CHICAGO, Oct. 14, 2020 /PRNewswire/ -- United Airlines
(UAL) today announced third-quarter 2020 financial results. Since
the beginning of the crisis, the company has been at the forefront
of the industry in delivering on its three-pillar strategy of
building and maintaining liquidity, minimizing cash burn and
variabilizing its cost structure. Achieving these objectives has
supported the airline's ability to manage the crisis as well as or
better than its competitors and positions United to lead the
industry when demand for air travel returns.
In addition, United expects that third-quarter revenue
performance will be the best, even in a historically difficult
environment, among our large network competitors - once they have
all reported their quarterly results. By almost any revenue
measure, the company expects on a year-over-year basis, with our
total unit revenue of down 26 percent, passenger unit revenue of
down 47 percent, cargo revenue of up 50 percent and loyalty revenue
of down 45 percent to be stronger results than those that will be
achieved by each of our legacy competitors.
"Having successfully executed our initial crisis strategy, we're
ready to turn the page on seven months that have been dedicated to
developing and implementing extraordinary and often painful
measures, like furloughing 13,000 team members, to survive the
worst financial crisis in aviation history," said United CEO
Scott Kirby. "Even though the
negative impact of COVID-19 will persist in the near term, we are
now focused on positioning the airline for a strong recovery that
will allow United to bring our furloughed employees back to work
and emerge as the global leader in aviation."
United CleanPlus: Keeping Our Customers and
Employees Safe
- Partnered with the Defense Advanced Research Projects Agency
(DARPA) to study how effectively the unique airflow configuration
on board an aircraft can prevent the spread of aerosolized
particles among passengers and crew.
- Only airline maximizing ventilation systems by running the
auxiliary power on mainline aircraft during the entire boarding and
deplaning process, so our customers and crew get the important
safety benefits provided by high-efficiency particulate air (HEPA)
filtration systems.
- First U.S. airline to announce the launch of a COVID-19 pilot
testing program for customers traveling on United from San Francisco International Airport (SFO) to
Hawaii.
- Added Zoono Microbe Shield, an EPA-registered antimicrobial
coating that forms a long-lasting bond with surfaces and inhibits
the growth of microbes, to the airline's already rigorous safety
and cleaning procedures and expects to add the coating to the
entire mainline and express fleet before the end of the year.
- Since COVID-19 began, first major U.S. airline to require
flight attendants to wear masks onboard, and among first to require
all customers to wear masks onboard. In the third quarter, extended
mask requirements to require customers to wear a face covering in
the more than 360 airports where United operates around the world,
including United customer service counters and kiosks, United Club
locations, United's gates, and baggage claim areas.
- Launched the United Automated Assistant, a new chat function
that gives customers a contactless option to receive immediate
access to information about cleaning and safety procedures put in
place due to COVID-19.
- Began cleaning pilot flight decks with Ultraviolet C (UVC)
lighting technology on most aircraft at hub airports to disinfect
the flight deck interior and continue providing pilots with a
sanitary work environment.
Pillar 1 – Raising and Maintaining
Liquidity
- Since March, the company has raised over $22 billion through commercial debt offerings,
stock issuances and the Coronavirus Aid, Relief, and Economic
Security Act ("CARES Act") Payroll Support Program grant and loan,
among other items.
- The company's total available liquidity1 at the end
of the third quarter 2020 was approximately $19.4 billion.
- Entered into the first-of-its-kind loyalty backed transaction,
borrowing $6.8 billion secured
against MileagePlus Holdings in the form of a $3.8 billion bond and a $3.0 billion term loan.
- Secured the ability to borrow $5.2
billion with the U.S. Treasury under the CARES Act loan
program between now and March 2021
and expects to have the ability to increase the borrowing capacity
up to $7.5 billion, subject to
government approval.
- Entered into an agreement with CDB Aviation to finance, via a
sale leaseback transaction, two Boeing 787-9 and ten Boeing 737 MAX
aircraft that are currently subject to purchase agreements between
United and The Boeing Company.
Pillar 2 – Minimizing Cash Burn
- Reduced total operating costs by 59 percent versus the third
quarter of 2019. Excluding special charges2, reduced
operating costs by 48 percent versus the third quarter of
2019.
- Achieved target average daily cash burn3 during the
third quarter of $21 million plus
$4 million of average debt principal
payments and severance payments per day, compared to second-quarter
average daily cash burn of $37
million plus $3 million of
debt principal payments and severance payments per
day.
Pillar
3 – Variabilizing Cost
Structure
- Reduced non-labor operating expenses, excluding special charges
and depreciation, by 63 percent in the third quarter, against a
capacity reduction of 70 percent.
- Restructured and significantly reduced our management and
administrative functions. These reductions are expected to be
largely permanent, even as demand recovers.
- Reached a landmark agreement with its pilot group that avoids
furloughs by securing flexibility in work hours, while also
reaching agreements to provide a path to early retirement and
reduce expense through voluntary leave of absence programs. These
agreements position the company to rebound quickly when demand
returns.
- Created a program with the Association of Flight Attendants
(AFA) that reduced 3,300 flight attendant furloughs while allowing
the company to react more quickly to network changes.
- Reduced furloughs of International Association of Machinists
and Aerospace Workers (IAM) represented employees through an
agreement that incentivizes employees to take a leave of
absence.
- Worked with the union representing dispatchers to reduce
furloughs and create staffing flexibility as demand returns through
an agreement that allows dispatchers to voluntarily reduce their
work schedules.
- Offered employees comprehensive voluntary separation packages,
retirement packages and/or extended leaves of absence with
approximately 9,000 employees opting to participate.
Third-Quarter Financial Results
- The company had a net loss of $1.8
billion, and an adjusted net loss4 of
$2.4 billion.
- Total operating revenues were down 78 percent year-over-year,
on a 70 percent decrease in capacity year-over-year.
- Passenger revenue was down 84 percent year-over-year.
Expanding Customer Benefits
- First among U.S. global airlines to permanently eliminate
change fees on all standard economy and premium cabin tickets for
travel within the U.S., and starting January
1, 2021, any United customer can fly standby for free on a
flight departing the day of their travel regardless of the type of
ticket or class of service.
- First U.S. airline to introduce the Destination Travel Guide, a
new interactive map tool on united.com and the United mobile app
that allows customers to filter and view destinations' COVID-19
related travel restrictions.
- First U.S. airline to introduce an interactive map feature for
customers on united.com, powered by Google Flight Search Enterprise
Technology, to easily compare and shop for flights based on
departure city, budget and location type. Customers can
simultaneously compare travel to various destinations in a single
search.
- Announced plan to continue installing Polaris Business Class on
Boeing 787 fleet.
Reimagining Our Route Network
- Announced 28 new domestic routes and 9 new international
routes.
- Resumed nonstop service on 146 domestic routes.
- Resumed and/or launched service on 78 international routes to
33 destinations in 18 countries around the world, including:
Aruba, Belgium, Brazil, Canada, China, Costa
Rica, Dominican Republic,
El Salvador, French Polynesia (Tahiti), Guatemala, Honduras, India, Ireland, Jamaica, Philippines, Singapore, South
Korea and Switzerland.
- Compared to June, United had nonstop service in 127 more
domestic and 29 more international markets in July, 157 more
domestic and 57 more international markets in August, and 151 more
domestic and 80 more international markets in September.
- Announced increased service to China from two to four weekly flights between
San Francisco and Shanghai's Pudong International Airport. Once
service resumes, United will be the only U.S. airline flying to
mainland China directly.
- Announced plans to expand global route network with new nonstop
service to Ghana, Hawaii, India, Nigeria, and South
Africa. With these new routes, United will offer more
nonstop service to India and
South Africa than any other U.S.
carrier and remain the largest carrier between the U.S. mainland
and Hawaii.
- Announced plans to add up to 28 daily nonstop flights this
winter connecting customers in Boston, Cleveland, Indianapolis, Milwaukee, New
York/LaGuardia, Pittsburgh,
and Columbus, Ohio to four popular
Florida destinations.
- Announced plans to fly roughly 40 percent of its full schedule
in October 2020 compared to October
of last year.
- Increased cargo revenue by 50 percent by leveraging
international flying and deploying strategic international
cargo-only missions.
Doing Our Part to Help Fight COVID-19 Since
Crisis Began
- Booked over 2,900 free flights for medical professionals to
support COVID-19 response in New
Jersey/New York and
California.
- More than 19.2 million miles donated by MileagePlus members and
7.6 million miles matched by United to help organizations providing
relief during COVID-19.
- Donated nearly 1.2 million pounds of food from United Polaris
lounges, United Club locations, and catering kitchens to local food
banks and charities.
- Over 7,500 face masks were made from upcycled unused employee
uniforms.
- More than 800 gallons of hand sanitizer produced by United
employees in San Francisco for use
by United employees.
- Donated 15,000 pillows, 2,800 amenity kits, and 5,000 self-care
products to charities and homeless shelters.
- More than 2.2 million pounds of food and household goods were
processed by United employees at the Houston Food Bank.
- Flew more than 146.8 million pounds of medical equipment and
personal protective equipment (PPE) and 3.1 million pounds of
supplies to support military troops.
- More than 2,400 United employees worldwide have volunteered,
with over 33,400 hours served.
- United began flying a portion of its Boeing 777 and 787 fleet
as dedicated cargo charter aircraft, as of March 19, to transfer freight to and from U.S.
hubs and key international business locations. Since then, we have
operated over 6,500 cargo-only flights and moved over 223 million
pounds of a variety of goods.
- Through a combination of cargo-only flights and passenger
flights, United has transported more than 401 million pounds of
freight, which includes 154 million pounds of vital shipments, such
as medical kits, PPE, pharmaceuticals and medical equipment, and
more than 3 million pounds of military mail and packages.
Additional Noteworthy Accomplishments
- Recognized for the fifth consecutive year as a top-scoring
company and best place to work for disability inclusion with a
perfect score of 100 on the 2020 Disability Equality Index
(DEI).
- Selected by the Commission on Presidential Debates as the
official airline for the 2020 Presidential and Vice Presidential
Debates.
- Announced signing of The Board Challenge and committed to
adding a second Black board member to the Board of Directors.
|
1 Total
available liquidity includes cash and cash equivalents, short-term
investments and $1 billion available under our undrawn revolving
credit facility, as well as $4.7 billion available under the CARES
Act Loan program.
|
2 Reconciliations of non-GAAP
financial measures to the most directly comparable GAAP measures
are included in the tables accompanying this release.
|
3 Cash burn is defined as: Net cash
from operations, less investing and financing activities. Proceeds
from the issuance of new debt (excluding expected aircraft
financing), government grants associated with the Payroll Support
Program of the CARES Act, issuance of new stock, net proceeds from
the sale of short-term and other investments and changes in certain
restricted cash balances are not included in this figure. Cash burn
excludes the borrowing and replacement of the $200 million
short-term loan associated with the CARES Act Loan
Program.
|
4 Excludes special charges,
nonoperating special termination benefits and settlement losses and
unrealized gains and losses on investments. Reconciliations of
non-GAAP financial measures to the most directly comparable GAAP
measures are included in the tables accompanying this
release.
|
Earnings Call
UAL will hold a conference call to discuss third quarter 2020
financial results as well as its financial and operational outlook
for the fourth quarter and full year 2020, on Thursday, October 15, at 9:30 a.m.
CT/10:30 a.m. ET. A live, listen-only
webcast of the conference call will be available at
ir.united.com.
The webcast will be available for replay within 24 hours of the
conference call and then archived on the website for three
months.
About United
United's shared purpose is "Connecting People. Uniting the
World." For more information, visit united.com, follow @United on
Twitter and Instagram or connect on Facebook. The common stock of
United's parent, United Airlines Holdings, Inc., is traded on the
Nasdaq under the symbol "UAL".
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995: Certain statements in this release are
forward-looking and thus reflect our current expectations and
beliefs with respect to certain current and future events and
anticipated financial and operating performance. Such
forward-looking statements are and will be subject to many risks
and uncertainties relating to our operations and business
environment that may cause actual results to differ materially from
any future results expressed or implied in such forward-looking
statements. Words such as "expects," "will," "plans,"
"anticipates," "indicates," "remains," "believes," "estimates,"
"forecast," "guidance," "outlook," "goals," "targets" and similar
expressions are intended to identify forward-looking statements.
Additionally, forward-looking statements include statements that do
not relate solely to historical facts, such as statements which
identify uncertainties or trends, discuss the possible future
effects of current known trends or uncertainties, or which indicate
that the future effects of known trends or uncertainties cannot be
predicted, guaranteed or assured. All forward-looking statements in
this release are based upon information available to us on the date
of this release. We undertake no obligation to publicly update or
revise any forward-looking statement, whether as a result of new
information, future events, changed circumstances or otherwise,
except as required by applicable law. Our actual results could
differ materially from these forward-looking statements due to
numerous factors including, without limitation, the following: the
duration and spread of the ongoing global COVID-19 pandemic and the
outbreak of any other disease or similar public health threat and
the impact on our business, results of operations and financial
condition; the lenders' ability to accelerate the MileagePlus
indebtedness, foreclose upon the collateral securing the
MileagePlus indebtedness or exercise other remedies if we are not
able to comply with the covenants in the MileagePlus financing
agreements; the final terms of borrowing pursuant to the Loan
Program under the CARES Act and the effects of the grant and
promissory note through the Payroll Support Program under the CARES
Act; the costs and availability of financing; our significant
amount of financial leverage from fixed obligations and ability to
seek additional liquidity and maintain adequate liquidity; our
ability to comply with the terms of our various financing
arrangements; our ability to utilize our net operating losses to
offset future taxable income; the material disruption of our
strategic operating plan as a result of the COVID-19 pandemic and
our ability to execute our strategic operating plans in the long
term; general economic conditions (including interest rates,
foreign currency exchange rates, investment or credit market
conditions, crude oil prices, costs of aircraft fuel and energy
refining capacity in relevant markets); risks of doing business
globally, including instability and political developments that may
impact our operations in certain countries; demand for travel and
the impact that global economic and political conditions have on
customer travel patterns; our capacity decisions and the capacity
decisions of our competitors; competitive pressures on pricing and
on demand; changes in aircraft fuel prices; disruptions in our
supply of aircraft fuel; our ability to cost-effectively hedge
against increases in the price of aircraft fuel, if we decide to do
so; the effects of any technology failures or cybersecurity or
significant data breaches; disruptions to services provided by
third-party service providers; potential reputational or other
impact from adverse events involving our aircraft or operations,
the aircraft or operations of our regional carriers or our code
share partners or the aircraft or operations of another airline;
our ability to attract and retain customers; the effects of any
terrorist attacks, international hostilities or other security
events, or the fear of such events; the mandatory grounding of
aircraft in our fleet; disruptions to our regional network, as a
result of the COVID-19 pandemic or otherwise; the impact of
regulatory, investigative and legal proceedings and legal
compliance risks; the success of our investments in other airlines,
including in other parts of the world, which involve significant
challenges and risks, particularly given the impact of the COVID-19
pandemic; industry consolidation or changes in airline alliances;
the ability of other air carriers with whom we have alliances or
partnerships to provide the services contemplated by the respective
arrangements with such carriers; costs associated with any
modification or termination of our aircraft orders; disruptions in
the availability of aircraft, parts or support from our suppliers;
our ability to maintain satisfactory labor relations and the
results of any collective bargaining agreement process with our
union groups; any disruptions to operations due to any potential
actions by our labor groups; labor costs; the impact of any
management changes; extended interruptions or disruptions in
service at major airports where we operate; U.S. or foreign
governmental legislation, regulation and other actions (including
Open Skies agreements, environmental regulations and the
United Kingdom's withdrawal from
the European Union); the seasonality of the airline industry;
weather conditions; the costs and availability of aviation and
other insurance; our ability to realize the full value of our
intangible assets and long-lived assets; any impact to our
reputation or brand image; and other risks and uncertainties set
forth under Part I, Item 1A., "Risk Factors," of our Annual Report
on Form 10-K for the fiscal year ended December 31, 2019, as updated by our Quarterly
Report on Form 10-Q for the quarter ended June 30, 2020, as well as other risks and
uncertainties set forth from time to time in the reports we file
with the U.S. Securities and Exchange Commission.
-tables attached-
UNITED AIRLINES
HOLDINGS, INC
|
STATEMENTS OF
CONSOLIDATED OPERATIONS (UNAUDITED)
|
|
|
|
Three Months Ended
September 30,
|
|
%
Increase/
(Decrease)
|
|
|
Nine Months Ended
September 30,
|
|
%
Increase/
(Decrease)
|
(In millions, except
per share data)
|
|
2020
|
|
2019
|
|
|
|
2020
|
|
2019
|
|
Operating
revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passenger
|
|
$
|
1,649
|
|
|
$
|
10,481
|
|
|
(84.3)
|
|
|
|
$
|
9,395
|
|
|
$
|
29,692
|
|
|
(68.4)
|
|
Cargo
|
|
422
|
|
|
282
|
|
|
49.6
|
|
|
|
1,088
|
|
|
863
|
|
|
26.1
|
|
Other operating
revenue
|
|
418
|
|
|
617
|
|
|
(32.3)
|
|
|
|
1,460
|
|
|
1,816
|
|
|
(19.6)
|
|
Total operating
revenue
|
|
2,489
|
|
|
11,380
|
|
|
(78.1)
|
|
|
|
11,943
|
|
|
32,371
|
|
|
(63.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and related
costs
|
|
2,229
|
|
|
3,063
|
|
|
(27.2)
|
|
|
|
7,354
|
|
|
8,993
|
|
|
(18.2)
|
|
Aircraft
fuel
|
|
508
|
|
|
2,296
|
|
|
(77.9)
|
|
|
|
2,474
|
|
|
6,704
|
|
|
(63.1)
|
|
Regional capacity
purchase
|
|
425
|
|
|
721
|
|
|
(41.1)
|
|
|
|
1,550
|
|
|
2,124
|
|
|
(27.0)
|
|
Landing fees and other
rent
|
|
500
|
|
|
645
|
|
|
(22.5)
|
|
|
|
1,552
|
|
|
1,893
|
|
|
(18.0)
|
|
Depreciation and
amortization
|
|
626
|
|
|
575
|
|
|
8.9
|
|
|
|
1,859
|
|
|
1,682
|
|
|
10.5
|
|
Aircraft maintenance
materials and outside repairs
|
|
115
|
|
|
490
|
|
|
(76.5)
|
|
|
|
659
|
|
|
1,319
|
|
|
(50.0)
|
|
Distribution
expenses
|
|
53
|
|
|
432
|
|
|
(87.7)
|
|
|
|
379
|
|
|
1,234
|
|
|
(69.3)
|
|
Aircraft
rent
|
|
50
|
|
|
67
|
|
|
(25.4)
|
|
|
|
147
|
|
|
221
|
|
|
(33.5)
|
|
Special charges
(credits)
|
|
(1,081)
|
|
|
27
|
|
|
NM
|
|
|
|
(2,467)
|
|
|
116
|
|
|
NM
|
|
Other operating
expenses
|
|
679
|
|
|
1,591
|
|
|
(57.3)
|
|
|
|
2,660
|
|
|
4,645
|
|
|
(42.7)
|
|
Total operating
expense
|
|
4,104
|
|
|
9,907
|
|
|
(58.6)
|
|
|
|
16,167
|
|
|
28,931
|
|
|
(44.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,615)
|
|
|
1,473
|
|
|
NM
|
|
|
|
(4,224)
|
|
|
3,440
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
(64.9)
|
%
|
|
12.9
|
%
|
|
NM
|
|
|
|
(35.4)
|
%
|
|
10.6
|
%
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonoperating income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
(345)
|
|
|
(191)
|
|
|
80.6
|
|
|
|
(712)
|
|
|
(570)
|
|
|
24.9
|
|
Interest
capitalized
|
|
16
|
|
|
22
|
|
|
(27.3)
|
|
|
|
54
|
|
|
65
|
|
|
(16.9)
|
|
Interest
income
|
|
8
|
|
|
36
|
|
|
(77.8)
|
|
|
|
45
|
|
|
103
|
|
|
(56.3)
|
|
Unrealized gains
(losses) on investments, net
|
|
15
|
|
|
21
|
|
|
(28.6)
|
|
|
|
(295)
|
|
|
72
|
|
|
NM
|
|
Miscellaneous,
net
|
|
(411)
|
|
|
(12)
|
|
|
NM
|
|
|
|
(1,317)
|
|
|
(40)
|
|
|
NM
|
|
Total nonoperating
expense
|
|
(717)
|
|
|
(124)
|
|
|
NM
|
|
|
|
(2,225)
|
|
|
(370)
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes
|
|
(2,332)
|
|
|
1,349
|
|
|
NM
|
|
|
|
(6,449)
|
|
|
3,070
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax
margin
|
|
(93.7)
|
%
|
|
11.9
|
%
|
|
NM
|
|
|
|
(54.0)
|
%
|
|
9.5
|
%
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit)
|
|
(491)
|
|
|
325
|
|
|
NM
|
|
|
|
(1,277)
|
|
|
702
|
|
|
NM
|
|
Net income
(loss)
|
|
$
|
(1,841)
|
|
|
$
|
1,024
|
|
|
NM
|
|
|
|
$
|
(5,172)
|
|
|
$
|
2,368
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share
|
|
$
|
(6.33)
|
|
|
$
|
3.99
|
|
|
NM
|
|
|
|
$
|
(18.91)
|
|
|
$
|
9.04
|
|
|
NM
|
|
Diluted weighted
average shares
|
|
291.0
|
|
|
256.4
|
|
|
13.5
|
|
|
|
273.5
|
|
|
262.0
|
|
|
4.4
|
|
UNITED AIRLINES
HOLDINGS, INC.
|
PASSENGER REVENUE
INFORMATION AND STATISTICS
|
|
Passenger revenue
information is as follows (in millions, except for percentage
changes):
|
|
|
3Q 2020
Passenger
Revenue
|
|
Passenger
Revenue
vs.
3Q 2019
|
|
PRASM vs.
3Q 2019
|
|
Yield vs.
3Q 2019
|
|
Available
Seat Miles
vs.
3Q 2019
|
|
3Q 2020
Available
Seat Miles
|
|
3Q 2020
Revenue
Passenger
Miles
|
Domestic
|
$
|
1,246
|
|
|
(81.0%)
|
|
(45.2%)
|
|
(12.7%)
|
|
(65.3%)
|
|
14,798
|
|
|
8,043
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Atlantic
|
182
|
|
|
(90.7%)
|
|
(65.7%)
|
|
(6.1%)
|
|
(72.9%)
|
|
4,117
|
|
|
1,305
|
|
Pacific
|
97
|
|
|
(91.3%)
|
|
(43.7%)
|
|
90.3%
|
|
(84.6%)
|
|
1,669
|
|
|
411
|
|
Latin
America
|
124
|
|
|
(85.3%)
|
|
(42.8%)
|
|
(6.4%)
|
|
(74.3%)
|
|
1,628
|
|
|
854
|
|
International
|
403
|
|
|
(89.7%)
|
|
(55.1%)
|
|
10.6%
|
|
(77.1%)
|
|
7,414
|
|
|
2,570
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
$
|
1,649
|
|
|
(84.3%)
|
|
(46.8%)
|
|
(4.2%)
|
|
(70.4%)
|
|
22,212
|
|
|
10,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Select operating
statistics are as follows:
|
|
|
|
Three Months Ended
September 30,
|
|
%
Increase/
(Decrease)
|
|
|
Nine Months Ended
September 30,
|
|
%
Increase/
(Decrease)
|
|
|
|
2020
|
|
2019
|
|
|
|
2020
|
|
2019
|
|
|
Passengers
(thousands)
|
|
9,739
|
|
|
43,091
|
|
|
(77.4)
|
|
|
|
42,911
|
|
|
122,137
|
|
|
(64.9)
|
|
|
Revenue passenger
miles (millions)
|
|
10,613
|
|
|
64,629
|
|
|
(83.6)
|
|
|
|
56,812
|
|
|
180,727
|
|
|
(68.6)
|
|
|
Available seat miles
(millions)
|
|
22,212
|
|
|
75,076
|
|
|
(70.4)
|
|
|
|
92,113
|
|
|
213,961
|
|
|
(56.9)
|
|
|
Passenger load
factor:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
47.8
|
%
|
|
86.1
|
%
|
|
(38.3)
|
|
pts.
|
|
61.7
|
%
|
|
84.5
|
%
|
|
(22.8)
|
|
pts.
|
Domestic
|
|
54.4
|
%
|
|
86.6
|
%
|
|
(32.2)
|
|
pts.
|
|
62.7
|
%
|
|
85.7
|
%
|
|
(23.0)
|
|
pts.
|
International
|
|
34.7
|
%
|
|
85.4
|
%
|
|
(50.7)
|
|
pts.
|
|
60.0
|
%
|
|
82.9
|
%
|
|
(22.9)
|
|
pts.
|
Passenger revenue per
available seat mile (cents)
|
|
7.42
|
|
|
13.96
|
|
|
(46.8)
|
|
|
|
10.20
|
|
|
13.88
|
|
|
(26.5)
|
|
|
Total revenue per
available seat mile (cents)
|
|
11.21
|
|
|
15.16
|
|
|
(26.1)
|
|
|
|
12.97
|
|
|
15.13
|
|
|
(14.3)
|
|
|
Average yield per
revenue passenger mile (cents)
|
|
15.54
|
|
|
16.22
|
|
|
(4.2)
|
|
|
|
16.54
|
|
|
16.43
|
|
|
0.7
|
|
|
Cargo ton
miles
|
|
685
|
|
|
804
|
|
|
(14.8)
|
|
|
|
1,876
|
|
|
2,440
|
|
|
(23.1)
|
|
|
Aircraft in fleet at
end of period
|
|
1,319
|
|
|
1,348
|
|
|
(2.2)
|
|
|
|
1,319
|
|
|
1,348
|
|
|
(2.2)
|
|
|
Average stage length
(miles)
|
|
1,212
|
|
|
1,473
|
|
|
(17.7)
|
|
|
|
1,312
|
|
|
1,464
|
|
|
(10.4)
|
|
|
Employee headcount (in
thousands)
|
|
87.9
|
|
|
95.0
|
|
|
(7.5)
|
|
|
|
87.9
|
|
|
95.0
|
|
|
(7.5)
|
|
|
Average aircraft fuel
price per gallon
|
|
$
|
1.31
|
|
|
$
|
2.02
|
|
|
(35.1)
|
|
|
|
$
|
1.65
|
|
|
$
|
2.08
|
|
|
(20.7)
|
|
|
Fuel gallons consumed
(millions)
|
|
387
|
|
|
1,134
|
|
|
(65.9)
|
|
|
|
1,501
|
|
|
3,221
|
|
|
(53.4)
|
|
|
Note: See Part II, Item 6, Selected Financial Data,
of UAL's Annual Report on Form 10-K for the fiscal year ended
December 31, 2019, for definitions of
these statistics.
Cash burn: The company's management views daily
"cash burn" as an important measure in monitoring liquidity in
order to assess the company's cash needs without the impact of
certain extraordinary actions or events, and the company believes
this provides useful information to investors about the company's
liquidity position.
|
Three Months Ended
September 30, 2020
|
Three Months Ended
June 30, 2020
|
Net cash used by
operating activities
|
$
|
(1,889)
|
|
$
|
(130)
|
|
Cash flows provided
by investing activities
|
770
|
|
812
|
|
Cash flows provided
by financing activities
|
7,905
|
|
2,382
|
|
|
6,786
|
|
3,064
|
|
|
|
|
Adjusted to
remove:
|
|
|
Net proceeds
from sale of short-term and other investments
|
406
|
|
838
|
|
CARES Act
Payroll Support Program ("PSP") grant
|
447
|
|
3,154
|
|
PSP
Note
|
192
|
|
1,309
|
|
CARES Act
secured loan
|
520
|
|
—
|
|
Secured debt
(net of discount and fees)
|
7,376
|
|
250
|
|
Equity
issuances
|
—
|
|
1,135
|
|
Increase
in restricted cash balance
|
99
|
|
1
|
|
Total Adjustments
|
9,040
|
|
6,687
|
|
|
|
|
Adjusted cash
burn
|
$
|
(2,254)
|
|
$
|
(3,623)
|
|
Days in the
period
|
92
|
|
91
|
|
Average daily cash
burn
|
$
|
(25)
|
|
$
|
(40)
|
|
UNITED AIRLINES HOLDINGS, INC.
NON-GAAP FINANCIAL RECONCILIATION
UAL evaluates its financial performance utilizing various
accounting principles generally accepted in the United States of America (GAAP) and
Non-GAAP financial measures, including adjusted operating income
(loss), adjusted operating margin, adjusted pre-tax income (loss),
adjusted pre-tax margin, adjusted net income (loss), adjusted
diluted earnings (loss) per share and CASM, excluding special
charges, third-party business expenses, fuel, and profit sharing,
among others. UAL believes that adjusting for special charges and
for nonoperating credit losses and nonoperating special termination
benefits and settlement losses is useful to investors because these
items are not indicative of UAL's ongoing performance. UAL believes
that adjusting for unrealized (gains) losses on investments, net is
useful to investors because those unrealized gains or losses may
not ultimately be realized on a cash basis. UAL believes that
adjusting for interest expense related to finance leases of Embraer
ERJ 145 aircraft is useful to investors because of the accelerated
recognition of interest expense.
CASM is a common metric used in the airline industry to measure
an airline's cost structure and efficiency. UAL reports CASM
excluding special charges, third-party business expenses, fuel and
profit sharing. UAL believes that adjusting for special charges is
useful to investors because special charges are not indicative of
UAL's ongoing performance. UAL also believes that excluding
third-party business expenses, such as maintenance, ground handling
and catering services for third parties, provides more meaningful
disclosure because these expenses are not directly related to UAL's
core business. UAL also believes that excluding fuel costs from
certain measures is useful to investors because it provides an
additional measure of management's performance excluding the
effects of a significant cost item over which management has
limited influence. UAL excludes profit sharing because this
exclusion allows investors to better understand and analyze our
operating cost performance and provides a more meaningful
comparison of our core operating costs to the airline industry.
Reconciliations of reported non-GAAP financial measures to the
most directly comparable GAAP financial measures are included
below.
|
|
Three Months Ended
September 30,
|
|
%
Increase/
(Decrease)
|
|
Nine Months Ended
September 30,
|
|
%
Increase/
(Decrease)
|
|
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
|
CASM
(cents)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost per available
seat mile (CASM) (GAAP)
|
|
18.48
|
|
|
13.20
|
|
|
40.0
|
|
|
17.55
|
|
|
13.52
|
|
|
29.8
|
|
Special
charges
|
|
(4.86)
|
|
|
0.04
|
|
|
NM
|
|
|
(2.68)
|
|
|
0.05
|
|
|
NM
|
|
Third-party business
expenses
|
|
0.06
|
|
|
0.07
|
|
|
NM
|
|
|
0.13
|
|
|
0.06
|
|
|
116.7
|
|
Fuel
expense
|
|
2.28
|
|
|
3.05
|
|
|
(25.2)
|
|
|
2.68
|
|
|
3.13
|
|
|
(14.4)
|
|
Profit
sharing
|
|
—
|
|
|
0.24
|
|
|
(100.0)
|
|
|
—
|
|
|
0.17
|
|
|
(100.0)
|
|
CASM, excluding
special charges, third-party business expenses, fuel, and profit
sharing (Non-GAAP)
|
|
21.00
|
|
|
9.80
|
|
|
114.3
|
|
|
17.42
|
|
|
10.11
|
|
|
72.3
|
|
UNITED AIRLINES
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)
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
|
Operating expenses
(GAAP)
|
$
|
4,104
|
|
|
$
|
9,907
|
|
|
$
|
(5,803)
|
|
|
(58.6)
|
|
|
$
|
16,167
|
|
|
$
|
28,931
|
|
|
$
|
(12,764)
|
|
|
(44.1)
|
|
Special charges
(credit)
|
(1,081)
|
|
|
27
|
|
|
(1,108)
|
|
|
NM
|
|
|
(2,467)
|
|
|
116
|
|
|
(2,583)
|
|
|
NM
|
|
Operating expenses,
excluding special charges
|
5,185
|
|
|
9,880
|
|
|
(4,695)
|
|
|
(47.5)
|
|
|
18,634
|
|
|
28,815
|
|
|
(10,181)
|
|
|
(35.3)
|
|
Adjusted to
exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third-party business
expenses
|
13
|
|
|
49
|
|
|
(36)
|
|
|
(73.5)
|
|
|
115
|
|
|
120
|
|
|
(5)
|
|
|
(4.2)
|
|
Fuel
expense
|
508
|
|
|
2,296
|
|
|
(1,788)
|
|
|
(77.9)
|
|
|
2,474
|
|
|
6,704
|
|
|
(4,230)
|
|
|
(63.1)
|
|
Profit sharing,
including taxes
|
—
|
|
|
174
|
|
|
(174)
|
|
|
(100.0)
|
|
|
—
|
|
|
368
|
|
|
(368)
|
|
|
(100.0)
|
|
Adjusted operating
expenses (Non-GAAP)
|
$
|
4,664
|
|
|
$
|
7,361
|
|
|
$
|
(2,697)
|
|
|
(36.6)
|
|
|
$
|
16,045
|
|
|
$
|
21,623
|
|
|
$
|
(5,578)
|
|
|
(25.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss) (GAAP)
|
$
|
(1,615)
|
|
|
$
|
1,473
|
|
|
$
|
(3,088)
|
|
|
NM
|
|
|
$
|
(4,224)
|
|
|
$
|
3,440
|
|
|
$
|
(7,664)
|
|
|
NM
|
|
Adjusted to
exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special charges
(credits)
|
(1,081)
|
|
|
27
|
|
|
(1,108)
|
|
|
NM
|
|
|
(2,467)
|
|
|
116
|
|
|
(2,583)
|
|
|
NM
|
|
Adjusted operating
income (Non-GAAP)
|
$
|
(2,696)
|
|
|
$
|
1,500
|
|
|
$
|
(4,196)
|
|
|
NM
|
|
|
$
|
(6,691)
|
|
|
$
|
3,556
|
|
|
$
|
(10,247)
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
(64.9)
|
%
|
|
12.9
|
%
|
|
(77.8)
|
|
|
pts.
|
|
|
(35.4)
|
%
|
|
10.6
|
%
|
|
(46.0)
|
|
|
pts.
|
|
Adjusted operating
margin (Non-GAAP)
|
(108.3)
|
%
|
|
13.2
|
%
|
|
(121.5)
|
|
|
pts.
|
|
|
(56.0)
|
%
|
|
11.0
|
%
|
|
(67.0)
|
|
|
pts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NM
|
|
Pre-tax income (loss)
(GAAP)
|
$
|
(2,332)
|
|
|
$
|
1,349
|
|
|
$
|
(3,681)
|
|
|
NM
|
|
|
$
|
(6,449)
|
|
|
$
|
3,070
|
|
|
$
|
(9,519)
|
|
|
NM
|
|
Adjusted to
exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special charges
(credit)
|
(1,081)
|
|
|
27
|
|
|
(1,108)
|
|
|
NM
|
|
|
(2,467)
|
|
|
116
|
|
|
(2,583)
|
|
|
NM
|
|
Termination benefits and settlement losses
|
415
|
|
|
—
|
|
|
415
|
|
|
NM
|
|
|
646
|
|
|
—
|
|
|
646
|
|
|
NM
|
|
Unrealized (gains)
losses on investments, net
|
(15)
|
|
|
(21)
|
|
|
6
|
|
|
NM
|
|
|
295
|
|
|
(72)
|
|
|
367
|
|
|
NM
|
|
Loss on BRW term loan
and guarantee
|
—
|
|
|
—
|
|
|
—
|
|
|
NM
|
|
|
697
|
|
|
—
|
|
|
697
|
|
|
NM
|
|
Interest expense on
ERJ 145 finance leases
|
—
|
|
|
22
|
|
|
(22)
|
|
|
NM
|
|
|
—
|
|
|
68
|
|
|
(68)
|
|
|
NM
|
|
Adjusted pre-tax
income (loss) (Non-GAAP)
|
$
|
(3,013)
|
|
|
$
|
1,377
|
|
|
$
|
(4,390)
|
|
|
NM
|
|
|
$
|
(7,278)
|
|
|
$
|
3,182
|
|
|
$
|
(10,460)
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax
margin
|
(93.7)
|
%
|
|
11.9
|
%
|
|
(105.6)
|
|
|
pts.
|
|
|
(54.0)
|
%
|
|
9.5
|
%
|
|
(63.5)
|
|
|
pts.
|
|
Adjusted pre-tax
margin (Non-GAAP)
|
(121.1)
|
%
|
|
12.1
|
%
|
|
(133.2)
|
|
|
pts.
|
|
|
(60.9)
|
%
|
|
9.8
|
%
|
|
(70.7)
|
|
|
pts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) (GAAP)
|
$
|
(1,841)
|
|
|
$
|
1,024
|
|
|
$
|
(2,865)
|
|
|
NM
|
|
|
$
|
(5,172)
|
|
|
$
|
2,368
|
|
|
$
|
(7,540.0)
|
|
|
NM
|
|
Adjusted to
exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special charges
(credit)
|
(1,081)
|
|
|
27
|
|
|
(1,108)
|
|
|
NM
|
|
|
(2,467)
|
|
|
116
|
|
|
(2,583)
|
|
|
NM
|
|
Termination benefits and settlement losses
|
415
|
|
|
—
|
|
|
415
|
|
|
NM
|
|
|
646
|
|
|
—
|
|
|
646
|
|
|
NM
|
|
Unrealized (gains)
losses on investments, net
|
(15)
|
|
|
(21)
|
|
|
6
|
|
|
NM
|
|
|
295
|
|
|
(72)
|
|
|
367
|
|
|
NM
|
|
Loss on BRW term loan
and guarantee
|
—
|
|
|
—
|
|
|
—
|
|
|
NM
|
|
|
697
|
|
|
—
|
|
|
697
|
|
|
NM
|
|
Interest expense on
ERJ 145 finance leases
|
—
|
|
|
22
|
|
|
(22)
|
|
|
NM
|
|
|
—
|
|
|
68
|
|
|
(68)
|
|
|
NM
|
|
Income tax expense
(benefit) related to adjustments above, net of valuation
allowance
|
148
|
|
|
(6)
|
|
|
154
|
|
|
NM
|
|
|
375
|
|
|
(25)
|
|
|
400
|
|
|
NM
|
|
Adjusted net income
(loss) (Non-GAAP)
|
$
|
(2,374)
|
|
|
$
|
1,046
|
|
|
$
|
(3,420)
|
|
|
NM
|
|
|
$
|
(5,626)
|
|
|
$
|
2,455
|
|
|
$
|
(8,081)
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings (loss) per share (GAAP)
|
$
|
(6.33)
|
|
|
$
|
3.99
|
|
|
$
|
(10.32)
|
|
|
NM
|
|
|
$
|
(18.91)
|
|
|
$
|
9.04
|
|
|
$
|
(27.95)
|
|
|
NM
|
|
Adjusted to
exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special charges
(credit)
|
(3.72)
|
|
|
0.10
|
|
|
(3.82)
|
|
|
NM
|
|
|
(9.02)
|
|
|
0.44
|
|
|
(9.46)
|
|
|
NM
|
|
Termination benefits and settlement losses
|
1.43
|
|
|
—
|
|
|
1.43
|
|
|
NM
|
|
|
2.36
|
|
|
—
|
|
|
2.36
|
|
|
NM
|
|
Unrealized (gains)
losses on investments, net
|
(0.05)
|
|
|
(0.08)
|
|
|
0.03
|
|
|
NM
|
|
|
1.08
|
|
|
(0.27)
|
|
|
1.35
|
|
|
NM
|
|
Loss on BRW term loan
and guarantee
|
—
|
|
|
—
|
|
|
—
|
|
|
NM
|
|
|
2.55
|
|
|
—
|
|
|
2.55
|
|
|
NM
|
|
Interest expense on
ERJ 145 finance leases
|
—
|
|
|
0.08
|
|
|
(0.08)
|
|
|
NM
|
|
|
—
|
|
|
0.26
|
|
|
(0.26)
|
|
|
NM
|
|
Income tax expense
(benefit) related to adjustments, net of valuation
allowance
|
0.51
|
|
|
(0.02)
|
|
|
0.53
|
|
|
NM
|
|
|
1.37
|
|
|
(0.10)
|
|
|
1.47
|
|
|
NM
|
|
Adjusted diluted
earnings (loss) per share (Non-GAAP)
|
$
|
(8.16)
|
|
|
$
|
4.07
|
|
|
$
|
(12.23)
|
|
|
NM
|
|
|
$
|
(20.57)
|
|
|
$
|
9.37
|
|
|
$
|
(29.94)
|
|
|
NM
|
|
UNITED AIRLINES HOLDINGS, INC.
NON-GAAP FINANCIAL RECONCILIATION (Continued)
UAL believes that adjusting capital expenditures for assets
acquired through the issuance of debt, finance leases and other
financial liabilities is useful to investors in order to
appropriately reflect the total amounts spent on capital
expenditures. UAL also believes that adjusting net cash provided by
operating activities for capital expenditures, adjusted capital
expenditures, and aircraft operating lease additions is useful to
allow investors to evaluate the company's ability to generate cash
that is available for debt service or general corporate
initiatives.
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
Capital
Expenditures (in millions)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Capital expenditures,
net of returns of purchase deposits on flight equipment
(GAAP)
|
$
|
(368)
|
|
|
$
|
869
|
|
|
$
|
1,630
|
|
|
$
|
3,336
|
|
Property and equipment
acquired through the issuance of debt and other
|
183
|
|
|
86
|
|
|
510
|
|
|
306
|
|
Property and equipment
acquired through finance leases
|
11
|
|
|
—
|
|
|
30
|
|
|
8
|
|
Property and equipment
acquired through other financial liabilities
|
693
|
|
|
—
|
|
|
973
|
|
|
—
|
|
Adjustment to property
and equipment acquired through other financial liabilities
(a)
|
(132)
|
|
|
—
|
|
|
(185)
|
|
|
—
|
|
Adjusted capital
expenditures (Non-GAAP)
|
$
|
387
|
|
|
$
|
955
|
|
|
$
|
2,958
|
|
|
$
|
3,650
|
|
|
|
|
|
|
|
|
|
Free Cash
Flow (in millions)
|
|
|
|
|
|
|
|
Net cash provided by
(used in) operating activities (GAAP)
|
$
|
(1,889)
|
|
|
$
|
1,103
|
|
|
$
|
(1,956)
|
|
|
$
|
5,728
|
|
Less capital
expenditures, net of returns of purchase deposits on flight
equipment
|
(368)
|
|
|
869
|
|
|
1,630
|
|
|
3,336
|
|
Free cash flow, net
of financings (Non-GAAP)
|
$
|
(1,521)
|
|
|
$
|
234
|
|
|
$
|
(3,586)
|
|
|
$
|
2,392
|
|
|
|
|
|
|
|
|
|
Net cash provided by
(used in) operating activities (GAAP)
|
$
|
(1,889)
|
|
|
$
|
1,103
|
|
|
$
|
(1,956)
|
|
|
$
|
5,728
|
|
Less adjusted capital
expenditures (Non-GAAP)
|
387
|
|
|
955
|
|
|
2,958
|
|
|
3,650
|
|
Less aircraft
operating lease additions
|
7
|
|
|
41
|
|
|
40
|
|
|
48
|
|
Free cash flow
(Non-GAAP)
|
$
|
(2,283)
|
|
|
$
|
107
|
|
|
$
|
(4,954)
|
|
|
$
|
2,030
|
|
|
|
|
|
|
|
|
|
(a) In the first nine
months of 2020, United entered into agreements with third parties
to finance through sale and leaseback transactions new Boeing model
787-9 aircraft and Boeing model 737 MAX aircraft subject to
purchase agreements between United and Boeing. In connection with
delivery of each aircraft from Boeing, United will assign its right
to purchase such aircraft to the buyer, and simultaneous with the
buyer's purchase from Boeing, United will enter into a long-term
lease for such aircraft with the buyer as lessor. Seven Boeing
model 787-9 aircraft were delivered under these transactions (and
each is presently subject to a long-term lease to United). Upon
delivery, the company accounted for the aircraft which have a
repurchase option at a price other than fair value as part of
Flight equipment on the company's balance sheet and the related
obligation as Other current liabilities and Other financial
liabilities from sale-leasebacks (noncurrent) since they do not
qualify for sale recognition. If the repurchase option is not
exercised, these aircraft will be accounted for as leased assets at
the time of the option expiration and the related assets and
liabilities will be adjusted to the present value of the remaining
lease payments at that time. This adjustment reflects the
difference between the recorded amounts and the present value of
future lease payments at inception.
|
UNITED AIRLINES
HOLDINGS, INC
|
CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
|
|
(In
millions)
|
September 30,
2020
|
|
December 31,
2019
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
13,150
|
|
|
$
|
2,762
|
|
Short-term
investments
|
552
|
|
|
2,182
|
|
Restricted
cash
|
76
|
|
|
—
|
|
Receivables, less
allowance for credit losses (2020 — $9; 2019 — $9)
|
1,171
|
|
|
1,364
|
|
Aircraft fuel, spare
parts and supplies, less obsolescence allowance (2020 — $483; 2019
— $425)
|
961
|
|
|
1,072
|
|
Prepaid expenses and
other
|
566
|
|
|
814
|
|
Total current
assets
|
16,476
|
|
|
8,194
|
|
|
|
|
|
Total operating
property and equipment, net
|
31,650
|
|
|
30,170
|
|
Operating lease
right-of-use assets
|
4,544
|
|
|
4,758
|
|
|
|
|
|
Other
assets:
|
|
|
|
Goodwill
|
4,527
|
|
|
4,523
|
|
Intangibles, less
accumulated amortization (2020 — $1,481; 2019 — $1,440)
|
2,852
|
|
|
3,009
|
|
Restricted
cash
|
172
|
|
|
106
|
|
Notes receivable, less
allowance for credit losses (2020 — $559)
|
144
|
|
|
671
|
|
Investments in
affiliates and other, net
|
824
|
|
|
1,180
|
|
Total other
assets
|
8,519
|
|
|
9,489
|
|
Total
assets
|
$
|
61,189
|
|
|
$
|
52,611
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Advance ticket
sales
|
$
|
4,907
|
|
|
$
|
4,819
|
|
Accounts
payable
|
1,831
|
|
|
2,703
|
|
Frequent flyer
deferred revenue
|
772
|
|
|
2,440
|
|
Accrued salaries and
benefits
|
1,994
|
|
|
2,271
|
|
Current maturities of
long-term debt
|
4,584
|
|
|
1,407
|
|
Current maturities of
finance leases
|
136
|
|
|
46
|
|
Current maturities of
operating leases
|
623
|
|
|
686
|
|
Other
|
944
|
|
|
566
|
|
Total current
liabilities
|
15,791
|
|
|
14,938
|
|
|
|
|
|
Long-term liabilities
and deferred credits:
|
|
|
|
Long-term
debt
|
22,297
|
|
|
13,145
|
|
Long-term obligations
under finance leases
|
278
|
|
|
220
|
|
Long-term obligations
under operating leases
|
4,943
|
|
|
4,946
|
|
Frequent flyer
deferred revenue
|
5,063
|
|
|
2,836
|
|
Postretirement benefit
liability
|
1,012
|
|
|
789
|
|
Pension
liability
|
2,282
|
|
|
1,446
|
|
Deferred income
taxes
|
389
|
|
|
1,736
|
|
Other financial
liabilities from sale-leasebacks
|
957
|
|
|
—
|
|
Other
|
1,174
|
|
|
1,024
|
|
Total long-term
liabilities and deferred credits
|
38,395
|
|
|
26,142
|
|
Total stockholders'
equity
|
7,003
|
|
|
11,531
|
|
Total liabilities and
stockholders' equity
|
$
|
61,189
|
|
|
$
|
52,611
|
|
UNITED AIRLINES
HOLDINGS, INC.
|
CONDENSED STATEMENTS
OF CONSOLIDATED CASH FLOWS (UNAUDITED)
|
|
(In
millions)
|
Nine Months Ended
September 30,
|
|
2020
|
|
2019
|
Cash Flows from
Operating Activities:
|
|
|
|
Net cash provided by
(used in) operating activities
|
$
|
(1,956)
|
|
|
$
|
5,728
|
|
|
|
|
|
Cash Flows from
Investing Activities:
|
|
|
|
Capital expenditures,
net of returns of purchase deposits on flight equipment
|
(1,630)
|
|
|
(3,336)
|
|
Purchases of
short-term and other investments
|
(552)
|
|
|
(2,168)
|
|
Proceeds from sale of
short-term and other investments
|
2,182
|
|
|
2,282
|
|
Other, net
|
10
|
|
|
(9)
|
|
Net cash provided by
(used in) investing activities
|
10
|
|
|
(3,231)
|
|
|
|
|
|
Cash Flows from
Financing Activities:
|
|
|
|
Proceeds from issuance
of debt
|
13,024
|
|
|
1,109
|
|
Proceeds from equity
issuance
|
1,135
|
|
|
—
|
|
Payments of long-term
debt
|
(964)
|
|
|
(726)
|
|
Repurchases of common
stock
|
(353)
|
|
|
(1,431)
|
|
Principal payments
under finance leases
|
(53)
|
|
|
(105)
|
|
Capitalized financing
costs
|
(294)
|
|
|
(51)
|
|
Other, net
|
(19)
|
|
|
(29)
|
|
Net cash provided by
(used in) financing activities
|
12,476
|
|
|
(1,233)
|
|
Net increase in cash,
cash equivalents and restricted cash
|
10,530
|
|
|
1,264
|
|
Cash, cash
equivalents and restricted cash at beginning of the
period
|
2,868
|
|
|
1,799
|
|
Cash, cash
equivalents and restricted cash at end of the period
|
$
|
13,398
|
|
|
$
|
3,063
|
|
|
|
|
|
Investing and
Financing Activities Not Affecting Cash:
|
|
|
|
Property and equipment
acquired through the issuance of debt, finance leases and
other
|
$
|
1,513
|
|
|
$
|
314
|
|
Right-of-use assets
acquired through operating leases
|
64
|
|
|
344
|
|
Lease modifications
and lease conversions
|
503
|
|
|
36
|
|
UNITED AIRLINES
HOLDINGS, INC.
|
NOTES
(UNAUDITED)
|
|
Special charges
(credit) and unrealized (gains) losses on investments, net include
the following:
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
(In
millions)
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Operating:
|
|
|
|
|
|
|
|
|
CARES Act
grant
|
|
$
|
(1,494)
|
|
|
$
|
—
|
|
|
$
|
(3,083)
|
|
|
$
|
—
|
|
Severance and benefit
costs
|
|
350
|
|
|
2
|
|
|
413
|
|
|
14
|
|
Impairment of
assets
|
|
38
|
|
|
—
|
|
|
168
|
|
|
69
|
|
(Gains) losses on
sale of assets and other special charges
|
|
25
|
|
|
25
|
|
|
35
|
|
|
33
|
|
Total operating special
charges (credit)
|
|
(1,081)
|
|
|
27
|
|
|
(2,467)
|
|
|
116
|
|
|
|
|
|
|
|
|
|
|
Nonoperating special
termination benefits and settlement losses
|
|
415
|
|
|
—
|
|
|
646
|
|
|
—
|
|
Nonoperating
unrealized (gains) losses on investments
|
|
(15)
|
|
|
(21)
|
|
|
295
|
|
|
(72)
|
|
Nonoperating credit
loss on BRW Aviation Holding LLC and BRW Aviation LLC ("BRW") term
loan and related guarantee
|
|
—
|
|
|
—
|
|
|
697
|
|
|
—
|
|
Total nonoperating
special charges and unrealized (gains) losses on
investments
|
|
400
|
|
|
(21)
|
|
|
1,638
|
|
|
(72)
|
|
Total operating and
nonoperating special charges (credit) and unrealized (gains) losses
on investments
|
|
(681)
|
|
|
6
|
|
|
(829)
|
|
|
44
|
|
Income tax expense
(benefit), net of valuation allowance
|
|
148
|
|
|
(2)
|
|
|
375
|
|
|
(10)
|
|
Total operating and non-operating special charges (credit) and
unrealized (gains) losses on investments, net of income
taxes
|
|
$
|
(533)
|
|
|
$
|
4
|
|
|
$
|
(454)
|
|
|
$
|
34
|
|
CARES Act grant. During the nine months ended September 30, 2020, the company received
approximately $5.1 billion in funding
pursuant to the Payroll Support Program under the CARES Act, which
consists of $3.6 billion of grants
and $1.5 billion of an unsecured
loan. The company also recorded $66
million for warrants issued to the U.S. Treasury Department,
within stockholder's equity, as an offset to the grant income. As
of September 30, 2020, we recognized
$3.1 billion of the grant as a credit
to Special charges (credit) with the remaining $453 million recorded as Payroll Support Program
deferred credit on our balance sheet. We expect to recognize the
remainder of the grant income from the Payroll Support Program as a
Special charge (credit) during the fourth quarter of 2020 as the
salaries and wages the grant is intended to offset are
incurred.
Impairment of assets: During the three months ended September 30, 2020, the company recorded an
impairment of $38 million of the
right-of-use asset associated with the embedded aircraft lease in
one of our CPA agreements. We review flight equipment and other
long-lived assets used in operations for impairment losses when
events and circumstances indicate the assets may be impaired. We
measure cash flows at the contract level with our CPA partners. The
factors that led to this impairment included the impact to cash
flows from the pandemic and the relatively short remaining term
under the CPA agreement.
During the nine months ended September
30, 2020, in addition to the impairment described above, the
company recorded impairment charges of $130
million for its China
routes. The company conducted impairment reviews of certain
intangible assets in the first, second and third quarters of 2020,
which consisted of a comparison of the book value of those assets
to their fair value calculated using the discounted cash flow
method. Due to the COVID-19 pandemic and the subsequent suspension
of flights to China, the company
determined that the value of its China routes had been impaired in the first
quarter of 2020. The additional impairment in the second quarter of
2020 was the result of a further delay in the expected return of
full capacity to the China
markets. No additional impairment was detected in the third
quarter of 2020.
During the nine months ended September
30, 2019, the company recorded a $47
million impairment for aircraft engines removed from
operations, a $6 million charge for
the early termination of several regional aircraft finance leases,
an $8 million fair value adjustment
for aircraft purchased off lease and $8
million in other miscellaneous impairments.
Severance and benefit costs: As announced in July 2020, the company started the involuntary
furlough process earlier this summer when issuing WARN Act notices
to 36,000 of its employees. Since then, the company worked to
further reduce the total number of furloughs to approximately
13,000 employees by working closely with its union partners,
introducing new voluntary options selected by approximately 9,000
employees, and proposing creative solutions that would save jobs.
This workforce reduction is part of the company's strategic
realignment of its business and new organizational structure as a
result of the impacts of the COVID-19 pandemic on the company's
operations and cost structure. The company recorded $350 million and $413
million during the three and nine months ended September 30, 2020, respectively, related to the
workforce reduction and voluntary plans for employee severance, pay
continuance from voluntary retirements, and benefits-related costs
(and additional costs associated with special termination benefits
and settlement losses discussed below).
During the three and nine months ended September 30, 2019, the company recorded
$2 million and $12 million, respectively, of management
severance. During the nine months ended September 30, 2019, the company recorded
$2 million of severance and benefit
costs related to a voluntary early-out program for its technicians
and related employees represented by the International Brotherhood
of Teamsters. In the first quarter of 2017, approximately 1,000
technicians and related employees elected to voluntarily separate
from the company and received a severance payment, with a maximum
value of $100,000 per participant,
based on years of service, with retirement dates through early
2019.
Nonoperating special termination benefits and settlement losses:
During the three and nine months ended September 30, 2020, the company recorded
$415 million and $646 million, respectively, of settlement losses
related to the company's primary defined benefit pension plan
covering certain U.S. non-pilot employees, and special termination
benefits offered, under furlough and voluntary separation
programs.
Nonoperating unrealized (gains) losses on investments, net:
During the three and nine months ended September 30, 2020, the company recorded gains of
$15 million and losses of
$271 million, respectively. primarily
for changes in the market value of its investment in Azul Linhas
Aéreas Brasileiras S.A. ("Azul"). During the nine months ended
September 30, 2020, the company
recorded a loss of $24 million for
the decrease in fair value of the AVH share call options, AVH share
appreciation rights, and AVH share-based upside sharing agreement
(collectively, the "AVH Derivative Assets") that United obtained as
part of the BRW term loan agreement and related agreements with
Kingsland Holdings Limited.
During the three and nine months ended September 30, 2019, the company recorded gains of
$25 million and $77 million, respectively, for the change in
market value of certain of its equity investments, primarily Azul
Linhas Aéreas Brasileiras S.A.. Also, during the three and nine
months ended September 30, 2019, the
company recorded losses of $4 million
and $5 million, respectively, for the
change in fair value of certain derivative assets related to equity
of Avianca Holdings S.A. For equity investments and derivative
assets subject to MTM accounting, the company records gains and
losses as part of Nonoperating income (expense): Miscellaneous, net
in its statements of consolidated operations.
Nonoperating credit loss on BRW term loan and related guarantee:
During the nine months ended September 30,
2020, the company recorded a $697
million expected credit loss allowance for the BRW term loan
and related guarantee. Avianca Holdings S.A.'s ("AVH") is currently
in bankruptcy.
Interest expense related to finance leases of Embraer ERJ 145
aircraft
During the third quarter of 2018, United entered into an
agreement with the lessor of 54 Embraer ERJ 145 aircraft to
purchase those aircraft in 2019. The provisions of the new lease
agreement resulted in a change in accounting classification of
these new leases from operating leases to finance leases up until
the purchase date. As a result of the change, the company
recognized $22 million and
$68 million, respectively, of
additional interest expense in the three and nine months ended
September 30, 2019.
Effective tax rate
The company's effective tax rates for the three and nine months
ended September 30, 2020 were 21.1%
and 19.8%, respectively. The effective tax rates for the three and
nine months ended September 30, 2019
were 24.1% and 22.9%, respectively. The provision for income taxes
is based on the estimated annual effective tax rate which
represents a blend of federal, state and foreign taxes and includes
the impact of certain nondeductible items and the impact of a
change in the company's mix of domestic and foreign earnings
(losses). The effective tax rates for the three and nine months
ended September 30, 2020 were
impacted by $27 million and
$157 million, respectively, of
valuation allowance related to unrealized capital losses.
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SOURCE United Airlines