What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-04-20 compared with 2022-10-19 · 121 added, 286 removed, 176 unchanged (70% of the section changed)

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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").

The Company's shared purpose is "Connecting People.

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

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

This Quarterly Report on Form 10-Q is a combined report of UAL and United, including their respective consolidated financial statements.

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

Our shared purpose is "Connecting People.

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

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

The Company transports people and cargo through its mainline operations, which utilize jet aircraft with at least 126 seats, and regional operations, which utilize smaller aircraft that are operated under contract by United Express carriers.

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

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

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

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

the adverse impacts of the ongoing COVID-19 global pandemic, including the gradual return of business travel demand to pre-COVID-19 levels;

the execution risks associated with our United Next plan;

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

inflationary pressures;

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

rising inflationary pressures;

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

volatile fuel prices;

aircraft delivery delays;

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

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

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

We continue to monitor the potential favorable or unfavorable

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

Risk Factors in the 2021 Form 10-K.

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

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

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

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

Impact of the COVID-19 Pandemic.

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

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

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

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

We operated at approximately 90% of our third quarter 2019 capacity during the third quarter of 2022.

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

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

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

As of September 30, 2022, unrestricted cash, cash equivalents and short-term investments totaled $18.7 billion, an increase of approximately $13.6 billion from September 30, 2019.

We had approximately $38.4 billion of debt, finance lease, operating lease and sale-leaseback obligations as of September 30, 2022 (including $4.5 billion that will become due in the next 12 months), up from approximately $18.2 billion as of September 30, 2019.

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

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

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

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

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

Strategic Operating Plan Execution.

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

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

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

Third Quarter 2022 Overview

Relative to the third quarter of 2019, the Company operated approximately 90% of its capacity for the third quarter of 2022 compared to approximately 72% of its capacity in the third quarter of 2021.

Operating revenue.

For the third quarter of 2022, operating revenue increased by $1.5 billion, or 13.2%, versus the third quarter of 2019 and increased by $5.1 billion, or 66.2%, versus the third quarter of 2021 due to the ongoing recovery from the

COVID-19 pandemic accompanied by an increase in the average yield.

In fact, the Company's TRASM (as defined below) for the month of September was the third best of any month in the Company's history, excluding pandemic months.

Operating expense.

For the third quarter of 2022, operating expense increased by $1.5 billion, or 15.3%, versus the third quarter of 2019, mostly due to a $1.5 billion increase in fuel costs, and by $4.7 billion, or 70.1%, versus the third quarter of 2021, mostly due to a $2.0 billion increase in fuel costs, a $1.1 billion Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") grant in the prior year period that did not repeat and other increased operating costs from flight activity.

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

Fourth Quarter 2022 Outlook

The Company expects its scheduled capacity to be down approximately 9% to 10% in the fourth quarter of 2022 as compared to the same period in 2019.

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

The Company expects TRASM to increase approximately 24% to 25% in the fourth quarter of 2022 as compared to the same period in 2019.

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

The Company expects CASM-ex (a non-GAAP financial measure defined as cost or operating expense per available seat mile ("CASM") excluding fuel, profit sharing, third-party business expense and special charges (credits)) to increase approximately 11% to 12% in the fourth quarter of 2022 as compared to the same period in 2019.

Adjusted operating margin.

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

We continue to monitor the potential favorable or unfavorable impacts of these and other factors on our business, operations, financial condition and future results of operations, which are dependent on future developments, including as a result of those factors discussed in Item 1A.

Risk Factors, of the 2022 Form 10-K.

Our future results of operations may be subject to volatility and our growth plans may be

delayed, particularly in the short term, due to the impact of the above factors and trends.

Absent significant and prolonged COVID-19 relapses or global economic disruptions, we believe that the expected long-term increase in travel demand will offset increased costs and that the expected operational challenges can be managed in a manner that will allow us to support increased demand.

RESULTS OF OPERATIONS

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

Third Quarter 2022 Compared to Third Quarter 2021

The Company recorded net income of $942 million for the third quarter of 2022 as compared to net income of $473 million for the third quarter of 2021.

The Company considers a key measure of its performance to be operating income, which was $1.5 billion for the third quarter of 2022 as compared to $1.0 billion for the third quarter of 2021, a $421 million increase year-over-year.

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

The following discussion provides an analysis of our results of operations and reasons for material changes therein for the three months ended March 31, 2023, as compared to the corresponding period in 2022.

First Quarter 2023 Compared to First Quarter 2022

The Company recorded a net loss of $194 million for the first quarter of 2023 as compared to a net loss of $1.4 billion for the first quarter of 2022.

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

2023 2022 Increase (Decrease) % Change

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Operating expense 11,472 8,942 2,530 28.3

Operating income 1,458 1,037 421 40.6

Operating loss (43) (1,376) (1,333) (96.9)

Nonoperating expense, net (213) (376) (163) (43.4)

Income tax expense 211 130 81 62.3

Net income $ 942 $ 473 $ 469 99.2

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

Income tax benefit (62) (375) (313) (83.5)

Net loss $ (194) $ (1,377) $ (1,183) (85.9)

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

2023 2022 Increase (Decrease) % Change

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Passenger revenue per available seat mile ("PRASM") (cents) 15.63 11.92 3.71 31.1

TRASM (cents) 19.02 14.38 4.64 32.3

Total revenue per ASM ("TRASM") (cents) 17.39 14.20 3.19 22.5

Average yield per revenue passenger mile ("Yield") (cents) (e) 19.56 16.43 3.13 19.1

Cargo revenue ton miles ("CTM") (millions) (f) 731 791 (60) (7.6)

CASM (cents) 16.87 12.46 4.41 35.4

Cost per ASM ("CASM") (cents) 17.46 16.79 0.67 4.0

CASM-ex (Non-GAAP) (cents) (g) 12.54 12.55 (0.01) (0.1)

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Fuel gallons consumed (millions) 952 775 177 22.8

Employee headcount, as of September 30

Employee headcount, as of March 31

96,300 87,400 8,900 10.2

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

(g) Cost or operating expense per available seat mile ("CASM") excluding fuel, profit sharing, third-party business expense and special charges (credits).

(g) CASM excluding fuel, profit sharing, third-party business expense and special charges (credits).

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

Operating Revenue.

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

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

2023 2022 Increase (Decrease) % Change

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Total operating revenue $ 11,429 $ 7,566 $ 3,863 51.1

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

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

Increase (decrease) from 2022:

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Passenger load factor (points) 3.4 6.4 43.3 12.9 7.3

Passenger revenue increased $5.0 billion, or 75.6%, in the third quarter of 2022 as compared to the year-ago period, primarily due to the ongoing recovery in air travel that was impacted by the COVID-19 pandemic and strength in the pricing environment as a result of inflationary pressures on fuel prices and other costs.

Cargo revenue decreased $21 million, or 4.0%, in the third quarter of 2022 as compared to the year-ago period, primarily due to lower yields as a result of increased market capacity and lower domestic mail volumes.

Other operating revenue increased $132 million, or 22.2%, in the third quarter of 2022 as compared to the year-ago period, primarily due to an increase in mileage revenue from non-airline partners, including credit card spending recovery with the co-branded credit card partner, JPMorgan Chase Bank, N.A, as well as an increase in the purchases of United Club memberships and lounge passes in the current year.

Passenger revenue increased $3.9 billion, or 61.8%, in the first quarter of 2023 as compared to the year-ago period, primarily due to an increase in capacity of 23.4% as well as strength in both yield and passenger load factor.

Cargo revenue decreased $229 million, or 36.5%, in the first quarter of 2023 as compared to the year-ago period, primarily due to lower yields and lower tonnage as a result of increased market capacity and rate pressures.

Other operating revenue increased $166 million, or 28.1%, in the first quarter of 2023 as compared to the year-ago period, primarily due to an increase in mileage revenue from non-airline partners, including credit card spending and new credit card member acquisitions with the co-branded credit card partner, JPMorgan Chase Bank, N.A., as well as an increase in the purchases of United Club memberships and one-time lounge passes.

Operating Expenses.

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

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

2023 2022 Increase (Decrease) % Change

Aircraft fuel $ 3,755 $ 1,710 $ 2,045 119.6

Salaries and related costs $ 3,322 $ 2,787 $ 535 19.2

Aircraft fuel 3,174 2,230 944 42.3

Landing fees and other rent 717 612 105 17.2

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Total operating expenses $ 11,472 $ 8,942 $ 2,530 28.3

Aircraft fuel expense increased by $2 billion, or 119.6%, in the third quarter of 2022 as compared to the year-ago period, due to both a higher average price per gallon of fuel and increased consumption from higher flight activity.

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

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

(In millions) Average price per gallon

2022 2021 % Change 2022 2021 % Change

Fuel expense $ 3,755 $ 1,710 119.6 % $ 3.81 $ 2.14 78.0 %

Fuel consumption (gallons) 985 800 23.1 %

Salaries and related costs increased $356 million, or 14.3%, in the third quarter of 2022 as compared to the year-ago period primarily due to an increase in headcount, volume-driven pay from increased flight activity in the third quarter of 2022 and $57 million of employee retention credits under the CARES Act in the third quarter of 2021 that did not occur in the current period, among other factors.

Aircraft maintenance materials and outside repairs increased $273 million, or 78.9%, in the third quarter of 2022 as compared to the year-ago period, primarily due to higher volumes of flying, increased engine overhauls, contractual rate escalations, increased materials purchases and heavy maintenance checks.

Regional capacity purchase increased $76 million, or 14.6%, in the third quarter of 2022 as compared to the year-ago period, primarily due to rate increases under various capacity purchase agreements with regional carriers as a result of the expiration of the CARES Act credits received in the prior year, partially offset by lower regional capacity.

Distribution expenses increased $264 million, or 121.1%, in the third quarter of 2022 as compared to the year-ago period, primarily due to higher credit card fees, higher travel agency commissions and higher volumes of global distribution fees as a result of the overall increase in passenger revenue and impacted by the mix of leisure travel and business travel, which requires the use of higher cost distribution channels and forms of payment.

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

CARES Act grant $ — $ (1,132)

Severance and benefit costs — 5

Impairment of assets — 46

(Gains) losses on sale of assets and other special charges 20 (17)

Special charges (credits) $ 20 $ (1,098)

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

Other operating expenses increased $593 million, or 49.5%, in the third quarter of 2022 as compared to the year ago period, primarily due to increases in ground handling, passenger services, food and beverage offerings, navigation fees and personnel-related costs as a direct result of the increase in flight activity and inflationary pressures and higher expenditures on information technology projects and services.

Nonoperating Income (Expense ).

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

2022 2021 Increase (Decrease) % Change

Interest expense $ (455) $ (449) $ 6 1.3

Interest capitalized 27 18 9 50.0

Interest income 104 11 93 NM

Unrealized gains (losses) on investments, net 28 (34) 62 NM

Miscellaneous, net (9) 20 (29) (145.0)

Total $ (305) $ (434) $ (129) (29.7)

Interest income increased $93 million in the third quarter of 2022 as compared to the year-ago period, primarily due to higher short-term investments in U.S.

government and agency notes.

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

Unrealized gains on investments, net, was $28 million in the third quarter of 2022 as compared to $34 million in unrealized losses in the year-ago period, primarily due to the change in the market value of the Company's investments in equity securities.

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

Miscellaneous, net decreased $29 million in the third quarter of 2022 as compared to the year-ago period, primarily due to higher foreign exchange losses recorded in 2022 and adjustments relating to debt extinguishment and modification fees recorded in 2021.

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

I ncome Taxes.

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

First Nine Months 2022 Compared to First Nine Months 2021

The Company recorded a net loss of $106 million in the first nine months of 2022 as compared to a net loss of $1.3 billion in the first nine months of 2021.

The Company considers a key measure of its performance to be operating income, which was $960 million for the first nine months of 2022, as compared to an operating loss of $614 million for the first nine months of 2021, an approximately $1.6 billion increase year-over-year, primarily as a result of increased demand for air travel.

Significant components of the Company's operating results for the nine months ended September 30 are as follows (in millions, except

percentage changes):

2022 2021 Increase (Decrease) % Change

Operating revenue $ 32,555 $ 16,442 $ 16,113 98.0

Operating expense 31,595 17,056 14,539 85.2

Operating income (loss) 960 (614) 1,574 256.4

Nonoperating expense, net (1,100) (1,098) 2 0.2

Income tax benefit (34) (394) (360) (91.4)

Net loss $ (106) $ (1,318) $ (1,212) (92.0)

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

2022 2021 Increase (Decrease) % Change

Passengers (thousands) 106,058 70,728 35,330 50.0

RPMs (millions) 152,033 86,793 65,240 75.2

ASMs (millions) 183,564 123,869 59,695 48.2

Passenger load factor 82.8 % 70.1 % 12.7 pts.

PRASM (cents) 15.71 10.75 4.96 46.1

TRASM (cents) 17.73 13.27 4.46 33.6

Yield (cents) 18.96 15.35 3.61 23.5

CTM (millions) 2,276 2,415 (139) (5.8)

CASM (cents) 17.21 13.77 3.44 25.0

CASM-ex (Non-GAAP) (cents) (a) 11.74 13.40 (1.66) (12.4)

Average price per gallon of fuel, including fuel taxes $ 3.67 $ 1.98 $ 1.69 85.4

Fuel gallons consumed (millions) 2,672 1,915 757 39.5

Employee headcount, as of September 30

90,800 85,300 5,500 6.4

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

Operating Revenue.

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

2022 2021 Increase (Decrease) % Change

Passenger revenue $ 28,830 $ 13,319 $ 15,511 116.5

Cargo 1,699 1,622 77 4.7

Other operating revenue 2,026 1,501 525 35.0

Total operating revenue $ 32,555 $ 16,442 $ 16,113 98.0

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

Increase (decrease) from 2021:

Domestic Atlantic Pacific Latin Consolidated

Passenger revenue (in millions) $ 8,876 $ 4,511 $ 871 $ 1,253 $ 15,511

Passenger revenue 90.2 % 329.5 % 202.6 % 74.8 % 116.5 %

Average fare per passenger 32.2 % 26.3 % (3.6) % 33.0 % 44.4 %

Yield 26.9 % 39.5 % (21.0) % 20.2 % 23.5 %

PRASM 37.5 % 104.3 % 88.0 % 49.3 % 46.1 %

Passengers 43.9 % 240.1 % 213.8 % 31.4 % 50.0 %

RPMs 49.9 % 207.9 % 282.9 % 45.5 % 75.2 %

ASMs 38.3 % 110.1 % 60.8 % 17.1 % 48.2 %

Passenger load factor (points) 6.6 26.2 36.5 16.1 12.7

Passenger revenue increased $15.5 billion, or 116.5%, in the first nine months of 2022 as compared to the year-ago period, primarily due to the ongoing recovery in air travel which was impacted by the COVID-19 pandemic and strength in the pricing environment as a result of inflationary pressures on fuel prices and other costs.

Cargo revenue increased $77 million, or 4.7%, in the first nine months of 2022 as compared to the year-ago period, primarily due to higher yields on freight revenue from strong global demand, primarily in the first quarter of 2022.

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

Other operating revenue increased $525 million, or 35.0%, in the first nine months of 2022 as compared to the year-ago period, primarily due to an increase in mileage revenue from non-airline partners, including credit card spending recovery with our co-branded credit card partner, JPMorgan Chase Bank, N.A., as well as United Club re-openings and increased member volumes compared to the prior year.

Operating Expenses.

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

Salaries and related costs increased $535 million, or 19.2%, in the first quarter of 2023 as compared to the year-ago period, primarily due to a 10.2% increase in headcount, an increase in volume-driven pay from increased flight activity and accruals for pay rate increases related to a potential new collective bargaining agreement with employees represented by the Air Line Pilots Association .

Aircraft fuel expense increased by $944 million, or 42.3%, in the first quarter of 2023 as compared to the year-ago period, due to both a higher average price per gallon of fuel and increased consumption from higher flight activity.

The table below presents the significant changes in aircraft fuel cost per gallon in the three months ended March 31, 2023 as compared to the year-ago period (in millions, except percentage change and per gallon data):

2023 2022 Increase (Decrease) % Change

Aircraft fuel $ 9,796 $ 3,793 $ 6,003 158.3

Salaries and related costs 8,466 6,987 1,479 21.2

Landing fees and other rent 1,919 1,735 184 10.6

Depreciation and amortization 1,832 1,866 (34) (1.8)

Regional capacity purchase 1,728 1,546 182 11.8

Aircraft maintenance materials and outside repairs 1,553 917 636 69.4

Distribution expenses 1,101 442 659 149.1

Aircraft rent 193 165 28 17.0

Special charges (credits) 124 (3,423) 3,547 NM

Other operating expenses 4,883 3,028 1,855 61.3

Total operating expenses $ 31,595 $ 17,056 $ 14,539 85.2

Aircraft fuel expense increased $6.0 billion, or 158.3%, in the first nine months of 2022 as compared to the year-ago period, primarily due to both a higher average price per gallon of fuel and increased consumption from higher flight activity.

We expect elevated fuel prices to continue throughout 2022.

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

(In millions) Average price per gallon

2022 2021 % Change 2022 2021 % Change

Fuel expense $ 3,174 $ 2,230 $ 944 42.3 %

Fuel consumption (gallons) 952 775 177 22.8 %

Salaries and related costs increased $1.5 billion, or 21.2%, in the first nine months of 2022 as compared to the year-ago period, primarily due to increased headcount, volume-driven pay from increased flight activity and $405 million of employee retention credits under the CARES Act in the first nine months of 2021 that did not occur in the current period, among other factors.

Landing fees and other rent increased $184 million, or 10.6%, in the first nine months of 2022 as compared to the year-ago period, primarily due to an increase in landed weight volume as a result of increased flight activity.

Regional capacity purchase increased $182 million, or 11.8%, in the third quarter of 2022 as compared to the year-ago period, primarily due to rate increases under various capacity purchase agreements with regional carriers as a result of the expiration of the CARES Act credits received in the prior year.

Aircraft maintenance materials and outside repairs increased $636 million, or 69.4%, in the first nine months of 2022 as compared to the year-ago period, primarily due to higher volumes of flying, increased engine overhauls, higher repair volumes, heavy airframe checks and contractual rate escalations.

Distribution expenses increased $659 million, or 149.1%, in the first nine months of 2022 as compared to the year-ago period, primarily due to higher credit card fees, higher travel agency commissions and higher volumes of global distribution fees as a result of the overall increase in passenger revenue.

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

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

CARES Act grant $ — $ (4,021)

Severance and benefit costs — 433

Impairment of assets — 105

Average price per gallon $ 3.33 $ 2.88 $ 0.45 15.6 %

Landing fees and other rent increased $105 million, or 17.2%, in the first quarter of 2023 as compared to the year-ago period, primarily due to increased flying driving higher landed weight volume and higher number of enplaned passengers.

Aircraft maintenance materials and outside repairs increased $295 million, or 72.5%, in the first quarter of 2023 as compared to the year-ago period, primarily due to increased flight activity and increased volumes of both engine overhauls and airframe heavy maintenance checks.

Depreciation expense increased $44 million, or 7.2%, in the first quarter of 2023 as compared to the year-ago period, primarily due to new aircraft inducted into service.

Regional capacity purchase increased $50 million, or 8.8%, in the first quarter of 2023 as compared to the year-ago period despite an 18.3% regional capacity reduction primarily due to rate increases under various capacity purchase agreements with regional carriers.

Distribution expenses increased $177 million, or 78.3%, in the first quarter of 2023 as compared to the year-ago period, primarily due to higher credit card fees, agency commissions and global distribution fees driven by the overall increase in passenger revenue.

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

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

(Gains) losses on sale of assets and other special charges $ 14 $ (8)

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

Other operating expenses increased $1.9 billion, or 61.3%, in the first nine months of 2022 as compared to the year-ago period, primarily due to increases in ground handling, passenger services, food and beverage offerings, navigation fees and personnel-related costs as a direct result of the increase in flight activity and inflationary pressures and higher expenditures on information technology projects and services.

Other operating expenses increased $363 million, or 25.0%, in the first quarter of 2023 as compared to the year ago period, primarily due to increases in ground handling, passenger services, food and beverage offerings, navigation fees and personnel-related costs as a direct result of the increase in flight activity and inflationary pressures and higher expenditures on information technology projects and services.

Nonoperating Income (Expense ).

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

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

2023 2022 Increase (Decrease) % Change

Interest expense $ (486) $ (424) $ 62 14.6

Interest income 170 5 165 NM

Interest capitalized 38 24 14 58.3

Interest income 142 30 112 373.3

Unrealized gains (losses) on investments, net (12) 91 (103) NM

Unrealized gains on investments, net 24 — 24 NM

Miscellaneous, net 41 19 22 115.8

Total $ (213) $ (376) $ (163) (43.4)

Interest expense increased $71 million, or 5.8%, in the first nine months of 2022 as compared to the year-ago period, primarily due to higher interest rates on variable rate debt.

Interest income increased $112 million, or 373.3%, in the first nine months of 2022 as compared to the year-ago period, primarily due to higher short-term investments in U.S.

government and agency notes.

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

Unrealized losses on investments, net, was $12 million in the first nine months of 2022 as compared to $91 million in unrealized gains in the year-ago period, primarily due to the change in the market value of the Company's investments in equity securities.

Interest expense increased $62 million, or 14.6%, in the first quarter of 2023 as compared to the year-ago period, primarily due to higher interest rates on variable rate debt.

Interest income increased $165 million in the first quarter of 2023 as compared to the year-ago period, primarily due to higher short-term investments in U.S.

government and agency notes as well as higher interest rates.

Unrealized gains on investments, net, was $24 million in the first quarter of 2023, primarily due to the change in the market value of the Company's investments in equity securities.

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

Miscellaneous, net decreased $44 million in the first nine months of 2022 as compared to the year-ago period, primarily due to special termination benefits related to voluntary separation programs and debt extinguishment and modification fees recorded in the first nine months of 2021 partially offset by higher foreign exchange losses recorded in 2022.

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

Income Taxes.

I ncome Taxes.

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

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Current Liquidity

As of September 30, 2022, the Company had $18.7 billion in unrestricted cash, cash equivalents and short-term investments, as compared to $18.4 billion at December 31, 2021.

As of March 31, 2023, the Company had $17.2 billion in unrestricted cash, cash equivalents and short-term investments, as compared to $16.4 billion at December 31, 2022.

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

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

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

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

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

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

No borrowings were outstanding under the Revolving Credit Facility at March 31, 2023.

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

As of September 30, 2022, the Company had approximately $38.4 billion of debt, finance lease, operating lease and sale-leaseback obligations, including $4.5 billion that will become due in the next 12 months.

As of March 31, 2023, the Company had approximately $37.2 billion of debt, finance lease, operating lease and other financial liabilities, including $3.9 billion that will become due in the next 12 months.

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

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

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

As of September 30, 2022, a substantial portion of the Company's assets, principally aircraft and certain related assets, its loyalty program, certain route authorities and airport slots and gates, was pledged under various loan and other agreements.

As of March 31, 2023, UAL and United were in compliance with their respective debt covenants.

As of March 31, 2023, a substantial portion of the Company's assets, principally aircraft and certain related assets, its loyalty program, certain route authorities and airport slots and gates, was pledged under various loan and other agreements.

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

For 2022, the Company expects approximately $4.7 billion of adjusted capital expenditures (a non-GAAP financial measure defined as GAAP capital expenditures including expenditures for assets acquired through the issuance of debt, finance leases and other financial liabilities).

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

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

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

See Note 7 to the financial statements included in Part I, Item I of this report for additional information on commitments.

As of March 31, 2023, United had firm commitments and options to purchase aircraft from The Boeing Company ("Boeing") and Airbus S.A.S.

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

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Aircraft Type Number of Firm

Commitments (a) Last Three Months

Commitments (a) Last Nine Months

of 2023 2024 After 2024

Airbus A321XLR 50 — — 50

Airbus A321neo 70 — 12 58

Airbus A350 45 — — 45

Boeing 737 MAX 353 27 121 205

Boeing 787 7 7 — —

787 100 — 8 92

737 MAX 412 114 88 210

A321neo 70 12 31 27

A321XLR 50 — — 50

A350 45 — — 45

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

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(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;

(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.

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

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

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

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

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

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 ten Airbus A321neo aircraft scheduled for delivery in 2024, as shown in the table above, are now expected to deliver in 2025.

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 eleven Boeing 737 MAX aircraft scheduled for delivery in 2023, as shown in the table above, will deliver in 2024 and 30 Boeing 737 MAX aircraft scheduled for delivery in 2024, as shown in table above, will deliver in 2025.

Furthermore, Boeing recently notified United that due to a manufacturing process issue relating to certain Boeing 737 MAX fuselages, six Boeing 737 MAX 8 aircraft scheduled for delivery in the second quarter of 2023, as shown in the table above, will be delayed.

Boeing may inform United that additional Boeing 737 MAX 8 aircraft scheduled for delivery in the third quarter of 2023 may be delayed and/or that certain Boeing 737 MAX aircraft currently expected to be delivered in 2023 may deliver in 2024.

However, at this time, we do not expect these delays to be extensive or to have a significant impact on our capacity plan for 2023.

The table below summarizes United's commitments as of March 31, 2023, which include aircraft and related spare engines, aircraft improvements and non-aircraft capital commitments.

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

(in billions)

Last three months of 2022 $ 3.0

Last nine months of 2023 $ 8.3

After 2027 16.8

Sources and Uses of Cash

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

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

2023 2022 Increase (Decrease)

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Financing activities (563) (856) (293)

Net increase (decrease) in cash, cash equivalents and restricted cash $ (7,006) $ 7,983 $ (14,989)

Net increase in cash, cash equivalents and restricted cash $ 611 $ 190 $ 421

Operating Activities.

Cash flows provided by operations increased $2.6 billion in the first nine months of 2022 as compared to the year-ago period, primarily due to higher profitability as improvements in the demand for air travel continued and an approximately $0.9 billion increase in advance ticket sales associated with the overall travel demand recovery.

Cash flows provided by operations increased $1.7 billion in the first three months of 2023 as compared to the year-ago period, primarily due to higher profitability as improvements in the demand for air travel continued.

Investing Activities.

Cash flows used in investing activities increased $8.1 billion in the first nine months of 2022 as compared to the year-ago period, primarily due to the purchase of short-term and other investments.

Capital expenditures were approximately $2.3 billion and $1.6 billion for the nine months ended September 30, 2022 and 2021, respectively.

Capital expenditures for the nine months ended September 30, 2022 were primarily attributable to the purchase of aircraft and aircraft improvements.

Capital expenditures for the nine months ended September 30, 2021 were primarily attributable to advance deposits for future aircraft purchases.

Cash flows used in investing activities increased $1.5 billion in the first three months of 2023 as compared to the year-ago period, primarily due to an increase in capital expenditures, which were approximately $1.8 billion and $0.4 billion for the three months ended March 31, 2023 and 2022, respectively.

Capital expenditures for the three months ended March 31, 2023 were primarily attributable to the purchase of aircraft, aircraft improvements and advance deposits for future aircraft purchases.

Financing Activities.

Significant financing events in the nine months ended September 30, 2022 and 2021 were as follows:

Significant financing events in the three months ended March 31, 2023 were as follows:

Debt, Finance Lease and Other Financing Liability Principal Payments .

During the nine months ended September 30, 2022, the Company made payments for debt, finance leases, and other financing liabilities of $2.6 billion.

During the nine months ended September 30, 2021, the Company made payments for debt, finance leases and other financing liabilities of $4.6 billion, primarily for repayments of $1.4 billion aggregate principal amount outstanding under a 2017 term loan facility, $1.0 billion aggregate principal amount outstanding under a 2017 revolving credit facility and $520 million aggregate principal amount outstanding under a CARES Act loan.

Debt Issuances.

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

During the nine months ended September 30, 2021, United received and recorded:

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

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

• $5.0 billion from a new term loan;

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

During the three months ended March 31, 2023 and 2022, the Company made payments for debt, finance leases, and other financing liabilities of $0.8 billion.

Debt and Other Financing Liabilities Issuances.

During the three months ended March 31, 2023, United received and recorded, net of fees, $488 million from aircraft financings.

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

Credit Ratings.

As of the filing date of this report, UAL and United had the following corporate credit ratings:

S&P Moody's Fitch

UAL BB- Ba2 B+

United BB- * B+

*The credit agency does not issue corporate credit ratings for subsidiary entities.

These credit ratings are below investment grade levels;

however, the Company has been able to secure financing with investment grade credit ratings for certain enhanced equipment trust certificates (EETCs), term loans and secured bond financings.

Downgrades from these rating levels, among other things, could restrict the availability, or increase the cost, of future financing for the Company as well as affect the fair market value of existing debt.

A rating reflects only the view of a rating agency and is not a recommendation to buy, sell or hold securities.

Ratings can be revised upward or downward at any time by a rating agency if such rating agency decides that circumstances warrant such a change.

Commitments, Contingencies and Liquidity Matters.

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

As described in the 2022 Form 10-K, the Company's liquidity may be adversely impacted by a variety of factors, including, but not limited to, pension funding obligations, reserve requirements associated with credit card processing agreements, guarantees, commitments and contingencies.

See the 2022 Form 10-K and Notes 6, 7 and 8 to the financial statements contained in Part I, Item 1 of this report for additional information.

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Supplemental Information

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

See "Forward-Looking Information" below.

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

Three Months Ended

September 30, Nine Months Ended

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

2022 2021 2019 2022 2021 2019 2019 2019

Below is a reconciliation of the non-GAAP financial measure provided in this report (CASM-ex) to the most directly comparable GAAP financial measure (CASM) for the three months ended March 31 (in cents):

CASM (GAAP) 17.46 16.79

Special charges (credits) 0.03 (2.04) 0.04 0.07 (2.76) 0.05 0.18 0.09

Third-party business expenses 0.06 0.07 0.07 0.06 0.07 0.06 0.07 0.06

Fuel expense 4.83 4.19

Profit sharing 0.01 — 0.24 — — 0.17 0.17 0.17

CASM-ex (Non-GAAP) 11.22 11.26 9.80 11.74 13.40 10.11 10.53 10.21

(in millions, except percentages)

Operating income (loss) (GAAP) $ 1,458 $ 1,037 $ 1,473 $ 960 $ (614) $ 3,440 $ 861 $ 4,301

Third-party business expenses 0.06 0.06

Special charges (credits) 0.03 (0.01)

Adjusted operating income (loss) (Non-GAAP) $ 1,478 $ (61) $ 1,500 $ 1,084 $ (4,037) $ 3,556 $ 991 $ 4,547

Operating margin 11.3 % 13.4 % 12.9 % 2.9 % (3.7) % 10.6 % 7.9 % 9.9 %

Adjusted operating margin (Non-GAAP) 11.5 % (0.8) % 13.2 % 3.3 % (24.6) % 11.0 % 9.1 % 10.5 %

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

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

CASM-ex (Non-GAAP) 12.54 12.55

FORWARD-LOOKING INFORMATION

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

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

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

Management's Discussion and Analysis of Financial Condition and Results of Operations and elsewhere, relating to, among other things, goals, plans and projections regarding the Company's financial position, results of operations, market position, capacity, fleet, product development, ESG targets and business strategy.

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

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

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

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

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

execution risks associated with our strategic operating plan;

changes in our network strategy or other factors outside our control resulting in less economic aircraft orders, costs related to modification or termination of

aircraft orders or entry into less favorable aircraft orders, as well as any inability to accept or integrate new aircraft into our fleet as planned;

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

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

any failure to effectively manage, and receive anticipated benefits and returns from, acquisitions, divestitures, investments, joint ventures and other portfolio actions, as well as related costs or other issues, or related exposures to unknown liabilities or other issues or underperformance as compared to our expectations;

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

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

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

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

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

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

extended interruptions or disruptions in service at major airports where we operate and space, facility and infrastructure constrains at our hubs or other airports;

extended interruptions or disruptions in service at major airports where we operate and space, facility and infrastructure constraints at our hubs or other airports;

geopolitical conflict, terrorist attacks or security events;

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

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

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

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

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

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

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

high and/or volatile fuel prices or significant disruptions in the supply of aircraft fuel;

the impacts of our significant amount of financial leverage from fixed obligations and the impacts of insufficient liquidity on our financial condition and business;

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

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

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

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

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the impacts of seasonality and other factors associated with the airline industry;

increases in insurance costs or inadequate insurance coverage;

and other risks and uncertainties set forth in Part I, Item 1A.

Risk Factors, of our 2021 Form 10-K, as well as other risks and uncertainties set forth from time to time in the reports we file with the SEC.

increases in insurance costs or inadequate insurance coverage and other risks and uncertainties set forth under Part I, Item 1A.

Risk Factors, of the

2022 Form 10-K, and under "Economic and Market Factors" in Part I, Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations, of this report, as well as other risks and uncertainties set forth from time to time in the reports we file with the SEC.

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

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

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

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

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis