Mary Jane Credeur – Bloomberg News Doug Hammer- Dow Jones David Koenig- Associated Press David Jonas- ProMedia Travel

Ladies and gentlemen, thank you for standing by. Welcome to Continental Airlines First Quarter 2009 Financial Results Conference Call. During the presentation all participants will be in a listen-only mode. Afterwards we will conduct a question and answer session. At that time if you have a question you will need to press star then one on your touchtone phone. As a reminder, this conference call is being webcast and recorded Wednesday April 22, 2009. I would now like to turn the call over to your host Nene Foxhall, Senior Vice President of Global Communications and Public Affairs and DeAnne Gabel, Director of Investor Relations. First, Miss Foxhall; ma’am, you may begin.

Thank you John; good morning everyone. Joining us here in Houston are Continental’s Chairman and Chief Executive Officer Larry Kellner, President and Chief Operating Officer Jeff Smisek; Executive Vice President and Chief Financial Officer Zane Rowe; Executive Vice President Marketing Jim Compton; Executive Vice President Operations Mark Moran and Senior Vice President Finance and Treasurer Gerry Laderman to discuss Continental’s first quarter 2009 financial results. Larry will begin with some overview comments, followed by Jeff’s review of our capacity and revenue results. Zane will follow with a discussion of Continental’s cost structure and balance sheet. At that point we will open the call for questions. We’ve planned 20 minutes for the executive comments and then 25 minutes for analyst questions. At the conclusion of the analyst questions we’ll begin a 15 minute question and answer session for the media. We would appreciate it if each of you would limit your questions to one with one follow-up. With that I’ll turn it over to DeAnne.

Thank you Nene. Earlier today we issued an update for investors presenting information relating to our financial and operational outlook for the first quarter and full year 2009 and other information. This investor update was included in the filing with the SEC. Today we will be discussing some non-GAAP financial measures such as net loss excluding special items. Please note that a reconciliation of the GAAP’s non-GAAP financial measures as well as the investor update can be found on our website at continental.com under the Investor Relations Section. In addition, our discussion today may contain forward-looking statements that are not limited to historical fact but reflect the company’s current beliefs, expectations or intentions regarding future events. All forward-looking statements involve risks and uncertainties that could cause actual results to differ materially. For examples of such risk and uncertainty please see the risk factors set forth in the company’s 2008 10K and its other Securities filings. With that, I’ll turn the call over to Larry.

Thank you, Nene and DeAnne and good morning to everybody on the call and thanks for joining us. This was a very tough quarter no matter how you look it but my coworkers are resilient and they did a great job pulling together to run a solid operation. From the front line to the back office my coworkers are committed to excellence; we know it and our customers know it. Whether it’s topping Fortune Magazine’s Annual Airline Industry List The World’s Most Admired Companies or being named Best Airline North America by Skytrax or giving of themselves to help others in times of need, my coworkers continue to make a difference every day. Turning now to our First Quarter 2009 financial results Continental reported a net loss of $136 million or a loss of $1.10 per diluted share; excluding $4 million of special charges our loss per share was $1.07. On a pretax basis our first quarter 2009 results excluding special items were about flat year over year and while it’s always disappointing to report a loss considering the economic backdrop our team did a good job mitigating the impact from a significant decline in business traffic. As I said, our team ran a solid operation during the quarter and achieved a system-wide segment completion factor of 99.2%. I want to add a special thanks to all my coworkers who helped with the successful launch of our nonstop service from New York to Shanghai. There are many detailed steps and a huge amount of effort involved in going from initial market analysis to landing our first 777 in Shanghai and I want my coworkers to know that I recognize their efforts and appreciate their commitment. Shanghai is an important market for us as we grow our portfolio of Asian destinations.…

Thanks Larry; I join Larry and the rest of the management team in thanking our coworkers for once again delivering solid operational results. As we mentioned in our mid-quarter update, during the first quarter we experienced year over year RASM degradation that accelerated during the quarter, largely driven by declines in business travel. During the quarter, as is common in our industry when demand slows, there were numerous industry fare sales designed to stimulate traffic but fare sales resulted in dilution as leisure, who would have traveled at a higher price, take advantage of the sales and traveled at a lower price. So, in the first quarter we were hit with a double effect of an adverse shift in mix caused by fewer business travelers and dilution of yield on leisure travelers who would have traveled anyway caused by industry fare sales. In addition, we continue to see a relaxation of some fare rules, thus lowering the fences between business and leisure demand and allowing business travelers to book at much lower fare levels. This, of course, is also detrimental to yields. So, until industry capacity is again re-sized to meet the reduced demand or until demand itself picks up again we expect to see pressure on yields. First quarter mainline yields decreased 7.6% year over year and load factor decreased three points year over year resulting in a mainline RASM decrease of 11.2% year over year. Regional RASM was down 19.6% year over year driven by both yield and load factor declines. Looking ahead to the second quarter, in general, close end bookings inside of 14 days continued to be soft as we have yet to see an improvement in business bookings. Domestic yields continue to suffer from weak business yields in bookings and we see an increased pressure…

Thanks Jeff; before I discuss our cost performance for the quarter I want to join Larry and Jeff in thanking the entire Continental team. This is obviously an unprecedented and tough economic environment we are operating in. With capacity declining and revenue down controlling cost is extremely important and I think we’ve done a good job at that. Our first quarter mainline CASM holding fuel rate constant and excluding special items was up a modest 0.9% year over year on a mainline capacity decrease of 7.6%. We are pleased with this cost performance and our success here is due to the efforts of the entire team. Across all areas of the company we remain focused on operating the airline more efficiently and reducing costs as we adjust our capacity to better align it with demand. For the full year, excluding special items and holding fuel rate constant, we expect both consolidated and mainline CASM to be up 1% to 2% year over year. Turning to fuel; fortunately we’ve seen significant relief from our largest expense item and have benefited from the steep decline in fuel prices. Our current projections for the full year have us saving in excess of $2.5 billion in the fuel line year over year. For the first quarter, our average consolidated fuel price per gallon including hedge impact and fuel-related taxes was $1.82, nearly a dollar lower than what we averaged for the same period last year. Not only did we benefit from lower crude prices but also from a much lower refining margin. The jet fuel crack spread averaged $12.63 per barrel in the first quarter or nearly $8 per barrel lower than the first quarter of 2008 and month to date in April it’s averaged less than $9. Based on our current hedge position…

Thank you Jeff and Zane; these are challenging times. We’ve traded skyrocketing fuel prices for a bleak revenue environment. Fortunately, the cost side of the ledger looks a lot better than it did last year thanks to the benefit from lower fuel prices and our consistent focus on cost control and operating efficiency. Competitively, we remain well positioned because of our core strengths; great people, our globally balanced network, our fuel efficient fleet and a superb product and we use those strengths to manage through these tough times. As we’ve consistently demonstrated, we’re prepared to and will take the necessary steps to adjust our capacity and cost to demand while managing strategically for the long term. We remain focused on achieving and sustaining profitability as that is what we owe our coworkers and shareholders. In the meantime, we’re going to stay focused on running a great operation while looking for opportunities to improve revenue and reduce our cost structure. We’ve got some great opportunities ahead as we transition to Star Alliance and we’ll keep you updated as we move through the transition. With that, I’ll turn the call back over to DeAnne to begin our Q&A.

Thank you Larry, Jeff and Zane; with that, we will begin the question and answer session for the analysts followed by the question and answer session for the media. John, if you could please review the Q&A process we’re ready to begin.

Thank you; we will now begin the question and answer session (Operator Instructions). Our first question is from William Greene from Morgan Stanley; please go ahead.

I’m wondering if we can talk a little bit about international capacity? I don’t see much in the way of cuts and in fact as we go forward they actually are even less, particularly by the time we get to the fourth quarter and yet if I understood your commentary correctly there’s a lot of headwinds from FX and fuel on the capacity front. So it’s not clear to me why we wouldn’t be revisiting that at this point because I would think if you wanted cuts in the fall you need to start thinking about those now.

Well, we are adjusting our international capacity with some frequency engage reductions. We are doing that now. There have been some headwinds certainly in Europe in terms of foreign exchange, although the opposite of that in the Pacific in terms of our yen exposure there. We take a look at every single route and make sure and we do a pretty thorough analysis making sure that our flying is always cash positive and we’re making reductions where we think they make sense. To the extent that we see continued revenue degradation we’ll take actions that are appropriate.

Bill, the other thing I’d add, this is Larry; is that our international business was profitable in the first quarter while our domestic business lost a lot of money. So as we look at how we focus our capacity going forward obviously we’re going to make the right fine-tuning adjustments on frequency and day of week but our international business, even in this tough environment, continues to be profitable.

Larry, you, I think, have done a really good job over the last few years sort of outlining a long-term growth plan if you will particularly on the capacity side for the company. But over the last let’s say five or seven years, maybe even longer, we’ve had some costs of debt that were quite a bit lower than they may be going forward. So when you think about this long-term growth plan, say 5% to 7% capacity, if the debt costs are a few hundred basis points higher at a minimum is that realistic? Do we have to rethink the level of that growth plan? Can you still make the math work if debt costs are actually higher for a longer period of time?

Yes, as long as the 787 gets delivered and we’ve got a lot of confidence in Boeing to ultimately do that. Clearly, we’re disappointed with the delay but we’ve got a lot of confidence in them to do that. That plane is dramatically more efficient than any long haul plane flying today. So while you would not like debt cost to be up that won’t offset the benefits of that aircraft and that’s really what our long-term international growth plan is built around.

Although you’re even still taking sort of 737’s as well, which…?

You need the 73’s to complement the feed you need for the long haul network and clearly there’s a lot of efficiency benefits to us in ultimately getting out of the 737 classes and getting just the 737 new gen’s. Also, we’ve been focused on taking 800’s and 900’s, which on a CASM basis are still very efficient airplanes. We’ve got to be thoughtful about how we deploy them. Clearly, we need to make sure that we’ve got our domestic network properly feeding our international network as we add international capacity. But it could cause us to slow down if debt costs were a couple hundred basis points higher, to slow down a little bit on the narrow body side domestically. But again, the new gen’s if you…Long term, I think fuel prices are going higher and so, again, we want to keep working the fuel efficiency side as well. We think there’s a payback there.

Just one quick question on liquidity; what options do you have left to sort of lever up or sell? Can you sell more miles etc.? What liquidity options are left if you needed them?

I think, Bill, we’ve had a pretty good history of talking about things after we do them rather than before we do them. We’ll continue to look at that. I think our relative liquidity compared to the other big global network carriers is in pretty good shape if you look at it as percent of revenues. We’ll have some collateral available if you look through the rest of the year that we’ll look at and we’ll look at some other opportunities. But I think we prefer to talk about it after we’ve done it.

Our next question comes from Hunter Keay from Stifel Nicolaus; please go ahead.

Good segue actually sort of on the liquidity cash that extends; it looks like you are going to end 2Q at roughly 20% of LTM revenues and unrestricted cash in your balance sheet. It seems to me, at least, like there’s a pretty good opportunity for you guys to make some pretty significant purchases with regard to hedging. I know, Zane, you touched on this and maybe if you could give a little more I’d appreciate it particularly going out there and I would assume at this point buying some call options, which I think would probably be a little bit more reasonably priced than they were say six or nine months ago. But I haven’t seen much in terms of your hedge build being built up; how do you guys think about that? I mean, how are you going to approach hedging? I know you talked about it again, Zane, but how are you going to approach hedging, the actual specific methods and when do you think it’s the appropriate time to get back in and using some of your cash? Because you could pretty much argue that that is one of the most prudent ways to use your cash at this point in time in terms of managing risk.

Sure, Hunter; I think it’s a good point and it’s a discussion we have here fairly regularly. As you know, looking at the forward curve if you were to just take the December 09 contract, while the front month earlier in the year was arguably artificially low you’ll see the December 09 contract hasn’t actually moved that much and the forward curve is still fairly steep. So, we look at if there’s still quite a bit of volatility around our ability to hedge and what that curve looks like, which makes call options rather expensive and obviously if you were to consider sort of going out with callers it’s just a challenge given what we’ve seen here with the front months actually coming in a lot lower than the forward curve would otherwise have dictated it to come it at some time ago. So, we’re looking at it actively. I think as Larry mentioned, we expect it to increase over time although that’s already built into the expectation of that forward curve so we’ll just continue to monitor it.

One additionally and I know you guys also touched on this too on FX; we’ve seen some pretty significant differences on FX as it relates to a couple of your major competitors that just recently reported. In fact, one of them reported an FX tailwind in the Pacific and the other one actually had a headwind so clearly that’s a function of point of sale and strategy with regard to where they’re flying and how they’re flying there and whatnot. Can you maybe help us out and maybe understand and maybe just major by geography, not just really the Pacific but in each say geographic entity what to watch for in terms of FX? Whether it’s Europe, Latin or Pacific; what are the major swings and what should we be watching for in terms of how this hits in terms of headwinds and tailwinds?

To start out with, in the first quarter we had five points of RASM headwind if you will on the Trans-Atlantic side. That was driven primarily by the movement in the pound year over year. On the yen side we were actually assisted by about seven points in RASM year over year. Again, it’s something we’re actually hedged about a third of our revenue on the yen, more or less close to where the forward strip is today but it is, again, something that we monitor closely.

Right and in Latin would be maybe the Real; what’s the major currency that swings Latin around?

Latin’s a little different, I think, because of the way they price out those tickets so it’s a little less sensitive as it relates to foreign currency swings. But obviously on that it’s a little shorter term and the markets aren’t quite as liquid as they are for the other currency.

Thanks for the color.

Our next question comes from Gary Chase from Barclays Capital; please go ahead.

Jeff, I apologize that I was on another call here this morning but I jumped on as you were talking, I think, about in the Trans-Atlantic I think you said something about average fares being down 35% year on year.

Average selling fare through May, yes.

Average selling fare…

Beginning; for example, I think it begins the end of April through the end of May. That’s just the time period of which we measured it.

The only reason I ask is if average fare is going to be down 35% and loads are roughly in line that’s quite a bit different than what we’ve been seeing. I must be confusing what you were trying to convey there.

The fact is that we’ve got pretty significant RASM degradation in Trans-Atlantic and you’re also going to see the year over year comps are going to be pretty tough as well because we’re getting into the period where we had pretty high fuel surcharges last year, which have evaporated this year. The Trans-Atlantic is fairly ugly right now.

So, when the close end bookings come we should see a yield that looks better than down 35% right?

We would hope so, yes.

I mean, that would be a major change from where you’ve been.

Gary, I will just point out that that’s driven by two factors. One was last year those yields were going up quite dramatically in this timeframe due to fuel.

I guess what I’m trying to do is I just want to make sure that I didn’t, I’m not misinterpreting the fact you might have been trying to convey; you could see yields down that much. I mean, it sounds like you’re comping what you’ve sold to date and it doesn’t sound like you expect to be that bad. I guess I’m just trying to get clarity around what context you were trying to provide that color.

Gary, this is Jim. As Jeff mentioned, that [inaudible] compare and so obviously the component year over year as you mentioned could be mixed. I would expect that the yield would come in less than that 35%.

That said, the yields in the Trans-Atlantic are pretty poor right now.

Well, yes; pretty poor and down 35% hopefully are different. Also, on the hub by hub performance you go through a little bit of the load factor change. If I just read the investor update does the hub by hub performance pretty much follow the loads or is there additional color that we need to understand that?

Gary, this is Jim. The hub to hub performance is pretty consistent with the capacity that you are mentioning. So, in other words, we’re not seeing any geographic area, for instance Detroit in the Midwest with unemployment and so forth. It’s pretty evenly distributed the softness across the hubs.

Another one for you Jim; one of the things that has to be affecting your domestic RASM is the allocations you make from international journeys into your domestic segments. Is that a material impact and if it is can you just give us a rough sense of how much drag that’s creating on your domestic RASM?

I’m trying to understand.

Could you…you allocate a portion of all your international journeys that connect over say Newark; you’ll allocate a portion of that revenue into your domestic base and obviously the fares and yields are getting hit harder in your international markets than they are domestically, partially because of capacity. I was just wondering if that’s dragging on your relative domestic RASM?

I would say that as we see weakness in the local markets one of the advantages obviously of that Newark hub is to connect traffic to supplement that local so I would say it’s not significant. But yes, as you flow more traffic across the hub, particularly in the Trans-Atlantic, you’ll see that moderating affect on the performance in RASM in the domestic.

Our next question comes from Mike Linenberg from Bank of America; please go ahead.

Just to follow-up on some of the stuff that Gary asked when we look at the selling fare down 35% in the Atlantic; what would that be if we were to exclude the fuel surcharge? How many percentage points of that is fuel surcharge if any?

This is Jim; I don’t have the numbers exactly in front of me. But again, the surcharges for traffic selling into the summer last year became very significant in terms of the dollar and again it depends on the type of fare. Obviously, a larger percent of the leisure fare than what was on as a percent of the business fare and so the mix is an issue also as you go forward but a fairly significant percent of last year that obviously we’re not having this year.

Since we don’t have the exact answer there because a big chunk of it could be fuel surcharge; if we assume let’s say yields are down 20% to 25% you’re cutting your Atlantic capacity for the quarter 10% or 11%. Just based on the math there wouldn’t it make sense to cut even more capacity or do you really start running into some serious cost headwinds? I mean, markets that I look at there are markets where maybe you have that second or third frequency that leaves later in the night. Maybe it’s a better frequency because it connects with a better bank structure or what but it just seems like with those type of returns or those type of yield declines that you would want to take maybe a bigger cut to supply.

Mike, this is Larry; there’s two pieces to that though. One, to the extent the network is profitable you have got to be careful especially as you look at the summertime clearly going into the fall. That’s why in September and October you see us taking some flights out. If you take them out on a somewhat surgical basis during the summer while that might make your other flights look better the costs you save on those flights are going to be primarily fuel. You’ve still got the aircraft. You’ve still got most of the fixed costs involved and so you’ve really got to be thoughtful as you look at it over the summertime, which is usually a very strong period if you look at travel. So, again, we are doing this international versus domestic. What you want to do is stop doing things that are losing money and try to do more of the things that are making money realizing that in the network business there’s a relationship between both of them so some of the domestic flying is necessary to feed the international flying.

That’s helpful, that’s good. Lastly, when we think about the alliances I think, Larry, you may have characterized the benefits from Star being materially greater than what you were getting out of Sky Team. I think if I go back and think when originally there was the agreement between you and Northwest and ultimately Delta was added into the fold back a decade ago it was a couple hundred million of…maybe it was $200 million to $300 million of annual revenue benefit kind of in year three or four. Then there’s obviously some contribution element that is some fraction of that but the fact is it was a profitable venture. Of course, I don’t know, maybe over the last couple years maybe there was some dilution as Delta/Northwest became a lot more closer and maybe you were pushed out of some potential opportunities. But, when I think about material relative to what’s out there is it fair to kind of go back to some of those older numbers or were you getting a much smaller benefit currently versus what you were seeing five to ten years ago? Any color on this revenue upside would be great.

Mike, if you cut out…I think if you look back I would say that Sky Team I wouldn’t characterize; I would have put more in the $100 million to $200 million range at a higher number for the Sky Team element. I think the shift to Star, separate that from the domestic alliance with Delta and Northwest; I think the shift to Star is probably worth another $100 million a year to us versus what we would have seen at Sky Team simply because in New York and in Latin America we’ve built a gap in the Star network where in Sky Team we had actually overlapping coverage in New York and Latin America. That’s why we ultimately made the decision to leave Sky Team and to move to Star.

Our next question comes from Bill Mastoris from Broadpoint Capital; please go ahead.

As kind of a follow-up to one of the earlier questions; with Trans-Atlantic yields down 35% and first quarter Trans-Atlantic RASM’s down 19.3%. I’m just wondering, Larry, you mentioned that your international network was profitable but it seems as though there’s been further kind of a sequential quarter over quarter degradation in fares. Would you be so bold as to say, hey, the second quarter you may be profitable even with the 35% decline in year over year yields? And maybe you could kind of differentiate a little bit your international network versus that of let’s say some of your peers because certainly you distinguished yourself during the first quarter but the second quarter seems like its really hemorrhaging.

Let me clarify a couple of things Bill. One, we said average selling fare, not yield. We try to be careful about projecting yields and RASM because when we’ve done it in the past we have not been overly accurate and we want to keep our credibility in that. I would tell you that if you looked at the average selling fare where it’s at today I would currently expect the yield to perform about ten points better than that. So, if you were looking to make sure we don’t create too much confusion I think the yield would be down more in the 25% range based on what we see as the average selling fare but I will caveat both because I want to keep our credibility and keep the lawyers happy. There is huge volatility around those numbers both ways based on what you see close in and what activity you see. But I wouldn’t want you to translate the 35% from an average selling fare to a yield number because I don’t think that’s an accurate way to look at it. Two, if you looked at it versus March I would expect that the yield decline we’ll see in the Trans-Atlantic; we saw about a 20% yield decline in March in the Trans-Atlantic so we’re not seeing a dramatic drop off on what I would expect for yields. Five points is still big but compared to the fact that we were flattish in December and down 20% in March we see that somewhat stabilizing where we’re at. But the best indicator we have we can talk about, the average selling fare, but I want to make sure we don’t create confusion as we talk about that. We would expect the yield to do better than that but it does depend on mix and it can move around a lot. It’s easiest if we talk about what we’re seeing today but clearly there’s a lot of selling pressure as we look out there and we in general have been careful not to predict RASM much less profitability so I think we’ll maintain that consistency.

Would you care to commit to second quarter maybe profitable on the international side? I think that would kind of buck the trend from what we’ve seen so far.

Again, we’re not going to get into…I don’t want to project RASM or profitability, especially not this early in the quarter. We just find that hard to do because so much…If you look at June we probably on a system basis only got, Jim, 30% of June sold right now, 30% to 35% of June sold right now, a little more in the international arena than the domestic arena. But there’s an awful lot of tickets to sell between then and now and clearly while I wouldn’t be ready to call a bottom we have seen…the trend is not dropping as fast from what we can see and we see some stabilization. It’s still going down a little but it was going down a lot in our forecasts. So, this turned pretty quickly to go down; it could also turn pretty quickly to go back up and so much of our business is dependent on what we sell in the last four, five or six weeks.

Then switching slightly; you made an earlier comment talking about some freed up collateral. I’m assuming those would come from the aircraft notes, which run off from select EETC’s. I’m just wondering and this is probably a question for Gerry; Gerry, have you been able to refinance those notes ahead of time?

We’ve done a couple of aircraft, which I think we talked about in the last month or two. But the rest of the aircraft, which really the bulk of them free up in the back half of this year, are taking a back seat to the financing of the new aircraft that are coming in the back half of the year.

John, we have time for one more question from the analysts.

Our next question comes from Kevin Crissey from UBS; please go ahead.

LiveTV, the installation and such you kind of outlined; that’s going to go into…You’re charging for it; it’s going to go into Other Revenue. What about the cost of it? It’s probably not material this year; how should I be thinking about that?

Our deal with LiveTV won’t have a very large cost component that hits our financials ever. We’ve got some minor capital expenses that we’re responsible for as we put it in but the way that we’ve structured that deal you will not see anything but some revenue primarily to our side to offset some of our fuel expense.

And that will be immaterial for kind of the next three or four quarters or so?

It ramps up pretty quickly. Mark, do you want to talk quickly, Mark Moran, about just the installation schedule?

Are you talking immaterial in terms of the…?

Revenue.

The capital cost of installation?

I was talking about the other revenue generation.

That is clearly immaterial.

If you are talking about the revenue long-term obviously we’d like to get somebody off the revenue side but it will be an installation schedule for the next few quarters.

And the current plan is this summer to start gearing up to about 15 installations per month and to have approximately 90 aircraft done by the end of the year.

On the distribution front do you see opportunities? American and Delta have mentioned some I would call them longer-term optimistic goals of actually charging for distribution of their content to the OTA’s. Do you see opportunities for distribution, maybe not of the magnitude or maybe of the magnitude that we saw back in 2001?

I think these are difficult economic times and I’m always reminded of the powerful benefit of our travel partners as we work through this. Whether you talk to our corporate customers who from a travel management side finds a lot of value in that service to people who want to shop for fares we are very focused on letting people buy the way they want to buy and making sure we’re good partners and that our content is available to people when they look for our fares.

What percentage of your tickets or revenue goes through an OTA?

This is Jim; online it’s about 13% of our revenue.

With that, we’re read to begin the media. I’ll turn that over to Nene.

Thanks DeAnne; John, if you could briefly review the process for asking questions we’ll begin the media session.

We will now begin the question and answer session. We have a question from Doug Hammer from Dow Jones; please go ahead.

Given that everybody’s waiting for “ flight carriers” to cut capacity to the pressure in international routes, given you’re in the sort of unique position of being in one and a half alliances I wonder what sort of visibility you have going forward of international competitors cutting capacity?

We usually learn from you guys, Doug, about what our international competitors are doing and I’d say the good question is are we in half an alliance or one and a half at the moment? We’re working on both but we have no insight. Our show cause order is merely a tentative decision so we don’t even have immunity with anybody other than COPA but our visibility and understanding it’s almost always based on what we see in the press.

We read about all the capacity reductions in the Financial Times.

I have one small follow-up that does kind of relate to London. You’re starting a Cleveland service to Heathrow. I’m curious if you’ve ever disclosed or you might say it now where you got the slots for that? In previous filings you’ve mentioned where you got the slots for the New York and Houston services but I’ve never seen where you were getting Cleveland from.

I’ll just say as we grow we were able to find somebody who had a slot for the summer that they weren’t going to use. It was at the right time while we don’t have that slot long-term so I think I’ll just leave it at the fact that we found one for this summer and we’ll look for one for next summer as we go forward. Clearly, we were helped a little bit by the overall softness and found it a little easier to find a short-term slot but that’s a short-term deal, not a long-term deal.

Our next question comes from Mary Jane Credeur from Bloomberg News; please go ahead.

Hi gentlemen, this is Mary Jane over at Bloomberg; I wanted to make sure I heard you correctly earlier, that conversation about yields, some of them being down as much as 25%. Can you explain that one more time real quick? I know that that doesn’t translate necessarily and it’s very volatile; did I hear that correctly?

Yes. We talked about average selling fare, which was different than yield. We said yield, we thought, looked down around 25% if you looked at the current data we had. That would be our thoughts as we looked at kind of here in the second quarter. In March, yields in the Atlantic were down about 20% so it’s a drop from where we were in March though if you look back as recently as December we were about flat in yield so, we’ve seen a fairly steep decline. While down 25% is a tough number that also is compared year over year so last year with the fuel pressure you had a lot of pressure to raise fares as you were going into the summer. So, we’ll work to figure out a way going forward to take some of the noise out of that and make the comparison as accurate as we can. But yes, we’d expect yield to be down around 25% year over year in the Trans-Atlantic for the second quarter.

So granted there’s a lot of noise in that; it’s hard to tell exactly what a good apples to apples will be at this point?

It’s fair to say that yes, it’s hard because of last year’s increasing fuel prices and some fuel surcharges, which were all included in yield. It makes it more difficult although we’ll work to do that. Two, while we can talk with great accuracy about the past I would tell you an awful lot of the second quarter is still to be sold and we tend to get…that number could be pretty volatile from here on out. We hesitate to predict RASM going forward, which is the mix of yield and load factor; simply because how much it can change over the last couple of weeks. So, I’d also put a wide band around that projection but that’s what we’re seeing today.

How much of that is front versus back of the cabin?

I tell you the front cabin is weak but as we look just as you try to sort down the data to that we use some averages. Looking at average selling through I don’t want to try to break it between the two.

Our next question comes from David Koenig from the Associated Press; please go ahead.

I also want to go back and make sure I heard something correctly. I think it was Larry Kellner; did you say you sold 30% to 35% of June and is that system-wide and if so how does that compare with a year ago at this time?

Typically if you look at this time if you look to June we would have sold about 30% to 35% of June at this point in the schedule and our bookings are…we talk in our Investor Update about our bookings but in general I would say that I wouldn’t view that as a major difference from last year.

Basically the shape of the booking curve; at this point in time, sitting here late April you would expect to have sold roughly 30% to 35% of June.

So that suggests that your capacity cuts have not matched what the demand is out there. Do you have any feeling for the summer season as a whole?

I would tell you that clearly it appears fares will be down from last year both because I think fares were up last year and I think the question on capacity cuts, to go back, would be that what you see is fares are going to adjust to what the demand level is. So, as you add more demand that’s good. Obviously if you have less demand the way you keep the capacity you’ve got flying at a reasonable level is to have a fare sale or to cut fares. I think you’ve seen a lot of that and seen a lot of summer sales as we go forward here and so clearly, I think it’s going to be cheaper to fly this summer than it was last summer.

In our guidance we talk about a mainline load factor of 82% to 83% so to Jeff’s comments about bookings that’s relatively the same load factor as last year.

Don’t mistake the tickets we’ve sold now for June with what the ultimate load factor will be in June. We expect year over year loads over the summer to be similar to what they were last year.

We have David Jonas from ProMedia Travel; please go ahead.

I wanted to talk about your competitors in recent days have shared their perspectives on how quickly business travel volumes have or can rebuild once recovery from recessions or other shocks to the system start to become apparent. What is your sense of that based on the corporate client roster that you guys have?

I think you can see it turn pretty quickly. I think that clearly as Jeff talked about in his remarks what we’ve seen in past downturns is that companies that were leaders also got back to traveling more quickly. I think there’s a natural tendency when people are looking at very tough times to say, “Well, we could eliminate this job or that job or we could really cut back travel” and then as they get into the situation they find a relationship here and a relationship there kind of withering away so they up that travel back and I think it can return. When people see activity going and you see the industrial engine starting to crank back up where people are needing to make things and do things as they work through their inventories that will also have a fairly quick turn on travel. We saw it turn down fairly quickly. It’s unclear to me. Things seem to feel better today than they did 45 days ago but I’m not sure if that’s simply because the pace of the decline is slowing or because things are actually stabilizing. I think that if you look back in any recession it’s a lot more obvious looking back several months later kind of where the turn was than trying to see it in the middle of it. I feel confident that demand can come back on the business side fairly quickly because the business travel, while it can occasionally sound glamorous isn’t that glamorous and so people in businesses travel because they need to and that’s how businesses work. I think that will come back as you see the economy to come back.

Would you expect business travel volumes therefore to build first before, perhaps, a loosening of some of the premium cabin policies?

We have seen already people being very careful about premium cabin traffic versus coach traffic. So yes, I will expect that as people come back you will still see an awful lot of discipline on how they travel. But candidly, most of our big corporate customers have been disciplined for years and so there’s a perception that we’d loosen up or tighten up. But if you’re going back and forth between the US and Europe 25 times a year it’s difficult for a company to have a policy that says you ought to do that in coach and you’ve got to work when you get there and so there’s a tradeoff in what you see. I think our corporate clients I have to say I meet with them on a regular basis are all very focused on running efficient businesses and have been for years and so even in the up cycle they were always very focused on cost and having a fairly tight travel policy. I think at the end of the day people did what they needed to, to make their businesses successful and to go back to that in the short-term it’s an easy expense to cut.

Larry, Jeff, Zane, DeAnne thanks very much for your participation, in fact to all of you on the call for joining us. Please call Corporate Communications if you have any further questions. We look forward to talking to you next quarter, thanks.

Thank you ladies and gentlemen; this concludes today’s conference. Thank you for participating; you may all disconnect.