United Airlines Holdings Inc (UAL) — Q2 2021 Earnings Call Transcript

Thanks, Brandon. Good morning, everyone, and welcome to United's second quarter 2021 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 more thorough descriptions of these factors. Also, during the course of our call, we will discuss several non-GAAP financial measures. 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 Chief Executive Officer, Scott Kirby; President, Brett Hart; Executive Vice President and Chief Commercial Officer, Andrew Nocella; and Executive Vice President and Chief Financial Officer, Gerry Laderman. 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.

Thanks, Kristina. Good morning, everyone, and thanks for joining us today. It was great to see many of you in person at our United Next event last month in New York. And personally, it's been great to be back out on the road during the quarter, talking to employees and customers and hearing anecdote after anecdote about how great it is to be back traveling. Thank you also to all the people of United Airlines for all that they did to take care of our customers and each other through the crisis and for all that they're doing now to truly change the customer experience at United Airlines.

Thanks, Scott. I want to start by congratulating the entire United family on our expected return to profitability in the second half of this year. United teams have worked towards this milestone of achieving positive adjusted pre-tax income for over a year and could not be more proud. During the second quarter, United continued our work to make the travel experience safer and more convenient for our customers. We recently made new enhancements to our already industry-leading app to allow customers to schedule COVID-19 tests and have results directly verified through the Travel-Ready Center platform within the United app. In May, we announced a first of its kind collaboration to use Abbott's COVID-19 home tests and app to enable our customers to self-administer a rapid antigen test and use the verified negative test result to board an international flight to the United States. As borders continue to open, we're working to make the return to international travel as convenient as possible for our customers. These initiatives make us uniquely ready to facilitate international travel and further position us as a leading international airline in the U.S. In addition, we recently launched our “Your Shot to Fly” sweepstakes, working effectively with the Federal government to creatively encourage people to get vaccinated and ultimately get back on planes again. We feel optimistic from the recent progress among European countries allowing U.S. tourists to enter with various vaccine and testing requirements. Countries such as Iceland, Croatia, Greece, Italy, France, and Spain have all begun accepting U.S. travelers for the summer tourist season. We look forward to more destination options for our customers in the coming months. We continue to encourage the Biden administration to open up international travel and appreciate the bipartisan and industry support to ease international travel restrictions. Andrew will detail further the demand surges we've seen to countries once restrictions are loosened, giving us even greater confidence regarding the long-term outlook for international travel. On the domestic side, all states have reopened local economies and removed travel restrictions, enabling the surge in domestic leisure travel that we are currently seeing. We remain focused on United's transformation to be the airline customers choose to fly. We have already eliminated change fees. And with our new aircraft order, we will improve the customer experience. We're adding feedback entertainment on all our aircraft, improving Wi-Fi, and innovating with customer-friendly technology like ConnectionSaver. We saved over 140,000 connections in the second quarter.

Thanks, Brett. I'm going to start off today by thanking the best commercial team in the business. Our combined efforts and agility over the last 18 months led us to this moment today, announcing the generally positive TRASM and PRASM and yield outlook for the second half of 2021, something hard to imagine just 12 months ago. The revenue outlook allows for much improved and profitable financial results on an adjusted pre-tax basis for the second half of the year. And Gerry will talk about that in just a bit. Our realistic view of the pandemic's impact on our business and industry was sometimes questioned. However, a realistic assessment from day one combined with capacity corresponding to real demand—not what we hoped demand would be for the keys—prepared us for what comes next.

Thanks, Andrew. Good morning, everyone. For the second quarter of 2021, we reported a pre-tax loss of $600 million and an adjusted pre-tax loss of $1.6 billion. Our adjusted EBITDA margin for the second quarter ended down 10.7% in line with our prior guidance, with our adjusted EBITDA margin a positive 9% for the month of June. Our adjusted operating expenses for the second quarter ended down 32% versus the second quarter of 2019, which was slightly worse than prior guidance of down 33%. The entire difference, though, is attributable to greater fuel consumption and higher fuel prices, as compared to what we anticipated when we provided second quarter guidance. All of our other costs came in as we expected, giving us continuing confidence in our ability to achieve our near-term and long-term cost targets. As previously noted, as the demand environment continues to improve, we expect to generate positive adjusted pre-tax income in the month of July. In fact, we expect to generate positive adjusted pre-tax income for both the third quarter and fourth quarter this year. Despite business and long-haul international demand not being fully recovered, we are pleased that our return to profitability is expected to occur well before prior expectations. We anticipate another step function improvement once business and international demand fully return. Turning to our outlook on costs, we expect our third quarter CASM x to be up approximately 17% versus the same period in 2019, with capacity down 26% versus 2019. To put the CASM x number in perspective, while capacity may be down 26%, we are not simply flying 26% less of the same network given our current international domestic mix, where we are currently flying more short-haul domestic flights combined with the temporary grounding of our fleet of 777 wide-body aircraft. This has created an incremental 6 points headwind to our CASM x because of lower stage length and lower gauge versus 2019. Our cost outlook additionally includes investments necessary for future flying, such as training and maintenance costs. On the positive side, embedded in this outlook is the early success from our $2 billion structural cost savings plan. We expect CASM x will better represent our true cost performance once our capacity reverts back to 2019 levels and when the network begins to be reshaped with our United Next plan, and we achieve the full implementation of our cost initiatives. We are currently in our 2022 planning process and although we won't share details today, we feel confident that our 2022 CASM x will be lower than 2019. We expect that our 2022 outlook will demonstrate substantial progress towards hitting our long-term CASM x target of down 4% in 2023, and down 8% in 2026 versus 2019. Additionally, our United Next targets are enabled by our recently announced order for 270 new narrow-body aircraft, which when added to our existing order book, provides us with 500 narrow-body aircraft on firm order. We expect 191 of these aircraft to be delivered through the end of 2023. This includes 13, 737 MAX 8 through the remainder of this year, 20 MAX 8 and 20 MAX 9s in 2022, and 56 MAX 8, 16 MAX 9, 50 MAX 10, and 16 A321 NEOs in 2023. Regarding capital expenditures this year, we currently expect adjusted CapEx for the full year to run about $4.5 billion. This assumes we take delivery of all 8, 787-10 aircraft scheduled for later this year. With Boeing's recent announcement regarding delays in delivering 787, it is possible that some of these aircraft and the related CapEx may slip into next year. In closing, our expectation for adjusted pre-tax profitability in both the third and fourth quarters represent a milestone that the entire United family has worked towards since the beginning of the pandemic. Gone are the days of talking about empty aircraft, cash burn, and job losses. We have now shifted our focus fully towards the long-term path for United Airlines and the United Next plan. We believe our achievements throughout the crisis have fully prepared us to execute on our plan to both maximize earnings power and be the airline that customers choose to fly. And with that, I'll hand it over to Kristina to start the Q&A.

Thank you, Gerry. We will now take analyst questions, please limit yourself to one question and, if needed, one follow-up question. Brandon, please describe the procedure to ask a question.

Hey, good morning, everyone. Your 3Q revenue guide is very strong both relative to 2Q and compared to one of your peers. I was wondering, what factors are driving that strength and what assumptions you are building in for that business demand recovery? Thanks.

Hi, Savi, it’s Andrew. Good morning. What I’d say about our guide is that, when I said this, I think over the last few conference calls that, in particular, our coastal hubs have really suffered during the pandemic. Traffic goes down, and those hubs are a lot more than mid-cons and small community mid-con hubs and small communities around the country. We really see an acceleration in demand now, out of those hubs, including leisure and business for domestic in particular, which is really great to see. And it goes to say again, that those headwinds, which were so significant during the crisis, are going to flip to tailwinds for United and provide us, I think, a lot of opportunity going forward. A little more color, for example, Newark in Q2 of this year was really our worst performing revenue hub. We expect Newark in Q3 to be one of our best to give you a little bit more color on what we're seeing there. So there's a lot more to come. I think I'm really excited about this because these headwinds were just so significant during the crisis and I think they’ll be tailwinds as we come out of the crisis.

Andrew, just a follow-up, too. It seems like you did a lot better job of also kind of tilting towards leisure recently, maybe not similarly to some other airlines. But just wondering, what mix of those new markets or capacity remain on as things normalize and just really trying to understand if there's an opportunity here to change the seasonality of the network?

Excellent question, and thank you for the vote of confidence there. We did, as I would say, tilt our capacity towards more leisure-oriented markets during the crisis. And we continue to do so and will do so for at least the rest of this year. The tilting of those ASMs towards more leisure-oriented markets, I think, has helped us during this recovery. To the extent, we did that better than others, I think our revenue forecast will be better than others. And so we're pretty proud of that. We do intend to keep a bigger footprint in these leisure markets going forward, particularly in Florida, where United was undersized. And that undersizing had led to Q1 results for United that could seasonally trail others. We're hopeful that on the other side of this crisis, as we rebuild the airline and we rebuild the network, we're going to build this better. We're going to be a bigger player in these leisure-oriented markets in the Q1 time period than we have historically been.

Good morning, everyone. Just really kind of a follow-on to Savi's question on revenues. Maybe Andrew, can you talk about how the booking curve has sort of changed over the course of 2Q now into 3Q? I would assume you have a lot more visibility today in terms of your 3Q revenue outlook as compared to back in April? And is there any color you can maybe give us in terms of what percentage of your anticipated 3Q revenues are already booked right now and how that compares to normal periods?

Sure, everything is starting to return to normal, which is great to see. Right now, about 60% of our revenue for Q3 is on the books. We have, obviously, I think really good visibility in July and August. In particular, I'd say August looks quite good. September, we have less visibility into, but we still feel very bullish about that as business traffic returns. So overall, things are returning to normal. The booking curve isn't exactly normal yet, but it is quickly getting there, particularly from the domestic point of view. So hopefully, that takes care of your question. But again, about 60% is booked. I'll also add that we do expect positive PRASM in all three months for the domestic entity for the quarter.

Got it. That's helpful. And then, Gerry, you called out the CASM impact from the stage engaged differentials here in 3Q of the 6 points. Should we think about that as a similar impact on TRASM as well?

Yes. Stage and gauge obviously impact all those stats. So there is going to be some impact as well on TRASM.

I will add. The dilemma we faced from a capacity point of view is the 777 aircraft that are grounded are large capacity domestic movers. We used those for Hawaii and hub-to-hub. Right now, we're flying well below where we like to be in Hawaii. It goes without saying that Hawaii is an incredibly strong part of our network. We would have absorbed that and I think we would have still done very well in Hawaii, even with those extra seats. Domestically, within the continental United States on the hub-to-hub missions, our load factors are just off the charts. Simply put, we have a clog in the system because we don't have enough gauge between our hubs to process the appropriate number of passengers through them. We really want those aircraft back. We think those aircraft are essential to our CASM. They also unlock better results and more connecting traffic through our domestic system. Hopefully, that gives you color as to how we think it impacts CASM as well as TRASM.

Hey, good morning, everybody. So Scott, kind of a follow-up to a question I asked you in New York with the event a couple of weeks ago. I noticed that bad things seem to happen to the industry every ten years or so. So as it relates to the 2026 guide, it looks like we're probably in the clear. Anyhow, the follow-up here…

That’s definitely a glass half-full perspective.

So you have these financial targets. You have your largest aircraft order in history. If we do hit some sort of speed bump, do you sacrifice the targets? Or do you adjust the CapEx and the delivery schedule? Basically, is the order book sacred? Or is it a lever you can pull to protect the financial targets just trying to better understand the priority there?

Well, I’d like to let Gerry start.

Yes, Jamie, as we said at that event, certainly starting in 2024, we have enough flexibility in the order book to be able to adjust based on what the macro environment would dictate. So that's a decision we can make as we approach the later years of it.

And I just would add also that we've created a track record, and it is certainly true that we are committed to our targets. When we put targets out there, we're committed to achieving those targets. We're going to achieve our 2023 and 2026 targets. And if that requires adjustments in the plan one way or another, we'll make adjustments to ensure that we achieve those targets.

And Jamie, yes, one of the nice things about this order as well as our fleet that has some aging aircraft, simply replacing those helps us with gauge, which aids in achieving those targets.

Okay, that's helpful. Thank you both. And then, just a bit of a modeling question. There wasn't a huge change in fuel efficiency, just looking at $0.08 per gallon from the first quarter to the second quarter. I mean, a little bit of an improvement. But with more international turning on in the current quarter, can you give us some consumption guidance for the fourth quarter as well if you happen to have it?

Jamie, I can't give you a precise number right now, but keep in mind just given the mix with a higher proportion of regional flying, as the wide-bodies come back and revert to normal that will help the fuel efficiency.

So maybe one more on cost, as we move to unit costs being down from 2019 levels next year, outside of capacity, what are the other tailwinds we should be thinking about? I know you called out the 6-point impact from gauge and the 777 grounding. But outside of that, are there some ramp-up headwinds today that we should think about abating as we move into the fourth quarter in 2022? And just any color on the size of that impact? Thanks.

I think the most significant tailwind actually aside from gauge and stage length reverting back is the ramp-up of the structural cost saving. If you want to model something right now, we'll give you some more color as we finalize '22. But right now, you could model that about half of those savings are in our numbers for the rest of this year. Starting in 2022, early in the year, first quarter, you could say that 80% ramping up to 100% by mid-year. So that's probably the most significant tailwind I can think of as we normalize the business.

That's very helpful, thank you. I have a question for Andrew regarding the Chase extension that was announced in February 2021. At that time, you mentioned a potential $400 million increase in annual cash flow, but then the pandemic hit, and we didn't get further details or a timeframe for achieving that. I'm assuming that the pandemic may have delayed progress on that front. Could you share how much of that increase has been reflected in your P&L so far and how you anticipate it will trend over the next year or two? Thank you.

Yes. Definitely everything has been interrupted by the pandemic, although, we have seen recently, where our numbers are now equal to or greater than 2019. So we're pretty excited about that. With our new agreement with Chase being effective then and impacting our financials already, we see our relationship with Chase is incredibly good right now. We're developing all creative ideas, new products, and that's fueling card growth and the new number of cards we’re putting out there and spend on the historic cards. So that's an answer to the question you'd like to hear. The relationship has gone well, which gives me great faith that we're going to hit the targets we put out there. I don't have the exact timeline, but it was clearly interrupted by the pandemic, and we are back on course.

So maybe, it seems like capacity additions are coming back at a faster rate. I appreciate the coastal hub. Can you maybe provide a little bit more color around CASM x below 2019 and 2022? What are your assumptions around capacity and maybe the mix of international and domestic?

It's still a little early to give you the capacity guidance; we will do that in the normal course but I can tell you, given the size of the fleet as it stands today, we expect 2022 capacity to be higher than 2019. We'll provide more precise numbers in the normal course.

I think with the incremental widebody jets that we have available, along with our expectation about what the transatlantic market is going to look like next year, it wouldn't shock me if we see international growth faster than domestic growth for next summer.

Yes. I guess on that note, somewhat related to that big picture, you mentioned in your prepared remarks on the international side, you're one of the carriers that have kept your widebodies going. So that supply/demand picture might look more attractive as international comes back. But domestically, what we're seeing is that low-cost carriers are doubling their fleet or expanding their fleet substantially, as you guys are to and increase gauge. How do you think the supply/demand picture plays out through 2026? How do you think United is positioned with that?

Well, I'll just go back to our United Next plan, where I think we have thoughtfully discussed all the details there. We're working to ensure that we build our connectivity, our schedule depth, and most importantly, our gauge. These factors, coupled with our customer focus, will drive our profitability in really unique ways relative to many of our competitors over the next few years in an industry where we absolutely expect elevated domestic capacity growth for everyone over the next few years. We feel really good that we've identified this; we've articulated a way to manage it here at United from a revenue, cost, and customer perspective to meet the targets that Scott laid out in New York a few weeks ago.

Do you think that investors, Scott, should just ratchet down our permanent expectations for pricing power for this industry?

No.

Why not? I mean, it's so clear that the market puts multiples on industries that can price, and the decision to deflate pricing and outrun it with lower CASM. It's hard to see why that makes sense when it is such a clear track record for this industry works is when they're pushing price. And look what you just did right now with the yield performance—not suggesting you're going to be down 25% forever, but I'm sure it was pretty satisfying to be able to push that price.

First, I disagree with the premise of the question. I recognize you've got a perspective respect that. But we had a pretty good track record in 2018, 2019. I think it was your research report that pointed out we grew EPS by 74%. This is largely a continuation of the strategies that were working well, with improvement. I think we're really focused on decommoditizing air travel and enhancing customer choice. It's about far more than growth. But even the 2018, 2019 plan was working. Your research report seems like the best evidence that we can do this without deflating prices. I'm confident that we're going to do that; I'm particularly confident that when you consider the mix of the international market and our revenue percentage combined with our ability to decommoditize travel domestically, our targets for 2023 and 2026 are arguably conservative, and that's going to ultimately be good for our shareholders.

Okay, yes, thanks for the time, Scott. I don't want to be disrespectful here. I'd appreciate the conversation. A quick modeling question for you, too, I have for Gerry. Should we assume that the SWB CASM is going to be in ‘22 and ‘23 above or below 2019, if you are willing to help us out with that?

I'll follow up with you offline, Hunter.

Sorry. No, we'll get to those numbers.

So kind of a different question. You have an open contract with your pilots. I know you have the letter agreement to agree to the differentials, so that you can ramp up as the recovery occurs. Can you just talk about how you're thinking about entering those negotiations again? And I don't know whether it's 2021 or 2022. But when should we think about that contract again?

I think part of the underlying premise of your question also points out that we've had a really good working relationship with our pilots throughout the pandemic, working hand in hand with them. At the end of the day, we are confident that we'll reach an agreement that will work for both our pilots and for the overall company. But as you can imagine, we don't discuss specifics of our discussions, negotiations, or the timeframe for reaching agreements in public or on earnings calls. But I appreciate the question.

Okay, well, that's helpful. Thank you. Just the other question is, as we think about the improvements that you're talking about, and efficiency, I don't know, Andrew or Gerry? How should we think about it, like working through the next 2.5 years? Are you just going to give us guidance every quarter for how we should think about those efficiencies? Or is there some number beyond minus 4% in 2023 that we'll be able to mark to?

Helane, that's really the crux of the $2 billion of structural cost saving. As I mentioned earlier, by next summer, I would expect 100% of those in the numbers. We will continue to provide guidance. Keep in mind those structural savings include savings that will grow as we grow the airline. It will be reflected in our ongoing CASM guidance over the next few years.

Just a couple from me on cargo. Andrew, I think you said no more dedicated freighters. I assume this is just a function of passenger demand coming back. But maybe you could just expand on that. If we think about your cargo capacity in total, maybe no more freighters, but more longer-haul flights coming back. How do you think about your cargo capacity in total?

Sure, correct. We are not going to be able to do more cargo-only flights, and we're obviously disappointed by that, given the current yield. The reason for that is the aircraft can be better deployed in passenger markets. Many of those passenger markets are also not exactly optimal cargo markets; they do have cargo, but they're not optimal cargo markets. The 52 777s that are grounded means we just have less flexibility on this front than we would otherwise have. If those aircraft were flying, we would continue our program missions because we'd have the ability to do both. When we look at the capacity available to fly, it is still significant as we put all these passenger planes back in the air. We think we've properly accounted for all this in our forecasts, and we expect to have another great cargo quarter in Q3, which has already gotten off to a strong start. That being said, it'll be different in the amount of cargo flights. But all numbers are in there, and hopefully, we can do a little better on cargo than we are currently planning. There has been a marked change in our cargo footprint, starting today—really starting a few weeks ago—and we'll see where it goes. But we feel very bullish on cargo for the remaining half of this year.

That's super helpful. Just for my follow-up on Scope. Scope is something that United talked a lot about in the past. Obviously, in the recent investor update, you talked about the big upgauge from 50 seaters. But I think just thinking about high frequency with 50 seaters going fully to mainline might imply less frequency. I have to think there are many markets where a 70 or 76 seater would be optimal. How should we be interpreting a kind of a lack of commentary around Scope? Is it something maybe longer term or beyond the forecast period that you think still makes sense?

To be clear, when we induct a MAX 10 or an A321 NEO, it's not replacing the 50-seater CRJ. There's a cascade that starts at the top, which goes all the way down. So 50-seater routes today will often go to 70 or 60, which is in the new United Next vision. The economics of that are a little different from what you may have described. We still intend to serve smaller communities in the United Next plan, while growing by gauge. We think that’s the right way to approach this, given where our hubs stand, particularly our mid-continent hubs, where most of the growth is gauge rather than frequency. So hopefully that helps answer the question.

It's a bit of a follow-up to the high-risk question again. But I'm curious if you've thought about perhaps using a return on invested capital or efficiency metric to go alongside your pre-tax margin and your pre-tax income, financial metrics, which govern your long-term incentive schemes as a way to sort of answer the question around the efficiency of assets being put underutilization?

We actually always look at the return on investments we want to make, and our rule of thumb is kind of mid-teens to justify those investments. That said, I think at the end of the day, pre-tax ultimately is the best way to look at things. The other components just all go into that, but we do look at returns on the investments we're making.

Okay. But not in the form scheme, just pre-tax income is the governing metric?

I think it's just the one that reflects how we expect to do.

Hey, Myles, this is Mike Leskinen. I would just add that even if you think about replacing some of the older aircraft with new technology, you look into 727 MAX aircraft. Even in that scenario, you're getting a mid-teen return on invested capital. And so while return on invested capital drives pre-tax margin, ROICs are well ahead of our weighted average cost of capital and it is a hurdle.

So Scott, I wanted to talk kind of at a high level here about how investors should think about the upside you see in decommoditizing travel. We get a little pushback that this is just a buzzword, if you will. I'm just wondering if you can talk about how much of this is really about a revenue premium that you can earn from having higher priced seats on a departure. If so, is there a way to think about that relative to the revenue you might have earned without the strategy? And also, if you could talk a little bit about whether this is also about limiting how much of the inventory that you put out in the market is actually exposed to low-cost competition on a day-to-day basis, and how that might be changing over the next couple of years since you implement this United Next strategy.

I'll start and Andrew can add on if you want. On the point about decommoditizing air travel, it's hard to put a precise quantification on it today. But I think customers do care about quality and do care about product. If you get on airplanes and talk to customers or just watch airplanes and people flying, that is an inescapable conclusion. There's at least one airline in the U.S. that embarked on this a decade ago and it was quite successful. There's certainly room for two of us in the United States. It's the largest travel market in the country for two of us to pursue that strategy. And frankly, United has, I think, the most opportunity because our hubs happen to be in the biggest premium markets where our seven hubs are. I think there's more upside for us than anyone else to pursue this strategy. I don't know for sure how much that translates into a revenue premium or growth faster than the rest of the industry because it's not as easy to quantify, but I'm confident it will lead to stronger results for United.

The only thing I would add is that flying approximately 300 single-class 50 seaters with no premium product on board at all, up against competitors that had premium products is just a step change function for United as we take that number down. We already saw with the introduction of the CRJ 550, which is our 50 seat dual-class aircraft, really great progress prior to the pandemic on being able to monetize those premium seats. We see our competitors do it all day long. We were simply underrepresented in this category and flying the wrong aircraft into big cities with no premium seats. Our hubs have a lot of premium demand, and we were just under-indexed to it. That was wrong, and we're going to correct it quickly.

Scott or Gerry, can you talk about CapEx needs on the widebody side? When do you need to address that with an order? When do deliveries start, do you think? Also, based on that, in what year do you see yourselves getting below $7 billion in CapEx?

Actually, I'm looking at Andrew, who always wants to ask me for aircraft. But keep in mind, over the last few years, we've taken 20-some odd wide-body aircraft, we haven't retired and we have a lot of widebody aircraft, Andrew's talked about that. The focus right now is really on the narrow-body. Andrew can provide some color, but I can tell you that it depends on both the speed of recovery throughout the world and then the opportunities that Andrew and his team have.

Yes, Gerry, I'll just add to what I think I've said, but I want to reiterate it. Because we took delivery of a large number of wide-body aircraft, or we ordered some right prior to the pandemic, those aircraft are coming online over the next 12 months. We have the ability to schedule approximately 30 incremental widebody jets for the summer of 2022. That really does provide a lot of growth potential during a time when the market conditions can optimize that. The second thing that I said a few weeks ago, that I'll reiterate is we're carefully reviewing the economic lifespan of these wide-body jets. I can tell you prior to the pandemic, we were thinking many of them, particularly the 777 and 767 fleet could go 30 years or more. Kudos to our maintenance team for keeping these aircraft in great shape and allowing us that optionality.

Okay. So do you expect CapEx to come back down to the $3 billion to $4 billion range in 2025 or is it still elevated? And then, Scott, you talked, I think, last call or the call before about doubling loyalty EBITDA. I haven't heard much on that. Is that like an aspirational goal that we should discount significantly? What are the drivers behind being able to achieve that? Thank you.

Well, it's our goal; I wouldn't discount it because I think we're going to do it. But you can choose to if you want. This is one of those that, until we have something to announce, we will not announce anything, but I saw the team meeting earlier this morning on it. They are seeking an update later today to get further information. There is a lot of activity on it, but we're not prepared to say anything publicly until we're ready for a big announcement.

It's too early to really give CapEx projections beyond 2023.