As the CEO of United Airlines, I am delighted to join this distinguished gathering of automotive leaders from around the world.  Aside from the fact that I love fast cars, I am here because we share a common cause and face many of the same challenges of a global marketplace.

We are really all in the same business -- the business of human mobility.  

No business has been more fundamental in shaping the world in which we live.

Today, we can travel to virtually any major city in the world in less than a day.  By connecting us face-to-face, person-to-person, modern transportation has flattened the globe -- certainly no less than modern telecommunications or the Internet. 

This new global connectivity has also created a new marketplace -- driving interaction and interdependence across national and regional borders and shaping how we compete, how we structure our businesses, and how we achieve efficiencies.

Nowhere is this new reality more evident than in mobility industries such as aviation and automobile transportation& ironically, the very enablers of the global marketplace.  

We face the same core challenge of achieving and maintaining global competitiveness, and that challenge will only increase over time. Just as the American automobile industry long reigned supreme, U.S. airlines led the world in efficiency, innovation, and competitiveness throughout the post-War period.

Today, U.S. airlines no longer lead.  Rather, we are falling farther behind the best of our global competitors.

Not one U.S. passenger airline is on the 2005 list of the top 20 most profitable international airlines. None has had the financial strength to make the major investments in new aircraft fleets, new technologies, or product and service improvements that our international competitors offer.   Indeed, there are only a handful of U.S. orders for the new high-efficiency Boeing 787 aircraft.

The U.S. airline industry is emerging from:

• Unexpected geopolitical shocks
• Associated negative economic reaction
• Unwarranted under capacity
• Intractable constituent conflict
• Remarkably enough a state of denial
  

A combination of circumstances that sent three of our five U.S. network carriers into bankruptcy, and cost the U.S. carriers some $35 billion in cumulative losses.

Contrast this with the prosperity of our international competitors, such as the combined Air France/KLM, now the worlds largest international carrier by revenue, or Asias fast-expanding Cathay Pacific/Dragonair, or Emirates Airlines which, by the end of last year, had ordered more than 100 new long-range aircraft, worth more than $30 billion.  

This is the reality of our U.S. network carriers today, and I do not have a broad prescription for its rapid regeneration.  There are no easy remedies& But there are actions to be taken in reviving the competitiveness of U.S. aviation and there are lessons learned at United during our complex and challenging reorganization.

First, we have to accept the new market reality.  We have to recognize the need and be prepared for fundamental change. Not just in the way we operate, but also in the way we think about competition. 

If we are to catch up with our global competitors and regain a leadership position, we must resist the temptation to seize short-term fixes that merely defer or delay hard choices.   It is easier in the short term to accept expedient, temporary solutions to difficult or complex problems, but it simply postpones the day of reckoning and provides no sustainable commercial remedy.

In Uniteds restructuring, we asked the tough, relevant questions. 

To start:
Can the Company be viable? 

Should we attempt to restructure, or liquidate?  

With an extraordinary network of international and domestic routes, a solid and loyal customer base, and dedicated employees, we decided that United was indeed worth saving.  

But we knew that we would have to convince a federal bankruptcy court that United was worth more as a going concern than as valuable assets that could be auctioned off with the proceeds divided among creditors.

Then we asked:

What will it take for us to be successful? 

To get a realistic sense of the possible, we needed to size the task at hand. We needed to understand the challenges confronting us -- what had to be done first to survive, and then to compete effectively, in the U.S. and on a global scale. 

We came to understand the need for major transformation and improvements across our company, and we identified the hard choices that had to be made&and there were many.

• We had to be decisive.
• We had to implement those hard choices, and commit to new ways of doing business.
• We cut costs dramatically& $7 billion reduction per annum against the contractual path of aircraft, labor and vendor agreements.
• We raised productivity, reduced duplication, and fashioned a $23 billion restructuring -- one of the nations largest ever.  

But beyond cost cuts and productivity enhancements, we have had to refocus and commit to a process of continuous improvement  of our product and, most importantly, our relationship with our customers.

We had lost sight of the interests of our customers, and our unique governance structure had made us inwardly focused.

We had to take to heart the basic truth that success starts and ends with our customers. And, we had to understand that, in an age in which our customers have Internet access to all our competitors, we are now competing against the best the world has to offer. 

We knew we had to take a hard look at the reality of our situation without preconceptions or sacred cows, and then act.  

We believed that we could and that we would find solutions and remedies. But only as long as we were fact-based and transparent in our work, & and prepared to call the question & however difficult that might be.

Expedience and half-measures were simply not an option if we were to convince those who would determine our future that liquidation was a poor second to a restructured United.

United can now move toward greater financial strength and efficiency, and continue to focus on achieving the right balance of the needs of our customers, our employees, and our shareholders. Their interests are best served by United remaining a viable, going concern -- a company willing and able to succeed in todays environment.

I believe that today we are on the right path and, as we have often said, there is much work yet to do. Our U.S. competitors have not stood still, undertaking significant reorganizations of their own, both in and out of Bankruptcy court; and our international competitors continue to widen the gap in products and services. 

First and foremost  and it bears repeating -- we need to strengthen our focus on our customers. We are investing time and resources to determine what they want and what they are willing to pay for.

Just as in the automotive industry, airline customers often associate themselves with a favored brand, and an experience they expect when using that brand.

Unlike some of our U.S. competitors, we do not see air travel as relegated to a commodity status.   We offer a range of choices to meet various needs, as the value proposition changes for our customers depending on the nature of the journey.

Our customers value different service options when they are flying to a family vacation in Florida, than when they fly across the U.S. or to Beijing for business meetings.

We have work to do to improve our product, especially in the international marketplace. We will invest in improving our product and service delivery over the next several years, as our growing financial strength allows.

And we will be working to ensure that whatever product each customer selects  from our low-fare Ted product to our International Business or First Class  it is delivered consistently. 

The automotive industry pioneered the concept of standard operating procedures as a way to achieve efficiencies and a consistent product.  The assembly line itself embodies this concept in driving safety and efficiency improvements.

Uniteds pilots, the best in the industry, rigorously adhere to such standard procedures whenever they enter the cockpit.  There is no reason to leave standard operating procedure at the flight deck.

By applying these techniques throughout our customer service operation, just as in other customer service industries such as hotels and retail, we can create a more consistent customer experience and continue to improve safety and service and lower our costs. 

United has committed to focus on our customers and to a process of continuous improvement as our pathway to success in the global marketplace.

We know there will be more challenges ahead&this is, after all, the airline industry& and we know something at United about facing and overcoming challenges.  We will continue to do what we need to do to compete and succeed in the U.S. and international markets.

But in meeting these new competitive realities, we and all other U.S. network carriers are still denied the opportunities to make commercially rational, market-driven decisions involving consolidation with other carriers, investments in airlines outside of the U.S., or international investment in U.S. carriers.

Uniquely restrictive prohibitions on international investment and commercial control continue to foreclose U.S. airlines from significant sources of potential investment capital, and keep us from growing through acquisitions or mergers, and so achieving scope and scale efficiencies.

We also face an anachronistic regulatory approach and application of antitrust laws that continue to promote fragmentation of the U.S. airline industry. This is based on an outdated view of the need to promote competition in the domestic aviation market.

The U.S. market has never been more competitive than it is today, and that robust and very vigorous competition by a wide range of air carriers will continue.

As we confront the effect of fragmentation and these regulatory hurdles in the U.S., our largest competitors in Europe and Asia grow ever-larger and stronger through their own consolidation and cross-border investment.  

The U.S. automobile industry has been fortunate to avoid these regulatory constraints. In fact, your industry is rapidly being transformed  and strengthened -- by cross-border consolidation and the creation of globe-spanning alliances.  

The most prominent recent example  the proposed arrangement between General Motors, Nissan, and Renault  apparently failed not because of perceived regulatory opposition, but rather because of economic and commercial considerations and practicalities.

There is no logical reason that this same market-focused approach should not apply to the highly-competitive global aviation sector.

Of course that does not mean that every potential transaction in our industry will make commercial sense.  

We are not in denial, nor are we naïve about the difficulty and complexity associated with transactions such as mergers and acquisitions& knowing full well in less complex industries they can fail to realize anticipated synergies and benefits.

But the complexity or challenge of potential transactions does not preclude our international competitors from sizing the risks and benefits, and making business-based, market-driven decisions designed to strengthen their ability to compete.

So, at United, we press ahead.

We will continue to put our house in order.

We will be the best competitor we can be, and ensure that we are in the best possible position to compete& to the benefit of our customers, our employees and our shareholders& whatever the future competitive landscape looks like. 

Thank you.