What changed in this filing

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Item 1. Financial Statements

2021-10-20 compared with 2021-07-22 · 238 added, 230 removed, 654 unchanged (42% of the section changed)

3 unchanged sentences

(In millions, except per share amounts)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

16 unchanged sentences

Total operating expense 6,713 4,104 17,056 16,167

Operating loss ( 270 ) ( 1,637 ) ( 1,651 ) ( 2,609 )

Operating income (loss) 1,037 ( 1,615 ) ( 614 ) ( 4,224 )

Nonoperating income (expense):

5 unchanged sentences

Total nonoperating expense, net ( 434 ) ( 717 ) ( 1,098 ) ( 2,225 )

Loss before income tax benefit ( 564 ) ( 2,003 ) ( 2,315 ) ( 4,117 )

Income tax benefit ( 130 ) ( 376 ) ( 524 ) ( 786 )

Net loss $ ( 434 ) $ ( 1,627 ) $ ( 1,791 ) $ ( 3,331 )

Loss per share, basic and diluted $ ( 1.34 ) $ ( 5.79 ) $ ( 5.60 ) $ ( 12.59 )

Income (loss) before income taxes 603 ( 2,332 ) ( 1,712 ) ( 6,449 )

Income tax expense (benefit) 130 ( 491 ) ( 394 ) ( 1,277 )

Net income (loss) $ 473 $ ( 1,841 ) $ ( 1,318 ) $ ( 5,172 )

Earnings (loss) per share, basic $ 1.46 $ ( 6.33 ) $ ( 4.10 ) $ ( 18.91 )

Earnings (loss) per share, diluted $ 1.44 $ ( 6.33 ) $ ( 4.10 ) $ ( 18.91 )

The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

2 unchanged sentences

(In millions)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Net loss $ ( 434 ) $ ( 1,627 ) $ ( 1,791 ) $ ( 3,331 )

Net income (loss) $ 473 $ ( 1,841 ) $ ( 1,318 ) $ ( 5,172 )

Other comprehensive income (loss), net of tax:

2 unchanged sentences

Total other comprehensive income (loss), net of tax ( 10 ) 250 15 ( 291 )

Total comprehensive loss, net $ ( 422 ) $ ( 2,115 ) $ ( 1,766 ) $ ( 3,872 )

Total comprehensive income (loss), net $ 463 $ ( 1,591 ) $ ( 1,303 ) $ ( 5,463 )

The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

2 unchanged sentences

(In millions, except shares)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Current assets:

30 unchanged sentences

(In millions, except shares)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

LIABILITIES AND STOCKHOLDERS' EQUITY

7 unchanged sentences

Current maturities of finance leases 116 182

Payroll Support Program deferred credit 1,132 —

Other 1,083 724

15 unchanged sentences

authorized 1,000,000,000 shares;

outstanding 323,610,765 and 311,845,232 shares at June 30, 2021 and December 31, 2020, respectively

outstanding 323,806,610 and 311,845,232 shares at September 30, 2021 and December 31, 2020, respectively

Additional capital invested 9,094 8,366

8 unchanged sentences

(In millions)

Six Months Ended June 30,

Nine Months Ended

September 30,

Cash Flows from Operating Activities:

2 unchanged sentences

Capital expenditures, net of flight equipment purchase deposit returns ( 1,571 ) ( 1,630 )

Purchases of short-term investments — ( 550 )

Proceeds from sale of short-term investments 184 1,774

Purchases of short-term and other investments ( 47 ) ( 552 )

Proceeds from sale of short-term and other investments 271 2,182

Other, net 23 10

Net cash used in investing activities ( 1,110 ) ( 760 )

Net cash provided by (used in) investing activities ( 1,324 ) 10

Cash Flows from Financing Activities:

12 unchanged sentences

Right-of-use assets acquired through operating leases 627 64

Notes receivable and warrants received for entering into agreements

Notes receivable and warrants received for entering into aircraft and other ancillary business agreements

(a) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheet:

12 unchanged sentences

Shares Amount

Balance at March 31, 2021 323.6 $ 4 $ 8,923 $ ( 3,834 ) $ 1,239 $ ( 1,126 ) $ 5,206

Net loss — — — — ( 434 ) — ( 434 )

Other comprehensive income — — — — — 12 12

Balance at June 30, 2021 323.6 $ 4 $ 9,042 $ ( 3,832 ) $ 804 $ ( 1,114 ) $ 4,904

Net income — — — — 473 — 473

Other comprehensive loss — — — — — ( 10 ) ( 10 )

Stock-settled share-based compensation — — 69 — — — 69

Warrants issued — — 52 — — — 52

Stock issued for share-based awards, net of shares withheld for tax 0.2 — ( 17 ) 18 ( 6 ) — ( 5 )

Balance at June 30, 2021 323.6 $ 4 $ 9,042 $ ( 3,832 ) $ 804 $ ( 1,114 ) $ 4,904

Balance at September 30, 2021 323.8 $ 4 $ 9,094 $ ( 3,814 ) $ 1,271 $ ( 1,124 ) $ 5,431

Balance at December 31, 2020 311.8 $ 4 $ 8,366 $ ( 3,897 ) $ 2,626 $ ( 1,139 ) $ 5,960

5 unchanged sentences

Stock issued for share-based awards, net of shares withheld for tax 1.0 — ( 72 ) 83 ( 37 ) — ( 26 )

Balance at September 30, 2021 323.8 $ 4 $ 9,094 $ ( 3,814 ) $ 1,271 $ ( 1,124 ) $ 5,431

Balance at June 30, 2020 291.0 $ 3 $ 7,307 $ ( 3,899 ) $ 6,365 $ ( 1,259 ) $ 8,517

Balance at March 31, 2020 247.3 $ 3 $ 6,096 $ ( 3,901 ) $ 7,991 $ ( 771 ) $ 9,418

Net loss — — — — ( 1,841 ) — ( 1,841 )

Other comprehensive loss — — — — — ( 488 ) ( 488 )

Other comprehensive income — — — — — 250 250

Stock-settled share-based compensation — — 38 — — — 38

Issuance of common stock 43.7 — 1,135 — — — 1,135

Warrants issued — — 40 — — — 40

Stock issued for share-based awards, net of shares withheld for tax — — ( 2 ) 1 — — ( 1 )

Balance at June 30, 2020 291.0 $ 3 $ 7,307 $ ( 3,899 ) $ 6,365 $ ( 1,259 ) $ 8,517

Balance at September 30, 2020 291.0 $ 3 $ 7,383 $ ( 3,898 ) $ 4,524 $ ( 1,009 ) $ 7,003

Balance at December 31, 2019 251.2 $ 3 $ 6,129 $ ( 3,599 ) $ 9,716 $ ( 718 ) $ 11,531

4 unchanged sentences

Repurchases of common stock ( 4.4 ) — — ( 342 ) — — ( 342 )

Warrants issued — — 57 — — — 57

Stock issued for share-based awards, net of shares withheld for tax 0.5 — ( 58 ) 43 ( 3 ) — ( 18 )

Warrants issued — — 97 — — — 97

Adoption of new accounting standard (a) — — — — ( 17 ) — ( 17 )

Balance at June 30, 2020 291.0 $ 3 $ 7,307 $ ( 3,899 ) $ 6,365 $ ( 1,259 ) $ 8,517

Balance at September 30, 2020 291.0 $ 3 $ 7,383 $ ( 3,898 ) $ 4,524 $ ( 1,009 ) $ 7,003

(a) Transition adjustment due to the adoption of Accounting Standards Update No.

4 unchanged sentences

(In millions)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

16 unchanged sentences

Total operating expense 6,713 4,104 17,055 16,166

Operating loss ( 269 ) ( 1,636 ) ( 1,650 ) ( 2,608 )

Operating income (loss) 1,037 ( 1,615 ) ( 613 ) ( 4,223 )

Nonoperating income (expense):

2 unchanged sentences

Interest income 11 8 30 45

Unrealized losses on investments, net 147 9 125 ( 310 )

Unrealized gains (losses) on investments, net ( 34 ) 15 91 ( 295 )

Miscellaneous, net 21 ( 411 ) ( 48 ) ( 1,317 )

Total nonoperating expense, net ( 433 ) ( 717 ) ( 1,098 ) ( 2,225 )

Loss before income tax benefit ( 564 ) ( 2,003 ) ( 2,315 ) ( 4,116 )

Income tax benefit ( 130 ) ( 377 ) ( 524 ) ( 786 )

Net loss $ ( 434 ) $ ( 1,626 ) $ ( 1,791 ) $ ( 3,330 )

Income (loss) before income taxes 604 ( 2,332 ) ( 1,711 ) ( 6,448 )

Income tax expense (benefit) 130 ( 491 ) ( 394 ) ( 1,277 )

Net income (loss) $ 474 $ ( 1,841 ) $ ( 1,317 ) $ ( 5,171 )

The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

2 unchanged sentences

(In millions)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Net loss $ ( 434 ) $ ( 1,626 ) $ ( 1,791 ) $ ( 3,330 )

Net income (loss) $ 474 $ ( 1,841 ) $ ( 1,317 ) $ ( 5,171 )

Other comprehensive income (loss), net of tax:

2 unchanged sentences

Total other comprehensive income (loss), net of tax ( 10 ) 250 15 ( 291 )

Total comprehensive loss, net $ ( 422 ) $ ( 2,114 ) $ ( 1,766 ) $ ( 3,871 )

Total comprehensive income (loss), net $ 464 $ ( 1,591 ) $ ( 1,302 ) $ ( 5,462 )

The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

2 unchanged sentences

(In millions, except shares)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Current assets:

30 unchanged sentences

(In millions, except shares)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

LIABILITIES AND STOCKHOLDER'S EQUITY

7 unchanged sentences

Current maturities of finance leases 116 182

Payroll Support Program deferred credit 1,132 —

Other 1,087 728

14 unchanged sentences

authorized 1,000 shares;

issued and outstanding 1,000 shares at both June 30, 2021 and December 31, 2020

issued and outstanding 1,000 shares at both September 30, 2021 and December 31, 2020

Additional capital invested 254 85

8 unchanged sentences

(In millions)

Six Months Ended June 30,

Nine Months Ended

September 30,

Cash Flows from Operating Activities:

2 unchanged sentences

Capital expenditures, net of flight equipment purchase deposit returns ( 1,571 ) ( 1,630 )

Purchases of short-term investments — ( 550 )

Proceeds from sale of short-term investments 184 1,774

Purchases of short-term and other investments ( 47 ) ( 552 )

Proceeds from sale of short-term and other investments 271 2,182

Other, net 23 10

Net cash used in investing activities ( 1,110 ) ( 760 )

Net cash provided by (used in) investing activities ( 1,324 ) 10

Cash Flows from Financing Activities:

12 unchanged sentences

Right-of-use assets acquired through operating leases 627 64

Notes receivable and warrants received for entering into agreements

Notes receivable and warrants received for entering into aircraft and other ancillary business agreements

(a) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheet:

10 unchanged sentences

Other Comprehensive Income (Loss) (Receivable from) Payable to Related Parties, Net Total

Balance at March 31, 2021 $ 117 $ 3,582 $ ( 1,126 ) $ 2,602 $ 5,175

Net loss — ( 434 ) — — ( 434 )

Other comprehensive income — — 12 — 12

Balance at June 30, 2021 $ 185 $ 3,148 $ ( 1,114 ) $ 2,653 $ 4,872

Net income — 474 — — 474

Other comprehensive loss — — ( 10 ) — ( 10 )

Stock-settled share-based compensation 69 — — — 69

Other — — — ( 6 ) ( 6 )

Balance at June 30, 2021 $ 185 $ 3,148 $ ( 1,114 ) $ 2,653 $ 4,872

Balance at September 30, 2021 $ 254 $ 3,622 $ ( 1,124 ) $ 2,647 $ 5,399

Balance at December 31, 2020 $ 85 $ 4,939 $ ( 1,139 ) $ 2,043 $ 5,928

4 unchanged sentences

Other — — — 72 72

Balance at September 30, 2021 $ 254 $ 3,622 $ ( 1,124 ) $ 2,647 $ 5,399

Balance at June 30, 2020 $ 30 $ 8,676 $ ( 1,259 ) $ 1,038 $ 8,485

Balance at March 31, 2020 $ 10 $ 10,302 $ ( 771 ) $ ( 161 ) $ 9,380

Net loss — ( 1,841 ) — — ( 1,841 )

Other comprehensive loss — — ( 488 ) — ( 488 )

Other comprehensive income — — 250 — 250

Stock-settled share-based compensation 38 — — — 38

Impact of UAL common stock issuance — — — 1,135 1,135

Other — — — 40 40

Balance at June 30, 2020 $ 30 $ 8,676 $ ( 1,259 ) $ 1,038 $ 8,485

Balance at September 30, 2020 $ 68 $ 6,835 $ ( 1,009 ) $ 1,078 $ 6,972

Balance at December 31, 2019 $ — $ 12,353 $ ( 718 ) $ ( 143 ) $ 11,492

4 unchanged sentences

Impact of UAL common stock issuance 1,135 1,135

Other — — — 46 46

Adoption of new accounting standard (a) — ( 17 ) — — ( 17 )

Balance at June 30, 2020 $ 30 $ 8,676 $ ( 1,259 ) $ 1,038 $ 8,485

Other — — — 86 86

Balance at September 30, 2020 $ 68 $ 6,835 $ ( 1,009 ) $ 1,078 $ 6,972

(a) Transition adjustment due to the adoption of Accounting Standards Update No.

16 unchanged sentences

Some information and footnote disclosures normally included in financial statements that comply with accounting principles generally accepted in the United States ("GAAP") have been condensed or omitted as permitted by the SEC.

The financial statements include all adjustments, including normal recurring adjustments and other adjustments, which are considered necessary for a fair presentation of the Company's financial position and results of operations.

The UAL and United financial statements should be read together with the information included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (the "2020 Form 10-K").

4 unchanged sentences

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 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 in different markets, the introduction and spread of new variants of the virus that may be resistant to currently approved vaccines and the continuation of existing or implementation of new government travel restrictions.

The Company began experiencing a significant decline in international and domestic travel demand related to COVID-19 during the first quarter of 2020, and this reduction in demand has continued through the date of this report.

However, since March 2021, the Company has seen increasing demand for travel both domestically and in countries where entry is permitted.

The Company cut, relative to second quarter 2019 capacity, approximately 46 % of its scheduled capacity for the second quarter of 2021 and expects its third quarter scheduled capacity to be down approximately 26 % versus the third quarter of 2019.

The Company has seen increasing demand for travel both domestically and in countries where entry is permitted;

however, as the situation surrounding the COVID-19 pandemic remains fluid, the pandemic has continued to negatively impact travel demand.

It remains difficult to reasonably assess or predict the full extent of the ongoing impact of the COVID-19 pandemic on the Company's longer-term operational and financial performance, which will depend on a number of future developments, many of which are outside the Company's control, such as the ultimate duration of and factors impacting the recovery from the pandemic (including the efficacy and speed of vaccination programs in curbing the spread of the virus in different markets, the introduction and spread of new variants of the virus that may be resistant to currently approved vaccines and the continuation of existing or implementation of new government travel restrictions), the volatility of aircraft fuel prices, customer behavior changes and fluctuations in demand for air travel, among others.

The Company's recovery from the COVID-19 pandemic has not followed a linear path, and due to the significant uncertainty that remains, its future operating performance, particularly in the short-term, may be subject to volatility.

The Company is taking steps to be prepared for recovery as demand for travel continues to increase in line with recent customer booking trends, which include making certain investments in the recovery.

The Company cut, relative to third quarter 2019 capacity, approximately 28 % of its scheduled capacity for the third quarter of 2021 and expects its fourth quarter scheduled capacity to be down approximately 23 % versus the fourth quarter of 2019.

The Company will continue to monitor booking trends for future travel and adjust its capacity as needed.

1 unchanged sentence

The Company has identified various permanent structural cost reductions including improvements in labor efficiencies.

During the first quarter of 2021, the Company offered voluntary leaves of absences to certain U.S.-based front-line employees.

During the first quarter of 2021, the Company offered voluntary leaves of absence to certain U.S.-based front-line employees.

This program included (based on employee group, age and completed years of service) a partially-paid leave of absence with active health care coverage and travel privileges.

3 unchanged sentences

The Company entered into a number of transactions to improve its liquidity and manage its capital.

In the first half of 2021, the Company:

• 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);

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;

In the first nine months of 2021, the Company:

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");

• 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;

• repaid 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 of March 29, 2017 (the "Existing Credit Agreement");

6 unchanged sentences

On January 15, 2021, United entered into a Payroll Support Program Extension Agreement (the "PSP2 Agreement") with Treasury providing the Company with total funding of approximately $ 3.0 billion, pursuant to the Payroll Support Program established under Subtitle A of Title IV of Division N of the Consolidated Appropriations Act, 2021.

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.

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 who were previously impacted by involuntary furloughs.

Approximately $ 2.1 billion was provided as a direct grant and $ 870 million as indebtedness evidenced by a 10 -year senior unsecured promissory note (the "PSP2 Note").

See Note 2 of this report for additional information on the warrants issued in connection with the PSP2 Note and Note 8 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 U.S.

employees who were impacted by involuntary furloughs.

On April 29, 2021, in connection with the Payroll Support Program established under Section 7301 of the American Rescue Plan Act of 2021, United entered into a Payroll Support Program 3 Agreement (the "PSP3 Agreement") with Treasury providing the Company with total funding of approximately $ 2.8 billion.

2 unchanged sentences

See Note 2 of this report for additional information on the warrants issued in connection with the PSP3 Note and Note 8 of this report for a discussion of the PSP3 Note.

United Next .

On June 27, 2021, United entered into a supplemental agreement to that certain Purchase Agreement, dated May 15, 2018 with The Boeing Company ("Boeing") for a firm narrowbody aircraft order of 200 Boeing 737 MAX aircraft.

The order consists of 150 Boeing 737 MAX 10s and 50 Boeing 737 MAX 8s.

Also on June 27, 2021, United entered into an amendment to that certain Purchase Agreement, dated December 3, 2019 with Airbus S.A.S ("Airbus") for a firm narrowbody aircraft order of 70 Airbus A321neo aircraft.

The firm orders of 200 Boeing 737 MAX aircraft and 70 Airbus A321neo aircraft are expected to be delivered starting in 2023 through 2028 and 2026, respectively.

NOTE 1 - REVENUE

2 unchanged sentences

Department of Transportation) (in millions):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

9 unchanged sentences

The Company's Advance ticket sales liability also includes credits issued to customers on electronic travel certificates ("ETCs") and future flight credits ("FFCs"), primarily for ticket cancellations, which can be applied towards a purchase of a new ticket.

In February 2021, the Company extended the expiration dates for all tickets issued between May 1, 2019 and March 31, 2021 to March 31, 2022.

As of June 30, 2021, the Company's Advance ticket sales liability included $ 2.6 billion related to these ETCs and FFCs.

The Company is unable to estimate the amount of the ETCs and FFCs that will be used within the next 12 months and has classified the entire amount of the Advance ticket sales liability in current liabilities even though some of the ETCs could be used after the next 12 months.

Also, the Company is unable to estimate the amount of the June 30, 2021 Advance ticket sales that will be recognized in revenue in 2021 compared to amounts refunded to customers or exchanged into ETCs.

The Company records breakage revenue on the travel date for its estimate of tickets that will expire unused.

To determine breakage, the Company uses its historical experience with refundable and nonrefundable expired tickets and other facts, such as recent aging trends, program changes and modifications that could affect the ultimate expiration patterns of tickets.

ETCs are valid up to two years from the date

however, all ETCs due to expire prior to December 31, 2022 have been extended until December 31, 2022.

FFCs are valid for 12 months from the original ticket date;

however, all FFCs issued on or before December 31, 2021 have been extended to be valid until December 31, 2022.

As of September 30, 2021, the Company's Advance ticket sales liability included $ 3.0 billion related to these ETCs and FFCs.

The Company estimates the value of tickets that will expire unused ("breakage") and recognizes revenue at the scheduled flight date.

To determine breakage, the Company uses its historical experience with expired tickets and other facts, such as recent aging trends, program changes and modifications that could affect the ultimate expiration patterns of tickets.

Given the uncertainty of travel demand caused by COVID-19, a significant portion of the ETCs and FFCs may expire unused in future periods and get recognized as breakage.

The Company will update its breakage estimates as future information is received.

In the three and six months ended June 30, 2021, the Company recognized approximately $ 1.5 billion and $ 1.4 billion, respectively, of passenger revenue for tickets that were included in Advance ticket sales at the beginning of those periods.

In the three and six months ended June 30, 2020, the Company recognized approximately $ 0.5 billion and $ 2.8 billion, respectively, of passenger revenue for tickets that were included in Advance ticket sales at the beginning of those periods.

In the three and nine months ended September 30, 2021, the Company recognized approximately $ 2.8 billion and $ 1.6 billion, respectively, of passenger revenue for tickets that were included in Advance ticket sales at the beginning of those periods.

In the three and nine months ended September 30, 2020, the Company recognized approximately $ 0.5 billion and $ 2.9 billion, respectively, of passenger revenue for tickets that were included in Advance ticket sales at the beginning of those periods.

Ancillary Fees.

1 unchanged sentence

These ancillary fees are part of the travel performance obligation and, as such, are recognized as passenger revenue when the travel occurs.

The Company recorded $ 499 million and $ 807 million of ancillary fees within passenger revenue in the three and six months ended June 30, 2021, respectively.

The Company recorded $ 71 million and $ 776 million of ancillary fees within passenger revenue in the three and six months ended June 30, 2020, respectively.

The Company recorded $ 707 million and $ 1.5 billion of ancillary fees within passenger revenue in the three and nine months ended September 30, 2021, respectively.

The Company recorded $ 205 million and $ 981 million of ancillary fees within passenger revenue in the three and nine months ended September 30, 2020, respectively.

Frequent Flyer Accounting.

The table below presents a roll forward of Frequent flyer deferred revenue (in millions):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

4 unchanged sentences

Total Frequent flyer deferred revenue - ending balance $ 6,217 $ 5,835 $ 6,217 $ 5,835

In the three and six months ended June 30, 2021, the Company recognized, in Other operating revenue, $ 449 million and $ 811 million, respectively, related to the marketing, advertising, non-travel miles redeemed (net of related costs) and other travel-related benefits of the mileage revenue associated with our various partner agreements including, but not limited to, our JPMorgan Chase Bank, N.A.

In the three and nine months ended September 30, 2021, the Company recognized, in Other operating revenue, $ 484 million and $ 1.3 billion, respectively, related to the marketing, advertising, non-travel miles redeemed (net of related costs) and other travel-related benefits of the mileage revenue associated with our various partner agreements including, but not limited to, our JPMorgan Chase Bank, N.A.

co-brand agreement.

The Company recognized $ 339 million and $ 869 million, respectively, in the three and six months ended June 30, 2020, related to those agreements.

The Company recognized $ 378 million and $ 1.2 billion, respectively, in the three and nine months ended September 30, 2020, related to those agreements.

The portion related to the MileagePlus miles awarded of the total amounts received from our various partner agreements is deferred and presented in the table above as an increase to the frequent flyer liability.

We determine the current portion of our frequent flyer liability based on expected redemptions in the

next 12 months.

Given the uncertainty in travel demand caused by COVID-19, we currently estimate a large percentage of award redemptions will occur beyond 12 months;

however, this estimate may change as travel demand and award redemptions become clearer in future periods.

NOTE 2 - LOSS PER SHARE

The computations of UAL's basic and diluted loss per share are set forth below (in millions, except per share amounts):

Three Months Ended June 30, Six Months Ended June 30,

We determine the current portion of our frequent flyer liability based on expected redemptions in the next 12 months (with the majority of these miles historically being redeemed within two years ).

NOTE 2 - EARNINGS (LOSS) PER SHARE

The computations of UAL's basic and diluted earnings (loss) per share are set forth below (in millions, except per share amounts):

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Loss available to common stockholders $ ( 434 ) $ ( 1,627 ) $ ( 1,791 ) $ ( 3,331 )

Weighted-average shares outstanding, basic and diluted 323.6 280.7 320.1 264.6

Loss per share, basic and diluted $ ( 1.34 ) $ ( 5.79 ) $ ( 5.60 ) $ ( 12.59 )

Earnings (loss) available to common stockholders $ 473 $ ( 1,841 ) $ ( 1,318 ) $ ( 5,172 )

Basic weighted-average shares outstanding 323.7 291.0 321.3 273.5

Dilutive effect of employee stock awards 3.0 — — —

Dilutive effect of stock warrants 2.3 — — —

Diluted weighted-average shares outstanding 329.0 291.0 321.3 273.5

Earnings (loss) per share, basic $ 1.46 $ ( 6.33 ) $ ( 4.10 ) $ ( 18.91 )

Earnings (loss) per share, diluted $ 1.44 $ ( 6.33 ) $ ( 4.10 ) $ ( 18.91 )

During the first quarter of 2021, UAL entered into a warrant agreement with Treasury pursuant to which UAL issued to Treasury warrants to purchase up to approximately 2.0 million shares of UAL common stock (the "PSP2 Warrants").

The PSP2 Warrants have a strike price of $ 43.26 per share.

The PSP2 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 relative fair value of the PSP2 Warrants was calculated using a Black-Scholes options pricing model, and approximately $ 56 million was recorded within stockholders' equity with an offset to the CARES Act grant credit.

During the second quarter of 2021, UAL also entered into a warrant agreement with Treasury, pursuant to which UAL issued to Treasury warrants to purchase up to approximately 1.5 million shares of UAL common stock (the "PSP3 Warrants").

The PSP3 Warrants have a strike price of $ 53.92 per share.

The PSP3 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.

During the second quarter of 2021, UAL entered into an additional warrant agreement with Treasury, pursuant to which UAL issued to Treasury warrants to purchase up to approximately 1.5 million shares of UAL common stock (the "PSP3 Warrants").

The relative fair value of the PSP3 Warrants was calculated using a Black-Scholes options pricing model, and approximately $ 43 million was recorded within stockholders' equity with an offset to the CARES Act grant credit.

The PSP2 Warrants and PSP3 Warrants are exercisable either through net share settlement in cash or in shares of UAL common stock, at UAL's option.

The PSP2 Warrants and PSP3 Warrants contain customary anti-dilution provisions and registration rights and are freely transferable.

Pursuant to the terms of the PSP2 Warrants and PSP3 Warrants, warrant holders do not have any voting rights.

As of June 30, 2021 , the Company had the following warrants outstanding:

As of September 30, 2021 , the Company had the following warrants outstanding:

Warrant Description Number of Shares of UAL Common Stock (in millions) Exercise Price Expiration Dates

4 unchanged sentences

(a) Warrants issued in connection with the $ 1.5 billion 10 -year senior unsecured promissory note with Treasury provided under the Payroll Support Program of the CARES Act ("PSP1").

On June 15, 2020, UAL entered into an equity distribution agreement with Citigroup Global Markets Inc., BofA Securities, Inc.

Morgan Securities LLC, relating to the issuance and sale from time to time by UAL (the "2020 ATM Offering"), of up to 28 million shares of UAL common stock.

On June 15, 2020, UAL entered into an equity distribution agreement relating to the issuance and sale from time to time by UAL (the "2020 ATM Offering"), of up to 28 million shares of UAL common stock.

In the first quarter of 2021, the Company sold approximately 7 million shares at an average price of $ 42.98 per share, with net proceeds to the Company of approximately $ 282 million.

With these sales, the Company sold all of the shares authorized under the 2020 ATM Offering.

On March 3, 2021, the Company entered into an equity distribution agreement (the "Distribution Agreement") with Morgan Stanley & Co.

LLC, AmeriVet Securities, Inc., Barclays Capital Inc., BofA Securities, Inc., BBVA Securities Inc., BNP Paribas Securities Corp., Citigroup Global Markets Inc., Credit Agricole Securities (USA) Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman Sachs & Co.

Morgan Securities LLC, Loop Capital Markets LLC and Wells Fargo Securities, LLC (collectively, the "Managers"), relating to the issuance and sale from time to time by UAL (the "2021 ATM Offering"), through the Managers, of up to 37 million shares of UAL common stock (the "2021 ATM Shares").

Sales of the 2021 ATM Shares under the Distribution Agreement may be made in any transactions that are deemed to be "at the market

offerings" as defined in Rule 415 under the Securities Act of 1933, as amended.

On March 3, 2021, the Company entered into an equity distribution agreement (the "Distribution Agreement") with several financial institutions (collectively, the "Managers"), relating to the issuance and sale from time to time by UAL (the "2021 ATM Offering"), through the Managers, of up to 37 million shares of UAL common stock (the "2021 ATM Shares").

Sales of the 2021 ATM Shares under the Distribution Agreement may be made in any transactions that are deemed to be "at the market offerings" as defined in Rule 415 under the Securities Act of 1933, as amended.

Under the terms of the Distribution Agreement, UAL may also sell the 2021 ATM Shares to any Manager, as principal for its own account, at a price agreed upon at the time of sale.

If UAL sells the 2021 ATM Shares to a Manager as principal, UAL will enter into a separate terms agreement with such Manager.

During the six months ended June 30, 2021, approximately 4 million shares were sold in the 2021 ATM Offering at an average price of $ 57.50 per share, with net proceeds to the Company totaling approximately $ 250 million.

If UAL sells the 2021 ATM Shares to a Manager as principal, UAL will enter into a separate terms agreement with such

During the nine months ended September 30, 2021, approximately 4 million shares were sold in the 2021 ATM Offering at an average price of $ 57.50 per share, with net proceeds to the Company totaling approximately $ 250 million.

NOTE 3 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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Pension and Other Postretirement Liabilities Investments and Other Deferred Taxes Total

Balance at March 31, 2021 $ ( 1,084 ) $ 1 $ ( 43 ) $ ( 1,126 )

Balance at June 30, 2021 $ ( 1,068 ) $ 1 $ ( 47 ) $ ( 1,114 )

Changes in value ( 19 ) ( 1 ) 4 ( 16 )

Amounts reclassified to earnings 7 (a) — ( 1 ) 6

Balance at June 30, 2021 $ ( 1,068 ) $ 1 $ ( 47 ) $ ( 1,114 )

Balance at September 30, 2021 $ ( 1,080 ) $ — $ ( 44 ) $ ( 1,124 )

Balance at December 31, 2020 $ ( 1,102 ) $ 2 $ ( 39 ) $ ( 1,139 )

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Amounts reclassified to earnings 17 (a) — ( 4 ) 13

Balance at September 30, 2021 $ ( 1,080 ) $ — $ ( 44 ) $ ( 1,124 )

Balance at June 30, 2020 $ ( 1,257 ) $ 3 $ ( 5 ) $ ( 1,259 )

Balance at March 31, 2020 $ ( 613 ) $ ( 14 ) $ ( 144 ) $ ( 771 )

Changes in value ( 11 ) — 2 ( 9 )

Amounts reclassified to earnings 333 (a) — ( 74 ) 259

Amounts reclassified to retained earnings — — — —

Balance at June 30, 2020 $ ( 1,257 ) $ 3 $ ( 5 ) $ ( 1,259 )

Balance at September 30, 2020 $ ( 935 ) $ 3 $ ( 77 ) $ ( 1,009 )

Balance at December 31, 2019 $ ( 560 ) $ 2 $ ( 160 ) $ ( 718 )

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Amounts reclassified to earnings 406 (a) — ( 90 ) 316

Balance at June 30, 2020 $ ( 1,257 ) $ 3 $ ( 5 ) $ ( 1,259 )

Balance at September 30, 2020 $ ( 935 ) $ 3 $ ( 77 ) $ ( 1,009 )

(a) This AOCI component is included in the computation of net periodic pension and other postretirement costs (see Note 5 of this report for additional information).

NOTE 4 - INCOME TAXES

The Company's effective tax rates for the three and six months ended June 30, 2021 were 23.0 % and 22.6 %, respectively.

The effective tax rates for the three and six months ended June 30, 2020 were 18.8 % and 19.1 %, respectively.

The Company's effective tax rates for the three and nine months ended September 30, 2021 were 21.6 % and 23.0 %, respectively.

The effective tax rates for the three and nine months ended September 30, 2020 were 21.1 % and 19.8 %, 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.

The effective tax rates for the three and six months ended June 30, 2021 were impacted by $ 74 million and $ 79 million, respectively, of released valuation allowance related to unrealized capital gains and state attributes.

The effective tax rates for the three and six months ended June 30, 2020 were impacted by $ 64 million and $ 130 million, respectively, of valuation allowance related to unrealized capital losses.

The effective tax rate was impacted by $ 52 million of additional valuation allowance related to unrealized capital losses for the three months ended September 30, 2021, and by $ 27 million of valuation allowance release related to unrealized capital gains and state attributes for the nine months ended September 30, 2021.

The effective tax rates for the three and nine months ended September 30, 2020 were impacted by $ 27 million and $ 157 million, respectively, of changes in valuation allowance related to unrealized capital losses.

NOTE 5 - EMPLOYEE BENEFIT PLANS

Defined Benefit Pension and Other Postretirement Benefit Plans.

The Company's net periodic benefit cost includes the following components for the three months ended June 30 (in millions):

The Company's net periodic benefit cost includes the following components for the three months ended September 30 (in millions):

Pension Benefits Other Postretirement Benefits Affected Line Item

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Total $ 79 $ 425 $ ( 29 ) $ 46

The Company's net periodic benefit cost includes the following components for the six months ended June 30 (in millions):

The Company's net periodic benefit cost includes the following components for the nine months ended September 30 (in millions):

Pension Benefits Other Postretirement Benefits Affected Line Item

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Total $ 235 $ 654 $ ( 42 ) $ 105

The Company does not have any minimum required contributions for 2021;

however, during the third quarter of 2021, the Company made a voluntary contribution of $ 375 million to its U.S.

domestic tax-qualified defined benefit pension plan covering certain U.S.

non-pilot employees.

In 2020 and 2021, the Company offered several voluntary leave programs and voluntary separation programs ("Voluntary Programs") to certain eligible employees, which in some cases included a partially-paid leave of absence with active health benefits and travel privileges.

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As a result, the Company recorded $ 46 million for those additional benefits in the three months ended March 31, 2021.

During the second quarter of 2020, the Company offered Voluntary Programs to its U.S.-based front-line employees, excluding pilots, and management and administrative employees.

Included in these Voluntary Programs, the Company offered special separation benefits in the form of additional years of pension service and additional subsidies for retiree medical costs (based on employee group, age and completed years of service).

As a result, the Company recorded, in the second quarter of 2020, $ 35 million and $ 125 million, respectively, for those additional benefits.

Also, the Company recognized a $ 71 million settlement loss related to the defined benefit pension plan covering certain U.S.

non-pilot employees in the second quarter of 2020.

During the second and third quarters of 2020, the Company offered certain of its eligible front-line employees special separation benefits in the form of additional years of pension service and additional subsidies for retiree medical costs (based on employee group, age and completed years of service) as a part of the Voluntary Programs.

As a result, the Company recorded, in the three and nine months ended September 30, 2020, $ 19 million and $ 54 million, respectively, for those additional pension benefits.

In the three and nine months ended September 30, 2020, the Company recorded $ 76 million and $ 201 million,

respectively, for those additional retiree medical benefits.

Also, the Company recognized, in the three and nine months ended September 30, 2020, $ 319 million and $ 390 million, respectively, in settlement losses related to the defined benefit pension plan covering certain U.S.

non-pilot employees.

Share-Based Compensation.

During the six months ended June 30, 2021, UAL's Board of Directors and stockholders approved the United Airlines Holdings, Inc.

During the nine months ended September 30, 2021, UAL's Board of Directors and stockholders approved the United Airlines Holdings, Inc.

2021 Incentive Compensation Plan (the "2021 Plan").

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nonqualified stock options;

incentive stock options (within the

meaning of Section 422 of the Internal Revenue Code of 1986);

incentive stock options (within the meaning of Section 422 of the Internal Revenue Code of 1986);

stock appreciation rights ("SARs");

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Any awards granted under the 2017 Plan prior to the approval of the 2021 Plan remain in effect pursuant to their terms.

Awards may not be granted under the 2021 Plan after May 26, 2031.

During the six months ended June 30, 2021, UAL granted share-based compensation awards pursuant to both the 2017 Plan and the 2021 Plan.

During the nine months ended September 30, 2021, UAL granted share-based compensation awards pursuant to both the 2017 Plan and the 2021 Plan.

These share-based compensation awards included 2.9 million RSUs, consisting of 1.3 million time-vested RSUs and 1.6 million short-term performance-based RSUs.

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The table below presents information related to share-based compensation (in millions):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Share-based compensation expense $ 71 $ 41 $ 174 $ 83

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Unrecognized share-based compensation $ 128 $ 88

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The table below presents disclosures about the financial assets and liabilities measured at fair value on a recurring basis in UAL's financial statements (in millions):

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3

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Equity securities 420 420 — — 241 205 — 36

Warrants 176 96 80 — 36 — — 36

Investments presented in the table above have the same fair value as their carrying value.

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Short-term investments — The short-term investments shown in the table above are classified as available-for-sale.

As of June 30, 2021, corporate debt securities have remaining maturities of less than two years , asset-backed securities have remaining maturities of less than one year to approximately nine years and U.S.

As of September 30, 2021, corporate debt securities have remaining maturities of less than two years , asset-backed securities have remaining maturities of less than one year to approximately eight years and U.S.

government and agency notes have maturities of less than one year .

Equity securities — Equity securities represent United's investment in Azul Linhas Aéreas Brasileiras S.A.

("Azul"), consisting of approximately 8 % of Azul's outstanding preferred shares (representing approximately 2 % of the total capital stock of Azul), and United's ownership of less than 1% of the outstanding Class A common shares of Clear Secure, Inc.

(formerly, Alclear, Inc.) ("Clear").

As of June 30, 2021, the carrying value of United's investment in Azul and Clear was $ 238 million and $ 31 million, respectively.

Warrants — Represents vested warrants for the purchase of 2.4 million shares of Class A common shares of Clear and for the purchase of 4.7 million common shares from Archer Aviation Inc.

The initial value of the warrants received from Archer is recorded as a deferred credit that will be recognized as a reduction to the cost of the aircraft received in future periods.

Equity securities — Represents equity and equity-linked securities (such as vested warrants) that make up United's investments in Azul Linhas Aéreas Brasileiras S.A., Clear Secure, Inc.

(formerly, Alclear, Inc.) and Archer Aviation Inc.

The Company received equity securities in exchange for assisting Archer in the development of battery-powered, short haul aircraft.

The Company will account for equity securities it receives from Archer as a deferred credit that will either be recognized into income upon United satisfying certain performance obligations or as a reduction to the cost of the aircraft received in future periods.

Other fair value information.

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Carrying amounts include any related discounts, premiums and issuance costs:

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Carrying Amount Fair Value Carrying Amount Fair Value

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Description Fair Value Methodology

Cash and cash equivalents The carrying amounts approximate fair value because of the short-term maturity of these assets.

Short-term investments,

Equity securities and

Restricted cash (current and non-current) Fair value is based on (a) the trading prices of the investment or similar instruments, (b) an income approach, which uses valuation techniques to convert future amounts into a single present amount based on current market expectations about those future amounts when observable trading prices are not available, or (c) broker quotes obtained by third-party valuation services.

Other assets Fair value is determined utilizing the Black-Scholes options pricing model or observable market prices.

Cash and cash equivalents and Restricted cash (current and non-current) The carrying amounts of these assets approximate fair value.

Short-term investments and Equity securities Fair value is based on (a) the trading prices of the investment or similar instruments, (b) an income approach, which uses valuation techniques to convert future amounts into a single present amount based on current market expectations about those future amounts when observable trading prices are not available, or (c) broker quotes obtained by third-party valuation services.

Long-term debt Fair values were based on either market prices or the discounted amount of future cash flows using our current incremental rate of borrowing for similar liabilities or assets.

Avianca Loan .

Avianca Holdings S.A.

("AVH") and certain of its affiliates filed voluntary r eorganization proceedings under Chapter 11 of the United States Bankruptcy Code in the U.S.

Bankruptcy Court for the Southern District of New York on May 10, 2020 (the "AVH Reorganization Proceedings").

As part of the AVH Reorganization Proceedings, the Company has a debtor-in-possession ("DIP") term loan ("DIP Loan") receivable under the terms of the DIP credit agreement.

Notes Receivable .

The Company has a debtor-in-possession ("DIP") term loan ("DIP Loan") receivable under the terms of the DIP credit agreement filed, on May 10, 2020, by Avianca Holdings S.A.

("AVH") and certain of its affiliates as part of the voluntary reorganization proceedings under Chapter 11 of the United States Bankruptcy Code in the U.S.

Bankruptcy Court for the Southern District of New York.

The DIP Loan is not convertible.

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The DIP Loan becomes immediately payable upon AVH's emergence from bankruptcy, in either cash or shares of AVH stock, at AVH's election.

As of June 30, 2021, the DIP Loan had a balance of $ 170 million and was recorded in Receivables on the Company's consolidated balance sheet.

AVH has filed a plan of reorganization in the U.S.

Bankruptcy Court for the Southern District of New York, pursuant to which it plans to repay the Company’s DIP Loan in shares of stock of the reorganized AVH upon AVH's emergence from bankruptcy.

As of September 30, 2021, the DIP Loan had a balance of $ 176 million and was recorded in Receivables on the Company's consolidated balance sheet.

The Company also received a $ 120 million note receivable (the "Boom Note") from Boom Technology, Inc.

("Boom") related to a commercial agreement to add supersonic aircraft to its global fleet as well as a cooperative sustainability initiative.

As of September 30, 2021, the Boom Note had a carrying value of $ 44 million and was recorded in Investments in affiliates and other, less allowance for credit losses on the Company's consolidated balance sheet.

The initial value of the Boom Note was recorded as a deferred credit that will either be recognized into income upon United satisfying certain performance obligations or as a reduction to the cost of the aircraft received in future periods.

Investments in Regional Carriers.

United holds investments in several regional carriers that fly or used to fly for the Company as United Express under its capacity purchase agreements ("CPAs").

The combined carrying value of the investments was approximately $ 152 million as of June 30, 2021.

The combined carrying value of the investments was approximately $ 160 million as of September 30, 2021.

United accounts for each investment using the equity method.

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• Republic Airways Holdings Inc.

("Republic Holdings").

United holds a 19 % minority interest in Republic Holdings.

Republic Holdings is the parent company of Republic Airways Inc.

("Republic").

United holds a 19 % minority interest in Republic.

Republic is the parent company of Republic Airways Inc.

Republic currently operates 66 regional aircraft under a CPA that has a term through 2029.

Republic currently operates 66 regional aircraft under CPAs that have terms through 2036.

• ManaAir, LLC ("ManaAir").

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Other Investments.

United holds other investments that are recorded at cost less impairment, adjusted for observable price changes in orderly transactions for an identical or similar investment of the same issuer.

As of June 30, 2021, United held these major investments:

• Fulcrum BioEnergy, Inc.

United owns approximately 7 % of the preferred shares (representing approximately 6 % of the total capital stock) of Fulcrum, a company that is developing a process for transforming municipal solid waste into transportation fuels, including jet fuel and diesel.

As of June 30, 2021, the carrying value of United's investment was $ 51 million.

• Boom Technology, Inc.

United holds vested warrants for the purchase of 568,857 shares of common stock of Boom, a company that is developing aircraft that will fly at supersonic speeds.

As of June 30, 2021, the carrying value of the warrants was $ 17 million.

United also holds a $ 120 million note receivable from Boom which we recorded at its inception date fair value of $ 41 million.

The values of the warrants and the note are recorded as deferred credits that will be recognized as a reduction to the cost of the aircraft received in future periods.

United holds other equity investments in emerging companies with new aircraft technologies or sustainable aviation fuel solutions, such as Fulcrum BioEnergy, Inc., Boom, Alder Fuels LLC and Heart Aerospace Incorporated, which do not have readily determinable fair values.

We account for these investments using a measurement alternative that allows entities to measure these investments at cost less impairment, adjusted for observable price changes in orderly transactions for an identical or similar investment of the same issuer.

As of September 30, 2021, the carrying value of these investments was $ 79 million.

NOTE 7 - COMMITMENTS AND CONTINGENCIES

As of June 30, 2021, United had firm commitments and options to purchase aircraft from Boeing and Airbus as presented in the table below:

As of September 30, 2021, United had firm commitments and options to purchase aircraft from The Boeing Company ("Boeing") and Airbus S.A.S.

("Airbus") as presented in the table below:

Scheduled Aircraft Deliveries

Aircraft Type Number of Firm

Commitments (a) Last Six Months

Commitments (a) Last Three Months

of 2021 2022 2023 After 2023

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(a) United also has options and purchase rights for additional aircraft.

During the third quarter of 2021, the Company elected to accelerate the delivery of eight Boeing 737 MAX aircraft from 2023 to 2022.

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, or to the extent rights are exercised pursuant to the relevant agreements to modify the timing of deliveries, the amount and timing of the Company's future capital commitments could change.

United also has an agreement to purchase six used Boeing 737-700 aircraft, which it intends to sell, with expected delivery dates in 2021.

In addition, United has an agreement to purchase 11 used Airbus A319 aircraft, which it intends to sell, with expected delivery dates in 2021 and 2022.

United has an agreement to purchase ten 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 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.

Eleven Boeing model aircraft were delivered in the first half of 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 six months of 2021.

Twenty Boeing model aircraft were delivered in the first nine months of 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 three months of 2021.

Upon delivery of aircraft in these sale and leaseback transactions in 2021, the Company accounted for seven of these aircraft, which have a repurchase option at a price other than fair value, as part of Flight equipment on the Company's consolidated balance sheet and the related obligation recorded in Other current liabilities and Other financial liabilities from sale-leasebacks (noncurrent) since they do not qualify for sale recognition.

The remaining four aircraft that qualified for sale recognition were recorded as Operating lease right-of-use assets and Current/Long-term obligations under operating leases on the Company's consolidated balance sheet after recognition of related gains on such sale.

The table below summarizes United's commitments as of June 30, 2021, which include aircraft and related spare engines, aircraft improvements and all non-aircraft capital commitments (in billions):

Last six months of 2021 $ 3.1

The remaining thirteen aircraft that qualified for sale recognition were recorded as Operating lease right-of-use assets and Current/Long-term obligations under operating leases on the Company's consolidated balance sheet after recognition of related gains on such sale.

The table below summarizes United's commitments as of September 30, 2021, which include aircraft and related spare engines, aircraft improvements and all non-aircraft capital commitments (in billions):

Last three months of 2021 $ 0.9

After 2025 12.2

Regional CPAs.

In September 2021, United entered into a new CPA with Republic for Republic to operate 38 Embraer E175LL aircraft on United's behalf starting in 2022 for a 12 -year term.

The new Embraer E175LL aircraft will replace the Embraer E170 aircraft currently being flown by Republic for United.

The table below summarizes the Company's expected future payments through the end of the terms of our CPAs, excluding aircraft ownership costs and variable pass-through costs such as fuel and landing fees, among others.

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We have set forth below estimates based on our current assumptions of our anticipated level of flight activity or any contractual minimum utilization levels if applicable, whichever is higher.

Based on these assumptions as of June 30, 2021, our estimated future payments through the end of the terms of our CPAs are presented in the table below (in billions):

Last six months of 2021 $ 1.1

Based on these assumptions as of September 30, 2021, our estimated future payments through the end of the terms of our CPAs are presented in the table below (in billions):

Last three months of 2021 $ 0.6

After 2025 5.5

As of June 30, 2021, United is the guarantor of approximately $ 1.9 billion in aggregate principal amount of tax-exempt special facilities revenue bonds and interest thereon.

As of September 30, 2021, United is the guarantor of approximately $ 2.1 billion in aggregate principal amount of tax-exempt special facilities revenue bonds and interest thereon.

These bonds, issued by various airport municipalities, are payable solely from rentals paid under long-term agreements with the respective governing bodies.

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All of these bonds are due between 2023 and 2041.

In August 2021, at the request of United, the City of Houston, Texas issued its approximately $ 289 million special facilities revenue bonds for the purpose of (a) financing the costs of construction of a multi-terminal baggage handling system, tenant improvements, fixtures, equipment, personnel areas, and related facilities, and an early baggage system building (together with a related fire pump room) at George Bush Intercontinental Airport (IAH), all to be installed by and for use by United and (b) paying related costs of issuance.

The bonds bear interest at 4.0 % per annum, payable semiannually, commencing January 2022 through the July 2041 maturity date.

United is accounting for the payments for these special facilities revenue bonds as lease payments under an operating lease recognized as a right-of-use asset and lease liability on the Company's balance sheet.

In November 2018, United, as lender, entered into a Term Loan Agreement (the "BRW Term Loan Agreement") with, among others, BRW Aviation Holding LLC and BRW Aviation LLC ("BRW"), as guarantor and borrower, respectively.

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In November 2018, in connection with funding the BRW Term Loan Agreement, the Company entered into an agreement with Kingsland Holdings Limited ("Kingsland"), AVH's largest minority shareholder, pursuant to which, in return for Kingsland's pledge of its 144.8 million common shares of AVH (which are eligible to be converted into the same number of preferred shares, which may be deposited with the depositary for AVH's American Depositary Receipts ("ADRs"), the class of AVH securities that trades on the NYSE, in exchange for 18.1 million ADRs) and its consent to BRW's pledge of its AVH common shares to United under the BRW Term Loan Agreement and related agreements, United (1) granted to Kingsland the right to put its AVH common shares to United at market price on the fifth anniversary of the BRW Term Loan Agreement or upon certain sales of AVH common shares owned by BRW, including upon a foreclosure of United's security interest, and (2) guaranteed BRW's obligation to pay Kingsland the difference if the market price of AVH common shares on the fifth anniversary, or upon any such sale, as applicable, is less than $ 12 per ADR on the NYSE, for an aggregate maximum possible combined put payment and guarantee amount on the fifth anniversary of $ 217 million.

Due to AVH's financial uncertainty and subsequent bankruptcy filing in 2019, the Company recorded the full amount of the guarantee as a liability.

Due to AVH's financial uncertainty and

subsequent bankruptcy filing in 2019, the Company recorded the full amount of the guarantee as a liability, and pursuant to the plan of reorganization that AVH has filed in the U.S.

Bankruptcy Court for the Southern District of New York, existing common shares of AVH would be cancelled and extinguished and holders would not be entitled to any recovery upon AVH’s exit from bankruptcy, planned to occur in the fourth quarter of 2021, and accordingly the expected value is zero per ADR.

Additionally, the Company posted $ 217 million as cash collateral for a standby letter of credit in favor of Citibank, N.A.

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The posting of this collateral, and any potential credit against the Company's put and guarantee payment, are entirely related to the original transactions entered in 2018 and do not represent any new or incremental investment.

As of June 30, 2021, United is the guarantor of $ 113 million of aircraft mortgage debt issued by one of United's regional carriers.

As of September 30, 2021, United is the guarantor of $ 109 million of aircraft mortgage debt issued by one of United's regional carriers.

The aircraft mortgage debt is subject to similar increased cost provisions as described below for the Company's debt, and the Company would potentially be responsible for those costs under the guarantees.

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In United's financing transactions that include loans in which United is the borrower, United typically agrees to reimburse lenders for any reduced returns with respect to the loans due to any change in capital requirements and, in the case of loans with respect to which the interest rate is based on the London Interbank Offered Rate (LIBOR), for certain other increased costs that the lenders incur in carrying these loans as a result of any change in law, subject, in most cases, to obligations of the lenders to take certain limited steps to mitigate the requirement for, or the amount of, such increased costs.

At June 30, 2021, the Company had $ 13.4 billion of floating rate debt with remaining terms of up to approximately 11 years that are subject to these increased cost provisions.

At September 30, 2021, the Company had $ 13.3 billion of floating rate debt with remaining terms of up to approximately 11 years that are subject to these increased cost provisions.

In several financing transactions involving loans or leases from non-U.S.

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Labor Negotiations.

As of June 30, 2021, the Company had approximately 84,400 employees, of whom approximately 85 % were represented by various U.S.

As of September 30, 2021, the Company had approximately 85,300 employees, of whom approximately 85 % were represented by various U.S.

labor organizations.

This total includes approximately 4,500 front-line employees who elected to voluntarily separate from the Company pursuant to the first quarter 2021 Company-offered Voluntary Programs but who still remained on pay and benefit continuation as of June 30, 2021.

This total includes employees who elected to voluntarily separate from the Company pursuant to Company-offered Voluntary Programs but who still remained on pay and benefit continuation.

During the third quarter of 2021, the Company announced its decision to transition, in October 2021, its catering operations to a combination of three outside suppliers who will operate five kitchens and oversee the functions related to menu design and administration.

Impacted employees who were in good standing have been offered jobs at one of the three suppliers, and about 70 % will continue to have union representation following the transition.

Credit Card Processing Agreements.

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On April 21, 2021, United paid all amounts outstanding under the 2017 Revolving Credit Facility and the 2017 Term Loan Facility, terminated the 2017 Revolving Credit Facility and the 2017 Term Loan Facility and entered into the New Loan Facilities described below.

As of June 30, 2021, United had $ 1.75 billion available for borrowing under the New Revolving Credit Facility at any time until April 21, 2025.

As of September 30, 2021, United had $ 1.75 billion available for borrowing under the New Revolving Credit Facility at any time until April 21, 2025.

No borrowings were outstanding under the New Revolving Credit Facility at September 30, 2021.

In February 2021, United created EETC pass-through trusts which issued pass-through certificates.

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Certain details of the pass-through trusts with proceeds received from issuance of debt in 2021 are as follows (in millions, except stated interest rate):

EETC Issuance Date Class Face Amount Stated interest rate Total proceeds received from issuance of debt Total debt recorded as of

June 30, 2021

EETC Issuance Date Class Face Amount Stated interest rate Total proceeds received from issuance of debt and recorded as debt as of September 30, 2021

February 2021 B $ 600 4.88 % $ 600

During the six months ended June 30, 2021, UAL issued an $ 870 million PSP2 Note to Treasury evidencing senior unsecured indebtedness of UAL.

During the nine months ended September 30, 2021, UAL issued an $ 870 million PSP2 Note to Treasury evidencing senior unsecured indebtedness of UAL.

The PSP2 Note is guaranteed by United and will mature ten years after issuance on January 15, 2031 (the "PSP2 Note Maturity Date").

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Interest on the PSP2 Note is payable semi-annually in arrears on the last business day of March and September of each year, beginning on March 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.

During the second quarter of 2021, UAL issued an $ 810 million PSP3 Note to Treasury evidencing senior unsecured indebtedness of UAL.

During the nine months ended September 30, 2021, UAL issued an $ 810 million PSP3 Note to Treasury evidencing senior unsecured indebtedness of UAL.

The PSP3 Note is guaranteed by United and will mature ten years after issuance on April 29, 2031 (the "PSP3 Note 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 such subsidiary shall be required to guarantee the obligations of UAL under the PSP3 Note.

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 such subsidiary shall be required to guarantee the obligations of UAL under the PSP3 Note.

UAL may, at its option, prepay the PSP3 Note, at any time, and from time to time, at par.

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Kennedy International Airport, LaGuardia Airport and Ronald Reagan Washington National Airport (subject to certain exclusions), and (iii) United's 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.

As of June 30, 2021, UAL and United were in compliance with their respective debt covenants.

The table below presents the Company's contractual principal payments (not including $ 600 million of unamortized debt discount, premiums and debt issuance costs) at June 30, 2021 under then-outstanding long-term debt agreements (in millions):

Last six months of 2021 $ 1,001

Our debt agreements contain customary terms and conditions as well as various affirmative, negative and financial covenants that, among other things, restrict the ability of the Company and its subsidiaries to incur additional indebtedness and pay dividends or repurchase stock.

As of September 30, 2021, UAL and United were in compliance with their respective debt covenants.

The table below presents the Company's contractual principal payments (not including $ 558 million of unamortized debt discount, premiums and debt issuance costs) at September 30, 2021 under then-outstanding long-term debt agreements (in millions):

Last three months of 2021 $ 519

After 2025 20,723

NOTE 9 - SPECIAL CHARGES (CREDITS)

For the three and six months ended June 30, special charges (credits), unrealized (gains) losses on investments, debt extinguishment and modification fees, special termination benefits and settlement losses and certain credit losses in the statements of consolidated operations consisted of the following (in millions):

For the three and nine months ended September 30, special charges (credits), unrealized (gains) losses on investments, debt extinguishment and modification fees, special termination benefits and settlement losses and certain credit losses in the statements of consolidated operations consisted of the following (in millions):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

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Total operating and nonoperating special charges (credits) and unrealized (gains) losses on investments, net ( 1,076 ) ( 681 ) ( 3,418 ) ( 829 )

Income tax expense (benefit), net of valuation allowance 203 241 494 227

Income tax expense, net of valuation allowance 274 148 768 375

Total operating and nonoperating special charges (credits) and unrealized (gains) losses on investments, net of income taxes $ ( 802 ) $ ( 533 ) $ ( 2,650 ) $ ( 454 )

CARES Act grant.

During the six months ended June 30, 2021, the Company received approximately $ 5.8 billion in funding pursuant to the PSP2 Agreement and the PSP3 Agreement, which included an approximately $ 1.7 billion unsecured loan.

The Company recorded $ 1.1 billion and $ 2.9 billion as grant income in Special charges (credits) during the three and six months ended June 30, 2021, respectively.

The Company also recorded $ 52 million and $ 99 million for the PSP2 Warrants and PSP3 Warrants issued to Treasury as part of the PSP2 Agreement and PSP3 Agreement, within stockholders' equity, as an offset to the grant income in the three and six months ended June 30, 2021, respectively.

The Company deferred recognition of $ 1.1 billion of the funds received under the PSP3 Agreement as of June 30, 2021 as the funds can only be used for the payment of eligible salaries, wages and benefits.

The Company expects the remainder of the PSP3 Agreement funds will be recognized as income in the third quarter of 2021.

During the nine months ended September 30, 2021, the Company received approximately $ 5.8 billion in funding pursuant to the PSP2 Agreement and the PSP3 Agreement, which included an approximately $ 1.7 billion unsecured loan.

The Company recorded $ 1.1 billion and $ 4.0 billion as grant income in Special charges (credits) during the three and nine months ended September 30, 2021, respectively.

The Company also recorded $ 99 million for the PSP2 Warrants and PSP3 Warrants issued to Treasury as part of the PSP2 Agreement and PSP3 Agreement, within stockholders' equity, as an offset to the grant income in the nine months ended September 30, 2021.

Impairment of assets .

During the three and six months ended June 30, 2021, the Company recorded $ 59 million of impairments primarily related to 64 Embraer EMB 145LR aircraft and related engines that United retired from its regional aircraft fleet.

During the three months ended September 30, 2021, the Company recorded $ 46 million of impairment charges for nine Airbus A319 aircraft and 13 Boeing 737-700 airframes as a result of current market conditions for used aircraft.

These aircraft are all considered held for sale and classified as part of other assets.

During the nine months ended September 30, 2021, in addition to the third quarter impairments described above, the Company recorded $ 59 million of

impairments primarily related to 64 Embraer EMB 145LR aircraft and related spare engines that United retired from its regional fleet.

The decision to retire these aircraft was triggered by the United Next aircraft order.

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Severance and benefit costs .

During the three and six months ended June 30, 2021, the Company recorded charges of $ 11 million and $ 428 million, respectively, related to pay continuation and benefits-related costs provided to employees who chose to voluntarily separate from the Company.

During the three and nine months ended September 30, 2021, the Company recorded charges of $ 5 million and $ 433 million, respectively, related to pay continuation and benefits-related costs provided to employees who chose to voluntarily separate from the Company.

The Company offered, based on employee group, age and completed years of service, pay continuation, health care coverage, and travel benefits.

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(Gains) losses on sale of assets and other special charges.

During the three and six months ended June 30, 2021, the Company recorded charges of $ 61 million and $ 77 million, respectively, primarily related to incentives for certain of its front-line employees to receive a COVID-19 vaccination and the termination of the lease associated with three floors of its headquarters at the Willis Tower in Chicago in the first quarter of 2021.

Nonoperating unrealized losses on investments, net .

During the three and six months ended June 30, 2021, the Company recorded $ 90 million of gains related to its equity investments and warrants in the equity of Clear.

Clear undertook its initial public stock offering in June 2021.

Also during the three and six months ended June 30, 2021, the Company recorded gains of $ 57 million and $ 35 million, respectively, primarily for the change in the market value of its investment in Azul .

During the three months ended September 30, 2021, the Company recorded net gains of $ 17 million primarily related to gains on aircraft sale-leaseback transactions and aircraft component manufacturer credits.

During the nine months ended September 30, 2021, the Company recorded net charges of $ 60 million primarily related to incentives for its employees to receive a COVID-19 vaccination and the termination of the lease associated with three floors of its headquarters at the Willis Tower in Chicago partially offset by the third quarter's gains.

Nonoperating unrealized (gains) losses on investments, net .

During the three and nine months ended September 30, 2021, the Company recorded losses of $ 34 million and gains of $ 91 million, respectively, primarily for the change in the market value of its investments in equity securities.

Substantially all of the gains and losses were related to equity securities held by the Company as of September 30, 2021.

See Note 6 of this report for information related to these equity investments.

Nonoperating debt extinguishment and modification fees.

During the three and six months ended June 30, 2021, the Company recorded $ 62 million of charges for fees and discounts related to the issuance of the New Loan Facilities and the prepayment of the Existing Loan Facilities.

Nonoperating special termination benefits.

During the six months ended June 30, 2021, as part of the first quarter Voluntary Programs, the Company recorded $ 46 million of special termination benefits in the form of additional subsidies for retiree medical costs for certain U.S.-based front-line employees.

The subsidies were in the form of a one-time contribution into the employee's Retiree Health Account of $ 125,000 for full-time employees and $ 75,000 for part-time employees.

During the nine months ended September 30, 2021, the Company recorded $ 50 million of charges for fees and discounts related to the issuance of the New Loan Facilities and the prepayment of the Existing Loan Facilities.

Nonoperating special termination benefits and settlement losses.

During the nine months ended September 30, 2021, as part of the first quarter Voluntary Programs, the Company recorded $ 46 million of special termination benefits in the form of additional subsidies for retiree medical costs for certain U.S.-based front-line employees.

The subsidies were in the form of a one-time contribution to a notional Retiree Health Account of $ 125,000 for full-time employees and $ 75,000 for part-time employees.

CARES Act grant.

During the three and six months ended June 30, 2020, the Company received approximately $ 4.5 billion in funding pursuant to PSP1, which consisted of a $ 3.2 billion grant and a $ 1.3 billion unsecured loan.

The Company recognized $ 1.6 billion of the grant as a credit to Special charges (credit) and $ 57 million in warrants issued to Treasury, within stockholder's equity, as an offset to the grant income.

During the nine months ended September 30, 2020, the Company received approximately $ 5.1 billion in funding pursuant to PSP1, which consisted of a $ 3.6 billion grant and a $ 1.5 billion unsecured loan.

The Company recognized $ 3.1 billion of the grant as a credit to Special charges (credits) and $ 66 million in warrants issued to Treasury, within stockholders' equity, as an offset to the grant income.

Impairment of assets.

During the three and six months ended June 30, 2020, the Company recorded impairment charges of $ 80 million and $ 130 million, respectively, for its China routes, which was primarily caused by the COVID-19 pandemic and the Company's subsequent suspension of flights to China.

During the three and nine months ended September 30, 2020, the Company recorded an impairment charge of $ 38 million related to the right-of-use asset associated with the embedded aircraft lease in one of our CPAs.

Also, during the nine months ended September 30, 2020, the Company recorded impairment charges of $ 130 million for its China routes, which were primarily caused by the COVID-19 pandemic, the Company's subsequent suspension of flights to China and a further delay in the expected return of full capacity to the China markets.

Severance and benefit costs.

During the three and six months ended June 30, 2020, the Company recorded $ 63 million related to pay continuation and benefits provided to employees who chose to voluntarily separate from the Company.

Nonoperating unrealized losses on investments, net.

During the three and six months ended June 30, 2020, the Company recorded gains of $ 9 million and losses of $ 310 million, respectively.

The losses in the six months ended June 30, 2020 were primarily due to the $ 284 million decrease in the market value of the Company's investment in Azul and the $ 24 million decrease in the fair value of the AVH share call options, AVH share appreciation rights and AVH share-based upside sharing agreement.

During the three and nine months ended September 30, 2020, the Company recorded $ 350 million and $ 413 million, respectively, related to the workforce reduction and voluntary plans for employee severance, pay continuance from voluntary retirements and benefits-related costs.

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 the change in the market value of its investment in equity securities.

Also, during the nine months ended September 30, 2020, the Company recorded losses 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.

Nonoperating special termination benefits and settlement losses.

During the three and six months ended June 30, 2020, the Company recorded $ 231 million of settlement losses related to the Company's primary defined benefit pension plans covering certain U.S.

non-pilot employees, and special termination benefits offered under voluntary leave programs to certain front-line U.S.

based employees participating in the non-pilot defined benefit pension plan and postretirement medical programs.

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

Voluntary Programs to certain front-line U.S.-based employees participating in the non-pilot defined benefit pension plan and postretirement medical programs.

Nonoperating credit loss on BRW Term Loan and related guarantee.

During the six months ended June 30, 2020, the Company recorded a $ 697 million expected credit loss allowance for the 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.

AVH is currently in bankruptcy.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements