Goldman Sachs Global Industrials Conference - Presentation

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Goldman Sachs Global Industrials Conference - Presentation

  1. 1. United Air Lines Inc. Goldman Sachs Goldman Sachs Global Industrials Conference 2007 Global Industrials Conference 2007 November 2007 November 2007
  2. 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, 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 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 is available on the company’s website at www.united.com/ir. 2
  3. 3. Our Progress Is Reflected In Unit Earnings Mainline Unit Earnings excluding Fuel Costs (RASM minus CASM ex Fuel) Twelve Months Ended 9/30/2007 ¢/ASM 4.45 4.24 4.17 4.13 4.10 3.91 3.32 4.43 4.23 3.94 NWA DAL UAUA AMR LCC CAL LUV TME 3Q07 B/(W) 19.4% 28.4% 13.0% 8.7% 12.8% 6.6% 4.3% than TME 3Q06 UAUA Fresh Start Adjusted OA Fresh Start Adjusted UAUA Unadjusted OA Unadjusted Sources: Company press releases. All results also exclude special items, regional affiliates and any applicable non-cash fresh-start and exit-related impacts. YOY results reflect Fresh-Start adjustments, where applicable. 3
  4. 4. Free Cash Flow Metrics Are Not Obscured By Exit Accounting And Are Better Than Peers Twelve Months Ended 9/30/2007 Free Cash Flow/Consolidated ASMs Free Cash Flow/Total Revenue $/1,000 ASMs 8.9% 8.9% $11.08 $11.08 6.8% 6.8% $8.43 $8.43 6.4% $7.96 6.4% $7.96 5.8% 5.8% $5.70 $5.70 $1.86 $1.86 1.2% 1.2% $0.30 $0.30 0.2% UAUA CAL AMR LUV LCC DAL UAUA CAL AMR LUV LCC DAL UAUA CAL AMR LUV LCC DAL UAUA CAL AMR LUV LCC DAL Sources: Company press releases. FCF or Free Cash Flow defined as cash flows from operations less capital expenditures. UAUA revenue includes fresh start revenue adjustment. 4
  5. 5. Going Forward, We Will Continue to Focus on Generating Value for All Our Stakeholders Limited fixed obligations enables strong free cash flow – Limited debt maturities; approximately $700M in 2008 – No material defined benefit pension funding – No planned capital expenditure for new aircraft Non-aircraft capex of $550MM in 2007 and $650M in 2008 focused on customer, infrastructure and IT needs Continuing to focus on strengthening balance sheet using excess cash to pay down debt Considering using portion of excess cash for shareholder friendly initiatives Continued capacity discipline – Expect mainline capacity domestic capacity down 3.0% - 4.0%; consolidated capacity flat to up 1 percent 5
  6. 6. Our Strategic Plan Is A 5-Year Roadmap To Create Value For All Stakeholders We will be the global airline of choice for premium customers, employees • Strengthen the core airline and investors – Consistently delivering superior service – Delivering differentiated products and services Investors Customers – Building employees’ connection and 5 Year commitment to United Plan – Developing new sources of revenue and Employees controlling costs • Unlock economic value of business units • Participate in consolidation Safety Safety given the right opportunity Balancing the needs of all stakeholders and strengthening the core business 6
  7. 7. Non-GAAP To GAAP Reconciliation
  8. 8. Non-GAAP To GAAP Reconciliations The Company believes that the reported non-GAAP financial results provide management and investors a better perspective of the Company’s core business and on-going financial performance and trends by excluding special items, severance, fresh-start items and fuel for comparative purposes. 8
  9. 9. Mainline Unit Earnings Mainline Unit Earnings Excl. Fuel & Special Twelve months ending September 30, % ($ and ASMs in Millions; Rates in cents) 2007 2006 Change $ 242 $ 1,124 Total operating earnings 128 (4) Less: Regional Affiliates Mainline operating earnings 996 $ 246 $ Fuel 4,710 4,851 (10) (9) UAFC (8) (87) Special items (a) Mainline operating earnings excl. fuel & special $ 5,609 $ 5,080 Available seat miles (ASM) 142,256 142,572 10.7% 3.94 3.56 Mainline Unit Earnings excl. fuel & special Mainline Unit Earnings Excl. Fuel, Special & Fresh-start $5,080 Mainline operating earnings excl. fuel & special $ 5,609 332 174 Adjusted for Fresh Start $ 5,254 $ 5,941 Adjusted mainline earnings 142,572 142,256 Adjusted available seat miles (ASM) 13.0% 4.17 3.69 Adjusted Mainline Unit Earnings (a) For TME 9/30/07, special items excludes the impact of $50 million in gains related to Airport Municipal bonds and other bankruptcy-related items. TME 9/30/06 adjusted CASM also excludes a $22 million charge for severance and a $30 million gain related to SFO Airport Municipal Bonds. 9
  10. 10. Free Cash Flow Metrics Twelve Months Ended, September 2007 ($ and ASM in millions) Cash Flow from Operations $ 2,295 Less: Capital Expenditures 538 Free Cash Flow $ 1,757 Total Revenue $19,699 Consolidated ASM 158,531 FCF / Total Revenue 8.9% FCF / 1,000 ASM 11.08 10

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