United Airlines 2009 Annual Report Download - page 26

Table of Contents
The Company’s initiatives to improve the delivery of its services to its customers, reduce costs, increase its revenues and increase shareholder value,
including the operational plans recently implemented by the Company, may not be adequate or successful.
The Company continues to identify and implement improvement programs to enhance the delivery of its services to its customers, reduce its costs and
increase its revenues. In response to the unprecedented increase in fuel prices during 2008 and the weakened U.S. and global economies, the Company has been
implementing certain operational plans in line with its “Focus on Five” operating agenda. The Company’s efforts are focused on cost savings in areas such as
telecommunications, airport services, catering, maintenance materials, aircraft ground handling and Regional Affiliates expenses, among others. In addition, the
Company significantly reduced Mainline domestic and consolidated capacity and removed 100 aircraft from its Mainline fleet, including its entire B737 fleet of
94 aircraft and six B747 aircraft. United eliminated its Ted product and reconfigured that fleet’s 56 A320s to include United First class seats. See Item 7,
Management’s Discussion and Analysis of Financial Condition and Results of Operations for further information regarding the Company’s capacity reductions.
The Company will continue to review the deployment of all of our aircraft in various markets and the overall composition of our fleet to ensure that we are using
our assets appropriately to provide the best available return. In connection with the capacity reductions, the Company streamlined its operations and corporate
functions in order to match the size of its workforce to the reduced size of its operations. The Company reduced its workforce by approximately 9,000 positions
during 2008 and 2009, through a combination of furloughs and furlough-mitigation plans, such as early-out options. There can be no assurance that the
Company’s initiatives to reduce costs and increase revenues will be successful.
The Company is taking additional actions beyond the operational plans discussed above, including increased cost reductions, new revenue sources and
other actions. The Company is also reviewing strategic alternatives to maximize the value of its assets and its businesses, which may include a possible sale of
all, or part of, these assets or operations. There can be no assurance that any transactions with respect to these assets or operations will occur, nor are there any
assurances with respect to the form or timing of any such transactions or their actual effect on shareholder value. A number of the Company’s ongoing initiatives
involve significant changes to the Company’s business that it may be unable to implement successfully. In addition, revenue and other initiatives may not be
successful due to the competitive landscape of the industry and the reaction of our competitors to certain of our initiatives. The adequacy and ultimate success of
the Company’s programs and initiatives to improve the delivery of its products and services to its customers, reduce its costs and increase both its revenues and
shareholder value cannot be assured.
Union disputes, employee strikes and other labor-related disruptions may adversely affect the Company’s operations and impair its financial performance.
Approximately 82% of the employees of UAL are represented for collective bargaining purposes by U.S. labor unions. These employees are organized
into six labor groups represented by six different unions.
Relations between air carriers and labor unions in the United States are governed by the RLA. Under the RLA, a carrier must maintain the existing terms
and conditions of employment following the amendable date through a multi-stage and usually lengthy series of bargaining processes overseen by the NMB. This
process continues until either the parties have reached agreement on a new collective bargaining agreement or the parties are released to “self-help” by the NMB.
Although in most circumstances the RLA prohibits strikes, shortly after release by the NMB, carriers and unions are free to engage in self-help measures such as
strikes and lock-outs. All six of the Company’s U.S. labor agreements became amendable in January 2010 and negotiations between the Company and all labor
unions commenced in April 2009. The Company has filed for mediation assistance with respect to the negotiations with four of its six unions and all four unions
are now in active mediation. The Company anticipates that the mediation process and the other two ongoing negotiations will continue in 2010. The Company
can provide no assurance that a successful or timely resolution of labor negotiations for all amendable agreements will be achieved. There is also a risk that
dissatisfied employees, either with or without union involvement, could engage in illegal slow-downs, work stoppages, partial work stoppages, sick-outs or
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