Hi it's Glenn, and it's Tuesday, September 13.

On these calls, we have talked about some of the work that's being done at United to improve our operations by changing the way that we approach our business and we do our business – specifically through the FIT and the LEAN programs.

Just as we continue to improve our operations, we are also improving every aspect of the company.

In the incredibly competitive industry environment that we face, United must maximize revenue on each of our flights. Good revenue management is critical to our success at the company.

Our financial results for July confirmed the solid progress that we're making in revenue improvement. Revenue for the month increased 9 percent year-over-year, strongly outpacing the industry average.

Today on the call, I'm pleased to welcome Dennis Corrigan. Dennis is our managing director of U.S. domestic revenue management, and he's with us today to give us some insight on pricing and yield management as we work to further improve our competitive revenue position.

So Dennis over to you…

Dennis:

Thanks, Glenn.

As you just said, our mission in revenue management is to maximize revenue on each and every single United flight.

And it's a complex balancing act.

First, we have to make sure that United's pricing is competitive in over 80,000 origin destination markets around the globe, and this includes places we serve directly – for example Chicago to Beijing – but also destinations we serve indirectly through our Star Alliance partners – such as Chicago to Okinawa.

And competitive pricing is very complex and fast-paced. Our challenge is to take pricing actions that are good for United, and that also respond to other carriers' actions in a way that maximizes United's market share and revenue. But at the end of the day we have to continue to provide our customers with products they want at prices they're willing to pay.

One question we always get is, “Why don't you just raise fares across the system by, say, $5.” And that sounds pretty simple, but the truth is - it's not that easy. The market for air travel is so brutally competitive – especially with the price transparency that the Internet gives customers – that being uncompetitive on a few fares in a handful of markets for just a couple of days can cost United millions of dollars over the long term.

The good news is that United and a number of our competitors have initiated fare increases throughout the year in response to the rising cost of fuel, and we've seen strong growth in average fares. The bad news is that these fare increases only offset a small portion of the increased cost of fuel.

Besides having the right set of prices in each market, there's a lot of revenue to be gained by balancing the number of low-yield and high-yield seats on each flight. Low-yield leisure passengers typically book early, so getting the maximum revenue on high demand flights requires that we take a risk. In many cases, we place some limits on the number of lower fare tickets available for certain flights, essentially betting that we'll be able to fill the remaining seats with higher yielding passengers who book closer to time of departure.

Here's an example. Say we have only one seat left on a flight from San Francisco to Las Vegas leaving in two weeks. Should we sell the last seat to a local San Francisco to Las Vegas passenger now for $200, or take a chance that we'll be able to sell it later to a business passenger flying from Beijing to a convention in Las Vegas via San Francisco, who will buy a business class ticket for $4,000. The answer depends on how accurately we can forecast future bookings.

To optimally balance risk with revenue maximization, we use a highly-sophisticated yield management system, called Orion. Orion forecasts demand for each flight in the system by price point and point-of-sale and then allocates seats to the best mix of high- and low-yield passengers – there by maximizing revenue.

But industry-leading technology and research and development are critical to achieving our goals. But in the end they're simply tools for our highly-trained staff of employees who leverage the power of the systems to make the best decisions for United.

Here's another example of our yield-management work that everyone in the field is familiar with – and that's overbooking. As we work to get the best mix of high-yield and low-yield passengers on every flight, we have to hit the right balance between filling every seat without causing a passenger to be denied boarding.

Once an airplane leaves, we lose the opportunity to ever sell those seats and generate revenue. Unfortunately, we know historically that a certain percentage of passengers holding reservations do not show up for their flights. And we take this into account when determining the overbooking level of the flight; that is – how many tickets would we need to sell if we wanted that flight to go out 100 percent full.

When we've gone back and analyzed the impact of overbooking, we've seen that, in fact, a very small percentage of our flights take denied boardings, but we're able to generate hundreds of millions of dollars for United – net of the cost of denied boardings – with the process we go through to maximize revenue. On the other hand, we know denied boardings can be difficult for frontline employees and most importantly for our customers.

So over the past year, we've been working on a company-wide project to further reduce the number of denied boardings, the impact on customers and ultimately the cost to United. And while this work is ongoing, we're already seeing the results. For the first half of 2005, United leads the major network carriers in fewest denied boardings.

So, how well is the Revenue Management process working? Overall our revenue results have been very good this year. We've been beating our revenue plan consistently and in the second quarter our unit revenue was 4 percent better than the rest of the industry. As Glenn told you earlier, our revenue for July is very competitive with the leaders among network carriers.

We're seeing solid revenue improvement from our reallocation of capacity to international markets, and domestically, demand continued to be very strong, resulting in record-high load factors. This enables us to more tightly control the availability of the lowest fares, and we're seeing passengers “buying up” to higher fares.

But while we've had a lot of revenue success, there's clearly more to do and work is underway across the Customer Division to further increase United's revenue.

Over to you Glenn.

Glenn:

Thanks very much, Dennis.

As everyone on the call knows, the hard work that we've put into restructuring at United has earned us the opportunity to compete with the leading network carriers. We have made steady progress in every measure that's important to us – including as Dennis has shared with us – unit revenue – to move now into direct competition with worthy competitors, such as American and Continental.

Our goal today is to work together as one company to become the leading network carrier in the United States, giving our customers, as Dennis has said, what they want – the best travel products and services – at prices that they are willing to pay.

That's all for now. I'll be talking to you again soon. Until then, stay focused on our customers and on one another…and stay united.