CHICAGO, Jan. 17, 2017 /PRNewswire/ -- United Airlines
(UAL) today announced its fourth-quarter and full-year 2016
financial results.
- Achieved best full-year on-time performance while reporting the
lowest number of cancellations, delay minutes and mishandled bags
in company history.
- UAL reported full-year net income of $2.3 billion, diluted earnings per share of
$6.85, pre-tax earnings of
$3.8 billion and pre-tax margin of
10.4 percent. Excluding special items, UAL reported full-year net
income of $2.9 billion, diluted
earnings per share of $8.65, pre-tax
earnings of $4.5 billion and pre-tax
margin of 12.2 percent.
- UAL reported fourth-quarter net income of $397 million, diluted earnings per share of
$1.26, pre-tax earnings of
$884 million and pre-tax margin of
9.8 percent. Excluding special items, UAL reported fourth-quarter
net income of $562 million, diluted
earnings per share of $1.78, pre-tax
earnings of $857 million and pre-tax
margin of 9.5 percent.
- Technicians and related employees ratified a joint contract in
the fourth quarter. UAL has completed new agreements with every
domestic unionized work group in 2016.
- Employees earned $628 million in
profit sharing for 2016.
"Our fourth quarter financial and operating performance capped
an outstanding year for United Airlines," said Oscar Munoz, chief executive officer of United
Airlines. "In 2016, we put into action our plan to become the best
airline in the world, and last year's results demonstrate we are on
our way to achieving that ambition. We will continue delivering on
this commitment by investing in our employees, elevating our
customer experience and driving strong and consistent returns for
our shareholders."
Full-Year and Fourth-Quarter
Revenue
For the fourth quarter of 2016, total revenue was $9.1 billion, an increase of 0.2 percent
year-over-year. Fourth-quarter 2016 consolidated passenger revenue
per available seat mile (PRASM) decreased 1.6 percent and
consolidated yield decreased 1.2 percent compared to the fourth
quarter of 2015. This outperformance versus the company's initial
guidance was due to stronger close-in bookings and yields in
November and December. For the full-year 2016, consolidated PRASM
declined 5.4 percent compared to the prior year driven by factors
including a strong U.S. dollar, lower surcharges, reductions from
energy-related corporate travel, and declining yields.
"We saw meaningful improvement in the pricing and demand
environment in the quarter," said Scott
Kirby, president of United Airlines. "Looking forward, we
anticipate first-quarter consolidated unit revenues to be
approximately flat, marking the fourth straight quarter of
sequential quarter-over-quarter improvement."
Full-Year and Fourth-Quarter Costs
Total operating expense was $8.0
billion in the fourth quarter, up 1.2 percent
year-over-year. Excluding special charges, total operating expense
was $8.1 billion, a 3.2 percent
increase year-over-year. Consolidated unit cost (CASM) decreased
0.8 percent compared to the fourth quarter of 2015 due mainly to
lower fuel expense. Fourth-quarter consolidated CASM, excluding
special charges, third-party business expenses, fuel and profit
sharing, increased 4.1 percent year-over-year driven largely by the
impact of labor agreements ratified in 2016. For the full
year, consolidated CASM decreased 2.9 percent compared
to full-year 2015 due to lower fuel expense. Excluding special
charges, third-party business expenses, fuel and profit sharing,
consolidated CASM increased 2.8 percent compared to the prior year
due primarily to new labor agreements.
"I am very pleased with core cost performance achieved in the
fourth quarter and full-year 2016 where we kept non-fuel cost
growth excluding new labor deals nearly constant," said
Andrew Levy, executive vice
president and chief financial officer of United Airlines. "I have
great confidence we will achieve our cost efficiency targets
outlined at our investor day as we look to offset rising fuel and
labor costs."
Liquidity and Capital Allocation
In the fourth quarter, UAL generated $658
million in operating cash flow and ended the quarter with
$5.8 billion in unrestricted
liquidity, including $1.35 billion of
undrawn commitments under its revolving credit facility. UAL
generated $5.5 billion in operating
cash flow for the full year. The company continued to invest in its
business through capital expenditures of $880 million in the fourth quarter and a total of
$3.2 billion for the full year.
Including assets acquired through the issuance of debt and airport
construction financing and excluding fully reimbursable projects,
the company invested $1.1 billion
during the fourth quarter and $3.3
billion for the full year in adjusted capital expenditures.
Free cash flow, measured as operating cash flow less adjusted
capital expenditures, was $2.2
billion for the full year.
For the 12 months ended Dec. 31,
2016, the company's return on invested capital was 19.3
percent. In the quarter, UAL purchased $156
million of its common shares. For full-year 2016, the
company purchased $2.6 billion of its
common shares, representing approximately 14 percent of shares
outstanding, at an average price of $51.80 per share. As of Dec. 31, 2016, the company had $1.8 billion remaining to purchase shares under
its existing share repurchase authority.
For more information on UAL's first-quarter 2017 guidance,
please visit ir.united.com for the company's investor update.
Full-Year and Fourth-Quarter
Highlights
Operations and Employees
- In the fourth quarter, United technicians and related
employees voted to ratify a new joint collective bargaining
agreement. During 2016, the company reached new agreements with
every domestic unionized work group.
- Achieved best full-year on-time performance while reporting the
lowest number of cancellations, delay minutes and mishandled bags
in company history.
- In December, United earned its sixth consecutive perfect 100
percent score on the Human Rights Campaign's Corporate Equality
Index and a spot on the organization's list of "Best Places to Work
for LGBT Equality."
- Employees earned cash-incentive payments of approximately
$30 million for achieving operational
performance goals in the quarter, marking a full year of bonus
payouts for a total of approximately $120
million.
- Further enabled employees to provide a better experience to
customers by equipping them with the technology and information
they need, including more than 50,000 mobile devices in the
operation.
Network and Fleet
- In the fourth quarter, launched service to Havana, Cuba from its Newark and Houston hubs. During 2016, the company also
introduced new routes between San
Francisco and five international destinations including
Tel Aviv; Xi'an, China; Singapore; Auckland,
New Zealand; and Hangzhou,
China.
- In the fourth quarter, took delivery of the first Boeing
777-300ER in the company's fleet, named the "New Spirit of United,"
featuring the all-new United Polaris business class seat.
- During the quarter, announced a modification to its narrowbody
order book by converting its original order for 65 Boeing 737-700
aircraft into four 737-800 aircraft to be delivered in 2017 and 61
737 MAX aircraft with delivery dates to be determined.
- During the year, took delivery of 22 new Boeing aircraft,
including 737NGs, 787s and 777s, as well as six used Airbus A319
aircraft.
Customer Experience
- Launched a reimagined international travel experience, United
Polaris service, in December and opened the first premier United
Polaris lounge in Chicago.
- Opened automated screening lanes to increase efficiency and
improve the screening experience for its customers at hubs in
Chicago, Los Angeles and Newark during the fourth quarter.
- During the year, redesigned and upgraded seven United Clubs
across the system.
- In 2016, re-introduced free snacks and began offering illy®
premium coffee on board and in United Clubs.
- For 2016, MileagePlus® loyalty program named best overall
frequent flyer program in the world for thirteenth consecutive year
by Global Traveler.
- Flew 1,500 athletes, coaches and Team USA staff to the 2016 Rio Olympic and
Paralympic Games over the summer as the company celebrated more
than 35 years partnering with Team USA.
- Expanded capabilities of United's award-winning mobile app,
used on more than 28 million devices – enhancing the customer
experience with new re-booking options and features to improve
management of international travel documents.
About United
United Airlines and United Express operate more than 4,500
flights a day to 339 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 737 mainline
aircraft and the airline's United Express partners operate 483
regional aircraft. The airline is a founding member of Star Alliance, which provides service to 192
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" 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,
revenue-generating initiatives, 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); economic and political instability and other risks of
doing business globally; 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; disruptions to our regional network; 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; 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 UAL's Annual Report on Form 10-K for the fiscal year ended
December 31, 2015, as well as other
risks and uncertainties set forth from time to time in the reports
we file with the U.S. Securities and Exchange Commission.
-tables attached-
UNITED CONTINENTAL
HOLDINGS, INC.
|
STATEMENTS OF
CONSOLIDATED OPERATIONS (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
%
Increase/
(Decrease)
|
|
|
Year Ended
December
31,
|
|
%
Increase/
(Decrease)
|
|
(In millions, except
per share data)
|
|
2016
|
|
2015
|
|
|
|
2016
|
|
2015
|
|
|
Operating
revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passenger -
Mainline
|
|
$
|
6,295
|
|
|
$
|
6,180
|
|
|
1.9
|
|
|
|
$
|
25,414
|
|
|
$
|
26,333
|
|
|
(3.5)
|
|
|
Passenger -
Regional
|
|
1,466
|
|
|
1,549
|
|
|
(5.4)
|
|
|
|
6,043
|
|
|
6,452
|
|
|
(6.3)
|
|
|
Total passenger
revenue (B)
|
|
7,761
|
|
|
7,729
|
|
|
0.4
|
|
|
|
31,457
|
|
|
32,785
|
|
|
(4.1)
|
|
|
Cargo
|
|
250
|
|
|
231
|
|
|
8.2
|
|
|
|
876
|
|
|
937
|
|
|
(6.5)
|
|
|
Other operating
revenue
|
|
1,041
|
|
|
1,076
|
|
|
(3.3)
|
|
|
|
4,223
|
|
|
4,142
|
|
|
2.0
|
|
|
Total operating
revenue
|
|
9,052
|
|
|
9,036
|
|
|
0.2
|
|
|
|
36,556
|
|
|
37,864
|
|
|
(3.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and related
costs
|
|
2,568
|
|
|
2,424
|
|
|
5.9
|
|
|
|
10,275
|
|
|
9,713
|
|
|
5.8
|
|
|
Aircraft fuel
(C)
|
|
1,555
|
|
|
1,618
|
|
|
(3.9)
|
|
|
|
5,813
|
|
|
7,522
|
|
|
(22.7)
|
|
|
Landing fees and
other rent
|
|
553
|
|
|
556
|
|
|
(0.5)
|
|
|
|
2,165
|
|
|
2,203
|
|
|
(1.7)
|
|
|
Regional capacity
purchase
|
|
552
|
|
|
565
|
|
|
(2.3)
|
|
|
|
2,197
|
|
|
2,290
|
|
|
(4.1)
|
|
|
Depreciation and
amortization
|
|
504
|
|
|
476
|
|
|
5.9
|
|
|
|
1,977
|
|
|
1,819
|
|
|
8.7
|
|
|
Aircraft maintenance
materials and outside repairs
|
|
448
|
|
|
399
|
|
|
12.3
|
|
|
|
1,749
|
|
|
1,651
|
|
|
5.9
|
|
|
Distribution
expenses
|
|
316
|
|
|
316
|
|
|
—
|
|
|
|
1,303
|
|
|
1,342
|
|
|
(2.9)
|
|
|
Aircraft
rent
|
|
159
|
|
|
174
|
|
|
(8.6)
|
|
|
|
680
|
|
|
754
|
|
|
(9.8)
|
|
|
Special charges
(D)
|
|
(31)
|
|
|
131
|
|
|
NM
|
|
|
|
638
|
|
|
326
|
|
|
NM
|
|
|
Other operating
expenses
|
|
1,423
|
|
|
1,296
|
|
|
9.8
|
|
|
|
5,421
|
|
|
5,078
|
|
|
6.8
|
|
|
Total operating
expense
|
|
8,047
|
|
|
7,955
|
|
|
1.2
|
|
|
|
32,218
|
|
|
32,698
|
|
|
(1.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
1,005
|
|
|
1,081
|
|
|
(7.0)
|
|
|
|
4,338
|
|
|
5,166
|
|
|
(16.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
11.1
|
%
|
|
12.0
|
%
|
|
(0.9)
|
|
pts.
|
|
11.9
|
%
|
|
13.6
|
%
|
|
(1.7)
|
|
pts.
|
Operating margin,
excluding special charges (A) (Non-GAAP)
|
|
10.8
|
%
|
|
13.4
|
%
|
|
(2.6)
|
|
pts.
|
|
13.6
|
%
|
|
14.5
|
%
|
|
(0.9)
|
|
pts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonoperating income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
(148)
|
|
|
(165)
|
|
|
(10.3)
|
|
|
|
(614)
|
|
|
(669)
|
|
|
(8.2)
|
|
|
Interest
capitalized
|
|
24
|
|
|
11
|
|
|
118.2
|
|
|
|
72
|
|
|
49
|
|
|
46.9
|
|
|
Interest
income
|
|
11
|
|
|
9
|
|
|
22.2
|
|
|
|
42
|
|
|
25
|
|
|
68.0
|
|
|
Miscellaneous, net
(D)
|
|
(8)
|
|
|
(31)
|
|
|
(74.2)
|
|
|
|
(19)
|
|
|
(352)
|
|
|
(94.6)
|
|
|
Total nonoperating
expense
|
|
(121)
|
|
|
(176)
|
|
|
(31.3)
|
|
|
|
(519)
|
|
|
(947)
|
|
|
(45.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
884
|
|
|
905
|
|
|
(2.3)
|
|
|
|
3,819
|
|
|
4,219
|
|
|
(9.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax
margin
|
|
9.8
|
%
|
|
10.0
|
%
|
|
(0.2)
|
|
pts.
|
|
10.4
|
%
|
|
11.1
|
%
|
|
(0.7)
|
|
pts.
|
Pre-tax margin,
excluding special items (A) (Non-GAAP)
|
|
9.5
|
%
|
|
10.4
|
%
|
|
(0.9)
|
|
pts.
|
|
12.2
|
%
|
|
11.9
|
%
|
|
0.3
|
|
pts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit) (E)
|
|
487
|
|
|
82
|
|
|
493.9
|
|
|
|
1,556
|
|
|
(3,121)
|
|
|
NM
|
|
|
Net income
|
|
$
|
397
|
|
|
$
|
823
|
|
|
(51.8)
|
|
|
|
$
|
2,263
|
|
|
$
|
7,340
|
|
|
(69.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share,
diluted
|
|
$
|
1.26
|
|
|
$
|
2.24
|
|
|
(43.8)
|
|
|
|
$
|
6.85
|
|
|
$
|
19.47
|
|
|
(64.8)
|
|
|
Weighted average
shares, diluted
|
|
316
|
|
|
367
|
|
|
(13.9)
|
|
|
|
330
|
|
|
377
|
|
|
(12.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NM Not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNITED CONTINENTAL
HOLDINGS, INC.
|
STATISTICS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
%
Increase/
(Decrease)
|
|
|
Year Ended
December
31,
|
|
%
Increase/
(Decrease)
|
|
|
|
2016
|
|
2015
|
|
|
2016
|
|
2015
|
|
Mainline:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passengers
(thousands)
|
|
25,590
|
|
|
24,169
|
|
|
5.9
|
|
|
|
101,007
|
|
|
96,327
|
|
|
4.9
|
|
|
Revenue passenger
miles (millions)
|
|
45,608
|
|
|
44,470
|
|
|
2.6
|
|
|
|
186,181
|
|
|
183,642
|
|
|
1.4
|
|
|
Available seat miles
(millions)
|
|
55,440
|
|
|
53,814
|
|
|
3.0
|
|
|
|
224,692
|
|
|
219,989
|
|
|
2.1
|
|
|
Cargo ton miles
(millions)
|
|
790
|
|
|
679
|
|
|
16.3
|
|
|
|
2,805
|
|
|
2,614
|
|
|
7.3
|
|
|
Passenger revenue per
available seat mile (cents)
|
|
11.35
|
|
|
11.48
|
|
|
(1.1)
|
|
|
|
11.31
|
|
|
11.97
|
|
|
(5.5)
|
|
|
Average yield per
revenue passenger mile (cents)
|
|
13.80
|
|
|
13.90
|
|
|
(0.7)
|
|
|
|
13.65
|
|
|
14.34
|
|
|
(4.8)
|
|
|
Aircraft in fleet at
end of period
|
|
737
|
|
|
715
|
|
|
3.1
|
|
|
|
737
|
|
|
715
|
|
|
3.1
|
|
|
Average stage length
(miles)
|
|
1,804
|
|
|
1,869
|
|
|
(3.5)
|
|
|
|
1,859
|
|
|
1,922
|
|
|
(3.3)
|
|
|
Average daily
utilization of each aircraft (hours)
|
|
9:54
|
|
|
9:59
|
|
|
(0.8)
|
|
|
|
10:06
|
|
|
10:24
|
|
|
(2.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regional:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passengers
(thousands)
|
|
10,433
|
|
|
10,983
|
|
|
(5.0)
|
|
|
|
42,170
|
|
|
44,042
|
|
|
(4.3)
|
|
|
Revenue passenger
miles (millions)
|
|
5,930
|
|
|
6,248
|
|
|
(5.1)
|
|
|
|
24,128
|
|
|
24,969
|
|
|
(3.4)
|
|
|
Available seat miles
(millions)
|
|
7,078
|
|
|
7,490
|
|
|
(5.5)
|
|
|
|
28,898
|
|
|
30,014
|
|
|
(3.7)
|
|
|
Passenger revenue per
available seat mile (cents)
|
|
20.71
|
|
|
20.68
|
|
|
0.1
|
|
|
|
20.91
|
|
|
21.50
|
|
|
(2.7)
|
|
|
Average yield per
revenue passenger mile (cents)
|
|
24.72
|
|
|
24.79
|
|
|
(0.3)
|
|
|
|
25.05
|
|
|
25.84
|
|
|
(3.1)
|
|
|
Aircraft in fleet at
end of period
|
|
494
|
|
|
521
|
|
|
(5.2)
|
|
|
|
494
|
|
|
521
|
|
|
(5.2)
|
|
|
Average stage length
(miles)
|
|
560
|
|
|
562
|
|
|
(0.4)
|
|
|
|
564
|
|
|
559
|
|
|
0.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
(Mainline and Regional):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passengers
(thousands)
|
|
36,023
|
|
|
35,152
|
|
|
2.5
|
|
|
|
143,177
|
|
|
140,369
|
|
|
2.0
|
|
|
Revenue passenger
miles (millions)
|
|
51,538
|
|
|
50,718
|
|
|
1.6
|
|
|
|
210,309
|
|
|
208,611
|
|
|
0.8
|
|
|
Available seat miles
(millions)
|
|
62,518
|
|
|
61,304
|
|
|
2.0
|
|
|
|
253,590
|
|
|
250,003
|
|
|
1.4
|
|
|
Passenger load
factor:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
82.4
|
%
|
|
82.7
|
%
|
|
(0.3)
|
|
pts.
|
|
82.9
|
%
|
|
83.4
|
%
|
|
(0.5)
|
|
pts.
|
Domestic
|
|
85.2
|
%
|
|
85.7
|
%
|
|
(0.5)
|
|
pts.
|
|
85.4
|
%
|
|
85.7
|
%
|
|
(0.3)
|
|
pts.
|
International
|
|
78.9
|
%
|
|
79.0
|
%
|
|
(0.1)
|
|
pts.
|
|
80.0
|
%
|
|
80.7
|
%
|
|
(0.7)
|
|
pts.
|
Passenger revenue per
available seat mile (cents)
|
|
12.41
|
|
|
12.61
|
|
|
(1.6)
|
|
|
|
12.40
|
|
|
13.11
|
|
|
(5.4)
|
|
|
Total revenue per
available seat mile (cents)
|
|
14.48
|
|
|
14.74
|
|
|
(1.8)
|
|
|
|
14.42
|
|
|
15.15
|
|
|
(4.8)
|
|
|
Average yield per
revenue passenger mile (cents)
|
|
15.06
|
|
|
15.24
|
|
|
(1.2)
|
|
|
|
14.96
|
|
|
15.72
|
|
|
(4.8)
|
|
|
Aircraft in fleet at
end of period
|
|
1,231
|
|
|
1,236
|
|
|
(0.4)
|
|
|
|
1,231
|
|
|
1,236
|
|
|
(0.4)
|
|
|
Average stage length
(miles)
|
|
1,441
|
|
|
1,456
|
|
|
(1.0)
|
|
|
|
1,473
|
|
|
1,487
|
|
|
(0.9)
|
|
|
Average full-time
equivalent employees (thousands)
|
|
84.8
|
|
|
82.1
|
|
|
3.3
|
|
|
|
83.9
|
|
|
82.1
|
|
|
2.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2015 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
%
Increase/
(Decrease)
|
|
|
Year Ended
December
31,
|
|
%
Increase/
(Decrease)
|
|
|
|
2016
|
|
2015
|
|
|
|
2016
|
|
2015
|
|
|
(In millions, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(GAAP)
|
|
$
|
1,005
|
|
|
$
|
1,081
|
|
|
(7.0)
|
|
|
|
$
|
4,338
|
|
|
$
|
5,166
|
|
|
(16.0)
|
|
|
Operating margin
(GAAP)
|
|
11.1
|
%
|
|
12.0
|
%
|
|
(0.9)
|
|
pts.
|
|
11.9
|
%
|
|
13.6
|
%
|
|
(1.7)
|
|
pts.
|
Operating income,
excluding Special charges (Non-GAAP)
|
|
974
|
|
|
1,212
|
|
|
(19.6)
|
|
|
|
4,976
|
|
|
5,492
|
|
|
(9.4)
|
|
|
Operating margin,
excluding Special charges (Non-GAAP)
|
|
10.8
|
%
|
|
13.4
|
%
|
|
(2.6)
|
|
pts.
|
|
13.6
|
%
|
|
14.5
|
%
|
|
(0.9)
|
|
pts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA,
excluding special items (Non-GAAP)
|
|
$
|
1,474
|
|
|
$
|
1,560
|
|
|
(5.5)
|
|
|
|
$
|
6,939
|
|
|
$
|
6,912
|
|
|
0.4
|
|
|
Adjusted EBITDA
margin, excluding special items (Non-GAAP)
|
|
16.3
|
%
|
|
17.3
|
%
|
|
(1.0)
|
|
pt.
|
|
19.0
|
%
|
|
18.3
|
%
|
|
0.7
|
|
pts.
|
Adjusted EBITDAR,
excluding special items (Non-GAAP)
|
|
1,633
|
|
|
1,734
|
|
|
(5.8)
|
|
|
|
7,619
|
|
|
7,666
|
|
|
(0.6)
|
|
|
Adjusted EBITDAR
margin, excluding special items (Non-GAAP)
|
|
18.0
|
%
|
|
19.2
|
%
|
|
(1.2)
|
|
pts.
|
|
20.8
|
%
|
|
20.2
|
%
|
|
0.6
|
|
pts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income
(GAAP)
|
|
$
|
884
|
|
|
$
|
905
|
|
|
(2.3)
|
|
|
|
$
|
3,819
|
|
|
$
|
4,219
|
|
|
(9.5)
|
|
|
Pre-tax margin
(GAAP)
|
|
9.8
|
%
|
|
10.0
|
%
|
|
(0.2)
|
|
pts.
|
|
10.4
|
%
|
|
11.1
|
%
|
|
(0.7)
|
|
pts.
|
Pre-tax income,
excluding special items
(Non-GAAP)
|
|
857
|
|
|
939
|
|
|
(8.7)
|
|
|
|
4,462
|
|
|
4,498
|
|
|
(0.8)
|
|
|
Pre-tax margin,
excluding special items (Non-GAAP)
|
|
9.5
|
%
|
|
10.4
|
%
|
|
(0.9)
|
|
pts.
|
|
12.2
|
%
|
|
11.9
|
%
|
|
0.3
|
|
pts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(GAAP)
|
|
$
|
397
|
|
|
$
|
823
|
|
|
(51.8)
|
|
|
|
$
|
2,263
|
|
|
$
|
7,340
|
|
|
(69.2)
|
|
|
Net income, excluding
special items (Non-GAAP)
|
|
562
|
|
|
934
|
|
|
(39.8)
|
|
|
|
2,857
|
|
|
4,478
|
|
|
(36.2)
|
|
|
Tax adjusted net
income, excluding special items (Non-GAAP)
|
|
562
|
|
|
602
|
|
|
(6.6)
|
|
|
|
2,857
|
|
|
2,883
|
|
|
(0.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share (GAAP)
|
|
$
|
1.26
|
|
|
$
|
2.24
|
|
|
(43.8)
|
|
|
|
$
|
6.85
|
|
|
$
|
19.47
|
|
|
(64.8)
|
|
|
Diluted earnings per
share, excluding special items (Non-GAAP)
|
|
1.78
|
|
|
2.54
|
|
|
(29.9)
|
|
|
|
8.65
|
|
|
11.88
|
|
|
(27.2)
|
|
|
Tax adjusted diluted
earnings per share, excluding special items (Non-GAAP)
|
|
1.78
|
|
|
1.64
|
|
|
8.5
|
|
|
|
|
8.65
|
|
|
|
7.65
|
|
|
13.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
|
658
|
|
|
$
|
1,115
|
|
|
(41.0)
|
|
|
|
$
|
5,542
|
|
|
$
|
5,992
|
|
|
(7.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
$
|
880
|
|
|
$
|
763
|
|
|
15.3
|
|
|
|
$
|
3,223
|
|
|
$
|
2,747
|
|
|
17.3
|
|
|
Adjusted capital
expenditures
|
|
1,078
|
|
|
791
|
|
|
36.3
|
|
|
|
3,347
|
|
|
3,506
|
|
|
(4.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow, net
of financings (Non-GAAP)
|
|
$
|
(222)
|
|
|
$
|
352
|
|
|
NM
|
|
|
|
$
|
2,319
|
|
|
$
|
3,245
|
|
|
(28.5)
|
|
|
Free cash flow
(Non-GAAP)
|
|
(420)
|
|
|
324
|
|
|
NM
|
|
|
|
2,195
|
|
|
2,486
|
|
|
(11.7)
|
|
|
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.
|
|
|
|
|
(in
millions)
|
Twelve Months Ended
December 31,
2016
|
Net Operating
Profit After Tax (NOPAT)
|
|
Pre-tax income
excluding special items (a)
|
$
|
4,462
|
|
NOPAT adjustments
(b)
|
998
|
|
NOPAT
|
$
|
5,460
|
|
|
|
Effective cash tax
rate (c)
|
0.3
|
%
|
|
|
Invested Capital
(five-quarter average)
|
|
Total
assets
|
$
|
40,435
|
|
Invested capital
adjustments (d)
|
12,182
|
|
Average Invested
Capital
|
$
|
28,253
|
|
|
|
Return on Invested
Capital
|
19.3
|
%
|
|
|
Notes:
|
Twelve Months Ended
December 31,
2016
|
(a) Non-GAAP
Financial Reconciliation
|
|
Pre-tax
income
|
$
|
3,819
|
|
Add: Special
items
|
643
|
|
Pre-tax income
excluding special items
|
$
|
4,462
|
|
|
|
|
|
(b)
|
NOPAT adjustments
include: adding back (net of tax shield) interest expense, the
interest component of capitalized aircraft rent and net interest on
pension.
|
(c)
|
Effective cash tax
rate is calculated by dividing cash taxes paid by adjusted pre-tax
income.
|
(d)
|
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.
|
UNITED CONTINENTAL
HOLDINGS, INC.
|
NON-GAAP FINANCIAL
RECONCILIATION
|
|
(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.
|
|
|
Three Months Ended
December 31,
|
|
%
Increase/
(Decrease)
|
|
Year Ended
December
31,
|
|
%
Increase/
(Decrease)
|
|
|
2016
|
|
2015
|
|
|
2016
|
|
2015
|
|
CASM Mainline
Operations (cents)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost per available
seat mile (CASM)
|
|
12.43
|
|
|
12.37
|
|
|
0.5
|
|
|
12.22
|
|
|
12.42
|
|
|
(1.6)
|
|
Less: Special charges
(D)
|
|
(0.06)
|
|
|
0.24
|
|
|
NM
|
|
|
0.29
|
|
|
0.15
|
|
|
NM
|
|
Less: Third-party
business expenses
|
|
0.13
|
|
|
0.16
|
|
|
(18.8)
|
|
|
0.11
|
|
|
0.13
|
|
|
(15.4)
|
|
Less: Fuel
expense
|
|
2.33
|
|
|
2.53
|
|
|
(7.9)
|
|
|
2.16
|
|
|
2.87
|
|
|
(24.7)
|
|
CASM, excluding
special charges, third-party business expenses and fuel
|
|
10.03
|
|
|
9.44
|
|
|
6.3
|
|
|
9.66
|
|
|
9.27
|
|
|
4.2
|
|
Less: Profit sharing
per available seat mile
|
|
0.22
|
|
|
0.28
|
|
|
(21.4)
|
|
|
0.28
|
|
|
0.32
|
|
|
(12.5)
|
|
CASM, excluding
special charges, third-party business expenses, fuel, and profit
sharing
|
|
9.81
|
|
|
9.16
|
|
|
7.1
|
|
|
9.38
|
|
|
8.95
|
|
|
4.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASM Consolidated
Operations (cents)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost per available
seat mile (CASM)
|
|
12.87
|
|
|
12.98
|
|
|
(0.8)
|
|
|
12.70
|
|
|
13.08
|
|
|
(2.9)
|
|
Less: Special charges
(D)
|
|
(0.05)
|
|
|
0.22
|
|
|
NM
|
|
|
0.25
|
|
|
0.13
|
|
|
NM
|
|
Less: Third-party
business expenses
|
|
0.11
|
|
|
0.14
|
|
|
(21.4)
|
|
|
0.10
|
|
|
0.12
|
|
|
(16.7)
|
|
Less: Fuel
expense
|
|
2.49
|
|
|
2.64
|
|
|
(5.7)
|
|
|
2.29
|
|
|
3.01
|
|
|
(23.9)
|
|
CASM, excluding
special charges, third-party business expenses and fuel
|
|
10.32
|
|
|
9.98
|
|
|
3.4
|
|
|
10.06
|
|
|
9.82
|
|
|
2.4
|
|
Less: Profit sharing
per available seat mile
|
|
0.19
|
|
|
0.25
|
|
|
(24.0)
|
|
|
0.25
|
|
|
0.28
|
|
|
(10.7)
|
|
CASM, excluding
special charges, third-party business expenses, fuel, and profit
sharing
|
|
10.13
|
|
|
9.73
|
|
|
4.1
|
|
|
9.81
|
|
|
9.54
|
|
|
2.8
|
|
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 2015 adjusted for the
impact of tax expense using the effective tax rate from the
respective period in 2016 in order to make the financial measures
more comparable. UAL had minimal income tax expense in the second
half of 2015 that was offset by the release of its deferred tax
asset valuation allowance resulting in a net income tax
benefit.
|
|
|
Three Months Ended
December 31,
|
|
$
Increase/
(Decrease)
|
|
%
Increase/
(Decrease)
|
|
Year Ended
December
31,
|
|
$
Increase/
(Decrease)
|
|
%
Increase/
(Decrease)
|
(in
millions)
|
|
2016
|
|
2015
|
|
|
2016
|
|
2015
|
|
Operating
expenses
|
|
$
|
8,047
|
|
|
$
|
7,955
|
|
|
$
|
92
|
|
|
1.2
|
|
|
$
|
32,218
|
|
|
$
|
32,698
|
|
|
$
|
(480)
|
|
|
(1.5)
|
|
Less: Special charges
(D)
|
|
(31)
|
|
|
131
|
|
|
(162)
|
|
|
NM
|
|
|
638
|
|
|
326
|
|
|
312
|
|
|
NM
|
|
Operating expenses,
excluding special charges
|
|
8,078
|
|
|
7,824
|
|
|
254
|
|
|
3.2
|
|
|
31,580
|
|
|
32,372
|
|
|
(792)
|
|
|
(2.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Third-party
business expenses
|
|
69
|
|
|
86
|
|
|
(17)
|
|
|
(19.8)
|
|
|
257
|
|
|
291
|
|
|
(34)
|
|
|
(11.7)
|
|
Less: Fuel
expense
|
|
1,555
|
|
|
1,618
|
|
|
(63)
|
|
|
(3.9)
|
|
|
5,813
|
|
|
7,522
|
|
|
(1,709)
|
|
|
(22.7)
|
|
Less: Profit sharing,
including taxes
|
|
122
|
|
|
153
|
|
|
(31)
|
|
|
(20.3)
|
|
|
628
|
|
|
698
|
|
|
(70)
|
|
|
(10.0)
|
|
Operating expenses,
excluding fuel, profit sharing, special charges and third-party
business expenses
|
|
$
|
6,332
|
|
|
$
|
5,967
|
|
|
$
|
365
|
|
|
6.1
|
|
|
$
|
24,882
|
|
|
$
|
23,861
|
|
|
$
|
1,021
|
|
|
4.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
$
|
1,005
|
|
|
$
|
1,081
|
|
|
$
|
(76)
|
|
|
(7.0)
|
|
|
$
|
4,338
|
|
|
$
|
5,166
|
|
|
$
|
(828)
|
|
|
(16.0)
|
|
Less: Special charges
(D)
|
|
(31)
|
|
|
131
|
|
|
(162)
|
|
|
NM
|
|
|
638
|
|
|
326
|
|
|
312
|
|
|
NM
|
|
Operating income,
excluding special charges
|
|
$
|
974
|
|
|
$
|
1,212
|
|
|
$
|
(238)
|
|
|
(19.6)
|
|
|
$
|
4,976
|
|
|
$
|
5,492
|
|
|
$
|
(516)
|
|
|
(9.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
$
|
884
|
|
|
$
|
905
|
|
|
$
|
(21)
|
|
|
(2.3)
|
|
|
$
|
3,819
|
|
|
$
|
4,219
|
|
|
$
|
(400)
|
|
|
(9.5)
|
|
Less: special items
before income taxes (D)
|
|
(27)
|
|
|
34
|
|
|
(61)
|
|
|
NM
|
|
|
643
|
|
|
279
|
|
|
364
|
|
|
NM
|
|
Income before income
taxes and excluding special items
|
|
$
|
857
|
|
|
$
|
939
|
|
|
$
|
(82)
|
|
|
(8.7)
|
|
|
$
|
4,462
|
|
|
$
|
4,498
|
|
|
$
|
(36)
|
|
|
(0.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
397
|
|
|
$
|
823
|
|
|
$
|
(426)
|
|
|
(51.8)
|
|
|
$
|
2,263
|
|
|
$
|
7,340
|
|
|
$
|
(5,077)
|
|
|
(69.2)
|
|
Less: special items,
net of tax (D)
|
|
165
|
|
|
111
|
|
|
54
|
|
|
NM
|
|
|
594
|
|
|
(2,862)
|
|
|
3,456
|
|
|
NM
|
|
Net income, excluding
special items
|
|
562
|
|
|
934
|
|
|
(372)
|
|
|
(39.8)
|
|
|
2,857
|
|
|
4,478
|
|
|
(1,621)
|
|
|
(36.2)
|
|
Less: Income tax
adjustment using 2016 tax rate for 2015
|
|
—
|
|
|
(332)
|
|
|
332
|
|
|
NM
|
|
|
—
|
|
|
(1,595)
|
|
|
1,595
|
|
|
NM
|
|
Tax adjusted net
income, excluding special items
|
|
$
|
562
|
|
|
$
|
602
|
|
|
$
|
(40)
|
|
|
(6.6)
|
|
|
$
|
2,857
|
|
|
$
|
2,883
|
|
|
$
|
(26)
|
|
|
(0.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share
|
|
$
|
1.26
|
|
|
$
|
2.24
|
|
|
$
|
(0.98)
|
|
|
(43.8)
|
|
|
$
|
6.85
|
|
|
$
|
19.47
|
|
|
$
|
(12.62)
|
|
|
(64.8)
|
|
Less: special
items
|
|
(0.09)
|
|
|
0.09
|
|
|
(0.18)
|
|
|
NM
|
|
|
1.95
|
|
|
0.74
|
|
|
1.21
|
|
|
NM
|
|
Less: special income
tax items
|
|
0.61
|
|
|
0.21
|
|
|
0.40
|
|
|
NM
|
|
|
(0.15)
|
|
|
(8.33)
|
|
|
8.18
|
|
|
NM
|
|
Diluted earnings per
share, excluding special items
|
|
$
|
1.78
|
|
|
$
|
2.54
|
|
|
$
|
(0.76)
|
|
|
(29.9)
|
|
|
$
|
8.65
|
|
|
$
|
11.88
|
|
|
$
|
(3.23)
|
|
|
(27.2)
|
|
Less: Income tax
adjustment using 2016 tax rate for 2015
|
|
—
|
|
|
(0.90)
|
|
|
0.90
|
|
|
NM
|
|
|
—
|
|
|
(4.23)
|
|
|
4.23
|
|
|
NM
|
|
Tax adjusted diluted
earnings per share, excluding special items
|
|
$
|
1.78
|
|
|
$
|
1.64
|
|
|
$
|
0.14
|
|
|
8.5
|
|
|
$
|
8.65
|
|
|
$
|
7.65
|
|
|
$
|
1.00
|
|
|
13.1
|
|
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.
|
|
|
Three Months Ended
December 31,
|
|
|
|
Year Ended
December
31,
|
|
EBITDA and
EBITDAR
|
|
2016
|
|
2015
|
|
|
|
2016
|
|
2015
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
397
|
|
|
$
|
823
|
|
|
|
|
$
|
2,263
|
|
|
$
|
7,340
|
|
|
Adjusted
for:
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
504
|
|
|
476
|
|
|
|
|
1,977
|
|
|
1,819
|
|
|
Interest
expense
|
|
148
|
|
|
165
|
|
|
|
|
614
|
|
|
669
|
|
|
Interest
capitalized
|
|
(24)
|
|
|
(11)
|
|
|
|
|
(72)
|
|
|
(49)
|
|
|
Interest
income
|
|
(11)
|
|
|
(9)
|
|
|
|
|
(42)
|
|
|
(25)
|
|
|
Income tax expense
(benefit) (E)
|
|
487
|
|
|
82
|
|
|
|
|
1,556
|
|
|
(3,121)
|
|
|
Special items before
income taxes (D)
|
|
(27)
|
|
|
34
|
|
|
|
|
643
|
|
|
279
|
|
|
Adjusted EBITDA,
excluding special items
|
|
1,474
|
|
|
1,560
|
|
|
|
|
6,939
|
|
|
6,912
|
|
|
Aircraft
rent
|
|
159
|
|
|
174
|
|
|
|
|
680
|
|
|
754
|
|
|
Adjusted EBITDAR,
excluding special items
|
|
$
|
1,633
|
|
|
$
|
1,734
|
|
|
|
|
$
|
7,619
|
|
|
$
|
7,666
|
|
|
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
December 31,
2016
|
|
Three Months Ended
December 31,
2015
|
|
Year Ended
December 31,
2016
|
|
Year Ended
December 31,
2015
|
Capital expenditures
– GAAP
|
|
$
|
880
|
|
|
$
|
763
|
|
|
$
|
3,223
|
|
|
$
|
2,747
|
|
Property and
equipment acquired through the issuance of debt
|
|
271
|
|
|
69
|
|
|
386
|
|
|
866
|
|
Airport construction
financing
|
|
23
|
|
|
12
|
|
|
91
|
|
|
17
|
|
Fully reimbursable
projects
|
|
(96)
|
|
|
(53)
|
|
|
(353)
|
|
|
(124)
|
|
Adjusted capital
expenditures – Non-GAAP
|
|
$
|
1,078
|
|
|
$
|
791
|
|
|
$
|
3,347
|
|
|
$
|
3,506
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
(in millions)
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
|
658
|
|
|
$
|
1,115
|
|
|
$
|
5,542
|
|
|
$
|
5,992
|
|
Less capital
expenditures – GAAP
|
|
880
|
|
|
763
|
|
|
3,223
|
|
|
2,747
|
|
Free cash flow, net
of financings - Non-GAAP
|
|
$
|
(222)
|
|
|
$
|
352
|
|
|
$
|
2,319
|
|
|
$
|
3,245
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
|
658
|
|
|
$
|
1,115
|
|
|
$
|
5,542
|
|
|
$
|
5,992
|
|
Less adjusted capital
expenditures – Non-GAAP
|
|
1,078
|
|
|
791
|
|
|
3,347
|
|
|
3,506
|
|
Free cash flow -
Non-GAAP
|
|
$
|
(420)
|
|
|
$
|
324
|
|
|
$
|
2,195
|
|
|
$
|
2,486
|
|
UNITED CONTINENTAL
HOLDINGS, INC.
|
NOTES
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
(B) Select passenger revenue
information is as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4Q 2016
Passenger
Revenue
(millions)
|
|
Passenger
Revenue
vs.
4Q 2015
|
|
PRASM
vs.
4Q 2015
|
|
Yield
vs.
4Q 2015
|
|
Available
Seat Miles
vs.
4Q 2015
|
Domestic
|
|
$
|
3,378
|
|
|
4.0%
|
|
(0.3%)
|
|
0.6%
|
|
4.3%
|
|
|
|
|
|
|
|
|
|
|
|
Atlantic
|
|
1,246
|
|
|
(5.2%)
|
|
(2.8%)
|
|
(0.2%)
|
|
(2.4%)
|
Pacific
|
|
1,030
|
|
|
1.8%
|
|
(6.0%)
|
|
(6.2%)
|
|
8.1%
|
Latin
America
|
|
641
|
|
|
6.0%
|
|
7.7%
|
|
4.2%
|
|
(1.6%)
|
International
|
|
2,917
|
|
|
(0.5%)
|
|
(2.2%)
|
|
(2.0%)
|
|
1.8%
|
|
|
|
|
|
|
|
|
|
|
|
Mainline
|
|
6,295
|
|
|
1.9%
|
|
(1.1%)
|
|
(0.7%)
|
|
3.0%
|
Regional
|
|
1,466
|
|
|
(5.4%)
|
|
0.1%
|
|
(0.3%)
|
|
(5.5%)
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
$
|
7,761
|
|
|
0.4%
|
|
(1.6%)
|
|
(1.2%)
|
|
2.0%
|
UNITED CONTINENTAL
HOLDINGS, INC.
|
NOTES
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
(C) UAL's results of
operations include fuel expense for both mainline and regional
operations.
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
%
Increase/
(Decrease)
|
|
Year Ended
December
31,
|
|
%
Increase/
(Decrease)
|
(In millions, except
per gallon)
|
|
2016
|
|
2015
|
|
|
2016
|
|
2015
|
|
Mainline fuel expense
excluding hedge impacts
|
|
$
|
1,270
|
|
|
$
|
1,184
|
|
|
7.3
|
|
|
$
|
4,640
|
|
|
$
|
5,711
|
|
|
(18.8)
|
|
Hedge losses reported
in fuel expense (a)
|
|
(20)
|
|
|
(175)
|
|
|
NM
|
|
|
(217)
|
|
|
(604)
|
|
|
NM
|
|
Total mainline fuel
expense
|
|
1,290
|
|
|
1,359
|
|
|
(5.1)
|
|
|
4,857
|
|
|
6,315
|
|
|
(23.1)
|
|
Regional fuel
expense
|
|
265
|
|
|
259
|
|
|
2.3
|
|
|
956
|
|
|
1,207
|
|
|
(20.8)
|
|
Consolidated fuel
expense
|
|
1,555
|
|
|
1,618
|
|
|
(3.9)
|
|
|
5,813
|
|
|
7,522
|
|
|
(22.7)
|
|
Cash paid on settled
hedges that did not qualify for hedge
accounting (b)
|
|
—
|
|
|
(115)
|
|
|
NM
|
|
|
(5)
|
|
|
(329)
|
|
|
NM
|
|
Fuel expense
including all losses from settled hedges
|
|
$
|
1,555
|
|
|
$
|
1,733
|
|
|
(10.3)
|
|
|
$
|
5,818
|
|
|
$
|
7,851
|
|
|
(25.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mainline fuel
consumption (gallons)
|
|
804
|
|
|
784
|
|
|
2.6
|
|
|
3,261
|
|
|
3,216
|
|
|
1.4
|
|
Mainline average
aircraft fuel price per gallon
|
|
$
|
1.60
|
|
|
$
|
1.73
|
|
|
(7.5)
|
|
|
$
|
1.49
|
|
|
$
|
1.96
|
|
|
(24.0)
|
|
Mainline average
aircraft fuel price per gallon excluding hedge losses recorded in
fuel expense
|
|
$
|
1.58
|
|
|
$
|
1.51
|
|
|
4.6
|
|
|
$
|
1.42
|
|
|
$
|
1.78
|
|
|
(20.2)
|
|
Mainline average
aircraft fuel price per gallon including cash paid on settled
hedges that did not qualify for hedge accounting
|
|
$
|
1.60
|
|
|
$
|
1.88
|
|
|
(14.9)
|
|
|
$
|
1.49
|
|
|
$
|
2.07
|
|
|
(28.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regional fuel
consumption (gallons)
|
|
158
|
|
|
167
|
|
|
(5.4)
|
|
|
643
|
|
|
670
|
|
|
(4.0)
|
|
Regional average
aircraft fuel price per gallon
|
|
$
|
1.68
|
|
|
$
|
1.55
|
|
|
8.4
|
|
|
$
|
1.49
|
|
|
$
|
1.80
|
|
|
(17.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated fuel
consumption (gallons)
|
|
962
|
|
|
951
|
|
|
1.2
|
|
|
3,904
|
|
|
3,886
|
|
|
0.5
|
|
Consolidated average
aircraft fuel price per gallon
|
|
$
|
1.62
|
|
|
$
|
1.70
|
|
|
(4.7)
|
|
|
$
|
1.49
|
|
|
$
|
1.94
|
|
|
(23.2)
|
|
Consolidated average
aircraft fuel price per gallon excluding hedge losses recorded in
fuel expense
|
|
$
|
1.60
|
|
|
$
|
1.52
|
|
|
5.3
|
|
|
$
|
1.43
|
|
|
$
|
1.78
|
|
|
(19.7)
|
|
Consolidated average
aircraft fuel price per gallon including cash paid on settled
hedges that did not qualify for hedge accounting
|
|
$
|
1.62
|
|
|
$
|
1.82
|
|
|
(11.0)
|
|
|
$
|
1.49
|
|
|
$
|
2.02
|
|
|
(26.2)
|
|
|
|
(a)
|
Includes losses from
settled hedges that were designated for hedge accounting. UAL
allocates 100 percent of hedge accounting gains (losses) to
mainline fuel expense.
|
(b)
|
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:
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Year Ended
December
31,
|
(In
millions)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Operating:
|
|
|
|
|
|
|
|
|
Labor agreement costs
and related items
|
|
$
|
(60)
|
|
|
$
|
18
|
|
|
$
|
64
|
|
|
$
|
18
|
|
Severance and benefit
costs
|
|
10
|
|
|
4
|
|
|
37
|
|
|
107
|
|
Impairment of
assets
|
|
—
|
|
|
48
|
|
|
412
|
|
|
79
|
|
Cleveland airport
lease restructuring
|
|
—
|
|
|
—
|
|
|
74
|
|
|
—
|
|
(Gains) losses on
sale of assets and other special charges
|
|
19
|
|
|
61
|
|
|
51
|
|
|
122
|
|
Special
charges
|
|
(31)
|
|
|
131
|
|
|
638
|
|
|
326
|
|
|
|
|
|
|
|
|
|
|
Nonoperating and
income taxes:
|
|
|
|
|
|
|
|
|
Losses (gain) on
extinguishment of debt and other
|
|
—
|
|
|
7
|
|
|
(1)
|
|
|
202
|
|
Income tax expense
(benefit) related to special charges
|
|
12
|
|
|
(11)
|
|
|
(229)
|
|
|
(11)
|
|
Total operating and
nonoperating special charges, net of income taxes
|
|
(19)
|
|
|
127
|
|
|
408
|
|
|
517
|
|
Income tax
adjustments (E)
|
|
180
|
|
|
88
|
|
|
180
|
|
|
(3,130)
|
|
Mark-to-market (MTM)
(gains) losses from fuel derivative contracts settling in future
periods
|
|
—
|
|
|
1
|
|
|
—
|
|
|
(8)
|
|
Prior period gains
(losses) on fuel derivative contracts settled in the current
period
|
|
4
|
|
|
(105)
|
|
|
6
|
|
|
(241)
|
|
Total special items,
net of income taxes
|
|
$
|
165
|
|
|
$
|
111
|
|
|
$
|
594
|
|
|
$
|
(2,862)
|
|
Special
items
|
|
Labor agreement costs
and related items: The fleet service, passenger service,
storekeeper and other employees represented by the International
Association of Machinists and Aerospace Workers (IAM) ratified
seven new contracts with the company which extended the contracts
through 2021. The technicians and related employees represented by
the International Brotherhood of Teamsters (IBT) ratified a
six-year joint collective bargaining agreement which extended the
contract through 2022. During 2016, the company recorded $171
million ($110 million net of taxes) of special charges primarily
for payments in conjunction with the IAM and IBT agreements
described above. As part of the ratified contract with the IBT, the
company amended some of its technicians and related employees'
postretirement medical plans. The amendments triggered curtailment
accounting, resulting in the recognition of a one-time $60 million
gain ($38 million net of taxes) for accelerated recognition of a
prior service credit in one of the plans. Also, as part of the
ratified contract with the Association of Flight Attendants, the
company amended two of its flight attendant postretirement medical
plans. The amendments triggered curtailment accounting, resulting
in the recognition of a one-time $47 million gain ($30 million net
of taxes) for accelerated recognition of a prior service
credit.
|
|
Severance and benefit
costs: During the three months and year ended December 31, 2016,
the company recorded $10 million ($6 million net of taxes) and $37
million ($24 million net of taxes), respectively, of severance and
benefit costs related to a voluntary early-out program for the
company's flight attendants and other severance agreements. In
2015, the company recorded $107 million of severance and benefit
costs primarily related to a voluntary early-out program for its
flight attendants. In 2014, more than 2,500 flight attendants
elected to voluntarily separate from the company for 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.
|
|
Impairment of assets:
In April 2016, the Federal Aviation Administration (FAA) announced
that it will designate Newark Liberty International Airport
(Newark) as a Level 2 schedule-facilitated airport under the
International Air Transport Association Worldwide Slot Guidelines
effective October 30, 2016. The designation was associated with an
updated demand and capacity analysis of Newark by the FAA. In 2016,
the company determined that the FAA's action impaired the entire
value of its Newark slots because the slots are no longer the
mechanism that governs take-off and landing rights. Accordingly,
the company recorded a $412 million special charge ($264 million
net of taxes) to write off the intangible asset. During its annual
assessment in the fourth quarter of 2015, the company recorded $33
million ($22 million net of related income tax benefit) related to
impairment of its indefinite-lived intangible assets (certain
domestic slots and international Pacific routes), $8 million for
the write-off of unexercised aircraft purchase options and $7
million for inventory held for sale. For the full-year 2015, the
company also recorded other impairments, including $10 million for
discontinued internal software projects and $10 million for the
impairment of several engines held for sale.
|
|
Cleveland airport
lease restructuring: During 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. 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.
|
|
(Gains) losses on
sale of assets and other special charges: During the three months
and year ended December 31, 2016, the company recorded gains and
losses on sale of assets and other special charges of $19 million
($12 million net of taxes) and $51 million ($33 million net of
taxes), respectively. During 2015, the company recorded $122
million, which includes $60 million of integration-related costs
primarily related to systems integration and training for
employees, $32 million related to charges for legal matters, $16
million for the cease use of an aircraft under lease and $14
million for losses on the sale of aircraft and other miscellaneous
gains and losses.
|
|
Losses (gain) on
extinguishment of debt and other: During the year ended December
31, 2016, the company recorded $8 million ($5 million net of taxes)
of losses due to exchange rate changes in Venezuela applicable to
funds held in local currency and recorded a $9 million ($6 million
net of taxes) gain on the sale of an affiliate. During 2015, the
company recorded $202 million of losses as part of Nonoperating
income (expense): Miscellaneous, net due primarily to the write-off
of $134 million related to the unamortized non-cash debt discount
from the extinguishment of the 6% Notes due 2026 and 6% Notes due
2028, and $61 million of foreign exchange losses on its holdings of
Venezuela currency.
|
|
MTM (gains)/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 uses certain combinations of derivative
contracts that are economic hedges but do not qualify for hedge
accounting under U.S. generally accepted accounting principles.
Additionally, the company may enter into contracts at different
times and later combine those contracts into structures designated
for hedge accounting. As with derivatives that qualify for hedge
accounting, the economic hedges and individual contracts are part
of the company's program to mitigate the adverse financial impact
of potential increases in the price of fuel. The company records
changes in the fair value of these various contracts that are not
designated for hedge accounting to Nonoperating income (expense):
Miscellaneous, net in the statements of consolidated operations.
During the three months and year ended December 31, 2016, the
company did not record any MTM gains or losses on fuel derivative
contracts that will settle in future periods. For fuel derivative
contracts that settled in the three months and year ended December
31, 2016, the company recorded MTM gains of $4 million and $6
million, respectively, in prior periods. During the three months
and year ended December 31, 2015, the company recorded $1 million
in MTM losses and $8 million in MTM gains, respectively, on fuel
derivative contracts that will settle in future periods. For fuel
derivative contracts that settled in the three months and year
ended December 31, 2015, the company recorded MTM losses of $105
million and $241 million, respectively, in prior
periods.
|
|
(E) The company's effective
tax rate for the three months and year ended December 31, 2016 was
55% and 41%, respectively. The rate for both periods was impacted
by a special tax expense of $180 million. The company recorded
approximately $180 million of deferred income tax expense
adjustments in AOCI, which related to losses on fuel hedges
designated for hedge accounting. Accounting rules required the
adjustments to remain in AOCI as long as the company had fuel
derivatives designated for cash flow hedge accounting. In 2016, we
settled all of our fuel hedges and have not entered into any new
fuel derivative contracts for hedge accounting. Accordingly, the
company reclassified the $180 million to income tax expense in
2016. The effective tax rate for 2016 also represented a blend of
federal, state and foreign taxes and the impact of certain
nondeductible items.
|
|
The company's
effective tax rate for the three months and year ended December 31,
2015 was impacted by the valuation allowance release. After
considering all positive and negative evidence, the company
concluded that its deferred income taxes would more likely than not
be realized. The company released substantially all of its
valuation allowance in the third quarter of 2015, which resulted in
a $3.2 billion benefit in its provision for income
taxes.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/united-airlines-reports-full-year-and-fourth-quarter-2016-performance-300392249.html
SOURCE United Airlines