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

All right. Moving right along. We will shift gears to United Airlines at this point. It's my pleasure to introduce Scott Kirby. We also have Andrew Nocella and Gerry Laderman on stage, along with Kristina Munoz. Scott, I mentioned this to Gerry at ISTAT, but I had drinks recently with the relevant Jamie from JP Dimon -- from JPMorgan rather. We haven't renamed the firm after him yet as near as I can tell. And he did speak very enthusiastically about the relationship and also mentioned that United has its best CEO ever, which I thought was pretty interesting considering we have a former CEO or at least we did on payroll here. But Jamie, did give me his permission to pass that along, so I did want to share that with you. So let me turn the podium over to Scott Kirby or word of Kristina for the safe harbor stuff.

We'll be making forward-looking statements that are based on our risk expectations as used today and may differ from our actual results. Please refer to our 8-K filing date, March 13 for a complete description or non-GAAP measures and outlook right, Scott.

Okay. Thanks, Kristina. Well, we're not actually doing a presentation today. We're mostly do Q&A, which felt like the right thing to do since we lowered our guidance yesterday afternoon. So I'll let least start and address that issue head on, which I hate to ever miss guidance. And we have a pretty good track record of not doing it. And really, I think what happened in the first quarter is we should have had forecast for RASM in the first quarter. And whether it's seasonality has changed, it is a different environment. We had a bad forecast, and we own it. We missed it. we sure don't want to do that ever again. But I think the bigger picture, while I hate that we missed it, everyone up here hates that we missed the forecast it's not something we do often. The bigger picture is the outlook looks really strong. And if we look we didn't share first half versus full year in our earnings call, but had we shared first half, RASM is actually a little bit above where it would have been. And just I recognize given that we missed the first quarter, how can we demonstrate that credibly. So I'll just give you a little more facts than I normally would on revenue guidance, which is by far, the best quarter in the month was March, RASM. And April is currently for yield and RASM essentially right on track with where March was at the same point in time. May and June are well above in terms of both yield and yield is important because you can only run a certain load factor, but yield and RASM are both well ahead of where March is at this point in time. That would make you think that RASM was going to be better in 2Q. For what it's worth, our mid-teen guidance is, hopefully, mines up being -- well, we don't want to miss it get. So without whether saying whether is conservative or aggressive. If we just hit March, we would have been up 18% in revenue, and we've guided to lower than that. I'm not -- we got to make sure we hit the number. So I really do think that the outlook is strong. Our confidence on the revenue environment hasn't changed. Our forecast was off for the first quarter, but our confidence hasn't changed. In the long term, I'll wait for Q&A, so during the long term, I would have had -- we've not been lowering guidance I would have done or page decks. I said everything we said in January feels even better now. The pieces keep falling, people keep cost convergences starting to happen, whether it's through guidance updates or capacity cuts keep happening. The operation is getting more challenged as we start to move into the peaker parts of the schedule. Like I would have had a 4 or 5 deck that said, everything we said in January, like the pieces just keep coming together on that. So I think our long-term pieces remains intact. We feel really good about where we are. I apologize for missing guidance. We don't want to guide conservatively that we never miss but was disappointed that we -- and recognize that you're disappointed that we missed. I do feel confident about 2Q and beyond. And with that, I hope to open it up to comments questions, whatever you guys want to talk about.

From the audience, but I'll kick off. So something that I occasionally do is look back at some of my old research just kind of like finding a dire. Yes, thinking like, oh, it's embarrassing. And I can't even read what I published in 2020 because essentially, everything we in fairness, others thought was wrong, we thought Southwest and other discounters were going to inherit the Earth -- there was speculation that would never recover past half of it's for either. Basically, we got everything wrong and the full-service carriers are the ones that appear to have come out of the downturn structurally stronger. So what did I and -- well, what did I get wrong?

Well, I think, look, most people got it wrong. And I think it's relevant for going forward. A number of things that became challenging. One, the environment was already getting tough for people to grow in places that had historically been easy. If you look at 2019, there's 1 for airline without naming a name like I went back for -- I had over a decade of data of their worst 10 months per completion factor were in 2019. They were already struggling with the growth. And the truth is, the system had just become saturated, and we were at the very beginning of seeing other constraints on capacity like pilots starting to happen. So what happened as we went through the pandemic is most people believed as you did, that the pandemic was going to be a permanent structural change. But importantly, they also built -- and look, I think if you listen to what people will get up here and say in this conference today, they are still building their airline with the presumption that they can get back to 2019. They're going to -- they want -- their models are all 2019. They're running their airlines as if it's 2019, and it just doesn't work today. And I think in a simpler way of saying it is -- it's been hard for everyone, sell side, buy side, airline management teams to figure out that the world is different now, but the world is different now. And all the constraints we talked about in our earnings call, whether it's pilots, I mean, you keep seeing that be a challenge. OEM keep seeing that be a challenge. Air-traffic control, air traffic control for what it's worth and capacity the first 10 weeks of the year, well, last weekend, it was sort of when spring break at least starts. So last week, airline schedule started going up by 10% to 12% and the increase as we head into the summer. And so now is when the test is happening. The first weekend was pretty bad. There were a lot of issues in the air traffic control system over this past weekend. Yesterday, 2 of the ultra low-cost carriers cancel 5% of their flights when the rest of the industry was under 1%. I mean, the system is full. And I think people failed to recognize that it's different now. And you have to run the airline different than you did before. That does mean higher cost. Our CASM is quite a bit higher than we originally expected. Now it's gone up less than everyone else's. That's the cost convergence point that I think is really relevant for the industry. As long as everyone's costs are going up, it winds up being like fuel and effectively a pass-through. But that cost convergence and that limit on supply, which they're related, but not entirely the same. Those are the things that people didn't figure out. I mean, historically, before 2020, you could -- everyone could grow as much as they want with no constraints. There's no constraints that may be a better way to say it. There are now constraints. Your models need to include the constraints. And that's not something people in the airline aviation that have ever done. And it's, I think, the most significant point. Well, look, I hate to stand up here and talking about today by day that we lowered guidance. But I look back 30 years of aviation industry was about revenue yields declining 50% in real terms, all the bad stuff that happened at airlines bankruptcies, all that stuff was driven by costs coming down at some places and prices coming down, and that drove all the bad stuff. I think the most important thing that's happened in 30 years from a financial perspective, was we hit the bottom of that coming out of COVID. And it's hard for me to see that ever coming back. And we're going to have cost convergence and we're going to have higher RASM. We're going to get back to Ed, I think, had a slide that showed it. We used it a little different data. We're going to get back to higher revenue in the industry, both in the near term in the second quarter, but also in the long term.

Scott, maybe I can ask you the same question I asked Ed, which is, can you take us around the world a little bit and talk about where we are in the recovery in your different regions with your different partners? And what the margin outlook is internationally versus domestic? What are the structural impediments there? Can you get to parity? Just what's your outlook there?

Well, I could, but you'll get a much better answer from Andrew, who got him talk to.

I'm not sure our answer will be dramatically different, to be frank. Going around the world, I would also say that if you include China, that Asia is basically fully back up. Japan has a little bit of a twist that there's a lot more U.S. auto going to Japan and Japanese citizens live in Japan, but the numbers are balanced in total and I think look really good. So we're -- I think we're in really good shape. And I'll also point out that a combination of Nevada and San Francisco is just the powerhouse combination to get across the Atlantic. And as a result, United is the #1 airline -- sorry, for specific and United is the #1 airline there. So we feel really good about margins there. And maybe to reverse, I talked about margins international versus domestic a lot. Jamie has asked me that question many times. I think I actually shocked Jamie on one of my answers a couple of years ago pre-pandemic. And we always believed all throughout the pandemic that international margins would come back that there were structural changes that occurred. And in fact, international is now more profitable than domestic for us. And I expect that to continue into 2023 as well and the Pacific is in actually leading the way with not only great past revenue but great cargo revenue. So just a fantastic environment across the Pacific. We signed new partnerships in Australia with Virgin Australia, which has been very effective and believe we just have the leading set of network and partnerships across that region of the world for by an enormous amount. Across the Atlantic, we are in great shape with our partners with the Lufthansa Group. And I also expect to see record margins across the Atlantic as we head into the spring and summer, the tee up is just amazingly good across the Atlantic and the hub system we have when you combine Newark and Dulles with the Lufthansa Group hubs, is just amazing and also leads in that region of the world. In Latin America, near Latin America has been very strong and we have some great partnerships there. Far South America has been a little bit slower to recover as others have indicated, but it's well on its way, too. But the international environment is fully up running excluding China and doing incredibly well.

So is there more upside then for United and domestic margins then versus international margins given that they're lagging right now?

Well, first, I think things upside in both and we've been working hard. I think not only United, but legacy carriers in general, have a connectivity issue domestically. All of our hubs are dramatically smaller than they used to be. And therefore, the number of connections we build are dramatically smaller. And I think you're going to see, particularly at United, where our fleet plan allows us to rebuild that connectivity over the next few years, that's going to be really, I think, a positive for our RASM and are positive for our P&L. Across the global network, while it is recovered and we're doing well and the margins are great. The Polaris Cabin is actually trailing, the Polaris Cabin has room and it has yield upside. And that's getting business travel from the real big business, not SME, the big business that bought those seats to Singapore or London Heathrow or Frankfurt to get back into that business. And we've covered a lot. But look, the economy is dramatically bigger than it was in 2019. And we're at 80% in terms of that category. When that category gets back to $100 or that category actually matches GDP at 120 in or something like that. That is a tremendous amount of upside to our International division. So -- and I expect our International division could continue to lead our margin growth over the next few years because of that structural shift as that rebound occurs.

And I want to pile on to one of the things that we don't talk about much, but Andrew talks about it a lot internally, which is important, which is connectivity and if you look at the number of flights we have all our capacities back to 2019 levels, our flights are down dramatically. That's because we've got effectively 300 regional jets that we aren't flying anymore. And we had a choice to make during the pandemic, do we ultimately bet on replacing those with bigger airplanes and sacrifice connectivity in the short term. But have -- get the connectivity back with much more cost-efficient and profit efficient airplanes in the long term. That's the choice we made. So connectivity domestically is lower. That impacts domestic RASM. As airplanes are coming in, that connectivity is building back up. It doesn't happen overnight. But to the margin point, domestically, I mean, you hear all the network carriers, we talk about connectivity and how important that is. You heard Delta -- I don't know if they talked about it today, but they've talked before about putting capacity back into Atlanta, and that's all really about connectivity. And that's something that we took a conscious hit on connectivity because we didn't want that many regional jets for the long term, and it's building back now as we take deliveries from Boeing, Airbus.

It's worth noting that point-to-point carriers didn't take that same hit, right? So this is further upside at least the United business model. And I think actually the legacy business model that many people aren't counting on.

And you referenced when corporate gets back to 100%? What is that date in your model?

I don't know what that date is. I wish it was sooner. But we'll look at the financials, putting aside where we are in Q1, the financials and the outlook are really great. we're on target for everything we said we'd be on target for the year. And so it's a different mix. What I'm pointing out is when that traditional corporate comes back, over top everything else that's happened in this business, that provides our business model, just an incredible tailwind that pushes us further and further towards our higher margin targets.

So another question for you, Andrew. This morning on CNBC, Delta cited that it has had a number of record sales days because consumers that were lethargic last year or home sick and waited too late to plan their vacations ended up contributing to pretty healthy yields. And the question that I've been getting from investors this morning is isn't an elongated booking curve problematic because the airlines are going to presell too much capacity at lower fares. I don't have a background of pricing, but I would think you'd want the elongated curve rather than the steeper environment that we saw last year. How should investors be thinking about that?

Well, we -- Dave Bartels, was here. He's our Head of Revenue Management. He would tell you, we watch this day by day. And yield is a key number. We'll often talk about what our bookings like, what are our bookings like and what are our yields like? And as Scott indicated earlier, our yields are really excellent going into Q2, which is why we are really bullish on this. we could sell out really early with low yields and say, "Oh, we're booked ahead. But we're booked ahead from a RASM yes, we what we don't do that is -- and in fact, our revenue management systems other than for a few really softer weeks in January and early February, our revenue management systems and people are running these systems really tight. I would urge you to tell all your neighbors if they're trying to go to Rome this summer the better book early because the prices are only going higher and the prices are already very high. And quite frankly, we're selling the seats because there's always this, well, you push it to a point where you aren't selling the seats. And look, we have to be careful in the weak January. And January is not what we'd like it to be before -- without the corporate traffic where it used to be but the rest of the year looks fantastic. And the RM systems are working, and the yield numbers look really good, and we've pushed it and we pushed it for the last 2 years. I think our yield numbers across the board quarter after quarter. And our TRASM and our RASM numbers have led the industry the entire way. We want to make sure we do the same going forward.

Gerry, maybe I can ask you about the largest ever order book that you have this year coming. The 787 was recently shut down production for a couple of weeks. Is that going to impact you further? You've already reduced your guidance this year, I think, at least once. So wondering if there's a further reduction that could be happening?

Well,Mark, none of those 78 that we ordered were scheduled to come this year, okay? So that's not relevant. I understand they announced they were restarting that delivery. We do have 1 aircraft from the order we placed a couple of years ago that got trapped in that, so I would expect that aircraft to deliver sometime soon. It is the case, however, as you know, that both manufacturers have been sliding aircraft a little to the right. We'll give updates every quarter on what we think we are going to actually receive this year. We'll do the same next year. And it's fair to say that one of the issues that we and other airlines are dealing with is trying to plan for when these aircraft are coming in. We know they're not delivering all the aircraft we had on firm order this year. What we don't know is when they might catch up over the next 2 years, 3 years or whatever. But we'll give those updates each quarter.

So without getting too much into the weeds with this, call it, $8 billion-plus order book for this year, One thing I've noticed is that at least year-to-date, and I was talking about this with your team in San Diego, you've been doing more operating leases, but they have purchase options. So I'm just sort of wondering, is there a philosophical difference in terms of how you're financing the fleet going forward. Traditionally, you at old Continental and old, current United so you'd buy airplanes, you'd finance them. Now you seem to be doing more leases. I'm just wondering has something structurally changed.

No and you sort of answered your own question, those operating leases we've been doing with these fixed price purchase options. We treat those actually as debt. The expectation is we exercise those options. So I wouldn't view them as traditional operating leases in the old sense. We will always remain opportunistic. Right now, those opportunities are in the sort of leasing environment with these purchase options. Given the size of the order book, I think you can expect us to, over time, go to a variety of markets.

Excellent. Questions from the room. Or Jamie is going to ask more.

One back here. We've got 1 over here. And we got 1 over there.

Out both near-term and medium-term targets out there. No one seems to believe them, except for the ultimate confidence you have internally with your team. So maybe talk about what gives you the confidence as we look out for the balance of this year. in your margin goal and how we think about the medium-term target if you're able to hit that goal?

Well, look, I'd start by saying if you went back and looked at the track record of meeting our targets, we're pretty high on meeting, higher, I think the most. Well, we did miss this quarter. I think we tried -- I try to explain it. Well, we do understand, we think we at least understand what happened. We just read an overly aggressive forecast. If we have started the year and said we're going to have 22% to 23% RASM in this quarter. And we think we're going to make $10 to $12 like we wouldn't be having this conversation. That's what we should have done because that was right. And the reason we feel confident about 2Q, we don't have tons of -- we don't have really visibility to 3Q and 4Q. But the reason we have confidence about 2Q, which informs our views on 3Q and 4Q is that is what I said earlier, which is it's booked well ahead of where it was at this point in time. And we kind of started this hypothesis of seasonality is different last year. We haven't pegged it exactly. I mean, it's the first time we've gone through January and February since COVID. And so we get it wrong. But our March numbers are good. Our April number -- April, May, June, all look better. And we certainly want expect to be back on the track record of not missing guidance, which we have a good track record of. I get the credibility point when you miss and then you're saying we have confidence about the next quarter. You can think whatever you want, whatever you should think. That's why I'm trying to give you a lot more detail. I believe we will -- I hope that the second quarter number certainly sounds to me like it is achievable -- more than achievable, as well within the zone where as long as something bad in the economy doesn't happen, we ought to beat it, and I think it will be. And that's really what gives us confidence. But we have sort of fundamental understanding internally of our numbers, and we could see this happening and it was a bad forecast for 1 quarter. But if we were doing the full year and for what it's worth, we had aspired back in 2019 to get to giving less detailed guidance, good to EPS. Now I wish we have done that. We were going to do it this year, too. We can't do it obviously when we missed at some point in time, I hope we will get to it. But we would have been right on track. And so look, just internally, like our numbers, they've shifted in timing, but they haven't really changed. And there's a lot of data that says the second quarter, in particular, the revenue number looks really solid.

Sorry, quick follow-up. I was actually not referencing the second quarter more so the full year 9% margin number and then the 14% margin guide in terms of confidence on...

So the 9% as we look back into the back half of the year, the peak for us in our internal forecast is -- I mean, look, the irony of all this is we started this year and the full year, we were doing the forecast before the earnings call, we were kind of pulling down the full year to try to be more conservative, partly because when we look at the forward curve on fuel and like let's be conservative on revenue. And we didn't do it for the first quarter. We did it for the full year. And the peak RASM by wide margin in our internal forecast in the second quarter, third and fourth quarter get a lot more conservative. I think there's upside in the third and fourth quarter to -- I hope there's upside to our internal forecast because I think capacity is likely at an industry level to be lower than what is even our internal models. And the second thing is for our -- this year but also for 14 is we just have this huge tailwind on costs because of gauge growth. What is it, Andrew? What's our gauge growth in 2026?

It's probably going to be another 22%, 25%.

From here, another 20-something percent on gauge growth. that is coming. And so we are just going to have a real tailwind on costs. And I think we have uniquely figured out this operating environment ahead of others. And while we haven't really talked about today, it is what gives me confidence for the future. I mean, if you look year-to-date, the lowest mainline cancellation rate and lower seat cancellation rate, we also track seat cancellation, which includes regionals in the industry is United Airlines. That's never been true. We went all the way back to merger, never been true. It's because of weather. Like our weather is worse than everyone else with where our hubs are. We have more air traffic control delays than everyone else in the industry. That's always true. But we're running the best, and I think we have figured this environment out, which is going to help us with cost, I think, relative to everyone else. So I have confidence in the revenue environment this year, and I have real confidence in the structural changes that are driving CASM at United, all the way out through 2026.

Can you discuss your -- in your previous guidance, your fuel forecast, what it is now? Where do you see crack spreads going out through the end of the year? And are there any areas where the spreads are very wide where it's an issue. And guess newer there may be other worldwide.

So we don't pretend to be fuel experts if we just use the forward curve at whatever point. And like we generally said it a few days before earnings, so we can get everything together and it usually doesn't really matter and happened to be a low point this quarter. But that's all we do. Like -- and if we had a better view on what's going to happen with the price of fuel, man, if we stop being an airline and we just invest our money in oil futures and then we'd retire it into the year because we make so much money. If we knew it all was going to be different than the market. So we just use the forward curve. One thing that is different now is that there is far more -- because the market is tight for product, diesel and jet because the market is so tight, there are -- and it's in elastic. There are huge spikes. Now we aren't -- we haven't been building -- I don't know if we should, but we haven't been building those into the forecast. Sometimes it comes down as well. we were using the differential -- I'll just give you the numbers. In January, if you take fuel, we call regional differences in price over Gulf Coast plus taxes and into plan, that was $0.11 in January. That was sort of implicit in our forecast that is buried in the model. In February, it was $0.33 because of what happened in New York Harbor. And so those things are going to happen that it's back down, it comes back down. But we're not pretending that we're experts on fuel. But what does happen is that winds up showing up in RASM. It doesn't show up immediately, but like look at what's happened this quarter, look at what our yields and I'm not going to -- I almost -- I'm not going to tell you the numbers, but yields are well above for May and June, where they were at this point in March. And you can see where March came in on RASM. And it winds up being reflected in the price. It doesn't immediately, but with the kind of 3- to 6-month winds up affecting the price, it's really high, I think.

Back here.

Going back to the domestic and international margin questions from earlier. If you have a domestic traveler connecting to a hub and doing international, how is that accounted for on the domestic side? And how does that impact that margin calculation?

Well, Andrew can -- it's prorated to the domestic. So somebody connecting takes -- it's not exactly -- it's more complicated. But think of it as a percentage of miles to get flown, get allocated to the domestic segment.

Are those more profitable domestic roots then?

I don't know if I'd say it that way. I mean the domestic portion of an international journey is really high for United Airlines in our global network. And those yields tend to be pretty good because of the stage length is really far relative to the shorter stage length on board the aircraft, the yields look similar on board. But when you stage on to just them, they would be really good. clearly, we're looking at this from a system profitability point of view. And overall, I'd say the economics in the equation work really well, pretty happy with it. But it depends on how you measure it and how you analyze it because we don't get that question very often, right? But a material percentage of our domestic client is international connections.

I mean the way -- I'm not sure where you're trying to go with the questions. It's hard to really answer but -- because it's kind of in the weeds. But the way if international is weak, it's a reasonably big portion of our domestic. So when international is weak, it shows up in domestic that feels different than others. And when international is strong, it shows up in domestic in a good way, which feels different than others. We under or outperform on domestic because of the domestic portion of international journey based on what's happening in international.

[indiscernible]

Yes. So the question is, if international outgrows, will that drive along, bring domestic up with the answers, yes.

Quite often, people underestimate our international revenue because they just look at the different entities and how we report it, but the international revenue is materially higher as a percentage of total when you look at it exactly the way you asked the question.

More from the room.

While we're going to the next one, I should have introduced my almost 9-year-old son Sean, who's boarded tier sitting in here. He turns 9 tomorrow. He joined me on this trip.

Just on corporate travel. You haven't really seen this, but from an ESG perspective, do you think a lot of corporations are going to start cutting corporate travel to reduce your carbon footprint?

I think it's a factor for them. It's one that I also think that what United is we're doing the right -- we're not doing it for this reason. We're trying to do the right thing for climate change. We're leading the world in terms of aviation industry on what we're doing for climate change. Our commitment to staff is about equal to all the rest of the world Airlines combined. Mike Leskinen, who is here running our newly launched fund, which customers and partners can join to help invest in the future. We've got to build the supply for sale and invest in that future. And we've made our first investment in the fund yesterday for algae technology, which would be really cool because if you use analogy technology to produce -- the issue for stands fuels, what's the feedstock finding a sustainable feedstock to use that is not oil. And if you could use Algae, it's essentially infinitely scalable, doesn't have bad land use. You can put it out in the desert with saltwater. It's not impacting arable land, and it's a lot of good things. But we're focused on trying to build that industry. And because we're the leader, I think those that care -- I know that those that care about ESG, whether they're in the government or in corporations, but we -- they know -- people that now know that United is the leader and that we're sincere and that what we're doing is not greenwashing. It's not marketing, it's real. And so I think that for those segments, that segment of customers probably helps us in that regard.

Gerry, just 1 more for you, for me. You're still sitting on far too much cash than what you'd need, what anyone would consider your minimums and so forth. So any update on how you're thinking about the excess cash, just using it to buy airplanes, liability management? Just how are you thinking about it given the second quarter outlook, which still seems robust. It doesn't seem like you need to sit on that much.

It's a pretty bold statement, actually, that we have way too much cash over.

You can never have too much cash.

And particularly in an uncertain environment. I mean, look at what happened over the last 5 days. We are very comfortable with where our liquidity is today given the uncertainties. We are going to continue to manage it based on a conservative view. It gives us tremendous flexibility on timing of when we would see additional aircraft financing because we can simply pay cash for aircraft in times when there are disruptions in the capital markets such mark, is you know, right now. This would not be the week to go into the market with a EETC. So having some additional liquidity is very helpful. And we'll manage it that way going forward.

Have you thought about what a new minimum is going forward? Or target?

The minimum is different from the target because the target will change over time. In any case, the minimum will be substantially higher by a multiple to what the old minimum was pre-COVID.

So just to be clear, Mark, is training praise next Marathon, which is why we've made him the microphone run it with the United Half I got to get your steps -- so during Delta's presentation, they leaned heavily into the topic of culture. And Ed said that it's really the people that set airlines apart. And I guess for folks here that just live in spreadsheets, I mean directionally, that sounds right. I really think about airline has a lot more to do with real estate than people, but maybe that's just me. You have said on several occasions, you think there's room for a second premium airline here in the U.S. Do you have the culture to achieve that?

Yes. So well, I think one of the reasons, Jamie, it was very nice. Thank you, Jamie Dimon, for and Jamie Baker repeating it, what he said. He said it to me privately several times. But he's heard me say at events, and I think he agrees, that being as the CEO, you really only have one job, which is the culture of the airline. And I know that's not what people aren't worried about what this quarter is going to be, I think, a lot about a lot of times, but it is true. The culture is everything. And I described the culture that I want to have at United as our employees are proud of the airline because if they're proud, they take care of everything else. This is the difference in customer service. We say we're about connecting people in United in the world. It's people and you get on a United airplane now, and I hear it all the time from customers all the time, both on fly my airline and flying on other airlines as a contrast. And you got 2 flight attendants that are excited, smiling, happy to be there that love the company, feel good about the company. You have a captain that often comes out of the cockpit and gets on the PA and talks to people like those may seem like little things, but they make the experience so much different. And that has been the key to our success. We're coming out of COVID, I think, leading in the industry. And certainly, our relative positioning has improved the most, and that's why because we built the culture. I mean I -- when I did my write-up for the Board last year, like the truth is the decision, certainly as a CEO, the kind of things you're doing are not about this quarter, they're about next year in the next 3 or 4 years beyond that. It is all about the culture if you get the culture right, look, you're going to have some ups and downs along the way, something will happen. But if you get the culture right, everything else is going to take care of itself. I 100% think that, that is the job of the CEO at every company. And the more consumer-facing you are, which we are, obviously, the more important that is in the service industry.

Scott, you never shy away from questions, so I'm going to throw this out. We'll see if you answer it. But is the NEA fair and should Spirit and JetBlue happen?

I probably shouldn't, but I will. You guys at JPMorgan know how to know -- that I'm willing to take debate. So you throw it out there.

There's only 2 minutes as a -- you only have 2 minutes.

Well, I just did. But look, I'm not a lawyer -- we don't have a dog in the hunt on either one of those. But really, I like our competitive position. we're winning market share. I like our competitive position either way because doing deals is hard and complicated. That helps us not doing deals. Look, what I would say like to say that an airline can't combine to be the fifth largest in a world where scale matters. If I was Rob and I'd be spitting angry, like that just doesn't seem fair. And I don't really care if they get to build on or not, but it does not seem fair or right to be. Just 1 guy's opinion. I'm not later.

You left us 1 minute. Any last questions in this time.

If there's not, just a follow-up to the 9% $10 to $12 target. -- you, and I'm looking, Kristina and Gerry, in particular, have a luxury of seeing my competitor models. The Street has not embraced the $10 to $12, 9% pretax margin guide. What's the largest delta for lack of a better term, between your model and the sell side collectively? What don't people really believe because I don't think there's -- there might be 1 or 2 estimates up there. But as a follow-up to the earlier question, it's not been embraced by the market at least not in the sell side.

I think the disagreements over revenue as simple as that, yes.

Okay. With that, on time landing here. So thanks very much.

Thanks for having us.

Thanks everybody.