UNITED AIRLINES HOLDINGS, INC. Overview
United Airlines Holdings, Inc. (together with its consolidated subsidiaries, "UAL" or the "Company") is a holding company, and its principal, wholly-owned subsidiary isUnited Airlines, Inc. (together with its consolidated subsidiaries, "United"). This Quarterly Report on Form 10-Q is a combined report of UAL and United, including their respective consolidated financial statements. As UAL consolidates United for financial statement purposes, disclosures that relate to activities of United also apply to UAL, unless otherwise noted. United's operating revenues and operating expenses comprise nearly 100% of UAL's revenues and operating expenses. In addition, United comprises approximately the entire balance of UAL's assets, liabilities and operating cash flows. When appropriate, UAL and United are named specifically for their individual contractual obligations and related disclosures and any significant differences between the operations and results of UAL and United are separately disclosed and explained. We sometimes use the words "we," "our," "us," and the "Company" in this report for disclosures that relate to all of UAL and United. The Company transports people and cargo through its mainline operations, which utilize jet aircraft with at least 126 seats, and regional operations, which utilize smaller aircraft that are operated under contract by United Express carriers. The Company serves virtually every major market around the world, either directly or through participation in Star Alliance®, the world's largest airline alliance. Impact of the COVID-19 Pandemic and Outlook The novel coronavirus (COVID-19) pandemic, together with the measures implemented or recommended by governmental authorities and private organizations in response to the pandemic, has had an adverse impact that has been material to the Company's business, operating results, financial condition and liquidity. The Company began experiencing a significant decline in international and domestic demand related to COVID-19 during the first quarter of 2020, and this reduction in demand has continued through the date of this report. The Company cut, relative to first quarter 2019 capacity, approximately 54% of its scheduled capacity for the first quarter of 2021. However, sinceMarch 2021 , the Company has seen increasing demand for travel both domestically and in countries where entry is permitted. The Company expects its second quarter scheduled capacity to be down approximately45% versus the second quarter of 2019. The full extent of the ongoing impact of COVID-19 on the Company's longer-term operational and financial performance will depend on future developments, including those outside our control related to the efficacy and speed of vaccination programs in curbing the spread of the virus, the introduction and spread of new variants of the virus which may be resistant to currently approved vaccines and the continuation of existing or implementing of new government travel restrictions. The Company entered into a number of transactions to improve its liquidity. In the first quarter of 2021, the Company has: •issued or entered into approximately$1.4 billion in new enhanced equipment trust certificate ("EETC") and government loans; and •raised approximately$0.5 billion in net cash proceeds from the issuance and sale of UAL common stock. Furthermore, onJanuary 15, 2021 , United entered into a Payroll Support Program Extension Agreement (the "PSP2 Agreement") with theU.S. Treasury Department ("Treasury") providing the Company with total funding of approximately$2.6 billion , pursuant to the Payroll Support Program established under Subtitle A of Title IV of Division N of the Consolidated Appropriations Act, 2021 (the "PSP Extension Law"). These funds were used to pay for the wages, salaries and benefits of United employees, including the payment of lost wages, salaries and benefits to returning employees. Approximately$1.9 billion was provided as a direct grant and$753 million as indebtedness evidenced by a 10-year senior unsecured promissory note (the "PSP2 Note"). The Company expects to receive an additional amount of approximately$391 million under the PSP2 Agreement, of which$117 million is expected to be in the form of an unsecured loan. See Note 2 to the financial statements included in Part I, Item 1 of this report for additional information on the warrants issued in connection with the PSP2 Note and Note 8 to the financial statements included in Part I, Item 1 of this report for a discussion of the PSP2 Note. As a result of the PSP2 Agreement, the Company offered an opportunity to return to active employment to employees who were impacted by involuntary furloughs. The American Rescue Plan Act of 2021 ("PSP3") was enacted onMarch 11, 2021 , authorizingTreasury to provide additional assistance to a passenger air carrier or contractor that (1) received financial assistance under the PSP Extension Law; (2) provided air transportation as ofMarch 31, 2021 and (3) has not conducted involuntary terminations or furloughs or reduced pay rates or benefits betweenMarch 31, 2021 and the date on which the air carrier makes certain certifications that will be included in its PSP3 agreement withTreasury . The Company expects to enter into a PSP3 agreement withTreasury and expects 27 -------------------------------------------------------------------------------- Table of Contents to receive assistance of approximately$2.8 billion , of which approximately$0.8 billion is expected to be in the form of an unsecured loan. The Company also expects to issue, toTreasury , warrants to purchase up to approximately 1.5 million shares of UAL common stock at a strike price of$53.92 . During the first quarter of 2021, the Company offered Voluntary Separation Leave ("VSL") programs to certainU.S. based front-line employees. The Company offered, based on employee group, age and completed years of service, pay continuation, health care coverage and travel benefits. Approximately 4,500 employees elected to voluntarily separate from the Company. See Note 5 and Note 9 to the financial statements included in Part I, Item 1 of this report for additional information on charges related to these programs. OnApril 21, 2021 , United issued, through a private offering to eligible purchasers,$4.0 billion in aggregate principal amount of two series of notes, consisting of$2.0 billion in aggregate principal amount of 4.375% senior secured notes due 2026 (the "2026 Notes") and$2.0 billion in aggregate principal amount of 4.625% senior secured notes due 2029 (the "2029 Notes" and, together with the 2026 Notes, the "Notes," and each a "series" of Notes). Concurrently with the closing of the offering of the Notes, United also entered into a new Term Loan Credit and Guaranty Agreement (the "New Term Loan Facility") initially providing term loans (the "New Term Loans") up to an aggregate amount of$5.0 billion and a new Revolving Credit and Guaranty Agreement (the "New Revolving Credit Facility" and, together with the New Term Loan Facility, the "New Loan Facilities") initially providing revolving loan commitments of up to$1.75 billion . United borrowed the full amount of the New Term Loans onApril 21, 2021 . United used the net proceeds from the offering of the Notes and borrowings under the New Term Loan Facility (i) to repay in full the$1.4 billion aggregate principal amount outstanding under the term loan facility (the "2017 Term Loan Facility") included in the Amended and Restated Credit and Guaranty Agreement, dated as ofMarch 29, 2017 (the "Existing Credit Agreement"), the$1.0 billion aggregate principal amount outstanding under the revolving credit facility (the "2017 Revolving Credit Facility") included in the Existing Credit Agreement and the$520 million aggregate principal amount outstanding under the Loan and Guarantee Agreement, dated as ofSeptember 28, 2020 , among United, UAL,Treasury and the Bank of New York Mellon, as administrative agent, as amended (the "CARES Act Loan" and, together with the 2017 Term Loan Facility and the 2017 Revolving Credit Facility, the "Facilities") entered into pursuant to the loan program established pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), (ii) to pay fees and expenses relating to the offering of the Notes and (iii) for United's general corporate purposes. As a result of such repayments, the Facilities were terminated onApril 21, 2021 and no further borrowings may be made thereunder. See Note 8 to the financial statements included in Part I, Item 1 of this report for additional information on the Notes and the New Loan Facilities. The Company continues to manage its costs and reduce expenses. The Company has identified$1.9 billion of annual cost savings and believes it has a path to achieve at least$2.0 billion in structural reductions moving forward. RESULTS OF OPERATIONS The following discussion provides an analysis of our results of operations and reasons for material changes therein for the three months endedMarch 31, 2021 as compared to the corresponding period in 2020. First Quarter 2021 Compared to First Quarter 2020 The Company recorded a net loss of$1.4 billion in the first quarter of 2021 as compared to a net loss of$1.7 billion in the first quarter of 2020. The Company considers a key measure of its performance to be operating income (loss), which was a$1.4 billion loss for the first quarter of 2021, as compared to a$972 million loss for the first quarter of 2020, a$0.4 billion increase year-over-year, primarily as a result of more severe impacts of the global COVID-19 pandemic. Significant components of the Company's operating results for the three months endedMarch 31 are as follows (in millions, except percentage changes): 2021 2020 Increase (Decrease) % Change Operating revenue$ 3,221 $ 7,979 $ (4,758) (59.6) Operating expense 4,602 8,951 (4,349) (48.6) Operating loss (1,381) (972) 409 42.1 Nonoperating income (expense) (370) (1,142) (772) (67.6) Income tax benefit (394) (410) (16) (3.9) Net loss$ (1,357) $ (1,704) $ (347) (20.4) 28
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Certain consolidated statistical information for the Company's operations for
the three months ended
Increase
2021 2020 (Decrease) % Change
Passengers (thousands) (a) 14,674 30,359 (15,685) (51.7)
Revenue passenger miles ("RPMs" or "traffic")
(millions) (b) 17,248 43,229 (25,981) (60.1)
Available seat miles ("ASMs" or "capacity")
(millions) (c) 30,370 60,938 (30,568) (50.2)
Passenger load factor (d) 56.8 % 70.9 % (14.1) pts. N/A
Passenger revenue per available seat mile
("PRASM") (cents) 7.63 11.59 (3.96) (34.2)
Average yield per revenue passenger mile
("Yield") (cents) (e) 13.43 16.34 (2.91) (17.8)
Cargo revenue ton miles ("CTM") (millions) (f) 765 695 70 10.1
Cost per available seat mile ("CASM") (cents) 15.15 14.69 0.46 3.1
Average price per gallon of fuel, including fuel
taxes $ 1.74 $ 1.90 $ (0.16) (8.4)
Fuel gallons consumed (millions) 490 910 (420) (46.2)
Employee headcount, as of March 31 84,100 95,200 (11,100) (11.7)
(a) The number of revenue passengers measured by
each flight segment flown.
(b) The number of scheduled miles flown by revenue passengers.
(c) The number of seats available for passengers multiplied by the number of scheduled miles those seats are flown.
(d) Revenue passenger miles divided by available seat miles.
(e) The average passenger revenue received for each revenue passenger mile flown.
(f) The number of cargo revenue tons transported multiplied by the number of miles flown.
Operating Revenue. The table below shows year-over-year comparisons by type of
operating revenue for the three months ended March 31 (in millions, except for
percentage changes):
2021 2020 Increase (Decrease) % Change
Passenger revenue $ 2,316 $ 7,065 $ (4,749) (67.2)
Cargo 497 264 233 88.3
Other operating revenue 408 650 (242) (37.2)
Total operating revenue$ 3,221 $ 7,979 $ (4,758)
(59.6)
The table below presents selected first quarter passenger revenue and operating data, broken out by geographic region, expressed as year-over-year changes:
Increase (decrease) from 2020:
Domestic Atlantic Pacific Latin Total
Passenger revenue (in millions) $ (2,792) $ (867) $ (599) $ (491) $ (4,749)
Passenger revenue (62.0) % (80.8) % (87.1) % (61.4) % (67.2) %
Average fare per passenger (25.3) % (18.2) % 47.9 % (28.0) % (32.2) %
Yield (21.1) % (33.6) % 86.3 % (20.9) % (17.8) %
PRASM (27.6) % (54.4) % (49.9) % (48.0) % (34.2) %
Passengers (49.1) % (76.5) % (91.3) % (46.4) % (51.7) %
RPMs (traffic) (51.8) % (71.1) % (93.1) % (51.2) % (60.1) %
ASMs (capacity) (47.5) % (57.8) % (74.2) % (25.7) % (50.2) %
Passenger load factor (points) (5.9) (21.6) (51.3) (25.8) (14.1)
Passenger revenue decreased$4.7 billion , or 67.2%, in the first quarter of 2021 as compared to the year-ago period, primarily due to the impacts of the worldwide spread of COVID-19 and travel restrictions that started in the latter part of the first quarter of 2020. Cargo revenue increased$233 million , or 88.3%, in the first quarter of 2021 as compared to the year-ago period, primarily due to an increase in cargo-only flights with higher yields as a result of increased demand for critical goods during the COVID-19 pandemic. 29 -------------------------------------------------------------------------------- Table of Contents Other operating revenue decreased$242 million , or 37.2%, in the first quarter of 2021 as compared to the year-ago period primarily due to lower passenger volumes and a decline in mileage revenue from non-airline partners, including the co-branded credit card partner,JPMorgan Chase Bank, N.A . Operating Expenses. The table below includes data related to the Company's operating expenses for the three months endedMarch 31 (in millions, except for percentage changes): Increase 2021 2020 (Decrease) % Change Salaries and related costs$ 2,224 $ 2,955 $ (731) (24.7) Aircraft fuel 851 1,726 (875) (50.7) Depreciation and amortization 623 615 8 1.3 Landing fees and other rent 519 623 (104) (16.7) Regional capacity purchase 479 737 (258) (35.0) Aircraft maintenance materials and outside repairs 269 434 (165) (38.0) Distribution expenses 85 295 (210) (71.2) Aircraft rent 55 50 5 10.0 Special charges (credits) (1,377) 63 (1,440) NM Other operating expenses 874 1,453 (579) (39.8) Total operating expenses$ 4,602 $ 8,951 $ (4,349) (48.6) Salaries and related costs decreased$731 million , or 24.7%, in the first quarter of 2021 as compared to the year-ago period primarily due to lower headcount as a result of various employee voluntary separation programs since the start of the COVID-19 pandemic and$240 million in tax credits provided by the Employee Retention Credit under the CARES Act. Aircraft fuel expense decreased by$875 million , or 50.7%, in the first quarter of 2021 as compared to the year-ago period due to both lower average prices per gallon and reduced consumption. The table below presents the significant changes in aircraft fuel cost per gallon in the three months endedMarch 31, 2021 as compared to the year-ago period: (In millions) Average price per gallon 2021 2020 % Change 2021 2020 % Change Fuel expense$ 851 $ 1,726 (50.7) %$ 1.74 $ 1.90 (8.4) % Total fuel consumption (gallons) 490 910
(46.2) %
Landing fees and other rent decreased$104 million , or 16.7%, in the first quarter of 2021 as compared to the year-ago period primarily due to a decrease in capacity-based rent and landing fees. A portion of other rent, especially at airport facilities, is fixed in nature and is not impacted by the reduction in flights. Regional capacity purchase decreased$258 million , or 35.0%, in the first quarter of 2021 as compared to the year-ago period primarily due to significantly reduced regional flying as a result of COVID-19. Aircraft maintenance materials and outside repairs decreased$165 million , or 38.0%, in the first quarter of 2021 as compared to the year-ago period primarily due to lower volumes of flying and the timing of airframe maintenance events. Distribution expenses decreased$210 million , or 71.2%, in the first quarter of 2021 as compared to the year-ago period primarily due to lower credit card fees, commissions and lower volume of global distribution fees as a result of the overall decrease in passenger revenue due to the COVID-19 pandemic. Details of the Company's special charges (credits) include the following for the three months endedMarch 31 (in millions): 2021 2020 CARES Act grant$ (1,810) $ - Severance and benefit costs 417 - Impairment of assets - 50 (Gains) losses on sale of assets and other special charges 16 13 Special charges (credits)$ (1,377) $ 63
See Note 9 to the financial statements included in Part I, Item 1 of this report for additional information.
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Other operating expenses decreased $579 million , or 39.8%, in the first quarter
of 2021 as compared to the year ago period, primarily due to the impacts of
COVID-19 on our catering, airport ground handling, navigation fees, technology
projects, advertising and crew-related expenses as well as lower advertising and
other discretionary spend.
Nonoperating Income (Expense). The table below shows year-over-year comparisons
of the Company's nonoperating income (expense) for the three months ended March
31 (in millions, except for percentage changes):
Increase
2021 2020 (Decrease) % Change
Interest expense $ (353) $ (171) $ 182 106.4
Interest capitalized 17 21 (4) (19.0)
Interest income 7 26 (19) (73.1)
Unrealized losses on investments, net (22) (319) (297) (93.1)
Miscellaneous, net (19) (699) (680) (97.3)
Total $ (370) $ (1,142) $ (772) (67.6)
Interest expense increased $182 million , or 106.4%, in the first quarter of 2021
as compared to the year-ago period, primarily due to the issuance of new debt to
provide additional liquidity to the Company during the COVID-19 pandemic.
Unrealized losses on investments, net, were $22 million in the first quarter of
2021 as compared to $319 million in the year-ago period, primarily due to the
change in the market value of the Company's equity investment in Azul Linhas
Aéreas Brasileiras S.A. See Note 6 to the financial statements included in Part
I, Item 1 of this report for information related to this equity investment.
Miscellaneous, net decreased $680 million in the first quarter of 2021 as
compared to the year-ago period, primarily due to the $697 million of credit
loss allowances associated with the Company's Term Loan Agreement, with, among
others, BRW Aviation Holding LLC and BRW Aviation LLC , and the related guarantee
recorded in the first quarter of 2020, partially offset by $46 million of
special termination benefits related to voluntary separation programs under the
Company's postretirement medical programs recorded in the first quarter of 2021.
See Notes 5, 6, 7 and 9 to the financial statements included in Part I, Item 1
of this report for additional information.
Income Taxes. See Note 4 to the financial statements included in Part I, Item 1
of this report for information related to income taxes.
LIQUIDITY AND CAPITAL RESOURCES
Current Liquidity
As of March 31, 2021 , the Company had $13.0 billion in unrestricted cash, cash
equivalents and short-term investments, as compared to $11.7 billion at December
31, 2020 . As of March 31, 2021 , the Company also had approximately $7.0 billion
available for borrowing by United under the CARES Act Loan at any time until May
28, 2021 and $1.0 billion available for borrowing by United under the 2017
Revolving Credit Facility at any time until April 1, 2022 . See Note 8 to the
financial statements included in Part I, Item 1 of this report for a discussion
of the Notes and New Loan Facilities issued in April 2021 and the termination of
the CARES Act Loan and the 2017 Revolving Credit Facility.
The Company has taken a number of actions in response to the significant decline
in international and domestic demand for air travel related to the COVID-19
pandemic, as discussed under "Impact of the COVID-19 Pandemic and Outlook"
above. The Company continues to focus on reducing expenses and managing its
liquidity but has also begun preparing for an eventual recovery from the
COVID-19 pandemic. Since March 2021 , we have seen increasing demand for travel
both domestically and in countries where entry is permitted, and we are taking
steps, which include making certain investments in the recovery, to be prepared
if demand for travel continues to increase in line with recent customer booking
trends. However, the timing of demand recovery will be dependent on a number of
factors outside of our control, and we expect to continue to modify our cost
management structure and capacity as the timing of demand recovery becomes more
certain.
On January 15, 2021 , United entered into the PSP2 Agreement with Treasury ,
providing the Company with total funding of approximately $2.6 billion ,
consisting of approximately $1.9 billion as a direct grant and the PSP2 Note
with a principal amount of $753 million . See Note 8 to the financial statements
included in Part I, Item 1 of this report for a discussion of the PSP2 Note.
Several of the Company's debt agreements contain covenants that, among other
things, restrict the ability of the Company and its subsidiaries to incur
additional indebtedness and pay dividends on or repurchase stock. As of March
31, 2021 , UAL and United were in compliance with their respective debt
covenants.
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We have a significant amount of fixed obligations, including debt, leases of
aircraft, airport and other facilities, and pension funding obligations. As of
March 31, 2021 , the Company had approximately $35.3 billion of debt, finance
lease, operating lease and sale-leaseback obligations, including $2.6 billion
that will become due in the next 12 months. In addition, we have substantial
noncancelable commitments for capital expenditures, including the acquisition of
certain new aircraft and related spare engines.
As of March 31, 2021 , United had firm commitments and options to purchase
aircraft from The Boeing Company ("Boeing"), Airbus S.A.S. ("Airbus") and
Embraer S.A. ("Embraer") as presented in the table below:
Scheduled Aircraft Deliveries
Number of Firm Last Nine Months
Aircraft Type Commitments (a) of 2021 2022 After 2022
Airbus A321XLR 50 - - 50
Airbus A350 45 - - 45
Boeing 737 MAX 180 13 40 127
Boeing 787 9 9 - -
Embraer E175 4 4 - -
(a) United also has options and
purchase rights for additional
aircraft.
The aircraft listed in the table above are scheduled for delivery through 2030.
To the extent the Company and the aircraft manufacturers with whom the Company
has existing orders for new aircraft agree to modify the contracts governing
those orders, the amount and timing of the Company's future capital commitments
could change.
United also has an agreement to purchase seven used Boeing 737-700 aircraft with
expected delivery dates in 2021. In addition, United has an agreement to
purchase 15 used Airbus A319 aircraft, which it intends to sell, with expected
delivery dates in 2021 and 2022.
In 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 the delivery of each aircraft from Boeing, United assigned its
right to purchase such aircraft to the buyer, and simultaneous with the buyer's
purchase from Boeing, United entered into a long-term lease for such aircraft
with the buyer as lessor. Ten Boeing model aircraft were delivered in 2021 under
these transactions (and each is presently subject to a long-term lease to
United). Remaining aircraft in the agreements are scheduled to be delivered in
the last nine months of 2021.
As of March 31, 2021 , UAL and United have total capital commitments related to
the acquisition of aircraft and related spare engines, aircraft improvements and
non-aircraft capital commitments for approximately $23.7 billion , of which
approximately $4 billion , $2.9 billion , $2.8 billion , $1.7 billion , $2.1 billion
and $10.2 billion are due in the last nine months of 2021 and for the full years
2022, 2023, 2024, 2025 and thereafter, respectively. To the extent the Company
and Boeing agree to modify the timing of Boeing 737 MAX deliveries, the amount
and timing of the Company's future capital commitments could change.
We expect that our 2021 liquidity needs will be met through our existing
liquidity levels. While we have been able to access the capital markets to meet
our significant long-term debt and finance lease obligations and future
commitments for capital expenditures, including the acquisition of aircraft and
related spare engines, we must return to profitability in order to service our
debt and maintain appropriate liquidity levels for our long-term operating
needs. We may also pursue financing options for our firm order aircraft and
other related capital expenditures consistent with our historical practice prior
to the onset of the COVID-19 pandemic. The Company has backstop financing
commitments available from certain of its aircraft manufacturers for a limited
number of its future aircraft deliveries, subject to certain customary
conditions.
See Note 8 to the financial statements included in Part I, Item 1 of this report
for additional information on aircraft financing and other debt instruments.
As of March 31, 2021 , a substantial portion of the Company's assets, principally
aircraft and certain related assets, its loyalty program, certain route
authorities and airport slots, was pledged under various loan and other
agreements. As of April 21, 2021 , the Company pledged as collateral for the
Notes and the New Loan Facilities the following: (i) all of United's route
authorities granted by the U.S. Department of Transportation to operate
scheduled service between any international airport located in the United States
and any international airport located in any country other than the United
States (except Cuba ), (ii) United's rights to substantially all of its landing
and take-off slots at foreign and domestic airports, including at John F.
Kennedy International Airport , LaGuardia Airport and Ronald Reagan Washington
National Airport (subject to certain exclusions), and (iii) United's
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rights to use or occupy space at airport terminals, each to the extent necessary
at the relevant time for servicing scheduled air carrier service authorized by
an applicable route authority.
Credit Ratings. As of the filing date of this report, UAL and United had the
following corporate credit ratings:
S&P Moody's Fitch
UAL B+ Ba2 B+
United B+ * B+* The credit agency does not issue corporate credit ratings for subsidiary entities.
These credit ratings are below investment grade levels; however, the Company has
been able to secure financing with investment grade credit ratings for certain
enhanced equipment trust certificates ("EETCs"), term loans and secured bond
financings. Downgrades from current rating levels, among other things, could
restrict the availability and/or increase the cost of future financing for the
Company.
Sources and Uses of Cash
Operating Activities. Cash flows provided by operations were $447 million for
the three months ended March 31, 2021 compared to $63 million in the same period
in 2020. The increase is primarily attributable to government grant funding
provided under the PSP2 Agreement of $1.8 billion partially offset by continuing
operating losses as a result of the COVID-19 pandemic.
Investing Activities. Capital expenditures were approximately $0.4 billion and
$2.0 billion in the three months ended March 31, 2021 and March 31, 2020 ,
respectively. Capital expenditures for the three months ended March 31, 2021
were primarily attributable to advance deposits for future aircraft purchases.
Financing Activities. Significant financing events in the three months ended
March 31, 2021 were as follows:
Debt, Finance Lease and Other Financing Liability Principal Payments. During the
three months ended March 31, 2021 , the Company made payments for debt, finance
leases and other financing liabilities of $569 million .
Debt Issuances. During the three months ended March 31, 2021 , United received
and recorded $753 million from the PSP2 Note and $600 million of proceeds as
debt from the EETC pass-through trusts established in February 2021 . See Note 8
to the financial statements included in Part I, Item 1 of this report for
additional information.
Share Issuance. During the three months ended March 31, 2021 , the Company raised
approximately $532 million in net cash proceeds from the issuance and sale of
UAL common stock, par value $0.01 per share, through "at the market offerings"
under equity distribution agreements entered into in June 2020 and March 2021 .
During the quarter ended March 31, 2021 , approximately 11 million shares were
sold through "at the market offerings" under such equity distribution agreements
at an average price of $48.76 per share.
Commitments, Contingencies and Liquidity Matters. As described in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (the
"2020 Form 10-K"), the Company's liquidity may be adversely impacted by a
variety of factors, including, but not limited to, pension funding obligations,
reserve requirements associated with credit card processing agreements,
guarantees, commitments, contingencies and the ongoing impact of the COVID-19
pandemic.
See the 2020 Form 10-K and Notes 5, 6, 7, 8 and 9 to the financial statements
contained in Part I, Item 1 of this report for additional information.
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CRITICAL ACCOUNTING POLICIES
See "Critical Accounting Policies" in Part II, Item 7, Management's Discussion
and Analysis of Financial Condition and Results of Operations in the 2020 Form
10-K.
FORWARD-LOOKING INFORMATION
Certain statements throughout Part I, Item 2, Management's Discussion and
Analysis of Financial Condition and Results of Operations, and elsewhere in this
report, including statements regarding the potential impacts of the COVID-19
pandemic and steps the Company plans to take in response thereto, 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," "intends," "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 us on the date
of this report. 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
adverse impacts of the ongoing COVID-19 global pandemic, and possible outbreaks
of another disease or similar public health threat in the future, on our
business, operating results, financial condition, liquidity and near-term and
long-term strategic operating plan, including possible additional adverse
impacts resulting from the duration and spread of the pandemic; unfavorable
economic and political conditions in the United States and globally; the highly
competitive nature of the global airline industry and susceptibility of the
industry to price discounting and changes in capacity; high and/or volatile fuel
prices or significant disruptions in the supply of aircraft fuel; our reliance
on technology and automated systems to operate our business and the impact of
any significant failure or disruption of, or failure to effectively integrate
and implement, the technology or systems; our reliance on third-party service
providers and the impact of any failure of these parties to perform as expected,
or interruptions in our relationships with these providers or their provision of
services; adverse publicity, harm to our brand; reduced travel demand and
potential tort liability as a result of an accident, catastrophe or incident
involving us, our regional carriers, our codeshare partners, or another airline;
terrorist attacks, international hostilities or other security events, or the
fear of terrorist attacks or hostilities, even if not made directly on the
airline industry; increasing privacy and data security obligations or a
significant data breach; disruptions to our regional network and United Express
flights provided by third-party regional carriers; the failure of our
significant investments in other airlines and the commercial relationships that
we have with those carriers to produce the returns or results we expect; further
changes to the airline industry with respect to alliances and joint business
arrangements or due to consolidations; changes in our network strategy or other
factors outside our control resulting in less economic aircraft orders, costs
related to modification or termination of aircraft orders or entry into less
favorable aircraft orders; our reliance on single suppliers to source a majority
of our aircraft and certain parts, and the impact of any failure to obtain
timely deliveries, additional equipment or support from any of these suppliers;
the impacts of union disputes, employee strikes or slowdowns, and other
labor-related disruptions on our operations; extended interruptions or
disruptions in service at major airports where we operate; the impacts of the
United Kingdom's withdrawal from the European Union on our operations in the
United Kingdom and elsewhere; the impacts of seasonality and other factors
associated with the airline industry; our failure to realize the full value of
our intangible assets or our long-lived assets, causing us to record
impairments; any damage to our reputation or brand image; the limitation of our
ability to use our net operating loss carryforwards and certain other tax
attributes to offset future taxable income for U.S. federal income tax purposes;
the costs of compliance with extensive government regulation of the airline
industry; costs, liabilities and risks associated with environmental regulation
and climate change; our inability to accept or integrate new aircraft into our
fleet as planned; the impacts of our significant amount of financial leverage
from fixed obligations, the possibility we may seek material amounts of
additional financial liquidity in the short-term and the impacts of insufficient
liquidity on our financial condition and business; failure to comply with the
covenants in the MileagePlus financing agreements, resulting in the possible
acceleration of the MileagePlus indebtedness, foreclosure upon the collateral
securing the MileagePlus indebtedness or the exercise of other remedies; failure
to comply with financial and other covenants governing our other debt; changes
in, or failure to retain, our senior management team or other key employees;
current or future litigation and regulatory actions, or failure to comply with
the terms of any settlement, order or arrangement relating to these actions;
increases in insurance costs or inadequate insurance coverage; and other risks
and uncertainties set forth under Part I, Item 1A., Risk Factors, of our 2020
Form 10-K, as well as
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other risks and uncertainties set forth from time to time in the reports we file
with the
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