7 unchanged sentences
generally accepted accounting principles.
−Removed: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 1, 2021, expressed an unqualified opinion thereon.
+Added: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 18, 2022, expressed an unqualified opinion thereon.
Basis for Opinion
15 unchanged sentences
Description of the matter
−Removed: At December 31, 2020, the Company's China route authorities indefinite-lived intangible asset had a carrying value of approximately $1.0 billion.
+Added: At December 31, 2021, the carrying value of the Company's China route authorities indefinite-lived intangible assets (the China intangible assets) was $1.02 billion.
As discussed in Note 1 of the consolidated financial statements, indefinite-lived assets are reviewed for impairment on an annual basis as of October 1, or on an interim basis whenever a triggering event occurs.
−Removed: As discussed in Note 14 of the consolidated financial statements, the Company recorded a $130 million interim impairment charge related to this intangible asset.
−Removed: Auditing management's annual China route authorities indefinite-lived intangibles impairment test was complex and judgmental due to the significant estimation required in determining the fair value.
+Added: Auditing management's annual China intangible assets impairment test was complex and highly judgmental due to the significant estimation required in determining the fair value of the assets.
The fair value estimate was sensitive to significant assumptions such as revenue growth rate, operating margin and the discount rate, each of which is affected by expectations about future market or economic conditions.
1 unchanged sentence
How we addressed the matter in our audit
−Removed: We tested the Company's design and operating effectiveness of internal controls that address the risk of material misstatement relating to the estimate of fair value of route authorities used in the annual and interim impairment tests.
+Added: We tested the Company's design and operating effectiveness of internal controls that address the risk of material misstatement relating to the estimate of fair value of the China intangible assets used in the annual impairment test.
This included testing controls over management's review of the significant assumptions used in the discounted cash flow methodology, including revenue growth rate, operating margin and the discount rate.
−Removed: To test the estimated fair value of the Company's China route authorities indefinite-lived intangible, we performed audit procedures that included, among others, assessing the fair value methodology used by management and evaluating the significant assumptions used in the valuation models.
+Added: To test the estimated fair value of the Company's China intangible assets, we performed audit procedures that included, among others, assessing the fair value methodology used by management and evaluating the significant assumptions used in the valuation model.
We compared significant assumptions to current industry, market and economic trends, and to the Company's historical results.
−Removed: We assessed the historical accuracy of management's estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the intangible asset that would result from changes in assumptions.
−Removed: We also involved a valuation specialist to assist in our evaluation of the Company's valuation methodology and discount rates.
+Added: We assessed the historical accuracy of management's estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the China intangible assets that would result from changes in assumptions.
+Added: We also involved a valuation specialist to assist in our evaluation of the Company's valuation methodology and discount rate.
Deferred Tax Assets—Valuation Allowance
1 unchanged sentence
As more fully described in Note 6 to the consolidated financial statements, at December 31, 2021, the Company had deferred tax assets of $7.5 billion.
−Removed: In addition, the Company had deferred tax liabilities of $6.5 billion.
+Added: In addition, the Company had deferred tax liabilities available to offset deferred tax assets of $6.2 billion.
Deferred tax assets are reduced by a valuation allowance if, based on the weight of all available evidence, in management's judgment it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.
−Removed: Auditing management's assessment of the realizability of its deferred tax assets involved complex auditor judgment because management's estimate is highly judgmental and based on significant assumptions that may be affected by future market or economic conditions.
+Added: Auditing management's assessment of the realizability of its deferred tax assets involved complex auditor judgment because management's judgement involves significant assumptions about the ability to generate future taxable income that may be affected by future market or economic conditions.
How we addressed the matter in our audit
4 unchanged sentences
For example, we compared the projections of future taxable income with the actual results of prior periods, as well as management's consideration of current industry and economic trends.
−Removed: Frequent Flyer Accounting – Co-Brand Agreement
−Removed: Description of the matter
−Removed: At December 31, 2020, the Company's frequent flyer deferred revenue liability was $6.0 billion.
−Removed: For the year ended December 31, 2020, the Company recognized revenue of $568 million classified as travel miles redeemed within passenger revenue, revenue of $69 million classified as non-travel miles redeemed within other operating revenue and revenue of $1.7 billion associated with various partner agreements including, but not limited to, the JPMorgan Chase Bank, N.A.
−Removed: ("Chase") co-brand agreement, classified as other operating revenue in the consolidated statement of operations.
−Removed: As disclosed in Note 1 to the consolidated financial statements, effective January 1, 2020, the Company amended its co-brand agreement with Chase.
−Removed: The Company allocates the consideration received from Chase based on its best estimate of the relative selling price of the products and services delivered, including the use of the Company's brand.
−Removed: Auditing the Company's accounting for its co-brand agreement with Chase was complex and highly judgmental due to the significant estimation required in determining the selling price of the Company's brand deliverable primarily resulting from the absence of observable standalone selling prices.
−Removed: A change in the estimated selling price of the brand deliverable could have a material impact on the deferred revenue balance and the timing of revenue recognition.
−Removed: How we addressed the matter in our audit
−Removed: We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company's accounting for its co-brand agreement with Chase, including controls specific to the estimated selling price of the Company's brand deliverable and the completeness and accuracy of the data underlying the brand deliverable estimate.
−Removed: To test the estimated selling price of the brand deliverable, our audit procedures included, among others, involving a valuation specialist to assist in testing the method used to develop the selling price of the Company's brand deliverable, and assessing the reasonableness of the inputs used to develop the estimate, which included corroborating those inputs to publicly available data.
−Removed: Additionally, we performed sensitivity analyses to evaluate the changes to the Company's deferred revenue that would result from changes in the estimated standalone selling price of the Company's brand deliverable.
/s/ Ernst & Young LLP
1 unchanged sentence
Chicago, Illinois
−Removed: March 1, 2021
+Added: February 18, 2022
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
24 unchanged sentences
Indefinite-lived Intangible Asset (China Route Authorities) Impairment Analysis
−Removed: Description of the matter At December 31, 2020, the Company’s China route authorities indefinite-lived intangible asset had a carrying value of approximately $1.0 billion.
+Added: Description of the matter At December 31, 2021, the carrying value of the Company's China route authorities indefinite-lived intangible assets (the China intangible assets) was $1.02 billion.
As discussed in Note 1 of the consolidated financial statements, indefinite-lived assets are reviewed for impairment on an annual basis as of October 1, or on an interim basis whenever a triggering event occurs.
−Removed: As discussed in Note 14 of the consolidated financial statements, the Company recorded a $130 million interim impairment charge related to this intangible asset.
−Removed: Auditing management's annual China route authorities indefinite-lived intangible impairment test was complex and judgmental due to the significant estimation required in determining the fair value.
+Added: Auditing management's annual China intangible assets impairment test was complex and highly judgmental due to the significant estimation required in determining the fair value of the assets.
The fair value estimate was sensitive to significant assumptions such as revenue growth rate, operating margin and the discount rate, each of which is affected by expectations about future market or economic conditions.
As a result of the subjectivity of the assumptions, adverse changes to management's estimates could reduce the underlying cash flows used to estimate fair value and trigger impairment charges.
−Removed: How we addressed the matter in our audit We tested the Company's design and operating effectiveness of internal controls that address the risk of material misstatement relating to the estimate of fair value of route authorities used in the annual and interim impairment tests.
+Added: How we addressed the matter in our audit We tested the Company's design and operating effectiveness of internal controls that address the risk of material misstatement relating to the estimate of fair value of the China intangible assets used in the annual impairment test.
This included testing controls over management's review of the significant assumptions used in the discounted cash flow methodology, including revenue growth rate, operating margin and the discount rate.
−Removed: To test the estimated fair value of the Company's China route authorities indefinite-lived intangible, we performed audit procedures that included, among others, assessing the fair value methodology used by management and evaluating the significant assumptions used in the valuation model.
+Added: To test the estimated fair value of the Company's China intangible assets, we performed audit procedures that included, among others, assessing the fair value methodology used by management and evaluating the significant assumptions used in the valuation model.
We compared significant assumptions to current industry, market and economic trends, and to the Company's historical results.
−Removed: We assessed the historical accuracy of management's estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the intangible asset that would result from changes in assumptions.
−Removed: We also involved a valuation specialist to assist in our evaluation of the Company's valuation methodology and discount rates.
+Added: We assessed the historical accuracy of management's estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the China intangible assets that would result from changes in assumptions.
+Added: We also involved a valuation specialist to assist in our evaluation of the Company's valuation methodology and discount rate.
Deferred Tax Assets - Valuation Allowance
Description of the matter As more fully described in Note 6 to the consolidated financial statements, at December 31, 2021, the Company had deferred tax assets of $7.5 billion.
−Removed: In addition, the Company had deferred tax liabilities of $6.5 billion.
+Added: In addition, the Company had deferred tax liabilities available to offset deferred tax assets of $6.2 billion.
Deferred tax assets are reduced by a valuation allowance if, based on the weight of all available evidence, in management’s judgment it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.
−Removed: Auditing management's assessment of the realizability of its deferred tax assets involved complex auditor judgment because management's estimate is highly judgmental and based on significant assumptions that may be affected by future market or economic conditions.
+Added: Auditing management's assessment of the realizability of its deferred tax assets involved complex auditor judgment because management's judgement involves significant assumptions about the ability to generate future taxable income that may be affected by future market or economic conditions.
How we addressed the matter in our audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls that address the risks of material misstatement relating to the realizability of deferred tax assets.
3 unchanged sentences
For example, we compared the projections of future taxable income with the actual results of prior periods, as well as management's consideration of current industry and economic trends.
−Removed: Frequent Flyer Accounting – Co-Brand Agreement
−Removed: Description of the matter At December 31, 2020, the Company's frequent flyer deferred revenue liability was $6.0 billion.
−Removed: For the year ended December 31, 2020, the Company recognized revenue of 568 million classified as travel miles redeemed within passenger revenue, revenue of $69 million classified as non-travel miles redeemed within other operating revenue and revenue of $1.7 billion associated with various partner agreements including, but not limited to, the JPMorgan Chase Bank, N.A.
−Removed: ("Chase") co-brand agreement, classified as other operating revenue in the consolidated statement of operations.
−Removed: As disclosed in Note 1 to the consolidated financial statements, effective January 1, 2020, the Company amended its co-brand agreement with Chase.
−Removed: The Company allocates the consideration received from Chase based on its best estimate of the relative selling price of the products and services delivered, including the use of the Company's brand.
−Removed: Auditing the Company's accounting for its co-brand agreement with Chase was complex and highly judgmental due to the significant estimation required in determining the selling price of the Company's brand deliverable primarily resulting from the absence of observable standalone selling prices.
−Removed: A change in the estimated selling price of the brand deliverable could have a material impact on the deferred revenue balance and the timing of revenue recognition.
−Removed: How we addressed the matter in our audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company's accounting for its co-brand agreement with Chase, including controls specific to the estimated selling price of the Company's brand deliverable and the completeness and accuracy of the data underlying the brand deliverable estimate.
−Removed: To test the estimated selling price of the brand deliverable, our audit procedures included, among others, involving a valuation specialist to assist in testing the method used to develop the selling price of the Company's brand deliverable, and assessing the reasonableness of the inputs used to develop the estimate, which included corroborating those inputs to publicly available data.
−Removed: Additionally, we performed sensitivity analyses to evaluate the changes to the Company's deferred revenue that would result from changes in the estimated standalone selling price of the Company's brand deliverable.
/s/ Ernst & Young LLP
1 unchanged sentence
Chicago, Illinois
−Removed: March 1, 2021
+Added: February 18, 2022
UNITED AIRLINES HOLDINGS, INC.
17 unchanged sentences
Aircraft rent 228 198 288
−Removed: Special charges (credit) ( 2,616 ) 246 487
+Added: Special charges (credits) ( 3,367 ) ( 2,616 ) 246
Other operating expenses 4,433 3,486 6,275
69 unchanged sentences
Current maturities of long-term debt 3,002 1,911
+Added: Current maturities of other financial liabilities 834 18
Current maturities of operating leases 556 612
9 unchanged sentences
Postretirement benefit liability 1,000 994
−Removed: Deferred income taxes — 1,736
−Removed: Other financial liabilities from sale-leasebacks 1,140 —
+Added: Other financial liabilities 863 1,140
Other 1,284 1,156
27 unchanged sentences
Changes in operating assets and liabilities -
−Removed: Decrease in receivables 135 44 17
+Added: (Increase) decrease in receivables ( 448 ) 135 44
(Increase) decrease in other assets ( 292 ) 484 ( 252 )
8 unchanged sentences
Proceeds from sale of short-term and other investments 397 2,319 2,996
+Added: Proceeds from sale of property and equipment 107 6 49
Loans made to others — — ( 174 )
−Removed: Investment in affiliates — ( 36 ) ( 139 )
Other, net ( 1 ) 4 30
2 unchanged sentences
Repurchases of common stock — ( 353 ) ( 1,645 )
−Removed: Proceeds from issuance of debt 16,044 1,847 1,594
+Added: Proceeds from issuance of debt, net of discounts and fees 11,096 15,676 1,786
Proceeds from equity issuance 532 2,103 —
−Removed: Payments of long-term debt ( 4,383 ) ( 1,240 ) ( 1,727 )
−Removed: Principal payments under finance leases ( 66 ) ( 151 ) ( 79 )
−Removed: Capitalized financing costs ( 368 ) ( 61 ) ( 37 )
+Added: Payments of long-term debt, finance leases and other financing liabilities ( 5,205 ) ( 4,449 ) ( 1,391 )
Other, net ( 27 ) ( 20 ) ( 30 )
5 unchanged sentences
Property and equipment acquired through the issuance of debt, finance leases and other $ 814 $ 1,968 $ 515
−Removed: Lease modifications and lease conversions 527 ( 2 ) 52
Right-of-use assets acquired through operating leases 771 198 498
−Removed: Capacity purchase agreement liability converted to debt 33 — —
−Removed: Debt associated with termination of a maintenance service agreement — — 163
+Added: Equity interest in Avianca Group International Limited ("AVG") received in consideration for a loan 164 — —
+Added: Notes receivable and warrants received for entering into aircraft and other ancillary business agreements 131 — —
+Added: Lease modifications and lease conversions 123 527 ( 2 )
Cash Paid (Refunded) During the Period for:
14 unchanged sentences
Repurchases of common stock ( 19.2 ) — — ( 1,641 ) — — ( 1,641 )
−Removed: Net treasury stock issued for share-based awards 0.4 — ( 38 ) 26 ( 4 ) — ( 16 )
−Removed: Adoption of accounting standard related to equity investments — — — — ( 6 ) 6 —
−Removed: Balance at December 31, 2018 269.9 3 6,120 ( 1,993 ) 6,715 ( 803 ) 10,042
−Removed: Net income — — — — 3,009 — 3,009
−Removed: Other comprehensive income — — — — — 85 85
−Removed: Stock-settled share-based compensation — — 66 — — — 66
−Removed: Repurchases of common stock ( 19.2 ) — — ( 1,641 ) — — ( 1,641 )
−Removed: Net treasury stock issued for share-based awards 0.5 — ( 57 ) 35 ( 8 ) — ( 30 )
+Added: Stock issued for share-based awards, net of shares withheld for tax 0.5 — ( 57 ) 35 ( 8 ) — ( 30 )
Balance at December 31, 2019 251.2 3 6,129 ( 3,599 ) 9,716 ( 718 ) 11,531
2 unchanged sentences
Stock-settled share-based compensation — — 97 — — — 97
−Removed: Sale of common stock 64.6 1 2,102 — — — 2,103
+Added: Issuance of common stock 64.6 1 2,102 — — — 2,103
Repurchases of common stock ( 4.4 ) — — ( 342 ) — — ( 342 )
−Removed: Net treasury stock issued for share-based awards 0.4 — ( 59 ) 44 ( 4 ) — ( 19 )
+Added: Stock issued for share-based awards, net of shares withheld for tax 0.4 — ( 59 ) 44 ( 4 ) — ( 19 )
Warrants issued — — 97 — — — 97
1 unchanged sentence
Balance at December 31, 2020 311.8 4 8,366 ( 3,897 ) 2,626 ( 1,139 ) 5,960
+Added: Net loss — — — — ( 1,964 ) — ( 1,964 )
+Added: Other comprehensive income — — — — — 197 197
+Added: Stock-settled share-based compensation — — 232 — — — 232
+Added: Warrants issued — — 99 — — — 99
+Added: Issuance of common stock 11.0 — 532 — — — 532
+Added: Stock issued for share-based awards, net of shares withheld for tax 1.0 — ( 73 ) 83 ( 37 ) — ( 27 )
+Added: Balance at December 31, 2021 323.8 $ 4 $ 9,156 $ ( 3,814 ) $ 625 $ ( 942 ) $ 5,029
(a) Transition adjustment due to the adoption of Accounting Standards Update No.
2016-13, Financial Instruments — Credit Losses .
−Removed: See Note 1 to the financial statements contained in Part II, Item 8 of this report.
The accompanying Combined Notes to Consolidated Financial Statements are an integral part of these statements.
18 unchanged sentences
Aircraft rent 228 198 288
−Removed: Special charges (credit) ( 2,616 ) 246 487
+Added: Special charges (credits) ( 3,367 ) ( 2,616 ) 246
Other operating expenses 4,431 3,484 6,273
67 unchanged sentences
Current maturities of long-term debt 3,002 1,911
+Added: Current maturities of other financial liabilities 834 18
Current maturities of operating leases 556 612
9 unchanged sentences
Postretirement benefit liability 1,000 994
−Removed: Deferred income taxes — 1,763
−Removed: Other financial liabilities from sale-leasebacks 1,140 —
+Added: Other financial liabilities 863 1,140
Other 1,284 1,156
8 unchanged sentences
Accumulated other comprehensive loss ( 942 ) ( 1,139 )
−Removed: Payable to (receivable from) parent 2,043 ( 143 )
+Added: Payable to parent 2,646 2,043
Total stockholder's equity 4,998 5,928
15 unchanged sentences
Changes in operating assets and liabilities -
−Removed: Decrease in receivables 135 44 17
+Added: Increase (decrease) in receivables ( 448 ) 135 44
Increase in intercompany receivables ( 28 ) ( 14 ) ( 33 )
9 unchanged sentences
Proceeds from sale of short-term and other investments 397 2,319 2,996
+Added: Proceeds from sale of property and equipment 107 6 49
Loans made to others — — ( 174 )
−Removed: Investment in affiliates — ( 36 ) ( 139 )
Other, net ( 1 ) 4 30
1 unchanged sentence
Financing Activities:
−Removed: Proceeds from issuance of debt 16,044 1,847 1,594
−Removed: Payments of long-term debt ( 4,383 ) ( 1,240 ) ( 1,727 )
+Added: Proceeds from issuance of debt, net of discounts and fees 11,096 15,676 1,786
+Added: Payments of long-term debt, finance leases and other financing liabilities ( 5,205 ) ( 4,449 ) ( 1,391 )
Proceeds from issuance of parent company stock 532 2,103 —
Dividend to UAL — ( 353 ) ( 1,645 )
−Removed: Principal payments under finance leases ( 66 ) ( 151 ) ( 79 )
−Removed: Capitalized financing costs ( 368 ) ( 61 ) ( 37 )
Other, net — ( 2 ) —
5 unchanged sentences
Property and equipment acquired through the issuance of debt, finance leases and other $ 814 $ 1,968 $ 515
−Removed: Lease modifications and lease conversions 527 ( 2 ) 52
Right-of-use assets acquired through operating leases 771 198 498
−Removed: Capacity purchase agreement liability converted to debt 33 — —
−Removed: Debt associated with termination of a maintenance service agreement — — 163
+Added: Equity interest in AVG received in consideration for a loan
+Added: Notes receivable and warrants received for entering into aircraft and other ancillary business agreements 131 — —
+Added: Lease modifications and lease conversions 123 527 ( 2 )
Cash Paid (Refunded) During the Period for:
15 unchanged sentences
Balance at December 31, 2019 — 12,353 ( 718 ) ( 143 ) 11,492
−Removed: Net income — 3,011 — — 3,011
−Removed: Other comprehensive income — — 85 — 85
+Added: Net loss — ( 7,067 ) — — ( 7,067 )
+Added: Other comprehensive loss — — ( 421 ) — ( 421 )
Dividend to UAL ( 12 ) ( 330 ) — — ( 342 )
Stock-settled share-based compensation 97 — — — 97
+Added: Adoption of new accounting standard (a) — ( 17 ) — — ( 17 )
+Added: Impact of UAL common stock issuance — — — 2,103 2,103
Other — — — 83 83
2 unchanged sentences
Other comprehensive loss — — 197 — 197
−Removed: Dividend to UAL ( 12 ) ( 330 ) — — ( 342 )
Stock-settled share-based compensation 232 — — — 232
−Removed: Adoption of new accounting standard (a) — ( 17 ) — — ( 17 )
−Removed: Other (b) — — — 2,186 2,186
+Added: Impact of UAL common stock issuance — — — 532 532
+Added: Other — — — 71 71
Balance at December 31, 2021 $ 317 $ 2,977 $ ( 942 ) $ 2,646 $ 4,998
1 unchanged sentence
2016-13, Financial Instruments — Credit Losses .
−Removed: See Note 1 to the financial statements contained in Part II, Item 8 of this report for additional information.
−Removed: (b) Primarily relates to equity issuances of UAL common stock.
The accompanying Combined Notes to Consolidated Financial Statements are an integral part of these statements.
10 unchanged sentences
We sometimes use the words "we," "our," "us," and the "Company" in this report for disclosures that relate to all of UAL and United.
−Removed: Recent Developments
−Removed: 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.
−Removed: The Company began experiencing a significant decline in international and domestic demand related to COVID-19 during the first quarter of 2020.
−Removed: The decline in demand caused a material deterioration in our revenues in 2020, resulting in a net loss of $ 7.1 billion.
−Removed: The full extent of the ongoing impact of COVID-19 on the Company's longer-term operational and financial performance will depend on future developments, including those outside our control related to the efficacy and speed of vaccination programs in curbing the spread of the virus, the introduction and spread of new variants of the virus which may be resistant to currently approved vaccines, passenger testing requirements, mask mandates or other restrictions on travel, all of which are highly uncertain and cannot be predicted with certainty
−Removed: In response to decreased demand, the Company cut, relative to 2019 capacity, approximately 57 % of its scheduled capacity for 2020.
−Removed: In the first quarter of 2021, the Company expects scheduled capacity to be down at least 51 % versus the first quarter of 2019.
−Removed: The Company plans to continue to proactively evaluate and cancel flights on a rolling 60 -day basis until it sees signs of a recovery in demand and expects demand to remain suppressed, relative to 2019 levels, until vaccines for COVID-19 are widely distributed and are effective in curbing the spread of the virus.
−Removed: In addition, the Company does not currently expect the recovery from COVID-19 to follow a linear path.
−Removed: As such, the Company's actual flown capacity may differ materially from its currently scheduled capacity.
−Removed: The Company has taken a number of actions in response to the decreased demand for air travel.
−Removed: In addition to the schedule reductions discussed above, the Company has:
−Removed: • reduced its planned capital expenditures and reduced operating expenditures in 2020 (including by postponing projects deemed non-critical to the Company's operations);
−Removed: • terminated its share repurchase program;
−Removed: • issued or entered into approximately $ 13.4 billion in new secured notes, secured term loan facilities and new aircraft financings in 2020, including short term borrowings that were paid in 2020;
−Removed: • borrowed $ 1.0 billion under the $ 2.0 billion revolving credit facility established under the Amended and Restated Credit and Guaranty Agreement (the "Credit Agreement");
−Removed: • availed itself of financial assistance and/or financing made available by the U.S.
−Removed: Treasury Department ("Treasury"), as further described below;
−Removed: • raised approximately $ 2.1 billion in cash proceeds from the issuance and sale of UAL common stock in 2020;
−Removed: • entered into agreements to finance certain aircraft currently subject to purchase agreements through sale and leaseback transactions;
−Removed: • elected to defer the payment of $ 199 million in payroll taxes incurred through December 31, 2020, as provided by the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), until December 2021, at which time 50% is due, with the remaining amount due December 2022;
−Removed: • taken a number of actions to reduce employee-related costs, including, among other items, the Company's Chief Executive Officer and President waived 100 % of their respective base salaries through the end of 2020, other officers temporarily waived a portion of their base salaries, the Company's non-employee directors waived 100 % of their cash compensation for the second and third quarters of 2020, the Company suspended merit salary increases for 2020 and implemented a temporary four-day work week for management and administrative employees and the Company offered voluntary unpaid leaves of absence.
−Removed: The Company also entered into an agreement with its pilots to distribute fewer flight hours to a larger number of pilots, while also reaching agreements to provide a path to early retirement and reduce expense through voluntary leave of absence programs.
−Removed: In addition, and as announced in July 2020, the Company started the involuntary furlough process by issuing Worker Adjustment and Retraining Notification ("WARN") Act notices to 36,000 of its employees.
−Removed: Since then, the Company worked to reduce the total number of furloughs to approximately 13,000 employees by working closely with its union partners, introducing new voluntary options selected by approximately 9,000 employees and proposing creative solutions that would save jobs.
−Removed: As a result of the Company's entry into the PSP2 Agreement, as described below, the Company issued recall notices to these furloughed employees and others impacted by furlough mitigation programs.
−Removed: See the discussion below for more detail about the PSP2 Agreement and the recall process.
−Removed: The Company continues to focus on reducing expenses and managing its liquidity.
−Removed: We expect to continue to modify our cost management structure and capacity as the timing of demand recovery becomes more certain.
−Removed: On March 27, 2020, the President of the United States signed the CARES Act into law.
−Removed: The CARES Act is intended to respond to the COVID-19 pandemic and its impact on the economy, public health, state and local governments, individuals, and businesses.
−Removed: The CARES Act also provides supplemental appropriations for federal agencies to respond to the COVID-19 pandemic.
−Removed: On April 20, 2020, United entered into a Payroll Support Program Agreement (the "PSP Agreement") with Treasury providing the Company with total funding of approximately $ 5.1 billion pursuant to the Payroll Support Program established under the CARES Act.
−Removed: These funds were used to pay for the wages, salaries and benefits of United employees.
−Removed: Approximately $ 3.6 billion of the $ 5.1 billion was provided as a direct grant, and approximately $ 1.5 billion consists of indebtedness evidenced by a 10 -year senior unsecured promissory note (the "PSP Note").
−Removed: See Note 2 of this report for additional information related to warrants issued in connection with the PSP Note and Note 10 of this report for a discussion of the PSP Note.
−Removed: During 2020, UAL and United entered into a loan and guarantee agreement with Treasury.
−Removed: The agreement provides for a term loan facility of up to approximately $ 7.5 billion (the "CARES Act Term Loan Facility") pursuant to the loan program established under Section 4003(b)(1) of the CARES Act (the "Loan Program").
−Removed: The loans (the "CARES Act Term Loans") may be disbursed in up to three disbursements on or before May 28, 2021.
−Removed: On September 28, 2020, United borrowed, and recorded as Long-term debt on the Company's consolidated balance sheet, $ 520 million under the CARES Act Term Loan Facility, the proceeds of which were used to pay certain transaction fees and expenses and for working capital and other general corporate purposes of the Company.
−Removed: See Note 2 of this report for additional information related to warrants issued in connection with the CARES Act Term Loans and Note 10 of this report for a discussion of the CARES Act Term Loans.
−Removed: Under the PSP Agreement and the Loan Program, the Company and its business are subject to certain restrictions, including, but not limited to, restrictions on the payment of dividends and the ability to repurchase UAL's equity securities, requirements to maintain certain levels of scheduled service and certain limitations on executive compensation.
−Removed: On January 15, 2021, United entered into a Payroll Support Agreement (the "PSP2 Agreement") with Treasury providing the Company with total funding of approximately $ 2.6 billion, pursuant to the Payroll Support Program established under Subtitle A of Title IV of Division N of the Consolidated Appropriations Act, 2021 (the "PSP Extension Law").
−Removed: 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.
−Removed: Approximately $ 1.9 billion was provided as a direct grant and approximately $ 753 million consists of indebtedness evidenced by a 10 -year senior unsecured promissory note (the "PSP2 Note").
−Removed: As of February 25, 2021, we have received a total of $ 1.3 billion.
−Removed: See Note 2 of this report for additional information on warrants issued in connection with the PSP2 Note and Note 10 of this report for a discussion of the PSP2 Note.
−Removed: Pursuant to the PSP2 Agreement, the Company is 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 its U.S.
−Removed: employee wages, salaries and benefits, including the payment of lost wages, salaries and benefits to returning U.S.
−Removed: requirements to maintain U.S.
−Removed: employment levels from the date of the PSP2 Agreement through March 31, 2021;
−Removed: requirements to recall (as such term is defined in the PSP2 Agreement), any U.S.
−Removed: employees subject to involuntary termination or furlough between October 1, 2020 and the date of the PSP2 Agreement, compensate such returning employees for certain lost salary, wages and benefits between December 1, 2020 and the date of the
−Removed: PSP2 Agreement and restore certain rights and protections for such returning employees;
−Removed: provisions prohibiting certain reductions in U.S.
−Removed: employee wages, salaries and benefits;
−Removed: provisions prohibiting the payment of dividends and the repurchase of certain equity until March 31, 2022;
−Removed: and provisions restricting the payment of certain executive compensation until October 1, 2022.
−Removed: As a result of the PSP2 Agreement, the Company offered employment, through March 2021, to employees who were impacted by involuntary furloughs.
−Removed: Because the Company cannot predict with certainty whether it will receive further payroll support from the federal government or when demand for air travel will increase in the short term, the Company is preparing for the possibility that these recalled employees might again be furloughed as soon as the end of the first quarter of 2021.
−Removed: The Company may record additional costs associated with these actions in the first quarter of 2021.
−Removed: Also, in order to reduce the number of such furloughs, during the first quarter of 2021, the Company offered voluntary leave and other programs to certain of its frontline employees, the cost of which cannot be estimated at this time.
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
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Actual results could differ from those estimates.
−Removed: (b) Revenue Recognitio n— The Company presents Passenger revenue, Cargo revenue and Other operating revenue on its income statement.
−Removed: Passenger revenue is recognized when transportation is provided and Cargo revenue is recognized when shipments arrive at their destination.
+Added: (b) Revenue Recognitio n— Passenger revenue is recognized when transportation is provided and Cargo revenue is recognized when shipments arrive at their destination.
Other operating revenue is recognized as the related performance obligations are satisfied.
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Non-refundable tickets generally expire on the date of the intended travel, unless the date is extended by notification from the customer on or before the intended travel date.
−Removed: In April 2020, due to the COVID-19 pandemic, the Company extended the expiration dates on all passenger tickets issued between May 1, 2019 and March 31, 2020 to 24 months from the original issue date.
−Removed: On February 24, 2021, the Company extended the expiration dates for all tickets issued between May 1, 2019 and March 31, 2021 to March 31, 2022.
−Removed: Fees charged in association with changes or extensions to non-refundable tickets are considered part of the Company's passenger travel obligation.
−Removed: As such, those fees are deferred at the time of collection and recognized at the time the travel is provided.
−Removed: Effective August 30, 2020, the Company eliminated change fees on all standard Economy and Premium cabin tickets for travel within the 50 U.S.
−Removed: states, Washington, D.C., Puerto Rico and the U.S.
−Removed: Virgin Islands.
−Removed: Also, in December 2020, the Company eliminated change fees on flights from the U.S.
−Removed: to all international destinations and fees on Basic Economy and all other international travel tickets issued by March 31, 2021.
United initially capitalizes the costs of selling airline travel tickets and then recognizes those costs as Distribution expense at the time of travel.
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The Company defers amounts related to future travel in its Advance ticket sales liability account.
−Removed: The Company's Advance ticket sales liability
−Removed: 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.
−Removed: In April 2020, due to the COVID-19 pandemic, the Company extended the expiration dates of ETCs from 12 months from the date of issuance to 24 months from the date of issuance and extended the expiration of FFCs, for tickets issued between May 1, 2019 and March 31, 2020 to 24 months from the original issue date.
−Removed: On February 24, 2021, the Company extended the expiration dates for all tickets issued between May 1, 2019 and March 31, 2021 to March 31, 2022.
−Removed: As of December 31, 2020, the Company's Advance ticket sales liability included $ 3.1 billion related to these credits and approximately 74 % of these credits have expiration dates extending beyond 12 months.
−Removed: The Company records breakage revenue on the travel date for its estimate of tickets that will expire unused.
−Removed: 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.
−Removed: The Company continues to use its historical experience and most recent trends and program changes to estimate its breakage.
+Added: 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.
+Added: ETCs are valid up to two years from the date of issuance;
+Added: however, all ETCs due to expire prior to December 31, 2022 have been extended until December 31, 2022.
+Added: FFCs are valid for 12 months from the original ticket date;
+Added: however, all FFCs issued on or before
+Added: December 31, 2021 have been extended to be valid until December 31, 2022.
+Added: As of December 31, 2021, the Company's Advance ticket sales liability included $ 3.2 billion related to ETCs and FFCs.
+Added: The Company estimates the value of Advance ticket sales that will expire unused ("breakage") and recognizes revenue at the scheduled flight date.
+Added: 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.
+Added: 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 revenue from breakage.
The Company will update its breakage estimates as future information is received.
−Removed: Given the uncertainty of travel demand caused by COVID-19, a significant portion of the $ 3.1 billion related to the ETCs and FFCs may expire unused in future periods and get recognized as breakage.
−Removed: Also, 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 Advanced ticket liability in current liabilities even though some of the ETCs and FFCs could be used after the next 12 months.
+Added: Changes in estimates of breakage are recognized prospectively in proportion to the remaining usage of the related tickets.
In the years ended December 31, 2021, 2020 and 2019, the Company recognized approximately $ 1.8 billion, $ 3.0 billion and $ 3.4 billion, respectively, of passenger revenue for tickets that were included in Advance ticket sales at the beginning of those periods.
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Ancillary Fees.
−Removed: The Company charges fees, separately from ticket sales, for certain ancillary services that are directly related to passengers' travel, such as ticket change fees, baggage fees, inflight amenities fees, and other ticket-related fees.
+Added: The Company charges fees, separately from ticket sales, for certain ancillary services that are directly related to passengers' travel, such as baggage fees, premium seat fees, inflight amenities fees, and other ticket-related fees.
These ancillary fees are part of the travel performance obligation and, as such, are recognized as passenger revenue when the travel occurs.
−Removed: The Company recorded $ 918 million, $ 2.4 billion and $ 2.2 billion of ancillary fees within passenger revenue in the years ended December 31, 2020, 2019 and 2018, respectively.
+Added: The Company recorded $ 2.2 billion, $ 1.3 billion and $ 3.6 billion of ancillary fees within passenger revenue in the years ended December 31, 2021, 2020 and 2019, respectively.
(c) Ticket Taxes— Certain governmental taxes are imposed on the Company's ticket sales through a fee included in ticket prices.
1 unchanged sentence
These fees are recorded on a net basis and, as a result, are excluded from revenue.
−Removed: The CARES Act provided an excise tax holiday that suspended certain U.S.
−Removed: aviation excise taxes.
−Removed: The excise tax holiday began on March 28, 2020 and ended on December 31, 2020.
−Removed: During the excise tax holiday, no excise tax was imposed on amounts paid for the transportation of persons and property by air.
−Removed: At December 31, 2020, the Company had approximately $ 150 million of excise taxes refunded to customers that are to be reimbursed by the U.S.
−Removed: government in 2021.
(d) Frequent Flyer Accounting— United's MileagePlus loyalty program builds customer loyalty by offering awards, benefits and services to program participants.
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Members can also earn miles by purchasing goods and services from our network of non-airline partners.
−Removed: We have contracts to sell miles to these partners with the terms extending from one to nine years .
+Added: We have contracts to sell miles to these partners with the terms extending from one to eight years .
These partners include domestic and international credit card issuers, retail merchants, hotels, car rental companies and our participating airline partners.
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The Company reviews its breakage estimates annually based upon the latest available information.
−Removed: The Company's estimate of the expected breakage of miles requires significant management judgment.
−Removed: Current and future changes to breakage assumptions, or to program rules and program redemption opportunities, may result in material changes to the deferred revenue balance as well as recognized revenues from the program.
+Added: The Company's estimate of the expected breakage of miles requires management judgment and current and future changes to breakage assumptions, or to program rules and program redemption opportunities, may result in material changes to the deferred revenue balance as well as recognized revenues from the program.
For the portion of the outstanding miles that we estimate will not be redeemed, we recognize the associated value proportionally as the remaining miles are redeemed.
Co-Brand Agreement .
−Removed: During 2020, the Company entered into a Third Amended and Restated Co-Branded Card Marketing Services Agreement (as amended from time to time, the "Co-Brand Agreement") with its co-branded credit card partner JPMorgan Chase Bank, N.A.
−Removed: The Co-Brand Agreement extended the term of the agreement into 2029 and modified certain other terms, resulting in a different allocation among the separately identifiable performance obligations.
+Added: United has a contract (the "Co-Brand Agreement") to sell MileagePlus miles to its co-branded credit card partner JPMorgan Chase Bank USA, N.A.
Chase awards miles to MileagePlus members based on their credit card activity.
10 unchanged sentences
Bag fees and seat upgrades are recorded to Passenger revenue at the time of the associated travel.
−Removed: We account for all the payments received (including monthly and one-time payments) under the Co-Brand Agreement by allocating them to the separately identifiable performance obligations.
+Added: We account for all the payments received under the Co-Brand Agreement by allocating them to the separately identifiable performance obligations.
The fair value of the separately identifiable performance obligations is determined using management's estimated selling price of each component.
13 unchanged sentences
Total Frequent flyer deferred revenue - ending balance $ 6,282 $ 5,975
−Removed: In the years ended December 31, 2020, 2019 and 2018, the Company recognized, in Other operating revenue, $ 1.7 billion, $ 2.0 billion and $ 2.0 billion (including a one-time $ 50 million payment), 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 Chase co-brand agreement.
+Added: In the years ended December 31, 2021, 2020 and 2019, the Company recognized, in Other operating revenue, $ 1.8 billion, $ 1.7 billion and $ 2.0 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 Co-Brand Agreement.
The portion related to the MileagePlus miles awarded of the total amounts received 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.
−Removed: Given the uncertainty in travel demand caused by COVID-19, we currently estimate a greater percentage of award redemptions will occur beyond 12 months, however this estimate may change as travel demand and award redemptions change in future periods.
(e) Cash and Cash Equivalents and Restricted Cash— Highly liquid investments with a maturity of three months or less on their acquisition date are classified as cash and cash equivalents.
−Removed: Restricted cash-current— primarily includes $ 217 million cash collateral for a standby letter of credit associated with guarantees under the BRW Term Loan.
−Removed: See Note 8 of this report for additional information on the BRW Term Loan and Note 13 for additional information on the guarantee.
−Removed: The balance also includes amounts to be used for the payment of fees, principal and interest on the $ 6.8 billion of senior secured notes and a secured term loan facility (the "MileagePlus Financing") secured by substantially all of the assets of Mileage Plus Holdings, LLC ("MPH"), a direct wholly-owned subsidiary of United.
−Removed: Restricted cash-non-current— primarily includes collateral associated with the MileagePlus Financing, collateral for letters of credit and collateral associated with facility leases and other insurance-related obligations.
Restricted cash is classified as short-term or long-term in the consolidated balance sheets based on the expected timing of return of the assets to the Company or payment to an outside party.
+Added: Restricted cash-current— The December 31, 2021 balance includes amounts to be used for the payment of fees, principal and interest on the $ 6.8 billion of senior secured notes and a secured term loan facility (the "MileagePlus Financing") secured by substantially all of the assets of Mileage Plus Holdings, LLC ("MPH"), a direct wholly-owned subsidiary of United.
+Added: Restricted cash-non-current— The December 31, 2021 balance primarily includes collateral associated with the MileagePlus Financing, collateral for letters of credit and collateral associated with facility leases and other insurance-related obligations.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the statements of consolidated cash flows (in millions):
10 unchanged sentences
Unrealized gains and losses on available-for-sale securities are reflected as a component of accumulated other comprehensive income (loss).
−Removed: Equity investments with readily determinable fair values are measured at fair value.
−Removed: Equity investments without readily determinable fair values are measured using the equity method, or measured at cost with adjustments for observable changes in price or impairments (referred to as the measurement alternative).
+Added: Equity investments are accounted for under the equity method if we are able to exercise significant influence over an investee.
+Added: Equity investments for which we do not have significant influence are recorded at fair value or at cost, if fair value is not readily determinable, with adjustments for observable changes in
+Added: price or impairments (referred to as the measurement alternative).
Changes in fair value are recorded in Unrealized gains (losses) on investments, net in the consolidated statements of operations.
1 unchanged sentence
(g) Accounts Receivable— Accounts receivable primarily consist of amounts due from credit card companies, non-airline partners, and cargo customers.
−Removed: We provide an allowance for uncollectible accounts equal to the estimated losses expected to be incurred based on historical write-offs and other specific analyses.
−Removed: Bad debt expense and write-offs related to trade receivables were not material for the year ended December 31, 2020 and 2019.
+Added: We provide an allowance for credit losses expected to be incurred.
+Added: We base our allowance on various factors including, but not limited to, aging, payment history, write-offs, macro-economic indicators and other credit monitoring indicators.
+Added: Credit loss expense and write-offs related to trade receivables were not material for the years ended December 31, 2021 and 2020.
(h) Aircraft Fuel, Spare Parts and Supplies— The Company accounts for aircraft fuel, spare parts and supplies at average cost and provides an obsolescence allowance for aircraft spare parts with an assumed residual value of 10% of original cost.
6 unchanged sentences
Leasehold improvements are amortized over the remaining term of the lease, including estimated facility renewal options when renewal is reasonably certain at key airports, or the estimated useful life of the related asset, whichever is less.
−Removed: Properties under finance leases are amortized on the straight-line method over the life of the lease or, in the case of certain aircraft, over their estimated useful lives, whichever is shorter.
+Added: Properties under finance leases are amortized using the straight-line method over the life of the lease or, in the case of certain aircraft, over their estimated useful lives, whichever is shorter.
Amortization of finance lease assets is included in depreciation and amortization expense.
8 unchanged sentences
As of December 31, 2021 and 2020, the Company had a carrying value of computer software of $ 499 million and $ 548 million, respectively.
−Removed: For the years ended December 31, 2020, 2019 and 2018, the Company's depreciation expense related to computer software was $ 172 million, $ 135 million and $ 122 million, respectively.
−Removed: Aircraft and aircraft spare
−Removed: parts were assumed to have residual values of approximately 10% of original cost, and other categories of property and equipment were assumed to have no residual value.
+Added: For the years ended December 31, 2021, 2020 and 2019, the Company's amortization expense related to computer software was $ 182 million, $ 172 million and $ 135 million, respectively.
+Added: Aircraft, spare engines and related rotable parts were assumed to have residual values of approximately 10% of original cost, and other categories of property and equipment were assumed to have no residual value.
(j) Long-Lived Asset Impairments— The Company evaluates the carrying value of long-lived assets subject to amortization whenever events or changes in circumstances indicate that an impairment may exist.
2 unchanged sentences
The amount of the charge is the difference between the asset's carrying value and fair market value.
−Removed: In December 2020, the Company decided to permanently ground 11 Boeing 757-200 aircraft and recorded $ 94 million in impairment changes.
+Added: In February 2021, the Company voluntarily and temporarily removed all 52 Boeing 777-200/200ER aircraft powered by Pratt & Whitney 4000 series engines from its schedule due to an engine failure incident with one of its aircraft.
+Added: The Company viewed this incident as an indicator of potential impairment.
+Added: Accordingly, as required under relevant accounting standards, United performed forecasted cash flow analyses and determined that the carrying value of the Boeing 777-200/200ER fleet is expected to be recoverable from future cash flows expected to be generated by that fleet and, consequently, no impairment was recorded.
+Added: The Company recorded impairment charges related to certain of its aircraft, related engines and spare parts of $ 97 million, $ 94 million, and $ 81 million for the years ended December 31, 2021, 2020 and 2019, respectively.
See Note 14 of this report for additional information related to impairments.
7 unchanged sentences
Because we are required to make estimates and assumptions when evaluating goodwill and indefinite-lived intangible assets for impairment, actual transaction amounts may differ materially from these estimates.
−Removed: In each quarter of 2020, the Company evaluated its goodwill and intangible assets for possible impairments due to the impact of the COVID-19 pandemic on UAL's market capitalization and cash flow projections.
−Removed: For goodwill and certain of its intangible assets, including the Company's China routes, London-Heathrow slots, alliances and the United trade name and logo, the Company performed a quantitative assessment which involved determining the fair value of the asset and comparing that amount to the asset's carrying value and, in the case of goodwill, comparing the Company's fair value to its carrying value.
+Added: In 2021, the Company evaluated its intangible assets for possible impairments.
+Added: For certain of its intangible assets, including the Company's China routes and alliances, the Company performed a quantitative assessment which involved determining the fair value of the asset and comparing that amount to the asset's carrying value.
For all other intangible assets, the Company performed a qualitative assessment of whether it was more likely than not that an impairment had occurred.
1 unchanged sentence
Key inputs into the models included forecasted capacity, revenues, fuel costs, other operating costs and an overall discount rate.
−Removed: The assumptions used for future projections include that demand will likely remain suppressed through 2021.
+Added: The assumptions used for future projections include that demand will continue to recover throughout 2022 and beyond.
These assumptions are inherently uncertain as they relate to future events and circumstances.
21 unchanged sentences
These include costs associated with lump sum cash payments that would be made in conjunction with the ratification of labor agreements.
−Removed: To the extent these upfront costs are in lieu of future pay increases, they would be capitalized and amortized over the term of the labor agreements.
+Added: To the extent these upfront costs are in lieu of future pay
+Added: increases, they would be capitalized and amortized over the term of the labor agreements.
If not, these amounts would be expensed.
11 unchanged sentences
Advertising expenses were $ 99 million, $ 87 million and $ 212 million for the years ended December 31, 2021, 2020 and 2019, respectively.
−Removed: (p) Third-Party Business— The Company has third-party business revenue that includes catering, ground handling, maintenance services and frequent flyer award non-travel redemptions.
+Added: (p) Third-Party Business— The Company has third-party business revenue that includes ground handling, maintenance services, flight academy and frequent flyer award non-travel redemptions.
Third-party business revenue is recorded in Other operating revenue.
−Removed: The Company also incurs third-party business expenses, such as maintenance, ground handling and catering services for third parties and non-travel mileage redemptions.
−Removed: The third-party business expenses are recorded in Other operating expenses, except for non-travel mileage redemption.
+Added: Expenses associated with these third-party business activities are recorded in Other operating expenses, except for non-travel mileage redemption.
Non-travel mileage redemption expenses are recorded to Other operating revenue.
4 unchanged sentences
See Note 6 of this report for additional information on UAL's uncertain tax positions.
−Removed: (r) Recently Issued Accounting Standards— The Company adopted Accounting Standards Update No.
−Removed: 2016-13 , Financial Instruments—Credit Losses ("ASU 2016-13") effective January 1, 2020.
−Removed: ASU 2016-13 replaces the incurred loss methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to calculate credit loss estimates.
−Removed: For trade receivables, loans and held-to-maturity debt securities, entities are required to estimate lifetime expected credit losses.
−Removed: For available-for-sale debt securities, entities are required to recognize an allowance for credit losses rather than a reduction to the carrying value of the asset.
−Removed: The Company recorded a $ 17 million cumulative-effect adjustment, net of related income taxes, to its retained earnings balance on January 1, 2020 as a result of this adoption.
−Removed: See Notes 8, 13 and 14 of this report for additional disclosures about the impact of ASU 2016-13 on 2020 results.
NOTE 2 - COMMON STOCKHOLDERS' EQUITY AND PREFERRED SECURITIES
−Removed: On February 24, 2020, the Company suspended share repurchases under its share repurchase program authorized by UAL's Board of Directors in July 2019.
−Removed: UAL's Board of Directors subsequently terminated this share repurchase program on April 24, 2020.
−Removed: In 2020, UAL repurchased approximately 4 million shares of UAL common stock in open market transactions for $ 0.3 billion.
−Removed: See Part II, Item 5, Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities, of this report for additional information.
−Removed: On April 20, 2020, UAL entered into a warrant agreement with Treasury, pursuant to which UAL agreed to issue to Treasury warrants to purchase up to approximately 4.6 million shares of common stock, pro rata in conjunction with increases to the principal amount outstanding under the PSP Note (the "PSP Warrants"), with an initial issuance of warrants to purchase up to approximately 2.3 million shares of common stock.
−Removed: As of December 31, 2020, UAL has issued PSP Warrants to purchase up to approximately 4.8 million shares of common stock, with such warrants accounted for as equity instruments.
−Removed: The PSP Warrants have a strike price of $ 31.50 per share (which was the closing price of UAL's common stock on The Nasdaq Stock Market on April 9, 2020).
−Removed: The PSP 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.
−Removed: The relative fair value of the PSP Warrants was calculated using a Black-Scholes options pricing model and approximately $ 66 million was recorded within stockholders' equity with an offset to the CARES Act grant credit.
−Removed: The PSP Warrants contain customary anti-dilution provisions and registration rights and are freely transferable.
−Removed: Pursuant to the terms of the PSP Warrants, PSP Warrant holders do not have any voting rights.
−Removed: In connection with the entry into the Term Loan Facility, UAL entered into a warrant agreement with Treasury on September 28, 2020, pursuant to which UAL will issue to Treasury warrants (the "Credit Agreement Warrants") to purchase up to approximately 16.4 million shares of UAL common stock, assuming United borrows the initial commitments under the Term Loan Facility in full.
−Removed: The Credit Agreement Warrants will be issued on the date of disbursement of each Term Loan in an amount corresponding to 10 % of the principal amount of each such disbursement.
−Removed: In connection with United's borrowing of the initial $ 520 million loan, on September 28, 2020, UAL issued Credit Agreement Warrants to purchase up to approximately 1.7 million shares of UAL common stock.
−Removed: The Credit Agreement Warrants will have a strike price of $ 31.50 per share.
−Removed: The Credit Agreement 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.
−Removed: The relative fair value of the Credit Agreement Warrants was calculated using a Black-Scholes options pricing model and approximately $ 30 million was recorded within stockholders' equity and as a debt discount against the outstanding loan.
−Removed: If Treasury increases its loan commitments, then the maximum amount of common stock for which warrants could be issued would increase proportionally with such increase to the commitments.
−Removed: During the first quarter of 2021, UAL entered into a warrant agreement with Treasury pursuant to which UAL will issue to Treasury 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 PSP2 Note (the "PSP2 Warrants").
−Removed: The PSP2 Warrants will have a
−Removed: strike price of $ 43.26 per share.
−Removed: 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.
−Removed: The PSP2 Warrants contain customary anti-dilution provisions, registration rights and are freely transferable.
−Removed: Pursuant to the terms of the PSP2 Warrants, PSP2 Warrant holders do not have any voting rights.
−Removed: In 2020, UAL entered into an underwriting agreement (the "Underwriting Agreement") with Morgan Stanley & Co.
+Added: On April 24, 2020, UAL's Board of Directors terminated its share repurchase program.
+Added: Under the agreements entered into pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), the Company and its business are subject to certain restrictions, including restrictions on the ability to repurchase UAL's equity securities through September 30, 2022.
+Added: During 2021, UAL entered into two Payroll Support Program Extension Agreements (collectively, the "PSP2 and PSP3 Agreements") with U.S.
+Added: Treasury Department ("Treasury") pursuant to which UAL issued to Treasury warrants to purchase up to approximately 3.5 million shares of UAL common stock (collectively, the "PSP2 and PSP3 Warrants").
+Added: The fair value of the PSP2 and PSP3 Warrants was calculated using a Black-Scholes options pricing model, and approximately $ 99 million was recorded within stockholders' equity with an offset to the CARES Act grant credit.
+Added: The PSP2 and PSP3 Warrants are exercisable either through net share settlement in cash or in shares of UAL common stock, at UAL's option.
+Added: The PSP2 and PSP3 Warrants contain customary anti-dilution provisions and registration rights and are freely transferable.
+Added: Pursuant to the terms of the PSP2 and PSP3 Warrants, warrant holders do not have any voting rights.
+Added: As of December 31, 2021 , the Company had the following warrants outstanding:
+Added: Warrant Description Number of Shares of UAL Common Stock (in millions) Exercise Price Expiration Dates
+Added: PSP1 Warrants (a) 4.8 $ 31.50 4/20/2025 — 9/30/2025
+Added: CARES Act Loan Warrants (b) 1.7 31.50 9/28/2025
+Added: PSP2 Warrants 2.0 43.26 1/15/2026 — 4/29/2026
+Added: PSP3 Warrants 1.5 53.92 4/29/2026 — 6/10/2026
+Added: (a) Warrants issued in fiscal year 2020 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 Note").
+Added: (b) Warrants issued in fiscal year 2020 in connection with the $ 520 million Loan and Guarantee Agreement, dated as of September 28, 2020, among United, UAL, Treasury and the Bank of New York Mellon, as administrative agent, as amended (the "CARES Act Loan"), which was entered into pursuant to the loan program established pursuant to the CARES Act.
+Added: In 2020, UAL entered into an underwriting agreement with Morgan Stanley & Co.
LLC and Barclays Capital Inc.
−Removed: (collectively, the "Underwriters"), relating to the issuance and sale by UAL of approximately 43 million shares of its common stock, par value $ 0.01 per share, at a price to the public of $ 26.50 per share, resulting in total proceeds of approximately $ 1.1 billion.
−Removed: On June 15, 2020, UAL entered into an equity distribution agreement (the "Distribution Agreement") with Citigroup Global Markets Inc., BofA Securities, Inc.
−Removed: Morgan Securities LLC (collectively, the "Managers"), relating to the issuance and sale from time to time by UAL (the "ATM Offering"), through the Managers, of up to 28 million shares of UAL's common stock, par value $ 0.01 per share.
−Removed: Sales of the shares, if any, 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.
−Removed: Under the terms of the Distribution Agreement, UAL may also sell shares to any Manager, as principal for its own account, at a price agreed upon at the time of sale.
−Removed: If UAL sells shares to a Manager as principal, UAL will enter into a separate agreement with such Manager.
−Removed: As of December 31, 2020, approximately 21.4 million shares were sold in the ATM Offering at an average price of $ 46.70 per share, with net proceeds to the Company totaling approximately $ 989 million.
+Added: relating to the issuance and sale by UAL of approximately 43 million shares of its common stock at a price to the public of $ 26.50 per share, resulting in total proceeds of approximately $ 1.1 billion.
+Added: 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.
+Added: During 2020, approximately 21 million shares were sold in the 2020 ATM Offering at an average price of $ 46.70 per share, with net proceeds to the Company totaling approximately $ 989 million.
+Added: In 2021, the Company sold the remaining authorized amount of approximately 7 million shares at an average price of $ 42.98 per share, with net proceeds to the Company of approximately $ 282 million.
+Added: 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").
+Added: 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.
+Added: 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.
+Added: If UAL sells the 2021 ATM Shares to a Manager as principal, UAL will enter into a separate terms agreement with such Manager.
+Added: During 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.
At December 31, 2021, approximately 6 million shares of UAL's common stock were reserved for future issuance related to the issuance of equity-based awards under the Company's incentive compensation plans.
6 unchanged sentences
Basic weighted-average shares outstanding 321.9 279.4 258.8
−Removed: Effect of share-based awards — 1.1 1.2
+Added: Dilutive effect of employee stock awards — — 1.1
Diluted weighted-average shares outstanding 321.9 279.4 259.9
1 unchanged sentence
Earnings (loss) per share, diluted $ ( 6.10 ) $ ( 25.30 ) $ 11.58
−Removed: The number of antidilutive securities excluded from the computation of diluted per share amounts was not material.
+Added: Potentially dilutive securities (a)
+Added: Stock warrants 0.9 — —
+Added: Employee stock awards 0.7 1.0 0.1
+Added: (a) Weighted-average potentially dilutive securities outstanding excluded from the computation of diluted earnings per share because the securities would have had an antidilutive effect.
NOTE 4 - SHARE-BASED COMPENSATION PLANS
UAL maintains share-based compensation plans for our management employees and our non-employee directors.
−Removed: These plans provide for grants of non-qualified stock options, incentive stock options (within the meaning of Section 422 of the Internal Revenue Code of 1986), stock appreciation rights, restricted shares, RSUs, performance compensation awards, performance units, cash incentive awards, other equity-based and equity-related awards, and dividends and dividend equivalents.
+Added: During 2021, UAL's Board of Directors and stockholders approved the United Airlines Holdings, Inc.
+Added: 2021 Incentive Compensation Plan (the "2021 Plan").
+Added: The 2021 Plan is an incentive compensation plan that allows the Company to use different forms of equity incentives to attract, retain and reward officers and employees.
+Added: Under the 2021 Plan, the Company may grant:
+Added: nonqualified stock options;
+Added: incentive stock options (within the meaning of Section 422 of the Internal Revenue Code of 1986);
+Added: stock appreciation rights ("SARs");
+Added: restricted stock ("RSAs");
+Added: performance units;
+Added: cash incentive awards and other equity-based and equity-related awards.
+Added: An award (other than an option, SAR or cash incentive award) may provide the holder with dividends or dividend equivalents.
+Added: The 2021 Plan replaces the United Continental Holdings, Inc.
+Added: 2017 Incentive Compensation Plan (the "2017 Plan").
+Added: Any awards granted under the 2017 Plan prior to the approval of the 2021 Plan remain in effect pursuant to their terms.
+Added: The number of shares of UAL common stock that remained available for issuance under the 2017 Plan as of the effective date of the 2021 Plan are now available for issuance under the 2021 Plan.
All awards are recorded as either equity or a liability in the Company's consolidated balance sheets.
The share-based compensation expense is recorded in salaries and related costs.
−Removed: During 2020, UAL granted share-based compensation awards pursuant to the United Continental Holdings, Inc.
−Removed: 2017 Incentive Compensation Plan.
−Removed: These share-based compensation awards included approximately 2.5 million RSUs consisting of 2.2 million time-vested RSUs and 0.3 million performance-based RSUs.
−Removed: The time-vested RSUs vest pro-rata, typically on February 28th of each year, over a three-year period from the date of grant.
−Removed: The amount of performance-based RSUs vest upon the achievement of established goals based on the Company's absolute pre-tax margin performance as well as a customer metric based on the Company's relative quarterly average of net promoter scores as compared to a group of industry peers, both of which are measured for the three-year performance period ending December 31, 2022.
+Added: During 2021, UAL granted share-based compensation awards pursuant to both the 2017 Plan and the 2021 Plan.
+Added: These share-based compensation awards included approximately 3 million RSUs consisting of approximately 1 million time-vested RSUs and approximately 2 million performance-based RSUs.
+Added: A majority of the time-vested RSUs vest equally in 25 % increments every 6 months over a two -year period from the date of grant.
+Added: The short-term performance-based RSUs vest upon the achievement of established goals based on financial and customer satisfaction metrics for the performance period January 1, 2021 to December 31, 2021.
RSUs are generally equity awards settled in stock for domestic employees and liability awards settled in cash for international employees.
4 unchanged sentences
RSUs $ 236 $ 106 $ 98
−Removed: Restricted stock — 1 2
Stock options 2 2 1
7 unchanged sentences
UAL paid approximately $ 29 million, $ 26 million and $ 41 million related to its cash-settled RSUs during 2021, 2020 and 2019, respectively.
−Removed: The table below summarizes UAL's RSUs and restricted stock activity for the years ended December 31 (shares in millions):
+Added: The table below summarizes UAL's RSU activity for the years ended December 31 (shares in millions):
Liability Awards Equity Awards
RSUs Weighted-
−Removed: Grant Price Restricted
−Removed: Stock Weighted-
Outstanding at December 31, 2018 1.9 1.8 $ 66.29
11 unchanged sentences
Outstanding at December 31, 2021 0.2 4.4 53.63
−Removed: The fair value of RSUs and restricted stock that vested in 2020, 2019 and 2018 was $ 87 million, $ 99 million and $ 70 million, respectively.
−Removed: The fair value of the restricted stock and the stock-settled RSUs was based upon the UAL common stock price on the date of grant.
−Removed: The fair value of the cash-settled RSUs was based on the UAL common stock price as of the last day preceding the settlement date.
+Added: The fair value of RSUs and RSAs that vested in 2021, 2020 and 2019 was approximately $ 104 million, $ 87 million and $ 99 million, respectively.
+Added: The last vesting of RSAs occurred in 2019 and the Company has not granted RSAs since 2016.
Stock Options.
2 unchanged sentences
Expense related to each portion of an option grant is recognized on a straight-line basis over the specific vesting period for those options.
−Removed: As of December 31, 2020, there were approximately 0.7 million outstanding stock option awards, 0.3 million of which were exercisable, with weighted-average exercise prices of $ 82.12 and $ 58.25 , respectively, weighted-average remaining contractual lives (in years) of 6.3 and 3.5 , respectively, and intrinsic values of zero as all of the exercise prices exceeded the closing stock price on that date.
+Added: As of December 31, 2021, there were approximately 0.7 million outstanding stock option awards, 0.3 million of which were exercisable, with weighted-average exercise prices of $ 82.12 and $ 59.05 , respectively, weighted-average remaining contractual lives (in years) of 5.3 and 2.9 , respectively, and intrinsic values of zero as all of the strike prices exceeded the closing stock price on that date.
NOTE 5 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ("AOCI")
1 unchanged sentence
Postretirement
−Removed: Liabilities Investments and Other Deferred Taxes
+Added: Liabilities Investments and Other Deferred Taxes (a)
Balance at December 31, 2018 $ ( 663 ) $ ( 4 ) $ ( 136 ) $ ( 803 )
Change in value 105 7 ( 24 ) 88
−Removed: Amounts reclassified to earnings 62 (a) — ( 13 ) 49
−Removed: Amounts reclassified to retained earnings ("RE") — 7 (b) ( 1 ) (b) 6
+Added: Amounts reclassified to earnings ( 2 ) (b) ( 1 ) — ( 3 )
Balance at December 31, 2019 ( 560 ) 2 ( 160 ) ( 718 )
Change in value ( 993 ) — 221 ( 772 )
−Removed: Amounts reclassified to earnings ( 2 ) (a) ( 1 ) — ( 3 )
+Added: Amounts reclassified to earnings 451 (b) — ( 100 ) 351
Balance at December 31, 2020 ( 1,102 ) 2 ( 39 ) ( 1,139 )
Change in value 239 ( 2 ) ( 53 ) 184
−Removed: Amounts reclassified to earnings 451 (a) — ( 100 ) 351
+Added: Amounts reclassified to earnings 16 (b) — ( 3 ) 13
Balance at December 31, 2021 $ ( 847 ) $ — $ ( 95 ) $ ( 942 )
−Removed: (a) This AOCI component is included in the computation of net periodic pension and other postretirement costs.
+Added: (a) Relates primarily to pension and other postretirement benefit liabilities and includes approximately $ 285 million of deferred income tax expense that will not be recognized in net income until these obligations are fully extinguished.
+Added: We consider all income sources, including other comprehensive income, in determining the amount of tax benefit allocated to results from operations.
+Added: (b) This AOCI component is included in the computation of net periodic pension and other postretirement costs.
See Note 7 of this report for additional information on pensions and other postretirement liabilities.
−Removed: (b) These amounts represent the reclassification from AOCI to RE of the unrealized loss, and related tax, on the Company's investment in Azul Linhas Aéreas Brasileiras S.A.
−Removed: ("Azul") which was classified as an available-for-sale security prior to the Company adopting Accounting Standards Update No.
−Removed: 2016-01, Financial Instruments—Overall (Subtopic 825-10) effective January 1, 2018.
NOTE 6 - INCOME TAXES
The income tax provision (benefit) differed from amounts computed at the statutory federal income tax rate and consisted of the following significant components (in millions) :
−Removed: UAL 2020 2019 2018
−Removed: Income tax provision (benefit) at statutory rate $ ( 1,852 ) $ 822 $ 556
−Removed: State income taxes, net of federal income tax benefit ( 110 ) 50 29
−Removed: Foreign tax rate differential — ( 90 ) ( 84 )
−Removed: Global intangible low-taxed income — 90 4
−Removed: Foreign income taxes 1 1 2
−Removed: Nondeductible employee meals 5 12 12
−Removed: State rate change ( 2 ) — 3
−Removed: Valuation allowance 197 ( 4 ) ( 3 )
−Removed: Other, net 8 24 7
−Removed: $ ( 1,753 ) $ 905 $ 526
−Removed: Current $ ( 12 ) $ 23 $ 14
−Removed: Deferred ( 1,741 ) 882 512
−Removed: $ ( 1,753 ) $ 905 $ 526
−Removed: United 2020 2019 2018
+Added: UAL and United 2021 2020 2019
Income tax provision (benefit) at statutory rate $ ( 537 ) $ ( 1,852 ) $ 822
−Removed: State income taxes, net of federal income tax ( 110 ) 50 29
+Added: State income tax provision (benefit), net of federal income tax benefit ( 34 ) ( 110 ) 50
Foreign tax rate differential — — ( 90 )
Global intangible low-taxed income — — 90
−Removed: Foreign income taxes 1 1 2
Nondeductible employee meals 7 5 12
−Removed: State rate change ( 2 ) — 3
Valuation allowance ( 38 ) 197 ( 4 )
4 unchanged sentences
$ ( 593 ) $ ( 1,753 ) $ 905
−Removed: The Company's effective tax rate for the year ended December 31, 2020 differed from the federal statutory rate of 21% due to a blend of federal, state and foreign taxes as well as the impact of certain nondeductible items and a valuation allowance of $ 197 million related to capital losses and state attributes.
Temporary differences and carryforwards that give rise to deferred tax assets and liabilities at December 31, 2021 and 2020 were as follows (in millions):
5 unchanged sentences
Operating lease liabilities 1,272 1,247 1,272 1,247
−Removed: Sale leaseback liabilities 260 — 260 —
+Added: Other financing liabilities 327 260 327 260
Other 535 362 535 362
5 unchanged sentences
Total deferred tax liabilities $ ( 6,829 ) $ ( 6,479 ) $ ( 6,829 ) $ ( 6,479 )
−Removed: Net deferred tax asset (liability) $ 131 $ ( 1,736 ) $ 103 $ ( 1,763 )
+Added: Net deferred tax asset $ 659 $ 131 $ 631 $ 103
United and its domestic consolidated subsidiaries file a consolidated federal income tax return with UAL.
4 unchanged sentences
If not utilized these federal pre-tax NOLs will expire as follows (in billions):
−Removed: $ 0.1 in 2026, $ 0.5 in 2028, and $ 0.4 in 2029, $ 0.2 in 2032 and $ 0.4 in 2033.
+Added: $ 0.5 in 2028, $ 0.4 in 2029, $ 0.2 in 2032 and $ 0.4 in 2033.
The remaining $ 8.4 billion of NOLs has no expiration date.
4 unchanged sentences
In order to form a conclusion, management considers positive evidence in the form of taxable income in prior carryback years, reversing temporary differences, tax planning strategies and projections of future taxable income during the periods in which those temporary differences become deductible, as well as negative evidence such as historical losses.
−Removed: Although the Company was in a cumulative loss position at the end of 2020, management determined that the 2020 results were not indicative of future results due to the impact of the COVID-19 pandemic on its operations.
+Added: Although the Company incurred losses in 2021 and 2020, management determined that these results were not indicative of future results due to the impact of the COVID-19 pandemic on its operations.
The Company concluded that the positive evidence outweighs the negative evidence, primarily driven by approval and distribution of COVID-19 vaccines as well as increased confidence with the timing of the recovery.
−Removed: The Company's largest deferred tax assets are mostly attributable to federal pre-tax NOLs which were $ 11.0 billion ($ 2.3 billion tax effected) at December 31, 2020.
−Removed: The majority of the NOLs do not expire and the Company expects to recognize the NOLs through the reversal of existing deferred tax liabilities and projected future taxable income.
−Removed: Therefore, we have not recorded a valuation allowance on our deferred tax assets other than the capital loss carryforwards and state attributes that have short expiration periods.
−Removed: While the Company expects to generate sufficient future profits to fully utilize these NOLs, the Company may have to record a valuation allowance against our NOLs if it is unable to generate sufficient taxable income in future periods.
−Removed: Recording a valuation allowance against our NOLs would not impact our ability to use them.
+Added: One of the Company's largest deferred tax assets was its federal pre-tax NOLs which were $ 9.9 billion ($ 2.1 billion tax effected) at December 31, 2021.
+Added: The majority of the NOLs do not expire and the Company expects to realize the benefits of the NOLs through the reversal of certain existing deferred tax liabilities of $ 6.2 billion and the remaining $ 1.3 billion (the income tax equivalent to approximately two years of average pre-COVID-19 pre-tax income) through projected future taxable income.
+Added: Therefore, we have not recorded a valuation allowance on our deferred tax assets other than the capital loss carryforwards and certain state attributes that have short expiration periods.
+Added: While the Company expects to generate sufficient future income to fully utilize its deferred tax assets (including NOLs), the Company may have to record a valuation allowance, which could be material, against deferred tax assets if negative evidence such as prolonged losses or reduced forecasted income outweigh positive evidence.
Assumptions about future taxable income are consistent with the plans and estimates used to manage our business.
Management will continue to evaluate future financial performance to determine whether such performance is both sustained and significant enough to provide sufficient evidence to support not recording valuation allowance on these NOLs.
−Removed: Any reduction in estimated future taxable income may require additional valuation allowance against the deferred tax assets, which could be material.
As of December 31, 2021, the Company has recorded $ 183 million of valuation allowance against its capital loss deferred tax assets.
1 unchanged sentence
The Company does not anticipate generating sufficient capital gains to utilize the losses before they expire, therefore, a valuation allowance is necessary as of December 31, 2021.
−Removed: Additionally, the
−Removed: Company recorded a valuation allowance of $ 62 million on the state NOL and state tax credit deferred tax assets primarily due to utilization limitations resulting from a prior ownership change.
+Added: Additionally, the Company recorded a valuation allowance of $ 27 million on certain state deferred tax assets primarily due to state NOLs that have short expiration periods.
The Company's unrecognized tax benefits related to uncertain tax positions were $ 55 million, $ 57 million and $ 53 million at December 31, 2021, 2020 and 2019, respectively.
4 unchanged sentences
The Company's federal income tax returns for tax years after 2002 remain subject to examination by the Internal Revenue Service (the "IRS") and state taxing jurisdictions.
−Removed: We are currently under audit by the IRS for the 2016 and 2017 tax years.
+Added: The IRS concluded its audit of the 2016 and 2017 tax years with no material adjustments.
NOTE 7 - PENSION AND OTHER POSTRETIREMENT PLANS
7 unchanged sentences
United maintains additional defined benefit pension plans, which cover certain international employees.
+Added: The Company did not have any minimum required contributions for 2021;
+Added: however, during the third quarter of 2021, the Company made a voluntary contribution of $ 375 million to its U.S.
+Added: domestic tax-qualified defined benefit pension plan covering certain U.S.
+Added: non-pilot employees.
Other Postretirement Plans.
1 unchanged sentence
Benefits provided are subject to applicable contributions, co-payments, deductibles and other limits as described in the specific plan documentation.
−Removed: During 2020, the Company offered voluntary separation programs ("VSPs") to its U.S.-based front-line employees and management and administrative employees.
−Removed: The Company offered certain of its eligible front-line employees, based on employee group, age and completed years of service, special termination benefits in the form of additional years of pension service and additional subsidies for retiree medical costs.
−Removed: These benefits resulted in a $ 54 million special termination benefit charges for the pension plans and $ 201 million for the retiree medical plan.
−Removed: The VSPs and other separation programs caused the lump sum settlements to increase in 2020.
−Removed: In 2020, the primary defined benefit pension plans paid $ 1.4 billion in lump sum distributions resulting in the recognition of $ 430 million of settlement losses.
−Removed: Settlement losses trigger the recognition of losses previously reported as unrealized in accumulated other comprehensive loss in an amount that is proportionate to the lump sum distributions as a percentage of the obligations of the plan.
+Added: In 2021 and 2020, 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.
+Added: Under these Voluntary Programs, employees generally separated (or will separate) from employment with certain post-employment health benefits and travel privileges.
+Added: Included in the Voluntary Programs offered during the first quarter of 2021, the Company offered special separation benefits in the form of additional subsidies for retiree medical costs for certain U.S.-based front-line employees.
+Added: The subsidies are 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.
+Added: As a result, the Company recorded $ 31 million for those additional benefits in 2021.
+Added: 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.
+Added: As a result, the Company recorded, in 2020, $ 54 million for those additional pension benefits and $ 201 million for those additional retiree medical benefits.
+Added: Also, the Company recognized, in 2020, $ 430 million in settlement losses related to the defined benefit pension plan covering certain U.S.
+Added: non-pilot employees.
Actuarial assumption changes are reflected as a component of the net actuarial (gain) loss during 2021 and 2020.
−Removed: The 2020 actuarial losses were mainly related to a decrease in the discount rate applied at December 31, 2020 compared to December 31, 2019.
+Added: The 2021 actuarial gains were mainly related to an increase in the discount rate applied at December 31, 2021 compared to December 31, 2020.
Actuarial (gains) losses will be amortized over the average remaining service life of the covered active employees or the average life expectancy of inactive participants.
8 unchanged sentences
Interest cost 184 209
−Removed: Actuarial loss 1,181 784
+Added: Actuarial (gain) loss ( 188 ) 1,181
Special termination benefit — 54
1 unchanged sentence
Curtailment ( 12 ) ( 105 )
+Added: Other ( 12 ) 17
Projected benefit obligation at end of year $ 6,473 $ 6,525
4 unchanged sentences
Benefits paid ( 263 ) ( 1,445 )
+Added: Other ( 4 ) 13
Fair value of plan assets at end of year $ 4,626 $ 4,069
20 unchanged sentences
Actuarial loss 114 107
−Removed: Plan amendments — ( 597 )
Special termination benefit 31 201
30 unchanged sentences
Amortization of prior service credits — ( 123 ) — ( 124 ) — ( 73 )
−Removed: Settlement loss - VSPs 430 — — — — —
−Removed: Special termination benefit - VSPs 54 201 — — — —
+Added: Settlement loss - Voluntary Programs — — 430 — — —
+Added: Special termination benefit - Voluntary Programs — 31 54 201 — —
Curtailment ( 8 ) — 1 — — —
25 unchanged sentences
We develop our expected long-term rate of return assumption for our defined benefit plans based on historical experience and by evaluating input from the trustee managing the plans' assets.
−Removed: Our expected long-term rate of return on plan assets for these
−Removed: plans is based on a target allocation of assets, which is based on our goal of earning the highest rate of return while maintaining risk at acceptable levels.
+Added: Our expected long-term rate of return on plan assets for these plans is based on a target allocation of assets, which is based on our goal of earning the highest rate of return while maintaining risk at acceptable levels.
The plans strive to have assets sufficiently diversified so that adverse or unexpected results from one security class will not have an unduly detrimental impact on the entire portfolio.
30 unchanged sentences
(a) In accordance with the relevant accounting standards, certain investments that are measured at fair value using the net asset value ("NAV") per share (or its equivalent) have not been classified in the fair value hierarchy.
−Removed: These investments are commingled funds that invest in fixed-income instruments including bonds, debt securities, and other similar instruments issued by various U.S.
+Added: These investments are commingled funds that invest in equity securities and fixed-income instruments including bonds, debt securities, and other similar instruments issued by various U.S.
public- or private-sector entities.
3 unchanged sentences
Fixed-income includes primarily U.S.
−Removed: government fixed-income securities and U.S.
−Removed: corporate fixed-income securities.
+Added: government fixed-income securities and non-U.S.
+Added: corporate fixed-income securities, as well as securitized debt securities.
Deposit Administration Fund.
12 unchanged sentences
Funding requirements for tax-qualified defined benefit pension plans are determined by government regulations.
−Removed: The Company did not have any minimum required contributions for 2020 and does not expect any for 2021.
+Added: The Company does not expect any minimum required contributions for 2022.
The Company expects to make approximately $ 124 million in contributions to United's postretirement plans in 2022.
14 unchanged sentences
For 2020, the Company's contributions to the IAM Plan represented more than 5% of total contributions to the IAM Plan.
−Removed: The 2020 information is not available as Form 5500 is not final for the plan year.
+Added: The 2021 information is not available as the applicable Form 5500 is not final for the plan year.
Pension Fund IAM National Pension Fund ("Fund")
EIN/ Pension Plan Number 51-6031295 — 002
−Removed: Pension Protection Act Zone Status (2020 and 2019) Critical (2020) and Endangered (2019).
−Removed: A plan generally is in "endangered" status if its funded percentage is less than 80 percent.
+Added: Pension Protection Act Zone Status (2021 and 2020) Critical (2021 and 2020).
A plan is in "critical" status if the funded percentage is less than 65 percent.
On April 17, 2019, the IAM National Pension Fund Board of Trustees voluntarily elected for the Fund to be in critical status effective for the plan year beginning January 1, 2019 to strengthen the Fund's financial health.
+Added: The Fund's funded percentage was 85.1 % as of January 1, 2020.
FIP/RP Status Pending/Implemented A 10 -year Rehabilitation Plan effective, January 1, 2022, was adopted on April 17, 2019 that requires the Company to make an additional contribution of 2.5 % of the hourly contribution rate, compounded annually for the length of the Rehabilitation Plan, effective June 1, 2019.
10 unchanged sentences
profit sharing plan for management and administrative employees.
−Removed: As a result of the pre-tax losses in 2020, no profit sharing was recorded.
−Removed: However, the Company recorded profit sharing and related payroll tax expense of $ 491 million and $ 334 million in 2019 and 2018, respectively.
+Added: As a result of the pre-tax losses in 2021 and 2020, no profit sharing was recorded.
+Added: However, the Company recorded profit sharing and related payroll tax expense of $ 491 million in 2019.
Profit sharing expense is recorded as a component of Salaries and related costs in the Company's statements of consolidated operations.
2 unchanged sentences
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.
−Removed: BRW Aviation Holding LLC and BRW are affiliates of Synergy Aerospace Corporation ("Synergy"), and BRW is the majority shareholder of Avianca Holdings S.A.
−Removed: Pursuant to the BRW Term Loan Agreement, United provided to BRW a $ 456 million term loan (the "BRW Term Loan"), secured by a pledge of BRW's equity, as well as BRW's 516 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 New York Stock Exchange (the "NYSE"), in exchange for 64.5 million ADRs) (such shares and equity, collectively, the "BRW Loan Collateral").
−Removed: In the first quarter of 2020, United recorded a full credit loss allowance against the $ 515 million carrying value of the BRW Term Loan and related receivables.
+Added: BRW Aviation Holding LLC and BRW are affiliates of Synergy Aerospace Corporation ("Synergy"), and BRW was the majority shareholder of Avianca Holdings S.A.
+Added: Pursuant to the BRW Term Loan Agreement, United provided to BRW a $ 456 million term loan (the "BRW Term Loan"), secured by a pledge of BRW's equity, as well as BRW's 516 million common shares of AVH (which were eligible to be converted into the same number of preferred shares, which could have been deposited with the depositary for AVH's American Depositary Receipts ("ADRs"), the class of AVH securities that traded on the New York Stock Exchange (the "NYSE"), in exchange for 64.5 million ADRs) (such shares and equity, collectively, the "BRW Loan Collateral").
+Added: AVH and certain of its affiliates filed voluntary reorganization proceedings under Chapter 11 of the United States Bankruptcy Code in the U.S.
+Added: Bankruptcy Court for the Southern District of New York on May 10, 2020 (the "AVH Reorganization Proceedings").
+Added: AVH successfully completed its financial restructuring process and emerged from Chapter 11 on December 1, 2021 as AVG.
+Added: The common shares of AVH are in the process of being cancelled and extinguished and holders, including BRW, were not entitled to any recovery upon AVH's exit from bankruptcy.
+Added: BRW is not a shareholder in the emerged entity.
+Added: See Note 9 of this report for additional information on the Company's investment in AVG.
+Added: In 2020, United recorded a full credit loss allowance against the $ 515 million carrying value of the BRW Term Loan and related receivables.
United recorded the allowance based on United's assessment of AVH's financial uncertainty due to its high level of leverage and the fact that the airline had ceased operations due to the COVID-19 pandemic.
1 unchanged sentence
Miscellaneous, net on the Company's statements of consolidated operations.
−Removed: AVH and certain of its affiliates filed voluntary reorganization proceedings under Chapter 11 of the United States Bankruptcy Code in the U.S.
−Removed: Bankruptcy Court for the Southern District of New York on May 10, 2020 (the "AVH Reorganization Proceedings").
−Removed: Accordingly, United maintains a full loss reserve against the BRW Term Loan and related receivables.
−Removed: In connection with funding the BRW Term Loan Agreement, the Company entered into certain other agreements with Kingsland.
−Removed: See Note 13 of this report for additional information regarding our obligations to Kingsland and their interrelationship with the BRW Term Loan Agreement.
−Removed: Avianca Loan.
−Removed: In November 2019, United entered into a senior secured convertible term loan agreement (the "AVH Convertible Loan Agreement") with, among others, AVH, as borrower, for the provision by the lenders thereunder (including United) to AVH of convertible term loans for general corporate purposes.
−Removed: In December 2019, United provided such a
−Removed: convertible term loan to AVH under the AVH Convertible Loan Agreement in the aggregate amount of $ 150 million (the "AVH Convertible Loan").
−Removed: The AVH Convertible Loan (1) was payable in a single installment in December 2023, (2) bore paid-in-kind interest at a rate of 3 percent per annum ("PIK Interest") and (3) was secured by a pledge of capital stock in AVH's major subsidiaries and, until released, certain Colombian Peso-denominated credit card receivables owing to Aerovías del Continente Americano S.A.
−Removed: ("Avianca"), a subsidiary of AVH and guarantor under the AVH Convertible Loan Agreement.
−Removed: In October, 2020, under the AVH Reorganization Proceedings, the balance of the convertible loan became a debtor-in-possession ("DIP") term loan ("DIP Loan") under the terms of the DIP credit agreement.
−Removed: The DIP Loan is not convertible.
−Removed: It bears paid-in-kind interest at a rate of 14.5 % per annum and has a scheduled maturity date in November 2021.
−Removed: The DIP Loan becomes immediately payable upon AVH's emergence from bankruptcy, in either cash or shares of AVH stock, at AVH's election.
−Removed: As of December 31, 2020, the DIP loan had a balance of $ 159 million and was recorded in Receivables on the Company's balance sheet.
−Removed: The Company has $ 31 million of notes receivable, the majority of which is from certain of its regional carriers.
+Added: The Company received a note receivable (the "Boom Note") from Boom Technology, Inc.
+Added: ("Boom") related to a commercial agreement to add supersonic aircraft to its global fleet as well as a cooperative sustainability initiative.
+Added: As of December 31, 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.
+Added: The initial value of the Boom Note was recorded as a deferred credit that will either be recognized into income or as a reduction to the cost of the aircraft received in future periods.
+Added: The Company has $ 32 million of other notes receivable, net of allowance for credit losses, the majority of which is from certain of its regional carriers.
NOTE 9 - INVESTMENTS AND FAIR VALUE MEASUREMENTS
11 unchanged sentences
government and agency notes 2 — 2 — 33 — 33 —
−Removed: Certificates of deposit placed through an account registry service — — — — 35 — 35 —
−Removed: Other fixed-income securities — — — — 95 — 95 —
−Removed: Other investments measured at NAV — — — — 193 — — —
Long-term investments:
Equity securities 229 229 — — 241 205 — 36
−Removed: AVH Derivative Assets — — — — 24 — — 24
−Removed: Other assets 36 — — 36 — — — —
−Removed: Short-term investments - T he short-term investments shown in the table above are classified as available-for-sale, with the exception of investments measured at NAV.
−Removed: As of December 31, 2020, corporate debt securities have remaining maturities of approximately two years or less, asset-backed securities have remaining maturities of less than one year to approximately 14 years, and U.S.
−Removed: government and agency notes have maturities of less than one year .
−Removed: Equity securities - Equity securities represent United's investment in Azul, consisting of approximately 8 % of Azul's outstanding preferred shares (representing approximately 2 % of the total capital stock of Azul).
−Removed: The Company recorded $ 180 million in losses and $ 136 million in gains, respectively, for the years ended December 31, 2020 and 2019 for changes to the fair market value of its equity investment in Azul in Unrealized gains (losses) on investments, net in the Company's statements of consolidated operations.
−Removed: The carrying value of our investment in Azul was $ 205 million at December 31, 2020.
−Removed: AVH Derivative Assets - As part of the BRW Term Loan Agreement and related agreements with Kingsland, United obtained AVH share call options and AVH share appreciation rights and entered into an AVH share-based upside sharing agreement (collectively, the "AVH Derivative Assets").
−Removed: The AVH Derivative Assets are recorded at fair value as Other assets on the Company's balance sheet and are included in the table above.
−Removed: The Company recorded $ 24 million in losses and $ 13 million in
−Removed: gains, respectively, for the years ended December 31, 2020 and 2019 for changes in the fair value of the AVH Derivative Assets in Unrealized gains (losses) on investments, net in the Company's statements of consolidated operations.
−Removed: Other assets - The other assets represent warrants provided to United for the purchase of membership units (Class B Units) in Alclear Holdings, LLC ("CLEAR").
−Removed: The Company records these warrants at fair value.
Investments presented in the table above have the same fair value as their carrying value.
+Added: Short-term investments — T he short-term investments ("STIs") shown in the table above are classified as available-for-sale.
+Added: The STIs had maturities of less than two years as of December 31, 2021.
+Added: Equity securities — Represents equity and equity-linked securities (such as vested warrants) that make up United's
+Added: investments in Azul Linhas Aéreas Brasileiras S.A., Clear Secure, Inc.
+Added: and Archer Aviation Inc.
+Added: The Company received equity securities in exchange for assisting Archer in the development of battery-powered, short haul aircraft.
+Added: The Company will account for equity securities it receives from Archer as a deferred credit that will either be recognized into income or as a reduction to the cost of the aircraft received in future periods.
Other fair value information - The table below presents the carrying values and estimated fair values of financial instruments not presented in the tables above as of December 31 (in millions).
5 unchanged sentences
Description Fair Value Methodology
−Removed: Cash and cash equivalents The carrying amounts approximate fair value because of the short-term maturity of these assets.
−Removed: Short-term investments, other than Other investments measured at NAV,
−Removed: Equity securities and
−Removed: 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.
−Removed: Other investments measured at NAV In accordance with the relevant accounting standards, certain investments that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.
−Removed: The fair value amounts presented in the table above are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position.
−Removed: The investments measured using NAV are shares of mutual funds that invest in fixed-income instruments including bonds, debt securities, and other similar instruments issued by various U.S.
−Removed: public- or private-sector entities.
−Removed: The Company can redeem its shares at any time at NAV subject to a three-day settlement period.
−Removed: AVH Derivative Assets Fair values are calculated using a Monte Carlo simulation approach.
−Removed: Unobservable inputs include expected volatility, expected dividend yield and control and acquisition premiums.
−Removed: Other assets Fair value is determined utilizing the Black-Scholes options pricing model.
+Added: Cash and cash equivalents and
+Added: Restricted cash (current and non-current) The carrying amounts of these assets approximate fair value.
+Added: Short-term investments and
+Added: Equity securities Fair value is based on (a) the trading prices of the investment or similar
+Added: 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.
Investments in Regional Carriers.
−Removed: United holds investments in several regional carriers that fly for the Company as United Express under its CPAs.
+Added: United holds investments in several regional carriers that fly or used to fly for the
+Added: Company as United Express under its CPAs.
The combined carrying value of the investments was approximately $ 171 million as of December 31, 2021.
1 unchanged sentence
Each investment and United's ownership stake are listed below.
+Added: • Champlain Enterprises, LLC ("Champlain").
+Added: United owns a 40 % minority ownership stake in Champlain.
+Added: does business as CommutAir.
+Added: CommutAir currently operates 75 regional aircraft under a CPA that has a term through 2026.
• Republic Airways Holdings Inc.
+Added: ("Republic Holdings").
+Added: United holds a 19 % minority interest in Republic Holdings.
+Added: Republic Holdings is the parent company of Republic Airways Inc.
("Republic").
−Removed: United holds a 19 % minority interest in Republic.
−Removed: Republic is the parent company of Republic Airways Inc.
−Removed: Republic currently operates 66 regional aircraft under a CPA that has terms through 2029.
+Added: Republic currently operates 66
+Added: regional aircraft under CPAs that have terms through 2036.
• ManaAir, LLC ("ManaAir").
United holds a 49.9 % minority ownership stake in ManaAir.
−Removed: ManaAir is the parent company of ExpressJet Airlines LLC ("ExpressJet").
+Added: ManaAir is the parent
+Added: company of ExpressJet Airlines LLC ("ExpressJet").
The Company terminated its CPA with ExpressJet.
−Removed: ExpressJet flew its last commercial flight, on behalf of United, on September 30, 2020.
−Removed: • Champlain Enterprises, LLC ("Champlain").
−Removed: United owns a 40 % minority ownership stake in Champlain.
−Removed: Champlain does business as CommutAir ("CommutAir").
−Removed: As of December 31, 2020, CommutAir operated 49 regional aircraft and is expected to operate additional ERJ 145 regional jets that were formerly part of the ExpressJet fleet.
+Added: flew its last commercial flight on behalf of United, on September 30, 2020.
Other Investments.
−Removed: 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.
−Removed: As of December 31, 2020, United held these major investments:
−Removed: • Fulcrum BioEnergy, Inc.
−Removed: 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.
−Removed: As of December 31, 2020, the carrying value of United's investment was $ 51 million.
−Removed: United owns less than 1 % of the Class B Units of CLEAR, a technology-enabled experience company that owns and operates a secure identity platform.
−Removed: Using biometrics, CLEAR enables touchless identification at airport checkpoints and other venues.
−Removed: As of December 31, 2020, the carrying value of United's investment was approximately $ 9 million.
+Added: United holds other equity investments in companies with emerging technologies and sustainable solutions, such as Fulcrum BioEnergy, Inc., Boom, Alder Fuels LLC, Heart Aerospace Incorporated and ZeroAvia, Inc., which do not have readily determinable fair values.
+Added: We account for these investments at cost less impairment, adjusted for observable price changes in orderly transactions for an identical or similar investment of the same issuer.
+Added: As of December 31, 2021, the carrying value of these investments was $ 84 million.
+Added: AVG Investment .
+Added: In consideration for the Company's agreement to convert its portion of the debtor-in-possession term loan under the terms of that certain Equity Conversion and Commitment Agreement dated September 1, 2020 (as amended from time to time) as part of the AVH Reorganization Proceedings, in December 2021 the Company received warrants to purchase equity in the reorganized AVG for a de minimus amount.
+Added: The Company subsequently exercised the warrants in full and on December 29, 2021 received common stock representing 16.4 % of AVG's outstanding equity, the carrying value of which was $ 164 million as of December 31, 2021.
+Added: We account for this investment at cost less impairment, adjusted for observable price changes in orderly transactions for an identical or similar investment of the same issuer.
NOTE 10 - DEBT
5 unchanged sentences
2027 6.25 % 3,000 3,000
−Removed: Revolving Credit Facility (a)
−Removed: 2022 1.49 % 1,000 —
−Removed: CARES Act Term Loan Facility (a) 2025 3.24 % 520 —
−Removed: Term Loan Facility (a) 2024 2.49 % 1,444 1,459
−Removed: Notes 2022 — 2025 4.25 % — 5.00 % 1,050 1,350
−Removed: PSP Note 2030 1.00 % 1,501 —
+Added: 2026 and 2029 Notes 2026 — 2029 4.38 % — 4.63 % 4,000 —
+Added: 2021 Term Loans (a) 2028 4.50 % 4,963 —
+Added: Revolving Credit Facility
+Added: CARES Act Loan — 520
+Added: Term Loan Facility — 1,444
+Added: Notes (b) 2022 — 2025 4.25 % — 5.00 % 1,041 1,050
+Added: PSP Notes (c) 2030 — 2031 1.00 % 3,181 1,501
Other unsecured debt 2023 — 2029 0.00 % — 5.75 % 598 448
4 unchanged sentences
(a) Financing includes variable rate debt based on LIBOR (or another index rate), generally subject to a floor, plus a specified margin ranging from 0.49 % to 5.25 %.
+Added: (b) On January 14, 2022, the Company gave notice for the redemption of all $ 400 million outstanding principal amount of the 4.250 % senior notes due 2022 (the "2022 Notes"), scheduled to occur on February 28, 2022.
+Added: The redemption price will be calculated in accordance with the terms of the indenture governing the 2022 Notes, and will include accrued and unpaid interest on the principal amount being redeemed to such redemption date.
+Added: (c) Includes PSP1 Note, PSP2 Note and PSP3 Note.
The table below presents the Company's contractual principal payments (not including debt discount or debt issuance costs) at December 31, 2021 under then-outstanding long-term debt agreements in each of the next five calendar years (in millions):
After 2026 15,601
−Removed: During 2020, pursuant to the PSP Agreement and in connection with Treasury providing the Company with total funding of approximately $ 5.1 billion under the Payroll Support Program of the CARES Act, UAL issued a promissory note to Treasury evidencing senior unsecured indebtedness of UAL of approximately $ 1.5 billion.
−Removed: The PSP Note is guaranteed by United and will mature on April 20, 2030, ten years after the initial issuance.
−Removed: If any subsidiary of UAL (other than United) guarantees other unsecured indebtedness of UAL with a principal balance in excess of a specified
−Removed: amount, or if certain subsidiaries are formed or acquired , then such subsidiary shall be required to guarantee the obligations of UAL under the PSP Note.
+Added: 2026 and 2029 Notes .
+Added: On April 21, 2021, United issued, through a private offering to eligible purchasers, $ 4.0 billion in aggregate principal amount of two series of notes, consisting of $ 2.0 billion in aggregate principal amount of 4.375 % senior secured notes due 2026 (the "2026 Notes") and $ 2.0 billion in aggregate principal amount of 4.625 % senior secured notes due 2029 (the "2029 Notes" and, together with the 2026 Notes, the "2026 and 2029 Notes").
+Added: The 2026 Notes, issued at a price of 100 % of their principal amount, bear interest at a rate of 4.375 % per annum and will mature on April 15, 2026.
+Added: The 2029 Notes, issued at a price of 100 % of their principal amount, bear interest at a rate of 4.625 % per annum and will mature on April 15, 2029.
+Added: The 2026 and 2029 Notes are guaranteed on an unsecured basis by UAL.
+Added: 2021 Loan Facilities.
+Added: Concurrently with the closing of the offering of the 2026 and 2029 Notes, United also entered into a new Term Loan Credit and Guaranty Agreement (the "2021 Term Loan Facility") initially providing term loans (the "2021 Term Loans") up to an aggregate amount of $ 5.0 billion and a new Revolving Credit and Guaranty Agreement (the "2021 Revolving Credit Facility" and, together with the 2021 Term Loan Facility, the "2021 Loan Facilities") initially providing revolving loan commitments of up to $ 1.75 billion.
+Added: United borrowed the full amount of the 2021 Term Loans on April 21, 2021, which bear interest at a variable rate equal to LIBOR (but not less than 0.75 % per annum) plus a margin of 3.75 % per annum.
+Added: The principal amount of the 2021 Term Loan Facility must be repaid in consecutive quarterly installments of 0.25 % of the original principal amount thereof with the balance due at maturity.
+Added: Borrowings under the 2021 Revolving Credit Facility bear interest at a variable rate equal to LIBOR plus a margin of 3.00 % to 3.50 % per annum.
+Added: United pays a commitment fee equal to 0.75 % per annum on the undrawn amount available under the 2021 Revolving Credit Facility.
+Added: No borrowings were outstanding under the 2021 Revolving Credit Facility at December 31, 2021.
+Added: United used the net proceeds from the offering of the 2026 and 2029 Notes and borrowings under the 2021 Term Loan Facility (i) to repay in full the $ 1.4 billion aggregate principal amount outstanding under the term loan facility (the "2017 Term Loan Facility") included in the Amended and Restated Credit and Guaranty Agreement, dated as of March 29, 2017 (the "2017 Credit Agreement"), the $ 1.0 billion aggregate principal amount outstanding under the revolving credit facility (the "2017 Revolving Credit Facility") included in the 2017 Credit Agreement and the $ 520 million aggregate principal amount outstanding under the CARES Act Loan and, together with the 2017 Term Loan Facility and the 2017 Revolving Credit Facility, the "2017 Loan Facilities"), (ii) to pay fees and expenses relating to the offering of the 2026 and 2029 Notes and (iii) for United's general corporate purposes.
+Added: As a result of such repayments, the 2017 Loan Facilities were terminated on April 21, 2021, and no further borrowings may be made thereunder.
+Added: During 2021, UAL issued an $ 870 million indebtedness evidenced by a 10 -year senior unsecured promissory note (the "PSP2 Note") to Treasury.
+Added: The PSP2 Note is guaranteed by United and will mature on January 15, 2031 (the "PSP2 Note Maturity Date").
+Added: 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 PSP2 Note.
UAL may, at its option, prepay the PSP2 Note, at any time, and from time to time, at par.
UAL is required to prepay the PSP2 Note upon the occurrence of certain change of control triggering events.
−Removed: The PSP Note does not require any amortization and is to be repaid in full on the maturity date.
−Removed: Interest on the PSP Note is payable semi-annually in arrears on the last business day of March and September of each year beginning on September 30, 2020 at a rate of 1.00 % in years one through five, and at the Secured Overnight Financing Rate (SOFR) plus 2.00 % in years six through ten.
−Removed: MileagePlus Financing.
−Removed: On July 2, 2020, MPH and Mileage Plus Intellectual Property Assets, Ltd., an indirect wholly-owned subsidiary of MPH ("MIPA" and, together with MPH, the "Issuers") issued $ 3.8 billion aggregate principal amount of their 6.50 % Senior Secured Notes due 2027 (the "Notes").
−Removed: The Notes have a fixed annual interest rate of 6.50 %, which will be paid in cash, quarterly in arrears on March 20, June 20, September 20 and December 20 of each year, beginning on September 21, 2020 (each a "Payment Date").
−Removed: Concurrently with the issuance of the Notes, the Issuers entered into a credit agreement that provides for a term loan facility in an aggregate principal amount of up to $ 3.0 billion (the "MP Term Loan Facility").
−Removed: On July 2, 2020, the Issuers borrowed $ 3.0 billion in aggregate principal amount under the MP Term Loan Facility.
−Removed: Loans outstanding under the MP Term Loan Facility will bear interest at a variable rate equal to LIBOR (but not less than 1.00 % per annum), plus a margin of 5.25 % per annum, payable on each Payment Date.
−Removed: The principal on the Notes and the MP Term Loan Facility will be repaid in quarterly installments on each Payment Date, beginning on September 20, 2022.
−Removed: The scheduled maturity date of the Notes and of the MP Term Loan Facility is June 20, 2027.
−Removed: The Issuers lent the proceeds of the Notes and of the MP Term Loan Facility to United, after depositing a portion of such proceeds in reserve accounts to cover future interest payments.
−Removed: The Notes and the loans under the MP Term Loan Facility are guaranteed by UAL, United and certain other subsidiaries of UAL.
−Removed: The Notes and the loans under the MP Term Loan Facility are secured by first-priority security interests in substantially all of the assets of the Issuers, other than excluded property and subject to certain permitted liens, including specified cash accounts that include the accounts into which MileagePlus revenues are or will be paid by United's marketing partners and by United.
−Removed: CARES Act Credit Agreement.
−Removed: On September 28, 2020, the Company entered into a Loan and Guarantee Agreement (the "CARES Act 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, Treasury, as lender, and The Bank of New York Mellon, as administrative and collateral agent.
−Removed: The CARES Act Credit Agreement provides for a CARES Act Term Loan Facility of up to approximately $ 7.5 billion pursuant to the Loan Program established under Section 4003(b)(1) of the CARES Act.
−Removed: The loans under the CARES Act Term Loan Facility may be disbursed in up to three disbursements on or before May 28, 2021.
−Removed: On September 28, 2020, United borrowed an amount equal to $ 520 million under the CARES Act Term Loan Facility.
−Removed: The principal amount must be repaid in a single installment on the maturity date on September 26, 2025.
−Removed: United may prepay all or a portion of the CARES Act Term Loan Facility from time to time, at par plus accrued and unpaid interest on the amount prepaid.
−Removed: Borrowings under the CARES Act Credit Agreement bear interest at a variable rate equal to LIBOR (but not less than 0 %), plus a margin of 3.00 % per annum.
−Removed: The obligations of United under the CARES Act Credit Agreement are secured by liens (i) on certain route authorities of United and certain related slots and gate leaseholds and other related assets, (ii) certain aircraft and (iii) certain flight simulators and related assets.
−Removed: Revolving Credit Facility.
−Removed: As of December 31, 2020, United had $ 1.0 billion available under the revolving credit facility of the Credit Agreement.
−Removed: The Credit Agreement provides for a term loan facility (the "Term Loan Facility") and a revolving credit facility (the "Revolving Credit Facility").
−Removed: To maximize United's flexibility under a debt incurrence covenant contained in two of United's financings, on July 2, 2020, United took the proactive step of borrowing $ 1.0 billion under the Revolving Credit Facility, which leaves $ 1.0 billion available for borrowing under such agreement by United at any time until April 1, 2022.
−Removed: Borrowings under the Revolving Credit Facility bear interest at a variable rate equal to LIBOR (but not less than 0 % per annum), plus a margin of 2.25 % per annum, or (at United's election) another rate based on certain market interest rates, plus a margin of 1.25 % per annum.
−Removed: United pays a commitment fee equal to 0.75 % per annum on the undrawn amount available under the Revolving Credit Facility.
−Removed: Used Aircraft Bridge Loan.
−Removed: On March 9, 2020, the Company entered into a Term Loan Credit and Guaranty Agreement (the "Used Aircraft Credit Agreement"), among United, as borrower, UAL, as parent and guarantor, the subsidiaries of UAL other than United party thereto from time to time, as guarantors, the lenders party thereto from time to time and JP Morgan Chase Bank N.A., as administrative agent.
−Removed: United borrowed the full amount of $ 2 billion under the Used Aircraft Credit Agreement (the "Used Aircraft Facility").
−Removed: The obligations of United under the Used Aircraft Bridge Loan were secured by liens on certain aircraft of United.
−Removed: The principal amount of the Used Aircraft Facility plus accrued interest was paid in full on October 28, 2020.
−Removed: Spare Parts Bridge Loan.
−Removed: On March 20, 2020, the Company entered into a Term Loan Credit and Guaranty Agreement (the "Spare Parts Credit Agreement"), among United, as borrower, UAL, as parent and guarantor, the subsidiaries of UAL other than
−Removed: United party thereto from time to time, as guarantors, the lenders party thereto from time to time and Goldman Sachs Bank USA, as administrative agent.
−Removed: United borrowed the full amount of $ 500 million under the Spare Parts Credit Agreement (the "Spare Parts Bridge Loan").
−Removed: The obligations of United under the Spare Parts Bridge Loan were secured by liens on certain aircraft spare parts of United.
−Removed: The principal amount of the Spare Parts Bridge Loan plus accrued interest was paid in full on October 28, 2020.
−Removed: Spare Engines Bridge Loan.
−Removed: On April 7, 2020, the Company entered into a Term Loan Credit and Guaranty Agreement (the "Spare Engines Credit Agreement"), among United, as borrower, UAL, as parent and guarantor, the subsidiaries of UAL other than United party thereto from time to time, as guarantors, the lenders party thereto from time to time and Bank of America, N.A., as administrative agent.
−Removed: United borrowed the full amount of $ 250 million under the Spare Engines Credit Agreement (the "Spare Engines Bridge Loan").
−Removed: The obligations of United under the Spare Engines Bridge Loan were secured by liens on certain aircraft spare engines of United.
−Removed: The principal amount of the Spare Engines Bridge Loan plus accrued interest was paid in full on October 28, 2020.
−Removed: SRG Bridge Loan.
−Removed: On June 30, 2020, the Company entered into a $ 200 million Term Loan Credit and Guaranty Agreement (the "SRG Bridge Loan"), among United, as borrower, UAL, as parent and guarantor, and Barclays Bank PLC, as administrative agent.
−Removed: The obligations of United under the SRG Bridge Loan were secured by liens on certain routes of United between cities in the U.S.
−Removed: and Europe, Israel, South America, and Mexico.
−Removed: United borrowed the full amount of the SRG Bridge Loan on July 1, 2020 and repaid it in full on September 29, 2020.
+Added: The PSP2 Note does not require any amortization and is to be repaid in full on the PSP2 Note Maturity Date.
+Added: 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.
+Added: During 2021, UAL issued an $ 810 million indebtedness evidenced by a 10 -year senior unsecured promissory note (the "PSP3 Note") to Treasury.
+Added: The PSP3 Note is guaranteed by United and will mature on April 29, 2031 (the "PSP3 Note Maturity Date").
+Added: 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.
+Added: UAL may, at its option, prepay the PSP3 Note, at any time, and from time to time, at par.
+Added: UAL is required to prepay the PSP3 Note upon the occurrence of certain change of control triggering events.
+Added: The PSP3 Note does not require any amortization and is to be repaid in full on the PSP3 Note Maturity Date.
+Added: Interest on the PSP3 Note is payable semi-annually in arrears on the last business day of March and September of each year, beginning on September 30, 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.
Aircraft Notes.
−Removed: As of December 31, 2020, United had $ 12.1 billion principal amount of equipment notes outstanding issued under enhanced equipment trust certificates ("EETC") financings included in notes payable in the table of outstanding debt above.
+Added: As of December 31, 2021, United had $ 11.2 billion principal amount of equipment notes outstanding issued under EETC financings.
Generally, the structure of these EETC financings consists of pass-through trusts created by United to issue pass-through certificates, which represent fractional undivided interests in the respective pass-through trusts and are not obligations of United.
3 unchanged sentences
These escrowed funds are not guaranteed by United and are not reported as debt on United's consolidated balance sheet because the proceeds held by the depositary are not United's assets.
−Removed: In September 2019, October 2020 and February 2021, United created new EETC pass-through trusts, each of which issued pass-through certificates.
−Removed: The proceeds from the issuance of the pass-through certificates were used to purchase equipment notes issued by United and secured by aircraft and, in the case of the EETC entered into in October 2020, also by spare engines and spare parts.
The Company records the debt obligation upon issuance of the equipment notes rather than upon the initial issuance of the pass-through certificates.
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):
−Removed: Issuance Date Class Principal Final expected distribution date Stated interest rate Total proceeds received from issuance of debt during 2020 Total debt recorded
−Removed: as of December 31, 2020
−Removed: September 2019 AA $ 702 May 2032 2.70 % $ 189 $ 702
−Removed: September 2019 A 287 May 2028 2.90 % 77 287
−Removed: September 2019 B 232 May 2028 3.50 % 62 232
−Removed: October 2020 A 3,000 October 2027 5.88 % 3,000 3,000
+Added: EETC Issuance Date Class Face Amount Final expected distribution date Stated interest rate Total proceeds received from issuance of debt and recorded as debt as of December 31, 2021
February 2021 B $ 600 January 2026 4.88 % $ 600
−Removed: $ 4,821 $ 3,328 $ 4,221
−Removed: In 2020, United borrowed approximately $ 691 million aggregate principal amount from various financial institutions to finance the purchase of several aircraft delivered in 2020.
−Removed: The notes evidencing these borrowings, which are secured by the related aircraft, mature in 2032 and have interest rates comprised of LIBOR plus a specified margin.
−Removed: In November 2019, at the request of United, the California Municipal Finance Authority issued its approximately $ 295 million special facility revenue bonds and loaned the proceeds of such bonds to United pursuant to a loan agreement to finance the costs of construction of an aircraft maintenance and ground service equipment complex at Los Angeles International Airport.
−Removed: The bonds bear interest at 4 % per annum, payable semiannually, commencing July 15, 2020 through the July 15, 2029 maturity
−Removed: As security for United's obligations under the loan agreement, United also entered into a leasehold mortgage which grants to the trustee of the bonds (acting on behalf of the bondholders) a lien on United's interest in the leased premises and any improvements thereon owned by or leased to United.
−Removed: As of December 31, 2020, United had recorded approximately $ 159 million related to this debt.
−Removed: During the first quarter of 2021, UAL issued the PSP2 Note to Treasury evidencing senior unsecured indebtedness of UAL.
−Removed: The principal amount of the PSP2 Note will increase to 30 % of any disbursement made by Treasury to United under the PSP2 Agreement after the initial issuance date to approximately $ 753 million aggregate principal amount after all disbursements.
−Removed: The PSP2 Note is guaranteed by United, and will mature ten years after issuance on January 15, 2031 (the "Maturity Date").
−Removed: 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 PSP2 Note.
−Removed: UAL may, at its option, prepay the PSP2 Note, at any time, and from time to time, at par.
−Removed: UAL is required to prepay the PSP2 Note upon the occurrence of certain change of control triggering events.
−Removed: The PSP2 Note does not require any amortization, and is to be repaid in full on the Maturity Date.
−Removed: 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.
−Removed: As of December 31, 2020, UAL and United were in compliance with their respective debt covenants.
+Added: 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.
+Added: As of December 31, 2021, the Company was in compliance with its respective debt covenants.
The collateral, covenants and cross default provisions of the Company's principal debt instruments that contain such provisions are summarized in the table below:
2 unchanged sentences
The indentures contain events of default that are customary for aircraft financings, including in certain cases cross default to other related aircraft.
−Removed: Credit Agreement
−Removed: Secured by certain of United's international route authorities, specified take-off and landing slots at certain airports and certain other assets.
−Removed: The Credit Agreement requires the Company to maintain at least $ 2.0 billion of unrestricted liquidity at all times, which includes unrestricted cash, short-term investments and any undrawn amounts under any revolving credit facility, and to maintain a minimum ratio of appraised value of collateral to the outstanding obligations under the Credit Agreement of 1.6 to 1.0 at all times.
−Removed: The Credit Agreement contains covenants that, among other things, restrict the ability of UAL and its restricted subsidiaries (as defined in the Credit Agreement) to make investments and to pay dividends on or repurchase stock.
−Removed: The Credit Agreement contains events of default customary for this type of financing, including a cross payment default and cross acceleration provision to certain other material indebtedness of the Company.
−Removed: CARES Act Credit Agreement Secured by liens on (i) certain route authorities of United and certain related slots and gate leaseholds and other related assets, (ii) certain aircraft and (iii) certain flight simulators and related assets.
−Removed: The CARES Act Credit Agreement requires the Company to maintain at least $ 2.0 billion of unrestricted liquidity at all times, which includes, among other things, unrestricted cash, certain short-term investments and any undrawn amounts under any revolving credit facility or under the CARES Act Credit Agreement, and to maintain a minimum ratio of appraised value of collateral to the outstanding obligations under the CARES Act Credit Agreement of 1.6 to 1.0.
−Removed: The CARES Act Credit Agreement contains covenants that, among other things, (i) restrict the ability of UAL and its subsidiaries to make investments and to pay dividends on or repurchase stock, (ii) require United to maintain certain levels of scheduled service and (iii) create certain limitations on executive compensation.
−Removed: The CARES Act Credit Agreement contains events of default customary for this type of financing, including a cross payment default and cross acceleration provision to certain other material indebtedness of the Company.
−Removed: MileagePlus Notes and Term Loan Facility Secured by first-priority security interests in substantially all of the assets of the Issuers, other than excluded property and subject to certain permitted liens, including security interests in specified cash accounts that include the accounts into which MileagePlus revenues are or will be paid by United's marketing partners and by United.
−Removed: PSP and PSP2 Notes The PSP Note and the PSP2 Note represent senior unsecured indebtedness of UAL.
−Removed: The PSP Note and the PSP2 Note are guaranteed by United.
−Removed: 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 PSP Note and the PSP2 Note.
−Removed: Unsecured notes The indentures for these notes contain covenants that, among other things, restrict the ability of the Company and its restricted subsidiaries (as defined in the indentures) to incur additional indebtedness and pay dividends on or repurchase stock, although the Company currently has ample ability under these restrictions to repurchase stock under the Company's share repurchase programs.
+Added: 2021 Loan Facilities
+Added: Secured on a senior basis by security interests granted by the Company to the collateral trustee for the benefit of the lenders under the 2021 Loan Facilities, among other parties, on the following:
+Added: (i) all of the Company's route authorities granted by the U.S.
+Added: Department of Transportation to operate scheduled service between any international airport located in the United States and any international airport located in any country other than the United States (except Cuba), (ii) the Company's rights to substantially all of its landing and take-off slots at foreign and domestic airports, including at John F.
+Added: Kennedy International Airport, LaGuardia Airport and Ronald Reagan Washington National Airport (subject to certain exclusions), and (iii) the Company'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.
+Added: The 2021 Loan Facilities contain negative covenants that, among other things, limit our ability under certain circumstances to create liens on the collateral, make certain dividends, conduct stock repurchases, make certain restricted investments and other restricted payments, and consolidate, merge, sell, or otherwise dispose of all or substantially all of our assets.
+Added: The 2021 Loan Facilities also contain financial covenants that require the Company to maintain at least $ 2.0 billion of unrestricted liquidity at all times, which includes unrestricted cash, short-term investments and any undrawn amounts under any revolving credit facility, and to maintain a minimum ratio of appraised value of collateral to the outstanding debt secured by such collateral (including under the 2021 Loan Facilities) of 1.6 to 1.0, tested semi-annually.
+Added: The 2021 Loan Facilities contain events of default customary for similar financings, including a cross-payment default and cross-acceleration to other material indebtedness.
+Added: 2026 and 2029 Notes The 2026 and 2029 Notes are secured on a senior basis by security interests granted by the Company to the collateral trustee for the benefit of the holders of the 2026 and 2029 Notes, among other parties, on the following:
+Added: (i) all of the Company's route authorities granted by the U.S.
+Added: Department of Transportation to operate scheduled service between any international airport located in the United States and any international airport located in any country other than the United States (except Cuba), (ii) the Company's rights to substantially all of its landing and take-off slots at foreign and domestic airports, including at John F.
+Added: Kennedy International Airport, LaGuardia Airport and Ronald Reagan Washington National Airport (subject to certain exclusions), and (iii) the Company'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.
+Added: The indenture for these 2026 and 2029 Notes contains covenants that, among other things, limit our ability under certain circumstances to create liens on the Collateral, make certain dividends, stock repurchases, restricted investments and other restricted payments, and consolidate, merge, sell, or otherwise dispose of all or substantially all of our assets.
+Added: The indenture also contains a financial covenant that requires UAL to pay special interest in an additional amount equal to 2.0 % per year of the principal amount of the 2026 and 2029 Notes for so long as it is unable to demonstrate that it maintains a minimum ratio of appraised value of collateral to the outstanding debt secured by such collateral (including the 2026 and 2029 Notes) of 1.6 to 1.0, tested semi-annually.
+Added: The indenture contains events of default customary for similar financings, including a cross-payment default and cross-acceleration to other material indebtedness.
+Added: MileagePlus Notes Secured by first-priority security interests in substantially all of the assets of the Issuers, other than excluded property and subject to certain permitted liens, including security interests in specified cash accounts that include the accounts into which MileagePlus revenues are or will be paid by the Company's marketing partners and by the Company.
+Added: CARES Act Loan Though the CARES Act Loan was terminated and repaid in full on April 20, 2021, United and its affiliates agreed in the corresponding term loan and guarantee agreement to comply with certain surviving provisions (i) prohibiting the payment of dividends and the repurchase of certain equity until April 20, 2022, (ii) requiring compliance with certain continuation of service requirements until March 1, 2022, and (iii) restricting the payment of certain executive compensation until April 20, 2022.
+Added: PSP Notes The PSP Notes represent senior unsecured indebtedness of UAL.
+Added: The PSP Notes are guaranteed by United.
+Added: If any subsidiary of UAL (other than United) becomes, or is required to become, an obligor on unsecured indebtedness of UAL or any of its subsidiaries with a principal balance in excess of a specified amount, then such subsidiary shall be required to guarantee the obligations of the Company under the PSP Notes.
+Added: Pursuant to the PSP Agreements, the Company and its affiliates will be required to comply with certain provisions including, among others, prohibiting certain reductions in employee wages, salaries and benefits;
+Added: provisions prohibiting the payment of dividends and the repurchase of certain equity until September 30, 2022;
+Added: audit and reporting requirements;
+Added: provisions to comply with certain continuation of service requirements until March 1, 2022;
+Added: and provisions restricting the payment of certain executive compensation until April 1, 2023.
+Added: Unsecured notes The indentures for these notes contain covenants that, among other things, restrict the ability of the Company and its restricted subsidiaries (as defined in the indentures) to incur additional indebtedness and make certain dividends, stock repurchases, restricted investments and other restricted payments.
NOTE 11 - LEASES AND CAPACITY PURCHASE AGREEMENTS
United leases aircraft, airport passenger terminal space, aircraft hangars and related maintenance facilities, cargo terminals, other airport facilities, other commercial real estate, office and computer equipment and vehicles, among other items.
−Removed: Certain of these leases include provisions for variable lease payments which are based on several factors, including, but not limited to, relative leased square footage, available seat miles, enplaned passengers, passenger facility charges, terminal equipment usage
−Removed: fees, departures, and airports' annual operating budgets.
+Added: Certain of these leases include provisions for variable lease payments which are based on several factors, including, but not limited to, relative leased square footage, available seat miles, enplaned passengers, passenger facility charges, terminal equipment usage fees, departures, and airports' annual operating budgets.
Due to the variable nature of the rates, these leases are not recorded on our balance sheet as a right-of-use asset and lease liability.
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Long-term lease obligations $ 5,152 $ 219
−Removed: As of December 31, 2020, we have additional leases of approximately $ 740 million for several mainline aircraft, regional jets under a CPA and airport facilities and office space leases that have not yet commenced.
−Removed: These leases will commence in 2021 with lease terms of up to 12 years.
+Added: As of December 31, 2021, we have additional leases of approximately $ 415 million for several regional aircraft under CPAs and airport facilities and office space leases that have not yet commenced.
+Added: These leases will commence in 2022 through 2024 with lease terms of up to 12 years.
+Added: 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, as well as 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.
+Added: The bonds bear interest at 4.0 % per annum, payable semiannually, commencing in January 2022 through the July 2041 maturity date.
+Added: 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 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.
−Removed: In connection with the delivery of each aircraft from Boeing, United assigned its right to purchase such aircraft to the buyer, and simultaneous
−Removed: with the buyer's purchase from Boeing, United entered into a long-term lease for such aircraft with the buyer as lessor.
−Removed: Fifteen Boeing model aircraft were delivered in 2020 under these transactions (and each is presently subject to a long-term lease to United).
−Removed: Remaining aircraft in the agreements are scheduled to be delivered in 2021.
−Removed: Upon delivery of aircraft in these sale and leaseback transactions in 2020, the Company accounted for 11 of these aircraft, which have a repurchase option at a price other than fair value, as part of Flight equipment on the Company's balance sheet and the related obligation recorded in Other current liabilities and Other financial liabilities from sale-leasebacks (noncurrent) since they do not qualify for sale recognition.
−Removed: 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 balance sheet after recognition of related gains on such sale.
+Added: 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.
+Added: Twenty-four Boeing model aircraft were delivered in 2021 under these transactions (and each is presently subject to a long-term lease to United).
+Added: 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 Current maturities of other financial liabilities and Other financial liabilities since they do not qualify for sale recognition.
+Added: The remaining 17 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.
See Note 14 of this report for additional information.
+Added: In 2021, under these sale and leaseback agreements, United gave notice of its intent to exercise repurchase options in 2022 for six Boeing 787 aircraft.
+Added: The liabilities associated with these aircraft are reflected in Current maturities of other financial liabilities on the Company's consolidated balance sheet at December 31, 2021.
+Added: In January 2022, the Company gave notice of its intent to exercise repurchase options in 2023 for eight Boeing 737 MAX aircraft under these sale and leaseback agreements.
+Added: The liabilities associated with these aircraft are reflected in Other financial liabilities on the Company's consolidated balance sheet at December 31, 2021.
Our lease agreements do not provide a readily determinable implicit rate nor is it available to us from our lessors.
21 unchanged sentences
Properties, of this report for additional information.
−Removed: In July 2020, the Company announced its plans to consolidate its Embraer ERJ 145 ("ERJ 145") operations into a single regional partner.
−Removed: As a result, the Company terminated its CPA with ExpressJet.
−Removed: ExpressJet flew its last commercial flight, on behalf of United, on September 30, 2020.
−Removed: Additionally, United transferred all of its ERJ 145 operations over to CommutAir as United's sole regional partner of this aircraft type.
+Added: 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.
+Added: The new Embraer E175LL aircraft will replace the Embraer E170 aircraft currently being flown by Republic for United.
United recorded approximately $ 0.6 billion, $ 0.6 billion and $ 1.0 billion in expenses related to its CPAs with its regional carriers in which United is a minority shareholder, for the years ended December 31, 2021, 2020 and 2019, respectively.
6 unchanged sentences
United's estimates of its future payments under all of the CPAs do not include the portion of the underlying obligation for any aircraft leased to a regional carrier or deemed to be leased from other regional carriers and facility rent that are disclosed as part of operating leases above.
−Removed: For purposes of calculating these estimates, we have assumed (1) the number of block hours flown is based on our anticipated level of flight activity or at any contractual minimum utilization levels if applicable, whichever is higher, (2) that we will reduce the fleet as rapidly as contractually allowed under each CPA, (3) that
−Removed: aircraft utilization, stage length and load factors will remain constant, (4) that each carrier's operational performance will remain at recent historic levels and (5) an annual projected inflation rate.
+Added: For purposes of calculating these estimates, we have assumed (1) the number of block hours flown is based on our anticipated level of flight activity or at any contractual minimum utilization levels if applicable, whichever is higher, (2) that we will reduce the fleet as rapidly as contractually allowed under each CPA, (3) that aircraft utilization, stage length and load factors will remain constant, (4) that each carrier's operational performance will remain at recent historic levels and (5) an annual projected inflation rate.
These amounts exclude variable pass-through costs such as fuel and landing fees, among others.
26 unchanged sentences
Based on this analysis, the Company determined that it is not required to consolidate the pass-through trusts.
−Removed: Synergy's wholly-owned affiliate, BRW, is a special purpose entity created to be the borrower of the BRW Term Loan.
−Removed: BRW is also the owner of the collateral that secures the BRW Term Loan.
−Removed: BRW is a VIE and United holds variable interests in BRW including the BRW Term Loan.
−Removed: However, United is not the primary beneficiary of BRW because it does not hold BRW equity and does not have management rights at BRW and therefore does not have the power to direct the activities that most significantly impact BRW's economic performance.
−Removed: In connection with the delivery by United of a notice of default to BRW, Kingsland was granted, in accordance with the agreements related to the BRW Term Loan Agreement, authority to manage BRW.
−Removed: United concluded that AVH is a VIE and that United holds a variable interest through the AVH DIP Loan and a call option on BRW's AVH shares.
−Removed: However, United is not the primary beneficiary because it does not hold a material number of shares of AVH and does not have the power through the AVH DIP Loan Agreement or any other agreement to direct the activities that most significantly impact AVH's economic performance.
−Removed: Further, AVH is currently in Chapter 11 bankruptcy and as such the bankruptcy court is viewed as having power to direct the activities that most significantly impact AVH's economic performance.
−Removed: See Note 9 of this report for more information about the AVH call options.
United concluded that ManaAir is a VIE as of December 31, 2021.
United holds a variable interest in ManaAir in the form of equity interest, but United is not the primary beneficiary because it does not have power to direct the activities that most significantly impact ManaAir's economic performance.
−Removed: United concluded that Champlain is a VIE as of December 31, 2020.
−Removed: United holds variable interests in Champlain in the form of equity interest and a loan to Champlain, but United is not the primary beneficiary because it does not have power to direct the activities that most significantly impact Champlain's economic performance.
NOTE 13 - COMMITMENTS AND CONTINGENCIES
−Removed: As of December 31, 2020 (adjusted to include the effects of the February 26, 2021 agreement with The Boeing Company ("Boeing") discussed below), United had firm commitments and options to purchase aircraft from Boeing, Airbus S.A.S.
−Removed: ("Airbus") and Embraer S.A.
−Removed: ("Embraer") presented in the table below:
+Added: As of December 31, 2021, United had firm commitments and options to purchase aircraft from The Boeing Company ("Boeing") and Airbus S.A.S.
+Added: ("Airbus") presented in the table below:
Scheduled Aircraft Deliveries
2 unchanged sentences
Airbus A321XLR 50 — — 50
+Added: Airbus A321neo 70 — 12 58
Airbus A350 45 — — 45
1 unchanged sentence
Boeing 787 8 8 — —
−Removed: Embraer E175 4 4 — —
(a) United also has options and purchase rights for additional aircraft.
−Removed: On February 26, 2021, the Company entered into an agreement with The Boeing Company ("Boeing") for a firm order of 25 Boeing 737 MAX aircraft for delivery in 2023, and to reschedule the delivery of 40 previously ordered Boeing 737 MAX aircraft to 2022 and 5 Boeing 737 MAX aircraft into 2023.
The aircraft listed in the table above are scheduled for delivery through 2030.
−Removed: To the extent the Company and the aircraft manufacturers with which the Company has existing orders for new aircraft agree to modify the contracts governing those orders, the amount and timing of the Company's future capital commitments could change.
−Removed: In March 2020, the Company entered into a confidential settlement with Boeing with respect to compensation for financial damages incurred in 2019 due to the grounding of the Boeing 737 MAX aircraft.
−Removed: In June 2020, the Company entered into an amended and restated confidential agreement with Boeing which provides for the settlement of additional items related to aircraft delivery and updates the scheduled delivery for substantially all undelivered Boeing 737 MAX aircraft.
−Removed: The compensation to the Company under the amended and restated settlement agreement is in the form of credit memos to be issued upon the satisfaction of certain conditions related to aircraft deliveries.
−Removed: The Company is accounting for this settlement as a reduction to the cost basis of future firm order Boeing 737 MAX aircraft deliveries and previously-delivered Boeing 737 MAX aircraft, which will reduce future depreciation expense associated with these aircraft.
−Removed: United also has an agreement to purchase 11 used Boeing 737-700 aircraft with expected delivery dates in 2021.
−Removed: In addition, United has an agreement to purchase 17 used Airbus A319 aircraft, which it intends to sell, with expected delivery dates in 2021 and 2022.
−Removed: The table below summarizes United's commitments as of December 31, 2020 (adjusted to include the effects of the February 26, 2021 agreement with Boeing), which include aircraft and related spare engines, aircraft improvements and all non-aircraft capital commitments (in billions):
+Added: 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.
+Added: The table below summarizes United's commitments as of December 31, 2021, which include aircraft and related spare engines, aircraft improvements and all non-aircraft capital commitments (in billions):
After 2026 8.9
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The Company has certain contingencies resulting from litigation and claims incident to the ordinary course of business.
−Removed: As of December 31, 2020, management believes, after considering a number of factors, including (but not limited to) the information currently available, the views of legal counsel, the nature of contingencies to which the Company is subject and prior experience, that the ultimate disposition of the litigation and claims will not materially affect the Company's consolidated financial position or results of operations.
−Removed: The Company records liabilities for legal and environmental claims when a loss is probable and reasonably estimable.
+Added: As of December 31, 2021, management believes, after considering a number of factors, including (but not limited to) the information currently available, the views of legal counsel, the nature of contingencies to which the Company is subject and prior experience, that its defenses and assertions in pending legal proceedings have merit and t he ultimate disposition of any pending matter will not materially affect the Company's financial position, results of operations or cash flows.
+Added: The Company records liabilities for legal and environmental claims when it is probable that a loss has been incurred and the amount is reasonably estimable.
These amounts are recorded based on the Company's assessments of the likelihood of their eventual disposition.
6 unchanged sentences
These bonds, issued by various airport municipalities, are payable solely from rentals paid under long-term agreements with the respective governing bodies.
−Removed: The leasing arrangements associated with these obligations are accounted for as operating leases recognized on the Company's balance sheet with the associated expense recorded on a straight-line basis over the expected lease term.
+Added: The leasing arrangements associated with these obligations are accounted for as operating leases recognized on the Company's consolidated balance sheet with the associated expense recorded on a straight-line basis over the expected lease term.
The obligations associated with these tax-exempt special facilities revenue bonds are included in our lease commitments disclosed in Note 11 of this report.
All of these bonds are due between 2023 and 2041.
−Removed: In connection with funding the BRW Term Loan Agreement, the Company entered into an agreement with Kingsland, 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 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 or any completed liquidation or dissolution of AVH, and (2) guaranteed BRW's obligation to pay Kingsland the difference (which amount, if paid by United, 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.
−Removed: Due to AVH's financial uncertainty due to its high level of leverage and the fact that the airline had ceased operations due to the COVID-19 pandemic, the Company recorded the full amount under this guarantee as a liability.
−Removed: In November 2020, the Company posted $ 217 million as cash collateral for a standby letter of credit in favor of Citibank, N.A.
−Removed: that serves as security for a loan from Citibank to Kingsland.
−Removed: Any drawings under the letter of credit would offset the Company's maximum possible put and guarantee payment to Kingsland by an equal amount.
−Removed: 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 December 31, 2021, United is the guarantor of $ 106 million of aircraft mortgage debt issued by one of United's regional carriers.
16 unchanged sentences
The guarantees will expire when the tax-exempt bonds are paid in full, which ranges from 2022 to 2056.
−Removed: The Company did not record a liability at the time these indirect guarantees were made.
+Added: The Company concluded it was not necessary to record a liability for these indirect guarantees.
Regional Capacity Purchase.
10 unchanged sentences
labor organizations.
−Removed: On February 1, 2019, the collective bargaining agreement with the Air Line Pilots Association ("ALPA"), the labor union representing United's pilots, became amendable.
−Removed: The Company and ALPA are in negotiations for an amended agreement.
−Removed: On September 28, 2020, United's pilots approved an agreement to avoid furloughs, at least until June 2021.
−Removed: The agreement offered, among other things, an early separation option for certain eligible pilots.
−Removed: The Company and UNITE HERE, the labor union representing United's Catering Operations employees, started negotiations for a first collective bargaining agreement in March 2019.
−Removed: In December 2020, the Company reviewed the provision of the collective bargaining agreement with the International Brotherhood of Teamsters ("IBT") for alignment with contract terms with other airlines' workgroups.
−Removed: This review provided a base pay rate increase for employees covered under this agreement.
−Removed: NOTE 14 - SPECIAL CHARGES AND UNREALIZED (GAINS) LOSSES ON INVESTMENTS
−Removed: Special charges and unrealized gains and losses on investments in the statements of consolidated operations consisted of the following for the years ended December 31 (in millions):
+Added: This total includes employees who elected to voluntarily separate from the Company pursuant to the Voluntary Programs but who are still on pre-separation leave of absence with pay and benefits.
+Added: NOTE 14 - SPECIAL CHARGES (CREDITS) AND UNREALIZED (GAINS) LOSSES ON INVESTMENTS
+Added: Special charges (credits) and unrealized (gains) and losses on investments in the statements of consolidated operations consisted of the following for the years ended December 31 (in millions):
2021 2020 2019
2 unchanged sentences
Impairment of assets 97 318 171
−Removed: Termination of an engine maintenance service agreement — — 64
(Gains) losses on sale of assets and other special charges 119 27 59
−Removed: Total operating special charges (credit) ( 2,616 ) 246 487
−Removed: Nonoperating credit loss on BRW Term Loan and related guarantee 697 — —
+Added: Total operating special charges (credits) ( 3,367 ) ( 2,616 ) 246
+Added: Nonoperating unrealized (gains) losses on investments, net 34 194 ( 153 )
+Added: Nonoperating debt extinguishment and modification fees 50 — —
Nonoperating special termination benefits and settlement losses 31 687 —
−Removed: Nonoperating unrealized (gains) losses on investments 194 ( 153 ) 5
−Removed: Total nonoperating special charges and unrealized (gains) losses on investments 1,578 ( 153 ) 5
−Removed: Total operating and nonoperating special charges (credit) and unrealized (gains) losses on investments ( 1,038 ) 93 492
+Added: Nonoperating credit loss on BRW Term Loan and related guarantee — 697 —
+Added: Total nonoperating special charges and unrealized (gains) losses on investments, net 115 1,578 ( 153 )
+Added: Total operating and nonoperating special charges (credits) and unrealized (gains) losses on investments, net ( 3,252 ) ( 1,038 ) 93
Income tax expense (benefit), net of valuation allowance 728 404 ( 21 )
−Removed: Income tax adjustments (Note 6) — — ( 5 )
−Removed: Total operating and nonoperating special charges (credit) and unrealized (gains) losses on investments, net of income taxes $ ( 634 ) $ 72 $ 377
+Added: Total operating and nonoperating special charges (credits) and unrealized (gains) losses on investments, net of income taxes $ ( 2,524 ) $ ( 634 ) $ 72
CARES Act grant.
+Added: During 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 .
+Added: The Company recorded $ 4.0 billion as grant income in Special charges (credits).
+Added: 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.
+Added: Severance and benefit costs .
+Added: During 2021, the Company recorded $ 438 million of charges related to pay continuation and benefits-related costs provided to employees who chose to voluntarily separate from the Company.
+Added: The Company offered, based on employee group, age and completed years of service, pay continuation, health care coverage, and travel benefits.
+Added: Approximately 4,500 employees elected to voluntarily separate from the Company.
+Added: Impairment of assets .
+Added: During 2021, the Company recorded the following impairment charges:
+Added: • $ 61 million, primarily comprised of impairment charges for 13 Airbus A319 aircraft and 13 Boeing 737-700 airframes as a result of current market conditions for used aircraft, along with charges for cancelled induction projects related to these aircraft.
+Added: These aircraft are all considered held for sale and classified as part of other assets.
+Added: • $ 36 million of impairments related to 64 Embraer EMB 145LR aircraft and related spare engines that United retired from its regional fleet.
+Added: The decision to retire these aircraft was triggered by the United Next aircraft order.
+Added: Almost all of these aircraft are classified as held for sale.
+Added: (Gains) losses on sale of assets and other special charges.
+Added: During 2021, the Company recorded net charges of $ 119 million primarily related to a one-time bonus paid to employees for their continued efforts during the COVID-19 pandemic, 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 gains primarily related to the sale of its former headquarters in suburban Chicago, aircraft sale-leaseback transactions and aircraft component manufacturer credits.
+Added: Nonoperating unrealized (gains) losses on investments, net .
+Added: During 2021, the Company recorded losses of $ 34 million primarily for the change in the market value of its investments in equity securities.
+Added: Nonoperating debt extinguishment and modification fees.
+Added: During 2021, the Company recorded $ 50 million of charges for fees and discounts related to the entry into the 2021 Loan Facilities and the prepayment of the 2017 Loan Facilities.
+Added: Nonoperating special termination benefits and settlement losses.
+Added: During 2021, as part of the first quarter Voluntary Programs, the Company recorded $ 31 million of special termination benefits in the form of additional subsidies for retiree medical costs
+Added: for certain U.S.-based front-line employees.
+Added: 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.
+Added: See Note 7 of this report for additional information.
+Added: CARES Act grant.
During 2020, the Company received approximately $ 5.1 billion in funding pursuant to the Payroll Support Program under the CARES Act, which consisted of a $ 3.6 billion grant and a $ 1.5 billion unsecured loan.
−Removed: The Company recorded $ 66 million for warrants issued to Treasury, within stockholders' equity, as an offset to the grant income.
−Removed: For 2020, we recognized the $ 3.5 billion grant as a credit to Special charges (credit).
+Added: The Company recorded $ 3.5 billion as grant income in Special charges (credits).
+Added: The Company also recorded $ 66 million for warrants issued to Treasury, within stockholders' equity, as an offset to the grant income.
Severance and benefit costs .
−Removed: In July 2020, the Company started the involuntary furlough process by issuing WARN Act notices to approximately 36,000 of its employees.
−Removed: Since then, the Company worked to reduce the total number of furloughs to approximately 13,000 employees by working closely with its union partners, introducing new voluntary options selected by approximately 9,000 employees and proposing creative solutions that would save jobs.
−Removed: This workforce reduction is part of the Company's strategic realignment of its business and new organizational structure as a result of the impacts of the COVID-19 pandemic on the Company's operations and cost structure.
−Removed: The Company recorded $ 575 million during 2020 related to the workforce reduction, employee severance, pay continuance from voluntary retirements, and benefits-related costs (and additional costs associated with special termination benefits and settlement losses discussed below under "Nonoperating special termination benefits and settlement losses").
−Removed: See also Note 7 of this report for further information.
+Added: During 2020, the Company recorded $ 575 million related to its workforce reduction and voluntary plans for employee severance, pay continuance from voluntary retirements and benefits-related costs.
Impairment of assets .
−Removed: United assesses its goodwill and intangible assets for potential impairment on an annual basis as of October 1, and on an interim basis if there are indicators that an impairment of goodwill or the intangible assets may have occurred.
−Removed: For goodwill and certain of its intangible assets, including the Company's China routes, London-Heathrow slots, alliances and the United trade name and logo, the Company performed a quantitative assessment which involved determining the fair value of the asset and comparing that amount to the asset's carrying value and, in the case of goodwill, comparing the Company's fair value to its carrying value.
−Removed: For all other intangible assets, the Company performed a qualitative assessment of whether it was more likely than not that an impairment had occurred.
−Removed: To determine fair value, the Company used discounted cash flow methods appropriate for each asset.
−Removed: Key inputs into the models included forecasted capacity, revenues, fuel costs, other operating costs and an overall discount rate.
−Removed: The assumptions used for future projections include that demand will likely remain suppressed through 2021.
−Removed: These assumptions are inherently uncertain as they relate to future events and circumstances.
−Removed: The Company performed intangible asset impairment reviews throughout the year.
−Removed: In light of the ongoing impact of the COVID-19 pandemic on both the U.S.
−Removed: and global economies, the significant, sustained impact on the demand for travel and government policies that restrict air travel, the exact timing of the recovery from the COVID-19 pandemic, and the speed at which such recovery could occur, continues to remain uncertain and could result in
−Removed: additional impairment charges in the future.
−Removed: We expect to continue to modify our cost management structure and capacity as the timing of demand recovery becomes more certain.
−Removed: As a result of the impairment assessments, the Company recorded impairment charges of $ 130 million during 2020 for its China routes which was 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.
−Removed: The Company's China routes are subject to China slot usage rules and U.S.
−Removed: Department of Transportation frequency use requirements.
−Removed: For the summer and winter 2020 seasons, both governments issued relief from these rules.
−Removed: The Company, therefore, has been able to reduce its mainland China service without violating the governments' rules.
−Removed: The Company is advocating for a continuation of this relief through the summer 2021 season.
−Removed: United assesses its long-lived assets whenever there are indicators that an impairment of the assets may have occurred.
−Removed: During 2020, in response to decreased demand caused by the COVID-19 pandemic, the Company temporarily grounded certain of its mainline fleet, some of which continue to be temporarily grounded.
−Removed: United performed forecasted cash flow analyses and determined that the carrying value of the tested fleets is recoverable from future cash flows expected to be generated by those fleets.
−Removed: To determine whether impairments exist for active and temporarily parked mainline aircraft, we group assets at the fleet-type level.
−Removed: In the fourth quarter of 2020, the Company permanently grounded 11 of its Boeing 757-200 aircraft.
−Removed: The Company's decision was influenced by the FAA's rescission of the order that grounded the Boeing 737MAX aircraft in March of 2019.
−Removed: As a result of the cash flow analysis for the 11 permanently-grounded aircraft, we recorded $ 94 million of impairments related to those aircraft and the related engines and spare parts.
−Removed: During 2020, the Company recorded an impairment of $ 38 million of the right-of-use asset associated with the embedded aircraft lease in one of our CPAs.
−Removed: We measure cash flows at the contract level with our CPA partners.
+Added: During 2020, the Company recorded the following impairment charges:
+Added: • $ 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.
+Added: • $ 94 million related to 11 permanently-grounded Boeing 757-200 aircraft and the related engines and spare parts.
+Added: • $ 38 million related to the right-of-use asset associated with the embedded aircraft lease in one of the Company's CPAs.
This impairment was primarily due to the impact to cash flows from the pandemic and the relatively short remaining term under the CPA.
−Removed: During 2020, the Company also recorded $ 56 million of impairments related to various cancelled facility, aircraft induction and information technology capital projects.
−Removed: The decisions driving these impairments were the result of the COVID-19 pandemic's impact on our operations.
−Removed: To the extent we make future decisions to permanently ground any of our fleet, or our estimates of future cash flows generated by our fleet change, we may be required to record impairment charges in future periods.
−Removed: The aircraft and intangible asset impairments described above required Level 3 fair value inputs including the maintenance condition of the aircraft (for impaired aircraft) and future assumptions about profit margin and our weighted average cost of capital (for the China route intangible).
+Added: • $ 56 million related to various cancelled facility, aircraft induction and information technology capital projects.
+Added: The decisions driving these impairments were the result of the COVID-19 pandemic's impact on the Company's operations.
+Added: (Gains) losses on sale of assets and other special charges.
+Added: During 2020, the Company recorded losses on certain asset sales and charges for legal reserves, partially offset by gains on aircraft sale-leaseback transactions.
+Added: Nonoperating unrealized gains (losses) on investments, net.
+Added: During 2020, the Company recorded losses of $ 194 million primarily for changes in the fair value of its investments in equity securities.
Nonoperating special termination benefits and settlement losses.
During 2020, the Company recorded $ 687 million of settlement losses related to the Company's primary defined benefit pension plan covering certain U.S.
−Removed: non-pilot employees, and special termination benefits offered, under furlough and voluntary separation programs.
+Added: non-pilot employees, and special termination benefits offered, under Voluntary Programs.
See Note 7 of this report for additional information.
−Removed: Nonoperating unrealized gains (losses) on investments, net.
−Removed: During 2020, the Company recorded losses of $ 170 million primarily for changes in the fair value of its investment in Azul.
−Removed: Also during 2020, the Company recorded losses of $ 24 million for the decrease in fair value of the AVH Derivative Assets.
Nonoperating credit loss on BRW Term Loan and related guarantee.
During 2020, the Company recorded a $ 697 million expected credit loss allowance for the BRW Term Loan and related guarantee.
−Removed: AVH is currently in bankruptcy.
−Removed: See Notes 8 and 13 of this report for additional information.
−Removed: During 2019, the Company recorded a special non-cash impairment charge of $ 90 million associated with its Hong Kong routes.
−Removed: The Company determined the fair value of the Hong Kong routes using a variation of the income approach known as the excess earnings method, which discounts an asset's projected future net cash flows to determine the current fair value.
−Removed: During 2019, the Company recorded a $ 43 million impairment primarily for surplus Boeing 767 aircraft engines removed from operations, an $ 18 million charge primarily for the write-off of unexercised aircraft purchase options, and $ 20 million in other aircraft impairments.
−Removed: During 2019, the Company recorded $ 14 million of management severance and $ 2 million of severance and benefit costs related to a voluntary early-out program for its technicians and related employees represented by the IBT.
−Removed: In the first quarter of 2017, approximately 1,000 technicians and related employees elected to voluntarily separate from the Company and received a
−Removed: severance payment, with a maximum value of $ 100,000 per participant, based on years of service, with retirement dates through early 2019.
−Removed: During 2019, the Company recorded charges of $ 25 million related to contract terminations, $ 18 million for the settlement of certain legal matters, $ 14 million for costs related to the transition of fleet types within a regional carrier contract and $ 2 million of other charges.
−Removed: During 2019, the Company recorded gains of $ 140 million for the change in market value of certain of its equity investments, primarily Azul, and $ 13 million for the change in fair value of the AVH Derivative Assets.
−Removed: During 2018, the Company recorded a special non-cash impairment charge of $ 206 million associated with its Hong Kong routes as a result of its annual intangible assets impairment review.
−Removed: The Company determined the fair value of the Hong Kong routes using a variation of the income approach as described above for the 2019 Hong Kong impairment.
−Removed: In May 2018, the Brazil–United States open skies agreement was ratified, which provides air carriers with unrestricted access between the United States and Brazil.
−Removed: The Company determined that the approval of the open skies agreement impaired the entire value of its Brazil route authorities because the agreement removes all limitations or reciprocity requirements for flights between the United States and Brazil.
−Removed: Accordingly, the Company recorded a $ 105 million special charge to write off the entire value of the intangible asset associated with its Brazil routes.
−Removed: Also during 2018, the Company recorded $ 66 million of fair value adjustments related to aircraft purchased off lease, write-offs of unexercised aircraft purchase options and other impairments related to certain fleet types and international slots no longer in use.
−Removed: During 2018, the Company recorded $ 22 million of severance and benefit costs related to the voluntary early-out program for its technicians and related employees represented by the IBT as described above.
−Removed: Also during 2018, the Company recorded other management severance of $ 19 million.
−Removed: During 2018, the Company recorded a one-time termination charge of $ 64 million related to one of its engine maintenance service agreements.
−Removed: During 2018, the Company recorded gains of $ 28 million for the change in market value of certain of its equity investments, primarily Azul.
−Removed: Also, the Company recorded losses of $ 33 million for the change in fair value of the AVH Derivative Assets.
−Removed: NOTE 15 - SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
−Removed: Quarter Ended
−Removed: (In millions, except per share amounts) March 31 June 30 September 30 December 31
−Removed: Operating revenue $ 7,979 $ 1,475 $ 2,489 $ 3,412
−Removed: Loss from operations ( 972 ) ( 1,637 ) ( 1,615 ) ( 2,135 )
−Removed: Net loss ( 1,704 ) ( 1,627 ) ( 1,841 ) ( 1,897 )
−Removed: Basic and diluted loss per share ( 6.86 ) ( 5.79 ) ( 6.33 ) ( 6.39 )
−Removed: Operating revenue $ 9,589 $ 11,402 $ 11,380 $ 10,888
−Removed: Income from operations 495 1,472 1,473 861
−Removed: Net income 292 1,052 1,024 641
−Removed: Basic earnings per share 1.09 4.03 4.01 2.54
−Removed: Diluted earnings per share 1.09 4.02 3.99 2.53
−Removed: UAL's quarterly financial data is subject to seasonal fluctuations and historically its second and third quarter financial results, which reflect higher travel demand, are better than its first and fourth quarter financial results.
−Removed: UAL's quarterly results were impacted by the following significant items (in millions):
−Removed: Quarter Ended
−Removed: March 31 June 30 September 30 December 31
−Removed: CARES Act grant $ — $ ( 1,589 ) $ ( 1,494 ) $ ( 453 )
−Removed: Impairment of assets 50 80 51 137
+Added: See Note 8 of this report for additional information.
Severance and benefit costs .
−Removed: (Gains) losses on sale of assets and other special charges 13 ( 3 ) 12 5
−Removed: Total operating special charges (credit) 63 ( 1,449 ) ( 1,081 ) ( 149 )
−Removed: Nonoperating special termination benefits and settlement losses — 231 415 41
−Removed: Nonoperating unrealized (gains) losses on investments 319 ( 9 ) ( 15 ) ( 101 )
−Removed: Nonoperating credit loss on BRW Term Loan and related guarantee 697 — — —
−Removed: Total nonoperating special charges and unrealized (gains) losses on investments 1,016 222 400 ( 60 )
−Removed: Total operating and nonoperating special charges (credit) and unrealized (gains) losses on investments 1,079 ( 1,227 ) ( 681 ) ( 209 )
−Removed: Income tax expense (benefit), net of valuation allowance ( 14 ) 241 148 29
−Removed: Total operating and nonoperating special charges (credit) and unrealized (gains) losses on investments, net of income taxes $ 1,065 $ ( 986 ) $ ( 533 ) $ ( 180 )
+Added: During 2019, the Company recorded $ 14 million of management severance and $ 2 million of severance and benefit costs related to a voluntary early-out program for its technicians and related employees represented by the International Brotherhood of Teamsters.
Impairment of assets.
−Removed: Severance and benefit costs 6 6 2 2
+Added: During 2019, the Company recorded a $ 90 million impairment charge associated with its Hong Kong routes.
+Added: The Company determined the fair value of the Hong Kong routes using a variation of the income approach known as the excess earnings method, which discounts an asset's projected future net cash flows to determine the current fair value.
+Added: Also during 2019, the Company recorded a $ 43 million impairment primarily for surplus Boeing 767 aircraft engines removed from operations, an $ 18 million charge primarily for the write-off of unexercised aircraft purchase options, and $ 20 million in other aircraft impairments.
(Gains) losses on sale of assets and other special charges.
−Removed: Total operating special charges 18 71 27 130
−Removed: Nonoperating unrealized (gains) losses on investments ( 17 ) ( 34 ) ( 21 ) ( 81 )
−Removed: Total special charges and unrealized (gains) losses on investments 1 37 6 49
−Removed: Income tax benefit related to special charges and unrealized (gains) losses on investments — ( 8 ) ( 2 ) ( 11 )
−Removed: Total special charges and unrealized (gains) losses on investments, net of income tax $ 1 $ 29 $ 4 $ 38
−Removed: See Note 14 of this report for additional information related to these items.
+Added: During 2019, the Company recorded charges of $ 25 million related to contract terminations, $ 18 million for the settlement of certain legal matters, $ 14 million for costs related to the transition of fleet types within a regional carrier contract and $ 2 million of other charges.
+Added: Nonoperating unrealized gains (losses) on investments, net.
+Added: During 2019, the Company recorded gains of $ 153 million primarily for the change in market value of certain of its equity investments.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
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.