What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-07-21 compared with 2022-04-21 · 187 added, 107 removed, 472 unchanged (38% of the section changed)

3 unchanged sentences

(In millions, except per share amounts)

Three Months Ended March 31,

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

2022 2021 2022 2021

Operating revenue:

15 unchanged sentences

Total operating expense 11,234 5,741 20,176 10,343

Operating loss ( 1,376 ) ( 1,381 )

Operating income (loss) 878 ( 270 ) ( 498 ) ( 1,651 )

Nonoperating income (expense):

2 unchanged sentences

Interest income 33 12 38 19

Unrealized losses on investments, net — ( 22 )

Unrealized gains (losses) on investments, net ( 40 ) 147 ( 40 ) 125

Miscellaneous, net ( 14 ) ( 49 ) 5 ( 68 )

Total nonoperating expense, net ( 419 ) ( 294 ) ( 795 ) ( 664 )

Loss before income tax benefit ( 1,752 ) ( 1,751 )

Income tax benefit ( 375 ) ( 394 )

Net loss $ ( 1,377 ) $ ( 1,357 )

Loss per share, basic and diluted $ ( 4.24 ) $ ( 4.29 )

Income (loss) before income tax expense (benefit) 459 ( 564 ) ( 1,293 ) ( 2,315 )

Income tax expense (benefit) 130 ( 130 ) ( 245 ) ( 524 )

Net income (loss) $ 329 $ ( 434 ) $ ( 1,048 ) $ ( 1,791 )

Earnings (loss) per share, basic $ 1.01 $ ( 1.34 ) $ ( 3.22 ) $ ( 5.60 )

Earnings (loss) per share, diluted $ 1.00 $ ( 1.34 ) $ ( 3.22 ) $ ( 5.60 )

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

2 unchanged sentences

(In millions)

Three Months Ended March 31,

Net loss $ ( 1,377 ) $ ( 1,357 )

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

2022 2021 2022 2021

Net income (loss) $ 329 $ ( 434 ) $ ( 1,048 ) $ ( 1,791 )

Other comprehensive income (loss), net of tax:

1 unchanged sentence

Investments and other ( 11 ) — ( 11 ) ( 1 )

Total other comprehensive income, net of tax 5 13

Total comprehensive loss, net $ ( 1,372 ) $ ( 1,344 )

Total other comprehensive income (loss), net of tax ( 7 ) 12 ( 2 ) 25

Total comprehensive income (loss), net $ 322 $ ( 422 ) $ ( 1,050 ) $ ( 1,766 )

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

2 unchanged sentences

(In millions, except shares)

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Current assets:

30 unchanged sentences

(In millions, except shares)

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

LIABILITIES AND STOCKHOLDERS' EQUITY

25 unchanged sentences

authorized 1,000,000,000 shares;

outstanding 326,728,861 and 323,810,825 shares at March 31, 2022 and December 31, 2021, respectively

outstanding 326,744,101 and 323,810,825 shares at June 30, 2022 and December 31, 2021, respectively

Additional capital invested 8,970 9,156

8 unchanged sentences

(In millions)

Three Months Ended

Six Months Ended June 30,

Cash Flows from Operating Activities:

13 unchanged sentences

Net cash provided by (used in) financing activities ( 1,654 ) 7,554

Net increase in cash, cash equivalents and restricted cash 190 1,396

Net increase (decrease) in cash, cash equivalents and restricted cash ( 1,401 ) 9,566

Cash, cash equivalents and restricted cash at beginning of the period 18,533 11,742

4 unchanged sentences

Right-of-use assets acquired through operating leases 84 214

Equity interest received in consideration for the sale of aircraft 42 —

Warrants received for entering into ancillary business agreements

Equity investment interest received in exchange for aircraft 42 —

Notes receivable and warrants received for entering into agreements 2 139

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

12 unchanged sentences

Shares Amount

Balance at March 31, 2022 326.7 $ 4 $ 8,953 $ ( 3,552 ) $ ( 844 ) $ ( 937 ) $ 3,624

Net income — — — — 329 — 329

Other comprehensive loss — — — — — ( 7 ) ( 7 )

Stock-settled share-based compensation — — 17 — — — 17

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

Balance at June 30, 2022 326.7 $ 4 $ 8,970 $ ( 3,551 ) $ ( 515 ) $ ( 944 ) $ 3,964

Balance at December 31, 2021 323.8 $ 4 $ 9,156 $ ( 3,814 ) $ 625 $ ( 942 ) $ 5,029

Net loss — — — — ( 1,048 ) — ( 1,048 )

Other comprehensive income — — — — — 5 5

Other comprehensive loss — — — — — ( 2 ) ( 2 )

Stock-settled share-based compensation — — 55 — — — 55

Stock issued for share-based awards, net of shares withheld for tax 2.9 — ( 241 ) 263 ( 92 ) — ( 70 )

Balance at June 30, 2022 326.7 $ 4 $ 8,970 $ ( 3,551 ) $ ( 515 ) $ ( 944 ) $ 3,964

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

Net loss — — — — ( 434 ) — ( 434 )

Other comprehensive income — — — — — 12 12

Stock-settled share-based compensation — — 68 — — — 68

Warrants issued — — 52 — — — 52

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

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

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

5 unchanged sentences

Stock issued for share-based awards, net of shares withheld for tax 0.8 — ( 55 ) 65 ( 31 ) — ( 21 )

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

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

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

2 unchanged sentences

(In millions)

Three Months Ended March 31,

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

2022 2021 2022 2021

Operating revenue:

15 unchanged sentences

Total operating expense 11,234 5,740 20,175 10,342

Operating loss ( 1,375 ) ( 1,381 )

Operating income (loss) 878 ( 269 ) ( 497 ) ( 1,650 )

Nonoperating income (expense):

2 unchanged sentences

Interest income 33 12 38 19

Unrealized losses on investments, net — ( 22 )

Unrealized gains (losses) on investments, net ( 40 ) 147 ( 40 ) 125

Miscellaneous, net ( 14 ) ( 50 ) 5 ( 69 )

Total nonoperating expense, net ( 419 ) ( 295 ) ( 795 ) ( 665 )

Loss before income tax benefit ( 1,751 ) ( 1,751 )

Income tax benefit ( 374 ) ( 394 )

Net loss $ ( 1,377 ) $ ( 1,357 )

Income (loss) before income tax expense (benefit) 459 ( 564 ) ( 1,292 ) ( 2,315 )

Income tax expense (benefit) 129 ( 130 ) ( 245 ) ( 524 )

Net income (loss) $ 330 $ ( 434 ) $ ( 1,047 ) $ ( 1,791 )

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

2 unchanged sentences

(In millions)

Three Months Ended March 31,

Net loss $ ( 1,377 ) $ ( 1,357 )

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

2022 2021 2022 2021

Net income (loss) $ 330 $ ( 434 ) $ ( 1,047 ) $ ( 1,791 )

Other comprehensive income (loss), net of tax:

1 unchanged sentence

Investments and other ( 11 ) — ( 11 ) ( 1 )

Total other comprehensive income, net of tax 5 13

Total comprehensive loss, net $ ( 1,372 ) $ ( 1,344 )

Total other comprehensive income (loss), net of tax ( 7 ) 12 ( 2 ) 25

Total comprehensive income (loss), net $ 323 $ ( 422 ) $ ( 1,049 ) $ ( 1,766 )

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

2 unchanged sentences

(In millions, except shares)

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Current assets:

30 unchanged sentences

(In millions, except shares)

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

LIABILITIES AND STOCKHOLDER'S EQUITY

24 unchanged sentences

authorized 1,000 shares;

issued and outstanding 1,000 shares at both March 31, 2022 and December 31, 2021

issued and outstanding 1,000 shares at both June 30, 2022 and December 31, 2021

Additional capital invested 373 317

8 unchanged sentences

(In millions)

Three Months Ended

Six Months Ended June 30,

Cash Flows from Operating Activities:

13 unchanged sentences

Net cash provided by (used in) financing activities ( 1,583 ) 7,575

Net increase in cash, cash equivalents and restricted cash 190 1,396

Net increase (decrease) in cash, cash equivalents and restricted cash ( 1,401 ) 9,566

Cash, cash equivalents and restricted cash at beginning of the period 18,533 11,742

4 unchanged sentences

Right-of-use assets acquired through operating leases 84 214

Equity interest received in consideration for the sale of aircraft 42 —

Warrants received for entering into ancillary business agreements

Equity investment interest received in exchange for aircraft 42 —

Notes receivable and warrants received for entering into agreements 2 139

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

10 unchanged sentences

Other Comprehensive Income (Loss) Payable to Parent Total

Balance at March 31, 2022 $ 355 $ 1,600 $ ( 937 ) $ 2,575 $ 3,593

Net income — 330 — — 330

Other comprehensive loss — — ( 7 ) — ( 7 )

Stock-settled share-based compensation 18 — — — 18

Other — — — ( 1 ) ( 1 )

Balance at June 30, 2022 $ 373 $ 1,930 $ ( 944 ) $ 2,574 $ 3,933

Balance at December 31, 2021 $ 317 $ 2,977 $ ( 942 ) $ 2,646 $ 4,998

3 unchanged sentences

Other — — — ( 72 ) ( 72 )

Balance at June 30, 2022 $ 373 $ 1,930 $ ( 944 ) $ 2,574 $ 3,933

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

Net loss — ( 434 ) — — ( 434 )

Other comprehensive income — — 12 — 12

Stock-settled share-based compensation 68 — — — 68

Other — — — 51 51

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

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

4 unchanged sentences

Other — — — 78 78

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

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

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

22 unchanged sentences

Department of Transportation) (in millions):

Three Months Ended March 31,

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

2022 2021 2022 2021

Domestic (U.S.

8 unchanged sentences

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

ETCs are valid up to two years from the date of issuance;

however, all ETCs due to expire on or before December 31, 2022 have been extended to December 31, 2023.

ETCs are valid up to one year from the date of issuance;

however, all ETCs issued on or before December 31, 2022 have been extended to December 31, 2023.

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

however, all FFCs issued on or before December 31, 2022 will be extended for travel dates through December 31, 2023.

however, all FFCs issued on or before December 31, 2022 have been extended to December 31, 2023.

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

3 unchanged sentences

Changes in estimates of breakage are recognized prospectively in proportion to the remaining usage of the related tickets.

In the three months ended March 31, 2022 and 2021, the Company recognized approximately $ 1.9 billion and $ 0.7 billion, respectively, of passenger revenue for tickets that were included in Advance ticket sales at the beginning of those periods.

In the three and six months ended June 30, 2022, the Company recognized approximately $ 4.2 billion and $ 2.6 billion, respectively, of passenger revenue for tickets that were included in Advance ticket sales at the beginning of those periods.

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

Ancillary Fees.

The Company charges fees, separately from ticket sales, for certain ancillary services that are directly related to passengers' travel, such as baggage fees, premium seats, inflight amenities 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.

The Company recorded $ 661 million and $ 308 million of ancillary fees within passenger revenue in the three months ended March 31, 2022 and 2021, respectively.

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

The Company recorded $ 0.9 billion and $ 1.5 billion of ancillary fees within passenger revenue in the three and six months ended June 30, 2022, respectively.

The Company recorded $ 0.5 billion and $ 0.8 billion of ancillary fees within passenger revenue in the three and six months ended June 30, 2021, respectively.

Frequent Flyer Accounting.

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

Three Months Ended March 31,

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

2022 2021 2022 2021

Total Frequent flyer deferred revenue - beginning balance $ 6,417 $ 6,109 $ 6,282 $ 5,975

3 unchanged sentences

Total Frequent flyer deferred revenue - ending balance $ 6,495 $ 6,185 $ 6,495 $ 6,185

In the three months ended March 31, 2022 and 2021, the Company recognized, in Other operating revenue, $ 519 million and $ 362 million, respectively, related to the marketing, advertising, non-travel miles redeemed (net of related costs) and other travel-related benefits of the mileage revenue associated with our various partner agreements including, but not limited to, our JPMorgan Chase Bank, N.A.

In the three and six months ended June 30, 2022, the Company recognized, in Other operating revenue, $ 0.6 billion and $ 1.1 billion, respectively, related to the marketing, advertising, non-travel miles redeemed (net of related costs) and other travel-related benefits of the mileage revenue associated with our various partner agreements including, but not limited to, our JPMorgan Chase Bank, N.A.

co-brand agreement.

The Company recognized $ 0.4 billion and $ 0.8 billion, respectively, in the three and six months ended June 30, 2021, related to those agreements.

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

We determine the current portion of our frequent flyer liability based on expected redemptions in the next 12 months .

NOTE 2 — LOSS PER SHARE

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

Three Months Ended

Loss available to common stockholders $ ( 1,377 ) $ ( 1,357 )

Weighted-average shares outstanding, basic and diluted 325.0 316.6

Loss per share, basic and diluted $ ( 4.24 ) $ ( 4.29 )

NOTE 2 — EARNINGS ( LOSS) PER SHARE

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

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

2022 2021 2022 2021

Earnings (loss) available to common stockholders $ 329 $ ( 434 ) $ ( 1,048 ) $ ( 1,791 )

Basic weighted-average shares outstanding 326.7 323.6 325.9 320.1

Dilutive effect of employee stock awards 1.7 — — —

Dilutive effect of stock warrants 1.9 — — —

Diluted weighted-average shares outstanding 330.3 323.6 325.9 320.1

Earnings (loss) per share, basic $ 1.01 $ ( 1.34 ) $ ( 3.22 ) $ ( 5.60 )

Earnings (loss) per share, diluted $ 1.00 $ ( 1.34 ) $ ( 3.22 ) $ ( 5.60 )

Potentially dilutive securities (a)

5 unchanged sentences

Pension and Other Postretirement Liabilities Investments and Other Deferred Taxes (a) Total

Balance at March 31, 2022 $ ( 839 ) $ — $ ( 98 ) $ ( 937 )

Changes in value 6 ( 14 ) 2 ( 6 )

Amounts reclassified to earnings ( 1 ) (b) — — ( 1 )

Balance at June 30, 2022 $ ( 834 ) $ ( 14 ) $ ( 96 ) $ ( 944 )

Balance at December 31, 2021 $ ( 847 ) $ — $ ( 95 ) $ ( 942 )

Changes in value 14 ( 14 ) (1) ( 1 )

Amounts reclassified to earnings — — — —

Amounts reclassified to earnings ( 1 ) (b) — — ( 1 )

Balance at June 30, 2022 $ ( 834 ) $ ( 14 ) $ ( 96 ) $ ( 944 )

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

Changes in value 11 — ( 2 ) 9

Amounts reclassified to earnings 5 (b) — ( 2 ) 3

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

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

1 unchanged sentence

Amounts reclassified to earnings 10 (b) — ( 3 ) 7

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

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

(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.

2 unchanged sentences

NOTE 4 — INCOME TAXES

The Company's effective tax rates for the three months ended March 31, 2022 and March 31, 2021 were 21.4 % and 22.5 %, respectively.

The Company's effective tax rates for the three and six months ended June 30, 2022 were 28.3 % and 18.9 %, respectively.

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

The effective tax rate represents a blend of federal, state and foreign taxes and includes the impact of certain nondeductible items.

We have historically calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate for the full fiscal year to income or loss for the reporting period.

We have used a discrete effective tax rate method to calculate taxes for the three months ended March 31, 2022.

We determined that since small changes in estimated income would result in significant changes in the estimated annual effective tax rate, the historical method would not provide a reliable estimate for the three months ended March 31, 2022.

We have used a discrete effective tax rate method to calculate taxes for the three and six months ended June 30, 2022.

We believe that, at this time, the use of the discrete method for the three and six months ended June 30, 2022 is more appropriate than the estimated annual effective tax rate method as the estimated annual effective tax rate method is not reliable due to a high degree of uncertainty in estimating annual pretax earnings.

NOTE 5 — EMPLOYEE BENEFIT PLANS

Defined Benefit Pension and Other Postretirement Benefit Plans.

The Company's net periodic benefit cost includes the following components for the three months ended March 31 (in millions):

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

Pension Benefits Other Postretirement Benefits Affected Line Item

7 unchanged sentences

Amortization of prior service credit — — ( 28 ) ( 31 ) Miscellaneous, net

Other — 1 — — Miscellaneous, net

Total $ 53 $ 78 $ ( 23 ) $ ( 29 )

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

Pension Benefits Other Postretirement Benefits Affected Line Item

in the Statements of

Consolidated Operations

2022 2021 2022 2021

Service cost $ 102 $ 120 $ 4 $ 5 Salaries and related costs

Interest cost 94 92 15 13 Miscellaneous, net

Expected return on plan assets ( 154 ) ( 142 ) ( 1 ) ( 1 ) Miscellaneous, net

Amortization of unrecognized (gain) loss 61 85 ( 7 ) ( 14 ) Miscellaneous, net

Amortization of prior service credit — — ( 56 ) ( 62 ) Miscellaneous, net

Special termination benefits — — — 46 Miscellaneous, net

3 unchanged sentences

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.

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

As a result, the Company recorded $ 46 million for those additional benefits.

NOTE 6 — FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

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

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

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

11 unchanged sentences

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.

Short-term investments — The short-term investments shown in the table above are classified as available-for-sale and have remaining maturities of up to one year .

Short-term investments — The short-term investments shown in the table above are classified as available-for-sale and have remaining maturities of approximately one year or less.

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

3 unchanged sentences

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

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Carrying Amount Fair Value Carrying Amount Fair Value

7 unchanged sentences

Investments in Regional Carriers.

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

The combined carrying value of the investments was approximately $ 177 million as of March 31, 2022.

As of June 30, 2022, United holds investments in two regional carriers that fly for the Company as United Express under its capacity purchase agreements.

The combined carrying value of the investments was approximately $ 178 million as of June 30, 2022.

United accounts for each investment using the equity method.

During the second quarter of 2022, United divested its investment in ManaAir, LLC, the parent company of ExpressJet Airlines LLC.

Other Investments.

United holds equity investments in a number of companies with emerging technologies and sustainable solutions.

United also has equity investments in Avianca Group International Limited, a multinational airline holding company,

and JetSuiteX, Inc., an independent air carrier doing business as JSX.

United also has equity investments in Avianca Group International Limited, a multinational airline holding company, and JetSuiteX, Inc., an independent air carrier doing business as JSX.

None of these investments have readily determinable fair values.

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.

As of March 31, 2022, the carrying value of these investments was $ 278 million.

As of June 30, 2022, the carrying value of these investments was $ 331 million.

NOTE 7 — COMMITMENTS AND CONTINGENCIES

As of March 31, 2022, United had firm commitments and options to purchase aircraft from The Boeing Company ("Boeing") and Airbus S.A.S.

As of June 30, 2022, United had firm commitments and options to purchase aircraft from The Boeing Company ("Boeing") and Airbus S.A.S.

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

1 unchanged sentence

Aircraft Type Number of Firm

Commitments (a) Last Nine Months

Commitments (a) Last Six Months

of 2022 2023 After 2023

10 unchanged sentences

or (iii) the aircraft manufacturers are unable to deliver in accordance with the terms of those orders.

Furthermore, subsequent to March 31, 2022 , Boeing notified United that seven Boeing 737 MAX aircraft and two Boeing 787 aircraft scheduled for delivery in 2022, as shown in the table above, are now expected to deliver in 2023.

In the first quarter of 2022, United gave notice of its intent to exercise options to purchase, in 2023, eight Boeing 737 MAX aircraft that are currently leased under sale and leaseback arrangements.

The table below summarizes United's commitments as of March 31, 2022, which include aircraft and related spare engines, aircraft improvements and all non-aircraft capital commitments (in billions):

Last nine months of 2022 $ 5.4

Furthermore, Boeing notified United that seven Boeing 737 MAX aircraft and three Boeing 787 aircraft scheduled for delivery in 2022, as shown in the table above, are now expected to deliver in 2023.

In the first half of 2022, United gave notice of its intent to exercise options to purchase, in 2023, eight Boeing 737 MAX aircraft that are currently leased under sale and leaseback arrangements.

The table below summarizes United's commitments as of June 30, 2022, which include aircraft and related spare engines, aircraft improvements and non-aircraft capital commitments (in billions):

Last six months of 2022 $ 4.8

After 2026 8.8

As of March 31, 2022, United is the guarantor of approximately $ 2.1 billion in aggregate principal amount of tax-exempt special facilities revenue bonds and interest thereon.

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

Legal Contingencies.

The Company has certain contingencies resulting from litigation and claims incident to the ordinary course of business.

As of June 30, 2022, 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 the contingencies to which the Company is subject and prior experience, that its defenses and assertions in pending legal proceedings have merit and the ultimate disposition of any pending matter will not materially affect the Company's financial position, results of operations or cash flows.

The Company records liabilities for legal claims when it is probable that a loss will be incurred and the amount is reasonably estimable.

These amounts are recorded based on the Company's assessments of the likelihood of their eventual disposition.

During the three months ended June 30, 2022, the Company recorded charges of $ 94 million as a result of a number of recent decisions, including one involving another carrier, that appear to impact the Company's ability to successfully assert, in certain cases, that federal law preempts state and local laws that conflict with union contracts and/or federal requirements.

As of June 30, 2022, United is the guarantor of approximately $ 2.0 billion in aggregate principal amount of tax-exempt special facilities revenue bonds and interest thereon.

These bonds, issued by various airport municipalities, are payable

solely from rentals paid under long-term agreements with the respective governing bodies.

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.

All of these bonds are due between 2023 and 2041.

As of March 31, 2022, United is the guarantor of $ 102 million of aircraft mortgage debt issued by one of United's regional carriers.

As of June 30, 2022, United is the guarantor of $ 99 million of aircraft mortgage debt issued by one of United's regional carriers.

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

Increased Cost Provisions.

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

At March 31, 2022, the Company had $ 13.2 billion of floating rate debt with remaining terms of up to approximately 11 years that are subject to these increased cost provisions.

At June 30, 2022, the Company had $ 13.1 billion of floating rate debt with remaining terms of up to approximately 10 years that are subject to these increased cost provisions.

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

5 unchanged sentences

Such financial institutions may require additional cash or other collateral reserves to be established or additional withholding of payments related to receivables collected if the Company does not maintain certain minimum levels of unrestricted cash, cash equivalents and short-term investments (collectively, "Unrestricted Liquidity").

The Company's current level of Unrestricted Liquidity is substantially in excess of these minimum levels.

Labor Negotiations.

As of March 31, 2022, the Company had approximately 87,400 employees, of whom approximately 85 % were represented by various U.S.

The Company's level of Unrestricted Liquidity as of June 30, 2022 is substantially in excess of these minimum levels.

As of June 30, 2022, the Company had approximately 91,200 employees, of whom approximately 85 % were represented by various U.S.

labor organizations.

This total includes employees who elected to voluntarily separate from the Company pursuant to voluntary leave programs and voluntary separation programs offered in 2020 and 2021 but who are still on pre-separation leave of absence with pay and benefits.

This total includes employees who elected to voluntarily separate from the Company pursuant to voluntary leave programs and voluntary separation programs offered in 2020 and 2021 but who were still on pre-separation leave of absence with pay and benefits as of June 30, 2022.

NOTE 8 — DEBT

As of March 31, 2022, we had $ 1.75 billion undrawn and available under our revolving credit facility.

As of June 30, 2022, we had $ 1.75 billion undrawn and available under our revolving credit facility.

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

As of March 31, 2022, UAL and United were in compliance with their respective debt covenants.

The table below presents the Company's contractual principal payments (not including $ 479 million of unamortized debt discount, premiums and debt issuance costs) at March 31, 2022 under then-outstanding long-term debt agreements (in millions):

Last nine months of 2022 $ 2,264

As of June 30, 2022, UAL and United were in compliance with their respective debt covenants.

The table below presents the Company's contractual principal payments (not including $ 447 million of unamortized debt discount, premiums and debt issuance costs) at June 30, 2022 under then-outstanding long-term debt agreements (in millions):

Last six months of 2022 $ 1,519

After 2026 15,755

In the second quarter of 2022, United borrowed $ 220 million aggregate principal amount from a financial institution to finance the purchase of aircraft.

The notes evidencing these borrowings, which are secured by the related aircraft, mature in 2034 and have interest rates of 4 %.

NOTE 9 — SPECIAL CHARGES (CREDITS)

For the three months ended March 31, operating and nonoperating special charges (credits) and unrealized (gains) losses on investments in the statements of consolidated operations consisted of the following (in millions):

For the three and six months ended June 30, operating and nonoperating special charges (credits) and unrealized (gains) losses on investments in the statements of consolidated operations consisted of the following (in millions):

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

CARES Act grant $ — $ ( 1,079 ) $ — $ ( 2,889 )

Severance and benefit costs — 11 — 428

Impairment of assets — 59 — 59

(Gains) losses on sale of assets and other special charges 112 61 104 77

Total operating special charges (credits) 112 ( 948 ) 104 ( 2,325 )

Nonoperating unrealized losses on investments, net — 22

Nonoperating debt extinguishment fees 7 —

Nonoperating unrealized (gains) losses on investments, net 40 ( 147 ) 40 ( 125 )

Nonoperating debt extinguishment and modification fees — 62 7 62

Nonoperating special termination benefits — — — 46

Total nonoperating special charges and unrealized losses on investments, net 7 68

Total operating and nonoperating special charges (credits) and unrealized losses on investments, net ( 1 ) ( 1,309 )

Income tax expense, net of valuation allowance — 291

Total operating and nonoperating special charges (credits) and unrealized losses on investments, net of income taxes $ ( 1 ) $ ( 1,018 )

Total nonoperating special charges and unrealized (gains) losses on investments, net 40 ( 85 ) 47 ( 17 )

Total operating and nonoperating special charges (credits) and unrealized (gains) losses on investments, net 152 ( 1,033 ) 151 ( 2,342 )

Income tax (benefit) expense, net of valuation allowance ( 10 ) 203 ( 10 ) 494

Total operating and nonoperating special charges (credits) and unrealized (gains) losses on investments, net of income taxes $ 142 $ ( 830 ) $ 141 $ ( 1,848 )

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

During the three months ended March 31, 2022, the Company recorded net gains of $ 8 million primarily related to sale-leaseback transactions and the sale of aircraft.

Nonoperating debt extinguishment fees .

During the three months ended March 31, 2022, the Company recorded $ 7 million of charges related to the early redemption of $ 400 million of its outstanding principal amount of the 4.25% senior notes due 2022.

During the three and six months ended June 30, 2022, the Company recorded $ 112 million and $ 104 million, respectively, of net charges primarily comprised of $ 94 million for various legal matters.

See Note 7 of this report for a discussion of the legal matters.

Nonoperating unrealized (gains) losses on investments, net.

During the three and six months ended June 30, 2022, the Company recorded losses of $ 40 million .

Nonoperating debt extinguishment and modifications fees .

During the six months ended June 30, 2022, the Company recorded $ 7 million of charges primarily related to the early redemption of $ 400 million of its outstanding principal amount of the 4.25% senior notes due 2022.

CARES Act grant.

During the three months ended March 31, 2021, the Company received approximately $ 2.6 billion in funding pursuant to a Payroll Support Program agreement under the Coronavirus Aid, Relief, and Economic Security Act (the "PSP2 Agreement"), which included a $ 753 million unsecured loan.

The Company recorded $ 1.8 billion as grant income and $ 47 million for the warrants issued to the U.S.

Department of the Treasury as part of the PSP2 Agreement, within stockholders' equity, as an offset to the grant income.

During the six months ended June 30, 2021, the Company received approximately $ 5.8 billion in funding pursuant to two Payroll Support Program Extension Agreements (collectively, the "PSP2 and PSP3 Agreements") under the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), which included approximately $ 1.7 billion aggregate principal amount of unsecured promissory notes.

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

The Company also recorded $ 52 million and $ 99 million for warrants to purchase shares of UAL common stock issued to the U.S.

Treasury Department as part of the PSP2 and PSP3 Agreements, within stockholders' equity, as an offset to the grant income in the three and six months ended June 30, 2021, respectively.

Severance and benefit costs .

During the three months ended March 31, 2021, the Company recorded $ 417 million related to pay continuation and benefits-related costs provided to employees who chose to voluntarily separate from the Company.

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

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

Approximately 4,500 employees elected to voluntarily separate from the Company.

Impairment of assets .

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

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

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

During the three months ended March 31, 2021, the Company recorded $ 16 million of net charges, driven by charges for the termination of the lease associated with three floors of its headquarters at the Willis Tower in Chicago and utility charges related to the February winter storms in Texas, partially offset by net gains, primarily on sale-leaseback transactions.

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

Nonoperating unrealized (gains) losses on investments, net .

During the three and six months ended June 30, 2021, the Company recorded $ 147 million and $ 125 million of gains, respectively .

Nonoperating debt extinguishment and modification fees.

During the three and six months ended June 30, 2021, the Company recorded $ 62 million of charges for fees and discounts related to the issuance of a new term loan and revolving credit facility and the prepayment of a CARES Act loan and a 2017 term loan and revolving credit facility.

Nonoperating special termination benefits.

During the three months ended March 31, 2021, the Company recorded $ 46 million of special termination benefits in the form of additional subsidies for retiree medical costs for certain U.S.-based front-line employees.

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

Nonoperating unrealized losses on investments, net.

During the three months ended March 31, 2021, the Company recorded losses of $ 22 million primarily for the decrease in the market value of its equity investments.

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

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

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

What changed 10-Q

Item 1. Financial Statements