Hi this is Glenn and it's Friday, March 26th. I'm calling today from San Francisco and I have asked Greg Hall, our Senior Vice President of Maintenance and Engineering, to join me. We've come to San Francisco to hold Board, officers' and weekly Executive Council meetings, and to meet with major customers, employees and airport executives.

One of the real highlights for our Board and our officers was having a chance to hear from Greg about the very positive changes that he and the employees in his organization -- his management team -- are making, to see the results of those changes in a tour of the Maintenance Center, and get to know some of the employees who are making it all happen.

The Maintenance and Engineering Division, which just recently re-branded itself as United Services, is focused on two things:

First, continue to provide excellent maintenance, repair and overhaul service to their most important and valuable customer, and that's us -- United Airlines; and

Second, to exploit the market opportunity for this kind of quality work and to build a broader base for external customers, generating additional revenue for our company.

The changes they are driving at United Services are geared toward doing this more efficiently and more cost-effectively while actually improving the workplace environment for employees and delivering better service to United and to their new customers.

And it's producing impressive results, I think, because it's a joint effort embraced by management and employees, and very importantly, by union leadership. It's very clear to me that AMFA union leadership shares with us an understanding of the realities of the increasingly competitive marketplace and what it is going to take to compete and be a more sustainable business in that marketplace. This is very encouraging, and it's helping bring back some of our employees to the workplace.

Greg, without my going any further, over to you about the efficiency measures you've been implementing and United Services' focus on building your business.

Greg:

Thanks, Glenn. As you said, United Services is implementing dramatic change. We're reducing operational costs and becoming more efficient to provide better service to two audiences:

First and foremost, our most important customer, United Airlines, by ensuring quicker turnaround and better quality for United means better on-time performance and more satisfied airline passengers.

Second, our external customers -- by becoming more efficient and cost-competitive, it will enable us to free up resources to build our external customer base for airline maintenance, repair, and overhaul services, which we call MRO.

The external opportunity for us is huge: the airline MRO industry is a 35 billion dollar industry. Last year alone, United Services earned 200 million dollars in revenue for United. By expanding our presence and actively competing in this business we have a chance to earn our fair share and enhance United's bottom line.

While there are more MRO providers in the marketplace than ever before, very few are as well positioned as we are to compete. We are recognized today by more than 150 customers around the world for our capabilities and attention to craftsmanship -- the reason we just re-branded our division is just this.

But, the reality is -- as with everything at United -- to be leaders, we need to know that we have to get better. That's why over the last nine months we have introduced improvements in process, productivity, cost efficiency, while retaining our focus on quality and safety.

First, we decided to concentrate on those areas where we have a distinct competitive advantage and can generate the most revenue: aircraft engines and landing gear, high-tech components, avionics, and our global line maintenance network.

This meant making hard decisions, such as exiting and outsourcing areas where we cannot compete economically. This has freed up our people to focus on our core areas and we have been retraining employees so that they can do so.

Now, Glenn, as you mentioned earlier, by listening to the ideas of our employees, and involving them in the planning, implementation and execution of our business plan, we have launched 'Lean,' a continuous improvement system that eliminates waste and redundancy, standardizes our processes, and lowers our costs. We have been driving improvements in rework, inventory levels and floor-space utilization. A good example of our progress with Lean is in our Landing Gear shop.

In the shop, we are co-locating nearly all machines and operations in as close to sequential order as possible so that the repair process works more smoothly and quickly. This reduces the distances between shops, which is improving the transportation time and lowering our materials costs significantly.

We're also ensuring that everything an employee needs to perform a job with is delivered to its point of use, so there's no searching for parts or tools in the middle of a job.

Across the maintenance base, we have cleared 80,000 square feet of wasted space and surplussed over 250 pieces of equipment. We have brought the functional experts together to identify breakthrough process changes, which will help us achieve a greater than 50 percent reduction in cycle time.

These modifications are being implemented across our organization and are improving our quality and job times, making us more efficient and cost-competitive.

The changes will give us new capacity, which enables us to serve more external commercial carriers for their maintenance and repair needs. They will help us give customers exactly and consistently what we ourselves insist on when choosing an outside vendor for United. And, newly won engine business is enabling us to bring back furloughed technicians.

What's truly exciting about this improvement system is that it can apply to all areas of the company, not just United Services.

We have also realigned our management organization structure to ensure it supports the objectives of the business plan, the process changes I've described, and sets it us up for success in the future.

In closing, I'd like to underscore again that there has been a real and positive joint employee, management and union effort to drive these initiatives. Success impacts overall improvement for United's business plan and the company's Success Sharing goals.

As we improve efficiency, productivity and cycle time in the shop and on the line, we turn planes around faster and ensure their interior and exterior condition are good. This helps us drive our on-time performance and our definite intent to repurchase ratings. And we will bring in more external work, which means a higher contribution to the operating earnings. Glenn, over to you.

Glenn:

Thanks very much for sharing the call with me, Greg, and thanks also to your team for your efforts. The Board of Directors and the officers of the company were most impressed with the Maintenance Center, and they had the opportunity to gain a clear, and a hands-on understanding of what you have been sharing with everybody on the call today.

The changes at United Services provide all of us with a good example of continuous improvement, and how to take continuous improvement in efficiency and cost consciousness and make it a way of life here at United. You and your team are doing it in a way that enhances the customer experience for United passengers, gives United employees the structure, the respect and the tools that they need to perform better and positions all of us, really through your example, for success as we go forward.

So, as we close, I want to thank you again and I also want to thank everyone in the company who worked so very hard to make this week's events in San Francisco a huge success. I look forward to our next call, and until then, for all of you on the call, keep up the good work, stay focused and stay United.