Good afternoon. Since we're an airline, we're going to go with T0. And if you're late, you're late. Welcome. This is my first event as the Head of IR at United and I am excited to be the newest member of this team. It's great to see a lot of familiar faces from my 16 years on the buy side. And it'll be great to work with all of you from a different seat. Our priority is to transparently communicate our goals and we're going to work on doing more transparency, you’re going to see some of that tonight, but also we want to let you hold us accountable for our financial targets and we're going to spend time focusing on that tonight as well. I think at the end of the night, you're going to see tangible evidence of a shift in that communication and I look forward to having a discussion with all of you. Before we begin today’s presentation, as safety is our highest priority, we like to provide a safety briefing. In the event of an emergency, please exit out the stairwell directly behind you and down the stairs. Once outside, proceed to the corner of Wall and Broad on the northeast side of the building where we all -- where we will meet and do a roll call. If you're CPR or First Aid certified and willing to assist in an emergency, please identify yourself now. An AD device is located in the coat room on this floor if needed. In case of an earthquake, duck under a table or other stable object. Clasp your hands and use them to cover and protect the back of your neck and head. In case of fire, the closest fire extinguisher is located in the back of the room. In addition to cellphones, there is a phone located in the back of the room as well, 99 for an outside line and then 911 in case of an emergency. In an event of an active shooter, be prepared to run hide or if you're Scott Kirby, fight. Thank you for your participation in this important matter. So I'm not going to read this. Information in the following slides do contain forward-looking statements. In fact, that's the primary purpose of tonight. With that said, I encourage all of you to read the legally required disclosure on the screen. Joining us tonight are Chief Executive Officer, Oscar Munoz; President, Scott Kirby; Executive Vice President and Chief Commercial Officer, Andrew Nocella; and Executive Vice President and Chief Financial Officer, Andrew Levy. With that, I'm going to hand it off to Oscar.

Thank you. Thank you, sir. And welcome Mikey. It’s great to have him here. It’s a great addition to the family and I think with Julie Stewart who's moved over to be my Chief of Staff, it's nice we have a buy side and a sell side perspective on the company. I think that sort of underscores our focus on the importance of you as investors as well as our many other constituents. We're doing something a little different today. We're going to have our fourth quarter sort of call very briefly and then go into this thing, we call, an investor update. I think it gives us a little more time to have more conversation and clarity about some of the things that we're doing. And I think as Mike said two or three times, transparency, accountability, all those wonderful words that get tossed around. I think you’re going to see lots of that more than you've seen certainly from us and maybe some – from people in the industry. Importantly, the E team is here, our executive team. All of you at the reception to get to know them a little better for those of you who don't know, if you have problems with the WiFi in particular and there's Linda. But there's actually a few of our young folks from both finance and commercial. [indiscernible]. There's Tom Doxey and Jonathan Ireland, which I think most of you kind of know and then from a commercial organization, there is Damien and Ankit [ph]. I hadn’t seen Ankit. Ankit, are you here? He’s stuck in traffic. Some of the people in the room. So I urge you, if you can, get a chance to meet those. Those are, I think, the future leaders of our company to some degree.…

Thank you, Oscar and thank you all for coming down here in person to join us and thanks to everyone that is listening on the Internet. As Oscar said, today, we're going to do something that is atypical, at least for our earnings calls and well Oscar talked a little bit about the earnings, everything from here going forward is talking about the future. And fundamentally, we're here today, one of the biggest messages that we want to talk about is the rationale for what we need to do to make the United network strong. And many of you have known me for a long time and you know that I'm passionate about airline route networks, because it is the foundation that everything else is built upon. And so today, we're going to talk about where we're going for the next several years. We're going to go all the way out through 2020 and tell you where we're going, but more importantly, we're going to tell you why we're doing what we think is the right thing to do for United Airlines. So to start, as I said, the network is the foundation of everything that we do and for as long as I've been around in the airline business, people have talked about the potential that exists at United Airlines and have been frustrated with when are we going to realize that potential. And today, we're going to hopefully talk about what really that means and what in the United Airlines route network doesn't realize the potential, what are the great things about it, but what are the things that aren't yet realizing the potential and how we can return United Airlines to profitable growth and how we can close the margin gap frankly through the right kind of…

Thanks, Scott. There I am. So as Scott said, the network is the really center of where we started this from, but we know all the commercial activities that surround network need to be worked in harmony for the network to achieve its potential and in particular, we know that our customer initiatives need to be ongoing as well and we have a lot of customer initiatives coming through the pipeline. So today, we're not really going to focus on those things, but I want to make it clear that those are ongoing and at the appropriate point in time, we'll discuss them. Today, I really want to focus on the revenue management and pricing area and customer segmentation. That is an important area of focus for the company and a lot is going on on that front. So in particular, Gemini, Gemini is our new revenue management system. We just turned it on and I want to talk about what it means to United Airlines and why it's so important. First of all, the very first chart on the left here is the forecast bias. So, Orion, which is a system that United's used for decades at this point, a couple of decades, just constantly under forecast demand and that's -- you can see the negative bar here under Orion. So what that meant is that we are constantly expecting the demand to our flights to be low. So our inventory access was open and we accepted lower yield passengers more often than we should. Our analysts did the best job they could what a complicated network of trying to boost the Orion forecast artificially to account for this, but across thousands of flights per day, 330 days per year, that was just not the way to manage the…

Good afternoon. So now you've heard Scott talk about the network strategy and one of the things that we think are important to do to improve profitability at United in the short term and the long term, Andrew just talked a lot about specific commercial opportunities and initiatives that are going to help us in terms of revenue. I'm going to talk about CASM mostly. Now, we are -- first and foremost, it’s a margin story. So when people ask us what kind of story are you, well, it’s margins. Margin is what matters and that's our primary focus. But we have a terrific CASM story and many of you here have known me for a long time. You know my background, my history, I've been in the low cost side of the business for most of my career and those are companies where you have to compete on costs. And so I'm very passionate about that. That's my experience pre-United. But we have a great CASM story here as well. We have, as Scott mentioned, a very high fixed cost base. We have all these assets, a lot of people and as we talked about in the seasonality side, we don't use it very often. We're going to be able to address that going forward and that's what's going to drive a lot of our opportunities and I'll talk about that in a little bit more. Now, we're also going to give you, as we've previewed, a annual 2018 earnings per share guide and we're also going to give you a target for 2020. We like earnings per share because it is really easy to calculate. It's really easy to hold us accountable, so we’re going to talk about that. And I’m not going to spend a lot of…

Just so we're clear on the numbers, $8.50 on the chart on the far range of EPS is the correct number. And I also want to reiterate, because it wasn't maybe clear on the chart that our CASM guide does include labor deals. And I do believe that from a transparency and a forward aspect, I don't know that anyone in the industry has ever sort of done them. And that's the level of cost management that we’re going to be going after. So with that, let me just bring it home before we get into Q&A. When I took this job, some of you in this room, a lot of people in the business talked about United being sort of the unsolvable puzzle. There was assets and resources and a global footprint that had great promise, but nobody had ever been able to figure out how to actually put that together. And so one of the first tasks we took out is how do we create a team around that with the smartest capable minds taking advantage of that and that's what we’ve created. And despite everything we hear and see and sometimes read, we've got a plan that we're very, very confident about. You heard that strengthening our hubs is critical, not just to our growth and competitiveness, but to profitability. I think that’s an important aspect of what we're doing. The numbers we've chosen, the things that we've done about maximizing profitability. And again as Andrew Nocella talked about driving revenue on all aspects of our business, but you heard him specifically say that every day he shows up to work, there is even more opportunity. So the opportunity set from my perspective, as I talk to the team, specifically, we talk about the great sort of…

I think Julie is going to – Julie and Mike are going to bring mics around. Maybe, to Mike? Maybe not.

Thanks for the update. It’s Andrew Davis from T. Rowe. Scott, as you try to build regional encashment in your hubs, is there a risk that the traffic that you are going to gain from better regional fee incomes and at a lower yield than it's coming at, now, maybe for some of your competitors and the reason I asked is because American just announced some additional expansion of regional feed, there's a lot of geographic overlap between you guys and I'm just kind of concerned that is this the next frontier of competition that prevents you guys from hitting some of those targets you hit today?

Yeah. And I’d like to answer that Andrew in a more -- in a broader perspective as well, because a lot of the questions we get are, what's the competitive response to this going to be. And I think it’s a perfect way to frame this and think about it. The growth potential for United Airlines, just like for our two competitors is really about the geography of our hubs. And what happened at United is, we had years where we were shrinking, while our competitors were kind of growing 2% or 3% a year and I expect they'll continue growing kind of 2%, 3% with GDP. What we're doing is frankly catching up to some of what we went negative on for years before, but it's a great example, the recent American Airlines announcement. I'll take the Northwest Florida airport, one I know that you like this go to. An American Airlines just announced service to the Northwest Florida airport. It's a really good market for United Airlines and we fly from Houston to the Northwest Florida airport. But it's a market that is almost all connecting traffic. Our largest O&D from Northwest Florida is flying to Denver and that's four passengers a day. Our second largest is Los Angeles and that's two passengers a day. And the reality is, when American starts flying to Charlotte, which is well positioned to serve Northwest Florida and to Dallas, which is also well positioned to serve the Northwest Florida airport, American is going to get some share from us. They're going to -- some of those two passengers a day that fly to LA are going to now connect through Chicago -- or through Charlotte or connect through Dallas and we're going to lose that share and there's nothing we can…

It’s Hunter Keay at Wolfe Research. Appreciate the multi-year CASM guidance and you said it includes all labor deals going forward, you're kind of up against the sort of max that you're allowed on your scope right now, Scott and I'm wondering how you can be so confident on that cost guide, when you're probably going to need some give back and scope from your pilots to achieve some of this regional feeds you’re trying to do. So how do you put a dollar amount on the amount that you're going to have to pay for likely scope relaxation? Unless you reject the premise of the question that you don't need scope relaxation?

Look, I start with -- I completely understand why our employees and our pilots in particular are worried about scope, because they have seen us take, as I said in the presentation, take airplanes out of a place like Rochester to Chicago and put it in Newark Atlanta. And they know that was stupid and they were right. We should not have done that. But we're now doing it the right way. We're not just asking them to believe us, we’re making commitments, where actions speak louder than words. We're up-gauging back in markets where we should be up-gauging and we're putting the regional jets in the right market. But our plan is predicated on having -- it's a critical element, having that high yield flow come through our hubs and we shouldn’t have been finding regional jets in a market like Newark, Atlanta but we're going to have to fly regional jets in places like Rochester, Minnesota or Elmira, New York or Columbia, Missouri. We're going to have to fly regional jets because that's the size of the market and we can't grow the mainline if we don't have that high yield flow coming through hubs. And so there is a win-win. The reality is, we will grow the main – the reason pilots want scope and don't want us growing is because they're worried about jobs. But we're going to create more pilot jobs by having the right kind of aircraft flying, having the right kind of regional jets flying, which then gets to the next point. In the past, we could fly 50 seaters and we've got a temporary surge in 50 seaters in 2018 because we don't have a choice today. But in the long run, we can't be flying in a market like Rochester, Minnesota…

Thanks for the presentation guys. Dan McKenzie from Buckingham Research. Couple of questions here, just one housecleaning. I guess, as you provide the EPS outlook for this year, does it factor in some potential upside that’s tax reform driven or is there some potential revenue upside beyond what you’ve guided? And then if you could just address, I think investors are pretty shell shocked from the pricing shock that occurred in 2017. Obviously, the guide doesn't factor in, maybe you can't talk about pricing, but it would seem that, maybe that's in the in the rearview mirror?

We do have in that guide of course tax reform, but we don't have anything explicit about that driving higher demand. And you guys can back into what our PRASM number is and I'm sure most of you've already done it. Some of you may have even published research reports on it already as we talked, which annoys me, because then you aren’t listening, I’m kidding. But we don't have anything explicit in there. We also don’t have anything explicit that there's going to be another pricing and I don't think there will be. Frankly, I always bet the over. I think everyone knows that. But with fuel at $2.11 a gallon, I think that chances of some bad pricing thing happening gets more than not zero, but with fuel $2.11 a gallon, which is what we've got embedded in those numbers, I think the chances of that are smaller and you can back into the numbers and recognize that our forecast kind of at an industry level is probably more conservative than some of you. And I hope you're right, but we've put out a number that we feel really good about and that we think we have some ability to deal with some ups and downs that might happen. We obviously not everything, there are things that could happen that caused us to miss, but that we have some ploy in there to deal with the inevitable, something bad happened somewhere in the world. We're not going to have a perfect year. We're going to have something most years, but we could also have some good things, but we don't have anything explicit kind of from tax reform built into the numbers yet.

Understood. Follow-up question. I'm wondering to what extent an up-gauge strategy in ’18 or in ’19 or ’20 plays into the non-fuel cost guide. At some point, does it make sense for A319s to free up 75 seat RJs, so that those 75-seat RJs then could go, free up 50 seat RJs. Are there any 50-seat RJs that come off in your capacity purchase agreements to give you that up-gauging opportunity?

Couple of points I guess. First of all, the up-gauging which has been a steady upward pace over the last few years, it does pause this year, starts going up again in ’19 and ’20 based on our fleet plan. We do have a lot of flexibility with our regional jet contracts, particularly the 50-seater. So we do have the ability to -- we do have a lot of flexibility with that in the next couple of years. So I’ll probably leave it at that as far as how that works, but we do have that. So, our hope is that we can replace 50-seaters with bigger regional jets or in some cases, it might be what you describes, maybe small narrowbody mainline airplane in its place. So stay tuned

Mike Linenberg with Deutsche Bank. So the 4% to 6% out over the next few years, I mean, they’re big numbers. If -- can you talk through maybe some of the key underlying elements in those numbers, like how much of it is better utilization or productivity like Andrew, you talked about huge opportunities to improve asset efficiency. How much of that is driving the increase in ASMs as well as what percent are in and out of hubs? Is maybe all that is hub flying or are there -- are you looking to expand in to focused cities, et cetera?

I’ll go in a reverse order, because that’s one is the easiest. 100% is in and out of hubs. Our strategy is about strengthening our hub’s – everything I talked about is better hubs and all of our growth is going to be in our hubs. I don't have an exact number on the breakdown of how much is utilization and -- but you can get an idea and we have better numbers for 2018. We’ve done more refined analysis. You can get an idea from the chart that Andrew showed about efficiency. Those are all asset efficiency. In 2018, another way of looking at it is, I think to approximately 2 points of our growth is Hawaii and that’s still real growth, but it's a different kind of growth than just flying in domestic markets. And by the way, our Hawaii growth is really a lot more focused on flying from our hubs, like Denver to Hawaii and then off the West Coast, much more competitive and we have grown there too as well. And we both have a history of knowing how well those connecting hubs can work to funnel people. Again, it’s funneling people through the hub and -- but two points in 2018 are from that. A big chunk of our growth in 2018 is actually this temporary surge in regional jets, which doesn't last. So there's every year there will be kind of those explanations, but you can get to pretty good numbers from looking at Andrew’s chart on the utilization, both of aircraft and gates and employees, just to get a good mix that you look at this year and at least half is kind of that kind of utilization type of line that's really efficient on the assets. And even the stuff that's not explicit in that category winds up fitting somewhat in that category, just because we aren’t adding gates anywhere in 2018. And I suspect in ’19 and ’20, we will have a picture that looks a lot similar, in a lot of ways similar to that. With more gauge, one of the things that’s going to drive it in ’19 and ’20 is also gate as well.

And then Scott, just to add onto that, some of the new routes that you're flying, some of these longer haul are ultra long haul flights that you're adding where you have because of your hubs, you're probably uniquely positioned of any US carrier to fly, say a Houston-Sydney or an LA-Singapore. I get that Houston-Sydney obviously competes with Dallas-Sydney with Quantas so for flow traffic, but it does seem like that that's also driving a sizeable chunk of the ASM growth. And again, there's nobody else really in some of those markets, they are very unique. You're the only game in town.

That's a really good point. And you're right. I mean, Houston-Sydney, I don't know the exact percentage, but it's probably a high single digit percentage of our ASMs in 2018. From a single route, then it’s an example of -- and it’s an example of the power of a hub. I mean, literally, 85% of the people on Houston-Sydney are going to be connecting from other destinations and it's a phenomenal route, because if you live on the East Coast, if you live in Oklahoma City or New Orleans, today, if you want to go to Australia, you basically have to fly to the West Coast and at least in one direction, spend the night, check into a hotel near LA or San Francisco and spend the night. But if you're going through Houston, you can do day trips each direction. And so it is for the whole rest of the country flying through a hub like Houston is the most efficient way to get there and it's just an example of the power of a hub and utilizing the power of the hub, not just for the domestic network, which we focus on today, but even for great international opportunities, because you would never fly that without the power of a hub behind it, supporting that market.

Good evening. Jamie Baker with JPMorgan. So 2017 was supposed to be the transition year, margin contraction and various reasons that at sort of this time last year, you were talking about that. The problem is the midpoint of the guide for 2018 implies another year of margin contraction, but obviously the ambitious 2020 guide speaks to the potential for margins to inflect. So my question really is, when is the transition year -- transitioning to higher margins instead of lower margins and what are the most important drivers of that from tonight's presentation, because it's not really clear to me the timing or the contribution and you're guiding down again year-on-year, when and what really drives the inflection, give us some confidence there?

Well, I think we’re guiding to essentially flat next year and that's what the $1.6 billion fuel headwind. That's the difference in 2018. And we've got an embedded assumption of industry revenue and forecast was in our number, which we aren’t going to tell you, but you can probably back into it and figure it out. And I think most of you have a more ambitious forecast and I hope you're right. And look, I think, you can make the case that particularly with fuel at $2.11 a gallon, revenues will come in better. But we are conscious of the fact that fuel prices are up $1.6 billion this year. And are we going to be able to pass through 100% of that or not, because essentially that's the math, because we've got flat to slightly -- flat to down CASM. So when fuel goes up 106 billion, we got to drive 1.6 billion on the revenue side. We got to drive it all on the revenue side and that's a pretty big decline when you think about it from that perspective and that's how we get to the numbers. Our margins frankly inflect and get better, because the curve is slightly backwardated and you're continuing to drive flat to down CASM with higher RASM. It's just -- it's math. And we have created numbers that are probably more conservative than you have. Others will have numbers that we feel good about making a commitment to you that we feel confident, we are not 100%, can never be 100%, but that we believe we can hit even when we get thrown some curve balls going forward.

Kevin Crissey at Citi. So Scott, how does the low cost competition in your hubs affect your ability to drive the margins that maybe Delta sees and some of the hubs that maybe has less LCC competition in the hubs? How does that affect?

It matters. The best way to be able -- first the best way to compete with a low cost carrier is master prices. Half our revenue approximately comes from customers that are mostly shopping on price. And we cannot ignore half of our revenue and we can't let our low cost carriers have price advantages in our hubs and no one chooses to fly on an ultra low cost carrier, if they can get the same price on United Airlines. Nobody, at least, if they know what they’re buying and so it's entirely within our control whether they succeed or fail in our hubs. And our advantage that we have when we compete with them and the advantage that Delta has that’s better than us is high connectivity, because if you can fill an airplane with 80% connecting revenues in a market, then they're left competing for 20% of the market and they cannot succeed in that environment, but the higher your percentage of local revenue is, the more able they are to compete, because they're just competing for local revenues in the market. So we're going to be – we’ll continue to have an aggressive competitive posture vis-à-vis ultra low cost carriers, but the biggest strength we have is the connectivity of our hubs and the higher that connectivity is, the harder it is for them to succeed. I mean, look at a place like Charlotte, no low cost carriers in Charlotte, because it's so much connecting revenue that the local market is too small, is too small of a percentage for them to try to pick off even big markets. And that's one of the benefits that we get as we grow connectivity and our hubs.

Thanks. And if I could follow up with a second one. Andrew, this is for you. Like, I try to come up with kind of rules of thumb, things that work in the industry from talking to airlines around the history and one of the things when you were at Allegiant was that you adjusted your schedule really aggressively, seasonally and day of the week. Why is it different, the economics of that different at United than it is, at say Allegiant?

Well, I think, they are two completely different businesses. I mean, just in every single respect, the business I was with, we built it to do exactly what it did. So we have a very high variable cost, a very low fixed cost. This is the exact opposite. We have very high fixed costs with not a lot of ability to vary them. So it's just completely different economics and the only thing that matters is that your RASM exceeds your CASM. So the marginal RASM is to exceed your marginal CASM, which drives profits, we think that the right thing to do here is what we've outlined today and we expect that it will work -- it will drive margin and it's just – it’s kind of night and day from what I've been involved in the past.

[indiscernible]. Just looking at the ASM growth and all the things you’ve said, there's a lot of moving pieces here, but should we assume that domestic ASM growth over the three year period will exceed international or is there no assumption we should be making in that at all?

That's our expectation that domestic will be higher than international. I would expect international to, over a long time horizon, sort of be growing with GDPish. In any given year, it might go up or down because as Mike pointed out earlier, you add one route, then it’s a full point of growth. So in any given year, it might be a little different. But over -- if you smooth it out over time, it's probably going to look GDPish.

Savanthi Syth from Raymond James. Just on the growth again. If I look at 2017, it looks like if I look at your competitors, much of their growth was small mid-markets, but if I look at United, the growth was kind of large, small, mid pretty evenly. As you look in to 2018, ’19, ’20, how is that growth mix? Is that going to be similar in the next few years?

It will and in fact, they’ll start this year as we have more regional jets coming. It will be probably more biased towards small markets, but what's really happening is, we're displacing -- the reason it looks like that in 2017 is we’re displacing regional jets in the big markets, because today, we're flying regional jets in big markets and we're displacing them. So, it’s a huge increase in percentage ASMs in a market like Newark to Atlanta or Dallas to Chicago. As you go back to the kind of airplane we had six or seven years ago, and you put the right airplane on it. And that will continue, but because we're taking more shelves of regional jets, there would probably be a little – there be more, a disproportionate amount that's moving into the small and medium sized markets, as there is more shelves available to do that kind of line.

Just a follow-up on the fixed cost question, is there any kind of discussion to rethink how the labor contracts are written where you can imagine close to the reality today, which is that the US is a mature market and to maybe have more less of a treadmill or more even seasonal flexibility where you don't – where your minimums are a lot lower in the kind of off peaks and you can have a higher kind of time spent in that peak?

I think the short answer is yes. There is a desire to give ourselves more flexibility to manage through the seasonality in a way that's more cost effective than what we are able to do today, but you have to -- you do have to take the employee perspective into account and these are people who live on their salaries. And if there's a -- we try to do with things like voluntary leaves and we can do a lot, because there is a lot of people that are willing to take voluntary leaves and willing to fly less in certain months, because it’s good for their life. But you can't have the kind of 22% decline that we have -- we don't have that many people to do it. And we're not going to get contractual flexibility, we can just say to people big change in your life in January compared to the rest of the year. It’s going to have to be something that works for each of our unions before we’ll get it done.

Hi. Rajeev Lalwani with Morgan Stanley. Oscar, a question for you. You came to investors and provided some healthy targets but then things started to move around as it relates to capacity and some of the other goals, how do you assure investors that that doesn't happen this time around? And then I have a follow up for Andrew.

Thank you for asking me a question. I was feeling lonely up here. Kind of building transparency, we use the words constantly. I think the EPS targets are the best measure as we’ve talked about. We've gone through the absolute versus relative. We did the Investor Day a year ago. It was hard to try. A lot of the feedback we got from all of you that it was just difficult. And so we thought the best way to do it is just to go to EPS and not only do it for the year, but for -- give you an hour target as well. So that's how you can measure us and that’s how we measure ourselves and that's what the guardrails are for us to make sure that all the decisions we make stay within that or above it as you might think.

Thanks for that. And then Andrew, can you just provide a walk of your old CASM guide to the new CASM guide and what impact does capacity have? Trying to get sort of an underlying clean number as far as what's changed versus before on a three year look?

Yeah. Every time you say Andrew, I have to wait to hear what the question is to see which Andrew. So, the short answer is, I don't have a quick answer to give you. I can tell you that old CASM guide, I think you're referring to what we talked about at Investor Day, which was not -- I wouldn't characterize it as a guide. I think what we're giving you day is a commitment that we're making. That is very different than what we talked about in November 16. So I think that's important to point out. That was a three-year view that we felt we would be between flat and 1% based on an assumed rate of capacity, which was a complete theoretical assumed rate of capacity. I think we made it very clear that that's all that was. The reality is not much has changed since then. I can honestly say, I think, adding regional jets, that's something that's different. We didn't expect that to happen when we came up with those numbers back in the – it was probably early November of 2016 when we put those numbers to bed. So I think that's probably the single biggest change that's occurred, but as we talked about, we have a better appreciation for the opportunities that we have to drive productivity and higher levels of efficiency, which really is a -- that is a huge part of the CASM story. I mean, there's other things too. We're scrutinizing our expenses in a level that we haven't done at least in a while, I'm told, having been still a relative newcomer, but we just went through a very rigorous budgeting process to try to make sure we understand we're spending our money on and eliminate areas where we can instill, de liver great product for our customers. But we can work with the offline to try to give you a bridge, but we didn't have one prepared at the moment, although I think that realistically, it's really the regionals for the most part. Everything else is pretty much the same, for the good guys on the productivity.

Good afternoon, everyone. This is Brandon Oglenski from Barclays. So hate to be critical, two earnings calls in a row here, but look, there's a lot of investors here that look at the group and say, these stocks are at least optically cheap on today's earnings, but a lot of folks won't buy your stock because the belief is we're on a long term trajectory to just dilute margins and take profits right back to breakeven and you have problems with balance sheets looking forward. So a lot of analysts in this room believe things are truly different this time, but Oscar, I hate to say it, just feels like this meeting is again contradictory. I think you opened it up saying the focus at United is on margins. That was clearly the message in 2016 as well. And I think the problem that people have measuring this is because you widened the margin gap in 2017 with a strategy that was outgrowing the market. We show up today, it will take the strategies again to most likely outgrow the market that's based on your own forecast, it looks like revenue underperforming cost performance, so margins again are likely to track below the industry, so the gap is going to widen for a second year in a row and what is a very robust economy so where is the confidence that you can instill in your investor base that we can believe those 2020 targets are actually achievable from here with a strategy that seems for the next three years to be a repeat of what we've already seen?

I would just quibble with the optics of what you just said, this plan -- the details of this plan, the aggressive guide with regards to CASM, I think we are very confident and focused on that and I think as we accomplish. I think what Scott said earlier and what we're comfortable with and giving you at this point in time, so indeed we don't sort of provide numbers that are maybe too high and we lose confidence. I think it's important to know that what we have in front of you is a pretty darn good plan. I think the growth aspect of it as it's been outlined and the component pieces of it and the reasons why and the profitability there in, I think are important and doable. We've already, and starting in the fourth quarter, our CASM experience has been great. So we are norming and forming a team that's really getting at the bowels of this. And so I wouldn’t project this plan and this guide and this outline in any way, but a really positive view and you may disagree with me on that as well, but I'm not going to defend our numbers in any other way other than the details are here. I've been in this industry for a long time and I've never seen and you’re not seeing the level of detail that we see with regards to Andrew Nocella who hasn't been asked a question either. So we’d get to you. The level of detail, OD pair, ordering by destination with the profitability expectation of where we're growing, how it measures up, it's the work that we did in our summer program and is the peak that was one of the first concerns about capacity was we went back and looked at it really hard as to hub, are we better off after that summer peak of growth than we would have. We were significantly better off. And so from my perspective, as I harness the energy of this team is, is growth good? It is in the right places at the right time in the right way. Would that gain us profitability? We've done different model at different numbers and this is where we have come out that it has the highest profitability and then we control the things that we can, which is CASM and that's what we've done. We give money back to share owners. So we're confident about this plan and we're going to -- the trick is to deliver on it and margin contraction, the 1.6 billion of fuel that we’re overlapping, I think when you take all of the things into account, it's better than you -- I would tell you that it's better than you think. You may think differently, but we're going to be very focused and energetic and communicating this in a very positive way to our company, so that we deliver.

If I could just follow up with Scott too, I think you said 4% to 6% capacity growth for the next three years. Is that right?

I said 4 to 6 and similar in ’19 and ’20.

Okay. Now look, I'm just an analyst, I don't run anything. So I definitely respect your opinions on the hubs and where your opportunities are in the network. But as investors and analysts agree to believe that at some point this plan is going to result in stimulation in your natural share, such that your revenue is going to significantly outperform your markets and I just want to ask that in the context of your Rochester example that you'd spoke a lot about, because I think it was a very right question that aren't you just going to be taking flow off from some of your competitors, so what's the competitive response going to be? I think your response was that the ASMs will sort themselves out between the competitors. So do you believe that incrementally you're going to win at the expense of some of your larger domestic competitors?

Look, I’ll let you say it that way. And I won’t characterize it that way. I think all of our hubs, if you grow them to their fair size, you're going to win your fair share of those small markets. And just like we will not be able to defend all of our market share from the Northwest Florida airport. Our two competitors can't defend all their market share from Rochester because it's just a function of the geography and the connecting hub that you are flying into. And as sort of Andrew showed in your numbers, we think in year one, those come in at lower than system average RASM, as you're moving into a market and the same would be true at our competitors. What's different at United is, we’ve spent years shrinking, while our competitors were growing. And we're not going to say that’s the new baseline and we're not going to accept 10 margin point lower profitability in our mid-continent hubs. I mean, that's the key. And growing our hubs to have the kind of connectivity that our competing hubs have, I don't think by the way we’ll get all the way there. There's reasons if we want to talk about the specifics hub by hub, we won't get all the way there, but we'll get close on the profitability of those mid-continent hubs by driving higher connectivity in those hubs. We absolutely, I mean, really it is math. We will get close in those hubs and we will always have higher profit margins in our international gateways. And that's what's going to drive profitability for United in the long run. And even in the near term, as we do that. Now, there will be times, there will be quarters where stuff happens. I mean, you…

Darryl Genovesi, UBS. Thank you. Scott, it's true that I can back in your RASM forecast, it's also true that I have. I guess what I can't necessarily see is what your underlying macro economic assumptions are and by the same token, I can’t see how you sort of view your own RASM performance over the next few years relative to the industry. So can you kind of help us understand that and also try to help us understand kind of sensitivities around your underlying assumptions?

So Andrew tried to hint at it without giving you specific number, so I'm going to hint as well without giving you specific numbers. We know that growing faster in the short term drives lower relative RASM. We know that higher competitive capacity growth in our markets drives lower relative RASM. We do have a lot of tailwinds. Andrew talked about them, Gemini being probably the biggest one segmentation, but those aren't necessarily -- I mean I think a lot of those are relative tailwinds because we're behind where our competitors are. But those aren't just relative tail -- those are tailwinds relative to not doing anything, but it doesn't necessarily -- our competitors aren’t going to sit still. Delta and the American didn't fire their whole yield management teams, just sit on their hands with your management systems. I think our 1.2 points that we're already seeing from that is going to be meaningfully better than they get, but they're not going to be zero. And so we try to give you a flavor, we do have specific numbers that we have internally. But we're not going to talk about our growth forecast, but you can – I mean you can do the math and get -- probably within a reasonable range of what we think our relative performance is going to be, given what we have said. And look, I know because I’ve read all of your reports. I know what you forecast that we are more conservative at a macro level and I hope you're right. But again, what we don't want to do is put an aggressive forecast out here today that things are going really well and we missed the absolute forecast. We're trying to make absolute commitments to you here today. And while I said before, we're not 100% certain we'll get there. We feel like we can deliver on these numbers in 2018 and on 2020. And we want to be able to deliver and so we're probably more conservative than you and I hope you're right.

Oscar, just a quick one. How frequently are you intending on updating this guidance?

We haven't talked about it. I think, we are definitely going to give you every quarter an update on everything we’re doing. Our EPS doesn't track ratably or sort of move around, but I think every quarter and possibly sometime two or three quarters down, I think it would be important to give you a sense, the scorecard that we have out there and other scorecards that we have. So we'll be a lot more visible, I think, more importantly, you'll see certainly me a little bit more often with either Andrew Levy or Scott with all of you investors that we've been focusing, I've been focusing on a lot of things and a lot of places and I think I had a key learning on the year, especially towards the tail end is that this part of our world is incredibly important. And then so we'll give you the updates as we see, but mostly -- hopefully we just want to give you some good results that track along the things that we're doing, which is why we're putting those EPS targets out there.

David Vernon with Bernstein. Scott, I really appreciate the color on what you need to do to build out the network and manufacture that connectivity. Can you give us a sense for how the financial returns from that strategy will pay off as you implement it? I imagine, you're expecting a little bit lower load factors, you mentioned before that yield should be okay. How do you think the cadence of the payoff from the strategy is going to play out between ’18 and ’20?

So actually, growing the network ought to drive higher load factors. You look like if that was Vegas example and you put ten more options for connectivity, it ought to do two things, especially as we get the yield management system tuned. One on peak demand days during the summer, we can spill off some of the lower loads because it was just, city X had the lowest yield and now city Y, one of the new ten cities has higher yields and we can take the city Y passengers into city X. But also in off peak periods, you can now fill -- where you run a 70% load factor today, you can run a 75% load factor because you have more demand. So the hub stuff ought to drive higher demand. The place where we have a lower load factors is what Andrew talked about, which is on the yield management system, which we had a built in bias in the yield management system to dramatically under forecast. And when you're under forecasting demand, you're saying there's fewer people left to come. And so even in your peak period, you're selling too soon. You're selling out far in advance. And so what's happened now, as we've got the yield management system is you're not selling as many seats far in advance and that leaves more seats to be sold close in, which are at much higher yield as Andrew pointed out, two point higher yield in the test, but since you ran a point lower load factor, because you didn't see all of those.

I made I guess – I heard your response to the first question around the yields not necessarily taking ahead from growing the capacity, and if load factors are going to go up and –

That was really a competitive question about what's going to happen when we add service into these small cities. And I don't think, I think ultimately capacity doesn't happen overnight, but I think capacity in those small city adjusts to the level of demand. None of the big network carriers go into small cities and try -- or any cities and try to stimulate demand by lowering prices. The pricing structure when we went, as we've gone into small cities and we've gone into a bunch of them in the last year, the pricing structure never changed. What changes is there's more capacity and demand changes and moves across airlines and it's not like some executive sitting on a table like this, says, oh, because American Airlines started flying to Northwest Florida, let's go cut one flight. It happens from the bottom up, because you see -- we'll see less demand than we otherwise would have seen in Houston to Northwest Florida and I'll never even know what happened and Andrew won’t know what happened, but somehow, capacity will adjust because we've lost demand in that market and our system and our processes and our scheduling department will make those adjustments. This is really a competitive question and I get the competitive question all the time about our growth. And I know it's complicated. People don’t like the natural share answer, but it really is and it really is about geography and we're not the only ones getting our natural share. It's just that we start further behind and because we start further behind, we have more near term growth to make up until we get back to where we were seven, eight years ago relative to Delta and American.

And maybe just Andrew as a quick follow, I commend your confidence in putting a narrower guidance range out in 2020 than for 2018. Can you give us a sense for what are the assumptions around economic growth, oil price when you build that long term forecast, like what do you have to believe that you can't control to put those numbers, those $11, $12 numbers in play.

And I think what you might have been asking is I think is kind of what’s your 2019 number? Is this the hockey stick, because you talked about the cadence I guess. I think that, I t think we gave you a fuel number or you'll see a fuel number in there. It’s $2.11. It uses the forward curve. It is slightly backwardated. So we get some benefits in ’19 and ’20. As far as GDP, we haven't shared that. I will tell you that we’re not assuming anything out of the ordinary. I think it would be fair to say, so we’re not assuming a recessionary environment or acceleration of growth, but we're using forecasts from companies that we’ve hired to give us long term macroeconomic forecasts. So, and I'm not sure if there's another part to your question. But I mean those are some of the – CASM, we talked a little bit about that. I mean, we’ve tried to give you a sense as to what we're going to do in ’18 and to get better in ’19 and ’20. I mean, it's not a 20-20, every year, we're going to do that. And you get to the number, so you can make the assumptions about RASM.

Thanks. Might be a better question for the board, but I wanted to ask you about the incentives in these earnings targets, which are positive, but to the extent that those are actually tied to your incentive comp. So there were some important changes made last year, where it moved much more to a relative margin expansion. I think the waiting on ROIC and ROIC improvement actually went down. And if memory serves, it was a 2017, 2018 measurement period, which feels like this would be the payoff year. So the question is, do you see those formulas changing and are you explicitly going to link your compensation to these earning star gets that you’ve offered today?

Yeah. The relative aspect has always been part of it that will continue to be that way. These particular targets, obviously, we're just rolling them out are comfortable and will meet here in the next month or so on established targets going forward. So of course, they will be tied with. The only other changes I think we're seeing now is on the customer service angle, that’s going to amplify those a little bit. And so, the board is still -- the company is still working through that. So I don't want to get ahead of them in what they're thinking. But relative margin is and will continue to be a big part of our long term incentive plan.

Not explicit earnings.

Again, I don't think so, because we haven't, but again the complement, you will have to work through that. I don’t want to commit them.

Joe DeNardi, Stifel. Scott, one of the areas of the business where you don't have to worry about competitive response is the credit card. We’ve talked in the past, it’s about 1.5 margin headwind for you guys. What's the strategy for closing that?

So, look two things. First, I would quibble with the start because it is competitive. And Houston where the natural player if you're Houston, Denver to have the credit card, but in the rest of the country and there is a bunch of markets that are jump balls. If you're in Kansas, if you're in any of the cities that aren't hubs, it's a jump ball and the kind of people that get frequent -- get the credit -- airline credit cards are the kind of people that travel and need to fly. And they have a -- not -- just like a Houston based customer is naturally biased to have the United Airlines credit card, a Kansas City or Wilmington, North Carolina customer as a natural bias to have the credit card of the airline that is biggest in that city, because that gives them the most optionality for flying. And so it is a competitive issue. It's not just about our RASM. We underperform and we would expect us to underperform in places that aren’t our hubs, because if we're number three, it's harder to get, it's harder for our customer to have the rationale to [indiscernible]. So competitive position matters, not just for the hub scale and passenger revenue, but it matters for the credit card. The second issue that we do have is, I think, in spite of that, we have a real opportunity to grow the number of customers that are signing up for a card. It is one of our big initiatives. We didn’t talk about today. It is one of the things that Andrew and his team are working really hard on. I am too. And look, Andrew Nocella and I – we’ve said a bunch of times today, we're not reinventing the oil. We’ve both been involved at our two previous airline and step function increases in the card revenues at those airlines and it's not exactly the same situation, it’s not exactly the same playbook here, but we do have a good partner in Chase and Jamie Baker just ensured me he is going to help me get this done and, but we have a very partner. But we've got to work through it and we're two big companies and I wish it was happening faster, but we are working with them to drive particularly higher originations and higher card signups for us with Chase and we have some ways that we have some cards in our hand to help make that happen. It really is twofold. We can do a better job with our existing relationship and if we're small in all these small cities, we're behind the eight ball in trying to get people to sign up for our card.

I've been reminded that we have a cocktail event. So I know there are a lot of questions and all of our executives are going to stay in the room for the next hour plus for questions. So we’ll cut it here.

Thank you.