United Airlines Reports Second-Quarter 2018 Performance
CHICAGO, July 17, 2018 /PRNewswire/ -- United Airlines (UAL) today announced its second-quarter 2018 financial results.
- UAL reported second-quarter net income of $684 million, diluted earnings per share of $2.48, pre-tax earnings of $857 million and pre-tax margin of 8.0 percent.
- Excluding special charges and mark-to-market adjustments, UAL reported second-quarter net income of $889 million, diluted earnings per share of $3.23, pre-tax earnings of $1.1 billion and pre-tax margin of 10.4 percent.
- Ranked first among largest competitors in on-time departures in the quarter.
- UAL repurchased $407 million of its common shares in the second quarter.
- Consolidated passenger revenue per available seat mile (PRASM) increased 3.0 percent year-over-year.
- Consolidated total revenue per available seat mile (TRASM) increased 2.8 percent year-over-year.
- Consolidated unit cost per available seat mile (CASM) increased 7.1 percent year-over-year.
- Consolidated CASM, excluding special charges, third-party business expenses, fuel and profit sharing, decreased 0.4 percent year-over-year.
- UAL now expects full-year 2018 diluted earnings per share, excluding special charges and mark-to-market adjustments, to be $7.25 to $8.751.
"We delivered great financial results and strong operational performance in the second quarter despite the significant headwind of higher fuel prices," said Oscar Munoz, chief executive officer of United Airlines. "These results are the strongest evidence yet that our strategic growth plan is working, and we are well positioned to carry our momentum into the second half of the year."
For more information on UAL's third-quarter 2018 guidance, please visit ir.united.com for the company's investor update.
Second-Quarter Highlights
Operations and Employees
- Completed the best second-quarter on-time departure performance in United's history.
- Received "Best-of-the-Best" Award from the National LGBT Chamber of Commerce and National Business Inclusion Consortium for commitment to diversity and inclusion across all communities.
- Announced a total of $8 million in grants to benefit organizations in each of its domestic hub communities.
- Became the first carrier to achieve certification through the new Audubon International Green Hospitality Program for the airline's United Club location in Terminal 7 of Los Angeles International Airport.
Customer Experience
- Expanded personal device entertainment option to all aircraft with DIRECTV live streaming for purchase, providing at least one free entertainment option on all Wi-Fi equipped aircraft (which is any aircraft with more than 70 seats).
- Opened three new United Polaris lounges located in San Francisco International Airport, Newark Liberty International Airport and Houston's George Bush Intercontinental Airport.
- Announced a new relationship with The Private Suite, offering the airline's customers access to a newly built, private terminal at Los Angeles International Airport.
- Introduced the new United Explorer Card which offers additional benefits, travel credits and discounts.
Network and Fleet
- Launched service from Newark/New York to two new international destinations: Reykjavik, Iceland, and Porto, Portugal.
- Announced the return of seasonal service to 25 destinations, including, among others: Athens, Greece; Glasgow, Scotland; Madrid and Barcelona, Spain; Rome and Venice, Italy; and Hamburg, Germany.
- Announced schedule expansion at East Coast hubs in Newark/New York and Washington-Dulles to offer more nonstop flights to destinations popular with New York-area customers while reallocating largely connecting passenger flights to Washington-Dulles.
- Took delivery of one Boeing 777-300ER aircraft and six Boeing 737 MAX 9 aircraft.
- Became North American launch customer of the Boeing 737 MAX 9 aircraft, which took its first flight on June 7 from Houston's George Bush Intercontinental Airport to Orlando International Airport in Florida.
Earnings Call
UAL will hold a conference call to discuss second-quarter 2018 financial results and its financial and operational outlook for the third quarter and full year of 2018 on Wednesday, July 18, at 9:30 a.m. Central Time /10:30 a.m. Eastern Time. A live, listen-only webcast of the conference call will be available at ir.united.com. The webcast will be available for replay within 24 hours of the conference call and then archived on the website for three months.
About United
United Airlines and United Express operate approximately 4,600 flights a day to 357 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 757 mainline aircraft and the airline's United Express carriers operate 551 regional aircraft. The airline is a founding member of Star Alliance, which provides service to 193 countries via 28 member airlines. For more information, visit united.com, follow @United on Twitter or connect on Facebook. The common stock of United's parent, United Continental Holdings, Inc., is traded on the NYSE under the symbol "UAL".
1 Excludes special charges, the nature of which are not determinable at this time, and mark-to-market impact of equity investments. Accordingly, UAL is not providing earnings guidance on a GAAP basis.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
Certain statements included in this release are forward-looking and thus reflect our current expectations and beliefs with respect to certain current and future events and anticipated financial and operating performance. Such forward-looking statements are and will be subject to many risks and uncertainties relating to our operations and business environment that may cause actual results to differ materially from any future results expressed or implied in such forward-looking statements. Words such as "expects," "will," "plans," "anticipates," "indicates," "believes," "estimates," "forecast," "guidance," "outlook," "goals" and similar expressions are intended to identify forward-looking statements. Additionally, forward-looking statements include statements that do not relate solely to historical facts, such as statements which identify uncertainties or trends, discuss the possible future effects of current known trends or uncertainties, or which indicate that the future effects of known trends or uncertainties cannot be predicted, guaranteed or assured. All forward-looking statements in this release are based upon information available to us on the date of this release. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, except as required by applicable law. Our actual results could differ materially from these forward-looking statements due to numerous factors including, without limitation, the following: general economic conditions (including interest rates, foreign currency exchange rates, investment or credit market conditions, crude oil prices, costs of aircraft fuel and energy refining capacity in relevant markets); economic and political instability and other risks of doing business globally, including political developments that may impact our operations in certain countries; demand for travel and the impact that global economic and political conditions have on customer travel patterns; competitive pressures on pricing and on demand; demand for transportation in the markets in which we operate; our capacity decisions and the capacity decisions of our competitors; the effects of any hostilities, act of war or terrorist attack; the effects of any technology failures or cybersecurity breaches; the impact of regulatory, investigative and legal proceedings and legal compliance risks; disruptions to our regional network; the ability of other air carriers with whom we have alliances or partnerships to provide the services contemplated by the respective arrangements with such carriers; costs associated with any modification or termination of our aircraft orders; potential reputational or other impact from adverse events in our operations, the operations of our regional carriers or the operations of our code share partners; our ability to attract and retain customers; our ability to execute our operational plans and revenue-generating initiatives, including optimizing our revenue; our ability to control our costs, including realizing benefits from our resource optimization efforts, cost reduction initiatives and fleet replacement programs; the impact of any management changes; our ability to cost-effectively hedge against increases in the price of aircraft fuel if we decide to do so; any potential realized or unrealized gains or losses related to any fuel or currency hedging programs; labor costs; our ability to maintain satisfactory labor relations and the results of any collective bargaining agreement process with our union groups; any disruptions to operations due to any potential actions by our labor groups; an outbreak of a disease that affects travel demand or travel behavior; U.S. or foreign governmental legislation, regulation and other actions (including Open Skies agreements and environmental regulations); industry consolidation or changes in airline alliances; our ability to comply with the terms of our various financing arrangements; the costs and availability of financing; our ability to maintain adequate liquidity; the costs and availability of aviation and other insurance; weather conditions; our ability to utilize our net operating losses to offset future taxable income; the impact of changes in tax laws; the success of our investments in airlines in other parts of the world; and other risks and uncertainties set forth under Part I, Item 1A., "Risk Factors," of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, as well as other risks and uncertainties set forth from time to time in the reports we file with the U.S. Securities and Exchange Commission.
-tables attached-
On January 1, 2018, United Continental Holdings, Inc. ("UAL") adopted Accounting Standards Update No. 2014-09 (Topic 606), Revenue from Contracts with Customers, and Accounting Standards Update No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. As such, certain previously reported 2017 figures are adjusted in this report on a basis consistent with the new standards. See the Current Report on Form 8-K filed by UAL with the Securities and Exchange Commission on March 1, 2018 for additional information.
UNITED CONTINENTAL HOLDINGS, INC. | ||||||||||||||||||||||||
STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED) (A) | ||||||||||||||||||||||||
Three Months Ended |
% |
Six Months Ended |
% |
|||||||||||||||||||||
(In millions, except per share data) |
2018 |
2017 |
(Decrease) |
2018 |
2017 |
(Decrease) |
||||||||||||||||||
Operating revenue: |
||||||||||||||||||||||||
Passenger |
$ |
9,880 |
$ |
9,151 |
8.0 |
$ |
18,030 |
$ |
16,804 |
7.3 |
||||||||||||||
Cargo |
314 |
273 |
15.0 |
607 |
511 |
18.8 |
||||||||||||||||||
Other operating revenue |
583 |
584 |
(0.2) |
1,172 |
1,119 |
4.7 |
||||||||||||||||||
Total operating revenue |
10,777 |
10,008 |
7.7 |
19,809 |
18,434 |
7.5 |
||||||||||||||||||
Operating expense: |
||||||||||||||||||||||||
Salaries and related costs |
2,878 |
2,842 |
1.3 |
5,604 |
5,478 |
2.3 |
||||||||||||||||||
Aircraft fuel |
2,390 |
1,669 |
43.2 |
4,355 |
3,229 |
34.9 |
||||||||||||||||||
Regional capacity purchase |
681 |
549 |
24.0 |
1,300 |
1,085 |
19.8 |
||||||||||||||||||
Landing fees and other rent |
603 |
541 |
11.5 |
1,161 |
1,085 |
7.0 |
||||||||||||||||||
Depreciation and amortization |
557 |
536 |
3.9 |
1,098 |
1,054 |
4.2 |
||||||||||||||||||
Aircraft maintenance materials and outside repairs |
438 |
472 |
(7.2) |
878 |
926 |
(5.2) |
||||||||||||||||||
Distribution expenses |
393 |
385 |
2.1 |
735 |
704 |
4.4 |
||||||||||||||||||
Aircraft rent |
119 |
152 |
(21.7) |
246 |
331 |
(25.7) |
||||||||||||||||||
Special charges (C) |
129 |
44 |
NM |
169 |
95 |
NM |
||||||||||||||||||
Other operating expenses |
1,428 |
1,381 |
3.4 |
2,826 |
2,690 |
5.1 |
||||||||||||||||||
Total operating expense |
9,616 |
8,571 |
12.2 |
18,372 |
16,677 |
10.2 |
||||||||||||||||||
Operating income |
1,161 |
1,437 |
(19.2) |
1,437 |
1,757 |
(18.2) |
||||||||||||||||||
Operating margin |
10.8 |
% |
14.4 |
% |
(3.6) |
pts. |
7.3 |
% |
9.5 |
% |
(2.2) |
pts. | ||||||||||||
Operating margin, excluding special charges (Non-GAAP) |
12.0 |
% |
14.8 |
% |
(2.8) |
pts. |
8.1 |
% |
10.0 |
% |
(1.9) |
pts. | ||||||||||||
Nonoperating income (expense): |
||||||||||||||||||||||||
Interest expense |
(177) |
(167) |
6.0 |
(353) |
(329) |
7.3 |
||||||||||||||||||
Interest capitalized |
14 |
21 |
(33.3) |
33 |
44 |
(25.0) |
||||||||||||||||||
Interest income |
25 |
13 |
92.3 |
42 |
24 |
75.0 |
||||||||||||||||||
Miscellaneous, net (C) |
(166) |
(27) |
NM |
(118) |
(69) |
71.0 |
||||||||||||||||||
Total nonoperating expense |
(304) |
(160) |
90.0 |
(396) |
(330) |
20.0 |
||||||||||||||||||
Income before income taxes |
857 |
1,277 |
(32.9) |
1,041 |
1,427 |
(27.0) |
||||||||||||||||||
Pre-tax margin |
8.0 |
% |
12.8 |
% |
(4.8) |
pts. |
5.3 |
% |
7.7 |
% |
(2.4) |
pts. | ||||||||||||
Pre-tax margin, excluding special charges and mark-to-market ("MTM") losses on equity investments (Non-GAAP) |
10.4 |
% |
13.2 |
% |
(2.8) |
pts. |
6.6 |
% |
8.3 |
% |
(1.7) |
pts. | ||||||||||||
Income tax expense (D) |
173 |
456 |
(62.1) |
210 |
507 |
(58.6) |
||||||||||||||||||
Net income |
$ |
684 |
$ |
821 |
(16.7) |
$ |
831 |
$ |
920 |
(9.7) |
||||||||||||||
Earnings per share, diluted |
$ |
2.48 |
$ |
2.67 |
(7.1) |
$ |
2.96 |
$ |
2.96 |
— |
||||||||||||||
Weighted average shares, diluted |
275.6 |
307.7 |
(10.4) |
280.2 |
311.1 |
(9.9) |
||||||||||||||||||
NM Not meaningful |
UNITED CONTINENTAL HOLDINGS, INC. | ||||||||||||||||||||||||
STATISTICS | ||||||||||||||||||||||||
Three Months Ended |
% |
Six Months Ended |
% |
|||||||||||||||||||||
2018 |
2017 |
(Decrease) |
2018 |
2017 |
(Decrease) |
|||||||||||||||||||
Mainline: |
||||||||||||||||||||||||
Passengers (thousands) |
29,589 |
28,084 |
5.4 |
54,191 |
51,909 |
4.4 |
||||||||||||||||||
Revenue passenger miles (millions) |
53,485 |
50,554 |
5.8 |
97,595 |
92,737 |
5.2 |
||||||||||||||||||
Available seat miles (millions) |
63,061 |
60,473 |
4.3 |
117,859 |
113,527 |
3.8 |
||||||||||||||||||
Cargo ton miles (millions) |
855 |
828 |
3.3 |
1,672 |
1,576 |
6.1 |
||||||||||||||||||
Passenger revenue per available seat mile (cents) |
12.76 |
12.39 |
3.0 |
12.44 |
12.08 |
3.0 |
||||||||||||||||||
Average yield per revenue passenger mile (cents) |
15.04 |
14.82 |
1.5 |
15.02 |
14.79 |
1.6 |
||||||||||||||||||
Aircraft in fleet at end of period |
757 |
748 |
1.2 |
757 |
748 |
1.2 |
||||||||||||||||||
Average stage length (miles) |
1,823 |
1,821 |
0.1 |
1,818 |
1,812 |
0.3 |
||||||||||||||||||
Average daily utilization of each aircraft (hours: minutes) |
11:07 |
10:46 |
3.3 |
10:32 |
10:16 |
2.6 |
||||||||||||||||||
Average aircraft fuel price per gallon |
$ |
2.24 |
$ |
1.62 |
38.3 |
$ |
2.17 |
$ |
1.66 |
30.7 |
||||||||||||||
Fuel gallons consumed (millions) |
885 |
867 |
2.1 |
1,656 |
1,628 |
1.7 |
||||||||||||||||||
Regional: |
||||||||||||||||||||||||
Passengers (thousands) |
11,469 |
10,163 |
12.9 |
21,362 |
19,443 |
9.9 |
||||||||||||||||||
Revenue passenger miles (millions) |
6,460 |
5,802 |
11.3 |
12,199 |
11,230 |
8.6 |
||||||||||||||||||
Available seat miles (millions) |
7,641 |
6,994 |
9.3 |
14,820 |
13,748 |
7.8 |
||||||||||||||||||
Passenger revenue per available seat mile (cents) |
24.02 |
23.72 |
1.3 |
22.73 |
22.44 |
1.3 |
||||||||||||||||||
Average yield per revenue passenger mile (cents) |
28.41 |
28.59 |
(0.6) |
27.62 |
27.47 |
0.5 |
||||||||||||||||||
Aircraft in fleet at end of period |
551 |
475 |
16.0 |
551 |
475 |
16.0 |
||||||||||||||||||
Average stage length (miles) |
552 |
558 |
(1.1) |
558 |
565 |
(1.2) |
||||||||||||||||||
Average aircraft fuel price per gallon |
$ |
2.38 |
$ |
1.71 |
39.2 |
$ |
2.29 |
$ |
1.75 |
30.9 |
||||||||||||||
Fuel gallons consumed (millions) |
173 |
156 |
10.9 |
334 |
305 |
9.5 |
||||||||||||||||||
Consolidated (Mainline and Regional): |
||||||||||||||||||||||||
Passengers (thousands) |
41,058 |
38,247 |
7.3 |
75,553 |
71,352 |
5.9 |
||||||||||||||||||
Revenue passenger miles (millions) |
59,945 |
56,356 |
6.4 |
109,794 |
103,967 |
5.6 |
||||||||||||||||||
Available seat miles (millions) |
70,702 |
67,467 |
4.8 |
132,679 |
127,275 |
4.2 |
||||||||||||||||||
Passenger load factor: |
||||||||||||||||||||||||
Consolidated |
84.8 |
% |
83.5 |
% |
1.3 |
pts. |
82.8 |
% |
81.7 |
% |
1.1 |
pts. | ||||||||||||
Domestic |
87.1 |
% |
86.8 |
% |
0.3 |
pts. |
85.1 |
% |
85.2 |
% |
(0.1) |
pts. | ||||||||||||
International |
81.7 |
% |
79.5 |
% |
2.2 |
pts. |
79.7 |
% |
77.5 |
% |
2.2 |
pts. | ||||||||||||
Passenger revenue per available seat mile (cents) |
13.97 |
13.56 |
3.0 |
13.59 |
13.20 |
3.0 |
||||||||||||||||||
Total revenue per available seat mile (cents) |
15.24 |
14.83 |
2.8 |
14.93 |
14.48 |
3.1 |
||||||||||||||||||
Average yield per revenue passenger mile (cents) |
16.48 |
16.24 |
1.5 |
16.42 |
16.16 |
1.6 |
||||||||||||||||||
Aircraft in fleet at end of period |
1,308 |
1,223 |
7.0 |
1,308 |
1,223 |
7.0 |
||||||||||||||||||
Average stage length (miles) |
1,460 |
1,475 |
(1.0) |
1,452 |
1,464 |
(0.8) |
||||||||||||||||||
Average full-time equivalent employees (thousands) |
86.7 |
86.0 |
0.8 |
86.2 |
85.6 |
0.7 |
||||||||||||||||||
Average aircraft fuel price per gallon |
$ |
2.26 |
$ |
1.63 |
38.7 |
$ |
2.19 |
$ |
1.67 |
31.1 |
||||||||||||||
Fuel gallons consumed (millions) |
1,058 |
1,023 |
3.4 |
1,990 |
1,933 |
2.9 |
Note: See Part II, Item 6, Selected Financial Data, of UAL's Annual Report on Form 10-K for the fiscal year ended December 31, 2017, for definitions of these statistics. |
UNITED CONTINENTAL HOLDINGS, INC. | ||||||||||||||||||||||||
SUMMARY FINANCIAL METRICS (A) | ||||||||||||||||||||||||
Three Months Ended |
% |
Six Months Ended |
% |
|||||||||||||||||||||
2018 |
2017 |
(Decrease) |
2018 |
2017 |
(Decrease) |
|||||||||||||||||||
(In millions, except per share data) |
||||||||||||||||||||||||
Operating income |
$ |
1,161 |
$ |
1,437 |
(19.2) |
$ |
1,437 |
$ |
1,757 |
(18.2) |
||||||||||||||
Operating margin |
10.8 |
% |
14.4 |
% |
(3.6) |
pts. |
7.3 |
% |
9.5 |
% |
(2.2) |
pts. | ||||||||||||
Operating income, excluding special charges (Non-GAAP) |
1,290 |
1,481 |
(12.9) |
1,606 |
1,852 |
(13.3) |
||||||||||||||||||
Operating margin, excluding special charges (Non-GAAP) |
12.0 |
% |
14.8 |
% |
(2.8) |
pts. |
8.1 |
% |
10.0 |
% |
(1.9) |
pts. | ||||||||||||
EBITDA, excluding special charges and MTM losses on equity investments (Non-GAAP) |
$ |
1,816 |
$ |
1,990 |
(8.7) |
$ |
2,676 |
$ |
2,837 |
(5.7) |
||||||||||||||
EBITDA margin, excluding special charges and MTM losses on equity investments (Non-GAAP) |
16.9 |
% |
19.9 |
% |
(3.0) |
pts. |
13.5 |
% |
15.4 |
% |
(1.9) |
pts. | ||||||||||||
Pre-tax income |
$ |
857 |
$ |
1,277 |
(32.9) |
$ |
1,041 |
$ |
1,427 |
(27.0) |
||||||||||||||
Pre-tax margin |
8.0 |
% |
12.8 |
% |
(4.8) |
pts. |
5.3 |
% |
7.7 |
% |
(2.4) |
pts. | ||||||||||||
Pre-tax income, excluding special charges and MTM losses on equity investments (Non-GAAP) |
1,121 |
1,321 |
(15.1) |
1,300 |
1,522 |
(14.6) |
||||||||||||||||||
Pre-tax margin, excluding special charges and MTM losses on equity investments (Non-GAAP) |
10.4 |
% |
13.2 |
% |
(2.8) |
pts. |
6.6 |
% |
8.3 |
% |
(1.7) |
pts. | ||||||||||||
Net income |
$ |
684 |
$ |
821 |
(16.7) |
$ |
831 |
$ |
920 |
(9.7) |
||||||||||||||
Net income, excluding special charges and MTM losses on equity investments (Non-GAAP) |
889 |
849 |
4.7 |
1,032 |
981 |
5.2 |
||||||||||||||||||
Diluted earnings per share |
$ |
2.48 |
$ |
2.67 |
(7.1) |
$ |
2.96 |
$ |
2.96 |
— |
||||||||||||||
Diluted earnings per share, excluding special charges and MTM losses on equity investments (Non-GAAP) |
3.23 |
2.76 |
17.0 |
3.68 |
3.15 |
16.8 |
||||||||||||||||||
Net cash provided by operating activities |
$ |
2,442 |
$ |
1,561 |
56.4 |
$ |
4,175 |
$ |
2,108 |
98.1 |
||||||||||||||
Capital expenditures |
$ |
755 |
$ |
1,089 |
(30.7) |
$ |
1,734 |
$ |
1,780 |
(2.6) |
||||||||||||||
Adjusted capital expenditures (Non-GAAP) |
783 |
1,247 |
(37.2) |
1,796 |
2,601 |
(30.9) |
||||||||||||||||||
Free cash flow, net of financings (Non-GAAP) |
$ |
1,687 |
$ |
472 |
257.4 |
$ |
2,441 |
$ |
328 |
NM |
||||||||||||||
Free cash flow (Non-GAAP) |
1,659 |
314 |
428.3 |
2,379 |
(493) |
NM |
||||||||||||||||||
NM Not meaningful |
UNITED CONTINENTAL HOLDINGS, INC. | |||
RETURN ON INVESTED CAPITAL (ROIC) - Non-GAAP | |||
ROIC is a non-GAAP financial measure that we believe provides useful supplemental information for management and investors by measuring the effectiveness of our operations' use of invested capital to generate profits. | |||
(in millions) |
Twelve Months Ended | ||
Net Operating Profit After Tax ("NOPAT") |
|||
Pre-tax income |
$ |
2,654 |
|
Special charges and MTM losses on equity investments (C): |
|||
Impairment of assets |
159 |
||
MTM losses on equity investments |
90 |
||
Severance and benefit costs |
63 |
||
(Gains) losses on sale of assets and other special charges |
28 |
||
Pre-tax income excluding special charges and MTM losses on equity investments (Non-GAAP) |
2,994 |
||
add: Interest expense (net of income tax benefit) (a) |
689 |
||
add: Interest component of capitalized aircraft rent (net of income tax benefit) (a) |
260 |
||
add: Net interest on pension (net of income tax benefit) (a) |
10 |
||
less: Income taxes paid |
(24) |
||
NOPAT (Non-GAAP) |
$ |
3,929 |
|
Average Invested Capital (five-quarter average) |
|||
Total assets |
$ |
43,205 |
|
add: Capitalized aircraft operating leases (b) |
4,227 |
||
less: Non-interest bearing liabilities (c) |
(16,957) |
||
Average invested capital (Non-GAAP) |
$ |
30,475 |
|
Return on invested capital (Non-GAAP) |
12.9 |
% | |
(a) |
Income tax benefit measured based on the effective cash tax rate. The effective cash tax rate is calculated by dividing cash taxes paid by pre-tax income excluding special charges. For the twelve months ended June 30, 2018, the effective cash tax rate was 0.8%. |
(b) |
The purpose of this adjustment is to capitalize the impact of aircraft operating leases. The company uses a multiple of seven times its annual aircraft rent expense to estimate the potential capitalized value and related liability of its aircraft. This is a simplified method used by many rating agencies and financial analysts to assist with the impact of operating leases on financial measures like return on invested capital. |
(c) |
Non-interest bearing liabilities include advance ticket sales, frequent flyer deferred revenue, deferred income taxes and other non-interest bearing liabilities. |
UNITED CONTINENTAL HOLDINGS, INC. | ||||||||||||||||||
NON-GAAP FINANCIAL RECONCILIATION | ||||||||||||||||||
(A) UAL evaluates its financial performance utilizing various accounting principles generally accepted in the United States of America (GAAP) and Non-GAAP financial measures, including operating income (loss), excluding special charges, operating margin excluding special charges, pre-tax income (loss), excluding special charges and MTM gains and losses on equity investments, pre-tax margin, excluding special charges and MTM gains and losses on equity investments, net income (loss), excluding special charges and MTM gains and losses on equity investments, diluted earnings (loss) per share, excluding special charges and MTM gains and losses on equity investments, and CASM, excluding special charges, third-party business expenses, fuel, and profit sharing, among others. UAL believes that adjusting for special charges is useful to investors because special charges are not indicative of UAL's ongoing performance. UAL believes that adjusting for MTM gains and losses on equity investments is useful to investors because those unrealized gains or losses may not ultimately be realized on a cash basis. | ||||||||||||||||||
CASM is a common metric used in the airline industry to measure an airline's cost structure and efficiency. UAL reports CASM excluding special charges, third-party business expenses, fuel and profit sharing. UAL believes that adjusting for special charges is useful to investors because special charges are not indicative of UAL's ongoing performance. UAL also believes that excluding third-party business expenses, such as maintenance, ground handling and catering services for third parties and fuel sales, provides more meaningful disclosure because these expenses are not directly related to UAL's core business. UAL also believes that excluding fuel costs from certain measures is useful to investors because it provides an additional measure of management's performance excluding the effects of a significant cost item over which management has limited influence. UAL excludes profit sharing because this exclusion allows investors to better understand and analyze our recurring cost performance and provides a more meaningful comparison of our core operating costs to the airline industry. | ||||||||||||||||||
Reconciliations of reported non-GAAP financial measures to the most directly comparable GAAP financial measures are included below. | ||||||||||||||||||
Three Months Ended |
% |
Six Months Ended |
% | |||||||||||||||
2018 |
2017 |
(Decrease) |
2018 |
2017 |
(Decrease) | |||||||||||||
CASM Mainline Operations (cents) |
||||||||||||||||||
Cost per available seat mile (CASM) |
13.08 |
12.27 |
6.6 |
13.31 |
12.68 |
5.0 |
||||||||||||
Special charges (C) |
0.20 |
0.07 |
NM |
0.14 |
0.09 |
NM |
||||||||||||
Third-party business expenses |
0.05 |
0.07 |
(28.6) |
0.05 |
0.06 |
(16.7) |
||||||||||||
Fuel expense |
3.14 |
2.32 |
35.3 |
3.05 |
2.38 |
28.2 |
||||||||||||
CASM, excluding special charges, third-party business expenses and fuel |
9.69 |
9.81 |
(1.2) |
10.07 |
10.15 |
(0.8) |
||||||||||||
Profit sharing per available seat mile |
0.17 |
0.25 |
(32.0) |
0.10 |
0.15 |
(33.3) |
||||||||||||
CASM, excluding special charges, third-party business expenses, fuel, and profit sharing |
9.52 |
9.56 |
(0.4) |
9.97 |
10.00 |
(0.3) |
||||||||||||
CASM Consolidated Operations (cents) |
||||||||||||||||||
Cost per available seat mile (CASM) |
13.60 |
12.70 |
7.1 |
13.85 |
13.10 |
5.7 |
||||||||||||
Special charges (C) |
0.18 |
0.07 |
NM |
0.13 |
0.07 |
NM |
||||||||||||
Third-party business expenses |
0.04 |
0.05 |
(20.0) |
0.05 |
0.06 |
(16.7) |
||||||||||||
Fuel expense |
3.38 |
2.47 |
36.8 |
3.28 |
2.54 |
29.1 |
||||||||||||
CASM, excluding special charges, third-party business expenses and fuel |
10.00 |
10.11 |
(1.1) |
10.39 |
10.43 |
(0.4) |
||||||||||||
Profit sharing per available seat mile |
0.16 |
0.23 |
(30.4) |
0.09 |
0.14 |
(35.7) |
||||||||||||
CASM, excluding special charges, third-party business expenses, fuel, and profit sharing |
9.84 |
9.88 |
(0.4) |
10.30 |
10.29 |
0.1 |
UNITED CONTINENTAL HOLDINGS, INC. | ||||||||||||||||||||||||||||||
NON-GAAP FINANCIAL RECONCILIATION (Continued) | ||||||||||||||||||||||||||||||
Three Months Ended |
$ |
% |
Six Months Ended |
$ |
% | |||||||||||||||||||||||||
(in millions) |
2018 |
2017 |
(Decrease) |
(Decrease) |
2018 |
2017 |
(Decrease) |
(Decrease) | ||||||||||||||||||||||
Operating expenses |
$ |
9,616 |
$ |
8,571 |
$ |
1,045 |
12.2 |
$ |
18,372 |
$ |
16,677 |
$ |
1,695 |
10.2 |
||||||||||||||||
Special charges (C) |
129 |
44 |
85 |
NM |
169 |
95 |
74 |
NM |
||||||||||||||||||||||
Operating expenses, excluding special charges |
9,487 |
8,527 |
960 |
11.3 |
18,203 |
16,582 |
1,621 |
9.8 |
||||||||||||||||||||||
Third-party business expenses |
29 |
41 |
(12) |
(29.3) |
60 |
81 |
(21) |
(25.9) |
||||||||||||||||||||||
Fuel expense |
2,390 |
1,669 |
721 |
43.2 |
4,355 |
3,229 |
1,126 |
34.9 |
||||||||||||||||||||||
Profit sharing, including taxes |
108 |
154 |
(46) |
(29.9) |
125 |
174 |
(49) |
(28.2) |
||||||||||||||||||||||
Operating expenses, excluding fuel, profit sharing, special charges and third-party business expenses |
$ |
6,960 |
$ |
6,663 |
$ |
297 |
4.5 |
$ |
13,663 |
$ |
13,098 |
$ |
565 |
4.3 |
||||||||||||||||
Operating income |
$ |
1,161 |
$ |
1,437 |
$ |
(276) |
(19.2) |
$ |
1,437 |
$ |
1,757 |
$ |
(320) |
(18.2) |
||||||||||||||||
Special charges (C) |
129 |
44 |
85 |
NM |
169 |
95 |
74 |
NM |
||||||||||||||||||||||
Operating income, excluding special charges |
$ |
1,290 |
$ |
1,481 |
$ |
(191) |
(12.9) |
$ |
1,606 |
$ |
1,852 |
$ |
(246) |
(13.3) |
||||||||||||||||
Pre-tax income |
$ |
857 |
$ |
1,277 |
$ |
(420) |
(32.9) |
$ |
1,041 |
$ |
1,427 |
$ |
(386) |
(27.0) |
||||||||||||||||
Special charges and MTM losses on equity investments before income taxes (C) |
264 |
44 |
220 |
NM |
259 |
95 |
164 |
NM |
||||||||||||||||||||||
Pre-tax income excluding special charges and MTM losses on equity investments |
$ |
1,121 |
$ |
1,321 |
$ |
(200) |
(15.1) |
$ |
1,300 |
$ |
1,522 |
$ |
(222) |
(14.6) |
||||||||||||||||
Net income |
$ |
684 |
$ |
821 |
$ |
(137) |
(16.7) |
$ |
831 |
$ |
920 |
$ |
(89) |
(9.7) |
||||||||||||||||
Special charges and MTM losses on equity investments, net of tax (C) |
205 |
28 |
177 |
NM |
201 |
61 |
140 |
NM |
||||||||||||||||||||||
Net income, excluding special charges and MTM losses on equity investments |
$ |
889 |
$ |
849 |
$ |
40 |
4.7 |
$ |
1,032 |
$ |
981 |
$ |
51 |
5.2 |
||||||||||||||||
Diluted earnings per share |
$ |
2.48 |
$ |
2.67 |
$ |
(0.19) |
(7.1) |
$ |
2.96 |
$ |
2.96 |
$ |
— |
— |
||||||||||||||||
Special charges and MTM losses on equity investments |
0.96 |
0.14 |
0.82 |
NM |
0.92 |
0.31 |
0.61 |
NM |
||||||||||||||||||||||
Tax effect related to special charges and MTM losses on equity investments |
(0.21) |
(0.05) |
(0.16) |
NM |
(0.20) |
(0.12) |
(0.08) |
NM |
||||||||||||||||||||||
Diluted earnings per share, excluding special charges and MTM losses on equity investments |
$ |
3.23 |
$ |
2.76 |
$ |
0.47 |
17.0 |
$ |
3.68 |
$ |
3.15 |
$ |
0.53 |
16.8 |
UNITED CONTINENTAL HOLDINGS, INC. | |||||||||||||||||||
NON-GAAP FINANCIAL RECONCILIATION (Continued) | |||||||||||||||||||
UAL provides financial metrics, including earnings before interest, taxes, depreciation and amortization (EBITDA), excluding special charges and MTM gains and losses on equity investments that we believe provide useful supplemental information for management and investors by measuring profit and profit as a percentage of total operating revenues. UAL believes that adjusting for special charges is useful to investors because special charges are not indicative of UAL's ongoing performance. UAL believes that adjusting for MTM gains and losses on equity investments is useful to investors because those unrealized gains or losses may not ultimately be realized on a cash basis. | |||||||||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||||||||
EBITDA, excluding special charges and MTM losses on equity investments (in millions) |
2018 |
2017 |
2018 |
2017 |
|||||||||||||||
Net income |
$ |
684 |
$ |
821 |
$ |
831 |
$ |
920 |
|||||||||||
Adjusted for: |
|||||||||||||||||||
Depreciation and amortization |
557 |
536 |
1,098 |
1,054 |
|||||||||||||||
Interest expense |
177 |
167 |
353 |
329 |
|||||||||||||||
Interest capitalized |
(14) |
(21) |
(33) |
(44) |
|||||||||||||||
Interest income |
(25) |
(13) |
(42) |
(24) |
|||||||||||||||
Income tax expense (D) |
173 |
456 |
210 |
507 |
|||||||||||||||
Special charges before income taxes (C) |
129 |
44 |
169 |
95 |
|||||||||||||||
MTM losses on equity investments (C) |
135 |
— |
90 |
— |
|||||||||||||||
EBITDA, excluding special charges and MTM losses on equity investments (Non-GAAP) |
$ |
1,816 |
$ |
1,990 |
$ |
2,676 |
$ |
2,837 |
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. | ||||||||||||||||
Three Months Ended |
Six Months Ended | |||||||||||||||
Capital Expenditures (in millions) |
2018 |
2017 |
2018 |
2017 | ||||||||||||
Capital expenditures |
$ |
755 |
$ |
1,089 |
$ |
1,734 |
$ |
1,780 |
||||||||
Property and equipment acquired through the issuance of debt and capital leases |
65 |
196 |
139 |
907 |
||||||||||||
Airport construction financing |
— |
11 |
12 |
32 |
||||||||||||
Fully reimbursable projects |
(37) |
(49) |
(89) |
(118) |
||||||||||||
Adjusted capital expenditures (Non-GAAP) |
$ |
783 |
$ |
1,247 |
$ |
1,796 |
$ |
2,601 |
||||||||
Free Cash Flow (in millions) |
||||||||||||||||
Net cash provided by operating activities |
$ |
2,442 |
$ |
1,561 |
$ |
4,175 |
$ |
2,108 |
||||||||
Less capital expenditures |
755 |
1,089 |
1,734 |
1,780 |
||||||||||||
Free cash flow, net of financings (Non-GAAP) |
$ |
1,687 |
$ |
472 |
$ |
2,441 |
$ |
328 |
||||||||
Net cash provided by operating activities |
$ |
2,442 |
$ |
1,561 |
$ |
4,175 |
$ |
2,108 |
||||||||
Less adjusted capital expenditures (Non-GAAP) |
783 |
1,247 |
1,796 |
2,601 |
||||||||||||
Free cash flow (Non-GAAP) |
$ |
1,659 |
$ |
314 |
$ |
2,379 |
$ |
(493) |
UNITED CONTINENTAL HOLDINGS, INC. | |||||||||||
NOTES (UNAUDITED) | |||||||||||
(B) Select passenger revenue information is as follows (in millions): | |||||||||||
2Q 2018 |
Passenger |
PRASM |
Yield |
Available | |||||||
Mainline |
$ |
4,395 |
8.7% |
1.7% |
1.6% |
6.9% | |||||
Regional |
1,786 |
10.6% |
0.9% |
(1.0%) |
9.6% | ||||||
Domestic |
6,181 |
9.2% |
1.7% |
1.3% |
7.4% | ||||||
Atlantic |
1,824 |
12.9% |
7.9% |
0.9% |
4.7% | ||||||
Pacific |
1,103 |
3.7% |
3.4% |
4.3% |
0.2% | ||||||
Latin America |
772 |
(5.2%) |
(2.9%) |
(4.2%) |
(2.3%) | ||||||
International |
3,699 |
5.9% |
4.3% |
1.4% |
1.6% | ||||||
Consolidated |
$ |
9,880 |
8.0% |
3.0% |
1.5% |
4.8% | |||||
Mainline |
$ |
8,045 |
7.4% |
3.0% |
1.5% |
4.3% | |||||
Regional |
1,835 |
10.6% |
1.3% |
(0.6%) |
9.3% | ||||||
Consolidated |
$ |
9,880 |
UNITED CONTINENTAL HOLDINGS, INC. | |||||||||||||||||
NOTES (UNAUDITED) | |||||||||||||||||
(C) Special charges and MTM losses on equity investments include the following: | |||||||||||||||||
Three Months Ended |
Six Months Ended | ||||||||||||||||
(In millions) |
2018 |
2017 |
2018 |
2017 | |||||||||||||
Operating: |
|||||||||||||||||
Impairment of assets |
$ |
111 |
$ |
— |
$ |
134 |
$ |
— |
|||||||||
Severance and benefit costs |
11 |
41 |
25 |
78 |
|||||||||||||
(Gains) losses on sale of assets and other special charges |
7 |
3 |
10 |
17 |
|||||||||||||
Total special charges |
129 |
44 |
169 |
95 |
|||||||||||||
Nonoperating MTM losses on equity investments |
135 |
— |
90 |
— |
|||||||||||||
Total special charges and MTM losses on equity investments |
264 |
44 |
259 |
95 |
|||||||||||||
Income tax benefit related to special charges |
(29) |
(16) |
(38) |
(34) |
|||||||||||||
Income tax benefit related to MTM losses on equity investments |
(30) |
— |
(20) |
— |
|||||||||||||
Total special charges and MTM losses on equity investments, net of income taxes |
$ |
205 |
$ |
28 |
$ |
201 |
$ |
61 |
Impairment of assets: In May 2018, the Brazil–United States open skies agreement was ratified, which provides air carriers with unrestricted access between the United States and Brazil. The company determined that the approval of the open skies agreement impaired the entire value of its Brazil route authorities because the agreement removes all limitations or reciprocity requirements for flights between the United States and Brazil. Accordingly, the company recorded a $105 million special charge ($82 million net of taxes) to write off the entire value of the intangible asset associated with its Brazil routes. This asset is not part of any collateral pledged against any of the company's borrowings. The company continues to maintain its slot assets related to Brazil since airport access is still restricted by slot allocations that are limited by airport facility constraints. For the three and six months ended June 30, 2018, the company also recorded $6 million ($5 million net of taxes) and $29 million ($22 million net of taxes), respectively, of fair value adjustments related to aircraft purchased off lease and other impairments related to certain fleet types and international slots no longer in use. |
Severance and benefit costs: During the three and six months ended June 30, 2018, the company recorded severance and benefit costs related to a voluntary early-out program for its technicians and related employees represented by the International Brotherhood of Teamsters of $6 million ($4 million net of taxes) and $14 million ($11 million net of taxes), respectively. 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 2018. Also during the three and six months ended June 30, 2018, the company recorded other management severance of $5 million ($4 million net of taxes) and $11 million ($8 million net of taxes), respectively. |
During the three and six months ended June 30, 2017, the company recorded $36 million ($23 million net of taxes) and $57 million ($37 million net of taxes), respectively, of severance and benefit costs related to the voluntary early-out program for its technicians and related employees, and $5 million ($3 million net of taxes) and $21 million ($13 million net of taxes), respectively, of management severance. |
(Gains) losses on sale of assets and other special charges: During the three and six months ended June 30, 2018, the Company recorded $7 million ($5 million net of taxes) and $10 million ($8 million net of taxes), respectively, of other special charges related primarily to contract termination of regional aircraft operations in Guam. |
MTM losses on equity investments: During the three and six months ended June 30, 2018, the company recorded losses of $135 million ($105 million net of taxes) and $90 million ($70 million net of taxes), respectively, for the change in market value of its investment in Azul, S.A. For equity investments subject to MTM accounting, the company records gains and losses to Nonoperating income (expense): Miscellaneous, net in its statements of consolidated operations. |
(D) Effective tax rate |
The company's effective tax rate for the three and six months ended June 30, 2018 was 20.2%, and the effective tax rate for the three and six months ended June 30, 2017 was 35.7% and 35.5%, respectively. The effective tax rate represents a blend of federal, state and foreign taxes and included the impact of certain nondeductible items. The effective tax rate for the three and six months ended June 30, 2018 also reflects the reduced federal corporate income tax rate as a result of the enactment of the Tax Cuts and Jobs Act (the "Tax Act") in December 2017 and the impact of a change in the company's mix of domestic and foreign earnings. We continue to analyze the different aspects of the Tax Act which could potentially affect the provisional estimates that were recorded at December 31, 2017. |
SOURCE United Airlines
For further information: United Airlines Worldwide Media Relations, +1-872-825-8640, media.relations@united.com
"We delivered great financial results and strong operational performance in the second quarter despite the significant headwind of higher fuel prices," said Oscar Munoz, chief executive officer of United Airlines. "These results are the strongest evidence yet that our strategic growth plan is working, and we are well positioned to carry our momentum into the second half of the year."
For more information on UAL's third-quarter 2018 guidance, please visit ir.united.com for the company's investor update.
Second-Quarter Highlights
Operations and Employees
- Completed the best second-quarter on-time departure performance in United's history.
- Received "Best-of-the-Best" Award from the National LGBT Chamber of Commerce and National Business Inclusion Consortium for commitment to diversity and inclusion across all communities.
- Announced a total of $8 million in grants to benefit organizations in each of its domestic hub communities.
- Became the first carrier to achieve certification through the new Audubon International Green Hospitality Program for the airline's United Club location in Terminal 7 of Los Angeles International Airport.
Customer Experience
- Expanded personal device entertainment option to all aircraft with DIRECTV live streaming for purchase, providing at least one free entertainment option on all Wi-Fi equipped aircraft (which is any aircraft with more than 70 seats).
- Opened three new United Polaris lounges located in San Francisco International Airport, Newark Liberty International Airport and Houston's George Bush Intercontinental Airport.
- Announced a new relationship with The Private Suite, offering the airline's customers access to a newly built, private terminal at Los Angeles International Airport.
- Introduced the new United Explorer Card which offers additional benefits, travel credits and discounts.
Network and Fleet
- Launched service from Newark/New York to two new international destinations: Reykjavik, Iceland, and Porto, Portugal.
- Announced the return of seasonal service to 25 destinations, including, among others: Athens, Greece; Glasgow, Scotland; Madrid and Barcelona, Spain; Rome and Venice, Italy; and Hamburg, Germany.
- Announced schedule expansion at East Coast hubs in Newark/New York and Washington-Dulles to offer more nonstop flights to destinations popular with New York-area customers while reallocating largely connecting passenger flights to Washington-Dulles.
- Took delivery of one Boeing 777-300ER aircraft and six Boeing 737 MAX 9 aircraft.
- Became North American launch customer of the Boeing 737 MAX 9 aircraft, which took its first flight on June 7 from Houston's George Bush Intercontinental Airport to Orlando International Airport in Florida.
Earnings Call
UAL will hold a conference call to discuss second-quarter 2018 financial results and its financial and operational outlook for the third quarter and full year of 2018 on Wednesday, July 18, at 9:30 a.m. Central Time /10:30 a.m. Eastern Time. A live, listen-only webcast of the conference call will be available at ir.united.com. The webcast will be available for replay within 24 hours of the conference call and then archived on the website for three months.
About United
United Airlines and United Express operate approximately 4,600 flights a day to 357 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 757 mainline aircraft and the airline's United Express carriers operate 551 regional aircraft. The airline is a founding member of Star Alliance, which provides service to 193 countries via 28 member airlines. For more information, visit united.com, follow @United on Twitter or connect on Facebook. The common stock of United's parent, United Continental Holdings, Inc., is traded on the NYSE under the symbol "UAL".
1 Excludes special charges, the nature of which are not determinable at this time, and mark-to-market impact of equity investments. Accordingly, UAL is not providing earnings guidance on a GAAP basis.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
Certain statements included in this release are forward-looking and thus reflect our current expectations and beliefs with respect to certain current and future events and anticipated financial and operating performance. Such forward-looking statements are and will be subject to many risks and uncertainties relating to our operations and business environment that may cause actual results to differ materially from any future results expressed or implied in such forward-looking statements. Words such as "expects," "will," "plans," "anticipates," "indicates," "believes," "estimates," "forecast," "guidance," "outlook," "goals" and similar expressions are intended to identify forward-looking statements. Additionally, forward-looking statements include statements that do not relate solely to historical facts, such as statements which identify uncertainties or trends, discuss the possible future effects of current known trends or uncertainties, or which indicate that the future effects of known trends or uncertainties cannot be predicted, guaranteed or assured. All forward-looking statements in this release are based upon information available to us on the date of this release. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, except as required by applicable law. Our actual results could differ materially from these forward-looking statements due to numerous factors including, without limitation, the following: general economic conditions (including interest rates, foreign currency exchange rates, investment or credit market conditions, crude oil prices, costs of aircraft fuel and energy refining capacity in relevant markets); economic and political instability and other risks of doing business globally, including political developments that may impact our operations in certain countries; demand for travel and the impact that global economic and political conditions have on customer travel patterns; competitive pressures on pricing and on demand; demand for transportation in the markets in which we operate; our capacity decisions and the capacity decisions of our competitors; the effects of any hostilities, act of war or terrorist attack; the effects of any technology failures or cybersecurity breaches; the impact of regulatory, investigative and legal proceedings and legal compliance risks; disruptions to our regional network; the ability of other air carriers with whom we have alliances or partnerships to provide the services contemplated by the respective arrangements with such carriers; costs associated with any modification or termination of our aircraft orders; potential reputational or other impact from adverse events in our operations, the operations of our regional carriers or the operations of our code share partners; our ability to attract and retain customers; our ability to execute our operational plans and revenue-generating initiatives, including optimizing our revenue; our ability to control our costs, including realizing benefits from our resource optimization efforts, cost reduction initiatives and fleet replacement programs; the impact of any management changes; our ability to cost-effectively hedge against increases in the price of aircraft fuel if we decide to do so; any potential realized or unrealized gains or losses related to any fuel or currency hedging programs; labor costs; our ability to maintain satisfactory labor relations and the results of any collective bargaining agreement process with our union groups; any disruptions to operations due to any potential actions by our labor groups; an outbreak of a disease that affects travel demand or travel behavior; U.S. or foreign governmental legislation, regulation and other actions (including Open Skies agreements and environmental regulations); industry consolidation or changes in airline alliances; our ability to comply with the terms of our various financing arrangements; the costs and availability of financing; our ability to maintain adequate liquidity; the costs and availability of aviation and other insurance; weather conditions; our ability to utilize our net operating losses to offset future taxable income; the impact of changes in tax laws; the success of our investments in airlines in other parts of the world; and other risks and uncertainties set forth under Part I, Item 1A., "Risk Factors," of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, as well as other risks and uncertainties set forth from time to time in the reports we file with the U.S. Securities and Exchange Commission.
-tables attached-
On January 1, 2018, United Continental Holdings, Inc. ("UAL") adopted Accounting Standards Update No. 2014-09 (Topic 606), Revenue from Contracts with Customers, and Accounting Standards Update No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. As such, certain previously reported 2017 figures are adjusted in this report on a basis consistent with the new standards. See the Current Report on Form 8-K filed by UAL with the Securities and Exchange Commission on March 1, 2018 for additional information.
UNITED CONTINENTAL HOLDINGS, INC. | ||||||||||||||||||||||||
STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED) (A) | ||||||||||||||||||||||||
Three Months Ended |
% |
Six Months Ended |
% |
|||||||||||||||||||||
(In millions, except per share data) |
2018 |
2017 |
(Decrease) |
2018 |
2017 |
(Decrease) |
||||||||||||||||||
Operating revenue: |
||||||||||||||||||||||||
Passenger |
$ |
9,880 |
$ |
9,151 |
8.0 |
$ |
18,030 |
$ |
16,804 |
7.3 |
||||||||||||||
Cargo |
314 |
273 |
15.0 |
607 |
511 |
18.8 |
||||||||||||||||||
Other operating revenue |
583 |
584 |
(0.2) |
1,172 |
1,119 |
4.7 |
||||||||||||||||||
Total operating revenue |
10,777 |
10,008 |
7.7 |
19,809 |
18,434 |
7.5 |
||||||||||||||||||
Operating expense: |
||||||||||||||||||||||||
Salaries and related costs |
2,878 |
2,842 |
1.3 |
5,604 |
5,478 |
2.3 |
||||||||||||||||||
Aircraft fuel |
2,390 |
1,669 |
43.2 |
4,355 |
3,229 |
34.9 |
||||||||||||||||||
Regional capacity purchase |
681 |
549 |
24.0 |
1,300 |
1,085 |
19.8 |
||||||||||||||||||
Landing fees and other rent |
603 |
541 |
11.5 |
1,161 |
1,085 |
7.0 |
||||||||||||||||||
Depreciation and amortization |
557 |
536 |
3.9 |
1,098 |
1,054 |
4.2 |
||||||||||||||||||
Aircraft maintenance materials and outside repairs |
438 |
472 |
(7.2) |
878 |
926 |
(5.2) |
||||||||||||||||||
Distribution expenses |
393 |
385 |
2.1 |
735 |
704 |
4.4 |
||||||||||||||||||
Aircraft rent |
119 |
152 |
(21.7) |
246 |
331 |
(25.7) |
||||||||||||||||||
Special charges (C) |
129 |
44 |
NM |
169 |
95 |
NM |
||||||||||||||||||
Other operating expenses |
1,428 |
1,381 |
3.4 |
2,826 |
2,690 |
5.1 |
||||||||||||||||||
Total operating expense |
9,616 |
8,571 |
12.2 |
18,372 |
16,677 |
10.2 |
||||||||||||||||||
Operating income |
1,161 |
1,437 |
(19.2) |
1,437 |
1,757 |
(18.2) |
||||||||||||||||||
Operating margin |
10.8 |
% |
14.4 |
% |
(3.6) |
pts. |
7.3 |
% |
9.5 |
% |
(2.2) |
pts. | ||||||||||||
Operating margin, excluding special charges (Non-GAAP) |
12.0 |
% |
14.8 |
% |
(2.8) |
pts. |
8.1 |
% |
10.0 |
% |
(1.9) |
pts. | ||||||||||||
Nonoperating income (expense): |
||||||||||||||||||||||||
Interest expense |
(177) |
(167) |
6.0 |
(353) |
(329) |
7.3 |
||||||||||||||||||
Interest capitalized |
14 |
21 |
(33.3) |
33 |
44 |
(25.0) |
||||||||||||||||||
Interest income |
25 |
13 |
92.3 |
42 |
24 |
75.0 |
||||||||||||||||||
Miscellaneous, net (C) |
(166) |
(27) |
NM |
(118) |
(69) |
71.0 |
||||||||||||||||||
Total nonoperating expense |
(304) |
(160) |
90.0 |
(396) |
(330) |
20.0 |
||||||||||||||||||
Income before income taxes |
857 |
1,277 |
(32.9) |
1,041 |
1,427 |
(27.0) |
||||||||||||||||||
Pre-tax margin |
8.0 |
% |
12.8 |
% |
(4.8) |
pts. |
5.3 |
% |
7.7 |
% |
(2.4) |
pts. | ||||||||||||
Pre-tax margin, excluding special charges and mark-to-market ("MTM") losses on equity investments (Non-GAAP) |
10.4 |
% |
13.2 |
% |
(2.8) |
pts. |
6.6 |
% |
8.3 |
% |
(1.7) |
pts. | ||||||||||||
Income tax expense (D) |
173 |
456 |
(62.1) |
210 |
507 |
(58.6) |
||||||||||||||||||
Net income |
$ |
684 |
$ |
821 |
(16.7) |
$ |
831 |
$ |
920 |
(9.7) |
||||||||||||||
Earnings per share, diluted |
$ |
2.48 |
$ |
2.67 |
(7.1) |
$ |
2.96 |
$ |
2.96 |
— |
||||||||||||||
Weighted average shares, diluted |
275.6 |
307.7 |
(10.4) |
280.2 |
311.1 |
(9.9) |
||||||||||||||||||
NM Not meaningful |
UNITED CONTINENTAL HOLDINGS, INC. | ||||||||||||||||||||||||
STATISTICS | ||||||||||||||||||||||||
Three Months Ended |
% |
Six Months Ended |
% |
|||||||||||||||||||||
2018 |
2017 |
(Decrease) |
2018 |
2017 |
(Decrease) |
|||||||||||||||||||
Mainline: |
||||||||||||||||||||||||
Passengers (thousands) |
29,589 |
28,084 |
5.4 |
54,191 |
51,909 |
4.4 |
||||||||||||||||||
Revenue passenger miles (millions) |
53,485 |
50,554 |
5.8 |
97,595 |
92,737 |
5.2 |
||||||||||||||||||
Available seat miles (millions) |
63,061 |
60,473 |
4.3 |
117,859 |
113,527 |
3.8 |
||||||||||||||||||
Cargo ton miles (millions) |
855 |
828 |
3.3 |
1,672 |
1,576 |
6.1 |
||||||||||||||||||
Passenger revenue per available seat mile (cents) |
12.76 |
12.39 |
3.0 |
12.44 |
12.08 |
3.0 |
||||||||||||||||||
Average yield per revenue passenger mile (cents) |
15.04 |
14.82 |
1.5 |
15.02 |
14.79 |
1.6 |
||||||||||||||||||
Aircraft in fleet at end of period |
757 |
748 |
1.2 |
757 |
748 |
1.2 |
||||||||||||||||||
Average stage length (miles) |
1,823 |
1,821 |
0.1 |
1,818 |
1,812 |
0.3 |
||||||||||||||||||
Average daily utilization of each aircraft (hours: minutes) |
11:07 |
10:46 |
3.3 |
10:32 |
10:16 |
2.6 |
||||||||||||||||||
Average aircraft fuel price per gallon |
$ |
2.24 |
$ |
1.62 |
38.3 |
$ |
2.17 |
$ |
1.66 |
30.7 |
||||||||||||||
Fuel gallons consumed (millions) |
885 |
867 |
2.1 |
1,656 |
1,628 |
1.7 |
||||||||||||||||||
Regional: |
||||||||||||||||||||||||
Passengers (thousands) |
11,469 |
10,163 |
12.9 |
21,362 |
19,443 |
9.9 |
||||||||||||||||||
Revenue passenger miles (millions) |
6,460 |
5,802 |
11.3 |
12,199 |
11,230 |
8.6 |
||||||||||||||||||
Available seat miles (millions) |
7,641 |
6,994 |
9.3 |
14,820 |
13,748 |
7.8 |
||||||||||||||||||
Passenger revenue per available seat mile (cents) |
24.02 |
23.72 |
1.3 |
22.73 |
22.44 |
1.3 |
||||||||||||||||||
Average yield per revenue passenger mile (cents) |
28.41 |
28.59 |
(0.6) |
27.62 |
27.47 |
0.5 |
||||||||||||||||||
Aircraft in fleet at end of period |
551 |
475 |
16.0 |
551 |
475 |
16.0 |
||||||||||||||||||
Average stage length (miles) |
552 |
558 |
(1.1) |
558 |
565 |
(1.2) |
||||||||||||||||||
Average aircraft fuel price per gallon |
$ |
2.38 |
$ |
1.71 |
39.2 |
$ |
2.29 |
$ |
1.75 |
30.9 |
||||||||||||||
Fuel gallons consumed (millions) |
173 |
156 |
10.9 |
334 |
305 |
9.5 |
||||||||||||||||||
Consolidated (Mainline and Regional): |
||||||||||||||||||||||||
Passengers (thousands) |
41,058 |
38,247 |
7.3 |
75,553 |
71,352 |
5.9 |
||||||||||||||||||
Revenue passenger miles (millions) |
59,945 |
56,356 |
6.4 |
109,794 |
103,967 |
5.6 |
||||||||||||||||||
Available seat miles (millions) |
70,702 |
67,467 |
4.8 |
132,679 |
127,275 |
4.2 |
||||||||||||||||||
Passenger load factor: |
||||||||||||||||||||||||
Consolidated |
84.8 |
% |
83.5 |
% |
1.3 |
pts. |
82.8 |
% |
81.7 |
% |
1.1 |
pts. | ||||||||||||
Domestic |
87.1 |
% |
86.8 |
% |
0.3 |
pts. |
85.1 |
% |
85.2 |
% |
(0.1) |
pts. | ||||||||||||
International |
81.7 |
% |
79.5 |
% |
2.2 |
pts. |
79.7 |
% |
77.5 |
% |
2.2 |
pts. | ||||||||||||
Passenger revenue per available seat mile (cents) |
13.97 |
13.56 |
3.0 |
13.59 |
13.20 |
3.0 |
||||||||||||||||||
Total revenue per available seat mile (cents) |
15.24 |
14.83 |
2.8 |
14.93 |
14.48 |
3.1 |
||||||||||||||||||
Average yield per revenue passenger mile (cents) |
16.48 |
16.24 |
1.5 |
16.42 |
16.16 |
1.6 |
||||||||||||||||||
Aircraft in fleet at end of period |
1,308 |
1,223 |
7.0 |
1,308 |
1,223 |
7.0 |
||||||||||||||||||
Average stage length (miles) |
1,460 |
1,475 |
(1.0) |
1,452 |
1,464 |
(0.8) |
||||||||||||||||||
Average full-time equivalent employees (thousands) |
86.7 |
86.0 |
0.8 |
86.2 |
85.6 |
0.7 |
||||||||||||||||||
Average aircraft fuel price per gallon |
$ |
2.26 |
$ |
1.63 |
38.7 |
$ |
2.19 |
$ |
1.67 |
31.1 |
||||||||||||||
Fuel gallons consumed (millions) |
1,058 |
1,023 |
3.4 |
1,990 |
1,933 |
2.9 |
Note: See Part II, Item 6, Selected Financial Data, of UAL's Annual Report on Form 10-K for the fiscal year ended December 31, 2017, for definitions of these statistics. |
UNITED CONTINENTAL HOLDINGS, INC. | ||||||||||||||||||||||||
SUMMARY FINANCIAL METRICS (A) | ||||||||||||||||||||||||
Three Months Ended |
% |
Six Months Ended |
% |
|||||||||||||||||||||
2018 |
2017 |
(Decrease) |
2018 |
2017 |
(Decrease) |
|||||||||||||||||||
(In millions, except per share data) |
||||||||||||||||||||||||
Operating income |
$ |
1,161 |
$ |
1,437 |
(19.2) |
$ |
1,437 |
$ |
1,757 |
(18.2) |
||||||||||||||
Operating margin |
10.8 |
% |
14.4 |
% |
(3.6) |
pts. |
7.3 |
% |
9.5 |
% |
(2.2) |
pts. | ||||||||||||
Operating income, excluding special charges (Non-GAAP) |
1,290 |
1,481 |
(12.9) |
1,606 |
1,852 |
(13.3) |
||||||||||||||||||
Operating margin, excluding special charges (Non-GAAP) |
12.0 |
% |
14.8 |
% |
(2.8) |
pts. |
8.1 |
% |
10.0 |
% |
(1.9) |
pts. | ||||||||||||
EBITDA, excluding special charges and MTM losses on equity investments (Non-GAAP) |
$ |
1,816 |
$ |
1,990 |
(8.7) |
$ |
2,676 |
$ |
2,837 |
(5.7) |
||||||||||||||
EBITDA margin, excluding special charges and MTM losses on equity investments (Non-GAAP) |
16.9 |
% |
19.9 |
% |
(3.0) |
pts. |
13.5 |
% |
15.4 |
% |
(1.9) |
pts. | ||||||||||||
Pre-tax income |
$ |
857 |
$ |
1,277 |
(32.9) |
$ |
1,041 |
$ |
1,427 |
(27.0) |
||||||||||||||
Pre-tax margin |
8.0 |
% |
12.8 |
% |
(4.8) |
pts. |
5.3 |
% |
7.7 |
% |
(2.4) |
pts. | ||||||||||||
Pre-tax income, excluding special charges and MTM losses on equity investments (Non-GAAP) |
1,121 |
1,321 |
(15.1) |
1,300 |
1,522 |
(14.6) |
||||||||||||||||||
Pre-tax margin, excluding special charges and MTM losses on equity investments (Non-GAAP) |
10.4 |
% |
13.2 |
% |
(2.8) |
pts. |
6.6 |
% |
8.3 |
% |
(1.7) |
pts. | ||||||||||||
Net income |
$ |
684 |
$ |
821 |
(16.7) |
$ |
831 |
$ |
920 |
(9.7) |
||||||||||||||
Net income, excluding special charges and MTM losses on equity investments (Non-GAAP) |
889 |
849 |
4.7 |
1,032 |
981 |
5.2 |
||||||||||||||||||
Diluted earnings per share |
$ |
2.48 |
$ |
2.67 |
(7.1) |
$ |
2.96 |
$ |
2.96 |
— |
||||||||||||||
Diluted earnings per share, excluding special charges and MTM losses on equity investments (Non-GAAP) |
3.23 |
2.76 |
17.0 |
3.68 |
3.15 |
16.8 |
||||||||||||||||||
Net cash provided by operating activities |
$ |
2,442 |
$ |
1,561 |
56.4 |
$ |
4,175 |
$ |
2,108 |
98.1 |
||||||||||||||
Capital expenditures |
$ |
755 |
$ |
1,089 |
(30.7) |
$ |
1,734 |
$ |
1,780 |
(2.6) |
||||||||||||||
Adjusted capital expenditures (Non-GAAP) |
783 |
1,247 |
(37.2) |
1,796 |
2,601 |
(30.9) |
||||||||||||||||||
Free cash flow, net of financings (Non-GAAP) |
$ |
1,687 |
$ |
472 |
257.4 |
$ |
2,441 |
$ |
328 |
NM |
||||||||||||||
Free cash flow (Non-GAAP) |
1,659 |
314 |
428.3 |
2,379 |
(493) |
NM |
||||||||||||||||||
NM Not meaningful |
UNITED CONTINENTAL HOLDINGS, INC. | |||
RETURN ON INVESTED CAPITAL (ROIC) - Non-GAAP | |||
ROIC is a non-GAAP financial measure that we believe provides useful supplemental information for management and investors by measuring the effectiveness of our operations' use of invested capital to generate profits. | |||
(in millions) |
Twelve Months Ended | ||
Net Operating Profit After Tax ("NOPAT") |
|||
Pre-tax income |
$ |
2,654 |
|
Special charges and MTM losses on equity investments (C): |
|||
Impairment of assets |
159 |
||
MTM losses on equity investments |
90 |
||
Severance and benefit costs |
63 |
||
(Gains) losses on sale of assets and other special charges |
28 |
||
Pre-tax income excluding special charges and MTM losses on equity investments (Non-GAAP) |
2,994 |
||
add: Interest expense (net of income tax benefit) (a) |
689 |
||
add: Interest component of capitalized aircraft rent (net of income tax benefit) (a) |
260 |
||
add: Net interest on pension (net of income tax benefit) (a) |
10 |
||
less: Income taxes paid |
(24) |
||
NOPAT (Non-GAAP) |
$ |
3,929 |
|
Average Invested Capital (five-quarter average) |
|||
Total assets |
$ |
43,205 |
|
add: Capitalized aircraft operating leases (b) |
4,227 |
||
less: Non-interest bearing liabilities (c) |
(16,957) |
||
Average invested capital (Non-GAAP) |
$ |
30,475 |
|
Return on invested capital (Non-GAAP) |
12.9 |
% | |
(a) |
Income tax benefit measured based on the effective cash tax rate. The effective cash tax rate is calculated by dividing cash taxes paid by pre-tax income excluding special charges. For the twelve months ended June 30, 2018, the effective cash tax rate was 0.8%. |
(b) |
The purpose of this adjustment is to capitalize the impact of aircraft operating leases. The company uses a multiple of seven times its annual aircraft rent expense to estimate the potential capitalized value and related liability of its aircraft. This is a simplified method used by many rating agencies and financial analysts to assist with the impact of operating leases on financial measures like return on invested capital. |
(c) |
Non-interest bearing liabilities include advance ticket sales, frequent flyer deferred revenue, deferred income taxes and other non-interest bearing liabilities. |
UNITED CONTINENTAL HOLDINGS, INC. | ||||||||||||||||||
NON-GAAP FINANCIAL RECONCILIATION | ||||||||||||||||||
(A) UAL evaluates its financial performance utilizing various accounting principles generally accepted in the United States of America (GAAP) and Non-GAAP financial measures, including operating income (loss), excluding special charges, operating margin excluding special charges, pre-tax income (loss), excluding special charges and MTM gains and losses on equity investments, pre-tax margin, excluding special charges and MTM gains and losses on equity investments, net income (loss), excluding special charges and MTM gains and losses on equity investments, diluted earnings (loss) per share, excluding special charges and MTM gains and losses on equity investments, and CASM, excluding special charges, third-party business expenses, fuel, and profit sharing, among others. UAL believes that adjusting for special charges is useful to investors because special charges are not indicative of UAL's ongoing performance. UAL believes that adjusting for MTM gains and losses on equity investments is useful to investors because those unrealized gains or losses may not ultimately be realized on a cash basis. | ||||||||||||||||||
CASM is a common metric used in the airline industry to measure an airline's cost structure and efficiency. UAL reports CASM excluding special charges, third-party business expenses, fuel and profit sharing. UAL believes that adjusting for special charges is useful to investors because special charges are not indicative of UAL's ongoing performance. UAL also believes that excluding third-party business expenses, such as maintenance, ground handling and catering services for third parties and fuel sales, provides more meaningful disclosure because these expenses are not directly related to UAL's core business. UAL also believes that excluding fuel costs from certain measures is useful to investors because it provides an additional measure of management's performance excluding the effects of a significant cost item over which management has limited influence. UAL excludes profit sharing because this exclusion allows investors to better understand and analyze our recurring cost performance and provides a more meaningful comparison of our core operating costs to the airline industry. | ||||||||||||||||||
Reconciliations of reported non-GAAP financial measures to the most directly comparable GAAP financial measures are included below. | ||||||||||||||||||
Three Months Ended |
% |
Six Months Ended |
% | |||||||||||||||
2018 |
2017 |
(Decrease) |
2018 |
2017 |
(Decrease) | |||||||||||||
CASM Mainline Operations (cents) |
||||||||||||||||||
Cost per available seat mile (CASM) |
13.08 |
12.27 |
6.6 |
13.31 |
12.68 |
5.0 |
||||||||||||
Special charges (C) |
0.20 |
0.07 |
NM |
0.14 |
0.09 |
NM |
||||||||||||
Third-party business expenses |
0.05 |
0.07 |
(28.6) |
0.05 |
0.06 |
(16.7) |
||||||||||||
Fuel expense |
3.14 |
2.32 |
35.3 |
3.05 |
2.38 |
28.2 |
||||||||||||
CASM, excluding special charges, third-party business expenses and fuel |
9.69 |
9.81 |
(1.2) |
10.07 |
10.15 |
(0.8) |
||||||||||||
Profit sharing per available seat mile |
0.17 |
0.25 |
(32.0) |
0.10 |
0.15 |
(33.3) |
||||||||||||
CASM, excluding special charges, third-party business expenses, fuel, and profit sharing |
9.52 |
9.56 |
(0.4) |
9.97 |
10.00 |
(0.3) |
||||||||||||
CASM Consolidated Operations (cents) |
||||||||||||||||||
Cost per available seat mile (CASM) |
13.60 |
12.70 |
7.1 |
13.85 |
13.10 |
5.7 |
||||||||||||
Special charges (C) |
0.18 |
0.07 |
NM |
0.13 |
0.07 |
NM |
||||||||||||
Third-party business expenses |
0.04 |
0.05 |
(20.0) |
0.05 |
0.06 |
(16.7) |
||||||||||||
Fuel expense |
3.38 |
2.47 |
36.8 |
3.28 |
2.54 |
29.1 |
||||||||||||
CASM, excluding special charges, third-party business expenses and fuel |
10.00 |
10.11 |
(1.1) |
10.39 |
10.43 |
(0.4) |
||||||||||||
Profit sharing per available seat mile |
0.16 |
0.23 |
(30.4) |
0.09 |
0.14 |
(35.7) |
||||||||||||
CASM, excluding special charges, third-party business expenses, fuel, and profit sharing |
9.84 |
9.88 |
(0.4) |
10.30 |
10.29 |
0.1 |
UNITED CONTINENTAL HOLDINGS, INC. | ||||||||||||||||||||||||||||||
NON-GAAP FINANCIAL RECONCILIATION (Continued) | ||||||||||||||||||||||||||||||
Three Months Ended |
$ |
% |
Six Months Ended |
$ |
% | |||||||||||||||||||||||||
(in millions) |
2018 |
2017 |
(Decrease) |
(Decrease) |
2018 |
2017 |
(Decrease) |
(Decrease) | ||||||||||||||||||||||
Operating expenses |
$ |
9,616 |
$ |
8,571 |
$ |
1,045 |
12.2 |
$ |
18,372 |
$ |
16,677 |
$ |
1,695 |
10.2 |
||||||||||||||||
Special charges (C) |
129 |
44 |
85 |
NM |
169 |
95 |
74 |
NM |
||||||||||||||||||||||
Operating expenses, excluding special charges |
9,487 |
8,527 |
960 |
11.3 |
18,203 |
16,582 |
1,621 |
9.8 |
||||||||||||||||||||||
Third-party business expenses |
29 |
41 |
(12) |
(29.3) |
60 |
81 |
(21) |
(25.9) |
||||||||||||||||||||||
Fuel expense |
2,390 |
1,669 |
721 |
43.2 |
4,355 |
3,229 |
1,126 |
34.9 |
||||||||||||||||||||||
Profit sharing, including taxes |
108 |
154 |
(46) |
(29.9) |
125 |
174 |
(49) |
(28.2) |
||||||||||||||||||||||
Operating expenses, excluding fuel, profit sharing, special charges and third-party business expenses |
$ |
6,960 |
$ |
6,663 |
$ |
297 |
4.5 |
$ |
13,663 |
$ |
13,098 |
$ |
565 |
4.3 |
||||||||||||||||
Operating income |
$ |
1,161 |
$ |
1,437 |
$ |
(276) |
(19.2) |
$ |
1,437 |
$ |
1,757 |
$ |
(320) |
(18.2) |
||||||||||||||||
Special charges (C) |
129 |
44 |
85 |
NM |
169 |
95 |
74 |
NM |
||||||||||||||||||||||
Operating income, excluding special charges |
$ |
1,290 |
$ |
1,481 |
$ |
(191) |
(12.9) |
$ |
1,606 |
$ |
1,852 |
$ |
(246) |
(13.3) |
||||||||||||||||
Pre-tax income |
$ |
857 |
$ |
1,277 |
$ |
(420) |
(32.9) |
$ |
1,041 |
$ |
1,427 |
$ |
(386) |
(27.0) |
||||||||||||||||
Special charges and MTM losses on equity investments before income taxes (C) |
264 |
44 |
220 |
NM |
259 |
95 |
164 |
NM |
||||||||||||||||||||||
Pre-tax income excluding special charges and MTM losses on equity investments |
$ |
1,121 |
$ |
1,321 |
$ |
(200) |
(15.1) |
$ |
1,300 |
$ |
1,522 |
$ |
(222) |
(14.6) |
||||||||||||||||
Net income |
$ |
684 |
$ |
821 |
$ |
(137) |
(16.7) |
$ |
831 |
$ |
920 |
$ |
(89) |
(9.7) |
||||||||||||||||
Special charges and MTM losses on equity investments, net of tax (C) |
205 |
28 |
177 |
NM |
201 |
61 |
140 |
NM |
||||||||||||||||||||||
Net income, excluding special charges and MTM losses on equity investments |
$ |
889 |
$ |
849 |
$ |
40 |
4.7 |
$ |
1,032 |
$ |
981 |
$ |
51 |
5.2 |
||||||||||||||||
Diluted earnings per share |
$ |
2.48 |
$ |
2.67 |
$ |
(0.19) |
(7.1) |
$ |
2.96 |
$ |
2.96 |
$ |
— |
— |
||||||||||||||||
Special charges and MTM losses on equity investments |
0.96 |
0.14 |
0.82 |
NM |
0.92 |
0.31 |
0.61 |
NM |
||||||||||||||||||||||
Tax effect related to special charges and MTM losses on equity investments |
(0.21) |
(0.05) |
(0.16) |
NM |
(0.20) |
(0.12) |
(0.08) |
NM |
||||||||||||||||||||||
Diluted earnings per share, excluding special charges and MTM losses on equity investments |
$ |
3.23 |
$ |
2.76 |
$ |
0.47 |
17.0 |
$ |
3.68 |
$ |
3.15 |
$ |
0.53 |
16.8 |
UNITED CONTINENTAL HOLDINGS, INC. | |||||||||||||||||||
NON-GAAP FINANCIAL RECONCILIATION (Continued) | |||||||||||||||||||
UAL provides financial metrics, including earnings before interest, taxes, depreciation and amortization (EBITDA), excluding special charges and MTM gains and losses on equity investments that we believe provide useful supplemental information for management and investors by measuring profit and profit as a percentage of total operating revenues. UAL believes that adjusting for special charges is useful to investors because special charges are not indicative of UAL's ongoing performance. UAL believes that adjusting for MTM gains and losses on equity investments is useful to investors because those unrealized gains or losses may not ultimately be realized on a cash basis. | |||||||||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||||||||
EBITDA, excluding special charges and MTM losses on equity investments (in millions) |
2018 |
2017 |
2018 |
2017 |
|||||||||||||||
Net income |
$ |
684 |
$ |
821 |
$ |
831 |
$ |
920 |
|||||||||||
Adjusted for: |
|||||||||||||||||||
Depreciation and amortization |
557 |
536 |
1,098 |
1,054 |
|||||||||||||||
Interest expense |
177 |
167 |
353 |
329 |
|||||||||||||||
Interest capitalized |
(14) |
(21) |
(33) |
(44) |
|||||||||||||||
Interest income |
(25) |
(13) |
(42) |
(24) |
|||||||||||||||
Income tax expense (D) |
173 |
456 |
210 |
507 |
|||||||||||||||
Special charges before income taxes (C) |
129 |
44 |
169 |
95 |
|||||||||||||||
MTM losses on equity investments (C) |
135 |
— |
90 |
— |
|||||||||||||||
EBITDA, excluding special charges and MTM losses on equity investments (Non-GAAP) |
$ |
1,816 |
$ |
1,990 |
$ |
2,676 |
$ |
2,837 |
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. | ||||||||||||||||
Three Months Ended |
Six Months Ended | |||||||||||||||
Capital Expenditures (in millions) |
2018 |
2017 |
2018 |
2017 | ||||||||||||
Capital expenditures |
$ |
755 |
$ |
1,089 |
$ |
1,734 |
$ |
1,780 |
||||||||
Property and equipment acquired through the issuance of debt and capital leases |
65 |
196 |
139 |
907 |
||||||||||||
Airport construction financing |
— |
11 |
12 |
32 |
||||||||||||
Fully reimbursable projects |
(37) |
(49) |
(89) |
(118) |
||||||||||||
Adjusted capital expenditures (Non-GAAP) |
$ |
783 |
$ |
1,247 |
$ |
1,796 |
$ |
2,601 |
||||||||
Free Cash Flow (in millions) |
||||||||||||||||
Net cash provided by operating activities |
$ |
2,442 |
$ |
1,561 |
$ |
4,175 |
$ |
2,108 |
||||||||
Less capital expenditures |
755 |
1,089 |
1,734 |
1,780 |
||||||||||||
Free cash flow, net of financings (Non-GAAP) |
$ |
1,687 |
$ |
472 |
$ |
2,441 |
$ |
328 |
||||||||
Net cash provided by operating activities |
$ |
2,442 |
$ |
1,561 |
$ |
4,175 |
$ |
2,108 |
||||||||
Less adjusted capital expenditures (Non-GAAP) |
783 |
1,247 |
1,796 |
2,601 |
||||||||||||
Free cash flow (Non-GAAP) |
$ |
1,659 |
$ |
314 |
$ |
2,379 |
$ |
(493) |
UNITED CONTINENTAL HOLDINGS, INC. | |||||||||||
NOTES (UNAUDITED) | |||||||||||
(B) Select passenger revenue information is as follows (in millions): | |||||||||||
2Q 2018 |
Passenger |
PRASM |
Yield |
Available | |||||||
Mainline |
$ |
4,395 |
8.7% |
1.7% |
1.6% |
6.9% | |||||
Regional |
1,786 |
10.6% |
0.9% |
(1.0%) |
9.6% | ||||||
Domestic |
6,181 |
9.2% |
1.7% |
1.3% |
7.4% | ||||||
Atlantic |
1,824 |
12.9% |
7.9% |
0.9% |
4.7% | ||||||
Pacific |
1,103 |
3.7% |
3.4% |
4.3% |
0.2% | ||||||
Latin America |
772 |
(5.2%) |
(2.9%) |
(4.2%) |
(2.3%) | ||||||
International |
3,699 |
5.9% |
4.3% |
1.4% |
1.6% | ||||||
Consolidated |
$ |
9,880 |
8.0% |
3.0% |
1.5% |
4.8% | |||||
Mainline |
$ |
8,045 |
7.4% |
3.0% |
1.5% |
4.3% | |||||
Regional |
1,835 |
10.6% |
1.3% |
(0.6%) |
9.3% | ||||||
Consolidated |
$ |
9,880 |
UNITED CONTINENTAL HOLDINGS, INC. | |||||||||||||||||
NOTES (UNAUDITED) | |||||||||||||||||
(C) Special charges and MTM losses on equity investments include the following: | |||||||||||||||||
Three Months Ended |
Six Months Ended | ||||||||||||||||
(In millions) |
2018 |
2017 |
2018 |
2017 | |||||||||||||
Operating: |
|||||||||||||||||
Impairment of assets |
$ |
111 |
$ |
— |
$ |
134 |
$ |
— |
|||||||||
Severance and benefit costs |
11 |
41 |
25 |
78 |
|||||||||||||
(Gains) losses on sale of assets and other special charges |
7 |
3 |
10 |
17 |
|||||||||||||
Total special charges |
129 |
44 |
169 |
95 |
|||||||||||||
Nonoperating MTM losses on equity investments |
135 |
— |
90 |
— |
|||||||||||||
Total special charges and MTM losses on equity investments |
264 |
44 |
259 |
95 |
|||||||||||||
Income tax benefit related to special charges |
(29) |
(16) |
(38) |
(34) |
|||||||||||||
Income tax benefit related to MTM losses on equity investments |
(30) |
— |
(20) |
— |
|||||||||||||
Total special charges and MTM losses on equity investments, net of income taxes |
$ |
205 |
$ |
28 |
$ |
201 |
$ |
61 |
Impairment of assets: In May 2018, the Brazil–United States open skies agreement was ratified, which provides air carriers with unrestricted access between the United States and Brazil. The company determined that the approval of the open skies agreement impaired the entire value of its Brazil route authorities because the agreement removes all limitations or reciprocity requirements for flights between the United States and Brazil. Accordingly, the company recorded a $105 million special charge ($82 million net of taxes) to write off the entire value of the intangible asset associated with its Brazil routes. This asset is not part of any collateral pledged against any of the company's borrowings. The company continues to maintain its slot assets related to Brazil since airport access is still restricted by slot allocations that are limited by airport facility constraints. For the three and six months ended June 30, 2018, the company also recorded $6 million ($5 million net of taxes) and $29 million ($22 million net of taxes), respectively, of fair value adjustments related to aircraft purchased off lease and other impairments related to certain fleet types and international slots no longer in use. |
Severance and benefit costs: During the three and six months ended June 30, 2018, the company recorded severance and benefit costs related to a voluntary early-out program for its technicians and related employees represented by the International Brotherhood of Teamsters of $6 million ($4 million net of taxes) and $14 million ($11 million net of taxes), respectively. 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 2018. Also during the three and six months ended June 30, 2018, the company recorded other management severance of $5 million ($4 million net of taxes) and $11 million ($8 million net of taxes), respectively. |
During the three and six months ended June 30, 2017, the company recorded $36 million ($23 million net of taxes) and $57 million ($37 million net of taxes), respectively, of severance and benefit costs related to the voluntary early-out program for its technicians and related employees, and $5 million ($3 million net of taxes) and $21 million ($13 million net of taxes), respectively, of management severance. |
(Gains) losses on sale of assets and other special charges: During the three and six months ended June 30, 2018, the Company recorded $7 million ($5 million net of taxes) and $10 million ($8 million net of taxes), respectively, of other special charges related primarily to contract termination of regional aircraft operations in Guam. |
MTM losses on equity investments: During the three and six months ended June 30, 2018, the company recorded losses of $135 million ($105 million net of taxes) and $90 million ($70 million net of taxes), respectively, for the change in market value of its investment in Azul, S.A. For equity investments subject to MTM accounting, the company records gains and losses to Nonoperating income (expense): Miscellaneous, net in its statements of consolidated operations. |
(D) Effective tax rate |
The company's effective tax rate for the three and six months ended June 30, 2018 was 20.2%, and the effective tax rate for the three and six months ended June 30, 2017 was 35.7% and 35.5%, respectively. The effective tax rate represents a blend of federal, state and foreign taxes and included the impact of certain nondeductible items. The effective tax rate for the three and six months ended June 30, 2018 also reflects the reduced federal corporate income tax rate as a result of the enactment of the Tax Cuts and Jobs Act (the "Tax Act") in December 2017 and the impact of a change in the company's mix of domestic and foreign earnings. We continue to analyze the different aspects of the Tax Act which could potentially affect the provisional estimates that were recorded at December 31, 2017. |
SOURCE United Airlines
For further information: United Airlines Worldwide Media Relations, +1-872-825-8640, media.relations@united.com
CHICAGO, April 19, 2021 /PRNewswire/ -- United Airlines (UAL) today announced first-quarter 2021 financial results. The company has its eyes on the future, making continued progress on its commitment to remove $2 billion in structural costs and investing in key customer programs that will position the airline to capitalize on the recovery of business travel and long-haul international demand.
Following its return to positive core cash flow1 in the month of March, the company is focused on returning to positive adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) margins, even if business and long-haul international demand remain as much as 70% below 2019 levels. United is already moving to capitalize on emerging pent-up demand for travel to countries where vaccinated travelers are welcome. In fact, the company announced new international flying to Greece, Iceland and Croatia earlier today, subject to government approval. These opportunistic steps help position United to return to positive net income even if business and long-haul international demand only returns to about 35% below 2019 levels.
"The United team has now spent a year facing down the most disruptive crisis our industry has ever faced and because of their skill and dedication to our customers, we're poised to emerge from this pandemic with a future that is brighter than ever," said United Airlines CEO Scott Kirby. "We've shifted our focus to the next milestone on the horizon and now see a clear path to profitability. We're encouraged by the strong evidence of pent-up demand for air travel and our continued ability to nimbly match it, which is why we're as confident as ever that we'll hit our goal to exceed 2019 adjusted EBITDA margins in 2023, if not sooner."
United's efforts to improve the customer experience resulted in the company achieving its highest ever customer satisfaction in the first quarter. Looking ahead, the company is planning continued investment in customers, including continuing the United Polaris® retrofit program and starting retrofit on narrowbody aircraft, modernizing gates, upgrading and expanding United Club℠ locations in Newark and Denver, and rolling out tools that give customers the opportunity to pre-order onboard meals.
* Adjusted EBITDA margin is a non-GAAP financial measure calculated as Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), excluding special charges and unrealized (gains) losses on investments, divided by total operating revenue. We are not providing a target or a reconciliation to profit margin (net income/total operating revenue), the most directly comparable GAAP measure, because we are unable to predict certain items contained in the GAAP measure without unreasonable efforts. Adjusted EBITDA margin does not reflect certain items, including special charges and unrealized (gains) losses on investments, which may be significant. For a reconciliation of adjusted EBITDA to net income for the three months ended March 31, 2021 and 2019 and the 12 months ended December 31, 2020 and 2019, please see the accompanying tables to this release. |
First-Quarter Financial Results
- Reported first-quarter 2021 net loss of $1.4 billion, adjusted net loss2 of $2.4 billion.
- Reported first-quarter total operating revenue of $3.2 billion, down 66% versus first-quarter 2019.
- Reported first-quarter operating expenses down 49% versus first-quarter 2019, down 34% excluding special charges.
- Reported first-quarter 2021 ending available liquidity3 of $21 billion.
- Reported first-quarter capacity down 54% versus first-quarter 2019.
- Reported first-quarter average core cash burn of $9 million per day, an improvement of about $10 million per day versus the fourth-quarter 2020.
Second-Quarter 2021 Outlook
- Based on current trends, the company expects second quarter 2021 Total Revenue Per Available Seat Mile (TRASM) to be down approximately 20% versus the second quarter 2019.
- Expects second quarter 2021 capacity to be down around 45% versus the second quarter 2019.
- Expects second quarter operating expenses excluding special charges4 to be down approximately 32% versus the second quarter 2019, with second quarter 2021 fuel price per gallon estimated to be approximately $1.83.
- Expects second quarter 2021 adjusted EBITDA margin5 of around (20%).
Key Highlights
- Set a new diversity goal and plan for 50% of the 5,000 students the airline has committed to train by 2030 at the new United Aviate Academy to be women and people of color.
- Created the Eco-Skies Alliance℠, a first-of-its-kind program, offering United's corporate customers the opportunity to help reduce their environmental impact by allowing them to pay the additional cost for sustainable aviation fuel (SAF). Additionally, United is giving customers the ability to contribute funds for additional SAF purchases by United or for use on initiatives United believes will help decarbonize aviation – the first of any U.S. airline to do so.
- Launched industry-exclusive "Travel-Ready Center" to ease the burden of COVID-19 travel restrictions. Customers can review COVID-19 entry requirements, find local testing options and upload any required testing and vaccination records for domestic and international travel, all in one place. United is the first airline to integrate all these features into its mobile app and website.
- Announced an agreement to work with air mobility company Archer as part of the company's broader effort to invest in emerging technologies that decarbonize air travel rather than relying on traditional combustion engines.
- Returned to John F. Kennedy Airport after a five-year absence, and are now operating direct service to the airline's West Coast hubs – Los Angeles International Airport and San Francisco International Airport.
- Announced a new luxury bus collaboration for customers to travel to Breckenridge and Fort Collins, Colorado with convenient year-round ground transportation service connecting through its Denver hub. This is the first time Breckenridge has ever been served by an airline and will be Fort Collins' first global network carrier service in 25 years.
Taking Care of Our Customers
- The only airline that lets customers upload travel documents to the United app and have them certified allowing customers to get their boarding pass before arriving at the airport.
- Announced plans to introduce United Premium Plus® service on seven Hawaii routes to Honolulu (Oahu), Kahului (Maui), and Kona (Hawaii) beginning in May 2021.
- Expanded COVID-19 testing and pre-clearance program to make Hawaii travel easier.
- Reducing stress of international travel by starting a test on Houston to Brazil flights, allowing customers to take an Abbott BinaxNOW test prior to their re-entry into the United States.
- In partnership with the Centers for Disease Control and Prevention (CDC), launched a program to collect information from passengers, allowing them to be contacted in the event they are near a Covid-19 positive passenger while on a United aircraft.
- Expanded rollout of virtual, on-demand customer service, now available at all U.S. hub airports.
- Recognized by the Airline Passenger Experience Association (APEX) and SimpliFlying for providing a hospital-grade standard of cleanliness and safety during the travel journey. United is the first airline among the four largest U.S. carriers to receive the highest possible certification.
Reimagining the Route Network
- In the first quarter, announced 41 new domestic routes and two new international routes and launched six domestic routes and four international routes, with 13 more international routes planned to launch in 2021.
- The company resumed nonstop service on 12 domestic routes and five international routes compared to the fourth quarter of 2020.
- Compared to December 2020, United had nonstop service in 12 more domestic and three more international routes in March 2021.
- Announced plans to fly roughly 52% of its full schedule in May 2021 compared to May 2019.
- Announced plans to expand the company's global route network with new, nonstop service between Boston Logan International Airport and London Heathrow – the only U.S. carrier to offer nonstop service between the nation's top seven business markets and London Heathrow.
Assisting the Communities We Serve
- More than 7 million miles donated to charities in need of travel through United's Miles on a Mission program.
- Over 65,000 lbs. of food and beverages ($322,549 value) donated to Houston Food Bank for winter storm relief.
- Unique Black History Month campaign raised over $255,000 for The Thurgood Marshall College Fund, The Leadership Conference Education Fund, The NAACP Legal Defense and Educational Fund, and United Negro College Fund.
- In the first quarter of 2021, through a combination of cargo-only flights and passenger flights, United has transported nearly 290 million pounds of freight, which includes nearly 60 million pounds of vital shipments, such as medical kits, PPE, pharmaceuticals, and medical equipment, and more than 800,000 pounds of military mail and packages.
Additional Noteworthy Accomplishments
- For the tenth consecutive year received a perfect score of 100% on the Corporate Equality Index (CEI), a premier benchmarking survey and report on corporate policies and practices related to LGBTQ+ workplace equality, administered by the Human Rights Campaign (HRC) Foundation.
- Teamed up with Chase and Visa in honor of Black History Month to encourage and reward United Credit Cardmembers to make donations to non-profits focused on providing access to educational opportunities for Black students and supporting human and civil rights policies.
_________________________________________________________________________ |
1. Core cash burn is defined as: Net cash from operations, investing and financing activities, adjusted to remove proceeds from the issuance of new debt (excluding expected aircraft financing), government grants associated with the Payroll Support Program of the CARES Act, issuance of new stock, net proceeds from the sale of short-term and other investments, changes in certain restricted cash balances, debt principal payments, timing of certain payments, capital expenditures (net of flight equipment purchase deposit returns), and investments in the recovery and severance payments. Core cash flow is defined in the same manner as core cash burn, except that the result is positive. The company's management views "core cash burn" or "core cash flow" as an important measure in monitoring liquidity in order to assess the company's operational cash needs without the impact of certain extraordinary actions or events, and the company believes this measure provides useful information to investors about the company's core operational performance. See the tables accompanying this release for further information. |
2. Excludes operating and non-operating special charges, and unrealized gains and losses on investments. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in the tables accompanying this release. |
3. Includes cash, cash equivalents, short-term investments, undrawn credit facilities and $7 billion available under the CARES Act loan program. |
4. Excludes operating special charges. We are not providing a reconciliation to operating expenses, the most directly comparable GAAP measure, because we are unable to predict certain items contained in the GAAP measure without unreasonable efforts. |
5. Adjusted EBITDA margin is a non-GAAP financial measure calculated as Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), excluding special charges and unrealized (gains) losses on investments, divided by total operating revenue. We are not providing a reconciliation to profit margin (net income/total operating revenue), the most directly comparable GAAP measure, because we are unable to predict certain items contained in the GAAP measure without unreasonable efforts. |
Earnings Call
UAL will hold a conference call to discuss first-quarter 2021 financial results as well as its financial and operational outlook for the second-quarter 2021, on Tuesday, April 20, at 9:30 a.m. CT/10:30 a.m. ET. A live, listen-only webcast of the conference call will be available at ir.united.com.
The webcast will be available for replay within 24 hours of the conference call and then archived on the website for three months.
About United
United's shared purpose is "Connecting People. Uniting the World." 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, including statements regarding our outlook for the second quarter 2021 and our adjusted EBITDA margin targets, 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," "intends," "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 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: the adverse impacts of the ongoing COVID-19 global pandemic, and possible outbreaks of another disease or similar public health threat in the future, on our business, operating results, financial condition, liquidity and near-term and long-term strategic operating plan, including possible additional adverse impacts resulting from the duration and spread of the pandemic; unfavorable economic and political conditions in the United States and globally; the highly competitive nature of the global airline industry and susceptibility of the industry to price discounting and changes in capacity; high and/or volatile fuel prices or significant disruptions in the supply of aircraft fuel; our reliance on technology and automated systems to operate our business and the impact of any significant failure or disruption of, or failure to effectively integrate and implement, the technology or systems; our reliance on third-party service providers and the impact of any failure of these parties to perform as expected, or interruptions in our relationships with these providers or their provision of services; adverse publicity, harm to our brand; reduced travel demand and potential tort liability as a result of an accident, catastrophe or incident involving us, our regional carriers, our codeshare partners, or another airline; terrorist attacks, international hostilities or other security events, or the fear of terrorist attacks or hostilities, even if not made directly on the airline industry; increasing privacy and data security obligations or a significant data breach; disruptions to our regional network and United Express flights provided by third-party regional carriers; further changes to the airline industry with respect to alliances and joint business arrangements or due to consolidations; changes in our network strategy or other factors outside our control resulting in less economic aircraft orders, costs related to modification or termination of aircraft orders or entry into less favorable aircraft orders; our reliance on single suppliers to source a majority of our aircraft and certain parts, and the impact of any failure to obtain timely deliveries, additional equipment or support from any of these suppliers; the impacts of union disputes, employee strikes or slowdowns, and other labor-related disruptions on our operations; extended interruptions or disruptions in service at major airports where we operate; the impacts of the United Kingdom's withdrawal from the European Union on our operations in the United Kingdom and elsewhere; the impacts of seasonality and other factors associated with the airline industry; our failure to realize the full value of our intangible assets or our long-lived assets, causing us to record impairments; any damage to our reputation or brand image; the limitation of our ability to use our net operating loss carryforwards and certain other tax attributes to offset future taxable income for U.S. federal income tax purposes; the costs of compliance with extensive government regulation of the airline industry; costs, liabilities and risks associated with environmental regulation and climate change; our inability to accept or integrate new aircraft into our fleet as planned; the impacts of our significant amount of financial leverage from fixed obligations, the possibility we may seek material amounts of additional financial liquidity in the short-term and the impacts of insufficient liquidity on our financial condition and business; failure to comply with the covenants in the MileagePlus financing agreements, resulting in the possible acceleration of the MileagePlus indebtedness, foreclosure upon the collateral securing the MileagePlus indebtedness or the exercise of other remedies; failure to comply with financial and other covenants governing our other debt; changes in, or failure to retain, our senior management team or other key employees; current or future litigation and regulatory actions, or failure to comply with the terms of any settlement, order or arrangement relating to these actions; increases in insurance costs or inadequate insurance coverage; 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, 2020, 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-
UNITED AIRLINES HOLDINGS, INC | ||||||||||||
Three Months Ended March 31, | % Increase/ (Decrease) | |||||||||||
(In millions, except per share data) | 2021 | 2020 | ||||||||||
Operating revenue: | ||||||||||||
Passenger revenue | $ | 2,316 | $ | 7,065 | (67.2) | |||||||
Cargo | 497 | 264 | 88.3 | |||||||||
Other operating revenue | 408 | 650 | (37.2) | |||||||||
Total operating revenue | 3,221 | 7,979 | (59.6) | |||||||||
Operating expense: | ||||||||||||
Salaries and related costs | 2,224 | 2,955 | (24.7) | |||||||||
Aircraft fuel | 851 | 1,726 | (50.7) | |||||||||
Depreciation and amortization | 623 | 615 | 1.3 | |||||||||
Landing fees and other rent | 519 | 623 | (16.7) | |||||||||
Regional capacity purchase | 479 |