Good morning, and welcome to United Continental Holdings' Earnings Conference Call for the First Quarter 2015. My name is Brandon, and I will be your operator for today. [Operator Instructions] This call is being recorded and is copyrighted. Please note that no portion of the call may be recorded, transcribed or rebroadcast without the company's permission. Your participation implies your consent to our recording of this call. If you do not agree with these terms, simply drop off the line. I will now turn the presentation over to your hosts for today's call, Nene Foxhall and Jonathan Ireland. Please go ahead.

Thank you, Brandon. Good morning, everyone, and welcome to United's first quarter 2015 earnings conference call. Joining us here in Chicago to discuss our results are Chairman, President and CEO, Jeff Smisek; Vice Chairman and Chief Revenue Officer, Jim Compton; Executive Vice President and Chief Operations Officer, Greg Hart; and Executive Vice President and Chief Financial Officer, John Rainey. Jeff will begin with some overview comments, after which Jim will discuss revenue and capacity. Greg will follow with an update on our operations. John will follow that with a review of our costs, fleet and capital structures, after which we will open the call for questions, first from analysts and then from the media. We'd appreciate if you would limit yourself to one question and one follow-up. With that, I'll turn the call over to Jonathan Ireland.

Thanks, Nene. This morning, we issued our earnings release and separate investor update. Both are available on our website at ir.united.com. Information in this morning's earnings release and investor update and remarks made during this conference call may contain forward-looking statements which represent the company's current expectations or beliefs concerning future events and financial performance. All forward-looking statements are based upon information currently available to the company. A number of factors could cause actual results to differ materially from our current expectations. Please refer to our press release, Form 10-Q and other reports filed with the SEC by United Continental Holdings and United Airlines for a more thorough description of these factors. Also, during the course of our call, we will discuss several non-GAAP financial measures. For a reconciliation of these non-GAAP measures to GAAP measures, please refer to the tables at the end of our earnings release and investor update, copies of which are available on our website. Unless otherwise noted, special charges are excluded as we walk you through our numbers for the quarter. These items are detailed in our earnings release. And now I'd like to turn the call over to Jeff.

Thanks Nene and Jonathan and thank you for joining on our first quarter 2015 earnings call. Today we reported pre-tax earnings of $585 million, the highest first quarter profit in United's history and over $1 billion improvement compared to the first quarter of last year. We earned $1.52 per diluted share, achieved at pre-tax margin of 6.8% and expanded our return on invested capital to 17.1% over the last 12 months. In the quarter we generated more than $1 billion of free cash flow and repurchased $200 million of our common stock. Our cost discipline continued in the first quarter with non-fuel unit cost down 1.5% year-over-year bringing our average non-fuel unit cost over the prior four quarters to approximately flat with only 0.4% capacity growth. It is also the seventh straight quarter in which we improved productivity. We continue to deliver on our goals under Project Quality our $2 billion efficiency initiative and we’re making substantial progress on improving our balance sheet. Additionally, in the first quarter our operational performance improved nicely with year-over-year improvements in our on time arrival and completion performance. This quarter all four of our Northern tier hubs experienced more snow days and more de-icing events than the first quarter of last year which you'll remember was a very tough winter. Yet we cancelled 17,000 fewer flights inconveniencing 1.3 million fewer customers. Importantly, we've delivered our operational improvements while also increasing the efficiency and productivity. We made improvements across every part of our business in the first quarter and we could not have done this without the dedication and professionalism of our employees. I want to thank them for their great work and their pride in United. I'm pleased that each quarter we've been building on previous accomplishments. We expect that the second quarter will…

Thanks Jeff. I’d like to take this opportunity to thank our customers for flying United. Every day we are working to improve our reliability, our product and our offering of destinations and schedule you desire. In the first quarter, our unit revenue was up 0.4%, higher than the midpoint of our initial guidance. Our domestic unit revenue was up 1.6% and our international unit revenue was down 0.5%. Our domestic unit revenue performance was largely driven by lower capacity in the quarter that would than anticipated results from our revenue initiatives and the timing of Easter. A contributor to our strong domestic performance was the re-banking of our schedules in Denver and Houston. We have seen both yields and volume of connecting traffic increase year-over-year in these hubs. We rebased Chicago in March and are pleased with the initial results. Our domestic results were also positively impacted by the timing of Easter this year, as Easter travel began in the first quarter. This provided a tailwind of 0.5 points to the consolidated network. This Easter travel share will reduce PRASM by a similar magnitude in the second quarter. Transatlantic unit revenue increased 6.9% in the quarter, mostly driven by our seasonal shaping initiative which reduced this flying during the lower demand in winter period while increasing flying during the higher demand summer period. This initiative helps to offset the pressure from a strengthening dollar, which generated a headwind of 1.4 points of PRASM in the Atlantic entities. Pacific unit revenue was down 7.4% primarily due to four factors; first, the weakening currencies in the Pacific contributed approximately 2 points of unit revenue decline; second, we grew our Pacific stage length as we revamped Australia flying and transitioned our unprofitable shorter haul intra-Asia flying to our joint venture partner ANA. This…

Thanks Jim. I'd like to take a moment to thank all of our employees for their great work in the first quarter. It was a challenging quarter and a tough winter but our operation performance improved as a result of their professionalism and their dedication. As Jeff mentioned in the first quarter we faced record cold and had more snow days and more de-icing events than the first quarter of last year, the year of the polar vortex. Despite these challenging conditions our operational performance improved year-over-year. One area of keen focus for United has been our express operation. In the first quarter our express completion factor improved by almost 5 points compared to last year. Our mainline operation also had a strong quarter with on-time performance increasing by 1.5 points year-over-year and in February we had the fewest cancellations of any major carries despite having four northern hubs. Much of this improvement is due to process changes and the investments we made to improve how we manage through and recover from the regular operations. For example, in late January we experienced a significant snow event at our north hub using our new [crew solver] software we were able to quickly and efficiently redeploy our flight crews after the storm resulted in a quicker recovery for customers and employees. On the following day our on-time departure performance was at least 6 percentage points better than we would have achieved last year. Additionally, we had a best express recovery day in the United’s history. Proactive planning and the great work of our employees combined with new software and other technology solutions all helped us to improve our operations in the first quarter. While I am pleased with our progress, we continue to take actions to improve our reliability. And now I will turn the call over to John.

Thanks Greg. And thanks to everyone for joining the call this morning. I’d also like to take this opportunity to thank our employees. The progress we made this quarter demonstrates their commitment to improve the United. With their continued support I know we can carry this momentum into the future. Today, we reported our highest ever first quarter pretax profit of $585 million and grew our earnings per share by $2.85. We increased our trailing 12 month return on invested capital to 17.1% and generated over $1 billion in free cash flow. Both our earnings and free cash flow represent $1 billion improvement over the first quarter of last year. I am pleased with the progress we’ve made but even more excited about the opportunities that we have in front of us. First quarter consolidated chasm excluding fuel, profit sharing and third party business expense decreased 1.5% year-over-year once again demonstrating the great progress we were making in reducing cost, becoming more efficient and improving the operation. We continue to make solid progress in executing our project quality efficiency initiatives including continued productivity improvements. In the first quarter productivity improved 2% year-over-year marking our seventh consecutive quarter of improved productivity. We also benefited from strengthening dollar which drove approximately 0.5 points of unit cost improvement. Looking to the second quarter, we expect consolidated chasm again excluding fuel, profit sharing and third party business expense to be up a 0.25% to 1.25% year-over-year. Our full year guidance remains unchanged as we continue to expect non-fuel chasm to be between flat and up 1% versus 2014 despite reducing our full year capacity guidance by 0.5 percentage point. Project Quality continues to be key to achieving our cost goals. In 2015 we expect to achieve $800 million in non-fuel savings from these initiatives…

Thank you John, first we'll take questions from the analysts' community, then we'll take questions from the media. Please limit yourself to one question and if needed one follow up question. Operator, please describe the procedure to ask a question.

On the fleet changes you guys announced the transitioning of some of the wide bodies under the domestic entity, can you just, I understand you're looking to pull down some international capacity but can you just walk through how that impacts kind of the domestic capacity trends over the next few years?

Hey Joe this is John. I sense that the main question out there is there fuels domestic capacity growth or not, and the answer is no, it doesn't. What this is going to allow us to do, it's going to permit us to reduce frequencies and increase gauge which is part of our network optimization plan. So this is a seat neutral initiative that we're doing here. Let me give you an example of where we fly high frequencies in our hub to hub and markets, take the example of San Francisco to O'Hare. Within 90 minutes on the late flights of the night, Red Eyes, we fly three narrow body aircraft. This is going to allow us to consolidate frequency to use that 777 in that market.

And I'll tie it to John's comment where he on numerous times mentioned removing our reliance on 50 seat regional jets, these narrow bodies then we'll be able to free up and do exactly that, is move, as our 50 seat reliance as we move away from that. It generates the narrow bodies to cover that, so there's a cascading effect to it, so in general, it really promotes more cost efficient flying while serving the demand that's out there.

Joe, I would just add, this is John, and this is bigger picture all part of our plan to utilize the assets that we have more efficiently and to improve our return on invested capital so that we can deploy capital in a manner that best creates shareholder value.

Okay, that's helpful, and then John, I feel like there have been a number of changes since you guys talked about Project Quality, that are impacting the cost structure a bit with the fleet changes here. Can you just talk about how some of those initiatives are going and what impact that these fleet changes are having on Project Quality and whether the better than expected performance continues into next year?

Sure, and you're probably alluding to the fact that half of our Project Quality savings are in fuel savings. And we have a goal of becoming about $1 billion more efficient in fuel by 2017 and certainly today's fuel prices impacted that and on the margin some of these decisions whether it's taking delivery of used narrow body aircraft, that are maybe less efficient or extending the life of some of the older planes that we have, they will have some impact but the progress that we’ve seen to date in the fuel efficiency line with Project Quality we're very pleased with. We expect to achieve about $500 million this year out of our Project Quality fuel savings initiative and so that's all based on really the tracks from our overall goal.

From JP Morgan we have Jamie Baker online. Please go ahead.

Thoughts on LaGuardia parameter rule and the impact on PS out of JFK, also wondering if this ties to the domestic wide body phenomenon, you clearly have the aircraft required for Transcom out of LaGuardia on 7,000 foot runway. But the facilities there are lacking in my opinion [the lounge is air side and obviously -- excuse me, land side and obviously your slot portfolio isn’t quite as rich as Delta or Americans. Does this tie together and what are your aggregate thoughts on this topic?

This is Jeff; let me take a crack at that. The parameter rule has been in place I think for something like 60 years it’s worked pretty well as is. We’re certainly consulting with the port authority about what their thoughts are and our thoughts and then different carriers have different views on that. As for operations in JFK I don’t think really at this point we want to comment on that.

And Jamie I would add, this is Jim here, our Transcom product continues to improve and perform very well across all the ports there so we’re excited about the product that we’re bringing in and what we can do in that market across our network.

And then follow up, question probably for Greg, as we think longer term about the ramifications of potentially pursuing more of a used aircraft strategy, I think Delta would argue one reason of their strategy has been successful that they have this sufficient Tech Ops in place that one really needs to support a somewhat older fleet. Is there a corresponding investment in maintenance for United that we should think about modeling as it relates to this strategy or do you have the systems and people in place and I realized we’re only talking 10 to 20 shelves for now I am just trying to think a little bit longer term?

I think we’re particularly well positioned to be able to manage any used aircraft we bring on market or into the market with our facility in San Francisco which are; we think are some of the best in the world and the services we provide there. So I think we’re very well positioned and it is well a lot of what the aircraft we’re looking at are actually similar vintage than what we already have in our fleet today.

From Credit Suisse we have Julie Yates on the line. Please go ahead.

Q1 was very strong quarter for free cash flow, those were $1 billion, but only $700 million looks seasoned deployed for debt pension and buybacks and I assume that free cash continues to improve in Q2 and Q3. John you mentioned balanced deployment but can you offer more color on the cadence of that deployments between the different opportunities and why we aren’t seeing more buyback especially with year-to-date stock performance?

Certainly Julie, we’ve talked for some time about our need to continue to de-lever and we’ve set some intermediate targets out there of gross debt goals in the neighborhood of $15 billion. The steps that we took to prepay the debt that thus far this year as we’ve announced will help achieve some of that. I do firmly believe that there is significant shareholder value opportunity with de-levering our balance sheet. We are too heavily levered today and it’s a vestige from an industry which is -- we’re not operating in it anymore, it’s much more reformed industry. As we look at the opportunities that we have to de-lever we don’t have a lot of other options to prepay debt where it make sense say for the secured debt that we have the term loan facility of about $1.3 billion. So as we begin to pick off these pieces of debt like the 6% notes there are less opportunities to prepay that and you will see us probably gear more towards returning cash to shareholders at that point.

And then just on the pension is there a benefit to expense from the higher discretionary contributions?

There is, and we treat pension just like debt and we’ll continue to fund that appropriate. We’re in situation today where in a low interest rate environment we want to be careful about being in a position where we could actually fund ourselves having an over [firm] pension where you’re not getting the good return on that cash. So, we’ll be primitive with respect to how much we fund there.

And then just lastly can you offer any update in terms of what amount of the CapEx for this year you tend to finance?

It’s a good question and typically what we’ve done if you look at our CapEx profile this year about $3 billion to $3.2 billion, about two thirds of that is aircraft. And in the past we tended to lever up and borrow most of the amount of that for aircrafts. To your earlier question about limited opportunities to prepaid debt. If we’re in situation where we’re generating a net free cash flow the next best opportunity to de-lever is actually not borrowing incremental money for new aircraft. And so that’s not a decision that we’ve made yet and we’ll wait to see how cash flow is paying out for the year. But it’s reasonable to expect that going forward we will borrow less money for aircraft and spend more cash up-front.

From Deutsche Bank we have Michael Linenberg on line. Please go ahead.

Two questions here, if I could, firstly John. John I want to make sure I heard you correctly I think you indicated that you were going to prefund the pension by 700 million this year?

That's correct.

Okay, so, I don't think you've put out your annual yet but just based on where the deficit was, plus the 700 million this year, it sounds like you're actually pretty close to removing the underfunding, we could be a year or so away from that is that right?

Well, that's fairly close, at the end of the first quarter we’ve got an unfunded liability position about $2.5 billion. And what I was alluding to earlier you could actually find yourself in a situation where if you close that entire gap and then interest rates were to rise again that reduces the projected benefit obligations so you could actually be in a situation where you have an overfunded pension and that's not necessarily the best use of that capital, so we're very thoughtful about the amount that we're going to fund so that we can get close to fully funded but not be in a situation where we'd be overfunded.

Perfect and just my second question to Jim, on the 777s, the ones that are being redeployed to domestic, appreciate the example that you provided, I mean the way we should interpret that or think about that airplane, is it you know going to be utilized hub to hub flying or Hawaii is that going to be the primary use if those airplanes come back into the domestic?

Hey Michael, this is Jim and you hit it right on the hub. It'll support us in frequency consolidation hub to hub and also support our Hawaii and so that's exactly right.

From Wolfe Research we have Hunter Keay on the line, please go ahead.

It's a question John on, looks like your ancillary business expense guidance ticked up at about a $100 million incrementally in the back half of the year. Is there any revenue attached to this and if not come the chasm mix fuel guide did not come down from the prior guide, it even went a little lower capacity and given how Project Quality is going I would think that that would sort of lead to a reduction in the full year chasm mix fuel guide, unless again this is a new initiative and there's some other revenue I can put in the model in the back half.

That's an insightful observation Hunter; we do have in that guidance an assumption about resuming some of the third party sales we've done for fuel. Just this quarter alone you know it's about a $130 million variance from the previous year so to the extent that we got increase of the revenues in and we have more or less in all setting expenses. It's a profitable business but its pretty low margin.

Right, okay, that's good and then, I think one of the things that I'm concerned about and I think I'm hearing this from an increasing basis from some investors is that big airports continue to get more service and the smaller mid-sized airports continue to get less and Jim you touched on some of the competitive capacity growth causing some pricing headwind for you guys in 2Q, you're not alone, everybody has competitive capacity growth in the markets and you're putting 777s in big airport that's going to theoretically I think exacerbate, that probably forward, so is there anything that you guys can tell us now, why we should not being concerned about -- even though the headline number on capacity continues to sort of trend better on the increment, the competitive capacity trends appear to be getting worse so how do we feel good about United's ability to sort of compete in that environment as the biggest airports are getting more and more competitive?

Hey Hunter, this is Jim. That's a great question, obviously I'll speak from United's perspective and how we think about this, but the base of it is that we are really committed to a disciplined capacity approach, so even the 777 that I talked about, it will be seat neutral and we'll manage that capacity discipline. You know as a matter of fact over the last eight years United's grown its capacity at GDP or less for every year and so that's really the strong part of our plan that we feel allows us to grow our margins and reinvest in our business and so continue to do that. There's an examples as we've done that, what's the test of that, we lowered our guidance to 0.5 point this year from 1.5 to 2.5 guidance from 1 to 2. A lot of the work we're doing to offset and mitigate some of the foreign exchange has been in place in the first quarter, our Japan capacity was down 11% year-over-year so it gets back to that general principle of always staying disciplined and allowing us to be flexible to move with what’s happening in the market places and the demand. So from United's perspective there's nothing about what we've been doing over the last several years that's going to change going forward. There's a change in how we're approaching capacity, the capacity that we're adding is really efficient and so when I talk about the slimline seats and that's going to grow our capacity growth of 2% in the domestic space in the second quarter, is that efficient slimline capacity growth comes in a lower average yield which drives pricing down, but it’s very cost effective and margin accretive. So our commitments to that and we're going to continue to do that.

Thank you John and Jim.

From Cowen and Company we have Helane Becker online, please go ahead.

This maybe a question for Jeff. You are now the second largest US airline and you're not included in the S&P yet, and I'm just kind of wondering if you think about that at all, if it's a priority and if you do think about getting included is there stuff you can do to perhaps move the process along?

Helane, I think about that every night right before I go to bed.

I hope that’s not true.

I am a really boring guy. Yes it is something that we do think about, it is something that we think is appropriate and as for anything we can do to get there that I’ll turn over to with John.

Halena, we meet the qualifications today to -- for inclusion in the S&P500 there is not anything, there is not anything that we can do to get them to be more interested in us I think part of it is you’ve got to have someone meet the S&P500 to actually being included. So, it’s something that I think would help our stock long term having a fund in us like that and something that we certainly desire but it’s largely outside of our control.

And then can I just ask a labor related question, I think you still got a couple of contracts that aren’t -- don’t have merged seniority list. Can you do an update for us on where that stands?

First of all, we’ve gotten contracts with -- we've got 28 out of our 30 contracts to get done, so we only have two left. So those are with our technicians and with our flight attendants. We’re in negotiations with both groups. I won’t comment on the negotiation themselves, but I’ll tell you we very much would desire to getting those done. We believe that our employee groups wish to get them done but we have to approach that in an appropriate disciplined manner to reach agreements that are good for the company and good for the employees.

From Morgan Stanley we have William Greene on line. Please go ahead.

Jim, I am wondering if you can clarify one point on some of the PRASM commentary, you talked about second quarter being the trough and so obviously things will get better. Do you feel like that’s more on balance capacity statement or is it more on balance of demand statement? Do you have enough visibility into the back half to understand sort of what demand looks like or is it really just the capacity from this or even comps I guess could be the other right answer too?

From a PRASM point of view, as you -- second quarter being the low point is driven by many of the things I talked about on the call. The largest effect for instance, fuel surcharges in Japan [hitting] us in the second quarter. And as you go through the year and particularly through the fourth quarter you begin to kind of mitigate some of that just on a year-over-year basis. On the -- some of it is just the seasonality, seasonal shaping that was really successful in the quarter, particularly in the Trans-Atlantic. We planned obviously to grow that capacity as we move into the summer strong periods and take advantage of the higher RASM in the summer period through for instance Trans-Atlantic. So it’s a combination of some of the effects year-over-year kind of balancing it out tied with the initiatives that we are doing to reduce our capacity and some of the oil related markets as well as for instance in the Trans-Atlantic will be flat to down year-over-year in the fourth quarter now which drives our guidance reducing it by 0.5 point to 1 point to 2 point. So, those things that market basket of things kind of makes the second quarter the low watermark based on what we see today.

John I wanted to follow up one question for you on fuel, so obviously we’re redoing the hedge book and we’ll participate in lot of the downside. When you think about deployment of cash, do you think at all about trying to lock in longer term some of the current fuel prices in any way or is that just not a part of the use of cash?

It’s a good question Bill and it’s absolutely when we look at four projections for earnings today at the fuel prices that you see today, which arguably are lower than the long term average. We absolutely think about protecting some of that because the opportunities that we have to improve our business with the type of cash flow that we can generate are huge and so spending a little bit of money to protect against any pop in oil prices is something that we will likely do as we look at opportunities we’re more focused on 2016 than ’15 at this point, but I think that’s a reasonable use of cash given what we can do with the cash flows in terms of improving shareholder value.

From Barclays we have David Fintzen on the line. Please go ahead.

Just a question for Jim and you alluded to I know you mentioned sort of point of sales start to shift into the summer. Just given the speed and sort of historic degree of the year and the move in the euro, is there a different dynamic in point of sale shift into the summer than maybe you’ve seen in the past where you’ve kind of clean up a lot of it with U.S. [20] sales, so how is that trending, is it sort of different this time?

There is a general shift deployment now to the U.S. side that head -- as you head into the summer. We do think that given the exchange rate and the strength of the dollar that we'll see that accelerate this year, and quite frankly in our bookings we are already starting to see some of that, so, some of that foreign exchange impact that's affecting us in the transatlantic will thus be offset by an even stronger point on sale of the US and the transatlantic since we're head into the summer. So we're beginning to see those trends happen, they're above and above the rate that they normally do.

Okay, sort of more 3Q than 2Q is what you're alluding that one?

Yes, absolutely, you know most of our, even our seasonal shaping of capacity was meant to hit kind of the June through August period, but we've really above the lines with seasonal shaping, the Trans-Atlantic that we set out for this year.

Okay and then just on a sort of similar topic, the Euro hedge, if you didn't have that hedge in the second quarter what would the incremental FX hit be and then how does that run off through the course of the year?

It's not a huge amount, we're hedged 47% for the balance of the year at around 1.22-1.23, and so I don’t think it’s big of a number for the second quarter. I don’t have the specific number that you've asked off the top of my head, but I don't believe its material, so I'm thinking through it.

Okay, all right, that's helpful and one quick one just to the energy related comment, on travel demand. The way I kind of interpret, is that predominantly international travel that's energy related that you're seeing or are you seeing sort of a broader Houston impact?

It's both of those, the energy travel going to a couple of interesting, is that it really flies, when it flies internationally it flies in business class, and so a big portion of that revenue is international because of that. But even in Houston a data point, is that we saw our Houston [rising] in the first quarter, down 5% and our consolidated PRASM was up 0.4, so that gives you a little contest that, yes it is -- a lot of that oil traffic is international. But it also affects the domestic and we're adjusting some of that domestic capacity for instance to North Dakota and Canada to address some of the demand issues that are associated with that.

From Evercore ISI we have Duane Pfennigwerth on the line, please go ahead.

Just two questions from me, to what extent did pilot availability factor into your decision to accelerate some of these regional fleet changes, and wonder if you can offer any comment on your partners' ability to fly the schedule the schedule that you want them to fly.

This is Jeff; I'll talk a little bit about that. Pilot availability clearly, particularly for the 50 seat operation is an issue for us which does indeed affect the availability of our express operators to fly the scheduled, and moreover the 50 seat product is something that is not as good a product as the 76 seaters, for example the new Imperio 175s that are in the market [indiscernible] product with considered very attractive airplane, very comfortable airplane has WiFi, has putting first class food up front, has a better ancillary revenue opportunities, and confortable seats and is a very good product. But the shift of the pilots, our reduction in availability of pilots for smaller airplanes is clearly affecting us, as in it's affecting all of our competitors who operate the [program].

Thanks Jeff, and then just on seasonality of free cash flow generation, strong number here in the first quarter earnings seasonally stronger in second quarter, but is it fair to assume that free cash flow generation will actually be higher sequentially in 2Q and thanks for taking the questions.

It's fair to assume that Duane, a lot depends upon earnings, but to your point we tend to build a lot more cash in the first and second quarters and we expect very strong cash generation there. We have a goal being free cash flow positive in every quarter and giving the earnings profile of this business, that's not an unreasonable assumption.

Is that something you think you could hit this year potentially.

Again it depends upon your earnings assumption, but yes potentially.

Thank you.

We've time for one final question, from Buckingham Research we have Dan McKenzie online, please go ahead.

Apologies for yet another 777 question but I can't resist and I guess I'm just wondering if the move is potential prelude to adding a fourth cabin domestically and how should we think about the pros and cons of that kind of a strategy?

Dan, this is Jim, we have no plans to add a fourth cabin domestically, given what we’re doing, ancillary revenue particularly with the economy plus, we actually we're really early in the game of driving as sort of the revenue with that product today, so we're going to kind of -- we’re going to continue to build on that and so the answer would be no.

Okay, very good. You know John, I guess just following up on the free cash flow commentary obviously you’re completing the share repurchase well ahead of schedule here and I believe investors are concluding that United may not actually announce another capital return program this year but -- and I guess I am wondering if we should preclude that possibility I mean what’s the right way to think about expectations here?

I think it’s reasonable to assume that as we conclude our existing share repurchase program that we’ll be in the market with something additional whether it’d be a share repurchase, dividend whatever we think is the best way to return cash to shareholders at that point in time.

Thank you. Ladies and gentlemen, this concludes the analyst and investor portion of our call today. We will now take questions from the media [Operator Instructions]. From Thomson Reuters we have Jeffrey Dastin on line. Please go ahead.

How does the 747 fits into United’s fleet --planned fleet, retirement plan in 2015 and how do you only considered retiring a significant portion of 747s going forward?

The 747 is something that we do intend to keep for a few more years we have a couple coming out of our fleet in the near future but some of these we’ve made some improvements to the operating reliability of the aircraft and we could expect to keep them for another few years. They have another sort of big maintenance events in the 2020 time frame that that will be another decision point for us whether we want to extend them further at that point or go ahead and retire them.

And just a separate fleet related question, so with which model of Dreamliner did United exchange for the 777s and might United elaborate on what discount they may have received for them?

We have not disclosed which model we substituted and we might not elaborate of the discount, that’s something we’d like to keep between us and Boeing.

From The Street we have Ted Reed on line. Please go ahead.

I don’t quite understand why you’re trading in 787 orders for 777 orders. I thought the 787 orders were big advantage for United. So I’d like to know why you’re doing it apart from price and give me an example of where it would benefit you.

We’re still a big believer in the 787, it’s a greater best in our fleet today. The 777-300ER is also a very good aircraft and happens to have the best reliability of any plane in the sky today. It also has -- we have an opportunity to put that in some markets that it’s a better aircraft and with the 787 or some of our other existing planes out there today. So this is all part of normal fleet planning that we do from time-to-time and there is nothing to read into this about the 787.

Can you give me an example of a route that it might be better than -- that the 777 might be better?

I won’t give you a specifically route, but clearly it integrates well with the 777 we fly to New York, it allows us to up gauge New York, which has always been a strategy of ours given the constraints there and the demand that we’re seeing in New York with the hub and how it’s working in New York. So that’s a great aircraft to up gauge in New York with that 777-300.

And one other thing Delta say that it would cut international capacity growth in fourth quarter by 3%, I can’t quite figure out from you said is that about what you’re doing. I know you have some big cuts in Japan, but can you compare it to Delta?

We haven’t disclosed what the fourth quarter in terms of international in total, we are bringing our Atlanta capacity to flat to down year-over-year. Again for us we’ve been very much focused on capacity discipline. So, our Japan capacity for instance in the first quarter was down 11% it’s already planned to be down 7% in the fourth quarter. So, we’ve been ahead of this as we create the flexibility in our fleet plan to match capacity and demand.

And we have time for one final question from Flightglobal, we have Edward Russell on line. Please go ahead.

I was wondering if you could provide some guidance on the time line of the 777-200s coming into the domestic fleet.

It won’t be this year.

With that, we’re out of time and we’ll conclude. Thanks to all of you on the call for joining us today. Please call media relations if you have further questions. We look forward to talking to you next quarter. Goodbye.