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Speaker 1: Bloomberg Audio Studios, podcasts, radio news cheer.

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Speaker 2: I would love to welcome in Scott Kirby, the CEO

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Speaker 2: of United Airlines, And Scott, it's really tremendous to see

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Speaker 2: not only what you did, but also the fact that

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Speaker 2: you see significant upside to the fourth quarter, and I

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Speaker 2: want to just start there. Where do you see the

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Speaker 2: acceleration in demand?

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Speaker 1: You know, actually you look across the full year.

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Speaker 3: The first three quarters were really good for United in

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Speaker 3: a lot of macro volatility that happened for the aviation industry.

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Speaker 3: That demonstrates the resilience of our revenue, diverse, brand loyal

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Speaker 3: business model.

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Speaker 1: But you look to the fourth quarter, it's even.

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Speaker 3: More exciting because as the economy started to get back

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Speaker 3: to a solid footing, at least for aviation, demonstrates a

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Speaker 3: lot of upside.

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Speaker 1: We think we're going to be able to grow earnings

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Speaker 1: for the full year even in this environment.

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Speaker 3: So it really is creating value for all of our

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Speaker 3: customers all the way from basic economy to winning much

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Speaker 3: higher market share in the brand loyal customers really is

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Speaker 3: a great resilient strategy when times are difficult, but a

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Speaker 3: lot of upside as the economy recovers here in four Q.

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Speaker 2: I guess I want to drill into the economy because

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Speaker 2: Scott earlier in the year had been the economy section

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Speaker 2: that had struggled the most. I'm just wondering how much

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Speaker 2: it's picking up, whether you've had to discount tickets to

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Speaker 2: bring people in to compete, or whether consumers are willing

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Speaker 2: to absorb higher prices and take their trips.

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Speaker 1: Yeah.

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Speaker 3: Well, as we've talked about before, ALESA, the airline industries

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Speaker 3: are a pretty good real time indicator of the economy,

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Speaker 3: and you know, we saw for much of the first

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Speaker 3: half of the year economic stress and ticket prices were

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Speaker 3: lower as a result of that. But as we got

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Speaker 3: into the third quarter, bookings at least for future travel,

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Speaker 3: the economy started to pick up. Bookings started to pick up,

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Speaker 3: and as we finished the quarter, you know, we've set

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Speaker 3: records each of the last several weeks on most corporate

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Speaker 3: revenue that we've ever booked in a single week, and

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Speaker 3: a number of records, particularly in business travel. Really kind

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Speaker 3: of strong across the board, though internationals come back stronger.

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Speaker 1: At the period has extended.

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Speaker 3: Premium is obviously stronger than main cabin but really we've

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Speaker 3: seen improvement.

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Speaker 1: You know, as we've moved through the third.

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Speaker 3: Quarter, kind of across the board on revenue streams, with

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Speaker 3: the biggest strength in the corporate segment.

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Speaker 2: And that's actually something that we see across the board,

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Speaker 2: particularly because they're all these deals, so people have to

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Speaker 2: actually get on a plane and go see some of

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Speaker 2: their clients. I am wondering, are you seeing international travelers

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Speaker 2: tourists come back to the United States. I thought that

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Speaker 2: was kind of a soft spot and a sort of

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Speaker 2: a tell in terms of the international reputation of the country.

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Speaker 3: Well, our business is about eighty percent US point of sale.

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Speaker 3: But we have and we saw a drop at international

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Speaker 3: traffic earlier in the year. It's not quite back to

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Speaker 3: last year's levels, but it has recovered and it's close

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Speaker 3: to last year's level. So we did see a dep

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Speaker 3: but even that has come back, and we think that's

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Speaker 3: on the trend to getting back to normal pretty soon.

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Speaker 2: Are you planning to keep capacity pretty much the same?

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Speaker 2: Are you expanding to Are you planning to expand or

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Speaker 2: cut back? I know that it was trained earlier this

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Speaker 2: year just because of demand, but as demand picks up,

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Speaker 2: are you going to bring more planes on deck?

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Speaker 1: Well?

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Speaker 3: We've been growing, you know, in absolute growth, actually faster

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Speaker 3: I think than in the airline in the world has

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Speaker 3: ever grown for several years in a row. And that's

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Speaker 3: worked really well for you nine and that's been successful.

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Speaker 3: So we really haven't much changed our capacity. We tweak

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Speaker 3: it here and there. The biggest change we're going to

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Speaker 3: make for next year, I think is actually to reshape

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Speaker 3: the seasonality of the year.

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Speaker 1: You know, one of the things that's happened that's good.

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Speaker 3: For our business is this third quarter peak has extended

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Speaker 3: into the fourth quarter, and it's made the fourth quarter

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Speaker 3: actually a better quarter from a margin perspective than the

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Speaker 3: third quarter. And what we think is as that particularly

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Speaker 3: international demand has extended into the fourth quarter, there's an

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Speaker 3: opportunity for us to actually fly less in the peak

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Speaker 3: in the third quarter, which would be good for our RASM.

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Speaker 3: But it turns out it's going to actually be good

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Speaker 3: for our cost structure too, because we've we have to

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Speaker 3: build staffing and infrastructure everything up to that peak for

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Speaker 3: six weeks of the peak summer. And so next year

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Speaker 3: we're going to actually try to reshape our schedule some

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Speaker 3: to lower the peak and let the demand spread across

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Speaker 3: more of the year.

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Speaker 2: I know, earlier this year when we were talking, you

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Speaker 2: said that you do expect to raise prices by you know,

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Speaker 2: single digits, just to compensate for higher costs. You see

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Speaker 2: that on track the same type of price increases and

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Speaker 2: our consumers okay with it? Are they absorbing it?

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Speaker 1: You know?

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Speaker 3: This year prices have come down, as we talked about,

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Speaker 3: just you know, as there was echo macro volatility, at

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Speaker 3: least for aviation. I do expect them to normalize next year,

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Speaker 3: and I think just over time that you should expect

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Speaker 3: to see airfares grow consistent with inflation is likely what's

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Speaker 3: going to happen over time.

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Speaker 2: How much do you see staff wage increases? Also playing

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Speaker 2: into this the idea that a lot of the people

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Speaker 2: work for United are also saying, okay, well things are

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Speaker 2: going up, we want.

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Speaker 1: To pay increase. Yeah.

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Speaker 3: A lot of people are the best in the world,

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Speaker 3: and they deserve industry leading contracts. Every time we sign

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Speaker 3: a new contract with one of our union groups, they

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Speaker 3: expect and deserve and will be paid at the top

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Speaker 3: of the industry. So that's built into our forecast, that's

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Speaker 3: built into everything that we're doing.

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Speaker 1: One of the great things that we're doing though.

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Speaker 3: At United Is, I think we're the best in the

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Speaker 3: world at managing our real core costs and being more

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Speaker 3: efficient at the airline. We've invested heavily in technology. It

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Speaker 3: helps us run the airline better. But like you look

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Speaker 3: at the third quarter. You know the number of airlines

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Speaker 3: that have talked about missing their cost guidance because of storms,

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Speaker 3: and there were storms in the quarter. But we've invested

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Speaker 3: so heavily in our recovery tools that we had best

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Speaker 3: in the industry cost performance, and we're driving our costs lower,

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Speaker 3: not by taking things away from the customer, but by

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Speaker 3: actually investing in technology that lets us run a better

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Speaker 3: operation for customers and is lower costs at the same time,

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Speaker 3: and that also helps fund investments for the customer. We're

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Speaker 3: spending over a billion dollars a year and incremental investments

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Speaker 3: for the customer, but also importantly investments in our people

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Speaker 3: and having them have the best pay and the best

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Speaker 3: contracts in the world.

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Speaker 2: Scott, I love saying that you're my favorite economists to

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Speaker 2: speak to.

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Speaker 1: You. You have this real time.

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Speaker 2: View of the economy, and right now what you're saying

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Speaker 2: is kind of flying in the face of the weakness

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Speaker 2: and some of the worries that we're hearing, whether it's

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Speaker 2: from the government shutdown is going to cause disruptions, or

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Speaker 2: whether it's the unemployment picture that people are increasingly worried about.

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Speaker 2: How do you square those two things, This reacceleration that

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Speaker 2: you're talking about with the weakness that policymakers seem to

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Speaker 2: be so worried about.

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Speaker 3: Well, uncertainty really is I think what drives the economy

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Speaker 3: in one direction or another. And there was a lot

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Speaker 3: of uncertainty to start the year. As we kind of

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Speaker 3: got into the third quarter and some of the macro issues,

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Speaker 3: the Reconciliation Bill passed, and geopolitical situation improved, Tariffs settled

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Speaker 3: into having some confidence what they're going to be. We

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Speaker 3: saw that improved. Now we do now have new issues

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Speaker 3: that things pop up all the time. What's happening with

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Speaker 3: the shutdown could become an issue. So far it hasn't been.

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Speaker 3: You know, first, the FA is doing I think a

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Speaker 3: great job of running the system. We have our lowest

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Speaker 3: cancelation rate in the last decade, our second best on

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Speaker 3: time performance.

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Speaker 1: The controllers are professionals.

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Speaker 3: There's not news about it, but the controllers are professionals

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Speaker 3: view their job as safety view their job is taking

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Speaker 3: care of the public, and kudos to them. They're almost

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Speaker 3: all of them are showing up to work and doing

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Speaker 3: their job. And has it the first couple of weeks

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Speaker 3: of October. Has it really affected bookings? I think if

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Speaker 3: this goes on for too long, certainly the risks escalate

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Speaker 3: in the economies that goes on. I think the economy

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Speaker 3: is better than most people think, but it's still tenuous.

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Speaker 3: It's still a little balanced on a knife edge, and

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Speaker 3: we shouldn't have unforecedare So let's get the shutdown settled.

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Speaker 2: Scott Kirby, thank you so much for your time. I

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Speaker 2: really appreciate it. That with Scott Kirby, the CEO of

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Speaker 2: United Airlines,