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Item 1. Financial Statements

2024-04-17 compared with 2023-10-18 · 140 added, 248 removed, 449 unchanged (46% of the section changed)

3 unchanged sentences

(In millions, except per share amounts)

Three Months Ended September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Operating revenue:

Passenger revenue $ 13,349 $ 11,653 $ 36,625 $ 28,830

Passenger $ 11,313 $ 10,274

Cargo 391 398

Other operating revenue 802 726 2,373 2,026

Other 835 757

Total operating revenue 12,539 11,429

9 unchanged sentences

Special charges 13 14

Other operating expenses 2,158 1,790 5,989 4,883

Other 2,148 1,814

Total operating expense 12,440 11,472

Operating income 1,739 1,458 3,213 960

Operating income (loss) 99 ( 43 )

Nonoperating income (expense):

5 unchanged sentences

Total nonoperating expense, net ( 263 ) ( 213 )

Income (loss) before income tax expense (benefit) 1,485 1,153 2,616 ( 140 )

Income tax expense (benefit) 348 211 598 ( 34 )

Net income (loss) $ 1,137 $ 942 $ 2,018 $ ( 106 )

Earnings (loss) per share, basic $ 3.47 $ 2.88 $ 6.16 $ ( 0.33 )

Earnings (loss) per share, diluted $ 3.42 $ 2.86 $ 6.08 $ ( 0.33 )

Loss before income tax benefit ( 164 ) ( 256 )

Income tax benefit ( 40 ) ( 62 )

Net loss $ ( 124 ) $ ( 194 )

Loss per share, basic and diluted $ ( 0.38 ) $ ( 0.59 )

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

2 unchanged sentences

(In millions)

Three Months Ended September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net income (loss) $ 1,137 $ 942 $ 2,018 $ ( 106 )

Three Months Ended March 31,

Net loss $ ( 124 ) $ ( 194 )

Other comprehensive income (loss), net of tax:

2 unchanged sentences

Total other comprehensive loss, net of tax ( 19 ) ( 14 )

Total comprehensive income (loss), net $ 1,125 $ 922 $ 1,934 $ ( 128 )

Total comprehensive loss, net $ ( 143 ) $ ( 208 )

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

2 unchanged sentences

(In millions, except shares)

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Current assets:

21 unchanged sentences

Restricted cash 244 245

Deferred income taxes — 91

Investments in affiliates and other, less allowance for credit losses (2024 — $ 32 ;

6 unchanged sentences

(In millions, except shares)

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

LIABILITIES AND STOCKHOLDERS' EQUITY

26 unchanged sentences

authorized 1,000,000,000 shares;

outstanding 328,013,283 and 326,930,321 shares at September 30, 2023 and December 31, 2022, respectively

outstanding 328,803,086 and 328,018,739 shares at March 31, 2024 and December 31, 2023, respectively

Additional capital invested 8,973 8,992

1 unchanged sentence

Retained earnings 3,664 3,831

Accumulated other comprehensive income 91 175

Accumulated other comprehensive loss ( 81 ) ( 62 )

Total stockholders' equity 9,188 9,324

4 unchanged sentences

(In millions)

Nine Months Ended

September 30,

Three Months Ended March 31,

Cash Flows from Operating Activities:

6 unchanged sentences

Other, net ( 4 ) 6

Net cash used in investing activities ( 5,363 ) ( 9,442 )

Net cash provided by (used in) investing activities 1,441 ( 1,968 )

Cash Flows from Financing Activities:

3 unchanged sentences

Net cash used in financing activities ( 1,938 ) ( 563 )

Net increase (decrease) in cash, cash equivalents and restricted cash 689 ( 7,006 )

Net increase in cash, cash equivalents and restricted cash 2,350 611

Cash, cash equivalents and restricted cash at beginning of the period 6,335 7,421

4 unchanged sentences

Lease modifications and lease conversions 14 23

Investment interests received in exchange for goods and services 25 93

Investment interests received in exchange for loans, goods and services 18 21

(a) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheet:

9 unchanged sentences

Stock Additional

Capital Invested Treasury Stock Retained Earnings (Accumulated Deficit) Accumulated

Capital Invested Treasury Stock Retained Earnings Accumulated

Other Comprehensive Income (Loss) Total

Shares Amount

Balance at June 30, 2023 328.0 $ 4 $ 8,945 $ ( 3,442 ) $ 2,095 $ 103 $ 7,705

Net income — — — — 1,137 — 1,137

Other comprehensive loss — — — — — ( 12 ) ( 12 )

Stock-settled share-based compensation — — 23 — — — 23

Balance at September 30, 2023 328.0 $ 4 $ 8,968 $ ( 3,442 ) $ 3,232 $ 91 $ 8,853

Balance at December 31, 2023 328.0 $ 4 $ 8,992 $ ( 3,441 ) $ 3,831 $ ( 62 ) $ 9,324

Net income — — — — 2,018 — 2,018

Other comprehensive loss — — — — — ( 84 ) ( 84 )

Stock-settled share-based compensation — — 55 — — — 55

Stock issued for share-based awards, net of shares withheld for tax 1.1 — ( 73 ) 92 ( 51 ) — ( 32 )

Balance at September 30, 2023 328.0 $ 4 $ 8,968 $ ( 3,442 ) $ 3,232 $ 91 $ 8,853

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

Net income — — — — 942 — 942

Net loss — — — — ( 124 ) — ( 124 )

Other comprehensive loss — — — — ( 19 ) ( 19 )

1 unchanged sentence

Stock issued for share-based awards, net of shares withheld for tax 0.8 — ( 44 ) 69 ( 43 ) — ( 18 )

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

Balance at March 31, 2024 328.8 $ 4 $ 8,973 $ ( 3,372 ) $ 3,664 $ ( 81 ) $ 9,188

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

3 unchanged sentences

Stock issued for share-based awards, net of shares withheld for tax 1.1 — ( 71 ) 91 ( 51 ) — ( 31 )

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

Balance at March 31, 2023 328.0 $ 4 $ 8,926 $ ( 3,443 ) $ 1,020 $ 161 $ 6,668

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

2 unchanged sentences

(In millions)

Three Months Ended September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Operating revenue:

Passenger revenue $ 13,349 $ 11,653 $ 36,625 $ 28,830

Passenger $ 11,313 $ 10,274

Cargo 391 398

Other operating revenue 802 726 2,373 2,026

Other 835 757

Total operating revenue 12,539 11,429

9 unchanged sentences

Special charges 13 14

Other operating expenses 2,158 1,789 5,988 4,881

Other 2,148 1,814

Total operating expense 12,440 11,472

Operating income 1,739 1,459 3,214 962

Operating income (loss) 99 ( 43 )

Nonoperating income (expense):

5 unchanged sentences

Total nonoperating expense, net ( 263 ) ( 213 )

Income (loss) before income tax expense (benefit) 1,486 1,154 2,618 ( 138 )

Income tax expense (benefit) 348 212 599 ( 33 )

Net income (loss) $ 1,138 $ 942 $ 2,019 $ ( 105 )

Loss before income tax benefit ( 164 ) ( 256 )

Income tax benefit ( 40 ) ( 62 )

Net loss $ ( 124 ) $ ( 194 )

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

2 unchanged sentences

(In millions)

Three Months Ended September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net income (loss) $ 1,138 $ 942 $ 2,019 $ ( 105 )

Three Months Ended March 31,

Net loss $ ( 124 ) $ ( 194 )

Other comprehensive income (loss), net of tax:

2 unchanged sentences

Total other comprehensive loss, net of tax ( 19 ) ( 14 )

Total comprehensive income (loss), net $ 1,126 $ 922 $ 1,935 $ ( 127 )

Total comprehensive loss, net $ ( 143 ) $ ( 208 )

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

2 unchanged sentences

(In millions, except shares)

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Current assets:

21 unchanged sentences

Restricted cash 244 245

Deferred income taxes — 62

Investments in affiliates and other, less allowance for credit losses (2024 — $ 32 ;

5 unchanged sentences

(In millions, except shares)

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

LIABILITIES AND STOCKHOLDER'S EQUITY

25 unchanged sentences

authorized 1,000 shares;

issued and outstanding 1,000 shares at both September 30, 2023 and December 31, 2022

issued and outstanding 1,000 shares at both March 31, 2024 and December 31, 2023

Additional capital invested 507 482

Retained earnings 6,212 6,336

Accumulated other comprehensive income 91 175

Accumulated other comprehensive loss ( 81 ) ( 62 )

Payable to parent 2,520 2,538

5 unchanged sentences

(In millions)

Nine Months Ended

September 30,

Three Months Ended March 31,

Cash Flows from Operating Activities:

6 unchanged sentences

Other, net ( 4 ) 6

Net cash used in investing activities ( 5,363 ) ( 9,442 )

Net cash provided by (used in) investing activities 1,441 ( 1,968 )

Cash Flows from Financing Activities:

1 unchanged sentence

Payments of long-term debt, finance leases and other financing liabilities ( 5,031 ) ( 820 )

Other, net — ( 3 )

Net cash used in financing activities ( 1,920 ) ( 532 )

Net increase (decrease) in cash, cash equivalents and restricted cash 689 ( 7,006 )

Net increase in cash, cash equivalents and restricted cash 2,350 611

Cash, cash equivalents and restricted cash at beginning of the period 6,335 7,421

4 unchanged sentences

Lease modifications and lease conversions 14 23

Investment interests received in exchange for goods and services 25 93

Investment interests received in exchange for loans, goods and services 18 21

(a) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheet:

10 unchanged sentences

Other Comprehensive Income (Loss) Payable to Parent Total

Balance at June 30, 2023 $ 435 $ 4,597 $ 103 $ 2,539 $ 7,674

Net income — 1,138 — — 1,138

Other comprehensive loss — — ( 12 ) — ( 12 )

Stock-settled share-based compensation 23 — — — 23

Balance at September 30, 2023 $ 458 $ 5,735 $ 91 $ 2,539 $ 8,823

Balance at December 31, 2023 $ 482 $ 6,336 $ ( 62 ) $ 2,538 $ 9,294

Net income — 2,019 — — 2,019

Other comprehensive loss — — ( 84 ) — ( 84 )

Stock-settled share-based compensation 55 — — — 55

Other — — — ( 32 ) ( 32 )

Balance at September 30, 2023 $ 458 $ 5,735 $ 91 $ 2,539 $ 8,823

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

Net income — 942 — — 942

Net loss — ( 124 ) — — ( 124 )

Other comprehensive loss — — ( 19 ) — ( 19 )

1 unchanged sentence

Other — — — ( 18 ) ( 18 )

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

Balance at March 31, 2024 $ 507 $ 6,212 $ ( 81 ) $ 2,520 $ 9,158

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

3 unchanged sentences

Other — — — ( 32 ) ( 32 )

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

Balance at March 31, 2023 $ 414 $ 3,522 $ 161 $ 2,539 $ 6,636

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

15 unchanged sentences

The financial statements include all adjustments, including normal recurring adjustments and other adjustments, which are considered necessary for a fair presentation of the Company's financial position and results of operations for interim periods presented.

The UAL and United financial statements should be read together with the information included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

The UAL and United financial statements should be read together with the information included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the "2023 Form 10-K").

The Company's quarterly financial data is subject to seasonal fluctuations.

4 unchanged sentences

Department of Transportation) (in millions):

Three Months Ended September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Domestic (U.S.

7 unchanged sentences

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

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.

The Company estimates the value of Advance ticket sales that will expire unused ("breakage") and recognizes revenue and any changes in estimates 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.

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.

In the nine months ended September 30, 2023 and 2022, the Company recognized approximately $ 5.3 billion and $ 3.0 billion, respectively, of passenger revenue for tickets that were included in Advance ticket sales at the beginning of those periods.

In the three months ended March 31, 2024 and 2023, the Company recognized approximately $ 4.0 billion and $ 3.5 billion, respectively, of passenger revenue for tickets that were included in Advance ticket sales at the beginning of those periods.

Ancillary Fees.

The Company charges fees, separately from ticket sales, for certain ancillary services that are directly related to passengers' travel, such as baggage fees, premium seat fees, inflight amenity fees and other ticket-related fees.

The Company charges fees, separately from ticket sales, for certain ancillary services that are directly related to passengers' travel.

This includes fees for baggage, premium seats, inflight amenities and other ticket-related fees.

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

The Company recorded $ 1.1 billion and $ 3.0 billion of ancillary fees within passenger revenue in the three and nine months ended

September 30, 2023, respectively.

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

The Company recorded $ 984 million and $ 892 million of ancillary fees within passenger revenue in the three months ended March 31, 2024 and 2023, respectively.

Frequent Flyer Accounting.

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

Three Months Ended September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Total Frequent flyer deferred revenue - beginning balance $ 7,143 $ 6,675

3 unchanged sentences

Total Frequent flyer deferred revenue - ending balance $ 7,279 $ 6,860

In the three and nine months ended September 30, 2023, the Company recognized, in Other operating revenue, $ 0.7 billion and $ 2.0 billion, respectively, related to the marketing, advertising, non-travel miles redeemed (net of related costs) and other travel-related benefits of the mileage revenue associated with our various partner agreements including, but not limited to, our JPMorgan Chase Bank, N.A.

In the three months ended March 31, 2024 and 2023, the Company recognized, in Other operating revenue, $ 714 million and $ 646 million, respectively, related to the marketing, advertising, non-travel miles redeemed (net of related costs) and other travel-related benefits of the mileage revenue associated with our various partner agreements including, but not limited to, our JPMorgan Chase Bank, N.A.

MileagePlus co-brand agreement.

The Company recognized $ 0.6 billion and $ 1.7 billion, respectively, in the three and nine months ended September 30, 2022, related to those agreements.

The portion related to the MileagePlus miles awarded of the total amounts received from our various partner agreements is deferred and presented in the table above as an increase to the Frequent flyer deferred revenue.

We determine the current portion of that account based on expected redemptions in the next 12 months.

NOTE 2 — EARNINGS (LOSS) PER SHARE

The computations of UAL's basic and diluted earnings (loss) per share are set forth below (in millions, except per share amounts):

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

2023 2022 2023 2022

Earnings (loss) available to common stockholders $ 1,137 $ 942 $ 2,018 $ ( 106 )

Basic weighted-average shares outstanding 328.0 326.8 327.8 326.2

Dilutive effect of stock warrants (a) 2.7 1.0 2.5 —

Dilutive effect of employee stock awards 1.7 1.7 1.5 —

Diluted weighted-average shares outstanding 332.4 329.5 331.8 326.2

Earnings (loss) per share, basic $ 3.47 $ 2.88 $ 6.16 $ ( 0.33 )

Earnings (loss) per share, diluted $ 3.42 $ 2.86 $ 6.08 $ ( 0.33 )

Potentially dilutive securities (b)

Stock warrants (a) 1.5 3.5 1.5 3.5

NOTE 2 — LOSS PER SHARE

The following table shows the computation of basic and diluted earnings per share, the latter of which uses the treasury stock method to calculate the dilutive effect of UAL's potential common stock (in millions, except per share amounts):

Three Months Ended March 31,

Loss available to common stockholders $ ( 124 ) $ ( 194 )

Weighted-average shares outstanding, basic and diluted 328.3 327.4

Loss per share, basic and diluted $ ( 0.38 ) $ ( 0.59 )

Potentially dilutive securities (a)

Stock warrants (b) 3.5 1.5

Employee stock awards 0.5 0.7

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

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

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

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

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

All warrants were outstanding as of September 30, 2023.

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

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").

Sales of the 2021 ATM Shares under the Distribution Agreement were allowed to be made in any transactions that were deemed to be "at the market offerings" as defined in Rule 415 under the Securities Act of 1933, as amended.

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.

No shares were sold in 2022 or 2023 under the 2021 ATM Offering, which expired in March 2023.

All warrants were outstanding as of March 31, 2024.

NOTE 3 — ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

1 unchanged sentence

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

Balance at June 30, 2023 $ 539 $ ( 39 ) $ ( 397 ) $ 103

Changes in value 7 10 ( 3 ) 14

Amounts reclassified to earnings ( 33 ) (b) — 7 ( 26 )

Balance at September 30, 2023 $ 513 $ ( 29 ) $ ( 393 ) $ 91

Balance at December 31, 2023 $ 289 $ ( 4 ) $ ( 347 ) $ ( 62 )

1 unchanged sentence

Amounts reclassified to earnings ( 25 ) (b) — 5 ( 20 )

Balance at September 30, 2023 $ 513 $ ( 29 ) $ ( 393 ) $ 91

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

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

Amounts reclassified to earnings — (b) — — —

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

Balance at March 31, 2024 $ 267 $ ( 6 ) $ ( 342 ) $ ( 81 )

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

1 unchanged sentence

Amounts reclassified to earnings ( 35 ) (b) — 7 ( 28 )

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

Balance at March 31, 2023 $ 582 $ ( 8 ) $ ( 413 ) $ 161

(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.

3 unchanged sentences

NOTE 4 — INCOME TAXES

The Company's effective tax rates for the three and nine months ended September 30, 2023 were 23.4 % and 22.9 %, respectively.

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

The Company's effective tax rates for the three months ended March 31, 2024 and 2023 were 24.4 % and 24.2 %, respectively.

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

1 unchanged sentence

Defined Benefit Pension and Other Postretirement Benefit Plans.

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

Pension Benefits Other Postretirement Benefits Affected Line Item

in the Statements of

Consolidated Operations

2023 2022 2023 2022

Service cost $ 31 $ 51 $ 1 $ 2 Salaries and related costs

Interest cost 53 47 10 8 Miscellaneous, net

Expected return on plan assets ( 62 ) ( 76 ) — — Miscellaneous, net

Amortization of unrecognized (gain) loss 2 29 ( 9 ) ( 3 ) Miscellaneous, net

Amortization of prior service credit 1 — ( 28 ) ( 28 ) Miscellaneous, net

Other 1 2 — — Miscellaneous, net

Total $ 26 $ 53 $ ( 26 ) $ ( 21 )

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

The Company's net periodic benefit cost includes the following components for the three months ended March 31 (in millions):

Pension Benefits Other Postretirement Benefits Affected Line Item

7 unchanged sentences

Amortization of prior service credit — — ( 23 ) ( 28 ) Miscellaneous, net

Other 2 3 — — Miscellaneous, net

Total $ 27 $ 25 $ ( 19 ) $ ( 26 )

Profit Sharing.

Substantially all employees participate in profit sharing based on a percentage of pre-tax earnings, excluding special or non-recurring charges, profit sharing expense and share-based compensation.

Profit sharing percentages range from 5 % to 20 % depending on the work group, and in some cases profit sharing percentages vary above and below certain thresholds.

As part of the new collective bargaining agreement with the Air Line Pilots Association ("ALPA"), the thresholds were lowered retroactive to January 1, 2023 for the pilot work group.

Eligible U.S.

co-workers in each participating work group receive a profit sharing payout using a formula based on the ratio of each qualified co-worker's annual eligible earnings to the eligible earnings of all qualified co-workers in all domestic work groups.

Eligible non-U.S.

co-workers receive profit sharing based on the calculation under the U.S.

profit sharing plan for management and administrative employees.

The Company recorded profit sharing and related payroll tax expense of $ 301 million and $ 521 million in the three and nine months ended September 30, 2023, respectively.

The Company recorded profit sharing expense of $ 8 million in both the three and nine months ended September 30, 2022.

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

NOTE 6 — FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

NOTE 6 — FAIR VALUE MEASUREMENTS, INVESTMENTS AND NOTES RECEIVABLE

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

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

4 unchanged sentences

government and agency notes 5,518 — 5,518 — 8,257 — 8,257 —

Asset-backed securities 29 — 29 — 325 — 325 —

Certificates of deposit placed through an account registry service ("CDARS") 73 — 73 — 73 — 73 —

Corporate debt — — — — 9 — 9 —

Long-term investments:

3 unchanged sentences

Restricted cash - non-current — Primarily includes collateral associated with the MileagePlus Financing, collateral for letters of credit and collateral associated with facility leases and other insurance-related obligations.

Short-term investments — The short-term investments shown in the table above are classified as available-for-sale and have remaining maturities of approximately 18 months or less.

Short-term investments — The short-term investments shown in the table above are classified as available-for-sale and have remaining maturities of 17 months or less.

Long-term investments:

Equity securities — Represents equity and equity-linked securities (such as vested warrants) that make up United's investments in Azul Linhas Aéreas Brasileiras S.A., Archer Aviation Inc., Eve Holding, Inc., Mesa Air Group, Inc.

and Clear Secure, Inc.

and Mesa Air Group, Inc.

Other fair value information.

1 unchanged sentence

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Carrying Amount Fair Value Carrying Amount Fair Value

7 unchanged sentences

Equity Method Investments.

As of September 30, 2023, United holds the following investments, accounted for using the equity method, with a combined carrying value of approximately $ 232 million:

• CommuteAir LLC.

United owns a 40 % minority ownership stake in CommuteAir LLC.

CommuteAir currently operates 53 regional aircraft under a capacity purchase agreement ("CPA") that has a term through 2026.

As of March 31, 2024, United holds investments, accounted for using the equity method, with a combined carrying value of approximately $ 230 million.

Significant equity method investments are described below:

• Republic Airways Holdings Inc.

1 unchanged sentence

("Republic").

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

Republic currently operates 66 regional aircraft under capacity purchase agreements ("CPAs") that have terms through 2035.

• CommuteAir LLC.

United owns a 40 % minority ownership stake in CommuteAir LLC.

CommuteAir currently operates 53 regional aircraft under a CPA that has a term through 2026.

• United Airlines Ventures Sustainable Flight Fund (the "Fund").

During the first quarter of 2023, United launched, through its corporate venture capital arm, United Airlines Ventures ("UAV"), an investment vehicle designed to support start-ups focused on decarbonizing air travel by accelerating the research, production and technologies associated with sustainable aviation fuel ("SAF").

The Fund started with more than $ 100 million in commitments from United and other corporate investors, collectively, as limited partners.

UAV transferred certain of its existing SAF investments to the Fund's portfolio.

As of September 30, 2023, the Company indirectly holds a 38 % ownership interest in the Fund and the Fund has approximately $ 200 million in commitments from United and other corporate investors.

During the first quarter of 2023, United launched, through its corporate venture capital arm, United Airlines Ventures, Ltd., an investment vehicle designed to support start-ups focused on decarbonizing air travel by accelerating the research, production and technologies associated with sustainable aviation fuel (SAF).

As of March 31, 2024, the Company indirectly holds a 33 % ownership interest in the Fund.

Other Investments.

As of September 30, 2023, United has equity investments in Abra Group Limited, a multinational airline holding company, JetSuiteX, Inc., an independent air carrier doing business as JSX as well as a number of companies with emerging technologies and sustainable solutions.

As of March 31, 2024, United has equity investments in Abra Group Limited, a multinational airline holding company, JetSuiteX, Inc., an independent air carrier doing business as JSX, as well as a number of companies with emerging technologies and sustainable solutions.

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 September 30, 2023, the carrying value of these investments was $ 425 million.

As of March 31, 2024, the carrying value of these investments was $ 421 million.

Notes Receivable.

As of March 31, 2024, the Company has $ 86 million of notes receivable, net of allowance for credit losses, the majority of which is from certain of its regional carriers.

The current portions of the notes receivable are recorded in Receivables, less allowance for credit losses.

The long-term portion of the notes receivable is recorded in Investments in affiliates and other, less allowance for credit losses on the Company's consolidated balance sheet.

NOTE 7 — COMMITMENTS AND CONTINGENCIES

As of September 30, 2023, United had firm commitments to purchase aircraft from The Boeing Company ("Boeing") and Airbus S.A.S.

As of March 31, 2024, United had firm commitments 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

of 2023 2024 After 2024 Last Three Months

Commitments (a) Last Nine Months

of 2024 2025 After 2025 Last Nine Months

of 2024 2025 After 2025

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737 MAX 8 36 36 — — 19 17 —

737 MAX 9 144 34 40 70 10 44 90

737 MAX 10 167 — — 167 — — 167

A321neo 123 23 38 62 22 24 77

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

(b) Expected aircraft deliveries reflect adjustments communicated by Boeing and Airbus or estimated by United.

(b) Expected aircraft deliveries reflect adjustments to contractual delivery schedules as communicated by Boeing and Airbus or estimated by United.

However, aircraft deliveries are subject to a number of variables, as further described in Part I, Item 1A.

Risk Factors of the 2023 Form 10-K, and we cannot guarantee delivery of any particular aircraft at any specific time notwithstanding firm purchase commitments.

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

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

On September 28, 2023, United entered into a supplemental agreement with Boeing, pursuant to which United exercised options to purchase 50 Boeing 787-9 aircraft scheduled for delivery between 2028 and 2031 and was granted options to purchase up to an additional 50 Boeing 787 aircraft.

In addition, on September 29, 2023, United entered into an amendment to the A320 Family Purchase Agreement, dated December 19, 2019, as amended, with Airbus, pursuant to which United exercised purchase rights to purchase 60 A321neo aircraft scheduled for delivery between 2028 and 2030 and was granted purchase rights to purchase up to an additional 40 A321neo aircraft.

The table above reflects the number of firm commitments related to these agreements as well as the contractual and expected aircraft deliveries.

During the nine months ended September 30, 2023, United entered into agreements with third parties to finance through sale and leaseback transactions new Boeing model 737 MAX aircraft subject to purchase agreements between United and Boeing.

For certain aircraft, 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.

Upon delivery of the aircraft in these sale and leaseback transactions, the Company accounted for these aircraft 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).

As of September 30, 2023, United had additional leases for 47 Embraer E175/E175LL regional jets under a CPA, 12 A321neo mainline aircraft, airport facilities and office space, none of which had commenced as of such date.

These leases will commence between fourth quarter 2023 and 2026 with lease terms of up to 12 years.

The table below summarizes United's firm commitments as of September 30, 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 communicated by Boeing and Airbus or estimated by United.

On April 14, 2024, the Company entered into confidential arrangements with Boeing with respect to compensation for financial damages incurred in first quarter of 2024 due to the Federal Aviation Administration grounding of the Boeing 737 MAX 9 aircraft, and a confidential agreement to accommodate certification delays for the Boeing 737 MAX 10 aircraft.

The compensation provided by Boeing for the grounding damages and in connection with rescheduling deliveries is in the form of credit memos for use on future purchases from Boeing.

The Company plans to account for these arrangements as a reduction to the cost basis of the previously-delivered Boeing 737 MAX 9 aircraft and future deliveries of the MAX 9 and MAX 10 aircraft, which is expected to reduce future depreciation expense associated with these aircraft.

The table below summarizes United's firm commitments as of March 31, 2024, 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 communicated by Boeing and Airbus or estimated by United but reflecting the discounts related to future deliveries offered as part of the April 14, 2024 arrangements between United and Boeing.

(in billions)

Last three months of 2023 $ 4.6

Last nine months of 2024 $ 7.1

After 2028 27.1

In April 2024, the Company signed letters of intent to enter into future leasing arrangements with major aircraft leasing companies for 35 Airbus A321neo aircraft with expected deliveries in 2026 and 2027.

Regional CPAs .

During the nine months ended September 30, 2023 , United amended several of its CPAs with certain of its regional carriers to increase the contractually agreed fees (carrier costs) paid to those carriers and to add additional aircraft that will replace existing aircraft near the end of their contractual terms.

Separately , the Company terminated its CPA and related regional flight operations with Air Wisconsin in June 2023.

During the three months ended March 31, 2024 , United amended several of its CPAs with certain of its regional carriers to increase the contractually agreed fees (carrier costs) paid to those carriers and to modify the terms for certain aircraft.

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

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For purposes of calculating these estimates, we have assumed (1) the number of block hours flown is based on our anticipated level of flight activity or at any contractual minimum utilization levels if applicable, whichever is higher, (2) that we will reduce the fleet as rapidly as contractually allowed under each CPA, (3) that aircraft utilization, stage length and load factors will remain constant, (4) that each carrier's operational performance will remain at recent historic levels and (5) an annual projected inflation rate.

Based on these assumptions as of September 30, 2023 , our estimated future payments through the end of the terms of our CPAs are presented in the table below :

Based on these assumptions as of March 31, 2024 , our estimated future payments through the end of the terms of our CPAs are presented in the table below :

(in billions)

Last three months of 2023 $ 0.6

Last nine months of 2024 $ 1.9

After 2028 4.2

As of September 30, 2023, United is the guarantor of approximately $ 1.9 billion in aggregate principal amount of tax-exempt special facilities revenue bonds and interest thereon.

As of March 31, 2024, United is the guarantor of approximately $ 1.9 billion in aggregate principal amount of tax-exempt special facilities revenue bonds and interest thereon.

These bonds, issued by various airport municipalities, are payable solely from rentals paid under long-term agreements with the respective governing bodies.

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All of these bonds are due between 2024 and 2041.

As of September 30, 2023, United is the guarantor of $ 81 million of aircraft mortgage debt issued by one of United's regional carriers.

As of March 31, 2024, United is the guarantor of $ 73 million of aircraft mortgage debt issued by one of United's regional carriers.

The aircraft mortgage debt is subject to similar increased cost provisions as described below for the Company's debt, and the Company would potentially be responsible for those costs under the guarantees.

Increased Cost Provisions.

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.

The Company elected to apply the guidance in Accounting Standards Codification 848, Reference Rate Reform, to contracts and transactions that transitioned from the London Interbank Offered Rate (LIBOR) to SOFR.

The application of this guidance did not have any material impact on the Company's financial statements.

At September 30, 2023, the Company had $ 11.4 billion of floating rate debt with remaining terms of up to approximately 12 years that are subject to these 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 the Secured Overnight Financing Rate (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 March 31, 2024, the Company had $ 10.1 billion of floating rate debt with remaining terms of up to approximately 12 years that are subject to these increased cost provisions.

In several financing transactions involving loans or leases from non-U.S.

entities, with remaining terms of up to approximately 12 years and an aggregate balance of $ 8.2 billion, the Company bears the risk of any change in tax laws that would subject loan or lease payments thereunder to non-U.S.

entities, with remaining terms of up to approximately 12 years and an aggregate balance of $ 6.9 billion, the Company

bears the risk of any change in tax laws that would subject loan or lease payments thereunder to non-U.S.

entities to withholding taxes, subject to customary exclusions.

As of September 30, 2023, the Company had approximately 102,000 employees, of whom approximately 83 % were represented by various U.S.

As of March 31, 2024, the Company had approximately 104,500 employees, of whom approximately 83 % were represented by various U.S.

labor organizations.

In January 2023, the Company's more than 8,000 technicians and related employees represented by the International Brotherhood of Teamsters ratified an extension to their labor contract with United.

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

In May 2023, nearly 30,000 fleet service, passenger service, storekeepers, maintenance instructors and fleet technical instructors and related employees represented by the International Association of Machinists & Aerospace Workers ("IAM") ratified five agreements with United.

On February 23, 2024, United and the International Association of Machinists and Aerospace Workers ratified agreements covering security guards in California and central load planners.

The ratified agreements are effective through 2025.

The Company recorded a one-time $ 48 million expense in conjunction with the ratification.

Negotiations with the IAM will continue for agreements to cover security guards in California and central load planners.

In September 2023, the Company's pilots represented by ALPA ratified an agreement with United.

The agreement includes numerous work rule changes and pay rate increases during the four-year term.

The agreement also includes a provision for a one-time $ 765 million payment upon ratification.

On February 28, 2024, United and the International Brotherhood of Teamsters reached a tentative agreement for an extension to their labor contract.

The agreement, if ratified, becomes amendable in December 2028.

NOTE 8 — DEBT

As of September 30, 2023, 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 September 30, 2023, UAL and United were in compliance with their respective debt covenants.

Equipment Notes .

On June 20, 2023, the Company and Wilmington Trust, National Association, as subordination agent and pass through trustee (the "Trustee") under a certain pass through trust newly formed by the Company, entered into the Note Purchase Agreement, dated as of June 20, 2023 (the "Note Purchase Agreement").

The Note Purchase Agreement provides for the issuance by the Company of equipment notes (the "Equipment Notes") in the aggregate principal amount of $ 1.3 billion to finance 39 Boeing aircraft delivered new to the Company from August 2022 to May 2023.

Pursuant to the Note Purchase Agreement, the Trustee purchased Equipment Notes issued under a trust indenture and mortgage (each, an "Indenture" and, collectively, the "Indentures") with respect to each aircraft entered into by the Company and Wilmington Trust, National Association, as mortgagee.

Each Indenture provides for the issuance of Equipment Notes in a single series, Series A, bearing interest at the rate of 5.80 % per annum.

The Equipment Notes were purchased by the Trustee, using the proceeds from the sale of Pass Through Certificates, Series 2023-1A, issued by a pass through trust newly-formed by the Company to facilitate the financing of the aircraft.

The interest on the Equipment Notes is payable semi-annually on each January 15 and July 15, beginning on January 15, 2024.

The principal payments on the Equipment Notes are scheduled on January 15 and July 15 of each year, beginning on July 15, 2024.

The final payments on the Equipment Notes will be due on January 15, 2036.

In the second quarter of 2023, United prepaid $ 1.0 billion of a 2021 term loan facility.

See Note 9 for information related to charges recorded as a result of this prepayment.

The table below presents the Company's contractual principal payments (not including $ 303 million of unamortized debt discount, premiums and debt issuance costs) at September 30, 2023 under then-outstanding long-term debt agreements (in millions):

Last three months of 2023 $ 739

On February 15, 2024, the Company entered into an Amended and Restated Revolving Credit and Guaranty Agreement (the "Revolving Credit Facility") increasing the borrowing capacity by $ 1.115 billion, which may be drawn upon until February 15, 2029, in the case of any Revolving Loans (as defined in the Revolving Credit Facility) made by the Extending Lenders (as defined in the Revolving Credit Facility), and April 21, 2025, in the case of any Revolving Loans made by the 2024 Non-Extending Lenders (as defined in the Revolving Credit Facility).

The revolving loan commitments of the Extending Lenders equal $ 2.7 billion and the revolving loan commitments of the 2024 Non-Extending Lenders equal $ 165 million.

The Revolving Loans, if any, will bear interest at a variable rate equal to Term SOFR (as defined in the Revolving Credit Facility), generally subject to a floor, plus a credit adjustment spread described in the Revolving Credit Facility, or, at United's election, another rate based on certain market interest rates, also generally subject to a floor, in each case plus a variable margin ranging from 3.00 % to 3.50 %, in the case of Term SOFR loans, and 2.00 % to 2.50 %, in the case of loans at other market rates.

As of March 31, 2024, we had $ 2.87 billion undrawn and available under the Revolving Credit Facility.

On April 16, 2024, the Company increased the revolving loan commitments of the Extending Lenders by $ 100 million.

The revolving loan commitments of the Extending Lenders now equal $ 2.8 billion and the revolving loan commitments of the 2024 Non-Extending Lenders remain $ 165 million.

On February 22, 2024, the Company also entered into Amendment No.

2 to Term Loan Credit and Guaranty Agreement (as amended, the "Term Loan Facility" and, together with the Revolving Credit Facility, the "Loan Facilities") and (i) used available cash in an amount equal to $ 1.37 billion to partially prepay the term loans under the 2021 term loans and (ii) borrowed the entire term loan commitment available under the Term Loan Facility in an amount equal to $ 2.5 billion and used the proceeds of such terms loans (the "Term Loans") to prepay in full the remaining outstanding principal balance under the existing term loan facility.

The Term Loans will bear interest at a variable rate equal to Term SOFR (subject to a floor of 0.0 %);

or, at United's election, another rate based on certain market interest rates (subject to a floor of 1.0 %), in each case plus a margin of 2.75 %, in the case of Term SOFR loans, and 1.75 %, in the case of loans at other market rates.

The remaining balance of the Term Loans will mature and be due and payable on February 22, 2031.

The table below presents the Company's contractual principal payments (not including $ 267 million of unamortized debt discount, premiums and debt issuance costs) as of March 31, 2024 under then-outstanding long-term debt agreements (in millions):

Last nine months of 2024 $ 2,936

After 2028 11,500

As of March 31, 2024, UAL and United were in compliance with their respective debt covenants.

NOTE 9 — SPECIAL CHARGES

For the three and nine months ended September 30, operating and nonoperating special charges and unrealized (gains) losses on investments in the statements of consolidated operations consisted of the following (in millions):

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Labor contract ratification bonuses $ 1 $ — $ 814 $ —

(Gains) losses on sale of assets and other special charges $ 13 $ 14

Total operating special charges 13 14

Nonoperating:

Nonoperating unrealized (gains) losses on investments, net 37 ( 24 )

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Total operating and nonoperating special charges and unrealized (gains) losses on investments, net of income taxes $ 74 $ ( 13 )

Labor contract ratification bonuses.

During the nine months ended September 30, 2023, the Company recorded $ 814 million of expense associated with the agreements with ALPA, IAM and other work groups.

See Note 7 for additional information.

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

During the three and nine months ended September 30, 2023, the Company recorded $ 28 million and $ 88 million, respectively, of net charges primarily comprised of reserves for various legal

matters, accelerated depreciation related to certain of the Company's assets that will be retired early, an impairment of flight training equipment that is being sold and other gains and losses on the sale of assets.

During the three months ended March 31, 2024, the Company incurred $ 13 million of charges primarily consisting of a settlement related to a certain pilot long term disability plan, accelerated depreciation on assets with shortened lives, and other losses on disposal of assets, which were partially offset by a gain from a favorable outcome related to a certain contract dispute as well as gains on sales of assets.

Nonoperating unrealized (gains) losses on investments, net.

During the three and nine months ended September 30, 2023, the Company recorded losses of $ 54 million and gains of $ 54 million, respectively, primarily for the change in the market value of its investments in equity securities.

During the three months ended March 31, 2024, the Company recorded losses of $ 37 million primarily for the change in the market value of its investments in equity securities.

Nonoperating debt extinguishment and modification fees .

During the nine months ended September 30, 2023, the Company recorded $ 11 million of charges primarily related to the prepayment of $ 1.0 billion of the outstanding principal amount under a 2021 term loan facility.

During the three months ended March 31, 2024, the Company recorded $ 35 million of charges primarily related to the refinancing of its 2021 term loans.

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

During the three and nine months ended September 30, 2022, the Company recorded $ 20 million and $ 124 million, respectively, of net charges primarily comprised of $ 94 million for various legal matters.

During the three months ended March 31, 2023, the Company recorded $ 14 million of net charges primarily comprised of accelerated depreciation related to certain of the Company's assets that were retired early and other gains and losses on the sale of assets.

Nonoperating unrealized (gains) losses on investments, net.

During the three and nine months ended September 30, 2022, the Company recorded gains of $ 28 million and losses of $ 12 million, respectively, primarily related to the change in the market value of its investments in equity securities.

Nonoperating debt extinguishment and modification fees .

During the nine months ended September 30, 2022, the Company recorded $ 7 million of charges primarily related to the early redemption of $ 400 million of the outstanding principal amount of its 4.25 % senior notes due 2022.

During the three months ended March 31, 2023, the Company recorded gains of $ 24 million primarily related to the change in the market value of its investments in equity securities .

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

What changed 10-Q

Item 1. Financial Statements