All right, folks, moving right along. This should be an interesting presentation, as always. You know, I, I hate to break it to the audience, but the industry really does have a chasm problem. And the chasm that I'm referring to is that on one side you have companies that make money, and on the other side of the chasm, you don't. Thankfully, we have a company that makes money here. So with that, let me turn it over to Scott Kirby, CEO of United Airlines. Scott,
thank you, Jamie.
All right, thank you, Devon.
Bringing us, thank you.
Putting yourself back in again.
All right, welcome, everyone. So obviously it'll take a couple minutes today, and then we'll get to Q&A. I'm gonna once again try to start with perhaps a different way of explaining it, but kind of a big picture overview of where I think the industry and United within the industry is headed and how it is evolving. You know, one way I'll start it is, you know, the last four years have been quite a tumultuous time. It was four years ago, at this conference where you switched it to virtual at the last minute. I can remember getting on the call and talking about revenue being down 70%, which turned out to be wildly optimistic. No one else believed that anything like that could happen, and being amazed that our stock price went up.
And I think Mike told me that happened because you just took the absolute worst case off the table. And I thought, "Huh, man, I wish you hadn't have said that," 'cause I think this might be really bad. But it's amazing to be standing here four years ago today. And I started that story because it's really relevant to where I think we are going. And I think this is a structurally different industry, in a lot of ways. And so what I think is important from a structural perspective is there's two things that have happened. One, primarily driven by cost convergence, the whole industry has moved to a higher level. The tide has risen. The bar has moved and is gonna continue to move to a higher level. And margin will expand across the whole industry in the years to come.
But the other thing that's happening, which creates a lot of angst in the stock market, over the near term, is I'll call it a seesaw. The margins has flipped. The seesaw has rotated the other way. And it used to be the ULCCs were at the highest, then the low-cost carriers, and then the network carriers. That's a broad generalization, not exactly everyone fits. But in a broad term, that would have been a seesaw, you know, if you just plotted out the margins. And it's completely flipped, with the network carriers at the top and the ULCCs now at the bottom. And it's completely flipped for structural reasons. And I think that's the important point.
And I'm gonna try to talk about today in a little different way what has changed structurally and why even today's updates make sense, in the light of a structural change in the industry. And for me, I wanna think about this and talk about this. I have thought of the world for a long time from a customer perspective in kinda three broad segments of customers. These are; this is a little bit of an oversimplification, 'cause they're blending between them. But think of it as premium travel, the kinds of customers that buy premium products. They also typically fly globally and, you know, are using their miles globally and travel more frequently, but pay more. Domestic road warriors, whose travel is mostly domestic, but they do a lot of traveling. You know, they fly from Phoenix to Los Angeles back and forth.
They're on the road all the time. I call those domestic road warriors. And then the third is price-sensitive customers. And pre-pandemic, United Airlines was good in all of those categories, but there was either one airline or some section of air some subset of airlines that was better. So we're sort of second tier in each one of those categories. And what's really changed during the pandemic is we took steps to move to the top tier in all those. And I might think we're the best in each of those categories, and I do think we are the best in those categories, but it doesn't even matter. What seems to me almost inarguable is, and I'll walk through each one of them, that we have moved into a competitive set with the top tier. And because of that, we're outperforming. That's what's really driving our outperformance.
You know, if you look at the premium, there was one airline that spent a lot of time investing in the premium product, and investing in the customer service. We have done that at United now. You know, I think the biggest change that's unappreciated is the change in customer service, how our people interact, behave, treat customers. You can feel it when you fly. We hear it from customers. I hear it anecdotally every time I'm out and around. I see it in our MPS scores. You can just see it across the board. I see it in our revenue data, what is happening with customers and the investment in the product that we've made, to really target premium customers. And the fact is that we have the hubs in the biggest and best markets.
And so we have the most untapped opportunity, of anyone, in that segment because of where ours are simply because we were born on third base when it came to where our hubs are located. That second one, the domestic road warriors, this has always been Southwest's strength, and their bread and butter. They've built a great airline, like, the best airline in the 50 years, the best model, in aviation history. But they had two things that were always a big advantage over United Airlines. One was the customer service. I talked about that. I think we have caught up to them, on the customer service. But the second one that we were never going to be able to win against them was change fees.
For those domestic road warriors, not having change fees if you're flying to Phoenix to Los Angeles, back and forth, not having change fees, was an insurmountable advantage for Southwest. I have spent 25 years of my career at the beginning when I figured this out, trying to, you know, create products around the edges without getting rid of change fees, to compete with Southwest and realized eventually that you had to get rid of change fees, because it's a billion-dollar decision. The only person that can make that decision is the CEO. And I was committed to for a long time, once I became the CEO of any airline, we were gonna get rid of change fees. We have, and that now means in competitive, particularly in our hubs, in competitive markets, we've taken away. We've gotten competitive with their biggest advantage.
That's not a knock on them. They do a great job. But now all of the other things that we have, the lounges, the frequent flyer programs, the international service, the bigger networks, all of those things can come to the fore for those customers. You can see it in our revenue data that we are winning in that segment. We, you know, I'm not saying even we're better, but we have gotten competitive in that domestic road warrior segment. And then the third is the price-sensitive. Here, you know, the ULCCs did something that the rest of us hadn't yet. They figured out that customers wanted a disaggregated price. You know, it took us time, but we've now finally got basic economy working and working really well.
The other thing we had to do to make that effective for price-sensitive customers is we had to get bigger airplanes in the market. We couldn't fly a 50-seat regional jet up against a 200-seat airplane and expect to succeed. We needed to have a lower CASM airplane, but also a plane that we could afford to sell the seats at the basic economy prices. So now we've created an environment where we went from being so good, but not the best, in all three of those product categories, to being in the top tier, either the best or tied with the best, in all three of those categories. And what that's meant is that our margins have improved faster than anywhere else. If you look deeper into the margins, this isn't about international or some of the things people talk about.
You know, if what I said was true, if my hypothesis was true, then we should be outperforming on domestic PRASM. That is what we are doing consistently. That's what's setting our margin performance versus the industry apart is really about our domestic PRASM and how that's increasing. That's increasing, because we've now gotten competitive in all three of those categories. This is structural to me. It's sustainable. It's why we have such confidence in where we are today, and where we're moving for the future, because we have the winning hand in each of those places, particularly in our hubs. We don't have the winning hand everywhere, but we're not gonna try to compete in places where we don't have the high ground.
And so we feel really, really good about where we are, what the future looks like at United, recognize that that's not in the stock price for us or others yet, but we think that that ultimately will be because this is structural. This is sustainable. It is a different industry than it was before. And while I do think that cost convergence is gonna cause the entire industry's margins to continue moving up, that seesaw has flipped, and the network carriers are gonna be at the top. I think we're gonna be on top within that group because we just have more untapped potential than the others. But we feel really good about where we are and where we're headed. So thanks for coming out and listening to us. And I guess we're gonna turn to Q&A now, Jamie. All right. Sit down.
Yeah. Please, please sit down. Apologies. I, I admitted, in introducing, Kristina Munoz and Mike Leskinen when I called you to the stage.
Well, I probably should have done that too.
So yeah, let me kick off. So I found your change fees commentary to be really interesting.
You've obviously been in the CEO spot now for several years, but it begs the question, at least to me, if that was a predetermined goal to get rid of those, was there anything else on your, if I'm ever an airline CEO, list of things that you wanted to change?
Yeah. You know, look, I just talked about it today, the three things. This has been in my mind for a couple of decades. And I'll take another step back. You know, I've.
From the America West days.
You know, well, not all of them, but I'll kinda give you the evolution. But I've, you know, going through my career, kind of in my mind, building the dream airline. What would I do? And we've done that now at United. It and you can see, like, by the way, everything I talked about up there, that's not, like, a projection of, "Oh, here's the future story." That's what's happened. It isn't just happening. It's what has already happened. And the first one was the Southwest, you know, competing for those domestic road warriors. And my story was I've had a friend that I played golf with in Arizona back in the 1990s, and he owned used car lots. And he told I was trying to convince him to fly America West.
And he's like, and I, he says, "You know, I go over to Southern California every week. Sometimes I buy between zero and 10 cars at auctions. If I buy zero, I wanna go back right away. If I buy 10, that paperwork takes me nine to 10 hours. I don't know when I'm coming back. And you have change fees." And that was a light bulb moment. We tried at America West a whole bunch of different, you know, like, tactical things to not have change fees to Southern California, and none of them worked. So even within 20 years ago, I concluded, like, we had to get rid of change fees to ever be competitive with Southwest. And by the way, that's an instance, you know, imitation is a sincere form of flattery. They did it really well.
One of the other things that I'm probably the only airline CEO that's done this. I've read every single transcript of every single earnings call of all of my competitors, you know, for the last two decades. And a lot of times, I criticize them for what they do, but I also learn from them when they do something, and do something well. So I've wanted to change that one for a long time. The second one was really watching Delta prove, give them credit, Delta prove that air travel's not a commodity. You know, I'd been at America West. I kinda come from that view. But watching them succeed, I became convinced that the product mattered and service mattered. We have done that at United now.
And the third one was really watching what, at the time, Spirit did to American in Dulles while American was in bankruptcy. It started the bankruptcy with two flights a day, two markets, ended it with 25, like, just ate their lunch and realized that that was existential risk for American Airlines. And we were going in there. And we had to find a way to compete for the price sensitive. And so that's been the timeline of them. And the pandemic was just this incredible opportunity to vault to the leader to the leadership position because everything was thrown up in the air. You could make the kinds of changes that were impossible outside of it, including the United Next order.
But to come out where we could be and that was the goal, you know, in the top tier of choice in each one of those three segments. That's what we've done. You can see it in our results. That's why it's structural too. I mean, it's just really hard, you know, if you're in any of those cases. It's not a criticism on it. We just have natural advantages that once we got competitive on the places they had advantages, our natural advantages win.
On the topic of the low-margin airlines, should they be rejoicing at your inability, well, everybody's inability, but United's inability in particular to source MAX 10s? Because I've, I've always viewed that aircraft as sort of a category killer. You put 30, 40 seats out at basic economy. You still have 160, 170. I don't recall the precise low, but, but you still have a lot of capacity in that plane to sell premium, and you rob a Spirit A320 of any chance of making a profit. So should they be celebrating the MAX debacle?
I'm gonna try to not talk about the LMAs too much, but I think they got plenty of things to worry about. For us, like, a MAX 9 has 179 seats. The MAX 10 in the current configuration has 185, so I don't think it's that big a deal.
Thanks.
Scott, just on that last point with the MAX 10, you know, we didn't talk about it with Ed, but he made headlines earlier this week talking about maybe a two-year delay from his scheduled 2025 deliveries to maybe as late as 2027. Just what's the latest with your conversations with Boeing on the MAX 10? And would love to hear what your conversations are with Airbus about an alternative product, to the extent that maybe you can source those 'cause you're taking them out of the fleet plan and so forth, sort of ripped the Band-Aid off there. Maybe you can just talk about where we stand with all that.
Sure. I am encouraged with the following at Boeing. I think they have accepted that there are larger changes that they need to make. And it's probably an overused term, but they need to go slow to go fast. And I think they're doing that. I think that means this year, deliveries are gonna be way behind what they expected, originally forecast and expected. And I am glad that that's the case. As much as I would like those deliveries, you know, this is not a 12-month issue. This is a two-decade issue. And I'd rather Boeing do what they need to do. And I think they are now. I think they believe they need to. And they're going through that. So I'm encouraged, at least at the first step. It's a long journey. It's one step, but I'm encouraged at that important step at Boeing.
That said, you know, we are in the market. We've been pretty public in the market for A321s. And, you know, if we get a deal that the economics work, then we'll do something. And if we don't, then we won't. And we'll wind up having more MAX 9s. For us, from a scheduling perspective, what we're doing is, I think it's impossible to say when the MAX 10 is going to get certified. And we've asked Boeing to start building us. It's stopped building Max 10s, which they've done for us, build MAX 9s. And if and when the Max 10 gets certified, we'll convert them back to we'll convert forward-looking to Max 10s. But Max 10's out for us until it's certified.
With the Airbus conversations on the 321s, in the regular course of business, is there enough opportunity for you to get the planes that you need, or do you need something to, you know, another competitor to give up slots? You know, how, how should we think about that?
Need is not the word I would use. You know, we have a lot of flexibility. And, you know, we don't ha you know, we're not gonna hit an artificial growth rate. We're not gonna have an artificial number of airplanes. We're not gonna target an artificial growth rate. You know, these are 30-year assets. We're not we wouldn't, for example, overpay, so that we could hit next year's growth, or hit 2026's growth. And, and, and we have time. We have flexibility. You know, we, we I Boeing will be able to deliver us, a lot of airplanes, on the Max 9, maybe not the next year and a half, but they will. And so I'm comfortable that whether we get more Airbus aircraft or not, we are gonna get the amount of lift that we think is, is right for the market.
You know, it'll in the next two years, it's gonna be a little lower than it would have otherwise been this year, next year. And then I think we'll also get on a steady cadence. We were having just because Boeing had been behind. We were building up even more and more deliveries. So I think we're gonna get to a steadier cadence that looks a lot like, you know, kinda what we did last year, in terms of narrow-body deliveries. And it'll be a mix, probably, of Boeing and Airbus. But we have flexibility, I think, to get to the number of airplanes without feeling under the gun or need is not the word I would ever use.
Okay. That's fair. Mike, two years ago, certainly, United wasn't selling a free cash flow story. You had the order book was in the process of growing to where it is right now. Operations weren't fully recovered and so forth. Now, when we think about 2024, it seems like there has been a shift. Not only have cash flow forecasts improved, but you also now have a little bit of order book or delivery relaxation because of what we're just talking about here. Is that... are we sensing that there's been sort of a permanent shift towards more of a focus on free cash flow generation at United? Is that a more important part of the narrative going forward?
Thanks, Jamie. I think maybe where we started was a misperception versus where we are now. This business is always based upon and we've always managed it to maximize returns, maximize profitability. And then long term, as you reach, as you have maximized your, your hubs and the connectivity in those hubs and grown the airline to its natural state, you get to a point where, you have free cash conversion. And that free cash conversion is used to deleverage the balance sheet and to, return value to shareholders, both. And so I think what has happened is we were on an accelerated path with United Next to get to that end state. And now, with the OEM delays, we have an opportunity to create some more balance. So we will be able to accelerate some of that deleveraging and potentially accelerate some returns to shareholders.
We'll get to the same the same level of capacity just a few years later. So, I think what has been thrown at us is lemons. We're gonna have the opportunity to turn into lemonade, and I think shareholders have looked at the growth trajectory and said, "Well, geez, United's never gonna return cash to us." That just was a misconception.
As a follow-up to that, Mike, you're the industry's newest CFO. I was certainly a fan.
What? That's not correct.
I think Devin is newer.
Oh, darn it. Okay. Good. Fair point.
Fair point. That's somebody that actually reads the transcripts.
Yeah. Oh, yeah. And meanwhile, I'm paid to be on those transcripts. I got it wrong.
I'm already up to 10 years.
I'm the second newest CFO in the sector. And I certainly was a big fan of Gerry Laderman, but he came from a different discipline, a different background. You have spent more time in this physical room thus far as a J.P. Morgan employee than as a United employee. So what should we be expecting? And perhaps this is also a question for Scott. How should we be thinking about capital stewardship at United now that you are in this seat? What lessons can you provide to Devin, who is the newest CFO in the industry?
I've said this before, and I'll say it again. You know, this industry attracts a lot of talent, a lot of talent that loves airplanes and might refer to themselves as aerosexuals. And I like airplanes too a lot. You know, and it's what the business we're in. But it is critical that the airplanes we buy return at a level of profits that exceeds our cost of capital. And so I'll be very focused on that. I think that coupled with more communication, more highlighting of some of the value, some of the crown jewels we have at this airline, and maybe a general gentrification of the neighborhood. Now, there's gonna be winners and losers, and there's some real losers for sure.
I think that combination of idiosyncratic opportunity at United and improving neighborhood and being very clear around return hurdles is gonna drive a lot of value for our shareholders. I think given the 20 years I spent on Wall Street, that's something that I bring that is unique to this seat.
Scott and Mike, let me just follow up on what Jamie's saying, which is Scott, you mentioned sort of the seesaw and the fact that it's swung the other way towards the big three. And if you look at, you know, international, your international probably is at or near peak profitability, or heading there, you know, paid load factor up front, right, just the swing in margins and so forth, loyalty, the importance of loyalty, and, and how important that is to United and some of your peers like Delta before you. Yet here we are, and you might have missed Jamie's opening comments, you know, we're sitting there with one of the biggest disconnects ever, really, in normal times between where the S&P 500's trading and where, you know, big three airline stocks are trading, including you. So, you know, what does it take to unlock a better multiple?
I wanna layer in loyalty into this discussion and whether or not you have an investor day coming up on May 1st. You know, should we expect, you know, is there a Skunk Works team, you know, behind the scenes in Chicago working on some sort of fantastic loyalty technology that's gonna be unveiled at some point this year to sort of prove valuation?
So, I'll try and mic him in on. I'll start with loyalty. We're gonna spend a lot of time talking about that at Investor Day. I think there is, by the way, one of the other things I didn't say when in my opening, as we've moved to the top tier in all three of those categories, the opportunity for the loyalty program is magnified. And there are opportunities for lines of business that haven't even existed amongst airlines. We've spent the last year working on those. They're already in market. We're already doing things. We haven't publicized them yet, but we're already doing things and generating revenue from one particular line of business that I think is gonna grow substantially in the loyalty side.
We'll spend more time talking about that, also talking about a commitment which Mike and I share, that that value is ultimately realized by shareholders in one way, form, or another. I'm not gonna say what that is. We're not gonna say on investor day what that will be. But we are committed to making sure that, you know, that that happens. We also don't like trading at a 4x multiple, as we are, especially in a world where the future looks so bright. Like, you know, we're pretty confident that our margins are gonna expand going forward. It's not peak margins. Our margins are gonna expand going forward. And it's the structural reasons I talked about, just, you know, we just have a strong hand to play. And we've been playing it, and it's been working almost exactly like we thought it would.
And, and that's gonna be the case going forward. So I don't think we know why margins, or why multiples are so low. I try not to be frustrated with it as opposed to figuring out, you know, what we should do about it. You know, I'll let Mike talk about his views. I have a view too that one of the things that holds back our multiple because it's not just us. Delta's trading at, you know, low multiples as well. I think those are two really good businesses that are gonna grow margins, in the years to come. And I think there's a view that that's just so different than what had happened in the past. There's skepticism. There's, "This must be peak earnings." There's skepticism.
There's "What is different this time?" and I think what we have to, my own view is we're going to have to and I don't know what the triggering event or the time is, convince the market what I believe, which I started trying to do today, that this is structurally different. This is a structurally changed certainly for United Airlines, this is a structurally different industry. And instead of focusing on what is, you know, RASM in every entity this quarter, that we're structurally marching to higher margins every year. And as long as we are doing that, that eventually the results will matter. Mike?
Thanks, Scott. I'll, I'll pile on with three points. I'm gonna put them in priority order. Number one, you all don't believe that our level of earnings today is sustainable. You think it's cyclical high, and it's coming down. We think that it's not only not cyclical anymore, it's structurally, structurally in the zone, but that we are marching a few points higher in profitability. So we have to demonstrate. I can talk about it till I'm blue in the face, but we have to demonstrate that our business is less cyclical than it's ever been before because of the premium revenue, because of the, the, the barriers to entry that didn't exist before, and because of the quality of some of our ancillary business. We will do that. We'll talk about that a lot at investor day. It's not just a rising tide of the industry.
It's some idiosyncratic opportunities that United has. So that's the number one. And that's gonna drive the majority of value. Number two, we have elements of this business, particularly at United, that, that are growth. We still have an opportunity to grow our midcontinent hubs to drive connectivity that nobody else has. We still have opportunity to drive relative CASM performance because of the gauge growth that we still have. We have an incredible opportunity in the loyalty program. We were the first to use it for debt monetization during the crisis. We will continue to be a leader in shining a spotlight on that. So sustainability, number one. Number two, proving to all of you that we're an earnings growth story. Number three, there's a misperception that whenever we have operating cash, we're gonna always use it to buy airplanes.
We need to demonstrate that the quality of our earnings is also higher. And by quality, in the long term, we need to demonstrate that we convert net income into free cash flow. And, as long as we have great opportunities to grow this business with returns that are that greatly exceed our cost of capital, you're gonna see us do that. But we're also gonna progressively signal that the quality of earnings is improving and that if you think about maintenance capex and where we're headed once we reach maturity, that there'll be a lot of value to share, in the form of cash with shareholders as well. So three components in those order.
Questions from the room?
Question on premium. Personally, I'm a fan of the Polaris product, but it's not your product. It was a Continental product, if memory serves. Does it allow you to do everything that you want to do in terms of penetrating and capitalizing on the premium trend?
It's a great product. But like all business class, kinda every 10-15 years, you refresh it. So we are working on a new one. That's a constantly improving product. But the Polaris product itself is a great product. And it's a lot more than just the seat. The seat matters a lot, but everything about the service, the experience, onboard the airplane, the app, how easy it is to get through, and like, everything about the experience matters. The clubs, one of the things that we did that I'm proud of during the pandemic, that apparently we're the only ones that did it, like the one time in history if you close a club to expand it, the clubs are always undersized everywhere, everywhere because space at a premium airports.
If you close them to expand, it takes a couple of years to refurb and redo them, and your customers are understandably unhappy while their clubs are closed. The pandemic was the one time in history. Like, we had 49% more club space, more square footage of club space coming out of the pandemic than we did going in because we thought, "This is the one time, one shot where you can do it without having a big penalty and get it done during a downtime." But there's a lot that goes into the product. But we are working on the next generation seat.
Mike, you mentioned the midcontinent hubs and further optimizing those. But, wondering if you can talk about, you and Scott, balancing the opportunity you have domestically with the network versus internationally because I know you just announced four new routes and so forth. International has been such a focus for United. So how should we think about when we think about, you know, further upside, further margin accretion, etc., you know, the opportunity domestic versus international?
I think it's gonna be both, actually. You know, the great thing about United—the reason I think we're gonna continue to outperform—I talked about the three areas where we've moved up that we'll continue to outperform—is that we're the only one of those network carriers that has untapped growth opportunities. On the international, you know, we really—we were born on third base. And, you know, Newark, Dallas, San Francisco—you know, just great international hubs, geography, local traffic. And, as we're gonna continue to grow them, everything we're doing is working really well. So those are gonna grow at a pretty steady pace. We start taking wide-body deliveries again at the end of this year. And so you'll see us continue, continue to grow there.
The international market is really strong, and it's going to be, you know, as far out as I can see, the retirements what people did during the pandemic internationally, retiring wide-body airplanes and downgrading pilots, that's at best a decade-long recovery. I mean, there's still airplanes around the world that are grounded today from the pandemic, 380s grounded, that airlines would like to fly, but they can't. And so that's a structurally changed environment also. It's gonna be in a capacity-constrained market with slots in most of these international destinations. So we feel really good about the international network. And domestically, you know, we really just had an opportunity to upgauge. What we're doing is we're getting rid of 350 regional jets, and we're gonna replace them with mainline airplanes.
So it's not that the frequency flight frequencies are really going up, but we're flying with a better product for customers, a better CASM for us, an airplane that has enough seats that we can sell, we can afford, that we have seats available to sell, basic economy, that we can compete. We drive higher effective connectivity. And what we're really doing is, you know, all the things we talk about in midcontinent hubs; the simplest way to think about it is replacing 350 regional jets with mainline aircraft. And that is a massive opportunity that's ongoing, that's been happening. It's working. I mean, look at y. I don't know. You guys can go do the analysis. I don't remember in my career an airline that was growing as much faster as we have been than the rest of the industry and outperforming on RASM.
That's not normally what happens because it's just a unique opportunity, United, both domestically and internationally.
Hey, I just wanna pile on one point that Scott made. You know, we talk about international and domestic all the time. Is international stronger than domestic? What's happening over the last six- nine months is also a bifurcation of the industry domestically. You're seeing customers choosing to fly on United Airlines. What you're seeing is improved profitability for us at the expense of some other carriers that are losing those customers because they're choosing to fly on us. It's easy to just put us in a box and say, "Well, international's strong. Domestic is weak." That is cyclical. That is not what is happening. You can dig into the domestic profitability by carrier, you'll see that I think that's something that is lost on the investor space right now.
Mike, United is the largest airline this morning to not provide a quarterly update. I'll assume that that implies that the quarter is tracking with your expectations. And I realize you're trying to focus on the long game, so I'm. I wasn't expecting an update from you. However, it was announced that pilot, you know, training was gonna take a breather. I think that came out earlier this week or last week. Sorry. I get on the road a lot. Should we assume that that is incrementally positive to your current CASM aspirations for the year, or was that already envisioned when you gave us, you know, color for 2024?
Yeah. Thank you, Jamie, for the question because guidance is almost something that it's philosophical to me, right? The good, the best industrial companies out there that do trade at better multiples set guidance. They stand by that guidance, and they hit it, you know, except for when there are two acts of God in a quarter. And occasionally, you wanna set it so that you'd be setting it too conservatively if you don't ever miss it when there's two acts of God. But when we think about "Okay" and Delta just did a great job this morning with their presentation. But when you think, "Okay. Fuels up, so RASM's up." Okay. Great. That's gonna happen time and again sometimes. And I'm still gonna hit my EPS range.
Sometimes, capacity, we're not gonna be able to grab all the capacity because of constraints with OEMs. But I'll get some other benefits to the P&L because of that, and I'm still gonna hit my EPS. So part of demonstrating that first component, that the earnings are structural and less cyclical, is setting guidance and sticking to it and not updating with little nits and nats, but at the end of the quarter, delivering on it, at the end of the year, delivering on it, giving you a multi-year path, and delivering on EPS and free cash. So that's what we're doing. You very deliberately did not see an 8K from us this morning because we're gonna build on that track record of making that promise upfront and delivering on it even when there are little, you know, little winds, one direction or another.
I'll squeeze in one last question, then we'll wrap up. Complicated topic. Maybe we can make it quick, but we have American up next. They've obviously been most aggressive in pushing into new distribution channels with corporate. So just wondering we talked about this a little bit, with Delta last night, but have you seen any corporate share shift given American's strategy for United? And can you just talk a little bit about corporate?
Well, look, I'll answer it even a little more broadly. I think one of the other things that's happening is that there's starting to be a divergence in how each of the network carriers are behaving. And I think, by the way, in a way that makes an awful lot of sense for each of them depending on what our networks are. So American there or Americans, you know, small-cities focus. They have great hubs in Dallas and Charlotte. You know, that's where they make the majority of their money, in Dallas and Charlotte. Those are markets that need. I mean, I helped build those hubs. They need a lot of regional jet service. And the distribution model is different for those hubs than it is if your hubs are in Newark and San Francisco.
And so I think that's a strength, you know, where they're going, you know, industry strength, where instead of just copycatting each other on everything, that we're each pursuing strategies that are best aligned to where our network is. And my guess is that's a reflection of what's, you know, that's partly their distribution. It's certainly their, you know, their network strategy on aircraft versus ours, and probably something that makes sense for them and makes sense for us at the same time.
Are you picking up corporate share?
Look, we're—I don't know if we're picking it up versus them. It's hard to see the data because we don't have it. You know, we're much more picking up, I think, corporate share from not having change fees. And American doesn't have change fees either. So, you know, that's a sort of neutral, but I think the bigger place we've picked up corporate share is it where we were competing with airlines that where we're now competitive on the change fees.
Let's end with that. Thank you very much.
Thanks.