United Airlines Holdings, Inc. ($UAL)

All right. Folks, moving right along, apparently fresh from the Magic Kingdom. I'd like to introduce Scott Kirby, also joined by Andrew Nocella, Mike Leskinen on stage, and Kristina Munoz. Kristina, do you have to read some safe harbor stuff? Or should I turn it over...

Yes.

So I'll turn it over to you. Scott, welcome back.

Thank you, Jamie.

Awesome. All right. Well, good afternoon, everyone. Thanks for joining us. Our presentation today might contain forward-looking statements with information currently available to the company. Unless otherwise noted, the financial measures we will discuss are on a non-GAAP basis. Please refer to our latest earnings release for definitions and reconciliations to the most directly comparable GAAP figures. On to you, Scott.

Thank you, Kristina. Thank you all for joining us today. My last -- are we the last airline? Save the best for last. That's important. So good to see Okay. We -- all right. Second best for last. Second to last. Well, thanks for having us here. It's good to be here. This is always a fun conference. So Jamie -- hey, Bob, you come hear how things going in the airline industry come on in. Jamie, you got to stop doing these conferences on this day because 6 years ago, we did it on the phone, and we always have something going on, it seems like. But we much -- you've heard a lot already today about the short term, and so I'll hit a few of those highlights. But we feel really good about how things are going at United, both in the short term and how it sets up for the long term. And we've talked about in the past having a goal of adding 1 point of margin per year, and we believe that we can get ourselves into the low double-digit margins on that path. We remain on that path. Prior to the fuel price spike, you've heard some of the revenue stuff like we were likely going to get not just the full point this year, but make up the point from last year and be in the low double digits even this year had this not happened. But we also married solidly on the path. And I think this has the potential if it lasts longer to actually accelerate some of the industry restructuring that moves you into the mid-double-digit range. So with that sort of backdrop, the near term, I'm going to say the same kind of stuff that everyone else has said today. The revenue environment is really strong. By the way, we have a goal this year to fully offset the increase in fuel prices, which is about $4.6 billion at the moment for revenue to fully offset that. And to do that, we need RASM to be up another 8.5 points. So it's an interesting kind of thought experiment. Is that doable or not? How achievable is being up 8.5 points? And so a few stats on that. We have had the 10 biggest booking weeks of our history, have been the first 10 weeks of this year. It only been 10 weeks this year, and they're #1 through 10, which is pretty remarkable. The last two have been the two biggest. We're currently running booked yields. Those are running up, but now they're running up between 15% and 20% in the last week. So pricing has been going up as one would expect. Open -- people ask the question with pricing going up like that, is that going to have an elasticity effect? I'll just give you some food for thought on that. If you look at it on a year over 2-year basis, it's more like 5% CAGR. But if you look at it more importantly, going back to 2019, from 2019 through 2025, inflation in the U.S. was up over 25%. Air fares were down 2%. So we're 27 points behind. So 15 points, we sort of covered half of the inflationary impact. So I don't think that's going to happen unless the economy really gets hurt, which is a different effect. But I don't think the elasticity effect is going to be high because we're really still recovering, and we're doing it rapidly, but this is where we're recovering kind of what happened post-COVID. So with some of those numbers, March RASM end of February, it was booked up 8%. It's going to end up plus 14%. So we're going to have March up plus 14%, double-digit RASM in 2Q. And so that 8.5%, I don't know if we'll get there or not, for sure. But you can look at all the data, and you can certainly make a credible case that at least as the environment sits today that we recover 100% of that increase in fuel price. So we'll see what happens for the rest of the year. The question becomes, though, what in that environment where we still do feel really good, is there anything that we should be doing differently? And at United, we are going to make adjustments because of what's happening with fuel prices. Even though we feel good, our goal is to recover 100%. And we'd much rather -- there's two kind of errors you can make in a situation like this. You can say, oh, everything is going to be -- is going to be short term, everything is going to be great. And -- or you can say, well, I hope everything is great. But if it's not, we're going to prepare proactively for it. I'd much rather -- and proactively at the near term at least mostly means cutting capacity. and eliminate marginal flying. I'd much rather make the mistake of leaving a couple of months' worth of demand on the table because we cut more and then you can get it back, as opposed to making the mistake of oil prices stay higher and longer and you're flying flights that lose cash. So we already, last Friday, loaded about 1 point of capacity reductions for May and June. We're working on more to extend that time line out. It's all utilization flying, Tuesday, Wednesday, Saturday, red eyes, stuff like that. But we're being proactive about it. And so I think what all this means is the other thing that's going to happen, particularly if this -- where this gets really interesting is if fuel prices stay higher for longer, that's really where it gets interesting. I think there's a reasonable chance that, that happens. And if it does, it's going to, I think, further accelerate the gap between the brand loyal airlines and everyone else. And the truth is there's 2 brand loyal airlines in the country. And I think we will outperform in that environment. It will also lead to kind of the structural changes in the industry much more rapidly that I think leave us to get us into the mid-double-digit margin range. And so at United, I think we're still consistently on course. We're sort of growing margins by a point a year to get into the low double digits. And there is a potential, not the certainty, but there's the potential that if this lasts longer, that it gets us pretty solidly into the mid-double-digit range by the time it ends if it does go for longer. So we feel good about where we are. We feel good about the track that we're on. We've always hypothesized that in a situation like this with a big fuel price spike, the industry restructuring would pass that along pretty quickly. It is as fast as I've ever seen it in my career and pretty remarkable to be standing here with this fuel price spike and not just United, but other airlines talking about recovering, having at least the possibility and the potential to recover 100% of the increase in fuel price. So thanks for having us, Jamie. With that, I'll sit down and we'll do Q&A, whatever you guys want.

So I'm happy to start, but hopefully, we get some audience engagement. So in terms of the speed of fuel price recovery, where you left off, do you think it's the financial duress that some of your competitors are on that explains that? Is it changes in how the U.S. consumer values the proposition of commercial air travel? Is it international fuel surcharges, which just sort of mechanically you make things -- I mean, why the rapid escalation?

I mean, maybe all of the above. But in some ways, you basically got -- you had 2 airlines that were 100% of the industry profitability last year, a couple of airlines that were essentially breakeven. You had low cost. The more you're biased to the low-cost end of the spectrum, the worse your margins were. They tend to be the price leaders. We tend to be price followers. And so the urgency at those -- and fuel is a bigger percentage of their expenses as well. So the urgency at the low end to raise prices is even higher. And -- so that's one. I think the industry largely has management more -- at least more has management teams that are focused on profitability and are well managed as opposed to fighting for market share. I saw Bob walk in. Southwest has been the airline that actually, I think, has done the most in the last year to really make changes. If you're willing to make those kinds of changes at an airline.

We talked about it. I'm sure.

But if you're willing to make those kind of changes at an airline, you're also willing to look at like fuel prices just going up 60%, 70%, do something about it. And so the industry, like the leadership teams are just different. Not all, but at most.

Andrew, has there been any change in consumer behavior in terms of the booking curve? I mean, are people just pulling forward their summer travel decisions? I mean this is when you should be booking the transatlantic anyway for summer, right?

We're definitely in the peak booking season for the Atlantic, and I don't see a change in behavior. I just see relatively strong demand. And last year was an easy comp, but still good strong demand.

Scott, you mentioned elasticity. It's one thing I wanted to ask because we were talking to some of the low-cost carriers and one of them specifically sort of admitted that. In the old days, we could -- if we were at $79 and we moved to $69, $59, $49, we could stimulate demand. But their point was you can throw all those models out the window because if United is in the market at $99, it doesn't matter what they do. So can you maybe talk about that dynamic in terms of your comment on elasticity and how brand loyalty sort of plays into that? Is it fully played out?

I'm getting over the shock that they said that because I said that 10 years ago, and they said 10 years saying I was wrong. But that's the point. What used to -- 10 years ago, what happened and how they built their models were not price elasticity of demand. It was price advantage. If they had a lower fare, people would book them. But that doesn't work now. And they could often have a lower fare. By the way, like the very first job I had at American Airlines when I first got in at AADT actually, was estimating price elasticity of demand. I've looked at it 200 different times, 6 ways to Sunday. Demand is inelastic. The overall price elasticity of demand is about minus 0.5%. So demand is inelastic period in the airline industry. But I think a lot of what has happened is the necessity to raise prices has forced them to rethink that paradigm and realize that in the past, they have price advantages. Today, they don't have price. That is the biggest change that happened to the ULCC model is that they're no longer have price advantage. And the reason is because we can be price competitive. We needed basic economy, and we needed higher gauge. But with those two things, we can be price competitive. So if you're going to try to fly in Chicago or New York, or like -- we are not going to go try to -- we wouldn't be successful competing with the ULCC from Akron to Orlando. But in our hubs, like we can be price competitive and like no carrier is going to fly a ULCC over United at the same price. At least they're not going to do it twice. They might make the mistake once, but they're not going to do a second time.

And Mike, fuel question for you. We've spent some time with both Alaska and Air Canada talking about how they source fuel, and how they have flexibility in where they source fuel. Obviously, there's a lot going on. There's a lot of difference right now between New York Harbor and Singapore and everywhere else, right? So can you talk a little bit about United's setup and what flexibility you have to move your fuel sourcing around?

Yes. Thanks for the question, Mark. And just to share with everyone, we have about a $400 million headwind in the quarter related to higher fuel prices. That's consistent with what you've heard from our peers. So it shouldn't be a big surprise. And we're having a lot of success passing through price. We have been on a 3-year journey to improve actually our systems accounting for fuel. So we know precisely what we pay for fuel in Sydney, and we know precisely what we pay for fuel in San Francisco and New York. And so around the edges, we do optimize based on those changing prices. And those prices in the recent weeks have been really volatile. And so that around the edges changes how much fuel we might tanker from one location to another. You can't do a lot, but you can move around the edges there. We also are very active in trying to figure out how to not figure out sourcing some of our own fuel and bringing in some through pipelines, et cetera, to try to minimize that price. So I think really successful. Given the magnitude of the move in prices for jet, it's going to be -- that's going to overwhelm the couple of pennies we might pick up by being smart around the edges. I would say to Jamie's earlier question, I think one of the things that makes for a healthy industry is an industry that passes through the cost of its inputs. And so for the first time, no major U.S. carrier has fuel hedges. The hedge is a natural hedge, and that is that we pass through to the consumer as the price of fuel rises.

Scott, when United Next was unveiled, I paraphrased it as going for gauge. I don't know why, and there were obviously more.

Andrew agrees.

Yes. So since you brought up gauge as it related to the competitive dynamic vis-a-vis some of your smaller competitors, are you -- and you admitted at the time that Delta had about, what, a 4- or 5-year lead on gauge. Is United properly gauged today? And how much more? Okay. So Andrew is shaking his head for those who are listening. So when do you get there?

I don't know when we'll get there. I know we're on a constant journey here, and we have a lot of upside. We're still undersized in our hubs. I think our hubs can support 170, 180 seats per departure, and we're well below that. And I think our average today is like 132 in North America. So that number -- it is difficult to move the number mathematically when you have this many airplanes. But I just think that we have a unique tail gauge tailwind that will be with us for at least another 5 to 6 years.

Well, and just to push back on that, and I happen to agree with you, but just in pursuit of devil's advocacy, isn't that the problem that the discounters ran into was going for gauge and just 321s and it was all a CASM exercise. So...

Going for gauge without connectivity. Like we have massive load -- we have massive connectivity. And I'll also point out, like going for gauge just for the sake of putting airplane seats on airplanes is just fundamentally flawed. I think the industry has now figured that out. We figured that out a long time ago with the 767 and the CRJ-700, which we made into 550s. And I think there's a lot of lessons to be learned by all that. So it's not just about gauge for gauge sake. The gauge allows us to put multiple product choices on an aircraft and do it profitably. And so gauge is just a panacea for a lot of things. And I think it's very unique to United. You look at our order book and our hubs, we have this opportunity, and I don't think other airlines do.

Scott, personally, I'm not a heads I win, tails you lose kind of guy, win-win situation. No, no, I'm not. But I think you made the point before about the fuel price change. The longer this persists, the more structural change is likely to take place that ultimately feeds into United's prosperity potentially. So my question, I don't know how often you revise your internal forecasts, but if fuel prices stay here, do you think your 2027 -- '27 emphasis moves higher, lower or stays the same, given the knock-on effect that that's going to have...

I'll give you a longer answer probably. One, I can't help myself, but -- because you sort of hinted at it. In a situation like this, as was true 6 years ago, this is obviously nowhere near the magnitude of COVID was 6 years ago. But in a situation like this, it's really important to be right about what the future is going to look like as opposed to what you hope the future is going to look like. And it's magnified if you are right and everyone else is wrong, which is what happened in COVID. Like we got COVID pretty much right and everyone else got it wrong, and we came out massively stronger. I'm not predicting yet that that's going to happen in this case, but it is a possibility that oil prices stay higher for longer. And like I just read the summary that I didn't listen to anything that's flying in here today. But there's a lot of -- this is going to be over soon with definitiveness. I'm not definitive about that. It's certainly a possibility, but we're going to prepare for it to be deeper and longer. And so if it's -- let's say, it's deeper and longer and oil is -- we've run a scenario actually on it, where we said oil goes to $175. Their Strait stay closed for 3 months, oil goes to $175 ends the year at $120, and ends 2027 at $100. I think that's a world where we have the ability to grow earnings next year. It requires assumptions on what happens to other airlines. But we've done the same analysis like some of our -- even our big competitors, if they don't do something, come out in 2027, 30x levered, which is impractical. And so I think it forces change. So that's an example of a scenario that we've run. I wouldn't make the forecast for sure today that we come out and be able to grow margins, but I think it's certainly plausible that we could in that environment. And by the way, if you look at kind of yields and revenue to get there, like you got 27 points to make up plus you're going to have inflation this year and next year, like not hard -- like saying, modeling yields just recover inflation, that's going to be 30 points improvement in yield from 2025 through 2027. The math is viable.

So on that inflationary issue, and we had a panel with John Heimlich, the A4A yesterday, and we talked about some of the same figures that you cited today. So for that yield improvement to take place, do you think consumers will pay that? Or does that have to be carved out of elsewhere in the travel ribbon? I mean for airfares to stage the sort of recovering at least directionally with what inflation has done, do other travel entities have to give that up to the airline?

So interesting point. Like I do think the price -- the right way to think about price elasticity is price elasticity of the trip, as opposed to price elasticity of the airlines. And every other part of the travel segment has done a pretty good job of recovering it except for airlines. And so I think fuel prices increase the probability that we do that. I do think that -- like it's naive to say that there's no price elasticity effect. There is a price elasticity effect. We raised yields 15%. There's going to be some fewer volume of passengers like we all took Econ. It's Econ 101. It's not as much as the 15 because of the trip point that you make. And it is primarily coming out of the commoditized portion of the industry. And I think the capacity comes out to reflect that loss of volume from the capacity part of the industry. So I think if you got to a year like 2027, where you had a 30% increase in yields, it would be harder for that part of the journey. The airlines would disproportionately recover that, not -- maybe not 100%, but would disproportionately recover that. There'd be some loss of volume. But I think that loss of volume for airlines would almost entirely come out of the commodity capacity in the airline industry.

Andrew, maybe you can talk a little bit about Middle East flying Tel Aviv. I mean it's an important lane for you. You've had quarters before where it's had a material impact on your results. Obviously, it's still important. Maybe just talk about in the short term, how you're managing that, what you're seeing, how you're thinking about that for the rest of this year?

Sure. I think we're getting used to this volatility. If it's not one thing, it's another. So we're always prepared to be agile and move aircraft around. In this case, I think roughly 2% of our capacity was between Tel Aviv and Dubai. We've clearly canceled both and have reallocated those widebodies into the system flying transcon at this point. And we've grounded the 757s they replaced. So we're going to -- in other words, ASMs will come down, as Scott indicated earlier. And so we'll move them back when conditions allow. But at this point, we're expecting not to return to Dubai until later this fall for a number of different reasons. And hopefully, we'll be able to get back to Tel Aviv this summer. But we're not going to sit and hold the aircraft completely separate and pretend that they'll have a use. So we've come up with a different use for them right now.

Just a follow-up. So how many 777s does that free up between...

Probably 7 widebodies, something like that.

So where do they go?

There -- some of them are not reallocated yet, but they'll be flying on transcon missions where we're seeing very strong demand. So New York, San Fran and New York, L.A. And the 757s they replace, those 757s will be parked for the short term.

So net, same number of airplanes flying.

I think Jamie just wants to know because he wants to fly that Polaris from...

There's a 777-300 out there somewhere in the domestic.

Jamie is going to hunt that down. Mike -- exactly. I know you too well. Mike, you have a goal for the first time ever from your seat, United has a goal to become investment-grade rated. And we were just talking in the hallways of San Diego last week. I sort of polled the audience of aircraft financiers about your ability to get there this year, next year. And the good is everyone still thinks you can get there within the next, sort of, year, 0 to 18 months, something like that. Is there an argument to be made that if you power through the next couple of quarters here that, that can actually be accelerated that -- I mean, if you can prove that you can handle this type of fuel shock and still sort of meet your guidance and so forth, is that sort of the nail in the coffin, if you will, to them viewing you as not worthy of high grade?

Yes. Look, I mean, I'll leave that to the rating agencies, but I'll say it certainly ought to. The biggest knock in getting to investment grade, our leverage ratio is fine. Our margins are marching higher. The knock is the industry rating at all the rating agencies. And if we prove that this is an industry that has more stability of earnings power through macroeconomic events, which I think is precisely what we're going to do this year, it ought to accelerate it. The other thing that ought to accelerate is we issued $2 billion of unsecured right on top of where investment-grade paper is trading. And so the buy side is already voting, and that is that we're right on the cusp. So we'll be at the metrics, I think, towards the end of this year, and I hope we get there towards the end of this year, but I feel really confident we'll be there no later than next year.

Scott, your Chicago expansion was characterized as reckless by -- you're former employer this morning. So far...

Took those in compliment.

If you care to respond, feel free. But more importantly, having been sitting at the negotiating table, and I know a resolution hasn't been achieved. How do you think this settles out? And can we be confident that the outcome is not punitive to United?

Yes. I think the DOT is, for the first time in my career, doing what they're supposed to do, which is manage schedules so that they equal the amount of capacity at the airport. I am highly confident that the DOT does not want to put their thumb on the scale either for United, unfortunately, or for American, that they want this to -- a bunch of questions about what's the fair starting point and all that. But they don't want to put their finger on their thumb on the scale, and I don't think that they will. So it's all going to be fine. Lots of histrionics, it's all going to work out fine. Actually, going to work out better because the airport is going to be managed capacity there. But I also think it's interesting to sort of how do we get here? There's really 3 moments in time that got us to this point. The first one is 2016, when United Airlines decided to embark on a strategy of investing in the product the service, the technology, the reliability to be a brand loyal airline. And American, I'm not criticizing them, but they chose a different direction. They chose to focus on costs. I don't actually know what they said today, but they talked about cost, and how good they are at managing costs. And they have been good at managing costs. But that is the opposite of what you do if you're trying to be a brand loyal airline. They focus on the commoditized portion of the industry, and we focus on the brand loyal. So we went in 2 different directions. And the consequence of that first moment in time led to the second moment in time, which is coming out of COVID, that point, American had lost massive market share in Chicago. They went from local customers, they went from having higher market share than United in 2016 to coming out of -- by the end of last year, we had a 19-point advantage with local market share and a 38-point advantage with business traffic in Chicago. We won -- not because of our schedule, we won because of product, service, reliability and technology. We're just a better airline. And the consequence of that was that American was now losing money in Chicago. And so American made the second moment in time, a perfectly rational decision to deploy their capacity coming out of COVID in Dallas and Charlotte. They grew those double digits. They made money there, and they left Chicago to shrink on the volume. They didn't grow it back because it lost money. It made sense for them to do that. The consequence of that second decision was they lost gates in Chicago. That's the way it works. They lost gates. By the way, it wasn't because of anything United did. We didn't -- we grew Chicago just like we grew the rest of our system. American failed to grow. And so American -- we didn't win gates. American lost gates, which led to the third moment in time, which was December 26 of last year. American decided to add 117 flights a day to start at the beginning of February. So 5 weeks to sell, it lost 40% of the booking window for a full summer schedule that they lost -- February demand is 29% below the summer. They added a full summer schedule with 5 weeks to sell it. That's a tell. That was not about profitability. That was not about rational economic behavior. That was a desire to, sort of, during the holidays, put a bunch of flights in, hope United wouldn't respond and they could win gates. Cost a lot of money, but that they could win gates. I mean they were on track to lose $1 billion in Chicago, which I don't think they even argued with today. Lots of [indiscernible] about variable costs, but they didn't even argue with.

They spoke about that.

And so that's sort of how we got here, those 3 moments of time, which, by the way, United never actually did anything, like United wasn't trying to harm American, or even win gates from American. American made decisions that they lost gates, and those are the consequences. And so that's what happened. We were forced to respond. I'm not going to call what they did reckless, but I'll leave you to decide if losing $1 billion a year at a hub, how you want to characterize that? I know that I would fire someone for doing that. But that's how we got there. But all the histrionics that have happened to get to this point, the DOT is going to come in and play dad, and forces to share, and it's going to all be fine.

So Scott, I have to remind myself sometimes we're in Washington, D.C. here. So I just want to ask you, number one, conversations with Secretary Duffy about FAA modernization and the pace at which you think that's -- it's increased, but is it meeting your expectations? Or what are reasonable expectations for that? And I also want to ask what you're hearing from your lobbyists about just credit card interchange fees, loyalty changes, all that noise that's around the loyalty and credit card system?

So first, like this administration, Secretary Duffy, Administrator Bedford, is the best triumberate that we've ever had by far in aviation. They care. They want to get it. I was at Disney World yesterday and Secretary Duffy called me just to make sure everything around the world is going okay with oil because he'd heard that maybe there's places it's hard to get jet fuel and like proactively called me to ask about that. And like he does that kind of stuff all the time. Bryan Bedford does the same thing. Like we've never had someone that wanted to make -- they hold us accountable, but never had somebody that wanted to help make the industry work. And the reality is 90% of the delays and cancellations in the country are air traffic control. That includes weather. That's not all on them. But weather and then all the other issues that happen. And like there's just -- like everything combined that you could do to fix to improve aviation for customers is not as big as improving air traffic control system, and they are great at doing that, and we are fortunate to have them. And all of us in aviation are supportive of them. And I think if I speak for all the airline CEOs when I say that. Credit card and interest rate legislation, particularly on the interchange rate, 86% of people have rewards cards in their wallets. People love them. Politicians are generally smart enough not to pass legislation that passes off 86% of their voters. And so that works really well, I think, on the hill. We'll have to keep fighting. I know there's one senator in particular, more than one, but one in particular that keeps pushing the legislation. So we'll keep fighting that. But the reality is consumers love them. Those programs exist because customers love those programs. That's why they're there. That's why they're successful. And the only way we keep them that way and keep them successful is that we're giving customers loyalty programs that they love.

That's a good segue into my question for Andrew. So in the last earnings call, you teased that MileagePlus changes were going to take place in I don't remember what you said 8 weeks or something like that. And when I tried to corner Kristina on that, the way she described it, she said that the flyer in me, the passenger would be much more interested than the analyst in terms of those changes. Okay. And that was helpful. And that diffused -- I was like, okay, I believe. But some of your competitors are now criticizing the changes that you have made. And I guess they don't go into effect until early April, April 2, something like that. So I guess the question is, how confident are you that you didn't hit too aggressively with those myriad changes? Because when I saw them, I figured, okay, United, first-mover advantage, others will likely follow because there's a lot of imitation in this industry. But yes, we've heard some criticism that those changes are too aggressive. What do you have to say?

Look, ultimately, we probably will follow. I don't know. We changed our champagne and others changed their champagne. So apparently, we have an impact on others' behavior, which we're really proud of. Look, we researched this for 18 months. We held countless focus groups, and we created a new value proposition where you can earn more and you can redeem for less. And right now, our credit card acquisitions are off the chart. Like if we were to continue at this pace for the rest of the year, I think we'd be up over 30% versus last year. So I think we are going to reward loyalty and those that hold our credit card are much more engaged with United Airlines, fly us more often and the numbers just price out. And we wanted to do something different. We put it out there. We're really confident it's going to work, and we're really confident it is working.

Okay. Question from the floor.

Scott, I think it's fascinating when you talked about running the analysis of $120, $175 oil and still being able to, at least right now, I think you can grow earnings through '27. And that statement just would not have been a statement you could make 10 years ago or something like that. So I think it's phenomenal. How do you think about it in terms of the work you and the rest of the team have done in terms of the cost side and the stuff that you can really control, and just being a better operating business, versus what may be a structural change in how the consumer thinks about the product you're offering? And so the consumer ultimately is willing to say, look, I'll stomp that because I want to go to Disney World, I want to see Mickey Mouse or whatever, and I'm willing to pay for it. How do you -- have you done any thought?

I'll try -- I'll say there's 3 legs to that stool in order of most -- probably at least significant and how it makes us feel. Number one was building a brand loyal airline. A brand loyal airline is the best inoculation you can possibly have to any stress event like this because if traffic starts to decline, if the economy gets weaker and traffic starts to decline, we still keep all of our brand loyal airlines, but those extra seats, then we disproportionately take customers from other airlines, that were commoditized customers, but we disproportionately take. And that drives other airlines to be forced to cut capacity. I mean if the scenario I just laid out is true, it doesn't matter what people stood on this stage and said that they wanted to do. Economic gravity will force their hand. You can't -- they just can't get through it without making changes. And so winning brand loyal customers, is the first leg of that pillar. Second one is real core efficiency in the operation, not cutting the food budget, not running tighter on flight attendants and pilots and having meltdowns every time there's a storm, not those kinds of things that impact the customer. But getting the core -- and that's what Mike and team have really done, getting the core cost efficiency of the airline to be higher. And it's hard for you to sort through what that is because you just see CASM. Like at an airline, if you're trying to measure -- one of the reasons we start giving CASM guidance because you all want us to have low CASM. But if you want to hit low CASM, basically, all you can do in the near term is higher -- fly more by higher utilization or cut the customer expenses. You can't control the other stuff. The other kind of stuff in the near term is you got to do the investments to have better technology and change the prices. Those things take 12 to 24 months at least. You got to be ahead of the curve. And so that's the reason we stopped giving guidance. And we're just better at that core CASM than anyone in the world. And you can even see it like recovering from the operational disruptions that have happened this quarter, like we couldn't have done this 4 years ago. We're so much better from a technology perspective at getting the airline back up and flying. So first is brand loyal customer. Second is the CASM. And then the third is to have a really strong balance sheet. And we have the best balance sheet that we've had in at least 30 years. And that gives us the confidence to sleep well at night and stay focused on the long term. I would not be wanting to -- if our scenario -- the scenario I just laid out turns out to be, in fact, anything close to true, boy, there's a lot of places I wouldn't want to be. It's going to create a lot of stress. We put those 3 things together and it really weigh -- I'm not -- I'm hoping that oil prices go down, but in a way, like it's an opportunity for us. We will definitely win on the other side.

Final quick question for Mike. What role are sale leasebacks going to play for United? And how should we frame your answer against free cash flow generation?

I mean it's a great question. And at this point, as we're on our path to investment grade, this is all about optimizing our cost of capital, not just our debt cost of capital, but our equity cost of capital. And so we have been using some sale leaseback when it's opportunistic. When the cost of a sale leaseback is cheaper than other financing options. When you think about the cost of equity and the cost of debt, it's that simple. We clearly disclose the amount of sale leasebacks, number one. And number two, I'd highlight, we are the -- we lease -- the least percent of our fleet of any major airline. So if you compare us to even Delta, we're leasing about 50% less than they do. But there's an optimal mix in there that gives us optionality in how we manage our fleet and brings down our cost of capital.

Thanks, Jamie. Thanks, everybody.