WEBVTT - United Airlines CEO Scott Kirby Talks Safety and Demand

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<v Speaker 1>If you look at the IR for data, what it'll

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<v Speaker 1>tell you is that a lot of the profitability in

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<v Speaker 1>this sector is coming from the United States, and within

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<v Speaker 1>the United States, it's coming from the big carriers. As

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<v Speaker 1>you say, we're joined by one of those now, the

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<v Speaker 1>CEO of United Scott Kirby. Nice Cae, sir, thanks for eving.

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<v Speaker 1>We saw a little hiccup a few days back. American

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<v Speaker 1>comes out, it changes its guidance, the industry reacts, share

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<v Speaker 1>prices go down. You're very quick, very quick to come

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<v Speaker 1>out and reconfirm your guidance on the back of that.

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<v Speaker 1>But are you seeing any indication that the consumer is

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<v Speaker 1>softening at the moment?

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<v Speaker 2>You know, it's demand for us is steady as she

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<v Speaker 2>goes in a way kind of boring over the last

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<v Speaker 2>couple of years. I think boring is good, but it

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<v Speaker 2>really is not getting a lot stronger, but not getting weaker.

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<v Speaker 3>It really is pretty steady.

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<v Speaker 1>And what changes that? Does anything change that? Does the

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<v Speaker 1>fact that the labor market maybe started to show a

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<v Speaker 1>few little cracks, the fact that maybe rates stay higher

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<v Speaker 1>for longer. Do any of these factors impact that strong

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<v Speaker 1>consumer that we're saying to you.

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<v Speaker 2>It could, but we spent the last two years talking

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<v Speaker 2>about the risk of recession, and the consumer just keeps

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<v Speaker 2>plowing ahead and keeps going, and so I think that's

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<v Speaker 2>likely going to continue. The bigger thing, the more likely

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<v Speaker 2>change for aviation, I think, is on the supply side.

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<v Speaker 2>We're at a peak and where the number of seats

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<v Speaker 2>is growing a whole lot faster than the demand in

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<v Speaker 2>the United States. But as we move into the third

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<v Speaker 2>and fourth quarter, those numbers are scheduled to come.

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<v Speaker 3>Back down life.

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<v Speaker 2>So I think the supply balance will counteract even if

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<v Speaker 2>there was.

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<v Speaker 1>It's going through because is it with you guys at

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<v Speaker 1>the upper end, the full service carriositing really.

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<v Speaker 2>Across the board, right, you know, Southwest is probably the

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<v Speaker 2>biggest thrower of seats, but it's really it really is

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<v Speaker 2>across the board. We're growing, others will growing kind of

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<v Speaker 2>across the board.

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<v Speaker 3>Just the peak.

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<v Speaker 2>This is a lot of still recovery from COVID, and

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<v Speaker 2>this was the time that people were getting all their

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<v Speaker 2>ability to grow back in place.

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<v Speaker 3>So second quarter's peak.

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<v Speaker 1>I can see that capacity in some ways making sense

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<v Speaker 1>that you're end of the market. Does it make sense

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<v Speaker 1>of the bottom end of the market. Do you think

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<v Speaker 1>all of those low cost carriers survive.

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<v Speaker 3>No, it doesn't make sense.

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<v Speaker 2>And we can look, we do do the route p

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<v Speaker 2>and ls really accurately for everyone, and you know everyone

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<v Speaker 2>that's you know, as Margins Lord of us as a

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<v Speaker 2>big chunk of their route network that loses money. The

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<v Speaker 2>low cost and ultra low cost carriage in particular lose.

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<v Speaker 3>An awful lot of money. It's just it's a fatally

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<v Speaker 3>flawed business model.

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<v Speaker 1>So some of them are going to go.

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<v Speaker 3>I think that they're going to struggle to survive.

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<v Speaker 1>Okay, that's about as far as I think I'm going

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<v Speaker 1>to get used to say. That just makes the American issue.

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<v Speaker 1>They pushed the corporate market very hard. Did you benefit

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<v Speaker 1>from them?

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<v Speaker 2>You know, there's a probably a small benefit in market

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<v Speaker 2>share that we watched the data pretty closely, and while

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<v Speaker 2>they we got a little bit of market share from them,

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<v Speaker 2>we thought that they were making up close to one

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<v Speaker 2>hundred percent of their revenue change in terms of distribution expenses.

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<v Speaker 2>And so I think it's gotten a lot of press,

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<v Speaker 2>but we certainly thought it was a marginal issue both

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<v Speaker 2>for them and for US.

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<v Speaker 1>Util supply side, the industry though, is supply constrained right now.

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<v Speaker 1>You've got an issue with the prime, with the enginestead

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<v Speaker 1>of going on three twenties, you've always the issues with

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<v Speaker 1>the Max and the White of Boeing issues right now

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<v Speaker 1>is your sense that we are past the worst of

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<v Speaker 1>that there's worse still to come. Come and just give

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<v Speaker 1>us to say.

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<v Speaker 2>To something, you know, I think we are past the worst.

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<v Speaker 2>I think we've acknowledged the problems by and large. You know,

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<v Speaker 2>you talked about two of the big manufacturers that are issues,

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<v Speaker 2>Pratt and Boeing. I think that we're we're probably moving

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<v Speaker 2>up from here. It's not going to be overnight. They're

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<v Speaker 2>not going to get back to one hundred percent, you

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<v Speaker 2>know quickly. But that's okay, Like you know, particular when

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<v Speaker 2>I took them Boeing, you know, like I'm not worried

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<v Speaker 2>about the next twelve to eighteen months. I want to

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<v Speaker 2>get structural the structure and they want to also, and

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<v Speaker 2>then get them back to delivering high quality, delivering on time,

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<v Speaker 2>delivering on schedule, and that's the path that's most important,

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<v Speaker 2>tim clock.

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<v Speaker 1>So when you thought that would be five years a Boeing, yeah,

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<v Speaker 1>I think that's a realistic number.

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<v Speaker 3>I think it'll be faster than five years.

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<v Speaker 2>But it depends on them really making the kinds of

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<v Speaker 2>cultural changes that they need to make. If they make

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<v Speaker 2>the cultural changes, I think Boeing gets fixed or gets back,

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<v Speaker 2>gets their mojo back quicker. If they don't make cultural changes,

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<v Speaker 2>they're not going to get their mojo back.

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<v Speaker 1>If you were to give advice to the chair on

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<v Speaker 1>what kind of a person needs to sit in that

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<v Speaker 1>cease of CEO, what kind of advice would you give?

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<v Speaker 2>So you know, what I hope they do is somebody

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<v Speaker 2>that focuses on the culture of Boeing and letting the

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<v Speaker 2>one hundred and forty thousand only has one hundred and

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<v Speaker 2>forty thousand great people, engineers, mechanics. Let them go build,

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<v Speaker 2>design great products, build great technology, and focus on that

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<v Speaker 2>and not focus on the short term financials.

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<v Speaker 3>That's the biggest issue. Focus on the upfront.

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<v Speaker 2>Build great airplanes, great products, and the financials will take

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<v Speaker 2>care of themselves.

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<v Speaker 3>Don't try to manage the back end. Manage it upfront.

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<v Speaker 1>Start from that. Let's stay with the FAA. You've been

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<v Speaker 1>under review by the FA. Any indication kind of how

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<v Speaker 1>on that process is going to last? Where are we?

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<v Speaker 2>Yeah, everything in that process is as has gone well,

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<v Speaker 2>so far, no major findings.

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<v Speaker 3>I think the FA would tell you that. I know

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<v Speaker 3>the FA would tell you the same thing if the

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<v Speaker 3>answer the question, you know, we forgot we think it.

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<v Speaker 3>Actually we've taken this as an opportunity.

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<v Speaker 2>Really we had a great safety foundation, but we did

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<v Speaker 2>have a number of events that happened. But take that

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<v Speaker 2>as an opportunity to make not just safety number one,

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<v Speaker 2>but top of mind awareness all the time. And you know,

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<v Speaker 2>I for the rest of my career, for example, every

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<v Speaker 2>time I talk to employees, you know, I'm going to

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<v Speaker 2>talk about keeping safety top of mind. We've all believe

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<v Speaker 2>it's number one in aviation, but keeping it top of

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<v Speaker 2>mind when everything is going great, you know, still focus

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<v Speaker 2>on that all the little things, because all the little

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<v Speaker 2>things matter.

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<v Speaker 1>What do you want to see from the next administration,

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<v Speaker 1>What do you want to see from the next incomings

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<v Speaker 1>of the White House?

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<v Speaker 3>What helps this industry?

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<v Speaker 1>What helps America?

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<v Speaker 2>Well, it's more about help America and help the world.

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<v Speaker 2>You know, I think the United States is I think

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<v Speaker 2>it's it's the greatest country in the history of the planet.

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<v Speaker 2>But what makes great is positivity, optimism, vision for the future.

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<v Speaker 3>And I want us to get back to.

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<v Speaker 2>Being positive, being optimistic, looking to the future and how

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<v Speaker 2>to make things better and focusing on that. And I

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<v Speaker 2>think we need that in the United States. I think

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<v Speaker 2>people would respond positively to that. The world needs it,

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<v Speaker 2>and we can make the country in the world a

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<v Speaker 2>better place.

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<v Speaker 1>You are, by far and away the most international of

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<v Speaker 1>the US major carriers. Do you think a Trump administration

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<v Speaker 1>makes your job harder being an international carrier? Do you

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<v Speaker 1>think we're going to see more fragmentation? I guess the

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<v Speaker 1>question that I'm really.

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<v Speaker 2>Asking you know, I don't think it really affects demand

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<v Speaker 2>or our ability to fly around the world in any

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<v Speaker 2>measurable way, one way or another.

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<v Speaker 1>Great to see you, Thanks very much to see Thank you, Scott,

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<v Speaker 1>Thank you very much. Indeed, Scott Kirby, the CEO of

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<v Speaker 1>United here at the IFFA AGM in Divine