And, the plan,

United team,

I want to commend all of you for your heroic efforts over the past week. My thoughts and prayers have been with each and every one of our Houston-based employees, and I thank all of you who have contributed to relief efforts to help our co-workers, customers and the communities devastated by this storm. The resilience of our people in Houston has been remarkable, and only with their commitment and determination have we been able to restart the operations and achieve a full recovery ahead of schedule.

This morning I presented to our analyst and investor community at a conference in Boston. I provided an update on our third-quarter financial guidance, which is below our initial expectations. There are a number of reasons for this. First, the closure of our Houston hub because of Harvey is estimated to have a significant negative impact on our third-quarter financial results. Jet fuel prices have increased, even more so after Harvey, and our revenue is below our initial forecast due to a variety of reasons.

One of the pressure points is related to our initial rollout of Basic Economy. This new product has been extremely effective in competing with ultra-low-cost-carriers on price and product, and has driven positive operational results through fewer gate-checked bags. However, any time you introduce a new product, it will take time to achieve the full results. In response to our competitors' slower-than-expected rollout of a comparable product, we have temporarily scaled back the breadth of our Basic Economy offering to address competitive challenges we experienced in the third quarter. We continue to believe wholeheartedly in our Basic Economy product that offers customers more choice and improves United's ability to compete for all passengers. We now project a pre-tax margin in the range of 8% -- 10%, and, while this is below our original expectations, I'm proud of all that you did to get us through some of the unique third-quarter issues.

Today we also announced significant changes to our Airbus A350 order, most notable of which is the timing of deliveries. We decided to defer these aircraft until 2022 to align with the replacement of our fleet of 55 Boeing 777-200ERs, which begin to turn 25 years old in 2023. Adjusting the timing of delivery of the A350s in no way limits our plan to grow and renew our fleet. We continue to take delivery of 777-300ERs, with the fleet growing to 18 aircraft by the end of next year, and will welcome our first 787-10 next year. Neither aircraft type was anticipated when we placed our original A350 order, and both types will fill our widebody growth needs over the next several years. In addition to our firm commitments shown below, we also plan to supplement our fleet with additional used aircraft.

Additionally, it was hard to justify having a small subfleet of 35 A350s spread out over our seven hubs, as there would be operational inefficiencies with crews, aircraft routings and spare parts, so we increased the order size to 45 aircraft. We also converted the order from the A350-1000 variant to the A350-900, which is a better fit for our network. We believe the smaller A350-900 is the better choice for United for our long range planning needs, as the A350-1000 is a larger aircraft that is comparable to the 18 777-300ERs being delivered through next year to replace the 747-400 fleet. Importantly, we have the ability to swap some of the A350-900 aircraft into the larger -1000 version if our views on aircraft size change over time.

The A350-900 is an outstanding aircraft with the size and range to be an excellent replacement for our 777-200ERs, and we have a substantial number of options we can exercise for more A350-900s. So if we decide to make this the sole replacement for the 777 fleet, we will be able to do so on similar, very attractive, economic terms.

While the third quarter had challenges, I feel strongly we are on track to achieving our long-term financial goals. It is the commitment from each of you to providing great service to our customers every day and to running a safe and on-time operation that will help us achieve our goal of being the world's leading airline.