1 00:00:02,520 --> 00:00:07,040 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:07,880 --> 00:00:11,480 Speaker 2: Yesterday after the bell, United Airlines reported earnings, as follows 3 00:00:11,480 --> 00:00:15,440 Speaker 2: Delta reporting earnings and United beat expectations across the board. 4 00:00:15,640 --> 00:00:18,360 Speaker 2: Joining us now to discuss is the chief executive officer 5 00:00:18,600 --> 00:00:22,280 Speaker 2: Scott Kirby. Right before that earnings call with investors. Scott, 6 00:00:22,280 --> 00:00:24,080 Speaker 2: thank you so much for being with us. I want 7 00:00:24,120 --> 00:00:26,720 Speaker 2: to start on the transformation in the airline industry. It 8 00:00:26,840 --> 00:00:30,520 Speaker 2: just seems incredible focus on revenues coming from premium and loyalty. 9 00:00:31,320 --> 00:00:34,240 Speaker 2: Really they doubled relative to the pace that you're seeing 10 00:00:34,240 --> 00:00:36,280 Speaker 2: in the main cabin. Can you give us some more 11 00:00:36,320 --> 00:00:37,559 Speaker 2: color about why that is. 12 00:00:38,600 --> 00:00:41,520 Speaker 3: Well, you know, we've spent a decade at United trying 13 00:00:41,520 --> 00:00:43,479 Speaker 3: to build what we call a brand loyal airline to 14 00:00:43,479 --> 00:00:46,880 Speaker 3: get customers but really all customers to choose to fly 15 00:00:47,040 --> 00:00:49,200 Speaker 3: United to get out of the commodity cycle of the business. 16 00:00:49,200 --> 00:00:50,680 Speaker 1: And twenty twenty five is a great year for that. 17 00:00:50,720 --> 00:00:54,080 Speaker 3: Despite all the headwinds, United Airlines was the only airline. 18 00:00:53,800 --> 00:00:55,600 Speaker 1: To grow EPs last year. 19 00:00:55,640 --> 00:00:58,120 Speaker 3: We started with a really strong booking environment in twenty 20 00:00:58,120 --> 00:01:00,720 Speaker 3: twenty five. It really is the culmination of this brand 21 00:01:00,760 --> 00:01:04,280 Speaker 3: loyal strategy. And yes, that's over indexes to the premium. 22 00:01:04,360 --> 00:01:06,880 Speaker 3: Those are the customers that fly the most and have 23 00:01:07,000 --> 00:01:09,319 Speaker 3: the most loyalty, and that part of the business has 24 00:01:09,360 --> 00:01:12,280 Speaker 3: done the best. But you know, we've seen pretty significant 25 00:01:12,280 --> 00:01:14,880 Speaker 3: strength in the back of the airplane as well. We 26 00:01:14,920 --> 00:01:17,679 Speaker 3: had seven percent growth and based economy last year, and 27 00:01:17,720 --> 00:01:19,360 Speaker 3: we've been investing there. You know, I think one of 28 00:01:19,400 --> 00:01:21,840 Speaker 3: the cool things we recently announced is we're the only 29 00:01:21,840 --> 00:01:24,880 Speaker 3: airline in the country that has ovens in coach, and 30 00:01:24,920 --> 00:01:26,959 Speaker 3: so we're going to be serving hot meals in coach 31 00:01:27,040 --> 00:01:29,200 Speaker 3: for customers that pre order, give the customers the ability 32 00:01:29,240 --> 00:01:31,880 Speaker 3: to pre order hot meals, and that applies obviously to 33 00:01:31,920 --> 00:01:34,760 Speaker 3: the entire cabin and is not just focused on premium. 34 00:01:34,760 --> 00:01:38,840 Speaker 3: Premium has over index, but really we're seeing strength across 35 00:01:38,880 --> 00:01:39,240 Speaker 3: the board. 36 00:01:40,440 --> 00:01:42,080 Speaker 2: That strength across the board, And this is what I 37 00:01:42,120 --> 00:01:43,959 Speaker 2: was trying to get into it. I'd love your color 38 00:01:44,040 --> 00:01:48,160 Speaker 2: on this. How much are the main cabin customers increasingly 39 00:01:48,240 --> 00:01:53,920 Speaker 2: cost conscious even as the more premium and loyalty customers 40 00:01:54,280 --> 00:01:57,640 Speaker 2: seem willing to pay for quality for the perks that 41 00:01:57,720 --> 00:01:59,640 Speaker 2: come along with some of your new offerings. 42 00:02:00,360 --> 00:02:03,000 Speaker 3: Well, while we index higher end kind of across the board, 43 00:02:03,040 --> 00:02:05,920 Speaker 3: even in main cabin so we're not a perfect indicator 44 00:02:05,960 --> 00:02:07,080 Speaker 3: of the economy. 45 00:02:07,600 --> 00:02:09,160 Speaker 1: You know, one of the things I would say. 46 00:02:09,000 --> 00:02:11,640 Speaker 3: Is customers are across the board willing to pay for 47 00:02:11,680 --> 00:02:15,920 Speaker 3: better product, service, better technology, better experience across the board. 48 00:02:16,000 --> 00:02:19,160 Speaker 3: But also i'd add, like airline traffic. You know, in 49 00:02:19,200 --> 00:02:22,560 Speaker 3: twenty twenty five, airfares were two percent lower than they 50 00:02:22,600 --> 00:02:26,200 Speaker 3: were in twenty nineteen, so we've been deflation Inflation is 51 00:02:26,200 --> 00:02:27,600 Speaker 3: about about twenty three percent. 52 00:02:27,400 --> 00:02:28,040 Speaker 1: Over that period. 53 00:02:28,639 --> 00:02:31,440 Speaker 3: We've been deflationary, and our cost in many cases have 54 00:02:31,520 --> 00:02:34,520 Speaker 3: grown even more. Fifty percent increase in air cross is 55 00:02:34,560 --> 00:02:37,799 Speaker 3: sort of the norm across the industry. So airfare remains 56 00:02:37,800 --> 00:02:40,920 Speaker 3: a pretty good value, pretty good good travel for customers. 57 00:02:41,520 --> 00:02:43,120 Speaker 3: There's a lot of that's put a lot of pressure 58 00:02:43,360 --> 00:02:46,080 Speaker 3: on the low end of the airline industry, as you 59 00:02:46,080 --> 00:02:49,440 Speaker 3: can see, but air traveler mains a good value, and 60 00:02:49,720 --> 00:02:53,080 Speaker 3: we are increasingly finding that really across the board, customers 61 00:02:53,120 --> 00:02:54,919 Speaker 3: are willing to pay for a little at least a 62 00:02:54,960 --> 00:02:56,519 Speaker 3: little bit for a better experience. 63 00:02:57,320 --> 00:02:59,799 Speaker 2: You know, that deflation that you're talking about, how much 64 00:02:59,840 --> 00:03:02,440 Speaker 2: do you need to see consolidation at the lower end 65 00:03:02,480 --> 00:03:06,320 Speaker 2: of the offerings in order to actually bring supply into balance. 66 00:03:07,160 --> 00:03:08,800 Speaker 3: Well, I think the low end, whether it havings through 67 00:03:08,840 --> 00:03:12,200 Speaker 3: consolidation or airline shrinking or airlines just going out of business. 68 00:03:12,800 --> 00:03:15,640 Speaker 3: I think the low end of the market is it's 69 00:03:15,680 --> 00:03:18,919 Speaker 3: a painful process, but in the process of shrinking back 70 00:03:18,960 --> 00:03:20,840 Speaker 3: to the niche that works for the low end, and 71 00:03:20,880 --> 00:03:24,080 Speaker 3: that really is flying in big leisure markets, mostly flying 72 00:03:24,080 --> 00:03:28,160 Speaker 3: to Orlando in Vegas and really shrinking back to that niche. 73 00:03:28,200 --> 00:03:29,560 Speaker 1: And they're going through that process. 74 00:03:29,600 --> 00:03:32,560 Speaker 3: I don't know if it'll be consolidation or liquidation or 75 00:03:32,600 --> 00:03:36,280 Speaker 3: just shrinking dramatically, but they really outgrew the niche and 76 00:03:36,320 --> 00:03:38,840 Speaker 3: they're in the painful process of shrinking back to that niche. 77 00:03:39,560 --> 00:03:42,680 Speaker 2: Do I expect And you're talking about a particular niche, 78 00:03:42,800 --> 00:03:44,880 Speaker 2: it makes me think you're talking about jet Blue as 79 00:03:44,920 --> 00:03:47,400 Speaker 2: position for that. Are you expanding the partnership that United 80 00:03:47,440 --> 00:03:48,360 Speaker 2: has with jet Blue. 81 00:03:49,040 --> 00:03:52,640 Speaker 3: Well, I wasn't talking about them, but jet Blue is 82 00:03:52,640 --> 00:03:55,600 Speaker 3: a great partner for us. We love their focus on customers. Really, 83 00:03:55,640 --> 00:03:57,720 Speaker 3: it's more cultural than anything. Is the reason we wanted 84 00:03:57,720 --> 00:04:00,600 Speaker 3: to partner with jet Blue, because we both believe in 85 00:04:00,720 --> 00:04:02,640 Speaker 3: doing the right thing for customers, that the industry is 86 00:04:02,680 --> 00:04:05,160 Speaker 3: not a commodity, and the. 87 00:04:05,160 --> 00:04:06,840 Speaker 1: Partnership is great so far. 88 00:04:06,880 --> 00:04:09,000 Speaker 3: If their opportunities to expand in the future, we'd certainly 89 00:04:09,360 --> 00:04:12,200 Speaker 3: look at that. You know, Jet Blue I is, you know, 90 00:04:12,240 --> 00:04:14,280 Speaker 3: trying to turn the corner they've had. They, like much 91 00:04:14,320 --> 00:04:17,719 Speaker 3: of the industries, you know, had challenges, but they have 92 00:04:17,800 --> 00:04:21,240 Speaker 3: the right strategy, the right vision, and we have a 93 00:04:21,279 --> 00:04:23,159 Speaker 3: lot of hope for them in the future and we 94 00:04:23,200 --> 00:04:24,840 Speaker 3: appreciate the partnership with them. 95 00:04:25,440 --> 00:04:28,000 Speaker 2: The first two weeks of January have been tremendous. They 96 00:04:28,000 --> 00:04:30,559 Speaker 2: broke records when it comes to revenues and ticketing, both 97 00:04:30,680 --> 00:04:34,960 Speaker 2: in consumers and also business travel. What does that say 98 00:04:35,279 --> 00:04:37,640 Speaker 2: for the setup for the remainder of twenty twenty six? 99 00:04:37,680 --> 00:04:40,159 Speaker 2: Do you expect this to be an incredibly active year? 100 00:04:41,120 --> 00:04:44,919 Speaker 3: You know, we have come in pretty hot to start 101 00:04:44,920 --> 00:04:48,840 Speaker 3: the year. I think that's indicative of an underlying economy 102 00:04:49,480 --> 00:04:51,000 Speaker 3: that has more underlying strength. 103 00:04:51,040 --> 00:04:52,479 Speaker 1: I think than most appreciate. 104 00:04:52,920 --> 00:04:55,080 Speaker 3: Saw that all through the last year, see it continuing 105 00:04:55,640 --> 00:04:58,480 Speaker 3: into this year and people getting back to travel. I'm 106 00:04:58,520 --> 00:05:02,520 Speaker 3: sure that applies in other industries as well. We're not 107 00:05:02,560 --> 00:05:04,240 Speaker 3: sure if it'll last for the whole year. You know, 108 00:05:04,279 --> 00:05:06,279 Speaker 3: I think our base case probably is that we'll we 109 00:05:06,279 --> 00:05:09,040 Speaker 3: haven't built that into our guidance. We've been more conservative 110 00:05:09,080 --> 00:05:11,640 Speaker 3: that in our guidance. But if it continues like this, 111 00:05:11,680 --> 00:05:13,960 Speaker 3: it's going to be a really good year for United Airlines. 112 00:05:14,880 --> 00:05:17,479 Speaker 2: Where specifically is it good, is it done? Domestic? Is 113 00:05:17,480 --> 00:05:21,960 Speaker 2: it international? We saw international really strong, although inbound traffic 114 00:05:22,040 --> 00:05:24,479 Speaker 2: to the United States fell off from a couple of 115 00:05:24,480 --> 00:05:26,280 Speaker 2: different countries. We saw that with Canada, we saw that 116 00:05:26,360 --> 00:05:28,680 Speaker 2: with China. I mean, where do you see the growth 117 00:05:28,680 --> 00:05:29,560 Speaker 2: really coming from? 118 00:05:30,120 --> 00:05:33,800 Speaker 3: You know, though the rising tide is lifting all of 119 00:05:33,839 --> 00:05:36,880 Speaker 3: those boats. So it's everything is better across the world. 120 00:05:36,920 --> 00:05:42,040 Speaker 3: But the best remains international, remains, premium, remains business travel, 121 00:05:42,600 --> 00:05:46,240 Speaker 3: and you know, speaking to international, about eighty percent of 122 00:05:46,279 --> 00:05:49,880 Speaker 3: the customers on United Airlines international flights are US citizens. 123 00:05:50,360 --> 00:05:53,440 Speaker 3: And we really never saw much slow down there, even 124 00:05:53,560 --> 00:05:56,880 Speaker 3: we did see some you know, some slow down from 125 00:05:56,920 --> 00:06:00,840 Speaker 3: some parts of geography. Those mostly bottomed out started to recover. 126 00:06:01,680 --> 00:06:05,240 Speaker 3: But really we see the most strength and international and premium. 127 00:06:05,279 --> 00:06:08,320 Speaker 3: But everything is getting better across the board, at least 128 00:06:08,320 --> 00:06:09,679 Speaker 3: in the first few weeks of January. 129 00:06:09,680 --> 00:06:12,599 Speaker 1: As we come into the new year, we're. 130 00:06:12,880 --> 00:06:15,240 Speaker 2: Here in Davos and there's a lot of discussion about 131 00:06:15,279 --> 00:06:18,960 Speaker 2: geopolitical tensions. There's a lot of discussion about the dispute 132 00:06:19,000 --> 00:06:23,440 Speaker 2: over Greenland and tariffs and treaties, and it feels as 133 00:06:23,520 --> 00:06:26,239 Speaker 2: though some people are saying that the world order is changing. 134 00:06:26,279 --> 00:06:28,240 Speaker 2: We've heard that from Mark Harney of Canada. I just 135 00:06:28,320 --> 00:06:31,599 Speaker 2: wonder how you plan for the year ahead with some 136 00:06:31,680 --> 00:06:34,240 Speaker 2: of these geopolitical tensions. Do you feel it when you 137 00:06:34,440 --> 00:06:37,960 Speaker 2: are transporting people between polices and seeing some of the 138 00:06:38,000 --> 00:06:41,080 Speaker 2: barriers maybe get a little bit higher. 139 00:06:42,080 --> 00:06:45,599 Speaker 3: So we've spent a decade with a strategy to build 140 00:06:45,640 --> 00:06:48,359 Speaker 3: a brand loyal airline that would have resilience in the 141 00:06:48,400 --> 00:06:51,400 Speaker 3: face of all the kind of issues that affect aviation 142 00:06:51,440 --> 00:06:53,320 Speaker 3: that happened all the time, and last year had more 143 00:06:53,360 --> 00:06:58,000 Speaker 3: than its fair share of surprises that impacted demand and 144 00:06:58,160 --> 00:07:01,120 Speaker 3: impacted travel. And yet you know, we had of a 145 00:07:01,120 --> 00:07:03,120 Speaker 3: no excuses culture here, you know, and then we just 146 00:07:03,200 --> 00:07:05,360 Speaker 3: overcame obstacles and with the only airline in the country 147 00:07:05,360 --> 00:07:09,119 Speaker 3: that grew EPs last year. And it's really that brand 148 00:07:09,160 --> 00:07:11,960 Speaker 3: loyal strategy gives us a resilience in the face of 149 00:07:12,080 --> 00:07:14,600 Speaker 3: what there are going to always be gealpolitical issues. We're 150 00:07:14,600 --> 00:07:17,680 Speaker 3: the largest global airline from the US. We're exposed to 151 00:07:17,720 --> 00:07:19,880 Speaker 3: all levels of the all around the globe, and so 152 00:07:20,240 --> 00:07:23,320 Speaker 3: we deal with stuff all the time, and you know 153 00:07:23,520 --> 00:07:26,520 Speaker 3: what has short term impact. Staying focused on the long 154 00:07:26,600 --> 00:07:30,040 Speaker 3: term and that brand strategy has been really successful for us. 155 00:07:30,400 --> 00:07:31,520 Speaker 1: I think it will be this year. 156 00:07:31,560 --> 00:07:33,640 Speaker 3: You know, we enter this year with a strong booking environment, 157 00:07:33,720 --> 00:07:37,120 Speaker 3: feeling like a pretty good economy, really more us focused 158 00:07:37,160 --> 00:07:39,680 Speaker 3: on our customer base, and you know, as we've said 159 00:07:39,720 --> 00:07:42,560 Speaker 3: on this in this interview, like our bookings are just 160 00:07:42,680 --> 00:07:44,680 Speaker 3: we're setting one record after another as we come into 161 00:07:44,680 --> 00:07:47,440 Speaker 3: the year. So we feel pretty good that our guidance 162 00:07:47,480 --> 00:07:50,400 Speaker 3: as solid and as long as things stay like they are, 163 00:07:50,440 --> 00:07:52,240 Speaker 3: were going to wind up being conservative as we get 164 00:07:52,240 --> 00:07:52,920 Speaker 3: through the full year.