Kirby or Nocella? I saw where Nocella said RJ cost increases were permanent, but nothing from Kirby. Although he is addressing the overall cost, not the labor alone.

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Savanthi Syth

Hey, good morning. Thank you. You mentioned regional shortfall is one of the factors impacting the 2023 outlook, though maybe not really different versus 2026. And I think we've all been expecting labor inflation, but recently, one of your competitors provided kind of very large pay increase that essentially eliminates the kind of the historical pay gap between regional and mainline pilots, which I thought was an important component of making the economics on those routes to work with those kind of small aircraft. I was kind of curious what your view was on the impact of this, assuming the rest of the regional industry also follows suit?

Andrew Nocella

Savi, I'll say that this is a big change but a change that we anticipated. So RJ ASMs used to be 7 point-something 7.5%, I think, of our ASMs. As we head to 2026, think of it as 3.5% to 4% of ASM because the economics of this business were going to change. We didn't know exactly how and when it would happen, but now we know.

And so we -- I think we've prepared for this. We've planned for this and we're not going to be reliant on RJs as much as it used to because the economic profile of the aircraft has materially changed. And that means service to small communities is going to be different.

Here at United, it means more mainline aircraft with lower scheduled depth, and we think that's a profit maximizing opportunity. And we also think that our customers in those markets are going to appreciate the mainline aircraft at the end of the day. So we're on plan, but the size and scope of RJ operations and their profitability will have changed and the smaller community’s ability to offer -- have differential yields that can support these high cost structures will be stressed and strained to the point where we don't think it makes sense to fly as many RJs in the future as we did in the past.

So this is a shift. We think it's a permanent shift. This is not a temporary cost increase for RJs. This is a permanent cost increase for RJs.