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United Airlines

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United Airlines ... The world's second largest airline. Largest US based international carrier ... 1113 Labor negotiations allowed United change of scope to ... – PowerPoint PPT presentation

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Title: United Airlines


1
United Airlines
  • Restructuring.
  • Not Losing Sight of the Customer Maintaining
    Competitive Advantage

2
Safe Harbor Statement
  • Safe Harbor Statement under the Private
    Securities Litigation Reform Act of 1995 Certain
    statements included in this presentation are
    forward-looking and thus reflect the Companys
    current expectations and beliefs with respect to
    certain current and future events and financial
    performance. Such forward-looking statements are
    and will be, as the case may be, subject to many
    risks and uncertainties relating to the
    operations and business environments of the
    Company that may cause actual results to differ
    materially from any future results expressed or
    implied in such forward-looking statements.
    Factors that could significantly affect net
    earnings, revenues, expenses, unit costs and
    profit improvements include, without limitation,
    the following the Companys ability to continue
    as a going concern the Companys ability to
    operate pursuant to the terms of the DIP
    Financing the Companys ability to obtain a
    federal loan guarantee from the ATSB our ability
    to obtain court approval with respect to motions
    in the Chapter 11 proceeding prosecuted by it
    from time to time the Companys ability to
    develop, prosecute, confirm and consummate one or
    more plans of reorganization with respect to the
    Chapter 11 Cases risks associated with third
    parties seeking and obtaining court approval to
    terminate or shorten the exclusive period for the
    Company to propose and confirm one or more plans
    of reorganization, the potential adverse impact
    of the Chapter 11 Cases on the Companys
    liquidity or results of operations the
    appointment of a Chapter 11 trustee or conversion
    of the cases to Chapter 7 the costs and
    availability of financing the Companys ability
    to execute its business plan the Companys
    ability to attract, motivate and/or retain key
    employees the Companys ability to attract and
    retain customers demand for transportation in
    the markets in which the Company operates
    general economic conditions the effects of any
    hostilities or act of war or any terrorist
    attack the ability of other air carriers with
    whom the Company has alliances or partnerships to
    provide the services contemplated by the
    respective arrangements with such carriers the
    costs and availability of aircraft insurance the
    costs of aviation fuel the costs associated
    with security measures and practices competitive
    pressures on pricing (particularly from
    lower-cost competitors) government legislation
    and regulation and other risks and uncertainties
    set forth from time to time in UALs reports to
    the United States Securities and Exchange
    Commission. Consequently, the forward-looking
    statements should not be regarded as
    representations or warranties by the Company that
    such matters will be realized. The Company
    disclaims any intent or obligation to update or
    revise any of the forward-looking statements,
    whether in response to new information,
    unforeseen events, changed circumstances or
    otherwise.

3
Background on United
4
United Airlines
  • The worlds second largest airline
  • Largest US based international carrier
  • Second largest Frequent Flyer Program with more
    than 40 million members
  • Provides 14 of U.S. domestic industry capacity
  • Founding member of Star Alliance, largest
    international airline alliance
  • More than 3,500 flights a day on a route network
    that spans the globe
  • Fleet age averages among the youngest in the
    industry at 10 years

5
Domestic network links 5 key hubs
Slide 6
6
International network links over 27 countries
Slide
7
A Perfect Storm
  • United, has faced an amazing number of events in
    recent time..
  • 9/11
  • Recession
  • Iraq war
  • SARS
  • Industry overcapacity
  • Record high fuel prices
  • Irrational pricing in the industry
  • Hypergrowth in particular regional areas

Industry Is Undergoing A Permanent Structural
Change
8
Restructuring United
9
Tough choices required a balanced approach
10
UA has accomplished significant savings over 3
years
  • New Labor Agreements Reduced Costs 32
  • Reduced Workforce by 38, Productivity Increased
    25
  • Renegotiated Aircraft Leases Reduced Costs Over
    900M
  • Business Transformation Office Initiatives
    Reduced Costs 508M
  • Over 600M in Pension Costs Eliminated
  • TOTAL Annual Savings -- 7B

11
Cost Management Labor Costs
12
Cost Management Aircraft Fleet
Reducing fleet by 94 aircraft
900 Million
13
UAs restructuring has maintained the key
strength schedule breadth and depth
14
and has maintained UA leadership in key Hubs
15
Focusing on the Customer
16
UA developed a Portfolio of products services
17
Significant time energy has been invested in UAX
  • Bankruptcy process allowed UA to renegotiate with
    all Express partners to save over 350M
  • 1113 Labor negotiations allowed United change
    of scope to increase overall number and size of
    Regional Jet aircraft
  • Regional Jets, 50 70 seats will be an
    significant component of UAs fleet and capacity
    planning
  • 2001 96 regional jet aircraft
  • 2005 238 regional jet aircraft

18
We launched Ted to combat LCC incursions
19
Ted Will Grow From 47 To 56 Aircraft, Serving 36
Markets
Teds success can be seen by its continued growth
MDW/ORD
RNO
IAD

DEN
SFO



LAS


LAX/ONT

PHX
MSY


MCO

TPA
FLL/MIA/PBI
RSW
SJD
SJU
CUN
PVR
20
We continue to add to our global Alliance network
  • Excellent carrier reputation
  • UA/SA code share expected November 1, 2005
  • Completes STAR presence in African sub-continent
  • UA/TP code share already in place
  • Provides access to additional Northern Africa
    markets
  • TAP/Varig a unique value proposition for STAR
  • LX/LH Merger provides unique opportunity
  • UA/LX code share expected October 30, 2005
  • Probable candidate for joining A - United and
    Lufthansa Transatlantic Joint Venture

21
No other alliance reaches this global offering...
22
For South African and United
23
the network will be a truly differentiating
strength
24
The portfolio allowed UA to adapt adjust
  • The evolution of the portfolio has allowed United
    to adjust and adapt its product offering to the
    marketplace to capture untapped revenue sources

25
Additionally, UA took time to improve our products
26
p.s. - launched to attract high yield NA
customers
12 UF / 26 UB / 72 UE configuration 12 United
First Class new Lie-Flat Avio Seats _at_ 68
pitch 26 United Business Class BE Aerospace (our
UB International Seat) _at_ 54 pitch 72 United
Economy Plus Seats _at_ 34 pitch
27
We changed our brand image to reflect the
positive work UA has completed throughout
restructuring
28
We communicated good news to United customers
29
and nearly won an Emmy for our advertising
30
Exiting Bankruptcy
31
UA is ready to compete and emerge from bankruptcy
  • Competitive cost structure in place
  • Balance sheet de-leveraged
  • Excess capacity eliminated
  • Assets refocused on strongest markets
  • Portfolio of products diversified
  • Complex governance eliminated
  • Management and labor focused on the customer and
    the bottom line

32
Our balanced scorecard highlights UAs good work
?
?
?
33
Moving forward
  • Whatever the future may hold, Uniteds efforts in
    restructuring the company have build a solid
    leadership foundation were ready.
  • Possible Merger and Acquisition Activity
  • Swiss/Lufthansa
  • USAirways / America West
  • Air China / Cathay Pacific
  • Foreign Competitive Increases / Regional
    Hyper-Growth / Technology
  • India Middle East
  • New Entrants / LCC
  • B777 Longest Flight A380 Largest Aircraft
  • Regulatory Changes
  • US-EU talks
  • USA Canada Open Skies Agreement
  • Continued Economic Challenges
  • USA Delta, Northwest and Independence Air
  • Fuel Prices

34
Thank You
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