What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2023-02-16 compared with 2022-02-18 · 174 added, 159 removed, 305 unchanged (52% of the section changed)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Management's discussion and analysis of financial condition and results of operations is provided as a supplement to and should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Form 10-K and the description of our business and reportable segments in Item 1 above to enhance the understanding of our results of operations, financial condition and cash flows.

Business of this Form 10-K to enhance the understanding of our results of operations, financial condition and cash flows.

This section generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021.

Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 are not included in this Form 10-K and can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the U.S.

Securities and Exchange Commission (the "SEC") on March 1, 2021 (the "2020 Annual Report").

Securities and Exchange Commission (the "SEC") on February 18, 2022 (the "2021 Annual Report").

Executive Summary

United Airlines Holdings, Inc.

(together with its consolidated subsidiaries, "UAL" or the "Company") is a holding company and its principal, wholly-owned subsidiary is United Airlines, Inc.

(together with its consolidated subsidiaries, "UAL" or the "Company") is a holding company and its wholly-owned subsidiary is United Airlines, Inc.

(together with its consolidated subsidiaries, "United").

The Company's shared purpose is "Connecting People.

Uniting the World." The Company has the most comprehensive route network among North American carriers, including U.S.

mainland hubs in Chicago, Denver, Houston, Los Angeles, New York/Newark, San Francisco and Washington, D.C.

As UAL consolidates United for financial statement purposes, disclosures that relate to activities of United also apply to UAL, unless otherwise noted.

United's operating revenues and operating expenses comprise nearly 100% of UAL's revenues and operating expenses.

In addition, United comprises approximately the entire balance of UAL's assets, liabilities and operating cash flows.

In addition, United comprises approximately the entire balance of UAL's assets, liabilities and operating

When appropriate, UAL and United are named specifically for their individual contractual obligations and related disclosures and any significant differences between the operations and results of UAL and United are separately disclosed and explained.

We sometimes use the words "we," "our," "us," and the "Company" in this report for disclosures that relate to all of UAL and United.

Our business and operating results for 2021 continued to be significantly impacted by the COVID-19 pandemic.

Given the more significant impact of the pandemic on our business and operating results in 2020, we believe that a comparison of our 2021 results to 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 "Cautionary Statement Regarding Forward-Looking Statements" and in Part I, Item 1A.

Our business and operating results for 2022 continued to be negatively impacted by the COVID-19 pandemic, particularly in the first half of the year.

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 2022 results to 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 "Economic and Market Factors" and "Cautionary Statement Regarding Forward-Looking Statements" and in Part I, Item 1A.

Risk Factors, of this Form 10-K.

The Company is unable to reconcile forward-looking projections to accounting principles generally accepted in the United States of America ("GAAP");

refer to "Supplemental Information" below for further details.

Impact of the COVID-19 Pandemic

The COVID-19 pandemic, together with the measures implemented or recommended by governmental authorities and private organizations in response to the pandemic, has had an adverse impact that has been material to the Company's business, operating results, financial condition and liquidity.

The 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, which in 2021 remained significantly lower than capacity prior to the pandemic and resulted in a significant reduction to our revenue through the date of this report.

We operated at approximately 63% of our full year 2019 capacity during the full year of 2021.

We have delayed a portion of our previously planned capacity increases for full year 2022 and may need to implement further modifications.

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 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 December 31, 2021, unrestricted cash, cash equivalents and short-term investments totaled $18.4 billion, an increase of approximately $13.5 billion from December 31, 2019.

We had approximately $41.1 billion of debt, finance lease, operating lease and sale-leaseback obligations as of December 31, 2021 (including $4.5 billion that will become due in the next 12 months), up from approximately $20.5 billion as of December 31, 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.

Risks and uncertainties related to the COVID-19 pandemic are further described in Part I, Item 1A.

Risk Factors— "The COVID-19 pandemic has materially and adversely impacted our business, operating results, financial condition and liquidity.

The full extent of the impact will depend on future developments and how quickly we can return to more normal operations, among other things.

If the impacts from the COVID-19 pandemic extend beyond our assumed timelines, our actual results may vary significantly from our expectations" of this report.

Outlook for Full Year 2022

The Company expects its scheduled capacity for full year 2022 to be down versus 2019.

Our shared purpose is "Connecting People.

Uniting the World." We have the most comprehensive route network among North American carriers, including U.S.

mainland hubs in Chicago, Denver, Houston, Los Angeles, New York/Newark, San Francisco and Washington, D.C.

Our United Next plan is our fundamental strategic evolution for driving future growth that we believe will have a transformational effect on the customer experience and earnings power of our business.

As part of our United Next plan, in June 2021 we announced our firm order for the purchase of 270 new Boeing and Airbus aircraft, which at the time was the largest combined order in the airline's history and the biggest by an individual carrier in the last decade.

In December 2022, we announced the largest widebody order by a U.S.

carrier in commercial aviation history (100 Boeing 787 Dreamliners with options to purchase 100 more), the exercise of options to purchase 44 Boeing 737 MAX aircraft for delivery between 2024 and 2026, the firm orders of 56 more Boeing 737 MAX aircraft for delivery between 2027 and 2028 and the acquisition of an additional 100 options to purchase additional Boeing 737 MAX aircraft.

We now expect to take delivery of about 700 new narrow and widebody aircraft by the end of 2033.

Our groundbreaking United Next strategy is expected to increase United's average gauge in North America, to increase the total number of available seats per departure and to significantly lower carbon emissions per seat.

United will retrofit 100% of its mainline, narrow-body planes with its signature interior that includes seat-back entertainment in every seat, larger overhead bins for every passenger's carry-on bag and the industry's fastest available in-flight WiFi, as well as a bright look-and-feel with LED lighting.

The carrier's international widebodies will feature the United Polaris® business class seat as well as United Premium Plus® seating.

The Company plans to replace older, smaller mainline jets and at least 200 single-class regional jets with larger aircraft, which we expect will lead to fuel efficiency benefits compared to older planes, including an expected 17-25% lower carbon emissions per seat compared to older planes.

We believe that 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.

The Company remains squarely focused on delivering on four strategic pillars:

• United Next:

Along with the items mentioned above, additional elements of the United Next plan include hiring over 50,000 new employees, expanding our leading global network to underserved countries and making significant technology changes designed to improve the customer experience and drive operational efficiency.

• Operational excellence:

The most important factor for customer satisfaction is on-time flights.

We face some unique challenges in this respect because we operate hubs in the most congested and constrained airports in the country.

That backdrop means that United needs to be a leader at using technology to overcome these challenges.

We believe that we have been doing that, but we have a lot of ideas to continue making advancements in this area.

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

The Company expects full year 2022 CASM-ex (a non-GAAP financial measure defined as CASM excluding fuel, profit sharing, third-party business expense and special charges;

see "Supplemental Information" below) to be higher than 2019.

Strategic Objectives

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.

It is expected to increase United's average gauge in North America, the total number of available seats per departure, by almost 30% by 2026 versus 2019, as well as significantly lower carbon emissions per seat.

New aircraft will come with a new signature interior that includes seat-back entertainment in every seat, larger overhead bins for every passenger's carry-on bag and the industry's fastest available in-flight WiFi, as well as a bright look-and-feel with LED lighting.

New aircraft are expected to increase North America premium seat counts by 75% per short-haul departure by 2026 versus 2019.

The Company plans to replace older, smaller mainline jets and at least 200 single-class regional jets with larger aircraft, which we expect will lead to significant sustainability benefits compared to older planes:

an expected 11% overall improvement in fuel efficiency and an expected 17-20% lower carbon emission per seat compared to older planes.

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.

We believe that our 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)) targets in connection with our United Next plan will be key in driving absolute and relative margin improvement.

Moreover, having best-in-class CASM-ex performance is expected to provide the cash flow needed to support our planned investments in growth.

• Customer service:

We believe that excellent customer service is part of de-commoditizing air travel.

Our people are our greatest asset and they are by far the most important part of our product.

A great route network, new aircraft, great

are a necessary but not sufficient condition for a great brand.

Ultimately our people provide customers with the service they expect.

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 execution risks associated with our United Next plan;

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

rising inflationary pressures;

labor market and supply chain constraints and related costs affecting us and our partners;

volatile fuel prices;

aircraft delivery delays;

the lasting effects of the COVID-19 global pandemic and related governmental regulations and restrictions, that we believe will change how our customers fly in ways that we expect to be both positive and negative for the Company, including the lingering impact of the pandemic on the return of business and international—especially in our China market— travel demand to pre-COVID-19 levels;

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 Russian airspace as well as third-party general sales agent services in Russia as a result of the Russia-Ukraine military conflict and 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, of this 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 2023 in response to several factors and trends noted above and may need to implement further modifications.

However, based on the current trend of our business operations, the Company believes that the long-term outlook for the Company remains positive due to the expected continued return of travel demand and the anticipated benefits by the United Next plan.

Absent significant and prolonged COVID-19 relapses or global economic disruptions, we believe that the expected long-term increase in travel 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.

Despite the lingering effects of COVID-19 induced business interruptions, which has caused the Company's recovery from the COVID-19 pandemic not to follow a linear path, we have seen increasing demand for travel both domestically and internationally in countries where entry is permitted as we operated at approximately 87% of our 2019 capacity during 2022.

However, it remains difficult to reasonably assess or predict the full extent of the impact of the COVID-19 pandemic on the broader economy and how consumer behavior may change—and whether such change is temporary or permanent.

As a result, the Company's operational and financial performance, particularly in the short-term, may be subject to volatility in the future.

Risks and uncertainties related to the COVID-19 pandemic are further described in Part I, Item 1A.

Risk Factors.

Results of Operations

10 unchanged sentences

Revenue passenger miles ("RPMs") (millions) (b) 206,791 128,979 73,883 239,360

ASMs (millions) 178,684 122,804 284,999

Cargo revenue ton miles (millions) (c) 3,285 2,711 3,329

Passenger load factor (d) 72.2 % 60.2 % 84.0 %

Passenger revenue per available seat mile ("PRASM") 11.30 9.61 13.90

Total revenue per available seat mile ("TRASM") 13.79 12.50 15.18

Average yield per revenue passenger mile ("Yield") (e) 15.66 15.98 16.55

CASM 14.36 17.68 13.67

Average stage length (miles) (f) 1,315 1,307 1,460

Available seat miles ("ASMs") (millions) (c)

247,858 178,684 122,804 284,999

Cargo revenue ton miles (millions) (d) 3,041 3,285 2,711 3,329

Passenger load factor (e) 83.4 % 72.2 % 60.2 % 84.0 %

Passenger revenue per available seat mile ("PRASM") (cents) 16.15 11.30 9.61 13.90

Total revenue per available seat mile ("TRASM") (cents) 18.14 13.79 12.50 15.18

Average yield per revenue passenger mile ("Yield") (cents) (f) 19.36 15.66 15.98 16.55

CASM (cents) 17.19 14.36 17.68 13.67

CASM-ex (Non-GAAP) (cents) 11.73 12.96 17.13 10.21

Average stage length (miles) (g) 1,437 1,315 1,307 1,460

Employee headcount, as of December 31 92,800 84,100 74,400 95,900

1 unchanged sentence

(b) The number of scheduled miles flown by revenue passengers.

(d) RPMs divided by ASMs.

(e) The average passenger revenue received for each revenue passenger mile flown.

(f) Average stage length equals the average distance a flight travels weighted for size of aircraft.

(d) The number of cargo revenue tons transported multiplied by the number of miles flown.

(e) RPMs divided by ASMs.

(f) The average passenger revenue received for each revenue passenger mile flown.

(g) Average stage length equals the average distance a flight travels weighted for size of aircraft.

Operating Revenue.

17 unchanged sentences

Passenger load factor (points) 5.6 22.5 39.3 14.4 11.2

Passenger revenue increased $8.4 billion, or 71.1%, in 2021 as compared to 2020, primarily due to an increase in the demand for air travel as a result of the increased availability of COVID-19 vaccines and the easing of travel and quarantine restrictions in the United States and various other jurisdictions.

Cargo revenue increased $701 million, or 42.5%, in 2021 as compared to 2020, primarily due to stronger yields on freight revenue and higher cargo tonnage from increased wide-body departures of passenger flights as well as cargo-only flights.

Other operating revenue increased $186 million, or 9.8%, in 2021 as compared to 2020, primarily due to an increase in mileage revenue from non-airline partners, including the Company's co-branded credit card partner, JPMorgan Chase Bank, N.A.

Passenger revenue increased $19.8 billion, or 98.2%, in 2022 as compared to 2021, 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 decreased $178 million, or 7.6%, in 2022 as compared to 2021, primarily due to lower yields as a result of increased market capacity.

Cargo revenue was especially high in 2021 due to the limited market capacity, lower passenger load factors and the utilization of cargo-only flights in the first half of 2021.

Other operating revenue increased $664 million, or 31.8%, in 2022 as compared to 2021, 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.

("Chase"), as well as an increase in the purchases of United Club memberships and lounge passes in the current year.

Operating Expense.

1 unchanged sentence

2022 2021 Increase (Decrease) % Change

Salaries and related costs $ 9,566 $ 9,522 $ 44 0.5

Aircraft fuel $ 13,113 $ 5,755 $ 7,358 127.9

Depreciation and amortization 2,485 2,488 (3) (0.1)

Salaries and related costs 11,466 9,566 1,900 19.9

Landing fees and other rent 2,576 2,416 160 6.6

Depreciation and amortization 2,456 2,485 (29) (1.2)

Regional capacity purchase 2,299 2,147 152 7.1

5 unchanged sentences

Total operating expenses $ 42,618 $ 25,656 $ 16,962 66.1

Salaries and related costs increased $44 million, or 0.5%, in 2021 as compared to 2020, primarily due to an increase in front-line employees' wages as a result of higher flight activity, partially offset by a $225 million increase in tax credits provided by the Employee Retention Credit under the CARES Act.

Aircraft fuel expense increased $2.6 billion, or 82.5%, in 2021 as compared to 2020.

Aircraft fuel expense increased $7.4 billion, or 127.9%, in 2022 as compared to 2021, primarily due to both a higher average price per gallon of fuel and increased consumption from higher flight activity.

The table below presents the significant changes in aircraft fuel cost per gallon for the years ended December 31 (in millions, except percentage changes and per gallon data):

2022 2021 % Change

Fuel expense $ 13,113 $ 5,755 127.9

1 unchanged sentence

Average price per gallon $ 3.63 $ 2.11 72.0

Landing fees and other rent increased $289 million, or 13.6%, in 2021 as compared to 2020, primarily due to an increase in the number of flights and passengers.

The increase was not directly proportionate to the volume of activity as some landing fees and other rents are fixed.

Regional capacity purchase costs increased $108 million, or 5.3%, in 2021 as compared to 2020, primarily due to increased regional flying and increased pass-through maintenance costs.

Aircraft maintenance materials and outside repairs increased $458 million, or 53.4%, in 2021 as compared to 2020, primarily due to higher volumes of flying and increased heavy check maintenance events.

Distribution expenses increased $218 million, or 47.5%, in 2021 as compared to 2020, primarily due to higher credit card fees and commissions and a 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 versus business travel, which requires the use of different distribution channels and forms of payment.

Salaries and related costs increased $1.9 billion, or 19.9%, in 2022 as compared to 2021, primarily due to an approximately 10% increase in headcount, volume-driven pay from increased flight activity, an increase in employee incentive accruals due to current year profitability (including profit sharing of $133 million in 2022) and $405 million of employee retention credits under the CARES Act in 2021 that did not reoccur in 2022.

Landing fees and other rent increased $160 million, or 6.6%, in 2022 as compared to 2021, primarily due to an increase in landed weight volume as a result of increased flight activity.

Regional capacity purchase costs increased $152 million, or 7.1%, in 2022 as compared to 2021, primarily due to rate increases.

Aircraft maintenance materials and outside repairs increased $837 million, or 63.6%, in 2022 as compared to 2021, primarily due to higher volumes of flying, increased engine overhauls, higher repair volumes, heavy airframe checks and contractual rate escalations.

Distribution expenses increased $858 million, or 126.7%, in 2022 as compared to 2021, primarily due to higher credit card fees, higher travel agency commissions and higher volumes of global distribution fees as a result of the overall increase in passenger revenue.

Distribution expenses were also impacted by a higher proportion of business travel as compared to leisure travel, which can result in higher cost distribution channels and forms of payment.

The table below presents special charges (credits) recorded by the Company during the years ended December 31 (in millions):

5 unchanged sentences

See Note 13 to the financial statements included in Part II, Item 8 of this report for additional information.

Other operating expenses increased $947 million, or 27.2%, in 2021 as compared to 2020, primarily due to increases in ground handling, passenger services and personnel-related costs as a direct result of increased flying and higher expenditures on information technology projects.

Other operating expenses increased $2.2 billion, or 49.5%, in 2022 as compared to 2021, 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 inflationary pressures and higher expenditures on information technology projects and services.

Nonoperating Income (Expense).

2 unchanged sentences

Interest expense $ (1,778) $ (1,657) $ 121 7.3

Interest income 298 36 262 NM

Interest capitalized 105 80 25 31.3

Interest income 36 50 (14) (28.0)

Unrealized gains (losses) on investments, net 20 (34) (54) (158.8)

Miscellaneous, net 40 (1,327) (1,367) NM

Miscellaneous, net 8 40 (32) (80.0)

Total nonoperating expense, net $ (1,347) $ (1,535) $ (188) (12.2)

Interest expense increased $594 million, or 55.9%, in 2021 as compared to 2020, primarily due to the issuance of additional debt, mainly in the second half of 2020 and first half of 2021, to provide additional liquidity to the Company during the COVID-19 pandemic.

Unrealized losses on investments, net decreased $160 million in 2021 as compared to 2020, primarily due to the change in the market value of the Company's investments in equity securities.

See Notes 9 and 14 to the financial statements included in Part II, Item 8 of this report for additional information.

Miscellaneous, net expense decreased $1.4 billion in 2021 as compared to 2020, primarily due to the $697 million of credit loss allowances associated with the Company's Term Loan Agreement with, among others, BRW Aviation Holding LLC and BRW Aviation LLC and the related guarantee and $687 million in settlement losses and special termination benefits related to

voluntary separation programs under the Company's defined benefit pension plan covering certain non-pilot U.S.

employees and postretirement medical programs recorded in 2020.

Interest expense increased $121 million, or 7.3%, in 2022 as compared to 2021, primarily due to higher interest rates on variable rate debt as well as a full year of interest expense in 2022 on certain debt incurred in the second quarter of 2021.

Interest income increased $262 million in 2022 as compared to 2021, primarily due to higher short-term investments in U.S.

government and agency notes.

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

Unrealized gains on investments, net was $20 million in 2022 as compared to unrealized losses on investments, net of $34 million in 2021, primarily due to the change in the market value of the Company's investments in equity securities.

See Notes 8 and 13 to the financial statements included in Part II, Item 8 of this report for additional information.

2 unchanged sentences

Liquidity and Capital Resources

As of December 31, 2021, the Company had $18.4 billion in unrestricted cash, cash equivalents and short-term investments, an increase of approximately $6.7 billion from December 31, 2020.

As of December 31, 2022, the Company had $16.4 billion in unrestricted cash, cash equivalents and short-term investments, a decrease of approximately $2.0 billion from 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.

1 unchanged sentence

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

We expect to maintain an elevated level of liquidity in the near term as we navigate through 2022, which may lead to the issuance of additional debt securities, the repurchase or redemption of debt securities prior to maturity or the issuance of common stock, as well as to the pursuit of financing options for our firm aircraft orders and other related capital expenditures consistent with our historical practice prior to the onset of the COVID-19 pandemic.

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 $5.9 billion of gross capital expenditures (including expenditures for assets acquired through the issuance of debt, finance leases and other financial liabilities).

See Note 13 to the financial statements included in Part II, Item 8 of this report for additional information on commitments.

The Revolving Credit and Guaranty Agreement, under the Term Loan Credit and Guaranty Agreement (the "2021 Term Loan Facility"), provides revolving loan commitments of up to $1.75 billion until April 21, 2025, subject to certain customary conditions.

No borrowings were outstanding under this facility at December 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.

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

As of December 31, 2021, the Company had approximately $41.1 billion of debt, finance lease, operating lease and sale-leaseback obligations, including $4.5 billion that will become due in the next 12 months.

As of December 31, 2022, the Company had approximately $37.3 billion of debt, finance lease, operating lease and other financial liabilities, including $3.6 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.

3 unchanged sentences

See Note 9 to the financial statements included in Part II, Item 8 of this report for additional information on aircraft financing and other debt instruments.

For 2023, the Company expects approximately $8.5 billion of gross capital expenditures (including expenditures for assets acquired through the issuance of debt, finance leases and other financial liabilities).

The Company's estimate for aircraft expenditures reflects its assumptions regarding delayed aircraft deliveries.

See Note 12 to the financial statements included in Part II, Item 8 of this report for additional information on commitments, including aircraft expenditures reflecting contractual delivery dates without adjustment for expected delays.

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.

The following table summarizes our cash flow for the years ended December 31 (in millions):

4 unchanged sentences

Financing activities (3,349) 6,396 12,957 (1,280)

Net increase in cash, cash equivalents and restricted cash $ 6,791 $ 8,874 $ 1,069

See the Statements of Consolidated Cash Flows include in Part II, Item 8 of this report for additional information.

Net increase (decrease) in cash, cash equivalents and restricted cash $ (11,112) $ 6,791 $ 8,874 $ 1,069

See the Statements of Consolidated Cash Flows included in Part II, Item 8 of this report for additional information.

Operating Activities.

Cash flows provided by operating activities for 2021 were higher than 2020 primarily due to improvements in the demand for passenger travel as well as total government grant funding provided under the PSP2 and PSP3 Agreements, discussed below, partially offset by operating losses as a result of the COVID-19 pandemic.

Cash flows provided by operating activities for 2022 were $4.0 billion higher than 2021 primarily due to an approximately $3.4 billion increase in operating income as improvements in the demand for air travel continued and an approximately $0.6 billion increase in various working capital items.

In 2021, United entered into two Payroll Support Program Extension Agreements (collectively, the "PSP2 and PSP3 Agreements") with the U.S.

4 unchanged sentences

Investing Activities.

Capital expenditures were $2.1 billion and $1.7 billion in 2021 and 2020, respectively, mainly related to advance deposits for future aircraft purchases.

Also, maturities and sales of short-term and other investments provided $0.4 billion of liquidity in 2021 as compared to $2.3 billion in 2020.

Cash flows used in investing activities increased $12.2 billion in 2022 as compared to the year-ago period mainly related to an approximately $9.5 billion increase in net purchase and sales of short-term and other investments.

Capital expenditures increased by $2.7 billion in 2022, as compared to 2021, and totaled $4.8 billion attributable to the purchase of aircraft and aircraft spare parts, advance deposits for future aircraft purchases and spend on facility and technology related projects.

Capital expenditures for 2021 were $2.1 billion and were primarily attributable to advance deposits for future aircraft purchases.

Financing Activities.

1 unchanged sentence

Debt, Finance Lease and Other Financing Liability Principal Payments .

During 2021, the Company made payments for debt, finance leases, and other financing liabilities of $5.2 billion.

• repaid in full the $1.4 billion aggregate principal amount outstanding under the term loan facility included in the Amended and Restated Credit and Guaranty Agreement, dated as of March 29, 2017 (the "2017 Credit Agreement");

• repaid in full the $1.0 billion aggregate principal amount outstanding under the revolving credit facility included in the 2017 Credit Agreement;

• repaid in full the $520 million aggregate principal amount outstanding under the Loan and Guarantee Agreement, dated as of September 28, 2020, among United, UAL, Treasury and the Bank of New York Mellon, as administrative agent, as amended, which was entered into pursuant to the loan program established pursuant to the CARES Act;

• made $1.9 billion of aircraft-related debt principal payments.

During 2022, the Company made $4.0 billion of principal payments on debt, finance leases, and other financing liabilities.

Debt Issuances.

During 2021, United received and recorded:

• $5.0 billion from the 2021 Term Loan Facility;

• $4.0 billion from two series of notes, consisting of $2.0 billion in aggregate principal amount of 4.375% senior secured notes due 2026 and $2.0 billion in aggregate principal amount of 4.625% senior secured notes due 2029;

• $1.7 billion from the PSP2 and PSP3 Notes;

• $600 million from the enhanced equipment trust certificates ("EETC") pass-through trusts established in February 2021.

During 2022, United borrowed $0.8 billion for aircraft financings.

See Note 9 to the financial statements included in Part II, Item 8 of this report for additional information.

Share Issuances.

During 2021, the Company raised approximately $532 million in net cash proceeds from the issuance and sale of UAL common stock through "at the market offerings" under equity distribution agreements entered into in June 2020 and March 2021.

Significant financing events in 2021 were as follows:

Debt, Finance Lease and Other Financing Liability Principal Payments.

During 2021, the Company made $5.2 billion in principal payments for debt, finance leases, and other financing liabilities.

• repaid in full $1.4 billion aggregate principal amount outstanding under a 2017 term loan facility;

• repaid in full $1.0 billion aggregate principal amount outstanding under a 2017 revolving credit facility;

• repaid in full $520 million aggregate principal amount outstanding under a CARES Act loan;

• made $1.9 billion of aircraft-related debt principal payments.

Debt Issuances.

During 2020, United received and recorded $16.8 billion from various credit agreements, including the MileagePlus Financing (as defined in Part I, Item 1A.

Risk Factors, of this report), loans provided under the CARES Act and EETC pass-through trusts established in September 2019 and October 2020.

In 2020, United had recorded approximately $159 million of debt to finance the construction of an aircraft maintenance and ground service equipment complex at Los Angeles International Airport.

Debt and Finance Lease Principal Payments.

During 2020, the Company made debt and finance lease principal payments of $4.4 billion.

During 2021, United received and recorded:

• $5.0 billion from a new term loan;

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

• $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.

Share Issuances.

During 2020, the Company raised approximately $2.1 billion in cash proceeds from the issuance and sale of UAL common stock through "at the market offerings" under an equity distribution agreement entered into in June 2020.

Share Repurchases .

In 2020, UAL's Board of Directors terminated the share repurchase program.

In 2020, prior to the termination of the program, UAL repurchased approximately 4 million shares of UAL common stock in open market transactions for $0.3 billion.

For additional information regarding these Liquidity and Capital Resource matters, see Notes 2, 9, 10 and 12 to the financial statements included in Part II, Item 8 of this report.

24 unchanged sentences

The table below provides a summary of the Company's current and long-term material cash requirements as of December 31, 2022 (in billions):

2022 2023 2024 2025 2026 After 2026 Total

2023 2024 2025 2026 2027 After 2027

Long-term debt (a) $ 2.9 $ 3.9 $ 3.4 $ 5.2 $ 2.4 $ 13.7

3 unchanged sentences

Leases not yet commenced (d) 0.2 0.3 0.4 0.4 0.4 1.5

Sale-leasebacks 0.9 0.1 0.1 0.1 0.1 0.5 1.8

Other financial liabilities 0.1 0.1 0.1 0.1 0.4 0.4

Regional CPAs (e) 2.2 1.9 1.5 1.3 0.9 3.2

5 unchanged sentences

Cash requirements do not include the debt discount, premiums and debt issuance costs.

(b) Future interest payments on variable rate debt were determined using the rates as of December 31, 2021.

(b) Future interest payments on variable rate debt were computed using the rates as of December 31, 2022.

See Note 10 to the financial statements included in Part II, Item 8 of this report for information on variable rate and short-term operating leases.

26 unchanged sentences

In general, each consortium lease agreement requires the consortium to make lease payments in amounts sufficient to pay the maturing principal and interest payments on the bonds.

As of December 31, 2021, approximately $1.8 billion principal amount of such bonds were secured by significant fuel facility leases in which United participates, as to which United and each of the signatory airlines has provided indirect guarantees of the debt.

As of December 31, 2022, approximately $2.5 billion principal amount of such bonds was secured by significant fuel facility leases in which United participates, as to which United and each of the signatory airlines has provided indirect guarantees of the debt.

As of December 31, 2022, the Company's contingent exposure was approximately $400 million principal amount of such bonds based on its recent consortia participation.

3 unchanged sentences

Increased Cost Provisions.

In United's financing transactions that include loans in which United is the borrower, United typically agrees to reimburse lenders for any reduced returns with respect to the loans due to any change in capital requirements and, in the case of loans with respect to which the interest rate is based on 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.

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 LIBOR or SOFR, 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 December 31, 2022, the Company had $12.9 billion of floating rate debt with remaining terms of up to 12 years that are subject to these increased cost provisions.

20 unchanged sentences

Advance ticket sales represent the Company's liability to provide air transportation in the future.

All tickets sold at any given point of time have travel dates extending up to 12 months.

All tickets sold at any given point in time have travel dates through the next 12 months.

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 two years from the date of issuance;

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

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

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

As of December 31, 2021, the Company's Advance ticket sales liability included $3.2 billion related to ETCs and FFCs.

The Company estimates the value of Advance ticket 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 COVID-19, a significant portion of the ETCs and FFCs may expire unused in future periods and get recognized as revenue from breakage.

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

The Company's Advance ticket sales liability also includes credits issued to customers for future flights ("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 estimates the value of Advance ticket sales that will expire unused ("breakage") and recognizes revenue in proportion to the usage of the related tickets.

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

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

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

3 unchanged sentences

Members can also earn miles by purchasing goods and services from our network of non-airline partners.

We have contracts to sell miles to these partners with the terms extending from one to eight years.

We have contracts to sell miles to these partners with the terms extending from one to seven years.

These partners include domestic and international credit card issuers, retail merchants, hotels, car rental companies and our participating airline partners.

1 unchanged sentence

Co-Brand Agreement .

United has a contract (the "Co-Brand Agreement") to sell MileagePlus miles to its co-branded credit card partner JPMorgan Chase Bank USA, N.A.

United has a contract (the "Co-Brand Agreement") to sell MileagePlus miles to its co-branded credit card partner Chase.

Chase awards miles to MileagePlus members based on their credit card activity.

14 unchanged sentences

Accordingly, we determine our best estimate of selling price by considering multiple inputs and methods including, but not limited to, discounted cash flows, brand value, volume discounts, published selling prices, number of miles awarded and number of miles redeemed.

The Company estimated the selling prices and volumes over the term of the Co-Brand Agreement in order to determine the allocation of proceeds to each of the components to be delivered.

The Company estimated the selling prices and volumes over the term of the Co-Brand Agreement, at the inception of the contract, in order to determine the allocation of proceeds to each of the components to be delivered.

We also evaluate volumes on an annual basis, which may result in a change in the allocation of the estimated consideration from the Co-Brand Agreement on a prospective basis.

8 unchanged sentences

Actual results will be influenced by the competitive environment, fuel costs and other expenses, and potentially other unforeseen events or circumstances that could have a material impact on future results.

In light of the ongoing impact of the COVID-19 pandemic on both the U.S.

and global economies, the significant, sustained impact on the demand for travel and government policies that restrict air travel, the exact timing of a complete recovery from the COVID-19 pandemic, and the speed at which such recovery could occur, continues to remain uncertain.

We recorded impairment charges of $130 million related to our China route indefinite-lived intangible assets during 2020 as a result of the impact of COVID-19.

Adverse changes to our forecasted results caused by COVID-19 or the other factors discussed above could result in additional impairment charges in the future.

In 2022, the Company evaluated its intangible assets for possible impairments.

For the Company's China route authority, the Company performed a quantitative assessment which involved determining the fair value of the asset and comparing that amount to the asset's carrying value.

For all other intangible assets, the Company performed a qualitative assessment of whether it was more likely than not that an impairment had occurred.

To determine fair value, the Company used discounted cash flow methods appropriate for each asset.

Key inputs into the models included forecasted capacity, revenues, fuel costs, other operating costs and an overall discount rate.

The assumptions used for future projections include that demand will continue to recover.

These assumptions are inherently uncertain as they relate to future events and circumstances.

See Notes 1 and 13 to the financial statements included in Part II, Item 8 of this report for additional information.

4 unchanged sentences

Although the Company incurred losses in 2021 and 2020, management determined that these results were not indicative of future results due to the impact of the COVID-19 pandemic on its operations.

The Company concluded that the positive evidence outweighs the negative evidence, primarily driven by approval and distribution of COVID-19 vaccines as well as increased confidence with the timing of the recovery.

The Company has $7.5 billion of deferred tax assets,

of which $2.1 billion (tax effected) are attributable to federal net operating losses ("NOLs") at December 31, 2021.

The majority of the NOLs do not expire and the Company expects to realize the benefits of the NOLs through the reversal of certain existing deferred tax liabilities of $6.2 billion and the remaining $1.3 billion (the income tax equivalent to approximately two years of average pre-COVID-19 pre-tax income) through projected future taxable income.

The Company has $7.5 billion of deferred tax assets, of which $2.8 billion (tax effected) are attributable to federal net operating

losses ("NOLs") at December 31, 2022.

The majority of the NOLs do not expire and the Company expects to realize the benefits of the NOLs and other deferred tax assets through the reversal of certain existing deferred tax liabilities of $6.7 billion and the remaining $0.8 billion through projected future taxable income.

Assumptions about our future taxable income are consistent with the plans and estimates used to manage our business.

Therefore, we have not recorded a valuation allowance on our deferred tax assets other than the capital loss carryforwards and certain state attributes that have short expiration periods.

While the Company expects to generate sufficient future income to fully utilize its deferred tax assets (including NOLs), the Company may have to record a valuation allowance, which could be material, against deferred tax assets if negative evidence such as prolonged losses or reduced forecasted income outweigh positive evidence.

While the Company expects to generate sufficient future income to fully utilize its deferred tax assets (including NOLs), the Company may have to record a valuation allowance, which could be material, against deferred tax assets if negative evidence such as reduced forecasted income outweigh positive evidence.

Recording a valuation allowance against our NOLs would not impact our ability to use them to offset cash taxes payable.

8 unchanged sentences

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

The Company has provided CASM-ex, a non-GAAP financial measure, which is 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.

The Company has provided CASM-ex, a non-GAAP financial measure, which is not calculated or presented in accordance with GAAP, as supplemental information and in addition to the financial measure that is calculated and presented in accordance with GAAP.

Management believes that adjusting 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, provides more meaningful disclosure because these expenses are not directly related to UAL's core business.

Management also believes that excluding fuel costs 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 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.

Because this non-GAAP financial measure is not calculated in accordance with GAAP, it should not be considered superior to, and is not intended to be considered in isolation or as a substitute for, the related GAAP financial measure and may not be the same as or comparable to any similarly titled measure presented by other companies due to possible differences in method and in the items being adjusted.

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 the Company's operating cost performance and provides a more meaningful comparison of our core operating costs to the airline industry.

Because this non-GAAP financial measure is not calculated in accordance with GAAP, it should not be considered superior to, and is not intended to be considered in isolation or as a substitute for, the related GAAP financial measure and may not be the same as or comparable to any similarly titled measures presented by other companies due to possible differences in method 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.

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.

For the same reasons, the Company is unable to address the probable significance of the unavailable information.

Forward-looking measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures.

See "Cautionary Statement Regarding Forward-Looking Statements" below.

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

Below is a reconciliation of the historical non-GAAP financial measure provided in this report (CASM-ex) to the most directly comparable GAAP financial measure (CASM) for the years ended December 31:

(in cents) 2022 2021 2020 2019

CASM (GAAP) 17.19 14.36 17.68 13.67

Special charges (credits) 0.09

Third-party business expenses 0.06

Fuel expense 5.29 3.22 2.57 3.14

Profit sharing 0.06 — — 0.17

Third-party business expenses 0.06 0.06 0.11 0.06

Special charges (credits) (a) 0.05 (1.88) (2.13) 0.09

CASM-ex (Non-GAAP) 11.73 12.96 17.13 10.21

(a) See Note 13 to the financial statements included in Part II, Item 8 of this report for additional information on special charges for 2020 to 2022.

Special charges for 2019 consist primarily of $171 million of impairment of assets, $16 million of severance and benefits and $59 million of losses on sale of assets and other special charges.

Cautionary Statement Regarding Forward-Looking Statements

8 unchanged sentences

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;

execution risks associated with our strategic operating plan;

changes in our network strategy or other factors outside our control resulting in less economic aircraft orders, costs related to modification or termination of aircraft orders or entry into less favorable aircraft orders, as well as any inability to accept or integrate new aircraft into our fleet as planned;

any failure to effectively manage, and receive anticipated benefits and returns from, acquisitions, divestitures, investments, joint ventures and other portfolio actions;

any failure to effectively manage, and receive anticipated benefits and returns from, acquisitions, divestitures, investments, joint ventures and other portfolio actions, as well as related costs or other issues;

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

adverse publicity, harm to our brand, reduced travel demand, potential tort liability and voluntary or mandatory operational restrictions as a result of an accident, catastrophe or incident involving us, our regional carriers, our codeshare partners or another airline;

10 unchanged sentences

increased use of social media platforms by us, our employees and others;

the impacts of union disputes, employee strikes or slowdowns, and other labor-related disruptions on our operations;

the impacts of union disputes, employee strikes or slowdowns, and other labor-related disruptions or compliance costs on our operations or financial performance;

any failure to attract, train or retain skilled personnel, including our senior management team or other key employees;

the monetary and operational costs of compliance with extensive government regulation of the airline industry;

current or future litigation and regulatory actions, or failure to comply with the terms of any settlement, order or arrangement relating to these

current or future litigation and regulatory actions, or failure to comply with the terms of any settlement, order or arrangement relating to these actions;

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;

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;

the impacts of our significant amount of financial leverage from fixed obligations 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;

8 unchanged sentences

The foregoing list sets forth many, but not all, of the factors that could impact our ability to achieve results described in any forward-looking statements.

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 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.

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.

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.

2 unchanged sentences

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-K

Item 7. Management’s Discussion and Analysis