Continental AirlinesCustomer Analysis

Chris Dwyer Meghan Murphy Kassonga Mwamba

Overviewbull Industry Trends

bull Product Markets

bull Domestic vs International

bull Types of Passengers

bull Market OpportunitiesStrategies

bull Potential Problems

bull Future

Trends ~ Airline Industrybull Rapid Growth in International Demand

bull Steady Growth in Domestic Demand

bull Increased On-Line Distribution

bull Decrease in Airline Capacity (due to bankruptcy)

bull Increase Price per Flight

bull Continued Pressure from LCCs in Domestic Market

bull Alliance Agreements

Positive Growth2

bull Continued Growth for 32 of the past 35 yearsndash 1991 ~ Desert Stormndash 2001-2002 ~ 911 Terrorist Attacks

bull Continued Economic Growth

bull Continued Increase in World Trade

See Source 2

Boeing Current Market Outlook 2005 Demand for Air Travel

Product Marketsbull Domestic

ndash Point to Point Routesndash Short-Haul Flightsndash Highly Price Sensitive customer segmentndash Increased Competition From LCCsndash Lower RASM

bull Internationalndash Network-Hub Routesndash Long-Haul Flightsndash Less Price Sensitive Customer Segmentndash Less Industry Competitionndash Higher RASM

Domestic vs Internationalbull 2004 International Growth

Increased 139 vs Domestic Growth 4812

bull ldquoMajorsrdquo Shifting to More Profitable International Segments

bull Typically Less Competition for International Travel

bull Growing Demand in Latin American Atlantic amp Pacific Segments

bull International Yields Higher RPSM

Revenue Percentage by Segment (Intl)

14172023262932353841

2001 2002 2003 2004 2005

American AirlinesContinental AirlinesUnited AirlinesDelta AirlinesNorthwest Airlines

Revenue Percentage by Segment (Domestic)

50545862667074788286

2001 2002 2003 2004 2005

American AirlinesContinental AirlinesUnited AirlinesDelta AirlinesNorthwest Airlines

Data taken from 05rsquo-02rsquo 10K reports See Sources 1561014

See Source 12

Types of Passengers

bull Leisure TravelerPreferences

Lower Price Willing to Sacrifice Service Limited Route Needs

bull Business Traveler34 of Domestic Revenue in 2000 (Only 10 of

Capacity)11

Preferences Price Sensitivity Driven by Economic Conditions Higher Class of Service Seeing Shift Towards LCCs

See Source 11

Frequent Flyer (FF) ~ Demographics

3

A person that takes AT LEAST 4 flights per year (17 Million Americans)

bull Average FF takes 9 flights per year

bull Only 18 of Total Airline Travelers BUT Account for 58 of ALL Flights Taken

bull 68 of FF have College or Graduate Degree

bull 75 are Employed Full or Part-time

bull Majority are Male ~ Accounting for 58 of all FFndash 61 of those are between the ages of 25-54 years of

age

See Source 3

Frequent Flyer Programs

bull American Airlinesndash AAdvantage Miles

bull Continental Airlinesndash OnePass

bull United Airlinesndash Mileage Plus

bull Southwest Airlinesndash Rapid Rewards

Market Opportunities

bull International Segmentsndash PacificAsiandash Latin Americandash AtlanticEurope

bull Frequent Flyer Programsndash Travel Industry Alliancesndash Miles Auctions

bull Higher Level of Servicendash Concierge

International Opportunitiesbull Continental Has More International Exposure

than any of the Other ldquoMajorsrdquo13

bull Current Hub and Spoke System Ideal for International Expansionndash Houston ndash Latin Americandash Newark ~ Serving Richest DMA in the US ndash Europe and

AsiaPacific

bull Purchasing Power Growth of US Hispanic and Latin American Market Segment

bull International Revenues Grew 29 in 200513

See Source 13

International Strategies

bull Continental Plans to Expand International Routes by 15 Over the Next Several Years ~ vs 2-4 Expansion in Domestic Market13

bull European Routes to Lower-Traffic European Airports8

bull Chinese Routes to Beijing and Hong Kong Serving Economically Expanding China Market

bull Launch of Spanish-Language Web SiteSee Source 13

See Source 8

FF Opportunities11

bull Frequent Flyers Make Up Significantly Large Portion of Flight Segments

bull Show High Level of Brand Loyalty

bull Focus on Online Booking

See Source 11

FF Strategies

bull Forming Alliances with Other Airlinesbull Increase Route Availabilitybull Allow Usage of FF Miles in Networkbull Decreases Need for FF to Go Outside Network

bull Enhance Web Site Booking System for FFbull Checking PointsMiles Statusbull Booking Capabilities

bull Miles Auctions

Service Opportunities

bull Differentiation with High Service Levels

bull Adding Service When Other Airlines Cutting Service Costs

bull US Economic Growth Trends Promising for Increased Service Requirements for Business Travelersndash Segmentation of ldquoTop-Tierrdquo passengers

Service Strategies

bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers

bull Enhancing In-Flight Reports for Flight Attendants4

bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved

Service11

See Source 4

See Source 11

Potential Problems

bull Increased Globalization

bull Liberalization of International Regulation

bull Domestic LCCs

bull Potential Terrorists Attacks

Future Strategy

bull EnhanceExpand Transcontinental Routes

bull Continued Customer Service Focus

bull Strengthen Alliances for Customer Convenience

bull Focus on Top Revenue Producing Segments

References1 American Airlines February 24 2006 2005 Annual Report [on-line]

httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061

2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006

3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006

4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006

5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062

6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063

1 Same site used for 2003 Annual Report

2 Same site used for 2003 Annual Report

3 Same site used for 2003 Annual Report

References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines

Initialing with Outperform Due to Low Costs amp Strong International Presence

8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom

9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005

10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064

11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future

12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005

13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies

14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065

4 Same site used for 2002 Annual Report

5 Same site used for 2003 Annual Report

Overviewbull Industry Trends

bull Product Markets

bull Domestic vs International

bull Types of Passengers

bull Market OpportunitiesStrategies

bull Potential Problems

bull Future

Trends ~ Airline Industrybull Rapid Growth in International Demand

bull Steady Growth in Domestic Demand

bull Increased On-Line Distribution

bull Decrease in Airline Capacity (due to bankruptcy)

bull Increase Price per Flight

bull Continued Pressure from LCCs in Domestic Market

bull Alliance Agreements

Positive Growth2

bull Continued Growth for 32 of the past 35 yearsndash 1991 ~ Desert Stormndash 2001-2002 ~ 911 Terrorist Attacks

bull Continued Economic Growth

bull Continued Increase in World Trade

See Source 2

Boeing Current Market Outlook 2005 Demand for Air Travel

Product Marketsbull Domestic

ndash Point to Point Routesndash Short-Haul Flightsndash Highly Price Sensitive customer segmentndash Increased Competition From LCCsndash Lower RASM

bull Internationalndash Network-Hub Routesndash Long-Haul Flightsndash Less Price Sensitive Customer Segmentndash Less Industry Competitionndash Higher RASM

Domestic vs Internationalbull 2004 International Growth

Increased 139 vs Domestic Growth 4812

bull ldquoMajorsrdquo Shifting to More Profitable International Segments

bull Typically Less Competition for International Travel

bull Growing Demand in Latin American Atlantic amp Pacific Segments

bull International Yields Higher RPSM

Revenue Percentage by Segment (Intl)

14172023262932353841

2001 2002 2003 2004 2005

American AirlinesContinental AirlinesUnited AirlinesDelta AirlinesNorthwest Airlines

Revenue Percentage by Segment (Domestic)

50545862667074788286

2001 2002 2003 2004 2005

American AirlinesContinental AirlinesUnited AirlinesDelta AirlinesNorthwest Airlines

Data taken from 05rsquo-02rsquo 10K reports See Sources 1561014

See Source 12

Types of Passengers

bull Leisure TravelerPreferences

Lower Price Willing to Sacrifice Service Limited Route Needs

bull Business Traveler34 of Domestic Revenue in 2000 (Only 10 of

Capacity)11

Preferences Price Sensitivity Driven by Economic Conditions Higher Class of Service Seeing Shift Towards LCCs

See Source 11

Frequent Flyer (FF) ~ Demographics

3

A person that takes AT LEAST 4 flights per year (17 Million Americans)

bull Average FF takes 9 flights per year

bull Only 18 of Total Airline Travelers BUT Account for 58 of ALL Flights Taken

bull 68 of FF have College or Graduate Degree

bull 75 are Employed Full or Part-time

bull Majority are Male ~ Accounting for 58 of all FFndash 61 of those are between the ages of 25-54 years of

age

See Source 3

Frequent Flyer Programs

bull American Airlinesndash AAdvantage Miles

bull Continental Airlinesndash OnePass

bull United Airlinesndash Mileage Plus

bull Southwest Airlinesndash Rapid Rewards

Market Opportunities

bull International Segmentsndash PacificAsiandash Latin Americandash AtlanticEurope

bull Frequent Flyer Programsndash Travel Industry Alliancesndash Miles Auctions

bull Higher Level of Servicendash Concierge

International Opportunitiesbull Continental Has More International Exposure

than any of the Other ldquoMajorsrdquo13

bull Current Hub and Spoke System Ideal for International Expansionndash Houston ndash Latin Americandash Newark ~ Serving Richest DMA in the US ndash Europe and

AsiaPacific

bull Purchasing Power Growth of US Hispanic and Latin American Market Segment

bull International Revenues Grew 29 in 200513

See Source 13

International Strategies

bull Continental Plans to Expand International Routes by 15 Over the Next Several Years ~ vs 2-4 Expansion in Domestic Market13

bull European Routes to Lower-Traffic European Airports8

bull Chinese Routes to Beijing and Hong Kong Serving Economically Expanding China Market

bull Launch of Spanish-Language Web SiteSee Source 13

See Source 8

FF Opportunities11

bull Frequent Flyers Make Up Significantly Large Portion of Flight Segments

bull Show High Level of Brand Loyalty

bull Focus on Online Booking

See Source 11

FF Strategies

bull Forming Alliances with Other Airlinesbull Increase Route Availabilitybull Allow Usage of FF Miles in Networkbull Decreases Need for FF to Go Outside Network

bull Enhance Web Site Booking System for FFbull Checking PointsMiles Statusbull Booking Capabilities

bull Miles Auctions

Service Opportunities

bull Differentiation with High Service Levels

bull Adding Service When Other Airlines Cutting Service Costs

bull US Economic Growth Trends Promising for Increased Service Requirements for Business Travelersndash Segmentation of ldquoTop-Tierrdquo passengers

Service Strategies

bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers

bull Enhancing In-Flight Reports for Flight Attendants4

bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved

Service11

See Source 4

See Source 11

Potential Problems

bull Increased Globalization

bull Liberalization of International Regulation

bull Domestic LCCs

bull Potential Terrorists Attacks

Future Strategy

bull EnhanceExpand Transcontinental Routes

bull Continued Customer Service Focus

bull Strengthen Alliances for Customer Convenience

bull Focus on Top Revenue Producing Segments

References1 American Airlines February 24 2006 2005 Annual Report [on-line]

httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061

2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006

3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006

4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006

5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062

6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063

1 Same site used for 2003 Annual Report

2 Same site used for 2003 Annual Report

3 Same site used for 2003 Annual Report

References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines

Initialing with Outperform Due to Low Costs amp Strong International Presence

8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom

9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005

10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064

11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future

12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005

13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies

14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065

4 Same site used for 2002 Annual Report

5 Same site used for 2003 Annual Report

Trends ~ Airline Industrybull Rapid Growth in International Demand

bull Steady Growth in Domestic Demand

bull Increased On-Line Distribution

bull Decrease in Airline Capacity (due to bankruptcy)

bull Increase Price per Flight

bull Continued Pressure from LCCs in Domestic Market

bull Alliance Agreements

Positive Growth2

bull Continued Growth for 32 of the past 35 yearsndash 1991 ~ Desert Stormndash 2001-2002 ~ 911 Terrorist Attacks

bull Continued Economic Growth

bull Continued Increase in World Trade

See Source 2

Boeing Current Market Outlook 2005 Demand for Air Travel

Product Marketsbull Domestic

ndash Point to Point Routesndash Short-Haul Flightsndash Highly Price Sensitive customer segmentndash Increased Competition From LCCsndash Lower RASM

bull Internationalndash Network-Hub Routesndash Long-Haul Flightsndash Less Price Sensitive Customer Segmentndash Less Industry Competitionndash Higher RASM

Domestic vs Internationalbull 2004 International Growth

Increased 139 vs Domestic Growth 4812

bull ldquoMajorsrdquo Shifting to More Profitable International Segments

bull Typically Less Competition for International Travel

bull Growing Demand in Latin American Atlantic amp Pacific Segments

bull International Yields Higher RPSM

Revenue Percentage by Segment (Intl)

14172023262932353841

2001 2002 2003 2004 2005

American AirlinesContinental AirlinesUnited AirlinesDelta AirlinesNorthwest Airlines

Revenue Percentage by Segment (Domestic)

50545862667074788286

2001 2002 2003 2004 2005

American AirlinesContinental AirlinesUnited AirlinesDelta AirlinesNorthwest Airlines

Data taken from 05rsquo-02rsquo 10K reports See Sources 1561014

See Source 12

Types of Passengers

bull Leisure TravelerPreferences

Lower Price Willing to Sacrifice Service Limited Route Needs

bull Business Traveler34 of Domestic Revenue in 2000 (Only 10 of

Capacity)11

Preferences Price Sensitivity Driven by Economic Conditions Higher Class of Service Seeing Shift Towards LCCs

See Source 11

Frequent Flyer (FF) ~ Demographics

3

A person that takes AT LEAST 4 flights per year (17 Million Americans)

bull Average FF takes 9 flights per year

bull Only 18 of Total Airline Travelers BUT Account for 58 of ALL Flights Taken

bull 68 of FF have College or Graduate Degree

bull 75 are Employed Full or Part-time

bull Majority are Male ~ Accounting for 58 of all FFndash 61 of those are between the ages of 25-54 years of

age

See Source 3

Frequent Flyer Programs

bull American Airlinesndash AAdvantage Miles

bull Continental Airlinesndash OnePass

bull United Airlinesndash Mileage Plus

bull Southwest Airlinesndash Rapid Rewards

Market Opportunities

bull International Segmentsndash PacificAsiandash Latin Americandash AtlanticEurope

bull Frequent Flyer Programsndash Travel Industry Alliancesndash Miles Auctions

bull Higher Level of Servicendash Concierge

International Opportunitiesbull Continental Has More International Exposure

than any of the Other ldquoMajorsrdquo13

bull Current Hub and Spoke System Ideal for International Expansionndash Houston ndash Latin Americandash Newark ~ Serving Richest DMA in the US ndash Europe and

AsiaPacific

bull Purchasing Power Growth of US Hispanic and Latin American Market Segment

bull International Revenues Grew 29 in 200513

See Source 13

International Strategies

bull Continental Plans to Expand International Routes by 15 Over the Next Several Years ~ vs 2-4 Expansion in Domestic Market13

bull European Routes to Lower-Traffic European Airports8

bull Chinese Routes to Beijing and Hong Kong Serving Economically Expanding China Market

bull Launch of Spanish-Language Web SiteSee Source 13

See Source 8

FF Opportunities11

bull Frequent Flyers Make Up Significantly Large Portion of Flight Segments

bull Show High Level of Brand Loyalty

bull Focus on Online Booking

See Source 11

FF Strategies

bull Forming Alliances with Other Airlinesbull Increase Route Availabilitybull Allow Usage of FF Miles in Networkbull Decreases Need for FF to Go Outside Network

bull Enhance Web Site Booking System for FFbull Checking PointsMiles Statusbull Booking Capabilities

bull Miles Auctions

Service Opportunities

bull Differentiation with High Service Levels

bull Adding Service When Other Airlines Cutting Service Costs

bull US Economic Growth Trends Promising for Increased Service Requirements for Business Travelersndash Segmentation of ldquoTop-Tierrdquo passengers

Service Strategies

bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers

bull Enhancing In-Flight Reports for Flight Attendants4

bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved

Service11

See Source 4

See Source 11

Potential Problems

bull Increased Globalization

bull Liberalization of International Regulation

bull Domestic LCCs

bull Potential Terrorists Attacks

Future Strategy

bull EnhanceExpand Transcontinental Routes

bull Continued Customer Service Focus

bull Strengthen Alliances for Customer Convenience

bull Focus on Top Revenue Producing Segments

References1 American Airlines February 24 2006 2005 Annual Report [on-line]

httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061

2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006

3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006

4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006

5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062

6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063

1 Same site used for 2003 Annual Report

2 Same site used for 2003 Annual Report

3 Same site used for 2003 Annual Report

References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines

Initialing with Outperform Due to Low Costs amp Strong International Presence

8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom

9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005

10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064

11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future

12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005

13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies

14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065

4 Same site used for 2002 Annual Report

5 Same site used for 2003 Annual Report

Positive Growth2

bull Continued Growth for 32 of the past 35 yearsndash 1991 ~ Desert Stormndash 2001-2002 ~ 911 Terrorist Attacks

bull Continued Economic Growth

bull Continued Increase in World Trade

See Source 2

Boeing Current Market Outlook 2005 Demand for Air Travel

Product Marketsbull Domestic

ndash Point to Point Routesndash Short-Haul Flightsndash Highly Price Sensitive customer segmentndash Increased Competition From LCCsndash Lower RASM

bull Internationalndash Network-Hub Routesndash Long-Haul Flightsndash Less Price Sensitive Customer Segmentndash Less Industry Competitionndash Higher RASM

Domestic vs Internationalbull 2004 International Growth

Increased 139 vs Domestic Growth 4812

bull ldquoMajorsrdquo Shifting to More Profitable International Segments

bull Typically Less Competition for International Travel

bull Growing Demand in Latin American Atlantic amp Pacific Segments

bull International Yields Higher RPSM

Revenue Percentage by Segment (Intl)

14172023262932353841

2001 2002 2003 2004 2005

American AirlinesContinental AirlinesUnited AirlinesDelta AirlinesNorthwest Airlines

Revenue Percentage by Segment (Domestic)

50545862667074788286

2001 2002 2003 2004 2005

American AirlinesContinental AirlinesUnited AirlinesDelta AirlinesNorthwest Airlines

Data taken from 05rsquo-02rsquo 10K reports See Sources 1561014

See Source 12

Types of Passengers

bull Leisure TravelerPreferences

Lower Price Willing to Sacrifice Service Limited Route Needs

bull Business Traveler34 of Domestic Revenue in 2000 (Only 10 of

Capacity)11

Preferences Price Sensitivity Driven by Economic Conditions Higher Class of Service Seeing Shift Towards LCCs

See Source 11

Frequent Flyer (FF) ~ Demographics

3

A person that takes AT LEAST 4 flights per year (17 Million Americans)

bull Average FF takes 9 flights per year

bull Only 18 of Total Airline Travelers BUT Account for 58 of ALL Flights Taken

bull 68 of FF have College or Graduate Degree

bull 75 are Employed Full or Part-time

bull Majority are Male ~ Accounting for 58 of all FFndash 61 of those are between the ages of 25-54 years of

age

See Source 3

Frequent Flyer Programs

bull American Airlinesndash AAdvantage Miles

bull Continental Airlinesndash OnePass

bull United Airlinesndash Mileage Plus

bull Southwest Airlinesndash Rapid Rewards

Market Opportunities

bull International Segmentsndash PacificAsiandash Latin Americandash AtlanticEurope

bull Frequent Flyer Programsndash Travel Industry Alliancesndash Miles Auctions

bull Higher Level of Servicendash Concierge

International Opportunitiesbull Continental Has More International Exposure

than any of the Other ldquoMajorsrdquo13

bull Current Hub and Spoke System Ideal for International Expansionndash Houston ndash Latin Americandash Newark ~ Serving Richest DMA in the US ndash Europe and

AsiaPacific

bull Purchasing Power Growth of US Hispanic and Latin American Market Segment

bull International Revenues Grew 29 in 200513

See Source 13

International Strategies

bull Continental Plans to Expand International Routes by 15 Over the Next Several Years ~ vs 2-4 Expansion in Domestic Market13

bull European Routes to Lower-Traffic European Airports8

bull Chinese Routes to Beijing and Hong Kong Serving Economically Expanding China Market

bull Launch of Spanish-Language Web SiteSee Source 13

See Source 8

FF Opportunities11

bull Frequent Flyers Make Up Significantly Large Portion of Flight Segments

bull Show High Level of Brand Loyalty

bull Focus on Online Booking

See Source 11

FF Strategies

bull Forming Alliances with Other Airlinesbull Increase Route Availabilitybull Allow Usage of FF Miles in Networkbull Decreases Need for FF to Go Outside Network

bull Enhance Web Site Booking System for FFbull Checking PointsMiles Statusbull Booking Capabilities

bull Miles Auctions

Service Opportunities

bull Differentiation with High Service Levels

bull Adding Service When Other Airlines Cutting Service Costs

bull US Economic Growth Trends Promising for Increased Service Requirements for Business Travelersndash Segmentation of ldquoTop-Tierrdquo passengers

Service Strategies

bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers

bull Enhancing In-Flight Reports for Flight Attendants4

bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved

Service11

See Source 4

See Source 11

Potential Problems

bull Increased Globalization

bull Liberalization of International Regulation

bull Domestic LCCs

bull Potential Terrorists Attacks

Future Strategy

bull EnhanceExpand Transcontinental Routes

bull Continued Customer Service Focus

bull Strengthen Alliances for Customer Convenience

bull Focus on Top Revenue Producing Segments

References1 American Airlines February 24 2006 2005 Annual Report [on-line]

httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061

2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006

3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006

4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006

5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062

6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063

1 Same site used for 2003 Annual Report

2 Same site used for 2003 Annual Report

3 Same site used for 2003 Annual Report

References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines

Initialing with Outperform Due to Low Costs amp Strong International Presence

8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom

9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005

10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064

11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future

12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005

13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies

14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065

4 Same site used for 2002 Annual Report

5 Same site used for 2003 Annual Report

Product Marketsbull Domestic

ndash Point to Point Routesndash Short-Haul Flightsndash Highly Price Sensitive customer segmentndash Increased Competition From LCCsndash Lower RASM

bull Internationalndash Network-Hub Routesndash Long-Haul Flightsndash Less Price Sensitive Customer Segmentndash Less Industry Competitionndash Higher RASM

Domestic vs Internationalbull 2004 International Growth

Increased 139 vs Domestic Growth 4812

bull ldquoMajorsrdquo Shifting to More Profitable International Segments

bull Typically Less Competition for International Travel

bull Growing Demand in Latin American Atlantic amp Pacific Segments

bull International Yields Higher RPSM

Revenue Percentage by Segment (Intl)

14172023262932353841

2001 2002 2003 2004 2005

American AirlinesContinental AirlinesUnited AirlinesDelta AirlinesNorthwest Airlines

Revenue Percentage by Segment (Domestic)

50545862667074788286

2001 2002 2003 2004 2005

American AirlinesContinental AirlinesUnited AirlinesDelta AirlinesNorthwest Airlines

Data taken from 05rsquo-02rsquo 10K reports See Sources 1561014

See Source 12

Types of Passengers

bull Leisure TravelerPreferences

Lower Price Willing to Sacrifice Service Limited Route Needs

bull Business Traveler34 of Domestic Revenue in 2000 (Only 10 of

Capacity)11

Preferences Price Sensitivity Driven by Economic Conditions Higher Class of Service Seeing Shift Towards LCCs

See Source 11

Frequent Flyer (FF) ~ Demographics

3

A person that takes AT LEAST 4 flights per year (17 Million Americans)

bull Average FF takes 9 flights per year

bull Only 18 of Total Airline Travelers BUT Account for 58 of ALL Flights Taken

bull 68 of FF have College or Graduate Degree

bull 75 are Employed Full or Part-time

bull Majority are Male ~ Accounting for 58 of all FFndash 61 of those are between the ages of 25-54 years of

age

See Source 3

Frequent Flyer Programs

bull American Airlinesndash AAdvantage Miles

bull Continental Airlinesndash OnePass

bull United Airlinesndash Mileage Plus

bull Southwest Airlinesndash Rapid Rewards

Market Opportunities

bull International Segmentsndash PacificAsiandash Latin Americandash AtlanticEurope

bull Frequent Flyer Programsndash Travel Industry Alliancesndash Miles Auctions

bull Higher Level of Servicendash Concierge

International Opportunitiesbull Continental Has More International Exposure

than any of the Other ldquoMajorsrdquo13

bull Current Hub and Spoke System Ideal for International Expansionndash Houston ndash Latin Americandash Newark ~ Serving Richest DMA in the US ndash Europe and

AsiaPacific

bull Purchasing Power Growth of US Hispanic and Latin American Market Segment

bull International Revenues Grew 29 in 200513

See Source 13

International Strategies

bull Continental Plans to Expand International Routes by 15 Over the Next Several Years ~ vs 2-4 Expansion in Domestic Market13

bull European Routes to Lower-Traffic European Airports8

bull Chinese Routes to Beijing and Hong Kong Serving Economically Expanding China Market

bull Launch of Spanish-Language Web SiteSee Source 13

See Source 8

FF Opportunities11

bull Frequent Flyers Make Up Significantly Large Portion of Flight Segments

bull Show High Level of Brand Loyalty

bull Focus on Online Booking

See Source 11

FF Strategies

bull Forming Alliances with Other Airlinesbull Increase Route Availabilitybull Allow Usage of FF Miles in Networkbull Decreases Need for FF to Go Outside Network

bull Enhance Web Site Booking System for FFbull Checking PointsMiles Statusbull Booking Capabilities

bull Miles Auctions

Service Opportunities

bull Differentiation with High Service Levels

bull Adding Service When Other Airlines Cutting Service Costs

bull US Economic Growth Trends Promising for Increased Service Requirements for Business Travelersndash Segmentation of ldquoTop-Tierrdquo passengers

Service Strategies

bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers

bull Enhancing In-Flight Reports for Flight Attendants4

bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved

Service11

See Source 4

See Source 11

Potential Problems

bull Increased Globalization

bull Liberalization of International Regulation

bull Domestic LCCs

bull Potential Terrorists Attacks

Future Strategy

bull EnhanceExpand Transcontinental Routes

bull Continued Customer Service Focus

bull Strengthen Alliances for Customer Convenience

bull Focus on Top Revenue Producing Segments

References1 American Airlines February 24 2006 2005 Annual Report [on-line]

httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061

2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006

3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006

4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006

5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062

6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063

1 Same site used for 2003 Annual Report

2 Same site used for 2003 Annual Report

3 Same site used for 2003 Annual Report

References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines

Initialing with Outperform Due to Low Costs amp Strong International Presence

8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom

9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005

10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064

11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future

12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005

13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies

14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065

4 Same site used for 2002 Annual Report

5 Same site used for 2003 Annual Report

Domestic vs Internationalbull 2004 International Growth

Increased 139 vs Domestic Growth 4812

bull ldquoMajorsrdquo Shifting to More Profitable International Segments

bull Typically Less Competition for International Travel

bull Growing Demand in Latin American Atlantic amp Pacific Segments

bull International Yields Higher RPSM

Revenue Percentage by Segment (Intl)

14172023262932353841

2001 2002 2003 2004 2005

American AirlinesContinental AirlinesUnited AirlinesDelta AirlinesNorthwest Airlines

Revenue Percentage by Segment (Domestic)

50545862667074788286

2001 2002 2003 2004 2005

American AirlinesContinental AirlinesUnited AirlinesDelta AirlinesNorthwest Airlines

Data taken from 05rsquo-02rsquo 10K reports See Sources 1561014

See Source 12

Types of Passengers

bull Leisure TravelerPreferences

Lower Price Willing to Sacrifice Service Limited Route Needs

bull Business Traveler34 of Domestic Revenue in 2000 (Only 10 of

Capacity)11

Preferences Price Sensitivity Driven by Economic Conditions Higher Class of Service Seeing Shift Towards LCCs

See Source 11

Frequent Flyer (FF) ~ Demographics

3

A person that takes AT LEAST 4 flights per year (17 Million Americans)

bull Average FF takes 9 flights per year

bull Only 18 of Total Airline Travelers BUT Account for 58 of ALL Flights Taken

bull 68 of FF have College or Graduate Degree

bull 75 are Employed Full or Part-time

bull Majority are Male ~ Accounting for 58 of all FFndash 61 of those are between the ages of 25-54 years of

age

See Source 3

Frequent Flyer Programs

bull American Airlinesndash AAdvantage Miles

bull Continental Airlinesndash OnePass

bull United Airlinesndash Mileage Plus

bull Southwest Airlinesndash Rapid Rewards

Market Opportunities

bull International Segmentsndash PacificAsiandash Latin Americandash AtlanticEurope

bull Frequent Flyer Programsndash Travel Industry Alliancesndash Miles Auctions

bull Higher Level of Servicendash Concierge

International Opportunitiesbull Continental Has More International Exposure

than any of the Other ldquoMajorsrdquo13

bull Current Hub and Spoke System Ideal for International Expansionndash Houston ndash Latin Americandash Newark ~ Serving Richest DMA in the US ndash Europe and

AsiaPacific

bull Purchasing Power Growth of US Hispanic and Latin American Market Segment

bull International Revenues Grew 29 in 200513

See Source 13

International Strategies

bull Continental Plans to Expand International Routes by 15 Over the Next Several Years ~ vs 2-4 Expansion in Domestic Market13

bull European Routes to Lower-Traffic European Airports8

bull Chinese Routes to Beijing and Hong Kong Serving Economically Expanding China Market

bull Launch of Spanish-Language Web SiteSee Source 13

See Source 8

FF Opportunities11

bull Frequent Flyers Make Up Significantly Large Portion of Flight Segments

bull Show High Level of Brand Loyalty

bull Focus on Online Booking

See Source 11

FF Strategies

bull Forming Alliances with Other Airlinesbull Increase Route Availabilitybull Allow Usage of FF Miles in Networkbull Decreases Need for FF to Go Outside Network

bull Enhance Web Site Booking System for FFbull Checking PointsMiles Statusbull Booking Capabilities

bull Miles Auctions

Service Opportunities

bull Differentiation with High Service Levels

bull Adding Service When Other Airlines Cutting Service Costs

bull US Economic Growth Trends Promising for Increased Service Requirements for Business Travelersndash Segmentation of ldquoTop-Tierrdquo passengers

Service Strategies

bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers

bull Enhancing In-Flight Reports for Flight Attendants4

bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved

Service11

See Source 4

See Source 11

Potential Problems

bull Increased Globalization

bull Liberalization of International Regulation

bull Domestic LCCs

bull Potential Terrorists Attacks

Future Strategy

bull EnhanceExpand Transcontinental Routes

bull Continued Customer Service Focus

bull Strengthen Alliances for Customer Convenience

bull Focus on Top Revenue Producing Segments

References1 American Airlines February 24 2006 2005 Annual Report [on-line]

httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061

2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006

3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006

4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006

5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062

6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063

1 Same site used for 2003 Annual Report

2 Same site used for 2003 Annual Report

3 Same site used for 2003 Annual Report

References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines

Initialing with Outperform Due to Low Costs amp Strong International Presence

8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom

9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005

10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064

11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future

12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005

13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies

14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065

4 Same site used for 2002 Annual Report

5 Same site used for 2003 Annual Report

Types of Passengers

bull Leisure TravelerPreferences

Lower Price Willing to Sacrifice Service Limited Route Needs

bull Business Traveler34 of Domestic Revenue in 2000 (Only 10 of

Capacity)11

Preferences Price Sensitivity Driven by Economic Conditions Higher Class of Service Seeing Shift Towards LCCs

See Source 11

Frequent Flyer (FF) ~ Demographics

3

A person that takes AT LEAST 4 flights per year (17 Million Americans)

bull Average FF takes 9 flights per year

bull Only 18 of Total Airline Travelers BUT Account for 58 of ALL Flights Taken

bull 68 of FF have College or Graduate Degree

bull 75 are Employed Full or Part-time

bull Majority are Male ~ Accounting for 58 of all FFndash 61 of those are between the ages of 25-54 years of

age

See Source 3

Frequent Flyer Programs

bull American Airlinesndash AAdvantage Miles

bull Continental Airlinesndash OnePass

bull United Airlinesndash Mileage Plus

bull Southwest Airlinesndash Rapid Rewards

Market Opportunities

bull International Segmentsndash PacificAsiandash Latin Americandash AtlanticEurope

bull Frequent Flyer Programsndash Travel Industry Alliancesndash Miles Auctions

bull Higher Level of Servicendash Concierge

International Opportunitiesbull Continental Has More International Exposure

than any of the Other ldquoMajorsrdquo13

bull Current Hub and Spoke System Ideal for International Expansionndash Houston ndash Latin Americandash Newark ~ Serving Richest DMA in the US ndash Europe and

AsiaPacific

bull Purchasing Power Growth of US Hispanic and Latin American Market Segment

bull International Revenues Grew 29 in 200513

See Source 13

International Strategies

bull Continental Plans to Expand International Routes by 15 Over the Next Several Years ~ vs 2-4 Expansion in Domestic Market13

bull European Routes to Lower-Traffic European Airports8

bull Chinese Routes to Beijing and Hong Kong Serving Economically Expanding China Market

bull Launch of Spanish-Language Web SiteSee Source 13

See Source 8

FF Opportunities11

bull Frequent Flyers Make Up Significantly Large Portion of Flight Segments

bull Show High Level of Brand Loyalty

bull Focus on Online Booking

See Source 11

FF Strategies

bull Forming Alliances with Other Airlinesbull Increase Route Availabilitybull Allow Usage of FF Miles in Networkbull Decreases Need for FF to Go Outside Network

bull Enhance Web Site Booking System for FFbull Checking PointsMiles Statusbull Booking Capabilities

bull Miles Auctions

Service Opportunities

bull Differentiation with High Service Levels

bull Adding Service When Other Airlines Cutting Service Costs

bull US Economic Growth Trends Promising for Increased Service Requirements for Business Travelersndash Segmentation of ldquoTop-Tierrdquo passengers

Service Strategies

bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers

bull Enhancing In-Flight Reports for Flight Attendants4

bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved

Service11

See Source 4

See Source 11

Potential Problems

bull Increased Globalization

bull Liberalization of International Regulation

bull Domestic LCCs

bull Potential Terrorists Attacks

Future Strategy

bull EnhanceExpand Transcontinental Routes

bull Continued Customer Service Focus

bull Strengthen Alliances for Customer Convenience

bull Focus on Top Revenue Producing Segments

References1 American Airlines February 24 2006 2005 Annual Report [on-line]

httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061

2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006

3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006

4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006

5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062

6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063

1 Same site used for 2003 Annual Report

2 Same site used for 2003 Annual Report

3 Same site used for 2003 Annual Report

References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines

Initialing with Outperform Due to Low Costs amp Strong International Presence

8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom

9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005

10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064

11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future

12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005

13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies

14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065

4 Same site used for 2002 Annual Report

5 Same site used for 2003 Annual Report

Frequent Flyer (FF) ~ Demographics

3

A person that takes AT LEAST 4 flights per year (17 Million Americans)

bull Average FF takes 9 flights per year

bull Only 18 of Total Airline Travelers BUT Account for 58 of ALL Flights Taken

bull 68 of FF have College or Graduate Degree

bull 75 are Employed Full or Part-time

bull Majority are Male ~ Accounting for 58 of all FFndash 61 of those are between the ages of 25-54 years of

age

See Source 3

Frequent Flyer Programs

bull American Airlinesndash AAdvantage Miles

bull Continental Airlinesndash OnePass

bull United Airlinesndash Mileage Plus

bull Southwest Airlinesndash Rapid Rewards

Market Opportunities

bull International Segmentsndash PacificAsiandash Latin Americandash AtlanticEurope

bull Frequent Flyer Programsndash Travel Industry Alliancesndash Miles Auctions

bull Higher Level of Servicendash Concierge

International Opportunitiesbull Continental Has More International Exposure

than any of the Other ldquoMajorsrdquo13

bull Current Hub and Spoke System Ideal for International Expansionndash Houston ndash Latin Americandash Newark ~ Serving Richest DMA in the US ndash Europe and

AsiaPacific

bull Purchasing Power Growth of US Hispanic and Latin American Market Segment

bull International Revenues Grew 29 in 200513

See Source 13

International Strategies

bull Continental Plans to Expand International Routes by 15 Over the Next Several Years ~ vs 2-4 Expansion in Domestic Market13

bull European Routes to Lower-Traffic European Airports8

bull Chinese Routes to Beijing and Hong Kong Serving Economically Expanding China Market

bull Launch of Spanish-Language Web SiteSee Source 13

See Source 8

FF Opportunities11

bull Frequent Flyers Make Up Significantly Large Portion of Flight Segments

bull Show High Level of Brand Loyalty

bull Focus on Online Booking

See Source 11

FF Strategies

bull Forming Alliances with Other Airlinesbull Increase Route Availabilitybull Allow Usage of FF Miles in Networkbull Decreases Need for FF to Go Outside Network

bull Enhance Web Site Booking System for FFbull Checking PointsMiles Statusbull Booking Capabilities

bull Miles Auctions

Service Opportunities

bull Differentiation with High Service Levels

bull Adding Service When Other Airlines Cutting Service Costs

bull US Economic Growth Trends Promising for Increased Service Requirements for Business Travelersndash Segmentation of ldquoTop-Tierrdquo passengers

Service Strategies

bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers

bull Enhancing In-Flight Reports for Flight Attendants4

bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved

Service11

See Source 4

See Source 11

Potential Problems

bull Increased Globalization

bull Liberalization of International Regulation

bull Domestic LCCs

bull Potential Terrorists Attacks

Future Strategy

bull EnhanceExpand Transcontinental Routes

bull Continued Customer Service Focus

bull Strengthen Alliances for Customer Convenience

bull Focus on Top Revenue Producing Segments

References1 American Airlines February 24 2006 2005 Annual Report [on-line]

httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061

2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006

3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006

4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006

5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062

6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063

1 Same site used for 2003 Annual Report

2 Same site used for 2003 Annual Report

3 Same site used for 2003 Annual Report

References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines

Initialing with Outperform Due to Low Costs amp Strong International Presence

8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom

9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005

10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064

11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future

12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005

13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies

14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065

4 Same site used for 2002 Annual Report

5 Same site used for 2003 Annual Report

Frequent Flyer Programs

bull American Airlinesndash AAdvantage Miles

bull Continental Airlinesndash OnePass

bull United Airlinesndash Mileage Plus

bull Southwest Airlinesndash Rapid Rewards

Market Opportunities

bull International Segmentsndash PacificAsiandash Latin Americandash AtlanticEurope

bull Frequent Flyer Programsndash Travel Industry Alliancesndash Miles Auctions

bull Higher Level of Servicendash Concierge

International Opportunitiesbull Continental Has More International Exposure

than any of the Other ldquoMajorsrdquo13

bull Current Hub and Spoke System Ideal for International Expansionndash Houston ndash Latin Americandash Newark ~ Serving Richest DMA in the US ndash Europe and

AsiaPacific

bull Purchasing Power Growth of US Hispanic and Latin American Market Segment

bull International Revenues Grew 29 in 200513

See Source 13

International Strategies

bull Continental Plans to Expand International Routes by 15 Over the Next Several Years ~ vs 2-4 Expansion in Domestic Market13

bull European Routes to Lower-Traffic European Airports8

bull Chinese Routes to Beijing and Hong Kong Serving Economically Expanding China Market

bull Launch of Spanish-Language Web SiteSee Source 13

See Source 8

FF Opportunities11

bull Frequent Flyers Make Up Significantly Large Portion of Flight Segments

bull Show High Level of Brand Loyalty

bull Focus on Online Booking

See Source 11

FF Strategies

bull Forming Alliances with Other Airlinesbull Increase Route Availabilitybull Allow Usage of FF Miles in Networkbull Decreases Need for FF to Go Outside Network

bull Enhance Web Site Booking System for FFbull Checking PointsMiles Statusbull Booking Capabilities

bull Miles Auctions

Service Opportunities

bull Differentiation with High Service Levels

bull Adding Service When Other Airlines Cutting Service Costs

bull US Economic Growth Trends Promising for Increased Service Requirements for Business Travelersndash Segmentation of ldquoTop-Tierrdquo passengers

Service Strategies

bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers

bull Enhancing In-Flight Reports for Flight Attendants4

bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved

Service11

See Source 4

See Source 11

Potential Problems

bull Increased Globalization

bull Liberalization of International Regulation

bull Domestic LCCs

bull Potential Terrorists Attacks

Future Strategy

bull EnhanceExpand Transcontinental Routes

bull Continued Customer Service Focus

bull Strengthen Alliances for Customer Convenience

bull Focus on Top Revenue Producing Segments

References1 American Airlines February 24 2006 2005 Annual Report [on-line]

httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061

2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006

3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006

4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006

5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062

6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063

1 Same site used for 2003 Annual Report

2 Same site used for 2003 Annual Report

3 Same site used for 2003 Annual Report

References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines

Initialing with Outperform Due to Low Costs amp Strong International Presence

8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom

9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005

10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064

11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future

12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005

13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies

14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065

4 Same site used for 2002 Annual Report

5 Same site used for 2003 Annual Report

Market Opportunities

bull International Segmentsndash PacificAsiandash Latin Americandash AtlanticEurope

bull Frequent Flyer Programsndash Travel Industry Alliancesndash Miles Auctions

bull Higher Level of Servicendash Concierge

International Opportunitiesbull Continental Has More International Exposure

than any of the Other ldquoMajorsrdquo13

bull Current Hub and Spoke System Ideal for International Expansionndash Houston ndash Latin Americandash Newark ~ Serving Richest DMA in the US ndash Europe and

AsiaPacific

bull Purchasing Power Growth of US Hispanic and Latin American Market Segment

bull International Revenues Grew 29 in 200513

See Source 13

International Strategies

bull Continental Plans to Expand International Routes by 15 Over the Next Several Years ~ vs 2-4 Expansion in Domestic Market13

bull European Routes to Lower-Traffic European Airports8

bull Chinese Routes to Beijing and Hong Kong Serving Economically Expanding China Market

bull Launch of Spanish-Language Web SiteSee Source 13

See Source 8

FF Opportunities11

bull Frequent Flyers Make Up Significantly Large Portion of Flight Segments

bull Show High Level of Brand Loyalty

bull Focus on Online Booking

See Source 11

FF Strategies

bull Forming Alliances with Other Airlinesbull Increase Route Availabilitybull Allow Usage of FF Miles in Networkbull Decreases Need for FF to Go Outside Network

bull Enhance Web Site Booking System for FFbull Checking PointsMiles Statusbull Booking Capabilities

bull Miles Auctions

Service Opportunities

bull Differentiation with High Service Levels

bull Adding Service When Other Airlines Cutting Service Costs

bull US Economic Growth Trends Promising for Increased Service Requirements for Business Travelersndash Segmentation of ldquoTop-Tierrdquo passengers

Service Strategies

bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers

bull Enhancing In-Flight Reports for Flight Attendants4

bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved

Service11

See Source 4

See Source 11

Potential Problems

bull Increased Globalization

bull Liberalization of International Regulation

bull Domestic LCCs

bull Potential Terrorists Attacks

Future Strategy

bull EnhanceExpand Transcontinental Routes

bull Continued Customer Service Focus

bull Strengthen Alliances for Customer Convenience

bull Focus on Top Revenue Producing Segments

References1 American Airlines February 24 2006 2005 Annual Report [on-line]

httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061

2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006

3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006

4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006

5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062

6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063

1 Same site used for 2003 Annual Report

2 Same site used for 2003 Annual Report

3 Same site used for 2003 Annual Report

References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines

Initialing with Outperform Due to Low Costs amp Strong International Presence

8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom

9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005

10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064

11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future

12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005

13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies

14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065

4 Same site used for 2002 Annual Report

5 Same site used for 2003 Annual Report

International Opportunitiesbull Continental Has More International Exposure

than any of the Other ldquoMajorsrdquo13

bull Current Hub and Spoke System Ideal for International Expansionndash Houston ndash Latin Americandash Newark ~ Serving Richest DMA in the US ndash Europe and

AsiaPacific

bull Purchasing Power Growth of US Hispanic and Latin American Market Segment

bull International Revenues Grew 29 in 200513

See Source 13

International Strategies

bull Continental Plans to Expand International Routes by 15 Over the Next Several Years ~ vs 2-4 Expansion in Domestic Market13

bull European Routes to Lower-Traffic European Airports8

bull Chinese Routes to Beijing and Hong Kong Serving Economically Expanding China Market

bull Launch of Spanish-Language Web SiteSee Source 13

See Source 8

FF Opportunities11

bull Frequent Flyers Make Up Significantly Large Portion of Flight Segments

bull Show High Level of Brand Loyalty

bull Focus on Online Booking

See Source 11

FF Strategies

bull Forming Alliances with Other Airlinesbull Increase Route Availabilitybull Allow Usage of FF Miles in Networkbull Decreases Need for FF to Go Outside Network

bull Enhance Web Site Booking System for FFbull Checking PointsMiles Statusbull Booking Capabilities

bull Miles Auctions

Service Opportunities

bull Differentiation with High Service Levels

bull Adding Service When Other Airlines Cutting Service Costs

bull US Economic Growth Trends Promising for Increased Service Requirements for Business Travelersndash Segmentation of ldquoTop-Tierrdquo passengers

Service Strategies

bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers

bull Enhancing In-Flight Reports for Flight Attendants4

bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved

Service11

See Source 4

See Source 11

Potential Problems

bull Increased Globalization

bull Liberalization of International Regulation

bull Domestic LCCs

bull Potential Terrorists Attacks

Future Strategy

bull EnhanceExpand Transcontinental Routes

bull Continued Customer Service Focus

bull Strengthen Alliances for Customer Convenience

bull Focus on Top Revenue Producing Segments

References1 American Airlines February 24 2006 2005 Annual Report [on-line]

httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061

2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006

3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006

4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006

5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062

6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063

1 Same site used for 2003 Annual Report

2 Same site used for 2003 Annual Report

3 Same site used for 2003 Annual Report

References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines

Initialing with Outperform Due to Low Costs amp Strong International Presence

8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom

9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005

10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064

11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future

12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005

13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies

14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065

4 Same site used for 2002 Annual Report

5 Same site used for 2003 Annual Report

International Strategies

bull Continental Plans to Expand International Routes by 15 Over the Next Several Years ~ vs 2-4 Expansion in Domestic Market13

bull European Routes to Lower-Traffic European Airports8

bull Chinese Routes to Beijing and Hong Kong Serving Economically Expanding China Market

bull Launch of Spanish-Language Web SiteSee Source 13

See Source 8

FF Opportunities11

bull Frequent Flyers Make Up Significantly Large Portion of Flight Segments

bull Show High Level of Brand Loyalty

bull Focus on Online Booking

See Source 11

FF Strategies

bull Forming Alliances with Other Airlinesbull Increase Route Availabilitybull Allow Usage of FF Miles in Networkbull Decreases Need for FF to Go Outside Network

bull Enhance Web Site Booking System for FFbull Checking PointsMiles Statusbull Booking Capabilities

bull Miles Auctions

Service Opportunities

bull Differentiation with High Service Levels

bull Adding Service When Other Airlines Cutting Service Costs

bull US Economic Growth Trends Promising for Increased Service Requirements for Business Travelersndash Segmentation of ldquoTop-Tierrdquo passengers

Service Strategies

bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers

bull Enhancing In-Flight Reports for Flight Attendants4

bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved

Service11

See Source 4

See Source 11

Potential Problems

bull Increased Globalization

bull Liberalization of International Regulation

bull Domestic LCCs

bull Potential Terrorists Attacks

Future Strategy

bull EnhanceExpand Transcontinental Routes

bull Continued Customer Service Focus

bull Strengthen Alliances for Customer Convenience

bull Focus on Top Revenue Producing Segments

References1 American Airlines February 24 2006 2005 Annual Report [on-line]

httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061

2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006

3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006

4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006

5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062

6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063

1 Same site used for 2003 Annual Report

2 Same site used for 2003 Annual Report

3 Same site used for 2003 Annual Report

References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines

Initialing with Outperform Due to Low Costs amp Strong International Presence

8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom

9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005

10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064

11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future

12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005

13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies

14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065

4 Same site used for 2002 Annual Report

5 Same site used for 2003 Annual Report

FF Opportunities11

bull Frequent Flyers Make Up Significantly Large Portion of Flight Segments

bull Show High Level of Brand Loyalty

bull Focus on Online Booking

See Source 11

FF Strategies

bull Forming Alliances with Other Airlinesbull Increase Route Availabilitybull Allow Usage of FF Miles in Networkbull Decreases Need for FF to Go Outside Network

bull Enhance Web Site Booking System for FFbull Checking PointsMiles Statusbull Booking Capabilities

bull Miles Auctions

Service Opportunities

bull Differentiation with High Service Levels

bull Adding Service When Other Airlines Cutting Service Costs

bull US Economic Growth Trends Promising for Increased Service Requirements for Business Travelersndash Segmentation of ldquoTop-Tierrdquo passengers

Service Strategies

bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers

bull Enhancing In-Flight Reports for Flight Attendants4

bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved

Service11

See Source 4

See Source 11

Potential Problems

bull Increased Globalization

bull Liberalization of International Regulation

bull Domestic LCCs

bull Potential Terrorists Attacks

Future Strategy

bull EnhanceExpand Transcontinental Routes

bull Continued Customer Service Focus

bull Strengthen Alliances for Customer Convenience

bull Focus on Top Revenue Producing Segments

References1 American Airlines February 24 2006 2005 Annual Report [on-line]

httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061

2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006

3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006

4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006

5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062

6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063

1 Same site used for 2003 Annual Report

2 Same site used for 2003 Annual Report

3 Same site used for 2003 Annual Report

References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines

Initialing with Outperform Due to Low Costs amp Strong International Presence

8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom

9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005

10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064

11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future

12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005

13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies

14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065

4 Same site used for 2002 Annual Report

5 Same site used for 2003 Annual Report

FF Strategies

bull Forming Alliances with Other Airlinesbull Increase Route Availabilitybull Allow Usage of FF Miles in Networkbull Decreases Need for FF to Go Outside Network

bull Enhance Web Site Booking System for FFbull Checking PointsMiles Statusbull Booking Capabilities

bull Miles Auctions

Service Opportunities

bull Differentiation with High Service Levels

bull Adding Service When Other Airlines Cutting Service Costs

bull US Economic Growth Trends Promising for Increased Service Requirements for Business Travelersndash Segmentation of ldquoTop-Tierrdquo passengers

Service Strategies

bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers

bull Enhancing In-Flight Reports for Flight Attendants4

bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved

Service11

See Source 4

See Source 11

Potential Problems

bull Increased Globalization

bull Liberalization of International Regulation

bull Domestic LCCs

bull Potential Terrorists Attacks

Future Strategy

bull EnhanceExpand Transcontinental Routes

bull Continued Customer Service Focus

bull Strengthen Alliances for Customer Convenience

bull Focus on Top Revenue Producing Segments

References1 American Airlines February 24 2006 2005 Annual Report [on-line]

httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061

2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006

3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006

4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006

5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062

6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063

1 Same site used for 2003 Annual Report

2 Same site used for 2003 Annual Report

3 Same site used for 2003 Annual Report

References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines

Initialing with Outperform Due to Low Costs amp Strong International Presence

8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom

9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005

10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064

11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future

12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005

13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies

14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065

4 Same site used for 2002 Annual Report

5 Same site used for 2003 Annual Report

Service Opportunities

bull Differentiation with High Service Levels

bull Adding Service When Other Airlines Cutting Service Costs

bull US Economic Growth Trends Promising for Increased Service Requirements for Business Travelersndash Segmentation of ldquoTop-Tierrdquo passengers

Service Strategies

bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers

bull Enhancing In-Flight Reports for Flight Attendants4

bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved

Service11

See Source 4

See Source 11

Potential Problems

bull Increased Globalization

bull Liberalization of International Regulation

bull Domestic LCCs

bull Potential Terrorists Attacks

Future Strategy

bull EnhanceExpand Transcontinental Routes

bull Continued Customer Service Focus

bull Strengthen Alliances for Customer Convenience

bull Focus on Top Revenue Producing Segments

References1 American Airlines February 24 2006 2005 Annual Report [on-line]

httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061

2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006

3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006

4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006

5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062

6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063

1 Same site used for 2003 Annual Report

2 Same site used for 2003 Annual Report

3 Same site used for 2003 Annual Report

References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines

Initialing with Outperform Due to Low Costs amp Strong International Presence

8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom

9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005

10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064

11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future

12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005

13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies

14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065

4 Same site used for 2002 Annual Report

5 Same site used for 2003 Annual Report

Service Strategies

bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers

bull Enhancing In-Flight Reports for Flight Attendants4

bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved

Service11

See Source 4

See Source 11

Potential Problems

bull Increased Globalization

bull Liberalization of International Regulation

bull Domestic LCCs

bull Potential Terrorists Attacks

Future Strategy

bull EnhanceExpand Transcontinental Routes

bull Continued Customer Service Focus

bull Strengthen Alliances for Customer Convenience

bull Focus on Top Revenue Producing Segments

References1 American Airlines February 24 2006 2005 Annual Report [on-line]

httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061

2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006

3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006

4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006

5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062

6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063

1 Same site used for 2003 Annual Report

2 Same site used for 2003 Annual Report

3 Same site used for 2003 Annual Report

References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines

Initialing with Outperform Due to Low Costs amp Strong International Presence

8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom

9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005

10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064

11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future

12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005

13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies

14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065

4 Same site used for 2002 Annual Report

5 Same site used for 2003 Annual Report

Potential Problems

bull Increased Globalization

bull Liberalization of International Regulation

bull Domestic LCCs

bull Potential Terrorists Attacks

Future Strategy

bull EnhanceExpand Transcontinental Routes

bull Continued Customer Service Focus

bull Strengthen Alliances for Customer Convenience

bull Focus on Top Revenue Producing Segments

References1 American Airlines February 24 2006 2005 Annual Report [on-line]

httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061

2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006

3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006

4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006

5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062

6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063

1 Same site used for 2003 Annual Report

2 Same site used for 2003 Annual Report

3 Same site used for 2003 Annual Report

References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines

Initialing with Outperform Due to Low Costs amp Strong International Presence

8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom

9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005

10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064

11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future

12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005

13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies

14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065

4 Same site used for 2002 Annual Report

5 Same site used for 2003 Annual Report

Future Strategy

bull EnhanceExpand Transcontinental Routes

bull Continued Customer Service Focus

bull Strengthen Alliances for Customer Convenience

bull Focus on Top Revenue Producing Segments

References1 American Airlines February 24 2006 2005 Annual Report [on-line]

httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061

2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006

3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006

4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006

5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062

6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063

1 Same site used for 2003 Annual Report

2 Same site used for 2003 Annual Report

3 Same site used for 2003 Annual Report

References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines

Initialing with Outperform Due to Low Costs amp Strong International Presence

8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom

9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005

10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064

11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future

12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005

13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies

14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065

4 Same site used for 2002 Annual Report

5 Same site used for 2003 Annual Report

References1 American Airlines February 24 2006 2005 Annual Report [on-line]

httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061

2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006

3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006

4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006

5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062

6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063

1 Same site used for 2003 Annual Report

2 Same site used for 2003 Annual Report

3 Same site used for 2003 Annual Report

References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines

Initialing with Outperform Due to Low Costs amp Strong International Presence

8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom

9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005

10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064

11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future

12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005

13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies

14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065

4 Same site used for 2002 Annual Report

5 Same site used for 2003 Annual Report

References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines

Initialing with Outperform Due to Low Costs amp Strong International Presence

8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom

9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005

10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064

11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future

12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005

13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies

14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065

4 Same site used for 2002 Annual Report

5 Same site used for 2003 Annual Report