was which, but one basically said, and you'll remember when you said this, if it really was you, we found out we had more collateral than we thought we had. And the second one was everyone was so focused on the equity value of loyalty. People really needed to be focused on the financing value or the collateral value of loyalty. So you already got [ asked ] the loyalty question on equity. But I just want to ask, when you think about funding the business long term, and -- not on the aircraft side, but on the loyalty, the route, slots and gates, et cetera, all the sort of new collateral, if you will. I mean, route, slots and gates have been around for a long time, too, but loyalty is relatively new to the financing markets and you have a lot of investors in this room. How are you thinking about how the balance sheet might look like 5 years from now, if you look forward? Are you still going to be borrowing against loyalty, for example?

That's a lot of questions.

Yes. Well, we have time. I'm just talking, so...

Let me start at the beginning. So it was clear that one of the things we learned in the early months of the pandemic was that we had more access to liquidity than we thought going in. Necessity is the mother of invention. And when the boss calls and says, can you raise $20 billion? We kind of looked at each other, the finance group, Mike, myself, Pam Hendry, and said, I don't know, let's see what we can do. And...

We said absolutely.

I think we said absolutely. But...

That's what I said.

To the boss, we said, of course. And we looked at each other and said, okay. But we took a look at loyalty first. And as you said, it had never been used the way we ended up using it, and it was repeated very quickly by the others that we found the secret sauce, which was to come up with a structure that isolated that cash flow in a way that made lenders who had that cash flow as collateral feel that they were very secure. And that was, in essence, what we did with that. And that's a structure just like EETCs that, while we didn't invent, we perfected them 25 years ago, and that is still the primary source for a U.S. airline anyway to raise a lot of capital to buy a lot of aircraft. The structure we came up with for MileagePlus, which may be tweaked over time, will be a structure that is always going to be available for U.S. airlines to raise liquidity when they need liquidity. But to kind of answer your question of where we want things...

Yes. I know it's going to be available. I want to know if you plan on using it.

Oh, I don't know what we will use or not use, but the way we're thinking about it and we haven't put out specific numbers other than I know that our -- the core liquidity we will hold will be more than we held prepandemic, having learned another thing from the pandemic, which is having your cash equal your ATL probably isn't the best thing to do. So we will adjust that. But I think equally important is that we want to make sure that whatever that liquidity we have on hand that we can repeat what we did back in 2020 over the first couple of months of whatever crisis, we can go raise more money. And so we would want the structures that we came up with to be available to raise money. So for instance, and this is purely hypothetical, let's say, the MileagePlus debt paid down to some lower level, I want to make sure that we have the ability then to raise it back up, or if it's gone completely, to be able to use that structure or maybe a better structure to go raise money. But that's true with all the different pools of collateral. So the SGR deal that we did, the same thing. If that gets paid down, we'd want to be able to, if we had to, raise additional money. And then with aircraft, whether it's unencumbered aircraft or let's say, B tranches that might be available on aircraft where we've issued A tranches. So all of that together, we will want in our toolbox to be able to -- if there is another similar crisis to top up our liquidity pretty quickly.

I think I know the answer to this, but do you want to get back to a point where you can issue cost-effective unsecured debt? Is there a role for that in your capital structure?

Well, I think we were there 3 months ago, actually. So we'll see. It is certainly a tool that we'd like to have available.

Andrew, a question on corporate demand. If I remember correctly, the 3 types of business that are most critical to United include financial services, manufacturing and tech. Correct me if that's wrong or if that's changed. Is tech, the biggest piece of what's currently missing?

Trying to remember all the numbers. But I'd say absolutely tech is probably still the biggest piece, and that's really centric to San Francisco and the Bay Area, having a recovery rate that is slower than the remainder of the country. I will say, over the last few weeks, we've seen that start to accelerate, which is really, really great to see. But tech is definitely trailing by more than average. But financial services is still the #1.

And of tech spend pre-COVID, how much was doing from China? So in other words, to what degree does China's continued closure impede the potential for tech sector corporate recovery?

In the grand scheme of the United Airlines network and business worldwide, it really is not that material. I mean -- and as you pointed out, China was a laggard on our margin scale to begin with. So a slower recovery in China is not -- we wanted to recover. We're doing well today to China, and we'd like to fly a lot more to China as soon as we possibly can. But the fact that it's recovering more slowly than the rest of the world, I don't view as a competitive disadvantage to United Airlines given where we are and the fact that we've redeployed the aircraft successfully elsewhere. The other thing that's happening and we're looking carefully at is where else in Asia do we see productions increasing and it wouldn't shock me that over the next few years that we add another dot or 2 in Asia, reflecting those type of changes.

And during COVID, did your corporate -- did your efforts to secure greater corporate share, did they cease? Did they transition to Zoom, still been out there? I mean, the JPMorgan contract, I think, is amendable on a labor contract, but I mean are those efforts ramping up again? Or did they never really abate?

They went into a different type of status where it was a maintenance-type situation, where we continue to communicate, we continue to understand, hopefully, the future needs of the business. But there wasn't a lot of flyers going anywhere, and there wasn't really a need to renegotiate at that point in time in any material way. So again, during the whole crisis, what I would say is that we never viewed market share as durable. That airlines -- the numbers were just -- every number we looked at, particularly in the peak of the crisis, was just nonsensical versus the past and what you think is reasonable. And so we really didn't try to focus on that. We really tried to focus on where do we need to be in 3, 4 or 5 years as we come out of this crisis. How do we position United appropriately, how do we have the right products and services and how do we meet our financial targets, while also getting the NPS scores where we want them to be. And we are incredibly well set up to do that. Now we also believe very strongly that business traffic is a laggard that hurts United more than the average airline, and it's coming back, and you'll see us accelerate. We believe very strongly that international long haul has been a laggard, and you can already start to see that accelerating. And when Asia's borders come down completely, we expect the same thing to happen, and that will be fuel or tailwind behind United. So we believe, in due respect to some of my other airline friends, that we are absolutely best positioned as we come out of this. We're a very different airline than we were going into it. And over the next few years, particularly as we change our gauge and our product mix, we are adapting to the future, not the past.

It's time. Thank you.

Thank you.

Thank you, Mark. Thank you, Jamie.