C (3:06)

about how you're cutting about 5% of capacity in particular in the Middle east and some of the routes there there in order to reduce capacity, preserve margins. Do you think that's it? Or if prices go even higher, do you expect that to actually be an even bigger cut to capacity?

D (3:21)

We'll watch and see what happens, particularly with demand. If our forecast of fuel prices is correct, then my guess is there's going to be an impact to the economy as well, and I hope not, but we'll watch that as it goes along. But what we're doing right now really is taking out flying that, you know, is pretty marginal, even in good times. And when oil prices double, it would lose money. And so there's just no point in flying flights that are going to lose money. They can't cover the cost of fuel. So it just seems reasonable to do it. We'll be nimble and see what happens with prices and demand.

C (3:50)

The Middle east has been an area of expansion for a while. I know that a number of the airlines have really been moving heavily into the region. Are you adjusting any of your thinking longer term as a result of the conflict and potentially how long it could go on?

D (4:02)

Well, we'll see. But I would guess that when this is over that places like dubai come back 100%. I don't know. We'll watch and see. But I would bet on Dubai for

C (4:13)

the long term going forward. You've talked about how you want to take advantage of this time, how you see this as a crisis not unlike what we saw during the pandemic, and that you'd be even interested in potentially picking up some assets. What does that mean? Airplanes, routes.

D (4:27)

Yeah. So first, I don't think it's a crisis like Covid, but it's going to be a stress event. That's the word I use more is stress event for the industry if our fuel forecast is right. But it's nowhere near the magnitude of what happened in Covid. And in a stress event like that, I want us to be, we start in the strongest position. I want us to be consistently ahead of the curve. Like every time there's something happening, I want us to be first, let everyone else follow. And if we, when we're doing that, you know, it's. And others take longer to adjust, it is going to amp up the stress on them. Many of them start with weak income statements, weak balance sheets and we'll be there to pick up some of those assets and might be a win win for them, but we'll be there to pick up some of those assets as we go through the crisis.

C (5:09)

Wholesale acquisition of a company or just.

D (5:12)

We'll see. There's. There's lots of rumors about that going forward.

C (5:15)

I'm curious. Also there's been questions about hedging against oil prices and a lot of the airlines have really moved away from that because it hasn't been profitable. Delta has a refinery investment that has helped somewhat to offset some of these costs. Do you have any plans around that in any capacity?

D (5:28)

You know, it's. We're so big it's hard to effectively hedge. We're just so big we move the market. If we try to hedge, it's really hard to hedge the crack spread, you know. You know, oil prices have gone up, the crack spread has gone up even more. It's really hard to hedge there. And so probably not. I actually tried to do a deal with ADNOC years ago when I was at American and it foundered over a force majeure clause where they wanted just been a swap founded over force majeure where they said well we need a force majeure. And I said, well that's the whole point. Like what if the Straits of Hormuz closes? I said 10 years ago, like that's what I want, your hedge and you can't get out of it. So it's just really hard for us to hedge.

C (6:05)

Meanwhile, if this were the only crisis you'd be dealing with, probably you'd be watching this carefully, but you'd be grateful. There is also this question around all of the scenes that we see in social media, etc. Of TSA lines getting longer and longer. Have you noticed people Missing their flights. I mean, how. How big of a problem has this been?

D (6:21)

You know, thank you to the TSA age. It's. The vast majority of them are showing up to work. And I understand it's. It's unconscionable that our politicians are. Put our TSA agents, safety professionals in a situation like this, but they're showing up to work. I love saying thank you to them every time I go through. They're doing a great job. Yes, there are places where we've had long lines. It's really the last week that it's started to increase a little bit. I am hopeful that we're near the finish line. You know, I'm on my way back to D.C. after here, but I've been talking to folks in the Senate on both sides of the aisle. It does feel to me like we're close. This feels like kind of like the FAA felt. You know, we're 48 hours away. We got the FAA reopened. Feels very similar to me that we're close, I hope, to having it resolved.

C (7:06)

Does having ICE agents there help things or hur.

D (7:09)

You know, I don't know. The. The what? We're all trying to provide resources. Tsa, you know, where we and other airlines are doing things like providing meals and offering to use our staff to help with lines or to help with the exit, you know, monitoring the exits. Those are the kinds of things that. That the other government officials are doing. So you've run. The key, though, is like, get TSA funded and pay the people.

C (7:32)

You've run companies for a long time. Have you ever spent more time in Washington, D.C. as a CEO?

D (7:36)

Boy, I just. I spent a lot of time there. I've spent more there probably this year than. Than any other year.

C (7:41)

Do you feel like the system is fraying in terms of also, like, safety issues? I mean, there's been a lot of concern about what happened with LaGuardia Airport.

D (7:47)

Yeah, you know, the system is safe. It really is safe. It's by far the safest way to travel of any mode of transportation. And I. I do think that we need to invest more in the faa, both in staffing and then the technology. And I am like, this is the first time in my career we've had an administration, Secretary Duffy, Administrator Bedford, that are fully committed to doing that, and they are doing it. And like, staffing in Newark, for example, it's the best it's been, you know, in my career. And we think we're going to be 100% to be the first time ever I think that we'll be 100% staffed later this year. So they're on that road. The secretary is about to ask, I think for another 6 to 7 billion for technology. I will encourage everyone on both sides of the out, let's do a bipartisan deal to get that done. That's what we needed. Invest in our.

C (8:32)

In the meantime, we have consumers that have been incredibly resilient for all of this. They still want to travel. I mean, at what point you start to see cannibalization? Are you starting to see any pushback?

D (8:40)

You know, I'm sure there will be some. There is always a price elasticity. But we're starting from a perspective where airfares in 2025 were 2% lower than they were in 2019, even though inflation was up 25%. So airfares are up 15 to 20% in the last few weeks. But that's sort of covering half to 60% of the inflationary increase. So I think we have some room to go. But I also think like, you know, there will be less demand, there'll be fewer people traveling as prices go up. That's part of our capacity. 5%. Like, you know, when airfares have to go up because of oil prices, there are going to be some people that choose not to fly and to be naive not to realize that. And so printing back some of that capacity is a rational response.

C (9:22)

How much do you expect prices to have to go up just to adjust to the oil prices?

D (9:28)

Well, you know, if oil prices stayed where they are today, that's 11 billion of expense for us. And that would require prices to be up 20% to break even to cover that cost.

C (9:42)

Meanwhile, you are announcing all of these new planes. A lot of them have put a real emphasis on the premium customer polaris on the both states, the bicoastal kind of transit. You've talked a lot about how premium is the future. Can you talk about how much it really is the growth sector and whether demand there continues to be robust?

D (10:00)

Well, the true that we're investing nose to tail for all customers. I mean everybody gets the best technology, best app technology in the world. Starlink, Seaback Entertainment. So it's not just premium. Premium gets a lot of the press, but we're investing nose to tail to win customers, brand loyal customers everywhere. But clearly the premium demand has been much stronger than anyone ever realized. What I really think it's not that premium demand is higher today than it was. It was always there. We didn't have the product to serve it. And once we create the product. We realize that there's demand, demand that was in excess of what we knew also at United. Like, we just, we were born on third base when it comes to premium, with hubs in Newark, Dulles, Chicago, San Francisco, like, you know, like, sometimes it's good to be lucky. We were born on third base where there's far more premium demand for our product. And so it lets us be the leader.

C (10:48)

Scott Kirby, wonderful for you to take the time. Thank you so much for being here. Wonderful to speak with you. That was Scott Kirby, the chief executive officer of United Airlines.

B (10:57)

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