United Airlines Holdings, Inc. · NASDAQ:UAL
United Airlines — UAL — Merrill Lynch Global Transportation Conference 2008
24 slides from United Airlines's conference presentation, Jun 18, 2008
Slide 1: UAL Corporation Merrill Lynch Global Transportation Conference
UAL Corporation Merrill Lynch Global Transportation Conference June 18, 2008
Slide 2: Safe Harbor Statement And Non-GAAP Reconciliation
p. 2 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,
Slide 3: The Core Business Performed Well In 2007
p. 3 The Core Business Performed Well In 2007 • 2007 was the most profitable year since 1999 – 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
Slide 4: Fresh-Start Accounting Significantly Affects Competitive Comparisons
p. 4 Fresh-Start Accounting Significantly Affects Competitive Comparisons Impact on Pre-Tax Income – TME 1Q 2008 $207M – LCC $207M – CAL $207M – AMR $160M $ (47)M NWA $287M $ 80 M DAL – $(207)M UAUA Net Adjustment To UAUA TME 1Q 2008 Pre-Tax Income For An “Apples-to-Apples” Competitive Comparison Fr
Slide 5: United's Pre-Tax Margin And Unit Earnings Are Competitive
p. 5 United’s Pre-Tax Margin And Unit Earnings Are Competitive 1.8% 4.1% 2.6% 2.3% 1.8% (0.2)% (2.0)% NWA CAL UAUA LCC DAL AMR LUV Pre-Tax Margin (Adjusted for fresh start accounting) Twelve Months Ended March 31, 2008 Fuel Hedge Benefit 9.3% Year-Over-Year (percentage points) Sources: Company press
Slide 6: United Led Peers In Free Cash Flow Generation
p. 6 United Led Peers In Free Cash Flow Generation Sources: Company press releases and Earnings Calls. Free Cash Flow defined as cash flows from operations less capital expenditures. LUV free cash flow excludes collateral deposits related to fuel derivative contracts. Free Cash Flow/Total Revenue Tw
Slide 7: Unprecedented Rise In Jet Fuel Prices Has Put Severe Pressure on Industry
p. 7 UAUA Consolidated Fuel Expense Reflects JetA and WTI crude prices from January 1, 2007 through June 13, 2008. 2008 consolidated fuel expense estimated based on actual expense through May 31 and on the forward curve for subsequent months. Jet A and WTI Spot Prices $9.5 $5.9 $5.7 $4.7 $3.4 $2.3 $
Slide 8: Core Performance Imperatives: Back To Basics
p. 8 Customers Employees Owners Core Performance Imperatives 4. Clean, workable product 3. Service Basics – DOT Published 2. Competitive Costs 1. Industry-leading revenues • Industry-leading margin & cash flow • Unrivaled customer satisfaction & experience • Aligned employees • World-class safety pe
Slide 9: Restructuring And Resizing Management To Better Respond To Changing Environment
p. 9 Restructuring And Resizing Management To Better Respond To Changing Environment • Streamlining management structure – John Tague, Chief Operating Officer, responsible for revenue and operations – Pete McDonald, Chief Administrative Officer, responsible for non-Finance staff functions • Putting
Slide 10: United Has Significant Flexibility In A High Fuel Cost Environment
p. 10 United Has Significant Flexibility In A High Fuel Cost Environment • Unrestricted cash of between $2.7B and $2.8B at the end of the second quarter – Excludes potential impact of any financing transactions • Modest capex helps fuel free cash flow – Non-aircraft capex plan of $450M in 2008 focus
Slide 11: Unencumbered Aircraft
p. 11 122 7 8 9 33 29 17 10 9 Unencumbered Aircraft 15.3 10.2 13.5 12.3 16.8 16.5 20.3 10.1 10.1 Average Age (Years) B777-200 TOTAL A320-200 A319-100 Wide-Body B747-400 B767-300 B757-200 B737-500 B737-300 Narrow-Body *Table includes nine aircraft that will be unencumbered in June 2008. Unencumbered
Slide 12: Other Unencumbered Assets Are Valued At Over $1B
p. 12 Other Unencumbered Assets Are Valued At Over $1B Spare Parts Inventory 51% Other 23% Engines 26%
Slide 13: Aggressive Actions To Combat Higher Fuel Costs
p. 13 Aggressive Actions To Combat Higher Fuel Costs • Sizing the business appropriately to reflect the current market reality – Reducing fourth quarter mainline domestic capacity by 13.5% to 14.5% – Permanently grounding 100 aircraft, including entire 737 fleet • Using capacity discipline to suppor
Slide 14: Leading The Industry In Capacity Reductions
p. 14 -3.5% -7.5% -9.0% N/A Northwest -7.5% -11.4% -7.5% -11.5% American^ -6.2% N/A -6.8% -11.4% Continental -1.0% -10.0% N/A N/A Delta^ N/A -11.0% Consolidated Domestic -5.0% -10.0% Total Mainline -4.0% -8.5% Total Consolidated -7.0% -14.0% Mainline Domestic US Airways United Fourth Quarter 2008 (v
Slide 15: United Is Pursuing New Revenue Streams
p. 15 United Is Pursuing New Revenue Streams • New product and service options allow customers to tailor their travel experience • Introduced a basket of fee changes – Adjusted ticket change fees from $100 to $150 – Fee changes will deliver $250M-$300M of annual run-rate revenue • Merchandising will
Slide 16: Continuing To Focus On Fuel Efficiency In 2008
p. 16 Continuing To Focus On Fuel Efficiency In 2008 • B737 fleet retirement • Flight Planning System replacement • Winglets • Single engine taxi • Selectively reduced speeds • Improved climb/descent profiles • Streamlining fuel supply chain C 44K gal B 48K gal A 47K gal
Slide 17: Continuing To Focus On Reducing Our Non-Fuel Costs
p. 17 At The Same Time, We Continue To Focus On Reducing Our Non-Fuel Costs $400 Million In 2008 Cost Savings Strategic Sourcing Transformation Distribution Cost Reduction Health & Benefits Optimization Support our strategic goals while containing and reducing cost Pressure on rates and creative cha
Slide 18: Reducing Capital Spending, But Targeting Investment In Key Products And Services
p. 18 Reducing Capital Spending, But Targeting Investment In Key Products And Services
Slide 19: Current Hedge Coverage
p. 19 Current Hedge Coverage • United has hedged 39% of forecasted Mainline fuel consumption for the second half of 2008 • Using combination of three-way collars, collars, and other structures, primarily crude oil • Mark-to-market value of approximately $234 million as of June 13th 9% 41% 37% 30% 2Q
Slide 20: @MUALCORPORATION
@MUALCORPORATION
Slide 21: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation
Slide 22: Pre-Tax Margin Reconciliation
p. 22 Pre-Tax Margin Reconciliation Twelve Months Ended 3/31/08 Twelve Months Ended 3/31/07 ($ in Millions) Consolidated Operating Revenue 20,481 $ 19,248 $ Less: Specials (45) – Consolidated Operating Revenue Ex Specials 20,436 19,248 Less: Fresh Start (11) 245 Consolidated Operating Revenue Ex Spe
Slide 23: Unit Earnings Reconciliation
p. 23 Unit Earnings Reconciliation Twelve Months Ended 3/31/08 Twelve Months Ended 3/31/07 ($ and ASM in Millions; Rates in cents) Consolidated Operating Revenues 20,481 $ 19,248 Less: Passenger - Regional Affiliates (3,103) (2,907) Less: Regional Affiliates Specials (8) Mainline Operating Revenues
Slide 24: Free Cash Flow Metrics Reconciliation
p. 24 Free Cash Flow Metrics Reconciliation ($ and ASM in Millions) Cash Flow from Operations 1,428 $ Less: Capital Expenditures (547) Free Cash Flow 881 $ Consolidated Available Seat Miles 158,136 FCF/Total Revenue 4.3% FCF/1,000 ASM 5.57 A - GAAP capital expenditures as reported in its statement o
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