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Home , Continental Airlines, Scott Kirby

Global

Group #6

- Brian Gabriel Purba

- Zhen(Bruno) Liu

- Fayassir Haqna AGENDA

 Industry Overview o Terminology o Characteristics of Industry o History o Current Status/Trends o Outlook  TERMINOLOGY

ATK: Available Tonne Kilometres • Measure available total capacity of and cargo

ASK: Available Seat Kilometers • [number of seats available] * [number of kilometers flown]

RPK: Revenue Passenger Kilometers • [number of ] * [number of kilometers flown]

FTK: Freight Tonne Kilometers • [Freight tonnes carried] * [kilometers flown]

YIELD: • [Revenue] / [RPK] • Represents an aggregate of all the airfare and airline charges and measured on a per kilometer basis

LOAD FACTOR: Capacity Utilization • [RPK] / [ASK] • [number of passengers] / [number of seats available]

BREAK-EVEN LOAD FACTOR: • [Unit Cost] / [Yield] • Operating cost = operating revenue INDUSTRY CHARACTERISTICS

• Very competitive industry • Powerful supplier ( and ) • Capital intensive industry • Sensitive to business cycle • High operating costs • Low profit Margin CATEGORY

•International

•National

•Regional

•Cargo COMPARISON HISTORY OF AIRLINE INDUSTRY

 Airline Industry began in early 1900s

 On December 17, 1903, Orville and Wilbur Wright built up the first powered flight

 The world’s first Airline was DELAG, it was found on November 16, 1909

 The first fixed wing scheduled air service Commercial flight flew from St. Petersburg, Florida to Tampa, Florida (23 minutes,18 miles).

 KLM operated its first flight in 1919 making it the oldest carrier which is still operated today.

 In WW I, the military value of aircraft was quickly recognized o After WW I, a large number of military planes were became available for civilian use

 As a consequence of WW I, nearly 20 small passenger airlines were created using bomber planes, notably in Germany, France and Great Britain. REGULATIONS

 1925, the Air Commerce Act (airways, certify aircraft, license pilots, and issue and enforce air traffic regulations)   1938, the Civil Aeronautics Act established the (CAB) (routes and ticket prices)

 1978, the Act (introducing a free market)

 In 2010 and 2011, the U.S. Department of Transportation (safety standards and other operating procedures)

 Internationally, the International Civil Aviation Organization (worldwide standards for safety and other vital concerns) CONDITIONS AFFECTING AIRLINE INDUSTRY

 Airport capacity  Route structures  Technology  Costs to lease or buy physical aircraft  Weather  Fuel cost  Labor  Economy  Regulations AIR TRANSPORT SYSTEM FLOW CHART ROUTE STRUCTURE

Point-to-point Hub and Spoke  Used by low cost (discount) carriers  Used by legacy carriers  Shorter routes, usually regional/domestic  Allows more distant and international routes  Decreased connection and travel times  Utilize main airports as hubs  Increased utilization leads to lower unit cost  Lead to more efficient use of transportation resource  Avoid domino effect  Centralized model result in inflexible  Require more routes, less flexibility in destination operation

 World’s largest global airline alliances  Star Alliance's 27 member airlines operate a fleet of approximately 4,657 aircraft, serve more than 1,330 airports in 192 countries and carry 641.1 million passengers per year on more than 18,500 daily departures STAR ALLIANCE DESTINATIONS AIRLINE CAPACITY INDUSTRY REVENUE DRIVERS COMMERCIAL AIRLINE TREND COMMERCIAL AIRLINE TREND AIRLINE TRAFFIC AIRLINE REVENUE & GDP GLOBAL RPK RPK & WORLD GDP GLOBAL RPK PROJECTION OPERATING MARGINS (INDUSTRY) GLOBAL AIRLINE INDUSTRY PERFORMANCE PROFITABLE INDUSTRY INDUSTRY PERFORMANCE CONSUMER CONFIDENCE DECLINING COST DECLINING COST OF FUEL DECLINING COST OF FUEL

STOCK INFORMATION 1 YEAR STOCK MOVEMENT 5 YEAR STOCK MOVEMENT 10 YEAR STOCK MOVEMENT MAX STOCK MOVEMENT 5 YEAR COMPARISON 10 YEAR COMPARISON DIVIDENDS STOCK INFORMATION (ADR) 1 YEAR STOCK MOVEMENT (ADR) 5 YEAR STOCK MOVEMENT (ADR) MAX STOCK MOVEMENT (ADR) 5 YEAR COMPARISON(ADR) 10 YEAR COMPARISON (ADR) HISTORY HISTORY COMPANY PROFILE

• Based at Singapore Changi Airport • Incorporated in 1972 • State-owned company • The combined passenger network covers 133 destinations in 37 countries. • World’s most awarded airlines • Subsidiaries: SilkAir, Scoot, Tiger Airways (which operates as Tigerair) and SIA Cargo AWARDS KEY STRATEGY SUBSIDIARIES SUBSIDIARIES PORTFOLIO ROUTE MAP FLEET PROFILE OWNERSHIP MANAGEMENT TEAM

Chairman - Peter Seah Lim Huat

• Appointed as Chairman since 1 January 2017

• He was awarded the Distinguished Service Order in 2012 and the Public Service Star (Bintang Bakti Masyarakat) in 1999, and made a Justice of the Peace in 2003

• Chairman of DBS Bank Ltd, DBS Group Holdings Ltd, Singapore Health Services Ltd and LaSalle College of the Arts Limited.

• He was with former Overseas Union Bank between 1977 and 2001, retiring as Vice Chairman and CEO. Prior to that, he was with Citibank N.A

• Bachelor of Business Administration (Honours), University of Singapore MANAGEMENT TEAM

Goh Choon Phong – CEO/Executive Director

• He worked for SIA group for more than 20 years

• Re-elected as director on 29 July 2016

• Appointed as CEO since 3 September 2010

• He joined the Company in 1990 and has held senior management positions in various divisions in Singapore and overseas.

• Chairman of Budget Aviation Holdings Pte. Ltd., (Manages Scoot and Tigerair),

• Director of SIA Engineering Company Limited,

Education: • Master of Science in Electrical Engineering and Computer Science • Bachelor of Science in Computer Science & Engineering • Bachelor of Science in Management Science • Bachelor of Science in Cognitive Science • Massachusetts Institute of Technology MANAGEMENT TEAM

Executive Vice President: Commercial - Mak Swee Wah

• Member of SIA group since 2007

• He has been an Executive Vice President of Commercial at Singapore Airlines Ltd. since February 1, 2011

• Chairman of SilkAir

• He graduated from the London School of Economics in 1982 with a Bachelor of Science (First Class Honours) degree in Accounting and Finance. Mr. Mak holds a Masters of Science degree in Operational Research from London School of Economics. MANAGEMENT TEAM

Director - Gautam Banerjee

• Re-elected as a director on 29 July 2016

• Senior Managing Director of Blackstone Group and the Chairman of Blackstone Singapore

• Served as the Chief Operating Officer for the Asia Pacific region at PricewaterhouseCoopers Singapore since 2005

• He was a Nominated Member of Parliament in Singapore between 2007 and 2009.

• He was awarded the Public Service Medal by the Singapore Government and an Honorary Doctor of Laws by the University of Warwick, England

• Education: Bachelor of Science in Accounting and Financial Analysis, University of Warwick MANAGEMENT TEAM

Director - Helmut Gunther William Panke

• First appointment as director on 1 September 2009

• Served as the Chairman of Bayerische Motoren Werke Aktiengesellschaft (BMW) from May 16, 2002 until September 1, 2006

• Served as the CEO of BMW from 1993 to 1996

• Trained nuclear engineer, was with BMW AG from 1982 to 2006

• Graduated from the University of Munich in physics, having started his studies in 1968, and received his Ph.D in 1976 MANAGEMENT TEAM

Senior Vice President: Finance/CFO - Stephen Barnes

• Appointed as senior VP since 2014

• Member of SIA group since 2001

• Ex-Senior Director, Portfolio Management from October 2008 – January 2014 at Guggenheim Aviation Partners Ltd.

• 30 Yeas of experiences in financial industry

• Education: The Judd School, Tonbridge, UK MANAGEMENT TEAM

Senior Vice President: Human Resources - Cheng Kian Hai

• Serves as the Senior Vice President of Human Resources at Singapore Airlines Limited and served as its Acting Senior Vice President of Human Resources since February 1, 2009 OPERATING STATISTICS OPERATING PERFORMANCE OPERATING PERFORMANCE OPERATING PERFORMANCE REVENUE BY ROUTE REGION COST COMPOSITION FUEL EXPENDITURE FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS BALANCE SHEET (QUARTERLY) BALANCE SHEET (QUARTERLY) BALANCE SHEET (ANNUAL) BALANCE SHEET (ANNUAL) INCOME STATEMENT (ANNUAL) INCOME STATEMENT (ANNUAL) INCOME STATEMENT (QUARTERLY) INCOME STATEMENT (QUARTERLY) CASH FLOW STATEMENT (ANNUAL) CASH FLOW STATEMENT (ANNUAL) CASH FLOW STATEMENT (QUARTERLY) RECOMMENDATION

HOLD

STOCK INFORMATION 1-YEAR STOCK PRICE MOVEMENT 5-YEAR STOCK PRICE MOVEMENT 10-YEAR STOCK PRICE MOVEMENT MAX STOCK PRICE MOVEMENT COMPARISON OF 5- YEAR CUMULATIVE TOTAL RETURN AMONG SOUTHWEST AIRLINES CO., S&P 500 INDEX, AND NYSE ARCA AIRLINE INDEX

LUV

S&P 500

NYSE ARCA Airline DIVIDEND HISTORY SOUTHWEST AIRLINE

 Incorporated on March 9, 1967

 Headquarters in Dallas,

 The nation's largest carrier in terms of originating domestic passengers boarded (the U.S. Department of Transportation)

 54,000+ employees and more than 100 million customers annually

 101 destinations in the and nine additional countries with 3,900+ departures a day during peak travel season

 Operates the largest fleet of Boeing aircraft in the world, the majority of which are equipped with satellite-based Wi-Fi providing gate-to-gate connectivity.

 As of May 17, 2017, this year Southwest has returned $1.1 billion to Shareholders through the payment of $123 million in dividends and the repurchase of $950 million in common stock. HISTORY – 1960 TO 1980

1967 1971 1973 1975 1978

Air Airline Southwest Common First flight Southwest established reaches the stock listed to a Co. was first route, first year on destination incorporate which profit and American outside of d included carries one Stock Texas (New Dallas, millionth Exchange Orleans) , customer under the and San ticker “LUV” Antonio HISTORY – 1980 TO TODAY

1994 1996 2005 2009 2011

Acquisition Online Enters first Becomes Integration of two booking site code-share largest of AirTran airline launched agreement carrier in companies: with the US, Arizona One American servicing 68 and Morris Trans Air airports in Air 35 states SOUTHWEST AIRLINES CULTURE: 1970S

Promotional Theme: “Love” • Flight attendants were dressed in hot pants and go-go boots • Southwest served “love potions” and “love bites” (drinks and peanuts) • The main target group were male business man MISSION &VISION

Mission

Vision BUSINESS STRATEGY ROUTE MAP TOP 10 AIRPORTS DEPARTURES FLEET MANAGEMENT

Chairman of the Board and Chief Executive Officer

• In 1986 began his career at Southwest Airlines as Controller, moving up to Chief Financial Officer and Vice President Finance, then Executive Vice President and CFO, before being promoted to CEO and Vice Chairman in July 2004.

• He received a B.B.A. in Accounting from the University of Texas at Austin.

• He is a Certified Public Accountant and serves on the Board of Directors of the Lincoln National Corporation and , the airline industry advocacy group (serving as Chairman Gary C. Kelly from 2012 - 2014). MANAGEMENT

President • In January, 2017, began his career at Southwest Airlines as president

• Served as an Executive Vice President of Strategy & Innovation at Southwest Airlines Co. since January 2016 until January 10, 2017

• He was a member of the Board of Directors of Southwest Airlines Co., a role he has held since December 1, 2010.

• He holds a Bachelor of Science degree from Villanova University and an MBA from the University of Dallas. Tom Nealon MANAGEMENT

Chief Operating Officer • He joined the company in 1993.

• He has held several positions at Southwest such as Executive Vice President of Aircraft Operations, Senior Vice President of Planning, Vice President Financial Planning & Analysis, Senior Director of Financial Planning & Analysis, Director of Financial Planning, and Director of Internal Audit

• He received a B.B.A. from the University of Texas at Austin. He is also a Certified Public Accountant Michael G. Van de Ven MANAGEMENT

Executive Vice President and Chief Financial Officer

• She joined the company in 1991 and she became Senior Vice President Planning in 2010

• Senior Vice President Finance and Chief Financial Officer since September 2012

• She received a B.B.A. in accounting from the University of Texas at Austin

Tammy Romo MANAGEMENT

Executive Vice President and Chief Revenue Officer

• Joined Southwest Airlines as vice president of network planning and performance in October 2013 and became senior vice president of network and revenue in January 2015.

• He was vice president of planning and revenue management at .

• He holds a bachelor’s degree from Washington University in St. Louis and an MBA from Vanderbilt University. Andrew Watterson MANAGEMENT

Executive Vice President of Corporate Services • Joined Southwest Airlines in 1988

• He has served in roles including Director Revenue Accounting, Corporate Controller, Vice President Procurement, Vice President Technology, Senior Vice President Enterprise Spend Management, and Executive Vice President Strategy and Technology

• Bob holds an undergraduate degree in Computer Science and a Masters in Business Administration, both from Texas A&M University

Robert E. Jordan COMPANY OWNERSHIP 2012-16 OPERATIONS REVENUE Q1 2017 OPERATIONS REVENUE

(30.3%) Operating Income AIRLINE LEVERAGE RETURN ON INVESTED CAPITAL HIGHLIGHTS FUEL IMPACT AIRLINE FUEL COST TREND

High

Southwest FUEL IMPACT (CONT.)

Fuel Exp. 13.6% FUEL HEDGING STRATEGY

 The Company enters into fuel derivative contracts to manage its risk associated with significant increases in fuel prices

 The more volatile the market the higher the cost of hedging

 The cost of hedging has increased in recent years with current high volatility in jet fuel prices and at the same time cost of fuel has decreased substantially what out weighted the increase in cost of hedging

 The Company holds a net position of fuel derivative instruments that represent a hedge for a portion of its anticipated jet fuel purchases. FUEL HEDGING FUEL HEDGING (CONT.) BALANCE SHEET 10-Q BALANCE SHEET 10-Q (CONT.) BALANCE SHEET 10-K BALANCE SHEET 10-K (CONT.) INCOME STATEMENT 10-K INCOME STATEMENT 10-Q CASH FLOW STATEMENT 10-K CASH FLOW STATEMENT 10-K (CONT.) CASH FLOW STATEMENT 10-Q CASH FLOW STATEMENT 10-Q (CONT.) RECOMMENDATION

Buy/Hold

STOCK INFORMATION 1-YEAR STOCK PRICE MOVEMENT 1-YEAR STOCK PRICE MOVEMENT 5-YEAR STOCK PRICE MOVEMENT 10-YEAR STOCK PRICE MOVEMENT MAX STOCK PRICE MOVEMENT 5-YEAR COMPARISON (CUMULATIVE) SHARE REPURCHASEMENT PROGRAM SHARE REPURCHASEMENT PROGRAM COMPANY PROFILE

• Headquartered in , • Incorporated on December 30 1968 • One of the largest airlines in the U.S. and the world • Co-founded Star Alliance • 4,500 daily departures to 338 airports across 50 countries • In 2016, operated +1.6 million flights with +143 million customers • Has approx. 88,400 employees • The Company transports people and cargo through its and regional operations • With key global aviation rights in North America, Asia-Pacific, Europe, Middle East and Latin America, UAL has the world’s most comprehensive global route network COMPANY HISTORY

1927 1931 1933 1934 1940 1953 1961 1968 1982

Boeing and UATC formed Began WW II: United Inception of Merged with Company The first carrier Pratt & Whitney United Airlines operating split UATC; Airlines were “men only” Capital Airlines restructured; to operate merged which Inc Boeing 247 airline interests flying bomber service UAL corp formed United became into a planes and created with Aircraft and single airline supporting UAL as wholly Transport United Airlines various mail owned Corporation efforts subsidiary

2010 2006 2003 2002 1995 1995 1994 1985 - 1991

Merged with Emerged Introduced Filed for Co-founded UAL employees Purchased Pan Continental from low cost bankruptcy Star Alliance available for agreed to an Am Pacific Airlines bankruptcy airline commercial ESOP of 55% of Division and after raising flights Company routes to $3 Billion Ownership Heathrow BUSINESS STRATEGY

• More Choice for Customers • Optimize Network and Revenue Management • Adjusting Aircraft Order Book • Continued Strong Cost Control • Building on Current Success ROUTE MAP ROUTE MAP HUBS & KEY AIRPORTS

• Chicago, IL — O'Hare International Airport (ORD) • , CO — Denver International Airport (DEN) • Frankfurt, Germany — Frankfurt International Airport (FRA) • — Antonio B. Won Pat International Airport (GUM) (also known as Guam International Airport) • Houston, TX — Houston/ George Bush Intercontinental Airport (IAH) • London, United Kingdom — London Heathrow International Airport (LHR) • Los Angeles, CA — Los Angeles International Airport (LAX) • Newark, NJ — New York/ Newark Liberty International Airport (EWR) [our New York area hub] • San Francisco, CA — San Francisco International Airport (SFO) • Tokyo, Japan — Tokyo Narita Airport (NRT) • Washington, D.C. — Washington Dulles International Airport (IAD) HUBS & KEY AIRPORTS FLEET FLEET REVENUE PASSENGER MILES REVENUE SEGMENTATION AIRCRAFT FUEL

• As of December 31, 2016, the Company did not have any outstanding fuel hedging contracts • The Company’s current strategy is to not enter into transactions to hedge its fuel consumption, although the Company regularly reviews its strategy based on market conditions and other factors MANAGEMENT

Oscar Munoz • Served on the board of directors for United Continental Holdings, Inc. since 2010 and served on the board of directors of , Inc. since 2004. • Ex President and CFO of CSX Corporation, a premier freight transportation company (2015) • Ex CFO and VP of consumer services at AT&T Corporation • Ex Senior VP of finance and administration for U.S. West • Ex Regional VP of finance and administration for Coca-Cola Enterprises • Graduated from the University of Southern California with a B.S. in Business Administration, and received an MBA from Pepperdine University. Chief Executive Officer MANAGEMENT

Scott Kirby

• Appointed as President of UAL and United Airlines since August 2016 • responsible for United’s operations, marketing, sales, alliances, network planning and revenue management. • Ex President of Group and American Airlines • Ex President of America West and US Airways • Started his career in Pentagon • Holds Bachelor Degree in Computer Science and Operations Research from the U.S. Air Force Academy and a Master of Science in Operations Research from George Washington University

President MANAGEMENT

Andrew Levy

• Appointed as CFO of United Airlines in August 2016 • Responsible for the airline’s overall financial strategy including cost management, capital allocation and balance sheet optimization. • Board member of • Ex President and CFO of Allegiant Travel, where he guided the restructuring of ultra low-cost carrier Allegiant AirEx CFO and VP of consumer services at AT&T Corporation for 13 years • Ex VP Network development and Network planning of mPower • Holds Bachelor Degree from Washington University and a Juris Doctor from Emory University Chief Financial Officer MANAGEMENT

Chris Kenny

• Appointed as VP and Controller of UAL and United since October 2010 • Responsible for all accounting, financial reporting and internal controls. • From September 2003 to September 2010, He served as Vice President and Controller of Continental. • Joined Continental in 1997 • Ex Assistant Controller for Halliburton Energy Services • Ex Senior Manager for EY LLP • Holds BBA degree from the University of Texas

VP and Controller MANAGEMENT

Linda Jojo

• Appointed as Executive Vice President and Chief Information Officer of UAL and United in November 2014 • Responsible for strategy and operations of United’s technology platforms and infrastructure, as well as United’s mobile app, e- commerce and commercial web platforms • Ex Executive Vice President and Chief Information Officer of Rogers Communications, Inc. • Ex Chief Information Officer of Energy Future Holdings, a Dallas- based privately held energy company and electrical utility provider • Member of the Board of Directors at Exelon Corporation • Holds a Bachelor Degree in Computer Science and a Master’s Degree in industrial engineering from Rensselaer Polytechnic Institute. Executive VP of Technology and Chief Digital Officer MANAGEMENT

Gregory Hart

• Served as Executive Vice President and Chief Operations Officer of UAL and United since February 2014 • Served as senior vice president of network for United from 2010- 2012 and as vice president of network strategy for Continental Airlines from 2008 to 2010. • Held various leadership positions at Continental Airlines since joining in 1997, including staff vice president of domestic scheduling and managing director of corporate development. • Holds a Bachelor’s Degree from the University of Wisconsin in 1987 and a MBA from Cornell University in 1993.

Executive VP and Chief Operations Officer MANAGEMENT

Brett Hart

• Served as Executive Vice President and General Counsel of UAL and United since February 2012 • Served as acting Chief Executive Officer and principal executive Officer of the Company, on an interim basis, from October 2015 to March 2016 • Ex Senior Vice President, General Counsel and Secretary of UAL, United and Continental (2010 – 2012) • Prior to joining United in 2010, Brett was executive vice president, general counsel and corporate secretary at Sara Lee Corporation • Holds a Bachelor of Arts Degree in Philosophy and English from the University of Michigan and a Juris Doctorate Degree from the University of Chicago Law School Executive VP, Chief Administrative Officer and General Counsel MANAGEMENT

Michael Bonds

• Served as Executive Vice President Human Resources and Labor Relations of UAL and United since October 2010 • Served as Senior Vice President Human Resources and Labor Relations of Continental Airlines from 2005 to 2010 • Joined Continental in 1995 • Member of Board of Director for the Boys and Girls club of Chicago, Lurie Child’s Hospital, and Skills for Chicagoland’s Future • Holds a Bachelor of Science Business Administration Degree from the University of Arkansas

Executive VP of Human Resources and Labor Relations COMPANY OWNERSHIP COMPANY OWNERSHIP EPS RATIOS BALANCE SHEET (10-K) BALANCE SHEET (10-K) BALANCE SHEET (10-Q) BALANCE SHEET (10-Q) INCOME STATEMENT(10-Q) INCOME STATEMENT(10-K) INCOME STATEMENT (10-Q) INCOME STATEMENT (10-K) CASHFLOW STATEMENT (10-Q) CASHFLOW STATEMENT (10-K) RECOMMENDATION

BUY