United Announces Full-Year 2015 Profit - United Hub

United Airlines Announces Full-Year 2015 Profit

Company Also Announces Record Fourth-Quarter Profit
January 21, 2016

CHICAGO, Jan. 21, 2016 /PRNewswire/ -- United Airlines (UAL) today reported its fourth-quarter and full-year 2015 financial results.

  • UAL reported full-year net income of $4.5 billion, or $11.88 per diluted share, excluding special items. Including special items, UAL reported full-year net income of $7.3 billion. These results include a nonrecurring $3.1 billion non-cash benefit associated with the reversal of the company's income tax valuation allowance.
  • UAL reported fourth-quarter net income of $934 million, or $2.54 per diluted share, excluding special items. Including special items, UAL reported fourth-quarter net income of $823 million.
  • Today, UAL announced it reached an agreement to acquire 40 new Boeing 737-700 aircraft which will enter the fleet beginning in mid-2017, replacing a portion of the capacity currently operated by regional partners.
  • Employees earned a record $698 million in profit sharing for full-year 2015.

"We improved our operational performance, continued to invest in our products and services and achieved record financial performance," said Brett J. Hart, UAL's acting chief executive officer. "We have great momentum as we head into 2016 and are committed to continuously earning the trust of our customers and employees. I'm proud of what we accomplished together, running a reliable airline and making the right investments to deliver shareholder value. We expect first-quarter pre-tax margin to be between 8 and 10 percent, excluding special items."

Full-Year and Fourth-Quarter Revenue and Capacity

For the fourth quarter of 2015, total revenue was $9.0 billion, a decrease of 3.0 percent year-over-year. Fourth-quarter 2015 consolidated PRASM decreased 6.0 percent and consolidated yield decreased 7.2 percent compared to the fourth quarter of 2014. For the full-year 2015, consolidated PRASM declined 4.4 percent versus the prior year. The declines in PRASM and yield were driven largely by a strong U.S. dollar, lower surcharges, travel reductions from customers impacted by declining oil prices and softening domestic and international yields.

Passenger revenue for the fourth quarter and full year of 2015 and period-to-period comparisons of related statistics for UAL's mainline and regional operations are included in the tables in the back of this document.

Full-Year and Fourth-Quarter Costs

Total operating expense excluding special charges was $7.8 billion in the fourth quarter, down 8.1 percent year-over-year. Including special charges, total operating expense was $8.0 billion, an 8.4 percent decrease year-over-year. The decrease was largely driven by lower oil prices. Consolidated unit cost (CASM), excluding special charges, third-party business expenses, fuel and profit sharing, was flat compared to the fourth quarter of 2014. Consolidated CASM including those items decreased 10 percent year-over-year. For the full year, consolidated CASM excluding special charges, third-party business expenses, fuel and profit sharing decreased 0.7 percent year-over-year. This strong cost performance was largely the result of improved efficiency as part of the company's Project Quality and upgauging initiatives and better completion as a result of improved operational performance. Consolidated CASM including those items decreased 11.9 percent compared to full-year 2014.

Liquidity and Capital Allocation

In the fourth quarter, UAL generated $1.1 billion in operating cash flow and $324 million in free cash flow, and ended the quarter with $6.5 billion in unrestricted liquidity, including $1.35 billion of undrawn commitments under its revolving credit facility. During the fourth quarter, the company continued to invest in its business through gross capital expenditures of $791 million, excluding fully reimbursable projects, including approximately $300 million in aircraft-related deposits that shifted to the fourth quarter of 2015 from the first quarter of 2016.

The company spent $520 million toward its $3 billion share repurchase authorization in the fourth quarter. For the year, United repurchased approximately $1.2 billion worth of shares.

UAL earned a 21.0 percent return on invested capital for the 12 months ended Dec. 31, 2015.

Fleet Updates

Today, UAL announced it would take delivery of 40 new Boeing 737-700 aircraft, which will enter the fleet beginning in mid-2017. These aircraft will replace a portion of the capacity currently operated by the company's regional partners, as the company expects to reduce by more than half the number of 50-seat aircraft in its fleet by 2019.

"Our customers have a preference for an improved travel experience, including first class seats, Economy Plus, and Wi-Fi. These aircraft are an efficient way to meet those needs while reducing 50-seat flying," said Gerry Laderman, UAL's acting chief financial officer.

For more information on UAL's first-quarter 2016 guidance, please visit ir.united.com for the company's investor update.

The company will provide further details on its full-year 2015 financial results on an investor conference call today at 9:30 a.m. CT. Participants in the call will include Oscar Munoz, president and CEO; Brett J. Hart, acting CEO; Gerry Laderman, acting chief financial officer; Jim Compton, vice chairman and chief revenue officer; and Greg Hart, executive vice president and chief operations officer.

About United

United Airlines and United Express operate an average of nearly 5,000 flights a day to 342 airports across six continents. In 2015, United and United Express operated nearly two million flights carrying 140 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 more than 700 mainline aircraft, and this year, the airline anticipates taking delivery of 20 new Boeing aircraft, including 737NGs, 787s and 777s. The airline is a founding member of Star Alliance, which provides service to 192 countries via 28 member airlines. Approximately 84,000 United employees reside in every U.S. state and in countries around the world. For more information, visit united.com, follow @United on Twitter or connect on Facebook. The common stock of United's parent, United Continental Holdings, Inc., is traded on the NYSE under the symbol UAL.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Certain statements included in this release are forward-looking and thus reflect our current expectations and beliefs with respect to certain current and future events and financial performance. Such forward-looking statements are and will be subject to many risks and uncertainties relating to our operations and business environment that may cause actual results to differ materially from any future results expressed or implied in such forward-looking statements. Words such as "expects," "will," "plans," "anticipates," "indicates," "believes," "forecast," "guidance," "outlook," "goals" and similar expressions are intended to identify forward-looking statements. Additionally, forward-looking statements include statements that do not relate solely to historical facts, such as statements which identify uncertainties or trends, discuss the possible future effects of current known trends or uncertainties or which indicate that the future effects of known trends or uncertainties cannot be predicted, guaranteed or assured. All forward-looking statements in this report are based upon information available to us on the date of this report. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, except as required by applicable law. Our actual results could differ materially from these forward-looking statements due to numerous factors including, without limitation, the following: our ability to comply with the terms of our various financing arrangements; the costs and availability of financing; our ability to maintain adequate liquidity; our ability to execute our operational plans, 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; our ability to utilize our net operating losses; our ability to attract and retain customers; demand for transportation in the markets in which we operate; an outbreak of a disease that affects travel demand or travel behavior; demand for travel and the impact that global economic conditions have on customer travel patterns; excessive taxation and the inability to offset future taxable income; general economic conditions (including interest rates, foreign currency exchange rates, investment or credit market conditions, crude oil prices, costs of aircraft fuel and energy refining capacity in relevant markets); our ability to cost-effectively hedge against increases in the price of aircraft fuel; any potential realized or unrealized gains or losses related to fuel or currency hedging programs; the effects of any hostilities, act of war or terrorist attack; the ability of other air carriers with whom we have alliances or partnerships to provide the services contemplated by the respective arrangements with such carriers; the costs and availability of aviation and other insurance; industry consolidation or changes in airline alliances; competitive pressures on pricing and on demand; our capacity decisions and the capacity decisions of our competitors; U.S. or foreign governmental legislation, regulation and other actions (including open skies agreements and environmental regulations); the impact of regulatory, investigative and legal proceedings and legal compliance risks; the impact of any management changes; our CEO's health prognosis and return from medical leave; labor costs; our ability to maintain satisfactory labor relations and the results of the collective bargaining agreement process with our union groups; any disruptions to operations due to any potential actions by our labor groups; weather conditions; and other risks and uncertainties set forth under Item 1A., Risk Factors, of UAL's Annual Report on Form 10-K, as well as other risks and uncertainties set forth from time to time in the reports we file with the SEC.

-tables attached-

 

UNITED CONTINENTAL HOLDINGS, INC.
STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)
THREE MONTHS AND YEAR ENDED DECEMBER 31, 2015 AND 2014
(In millions, except per share data)

(In millions, except per share data) Three Months Ended
December 31, 2015
Three Months Ended
December 31, 2014
%
Increase/
(Decrease)
Year Ended
December 31, 2015
Year Ended
December 31, 2014
%
Increase/
(Decrease)
Operating revenue:
Passenger: (A)
Mainline
$6,180 $6,375 (3.1) $26,333 $26,785 (1.7)
Operating revenue: Passenger: (A) Regional 1,549 1,708 (9.3) 6,452 6,977 (7.5)
Operating revenue: Passenger: (A) Total passenger revenue 7,729 8,083 (4.4) 32,785 33,762 (2.9)
Operating revenue: Cargo 231 260 (11.2) 937 938 (0.1)
Operating revenue: Other operating revenue 1,076 970 10.9 4,142 4,201 (1.4)
Operating revenue:Other operating revenue: Total operating revenue 9,036 9,313 (3.0) 37,864 38,901 (2.7)
Operating expense:
Salaries and related costs
2,424 2,251 7.7 9,713 8,935 8.7
Operating expense: Aircraft fuel(B) 1,618 2,530 (36.0) 7,522 11,675 (35.6)
Operating expense: Regional capacity purchase 565 597 (5.4) 2,290 2,344 (2.3)
Operating expense: Landing fees and other rent 556 568 (2.1) 2,203 2,274 (3.1)
Operating expense: Depreciation and amortization 476 431 10.4 1,819 1,679 8.3
Operating expense: Aircraft maintenance materials and outside repairs 399 415 (3.9) 1,651 1,779 (7.2)
Operating expense: Distribution expenses 316 334 (5.4) 1,342 1,373 (2.3)
Operating expense: Aircraft rent 174 215 (19.1) 754 883 (14.6)
Operating expense: Special charges (C) 131 179 NM1 326 443 NM1
Operating expense: Other operating expenses 1,296 1,168 11.0 5,078 5,143 (1.3)
Operating expense: Other Operating Expenses: Total operating expenses 7,955 8,688 (8.4) 32,698 36,528 (10.5)
Operating income: Operating income 1,081 625 73.0 5,166 2,373 117.7
Nonoperating income (expense):
Interest expense
(165) (176) (6.3) (669) (735) (9.0)
Nonoperating income (expense): Interest capitalized 11 12 (8.3) 49 52 (5.8)
Nonoperating income (expense): Interest income 9 5 80.0 25 22 13.6
Nonoperating income (expense): Miscellaneous, net (C) (31) (443) (93.0) (352) (584) (39.7)
Nonoperating income (expense): Miscellaneous, net (C): Total nonoperating expense (176) (602) (70.8) (947) (1,245) (23.9)
Income before income taxes: Income before income taxes 905 23 NM 4,219 1,128 274.0
Income tax expense: Income tax expense (benefit) (D) 82 (5) NM1 (3,121) (4) NM1
Net income: Net income $823 $28 NM $7,340 $1,132 NM
Earnings per share: Earnings per share, basic $2.24 $0.08 NM $19.52 $3.05 NM
Earnings per share: Earnings per share, diluted $2.24 $0.07 NM $19.47 $2.93 NM
Weighted average shares: Weighted average shares, basic 367 372 (1.3) 376 371 1.3
Weighted average shares: Weighted average shares, diluted 367 376 (2.4) 377 390 (3.3)
  1. NM means Not Meaningful

 

UNITED CONTINENTAL HOLDINGS, INC.
NOTES (UNAUDITED)

(A) Select passenger revenue information is as follows (in millions):
4Q 2015
Passenger
Revenue
(millions)
Passenger
Revenue
vs.
4Q 2014
PRASM
vs.
4Q 2014
Yield
vs.
4Q 2014
Available
Seat Miles
vs.
4Q 2014
Domestic $3,249 0.9% (3.2%) (5.6%) 4.3%
Atlantic 1,314 (3.2%) (2.7%) (1.5%) (0.5%)
Pacific 1,012 (8.6%) (8.6%) (9.2%) 0.0%
Latin America 605 (12.6%) (20.9%) (20.8%) 10.5%
International 2,931 (7.1%) (8.9%) (8.7%) 1.9%
Mainline 6,180 (3.1%) (6.0%) (7.1%) 3.1%
Regional 1,549 (9.3%) (3.0%) (4.2%) (6.6%)
Consolidated $7,729 (4.4%) (6.0%) (7.2%) 1.8%

 

UNITED CONTINENTAL HOLDINGS, INC.
NOTES (UNAUDITED)

(B) UAL's results of operations include fuel expense for both mainline and regional operations. (In millions, except per share data)
Three Months Ended
December 31, 2015
Three Months Ended
December 31, 2014
%
Increase/
(Decrease)
Year Ended
December 31, 2015
Year Ended
December 31, 2014
%
Increase/
(Decrease)
Mainline fuel expense excluding hedge impacts $1,184 $1,982 (40.3) $5,711 $9,408 (39.3)
Hedge losses reported in fuel expense 2 (175) (85) NM1 (604) (89) NM1
Total mainline fuel expense 1,359 2,067 (34.3) 6,315 9,497 (33.5)
Regional fuel expense 259 463 (44.1) 1,207 2,178 (44.6)
Consolidated fuel expense 1,618 2,530 (36.0) 7,522 11,675 (35.6)
Cash paid on settled hedges that did not qualify for hedge accounting 3 (115) (151) NM1 (329) (138) NM1
Fuel expense including all losses from settled hedges $1,733 $2,681 (35.4) $7,851 $11,813 (33.5)
Mainline fuel consumption (gallons) 784 769 2.0 3,216 3,183 1.0
Mainline average aircraft fuel price per gallon excluding hedge losses recorded in fuel expense $1.51 $2.58 (41.5) $1.78 $2.96 (39.9)
Mainline average aircraft fuel price per gallon $1.73 $2.69 (35.7) $1.96 $2.98 (34.2)
Mainline average aircraft fuel price per gallon including cash paid on settled hedges that did not qualify for hedge accounting $1.88 $2.88 (34.7) $2.07 $3.03 (31.7)
Regional fuel consumption (gallons) 167 179 (6.7) 670 722 (7.2)
Regional average aircraft fuel price per gallon $1.55 $2.59 (40.2) $1.80 $3.02 (40.4)
Consolidated fuel consumption (gallons) 951 948 0.3 3,886 3,905 (0.5)
Consolidated average aircraft fuel price per gallon excluding hedge losses recorded in fuel expense $1.52 $2.58 (41.1) $1.78 $2.97 (40.1)
Consolidated average aircraft fuel price per gallon $1.70 $2.67 (36.3) $1.94 $2.99 (35.1)
Consolidated average aircraft fuel price per gallon including cash paid on settled hedges that did not qualify for hedge accounting $1.82 $2.83 (35.7) $2.02 $3.03 (33.3)
  1. Includes losses from settled hedges that were designated for hedge accounting. UAL allocates 100 percent of hedge accounting gains (losses) to mainline fuel expense.
  2. Includes ineffectiveness losses on settled hedges and losses on settled hedges that were not designated for hedge accounting. Ineffectiveness gains (losses) and gains (losses) on hedges that do not qualify for hedge accounting are recorded in Nonoperating income (expense): Miscellaneous, net.
UNITED CONTINENTAL HOLDINGS, INC.
NOTES (UNAUDITED)

(C) Special items include the following:
(In millions) Three Months Ended
December 31, 2015 (In millions)
Three Months Ended
December 31, 2014 (In millions)
Year Ended
December 31, 2015 (In millions)
Year Ended
December 31, 2014 (In millions)
Operating:
Impairment of assets
$48 $16 $79 $49
Operating:Integration-related costs 13 17 60 96
Operating:Severance and benefit costs 4 141 107 199
Operating:(Gains) losses on sale of assets and other miscellaneous (gains) losses, net 66 5 80 99
Operating: (Gains) losses on sale of assets and other special charges:Special charges 131 179 326 443
Nonoperating and income taxes:
Losses on extinguishment of debt and other, net
7 53 202 74
Nonoperating and income taxes:Income tax benefit related to special charges (11) (6) (11) (10)
Nonoperating and income taxes:Income tax expense (benefit) associated with valuation allowance release (D) 88 (3,130)
Nonoperating and income taxes: Income tax expense (benefit) associated with valuation allowance release (D): Total operating and nonoperating special charges, net of income taxes 215 226 (2,613) 507
Nonoperating and income taxes:Mark-to-market (MTM) losses from fuel derivative contracts settling in future periods 1 225 (8) 244
Nonoperating and income taxes:Prior period gains (losses) on fuel derivative contracts settled in the current period (105) (18) (241) 83
Nonoperating and income taxes: Prior period gains (losses) on fuel derivative contracts settled in the current period:Total special items, net of income taxes $111 $433 $(2,862) $834

 

   
 

2014 - Special items




Impairment of assets: During 2014, the company recorded a charge of $16 million ($10 million net of related income tax benefits) related to its annual assessment of impairment of its indefinite-lived intangible assets (certain international Pacific routes). In addition, the company also recorded $33 million for charges related primarily to impairment of its flight equipment held for disposal associated with its Boeing 737-300 and 737-500 fleets.




Integration-related costs: Integration-related costs included compensation costs related to systems integration, training, severance and relocation for employees.




Severance and benefit costs: During the fourth quarter of 2014, the company recorded $141 million of severance and benefit costs related primarily to a voluntary early-out program for its flight attendants. More than 2,500 participants elected a one-time opportunity 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 the end of 2016. In addition, the company recorded $58 million of severance and benefits primarily related to reductions of management and front-line employees, including from Hopkins International Airport (Cleveland), as part of its cost savings initiatives. The company is currently evaluating its options regarding its long-term contractual lease commitments at Cleveland. The capacity reductions at Cleveland may result in further special charges, which could be significant, related to our contractual commitments.




(Gains) losses on sale of assets and other miscellaneous (gains) losses, net: During 2014, the company recorded $66 million for the permanent grounding of 21 of the company's Embraer ERJ 135 regional aircraft under lease through 2018, which included an accrual for remaining lease payments and an amount for maintenance return conditions. The company decided to permanently ground these 21 Embraer ERJ 135 aircraft as a result of new Embraer E175 regional jet deliveries, the impact of pilot shortages at regional carriers and fuel prices. In addition, the company also recorded $33 million for losses on the sale of assets and other special charges.




Loss on extinguishment of debt and other, net: On October 10, 2014, United used cash to retire, at par, the entire $248 million principal balance of the 6% Convertible Junior Subordinated Debentures and the 6% Convertible Preferred Securities, Term Income Deferrable Equity Securities (TIDES). The $53 million expense is primarily associated with the write-off of non-cash debt discounts recorded on the TIDES due to purchase accounting during the company's merger transaction in 2010.




MTM losses from fuel derivative contracts settling in future periods and prior period gains (losses) on fuel derivative contracts settled in the current period: The company utilizes certain derivative instruments that are economic hedges but do not qualify for hedge accounting under U.S. generally accepted accounting principles. The company records changes in the fair value of these economic hedges to Nonoperating income (expense): Miscellaneous, net in the statements of consolidated operations. During the three months and year ended December 31, 2014, the company recorded $225 million and $244 million, respectively, in MTM losses on economic hedges that will settle in future periods. For economic hedges that settled in the three months and year ended December 31, 2014, the company recorded MTM gains (losses) of ($18) million and $83 million, respectively, in prior periods. The figures above also include an insignificant amount of ineffectiveness on hedges that are designated for hedge accounting.




(D)  

The company's income tax benefit was $3.1 billion for the year ended December 31, 2015. During 2015, after considering all positive and negative evidence and the four sources of taxable income, the Company concluded that its deferred income tax assets are more likely than not to be realized. In evaluating the likelihood of utilizing the Company's net federal and state deferred tax assets, the significant relevant factors that the Company considered are: (1) its recent history and forecasted profitability; (2) growth in the U.S. and global economies; and (3) future impact of taxable temporary differences. Therefore, the Company released almost all of its valuation allowance in 2015, resulting in a $3.1 billion benefit in its provision for income taxes.

UNITED CONTINENTAL HOLDINGS, INC.
STATISTICS
Three Months Ended
December 31, 2015
Three Months Ended
December 31, 2014
%
Increase/
(Decrease)
Year Ended
December 31, 2015
Year Ended
December 31, 2014
%
Increase/
(Decrease)
Mainline:
Passengers (thousands)
24,169 22,087 9.4 96,327 91,475 5.3
Mainline:Revenue passenger miles (millions) 44,470 42,609 4.4 183,642 179,015 2.6
Mainline:Available seat miles (millions) 53,814 52,197 3.1 219,989 214,105 2.7
Mainline:Cargo ton miles (millions) 679 674 0.7 2,614 2,487 5.1
Mainline:Passenger load factor:
Mainline
82.6% 81.6% 1.0 pts. 83.5% 83.6% (0.1) pts.
Mainline:Domestic 86.1% 84.1% 2.0 pts. 86.3% 86.0% 0.3 pts.
Mainline:International 79.1% 79.2% (0.1) pts. 80.8% 81.3% (0.5) pts.
Mainline:Passenger revenue per available seat mile (cents) 11.48 12.21 (6.0) 11.97 12.51 (4.3)
Mainline:Average yield per revenue passenger mile (cents) 13.90 14.96 (7.1) 14.34 14.96 (4.1)
Mainline:Average aircraft fuel price per gallon excluding hedge losses recorded in fuel expense 4 $1.51 $2.58 (41.5) $1.78 $2.96 (39.9)
Mainline:Average aircraft fuel price per gallon 4 $1.73 $2.69 (35.7) $1.96 $2.98 (34.2)
Mainline:Average aircraft fuel price per gallon including cash paid on settled hedges that did not qualify for hedge accounting 3 $1.88 $2.88 (34.7) $2.07 $3.03 (31.7)
Mainline:Fuel gallons consumed (millions) 784 769 2.0 3,216 3,183 1.0
Mainline:Aircraft in fleet at end of period 715 691 3.5 715 691 3.5
Mainline:Average stage length (miles) 1,869 1,936 (3.5) 1,922 1,958 (1.8)
Mainline:Average daily utilization of each aircraft (hours) 9:59 10:11 (2.0) 10:24 10:26 (0.3)
Regional:
Passengers (thousands)
10,983 11,470 (4.2) 44,042 46,554 (5.4)
Regional:Revenue passenger miles (millions) 6,248 6,602 (5.4) 24,969 26,544 (5.9)
Regional:Available seat miles (millions) 7,490 8,016 (6.6) 30,014 31,916 (6.0)
Regional:Passenger load factor 83.4% 82.4% 1.0 pts. 83.2% 83.2% — pts.
Regional:Passenger revenue per available seat mile (cents) 20.68 21.31 (3.0) 21.50 21.86 (1.6)
Regional:Average yield per revenue passenger mile (cents) 24.79 25.87 (4.2) 25.84 26.28 (1.7)
Regional:Aircraft in fleet at end of period 524 566 (7.4) 524 566 (7.4)
Regional:Average stage length (miles) 562 570 (1.4) 559 561 (0.4)
Consolidated (Mainline and Regional):
Passengers (thousands)
35,152 33,557 4.8 140,369 138,029 1.7
Consolidated (Mainline and Regional):Revenue passenger miles (millions) 50,718 49,211 3.1 208,611 205,559 1.5
Consolidated (Mainline and Regional):Available seat miles (millions) 61,304 60,213 1.8 250,003 246,021 1.6
Consolidated (Mainline and Regional):Passenger load factor 82.7% 81.7% 1.0 pts. 83.4% 83.6% (0.2) pts.
Consolidated (Mainline and Regional):Passenger revenue per available seat mile (cents) 12.61 13.42 (6.0) 13.11 13.72 (4.4)
Consolidated (Mainline and Regional):Total revenue per available seat mile (cents) 14.74 15.47 (4.7) 15.15 15.81 (4.2)
Consolidated (Mainline and Regional):Average yield per revenue passenger mile (cents) 15.24 16.43 (7.2) 15.72 16.42 (4.3)
Consolidated (Mainline and Regional):Average aircraft fuel price per gallon excluding hedge losses recorded in fuel expense 4 $1.52 $2.58 (41.1) $1.78 $2.97 (40.1)
Consolidated (Mainline and Regional):Average aircraft fuel price per gallon 4 $1.70 $2.67 (36.3) $1.94 $2.99 (35.1)
Consolidated (Mainline and Regional):Average aircraft fuel price per gallon including cash paid on settled hedges that did not qualify for hedge accounting 4 $1.82 $2.83 (35.7) $2.02 $3.03 (33.3)
Consolidated (Mainline and Regional):Fuel gallons consumed (millions) 951 948 0.3 3,886 3,905 (0.5)
Consolidated (Mainline and Regional):Average full-time equivalent employees (thousands) 82.1 80.5 2.0 82.1 82.0 0.1
  1. Fuel price per gallon includes aircraft fuel and related taxes.

 

UNITED CONTINENTAL HOLDINGS, INC.
NON-GAAP FINANCIAL RECONCILIATION

UAL evaluates its financial performance utilizing various accounting principles generally accepted in the United States of America (GAAP) and Non-GAAP financial measures, including income (loss) before income taxes excluding special items, net income (loss) excluding special items, net earnings (loss) per share excluding special items, and CASM, among others. CASM is a common metric used in the airline industry to measure an airline's cost structure and efficiency. Pursuant to SEC Regulation G, UAL has included the following reconciliation of reported Non-GAAP financial measures to comparable financial measures reported on a GAAP basis. UAL believes that adjusting for special items is useful to investors because special charges are non-recurring charges not indicative of UAL's ongoing performance. In addition, the company believes that adjusting for MTM gains and losses from fuel derivative contracts settling in future periods and prior period gains and losses on fuel derivative contracts settled in the current period is useful because the adjustments allow investors to better understand the cash impact of settled fuel derivative contracts in a given period. UAL also believes that excluding third-party business expenses, such as maintenance, ground handling and catering services for third parties, fuel sales and non-air mileage redemptions, provides more meaningful disclosure because these expenses are not directly related to UAL's core business. UAL also believes that excluding fuel costs from certain measures is useful to investors because it provides an additional measure of management's performance excluding the effects of a significant cost item over which management has limited influence. UAL excludes profit sharing because this exclusion allows investors to better understand and analyze our recurring cost performance and provides a more meaningful comparison of our core operating costs to the airline industry. UAL also believes that adjusting capital expenditures for fully reimbursable projects is useful to investors in order to appropriately reflect the non-reimbursable funds spent on capital expenditures.

 

UNITED CONTINENTAL HOLDINGS, INC.
NON-GAAP FINANCIAL RECONCILIATION (Continued)
Three Months Ended
December 31, 2015 (In millions)
Three Months Ended
December 31, 2014 (In millions)
$
Increase/
(Decrease)
%
Increase/
(Decrease)
Year Ended
December 31, 2015 (In millions)
Year Ended
December 31, 2014 (In millions)
$
Increase/
(Decrease)
%
Increase/
(Decrease)
Operating expenses $7,955 $8,688 $(733) (8.4) $32,698 $36,528 $(3,830) (10.5)
Operating expensesLess: Special charges (C) 131 179 (48) NM1 326 443 (117) NM1
Operating expenses, excluding special charges 7,824 8,509 (685) (8.1) 32,372 36,085 (3,713) (10.3)
Operating expenses, excluding special charges:Less: Third-party business expenses 86 65 21 32.3 291 534 (243) (45.5)
Operating expenses, excluding special charges:Less: Fuel expense 1,618 2,530 (912) (36.0) 7,522 11,675 (4,153) (35.6)
Operating expenses, excluding special charges:Less: Profit sharing, including taxes 153 53 100 188.7 698 235 463 197.0
Operating expenses, excluding fuel, profit sharing, special charges and third-party business expenses $5,967 $5,861 $106 1.8 $23,861 $23,641 $220 0.9
Income before income taxes $905 $23 $882 NM $4,219 $1,128 $3,091 274.0
Income before income taxes:Less: Special items before income tax benefit 34 439 (405) NM1 279 844 (565) NM1
Income before income taxes and excluding special items $939 $462 $477 103.2 $4,498 $1,972 $2,526 128.1
Net income $823 $28 $795 NM $7,340 $1,132 $6,208 NM
Net income:Less: special items, net of tax (C) 111 433 (322) NM1 (2,862) 834 (3,696) NM1
Net income, excluding special items $934 $461 $473 102.6 $4,478 $1,966 $2,512 127.8
Diluted earnings per share $2.24 $0.07 $2.17 NM $19.47 $2.93 $16.54 NM
Diluted earnings per share:Add back: special items 0.30 1.12 (0.82) NM1 (7.59) 2.12 (9.71) NM1
Diluted earnings per share:Add back: Impact of dilution, net 0.01 (0.01) NM1 0.01 (0.01) NM1
Diluted earnings per share, excluding special items $2.54 $1.20 $1.34 111.7 $11.88 $5.06 $6.82 134.8

 

UNITED CONTINENTAL HOLDINGS, INC.
NON-GAAP FINANCIAL RECONCILIATION (Continued)
Three Months Ended
December 31, 2015 in cents
Three Months Ended
December 31, 2014 in cents
%
Increase/
(Decrease)
Year Ended
December 31, 2015 in cents
Year Ended
December 31, 2014 in cents
%
Increase/
(Decrease)
CASM Mainline Operations (cents)
Cost per available seat mile (CASM)
12.37 13.68 (9.6) 12.42 14.03 (11.5)
CASM Mainline Operations (cents): Cost per available seat mile (CASM):Less: Special charges (C) 0.24 0.34 NM1 0.15 0.21 NM1
CASM Mainline Operations (cents): CASM, excluding special charges 12.13 13.34 (9.1) 12.27 13.82 (11.2)
CASM Mainline Operations (cents): CASM, excluding special chargesLess: Third-party business expenses 0.16 0.12 33.3 0.13 0.25 (48.0)
CASM Mainline Operations (cents): CASM, excluding special charges and third-party business expenses 11.97 13.22 (9.5) 12.14 13.57 (10.5)
CASM Mainline Operations (cents): CASM, excluding special charges and third-party business expensesLess: Fuel expense 2.53 3.96 (36.1) 2.87 4.44 (35.4)
CASM Mainline Operations (cents): CASM, excluding special charges, third-party business expenses and fuel 9.44 9.26 1.9 9.27 9.13 1.5
CASM Mainline Operations (cents): CASM, excluding special charges, third-party business expenses and fuelLess: Profit sharing per available seat mile 0.28 0.10 180.0 0.32 0.11 190.9
CASM Mainline Operations (cents): CASM, excluding special charges, third-party business expenses, fuel, and profit sharing 9.16 9.16 8.95 9.02 (0.8)
CASM Consolidated Operations (cents)
Cost per available seat mile (CASM)
12.98 14.43 (10.0) 13.08 14.85 (11.9)
CASM Consolidated Operations (cents): Cost per available seat mile (CASM)Less: Special charges (C) 0.22 0.30 NM1 0.13 0.18 NM1
CASM Consolidated Operations (cents): CASM, excluding special charges 12.76 14.13 (9.7) 12.95 14.67 (11.7)
CASM Consolidated Operations (cents): CASM, excluding special chargesLess: Third-party business expenses 0.14 0.11 27.3 0.12 0.22 (45.5)
CASM Consolidated Operations (cents): CASM, excluding special charges and third-party business expenses 12.62 14.02 (10.0) 12.83 14.45 (11.2)
CASM Consolidated Operations (cents): CASM, excluding special charges and third-party business expensesLess: Fuel expense 2.64 4.20 (37.1) 3.01 4.75 (36.6)
CASM Consolidated Operations (cents): CASM, excluding special charges, third-party business expenses and fuel 9.98 9.82 1.6 9.82 9.70 1.2
CASM Consolidated Operations (cents): CASM, excluding special charges, third-party business expenses and fuelLess: Profit sharing per available seat mile 0.25 0.09 177.8 0.28 0.09 211.1
CASM Consolidated Operations (cents): CASM, excluding special charges, third-party business expenses, fuel, and profit sharing 9.73 9.73 9.54 9.61 (0.7)

 

UNITED CONTINENTAL HOLDINGS, INC.
CAPITAL EXPENDITURES AND FREE CASH FLOW
Capital Expenditures (in millions) Three Months Ended
December 31, 2015
Year Ended
December 31, 2015
Capital ExpendituresCapital expenditures – GAAP $763 $2,747
Capital Expenditures: Capital expenditures – GAAP:Property and equipment acquired through the issuance of debt 69 866
Capital Expenditures: Capital expenditures – GAAP:Airport construction financing 12 17
Capital Expenditures: Capital expenditures – GAAP:Fully reimbursable projects (53) (124)
Capital Expenditures:Adjusted capital expenditures – Non-GAAP $791 $3,506
Free Cash Flow (in millions) Three Months Ended
December 31, 2015
Year Ended
December 31, 2015
Free Cash Flow:Net cash provided by operating activities $1,115 $5,992
Free Cash Flow: Net cash provided by operating activities:Less adjusted capital expenditures – Non-GAAP 791 3,506
Free Cash Flow:Free cash flow - Non-GAAP $324 $2,486

 

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

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.
Twelve Months Ended
December 31, 2015
Return On Invested CapitalNet Operating Profit After Tax (NOPAT)
Pre-tax income excluding special items 5
$4,498
Return On Invested CapitalNOPAT adjustments 6 1,100
Return On Invested CapitalNOPAT $5,598
Return On Invested CapitalEffective cash tax rate 7 0.4%
Return On Invested CapitalInvested Capital (five-quarter average)
Total assets
$39,210
Return On Invested CapitalInvested capital adjustments 8 12,507
Return On Invested CapitalAverage Invested Capital $26,703
Return On Invested CapitalReturn on Invested Capital 21.0%
  1. Non-GAAP Financial Reconciliation
  2. NOPAT adjustments include: adding back (net of tax shield) interest expense, the interest component of capitalized aircraft rent and net interest on pension.
  3. Effective cash tax rate is calculated by dividing cash taxes paid by adjusted pre-tax income.
  4. Invested capital adjustments include: adding back capital aircraft rent (at 7.0X) and deferred income taxes, less advance ticket sales, frequent flyer deferred revenue, tax valuation allowance and other non-interest bearing liabilities.
Notes: Twelve Months Ended
December 31, 2015
Pre-tax income $4,219
Return On Invested CapitalAdd: Special items 279
Return On Invested CapitalPre-tax income excluding special items $4,498

 

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Logo - http://photos.prnewswire.com/prnh/20130404/MM89155LOGO

 

SOURCE United Airlines

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

United Announces 2020 Financial Results: 2021 Will Focus On Transition To Recovery; Expects To Exceed 2019 Adjusted EBITDA Margin By 2023*

Company continues to improve core cash burn in the face of continued COVID-19 headwinds; sharpens focus to prepare for recovery
January 20, 2021

CHICAGO, Jan. 20, 2021 /PRNewswire/ -- United Airlines (UAL) today announced fourth-quarter and full-year 2020 financial results. The company continues its efforts to lead the industry as it manages the most disruptive crisis in aviation history.

Since the beginning of the COVID-19 crisis, United has raised over $26 billion in liquidity and made important progress in reducing core cash burn (see detailed chart below) to ensure the company's survival. Over the last three quarters, the company has identified $1.4 billion of annual cost savings and has a path to achieve at least $2.0 billion in structural reductions moving forward. United ended 2020 with $19.7 billion in available liquidity1, including an undrawn revolver capacity and funds available under the CARES Act loan program from the U.S. Treasury.

Having stabilized its financial foundation, the company expects 2021 to be a transition year that's focused on preparing for a recovery. United has resumed heavy maintenance and engine overhauls, investments that are essential to recovery when demand returns. The combination of structural cost reduction and timely investments will help set up United to exceed its 2019 adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) margin in 2023. The company expressed high confidence that it would achieve this target by 2023 – and said its ongoing recovery planning would help ensure the company was equipped to reach this level even sooner, if demand returns more quickly.

"Aggressively managing the challenges of 2020 depended on our innovation and fast-paced decision making. But, the truth is that COVID-19 has changed United Airlines forever," said United Airlines CEO Scott Kirby. "The passion, teamwork and perseverance that the United team showed in 2020 is exactly what will help us build a new United Airlines that's better, stronger and more profitable than ever. I could not be prouder of – and more grateful to – this team, which is going to lead us there." 

_____________________________________________________________________

* 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 years ended December 31, 2020 and 2019, please see the accompanying tables to this release.

Fourth-Quarter and Full-Year 2020 Financial Results

  • Reported fourth-quarter net loss of $1.9 billion, $7.1 billion for the full-year 2020.
  • Reported fourth-quarter adjusted net loss2 of $2.1 billion, $7.7 billion for the full-year 2020.
  • Reported fourth-quarter total operating revenue of $3.4 billion, down 69% versus fourth-quarter 2019.
  • Reported fourth-quarter operating expenses down 45% versus fourth-quarter 2019, down 42% excluding special charges3.

Core Cash Burn

  • Reported fourth-quarter daily cash burn4 of $23 million, plus $10 million of average debt principal payments and severance payments per day.
  • Reported fourth-quarter core cash burn4 of $19 million per day, an improvement of an average of $5 million per day versus the third-quarter 2020.
  • Core cash burn captures underlying operational performance of the company throughout the pandemic; a reconciliation with cash burn4 is provided below.

 

$M/day


2Q20


3Q20


4Q20








Cash burn4


$(40)


$(25)


$(33)

  Debt principal and severance payments


(3)


(4)


(10)

  Timing of certain payments5


2


1


(2)

  Investments in the recovery6



(1)


(2)

  Capital expenditures, net of flight equipment purchase deposit returns



4


(1)

Core cash burn4


$(38)


$(24)


$(19)

First Quarter 2021 Outlook

  • Based on current trends, the company expects first quarter 2021 total operating revenue to be down 65 percent to 70 percent versus the first quarter 2019. Accelerated distribution of the COVID-19 vaccine may lead to faster improvement, however, the company is not including this potential improvement in its first quarter 2021 revenue outlook.
  • Expects first quarter 2021 capacity to be down at least 51 percent versus the first quarter of 2019.
  • Expects first quarter 2021 ending available liquidity to be similar to year-end 2020 available liquidity of around $19.7 billion1.

Fourth-Quarter and Full-Year Highlights

  • Completed $3 billion Enhanced Equipment Trust Certificate (EETC) transaction; the largest deal of this type in aviation history.
  • First U.S. airline to leverage its loyalty program, MileagePlus®, as collateral for a $6.8B loan.
  • Received $968 million in net proceeds from the sale of 20.8 million shares in the ATM program in the fourth quarter 2020. For the full year 2020, total net proceeds were $989 million from the sale of 21.4 million shares through the ATM program.
  • Only airline to partner with the Defense Advanced Research Projects Agency (DARPA), U.S. Transportation Command (USTRANSCOM) and Air Mobility Command (AMC) to study how effectively the unique airflow configuration on board an aircraft can prevent the spread of aerosolized particles among passengers and crew.
  • First airline to safely transport the first delivery of Pfizer and BioNTech's COVID-19 vaccine into the U.S.
  • First among U.S. global airlines to permanently eliminate change fees on all standard economy and premium cabin tickets for travel within the U.S., and starting January 1, 2021, any United customer can fly standby for free on a flight departing the day of their travel regardless of the type of ticket or class of service.
  • Announced bold environmental commitment unmatched by any airline; pledging 100% green by reducing greenhouse gas emissions 100% by 2050.
  • First U.S. airline to implement schedule reductions due to sharp travel demand drop.
  • Increased cargo revenue by an industry-leading 77 percent in the fourth quarter by leveraging international flying and deploying strategic international cargo-only missions.
  • Launched the world's first free transatlantic COVID-19 testing pilot for customers.
  • First U.S. airline to launch a COVID-19 testing program for customers traveling on United from San Francisco International Airport to Hawaii.
  • Since COVID-19 began, first major U.S. airline to require masks onboard. In the third quarter, extended mask requirements to airport terminals.
  • One of the first U.S. airlines to enforce policy banning customers for refusing to follow mask requirements.
  • First major U.S. airline to ask all passengers to complete a health self-assessment during their check-in process based on recommendations from the Cleveland Clinic.
  • First airline to contact customers when flights are more than 70% full to give them the opportunity to change their plans for free.
  • First U.S. airline to introduce a tool like the Destination Travel Guide, a new interactive map tool on united.com and the United mobile app that allows customers to filter and view destinations' COVID-19 related travel restrictions.
  • First U.S. airline to introduce an interactive map feature for customers on united.com, powered by Google Flight Search Enterprise Technology, to easily compare and shop for flights based on departure city, budget, and location type. Customers can simultaneously compare travel to various destinations in a single search.
  • First U.S. airline whose CEO took a 100% salary cut. 

Taking Care of Our Customers

  • Launched United CleanPlusSM to reinforce the company's commitment to putting health and safety at the forefront of the entire customer experience, with the goal of delivering an industry-leading standard of cleanliness, including partnerships with Clorox and experts from the Cleveland Clinic.
  • First and only airline to maximize ventilation systems by running the auxiliary power on mainline aircraft during the entire boarding and deplaning process, so customers and crew get the important safety benefits provided by high-efficiency particulate air (HEPA) filtration systems.
  • Electrostatic spraying aircraft interiors on all U.S. flights.
  • Began using new Clorox® Electrostatic Sprayers to disinfect airport terminals.
  • Introduced customer COVID-19 testing from Houston to Latin American and Caribbean destinations.
  • Began working with the Centers for Disease Control (CDC) on the first contact tracing initiative for all international and domestic flights.
  • Added Zoono Microbe Shield, an EPA-registered antimicrobial coating that forms a long-lasting bond with surfaces and inhibits the growth of microbes, to the airline's already rigorous safety and cleaning procedures.
  • Launched an automated assistant chat function that gives customers a contactless option to receive immediate access to information about cleaning and safety procedures put in place due to COVID-19.
  • Began cleaning pilot flight decks with Ultraviolet C (UVC) lighting technology on most aircraft at hub airports to disinfect the flight deck interior and continue providing pilots with a sanitary work environment.
  • Expanded touchless check-in capabilities to kiosks at more than 215 airports.
  • Launched free COVID-19 testing to all employees and checks their temperatures before they begin work at all U.S. airports.
  • In May, started providing individually wrapped hand wipes and snack bag with pretzels, Stroopwafel and water to reduce touchpoints.
  • Redesigned United's Mobile App to be more accessible for people with visual disabilities.
  • Announced changes to the MileagePlus Premier® program that will make it easier to earn status in 2021 for the 2022 program year.
  • Launched virtual, on-demand customer service at the airport.
  • Announced plan to continue installing United Polaris® Business Class on Boeing 787 fleet.

Reimagining the Route Network

  • In 2020, started 43 domestic routes and 10 international routes, with 15 more international routes planned to launch in 2021.
  • In 4Q, responded to Thanksgiving travel demand by adding over 1,400 domestic flights to the November schedule.
  • In 4Q, expanded service to India with 4 daily flights including the addition of O'Hare to Delhi; United remains the only U.S. carrier to serve India.
  • Compared to September, United had nonstop service in 23 more domestic and 8 more international routes in October, 37 more domestic and 32 more international routes in November, and 95 more domestic and 53 more international routes in December.
  • Announced plans to return service to New York/JFK after a five-year absence, with two daily round-trips to both San Francisco and Los Angeles starting in February 2021.

Assisting the Communities We Serve

  • Through a combination of cargo-only flights and passenger flights, United has transported more than 401 million pounds of freight, which includes 87 million pounds of vital shipments, such as COVID-19 vaccines, medical kits, PPE, pharmaceuticals, and medical equipment, and more than 3.4 million pounds of military mail and packages.
  • Booked over 2,900 free flights for medical professionals to support COVID-19 response in New Jersey/New York and California.
  • Using crowdsourcing platform - Miles on a Mission - donated more than 11 million miles for charities like the Thurgood Marshall College Fund, College to Congress, and Compass to Care.
  • More than 19.2 million miles were donated by MileagePlus members and 7.6 million miles were matched by United to help organizations providing relief during COVID-19.
  • Donated nearly 1.2 million pounds of food from United Polaris lounges, United Club locations, and catering kitchens to local food banks and charities.
  • Over 7,500 face masks were made from upcycled unused employee uniforms.
  • More than 800 gallons of hand sanitizer produced by United employees in San Francisco for use by United employees.
  • Donated 15,000 pillows, 2,800 amenity kits, and 5,000 self-care products to charities and homeless shelters.
  • More than 2.2 million pounds of food and household goods were processed by United employees at the Houston Food Bank.
  • More than 2,500 United employees worldwide have volunteered, with over 36,800 hours served.

Additional Noteworthy Accomplishments

  • For the ninth 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.
  • Honored by DiversityInc with their "DiversityInc Top 50" designation, lauding the airline's leadership in promoting diversity through a diversity-focused talent pipeline and talent development, leadership accountability and a top supplier diversity program.
  • Recognized for the fifth consecutive year as a top-scoring company and best place to work for disability inclusion with a perfect score of 100 on the 2020 Disability Equality Index (DEI).
  • Teamed up with Peerspace to bundle flights with work and meeting spaces for remotely distanced companies.
  • Named best overall airline in the world by Global Traveler Readers.
  • Selected by the Commission on Presidential Debates as the official airline for the 2020 Presidential and Vice Presidential Debates.
  • Announced signing of The Board Challenge and committed to adding a second Black board member to the Board of Directors.

_________________________________________________________________________

1 Total available liquidity includes cash and cash equivalents, short-term investments and $1 billion available under our undrawn revolving credit facility, as well as $7 billion available under the CARES Act loan program.

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 Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in the tables accompanying this release.

4 Cash burn, as previously guided, is defined as: Net cash from operations, less investing and financing activities. Proceeds from the issuance of new debt (excluding expected aircraft financing), government grants associated with the Payroll Support Program of the CARES Act, issuance of new stock, net proceeds from the sale of short-term and other investments and changes in certain restricted cash balances are not included in this figure. Core cash burn is defined as: Cash burn, as further adjusted to exclude: debt principal payments, timing of certain payments, capital expenditures (net of flight equipment purchase deposit returns), investments in the recovery and severance payments. Amounts may not add due to rounding. See the tables accompanying this release for further information.

5 Timing of certain payments refers to exclusion of payments in the quarter that had been deferred from prior periods or additions of payments that were deferred to a future period to maximize cash preservation.

6 Investments in the recovery primarily include, but are not limited to, spending on engine and airframe maintenance to prepare for the efficient operations ramp up as air travel demand returns.

Earnings Call

UAL will hold a conference call to discuss fourth-quarter and full-year 2020 financial results as well as its financial and operational outlook for the first quarter 2021, on Thursday, January 21, 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 first quarter 2021, our 2023 adjusted EBITDA margin target and our cost savings plans related to preparing for a recovery, 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," "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 duration and spread of the ongoing global COVID-19 pandemic and the outbreak of any other disease or similar public health threat and the impact on our business, results of operations and financial condition; the lenders' ability to accelerate the MileagePlus indebtedness, foreclose upon the collateral securing the MileagePlus indebtedness or exercise other remedies if we are not able to comply with the covenants in the MileagePlus financing agreements; the effects of borrowing pursuant to the Loan Program under the CARES Act and the effects of the grant and promissory note through the Payroll Support Program under the CARES Act; the costs and availability of financing; our significant amount of financial leverage from fixed obligations and ability to seek additional liquidity and maintain adequate liquidity; our ability to comply with the terms of our various financing arrangements; our ability to utilize our net operating losses to offset future taxable income; the material disruption of our strategic operating plan as a result of the COVID-19 pandemic and our ability to execute our strategic operating plans in the long term; general economic conditions (including interest rates, foreign currency exchange rates, investment or credit market conditions, crude oil prices, costs of aircraft fuel and energy refining capacity in relevant markets); risks of doing business globally, including instability and political developments that may impact our operations in certain countries; demand for travel and the impact that global economic and political conditions have on customer travel patterns; our capacity decisions and the capacity decisions of our competitors; competitive pressures on pricing and on demand; changes in aircraft fuel prices; disruptions in our supply of aircraft fuel; our ability to cost-effectively hedge against increases in the price of aircraft fuel, if we decide to do so; the effects of any technology failures or cybersecurity or significant data breaches; disruptions to services provided by third-party service providers; potential reputational or other impact from adverse events involving our aircraft or operations, the aircraft or operations of our regional carriers or our code share partners or the aircraft or operations of another airline; our ability to attract and retain customers; the effects of any terrorist attacks, international hostilities or other security events, or the fear of such events; the mandatory grounding of aircraft in our fleet; disruptions to our regional network, as a result of the COVID-19 pandemic or otherwise; the impact of regulatory, investigative and legal proceedings and legal compliance risks; the success of our investments in other airlines, including in other parts of the world, which involve significant challenges and risks, particularly given the impact of the COVID-19 pandemic; industry consolidation or changes in airline alliances; the ability of other air carriers with whom we have alliances or partnerships to provide the services contemplated by the respective arrangements with such carriers; costs associated with any modification or termination of our aircraft orders; disruptions in the availability of aircraft, parts or support from our suppliers; our ability to maintain satisfactory labor relations and the results of any collective bargaining agreement process with our union groups; any disruptions to operations due to any potential actions by our labor groups; labor costs; the impact of any management changes; extended interruptions or disruptions in service at major airports where we operate; U.S. or foreign governmental legislation, regulation and other actions (including Open Skies agreements, environmental regulations and the United Kingdom's withdrawal from the European Union); the seasonality of the airline industry; weather conditions; the costs and availability of aviation and other insurance; our ability to realize the full value of our intangible assets and long-lived assets; any impact to our reputation or brand image; 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, 2019, as updated by our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 and our Current Report on Form 8-K filed on the date hereof, 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.

STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED) 



Three Months Ended

December 31,


%

Increase/



Year Ended

December 31,


%

Increase/

(In millions, except per share data)

2020


2019


(Decrease)



2020


2019


(Decrease)

Operating revenue:













Passenger

$

2,410



$

9,933



(75.7)




$

11,805



$

39,625



(70.2)


Cargo

560



316



77.2




1,648



1,179



39.8


Other operating revenue

442



639



(30.8)




1,902



2,455



(22.5)


Total operating revenue

3,412



10,888



(68.7)




15,355



43,259



(64.5)















Operating expense:













Salaries and related costs

2,168



3,078



(29.6)




9,522



12,071



(21.1)


Aircraft fuel

679



2,249



(69.8)




3,153



8,953



(64.8)


Regional capacity purchase

489



725



(32.6)




2,039



2,849



(28.4)


Landing fees and other rent

575



650



(11.5)




2,127



2,543



(16.4)


Depreciation and amortization

629



606



3.8




2,488



2,288



8.7


Aircraft maintenance materials and outside repairs

199



475



(58.1)




858



1,794



(52.2)


Distribution expenses

80



417



(80.8)




459



1,651



(72.2)


Aircraft rent

51



67



(23.9)




198



288



(31.3)


Special charges (credits)

(149)



130



NM




(2,616)



246



NM


Other operating expenses

826



1,630



(49.3)




3,486



6,275



(44.4)


Total operating expense

5,547



10,027



(44.7)




21,714



38,958



(44.3)















Operating income (loss)

(2,135)



861



NM




(6,359)



4,301



NM















Nonoperating income (expense):













Interest expense

(351)



(161)



118.0




(1,063)



(731)



45.4


Interest capitalized

17



20



(15.0)




71



85



(16.5)


Interest income

5



30



(83.3)




50



133



(62.4)


Unrealized gains (losses) on investments, net

101



81



24.7




(194)



153



NM


Miscellaneous, net

(10)



13



NM




(1,327)



(27)



NM


Total nonoperating expense

(238)



(17)



NM




(2,463)



(387)



NM















Income (loss) before income taxes

(2,373)



844



NM




(8,822)



3,914



NM















Income tax expense (benefit)

(476)



203



NM




(1,753)



905



NM


Net income (loss)

$

(1,897)



$

641



NM




$

(7,069)



$

3,009



NM















Diluted earnings (loss) per share

$

(6.39)



$

2.53



NM




$

(25.30)



$

11.58



NM


Diluted weighted average shares

297.0



253.4



17.2




279.4



259.9



7.5















NM Not meaningful













 

UNITED AIRLINES HOLDINGS, INC.

PASSENGER REVENUE INFORMATION AND STATISTICS


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



4Q 2020

Passenger

Revenue


Passenger

Revenue

vs.

4Q 2019


PRASM vs.

4Q 2019


Yield vs.

4Q 2019


Available

Seat Miles

vs.

4Q 2019


4Q 2020

Available

Seat Miles


4Q 2020

Revenue

Passenger

Miles

Domestic

$

1,797



(71.6%)


(39.9%)


(22.2%)


(52.8%)


19,166



12,417
















Atlantic

199



(87.7%)


(71.5%)


(32.0%)


(56.8%)


5,467



1,877


Pacific

100



(90.8%)


(47.2%)


78.4%


(82.6%)


1,935



446


Latin America

314



(64.8%)


(42.9%)


(16.0%)


(38.3%)


4,123



2,331


International

613



(82.9%)


(55.0%)


(9.9%)


(62.1%)


11,525



4,654
















Consolidated

$

2,410



(75.7%)


(43.8%)


(16.6%)


(56.8%)


30,691



17,071
















 

Select operating statistics are as follows:



Three Months Ended

December 31,


%

Increase/



Year Ended

December 31,


%

Increase/



2020


2019


(Decrease)



2020


2019


(Decrease)

Passengers (thousands)

14,850



40,306



(63.2)




57,761



162,443



(64.4)



Revenue passenger miles (millions)

17,071



58,633



(70.9)




73,883



239,360



(69.1)



Available seat miles (millions)

30,691



71,038



(56.8)




122,804



284,999



(56.9)



Passenger load factor:














Consolidated

55.6

%


82.5

%


(26.9)


pts.


60.2

%


84.0

%


(23.8)


pts.

Domestic

64.8

%


83.8

%


(19.0)


pts.


63.2

%


85.2

%


(22.0)


pts.

International

40.4

%


80.8

%


(40.4)


pts.


55.1

%


82.4

%


(27.3)


pts.

Passenger revenue per available seat mile (cents)

7.85



13.98



(43.8)




9.61



13.90



(30.9)



Total revenue per available seat mile (cents)

11.12



15.33



(27.5)




12.50



15.18



(17.7)



Average yield per revenue passenger mile (cents)

14.12



16.94



(16.6)




15.98



16.55



(3.4)



Cargo ton miles (millions)

835



889



(6.1)




2,711



3,329



(18.6)



Aircraft in fleet at end of period

1,287



1,372



(6.2)




1,287



1,372



(6.2)



Average stage length (miles)

1,292



1,446



(10.7)




1,307



1,460



(10.5)



Employee headcount (in thousands)

74.4



95.9



(22.4)




74.4



95.9



(22.4)



Average aircraft fuel price per gallon

$

1.35



$

2.10



(35.7)




$

1.57



$

2.09



(24.9)



Fuel gallons consumed (millions)

503



1,071



(53.0)




2,004



4,292



(53.3)




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, 2019, for definitions of these statistics. 

Cash burn: The company's management views  "cash burn" as an important measure in monitoring liquidity in order to assess the company's cash needs without the impact of certain extraordinary actions or events, and the company believes this provides useful information to investors about the company's liquidity position. In light of the transition to recovery in 2021, the company is now presenting "core cash burn", which the company believes better reflects the core operational performance of the company's business.


Three Months Ended

June 30, 2020


Three Months Ended

September 30, 2020

Three Months Ended

December 31, 2020

Net cash used by operating activities

$

(130)



$

(1,889)


$

(2,137)


Cash flows provided by investing activities

812



770



Cash flows provided by financing activities

2,382



7,905


481



3,064



6,786


(1,656)







Adjusted to remove:





  CARES Act Payroll Support Program ("PSP") grant

3,154



447



  PSP Note

1,309



192



  Equity issuances

1,135




968


  Net proceeds from sale of short-term and other investments

838



406


137


  Secured debt (net of discount and fees)

250



7,376


250


  Increase in certain restricted cash balances

1



99


11


  CARES Act secured loan



520



Total adjustments

6,687



9,040


1,366


Adjusted Cash Burn

$

(3,623)



$

(2,254)


$

(3,022)


Days in the period

91



92


92


Average daily cash burn

$

(40)



$

(25)


$

(33)


Further adjusted to remove:





  Debt principal and severance payments (a)

(288)



(348)


(886)


  Timing of certain payments

160



60


(148)


  Capital expenditures, net of flight equipment purchase deposit returns

(39)



368


(137)


  Investments in the recovery



(81)


(139)


Total additional adjustments

(167)



(1)


(1,310)


Core cash burn

$

(3,456)



$

(2,253)


$

(1,712)


Days in the period

91



92


92


Average daily core cash burn

$

(38)



$

(24)


$

(19)



(a) Fourth quarter amounts include interest payments on extinguished debt

UNITED AIRLINES HOLDINGS, INC.
NON-GAAP FINANCIAL RECONCILIATION

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 earnings before interest, taxes, depreciation and amortization (adjusted EBITDA), 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 and for nonoperating credit losses and nonoperating special termination benefits and settlement losses is useful to investors because these items are not indicative of UAL's ongoing performance. UAL believes that adjusting for unrealized (gains) losses on investments, net is useful to investors because those unrealized gains or losses may not ultimately be realized on a cash basis. UAL believes that adjusting for interest expense related to finance leases of Embraer ERJ 145 aircraft is useful to investors because of the accelerated recognition of interest expense.

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

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


Three Months Ended

December 31,


%

Increase/

(Decrease)


Year Ended

December 31,


%

Increase/

(Decrease)


2020


2019



2020


2019


CASM (cents)












Cost per available seat mile (CASM) (GAAP)

18.07



14.11



28.1



17.68



13.67



29.3


Special charges

(0.49)



0.18



NM


(2.13)



0.09



NM

Third-party business expenses

0.07



0.07





0.11



0.06



83.3


Fuel expense

2.21



3.16



(30.1)



2.57



3.14



(18.2)


Profit sharing



0.17



(100.0)





0.17



(100.0)


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

16.28



10.53



54.6



17.13



10.21



67.8



NM Not Meaningful

 

Adjusted EBITDA

Year Ended

December 31,


2020


2019

Net income (loss)

$

(7,069)



$

3,009


Adjusted for:




     Depreciation and amortization

2,488



2,288


     Interest expense

1,063



731


     Interest capitalized

(71)



(85)


     Interest income

(50)



(133)


     Income tax expense (benefit)

(1,753)



905


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

(1,038)



93


Adjusted EBITDA, excluding special charges and unrealized (gains) losses on investments, net

$

(6,430)



$

6,808


  Adjusted EBITDA margin

(41.9)

%


15.7

%

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

UAL believes that adjusting capital expenditures for assets acquired through the issuance of debt, finance leases and other financial liabilities is useful to investors in order to appropriately reflect the total amounts spent on capital expenditures. UAL also believes that adjusting net cash provided by (used in) operating activities for capital expenditures, adjusted capital expenditures, and aircraft operating lease additions 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

December 31,


Year Ended

December 31,

Capital Expenditures (in millions)

2020


2019


2020


2019

Capital expenditures, net of flight equipment purchase deposit returns (GAAP)

$

137



$

1,192



$

1,767



$

4,528


Property and equipment acquired through the issuance of debt and other

263



187



773



493


Property and equipment acquired through finance leases



14



30



22


Property and equipment acquired through other financial liabilities

192





1,165




Adjustment to property and equipment acquired through other financial liabilities (a)

(61)





(246)




Adjusted capital expenditures (Non-GAAP)

$

531



$

1,393



$

3,489



$

5,043










Free Cash Flow (in millions)








Net cash provided by (used in) operating activities (GAAP)

$

(2,137)



$

1,181



$

(4,093)



$

6,909


Less capital expenditures, net of flight equipment purchase deposit returns

137



1,192



1,767



4,528


Free cash flow, net of financings (Non-GAAP)

$

(2,274)



$

(11)



$

(5,860)



$

2,381










Net cash provided by (used in) operating activities (GAAP)

$

(2,137)



$

1,181



$

(4,093)



$

6,909


Less adjusted capital expenditures (Non-GAAP)

531



1,393



3,489



5,043


Less aircraft operating lease additions

131



8



171



56


Free cash flow (Non-GAAP)

$

(2,799)



$

(220)



$

(7,753)



$

1,810










(a) In 2020, United entered into agreements with third parties to finance through sale and leaseback transactions new Boeing model 787-9 aircraft and Boeing model 737 MAX aircraft subject to purchase agreements between United and Boeing. In connection with the delivery of each aircraft from Boeing, United assigned its right to purchase such aircraft to the buyer, and simultaneous with the buyer's purchase from Boeing, United entered into a long-term lease for such aircraft with the buyer as lessor. Fifteen Boeing model aircraft were delivered in 2020 under these transactions (and each is presently subject to a long-term lease to United). Upon delivery, the company accounted for the aircraft which have a repurchase option at a price other than fair value as part of Flight equipment on the company's balance sheet and the related obligation as Other current liabilities and Other financial liabilities from sale-leasebacks (noncurrent) since they do not qualify for sale recognition. If the repurchase option is not exercised, these aircraft will be accounted for as leased assets at the time of the option expiration and the related assets and liabilities will be adjusted to the present value of the remaining lease payments at that time. This adjustment reflects the difference between the recorded amounts and the present value of future lease payments at inception. The remaining aircraft in this transaction that qualify for sale recognition are recorded as Operating lease right-of-use assets and lease liabilities on the company's balance sheet after recognition of related gains or losses on such sale.

 

UNITED AIRLINES HOLDINGS, INC.

NON-GAAP FINANCIAL RECONCILIATION (Continued)



Three Months Ended

December 31,


Increase/

(Decrease)


%

Increase/

(Decrease)


Year Ended

December 31,


Increase/


%

Increase/

(in millions)

2020


2019




2020


2019


(Decrease)


(Decrease)

Operating expenses (GAAP)

$

5,547



$

10,027



$

(4,480)



(44.7)



$

21,714



$

38,958



$

(17,244)



(44.3)


Special charges (credit)

(149)



130



(279)



NM



(2,616)



246



(2,862)



NM


Operating expenses, excluding special charges

5,696



9,897



(4,201)



(42.4)



24,330



38,712



(14,382)



(37.2)


Adjusted to exclude:
















Third-party business expenses

22



48



(26)



(54.2)



137



168



(31)



(18.5)


Fuel expense

679



2,249



(1,570)



(69.8)



3,153



8,953



(5,800)



(64.8)


Profit sharing, including taxes



123



(123)



(100.0)





491



(491)



(100.0)


Adjusted operating expenses (Non-GAAP)

$

4,995



$

7,477



$

(2,482)



(33.2)



$

21,040



$

29,100



$

(8,060)



(27.7)


















Operating income (loss) (GAAP)

$

(2,135)



$

861



$

(2,996)



NM



$

(6,359)



$

4,301



$

(10,660)



NM


Adjusted to exclude:
















Special charges (credits)

(149)



130



(279)



NM



(2,616)



246



(2,862)



NM


Adjusted operating income (Non-GAAP)

$

(2,284)



$

991



$

(3,275)



NM



$

(8,975)



$

4,547



$

(13,522)



NM


















Operating margin

(62.6)

%


7.9

%


(70.5)



pts.



(41.4)

%


9.9

%


(51.3)



pts.


Adjusted operating margin (Non-GAAP)

(66.9)

%


9.1

%


(76.0)



pts.



(58.5)

%


10.5

%


(69.0)



pts.


















Pre-tax income (loss) (GAAP)

$

(2,373)



$

844



$

(3,217)



NM



$

(8,822)



$

3,914



$

(12,736)



NM


Adjusted to exclude:
















Special charges (credit)

(149)



130



(279)



NM



(2,616)



246



(2,862)



NM


   Termination benefits and settlement losses

41





41



NM



687





687



NM


Unrealized (gains) losses on investments, net

(101)



(81)



(20)



NM



194



(153)



347



NM


Loss on BRW term loan and guarantee







NM



697





697



NM


Interest expense on ERJ 145 finance leases



(4)



4



NM





64



(64)



NM


Adjusted pre-tax income (loss) (Non-GAAP)

$

(2,582)



$

889



$

(3,471)



NM



$

(9,860)



$

4,071



$

(13,931)



NM


















Pre-tax margin

(69.5)

%


7.8

%


(77.3)



pts.



(57.5)

%


9.0

%


(66.5)



pts.


Adjusted pre-tax margin (Non-GAAP)

(75.7)

%


8.2

%


(83.9)



pts.



(64.2)

%


9.4

%


(73.6)



pts.


















 Net income (loss) (GAAP)

$

(1,897)



$

641



$

(2,538)



NM



$

(7,069)



$

3,009



$

(10,078)



NM


Adjusted to exclude:
















Special charges (credit)

(149)



130



(279)



NM



(2,616)



246



(2,862)



NM


   Termination benefits and settlement losses

41





41



NM



687





687



NM


Unrealized (gains) losses on investments, net

(101)



(81)



(20)



NM



194



(153)



347



NM


Loss on BRW term loan and guarantee







NM



697





697



NM


Interest expense on ERJ 145 finance leases



(4)



4



NM





64



(64)



NM


Income tax expense (benefit) related to adjustments above, net of valuation allowance

29



(10)



39



NM



404



(35)



439



NM


Adjusted net income (loss) (Non-GAAP)

$

(2,077)



$

676



$

(2,753)



NM



$

(7,703)



$

3,131



$

(10,834)



NM


















 Diluted earnings (loss) per share (GAAP)

$

(6.39)



$

2.53



$

(8.92)



NM



$

(25.30)



$

11.58



$

(36.88)



NM


Adjusted to exclude:
















Special charges (credit)

(0.50)



0.52



(1.02)



NM



(9.36)



0.95



(10.31)



NM


   Termination benefits and settlement losses

0.13





0.13



NM



2.46





2.46



NM


Unrealized (gains) losses on investments, net

(0.34)



(0.32)



(0.02)



NM



0.69



(0.59)



1.28



NM


Loss on BRW term loan and guarantee







NM



2.49





2.49



NM


Interest expense on ERJ 145 finance leases



(0.02)



0.02



NM





0.25



(0.25)



NM


Income tax expense (benefit) related to adjustments, net of valuation allowance

0.10



(0.04)



0.14



NM



1.45



(0.14)



1.59



NM


Adjusted diluted earnings (loss) per share (Non-GAAP)

$

(7.00)



$

2.67



$

(9.67)



NM



$

(27.57)



$

12.05



$

(39.62)



NM



NM Not Meaningful

 

UNITED AIRLINES HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


 (In millions)

December 31, 2020


December 31, 2019

ASSETS




Current assets:




Cash and cash equivalents

$

11,269



$

2,762


Short-term investments

414



2,182


Restricted cash

255




Receivables, less allowance for credit losses (2020—$78; 2019—$9)

1,295



1,364


Aircraft fuel, spare parts and supplies, less obsolescence allowance (2020—$478; 2019—$425)

932



1,072


Prepaid expenses and other

635



814


Total current assets

14,800



8,194






Total operating property and equipment, net

31,466



30,170


Operating lease right-of-use assets

4,537



4,758






Other assets:




Goodwill

4,527



4,523


Intangibles, less accumulated amortization (2020—$1,495; 2019—$1,440)

2,838



3,009


Restricted cash

218



106


Notes receivable, less allowance for credit losses (2020—$522)

31



671


Deferred income taxes

131




Investments in affiliates and other, net

1,000



1,180


Total other assets

8,745



9,489


Total assets

$

59,548



$

52,611






LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Advance ticket sales

$

4,833



$

4,819


Accounts payable

1,595



2,703


Frequent flyer deferred revenue

908



2,440


Accrued salaries and benefits

1,960



2,271


Current maturities of long-term debt

1,911



1,407


Current maturities of finance leases

182



46


Current maturities of operating leases

612



686


Other

724



566


Total current liabilities

12,725



14,938






Long-term liabilities and deferred credits:




Long-term debt

24,836



13,145


Long-term obligations under finance leases

224



220


Long-term obligations under operating leases

4,986



4,946


Frequent flyer deferred revenue

5,067



2,836


Postretirement benefit liability

994



789


Pension liability

2,460



1,446


Deferred income taxes



1,736


Other financial liabilities from sale-leasebacks

1,140




Other

1,156



1,024


Total long-term liabilities and deferred credits

40,863



26,142


Total stockholders' equity

5,960



11,531


Total liabilities and stockholders' equity

$

59,548



$

52,611


 

UNITED AIRLINES HOLDINGS, INC.

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)


 (In millions)

Year Ended

December 31,


2020


2019

Cash Flows from Operating Activities:




Net cash provided by (used in) operating activities

$

(4,093)



$

6,909






Cash Flows from Investing Activities:




Capital expenditures, net of flight equipment purchase deposit returns

(1,767)



(4,528)


Purchases of short-term and other investments

(552)



(2,897)


Proceeds from sale of short-term and other investments

2,319



2,996


Loans made to others



(174)


Investment in affiliates



(36)


Other, net

10



79


Net cash provided by (used in) investing activities

10



(4,560)






Cash Flows from Financing Activities:




Repurchases of common stock

(353)



(1,645)


Proceeds from issuance of debt

16,044



1,847


Proceeds from equity issuance

2,103




Payments of long-term debt

(4,383)



(1,240)


Principal payments under finance leases

(66)



(151)


Capitalized financing costs

(368)



(61)


Other, net

(20)



(30)


Net cash provided by (used in) financing activities

12,957



(1,280)


Net increase in cash, cash equivalents and restricted cash

8,874



1,069


Cash, cash equivalents and restricted cash at beginning of year

2,868



1,799


Cash, cash equivalents and restricted cash at end of year

$

11,742



$

2,868






Investing and Financing Activities Not Affecting Cash:




Property and equipment acquired through the issuance of debt, finance leases and other

$

1,968



$

515


Right-of-use assets acquired through operating leases

198



498


Lease modifications and lease conversions

527



(2)


Capacity purchase agreement liability converted to debt

33




 

UNITED AIRLINES HOLDINGS, INC.

NOTES (UNAUDITED)


Special charges (credit) and unrealized (gains) losses on investments, net include the following:



Three Months Ended

December 31,


Year Ended

December 31,

(In millions)

2020


2019


2020


2019

Operating:








CARES Act grant

$

(453)



$



$

(3,536)



$


Severance and benefit costs

162



2



575



16


Impairment of assets

137



102



318



171


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

5



26



27



59


     Total operating special charges (credit)

(149)



130



(2,616)



246










Nonoperating unrealized (gains) losses on investments

(101)



(81)



194



(153)


Nonoperating special termination benefits and settlement losses

41





687




Nonoperating credit loss on BRW Aviation Holding LLC and BRW Aviation LLC ("BRW") term loan and related guarantee





697




Total nonoperating special charges and unrealized (gains) losses on investments

(60)



(81)



1,578



(153)


Total operating and nonoperating special charges (credit) and unrealized (gains) losses on investments

(209)



49



(1,038)



93


Income tax expense (benefit), net of valuation allowance

29



(11)



404



(21)


    Total operating and non-operating special charges (credit) and unrealized (gains) losses on investments, net of income taxes

$

(180)



$

38



$

(634)



$

72


CARES Act grant. During the year ended December 31, 2020, the company received approximately $5.1 billion in funding pursuant to the Payroll Support Program under the CARES Act, which consisted of $3.6 billion of grants and $1.5 billion of an unsecured loan. The company also recorded $66 million for warrants issued to the U.S. Treasury Department, within stockholders' equity, as an offset to the grant income. We recognized the grant as a credit to Special charges (credit) as the salaries and wages the grant was intended to offset were incurred.

Severance and benefit costs: As announced in July 2020, the company started the involuntary furlough process earlier this summer when issuing WARN Act notices to 36,000 of its employees. Since then, the company worked to further reduce the total number of furloughs to approximately 13,000 employees by working closely with its union partners, introducing new voluntary options selected by approximately 9,000 employees and proposing creative solutions that would save jobs. This workforce reduction is part of the company's strategic realignment of its business and new organizational structure as a result of the impacts of the COVID-19 pandemic on the company's operations and cost structure. The company recorded $162 million and $575 million during the three and twelve months ended December 31, 2020, respectively, related to the workforce reduction and voluntary plans for employee severance, pay continuance from voluntary retirements, and benefits-related costs (and additional costs associated with special termination benefits and settlement losses discussed below).

During the three and twelve months ended December 31, 2019, the company recorded $2 million and $14 million, respectively, of management severance. During the twelve months ended December 31, 2019, the company recorded $2 million of severance and benefit costs related to a voluntary early-out program for its technicians and related employees represented by the International Brotherhood of Teamsters. In the first quarter of 2017, approximately 1,000 technicians and related employees elected to voluntarily separate from the company and received a severance payment, with a maximum value of $100,000 per participant, based on years of service, with retirement dates through early 2019.

Impairment of assets: During the three months ended December 31, 2020, the company recorded $94 million of impairments related to 11 of its Boeing 757-200 aircraft and the related engines and spare parts. In the fourth quarter, United determined that those aircraft would be permanently grounded. The company also recorded $43 million of impairments related to various cancelled facility, aircraft induction, and information technology capital projects. The decisions driving these impairments were the result of the COVID-19 pandemic's impact on our operations. For the year ended December 31, 2020, the company recorded $56 million of charges for the cancellation of capital projects.

During the year ended December 31, 2020, in addition to the impairments described above, the company recorded impairment charges of $130 million for its China routes. The company conducted impairment reviews of certain intangible assets throughout 2020, which consisted of a comparison of the book value of those assets to their fair value calculated using the discounted cash flow method. Due to the COVID-19 pandemic and the subsequent suspension of flights to China, the company determined that the value of its China routes had been impaired. 

Also during the year ended December 31, 2020, the company recorded an impairment of $38 million of the right-of-use asset associated with the embedded aircraft lease in one of our CPA agreements. We review flight equipment and other long-lived assets used in operations for impairment losses when events and circumstances indicate the assets may be impaired. We measure cash flows at the contract level with our CPA partners. The factors that led to this impairment included the impact to cash flows from the pandemic and the relatively short remaining term under the CPA agreement. Also, during the twelve months ended December 31, 2020, the company recorded $13 million of charges for the cancellation of certain capital projects.

During the three months ended December 31, 2019, the company recorded an impairment charge of $90 million associated with its Hong Kong routes. The company conducted its annual impairment review of intangible assets in the fourth quarter of 2019, which consisted of a comparison of the book value of specific assets to the fair value of those assets calculated using the discounted cash flow method. Due to a decrease in demand for the Hong Kong market and the resulting decrease in unit revenue, the company determined that the value of its Hong Kong routes had been fully impaired. 

During the year ended December 31, 2019, in addition to the impairments described above, the company recorded a $43 million impairment primarily for surplus Boeing 767 aircraft engines removed from operations, an $18 million charge primarily for the write-off of unexercised aircraft purchase options and $20 million in other aircraft impairments.

(Gains) losses on sale of assets and other special charges: During the three months ended December 31, 2020, the company recorded a net $5 million of charges for legal reserves offset by gains on certain aircraft sale-leaseback transactions. During the year ended December 31, 2020, in addition to the items described above, the company recorded several charges for sales and disposals of individual aircraft and aircraft-related parts.

During the three months ended December 31, 2019, the company recorded charges of $14 million for costs related to the transition of fleet types within a regional carrier contract, $10 million for contract terminations and $2 million in other charges. During the twelve months ended December 31, 2019, in addition to the amounts described above, the company recorded charges of $18 million for the settlement of certain legal matters and $15 million related to contract terminations.

Nonoperating special termination benefits and settlement losses: During the three and twelve months ended December 31, 2020, the company recorded $41 million and $687 million, respectively, of settlement losses related to the company's primary defined benefit pension plan covering certain U.S. non-pilot employees, and special termination benefits offered, under furlough and voluntary separation programs.

Nonoperating unrealized (gains) losses on investments, net: During the three and twelve months ended December 31, 2020, the company recorded gains of $101 million and losses of $170 million, respectively. primarily for changes in the market value of its investment in Azul Linhas Aéreas Brasileiras S.A. ("Azul"). During the twelve months ended December 31, 2020, the company recorded a loss of $24 million for the decrease in fair value of the Avianca Holdings S.A.'s ("AVH") share call options, AVH share appreciation rights, and AVH share-based upside sharing agreement (collectively, the "AVH Derivative Assets") that United obtained as part of the BRW term loan agreement and related agreements with Kingsland Holdings Limited.

During the three and twelve months ended December 31, 2019, the company recorded gains of $63 million and $140 million, respectively, for the change in market value of certain of its equity investments, primarily Azul. Also, during the three and twelve months ended December 31, 2019, the company recorded gains of $18 million and $13 million, respectively, for the change in fair value of the AVH Derivative Assets.

Nonoperating credit loss on BRW term loan and related guarantee: During the twelve months ended December 31, 2020, the company recorded a $697 million expected credit loss allowance for the BRW term loan and related guarantee. AVH is currently in bankruptcy.

Interest expense related to finance leases of Embraer ERJ 145 aircraft

During the third quarter of 2018, United entered into an agreement with the lessor of 54 Embraer ERJ 145 aircraft to purchase those aircraft in 2019. The provisions of the new lease agreement resulted in a change in accounting classification of these new leases from operating leases to finance leases up until the purchase date. As a result of the change, the company recognized a $4 million reduction in interest expense, and $64 million of additional interest expense, respectively, in the three and twelve months ended December 31, 2019.

Effective tax rate

The company's effective tax rates for the three and twelve months ended December 31, 2020 were 20.1% and 19.9%, respectively. The effective tax rates for the three and twelve months ended December 31, 2019 were 24.1% and 23.1%, respectively. The provision for income taxes is based on the estimated annual effective tax rate which represents a blend of federal, state and foreign taxes and includes the impact of certain nondeductible items and the impact of a change in the company's mix of domestic and foreign earnings (losses). The effective tax rates for the three and twelve months ended December 31, 2020 were impacted by $28 million and $185 million, respectively, of valuation allowance related to capital losses.

 

SOURCE United Airlines

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

Doreen Burse Named Worldwide Sales SVP

January 19, 2021

CHICAGO, Jan. 19, 2021 /PRNewswire/ -- United Airlines today announced that the carrier has named Doreen Burse senior vice president of Worldwide Sales. Burse brings to the company more than 30 years of sales expertise from the hospitality industry.

Burse, who will report to Executive Vice President and Chief Commercial Officer Andrew Nocella, will be responsible for leading United's global sales strategy. She will work to enhance the airline's existing sales programs while building new partnerships and driving overall revenue.

"During her more than 33 years in the hospitality industry, Doreen has been a change agent, showing consistent achievement in leading teams through challenging environments," said Nocella. "Her results-driven focus, collaborative style and commitment to employee morale and development will help United navigate the evolving needs of corporate customers as they return to the skies in force as the pandemic recedes."

Most recently, Burse served as the vice president of Marriott's Global Sales for the U.S. and Canada. She led a cross-functional global account team serving hundreds of accounts, representing about 1,000 associations, 250 corporations, and hundreds of group intermediary partners, travel management companies, retail agencies and other organizations representing $16 billion in annual spending. Burse is also a member of the Global Business Travel Association, on the Board of Directors of AMC Institute, and an Editorial Board Member for Smart Meetings magazine, in addition to her participation in numerous other industry organizations.

Her first day at United will be March 1, 2021.

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 UAL 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 Receives Hospital-Grade Certification for Cleaning and Safety

United is the first of the four largest U.S airlines to be certified Diamond by the Airline Passenger Experience Association (APEX) and SimpliFlying
January 12, 2021

CHICAGO, Jan. 12, 2021 /PRNewswire/ -- Today, United Airlines was 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 - Diamond - in the new APEX Health Safety audit powered by SimpliFlying. This new scientifically-based certification is designed to create a recognized, global standard for health and safety across the aviation industry.

"Since the start of this pandemic, United has been committed to pursuing industry leading safety measures to protect the wellbeing of our customers and employees," said Sasha Johnson, United's vice president of Corporate Safety. "This recognition from APEX and SimpliFlying underscores that United will continue to innovate and raise the standard when it comes to preventing the spread of COVID-19."

To achieve this certification, United submitted detailed responses for audit against a 58-point checklist covering ten categories, including things like testing, contact tracing, on-the-ground procedures, in-flight measures, and strategic partnerships. For each cleaning and safety measure noted on the checklist, United shared proof points for further review by the APEX and SimpliFlying experts. United's certification as a Diamond airline means that the company's initiatives were at least 200 points above the gold-standard baseline APEX and SimpliFlying established as the minimum required to ensure passenger safety and well-being.

"United Airlines' tremendous customer-centric investments definitively merited the Diamond level of health safety across a broad scoreboard of categories focused on passenger wellbeing," APEX CEO Dr. Joe Leader said.  "We applaud United's thought-leadership across key initiatives that have benefited both customers of United Airlines and the airline industry. Passengers and airline team members should be proud of United Airlines' continuous advancements for customer wellbeing."

The United CleanPlusSM program, which includes its partnerships with the Cleveland Clinic and Clorox, was one of the many efforts APEX and SimpliFlying cited when granting the airline this certification. Medical experts from the Cleveland Clinic have helped ensure United's policies and protocols reflect the latest scientific guidance, and Clorox has helped the airline redefine disinfection procedures to support a healthier environment. Other efforts APEX and SimpliFlying called out when granting United this certification include:

United was also the first major U.S. airline to mandate masks for flight attendants, quickly following with all customers and employees. United was also among the first U.S. carriers to announce it wouldn't permit customers who refused to comply with the airline's mandatory mask policy to fly with them while the face mask policy is in place. United was also the first U.S. airline to roll out touchless check-in for customers with bags, and the first to require passengers take an online health assessment before traveling.

To learn more about United's cleaning and safety efforts, visit United.com/CleanPlus.

About United

United's shared purpose is "Connecting People. Uniting the World." For more information, visit united.com, follow @United on Twitter and Instagram or connect on Facebook. The common stock of United's parent, United Airlines Holdings, Inc., is traded on the Nasdaq under the symbol "UAL".

 

SOURCE United Airlines

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

United to Hold Webcast of Fourth-Quarter and Full-Year 2020 Financial Results

January 06, 2021

CHICAGO, Jan. 6, 2021 /PRNewswire/ -- United Airlines will hold a conference call to discuss fourth-quarter and full-year 2020 financial results on Thursday, January 21 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 company will issue its fourth-quarter and full-year 2020 financial results after market close on Wednesday, January 20.

The webcast will be available for replay within 24 hours of the conference call and then archived on the website for three months.

About United

United's shared purpose is "Connecting People. Uniting the World." For more information, visit united.com, follow @United on Twitter and Instagram or connect on Facebook. The common stock of United's parent, United Airlines Holdings, Inc., is traded on the Nasdaq under the symbol "UAL".

 

SOURCE United Airlines

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

A Message From Scott Kirby and Brett Hart

December 21, 2020

CHICAGO, Dec. 21, 2020 /PRNewswire/ -- J. Scott Kirby, Chief Executive Officer, and Brett Hart, President, today issued the following message to all United Airlines (NASDAQ: UAL) employees:

United Team:

We're writing today with some really good news: the Administration and Congress have come together in a bipartisan way on a relief bill that includes several items, including an extension of the Payroll Support Program (PSP) for the airlines.

United Named Best Overall Airline in the World by Global Traveler Readers

United received ten awards including Best Overall Airline, Airline of the year and Best Overall Frequent-Flyer Program

December 17, 2020

CHICAGO, Dec. 17, 2020 – Readers from Global Traveler, a publication written for business and luxury travelers, named United Airlines the Best Overall Airline in the World as part of this year's GT Trusted Reader Survey. Additionally, a select panel of Global Traveler employees and Advisory Board members named United Airline of the Year, an honor which is based on on-time arrivals and departures, safety, brand image and more. And for the 17th consecutive year, MileagePlus® was named best Loyalty Program by Global Traveler readers. The airline earned top scores from readers in ten categories across FXExpress Publications, Inc. awards, which include Global Traveler, The Trazees and the Wherever Awards.

United and CDC Work Together on Contact Tracing Initiative for All International and Domestic Flights

Program designed to collect detailed, real-time information that will better support CDC efforts to curb the spread of COVID-19
December 16, 2020

CHICAGO, Dec. 16, 2020 /PRNewswire/ -- United Airlines with the support of the Centers for Disease Control and Prevention (CDC) today announced a program to collect customer contact information for all international and domestic flights. During the check-in process, United customers will be prompted to voluntarily opt-in and provide contact information such as an email address, phone numbers and an address of where they will be once they reach their destination, details that were previously difficult for the CDC to obtain in real-time. This effort represents the airline industry's most comprehensive public health contact information collection program to date and the immediate access to the data will better support the CDC's efforts to curb the spread of COVID-19 in the United States and around the world.

United Makes Bold Environmental Commitment Unmatched by Any Airline; Pledges 100% Green by Reducing Greenhouse Gas Emissions 100% by 2050

United will meet this ambitious goal by making industry-leading investments in new technology and sustainable fuels - not from buying carbon offsets
December 10, 2020

CHICAGO, Dec. 10, 2020 /PRNewswire/ -- United Airlines today is taking its most ambitious step yet in leading the fight against climate change: pledging to become 100% green by reducing its greenhouse gas (GHG) emissions by 100% by 2050. United, which in 2018 became the first U.S. airline to commit to reducing its GHG emissions by 50% by 2050, will advance towards carbon neutrality by committing to a multimillion-dollar investment in revolutionary atmospheric carbon capture technology known as Direct Air Capture – rather than indirect measures like carbon-offsetting – in addition to continuing to invest in the development and use of sustainable aviation fuel (SAF). With this unprecedented announcement, United becomes the first airline in the world to announce a commitment to invest in Direct Air Capture technology.

United Launches Virtual, On Demand Customer Service at the Airport

New "Agent on Demand" platform gives customers live, fast, contactless access to information and assistance at all U.S. hubs;
December 08, 2020

CHICAGO, Dec. 8, 2020 /PRNewswire/ -- United passengers will soon have access to virtual, on demand customer service at the airline's hubs, giving people an easy, contact-free option to get real-time information and support. Customers can access "Agent on Demand" on any mobile device to call, text or video chat live with an agent and get answers on everything from seat assignments to boarding times. Agent on Demand is currently available at Chicago O'Hare and Houston's George Bush International Airports and is rolling out to United's hubs by end of year.

United Adopts Tax Benefits Preservation Plan To Protect Valuable Tax Assets

Preserving long-term stockholder value by adopting a rights plan intended to protect tax assets Rights plan in effect immediately; will be submitted for stockholder ratification at 2021 annual meeting
December 04, 2020

CHICAGO, Dec. 4, 2020 /PRNewswire/ -- United Airlines Holdings, Inc. ("UAL" and, together with its consolidated subsidiaries, the "Company") today announced that its Board of Directors has unanimously adopted a tax benefits preservation plan (the Plan) to preserve and protect the Company's ability to use its large net operating loss carryforwards (NOLs) and other tax assets under Section 382 of the Internal Revenue Code (the Code). The Plan is similar to plans adopted by other companies with significant NOLs.

As of Sept.30, 2020, UAL reported consolidated federal NOLs of approximately $8.2 billion. These NOLs, which have increased significantly in recent months, are available to reduce the Company's futur