United Airlines Reports Second-Quarter 2018 Performance

July 17, 2018

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 June 30,						% Increase/		Six Months Ended June 30,						% Increase/
(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 June 30,						% Increase/		Six Months Ended June 30,						% Increase/
	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 June 30,						% Increase/		Six Months Ended June 30,						% Increase/
	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 June 30, 2018
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 June 30,		% Increase/	Six Months Ended June 30,		% Increase/
	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 June 30,				$ Increase/		% Increase/	Six Months Ended June 30,				$ Increase/		% Increase/
(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 June 30,				Six Months Ended June 30,
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 June 30,				Six Months Ended June 30,
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 Revenue (millions)		Passenger Revenue vs. 2Q 2017	PRASM vs. 2Q 2017	Yield vs. 2Q 2017	Available Seat Miles vs. 2Q 2017

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 June 30,				Six Months Ended June 30,
(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

United Airlines to Present at Barclays Industrial Select Conference 2019

February 18, 2019

CHICAGO, Feb. 18, 2019 /PRNewswire/ -- United Airlines will present at Barclays Industrial Select Conference on Wednesday, February 20. United Airlines' Vice President of Pricing and Revenue Management Dave Bartels and Vice President of Finance and CFO of Commercial Jonathan Ireland will present at the conference beginning at 1:15 p.m. ET / 12:15 p.m. CT.

The live webcast will be available on the investor relations section of United's website at ir.united.com. The company will archive the audio webcast on the website within 24 hours of the presentation, and the webcast will be available for a limited time.

About United

United's shared purpose is "Connecting People. Uniting the World." We are more focused than ever on our commitment to customers through a series of innovations and improvements designed to help build a great experience: Every customer. Every flight. Every day. Together, United Airlines and United Express operate approximately 4,800 flights a day to 353 airports across five continents. In 2018, United and United Express operated more than 1.7 million flights carrying more than 158 million customers. United is proud to have the world's most comprehensive route network, including U.S. mainland hubs in Chicago, Denver, Houston, Los Angeles, New York/Newark, San Francisco and Washington, D.C. United operates 770 mainline aircraft and the airline's United Express carriers operate 559 regional aircraft. United 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 and Instagram or connect on Facebook. The common stock of United's parent, United Continental Holdings, Inc., is traded on the Nasdaq under the symbol "UAL".

SOURCE United Airlines

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

United Adds More Than 1,600 New Premium Seats to International, Domestic and Regional Aircraft; More Comfort for More Customers in the Skies

February 06, 2019

CHICAGO, Feb. 6, 2019 /PRNewswire/ -- United Airlines today announced the next step in its commitment to making more customers more comfortable by adding more than 1,600 United Polaris^® business class and United First seats to nearly 250 international and domestic aircraft. Additionally, United will revolutionize the regional flying experience by introducing the two-cabin, 50-seat Bombardier CRJ 550 aircraft to its fleet, offering customers on key regional routes more legroom, storage and amenities than any other 50-seat regional aircraft operating today.

Click here to view an infographic on United's newly reconfigured aircraft

"In an era where many airlines are adding seats to their aircraft to crowd more passengers onto the plane, we're re-configuring more than 100 of our aircraft and doing exactly the opposite – for the benefit of our customers," said Andrew Nocella, United's executive vice president and chief commercial officer. "From adding more premium seats on aircraft that serve some of our most traveled routes, introducing a revolutionary, best-in-class 50-seat experience or simply offering free DIRECTV on more than 200 aircraft, we are committed to making United the airline that our customers choose to fly."

More United Polaris business seats on Boeing 767-300ER aircraft

In the next several weeks, United will introduce to its fleet the first of 21 reconfigured Boeing 767-300ER aircraft featuring 16 additional United Polaris business seats in the premium cabin – a more than 50 percent increase in all-aisle-access seating – bringing the total premium cabin seat count to 46. The newly reconfigured aircraft will also feature 22 United^® Premium Plus seats (becoming the first 767-300ER to offer this seat type); 47 Economy Plus^® seats and 52 Economy seats. United will first operate the reconfigured 767 – which will feature the highest proportion of premium seats on any widebody operated by any U.S. carrier – between Newark/New York and London, offering 50 percent more premium seats in the largest premium route in the world. The airline expects to introduce all the reconfigured aircraft to its fleet by the end of next year.

More United First seats on Airbus A319 and A320 aircraft

United is also adding more United First^® seats to its fleet of Airbus aircraft, offering customers greater opportunities to upgrade and enjoy a premium flying experience. Beginning this fall, the carrier will add four United First seats on its fleet of Airbus A319s, increasing the total count from eight to 12. The reconfigured aircraft will also feature 36 Economy Plus and 78 Economy seats.

Beginning early next year, United will add four United First seats on its fleet of nearly 100 Airbus A320 aircraft, increasing the total count from 12 to 16. The reconfigured aircraft will also feature 39 Economy Plus seats and 95 Economy seats. United expects to complete the reconfiguration of the Airbus A320 and A319s by the middle of next year.

Introducing the first-of-its-kind Bombardier CRJ 550

By the end of this year, United will revolutionize the regional flying experience with the planned introduction of 50 spacious, 50-seat Bombardier CRJ 550 aircraft to its regional fleet, subject to government certification. In addition to becoming the only 50-seat aircraft in the world to offer true first-class seating, the innovative new aircraft will provide customers with a truly exceptional flying experience, including a state-of-the-art interior featuring LED lighting, a self-serve beverage and snack station for customers seated in the premium cabin, Wi-Fi and more overall legroom per seat than any other 50-seat aircraft flown by any U.S. carrier. Additionally, the CRJ 550 will feature four storage closets, providing customers ample room to store their carryon bags and making the CRJ 550 the only regional jet in the skies where customers will not need to routinely gate check their bags.

The two-cabin CRJ 550 will feature 10 United First seats; 20 Economy Plus seats and 20 Economy seats. The CRJ 550 aircraft will eventually replace existing single-cabin 50-seat aircraft and will bring a higher percentage of two-cabin departures to smaller cities across the carrier's network. Additionally, the innovative aircraft will enable United to offer premium seats on more connecting flights from smaller cities to the airline's overall global network, further strengthening its competitive position and emphasizing its role as an industry innovator.

United expects that its regional partner GoJet will begin operating the CRJ 550 in the second half of this year – subject to agreement on final terms and conditions – on select routes from Chicago, O'Hare followed by Newark/New York, offering customers connecting through the hub the opportunity to enjoy a premium cabin experience at every step of their journey.

Every customer. Every flight. Every day.

In 2019, United is focusing more than ever on its commitment to its customers, looking at every aspect of its business to ensure that the carrier keeps customers' best interests at the heart of its service. In addition to today's announcement, United recently released a re-imagined version of the most downloaded app in the airline industry and made DIRECTV free for every passenger on 211 aircraft, offering more than 100 channels on seat back monitors on more than 30,000 seats. The multimillion-dollar investment in improving inflight entertainment options will benefit the more than 29 million people expected to fly United's DIRECTV-enabled planes this year.

About United

United Airlines and United Express operate approximately 4,800 flights a day to 353 airports across five continents. In 2018, United and United Express operated more than 1.7 million flights carrying more than 158 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 770 mainline aircraft and the airline's United Express carriers operate 559 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 Nasdaq under the symbol "UAL".

SOURCE United Airlines

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

United Airlines Announces Four New Domestic United Club Locations for 2019

February 04, 2019

CHICAGO, Feb. 4, 2019 /PRNewswire/ -- United Airlines today welcomed the newest addition to its network of more than 50 United Club locations around the world with the opening of a brand-new 5,000 square foot United Club at Fort Lauderdale-Hollywood International Airport. Located near Gate C1, this new United Club is the first of four new United Club locations set to open in 2019.

"United Clubs are the perfect spot for our customers to relax and recharge and we are excited to open the first of four new United Clubs this year," said United's Chief Customer Officer Toby Enqvist. "Our multimillion-dollar investment in the United Clubs is one of many ways we are working to improve every aspect of our customers' experience."

In addition to the Fort Lauderdale renovation, the airline is expanding its United Club network by introducing new locations in popular destinations. This summer, United plans to open a new United Club in New Orleans in conjunction with the opening of the new terminal at Louis Armstrong New Orleans International Airport. United will also open a brand-new United Club location in New York's La Guardia Airport to coincide with the relocation of its operations to the airport's Terminal B. Additionally, United will introduce its first-ever United Club location in Raleigh-Durham International Airport.

Designed with today's customers in mind, each United Club location is created to serve the distinct needs of customers traveling to and from that destination and feature complimentary high-speed Wi-Fi, wellness rooms and specially curated local food and beverage offerings. United Club members enjoy access to more than 50 United Club locations and participating Star Alliance partner lounges around the world.

About United

SOURCE United Airlines

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

United Airlines Offers Customers Free Live TV

January 30, 2019

CHICAGO, Jan. 30, 2019 /PRNewswire/ -- Just in time for the Big Game, United Airlines today announced that effective immediately more than 100 channels of live television will now be free on 211 Boeing 737 United aircraft equipped with seat back TV, making viewing easy gate-to-gate. In addition to offering free live DIRECTV at more than 30,000 seats, United customers also have access to hundreds of movies and TV shows available on personal devices through the airline's collection on the United app – offering customers thousands of hours of programming in total.

"This year, we will be introducing a series of innovations and improvements designed to help build a great experience for all our customers," said United's Chief Customer Officer Toby Enqvist. "Offering free entertainment, whether it's on seat back TV or on personal devices, is one example of how we are placing our customers at the heart of what we do and helping them to relax and enjoy their flights."

"We're pleased that United is offering customers complimentary access to live TV on more than 200 of its aircraft so customers can feel like they're sitting in their own living rooms enjoying DIRECTV," said Roman Pacewicz, chief product officer, AT&T; Business. "Whether they want to tune into their favorite primetime show or their favorite sports team, United customers won't miss a moment with free DIRECTV programming."

Personal Device Entertainment

Over the last year, United has also expanded its personal device entertainment product to aircraft that previously only offered DIRECTV, providing an option for customers to use their phones, tablets or laptops to access a library of more than 280 complimentary movies and TV shows.

Accessibility

Additionally, United has made improvements in its entertainment options for customers with hearing and mobility issues through its Accessible Entertainment menu category available on seat back on-demand systems. Accessible Entertainment offers customers entertainment options by grouping titles that are either audio descriptive or closed captioned under one menu. United currently offers more than 20 audio descriptive movies and TV shows and more than 50 with English closed captioning. Select DIRECTV channels also include closed captioning, subject to programming availability.

About United

SOURCE United Airlines

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

United Airlines Donates $1 Million to Feeding America's Shutdown Response Fund

January 25, 2019

CHICAGO, Jan. 25, 2019 /PRNewswire/ -- United Airlines announced today that in response to Feeding America's increased need for support as a result of the government shutdown, the airline is donating $1 million to the organization's Shutdown Response Fund. This donation will directly support the food banks that are providing food for families of federal workers, who need assistance following their loss of income.

"On behalf of the United family, I would like to thank the countless federal employees who have made a large sacrifice to ensure our safety despite not being paid, and we hope this contribution provides them much-needed support. Even with today's announcement, there is continued need among federal employees, in addition to the important programs that Feeding America administers," said Oscar Munoz, chief executive officer of United Airlines. "We continue to urge our leaders to work in a bipartisan way over the coming weeks to ensure the long-term certainty on which our industry and the overall economy depends."

"Feeding America is thankful to our long-time partner, United Airlines, for stepping up, yet again, to help families in need. Even after the government is re-opened, many hardworking families will likely suffer the lingering impact of this crisis," said Claire Babineaux-Fontenot, chief executive officer of Feeding America. "This donation will support Feeding America member food banks as they provide immediate and longer-term assistance to people impacted by the furlough as they get back on their feet in the coming months."

Today's announcement builds on United's ongoing efforts to support the federal workers who work side-by-side with the United team every day to get customers where they need to go safely and on time. This includes working with Feeding America member food banks to set up and provide food distribution centers at United's seven hub airports and New York's LaGuardia Airport, and distributing care packages to federal employees twice a week throughout February. United will continue to work with Feeding America and other charitable partners to assess expanding support if and where it is needed.

About United

About Feeding America

Feeding America® is the largest hunger-relief organization in the United States. Through a network of 200 food banks and 60,000 food pantries and meal programs, we provide meals to more than 46 million people each year. Feeding America also supports programs that prevent food waste and improve food security among the people we serve; educates the public about the problem of hunger; and advocates for legislation that protects people from going hungry. Individuals, charities, businesses and government all have a role in ending hunger. Donate. Volunteer. Advocate. Educate. Together we can solve hunger. Visit www.feedingamerica.org, find us on Facebook or follow us on Twitter.

SOURCE United Airlines

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

The No. 1 Airline App Just Got Better - United Airlines Introduces Upgraded App

January 24, 2019

CHICAGO, Jan. 24, 2019 /PRNewswire/ -- Today, United Airlines is introducing a reimagined mobile app to customers around the world. Already the top downloaded airline app for Apple and Android phones, the refreshed app now features a more dynamic experience that updates customers at each step of their travel journey, making it the perfect travel companion. The app includes features customers know and love from the previous version, while adding enhancements that make managing travel easier from booking to landing.

United app updated after boarding process has begun

"Every day we are using technology to improve our customers' experience and making more information available to our customers at the swipe of a finger," said Linda Jojo, executive vice president of technology and chief digital officer at United Airlines. "With this updated app, we set out to bring improvements that are meaningful to all our customers, whether they travel every week or only once a year."

Customers' favorite features, such as bag tracking, will continue to be available in the updated app, and new highlights include:

A navigation bar that gives customers quick access to some of the most popular tools such as flight status, and some new handy features like My Trips.
A My Trips tab in the navigation bar that allows customers to easily access information about their upcoming trip and stores boarding passes when customers are checked in for their flights.
An inbox that stores important push notifications United sends customers about their flight, such as if a flight status changes, gate changes and alerts about when boarding for a flight has begun.
Dynamic boarding times will be updated throughout the app in the event that departure times change to give customers the latest information even when they are not at the gate. This builds on the airline's recent addition of boarding notifications, which were added when United rolled out its Better Boarding process.

One of the biggest updates to the app comes during the travel period, when the home screen updates to give customers the most helpful information for each step of their travel journey. The home screen will begin to update starting 48 hours before a flight, and will continue updating throughout various phases all the way through arrival at the final destination with the most useful information. For instance, customers connecting will find a screen that allows them to easily access airport maps so they can easily navigate to the next gate. Bringing the most useful information to the forefront will make the entire journey less stressful and more intuitive.

The app also includes an updated design with more engaging content. When a customer does not have an upcoming trip, the app will open to a beautiful destination image to provide travel inspiration. Content on the home screen is also more personalized to each user; for example, customers who recently passed loyalty milestones will be recognized on the home screen, and the app will also celebrate customers on their birthday.

United's in-house digital team spent over a year designing and creating this updated app, including eight months during which customers and more than 18,000 employees provided feedback to create the final version that rolls out worldwide today. United issued seven releases during the beta test, making numerous changes based on user feedback. There were more than 13,000 check-ins during the beta test period. The airline will continue soliciting feedback on the app and expects to roll out additional features later this year to further improve and ease travel for our customers.

As a technology leader, United was the first carrier to offer mobile boarding passes and became the first to introduce boarding passes and flight information in its app for partner airlines. Customers can access boarding passes and flight information for flights on United's Star Alliance partner airlines when flights are booked with connecting travel on United on the same itinerary. The airline also made it easier for customers to search for fare classes available in the app with Expert Mode, a popular feature from united.com.

Last year, United updated its digital platforms including the united.com homepage and entire mobile website to make them more dynamic and personalized.

For more information about updates to the app, visit the United Hub.

About United

SOURCE United Airlines

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

United Airlines Names Bryan Quigley Senior Vice President - Flight Operations

January 18, 2019

CHICAGO, Jan. 18, 2019 /PRNewswire/ -- United Airlines (UAL) today announced Bryan Quigley has been named senior vice president of flight operations. Quigley will be responsible for overseeing United's 12,500 pilots and will serve as the airline's FAA certificate director of operations. Quigley will replace Howard Attarian who is retiring after more than a decade of leadership at United.

Quigley, who joined United in 1995, has held several leadership positions throughout United. He most recently was the vice president of the company's San Francisco hub. Quigley also served as chief pilot and led the team in charge of the integration of policies and procedures following the merger of United and Continental.

"Bryan is an exceptional leader both in and out of the flight deck. He has developed a deep understanding of the entire airline after leading our San Francisco hub and I believe he will do great work as the leader of our pilots," said Executive Vice President and Chief Operations Officer Greg Hart.

In addition to his time at United, Quigley spent 26 years in the United States Navy, serving as a U.S. naval aviator.

Attarian retires after more than 40 years in aviation. In addition to his time at United, he spent more than 23 years as a pilot for Northwest Airlines and held several leadership positions with the Air Line Pilots Association. Attarian also served in the United States Air Force and was a demonstration pilot with the U.S. Air Force Thunderbirds.

"Over the past five years, Howard has worked tirelessly to develop the best group of aviators in the industry. We will forever be grateful and wish him the best as he enters the next chapter of his life," said Hart.

Quigley holds a bachelor of science degree in Business Administration from Appalachian State University and has completed the Executive Scholar Program from the Kellogg School of Business at Northwestern University.

Matt Miller, current vice president of international will replace Quigley as vice president of the San Francisco hub.

About United

SOURCE United Airlines

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

United Airlines Reports Full-Year and Fourth-Quarter 2018 Performance

January 15, 2019

CHICAGO, Jan. 15, 2019 /PRNewswire/ -- In a departure from industry trends, United (UAL) announced today that its fourth-quarter unit revenue came in at the high end of its guidance range and also exceeded its full-year adjusted diluted earnings per share target laid out last January. UAL reported full-year net income of $2.1 billion, diluted earnings per share of $7.70 (a 9.1 percent increase year-over-year), pre-tax earnings of $2.7 billion and pre-tax margin of 6.4 percent. UAL reported adjusted full-year net income of $2.5 billion, adjusted pre-tax earnings of $3.2 billion and adjusted pre-tax margin of 7.7 percent.¹UAL increased its full-year 2018 adjusted diluted earnings per share outlook three times during the year despite a $2.4 billion year-over-year headwind from fuel. Full-year adjusted diluted earnings per share increased 33.5 percent year-over-year to $9.13, above the high end of the company's most recent guidance range.¹

"United's financial performance is a testament to the successful implementation of the first year of our strategic plan and to the record-setting operational performance powered by the more than 90,000 airline professionals who work at United," said Oscar Munoz, chief executive officer of United Airlines. "United delivered proof, not just promises in 2018 - even in the face of significant headwinds from higher than expected fuel costs. It's why I couldn't be more proud of our winning culture and customer-focused team and continue to be enthusiastic about United's bright future."

For 2019, UAL expects adjusted diluted earnings per share to again grow year-over-year to between $10.00 to $12.00.²

UAL reported fourth-quarter net income of $462 million, diluted earnings per share of $1.70, pre-tax earnings of $556 million and pre-tax margin of 5.3 percent.
UAL reported fourth-quarter adjusted net income of $657 million, adjusted diluted earnings per share of $2.41 and adjusted pre-tax earnings of $814 million.
UAL reported fourth-quarter adjusted pre-tax margin of 7.8 percent,¹ expanding margin on an adjusted basis of 0.9 points versus the fourth-quarter of 2017.
UAL recovered 98% percent of the year-over-year increase in fuel prices in 2018.
Consolidated fourth-quarter passenger revenue per available seat mile (PRASM) increased 5 percent year-over-year, at the high end of the company's fourth-quarter 2018 guidance range.
Consolidated fourth-quarter unit cost per available seat mile (CASM) increased 7.0 percent year-over-year.
Consolidated fourth-quarter CASM, excluding special charges, third-party business expenses, fuel and profit sharing, decreased 0.7 percent year-over-year.
Employees earned $334 million in profit sharing for 2018.

For more information on UAL's first-quarter and full-year 2019 guidance, please visit ir.united.com for the company's investor update.

2018 Highlights

Record-Setting Operational Performance³

Set new UAL records by flying the most revenue passengers ever, operating the most mainline departures and achieving the fewest cancellations ever in a year, resulting in more UAL customers departing on-time in 2018 than ever before.
For the year, achieved the best completion rate in company history with more than 1.7 million flights.
In 2018, achieved the best ever company STAR performance (first departures of the day), with nearly 250,000 flights leaving on time.
In the fourth quarter, the company achieved top-tier performance in on-time departures among its largest competitors. For the December holiday season, UAL had its best-ever on-time departure performance while flying the most revenue customers it had ever flown during the holiday period.

Customer Experience

Opened three new United Polaris lounges located in San Francisco International Airport, Newark Liberty International Airport and Houston's George Bush Intercontinental Airport.
Announced UAL's newest premium seating, United® Premium Plus, which will provide more space, comfort and amenities on select international flights starting later this year.
Introduced a new boarding process designed to reduce customers' stress by reducing time spent waiting in line and providing them with improved boarding information.
Expanded personal device entertainment option to all aircraft, providing at least one free entertainment option on all Wi-Fi equipped aircraft.
MileagePlus loyalty program voted Best Overall Frequent-Flyer Program in the world for the 15th consecutive year by readers of Global Traveler, and voted Favorite Frequent-Flyer Program in the Trazee Awards.

Employees

Employees earned incentive payments totaling approximately $14 million for achieving operational performance goals in the quarter, marking a full year of earned incentive payments totaling $55 million.
Introduced and trained over 90,000 team members on UAL's new customer service decision framework, the core4, which focuses on the principles of safe, caring, dependable and efficient.
Deployed 6,000 iPads to maintenance employees, improving reliability and efficiency.
Unveiled a state-of-the-art flight training center in Denver, Colorado - the largest in the world and home to the company's more than 30 full flight simulators representing all of UAL's fleet types.
Successfully completed the full implementation of the flight attendant joint collective bargaining agreement, allowing the company to operate more efficiently and reliably.
Achieved the top score of 100 percent on the 2018 Disability Equality Index (DEI), a prominent benchmarking metric that rates U.S. companies on their disability inclusion policies and practices, also earning UAL a place on DEI's 2018 "Best Places to Work" list.
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.

Network

Introduced 93 new routes, adding more flights in 2018 than any other U.S. airline.
Announced new international service including Washington-Dulles to Tel Aviv, Israel; San Francisco to Amsterdam, Netherlands; Newark/New York to Naples, Italy; as well as Newark/New York to Prague, Czech Republic and Denver to Frankfurt, Germany, all subject to government approval.
Launched several exciting new international routes including Houston to Sydney, San Francisco to Tahiti and Denver to London.
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.
Announced a joint business agreement with Compañía Panameña de Aviación S.A. (Copa), Aerovías del Continente Americano S.A. (Avianca) and many of Avianca's affiliates, pending government approval.

Fleet

Took delivery of 21 new Boeing aircraft, including four 777-300ER, four 787-9, three 787-10 and ten 737 MAX 9 aircraft.
In December 2018, ordered an additional four Boeing 777-300ER aircraft and 24 737 MAX aircraft.

Community and Environment

Pledged to reduce the company's greenhouse gas emissions by 50 percent by 2050, the only U.S. airline to commit to emissions reductions, further strengthening UAL's ambition to be the world's most environmentally conscious airline.
Announced a total of $8 million in grants to benefit organizations in each of UAL's domestic hub communities.
Announced new global partnership with the Special Olympics and flew hundreds of Team USA Olympic and Paralympic Winter Games 2018 athletes, coaches and family members to PyeongChang, South Korea, continuing the 38-year relationship between UAL and the United States Olympic Committee.
Ranked No. 1 among global carriers in Newsweek's 2017 Global 500 Green Rankings, one of the most recognized environmental performance assessments of the world's largest publicly traded companies.
Launched a Crowdrise fundraising campaign to support those affected by Hurricane Florence, Typhoon Mangkhut, flooding in Western Japan, wildfires in California and other disasters.

Earnings Call

UAL will hold a conference call to discuss its fourth-quarter and full-year 2018 financial results and its financial and operational outlook for the first quarter and full year of 2019 on Wednesday, January 16, 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

¹Adjusted pre-tax earnings and adjusted pre-tax margin exclude special charges, the mark-to-market ("MTM") impact of financial instruments and imputed interest on certain capitalized leases. Adjusted net income and adjusted diluted earnings per share exclude special charges, the MTM impact of financial instruments, imputed interest on certain capitalized leases and certain tax adjustments. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in the tables accompanying this release.

² Excludes special charges and the MTM impact of financial instruments, the nature of which are not determinable at this time, and imputed interest on certain capitalized leases. Accordingly, UAL is not providing earnings guidance on a GAAP basis.

³ Company history defined as post-2010 merger; company records measured from 2010 merger.

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, the operations of our code share partners or the aircraft operated by another airline of the same model as operated by us, our regional carriers or 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-

UNITED CONTINENTAL HOLDINGS, INC.
STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)

	Three Months Ended December 31,						%		Full Year Ended December 31,						%
(In millions, except per share data)	2018			2017			Increase/ Decrease)		2018			2017			Increase/ Decrease)
Operating revenue:
Passenger	$	9,556		$	8,587		11.3		$	37,706		$	34,460		9.4
Cargo	334			324			3.1		1,237			1,114			11.0
Other operating revenue	601			540			11.3		2,360			2,210			6.8
Total operating revenue	10,491			9,451			11.0		41,303			37,784			9.3

Operating expense:
Salaries and related costs	2,924			2,678			9.2		11,458			10,941			4.7
Aircraft fuel	2,380			1,875			26.9		9,307			6,913			34.6
Regional capacity purchase	638			580			10.0		2,601			2,232			16.5
Landing fees and other rent	602			570			5.6		2,359			2,240			5.3
Depreciation and amortization	578			539			7.2		2,240			2,149			4.2
Aircraft maintenance materials and outside repairs	434			479			(9.4)		1,767			1,856			(4.8)
Distribution expenses	396			354			11.9		1,558			1,435			8.6
Aircraft rent	78			145			(46.2)		433			621			(30.3)
Special charges (B)	301			31			NM		487			176			NM
Other operating expenses	1,508			1,424			5.9		5,801			5,550			4.5
Total operating expense	9,839			8,675			13.4		38,011			34,113			11.4

Operating income	652			776			(16.0)		3,292			3,671			(10.3)

Operating margin	6.2		%	8.2		%	(2.0)	pts.	8.0		%	9.7		%	(1.7)	pts.
Adjusted operating margin (Non-GAAP) (A)	9.1		%	8.5		%	0.6	pts.	9.1		%	10.2		%	(1.1)	pts.

Nonoperating income (expense):
Interest expense	(189)			(173)			9.2		(729)			(671)			8.6
Interest capitalized	19			20			(5.0)		70			84			(16.7)
Interest income	31			16			93.8		101			57			77.2
Miscellaneous, net (B)	43			(19)			NM		(76)			(101)			(24.8)
Total nonoperating expense	(96)			(156)			(38.5)		(634)			(631)			0.5

Income before income taxes	556			620			(10.3)		2,658			3,040			(12.6)

Pre-tax margin	5.3		%	6.6		%	(1.3)	pts.	6.4		%	8.0		%	(1.6)	pts.
Adjusted pre-tax margin (Non-GAAP) (A)	7.8		%	6.9		%	0.9	pts.	7.7		%	8.5		%	(0.8)	pts.

Income tax expense (D)	94			41			129.3		529			896			(41.0)
Net income	$	462		$	579		(20.2)		$	2,129		$	2,144		(0.7)

Diluted earnings per share	$	1.70		$	1.98		(14.1)		$	7.70		$	7.06		9.1
Diluted weighted average shares	272.7			291.8			(6.5)		276.7			303.6			(8.9)

NM Not meaningful

UNITED CONTINENTAL HOLDINGS, INC.
SELECT PASSENGER REVENUE INFORMATION AND STATISTICS

Select passenger revenue information is as follows:

	4Q 2018 Passenger Revenue (millions)		Passenger Revenue vs. 4Q 2017	PRASM vs. 4Q 2017	Yield vs. 4Q 2017	Available Seat Miles vs. 4Q 2017
Domestic	6,088		12.8%	6.0%	6.7%	6.4%

Atlantic	1,535		9.6%	1.6%	(5.0%)	8.0%
Pacific	1,139		8.8%	4.5%	3.2%	4.0%
Latin America	794		7.2%	3.8%	1.1%	3.1%
International	3,468		8.8%	3.2%	(0.5%)	5.4%

Consolidated	$	9,556	11.3%	5.0%	3.8%	6.0%

Select statistics are as follows:

	Three Months Ended December 31,						% Increase/ (Decrease)		Full Year Ended December 31,						% Increase/ (Decrease)
	2018			2017					2018			2017
Passengers (thousands)	39,891			37,413			6.6		158,330			148,067			6.9
Revenue passenger miles (millions)	56,968			53,149			7.2		230,155			216,261			6.4
Available seat miles (millions)	68,902			65,028			6.0		275,262			262,386			4.9
Passenger load factor:
Consolidated	82.7		%	81.7		%	1.0	pt.	83.6		%	82.4		%	1.2	pts.
Domestic	84.6		%	85.2		%	(0.6)	pts.	85.4		%	85.2		%	0.2	pts.
International	80.1		%	77.2		%	2.9	pts.	81.3		%	78.9		%	2.4	pts.
Passenger revenue per available seat mile (cents)	13.87			13.21			5.0		13.70			13.13			4.3
Total revenue per available seat mile (cents)	15.23			14.53			4.8		15.00			14.40			4.2
Average yield per revenue passenger mile (cents)	16.77			16.16			3.8		16.38			15.93			2.8
Aircraft in fleet at end of period	1,329			1,262			5.3		1,329			1,262			5.3
Average stage length (miles)	1,426			1,431			(0.3)		1,446			1,460			(1.0)
Average full-time equivalent employees (thousands)	87.3			85.6			2.0		86.6			86.0			0.7
Average aircraft fuel price per gallon	$	2.30		$	1.91		20.4		$	2.25		$	1.74		29.3
Fuel gallons consumed (millions)	1,036			980			5.7		4,137			3,978			4.0

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.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In millions)	December 31, 2018		December 31, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	1,694	$	1,482
Short-term investments	2,256		2,316
Receivables, net	1,346		1,340
Aircraft fuel, spare parts and supplies, net	985		924
Prepaid expenses and other	913		1,071
Total current assets	7,194		7,133

Total operating property and equipment, net	28,329		26,208

Other assets:
Goodwill	4,523		4,523
Intangibles, net	3,159		3,539
Restricted cash	105		91
Loans to others, net	496		46
Investments in affiliates and other, net	966		806
Total other assets	9,249		9,005
Total assets	$	44,772	$	42,346

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Advance ticket sales	$	4,381	$	3,940
Accounts payable	2,363		2,196
Frequent flyer deferred revenue	2,286		2,192
Accrued salaries and benefits	2,184		2,166
Current maturities of long-term debt and capital leases	1,379		1,693
Other	600		576
Total current liabilities	13,193		12,763

Other liabilities and deferred credits:
Long-term debt and capital leases	13,349		12,699
Frequent flyer deferred revenue	2,719		2,591
Postretirement benefit liability	1,295		1,602
Pension liability	1,576		1,921
Deferred income taxes	814		204
Other	1,831		1,832
Total other liabilities and deferred credits	21,584		20,849

Commitments and contingencies

Stockholders' equity	9,995		8,734
Total liabilities and stockholders' equity	$	44,772	$	42,346

UNITED CONTINENTAL HOLDINGS, INC.
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)

(In millions)	Full Year Ended December 31,
	2018		2017
Cash Flows from Operating Activities:
Net cash provided by operating activities	$	6,181	$	3,413

Cash Flows from Investing Activities:
Capital expenditures	(4,177)		(3,998)
Purchases of short-term and other investments	(2,552)		(3,241)
Proceeds from sale of short-term and other investments	2,616		3,177
Loans made to others	(456)		—
Investment in affiliates	(139)		—
Other, net	145		132
Net cash used in investing activities	(4,563)		(3,930)

Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt and airport construction financing	1,740		2,765
Repurchases of common stock	(1,235)		(1,844)
Payments of long-term debt	(1,727)		(901)
Principal payments under capital leases	(134)		(124)
Other, net	(54)		(91)
Net cash used in financing activities	(1,410)		(195)
Net increase (decrease) in cash, cash equivalents and restricted cash	208		(712)
Cash, cash equivalents and restricted cash at beginning of the year	1,591		2,303
Cash, cash equivalents and restricted cash at end of the year (a)	$	1,799	$	1,591

Investing and Financing Activities Not Affecting Cash:
Property and equipment acquired through the issuance of debt and capital leases	$	174	$	935
Debt associated with termination of a maintenance service agreement	163		—
Equity interest in Republic Airways Holdings, Inc. received in consideration for bankruptcy claims	—		92
Airport construction financing	12		42
Operating lease conversions to capital lease	52		—

(a) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheet:

Reconciliation of cash, cash equivalents and restricted cash:
Current assets:
Cash and cash equivalents	$	1,694	$	1,482
Restricted cash included in Prepaid expenses and other	—		18
Other assets:
Restricted cash	105		91
Total cash, cash equivalents and restricted cash	$	1,799	$	1,591

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

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

(in millions)	Twelve Months Ended December 31, 2018
Net Operating Profit After Tax ("NOPAT")
Pre-tax income	$	2,658
Special charges and MTM losses on financial instruments (B):
Impairment of assets	377
Termination of a maintenance service agreement	64
Severance and benefit costs	41
MTM losses on financial instruments	5
(Gains) losses on sale of assets and other special charges	5
Pre-tax income excluding special charges and MTM losses on financial instruments (Non-GAAP)	3,150
add: Interest expense (net of income tax benefit) (a)	725
add: Interest component of capitalized aircraft rent (net of income tax benefit) (a)	211
add: Net interest on pension (net of income tax benefit) (a)	(16)
less: Income taxes paid	(19)
NOPAT (Non-GAAP)	$	4,051


Average Invested Capital (five-quarter average)
Total assets	$	44,133
add: Capitalized aircraft operating leases (b)	3,723
less: Non-interest bearing liabilities (c)	(17,224)
Average invested capital (Non-GAAP)	$	30,632

ROIC (Non-GAAP)	13.2		%


(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 December 31, 2018, the effective cash tax rate was 0.6%.
(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 assess 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 adjusted operating income (loss), adjusted operating margin, adjusted pre-tax income (loss), adjusted pre-tax margin, adjusted net income (loss), adjusted diluted earnings (loss) per share and CASM, excluding special charges, third-party business expenses, fuel, and profit sharing, among others. UAL believes that adjusting for special charges is useful to investors because special charges are not indicative of UAL's ongoing performance. UAL believes that adjusting for MTM gains and losses on financial instruments is useful to investors because those unrealized gains or losses may not ultimately be realized on a cash basis. UAL believes that adjusting for interest expense related to capital leases of Embraer ERJ 145 aircraft is useful to investors because of the accelerated recognition of interest expense.

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

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

	Three Months Ended December 31,		% Increase/	Full Year Ended December 31,		% Increase/
	2018	2017	(Decrease)	2018	2017	(Decrease)
CASM (cents)
Cost per available seat mile (CASM) (GAAP)	14.28	13.34	7.0	13.81	13.00	6.2
Special charges (B)	0.44	0.04	NM	0.18	0.07	NM
Third-party business expenses	0.04	0.06	(33.3)	0.04	0.05	(20.0)
Fuel expense	3.46	2.88	20.1	3.38	2.64	28.0
Profit sharing, including taxes	0.12	0.07	71.4	0.12	0.13	(7.7)
CASM, excluding special charges, third-party business expenses, fuel, and profit sharing (Non-GAAP)	10.22	10.29	(0.7)	10.09	10.11	(0.2)

NM Not Meaningful

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

	Three Months Ended December 31,				$ Increase/		% Increase/	Full Year Ended December 31,				$ Increase/		% Increase/
(in millions)	2018		2017		(Decrease)		(Decrease)	2018		2017		(Decrease)		(Decrease)
Operating expenses (GAAP)	$	9,839	$	8,675	$	1,164	13.4	$	38,011	$	34,113	$	3,898	11.4
Special charges (B)	301		31		270		NM	487		176		311		NM
Operating expenses, excluding special charges	9,538		8,644		894		10.3	37,524		33,937		3,587		10.6
Adjusted to exclude:
Third-party business expenses	32		31		1		3.2	121		145		(24)		(16.6)
Fuel expense	2,380		1,875		505		26.9	9,307		6,913		2,394		34.6
Profit sharing, including taxes	82		45		37		82.2	334		349		(15)		(4.3)
Adjusted operating expenses (Non-GAAP)	$	7,044	$	6,693	$	351	5.2	$	27,762	$	26,530	$	1,232	4.6

Operating income (GAAP)	$	652	$	776	$	(124)	(16.0)	$	3,292	$	3,671	$	(379)	(10.3)
Adjusted to exclude:
Special charges (B)	301		31		270		NM	487		176		311		NM
Adjusted operating income (Non-GAAP)	$	953	$	807	$	146	18.1	$	3,779	$	3,847	$	(68)	(1.8)

Pre-tax income (GAAP)	$	556	$	620	$	(64)	(10.3)	$	2,658	$	3,040	$	(382)	(12.6)
Adjusted to exclude:
Special charges (B)	301		31		270		NM	487		176		311		NM
MTM (gains) losses on financial instruments (B)	(56)		—		(56)		NM	5		—		5		NM
Interest expense on ERJ 145 capital leases (C)	13		—		13		NM	26		—		26		NM
Adjusted pre-tax income (Non-GAAP)	$	814	$	651	$	163	25.0	$	3,176	$	3,216	$	(40)	(1.2)

Net income (GAAP)	$	462	$	579	$	(117)	(20.2)	$	2,129	$	2,144	$	(15.0)	(0.7)
Adjusted to exclude:
Special charges (B)	301		31		270		NM	487		176		311		NM
MTM (gains) losses on financial instruments (B)	(56)		—		(56)		NM	5		—		5		NM
Interest expense on ERJ 145 capital leases (C)	13		—		13		NM	26		—		26		NM
Income tax benefit related to adjustments above	(58)		(11)		(47)		NM	(116)		(63)		(53)		NM
Special income tax adjustments (D)	(5)		(179)		174		NM	(5)		(179)		174		NM
Adjusted net income (Non-GAAP)	$	657	$	420	$	237	56.4	$	2,526	$	2,078	$	448	21.6

Diluted earnings per share (GAAP)	$	1.70	$

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