UAL Future Pilot Sourcing AABI Winter Meeting February 20, 2013.

UAL Future Pilot SourcingAABI Winter Meeting

February 20, 2013

Worldwide Pilot Shortage – The Risk

Worldwide airlines need 460,000 new commercial pilots over next 20 years

U.S. airlines need 69,000 new commercial pilots over the next 20 years

Regional airlines take the biggest hit – United Express carrierslose 10.0% of their pilots per year to majors for next 20 years

NO new crop of qualified pilots waiting in the wings to backfill

United Express$6.8B (21%) of UAL passenger revenue/160 (67%) of domestic destinations

UAL Future Pilot Sourcing2

United Risk and Mitigation


Famed “Worldwide Pilot Shortage” is here UAL needs 530 pilots per year (no growth) for next 20 years

Biggest effect on our regional partners – need 700 pilots per year United airlines proactive leadership is key to mitigate the risks (P3)

Power to shape the landscape Promote the airline pilot profession Provide a viable career path

Problem Definition – Increasing Pilot Demand

2013

2015

2017

2019

2021

2023

2025

2027

2029

2031

0

100

200

300

400

500

600

700

800

900

UAL Pilot Demand – 20 Years (No Growth)

Pilot Retirements (Age 65) and Attrition (UAL Combined)

1. Boeing study (July 2012)2. Retirements plus normal attrition3. UA regionals ~7000 pilots (10% annual attrition)

Annual(average)

20 Year Total(2013-2032)

Worldwide1 23,000 460,000

N. America1 3,450 69,000

United2 530 10,606

UAX3 700 14,000

Forces Increasing Pilot Demand Retirements (Age 65/Dec 2012) and normal

attrition FAR Part 117 Crew Rest Rules (Jan 2014)

+3.1% UAL +5.0-10.0% United Regionals

Global growth (especially Asia/Pacific)

UALGrowth

Annual(average)

20 Year Total(2013-2032)

1.0% 639 12,775

1.5% 701 14,023

2.0% 770 15,393

4 UAL Future Pilot Sourcing

Problem Definition – Limited Pilot Supply

Pilot Supply Pressures Part 121 SIC ATP regulation (Aug 2013) Declining career interest – University of North

Dakota Study (ROI and career stability) International airlines hiring experienced U.S.

pilots Unpredictable military supply

Annual U.S. Military Pilot Supply

New ATPs down 47% (8500 in 1991 to 4500 in 2011)

Leave Military

To Airlines (80%)

Air Force 1035 828

Navy/Marine 520 416

TOTAL 1555 1244

UAL Capture 15% 186 (annual)

New Commercial certificates down 50% (17,000 in 1991 to 8500 in 2011)


UAL and UAX Demand and Supply Summary


5 Year2013-2017

(Annual Avg)

10 Year2013-2022

(Annual Avg)

20 Year2013-2032

(Annual Avg)

UAL Need (retire + attrition + 1.0% growth)1 469 524 639

Pilots from Military 186 186 186

UAL Need from Other Sources 283 338 453

UAX Need: Flow to UAL 283 338 453

UAX Need (retire + attrition) - no growth 49 59 92

UAX Need: Flow to Other Airlines 96 115 155

TOTAL UAX Need1 428 (6.1%) 512 (7.3%) 700 (10.0%)

1. Does NOT include FAR 117 crew rest rule (Jan 2014) – increases pilot requirements 3.1% (306 pilots) at UAL and 5-10% (350-700 pilots) at UAX

Aviation University

Supply2

Annual Output

Airline Career (56%)

UAX Capture(20%)

Annual Shortfall(5 Year)

Annual Shortfall(10 Year)

AnnualShortfall(20 Year)

2011 1800 1008 202 226 310 497

2. Approximately 2 year delay after graduation to have requirements for ATP (FAA F/O ATP Rule – Aug 2013)

Pilot Shortage Effect on UAL

Direct Effects Constrained mainline growth Increased costs Operational disruptions

Indirect Effects Reduced regional capacity Service termination Increased UAX costs

Regional airlines will take the brunt of the pilot shortage, but…

UAX exclusively serves 67% of United U.S. destinations for UAL, and UAX contributes significantly to UAL passenger revenue ($6.8B/21% in CY2012)



Mitigation

Power

Promote

Provide

Use United’s industry power and influence to shape the landscape (Government, Industry, Academia)

Promote the airline pilot profession

Provide a viable career path (High School to UAL)

Professional Pilot Career Path



Questions?


Backup Slides


Airline Market Overview


Global Pilot Needs (UND Study)

UAX Pilot Age Demographics

Represents approximately 74% of UAL express fleet calculated by total number of monthly flights (Dec 2012)Total Number of Pilots = 8335


UAL Future Pilot Sourcing AABI Winter Meeting February 20, 2013.

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