Generational Shifts Socio-Economic– Geo Political – Technology – People/ Resources

March 2013

J.J. DeGiovanni

Socio-Economic

Mobility of the world

Merger

Supply

Geo Political

Open Skies

Fuel

Technology

Information

Aircraft

People/ Resources

Skills

Mindset shift

2

Generational Shifts

Incremental and Transformational Change

What We Do

3

Ground Processing Concerns & Actions

B777 506K lbs. – Fully Loaded

54 Vehicle Movements

207K lbs. of Fuel

348 Passengers

120K lbs. of Cargo

60 Minute Turn

Issues

Injury

Damage (Declared/Discovered)

Mechanical

Foreign Object Damage (FOD)

Actions

Line Operations Safety Assessment (LOSA)

Supplier

FOD Programs

FAA Aviation Safety Action Program (ASAP)

Training

4

Airline Industry Strategy Analysis

Entrants

• Open Skies

• Foreign

Suppliers

• Lower cost

• Expanding services

• Express Providers

• Fuel/New Aircraft

Substitutes

• High Speed rail

• Private Jets share

• Ground transport

Customers

• Emerging Markets

• Low touch

• Economy Driven

• Convenience

Industry

• Consolidation/Alliances

• Labor/Skill/Shifting

• Mega Carrier

• Automation

5

Airline Dynamics

Positive Positive

?

Positive

Low impact

Airline Environment

6

Past Present Future Labor Intensive

• Process

• Paper

Automated

• Minimal touch

Technology improvements

• Enabling/Integration

Rules Based Pay as you go

Global Competition

Wireless communications

Protected Market Open Skies

Force multipliers

• Knowledge/Decisions

Divisional Autonomy Consolidation Common Cultures

Restructured Business Principle Based

Mergers

Organizational Alignment

Safety Mindset

Structure

Consolidation

Best Practice

Drop & Adopt

Aligning Values

7

United 1933

The New

“United”

November 30,

2010 Continental 1934

Distraction Management Focus

Go Forward Plan - 2013

Alignment (85K+ People)

Focus-Purpose

Performance Based-Profit Sharing/Incentive

Accountability

Teamwork

8

Quality/Safety Impacts all 4 Objectives

People Generational Differences

Traditional Boomer Gen - X Gen - Y

Birth dates 1900-1946 1946-1964 1965-1985 1981-1997

Description G.I generation Me generation Latchkey

generation

Digital

generation

Major events Experienced

WWII

Atomic age

Modern

Gov Trust?

End of cold war

Gulf war

Internet

Personality

Traits

Command &

control

Self sacrifice

Optimistic

Success

Company for

life

Independent

Skeptical

Hopeful

Determined

Opportunistic

Likes Respects

Authority

Family

Responsibility

Can-do

Society

Freedom

Work-life-

balance

Public

activism

Latest tech

E-Engaged

Dislikes Waste

Tech-cautious

Laziness Red tape

Hype

Anything slow

Negativity

Safety Self based/why Make Sense Reason based Understand

9

Traditionalist

Strengths

• Get it done

• Objective

• Knowledge

Gen X

Strengths

• Fresh perspective

• IT Savvy

• Inquisitive

Gen Y

Strengths

• Accomplishments/Speed

• Society/time

• E engaged

• Virtual

Boomers

Strengths

• Hierarchy

• Society

• Focus

Balancing Inputs

10

United Keys to Success

• Optimizing strengths

• Growing common vision

• Alignment

• Cross education/ mentoring

• Innovation

Balance / Mentoring / Learning

Mentoring/values

Safety Training (People)

Connecting Across Generations

Interactive

Hands-on/ Touch

Visual

Purpose

Safety Focus

Behavioral Based

Enabling People

Knowledge/ Tools

Transparency

11

Connecting with People

Safety & Technology

Improve Transparency

Data

Results

Efficiency

Leverage Knowledge

Experience

Better Decisions

12

Passengers/

Industry Employed

1990 1995 2000 2005

390 million

pass

433 million

pass

526 million

pass

514 million

pass

462 k

417 k

520 k

375 k

2010

369 k

516 million

pass

Source BTS Data

Productivity - Everything!

Socio Economic

Drivers

New Aircraft

Touch Labor

Use of supply chain

Efficiency

How you think?

Supply Chain

1990 Airlines did everything

2012 : 95% Fuel/ 100% Cleaning/ Heavy Maintenance 50%

Shift in Safety

Increased oversight of supply

Supply integration

Competitors now Business Partners 13

42 Bankruptcy

Economics of Fuel

Facts:

26% of all Expense

Every $1 change in the cost of a barrel of oil

impacts UA $100 million annually

9 Million Gallons used per day at United

Jet Fuel cost 35% more than Crude Oil

14

1980 1990 2000 Today Op Cost

2012

.79 per gal .80 per gal .86 per gal 2.96 per gal 26.3%

• Fare increases and fuel

surcharges as market allows

• Hedging (temporary coverage)

• Additional winglets installations

• B757 Carbon Brakes

• B777 Performance improvements

• ECO-wash

• Aircraft weight reduction

• Aircraft burn bias R&D

• B787

• Fuel Planning

• APU Usage reductions

• Upgrade APU tracking tech

• Gate/ground power systems

• Consolidated data analysis

• Shared best practices

• mainline

• Regionals

• IATA Fuel Gap Analysis

• Flight planning systems

• Dispatch efficiency

• Consolidated tanker operations

• Efficiency training

Geo Political

Open Skies

Drives increased competition

Need for operating efficiency

Safety

Reduce injuries

Damage Cost

Regulations

OSHA

Increased oversight

Fines/ Inspections

Flight cabin oversight

Safety Management System (SMS)

Integration of Airline

Behavioral Based

Personal Ownership

FAA 2014 regulation 15

Future Markets-Major Shifts

16

Framework Plan

Recognition Safety Knowledge Communication Safety Leadership Team

MoveSmart/ BackSafe TEM - ADD UP Cost of Poor Safety SCA*

Integrated SMS VPP–Safety Excellence Safety Act. Program LOSA

Thinking Mindsets Reliability Advocate Roles

Team Based Safety

Cu

ltu

re

To

ols

S

ys

tem

s

Pe

op

le

•Safe Environment

•Going the Extra Distance

•Proactive in Safety

$

Time

•Injury

•Damage

•WC Costs

•Lost Revenue

AFA IBT

IAM UAL

Maintenance

Airport Operations

On Board

Flight Ops

•People

•Behaviors

•Location

•Intervention

* SCA – Safety Compliance Assessment

Summary

18

Mergers

Distractions

Management

Threat & Error Management

Competitive Cost

Fuel

Service Providers

Communication

Real time data

People

Adaptable/Skills

Alignment

Principle/Values

Technology Socio

Economic Geo Political

Competitive Product

New Markets

Enablers Stability/Not

Knowledge/Experience

Capability Global Opportunities

Backup

Common and Special Cause

Safety Management System

Alignment

Framework

19

Common vs. Special Cause

20

Wingtip Fracture- Fall Special

Cause =

Significant

Vehicle Accident

• Towing

• Slips/Fall

• Strains

• Walked into

Common Cause

Time

QT

Y

Special = Investigation & High Visibility

Common = What We Typically Accept

Actions

• Threat & Error Management

• MoveSmart

• Near Miss Program

• Communications / Advocates

Changing Performance is a Common Cause Issue

Operational Efficiency Improvements

SMS

Policy – What’s to be achieved

Risk – Define/Control

QA – Monitor and Feedback

Promotion – Creating a Positive Culture

LOSA

Self Correction

Behavioral Based

Peer to Peer

SECA

Structure/ Framework

Training

Recognition

21

Aligning 84k people

Adaptability

Ability to bring and be changed

Manageability

Framework to think

Team work

Growing focus for team focus/recognition

Balance

Work life/family balance

Loyalty

Appreciative work place

22

The “Plan”

Safety Incentive

SAT

On-Time Bonus

Generational Shifts - Variables

23

People

Geo Political

Socio-Economic

Technology

Mergers