Good afternoon everyone, it is a pleasure to be here today at the Chicagoland Aviation Summit.

I would like to thank Bill Little, Chairman, National Chamber Foundation and the Chicagoland Chamber of Commerce Foundation for hosting this forum and inviting me to speak to you today.

I would also like to acknowledge Jerry Roper, Chairman, Chicagoland Chamber of Commerce and Lester Crown, Chairman, Chicago Council on Foreign Relations for their ongoing commitment to the business community, to the importance of aviation to Chicago, and their support of United during our restructuring.

As some of you may know, I arrived in Chicago to work in the airline industry in 2002, almost four years ago.  As I am sure all of you know, these have been very challenging times for United... but not only for United, this has also been a period of extensive change in the global aviation industry.

Although the US still has the "largest" carriers in size of fleet, the US does not lead in terms of profitability, or in terms of quality products and services.

No US carrier today appears on the "International Top 20" list of airlines, ranked by operating profit in 2005.

In fact in 2005, the leaders in operating profit were British Airways, Air France/KLM, and Qantas.

The global aviation industry, excluding US carriers, was profitable in 2005... and is projected to be so again in 2006. In fact, the only region to post losses in 2005 other than the US was Africa... Although, the losses in Africa, as you might imagine, were somewhat shy of the $6 billion in operating losses in the United States.
 
So, it should come as no surprise that the US no longer leads the global aviation industry.
 
The question for us to consider is, will the trend continue or will it be reversed?

For the past four years, discussions of aviation in the US tend to focus on the domestic market. The network carriers, those of us who compete with the new leaders in the global markets, were uncompetitive and some of us were written off for dead.

There were those who, not unreasonably,  thought such legacy carriers could not compete even in the US market... the future belonged to the low cost carriers, flying point to point. The hub and spoke model was a thing of the past.

The Associated Press captured that sentiment when it wrote "Some industry observers say the big carrier concept is an endangered species in the face of ever increasing competition from low fare airlines."

Despite such low expectations and an extraordinary succession of external pressures - - $75 fuel and the intense international and domestic competition to name two - - today network carriers are in fact defying predictions.

It takes unprecedented action to address the scale of change required to reset the competitiveness of the US network carriers...but that work is being done.
 
Among the "big six" ...we have eight bankruptcy restructurings between us, five in the last four years and two of those still in progress, and American has done significant restructuring out of court.
 
Such restructuring requires contributions from all of our constituencies. Their expectation... not unreasonably... in return for their contribution, is to be a part of a sustainable business. One for which there is a future.

We, at United, are fortunate to have the support of Illinois and Chicago elected officials and the support of the business community represented in this room, particularly our good friends Lester and Jerry, because they understand the significant impact of commercial aviation on Chicago and the State of Illinois.

Illinois has stepped up to address soaring jet fuel taxes; and both city and state are assisting in lowering airport costs; leases and the cost of our ongoing business.

In addition to making Chicago a great place to live, Mayor Daley is making Chicago a truly world class city for business, tourism and conventions, such as the National Business Travel Association Annual Conference here this week and the US Travel and Tourism Advisory Board, Chaired by the Secretary of Commerce which I attended as a board member just last week.

Our mayor has always understood the part we play in his vision and he continues to champion the modernization plan for O'Hare.

Our Governor and the State Legislature were instrumental in changing state law to support the much needed modernization program.

I should take a moment to acknowledge First Deputy of Aviation, Pat Harney and Executive Director Rosie Andolino for their continued hard-work on the program.

As important constituents, their expectation... not unreasonably...is that we continue to provide vital travel and cargo connectivity within and outside the United States.

They expect flights that connect to the more than 200 plus smaller cities and communities; they also expect more international destinations connecting to expanding global commerce and tourism... Both are critical to the city of Chicago and the State, but neither is provided by point to point Low Cost Carriers.  The simple Southwest model although compelling from a cost perspective, will never serve Shanghai nor will it ever serve Springfield, Illinois.

Airlines are vital to virtually every sector of the economy and international business development and we recognize our responsibility to do more as individual companies and as an industry, to meet constituent expectations of us.

In the course of Uniteds restructuring, we realistically and continually assessed the magnitude of our un-competitiveness. We identified those elements of business that needed to be dramatically restructured and we did just that.

Now we have successfully exited from Chapter 11, we are focused on our responsibility to our primary constituents: our customers, our employees and our investors... and, of course, our home town.

We have made significant progress and there is still a tremendous amount of work to do.  That's what business is about  continuous improvement. We will continue to make improvements in everything that we do, across the company, every day.

When you are at O'Hare, there are improvements in evidence: from those in your check in experience at the curb side and changes being implemented in the way we manage the lobby; through to faster aircraft turns resulting from improvements made on the ramp.  This work is being developed and executed with the involvement of our employees, in these examples with our CSRs and our ramp service people.

And, we are using innovative and very effective training programs such as "Pit Crew U" for our ramp workers, to improve ramp safety and efficiency in airplane receipt and dispatch.  The training program was developed by NASCAR to drive team work and standardize safe and efficient work practices.

You may have seen the coverage recently on CNN, Good Morning America or NBC Nightly News on the success of this particular training.
 
In the face of a much changed domestic and international marketplace; ongoing financial pressures; and the daunting competitive challenge posed by the emerging mega-combinations of international carriers, it is not unreasonable for us, as constituents of the US government, to expect that they also be responsive to the changed environment.

The government should no longer be pursuing domestic policies and regulatory goals that perpetuate and cause even greater fragmentation in the US industry.  Such policies impede the ability of US carriers to achieve the scope and scale of operations necessary to compete successfully with emerging international super-carriers.

The government should limit its involvement in the industry to situations where the goal of safe, convenient, fairly-priced and efficient air travel cannot be achieved through a normal free, competitive market.

International restrictions also continue to impact U.S. carriers' global competitiveness. These restrictions, including limits on open access to foreign markets and cross border investment opportunities, prohibit us from taking full advantage of international opportunities and to spread our business risk. 

The restructuring of the network carriers has strengthened our ability to compete.  As we look to the future, we should be able to compete more effectively in the world market, not limited by regulatory "protection" from international competition or investment.  

Airlines should be allowed to function in the same way as other global businesses, driven by the dictates of a free market, not government edict.  In today's competitive global airline industry, the only path that makes sense is the one that leads toward full deregulation and the elimination of restrictions that continue to hold US carriers back.

I said pretty much the same thing exactly three years ago in a speech in Washington DC. And, the lack of progress is disappointing.

Since 1995, there has been progress in opening international markets, but there is much unfinished business.

The Department of Transportation's International Aviation Policy dates back to 1995.  It has not been adapted to match changed market realities; and it drives the prevailing regulatory mindset that has prevented the development of carrier relationships within the US market... such as the KLM and Air France combination across country borders in Europe.   

The growth, changes and opportunities in the global marketplace are going to continue.

Today we are certain United will be a part of the future, whatever it may be.

We will participate to the full extent of our capability, to make sure we are best positioned to take full advantage of every opportunity that is presented to us.

We will continue to provide Chicago with valuable and productive connectivity, to more US and global destinations, through our Star Alliance partnership, than any other airline.

And, following our announcement I was delighted to meet with the Mayor and the Governor last Saturday at 77 West Wacker, we will continue to be your home town airline...

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