United Airlines Reports Fourth-Quarter and Full-Year 2017 Performance
"I am incredibly proud of how our employees delivered in 2017, achieving our best-ever operational performance. Reliability is an important pillar in our continued focus on further improving the customer experience," said Oscar Munoz, chief executive officer of United Airlines. "Looking ahead, we are committed to improving profitability over the long-term by building on the strong foundation we have laid over the past two years. Everyone at United is excited to enter 2018 with a clear set of priorities and a renewed sense of purpose around unlocking the full potential of United Airlines."
Fourth-Quarter and Full-Year Revenue
For the fourth quarter of 2017, revenue was $9.4 billion, an increase of 4.3 percent year-over-year. Fourth-quarter 2017 consolidated passenger revenue per available seat mile (PRASM) was up 0.2 percent compared to the fourth quarter of 2016. Cargo revenue was $304 million in the fourth quarter of 2017, an increase of 21.6 percent year-over-year primarily due to higher international freight volume and yields. For the full year of 2017, total revenue was $37.7 billion, an increase of 3.2 percent year-over-year.
"Everything we do at United is underpinned by a commitment to deliver top tier operational reliability," said Scott Kirby, president of United Airlines. "Thanks to the drive and dedication of our employees, we have significantly raised the bar in this area, delivering a record-setting operational performance in 2017. Looking ahead, our focus will be on continuing to improve customer service and expanding United's network to offer customers more choice."
Fourth-Quarter and Full-Year Costs
Total operating expense was $8.7 billion in the fourth quarter, up 8.2 percent year-over-year. Consolidated unit cost per available seat mile (CASM) increased 4.0 percent compared to the fourth quarter of 2016 due largely to higher fuel and labor expense. Fourth-quarter consolidated CASM, excluding special charges, third-party business expenses, fuel and profit sharing, increased 1.5 percent year-over-year, driven mainly by higher labor expense. For the full year, consolidated CASM increased 2.8 percent compared to full-year 2016 due largely to higher fuel and labor expense. Excluding special charges, third-party business expenses, fuel and profit sharing, consolidated CASM increased 3.1 percent compared to the prior year primarily due to expenses resulting from labor agreements ratified in 2016.
"We are encouraged by our financial results in the fourth quarter which capped a year of strong earnings. Additionally, throughout the year we made significant investments in the business while continuing to return cash to our shareholders through $1.8 billion of share repurchases," said Andrew Levy, executive vice president and chief financial officer of United Airlines. "In 2018, we will continue to focus on cost control, invest strategically into the business and utilize our new $3 billion share repurchase authorization to return cash to our shareholders."
Capital Allocation
UAL generated $728 million in operating cash flow during the fourth quarter of 2017 and ended the quarter with $5.8 billion in unrestricted liquidity, including $2.0 billion of undrawn commitments under its revolving credit facility. UAL generated $3.4 billion in operating cash flow for the full year. The company continued to invest in its business through capital expenditures of $1.1 billion in the fourth quarter and a total of $4.0 billion for the full year. Adjusted capital expenditures, measured as capital expenditures including assets acquired through the issuance of debt and capital leases, airport construction financing, and excluding fully reimbursable projects, were $1.0 billion during the fourth quarter and $4.7 billion for the full year in 2017. The company contributed $419 million to its pension plans and made debt and capital lease principal payments of $1.0 billion during 2017.
For the 12 months ended Dec. 31, 2017, the company's pre-tax income was $3.0 billion and return on invested capital (ROIC) was 13.8 percent. In the fourth quarter, UAL purchased $553 million of its common shares at an average price of $59.61 per share. During 2017, UAL purchased $1.8 billion of its common shares at an average price of $66.30 per share. The company completed its July 2016 $2 billion share repurchase program and announced authorization for a new $3 billion share repurchase program, which represents approximately 14 percent of the company's market capitalization based on the closing stock price on Jan. 22, 2018.
UAL management will host an Investor Event at 4:30pm ET today to discuss fourth-quarter and full-year 2017 earnings, outline 2018 priorities, provide an update on United's network strategy and deliver a financial update. During this presentation, UAL will provide full-year 2018 guidance including earnings per share and establish long-term earnings targets. Please visit ir.united.com to access the first-quarter 2018 investor update, the webcast of the event and the company's presentation made available during the webcast, the entirety of which will be available on the website at the conclusion of the event.
Fourth-Quarter and Full-Year Highlights
Operations and Employees
- Achieved a record-setting year for operational reliability, including best on-time departure performance, fewest cancellations, and best baggage handling performance.
- The fourth quarter saw a record-breaking performance during the busy holiday travel season.
- In December, United was first place among competitors in mainline on-time departures, completion factor, and on-time arrivals.
- In November, United set company performance records during the busy Thanksgiving travel week, landing its best-ever Thanksgiving completion factor and twice breaking on-time performance records in the midst of the busiest travel days of the year.
- Employees earned incentive payments of approximately $30 million for achieving operations performance goals in the fourth quarter, marking a full year of earned bonuses totaling approximately $87 million.
- The company earned its seventh consecutive perfect 100 percent score on the Human Rights Campaign's Corporate Equality Index and a spot on the organization's list of "Best Places to Work for LGBT Equality."
- Recognized as a Top 100 Best Places to Work in the U.S. by the Glassdoor Employees' Choice Awards.
- Announced the appointment of Regional Presidents for California and New York/New Jersey, demonstrating our commitment to these communities and our hubs.
- In response to the catastrophic weather events Harvey, Irma and Maria, United and its employees came together to keep the operation moving and take part in relief efforts, delivering more than 1.7 million pounds of relief supplies to impacted areas, and together with customers and employees, raised and contributed more than $9 million to community assistance.
Network and Fleet
- Last year, announced 44 new domestic routes from the company's seven U.S. mainland hubs, and increased service on 11 routes to the Hawaiian Islands from Denver, Chicago, Los Angeles and San Francisco – offering more nonstop service to Hawaiian destinations than any other carrier.
- Announced 13 new international routes in 2017 including its newest route San Francisco to Papeete, Tahiti starting seasonally in October 2018.
- By increasing its nonstop service from six hub cities to nine ski destinations, United offers customers the most service to the most ski destinations across the U.S.
- During 2017, took delivery of 19 new Boeing aircraft, including twelve 777-300ER, three 787-9, four 737-800 and eight used Airbus aircraft including two A320 and six A319.
- Announced an agreement with Boeing to convert 100 current 737 MAX orders into 737 MAX 10 aircraft starting in late 2020.
- Announced an agreement with Airbus to modify its A350 order resulting in a conversion of the model type from the A350-1000 to the A350-900, an increase in the order size from 35 to 45 aircraft and a deferral of the first delivery to late 2022.
- Retired the company's iconic Boeing 747 fleet with a final farewell flight between San Francisco and Honolulu.
Customer Experience
- Took several actions to improve the overall customer experience – including providing more tools to employees to assist customers and increasing compensation for denied boarding.
- Rolled out system-wide new Customer Solutions Desk with a dedicated team to develop creative solutions to assist customers in reaching their final destinations when their travel plans don't go as expected.
- Decreased involuntary denied boardings by 92% since April, and in December only had 13 involuntary denied boardings.
- Upgraded the Houston and Newark terminal experience with the opening of OTG experience, opened new security lanes with automated security bins at Chicago and Newark, and opened the brand new upgraded Los Angeles United Club along with new Global Services lobbies in Houston, Newark and Los Angeles.
- Improved the customer experience at Houston George Bush Intercontinental Airport by offering customers shorter, more convenient connection times and better access to more destinations through "rebanking" of the hub. UAL will "rebank" Chicago O'Hare beginning in February of 2018.
- Unveiled new enhancements to United's award-winning mobile app including bag tracking feature, ability to change and cancel flights in the app, add MileagePlus and United Club cards to the Apple Wallet, and allow customers to access boarding passes for 19 other carriers.
- Became the first airline to give customers access to flight information and other amenities skills for Amazon Alexa, Google Assistant and Fitbit Ionic smartwatch.
- Continued to improve the mobile tools used by employees, including the first release of the "in the moment" care app, and new functionality in flight attendant tools to better serve customers.
- The company received the CIO 100 award, an acknowledged mark of enterprise excellence in business technology.
- Launched a new online portal, United Jetstream, in an effort to simplify the travel management process and give corporate and agency customers an intuitive suite of self-service tools.
About United
United Airlines and United Express operate approximately 4,500 flights a day to 338 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 744 mainline aircraft and the airline's United Express carriers operate 518 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".
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," "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: our ability to comply with the terms of our various financing arrangements; the costs and availability of financing; our ability to maintain adequate liquidity; 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; costs associated with any modification or termination of our aircraft orders; our ability to utilize our net operating losses; our ability to attract and retain customers; potential reputational or other impact from adverse events in our operations; demand for transportation in the markets in which we operate; an outbreak of a disease that affects travel demand or travel behavior; demand for travel and the impact that global economic and political conditions have on customer travel patterns; excessive taxation and the inability to offset future taxable income; 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; 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 fuel or currency hedging programs; the effects of any hostilities, act of war or terrorist attack; 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; the effects of any technology failures or cybersecurity breaches; disruptions to our regional network; the costs and availability of aviation and other insurance; industry consolidation or changes in airline alliances; the success of our investments in airlines in other parts of the world; competitive pressures on pricing and on demand; our capacity decisions and the capacity decisions of our competitors; U.S. or foreign governmental legislation, regulation and other actions (including Open Skies agreements and environmental regulations); the impact of regulatory, investigative and legal proceedings and legal compliance risks; the impact of any management changes; 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; weather conditions; 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, 2016, 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-
| (In millions, except per share data) | Three Months Ended December 31, 2017 |
Three Months Ended December 31, 2016 |
% Increase/ (Decrease) |
Year Ended December 31, 2017 |
Year Ended December 31, 2016 |
% Increase/ (Decrease) |
|---|---|---|---|---|---|---|
| Operating revenue: Passenger: Mainline |
$6,582 | $6,295 | 4.6 | $26,552 | $25,414 | 4.5 |
| Operating revenue: Passenger: Regional | 1,498 | 1,466 | 2.2 | 5,852 | 6,043 | (3.2) |
| Operating revenue: Passenger: (B) Total passenger revenue | 8,080 | 7,761 | 4.1 | 32,404 | 31,457 | 3.0 |
| Operating revenue: Cargo | 304 | 250 | 21.6 | 1,035 | 876 | 18.2 |
| Operating revenue: Other operating revenue | 1,054 | 1,041 | 1.2 | 4,297 | 4,223 | 1.8 |
| Operating revenue:Other operating revenue: Total operating revenue | 9,438 | 9,052 | 4.3 | 37,736 | 36,556 | 3.2 |
| Operating expense: Salaries and related costs |
2,704 | 2,568 | 5.3 | 11,045 | 10,275 | 7.5 |
| Operating expense: Aircraft fuel(C) | 1,875 | 1,555 | 20.6 | 6,913 | 5,813 | 18.9 |
| Operating expense: Landing fees and other rent | 570 | 553 | 3.1 | 2,240 | 2,165 | 3.5 |
| Operating expense: Regional capacity purchase | 580 | 552 | 5.1 | 2,232 | 2,197 | 1.6 |
| Operating expense: Depreciation and amortization | 539 | 504 | 6.9 | 2,149 | 1,977 | 8.7 |
| Operating expense: Aircraft maintenance materials and outside repairs | 479 | 448 | 6.9 | 1,856 | 1,749 | 6.1 |
| Operating expense: Distribution expenses | 328 | 316 | 3.8 | 1,349 | 1,303 | 3.5 |
| Operating expense: Aircraft rent | 145 | 159 | (8.8) | 621 | 680 | (8.7) |
| Operating expense: Special charges (D) | 31 | (31) | NM | 176 | 638 | NM |
| Operating expense: Other operating expenses | 1,458 | 1,423 | 2.5 | 5,657 | 5,421 | 4.4 |
| Operating expense: Total operating expenses | 8,709 | 8,047 | 8.2 | 34,238 | 32,218 | 6.3 |
| Operating income: Operating income | 729 | 1,005 | (27.5) | 3,498 | 4,338 | (19.4) |
| Operating margin: | 7.7% | 11.1% | (3.4) pts. | 9.3% | 11.9% | (2.6) pts. |
| Operating margin, excluding special charges (A) (Non-GAAP) | 8.1% | 10.8% | (2.7) pts. | 9.7% | 13.6% | (3.9) pts. |
| Nonoperating income (expense): Interest expense |
(171) | (148) | 15.5 | (643) | (614) | 4.7 |
| Nonoperating income (expense): Interest capitalized | 20 | 24 | (16.7) | 84 | 72 | 16.7 |
| Nonoperating income (expense): Interest income | 16 | 11 | 45.5 | 57 | 42 | 35.7 |
| Nonoperating income (expense): Miscellaneous, net (D) | 6 | (8) | NM | 3 | (19) | NM |
| Nonoperating income (expense): Total nonoperating expense | (129) | (121) | 6.6 | (499) | (519) | (3.9) |
| Income before income taxes: Income before income taxes | 600 | 884 | (32.1) | 2,999 | 3,819 | (21.5) |
| Pre-tax margin:Pre-tax margin | 6.4% | 9.8% | (3.4) pts. | 7.9% | 10.4% | (2.5) pts. |
| Pre-tax margin: Pre-tax margin, excluding special charges and reflecting hedge adjustments (A) (Non-GAAP) | 6.7% | 9.5% | (2.8) pts. | 8.4% | 12.2% | (3.8) pts. |
| Income tax expense: Income tax expense (E) | 20 | 487 | (95.9) | 868 | 1,556 | (44.2) |
| Net income: Net income | $580 | $397 | 46.1 | $2,131 | $2,263 | (5.8) |
| Earnings per share: Earnings per share, diluted | $1.99 | $1.26 | 57.9 | $7.02 | $6.85 | 2.5 |
| Weighted average shares: Weighted average shares, diluted | 291.8 | 315.7 | (7.6) | 303.6 | 330.3 | (8.1) |
|
||||||
| Statistics: |
|
NM Not meaningful |
| Statistics: | Three Months Ended December 31, 2017 |
Three Months Ended December 31, 2016 |
% Increase/ (Decrease) |
Year Ended December 31, 2017 |
Year Ended December 31, 2016 |
% Increase/ (Decrease) |
|---|---|---|---|---|---|---|
| Mainline: Passengers (thousands) |
26,926 | 25,590 | 5.2 | 108,017 | 101,007 | 6.9 |
| Mainline:Revenue passenger miles (millions) | 47,192 | 45,608 | 3.5 | 193,444 | 186,181 | 3.9 |
| Mainline:Available seat miles (millions) | 57,866 | 55,440 | 4.4 | 234,576 | 224,692 | 4.4 |
| Mainline:Cargo ton miles (millions) | 910 | 790 | 15.2 | 3,316 | 2,805 | 18.2 |
| Mainline:Passenger revenue per available seat mile (cents) | 11.37 | 11.35 | 0.2 | 11.32 | 11.31 | 0.1 |
| Mainline:Average yield per revenue passenger mile (cents) | 13.95 | 13.80 | 1.1 | 13.73 | 13.65 | 0.6 |
| Mainline:Aircraft in fleet at end of period | 744 | 737 | 0.9 | 744 | 737 | 0.9 |
| Mainline:Average stage length (miles) | 1,775 | 1,804 | (1.6) | 1,806 | 1,859 | (2.9) |
| Mainline:Average daily utilization of each aircraft (hours: minutes) | 10:16 | 9:54 | 3.7 | 10:27 | 10:06 | 3.5 |
| Regional: Passengers (thousands) |
10,487 | 10,433 | 0.5 | 40,050 | 42,170 | (5.0) |
| Regional:Revenue passenger miles (millions) | 5,957 | 5,930 | 0.5 | 22,817 | 24,128 | (5.4) |
| Regional:Available seat miles (millions) | 7,162 | 7,078 | 1.2 | 27,810 | 28,898 | (3.8) |
| Regional:Passenger revenue per available seat mile (cents) | 20.92 | 20.71 | 1.0 | 21.04 | 20.91 | 0.6 |
| Regional:Average yield per revenue passenger mile (cents) | 25.15 | 24.72 | 1.7 | 25.65 | 25.05 | 2.4 |
| Regional:Aircraft in fleet at end of period | 518 | 494 | 4.9 | 518 | 494 | 4.9 |
| Regional:Average stage length (miles) | 558 | 560 | (0.4) | 558 | 564 | (1.1) |
| Consolidated (Mainline and Regional): Passengers (thousands) |
37,413 | 36,023 | 3.9 | 148,067 | 143,177 | 3.4 |
| Consolidated (Mainline and Regional)Revenue passenger miles (millions) | 53,149 | 51,538 | 3.1 | 216,261 | 210,309 | 2.8 |
| Consolidated (Mainline and Regional)Available seat miles (millions) | 65,028 | 62,518 | 4.0 | 262,386 | 253,590 | 3.5 |
| Consolidated (Mainline and Regional)Passenger load factor | 81.7% | 82.4% | (0.7) pts. | 82.4% | 82.9% | (0.5) pts. |
| Consolidated (Mainline and Regional)Domestic | 85.2% | 85.2% | — | 85.2% | 85.4% | (0.2) pts. |
| Consolidated (Mainline and Regional)Internal | 77.2% | 78.9% | (1.7) pts. | 78.9% | 80.0% | (1.1) pts. |
| Consolidated (Mainline and Regional)Passenger revenue per available seat mile (cents) | 12.43 | 12.41 | 0.2 | 12.35 | 12.40 | (0.4) |
| Consolidated (Mainline and Regional)Total revenue per available seat mile (cents) | 14.51 | 14.48 | 0.2 | 14.38 | 14.42 | (0.3) |
| Consolidated (Mainline and Regional)Average yield per revenue passenger mile (cents) | 15.20 | 15.06 | 0.9 | 14.98 | 14.96 | 0.1 |
| Consolidated (Mainline and Regional)Aircraft in fleet at end of period | 1,262 | 1,231 | 2.5 | 1,262 | 1,231 | 2.5 |
| Consolidated (Mainline and Regional)Average stage length (miles) | 1,431 | 1,441 | (0.7) | 1,460 | 1,473 | (0.9) |
| Consolidated (Mainline and Regional)Average full-time equivalent employees (thousands) | 85.6 | 84.8 | 0.9 | 86.0 | 83.9 | 2.5 |
| Note:See Part II, Item 6 Selected Financial Data of the company's annual report on Form 10-K for the year ended December 31, 2016 for the definition of these statistics. | ||||||
| (In millions, except per share data) | Three Months Ended December 31, 2017 |
Three Months Ended December 31, 2016 |
% Increase/ (Decrease) |
Year Ended December 31, 2017 |
Year Ended December 31, 2016 |
% Increase/ (Decrease) |
|---|---|---|---|---|---|---|
| Operating income: Operating income | $729 | $1,005 | (27.5) | $3,498 | $4,338 | (19.4) |
| Operating margin:Operating margin: | 7.7% | 11.1% | (3.4) pts. | 9.3% | 11.9% | (2.6) pts. |
| Operating income, excluding special charges (Non-GAAP) | 760 | 974 | (22.0) | 3,674 | 4,976 | (26.2) |
| Operating margin, excluding special charges (Non-GAAP) | 8.1% | 10.8% | (2.7) pts. | 9.7% | 13.6% | (3.9) pts. |
| Adjusted EBITDA, excluding special charges and reflecting hedge adjustments (a) (Non-GAAP) | $1,305 | $1,474 | (11.5) | $5,826 | $6,939 | (16.0) |
| Adjusted EBITDA margin, excluding special charges and reflecting hedge adjustments (a) (Non-GAAP) | 13.8% | 16.3% | (2.5) pts. | 15.4% | 19.0% | (3.6) pts. |
| Pre-tax income | $600 | $884 | (32.1) | $2,999 | $3,819 | (21.5) |
| Pre-tax margin | 6.4% | 9.8% | (3.4) pts. | 7.9% | 10.4% | (2.5) pts. |
| Pre-tax income, excluding special charges and reflecting hedge adjustments (a) (Non-GAAP) | 631 | 857 | (26.4) | 3,175 | 4,462 | (28.8) |
| Pre-tax margin, excluding special charges and reflecting hedge adjustments (a) (Non-GAAP) | 6.7% | 9.5% | (2.8) pts. | 8.4% | 12.2% | (3.8) pts. |
| Net income: Net income | $580 | $397 | 46.1 | $2,131 | $2,263 | (5.8) |
| Net income: Net income, excluding special charges and reflecting hedge adjustments (a) (Non-GAAP) | 408 | 562 | (27.4) | 2,052 | 2,857 | (28.2) |
| Diluted earnings per share: Diluted earnings per share | $1.99 | $1.26 | 57.9 | $7.02 | $6.85 | 2.5 |
| Diluted earnings per share: Diluted earnings per share, excluding special charges and reflecting hedge adjustments (a) (Non-GAAP) | 1.40 | 1.78 | (21.3) | 6.76 | 8.65 | (21.8) |
| Net cash provided by operating activities: Net cash provided by operating activities | $728 | $658 | 10.6 | $3,413 | $5,542 | (38.4) |
| Capital expenditures: Capital expenditures | $1,098 | $880 | 24.8 | $3,998 | $3,223 | 24.0 |
| Capital expenditures: Adjusted capital expenditures (Non-GAAP) | 1,046 | 1,078 | (3.0) | 4,729 | 3,347 | 41.3 |
| Free cash flow: Free cash flow, net of financings (Non-GAAP) | $(370) | $(222) | NM | $(585) | $2,319 | NM |
| Free cash flow: Free cash flow (Non-GAAP) | (318) | (420) | NM | (1,316) | 2,195 | NM |
| (a) Hedge adjustments include prior period gains (losses) on fuel derivative contracts settled in the current period. See note D for further information. | ||||||
| (b) The company recorded a special income tax benefit adjustment of $192 million in 2017 and a special income tax expense adjustment of $180 million in 2016. See note E for further information on the income tax adjustments. | ||||||
| (in millions) | Twelve Months Ended December 31, 2017 |
||||
|---|---|---|---|---|---|
| Return On Invested CapitalNet Operating Profit After Tax (NOPAT) Pre-tax income |
$2,999 | ||||
| Return On Invested CapitalSpecial charges (D): Severance and benefit costs |
116 | ||||
| Return On Invested Capital Impairment of assets |
25 | ||||
| Return On Invested Capital (Gains) losses on sale of assets and other special charges |
35 | ||||
Pre-tax income excluding special charges and reflecting hedge adjustments - Non-GAAP |
3,175 | ||||
add: Interest expense (net of income tax benefit) (a) |
639 | ||||
add: Interest component of capitalized aircraft rent (net of income tax benefit) (a) |
302 | ||||
add: Net interest on pension (net of income tax benefit) (a) |
41 | ||||
less: Income taxes paid |
(20) | ||||
NOPAT - Non-GAAP |
$4,137 | ||||
| Return On Invested CapitalInvested Capital (five-quarter average) Total assets |
$41,753 | ||||
add: Capitalized aircraft operating leases (b) |
4,585 | ||||
less: Non-interest bearing liabilities (c) |
(16,394) | ||||
Average invested capital - Non-GAAP |
$29,944 | ||||
Return On Invested Capital - Non-GAAP |
13.8% | ||||
|
|||||
|
UNITED CONTINENTAL HOLDINGS, INC. |
|
(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, income (loss) before income taxes excluding special charges and reflecting hedge adjustments, net income (loss) excluding special charges and reflecting hedge adjustments, net earnings (loss) per share excluding special charges and reflecting hedge adjustments, and CASM, as adjusted, among others. 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 non-recurring 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, fuel sales and non-air mileage redemptions, 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 recurring cost performance and provides a more meaningful comparison of our core operating costs to the airline industry. In addition, the company believes that adjusting for prior period gains and losses on fuel derivative contracts settled in the current period is useful because the adjustments allow investors to better understand the cash impact of settled fuel derivative contracts in a given period. Pursuant to SEC Regulation G, UAL has included the following reconciliations of reported Non-GAAP financial measures to comparable financial measures reported on a GAAP basis. |
| Statistics: | Three Months Ended December 31, 2017 |
Three Months Ended December 31, 2016 |
% Increase/ (Decrease) |
Nine Months Ended December 31, 2017 |
Nine Months Ended December 31, 2016 |
% Increase/ (Decrease) |
|---|---|---|---|---|---|---|
| CASM Mainline Operations (cents) Cost per available seat mile (CASM) |
12.90 | 12.43 | 3.8 | 12.59 | 12.22 | 3.0 |
| Cost per available seat mile (CASM)Special charges (D) | 0.06 | (0.06) | NM | 0.07 | 0.29 | NM |
| Cost per available seat mile (CASM)Third-party business expenses | 0.12 | 0.13 | (7.7) | 0.12 | 0.11 | 9.1 |
| Cost per available seat mile (CASM)Fuel expense | 2.68 | 2.33 | 15.0 | 2.46 | 2.16 | 13.9 |
| CASM Mainline OperationsCASM, excluding special charges, third-party business expenses and fuel | 10.04 | 10.03 | 0.1 | 9.94 | 9.66 | 2.9 |
| CASM Mainline OperationsProfit sharing per available seat mile | 0.08 | 0.22 | (63.6) | 0.15 | 0.28 | (46.4) |
| CASM Mainline OperationsCASM, excluding special charges, third-party business expenses, fuel, and profit sharing | 9.96 | 9.81 | 1.5 | 9.79 | 9.38 | 4.4 |
| CASM Consolidated Operations (cents)Cost per available seat mile (CASM) | 13.39 | 12.87 | 4.0 | 13.05 | 12.70 | 2.8 |
| CASM Mainline Operations (cents)Special charges (D) | 0.04 | (0.05) | NM | 0.07 | 0.25 | NM |
| CASM Mainline Operations (cents)Third-party business expenses | 0.12 | 0.11 | 9.1 | 0.10 | 0.10 | — |
| CASM Mainline Operations (cents) Fuel expense | 2.88 | 2.49 | 15.7 | 2.64 | 2.29 | 15.3 |
| CASM Mainline Operations (cents) CASM, excluding special charges, third-party business expenses and fuel | 10.35 | 10.32 | 0.3 | 10.24 | 10.06 | 1.8 |
| CASM Mainline Operations (cents) Profit sharing per available seat mile | 0.07 | 0.19 | (63.2) | 0.13 | 0.25 | (48.0) |
| CASM Mainline Operations (cents) CASM, excluding special charges, third-party business expenses, fuel, and profit sharing | 10.28 | 10.13 | 1.5 | 10.11 | 9.81 | 3.1 |
| (In millions) | Three Months Ended December 31, 2017 |
Three Months Ended December 31, 2016 |
$ Increase/ (Decrease) |
% Increase/ (Decrease) |
Year Ended December 31, 2017 |
Year Ended December 31, 2016 |
$ Increase/ (Decrease) |
% Increase/ (Decrease) |
|---|---|---|---|---|---|---|---|---|
| Operating expenses | $8,709 | $8,047 | $662 | 8.2 | $34,238 | $32,218 | $2,020 | 6.3 |
| Operating expensesSpecial charges (D) | 31 | (31) | 62 | NM | 176 | 638 | (462) | NM |
| Operating expenses, excluding special charges Operating expenses, excluding special charges | 8,678 | 8,078 | 600 | 7.4 | 34,062 | 31,580 | 2,482 | 7.9 |
| Operating expenses, excluding special chargesThird-party business expenses | 72 | 69 | 3 | 4.3 | 277 | 257 | 20 | 7.8 |
| Operating expenses, excluding special chargesFuel expense | 1,875 | 1,555 | 320 | 20.6 | 6,913 | 5,813 | 1,100 | 18.9 |
| Operating expensesProfit sharing, including taxes | 45 | 122 | (77) | (63.1) | 349 | 628 | (279) | (44.4) |
| Operating expensesOperating expenses, excluding fuel, profit sharing, special charges and third-party business expenses | $6,686 | $6,332 | $354 | 5.6 | $26,523 | $24,882 | $1,641 | 6.6 |
| Operating income | $729 | $1,005 | $(276) | (27.5) | $3,498 | $4,338 | $(840) | (19.4) |
| Operating incomeLess: Special charges (D) | 31 | (31) | 62 | NM | 176 | 638 | (462) | NM |
| Operating incomeOperating income, excluding special charges | $760 | $974 | $(214) | (22.0) | $3,674 | $4,976 | $(1,302) | (26.2) |
| Operating incomeIncome before income taxes | $600 | $884 | $(284) | (32.1) | $2,999 | $3,819 | $(820) | (21.5) |
| Operating incomeSpecial charges and hedge adjustments before income taxes (D) | 31 | (27) | 58 | NM | 176 | 643 | (467) | NM |
| Operating incomeIncome before income taxes and excluding special items | $631 | $857 | $(226) | (26.4) | $3,175 | $4,462 | $(1,287) | (28.8) |
| Operating incomeNet income | $580 | $397 | $183 | 46.1 | $2,131 | $2,263 | $(132) | (5.8) |
| Operating incomeSpecial charges and hedge adjustments, net of tax (D) | (172) | 165 | (337) | NM | (79) | 594 | (673) | NM |
| Operating incomeNet income, excluding special charges and reflecting hedge | $408 | $562 | $(154) | (27.4) | $2,052 | $2,857 | $(805) | (28.2) |
| Diluted earnings per shareDiluted earnings per share | $1.99 | $1.26 | $0.73 | 57.9 | $7.02 | $6.85 | $0.17 | 2.5 |
| Diluted earnings per shareSpecial charges and hedge adjustments | 0.11 | (0.09) | 0.20 | NM | 0.58 | 1.95 | (1.37) | NM |
| Diluted earnings per shareTax effect related to special charges and hedge adjustments | (0.70) | 0.61 | (1.31) | NM | (0.84) | (0.15) | (0.69) | NM |
| Diluted earnings per shareDiluted earnings per share, excluding special items | $1.40 | $1.78 | $(0.38) | (21.3) | $6.76 | $8.65 | $(1.89) | (21.8) |
|
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. Adjusted EBITDA is EBITDA excluding special charges that are non-recurring and that management believes are not indicative of UAL's ongoing performance. Adjusted EBITDA also includes hedge adjustments to reflect the cash impact of fuel derivative contracts settled in the current period. |
||||||||||||||||
| EBITDA (In millions) |
Three Months Ended December 31, 2017 |
Three Months Ended December 31, 2016 |
Year Ended December 31, 2017 |
Year Ended December 31, 2016 |
||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net income: Net income |
$580 | $397 | $2,131 | $2,263 | ||||||||||||
| Net income Adjusted for:Depreciation and amortization | 539 | 504 | 2,149 | 1,977 | ||||||||||||
| Net income Adjusted for:Interest expense | 171 | 148 | 643 | 614 | ||||||||||||
| Net income Adjusted for:Interest capitalized | (20) | (24) | (84) | (72) | ||||||||||||
| Net income Adjusted for:Interest income | (16) | (11) | (57) | (42) | ||||||||||||
| Net income Adjusted for:Income tax expense(E) | 20 | 487 | 868 | 1,556 | ||||||||||||
| Net income Adjusted for:Special charges and hedge adjustments before income taxes (D) | 31 | (27) | 176 | 643 | ||||||||||||
| Adjusted EBITDA, excluding special charges and reflecting hedge adjustments - Non-GAAPAdjusted EBITDA, excluding special charges and reflecting hedge adjustments - Non-GAAP | $1,305 | $1,474 | $5,826 | $6,939 | ||||||||||||
|
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 December 31, 2017 |
Three Months Ended December 31, 2016 |
Year Ended December 31, 2017 |
Year Ended December 31, 2016 |
||||||||||||
| Capital expenditures:Capital expenditures | $1,098 | $880 | $3,998 | $3,223 | ||||||||||||
| Capital expenditures:Property and equipment acquired through the issuance of debt and capital leases | 17 | 271 | 935 | 386 | ||||||||||||
| Capital expenditures:Airport construction financing | 1 | 23 | 42 | 91 | ||||||||||||
| Capital expenditures:Fully reimbursable projects | (70) | (96) | (246) | (353) | ||||||||||||
| Capital expenditures:Adjusted capital expenditures – Non-GAAP | $1,046 | $1,078 | $4,729 | $3,347 | ||||||||||||
| Free Cash Flow (In millions) |
||||||||||||||||
| Free Cash Flow:Net cash provided by operating activities | $728 | $658 | $3,413 | $5,542 | ||||||||||||
| Free Cash Flow:Less capital expenditures | 1,098 | 880 | 3,998 | 3,223 | ||||||||||||
| Free Cash Flow:Free cash flow, net of financings - Non-GAAP | $(370) | $(222) | $(585) | $2,319 | ||||||||||||
| Free Cash Flow:Net cash provided by operating activities | $728 | $658 | $3,413 | $5,542 | ||||||||||||
| Free Cash Flow:Less adjusted capital expenditures – Non-GAAP | 1,046 | 1,078 | 4,729 | 3,347 | ||||||||||||
| Free Cash Flow:Free cash flow - Non-GAAP | $(318) | $(420) | $(1,316) | $2,195 | ||||||||||||
| Notes (Unaudited): | 4Q 2017 Passenger Revenue (millions) |
Passenger Revenue vs. 4Q 2016 |
PRASM vs. 4Q 2016 |
Yield vs. 4Q 2016 |
Available Seat Miles vs. 4Q 2016 |
|---|---|---|---|---|---|
| Mainline:Mainline | $3,626 | 7.3% | 0.3% | 0.1% | 7.1% |
| Regional:Regional | 1,453 | 2.7% | 1.0% | 1.9% | 1.7% |
| Domestic:Domestic | 5,079 | 6.0% | (0.1%) | 0.0% | 6.0% |
| Atlantic:Atlantic | 1,312 | 5.3% | 1.3% | 1.5% | 4.0% |
| Pacific:Pacific | 986 | (4.3%) | (2.9%) | 0.6% | (1.4%) |
| Latin America:Latin America | 703 | 1.6% | (0.6%) | 2.6% | 2.3% |
| International:International | 3,001 | 1.1% | (0.4%) | 1.9% | 1.4% |
| Consolidated:Consolidated | 8,080 | 4.1% | 0.2% | 0.9% | 4.0% |
| Mainline:Mainline | $6,582 | 4.6% | 0.2% | 1.1% | 4.4% |
| Regional:Regional | 1,498 | 2.2% | 1.0% | 1.7% | 1.2% |
| Consolidated:Consolidated | 8,080 |
| (In millions, except per gallon) | Three Months Ended December 31, 2017 |
Three Months Ended December 31, 2016 |
% Increase/ (Decrease) |
Nine Months Ended December 31, 2017 |
Nine Months Ended December 31, 2016 |
% Increase/ (Decrease) |
|---|---|---|---|---|---|---|
| Mainline fuel expense excluding hedge impacts Mainline fuel expense excluding hedge impacts | $1,551 | $1,270 | 22.1 | $5,770 | $4,640 | 24.4 |
| Hedge losses reported in fuel expense (a) | — | (20) | NM | (2) | (217) | NM |
| Total mainline fuel expenseTotal mainline fuel expense | 1,551 | 1,290 | 20.2 | 5,772 | 4,857 | 18.8 |
| Regional fuel expense Regional fuel expense | 324 | 265 | 22.3 | 1,141 | 956 | 19.4 |
| Consolidated fuel expenseConsolidated fuel expense | $1,875 | $1,555 | 20.6 | $6,913 | $5,813 | 18.9 |
| Mainline fuel consumption (gallons)Mainline fuel consumption (gallons) | 820 | 804 | 2.0 | 3,357 | 3,261 | 2.9 |
| Mainline average aircraft fuel price per gallonMainline average aircraft fuel price per gallon | $1.89 | $1.60 | 18.1 | $1.72 | $1.49 | 15.4 |
| Mainline average aircraft fuel price per gallon excluding hedge losses recorded in fuel expenseMainline average aircraft fuel price per gallon excluding hedge losses recorded in fuel expense | $1.89 | $1.58 | 19.6 | $1.72 | $1.42 | 21.1 |
| Regional fuel consumption (gallons)Regional fuel consumption (gallons) | 160 | 158 | 1.3 | 621 | 643 | (3.4) |
| Regional average aircraft fuel price per gallonRegional average aircraft fuel price per gallon | $2.03 | $1.68 | 20.8 | $1.84 | $1.49 | 23.5 |
| Consolidated fuel consumption (gallons)Consolidated fuel consumption (gallons) | 980 | 962 | 1.9 | 3,978 | 3,904 | 1.9 |
| Consolidated average aircraft fuel price per gallonConsolidated average aircraft fuel price per gallon | $1.91 | $1.62 | 17.9 | $1.74 | $1.49 | 16.8 |
| Consolidated average aircraft fuel price per gallon excluding hedge losses recorded in fuel expenseConsolidated average aircraft fuel price per gallon excluding hedge losses recorded in fuel expense | $1.91 | $1.60 | 19.4 | $1.74 | $1.43 | 21.7 |
|
||||||
|
(a) UAL allocates 100 percent of losses from settled hedges that were designated for hedge accounting to mainline fuel expense. |
| (In millions) | Three Months Ended December 31, 2017 |
Three Months Ended December 31, 2016 |
Year Ended December 31, 2017 |
Year Ended December 31, 2016 |
|---|---|---|---|---|
| Operating: Severance and benefit costs |
$15 | $10 | $116 | $37 |
| Operating:Impairment of assets | 10 | — | 25 | 412 |
| Operating:Labor agreement costs | — | (60) | — | 64 |
| Operating:Cleveland airport lease restructuring | — | — | — | 74 |
| Operating:(Gains) losses on sale of assets and other special charges | 6 | 19 | 35 | 51 |
| Operating:Subtotal | 31 | (31) | 176 | 638 |
| Other nonoperating (gains) losses:Other nonoperating (gains) losses | — | — | — | (1) |
| Total special charges:Total special charges | 31 | (31) | 176 | 637 |
| Income tax benefit related to special charges:Income tax benefit related to special charges | (11) | 12 | (63) | (229) |
| Total special charges, net of income taxes:Total special charges, net of income taxes | 20 | (19) | 113 | 408 |
| Income tax adjustments (E) | (192) | 180 | (192) | 180 |
| Hedge adjustments: prior period gains on fuel derivative contracts settled in the current period:Hedge adjustments: prior period gains on fuel derivative contracts settled in the current period | — | 4 | — | 6 |
| Total special charges and hedge adjustments, net of income taxes:Total special charges and hedge adjustments, net of income taxes | $(172) | $165 | $(79) | $594 |
|
Special charges, hedge adjustments and income tax adjustments |
|
Severance and benefit costs: During the three months and year ended December 31, 2017, the company recorded $10 million ($6 million net of taxes) and $83 million ($53 million net of taxes), respectively, of severance and benefit costs related to a voluntary early-out program for its technicians and related employees represented by the International Brotherhood of Teamsters (the "IBT"). 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 and year ended December 31, 2017, the company recorded $5 million ($3 million net of taxes) and $33 million ($21 million net of taxes), respectively, of severance primarily related to its management reorganization initiative. |
|
During the three months and year ended December 31, 2016, the company recorded $10 million ($6 million net of taxes) and $37 million ($24 million net of taxes), respectively, of severance and benefit costs related to a voluntary early-out program for the company's flight attendants and other severance agreements. |
|
Impairment of assets: In the fourth quarter of 2017, the company recorded a $10 million ($6 million net of taxes) impairment charge related to obsolete spare parts inventory. During 2017, United recorded a $15 million ($10 million net of taxes) intangible asset impairment charge related to a maintenance service agreement. |
|
In April 2016, the Federal Aviation Administration ("FAA") announced that, effective October 30, 2016, it would designate Newark Liberty International Airport ("Newark") as a Level 2 schedule-facilitated airport under the International Air Transport Association Worldwide Slot Guidelines. The designation was associated with an updated demand and capacity analysis of Newark by the FAA. In the second quarter of 2016, the company determined that the FAA's action impaired the entire value of its Newark slots because the slots are no longer the mechanism that governs take-off and landing rights. Accordingly, the company recorded a $412 million special charge ($264 million net of taxes) to write off the intangible asset. |
|
Labor agreement costs and related items: In 2016, the fleet service, passenger service, storekeeper and other employees represented by the International Association of Machinists and Aerospace Workers (IAM) ratified seven new contracts with the company which extended the contracts through 2021. Also in 2016, the technicians and related employees represented by the International Brotherhood of Teamsters (IBT) ratified a six-year joint collective bargaining agreement which extended the contract through 2022. During 2016, the company recorded $171 million ($110 million net of taxes) of special charges primarily for payments in conjunction with the IAM and IBT agreements described above. As part of the ratified contract with the IBT, the company amended some of its technicians and related employees' postretirement medical plans. The amendments triggered curtailment accounting, resulting in the recognition of a one-time $60 million gain ($38 million net of taxes) for accelerated recognition of a prior service credit in one of the plans. Also, as part of the ratified contract with the Association of Flight Attendants, the company amended two of its flight attendant postretirement medical plans. The amendments triggered curtailment accounting, resulting in the recognition of a one-time $47 million gain ($30 million net of taxes) for accelerated recognition of a prior service credit. |
|
Cleveland airport lease restructuring: During 2016, the City of Cleveland agreed to amend the company's lease, which runs through 2029, associated with certain excess airport terminal space (principally Terminal D) and related facilities at Hopkins International Airport. The company recorded an accrual for remaining payments under the lease for facilities that the company no longer uses and will continue to incur costs under the lease without economic benefit to the company. This liability was measured and recorded at its fair value when the company ceased its right to use such facilities leased to it pursuant to the lease. The company recorded a special charge of $74 million ($47 million net of taxes) related to the amended lease. |
|
Hedge adjustments: Prior to 2017, the company used certain combinations of derivative contracts that were economic hedges but did not qualify for hedge accounting under U.S. generally accepted accounting principles. As with derivatives that qualified for hedge accounting, the economic hedges and individual contracts were part of the company's program to mitigate the adverse financial impact of potential increases in the price of fuel. The company recorded changes in the fair value of the various contracts that were not designated for hedge accounting to Nonoperating income (expense): Miscellaneous, net in the statements of consolidated operations. During the three months and year ended December 31, 2016, for fuel derivative contracts that settled in the three months and year ended December 31, 2016, the company recorded mark-to-market gains of $4 million and $6 million, respectively, in prior periods. |
|
(E) Effective tax rate: The company's effective tax rate for the three months and year ended December 31, 2017 was 3.5% and 29.0%, respectively. The company's effective tax rate for the three months and year ended December 31, 2016 was 55.1% and 40.7%, respectively. The rate for both 2017 periods was impacted by a one-time, $192 million benefit due to the passage of the Tax Cuts and Jobs Act in the fourth quarter of 2017. The rate for both 2016 periods was impacted by a special tax expense of $180 million. In 2016, the company recorded approximately $180 million of deferred income tax expense adjustments in AOCI, which related to losses on fuel hedges designated for hedge accounting. Accounting rules required the adjustments to remain in AOCI as long as the company had fuel derivatives designated for cash flow hedge accounting. In 2016, we settled all of our fuel hedges and have not entered into any new fuel derivative contracts for hedge accounting. Accordingly, the company reclassified the $180 million to income tax expense in 2016. |
|
The effective tax rates for the 2017 and 2016 periods represented a blend of federal, state and foreign taxes and the impact of certain nondeductible items. The effective tax rate for the three months and year ended December 31, 2017 reflects the impact of a change in the mix of domestic and foreign earnings. |
SOURCE United Airlines
For further information: United Airlines Worldwide Media Relations, +1-872-825-8640, media.relations@united.com
"I am incredibly proud of how our employees delivered in 2017, achieving our best-ever operational performance. Reliability is an important pillar in our continued focus on further improving the customer experience," said Oscar Munoz, chief executive officer of United Airlines. "Looking ahead, we are committed to improving profitability over the long-term by building on the strong foundation we have laid over the past two years. Everyone at United is excited to enter 2018 with a clear set of priorities and a renewed sense of purpose around unlocking the full potential of United Airlines."
Fourth-Quarter and Full-Year Revenue
For the fourth quarter of 2017, revenue was $9.4 billion, an increase of 4.3 percent year-over-year. Fourth-quarter 2017 consolidated passenger revenue per available seat mile (PRASM) was up 0.2 percent compared to the fourth quarter of 2016. Cargo revenue was $304 million in the fourth quarter of 2017, an increase of 21.6 percent year-over-year primarily due to higher international freight volume and yields. For the full year of 2017, total revenue was $37.7 billion, an increase of 3.2 percent year-over-year.
"Everything we do at United is underpinned by a commitment to deliver top tier operational reliability," said Scott Kirby, president of United Airlines. "Thanks to the drive and dedication of our employees, we have significantly raised the bar in this area, delivering a record-setting operational performance in 2017. Looking ahead, our focus will be on continuing to improve customer service and expanding United's network to offer customers more choice."
Fourth-Quarter and Full-Year Costs
Total operating expense was $8.7 billion in the fourth quarter, up 8.2 percent year-over-year. Consolidated unit cost per available seat mile (CASM) increased 4.0 percent compared to the fourth quarter of 2016 due largely to higher fuel and labor expense. Fourth-quarter consolidated CASM, excluding special charges, third-party business expenses, fuel and profit sharing, increased 1.5 percent year-over-year, driven mainly by higher labor expense. For the full year, consolidated CASM increased 2.8 percent compared to full-year 2016 due largely to higher fuel and labor expense. Excluding special charges, third-party business expenses, fuel and profit sharing, consolidated CASM increased 3.1 percent compared to the prior year primarily due to expenses resulting from labor agreements ratified in 2016.
"We are encouraged by our financial results in the fourth quarter which capped a year of strong earnings. Additionally, throughout the year we made significant investments in the business while continuing to return cash to our shareholders through $1.8 billion of share repurchases," said Andrew Levy, executive vice president and chief financial officer of United Airlines. "In 2018, we will continue to focus on cost control, invest strategically into the business and utilize our new $3 billion share repurchase authorization to return cash to our shareholders."
Capital Allocation
UAL generated $728 million in operating cash flow during the fourth quarter of 2017 and ended the quarter with $5.8 billion in unrestricted liquidity, including $2.0 billion of undrawn commitments under its revolving credit facility. UAL generated $3.4 billion in operating cash flow for the full year. The company continued to invest in its business through capital expenditures of $1.1 billion in the fourth quarter and a total of $4.0 billion for the full year. Adjusted capital expenditures, measured as capital expenditures including assets acquired through the issuance of debt and capital leases, airport construction financing, and excluding fully reimbursable projects, were $1.0 billion during the fourth quarter and $4.7 billion for the full year in 2017. The company contributed $419 million to its pension plans and made debt and capital lease principal payments of $1.0 billion during 2017.
For the 12 months ended Dec. 31, 2017, the company's pre-tax income was $3.0 billion and return on invested capital (ROIC) was 13.8 percent. In the fourth quarter, UAL purchased $553 million of its common shares at an average price of $59.61 per share. During 2017, UAL purchased $1.8 billion of its common shares at an average price of $66.30 per share. The company completed its July 2016 $2 billion share repurchase program and announced authorization for a new $3 billion share repurchase program, which represents approximately 14 percent of the company's market capitalization based on the closing stock price on Jan. 22, 2018.
UAL management will host an Investor Event at 4:30pm ET today to discuss fourth-quarter and full-year 2017 earnings, outline 2018 priorities, provide an update on United's network strategy and deliver a financial update. During this presentation, UAL will provide full-year 2018 guidance including earnings per share and establish long-term earnings targets. Please visit ir.united.com to access the first-quarter 2018 investor update, the webcast of the event and the company's presentation made available during the webcast, the entirety of which will be available on the website at the conclusion of the event.
Fourth-Quarter and Full-Year Highlights
Operations and Employees
- Achieved a record-setting year for operational reliability, including best on-time departure performance, fewest cancellations, and best baggage handling performance.
- The fourth quarter saw a record-breaking performance during the busy holiday travel season.
- In December, United was first place among competitors in mainline on-time departures, completion factor, and on-time arrivals.
- In November, United set company performance records during the busy Thanksgiving travel week, landing its best-ever Thanksgiving completion factor and twice breaking on-time performance records in the midst of the busiest travel days of the year.
- Employees earned incentive payments of approximately $30 million for achieving operations performance goals in the fourth quarter, marking a full year of earned bonuses totaling approximately $87 million.
- The company earned its seventh consecutive perfect 100 percent score on the Human Rights Campaign's Corporate Equality Index and a spot on the organization's list of "Best Places to Work for LGBT Equality."
- Recognized as a Top 100 Best Places to Work in the U.S. by the Glassdoor Employees' Choice Awards.
- Announced the appointment of Regional Presidents for California and New York/New Jersey, demonstrating our commitment to these communities and our hubs.
- In response to the catastrophic weather events Harvey, Irma and Maria, United and its employees came together to keep the operation moving and take part in relief efforts, delivering more than 1.7 million pounds of relief supplies to impacted areas, and together with customers and employees, raised and contributed more than $9 million to community assistance.
Network and Fleet
- Last year, announced 44 new domestic routes from the company's seven U.S. mainland hubs, and increased service on 11 routes to the Hawaiian Islands from Denver, Chicago, Los Angeles and San Francisco – offering more nonstop service to Hawaiian destinations than any other carrier.
- Announced 13 new international routes in 2017 including its newest route San Francisco to Papeete, Tahiti starting seasonally in October 2018.
- By increasing its nonstop service from six hub cities to nine ski destinations, United offers customers the most service to the most ski destinations across the U.S.
- During 2017, took delivery of 19 new Boeing aircraft, including twelve 777-300ER, three 787-9, four 737-800 and eight used Airbus aircraft including two A320 and six A319.
- Announced an agreement with Boeing to convert 100 current 737 MAX orders into 737 MAX 10 aircraft starting in late 2020.
- Announced an agreement with Airbus to modify its A350 order resulting in a conversion of the model type from the A350-1000 to the A350-900, an increase in the order size from 35 to 45 aircraft and a deferral of the first delivery to late 2022.
- Retired the company's iconic Boeing 747 fleet with a final farewell flight between San Francisco and Honolulu.
Customer Experience
- Took several actions to improve the overall customer experience – including providing more tools to employees to assist customers and increasing compensation for denied boarding.
- Rolled out system-wide new Customer Solutions Desk with a dedicated team to develop creative solutions to assist customers in reaching their final destinations when their travel plans don't go as expected.
- Decreased involuntary denied boardings by 92% since April, and in December only had 13 involuntary denied boardings.
- Upgraded the Houston and Newark terminal experience with the opening of OTG experience, opened new security lanes with automated security bins at Chicago and Newark, and opened the brand new upgraded Los Angeles United Club along with new Global Services lobbies in Houston, Newark and Los Angeles.
- Improved the customer experience at Houston George Bush Intercontinental Airport by offering customers shorter, more convenient connection times and better access to more destinations through "rebanking" of the hub. UAL will "rebank" Chicago O'Hare beginning in February of 2018.
- Unveiled new enhancements to United's award-winning mobile app including bag tracking feature, ability to change and cancel flights in the app, add MileagePlus and United Club cards to the Apple Wallet, and allow customers to access boarding passes for 19 other carriers.
- Became the first airline to give customers access to flight information and other amenities skills for Amazon Alexa, Google Assistant and Fitbit Ionic smartwatch.
- Continued to improve the mobile tools used by employees, including the first release of the "in the moment" care app, and new functionality in flight attendant tools to better serve customers.
- The company received the CIO 100 award, an acknowledged mark of enterprise excellence in business technology.
- Launched a new online portal, United Jetstream, in an effort to simplify the travel management process and give corporate and agency customers an intuitive suite of self-service tools.
About United
United Airlines and United Express operate approximately 4,500 flights a day to 338 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 744 mainline aircraft and the airline's United Express carriers operate 518 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".
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," "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: our ability to comply with the terms of our various financing arrangements; the costs and availability of financing; our ability to maintain adequate liquidity; 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; costs associated with any modification or termination of our aircraft orders; our ability to utilize our net operating losses; our ability to attract and retain customers; potential reputational or other impact from adverse events in our operations; demand for transportation in the markets in which we operate; an outbreak of a disease that affects travel demand or travel behavior; demand for travel and the impact that global economic and political conditions have on customer travel patterns; excessive taxation and the inability to offset future taxable income; 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; 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 fuel or currency hedging programs; the effects of any hostilities, act of war or terrorist attack; 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; the effects of any technology failures or cybersecurity breaches; disruptions to our regional network; the costs and availability of aviation and other insurance; industry consolidation or changes in airline alliances; the success of our investments in airlines in other parts of the world; competitive pressures on pricing and on demand; our capacity decisions and the capacity decisions of our competitors; U.S. or foreign governmental legislation, regulation and other actions (including Open Skies agreements and environmental regulations); the impact of regulatory, investigative and legal proceedings and legal compliance risks; the impact of any management changes; 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; weather conditions; 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, 2016, 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-
| (In millions, except per share data) | Three Months Ended December 31, 2017 |
Three Months Ended December 31, 2016 |
% Increase/ (Decrease) |
Year Ended December 31, 2017 |
Year Ended December 31, 2016 |
% Increase/ (Decrease) |
|---|---|---|---|---|---|---|
| Operating revenue: Passenger: Mainline |
$6,582 | $6,295 | 4.6 | $26,552 | $25,414 | 4.5 |
| Operating revenue: Passenger: Regional | 1,498 | 1,466 | 2.2 | 5,852 | 6,043 | (3.2) |
| Operating revenue: Passenger: (B) Total passenger revenue | 8,080 | 7,761 | 4.1 | 32,404 | 31,457 | 3.0 |
| Operating revenue: Cargo | 304 | 250 | 21.6 | 1,035 | 876 | 18.2 |
| Operating revenue: Other operating revenue | 1,054 | 1,041 | 1.2 | 4,297 | 4,223 | 1.8 |
| Operating revenue:Other operating revenue: Total operating revenue | 9,438 | 9,052 | 4.3 | 37,736 | 36,556 | 3.2 |
| Operating expense: Salaries and related costs |
2,704 | 2,568 | 5.3 | 11,045 | 10,275 | 7.5 |
| Operating expense: Aircraft fuel(C) | 1,875 | 1,555 | 20.6 | 6,913 | 5,813 | 18.9 |
| Operating expense: Landing fees and other rent | 570 | 553 | 3.1 | 2,240 | 2,165 | 3.5 |
| Operating expense: Regional capacity purchase | 580 | 552 | 5.1 | 2,232 | 2,197 | 1.6 |
| Operating expense: Depreciation and amortization | 539 | 504 | 6.9 | 2,149 | 1,977 | 8.7 |
| Operating expense: Aircraft maintenance materials and outside repairs | 479 | 448 | 6.9 | 1,856 | 1,749 | 6.1 |
| Operating expense: Distribution expenses | 328 | 316 | 3.8 | 1,349 | 1,303 | 3.5 |
| Operating expense: Aircraft rent | 145 | 159 | (8.8) | 621 | 680 | (8.7) |
| Operating expense: Special charges (D) | 31 | (31) | NM | 176 | 638 | NM |
| Operating expense: Other operating expenses | 1,458 | 1,423 | 2.5 | 5,657 | 5,421 | 4.4 |
| Operating expense: Total operating expenses | 8,709 | 8,047 | 8.2 | 34,238 | 32,218 | 6.3 |
| Operating income: Operating income | 729 | 1,005 | (27.5) | 3,498 | 4,338 | (19.4) |
| Operating margin: | 7.7% | 11.1% | (3.4) pts. | 9.3% | 11.9% | (2.6) pts. |
| Operating margin, excluding special charges (A) (Non-GAAP) | 8.1% | 10.8% | (2.7) pts. | 9.7% | 13.6% | (3.9) pts. |
| Nonoperating income (expense): Interest expense |
(171) | (148) | 15.5 | (643) | (614) | 4.7 |
| Nonoperating income (expense): Interest capitalized | 20 | 24 | (16.7) | 84 | 72 | 16.7 |
| Nonoperating income (expense): Interest income | 16 | 11 | 45.5 | 57 | 42 | 35.7 |
| Nonoperating income (expense): Miscellaneous, net (D) | 6 | (8) | NM | 3 | (19) | NM |
| Nonoperating income (expense): Total nonoperating expense | (129) | (121) | 6.6 | (499) | (519) | (3.9) |
| Income before income taxes: Income before income taxes | 600 | 884 | (32.1) | 2,999 | 3,819 | (21.5) |
| Pre-tax margin:Pre-tax margin | 6.4% | 9.8% | (3.4) pts. | 7.9% | 10.4% | (2.5) pts. |
| Pre-tax margin: Pre-tax margin, excluding special charges and reflecting hedge adjustments (A) (Non-GAAP) | 6.7% | 9.5% | (2.8) pts. | 8.4% | 12.2% | (3.8) pts. |
| Income tax expense: Income tax expense (E) | 20 | 487 | (95.9) | 868 | 1,556 | (44.2) |
| Net income: Net income | $580 | $397 | 46.1 | $2,131 | $2,263 | (5.8) |
| Earnings per share: Earnings per share, diluted | $1.99 | $1.26 | 57.9 | $7.02 | $6.85 | 2.5 |
| Weighted average shares: Weighted average shares, diluted | 291.8 | 315.7 | (7.6) | 303.6 | 330.3 | (8.1) |
|
||||||
| Statistics: |
|
NM Not meaningful |
| Statistics: | Three Months Ended December 31, 2017 |
Three Months Ended December 31, 2016 |
% Increase/ (Decrease) |
Year Ended December 31, 2017 |
Year Ended December 31, 2016 |
% Increase/ (Decrease) |
|---|---|---|---|---|---|---|
| Mainline: Passengers (thousands) |
26,926 | 25,590 | 5.2 | 108,017 | 101,007 | 6.9 |
| Mainline:Revenue passenger miles (millions) | 47,192 | 45,608 | 3.5 | 193,444 | 186,181 | 3.9 |
| Mainline:Available seat miles (millions) | 57,866 | 55,440 | 4.4 | 234,576 | 224,692 | 4.4 |
| Mainline:Cargo ton miles (millions) | 910 | 790 | 15.2 | 3,316 | 2,805 | 18.2 |
| Mainline:Passenger revenue per available seat mile (cents) | 11.37 | 11.35 | 0.2 | 11.32 | 11.31 | 0.1 |
| Mainline:Average yield per revenue passenger mile (cents) | 13.95 | 13.80 | 1.1 | 13.73 | 13.65 | 0.6 |
| Mainline:Aircraft in fleet at end of period | 744 | 737 | 0.9 | 744 | 737 | 0.9 |
| Mainline:Average stage length (miles) | 1,775 | 1,804 | (1.6) | 1,806 | 1,859 | (2.9) |
| Mainline:Average daily utilization of each aircraft (hours: minutes) | 10:16 | 9:54 | 3.7 | 10:27 | 10:06 | 3.5 |
| Regional: Passengers (thousands) |
10,487 | 10,433 | 0.5 | 40,050 | 42,170 | (5.0) |
| Regional:Revenue passenger miles (millions) | 5,957 | 5,930 | 0.5 | 22,817 | 24,128 | (5.4) |
| Regional:Available seat miles (millions) | 7,162 | 7,078 | 1.2 | 27,810 | 28,898 | (3.8) |
| Regional:Passenger revenue per available seat mile (cents) | 20.92 | 20.71 | 1.0 | 21.04 | 20.91 | 0.6 |
| Regional:Average yield per revenue passenger mile (cents) | 25.15 | 24.72 | 1.7 | 25.65 | 25.05 | 2.4 |
| Regional:Aircraft in fleet at end of period | 518 | 494 | 4.9 | 518 | 494 | 4.9 |
| Regional:Average stage length (miles) | 558 | 560 | (0.4) | 558 | 564 | (1.1) |
| Consolidated (Mainline and Regional): Passengers (thousands) |
37,413 | 36,023 | 3.9 | 148,067 | 143,177 | 3.4 |
| Consolidated (Mainline and Regional)Revenue passenger miles (millions) | 53,149 | 51,538 | 3.1 | 216,261 | 210,309 | 2.8 |
| Consolidated (Mainline and Regional)Available seat miles (millions) | 65,028 | 62,518 | 4.0 | 262,386 | 253,590 | 3.5 |
| Consolidated (Mainline and Regional)Passenger load factor | 81.7% | 82.4% | (0.7) pts. | 82.4% | 82.9% | (0.5) pts. |
| Consolidated (Mainline and Regional)Domestic | 85.2% | 85.2% | — | 85.2% | 85.4% | (0.2) pts. |
| Consolidated (Mainline and Regional)Internal | 77.2% | 78.9% | (1.7) pts. | 78.9% | 80.0% | (1.1) pts. |
| Consolidated (Mainline and Regional)Passenger revenue per available seat mile (cents) | 12.43 | 12.41 | 0.2 | 12.35 | 12.40 | (0.4) |
| Consolidated (Mainline and Regional)Total revenue per available seat mile (cents) | 14.51 | 14.48 | 0.2 | 14.38 | 14.42 | (0.3) |
| Consolidated (Mainline and Regional)Average yield per revenue passenger mile (cents) | 15.20 | 15.06 | 0.9 | 14.98 | 14.96 | 0.1 |
| Consolidated (Mainline and Regional)Aircraft in fleet at end of period | 1,262 | 1,231 | 2.5 | 1,262 | 1,231 | 2.5 |
| Consolidated (Mainline and Regional)Average stage length (miles) | 1,431 | 1,441 | (0.7) | 1,460 | 1,473 | (0.9) |
| Consolidated (Mainline and Regional)Average full-time equivalent employees (thousands) | 85.6 | 84.8 | 0.9 | 86.0 | 83.9 | 2.5 |
| Note:See Part II, Item 6 Selected Financial Data of the company's annual report on Form 10-K for the year ended December 31, 2016 for the definition of these statistics. | ||||||
| (In millions, except per share data) | Three Months Ended December 31, 2017 |
Three Months Ended December 31, 2016 |
% Increase/ (Decrease) |
Year Ended December 31, 2017 |
Year Ended December 31, 2016 |
% Increase/ (Decrease) |
|---|---|---|---|---|---|---|
| Operating income: Operating income | $729 | $1,005 | (27.5) | $3,498 | $4,338 | (19.4) |
| Operating margin:Operating margin: | 7.7% | 11.1% | (3.4) pts. | 9.3% | 11.9% | (2.6) pts. |
| Operating income, excluding special charges (Non-GAAP) | 760 | 974 | (22.0) | 3,674 | 4,976 | (26.2) |
| Operating margin, excluding special charges (Non-GAAP) | 8.1% | 10.8% | (2.7) pts. | 9.7% | 13.6% | (3.9) pts. |
| Adjusted EBITDA, excluding special charges and reflecting hedge adjustments (a) (Non-GAAP) | $1,305 | $1,474 | (11.5) | $5,826 | $6,939 | (16.0) |
| Adjusted EBITDA margin, excluding special charges and reflecting hedge adjustments (a) (Non-GAAP) | 13.8% | 16.3% | (2.5) pts. | 15.4% | 19.0% | (3.6) pts. |
| Pre-tax income | $600 | $884 | (32.1) | $2,999 | $3,819 | (21.5) |
| Pre-tax margin | 6.4% | 9.8% | (3.4) pts. | 7.9% | 10.4% | (2.5) pts. |
| Pre-tax income, excluding special charges and reflecting hedge adjustments (a) (Non-GAAP) | 631 | 857 | (26.4) | 3,175 | 4,462 | (28.8) |
| Pre-tax margin, excluding special charges and reflecting hedge adjustments (a) (Non-GAAP) | 6.7% | 9.5% | (2.8) pts. | 8.4% | 12.2% | (3.8) pts. |
| Net income: Net income | $580 | $397 | 46.1 | $2,131 | $2,263 | (5.8) |
| Net income: Net income, excluding special charges and reflecting hedge adjustments (a) (Non-GAAP) | 408 | 562 | (27.4) | 2,052 | 2,857 | (28.2) |
| Diluted earnings per share: Diluted earnings per share | $1.99 | $1.26 | 57.9 | $7.02 | $6.85 | 2.5 |
| Diluted earnings per share: Diluted earnings per share, excluding special charges and reflecting hedge adjustments (a) (Non-GAAP) | 1.40 | 1.78 | (21.3) | 6.76 | 8.65 | (21.8) |
| Net cash provided by operating activities: Net cash provided by operating activities | $728 | $658 | 10.6 | $3,413 | $5,542 | (38.4) |
| Capital expenditures: Capital expenditures | $1,098 | $880 | 24.8 | $3,998 | $3,223 | 24.0 |
| Capital expenditures: Adjusted capital expenditures (Non-GAAP) | 1,046 | 1,078 | (3.0) | 4,729 | 3,347 | 41.3 |
| Free cash flow: Free cash flow, net of financings (Non-GAAP) | $(370) | $(222) | NM | $(585) | $2,319 | NM |
| Free cash flow: Free cash flow (Non-GAAP) | (318) | (420) | NM | (1,316) | 2,195 | NM |
| (a) Hedge adjustments include prior period gains (losses) on fuel derivative contracts settled in the current period. See note D for further information. | ||||||
| (b) The company recorded a special income tax benefit adjustment of $192 million in 2017 and a special income tax expense adjustment of $180 million in 2016. See note E for further information on the income tax adjustments. | ||||||
| (in millions) | Twelve Months Ended December 31, 2017 |
||||
|---|---|---|---|---|---|
| Return On Invested CapitalNet Operating Profit After Tax (NOPAT) Pre-tax income |
$2,999 | ||||
| Return On Invested CapitalSpecial charges (D): Severance and benefit costs |
116 | ||||
| Return On Invested Capital Impairment of assets |
25 | ||||
| Return On Invested Capital (Gains) losses on sale of assets and other special charges |
35 | ||||
Pre-tax income excluding special charges and reflecting hedge adjustments - Non-GAAP |
3,175 | ||||
add: Interest expense (net of income tax benefit) (a) |
639 | ||||
add: Interest component of capitalized aircraft rent (net of income tax benefit) (a) |
302 | ||||
add: Net interest on pension (net of income tax benefit) (a) |
41 | ||||
less: Income taxes paid |
(20) | ||||
NOPAT - Non-GAAP |
$4,137 | ||||
| Return On Invested CapitalInvested Capital (five-quarter average) Total assets |
$41,753 | ||||
add: Capitalized aircraft operating leases (b) |
4,585 | ||||
less: Non-interest bearing liabilities (c) |
(16,394) | ||||
Average invested capital - Non-GAAP |
$29,944 | ||||
Return On Invested Capital - Non-GAAP |
13.8% | ||||
|
|||||
|
UNITED CONTINENTAL HOLDINGS, INC. |
|
(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, income (loss) before income taxes excluding special charges and reflecting hedge adjustments, net income (loss) excluding special charges and reflecting hedge adjustments, net earnings (loss) per share excluding special charges and reflecting hedge adjustments, and CASM, as adjusted, among others. 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 non-recurring 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, fuel sales and non-air mileage redemptions, 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 recurring cost performance and provides a more meaningful comparison of our core operating costs to the airline industry. In addition, the company believes that adjusting for prior period gains and losses on fuel derivative contracts settled in the current period is useful because the adjustments allow investors to better understand the cash impact of settled fuel derivative contracts in a given period. Pursuant to SEC Regulation G, UAL has included the following reconciliations of reported Non-GAAP financial measures to comparable financial measures reported on a GAAP basis. |
| Statistics: | Three Months Ended December 31, 2017 |
Three Months Ended December 31, 2016 |
% Increase/ (Decrease) |
Nine Months Ended December 31, 2017 |
Nine Months Ended December 31, 2016 |
% Increase/ (Decrease) |
|---|---|---|---|---|---|---|
| CASM Mainline Operations (cents) Cost per available seat mile (CASM) |
12.90 | 12.43 | 3.8 | 12.59 | 12.22 | 3.0 |
| Cost per available seat mile (CASM)Special charges (D) | 0.06 | (0.06) | NM | 0.07 | 0.29 | NM |
| Cost per available seat mile (CASM)Third-party business expenses | 0.12 | 0.13 | (7.7) | 0.12 | 0.11 | 9.1 |
| Cost per available seat mile (CASM)Fuel expense | 2.68 | 2.33 | 15.0 | 2.46 | 2.16 | 13.9 |
| CASM Mainline OperationsCASM, excluding special charges, third-party business expenses and fuel | 10.04 | 10.03 | 0.1 | 9.94 | 9.66 | 2.9 |
| CASM Mainline OperationsProfit sharing per available seat mile | 0.08 | 0.22 | (63.6) | 0.15 | 0.28 | (46.4) |
| CASM Mainline OperationsCASM, excluding special charges, third-party business expenses, fuel, and profit sharing | 9.96 | 9.81 | 1.5 | 9.79 | 9.38 | 4.4 |
| CASM Consolidated Operations (cents)Cost per available seat mile (CASM) | 13.39 | 12.87 | 4.0 | 13.05 | 12.70 | 2.8 |
| CASM Mainline Operations (cents)Special charges (D) | 0.04 | (0.05) | NM | 0.07 | 0.25 | NM |
| CASM Mainline Operations (cents)Third-party business expenses | 0.12 | 0.11 | 9.1 | 0.10 | 0.10 | — |
| CASM Mainline Operations (cents) Fuel expense | 2.88 | 2.49 | 15.7 | 2.64 | 2.29 | 15.3 |
| CASM Mainline Operations (cents) CASM, excluding special charges, third-party business expenses and fuel | 10.35 | 10.32 | 0.3 | 10.24 | 10.06 | 1.8 |
| CASM Mainline Operations (cents) Profit sharing per available seat mile | 0.07 | 0.19 | (63.2) | 0.13 | 0.25 | (48.0) |
| CASM Mainline Operations (cents) CASM, excluding special charges, third-party business expenses, fuel, and profit sharing | 10.28 | 10.13 | 1.5 | 10.11 | 9.81 | 3.1 |
| (In millions) | Three Months Ended December 31, 2017 |
Three Months Ended December 31, 2016 |
$ Increase/ (Decrease) |
% Increase/ (Decrease) |
Year Ended December 31, 2017 |
Year Ended December 31, 2016 |
$ Increase/ (Decrease) |
% Increase/ (Decrease) |
|---|---|---|---|---|---|---|---|---|
| Operating expenses | $8,709 | $8,047 | $662 | 8.2 | $34,238 | $32,218 | $2,020 | 6.3 |
| Operating expensesSpecial charges (D) | 31 | (31) | 62 | NM | 176 | 638 | (462) | NM |
| Operating expenses, excluding special charges Operating expenses, excluding special charges | 8,678 | 8,078 | 600 | 7.4 | 34,062 | 31,580 | 2,482 | 7.9 |
| Operating expenses, excluding special chargesThird-party business expenses | 72 | 69 | 3 | 4.3 | 277 | 257 | 20 | 7.8 |
| Operating expenses, excluding special chargesFuel expense | 1,875 | 1,555 | 320 | 20.6 | 6,913 | 5,813 | 1,100 | 18.9 |
| Operating expensesProfit sharing, including taxes | 45 | 122 | (77) | (63.1) | 349 | 628 | (279) | (44.4) |
| Operating expensesOperating expenses, excluding fuel, profit sharing, special charges and third-party business expenses | $6,686 | $6,332 | $354 | 5.6 | $26,523 | $24,882 | $1,641 | 6.6 |
| Operating income | $729 | $1,005 | $(276) | (27.5) | $3,498 | $4,338 | $(840) | (19.4) |
| Operating incomeLess: Special charges (D) | 31 | (31) | 62 | NM | 176 | 638 | (462) | NM |
| Operating incomeOperating income, excluding special charges | $760 | $974 | $(214) | (22.0) | $3,674 | $4,976 | $(1,302) | (26.2) |
| Operating incomeIncome before income taxes | $600 | $884 | $(284) | (32.1) | $2,999 | $3,819 | $(820) | (21.5) |
| Operating incomeSpecial charges and hedge adjustments before income taxes (D) | 31 | (27) | 58 | NM | 176 | 643 | (467) | NM |
| Operating incomeIncome before income taxes and excluding special items | $631 | $857 | $(226) | (26.4) | $3,175 | $4,462 | $(1,287) | (28.8) |
| Operating incomeNet income | $580 | $397 | $183 | 46.1 | $2,131 | $2,263 | $(132) | (5.8) |
| Operating incomeSpecial charges and hedge adjustments, net of tax (D) | (172) | 165 | (337) | NM | (79) | 594 | (673) | NM |
| Operating incomeNet income, excluding special charges and reflecting hedge | $408 | $562 | $(154) | (27.4) | $2,052 | $2,857 | $(805) | (28.2) |
| Diluted earnings per shareDiluted earnings per share | $1.99 | $1.26 | $0.73 | 57.9 | $7.02 | $6.85 | $0.17 | 2.5 |
| Diluted earnings per shareSpecial charges and hedge adjustments | 0.11 | (0.09) | 0.20 | NM | 0.58 | 1.95 | (1.37) | NM |
| Diluted earnings per shareTax effect related to special charges and hedge adjustments | (0.70) | 0.61 | (1.31) | NM | (0.84) | (0.15) | (0.69) | NM |
| Diluted earnings per shareDiluted earnings per share, excluding special items | $1.40 | $1.78 | $(0.38) | (21.3) | $6.76 | $8.65 | $(1.89) | (21.8) |
|
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. Adjusted EBITDA is EBITDA excluding special charges that are non-recurring and that management believes are not indicative of UAL's ongoing performance. Adjusted EBITDA also includes hedge adjustments to reflect the cash impact of fuel derivative contracts settled in the current period. |
||||||||||||||||
| EBITDA (In millions) |
Three Months Ended December 31, 2017 |
Three Months Ended December 31, 2016 |
Year Ended December 31, 2017 |
Year Ended December 31, 2016 |
||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net income: Net income |
$580 | $397 | $2,131 | $2,263 | ||||||||||||
| Net income Adjusted for:Depreciation and amortization | 539 | 504 | 2,149 | 1,977 | ||||||||||||
| Net income Adjusted for:Interest expense | 171 | 148 | 643 | 614 | ||||||||||||
| Net income Adjusted for:Interest capitalized | (20) | (24) | (84) | (72) | ||||||||||||
| Net income Adjusted for:Interest income | (16) | (11) | (57) | (42) | ||||||||||||
| Net income Adjusted for:Income tax expense(E) | 20 | 487 | 868 | 1,556 | ||||||||||||
| Net income Adjusted for:Special charges and hedge adjustments before income taxes (D) | 31 | (27) | 176 | 643 | ||||||||||||
| Adjusted EBITDA, excluding special charges and reflecting hedge adjustments - Non-GAAPAdjusted EBITDA, excluding special charges and reflecting hedge adjustments - Non-GAAP | $1,305 | $1,474 | $5,826 | $6,939 | ||||||||||||
|
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 December 31, 2017 |
Three Months Ended December 31, 2016 |
Year Ended December 31, 2017 |
Year Ended December 31, 2016 |
||||||||||||
| Capital expenditures:Capital expenditures | $1,098 | $880 | $3,998 | $3,223 | ||||||||||||
| Capital expenditures:Property and equipment acquired through the issuance of debt and capital leases | 17 | 271 | 935 | 386 | ||||||||||||
| Capital expenditures:Airport construction financing | 1 | 23 | 42 | 91 | ||||||||||||
| Capital expenditures:Fully reimbursable projects | (70) | (96) | (246) | (353) | ||||||||||||
| Capital expenditures:Adjusted capital expenditures – Non-GAAP | $1,046 | $1,078 | $4,729 | $3,347 | ||||||||||||
| Free Cash Flow (In millions) |
||||||||||||||||
| Free Cash Flow:Net cash provided by operating activities | $728 | $658 | $3,413 | $5,542 | ||||||||||||
| Free Cash Flow:Less capital expenditures | 1,098 | 880 | 3,998 | 3,223 | ||||||||||||
| Free Cash Flow:Free cash flow, net of financings - Non-GAAP | $(370) | $(222) | $(585) | $2,319 | ||||||||||||
| Free Cash Flow:Net cash provided by operating activities | $728 | $658 | $3,413 | $5,542 | ||||||||||||
| Free Cash Flow:Less adjusted capital expenditures – Non-GAAP | 1,046 | 1,078 | 4,729 | 3,347 | ||||||||||||
| Free Cash Flow:Free cash flow - Non-GAAP | $(318) | $(420) | $(1,316) | $2,195 | ||||||||||||
| Notes (Unaudited): | 4Q 2017 Passenger Revenue (millions) |
Passenger Revenue vs. 4Q 2016 |
PRASM vs. 4Q 2016 |
Yield vs. 4Q 2016 |
Available Seat Miles vs. 4Q 2016 |
|---|---|---|---|---|---|
| Mainline:Mainline | $3,626 | 7.3% | 0.3% | 0.1% | 7.1% |
| Regional:Regional | 1,453 | 2.7% | 1.0% | 1.9% | 1.7% |
| Domestic:Domestic | 5,079 | 6.0% | (0.1%) | 0.0% | 6.0% |
| Atlantic:Atlantic | 1,312 | 5.3% | 1.3% | 1.5% | 4.0% |
| Pacific:Pacific | 986 | (4.3%) | (2.9%) | 0.6% | (1.4%) |
| Latin America:Latin America | 703 | 1.6% | (0.6%) | 2.6% | 2.3% |
| International:International | 3,001 | 1.1% | (0.4%) | 1.9% | 1.4% |
| Consolidated:Consolidated | 8,080 | 4.1% | 0.2% | 0.9% | 4.0% |
| Mainline:Mainline | $6,582 | 4.6% | 0.2% | 1.1% | 4.4% |
| Regional:Regional | 1,498 | 2.2% | 1.0% | 1.7% | 1.2% |
| Consolidated:Consolidated | 8,080 |
| (In millions, except per gallon) | Three Months Ended December 31, 2017 |
Three Months Ended December 31, 2016 |
% Increase/ (Decrease) |
Nine Months Ended December 31, 2017 |
Nine Months Ended December 31, 2016 |
% Increase/ (Decrease) |
|---|---|---|---|---|---|---|
| Mainline fuel expense excluding hedge impacts Mainline fuel expense excluding hedge impacts | $1,551 | $1,270 | 22.1 | $5,770 | $4,640 | 24.4 |
| Hedge losses reported in fuel expense (a) | — | (20) | NM | (2) | (217) | NM |
| Total mainline fuel expenseTotal mainline fuel expense | 1,551 | 1,290 | 20.2 | 5,772 | 4,857 | 18.8 |
| Regional fuel expense Regional fuel expense | 324 | 265 | 22.3 | 1,141 | 956 | 19.4 |
| Consolidated fuel expenseConsolidated fuel expense | $1,875 | $1,555 | 20.6 | $6,913 | $5,813 | 18.9 |
| Mainline fuel consumption (gallons)Mainline fuel consumption (gallons) | 820 | 804 | 2.0 | 3,357 | 3,261 | 2.9 |
| Mainline average aircraft fuel price per gallonMainline average aircraft fuel price per gallon | $1.89 | $1.60 | 18.1 | $1.72 | $1.49 | 15.4 |
| Mainline average aircraft fuel price per gallon excluding hedge losses recorded in fuel expenseMainline average aircraft fuel price per gallon excluding hedge losses recorded in fuel expense | $1.89 | $1.58 | 19.6 | $1.72 | $1.42 | 21.1 |
| Regional fuel consumption (gallons)Regional fuel consumption (gallons) | 160 | 158 | 1.3 | 621 | 643 | (3.4) |
| Regional average aircraft fuel price per gallonRegional average aircraft fuel price per gallon | $2.03 | $1.68 | 20.8 | $1.84 | $1.49 | 23.5 |
| Consolidated fuel consumption (gallons)Consolidated fuel consumption (gallons) | 980 | 962 | 1.9 | 3,978 | 3,904 | 1.9 |
| Consolidated average aircraft fuel price per gallonConsolidated average aircraft fuel price per gallon | $1.91 | $1.62 | 17.9 | $1.74 | $1.49 | 16.8 |
| Consolidated average aircraft fuel price per gallon excluding hedge losses recorded in fuel expenseConsolidated average aircraft fuel price per gallon excluding hedge losses recorded in fuel expense | $1.91 | $1.60 | 19.4 | $1.74 | $1.43 | 21.7 |
|
||||||
|
(a) UAL allocates 100 percent of losses from settled hedges that were designated for hedge accounting to mainline fuel expense. |
| (In millions) | Three Months Ended December 31, 2017 |
Three Months Ended December 31, 2016 |
Year Ended December 31, 2017 |
Year Ended December 31, 2016 |
|---|---|---|---|---|
| Operating: Severance and benefit costs |
$15 | $10 | $116 | $37 |
| Operating:Impairment of assets | 10 | — | 25 | 412 |
| Operating:Labor agreement costs | — | (60) | — | 64 |
| Operating:Cleveland airport lease restructuring | — | — | — | 74 |
| Operating:(Gains) losses on sale of assets and other special charges | 6 | 19 | 35 | 51 |
| Operating:Subtotal | 31 | (31) | 176 | 638 |
| Other nonoperating (gains) losses:Other nonoperating (gains) losses | — | — | — | (1) |
| Total special charges:Total special charges | 31 | (31) | 176 | 637 |
| Income tax benefit related to special charges:Income tax benefit related to special charges | (11) | 12 | (63) | (229) |
| Total special charges, net of income taxes:Total special charges, net of income taxes | 20 | (19) | 113 | 408 |
| Income tax adjustments (E) | (192) | 180 | (192) | 180 |
| Hedge adjustments: prior period gains on fuel derivative contracts settled in the current period:Hedge adjustments: prior period gains on fuel derivative contracts settled in the current period | — | 4 | — | 6 |
| Total special charges and hedge adjustments, net of income taxes:Total special charges and hedge adjustments, net of income taxes | $(172) | $165 | $(79) | $594 |
|
Special charges, hedge adjustments and income tax adjustments |
|
Severance and benefit costs: During the three months and year ended December 31, 2017, the company recorded $10 million ($6 million net of taxes) and $83 million ($53 million net of taxes), respectively, of severance and benefit costs related to a voluntary early-out program for its technicians and related employees represented by the International Brotherhood of Teamsters (the "IBT"). 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 and year ended December 31, 2017, the company recorded $5 million ($3 million net of taxes) and $33 million ($21 million net of taxes), respectively, of severance primarily related to its management reorganization initiative. |
|
During the three months and year ended December 31, 2016, the company recorded $10 million ($6 million net of taxes) and $37 million ($24 million net of taxes), respectively, of severance and benefit costs related to a voluntary early-out program for the company's flight attendants and other severance agreements. |
|
Impairment of assets: In the fourth quarter of 2017, the company recorded a $10 million ($6 million net of taxes) impairment charge related to obsolete spare parts inventory. During 2017, United recorded a $15 million ($10 million net of taxes) intangible asset impairment charge related to a maintenance service agreement. |
|
In April 2016, the Federal Aviation Administration ("FAA") announced that, effective October 30, 2016, it would designate Newark Liberty International Airport ("Newark") as a Level 2 schedule-facilitated airport under the International Air Transport Association Worldwide Slot Guidelines. The designation was associated with an updated demand and capacity analysis of Newark by the FAA. In the second quarter of 2016, the company determined that the FAA's action impaired the entire value of its Newark slots because the slots are no longer the mechanism that governs take-off and landing rights. Accordingly, the company recorded a $412 million special charge ($264 million net of taxes) to write off the intangible asset. |
|
Labor agreement costs and related items: In 2016, the fleet service, passenger service, storekeeper and other employees represented by the International Association of Machinists and Aerospace Workers (IAM) ratified seven new contracts with the company which extended the contracts through 2021. Also in 2016, the technicians and related employees represented by the International Brotherhood of Teamsters (IBT) ratified a six-year joint collective bargaining agreement which extended the contract through 2022. During 2016, the company recorded $171 million ($110 million net of taxes) of special charges primarily for payments in conjunction with the IAM and IBT agreements described above. As part of the ratified contract with the IBT, the company amended some of its technicians and related employees' postretirement medical plans. The amendments triggered curtailment accounting, resulting in the recognition of a one-time $60 million gain ($38 million net of taxes) for accelerated recognition of a prior service credit in one of the plans. Also, as part of the ratified contract with the Association of Flight Attendants, the company amended two of its flight attendant postretirement medical plans. The amendments triggered curtailment accounting, resulting in the recognition of a one-time $47 million gain ($30 million net of taxes) for accelerated recognition of a prior service credit. |
|
Cleveland airport lease restructuring: During 2016, the City of Cleveland agreed to amend the company's lease, which runs through 2029, associated with certain excess airport terminal space (principally Terminal D) and related facilities at Hopkins International Airport. The company recorded an accrual for remaining payments under the lease for facilities that the company no longer uses and will continue to incur costs under the lease without economic benefit to the company. This liability was measured and recorded at its fair value when the company ceased its right to use such facilities leased to it pursuant to the lease. The company recorded a special charge of $74 million ($47 million net of taxes) related to the amended lease. |
|
Hedge adjustments: Prior to 2017, the company used certain combinations of derivative contracts that were economic hedges but did not qualify for hedge accounting under U.S. generally accepted accounting principles. As with derivatives that qualified for hedge accounting, the economic hedges and individual contracts were part of the company's program to mitigate the adverse financial impact of potential increases in the price of fuel. The company recorded changes in the fair value of the various contracts that were not designated for hedge accounting to Nonoperating income (expense): Miscellaneous, net in the statements of consolidated operations. During the three months and year ended December 31, 2016, for fuel derivative contracts that settled in the three months and year ended December 31, 2016, the company recorded mark-to-market gains of $4 million and $6 million, respectively, in prior periods. |
|
(E) Effective tax rate: The company's effective tax rate for the three months and year ended December 31, 2017 was 3.5% and 29.0%, respectively. The company's effective tax rate for the three months and year ended December 31, 2016 was 55.1% and 40.7%, respectively. The rate for both 2017 periods was impacted by a one-time, $192 million benefit due to the passage of the Tax Cuts and Jobs Act in the fourth quarter of 2017. The rate for both 2016 periods was impacted by a special tax expense of $180 million. In 2016, the company recorded approximately $180 million of deferred income tax expense adjustments in AOCI, which related to losses on fuel hedges designated for hedge accounting. Accounting rules required the adjustments to remain in AOCI as long as the company had fuel derivatives designated for cash flow hedge accounting. In 2016, we settled all of our fuel hedges and have not entered into any new fuel derivative contracts for hedge accounting. Accordingly, the company reclassified the $180 million to income tax expense in 2016. |
|
The effective tax rates for the 2017 and 2016 periods represented a blend of federal, state and foreign taxes and the impact of certain nondeductible items. The effective tax rate for the three months and year ended December 31, 2017 reflects the impact of a change in the mix of domestic and foreign earnings. |
SOURCE United Airlines
For further information: United Airlines Worldwide Media Relations, +1-872-825-8640, media.relations@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." 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".
SOURCE United Airlines
For further information: United Airlines Worldwide Media Relations, +1-872-825-8640, media.relations@united.com
This press release is neither an offer to sell nor the solicitation of an offer to buy the Notes or any other securities and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offering, solicitation or sale would be unlawful. The Notes are being offered only to qualified institutional buyers in an offering exempt from registration in reliance on Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and outside the United States in reliance on Regulation S under the Securities Act. The Notes have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States without registration or an applicable exemption from the registration requirements of the Securities Act or any applicable state securities laws.
About United
United's shared purpose is "Connecting People. Uniting the World." 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 in this release are forward-looking and thus reflect the Company's 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 the Company's 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," "remains," "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 the Company on the date of this release. The Company undertakes 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.
The Company's actual results could differ materially from these forward-looking statements due to numerous factors including, without limitation, the following: the duration and spread of the ongoing global COVID-19 pandemic and the outbreak of any other disease or similar public health threat and the impact on the business, results of operations and financial condition of the Company; the lenders' ability to accelerate the MileagePlus indebtedness, foreclose upon the collateral securing the MileagePlus indebtedness or exercise other remedies if the Company is not able to comply with the covenants in the MileagePlus financing agreement; the final terms of borrowing pursuant to the Loan Program under the CARES Act, if any, and the effects of the grant and promissory note through the Payroll Support Program under the CARES Act; the costs and availability of financing; the Company's significant amount of financial leverage from fixed obligations and ability to seek additional liquidity and maintain adequate liquidity; the Company's ability to comply with the terms of its various financing arrangements; the material disruption of the Company's strategic operating plan as a result of the COVID-19 pandemic and the Company's ability to execute its strategic operating plans in the long term; 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 its operations in certain countries; demand for travel and the impact that global economic and political conditions have on customer travel patterns; the Company's capacity decisions and the capacity decisions of its competitors; competitive pressures on pricing and on demand; changes in aircraft fuel prices; disruptions in the Company's supply of aircraft fuel; the Company's ability to cost-effectively hedge against increases in the price of aircraft fuel, if it decides to do so; the effects of any technology failures, cybersecurity or significant data breaches; disruptions to services provided by third-party service providers; potential reputational or other impact from adverse events involving the Company's aircraft or operations, the aircraft or operations of its regional carriers or its code share partners or the aircraft or operations of another airline; the Company's 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 the Company's fleet; disruptions to the Company's regional network as a result of the COVID-19 pandemic or otherwise; the impact of regulatory, investigative and legal proceedings and legal compliance risks; the success of the Company's investments in other airlines, including in other parts of the world, which involve significant challenges and risks, particularly given the impact of the COVID-19 pandemic; industry consolidation or changes in airline alliances; the ability of other air carriers with whom the Company has alliances or partnerships to provide the services contemplated by the respective arrangements with such carriers; costs associated with any modification or termination of the Company's aircraft orders; disruptions in the availability of aircraft, parts or support from its suppliers; the Company's ability to maintain satisfactory labor relations and the results of any collective bargaining agreement process with its union groups; any disruptions to operations due to any potential actions by the Company's labor groups; labor costs; the impact of any management changes; extended interruptions or disruptions in service at major airports where the Company operates; 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 Company's ability to realize the full value of its intangible assets and long-lived assets; any impact to the Company's reputation or brand image and other risks and uncertainties set forth under Part I, Item 1A., "Risk Factors," of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as updated by the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and the Company's Current Report on Form 8-K filed June 15, 2020, as well as other risks and uncertainties set forth from time to time in the reports it files with the SEC.
SOURCE United Airlines
For further information: United Airlines Worldwide Media Relations, +1-872-825-8640, media.relations@united.com
United has overhauled its cleaning and safety procedures under United CleanPlus and is giving customers more flexibility when booking by extending its waiver of change fees and award redeposit fees for reservations through July 31.
United plans to add more than 350 daily flights from its U.S. hubs in August, including doubling the number of flights from New York/Newark compared to July. This increase includes more flights to mountain and national park destinations like Aspen, Colorado; Bangor, Maine; Bozeman, Montana; and Jackson Hole, Wyoming. Internationally, United's August schedule will include a return to Tahiti and additional flights to Hawaii, the Caribbean and Mexico. Across the Atlantic, United will add more flights and options to Brussels, Frankfurt, London, Munich, Paris and Zurich.
"We're taking the same data-driven, realistic approach to growing our schedule as we did in drawing it down at the start of the pandemic," said Ankit Gupta, United's vice president of Domestic Network Planning. "Demand is coming back slowly and we're building in enough capacity to stay ahead of the number of people traveling. And we're adding in flights to places we know customers want to travel to, like outdoor recreation destinations where social distancing is easier but doing so in a way that's flexible and allows us to adjust should that demand change."
U.S. Domestic
Domestically, United plans to fly 48% of its 2019 schedule in August compared to 2019 levels, up from 30% in July. Travelers in search of more socially distant vacation options like beach, mountain and national park destinations will see more opportunities for leisure travel in United's August schedule. Highlights include:
- Adding more than 600 daily flights to more than 200 airports across the United States, including the resumption of 50 routes from July to August.
- Expanding flights at 147 airports across the United States.
- Increasing connectivity in United's mid-continental hubs, including Chicago, Denver and Houston.
- Doubling the number of flights from New York/Newark
- Returning around 90 aircraft back into service, including adding more CRJ-550 service between New York/Newark and St. Louis; Indianapolis; Richmond, Virginia; Cincinnati; Norfolk, Virginia; and Columbus, Ohio.
- Increasing service between Hawaii and its hubs in Chicago, Denver, Houston, Los Angeles and San Francisco
- Resuming service to more Hawaiian destinations, including Lihue from San Francisco and Hilo from Los Angeles.
International
"United's international schedule continues to be guided by customer demand as we add back capacity in regions with relative strength," said Patrick Quayle, United's vice president of International Network and Alliances. "For August, we've seen increasing demand for leisure travel and have added options to places like Cancun and reinstated service to Tahiti. Additionally, we are further building out service to partner hubs like Frankfurt and Zurich, where customers can connect on to a wide array of destinations."
Atlantic
Internationally, United is scheduled to fly 25% of its schedule in August, up from 16% in July. Across the Atlantic, United plans to offer customers more opportunities to get to Europe and beyond, with more flying from Chicago, New York/Newark and San Francisco. Highlights include:
- Resuming service between Chicago and Brussels and Frankfurt.
- Resuming service between New York/Newark and Brussels, Munich and Zurich.
- Resuming service between San Francisco and London.
Upon government approval, United will restart daily service between Delhi and San Francisco and New York/Newark.
Pacific
Across the Pacific in August, United is scheduled to restart three-times-weekly service connecting the mainland United States and Tahiti. In July, United made several changes to its Asia Pacific schedule. Highlights of United's service include:
- Starting new service, five times weekly, between Chicago and Tokyo's Haneda Airport. United will continue operating daily service to Tokyo Narita from New York/Newark and San Francisco.
- Resuming service between Hong Kong and San Francisco five days a week, with service continuing to Singapore.
- Resuming service to Seoul, South Korea three days a week.
- Resuming service to Shanghai from San Francisco two days a week.
Latin America/Caribbean
Throughout Latin America and the Caribbean, United is expanding across each region with a total of 35 new routes for August. Highlights of United's schedule include:
- Resuming service between Houston and Lima.
- Resuming service between New York/Newark and Sao Paulo.
- Resuming service between Mexico City and Chicago, New York/Newark and San Francisco.
- Adding more ways to get to Cancun from Chicago, Denver, Los Angeles, New York/Newark and San Francisco.
- Resuming service to San Salvador and Guatemala City from Houston, New York/Newark, Los Angeles and Washington, D.C.
- Increasing the number of flights between Houston and Mexico City, Cancun, Guadalajara and Leon in Mexico; Panama City, Panama.
- Increasing the number of flights between New York/Newark and Punta Cana, Santiago and Santo Domingo in the Dominican Republic.
Committed to Ensuring a Safe Journey
United is committed to putting health and safety at the forefront of every customer's journey, with the goal of delivering an industry-leading standard of cleanliness through its United CleanPlus program. United has teamed up with Clorox and Cleveland Clinic to redefine cleaning and health safety procedures from check-in to landing and has implemented more than a dozen new policies, protocols and innovations designed with the safety of customers and employees in mind, including:
- Requiring all travelers – including crew members – to wear face coverings and potentially revoking travel privileges for customers who do not follow these requirements, as underscored in a recent video from United CEO, Scott Kirby.
- Using state-of-the-art high-efficiency (HEPA) filters on United aircraft to circulate air and remove up to 99.97% of airborne particles.
- Using electrostatic spraying on all mainline aircraft before departure for enhanced cabin sanitation.
- Adding a step to the check-in process, based on a recommendation from the Cleveland Clinic, requiring customers to acknowledge they do not have symptoms for COVID-19 and agree to follow our policies, including wearing a mask on board.
- Offering customers a touchless baggage check-in experience at more than 200 airports across the United States; United is the first and only U.S. airline to make this technology available.
For more details on all the ways United is helping keep customers safe during their journey, please visit united.com/cleanplus.
About United
United's shared purpose is "Connecting People. Uniting the World." 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".
Domestic U.S., Canada – August | ||
Chicago O'Hare (ORD) | City | Frequency |
August 3 | Albuquerque, NM (ABQ) | Daily |
August 3 | Bangor, ME (BGR) | Daily |
August 3 | Colorado Springs, CO (COS) | Daily |
August 3 | El Paso, TX (ELP) | Daily |
August 3 | Honolulu, HI (HNL) | Daily* |
August 3 | Quebec, QC (YQB) | Daily |
August 3-August 15 | Missoula, MT (MSO) | Daily |
*Service increases to Daily August 3 | ||
Denver (DEN) | City | Frequency |
August 1 | Everett, WA (PAE) | Daily |
August 3 | Calgary, AB (YYC) | Daily |
August 3 | Charlotte-Douglas, NC (CLT) | Daily |
August 3 | Detroit, MI (DTW) | Daily |
August 3 | El Paso, TX (ELP) | 2x daily |
August 3 | Fort Lauderdale, FL (FLL) | Daily |
August 3 | Hartford, CT (BDL) | Daily |
August 3 | Honolulu/Oahu, HI (HNL) | Daily |
August 3 | Kahului/Maui, HI (OGG) | Daily |
August 3 | Kona, HI (KOA) | 4x weekly |
August 3 | Little Rock, AR (LIT) | Daily |
August 3 | Louisville (SDF) | Daily |
August 3 | Lubbock, TX (LBB) | 5x weekly |
August 3 | Monterey, CA (MRY) | Daily |
August 3 | Richmond, VA (RIC) | Daily |
August 3 | Riverton, WY (RIW) | Daily |
August 3 | Traverse City, MI (TVC) | Daily |
August 3 | Vancouver, BC (YVR) | Daily |
August 4 | Lihue, HI (LIH) | 3x weekly |
August 8 | Destin-Ft Walton Beach, FL (VPS) | 1x weekly |
August 8 | Greenville/Spartanburg, SC (GSP) | 1x weekly |
August 22 | Jacksonville, FL (JAX) | 12 Ops |
Houston (IAH) | City | Frequency |
August 3 | Calgary, AL (YYC) | Daily |
August 3 | Amarillo, TX (AMA) | Daily |
August 3 | Honolulu, HI (HNL) | Daily |
August 3 | Ontario, CA (ONT) | Daily |
August 8 | Jackson Hole, WY (JAC) | 1x weekly |
August 8-August 15 | Bozeman, MT (BZN) | 1x weekly |
August 8-August 15 | Rapid City, SD (RAP) | 1x weekly |
Los Angeles (LAX) | City | Frequency |
August 3 | Boston, MA (BOS) | Daily |
August 3 | Kalispell, MT (FCA) | Daily |
August 3 | Kona, HI (KOA) | Daily |
August 3 | Kahului, HI (OGG) | Daily |
August 3 | Lihue, HI (LIH) | Daily |
August 3 | Phoenix, AZ (PHX) | 2x daily |
August 3 | Seattle, WA (SEA) | 2x daily |
August 4 | Hilo, HI (ITO) | 3x weekly |
New York/Newark (EWR) | City | Frequency |
August 3 | Burlington, VT (BTV) | 2x daily |
August 3 | Kansas City, MO (MCI) | 2x daily |
August 3 | Orange County, CA (SNA) | Daily |
August 3 | Sarasota/Bradenton, FL (SRQ) | 3x daily |
August 3 | Syracuse, NY (SYR) | Daily |
August 3 | Toronto, ON (YYZ) | Daily |
August 8 | Bozeman, MT (BZN) | 2x weekly |
August 8-August 15 | Rapid City, SD (RAP) | 1x weekly |
San Francisco (SFO) | City | Frequency |
August 3 | Honolulu, Hawaii (HNL) | 2x daily* |
August 3 | Kona, Hawaii (KOA) | 2x daily* |
August 3 | Kahului, Hawaii (OGG) | 2x daily* |
August 3 | Lihue, Hawaii (LIH) | Daily |
August 3 | Washington, DC (DCA) | 6x weekly |
August 8-August 15 | Rapid City (RAP) | 1x weekly |
*Service increases August 3 | ||
International – August | ||
* New market in August / ** Market with increasing frequencies in August | ||
Chicago O'Hare (ORD) | City | Frequency |
Atlantic | Brussels (BRU)* | 4x weekly |
Frankfurt (FRA)* | 5x weekly | |
London (LHR) | Daily | |
Latin | Cancun, Mexico (CUN)* | 4x weekly |
Mexico City, Mexico (MEX)* | 5x weekly | |
Pacific | Tokyo-Haneda (HND) | 5x weekly |
Canada | Calgary (YYC) | Daily |
Montreal (YUL)** | 2x daily | |
Quebec City (YQB)* | Daily | |
Toronto (YYZ)** | 3x daily | |
Denver (DEN) | City | Frequency |
Latin | Cancun, Mexico (CUN)* | 4x weekly |
Canada | Calgary (YYC)* | Daily |
Vancouver (YVR)* | Daily | |
Houston (IAH) | City | Frequency |
Latin (Central & South Am.) | Belize City, Belize (BZE)* | Daily |
Guatemala City, Guatemala (GUA)* | 2x daily | |
Liberia, Costa Rica (LIR)* | Daily | |
Lima, Peru (LIM)* | 3x weekly | |
Managua, Nicaragua (MGA)* | Daily | |
Panama City, Panama (PTY)* | 2x daily | |
Quito, Ecuador (UIO)** | Daily | |
San Jose, Costa Rica (SJO)* | 2x daily | |
San Pedro Sula, Honduras (SAP)* | 2x daily | |
San Salvador, El Salvador (SAL)* | 2x daily | |
São Paulo, Brazil (GRU)* | Daily | |
Tegucigalpa, Honduras (TGU) | Daily | |
Latin (Mexico) | Cancun, Mexico (CUN)** | 3x daily |
Cozumel, Mexico (CZM)* | 1x weekly | |
Guadalajara, Mexico (GDL)** | 2x daily | |
Leon, Mexico (BJX)** | 2x daily | |
Los Cabos, Mexico (SJD) | Daily | |
Mexico City (MEX)** | 3x daily | |
Monterrey, Mexico (MTY) | Daily | |
Puebla, Mexico (PBC)* | 4x weekly | |
Puerto Vallarta, Mexico (PVR) | Daily | |
Queretaro, Mexico | Daily | |
San Luis Potosi, Mexico | Daily | |
Latin (Caribbean) | Aruba (AUA)* | 1x weekly |
Montego Bay, Jamaica (MBJ)** | Daily | |
Nassau, Bahamas (NAS)** | Daily | |
Punta Cana, Dominican Republic (PUJ)** | Daily | |
San Juan, Puerto Rico (SJU) | Daily | |
St. Thomas | 3x weekly | |
Canada | Calgary (YYC)* | Daily |
Los Angeles (LAX) | City | Frequency |
Latin | Guatemala City, Guatemala (GUA)* | 2x weekly |
San Salvador, El Salvador (SAL)* | 2x weekly | |
Los Cabos, Mexico (SJD)* | 5x weekly | |
Cancun, Mexico (CUN)* | 2x weekly | |
New York/Newark (EWR) | City | Frequency |
Atlantic | Amsterdam (AMS) | Daily |
Brussels (BRU)* | 3x weekly | |
Dublin (DUB) | 4x weekly | |
Frankfurt (FRA) | Daily | |
London (LHR) | Daily | |
Munich (MUC)* | 3x weekly | |
New Delhi (DEL) | Daily | |
Paris (CDG)** | Daily | |
Tel Aviv (TLV) | Daily | |
Zurich (ZRH)* | 3x weekly | |
Latin | São Paulo, Brazil (GRU)* | 3x weekly |
Guatemala City, Guatemala (GUA)* | 2x weekly | |
Liberia, Costa Rica (LIR)* | 1x weekly | |
San Salvador, El Salvador (SAL)* | 2x weekly | |
San Pedro Sula, Honduras (SAP)* | 2x weekly | |
San Jose, Costa Rica (SJO)* | 3x weekly | |
Cancun, Mexico (CUN)* | 2x daily | |
Mexico City, Mexico (MEX)* | Daily | |
Aguadilla, Puerto Rico (BQN)* | Daily | |
Aruba (AUA)** | Daly | |
Montego Bay, Jamaica (MBJ)** | Daily | |
Nassau, Bahamas (NAS)** | Daily | |
Puerto Plata, Dominican Republic (POP)* | 1x weekly | |
Punta Cana, Dominican Republic (PUJ)** | Daily | |
Santo Domingo, Dominican Republic (SDQ)** | 2x daily | |
Santiago, Dominican Republic (STI)** | 2x daily | |
San Juan, Puerto Rico (SJU) | Daily | |
Pacific | Tokyo-Narita (NRT) | Daily |
Canada | Toronto (YYZ)* | Daily |
San Francisco (SFO) | City | Frequency |
Atlantic | Frankfurt (FRA) | Daily |
London (LHR)* | 5x weekly | |
New Delhi (DEL) | 3x weekly | |
Tel Aviv (TLV) | 3x weekly | |
Latin | Cancun, Mexico (CUN)* | 2x weekly |
Mexico City, Mexico (MEX)* | 5x weekly | |
Puerto Vallarta, Mexico (PVR)* | 5x weekly | |
Los Cabos, Mexico (SJD)* | 5x weekly | |
Pacific | Hong Kong (HKG) - Singapore (SIN) | 5x weekly |
Pape'ete, Tahiti (PPT)* | 3x weekly | |
Seoul (ICN) | 3x weekly | |
Shanghai (PVG) | 2x weekly | |
Sydney (SYD) | Daily | |
Tokyo-Narita (NRT) | Daily | |
Canada | Vancouver (YVR)** | 2x daily |
Washington, D.C. (IAD) | City | Frequency |
Atlantic | Brussels (BRU) | Daily |
Frankfurt (FRA) | Daily | |
London (LHR) | Daily | |
Munich (MUC)** | Daily | |
Zurich (ZRH) | Daily | |
Latin | Guatemala City, Guatemala (GUA)* | 2x weekly |
San Salvador, El Salvador (SAL)* | 2x weekly | |
Canada | Toronto (YYZ) | Daily |
Guam (GUM) | City | Frequency |
Tokyo-Narita (NRT)** | 10x weekly | |
Honolulu (HNL) | Daily | |
Saipan (SPN) | 3x weekly | |
Palau (ROR) | 2x monthly | |
Yap (YAP) | 1x monthly | |
Island Hopper (TKK,PNI,KSA,KWA,MAJ) | 1x monthly | |
Chuuk (TKK) - Pohnpei (PNI) | 1x monthly | |
SOURCE United Airlines
For further information: United Airlines Worldwide Media Relations, +1-872-825-8640, media.relations@united.com
"United's service to mainland China has been a point of pride for our employees and customers for more than 30 years," said Patrick Quayle, United's vice president of International Network and Alliances. "Resuming service to Shanghai from the United States is a significant step in rebuilding our international network."
Flight | Depart | Day | Time | Arrive | Time |
UA 857 | San Francisco | Weds., Sat. | 11:00 a.m. | Shanghai | 5:45 p.m.+1 day |
UA 858 | Shanghai | Thurs., Sun. | 9:40 p.m. | San Francisco | 8:55 p.m. |
Prior to suspending service to Shanghai in February due to COVID-19, United was the largest U.S. carrier serving China and operated five daily flights between Shanghai and its hubs in San Francisco, Los Angeles, Chicago and New York/Newark and has served Shanghai for more than 30 years. In July, across the Pacific, United will also reinstate service between Chicago and Tokyo with the addition of new service to Tokyo's Haneda Airport. Additionally, United will resume service to Seoul; restart service to Hong Kong and will fly to Singapore via a stop at Hong Kong.
Committed to Ensuring a Safe Journey
United is committed to putting health and safety at the forefront of every customer's journey, with the goal of delivering an industry-leading standard of cleanliness through its United CleanPlus program. United has teamed up with Clorox and Cleveland Clinic to redefine cleaning and health and safety procedures from check-in to landing and has implemented more than a dozen new policies, protocols and innovations designed with the safety of customers and employees in mind, including:
- Requiring all travelers – including crew members – to wear face coverings and temporarily revoking travel privileges for customers who do not follow these requirements.
- Using state-of-the-art high-efficiency (HEPA) filters on all United mainline aircraft to circulate air and remove up to 99.97% of airborne particles
- Using electrostatic spraying on all aircraft before departure for enhanced cabin sanitization
- Adding a step to the check-in process, based on a recommendation from the Cleveland Clinic, requiring customers to acknowledge they do not have symptoms of COVID-19 and agree to follow our policies including wearing a mask on board
- Offering customers a touchless baggage check-in experience at more than 200 airports across the United States; United is the first and only U.S. airline to make this technology available
For more details on all the ways United is helping keep customers safe during their journey, please visit united.com/cleanplus.
About United
United's shared purpose is "Connecting People. Uniting the World." 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".
SOURCE United Airlines
For further information: United Airlines Worldwide Media Relations, 872.825.8640, media.relations@united.com
This press release is neither an offer to sell nor the solicitation of an offer to buy the Notes or any other securities and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offering, solicitation or sale would be unlawful. The Notes are being offered only to qualified institutional buyers in an offering exempt from registration in reliance on Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and outside the United States in reliance on Regulation S under the Securities Act. The Notes have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States without registration or an applicable exemption from the registration requirements of the Securities Act or any applicable state securities laws.
About United
United's shared purpose is "Connecting People. Uniting the World." 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 in this release are forward-looking and thus reflect the Company's 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 the Company's 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," "remains," "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 the Company on the date of this release. The Company undertakes 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. The Company's actual results could differ materially from these forward-looking statements due to numerous factors including, without limitation, the following: the duration and spread of the ongoing global COVID-19 pandemic and the outbreak of any other disease or similar public health threat and the impact on the business, results of operations and financial condition of the Company; the risk that the MileagePlus financing is not completed; the lenders' ability to accelerate the MileagePlus indebtedness, foreclose upon the collateral securing the MileagePlus indebtedness or exercise other remedies if the Company is not able to comply with the covenants in the MileagePlus financing agreement; the final terms of borrowing pursuant to the Loan Program under the CARES Act, if any, and the effects of the grant and promissory note through the Payroll Support Program under the CARES Act; the costs and availability of financing; the Company's significant amount of financial leverage from fixed obligations and ability to seek additional liquidity and maintain adequate liquidity; the Company's ability to comply with the terms of its various financing arrangements; the material disruption of the Company's strategic operating plan as a result of the COVID-19 pandemic and the Company's ability to execute its strategic operating plans in the long term; 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 its operations in certain countries; demand for travel and the impact that global economic and political conditions have on customer travel patterns; the Company's capacity decisions and the capacity decisions of its competitors; competitive pressures on pricing and on demand; changes in aircraft fuel prices; disruptions in the Company's supply of aircraft fuel; the Company's ability to cost-effectively hedge against increases in the price of aircraft fuel, if it decides to do so; the effects of any technology failures, cybersecurity or significant data breaches; disruptions to services provided by third-party service providers; potential reputational or other impact from adverse events involving the Company's aircraft or operations, the aircraft or operations of its regional carriers or its code share partners or the aircraft or operations of another airline; the Company's 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 the Company's fleet; disruptions to the Company's regional network as a result of the COVID-19 pandemic or otherwise; the impact of regulatory, investigative and legal proceedings and legal compliance risks; the success of the Company's investments in other airlines, including in other parts of the world, which involve significant challenges and risks, particularly given the impact of the COVID-19 pandemic; industry consolidation or changes in airline alliances; the ability of other air carriers with whom the Company has alliances or partnerships to provide the services contemplated by the respective arrangements with such carriers; costs associated with any modification or termination of the Company's aircraft orders; disruptions in the availability of aircraft, parts or support from its suppliers; the Company's ability to maintain satisfactory labor relations and the results of any collective bargaining agreement process with its union groups; any disruptions to operations due to any potential actions by the Company's labor groups; labor costs; the impact of any management changes; extended interruptions or disruptions in service at major airports where the Company operates; 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 Company's ability to realize the full value of its intangible assets and long-lived assets; any impact to the Company's reputation or brand image and other risks and uncertainties set forth under Part I, Item 1A., "Risk Factors," of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as updated by the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and the Company's Current Report on Form 8-K filed June 15, 2020, as well as other risks and uncertainties set forth from time to time in the reports it files with the SEC.
SOURCE United Airlines
For further information: United Airlines Worldwide Media Relations, +1-872-825-8640, media.relations@united.com
The MileagePlus Subsidiaries intend to lend the net proceeds from the offering of the Notes to United, after depositing a portion of such proceeds in a reserve account. The final terms and amounts of the Notes are subject to market and other conditions and may be materially different than expectations.
This press release is neither an offer to sell nor the solicitation of an offer to buy the Notes or any other securities and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offering, solicitation or sale would be unlawful. The Notes are being offered only to qualified institutional buyers in an offering exempt from registration in reliance on Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and outside the United States in reliance on Regulation S under the Securities Act. The Notes have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States without registration or an applicable exemption from the registration requirements of the Securities Act or any applicable state securities laws.
About United
United's shared purpose is "Connecting People. Uniting the World." 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 in this release are forward-looking and thus reflect the Company's 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 the Company's 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," "remains," "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 the Company on the date of this release. The Company undertakes 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. The Company's actual results could differ materially from these forward-looking statements due to numerous factors including, without limitation, the following: the duration and spread of the ongoing global COVID-19 pandemic and the outbreak of any other disease or similar public health threat and the impact on the business, results of operations and financial condition of the Company; the risk that the MileagePlus financing is not completed; the lenders' ability to accelerate the MileagePlus indebtedness, foreclose upon the collateral securing the MileagePlus indebtedness or exercise other remedies if the Company is not able to comply with the covenants in the MileagePlus financing agreement; the final terms of borrowing pursuant to the Loan Program under the CARES Act, if any, and the effects of the grant and promissory note through the Payroll Support Program under the CARES Act; the costs and availability of financing; the Company's significant amount of financial leverage from fixed obligations and ability to seek additional liquidity and maintain adequate liquidity; the Company's ability to comply with the terms of its various financing arrangements; the material disruption of the Company's strategic operating plan as a result of the COVID-19 pandemic and the Company's ability to execute its strategic operating plans in the long term; 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 its operations in certain countries; demand for travel and the impact that global economic and political conditions have on customer travel patterns; the Company's capacity decisions and the capacity decisions of its competitors; competitive pressures on pricing and on demand; changes in aircraft fuel prices; disruptions in the Company's supply of aircraft fuel; the Company's ability to cost-effectively hedge against increases in the price of aircraft fuel, if it decides to do so; the effects of any technology failures, cybersecurity or significant data breaches; disruptions to services provided by third-party service providers; potential reputational or other impact from adverse events involving the Company's aircraft or operations, the aircraft or operations of its regional carriers or its code share partners or the aircraft or operations of another airline; the Company's 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 the Company's fleet; disruptions to the Company's regional network as a result of the COVID-19 pandemic or otherwise; the impact of regulatory, investigative and legal proceedings and legal compliance risks; the success of the Company's investments in other airlines, including in other parts of the world, which involve significant challenges and risks, particularly given the impact of the COVID-19 pandemic; industry consolidation or changes in airline alliances; the ability of other air carriers with whom the Company has alliances or partnerships to provide the services contemplated by the respective arrangements with such carriers; costs associated with any modification or termination of the Company's aircraft orders; disruptions in the availability of aircraft, parts or support from its suppliers; the Company's ability to maintain satisfactory labor relations and the results of any collective bargaining agreement process with its union groups; any disruptions to operations due to any potential actions by the Company's labor groups; labor costs; the impact of any management changes; extended interruptions or disruptions in service at major airports where the Company operates; 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 Company's ability to realize the full value of its intangible assets and long-lived assets; any impact to the Company's reputation or brand image and other risks and uncertainties set forth under Part I, Item 1A., "Risk Factors," of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as updated by the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and the Company's Current Report on Form 8-K filed June 15, 2020, as well as other risks and uncertainties set forth from time to time in the reports it files with the SEC.
SOURCE United Airlines
For further information: United Airlines Worldwide Media Relations, +1-872-825-8640, media.relations@united.com
United currently requires all passengers to wear a face covering onboard its flights and expects that policy to remain in place for at least the next 60 days. The only exceptions to this policy are individuals who have a medical condition or a disability that prevents them from wearing a face covering, those who cannot put on or remove a face covering themselves and small children. Customers are expected to wear a mask for the duration of the flight, except when eating or drinking.
"Every reputable heath institution says wearing a mask is one of the most effective things people can do to protect others from contracting COVID-19, especially in places like an aircraft where social distancing is a challenge," said United's Chief Customer Officer, Toby Enqvist. "We have been requiring our customers to wear masks onboard United aircraft since May 4 and we have been pleased that the overwhelming majority of passengers readily comply with our policy. Today's announcement is an unmistakable signal that we're prepared to take serious steps, if necessary, to protect our customers and crew."
Under this new policy, if a flight attendant notices or is informed of a customer onboard who is not wearing a face covering and that passenger does not fall within an exception, the flight attendant will proactively inform the customer that for the health and safety of everyone, face coverings are mandatory for all customers and crew on board. They will also offer to provide the customer with a mask if needed. If the customer continues to be non-compliant, flight attendants will do their best to de-escalate the situation, again inform the customer of United's policy, and provide the passenger with an In-Flight Mask policy reminder card. If a customer continues to not comply, the flight attendant will file a report of the incident, which will initiate a formal review process. Any final decision or actions regarding a customer's future flight benefits will not occur onboard but instead take place after the flight has reached its destination and the security team has investigated the incident.
"U.S. airlines are very serious about requiring face coverings on their flights. Carriers are stepping up enforcement of face coverings and implementing substantial consequences for those who do not comply with the rules," said A4A President and CEO Nicholas E. Calio. "Face coverings are one of several public health measures recommended by the CDC as an important layer of protection for passengers and customer-facing employees."
In April, United became the first major U.S.-based airline to require flight attendants to wear a face mask while on duty, and beginning in May, expanded that mandate to include all employees and customers on board. This includes front-line workers like pilots, customer service agents and ramp workers when on board an aircraft, along with any other United employees traveling using their flight benefits.
"Wearing a mask is a critical part of helping make air travel safer," said Dr. James Merlino, Chief Clinical Transformation Officer at Cleveland Clinic. "The more people in a given space wearing masks, the fewer viral particles are making it into the space around them, decreasing exposure and risk."
The airline's mask policy is an important part of the United CleanPlus program, which brings together one of the most trusted brands in surface disinfection - Clorox - and the country's top medical experts - Cleveland Clinic - to inform and guide United's new cleaning, safety and social distancing protocols. As part of this program, United is taking a layered approach to help protect passengers and employees on board. In addition to requiring masks, United Airlines planes have HEPA grade filters that recirculate air every 2-3 minutes, and the airline is using electrostatic sprayers to disinfect the cabin before flights.
In addition to the onboard actions, United has implemented dozens of other new procedures at other points in the travel journey including offering touchless check-in for baggage at more than 200 locations, asking customers to complete a health assessment at check-in, installing sneeze guards and adjusting the boarding process.
For full information on the United CleanPlus program, please visit united.com/cleanplus.
About United
United's shared purpose is "Connecting People. Uniting the World." 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".
SOURCE United Airlines
For further information: United Airlines Worldwide Media Relations, +1-872-825-8640, media.relations@united.com
CHICAGO, June 15, 2020 /PRNewswire/ -- United Airlines (NASDAQ: UAL) today announced that it expects to have total available liquidity of approximately $17 billion at the end of the third quarter of 2020.[1] This dollar amount reflects committed financing of $5 billion to be secured by the airline's loyalty program, MileagePlus, that allows the airline to continue to operate, evolve, and grow the program, as well as $4.5 billion expected to be available to United through the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") Loan Program. The company believes it has sufficient slots, gates and routes collateral available to meet the collateral coverage that may be required for the full $4.5 billion available to the company under the Loan Program. This $9.5 billion of additional liquidity will provide even more flexibility as the airline navigates the most disruptive financial crisis in the history of aviation.
Given the impact COVID-19 has had on travel demand, United has spent the past several months aggressively and proactively cutting costs. The airline has already reduced planned capital expenditures and operating and vendor expenditures, suspended raises and implemented an unpaid time off program for management and administrative employees, put a freeze on hiring, introduced voluntary leave and separation programs, reduced pay for all executives and cut its CEO and President's base salaries by 100%, among other cost-saving measures. United expects an average cash burn of approximately $40 million per day in the second quarter of 2020 and to reduce its average cash burn to approximately $30 million per day in the third quarter of 2020.[2]
Goldman Sachs Lending Partners LLC, Barclays Bank PLC and Morgan Stanley Senior Funding, Inc. have committed to provide, and have agreed to arrange the syndication of, the MileagePlus financing through a term loan facility, which is expected to close, subject to standard conditions precedent, by the end of July 2020. Goldman Sachs Lending Partners LLC will act as the sole structuring agent and lead left arranger for the transaction.
MileagePlus has more than 100 million members, over 100 program partners, and is an essential asset for United. The program has historically generated material and stable revenues and free cash flows, drives customer retention, and increases customer lifetime value. United continues to invest in making MileagePlus the top loyalty program for its members. Last year the airline announced that MileagePlus miles never expire and announced a partnership with CLEAR to offer free and discounted memberships to MileagePlus members. United also introduced PlusPoints, a new industry-leading upgrade benefit for Premier members.
About United
United's shared purpose is "Connecting People. Uniting the World." 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 in this release are forward-looking and thus reflect the Company's 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 the Company's 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," "remains," "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 the Company on the date of this release. The Company undertakes 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.
The Company's actual results could differ materially from these forward-looking statements due to numerous factors including, without limitation, the following: the duration and spread of the ongoing global COVID-19 pandemic and the outbreak of any other disease or similar public health threat and the impact on the business, results of operations and financial condition of the Company; the risk that the MileagePlus financing is not completed; the lenders' ability to accelerate the MileagePlus indebtedness, foreclose upon the collateral securing the MileagePlus indebtedness or exercise other remedies if the Company is not able to comply with the covenants in the MileagePlus financing agreement; the final terms of borrowing pursuant to the Loan Program under the CARES Act, if any, and the effects of the grant and promissory note through the Payroll Support Program under the CARES Act; the costs and availability of financing; the Company's significant amount of financial leverage from fixed obligations and ability to seek additional liquidity and maintain adequate liquidity; the Company's ability to comply with the terms of its various financing arrangements; the material disruption of the Company's strategic operating plan as a result of the COVID-19 pandemic and the Company's ability to execute its strategic operating plans in the long term; 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 its operations in certain countries; demand for travel and the impact that global economic and political conditions have on customer travel patterns; the Company's capacity decisions and the capacity decisions of its competitors; competitive pressures on pricing and on demand; changes in aircraft fuel prices; disruptions in the Company's supply of aircraft fuel; the Company's ability to cost-effectively hedge against increases in the price of aircraft fuel, if it decides to do so; the effects of any technology failures, cybersecurity or significant data breaches; disruptions to services provided by third-party service providers; potential reputational or other impact from adverse events involving the Company's aircraft or operations, the aircraft or operations of its regional carriers or its code share partners or the aircraft or operations of another airline; the Company's 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 the Company's fleet; disruptions to the Company's regional network as a result of the COVID-19 pandemic or otherwise; the impact of regulatory, investigative and legal proceedings and legal compliance risks; the success of the Company's investments in other airlines, including in other parts of the world, which involve significant challenges and risks, particularly given the impact of the COVID-19 pandemic; industry consolidation or changes in airline alliances; the ability of other air carriers with whom the Company has alliances or partnerships to provide the services contemplated by the respective arrangements with such carriers; costs associated with any modification or termination of the Company's aircraft orders; disruptions in the availability of aircraft, parts or support from its suppliers; the Company's ability to maintain satisfactory labor relations and the results of any collective bargaining agreement process with its union groups; any disruptions to operations due to any potential actions by the Company's labor groups; labor costs; the impact of any management changes; extended interruptions or disruptions in service at major airports where the Company operates; 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 Company's ability to realize the full value of its intangible assets and long-lived assets; any impact to the Company's reputation or brand image and other risks and uncertainties set forth under Part I, Item 1A., "Risk Factors," of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as updated by the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and the Company's Current Report on Form 8-K filed June 15, 2020, as well as other risks and uncertainties set forth from time to time in the reports it files with the SEC.
1 Includes liquidity available under the company's $2 billion revolving credit facility, $5 billion of committed financing to be secured by the company's loyalty program, MileagePlus, as well as $4.5 billion expected to be available to the company through the CARES Act Loan Program.
2 "Cash burn" is defined as net cash from operations, less investing and financing activities. Proceeds from the issuance of new debt (excluding expected aircraft financing), government grants associated with the Payroll Support Program of the CARES Act and any new issuances of UAL common stock are not included in this figure.
SOURCE United Airlines
For further information: United Airlines Worldwide Media Relations, +1-872-825-8640, media.relations@united.com
NEW YORK, June 12, 2020 /PRNewswire/ -- United customers traveling through New York-LaGuardia (LGA) this weekend will be the first of any legacy airline to enjoy the airport's new Terminal B experience, featuring brand-new, best-in-class Arrivals and Departures Hall. Whether their journey starts or ends at LGA, United passengers will see amenities including first-rate retail and dining choices as well as innovative lobby and baggage claim areas. The new building is part of the $4 billion, 1.3-million-square-foot Terminal B redevelopment project operated by LaGuardia Gateway Partners (LGP). Images and video can be downloaded here.
"A world-class city like New York deserves a world-class airport, and we are proud to be the first legacy airline to experience the new LaGuardia including the Arrivals and Departures Hall and Terminal B gates - it's a spectacular facility," said David Kinzelman, the airline's vice president of domestic and international line stations. "LaGuardia is an important connection point each year for our customers traveling across the country and around the globe and we look forward to pairing our service with a truly elevated and state-of-the art airport experience."
"The opening of the first new Arrivals and Departure Hall is a major milestone in delivering on Governor Cuomo's vision for a brand new, world-class, 21st century LaGuardia Airport that the region deserves. We thank the contractors, subcontractors, and union construction workers who worked thorough the pandemic to deliver this extraordinary building on time and on budget. Today's opening should be a shining symbol of the region's potential for a strong economic recovery with the vitality of New York before COVID-19," said Rick Cotton, Executive Director, Port Authority of New York and New Jersey Executive Director.
The newly completed and highly contemporary Arrivals and Departures Hall connects directly to Terminal B and the eastern concourse gates via a pedestrian bridge built over the top of the original terminal. United's gates opened last June in the Terminal B eastern concourse along with a new United Club located after security near the airline's gates. The Club is a private, 10,500-square-foot space that features more than 200 seats – 30 percent larger than United's previous LGA Club. Along with a more spacious experience, the Club offers sweeping views of the tarmac while combining the sleek styles of New York City with the modern touches travelers desire.
"The success of creating a brand new Terminal B would not be possible without our airline partners, including United Airlines. The Eastern Concourse in the new Terminal B saw the opening of United's new gates and the United Club last June, offering passengers a place to relax before their flight and a premier guest experience," said Stewart Steeves, Chief Executive Officer of LaGuardia Gateway Partners. "Our guests are our top priority at LaGuardia Gateway Partners, and we're excited to continue our work with United Airlines in order to create an experience worthy of all passengers travelling to and from New York City."
About United
United's shared purpose is "Connecting People. Uniting the World." 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".
SOURCE United Airlines
For further information: United Airlines Worldwide Media Relations, +1-872-825-8640, media.relations@united.com
