United Airlines Holdings, Inc. Common Stock Morgan Stanley's 14th Annual Laguna Conference

Thank you, Ravi, and good morning. It's a great time in the airline industry. This industry is continuing to de-commoditize. You're seeing the winners in this industry really create a value proposition for the consumer that's differentiated, and that's creating healthy financials through cycle. We're starting to see that in the valuations for our stocks, and I'm thrilled to talk a little bit more about it today.

Let me start with demand, because demand is incredibly resilient. This is an industry that historically has priced to the lowest common denominator. But the American consumer is becoming a lot more sophisticated, and they care about the quality of the product, the resiliency through irregular operations, whether you have Starlink or not, et cetera. The consumer has disposable income and wants to spend that on experiences. So, the industry, to maintain profitability, has had to push through some price to offset rising fuel prices. I wouldn't say to our surprise, it was our expectation, but it's proven out that demand is incredibly resilient. We have not captured price as an industry for the last 5, 10, 20 years relative to other categories in the travel spend bucket.

I think we have finally put together a product and a service that is demanding some recapture of that. It is nice to see that resiliency in this business.

Look, I think at United, we have a philosophy. It is a no-excuses philosophy, and we have a business plan, a culture of driving profitability in all environments. When the world changes, we change. We don't stick our head in the sand. You saw that as fuel prices spiked, we expected them to be higher for longer. We made some adjustments to our schedule because every airline has a bell curve of profitability if you look across the routes, and there are some routes that were on the lower end that get pushed into not profitable when fuel spikes like this. Not a lot, because as I said, the consumer's been incredibly resilient.

There's some marginal routes that don't make sense in a higher fuel environment, so we cut them. You should see us continue to behave that. You will see us continue to behave that way. As you look into the fourth quarter, there'll be some flights in December that we won't fly that we thought we were going to fly. If fuel remains high, we'll make some adjustments into the first quarter and beyond into 2027. You always will see United do that. We are not flying to maximize market share. We're flying to maximize profitability and free cash generation. So we'll make those adjustments.

It is really strong. In the third quarter, there has been some calendar items, the Jewish holidays, when Labor Day fell.

Sure. I think when you look at the TSA data, it caused a little bit of a false indicator.

Sure. As we look into the fourth quarter, bookings are tremendously strong.

We talked about that on our conference call. Bookings have continued as we expected. So that piece of the equation is resilient. Very little evidence of demand destruction. If you squint at some of the lower-priced tickets, you might be able to find something there, but very small for United Airlines. In the premium cabins, just humming along very nicely. Corporate business has been ticking up a little bit.

We're still 4.5 points back from what we think trend line is.