UAL Future Pilot Sourcing AABI 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 carriers lose 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 Sourcing 2

United Risk and Mitigation UAL Future Pilot Sourcing 3  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 1. Boeing study (July 2012) 2. Retirements plus normal attrition 3. UA regionals ~7000 pilots (10% annual attrition) Annual (average) 20 Year Total ( ) Worldwide 1 23,000460,000 N. America 1 3,45069,000 United ,606 UAX ,000 Forces Increasing Pilot Demand  Retirements (Age 65/Dec 2012) and normal attrition  FAR Part 117 Crew Rest Rules (Jan 2014)  +3.1% UAL  % United Regionals  Global growth (especially Asia/Pacific) UAL Growth Annual (average) 20 Year Total ( ) 1.0%63912, %70114, %77015,393 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 Navy/Marine TOTAL UAL Capture15%186 (annual) New Commercial certificates down 50% (17,000 in 1991 to 8500 in 2011) 5 UAL Future Pilot Sourcing

UAL and UAX Demand and Supply Summary 6 UAL Future Pilot Sourcing 5 Year (Annual Avg) 10 Year (Annual Avg) 20 Year (Annual Avg) UAL Need (retire + attrition + 1.0% growth) Pilots from Military186 UAL Need from Other Sources UAX Need: Flow to UAL UAX Need (retire + attrition) - no growth UAX Need: Flow to Other Airlines TOTAL UAX Need (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% ( pilots) at UAX Aviation University Supply 2 Annual Output Airline Career (56%) UAX Capture (20%) Annual Shortfall (5 Year) Annual Shortfall (10 Year) Annual Shortfall (20 Year) 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) 7 UAL Future Pilot Sourcing

8 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 9 UAL Future Pilot Sourcing

10 Questions?

UAL Future Pilot Sourcing 11 Backup Slides

UAL Future Pilot Sourcing 12 Airline Market Overview

UAL Future Pilot Sourcing 13 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 = UAL Future Pilot Sourcing