Scott Kirby
Chief Executive Officer at United Airlines
Thank you, Kristina, and good morning to everyone on the call today. Despite the numerous geopolitical and other headwinds around the globe 2023 really was the year that our plan for United Airlines came together. Despite numerous geopolitical and other headwinds around the globe, 2023 really was the year that our plan for United Next came together. Our thesis at this time last year was that operational constraints and other factors were leading to cost convergence, and those cost pressures, in turn, would lead to higher revenues. That is certainly true for United, as our diversified revenue streams continue to differentiate us from other airlines.
Another way of saying that is that we believe that a new link between United's CASM and RASM was being solidified. And while it might be hard to get either a CASM or RASM forecast exactly correct, we can have higher confidence in forecasting the relationship between the two; and therefore, have higher confidence in our earnings and margin forecast. And despite a year filled with events that we could have never predicted, that's exactly what happened in 2023. And so, I'd like to thank the 100,000 United team members around the world who worked so hard to make that happen, and those same 100,000 people continue to deliver in the face of a huge impact on our employees and customers from the MAX 9 ground. I'm proud of our tech-ops team who's taken the lead and has been working 18-hour days, non-stop since January 6 to ensure that the MAX 9 is 100% safe before we return it to service.
I'd also like to thank the FAA for their professional leadership in this situation, and also acknowledge that they too are also working long hours and weekends with us in an effort to ensure that we know for sure what happened, so that we -- so that we be confident that the remediation prevents it from ever happening again. 2023 really sets the stage for what is likely to be a repeat in 2024. United financial performance was impressive, especially if you consider what analysts were expecting just one year ago. In 2023, we delivered full year earnings per share above $10, which was within the range of our initial United Next targets of $10 to $12.
I want to spend some time today examining how we got there and why we think those trends will persist in 2024:
One, we expected the operating environment to be challenging, driven by pilot and other hiring constraints, FAA, air traffic control staff, maintenance, catch up, and supply chain issues. It turned out to be even more challenging than we thought.
Two, and those operating environment challenges led directly to industry capacity plans, including our own, coming down three points on average, as carriers adapted to the new operating environment. For United, we made changes to our schedule and we closed out the year setting operational records. The improvements in Newark in particular, are one of the most important accomplishments that we achieved last year. Brett will share more details in just a moment, but the FAA waivers right-sided the airport and airspace due to physical constraints and allowed us to run an operation that performed better than ever in Newark, that's been good for our business and it's been really good for our customers.
Three, but as we predict the challenging operating environment led to cost pressures and cost conversions in the industry. To be fair, even we at United underestimated the inflationary pressures that we would face, primarily from labor, maintenance and supply chain issues, and that led to higher absolute CASM-ex than we were forecasting. But those same cost pressures are being felt across the entire industry. And a year ago, when we talked, we believed the industry wide cost pressures would wind up as a pass through, much like fuel has been in the past.
Four, and that is in fact exactly what happened. While industry cost pressures drove higher CASM-ex at United, we offset those higher than expected costs with higher than expected revenues.
Five, which leads to the final point. While difficult to predict events like the fuel price spike, rising conflict in the Middle East, fires in Maui, persistent inflationary pressure, so many other things that makes it difficult to predict United's full year 2023 CASM and RASM 12 months in advance, the tightening connection at United between CASM and RASM meant that we achieved our initial $10 to $12 EPS range, despite those multiple headwinds around the globe.
The link between RASM and CASM, combined with the success of United Next, is what made 2023 such a successful and important year in our history. And we expect 2024 to follow a similar path for the same reasons. This is just the new normal. The operational challenges remain. It will be years before the FAA is back to full staffing, we're still overlapping new labor agreements which show up in our CASM, and the supply chain challenges aren't going away anytime soon. That means capacity will continue to ratchet down out of necessity and cost convergence will continue. But revenues will adjust to the new cost reality, and you can expect United to maintain and grow EPS and margins.
2.5 years ago, we laid out our United Next growth strategy. In 2023. We demonstrated that the plan is working almost exactly as we expected and the future is bright. There have been and there will be more bumps in the road, but we continue to feel confident about our ability to grow earnings and margin over the long-term because of the tighter connection between United's cost and United's revenue.
Looking ahead to 2024, the United Next plan is working, and no airline is better positioned to capitalize on industry and macroeconomic trends than United, and we're continuing to move aggressively to capitalize on emerging opportunities. We'll have more to share with you at our Investor Day later this spring. In the meantime, we're focused on delivering another great year for our employees, customers, and our shareholders.
And with that, I'll hand it over to Brett.
