Item 1.01 Entry into a Material Definitive Agreement. Payroll Support Program Extension AgreementUnited Airlines Holdings, Inc. ("UAL") andUnited Airlines, Inc. , a wholly-owned subsidiary of UAL ("United" and, together with UAL, the "Company") submitted an application to theUnited States Department of the Treasury (the "U.S. Treasury Department ") 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"). OnJanuary 15, 2021 , in connection with the Payroll Support Program, United entered into a Payroll Support Program Extension Agreement (the "PSP Agreement") with theU.S. Treasury Department providing the Company with total funding of approximately$2.6 billion . Pursuant to the PSP Agreement, United and its affiliates will be required to comply with certain provisions of the PSP Extension Law, including, among others, the requirement that all funds provided under the Payroll Support Program will be used by United exclusively for the continuation of payment of itsU.S. employee wages, salaries and benefits, including the payment of lost wages, salaries and benefits to returningU.S. employees; requirements to maintainU.S. employment levels from the date of the PSP Agreement throughMarch 31, 2021 ; the requirements to recall (as such term is defined in the PSP Agreement), not later than 72 hours after the PSP Agreement has been executed, anyU.S. employees subject to involuntary termination or furlough betweenOctober 1, 2020 and the date of the PSP Agreement, compensate such returning employees for certain lost salary, wages and benefits betweenDecember 1, 2020 and the date of the PSP Agreement and restore certain rights and protections for such returning employees; provisions prohibiting certain reductions inU.S. employee wages, salaries and benefits; provisions prohibiting the payment of dividends and the repurchase of certain equity untilMarch 31, 2022 ; audit and reporting requirements; provisions to comply with certain continuation of service requirements untilMarch 1, 2022 ; and provisions restricting the payment of certain executive compensation untilOctober 1, 2022 . Promissory Note OnJanuary 15, 2021 , UAL issued a promissory note (the "PSP Note") to theU.S. Treasury Department evidencing senior unsecured indebtedness of UAL in the initial principal amount of approximately$361 million . The principal amount of the PSP Note will increase in an amount equal to 30% of any disbursement made by theU.S. Treasury Department to United under the PSP Agreement after the initial issuance date. The aggregate principal amount of the PSP Note after all disbursements will be approximately$753 million . The PSP Note will be guaranteed by United, and will mature ten years after issuance onJanuary 15, 2031 (the "Maturity Date"). If any subsidiary of UAL (other than United) guarantees other unsecured indebtedness of UAL with a principal balance in excess of a specified amount, then the subsidiary shall be required to guarantee the obligations of UAL under the PSP Note. UAL may, at its option, prepay the PSP Note, at any time, and from time to time, at par. UAL is required to prepay the PSP Note upon the occurrence of certain change of control triggering events. The PSP Note does not require any amortization, and is to be repaid in full on the Maturity Date. Interest on the PSP Note is payable semi-annually in arrears on the last business day of March and September of each year, beginning onMarch 31, 2021 , at a rate of 1.00% in years 1 through 5, and at the Secured Overnight Financing Rate (SOFR) plus 2.00% in years 6 through 10. Warrant Agreement In addition to the PSP Note, UAL also entered into a warrant agreement (the "Warrant Agreement") with theU.S. Treasury Department onJanuary 15, 2021 , pursuant to which UAL will issue to theU.S. Treasury Department warrants to purchase up to approximately 1.7 million shares of UAL common stock, pro rata in conjunction with increases to the principal amount outstanding under the PSP Note (the "Warrants"), with an initial issuance of warrants to purchase up to approximately 0.8 million shares of common stock. The Warrants will have a strike price of$43.26 per share (which was the closing price of UAL's common stock onThe Nasdaq Stock Market onDecember 24, 2020 ). The Warrants will expire five years after issuance, and are exercisable either through net share settlement in cash or in shares of UAL common stock, at UAL's option. The Warrants contain customary anti-dilution provisions, registration rights and are freely transferable. Pursuant to the terms of the Warrants, Warrant holders do not have any voting rights. The foregoing descriptions do not purport to be complete and are qualified in their entirety by reference to each of the PSP Agreement, the PSP Note, the Warrant Agreement and the Form of Warrant. The PSP Note, the Warrant Agreement, the Form of Warrant and the PSP Agreement are attached as Exhibits 4.1, 4.2, 4.3 and 10.1, respectively, to this Current Report on Form 8-K and are incorporated herein by reference. 2 -------------------------------------------------------------------------------- Third Amendment to Loan and Guarantee Agreement OnJanuary 15, 2021 (the "Amendment Date"), the Company entered into a Third Amendment to Loan and Guarantee Agreement, dated as of the Amendment Date (the "Amendment"), which amended the Loan and Guarantee Agreement dated as ofSeptember 28, 2020 (as amended and restated by the Restatement Agreement datedNovember 6, 2020 and by the Second Amendment to Loan and Guarantee Agreement dated as ofDecember 8, 2020 , the "Previous Credit Agreement", and, the Previous Credit Agreement, as amended by the Amendment, the "Amended 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, theU.S. Treasury Department , as lender, andThe Bank of New York Mellon , as administrative agent and collateral agent. The Amendment (i) extends the termination date of the commitments for the$7.491 billion term loan facility (the "Term Loan Facility") under the Amended Credit Agreement fromMarch 26, 2021 toMay 28, 2021 , and (ii) includes certain technical amendments. OnSeptember 28, 2020 , United borrowed the initial term loan under the Term Loan Facility in an amount equal to$520 million . United has not borrowed additional amounts under the Term Loan Facility as of the date of this report. The other material terms of the Previous Credit Agreement remain effective as described in the Current Report on Form 8-K of the Company filed on September 30, 2020 as updated by the Current Report on Form 8-K of the Company filed on November 9, 2020 and by the Current Report on Form 8-K of the Company filed onDecember 8, 2020 . The foregoing description does not purport to be complete and is qualified in its entirety by reference to each of the Restatement Agreement datedNovember 6, 2020 and the Second Amendment to Loan and Guarantee Agreement dated as ofDecember 8, 2020 , copies of which will be filed as exhibits to the Company's Annual Report on Form 10-K for the year endingDecember 31, 2020 , and by reference to the Amendment (including the Amended Credit Agreement), a copy of which will be filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter endingMarch 31, 2021 . Item 2.02 Results of Operations and Financial Condition. OnJanuary 15, 2021 , UAL issued a press release announcing the financial results of the Company for fourth quarter and full year 2020. The press release is attached as Exhibit 99.1 and is incorporated herein by reference. The information in this Item 2.02, including Exhibit 99.1, is being furnished and shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that Section and shall not be deemed incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended (the "Securities Act"), except as shall be expressly set forth by specific reference in such filing. Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. The information described under Item 1.01 is incorporated herein by reference to the extent responsive to Item 2.03. Item 3.02 Unregistered Sales ofEquity Securities . The information described under Item 1.01 is incorporated herein by reference to the extent responsive to Item 3.02. The Warrants were or will be issued pursuant to an exemption from registration provided for under Section 4(a)(2) of the Securities Act. Item 8.01 Other Events. Financial Results for Fourth Quarter and Full Year 2020 The following are certain excerpts from UAL's press release announcing the financial results of the Company for fourth quarter and full year 2020: •Since the beginning of the COVID-19 crisis, United has raised over$26 billion in liquidity and made important progress in reducing core cash burn (see detailed chart below) to ensure the company's survival. Over the last three quarters, the company has identified$1.4 billion of annual cost savings and has a path to achieve at least$2.0 billion in structural reductions moving forward. United ended 2020 with$19.7 billion in liquidity1, including an undrawn revolver and funds available under the CARES Act loan program from theU.S. Treasury . •Reported fourth-quarter net loss2 of$1.9 billion ,$7.1 billion for the full-year 2020. 3 -------------------------------------------------------------------------------- •Reported fourth-quarter total operating revenue of$3.4 billion , down 69% versus fourth-quarter 2019. •Reported fourth-quarter operating expenses down 45% versus fourth-quarter 2019, down 42% excluding special charges3. •Received$968 million in net proceeds from the sale of 20.8 million shares in the ATM program in the fourth quarter 2020. For the full year 2020, total net proceeds were$989 million from the sale of 21.4 million shares through the ATM program. •Expects first quarter 2021 capacity to be down at least 51 percent versus the first quarter of 2019. •Reported fourth-quarter daily cash burn4 of$23 million , plus$10 million of average debt principal payments and severance payments per day. •Reported fourth-quarter core cash burn4 of$19 million per day, an improvement of an average of$5 million per day versus the third-quarter 2020. •Core cash burn captures underlying operational performance of the company throughout the pandemic; a reconciliation with cash burn4 is provided below. $M/day 2Q20 3Q20 4Q20 Cash burn4$(40) $(25) $(33) Debt principal and severance payments (3) (4) (10) Timing of certain payments5 2 1 (2) Investments in the recovery6 - (1) (2) Capital expenditures, net of flight equipment purchase deposit returns - 4 (1) Core cash burn4$(38) $(24) $(19) 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$7 billion available under the CARES Act Loan program. 2 Excludes operating and nonoperating special charges, and unrealized gains and losses on investments. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in the tables accompanying this release. 3 Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in the tables accompanying this release. 4 Cash burn, as previously guided, is defined as: Net cash from operations, less investing and financing activities. Proceeds from the issuance of new debt (excluding expected aircraft financing), government grants associated with the Payroll Support Program of the CARES Act, issuance of new stock, net proceeds from the sale of short-term and other investments and changes in certain restricted cash balances are not included in this figure. Core cash burn is defined as: Cash burn, as further adjusted to exclude: debt principal payments, timing of certain payments5, capital expenditures (net of flight equipment purchase deposit returns), investments in the recovery6 and severance payments. Amounts may not add due to rounding. See the tables accompanying this release for further information. 5 Timing of certain payments refers to exclusion of payments in the quarter that had been deferred from prior periods or additions of payments that were deferred to a future period to maximize cash preservation. 6 Investments in the recovery primarily include, but are not limited to, spending on engine and airframe maintenance to prepare for the efficient operations ramp up as air travel demand returns. 4
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UNITED AIRLINES HOLDINGS, INC STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED) Three Months Ended % Year Ended % December 31, Increase/ December 31,
Increase/
(In millions, except per share data) 2020 2019 (Decrease) 2020 2019 (Decrease) Operating revenue: Passenger$ 2,410 $ 9,933 (75.7)$ 11,805 $ 39,625 (70.2) Cargo 560 316 77.2 1,648 1,179 39.8 . . . Item 9.01 Financial Statements and Exhibits. Exhibit No. Description Promissory Note, dated as of January 15, 2021 , among UAL, United, 4.1 as guarantor, and the United States Department of
the
Warrant Agreement, dated as of January 15, 2021, between UAL and the United 4.2 States Department of the Treasury. 4.3 Form of Warrant (included in Exhibit 4.2 as Annex B thereto). Payroll Support Program Agreement, dated as of January 15, 2021 , 10.1 between United and the United States Department of the Treasury. Press Release issued by United Airlines Holdings, Inc. dated January 20, 99.1 2021. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) 14
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