the Pension Protection Act. As a result, we intend to preserve our defined benefit pension plan for active and retired non-pilot employees;

 

	·	reached agreement with the Pension Benefit Guaranty Corporation (the “PBGC”) regarding the termination of the Pilot Plan; and

 

	·	implemented an enhanced profit-sharing plan that will allow employees to share in our future success. 



Emergence Business Plan

 

As a result of our reorganization, we expect to emerge from bankruptcy as a competitive, standalone airline with a global network. We intend to be the airline of choice for customers by continuing to improve the customer experience on the ground and in the air. Our business strategy touches all facets of our operations - the destinations we will serve, the way we will serve our customers, and the fleet we will operate - in order to earn customer preference and continue to improve revenue performance. At the same time, we intend to remain focused on maintaining the competitive cost structure we have obtained from our reorganization to improve our financial position and pursue long-term stability as a standalone carrier.

 

Important aspects of our emergence business strategy include the following:

 

	·	Leveraging Network Strength to Provide Expanded International Service. We will continue to focus on international growth. With our geographically-balanced hubs, we believe we are well- positioned for international growth from the U.S. to Europe and Latin America. In addition, we expect our hubs will help us increase service to Africa and Asia.

 

	·	Maintaining Focus on Improving the Customer Experience. Our focus on safety will remain our top priority. We are also committed to continuous improvement throughout our operations to earn our customers’ preference. We have renewed our focus on improving our product and customer service through aircraft cabin and airport improvements.

 

	·	Maximizing a Streamlined and Upgraded Fleet. We are supporting the ongoing changes to our network by bolstering our internationally-capable mainline fleet. We plan to pursue additional strategic improvements to our fleet by adding high-performance aircraft that will enable us to serve new destinations with appropriate capacity. We have announced plans to add 28 internationally capable aircraft scheduled for delivery in 2007 through 2009.

 

	·	Capturing the Benefit of Competitive Cost Structure. Through initiatives undertaken during the Chapter 11 proceedings and previous productivity initiatives, we currently have one of the lowest mainline unit cost structures of any full service carrier. These efforts have resulted in reduced costs throughout our organization, including reductions in employment costs, retiree pension and healthcare costs and aircraft fleet costs. We recognize that, to succeed, we must maintain the competitive unit cost structure that we developed through our restructuring efforts.

 

	·	Generating Cash Flow from Operations Necessary to Fund Capital Expenditures and Reduce Debt. Over an extended period following emergence from Chapter 11, we intend to balance long-term operating growth with overall credit improvement. At emergence