Glenn Tilton and Executive Vice President Pete McDonald spoke on today's EYE-ON-UA call about the importance of the company's focus on continuous improvement and cost competitiveness. They jointly announced that McDonald will hold primary responsibility for cost management to help streamline the implementation of cost-efficiency initiatives across the company. The company also announced that Strategic Sourcing Senior Vice President Rick Poulton will oversee the company's business transformation efforts. With these changes, the Business Transformation Office moves from the Finance organization to Operations. The move is a natural fit, because both Strategic Sourcing and business transformation are focused on achieving efficiencies in cost and process. The text of the EYE-ON-UA call follows.

Hi, this is Glenn, and it's Wednesday, the 3rd of March, and I'm calling from headquarters.

Today, I've asked Pete McDonald to join me to talk to all of you more about our focus on continuous improvement and cost competitiveness of the company. We are announcing today that we are centralizing responsibility for cost management for the entire company under Pete and his leadership team.

I think that this makes sense not just because the majority of our costs are in operations, but also because it will help streamline the implementation of cost-efficiency initiatives and it will establish clearer lines of accountability.

As we have seen in the company's financial results for 2003, this company has made great progress. But we must be able to compete in a marketplace that continues to change dramatically every day. Cost is clearly one critical issue in our ability to do so -- as it is with every one of our competitors today. In fact, at a JPMorgan conference yesterday, where the company presented, costs were a prominent part of every single airline presentation.

Our labor costs have become more competitive, but there is still significant opportunity for us to become more productive, more cost efficient and more cost competitive in everything that we do. This will involve all of us finding more efficient ways to do our work.

As we do so, we're going to drive costs down, which is critical to enable us to continue making necessary investments in our product so that our customers and other customers will continue to choose to fly United. Pete, over to you.

Pete:

Thanks, Glenn. I want to start with something Glenn and I feel strongly about: in 2003, United employees delivered the best on-time and customer service performance while maintaining the highest safety standards. This was a real accomplishment.

But operational excellence is not just about safety and performance metrics. It's also very much about constantly finding ways to become more efficient -- in costs and process. Just as we've led network carriers for two years straight in on-time performance, we want to lead in efficiency.

We made a great start in 2003, achieving 500 million dollars in savings through initiatives tracked by the Business Transformation Office (BTO) that many of you helped implement.

We are going to have to build on that to get out ahead of the competition. Even low-cost carriers are finding ways to become more efficient and shave costs while adding amenities.

I want to be clear about where we are going to look for cost and efficiency opportunities. We are not targeting compensation and we are not going to cut into the customer experience.

What we will do is identify areas where we can introduce more efficient processes that boost productivity. We're also going to eliminate redundant and wasteful cost. And we are going to make smart choices about how we spend, whether it goes toward running the operation or improving the customer experience. Every dollar counts.

As we drive down our unit costs, we'll give ourselves a greater ability to continue making sensible, targeted investments in our customers, so that we retain the ones we have and get others off our competitors' planes and into ours.

At a high level, our effort is about making efficiency and cost improvement a way of life at United, not a temporary response to a financial crisis. From an organizational perspective, then, it makes complete sense to embed this responsibility in the business.

In that spirit, as the BTO moves from finance into operations, and more specifically Strategic Sourcing, it will become more deeply intertwined within the operations of the company. These efforts will go beyond the plan, becoming a continuous strategy of cost efficiency and improvement.

I want to make this as understandable as possible through an example.

The Maintenance and Engineering Division is in the process of completely overhauling the way we repair landing gear. They are introducing new shop floor processes under a continuous improvement system called LEAN. When LEAN is fully implemented, they will have reduced landing gear repair time by 50 percent, while improving the quality at the same time. This will allow United Services to take on more customers, increasing revenue and enhancing United's bottom line.

Initiatives like this not only make processes more efficient and less costly, they increase our ability to channel resources toward our customers. Directly or indirectly, this makes us a better, more successful airline.

While the company's leadership team and I will take the responsibility for driving cost improvements, each of us has a role to play every day by thinking about how we can be more efficient in our jobs without weakening our service.

We can all discuss new, potentially better approaches to our work with supervisors or managers. We all can submit well-thought-out improvement ideas through the Idea Center. We all can play an active role in making sure cost control and efficiency is a focus every day. Glenn?

Glenn:

Thank you, Pete. I'd like to underscore just a couple of things as we close. We have begun to do much better, more rigorous work at United, and that has enabled us to create a solid foundation from which to compete in the future. But now we want to turn our attention to leadership, and because of that, there's more work to do.

Everything that Pete and I have talked about today centers on one thing: continuous improvement. Continuous improvement in everything that we do is the key to becoming a leader in this industry.

If we are all focused every day in all of our jobs, we will become more efficient and we will have the right cost structure that allows us to make investments in our customers and to be a resilient competitor going forward.

The concept, the attitude of continuous improvement, has got to define the company as we go forward. In everything that we do, including the most important thing that we do every day, and that's keep our customers and ourselves safe. This is the way we are going to create long-term competitiveness for United. This is the way we're going to sustain this company going forward. In closing, thanks for all of your individual hard work, thanks for the start you've given this initiative, please keep it up, and I'll look forward to our next opportunity to talk.