Hi, this is Glenn and I’m calling from Chicago, and it's Friday, April 8.

I have often said on these calls that the work that we are doing to change the way that we do business, to improve performance and customer service and to contain our costs must continue. That to remain competitive we have to always remain focused on our cost-competitiveness.

This is especially true in our efforts to reduce costs throughout the company.

Our focus on reducing non-labor costs has necessarily intensified as the market conditions have become ever more challenging over the last two years.

For example, right now fuel prices are a real challenge to the business plan. They reached an all-time high of more than $58 per barrel earlier this week. Last week, jet fuel price on the Mercantile Exchange was $1.64 a gallon. Every penny the price of fuel climbs costs us $22 million against the plan.

Regardless of whether fuel is a temporary issue or a permanent one, we are actively engaged in improving results across the company – especially in the important areas of revenue, capacity modification and cost reduction.

Put simply, we are taking action now and not waiting to find out if this is a temporary or a permanent challenge.

We are continuing corporate overhead cost reduction as we have always said we would. We are looking at absolutely everything.

We have formed a new team to lead this effort. The team consists of Judy Bishop, Scott Dolan, Barry French, Rick Poulton and Dave Wing. And they are the leaders of the team who represent a terrific combination of proven experience -- both within and outside of United. They come to United from companies known for efficiency, and internally, they bring a wealth of knowledge including field and international experience.

Scott Dolan is our senior vice president at United and president of our Cargo Division, who joined us last year from Atlas Air and previously worked at GE. Dave Wing is our new controller from ATA and Barry French is the new vice president of Corporate Communications, who has joined the company from Dell, a company renowned for cost management.

These three, along with Judy, our vice president of Worldwide Reservations, Sales and Service, and Rick Poulton, our senior vice president of Strategic Sourcing, will be assessing opportunities like shared services and outsourcing of non-core work, improving process and improving efficiency, eliminating redundancy. They will be reviewing our domestic and international operations, and they are accountable to reduce overhead and expense wherever possible.

Today I’ve asked Pete to join me on the call to bring everyone up to speed on what we have accomplished so far in non-labor cost reductions and to discuss the other ongoing initiatives that we are engaged in across the company today. As Pete will tell you, there are going to be -- in fact there are -- no sacred cows in this process as we look at absolutely everything to re-engineer our overhead spending practice across the company. So Pete, over to you on the matter of "no sacred cows."

Pete:

Thanks, Glenn. As one of the Executive Council sponsors of this team, I’m encouraged by the discipline they will bring to the effort.

I’m also pleased to tell everyone on the call that United is on track to beat our first quarter goal of 8.13 cents for Mainline Cost Per Available Seat Mile - excluding fuel, and we expect to beat that goal by a significant margin.

In every area of the company, with the exception of fuel, we are ahead of plan on expenses, which means that you are executing very well against our cost reduction targets.

Those targets include both labor-related and non-labor cost reduction, and today I would like to focus on our progress in reducing non-labor costs.

Managing our fleet is a major factor in reducing costs.

We have simplified our fleet from 10 aircraft types to five, and we are benefiting from the efficiencies of that work.

As we have told you before, we are reducing our fleet size from 565 aircraft to 455 aircraft.

Although we still have work to do, we are significantly reducing our aircraft ownership costs through the 1110 process.

We are also currently engaged in pursuing more savings on the non-labor front with our Business Improvement Initiatives.

With these initiatives, we are reviewing everything we do as a company and eliminating every single dollar we can across the business, chipping away at all our non-labor expenses to make sure United is as efficient and cost effective as it can be.

Let me give you just a few examples.

In the cost of selling our product:

For United ticket sales on Orbitz, we have installed technology that allows us to bypass existing global distribution systems (GDS) and the fees that they charge to book those sales directly on our internal reservation system. This reduces distribution costs by $9 million annually.

We’ve also reviewed sales commissions, country by country around the world, and expect to save $17 million this year and $50 million annually by the end of 2007.

By 2007, we expect to save $100 million annually because of cost reductions in GDS fees and commissions.

We are continuing to push down fuel consumption:

Every pilot and dispatcher has now been trained in fuel efficiency techniques. We’ve reduced contingency fuel on our aircraft by 15 percent, and through February, on a year-over-year basis, we have saved $1.9 million. This program is expected to save us $10 million this year.

This is only one piece of our overall fuel consumption strategy, which includes APU run-time reduction, which is expected to save us $50 million annually by the end of next year.

We've also made great progress in reducing costs of our United Express service that is so essential in feeding passengers to our mainline:

We've put United Express (UAX) ground handling out for competitive bidding, which will save $25 million.

The RFP on Air Wisconsin UAX flying is expected to save $30 million.

All of this is great work, but the cost of fuel continues to challenge our recovery -- and the competition is making significant progress to reduce costs, as Continental, Delta and Northwest have announced.

And so, we have to do more. And we are doing more:

We have initiated a project called Resource Optimization. United’s flight schedule is currently built to maximize revenue through very tight planning of ground time, block time, and other criteria.

With this project, we expect that by de-peaking some scheduling and shifting our focus to optimizing our resources and minimizing costs -- along with maximizing revenue -- we can improve our margins.

We'll keep you posted on our progress. Glenn?

Glenn:

Thank you, Pete.

As I said on my last call, I was on the West Coast for two days earlier this week and delivered a speech to the Asia Society in San Francisco, talking about significant opportunities in Asia. As I also said, we have put a transcript of the speech onto SkyNet so you that you can read the entire thing.

I also took the time while I was in the San Francisco and LAX areas to meet with customers and employees, including an employee meeting at the airport in LAX.

I was impressed by how many of our employees are working harder than ever, with a very positive attitude and a commitment to help the company succeed. I told them something that I want all of you to take away from this call today: We are working to put the right tools in your hands so that you can work smarter every day.

In fact, many of you have already helped us identify and eliminate costs. And many of you have been involved in the process of changing the way we do our work. However, we still have much more to do.

That is a difficult part of any transformation, and Pete and I both want to thank you for your commitment to this work – it's as critical as anything that all of us do together.

Remember that we are not the only airline cutting costs. Our competitors are cutting costs, too, and it really is a race to be the most competitive. We cannot let up and we can't look back.

This work has to continue every day, now and into the future at United. Containing and reducing costs and improving revenue is going to be a part of who we are as a company.

That’s all for now. Until next time, stay United.