Oscar Munoz, Executive Chairman of United Airlines, Discusses the Future of Travel

Monday, August 3, 2020 - Executive Chairman of United Airlines Oscar Munoz discusses the future of air travel during the COVID-19 pandemic as well as answers questions about how we can make our society more equitable.

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Oscar Munoz is the executive chairman of United Airlines, having previously served as CEO from 2015 to 2019.
Oscar Munoz is the executive chairman of United Airlines, having previously served as CEO from 2015 to 2019.

Oscar Munoz is the executive chairman of United Airlines, having previously served as CEO from 2015 to 2019. Today, he will discuss how United and the airline industry have navigated the economic and health challenges of the COVID-19 pandemic and what to expect from the industry moving forward.

Oscar Munoz says airlines were the first industry to feel the impact of the COVID-19 pandemic because of the global nature of both the disease and the industry. However, he proudly notes the efforts of the United family to transport personal protective equipment and medical professionals around the world during this crisis. Shockingly, the industry is operating at roughly 10% of what it should be at this time of year and Munoz does not expect a sustained turnaround for the industry until a vaccine is available.

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In This Episode

Read the transcript of this conversation below. Use the links to jump to a topic that interests you.

Opening Remarks

Oscar Munoz:
I'm sure there's a couple of folks that I've had a chance to meet there at some point in time, and I suspect many of you have flown on our aircraft over the last few years, and I hope your experience was generally good. This is an industry, airlines, where everyone that flies is instantly an expert, and so we get lots of feedback on everything, from soup to nuts. It's also an industry where no good deed goes unpunished. If you do something, there's a large portion of the folks that don't like it, and vice versa.

We fly approximately 180 million people a year, or did fly, to over 60 countries. And so large scale and global, we are all of those things. And certainly, my thought today would be given that I have this background in the airline, give you a little bit of sense of what's going on, what's happened, and then open it up to questions. I find that we never have enough time for what is a myriad endless set of questions with regards to anything and everything about our flights, including your own personal travel that's upcoming, and I'll do my best to answer all of those things.

It is a complicated industry. Think of the logic and algorithms involved in getting roughly 1,500 aircraft in the air, 24 by seven, getting all the right crews and all the right food and all the right people in the right seats endlessly. There's never a stopping point. I used to run a railroad, we at least stopped at night, to a degree. But in this business, it's constantly going and it's high stakes. It's incredibly competitive, historically very low margins.

And what has transpired over the course of the last five years, for the industry at large and certainly at United, is we've done a really good job of building an actual business, a business that has a little bit of margin, it focuses on you, the customers. And up to approximately February, March of this year, we were on a roll. We had announced my transition to exec chair that was effective just a couple of weeks ago in May in December. And that's what good companies are supposed to do, is create a transition plan that's nice.

And we had a trajectory, we had... our stock had doubled, and more importantly, more importantly, the hundred thousand people that work at the United family were feeling finally good about who they are and about themselves and where they were headed. And so it was a perfect time for the transition. Then all of this happens. And as I think of all of this, it's like, we're not living through just one, but really three once-in-a-lifetime events that are taking place concurrently. The epidemic and all the people affected, the deaths, the economic impact on the, at one point in time, over 30 million people unemployed, down to... I think the latest numbers is over 20. And then of course, just recently, the last few weeks, this historic protest calling for civil rights and social justice and the African American community.

And while each event, in my mind, is distinct, I think we've all realized that they brought into focus some basic hard realities about the disparity, economic and racial, that is at the heart of our society and has been there for a long period of time. I speak as someone who has done a lot in business and in politics and a host of different things. But I can tell you stories about being a Mexican American in America. It's not an easy thing and it shouldn't be as hard, and I can imagine and then... or empathize a little bit more. But these impacts these events have... if you think about it, they have fallen, disproportionately, on communities of color, as we see, for all the reasons that we have.

So I'm going to walk through a few things business, and on the racial issues, which I think we're all passionate about. We do have a uniquely United sort of view on this. Since we are global, we fly to all these countries, we saw some of the early aspects of this virus firsthand and took the appropriate sort of actions very early on. We certainly were the first to feel it, as an industry, and probably the last to feel any benefit from it. Our first realization was... If you remember back, we were hearing about it, it was in the ecosphere, but it wasn't in America yet. It was in these far off places that we as Americans tend to not really associate ourselves with. Wuhan? Where is that sort of thing?

But that weekend, when you saw the outbreak in South Korea, and then you saw the outbreak in Italy, it really began to set home for some of us. Well, we saw, because of the business we run, Italy in particular, typically, at that time a year, we have full flights daily, there are people booking more flights for future times. As soon as the outbreak in North Florida [inaudible 00:06:55] region sort of came in the news, within hours, we saw our load factors, people actually flying, drop precipitously. We saw bookings drop almost to zero. And that was just in that part of the world.

We quickly saw that and extrapolated to the point that this thing... clearly, the virus travels, travels fast, and it's only a matter of time before it gets to the US. It was our early assumption with regards to that, and it's... So if you fast forward a couple of weeks later, we had already cut our capital spending, got into the system, raised a billion and a half of debt quickly, before the news really got out on this. And in fact, in a private session with the president of United States, literally, what I left with it's like, [inaudible 00:07:46] the demand drops to zero as soon as we have an outbreak.

And so we did, I think, a phenomenal job of getting that information out, convincing, honestly, a lot of my own industry leaders about the impact of this, and importantly, getting us to sort of, as an industry, come together, and begin to form a coalition to go to the government for the support that we eventually had. There's a term that people use that we get defensive about, the bailout of the US airline system. This wasn't a bailout. There was nothing wrong with our firm, there was nothing wrong with our industry. In fact, we were sort of on a really good trajectory, and convincing government, which is a book and a chapter and a whole hour-long conference of itself, about how we get to that point.

But I think our transparency and importantly, our frankness and directness, which continues to be the point today, every time I speak publicly now, our stock drops. Because we just have the same basic concept, we see the facts. I always say, and I've passed this on to my successor, every morning, you need to wake up and get facts and data that supports your view and opinion. Because we want to be more helpful, we want to be more optimistic about the future, but the fact of the matter is with this virus and the impact that we've seen, and constantly, every time, any little bit of news rises with regards to this virus, we see our business drop precipitously.

New York; New York is just coming out of this, everything's doing great, and all of a sudden, the governor announces the ban on people from the hot states, and you see the drop off can bookings precipitously. It is still a very sensitive subject. We're tracking all the different hot areas, and no one's going to Arizona and Texas, and to a degree, Florida, where I live and Harp used to live. [inaudible 00:09:39]. So frankness and transparency has been really important. It really helped us get the... We're the only industry that got money from the government as a grant that had its hooks, but nevertheless, it was helpful to do that.

So also in the interim, I do want to give a little bit of shout out, because as dire and as impactful as this was, we also took, as a company, the opportunity, like many other corporations, to help out. We've been repatriating our citizens from all over the world. I can't tell you how many tens of thousands we've had to bring back because of the various sort of barriers to entry and exit. We have transported lots of cargo, the famous acronym of PPE. I can't tell you how many variants of all that we've transported over the course of the last four months. And then, of course, flying medical personnel from all over the country, to the hot places.

And why that's heroic is that my employees, my United family, are deemed essential, and so they are indeed at the front line, like are our medical workers. And so it's been terrific to watch them go through this, knowing that, from a standpoint of the recovery on this, many of them may not have a job after it's done. And I'll talk a little bit about that later. I also think we've led the way on the health standards, and I think a lot of questions that everyone has, and when you read different things in different periodicals and on the internet, an aircraft is indeed probably one of the safest places you can fly at this point. I'll tell you why in a little bit.

Getting to the airplane, walking through the airport, wherever your location might be, is something we don't control, but the things that you'll see that are very visible and should give you a lot of confidence, as you've read about and heard about, the HEPA-grade air filters in our aircraft, they remove 99.97% of particles in the air, every four to five minutes. That, combined with any kind of mask, or even an N95 mask, the risk of transmission inside an aircraft versus the droplets is fairly, fairly nil. We are in the process of finishing a study that will be published by third parties.

We know since this has started, the crisis has started, we've not had a single infection from somebody having it on the aircraft. We've had plenty of people on the aircraft that have had the virus, that have been diagnosed, but none of our employees, none of the people that help in service on the aircraft, are flying have... we've not had one instance. So the air filters and the masks and the combination of that have been very helpful. We are actually cleaning, we're making people wear masks. Unfortunately, as all of us know, and no labels is a perfect example, I'm sure you'd support this, it's become politicized. When president United States says, if you wear it, you don't like me, that is just confounding to someone who wants to keep people safe and everything.

In fact, we got the industry together and made sure we got this all done at the same time. If you don't want to wear your mask, we ban you from flying on our airline. But importantly, we got the rest of the airline system to do that. So if you get the proverbial red card in soccer, you cannot fly any US airline. That's how strongly we feel about the aspect of wearing a mask. I know they're not comfortable, I know people wear them over their eyes and all sorts of things, but it is important that we wear those. But at the end of the day, we are doing so many things to make sure everything is clean, everything is electrostatic. We've got drones with ultraviolet lights that do all those things.

Importantly, before you fly us, we ask you to a health self-assessment that walks you through a list of questions. You're on your own, you can lie anytime you want, but it's important to have those little different things. And then lately, over the last month and a half, sort of to confirm and get competence to our actions, we've teamed up with Clorox as a brand name that I think we'll all agree, speaks of cleanliness, and we teamed up with the Cleveland Clinic, who is directing everything that we've done. Again, the purpose, the simple objective is to give you a little process and a little confidence that when you're on the aircraft, you're indeed safe.

Now, I'm not telling you to go fly, I'm telling you to make your own decisions. I'm just telling you that as it regards to cleanliness and health, an aircraft could be one of the safest places, as hospital rooms tend to be right now in other places [inaudible 00:14:18]. The business is down significantly. You'll read that there's a little bit of an uptick in the business. There is. We've gone from traveling maybe eight to 10,000 people per day, which may sound like a lot. It's gone up to almost 70,000 people per day. So massive increase. At this time of year, in our business, we are normally traveling 600,000 people. So we are nowhere near the level of volume that we have on an everyday basis, and our revenues are therefore down to that degree.

We're about a $45 billion business normally. We'll be lucky to hit five over the course of the rest of the year. So the financial impact is significant, and therefore, the need to cost and size-adjust our business for the future... Because we have a fundamental view, again, back to frankness, that until a vaccine is developed, implemented, and the world is inoculated, we don't think demand comes back until then. Not to the levels that we have. You'll hear that we just announced a flight to China. It's two flights, they'll be very empty, by and large. And we used to fly 12 and a half times per day to China. That level of volume won't come back for a long period of time.

My United family is operating under all of these kinds of constraints. In a lot of Europe, people are business folks. How can you be, I don't know, for lack of a better term, disruptive, in the same process? So we're going to go frictionless. We've been wanting to not have paper boarding passes for quite some time. A big majority of our flyers don't use them anyway, they use the app, and just... But there's a large bit of population, I'm sure some of us all here on this call, that still like their paper. My wife was one of those folks. "I don't care. I just want my paper." This is going to be an opportunity when no one's going to want the paper anymore.

And so whoever you fly, all the airlines have apps, I strongly recommend that you get those. The United App, by the way, was voted the best in the airline industry. But again, touchless for everything, your baggage claims. We're doing a lot of things that you don't have to really touch or actually interact with anyone. Importantly, with our app, probably some of the last few questions about middle seats, our app, we can... If you fly with us, 24 hours in advance, if we see that your flight is over 70% full, which indicates that middle seats would have to be filled in order to get that, we let you know and allow you to change your flight to a different time and different place where the flight isn't as full.

And so interestingly enough, the take rate on that, when we've gotten a few flights that we have over that 70%, less than... I think it's 1.8% of people have actually taken us up on that. The thing about flying is if you're going where I want to go or need to go, if it's the right price and at the right time, people fly all the time. And while a lot of you on the call will say, "I'm not flying forever and ever," there's a huge population of folks, largely millennial and younger, who are taking advantage of the low prices and the fact that they seem to not get the disease or as seriously as others, they're taking an opportunity to really fly a lot. But again, it's a very few amount of folks. And so we're taking all this time to put some things together that will be.

If I think of the magnitude of this, just to give you a sense, the worst ever scenario in the airline industry was 9/11. Right after 9/11, no one was flying. The impact of that is our business, our revenue went down about 40% as an industry for approximately two and a half, three months. Ours has gone down 95, 98% and only climbing up now, and it's been more than three months, and reportedly, we don't know when this is going to end. My conjecture is that a vaccine is going to have to come place at some point in time.

So we are slowly... we're hanging in there, there is going to be... Unfortunately, we've had to announce a lot of departures from the business, people that have worked with us for 20, 30 years, and it's heart-wrenching to be able to have to make those decisions. But I'll tell you, in your various lines of business and work... I have to tell you, an airline employee and what they have to go through, from a training perspective, what they have to go through every day with variables that are involved in our business... We have the best planning logistics teams in the world, but we don't control mother nature, we don't control the medical community, we don't control so many different things that can affect how air traffic will flow. But if you ever have a chance to support someone, that's, unfortunately, a recent United Airline employee, you'll find that their skillset as a human, as a leader, as someone that can manage a lot of variables is pretty high. So just my plug for the folks that are out there.

And then as I sort of wind down on the business, I think we are going to recover. I know it's going to recover slowly. Domestic business will come first. International's almost nonexistent. Most of our international flights are just cargo flights. For those of you with questions that, "Hey, I was thinking of going to Europe for the summer or late summer," all those trips, it's going to be difficult to get... We have the barriers, we have the restrictions on travel at the US, against those of us in America and vice versa, all of that has to be lifted. So while there are places we want to fly, and there's a little bit of demand to go there, unfortunately, politics will get involved to some degree and that'll continue to be a point that we manage through.

So as we go to the Q&A, any questions... There's been incidents on my airline under my watch this, the doctor being dragged off. We've had just a myriad of the government shut down, we had Pakistani airspace... There's just a never-ending sort of dialogue of disasters that always befall our industry. Happy to answer any questions about those things. But before I do that, let me spend a few minutes on the racial tensions. And we've tried to be, all of us, I think, understanding and opening up dialogue, which I think is one of the most important things that any one of us individually can do. If you don't understand why, ask someone, and ask someone in a way that they will talk to you calmly, and the way that you'll listen.

The anger, the hurt, the despair you see on the faces of people on TV and others and the response, it's real, and it comes from a long history that some of us know, and some of us don't always... can appreciate. But we've also seen great acts of bravery and heroism and people helping each other out in so many ways. And then importantly, what we've done, at business round table, business council, and all of the corporate leaders... I think corporate leaders are really beginning to take a lot of action in speaking up in the way. And so it's been encouraging to see all that. But the mantra of this moment needs to be that this time, it's different. And we have to make it so in a way that...

Because the response from us as corporate leaders and all of us, it has to go beyond the traditional things that we've done. All of us that sit on boards, we've been through this for 20 years. We're going to put metrics and for diversity, we're going to put all these numbers, but it's not always managed itself in any way. So, as I think through this and I talk with a lot of our folks, African Americans, they don't just feel locked in to this criminal system, they also feel locked out of the economic cycle that a lot of us have gotten the chance to participate in.

And so in addition to the police reform that is being... We had all the folks from our government talking about this yesterday to the BRT. Police reform is going to get political a little bit, but there'll be some changes. But there are things that we can do and are being done that are more important. Certainly, banking, folks, and community capital allocation, all of that is... you're seeing much more of that. For me, having grown up very poor in a community where this happened to... But the loss of traditional pillars that kind of hold up and fortify communities, whether it's schools, gyms, YMCAs, your church, your park...

I grew up in Southern California, in East LA in the inner city, and I remember, as a young kid, seeing some of the things available to us that slowly disappeared. Through whatever means, there's an area there where all of us can help him fix. In your communities, there are places that are no longer existing or are just a bit hanging on. I think you can go into those communities and support financially or any way you can. I think it'd be helpful. Because I think the corporate allocation of resources is going to really happen.

But the thing I would leave you with on race, and it's one of the most important things, when people that aren't in the underrepresented class, people that are not of Color speak up about this, in exponential volume versus, someone like me talking about it, or someone who is African American... I've been around for too long, I just see it; I see people roll their eyes, I've seen it through the women's movement, or through gay lesbian movement. When we, who aren't affected by this, truly understand it and speak up, and I think the term is ally, it... I just can't tell you how important that is for the community to have people really sort of... in essence, [inaudible 00:24:36] to wake up to this thing.

And so this is a time for action at every level, not just words of support, because... I always say at my company, proof not promise. And so if indeed you feel strongly about this, there are ways to get involved that don't involve a ton of money or speeches. There's a lot of ways that you can do fundamentally in your own community that can help. I'll leave you with the fact that the righteous anger that you see in this movement stems, as I talk to people, from a really deep suspicion that, once again, nothing's going to change. And that's where that comes from, and that's what's the most frustrating to folks. And so if indeed this time it's different, I think it's up to all of us to make it so. So Harp and Nancy and Liz, I'll stop there. And again, I tried to carry a wide vast of subjects, but I'd love to hear the questions.

Regional Markets Impacted by COVID-19

Maxine Clark:
Thanks, and thank you for your comments today. I'm from St. Louis, Missouri and fly United often to the West coast and also to Newark Airport as often... almost all the time prior to the COVID. And unfortunately, in St. Louis, we have those small airplanes that are... I know they're not really United, but they're operated by somebody else. And how are those going to possibly be? They're not even the modern big airplanes, like you can get on to go to LA or somewhere else. How are those going to operate? And are they going to be cut back because of just expenses?

Oscar Munoz:
Those are slowly phasing out for a lot of complicated reasons; longterm leases, longterm ratios and our labor contracts with the unions are required to use those, and, to a degree, the demand out of certain cities makes those at least economically optimal. They're awful airplanes for the future. You see United really slowly move out of those, getting to those larger 70, 60 seaters, which actually have a first class section and all those. So-

Maxine Clark:
Most of them have a first class section, but they're still small and you can reach across to the person that's across the aisle. They're still small.

Oscar Munoz:
Again, those planes are put in places where the demand is [inaudible 00:27:03]. St. Louis, as an example, I think, historically, where you used to have a lot of aircraft,. TWA was based out of there. Over time, for a lot of different reasons, the level of demand, the level of business demand has just weakened to a point where our airplanes just don't go there, and therefore you get the smaller. So the 76 seaters will fly for a while, it's the smallest small ones that will cease to exist in a short time.

Maxine Clark:
I think that's going to be a challenge in markets like St. Louis, which are big markets. I constantly commute to DC, San Francisco and New York, and I live with it. But it's not pleasant, it's always a... It's a short flight relatively, but it's still not pleasant. But I do know how complicated it is for an airline. I don't even know how you get us all where we have to go and our bags and everything else, so I totally appreciate it. And I know this has been an incredibly complex time. I appreciate your comments, particularly about a race and race relations, but I have to say that except on these small airplanes that I fly, that sometimes there is African American flight attendant. I don't think I've ever seen an African American pilot, or in the bigger flights, have I ever seen African American flight attendants in the regular flights to Europe or anywhere else. And I just think that's a huge opportunity. I know those were always desirable, have been desirable jobs in the past for the benefit of travel and working for a good company, and I think that's a real opportunity to open up those opportunities to young... for them to even know those jobs exist, that they're possibilities for them.

Oscar Munoz:
I think you're right. We created a program called Aviate, which was our, again, this concept of proof not promise. We put a program in place that was certainly going to help that. You probably haven't seen them. The facts around our diversity in our company writ large, but certainly in our pilot lens, we have the highest percentage of women pilots in the world and we have the second highest ratio of African American male pilots in the world, second only to some South African airlines.

And so we're proud of the places, but if I gave you the numbers for women, it's 8%, and we lead the world in that regard. So the opportunity exists for this all the time. They are great jobs. We are starting at grassroots levels. Education is such an important thing, as we all know, on this call, but getting to folks in really high school, because of the aptitude intellectually has to be such, because it's fairly complex. But you also need a little bit of the eye-hand coordination. We used to get a lot of people from the military, where we got a lot of our diversity, but the military has cut back with regards to that. So it's a never ending task. So thank you for that, and hopefully you see all that.

Now, with our flight attendants, that's easily the most diverse population of any employment group, anywhere in the world. We are completely over-indexed on that. So I feel very confident that you should see more of those, maybe not on the small aircraft, because those are different places, but we are very well-represented in that community.

Mask Enforcement

David Robin:
Just one quick question. I've read more than a few accounts, unfortunately, of people flying, and seeing people basically smirk when the flight attendants ask them to wear their face mask. And I read an article the other day about a guy who flew from South Africa to DC and said when he got to the airport in South Africa, they took his temperature, he filled out a form, they took his temperature three or four times on the flight, and when he landed in DC, no one collected the form from him, no one took his temperature, and he was just sort of stunned at the lackadaisical nature of enforcement.

And from what I understand, and again, I'm not sure this hasn't changed, but the FAA has not yet made it a regulation that you have to wear a mask, and so the flight attendants are sort of hamstrung in terms of enforcement. I did hear what you said about this sort of red card that you're issuing now. But during a flight, what I've read is that flight attendants are kind of hamstrung and they're trying to avoid getting into any sort of argument with a passenger mid-flight that might lead to them having to do an emergency landing, so they're just sort of letting it go. And I'm curious if there's any logic as to why, other than following some crazy mandate from Trump, but why the FAA would not mandate, just like wearing a seat belt or not smoking, mask-wearing.

Oscar Munoz:
Well, you mentioned two areas, smoking and seatbelt, that we have a continuous problem with always. Again, when you fly 180 million people all over the world, you're always going to have some just not right person that feels that they don't want to do this. I think, not in defense, but just in recognition of the complexity of trying to enforce anything, what is your enforcement capability? You can land a flight and you won't be happy. If you're on that aircraft and we have to land it in an emergency because somebody doesn't want to put their mask on, I guarantee you that a high percentage of the people on that aircraft are going to be pissed, because it just... The enforcement, for us, from a mandate from FAA or any other place, is almost impossible to work through, because it has to happen before or after, which is why we developed this kind of red card concept. So you can away with it once, but you're not going to get away with it anymore.

With regards to crossing jurisdictions, talk about somebody from South Africa coming all the way to DC and all that, it's impossible to get those two governmental units coordinated. An airport receives hundreds of flights any given hour, so it's tough to do that. I just had a friend fly from Florida into New York, knowing that he was going to have to go in quarantine, he's all worried, he's got his paperwork; no one said a word. Not a person. He just walked off the plane and he's looking around for people trying to give something, didn't happen.

The question is, would you rather have an FAA mandate or would you rather work it the way you do? I think generally, we prefer to work it the way we do, because this thing that we're doing is helpful. We've only had to give four red cards out in the last... I checked, in the last three weeks probably. Again, it's damned if you do and damned if you don't. Human beings, when they don't want to do something... The seatbelt question is a perfect one. People refuse to wear them, completely refuse. Don't need them. It's going to mess up my suit or my dress, and those kinds of [inaudible 00:33:50].

Back to the issue of what are our employees have to put up with all the time, they have to. So we teach them, rather than enforcement and just pull out the heavy card and get a policeman to drag them off the plane, because that's how that other thing happened to some degree, deescalation. How do you take a person? How do you quiet them down? How do you say this? And then we are moving people around, if someone doesn't want to. And so we're trying to manage as best as possible. But in mandate, it has to be enforced through anything. I don't know that it would be that much more helpful.

Flying Full Planes?

Bill Galston:
First of all, Mr. Munoz, your credentials as a communicator have not been overstated. It's a pleasure to have this dialogue with you. In the name of keeping the pleasant vibrations flowing, I will not share with you my impressions of what has happened to the customer experience over the past five years as the business model has improved. But I do have a question/comment on what you said about the safety of airline travel because of filtration systems. I can tell you, psychologically, that if I'm sitting next to a person who is not my wife on an airplane, particularly a small airplane, I don't care what the statistics say, I will not feel safe. Which tees up my question, I wonder whether you had a reaction to the CDC's pretty blunt and tart rebuke to one of your competitors that recently announced that they would be flying full planes, that they would no longer carry out their middle seat vacant policy.

Oscar Munoz:
Dr. Redfield, who I know well, and we've talked since, and Dr. Fauci, who I also know well and have talked since, and Dr. Sanjay Gupta, who has been live with this... There's probably a thousand other doctors that would tell you the opposite. But the fact of the matter... So let's just get the facts rather than what you see or read or hear in the press. A regular aircraft is a 11 foot wide tube, in essence. It is impossible to "socially distance" anyone sitting in the same isle. It's only 11 foot across, you can't sit far enough apart.

So while you're right, you may be uncomfortable with someone you don't know sitting next to you, but most of us are uncomfortable with sitting next to someone we don't know anyway, and that's back to your customer experience, and I'm sure you've got a long litany of those issues over the years as our aircraft have been redesigned. So what you hear about middle seats being open, it's a bit more of a public relations campaign, it's not a medical one. And this is what we do with Cleveland Clinic, for instance, and that's why they help us. They're the ones that helped us guide to this way. It's like, there's nothing you can do to actually... If somebody is indeed stick within a radius, the row behind you, the row in front of you, it's always going to be a potential for infection. But again, we've not had a single infection of anyone in four months.

Now, we've got to get that data out, we've got to get it by a third party that modifies that. So my reaction to those commentaries, it's just like with anybody, that's like, have you considered these facts? And the HEPA air filter is a big part of it, along with a mask, that combination, to really limit anything. The fact that we're forcing people to wear a mask is another, the fact that we're cleaning is all of this. But at the end of the day, there's going to be a lot of people are uncomfortable with that, and our answer to them is, terrific, don't fly. Don't do it.

Because if you're indeed that nervous about it, why are you doing it? And the reason is, some people have to. That's the other thing, is people just aren't applying for leisure. You hear the stories, I have a sick parent that I haven't seen and if I don't see them soon... And so we try to... Which is why we developed the app that says, this flight's going to be full. Can you go another time? And again, very few people have taken us up on that. So again, this is an industry where everybody has an opinion, everybody shares it, everybody has a bully pulpit, both ways, and our job is to do the best we can to inform you as much as we can, to tell you the facts, to be frank, transparent.

We're not flying that many aircraft. Listen, the airline you mentioned is doubling the size of their fleet that's flying. There is no demand for that kind of business; none, zero. So it's going to be a constant sort of conversation. And as I told Dr. Fauci, Dr. Redfield when we had this debate, is that you guys were also the ones that declared loudly that masks weren't something for us to wear, and you've reversed course on that. What have you learned from that via facts? And can you explore the facts that we've just given you with regards to the efficacy of these HEPA air filters? And you don't have to say it anymore, but you should see it from [inaudible 00:39:21], because they weren't aware of that, for some reason.

I sound defensive, because we're having this conversation at all times. It does not behoove us to get any of you sick on an aircraft, none. The money? We are hemorrhaging money today. We're burning $40 million a day. Do the math in a quarter. That's billions of dollars. God, we've just raised $10 billion of debt, and the hangover from that, for my company, you want to talk about customer experience going forward? We're not going to have any money to do some of the things that we've been trying to do. So it's a dire time.

So I don't need anyone to be more angry or more upset or get sick or create an actual fact-based sort of infection rate in our aircraft. We feel comfortable. I'm a heart transplant patient, there is no one more immune-suppressed than myself. I wear my mask, I fly, I see people, we don't touch, we do all the behavioral things. But that's my choice. And for others that want to have this debate longterm, it's like, don't fly. Don't fall for the PR stuff, because I guarantee you, flying Southwest, the exposure is, frankly, the same, to some degree.

And what you'll see, and you can mark my words as I stand before you, it's only a matter of time before the airlines that are making a big PR issue have to revert back from that, because the economics of our business do not work with flying aircraft only 65% full. They just don't. Impossible to do that. They'll have to revert back at the right time and they'll face the same pressure.

Planning Future Infrastructure Development

Don Upton:
Thank you. And thank you for being with us today. I put a red circle on my calendar for this one. I'm calling from Tampa Bay, at my home, and my headquarters is in Charlotte, North Carolina soon-to-be home, two cities that depend on a great future vision for it's airport and it's multimodal transportation, but I think everyone that's participating has that feeling about their region. So my question goes a bit into the future, and it depends on you wearing all these great hats, because you are a real guy, you are an airline man, you are a multimodal thinker. And I think that puts you in a special position to be an advisor for a group like this. And I think there will be significant infrastructure funding on the horizon, at a federal level. It'll be a robust. I don't know if it will be strategic, but it will be robust.

And I was wondering if you could take us to the end of the pandemic and into big infrastructure funding, what do you think we need to keep our eye on in terms of how we plan for the next 50 years, how we invest, how we vision for those dollars so it builds out the multimodal infrastructure of which you're such an important part? Can you take us a bit into the future? How can we change?

Oscar Munoz:
Well, that's a heavy question, because it involves such a wide variety of things. And you mentioned some predicates that may or may not happen. I think, and I agree, wholeheartedly, that infrastructure, writ large investment, in this nation has to be done. Our highway system last time was in the '50s when it was built, we saw the bridge that collapsed a few years ago. I used to run a rail business, and so the rails have to pave their own way for the rails they use. The shipping industry has had its issues, but yet the world continues to consume and it continues to be infinitely more global. The Panama Canal expansion is a good example of that.

So the, writ large, understands this. I worry about your predicate, that when this is over, there'll be lots of money to invest in infrastructure. I don't know that that's going to be the case. We're talking about a trillion dollar pays for COVID relief, and it's not going to be the last. I think very much like corporations like me, that are going to wake up from this with a very heavy debt hangover and interest on carrying cost of all of that, I think our nation is going to be in the same place. And it's such a political environment, because where do you invest first? If you say roads and bridges, great. Which roads and bridges and where? And ports.

So you've seen a lot of private public partnerships, which will be part of it, you see a lot of infrastructure funds. So I think that'll continue. It's going to have to be... So in the future... For us, our international flights are cargo-only, by and large. We'll carry 20, 30 human beings that are just going back to their country. We've never carried that. Because of my background and freight coverage, and because of the fact that I knew a lot of players in the big cargo space, our cargo business at United, before the COVID, went from, I don't know, half a billion dollars to close to $2 billion. Of course, it's even higher now, because we're doing a lot more of that.

I don't know that I have a good answer to what the future looks like. It is going to have to be, to a degree, much more of a priority for governments. And what's going to be difficult is governments aren't trusting each other. You see this with the travel ban. So we have a long period of regaining the trust of our allies, and that's not a political statement, but kind of is, and the only way you have really good partnerships is through trust. So your question's a great one. I don't think anything's going to change drastically in the interim. I think you're going to see a consolidation of companies all over the place, you're seeing it all. You're going to see a ton less airlines, certainly, a ton less sort of shipping companies. And then we'll have to start...

The reason for multimodal shipping is that people need goods to manufacturer, to move ahead, and so the economy is going to have to come up. So I have a bit of a... not a particularly positive outlook on that at this point, but stay tuned. The infrastructure funding is going to be critical, and that's a huge political mess. So we'll see.

Business Round Table

Doug Scribner:
You mentioned the business round table, and last August, the BRT announced its new statement on stakeholder theories of governance. Can you give a little color about, what did it take within the BRT to make that happen? And then what's going to change? What would you like to do differently as a result of that approach, if anything?

Oscar Munoz:
So, two things. We've done a lot of things at the BRTs since I've been on there. We did the corporate purpose one and got a lot of backlash. Companies should only exist to make money for the shareholders, we said, yes, but it's also important to lead social causes, to help with all sorts of things, and there was a bit of backlash on that. I think the purpose at the BRT is you get the top leaders of corporate America, and there's different views, but we coalesce to put statements together that, I don't know, simplify a concept and set a direction that corporate American get behind. That's all we try to do. It works sometimes.

We did a reopening one. We spent a lot of time, and I was not a supporter of that particular [inaudible 00:49:12]. And Josh Bolton, who runs it, talked to me, and it's like, Josh, this is the wrong time to talk about reopening. Unless we have a vaccine, we're going to have recurring waves of this. And I'm not a medical professional, but I just... you can see where it's happening. But they went ahead and put this all together and published it and we took it all the way to the president's office and all his leaders, everybody reopened however they wanted to, whether someone followed the [inaudible 00:49:36] or not.

But my point, our point, in general, when we debate these things, it's like, but not doing anything or saying anything is probably worse. So let's get the collective views of arguably some of our best business minds in the world and get sort of a mass around a particular subject and put it down on paper, and maybe somewhere, somehow that begins to sort of direct or provide direction to someone. And so that's the purpose and objective, and we'll get it out everywhere and people, again, will have their views on it. But not doing anything is important. [inaudible 00:50:15].

We're also, again, back to this proof, not promise that permeates everything I do, anyway, for folks. You're going to see it here, increasingly, more and more sort of declarations from business leaders at the highest levels about racial equality, about things that we talk about. So that's the intent and the objective. It has varying degrees of success, but again, my personal commentary is that it's far better to have done something and put something together than nothing at all.

How has travel changed forever?

Joe Myers:
If you were to kind of put yourself four or five years ahead, with your insight, how do you think that travel, again, looking at it four or five years out, has been changed forever. Clearly, move back in a direction of where we came, but to what extent and what are the permanent changes?

Oscar Munoz:
Sure. So history teaches us a lot, right? You saw many of us on the call were around during 9/11 and remember those good old days where you could just literally pull up to an airport and park your car and walk in, and everybody greeted you with gloves and gave you everything you wanted for free, and you walk right on an aircraft without anything in the middle of that. And how vastly those times have changed post that. TSA is probably the most sort of icon-ish view of that. I think going forward, until we have a vaccine, I think the invasion of privacy, as somebody terms it, is going to increase. We're going to want to know whether you're really sick or not. We're going to do thermal imaging and you're going to be answering a lot of questions. There's going to be a lot of folks that aren't allowed on planes if we indicate that. So I think you're going to see that for a little while.

For the future of the business, there's... I think a lot of people are saying that people have learned to work in this fashion, where you gather lots of people over a camera and it's very effective and efficient and I don't have to leave my living room or my office. Businesses don't run that way, in my opinion. You don't build cultures that withstand pressures like this, this way. I think as humans, the dynamic we need is others. It's simple. Back to ancient times, where... We are social animals, period, and that's just the way it's always going to be.

So I think there'll be some degree of less conferences for a while and all that, but I think the art of flying and connecting with other human beings will continue. It'll take some time. How we do it, I think, is probably more your question. There's supersonic, hypersonic, flights being scheduled, there's all sorts of modes of transportation that'll make it a little easier for us to connect. But at the end of the day, in that time period, in five years, I think you'll see more frictionless, more wonderful technology that makes things a lot easier. You've seen radical changes in the last few years, for instance at United. That app, you can do a lot of things with that app that you always had to call someone. So we'll do a lot of that.

The real big thing that will be interesting to see how it's accepted... We can fly aircraft today without pilots. The technology's there. In fact, in particular cases of really adverse weather, we actually suggest strongly to our pilots that they take their hand off and let the machine, let the computer do that, because computers don't make mistakes, in that word, and humans can. And so we do that today. And so the question becomes, to all of you, if indeed we began to fly lights with no human pilot in charge, would you fly? And someone goes, "Yeah, sure. I would." And other people [inaudible 00:54:37]. I don't know.

Technical capability and social acceptance are two very different things. So I think you'll begin to have some of those options, they're existing today, and so you'll see... The other thing is, will we have smaller aircraft with less people? It's like, the economics of this business and the many, many carriers around the world, it's going to take a generation or two to really fundamentally change that. Other than developments in technology, developments in customer satisfaction, hopefully [inaudible 00:55:08], I think we'll continue to move forward. But something as radical as having, for instance, no one in the aircraft to fly it, I just don't see that happening anytime soon, from a social acceptance perspective.

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