March 9, 2006 – Improving the Customer Experience in Every Detail

Hi, it's Glenn, and it's Thursday the 9th of March.

Last week on the call, we heard from Suzanne Fletcher, the travel director for one of our major corporate customers, about what matters most to her and her company's frequent travelers.  On the call, Suzanne emphasized how important it is for us at United to get the basics right – at every point of contact with our customers, in every airport experience and on every flight.  She pointed out that it goes beyond getting customers where they need to go in the world – both safely and on time.  It is also about getting them there in comfortable, clean surroundings and providing the right service before, during and after their flights. 

Success is in the details – and it is in our ability to constantly improve everything we do to better meet our customers' expectations.  In that, we all have an important role to play – and it takes great attention and focus to find every opportunity to execute more effectively.  It also takes the right tools and the resources to ensure that we can fully capture these opportunities.

To talk to us on the call in more detail about this today are Larry De Shon, senior vice president of Airport Operations, and Bill Norman, senior vice president of United Services.  Both of these divisions are taking a rigorous look at United from the perspective of our customers – and making the changes and the investments that we need to succeed.

So with that, Larry, let me turn the call first over to you and then to Bill.

Larry De Shon

Thanks, Glenn.

In Airport Operations, we are focusing on finding the right balance among staffing, process improvements and technology to continuously improve the customer experience.  And once we get the balance right, the changes we're making should be sustainable over time with highly consistent delivery.

We're looking at every area – from bag-automation technology to more functional printers and improved EasyCheck-in reliability.  And for 2006, we have already earmarked more than $21 million dollars to be invested in new ground equipment. 

We know we have more work to do.  We expect to realize the benefits of Project Newton, our major technology overhaul, when it fully kicks in during the third quarter… but our customers can't wait.  So we're working closely with ISD to address the priority technology needs in our airports for printers, EasyCheck-in kiosks and other IT equipment to help improve the check-in process.

We're working to replace all of our gate and lobby printers with new printers that will have the capability to issue bag tags, as well as boarding passes and tickets. 

In the meantime, we're pulling current printers from curbsides, replacing them with a printer that meets the Skycaps' needs and using these extra machines for spare parts or temporary replacements at lobby and gate locations.

Our new vendor, EDS, is making EasyCheck-in reliability one of their highest priorities.  EDS came on board three weeks ago and immediately addressed a significant number of open problems.  The EDS team has already fixed more than half of these problems and is continuing to clear the remaining backlog they inherited.

This past weekend, we also conducted a full blitz to look at every piece of equipment that was out of service at O'Hare – one of the highest priorities given the hub's impact on the entire system.  By Sunday evening, more than 60 percent of the open issues were addressed. 

Our ISD and EDS teams will be implementing a comprehensive plan to address the backlog of open issues at all locations.  The plan will initially target hubs, but will touch all locations in the next few weeks.  There will also be more emphasis on proactive maintenance to prevent equipment breakdowns that can ultimately affect the service we deliver. 

Over to you, Bill.

Bill Norman

Thanks, Larry.

As we learned from one of our corporate customers during our last call, we should never underestimate the importance of a clean, well-functioning cabin.

Cabin audits have been one of our primary concerns, based on declining customer satisfaction ratings in the area of interior condition and cleanliness.  So, we formed a dedicated, cross-functional team to review the condition of United's cabins.  This team includes representatives from Marketing, Maintenance, Quality Assurance and the Appearance group.

We studied the problem from the point of view of our customers:  What exactly were their expectations when they walked onto the airplane for a flight?  The challenge was to translate their subjective expectations into an objective audit sheet that we could measure and check our own performance against.

Armed with a checklist of 28 different items, the team has audited over 3,600 seats (and a variety of lavatories, overhead bins and entertainment systems) against this newly developed standard.  And, we found that the results were relatively consistent from station to station.  

The team was rigorous in their analysis.  They kept adjusting and modifying our search for problems and solutions.  Some findings were pretty straight-forward.  For example, the condition and cleanliness of the suede panels, seat covers, personal video screens and snake lights in some cases were not up to par for our premium cabins.

We also had complaints about audio quality and the team was expecting to find that we would have to replace all of the audio jacks in the first-class suites.  However, the team discovered that 98 percent of our headphone jacks worked, yet about 15 percent of our headsets were defective.

Another example…the team initially thought that many of our tray tables had to be replaced.  Our audits, however, found that the arm cap coverings of the trays are defective, not actually the tables.

The work we have to do going forward has been identified, the cost analysis is being completed, and I am confident that we have the process in place to address the issues that are important to our customers.

Going forward, an independent group will continue to audit the cabins and provide feedback to the Aircraft Appearance and Maintenance teams so their programs can be adjusted to meet our customers' expectations… leaving every United customer with a lasting positive impression of their travel experience while flying with us.

Back to you, Glenn.

Glenn Tilton

Thanks, Bill, and thanks to you, also, Larry.  This is smart work that is already having an impact on our ability to serve customers, just as Suzanne suggested we should.

As I've said before, where we can get better and stronger, we must.  But there are no quick fixes – and no short cuts to success.  We simply have to continue to dig in to the issues – taking a rigorous look at how we meet the expectations of our customers.

We've made a very good start but there is still much more to do – and all of us at United have a very important role to play.

That's it for today on the call.  I'll be talking with you again soon.  Until then, stay focused on our customers, on one another and stay United.