United Airlines 8K Regulation FD Disclosure | UAL 18 Sep 08

p. 1

UAL Corporation

Calyon

Airline Conference 2008

September 18, 2008

Exhibit 99.1

p. 2

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 2007 and other subsequent Company reports filed with the

United States Securities and Exchange Commission. Persons reviewing this

presentation 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

this

presentation

available

the

Company's

web

site

www.united.com/ir

p. 3

United 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

•

Competitive Pre-Tax Margin

p. 4

$40

$60

$80

$100

$120

$140

$160

$180

Jan-07

Apr-07

Jul-07

Oct-07

Jan-08

Apr-08

Jul-08

$0.95

$1.45

$1.95

$2.45

$2.95

$3.45

$3.95

$4.45

United Consolidated Fuel Expense

Reflects Jet A and WTI crude prices from January 1, 2007 through

September 16, 2008

Jet A and WTI Spot Prices

~$8.8

$5.9

$5.7

$4.7

$3.4

$2.3

$2.1

2002

2003

2004

2005

2006

2007

2008E

$ Billions

~$2.9B

$3.8B

Unprecedented Rise In Jet Fuel Prices Has Put

Severe Pressure on Financial Performance

Unprecedented Rise In Jet Fuel Prices Has Put

Severe Pressure on Financial Performance

+81%

Jet A

($/gal)

WTI Crude

Oil

($/barrel)

p. 5

Pre-Tax Margin

Twelve Months Ended June 30, 2008

Pre-Tax Margin

Twelve Months Ended June 30, 2008

Adjusted for Unrealized Hedge Gains

Pre-Tax Margin and Cash Flow Generation

Free Cash Flow/Total Revenue

Twelve Months Ended June 30, 2008

Free Cash Flow/Total Revenue

Twelve Months Ended June 30, 2008

Sources: Company press releases and Earnings Calls.

Pre-tax margin adjusted for fresh start accounting

Free Cash Flow defined as cash flows from operations less capital

expenditures, fuel hedge collateral received and purchase deposits paid.

1.3%

0.5%

(0.1)%

(1.2)%

(2.5)%

(0.8)%

NWA

CAL

DAL

LCC

UAUA

AMR

(8.2)%

(8.0)%

(5.0)%

(4.1)%

(2.6)%

0.5%

UAL

AMR

DAL

CAL

NWA

LCC

p. 6

Raising New Capital

•

Renegotiating the Chase contract, raises an additional $1B in

immediate cash

–

Includes reducing our credit card holdback and increasing prepaid

frequent flyer miles purchased by Chase

•

Recent financing activities raised $550M in cash

–

Combination of asset sales, secured aircraft financings and the

release of restricted cash

•

All together United’s actions increase cash by over $1.7B

•

Renegotiating the Chase contract, raises an additional $1B in

immediate cash

–

Includes reducing our credit card holdback and increasing prepaid

frequent flyer miles purchased by Chase

•

Recent financing activities raised $550M in cash

–

Combination of asset sales, secured aircraft financings and the

release of restricted cash

•

All together United’s actions increase cash by over $1.7B

p. 7

Over $3 Billion Of Unencumbered Hard Assets

Includes High Quality Collateral

Over $3 Billion Of Unencumbered Hard Assets

Includes High Quality Collateral

Spare Parts

18%

Other

Engines

10%

Aircraft

64%

p. 8

116

15.7

10.9

13.7

12.6

17.1

16.5

20.5

10.8

10.4

B777-200

TOTAL

A320-200

A319-100

Wide-Body

B747-400

B767-300

B757-200

B737-500

B737-300

Narrow-Body

Unencumbered

Average

Age

Unencumbered Aircraft Are Valued

At Over $2 Billion

Unencumbered Aircraft Are Valued

At Over $2 Billion

p. 9

Organization Is Focused On The Core Elements

That Drive Success Outcomes, Matter Most To

Employees, Customers, Shareholders

Organization Is Focused On The Core Elements

That Drive Success Outcomes, Matter Most To

Employees, Customers, Shareholders

•

Industry-leading margin

and cash flow

•

Unrivaled customer

satisfaction and experience

•

Aligned employees

•

World-class safety

performance

A respected,

industry-leading

airline that

customers value

and of which

employees are

proud

Core Performance Imperatives

Results

Success

Industry-leading revenues

Competitive costs

DOT service basics

Clean, workable product

Courteous, caring, respectful

p. 10

Leading Necessary Capacity Reductions

•

Reducing fourth quarter mainline domestic capacity by

15.5% to 16.5%

•

Permanently grounding 100 aircraft, including entire 737 fleet

•

Reducing fourth quarter mainline domestic capacity by

15.5% to 16.5%

•

Permanently grounding 100 aircraft, including entire 737 fleet

(13.0%) to (12.0%)

(11.5%) to (10.5%)

Consolidated System

(16.5%) to (15.5%)

(14.0%) to (13.0%)

Consolidated Domestic

(7.0%) to (6.0%)

(8.0%) to (7.0%)

International

(20.5%) to (19.5%)

(16.5%) to (15.5%)

Domestic

(15.0%) to (14.0%)

(12.5%) to (11.5%)

Mainline

Year

over

Year

2008

2009

Capacity

(ASMs)

(vs.

2007)

(vs.

2007)

p. 11

Leading Development of New Revenue Streams

•

Fee revenue expansion

–

Ticketing fees, change fees, and excess baggage fees increased

•

First/Second Bag Fee

–

United led 2 Bag Charge; All majors followed

–

On Monday announced an increase in 2 bag charge to $50

–

Represents $300M of additional revenue in 2009

•

Travel enhancement products

–

Seat up-sell expected to generate $270M in 2009

–

Award Accelerator

–

New products to generate $100M in 2009

•

Fee revenue expansion

–

Ticketing fees, change fees, and excess baggage fees increased

•

First/Second Bag Fee

–

United led 2 Bag Charge; All majors followed

–

On Monday announced an increase in 2 bag charge to $50

–

Represents $300M of additional revenue in 2009

•

Travel enhancement products

–

Seat up-sell expected to generate $270M in 2009

–

Award Accelerator

–

New products to generate $100M in 2009

More than $1B in Merchandising, Upsell

and Fee Revenue

expected in 2009; Incremental Revenue of $700M vs. 2007

p. 12

Aggressively Reducing Non-Fuel Costs

$500 Million in 2008

Operating Expense

Savings

Strategic Sourcing

Transformation

Distribution Cost

Reduction

Health & Benefits

Optimization

Continuous

Improvement

Since January, When We Forecasted Flat Capacity Growth, Non-Fuel

CASM Guidance has Remained Unchanged Despite 4% to 5% Capacity

Reduction

p. 13

Improving Fuel Efficiency

•

B737 fleet retirement

•

Engine Washing

•

Improved climb/descent

profiles

•

Flight Planning System

replacement

•

Winglets

•

Single engine taxi

•

Streamlining fuel

supply chain

•

B737 fleet retirement

•

Engine Washing

•

Improved climb/descent

profiles

•

Flight Planning System

replacement

•

Winglets

•

Single engine taxi

•

Streamlining fuel

supply chain

p. 14

Ramping Up Hedge Coverage

•

As of Sept 15th, United had hedged 51% of forecasted

Mainline fuel consumption for the second half of 2008

•

Using combination of three-way collars, collars, and other

structures, primarily on crude oil

•

As of Sept 15th, United had hedged 51% of forecasted

Mainline fuel consumption for the second half of 2008

•

Using combination of three-way collars, collars, and other

structures, primarily on crude oil

% of Forecasted Mainline

Fuel Consumption

Hedged

46%

3Q08

58%

4Q08

37%

1Q09

32%

17%

2Q09

2H09

p. 15

•

Increased Focus on

Performance and Execution

•

Adding Ground Time

•

Increasing by 7 minutes domestically

•

Adding Gate Rest Time

•

Increasing by 5 minutes at hubs

•

Increasing Spare Aircraft

•

Increasing from 2.5% to 5%

of scheduled fleet

•

New O’Hare Runway to

Open in November

Improving On-Time Performance

p. 16

Investing in Key Products And Services To Drive

Customer Satisfaction, Margin Improvement

Investing in Key Products And Services To Drive

Customer Satisfaction, Margin Improvement

•

2008 Capital Expenditure plan reduced by $200M from $650M to

$450M

•

Installing new United First Suite and full lie-flat seats in

Business Class

–

Customer surveys show that customer satisfaction has doubled

with the product

•

2008 Capital Expenditure plan reduced by $200M from $650M to

$450M

•

Installing new United First Suite and full lie-flat seats in

Business Class

–

Customer surveys show that customer satisfaction has doubled

with the product

New First

Suite

New Business Class

Seat

New O’Hare Red Carpet Club

p. 17

Further Strengthening The Operations Team

•

Putting in place experienced leaders with proven results, targeting

specific areas of the business

–

Named Joe Kolshak, SVP Operations

–

Jim Keenan, SVP United Services

–

Howard Attarian, VP Flights Operations

–

Tim

Canavan, VP -

Line Maintenance & Cabin Appearance

–

Donald Dillman

, VP Operations Control

•

Putting in place experienced leaders with proven results, targeting

specific areas of the business

–

Named Joe Kolshak, SVP Operations

–

Jim Keenan, SVP United Services

–

Howard Attarian, VP Flights Operations

–

Tim

Canavan, VP -

Line Maintenance & Cabin Appearance

–

Donald Dillman

, VP Operations Control

p. 18

Taking UA/CO Alliance Beyond a Traditional

Partnership

Taking UA/CO Alliance Beyond a Traditional

Partnership

•

Comprehensive Plan For Global Cooperation

–

Broad domestic and international bilateral code share along with

reciprocal frequent flyer and lounge programs

–

Continental joining the Star Alliance

–

Establishing a 4 carrier trans-Atlantic joint venture

–

Developing plans for cost savings and other synergies that are not

dependent on antitrust immunity

•

Comprehensive Plan For Global Cooperation

–

Broad domestic and international bilateral code share along with

reciprocal frequent flyer and lounge programs

–

Continental joining the Star Alliance

–

Establishing a 4 carrier trans-Atlantic joint venture

–

Developing plans for cost savings and other synergies that are not

dependent on antitrust immunity

p. 19

United Well Positioned For Success

•

Leading cash flow performance, and generating liquidity

•

Maintaining flexibility with unencumbered hard assets, CBAs

•

Developing new revenue streams

•

Reducing non fuel costs

•

Ramping up hedge coverage

•

Improving operational performance

•

Investing in key products and services

•

Strengthening the management team

•

Building comprehensive UA/CO partnership

•

Leading cash flow performance, and generating liquidity

•

Maintaining flexibility with unencumbered hard assets, CBAs

•

Developing new revenue streams

•

Reducing non fuel costs

•

Ramping up hedge coverage

•

Improving operational performance

•

Investing in key products and services

•

Strengthening the management team

•

Building comprehensive UA/CO partnership

p. 20

Q & A

p. 21

Non-GAAP To GAAP

Reconciliation

p. 22

Free Cash Flow Metrics Reconciliation

($ in Millions)

Cash Flow from Operations

611

Less: Capital Expenditures

(547)

Free Cash Flow

105

Total Revenue

20,639

FCF/Total Revenue

0.5%

Twelve Months

Ended 6/30/08

Less: Proceeds from litigation on advance deposits

Note:

$197

million

aircraft

refinancing

from

half

2007

excluded

from

Capital

Expenditures

both

periods

presented

above

2,134

(461)

1,673

20,143

8.3%

Twelve Months

Ended 12/31/07

p. 23

Pre-Tax Margin Reconciliation

Twelve Months

Ended 6/30/08

($ in Millions)

Consolidated Operating Revenue

20,639

Less: Specials

(45)

Consolidated Operating Revenue Ex Specials

20,594

Less: Fresh Start

Consolidated Operating Revenue Ex Specials & Fresh Start

20,626

Consolidated Income/(Loss) Pre-Tax

(2,834)

Less: Specials and One-time Gains

2,505

Pre-Tax Income/(Loss) Ex Specials

(329)

Less: Fresh Start

264

Consolidated

Income

Pre-Tax-

Fuel

Hedge

Gains,

Specials

Fresh

Start

(242)

Less: Fuel Hedge Gains

(177)

Pre-Tax Income/(Loss) Ex Specials & Fresh Start

(65)

Margin Ex Fuel Hedge Gains, Fresh Start & Specials

(1.2)%

United Airlines (UAL) 8-KRegulation FD Disclosure