United Airlines CEO Talks Industry Challenges

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News.

**Lisa Abramowicz** (0:07)
To Rio de Janeiro now, that's where our colleague Lisa Abramowicz is, of course, co-host of Bloomberg Surveillance.

**Scott Kirby** (0:11)
She's sitting down with the CEO of United Airlines, Scott Kirby.

**Lisa Abramowicz** (0:14)
Lisa, take it away. Thank you so much, David. I am here, still in Rio, with Scott Kirby, the CEO of United Airlines. Scott, always wonderful to speak with you.

**Scott Kirby** (0:22)
Great to be here, Lisa.

**Lisa Abramowicz** (0:23)
Thank you for being here. I was actually surprised by the tone here, and I shouldn't be surprised because every conversation I have with different executives in the airline industry, things are better than expected. Demand is actually picking up. It's been more resilient. This summer is going to be a record summer. You're hearing the same thing. Is that kind of your tone as well?

**Scott Kirby** (0:37)
A lot of questions for people around the globe, really, because we're US airline, obviously, what do you think is going to happen in the Gulf?
And people are worried about oil prices. But demand, certainly, US, anything related to the US, feels strong. I think there are other parts of the globe that maybe are a little more concerned about demand, but really strong in the US and mostly strong around the globe. People have the view that hope that this gets resolved at some point and that we're back on track to what was looking to be a really good year to start the year.

**Lisa Abramowicz** (1:04)
Where are you seeing demand kind of fizzle around the world, or at least fade just a touch, in response to higher prices?

**Scott Kirby** (1:10)
We don't really see it at United, because 80% of our traffic, even international traffic, is US point of sale. But you can, I think, see, you know, starting to see the glimmers, and you know, Asia is the first place, you know, the impact of oil and refinery issues in Asia have been the worst. And, you know, I think Africa, you know, certainly the Middle East has had an impact. So you can, I think, sense some worry, not really evidence of weakening of demand, but, you know, you talk to people in one-on-ones, you get some concern that if this goes, you know, sort of in the standard line all along, if this goes till July, it's going to be a problem. And in March, if this goes into April, it's going to be a problem. And it keeps getting pushed down the road, unfortunately, because demand stays strong.

**Lisa Abramowicz** (1:52)
Well, and so, so far, you've raised prices about 20 percent, you've cut capacity about 5 percent. Is that enough? Do you anticipate more price increases and more capacity limitations?

**Scott Kirby** (2:02)
You know, time will tell. It depends on what's happening with the economy, what happens with oil prices. But I feel pretty good about where we are right now. You know, we laid out a path to getting to 100% fuel recovery. It certainly looks like we're still pretty much solidly on that path. And, you know, oil has come down a little, so that actually would move it a little earlier from when we set it. But we feel pretty good about where the demand environment is. And, you know, the consumer has been resilient, even with fares, you know. But in truth, like, fares are up 20%, but they're still, in real terms, lower than they were in 2019 So air travel, by far, the best value is part of the travel chain.
And so I've been pleasantly surprised with the resilience of the consumer so far.

**Lisa Abramowicz** (2:42)
Is it all driven by the premium consumer, who seems to be insatiable, or is it really across the board?

**Scott Kirby** (2:46)
You know, I always talk about it, at least at United, we're investing nose to tail for our customers. And most of the things that we're doing for the product apply to everyone. Seatback Entertainment, every seat, Starlink on every aircraft, you know, great new interiors, applies to everyone. And, you know, the premium has been stronger for a couple of years. It's still a little bit stronger, but it's pretty hard to, you know, I think it's been strong, you know, across the board for us. But, you know, we skew to the high end, you know, seven economy passengers are, you know, skewing towards the top end of that K curve for air travel. International, of course, skews even higher.
But we really haven't seen any noticeable cracks in demand, sort of, anywhere in the cabin.

**Lisa Abramowicz** (3:28)
I know you've been upgrading all your planes quite considerably. Yeah. Nose to tail, whether it's the full down seats to have you sleep across the...