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United Airlines Holdings Inc (NASDAQ:UAL)
Q3 2021 Earnings Call
Oct 20, 2021, 10:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

[Operator Instructions] Good morning and welcome to United Airlines Holdings Earnings Conference Call for the Third Quarter 2021. My name is Brandon and I'll be your conference facilitator today. Following the initial remarks from management, we will open the lines for questions. [Operator Instructions] I will now turn the presentation over to your host for today's call, Kristina Munoz, Director of Investor Relations. Please go ahead.

Kristina Munoz -- Director, Investor Relations

Thank you, Brandon. Good morning everyone, and welcome to United's third quarter 2021 earnings conference call. Yesterday, we issued our earnings release which is available on our website at ir.united.com. Information in yesterday's release and the remarks made during this conference call may contain forward-looking statements, which represent the company's current expectations or beliefs concerning future events and financial performance. All forward-looking statements are based upon information currently available to the company. Number of factors could cause actual results to differ materially from our current expectations. Please refer to our earnings release Form 10-K and 10-Q and other reports filed with the SEC by United Airlines Holdings and United Airlines for more thorough description of these factors.

Also during the course of the call, we'll discuss several non-GAAP financial measures. For a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures, please refer to the tables at the end of our earnings release. Joining us in Chicago today to discuss our results and outlook are Chief Executive Officer, Scott Kirby; President, Brett Hart; Executive Vice President and Chief Commercial Officer, Andrew Nocella; Executive Vice President and Chief Financial Officer, Gerald Laderman. In addition, we have other members of the executive team on the line available to assist with the Q&A. And now, I'd like to turn the call over to Scott.

Scott Kirby -- Chief Executive Officer

Good morning everyone, and thanks for joining us today. I want to start by expressing my thanks to the team at United for taking care of our customers and each other during an eventful summer, and what we've done in the last 19 months stand out even more than in normal times, as we've also been a part of the humanitarian relief efforts around the world; flying over 160 million doses of vaccine, returning thousands of refugees from Afghanistan, and delivering thousands of tons of oxygen canisters and medical equipment to India, among many other things. Despite the personal stress and strain from the pandemic, our people have continued to run a reliable operation and deliver phenomenal customer service avoiding the significant issues that have plagued far too many in the aviation industry.

The United team is emerging from COVID as the leader in global aviation. Most prominently, leading on safe, by effectively and efficiently implementing our early vaccine requirement. We kicked off the third quarter with strong momentum as pent up leisure demand soared and bookings -- business bookings began moving in the right direction. So, we obviously knew that the delta variant was a risk. Andrew will give you more details about the ups and downs of the second half of this year, but from my perspective, the long-term recovery remains on track with the opening of Europe, Australia and Singapore, and an expected inflection point in business demand now anticipated in January.

Before we move to the traditional discussion about the near-term environment, I want to take a few minutes to at least lay out our view of four big picture trends that we believe make United Airlines the airline investment choice for longer-term shareholders.

Number one, we will lead on costs. Inflation is high but within our expectations and we remain on track for CASM-ex down in 2022; down approximately 4% in 2023, and down approximately 8% in 2026 versus 2019. I know there are some skeptics on this, but it really is just the math of 30% plan to gauge growth, but there are also real industry leading unique structural technology and efficiency changes that were implemented at United. I can see it as I just walk through airports or read press comments about hiring struggles at other airlines; something that is not happening at United because we really have become much more efficient during COVID.

Number two, geography becomes a competitive advantage. During the pandemic, United's geography has been a greater headwind than any other US airline, given our largest business coastal hub [Phonetic] and international exposure. The domestic and Latin revenues, where United is the smallest in percentage terms, have been running in the 70% to 90% range versus 2019. While the Atlantic and Pacific, where United is the largest, have been down 20% or more. However, despite those significant geographical headwinds, we've managed to produce results in line with or better than the industry in terms of minimizing losses. But most importantly for investors, we expect those headwinds to become a long-term tailwind as the supply of international wide-body aircraft is significantly different than the domestic narrow-body supply post-pandemic. We expect the Atlantic and the Pacific to significantly outperform the domestic market for many years to come, which will turn our current geographic disadvantage during COVID into a sustainable long-term advantage for United global network.

Number 3, unlocking the power of United Next and growing our revenue stream. Higher connectivity and noticeably improving product and the extraordinary service of the United professionals, I mentioned at the top, are already driving rapidly improving NPS scores in customer choice. We expect that improvement will accelerate as we take delivery of hundreds of new customer-friendly, narrow-body aircraft, and retrofit all of our remaining narrow-bodies in the next several years. This will make United the airline customers choose to fly and help us drive premium revenue.

Number four, ESG. United today is the leader in global aviation with our unique and real, not [Indecipherable] commitment to climate change action and the work we're doing on diversity as exemplified by the United Aviate Academy. And this, already matters to customers, employees and regulators. And I think you'll see it reflected in customer choice, and perhaps, even evaluations in the years to come. And all of that leads to our United net financial outlook. We will absolutely hit our CASM-ex target, and we remain on track.

And on the revenue front, our United Next target, assume that it takes all the way until 2026 to return to 2019 [Indecipherable] level. While we're hopeful and actually expect the [Indecipherable] trajectory will be stronger than that, that hopefully conservative assumption still leads to an adjusted pre-tax margin of around 14% and adjusted EPS of around 20% at our current share count.

In closing, COVID appears to be playing out remarkably close to what we expected in May of last year. Our expectation back then was that demand will probably remain depressed until Christmas of 2021, and the business demand wouldn't start in earnest until January of 2022. But we always believed that total demand, including international, would ultimately fully recover. That forecast now looks remarkably prescient, and we found new and successful international market in India and Africa. We anticipate a robust European recovery and we're just now beginning to see the openings across the Pacific, starting with Australia and Singapore. United's perspective was singularly unique, both on the depth of the crisis but also on the ultimate strength of the recovery. That put us in a position to make long-term decisions on fleet and permanent changes to our cost structure. And we're now uniquely set up to reap the rewards of those decisions.

And with that, I'll hand it over to Brett.

Brett J. Hart -- President

Thanks, Scott. I'd also like to thank our employees for their hard work in the quarter. July was our busiest month since the start of the pandemic. Despite regularly changing mandates restriction and new protocols that have been part of commercial air travel in 2021, our team did a fantastic job helping our customers get to their destination as seamlessly as possible, as evidenced by our record high NPS scores year-to-date. We are now past what we believe is the worst of the booking impact from this wave of the delta variant.

And looking ahead, there are some recently announced regulatory changes that are driving momentum in bookings. We were pleased by the announcement that the US entry restrictions on travelers from Europe, UK, India and other international locations, the so-called 212 restrictions will be lifted by November 8 and replaced by a global proof of vaccination requirement for all international visitors entering the US. We look forward to more specific details including the effective date of the changes to avoid any confusion about the new requirements for our customers and employees.

Since the announcement, we have seen a 35 point increase in year-over-two-year system bookings from international point of sale agencies for travel in November and December. This gives us even more confidence in our expectation that summer '22, particularly over the Atlantic, will be robust. Additionally, we have repeatedly innovated and upgraded our United app, our industry leading tool, which outlines for our customers the travel recommendations and requirements as it relates to quarantines, vaccination or COVID-19 tests. This tool gives United customers an advantage as they navigate the evolving [Technical Issues] of rules and regulations and reduce as much stress as possible at the airport. We are ready for the returning international travelers.

Lastly, as Scott mentioned, with the exception of a small number of employees and sort of religious and medical combination more than 99.7% of our US employees chose to get vaccinated. We're committed to providing the safest environment possible. It also means that our customers can book with confidence knowing that United's operation and their travel experience will not be hampered by changes to government vaccine regulations.

Speaking of the reliability of our operations, we have been proactive on the hiring front. During the first three quarters of 2021, we hired nearly 1,000 pilots, which is more than we hired in all of 2019 and what will bring new classes of flight attendants. On ESG, in the third quarter, we partnered with Honeywell to make yet another investment that contributes to our journey to become 100% green by 2050. Last month, we announced the industry's largest sustainable aviation fuel agreement, in which we commit to purchase 1.5 billion gallons of SAF over 20 years, making our total commitment more than double; the combined total of the rest of the world's airlines public SAF commitments.

Last week, we also became the first airline to fly a flight on 100% sustainable aviation fuel, due to both important steps in our goal of reducing our emissions by 50%, on carbon intensity basis by 2035, and to net zero by 2015. The third quarter was also punctuated by the prices in Afghanistan. We recall [Technical Issues] US military and bringing 15,000 Afghans into the US and troops back home. We've operated approximately 40 civil reserving air fleets or craft flights to date. We also converted our maintenance hangar in Dulles Airport to a temporary shelter where traveling evacuees could rest, get a warm meal and take a breath after enduring such a remarkable journey. More than 8,000 employees raised their hands to participate in these missions working as crew members, translators [Phonetic], paramedics and more. Many volunteers have personal ties to Afghanistan or to our military veterans. I want to take this opportunity to extend my heartfelt thanks for their service.

We're also helping Afghans to begin their new lives in the US through our partnership with Miles4Migrants where we have donated 15 million miles and continue to support and incentivize donations from our MileagePlus members. As you can see the spirit of innovation at United has not been dimmed by the pandemic. In fact, we've relied on it to adapt to the changing economic or regulatory environments and put our expertise to work to help those in need. That makes me incredibly proud of this company and it gives all of us more confidence in our ability to meet the financial targets we've laid out. I'll now hand it off to Andrew to describe in more detail on how we plan to do that.

Andrew Nocella -- Executive Vice President and Chief Commercial Officer

Thanks, Brent. Before talking about the third quarter results or the fourth quarter outlook. It's important to acknowledge the impact of the delta variant on our business was substantial. However, we expect the worst of this wave is now passed. In the last two weeks, we've seen on several of our leading business indicators have returned to where we were in July or better. Those indicators include, number one, passenger cancellation rates are close to 2019 levels and consistent with pre-delta level. Two, positive domestic co-brand spend for the quarter of new card acquisition is above 2019 levels and retention level is better than 2019. Three, passenger bookings for November and beyond travel have been above 2019 levels for the last week. A strong bounce back from a few weeks ago. Four, demand for Atlantic travel is consistent with 2019 levels since the announcement of lower travel restrictions and yesterday was up 19%. Five, domestic business demand has rebounded to pre-delta levels or better, and our largest accounts are now increasing at a similar rate to our smallest. Six, business traffic across the Atlantic is now tracking [Phonetic] consistent with or slightly better than domestic business traveling. Seven, Brazilian demand is rebounded quickly, matching the strength we've seen in for months, in mere Latin demand. Eight, book yield for upcoming holidays are positive as well as early '22 are positive. Nine, awards booking levels have exceeded 2019 levels this week for the first time.

While we believe these leading indicators are solid evidence of a bright outlook for United, another set of positive indicators that we've been tracking in recent months is the relative strength of our premium leisure business during the pandemic. These indicators include, one, domestic first class revenue reached 2019 levels this summer with paid load factors 5 points above. 50% of our revenue in transatlantic leisure market came from the premium cabins in 2021, a 13 point improvement versus 2019. Three, paid load factors for our Economy Plus increased by 10 points relative to 2019 this summer. And four, ancillary receipt revenues in Q3 were a record $9.17 per plane passenger, and that's basically at 2019 levels, despite 28% less demand.

Whenever I talk about United Next, our long-term strategy, I tend to focus on domestic gauge growth of 30% and it's importance. However, United Next also grows premium seating [Indecipherable] across our domestic fleets, simply closing the gaps we've had to our primary competitors, our matching demand and our southern hubs that we've missed in the past few years. This recent trend of increased premium leisure demand is a material incremental revenues for our long-term outlook and has the potential to increase overall leisure yields by 2 to 3 points versus our original long-term outlook. While we still believe this traffic will return in full, our plans will succeed, even if it only returns to 85% to 90% of these levels given the yield -- these are yield gains if the prove permanent.

Furthering our revenue segmentation and premium leisure efforts, we've made the decision to outfit our 14 remaining 767-300s with our new mid-tier premium plus product, so that all 767s now include this product. We can also confirm that will offer the separate mid tier cabin on future deliveries of the A320 large jet in 2024.

Relative to 2019, premium plus performance across the Atlantic was our best performing cabin. Our revenue segmentation strategies have always been about offering a range of products customers want to use, from Polaris to premium plus to basic economy. Effective segmentation makes our business model more durable when faced with elevated levels of competition, something we anticipate domestically in the coming year.

I'll now turn to my new role [Phonetic] update of our performance in the quarter and our near-term outlook. I'll also provide an early preview of our internationally focused 2022 capacity blend. Traveling for the third quarter, finishing on 5% and total revenues were down 32% versus 2019. United did achieve a positive year over to -- traveling for July as expected. Passenger yields were positive in July and August versus '19 but fell by 10% in September, given the large but temporary industry supply demand imbalance caused by the delta variant. The impact of lower pricing and yield will continue into the part of the fourth quarter with October performance only marginally better than September. Close-in bookings continue to track below 2019 levels but are getting better week over week for the last few weeks. Just as in previous quarters, our cargo operation again delivered a record quarter for United total cargo revenue was up 84% from 2019, and was the best third quarter on record. United cargo is once again reviewed all cargo flights that are available, wide-body jets, for the remainder of the year, which we expect will once again result in leading cargo performance.

Turning to our fourth quarter outlook, we now expect total revenue to be down 25% to 30% versus 4Q 2019, with November and December at the top end of the range. Though the delta variance impact on leisure demand is now gone, its impact on business travel and yield in the fourth quarter continues. We expect capacity to be down 23% in the fourth quarter versus 2019, down 13% for domestic and 35% for international. We continue to slowly add back capacity consistent with our capabilities to deliver a consistent operation for our customers, while also managing our expectations for demand.

By December, we expect domestic capacity will only be down 9% as we prepare for a very strong holiday season. Our fleet of 52 Pratt & Whitney powered 777s are not expected to fly this quarter and we continue to have 57 idle [Indecipherable] jets temporarily grounded. We expect most of these grounded jets to return to service by June 2022, in time for strong summer demand.

As I indicated earlier, bookings to Latin America and across the Atlantic have reacted well to the lowering of restrictions for travel November 8 and beyond. We remain optimistic that our Latin and Atlantic client [Phonetic] will gradually build to 2019 levels and above by summer 2022 and business traffic will accelerate early next year. We currently expect capacity for 2022 to be up approximately 5% versus 2019. Our plan -- consider our expectation of [Indecipherable] macro demand, supply and pricing and focus 100% of our growth in the international markets where we expect capacity to be up about 10% versus 2019.

As a result, we expect domestic capacity for 2022 to be approximately flat. We remain agile to new planes around as needed or even ground unneeded widebody jets if conditions warrant. Consistent with our plan for international growth for 2022, last week we announced 10 new Atlantic routes that are focused on premium leisure destinations, such as [Indecipherable] or Italy. Most of our new routes have common theme of premium leisure business as we continue to diversify our global revenue streams, which in the past, were very business-centric.

We're also diversifying our geographic scope across the Atlantic to India, Africa and the Middle East. Many of our new routes also have low historic shares with United and our star partners. One additional common feature of all these routes is the potential of our leading gateways in New York and Washington. We have one more significant international network announcement planned for later this month as we work toward finalizing our 2022 outlook. As the leading US airline across the Pacific, we do expect slower demand recovery versus other parts of the world. We've seen some really great news in recent days with the partial opening of Australia and Singapore. Most of our capacity across the Pacific in Q4 is being supported by further [Phonetic] revenues.

We continue to expect international long-haul of flying [Indecipherable] a strong period of margin improvement versus the last cycle and we are positioned in our capacity to take advantage of that trend. Not only have many widebody jets retired across industry, but we expect that the industry premium seat capacity for the largest Atlantic carriers will be down approximately 10% per departure to 46 seats as many aircraft, including the 747s and the A380s with large premium cabins have been grounded. The United widebody jets have an average of 46 flare [Phonetic] seats, approximately the same number as our primary Atlantic competitors.

As we rebuild our global network, our Polaris lounges are now set to reopen over the next few months, starting with our brand new club at Washington Dulles tomorrow. Briefly, I wanted to talk about our United Next signature interior. We've now taken delivery of 13 MAX 8s with the signature interior and it's a hit with our team and our customers. Each of these land has NPS scores materially higher than any other domestic mainline jet we fly, and has large economy cabins with seat-back monitors at every seat. We will soon begin modifications of the remainder of the narrow-body jets so that by early 2025, the entire mainline fleet has this consistent, superior look and feel.

Thanks for indulging me in this rather long explanation of where things stand, but more importantly, where we're taking United. I have to give thanks to the entire United team for delivering this summer in pretty difficult conditions.

And with that, I'm going to hand it off to Gerry to discuss our financial results and outlook.

Gerald (Gerry) Laderman -- Executive Vice President and Chief Financial Officer

Thanks, Andrew. Good morning, everyone. Andrew, we truly enjoyed your verbose remarks, but everyone can take comfort in the fact that I will be shorter. For the third quarter of 2021, we reported pre-tax income of around $600 million and an adjusted pre-tax loss of around $500 million. This was obviously different from our expectations when we spoke to you in July, but as Scott and Andrew discussed, this loss is solely attributable to the impact of the delta-variant on customer travel in the months of August and September. The good news is that our third quarter CASM-ex of up 15% was better than our guidance and we are on track for further improvement in the fourth quarter. We currently expect CASM-ex in the fourth quarter to increase 12% to 14% versus the fourth quarter of 2019 on capacity down around 23% versus the fourth quarter of 2019.

Looking beyond this year. We are in a middle of putting together our financial plan for 2022 and expect to share more color with you in January. However, I wanted to highlight a few items now that give us confidence in our CASM-ex outlook. First, we are exceeding our target on structural cost savings as we have identified approximately $2.2 billion in initiatives, which we expect to fully benefit from by next summer. As the proof point of this success, we estimate that we can flight schedule ten percent larger than 2019, with the same number of employees we needed in 2019. This includes a significant and permanent reduction in management employees.

Second, we expect to return all 52 on ground 777s to service in the first half of next year. This allows us to more appropriately match the right aircraft to right markets, which will ultimately drive a step function CASM-ex improvement as these both CASM-ex and high gauge aircraft return to the fleet.

Third, our outlook for 2022 includes the higher inflationary pressure we are seeing today across all aspects of our business, ranging from vendors wage pressures to supply chain bottlenecks. It is for these three reasons that I am confident that our 2022 outlook of CASM-ex lower than 2019 is both fair and achievable. Importantly, it also sets a firm foundation for achieving the negative 4% and negative 8% CASM-ex goals for 2023 and 2026, which we've already discussed. In fact, I feel more confident today that our 2023 and 2026 goals than I did back in June.

Importantly, we are committed to achieving these cost targets while also investing in the superior product and experience for our customers. For example, all of our new narrow-body aircraft are being delivered with state-of-the-art interiors, including overhead bins, everyone's carry-on bags, and bluetooth enabled seat back entertainment with a long list of choices displayed on large HD quality screens. We are also retrofitting the rest of our fleet to be consistent with these standards. In fact, I was recently on a new 737 MAX 8 flying home from New York to Houston [Indecipherable] Belgium, Brussels. The flight was completely full and everyone found room for their bags. The flight crew made sure the customers knew about all the amenities as the crew was engaged with everyone from pre-boarding, throughout the flight, and as the customers deplaned. 15 minutes early by the way. As I strolled through the cabin during the flight, by my count, at least two-thirds of the passengers were enjoying the seat back system, and I even noticed several children entertained with our new children's amenity kit.

After this flight, I was curious about the net promoter score and sure enough, the NPS for the flight was over 40% higher than system average last year. We will continue to make these types of revenue enhancing product investments, while we continue to reduce unit costs because of our plans for efficient gauge driven growth, as well as our $2.2 billion structural cost savings program.

Turning to capital expenditures, we currently expect to take delivery of three 737 MAX aircraft and one 787 aircraft through the end of this year. In addition to the 24 mainline aircraft already delivered this year. A number of 787 deliveries previously expected this year are now expected to reoccur next year, which results in the related capex shifted out of 2021 into 2022, including this change, we now expect adjusted capex to be around $3 billion in 2021. We expect to use a mix of debt financing leases and cash to fund the acquisition of new aircraft and we'll balance the mix with United Next financial targets in mind, including adjusted total debt to adjusted EBITDA below 4 times in 2023 and below 2.5 times in 2026. As the recovery progresses, we expect to economically pursue deleveraging while balancing our capital commitment. In the third quarter, we made a $375 million voluntary contribution to our pension which will drive PBGC premium savings and access to returns on the funds added. While we are not required to make any meaningful contribution to our pensions for several years, we view our pension obligation as just another form of debt. This is effectively the most expensive pre-payable debt we currently had, and we took the opportunity to pay.

In closing, as the impact of the delta-variant appears to be receiving, we continue our focus on managing the business efficiently to maximize our earnings power for the long term. Our focus on cost and revenue initiatives will drive improving margins, leading to a 2026 adjusted pre-tax margin of around 14% and adjusted EPS of around $20 at current quarter-end share count. While we have never expected the recovery from the pandemic being linear, we are confident that United best days are ahead as we execute on our United next strategy in the coming years.

And with that, I'll pass it to Kristina to start the Q&A.

Kristina Munoz -- Director, Investor Relations

Thank you, Gerry. We will now take your questions from the analyst committee. Please limit yourself to one question, and if needed, one follow-up question. Brandon, please describe the procedure to ask a question.

Questions and Answers:

Operator

Thank you, Kristina. [Operator Instructions] And from Barclays we have Brandon Oglenski. Please go ahead.

Brandon Oglenski -- Barclays -- Analyst

Hey, good morning everyone and thanks for taking my question. So, Gerry, speaking of capex, can you talk to us about what 2022 could look like here? And then, maybe, a longer-term question for you or Scott, like how do you manage the balance sheet risk here versus what is a very ambitious outlook and obviously trying to improve profitability by leveraging those things you put out there?

Gerald (Gerry) Laderman -- Executive Vice President and Chief Financial Officer

So, we'll have some more detail on 2022 capex in January, but I can tell you that the bulk of the reduction this year is just shifting into next year; the 787s in particular, that cause reduction this year, which is being additive for next year. So, when you add those to the 48 narrow bodies we have, you'll see a step up in capex, or I think if you took this year and next year together, blended it's sort of consistent. But you should assume that most of the capex reduction this year simply got moved into the first half of next year.

Yes, for longer term, we are laser focused on reducing net debt balance and deleveraging. We could have done some more if we had more pre-payable debt. We simply don't. So, we are going to, over the next few years, focus on reducing that debt as we have the opportunity to economically prepay that debt. That's a critical component of how United Next's plans.

Brandon Oglenski -- Barclays -- Analyst

I guess if I can follow-up on that, Gerry. If you get upside to earnings, you can get margins faster based on getting your premium and leveraging the international network, is that how you plan to manage the balance sheet and potentially get leverage down faster?

Gerald (Gerry) Laderman -- Executive Vice President and Chief Financial Officer

So, we -- yes, the answer is yes. As we implement the plan, we see the returns, that profitability is going to go directly into paying down the debt. And keep in mind we also have the flexibility. If the recovery takes a little bit longer over the next few years, we have the flexibility to manage aircraft deliveries and retirements to adjust to whatever the environment is. From Bank of America we have Andrew Didora. Please go ahead.

Andrew Didora -- Bank of America -- Analyst

Hi, good morning everyone. So, Scott or maybe Andrew, I think the consensus out there to this point is that the international recovery is expected to take a bit longer than the domestic recovery. So, just curious if you could maybe elaborate on your plans to grow to get international capacity back above pre-pandemic levels before domestic? And then also just curious on how you think about your Pacific growth as it relates to that 10% international growth next year?

Andrew Nocella -- Executive Vice President and Chief Commercial Officer

Sure, I'll take that. Definitely, the growth rate and the recovery will be different by the different regions of the world, and the Pacific is going to be the slowest. We've said that a number of times. However, when you go through all of our data, what I would tell you is that we really need to start to break down our entities into a little bit more detail, particularly going across the Atlantic. We expect, and again, I said already today, that our bookings across the Atlantic are now approaching past 2019 levels. We expect a very strong bounce back next year, in particular starting in the spring and summer.

And then, the second point I'll point out is that a lot of our Atlantic capacity does not go into the traditional core European markets. We've gone aggressively into the Middle East and Africa as well. And for example, a new flight to Amman, [Indecipherable] Cape Town and Johannesburg [Indecipherable] So, our number as well up here elevated across the Atlantic. We're going into this new revenue pool that we feel very good about. We feel very good about the pricing in those revenue pools, and we feel really good about the bounce back in those revenue pools, and we're seeing that data already today. So, we're accounting for a slow Pacific recovery. We're accounting for a strong Atlantic -- strong Atlantic really is across multiple different entities within the Atlantic today, which allows that kind of bounce back that we're anticipating.

And again, the numbers over the last few weeks have just been -- or really, in the last week, have been incredible going across the Atlantic. So, we remain really bullish. We think we have the right plan. And we think we have pointed the aircraft to where we can make the most money next year.

Andrew Didora -- Bank of America -- Analyst

Got it. Understood. And then, just my second question; obviously, operational challenges have been increasing at a lot of your competitors, yet you haven't seen the same type of disruptions. One, what do you think that is? And then, I guess more importantly, what do you see as the biggest operational risks as you begin to ramp capacity back up to those 2019 levels? Thanks.

Andrew Nocella -- Executive Vice President and Chief Commercial Officer

Well, thanks for noticing that. And you're right, it has been uniquely different at United than many other airlines, including all of our large competitors who at different times have had operational challenges in the past year. And really, the reason starts I think going back to the realistic assessment that we had all the way in February -- in the last week of February of last year because we thought this pandemic was going to last all the way through the end of 2021. It caused a different planning mentality, it caused a different management process. A very collaborative managing process. [Indecipherable] we do three times a week, now three hours. So, nine hours a week. But we are altogether either in person or on a teams meeting. Every single one of us knows what is happening at every single other department. And in many cases we just step into each other jobs if we have to. But that collaborative process is in a really complex environment, because this environment is really complicated when you've brought the airline down 90% and then try to bring it back up. That's really difficult to do. None of us in aviation have experience to do it. That process and that realistic assessment set us up. Well, led us to make different decisions. We're the only airline out there with negotiated deal with pilots for example.

And then because of that, we can pull the airline down, keep everyone in their seat, keep everyone in their positions, and bring the airline back up without having the crew shortages or crew constraints that affect the other airlines. We worked with our flight attendants on processes on board the aircrafts to avoid escalation and avoid some of the conflict that has happened on other airlines around mask. We had over 50% reduction in the mask issues this year. And our flight attendants did an amazing job, amazing professionals, the tone, the environment. It's not that we have zero issues but the tone, the environment on United is certainly different than what I read about in the press on other airlines. And we also metered into growth. We didn't try to get out over our skis and say demand is starting to come back and growth at a rate that we wouldn't be able to support. We viewed that as risky to our customers and we've really changed the customer experience during this and we weren't going to lose it by trying to fly a few more flights.

And so, we've just managed to completely differ from what has happened in other airlines. You talked about the risk going forward. I mean I think looking forward, by far the biggest incremental risk in aviation in the United States are vaccine mandates. And United, we did our vaccine mandate -- obviously, we did it before it was a mandate. We were done with it before government requirements came in. So, we did it purely for safety reasons. But listening to other airlines that are now backing off those vaccine requirement and are going to -- encouraging employees to just all apply for exemption, they are likely to have tens of thousands of employees that need to be tested every week. This is in the rearview mirror for United. This is not going to be an issue.

But can you imagine your tens of thousands of employees; people forget to get their test, people do the test wrong, people don't get it done, people test positive. And if you think weather in one state can lead to a meltdown, imagine if you have thousands employees on one day calling in and saying, for some reason my test didn't pass. I mean it is going to be a huge challenge for airlines that are not implementing vaccine requirement. Customers can book with confidence on United. We're done with it. You can book with confidence on United. But if you're booking on an airline that doesn't have a vaccine requirement, they have government rules they have to follow and caveat emptor.

Operator

From JP Morgan, we have Jamie Baker. Please go ahead.

Jamie Baker -- JP Morgan -- Analyst

Hey, good morning everybody. Scott, I like the four big picture trends that you discussed in your opening remarks. Question on the expectation for the Atlantic and the Pacific to outperform the domestic over the next several years. Is that really a comment on how strong the Atlantic and Pacific might be or is it short hand for we expect the domestic to structurally suffer going forward. Why shouldn't I look at it with that sort of double advocate view?

Scott Kirby -- Chief Executive Officer

Well, Jamie. I'll let Andrew -- it will be better if he answered than me, but most it is supply demand. The supply demand balance is just significantly different in the long-haul international wide-body market. Hundreds of airplanes around the globe have been retired and those take a really long time to change. And the supply demand balance is more balanced. And It's as simple as that.

Jamie Baker -- JP Morgan -- Analyst

Okay.

Andrew Nocella -- Executive Vice President and Chief Commercial Officer

So, Jamie, the only thing I can add is that we just have a structural advantage when it comes to global long haul given where our gateways are, and this is the time for us to move forward and deploy our capacity in the way it makes sense and is profitable in those regions of the world. And in some respects, I think we're uniquely able to do it as a US flag carrier and we're going to take advantage of it.

Jamie Baker -- JP Morgan -- Analyst

Understood. And a follow-up on that, Andrew, while I got you. But I just wanted to make sure I haven't missed any changes in the last year or so as it relates to fuel surcharges. So, we do not have a fuel surcharge mechanism domestically, but how broadly do they exist right now in your international markets? How should we think about that?

Andrew Nocella -- Executive Vice President and Chief Commercial Officer

Jim, I don't want to get into a lot of details. There are certain countries around the world that you have fuel surcharges. They're government mandated. And in fact, they go up and down with the price of oil and it's just kind of set by that countries. So, those exist. And then in other countries, we take care of it ourselves. I think we have got this under control, but the price of fuel, I think, you're going to view is high. By the way, we view that price of fuel being high as a sign that business demand is recovering as people get to work in factories around the world are making things. So, that is a good thing and not just completely a bad thing. And that being said, when can we price through this higher price of fuel? It's going to take some time. The supply demand imbalance was broken temporarily. We're getting -- I think the industry -- well, I think United is in the right direction. I think the numbers look a lot better as we get into next year, particularly as you get to the President's Day and spring break holidays. So, I'm optimistic about yield quality out then. And like I said earlier, our yields for these upcoming holidays and early next year are positive, which is great to see.

Jamie Baker -- JP Morgan -- Analyst

That's great. Thank you, Andrew. Thank you, Scott. Take care.

Operator

From Citi we have Steven Brent [Phonetic] Please go ahead.

Steven Brent -- Citi -- Analyst

Good morning everybody and thanks for taking my question. Kind of a follow-up to Jamie's question actually. Over the past few months, you guys had mentioned doing some domestic point to point flying. How should we think about where you are now in the, let's say, gradual process of maybe phasing that out as some of your international pulls up and you move more toward domestic capillarity [Phonetic] out of your hubs?

Andrew Nocella -- Executive Vice President and Chief Commercial Officer

Sure, it's Andrew. We did during the middle of the pandemic opportunistically looked at some point to point flying and we had that out there. As we returned to normal, which we are doing rapidly now, we are almost 100% focused on our seven hubs for all kinds of reasons. We think our best opportunity is there and clearly [Phonetic] the best opportunity for higher margins are there. And that's where we're pointing the metal. So, that's what you'll see. We do have a little bit of point to point flying in our system is proved -- what's left is proved very successful. So, we'll continue to do that. That is not our strategic focus. Our focus is on our seven hubs.

Steven Brent -- Citi -- Analyst

Okay, very helpful. I will let someone else ask a question. Thank you.

Operator

From Raymond James we have Savanthi Syth. Please go ahead.

Savanthi Syth -- Raymond James -- Analyst

Hey, good morning, everyone. Just on the capacity. I was wondering if you could help -- help me understand just next year how that progresses from down 23% currently in the fourth quarter? I'm guessing a lot of it comes over the summer. But I was wondering if you could help bridge that kind of getting from down 23% to up 5% next year?

Andrew Nocella -- Executive Vice President and Chief Commercial Officer

Sure, Savi. We've timed the capacity to measure where or match where we think demand is going to be. So, in early part of the year, it is continuing to be a pretty low number, and in the last part of the year it is a higher number. We haven't finalized our budget for next year. So, we don't have the exact numbers in our overall numbers, an approximate number at this point, as you can tell. The other thing to note is our delivery for next year are heavily geared toward the latter part of next year that when we really -- that's when, in many respects, we really get started with United Next and changing the game equation going forward. So, we'll have more information on how the capacity meters in later this year, early next year when we can finalize our budget.

Savanthi Syth -- Raymond James -- Analyst

That's helpful. Thank you. And then, if I might, I know we've not talked a lot about cash flow, and given that we have strong liquidity and the earnings are trending around here, but I just kind of curious if you could provide some color on just the cash flow components over the next 12 to 18 months especially how you're kind of thinking about ATL here?

Gerald (Gerry) Laderman -- Executive Vice President and Chief Financial Officer

So, hi, it's Gerry. So, we'll provide some more color in January. I would say that the idea is as the world returns to normal, ATL will begin to return to normal as well. You see the normal peaks in valleys that are driven by seasonality. On sort of other matters, the biggest other thing for us to look at is, as I said earlier, is debt repayment. And when we start seeing those debt maturity kick in prepayment opportunities kick in next year, relatively modest year on debt repayment, about 3 billion scheduled debt payments. But we're going to focus on further opportunities to use that cash to manage the balance sheet starting as early as next year.

Savanthi Syth -- Raymond James -- Analyst

Appreciate it. Thank you.

Operator

From Evercore ISI, we have Duane Pfennigwerth. Please go ahead.

Duane Pfennigwerth -- Evercore ISI -- Analyst

Hey, thank you. Andrew, in your extensive list, you talked about domestic business demand rebounding to 19 levels. I'll admit I missed the context on that, was that a premium comment and kind of where are we on corporate now relative to kind of the exit rate last quarter?

Andrew Nocella -- Executive Vice President and Chief Commercial Officer

Yes, what I said was over the last week, we've seen our total bookings for domestic and for the Atlantic exceeding the same period in 2019, which is great to see. We have not recovered fully on business traffic and have a long way to go. The Atlantic comment was the recovery on Atlantic business traffic is now similar to our, in fact slightly ahead of the recovery for domestic business traffic, which we obviously feel really good about to see that number and see how quickly the Atlantic business traffic is recovering, and over the last few weeks in particular. But the numbers are heading toward down 50%, but they're not there just yet. But just looking at the trend of only the last few days, I would tell you that our level of being bullish about this has increased a lot. The numbers for the delta-variant caused things to go down quickly. And now that we're past delta-variant, it appears that they're going to go up, hopefully, just as quickly. So, it is a bit more volatile than I think we would otherwise like to see, but we definitely like the upward volatility that we're seeing right now.

Duane Pfennigwerth -- Evercore ISI -- Analyst

That's helpful. And then, just for my follow-up on non-fuel cost, can you speak to the cadence and I guess the dependency here is when you expect longer stage flying to be more fully restored at these fuel prices? It seems like March is maybe our best shot at the earliest, but is the cost or a more of a second half at this point? Appreciate your thoughts there.

Gerald (Gerry) Laderman -- Executive Vice President and Chief Financial Officer

Yes, sure. So, the price will track the capacity. So, what you'll see and what we've talked about in January is the first half of the year versus second half of the year. And you'll see as the triple-sevens come back and the other aircraft come in, as we hit the full run rate on the $2.2 billion initiatives next summer, you'll see the second half of the year being significantly different from the first half of the year. But you could certainly track the capacity to the cadence.

Duane Pfennigwerth -- Evercore ISI -- Analyst

Thank you.

Operator

From Goldman Sachs, we have Catherine O'Brien. Please go ahead. Hi, good morning, everyone. Maybe a bit of a different take on Jamie's question earlier but has the current demand backdrop or the competitive capacity backdrop in the US changed your plans on this domestic expansion, and also to introduce United Next back in June? Was it your view back then that 2020 domestic capacity will be flat or is it just with some of these international border reopenings has the opportunity set changed? Thanks.

Andrew Nocella -- Executive Vice President and Chief Commercial Officer

The latter. The international border opening and the recovery that we're seeing over the last few weeks, just leads us to think that the profit-maximizing opportunity is to deploy those flights overseas and that's what we've done.

Catherine O'Brien -- Goldman Sachs -- Analyst

Okay, got it. And then, maybe just not sure you can share this yet, but could you just add any just high level color on what entities are going to drive the 10% international growth and maybe are you able to frame the impact of some of these new long range routes, you mentioned, are having on that 10% growth? Thanks so much for the time.

Andrew Nocella -- Executive Vice President and Chief Commercial Officer

Sure. Our current expectations is this will be more across the Atlantic than the Pacific obviously, given what I said earlier. And so, we are [Technical Issues] for Europe. And we've been in a bunch of new markets that are brand new; the United Airlines, in fact, no other US carrier flies. So, we're really excited about those. But we've also announced more services to the Middle East with Amman, Jordan. We've announced a lot of service to Africa, which has done really well so far and so you should expect more of that. So, there's a lot going on there. And as well as South America, which we think is on the path to recovery. Particularly Brazil, in recent days, given the change there has looked really good. Across the Pacific, again, much slower. We do expect across the South Pacific, faster than the North Pacific. But really, really agile across the Pacific and we will be able to cancel down or grow depending on the demand we see. We have the best Pacific network of any US carrier and we expect we'll bounce back first and we'll bounce back stronger. But that being said, we're going to be really careful when we choose to load [Phonetic] that extra capacity.

Catherine O'Brien -- Goldman Sachs -- Analyst

Thanks.

Operator

From Wolfe Research, we have Hunter Keay. Please go ahead.

Hunter Keay -- Wolfe Research -- Analyst

Hey, good morning. So, it seems like after Labor Day a lot of folks went back to the office and they're excited to be there and now it kind of feels like people are working from home a little bit more again, because they realize that commuting is really not fun, I'm kind of wondering if you're expecting that with business travel next year, Scott? Like, are you expecting this big pop in pent-up business travel demand that everyone's all excited to get back on the road, 100% recovered, and then maybe slowly sort of bleeds back to like a lower watermark as the year progresses, as sort of the euphoria wears off?

Andrew Nocella -- Executive Vice President and Chief Commercial Officer

It's Andrew. What I would say is that the delta-variant clearly delays some offices return. United today is here in the Willis Towers. So, we're all back in our office. And when we talk to our corporate clients, we don't really see high fives; some are in, some are not. But people are generally more and more returning to their office environment. And what we've been told -- although, look, it changes depending on the week, is that we should expect really an acceleration of business traffic next year with a lot of pent up demand. We have a lot of clients that need to get back on the road. And they're anxious to do so. And when they do so, they're glad they have done it. And I know I'm excited to get back on the road and have been traveling a lot more in the last few weeks. So, a lot -- it's TBD.

I can't exactly answer that question other than the feedback we get is it's going to be very strong. We also expect consumer demand next year after being not able to travel as they would like for almost two years, we think it's going to be really strong, including here domestically, by the way. We believe our profit-maximizing opportunities are across the Atlantic right now, and in India and Africa and the Middle East, but we also think there's going to be a domestic recovery that's really significant and strong. And in fact, hopefully, by February, March, April, it's going to overcome this much higher price of fuel. And that's the trajectory we're on. We feel good about it. And that's our plan.

Hunter Keay -- Wolfe Research -- Analyst

Okay. And then, how do you expect, Andrew, corporates to book travel in 2023? I know that there's a lot of direct bookings right now and '22 is probably going to be weird too, but is 2023 going to look like 2019? Are you going to have the same mix of GDS channel and TMCs just as relevant? How do you expect that to shake out long-term?

Andrew Nocella -- Executive Vice President and Chief Commercial Officer

Long-term, I don't know. Technology is changing rapidly. But what I would say is we have really great TMC [Phonetic] partners and they really help us reach our SME market and we use the GDS just to provide all the content and we do it so successfully and in agreement with our major GS contractors up until this point, I don't expect any radical changes. Clearly, there are those in the distribution network that would like to do things slightly different and we'll let those companies and those agencies tell us what they would like and we'll do our best, obviously, with all of our clients and all of our customers to give them the best customer service we possibly can. But I do believe that the TMC and the GDS model are really strong and help deliver high quality revenues to United Airlines.

Hunter Keay -- Wolfe Research -- Analyst

Thank you.

Operator

From Cowen we have Helane Becker. Please go ahead.

Helane Becker -- Cowen and Company -- Analyst

Thanks very much, operator. Hi everybody and thank you so much for the time. Just a couple of questions, one is on the 777s that are coming back. Gerry, what's the cost going to be to bring those back and is that included in your capex forecast for 20-- or will it be in your capex forecast for fourth quarter and for 2022?

Gerald (Gerry) Laderman -- Executive Vice President and Chief Financial Officer

The 777s services, our aircraft obviously is already in the fleet. There is not a capex component to bringing them back. There is an opex component of getting them ready. And so that's included in our forecast. It was not included in any forecast as whether there is any contribution to that from other parties. We're assuming in our forecast that we are incurring that cost.

Helane Becker -- Cowen and Company -- Analyst

Okay, that's very helpful. And then, the other question I have is with regard to all these new markets; a: is are you concerned that your alliance partners will be put off by the fact that you're over flying their hubs to do this on your own? And b, can I give you a list of cities I'd like to go to that are on my bucket list?

Gerald (Gerry) Laderman -- Executive Vice President and Chief Financial Officer

I would have thought with the cities we just added we got to your bucket list, but let me know. But we work with our great alliance partners. We really do have the best alliance partners in the globe. And what I would tell you is that about how we came to the conclusion about what Syniverse [Phonetic] to add for the summer, many of these Syniverse United and our Star Alliance partners had very low shares in. So, traffic between the United States in those markets are carried by other alliances, not ours. and that's why these markets are great. And the other thing I'd tell you is sometimes you have to make the market and there is a lot of service to a lot of different places around the world. But for example, the Azores is a great opportunity for you personally and all your colleagues to head on a great vacation, that was very, very difficult to reach in previous years, that will be a lot easier to reach on United Airlines [Indecipherable] out in New York starting this summer.

Helane Becker -- Cowen and Company -- Analyst

That's great. Very helpful. Thanks everybody. Have a nice day.

Operator

From Deutsche Bank. We have Michael Linenberg. Please go ahead.

Michael Linenberg -- Deustche Bank -- Analyst

Hey, good morning everyone. Hey, Scott, back to your point about the vaccine mandates being the biggest risk, where are you may be in conversations with the government and as it pertains to the TSA, which I think, the latest data is that I think they're only at like 60% to 65% vaccinated. Are you making any sort of contingency plans or as we approach the holidays, are we going to have to have additional United people to help staff and kind of get people through the airports, just where things stand on that? Thanks.

Scott Kirby -- Chief Executive Officer

Well, I would like to compliment TSA. We'll get there. They've been working hard. I think they've been doing a great job during the pandemic. It's really tough times. They also -- the same department was also instrumental in bringing the tens of thousands of refugees back from Afghanistan. So I think we all should give kudos and credit to the Department of Homeland Security, Secretary Alejandro Mayorkas and the TSA for everything they're doing. I'm pretty confident that we'll get there. I mean I think there are implementing vaccine requirements correctly. I mean that design [Phonetic] we have proven that if you just do it, if you put the requirement out there and you're not compromising, you're not wishy-washy, you don't wobble, you don't backtrack, you can get to over 99%. And I think we'll do the same thing and we'll get there.

Michael Linenberg -- Deustche Bank -- Analyst

Okay, very good. And then just a quick follow-up. Scott, you talked about hitting your targets with I think only 85% to 90% of corporate coming back. And there's a lot of talk about premium leisure travel and I'm just curious, is there something secular going on with that passenger segment or is this just United catching up to the rest of the industry and just having premium seats that are on par with everybody else? Thoughts there. Thanks.

Andrew Nocella -- Executive Vice President and Chief Commercial Officer

Hey, Mike. This is Andrew. And I would tell you it's probably a little of both, although we have really not started to materially change the aircraft mix from when we announced United Next just a few months ago. So, we, a lot of that benefit is going to come in 2023 and beyond. But there has been an amazing amount of premium leisure business, being able to sell premium seats in the first class cabin, and even in the main cabin, with much higher load factors than we've done in the past. We're anxious to prove out that this is a permanent change. But part of it is clearly that there is more inventory available closer in for these seats because corporate travel hasn't rebounded completely. So, corporate travel is 100% and we'll have to see where the premium leisure yields are. I think we have to balance both and come out with a better outcome given this change if any of it proves permanent which we're -- again, we're bullish and we will be. It's exciting to see. It is pretty material in such a short period of time. So we'll have to wait and see for sure because we need to balance that with the corporate demand when it comes back. But all that being said, in the unlikely event corporate demand is not 100%, we do have other levers to push and this one has become increasingly obvious over the last three months as an opportunity to do something a little bit different and get some more revenue on board the aircraft.

Michael Linenberg -- Deustche Bank -- Analyst

Great, thanks.

Operator

From MKM Partners, we have Conor Cunningham. Please go ahead.

Conor Cunningham -- MKM Partners -- Analyst

Hi, everyone. Thanks for the time. I think you hinted at it in the prepared remarks, but when you think about potential swing capacity in 2022, is it fair to assume that the swing capacity in the domestic market could move lower rather than you making an adjustment on the international side just given the competitive landscape? I get that demand dictates all that, but just curious on your thoughts on the high level.

Andrew Nocella -- Executive Vice President and Chief Commercial Officer

[Technical Issues] we have a lot of flexibility to move the aircraft around. Our aircraft, our factories, they clearly can be moved around wherever we need them to go, whether it'd be domestically or overseas. So we're agile, I think we've proved that continuously throughout the entire pandemic. And we look like we're getting back on track and getting back to our normal stated employment, which again, is why I said there will be less point to point flying in the future. But we'll be flexible to do what we need to do both domestically and internationally, including ground widebody jets if they're not needed later this year. But we'll wait and see.

Conor Cunningham -- MKM Partners -- Analyst

Okay. And then, just a follow-up to what Hunter was talking about in the business side. So I'm just curious on what sectors you're seeing the most pent-up demand for business travel or maybe like which sectors, you're actually most bullish on longer term that you think you can gain share or however you're thinking about that in the current context. Thank you.

Andrew Nocella -- Executive Vice President and Chief Commercial Officer

Well, with everything we've done in United we intend to gain share everywhere to make that really clear to you and all of our competitors. With that being said, what we're seeing right now is consulting is obviously very strong, as they get back on the road and start helping businesses all around the globe. But we're also seeing rebounds across the board. But we think we're moving in the right direction.

Operator

Thank you. And we will now take questions from the media. [Operator Instructions] And from Wall Street Journal we have Alison Sider. Please go ahead.

Alison Sider -- The Wall Street Journal -- Reporter

Thanks so much. Yes, I guess one of the big complaints heard from customers throughout the industry over the course of the last several months is just sort of about the instability of schedule, late closing [Phonetic] changes and everything kind of being up in the air. And I'm just curious when you think we might see that level out, just see some more stability and get back to kind of normal or if this is part of the new normal going forward?

Andrew Nocella -- Executive Vice President and Chief Commercial Officer

Hi, Alison. It's Andrew. What I would tell you is that we needed to be really flexible as we went into this crisis. We took the airline down to basically 10% within a matter of a few weeks and we learned a bunch of things about how flexible we can be in our process. That being said, to run an airline of this size we need process, we need consistency and we need to lock and load our schedule early for the convenience of our customers, so they can book with certainty. And we have more or less, as of this week or next, returned to a normal schedule load process where we load our schedules 90 days in advance. And the final is close to 90 days as possible. During the pandemic, that number was dramatically lower, and a level of disruption that was unfortunate but necessary. And we did talk to our customers about it and we did react to it at raise [Phonetic] and we react to it in every way possible to make it into simple and easy to change the reservation. However, that problem should be in the past very, very soon, if not already.

Alison Sider -- The Wall Street Journal -- Reporter

Thanks.

Operator

From CNBC we have Leslie Josephs. Please go ahead.

Leslie Josephs -- CNBC -- Reporter

Hi, good morning, everyone. My question is about regional airlines. Do you know the carriers that fly for you, under your name are going to be subject in the same federal mandate or it's not due to some of the ocean rules, do you have any operational concerns about getting them into compliance in the next few weeks? And then, also if you have any information about how you're approaching changes cargo just given all the supply chain issues for the quarter, especially before the holidays. Thanks.

Brett J. Hart -- President

Hi, this is Brett Hart. What we will say is that our regional carriers, we know that they're evaluating the ability [Phonetic] of the executive order on their business and we're in discussions with them. I think it is very where we stand with respect to the importance of vaccinations, but they are in the process of working through that now and we'll certainly be in process of helping them in that process to the extent that we can.

Andrew, do you want to touch on cargo?

Andrew Nocella -- Executive Vice President and Chief Commercial Officer

Yes, in terms of cargo, we've obviously had a record quarter, a record year. We expect that to continue well into the fourth quarter and actually beyond, given where the country stands in terms of the back of the ports [Phonetic], but also in terms of consumer demand. We're transporting things by airplanes today that we traditionally have not. And in talking to the entire team, we expect that to continue well into next year, if not all of next year based on where demand is for these products. And again, where the ports are and the services that we provide, which are second to none on the cargo front. And Leslie, if you look at our numbers, you can see that are numbers aren't ever poor.

Leslie Josephs -- CNBC -- Reporter

Okay, thanks. Could you ask the regional airlines to refer to the same vaccine mandate that you have and so they say no, just for uniformity, [Indecipherable] on the plane?

Brett J. Hart -- President

At present, we haven't asked or required our regional carriers to adopt our same policy. And you understand from a legal perspective, we don't have the right to require them to do it. But this is a process that they will work through in the same way that we did. And we know that they are very focused on it. And we're confident that at the end of the day they'll get to a good place on it.

Scott Kirby -- Chief Executive Officer

But we have and are strongly encouraging them, pushing them to do it. We think it's right thing for them to do as well, which is starting control.

Operator

[Operator Instructions] And from Bloomberg News, we have Justin Bachman. Please go ahead.

Justin Bachman -- Bloomberg News -- Analyst

Hi, thanks for taking my question. I wanted to go back to the earlier comment about United being in the US flag carrier and that sort of structural change that you see on the international wide-body front and how that makes long haul more profitable. I wanted to get your thoughts on the thesis though because it seems to rest on the idea of that other carriers can't or won't add widebody capacity if they can get some decent yields on that. And I just wanted to get your thoughts on that, because some of these airlines you've accused in the past of being government subsidized, and it seems that they could add capacity if they chose to. Thank you.

Andrew Nocella -- Executive Vice President and Chief Commercial Officer

Hey, Justin. It's Andrew. Well, there's really two components. One is the fleet and how long it takes to get widebody aircraft and configure them and put them in the air. And that is -- haven't done it here at United, it takes a couple of years. So, when you choose to retire an aircraft, it's very difficult to reverse that decision, get trained up and acquire a new aircraft to replace them. So, it just cannot happen immediately. But secondly, and more importantly, is the fact that we're flying from what are seven maiden [Phonetic] hubs here in the United States that just represents both international travel to and from the country, not only leisure business, but regular corporate business. And so, we just have a structural advantage on this front. We're already the largest international carrier by far. We're able to successfully fly not only to our partner hubs, but to suppose all over the world. And you saw that in our recent announcement including the new players like Amman, Jordan. And so, we're simply taking advantage of the structural advantage that we have at United that we just haven't been able to in the past properly do. But now we can and we're doing so in an era -- I think tailwinds based on the fact that demand is bouncing back rapidly and our competitors across the board have retired many, many large aircraft, many of them with large business class cabins.

Justin Bachman -- Bloomberg News -- Analyst

Okay, thank you.

Operator

From CNN, we have Chris Isidore. Please go ahead.

Chris Isidore -- CNN -- Reporter

Getting back to the cargo and supply chain issues, are you still flying any all cargo flights and are you considering any purchases of freighter -- traditional freighter aircraft, either used or new as you're seeing more cargo demand?

Andrew Nocella -- Executive Vice President and Chief Commercial Officer

I'll take that. We stopped -- we'd stopped or planned to stop all cargo flights to be more correct as we were going through the summer because of the rebound in traffic and the lack of our crafts, we need 777s to fly. As we went through the delta-variant phase and demand fell, we did allocate a small number of widebodies to our cargo team and they've taken them and they are flying as all cargo through the end of this year. And that is doing extremely well. We will likely bring that to an end, again, sometime late this year, early next year. Well, that depends on the return to service of our [Indecipherable] 777s. So, we do see a lot of men [Phonetic] on the cargo front. The team is doing a great job and we're going to have a record year.

Chris Isidore -- CNN -- Reporter

And freighter aircraft, is that something that you're weighing and considering or is that just not something that you see being a mix long-term?

Andrew Nocella -- Executive Vice President and Chief Commercial Officer

Sure. We have a fleet of about 220 or so wide-body jets in United Airlines. They all large bellies with room for a lot of cargo. We just haven't seen the need to supplement those aircraft with any all greater versions of those aircraft at this point in time. And just from a business model perspective, we can obviously take months or years where that makes sense or a few individual routes, but the fact that we operate -- I think is the second largest wide-body fleets in the world. We have a ton of belly capacity that more than meets our needs.

Operator

From the Associated Press, we have David Koenig. Please go ahead.

David Koenig -- Associated Press -- Reporter

Hey, thanks very much. Scott, following up on your caveat emptor comment earlier, I wondered if you have any evidence that people are booking to United because of your mandate? And I guess are you counting on some of your rivals struggling to have enough staff over the holidays?

Scott Kirby -- Chief Executive Officer

Well, the story, I think it'd be hard to sort that out even if it was happening, but I would also say, I don't want that to happen. I mean I don't, because I want everybody to get back and that's the right answer for the safety, that's the right answer for the country. I hope that every airline will stop backtracking and will in fact get everyone vaccinated like United Airlines has done. And so, that it will not be a competitive advantage for us, but it is without a question the right thing to do.

David Koenig -- Associated Press -- Reporter

Is it a competitive disadvantage if they seem to settle for less and have some sort of testing alternative to vaccination?

Scott Kirby -- Chief Executive Officer

Well, look, again, I hope that they will again backtrack and get all their employees back because it is the right thing to do. But it is unquestionably going to be operationally, really, really difficult to get tens of thousands employees tested every week.

David Koenig -- Associated Press -- Reporter

Okay, thanks.

Operator

From Reuters, we have Rachit Singh. Please go ahead. Good morning, everyone. I have two questions. First, I want to clarify your comments on 777s. You said that you expect them to return to service in the first half of next year, is that your assumption or has FAA-cleared the ground fleet to return to service in the first half of 2022?

Gerald (Gerry) Laderman -- Executive Vice President and Chief Financial Officer

Hi, this is Greg. We have heard that from the FAA. But we have been working tirelessly with Pratt & Whitney and the FAA over the past six months, and we do expect the aircraft return to service in the first quarter next year safely.

Rachit Singh -- Thomson Reuters -- Reporter

And my second question is about supply chain bottlenecks that you alluded to the supply chain process and your comments on [Indecipherable] Can you share some color and details on these bottlenecks and how are you navigating from them?

Gerald (Gerry) Laderman -- Executive Vice President and Chief Financial Officer

Hey, it's Gerry. So, I'll say, we're not seeing anything different from what others are seeing and where we are seeing shortages or potential shortages, we're just trying to stay ahead of it. So, it's not at all impacting the operation or the product, but it does have some impact just on costs. It's just more expensive, as the whole world is seeing, sometimes to get the supply that you need.

Operator

From The Washington Post, we have Hannah Sampson. Please go ahead.

Hannah Sampson -- The Washington Post -- Reporter

Hey, good morning. On the question of premium increased demand for maybe your customers for premium products, how are you seeing that play out? Are they just kind of booking those upfront? They're using miles for upgrades or getting free upgrades? I guess I'm curious have leisure travelers been like dying to book a seat all along and just didn't have the chance or do they have more cash to work with now? What do you see playing out there?

Andrew Nocella -- Executive Vice President and Chief Commercial Officer

This is Andrew speaking. We'll let this play out over time. But what we've seen over the last few months in particular is more a willingness to spend a few extra dollars to upgrade to a premium seat in the main cabin or to fly in the first class cabin, or across the Atlantic we've seen a better rebound in our business class cabin to our leisure oriented routes, so such as, app and durability this summer than we did in the main cabin. And I think people, a lot of consumers have saved up some money during the pandemic, and maybe are hurting a little bit. There is also, these are great upgrades to the product, a big thing here at United is to make sure that we have our product for all of our customers from the top, from the scales, from the Polaris, down to a basic economy customer. We can provide products across that range and that's exactly what we're doing. We expect to do more of that over time by the way. And we actually know that there are certain customer that want that elevated experience while there's others that don't. And we will offer a range of product types as long as they allow us to do that.

Hannah Sampson -- The Washington Post -- Reporter

Okay, thanks. And then if I could slip another one in real quick, how are you feeling prepared for the holidays staffing wise, not just pilots and flight attendants, but across the board, agents, people to answer the phone, the people that have questions or problems, how prepared are you feeling for that?

Scott Kirby -- Chief Executive Officer

We're in good shape and customers can book with confidence at United Airlines.

Operator

Thank you. We will now turn it back to Kristina Munoz for closing remarks.

Kristina Munoz -- Director, Investor Relations

Thanks everyone for joining the call today. Please contact Investor or Media Relations if you have any further questions and we look forward to talking to you next year. Thanks, everyone.

Operator

[Operator Closing Remarks]

Duration: 78 minutes

Call participants:

Kristina Munoz -- Director, Investor Relations

Scott Kirby -- Chief Executive Officer

Brett J. Hart -- President

Andrew Nocella -- Executive Vice President and Chief Commercial Officer

Gerald (Gerry) Laderman -- Executive Vice President and Chief Financial Officer

Brandon Oglenski -- Barclays -- Analyst

Andrew Didora -- Bank of America -- Analyst

Jamie Baker -- JP Morgan -- Analyst

Steven Brent -- Citi -- Analyst

Savanthi Syth -- Raymond James -- Analyst

Duane Pfennigwerth -- Evercore ISI -- Analyst

Catherine O'Brien -- Goldman Sachs -- Analyst

Hunter Keay -- Wolfe Research -- Analyst

Helane Becker -- Cowen and Company -- Analyst

Michael Linenberg -- Deustche Bank -- Analyst

Conor Cunningham -- MKM Partners -- Analyst

Alison Sider -- The Wall Street Journal -- Reporter

Leslie Josephs -- CNBC -- Reporter

Justin Bachman -- Bloomberg News -- Analyst

Chris Isidore -- CNN -- Reporter

David Koenig -- Associated Press -- Reporter

Rachit Singh -- Thomson Reuters -- Reporter

Hannah Sampson -- The Washington Post -- Reporter

More UAL analysis

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