United Airlines Holdings, Inc.

Today's conference is ready to begin. There will be a brief moment of silence as I connect the lines. Please stand by. Good morning and welcome to United Airlines Holdings earnings conference call for the second quarter 2023. My name is Silas and I will be your conference facilitator today. Following the initial remarks from management, we will open the line for questions. At that time, please press pound two on your telephone keypad to enter the question queue. This call is being recorded and is copyrighted. Please note that no portion of the call may be recorded, transcribed, or rebroadcast without the company's permission. Your participation implies your consent to our recording of this call. If you do not agree with these terms, simply drop off the line. I will now turn the presentation over to your host for today's call, Christina Munoz, Director of Investor Relations. Please go ahead.

Thank you, Silas. Good morning, everyone, and welcome to United's second quarter 2023 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 conference call may contain forward-looking statements, which represent the company's current expectations or beliefs concerning future events and financial performance. All forward-looking statements 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 10-K and 10-Q and other reports filed with the SEC by United Airlines Holdings and United Airlines for a more thorough description of these factors. Unless otherwise noted, we will be discussing our financial metrics on a non-GAAP basis on this call. please refer to the related definitions and reconciliations in our press release. For reconciliation of these non-GAAP measures to the most directly comparable GAAP measures, please refer to the tables at the end of our earnings release. Joining us on the call today to discuss our results 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 Jerry Lederman. In addition, we have other members of the executive team on the line available to assist with the Q&A. And now I'd like to turn the call over to Scott.

Thank you, Christina, and thanks, everyone, for joining us this morning. Before I discuss our financial performance for the second quarter, I'd like to first address the operational challenges at Newark at the end of last month. I am extremely proud of the people of the United for all they did to recover under very challenging circumstances. Our pilots, flight attendants, gate agents, contact center teams, and others went above and beyond to inform and assist our customers in an extremely stressful situation. We're now doing more than ever to mitigate the impact of weather, congestion, and other infrastructure constraints at Newark, and frankly, to build a schedule at Newark that's more manageable given the frequency of weather events and the very real operating constraints that exist there, even on blue sky days. Brett will highlight just a few of those changes shortly, but we've already put them in motion, already starting to improve the working experience for our people and travel experience for our customers. But bigger picture, this quarter was yet another proof point that our United Next strategy was correct and is working almost exactly as we expected. Over the past couple of years, I've talked a lot about three exogenous constraints facing the industry, but also the fact that those very constraints and challenges are going to set the table for improved financial results for the airline industry. One, pilot shortages. Two, supply chain disruptions. And three, infrastructure limitations. At United, we have control over the first two constraints, pilot and supply chain, and we mostly got ahead of the curve and then had minimal issues there. But we're probably as exposed or the most exposed to the infrastructure constraints since our hubs are in some of the largest and most crowded airports in the country. So now we're taking even more action to give us the ability to operate more reliably despite the infrastructure constraints. That means we've had to lower our capacity plans for the second half and therefore raised our CASMX guidance. But the reality is that our CASMAX will be better than it otherwise would have been because there's nothing as expensive as running an off-schedule operation. And these changes are designed to get our operation, particularly at Newark, working at a level that reflects the fact that it only has one set of parallel runways operating in the most crowded airspace in the world. The flip side of this coin, however, is that these exogenous constraints were also the basis of our United Next strategy, and it is off to an incredible, even record-setting start. This was an all-time record quarter for pre-tax earnings and EPS on an adjusted basis. This performance reflects our success in building a strategy to, one, aggressively hire pilots, two, grow our mid-con hubs, three, up-gauge our domestic fleet, and four, expand our wide-body fleet and international exposure in response to trends that we identified at the beginning of COVID. Importantly, we now expect to deliver earnings per share of $11 to $12, even with incremental conservatism and our costs in the back half of the year. The vision and strategic outlook that we first identified nearly three years ago is happening. Cost convergence is happening, which has changed our business dramatically on the domestic front. Long-term positive structural changes to the international markets are also apparent in our results. We continue to anticipate that the GDP relationship between airline revenues has been reset higher due to cost convergence and will continue to improve. The outlook for United and our United Next strategy is incredibly bright, as highlighted by our financial results this quarter. This quarter demonstrates that we're ahead of our planned targets, and the challenges emphasize that the industry backdrop gives us a clear path to our 14% pre-tax margin in 2026. As we march towards that goal, we're focused on setting the airline up for success. I'm also pleased that we've reached an agreement on an industry-leading contract with Alpha. The four-year agreement, once ratified, will deliver a meaningful pay raise and quality of life improvements for our pilots. Thanks to the team for getting this across the finish line. We are well on our way to being the best airline in the history of aviation. United Next gave us an unbeatable head start on that goal as long as we execute, and execute we will. Thanks again to the United team. And with that, I'll turn it over to Brett. Thank you, Scott.