United Airlines CEO Scott Kirby on Q1 results: Would've been profitable without the Max 9 grounding

Good to see you, Andrew. Lots of questions for Scott Kirby. Let’s talk First off about the first quarter, much better than was what is expected. Andrew went through 15 cent loss versus 57 cent, percent of 57 cent loss expected. What happened that Wall Street failed to appreciate going into the earnings report? You know, I think at United Airlines it was a good first quarter. There’s a lot of issues and challenges which I’m sure we’re going to talk about this morning. But there’s been a structural change in the industry and you can you can see it, there’s a couple of airlines that are really outperforming. United is one of those as we’re picking up market share and winning customers. We had strong revenue performance. We had really great domestic performance. We had the best operations that we’ve had in our history. You put all that together even with the challenges, you know we we had a really good first quarter would have been profitable without the Max 9 grounding. But you’re expecting better than expected profits in the second quarter relative to St. estimates going into yesterday. And this is coming as we go into the summer where you’re going to be fighting capacity limitations. How much is that limiting your ability to grow? Yeah. So you know the the there has, there is a lot of our challenges in the industry, the capacity limitations particularly the suppliers. You know it is pretty remarkable. We started the year with this kind of bow wave of aircraft delivery supposed to be 183. We actually knew we wouldn’t get all of those. We planned for 101, we’re now planning for 61. The biggest impact of that really is on our cost structure. We hired, you know, enough employees to fly 101 airplanes and and we’re going to be carrying that. You know, as we go through the summer it’ll catch up within a few months, but we’re carrying that during the summer. How long do you expect the pilot unpaid leave offer to be out there and the pause in pilot hiring, is that a A2 month situation or do you sit there and say, look, it might have to extend a little further. So unpilling leaves are something that are regular. We do regularly in the industry, just the seasonality of our business. We don’t need them all. We need them all during the summer. We need them all Thanksgiving at Christmas and we it’s a it’s a benefit that we offer a small minority of people use it but for that small minority who can afford to you know it’s a great opportunity for them to take a month and you know travel the world use their flight benefits and and so that’ll that’s just kind of regular course with regard to pilot hiring. You know I think we’ll be probably be back on track this summer and really it was this was just about you know when we had fewer aircraft we’d staffed up and so take a couple months pause and then we’re back right on track. Last time we talked last quarter in Houston, you said look we are taking the Max 10 off of our expectations in our order book and you immediately started saying we may look to find some A320 ones from Airbus, you’re leasing 35 of these. How tough was it to put that deal together given the tight market that’s out there right now? You know when you’re United Airlines, you know I think most of the aircraft lessors are are kind of chomping at the bit to do business with us. So but you did try to buy from Airbus, we talked to Airbus and they are, you know they’re they’re sold out to the end of the the decade. They build a great airplane. It is a very tight market now, particularly with the challenges that are happening at Boeing. But you know what we’ve done I think is really get our fleet plan in a much better place now where we’re going to take 100 narrow bodies a year. We had these big spikes as aircraft got delay, you know delayed and we’ll have consistency, steady deliveries, we’ll have steady CapEx, but importantly we’ll have steady for the operation on pilot hiring, pilot training, all the things that go wrong with it. You know that consistency is really going to help. Two quick questions. First of all, there’s a whistleblower testifying in Capitol Hill today essentially saying the Dreamliner is not safe. You’re the largest operator of the Dreamliner. Look, he’s on nightly news last night saying these things could fall out of the sky. When you hear that, what’s your reaction? Look, this is an airplane. There are thousands of these airplanes. They’ve been flying for decades, millions of flight hours. I am totally confident the 787 is a safe airplane. And then with regard to the FAA audit of your maintenance issues, you had a string of them this spring as these were taking place. What did you say to your staff and what have you said to the FAA about what’s happening here? Yeah, you know, safety at United Airlines is the number one priority. It always has been. That is by the way is true at all of US aviation. At United, we have a leading and strong foundation of safety training process systems, reporting culture that goes up well beyond the standards that are required. But it is true that while they were unrelated, we had a cluster of several high profile incidents. And because of that, you know it’s an opportunity to say we may have a really high safety standard. Air transportation is by far the safest form of transport in the world, but how can we take the standard even higher? And we’re working very well with the FA. We welcome them in here. We’re really embracing this as an opportunity to take the already very high standards to an even higher level and I’m confident we’ll be able to do that. And look you can for for CNBC viewers who are watching you know and care about financials, you can. Our focus is on the safety process internally at United, but you can see our numbers. You know we’re able to operate well while we do this at the same time.