United reports first quarter 2017 performance - United Hub

United Airlines Reports First-Quarter 2017 Performance

April 17, 2017

CHICAGO, April 17, 2017 /PRNewswire/ -- United Airlines (UAL) today announced its first-quarter 2017 financial results.

  • UAL reported first-quarter net income of $96 million, diluted earnings per share of $0.31, pre-tax earnings of $145 million and pre-tax margin of 1.7 percent.
  • Excluding special items, UAL reported first-quarter net income of $129 million, diluted earnings per share of $0.41, pre-tax earnings of $196 million and pre-tax margin of 2.3 percent.

Oscar Munoz, chief executive officer of United Airlines, said, "In the first quarter of 2017, our financial and operational performance gives us a lot of confidence about the foundation we are building. It is obvious from recent experiences that we need to do a much better job serving our customers. The incident that took place aboard Flight 3411 has been a humbling experience, and I take full responsibility. This will prove to be a watershed moment for our company, and we are more determined than ever to put our customers at the center of everything we do. We are dedicated to setting the standard for customer service among U.S. airlines, as we elevate the experience our customers have with us from booking to baggage claim."

First-Quarter Revenue

For the first quarter of 2017, revenue was $8.4 billion, an increase of 2.7 percent year-over-year. First-quarter 2017 consolidated passenger revenue per available seat mile (PRASM) was flat and consolidated yield increased 0.4 percent compared to the first quarter of 2017.

Scott Kirby, president of United Airlines, said, "United is delivering on the commitments we made at investor day last fall. We saw positive trends in the revenue environment in the quarter and are optimistic about the year ahead. Looking forward, we expect second-quarter consolidated PRASM to be up 1.0 to 3.0 percent. This would mark the fifth straight quarter of sequential improvement and the first quarter of positive unit revenue growth in two years."

First-Quarter Costs

Operating expense was $8.1 billion in the first quarter, up 7.9 percent year-over-year. Excluding special charges, operating expense was $8.1 billion, a 10.0 percent increase year-over-year. Consolidated unit cost per available seat mile (CASM) increased 5.1 percent compared to the first quarter of 2017 due largely to higher fuel expense and the impact of labor agreements ratified in 2017. First-quarter consolidated CASM, excluding special charges, third-party business expenses, fuel and profit sharing, increased 5.0 percent year-over-year, driven mainly by higher labor expense.

Liquidity and Capital Allocation

In the first quarter of 2017, UAL increased its revolving credit facility by $650 million to a total capacity of $2.0 billion with the full amount currently undrawn and increased its existing term loan by approximately $440 million with more favorable terms and rates. Also in the first quarter, the company raised $300 million of unsecured debt at 5 percent.

UAL generated $547 million in operating cash flow and ended the quarter with $6.4 billion in unrestricted liquidity, including its $2.0 billion revolving credit facility. The company's capital expenditures were $691 million in the first quarter. Including assets acquired through the issuance of debt and airport construction financing and excluding fully reimbursable projects, the company invested $1.4 billion during the first quarter in adjusted capital expenditures. The company contributed $80 million to its pension plans and made debt and capital lease principal payments of $346 million in the first quarter.

For the 12 months ended March 31, 2017, the company's pre-tax income was $3.5 billion and return on invested capital (ROIC) was 17.5 percent. In the quarter, UAL purchased $0.3 billion of its common shares at an average price of $68.41 per share. As of March 31, 2017, the company had approximately $1.5 billion remaining to purchase shares under its existing share repurchase authority.

Andrew Levy, executive vice president and chief financial officer of United Airlines, said, "During the quarter, we improved our liquidity and continued to return cash to shareholders. We remain focused on maintaining a strong balance sheet and finding incremental cost savings opportunities."

For more information on UAL's second-quarter 2017 guidance, please visit ir.united.com for the company's investor update.

First-Quarter Highlights

Customer Experience

  • Modernized airport screening experience with fully redesigned security checkpoint at Newark Liberty International Airport.
  • Debuted new Terminal C North at Houston's George Bush Intercontinental Airport – elevating the customer experience with roomier gate areas, the latest technology and chef-inspired dining choices.
  • United named "Eco-Airline of the Year" from Air Transport World magazine for its leadership in environmental action.
  • Launched United Jetstream, a new online portal for corporate and travel agency customers that simplifies the travel management process and gives customers an intuitive suite of self-service tools.
  • Launched new Basic Economy fare for travel between Minneapolis/St. Paul and any of United's seven U.S. hubs.

Network and Fleet

  • Began implementing plan to improve the company's route network with more destinations, more flights and more convenient connections, with expectations to add service to 31 destinations across the U.S. and Europe in 2017.
  • Took delivery of six Boeing 777-300ER aircraft, two Boeing 787-9 aircraft and one used Airbus A319 aircraft in the quarter.
  • Purchased 12 currently operated Boeing 737NG aircraft previously leased to the company.
  • Entered into a new partnership with Air Wisconsin Airlines to operate 50 regional jets under the United Express brand.

Operations and Employees

  • Achieved a record-setting 25 zero-cancellation days for the mainline operation in the quarter.
  • Consolidated completion factor was 97.5 percent in the first quarter, 0.6 points higher than the 96.9 percent from first-quarter 2017. This represents over 2,500 fewer flight cancellations compared to the first quarter of 2017.
  • Achieved best-ever consolidated on-time departure rate for both February and March and lowest-ever first-quarter mishandled bag rate in company history.
  • Employees earned cash-incentive payments of approximately $18 million for achieving operational performance goals in the quarter.

About United

United Airlines and United Express operate approximately 4,500 flights a day to 337 airports across five continents. In 2016, United and United Express operated more than 1.6 million flights carrying more than 143 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 743 mainline aircraft and the airline's United Express partners operate 478 regional aircraft. The airline is a founding member of Star Alliance, which provides service to 190 countries via 28 member airlines. For more information, visit united.com, follow @United on Twitter or connect on Facebook. The common stock of United's parent, United Continental Holdings, Inc., is traded on the NYSE under the symbol "UAL".

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: 

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

-tables attached-

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

(In millions, except per share data) Three Months Ended
March 31, 2017
Three Months Ended
March 31, 2016
%
Increase/
(Decrease)
Operating revenue:
Passenger:
Mainline
$5,831 $5,577 4.6
Operating revenue: Passenger: Regional 1,343 1,413 (5.0)
Operating revenue: Passenger: Total passenger revenue (B) 7,174 6,990 2.6
Operating revenue: Cargo 220 194 13.4
Operating revenue: Other operating revenue 1,026 1,011 1.5
Operating revenue: Total operating revenue 8,420 8,195 2.7
Operating expense:
Salaries and related costs
2,661 2,490 6.9
Operating expense: Aircraft fuel (C) 1,560 1,218 28.1
Operating expense: Landing fees and other rent 544 525 3.6
Operating expense: Regional capacity purchase 536 522 2.7
Operating expense: Depreciation and amortization 518 479 8.1
Operating expense: Aircraft maintenance materials and outside repairs 454 402 12.9
Operating expense: Distribution expenses 307 303 1.3
Operating expense: Aircraft rent 179 178 0.6
Operating expense: Special charges (D) 51 190 NM1
Operating expense: Other operating expenses 1,332 1,239 7.5
Operating expense: Other Operating Expenses: Total operating expenses 8,142 7,546 7.9
Operating income: Operating income 278 649 (57.2)
Operating margin 3.3% 7.9% (4.6) pts.
Operating margin, excluding special charges (A) (Non-GAAP) 3.9% 10.2% (6.3) pts.
Nonoperating income (expense):
Interest expense
(150) (159) (5.7)
Nonoperating income (expense): Interest capitalized 23 14 64.3
Nonoperating income (expense): Interest income 11 8 37.5
Nonoperating income (expense): Miscellaneous, net (D) (17) (18) (5.6)
Nonoperating income (expense): Miscellaneous, net (D): Total nonoperating expense (133) (155) (14.2)
Income before income taxes: Income before income taxes 145 494 (70.6)
Pre-tax margin 1.7% 6.0% (4.3) pts.
Pre-tax margin, excluding special items (A) (Non-GAAP) 2.3% 8.4% (6.1) pts.
Income tax expense (benefit) (E) 49 181 (72.9)
Net income $96 $313 (69.3)
Earnings per share, diluted $0.31 $0.88 (64.8)
Weighted average shares, diluted 315 355 (11.3)
  1. NM means Not Meaningful

 

UNITED CONTINENTAL HOLDINGS, INC.
STATISTICS
Statistics: Three Months Ended
March 31, 2017
Three Months Ended
March 31, 2016
%
Increase/
(Decrease)
Mainline:
Passengers (thousands)
23,825 22,277 6.9
Mainline:Revenue passenger miles (millions) 42,183 40,856 3.2
Mainline:Available seat miles (millions) 53,054 51,165 3.7
Mainline:Cargo ton miles (millions) 748 622 20.3
Mainline:Passenger revenue per available seat mile (cents) 10.99 10.90 0.8
Mainline:Average yield per revenue passenger mile (cents) 13.82 13.65 (1.2
Mainline:Aircraft in fleet at end of period 743 719 3.3
Mainline:Average stage length (miles) 1,802 1,859 (3.1)
Mainline:Average daily utilization of each aircraft (hours) 9:45 9:36 1.6
Regional:
Passengers (thousands)
9,280 9,810 (5.4)
Regional:Revenue passenger miles (millions) 5,428 5,726 (5.2)
Regional:Available seat miles (millions) 6,754 7,108 (5.0)
Regional:Passenger revenue per available seat mile (cents) 19.88 19.88
Regional:Average yield per revenue passenger mile (cents) 24.74 24.68 0.2
Regional:Aircraft in fleet at end of period 478 503 (5.0)
Regional:Average stage length (miles) 573 575 (0.3)
Consolidated (Mainline and Regional):
Passengers (thousands)
33,105 32,087 3.2
Consolidated (Mainline and Regional):Revenue passenger miles (millions) 47,611 46,582 2.2
Consolidated (Mainline and Regional):Available seat miles (millions) 59,808 58,273 2.6
Consolidated (Mainline and Regional):Passenger load factor:
Consolidated
79.6% 79.9% (0.3) pts.
Consolidated (Mainline and Regional):Domestic 83.3% 82.9% 0.4 pts.
Consolidated (Mainline and Regional):International 75.2% 76.4% (1.2) pts.
Consolidated (Mainline and Regional):Passenger revenue per available seat mile (cents) 12.00 12.00
Consolidated (Mainline and Regional):Total revenue per available seat mile (cents) 14.08 14.06 0.1
Consolidated (Mainline and Regional):Average yield per revenue passenger mile (cents) 15.07 15.01 0.4
Consolidated (Mainline and Regional):Aircraft in fleet at end of period 1,221 1,222 (0.1)
Consolidated (Mainline and Regional):Average stage length (miles) 1,451 1,461 (0.7)
Consolidated (Mainline and Regional):Average full-time equivalent employees (thousands) 85.2 82.5 3.3
  • Note: See Part II, Item 6 Selected Financial Data of the company's Annual Report on Form 10-K for the year ended December 31, 2016 for the definition of these statistics.

 

UNITED CONTINENTAL HOLDINGS, INC.
SUMMARY FINANCIAL METRICS

Note (A) provides a reconciliation of non-GAAP financial metrics to the comparable GAAP financial metrics and provides the reasons UAL management believes these financial metrics are useful.
(In millions, except per share data)

Summary Financial Metrics: Three Months Ended
March 31, 2017
Three Months Ended
March 31, 2016
%
Increase/
(Decrease)
Operating income (GAAP) $278 $649 (57.2)
Operating margin (GAAP) 3.3% 7.9% (4.6) pts.
Operating income, excluding Special charges (Non-GAAP) 329 839 (60.8)
Operating margin, excluding Special charges (Non-GAAP) 3.9% 10.2% (6.3) pts.
Adjusted EBITDA, excluding special items (Non-GAAP) $830 $1,304 (36.3)
Adjusted EBITDA margin, excluding special items (Non-GAAP) 9.9% 15.9% (6.0) pts.
Adjusted EBITDAR, excluding special items (Non-GAAP) 1,009 1,482 (31.9)
Adjusted EBITDAR margin, excluding special items (Non-GAAP) 12.0% 18.1% (6.1) pts.
Pre-tax income (GAAP) $145 $494 (70.6)
Pre-tax margin (GAAP) 1.7% 6.0% (4.3) pts.
Pre-tax income, excluding special items (Non-GAAP) 196 688 (71.5)
Pre-tax margin, excluding special items (Non-GAAP) 2.3% 8.4% (6.1) pts.
Net income (GAAP) $96 $313 (69.3)
Net income, excluding special items (Non-GAAP) 129 435 (70.3)
Diluted earnings per share (GAAP) $0.31 $0.88 (64.8)
Diluted earnings per share, excluding special items (Non-GAAP) 0.41 1.23 (66.7)
Net cash provided by operating activities $547 $1,199 (54.4)
Capital expenditures $691 $816 (15.3)
Adjusted capital expenditures 1,354 823 64.5
Free cash flow, net of financings (Non-GAAP) $(144) $383 NM
Free cash flow (Non-GAAP) (807) 376 NM

 

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.
Return on invested captial: Twelve Months Ended
March 31, 2017
Net Operating Profit After Tax (NOPAT)
Pre-tax income excluding special items 2
$3,970
Pre-tax income excluding special items: NOPAT adjustments 3 975
NOPAT $4,945
Effective cash tax rate 4 0.5%
Invested Capital (five-quarter average)
Total assets
$40,552
Total assets: Invested capital adjustments 5 12,271
Average Invested Capital $28,281
Return on Invested Capital 17.5%
  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
March 31, 2017
Pre-tax income $3,470
Pre-tax income: Add: Special items 500
Pre-tax income excluding special items $3,970

 

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

(A) Pursuant to SEC Regulation G, UAL has included the following reconciliations of reported Non-GAAP financial measures to comparable financial measures reported on a GAAP basis.

CASM is a common metric used in the airline industry to measure an airline's cost structure and efficiency. UAL reports CASM excluding special charges, third-party business expenses, fuel and profit sharing. UAL believes that adjusting for special charges is useful to investors because special charges are non-recurring charges not indicative of UAL's ongoing performance. UAL also believes that excluding third-party business expenses, such as maintenance, ground handling and catering services for third parties, fuel sales and non-air mileage redemptions, provides more meaningful disclosure because these expenses are not directly related to UAL's core business. UAL also believes that excluding fuel costs from certain measures is useful to investors because it provides an additional measure of management's performance excluding the effects of a significant cost item over which management has limited influence. UAL excludes profit sharing because this exclusion allows investors to better understand and analyze our recurring cost performance and provides a more meaningful comparison of our core operating costs to the airline industry. In addition, the company believes that adjusting for 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.
Non-GAAP Financial Reconciliation: Three Months Ended
March 31, 2017 in cents
Three Months Ended
March 31, 2016 in cents
%
Increase/
(Decrease)
CASM Mainline Operations (cents)
Cost per available seat mile (CASM)
13.22 12.47 6.0
CASM Mainline Operations (cents): Cost per available seat mile (CASM):Less: Special charges (D) 0.09 0.37 NM1
CASM Mainline Operations (cents): Cost per available seat mile (CASM): Less: Third-party business expenses 0.13 0.13
CASM Mainline Operations (cents): Cost per available seat mile (CASM): Less: Fuel expense 2.44 2.00 22.0
CASM Mainline Operations (cents): CASM, excluding special charges, third-party business expenses and fuel 10.56 9.97 5.9
CASM Mainline Operations (cents): CASM, excluding special charges, third-party business expenses and fuel: Less: Profit sharing per available seat mile 0.03 0.18 (83.3)
CASM Mainline Operations (cents): CASM, excluding special charges, third-party business expenses, fuel, and profit sharing 10.53 9.79 7.6
CASM Consolidated Operations (cents)
Cost per available seat mile (CASM)
13.61 12.95 5.1
CASM Consolidated Operations (cents): Cost per available seat mile (CASM):Less: Special charges (D) 0.08 0.33 NM1
CASM Consolidated Operations (cents): Cost per available seat mile (CASM): Less: Third-party business expenses 0.12 0.11 9.1
CASM Consolidated Operations (cents): Cost per available seat mile (CASM): Less: Fuel expense 2.60 2.09 24.4
CASM Consolidated Operations (cents): CASM, excluding special charges, third-party business expenses and fuel 10.81 10.42 3.7
CASM Consolidated Operations (cents): CASM, excluding special charges, third-party business expenses and fuel: Less: Profit sharing per available seat mile 0.04 0.16 (75.0)
CASM Consolidated Operations (cents): CASM, excluding special charges, third-party business expenses, fuel, and profit sharing 10.77 10.26 5.0

 

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

UAL evaluates its financial performance utilizing various accounting principles generally accepted in the United States of America (GAAP) and Non-GAAP financial measures, including operating income (loss) excluding special charges, income (loss) before income taxes excluding special items, net income (loss) excluding special items, and net earnings (loss) per share excluding special items, among others. UAL also presented diluted earnings per share excluding special items for the periods presented in 2016 adjusted for the impact of tax expense using the effective tax rate from the respective period in 2017 in order to make the financial measures more comparable. UAL had minimal income tax expense in the second half of 2016 that was offset by the release of its deferred tax asset valuation allowance resulting in a net income tax benefit.
Non-GAAP Financial Reconciliation continued: Three Months Ended
March 31, 2017 (In millions)
Three Months Ended
March 31, 2016 (In millions)
$
Increase/
(Decrease)
%
Increase/
(Decrease)
Operating expenses $8,142 $7,546 $596 7.9
Operating expenses: Less: Special charges (D) 51 190 (139) NM1
Operating expenses, excluding special charges 8,091 7,356 735 10.0
Operating expenses, excluding special charges: Less: Third-party business expenses 68 67 1 1.5
Operating expenses, excluding special charges: Less: Fuel expense 1,560 1,218 342 28.1
Operating expenses, excluding special charges: Less: Profit sharing, including taxes 20 93 (73) (78.5)
Operating expenses, excluding fuel, profit sharing, special charges and third-party business expenses $6,443 $5,978 $465 7.8
Operating income $278 $649 $(371) (57.2)
Operating income: Less: Special charges (D) 51 190 (139) NM1
Operating income, excluding special charges $329 $839 $(510) (60.8)
Income before income taxes $145 $494 $(349) (70.6)
Income before income taxes: Less: special items before income taxes (D) 51 194 (143) NM1
Income before income taxes and excluding special items $196 $688 $(492) (71.5)
Net income $96 $313 $(217) (69.3)
Net income: Less: special items, net of tax (D) 33 122 (89) NM1
Net income, excluding special items 129 435 (306) (70.3)
Diluted earnings per share $0.31 $0.88 $(0.57) (64.8)
Diluted earnings per share: Less: special items 0.16 0.55 (0.39) NM1
Diluted earnings per share: Less: tax effect related to special items (0.06) (0.20) 0.14 NM1
Diluted earnings per share, excluding special items $0.41 $1.23 $(0.82) (66.7)

 

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

UAL provides financial metrics, including earnings before interest, taxes, depreciation and amortization (EBITDA) as well as earnings before interest, taxes, depreciation and amortization, and aircraft rent (EBITDAR), that we believe provides useful supplemental information for management and investors by measuring profit and profit as a percentage of total operating revenues. These financial metrics are adjusted for special items that are non-recurring and that management believes are not indicative of UAL's ongoing performance.
EBITDA and EBITDAR (in millions) Three Months Ended
March 31, 2017
Three Months Ended
March 31, 2016
Net income $96 $313
Adjusted For:
Depreciation and amortization
518 479
Adjusted For: Interest expense 150 159
Adjusted For: Interest capitalized (23) (14)
Adjusted For: Interest income (11) (8)
Adjusted For: Income tax expense 49 181
Adjusted For: Special items before income taxes (D) 51 194
Adjusted EBITDA, excluding special items 830 1,304
Adjusted EBITDA, excluding special items: Aircraft rent 179 178
Adjusted EBITDAR, excluding special items $1,009 $1,482
UAL believes that adjusting capital expenditures for assets acquired through the issuance of debt, airport construction financing and excluding fully reimbursable projects is useful to investors in order to appropriately reflect the non-reimbursable funds spent on capital expenditures.

 

Capital Expenditures (in millions) Three Months Ended
March 31, 2017
Three Months Ended
March 31, 2016
Capital Expenditures: Capital expenditures – GAAP $691 $816
Capital Expenditures: Capital expenditures – GAAP:Property and equipment acquired through the issuance of debt 711 59
Capital Expenditures: Capital expenditures – GAAP:Airport construction financing 21 9
Capital Expenditures: Capital expenditures – GAAP:Fully reimbursable projects (69) (61)
Capital Expenditures:Adjusted capital expenditures – Non-GAAP $1,354 $823
Free Cash Flow (in millions) Three Months Ended
March 31, 2017
Three Months Ended
March 31, 2016
Free Cash Flow: Net cash provided by operating activities $547 $1,199
Free Cash Flow: Net cash provided by operating activities: Less capital expenditures – Non-GAAP 691 816
Free Cash Flow: Free cash flow, net of financings - Non-GAAP $(144) $383
Free Cash Flow: Net cash provided by operating activities $547 $1,199
Free Cash Flow: Net cash provided by operating activities: Less adjusted capital expenditures – Non-GAAP 1,354 823
Free Cash Flow: Free cash flow - Non-GAAP $(807) $376

 

UNITED CONTINENTAL HOLDINGS, INC.
NOTES (UNAUDITED)

(B) Select passenger revenue information is as follows (in millions):
Notes unaudited: 1Q 2017
Passenger
Revenue
(millions)
Passenger
Revenue
vs.
1Q 2016
PRASM
vs.
1Q 2016
Yield
vs.
1Q 2016
Available
Seat Miles
vs.
1Q 2016
Domestic $4,358 3.0% (0.1%) (0.6%) 3.1%
Atlantic 1,048 0.8% 2.1% 3.7% (1.3%)
Pacific 987 3.7% (3.5%) (0.1%) 7.4%
Latin America 781 2.0% 2.8% 2.3% (0.8%)
International 2,816 2.1% 0.0% 1.6% 2.1%
Consolidated $7,174 2.6% 0.0% 0.4% 2.6%
Mainline $5,831 4.6% 0.8% 1.2% 3.7%
Regional 1,343 (5.0%) 0.0% 0.2% (5.0%)
Consolidated $7,174

 

UNITED CONTINENTAL HOLDINGS, INC.
NOTES (UNAUDITED)

(C) UAL's results of operations include fuel expense for both mainline and regional operations. (In millions, except per gallon)
Notes unaudited: Three Months Ended
March 31, 2017
Three Months Ended
March 31, 2016
%
Increase/
(Decrease)
Mainline fuel expense excluding hedge impacts $1,290 $885 45.8
Hedge losses reported in fuel expense 6 (2) (138) NM1
Total mainline fuel expense 1,292 1,023 26.3
Regional fuel expense 268 195 37.4
Consolidated fuel expense 1,560 1,218 28.1
Mainline fuel consumption (gallons) 761 734 3.7
Mainline average aircraft fuel price per gallon $1.70 $1.39 22.3
Mainline average aircraft fuel price per gallon excluding hedge losses recorded in fuel expense $1.70 $1.21 40.5
Regional fuel consumption (gallons) 149 156 (4.5)
Regional average aircraft fuel price per gallon $1.80 $1.25 44.0
Consolidated fuel consumption (gallons) 910 890 2.2
Consolidated average aircraft fuel price per gallon $1.71 $1.37 24.8
Consolidated average aircraft fuel price per gallon excluding hedge losses recorded in fuel expense $1.71 $1.21 41.3
  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)

(D) Special items include the following:
(In millions) Three Months Ended
March 31, 2017 (In millions)
Three Months Ended
March 31, 2016 (In millions)
Operating:
Operating: Severance and benefit costs
$37 $8
Labor agreement costs 100
Operating: Cleveland airport lease restructuring 74
Operating: (Gains) losses on sale of assets and other special charges 14 8
Operating: (Gains) losses on sale of assets and other special charges: Special charges 51 190
Nonoperating and income taxes:
Foreign currency loss
8
Nonoperating and income taxes: Income tax benefit related to special charges (18) (72)
Nonoperating and income taxes: Income tax expense (benefit) related to special charges: Total operating and nonoperating special charges, net of income taxes 33 126
Nonoperating and income taxes: Prior period losses on fuel derivative contracts settled in the current period (4)
Nonoperating and income taxes: Prior period gains (losses) on fuel derivative contracts settled in the current period:Total special items, net of income taxes $33 $122

 

Special items

 

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

During the three months ended March 31, 2016, the company recorded $8 million ($5 million net of taxes) of severance and benefit costs primarily related to a voluntary early-out program for its flight attendants.

 

Labor agreement costs: In April 2016, the fleet service, passenger service, storekeeper and other employees represented by the International Association of Machinists and Aerospace Workers ratified seven new contracts with the company which extended the contracts through 2021. The company recorded a $100 million ($64 million net of taxes) special charge for bonus payments in conjunction with the ratification of these contracts.

 

Cleveland airport lease restructuring: During the three months ended March 31, 2016, the City of Cleveland agreed to amend the lease, which runs through 2029, associated with certain excess airport terminal space (principally Terminal D) and related facilities at Hopkins International Airport ("Cleveland"). The company recorded an accrual for remaining payments under the lease for facilities that the company no longer uses and will continue to incur costs under the lease without economic benefit to the company. This liability was measured and recorded at its fair value when the company ceased its right to use such facilities leased to it pursuant to the lease. The company recorded a net charge of $74 million ($47 million net of taxes) related to the amended lease.

 

Foreign currency loss: During the three months ended March 31, 2016, the company recorded $8 million of losses ($5 million net of taxes) due to exchange rate changes in Venezuela applicable to funds held in local currency.

 

Prior period losses on fuel derivative contracts settled in the current period: Prior to 2017, the company used certain combinations of derivative contracts that were economic hedges but did not qualify for hedge accounting under U.S. generally accepted accounting principles.  As with derivatives that qualified for hedge accounting, the economic hedges and individual contracts were part of the company's program to mitigate the adverse financial impact of potential increases in the price of fuel. The company recorded changes in the fair value of the various contracts that were not designated for hedge accounting to Nonoperating income (expense): Miscellaneous, net in the statements of consolidated operations. For fuel derivative contracts that settled in the three months ended March 31, 2016, the company recorded mark-to-market losses of $4 million in prior periods.

 

(E) Effective tax rate: The company's effective tax rate for the three months ended March 31, 2017 and 2016 was 33.8% and 36.6%, respectively, which represented a blend of federal, state and foreign taxes and included the impact of certain nondeductible items. The effective tax rate for the three months ended March 31, 2017 reflects the impact of discrete events including the recognition of excess tax benefits related to employee stock compensation as a result of the adoption of ASU 2016-09, as well as a change in the mix of domestic and foreign earnings.

 
 

 

 

 

SOURCE United Airlines

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

United Launches Industry-Exclusive Technology to Ease the Burden of COVID-19 Travel Restrictions

United's "Travel-Ready Center" will allow customers to upload and validate test results, review local entry requirements, find testing providers, and store vaccination records - all in the United app and United.com
January 25, 2021

CHICAGO, Jan. 25, 2021 /PRNewswire/ -- United Airlines today launched the "Travel-Ready Center" - a new, digital solution where customers can review COVID-19 entry requirements, find local testing options and upload any required testing and vaccination records for domestic and international travel, all in one place. United is the first airline to integrate all these features into its mobile app and website.

"While pre-travel testing and documentation are key to safely reopening global travel, we know it can be confusing for customers when they're preparing for a flight," said Linda Jojo, Executive Vice President for Technology and Chief Digital Officer, United. "Starting today, our 'Travel-Ready Center' gives customers a personalized, step-by-step guide of what is needed for their trip, a simple way to upload required documents and quickly get their boarding pass, fully integrated within our app and website."


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.

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.

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.

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.

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 future federal income tax expense and represent significant value to the Company. The purpose of the Plan is to protect the Company's ability to use these tax assets, which would be substantially limited if the Company experienced an "ownership change" within the meaning of Section 382 of the Code. Generally, an "ownership change" occurs if the percentage of UAL's stock owned by one or more of its "5-percent shareholders" (as such term is defined in Section 382 of the Code) increases by more than 50 percentage points over a rolling three-year period. 

In light of the volatility and decline in the market price of UAL's common stock resulting from the sharp decline in demand for air travel caused by the COVID-19 pandemic and other macroeconomic factors and in light of potential transactions involving the sale or issuance of UAL common stock, UAL's Board of Directors determined to adopt the Plan to prevent an inadvertent impairment of the Company's NOLs.

Pursuant to the Plan, UAL will issue, by means of a dividend, one preferred share purchase right for each outstanding share of UAL common stock to stockholders of record at the close of business on December 14, 2020. Stockholders are not required to take any action to receive the rights. Initially, these rights will not be exercisable and will trade with, and be represented by, the shares of UAL common stock.

UAL intends to submit the Plan to a vote of its stockholders at its 2021 annual meeting.  The Plan will expire on the first business day following the certification of the voting results for UAL's 2021 annual meeting, unless UAL's stockholders ratify the Plan at such meeting, in which case the Plan will continue in effect until Dec. 4, 2023, unless terminated earlier in accordance with its terms.

Under the Plan, the rights generally become exercisable only if a person or group (an "acquiring person") acquires beneficial ownership of 4.9% or more of the outstanding shares of UAL common stock in a transaction not approved by the Board. In that situation, each holder of a right (other than the acquiring person, whose rights will become void and will not be exercisable) will be entitled to purchase, at the then-current exercise price, additional shares of UAL common stock at a 50% discount. The Board, at its option, may exchange each right (other than rights owned by the acquiring person that have become void) in whole or in part, at an exchange ratio of one share of UAL common stock per outstanding right, subject to adjustment. Except as provided in the Plan, the Board is entitled to redeem the rights at $0.001 per right.

If a person or group beneficially owns 4.9% or more of the outstanding shares of UAL common stock prior to today's announcement of the Plan, then that person's or group's existing ownership percentage will be grandfathered. However, grandfathered shareholders will generally not be permitted to acquire any additional shares. 

Additional information regarding the Plan will be contained in a Current Report on Form 8-K to be filed by UAL with the U.S. Securities and Exchange Commission.

Sidley Austin LLP is acting as legal counsel to UAL.

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, 872.825.8640, media.relations@united.com