What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-07-21 compared with 2022-04-21 · 245 added, 103 removed, 200 unchanged (64% of the section changed)

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The Company serves virtually every major market around the world, either directly or through participation in Star Alliance ® , the world's largest airline alliance.

Our business and operating results for first quarter 2022 continued to be impacted by the COVID-19 pandemic.

Given the more significant impact of the pandemic on our business and operating results in 2020 and 2021, we believe that a comparison of our first quarter 2022 results to first quarter of 2019 for certain key metrics in this financial overview discussion is more reflective of the impact of the COVID-19 pandemic.

Our current expectations described below are forward-looking statements and our actual results and timing may vary materially based on various factors that include, but are not limited to, those discussed below under "Forward-Looking Information" and in Part I, Item 1A.

Given the more significant impact of the COVID-19 pandemic on our business and operating results in 2020 and 2021, we believe that a comparison of our second quarter 2022 results to second quarter of 2019 results for certain key metrics in this financial overview discussion is more reflective of the impact of the pandemic.

Our current expectations described below are forward-looking statements and our actual results and timing may vary materially based on various factors that include, but are not limited to, those discussed below under "Economic and Market Factors" and "Forward-Looking Information" and in Part I, Item 1A.

Risk Factors, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the "2021 Form 10-K").

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refer to "Supplemental Information" below for further details.

The results presented in this report are not necessarily indicative of future operating results.

Economic and Market Factors

The airline industry is highly competitive, marked by significant competition with respect to routes, fares, schedules (both timing and frequency), services, products, customer service and frequent flyer programs.

We, like other companies in our industry, have been subject to these and other industry-specific competitive dynamics.

In addition, our operations, supply chain, partners and suppliers have been subject to various global macroeconomic factors.

We expect to continue to remain vulnerable to a number of industry-specific and global macroeconomic factors that may cause our actual results of operations to differ from our historical results of operations or current expectations.

The factors and trends that we currently believe are or will be most impactful to our results of operations and financial condition include the following:

the adverse impacts of the ongoing COVID-19 global pandemic;

the execution risks associated with our United Next plan;

the impact on the Company of significant operational challenges by third parties on which we rely;

inflationary pressures;

potential labor and supply chain shortages affecting us and our partners;

volatile fuel prices ;

aircraft delivery delays;

the closure of our flying airspace and termination of other operations due to regional conflicts, including the continuation of the suspension of our overflying in Russia airspace as well as third-party general sales agent services in Russia as a result of the Russia-Ukraine military conflict and/or an escalation of the broader economic consequences of the conflict beyond their current scope;

and changes in general economic conditions in the markets in which the Company operates, including an economic downturn leading to a decrease in demand for air travel or fluctuations in foreign currency exchange rates that may impact international travel demand.

We continue to monitor the potential favorable or unfavorable impacts of these and other factors on our business, operations,

financial condition and future results of operations, which are dependent on future developments, including as a result of those factors discussed in Item 1A.

Risk Factors in the 2021 Form 10-K.

Our future results of operations may be subject to volatility and our growth plans may be delayed, particularly in the short term, due to the impact of the above factors and trends.

For instance, we have delayed a portion of our previously planned capacity increases for full year 2022 and 2023 in response to several factors and trends noted above and may need to implement further modifications.

However, we believe that the long-term outlook for the Company remains positive due to the expected continued return of travel demand.

We believe that this expected long-term increase in demand will offset increased costs and that the expected operational challenges can be managed in a manner that will allow us to support increased demand.

Impact of the COVID-19 Pandemic.

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

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

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

The COVID-19 pandemic and the measures taken in response may continue to impact many aspects of our business, operating results, financial condition and liquidity in a number of ways, including labor shortages (including reductions in available skilled labor and related impacts to the Company's flight schedules and reputation), facility closures and related costs, disruptions to the Company's and its business partners' operations, reduced travel demand and consumer spending, increased fuel and other operating costs, supply chain disruptions,

logistics constraints, inflation, volatility in the price of our securities, our ability to access capital markets and volatility in the global economy and financial markets generally.

We have reduced our capacity as we managed through the effects of the COVID-19 pandemic, and our capacity in 2022 remained lower than capacity prior to the pandemic, resulting in a significant reduction to our revenue through the first quarter of 2022.

We operated at approximately 81% of our first quarter 2019 capacity during the first quarter of 2022.

We have also delayed a portion of our previously planned capacity increases for full year 2022 in response to several macroeconomic factors, including rising fuel prices as well as expected aircraft delivery delays and may need to implement further modifications.

however, as the situation surrounding the COVID-19 pandemic remains fluid, with intermittent periods of decelerated demand that have coincided with surges in the number of COVID-19 cases, it remains difficult to reasonably assess or predict the full extent of the ongoing impact of the COVID-19 pandemic on the Company's longer-term operational and financial performance, which will depend on a number of future developments, many of which are outside the Company's control, such as the ultimate duration of and factors impacting the long-term recovery from the pandemic (including the efficacy and speed of vaccination programs in curbing the spread of the virus in different markets, the efficacy and availability of various treatment options, the introduction and spread of new variants of the virus that may be resistant to currently approved vaccines or treatment options, and the continuation of existing or implementation of new government travel restrictions and testing requirements), customer behavior changes and fluctuations in demand for air travel, among others.

We operated at approximately 85% of our second quarter 2019 capacity during the second quarter of 2022.

At the beginning of the COVID-19 pandemic, we suspended portions of our international operations, but we resumed service to several international destinations as travel restrictions were eased and demand for travel increased.

The Company is taking steps to be prepared for recovery as demand for travel continues to generally increase, which include investing in innovative technology, focusing on process improvements and implementing the United Next transformative strategy.

We have also taken steps to strengthen our financial position during this period of market uncertainty, which has resulted in an increase of our overall debt levels.

As of March 31, 2022, unrestricted cash, cash equivalents and short-term investments totaled $18.7 billion, an increase of approximately $14.6 billion from March 31, 2019.

We had approximately $40.3 billion of debt, finance lease, operating lease and sale-leaseback obligations as of March 31, 2022 (including $4.8 billion that will become due in the next 12 months), up from approximately $20.1 billion as of March 31, 2019.

As of June 30, 2022, unrestricted cash, cash equivalents and short-term investments totaled $20.1 billion, an increase of approximately $14.6 billion from June 30, 2019.

We had approximately $39.4 billion of debt, finance lease, operating lease and sale-leaseback obligations as of June 30, 2022 (including $4.5 billion that will become due in the next 12 months), up from approximately $20.2 billion as of June 30, 2019.

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

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If the impacts from the COVID-19 pandemic extend beyond our assumed timelines, our actual results may vary significantly from our expectations" of the 2021 Form 10-K.

First Quarter 2022 Overview

Relative to the first quarter of 2019, the Company operated approximately 81% of its capacity for the first quarter of 2022 compared to approximately 46% of its capacity in the first quarter of 2021.

Strategic Operating Plan Execution.

In the second quarter of 2021, United announced its United Next plan, which we believe will have a transformational effect on the customer experience and earnings power of the business.

We continued executing our United Next plan during the second quarter of 2022.

We believe United Next will allow us to differentiate our network and segment our products with a greater premium offering, while also maintaining fare competitiveness with low-cost carriers.

Second Quarter 2022 Overview

Relative to the second quarter of 2019, the Company operated approximately 85% of its capacity for the second quarter of 2022 compared to approximately 54% of its capacity in the second quarter of 2021.

Operating revenue.

For the first quarter of 2022, operating revenue increased by $4.3 billion, or 134.9% versus the first quarter of 2021 due to recovery from the COVID-19 pandemic.

For the second quarter of 2022, operating revenue increased by $0.7 billion, or 6.2%, versus the second quarter of 2019 and increased by $6.6 billion, or 121.4%, versus the second quarter of 2021 due to the ongoing recovery from the COVID-19 pandemic.

Operating expense.

For the first quarter of 2022, operating expense increased by $4.3 billion, or 94.3%, versus the first quarter of 2021 mostly due to a $1.4 billion increase in fuel costs, partly as a result of the Russia-Ukraine conflict, $1.8 billion in Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") grant in the prior period that did not repeat and other increased operating costs from flight activity.

We expect elevated fuel cost to continue throughout 2022 due to market volatility caused by the Russia-Ukraine conflict and macroeconomic factors.

Second Quarter 2022 Outlook

The Company expects its scheduled capacity to be down approximately 13% in the second quarter of 2022 as compared to the same period in 2019.

Total revenue per available seat mile ("TRASM").

The Company expects TRASM to increase approximately 17% in the second quarter of 2022 as compared to the same period in 2019.

For the second quarter of 2022, operating expense increased by $1.3 billion, or 13.1%, versus the second quarter of 2019 and by $5.5 billion, or 95.7%, versus the second quarter of 2021 mostly due to a $2.6 billion increase in fuel costs, a $1.1 billion in Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") grant in the prior year period that did not repeat and other increased operating costs from flight activity.

We expect fuel costs to remain elevated or increase further throughout 2022.

Third Quarter 2022 Outlook

The Company expects its scheduled capacity to be down approximately 11% in the third quarter of 2022 as compared to the same period in 2019.

Total operating revenue and total revenue per available seat mile ("TRASM").

The Company expects total operating revenue to increase approximately 11% and TRASM to increase approximately 24% to 26% in the third quarter of 2022 as compared to the same period in 2019.

Adjusted cost per available seat mile ("CASM-ex").

The Company expects CASM-ex (a non-GAAP financial measure defined as cost or operating expense per available seat mile ("CASM") excluding fuel, profit sharing, third-party business expense and special charges (credits)) to increase approximately 16% in the second quarter of 2022 as compared to the same period in 2019.

Operating margin.

The Company expects operating margin of approximately 10% for the second quarter of 2022.

The Company expects CASM-ex (a non-GAAP financial measure defined as cost or operating expense per available seat mile ("CASM") excluding fuel, profit sharing, third-party business expense and special charges (credits)) to increase approximately 16% to 17% in the third quarter of 2022 as compared to the same period in 2019.

Adjusted operating margin.

The Company expects adjusted operating margin (a non-GAAP financial measure defined as operating margin excluding special charges (credits)) of approximately 10% for the third quarter of 2022.

RESULTS OF OPERATIONS

The following discussion provides an analysis of our results of operations and reasons for material changes therein for the three months ended March 31, 2022 as compared to the corresponding period in 2021.

First Quarter 2022 Compared to First Quarter 2021

The Company recorded a net loss of $1.4 billion for both the first quarter of 2022 and the first quarter of 2021.

The Company considers a key measure of its performance to be operating income (loss), which was also a $1.4 billion loss for both the first

quarter of 2022 and the first quarter of 2021.

Significant components of the Company's operating results for the three months ended March 31 are as follows (in millions, except percentage changes):

The following discussion provides an analysis of our results of operations and reasons for material changes therein for the three months ended June 30, 2022, as compared to the corresponding period in 2021.

Second Quarter 2022 Compared to Second Quarter 2021

The Company recorded net income of $329 million for the second quarter of 2022 as compared to a net loss of $434 million for the second quarter of 2021.

The Company considers a key measure of its performance to be operating income, which was $878 million for the second quarter of 2022 as compared to an operating loss of $270 million for the second quarter of 2021.

Significant components of the Company's operating results for the three months ended June 30 are as follows (in millions, except percentage changes):

2022 2021 Increase (Decrease) % Change

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Operating expense 11,234 5,741 5,493 95.7

Operating loss (1,376) (1,381) (5) (0.4)

Operating income (loss) 878 (270) 1,148 NM

Nonoperating expense, net (419) (294) 125 42.5

Income tax benefit (375) (394) (19) (4.8)

Net loss $ (1,377) $ (1,357) $ 20 1.5

Certain consolidated statistical information for the Company's operations for the three months ended March 31 is as follows:

Income tax expense (benefit) 130 (130) 260 NM

Net income (loss) $ 329 $ (434) $ 763 NM

Certain consolidated statistical information for the Company's operations for the three months ended June 30 is as follows:

2022 2021 Increase (Decrease) % Change

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Passenger revenue per available seat mile ("PRASM") (cents) 17.30 11.02 6.28 57.0

TRASM (cents) 19.35 13.81 5.54 40.1

Average yield per revenue passenger mile ("Yield") (cents) (e) 19.94 15.31 4.63 30.2

Cargo revenue ton miles ("CTM") (millions) (f) 752 892 (140) (15.7)

TRASM (cents) 14.20 10.61 3.59 33.8

CASM (cents) 17.94 14.49 3.45 23.8

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Fuel gallons consumed (millions) 912 625 287 45.9

Employee headcount, as of March 31 87,400 84,100 3,300 3.9

Employee headcount, as of June 30

91,200 84,400 6,800 8.1

(a) The number of revenue passengers measured by each flight segment flown.

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Operating Revenue.

The table below shows year-over-year comparisons by type of operating revenue for the three months ended March 31 (in millions, except for percentage changes):

The table below shows year-over-year comparisons by type of operating revenue for the three months ended June 30 (in millions, except for percentage changes):

2022 2021 Increase (Decrease) % Change

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Total operating revenue $ 12,112 $ 5,471 $ 6,641 121.4

The table below presents selected first quarter passenger revenue and operating data, broken out by geographic region, expressed as year-over-year changes:

The table below presents selected second quarter passenger revenue and operating data, broken out by geographic region, expressed as year-over-year changes:

Increase (decrease) from 2021:

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Passengers 52.4 % 424.8 % 232.2 % 25.4 % 58.6 %

RPMs (traffic) 109.8 % 192.3 % 226.6 % 123.2 % 124.0 %

ASMs (capacity) 76.3 % 103.6 % 76.1 % 48.2 % 75.4 %

RPMs 58.6 % 355.5 % 301.0 % 42.2 % 90.4 %

ASMs 47.0 % 152.6 % 44.3 % 16.4 % 58.0 %

Passenger load factor (points) 6.6 37.5 42.8 15.6 14.7

Passenger revenue increased $4.0 billion, or 174.1%, in the first quarter of 2022 as compared to the year-ago period, primarily due to the ongoing recovery in air travel that was impacted by the COVID-19 pandemic.

Cargo revenue increased $130 million, or 26.2%, in the first quarter of 2022 as compared to the year-ago period, primarily due to higher yields on freight revenue from strong global demand.

Other operating revenue increased $183 million, or 44.9%, in the first quarter of 2022 as compared to the year-ago period, primarily due to an increase in mileage revenue from non-airline partners, including credit card spending recovery with the co-branded credit card partner, JPMorgan Chase Bank, N.A.

Passenger revenue increased $6.5 billion, or 148.0%, in the second quarter of 2022 as compared to the year-ago period, primarily due to the ongoing recovery in air travel that was impacted by the COVID-19 pandemic and strength in the pricing environment as a result of inflationary pressures on fuel prices and other costs.

Cargo revenue decreased $32 million, or 5.3%, in the second quarter of 2022 as compared to the year-ago period, primarily due to lower yields due to an increase in market capacity and a decrease in available cargo space due to higher passenger loads and flight cancellations.

Other operating revenue increased $210 million, or 42.1%, in the second quarter of 2022 as compared to the year-ago period, primarily due to an increase in mileage revenue from non-airline partners, including credit card spending recovery with the co-branded credit card partner, JPMorgan Chase Bank, N.A.

Operating Expenses.

The table below includes data related to the Company's operating expenses for the three months ended March 31 (in millions, except for percentage changes):

The table below includes data related to the Company's operating expenses for the three months ended June 30 (in millions, except for percentage changes):

2022 2021 Increase (Decrease) % Change

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Total operating expenses $ 11,234 $ 5,741 $ 5,493 95.7

Salaries and related costs increased $563 million, or 25.3%, in the first quarter of 2022 as compared to the year-ago period primarily due to several factors, including an increase in headcount and higher flight activity in the first quarter of 2022 and lower expense in the first quarter of 2021 due to $240 million in tax credits provided by the Employee Retention Credit under the Coronavirus Aid, Relief, and Economic Security Act.

Aircraft fuel expense increased by $1.4 billion, or 162.0%, in the first quarter of 2022 as compared to the year-ago period, due to both higher average price per gallon of fuel and increased consumption.

Fuel prices in the first quarter of 2022 were impacted by the Russia-Ukraine conflict.

We expect elevated fuel cost to continue throughout 2022 due to market volatility caused by the Russia-Ukraine conflict and other macroeconomic factors.

The table below presents the significant changes in aircraft fuel cost per gallon in the three months ended March 31, 2022 as compared to the year-ago period:

Salaries and related costs increased $560 million, or 24.6%, in the second quarter of 2022 as compared to the year-ago period primarily due to an increase in headcount, higher flight activity in the second quarter of 2022 and $108 million of Employee Retention Credits under the CARES Act in the second quarter 2021 that did not occur in the current period, among other factors.

Aircraft fuel expense increased by $2.6 billion, or 209.3%, in the second quarter of 2022 as compared to the year-ago period, due to both a higher average price per gallon of fuel and increased consumption from higher flight activity.

We expect elevated fuel prices to continue or increase further throughout 2022.

The table below presents the significant changes in aircraft fuel cost per gallon in the three months ended June 30, 2022 as compared to the year-ago period:

(In millions) Average price per gallon

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Fuel consumption (gallons) 912 625 45.9 %

Landing fees and other rent increased $93 million, or 17.9%, in the first quarter of 2022 as compared to the year-ago period, primarily due to increases in landed weight as a result of increased flight activity.

Regional capacity purchase increased $86 million, or 18.0%, in the first quarter of 2022 as compared to the year-ago period, primarily due to increased regional flying.

Aircraft maintenance materials and outside repairs increased $138 million, or 51.3%, in the first quarter of 2022 as compared to the year-ago period, primarily due to higher volumes of flying and increased heavy check maintenance events.

Distribution expenses increased $141 million, or 165.9%, in the first quarter of 2022 as compared to the year-ago period, primarily due to higher credit card fees and higher volumes of global distribution fees as a result of the overall increase in passenger revenue.

Details of the Company's special charges (credits) include the following for the three months ended March 31 (in millions):

Landing fees and other rent increased $104 million, or 18.4%, in the second quarter of 2022 as compared to the year-ago period, primarily due to increases in landed weight volume as a result of increased flight activity.

Aircraft maintenance materials and outside repairs increased $225 million, or 74.5%, in the second quarter of 2022 as compared to the year-ago period, primarily due to higher volumes of flying and increased engine overhauls, airframe checks, and landing gear inductions.

Distribution expenses increased $254 million, or 182.7%, in the second quarter of 2022 as compared to the year-ago period, primarily due to higher credit card fees and higher volumes of global distribution fees as a result of the overall increase in passenger revenue.

Details of the Company's special charges (credits) include the following for the three months ended June 30 (in millions):

CARES Act grant $ — $ (1,079)

Severance and benefit costs — 11

Impairment of assets — 59

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

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See Note 9 to the financial statements included in Part I, Item 1 of this report for additional information on the Company's special charges (credits).

Other operating expenses increased $577 million, or 66.0%, in the first quarter of 2022 as compared to the year ago period, primarily due to increases in ground handling, passenger services, food and beverage offerings, navigation fees and personnel-related costs as a direct result of the increase in flight activity and higher expenditures on information technology services.

Other operating expenses increased $685 million, or 71.6%, in the second quarter of 2022 as compared to the year ago period, primarily due to increases in ground handling, passenger services, food and beverage offerings, navigation fees and personnel-related costs as a direct result of the increase in flight activity and higher expenditures on information technology services.

Nonoperating Income (Expense ).

The table below shows year-over-year comparisons of the Company's nonoperating income (expense) for the three months ended March 31 (in millions, except for percentage changes):

The table below shows year-over-year comparisons of the Company's nonoperating income (expense) for the three months ended June 30 (in millions, except for percentage changes):

2022 2021 Increase (Decrease) % Change

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Interest income 33 12 21 175.0

Unrealized losses on investments, net — (22) (22) 100.0

Miscellaneous, net 19 (19) 38 NM

Unrealized gains (losses) on investments, net (40) 147 (187) NM

Miscellaneous, net (14) (49) (35) (71.4)

Total $ (419) $ (294) $ 125 42.5

Interest expense increased $71 million, or 20.1%, in the first quarter of 2022 as compared to the year-ago period, primarily due to higher debt balances than the year-ago period.

Unrealized losses on investments, net, was $40 million in the second quarter of 2022 as compared to $147 million in unrealized gains in the year-ago period, primarily due to the change in the market value of the Company's investments in equity securities.

See Note 6 to the financial statements included in Part I, Item 1 of this report for information related to these equity investments.

Miscellaneous, net decreased $35 million in the second quarter of 2022 as compared to the year-ago period, primarily due to debt extinguishment and modification fees recorded in 2021 partially offset by higher foreign exchange losses recorded in 2022.

See Note 9 to the financial statements included in Part I, Item 1 of this report for additional information related to debt extinguishment and modification fees.

I ncome Taxes.

See Note 4 to the financial statements included in Part I, Item 1 of this report for information related to income taxes.

First Six Months 2022 Compared to First Six Months 2021

The Company recorded a net loss of $1.0 billion in the first six months of 2022 as compared to a net loss of $1.8 billion in the first six months of 2021.

The Company considers a key measure of its performance to be operating income (loss), which was a $498 million loss for the first six months of 2022, as compared to a $1.7 billion loss for the first six months of 2021, an approximately $1.2 billion decrease year-over-year, primarily as a result of increased demand for air travel.

Significant components of the Company's operating results for the six months ended June 30 are as follows (in millions, except percentage changes):

2022 2021 Increase (Decrease) % Change

Operating revenue $ 19,678 $ 8,692 $ 10,986 126.4

Operating expense 20,176 10,343 9,833 95.1

Operating loss (498) (1,651) (1,153) (69.8)

Nonoperating expense, net (795) (664) 131 19.7

Income tax benefit (245) (524) (279) (53.2)

Net loss $ (1,048) $ (1,791) $ (743) (41.5)

Certain consolidated statistical information for the Company's operations for the six months ended June 30 is as follows:

2022 2021 Increase (Decrease) % Change

Passengers (thousands) 67,256 38,583 28,673 74.3

RPMs (millions) 92,946 45,762 47,184 103.1

ASMs (millions) 115,869 69,983 45,886 65.6

Passenger load factor 80.2 % 65.4 % 14.8 pts.

PRASM (cents) 14.82 9.55 5.27 55.2

TRASM (cents) 16.98 12.42 4.56 36.7

Yield (cents) 18.48 14.60 3.88 26.6

CTM (millions) 1,543 1,657 (114) (6.9)

CASM (cents) 17.41 14.78 2.63 17.8

CASM-ex (Non-GAAP) (cents) (a) 12.05 15.05 (3.00) (19.9)

Average price per gallon of fuel, including fuel taxes $ 3.58 $ 1.87 $ 1.71 91.4

Fuel gallons consumed (millions) 1,687 1,115 572 51.3

Employee headcount, as of June 30

91,200 84,400 6,800 8.1

(a) See "Supplemental Information" below for a reconciliation to CASM, the most directly comparable GAAP measure.

Operating Revenue.

The table below shows year-over-year comparisons by type of operating revenue for the six months ended June 30 (in millions, except for percentage changes):

2022 2021 Increase (Decrease) % Change

Passenger revenue $ 17,177 $ 6,682 $ 10,495 157.1

Cargo 1,201 1,103 98 8.9

Other operating revenue 1,300 907 393 43.3

Total operating revenue $ 19,678 $ 8,692 $ 10,986 126.4

The table below presents selected passenger revenue and operating data, broken out by geographic region, expressed as year-over-year changes for the six months ended June 30, 2022 compared to the six months ended June 30, 2021:

Increase (decrease) from 2021:

Domestic Atlantic Pacific Latin Consolidated

Passenger revenue (in millions) $ 6,664 $ 2,454 $ 434 $ 943 $ 10,495

Passenger revenue 133.3 % 463.9 % 196.4 % 101.2 % 157.1 %

Average fare per passenger 38.6 % 23.5 % (7.2) % 30.3 % 47.5 %

Yield 31.2 % 45.5 % (20.3) % 17.3 % 26.6 %

PRASM 46.1 % 142.8 % 86.5 % 54.0 % 55.2 %

Passengers 68.3 % 356.4 % 219.4 % 54.4 % 74.3 %

RPMs 77.7 % 287.3 % 271.8 % 71.4 % 103.1 %

ASMs 59.6 % 132.2 % 58.7 % 30.6 % 65.6 %

Passenger load factor (points) 8.6 31.3 29.2 19.1 14.8

Passenger revenue increased $10.5 billion, or 157.1%, in the first six months of 2022 as compared to the year-ago period, primarily due to the ongoing recovery in air travel which was impacted by the COVID-19 pandemic and strength in the pricing environment as a result of inflationary pressures on fuel prices and other costs.

Cargo revenue increased $98 million, or 8.9%, in the first six months of 2022 as compared to the year-ago period, primarily due to higher yields on freight revenue from strong global demand in the first quarter of 2022.

Other operating revenue increased $393 million, or 43.3%, in the first six months of 2022 as compared to the year-ago period, primarily due to an increase in mileage revenue from non-airline partners, including credit card spending recovery with our co-branded credit card partner, JPMorgan Chase Bank, N.A.

Operating Expenses.

The table below includes data related to the Company's operating expenses for the six months ended June 30 (in millions, except for percentage changes):

2022 2021 Increase (Decrease) % Change

Salaries and related costs $ 5,623 $ 4,500 $ 1,123 25.0

Aircraft fuel 6,041 2,083 3,958 190.0

Landing fees and other rent 1,280 1,083 197 18.2

Depreciation and amortization 1,222 1,243 (21) (1.7)

Regional capacity purchase 1,132 1,026 106 10.3

Aircraft maintenance materials and outside repairs 934 571 363 63.6

Distribution expenses 619 224 395 176.3

Aircraft rent 128 107 21 19.6

Special charges (credits) 104 (2,325) 2,429 NM

Other operating expenses 3,093 1,831 1,262 68.9

Total operating expenses $ 20,176 $ 10,343 $ 9,833 95.1

Salaries and related costs increased $1.1 billion, or 25.0%, in the first six months of 2022 as compared to the year-ago period, primarily due to increased headcount, volume-driven pay from increased flight activity and $348 million of Employee Retention Credits under the CARES Act in the first six months of 2021 that did not occur in the current period, among other factors.

Aircraft fuel expense increased $4.0 billion, or 190.0%, in the first six months of 2022 as compared to the year-ago period, primarily due to both a higher average price per gallon of fuel and increased consumption from higher flight activity.

We expect elevated fuel prices to continue throughout 2022.

The table below presents the significant changes in aircraft fuel cost per gallon in the six months ended June 30, 2022, as compared to the year-ago period:

(In millions) Average price per gallon

2022 2021 % Change 2022 2021 % Change

Fuel expense $ 6,041 $ 2,083 190.0 % $ 3.58 $ 1.87 91.4 %

Fuel consumption (gallons) 1,687 1,115 51.3 %

Landing fees and other rent increased $197 million, or 18.2%, in the first six months of 2022 as compared to the year-ago period, primarily due to an increase in capacity-based rent and landing fees.

Aircraft maintenance materials and outside repairs increased $363 million, or 63.6%, in the first six months of 2022 as compared to the year-ago period, primarily due to higher volumes of flying that resulted in increased engine overhauls, airframe checks, and line maintenance.

Distribution expenses increased $395 million, or 176.3%, in the first six months of 2022 as compared to the year-ago period, primarily due to higher credit card fees and commissions and higher volume of global distribution fees as a result of the overall increase in passenger revenue.

Distribution expenses were also impacted by the mix of leisure travel and business travel, which requires the use of different distribution channels and forms of payment.

Details of the Company's special charges (credits) include the following for the six months ended June 30 (in millions):

CARES Act grant $ — $ (2,889)

Severance and benefit costs — 428

Impairment of assets — 59

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

Special charges (credits) $ 104 $ (2,325)

See Note 9 to the financial statements included in Part I, Item 1 of this report for additional information on the Company's special charges (credits).

Other operating expenses increased $1.3 billion, or 68.9%, in the first six months of 2022 as compared to the year-ago period, primarily due to increases in ground handling, passenger services, food and beverage offerings, navigation fees and personnel-related costs as a direct result of the increase in flight activity and higher expenditures on information technology services.

Nonoperating Income (Expense).

The following table illustrates the year-over-year dollar and percentage changes in the Company's nonoperating income (expense) for the six months ended June 30 (in millions, except for percentage changes):

2022 2021 Increase (Decrease) % Change

Interest expense $ (844) $ (779) $ 65 8.3

Interest capitalized 46 39 7 17.9

Interest income 38 19 19 100.0

Unrealized gains (losses) on investments, net (40) 125 (165) NM

Miscellaneous, net 5 (68) (73) NM

Total $ (795) $ (664) $ 131 19.7

Interest expense increased $65 million, or 8.3%, in the first six months of 2022 as compared to the year-ago period, primarily due to higher outstanding long-term debt balances than the year-ago period.

Unrealized losses on investments, net, was $40 million in the first six months of 2022 as compared to $125 million in unrealized gains in the year-ago period, primarily due to the change in the market value of the Company's investments in equity securities.

See Note 6 to the financial statements included in Part I, Item 1 of this report for information related to these equity investments.

Miscellaneous, net decreased $73 million in the first six months of 2022 as compared to the year-ago period, primarily due to special termination benefits related to voluntary separation programs and debt extinguishment and modification fees recorded in the first six months of 2021 partially offset by higher foreign exchange losses recorded in 2022.

See Notes 5 and 9 to the financial statements included in Part I, Item 1 of this report for additional information.

Income Taxes.

See Note 4 to the financial statements included in Part I, Item 1 of this report for information related to income taxes.

LIQUIDITY AND CAPITAL RESOURCES

Current Liquidity

As of March 31, 2022, the Company had $18.7 billion in unrestricted cash, cash equivalents and short-term investments, as compared to $18.4 billion at December 31, 2021.

We believe that our existing cash, cash equivalents and short-term investments, together with cash generated from operations, will be sufficient to satisfy our anticipated liquidity needs for the next twelve months, and we expect to meet our long-term liquidity needs with our anticipated access to the capital markets and

projected cash from operations.

As of June 30, 2022, the Company had $20.1 billion in unrestricted cash, cash equivalents and short-term investments, as compared to $18.4 billion at December 31, 2021.

We regularly assess our anticipated working capital needs, debt and leverage levels, debt maturities, capital expenditure requirements (including in connection with our capital commitments for our firm order aircraft) and future investments or acquisitions in order to maximize shareholder return, efficiently finance our ongoing operations and maintain flexibility for future strategic transactions.

We also regularly evaluate our liquidity and capital structure to ensure financial risks, liquidity access and cost of capital are each managed efficiently.

While we have been able to access the capital markets to meet our significant long-term debt and finance lease obligations and future commitments for capital expenditures, including the acquisition of aircraft and related spare engines, we must return to profitability in order to service our debt and maintain appropriate liquidity levels for our long-term operating needs.

For 2022, the Company expects approximately $5.3 billion of adjusted capital expenditures (a non-GAAP financial measure defined as GAAP capital expenditures including expenditures for assets acquired through the issuance of debt, finance leases and other financial liabilities).

See "Supplemental Information" for additional information on non-GAAP financial measures and Note 7 to the financial statements included in Part I, Item I of this report for additional information on commitments.

In 2021, the Company entered into a four-year $1.75 billion revolving credit facility (the "Revolving Credit Facility") expiring April 21, 2025 (subject to customary extension rights).

While we have been able to access the capital markets to meet our significant long-term debt and finance lease obligations and future commitments for capital expenditures, including the acquisition of aircraft and related spare engines, we must return to sustained profitability in order to service our debt and maintain appropriate liquidity levels for our long-term operating needs.

The Company has a $1.75 billion revolving credit facility (the "Revolving Credit Facility") expiring April 21, 2025 (subject to customary extension rights).

The Revolving Credit Facility is secured by certain route authorities and airport slots and gates.

No borrowings were outstanding under the facility at March 31, 2022.

In addition, the Company has backstop financing commitments available from certain of its aircraft manufacturers for a limited number of its future aircraft deliveries, subject to certain customary conditions.

No borrowings were outstanding under the facility at June 30, 2022.

We have a significant amount of fixed obligations, including debt, leases of aircraft, airport and other facilities, and pension funding obligations.

As of March 31, 2022, the Company had approximately $40.3 billion of debt, finance lease, operating lease and sale-leaseback obligations, including $4.8 billion that will become due in the next 12 months.

As of June 30, 2022, the Company had approximately $39.4 billion of debt, finance lease, operating lease and sale-leaseback obligations, including $4.5 billion that will become due in the next 12 months.

In addition, we have substantial noncancelable commitments for capital expenditures, including the acquisition of certain new aircraft and related spare engines.

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.

As of March 31, 2022, a substantial portion of the Company's assets, principally aircraft and certain related assets, its loyalty program, certain route authorities and airport slots and gates, was pledged under various loan and other agreements.

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

As of June 30, 2022, a substantial portion of the Company's assets, principally aircraft and certain

related assets, its loyalty program, certain route authorities and airport slots and gates, was pledged under various loan and other agreements.

See Note 8 to the financial statements included in Part I, Item 1 of this report for additional information on aircraft financing and other debt instruments.

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

For 2022, the Company expects approximately $5.2 billion of adjusted capital expenditures (a non-GAAP financial measure defined as GAAP capital expenditures including expenditures for assets acquired through the issuance of debt, finance leases and other financial liabilities).

T he Company has backstop financing commitments available from certain of its aircraft manufacturers for a limited number of its future aircraft deliveries, subject to certain customary conditions.

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:

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Aircraft Type Number of Firm

Commitments (a) Last Nine Months

Commitments (a) Last Six Months

of 2022 2023 After 2023

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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.

As of March 31, 2022, UAL and United have total capital commitments related to the acquisition of aircraft and related spare engines, aircraft improvements and non-aircraft capital commitments for approximately $34.7 billion, of which approximately $5.4 billion, $7.7 billion, $5.0 billion, $4.4 billion, $3.4 billion and $8.8 billion are due in the last nine months of 2022, for the full years 2023, 2024, 2025, 2026, and after 2026, respectively.

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.

The table below summarizes the Company'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

Sources and Uses of Cash

The following table summarizes our cash flow for the three months ended March 31 (in millions):

The following table summarizes our cash flows for the six months ended June 30 (in millions):

2022 2021 Increase (Decrease)

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Financing activities (1,654) 7,554 (9,208)

Net increase in cash, cash equivalents and restricted cash $ 190 $ 1,396 $ (1,206)

Net increase (decrease) in cash, cash equivalents and restricted cash $ (1,401) $ 9,566 $ (10,967)

Operating Activities.

Cash flows provided by operations increased $1.0 billion in the first quarter of 2022 as compared to the year-ago period, primarily due to an increase in advance ticket sales as demand for air travel continued to recover.

Cash flows provided by operations increased $1.0 billion in the first six months of 2022 as compared to the year-ago period, primarily due to an improvement in operating income (loss) as demand for air travel continued to recover.

Investing Activities.

Cash flows used in investing activities increased $101 million in the first quarter of 2022 as compared to the year-ago period, primarily due to the purchase of short-term and other investments.

Cash flows used in investing activities increased $2.8 billion in the first six months of 2022 as compared to the year-ago period, primarily due to the purchase of short-term and other investments.

Financing Activities.

Significant financing events in the three months ended March 31, 2022 were as follows:

Significant financing events in the six months ended June 30, 2022 were as follows:

Debt, Finance Lease and Other Financing Liability Principal Payments .

During the three months ended March 31, 2022, the Company made payments for debt, finance leases, and other financing liabilities of $0.8 billion.

During the six months ended June 30, 2022, the Company made payments for debt, finance leases, and other financing liabilities of $1.8 billion.

During the six months ended June 30, 2021, the Company made payments for debt, finance leases and other financing liabilities of $4.1 billion, primarily for repayments of $1.4 billion aggregate principal amount outstanding under a 2017 term loan facility, $1.0 billion aggregate principal amount outstanding under a 2017 revolving credit facility and $520 million aggregate principal amount outstanding under a CARES Act loan.

Debt Issuances.

During the six months ended June 30, 2022, United received and recorded $220 million from aircraft financings.

During the six months ended June 30, 2021, United received and recorded:

• $1.7 billion from senior unsecured notes under the Payroll Support Program Extension Agreements of the CARES Act;

• $600 million of proceeds as debt from the enhanced equipment trust certificates pass-through trusts established in February 2021;

• $5.0 billion from a new term loan;

• $4.0 billion from the 4.375% senior secured notes due 2026 and 4.625% senior secured notes due 2029.

See Note 8 to the financial statements included in Part I, Item 1 of this report for additional information.

Commitments, Contingencies and Liquidity Matters.

As described in the 2021 Form 10-K, the Company's liquidity may be adversely impacted by a variety of factors, including, but not limited to, pension funding obligations, reserve requirements associated with credit card processing agreements, guarantees, commitments, contingencies and the ongoing impact of the COVID-19 pandemic.

See the 2021 Form 10-K and Notes 5, 6, 7, 8 and 9 to the financial statements contained in Part I, Item 1 of this report for additional information.

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Supplemental Information

The Company evaluates its financial performance utilizing various GAAP and non-GAAP financial measures, including CASM-ex and adjusted capital expenditures.

The Company has provided CASM-ex and adjusted capital expenditures, non-GAAP financial measures that are not calculated or presented in accordance with GAAP, as supplemental information and in addition to the financial measures that are calculated and presented in accordance with GAAP.

Management believes that adjusting CASM for special charges (credits) is useful to investors because special charges (credits) are not indicative of UAL's ongoing performance.

Management also believes that excluding third-party business expenses, such as maintenance and ground handling for third parties, from CASM provides more meaningful disclosure because these expenses are not directly related to UAL's core business.

The Company evaluates its financial performance utilizing various GAAP and non-GAAP financial measures, including CASM-ex, adjusted operating margin and adjusted capital expenditures.

The Company has provided CASM-ex, adjusted operating margin and adjusted capital expenditures, non-GAAP financial measures that are not calculated or presented in accordance with GAAP, as supplemental information and in addition to the financial measures that are calculated and presented in accordance with GAAP.

Management believes that adjusting CASM and operating margin for special charges (credits) is useful to investors because special charges (credits) are not indicative of UAL's ongoing performance.

Management also believes that excluding third-party business expenses, such as expenses associated with maintenance and ground handling for third parties, from CASM provides more meaningful disclosure because these expenses are not directly related to the Company's core business.

Management also believes that excluding fuel costs from CASM is useful to investors because it provides an additional measure of management's performance excluding the effects of a significant cost item over which management has limited influence.

Management also believes that excluding profit sharing from CASM allows investors to better understand and analyze UAL's operating cost performance and provides a more meaningful comparison of our core operating costs to the airline industry.

UAL believes that adjusting capital expenditures for assets acquired through the issuance of debt, finance leases and other financial liabilities is useful to investors in order to appropriately reflect the total amounts spent on capital expenditures.

Management also believes that excluding profit sharing from CASM allows investors to better understand and analyze the Company's operating cost performance and provides a more meaningful comparison of our core operating costs to the airline industry.

The Company believes that adjusting capital expenditures for assets acquired through the issuance of debt, finance leases and other financial liabilities is useful to investors in order to appropriately reflect the total amounts spent on capital expenditures.

Because these non-GAAP financial measures are not calculated in accordance with GAAP, they should not be considered superior to, and are not intended to be considered in isolation or as substitutes for, the related GAAP financial measures and may not be the same as or comparable to any similarly titled measures presented by other companies due to possible differences in methods and in the items being adjusted.

We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

The Company is not providing a target for CASM or a reconciliation for CASM-ex projections to CASM, the most directly comparable GAAP measure, because the Company is unable to predict certain items contained in the GAAP measure without unreasonable efforts and it does not provide a reconciliation of forward-looking measures where it believes such a reconciliation would imply a degree of precision and certainty that could be confusing to investors and is unable to reasonably predict certain items contained in the GAAP measure without unreasonable efforts.

The Company is not providing targets for CASM or operating margin, or reconciliations for CASM-ex projections to CASM or adjusted operating margin projections to operating margin, the most directly comparable respective GAAP measures, because the Company is unable to predict certain items contained in the GAAP measures without unreasonable efforts, and it does not provide a reconciliation of forward-looking measures where it believes such a reconciliation would imply a degree of precision and certainty that could be misleading.

This is due to the inherent difficulty of forecasting the timing or amount of various items that have not yet occurred and are out of the Company's control or cannot be reasonably predicted.

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See "Forward-Looking Information" below.

Below is a reconciliation of the non-GAAP financial measure (CASM-ex) to the most directly comparable GAAP financial measure (CASM) for the three months ended March 31, 2022, March 31, 2021, March 31, 2019 and year ended December 31, 2019 (in cents):

Below are reconciliations of CASM-ex and adjusted operating margin to the most directly comparable GAAP financial measures (CASM and operating margin, respectively) for the three and six months ended June 30, 2022, June 30, 2021, and June 30, 2019, the three months ended September 30, 2019 and the year ended December 31, 2019 (in cents):

Three Months Ended

March 31, Year Ended December 31,

June 30, Six Months Ended

June 30, Three Months Ended September 30, Year Ended December 31,

2022 2021 2019 2022 2021 2019 2019 2019

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CASM-ex (Non-GAAP) 11.62 13.70 9.93 12.05 15.05 10.27 9.80 10.21

Non-cash capital expenditures are not determinable at this time.

Accordingly, United does not provide capital expenditures guidance on a GAAP basis.

(in millions, except percentages)

Operating income (loss) (GAAP) $ 878 $ (270) $ 1,472 $ (498) $ (1,651) $ 1,967 $ 1,473 $ 4,301

Special charges (credits) 112 (948) 71 104 (2,325) 89 27 246

Adjusted operating income (loss) (Non-GAAP) $ 990 $ (1,218) $ 1,543 $ (394) $ (3,976) $ 2,056 $ 1,500 $ 4,547

Operating margin 7.2 % (4.9) % 12.9 % (2.5) % (19.0) % 9.4 % 12.9 % 9.9 %

Adjusted operating margin (Non-GAAP) 8.2 % (22.3) % 13.5 % (2.0) % (45.7) % 9.8 % 13.2 % 10.5 %

Non-cash capital expenditures, which may be significant, are not determinable at this time.

Accordingly, the Company does not provide capital expenditures guidance on a GAAP basis.

FORWARD-LOOKING INFORMATION

This report contains certain "forward-looking statements," within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including in Part I, Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this report, relating to, among other things, the potential impacts of the COVID-19 pandemic and steps the Company plans to take in response thereto and goals, plans and projections regarding the Company’s financial position, results of operations, market position, capacity, fleet, product development, ESG targets and business strategy.

Such forward-looking statements are based on historical performance and current expectations, estimates, forecasts and projections about the Company’s future financial results, goals, plans, commitments, strategies and objectives and involve inherent risks, assumptions and uncertainties, known or unknown, including internal or external factors that could delay, divert or change any of them, that are difficult to predict, may be beyond the Company's control and could cause the Company's future financial results, goals, plans and objectives to differ materially from those expressed in, or implied by, the statements.

Words such as "should," "could," "would," "will," "may," "expects," "plans," "intends," "anticipates," "indicates," "remains," "believes," "estimates," "projects," "forecast," "guidance," "outlook," "goals", "targets" and other words and terms of similar meaning and expression are intended to identify forward-looking statements, although not all forward-looking statements contain such terms.

This report contains certain "forward-looking statements," within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including in Part I, Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this report, relating to, among other things, the potential impacts of the COVID-19 pandemic and other macroeconomic factors and steps the Company plans to take in response thereto and goals, plans and projections regarding the Company's financial position, results of operations, market position, capacity, fleet, product development and business strategy.

Such forward-looking statements are based on historical performance and current expectations, estimates, forecasts and projections about the Company's future financial results, goals, plans, commitments, strategies and objectives and involve inherent risks, assumptions and uncertainties, known or unknown,

including internal or external factors that could delay, divert or change any of them, that are difficult to predict, may be beyond the Company's control and could cause the Company's future financial results, goals, plans and objectives to differ materially from those expressed in, or implied by, the statements.

Words such as "should," "could," "would," "will," "may," "expects," "plans," "intends," "anticipates," "indicates," "remains," "believes," "estimates," "projects," "forecast," "guidance," "outlook," "goals," "targets," "confident" and other words and terms of similar meaning and expression are intended to identify forward-looking statements, although not all forward-looking statements contain such terms.

All statements, other than those that relate solely to historical facts, are forward-looking statements.

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Our actual results could differ materially from these forward-looking statements due to numerous factors including, without limitation, the following:

the adverse impacts of the ongoing COVID-19 global pandemic on our business, operating results,

financial condition and liquidity;

the adverse impacts of the ongoing COVID-19 global pandemic on our business, operating results, financial condition and liquidity;

execution risks associated with our strategic operating plan;

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disruptions to our regional network and United Express flights provided by third-party regional carriers;

unfavorable economic and political conditions in the United States and globally;

unfavorable economic and political conditions in the United States and globally (including inflationary pressures);

reliance on third-party service providers and the impact of any significant failure of these parties to perform as expected, or interruptions in our relationships with these providers or their provision of services;

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costs, liabilities and risks associated with environmental regulation and climate change, including our climate goals;

high and/or volatile fuel prices or significant disruptions in the supply of aircraft fuel (including as a result of the Russia-Ukraine conflict);

high and/or volatile fuel prices or significant disruptions in the supply of aircraft fuel (including as a result of the Russia-Ukraine military conflict);

the impacts of our significant amount of financial leverage from fixed obligations, the possibility we may seek material amounts of additional financial liquidity in the short-term, and the impacts of insufficient liquidity on our financial condition and business;

failure to comply with financial and other covenants governing our debt, including our MileagePlus® financing agreements;

the impacts of the proposed phase out of the London interbank offer rate;

the impacts of the proposed phaseout of the London interbank offer rate;

limitations on our ability to use our net operating loss carryforwards and certain other tax attributes to offset future taxable income for U.S.

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Investors should understand that it is not possible to predict or identify all such factors and should not consider this list to be a complete statement of all potential risks and uncertainties.

In addition, certain forward-looking outlook provided in this report relies on assumptions about the duration and severity of the COVID-19 pandemic, the timing of the return to a more stable business environment, the volatility of aircraft fuel prices, customer behavior changes and a return in demand for air travel, among other things (together, the "Recovery Process").

If the actual Recovery Process differs materially from our assumptions, the impact of the COVID-19 pandemic on our business could be worse than expected, and our actual results may be negatively impacted and may vary materially from our expectations and projections.

In addition, certain forward-looking outlook provided in this report relies on assumptions about the duration and severity of the COVID-19 pandemic, the timing of the return to a more stable business environment, the volatility of aircraft fuel prices, customer behavior changes and return in demand for air travel, among other things (together, the "Recovery Process").

If the actual Recovery Process differs materially from our assumptions, the impact of the COVID-19 pandemic on our business could be worse than expected, and our actual

results may be negatively impacted and may vary materially from our expectations and projections.

It is routine for our internal projections and expectations to change as the year or each quarter in the year progresses, and therefore it should be clearly understood that the internal projections, beliefs and assumptions upon which we base our expectations may change.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis