United Airlines Holdings (UAL) Q3 2026 earnings call transcript

Thank you, Regina. Good morning, everyone. Welcome to United's third quarter of 2026 earnings conference call. Yesterday, we issued our earnings release, which is available on our website at ir. united. com. Information in yesterday's release and the remarks made during this month's call may contain forward-looking statements, which represent the company's current expectations, which are based upon information currently available to the company. A number of factors could cause actual results to differ materially from our current expectations. Please refer to our earnings release, form 10k and 2 and other reports filed with the SEC by United Airlines holdings and United Airlines for a more thorough description of these factors. Month otherwise noted, we are discussing our financial metrics on the non-gap basis on this call.

An historical operational metrics will produce pandemic years of 2020 to 2022. Please refer to the related definitions and recommendations of these non-gap measures to the most directly comparable gap measures at the end of our earnings release. Joining us today to discuss our results here in Houston and Outlook are Chief Executive Officer Scott Kirby, President Brett Hart, Executive Vice President and Chief Commercial Officer Andrew Nacella, and Executive Vice President and Chief Financial Officer Mike Leskman. We also have other members of the executive team on the line available for tuning, and now I'd like to book the call over Scott.

Thanks, Christina. Thank you all for joining us on the call today. It's been in a vipful year, but it's once again given us the opportunity to demonstrate how be commoditizing and becoming a true brand loyal airline with a structural change for United that gives us resilience, involves all times, and I expected to lead to strong results in a normalized environment.

We build an airline that our employees are proud of, and they're delivering and have made United the leading airline around the globe. Before I start, I want to congratulate Boeing on the certification of the MAX-10. Fantastic aircraft, and we look forward to taking our first delivery next year. On this call, we'll talk a lot about 2026 in the current environment, but I want to take a couple minutes to focus on 2027, and specifically answer the question, what will it take for us to reach our goal of double-digit pre-tax margins next year?

We live and breed no excuses, and one thing you'll never hear us say or use as a planning excuse is if it weren't for fuel. Instead, we're planning for and actually expect fuel to remain elevated for all of 2027. It also appears that industry capacity will accelerate. Obviously, either of those things could change and get us to double-digit pre-tax margins, but we're not counting on that. So what would it take to get there in a higher fuel and capacity environment?

To be blunt, even though we're outperforming the traditional way of looking at it would be hard. So in fairness, I've been pleasantly surprised that the industry's ability this year to raise yields and pass through much of the increase in fuel prices. So it's possible that airlines will continue to focus on yields as expensive load factor, and that alone could get us to double-digit margins next year.

But we aren't going to assume that will happen. You've heard me say in the past that hope is not a strategy. Instead, we're focused on things we can control, and those are the big investments we've made over the past several years in products, service, and technology. And one of those things is Starlink, a new and truly differentiating RASM tailwind in 2027. Today, about half of United departures are on Starlink equipped aircraft, but we offer more Starlink flights than the entire U. S. airline industry combined.

We currently expect to reach 61% of departures by the end of 26, 87% by June 1, and available fleet-wide by the end of 2027. Importantly, we're also seeing evidence that Starlink is a motivating factor for customers to choose which airline they fly. That's why we launched a new tracker so people can check if their flight has it and can follow along as we outfit our fleet.

It's hard to get brand loyal customers to switch airlines, and while it's mostly anecdotal, we're seeing two important things happen. One, customers who are brand loyal to other airlines and have flown them for years switched to a United flight solely because of Starlink. And two, once they try us, they stick with us because they also experience great service and all the nodes to tell things we've invested in for years like new aircraft, larger feedback screens, and every class of service, oversized bins, technology like Connections Saver, and a mobile app that's dramatically better than anything they've experienced before. We know that eventually high-speed, low-Earth orbit Wi-Fi will be industry standard for everyone. But for 2027, and really 2028, we are well on our way to being the only global U. S. airline with Starlink at scale, so a lot of new customers are going to try us.

It's a huge head start, and we're going to press our advantage wherever we can. And while others are just ramping up on their loyal Wi-Fi installations, we'll be on to our next wave of product and technology to sustain our lead and further deepen the competitive modes around our business. Our mission will be to show new customers the very best of the United, and then earn their long-term loyalty by demonstrating that we're the number one airline and everything else as well. With both fuel and industry capacity expected to be elevated next year, well that's your shift happened fast enough to get us to double-digit pre-text margins.

While I do expect a meaningful rasm tailwind from Starlink at 2027, to be honest, it probably isn't enough on its own. To get there in 2027, we probably also need at least one of the three following things to happen. Lower fuel, lower industry capacity, or a continued wellness for the industry to trade load factor for yield. Regardless of what happens on how big the rasm benefits are in 2027, however, our series of big customer investments, including Starlink, it's a big new idea as we haven't even announced yet. We're coming in the not-too-distant future. Having merged as a new tailwind to a plan that was already working at United, we expect to exit 2027, more brand loyal customers than we otherwise would have had, and expect that to lead to higher rasm at 2027 and beyond.

With that, I'll pass it over to Brett.

Thank you, Scott, and good morning. First, I want to thank all of our United employees for their tremendous work throughout the quarter. Our team demonstrated exceptional resilience and adaptability, working together to restore operation and get our customers to their destinations.

United ranks second and on time departures for the third quarter, with United being first among the top seven U. S. carriers in July. We also delivered our second best quarter, best third quarter, post-pandemic seed cancellation rate in United history, ranking first amongst the three largest U. S. carriers for the quarter.

Ultimately, the strength of our operation is reflected in our customer satisfaction results. In the third quarter, we saw our highest quarterly MPS score since 2022, amidst record passenger growth.

Our people remain at the center of everything we do, and in August, we completed the first phase of our expanded pilot training center in Denver, increasing our capacity to train up to 860 pilots per day with 86 flight simulation training devices, 52 of which are full motion simulators. This investment supports both our existing workforce and our ability to develop the talent needed for United's future.

Transportation Secretary Duffy and FAA Administrator Bedford announced that they are seeking an additional $30 billion in improvement. For our nation's air traffic control system, a safer and more resilient ATC system will benefit United's customers and operations, and we're actively engaged with the administration in both sides of the aisle in Congress to advocate for this much needed funding.

And it's especially exciting to be here in Houston today as we celebrate a major milestone in the transformation of Terminal B at George Bush Intercontinental Airport. This project represents a significant investment in one of our most important hubs, and we believe it will fundamentally improve the experience for millions of customers traveling through Houston. We're making significant investments across our hub network, including at Washington Dulles, where we're also advancing a major airport transformation and expect to open a new concourse with 14 additional gates next month. Together, these investments reflect our continued execution of our strategy to build a stronger airline position for long-term profitable growth.

With that, I'll turn it over to Andrew.

Thanks, Brett. United's top line 23 revenues increased by 17.4% year over year to 17.9 billion. Trasm increased by 15.9% with yields up to 17%, passenger load factor fell modestly. Consumers and businesses have been accepting price increases, which we believe is a result of fares lag in the rest of inflation along with other aspects of travel costs for many years.

Looking at revenues by cabin, in Q3, premium revenue, including economy plus, increased 17% on a 2.5% increase in capacity. Premium prasm increased 14.1%. Non-premium revenue increased 18.4% on a half-point increase in capacity, rather than up 17.8%. Against the backdrop of strong premium revenue growth, it was nice to see standard economy cabin rasms up. Recall that in Q1 or 26, it was the first time in 12 quarters that economy cabin rasms were positive. In other words, yields still have a long way to go to catch up with inflation, whether measured before or after the pandemic.

Expect economy rasm to outpace premium once again in Q4. Looking at revenues by travel purpose, business revenue increased by 22% in the quarter, but yields up 15%. Contracted business revenues increased by 26%. Premium business continues to be strong with load factors in the premium cabins up a little over half a point year over year and up 3.6 points since 2019.

Business load factor in the quarter increased by almost a point. While Starlink is important to all of our customers, it is critical for our business customers, which we believe will be a key driver of revenue and share growth in 2027. Leisure revenues were up 16%, which would stronger year over year yield gains than business traffic. Leisure load factor fell modestly by 1.3 points, which reviews a small amount of elasticity given higher ticket prices.

A trade we would make every day. Cargo revenues increased by 23% year over year, most of the increase occurring in yields as our global long-haul capacity growth was minimal in the quarter. Loyalty revenue had another strong quarter, up 17%. Remeration from Chase was up 15%. And portfolio spend on our co-brand cards was up 13%. We remain on pace to generate 1 million new accounts in 2026. A material increase from 2025, thanks to changes to mileage plus, along with strong marketing from both United and Chase.

I've talked about United's efforts in the past to deseasonalize our business by improving the relative harassment performance of Q3. We made substantial progress in Q3 of 2026 on this goal. Fuel costs may make our progress hard to see, but we believe these recent results are another milestone towards our goal of reaching double-digit pre-text margins as we move forward into a more normalized fuel environment.

My goal in absolute rasm is Q1, 2, and 4 to be similar each year with a slight reduction in Q3, even less business traffic that travels during the summer. We can tailor our network in capacity to achieve this goal over time. We expect rasm and yields increased sequentially from Q3 to Q4. Cell and yields have been up in the very high teens and recent weeks, including some weeks, north of 20%. However, we know we need to achieve more to capture fuel costs as we see them today.

For a little more color and rasm, strength in Q3, Central America, the Caribbean, Florida, Newark, and London were strong rasm tails when tailwinds in the quarter. In fact, Florida rasms were up 26% in the quarter alone. Hawaii, the South Pacific, and Chicago were rasm-relative laggards in the quarter. Hawaii will have a better Q4, but will still underperform. A quick note on Chicago, starting in the second quarter of 2027, we expect minimal domestic industry capacity growth at O'Hare due to the FAA capacity constraints where the growth in total flights is capped. United is capped at 600 daily flights, and we think that may be the likely outcome well into 2028 at this point.

United's revenue share in Chicago continues to climb as we win more brand loyal customers. United hit the key milestone in Q2 of 2026, capturing 50% of Chicago-based passengers' revenue for the first time. Congratulations to the entire United team for delivering this amazing achievement. Beyond Chicago, we also saw share gains in all remaining United Hub cities with the latest data released by the DOT.

We believe these share gains will increase further in 2027 as Starlink becomes commonplace across all United's flights. As we think about what changes from today to the end of 2027 for United, I wanted to give you a few highlights. We'll continue to efforts to de-seasonize our rasm production. We're excited to re-establish JFK as the destination in 2027. We will largely complete our United Next Connectivity Goals in our mid-con hubs by the summer of 27.

We will turn more of our attention towards our coastal gateways and international expansion in 2027 and beyond. We'll open amazing new terminal facilities in Houston tomorrow and in Dallas in just a few weeks. We'll also open numerous United clubs. Our newest club right here in Houston, Texas, opens tomorrow, which will not only be United's largest club, but the largest in the Americas.

By the end of 27, we expect to finish installing Starlink on all our jets, both mainline and express. We'll finish installation of our interior signature cabins, including CPAC, entertainment for all, large overhead bins, and new lighting by the end of 27. We'll also grow premium capacity faster than main cabin capacity as we introduce the H21 coastline and XLR. At scale, we believe no other airline is contemplating.

We'll launch Relaxro, an economy plus open middle seat extended premium products to all cabins as we elevate the experience in all cabins for all passengers. We'll continue to refine our product segmentation and retailing with the introduction of tiered fairs across our network and various product types. Again, we'll add more than one million new co-brand accounts as we enter the sunset years of our existing chase agreement. And we aim to recapture 100% of the price of oil in 2027.

At United, we will continue to stay focused on our consistent strategy and path, recognizing that our relative results show our plan is working. Our goal is double digit pre-tax margins and will remain steadfast in our commitment to deliver them. And with that, I will pass it over to Mike. Mike.

Thanks, Andrew, and thank you to the entire United team for the tremendous effort as we manage through a high fuel cost environment. An environment in which most of the industry will lose money. Our third quarter results reinforce why United is on the right path and demonstrate how much progress we've made earning grand loyal customers, which are critical to delivering resilient and durable earnings.

In the third quarter, we were delivered about where we deployed capacity and continued to thoughtfully invest in the business.

We remain determined to be, we remain determined to achieve double digit pre-tax margins and in investment grade credit rating. Our ability to pass on high fuel costs through higher ticket prices was stronger than ever before and demonstrates how much United and the industry has transformed.

In the third quarter, we delivered earnings per share of $2.54 and a pre-tax margin of 6.2%. Earnings per share were within our guidance range. Fuel prices accelerated in the quarter and drove a $1.8 billion increase in expense here over year. We recaptured 72% of the increase in fuel expense as much of the increase versus our guidance occurred in the period.

And most of our revenue was already on the books. We're highly confident in our ability to recapture 100% of increases in our fuel costs, but with a lag.

Our CASMEX was up 7.8% and the higher rate now captures the full run rate of expense from our flight attendant deal. We also incurred the impact of close in capacity reductions.

We expect Q3 to be the high water mark for CASMEX and expense growth will step down in the fourth quarter and then step materially lower in 2027.

Outside of the impact from close in capacity reductions, our CASMEX trajectory has remained consistent with our expectations at the start of the year. I want to thank our team for their diligent work to keep us on track in such an inflationary environment.

Looking ahead, we expect fourth quarter earnings per share to be between $0.50 and $0.50, assuming an all-in fuel price per gallon of approximately $4.80, based on last Friday's forward curve.

Underlying this guidance is a CASMEX that will decelerate and a TRASM that is accelerating compared to the third quarter. This is a good setup as we exit the year. We are forecasting that our fuel recapture in the fourth quarter will be similar to the third quarter given the continued increase in fuel prices. This is lower than the 100% we were anticipating due to the rapid spike in jet fuel prices late in the third quarter.

Turning to the balance sheet, we ended the quarter with $17.7 billion of liquidity, including our undrawn revolver, and paid down approximately $1 billion of debt. We raised $900 million of new debt that was priced at a fixed rate equivalent in a low 5% range. Additionally, we upsized our revolving credit facility last week from $3 billion of unfunded liquidity to $5 billion, and we extended the maturity two more years to 2031. We intend to reduce gross debt by the same amount as we target $18 billion in liquidity at year end.

We expect this shift to unfunded liquidity to save approximately $70 million of annual interest in fees. This is currently the largest airline revolving credit facility in history, and yet another proof point of the strength of our business and our balance sheet.

Rising oil prices have impacted our near-term metrics, with our net leverage at 2.4 turns. However, we remain determined to achieve investment grade metrics, and hopefully also ratings next year. We continue to target net leverage of less than two turns.

Our financial performance continues to demonstrate the strength of United's business model and our ability to execute through industry shock events.

We can't control oil prices or geopolitics, but we can control how we run our airline. And in an environment like this, the gap between airlines that have invested to the long-term and those that have it has become even more apparent.

While our relative margin has been industry leading, we remain focused on achieving absolute double-digit pre-tax margins as our top financial goal. We will continue making investments that further our competitive advantage, and it will lead to those double-digit pre-tax margins. I'll now turn it to Christina to kick off the Q&A.

Thank you, Mike. We will now take questions from the analyst today. Please limit yourself to one question and if needed one related follow-up question. So, Gina, please describe the procedure to ask the question.

Yeah, thanks, Mike. It's a great question. And it does create optionality, but we are cost conscious. And so, if you think about when we've raised our debt and where we're investing the liquidity, the cost of carry is relatively low right now. Number one, number two, the upsizing the revolver is going to allow us to carry that liquidity in a more efficient way.

So, I said my prepared remarks, but let me repeat, we intend to bring that liquidity to $18 billion at your end. $20 billion is too much. And so, we'll bring that down. That's going to save us over $70 million in interest and fees. And as we earn in an investment grade credit metric, we'll reevaluate the level of liquidity. But we're comfortable with this. We're an industry that asteroids hit.

We're well prepared for lots of events. And it is a relatively low cost of insurance to carry the extra liquidity.

Mike, I'll just quickly add, if people think we did that for optionality to do M&A activity, that is absolutely 100% not the rationale. It's saved $70 million to get to the same liquidity targets we had anyway. It's simple.

You know, I think we hope so. As you pointed out, the milestone of the million new accounts, if those accounts mature and spend more next year in the year after, that's how that calculation works, I think I'm all aware of. And so we'll do a million accounts this year. We'll get those accounts spend in. We'll get them upgraded to higher credit cards, the club card in particular.

And then we'll do another million accounts next year. And that's a big investment in making that number in terms of total loyalty revenue, you know, increase hopefully in the mid teens, at least 14 or 15%, consistently for the next few years, or maybe even higher.

Yeah. You know, I will say that we are really pleased by the launch of the tier, your products. And we continue to expand them and are doing a bit more in the next few weeks. I think it's been, you know, great for our customers. It provides more options for them and great for the airline as well. We've redesigned United. com specifically to sell them effectively.

And we'll continue to refine our approach on that that I think has even more upside. The buy up rates are incredibly high. Consumers know what they're buying and we disclose it very carefully.

This is work for years. It started with basic economy a little more than 10 years ago. We've learned a lot of lessons on how to do this. And I just think it's been really monumental for us more so than people realize. And we're glad to pave the way on this. It was a very good idea. And we look forward to refining it. And if you recall, the early days of basic economy took a lot of refinements. And I think we're just at the early days of this phenomena in the other cabins as well.

Hi Sheila. Look, we're really excited and want to congratulate Boeing for the certification of the max 10.10 is a big part of our upgaging strategy. It's going to be a very competitive aircraft for our network. So very excited about taking delivery of that. As we look into 2027 rather, I think we're going to take about two by body aircraft a month. And we'll take over 100 narrow body aircraft. So we have some pent up demand in our fleet with older aircraft that maintenance inefficient fuel inefficient. And so regardless of where we end up the amount of capacity, we end up flying.

There is an opportunity for us to modernize the fleet and to upgage the fleet that is really strong. So we're excited to accelerate that rate of delivery on both narrow and wide.

I'll do my best. So I'll disaggregate it into unique, united, and industry. Unique, united. We've been winning share, you know, kind of everywhere we fly at all of our hubs for a while now.

And I have pretty good anecdotes already. I mean, it's mostly anecdotal now, but that stormlink is causing customers to move. And what I hear from those people is like, you know, the number one thing I hear is the pick the United flight. There's some other hub. There's somewhere else. We're a frequent fire, somewhere else. They pick the United flight and they say, oh, my God, the app is amazing. Why doesn't any of the airline have that? And then the people are nice. And they wind up switching. So, you know, I don't know.

I don't think that's going to happen fast enough personally in 2027 to get us to double digits without some other structural macro changes. As I said in my opening comments, but it's a big tailwind.

And so that's sort of unique to United. On the structural level, boy, you know, I happen to think that oil prices are going to be high all the way through next year. There's been an awful lot of airlines say, you know, managing their business if it weren't for fuel, you know, which in the short term is a way to dissolve yourself of responsibility and accountability.

But I just don't think that's going to last. So really what I think is good. I don't know the timing. I think this is more a question of when than if, but if oil prices stay high, like I think they will through next year, I find it low probability that every airline runs out what their current capacity plans are for the full year. I know they're all going to get on calls and say it. But once they get an activist investor coming in or something else like that happens, like it changes your mind in a hurry.

And I just like the losses will be. So it's six of ten years airlines are going to lose money this year. And if oil is higher next year, like, you know, it just the stress is building. So I think there are going to be supply changes, you know, actually being successful as an airline is really simple. One golden rule, don't fly places that lose money.

Well, it's simple. Very few people follow it. But there's going to be less loss making flying. I think by the end of next year, I don't know when it's going to happen. But I think at some point next year, these calls are going to be transitioned to 2028, it's going to be a really good year because more structural changes happen. And structural change has happened this year. The fact that Spirit went away was a reprieve from some airlines for making hard decisions. They gave them a reprieve.

But there's other airlines that are next up on the firing line. And I think changes are coming.

Yeah. Thanks, Scott. And I think it's a reasonable question to ask. This team has done an incredible job of managing the inflationary pressures we faced in 2026. And so I will repeat what I said in my script. Were it not for the voluntary reductions in capacity. Or 2026, Kazimax is tracking exactly where we expected it to at the beginning of the year. So, given the inflationary pressures, given what we've seen from peers, I think that's an incredible result.

As we look to 2027, we are going to continue to target 2 to 3% Kazimax. We are definitely facing inflationary pressures. One of the biggest inflationary pressures we're facing is from increasing distribution costs, because as fairs go up, the distribution costs is presented as fairs. We're facing airport costs that since the pandemic have gone up by 60%. So, there's lots of work to do to run a more efficient airline to offset those inflationary pressures. Head united, we're going to have a unique tailwind in increasing gauge growth in 2027.

So, we're going to work hard to live within that 2 to 3% Kazimax in 27 and beyond, but we do ever work cut out for us. The last thing I will say is, in environments like this where fuel prices spike, we're going to have no hesitation to cut capacity of flights that are losing money, because we're not managing the Kazimax, we're managing the margin.

So, we're doing a great job relative, Kazimax, we're not changing the goals. The goals are going to remain aggressive, but make no mistake, we're managing the margin, not Kazimax.

You know, I think Scott gave the macro answer to that question largely, so I don't think I want to repeat it. You know, for United, we're very conscious of our capacity. I think about it every day and look at every flight in every market. And we are nimble and we'll make the right decision and we'll make the right decision for 2027 as well as we usually do. I think we have a very good track record on this.

Thanks, Andrew. I love the question. And look, we're the first airline to use the loyalty, our loyalty program is collateral in the pandemic. So I want to compliment the merit, I want to compliment the air candidate team on an incredible transaction. I think it highlights the value of these loyalty programs, the tremendous value that frankly we're not seeing in our share prices.

That said, here at United, as Andrew has shared, we are getting close to the sunset of our existing contract with, with our partner, number one. Number two, given that, it makes sense, given this, given that it's about the sunset and given that it's, it's a historic contract that doesn't have modern economics. It makes much more sense for us to wait and get the new contract and then provide the additional disclosure. So for now, holding pattern, but air candidate did an amazing job of highlighting the value that exists in these programs and particularly here at United.

Well, I've, I've done enough talking this year, I think about the C word, as you say, and I've done enough talking to beat Newsworthy in the last 48 hours. Actually, I did an interview six, seven weeks ago to beat Newsworthy. So I'm not going to great. I have nothing new to add on that. Like, we're focused on, you know, you can hear from our call. You can hear from our tone. We're out of the team, you know, the fact that we're able to, you know, be doing this well in this environment. I think it is a matter of when, not if we get to double digit margins on a standalone basis.

We just have, and I think by the way, Starlink is, it is the second schedule is number one. It is the clear number two in choice when people are choosing their line to me. It is a significant advantage we're going to have for the next couple of years. And so we're really focused on my message to the team is, we're going to have new customers trying us from other airlines. And our mission, I'm going to do it with a bunch of employees here in an hour, is make sure they know that United is the best airline in the country for them to fly and get them to be long term customers. I would say, by the way, those on the call that are listening at some point that fly other airlines at some point in the next 12 months when you find yourself on the second or third United flight because of Starlink.

And you find yourself taking the application from the flight in it for the credit card and you realize that you switched airlines, you will get it to per. You will have upgraded your airline and your stock investment idea.

Well, look, I'll start off with, and looking backwards at our razz and results in Q3, I don't think you saw any speed bumps, right? And looking forward to our outlook for Q4, I think our numbers also show there are no speed bumps. But that being said, there is a bit more capacity in Chicago than normal year over year. That headwind, I think, turns into a tailwind as of April, given the way the FAA is managing capacity at the airport.

Overall, you know, I'm not going to put a lot of fuel in this fire, but I would tell you that the razz and premium we have to brand X is about 14 points. And our cash and premium, our cash is better by three to four points. So I'll leave you to do all the economics and math that that results in, but that's the latest data that we see. We wash it daily. But overall, I think that the macro point is it's a minor thing in our Q3, Q4 numbers.

And as we enter the bulk of next year, I think Chicago becomes a tailwind as of April and beyond.

Yeah, so first of all, going back to Q3, I mean, I've been disappointed over a period of years that Q3's relative financial results have been disappointed in v. Q2, which has gotten incredibly strong. June in particular is an amazing month now, much, much more than it had been in the past. And August is the opposite of that, I think, as kids go back to school earlier. And so we've been working really hard to make sure that we can get to a path where our Q3 earnings are at par with the other quarters.

For Q4 and Q1, you know, we had a lot of work on Q1 coming out of the pandemic, particularly as business traffic evolved. And I think that's come a long, long way, particularly with our Atlantic rasms and relative profitability. But as I said earlier in the opening, we would like for the ras and performance in all the quarters to be the same, other than Q3, where given, you know, there's just less premium business traffic in Q3, we think that should be a little bit lower. Again, that number was masked by fuel, I think, in Q3 of this year. But that's our goal. And, you know, v-seasonalizing the business creates a lot more ability to fly and even schedule almost year round, which creates other cost efficiencies, which we think is great.

That's the right way to go. And that's where we're evolving to as quickly as we get.

Okay. I think it's obvious where the price of fuel is. It's obvious where our total chasm is. And it's also, therefore, mathematically obvious what yields need to do. Do I expect there'd be some impacts on low factor? There was a tiny bit in Q3. There'll probably be a little bit more in Q4. But, you know, we know where yields need to be for United.

And we're taking all the appropriate actions to get them there so we can recover 100% fuel. And I do expect that that means slightly lower load factors. And I'll just reiterate, we don't manage to a fixed load factor target. That's not how it works. It's not how it should work. We manage to maximize our rasm and our long-term margin goal. And if load factors fall, they are incredibly high, by the way, relative to all of the past and my experience in this business.

That's perfectly okay.

Well, I'm not going to talk about the other guy in that level of detail. I can tell you that we're winning chair, winning chair in all our hubs, not just Chicago, by the way. And we have an amazing competitive tool out there with Starlink to help us monetize that more, even for their next year. And also point out why Starlink is so, so important to us in this unique advantage is that, you know, we have a fair, you know, our hubs are contested much more than the average legacy airline. And therefore, there are a lot more splitters that split their business between airlines. And in fact, there are a few people in our hubs, I don't know exactly why, that give a higher share wallet to the other airlines.

And we're going to reverse that next year and gain more share. So we feel really good about the unique aspects for where we're going. For Chicago, you know, whether I like it or not, the FAA's impose caps, and those are a reality, and that's going to change the game a bit. And we like our advantage in Chicago, it's a good advantage to have, and we will work it and continue to push it. So I like our position, quite frankly, in Chicago for the short run and the long run. But I do think that competitive heat, as maybe you would describe it, is going to be different for them at vast majority of 2027, just because of the conditions placed upon us by the FAA.

And also because of our gains of share, because of Starlink.

Well, thanks. You described it kindly. I'll describe it, I think, more accurately. I'm not mean to be mean. I look at those strategies as hope is our strategy.

And it's not going to work. The reason it doesn't work is because it's not bells and whistles. You use the term bells and whistles. You can't just put a first-class in. You can't just put a seat that has a door or whatever. You just can't match selectively some of the things that have been done. It's the whole package.

And we have the best product, I think, in the Western world now on our aircraft and the recognition of that from others.

That's the easiest part to match for another airline, to match the product. It's really important, but it's the easiest part to match. The rest of the stuff is harder. We are the most reliable airline in each one of our hubs. Newark is now the most reliable of the three New York airports. We've invested an incredible amount in technology to do that. And that's why we operate in the hardest places in the country. That's why we're number one. That's hard to replicate. Technology. Incredibly hard to replicate. I don't think people appreciate how big the technology advantage is. If you fly United, you can see it in the app. But the app is the tip of the iceberg.

We started six years ago a program, hundreds of millions of dollars that we spent to get our technology moved off of legacy platforms and systems and into modern programs. Well, not just moving it to the cloud, but moving it to modern platforms. So we can move fast and do things that others simply can't do because we did that. At the time, there was no ROI on that because we didn't know what we'd do with it, but it enabled us to do incredible. So our technology lead is massive versus, I don't know who the second best airline in the world, but it is massive versus all of them. And then finally, service. When you create an airline that your employees are proud of, and that's my job is to get our employees inspired, to believe in United, and they do, and they are delivering for customers.

And so you put that whole package together. That's what being premium. It's all of the above. You can't, like the analogy, you can't just take a four seasons room, copy the room, put it in a Motel 6 and expect it to be a four seasons. You need everything else that goes with it to be successful. And there are only two airlines in the country that have been doing it. And we've been doing it for 10 years. You just don't snap your fingers and say, oh, I'm going to match this one element, and it works. So I'm not worried about it as a competitor. It might be better for their own airlines, like they may be able to upsell with their own airlines and stuff, but brand little customers are not going to switch because of that.

No, the reason I didn't say that is because the commodity part of business is the route network. Almost everyone in the business with the exception of people that sit in the conference rooms at United and Delta thinks of air travel as a commodity. And the route network is incredibly important. Like Patrick is sitting in this room, like he is the best in the world at cool destinations on the map, like New Greenland, or Oolam-Batar, or Planet Support O now.

And that is a nice to have for the frequent flyer program, but that is the commodity part of the business. The service, product, technology, and reliability are what sets a brand airline, brand loyal airline apart. And by the way, for international, you know, United was born on third base, you know, like I wish we had a huge domestic hub like Atlanta or Dallas. We don't. That's a weakness for us compared to the other guys, but on international, Newark, Dulles, and San Francisco are really the three best hubs in the country for international, particularly premium, but all international. And we happen to have hubs in those places. It's just a natural advantage for us.

Yeah, he's an insightful question, and I will try to answer to me questions today, but I think it's really important.

First, I think it's important to note that while pricing has gone up a lot this year, it is still down in real terms compared to 2019. So we are bouncing still off of a COVID low and air travel raise a great value. The more important point for will it stay and will it hold is I think we're demonstrating this year that it's different this time. It's different this time because costs have escalated so much across the industry. It's not just fuel price, you know, our airport fees at our hub airports are 60% higher now than they were pre COVID. And those are the kinds of those that escalate, you know, maintenance fees, engines, like all that stuff has just gone through the roof and those apply to every airline.

In the past, the cost leaders were the high margin low cost airlines. They are now the low margin no longer low cost airlines because costs have been harmonized.

And every airline, you know, like 610 US airlines is going to use money this year. It's expensive to fly airport and you don't, you can't continue to exist unless you can get to profitability. And so I think the tide has to rise for everyone or those airlines simply won't exist, which of course suggests pricing as well. They won't exist if they can't get pricing up.

And that is what's happened this year. People, by and large, have been willing to accept lower load factors. I think it's an important point. You know, I said it in my opening script. Maybe we'll continue to trade. Maybe a way we get there next year anyway.

That doesn't happen 100%. There's still temptation from people to run fair sales and things, but mostly people have been willing to trade yield for load factor because they look at it and say, like, I have to charge what my cost is. It costs me X flat airplane. My yield has to be higher than X. And that sort of fundamental math applies to every airline.

And it's actually why I'm pretty confident that we're not going to take steps backwards in pricing because, you know, everyone's looking at, you know, they got to get their yield at least above their costs.

And a number of airlines aren't there yet. So I feel confident, like I've been around the industry a long time like you. And, you know, it's certainly easier, by the way, if there was less capacity, it's more straightforward because the temptation to run a sale and boost your load factor is lower if you're already booked high. So it's going to be easier, but there's a good chance. I certainly think pricing is going to stay.

But I think that there's a good chance that we, the industry surprises to the upside on yield next year, even in a higher capacity.

Look, we're trying not to be a hedge fund or fuel trader. So what we do is we look at spreads and we look at the forward curve for Brent. And if you look at that, fuel price in 2027 would be over $4 for the pool year. And it'd be about $4.50 for Q1 and $4.20 for Q2 drifting to 370 by 4Q at 27.

So we think about that as the base case. I'm sure that's wrong, but we don't try to prognosticate on any different viewers. So that's what we would need to pass through.

Sure. I mean, the simple answers I said earlier is leisure yields are higher than business, but business is still strong. But the momentum is a bit stronger in international. As you saw in Q3, Latin had a great quarter. I expect that to happen yet again in Q4. We're not going to lose any momentum there. But I also expect the Atlantic and the Pacific to gain momentum.

So that's why we gave the guide, and that's how we're talking about our acceleration into Q4. So hopefully that helps.

Asia is definitely very strong. As you know, from our numbers, we didn't grow our global long haul a lot last year. And in particular, in the high cargo tracks, we didn't. So we've been focused on yield in the bellies, because the bellies are relatively full of bandwidth. And so we did a great job on that track, and we'll see where it goes next year. But the environment for cargo, I think, does remain strong. It is more of a commodity-based product than our passenger seats at this point. We're aware of that. We're doing our best to even de-commoditize cargo. That's another subject. But cargo is an amazing part of United Airlines. We lead the way in the United States, and expect to continue to do so for a long time to come.

I mean, corporate is still, you know, I would say, 4 to 5 load factor points behind 2019 as a contribution to United Airlines. So as that continues to move in this direction, obviously we're really excited. This is another place that we were born on third place for all the obvious reasons, our third base, not third place, for all the obvious reasons. And so I think that's a meaningful tailwind to the premium global business carriers in which there's primarily 2 in the country.

And so that's, I think, a big tailwind for us. The trends for Q4 look identical in this space to Q3 for me in terms of the yield production and the volumes of the revenues. So we're going into, I think, a particularly strong Q4 where business traffic just shines in the United Network. And I think you'll see that when we are talking about this in January of next year.

Yeah, well, you know, Scott talked about this, I think, in a great amount of detail on that. I don't think anybody's capacity plans for 2027 are firm. And even when they are, they probably won't be realized for numerous different reasons. So I'll kind of leave it at that. You know, I think we have a very good track record of making great capacity decisions, and I expect we will do the same in 2027.

We will now switch to the media portion of the call.

Well, I'll start then. I have a huge respect for Ed, and I've been public and say, you know, I took inspiration from what Delta did. Now, I think we've passed them and we're the innovator now, but I took a lot of inspiration from what Ed did. And I'm going to miss it because we host a big charity event in Dallas this weekend, but I texted Ed as soon as he got it. And the well-deserved, maybe a decade late that you should have got it a long time ago.

But I think Delta and Ed have done a great job. It is well-deserved. He should have gotten it earlier, but I'm sorry I'm going to miss it because we got it.

Leslie, I'll take the first part of the question, I guess. Look, you know, our perspective is we need to charge prices that recover the total cost to what it costs to blind airline, and we have to do that. But that being said, as we create our products, we're aiming to elevate for all and all cabins for all passengers and create value for all in the process of doing so. And the latest example is, you know, Wi-Fi that works, it works at scale. And it's going to be a reason, I think, you know, customers increasingly choose United Airlines in 2027 and beyond.

Well, you know, this is a really complicated assessment, but there is an enormous amount of construction, the current at O'Hare. It goes through the early 2030s, and that is the timeline. We wish it was faster, by the way. We were always supportive of redeveloping the field and getting modern facilities when maybe others were not. And we look forward to those facilities being built. But in the meantime, it is a construction zone, and we need to reflect that reality. And I think the taxiways and other aspects of the airfield, which do not have immediate changes planned for them, are just going to take years to resolve. It's disappointed. As we invest all this money in the field, I think United Airlines would like to grow.

But at the same time, it's important that it be a reliable airfield for all travelers on all airlines. We've had numerous conversations with the FAA about this, and that's where I think it's coming out at. And so my guess is that this restriction lasts for a long-term full effect, but that's simply my guess based on what I see from the construction at the airport and the timelines for completion.

That this is a restriction that lasts until the construction that the airport has done, and the taxiway situation has been resolved.

All right, thanks.

Thanks, everyone, for joining the call today. Please contact Investor Media Relations. If you have any further questions, then we look forward to talk to you next quarter. Bye, everyone.