Fourth Quarter UAL Investor Update

Investor DayInvestor DayFebruary 5, 2008

Kathy MikellsKathy MikellsVP – Investor RelationsVP – Investor Relations

Safe Harbor Statement And Non-GAAP Reconciliation

Safe Harbor Statement And Non-GAAP Reconciliation

The information included in this presentation contains certain statements that are “Forward-Looking Statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to a number of assumptions, risks and uncertainties related to the Company’s operations and the business environment in which it operates. Actual results may differ materially from any future results expressed or implied in such Forward-Looking Statements due to numerous factors, many of which are beyond the Company’s control, including factors set forth in the Company’s Form 10-K for 2006 and other subsequent Company reports filed with the United States Securities and Exchange Commission. Persons reviewing this present-ation are cautioned that the Forward-Looking Statements speak only as of the date made and are not guarantees of future performance. The Company undertakes no obligation to update any Forward-Looking Statements.

Information regarding reconciliation of certain non-GAAP financial measures contained in this presentation is available on the Company's web site at www.united.com/ir

We Are Pursuing Multiple ApproachesTo Create Shareholder Value


Return To Shareholders

StrengtheningThe Core

Airline

CapitalStructureInitiatives

Unlocking Value In Ancillary Businesses

Consolidation

Glenn TiltonGlenn TiltonChairman, President & CEOChairman, President & CEO

Our Strategic Plan Is A 5-Year Roadmap To Create Value For All Stakeholders

Our Strategic Plan Is A 5-Year Roadmap To Create Value For All Stakeholders

We will be the global airline of choice for premium customers, employees and investors

Customers Investors

Employees

SafetySafety

Balancing the needs of all stakeholders and strengthening the core business

We Are Charting Our Own CourseTo Create Value For ShareholdersWe Are Charting Our Own CourseTo Create Value For Shareholders

• Strengthen the core airline– Consistently delivering superior service– Delivering differentiated products and services– Building employees’ connection and

commitment to United– Developing new sources of revenue and

controlling costs

• Disaggregating business units

• Participate in consolidation given the right opportunity

Five Year Plan

Expanding Our Revenue Premium

Expanding Our Revenue Premium

John TagueJohn TagueEVP & Chief Revenue OfficerEVP & Chief Revenue Officer

United’s Actions Produce Superior Revenue Performance

United’s Actions Produce Superior Revenue Performance

SuperiorSuperiorRevenueRevenue

PerformancePerformance

+

=

• Convenient service• Global reach• Profitable expansion

GlobalGlobalNetworkNetwork

• Matching supply with demand• Elimination of unprofitable service

Capacity Capacity DisciplineDiscipline

• Leveraging customer relationships • Identifying new revenue sources

Sales,Sales,Mileage Plus Mileage Plus

and Innovative and Innovative Revenue Revenue

OpportunitiesOpportunities

• Rational pricing • Effective inventory management

Revenue Revenue ManagementManagementEffectivenessEffectiveness+

+

Powered By Execution/Rigor/Analytics


Kevin KnightKevin KnightSVP – PlanningSVP – Planning

Network And Capacity DisciplineAre Critical To Success

Network And Capacity DisciplineAre Critical To Success



+

=


GlobalNetwork


Capacity Discipline







+



United Has A Strong Global Network And Is The Second Largest U.S. CarrierUnited Has A Strong Global Network

And Is The Second Largest U.S. Carrier

Source: OAG TME Feb 08

• Global Reach• 225 Cities• 31 Countries• 3,568 Daily

Departures• 5 Hubs

Total Capacity(Billion ASMs)

748

557652

Star Alliance Skyteam Oneworld

Total Capacity(Billion ASMs)

748

557652

Star Alliance Skyteam Oneworld

Combined With Star Alliance, United Offers Unsurpassed Global Access

Combined With Star Alliance, United Offers Unsurpassed Global Access

Source: Star Alliance, Q4 2007

Cities Served 897 808 640Daily Flights 17,200 14,500 8,400

15% Larger34% Larger

Passenger Share 28.1% 24.3% 18.5%

New Partnerships Solidify United’s Position As The Premier U.S. Carrier To China

New Partnerships Solidify United’s Position As The Premier U.S. Carrier To China

Source: Airline Websites; OAGNote: Application for membership for both airlines was accepted in 2007

Beijing

ShanghaiKWL

HRB

SHE

TAO

DLC

CGO

HGH

NKG

FOCXMN

SWASZX

CAN

WUH

CSXKHNKWE

KMG

CKGCTU

LHW

INCBAV

TYN

NNG

CZX

China

• Flag carrier of China• Service to 71 cities in China• 39 international destinations• 213 aircraft

• Sixth largest carrier in China• Service to 48 cities in China• 53 aircraft

Capacity Discipline: Matching Capacity With Profitable Demand

Capacity Discipline: Matching Capacity With Profitable Demand

Profitable Demand

Price

Demand

Capacity discipline Capacity discipline enables revenue enables revenue managementmanagement

Optimizes results Optimizes results

Marginal capacity Marginal capacity decisions impact more than decisions impact more than marginal revenuemarginal revenue

20,000

40,000

60,000

80,000

2003 2004 2005 2006 2007 2008 (E)

Growing Internationally Where Demand Remains Strong

Growing Internationally Where Demand Remains StrongUA International Capacity (Million ASMs)

Source: United data; ATA (2003 – 2007)

5% CAGR

Industry and United Revenue Growth Rate of 16%

We Are Taking Advantage Of Profitable International Opportunities

We Are Taking Advantage Of Profitable International Opportunities

2007Los Angeles - FrankfurtLos Angeles - Hong Kong

Dulles - BeijingDulles - Kuwait (Daily)Dulles - RomeDulles - Rio De Janeiro (Seasonal)

San Francisco - Frankfurt 2nd DailySan Francisco - Taipei

2008Denver - London HeathrowSan Francisco - Guangzhou

% of Revenue By Region

Domestic 49.9%

International 50.1%

Note: TME December 2007; International revenue includes domesticportion of international itineraries

United Has The Ability To Grow Internationally With Existing FleetUnited Has The Ability To Grow

Internationally With Existing Fleet

Note: Capacity change measured in ASMsHypothetical exercise – no commitments made

Aircraft Returning Aircraft Returning to Scheduled to Scheduled

ServiceService

Product Product ReconfigurationReconfiguration

Increased Increased Operating Operating EfficiencyEfficiency

12%12%Incremental Incremental

Capacity Growth Capacity Growth PotentialPotential

United Has Led The IndustryIn Capacity Discipline

United Has Led The IndustryIn Capacity Discipline

(4.7)%(5.6)%

(6.6)%(6.0)%

(4.8)%

(1.8)%

Q1 Q2 Q3 Q4 Q12008 (e)

FY2008 (e)

UA 2007 Domestic Capacity GrowthUA H/(L) than Industry

Source: ATA carriers + WN mainline data; Financial statements and OAG

• Eliminate marginal flights

• Utilize UAX to reduce capacity but maintain schedule

• Tailor schedules to day of week demand

2007 2007 2007 2007

364373

389 398 402

2004 2005 2006 2007 2008

Domestic Non Stop Markets Served

Note: 50 US states plus Canada mainline + UAX, excludes prorate and seasonal markets Source: OAG

United Continues To Expand Its Domestic Network

United Continues To Expand Its Domestic Network

Doug LeoDoug LeoVP – Revenue ManagementVP – Revenue Management

Superior Revenue Management Is A Differentiator

Superior Revenue Management Is A Differentiator



+

=










Revenue ManagementEffectiveness

Revenue ManagementEffectiveness+

+



Our Focus On Execution Is Taking Us Down A Different Path

Our Focus On Execution Is Taking Us Down A Different Path

• Sophisticated inventory management systems

• Consistent pricing philosophies

• Similar pricing tools

• Pricing driven by competitive matching

• Well funded and staffed

• Back-to-basics execution

• Margin-based pricing actions

• Enhanced segmentation

• State-of-the-art proprietary tools

Similarities Across Airlines

Differentiation Opportunity

Back To Basics Approach Better Facilitates Executional ExcellenceBack To Basics Approach Better

Facilitates Executional Excellence

Segment on FundamentalsSegment on Fundamentals

Declare Targets and ActionsDeclare Targets and Actions

Monitor and AdjustMonitor and Adjust

Measure ResultsMeasure Results

Grounded in Fundamentals

Promotes Thoroughness

Drives Consistency

Creates Transparency

Permits Accountability

Formalizing Process, Tools For New Approach

Formalizing Process, Tools For New Approach

Segmentation Tool Rigorous Monitoring

Wiki PlaybookSegmentation Concepts

Disadvantaged Markets

Stimulation ActionConsider Capacity Reduction

Yield-Rich Markets with Moderate LFs

Yield Mix Protection Strategies

High LF Markets

Strong Yield Strategies

Capacity Advantaged

Strong Yield Markets

Demand & Yield Mix Factors

Cap

acity

Fac

tors

Unf

avor

able

F

avor

able

Unfavorable Favorable

Demand & Yield Mix Factors

Cap

acity

Fac

tors

Unf

avor

able

F

avor

able

Unfavorable Favorable

We Are Utilizing Our Market And Product Advantages To Price At A Premium

We Are Utilizing Our Market And Product Advantages To Price At A Premium

Source: January Published fares; FY 2007 revenues

7% PRASM Growth

UA Fare Premium vs. Competitor (%)UA Fare Premium vs. Competitor (%)

Fare SnapshotNew York (JFK) – Los Angeles (p.s.)

Fare SnapshotNew York (JFK) – Los Angeles (p.s.)

Fare TypeFare Type UA FareUA Fare AAAA DLDL VXVXLowest FirstLowest First $2,483$2,483 315%315% 315%315% 453%453%Lowest UnrestrictedLowest Unrestricted $ 812$ 812 123%123% 123%123% 123%123%Lowest RestrictedLowest Restricted $ 264$ 264 56%56% 56%56% 56%56%

System YOY PRASMUnited vs Industry Average

9.2%

2.3%

4.5%

8.9%

5.2%4.8%4.0%2.5%

1Q 2007 2Q 2007 3Q 2007 4Q 2007UA Adjusted (1) Industry ex UA

Our Actions Have Resulted In A Steady Improvement In PRASM Growth . . .

Our Actions Have Resulted In A Steady Improvement In PRASM Growth . . .

(1)UA Adjusted for Mileage Plus under old accounting and special itemsSource: Air Transport Association

(0.9) (0.9) (1.6) (2.9)YOY Capacity UA vs Industry

. . . With Strong Results Across The System

Source: Earnings releases of ATA carriers; UA adjusted for Mileage Plus under old accounting; excludes 36 to18 month impact All numbers are mainline only

Year-Over-Year Improvement in All Entities

United 2007 YOY PRASM

3.8%

12.5% 11.8%

8.5%

0%2%4%6%8%

10%12%14%

Domestic Atlantic Pacific Latin

Our Focus On Execution ExtendsInto The Cargo Division

Our Focus On Execution ExtendsInto The Cargo Division

• Cargo integrated into route/scheduling planning process

– Contributes up to 10%-15% ofrevenue for some int’l routes

• Implementing state-of-the-artcargo revenue managementsystem

– Phase 1 improved spaceutilization

– Phase 2 (2008) will improvecargo mix and yield

• Winning profitable newbusiness

– Regained U.S. domestic mailcontract after relinquishinglower margin contract in 2H 2006

Continued Innovation Is The Key To Outperforming Competition

Continued Innovation Is The Key To Outperforming Competition

Next Generation System

Improvements

Formalize and Sustain RM

Process

• Improve segmentation tool• Standard work/playbooks• Continuous improvement• Talent development/recruitment

• Improve segmentation tool• Standard work/playbooks• Continuous improvement• Talent development/recruitment

• Conditional revenue optimization• Merchandizing considerations• Business models of the future

Jeff FolandJeff FolandSVP – Worldwide SalesSVP – Worldwide Sales

Leveraging Our Relationships With Agency And Corporate CustomersLeveraging Our Relationships With Agency And Corporate Customers



+

=






Sales,Mileage Plus

and Innovative Revenue

Opportunities



+



Experience Enhancers

Corporate Share Agreements

Incentive Agreements

Effective Management Of Our B2B Portfolio Increases High-Yield Traffic

Effective Management Of Our B2B Portfolio Increases High-Yield Traffic

>50% passenger revenue influenced via contracts and incentives

Nearly 20% of passenger revenue under direct corporate contract

Yield for corporate contracted revenue nearly double all other

Large Large Corporate Corporate

BuyersBuyers

Individual Individual Corporate Corporate TravelersTravelers

Large Travel Large Travel Agencies & Agencies & DistributorsDistributors

United’s B2B Sales Efforts Are Sharply Focused On Improving Margin

United’s B2B Sales Efforts Are Sharply Focused On Improving Margin

• Strengthen high yield revenue core

- and -

• Reduce all sales and distribution costs

• Portfolio analysis and management

• Contract modeling

• Disciplined account management

• Innovative B2B programs and offerings

• New tools and enablers

• Quantitative goals and measures

Sales Discipline and FocusSales Discipline and Focus Margin ImprovementMargin Improvement

Our Sales Approach Is Process-Driven, Analytical and Progressive

Our Sales Approach Is Process-Driven, Analytical and Progressive

Focused TrainingDefined Processes• Are we getting

value from this decision?

• How quickly will we see results?

• Should we change?

• Did we make the right decision?

• Which supplier best meets our criteria?

• What are the risks?

• Am I getting good value/ fair price?

• What are my options?

• What decision criteria should we use?


• Do we have a problem?

• How large is it?• Does it justify

action?• What is the

perfect solution?

• Why is United contacting us?

• What can United offer to us?

Custom

er Concerns

Stage Objectives

Process Stages

• Enable maximum value creation through the Account Review process

• Resolve service issues that threaten customer perception of value

• Enable maximum contract performance through timely, flawless implementation

• Begin account development

• Present proposal to customer

• Help customer resolve perceived risks & barriers

• Achieve win-win result

• Build preliminary Deal based on Deal Building Plan

• Develop multiple scenarios and finalize proposal

• Establish proposal presentation strategy

• Develop proposal discussion materials

• Customize value proposition

• Identify potential barriers and develop solutions

• Maximize perceived fit with d.c.

• Understand customer buying process and decision criteria (d.c.)

• Stimulate need for change

• Collect customer travel data

• Identify prospects

• Screen prospects• Assign sales

channel for qualified leads

• Are we getting value from this decision?

• How quickly will we see results?

• Should we change?

• Did we make the right decision?


• What are the risks?

• Am I getting good value/ fair price?

• What are my options?

• What decision criteria should we use?


• Do we have a problem?

• How large is it?• Does it justify

action?• What is the

perfect solution?

• Why is United contacting us?

• What can United offer to us?

Custom

er Concerns

Stage Objectives

Process Stages

• Enable maximum value creation through the Account Review process

• Resolve service issues that threaten customer perception of value

• Enable maximum contract performance through timely, flawless implementation

• Begin account development

• Present proposal to customer

• Help customer resolve perceived risks & barriers

• Achieve win-win result

• Build preliminary Deal based on Deal Building Plan

• Develop multiple scenarios and finalize proposal

• Establish proposal presentation strategy

• Develop proposal discussion materials

• Customize value proposition

• Identify potential barriers and develop solutions

• Maximize perceived fit with d.c.

• Understand customer buying process and decision criteria (d.c.)

• Stimulate need for change

• Collect customer travel data

• Identify prospects

• Screen prospects• Assign sales

channel for qualified leads

1.Generate & Screen Leads

3. Develop Opportunity

4.Tailor Value Proposition 5.Build Deal 6.Negotiate &

Close7.Implement

Program8. Maximize

Value

2.Develop Account Plans

Quantitative Goals Pay for PerformanceIncentive Compensation Scorecard for Lavallechaiken, Laurie

Territory Code: D_US_CC_E_A1 Terr Name: Milwaukee N, WI

Plan to Date Performance and Attainment

CSA Share PremiumTMC Share PremiumSAM TMC SP

Attainment on SP metrics

Contracting (DVC, $000s)

Overall Attainment

Quarterly Payout Incentive Plan Details

x

-

Monthly Performance Trends

200% plus .147% payout for every 1% attainment above 130%

225%

4% payout for every 1% attainment above 75%

0%

100% plus 3.33% payout for every 1% attainment above 100%Plan-end Projected Incentive

75% to 100%

100% to 130%

Estimated Quarter Payout

Previous Quarter Payout in this Plan Period

5,211$

1,875$

3,750$

3,336$

130% to 300%

100%

$6,350

7.4 pt

5.9 pt

128% 10%

Overall Attainment

% of Target Payout

Plan Target Payout

32%

139.0%

112%

Less than 75%

Attainment Payout (% of Target)

$6,453

Goal Weight

More than 300%

Data month: Nov/06

Attainment

98%

74%10.0 pt

2.3 pt

Performance Goal

112%

68%

Goal Share

32.8%

22.0%

118%

154%27%

31%

Service Share

22.8%

19.7%

UA Share

30.2%

25.6%

CSA Share Premium

0

2

4

6

8

10

12

Jul Aug Sep Oct Nov Dec

CSA

SP

Performance Goal

0%

50%

100%

150%

200%

250%

0% 50% 100% 150% 200% 250% 300% 350%Attainment (%)

Payo

ut (%

of T

arge

t)

Contracting

$000$1,000$2,000$3,000$4,000$5,000$6,000$7,000


DVC

(000

s)

Performance Goal

TMC Share Premium

012345678


TMC

SP

Performance Goal

SAM TMC SP Attainment

0%

25%

50%

75%

100%

125%

150%

175%


SAM

TM

C A

ttain

men

t

Performance 100%

Contracting ListingCSA SP Listing TMC SP Listing SAM TMC SP Listing NotesIncentive Calculator

Illustrative

Close Scorecard

Proprietary Tools

Portfolio Management

DIS

CO

UN

TS A

ND

AM

ENIT

IES

(D&

A)

INVESTMENT/PROFIT MATRIXANNUALIZED

24

5

7

8

12

13

14

1718

19

20

6

9

10

11

15

Sample Customer, LLC

10%

15%

20%

25%

30%

35%

40%

45%

-20% -10% 0% 10% 20% 30%

Sample Customer, LLC – Current Deal

Proposal 1 Proposal 2

DEAL CONTRIBUTION

0.0

1.0

2.0

3.0

4.0

Rev

enue

Sha

re P

rem

ium

*

*Share Premium = market share minus “fair share” (the amount of share United should expect based on network and schedule alone)Data displayed for portfolio of all assigned North America agencies4Q2007 data contains actual October and November and estimated December data

20072006

Our Disciplined Approach Is Yielding Positive Results With Large Agencies

Reduced Agency Incentive Costs

14%

2005 2006 2007

Cos

t of S

ale

Increased Agency Revenue Performance

We Are Adding Smart New Business To Our Corporate Accounts Portfolio

1) Not including purposeful walkaways2) “Same Store” contracts with at least 18 months duration

20072006 200710.0

10.5

11.0

11.5

12.0

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

Rev

enue

Sha

re P

rem

ium

1Q 2Q 3Q 4QQ1 Q3 Q4Q2 Q2Q1 Q4Q3

Net new acquisitionsLosses1

Cumulative Corporate Customer Acquisitions ($M)

Corporate Portfolio Share Premium2

We Are Now Applying This ApproachTo Our Global Portfolio

We Are Now Applying This ApproachTo Our Global Portfolio

’05/’06’05/’06Late ’07/’08Late ’07/’08EMEA & AsiaEMEA & Asia

Late ’07/’08Late ’07/’08Latin AmericaLatin America

Started InNorth America

Started InNorth America

EMEA: Europe, Middle East, Africa

Disciplined Commercial Relationships• Commissions ↓• Credit card costs ↓• SG&A ↓

Disproportionate High Yield Revenue Share• Contract performance ↑• Discount discipline ↑• Middle market penetration ↑• Global accounts development ↑

Revenue Revenue Management Management

ProcessProcess

Strong Execution Provides Further Opportunity To Increase Margin

Strong Execution Provides Further Opportunity To Increase Margin

MarginMargin

Corporate Corporate BuyersBuyers

Agencies/ Agencies/ DistributorsDistributors

UnitedUnitedSales Sales

EngineEngine

Business Business TravelersTravelers

Dennis CaryDennis CarySVP – MarketingSVP – Marketing

Developing New Revenue Sources And Leveraging Old Ones




+

=






Sales,Mileage Plus


Opportunities



+



Mileage Plus Is Key To United’s Revenue Performance

Mileage Plus Is Key To United’s Revenue Performance

Core Program Strengths• Attractive awards

– World-wide travel– First and Business Class– Upgrades– Star Alliance award seats

• Wide-range of accrual opportunities

• Surplus inventory economics

• Large enrolled and active membership

Core Program StrengthsCore Program Strengths•• Attractive awardsAttractive awards

–– WorldWorld--wide travelwide travel–– First and Business ClassFirst and Business Class–– UpgradesUpgrades–– Star Alliance award seatsStar Alliance award seats

•• WideWide--range of accrual range of accrual opportunitiesopportunities

•• Surplus inventory economicsSurplus inventory economics

•• Large enrolled and active Large enrolled and active membershipmembershipOver 1000+ Mileage Plus PartnersOver 1000+ Mileage Plus Partners

145

186

262

167192

268

0

50

100

150

200

250

300

Average HouseholdIncome

Premium Credit CardHolder

Hold Advanced Degree

Mileage Plus Has Millions Of Engaged Members With Highly

Attractive Demographics

Mileage Plus Has Millions Of Engaged Members With Highly

Attractive Demographics

National Average

Indexed to National Average

Source: Compiled from Mileage Plus and Acxiom data

General MembersElite Members

141%133%111%100% 119%

2003 2004 2005 2006 2007

Tota

l rev

enue

as

a %

of 2

003

141%133%111%100% 119%

2003 2004 2005 2006 2007

Tota

l rev

enue

as

a %

of 2

003

Our Members Are Very Loyal Customers For United And Partners

Our Members Are Very Loyal Customers For United And Partners

CAGR= 9%

Miles Issued to Third-Parties Excluding Airline Partners(1) Indexed to 2003

Non-Members

46%

Elite Members31%

General Members

23%

2007 United Passenger RevenueBy Membership and Status

Generates Disproportionate RevenueGenerates Disproportionate RevenueGenerates Disproportionate Revenue Steady Sales GrowthSteady Sales GrowthSteady Sales Growth

(1)Excludes Mileage Sales to United and its Airline Partners

Miles Issued To Partners Growing Faster Than Miles Issued To United PassengersMiles Issued To Partners Growing Faster Than Miles Issued To United Passengers

2007 Miles Issued

Nearly $1B in 2007 Non-Airline Mileage Sales Nearly $1B in 2007 NonNearly $1B in 2007 Non--Airline Mileage Sales Airline Mileage Sales

Miles IssuedCompound Annual Growth Rate

2003 to 2007

United47%

Non Airline43%

Other Airlines

10%

5%

9%10%

United Non Airline Other Airlines

We Are Innovating To Deliver Better Outcomes For Members,

Partners And United

We Are Innovating To Deliver Better Outcomes For Members,

Partners And United• We are setting higher expectations for future credit card

spend growth– Excellent alignment and support from Chase and Visa

• We are applying increased business discipline to the issuance of miles

• We are increasing redemption options for members at reasonable unit cost– Increases member satisfaction and accelerates

revenue recognition

• We are building momentum to increase breadth and depth of relationships with both members and partners

• We are setting higher expectations for future credit card spend growth– Excellent alignment and support from Chase and Visa

• We are applying increased business discipline to the issuance of miles

• We are increasing redemption options for members at reasonable unit cost– Increases member satisfaction and accelerates

revenue recognition

• We are building momentum to increase breadth and depth of relationships with both members and partners





+

=






Sales,Mileage Plus


Opportunities



+



Merchandising Will Increase Revenue And Improve Customer Satisfaction

• New product and service options allow customers to tailor their travel experience– Allows customers to buy services they value rather

than paying for those they don’t

• Will generate significant top and bottom line growth, as evidenced with seat up-sell

• Merchandising does not depend on share shift; it should therefore be accretive to the industry

• New product and service options allow customers to tailor their travel experience– Allows customers to buy services they value rather

than paying for those they don’t

• Will generate significant top and bottom line growth, as evidenced with seat up-sell

• Merchandising does not depend on share shift; it should therefore be accretive to the industry

Strong Up-sell Results Demonstrate Merchandising Potential . . .

Strong Up-sell Results Demonstrate Merchandising Potential . . .

$42M

$167M

$220M

$99M

$0

$50

$100

$150

$200

$250

2005 2006 2007 2008F

united.comOther Kiosk Expected Revenues

Economy Plus and Premium CabinUp-sell Revenue

$ M

illio

ns

. . . As Do Our Changes To Food Service In Domestic Economy CabinsDomestic Food Economics

$ M

illio

ns

20072000

$0

$19M$16M

$103M

$0

$25

$50

$75

$100

Cost Revenue Cost Revenue

Customers Indicate A Strong Appetite For New Products And Services

Customers Indicate A Strong Appetite For New Products And Services

5662

7383

0

20

40

60

80

100

Non-Member GeneralMember

Elite Super Elite

Willing To Purchase Enhancements To Improve Their Travel Experience

Perc

ent

Perc

ent

New Products Are Expected To Generate $400M Annual Revenue At Steady State

$20M$30M

$40M

$60M $60M

$80M

$110M

0

20

40

60

80

100

120

Product 1 Product 2 Product 3 Product 4 Product 5 Product 6 Product 7

Steady State Revenue Potential$ Millions

$ M

illio

ns

Additional Value Can Be Created By Unbundling Today’s Core Offering

• We recently reduced the domestic checked baggage allowance for non-elite customers from 2 to 1

• We consider a number of factors in making these changes:

– Protect elite frequent flyers– Offer the ability to buy back

eliminated services

• If adopted by the industry, our bag initiative is worth more than $100M to United

• We recently reduced the domestic checked baggage allowance for non-elite customers from 2 to 1

• We consider a number of factors in making these changes:

– Protect elite frequent flyers– Offer the ability to buy back

eliminated services

• If adopted by the industry, our bag initiative is worth more than $100M to United

Reduced Allowance

2 to 1

No ChangeDomestic Economy Non-Refund-able Tickets

No ChangeNo ChangeRefundable Tickets

Non-ElitesElites

Segmentation for Changes to Baggage Allowance

Segmentation for Changes to Baggage Allowance

Merchandising Will Produce $1 Billion In Annual Revenue Within Five Years

• Seat up-sell can double to $300M or more per year

• Unbundling products that have traditionally been part of the basic offering can generate $200M-$300M

• The initial set of seven new products are expected to generate $400M per year or more

• Several initiatives will be launched by Fall 2008, with full deployment over the next few years

• Seat up-sell can double to $300M or more per year

• Unbundling products that have traditionally been part of the basic offering can generate $200M-$300M

• The initial set of seven new products are expected to generate $400M per year or more

• Several initiatives will be launched by Fall 2008, with full deployment over the next few years

Questions & Answers Questions & Answers

Building Best-In-Class Operations & Customer

Experience

Building Best-In-Class Operations & Customer

Experience

Graham AtkinsonGraham AtkinsonEVP & Chief Customer OfficerEVP & Chief Customer Officer

Our Goal Is To Create A Best-In-Class Experience For Premium Customers

Our Goal Is To Create A Best-In-Class Experience For Premium Customers

• Use unique portfolio of products and services to target distinct customer segments

• Win the premium “travel experience” by creating best-in-class customer experience on and off the plane

• Enroll frontline to ensure efforts are sustainable

Best-in-class experience worth >$200M in gross revenueBest-in-class experience worth >$200M in gross revenue

Capture greater share of premium customers

Capture greater share of premium customers

• Our segmentation work shows that Premium Customers are growing in size and contribution

Premium Customer Contribution To Industry Revenue Continues To Grow

15%20%25%30%35%40%45%50%

Premium

2004 2005 2007

Industry Share of Revenue as Estimated by Market Research

CAGR 16%

Source: United Market Research

• Reliability

• Cleanliness

• Courtesy

• Easy Processes

• Helpful Employees

• Problem Resolution

• Engaging and Thoughtful Service

• Relaxing Experience

• Personalized Rewards

Best-In-Class Service Must Be Built On A Foundation Of Strong

Operating Performance



CreatingMemorable

Experiences

CreatingMemorable

Experiences

Meeting And ExceedingIndustry Standards

Consistently Getting The Basics Right


SafetySafety

+

To improve the basics and exceed industry standards

To improve customer service through tools, training and front-line leadership

To create lasting customer impressions with game-changing initiatives

ProcessImprovements

Employee Service Delivery

SignatureService

Elements

We Have A Clear Strategy To Create A Best-In-Class Customer ExperienceWe Have A Clear Strategy To Create A Best-In-Class Customer Experience

+ =Best-In-Class

CustomerExperience

Alex MarrenAlex MarrenVP – Operational Services

& United ExpressVP – Operational Services

& United Express

+Process

ImprovementsEmployee

Service Delivery

SignatureService

Elements

Best-In-Class Customer Experience Starts By Getting The Fundamentals Right

Best-In-Class Customer Experience Starts By Getting The Fundamentals Right

+ =Best-In-Class

CustomerExperience




Delivering Quality Service By Consistently Getting The Basics Right

Delivering Quality Service By Consistently Getting The Basics Right

Reliability

Courtesy

Cleanliness

Continuous Improvement Principles

Continuous Improvement Principles

Getting The Basics Right

Standard Work

Root Cause Analysis

Performance Management

Collaboration

Standard Work

Root Cause Analysis

Performance Management

Collaboration

Employee Engagement and Enablement

Employee Engagement and Enablement

Tools and Technology

Work Environment

Employee Communication

Leadership

Employee Development and Recognition

Teamwork and Collaboration

Tools and Technology

Work Environment

Employee Communication

Leadership

Employee Development and Recognition

Teamwork and Collaboration

SafetySafety

Reliability Starts With Operating An On-Time Airline

Reliability Starts With Operating An On-Time Airline

70% 71%72%

74%

78%

AA DL UA CO NW US% o

f Sch

edul

ed D

epar

ture

s

70% 71%72%

74%

78%

AA DL UA CO NW US% o

f Sch

edul

ed D

epar

ture

s

75%77%

68%72%71%70%

US AA NW UA CO DL

% o

f Flig

hts 75%

77%

68%72%71%70%

US AA NW UA CO DL

% o

f Flig

hts

UnitedDomestic Network Carriers Arrival :14

(Dec ’06-Nov ’07)

Improved to the #3 network carrier in 2007 from #5 in 2006

Source: DOT Statistics

79%

AA DL UA CO NW US

US AA NW UA CO DLUnited Express

Commuter Operations Arrival :14(Dec ’06-Nov ’07)

United Also Performs Well On Other Reliability Metrics That Matter

To Customers

United Also Performs Well On Other Reliability Metrics That Matter

To Customers

Percent Of Domestic Flights Diverted0.34% 0.33%

0.22% 0.20% 0.19% 0.19%

AA CO DL US NW UA

Perc

ent o

f Flig

hts

Percent Of Domestic Flights Diverted0.34% 0.33%

0.22% 0.20% 0.19% 0.19%

AA CO DL US NW UA

Perc

ent o

f Flig

hts

Percent Of Flights Delayed 70% Or More Of The Time

0.16%0.13%

0.08%0.05% 0.04%

0.02%

AA US DL CO NW UA

Perc

ent o

f Flig

hts

Percent Of Flights Delayed 70% Or More Of The Time

0.16%0.13%

0.08%0.05% 0.04%

0.02%

AA US DL CO NW UA

Perc

ent o

f Flig

hts

Percent Of Flights With Taxi-Out Times Greater Than 2 Hours

0.29%

0.21%0.17% 0.16% 0.15%

0.06%

CO AA DL UA US NW

Perc

ent o

f Flig

hts

Percent Of Flights With Taxi-Out Times Greater Than 2 Hours

0.29%

0.21%0.17% 0.16% 0.15%

0.06%

CO AA DL UA US NW

Perc

ent o

f Flig

hts

Chronically Late Flights

Long Taxi TimesDiversions


Nov ‘08 ConfigurationNov ‘08 Configuration

New 9L-27RNew 9L-27R

Exposure To 10 Most Delayed AirportsPercent Of Carrier Arrivals

37%30%

27% 24% 22%15%

UA NW CO AA US DL

Perc

ent O

f Sch

edul

ed

Arr

ival

s

Exposure To 10 Most Delayed AirportsPercent Of Carrier Arrivals

37%30%

27% 24% 22%15%

UA NW CO AA US DL

Perc

ent O

f Sch

edul

ed

Arr

ival

s

Top 10 Most Delayed U.S. AirportsPercent Of Arrivals Issued FAA Delay

29% 29%

18%14% 13% 12%

9%6% 4% 4%

LGA EWR ORD JFK PHL SFO BOS TEB MSP HPN

Perc

ent O

f Ind

ustr

y A

rriv

als

Top 10 Most Delayed U.S. AirportsPercent Of Arrivals Issued FAA Delay

29% 29%

18%14% 13% 12%

9%6% 4% 4%

LGA EWR ORD JFK PHL SFO BOS TEB MSP HPN

Perc

ent O

f Ind

ustr

y A

rriv

als

ATC Constraints Disproportionately Challenge United, But Some Relief

Is In Sight

ATC Constraints Disproportionately Challenge United, But Some Relief

Is In SightORD North Runway

Potential to reduce delays by 20%- 40%

ATC Impact

Airline Exposure


2008 Initiatives Will Further Improve Reliability

2008 Initiatives Will Further Improve Reliability

Maintenance• Adding heavy maintenance capabilities internationally• New technology enables early-diagnosis of maintenance issues

Flight Operations/On-board Services• New crew recovery tools during irregular operations

Other Actions• Tighter integration across the company for IRROPS management• Increasing spare aircraft and ground times• Enhancing employee training and front-line leadership• Refining United Express scheduling practices and improving

aircraft turnaround times

Maintenance• Adding heavy maintenance capabilities internationally• New technology enables early-diagnosis of maintenance issues

Flight Operations/On-board Services• New crew recovery tools during irregular operations

Other Actions• Tighter integration across the company for IRROPS management• Increasing spare aircraft and ground times• Enhancing employee training and front-line leadership• Refining United Express scheduling practices and improving

aircraft turnaround times

United Express Is Of Increasing Importance To Our Customers

United Express Is Of Increasing Importance To Our Customers

United Express Percent Of Consolidated Capacity

14.8%15.8% 16.7%

11.4%

2004 2005 2006 2007

United Express Percent Of Consolidated Capacity

14.8%15.8% 16.7%

11.4%

2004 2005 2006 2007

United Express is becoming a more significant part of our portfolio

D:0061%

59%

UA

D:0061%

59%

UA

Our Actions Are Improving The UAX Customer Experience And Increasing Profitability

Our Actions Are Improving The UAX Customer Experience And Increasing Profitability

Better Departure Performance

3%

United Express 2 Class (and E-Plus) Aircraft Percent Of Total Express Capacity

12%

33%

53% 56%

2004 2005 2006 2007

United Express 2 Class (and E-Plus) Aircraft Percent Of Total Express Capacity

12%

33%

53% 56%

2004 2005 2006 2007

Better Aircraft

5.79¢

6.36¢

UA

5.79¢

6.36¢

UA

Regional Unit Earnings excluding Fuel

10%

2006 20072006 2007

14.3

22.7

UA

14.3

22.7

UA

Higher Customer Satisfaction*

59%

2006 2007

*Source: United Track Customer Survey

2004 2005 2006 2007

Enhanced Automation Will Improve Delivery Of Information To CustomersEnhanced Automation Will Improve

Delivery Of Information To Customers• New technology allows United to notify customers of known

delays, cancellations and diversions more quickly via:– Better Internal Systems:

EasyRebook and Flight Monitoring System– Better Customer Facing Systems:

united.comEasyUpdate messages

Focusing On Several Areas To AchieveBest-In-Class Customer Experience

Focusing On Several Areas To AchieveBest-In-Class Customer Experience

Fixing The BasicsFixing The Basics Problem ResolutionProblem Resolution Better ServiceBetter Service

• Flights that arrive on time

• Operating clean aircraft

• Improving aircraft condition

• Flights that arrive on time

• Operating clean aircraft

• Improving aircraft condition

• Handling of delays

• Handling of cancels

• Improving information delivery

• Handling of delays

• Handling of cancels

• Improving information delivery

• Lobby Agents are courteous

• Gate Agents are courteous

• Flight Attendants are courteous

• Lobby Agents are courteous

• Gate Agents are courteous

• Flight Attendants are courteous

Scott DolanScott DolanSVP – Airport Operations & CargoSVP – Airport Operations & Cargo

+Process


Service Delivery

SignatureService

Elements

Best-In-Class Customer Experience Is All About Consistency And Service DeliveryBest-In-Class Customer Experience Is All About Consistency And Service Delivery

+ =Best-In-Class

CustomerExperience




Standard Work Enables ConsistentService Delivery At A Lower Cost

Standard Work Enables ConsistentService Delivery At A Lower Cost

• Train employees to consistently deliver superior service

• New tools

• Balance financial and operational goals

• Execute

• Measure performance

• Recalibrate plans with performance feedback

• Alignment with Leadership

ApproachApproach Key AreasKey AreasAbove The Wing

• Lobbies• Gates

• Customer Service Centers

• Baggage Claim

• Planeside Operations

• Bag Rooms• Bag Transfers

Below The Wing

Standard Work Practices Produced Significant Results In 2007

Standard Work Practices Produced Significant Results In 2007

Standard work improved operational performance …• DOT Baggage: #3 in 2007, #1 in 3Q• Customer satisfaction drivers increased in 2007

– Check-in, gate and boarding process– Baggage delivery

… and improved costs measurably• Cost containment at +2%• Sick time down 16%, best since 1999• Overtime down 23%

Improvement in safety performance• Lost time injuries down 24%• Ground environment aircraft damage down 15%

Standard work improved operational performance …• DOT Baggage: #3 in 2007, #1 in 3Q• Customer satisfaction drivers increased in 2007

– Check-in, gate and boarding process– Baggage delivery

… and improved costs measurably• Cost containment at +2%• Sick time down 16%, best since 1999• Overtime down 23%

Improvement in safety performance• Lost time injuries down 24%• Ground environment aircraft damage down 15%

Innovative Training Is Improving Employee Service Delivery

Innovative Training Is Improving Employee Service Delivery

212212oo

• Designed for service directors

• Focuses importance of every action on customer experience by drawing parallels with a fast paced restaurant

• 47% of service directors and all station leadership trained

• Designed for service directors

• Focuses importance of every action on customer experience by drawing parallels with a fast paced restaurant

• 47% of service directors and all station leadership trained

Pit Crew UPit Crew U

• Designed for lead ramp professionals and service directors

• Focus on safety, team work and standard work of a pit crew

• 90% of ramp leads trained

• Designed for lead ramp professionals and service directors

• Focus on safety, team work and standard work of a pit crew

• 90% of ramp leads trained

Problem ResolutionProblem Resolution

• Designed for customer service agents

• Focused on improving customer service skills by using problem resolution tools

• Over 75% of LAX customer service agents and management trained

• Designed for customer service agents

• Focused on improving customer service skills by using problem resolution tools

• Over 75% of LAX customer service agents and management trained

New Tools And Standard Processes Are Enhancing Airport Lobby Performance . . .New Tools And Standard Processes Are

Enhancing Airport Lobby Performance . . .

Lobby Staff Manager with Cameras

Lobby Improvement at O’HareLobby Improvement at O’Hare

• Enables higher service levels to our premium customers with less staffing

• O’Hare premium check-in times improved significantly

– Line wait satisfaction increased 81%– Improved utilization of customer

service agents across the airport, leading to higher employee satisfaction

• Cost savings used to fund other special services

Source: United Track Customer Survey

. . . And Performance At Our Gates. . . And Performance At Our Gates

• Loading bridge performance up 17%

• Customer service delays down 37%

• Utilization of customer service agents up 15%

• Customer satisfaction with the gate personnel up 11%

• Both employees and the operations benefit from more streamlined, accurate and timely assignment notification

Gate Staff Manager Equipped with Blackberries

Gates Improvement at O’HareGates Improvement at O’Hare

Standard Work Will Improve Customer Satisfaction During Delays And CancelsStandard Work Will Improve Customer

Satisfaction During Delays And Cancels

• Provide transparent and consistent information across channels

• Cancel flights preemptively and notify customers

• Deploy IRROPS Easy Check-in Units to top 18 stations

• Integrate customer service center staffing with lobby and gate staffing management system

• Increase service training for front line

Implementing Standard Work During Irregular Operations

Implementing Standard Work During Irregular Operations Customer Benefits

• To know where and when they’re going

• To be aware of any changes or new arrangements

• To board the flight/next flight with minimal stress

In 2008, We Will Continue To Roll Out These Programs Across Our System

In 2008, We Will Continue To Roll Out These Programs Across Our System

• Additional cameras and resource management systems to all hubs in 2008

• New camera systems for hub concourse customer service centers in 2008

• Deployment of Blackberry devices and gate staffing systems to all hubs in 2009

• New ramp planeside resource management system to hubs in 2008 and 2009

• Develop transfer baggage tools in 2008, deploy at hubs in 2009

• Additional cameras and resource management systems to all hubs in 2008

• New camera systems for hub concourse customer service centers in 2008

• Deployment of Blackberry devices and gate staffing systems to all hubs in 2009

• New ramp planeside resource management system to hubs in 2008 and 2009

• Develop transfer baggage tools in 2008, deploy at hubs in 2009

Gates

PlanesideOperations

Lobby

Barbara HigginsBarbara HigginsVP – Customer ExperienceVP – Customer Experience

+Process


Service Delivery

SignatureService

Elements

We Will Build On Our Progress With New Process And Product Improvements

We Will Build On Our Progress With New Process And Product Improvements

+ =Best-In-Class

CustomerExperience




UAUA

In 2007, We Created New Benefits That Increased Our Share Of Premium Customers

Upgrades and Freebies

Security Lines

Boarding Trip Protection

Contact Center

Check-in

UAQ4 ’06

UAQ4 ’06

UAQ4 ’07

UAQ4 ’07

+25%

Premium Customers Are Consolidating More

Business with United*

*Source: United Market Research

Going Forward, We Are Improving The Customer Experience On The GroundGoing Forward, We Are Improving The Customer Experience On The Ground

• Refurbishing lounges

• Enhancing gate information displays

• Enabling mobile/PDA check-in

• Testing document-less travel

. . . Improving The Customer Experience In The Air . . .

. . . Improving The Customer Experience In The Air . . .

• Increasing cabin cleaning depth and frequency

• Expanding refurbishment capacity between heavy maintenance visits

• Installing leather on all domestic narrowbody aircraft beginning in 2008

. . . And Improving The Customer Experience Behind The Scenes

. . . And Improving The Customer Experience Behind The Scenes

• Improving infrastructure and database for storing and accessing customer data

• Using information to better build lifelong relationships with customers

• Global Reception at O’Hare – a private lobby to: – Complement the new International First Class – Reward the loyalty of our Global Services guests

Entrance

Exit to front of security

ORD Global Reception Lobby Will BeA Very Visible New Signature Element ORD Global Reception Lobby Will Be

A Very Visible New Signature Element

The New Int’l First And Business Class Is An Industry-Leading Signature Element

The New Int’l First And Business Class Is An Industry-Leading Signature Element• Terrific early customer response• Customer satisfaction doubled on upgraded aircraft • Expected to increase First and Business Class market share

Product upgrade will be substantially complete by end of 2009

New First Suite New Business Class Seat

Developing Individualized Service Delivery As A Signature Element For Global ServicesDeveloping Individualized Service Delivery

As A Signature Element For Global Services

Global Services (GS) Standard Work and Training• Defining more personalized standard work• Instituting new training with Disney Institute

Global Services (GS) Standard Work and Training• Defining more personalized standard work• Instituting new training with Disney Institute

New Tools• Enhancing back office systems• Upgrading communication devices • New uniforms to enhance employee pride

New Tools• Enhancing back office systems• Upgrading communication devices • New uniforms to enhance employee pride

Frontline Leadership• Creating Supervisor positions to manage

Global Services at our hubs

Frontline Leadership• Creating Supervisor positions to manage

Global Services at our hubs

Pete McDonaldPete McDonaldEVP & Chief Operating OfficerEVP & Chief Operating Officer

• Reliability

• Cleanliness

• Courtesy

• Easy Processes

• Helpful Employees

• Problem Resolution

• Engaging and Thoughtful Service

• Relaxing Experience

• Personalized Rewards





CreatingMemorable

Experiences

CreatingMemorable

Experiences

Meeting And ExceedingIndustry Standards



SafetySafety


Providing A Return To Shareholders

Providing A Return To Shareholders

Jake BraceJake BraceEVP & Chief Financial OfficerEVP & Chief Financial Officer





Airline



Consolidation

The Core Business Is Performing WellThe Core Business Is Performing Well

• Most profitable year since 1999 despite $72 per barrel fuel– Over $1 billion of operating income – Over $600 million of pre-tax profit

• $2.1 billion in operating cash flow– 37% higher than 2006

• $2.3 billion in debt reduction – Combined with refinancings, creating a run-rate savings of

over $120 million in net interest expense in 2008 and beyond

• Shareholder distribution of $250M

Kathy MikellsKathy MikellsVP – Investor RelationsVP – Investor Relations

Our Financial Performance Reflects Focus On Strengthening The Core Airline

Our Financial Performance Reflects Focus On Strengthening The Core Airline



Airline



Consolidation

Fresh Start Accounting SignificantlyImpacts Restructured Carriers

Fresh Start Accounting SignificantlyImpacts Restructured Carriers

• Not all fresh start accounting is the same – there are major differences between carriers

• New accounting method for frequent flyer program recognizes the full liability caused by awarded miles, unlike the prior method – Significant differences in revenue recognition, due to different

valuations put on miles awarded post-exit

• Depreciation and amortization expense changes due to asset revaluation– New intangible assets added to the balance sheet resulting in an

increase in amortization expense, e.g. customer list and alliance and marketing agreements

• Because liabilities are reset at exit, some deferred gains are eliminated– Results in higher aircraft rent for carriers like United which have

greater numbers of leased aircraft

• Not all fresh start accounting is the same – there are major differences between carriers

• New accounting method for frequent flyer program recognizes the full liability caused by awarded miles, unlike the prior method – Significant differences in revenue recognition, due to different

valuations put on miles awarded post-exit

• Depreciation and amortization expense changes due to asset revaluation– New intangible assets added to the balance sheet resulting in an

increase in amortization expense, e.g. customer list and alliance and marketing agreements

• Because liabilities are reset at exit, some deferred gains are eliminated– Results in higher aircraft rent for carriers like United which have

greater numbers of leased aircraft

Total Pre-Tax Impact

Non-Operating Expense

Revenue Impact:Deferred Revenue Accounting

Change in Expiration Policy

Other Expense Impacts

Aircraft Rent

Depreciation & Amortization

Expense Impact:Stock-based Compensation

Postretirement Welfare Cost

$ Millions

$(277)M

$(76)M

$(72)M

$(49)M

$(19)M

$(99)M

Information based on the fourth quarter 2007 press releases

Impact Varies Widely Among Carriers

$(248)M

UAUA DAL NWA

Fresh Start And Exit Related Impact vs. Pre-Bankruptcy Accounting

$0

$0

$(39)M

$(43)M

$5M

$20M

$30M $11M

$6M $67M

$188M

$52M

$0 $0$246M

$(105)M $(20)M

$(56)M $0 $0

Fresh Start Adjustments On Pre-TaxMargin Are Significant . . .

Fresh Start Adjustments On Pre-TaxMargin Are Significant . . .

$(52)

$43

Impact on Pre-Tax Income - Full Year 2007

$300M

$205M

Pre-Tax MarginUnadjusted

Adjustment

2.7% 3.2 % 6.2%

1.2% (0.2)% 0.3%

$248

UAUA DAL NWA

Sources: Company press releases. All results exclude special items and one-time gains.

. . . And Make A Difference To Competitive Comparisons

. . . And Make A Difference To Competitive Comparisons

Pre-Tax Margin(Adjusted for fresh start accounting)

Full Year 2007

Sources: Company press releases. All results exclude special items and one-time gains.

3.0%

6.5%

4.6%3.9% 3.8%

1.6%

0.1%

0.0

NWA LCC UAUA CAL DAL AMR LUV

Fuel

Hedge

Benefit

10.7%

2007 B/(W) 2006(percentage points)

3.9 0.9 1.4 1.5 7.3 0.6 (0.5)

Our Performance Is Reflected In Unit Earnings

Our Performance Is Reflected In Unit Earnings

Mainline Unit Earnings excluding Fuel Costs(RASM minus CASM ex Fuel)

Full Year 2007

Sources: Company press releases. All results also exclude special items, regional affiliates and any applicable non-cash fresh-start and exit-related items.

3.34

4.51 4.46

3.844.104.204.28

NWA DAL UAUA AMR CAL LCC LUV

¢/ASM

2007 B/(W) 2006 4.2% 25.3% 9.2% 6.2% 9.5% (1.3)% 0.6%

Free Cash Flow Metrics Are Not Obscured By Exit Accounting; United Leads Peers

Free Cash Flow Metrics Are Not Obscured By Exit Accounting; United Leads Peers

Sources: Company press releases and Earnings Calls. Free Cash Flow defined as cash flows from operations less capital expenditures.

Free Cash Flow/Total Revenue

Twelve Months Ended Sep 30, 2007

1.86

10.297.96

6.985.70

5.36 5.07

UAUA AMR CAL LUV DAL NWA LCC

1.86

10.297.96

6.985.70

5.36 5.07

UAUA AMR CAL LUV DAL NWA LCC

Free Cash Flow/Consolidated ASMs$/1,000 ASMs

8.1%

6.4%5.8% 5.6%

4.3%3.8%

1.2%

UAUA AMR LUV CAL DAL NWA LCC

8.1%

6.4%5.8% 5.6%

4.3%3.8%

1.2%

UAUA AMR LUV CAL DAL NWA LCC

FY 2007 cash-flow numbers for UAUA and DAL; Full year cash-flow numbers not yet available for other carriers

Greg TaylorGreg TaylorSVP – Corporate Planning & StrategySVP – Corporate Planning & Strategy

We Are Creating Value For Stakeholders Starting With The Core Airline

We Are Creating Value For Stakeholders Starting With The Core Airline



Airline



Consolidation

Integrated Business Planning Is Critical To Long-Term Performance

Integrated Business Planning Is Critical To Long-Term Performance

• Integrated corporate strategy, performance targets, divisional business plans and budgets (“vertical alignment”)

• Enterprise level strategic initiative roadmap (“horizontal alignment”)

• Enhanced performance management

• Continuous improvement across business initiatives

Employees

Investors

Customers

Our 2012 Aspiration Is To Become Best-In-Class Among

U.S. Network Carriers

Our 2012 Aspiration Is To Become Best-In-Class Among

U.S. Network CarriersCorporate aspirations

SafetySafety

InvestorsInvestors

CustomersCustomers

EmployeesEmployees

• Deliver uncompromising excellence in safety

• Provide the best-in-class customer experience for premium customers, while improving the non-premium customer experience

• Achieve best-in-class reliability

• Become the most profitable U.S. carrier• Deliver shareholder value competitive with industrial

company returns

• Deliver best-in-class airline employee experience

Defined Goals On The Balanced Scorecard Create Accountability

Defined Goals On The Balanced Scorecard Create Accountability

EmployeesEmployees

SafetySafety

CustomersCustomers

• Engagement• Enablement• Retention

• Passenger unit revenue

• Pre-tax margin• Consolidated unit cost

• Non-passenger business contribution

• Lost time injuries• Aircraft damage

• Departure completion• Arrival OnTime:14• Departure OnTime:00

• Premium customer promoter score• Non-premium customer promoter score

Focus area Metric

InvestorsInvestors

Investments In 2008 Initiatives Will Enable Improvement Across The Scorecard

Investments In 2008 Initiatives Will Enable Improvement Across The Scorecard

• Next generation revenue management and scheduling systems• Merchandising opportunities• $200M cost reduction program• Enterprise Resource Planning (ERP) Implementation

• Front-line leadership development• New online training system• End-user technology refresh

Major 2008 Initiatives

• New international premium product • New leather seats in economy cabins• Self service technology enhancements• Maintenance program enhancements to improve aircraft reliability• Management tools to improve performance in irregularities

• IT enhancements to improve safety reporting• Process improvement, training and organizational structure changes

SafetySafety

CustomersCustomers

EmployeesEmployees

InvestorsInvestors

$650M Capital Investment In 2008, With 50% On Aircraft Mods And

Customer Projects

$650M Capital Investment In 2008, With 50% On Aircraft Mods And

Customer Projects

30%

50%

35%

25%35%

25%

2007 2008 Plan

IT and Other

Infrastructure

Aircraft and Customer

$500M

$650M

Inflationary Pressures Create Cost Challenges In 2008

Inflationary Pressures Create Cost Challenges In 2008

• Revenue improvement leads to increased distribution costs

• Maintenance continues to be a challenge– Increased engine and airframe volumes – Material and component inflation

• Medical and dental inflation at 9% to 10%

• Airport rents and landing fees rates increase 5% to 6%

• Contractual salary increases of 2%

• Revenue improvement leads to increased distribution costs

• Maintenance continues to be a challenge– Increased engine and airframe volumes – Material and component inflation

• Medical and dental inflation at 9% to 10%

• Airport rents and landing fees rates increase 5% to 6%

• Contractual salary increases of 2%

Fuel Efficiency Programs Will Yield $40M Of Savings In 2008Fuel Efficiency Programs Will Yield $40M Of Savings In 2008

Major Initiatives Include:• Flight Planning System

replacement

• Winglets

• Other initiatives– Single engine taxi– Selectively reduced speeds– Improved climb/descent profiles– Streamlining fuel supply chain

• United Express– Implementation of mainline fuel

programs at Express partners

Major Initiatives Include:• Flight Planning System

replacement

• Winglets

• Other initiatives– Single engine taxi– Selectively reduced speeds– Improved climb/descent profiles– Streamlining fuel supply chain

• United Express– Implementation of mainline fuel

programs at Express partners

C44K gal

B48K gal

A47K gal

Targeting Non-Fuel Expense Savings Of $200M In 2008

Targeting Non-Fuel Expense Savings Of $200M In 2008

Expected to result in 2008 CASM, excluding fuel, increasing by 1.5% – 2.5%

$200 MillionSavings

Strategic SourcingTransformation

Distribution CostReduction

Health and BenefitsOptimization

Support our strategic goals

while containing and reducing

cost

Pressure on rates and creative channel

management

Safety initiatives lower expense and sick leave

Dependent audit

ContinuousImprovement

Improvements in process, tools, and technology

across the enterprise

Grace PumaGrace PumaSVP - Strategic SourcingSVP - Strategic Sourcing

We Are Taking Costs Out Of Every Piece Of The Business

We Are Taking Costs Out Of Every Piece Of The Business



Airline



Consolidation

Goal of Strategic Sourcing Is To Reduce Total Cost of Ownership To United

ImplementationCost

Total Cost of

Ownership

Cost of Quality Level

VendorPrice

Five Key Changes Will Lower Costs While Improving Quality And Turnaround Time

• Standardizing strategic sourcing process focused on total cost of ownership

• Leveraging cross-functional United resources to focus on purchased services areas where maximum value can be realized

• Implementing multi-year sourcing plan for purchased service areas using total cost of ownership sourcing process

• Establishing clear financial accountability to achieve 3% annual savings from $1.7 billion of current addressable spend

• Transforming strategic sourcing organization

• Standardizing strategic sourcing process focused on total cost of ownership

• Leveraging cross-functional United resources to focus on purchased services areas where maximum value can be realized

• Implementing multi-year sourcing plan for purchased service areas using total cost of ownership sourcing process

• Establishing clear financial accountability to achieve 3% annual savings from $1.7 billion of current addressable spend

• Transforming strategic sourcing organization

Integration Of Strategic Sourcing Will Support Company Goals While Containing Costs

Integration Of Strategic Sourcing Will Support Company Goals While Containing Costs

Business strategyBusiness strategy

Supplier Supplier business business

relationshiprelationship

UAL business model

• How United works cross-functionally to reduce total cost of ownership

• Category strategy developed in support of business goals

• Enterprise level strategy (~5-year horizon)• Division business plans – in support of

enterprise goals

• Improve quality and timeto delivery by leveraging

supplier capabilities• Enhance efficiency

through supplier manage-ment and development of new supplier relationships

Shapes the specification and demand

Supports the business model

Provides growth opportunities

Offers innovation and expertise

Establishes standard process for the way UAL does business

Strategic Strategic sourcingsourcing

Develop the Fact Base

Design SourcingStrategies

Create SupplierPortfolio

Negotiate andImplement

Implementing A World-Class, Standard Process For United Sourcing

Focus On Areas Of Highest Sourcing Complexity And Leveraged Buying

Opportunities

Focus On Areas Of Highest Sourcing Complexity And Leveraged Buying

Opportunities

Business/Function specialty items

Example: Credit Card Fees

Low

High Highest complexity total cost of ownership items

Example: Catering

Commodity items

Example: Office Supplies

Leveraged items

Example: Cargo Warehousing

Low HighStrategic Sourcing impact on value

Utilize strategic sourcing

resources and application of processes to

maximize impactComplexityComplexity

We Will Deliver $50M In 2008 Savings And Are Building A Pipeline

For The Future• Strategic Sourcing process has focused on $1.7

billion of addressable spend– Looking at Operations, IT, Telecom, Maintenance,

and Catering among others– Estimated 2008 savings: $50 million – Estimated steady state savings: $120 million

• Future pipeline targets additional $700 million of spend, with a goal of 6% cost reduction for 2009 and beyond

• Strategic Sourcing process has focused on $1.7 billion of addressable spend– Looking at Operations, IT, Telecom, Maintenance,

and Catering among others– Estimated 2008 savings: $50 million – Estimated steady state savings: $120 million

• Future pipeline targets additional $700 million of spend, with a goal of 6% cost reduction for 2009 and beyond

United Is Transforming Its Strategic Sourcing Organization To Ensure Success

United Is Transforming Its Strategic Sourcing Organization To Ensure Success

• New leadership team is in place with significant strategic sourcing experience

• Realigning strategic sourcing and business resources by buying category

• Extensive training is underway to expand capability

• Focused and clear execution plans are in place

• New leadership team is in place with significant strategic sourcing experience

• Realigning strategic sourcing and business resources by buying category

• Extensive training is underway to expand capability

• Focused and clear execution plans are in place

Stephen LiebermanStephen LiebermanVP & TreasurerVP & Treasurer

Moving To An Optimal Capital Structure Creates Additional Value

Moving To An Optimal Capital Structure Creates Additional Value



Airline



Consolidation

Our Long-Term Goal Is To Minimize Our Cost Of Capital

Our Long-Term Goal Is To Minimize Our Cost Of Capital

AA A BBB BB B C

• Approach considers company and industry specific factors that impact optimal WACC– Variability in cash flow generation– Minimal debt tax shield– Low cost of secured debt

• Approach considers company and industry specific factors that impact optimal WACC– Variability in cash flow generation– Minimal debt tax shield– Low cost of secured debt

AAAUAUA2007

Debt Reduction Actions Significantly Improved Key Credit Metrics

Debt Reduction Actions Significantly Improved Key Credit Metrics

$2,324Total 2007 Debt Reduction

178EETC Repurchases and Other Debt Reductions

500December 2007 Credit Facility Reduction

986February 2007 Credit Facility Reduction

$ 660Scheduled Principal Payments in 2007

25% - 35% improvementin key credit metrics

11.1%

6.6x

1.9x

YE2006

18.5%Cash-Flow from Operations/Debt*

4.7xDebt/EBITDAR (x)*

2.5xEBITDAR Interest & A/C Rent Coverage (x)*

YE2007

*Adjusted for fresh start accounting

Greater Share Of Success Flows To Shareholders As Credit Metrics Improve

Greater Share Of Success Flows To Shareholders As Credit Metrics Improve

Disproportionate Share to Debt

Disproportionate Share to Equity

2006 & 2007$2.6BDebtReductionApprox. $250MShareholderDistribution

AA A BBB BB B CAAA

Jake BraceJake BraceEVP & Chief Financial OfficerEVP & Chief Financial Officer

We Are Pursuing Multiple Approaches To Create Shareholder Value

We Are Pursuing Multiple Approaches To Create Shareholder Value



Airline



Consolidation

We Have Completed Phase One Of Our Mileage Plus Plan

We Have Completed Phase One Of Our Mileage Plus Plan

• Developed market-based transfer pricing for miles, award seats, and other inter-company services

• Instituted internal financial reporting for Mileage Plus

• Identified management processes that will need to change

• Developed market-based transfer pricing for miles, award seats, and other inter-company services

• Instituted internal financial reporting for Mileage Plus

• Identified management processes that will need to change

Part of The AirlinePart of The AirlineCreation of StandCreation of Stand--

Alone Business Alone Business UnitUnit

Unlocking Value Unlocking Value of Ancillary Unitsof Ancillary Units

Starting Point Phase 1 Phase 2

• To achieve optimal Phase 2, we are– “Test driving” processes in an arms-length relationship – Balancing each entity’s interests– Continuing to develop Mileage Plus organizational capabilities

• To achieve optimal Phase 2, we are– “Test driving” processes in an arms-length relationship – Balancing each entity’s interests– Continuing to develop Mileage Plus organizational capabilities

The Next Phase Involves Creation Of A Commercially Independent Entity





We Are Further Along In The MRO ProcessWe Are Further Along In The MRO Process

• Created detailed business and financial plan for carving out United’s MRO business– Includes maintenance business (excluding line

maintenance) and its associated assets– Long term, market-based maintenance services agreement

• Conducted due diligence with interested strategic and financial investors

• Received multiple proposals from both strategic and financial investors– Continuing evaluation process of proposals during 1Q 2008

• Created detailed business and financial plan for carving out United’s MRO business– Includes maintenance business (excluding line

maintenance) and its associated assets– Long term, market-based maintenance services agreement

• Conducted due diligence with interested strategic and financial investors

• Received multiple proposals from both strategic and financial investors– Continuing evaluation process of proposals during 1Q 2008









Airline



Consolidation


Non-GAAP To GAAP Reconciliation

Non-GAAP To GAAP Reconciliation

Year Ended 12/31/07 Year Ended 12/31/06($ in Millions)Consolidated Operating Revenue 20,143$ 19,340$ Less: Specials (45) - Consolidated Operating Revenue Ex Specials 20,098 19,340 Less: Fresh Start 31 158 Consolidated Operating Revenue Ex Specials & Fresh Start 20,129$ 19,498$

Consolidated Income Pre-Tax 695$ (45)$ Less: Specials and One-time Gains (152) - Pre-Tax Income Ex Specials 543 (45) Less: Fresh Start 248 532 Consolidated Income Pre-Tax- Ex Specials & Fresh Start 791$ 487$

GAAP Margin 3.4% -0.2%Margin Ex Specials 2.7% -0.2%Margin Ex Fresh Start & Specials 3.9% 2.5%

Pre-Tax MarginPre-Tax Margin

A - 2006 excludes reorganization items of $22.9 Billion.

B - Includes special items of $89 million and one time gains of $41M from ARINC sale and $22M from early debt retirement.

A

B

Mainline Unit Earnings Excluding Fuel CostsMainline Unit Earnings Excluding Fuel CostsYear Ended 12/31/07 Year Ended 12/31/06

($ and ASM in Millions; Rates in cents)

Consolidated Operating Revenues 20,143$ 19,340 Less: Passenger - Regional Affiliates (3,063) (2,901) Less: Regional Affiliates Specials (8) - Mainline Operating Revenues 17,072$ 16,439$ Less: UAFC (45) (352) Less: Mainline Specials (37) - Less: Mainline Fresh Start Adjustments 26 133 Adjusted Mainline 17,016$ 16,220

Mainline available seat miles 141,890 143,095 GAAP Mainline RASM (in cents) 12.03$ 11.49$ Adjusted Mainline RASM (in cents) 11.99$ 11.34$

Consolidated Operating Expenses 19,106$ 18,893 Less: Regional Affiliates (2,941) (2,824) Mainline Operating Expense 16,165$ 16,069$ Less: Fuel (5,003) (4,824) Less: UAFC (35) (342) Less: Special Items 44 36 Mainline Operating Expense ex. Fuel and Specials 11,170$ 10,939$ Less: Mainline Fresh Start Adjustments (223) (323) Adjusted Mainine Expenses 10,947$ 10,616$ GAAP Mainline CASM (in cents) 11.39$ 11.23$ Adjusted Mainline CASM (in cents) 7.72$ 7.42$

GAAP Mainline Unit Earnings 0.64$ 0.26$ Adjusted Mainline Unit Earnings 4.28$ 3.92$

Free Cash Flow MetricsFree Cash Flow Metrics

Twelve Months EndedDecember 2007($ and ASM in millions)

Cash Flow from Operations 2,134$Less: Capital Expenditures (507)Free Cash Flow 1,627$

Total Revenue 20,143$

Consolidated ASM 158,191

FCF/Total Revenue 8.1%FCF/1,000 ASM 10.29

A - GAAP capital expenditures as reported in its statement of cash flows are $658 million. The lower Non-GAAP capital expenditures is primarily due to the exclusion of $197 million of aircraft expenditures and inclusion of capitalized IT labor expenditures, which are reported as an “Other” investing outflow in the GAAP statement of cash flows.

A

Credit MetricsCredit MetricsYear En ded 12 /31/07 Year Ended 12/31/06

Operating Earn ings 1,037 447 Add Back: Deprecia tion & Amortization 925 888 Add Back: Aircra ft Rent 406 415 Fresh-start Adjustments 106 341 Adju sted EBIT DAR 2,474 2,091 EBITDAR 2,368 1,750

Adju sted In terest (Interest and Aircraft Rent Coverage)In terest on Debt 661 770 Aircra ft Ren t 406 415 Fresh-start ad justm ent fo r Aircra ft Rent (72) (66) Adju sted In terest & Rent 995 1,119

Adju sted EBIT DAR / In terest & Ren t 2 .5 1.9 EBITDAR / GAAP Interest & Rent 2 .2 1.5

Cashflow from Op erat ionsCashf low from Operations 2,134 1,562 Cashf low used by reorganizat ion activit ies - (23) To tal 2,134 1,539

Deb tReported Debt (on Balance Sheet) 8,449 10,600 Repurchased EETC securities (98) - Cap ita l value of AC leases and m un i bonds 3,177 3,252 Adju sted Debt 11,528 13,852

Cashflow from Op erat ions / Ad justed Debt 18.5% 11.1%Cashflow / GAAP Deb t 25.3% 14.5%

Adju sted Debt / EBITDAR 4.7 6.6 GAAP Debt / EBIT DAR 3.6 6.1

Quarterly Mainline PRASMQuarterly Mainline PRASM($ and ASMs in millions)

2007 Q1 Q2 Q3 Q4 YTDMainline Passenger revenues 3,264 3,968 4,262 3,797 15,291 Less: special item (37) (37) Less: fresh start 90 (2) (12) (50) 26 Adjusted Mainline revenues 3,354 3,966 4,213 3,747 15,280

ASMs 34,535 35,875 36,531 34,949 141,890 PRASM 9.45 11.06 11.67 10.86 10.78 Adjusted PRASM 9.71 11.06 11.53 10.72 10.77

2006Mainline Passenger revenues 3,256 3,806 3,916 3,389 14,367 Less: fresh start 17 22 14 80 133 Adjusted Mainline revenues 3,273 3,828 3,930 3,469 14,500


Adjusted PRASM % Change 2.3% 4.5% 8.9% 9.2% 6.3%

(a) - Q3 2007 GAAP revenues include special item of $37 million

Mainline PRASM by RegionMainline PRASM by Region

($ and ASMs in millions)2007 Domestic Pacific Atlantic Latin YTD

Mainline Passenger revenues 9,155 3,261 2,365 510 15,291 Less: special item (22) (6) (8) (1) (37) Less: fresh start 14 7 4 1 26 Adjusted Mainline revenues 9,147 3,262 2,361 510 15,280


2006Mainline Passenger revenues 9,034 2,888 1,942 503 14,367 Less: fresh start 70 34 23 6 133 Adjusted Mainline revenues 9,104 2,922 1,965 509 14,500


Adjusted PRASM % Change 3.8% 8.5% 12.5% 11.8% 6.3%

Date post:	19-Jun-2015
Category:	Economy & Finance
Upload:	finance13
View:	477 times
Download:	2 times

Fourth Quarter UAL Investor Update

Economy & Finance