What changed in this filing

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Item 1. Financial Statements

2022-10-19 compared with 2022-07-21 · 125 added, 116 removed, 543 unchanged (31% of the section changed)

3 unchanged sentences

(In millions, except per share amounts)

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

Three Months Ended September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

5 unchanged sentences

Operating expense:

Salaries and related costs 2,836 2,276 5,623 4,500

Aircraft fuel 3,755 1,710 9,796 3,793

Salaries and related costs 2,843 2,487 8,466 6,987

Landing fees and other rent 639 652 1,919 1,735

Aircraft maintenance materials and outside repairs 619 346 1,553 917

Depreciation and amortization 610 623 1,832 1,866

Regional capacity purchase 596 520 1,728 1,546

Aircraft maintenance materials and outside repairs 527 302 934 571

Distribution expenses 482 218 1,101 442

20 unchanged sentences

(In millions)

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

Three Months Ended September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

9 unchanged sentences

(In millions, except shares)

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Current assets:

30 unchanged sentences

(In millions, except shares)

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

LIABILITIES AND STOCKHOLDERS' EQUITY

25 unchanged sentences

authorized 1,000,000,000 shares;

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

outstanding 326,926,963 and 323,810,825 shares at September 30, 2022 and December 31, 2021, respectively

Additional capital invested 8,970 9,156

Stock held in treasury, at cost ( 3,533 ) ( 3,814 )

Retained earnings (accumulated deficit) ( 515 ) 625

Retained earnings 421 625

Accumulated other comprehensive loss ( 964 ) ( 942 )

5 unchanged sentences

(In millions)

Six Months Ended June 30,

Nine Months Ended

September 30,

Cash Flows from Operating Activities:

20 unchanged sentences

Right-of-use assets acquired through operating leases 98 627

Equity investment interest received in exchange for aircraft 42 —

Notes receivable and warrants received for entering into agreements 2 139

Investment interests received in exchange for goods and services 93 129

(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

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

Net income — — — — 942 — 942

2 unchanged sentences

Stock issued for share-based awards, net of shares withheld for tax 0.2 — ( 15 ) 18 ( 6 ) — ( 3 )

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

Balance at September 30, 2022 326.9 $ 4 $ 8,970 $ ( 3,533 ) $ 421 $ ( 964 ) $ 4,898

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

3 unchanged sentences

Stock issued for share-based awards, net of shares withheld for tax 3.1 — ( 256 ) 281 ( 98 ) — ( 73 )

Balance at September 30, 2022 326.9 $ 4 $ 8,970 $ ( 3,533 ) $ 421 $ ( 964 ) $ 4,898

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

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

Net income — — — — 473 — 473

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

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

Warrants issued — — 52 — — — 52

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

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

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

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

5 unchanged sentences

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

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

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

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

2 unchanged sentences

(In millions)

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

Three Months Ended September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

5 unchanged sentences

Operating expense:

Salaries and related costs 2,836 2,276 5,623 4,500

Aircraft fuel 3,755 1,710 9,796 3,793

Salaries and related costs 2,843 2,487 8,466 6,987

Landing fees and other rent 639 652 1,919 1,735

Aircraft maintenance materials and outside repairs 619 346 1,553 917

Depreciation and amortization 610 623 1,832 1,866

Regional capacity purchase 596 520 1,728 1,546

Aircraft maintenance materials and outside repairs 527 302 934 571

Distribution expenses 482 218 1,101 442

18 unchanged sentences

(In millions)

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

Three Months Ended September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

9 unchanged sentences

(In millions, except shares)

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Current assets:

30 unchanged sentences

(In millions, except shares)

June 30, 2022 December 31, 2021

September 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 June 30, 2022 and December 31, 2021

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

Additional capital invested 387 317

8 unchanged sentences

(In millions)

Six Months Ended June 30,

Nine Months Ended

September 30,

Cash Flows from Operating Activities:

20 unchanged sentences

Right-of-use assets acquired through operating leases 98 627

Equity investment interest received in exchange for aircraft 42 —

Notes receivable and warrants received for entering into agreements 2 139

Investment interests received in exchange for goods and services 93 129

(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

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

Net income — 942 — — 942

2 unchanged sentences

Other — — — ( 3 ) ( 3 )

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

Balance at September 30, 2022 $ 387 $ 2,872 $ ( 964 ) $ 2,571 $ 4,866

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

3 unchanged sentences

Other — — — ( 75 ) ( 75 )

Balance at September 30, 2022 $ 387 $ 2,872 $ ( 964 ) $ 2,571 $ 4,866

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

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

Net loss — ( 434 ) — — ( 434 )

Other comprehensive income — — 12 — 12

Net income — 474 — — 474

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

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

Other — — — ( 6 ) ( 6 )

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

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

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

4 unchanged sentences

Other — — — 72 72

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

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

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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

8 unchanged sentences

The Company defers amounts related to future travel in its Advance ticket sales liability account.

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 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 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.

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

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

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

The Company is unable to estimate the amount of the FFCs and ETCs 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 FFCs and ETCs could be used after the next 12 months.

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

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

Given the uncertainty of travel demand caused by the novel coronavirus ("COVID-19") pandemic, changes in our estimates of ETCs and FFCs that may expire unused could have a significant impact on revenue.

Given the uncertainty of travel demand caused by the novel coronavirus ("COVID-19") pandemic, changes in our estimates of FFCs and ETCs that may expire unused could have a significant impact on revenue.

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

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.

In the three and nine months ended September 30, 2022, the Company recognized approximately $ 5.1 billion and $ 3.0 billion, respectively, of passenger revenue for tickets that were included in Advance ticket sales at the beginning of those periods.

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

Ancillary Fees.

1 unchanged sentence

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

The Company recorded $ 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.

The Company recorded $ 0.9 billion and $ 2.4 billion of ancillary fees within passenger revenue in the three and nine months ended September 30, 2022, respectively.

The Company recorded $ 0.7 billion and $ 1.5 billion of ancillary fees within passenger revenue in the three and nine months ended September 30, 2021, respectively.

Frequent Flyer Accounting.

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

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

Three Months Ended September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

4 unchanged sentences

Total Frequent flyer deferred revenue - ending balance $ 6,578 $ 6,217 $ 6,578 $ 6,217

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.

In the three and nine months ended September 30, 2022, the Company recognized, in Other operating revenue, $ 0.6 billion and $ 1.7 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.

MileagePlus co-brand agreement.

The Company recognized $ 0.5 billion and $ 1.3 billion, respectively, in the three and nine months ended September 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.

2 unchanged sentences

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,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

7 unchanged sentences

Potentially dilutive securities (a)

Stock warrants 1.5 — 1.5 0.3

Stock warrants (b) 3.5 1.5 3.5 0.7

Employee stock awards 0.7 0.7 0.7 0.7

(a) Weighted-average potentially dilutive securities outstanding excluded from the computation of diluted earnings per share because the securities would have had an antidilutive effect.

(b) Represent warrants issued to the U.S.

Treasury Department ("Treasury") pursuant to the payroll support program, including extensions, and the loan program established under the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act").

The Company issued, to Treasury, warrants to purchase up to approximately 10 million shares of UAL common stock at exercise prices ranging from $ 31.50 to $ 53.92 and expiration dates ranging from April 20, 2025 to June 10, 2026.

All warrants were outstanding as of September 30, 2022.

NOTE 3 — ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

1 unchanged sentence

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

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

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

Changes in value ( 1 ) ( 25 ) 6 ( 20 )

Amounts reclassified to earnings — (b) — — —

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

Balance at September 30, 2022 $ ( 835 ) $ ( 39 ) $ ( 90 ) $ ( 964 )

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

1 unchanged sentence

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

Balance at September 30, 2022 $ ( 835 ) $ ( 39 ) $ ( 90 ) $ ( 964 )

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

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

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

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

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

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

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

1 unchanged sentence

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

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.

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

(a) Includes approximately $ 285 million of deferred income tax expense that will not be recognized in net income until the related pension and other postretirement benefit obligations are fully extinguished.

We consider all income sources, including other comprehensive income, in determining the amount of tax benefit allocated to results from operations.

1 unchanged sentence

NOTE 4 — INCOME TAXES

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 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.

The Company's effective tax rates for the three and nine months ended September 30, 2022 were 18.3 % and 24.3 %, respectively.

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

The provision for income taxes is based on the estimated annual effective tax rate, which represents a blend of federal, state and foreign taxes and includes the impact of certain nondeductible items.

NOTE 5 — EMPLOYEE BENEFIT PLANS

Defined Benefit Pension and Other Postretirement Benefit Plans.

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

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

Pension Benefits Other Postretirement Benefits Affected Line Item

9 unchanged sentences

Total $ 53 $ 79 $ ( 21 ) $ ( 29 )

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

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

Pension Benefits Other Postretirement Benefits Affected Line Item

15 unchanged sentences

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

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

3 unchanged sentences

Short-term investments:

Corporate debt 43 — 43 — 95 — 95 —

Asset-backed securities 163 — 163 — 26 — 26 —

government and agency notes 6,954 — 6,954 — 2 — 2 —

Asset-backed securities 460 — 460 — 26 — 26 —

Corporate debt 23 — 23 — 95 — 95 —

Long-term investments:

4 unchanged sentences

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.

and Archer Aviation Inc.

Long-term investments:

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., Archer Aviation Inc.

and Eve Holding, Inc.

Other fair value information.

1 unchanged sentence

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Carrying Amount Fair Value Carrying Amount Fair Value

7 unchanged sentences

Investments in Regional Carriers.

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.

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

The combined carrying value of the investments was approximately $ 183 million as of September 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.

3 unchanged sentences

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

As of September 30, 2022, the carrying value of these investments was $ 330 million.

NOTE 7 — COMMITMENTS AND CONTINGENCIES

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

As of September 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 Six Months

Commitments (a) Last Three 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, 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

Furthermore, Boeing notified United that three Boeing 787 aircraft scheduled for delivery in 2022 and 15 Boeing 737 MAX aircraft scheduled for delivery in 2023, all as shown in the table above, are now expected to deliver in 2023 and 2024, respectively.

In addition to Boeing’s notification, United estimates that seven additional Boeing 737 MAX aircraft scheduled for delivery in 2022, as shown in the table above, will deliver in 2023.

United intends to exercise options to purchase, in 2023, eight Boeing 737 MAX aircraft that are currently leased under sale and leaseback arrangements.

United has an agreement to purchase eight used Bombardier CRJ550 aircraft in the last three months of 2022.

The table below summarizes United's commitments as of September 30, 2022, which include aircraft and related spare engines, aircraft improvements and non-aircraft capital commitments.

Aircraft commitments are based on contractual scheduled aircraft deliveries without any adjustments for the delays communicated by Boeing or estimated by United.

(in billions)

Last three months of 2022 $ 3.0

After 2026 8.5

1 unchanged sentence

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.

As of September 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.

During the nine months ended September 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 September 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 June 30, 2022, United is the guarantor of $ 99 million of aircraft mortgage debt issued by one of United's regional carriers.

As of September 30, 2022, United is the guarantor of $ 95 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.

1 unchanged sentence

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

At June 30, 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.

At September 30, 2022, the Company had $ 12.8 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 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.

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

As of September 30, 2022, the Company had approximately 90,800 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 were still on pre-separation leave of absence with pay and benefits as of June 30, 2022.

NOTE 8 — DEBT

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

As of September 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 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

As of September 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 $ 412 million of unamortized debt discount, premiums and debt issuance costs) at September 30, 2022 under then-outstanding long-term debt agreements (in millions):

Last three months of 2022 $ 759

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.

During the nine months ended September 30, 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 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):

For the three and nine months ended September 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

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

12 unchanged sentences

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

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.

During the three and nine months ended September 30, 2022, the Company recorded $ 20 million and $ 124 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.

During the three and nine months ended September 30, 2022, the Company recorded gains of $ 28 million and losses of $ 12 million, respectively.

Nonoperating debt extinguishment and modification fees .

During the nine months ended September 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 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.

During the nine months ended September 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 CARES Act, which included approximately $ 1.7 billion aggregate principal amount of unsecured promissory notes.

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

The Company also recorded $ 99 million for 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 nine months ended September 30, 2021.

Severance and benefit costs .

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

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

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

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

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.

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

During the nine months ended September 30, 2021, in addition to the third quarter 2021 impairments, 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 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.

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

During the nine months ended September 30, 2021, the Company recorded net charges of $ 60 million primarily related to incentives for 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, which were partially offset by the net gains in the third quarter of 2021 described above.

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 .

During the three and nine months ended September 30, 2021, the Company recorded losses of $ 34 million and gains of $ 91 million, 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.

During the nine months ended September 30, 2021, the Company recorded $ 50 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 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.

During the nine months ended September 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