Hello, this is Jane Allen with an update for Friday, November 12.

I wanted to talk with you today about the company's recent announcements … about its need for significant additional savings by mid-January, about how this affects us all, and what it means for United's future.

We all share the same goal - United must exit Chapter 11 as a competitive, profitable company that will be sustainable for the long-term and that provides competitive pay and benefits to our employees. To do this in these challenging times, we must address both short- and long-term change, and we must continue to make difficult decisions.

Because of market conditions and a shift in the value customers place on airline travel, we must do even more than we have already done to restructure successfully. With fares at 12-year lows, oil at record highs and no pricing power, we must move quickly to address the cash requirements created by our situation.

United's financial situation is urgent. The industry's financial reality is stark. So we have no choice but to focus immediately on additional cost savings - including savings through the Section 1113 process. We must move quickly, so that we can create a financeable business plan to exit Chapter 11.

Specifically, throughout the company, we need to achieve additional average annual savings of $2 billion. Roughly one-third will come from pension termination and replacement; one-third from employee wages, benefits and productivity improvements; and one-third from non-labor initiatives.

The necessary labor savings from unionized and non-unionized employees total $725 million. To ensure that changes are fair and equitable for all groups of employees, the company is requiring each group to provide their relative share of the necessary labor cost savings. Accordingly, cost savings have been allocated based on each group's labor costs as a percentage of the company's total 2004 labor costs.

For example, if a specific group's labor costs represent 20% of United's total 2004 labor costs, their cost savings allocation would be 20% of the $725 million in necessary labor savings. AFA's labor costs represent 19% of United's total 2004 labor costs, so its total cost savings allocation will be 19% of the $725 million in necessary labor savings. That equals $138 million.

Using the same methodology, ALPA's costs savings target is 26.4 percent, which is $191 million of the total necessary labor savings. IAM's target is 24.8 percent, which is $180 million of the total. AMFA's target is 14 percent of the total which is $101 million. Savings from PAFCA is $3 million, and TWU 's are $242,000, which represents less than one percent of the total. In addition, cost savings are being allocated to salaried and management employees using the same methodology. SAM's allocation is 15.4% of the savings, or $112 million.

In order to ensure adequate cash levels, we must begin realizing the labor cost savings we need by mid-January 2005.

At the end of last week, we gave the leadership of AFA a proposal, or term sheet. What does that mean? It means that United made specific proposals to the union, including suggested modifications to wages, benefits and work rules - possible ways for AFA to achieve the necessary cost savings, totaling $138 million, through a combination of changes.

We also are open to other cost-cutting labor agreement proposals that the unions, including AFA, might want us to consider. And we told each union that we were open to such alternative proposals.

In addition, United asked all our unions for the right to terminate and replace our defined benefit pension plans.

How each group achieves the allocated savings will be determined through the upcoming negotiations, and our goal is to reach consensual agreements quickly with each group. Regarding salaried and management employees, senior management will decide how SAM employees achieve their savings allocation. We are firmly committed to ensuring that any changes are necessary, fair and equitable, achieving a balance of reductions and incentives for all employees.

An important point for you to keep in mind is that managers and supervisors cannot engage in discussions regarding specific proposals in the term sheets. Those proposals are the subject of negotiations, so any questions or comments that you, as a represented employee, have about the proposals should be directed to the AFA.

One last point, each member of United's Executive Council - composed of Glenn Tilton and his seven direct reports - is taking a 15-percent salary reduction, effective January 1, 2005. As proposed for all groups, part of this salary reduction will be restored on exit from bankruptcy. In addition, if pensions are terminated and replaced, executives and officers will be treated the same as all other salaried and management employees.

We appreciate the contributions that you have made over the past 23 months to put this company on a far more competitive footing. While we regret taking this step, it is necessary for United to successfully exit Chapter 11.

As we proceed through these very difficult times, I urge you to be patient, avoid speculation, stay informed, and let the process work. Thank you for your continued hard work and take care of each other. I'll talk with you next week.