Nene Foxhall - EVP Communications and Government Affairs Sarah Murphy - Director IR Jeff Smisek - Chairman, President & CEO Jim Compton - Vice Chairman & Chief Revenue Officer John Rainey - EVP & CFO

Michael Linenberg - Deutsche Bank Hunter Keay - Wolfe Trahan Kevin Crissey - UBS Jamie Baker - JPMorgan John Godyn - Morgan Stanley David Fintzen - Barclays Duane Pfennigwerth - Evercore Partners Josh Freed - Associated Press Doug Cameron - Wall Street Journal

Thank you Brandon. Good morning everyone, and welcome to United's fourth quarter and full year 2012 earnings conference call.

Joining us here in Chicago to discuss our results are Chairman, President, and CEO, Jeff Smisek; Vice Chairman and Chief Revenue Officer, Jim Compton; and Executive Vice President and Chief Financial Officer, John Rainey. Jeff will begin with some overview comments, after which Jim will review operational performance, capacity, and revenue results.

John will follow with a discussion of our cost structure, balance sheet, and guidance. Jeff will make a few closing remarks, and then we will open the call for questions, first from analysts and then from the media.

We would appreciate if you would limit yourself to one question and one follow-up. With that, I'll turn it over to Sarah Murphy.

Thank you Nene. This morning, we issued our earnings release and separate investor update.

Both are available on our website at ir.united.com. Let me point out that information in this morning’s earnings release and investor update and the remarks made during this conference call may contain forward-looking statements, which represents the company’s current expectations or beliefs concerning future events and financial performance.

All forward-looking statements are based upon information currently available to the company. A number of factors could cause actual results to differ materially from our current expectations.

Please refer to our press release, Form 10-K, and other reports filed with the SEC by United Continental Holdings, United Airlines, and Continental Airlines for a more thorough description of these factors. Also during the course of our call, we will discuss several non-GAAP financial measures.

For a reconciliation of these non-GAAP measures to GAAP measures, please refer to the tables at the end of our earnings release, a copy of which is available on our website. Unless otherwise noted, special charges are excluded as we walk you through our numbers for the quarter and the full year.

These items are detailed in our earnings release, and now I'd like to turn the call over to Jeff Smisek, Chairman, President, and CEO of United.

Thanks Nene and Sarah, and thank you all for joining us on our fourth quarter and full-year 2012 earnings call. Today, we reported net income of $589 million for the full year or $1.59 per diluted share delivering a pre-tax margin of 1.6%.

2012 was the toughest year of our merger integration, and it wasn’t an easy year for our co-workers or our customers. Despite our integration pains, we accomplished an enormous amount and we are now in a position to go forward as a single carrier and compete effectively on a global scale.

Our operations are running smoothly where many product improvements are rolling out and our customer satisfaction scores are climbing. I want to thank all of my co-workers for working together during 2012 to help build the base for United’s future.

I’m pleased to recognize my co-workers’ hard work with a $119 million of profit sharing which we will distribute to eligible co-workers on February 14. I also want to thank our customers for choosing to fly United.

We’re working hard every day to make your travel experience a great one, and you’ll see continued improvement in our product and service as 2013 unfolds. In 2013, we will move beyond our merger; we will continue to deliver on our go-forward plan, the annual operating plan we use to guide our efforts and investments company wide.

Our top priorities this year include running a consistently reliable airline, providing great customer service, bringing the rest of our work groups together, continuing to invest in our people, our technology, and our product offering, and running United as a business to achieve our return on invested capital target of 10% over the business cycle. We did not achieve our return on invested capital target in 2012, and we’re absolutely not satisfied with the financial results we produced last year.

We need to generate better unit revenue and operate more efficiently, and we’re taking actions to address both of those areas. Leadership starts at the top, and in December we reduce the number of our officers by 7%.

Today, we internally announced the difficult but necessary decision to reduce our management and administrative staff by 6% starting next month. We have many other actions planned to increase efficiency and increase our revenues throughout 2013 and beyond.

I want to thank my co-workers for their professional response and empathy towards customers and fellow co-workers in the aftermath of super storm Sandy, which reduced our fourth quarter earnings by approximately $85 million. Our operations substantially improved in the fourth quarter triggering two on-time bonus payouts for our co-workers.

I would like to thank my frontline co-workers for doing a great job managing high loads during the holidays, made more challenging by snow storms that hit a number of our hubs. We’re back on track running a reliable operation, and we’ll continue to support our operations through higher than normal staffing at airports, spare aircraft levels, and maintenance programs over the next few quarters to ensure that our operation performs as we and our customers expect it to.

Customers are noticing our improved operational reliability, and as I mentioned earlier, our customer satisfaction scores continue to improve as does feedback from our corporate customers. We’re keenly focused on improving our customer service, and we’ve begun a comprehensive customer service training program for our airport agents, contact center agents, and flight attendants worldwide.

By the end of January, all airport contact centers, in-flight supervisors, and peer leaders will have completed training on how to lead their teams to provide great service. As we finish training the leadership, we will train all of our airport and contact center agents and flight attendants across the globe on our new customer service standards, and we’ll complete all of this training this year.

United is committed to providing great customer service each and every day, and it is the responsibility of every co-worker to do so. At our internal leadership conference next week, we will roll out, It’s Our Job,” a company-wide integrated approach to customer service.

It's Our Job includes training that clearly explains our customer service standards and expectations for frontline co-workers. The program also includes an expanded outperform recognition program that rewards more employees for outstanding service and a broad based quarterly bonus program tied to improvements in customer satisfaction scores.

This year, we will collect more detailed customer satisfaction data and begin customer service quality reviews across the system improving the quality and quantity of service delivery data that will help us identify areas of opportunity and future training needs. Importantly, our co-workers want to provide great customer service; they take pride in it and we in-turn take pride in their efforts.

This year, we’re making sure they will have the tools that help them do their jobs. Throughout the year, we’ll be rolling out a modernized fully integrated suite of tools for our airport agents that expands on recent enhancements and allows our agents to provide better and more efficient service to our customers.

We’ll first implement these new tools at the gates to assist with the departure management process and improve the boarding experience for our customers. Later in the year, we’ll expand these tools to include ticketing and check-in functions in the lobby.

We’re also investing in our customer relationship management technology to better understand our customers’ individual preferences when they travel. The more we understand our customer’s preferences, the better we’ll be able to design and offer tailored products and services that meet or exceed their expectations and improve our profitability.

Last year, we made substantial progress bringing our work groups together, an important step in building our working together culture. In December, our pilots ratified our first joint collective bargaining agreement, a four-year contract that marks to market the pay of our pilots while increasing their productivity and our scope flexibility.

Additionally our subsidiary United, subsidiary Continental, and Continental Micronesia flight attendants, and Continental Micronesia technicians ratified a new collective bargaining agreement during 2012. Toward the end of last year, our negotiations for joint collective bargaining agreement with our airport and contact center agents represented by the IAM gained significant traction and continued on a good path early on the New Year.

We’re in expedited discussions for joint collective bargaining agreement with our technicians represented by the Teamsters, and we’re also in discussions for joint collective bargaining agreements with our flight attendants and our dispatchers. We understand the importance of marking to market, the wages and benefits of our people, and we’re committed to reaching competitive joint contracts with all of our work groups.

In addition to seeing improved customer service this year, our customers will begin to experience the many product improvements we’ve discussed since our merger. By the end of the first quarter, 96% of our mainline fleet will have our very popular economy plus seating.

Additionally, we have installed over 6800 flatbed seats in the premium cabins of our international aircraft, more than any of our U.S. competitors.

In February, we will finish modifying our domestic Boeing 767 aircraft to an international configuration with fully flatbed seats in the business first cabin, seat back audio/video on demand, and power outlets throughout the aircraft. Customers today are using the new larger overhead bins on 70 of our airbus aircraft, and we’ll finish installing those bigger bins across the rest of that fleet this year.

We’re installing global satellite based Wi-Fi across our mainline fleet with a modest number of aircraft outfitted to date, including our first Boeing 747. We’re ramping up installation and expect to install global satellite based Wi-Fi on 300 of our mainline aircraft by yearend, and we will continue installation next year until substantially all of our mainline aircraft have this industry-leading Wi-Fi product.

We took delivery of 25 new aircraft last year including six Boeing 787 Dreamliners. History teaches us that all new aircraft types have issues, and the 787 is no different.

We continue to have confidence in the aircraft and in Boeing’s ability to fix the issues just as they have done on every other new aircraft model they have produced. Safety is of course our top priority, and we’re working closely with the FAA and Boeing to safely return our 787 aircraft to service.

In 2013, we expect to take delivery of 26 new fuel efficient and customer pleasing aircraft including two more Dreamliners in the second half of the year. At the end of last year, we opened our first completely redesigned and expanded United Club at Terminal 2 of O' Hare International Airport, and we’re receiving outstanding feedback from our customers on the look, feel, and usability of the club.

If you’re passing through O’Hare, I encourage you to drop by the club for a glimpse of the future. This year, we will renovate four additional United Clubs around the network with this superb new look and feel.

As with our operations, our service standards, and our people, we will continue to make substantial return-oriented investments in our product and customer experience this year. I’m confident that our focus on operational reliability, customer service, product improvements, and our working together culture will put United on the right track for creating economic value in 2013 and beyond as we become the world’s leading airline.

With that, I will turn the call over to Jim and John to go through the results in greater detail.

Thanks Jeff. I would like to take a moment to thank my co-workers for their hard work in 2012.

Our operational performance and revenue results last year did not meet our expectations or our potential, but we built the foundation for United from which we’ll provide consistent reliability, a competitive product offering, and a great customer service in 2013. I would also like to thank our customers for choosing to fly United.

We appreciate your business and our working together to make United the best airline for you. Our operational performance improved in the fourth quarter, and we delivered 80% on-time performance for the quarter despite severe weather including super-storm Sandy and snow storms.

In 2012, we paid out six on-time bonuses totaling $26 million to our co-workers for achieving monthly on-time goals including two pay-outs during the fourth quarter. Our fourth quarter mishandled bag ratio improved nearly 10% from the summer lows.

It takes team work, reliable fleet, and the right processes and procedures to run a consistently reliable airline, and we’ll continue to invest in those areas this year. Running a reliable airline is highly correlated with customer satisfaction scores and passenger revenue results.

As we improved our reliability at the end of the third quarter and throughout the fourth quarter, our customer satisfaction scores improved nicely, and we have recently seen encouraging progress with passenger revenue. I look forward to more closely integrating the way we manage both operations and revenue in my new role.

Our full year consolidated capacity declined 1.5% year-over-year in 2012 demonstrating our continued commitment to capacity discipline. In the fourth quarter, consolidated capacity was 4.2% lower versus 2011.

Our approach to capacity deployment remains the same, met supply with demand on a market by market basis. Through this approach, we’re confident we can optimize our broad network and generate returns in excess of our cost of capital.

As we experienced merger-related operational issues last year, we took actions to support our integration and our operations that did not optimize our network or revenue and that added to our cost. Examples include higher staffing levels at airports, carrying a higher level of spare aircraft, and modestly increasing our block and ground time.

During 2013, as we streamline our boarding process, deliver on our new easy-to-use and more intuitive technology for our co-workers at airports, and consistently deliver reliable operations we’ll begin to unwind these actions. Now turning to our revenue results, consolidated passenger unit revenue increased 0.6% in the fourth quarter of 2012 and 1.7% for the full-year versus 2011.

These results include $140 million of loss revenue due to super storm Sandy. The Pacific was our best performing geographic region in the fourth quarter and for the full year.

As PRASM increased 5.9% and 5.8% respectively. Both higher yields and loads contributed to the solid performance.

China continued to be a highlight in the fourth quarter with PRASM increasing 9% and yield increasing 5% compared to the fourth quarter of 2011. Our ancillary revenue increased 2% and 3% respectively for the fourth quarter and full-year 2012 compared to 2011.

Our fourth quarter capacity reduction resulted in fewer [employments] (ph) and in turn lower checked bag and change fee revenue. During the fourth quarter, we implemented a second bag fee for travel between the U.S.

and Japan and are the only U.S. carrier to apply this important cost recovery mechanism across our entire transpacific network.

We have heard from our customers how much they value more space to work and relax when they travel, and we’re pleased to offer the seating products that they value and will pay for. Economy Plus continued its outstanding performance with 33% sales growth year-over-year in the fourth quarter and 25% growth for the full-year 2012.

Sales of paid premium upgrades increased 58% in the fourth quarter and 34% for the full year versus 2011. A significant portion of the increase in economy plus and paid premium upgrade sales is due to pricing optimization permitted by our powerful SHARES platform.

While our corporate revenue for the full year increased modestly due to higher yields, we’re dissatisfied with the 2012 results. The operational challenges we faced last summer impacted our corporate customers, and our corporate revenue and share premium performance lagged our expectations.

Put simply, some of our corporate customers took a detour while the road was under construction, and we suffered for it. We’re confident, however, that in 2013, we will win back those corporate customers and attract new corporate customers with our significantly improved operational reliability, our improving customer service, our competitive product, and our industry-leading network.

We aspire to be the travel partner of choice for our corporate customers. A partner that helps them reach their goals.

We also know how important it is to listen to our customers, and we have an ongoing dialogue with many of the travel managers at our top accounts throughout through our corporate advisory board. Through frequent conversations with our corporate advisory board members, we keep our finger on the pulse of our customers’ expectations, experiences, and aspirations for United.

From our most recent conversations, we know our corporate customers are experiencing firsthand the improvements in our reliability, customer service, and product offering. Route network and schedule convenience may be the most important factors when many business customers choose an airline , but we recognize the importance of running an on-time airline and offering great service with a competitive product as well.

United’s best in class global route network is ideal for business travelers through our international gateways in New York, Washington DC, Chicago, Houston, San Francisco, and Los Angeles. We help our customers access the world.

Our hubs are located in six of the eight largest metropolitan areas in the U.S. and are uniquely positioned across the country to create an unmatched domestic and international network offering for our corporate customers.

We’re investing more than $0.5 billion in our product, making our customers’ travel experience more comfortable, relaxing, and simple. Beginning this quarter, our customers are going to experience many of the product investments we have been talking about for some time.

United offers travelers the best options on board from more room to work and relax. Today, we have a 176 wide-body aircraft outfitted with our comfortable, lie-flat flat seats in the premium cabins.

In February, every wide-body aircraft flying across the Atlantic will have lie-flat seats in the premium cabins. Our entire long-haul wide-body international fleet will have lie-flat seats by the end of the second quarter.

Our industry leading Economy Plus seating is available on nearly our entire mainline fleet and on almost all of our larger regional aircraft. As just mentioned we’re installing global satellite based Wi-Fi across our entire mainline fleet and early customer feedback is very positive.

We’re the first U.S. airline that will be able to offer our customers the opportunity to stay in touch no matter where they are flying around the globe.

Our product investments are not only on our aircraft. This quarter we will introduce the first phase on a new simplified boarding process that will release some of the boarding stress our customers experience.

We’re keenly focused on delivering great customer service and we’re training and equipping our co-workers to be able to deliver on that goal. We also continued to invest in our very popular mobile app in united.com making it easier for customers to do business with us.

This year as our customers experience an improved reliability and substantial investments in our products and service while traveling on our industry leading route network, our value proposition will appeal more than ever to global corporate customers, small business travelers and leisure customers alike, we want every customer from Global First to last row of Economy to have a great travel experience on United. As for our capacity outlook we have operated in an environment of slow global economic growth for the last few years and based on the latest GDP information the 2013 outlook is similar.

We expect our full year 2013 capacity to decline about 1.5% and expect first quarter capacity to decline between 4.1% and 5.1% year-over-year. We’re committed to capacity discipline and achieving our return on invested capital goal.

Turning to our January outlook, we’re running a solid operation month to-date with our domestic mainline and on-time arrival at 84% above our internal goal. And our mainline system completion factor is 99.5%.

And finally we currently estimate United’s generated consolidated PRASM to increase about 2.5% year-over-year. With that I will turn the call over to John.

Thanks Jim. Today we reported full year net income of $589 million generating a pretax margin on 1.6% for the year.

While we reported a full year profit for 2012 these results clearly fell short of our expectations and the return goals we have set. However I don’t want that to take away from the tremendous efforts of our frontline co-workers.

They are the face of United to our customers and bore the brunt of the integration challenges last year. And I want to thank them for their work.

We’re all glad to have the heavy lifting of a merger integration behind us. For the fourth quarter and full year 2012 our consolidated operating expenses increased 1.1% and 3.2% respectively.

Full year 2012 CASM excluding fuel, third party business expense and profit sharing, increased 3.4% year-over-year on 1.5% lower capacity. On a fuel rate and profit sharing neutral basis full year unit cost increased 2.5% versus 2011.

Fourth quarter consolidated CASM excluding fuel, third party business expense and profit sharing increased 6.5% versus 2011 on 4.2% lower capacity. Holding fuel rate and profit sharing constant our fourth quarter consolidated unit cost increased 4.8% year-over-year.

In 2012 we continue to make progress improving our balance sheet making $1.5 billion of debt in capital lease payments including $265 million of prepayments. We ended the year with $6.5 billion of unrestricted cash.

One of the real opportunities we have to provide value to our shareholders is to reduce the level and type of debt in our business and the cost associated with that debt. We’re paying down high coupon, non-aircraft debt and reducing our reliance on debt financing to run the day to day operation instead accessing the capital markets to fund long term investments in our business.

We continue to make progress in this area in 2012 paying off about $340 million of non-aircraft debt with an average coupon of over 11%. Our full year 2012 interest expense was $122 million lower than it was in 2011.

At the end of the year we reached an agreement to amend the terms of two series of notes held by the PBGC, that the old United issued in its bankruptcy. The first series were 8% unsecured notes that the company was obligated to issue over time as certain EBITDA thresholds were met.

The maximum amount which could have been issued was $500 million with $188 million already incurred. The second series with a 6% unsecured notes also held by the PBGC due in 2031.

A recent agreement reduced the principal amount of the 8% notes to $400 million in return for issuing them now and removing the contingency and shortened the maturity of the 6% notes. For the last three years our return on invested capital has been 10.7% above our 10% target.

However for the full year 2012 our return on invested capital of 8% was below our target. We’re committed to achieving our return on invested capital goal and we’ve taken a number of steps to ensure we do so in 2013.

First and foremost we have addressed the operational issues we faced last summer. Given our improved operations and increasing customer satisfaction scores we expect our revenue performance to improve this year.

We also need to become more efficient. We’ve a number of initiatives planned for 2013 that will increase our efficiency and mitigate some of the cost pressures we face.

As Jeff mentioned we recently reduced our officer headcount by 7% and are reducing our management and administrative overhead by 6% to a mix of voluntary and involuntary reductions. As Jim explained we took a number of steps to address the operational issues we faced last summer and some of these actions resulted in higher cost as we consistently demonstrate our ability to run a good operation we will increase our efficiency and we will remove the cost associated with these actions.

We did a good job in 2012 in achieving cost and other revenue synergies but clearly underperformed from a passenger revenue synergy perspective. We’re confident though that we will achieve the full merger synergies and look to get back on track on our passenger revenue synergies in 2013.

Turning to 2013 unit cost, we expect full year CASM excluding fuel, third party business expense and profit sharing to increase between 4.5% and 5.5% year-over-year on lower capacity. This is higher than our CASM performance in past years and higher than what we expect on a normal run-rate basis.

Approximately 2.5 points of the year-over-year CASM increase for 2013 is due to labor agreements. A significant portion of our co-workers had not received a pay increase for a number of years and we’re committed to paying our employees competitive market wages.

The wage pressure in 2013 is effectively a mark to market adjustment that is larger than the ongoing normal year-over-year labor cost pressure we expect to incur in future years. An additional 1/3rd of point of year-over-year CASM pressure is due to increased pension expense which is largely a result of a lower expected discount rate.

We have a $2.4 billion unfunded pension obligation and while this is a long term obligation that needs to be managed just like debt the accounting cost of that obligation can change significantly from one year to the next. The remaining approximately 2% year-over-year increase in CASM is what we consider core CASM growth and is much more in line what we would expect in our normal year and include some improvements in efficiency.

Despite our higher CASM growth in 2013 we remain committed to achieving a return on invested capital goal of 10%. Because of the timing of some of the cost pressures I mentioned our year-over-year CASM increase in 2013 is not evenly distributed among the quarters and is skewed heavily toward the first part of the year.

We expect first quarter CASM excluding fuel, third party business expense and profit sharing to increase 8% to 9% versus the first quarter 2012. We’re projecting a consolidated capacity decline of between 4.1% and 5.1% in the first quarter which also puts additional pressure on our first quarter CASM.

We expect CASM growth to moderate significantly in the second half of the year with an increase between 2% and 3% year-over-year. We took delivery of 25 aircrafts in 2012 including six Boeing 787 Dreamliners and 19 Boeing 737 900ERs and removed 23 aircraft from service in the year including 19 737 Classics, 3 767 200s and one Boeing 757.

We also sold or returned to lessors 37 aircraft that had been parked in the desert. In 2013, we expect to take delivery of two more Dreamliners and 24 Boeing 737 900ERs which will replace older less efficient aircraft in our mainline fleet.

We expect to end the year with 10 fewer mainline aircraft than we started the year with a total of 692 aircraft. Our 2013 scheduled debt and capital lease principal payments amount to $1.9 billion, $600 million of these obligations are the secured notes that carry interest rates of 9.875% on the first lien and 12% on the second lien.

These instruments mature in the back half of 2013 but allow for prepayment without penalty next month which we intend to do. We expect 2013 gross capital expenditures including purchase deposits of $2.5 billion or $1.4 billion net of expected financing.

Earnings instability and liquidity issues prior to our merger resulted in chronic underinvestment in our business. To provide the product we need to achieve our earnings and return on invested capital targets we played catch up with capital investment for the last two years.

Of the 1.4 billion in net CapEx in 2013 approximately 40% to 50% is for items that are more one time in nature that we don’t expect to incur on a consistent basis. For example we’re building a new data center and two new maintenance hangers and installing new overhead bins, slim line seats, winglets and Wi-Fi.

We have the need and the intent to get to a more balanced approach to cash flow allocation as we complete the integration and harvest the benefits of our merger. Lastly as we move beyond the peak of our integration we expect integration related cash special charges to abate significantly in 2013 to approximately $250 million.

In closing, 2012 was the toughest year of our integration but it's behind us. That said our disappointment about reporting almost 600 million of profit for the year is a clear sign of the increasing health and stability of our industry and of United specifically.

It shows the progress we’re making towards becoming a real business that provides consistent returns for our shareholders. As I talk with many of our customers and co-workers they are encouraged by the significant progress we’ve made since the depths of our integration issues last summer.

They like many of our investors recognize the potential that United has in 2013 and beyond. With that I’ll turn the call back over to Jeff.

Thanks John. We’ve a lot of momentum now and in 2013 we’re going to run a reliable airline and provide great customer service.

We’ll deliver on our go-forward plan and use our ever improving fleet, facilities, technology, product, network and customer service to become the airline customers want to fly, investors want to invest in and co-workers want to work for. I’ll now turn over to Sarah to open up the call for questions.

Thank you, Jeff. First we’ll take questions from the analyst community, then we’ll take questions from the media.

Please limit yourself to one question and if needed one follow-up question. Brandon, please provide the procedure to ask a question.

Two questions here and maybe the first one is for Jeff. You have the pilot deal, you have that all set up but now you have to go through the seniority integration process, what’s the timing on that and at what point if an agreement is not reached between the two groups would we go to binding arbitration, if you can just update us on that.

Well we expect, Michael, we expect the seniority list integration to be accomplished this year and we currently see no issues in them reaching their agreement at a timely basis.

Okay good, and then just my second question and this is for you Jeff as well. You know 2012 indicated was a tough year, you did about 600 million of net and I look at a company like Delta who has roughly the same size as you on a revenue basis and they were 1.6 billion of net, when you talked earlier about the momentum you felt like that things were really starting to turn.

Is that a gap that you think that you can close this year or is it more like a multi-year process to catch up with them. How quickly can things improve now that you’ve gotten over the big hump?

I think as you mentioned obviously a tough year and the biggest, I think I talked about in this way I think the biggest disappointment from my perspective was the revenue, the synergies we faced last year and you know I think expectations I think you can think of one to two points in RASM that we under performed and you know and so my confidence is as John mentioned at close is that given the stability of the operations because I really believe predictability is important, when you’re predictable things just operate so much better across the system and revenue flows with that. So you know we’re excited about 2013 given the initiatives that we have in place and you know we feel that we will certainly close that gap and but we’ll work our way through the year but we’re very optimistic.

Mark I would just add to that, this is John. 2013 is clearly a year where we’re focused on execution and proving our operational reliability.

We think though that with the route network that we have and efficient fleet, the employees that we have, the results will take care of themselves if we do the blocking and tackling.

Congratulations on the second bag fee of Japan I think that’s great news, Jim but I noticed correct me if I’m wrong I don’t think ANA has a second bag fee to the United States so it's two part question, did you coordinate with them you know with regard how the JVs has functioned and if they don’t have a second bag fee for the US, are you just going to collect the second bag fee revenue and just give half to them as they don’t have to necessarily deal with the bad publicity associated with the second bag fee.

Hunter I won't get into specifics of how that work. I will tell you that obviously we work very closely with ANA, they are a terrific partner and you know the JV has mechanisms to work through all kinds of different things that come up and that’s what we will do working with them but again we’re seeing the JV quite frankly is delivering terrific results as we’re seeing connections over Narita using ANA and also both of us are partnering with each other in the Trans-Pacific.

And as it pertains to the January PRASM number if you look at the bookings that were up 400 basis points weighted average coming into the month and that was capacity down maybe 400 – 500 basis points. I’m curious to know why the yields came in where they did in January, and is the strategy right now to just to sort of fill the flights and sort of focus on yields as the operational improvement gets better.

So you’re just focusing more of load factors in that regard or I guess the real ultimate question is how do yields start to go up again because that’s probably going to have to provide the next leg of PRASM.

That’s a great question, from my perspective the way I look at it is somewhat as you described, right, I think our challenges last year from the management’s perspective is that we actually manage less flights that we underperformed in load factor and so as that load factor comes in what happens is we begin to manage more flights and [revenue manage analyst] [ph] begin to manage the buckets and so forth. So not talking too much about yield going forward but again as our corporate customers recognize what we’re doing from a reliability point of view as those, as the demand continues to grow we will manage the inventory to optimize that revenue.

So is there - can you talk about maybe if not the exact percentages but the progression of capacity, because 2.5% I think is lower than where people would have thought given the capacity cuts for the quarter so maybe there is something unique about January capacity relative to the rest of the quarter if you can talk about that.

So I think the way to think about the quarter for us that 4.1% to 5.1% down in the first quarter is February even adjusting for leap year will be the most significant capacity cut month followed by not as much but March. So January is the least capacity year-over-year reduction of the quarter.

And then just looking at the numbers you guys overall, I mean so I would hope that then you would have a pick up from here because if you look at I don’t think your comparisons are more difficult than say U.S. airways or Delta but you’re, there seems to be quite a bit of continued under improvement unless you have a significant pick-up from in February and March given where their guidance is for RASM, is that fair?

I think again the when I talk about January, one data point for us is January is a little bit more difficult comp for us on a, if we went on a two year over two year just kind of put a framework reference in December we’re 8% up over 2 years that 2.5% represents a beat of that 8% on the two year basis. So any given month I guess it's hard, things can fluctuate and change.

I think the investor updates were very feel good about the demand, the booking curve that we see going forward.

And I guess similar to Mike’s question I guess, the way I’m thinking is laborers gotten their pay increase. I know they didn’t had in a while but you bought them a car, the pilots a car and then effectively with the amount of back pay and then you’re buying them a car each year in terms of forward pay.

The customers are getting a better product hopefully they will get a better operation as we move forward and yet the financial returns aren’t improved, they have diminished. So what I’m trying to understand is whether this is a function of the challenges uniquely to your integration or if you rethink the timing of the synergies overall and whether they are more back loaded the benefits of the mergers in general, thanks.

I think speaking to synergy achievement, we targeted about to achieve 75% of the 1 billion to 1.2 billion last year and we did a good job in terms of other revenue and cost synergies. Those two combined amounted to about $650 million but as I said in my remarks earlier we clearly underperformed from a passenger revenue perspective.

We have every bit of confidence that we will achieve the full run-rate of the 1 to 1.2 and we’re actually are optimistic about that. In terms of the timing, getting back to Mike’s question.

We love to get that in 2013 but it's also reasonable to assume that that could be a difficult bar and it could slip into 2014.

Jeff you and I sparred a little bit on the last conference call on the subject to pilot costs and to your credit the deal did come shortly thereafter so looking back I respect your decision to remain tight lipped, but you can’t blame me for trying the same approach as it relates to mechanics and flight attendants. So, if we set aside wages, are there any competitor work rules incorporated into the contracts that are already out there that could afford you some greater flexibility or should we simply view this exercise as one of increased expense?

Jamie, we’re trying to make sure that in return for marking the market with wages and the benefits of our co-workers, in return we get good productivity from them and flexibility because this is an industry that requires flexibility and you know we’re making -- very good progress with the IAAM. We’re also making good progress with our teamsters and I hope to be able to announce some new deals as we go forward in time this year.

Excellent and for my follow-up obviously unit margins lagging those of the industry you know I’d argue and I sense you to agree that the only thing standing between you and margin parity is execution as opposed to being anything structurally wrong with the franchise but as we think about closing the margin gap what are the key drivers, what is the waterfall chart look like. Does fleet optimization drive a quarter of the gap and improve customer service another quarter, sending the management rank a few points do you have to buy an oil refinery, I mean what gets you from where you are today to where you know Delta already is.

I think you know clearly we got to make up a big part of that gap in terms of our revenue performance and some of that will come through corporate shares, some of it will be harvesting the benefits of the mergers through redeployment of aircraft in that nature but we also have a significant opportunity in terms of becoming more efficient., We have attacked some of our operational problems with, call it a blunt instrument and we have thrown head count at it and I think that we can be a lot more efficient. We can better deploy technology, put it in the hands of the customer and I think overtime we can actually see significant savings in other areas on the expense side.

Just a follow-up on some of the questions on closing the margin gap, as you know one of your competitors is very focused on announcing a plan for returning capital to shareholders this year. Once you do close the margin gap it's moving in that direction the next step?

Clearly, we have the aspiration of getting there, I would remind you that Delta is two years ahead of us in their integration and you know that the way that we have framed this internally is I would prioritize as we want to get the operation running like it needs to be and then we want to continue to pay down a lot of the non-aircraft debt, we got a significant amount of non-aircraft debt that’s coming due in the next few years and then I think we can have a very healthy discussion about returning cash to shareholders. Now I would say I don’t think all those have to happen in a serial fashion but clearly in terms of how I prioritize those that’s what it would be.

Jim just a follow-up on some of the PRASM questions which I guess suggest that maybe Jan was a little bit weak, I know you can’t give numbers for all the sort of comps issues but is it fair to say that it sounds like the completion factor that you’re looking at for Jan and shift in Chinese New Year or maybe bringing Jan a little lower than maybe people would have expected and as we look into February certainly again the shift in Chinese New Year the easy comps perhaps depending on how the completion factor fairs and maybe some accounting adjustments are actually going to just naturally create a very big bump to PRASM, is that a fair way kind of framework for thinking about it?

It is understood John. First of all the completion factor is exceeding our expectations, the operations has been stellar this month from a completion and so we’re generating the ASMs from a completion factor point of view.

The second point is on the Chinese New Year’s a little bit is a good point also, a little perspective is January last year we cancelled 25 round trips because of the New Year and TransPac to support what become very much not a business travel period. That is shifted to February and so is a specific capacity you know is running kind of a more normal time with the Chinese New Year been in there.

So both of those things affect exactly what you’re talking about.

Okay thanks and I couldn’t help to notice that the advance book factor for the pacific was up meaningfully. Is it fair to say that you’re seeing evidence of some of those easier reacceleration that we might be seeing in other date and other companies we track?

In terms of leisure in general John?

I just mean in terms of traffic levels and demand.

I think what we’re seeing is kind of ongoing, we’re seeing the ongoing kind of general economic environment that we saw in 2012 and seeing still good demand really in all the booking windows going out.

You know you mentioned I think as Jim mentioned sort of corporate customers around a bit of detour, I’m curious obviously there is a lot you can do to improve the operation, but if (inaudible) find someone else, how do you make sure they know what you’re doing and the piece of that is if you’re hitting sort of your on-time performance targets, is it really your target that matter or do you think you have to make sure that you are towards to the top of the industry, so you can maybe show a customer who has gone somewhere else that your competitive in terms of the operation. I’m curious how you think about that both in terms of the outreach and in terms of the absolute performance and the relative performance on the on-time side.

It's a combination of things, it's not just the on-time performance and you need to be reliable and different levels of reliability above 80% have diminishing returns, but it's really also -- it’s many different factors, it's also very important as the customer service and which is why we’re focusing so heavily on customer service this year as you know I mean you all fly. A good customer service can take even delayed flight or a flight where there is an issue on-board the aircraft, a broken piece of IFE (ph) or something.

And good service can turn that into a really good flight, you can also have a perfectly on-time flight on a brand new airplane everything works and if you’re not getting good service it's going to be a crappy flight. So you know we’re also focusing very, very heavily on customer service both at the airport, on contact center agents with flight attendants and I think that’s and I think you can see that in our improving customer satisfaction scores and I believe those scores will continue to improve.

We have enormous amount of folks on it including we’re going to have a broad-based quarterly bonus program for all of our co-workers based on improvements in customer satisfaction scores. So we’re going to focus heavily on that and as people fly as the word does get out and we’re significantly better today for sure than we’re in the summer and I believe this time next year we’ll be significantly better than we’re today and with that I would take it over to Jim.

I think as we mentioned kind of in the comments that the last duty integration put a lot of stress on our employees and our customers. I’ll tell you that in that group of employees that a lot of stress was on with our sales force.

And our sales force literally was always out there with our corporate partners and travel managers. The difference is the conversation was a little bit different than what we had hoped for.

The conversation was about some of the integration issues and so forth. What’s happened with the on-time performance in the fourth quarter, the improvements we’re seeing now they have really -- the sales force has always been very present with our corporate travel partners and now what they are doing is again talking about the network, the value of the network that it brings to them, what it can do for them in their travel needs.

So I guess the point is how did the awareness that things are back. I think the awareness is driven by the fact that they have the sales force is out there communicating, I mentioned a couple of forms we do with advisory boards but really every day they are calling on their customers and letting them know where we’re are at and how we can help them in their travel needs.

I appreciate that and maybe just a quick one now that the pilot contracts done and you have the scope really on the RJs, and is that something that we should look for reasonably large changes in ‘14 or is that a smaller component trying to get a sense of what your opportunities does that some of these higher labor cost down the road with similar to what Deltas did.

The new contract as it relates to regional does present us with a tremendous amount of flexibility to be competitive in the 70 seat market. Really, the first phase of this year quite frankly is with the new agreement is being able to redeploy the current 70 seaters that we have across the system to optimize the network, some of the things we talked about in terms of synergies for the first year.

But as you’re moving to 2014, then we will be able to kind of take that second phase, but this year will be about using the aircrafts that we have and redeploying, but that contract does create tremendous amount of flexibility for us to be competitive in that space.

Just wondering when you think you will be able to expand margins year-to-year with this first quarter CASM guidance, do you think revenue can be good enough to start that process this quarter?

I don’t want to comment on revenue Duane, I think you know as I alluded to earlier in response to Mike. We’re extremely focused on execution we have a plan, we’re following that plan I think that if we execute on that and we do the things that we’re capable of and you combine that with the product that we’re providing, the network that we have, I think that you will begin to see margin expansion clearly.

We wanted as badly as our investors, our employee’s want it and I think that 2013 as I said is an important year for us as we’re beginning to put all these different items in place to enable us to achieve that.

And then just I will ask one follow-up just in terms of your difference between your first quarter CASM guidance and your full year what are the things that sort of drive that moderation other than just more ASMs?

You’re right, ASM is a significant piece of that but probably two thirds of the cost guidance in the first quarter or the cost increase is related to labor and that’s simply the anniversary effect of lapping some of the labor agreements of last year, results were put in the place during the year. So labor is a piece of that, the only other thing that I would call out as significant as we have got a higher than normal volume of engine events in our V2500 engines in the first and second quarter.

So I would expect maintenance expense related those items will be up $30 million to $40 million each quarter, but that tells often back half of the year we actually see some improvements.

Has either Boeing or the FFA given you any guidance at all on when you can expect to get your 787s flying again?

No.

Okay and are you, what are you hearing from your pilots on the subject of the 787, Are they seeking any additional safeguards it might be in addition to whatever the FAA comes up with, is there any push back from them at all on 787?

Look, Josh, safety is obviously very important than and I’m confident that when the regulatory authorities and Boeing working together determine the cause of the battery issues and the [fixed] board that we will implement whatever that fix is under the (inaudible) permit us to fly the aircraft safely again. So there is no distinction between us and our pilots with respect to safety.

Very, very quickly, can you put any numbers on the head count reduction? I know you gave in terms of percentage can you say any numbers on the number of people you expect to end up cutting?

Sure it's over 600.

Just going up on Josh’s question, Jeff and you won't be surprised, but as often no one is going to buy the 787 from (inaudible) 100% safety….

Doug, we’re having a hard time hearing you from this end.

I mean this is for Jeff and Jim, obviously the industry is not going to fly the 787 until the industry, (inaudible) 100% confident in safety –so, but how do you and other operators start going about convincing the traveling public if that’s the case?

Once the NTSP, GTSP together and FA work together to [determine causality] and Boeing fixes it or done because look the aircraft is a terrific aircraft and customers love the airplane and I have no doubt that customers will flock back to that airplane as soon as we get it back up again. But this is a problem that Boeing and the regulatory authorities need to deal with, they should deal with it, we support them, we will give them every bit of assistance that we possibly can because we too want to get the airplane up and flying safely and I’m confident that will occur.

I don’t know when that will occur but we will learn more with time.

What gives you that confidence though?

Well in terms that they will find a fix, I mean in history.

No, the confidence that customers will flock back.

Look it's a terrific airplane, I mean ask anybody who has flown that airplane it’s spectacular and once this particular issue is solved it's solved and it's just a matter of whatever time it takes to solve it.

With that we’re out of time. We’ll conclude.

Thanks to all of you on the call for joining us today. Please call Investor Relations if you have any further questions and we look forward to talking to you next quarter.

Good bye.