Item 2.03
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Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
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On March 29, 2017, United Airlines Holdings, Inc. (formerly
known as United Continental Holdings, Inc.) (“UAL”) and United Airlines, Inc. (“United” and, together with
UAL, the “Company”) entered into an Amended and Restated Credit and Guaranty Agreement (the “2017 Credit Agreement”),
among United, as borrower, UAL, as parent and guarantor, the subsidiaries of UAL other than United party thereto from time to time,
as guarantors, the lenders party thereto from time to time and JPMorgan Chase Bank, N.A., as administrative agent (the “Agent”).
The 2017 Credit Agreement provides for a term loan facility of $1,500,000,000 (the “Term Loan Facility”) and a revolving
credit facility of $2,000,000,000 (the “Revolving Credit Facility”). As previously disclosed, on March 29, 2017, United
borrowed the full amount of the Term Loan Facility.
On July 2, 2020, United borrowed $1,000,000,000 under the Revolving
Credit Facility (the “Revolving Loan”), the proceeds of which will be used for general corporate purposes. The outstanding
principal amount of the Revolving Loan must be repaid in full on April 1, 2022. Prior to such date, United may repay the Revolving
Loan in whole at any time or in part from time to time at par and borrow under the Revolving Credit Facility, subject to the terms
of the 2017 Credit Agreement. To comply with covenants under certain of its financings and to maximize flexibility, United took the proactive step of borrowing
the Revolving Loan on July 2, 2020. After giving effect to the advance to United of the Revolving Loan, $1,000,000,000 remained available for borrowing
by United at any time until April 1, 2022, under the Revolving Credit Facility.
Borrowings under the Revolving Credit Facility bear interest
at a variable rate equal to the London interbank offering rate, known as LIBOR (but not less than 0% per annum), plus a margin
of 2.25% per annum, or (at United’s election) another rate based on certain market interest rates, plus a margin of 1.25%
per annum.
The obligations of United under the 2017 Credit Agreement are
secured by liens on certain route authorities of United to operate between the United States, on the one hand, and China, Hong
Kong, England, and Japan, on the other hand, certain take-off and landing rights of United at LaGuardia and Ronald Reagan Washington
National airports and certain related assets (the “Collateral”).
The 2017 Credit Agreement includes covenants that restrict the
Company’s ability to, among other things, make investments and to pay dividends on, or to repurchase, UAL common stock. In
addition, the 2017 Credit Agreement requires the Company to maintain unrestricted cash and cash equivalents and unused commitments
available under all revolving credit facilities (including any availability under the Revolving Credit Facility) aggregating not
less than $2.0 billion and to maintain a minimum ratio of appraised value of Collateral to outstanding obligations under the 2017
Credit Agreement of 1.60 to 1.
The 2017 Credit Agreement contains events of default customary
for this type of financing, including a cross default and cross acceleration provision to certain other material indebtedness of
the Company. Upon the occurrence of an event of default, the outstanding obligations under the 2017 Credit Agreement may be accelerated
and become due and payable immediately. In addition, if certain change of control events occur with respect to UAL, the Company
is required to repay the loans outstanding under the 2017 Credit Agreement and terminate the Revolving Credit Facility.
The foregoing description does not purport to be complete and
is qualified in its entirety by reference to the 2017 Credit Agreement, which is Exhibit 10.1 to this Current Report on Form 8-K
and is incorporated herein by reference.
Item 2.05
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Costs Associated with Exit or Disposal Activities
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On July 8, 2020, in order to comply with various labor regulations
in certain jurisdictions, including pursuant to the Worker Adjustment and Retraining Notification Act, United informed approximately
36,000 U.S.-based employees, either directly or through a union representative, of plans to implement a workforce reduction at
their work location. These notices are part of the Company’s strategic realignment of its business and new organizational
structure as a result of the impacts of the COVID-19 pandemic on the Company’s operations and cost structure. As of the date hereof, the Company expects that these actions will take effect on or
after October 1, 2020 and may continue through the end of 2020. The COVID-19 pandemic is an act of nature and is a circumstance beyond the Company's control, which is further compounded
by governmental restrictions on travel and stay-at-home orders that have substantially reduced bookings and the demand for
airline travel, resulting in the temporary grounding of a substantial number of the Company's aircraft.
In connection with these workforce reductions, the Company expects
that it will recognize employee separation charges aggregating approximately $300 million in the second quarter of 2020 related
to voluntary terminations elected by employees during the second quarter of 2020. The Company expects that the cash amount of such
charges will be approximately $50 million.
At this time, the Company is unable to in good faith make a
determination of an estimate or range of estimates required by paragraphs (b), (c) and (d) of Item 2.05 of Form 8-K
with respect to workforce reduction actions in the remainder of 2020. The Company will file an amendment to this report after it
makes a determination of such estimate or range of estimates.
Cautionary Statement Regarding Forward-Looking Statements:
Certain statements in this Current Report on Form 8-K are forward-looking
and thus reflect the Company’s 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 the Company’s operations and business environment that may cause actual results to differ materially from any future results
expressed or implied in such forward-looking statements. Words such as “expects,” “will,” “plans,”
“anticipates,” “indicates,” “remains,” “believes,” “estimates,” “forecast,”
“guidance,” “outlook,” “goals,” “targets” and similar expressions are intended
to identify forward-looking statements. Additionally, forward-looking statements include statements that do not relate solely to
historical facts, such as statements which identify uncertainties or trends, discuss the possible future effects of current known
trends or uncertainties, or which indicate that the future effects of known trends or uncertainties cannot be predicted, guaranteed
or assured. All forward-looking statements in this report are based upon information available to the Company on the date of this
report. The Company undertakes 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.
The Company’s actual results could differ materially from
these forward-looking statements due to numerous factors including, without limitation, the following: the duration and spread
of the ongoing global COVID-19 pandemic and the outbreak of any other disease or similar public health threat and the impact on
the business, results of operations and financial condition of the Company; the lenders’ ability to accelerate the MileagePlus
indebtedness, foreclose upon the collateral securing the MileagePlus indebtedness or exercise other remedies if the Company is
not able to comply with the covenants in the MileagePlus financing agreement; the final terms of borrowing pursuant to the Loan
Program under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), if any, and the effects of
the grant and promissory note through the Payroll Support Program under the CARES Act; the costs and availability of financing;
the Company’s significant amount of financial leverage from fixed obligations and ability to seek additional liquidity and
maintain adequate liquidity; the Company’s ability to comply with the terms of its various financing arrangements; the
material disruption of the Company’s strategic operating plan as a result of the COVID-19 pandemic and the Company’s
ability to execute its strategic operating plans in the long term; general economic conditions (including interest rates, foreign
currency exchange rates, investment or credit market conditions, crude oil prices, costs of aircraft fuel and energy refining capacity
in relevant markets); risks of doing business globally, including instability and political developments that may impact its operations
in certain countries; demand for travel and the impact that global economic and political conditions have on customer travel patterns;
the Company’s capacity decisions and the capacity decisions of its competitors; competitive pressures on pricing and on demand;
changes in aircraft fuel prices; disruptions in the Company’s supply of aircraft fuel; the Company’s ability to cost-effectively
hedge against increases in the price of aircraft fuel, if it decides to do so; the effects of any technology failures, cybersecurity
or significant data breaches; disruptions to services provided by third-party service providers; potential reputational or other
impact from adverse events involving the Company’s aircraft or operations, the aircraft or operations of its regional carriers
or its code share partners or the aircraft or operations of another airline; the Company’s ability to attract and retain
customers; the effects of any terrorist attacks, international hostilities or other security events, or the fear of such events;
the mandatory grounding of aircraft in the Company’s fleet; disruptions to the Company’s regional network as a result
of the COVID-19 pandemic or otherwise; the impact of regulatory, investigative and legal proceedings and legal compliance risks;
the success of the Company’s investments in other airlines, including in other parts of the world, which involve significant
challenges and risks, particularly given the impact of the COVID-19 pandemic; industry consolidation or changes in airline alliances;
the ability of other air carriers with whom the Company has alliances or partnerships to provide the services contemplated by the
respective arrangements with such carriers; costs associated with any modification or termination of the Company’s aircraft
orders; disruptions in the availability of aircraft, parts or support from its suppliers; the Company’s ability to maintain
satisfactory labor relations and the results of any collective bargaining agreement process with its union groups; any disruptions
to operations due to any potential actions by the Company’s labor groups; labor costs; the impact of any management changes;
extended interruptions or disruptions in service at major airports where the Company operates; U.S. or foreign governmental legislation,
regulation and other actions (including Open Skies agreements, environmental regulations and the United Kingdom’s withdrawal
from the European Union); the seasonality of the airline industry; weather conditions; the costs and availability of aviation and
other insurance; the Company’s ability to realize the full value of its intangible assets and long-lived assets; any impact
to the Company’s reputation or brand image and other risks and uncertainties set forth under Part I, Item 1A., “Risk
Factors,” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as updated by the
Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2020 and the Company’s Current Report
on Form 8-K filed on June 15, 2020, as well as other risks and uncertainties set forth from time to time in the reports the Company
files with the U.S. Securities and Exchange Commission.