CHICAGO, Oct. 18, 2017 /PRNewswire/ -- United
Airlines (UAL) today announced its third-quarter 2017 financial
results.
- UAL reported third-quarter net income of $637 million, diluted earnings per share of
$2.12, pre-tax earnings of
approximately $1.0 billion and
pre-tax margin of 9.9 percent.
- Excluding special charges, UAL reported third-quarter net
income of $669 million, diluted
earnings per share of $2.22, pre-tax
earnings of $1.0 billion and pre-tax
margin of 10.4 percent.
- UAL repurchased $556 million of
its common shares in the third quarter, bringing the year-to-date
share repurchases to $1.3
billion.
- UAL delivered the best-ever third-quarter consolidated on-time
departures in the history of the company, and employees earned
$11 million in bonuses for
operational performance.
"I could not be prouder of how our employees are raising the bar
both in terms of serving our customers, as well as delivering
record-setting operational performance. Not only did they manage to
keep our operation moving through back-to-back natural disasters,
but the United family banded together to help one another take part
in one of the largest relief efforts in our airline's history,"
said Oscar Munoz, chief executive
officer of United Airlines. "Even with the challenging environment
in the third quarter, we continue to set the stage for United's
long-term success and investing in the right strategy for our
future."
During the quarter, the company cancelled approximately 8,300
flights as a result of severe weather in southeast Texas, Florida and parts of the Caribbean. The operational disruption reduced
third-quarter pre-tax income by an estimated $185 million.
"Our employees continued to run a great operation and set new
company records during the third quarter despite a challenging
operational environment with an unprecedented series of storms. Our
team set new records for on-time performance this quarter and had
the fewest maintenance delays in over five years," said
Scott Kirby, president of United
Airlines. "Our company took part in relief efforts by operating 46
relief flights, delivering more than 1.7 million pounds of relief
supplies and together with our customers and employees,
raising and contributing more than $9 million to community and employee
assistance. And thanks to a remarkable effort by the people of
United, our Houston hub returned
to full operations quicker than expected following Harvey."
Third-Quarter Revenue
For the third quarter of 2017, revenue was $9.9 billion, roughly flat year-over-year
including an estimated $210 million
loss of revenue from severe weather during the quarter.
Third-quarter 2017 consolidated passenger revenue per available
seat mile (PRASM) was down 3.7 percent compared to the third
quarter of 2016. Cargo revenue was $257
million in the third quarter of 2017, an increase of 14.7
percent year-over-year primarily due to higher international
freight volume.
Third-Quarter Costs
Operating expense was $8.8 billion
in the third quarter, up 6.0 percent year-over-year. Consolidated
unit cost per available seat mile (CASM) increased 3.0 percent
compared to the third quarter of 2016 due largely to higher fuel
and labor expense. Third-quarter consolidated CASM, excluding
special charges, third-party business expenses, fuel and profit
sharing, increased 2.6 percent year-over-year, driven mainly by
higher labor expense.
Liquidity and Capital Allocation
UAL generated $577 million in
operating cash flow and ended the quarter with $6.3 billion in unrestricted liquidity, including
$2.0 billion of undrawn commitments
under its revolving credit facility. Capital expenditures were
$1.1 billion in the third
quarter.
In the third quarter of 2017, UAL raised $400 million of unsecured debt with an interest
rate of 4.25 percent. The company contributed $160 million to its pension plans and made debt
and capital lease principal payments of $222
million. In the quarter, UAL purchased $556 million of its common shares at an average
price of $67.08 per share. As of
Sept. 30, 2017, the company had
approximately $553 million remaining
under its existing share repurchase authority.
For the 12 months ended Sept. 30,
2017, the company's pre-tax income was $3.3 billion and return on invested capital
(ROIC) was 14.9 percent.
"As we balance United's customer, employee and shareholder
priorities going forward, a key focus remains returning cash to
shareholders and we continued this during the third quarter,
repurchasing $556 million of stock,
which brings our year-to-date repurchase total to $1.3 billion," said Andrew Levy, executive vice president and chief
financial officer of United Airlines. "Our balance sheet remains
strong as evidenced by the 4.25 interest percent rate on the
$400 million of unsecured debt raised
during the quarter."
For more information on UAL's fourth-quarter 2017 guidance,
please visit ir.united.com for the company's investor update.
Third-Quarter Highlights
Customer
Experience
- New Customer Solutions Desk rolled out system-wide with a
dedicated team to develop creative solutions to ensure customers
reach their final destinations when their travel plans don't go as
expected.
- Named the 2017 Airline of the Year in recognition of United
Polaris business class experience at the International Flight
Services Association (IFSA) Compass Awards.
- Unveiled a bag tracking feature in the United mobile app which
allows customers to track their checked bags from check-in to
arrival.
- Retrofitted the first Boeing 767-300ER aircraft with the United
Polaris business class.
- United Polaris earned Global Traveler magazine's
"Outstanding Innovations" award at the Global Traveler's
fifth annual Leisure Lifestyle Awards.
- Became the first U.S.-based airline to offer a new option to
check in and learn about flights without the touch of a finger
through a new United skill for Amazon Echo and Amazon Echo
Dot.
- Officially announced the final flight of the Boeing 747-400 as
it retires, with the final voyage on Nov.
7, 2017 from San
Francisco to Honolulu.
Network and Fleet
- Announced several new routes:
-
- New international nonstop service between Houston and Sydney, nonstop seasonal service to
Mazatlan, Mexico, increased
seasonal service to popular ski destinations and more options for
Seattle-area customers with daily
service between Paine Field and Denver and San
Francisco.
- Announced new seasonal service between Denver and London; Newark, New Jersey, and Porto, Portugal and Reykjavik, Iceland; San Francisco and Zurich; and Washington Dulles and Edinburgh, Scotland. Additionally, announced
expanded year-round service between Newark and Rome.
- Announced an agreement with Airbus to modify its A350 order
resulting in a conversion of the model type from the A350-1000 to
the A350-900, an increase in the order size from 35 to 45 aircraft
and a deferral of the first delivery to late 2022.
- Took delivery of one Boeing 787-9 aircraft, four Boeing 737-800
aircraft and nine Embraer E175 aircraft.
- Finalized agreements to take delivery of two additional used
Airbus A320 aircraft by the end of 2017.
Operations and Employees
- In response to the recent catastrophic weather events Harvey,
Irma and Maria, United and its employees came together to keep the
operation moving and take part in relief efforts:
-
- Operated 84 additional flights to provide additional seats and
deliver needed relief supplies to impacted areas.
- Operated 46 relief flights, flying more than 2,000 evacuees out
of impacted areas.
- Flew 767 flights with larger aircraft in order to carry more
people and supplies. The combination resulted in over 13,600
additional seats to impacted areas.
- Delivered over 1.7 million pounds of relief supplies to aid the
recovery in Texas, Florida, Puerto
Rico and the Caribbean.
- Customers and employees, with supporting funds from the
company, raised and contributed more than $9 million to community and employee
assistance.
- Continued to improve the mobile tools used by employees,
including the first release of the "in the moment" care app, and
new functionality in flight attendant tools to better serve
customers. These tools were the basis for the company receiving the
CIO 100 award.
- Announced partnerships with three world-class design and
apparel companies – Brooks Brothers, Tracy
Reese and Carhartt – to inspire and create a new line of
uniforms for the carrier's more than 70,000 front-line
employees.
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, Newark/New York,
San Francisco and Washington, D.C. United operates 751 mainline
aircraft and the airline's United Express carriers operate 489
regional aircraft. The airline is a founding member of Star Alliance, which provides service to more
than 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); economic and
political instability and other risks of doing business globally;
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; 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, 2016, 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 September 30,
|
|
% Increase/ (Decrease)
|
|
|
Nine
Months Ended September
30,
|
|
% Increase/ (Decrease)
|
|
(In millions, except
per share data)
|
|
2017
|
|
2016
|
|
|
|
2017
|
|
2016
|
|
|
Operating
revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passenger -
Mainline
|
|
$
|
7,083
|
|
|
$
|
7,017
|
|
|
0.9
|
|
|
|
$
|
19,970
|
|
|
$
|
19,119
|
|
|
4.5
|
|
|
Passenger -
Regional
|
|
1,445
|
|
|
1,586
|
|
|
(8.9)
|
|
|
|
4,354
|
|
|
4,577
|
|
|
(4.9)
|
|
|
Total passenger
revenue (B)
|
|
8,528
|
|
|
8,603
|
|
|
(0.9)
|
|
|
|
24,324
|
|
|
23,696
|
|
|
2.7
|
|
|
Cargo
|
|
257
|
|
|
224
|
|
|
14.7
|
|
|
|
731
|
|
|
626
|
|
|
16.8
|
|
|
Other operating
revenue
|
|
1,093
|
|
|
1,086
|
|
|
0.6
|
|
|
|
3,243
|
|
|
3,182
|
|
|
1.9
|
|
|
Total operating
revenue
|
|
9,878
|
|
|
9,913
|
|
|
(0.4)
|
|
|
|
28,298
|
|
|
27,504
|
|
|
2.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and related
costs
|
|
2,812
|
|
|
2,625
|
|
|
7.1
|
|
|
|
8,341
|
|
|
7,707
|
|
|
8.2
|
|
|
Aircraft fuel
(C)
|
|
1,809
|
|
|
1,603
|
|
|
12.9
|
|
|
|
5,038
|
|
|
4,258
|
|
|
18.3
|
|
|
Landing fees and
other rent
|
|
585
|
|
|
546
|
|
|
7.1
|
|
|
|
1,670
|
|
|
1,612
|
|
|
3.6
|
|
|
Regional capacity
purchase
|
|
567
|
|
|
572
|
|
|
(0.9)
|
|
|
|
1,652
|
|
|
1,645
|
|
|
0.4
|
|
|
Depreciation and
amortization
|
|
556
|
|
|
503
|
|
|
10.5
|
|
|
|
1,610
|
|
|
1,473
|
|
|
9.3
|
|
|
Aircraft maintenance
materials and outside repairs
|
|
451
|
|
|
451
|
|
|
—
|
|
|
|
1,377
|
|
|
1,301
|
|
|
5.8
|
|
|
Distribution
expenses
|
|
352
|
|
|
345
|
|
|
2.0
|
|
|
|
1,021
|
|
|
987
|
|
|
3.4
|
|
|
Aircraft
rent
|
|
145
|
|
|
168
|
|
|
(13.7)
|
|
|
|
476
|
|
|
521
|
|
|
(8.6)
|
|
|
Special charges
(D)
|
|
50
|
|
|
45
|
|
|
NM
|
|
|
|
145
|
|
|
669
|
|
|
NM
|
|
Other operating
expenses
|
|
1,459
|
|
|
1,431
|
|
|
2.0
|
|
|
|
4,199
|
|
|
3,998
|
|
|
5.0
|
|
|
Total operating
expense
|
|
8,786
|
|
|
8,289
|
|
|
6.0
|
|
|
|
25,529
|
|
|
24,171
|
|
|
5.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
1,092
|
|
|
1,624
|
|
|
(32.8)
|
|
|
|
2,769
|
|
|
3,333
|
|
|
(16.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
11.1
|
%
|
|
16.4
|
%
|
|
(5.3)
|
|
pts.
|
|
9.8
|
%
|
|
12.1
|
%
|
|
(2.3)
|
|
pts.
|
Operating margin,
excluding special charges (A) (Non-GAAP)
|
|
11.6
|
%
|
|
16.8
|
%
|
|
(5.2)
|
|
pts.
|
|
10.3
|
%
|
|
14.6
|
%
|
|
(4.3)
|
|
pts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonoperating income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
(164)
|
|
|
(150)
|
|
|
9.3
|
|
|
|
(472)
|
|
|
(466)
|
|
|
1.3
|
|
|
Interest
capitalized
|
|
20
|
|
|
20
|
|
|
—
|
|
|
|
64
|
|
|
48
|
|
|
33.3
|
|
|
Interest
income
|
|
17
|
|
|
14
|
|
|
21.4
|
|
|
|
41
|
|
|
31
|
|
|
32.3
|
|
|
Miscellaneous, net
(D)
|
|
15
|
|
|
2
|
|
|
NM
|
|
|
|
(3)
|
|
|
(11)
|
|
|
(72.7)
|
|
|
Total nonoperating
expense
|
|
(112)
|
|
|
(114)
|
|
|
(1.8)
|
|
|
|
(370)
|
|
|
(398)
|
|
|
(7.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
980
|
|
|
1,510
|
|
|
(35.1)
|
|
|
|
2,399
|
|
|
2,935
|
|
|
(18.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax
margin
|
|
9.9
|
%
|
|
15.2
|
%
|
|
(5.3)
|
|
pts.
|
|
8.5
|
%
|
|
10.7
|
%
|
|
(2.2)
|
|
pts.
|
Pre-tax margin,
excluding special charges and reflecting hedge adjustments (A)
(Non-GAAP)
|
|
10.4
|
%
|
|
15.7
|
%
|
|
(5.3)
|
|
pts.
|
|
9.0
|
%
|
|
13.1
|
%
|
|
(4.1)
|
|
pts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
(E)
|
|
343
|
|
|
545
|
|
|
(37.1)
|
|
|
|
848
|
|
|
1,069
|
|
|
(20.7)
|
|
|
Net income
|
|
$
|
637
|
|
|
$
|
965
|
|
|
(34.0)
|
|
|
|
$
|
1,551
|
|
|
$
|
1,866
|
|
|
(16.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share,
diluted
|
|
$
|
2.12
|
|
|
$
|
3.01
|
|
|
(29.6)
|
|
|
|
$
|
5.04
|
|
|
$
|
5.57
|
|
|
(9.5)
|
|
|
Weighted average
shares, diluted
|
|
301
|
|
|
321
|
|
|
(6.2)
|
|
|
|
308
|
|
|
335
|
|
|
(8.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NM Not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNITED CONTINENTAL
HOLDINGS, INC.
|
STATISTICS
|
|
|
|
Three Months Ended
September 30,
|
|
%
Increase/
(Decrease)
|
|
|
Nine
Months Ended
September
30,
|
|
%
Increase/
(Decrease)
|
|
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
Mainline:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passengers
(thousands)
|
|
29,182
|
|
|
27,501
|
|
|
6.1
|
|
|
|
81,091
|
|
|
75,417
|
|
|
7.5
|
|
|
Revenue passenger
miles (millions)
|
|
53,515
|
|
|
51,875
|
|
|
3.2
|
|
|
|
146,252
|
|
|
140,573
|
|
|
4.0
|
|
|
Available seat miles
(millions)
|
|
63,183
|
|
|
60,635
|
|
|
4.2
|
|
|
|
176,710
|
|
|
169,252
|
|
|
4.4
|
|
|
Cargo ton miles
(millions)
|
|
830
|
|
|
714
|
|
|
16.2
|
|
|
|
2,406
|
|
|
2,015
|
|
|
19.4
|
|
|
Passenger revenue per
available seat mile (cents)
|
|
11.21
|
|
|
11.57
|
|
|
(3.1)
|
|
|
|
11.30
|
|
|
11.30
|
|
|
—
|
|
|
Average yield per
revenue passenger mile (cents)
|
|
13.24
|
|
|
13.53
|
|
|
(2.1)
|
|
|
|
13.65
|
|
|
13.60
|
|
|
0.4
|
|
|
Aircraft in fleet at
end of period
|
|
751
|
|
|
724
|
|
|
3.7
|
|
|
|
751
|
|
|
724
|
|
|
3.7
|
|
|
Average stage length
(miles)
|
|
1,825
|
|
|
1,882
|
|
|
(3.0)
|
|
|
|
1,817
|
|
|
1,878
|
|
|
(3.2)
|
|
|
Average daily
utilization of each aircraft (hours: minutes)
|
|
10:58
|
|
10:59
|
|
(0.2)
|
|
|
|
10:30
|
|
10:25
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regional:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passengers
(thousands)
|
|
10,120
|
|
|
11,150
|
|
|
(9.2)
|
|
|
|
29,563
|
|
|
31,737
|
|
|
(6.9)
|
|
|
Revenue passenger
miles (millions)
|
|
5,630
|
|
|
6,297
|
|
|
(10.6)
|
|
|
|
16,860
|
|
|
18,198
|
|
|
(7.4)
|
|
|
Available seat miles
(millions)
|
|
6,900
|
|
|
7,439
|
|
|
(7.2)
|
|
|
|
20,648
|
|
|
21,820
|
|
|
(5.4)
|
|
|
Passenger revenue per
available seat mile (cents)
|
|
20.94
|
|
|
21.32
|
|
|
(1.8)
|
|
|
|
21.09
|
|
|
20.98
|
|
|
0.5
|
|
|
Average yield per
revenue passenger mile (cents)
|
|
25.67
|
|
|
25.19
|
|
|
1.9
|
|
|
|
25.82
|
|
|
25.15
|
|
|
2.7
|
|
|
Aircraft in fleet at
end of period
|
|
489
|
|
|
490
|
|
|
(0.2)
|
|
|
|
489
|
|
|
490
|
|
|
(0.2)
|
|
|
Average stage length
(miles)
|
|
542
|
|
|
556
|
|
|
(2.5)
|
|
|
|
558
|
|
|
565
|
|
|
(1.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
(Mainline and Regional):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passengers
(thousands)
|
|
39,302
|
|
|
38,651
|
|
|
1.7
|
|
|
|
110,654
|
|
|
107,154
|
|
|
3.3
|
|
|
Revenue passenger
miles (millions)
|
|
59,145
|
|
|
58,172
|
|
|
1.7
|
|
|
|
163,112
|
|
|
158,771
|
|
|
2.7
|
|
|
Available seat miles
(millions)
|
|
70,083
|
|
|
68,074
|
|
|
3.0
|
|
|
|
197,358
|
|
|
191,072
|
|
|
3.3
|
|
|
Passenger load
factor:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
84.4
|
%
|
|
85.5
|
%
|
|
(1.1)
|
|
pts.
|
|
82.6
|
%
|
|
83.1
|
%
|
|
(0.5)
|
|
pts.
|
Domestic
|
|
85.3
|
%
|
|
86.4
|
%
|
|
(1.1)
|
|
pts.
|
|
85.2
|
%
|
|
85.4
|
%
|
|
(0.2)
|
|
pts.
|
International
|
|
83.3
|
%
|
|
84.3
|
%
|
|
(1.0)
|
|
pt.
|
|
79.5
|
%
|
|
80.4
|
%
|
|
(0.9)
|
|
pts.
|
Passenger revenue per
available seat mile (cents)
|
|
12.17
|
|
|
12.64
|
|
|
(3.7)
|
|
|
|
12.32
|
|
|
12.40
|
|
|
(0.6)
|
|
|
Total revenue per
available seat mile (cents)
|
|
14.09
|
|
|
14.56
|
|
|
(3.2)
|
|
|
|
14.34
|
|
|
14.39
|
|
|
(0.3)
|
|
|
Average yield per
revenue passenger mile (cents)
|
|
14.42
|
|
|
14.79
|
|
|
(2.5)
|
|
|
|
14.91
|
|
|
14.92
|
|
|
(0.1)
|
|
|
Aircraft in fleet at
end of period
|
|
1,240
|
|
|
1,214
|
|
|
2.1
|
|
|
|
1,240
|
|
|
1,214
|
|
|
2.1
|
|
|
Average stage length
(miles)
|
|
1,480
|
|
|
1,493
|
|
|
(0.9)
|
|
|
|
1,470
|
|
|
1,484
|
|
|
(0.9)
|
|
|
Average full-time
equivalent employees (thousands)
|
|
87.3
|
|
|
85.1
|
|
|
2.6
|
|
|
|
86.2
|
|
|
83.6
|
|
|
3.1
|
|
|
|
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 (A)
|
|
|
|
Three Months Ended
September 30,
|
|
%
Increase/
(Decrease)
|
|
|
Nine
Months Ended
September
30,
|
|
%
Increase/
(Decrease)
|
|
|
|
2017
|
|
2016
|
|
|
|
2017
|
|
2016
|
|
|
(In millions, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
$
|
1,092
|
|
|
$
|
1,624
|
|
|
(32.8)
|
|
|
|
$
|
2,769
|
|
|
$
|
3,333
|
|
|
(16.9)
|
|
|
Operating
margin
|
|
11.1
|
%
|
|
16.4
|
%
|
|
(5.3)
|
|
pts.
|
|
9.8
|
%
|
|
12.1
|
%
|
|
(2.3)
|
|
pts.
|
Operating income,
excluding special charges (Non-GAAP)
|
|
1,142
|
|
|
1,669
|
|
|
(31.6)
|
|
|
|
2,914
|
|
|
4,002
|
|
|
(27.2)
|
|
|
Operating margin,
excluding special charges (Non-GAAP)
|
|
11.6
|
%
|
|
16.8
|
%
|
|
(5.2)
|
|
pts.
|
|
10.3
|
%
|
|
14.6
|
%
|
|
(4.3)
|
|
pts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA,
excluding special charges and reflecting hedge adjustments (a)
(Non-GAAP)
|
|
$
|
1,713
|
|
|
$
|
2,177
|
|
|
(21.3)
|
|
|
|
$
|
4,521
|
|
|
$
|
5,465
|
|
|
(17.3)
|
|
|
Adjusted EBITDA
margin, excluding special charges and reflecting hedge adjustments
(a) (Non-GAAP)
|
|
17.3
|
%
|
|
22.0
|
%
|
|
(4.7)
|
|
pts.
|
|
16.0
|
%
|
|
19.9
|
%
|
|
(3.9)
|
|
pts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax
income
|
|
$
|
980
|
|
|
$
|
1,510
|
|
|
(35.1)
|
|
|
|
$
|
2,399
|
|
|
$
|
2,935
|
|
|
(18.3)
|
|
|
Pre-tax
margin
|
|
9.9
|
%
|
|
15.2
|
%
|
|
(5.3)
|
|
pts.
|
|
8.5
|
%
|
|
10.7
|
%
|
|
(2.2)
|
|
pts.
|
Pre-tax income,
excluding special charges and reflecting hedge adjustments (a)
(Non-GAAP)
|
|
1,030
|
|
|
1,558
|
|
|
(33.9)
|
|
|
|
2,544
|
|
|
3,605
|
|
|
(29.4)
|
|
|
Pre-tax margin,
excluding special charges and reflecting hedge adjustments (a)
(Non-GAAP)
|
|
10.4
|
%
|
|
15.7
|
%
|
|
(5.3)
|
|
pts.
|
|
9.0
|
%
|
|
13.1
|
%
|
|
(4.1)
|
|
pts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
637
|
|
|
$
|
965
|
|
|
(34.0)
|
|
|
|
$
|
1,551
|
|
|
$
|
1,866
|
|
|
(16.9)
|
|
|
Net income, excluding
special charges and reflecting hedge adjustments (a)
(Non-GAAP)
|
|
669
|
|
|
997
|
|
|
(32.9)
|
|
|
|
1,644
|
|
|
2,295
|
|
|
(28.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
$
|
2.12
|
|
|
$
|
3.01
|
|
|
(29.6)
|
|
|
|
$
|
5.04
|
|
|
$
|
5.57
|
|
|
(9.5)
|
|
|
Diluted earnings per
share, excluding special charges and reflecting hedge adjustments
(a) (Non-GAAP)
|
|
2.22
|
|
|
3.11
|
|
|
(28.6)
|
|
|
|
5.35
|
|
|
6.85
|
|
|
(21.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
|
577
|
|
|
$
|
1,138
|
|
|
(49.3)
|
|
|
|
$
|
2,685
|
|
|
$
|
4,884
|
|
|
(45.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
$
|
1,120
|
|
|
$
|
689
|
|
|
62.6
|
|
|
|
$
|
2,900
|
|
|
$
|
2,343
|
|
|
23.8
|
|
|
Adjusted capital
expenditures (Non-GAAP)
|
|
1,082
|
|
|
679
|
|
|
59.4
|
|
|
|
3,683
|
|
|
2,269
|
|
|
62.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow, net
of financings (Non-GAAP)
|
|
$
|
(543)
|
|
|
$
|
449
|
|
|
NM
|
|
|
|
$
|
(215)
|
|
|
$
|
2,541
|
|
|
NM
|
|
|
Free cash flow
(Non-GAAP)
|
|
(505)
|
|
|
459
|
|
|
NM
|
|
|
|
(998)
|
|
|
2,615
|
|
|
NM
|
|
|
|
|
(a)
|
Hedge
adjustments include prior period gains (losses) on fuel derivative
contracts settled in the current period. See note D for further
information.
|
UNITED CONTINENTAL
HOLDINGS, INC.
|
RETURN ON INVESTED
CAPITAL (ROIC) - non-GAAP
|
|
ROIC - Non-GAAP is a
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 September 30, 2017
|
NOPAT
|
|
Pre-tax
income
|
$
|
3,283
|
|
Special charges and
hedge adjustments (D):
|
|
Severance and
benefit costs
|
111
|
|
Labor
agreement costs and related items
|
(60)
|
|
Impairment of
assets
|
15
|
|
(Gains) losses
on sale of assets and other special charges
|
48
|
|
Hedge
adjustments
|
4
|
|
Pre-tax income
excluding special charges and reflecting hedge adjustments -
non-GAAP
|
3,401
|
|
add: Interest expense
(net of income tax benefit) (a)
|
617
|
|
add: Interest
component of capitalized aircraft rent (net of income tax benefit)
(a)
|
310
|
|
add: Net interest on
pension (net of income tax benefit) (a)
|
46
|
|
less: Income taxes
paid
|
(18)
|
|
NOPAT -
Non-GAAP
|
$
|
4,356
|
|
|
|
|
|
Invested Capital
(five-quarter average)
|
|
Total
assets
|
$
|
41,357
|
|
add: Capitalized
aircraft operating leases (b)
|
4,689
|
|
less: Non-interest
bearing liabilities (c)
|
(16,734)
|
|
Average invested
capital - Non-GAAP
|
$
|
29,312
|
|
|
|
Return on invested
capital - Non-GAAP
|
14.9
|
%
|
|
|
(a)
|
Income tax benefit
measured based on the effective cash tax rate. The effective cash
tax rate is calculated by dividing cash taxes paid by pre-tax
income excluding special charges and reflecting hedge adjustments.
For the twelve months ended September 30, 2017, the effective cash
tax rate was 0.5%.
|
(b)
|
The purpose of this
adjustment is to capitalize the impact of aircraft operating
leases. The company uses a multiple of seven times its annual
aircraft rent expense to estimate the potential capitalized value
and related liability of its aircraft. This is a simplified method
used by many rating agencies and financial analysts to assist with
the impact of operating leases on financial measures like return on
invested capital.
|
(c)
|
Non-interest bearing
liabilities include advance ticket sales, frequent flyer deferred
revenue, deferred income taxes and other non-interest bearing
liabilities.
|
UNITED CONTINENTAL
HOLDINGS, INC.
|
NON-GAAP FINANCIAL
RECONCILIATION
|
|
(A) UAL
evaluates its financial performance utilizing various accounting
principles generally accepted in the United States of America
(GAAP) and Non-GAAP financial measures, including operating income
(loss) excluding special charges, income (loss) before income taxes
excluding special charges and reflecting hedge adjustments, net
income (loss) excluding special charges and reflecting hedge
adjustments, net earnings (loss) per share excluding special
charges and reflecting hedge adjustments, and CASM, as adjusted,
among others.
|
|
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 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.
|
|
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.
|
|
|
|
Three Months Ended
September 30,
|
|
%
Increase/
(Decrease)
|
|
Nine
Months Ended
September
30,
|
|
%
Increase/
(Decrease)
|
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
CASM Mainline
Operations (cents)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost per available
seat mile (CASM)
|
|
12.03
|
|
|
11.65
|
|
|
3.3
|
|
|
12.49
|
|
|
12.15
|
|
|
2.8
|
|
Special charges
(D)
|
|
0.08
|
|
|
0.08
|
|
|
NM
|
|
|
0.08
|
|
|
0.40
|
|
|
NM
|
|
Third-party business
expenses
|
|
0.10
|
|
|
0.10
|
|
|
—
|
|
|
0.12
|
|
|
0.11
|
|
|
9.1
|
|
Fuel
expense
|
|
2.41
|
|
|
2.21
|
|
|
9.0
|
|
|
2.39
|
|
|
2.11
|
|
|
13.3
|
|
CASM, excluding
special charges, third-party business expenses and fuel
|
|
9.44
|
|
|
9.26
|
|
|
1.9
|
|
|
9.90
|
|
|
9.53
|
|
|
3.9
|
|
Profit sharing per
available seat mile
|
|
0.21
|
|
|
0.34
|
|
|
(38.2)
|
|
|
0.17
|
|
|
0.30
|
|
|
(43.3)
|
|
CASM, excluding
special charges, third-party business expenses, fuel, and profit
sharing
|
|
9.23
|
|
|
8.92
|
|
|
3.5
|
|
|
9.73
|
|
|
9.23
|
|
|
5.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASM Consolidated
Operations (cents)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost per available
seat mile (CASM)
|
|
12.54
|
|
|
12.18
|
|
|
3.0
|
|
|
12.94
|
|
|
12.65
|
|
|
2.3
|
|
Special charges
(D)
|
|
0.07
|
|
|
0.07
|
|
|
NM
|
|
|
0.08
|
|
|
0.35
|
|
|
NM
|
|
Third-party business
expenses
|
|
0.09
|
|
|
0.09
|
|
|
—
|
|
|
0.10
|
|
|
0.10
|
|
|
—
|
|
Fuel
expense
|
|
2.58
|
|
|
2.35
|
|
|
9.8
|
|
|
2.55
|
|
|
2.23
|
|
|
14.3
|
|
CASM, excluding
special charges, third-party business expenses and fuel
|
|
9.80
|
|
|
9.67
|
|
|
1.3
|
|
|
10.21
|
|
|
9.97
|
|
|
2.4
|
|
Profit sharing per
available seat mile
|
|
0.19
|
|
|
0.30
|
|
|
(36.7)
|
|
|
0.16
|
|
|
0.26
|
|
|
(38.5)
|
|
CASM, excluding
special charges, third-party business expenses, fuel, and profit
sharing
|
|
9.61
|
|
|
9.37
|
|
|
2.6
|
|
|
10.05
|
|
|
9.71
|
|
|
3.5
|
|
UNITED CONTINENTAL
HOLDINGS, INC.
|
NON-GAAP FINANCIAL
RECONCILIATION (Continued)
|
|
|
|
Three Months Ended
September 30,
|
|
$
Increase/
(Decrease)
|
|
%
Increase/
(Decrease)
|
|
Nine
Months Ended
September
30,
|
|
$
Increase/
(Decrease)
|
|
%
Increase/
(Decrease)
|
(in
millions)
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
Operating
expenses
|
|
$
|
8,786
|
|
|
$
|
8,289
|
|
|
$
|
497
|
|
|
6.0
|
|
|
$
|
25,529
|
|
|
$
|
24,171
|
|
|
$
|
1,358
|
|
|
5.6
|
|
Special charges
(D)
|
|
50
|
|
|
45
|
|
|
5
|
|
|
NM
|
|
|
145
|
|
|
669
|
|
|
(524)
|
|
|
NM
|
|
Operating expenses,
excluding special charges
|
|
8,736
|
|
|
8,244
|
|
|
492
|
|
|
6.0
|
|
|
25,384
|
|
|
23,502
|
|
|
1,882
|
|
|
8.0
|
|
Third-party business
expenses
|
|
62
|
|
|
61
|
|
|
1
|
|
|
1.6
|
|
|
205
|
|
|
188
|
|
|
17
|
|
|
9.0
|
|
Fuel
expense
|
|
1,809
|
|
|
1,603
|
|
|
206
|
|
|
12.9
|
|
|
5,038
|
|
|
4,258
|
|
|
780
|
|
|
18.3
|
|
Profit sharing,
including taxes
|
|
130
|
|
|
204
|
|
|
(74)
|
|
|
(36.3)
|
|
|
304
|
|
|
506
|
|
|
(202)
|
|
|
(39.9)
|
|
Operating expenses,
excluding fuel, profit sharing, special charges and third-party
business expenses
|
|
$
|
6,735
|
|
|
$
|
6,376
|
|
|
$
|
359
|
|
|
5.6
|
|
|
$
|
19,837
|
|
|
$
|
18,550
|
|
|
$
|
1,287
|
|
|
6.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
$
|
1,092
|
|
|
$
|
1,624
|
|
|
$
|
(532)
|
|
|
(32.8)
|
|
|
$
|
2,769
|
|
|
$
|
3,333
|
|
|
$
|
(564)
|
|
|
(16.9)
|
|
Special charges
(D)
|
|
50
|
|
|
45
|
|
|
5
|
|
|
NM
|
|
|
145
|
|
|
669
|
|
|
(524)
|
|
|
NM
|
|
Operating income,
excluding special charges
|
|
$
|
1,142
|
|
|
$
|
1,669
|
|
|
$
|
(527)
|
|
|
(31.6)
|
|
|
$
|
2,914
|
|
|
$
|
4,002
|
|
|
$
|
(1,088)
|
|
|
(27.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before
income taxes
|
|
$
|
980
|
|
|
$
|
1,510
|
|
|
$
|
(530)
|
|
|
(35.1)
|
|
|
$
|
2,399
|
|
|
$
|
2,935
|
|
|
$
|
(536)
|
|
|
(18.3)
|
|
Special charges and
hedge adjustments before income taxes (D)
|
|
50
|
|
|
48
|
|
|
2
|
|
|
NM
|
|
|
145
|
|
|
670
|
|
|
(525)
|
|
|
NM
|
|
Income before income
taxes excluding special charges and reflecting hedge
adjustments
|
|
$
|
1,030
|
|
|
$
|
1,558
|
|
|
$
|
(528)
|
|
|
(33.9)
|
|
|
$
|
2,544
|
|
|
$
|
3,605
|
|
|
$
|
(1,061)
|
|
|
(29.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
637
|
|
|
$
|
965
|
|
|
$
|
(328)
|
|
|
(34.0)
|
|
|
$
|
1,551
|
|
|
$
|
1,866
|
|
|
$
|
(315)
|
|
|
(16.9)
|
|
Special charges and
hedge adjustments, net of tax (D)
|
|
32
|
|
|
32
|
|
|
—
|
|
|
NM
|
|
|
93
|
|
|
429
|
|
|
(336)
|
|
|
NM
|
|
Net income, excluding
special charges and reflecting hedge adjustments
|
|
$
|
669
|
|
|
$
|
997
|
|
|
$
|
(328)
|
|
|
(32.9)
|
|
|
$
|
1,644
|
|
|
$
|
2,295
|
|
|
$
|
(651)
|
|
|
(28.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share
|
|
$
|
2.12
|
|
|
$
|
3.01
|
|
|
$
|
(0.89)
|
|
|
(29.6)
|
|
|
$
|
5.04
|
|
|
$
|
5.57
|
|
|
$
|
(0.53)
|
|
|
(9.5)
|
|
Special charges and
hedge adjustments
|
|
0.16
|
|
|
0.15
|
|
|
0.01
|
|
|
NM
|
|
|
0.47
|
|
|
2.00
|
|
|
(1.53)
|
|
|
NM
|
|
Tax effect related to
special charges and hedge adjustments
|
|
(0.06)
|
|
|
(0.05)
|
|
|
(0.01)
|
|
|
NM
|
|
|
(0.16)
|
|
|
(0.72)
|
|
|
0.56
|
|
|
NM
|
|
Diluted earnings per
share, excluding special charges and reflecting hedge
adjustments
|
|
$
|
2.22
|
|
|
$
|
3.11
|
|
|
$
|
(0.89)
|
|
|
(28.6)
|
|
|
$
|
5.35
|
|
|
$
|
6.85
|
|
|
$
|
(1.50)
|
|
|
(21.9)
|
|
UNITED CONTINENTAL
HOLDINGS, INC.
|
NON-GAAP FINANCIAL
RECONCILIATION (Continued)
|
|
UAL provides
financial metrics, including earnings before interest, taxes,
depreciation and amortization (EBITDA), that we believe provide
useful supplemental information for management and investors by
measuring profit and profit as a percentage of total operating
revenues. Adjusted EBITDA is EBITDA excluding special charges that
are non-recurring and that management believes are not indicative
of UAL's ongoing performance. Adjusted EBITDA also includes hedge
adjustments to reflect the cash impact of fuel derivative contracts
settled in the current period.
|
|
|
|
Three Months Ended September 30,
|
|
Nine
Months Ended September
30,
|
EBITDA
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
(In
millions)
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
637
|
|
|
$
|
965
|
|
|
$
|
1,551
|
|
|
$
|
1,866
|
|
Adjusted
for:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
556
|
|
|
503
|
|
|
1,610
|
|
|
1,473
|
|
Interest
expense
|
|
164
|
|
|
150
|
|
|
472
|
|
|
466
|
|
Interest
capitalized
|
|
(20)
|
|
|
(20)
|
|
|
(64)
|
|
|
(48)
|
|
Interest
income
|
|
(17)
|
|
|
(14)
|
|
|
(41)
|
|
|
(31)
|
|
Income tax
expense
|
|
343
|
|
|
545
|
|
|
848
|
|
|
1,069
|
|
Special charges and
hedge adjustments before income taxes (D)
|
|
50
|
|
|
48
|
|
|
145
|
|
|
670
|
|
Adjusted EBITDA,
excluding special charges and reflecting hedge adjustments -
Non-GAAP
|
|
$
|
1,713
|
|
|
$
|
2,177
|
|
|
$
|
4,521
|
|
|
$
|
5,465
|
|
|
UAL believes that
adjusting capital expenditures for assets acquired through the
issuance of debt and capital leases, airport construction financing
and excluding fully reimbursable projects is useful to investors in
order to appropriately reflect the non-reimbursable funds spent on
capital expenditures. UAL also believes that adjusting net
cash provided by operating activities for capital expenditures and
adjusted capital expenditures is useful to allow investors to
evaluate the company's ability to generate cash that is available
for debt service or general corporate initiatives.
|
|
|
|
Three Months Ended
September 30,
|
|
Nine
Months Ended
September
30,
|
Capital
Expenditures (in millions)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Capital
expenditures
|
|
$
|
1,120
|
|
|
$
|
689
|
|
|
$
|
2,900
|
|
|
$
|
2,343
|
|
Property and
equipment acquired through the issuance of debt and capital
leases
|
|
11
|
|
|
56
|
|
|
918
|
|
|
115
|
|
Airport construction
financing
|
|
9
|
|
|
33
|
|
|
41
|
|
|
68
|
|
Fully reimbursable
projects
|
|
(58)
|
|
|
(99)
|
|
|
(176)
|
|
|
(257)
|
|
Adjusted capital
expenditures – Non-GAAP
|
|
$
|
1,082
|
|
|
$
|
679
|
|
|
$
|
3,683
|
|
|
$
|
2,269
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
(in millions)
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
|
577
|
|
|
$
|
1,138
|
|
|
$
|
2,685
|
|
|
$
|
4,884
|
|
Less capital
expenditures
|
|
1,120
|
|
|
689
|
|
|
2,900
|
|
|
2,343
|
|
Free cash flow, net
of financings - Non-GAAP
|
|
$
|
(543)
|
|
|
$
|
449
|
|
|
$
|
(215)
|
|
|
$
|
2,541
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
|
577
|
|
|
$
|
1,138
|
|
|
$
|
2,685
|
|
|
$
|
4,884
|
|
Less adjusted capital
expenditures – Non-GAAP
|
|
1,082
|
|
|
679
|
|
|
3,683
|
|
|
2,269
|
|
Free cash flow -
Non-GAAP
|
|
$
|
(505)
|
|
|
$
|
459
|
|
|
$
|
(998)
|
|
|
$
|
2,615
|
|
UNITED CONTINENTAL
HOLDINGS, INC.
|
NOTES
(UNAUDITED)
|
|
|
(B) Select passenger revenue
information is as follows (in millions):
|
|
|
|
|
3Q
2017 Passenger Revenue
(millions)
|
|
Passenger
Revenue
vs.
3Q 2016
|
|
PRASM vs.
3Q 2016
|
|
Yield vs.
3Q 2016
|
|
Available
Seat Miles vs.
3Q 2016
|
|
|
|
|
|
|
|
|
|
|
|
Mainline
|
|
$
|
3,708
|
|
|
3.5%
|
|
(3.5%)
|
|
(2.8%)
|
|
7.3%
|
Regional
|
|
1,407
|
|
|
(8.3%)
|
|
(1.8%)
|
|
2.3%
|
|
(6.7%)
|
Domestic
|
|
5,115
|
|
|
0.0%
|
|
(4.4%)
|
|
(3.2%)
|
|
4.6%
|
|
|
|
|
|
|
|
|
|
|
|
Atlantic
|
|
1,622
|
|
|
0.2%
|
|
(0.4%)
|
|
(0.9%)
|
|
0.6%
|
Pacific
|
|
1,059
|
|
|
(9.3%)
|
|
(10.4%)
|
|
(6.6%)
|
|
1.2%
|
Latin
America
|
|
732
|
|
|
4.7%
|
|
3.5%
|
|
3.4%
|
|
1.3%
|
International
|
|
3,413
|
|
|
(2.1%)
|
|
(3.0%)
|
|
(1.9%)
|
|
0.9%
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
$
|
8,528
|
|
|
(0.9%)
|
|
(3.7%)
|
|
(2.5%)
|
|
3.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mainline
|
|
$
|
7,083
|
|
|
0.9%
|
|
(3.1%)
|
|
(2.1%)
|
|
4.2%
|
Regional
|
|
1,445
|
|
|
(8.9%)
|
|
(1.8%)
|
|
1.9%
|
|
(7.2%)
|
Consolidated
|
|
$
|
8,528
|
|
|
|
|
|
|
|
|
|
UNITED CONTINENTAL
HOLDINGS, INC.
|
NOTES
(UNAUDITED)
|
|
(C) UAL's results of
operations include fuel expense for both mainline and regional
operations.
|
|
|
|
Three Months Ended
September 30,
|
|
%
Increase/
(Decrease)
|
|
Nine
Months Ended
September
30,
|
|
%
Increase/
(Decrease)
|
(In millions, except
per gallon)
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
Mainline fuel expense
excluding hedge impacts
|
|
$
|
1,526
|
|
|
$
|
1,319
|
|
|
15.7
|
|
|
$
|
4,219
|
|
|
$
|
3,370
|
|
|
25.2
|
|
Hedge losses reported
in fuel expense (a)
|
|
—
|
|
|
(24)
|
|
|
NM
|
|
|
(2)
|
|
|
(197)
|
|
|
NM
|
|
Total mainline fuel
expense
|
|
1,526
|
|
|
1,343
|
|
|
13.6
|
|
|
4,221
|
|
|
3,567
|
|
|
18.3
|
|
Regional fuel
expense
|
|
283
|
|
|
260
|
|
|
8.8
|
|
|
817
|
|
|
691
|
|
|
18.2
|
|
Consolidated fuel
expense
|
|
$
|
1,809
|
|
|
$
|
1,603
|
|
|
12.9
|
|
|
$
|
5,038
|
|
|
$
|
4,258
|
|
|
18.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mainline fuel
consumption (gallons)
|
|
909
|
|
|
889
|
|
|
2.2
|
|
|
2,537
|
|
|
2,457
|
|
|
3.3
|
|
Mainline average
aircraft fuel price per gallon
|
|
$
|
1.68
|
|
|
$
|
1.51
|
|
|
11.3
|
|
|
$
|
1.66
|
|
|
$
|
1.45
|
|
|
14.5
|
|
Mainline average
aircraft fuel price per gallon excluding hedge losses recorded in
fuel expense
|
|
$
|
1.68
|
|
|
$
|
1.48
|
|
|
13.5
|
|
|
$
|
1.66
|
|
|
$
|
1.37
|
|
|
21.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regional fuel
consumption (gallons)
|
|
156
|
|
|
168
|
|
|
(7.1)
|
|
|
461
|
|
|
485
|
|
|
(4.9)
|
|
Regional average
aircraft fuel price per gallon
|
|
$
|
1.81
|
|
|
$
|
1.55
|
|
|
16.8
|
|
|
$
|
1.77
|
|
|
$
|
1.42
|
|
|
24.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated fuel
consumption (gallons)
|
|
1,065
|
|
|
1,057
|
|
|
0.8
|
|
|
2,998
|
|
|
2,942
|
|
|
1.9
|
|
Consolidated average
aircraft fuel price per gallon
|
|
$
|
1.70
|
|
|
$
|
1.52
|
|
|
11.8
|
|
|
$
|
1.68
|
|
|
$
|
1.45
|
|
|
15.9
|
|
Consolidated average
aircraft fuel price per gallon excluding hedge losses recorded in
fuel expense
|
|
$
|
1.70
|
|
|
$
|
1.49
|
|
|
14.1
|
|
|
$
|
1.68
|
|
|
$
|
1.38
|
|
|
21.7
|
|
|
(a) UAL
allocates 100 percent of losses from settled hedges that were
designated for hedge accounting to mainline fuel
expense.
|
|
UNITED CONTINENTAL
HOLDINGS, INC.
|
NOTES
(UNAUDITED)
|
|
(D) Special charges and hedge
adjustments include the following:
|
|
|
|
Three Months Ended
September 30,
|
|
Nine
Months Ended
September
30,
|
(In
millions)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Operating:
|
|
|
|
|
|
|
|
|
Severance and benefit
costs
|
|
$
|
23
|
|
|
$
|
13
|
|
|
$
|
101
|
|
|
$
|
27
|
|
Impairment of
assets
|
|
15
|
|
|
—
|
|
|
15
|
|
|
412
|
|
Labor agreement
costs
|
|
—
|
|
|
14
|
|
|
—
|
|
|
124
|
|
Cleveland airport
lease restructuring
|
|
—
|
|
|
—
|
|
|
—
|
|
|
74
|
|
(Gains) losses on
sale of assets and other special charges
|
|
12
|
|
|
18
|
|
|
29
|
|
|
32
|
|
Subtotal
|
|
50
|
|
|
45
|
|
|
145
|
|
|
669
|
|
Other nonoperating
(gains) losses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1)
|
|
Total special
charges
|
|
50
|
|
|
45
|
|
|
145
|
|
|
668
|
|
Income tax benefit
related to special charges
|
|
(18)
|
|
|
(16)
|
|
|
(52)
|
|
|
(241)
|
|
Total special
charges, net of income taxes
|
|
32
|
|
|
29
|
|
|
93
|
|
|
427
|
|
Hedge adjustments:
prior period gains on fuel derivative contracts settled in the
current period
|
|
—
|
|
|
3
|
|
|
—
|
|
|
2
|
|
Total special charges
and hedge adjustments, net of income taxes
|
|
$
|
32
|
|
|
$
|
32
|
|
|
$
|
93
|
|
|
$
|
429
|
|
Special charges
and hedge adjustments
|
|
Severance and benefit
costs: During the three and nine months ended September 30,
2017, the company recorded $16 million ($10 million net of
taxes) and $73 million ($47 million net of taxes), respectively, of
severance and benefit costs related to a voluntary early-out
program for its technicians and related employees represented by
the International Brotherhood of Teamsters (the "IBT"). 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. Also during the three and nine months
ended September 30, 2017, the company recorded $7 million ($5
million net of taxes) and $28 million ($18 million net of taxes),
respectively, of severance primarily related to its management
reorganization initiative.
|
|
During the three and
nine months ended September 30, 2016, the company recorded $13
million ($8 million net of taxes) and $27 million ($17 million net
of taxes), respectively, of severance and benefit costs primarily
related to a voluntary early-out program for its flight
attendants.
|
|
Impairment of
assets: During the three months ended September 30, 2017,
United recorded a $15 million ($10 million net of taxes) intangible
asset impairment charge related to a maintenance service
agreement.
|
|
In April 2016, the
Federal Aviation Administration ("FAA") announced that, effective
October 30, 2016, it would designate Newark Liberty International
Airport ("Newark") as a Level 2 schedule-facilitated airport under
the International Air Transport Association Worldwide Slot
Guidelines. The designation was associated with an updated demand
and capacity analysis of Newark by the FAA. In the second quarter
of 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.
|
|
Labor agreement
costs: During the nine months ended September 30, 2016, the fleet
service, passenger service, storekeeper and other employees
represented by the International Association of Machinists and
Aerospace Workers (the "IAM") ratified seven new contracts with the
company which extended the contracts through 2021. The company also
reached a tentative agreement with the IBT during the same time
period. During the three and nine months ended September 30, 2016,
the company recorded $61 million ($39 million net of taxes) and
$171 million ($109 million net of taxes), respectively, of special
charges primarily for payments in conjunction with the IAM and IBT
agreements described above. Also, as part of its 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.
|
|
Cleveland airport
lease restructuring: During the nine months ended September 30,
2016, the City of Cleveland agreed to amend the company's 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 special charge of $74 million ($47 million
net of taxes) related to the amended lease.
|
|
Hedge adjustments:
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.
During the three and nine months ended September 30, 2016, for fuel
derivative contracts that settled in the three and nine months
ended September 30, 2016, the company recorded MTM gains of $3
million and $2 million, respectively, in prior periods.
|
|
(E) Effective tax
rate: The company's effective tax rate for the three and nine
months ended September 30, 2017 was 35.0% and 35.3%, respectively.
The company's effective tax rate for the three and nine months
ended September 30, 2016 was 36.1% and 36.4%, respectively. The
effective tax rates for the 2017 and 2016 periods represented a
blend of federal, state and foreign taxes and the impact of certain
nondeductible items. The effective tax rate for the three and nine
months ended September 30, 2017 also reflects the impact of a
change in the mix of domestic and foreign earnings.
|
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SOURCE United Airlines