Ca$htag$: UAL Soaring Above Rivals, Fuel Costs Weigh on Outlook

SPEAKER_1 (0:00)

Time now for our Cash Tag Segment for that. Let's bring in our next guest, and that is Andy Swan, co-founder of LikeFolio with a deep dive into United Airlines ahead of its quarterly results. So you've got fresh sentiment data on United. That one is the hub for me where I am, so usually that's my airline of choice. What is your latest sentiment data look like?

Andy Swan (0:20)

It looks like it's becoming a lot of people's airline of choice. The really good news, I think, for United shareholders here is, flying United is cool again, and that's where people are flocking. We're seeing web visits to United up 15% year over year, which is significantly higher than both Delta and American. Posts about flying, user-generated posts about flying on United up over 50% in just the last four weeks versus the prior four. A lot of this was that controversy, if you want to call it that, that Delta decided not to go with Starlink because of a seemingly personal beef with Elon Musk. And United captured on to that and said, hey, we'll take your miles over here at United if you want to transfer them from Delta, we'll give you some status, et cetera.

That seemed to have a pretty good impact. We'll have to see how that follows through to actual bookings into the future, but from a brand perspective, United is really hot right now. On the flip side, fuel prices are a big problem. We expect that to dominate the earnings call. And so, our big takeaway here is long-term, United has done a phenomenal job of reinvigorating its brand of bringing people into its ecosystem in terms of status and loyalty.

And so, they're in a good spot as long as travelers keep traveling. And they're in a really good spot if fuel prices can come down for them. But that's outside of our purview. So for now, we'll just say, United is finally cool again.

SPEAKER_3 (2:07)

You know, Andy, it seems like the intent on your chart, you know, up 112% on a year-over-year basis. That's right, because people are looking on a daily basis, hey, I need to book this flight. But it's really expensive and those costs continue to move to the upside, even though purchase, booking a flight's up 12% on a year-over-year basis. Is that the key, Andy? Are you guys seeing any signs in your data that people are just, instead of actually booking it and paying up, that they're actually pulling back and they're saying, I just can't afford to spend $600 on a flight to Miami when it used to be 350 bucks a year ago?

Andy Swan (2:47)

Yeah, it's a big factor. The good news for United is that the core profitable customer, the ones that will upgrade, the ones that aren't price sensitive, are moving over to United. So they're stealing market share from the consumers that really matter in terms of against Delta and definitely even against Southwest. So they're in good shape with the consumers that really matter, the less price sensitive consumers, but from an overall perspective, I think you're right. It's just getting to the point where now you're deciding if you really need that trip. Now you're deciding if we can drive instead, especially when you're talking about families of three, four, five people, it can really add up very quickly. So we do see that pain showing through in the data, but I will say United specifically is becoming less and less impacted by that because more and more of their travelers are the higher end types that will pay the premium prices for the premium experience that United can offer.

SPEAKER_1 (3:56)

Is there anything in your data that shows a pain point for the upper part of the K at all?

Andy Swan (4:02)

No, not really. I think that that's the most surprising thing for our data is that that upper part of the K is extraordinarily resilient when it comes to air travel, paying up for a better experience. United just rolled out a lot more flights are going to be able to pre-order meals. So they're taking that experience and that more expensive seat up to the next level, really focusing on that higher end traveler. And it seems to be working. We haven't seen that traveler hit their breaking point yet.

SPEAKER_3 (4:37)

Andy, you mentioned this earlier about the fact that, and I saw all the advertising too, that United came out with after that misstep by the Delta CEO, as far as not wanting to use Starlink. Now American Airlines is going to join the fray in 2027 They're going to have Starlink. So making those decisions like that, is that the key for United? Because they're not increasing capacity, which is a good thing typically for the stock. They're going to take a hit on jet fuel cost. But this will lock people in because typically when you move over miles, you're going to be stuck with United. That's probably a positive for them moving forward, right?