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

Okay. All right. Good morning, everybody. Moving right along. Very excited to turn the stage over to United Airlines next. We've got Scott Kirby, the CEO and for the sake of people listening in, at the table, we also have Andrew Nocella, Mike Leskinen and Kristina Munoz. I forgot that I wasn't supposed to wear this blazer today because Scott always tells me that I look like a professor, so from this point forward, you have to address me as Captain, My Captain. Okay, that was a movie reference.

But mostly what you look is extremely hot to me. That's like thick coat and a sweater and it's hot standing up here. Anyway, thank you all for joining us today. This is the one conference that I start every year with Jamie. We go back a long way together. So -- and this is one of the highlights of the year. I know everyone in the room is anxious to talk about the short term, especially with all the 8-Ks that came out last night and so on.

Can I give the disclaimer?

Oh, you can.

Yes. Today's discussion may contain forward-looking statements, which represent United's current expectations based upon information currently available to the company. A number of factors could cause actual results to differ materially from our current expectations. Please refer to our latest earnings release, Form 10-K and 10-Q and other reports filed with the SEC by United Airlines for a more thorough description of these factors. We may also discuss United's financial metrics on a non-GAAP basis during this discussion. Please refer to the related definitions and reconciliations to the most directly comparable GAAP measures in our latest earnings release and investor update, which are available on the IR section of our website and are filed with the SEC.

All right. Thanks, Kristina. So I will talk about the short term given I know it's on everyone's mind. But I want to start with the long term because the long term, everything that we've said for several years now, the industry and United Airlines are developing much like we expected. There is certainly some short-term macroeconomic issues but that doesn't change what's happening and the structural changes that have happened in the industry or what's happening in the long term. So nothing that we've seen in the short term impacts what we think is going to be happening even a year from now. So I want to start there. And to -- talking about the long term, there's sort of been two ways to think about it. We have talked about an industry thesis and a United Airlines thesis for several years now that have been consistent and all the data points seem to be consistent with that. At an industry level, we thought that cost convergence broadly, all the supply chain issues, all the other FAA challenges, all the things, airport costs going up dramatically, all of those things were going to drive what is effectively a supply response in the industry. That more and more markets, particularly for low-cost carriers were going to become uneconomic. They wouldn't be able to be profitable, and that was going to drive supply out of the low end, in particular, of the industry. That is exactly what has happened. That is continuing to happen. I think that the near-term economic pressures likely accelerate that. I think you'll see another really sizable drop in capacity as we move past the summer peak. So the second half of August, and you'll see that same thing happen again for the exact same reason that we've been describing for years. So that industry thesis remains intact. That's a lot of what the stocks moved on last year. That industry thesis remains firmly on track regardless of what is happening in the short term. At United, I have described what is happening to United and our movement to the industry leadership -- to an industry leadership position in terms of margins and with the customers as structural, permanent and irreversible. And what I mean by that is really two things. We have two things going for us that are hard to replicate if you don't already have them. Number 1 is revenue diversity. We have international. We have domestic. We have cracked the code on the price-sensitive customer with basic economy and higher yield. We have cracked the code with the domestic road warriors, elimination of bag fees. There was another big change today that helps -- that's going to help that airline more, but helps with that. And the premium we've always been good at, and we have gotten better at it. You add loyalty to that, and we have a diverse revenue stream that even when there's weakness in some part of the business, as there is now, the other parts can at least cover for much of that. The second, and I think in some ways, more important element is winning brand loyal customers. And I want to start this, if you're new, and you think about why customers choose an airline. And broadly speaking, I think there's two ways they choose. There's a large set of customers who typically are infrequent, don't travel a lot, that choose an airline based on schedule and price. That's what we talked about in the industry a lot, schedule and price. They're much more commoditized customers. And there's a large segment of the population that does. That's -- they're important to us. There are two -- we can't ignore it. That's what basic economy in particular, has done for us. And we've gotten to a point where we went -- we're going to win our fair share of Bramble -- of those price-sensitive customers. But the real game in airlines is to win brand loyal customers. What I mean by brand loyalty, these are people that fly a lot. They're typically not out price shopping on every flight. What do those customers care about? Well, first, they do care about schedule and price. The price is generally on a large level, the same, on average, it's the same at all the big airlines. So you kind of almost put that aside. They care about the schedule. So if you're a brand loyal customer, you're going to fly a lot, you live in Dallas, you may like or dislike things about American Airlines, but you're going to be American Airlines brand loyal customer. If you live in Atlanta, you're going to be Delta. That typically is number one. But in all those competitive markets, and most of the country is competitive, whether you're in Chicago or New York or Los Angeles or Nashville or Grand Rapids, all of the other parts of the country that aren't -- people that don't live in those big hubs, are up for grabs for brand loyal customers. What do those customers care about? Well, the schedule matters, but the schedule in most of those cases is equal between 1 or 2 airlines. So then their choice comes down to whose frequent flyer program do I like, whose club programs do I like, whose service do I like better, whose airplanes do I like better, I want to be on an airplane that has a seatback entertainment, I care about the WiFi. All of those things go into the mix. And the important point about those customers is that they are sticky. Once they decide to switch to an airline, they tend to stay there for decades or beyond. They get the credit card, they tend to stay. And the best example or a good example at least that I can use for brand loyal customers two of the markets where we've won, well into double-digit market share, are Denver and Chicago. And it's not a knock on those airlines. United has done a lot of things to just win brand loyal share. But those also are two markets where we've had over 100% growth in credit cards from 2019 to today -- to last year. In 5 years, both well over 100% growth in credit card sign-ups because as customers switch to us, they get the credit card, they're sticky. The point of all that is those customers are sticky. Those customers are typically choosing the best airline in any given market. You live in Denver, you're trying to choose the best airline. And if you're second place, you don't get a fair share, you get dramatically less traffic if you're second place. And so trying to be the #1 airline for customer choice in each of the big markets we fly has been our strategy for brand loyalty. And I have lots of micro data kind of market by market where we've done that. It's the reason that Andrew talked about on our last earnings call, that's the difference between our most profitable and our least profitable hub is only 6 points. We are the only airline in the country that is even close to true that all of our hubs are profitable. And it's because we've won brand loyal customers. And so all of that -- those industry trends and the United trends remain firmly in track. Now in the near term, read the same newspaper, ead the 8-Ks this morning. There's certainly -- we have also seen weakness in the demand market. It started with government. Government is 2% of our business. Government adjacent, all the other consultants and contracts that go along with that are probably another 2% to 3%. That's running down about 50% right now. So a pretty material impact in the short term. I'll talk about what we can do about that in the medium term. And we've seen some bleed over to that into the domestic leisure market. Good news is that international, long haul, Hawaii, premium, all remain really strong. But we have seen government and some low-end consumer leisure weakness, which also appears consistent to me with a lot of other data that I look at. We've had a fuel price benefit from that. But -- and our internal costs are also better. You put all that together, and we now expect to be at the low end of our guidance range. We didn't put an 8-K out, but we expect to be at the low end of our guidance range. So what do we do in response to that? At United, we looked at that and said, "Well, what we're doing, one of the things that we're doing is we've early retiring 21 aircraft". That's something that will be cash positive this year. We'd have to spend $100 million on engine overhauls this year alone for those airplanes. It'll be CASM positive. Those are our most expensive aircraft. We built a plan. We told all of you we built a plan with optionality and flexibility that if we see short-term headwinds, we can make short-term responses. And that 21 aircraft by the way, sort of correlates with what we've seen from the government. We've already started the process of where that capacity is coming out. A lot of it transborder, big drop in Canadian traffic to go into the U.S. Some of it's going to come out in government markets where we've seen less demand. And we're also going to cancel red-eye flying. Utilization flying is generally unprofitable at airlines even in good times, and it's really unprofitable in bad times. So we're taking those proactive steps. Further, particularly with the government traffic, there's a short-term yield management effect. We see that kind of drop off effectively the yield management seat is -- management system is saving seats for those customers. By the time we're into April, we're not doing that anymore. We've adjusted yield management system. We're taking more leisure bookings instead of government bookings. So much of that kind of 45 -- or that 50% drop in government gets corrected by the capacity changes and by removing -- by the yield management system. So that's what United is doing. From an industry level, I expect that you're going to see probably modest supply changes in the very near term as we go through the summer, hope springs eternal, and it is the summer peak. I don't think you'll see huge changes. But I think by the time we get to August next year, just like we got to August of last year, there's going to be a huge -- every analyst is going to be writing about the capacity cuts and the supply changes. And it's just economics. Like I said on the last call that airlines were moving to their markets where they have a comparative advantage. One of the big trends that's happening is there are -- I do the P&Ls for every airline, for every route. I know them. I probably know better than some of the other airline CEOs. But where you see people cutting is the places that they've lost money or they have a comparative disadvantage. You cannot be the #2 brand loyal choice with customers and a market entity. It's not possible. And so the industry is evolving to a place where people focus on their comparative advantage, where they focus on the markets, where they have the #1 position with customer choice and moving away from others. And all of that, I think, is good. I think the short-term turbulence is going to do -- the only thing it's going to do is accelerate the endpoint. We're going to end at the same endpoint from an industry supply perspective, but we're going to accelerate that end point as we go through what looks like a tougher economic time ahead. So we feel really good at United about where we are. We feel good about our ability to manage even through a downturn, if it happens. Having, I think, margins that are going to surprise to the upside even if there is a downturn and what all this means for the future outlook. So thanks, Jamie. Thank you guys for having us, and Mark as well. That, open it up to comments or questions.

So Scott, I think it was -- I think it was like 3 quarters ago that you really started into the permanent structural and irreversible became part of the Kirby vernacular. And I don't disagree with you, but I still, with your help, want to try to push back on that. So for example, is there a scenario where certain carriers could reestablish massive pilot pay differentials that would help some of those airlines like they've had in the past? Is there -- you talk about cost convergence, is there any scenario where costs would begin to diverge?

That's fair. When I talk about permanent structure and irreversible, I'm more focused on the customer side, the revenue side of the equation, where customer choice isn't going to change. So you'd have to do something to really change that customer choice. And I think the structural costs, labor is one where somebody could perhaps do that. But the structural costs that matter are much bigger than that. Labor adding, list labor on my list, because I mean airport costs are probably the most important one. You cannot be a low-cost carrier and fly the big three -- the metro -- big three metro areas, you can't. Like this is one of the fundamental things that happened with the low -- because their cost is optimized. Southwest, which is -- was the greatest airline in the history of global aviation, did more to change than any airline in the history and have immense respect for what they did. But one of their foundational planks was, we don't -- we fly to cheap airports that are not crowded. And they -- and by the way, there's one still one successful low-cost ULCC in the world, it's called -- it's Ryanair. And they don't fly to London Heathrow. And they don't fly to Charles de Gaulle because those airports are too expensive. And in the U.S., low-cost carriers just wanted to keep growing. And so they plowed into New York and plus the LAX and -- it does -- you can't pay $50 in airport cost and charge $70. You cannot do it. The economics don't work. And so look, maybe they'd be better at competing in Akron to Orlando, if they had lower labor costs, but they can never compete in the New York Metro area, in the Chicago airports, in Los Angeles and San Francisco. The airports are just too expensive. The airport costs, I see Sean from Dallas, the airport authorities have killed the low-cost carrier business model in the big cities.

So looking out 5 to 10 years, do you think there'll be more point-to-point service by some of those carriers?

No. I think 5 to 10 years from now, you're going to have airlines concentrated in the places where they're successful. So you're going to have -- United, you're going to have 7 hubs, like that's -- we don't have aspirations beyond that, our 7 hubs, 6 of the 7, by the way, we're the clear leader now in those hubs. We've won lots of market share. I talked about Denver, Chicago, San Francisco and New York or second -- or third and fourth largest increase in credit card sign-ups. New York metro area and San Fran Metro. L.A. is still a toss up. It's the only one that's kind of a toss up. It's down to 2, used to be 4, down to 2 airlines that are sort of tied for the brand loyal customers. But our focus is going to be there, for example. And I think other airlines -- the other network, the big airlines are going to be focused there. There's going to be a lot less low-cost carrier capacity. I think there's a niche that works for the low-cost carriers of point-to-point, but the niche doesn't involve a big city, a big, high-cost airport at one end. And that's just a smaller niche. The reality is what happened to the LCC, ULCC business model is they outgrew their total addressable market size in the United States. And that got exacerbated when we all eliminated change fees. That was a huge, huge market share advantage. So in a place like Denver when United had change fees in place, there were a segment of customers that United was the brand loyal airline and this segment of customers -- I'm not trying to knock on Southwest. I see [indiscernible]. Hi, Tom. But he worked for me for a long time, so he's good training. Going to do well at Southwest. But -- and so we had -- but the -- those domestic road warriors, the biggest advantage that Southwest had over United was no change fees. For customers that mattered, that was enough to overwhelm our frequent flyer program in first class, in clubs and food and all the other stuff. But now that's a tie. We're not better, but that's a tie. And all the other stuff that United went. And so the brand loyal customers move, not because Southwest did anything wrong, they didn't. But we just took -- we just matched their one competitive advantage. And those brand-loyal customers have switched. And so it's just -- that's the point about it. It's sticky. Those customers are sticky. And as other's airlines incrementally move closer to us, it's not going to be enough that they pass us in an airline and a customer decides to switch. They're just -- they're sticky at United.

And a couple of years ago, you made the point that you felt that there was room in the U.S. for two premium airlines, which I interpreted as a nod to Delta and maybe a swipe at American. But the question that I've gotten is that -- I mean, is that just something you said at the time? Or do you think that the premium market itself can't actually support more capacity?

Well, the first time I actually remember saying that was December 9, 2013, which was the day the American Airlines U.S. Airways merger closed. And at the end of a successful day, I got everyone in the room and said, there's only room in the country for 2 successful premium airlines. We're going to be it. Here's what we're going do. We're going to have seatback entertainment. We're going to sort of the same playbook. We're going to do all this stuff. We're going to push United out of the TransCon market, then we're going to push them out to Los Angeles, then we're going to push them out of Chicago. I said that on December 9, 2013. So I've thought that for a long time. The airlines decided to put the playbooks, but I still think there's only room for two. It's just the size of the market. You just look at the big metro areas like New York is big enough to have 2, it's really hard to be three in there. It's hard to have a competitive advantage. Here in New York, is bigger on 1 side of the river. We're bigger on the other. We can each kind of be #1, but it's hard to -- the real point it's hard to be #2. And you just run out of big cities where you can be number 2. You can be really big in a place that's not New York or Chicago or Los Angeles, but it's hard to be kind of global and comprehensive if you can't be #1 in those big cities. And there was always -- I thought there was always only room for 2 as you just look at the map. And I still think there's no room for 2.

Couple of questions from me for Andrew. We already spoke with Delta this morning a little bit about their government exposure. Can you talk about your government exposure and specifically IAD and the Washington sort of catchment versus the rest of the network and how that's been playing out?

Sure. There's no doubt with Delta sub, we have more exposure than they do. So roughly 2%, a little less than 2% of our revenue, and that's true for both domestic and international, the level of exposure. And obviously, Dallas has the highest exposure at United. We've seen the fall off, as Scott said, at roughly 50%. It's more in far out bookings than close-in bookings. The close-in government bookings continue to be rather normal. It's the far out stuff that has dissipated quite a bit. So we'll see where it goes. As we had to do earlier, our ability to refill the seats as we head into the Easter and spring break time period is much better than in February or March at this point. So we feel bullish as we go forward that we'll be able to recoup some of what's been lost. But it is roughly 4% of our revenue when you take the direct and the indirect impact of what we think the government provides United.

Any observations on other corporate sectors? We spoke with Delta a little bit, about they cited aerospace and defense, autos. Obviously, the A&D has a government relationship. But just when you look at -- obviously, you have a big tech exposure out of the West Coast and so forth. Just any observations when you look at corporate travel trends?

I think we'd reiterate what you heard this morning that as we ended the year and started this new year, the trends were incredibly strong and they have dissipated a bit. But they still remain, I think, relatively healthy in the corporate space, excluding the government part of it. So I'm pretty bullish that hopefully, we get through this little rough patch, and we see that traffic return to that fast pace. That was just a few weeks ago when you add it all up. But I generally see similar trends across most of those businesses at this point. There's nothing to point out that's worse or better, in my opinion.

And a question, maybe, Andrew, for you or for Scott or Mike, when you think about Southwest decision to eliminate bag fees, how do you compare that in terms of the impact on United as change fees or some of the other sort of barriers that have fallen to level the playing field?

I think it will be a really big deal for Southwest. It would be good for everyone else. It'll make them more competitive. But it mostly impacted the low-end customers. Our customers that have the credit card and [indiscernible] get feedback because it's a reason we never worried about matching it. I think it will raise the tide for Southwest across the board. It will -- the relative margins will be worse in competitive markets because it will cause some customers at the margins to switch to competing airlines. But it will not be good for -- I think the far bigger thing is like it's the slaying of a sacred cow. It's one of the two big things that get Southwest back to industry-leading margin that and stop flying places that lose money, like we should be willing to slay one, maybe went to slay two, I don't know. But I view it as a big deal because it's more -- it feels more financially driven -- a results-driven airline than it's ever been before.

And Mike, I want to ask you a question about the balance sheet because under previous regimes at United, right, there was never a goal to be investment grade rated. It was always investment-grade metrics and so forth. You changed that up. You have a goal to be an investment-grade rated airline. And we haven't had a chance to discuss in a big forum like this. And I just want to ask you why that's so important?

I appreciate the question, Mark. The best balance sheet to get to investment grade, it's all about playing offense. You need to have strong P&L. You need to have strong margins. Otherwise, what you would have to do the balance sheet would just be exorbitantly expensive to get to investment grade. And so as we're on this march to double-digit margins, we now have that opportunity that I don't think existed in previous regime at United. The brand loyalty, the resiliency of the business, the predictability of our margin along with having relative industry-leading margins, all of that is the foundation for investment grade. And so now we think about what we're doing with operating cash. And what we're doing with the free cash to bring down the balance sheet is at the same time we buy back shares. And we're on a path right now to get to below 2x net debt to EBITDA. I'm not sure if we need to refine that a little bit lower than that, we're going to work to see that. But investment-grade is really important for a ton of reasons for this business. The biggest reason is the optionality it creates in times of crisis. And so what we're seeing in the market right now is the cost of borrowing unsecured is starting to become really tight with the cost of borrowing secured debt. And so as that continues to narrow, you should expect to see us evolve how we finance this business. I do think as we roll into 2026, we'll be at investment-grade metrics. And we'll see how long it takes to get from investment-grade metrics to an investment-grade rating.

Just on that point, how does that interplay with the fleet strategy? So you sort of build up sometimes we heard from Delta big unencumbered assets. Historically, there was sort of a move to kind of balance financed aircraft and leased aircraft. How does United think about sort of that leased aspect vis-a-vis kind of the path to IG?

It's a great question. The overarching principle is how do we optimize our overall cost of capital, debt and equity capital. And so as we think about mixing lease financing with more traditional WPC financing, it's about what is the most cost effective at the time. And I think that what you'll see more and more of is maybe we'll start to tap into the unsecured market as well. So -- but it is really about optimizing our overall cost of capital. In the past, it was about minimizing cost of debt in a vacuum. And I want to minimize the cost of equity at the same time.

I've got one for Mike and then a follow-up for Scott, depending on Mike's answer.

I agree.

I think it was the January earnings call last year. And then I asked you about the potential to do something with loyalty, some potential for them to monetize is maybe a portion of the program. And I remember, I asked the question because it was two years prior that there were some Bloomberg articles on that topic. In any event, you really seemed to leaned into that question at the time. And the impression that I got in the months after that was that it was something that was being seriously looked at internally. Then the stock started to work. And the impression that I've been left with is that any efforts in that regard were kind of pushed to the side. So I guess my first question is, is this a reasonable way to describe history? And is it just kind of a no brainer, I mean, with the stock under so much pressure, does that mean you potentially revisit some of those thoughts?

Jamie, you're an astute observer of this industry. Look, I would say that we're trying to optimize our balance sheet, optimize our cost of capital. And it was clear to me before I joined United that we had this hidden gem in the loyalty business at United and a couple of other airlines, 3 or 4 programs, that's it. And in the pandemic, we tapped that to raise liquidity at a time of crisis at reasonably attractive rates. But in a time of strength as the economy is stronger, what does that mean for our equity value? And we weren't getting any credit for that. We still aren't getting sufficient credit for that. But the goal, when we think talking about monetizing that loyalty program, was about getting respect for our equity multiple. Trading at 4x was just simply unjustified. As our multiple went from 4 to 8x that didn't say we stopped the process, but it meant that we could take our time. Everything -- all the work is being done. And so to the extent our multiple were to contract for an extended period of time, we would take that book off the shelf without question. Now that's just part of the story, though, because the other part of the story is we've got a business within the larger airline business that is high margin and low capital intensity. That should be a higher multiple business. And so we can get credit in the overall business for that. But that business, we ought to be allocating more and more resources too, both operating expenses and CapEx. And so what you've seen is a pretty dramatic shift at United, where we're allocating more of those resources to that business, to expand that low margin and that high-margin, low-capital business. And so we're not quite ready to unveil all of the details of that, but we have supercharged that business. You're going to see an accelerated growth rate. And over time, you're going to see additional disclosure, but we want to do it right. There have been plenty of loyalty programs, whether or not they've been spun out, where the relationship with the overall airline has been imbalanced and that creates a lot of disruption. So we're trying to take our time and do it the right way. But no -- make no mistake, I want to end on this, that there's a ton of value there. And if the market sees that value, then we don't need to do anything more about disclose. If the market does not see that value, then we have an obligation to shareholders to do something more to create that value.

And my follow-up for Scott, you have very sophisticated internal systems for monitoring route profitability. You had your competitors. I assume that you've crunched whatever numbers you can on the Citi American deal, and you have good line of sight into Delta Amex economics. You've expressed dissatisfaction with your Chase economics in the past. Certainly, some of the stories I've heard about you and [indiscernible] [ Jamie Dawn ] are colorful, but I think that's all in the past. How would you describe -- I mean, are you operating at an economic deficit to where American and Delta currently are with loyalty returns?

I wouldn't describe it that way, that we're -- we've not expressed dissatisfaction with Chase. We have a great relationship. We have a great partnership with Chase. But like all of these deals, they're sort of competitive in the market. Whoever has done the latest tends to jump to the top at least a little bit. And ours is the last, ours was signed earlier. So I don't think there's anything -- it's like pilot contracts. When you sign the next one, you jump to the front. And we have a great partnership with Chase. At all levels of the company, from me and Jamie, I'm seeing him later today, to Andrew and his team, like all the way down, we have a really solid partnership, and we know that we win together. And new contract's not up for a few years, but I would not describe it the way you said. I think theirs is probably a little better than ours, just because they came after us.

Yes. Tell Jamie, we said hello. So Scott, you're the only CEO that may give us a somewhat direct answer to this question, which is...

Your're telling me you're setting a trap and I'm going to walk into it anyway.

I'm trying to [indiscernible] with this question here, okay?

How do you feel what it is?

Excluding Spirit and Frontier, will we see or -- and/or do we need more industry consolidation? And does United play a role in it?

I don't know. I think it's -- I probably think it's less likely than others I think. JetBlue is the obvious. Joanna is going to be here later today. So you can ask her, what she thinks. She probably...

She's not going to answer. That's why I was asking you?

You'd just probably control that decision. It's possible. But there's a lot of challenges, like I look at it from United's perspective. We have a great plan that is working and mergers are so hard. They're disruptive. Your technology team spends two years on the sideline, just integrating like I bet a lot of you used the United app. I bet you all think it's the best app in the world in airlines because it is. Like that kind of investment just gets harder to do. We've got some super cool stuff coming for customers this year. That stuff just gets harder and harder to do. And at United, when the business -- business plan is working, like the hurdle to go to -- we don't need a deal for sure. The hurdle to go do a deal gets a whole lot higher. That said, at least at United, I would like to have a bigger -- I'd like to have a presence on the other side of the river at JFK. But man, all the headache, all the brain damage of buying a whole airline to get there. That's a lot to do. So really, I think the ball is going to be in JetBlue's court. They're working out on spec form. They're working hard. They're also an airline that focuses on brand loyalty. So from a customer's perspective, they have a lot of those sort of core DNA things, that I respect but they're also competing with another airline, JFK and Boston, that has that, too. And so it's a tough position for her to be in. So sort of their decision on how to sort through that. That's the only one that I think really is potentially in play one way or another.

Any hope that the change in administration in Washington, besides all the noise that's out there right now, but leads to some beneficial improvements to United in terms of whether it's air traffic control, FAA, what you're hearing from the Department of Transportation?

Well, two things. First, I'm hopeful. I think all of us think that there's opportunity to make the government more efficient. And like I might go about those a little differently. I would go about it a little differently if I was running it, a little more scalpel, maybe a lot more scalpel approach. But hopefully, the government -- a more efficient government, even if we pay some short-term pain, which we're going to go through some short-term pain for that. Hopefully, we're better on that in the long term. But I think without question, the FAA is set up to be -- to finally fix the FAA. I think there -- that Secretary Duffy is focused on the -- I suppose there's three things he need to do to fix FAA. Get staffing back up to full staffing, technology and facilities and equipment investment. They've just got ancient facilities. You spend -- they spend 90% of their budget, repairing and maintaining existing facilities. Like there's no new businesses it's the inverse. It's literally the inverse. As we fix those three things, they're not that complicated. They're relatively sticky. They're not easy, but they're straightforward to understand. And I think Secretary Duffy gets it, the administration gets it. I'm up on head straight from here to D.C. I'll see a bunch more people but I've talked to all the people on both sides of the aisle. This is one that's bipartisan, like Washington, God, [indiscernible] me to understand it. Like everyone agrees, and still don't do it. But I think at this time, it's going to actually get it. I think the FAA -- it won't happen overnight, but I think FAA in a few years is going to be fixed, and that is an absolute.

Anyone from the room, anybody? I think the clock is going the wrong way.

All right. Thanks, Jamie. Thanks, Mark. Thanks, everybody.