United Airlines Holdings, Inc. (NASDAQ:UAL) Q3 2023 Earnings Call Transcript

United Airlines Holdings, Inc. (NASDAQ:UAL) Q3 2023 Earnings Call Transcript October 18, 2023

Operator: Good morning and welcome to the United Airlines Holdings Earnings Conference Call for the Third 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. [Operator Instructions] 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, Kristina Edwards, Director of Investor Relations. Please go ahead.

Kristina Edwards: Thank you, Silas. Good morning, everyone, and welcome to United’s third 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 a 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 our Chief Executive Officer, Scott Kirby; President, Brett Hart; Executive Vice President and Chief Commercial Officer, Andrew Nocella; and new Executive Vice President and Chief Financial Officer, Mike Leskinen. 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.

Scott Kirby: Thank you, Kristina. I want to start today by saying how heartbroken we are by the horrific attacks on Israel and the escalating conflict in the region that has millions of innocent people in harm’s way. Here at United when tragedy strikes anywhere around the world, we focus first on safety and second on how we can use our unique capabilities to help. While we suspended our service to Tel Aviv, we were the first U.S. carrier to add extra flights to Athens where customers connect from airlines operating between Tel Aviv and Athens. We also upgauged some regularly scheduled flights to Athens, added a dedicated Tel Aviv support desk and continued flying to Oman and Dubai to maximize flexibility for our customers with tickets to Tel Aviv.

We’re closely monitoring the situation on the ground and staying in close touch with State Department officials so that we can resume service as soon as possible. We look forward to cessation of violence in the region, and as we’ve done in the past crises around the globe, we expect United to continue to play a meaningful role in the humanitarian response. Turning back to the business, I want to start by welcoming Mike to the leadership team. You all know him well, but I’m excited to have him as a partner who agrees with my no excuses approach, who is a 100% committed to making United work for our employees, customers and shareholders. I also want to congratulate Kristina for her recent announcement as a — from Crain’s here in Chicago as one of the top 40 Under 40.

The third quarter was another solid milestone to demonstrate that United Next is working as we expected, and the growth we are adding is profitable. Though fuel spiked this quarter, we’re very encouraged about our results. It’s clear to see why from the numbers. Our top line revenue grew 12.5% to $14.5 billion, making it the highest third quarter in our history. Our costs were also on track with our plans as we delivered strong operations in both August and September. United’s diverse revenue streams have also allowed us to handle variations in demand and produce solid, absolute, and even better relative results. It’s evident in the numbers. United and one other airline expected to count for 98% of the total industry revenue growth this quarter, and over 90% of the industry’s total pre-tax profitability.

Even in a tough industry environment, United’s diverse model is building strong, absolute, and even more impressive relative margins. So, what is it about revenue diversity that makes us different? First, because of our size and industry leading global network, our loyalty program is the most attractive program in the world for customers, and therefore generates significantly directly earned EBIT, significant loyalty, but also significant opportunity to do even more with it in the future. Expect to hear a lot more details from us on this front, starting at an investor day in early 2024. Second, we have unmatched geographic diversity with the largest domestic network complemented by the largest long-haul international network, and both are solidly profitable.

While this is a great attribute, it does create some short-term risk and volatility as we’re seeing right now with the transitory hit to margins this quarter, as a result of the tragedy in Israel. Third, we feel that both business travelers, it’s been nice to see recent momentum in that segment, but also increasingly the leisure customers as well. We’ve gotten a lot more agile at pivoting capacity in the leisure markets and not surprisingly have found that our core customers can now fly us in both business and leisure markets as we add seats to leisure destinations. Our ability to move domestic capacity in the leisure markets when they’re strong is a consequential driver of our strong relative revenue performance. And fourth, we continue to advance and improve our segmentation efforts.

This is a project almost a decade in the making, but all the way from Basic Economy, which just allows us to compete profitably on price on the low end and all the way up to Polaris on long-haul international, United is able to give our customers the real choice they want. So, what does that mean going forward? In short, it’s a confirmation that United Next is working as we expected. We thought the industry operating environment would be difficult. We thought that medium term capacity aspirations would be higher than demand growth. We thought that domestic would be a lot tougher than international, in the short to medium-term. But we also thought United would win share, grow our gauge and grow our connectivity, and that would allow United specifically to improve our results.

By the way, we also expected and now believe it’ll happen even faster, that the domestic market is going to see a shakeout that leads to an improvement in margins over the medium to long-term. It’s impossible to call the timing exactly, but I guess that we see meaningful industry changes by 2H ‘24. And for what it’s worth, that’s what has happened every single time we’ve been through one of the cycles in my career. And as that is happening, I’ll continue closely tracking the airline industry revenue to GDP relationship. I’ve talked about this in the past. That ratio declined by approximately 35% in the past few decades. I don’t think we’ll make all that up, but almost everything we do make up goes straight to the bottom-line.

So, in conclusion, I’m proud of the team at United. We’re creating something special here. Even in a tough industry environment, we’re producing strong absolute results while producing the best relative results in our history. We believe we have a lot of runway ahead of us with United Next in our diverse revenue streams, along with our ability to catch up on gauge and connectivity positioning United well. We expect that the current stress in segments of the industry is also going to lead to structural changes that lay the foundation for an even better future for United, our employees, our customers, and our shareholders. With that, I’ll turn it over to Brett.

Brett Hart: Thank you, Scott. And thank you to each member of the United team. Your dedication is what continues to propel us to the top. I also want to acknowledge the tragic conflict in Israel. At United, our top priority is the safety of our crews and customers. We are closely monitoring the situation. Following our coordination with the State Department, we have suspended flights to Tel Aviv till the end of October, and we are offering waivers to impacted customers. We will continue to monitor the situation and adjust as needed. Mike will provide more detail on the impact of these capacity adjustments shortly. Last quarter, we announced changes to our operation at Newark to better hedge against disruptions, including taking advantage of FAA granted waivers to reduce our flight schedule along with the necessary airspace relief in the highly congested region.

While July was a difficult weather month, the Newark waivers and other proactive measures to improve reliability helped avoid pre-pandemic levels of ATC-related delays. In the third quarter, delayed arrivals were down 16 points versus the third quarter of 2019. Additionally, in August, we had the fewest cancels of any August in history, while operating the third largest quarter widebody schedule effort. In September, the FAA granted extensions to the New York airspace waivers, allowing the ability to maintain a reduced flight schedule at Newark that will help minimize air traffic delays through the rest of the year. The flexibility enabled by waivers are proving to be successful in ensuring operational reliability and resiliency at our largest international hub and have meaningfully improved the travel experience for our customers traveling in and out of Newark and throughout our network.

Looking to our system operations. During the quarter, we carried over 482,000 revenue passengers daily, the most in any quarter in United’s history with top-tier system customer D:00 in August and September. We’re grateful to the FAA for allowing us to make necessary adjustments in Newark and thank our employees who worked hard to get our customers to their destinations safely and on time. While most of our network has recovered to 2019 capacity levels or beyond, our China network has been last to recover. At the start of the quarter, we were operating four flights a week from San Francisco to Shanghai. And this month, we increased that to a daily flight. Next month, we will be the first U.S. airline to return to Beijing with a daily flight from San Francisco.

We believe this measured approach to bringing China capacity back on line is appropriate as demand slowly recovers. These increased flights are a significant step forward in rebuilding our Asia Pacific network. Late last month, our pilots ratified their industry-leading agreement. This contract enables us to continue providing great career opportunities in United, and I’m excited for the future as we continue to execute our United Next plan. At this point, we ratified agreements for four out of our five major work groups. Flight attendants represented by AFA are in active negotiations, and we look forward to sharing an update when we have one. As a reminder, we began accruing for pilot pay rate increases in the first quarter of this year.

Our outlook has and continues to represent our expectation for this agreement. And with that, I will hand it over to Andrew to discuss the revenue environment.

Andrew Nocella: Thanks, Brett. Total revenue for the third quarter increased 12.5%, 1 point ahead of our guidance midpoint. TRASM was down 2.8%, PRASM was down 1% and capacity increased 15.7% year-over-year. Capacity came in a bit below our original outlook, mostly due to the changes in our Hawaii flying levels in response to the fires. It’s nice to come in ahead of our revenue outlook as the strong Q3 outcome further validates that our United Next commercial strategies are working well and that we have differentiated United from our competition. Demand for the Atlantic and the Pacific was truly outstanding, and we see that trend continuing into the fourth quarter. Third quarter domestic PRASM results were consistent with our year-over-year performance in the second quarter of down 2.1 points.

In other words, we saw no real change in our domestic trends in the quarter-over-quarter review. Our focus on prudent gauge growth centered in our hubs resulted in strong positive marginal revenue on our incremental capacity. We did focus a majority of our third quarter growth on international flying. International capacity increased 22%. International PRASM was up 1.3% year-over-year. International profit margins remain well ahead of domestic, though domestic margins remain solidly profitable. We also saw strong performance across most of the globe. Clearly, Europe was a standout with capacity being up 12% and with positive PRASM performance. Asia Pacific led international PRASM up 3.8% on 86% more capacity. Turning to our outlook for the fourth quarter.

We expect total revenue to be up approximately 10.5% on approximately 15.5% more capacity. This implies TRASM will be down around 4.5% year-over-year. Our guide assumes we begin limited service to Tel Aviv again in November. Tel Aviv accounts for approximately 2% of United’s consolidated capacity. As we think about the sequential trend in unit revenues, I know many of you are wondering if we are seeing a slowdown. Resurgence of the Pacific flying is resulting in many long-haul flights being added, increasing United’s long-haul international scheduling by 5 points versus Q3. United’s Q4 unit revenue expectations are consistent with Q3 adjusted for stage. United has taken full advantage of the demand surge across the Pacific with capacity being added to key markets, including the long pending resumption of daily flights to Beijing and Shanghai from San Francisco and the addition of Manila, just to name a few.

Having done capacity plan in my entire career, I haven’t said that our team is the best in the business. United properly allocated our 2023 growth to international markets over domestic and in domestic markets, we wisely invested in gauge, not scope or depth. Less than 1% of United’s domestic capacity this winter is in new markets, not in 2019. Capacity planning for 2024 will be even more important to achieve our financial goals. While we’re not going to provide guidance for 2024 today, we have plans to let the 30% growth we’ve added to the Atlantic since 2019 mature in 2024 and expect to fly at similar level of capacity in ‘24 as ‘23. We also plan on little to no growth for the first half of next year on domestic flying. This preview of our 2024 capacity, I think, will allow United to continue to produce top-tier results as we align with industry conditions.

I wanted to touch on a few other important commercial elements today as well. Recently, the question I get asked the most often by our frequent flyers is about potential changes to achieve premier status on United. The good news is we have no material changes planned for 2025 program year. We’ve carefully managed our premier population in recent years to maintain a robust and valuable set of benefits for each premier member. We very much believe in never causing a situation where everyone has a premier status which obviously results in no one receiving an adequate level of premier benefits. Our United strategy to offer premier members access to more premium seats than each of our competitors is enhancing the value of our frequent flyer loyalty program.

I also wanted to take a moment to talk about revenue segmentation. We’ve worked really hard on perfecting segmentation of our products in recent years. Not only do we have multiple product types appealing to a broad range of customers but we also have new, more effective ways to distribute our products by united.com and NDC technology. United is, of course, very focused on growing all of our premium products, given where our hubs are located. When I look back at where United was in 2017, we simply didn’t offer premium products that many of our best customers were willing to pay for. We put a plan in place with United Next to correct this disconnect in our commercial plans and we’re making quick progress. Premium Plus is one of our best examples of segmentation and has been a huge success.

Premium Plus third quarter 2023 capacity is 5 times that of 2019, with revenue up 7 times 2019 and is now our most profitable cabin. Premium Plus is now offered on all twin engine international aircraft to United and also will be onboard our new A321XLR jets, which replace our 757 starting in 2025. Another important driver of revenues has been the success of domestic first class. We plan on increasing our first class seats per departure from 9 in 2019 to 16 by 2027, an 80% increase. This increase in first class seats comes as more and more customers are seeking elevated experiences. United’s Basic Economy product represents the other side of the spectrum compared to many of our premium products. Basic has made United more competitive versus ultra low-cost competitors and giving our customers more choices.

Basic Economy is now 12% of our domestic passengers, and we expect to be even more competitive in this segment of the market in the future with the arrival of our large narrow-body jets in 2024 and 2025. These new jets have low marginal CASMs allowing United to be price competitive with anyone at any time. While it took time to perfect the offer and we are only in the early stages of inducting these jets, Basic has changed the competitive dynamics of our industry. I think it’s also becoming increasingly clear that United’s core business model of multiple product choices and expanding club network, experience levels from Basic Economy to Polaris provide travelers choices, and for United’s growing premium product choices travelers are willing to pay for.

Beyond segmentation, United’s network split evenly between domestic and global capacity. [Technical Difficulty]

Operator: Thank you for standing by. We are now live again to the audience.

Andrew Nocella: I’ll just end with diversified revenue streams provide United with a resiliency other business models will just not ever achieve. RASM-accretive gauge growth focused in our hubs in turn provides United with the unmatched ability to create cost convergence for years to come with our low-cost providers. Thanks again to the best team in the business. And with that, I will hand it off to Mike.

Mike Leskinen: Thanks, Andrew. Good morning, everyone. Before I get into the results, I want to take a minute to say how honored and excited I am to join the United executive team during such a transformative time. Industry dynamics are constantly changing, and I continue to see the incredible opportunity ahead for United. We believe our no excuses mentality and clear strategy with United Next are laying the foundation for success. I look forward to continuing the conversations I’ve had with the investment community thus far in my new role, and I’m excited to lead the talented finance team here at United. Now let’s turn to the results. For the third quarter, we delivered pretax earnings of $1.6 billion and a pretax margin of 10.8%.

Our earnings per share of $3.65 was ahead of expectations as our revenue growth came at a full point ahead of our guidance midpoint. Thanks to the amazing commercial team for their great work. They truly are the best in the business. Fuel remains volatile and worked against us in the quarter. Our average fuel price for the quarter ended $0.30 higher than the midpoint of our July expectation and more than accounts for the entirety of the reduced outlook for the third quarter. Our CASM-ex remained on track at up 2.6% versus the third quarter of 2022. Our operation to Tel Aviv has been impacted by the recent events in the region and is materially impacting our outlook as this market represents approximately 2% of our capacity. For the fourth quarter, we expect CASM-ex to be up approximately 3.5%, with capacity up 15.5%, both versus the fourth quarter of last year.

Our guidance incorporates no service to Tel Aviv through the end of October. If flights are further suspended through the end of the year, it would reduce capacity by an additional approximately 1.5 points and add approximately 1.5 points of CASM-ex as it’s very difficult to cut the associated expenses related to this flying so close in. These changes bring capacity for the full year, up around 17.5% year-over-year, just below our guidance. We’re proud of that result given all the headwinds United and our industry faced, a huge testament to the hard work of our operations team. Lower capacity along with elevated maintenance expense has pressured CASM-ex and pushed us above the high end of our CASM-ex range for the full year. For the fourth quarter, we expect earnings per share of approximately $1.80 with an average fuel price of approximately $3.28.

Absent our Tel Aviv flying through the rest of the year, our fourth quarter earnings per share would be reduced by approximately $0.30. Looking ahead to 2024, we feel good about the core fundamentals of our expenses. However, we are facing sizable headwinds with labor in expectation of a new flight attendant agreement and continued higher maintenance expense. We believe our capacity growth, along with improvements in utilization are helpful tailwinds as we manage down expenses. We are working through our 2024 budget and new projections for 2024 capacity, CASM-ex and our other financials, and we’ll provide a customary guidance on our January call. On the fleet, in the third quarter, we took delivery of 18 Boeing 737 MAX aircraft and paid for 14 of those aircraft with cash.

We expect to take delivery of 20 737 MAX aircraft in the fourth quarter, and we took delivery of our first Airbus A321neo last week. This is a reduction of 12 aircraft versus our plan in July for the second half of the year. Due to these aircraft shifting into 2024, we now expect our full year 2023 adjusted capital expenditures to be approximately $8 billion. Earlier this month, we announced our order for 60 A321neos and exercised options for 50 787s for delivery in 2028 and beyond. Managing the delivery skyline for the future of United is critical. This order builds on the successes we are already seeing with United Next and reflects our confidence as we extend our planning into the next decade. With the retirement of our Boeing 757 and 767 fleet later this decade, these aircraft are important additions as we work towards fleet simplification and capitalize on our cost reduction opportunity.

Turning briefly to the balance sheet. We ended the quarter with almost $19 billion in liquidity, including our undrawn revolver. Before we end our prepared remarks today, it’s important to recognize that while our financial results remain strong, as an industry, we are facing new and unique challenges. Our growth has helped us deliver strong relative cost performance, and that’s even before we begin the accelerated gauge growth that we expect will come from the 737 MAX 10 and the A321 additions to our fleet. We are committed to continuing to deliver industry-leading cost performance. And this will form the foundation for continued cost convergence and improving absolute profitability. And because our growth is focused on our hubs, we’re also growing with industry-leading PRASM.

There are and will always be headwinds facing our industry, but as we enter 2024, United has great momentum, and I’m confident of very bright future. With that, I’ll hand it over to Kristina to start the Q&A.

Kristina Edwards: Thank you, Mike. We will now take questions from the analyst community. Please limit yourself to one question and if needed, one follow-up question. Silas, please describe the procedure to ask questions.

Operator: [Operator Instructions] The first question comes from Jamie Baker from JP Morgan.

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Q&A Session

Jamie Baker: So following up on some of the prepared remarks, probably for Andrew or maybe Scott, I can’t recall a time when there’s been such a CASM between domestic yields at United and those of the LMAs. How would you rank order the drivers of this? How much is reflective of low-end consumer weakness? How much is your own success with Basic Economy, how much is loyalty, maybe the LMAs are just selling out too far in advance. Just trying to assess the permanence of the phenomenon, so if you could rank order the drivers, that would be great.

Andrew Nocella: Hi Jamie. I’ll try to give that a try. I mean, rank order them maybe a little difficult, but let’s see what we can do. I do think your question is really one of the most important questions that anyone could ask today because there’s such a difference occurring versus the past. And clearly, what I think I would start off is there’s a large range of business models today that didn’t exist in years past in this business. And these models are clearly creating winners and losers in a way many of us did not anticipate during the pandemic. I recall telling all of you on the Q1 2022 call that industry domestic margins will be challenging post-pandemic. Clearly, the thinking at the time was — for most, at least, was that all airlines would be pressured equally at best are the legacy carriers even more so.

Right? It was widely assumed that lower margin, higher cost legacy carriers, which shrink rebalance in supply and demand, an outcome that has happened so many times in the past, so why not again? The number of times I heard that the airline with the lowest cost wins the race, I can’t even begin to count. So, that kind of sets up what about the business models has shifted so much to cause this paradigm change we’re seeing today. Why are these low-cost airlines so unprofitable? Why does United have top tier results? And first, I just want to be really clear. United’s domestic network is profitable. So it’s not simply our great global network that’s creating this outcome for us. The first issue, of course, Mike talked about it is cost.

Every airline has to manage higher inflationary cost pressures with the lowest cost carriers’ cost structure relative to the legacy carriers are clearly converging. The shrinking cost gap is just a fundamental shift for United and our industry. And I guess, I would rank that number one. You said it’s impossible to run your airline like it’s 2019. High utilization was a critical ingredient for success of certain models, and that’s simply not possible, where we are today. And also having large labor cost differentials are not possible. Low-cost carriers also tend to operate at a very high gauge already. It will be much more difficult for them to drive cost materially lower with larger gauge planes like United. United has increased domestic gauge more than any airline since 2019, and our plan is to push that even further in the years to come.

Another issue that I think we should talk about is it’s difficult for many to grasp is not every ASM is created equal. It’s easy to mistake often in the middle of really large spreadsheets that everyone uses to evaluate our outlook, right? At United, we proved this point early in 2018 and ‘19 with our growth and revenue performance and we just did it again in Q3. Market saturation of the low-cost business model in certain regions is creating very low marginal RASMs for some of our competitors. In fact, many of our competitors have marginal revenue percentages that are negative. There are only so many seats Florida, Cancun or Vegas can support in such a short period of time. Also low-cost carriers generally must operate a very large gauge equipment to have low-cost without the connectivity benefit of the hub-and-spoke business model, expansion of the low-cost model into smaller and medium-sized markets with these very large jets lacking connectivity just creates low marginal RASMs. Market saturation and the mismatch of gauge and other connectivity continues to plague certain business models.

Expansion opportunities with this type of business model are not endless in our view, but in response to that shortcoming, many of our domestic competitors have doubled down with plans for even more growth in 2024. 2024 marginal growth in markets will absolutely be no better than 2023. No airline network team would say, let’s add the bad markets in 2023, so we can save the good ones for 2024. The other factor is the percentage of ASMs that these airlines have in new markets. Very fast growth rates simply create a high percentage of new capacity, which by its nature in the best of times is below average. The fourth quarter — this fourth quarter, United has less than 1% of our ASMs in new markets versus ‘19. This is an absolute difference maker.

And capacity growth is designed as a strategy to maintain low cost without revenue accretive markets to add the entire business model can break. And that is what we think is happening right now. United’s domestic capacity growth has always been about correcting a gauge mismatch created by the overuse of high-cost passenger and friendly single-class regional jets. At United, we have this diversity of revenue streams that provide us long-term stability and earnings that a one-dimensional plan will never achieve. We have a range of products, including array of premium seating options that’s increasingly popular with our travelers. We fly as much capacity in global markets as we do domestically. We fly to big cities and small. We have a great hub-and-spoke business model.

United has significant margin accretive growth, and we’ve proven that time and time again. United’s business model can support dramatically higher gauge and once added, we spill less and less traffic to others. United’s higher gauge will create more and more cost conversions between now and 2027. The complexity of United’s product offering is not a disadvantage. It in fact is a structural advantage that generates revenues more than the cost it creates by the complexity and just cannot be replicated. In the past, United and other legacy carriers that have emerged from the crisis smaller, creating excess planes and other resources for others to grow. This time, that will not happen. This time around, it is not United with the low margins.

We will not adjust our plans. United’s focus on global markets has clearly won the day in Q3, and you can see that in the results. Our focus on domestic gauge is absolutely the right one. We’ll no longer spill as much revenue to others as we’ve done in the past. Our focus on basic fares means we’ll be able to be even more competitive. United will moderate our domestic growth plan, as I said earlier, for the first half of 2024 because we’re focused on building our Asia Pacific line where we see the strongest short-term results. But I have to say, maybe in our timing, there may be off to a few other — the timing may be off, Jamie, but the quarters are coming, and there’s a lot of other variables. And I truly am confident that sooner or later, the industry will rebalance like it has done in the past, and the United and a few others with similar diversified revenue streams are going to come out on top.

I know that was a long answer.

Jamie Baker: Andrew, that’s great. I really do appreciate it. But let me just follow up with a quick philosophical question. If spill carriers can’t make money but full-service airlines can, doesn’t that suggest we’re actually at the optimal amount of domestic capacity rather than the oversupply that investors keep asking me about?

Scott Kirby: Well, I guess, I’ll try now. It’s hard to follow, Andrew. That was a great answer and very comprehensive. And probably why we feel that — what Andrew said is why we feel so different that I recognize everyone on this call feels or that the market feels. We feel really confident about where we’re headed, what this means for margins out in 2026, by the time we’re there. We just feel really confident. But without answering the question about sort of overall industry capacity, I kind of at a high level, think of this, Jamie, to me, one of the most remarkable statistics this quarter is that 90% of the industry revenue growth is going to be at two airlines and 90% of the pretax profitability. We just have better model.

And what we’ve tried to do is we went through — the goal was to create an airline that had better product service experience for customers across the board. We can’t just be a leisure airline. We can’t just be a low fare airline. We can’t just be a premium airline. We need to deliver for all customers. We try to create products that are better on the high end, but all the way down to the low end. I believe strongly that air travel is not a commodity. Some of the industry thinks it’s a commodity. And that’s how you get the low-cost wins, if you believe it’s a commodity. I do not think that. And I think we are proving — our results of two airlines are proving that air travel is not a commodity. So without commenting on what the total industry growth is, what is happening is to have that differentiated product service experience, getting almost all of the revenue growth and customers are voting with their wallets that those models are working.