United Airlines Holdings, Inc.

Now turn the presentation over to your host for today's call, Christina Edwards, Managing Director of Investor Relations. Please go ahead.

Thank you, Sarah. Good morning, everyone, and welcome to United's first quarter 2025 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, 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 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 Mike Leskinen. In addition, we have other members of the executive team on the line available for the Q&A. And now, I'd like to turn the call over to Scott.

Thanks, Christina, and good morning, everyone. The first quarter of 2025 was sure eventful. It's clear the softer macroeconomic environment is driving both volatility in the market and softer demand for travel. But for United specifically, two big picture themes have been confirmed. First, United's performance is strong even in this weak environment because we've won the battle for brand loyal customers. And second, because we've won those brand loyal customers, our earnings and financial metrics are demonstrating resilience that United's never had before. The strains on the macro economy have impacted demand, but even in that strained environment, United just had the highest first quarter pre-tax margins since COVID began, and we expect to be one of only two airlines that are profitable in the first quarter. And our resilience is further demonstrated by the fact that if the environment remains relatively weaker but stable, we can stay within our full year guidance range. However, we read the same headlines as you, and so we think that there's a reasonable chance that bookings could weaken from here. But even if we're in that recessionary environment, we still expect to earn $7 to $9 per share for the full year of 2025. When I say that there's been a structural, permanent, and irreversible change, what I mean is that United has won brand-loyal customers, and they are sticky, lifelong customers. We are now the brand-loyal leader by a wide margin in six of our seven hubs and tied with one other airline in Los Angeles. In most spokes around the country, we're the leader or one of the leaders of brand-loyal customers. Andrew will share some facts on customers that live in the Bay Area, Denver, and Chicago in his remarks. But it is those gains that are allowing us to be resilient, even in this weaker economic environment. To be clear, even though those customers are sticky and we believe those market share gains are permanent, we're capitalizing on our momentum and doing more to attract even more brand loyal customers. We're building huge new clubs in Houston and San Francisco and about to open an additional new club in Denver. We're installing the fastest Wi-Fi in the world on our planes with Starlink. And they'll start flying next month. We're adding new features to the most powerful travel app in the world every couple of weeks. And our operation is reliable and resilient as ever. This weakening environment doesn't have us reconsidering these investments. In fact, we're leaning into them because they're at the center of our biggest competitive advantage, winning brand loyal customers. And a huge thank you to our employees for their incredible service that makes this one possible. Periods of economic softening are part of the business cycle. So the question for United is what should we do now that we see economic softness? Tactically, we're being very diligent about expenses and removing capacity, particularly off-peak utilization flying. And Andrew and Mike will talk about those in a few minutes. And strategically, our priority is pretty simple and it hasn't changed. Win the brand loyal customers because that gives us the best margins in good times and that lead can grow even larger during lean times. The reason is that for any given customer living in any given city, If you're not the brand loyal airline, you're the spill airline. The only way a spill airline gets passengers is through lower prices. When times are good, that strategy can work okay. But when times get tougher, the brand loyal airline like United has more seats to sell, which we do sell at lower prices. But that disproportionately impacts all the spill carriers that we compete with. Some of the recent guidance updates from other airlines are a stark reminder of this point. For some historical perspective, Southwest historically was the airline with the highest percentage of brand loyal customers. For most of its history, Southwest was focused on smaller, secondary cities where they had by far the best schedule for customers. They also had a huge customer advantage as the only airline that didn't have change fees or back fees. That meant that a high percentage of their customers were brand loyal to Southwest. At its core, that's why Southwest historically was the highest margin airline in good times, and while they always outperformed by an even wider margin when times got tough. But as they've moved into big, high-cost hubs of other airlines, both of those advantages are gone. And now United and one other airline are the brand-loyal customer leaders. It's always dangerous to say that it's different this time. And in fact, we're saying exactly the opposite. It's going to be exactly the same this time. History is just repeating. The only thing that's changed is that United is now one of the two brands that leading brand loyal airlines. So to conclude, United Next is the right strategy. It's been well executed by our people, and it's producing strong, resilient results in good times and even more impressively in tough times. United has never been in a stronger competitive position. Customers are benefiting, our employees are benefiting, and our shareholders will also benefit in the value that's being created.