United Airlines Holdings, Inc. (NASDAQ:UAL) released its third-quarter earnings report before Thursday’s opening bell.
Below are the transcripts from the Q3 earnings call.
This transcript is brought to you by Benzinga APIs. For real-time access to our entire catalog, please visit https://www.benzinga.com/apis/ for a consultation.
Operator
Good morning and welcome to United Airlines Holdings earnings conference call for the third quarter of 2025. My name is Regina and I will be your conference facilitator today. Following the initial remarks from management, we will open the lines for questions. In order to ask a question, you will need to press STAR followed by the number one on your telephone keypad. 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 Edwards, Managing Director of Investor Relations. Please go ahead.
Director of Investor Relations
Thanks, Regina. Good morning everyone and welcome to United’s third quarter 2025 earnings conference call. Yesterday we issued our earnings release which is available on our website@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 & 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 and historical operational metrics will exclude pandemic years of 2020-2022. Please refer to the related definitions and reconciliations of these non GAAP measures to the most directly comparable GAAP measures 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 Nisella, and Executive Vice President and Chief Financial Officer Mike Leskinen. We also have other members of the executive team on the line available for the Q&A. And now I’ll flip the call over to Scott.
Scott Kirby
Thanks Christina and good morning everyone. For the last few years we’ve talked about an industry that is transforming and the United Airlines is competitively positioned to win. For United, that’s meant winning brand loyal customers. The third quarter is another data point that is consistent with the structural, permanent and irreversible change that is occurring in this industry. We delivered strong third quarter results despite macro volatility in the first nine months of the year and we now expect to grow earnings for the full year. The first three quarters of the year were an economic downturn for airlines at least, and our ability to grow earnings in the face of the macro issues is pretty that the brand loyal United Next strategy is resilient in tough times and a clear proof point on our path to solid double digit margins. What we’ve really proven is air travel is not a commodity. Our calls in the last few years we spent a lot of time appropriately talking about the industry structure and making predictions about how that would play out in the future. We’re now seeing those predictions come true and even though it’s only the second or third inning, I think the general contours of how that is going to end are widely known. Easy to forecast to everyone at this point and given that, I think it’s time to shift the focus and talk about how United gets to double digit margins even in the current industry environment. There are two points on the revenue side and likewise two points on the cost side. On the revenue side. It starts with winning brand loyal customers. United is investing over a billion dollars in customer product enhancements annually and that investment is in all cabins and classes of service. Every customer who flies United gets more value. For basic economy customers, we don’t just offer them a competitively priced ticket, we offer them the best app, an on time flight power in every seat, seatback screens, a great loyalty program just to name a few. For brand loyal customers we offer all the benefits I just mentioned, plus expansive clubs, more seats up front, better food, a more extensive route network to exotic destinations around the globe, and a loyalty program that gives bigger rewards and a tremendous amount of utility for their miles. And most importantly, our people are our best asset and they’re delivering for all of our customers each and every day. We’re in the people business and our people have done an amazing job of caring and providing friendly service that makes customers feel good is the foundation of keeping them brand loyal. From basic economy all the way to Polaris class, every United customer simply gets more value at United than what our competitors offer and that’s why they’re brand loyal. It’s also why we’re winning more brand loyal customers every day. And and it’s the important competitive advantage that is giving us a general generational lead versus most of the industry. We believe that winning brand loyal customers sets up our second revenue advantage, the potential to double the EBITDA from our loyalty program in the years to come. We’re still in the pregame warm ups for taking the United loyalty program to another level. But in order to invest over a billion dollars per year in incremental customer products and services, we had to find a different and better way to manage costs. Historically, airlines looking to reduce costs have focused on cutting customer friendly amenities like food. Because most of our expense is in areas we can’t control like union contracts, airport fees, fuel, et cetera, or by adding utilization flying late at night, on off peak days or during slower times of the year. United is doing the exact opposite of that industry dogma, namely investing more for the customer and focusing on flying at times that can be profitable instead of just trying to maximize aircraft utilization. And you can see it in our numbers. Our major cost focus at United is to drive real cost efficiency through our use of technology that can also improve the customer experience. In public discussions we’ve tended to focus more on the app and customer facing technology, but we’re doing far more behind the scenes and we’re the most cutting edge technology airline in the world. Mike will give you some examples of these technology driven savings that allow us to lower true CASM-ex. These technology investments are efficient for cost, but they also help us to run a more reliable operation for customers. And secondly on cost, we have large gauge increases coming as both Boeing and Airbus get back to a better delivery cadence. This strategy is working and I expect us to add at least a point or more of margin each year, normalized for any unusual macroeconomic activity up or down, which gets us to the low teen margins in this industry capacity environment. But as I said earlier, the industry restructuring that is each airline focusing its capacity in markets where they can be profitable is only in the second or third inning and as that process plays out, I expect that to add several more margin points to United moving us up into the mid teens margins. And as we deliver on that, I’d bet that our multiples move up meaningfully as well. I’ll now turn it back to the team for a run through of the quarter and our outlook.
Brett Hart
Thank you Scott and good morning. This summer was the busiest in United’s history. We surpassed 1 billion available seat miles in a single day and flew over 48 million customers in the quarter. Even with these volumes, as well as significant summer weather disruptions and system wide ATC challenges, our operation was resilient this quarter. The third quarter marked our lowest rate of cancellations for any third quarter in company history and six of our seven hubs ranked first or second for on time departures. We continue to adapt under pressure and to maintain flexibility during irregular operations, preserving travel plans for more than 290,000 customers by managing delays rather than canceling flights or use of connection safe. This is what drives the most value to our customers and helps build the brand loyalty we speak so much about and our customer NPS score was up nearly 7% this summer versus summer 2024. This performance is a testament to the dedication of our United team, so thank you to each of you. At United we remain focused on innovation and providing our teams with the most advanced tools in the industry to help them deliver their best every day. We are modernizing applications for employees that allows us to recover faster scale support for customers, enabling better experiences even when things don’t go as planned. We also continue to invest in our industry leading digital customer experience with a new dedicated section in our mobile app focused on making tight connections smoother and more predictable for customers through real time personalized tools and communication, driving further improvements in our customer experience and NPS scores as we continue to take aircraft deliveries. We will also be growing our team. In 2026 we expect to hire over 2000 pilots and over 3200 new flight attendants. We are all proud of the fact that we continue to be a destination for great talent with over 27,000 applicants in just a few days. For the most recent flight attendant posting regarding the negotiations with the afa, we met with the mediator in mid September and our negotiation is scheduled for the end of October. We remain focused on getting our flight attendants the best in the industry, the industry leading contract they deserve. I want to thank Secretary Duffy, Administrator Bedford and the Administration for their support and leadership on the improvements at Newark. We are pleased with the FAA’s announcement that flights at Newark will be capped through October 2026 at 72 operations per hour, which better matches the capacity of the airport. The reduction in emissions along with the continued focus on technology upgrades and ATC staffing further underpins our confidence in Newark’s long term outlook. Newark achieved its best ever on time departure and Star D0 for any third quarter. Clear proof that the investments being made are working. Yesterday our first Starlink equipped Boeing 737800 took off from Newark following FAA certification last month. This marks a major milestone in our journey to deliver the fastest, most reliable and free for MileagePlus members. Wi Fi in the skies. More than half of our regional flight now has Starlink successfully installed. We believe this superior in flight experience will be truly game changing as it expands across the remainder of our fleet by 2027. Thank you to the entire United team for your continued hard work and commitment to excellence this quarter. I will now hand it over to Andrew to provide an update on the revenue environment.
Brett Hart
Thanks Brett. United’s top line revenues increased 2.6% to $15.2 billion in the quarter on a 7.2% increase in capacity. Consolidated TRASM for the quarter was down 4.3%. Domestic PRASM was down 3.3% in Q3 on 6.6% more capacity. Premium cabins outperformed the main cabin once again after a long stream of positive RASM quarters. United’s International flights in Q3 had prasms down 7.1%. Global long haul demand continues to spread both earlier and later in the year out of Q3, making those periods stronger a trade we take any day. Premium revenues were up 6% year over year and PRASM for premium cabins outperformed the main cabin by five points. United had the company’s all time highest business revenue signal during the week ending October 5th. Of the top five best weeks in our history, three of the remaining four occurred in September 2025. Leisure demand is also healthy as we head into Q4. Not unlike 2024, capacity and demand are simply better balanced. In the last quarter of this year, particularly for global long haul flying. We saw bookings inflect positive in early July and industry revenues are expected to be positive year over year. For all remaining months of 2025. We expect our consolidated rasm to meaningfully improve in Q4 year over year. International rasms in Q4 will outperform domestic based on the current outlook. We also expect that Q4 will have United’s best revenue quarter ever, but also have the highest absolute RASM of any quarter of 2025. As you can see by the stressed financials at many airlines, it is clear much of their domestic flying once again lost money in 2025, but also in the peak summer quarter. It is already beginning, but we believe more unprofitable industry flying will continue to be scaled back, although the timing remains uncertain. While the supply demand imbalance did impact United’s profits in the third quarter, we can report all seven of our hubs were profitable in the quarter. We at United remain focused on refinements we can make to the network and commercial strategies to build a stronger margin, particularly in the third quarter of each year. Two years ago we focused on adjustments to our Q1 network deployment that led to nearly a four point improvement in pre tax margins and in 2026 we’re going to take a similar approach to Q3. For most of recent pre pandemic history, Q3 rasms were consistent with Q2 and Q4 with a modest peak in the capacity in Q3 where marginal rasm was greater than marginal chasm. However, in 2024 we saw a gap emerge where Q3 rasms at United trailed Q2 and Q4. In 2025, we expect this gap to once again exist and to have widened. This Q3 issue appears to be an industry issue not specific to United. As much as we Love the relative Q4 performance in recent years, the idea that Q3 trails by the magnitude we’ve seen in 2024 and in 2025 represents an opportunity for margin expansion in 2026. We’ll adjust how peaked our summer capacity plan is by ending the summer schedule a week early, operating 15% fewer red eye flights and cutting more capacity from the July 4th holiday, to name a few, in pursuit of higher margins. I also expect that our Atlantic capacity year over year excluding Tel Aviv will be flat to negative in Q3 202026 United’s business model now has a more balanced demand levels across more of the year as our increasingly optimal mix between leisure demand, premium leisure demand and business demand is yet another emerging advantage we have over commodity based airlines. United’s ability to further deseasonalize capacity we think creates yet another opportunity for cost convergence versus commodity airlines that only see profit opportunities on peak leisure travel demand days or months. I think it’s interesting to note profitability is now inversely correlated with aircraft utilization in the US the highest utilization airlines have the lowest margins mileageplus had another strong quarter with total loyalty revenues up over 9% CO brand remuneration was up 15% year over year and should end the year up over 12. We are seeing increased retention of cardholders along with higher spend as United’s brand grows today. I’d also like to share my view of where United has come from in the past decade, why our actual 2025 results thus far have proven so durable and what we expect to drive continued gains among brand loyal customers and double digit margins down the line. Starting with our many transformational annual investments of over 1 billion for our customers, we have successfully decommoditized most of United’s passenger revenues. We believe that our tilt to brand loyal capacity and products in the last five years was well timed but also consistent with the demand profile in our hub cities, which is why it’s worked so well and why our premium efforts will be more margin accretive than others. However, it’s important to understand we’re always investing to create value for all passengers in all cabins. Even our most premium yield passengers often fly in the main cabin and our efforts to convert passengers to brand loyal clearly starts in the main cabin. Basic economy has altered the competitive landscape in the US and provided United a profitable entry fare to attract many customers over a full life cycle. Quality and value matters more than ever to US consumers. Clubs that are not overcrowded, enhanced meals, great wine, industry leading technology, great customer service, seat back screens and fast wi-fi to name a few. Those are the attributes we focus on. The quality part of the product offering was often overlooked by many as we favored simplicity and low cost. In our view, quality goes well beyond the schedule we offer our inherent excellent reliability. Smaller details do matter and that combined with best in class customer service our team members deliver sets us up for success. Consistency of our products and services was unsurprisingly low at the early stages of our transformation but is now reaching critical mass. United now operates 765 jets with more than 146,000 seatback screens. These screens are one way of defining a premium airline in the U.S. our signature interior conversion is now at 64% and an investment of over 1.6 billion. At United we’ve proven our ability to increase our relative rasmus with the best results while at the same time increasing domestic gauge by almost 20% since 2019. We said a decade ago that not all capacity was created equal and our results have proven that business case. The statement is only true for brand loyal airlines. Domestic gauge is expected to once Again accelerate in 2027 as our 200 seat A321 fleet reaches critical mass after years of delay, helping drive better customer experience but also creating cost convergence with others. This gauge increase is a proven formula for margin growth and accelerates as we retire smaller lower margin A319 and A320 aircraft from our fleet by 2030. United subs can support this higher gauge and allows us to accept more basic economy passengers at a profit. Our transformation is making the world a smaller place for United and allowing us to add unique fine to places including but not limited to Greenland and Mongolia. A large thanks to the 100,000 plus United team members who together have built this durable generational lead. I’m going to turn it over to Mike to talk about our financial results.
Michael D. Leskinen
Mike thanks Andrew. We delivered a strong third quarter. Customers are speaking with their wallets and are increasingly choosing to fly United because of our strong operational performance and the significant investments we made and continue to make in the airline. Starlink is another example of how we’re differentiating our customer experience for the better this quarter. I’m particularly proud of our team for our disciplined cost management. I expect that our negative 0.9% CASM-ex performance will be industry leading. As Scott mentioned, we’ve made strategic investments in our product that drive higher costs, but we are helping offset those by running the core airline more efficiently. And those investments are increasingly differentiating United Airlines, creating brand loyal customers, decommoditizing United, and driving solid margins and returns on capital. We’ve been investing over 1 billion annually over the last few years into improving our aircraft, our clubs, our food and our WI fi and we expect to spend another billion dollars next year. We increased the amount we spend on food by 25% this year we’re investing 1 billion on our rollout of Starlink WI Fi so that our customers have the best in class connectivity. Our investments in clubs doubled in 2025 and is expected to more than double in 2026 as demand for this product continues to grow. These are just a few examples, but it’s important to note that we’re doing this all while delivering industry leading cost performance. Being able to invest in our customer experience is possible because we’re simultaneously driving efficiency in the core operation that produces meaningful and permanent savings. Some examples include modernizing all of our maintenance technology so that it can be used on iPads, allowing our technicians quicker access to United’s resources. For example, before introducing iPads throughout their shift, our technicians would walk to and from our hangars and aircraft, checking the aircraft’s paper logbook, printing manuals from the legacy mainframe systems at the hangar and ordering parts from their terminal at the hangar to ultimately fix the aircraft. Today, iPads give technicians the ability to instantaneously access troubleshooting manuals and order parts, all while at the aircraft, turning airplanes faster and improving the efficiency of our workforce. Additionally, significant investments in people, process and technology have been made to improve our recovery from IROPS events, which enables us to restart the airline following an event much quicker than we have in the past. One particular tool already in use is our ORCA tool, which optimizes aircraft routing, crew pairings and customer connections so that our targeted delays or cancels prioritize our customers in the optimal plan for guiding the airline through significant events. Our operational leadership and frontline employees are performing the best in our history. This has led to United leading the industry in the quickest recovery following significant events, and you can see the direct impact of that. Comparing our third quarter cost to others in the industry, we’re not just looking to make our operation more efficient, we’re making process changes and using AI to make the work of our headquarters management team more efficient too. In fact, our management headcount is 4% lower than last year. As this efficiency work continues, we’re planning to shrink another 4% in 2026. This is a new culture at United Airlines and as such I’m going to give a long term framework on how we’re thinking about CASM X General inflation in this industry is running about 3 to 4% annually and we expect that to continue inclusive of labor. At United, our gauge growth should provide about a one point annual tailwind through the end of the decade. We’re also committed to driving efficiency into the core business of another 1 point per year. So together our core Casimax growth should run up at 1 to 2% annually if we did nothing else. But as we’ve been highlighting, United is transforming because of our investments we have made into improving the customer experience and decommoditizing air travel. You should expect that to continue and on average we expect that to add about one point of CASM X pressure per year. That is more than offset by revenue generation. Altogether, our CASM X run rate should run up around 2 to 3% annually. Now turning to the quarter, we delivered third quarter earnings per share of $2.78 above the top end of our guidance range of $2.25 to $2.75 and ahead of Wall street expectations of $2.68. Our pre tax margin was 8% and would have been a point higher absent the disruptions earlier this year. At Newark we had industry leading operational performance that underpinned strong unit cost performance. Our third quarter CASM ex was down 0.9%. Our costs in the quarter did benefit by approximately 1 point of expense moving to the fourth quarter primarily driven by maintenance and approximately 1 point from the timing of certain labor contracts. Looking to the fourth quarter, the momentum in the revenue environment Andrew described continues and we expect fourth quarter EPS to be $3 to $3 and $0.50. That brings our full year EPS towards the better half of Our full year 2025 guidance range of 9 to $11 and should position us to be the only airline to grow earnings this year. This demonstrates that winning brand loyal customer drives resilience in the business and when the economy rallies provides upside. As I mentioned last quarter, the industry now has two brand loyal, structurally profitable and revenue diverse airlines which together will represent about 100% of industry profits in 2025. We continue to target double digit pre tax margins in the long term. Turning to the balance sheet, we continue to march towards our goal of an investment grade balance sheet during the quarter and earlier this month we bought back three 787 aircraft off of expensive Covid air leases that carried implied interest rates in the high single digits. This accelerated our deleveraging efforts while further optimizing our cost of capital. We’ve eliminated all expensive financing from the balance sheet and have no fixed coupons over 6%, an average floating margin of 1.9% and an average cost of debt of less than 5%. These actions are being noticed by the rating agencies. We are upgraded by S and p to double B plus from BB on August 12, the highest they have rated us in over two decades. This change gives recognition to the fact that our business plan is working as our earnings grow and become more resilient and continue our migration towards investment grade credit ratings. Free cash flow generation also remains a key focus and we expect to generate over 3 billion in free cash flow this year. I’ve talked about free cash flow conversion around 50% and this year we’re trending well above that due to the timing of aircraft deliveries. As aircraft deliveries accelerate and capex rises, we expect to remain in the 50% range and as we exit the decade we expect the conversion to accelerate closer to around 75%. On the buyback, we continue to take a measured approach and take advantage of opportunistic moves in the market while also working towards getting our net leverage below two times. To wrap it up, I want to thank the team for the continued execution. Our ability to manage through what has been an earnings recession for the airline industry has been remarkable. And while I still think there is upside to our absolute margin and that matters the most, our relative margin is outstanding. My confidence in the financial future continues to grow. As we exit the year, United Airlines and the industry continue to transform into a customer centric, brand loyal business. United Airlines will continue to provide more value to our customers, to our employees and to our shareholders. Now back to Christina to start Q and A.
Operator
Thanks Mike. We will now take questions from the analyst community. We want to get to as many of you as possible, so please limit yourself to one question and if absolutely needed, one follow up question. Regina, please describe the procedure to ask a question. Thank you. The question and answer session will be conducted electronically. If you would like to ask a question please press Star then one on your telephone keypad. Please hold for a moment while we assemble our queue. The first question comes from the line of Katherine o’ Brien with Goldman Sachs. Please go ahead.
Goldman Sachs Analyst
Good morning everyone. Thanks for the time, Sue. First, a follow up to Scott’s margin commentary to kick off the call. You know, we’ve seen domestic main cabin seats come out of the market this year, although there has been backfill. You noted that system margins would go up a couple of points if the industry rationalized more. But what’s your view on what would happen to main cabin margins if there was a step function change in main cabin supply? Would that narrow or even close the gap between main cabin and premium cabin margins? Or there’s just always going to be a gap given the demand profile of price sensitive versus more premium customers. Thanks.
Scott Kirby
So thanks, Kathryn. That’s an interesting and I think insightful question. But to answer it, I’m going to give you some of the I think you guys take a step back and give some of the history and evolution of the industry and for most of my career, essentially everyone associated with the airline industry, airline executives, including myself for the first decade, but Wall street analysts and investors have thought of the airline industry as a commodity, not just price, but that schedule, schedule drove everything. And that’s how most of us thought of the industry. And by the way, it’s why people in Wall street write notes that essentially every seat is created equal and do competitive capacity analysis. For implicitly the assumption is every seat is created equal. I also think, by the way, it’s the reason we trade at such low multiples, because that’s what happens in commodity industries. But what we’ve proven and continue to prove in the last few years is that it is possible to transform into a brand loyal airline, which is dramatically different than the commoditized portion of the industry for brand loyal customers. If you think about those, I think that the majority of customers in the industry, they’re not all, but they’re the majority of the customers in the industry. And for them, schedule is still the number one factor. That’s kind of how we got to thinking of this as a commoditized industry. But most customers have multiple airlines that have broadly competitive and similar schedules that give them the option. And so most of those customers like to choose an airline to give their loyalty to accumulate miles, get the credit card, go on great exotic destinations around the globe. And winning those customers is the winning formula. You have to win them, you have to give them great value. But winning those customers is the winning formula. And for those customers it starts at the schedule. But that’s just the starting point. And from there it’s the product, it’s the technology, it’s the service, it’s how our people treat all of them that allow us to win those customers. And we look at the data from the last five years in each of our hubs, we’ve won significant market share of customers that live in those cities and it’s those brand loyal customers that we have won. And that’s, you know, that’s something that we’ve been working on for almost a decade now. Billions of dollars of investments to get there. A focused strategy that has been consistent over time. That’s why I say that is structural, that is a structural change. But because it’s structural, it’s permanent and irreversible. What that means on the commodity portion of this is we do have some, you know, some of our seats that are being supplied to the commodity portion of the business. It’s less as a percentage, it’s less than others, but everyone does. I think that portion of the business currently loses money for everyone. You know for the ultra low cost carriers they’re 100% commoditized and you can see how much it loses, but it really loses money across the board. Brand loyal is higher, higher margin but commodity loses money. That supply is adjusting in the commodity portion of the business. I think it is going to, it just started, you know, the tip of the spear is the airlines that are 100% but it’s not going to stop there. And I, I think within a couple of years the supply and demand will be balanced for the commodity portion of the business and it’ll be profitable for everyone. I think it’ll be low margin as all commodity businesses are, but it will be profitable. But the great news for us is that the majority of our revenue is going to come from the brand loyal customers. I think we’re proving this year that that revenue stream is resilient in tough times but that’s also has even more upside in the good times. So commodit seats on an airline, the more commoditized seats you have, the lower the margins are going to be Though I think they will be profitable. But that future really is going to belong to the couple of brand loyal airlines that I think are going to be able to achieve more stability in earnings. Less cyclicality, more stability and mid teens margins.
Goldman Sachs Analyst
Thanks so much for all that color Scott. Really appreciate it. Maybe if I can squeeze in a quick follow up for Mike on costs. So last quarter you had said fourth quarter costs would look similar to 2Q inclusive of a flight attendant deal. There’s quite a lot of moving pieces since then with the flight attendants and some maintenance shift. Can you update us on something that’s Heather to could CASM still be close to that 2Q reference point? Or if not, can you just help us help us frame it a bit more? Thank you so much.
Michael D. Leskinen
Thanks for the question, Katie. And look, we got about a point benefit from maintenance moving from 3Q into 4Q. As I said, we also get about a point benefit from the labor agreement. Underlying that, we also got a further third point of goodness that I think is indicative of what you’re going to see in the future from us of underlying core efficiency. So all that came together for really an excellent result. I do expect 4Q to trend up from the 3Q level, but really proud of those results.
Operator
Our next question comes from the line of Jamie Baker with J.T. morgan. Please go ahead.
JPMorgan Analyst
Yeah, good morning. So question for Andrew. Last week the topic of premium leisure. Yields exceeding certain corporate yields came up. Obviously it’s easy to find isolated examples of this, but you know, my question to you is, you know, how widespread might this be across your network and does this potentially represent a secular change or should investors still remain focused on corporate yields as, you know, representing the gold standard in the long run the way they clearly were a decade ago?
Andrew Nisella
It’s a really good question, Jamie, and it’s a nuisance answered based on everything else in our business that’s complicated. So the answer is the premise is correct that we’ve seen the growth, the premium leisure and the yield quality accelerate really fast. And when we look at it across our domestic system, we find in fact, the quality of premium leisure business often exceeds that of traditional corporate business, which by the way is a much smaller percentage of United’s business than it was in 2019. I think the distinction that I’ll give you that’s a little bit different is that that same phenomenon is not yet true in global long haul, that the corporate there does remain much higher yield than the premium leisure business at this point. But again, premium leisure continues to accelerate, the percentage of the cabinet continues to grow and our overall sold load factors in Polaris continue to grow. So we seek through RM the best of both worlds. We seek to maintain all that corporate business and gain corporate share while at the same time as we reconfigure aircraft taking on more and more premium leisure business. So I couldn’t be more excited by this trend. Like it’s just an amazing thing that I don’t think anybody would have predicted in 2019, but it’s come true and it’s come true quarter after quarter I think for three years in a row now. And it will come true again in the Q4 this year and we will lean further into premium capacity next year as a result with things we planned.
JPMorgan Analyst
A couple years ago and somewhat related to that. Andrew, you know the relationship between revenue. And nominal GDP got a lot of. Airplay during the recovery, you know, from COVID It’s not really a talking point anymore. But you know, the bull case at. One time was that enough structural change had taken place that we would see the industry exceed, you know, the pre Covid long term relationship. And certainly based on the A4A data that hasn’t happened yet. Maybe you crunch the numbers differently, but is this topic merely a blast from the past or something that we should continue thinking about? Do you think about it, put it that way? Thanks.
Andrew Nisella
I don’t think about it that way anymore and I don’t think about it that way in a large part. You know, Scott gave his narrative on how we’re different, how a few airlines like us are different and our revenue streams are simply different and durable relative to the commodity based airline. So when you look at that GDP relationship, you’re looking at one big total of revenues and it doesn’t distinguish the high quality airlines and the high quality seats from the low quality seats. And that’s the thing that I think has been lost in the formula that we all used to rely upon. So no, we do not rely upon that formula as we used to.
Operator
Our next question comes from the line of Andrew Dodora with Bank of America. Please go ahead.
Bank of America Analyst
Hey, good morning everyone. Thanks for taking the questions. This first question for Andrew, I guess I noticed the air traffic liability fell only 3% sequentially. If I look back historically, it’s been closer to down, down 10 2Q to 3Q. So I think this clearly supports some. Of the bullish commentary that you’ve had on the call. I guess my question, you know, how. Should we read into this decline in the atl? Does this speak to just the strong. Pricing that you’re seeing or does it. Say something just in terms of how you are booked today for the rest. Of the year in terms of volumes. Than maybe you typically are at this point in time?
Andrew Nisella
Those facts are correct in terms of the atl, you know, I would. It’s the momentum in the business. It is clearly a lot of good bookings that we’ve taken over the last few months and months reflecting our outlook for Q4, which you know, we’re really proud of the outlook for Q4 and how it is inflected nicely from Q3. We’re also booked a little bit ahead as we go into Q4 that reflects that. But overall, you know, we’ve seen a really good environment. I said in my prepared remarks what we saw from business traffic at United, our bookings over the last few weeks, which have been really amazing. So looking forward to positive news for Q4 and a great 2026.
Bank of America Analyst
Got it. And then just as a follow up, I kind of wanted to ask you. On the Latin America results in the quarter. Your calls are very focused on margins. So just curious, why did you grow. So much in Latin America in 3Q. When it seems like the RASM performance. Certainly didn’t warrant it. Just curious your thoughts there and how maybe you can fix that going forward. Thank you.
Andrew Nisella
Yeah, I think that’s a very fair question. Look, results for Latin. We’re disappointed as we look towards Q4. You know, I think Latin will have our largest sequential improvement. But you know, that’s not an easy. It is an easy comp, I guess at the end of the day. So look, I expect elevated year of year capacity in the region to exist for approximately another 2/4 by United and the industry. While competitive capacity tailwinds are favorable across most of our network in the coming quarters, that isn’t true in Latin America and that’s very focused on Mexico and Central America as we see in our domestic flying. We believe most of the new competitive flying in the region to the United States is unprofitable and transitory. We have a good position in Houston and we intend to hold our ground non core, non Houston flying by United that underperformed will be removed. And I’ll also say deep south flying is setting up for a nice peak season and drive and improvements. But you know, core United capacity to and from Houston to Mexico and Central America will continue as planned. And we remain very focused on the long term when it comes to our Houston hub and our Latin American franchise.
Operator
Our next question comes from the line of Sheila Kayalu with Jeffries. Please go ahead.
Jefferies Analyst
Good morning guys and thank you. Maybe two questions. The first one, short term. Can we talk about the sequential unit revenue trajectory for Q4, the moving pieces of domestic versus international. It’s somewhat interesting that international is going to outperform given where schedules are shaping up. Can you just give us a little bit of data on the booking curve and how the holidays are looking?
Andrew Nisella
All right, look, it’s Andrew. Q4 is setting up nicely as I’ve indicated. And I think as you all can figure out, if you look at our guidance, we’re seeing really significant sequential gains in our rasms. You know what I’ll start off with is Newark clearly had a substantial negative impact on Q3 of a little more than a point. And while we’re always yield focused as a premium branded loyal airline, we did temporarily use lower prices across all products to regain share following that event. And that continued for most of Q3. New York Share did rebound first with lower yield in local leisure passengers and then with higher yield leisure and corporate business following the improvement throughout the quarter. And while the impact of bookings has largely dissipated, we did build a small deficit of Q3 bookings traveling into Q4, which is in our guide. By the way, the remainder, you know of our Q3 gap relates to the timing of events in 2024, including the Paris Olympics and CrowdStrike. And I think that’s pretty simple math that others in the industry have explained. So I’m really excited about the inflection. I think all three international entities are going to see really good sequential improvement. By the way, I think Atlantic, even with elevated capacity, will absolutely be positive in Q4 year over year. And probably the same is true for our Pacific entity. And so we did see this one time gap in Q3 based on how we shaped capacity. And I said earlier in my prepared remarks, we’re going to alter our schedule for 2026 to account for that. And then in the end across the entire globe, you know, Hawaii has definitely been a strong spot for us, but I’d say the rest of the globe is all performing at the same rate, which is a rate we’re pretty happy with when we look again at the sequential improvement.
Jefferies Analyst
Great. And maybe a longer term question, Scott, maybe for you, if you’d like to, you mentioned 100bps of margin improvement per year. How do you think about that? As CASM X rises 2 to 3% per year, it implies margin expansion is assuming RASM up low to mid single digits per year. So how do you think about the drivers of that? And obviously a significant divergence in history.
Scott Kirby
Yeah, it does. The math means that RASM has to outperform casm. I do expect that to happen. I mean you look next year it’s easy comps to start with, but you know, we just continue to have a lot of traction with brand loyal customers and deeper into the data where we won market share in each of our hubs and you know how that is reacted, you know how that is flowing through the margins, feel pretty confident that we ought to be able to get at least a point of margin per year. And I think if you kind of. Look at this year, there’s been an unprecedented amount of stuff that has happened this year, you know, kind of across the whole industry at a macro level and also to us specifically in Newark. And the fact that we’re going to grow earnings this year, I think is quite remarkable. You know, I use the word resilient, but it’s also a demonstration that our strategy, you know, if you strip all that out, you know, we grew by more than a margin. We would have grown by more than a margin, a full point of margin this year. And so we feel really confident. Dig into the data on, you know, brand loyal customers and what’s happening in each of our hubs. That that’s going to be a tailwind. And I also briefly mentioned it in my opening remarks. But we have some really big ideas on the loyalty program which we’re not going to tell you today. For anyone else asking, I think we’re going to double the EBITDA by the end of the decade in that program, which is going to have more. I think we’re just beginning to realize the full potential of the loyalty program. And there’s a lot of, a lot, a lot of Runway there.
Mike Leskinen
Sheila, I can’t help but pile on. You know, when I talked about CASM X buildup, I talked about 1 to 2% of CASM x related to inflation. After we manage, you know, have the opportunity to drive, engage and then we’re adding a point as we create more segmentation, more premium product, we’re adding that point very consciously because it’s driving consumer preference. It’s, it’s driving consumers to upgrade their cabinets, driving consumers to buy what is a premium product. And so that’s profit accretive. If it wasn’t profit creative, we wouldn’t spend it.
Andrew Nisella
And then I’ll, I’ll just pile on. Since we’re all talking, you know, for next year our premium capacity will be up two to three points more than our total capacity. I’m not going to give you guidance for next year, but we’ve, we’ve pre programmed this long ago to take advantage of these premium trends. And we know that we need to change our commercial strategies, our configurations and our products in order to achieve those arousal gains. And the good news is we preplanned it and it’s going to happen.
Operator
Our next question will come from the line of Dwayne Finnensworth with evercore Isi, please go ahead.
Evercore ISI Analyst
Hey, thanks. Appreciate it. You’ve covered a lot of good stuff already. But I wondered if we could bridge from the tone of mid September conferences to today, not really about the third quarter, but forward bookings. I assume you have a good head start on 4Q bookings and advance yields year over year. Can you comment on how much of a head start you’ve built specifically maybe on advanced book yields? And is your relative optimism about transatlantic, Is that a volume comment or is that a yield comment?
Andrew Nisella
Look, definitely over the next two months we’ve booked ourselves ahead versus last year. So we go into the, into the quarter, booked a couple points ahead, which was intentional on our part. We did use a little bit of yield to make that happen again, but that was intentional based on what we did last year and how we manage the capacity. And so we’re happy with that. On the Atlantic, you know, there’s a Tel Aviv story which is different than the rest, but Atlantic, you know, again, we’ve learned a lot about Q3 seasonality and where capacity should be placed. And we are going to be a lot more prudent with July and August in particular next year and push capacity out into the other quarters. And so as we look at Atlantic and you can see the numbers were growing pretty swiftly in Q3 or Q4. Sorry. And I’ve told you already that we expect we will be positive rasm across the Atlantic. So we properly placed our capacity, we’re aware of the demand trends and we’re very happy with what it looks like. And the last thing I’ll add is in particular for us, the propensity or the share of revenue in premium cabins is the lowest in Q3 and the highest in Q4, which favors United Airlines given our business centric airline and how we do well. And so we’re heading into amazingly, which is a point of strength, Q4 across the Atlantic, which again, I don’t think if we went back to 2017, 18 or 19, I would be able to say that. And I’m really excited about that. I think that opens up all kinds of possibilities for the airline on how we manage our capacity. And it’s off to a great start. We’re early in the quarter, but it’s off to a great start.
Evercore ISI Analyst
Thank you, Andrew. And just quickly on costs, Mike, can you talk more specifically about the maintenance expense that shifted here? It just, I mean, the muscle memory. Is such that there always seems to be something that’s going to come back and then it never does. So I think You’ve been, you know, good and conservative there. Is there an accrual for flight attendants specifically baked into the 4Q guide? And should we think about 2026 as one of your framework? Two to three years. Thank you.
Mike Leskinen
I think there are three questions in there. Let me try to address them in order. 2020, the quarter the 1% movement was primarily engines. This happens with some frequency where an engine event that we had been expecting pushes from 3Q to 4Q or 2Q to 3Q. That happens. And then yes, sometimes what happens is that another separate engine event pushes from 4Q into 1Q and therefore you don’t see the catch up. I do think you’ll see the catch up of that point in 4Q of this year. So that was the point regarding flight attendants. Look, we’ve got the best flight attendants in the business. They deserve an industry leading contract. We’re going to give them an industry leading contract. We’re hoping to get back to the negotiation table here in late October and very optimistic. We will have a ratified deal in 2026, early 2026, to get them that industry leading pay. But we’re not going to accrue for expenses in a quarter when we don’t expect a ratification in that quarter. And then your final question around 2026, I think that 2 to 3% is the right expectation for CASMX as you look over a multi year time frame. We have, we do have a bill to pay on the labor front. I’ve been saying for some time that that bill is 2 to 3 points when all of those labor agreements ratify. And so we will have some added expense relative to that in 2026.
Operator
Our next question comes from the line of Connor Cunningham with Melius Research. Please go ahead.
Melius Research Analyst
Hi everyone. Thank you. Scott, I know you asked us not to ask about the doubling of the loyalty ebitda, but it’s a pretty big carrot. So I have to ask, maybe you could talk about, you know, you redid the deal on your credit card with Chase right before the Pand. You know, I think that we’re getting up to the time where we start to renegotiate a new one. So maybe you could talk about what is the driver behind doubling in terms of a new rate and versus what you’re going to do behind the scenes. To make the loyalty program more valuable. Thank you.
Mike Leskinen
So look, I’ll start. Look, I mean couldn’t be more excited about the opportunity. There’s a lot going on in the space and I’m not going to divulge the details of our Chase contract in terms of its term, that remains confidential. But the term doesn’t go forever, just like every contract we enter into. I think the broader point is when we think about the frequent flyer program, United is a true loyalty program. You know, and loyalty is different than a reward program. And it’s important that we manage our program in that vein. And there are a bunch of things we can do to take advantage of our unique status. And we think there’s only in the United States two to four loyalty programs. Everything else we talk about is a reward program. And so we’re not going to announce it today, but we’re going to be working very hard to make sure that consumers fully understand the distinction between our program and the alternatives and the rewards and the value that can be achieved at United in a way that I don’t think has been done in the past. So I think that’s enough of a hint for now and more to come. But you know, as Scott said, we’re very excited about this and we’ll see where we get.
Melius Research Analyst
Okay, we’ll look forward to that. Maybe sticking with the, the whole hub stuff in capacity in general. Scott, I think you did interview not too long ago. You talked about how United only fights battle from the high ground. You know, when you first came there, when you guys first came there to take over United and reshape it, you talked a fair bit about the mid con hub strategy. I was hoping you could just mark where we are in terms of that rebuild. It just seems like there’s, you know, the industry’s in flux right now. There’s an opportunity to kind of start to potentially think about focus cities and whatnot. Can you just talk about the opportunity behind beyond the seven hubs in general? Thank you.
Andrew Nisella
Well, you know, I’ll start off with, I’m sure Scott can add some of his wisdom to the conversation, but we haven’t completed the United next assignment that we set out to do. We should complete that either probably in late 2026 or maybe early 2027. And that goal is to reach a certain level of connectivity, critical mass and gauge that allows us to achieve much higher domestic margins than we have traditionally achieved in our domestic hubs. You know, as I’ve said many times, and I’ll say again today, international margins lead the way United. And while I expect that to be true over the long run, I do expect the gap to be able to shrink dramatically based on, you know, what we plan for the hubs and in particular this gauge calculation we still remain under gauged. That gauge is going to change our cost convergence calculation even further, allow us to capture more share at the high end and more share at the low end, all profitably. But we still have, you know, roughly one to two more years to go. You know, we’ll figure out the exact endpoint. But after that endpoint we will take a broader look beyond our hubs at what makes sense. But you know, we’re very careful to make sure that whatever flying we add is margin accretive and that’ll be a test beyond our hubs. But for right now, still very focused on our hubs.
Operator
Our next question comes from the line of Scott Group with Wolff Research. Please go ahead.
Wolffe Research Analyst
Hey, thanks. Good morning. I’ve got two quick ones so I’ll just lump them into one. The loyalty EBITDA doubling like just a rough starting point like what percentage of the EBITDA is it today? I just want to get a sense of the base and then Mike, just your point about two to three point bill from Labor. Is that all two to three points incremental that comes next year. Have you realized some of that from some of the other labor deals? I just Want to is 5 to 10 in an incremental 2 to 3 points? I guess that’s what I’m trying to figure out.
Michael D. Leskinen
Let me take the expense question, Scott. You know this is not the time where we would give 2026 guidance and nor do we give CHASM and TRASM guidance anymore. But what I will tell you is with the underlying inflation, with the labor headwinds we expect, we feel very confident about margin expansion and growth in earnings in 2026. For more detail on that, you’re going to have to wait for the Q4 call. I’ll give loyalty to Andrew. Thank you, Mike.
Andrew Nisella
We can answer. I mean Andrew just answered a very similar question right before this, Scott, and you’ll have to wait and see for an investor day when we provide, you know, a clear breakdown of the contribution of this business. But it’s obviously a very meaningful portion of our earnings. And for those of you that have that are next in the queue, I suggest you take my recommendation to limit yourself to one question.
Operator
Our next question comes from the line of Tom Fitzgerald with TD Cowan. Please go ahead.
TD Cowan Analyst
Hi. Thanks so much for the time. I was wondering if you could just update us on the cadence of Starlink installation as we move through 2026 and then how the opportunities that opens up for Connective Media. Thanks again.
Andrew Nisella
I’ll give it A start for United Express. I think we’re over halfway through at this point with the Embraer 175s and the CRJ 550s. The experience on board the aircraft, by the way, is amazing. Hopefully everybody tuned into the Today show yesterday to see that demonstration on board and if you haven’t, you can find it on social media and TikTok because it was quite amazing. Our first 737, 800 took off yesterday from New York to Houston with dramatically higher NPS scores. Like off the chart on that aircraft equipped with Starlink. It is a game changer, a gate to gate experience. Reliable and as fast as your living room. This is going to be a unique differentiator versus our other competition. And I tell you, like, of all the things we put on board aircraft, all the changes we made, whether it’s wine or food or better seats, Starlink could be the biggest of them all. And as you pointed out, one of the more exciting things is how we intersect Starlink and the ability to deliver unique content to each and every seat in our connected media business. Obviously we have I think through the end of 2027 to install Starlink on all of our aircraft and we’re going to do it on every single one of our aircraft and when we have that fully enabled, so it’s still a bit down the road the unique things we can do by knowing who’s in a seat and being able to deliver unique content to that seat very quickly. And by the way, that’s not only the media opportunity, but that’s about delivering aids to help in the travel journey. Whether you’re luggage made in onboard the aircraft or what you’re about to eat, or any other thing you need to know to make sure that you are stress free when you travel on United Airlines. So, so, so much upside. Again, I’m going to go back. The NPS scores on that flight the other day were off the charts like a game changer for United. We couldn’t be more excited about this. It’s one of the biggest things we’ve done in a really long time and maybe underappreciated, but it will soon be appreciated.
Toby Enqvist
And if you want to geek out, this is Toby on that statistics. We had 145 paying customers, 170 devices connected on the inaugural and the 145 gigabytes used on the flight, which is about a thousand times more than a normal flight. But it’s cool. For the nerds out there.
Operator
Our next question comes from the line of Mike Lindenberg with Deutsche bank, please go ahead.
Deutsche Bank Analyst
Oh, yeah. Hey, good morning, everyone. You know, Scott, I know this fourth quarter I believe you’re going to be making a decision on the future shape and size of your widebody fleet. And I know historically, or at least the prevailing view has been that bringing on another airplane type, especially on the widebody side, you know, comes with, you know, various pain points. Can you just discuss some of the. Factors, like how has that evolved or is it still as prohibitively expensive to bring on an additional type? Just your thoughts around that. Thanks for taking my question.
Mike Leskinen
Hey, Mike, this is Mike. I’m going to take that question. You’re right. We’re always thinking about fleet decisions and this fourth quarter is an important decision for us. There are complexity costs around having additional aircraft types. That is always true for United. Given the nature of our hub network. That has not changed. The larger we grow and to the extent it’s a larger sub fleet, that gives us, that gives us opportunity to mitigate. But there are also different capabilities of different aircraft and you need different range and you need different gauge. And so we’re weighing those against one another and we’re weighing the price and we’re weighing the expected maintenance cost of the aircraft. And we’re going to make the decision that optimizes profits for the long term for United States. So stay tuned.
Operator
Our next question comes from the line of Asavi Scythe with Raymond James. Please go ahead.
Raymond James Analyst
Hey, good morning. I was curious if you could remind us again how you’re thinking about the fleet plan. It seems like you had a few more deliveries this year than you had initially planned. So Airbus and Boeing getting their act together. So curious how you’re thinking about kind of 2026 and how that progresses. Thanks.
Michael D. Leskinen
Look, Boeing is definitely getting their act together on the near body side and we’re getting some additional deliveries versus what we had expected. And I think that’s going to continue in 26 and maybe even 27. On the widebody front, we’re still seeing some delays, although there’s reason for some optimism on that front as well. To the extent that occurs, we’ll see additional deliveries that’ll drive Capex up in the short term. But the up gauging on the narrowbody side in particular, combined with the financing terms and our prices, it is margin accretive. It’s pretty quickly actually even return on capital accretive. And so we’re welcoming some faster deliveries of delivery of aircraft. And as I talk about free cash conversion, you know, we run A whole multitude of scenarios and I feel very good about accepting expanding free cash conversion even with growing capex.
Operator
Our next question will come from the line of Robbie Shanker with Morgan Stanley. Please go ahead.
Morgan Stanley Analyst
Great. Nice morning everyone. Apologies if I missed this, but I think there hasn’t been much talk of the government shutdown so far. If you can just help quantify what you’re seeing out there, what are some of the puts and takes in terms of the range of outcomes and whether that is your act of God building your guidance for the quarter. Thank you.
Scott Kirby
Okay, I’ll try. First, the controllers. Despite a lot of the press, the controllers are professionals. The vast majority of the controller workforce is showing up to business. We also have more communication and coordination at all levels with the FAA than I ever have seen in my entire career. And the some of those two means that the system is actually running well. We have our lowest cancellation rate in a decade for October 2nd best on time performance from a bookings perspective the first couple of weeks. You know there hasn’t really been a measurable impact in the first couple of weeks of October though. I think the longer this drags on obviously the risk will grow on both of those points. So I hope our politics, politicians will figure out how to get in a room, compromise and get something done.
Mike Leskinen
Robbie, to your question of an act of God, I think we calibrated the range of earnings per share for Q4 with government shutdown in mind. It’s one act of God, not two acts of God. But we’ve got, we’ve got reasonable room there for, for continued, continued government shutdown. But it’s not, you know, it’s not infinite.
Operator
Our next question comes from the line of Brandon Oglensky with Barclays. Please go ahead.
Barclays Analyst
Hey, good morning everyone. And I think I’m going to ask like a nerdy and geeky question of. Andrew here, but speaking of brand oil. Airlines versus commoditized low cost carriers, I think from our perception the booking window. Might actually be shorter at the lower end of the market, especially for like a spirit right now. So I guess can you talk to. We’re going to see another big chunk of capacity come out of the loan. Of the market here that’s disclosed by. Them in their reorganization plan. How is that going to impact Dynamics competitively especially as we go through the fourth quarter here. I don’t mean to make this a. Near term question but I guess any. Insights you can provide would be helpful.
Andrew Nisella
Sure, I’ll give it a try. You know, clearly future schedules have been recently loaded that are materially different than past schedules and unprofitable capacity is leaving the system. You know, certain airlines definitely have a very close in booking curve based on, you know, pricing and how they price. Relative to others, I suppose is the. Macro level thing, I would say. And their booking curves are different than United’s booking curve because we have a full range of customers and products and flying all over the world. What it means for the future as more and more unprofitable capacity comes out, we’ll continue to continue to adjust. But I’ll tell you, a basic economy is an entry point. There’s always going to be ultra low cost carriers in the marketplace. They may have different names over time and we will always be competitive with them. The one thing we do think is going to change is unprofitable fly in is going to be diminishing because it just doesn’t make sense in the long run, whether it be for United or any other carrier. You know, we’re going to make adjustments to Q3 as I reiterated earlier and others will have to and are being forced to make adjustments. So it’s a really great setup as that unprofitable capacity and that commoditized capacity leaves the system and supply and demand rebalance to great outlooks.
Operator
We will now switch to the media portion of the call. If you’d like to ask a question, please press Star then one on your telephone keypad. Please limit yourself to one question. Please hold for a moment while we assemble our queue. Our first question will come from the line of Narajchoksky with the New York Times. Please go ahead.
New York Times Reporter
Hey, thank you. I was just curious. You guys have talked about how, you. Know, premium demand will, you know, be resilient in a downturn. Can you just kind of talk through. A little bit more about, you know. How that is, why that, why you believe that?
Scott Kirby
Sure. You know, actually I call it brand loyal demand instead of premium demand to start with. Because many of our brand loyal customers are flying in economy. They sometimes fly up front as well, but they often are flying in economy. And that demand has been resilient, I think is resilient. There are people that one in many cases do have the incomes to continue traveling. Travel is high on the list of what people want to do. And most of those people do. Many of them are business travelers that are flying for business. And because you have higher share there, that’s what really makes that resilient. You know, if demand kind of bleeds off on the lower end when there’s economic stress, there’s more seats available on United Airlines for those brand loyal customers. And so it makes it resilient. You can see that, you know, in our results this year. I think.
Operator
Our next question comes from the line of Rajesh Singh with Reuters. Please go ahead. Hi.
Reuters Reporter
Thanks for taking my question, Scott. I have a question on Russian overflights. United said this week that restrictions on flying over Russia means you are effectively barred from flying directly to China from Chicago, Washington or New York. And United has called for a expanding a proposed ban on Russian over flights to include Hong Kong. Should this ban be included to other. Countries to bar their airlines from using Russian airspace for flights to the US and the second part of my question. Is that how much of a competitive disadvantage is it for US Airlines compared with other non US Carriers that are currently using the same?
Scott Kirby
Well, I’m a focus on China and I absolutely think this is just a matter of basic fairness. The Russian government does not allow US Airlines to fly over Russia and we are competing with Chinese airlines that are allowed to, by the way, a country that is supporting Russia in the Ukrainian war and you know, perfect example is we used to fly from New York to Hong Kong and we cannot do it now. And we’re competing with a Chinese airline that is allowed to fly from New York to Hong Kong. And that just isn’t right, that isn’t fair. And all we want is a level playing field. And I absolutely think we should get it. And I really appreciate that this administration is looking at the issue and focusing on the issue. And it started they started with Beijing and Shanghai. And I hope they will continue the logical efforts and include, you know, the other large Chinese city, Hong Kong, in those efforts.
Operator
Our next question comes from the line of Leslie Josephs with cnbc. Please go ahead.
CNBC Reporter
Hi, good morning. Thanks for taking my question. With the shutdown, is there a certain point that you think the airline could start feeling some of the impact? We heard from another airline that maybe if it went on for 10 days longer, which we’re kind of in that territory now, that things could get a little bit more difficult. Is there, you know, any sort of. Cutoff that you see there? And then second, there are a lot. Of other airlines, large and small that. Are trying to go premium now. How successful do you think that can be and how long do you think it takes to, I guess, to go upscale in certain products?
Scott Kirby
So on the first question, the answer is we don’t know. This is a little unprecedented or at least it doesn’t happen often. So you don’t really know. So I think that at least for the first couple of weeks, people thought it was going to get resolved. So they just kind of continued business as usual. But as time goes on, as people read headlines that say it’s not going to get resolved soon, people start to lose confidence in the government and the government’s ability to resolve this. And that’s when it starts to impact books. I don’t know when that happens. It’s not some step, magic step function. But every day that goes by, you know, the risk to the US Economy grows. So I hope we will avoid an unforced error here. And the second question on other airlines, look, we’ve been doing the investment in the customer for a decade. It is a bill, it is billions of dollars of Capex and opex. There’s two ways that you can get market you can get revenue improvements from the kinds of premium investments that people are making. One, you get your own customer base to buy up to those products. Two, you can get market share shift. The other airlines I think will have some success in getting their own customers to pay more for some of their products. But the biggest upside is getting market share shift. And you’re not going to get market share shift away from an airline that’s been investing for a decade like, you know, another airline getting a little bit better than they are today. Is it going to come nowhere close to what United is? And a brand loyal customer is not going to say all of a sudden, you know, airline X, you know, closed one of 100 points of gap between United and them. So I’m going to switch my loyalty. They’re going to stick with United. So I think they might have upside in their own customer base, but there’s really not much upside in the market share shift part of it.
Operator
And I will now turn the call back over to Christina Edwards for closing comments.
Director of Investor Relations
Thanks, Regina. Thanks for flying with us this season. We’ll see you again next quarter. Please contact Investor Media Relations if you have any further questions. Thank you.
Operator
Ladies and gentlemen, this concludes today’s conference. You may now disconnect.
This transcript is to be used for informational purposes only. Though Benzinga believes the content to be substantially and directionally correct, Benzinga cannot and does not guarantee 100% accuracy of the content herein. Audio quality, accents, and technical issues could impact the exactness and we advise you to refer to source audio files before making any decisions based upon the above.
Photo: Shutterstock
