What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-02-16 compared with 2022-02-18 · 249 added, 331 removed, 1262 unchanged (31% of the section changed)

30 unchanged sentences

As a result of the subjectivity of the assumptions, adverse changes to management's estimates could reduce the underlying cash flows used to estimate fair value and trigger impairment charges.

How we addressed the matter in our audit

We Addressed the Matter in Our Audit

We tested the Company's design and operating effectiveness of internal controls that address the risk of material misstatement relating to the estimate of fair value of the China intangible assets used in the annual impairment test.

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Auditing management's assessment of the realizability of its deferred tax assets involved complex auditor judgment because management's judgement involves significant assumptions about the ability to generate future taxable income that may be affected by future market or economic conditions.

How we addressed the matter in our audit

We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls that address the risks of material misstatement relating to the realizability of deferred tax assets.

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Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

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As a result of the subjectivity of the assumptions, adverse changes to management's estimates could reduce the underlying cash flows used to estimate fair value and trigger impairment charges.

How we addressed the matter in our audit We tested the Company's design and operating effectiveness of internal controls that address the risk of material misstatement relating to the estimate of fair value of the China intangible assets used in the annual impairment test.

We Addressed the Matter in Our Audit We tested the Company's design and operating effectiveness of internal controls that address the risk of material misstatement relating to the estimate of fair value of the China intangible assets used in the annual impairment test.

This included testing controls over management's review of the significant assumptions used in the discounted cash flow methodology, including revenue growth rate, operating margin and the discount rate.

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How we addressed the matter in our audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls that address the risks of material misstatement relating to the realizability of deferred tax assets.

We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls that address the risks of material misstatement relating to the realizability of deferred tax assets.

This included controls over management's scheduling of the future reversal of existing taxable temporary differences (deferred tax liabilities) and projections of future taxable income.

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Operating expense:

Salaries and related costs 9,566 9,522 12,071

Aircraft fuel 13,113 5,755 3,153

Depreciation and amortization 2,485 2,488 2,288

Salaries and related costs 11,466 9,566 9,522

Landing fees and other rent 2,576 2,416 2,127

Depreciation and amortization 2,456 2,485 2,488

Regional capacity purchase 2,299 2,147 2,039

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Interest expense ( 1,778 ) ( 1,657 ) ( 1,063 )

Interest capitalized 80 71 85

Interest income 298 36 50

Interest capitalized 105 80 71

Unrealized gains (losses) on investments, net 20 ( 34 ) ( 194 )

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Deferred income taxes 91 659

Notes receivable, less allowance for credit losses (2021—$ 622 ;

Investments in affiliates and other, net 1,344 1,000

Investments in affiliates and other, less allowance for credit losses (2022—$ 21 ;

Total other assets 8,963 9,622

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Retained earnings 1,265 625

Accumulated other comprehensive loss ( 942 ) ( 1,139 )

Accumulated other comprehensive income (loss) 175 ( 942 )

Total stockholders' equity 6,896 5,029

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Unrealized (gains) losses on investments ( 20 ) 34 194

Amortization of debt discount and debt issuance costs 156 171 94

Other operating activities 218 222 226

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Increase (decrease) in accounts payable 796 985 ( 1,079 )

Decrease in other liabilities ( 403 ) ( 26 ) ( 302 )

Increase (decrease) in other liabilities 110 ( 403 ) ( 26 )

Net cash provided by (used in) operating activities 6,066 2,067 ( 4,133 )

4 unchanged sentences

Proceeds from sale of property and equipment 207 107 6

Loans made to others — — ( 174 )

Other, net ( 69 ) ( 1 ) 4

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Financing Activities:

Repurchases of common stock — ( 353 ) ( 1,645 )

Proceeds from issuance of debt, net of discounts and fees 736 11,096 15,676

Proceeds from equity issuance 532 2,103 —

Payments of long-term debt, finance leases and other financing liabilities ( 4,011 ) ( 5,205 ) ( 4,449 )

Repurchases of common stock — — ( 353 )

Proceeds from equity issuance — 532 2,103

Other, net ( 74 ) ( 27 ) ( 20 )

Net cash provided by (used in) financing activities ( 3,349 ) 6,396 12,957

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

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

Cash, cash equivalents and restricted cash at beginning of year 18,533 11,742 2,868

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Right-of-use assets acquired through operating leases 137 771 198

Equity interest in Avianca Group International Limited ("AVG") received in consideration for a loan 164 — —

Notes receivable and warrants received for entering into aircraft and other ancillary business agreements 131 — —

Investment interests received in exchange for goods and services 103 295 —

Lease modifications and lease conversions ( 84 ) 123 527

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Balance at December 31, 2019 251.2 $ 3 $ 6,129 $ ( 3,599 ) $ 9,716 $ ( 718 ) $ 11,531

Net income — — — — 3,009 — 3,009

Other comprehensive income — — — — — 85 85

Stock-settled share-based compensation — — 66 — — — 66

Repurchases of common stock ( 19.2 ) — — ( 1,641 ) — — ( 1,641 )

Stock issued for share-based awards, net of shares withheld for tax 0.5 — ( 57 ) 35 ( 8 ) — ( 30 )

Balance at December 31, 2019 251.2 3 6,129 ( 3,599 ) 9,716 ( 718 ) 11,531

Net loss — — — — ( 7,069 ) — ( 7,069 )

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

Net income — — — — 737 — 737

Other comprehensive income — — — — — 1,117 1,117

Stock-settled share-based compensation — — 86 — — — 86

Stock issued for share-based awards, net of shares withheld for tax 3.1 — ( 256 ) 280 ( 97 ) — ( 73 )

Balance at December 31, 2022 326.9 $ 4 $ 8,986 $ ( 3,534 ) $ 1,265 $ 175 $ 6,896

(a) Transition adjustment due to the adoption of Accounting Standards Update No.

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Operating expense:

Salaries and related costs 9,566 9,522 12,071

Aircraft fuel 13,113 5,755 3,153

Depreciation and amortization 2,485 2,488 2,288

Salaries and related costs 11,466 9,566 9,522

Landing fees and other rent 2,576 2,416 2,127

Depreciation and amortization 2,456 2,485 2,488

Regional capacity purchase 2,299 2,147 2,039

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Interest expense ( 1,778 ) ( 1,657 ) ( 1,063 )

Interest capitalized 80 71 85

Interest income 298 36 50

Interest capitalized 105 80 71

Unrealized gains (losses) on investments, net 20 ( 34 ) ( 194 )

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Deferred income taxes 62 631

Notes receivable, less allowance for credit losses (2021—$ 622 ;

Investments in affiliates and other, net 1,344 1,000

Investments in affiliates and other, less allowance for credit losses (2022—$ 21 ;

Total other assets 8,934 9,594

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Retained earnings 3,716 2,977

Accumulated other comprehensive loss ( 942 ) ( 1,139 )

Accumulated other comprehensive income (loss) 175 ( 942 )

Payable to parent 2,571 2,646

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Unrealized (gains) losses on investments ( 20 ) 34 194

Amortization of debt discount and debt issuance costs 156 171 94

Other operating activities 218 222 226

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Increase (decrease) in accounts payable 796 985 ( 1,079 )

Decrease in other liabilities ( 403 ) ( 26 ) ( 302 )

Increase (decrease) in other liabilities 110 ( 403 ) ( 26 )

Net cash provided by (used in) operating activities 5,992 2,040 ( 4,145 )

4 unchanged sentences

Proceeds from sale of property and equipment 207 107 6

Loans made to others — — ( 174 )

Other, net ( 69 ) ( 1 ) 4

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Net cash provided by (used in) financing activities ( 3,275 ) 6,423 12,975

Net increase in cash, cash equivalents and restricted cash 6,791 8,880 1,069

Net increase (decrease) in cash, cash equivalents and restricted cash ( 11,112 ) 6,791 8,880

Cash, cash equivalents and restricted cash at beginning of year 18,533 11,742 2,862

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Right-of-use assets acquired through operating leases 137 771 198

Equity interest in AVG received in consideration for a loan

Notes receivable and warrants received for entering into aircraft and other ancillary business agreements 131 — —

Investment interests received in exchange for goods and services 103 295 —

Lease modifications and lease conversions ( 84 ) 123 527

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Balance at December 31, 2019 $ — $ 12,353 $ ( 718 ) $ ( 143 ) $ 11,492

Net income — 3,011 — — 3,011

Other comprehensive income — — 85 — 85

Dividend to UAL ( 664 ) ( 977 ) — — ( 1,641 )

Stock-settled share-based compensation 66 — — — 66

Other — — — ( 33 ) ( 33 )

Balance at December 31, 2019 — 12,353 ( 718 ) ( 143 ) 11,492

Net loss — ( 7,067 ) — — ( 7,067 )

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Net loss — ( 1,962 ) — — ( 1,962 )

Other comprehensive loss — — 197 — 197

Other comprehensive income — — 197 — 197

Stock-settled share-based compensation 232 — — — 232

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

Net income — 739 — — 739

Other comprehensive income — — 1,117 — 1,117

Stock-settled share-based compensation 86 — — — 86

Other — — — ( 75 ) ( 75 )

Balance at December 31, 2022 $ 403 $ 3,716 $ 175 $ 2,571 $ 6,865

(a) Transition adjustment due to the adoption of Accounting Standards Update No.

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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").

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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.

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The Company further disaggregates revenue by geographic regions.

Operating segments are defined as components of an enterprise with separate financial information, which are evaluated regularly by the chief operating decision maker and are used in resource allocation and performance assessments.

The Company deploys its aircraft across its route network through a single route scheduling system to maximize its value.

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The Company's chief operating decision maker makes resource allocation decisions to maximize the Company's consolidated financial results.

Managing the Company as one segment allows management the opportunity to maximize the value of its route network.

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and Canada) $ 28,474 $ 16,845 $ 9,911

Atlantic 3,414 2,226 7,387

Atlantic (including Africa, India and Middle East destinations) 9,072 3,414 2,226

Pacific 2,927 1,507 1,706

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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.

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The total consideration from each ticket sale is then allocated to each of these elements, individually, on a pro-rata basis.

At the time of travel, the Company records the portion allocated to the miles to Frequent flyer deferred revenue on the Company's consolidated balance sheet and subsequently recognizes it into revenue when miles are redeemed for air travel and non-air travel awards.

At the time of travel, the Company records the

portion allocated to the miles to Frequent flyer deferred revenue on the Company's consolidated balance sheet and subsequently recognizes it into revenue when miles are redeemed for air travel and non-air travel awards.

Estimated Selling Price of Miles .

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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.

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Miles in MileagePlus members' accounts are combined into one homogeneous pool and are thus not separately identifiable, for award redemption purposes, between miles earned in the current period and those in their beginning balance.

Of the miles expected to be redeemed, the majority of these miles have historically been redeemed within two years .

Of the miles expected to be redeemed, the Company expects the majority of these miles to be redeemed within two years .

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

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Total miles awarded 2,558 1,545

Travel miles redeemed (Passenger revenue) ( 1,171 ) ( 568 )

Non-travel miles redeemed (Other operating revenue) ( 67 ) ( 69 )

Travel miles redeemed ( 2,079 ) ( 1,171 )

Non-travel miles redeemed ( 86 ) ( 67 )

Total Frequent flyer deferred revenue - ending balance $ 6,675 $ 6,282

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The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the statements of consolidated cash flows (in millions):

At December 31, At December 31,

At December 31,

2022 2021 2020

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Realized gains and losses on sales of these investments are reflected in Miscellaneous, net in the consolidated statements of operations.

Unrealized gains and losses on available-for-sale securities are reflected as a component of accumulated other comprehensive income (loss).

Unrealized gains and losses on available-for-sale debt securities are reflected as a component of accumulated other comprehensive income (loss).

Equity investments are accounted for under the equity method if we are able to exercise significant influence over an investee.

Equity investments for which we do not have significant influence are recorded at fair value or at cost, if fair value is not readily determinable, with adjustments for observable changes in

price or impairments (referred to as the measurement alternative).

Equity investments for which we do not have significant influence are recorded at fair value or at cost, if fair value is not readily determinable, with adjustments for observable changes in price or impairments (referred to as the measurement alternative).

Changes in fair value are recorded in Unrealized gains (losses) on investments, net in the consolidated statements of operations.

See Note 8 of this report for additional information related to investments.

(g) Accounts Receivable— Accounts receivable primarily consist of amounts due from credit card companies, non-airline partners, and cargo customers.

(g) Securities received in connection with purchase agreements— The Company accounts for the value of securities received from vendors as deferred credits that will generally be recognized as a reduction to the cost of the asset received in future periods.

(h) Accounts Receivable— Accounts receivable primarily consist of amounts due from credit card companies, non-airline partners, and cargo customers.

We provide an allowance for credit losses expected to be incurred.

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Credit loss expense and write-offs related to trade receivables were not material for the years ended December 31, 2022 and 2021.

(h) Aircraft Fuel, Spare Parts and Supplies— The Company accounts for aircraft fuel, spare parts and supplies at average cost and provides an obsolescence allowance for aircraft spare parts with an assumed residual value of 10% of original cost.

(i) Property and Equipment— The Company records additions to owned operating property and equipment at cost when acquired.

(i) Aircraft Fuel, Spare Parts and Supplies— The Company accounts for aircraft fuel, spare parts and supplies at average cost and provides an obsolescence allowance for aircraft spare parts with an assumed residual value of 10% of original cost.

(j) Property and Equipment— The Company records additions to owned operating property and equipment at cost when acquired.

Property under finance leases and the related obligation for future lease payments are recorded at an amount equal to the initial present value of those lease payments.

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Aircraft, spare engines and related rotable parts were assumed to have residual values of approximately 10% of original cost, and other categories of property and equipment were assumed to have no residual value.

(j) Long-Lived Asset Impairments— The Company evaluates the carrying value of long-lived assets subject to amortization whenever events or changes in circumstances indicate that an impairment may exist.

(k) Long-Lived Asset Impairments— The Company evaluates the carrying value of long-lived assets subject to amortization whenever events or changes in circumstances indicate that an impairment may exist.

For purposes of this testing, the Company has generally identified the aircraft fleet type as the lowest level of identifiable cash flows for its mainline fleet and the contract level for its regional fleet under capacity purchase agreements ("CPAs").

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The amount of the charge is the difference between the asset's carrying value and fair market value.

In February 2021, the Company voluntarily and temporarily removed all 52 Boeing 777-200/200ER aircraft powered by Pratt & Whitney 4000 series engines from its schedule due to an engine failure incident with one of its aircraft.

The Company viewed this incident as an indicator of potential impairment.

Accordingly, as required under relevant accounting standards, United performed forecasted cash flow analyses and determined that the carrying value of the Boeing 777-200/200ER fleet is expected to be recoverable from future cash flows expected to be generated by that fleet and, consequently, no impairment was recorded.

The Company recorded impairment charges related to certain of its aircraft, related engines and spare parts of $ 97 million, $ 94 million, and $ 81 million for the years ended December 31, 2021, 2020 and 2019, respectively.

The Company recorded impairment charges related to certain of its aircraft, related engines and spare parts of $ 97 million and $ 94 million for the years ended December 31, 2021 and 2020, respectively.

See Note 13 of this report for additional information related to impairments .

(k) Intangibles— The Company has finite-lived and indefinite-lived intangible assets, including goodwill.

(l) Intangibles— The Company has finite-lived and indefinite-lived intangible assets, including goodwill.

Finite-lived intangible assets are amortized over their estimated useful lives.

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These measurements include the following key assumptions:

(1) forecasted revenues, expenses and cash flows, (2) terminal period revenue growth and cash flows, (3) an estimated weighted average cost of capital, (4) assumed discount rates depending on the asset and (5) a tax rate.

(1) forecasted revenues, expenses and cash flows, (2) terminal period revenue growth and cash flows, (3) an estimated weighted average cost of capital, (4)

assumed discount rates depending on the asset and (5) a tax rate.

These assumptions are consistent with those that hypothetical market participants would use.

1 unchanged sentence

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

For certain of its intangible assets, including the Company's China routes and alliances, the Company performed a quantitative assessment which involved determining the fair value of the asset and comparing that amount to the asset's carrying value.

For 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.

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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 throughout 2022 and beyond.

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.

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Projected amortization expense in 2023, 2024, 2025, 2026 and 2027 is $ 37 million, $ 32 million, $ 28 million, $ 18 million and $ 11 million, respectively.

(l) Labor Costs— The Company records expenses associated with new or amendable labor agreements when the amounts are probable and estimable.

These include costs associated with lump sum cash payments that would be made in conjunction with the ratification of labor agreements.

To the extent these upfront costs are in lieu of future pay

increases, they would be capitalized and amortized over the term of the labor agreements.

(m) Labor Costs— The Company records expenses associated with new or amendable labor agreements when the amounts are probable and estimable.

These could include costs associated with retro-active lump sum cash payments made in conjunction with the ratification of labor agreements.

To the extent these upfront costs are in lieu of future pay increases, they would be capitalized and amortized over the term of the labor agreements.

If not, these amounts would be expensed.

(m) Share-Based Compensation— The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award.

(n) Share-Based Compensation— The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award.

The resulting cost is recognized over the period during which an employee is required to provide service in exchange for the award, usually the vesting period.

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See Note 4 of this report for additional information on UAL's share-based compensation plans.

(n) Maintenance and Repairs— The cost of maintenance and repairs, including the cost of minor replacements, is charged to expense as incurred, except for costs incurred under our power-by-the-hour ("PBTH") engine maintenance agreements.

(o) Maintenance and Repairs— The cost of maintenance and repairs, including the cost of minor replacements, is charged to expense as incurred, except for costs incurred under our power-by-the-hour ("PBTH") engine maintenance agreements.

PBTH contracts transfer certain risk to third-party service providers and fix the amount we pay per flight hour or per cycle to the service provider in exchange for maintenance and repairs under a predefined maintenance program.

Under PBTH agreements, the Company recognizes expense at a level rate per engine hour, unless the level of service effort and the related payments during the period are substantially consistent, in which case the Company recognizes expense based on the amounts paid.

(o) Advertising— Advertising costs, which are included in Other operating expenses, are expensed as incurred.

(p) Advertising— Advertising costs, which are included in Other operating expenses, are expensed as incurred.

Advertising expenses were $ 165 million, $ 99 million and $ 87 million for the years ended December 31, 2022, 2021 and 2020, respectively.

(p) Third-Party Business— The Company has third-party business revenue that includes ground handling, maintenance services, flight academy and frequent flyer award non-travel redemptions.

(q) Third-Party Business— The Company has third-party business activity that includes ground handling, maintenance services, flight academy and frequent flyer award non-travel redemptions.

Third-party business revenue is recorded in Other operating revenue.

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Non-travel mileage redemption expenses are recorded to Other operating revenue.

(q) Uncertain Income Tax Positions— The Company has recorded reserves for income taxes and associated interest that may become payable in future years.

(r) Uncertain Income Tax Positions— The Company has recorded reserves for income taxes and associated interest that may become payable in future years.

Although management believes that its positions taken on income tax matters are reasonable, the Company nevertheless established tax and interest reserves in recognition that various taxing authorities may challenge certain of the positions taken by the Company, potentially resulting in additional liabilities for taxes and interest.

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NOTE 2 - COMMON STOCKHOLDERS' EQUITY AND PREFERRED SECURITIES

On April 24, 2020, UAL's Board of Directors terminated its share repurchase program.

Under the agreements entered into pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), the Company and its business are subject to certain restrictions, including restrictions on the ability to repurchase UAL's equity securities through September 30, 2022.

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

Treasury Department ("Treasury") pursuant to which UAL issued to Treasury warrants to purchase up to approximately 3.5 million shares of UAL common stock (collectively, the "PSP2 and PSP3 Warrants").

The fair value of the PSP2 and PSP3 Warrants was calculated using a Black-Scholes options pricing model, and approximately $ 99 million was recorded within stockholders' equity with an offset to the CARES Act grant credit.

The PSP2 and PSP3 Warrants are exercisable either through net share settlement in cash or in shares of UAL common stock, at UAL's option.

The PSP2 and PSP3 Warrants contain customary anti-dilution provisions and registration rights and are freely transferable.

Pursuant to the terms of the PSP2 and PSP3 Warrants, warrant holders do not have any voting rights.

The Company issued warrants to the U.S.

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

See Note 9 of this report for additional information about the unsecured promissory notes issued by the Company to Treasury under the PSP and related extensions.

As of December 31, 2022 , the Company had the following warrants outstanding:

Warrant Description Number of Shares of UAL Common Stock (in millions) Exercise Price Expiration Dates

PSP1 Warrants (a) 4.8 $ 31.50 4/20/2025 — 9/30/2025

CARES Act Loan Warrants (b) 1.7 31.50 9/28/2025

PSP1 Warrants 4.8 $ 31.50 4/20/2025 — 9/30/2025

CARES Act Warrants 1.7 31.50 9/28/2025

PSP2 Warrants 2.0 43.26 1/15/2026 — 4/29/2026

(a) Warrants issued in fiscal year 2020 in connection with the $ 1.5 billion 10 -year senior unsecured promissory note with Treasury provided under the Payroll Support Program of the CARES Act ("PSP1 Note").

(b) Warrants issued in fiscal year 2020 in connection with the $ 520 million Loan and Guarantee Agreement, dated as of September 28, 2020, among United, UAL, Treasury and the Bank of New York Mellon, as administrative agent, as amended (the "CARES Act Loan"), which was entered into pursuant to the loan program established pursuant to the CARES Act.

In 2020, UAL entered into an underwriting agreement with Morgan Stanley & Co.

LLC and Barclays Capital Inc.

relating to the issuance and sale by UAL of approximately 43 million shares of its common stock at a price to the public of $ 26.50 per share, resulting in total proceeds of approximately $ 1.1 billion.

On June 15, 2020, UAL entered into an equity distribution agreement relating to the issuance and sale from time to time by UAL (the "2020 ATM Offering") of up to 28 million shares of UAL common stock.

During 2020, approximately 21 million shares were sold in the 2020 ATM Offering at an average price of $ 46.70 per share, with net proceeds to the Company totaling approximately $ 989 million.

In 2021, the Company sold the remaining authorized amount of approximately 7 million shares at an average price of $ 42.98 per share, with net proceeds to the Company of approximately $ 282 million.

PSP3 Warrants 1.5 53.92 4/29/2026 — 6/10/2026

As of December 31, 2022, approximately 4.6 million shares of UAL's common stock were reserved for future issuance related to the issuance of equity-based awards under the Company's incentive compensation plans.

As of December 31, 2022, UAL had two shares of junior preferred stock (par value $ 0.01 per share) outstanding.

In addition, UAL is authorized to issue 250 million shares of preferred stock (without par value) under UAL's amended and restated certificate of incorporation.

On March 3, 2021, the Company entered into an equity distribution agreement (the "Distribution Agreement") with several financial institutions (collectively, the "Managers"), relating to the issuance and sale from time to time by UAL (the "2021 ATM Offering"), through the Managers, of up to 37 million shares of UAL common stock (the "2021 ATM Shares").

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Under the terms of the Distribution Agreement, UAL may also sell the 2021 ATM Shares to any Manager, as principal for its own account, at a price agreed upon at the time of sale.

If UAL sells the 2021 ATM Shares to a Manager as principal, UAL will enter into a separate terms agreement with such Manager.

If UAL sells the 2021 ATM Shares to a Manager as principal, UAL will enter into a separate terms agreement with such

During 2021, approximately 4 million shares were sold in the 2021 ATM Offering at an average price of $ 57.50 per share, with net proceeds to the Company totaling approximately $ 250 million.

At December 31, 2021, approximately 6 million shares of UAL's common stock were reserved for future issuance related to the issuance of equity-based awards under the Company's incentive compensation plans.

As of December 31, 2021, UAL had two shares of junior preferred stock (par value $ 0.01 per share) outstanding.

In addition, UAL is authorized to issue 250 million shares of preferred stock (without par value) under UAL's amended and restated certificate of incorporation.

No shares were sold in 2022 under the 2021 ATM Offering.

NOTE 3 - EARNINGS (LOSS) PER SHARE

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Dilutive effect of employee stock awards 2.2 — —

Dilutive effect of stock warrants 1.5 — —

Diluted weighted-average shares outstanding 330.1 321.9 279.4

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Potentially dilutive securities (a)

Stock warrants 0.9 — —

Stock warrants (b) 3.5 0.9 —

Employee stock awards 0.7 0.7 1.0

(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 Treasury pursuant to the payroll support program, including extensions, and the loan program established under the CARES Act.

See Note 2 of this report for additional information about these warrants.

NOTE 4 - SHARE-BASED COMPENSATION PLANS

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stock appreciation rights ("SARs");

restricted stock ("RSAs");

restricted stock;

performance units;

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The share-based compensation expense is recorded in salaries and related costs.

During 2021, UAL granted share-based compensation awards pursuant to both the 2017 Plan and the 2021 Plan.

During 2022, UAL granted share-based compensation awards pursuant to the 2021 Plan.

These share-based compensation awards included approximately 2.4 million RSUs consisting of approximately 2.0 million time-vested RSUs and approximately 0.4 million performance-based RSUs.

A majority of the time-vested RSUs vest equally in 25 % increments every 6 months over a two -year period from the date of grant.

The short-term performance-based RSUs vest upon the achievement of established goals based on financial and customer satisfaction metrics for the performance period January 1, 2021 to December 31, 2021.

The time-vested RSUs vest pro-rata, a majority of which vest on February 28th of each year, over a three-year period from the date of grant.

The performance-based RSUs vest upon continuous employment with the Company through December 31, 2024 and the achievement of certain financial, operational and diversity goals.

RSUs are generally equity awards settled in stock for domestic employees and liability awards settled in cash for international employees.

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Granted 0.1 2.3 31.96

Additional issuance due to achievement of performance metrics — 1.6 58.17

Vested ( 0.2 ) ( 4.8 ) 56.00

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Outstanding at December 31, 2022 0.1 3.3 37.88

The fair value of RSUs and RSAs that vested in 2021, 2020 and 2019 was approximately $ 104 million, $ 87 million and $ 99 million, respectively.

The last vesting of RSAs occurred in 2019 and the Company has not granted RSAs since 2016.

The fair value of RSUs that vested in 2022, 2021 and 2020 was approximately $ 274 million, $ 104 million and $ 87 million, respectively.

Stock Options.

UAL did no t grant any stock option awards during either 2020 or 2021.

In 2019, UAL granted an award of approximately 307,000 premium-priced stock options with an exercise price that was 25 % higher than the closing price of UAL's common stock on the date of grant, representing an exercise price of $ 110.21 .

Expense related to each portion of an option grant is recognized on a straight-line basis over the specific vesting period for those options.

As of December 31, 2021, there were approximately 0.7 million outstanding stock option awards, 0.3 million of which were exercisable, with weighted-average exercise prices of $ 82.12 and $ 59.05 , respectively, weighted-average remaining contractual lives (in years) of 5.3 and 2.9 , respectively, and intrinsic values of zero as all of the strike prices exceeded the closing stock price on that date.

UAL did no t grant any stock option awards during 2022, 2021 or 2020.

As of December 31, 2022, there were approximately 0.7 million outstanding stock option awards, 0.4 million of which were exercisable, with weighted-average exercise prices of $ 82.12 and $ 59.58 , respectively, weighted-average remaining contractual lives of 4.3 years and 2.3 years, respectively, and intrinsic values of zero as all of the strike prices exceeded the closing stock price on that date.

NOTE 5 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ("AOCI")

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Balance at December 31, 2022 $ 626 $ ( 35 ) $ ( 416 ) $ 175

(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.

(a) Includes approximately $ 285 million of deferred income tax expense that will not be recognized in net income until the related pension and 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.

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The income tax provision (benefit) differed from amounts computed at the statutory federal income tax rate and consisted of the following significant components (in millions) :

UAL and United 2021 2020 2019

2022 2021 2020

Income tax provision (benefit) at statutory rate $ 208 $ ( 537 ) $ ( 1,852 )

State income tax provision (benefit), net of federal income tax benefit 13 ( 34 ) ( 110 )

Foreign tax rate differential — — ( 90 )

Global intangible low-taxed income — — 90

Nondeductible employee meals 12 7 5

Nondeductible transportation fringe benefit 10 8 7

Valuation allowance ( 10 ) ( 38 ) 197

Other, net 20 1 —

$ ( 593 ) $ ( 1,753 ) $ 905

Income tax expense (benefit) $ 253 $ ( 593 ) $ ( 1,753 )

Current $ 5 $ ( 10 ) $ ( 12 )

Deferred 248 ( 583 ) ( 1,741 )

$ ( 593 ) $ ( 1,753 ) $ 905

Income tax expense (benefit) $ 253 $ ( 593 ) $ ( 1,753 )

Temporary differences and carryforwards that give rise to deferred tax assets and liabilities at December 31, 2022 and 2021 were as follows (in millions):

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Other financing liabilities 141 327 141 327

Interest expense carryforward 510 — 510 —

Other 576 535 576 535

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In determining their own tax liabilities, United and each of its subsidiaries take into account all tax credits or benefits generated and utilized as separate companies and they are each compensated for the aforementioned tax benefits only if they would be able to use those benefits on a separate company basis.

The Company recorded a deferred tax asset for a temporary interest expense limitation under Internal Revenue Code ("IRC") section 163(j) due to law changes resulting from the CARES Act.

Interest expense disallowed under IRC section 163(j) can be carried forward indefinitely and deducted in future years.

The Company's federal and state NOL and tax credit carryforwards relate to current and prior years' NOLs and credits, which may be used to reduce tax liabilities in future years.

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If not utilized these federal pre-tax NOLs will expire as follows (in billions):

$ 0.5 in 2028, $ 0.4 in 2029, $ 0.2 in 2032 and $ 0.4 in 2033.

$ 0.1 in 2026, $ 0.5 in 2028, $ 0.4 in 2029, $ 0.2 in 2032 and $ 0.4 in 2033.

The remaining $ 11.6 billion of NOLs has no expiration date.

State pre-tax NOLs of $ 3.3 billion ($ 0.2 billion tax effected) expire over a five to twenty year period.

Federal tax credits of $ 40 million will expire over a one -to- eighteen-year period and state tax credits of $ 45 million will expire over a one -to- eleven-year period.

State pre-tax NOLs of $ 3.9 billion ($ 0.2 billion tax effected) expire over a 1 to 20 -year period.

Federal tax credits of $ 44 million will expire over a 1 to 20-year period and state tax credits of $ 45 million will expire over a 1 to 15-year period.

A tax valuation allowance is recognized if it is more likely than not that some portion or all of the deferred tax assets will not be realized.

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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.

One of the Company's largest deferred tax assets was its federal pre-tax NOLs which were $ 13.2 billion ($ 2.8 billion tax effected) at December 31, 2022.

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 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.

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.

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

Management will continue to evaluate future financial performance to determine whether such performance is both sustained and significant enough to provide sufficient evidence to support not recording valuation allowance on these NOLs.

Management will continue to evaluate future financial performance to determine whether such

performance is both sustained and significant enough to provide sufficient evidence to support not recording valuation allowance on these NOLs.

As of December 31, 2022, the Company has recorded $ 175 million of valuation allowance against its capital loss deferred tax assets.

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The Company's federal income tax returns for tax years after 2002 remain subject to examination by the Internal Revenue Service (the "IRS") and state taxing jurisdictions.

The IRS concluded its audit of the 2016 and 2017 tax years with no material adjustments.

NOTE 7 - PENSION AND OTHER POSTRETIREMENT PLANS

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United maintains additional defined benefit pension plans, which cover certain international employees.

The Company did not have any minimum required contributions for 2021;

however, during the third quarter of 2021, the Company made a voluntary contribution of $ 375 million to its U.S.

domestic tax-qualified defined benefit pension plan covering certain U.S.

non-pilot employees.

Other Postretirement Benefits

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Rate to which the cost trend rate is assumed to decline (ultimate trend rate in 2033) 4.50 % 4.50 %

A 50 basis points decrease in the weighted average discount rate would have increased the Company's December 31, 2021 postretirement benefit liability by approximately $ 46 million and increased the estimated 2021 benefits expense by approximately $ 2 million.

The Company used the Society of Actuaries' PRI-2012 Private Retirement Plans Mortality Tables projected generationally using the Society of Actuaries' MP-2021 projection scale.

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Alternatives 15 - 25

A 50 basis points decrease in the expected long-term rate of return on plan assets would have increased estimated 2021 pension expense by approximately $ 20 million.

The table below shows the impacts of a change in certain assumptions on the 2023 net periodic benefit cost and the benefit obligations at December 31, 2022 (in millions):

Pension Benefits Other Postretirement Benefits

Impact on Benefit Obligation at December 31, 2022

100 basis points decrease in the weighted average discount rate

Impact on 2023 Net Periodic Benefit Cost

100 basis points decrease in the weighted average discount rate (a)

100 basis points decrease in the expected long-term rate of return on plan assets

(a) In general, as discount rates increase, the impact of changes in discount rates decreases.

Therefore, these sensitivities cannot be extrapolated for larger increases or decreases in the discount rate.

In addition, benefit cost is affected by other factors including, but not limited to, investment performance, contributions, demographic experience and other assumption changes.

Fair Value Information.

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Other investments.

Other investments consist of primarily cash, as well as insurance contracts.

The reconciliation of United's benefit plan assets measured at fair value using unobservable inputs (Level 3) for the years ended December 31, 2021 and 2020 is as follows (in millions):

Other investments consist of primarily cash equivalents, as well as insurance contracts.

The following table presents reconciliation of United's benefit plan assets measured at fair value using unobservable inputs (Level 3) for the years ended December 31, 2022 and 2021 (in millions):

Balance at beginning of year $ 435 $ 401

Actual return (loss) on plan assets:

Actual income (loss) on plan assets:

Sold during the year 34 2

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Funding requirements for tax-qualified defined benefit pension plans are determined by government regulations.

The Company does not expect any minimum required contributions for 2022.

The Company expects to make approximately $ 124 million in contributions to United's postretirement plans in 2022.

The estimated future benefit payments, net of expected participant contributions, in United's pension plans and other postretirement benefit plans as of December 31, 2021 are as follows (in millions):

The Company does not expect any minimum required contributions for 2023 for its tax-qualified defined benefit pension plans.

The Company expects to make approximately $ 113 million in contributions to its other postretirement benefit plans in 2023.

The estimated future benefit payments, net of expected participant contributions, in United's pension plans and other postretirement benefit plans for the next ten years, as of December 31, 2022, are as follows (in millions):

Pension Other Postretirement

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United's participation in the IAM National Pension Plan ("IAM Plan") for the annual period ended December 31, 2022 is outlined in the table below.

In addition to the additional required contributions described in table below, contributions in 2021 were affected by COVID-19 impacts on United's operations and consequently employee hours paid.

The risks of participating in these multi-employer plans are different from single-employer plans, as United may be subject to additional risks that others do not meet their obligations, which in certain circumstances could revert to United.

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profit sharing plan for management and administrative employees.

The Company recorded profit sharing and related payroll tax expense of $ 133 million in 2022.

As a result of the pre-tax losses in 2021 and 2020, no profit sharing was recorded.

However, the Company recorded profit sharing and related payroll tax expense of $ 491 million in 2019.

Profit sharing expense is recorded as a component of Salaries and related costs in the Company's statements of consolidated operations.

NOTE 8 - NOTES RECEIVABLE

BRW Term Loan.

In November 2018, United, as lender, entered into a Term Loan Agreement (the "BRW Term Loan Agreement") with, among others, BRW Aviation Holding LLC and BRW Aviation LLC ("BRW"), as guarantor and borrower, respectively.

BRW Aviation Holding LLC and BRW are affiliates of Synergy Aerospace Corporation ("Synergy"), and BRW was the majority shareholder of Avianca Holdings S.A.

Pursuant to the BRW Term Loan Agreement, United provided to BRW a $ 456 million term loan (the "BRW Term Loan"), secured by a pledge of BRW's equity, as well as BRW's 516 million common shares of AVH (which were eligible to be converted into the same number of preferred shares, which could have been deposited with the depositary for AVH's American Depositary Receipts ("ADRs"), the class of AVH securities that traded on the New York Stock Exchange (the "NYSE"), in exchange for 64.5 million ADRs) (such shares and equity, collectively, the "BRW Loan Collateral").

AVH and certain of its affiliates filed voluntary reorganization proceedings under Chapter 11 of the United States Bankruptcy Code in the U.S.

Bankruptcy Court for the Southern District of New York on May 10, 2020 (the "AVH Reorganization Proceedings").

AVH successfully completed its financial restructuring process and emerged from Chapter 11 on December 1, 2021 as AVG.

The common shares of AVH are in the process of being cancelled and extinguished and holders, including BRW, were not entitled to any recovery upon AVH's exit from bankruptcy.

BRW is not a shareholder in the emerged entity.

See Note 9 of this report for additional information on the Company's investment in AVG.

In 2020, United recorded a full credit loss allowance against the $ 515 million carrying value of the BRW Term Loan and related receivables.

United recorded the allowance based on United's assessment of AVH's financial uncertainty due to its high level of leverage and the fact that the airline had ceased operations due to the COVID-19 pandemic.

The credit loss allowance was recorded as part of Nonoperating income (expense):

Miscellaneous, net on the Company's statements of consolidated operations.

The Company received a note receivable (the "Boom Note") from Boom Technology, Inc.

("Boom") related to a commercial agreement to add supersonic aircraft to its global fleet as well as a cooperative sustainability initiative.

As of December 31, 2021, the Boom Note had a carrying value of $ 44 million and was recorded in Investments in affiliates and other, less allowance for credit losses on the Company's consolidated balance sheet.

The initial value of the Boom Note was recorded as a deferred credit that will either be recognized into income or as a reduction to the cost of the aircraft received in future periods.

The Company has $ 32 million of other notes receivable, net of allowance for credit losses, the majority of which is from certain of its regional carriers.

NOTE 9 - INVESTMENTS AND FAIR VALUE MEASUREMENTS

NOTE 8 - FAIR VALUE MEASUREMENTS, INVESTMENTS AND NOTES RECEIVABLE

Fair Value Information.

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Short-term investments:

Corporate debt 95 — 95 — 330 — 330 —

Asset-backed securities 26 — 26 — 51 — 51 —

government and agency notes 8,914 — 8,914 — 2 — 2 —

Asset-backed securities 325 — 325 — 26 — 26 —

Corporate debt 9 — 9 — 95 — 95 —

Long-term investments:

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Investments presented in the table above have the same fair value as their carrying value.

Short-term investments — T he short-term investments ("STIs") shown in the table above are classified as available-for-sale.

The STIs had maturities of less than two years as of December 31, 2021.

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.

The Company received equity securities in exchange for assisting Archer in the development of battery-powered, short haul aircraft.

The Company will account for equity securities it receives from Archer as a deferred credit that will either be recognized into income or as a reduction to the cost of the aircraft received in future periods.

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

Long Term Investments:

Equity securities — Represents equity and equity-linked securities (such as vested warrants) in Azul Linhas Aéreas Brasileiras S.A., Clear Secure, Inc., Archer Aviation Inc.

and Eve Holding, Inc.

Other fair value information - The table below presents the carrying values and estimated fair values of financial instruments not presented in the tables above as of December 31 (in millions).

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Restricted cash (current and non-current) The carrying amounts of these assets approximate fair value.

Short-term investments and

Equity securities Fair value is based on (a) the trading prices of the investment or similar

instruments, (b) an income approach, which uses valuation techniques to convert future amounts into a single present amount based on current market expectations about those future amounts when observable trading prices are not available, or (c) broker quotes obtained by third-party valuation services.

Short-term and Long-term investments Fair value is based on (a) the trading prices of the investment or similar

instruments or (b) broker quotes obtained by third-party valuation services.

Long-term debt Fair values were based on either market prices or the discounted amount of future cash flows using our current incremental rate of borrowing for similar liabilities or assets.

Investments in Regional Carriers.

United holds investments in several regional carriers that fly or used to fly for the

Company as United Express under its CPAs.

United holds investments in three regional carriers that fly for the Company as United Express under its CPAs.

The combined carrying value of the investments was approximately $ 188 million as of December 31, 2022.

United accounts for each investment using the equity method.

Each investment and United's ownership stake are listed below.

• Champlain Enterprises, LLC ("Champlain").

United owns a 40 % minority ownership stake in Champlain.

does business as CommutAir.

CommutAir currently operates 75 regional aircraft under a CPA that has a term through 2026.

• CommuteAir LLC.

United owns a 40 % minority ownership stake in CommuteAir LLC, which does business as CommuteAir.

CommuteAir currently operates 63 regional aircraft under a CPA that has a term through 2026.

We account for this investment using the equity method.

• Republic Airways Holdings Inc.

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("Republic").

Republic currently operates 66

regional aircraft under CPAs that have terms through 2036.

• ManaAir, LLC ("ManaAir").

United holds a 49.9 % minority ownership stake in ManaAir.

ManaAir is the parent

company of ExpressJet Airlines LLC ("ExpressJet").

The Company terminated its CPA with ExpressJet.

flew its last commercial flight on behalf of United, on September 30, 2020.

Republic currently operates 66 regional aircraft under CPAs that have terms through 2036.

We account for this investment using the equity method.

• Mesa Air Group, Inc.

("Mesa Air Group").

In January 2023, United obtained a 10 % minority interest in Mesa Air Group, the parent company of Mesa Airlines, Inc.

Mesa currently operates 63 regional aircraft, with the opportunity to operate up to 80 regional aircraft, under a CPA that has a term through 2032.

Other Investments.

United holds other equity investments in companies with emerging technologies and sustainable solutions, such as Fulcrum BioEnergy, Inc., Boom, Alder Fuels LLC, Heart Aerospace Incorporated and ZeroAvia, Inc., which do not have readily determinable fair values.

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

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

None of these investments have readily determinable fair values.

We account for these investments at cost less impairment, adjusted for observable price changes in orderly transactions for an identical or similar investment of the same issuer.

As of December 31, 2022, the carrying value of these investments was $ 434 million.

AVG Investment .

In consideration for the Company's agreement to convert its portion of the debtor-in-possession term loan under the terms of that certain Equity Conversion and Commitment Agreement dated September 1, 2020 (as amended from time to time) as part of the AVH Reorganization Proceedings, in December 2021 the Company received warrants to purchase equity in the reorganized AVG for a de minimus amount.

The Company subsequently exercised the warrants in full and on December 29, 2021 received common stock representing 16.4 % of AVG's outstanding equity, the carrying value of which was $ 164 million as of December 31, 2021.

We account for this investment at cost less impairment, adjusted for observable price changes in orderly transactions for an identical or similar investment of the same issuer.

Notes Receivable.

The Company has $ 101 million of notes receivable, net of allowance for credit losses, the majority of which is from certain of its regional carriers.

The loans are recorded in Investments in affiliates and other, less allowance for credit losses on the Company's consolidated balance sheet.

NOTE 9 - DEBT

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2027 6.50 % 3,420 3,800

MileagePlus Term Loan Facility (a)

MileagePlus Term Loan Faci lity (b)

2027 10.00 % 2,700 3,000

2026 and 2029 Notes 2026 — 2029 4.38 % — 4.63 % 4,000 4,000

2021 Term Loans (a) 2028 4.50 % 4,963 —

Revolving Credit Facility

CARES Act Loan — 520

Term Loan Facility — 1,444

Notes (b) 2022 — 2025 4.25 % — 5.00 % 1,041 1,050

2021 Term Loan s (b)

2028 8.11 % 4,913 4,963

Notes 2024 — 2025 4.88 % — 5.00 % 596 1,041

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Long-term debt, net $ 28,283 $ 30,361

(a) Financing includes variable rate debt based on LIBOR (or another index rate), generally subject to a floor, plus a specified margin ranging from 0.49 % to 5.25 %.

(b) On January 14, 2022, the Company gave notice for the redemption of all $ 400 million outstanding principal amount of the 4.250 % senior notes due 2022 (the "2022 Notes"), scheduled to occur on February 28, 2022.

The redemption price will be calculated in accordance with the terms of the indenture governing the 2022 Notes, and will include accrued and unpaid interest on the principal amount being redeemed to such redemption date.

(a) Financing includes variable rate debt based on LIBOR (or another index rate), generally subject to a floor, plus a specified margin of 0.49 % to 2.25 % .

(b) Financing includes variable rate debt based on LIBOR (or another index rate), subject to a floor, plus a specified margin of 3.75 % to 5.25 %.

(c) The PSP Notes include $ 1.5 billion of indebtedness evidenced by a 10 -year senior unsecured promissory note with Treasury provided under the PSP of the CARES Act ("PSP1"), $ 0.9 billion of indebtedness evidenced by a 10-year senior unsecured promissory note issued to Treasury pursuant to Payroll Support Program Extension Agreements under the CARES Act ("PSP2") and $ 0.8 billion of indebtedness evidenced by a 10-year senior unsecured promissory note issued to Treasury pursuant to the Payroll Support Program established under Section 7301 of the American Rescue Plan Act of 2021 ("PSP3").

These PSP Notes have a rate of 1.00 % in years 1 through 5, and a rate of the Secured Overnight Financing Rate ("SOFR") plus 2.00 % in years 6 through 10.

The table below presents the Company's contractual principal payments (not including debt discount or debt issuance costs) at December 31, 2022 under then-outstanding long-term debt agreements in each of the next five calendar years (in millions):

After 2027 13,749

2026 and 2029 Notes .

On April 21, 2021, United issued, through a private offering to eligible purchasers, $ 4.0 billion in aggregate principal amount of two series of notes, consisting of $ 2.0 billion in aggregate principal amount of 4.375 % senior secured notes due 2026 (the "2026 Notes") and $ 2.0 billion in aggregate principal amount of 4.625 % senior secured notes due 2029 (the "2029 Notes" and, together with the 2026 Notes, the "2026 and 2029 Notes").

The 2026 Notes, issued at a price of 100 % of their principal amount, bear interest at a rate of 4.375 % per annum and will mature on April 15, 2026.

The 2029 Notes, issued at a price of 100 % of their principal amount, bear interest at a rate of 4.625 % per annum and will mature on April 15, 2029.

The 2026 and 2029 Notes are guaranteed on an unsecured basis by UAL.

2021 Loan Facilities.

Concurrently with the closing of the offering of the 2026 and 2029 Notes, United also entered into a new Term Loan Credit and Guaranty Agreement (the "2021 Term Loan Facility") initially providing term loans (the "2021 Term Loans") up to an aggregate amount of $ 5.0 billion and a new Revolving Credit and Guaranty Agreement (the "2021 Revolving Credit Facility" and, together with the 2021 Term Loan Facility, the "2021 Loan Facilities") initially providing revolving loan commitments of up to $ 1.75 billion.

United borrowed the full amount of the 2021 Term Loans on April 21, 2021, which bear interest at a variable rate equal to LIBOR (but not less than 0.75 % per annum) plus a margin of 3.75 % per annum.

The principal amount of the 2021 Term Loan Facility must be repaid in consecutive quarterly installments of 0.25 % of the original principal amount thereof with the balance due at maturity.

Borrowings under the 2021 Revolving Credit Facility bear interest at a variable rate equal to LIBOR plus a margin of 3.00 % to 3.50 % per annum.

United pays a commitment fee equal to 0.75 % per annum on the undrawn amount available under the 2021 Revolving Credit Facility.

No borrowings were outstanding under the 2021 Revolving Credit Facility at December 31, 2021.

United used the net proceeds from the offering of the 2026 and 2029 Notes and borrowings under the 2021 Term Loan Facility (i) to repay in full the $ 1.4 billion aggregate principal amount outstanding under the term loan facility (the "2017 Term Loan Facility") included in the Amended and Restated Credit and Guaranty Agreement, dated as of March 29, 2017 (the "2017 Credit Agreement"), the $ 1.0 billion aggregate principal amount outstanding under the revolving credit facility (the "2017 Revolving Credit Facility") included in the 2017 Credit Agreement and the $ 520 million aggregate principal amount outstanding under the CARES Act Loan and, together with the 2017 Term Loan Facility and the 2017 Revolving Credit Facility, the "2017 Loan Facilities"), (ii) to pay fees and expenses relating to the offering of the 2026 and 2029 Notes and (iii) for United's general corporate purposes.

As a result of such repayments, the 2017 Loan Facilities were terminated on April 21, 2021, and no further borrowings may be made thereunder.

During 2021, UAL issued an $ 870 million indebtedness evidenced by a 10 -year senior unsecured promissory note (the "PSP2 Note") to Treasury.

The PSP2 Note is guaranteed by United and will mature on January 15, 2031 (the "PSP2 Note Maturity Date").

If any subsidiary of UAL (other than United) guarantees other unsecured indebtedness of UAL with a principal balance in excess of a specified amount, then such subsidiary shall be required to guarantee the obligations of UAL under the PSP2 Note.

UAL may, at its option, prepay the PSP2 Note, at any time, and from time to time, at par.

UAL is required to prepay the PSP2 Note upon the occurrence of certain change of control triggering events.

The PSP2 Note does not require any amortization and is to be repaid in full on the PSP2 Note Maturity Date.

Interest on the PSP2 Note is payable semi-annually in arrears on the last business day of March and September of each year, beginning on March 31, 2021, at a rate of 1.00 % in years 1 through 5, and at the Secured Overnight Financing Rate (SOFR) plus 2.00 % in years 6 through 10.

During 2021, UAL issued an $ 810 million indebtedness evidenced by a 10 -year senior unsecured promissory note (the "PSP3 Note") to Treasury.

The PSP3 Note is guaranteed by United and will mature on April 29, 2031 (the "PSP3 Note Maturity Date").

UAL may, at its option, prepay the PSP3 Note, at any time, and from time to time, at par.

UAL is required to prepay the PSP3 Note upon the occurrence of certain change of control triggering events.

The PSP3 Note does not require any amortization and is to be repaid in full on the PSP3 Note Maturity Date.

Interest on the PSP3 Note is payable semi-annually in arrears on the last business day of March and September of each year, beginning on September 30, 2021, at a rate of 1.00 % in years 1 through 5, and at the Secured Overnight Financing Rate (SOFR) plus 2.00 % in years 6 through 10.

Aircraft Notes.

As of December 31, 2021, United had $ 11.2 billion principal amount of equipment notes outstanding issued under EETC financings.

Generally, the structure of these EETC financings consists of pass-through trusts created by United to issue pass-through certificates, which represent fractional undivided interests in the respective pass-through trusts and are not obligations of United.

The proceeds of the issuance of the pass-through certificates are used to purchase equipment notes which are issued by United and secured by aircraft and, in certain structures, spare engines and spare parts.

United is responsible for the payment obligations under the equipment notes.

In certain EETC structures, proceeds received from the sale of pass-through certificates are initially held by a depositary in escrow for the benefit of the certificate holders until United issues equipment notes to the trust, which purchases such notes with a portion of the escrowed funds.

These escrowed funds are not guaranteed by United and are not reported as debt on United's consolidated balance sheet because the proceeds held by the depositary are not United's assets.

The Company records the debt obligation upon issuance of the equipment notes rather than upon the initial issuance of the pass-through certificates.

Certain details of the pass-through trusts with proceeds received from issuance of debt in 2021 are as follows (in millions, except stated interest rate):

EETC Issuance Date Class Face Amount Final expected distribution date Stated interest rate Total proceeds received from issuance of debt and recorded as debt as of December 31, 2021

February 2021 B $ 600 January 2026 4.88 % $ 600

During 2022, United borrowed $ 752 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 fixed and variable interest rates ranging from 4.0 % to 5.9 % at December 31, 2022.

In 2021, United entered into a new Term Loan Credit and Guaranty Agreement (the "2021 Term Loan Facility") initially providing term loans (the "2021 Term Loans") up to an aggregate amount of $ 5.0 billion and a new Revolving Credit and Guaranty Agreement (the "2021 Revolving Credit Facility" and, together with the 2021 Term Loan Facility, the "2021 Loan Facilities") initially providing revolving loan commitments of up to $ 1.75 billion.

As of December 31, 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 December 31, 2021, the Company was in compliance with its respective debt covenants.

As of December 31, 2022, the Company was in compliance with its debt covenants.

The collateral, covenants and cross default provisions of the Company's principal debt instruments that contain such provisions are summarized in the table below:

Debt Instrument Collateral, Covenants and Cross Default Provisions

Various equipment notes and other notes payable Secured by certain aircraft, spare engines and spare parts.

Aircraft notes and other notes payable Secured by certain aircraft, spare engines and spare parts.

The indentures contain events of default that are customary for aircraft financings, including in certain cases cross default to other related aircraft.

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The indenture contains events of default customary for similar financings, including a cross-payment default and cross-acceleration to other material indebtedness.

MileagePlus Notes Secured by first-priority security interests in substantially all of the assets of the Issuers, other than excluded property and subject to certain permitted liens, including security interests in specified cash accounts that include the accounts into which MileagePlus revenues are or will be paid by the Company's marketing partners and by the Company.

CARES Act Loan Though the CARES Act Loan was terminated and repaid in full on April 20, 2021, United and its affiliates agreed in the corresponding term loan and guarantee agreement to comply with certain surviving provisions (i) prohibiting the payment of dividends and the repurchase of certain equity until April 20, 2022, (ii) requiring compliance with certain continuation of service requirements until March 1, 2022, and (iii) restricting the payment of certain executive compensation until April 20, 2022.

MileagePlus Senior Secured Notes and MileagePlus Term Loan Facility

Secured by first-priority security interests in substantially all of the assets of the Issuers, other than excluded property and subject to certain permitted liens, including security interests in specified cash accounts that include the accounts into which MileagePlus revenues are or will be paid by the Company's marketing partners and by the Company.

PSP Notes The PSP Notes represent senior unsecured indebtedness of UAL.

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If any subsidiary of UAL (other than United) becomes, or is required to become, an obligor on unsecured indebtedness of UAL or any of its subsidiaries with a principal balance in excess of a specified amount, then such subsidiary shall be required to guarantee the obligations of the Company under the PSP Notes.

Pursuant to the PSP Agreements, the Company and its affiliates will be required to comply with certain provisions including, among others, prohibiting certain reductions in employee wages, salaries and benefits;

provisions prohibiting the payment of dividends and the repurchase of certain equity until September 30, 2022;

audit and reporting requirements;

provisions to comply with certain continuation of service requirements until March 1, 2022;

and provisions restricting the payment of certain executive compensation until April 1, 2023.

Pursuant to the PSP Agreements, the Company and its affiliates will be required to comply with certain provisions including, among others, audit and reporting requirements and provisions restricting the payment of certain executive compensation until April 1, 2023.

Unsecured notes The indentures for these notes contain covenants that, among other things, restrict the ability of the Company and its restricted subsidiaries (as defined in the indentures) to incur additional indebtedness and make certain dividends, stock repurchases, restricted investments and other restricted payments.

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Long-term lease obligations $ 4,459 $ 115

As of December 31, 2021, we have additional leases of approximately $ 415 million for several regional aircraft under CPAs and airport facilities and office space leases that have not yet commenced.

These leases will commence in 2022 through 2024 with lease terms of up to 12 years.

In August 2021, at the request of United, the City of Houston, Texas issued its approximately $ 289 million special facilities revenue bonds for the purpose of (a) financing the costs of construction of a multi-terminal baggage handling system, tenant improvements, fixtures, equipment, personnel areas and related facilities, as well as an early baggage system building (together with a related fire pump room) at George Bush Intercontinental Airport (IAH), all to be installed by and for use by United and (b) paying related costs of issuance.

The bonds bear interest at 4.0 % per annum, payable semiannually, commencing in January 2022 through the July 2041 maturity date.

United is accounting for the payments for these special facilities revenue bonds as lease payments under an operating lease recognized as a right-of-use asset and lease liability on the Company's balance sheet.

As of December 31, 2022, we have additional leases of approximately $ 3.0 billion for several regional aircraft under CPAs and airport facility leases that have not yet commenced.

These leases will commence starting in 2023 through 2025 with lease terms of up to 12 years.

In 2020, United entered into agreements with third parties to finance through sale and leaseback transactions new Boeing model 787 aircraft and Boeing model 737 MAX aircraft subject to purchase agreements between United and Boeing.

In connection with the delivery of each aircraft from Boeing, United assigned its right to purchase such aircraft to the buyer, and simultaneous with the buyer's purchase from Boeing, United entered into a long-term lease for such aircraft with the buyer as lessor.

Twenty-four Boeing model aircraft were delivered in 2021 under these transactions (and each is presently subject to a long-term lease to United).

Upon delivery of aircraft in these sale and leaseback transactions in 2021, the Company accounted for seven of these aircraft, which have a repurchase option at a price other than fair value, as part of Flight equipment on the Company's consolidated balance sheet and the related obligation recorded in Current maturities of other financial liabilities and Other financial liabilities since they do not qualify for sale recognition.

Upon delivery of the aircraft in these sale and leaseback transactions, the Company accounted for several of these aircraft, which have a repurchase option at a price other than fair value, as part of Flight equipment on the Company's consolidated balance sheet and the related obligation recorded in Current maturities of other financial liabilities and Other financial liabilities since they did not qualify for sale recognition (failed sale and leaseback).

The remaining aircraft that qualified for sale recognition were recorded as Operating lease right-of-use assets and Current/Long-term obligations under operating leases on the Company's consolidated balance sheet after recognition of related gains on such sale.

See Note 14 of this report for additional information.

In 2021, under these sale and leaseback agreements, United gave notice of its intent to exercise repurchase options in 2022 for six Boeing 787 aircraft.

The liabilities associated with these aircraft are reflected in Current maturities of other financial liabilities on the Company's consolidated balance sheet at December 31, 2021.

In January 2022, the Company gave notice of its intent to exercise repurchase options in 2023 for eight Boeing 737 MAX aircraft under these sale and leaseback agreements.

The liabilities associated with these aircraft are reflected in Other financial liabilities on the Company's consolidated balance sheet at December 31, 2021.

In 2022, under these sale and leaseback agreements, United exercised repurchase options for six Boeing 787 aircraft.

The table below presents the Company's contractual payments at December 31, 2022 under then-outstanding failed sale and leaseback agreements in each of the next five calendar years (in millions):

Other Financial Liabilities

After 2027 428

Imputed interest ( 248 )

Current maturities of other financial liabilities ( 23 )

Other financial liabilities $ 844

Our lease agreements do not provide a readily determinable implicit rate nor is it available to us from our lessors.

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Weighted-average remaining lease term - finance leases 3 years 6 years

Weighted-average remaining lease term - other financial liabilities 9 years 13 years

Weighted-average discount rate - operating leases 5.5 % 5.0 %

Weighted-average discount rate - finance leases 6.4 % 4.8 %

Weighted-average interest rate - other financial liabilities 6.0 % 6.0 %

The table below presents supplemental cash flow information related to leases during the year ended December 31 (in millions):

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Under these CPAs, the Company pays the regional carriers contractually agreed fees (carrier costs) for operating these flights plus a variable rate adjustment based on agreed performance metrics, subject to annual adjustments.

The fees are based on specific rates multiplied by specific operating statistics (e.g., block hours, departures), as well as fixed monthly amounts.

fees are based on specific rates multiplied by specific operating statistics (e.g., block hours, departures), as well as fixed monthly amounts.

Under these CPAs, the Company is also responsible for all fuel costs incurred, as well as landing fees and other costs, which are either passed through by the regional carrier to the Company without any markup or directly incurred by the Company.

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Properties, of this report for additional information.

In September 2021, United entered into a new CPA with Republic for Republic to operate 38 Embraer E175LL aircraft on United's behalf starting in 2022 for a 12 -year term.

The new Embraer E175LL aircraft will replace the Embraer E170 aircraft currently being flown by Republic for United.

United recorded approximately $ 0.9 billion, $ 0.6 billion and $ 0.6 billion in expenses related to its CPAs with its regional carriers in which United is a minority shareholder, for the years ended December 31, 2022, 2021 and 2020, respectively.

There were approximately $ 102 million and $ 68 million in accounts payable due to these companies as of December 31, 2021 and December 31, 2020, respectively.

There were no material accounts receivables due from these companies as of December 31, 2021 and December 31, 2020.

United had notes receivables with carrying values of $ 62 million and $ 28 million due from these companies, as of December 31, 2022 and 2021, respectively.

There were no accounts payable due to these companies as of December 31, 2022 and $ 102 million in accounts payable due to these companies as of December 31, 2021.

The CPAs with these related parties were executed in the ordinary course of business.

In 2022, United entered into an amended CPA with Mesa to operate, starting in 2023, up to 38 CRJ-900 aircraft with a five-year term, dependent upon the number of Embraer E175 aircraft that Mesa is flying on United's behalf.

Additionally in 2022, United amended a majority of its CPA agreements to increase the contractually agreed fees (carrier costs) paid to its regional carriers.

The Company plans to wind down its CPA with Air Wisconsin in 2023.

Our future commitments under our CPAs are dependent on numerous variables, and are, therefore, difficult to predict.

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Although we are not required to purchase a minimum number of block hours under certain of our CPAs, we have set forth below estimates of our future payments under the CPAs based on our assumptions.

The actual amounts we pay to our regional operators under CPAs could differ materially from these estimates.

United's estimates of its future payments under all of the CPAs do not include the portion of the underlying obligation for any aircraft leased to a regional carrier or deemed to be leased from other regional carriers and facility rent that are disclosed as part of operating leases above.

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After 2027 3.2

The actual amounts we pay to our regional operators under CPAs could differ materially from these estimates.

For example, a 10 % increase or decrease in scheduled block hours for all of United's regional operators (whether as a result of changes in average daily utilization or otherwise) in 2022 would result in a corresponding change in annual cash obligations under the CPAs of approximately $ 125 million.

NOTE 11 - VARIABLE INTEREST ENTITIES ("VIE")

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Based on this analysis, the Company determined that it is not required to consolidate the pass-through trusts.

United concluded that ManaAir is a VIE as of December 31, 2021.

United holds a variable interest in ManaAir in the form of equity interest, but United is not the primary beneficiary because it does not have power to direct the activities that most significantly impact ManaAir's economic performance.

NOTE 12 - COMMITMENTS AND CONTINGENCIES

As of December 31, 2021, United had firm commitments and options to purchase aircraft from The Boeing Company ("Boeing") and Airbus S.A.S.

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

("Airbus") presented in the table below:

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Commitments (a) 2023 2024 After 2024

Airbus A321XLR 50 — — 50

Airbus A321neo 70 — 12 58

Airbus A350 45 — — 45

Boeing 737 MAX 367 53 109 205

Boeing 787 8 8 — —

787 102 2 8 92

737 MAX 433 135 88 210

A321neo 70 12 31 27

A321XLR 50 — — 50

A350 45 — — 45

(a) United also has options and purchase rights for additional aircraft.

The aircraft listed in the table above are scheduled for delivery through 2033.

To the extent the Company and the aircraft manufacturers with whom the Company has existing orders for new aircraft agree to modify the contracts governing those orders, or to the extent rights are exercised pursuant to the relevant agreements to modify the timing of deliveries, the amount and timing of the Company's future capital commitments could change.

The amount and timing of the Company's future capital commitments could change to the extent that:

(i) the Company and the aircraft manufacturers, with whom the Company has existing orders for new aircraft, agree to modify the contracts governing those orders;

(ii) rights are exercised pursuant to the relevant agreements to modify the timing of deliveries;

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

Airbus notified United that eight Airbus A321neo aircraft scheduled for delivery in 2023, as shown in the table above, are now expected to deliver in 2024, and Boeing notified United that 37 Boeing 737 MAX aircraft scheduled for delivery in 2023, as shown in the table above, are now expected to deliver in 2024.

Also, United estimates that an additional six Boeing 737 MAX aircraft scheduled for delivery in 2023, as shown in the table above, will deliver in 2024.

In December 2022, the Company entered into a confidential settlement with Boeing with respect to compensation for aircraft manufacturer delivery delays in 2020 through 2022 related to Boeing 787 aircraft.

The compensation is in the form of credit memos to be issued at future dates upon the satisfaction of certain conditions.

The Company is accounting for this settlement as a reduction to the cost basis of certain existing and future firm order Boeing 787 aircraft, which is expected to reduce future depreciation expense associated with these aircraft.

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

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

During 2022, the Company recorded charges of $ 94 million as a result of a number of recent decisions 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.

Guarantees and Indemnifications.

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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.

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Interline agreements govern the rights and responsibilities of the consortia members and provide for the allocation of the overall costs to operate the consortia based on usage.

The consortia (and in limited cases, the participating carriers) have entered into long-term agreements to lease certain airport fuel storage and distribution facilities that are typically financed through tax-exempt bonds, either special facilities lease revenue bonds or general airport revenue bonds, issued by various local municipalities.

The consortia (and in limited cases, the participating carriers) have entered into long-term agreements to lease certain airport fuel storage and distribution facilities that

are typically financed through tax-exempt bonds, either special facilities lease revenue bonds or general airport revenue bonds, issued by various local municipalities.

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.

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labor organizations.

This total includes employees who elected to voluntarily separate from the Company pursuant to the Voluntary Programs but who are still on pre-separation leave of absence with pay and benefits.

NOTE 14 - SPECIAL CHARGES (CREDITS) AND UNREALIZED (GAINS) LOSSES ON INVESTMENTS

Special charges (credits) and unrealized (gains) and losses on investments in the statements of consolidated operations consisted of the following for the years ended December 31 (in millions):

In November 2022, United dispatchers represented by the Professional Airline Flight Control Association voted to ratify a two-year contract extension.

Also, in January 2023, United and the International Brotherhood of Teamsters ratified an extension to its labor contract covering the Company's more than 8,000 technicians and related employees.

The agreement becomes amendable in December 2024 and includes a one-year early opener that allows for bargaining on a successor agreement to begin in December 2023.

NOTE 13 - SPECIAL CHARGES (CREDITS)

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

2022 2021 2020

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Total operating and nonoperating special charges (credits) and unrealized (gains) losses on investments, net of income taxes $ 94 $ ( 2,524 ) $ ( 634 )

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

During 2022, the Company recorded $ 140 million of net charges primarily comprised of $ 94 million for various legal matters and $ 23 million related to certain contract disputes.

See Note 12 of this report for a discussion of the legal matters.

Nonoperating unrealized (gains) losses on investments, net.

During 2022, the Company recorded gains of $ 20 million primarily for the change in the market value of its investments in equity securities.

Nonoperating debt extinguishment and modification fees .

During 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 2021, the Company received approximately $ 5.8 billion in funding pursuant to the PSP2 Agreement and the PSP3 Agreement, which included an approximately $ 1.7 billion unsecured loan .

During 2021, the Company received approximately $ 5.8 billion in funding pursuant to the Payroll Support Program agreements under the CARES Act (the "PSP2 and PSP3 Agreements"), which included approximately $ 1.7 billion aggregate principal amount of unsecured promissory notes .

The Company recorded $ 4.0 billion as grant income in Special charges (credits).

The Company also recorded $ 99 million for the PSP2 Warrants and PSP3 Warrants issued to Treasury as part of the PSP2 Agreement and PSP3 Agreement, within stockholders' equity, as an offset to the grant income.

The Company also recorded $ 99 million for the PSP2 Warrants and PSP3 Warrants issued to Treasury as part of the PSP2 and PSP3 Agreements, within stockholders' equity, as an offset to the grant income.

Severance and benefit costs .

During 2021, the Company recorded $ 438 million of charges related to pay continuation and benefits-related costs provided to employees who chose to voluntarily separate from the Company.

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

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.

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During 2021, the Company recorded the following impairment charges:

• $ 61 million, primarily comprised of impairment charges for 13 Airbus A319 aircraft and 13 Boeing 737-700 airframes as a result of current market conditions for used aircraft, along with charges for cancelled induction projects related to these aircraft.

These aircraft are all considered held for sale and classified as part of other assets.

• $ 61 million, primarily comprised of impairment charges for 13 Airbus A319 aircraft and 13 Boeing 737-700 airframes as a result of the then-current market conditions for used aircraft, along with charges for cancelled induction projects related to these aircraft.

• $ 36 million of impairments related to 64 Embraer EMB 145LR aircraft and related spare engines that United retired from its regional fleet.

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

Almost all of these aircraft are classified as held for sale.

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

During 2021, the Company recorded net charges of $ 119 million primarily related to a one-time bonus paid to employees for their continued efforts during the COVID-19 pandemic, incentives for its employees to receive a COVID-19 vaccination and the termination of the lease associated with three floors of its headquarters at the Willis Tower in Chicago, partially offset by gains primarily related to the sale of its former headquarters in suburban Chicago, aircraft sale-leaseback transactions and aircraft component manufacturer credits.

During 2021, the Company recorded net charges of $ 119 million primarily related to a one-time bonus paid to employees for their continued efforts during the COVID-19 pandemic, incentives

for its employees to receive a COVID-19 vaccination and the termination of the lease associated with three floors of its headquarters at the Willis Tower in Chicago, partially offset by gains primarily related to the sale of its former headquarters in suburban Chicago, aircraft sale-leaseback transactions and aircraft component manufacturer credits.

Nonoperating unrealized (gains) losses on investments, net .

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Nonoperating debt extinguishment and modification fees.

During 2021, the Company recorded $ 50 million of charges for fees and discounts related to the entry into the 2021 Loan Facilities and the prepayment of the 2017 Loan Facilities.

During 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 and settlement losses.

During 2021, as part of the first quarter Voluntary Programs, the Company recorded $ 31 million of special termination benefits in the form of additional subsidies for retiree medical costs

for certain U.S.-based front-line employees.

During 2021, as part of the first quarter voluntary leave programs, the Company recorded $ 31 million of special termination benefits in the form of additional subsidies for retiree medical costs for certain U.S.-based front-line employees.

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

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• $ 94 million related to 11 permanently-grounded Boeing 757-200 aircraft and the related engines and spare parts.

• $ 38 million related to the right-of-use asset associated with the embedded aircraft lease in one of the Company's CPAs.

• $ 38 million related to the right-of-use assets associated with the embedded aircraft leases in one of the Company's CPAs.

This impairment was primarily due to the impact to cash flows from the pandemic and the relatively short remaining term under the CPA.

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During 2020, the Company recorded $ 687 million of settlement losses related to the Company's primary defined benefit pension plan covering certain U.S.

non-pilot employees, and special termination benefits offered, under Voluntary Programs.

non-pilot employees, and special termination benefits offered, under voluntary leave programs.

See Note 7 of this report for additional information.

Nonoperating credit loss on BRW Term Loan and related guarantee.

During 2020, the Company recorded a $ 697 million expected credit loss allowance for the BRW Term Loan and related guarantee.

See Note 8 of this report for additional information.

Severance and benefit costs .

During 2019, the Company recorded $ 14 million of management severance and $ 2 million of severance and benefit costs related to a voluntary early-out program for its technicians and related employees represented by the International Brotherhood of Teamsters.

Impairment of assets.

During 2019, the Company recorded a $ 90 million impairment charge associated with its Hong Kong routes.

The Company determined the fair value of the Hong Kong routes using a variation of the income approach known as the excess earnings method, which discounts an asset's projected future net cash flows to determine the current fair value.

Also during 2019, the Company recorded a $ 43 million impairment primarily for surplus Boeing 767 aircraft engines removed from operations, an $ 18 million charge primarily for the write-off of unexercised aircraft purchase options, and $ 20 million in other aircraft impairments.

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

During 2019, the Company recorded charges of $ 25 million related to contract terminations, $ 18 million for the settlement of certain legal matters, $ 14 million for costs related to the transition of fleet types within a regional carrier contract and $ 2 million of other charges.

Nonoperating unrealized gains (losses) on investments, net.

During 2019, the Company recorded gains of $ 153 million primarily for the change in market value of certain of its equity investments.

During 2020, the Company recorded a $ 697 million expected credit loss allowance for the Company's Term Loan Agreement (the "BRW Term Loan"), with, among others, BRW Aviation Holding LLC and BRW Aviation LLC, and the related guarantee.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data