EYE-ON-UA
April 26, 2004
Hi, it's Glenn. It's Monday, April 26th. I'm calling today from Los Angeles. I have just given a keynote at the Pow Wow convention here in Los Angeles. Pow Wow is an annual international conference focusing on travel to the United States organized by the Travel Industry Association of America.
This is the largest event in the U.S. for the travel and tourism industry, and there are more than 5,000 industry professionals attending from all around the world.
It's an amazing event for United and our customers. And I was delighted to have the opportunity to speak to the group about United and Star Alliance and our working together to strengthen partnerships across the industry.
It's important, I think, for us all to know that Star Alliance was the sponsoring organization for the conference.
We're going to take the speech and post it on SkyNet so everybody will have the opportunity to read the speech throughout the week.
The main purpose of this call, however, is to talk to you about a letter that I've sent to the Wall Street Journal in response to the editorial that they published earlier expressing their opposition to the ATSB loan guarantee for United.
Everyone on the call will remember that the Chicago Tribune wrote an editorial more than a week ago. It was very much in favor of the ATSB approving United's application for the loan guarantee.
So we now have two positions taken -- one by the Tribune and one by the Wall Street Journal written in a very different way and perhaps for many different reasons.
But as I said on the Leadership Call on Friday, we should expect that there are going to be more opinions expressed in the days ahead as we work toward the conclusion of our ATSB approval process. And there are going to be those in favor of the application, and there are going to be those who are opposed.
That said, I have sent the letter in response to the Wall Street Journal editorial. And in the event that it is edited by the Wall Street Journal when they receive it, I wanted to make sure that everybody on the call had the opportunity to hear the letter and then read it on SkyNet in its entirety.
"To the Editor:
Your editorial of last week regarding the Air Transportation Stabilization Board (ATSB) included factual inaccuracies concerning United Airlines which I would now like the opportunity to correct.
The Journal's opinion aside, the ATSB was established by Congress and given a specific mandate to provide loan guarantees to U.S. airlines that met strictly defined criteria -- a mandate that remains in full effect today.
United meets the legislative criteria. As America 's largest international carrier and second largest overall, we play a vital role in maintaining a safe and viable commercial air system, providing jobs and service to communities across the U.S.
When the ATSB deferred the approval of United's application in December 2002, it identified specific areas of concern. We have restructured our business and deleveraged the company's balance sheet significantly, reducing costs and improving revenue. In doing so, we have addressed each of the ATSB's concerns and many more.
We have stripped more than $5 billion in annual costs, including six-year labor agreements, reached consensually, that deliver $2.5 billion of those savings -- along with unprecedented operating flexibility that enables us to adapt quickly to new market challenges and opportunities. Our new labor agreements have reduced United's future pension obligations by well over $1 billion. We have shed over $5 billion of debt and lease obligations from our balance sheet. For each of the last nine months, United has substantially outpaced the industry in unit revenue growth.
Despite the impact of these significant changes on our employees, they are today focused on what we need to do to succeed and have responded with the best operating performance in United's history.
Contrary to your speculation, we will be able to repay these loans. The capital markets validated this when JPMorgan and Citigroup agreed to back $2 billion in exit financing for the company -- including a total of $400 million in non-guaranteed, at risk financing. This 20% non-guaranteed portion is greater than that included in any loan the ATSB has approved thus far. And, in the worst case, these loans will have collateral coverage worth two to three times the loan amount, which assures ultimate taxpayer recovery.
Our progress to date has been substantial. We have more to do and we are focused on continuing to methodically and systematically resolve remaining issues. We strongly believe United is a compelling candidate for an ATSB loan guarantee, and that our application will be evaluated on its merits and should be approved.
Sincerely,
Glenn F. Tilton"
I've written this letter on behalf of all of you and on behalf of all the work that we have done to satisfy the criteria that I mention in the letter.
And I hope you'll agree that we did our best work in writing the letter and it represents what you would have written individually if you had the opportunity to do so.
So take a moment. Read the letter. Reflect on the impression that it creates on the work that we have done. And until I can speak to you next time, stay United.
April 26, 2004
Hi, it's Glenn. It's Monday, April 26th. I'm calling today from Los Angeles. I have just given a keynote at the Pow Wow convention here in Los Angeles. Pow Wow is an annual international conference focusing on travel to the United States organized by the Travel Industry Association of America.
This is the largest event in the U.S. for the travel and tourism industry, and there are more than 5,000 industry professionals attending from all around the world.
It's an amazing event for United and our customers. And I was delighted to have the opportunity to speak to the group about United and Star Alliance and our working together to strengthen partnerships across the industry.
It's important, I think, for us all to know that Star Alliance was the sponsoring organization for the conference.
We're going to take the speech and post it on SkyNet so everybody will have the opportunity to read the speech throughout the week.
The main purpose of this call, however, is to talk to you about a letter that I've sent to the Wall Street Journal in response to the editorial that they published earlier expressing their opposition to the ATSB loan guarantee for United.
Everyone on the call will remember that the Chicago Tribune wrote an editorial more than a week ago. It was very much in favor of the ATSB approving United's application for the loan guarantee.
So we now have two positions taken -- one by the Tribune and one by the Wall Street Journal written in a very different way and perhaps for many different reasons.
But as I said on the Leadership Call on Friday, we should expect that there are going to be more opinions expressed in the days ahead as we work toward the conclusion of our ATSB approval process. And there are going to be those in favor of the application, and there are going to be those who are opposed.
That said, I have sent the letter in response to the Wall Street Journal editorial. And in the event that it is edited by the Wall Street Journal when they receive it, I wanted to make sure that everybody on the call had the opportunity to hear the letter and then read it on SkyNet in its entirety.
"To the Editor:
Your editorial of last week regarding the Air Transportation Stabilization Board (ATSB) included factual inaccuracies concerning United Airlines which I would now like the opportunity to correct.
The Journal's opinion aside, the ATSB was established by Congress and given a specific mandate to provide loan guarantees to U.S. airlines that met strictly defined criteria -- a mandate that remains in full effect today.
United meets the legislative criteria. As America 's largest international carrier and second largest overall, we play a vital role in maintaining a safe and viable commercial air system, providing jobs and service to communities across the U.S.
When the ATSB deferred the approval of United's application in December 2002, it identified specific areas of concern. We have restructured our business and deleveraged the company's balance sheet significantly, reducing costs and improving revenue. In doing so, we have addressed each of the ATSB's concerns and many more.
We have stripped more than $5 billion in annual costs, including six-year labor agreements, reached consensually, that deliver $2.5 billion of those savings -- along with unprecedented operating flexibility that enables us to adapt quickly to new market challenges and opportunities. Our new labor agreements have reduced United's future pension obligations by well over $1 billion. We have shed over $5 billion of debt and lease obligations from our balance sheet. For each of the last nine months, United has substantially outpaced the industry in unit revenue growth.
Despite the impact of these significant changes on our employees, they are today focused on what we need to do to succeed and have responded with the best operating performance in United's history.
Contrary to your speculation, we will be able to repay these loans. The capital markets validated this when JPMorgan and Citigroup agreed to back $2 billion in exit financing for the company -- including a total of $400 million in non-guaranteed, at risk financing. This 20% non-guaranteed portion is greater than that included in any loan the ATSB has approved thus far. And, in the worst case, these loans will have collateral coverage worth two to three times the loan amount, which assures ultimate taxpayer recovery.
Our progress to date has been substantial. We have more to do and we are focused on continuing to methodically and systematically resolve remaining issues. We strongly believe United is a compelling candidate for an ATSB loan guarantee, and that our application will be evaluated on its merits and should be approved.
Sincerely,
Glenn F. Tilton"
I've written this letter on behalf of all of you and on behalf of all the work that we have done to satisfy the criteria that I mention in the letter.
And I hope you'll agree that we did our best work in writing the letter and it represents what you would have written individually if you had the opportunity to do so.
So take a moment. Read the letter. Reflect on the impression that it creates on the work that we have done. And until I can speak to you next time, stay United.