Brandon Oglenski

Brandon Oginski asked John Brooks about business wins supporting CPKC's longer-term growth profile for next year and early insights into 2026 volumes, considering trade fluctuations.

Answer

EVP and CMO John Brooks expects CPKC to outperform peers and the macro in 2026, with grain rolling into next year as a strength. He anticipates another CAD 300 million in self-help initiatives and synergies, including growth in MMX, intermodal routes, reefer business, and Lazaro/Gemini. Brooks also highlighted a strong industrial development pipeline, representing over CAD 200 million in new business starting in Q4 and early 2026, combined with opportunities from connecting road partnerships.

Brandon Oginski asked about business wins supporting CPKC's longer-term growth profile for next year and early insights into 2026 volumes, considering trade fluctuations.

Answer

EVP and CMO John Brooks expects CPKC to outperform peers and the macro in 2026, citing potential carryover grain volumes and exceeding the $300 million synergy target this year. He anticipates another $300 million from self-help initiatives and synergies (MMX, intermodal, reefer, Lazaro/Gemini), a strong industrial development pipeline ($200 million+ new business), and partnerships with connecting roads.

Brandon Oglenski of Barclays asked about the specific impact of trade tariffs on CPKC's business and growth outlook, particularly concerning the automotive segment and other potential areas of impact.

Answer

EVP & CMO John Brooks identified three main areas impacted by tariffs: cross-border steel, which is practically shut down; automotive, which has seen 'choppy' volumes but where CPKC's superior service product has insulated it by driving continued growth; and international intermodal, which sees ebbs and flows. He noted that despite these headwinds, the company's self-help initiatives, strong bulk franchise outlook, and disciplined pricing provide confidence for the second half of the year.

Brandon Oglenski of Barclays asked how new labor agreements are helping the network and what the operational plan is to combat inflation and drive further efficiency this year.

Answer

EVP & COO Mark Redd detailed that the company first targets cost take-outs regardless of union wage increases. He noted the stability from new 4-year deals in Canada and progress on hourly agreements in the U.S. southern region, which allow for more flexible crew bases and longer runs, contributing to efficiency gains.

Brandon Oglenski asked if CPKC is seeking to harmonize labor agreements across its three operating countries and if long-term productivity goals are being incorporated into new contracts.

Answer

EVP and COO Mark Redd explained that productivity efforts are tailored to each region. In the U.S., the focus is on enabling year-round capital work to avoid seasonal furloughs. In Mexico, change will be more incremental over time, focusing on areas like locomotive and fuel optimization to capture upside. He noted that hourly agreement negotiations are still ongoing on the legacy KCS property.

Brandon Oglenski asked about Landstar's long-term ability to return to pre-pandemic net operating margins, which were consistently in the 40-50% range.

Answer

CEO Frank Lonegro and CFO Jim Todd outlined several factors: increased revenue to spread fixed costs, higher rates, improved insurance and claims management, efficiency gains from technology (including AI), and higher BCO utilization. Jim Todd specifically pointed to persistent claim cost inflation as a significant challenge impacting margins, despite the company maintaining safety levels comparable to 2019 with fewer BCOs.

Brandon Oglenski from Barclays Bank PLC asked about Landstar's long-term ability to return to pre-pandemic net operating margins, which were consistently in the 40-50% range.

Answer

Frank Lonegro, CEO and President, and Jim Todd, CFO and VP, discussed the need for increased revenue to spread fixed costs, improved rates, and addressing persistent claim cost inflation. They also highlighted efficiency gains from technology, AI, and headcount reductions as levers to improve operating margins.

Brandon Oglenski inquired about the $1 billion cash flow outlook for next year, the role of M&A in capital deployment, and the long-term needs for incremental capacity build-out. He also asked Angela Nam about the sustainable level of maintenance CapEx and reinvestment in the leasing business going forward.

Answer

Joe Adams, Chairman and CEO, stated that capacity expansion will continue through low-cost investments (e.g., $20M-$30M for meaningful capacity) and accretive M&A on the repair side, emphasizing flexibility in acquiring capabilities. Angela Nam, CFO and CAO, expects maintenance CapEx to remain around $125 million and replacement CapEx not to increase significantly due to the engine exchange structure of SCI.

Brandon Oglenski asked about the $1 billion cash flow outlook for next year, the role of M&A in capital deployment, and the long-term needs for incremental capacity build-out. He also asked Angela Nam about the sustainable level of maintenance CapEx and reinvestment in the leasing business.

Answer

Joe Adams, Chairman and CEO of FTAI Aviation, stated that capacity expansion will continue in a cost-effective manner (e.g., $20-30 million investments for meaningful capacity), and M&A on the repair side will focus on accretive deals requiring minimal capital. Angela Nam, CFO and CAO, indicated that maintenance CapEx is targeted at $125 million this year and is expected to remain similar, with replacement CapEx not expected to increase due to SCI engine work being structured as exchanges.

Brandon Oglenski of Barclays requested an update on the approval timeline for the company's pending PMA parts and sought more detail on the structure and global replicability of the recent deal with a major U.S. airline.

Answer

Joseph Adams, Chairman, CEO & Director, stated that the final application for the third and most significant PMA part was submitted in May, with historical precedent suggesting a six-month review, pointing to a potential October approval. Regarding the airline deal, he clarified it involved full performance restorations, which contributed high dollar value but at lower margins than typical, and expects margins to normalize as the product mix reverts.

Brandon Oglenski asked for confirmation of the 3x net leverage target, the impact of the SCI on the debt profile and credit rating, and the progress of the V2500 engine partnership with Pratt & Whitney.

Answer

CEO Joseph Adams confirmed the year-end 3x leverage target. CFO Eun Nam added that the SCI model accelerates this goal, positioning FTAI for a 'strong BB' credit rating. Regarding the Pratt & Whitney partnership, Adams reported that they have put 'quite a few' V2500 engines through the network, are very happy with the relationship, and confirmed the margins are not dilutive to the aerospace products business.

Brandon Oglenski inquired about airline sentiment regarding the longevity of 737NG and A320ceo fleets, given new aircraft delivery delays. He also asked about FTAI's success in securing long-term maintenance contracts versus one-off transactions during the quarter.

Answer

CEO Joe Adams stated that FTAI is betting on these platforms running longer due to new aircraft delivery shortfalls and new engine technology issues. COO David Moreno added that airlines are extending these assets for 5-8 years because of their durability and predictable costs. Regarding contracts, Moreno described a mix of spot deals and multi-year programs, noting that the SCI will create a significant contractual backlog with an average duration of about four years. He reiterated that every customer who tries their product returns for more.

Brandon Oglenski of Barclays asked for details on the contractual backlog in the products segment, the long-term sustainability of its high margins compared to traditional MROs, and the company's upcoming capital funding needs.

Answer

COO David Moreno linked backlog to repeat customers, who make up 66% of volume and provide long-term schedules, giving visibility. He stated margins are sustainable due to the OEM's pricing umbrella and FTAI's focus on cost reduction. CEO Joe Adams differentiated their model from MROs by noting they only work on their own engines, creating a high-volume, standardized manufacturing process. CFO Eun Nam identified the upcoming redemption of Series B preferred stock as a capital priority, with no other major needs foreseen and no debt maturities until 2028.

Brandon Oglinski from Barclays asked how Norfolk Southern plans to manage its cost structure amidst potential share loss and trade headwinds, especially considering the need to maintain excess capacity for the proposed merger.

Answer

President and CEO Mark George emphasized a careful approach, highlighting productivity gains like moving 4% more GTMs with a 3% reduction in headcount, and mid-single-digit improvements in fuel efficiency. Chief Operating Officer John Orr detailed ongoing PSR 2.0 transformation efforts, including a zero-based train service plan that reduced intermodal crew starts by 14% year-to-date, aiming for a cumulative $600 million in efficiency targets by 2026.

Brandon Oglenski asked how Norfolk Southern plans to manage its cost structure amidst potential share loss and trade headwinds, balancing cost reduction with maintaining excess capacity for a future merger.

Answer

President and CEO Mark George emphasized careful management, highlighting productivity gains (4% GTM growth with 3% headcount reduction) and mid-single-digit fuel efficiency improvements. Chief Operating Officer John Orr detailed operational fundamentals, including reduced intermodal crew starts (14% YTD) and improved shipments per crew start (11%), aiming for a cumulative $600 million cost takeout by 2026.

Brandon Oglenski asked about long-term targets for intermodal and merchandise service metrics and whether the company is seeing tangible evidence of highway-to-rail conversions in domestic intermodal.

Answer

COO John Orr stated he wants to see trip plan compliance in the 80s and 90s, but noted that as they tighten standards, the metrics may show variability. The ultimate goal is reliable customer delivery. CCO Ed Elkins confirmed that the spring bid season has been encouraging, with customers looking to save money by using their trusted service, and he expects the trend of highway conversions to continue.

Brandon Oglenski of Barclays PLC asked about long-term goals for intermodal and merchandise service scores and whether the company was seeing conversions from highway to rail.

Answer

COO John Orr targeted trip plan compliance in the 80-90% range but noted that tightening standards can cause variability. CCO Ed Elkins confirmed they are successfully converting freight from highway, as customers leverage Norfolk Southern's improved, reliable service to reduce their supply chain costs.

Brandon Oglenski asked for more elaboration on the changes being made to the operating plan in the current year, which was described as a 'refreshment' or a 'new operating plan'.

Answer

COO John Orr described the new plan as the next step in continuous improvement, focused on tightening standards for terminal connections and train performance. The goal is to leverage recent speed gains to improve asset utilization, reduce handlings, run longer trains, and right-size the car and locomotive fleets to drive further productivity.

Brandon Oglenski asked about CEO Mark George's plans for organizational changes and whether the long-term guidance for a sub-60% operating ratio remains valid.

Answer

CEO Mark George reaffirmed the long-term sub-60% OR target, contingent on cost cuts and top-line recovery. He stated the focus is on execution, not major structural changes, emphasizing a culture of operational excellence, two-way communication, and deeper customer collaboration to accelerate share gains.

Brandon Oglenski from Barclays sought clarification on the outlook for coal yields in the second half and asked if potential large land sales are included in the OR outlook, also inquiring about the normal run-rate for property gains.

Answer

Mark George, CFO, clarified that any large land sales would be considered non-GAAP items to strengthen the balance sheet and are not in the OR guidance. He noted the typical annual run-rate for property gains included in OR is $30-$40 million. Ed Elkins, CMO, added that coal rates are expected to drift slightly lower, though seaborne prices should remain above $200.

Brandon Oglenski asked if the previously stated $4.3 billion in total initiatives for next year is still valid. He also sought a better understanding of how the buy-up process is currently working in Q4 and how it might change from basic to plus fares with the introduction of seat assignments and premium availability.

Answer

CFO Tom Doxey confirmed that the $4.3 billion in initiatives remains intact, detailing components such as $780 million in cost savings, $1 billion from bag fees, $1 billion from extra legroom and seat assignments, and enhancements to the loyalty program and Chase agreement. COO Andrew Watterson explained that the current buy-up process primarily focuses on flexibility and Rapid Rewards accrual, showing a mid-single-digit increase in voluntary buy-ups. He anticipates a much larger impact with seat assignments next year, leading to strong yield increases in Q1 bookings as customers are given more choice.

Brandon Oglenski asked Steve Angel for his initial impressions of CSX's commercial strategy, particularly regarding converting highway to rail volume, what limits group volume, and how CSX will pursue it differently.

Answer

Steve Angel, President and CEO, expressed optimism about opportunities to collaborate with other railroads to reduce friction and shift truck volume to rail. He noted that current cooperation levels are higher than historically seen, leading to positive intermodal numbers and reason for optimism.

Brandon Oglenski questioned if the typical sequential Q1 to Q2 operating ratio improvement is achievable this year, given the extended operational recovery and the deployment of additional resources.

Answer

CFO Sean Pelkey confirmed that Q2 results will be better than Q1 but avoided committing to a specific magnitude of margin improvement. He clarified that resource additions are minor and that improved fluidity ultimately saves costs and unlocks revenue opportunities. The pace of recovery, he noted, will depend on both operations and the macro environment.

Brandon Oglenski asked about the long-term benefits of the Howard Street Tunnel project and whether its completion could lead to a significantly better performance in 2026 in terms of margins, pricing, and volume.

Answer

CEO Joe Hinrichs described the Howard Street Tunnel as one of the company's most important projects, which has been accelerated from a three-year to a one-year timeline. He explained that its completion will enable double-stack service along the East Coast, a major competitive advantage. This will unlock significant growth opportunities in 2026 and 2027, supporting the company's long-term targets.

Brandon Oglenski revisited the new five-year labor agreement, asking for the rationale behind signing early with locked-in wage increases and what strategic gains CSX expects from this approach.

Answer

CEO Joseph Hinrichs explained the decision was a strategic move to foster a positive 'ONE CSX' culture and avoid the turmoil of the last negotiation cycle. He emphasized that securing a voluntary agreement early improves employee retention and allows the company to focus on long-term discussions about safety, efficiency, and work rules without the distraction of national wage bargaining.

Brandon Oglenski from Barclays asked about the competitive dynamics between brand-loyal airlines and commoditized low-cost carriers, specifically how a shorter booking window at the lower end and anticipated capacity reductions from low-cost carriers might impact the market, particularly in Q4.

Answer

EVP and Chief Commercial Officer Andrew Nocella noted that future schedules are materially different, with unprofitable capacity leaving the system. He observed that certain airlines have a very close-in booking curve, distinct from United's full range of customers and products. He emphasized that while ultra-low-cost carriers will always exist, unprofitable flying will diminish, leading to a rebalancing of supply and demand and a 'great outlook' as commoditized capacity leaves the system.

Brandon Oglenski of Barclays questioned the sustainability of United's strong free cash flow, given that current capital expenditures are low due to delivery delays but are expected to increase significantly in coming years.

Answer

EVP & CFO Mike Leskinen stated that he expects free cash flow to continue to expand in 2026 and 2027. He anticipates that operating cash flow will grow at a faster rate than capital expenditures, even as CapEx normalizes, ensuring the sustainability of free cash flow generation.

Brandon Oglenski of Barclays asked for a clearer definition of 'brand loyal customers' and questioned the prudence of high single-digit domestic capacity growth given recent unit revenue weakness.

Answer

EVP and CCO Andrew Nocella defined brand loyal customers by metrics like total and local origin market share in hubs, co-brand card penetration, and share with global travel agencies, all of which are increasing. He defended the capacity plan as proven, focused on peak times, and the best path for United, while noting they have already made adjustments and remain open to future changes for September and beyond.

Brandon Oglenski asked if the long-term aircraft gauge outlook includes the Boeing MAX 10 and what the domestic capacity growth priorities are for 2025, considering the constraints on upgauging.

Answer

EVP and CFO Mike Leskinen confirmed they are 'more bullish' on the MAX 10. EVP and CCO Andrew Nocella added that gauge will increase significantly regardless, driven by the MAX 9 and A321. For 2025, Nocella said the domestic focus is on building connectivity in the Chicago, Houston, and Denver hubs.

Brandon Oglenski asked how integral the elevated capital spending is to achieving the double-digit margin target and sought clarity on the free cash flow outlook within that spending context.

Answer

EVP & CFO Mike Leskinen described the CapEx as 'absolutely integral' to the United Next strategy, as it enables competitive advantages like the Basic Economy product. He introduced a free cash flow conversion target of 50% for the next 2-3 years and 70-75% later in the decade, confirming this is within the context of the $7B-$9B annual CapEx plan.

Brandon Oglenski asked about Delta's long-term goals for margin improvement, specifically what factors are within Delta's control for 2026, including market capacity, commercial momentum, and cost efficiencies. He also inquired about the drivers behind the 12% increase in co-brand spend and the sustainability of loyalty drivers into next year.

Answer

CFO Dan Janki reiterated Delta's focus on driving margins into the mid-teens through profitable growth, margin expansion, and disciplined capital allocation. He highlighted growing high-margin revenue streams (premium, Amex loyalty), fleet renewal, and cost performance through airport utilization, fleet simplification, and technology. President Glen Hauenstein attributed co-brand spend growth to the premiumization of the card itself, with a record number of premium cardholders whose spend significantly outpaces base members, and expects this trend to continue.

Brandon Oglenski asked about Delta's long-term goals for margin improvement, specifically what factors are within the company's control for 2026, including market capacity, commercial momentum, and cost efficiencies. He also inquired about the sustainability of loyalty drivers, given the 12% increase in co-brand spend.

Answer

CFO Dan Janki reiterated Delta's Investor Day playbook, focusing on driving margins to the mid-teens by growing high-margin revenue streams (premium, Amex/loyalty), fleet renewal, and disciplined low single-digit non-fuel unit cost growth through airport utilization, fleet simplification, and technology. President Glen Hauenstein attributed co-brand spend growth to the premiumization of the card, with record acquisitions of premium cardholders who have higher spend multiples, and strategic focus on high-income growth areas.

Brandon Oglenski noted the recurring theme of off-peak weakness and asked when the industry might need to fundamentally restructure its approach to such periods. He also asked for clarification on incremental aircraft retirements and the impact on maintenance spending.

Answer

President Glen Hauenstein explained that building up off-peak flying during growth periods provides a strategic first line of defense to cut during downturns, as this capacity has high recapture rates. CFO Dan Janki confirmed incremental retirements are planned (30+ this year) which, along with cutting high-cost flying, will generate additional maintenance savings.

Brandon Oglenski inquired about the strategy to monetize the SkyMiles program following new partnerships and asked for insight into the key drivers for keeping non-fuel unit cost growth in the low single digits for 2025.

Answer

CEO Ed Bastian clarified that the immediate goal of new partnerships is not monetization but creating a long-term, experience-based platform to grow the value of SkyMiles membership and deepen loyalty. CFO Dan Janki detailed cost control levers, including better asset utilization, moderating headcount growth below capacity growth, normalizing maintenance expenses, and future technology-driven efficiencies.

Brandon Oglenski from Barclays PLC asked about the strategy behind increasing capacity in the Atlanta hub and the resulting implications for airport costs.

Answer

President Glen Hauenstein explained that after strengthening coastal gateways, the focus is now on restoring core hubs like Atlanta by using larger aircraft to drive efficiency. CFO Dan Janki and CEO Ed Bastian added that while recent airport investments have increased costs, the bulk of this spending is complete, creating a future opportunity to leverage these assets for better utilization and a competitive advantage.

Brandon Oglenski inquired about FedEx's outlook for domestic package volumes, the competitive landscape, market share opportunities, and pricing strategies, particularly in light of a major competitor's shrinking volumes.

Answer

EVP & Chief Customer Officer Brie Carere stated that FedEx expects continued domestic parcel trends, driven by strategic profitable market share acquisition. She highlighted strong momentum in SMB, effective loyalty programs, growth in healthcare, and the success of the HD ground economy bundle. She also noted that pricing in the market is improving and remains rational.

Brandon Oglenski asked for insight on how FedEx plans to navigate a global environment with potentially permanent higher U.S. trade barriers and how the network is being adapted for this new reality, in the spirit of commentary previously provided by founder Fred Smith.

Answer

President & CEO Raj Subramaniam acknowledged that FedEx implements, rather than makes, trade policy. He emphasized that in a dynamic and complex environment with shifting trade flows, the scale of FedEx's physical and digital global network becomes a key competitive advantage in executing for customers.

Brandon Oglenski asked for insight into how FedEx navigates higher U.S. trade barriers, referencing founder Fred Smith's historical advocacy for free trade and seeking his potential guidance on the current environment.

Answer

President & CEO Raj Subramaniam acknowledged Fred Smith's pro-free trade stance but emphasized that FedEx's role is to implement policy, not make it. He stressed that in a complex and dynamic trade environment, the scale of FedEx's physical and digital network provides a key competitive advantage in executing for customers.

Brandon Oglenski of Barclays asked for qualitative input on what customers are seeing and how they are reacting to recession fears and potential future trade tariffs.

Answer

EVP and CCO Brie Carere noted that the Q4 forecast is prudent and incorporates customer feedback. She stated FedEx has not seen a significant pull-forward of inventory. President and CEO Rajesh Subramaniam added that FedEx's global network provides flexibility as supply chains shift, and its structured data offers new value to customers navigating complex trade environments.

Brandon Oglenski of Barclays asked how the DRIVE program has fundamentally changed the way FedEx does business, particularly regarding revenue quality, and what other portfolio changes could be made in the future.

Answer

President and CEO Raj Subramaniam explained that DRIVE has evolved into a new, data-driven business architecture for the entire company, instilling rigor, disciplined execution, and a digital-first mindset. He noted this transformation is foundational for future initiatives like Network 2.0 and improving European performance. Subramaniam stated that of the $4 billion in total DRIVE savings, approximately $1.8 billion is a direct result of new technology implementation.

Brandon Oglenski challenged the positive transformation narrative against the reality of one of the lowest profit first quarters since 2009, asking for concrete examples of what will change to bridge the credibility gap and achieve the guided earnings run rate.

Answer

President and CEO Raj Subramaniam acknowledged the weak industrial economy's impact but stressed a 'deep sense of urgency' on controllable factors like the proven DRIVE program. CFO John Dietrich provided examples including staffing optimization, post-USPS network changes, and centralized procurement. CCO Brie Carere added that new, additive pricing actions will primarily impact the second half of the year.

Brandon Oglenski asked how to reconcile Frontier's large aircraft order book with shrinking capacity in a challenged domestic market, and whether the market is still stimulative.

Answer

CEO Barry Biffle asserted that the current environment is a domestic oversupply issue, not a flaw in the ULCC model. He believes Frontier will be a primary beneficiary as competitors are forced to cut capacity, positioning Frontier as the 'last man standing' with its low costs and strong balance sheet. He also affirmed that significant untapped, stimulative markets still exist for future growth.

Brandon Oglenski from Barclays asked if recurring setbacks point to a structural issue with the low-cost model and whether Frontier needs to make internal changes or consider M&A. He also sought clarification on aircraft lease activities.

Answer

CEO Barry Biffle refuted a structural model issue, citing strong 19% YoY RASM growth in January before a 'demand shock' hit. He acknowledged they were flying too much on off-peak days, a problem they are now correcting, and declined to comment on M&A. CFO Mark Mitchell clarified that the company extended leases on 14 aircraft due to attractive economics and strategic alignment with maintenance schedules.

Brandon Oglenski inquired about the underlying unit revenue and cost trends driving the 2025 guidance and asked which specific commercial initiatives are currently gaining the most traction.

Answer

CEO Barry Biffle stated that revenue trends are performing well due to network initiatives started in mid-2024, with more tailwinds expected from premium seating and loyalty programs. He affirmed the company will maintain over a 40% cost advantage. President James Dempsey added that network adjustments, such as focusing on peak-day flying and maturing the 13-base out-and-back network, are improving unit revenue. Chief Commercial Officer Bobby Schroeter highlighted the success of UpFront Plus seating and the significant long-term value opportunity in the loyalty program, which is currently generating under $3 per passenger compared to peers at over $30.

Brandon Oglenski of Barclays asked for clarification on the timing of the pricing step-up in the Amazon contract. He also questioned Sun Country's strategic posture given the operational and financial challenges faced by other low-cost carriers.

Answer

CFO Bill Trousdale confirmed an annual step-up in the Amazon contract and noted a final rate increase just kicked in, with Q3 being the first full quarter at the new, higher rates. CEO Jude Bricker explained the strategy is to maintain a strong balance sheet and execute well, staying ready to seize organic growth opportunities that may arise from industry disruptions.

Brandon Oglenski asked if the strong Q1 charter growth was driven by contracted or ad hoc business, sought clarification on the cargo revenue timeline, and questioned the strategic thinking behind the new $25 million share repurchase authorization.

Answer

Grant Whitney (executive) explained that while Q1 strength came from ad hoc flying, it's built on strong customer relationships and operational reliability. CEO Jude Bricker reiterated the cargo revenue doubling target for September. Regarding the buyback, Bricker stated it was an opportunistic tool to use if the stock price becomes dislocated, allowing them to act rather than sit on the sidelines.

Brandon Oglenski from Barclays inquired about network priorities for the summer months as pilot capacity shifts to the cargo business and whether this would improve margins in softer quarters. He also asked about the scheduled capacity outlook for 2026.

Answer

CEO Jude Bricker responded that the summer schedule will see cuts to marginal routes, particularly those added to counter competitive incursions last year, which is expected to drive substantially higher fares. President and CFO David Davis projected that scheduled capacity would shrink through Q3 2025 before rebounding in Q4 and growing into 2026, likely returning to early 2025 levels by mid-2026.

Brandon Oglenski sought confirmation on whether to expect a double-digit decline in scheduled service capacity next year and asked if the company was altering its inventory or pricing strategy in response to capacity reductions.

Answer

President and CFO David Davis updated the outlook, stating the scheduled service capacity shrink is now expected to be in the mid-single-digit range, less than the previously guided 10%, due to better pilot availability. CEO Jude Bricker added that this is a floor and capacity could increase as staffing becomes clearer. Davis clarified that comments on the booking profile reflect the natural lag of leisure travel, not a change in inventory strategy, and that booked fares are showing positive year-over-year trends.

Brandon Oglenski from Barclays asked about the historical evolution of the customer interchange process, particularly at pain points like Chicago, and the inherent limitations of the current industry structure.

Answer

CEO Jim Vena explained that Union Pacific's strategy is to simplify the movement of products by removing touchpoints and leveraging technology to create a more fluid, less-touching railroad. He noted that reducing the number of times a car is handled, for example between the L.A. Basin and Minneapolis, improves service consistency and cost efficiency, which is a key part of their 'secret sauce' and a win for customers.

Brandon Oglenski of Barclays asked about the potential impact of significant tariffs on Chinese goods, customer contingency plans, and how operations would manage a sudden drop in demand on the West Coast.

Answer

EVP Kenny Rocker stated the company is staying close to customers and expects some softness but will remain agile. EVP of Operations Eric Gehringer detailed the operational response, explaining they would promptly adjust resources like locomotives and crews using adaptive planning tools, prioritizing filling latent capacity on existing trains before reducing services.

Brandon Oglenski of Barclays asked if the company's goal to have volume outpace the market is being driven by concrete, incremental business development wins that leverage its improved service product.

Answer

EVP of Marketing and Sales Kenny Rocker confirmed this directly. He stated that business development wins are critical for outpacing the market, highlighting successes in structurally challenged markets like coal, emerging markets like renewable diesel, and growth markets like petrochemicals, all enabled by a strong service product.

An associate for Brandon Oglenski of Barclays asked about business mix effects in Q4 beyond intermodal, particularly the margin contribution from different commodity groups like coal.

Answer

CFO Jennifer Hamann explained that the Industrial segment, which has a high average revenue per car, has been down all year, contributing to negative mix. She also noted mix shifts within the Bulk segment, such as shorter-haul grain to Mexico. EVP Kenny Rocker added that the company will not apologize for accepting a 33% increase in intermodal volume, as they were prepared for it.

Brandon Oglenski from Barclays asked how the strong growth in the Eastern network, relative to flat or declining Transcon volumes, affects the company's lane balance strategy and the cost efficiency outlook for the Intermodal segment.

Answer

Darren Field, President of Intermodal, explained that the Eastern network has different balance dynamics. Its shorter length of haul results in significantly lower costs to reposition empty equipment. Furthermore, the business mix is more consistent year-round, avoiding the large empty-flow surges common in the Transcon network, thus putting less pressure on repositioning costs.

Brandon Oglenski from Barclays questioned the loss of some intermodal accounts to competitors on price, asking if this was reflected in the current volume run-rate and what is needed to achieve better pricing outcomes.

Answer

Darren Field, President of Intermodal, confirmed some business was lost due to pricing discipline but stated he did not want to overplay its magnitude. Brad Hicks, President of Dedicated, reinforced this, noting it demonstrates a willingness to walk away from business that doesn't meet return targets, particularly in high-demand headhaul markets.

Brandon Oglenski asked about the level of spare capacity in the Intermodal network, particularly after the Walmart asset acquisition, and whether this excess capacity represents a hurdle for 2025.

Answer

Darren Field, President of Intermodal, confirmed that significant underutilized capacity exists, creating a cost headwind. He specified that the acquired Walmart equipment is currently in storage awaiting modification and will be integrated into the fleet as demand grows, with the immediate focus on utilizing their existing 122,000 containers.

Brandon Oglenski of Barclays asked about the drivers for the expected ramp in EBITDA in the second half of the year to meet guidance. He also questioned if GXO had quantified its exposure to Chinese imports within its U.S. facilities.

Answer

CFO Baris Oran attributed the EBITDA ramp to maturing start-ups, ongoing productivity initiatives, and synergies from the Wincanton integration. Regarding Chinese imports, he noted that for the U.S. consumer business, slightly less than a quarter of the product originates from China, and customers have significantly diversified their supply chains.

Brandon Oglenski of Barclays asked about the competitive environment for pricing new deals, particularly for automated contracts, and inquired if core customer volumes have improved throughout the year.

Answer

CEO Malcolm Wilson stated the competitive landscape remains stable, with fewer competitors for large, complex automated solutions, which allows for better margins and longer-term contracts. He noted GXO focuses on these value-added deals rather than low-tech, highly competitive manual warehousing. CFO Baris Oran confirmed that the volume environment with existing customers has gradually improved each quarter and is expected to continue improving in Q4, though still slightly negative year-over-year.

Brandon Oglenski inquired whether rising trade barriers with the U.S. have created longer-term opportunities for CN to help customers reshape supply chains to be more export-centric from Canada to other global partners.

Answer

CEO Tracy Robinson confirmed these conversations are intensifying, as Canada seeks to diversify its markets, positioning CN as an obvious partner with its access to three coasts. CCO Remi Lalonde added that this includes national conversations about infrastructure investment to support diversification, such as developing the Port of Contrecoeur and potentially exporting crude from the West Coast.

Brandon Oglenski asked how the significant start-and-stop disruptions in 2024 have influenced the operating and engineering plans for 2025.

Answer

Chief Field Operations Officer Derek Taylor credited the company's disciplined, scheduled operating model for enabling rapid and organized network shutdowns and restarts. He noted that with fewer disruptions expected in 2025, they anticipate continued productivity improvements, particularly from standardized work gangs in the engineering department.

Brandon Oglenski from Barclays requested details on the composition (volume, price) of the updated high single-digit EPS CAGR outlook and how CN-specific opportunities contribute to it.

Answer

President and CEO Tracy Robinson deferred a detailed breakdown, stating that the company is focused on finishing the current year. She promised to provide a more detailed layout of the 2025 plan and its components during the January earnings call.

Brandon Oglenski asked about the challenges of managing off-peak demand from a cost perspective and inquired about the maintenance cost outlook, particularly concerning the potential extension of older A320 aircraft.

Answer

President Martin St. George explained that the current downturn is particularly 'trough adverse,' prompting aggressive capacity cuts on off-peak days to match demand. Financial Officer Ursula Hurley added that they are trying to provide advanced notice for capacity pulls to capture labor savings and are re-evaluating the plan to extend 30 A320s. She indicated they will likely scale back the extensions, which would result in maintenance savings.

Brandon Oglenski sought to confirm if recent commercial improvements were driven more by product and pricing than network changes, and asked for details on those initiatives. He also questioned what incremental levers JetBlue could pull if profitability does not improve next year.

Answer

President Marty St. George confirmed that product and pricing changes, such as preferred seating fees and the revised Blue Basic baggage policy, have been the most impactful drivers, outperforming expectations. CEO Joanna Geraghty stated that the primary lever for future profitability is the continued execution of the JetForward plan, which has more initiatives in the pipeline. She added that favorable movements in fuel, competitor capacity, or the AOG situation would serve as additional tailwinds.

Brandon Oglenski of Barclays asked about Saia's strategic approach to balancing network scope and variable costs in a downturn, questioning if they would manage more toward incremental revenue. He also asked how the company optimizes linehaul when expected shipment growth does not materialize.

Answer

President and CEO Fritz Holzgrefe explained that the focus is on the right kind of revenue growth, such as leveraging the new national network to capture more freight from existing customers, which builds density efficiently. For linehaul optimization, he said the key is building more direct routes to bypass breakbulk facilities as density increases. This reduces handling and improves efficiency, a core execution program that becomes more viable as the network scales.

Brandon Oglenski challenged the decision to accelerate share repurchases in an uncertain environment rather than preserving capital for other industry opportunities. He also asked about competitive dynamics in Hawaii, particularly with a competitor changing its pricing structure.

Answer

CEO Benito Minicucci defended the buyback, stating the company is convicted in its long-term plan and will not repeat the "mistake" of only buying back stock at high prices. He asserted the balance sheet is strong enough for both buybacks and other opportunities. On competition, Executive Andrew Harrison noted that industry capacity is generally being reduced and that Air Group is focused on playing to its strengths.

Brandon Oglenski from Barclays inquired about the most critical network reallocations for the upcoming year, specifically the Seattle-Narita launch and the hub banking strategy in Seattle and Portland. He also asked for more details on the significant spike in corporate travel demand seen in December and its continuation into January.

Answer

CEO Benito Minicucci emphasized the focus on executing the integration and capturing synergies from connecting the networks. CCO Andrew Harrison added that with low overall capacity growth, the focus is on optimizing aircraft placement, noting the rebanking strategy is already yielding significant benefits. On corporate travel, Harrison confirmed it was up 8% in Q4, driven by West Coast traffic, and that held managed corporate revenues for the next quarter were up 20%.

Brandon Oglenski asked about long-term strategic thinking during this prolonged downturn, including potential for further cost efficiencies across the truckload brand portfolio and the future of the Intermodal business given its profitability challenges.

Answer

Executive Adam Miller responded that the company is continuously making adjustments to its brands but is avoiding making major strategic decisions at the 'trough of a trough' cycle. Regarding Intermodal, he expressed confidence in the team and the progress made, stating it's a service customers value. He indicated that the business's performance should be evaluated in a more balanced market environment before considering any drastic changes, emphasizing that the current focus is on navigating the market and returning all businesses to normalized earnings.

Brandon Oglenski questioned whether the prolonged downturn is due to modal substitution from LTL to truckload because of LTL pricing, and asked if ODFL needs to reconsider its long-term strategy.

Answer

CFO Adam Satterfield defended ODFL's strategy, arguing that while some fringe freight may shift to truckload, core LTL shipments require the specialized network and service that ODFL provides. He emphasized that ODFL has maintained market share and pricing discipline, which will create significant operating leverage when the economy recovers.

Brandon Oglenski challenged the 'freight recession' narrative, suggesting LTL might be losing volume to modal substitution due to pricing, and asked if ODFL needs to rethink its strategy.

Answer

CFO Adam Satterfield defended the company's strategy, stating that while some fringe freight moves to truckload, ODFL's core LTL service is distinct. He emphasized that ODFL has maintained market share and pricing discipline and is confident its investments will drive significant leverage and growth when the economy recovers.

Brandon Oglenski of Barclays questioned the appropriate level of maintenance CapEx during the network rightsizing and asked about the prudence of the $1 billion share repurchase plan, given the high dividend payout ratio.

Answer

CFO Brian Dykes explained that CapEx is being reduced by operating with fewer vehicles, aircraft, and buildings, but is still fully funding the 'Network of the Future' automation. He suggested future CapEx would be managed in line with depreciation. CEO Carol Tomé defended the capital allocation, noting a strong liquidity position and that the dividend payout ratio is distorted by non-cash pension expenses. She explained the $1 billion share repurchase is intended to offset dilution from compensation plans and could be debt-financed favorably.

Brandon Oglenski asked for context on the volume 'glide down' with UPS's largest enterprise customer and requested an update on incremental savings from the 'Fit to Serve' program in Q4.

Answer

CEO Carol Tomé confirmed the glide down with their largest customer is ongoing, attributing 100% of the Q3 air volume decline to that single customer trading down to ground. CFO Brian Dykes stated that the 'Fit to Serve' program is expected to deliver approximately $70 million in incremental savings in the fourth quarter.

Brandon Oglenski of Barclays asked for an articulation of American's current commercial strategy and when it might shift from a defensive to an offensive posture. He also asked about potential productivity offsets from new labor agreements.

Answer

CEO Robert Isom reaffirmed Investor Day commitments, stating the airline is now positioned to go on offense by monetizing customer experience investments like satellite WiFi, premium lounges, and new seats. CFO Devon May clarified that productivity gains come from reengineering initiatives and technology investments, not directly from the labor agreements, and these efforts will drive efficiency into 2026.

Brandon Oglenski sought clarification on whether the goal of returning to 'full aircraft utilization' applies only to peak periods or the entire schedule. He also asked about the Sunseeker Resort's booking trends for the holiday period and if the property is seasoning as expected.

Answer

President and CEO Gregory Anderson clarified the focus is on restoring utilization to 2019 levels specifically during peak demand periods. Regarding Sunseeker, Anderson and executive Micah Richins conveyed optimism, noting holiday bookings look good and that Q1 2025 is expected to be EBITDA positive, with group room bookings for the quarter nearly double the prior year's actuals.