United Airlines Reports First-Quarter 2018 Performance - United Hub

United Airlines Reports First-Quarter 2018 Performance

April 17, 2018

CHICAGO, April 17, 2018 /PRNewswire/ -- United Airlines (UAL) today announced its first-quarter 2018 financial results. 

  • UAL reported first-quarter net income of $147 million, diluted earnings per share of $0.52, pre-tax earnings of $184 million and pre-tax margin of 2.0 percent.
  • Excluding special charges and mark-to-market adjustments, UAL reported first-quarter net income of $143 million, diluted earnings per share of $0.50, pre-tax earnings of $179 million and pre-tax margin of 2.0 percent.
  • UAL has repurchased $747 million of its common shares year-to-date through April 16, 2018, representing approximately 4 percent of its shares outstanding as of year-end 2017.
  • Consolidated passenger revenue per available seat mile (PRASM) increased 2.7 percent year-over-year.
  • Consolidated total revenue per available seat mile (TRASM) increased 3.4 percent year-over-year.
  • Consolidated unit cost per available seat mile (CASM) increased 4.3 percent year-over-year.
  • First-quarter consolidated CASM, excluding special charges, third-party business expenses, fuel and profit sharing, increased 0.6 percent year-over-year.
  • UAL now expects full-year 2018 diluted earnings per share, excluding special charges and mark-to-market adjustments, to be $7.00 to $8.501.

"The exceptional operational performance United's employees delivered over the past quarter is impressive.  Even more so when we consider United achieved the best departure performance among our largest competitors despite four nor'easters and other weather disruptions." said Oscar Munoz, chief executive officer of United Airlines. "With our first-quarter financial results and our increased confidence in the outlook for the remainder of the year, we are tightening our adjusted EPS guidance range for the full year to $7.00 to $8.50. We continue to execute our strategy to strengthen and grow our domestic network, drive asset efficiency and productivity, while also continuing our focus on our customers."

For more information on UAL's second-quarter 2018 guidance, please visit ir.united.com for the company's investor update.

First-Quarter Highlights

Operations and Employees

  • Ranked first among our largest competitors in on-time departures and second among the same group in fewest cancelled flights.
  • Introduced and began training our team on United's new customer service decision framework, the core4, which focuses on the principles of being safe, caring, dependable and efficient.
  • Ranked number one among global carriers in Newsweek's 2017 Global 500 Green Rankings, one of the most recognized environmental performance assessments of the world's largest publicly traded companies.
  • Announced new global partnership with the Special Olympics.
  • Flew hundreds of Team USA Olympic and Paralympic Winter Games 2018 athletes – along with coaches and family members – to PyeongChang, South Korea, continuing the 38-year relationship between United and the United States Olympic Committee.

Customer Experience

  • Announced United Premium Plus that will provide more space, comfort and amenities on select international flights starting later this year.
  • Expanded menu selections for our Snack Shop and Bistro on Board and launched a new menu for customers flying from Canada to the U.S.
  • Announced that consumers can now earn and use United MileagePlus award miles at participating BP retail stations.
  • Eliminated charges for customers' second checked bag on all routes from North America to China and Hong Kong.

Network and Fleet

  • Launched two new international routes from Houston to Sydney and Denver to London.
  • Announced new service between six domestic hubs and eight destinations in California, Ohio, North Dakota, South Dakota, Virginia and Wisconsin.
  • As part of our joint venture relationship, Air New Zealand announced new nonstop service between Auckland and Chicago beginning this fall.
  • Announced year-round service between San Francisco and Auckland beginning April 2019.
  • Awarded tentative authority by the U.S. Department of Transportation to begin offering daily nonstop service between Houston and Havana, Cuba.
  • Took delivery of six new aircraft: four Boeing 787-9s and two Boeing 777-300ERs.
  • Announced newest aircraft type, the Boeing 737 MAX 9, to be introduced in domestic flight schedules starting in June.
  • Entered into an agreement to purchase 20 used Airbus A319 aircraft with expected delivery dates scheduled in 2020 and 2021.

Earnings Call

UAL will hold a conference call to discuss first-quarter 2018 financial results on Wednesday, April 18, at 9:30 a.m. Central Time /10:30 a.m. Eastern Time. A live, listen-only webcast of the conference call will be available at ir.united.com. The webcast will be available for replay within 24 hours of the conference call and then archived on the website for three months.

About United

United Airlines and United Express operate approximately 4,600 flights a day to 354 airports across five continents. In 2017, United and United Express operated more than 1.6 million flights carrying more than 148 million customers. United is proud to have the world's most comprehensive route network, including U.S. mainland hubs in Chicago, Denver, Houston, Los Angeles, Newark/New York, San Francisco and Washington, D.C. United operates 750 mainline aircraft and the airline's United Express carriers operate 545 regional aircraft. The airline is a founding member of Star Alliance, which provides service to 191 countries via 28 member airlines. For more information, visit united.com, follow @United on Twitter or connect on Facebook. The common stock of United's parent, United Continental Holdings, Inc., is traded on the NYSE under the symbol "UAL".

1 Excludes special charges and mark-to-market impact of equity investments, the nature of which are not determinable at this time. Accordingly, UAL is not providing earnings guidance on a GAAP basis.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
Certain statements included in this release are forward-looking and thus reflect our current expectations and beliefs with respect to certain current and future events and anticipated financial and operating performance. Such forward-looking statements are and will be subject to many risks and uncertainties relating to our operations and business environment that may cause actual results to differ materially from any future results expressed or implied in such forward-looking statements. Words such as "expects," "will," "plans," "anticipates," "indicates," "believes," "estimates," "forecast," "guidance," "outlook," "goals" and similar expressions are intended to identify forward-looking statements. Additionally, forward-looking statements include statements that do not relate solely to historical facts, such as statements which identify uncertainties or trends, discuss the possible future effects of current known trends or uncertainties, or which indicate that the future effects of known trends or uncertainties cannot be predicted, guaranteed or assured. All forward-looking statements in this release are based upon information available to us on the date of this release. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, except as required by applicable law. Our actual results could differ materially from these forward-looking statements due to numerous factors including, without limitation, the following: general economic conditions (including interest rates, foreign currency exchange rates, investment or credit market conditions, crude oil prices, costs of aircraft fuel and energy refining capacity in relevant markets); economic and political instability and other risks of doing business globally, including political developments that may impact our operations in certain countries; demand for travel and the impact that global economic and political conditions have on customer travel patterns; competitive pressures on pricing and on demand; demand for transportation in the markets in which we operate; our capacity decisions and the capacity decisions of our competitors; the effects of any hostilities, act of war or terrorist attack; the effects of any technology failures or cybersecurity breaches; the impact of regulatory, investigative and legal proceedings and legal compliance risks; disruptions to our regional network; the ability of other air carriers with whom we have alliances or partnerships to provide the services contemplated by the respective arrangements with such carriers; costs associated with any modification or termination of our aircraft orders; potential reputational or other impact from adverse events in our operations, the operations of our regional carriers or the operations of our code share partners; our ability to attract and retain customers; our ability to execute our operational plans and revenue-generating initiatives, including optimizing our revenue; our ability to control our costs, including realizing benefits from our resource optimization efforts, cost reduction initiatives and fleet replacement programs; the impact of any management changes; our ability to cost-effectively hedge against increases in the price of aircraft fuel if we decide to do so; any potential realized or unrealized gains or losses related to any fuel or currency hedging programs; labor costs; our ability to maintain satisfactory labor relations and the results of any collective bargaining agreement process with our union groups; any disruptions to operations due to any potential actions by our labor groups; an outbreak of a disease that affects travel demand or travel behavior; U.S. or foreign governmental legislation, regulation and other actions (including Open Skies agreements and environmental regulations); industry consolidation or changes in airline alliances; our ability to comply with the terms of our various financing arrangements; the costs and availability of financing; our ability to maintain adequate liquidity; the costs and availability of aviation and other insurance; weather conditions; our ability to utilize our net operating losses to offset future taxable income; the impact of changes in tax laws; the success of our investments in airlines in other parts of the world; and other risks and uncertainties set forth under Part I, Item 1A., "Risk Factors," of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, as well as other risks and uncertainties set forth from time to time in the reports we file with the U.S. Securities and Exchange Commission.

-tables attached-

On January 1, 2018, United Continental Holdings, Inc. ("UAL") adopted Accounting Standards Update No. 2014-09 (Topic 606), Revenue from Contracts with Customers, and Accounting Standards Update No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. As such, certain previously reported 2017 figures are adjusted in this report on a basis consistent with the new standards. See the Current Report on Form 8-K filed by UAL with the Securities and Exchange Commission on March 1, 2018 for additional information.

 

UNITED CONTINENTAL HOLDINGS, INC.
STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED) (A)
(In millions, except per share data)

(In millions, except per share data) Three Months Ended
March 31, 2018
Three Months Ended
March 31, 2017
%
Increase/
(Decrease)
Operating revenue Passenger $8,149 $7,653 6.5
Operating revenue: Cargo 293 238 23.1
Operating revenue: Other operating revenue 590 535 10.3
Operating revenue: Total operating revenue 9,032 8,426 7.2
Operating expense: Operating expense: Salaries and related costs 2,726 2,636 3.4
Operating expense: Aircraft fuel 1,965 1,560 26.0
Operating expense: Regional capacity purchase 619 536 15.5
Operating expense: Landing fees and other rent 558 544 2.6
Operating expense: Depreciation and amortization 541 518 4.4
Operating expense: Aircraft maintenance materials and outside repairs 440 454 (3.1)
Operating expense: Distribution expenses 342 319 7.2
Operating expense: Aircraft rent 127 179 (29.1)
Operating expense: Special charges (C) 40 51 NM
Operating expense: Other operating expenses 1,398 1,309 6.8
Operating expense: Other Operating Expenses: Total operating expenses 8,756 8,106 8.0
Operating income: Operating income 276 320 (13.8)
Operating margin 3.1% 3.8% (0.7) pts.
Operating margin, excluding special charges (Non-GAAP) 3.5% 4.4% (0.9) pts.
Nonoperating income (expense):
Interest expense
(176) (162) 8.6
Nonoperating income (expense): Interest capitalized 19 23 (17.4)
Nonoperating income (expense): Interest income 17 11 54.5
Nonoperating income (expense): Miscellaneous, net (C) 48 (42) NM
Nonoperating income (expense): Total nonoperating expense (92) (170) (45.9)
Income before income taxes: Income before income taxes 184 150 22.7
Pre-tax margin 2.0% 1.8% 0.2 pts.
Pre-tax margin, excluding special charges and mark-to-market ("MTM") gains on equity investments (Non-GAAP) 2.0% 2.4% (0.4) pts.
Income tax expense (D) 37 51 (27.5)
Net income $147 $99 48.5
Earnings per share, diluted $0.52 $0.32 62.5
Weighted average shares, diluted 284.9 314.6 (9.4)
  1. NM means Not Meaningful

 

UNITED CONTINENTAL HOLDINGS, INC.
STATISTICS
Statistics: Three Months Ended
March 31, 2018
Three Months Ended
March 31, 2017
%
Increase/
(Decrease)
Mainline:
Passengers (thousands)
24,602 23,825 3.3
Mainline:Revenue passenger miles (millions) 44,110 42,183 4.6
Mainline:Available seat miles (millions) 54,798 53,054 3.3
Mainline:Cargo ton miles (millions) 817 748 9.2
Mainline:Passenger revenue per available seat mile (cents) 12.07 11.74 2.8
Mainline:Average yield per revenue passenger mile (cents) 15.00 14.76 1.6
Mainline:Aircraft in fleet at end of period 750 743 0.9
Mainline:Average stage length (miles) 1,813 1,802 0.6
Mainline:Average daily utilization of each aircraft (hours:minutes) 9:57 9:45 2.1
Mainline:Average aircraft fuel price per gallon $2.09 $1.70 22.9
Mainline:Fuel gallons consumed (millions) 771 761 1.3
Regional:
Passengers (thousands)
9,893 9,280 6.6
Regional:Revenue passenger miles (millions) 5,739 5,428 5.7
Regional:Available seat miles (millions) 7,179 6,754 6.3
Regional:Passenger revenue per available seat mile (cents) 21.35 21.11 1.1
Regional:Average yield per revenue passenger mile (cents) 26.71 26.27 1.7
Regional:Aircraft in fleet at end of period 545 478 14.0
Regional:Average stage length (miles) 565 573 (1.4)
Regional:Average aircraft fuel price per gallon $ 2.19 $ 1.80 21.7
Regional:Fuel gallons consumed (millions) 161 149 8.1
Consolidated (Mainline and Regional):
Passengers (thousands)
34,495 33,105 4.2
Consolidated (Mainline and Regional):Revenue passenger miles (millions) 49,849 47,611 4.7
Consolidated (Mainline and Regional):Available seat miles (millions) 61,977 59,808 3.6
Consolidated (Mainline and Regional):Passenger load factor:
Consolidated
80.4% 79.6% 0.8 pts.
Consolidated (Mainline and Regional):Domestic 82.8% 83.3% (0.5) pts.
Consolidated (Mainline and Regional):International 77.5% 75.2% 2.3 pts.
Consolidated (Mainline and Regional):Passenger revenue per available seat mile (cents) 13.15 12.80 2.7
Consolidated (Mainline and Regional):Total revenue per available seat mile (cents) 14.57 14.09 3.4
Consolidated (Mainline and Regional):Average yield per revenue passenger mile (cents) 16.35 16.07 1.7
Consolidated (Mainline and Regional):Aircraft in fleet at end of period 1,295 1,221 6.1
Consolidated (Mainline and Regional):Average stage length (miles) 1,443 1,451 (0.6)
Consolidated (Mainline and Regional):Average full-time equivalent employees (thousands) 85.6 85.2 0.5
Consolidated (Mainline and Regional):Average aircraft fuel price per gallon $ 2.11 $ 1.71 23.4
Consolidated (Mainline and Regional): Fuel gallons consumed (millions) 932 910 2.4
  • Note: See Part II, Item 6, Selected Financial Data, of UAL's Annual Report on Form 10-K for the fiscal year ended December 31, 2017, for definitions of these statistics.

 

UNITED CONTINENTAL HOLDINGS, INC.
SUMMARY FINANCIAL METRICS (A)

 

Summary Financial Metrics: (In millions, except per share data) Three Months Ended
March 31, 2018
Three Months Ended
March 31, 2017
%
Increase/
(Decrease)
Operating income $276 $320 (13.8)
Operating margin 3.1% 3.8% (0.7) pts.
Operating income, excluding special charges (Non-GAAP) 316 371 (14.8)
Operating margin, excluding special charges (Non-GAAP) 3.5% 4.4% (0.9) pts.
EBITDA, excluding special charges and MTM gains on equity investments (Non-GAAP) $860 $847 1.5
EBITDA margin, excluding special charges and MTM gains on equity investments (Non-GAAP) 9.5% 10.1% (0.6) pts.
Pre-tax income $184 $150 22.7
Pre-tax margin 2.0% 1.8% 0.2 pts.
Pre-tax income, excluding special charges and MTM gains on equity investments (Non-GAAP) 179 201 (10.9)
Pre-tax margin, excluding special charges and MTM gains on equity investments (Non-GAAP) 2.0% 2.4% (0.4) pts.
Net income $147 $99 48.5
Net income, excluding special charges and MTM gains on equity investments (Non-GAAP) 143 132 8.3
Diluted earnings per share $0.52 $0.32 62.5
Diluted earnings per share, excluding special charges and MTM gains on equity investments (Non-GAAP) 0.50 0.42 19.0
Net cash provided by operating activities $1733 $547 216.8
Capital expenditures $979 $691 41.7
Adjusted capital expenditures (Non-GAAP) 1,013 1,354 (25.2)
Free cash flow, net of financings (Non-GAAP) $754 $(144) NM
Free cash flow (Non-GAAP) 720 (807) NM
  1. NM means Not Meaningful

 

UNITED CONTINENTAL HOLDINGS, INC.
ETURN ON INVESTED CAPITAL (ROIC) - Non-GAAP

ROIC is a Non-GAAP financial measure that we believe provides useful supplemental information for management and investors by measuring the effectiveness of our operations' use of invested capital to generate profits.
Return on invested captial: Twelve Months Ended
March 31, 2018
(in millions)
Net Operating Profit After Tax ("NOPAT")
Pre-tax income
$3,074
Special charges and MTM gains on equity investments (C): Severance and benefit costs 93
Special charges and MTM gains on equity investments (C): Impairment of assets 48
Special charges and MTM gains on equity investments (C): (Gains) losses on sale of assets and other special charges 24
Special charges and MTM gains on equity investments (C): MTM gains on equity investments (45)
Pre-tax income excluding special charges and MTM gains on equity investments (Non-GAAP) 3,194
add: Interest expense (net of income tax benefit) (a) 681
add: Interest component of capitalized aircraft rent (net of income tax benefit) (a) 277
add: Net interest on pension (net of income tax benefit) (a) 25
less: Income taxes paid (17)
NOPAT (Non-GAAP) $4,160
Average Invested Capital (five-quarter average)
Total assets
$42,571
Average Invested Capital (five-quarter average)Total assets add: Capitalized aircraft operating leases (b) 4,430
Average Invested Capital (five-quarter average)Total assets less: Non-interest bearing liabilities (c) (16,696)
Average invested capital (Non-GAAP) $30,305
Return on invested capital (Non-GAAP) 13.7%
Notes:
  1. Income tax benefit measured based on the effective cash tax rate. The effective cash tax rate is calculated by dividing cash taxes paid by pre-tax income excluding special charges and MTM gains on equity investments. For the twelve months ended March 31, 2018, the effective cash tax rate was 0.5%.
  2. The purpose of this adjustment is to capitalize the impact of aircraft operating leases. The company uses a multiple of seven times its annual aircraft rent expense to estimate the potential capitalized value and related liability of its aircraft. This is a simplified method used by many rating agencies and financial analysts to assist with the impact of operating leases on financial measures like return on invested capital.
  3. Non-interest bearing liabilities include advance ticket sales, frequent flyer deferred revenue, deferred income taxes and other non-interest bearing liabilities.

 

UNITED CONTINENTAL HOLDINGS, INC.
NON-GAAP FINANCIAL RECONCILIATION

(A) UAL evaluates its financial performance utilizing various accounting principles generally accepted in the United States of America (GAAP) and Non-GAAP financial measures, including operating income (loss), excluding special charges, operating margin excluding special charges, pre-tax income (loss), excluding special charges and MTM gains and losses on equity investments, pre-tax margin, excluding special charges and MTM gains and losses on equity investments, net income (loss), excluding special charges and MTM gains and losses on equity investments, diluted earnings (loss) per share, excluding special charges and MTM gains and losses on equity investments, and CASM, excluding special charges, third-party business expenses, fuel, and profit sharing, among others. UAL believes that adjusting for special charges is useful to investors because special charges are charges not indicative of UAL's ongoing performance. UAL believes that adjusting for MTM gains and losses on equity investments is useful to investors because those unrealized gains or losses may not ultimately be realized on a cash basis.

CASM is a common metric used in the airline industry to measure an airline's cost structure and efficiency. UAL reports CASM excluding special charges, third-party business expenses, fuel and profit sharing. UAL believes that adjusting for special charges is useful to investors because special charges are charges not indicative of UAL's ongoing performance. UAL also believes that excluding third-party business expenses, such as maintenance, ground handling and catering services for third parties, and fuel sales, provides more meaningful disclosure because these expenses are not directly related to UAL's core business. UAL also believes that excluding fuel costs from certain measures is useful to investors because it provides an additional measure of management's performance excluding the effects of a significant cost item over which management has limited influence. UAL excludes profit sharing because this exclusion allows investors to better understand and analyze our operating cost performance and provides a more meaningful comparison of our core operating costs to the airline industry. Reconciliations of reported non-GAAP financial measures to the most directly comparable GAAP financial measures are included below.
Non-GAAP Financial Reconciliation: Three Months Ended
March 31, 2018 in cents
Three Months Ended
March 31, 2017 in cents
%
Increase/
(Decrease)
CASM Mainline Operations (cents)
Cost per available seat mile (CASM)
13.58 13.15 3.3
CASM Mainline Operations (cents): Cost per available seat mile (CASM):Special charges (C) 0.07 0.09 NM
CASM Mainline Operations (cents): Cost per available seat mile (CASM): Third-party business expenses 0.06 0.09 (33.3)
CASM Mainline Operations (cents): Cost per available seat mile (CASM): Fuel expense 2.94 2.44 20.5
CASM Mainline Operations (cents): CASM, excluding special charges, third-party business expenses and fuel 10.51 10.53 (0.2)
CASM Mainline Operations (cents): CASM, excluding special charges, third-party business expenses and fuel: Profit sharing per available seat mile 0.03 0.03
CASM Mainline Operations (cents): CASM, excluding special charges, third-party business expenses, fuel, and profit sharing 10.48 10.50 (0.2)
CASM Consolidated Operations (cents)
Cost per available seat mile (CASM)
14.13 13.55 4.3
CASM Consolidated Operations (cents): Cost per available seat mile (CASM):Special charges (C) 0.07 0.08 NM
CASM Consolidated Operations (cents): Cost per available seat mile (CASM): Third-party business expenses 0.05 0.07 (28.6)
CASM Consolidated Operations (cents): Cost per available seat mile (CASM): Fuel expense 3.17 2.60 21.9
CASM Consolidated Operations (cents): CASM, excluding special charges, third-party business expenses and fuel 10.84 10.80 0.4
CASM Consolidated Operations (cents): CASM, excluding special charges, third-party business expenses and fuel: Profit sharing per available seat mile 0.02 0.04 (50.0)
CASM Consolidated Operations (cents): CASM, excluding special charges, third-party business expenses, fuel, and profit sharing 10.82 10.76 0.6
NM means Not Meaningful

 

UNITED CONTINENTAL HOLDINGS, INC.
NON-GAAP FINANCIAL RECONCILIATION (Continued)
 
Non-GAAP Financial Reconciliation continued: Three Months Ended
March 31, 2018 (In millions)
Three Months Ended
March 31, 2017 (In millions)
$
Increase/
(Decrease)
%
Increase/
(Decrease)
Operating expenses $8,756 $8,106 $650 8.0
Operating expenses: Special charges (C) 40 51 (11) NM
Operating expenses, excluding special charges 8,716 8,055 661 8.2
Operating expenses, excluding special charges: Third-party business expenses 31 40 (9) (22.5)
Operating expenses, excluding special charges: Fuel expenses 1,965 1,560 405 26.0
Operating expenses, excluding special charges: Profit sharing, including taxes 17 20 (3) (15.0)
Operating expenses, excluding fuel, profit sharing, special charges and third-party business expenses $6,703 $6,435 $268 4.2
Operating income $276 $320 $(44) (13.8)
Operating income: Special charges (C) 40 51 (11) NM
Operating income, excluding special charges $316 $371 $(55) (14.8)
Pre-tax income $184 $150 $34 22.7
Income before income taxes: Special charges and MTM gains on equity investments before income taxes (C) (5) 51 (56) NM
Pre-tax income excluding special charges and MTM gains on equity investments $179 $201 $(22) (10.9)
Net income $147 $99 $48 48.5
Net income: Special charges and MTM gains on equity investments, net of tax (C) (4) 33 (37) NM
Net income, excluding special charges and MTM gains on equity investments 143 132 11 8.3
Diluted earnings per share $0.52 $0.32 $0.20 62.5
Diluted earnings per share: Special charges and MTM gains on equity investments (0.02) 0.16 (0.18) NM
Diluted earnings per share: Tax effect related to special charges and MTM gains on equity investments (0.06) 0.06 NM
Diluted earnings per share, excluding special charges and MTM gains on equity investments $0.50 $0.42 $0.08 19.0
NM means Not Meaningful

 

UNITED CONTINENTAL HOLDINGS, INC.
NON-GAAP FINANCIAL RECONCILIATION (Continued)

UAL provides financial metrics, including earnings before interest, taxes, depreciation and amortization (EBITDA), that we believe provide useful supplemental information for management and investors by measuring profit and profit as a percentage of total operating revenues. UAL also provides EBITDA excluding special charges that management believes are not indicative of UAL's ongoing performance, and excluding MTM on equity investments, which represents unrealized gains or losses that may not ultimately be realized on a cash basis.
EBITDA, excluding special charges and MTM gains on equity investments (in millions) Three Months Ended
March 31, 2018
Three Months Ended
March 31, 2017
Net income $147 $99
Adjusted For:
Depreciation and amortization
541 518
Adjusted For: Interest expense 176 162
Adjusted For: Interest capitalized (19) (23)
Adjusted For: Interest income (17) (11)
Adjusted For: Income tax expense (D) 37 51
Adjusted For: Special charges before income taxes (C) 40 51
Adjusted For: MTM gains on equity investments (C) (45)
Adjusted EBITDA, excluding special items $860 $847
UAL believes that adjusting capital expenditures for assets acquired through the issuance of debt and capital leases, airport construction financing and excluding fully reimbursable projects is useful to investors in order to appropriately reflect the non-reimbursable funds spent on capital expenditures. UAL also believes that adjusting net cash provided by operating activities for capital expenditures and adjusted capital expenditures is useful to allow investors to evaluate the company's ability to generate cash that is available for debt service or general corporate initiatives.

 

Capital Expenditures (in millions) Three Months Ended
March 31, 2018
Three Months Ended
March 31, 2017
Capital Expenditures: Capital expenditures $979 $691
Capital Expenditures: Capital expendituresProperty and equipment acquired through the issuance of debt and capital leases 74 711
Capital Expenditures: Capital expendituresAirport construction financing 12 21
Capital Expenditures: Capital expendituresFully reimbursable projects (52) (69)
Capital Expenditures:Adjusted capital expenditures – Non-GAAP $1,013 $1,354
Free Cash Flow (in millions) Three Months Ended
March 31, 2018
Three Months Ended
March 31, 2017
Free Cash Flow: Net cash provided by operating activities $1,733 $547
Free Cash Flow: Net cash provided by operating activities: Less capital expenditures 979 691
Free Cash Flow: Free cash flow, net of financings - Non-GAAP $754 $(144)
Free Cash Flow: Net cash provided by operating activities $1733 $547
Free Cash Flow: Net cash provided by operating activities: Less adjusted capital expenditures – Non-GAAP 1,013 1,354
Free Cash Flow: Free cash flow - Non-GAAP $720 $(807)

 

UNITED CONTINENTAL HOLDINGS, INC.
NOTES (UNAUDITED)

(B) Select passenger revenue information is as follows (in millions):
Notes unaudited: 1Q 2018
Passenger
Revenue
(millions)
Passenger
Revenue
vs.
1Q 2017
PRASM
vs.
1Q 2017
Yield
vs.
1Q 2017
Available
Seat Miles
vs.
1Q 2017
Mainline $3,485 6.5% 1.7% 2.2% 4.7%
Regional 1,483 7.5% 0.5% 1.6% 7.0%
Domestic 4968 6.8% 1.6% 2.2% 5.2%
Atlantic 1,252 12.1% 8.8% 1.0% 3.1%
Pacific 1,069 1.5% (1.5%) (1.9%) 3.0%
Latin America 860 3.4% 5.1% 2.9% (1.6%)
International 3,181 6.0% 4.1% 1.0% 1.8%
Consolidaterd $8,149 6.5% 2.7% 1.7% 3.6%
Mainline $6,616 6.2% 2.8% 1.6% 3.3%
Regional 1,533 7.5% 1.1% 1.7% 6.3%
Consolidated $8,149

 

UNITED CONTINENTAL HOLDINGS, INC.
NOTES (UNAUDITED)

(C) Special charges and MTM gains on equity investments include the following:
(In millions) Three Months Ended
March 31, 2018 (In millions)
Three Months Ended
March 31, 2017 (In millions)
Operating:
Operating: Severance and benefit costs
$14 $37
Operating: Impairment of assets 23
Operating: (Gains) losses on sale of assets and other special charges 3 14
Operating: (Gains) losses on sale of assets and other special charges Total special charges 40 51
Operating: Nonoperating MTM gains on equity investments (45)
Operating: Nonoperating MTM gains on equity investmentsTotal special charges and MTM gains on equity investments (5) 51
Operating: Income tax benefit related to special charges (9) (18)
Operating: Income tax expense related to MTM gains an on equity investments 10
Operating: Total special charges and MTM gains on equity investments, net of income taxes $(4) $(33)

 

Severance and benefit costs:During the three months ended March 31, 2018 and 2017, the company recorded $8 million ($7 million net of taxes) and $21 million ($14 million net of taxes), respectively, of severance and benefit costs primarily related to a voluntary early-out program for its technicians and related employees represented by the International Brotherhood of Teamsters. In the first quarter of 2017, approximately 1,000 technicians and related employees elected to voluntarily separate from the company and will receive a severance payment, with a maximum value of $100,000 per participant, based on years of service, with retirement dates through early 2019. Also during the three months ended March 31, 2018 and 2017, the company recorded $6 million ($4 million net of taxes) and $16 million ($10 million net of taxes), respectively, of severance related to its management reorganization initiative.

Impairment of assets:During the three months ended March 31, 2018, the company recorded a $23 million ($17 million net of taxes) fair value adjustment for aircraft purchased off lease and impairments related to certain fleet types and certain international slots no longer in use.

MTM gains on equity investments: During the three months ended March 31, 2018, the company recorded a gain of $45 million ($35 million net of taxes) for the change in market value of its investment in Azul, S.A. For equity investments subject to MTM accounting, the company records gains and losses to Nonoperating income (expense): Miscellaneous, net in its statements of consolidated operations.

(D) Effective tax rate

The company's effective tax rate for the three months ended March 31, 2018 and 2017 was 20.3% and 33.6%, respectively. The effective tax rates represented a blend of federal, state and foreign taxes and included the impact of certain nondeductible items. The effective tax rate for the three months ended March 31, 2018 also reflects the reduced federal corporate income tax rate as a result of the enactment of the Tax Cuts and Jobs Act ("Tax Act") in December 2017 and the impact of a change in the mix of domestic and foreign earnings. We continue to analyze the different aspects of the Tax Act which could potentially affect the provisional estimates that were recorded at December 31, 2017.

SOURCE United Airlines

For further information: United Airlines Worldwide Media Relations, +1-872-825-8640, media.relations@united.com

United Airlines Reaches 2020 Adjusted Earnings Per Share Target One Year Ahead Of Schedule

January 21, 2020

CHICAGO, Jan. 21, 2020 /PRNewswire/ -- United Airlines (UAL) today announced it reached its 2020 goal -- first announced in January 2018 -- to achieve adjusted diluted earnings per share (EPS) target2 of $11 to $13 a full year ahead of schedule. The company also achieved full year pre-tax margin growth of 2.6 points, which is expected to outpace its largest competitors for 2019.

  • Reported fourth quarter net income of $641 million, diluted EPS of $2.53, up 50% versus the fourth quarter of 2018, pre-tax earnings of $844 million and pre-tax margin of 7.8 percent, expanding pre-tax margin 2.5 points versus the fourth quarter of 2018.
  • Reported fourth quarter adjusted net income of $676 million, adjusted diluted EPS of $2.67, up 11% versus the fourth quarter of 2018, adjusted pre-tax earnings of $889 million and adjusted pre-tax margin of 8.2 percent, expanding adjusted pre-tax margin 0.5 points versus the fourth quarter of 2018.1
  • Reported full year net income of $3.0 billion, diluted EPS of $11.58, up 51% versus full year 2018, pre-tax earnings of $3.9 billion and pre-tax margin of 9.0 percent, expanding pre-tax margin 2.6 points versus full year 2018.
  • Reported full year adjusted net income of $3.1 billion, adjusted diluted EPS of $12.05, up 32% versus full year 2018, adjusted pre-tax earnings of $4.1 billion and adjusted pre-tax margin of 9.4 percent, expanding adjusted pre-tax margin 1.7 points versus full year 2018.1
  • Consolidated fourth quarter passenger revenue per available seat mile (PRASM) increased 0.8 percent year-over-year.
  • Consolidated fourth quarter unit cost per available seat mile (CASM) decreased 1.3 percent year-over-year and consolidated full year unit cost per available seat mile (CASM) decreased 1.2 percent year-over-year.
  • Consolidated fourth quarter CASM, excluding special charges, third party business expenses, fuel and profit sharing, increased 2.7 percent year-over-year. Consolidated full year CASM, excluding special charges, third-party business expenses, fuel and profit sharing, increased 1.0 percent year-over-year.
  • Repurchased $216 million of its common shares in the fourth quarter of 2019, at an average purchase price of $88.95 per share, bringing share repurchases for full year 2019 to $1.6 billion.

"2019 was a great year for our United team -- highlighted by achieving our $11 to $13 adjusted EPS target a full year ahead of schedule," said Oscar Munoz, CEO of United Airlines. "With a four-quarter streak of expanding profit margins, when all the results are in we expect our full year 2019 pre-tax margin growth to be the highest amongst our largest competitors. When I look at United's fundamental strength, I could not be prouder of what we've accomplished in such a short time. This is the New United we set out to build more than four years ago. As we embark on a new year and decade, I believe the outlook for United's future has never been brighter."

1 Excludes special charges, unrealized gains and losses on investments and imputed interest on certain finance leases. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in the tables accompanying this release.
2 Excludes special charges and unrealized gains and losses on investments, the nature of which are not determined at this time. Accordingly, UAL does not provide earnings guidance on a GAAP basis.

For more information on UAL's first quarter and full year 2020 guidance, please visit ir.united.com for the company's investor update.

2019 Highlights

Operations and Employees

  • Flew most revenue passengers in company history.
  • Set new company record for most mainline departures with nearly 800,000 departures.
  • Number one in on-time departures at all hubs with direct competitors -- Chicago, Denver and Los Angeles.
  • Hosted Backstage 2019, which brought all 25,000 flight attendants to Chicago for an event which was designed to underscore the important role flight attendants play in delivering great service.
  • Profit sharing for 2019 was on average 45 percent higher per participating employee year-over-year.
  • Launched Aviate, a new pilot recruiting and development program and career website to establish a more structured career path to becoming a United pilot.
  • Hired nearly 9,000 aviation professionals in well paying careers with great benefits in 2019.

Customer Experience

  • Introduced ConnectionSaver, a new tool dedicated to improving the experience for customers connecting from one United flight to the next, saving nearly 100,000 connections to be made in 2019.
  • Became the first U.S. airline to offer non-binary gender options throughout all booking channels in addition to providing the option to select the title "Mx." during booking.
  • Announced MileagePlus award miles never expire, giving members a lifetime to use miles on flights, experiences, hotels and more.
  • Announced free live DIRECTV on 211 Boeing 737 United aircraft equipped with seat back TV, providing more than 100 channels of live television.
  • Introduced a re-imagined mobile app to customers featuring a more dynamic experience that updates customers at each step of their travel journey.
  • Customers are now provided three inflight snack options on domestic flights regardless of departure time, including the Stroopwafel.
  • MileagePlus members between the ages of 18 to 22 received a discount on domestic flights when booked through the United mobile app through the end of 2019.
  • Opened the fifth of its award-winning United Polaris Lounges at Los Angeles International Airport.
  • Opened three new United Clubs at Fort Lauderdale-Hollywood International Airport, LaGuardia Airport and Raleigh-Durham International Airport.
  • Announced the addition of more than 1,600 United Polaris® business class and United First seats to nearly 250 international and domestic aircraft.
  • Began flight operations at LaGuardia Airport's new Terminal B Eastern Concourse.
  • Customers can now pre-pay for bags as soon as their ticket is issued. Previously customers had to wait until check-in to pay for their bags.
  • Announced partnership with CLEAR which includes a free or discounted CLEAR membership for U.S.-based MileagePlus members.

Network

  • Announced a total of nine new international routes and two new expanded routes beginning in 2020, including four new daily nonstop flights to Tokyo Haneda Airport.
  • Strengthened the domestic route network with 69 new routes including launching 54 new routes and announcing 15 routes beginning in 2020.
  • Launched 11 new international routes in 2019, including direct flights from Newark Liberty International Airport to Cape Town, South Africa; Prague, Czech Republic; and Naples, Italy.

Fleet

  • Took delivery of 49 aircraft in 2019, including eight Boeing 787-10 aircraft, becoming the first carrier in the world to operate all three Dreamliner models.
  • Signed agreements to purchase 50 Airbus A321 XLR, 20 used Boeing 737-700 aircraft and 20 Embraer E175 aircraft operated by our regional partners.
  • Introduced a brand new and revolutionary regional flying experience with the addition of the two-cabin, 50-seat Bombardier CRJ 550 aircraft.
  • Unveiled next paint design, which brings a refreshed look to its fleet, serving as a visual representation of the airline's ongoing brand evolution.
  • Launched Boeing 767-300ER ultra-premium United Polaris business class configuration on all flights between New York/Newark and Chicago to London-Heathrow.

Community and Environment

  • Launched Miles on a Mission, a first-of-its-kind crowdsourcing platform which gives customers a simple way to donate miles to non-profit organizations and charities in need of air travel.
  • Pledged on Giving Tuesday to match up to 10 million MileagePlus miles to featured Miles on a Mission partners.
  • Committed $40 million toward a new investment initiative focused on accelerating the development of sustainable aviation fuels and other decarbonization technologies.
  • Made history with the departure of the "Flight for the Planet," the most eco-friendly commercial flight of its kind in the history of aviation.
  • Renewed contract with Boston-based World Energy to purchase up to 10 million gallons of cost-competitive, commercial-scale, sustainable aviation biofuel.
  • Launched Her Art Here, a contest where two women artists were chosen to have their work painted on California- and New York/New Jersey-themed Boeing 757s to uplift underrepresented women artists.
  • Celebrated Women in Aviation International's annual Girls in Aviation Day by hosting more than 500 girls in 14 locations around the world.
  • Became the first public company to be inducted into Pride Live's Stonewall Ambassador program in recognition of the airline's commitment to LGBTQ+ equality.
  • Reached a milestone of 1 million meals packed for charity partner Rise Against Hunger.
  • Donated $1 million to Feeding America's Shutdown Response Fund to directly support the food banks providing food for families of federal workers.

Earnings Call

UAL will hold a conference call to discuss its fourth quarter and full year 2019 financial results as well as its financial and operational outlook for first quarter and full year 2020 on Wednesday, January 22, at 9:30 a.m. Central time / 10:30 a.m. Eastern time. A live, listen-only webcast of the conference call will be available at ir.united.com. The webcast will be available for replay within 24 hours of the conference call and then archived on the website for three months.

About United

United's shared purpose is "Connecting People. Uniting the World." We are more focused than ever on our commitment to customers through a series of innovations and improvements designed to help build a great experience: Every customer. Every flight. Every day. Together, United and United Express operate approximately 4,900 flights a day to 362 airports across six continents. In 2019, United and United Express operated more than 1.7 million flights carrying more than 162 million customers. United is proud to have the world's most comprehensive route network, including U.S. mainland hubs in Chicago, Denver, Houston, Los Angeles, New York/Newark, San Francisco and Washington, D.C. United operates 791 mainline aircraft and the airline's United Express partners operate 581 regional aircraft. United is a founding member of Star Alliance, which provides service to 195 countries via 26 member airlines. For more information, visit united.com, follow @United on Twitter and Instagram or connect on Facebook. The common stock of United's parent, United Airlines Holdings, Inc., is traded on the Nasdaq under the symbol "UAL".

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Certain statements included in this release are forward-looking and thus reflect our current expectations and beliefs with respect to certain current and future events and anticipated financial and operating performance. Such forward-looking statements are and will be subject to many risks and uncertainties relating to our operations and business environment that may cause actual results to differ materially from any future results expressed or implied in such forward-looking statements. Words such as "expects," "will," "plans," "anticipates," "indicates," "believes," "estimates," "forecast," "guidance," "outlook," "goals," "targets" and similar expressions are intended to identify forward-looking statements. Additionally, forward-looking statements include statements that do not relate solely to historical facts, such as statements which identify uncertainties or trends, discuss the possible future effects of current known trends or uncertainties, or which indicate that the future effects of known trends or uncertainties cannot be predicted, guaranteed or assured. All forward-looking statements in this release are based upon information available to us on the date of this release. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, except as required by applicable law. Our actual results could differ materially from these forward-looking statements due to numerous factors including, without limitation, the following: our ability to execute our strategic operating plan, including our growth, revenue-generating and cost-control initiatives; general economic conditions (including interest rates, foreign currency exchange rates, investment or credit market conditions, crude oil prices, costs of aircraft fuel and energy refining capacity in relevant markets); risks of doing business globally, including instability and political developments that may impact our operations in certain countries; demand for travel and the impact that global economic and political conditions have on customer travel patterns; our capacity decisions and the capacity decisions of our competitors; competitive pressures on pricing and on demand; changes in aircraft fuel prices; disruptions in our supply of aircraft fuel; our ability to cost-effectively hedge against increases in the price of aircraft fuel, if we decide to do so; the effects of any technology failures or cybersecurity breaches; disruptions to services provided by third-party service providers; potential reputational or other impact from adverse events involving our aircraft or operations, the aircraft or operations of our regional carriers or our code share partners or the aircraft or operations of another airline; our ability to attract and retain customers; the effects of any terrorist attacks, international hostilities or other security events, or the fear of such events; the mandatory grounding of aircraft in our fleet; disruptions to our regional network; the impact of regulatory, investigative and legal proceedings and legal compliance risks; the success of our investments in other airlines, including in other parts of the world; industry consolidation or changes in airline alliances; the ability of other air carriers with whom we have alliances or partnerships to provide the services contemplated by the respective arrangements with such carriers; costs associated with any modification or termination of our aircraft orders; disruptions in the availability of aircraft, parts or support from our suppliers; our ability to maintain satisfactory labor relations and the results of any collective bargaining agreement process with our union groups; any disruptions to operations due to any potential actions by our labor groups; labor costs; an outbreak of a disease that affects travel demand or travel behavior; the impact of any management changes; extended interruptions or disruptions in service at major airports where we operate; U.S. or foreign governmental legislation, regulation and other actions (including Open Skies agreements, environmental regulations and the United Kingdom's withdrawal from the European Union); the seasonality of the airline industry; weather conditions; the costs and availability of aviation and other insurance; the costs and availability of financing; our ability to maintain adequate liquidity; our ability to comply with the terms of our various financing arrangements; our ability to realize the full value of our intangible assets and long-lived assets; and other risks and uncertainties set forth under Part I, Item 1A., "Risk Factors," of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, our Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, as well as other risks and uncertainties set forth from time to time in the reports we file with the U.S. Securities and Exchange Commission.

-tables attached-

On January 1, 2019, United Airlines Holdings, Inc. ("UAL") adopted Accounting Standards Update No. 2016-02, Leases ("Topic 842"). As such, certain previously reported 2018 figures are adjusted in this report on a basis consistent with Topic 842.

UNITED AIRLINES HOLDINGS, INC,

STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)




Three Months Ended
December 31,


%
Increase/
(Decrease)



Year Ended
December 31,


%
Increase/
(Decrease)


(In millions, except per share data)


2019


2018




2019


2018



Operating revenue:















Passenger


$

9,933



$

9,556



3.9




$

39,625



$

37,706



5.1



Cargo


316



334



(5.4)




1,179



1,237



(4.7)



Other operating revenue


639



601



6.3




2,455



2,360



4.0



Total operating revenue


10,888



10,491



3.8




43,259



41,303



4.7


















Operating expense:















Salaries and related costs


3,078



2,924



5.3




12,071



11,458



5.3



Aircraft fuel


2,249



2,380



(5.5)




8,953



9,307



(3.8)



Regional capacity purchase


725



650



11.5




2,849



2,649



7.6



Landing fees and other rent


650



627



3.7




2,543



2,449



3.8



Depreciation and amortization


606



558



8.6




2,288



2,165



5.7



Aircraft maintenance materials and outside repairs


475



434



9.4




1,794



1,767



1.5



Distribution expenses


417



396



5.3




1,651



1,558



6.0



Aircraft rent


67



78



(14.1)




288



433



(33.5)



Special charges (B)


130



301



NM




246



487



NM



Other operating expenses


1,630



1,508



8.1




6,275



5,801



8.2



Total operating expense


10,027



9,856



1.7




38,958



38,074



2.3


















Operating income


861



635



35.6




4,301



3,229



33.2


















Operating margin


7.9

%


6.1

%


1.8

pts.



9.9

%


7.8

%


2.1

pts.

















Nonoperating income (expense):















Interest expense


(161)



(173)



(6.9)




(731)



(670)



9.1



Interest capitalized


20



19



5.3




85



65



30.8



Interest income


30



31



(3.2)




133



101



31.7



Unrealized gains (losses) on investments, net (B)


81



56



44.6




153



(5)



NM


Miscellaneous, net


13



(15)



NM




(27)



(72)



(62.5)



Total nonoperating expense


(17)



(82)



(79.3)




(387)



(581)



(33.4)


















Income before income taxes


844



553



52.6




3,914



2,648



47.8


















Pre-tax margin


7.8

%


5.3

%


2.5

pts.



9.0

%


6.4

%


2.6

pts.

















Income tax expense (D)


203



92



120.7




905



526



72.1



Net income


$

641



$

461



39.0




$

3,009



$

2,122



41.8


















Diluted earnings per share


$

2.53



$

1.69



49.7




$

11.58



$

7.67



51.0



Diluted weighted average shares


253.4



272.7



(7.1)




259.9



276.7



(6.1)


















NM Not meaningful
















 

UNITED AIRLINES HOLDINGS, INC.

PASSENGER REVENUE INFORMATION AND STATISTICS


Passenger revenue information is as follows (in millions, except for percentage changes):



4Q 2019

Passenger

Revenue


4Q 2018

Passenger

Revenue (a)


Reporting Adjustments (b)


4Q 2018

Passenger

Revenue (b)


Passenger

Revenue

vs.

4Q 2018 (b)


PRASM vs. 4Q 2018 (b)


Yield vs. 4Q 2018 (b)


Available

Seat Miles

vs.

4Q 2018


4Q 2019 Available Seat Miles


4Q 2019 Revenue Passenger Miles

Domestic

$

6,338



$

6,088



$

52



$

6,140



3.2%


0.6%


1.5%


2.6%


40,612


34,051





















Atlantic

1,616



1,535



(30)



1,505



7.4%


(0.2%)


(1.3%)


7.6%


12,649


10,373

Pacific

1,088



1,139



(31)



1,108



(1.8)%


(1.2)%


(1.9)%


(0.7%)


11,098


8,653

Latin America

891



794



9



803



11.0%


6.3%


5.8%


4.4%


6,679


5,556

International

3,595



3,468



(52)



3,416



5.2%


1.5%


0.5%


3.8%


30,426


24,582





















Consolidated

$

9,933



$

9,556



$



$

9,556



3.9%


0.8%


1.0%


3.1%


71,038


58,633






















(a) As previously reported.

(b) During the third quarter of 2019, United implemented a new revenue accounting software system which allowed it to more precisely determine the geographic regions associated with certain ancillary passenger revenue items. Prior to July 2019, those ancillary revenue items were determined using an allocation method that was based on revenue from passenger travel. While the total passenger revenue is not impacted, the geographic totals for each period are not comparable year-over-year due to the change. The fourth quarter 2018 passenger revenue presented in the table above reallocates these ancillary items using the 2019 allocation.

 

Select operating statistics are as follows:




Three Months Ended
December 31,


%

Increase/

(Decrease)



Year Ended
December 31,


%

Increase/

(Decrease)




2019


2018




2019


2018



Passengers (thousands)


40,306



39,891



1.0




162,443



158,330



2.6



Revenue passenger miles (millions)


58,633



56,968



2.9




239,360



230,155



4.0



Available seat miles (millions)


71,038



68,902



3.1




284,999



275,262



3.5



Passenger load factor:















    Consolidated


82.5

%


82.7

%


(0.2)

pts.



84.0

%


83.6

%


0.4

pts.


    Domestic


83.8

%


84.6

%


(0.8)

pts.



85.2

%


85.4

%


(0.2)

pts.


    International


80.8

%


80.1

%


0.7

pts.



82.4

%


81.3

%


1.1

pts.


Passenger revenue per available seat mile (cents)


13.98



13.87



0.8




13.90



13.70



1.5



Total revenue per available seat mile (cents)


15.33



15.23



0.7




15.18



15.00



1.2



Average yield per revenue passenger mile (cents)


16.94



16.77



1.0




16.55



16.38



1.0



Cargo ton miles


889



902



(1.4)




3,329



3,425



(2.8)



Aircraft in fleet at end of period


1,372



1,329



3.2




1,372



1,329



3.2



Average stage length (miles)


1,446



1,426



1.4




1,460



1,446



1.0



Average full-time equivalent employees


90,264



87,315



3.4




90,116



86,641



4.0



Average aircraft fuel price per gallon


$

2.10



$

2.30



(8.7)




$

2.09



$

2.25



(7.1)



Fuel gallons consumed (millions)


1,071



1,036



3.4




4,292



4,137



3.7





























Note: See Part II, Item 6, Selected Financial Data, of UAL's Annual Report on Form 10-K for the fiscal year ended December 31, 2018, for definitions of these statistics.       


 

UNITED AIRLINES HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


 (In millions)

December 31, 2019


December 31, 2018

ASSETS




Current assets:




Cash and cash equivalents

$

2,762



$

1,694


Short-term investments

2,182



2,256


Receivables, less allowance for doubtful accounts

1,364



1,426


Aircraft fuel, spare parts and supplies, less obsolescence allowance

1,072



985


Prepaid expenses and other

814



733


Total current assets

8,194



7,094






Total operating property and equipment, net

30,170



27,399


Operating lease right-of-use assets

4,758



5,262






Other assets:




Goodwill

4,523



4,523


Intangibles, less accumulated amortization

3,009



3,159


Restricted cash

106



105


Notes receivable, net

671



516


Investments in affiliates and other, net

1,180



966


Total other assets

9,489



9,269


Total assets

$

52,611



$

49,024






LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Advance ticket sales

$

4,819



$

4,381


Accounts payable

2,703



2,363


Frequent flyer deferred revenue

2,440



2,286


Accrued salaries and benefits

2,271



2,184


Current maturities of long-term debt

1,407



1,230


Current maturities of finance leases

46



123


Current maturities of operating leases

686



719


Other

566



553


Total current liabilities

14,938



13,839






Other long-term liabilities and deferred credits:




Long-term debt

13,145



12,215


Long-term obligations under finance leases

220



224


Long-term obligations under operating leases

4,946



5,276


Frequent flyer deferred revenue

2,836



2,719


Postretirement benefit liability

789



1,295


Pension liability

1,446



1,576


Deferred income taxes

1,736



828


Other

1,024



1,010


Total other long-term liabilities and deferred credits

26,142



25,143


Stockholders' equity

11,531



10,042


Total liabilities and stockholders' equity

$

52,611



$

49,024



 

UNITED AIRLINES HOLDINGS, INC.

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)


 (In millions)

Year Ended
December 31,


2019


2018

Cash Flows from Operating Activities:




Net cash provided by operating activities

$

6,909



$

6,164






Cash Flows from Investing Activities:




Capital expenditures

(4,528)



(4,070)


Purchases of short-term and other investments

(2,897)



(2,552)


Proceeds from sale of short-term and other investments

2,996



2,616


Loans made to others

(174)



(466)


Investment in affiliates

(36)



(139)


Other, net

79



156


Net cash used in investing activities

(4,560)



(4,455)






Cash Flows from Financing Activities:




Proceeds from issuance of long-term debt and airport construction financing

1,847



1,594


Payments of long-term debt

(1,240)



(1,727)


Repurchases of common stock

(1,645)



(1,235)


Principal payments under finance leases

(151)



(79)


Capitalized financing costs

(61)



(37)


Other, net

(30)



(17)


Net cash used in financing activities

(1,280)



(1,501)


Net increase in cash, cash equivalents and restricted cash

1,069



208


Cash, cash equivalents and restricted cash at beginning of the year

1,799



1,591


Cash, cash equivalents and restricted cash at end of the year

$

2,868



$

1,799






Investing and Financing Activities Not Affecting Cash:




Property and equipment acquired through the issuance of debt

$

493



$

143


Right-of-use assets acquired through operating leases

498



663


Property and equipment acquired through finance lease

22



17


Lease modifications and lease conversions

(2)



52


Debt associated with termination of a maintenance service agreement



163






 

 UNITED AIRLINES HOLDINGS, INC.

RETURN ON INVESTED CAPITAL (ROIC)—Non-GAAP


ROIC is a non-GAAP financial measure that UAL believes provides useful supplemental information for management and investors by measuring the effectiveness of the company's operations' use of invested capital to generate profits.


(in millions)

Year Ended
December 31, 2019

Net Operating Profit After Tax ("NOPAT")


Pre-tax income

$

3,914


Adjustments:


  Special charges and unrealized (gains) losses on investments, net:


    Impairment of assets

171


    Severance and benefit costs

16


    Unrealized (gains) losses on investments, net

(153)


    (Gains) losses on sale of assets and other special charges

59


Pre-tax income excluding special charges and unrealized (gains) losses on investments, net (Non-GAAP)

4,007


    add: Interest expense  (net of income tax benefit) (a)

726


    add: Interest component of capitalized aircraft rent  (net of income tax benefit) (a)

154


    add: Net interest on pension (net of income tax benefit) (a)

(19)


    less: Income taxes paid

(29)


NOPAT (Non-GAAP)

$

4,839






Average Invested Capital (five-quarter average)


Total assets

$

51,325


less: Non-interest bearing liabilities (b)

(18,113)


Average invested capital (Non-GAAP)

$

33,212




ROIC (Non-GAAP)

14.6

%




(a)  Income tax benefit measured based on the effective cash tax rate. The effective cash tax rate is calculated by dividing cash taxes paid by pre-tax income excluding special charges and unrealized (gains) losses on investments, net. For the year ended December 31, 2019, the effective cash tax rate was 0.7%.

(b)  Non-interest bearing liabilities include advance ticket sales, frequent flyer deferred revenue, deferred income taxes and other non-interest bearing liabilities.

 

UNITED AIRLINES HOLDINGS, INC.
NON-GAAP FINANCIAL RECONCILIATION


(A)  UAL evaluates its financial performance utilizing various accounting principles generally accepted in the United States of America (GAAP) and Non-GAAP financial measures, including adjusted operating income (loss), adjusted operating margin, adjusted pre-tax income (loss), adjusted pre-tax margin, adjusted net income (loss), adjusted diluted earnings (loss) per share and CASM, excluding special charges, third-party business expenses, fuel, and profit sharing, among others. UAL believes that adjusting for special charges is useful to investors because special charges are not indicative of UAL's ongoing performance. UAL believes that adjusting for unrealized (gains) losses on investments, net is useful to investors because those unrealized gains or losses may not ultimately be realized on a cash basis. UAL believes that adjusting for interest expense related to finance leases of Embraer ERJ 145 aircraft is useful to investors because of the accelerated recognition of interest expense.


CASM is a common metric used in the airline industry to measure an airline's cost structure and efficiency. UAL reports CASM excluding special charges, third-party business expenses, fuel and profit sharing. UAL believes that adjusting for special charges is useful to investors because special charges are not indicative of UAL's ongoing performance. UAL also believes that excluding third-party business expenses, such as maintenance, ground handling and catering services for third parties and fuel sales, provides more meaningful disclosure because these expenses are not directly related to UAL's core business. UAL also believes that excluding fuel costs from certain measures is useful to investors because it provides an additional measure of management's performance excluding the effects of a significant cost item over which management has limited influence. UAL excludes profit sharing because this exclusion allows investors to better understand and analyze our operating cost performance and provides a more meaningful comparison of our core operating costs to the airline industry.


Reconciliations of reported non-GAAP financial measures to the most directly comparable GAAP financial measures are included below.                          




Three Months Ended
December 31,


%

Increase/

(Decrease)


Year Ended
December 31,


%

Increase/

(Decrease)



2019


2018



2019


2018


CASM (cents)













Cost per available seat mile (CASM) (GAAP)


14.11



14.30



(1.3)



13.67



13.83



(1.2)


Special charges (B)


0.18



0.44



NM



0.09



0.18



NM


Third-party business expenses


0.07



0.03



133.3



0.06



0.04



50.0


Fuel expense


3.16



3.46



(8.7)



3.14



3.38



(7.1)


Profit sharing, including taxes


0.17



0.12



41.7



0.17



0.12



41.7


CASM, excluding special charges, third-party business expenses, fuel, and profit sharing (Non-GAAP)


10.53



10.25



2.7



10.21



10.11



1.0



NM Not Meaningful


 

UNITED AIRLINES HOLDINGS, INC.

NON-GAAP FINANCIAL RECONCILIATION (Continued)



Three Months Ended
December 31,


 

Increase/

(Decrease)


%

Increase/

(Decrease)


Year Ended
December 31,


 

Increase/

(Decrease)


%

Increase/

(Decrease)

(in millions)

2019


2018



2019


2018


Operating expenses (GAAP)

$

10,027



$

9,856



$

171



1.7



$

38,958



$

38,074



$

884



2.3


Special charges (B)

130



301



(171)



NM



246



487



(241)



NM


Operating expenses, excluding special charges

9,897



9,555



342



3.6



38,712



37,587



1,125



3.0


Adjusted to exclude:
















Third-party business expenses

48



32



16



50.0



168



121



47



38.8


Fuel expense

2,249



2,380



(131)



(5.5)



8,953



9,307



(354)



(3.8)


Profit sharing, including taxes

123



82



41



50.0



491



334



157



47.0


Adjusted operating expenses (Non-GAAP)

$

7,477



$

7,061



$

416



5.9



$

29,100



$

27,825



$

1,275



4.6


















Operating income (GAAP)

$

861



$

635



$

226



35.6



$

4,301



$

3,229



$

1,072



33.2


Adjusted to exclude:
















Special charges (B)

130



301



(171)



NM



246



487



(241)



NM


Adjusted operating income (Non-GAAP)

$

991



$

936



$

55



5.9



$

4,547



$

3,716



$

831



22.4


Operating margin

7.9

%


6.1

%


1.8



pts.



9.9

%


7.8

%


2.1



pts.


Adjusted operating margin (Non-GAAP) (A)

9.1

%


8.9

%


0.2



pts.



10.5

%


9.0

%


1.5



pts.


















Pre-tax income (GAAP)

$

844



$

553



$

291



52.6



$

3,914



$

2,648



$

1,266



47.8


Adjusted to exclude:
















Special charges (B)

130



301



(171)



NM



246



487



(241)



NM


Unrealized (gains) losses on investments, net (B)

(81)



(56)



(25)



NM



(153)



5



(158)



NM


Interest expense on ERJ 145 finance leases (C)

(4)



13



(17)



NM



64



26



38



NM


Adjusted pre-tax income (Non-GAAP)

$

889



$

811



$

78



9.6



$

4,071



$

3,166



$

905



28.6


Pre-tax margin

7.8

%


5.3

%


2.5



pts.



9.0

%


6.4

%


2.6



pts.


Adjusted pre-tax margin (Non-GAAP) (A)

8.2

%


7.7

%


0.5



pts.



9.4

%


7.7

%


1.7



pts.


















 Net income (GAAP)

$

641



$

461



$

180



39.0



$

3,009



$

2,122



$

887.0



41.8


Adjusted to exclude:
















Special charges (B)

130



301



(171)



NM



246



487



(241)



NM


Unrealized (gains) losses on investments, net (B)

(81)



(56)



(25)



NM



(153)



5



(158)



NM


Interest expense on ERJ 145 finance leases (C)

(4)



13