United Airlines CEO Scott Kirby sits down with Yahoo Finance's Brian Sozzi to discuss the state of the business, growth in international travel, and the potential impact of a U.S. debt default.
And this summer, they can't afford any more meltdowns. One of the airlines gearing up for a big Memorial Day weekend is United Airlines. The airline is unveiling a major investment in Denver International Airport today. Let's bring in the United Airlines CEO, Scott Kirby. Scott, always great to get some time with you here on "Yahoo Finance."
So big investment in Denver-- let's start there. A part of a $1 billion plan by your organization. Why Denver?
It's just a great growing city. Great geography for connecting customers across the country. We're really excited about everything that's going on for us here in Denver.
And they work remotely for one or two days. And so they're still online. And they're still working. But they work remotely. And so it means there's just a structurally higher level of travel than there was before because people weren't constrained by money. They're constrained by time. And taking that time constraint off gives them more ability to travel. And we see that happening. And I've seen it happening for the past year and a half.
BRIAN SOZZI: Scott, for investors not too familiar, where else you're putting capital to work? So $1 billion in Denver, that's a very large number. Where else are you investing in the United States at the same level or even more?
SCOTT KIRBY: Well, by far, our biggest investment is in aircraft. We've got the largest aircraft orders in history coming this year and in the years to come. So we're going to spend a little over $8 billion in CapEx this year, mostly on aircraft. We're making big investments at almost all of our airports. But the big CapEx number for us is aircraft.
BRIAN SOZZI: And I see the 737 Max by Boeing will be part of your planning in Denver. Is there still customer hasn't seen on getting on that airplane?
SCOTT KIRBY: No. It's a great airplane, a very safe airplane. And there's no impact at all.
BRIAN SOZZI: Talk to us about Memorial Day weekend demand. It's expected to be very strong. Compared to what we just heard from you a couple of weeks on earnings, how is the demand environment looking?
SCOTT KIRBY: Look, the demand environment remains very good. We've had six of our 10 highest in history revenue booking days here in the month of May. The other four were all in March before Silicon Valley banking scare. So the demand environment remains very good. We're expecting all time records this weekend. But consistent all time records as we go through the summer. And expect to continue to break the booked revenue records as we move forward.
BRIAN SOZZI: What is growing faster, US or international travel?
SCOTT KIRBY: So international is growing faster. Well, international is growing faster really across the board. And a lot of what happened last year is international borders were still tough, either completely closed or there are all kinds of requirements to get in and around COVID. So that caused a surge in demand for domestic travel. This year, borders are open. A lot of people are able to go for the first time. And so long haul international particularly is the strongest part of the network.
BRIAN SOZZI: We were looking at the latest CPI data, Scott. And we noticed that prices for airfares have start to come down a little bit. Is that because of more capacity in the airline industry or consumers balking at some of the higher prices?
SCOTT KIRBY: No. I think this is really just a function of COVID. Airfares went up a lot last year, as there was coming out of Omicron and with the pent up demand. And so they're now coming back to the trend line of where they were before relative to GDP. So we all expected this. I don't think there's anything to read into it other than this time last year was this really surge, especially for domestic demand. And that CPI data is heavily weighted to domestic because people couldn't travel internationally.
And so last year was the anomaly. And this year is back to normal trend line.
BRIAN SOZZI: As an airline, Scott, that is investing billions of dollars each year, airplanes, infrastructure like in Denver, how concerned are you about what's going on in Washington right now with the debt ceiling debate? And how destabilizing? Could that be to your business and the overall airline industry, if there is a default?
SCOTT KIRBY: Well, first, I've already talked about demand is really good for us. And so it feels to me like the economy is, we're going to make it through this fighting back against inflation with either a soft landing or at worst, a mild recession. But the economy is balanced on a knife's edge. When Silicon Valley banking scare started, we saw a 15% overnight drop in business bookings. And that tells you that the economy is very fragile. And that's what I'm worried about with the debt ceiling.
We don't need an unforced error in the economy. And this would just be an unforced error. And I really hope that our politicians can find a way to compromise. And I'm bipartisan in that. Both sides compromise and get a deal done. Because we're going to make it through a tough period, I think, without a lot of damage. Unless, we do harm to ourselves. So let's not do harm to ourselves, not have an unforced error around the debt ceiling.
BRIAN SOZZI: A lot of leaders I talked to, Scott, share your sentiment. Absolutely. But as a leader, as a CEO of a very large company, do you put plans in place if it doesn't go according to plan?
SCOTT KIRBY: Well, there's not much for us that we're going to do different in the short term. If you're in banking or part of the financial plumbing, what I think of this is the debt ceiling would be the first domino. And there's a bunch of dominoes lined up in the financial system. And that's really where we have really bad outcomes, if some of those dominoes start to fall. And so I think they're really focused on what to do on day one.
For us, on day one, it doesn't change. Our dominoes are more at the end of that chain. That if the debt ceiling crisis turns into a bigger crisis, is where we're really impacted. But we just shouldn't take the risk. It's a silly, silly, silly risk to even think about letting that first domino fall.
BRIAN SOZZI: On a happier note, Scott, I booked a trip for next month. "Yahoo Finance" is headed to Cairns, which I'm very excited about. But it felt like to me, I'm using United. It felt like--
SCOTT KIRBY: That's good. Thank you.
BRIAN SOZZI: Yeah. Well, happy to help. But it felt like more premium seats on board. Are you adding more luxury seats, more first class seats on these planes? And why may that be the case?
SCOTT KIRBY: Yeah. United, we've become the flag carrier of the United States. We fly to more destinations across the Atlantic than all the other US airlines combined, more across the Pacific than all the other US airlines combined. And a lot of our business is premium travel, so both business class and premium economy seats. And so we've had growth across the Atlantic, but even larger growth in the premium cabins for customers.
BRIAN SOZZI: Do you have to take planes out of service to reconfigure them? It seems like a pretty big undertaking to put in just larger seating and more plush environments.
SCOTT KIRBY: We do. And. In fact, it depends on what kind of reconfiguration you're doing. But think of it as an $8 to $10 million per airplane project. So there's significant investments when we run them through to upgrade the interiors with all the new seats, new paint, everything on the interiors.
BRIAN SOZZI: Well, I hate to be the bearer of bad news. I'm flying economy class, Scott.
[LAUGHING]
But maybe next time. I want to keep saving. You got to watch it. You got to watch it.
SCOTT KIRBY: Watch all those comfortable people and buy business next time.
BRIAN SOZZI: Oh, I know I have the corporate card. But you've got to do the right thing. You got to do the right thing. All right. Scott Kirby, congratulations on that Denver investment. United Airlines, CEO, always great to get some time with you. Appreciate it.
SCOTT KIRBY: Thanks, Brian.