United Airlines Holdings, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS. UNITED AIRLINES HOLDINGS, INC. STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED ) (In millions, except per share amounts) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Operating revenue: Passenger $ 13,680 $ 13,002 $ 24,993 $ 23,276 Cargo 414 362 805 760 Other 892 814 1,727 1,571 Total operating revenue 14,986 14,178 27,525 25,607 Operating expense: Salaries and related costs 4,098 3,710 8,030 7,032 Aircraft fuel 3,133 2,820 6,087 5,994 Landing fees and other rent 866 765 1,670 1,482 Aircraft maintenance materials and outside repairs 716 686 1,489 1,388 Depreciation and amortization 719 669 1,427 1,324 Regional capacity purchase 612 599 1,197 1,214 Distribution expenses 626 487 1,106 890 Aircraft rent 40 49 83 105 Special charges 36 859 49 873 Other 2,211 2,017 4,359 3,831 Total operating expense 13,057 12,661 25,497 24,133 Operating income 1,929 1,517 2,028 1,474 Nonoperating income (expense): Interest expense ( 427 ) ( 493 ) ( 881 ) ( 979 ) Interest income 190 216 367 386 Interest capitalized 60 42 121 80 Unrealized gains (losses) on investments, net ( 33 ) 84 ( 70 ) 108 Miscellaneous, net 20 21 10 62 Total nonoperating expense, net ( 190 ) ( 130 ) ( 453 ) ( 343 ) Income before income tax expense 1,739 1,387 1,575 1,131 Income tax expense 416 312 376 250 Net income $ 1,323 $ 1,075 $ 1,199 $ 881 Earnings per share, basic $ 4.02 $ 3.28 $ 3.65 $ 2.69 Earnings per share, diluted $ 3.96 $ 3.24 $ 3.60 $ 2.66 The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements. 3 Table of Contents UNITED AIRLINES HOLDINGS, INC. STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (In millions) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net income $ 1,323 $ 1,075 $ 1,199 $ 881 Other comprehensive income (loss), net of tax: Employee benefit plans ( 17 ) ( 34 ) ( 34 ) ( 69 ) Investments and other 1 ( 24 ) ( 1 ) ( 3 ) Total other comprehensive loss, net of tax ( 16 ) ( 58 ) ( 35 ) ( 72 ) Total comprehensive income, net $ 1,307 $ 1,017 $ 1,164 $ 809 The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements. 4 Table of Contents UNITED AIRLINES HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In millions, except shares) June 30, 2024 December 31, 2023 ASSETS Current assets: Cash and cash equivalents $ 10,864 $ 6,058 Short-term investments 4,384 8,330 Restricted cash 30 31 Receivables, less allowance for credit losses (2024 — $ 20 ; 2023 — $ 18 ) 2,376 1,898 Aircraft fuel, spare parts and supplies, less obsolescence allowance (2024 — $ 754 ; 2023 — $ 689 ) 1,680 1,561 Prepaid expenses and other 669 609 Total current assets 20,003 18,487 Operating property and equipment: Flight equipment 49,814 48,448 Other property and equipment 11,295 10,527 Purchase deposits for flight equipment 3,457 3,550 Total operating property and equipment 64,566 62,525 Less — Accumulated depreciation and amortization ( 23,901 ) ( 22,710 ) Total operating property and equipment, net 40,665 39,815 Operating lease right-of-use assets 3,803 3,914 Other assets: Goodwill 4,527 4,527 Intangibles, less accumulated amortization (2024 — $ 1,347 ; 2023 — $ 1,495 ) 2,699 2,725 Restricted cash 220 245 Investments in affiliates and other, less allowance for credit losses (2024 — $ 32 ; 2023 — $ 38 ) 1,337 1,391 Total other assets 8,783 8,888 Total assets $ 73,254 $ 71,104 (continued on next page) 5 Table of Contents UNITED AIRLINES HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In millions, except shares) June 30, 2024 December 31, 2023 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 4,478 $ 3,835 Accrued salaries and benefits 2,383 2,940 Advance ticket sales 9,365 6,704 Frequent flyer deferred revenue 3,252 3,095 Current maturities of long-term debt 4,757 4,018 Current maturities of operating leases 548 576 Current maturities of finance leases 110 172 Current maturities of other financial liabilities 68 57 Other 894 806 Total current liabilities 25,855 22,203 Long-term debt 21,687 25,057 Long-term obligations under operating leases 4,443 4,503 Long-term obligations under finance leases 65 91 Other liabilities and deferred credits: Frequent flyer deferred revenue 4,101 4,048 Pension liability 998 968 Postretirement benefit liability 612 637 Deferred income taxes 951 594 Other financial liabilities 2,576 2,265 Other 1,440 1,414 Total other liabilities and deferred credits 10,678 9,926 Commitments and contingencies Stockholders' equity: Preferred stock — — Common stock at par, $ 0.01 par value; authorized 1,000,000,000 shares; outstanding 328,832,139 and 328,018,739 shares at June 30, 2024 and December 31, 2023, respectively 4 4 Additional capital invested 9,001 8,992 Stock held in treasury, at cost ( 3,368 ) ( 3,441 ) Retained earnings 4,986 3,831 Accumulated other comprehensive loss ( 97 ) ( 62 ) Total stockholders' equity 10,526 9,324 Total liabilities and stockholders' equity $ 73,254 $ 71,104 The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements. 6 Table of Contents UNITED AIRLINES HOLDINGS, INC. CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED) (In millions) Six Months Ended June 30, 2024 2023 Cash Flows from Operating Activities: Net cash provided by operating activities $ 5,723 $ 6,941 Cash Flows from Investing Activities: Capital expenditures, net of flight equipment purchase deposit returns ( 2,530 ) ( 3,263 ) Purchases of short-term and other investments ( 1,754 ) ( 6,876 ) Proceeds from sale of short-term and other investments 5,820 6,702 Proceeds from sale of property and equipment 42 9 Other, net ( 3 ) 1 Net cash provided by (used in) investing activities 1,575 ( 3,427 ) Cash Flows from Financing Activities: Proceeds from issuance of debt and other financing liabilities, net of discounts and fees 3,718 1,591 Payments of long-term debt, finance leases and other financing liabilities ( 6,217 ) ( 2,614 ) Other, net ( 19 ) ( 31 ) Net cash used in financing activities ( 2,518 ) ( 1,054 ) Net increase in cash, cash equivalents and restricted cash 4,780 2,460 Cash, cash equivalents and restricted cash at beginning of the period 6,334 7,421 Cash, cash equivalents and restricted cash at end of the period (a) $ 11,114 $ 9,881 Investing and Financing Activities Not Affecting Cash: Property and equipment acquired through the issuance of debt, finance leases and other $ ( 206 ) $ 559 Right-of-use assets acquired through operating leases 143 434 Lease modifications and lease conversions 73 349 Investment interests received in exchange for loans, goods and services 18 25 (a) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheet: Current assets: Cash and cash equivalents $ 10,864 $ 9,605 Restricted cash — Current 30 38 Restricted cash — Non-Current 220 238 Total cash, cash equivalents and restricted cash $ 11,114 $ 9,881 The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements. 7 Table of Contents UNITED AIRLINES HOLDINGS, INC. STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY (UNAUDITED) (In millions) Common Stock Additional Capital Invested Treasury Stock Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Shares Amount Balance at March 31, 2024 328.8 $ 4 $ 8,973 $ ( 3,372 ) $ 3,664 $ ( 81 ) $ 9,188 Net income — — — — 1,323 — 1,323 Other comprehensive loss — — — — — ( 16 ) ( 16 ) Stock-settled share-based compensation — — 31 — — — 31 Stock issued for share-based awards, net of shares withheld for tax — — ( 3 ) 4 ( 1 ) — — Balance at June 30, 2024 328.8 $ 4 $ 9,001 $ ( 3,368 ) $ 4,986 $ ( 97 ) $ 10,526 Balance at December 31, 2023 328.0 $ 4 $ 8,992 $ ( 3,441 ) $ 3,831 $ ( 62 ) $ 9,324 Net income — — — — 1,199 — 1,199 Other comprehensive loss — — — — — ( 35 ) ( 35 ) Stock-settled share-based compensation — — 56 — — — 56 Stock issued for share-based awards, net of shares withheld for tax 0.8 — ( 47 ) 73 ( 44 ) — ( 18 ) Balance at June 30, 2024 328.8 $ 4 $ 9,001 $ ( 3,368 ) $ 4,986 $ ( 97 ) $ 10,526 Balance at March 31, 2023 328.0 $ 4 $ 8,926 $ ( 3,443 ) $ 1,020 $ 161 $ 6,668 Net income — — — — 1,075 — 1,075 Other comprehensive loss — — — — — ( 58 ) ( 58 ) Stock-settled share-based compensation — — 21 — — — 21 Stock issued for share-based awards, net of shares withheld for tax — — ( 2 ) 1 — — ( 1 ) Balance at June 30, 2023 328.0 $ 4 $ 8,945 $ ( 3,442 ) $ 2,095 $ 103 $ 7,705 Balance at December 31, 2022 326.9 $ 4 $ 8,986 $ ( 3,534 ) $ 1,265 $ 175 $ 6,896 Net income — — — — 881 — 881 Other comprehensive loss — — — — — ( 72 ) ( 72 ) Stock-settled share-based compensation — — 32 — — — 32 Stock issued for share-based awards, net of shares withheld for tax 1.1 — ( 73 ) 92 ( 51 ) — ( 32 ) Balance at June 30, 2023 328.0 $ 4 $ 8,945 $ ( 3,442 ) $ 2,095 $ 103 $ 7,705 The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements. 8 Table of Contents UNITED AIRLINES, INC. STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED) (In millions) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Operating revenue: Passenger $ 13,680 $ 13,002 $ 24,993 $ 23,276 Cargo 414 362 805 760 Other 892 814 1,727 1,571 Total operating revenue 14,986 14,178 27,525 25,607 Operating expense: Salaries and related costs 4,098 3,710 8,030 7,032 Aircraft fuel 3,133 2,820 6,087 5,994 Landing fees and other rent 866 765 1,670 1,482 Aircraft maintenance materials and outside repairs 716 686 1,489 1,388 Depreciation and amortization 719 669 1,427 1,324 Regional capacity purchase 612 599 1,197 1,214 Distribution expenses 626 487 1,106 890 Aircraft rent 40 49 83 105 Special charges 36 859 49 873 Other 2,210 2,016 4,358 3,830 Total operating expense 13,056 12,660 25,496 24,132 Operating income 1,930 1,518 2,029 1,475 Nonoperating income (expense): Interest expense ( 427 ) ( 493 ) ( 881 ) ( 979 ) Interest income 190 216 367 386 Interest capitalized 60 42 121 80 Unrealized gains (losses) on investments, net ( 33 ) 84 ( 70 ) 108 Miscellaneous, net 20 21 10 62 Total nonoperating expense, net ( 190 ) ( 130 ) ( 453 ) ( 343 ) Income before income tax expense 1,740 1,388 1,576 1,132 Income tax expense 416 313 376 251 Net income $ 1,324 $ 1,075 $ 1,200 $ 881 The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements. 9 Table of Contents UNITED AIRLINES, INC. STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (In millions) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net income $ 1,324 $ 1,075 $ 1,200 $ 881 Other comprehensive income (loss), net of tax: Employee benefit plans ( 17 ) ( 34 ) ( 34 ) ( 69 ) Investments and other 1 ( 24 ) ( 1 ) ( 3 ) Total other comprehensive loss, net of tax ( 16 ) ( 58 ) ( 35 ) ( 72 ) Total comprehensive income, net $ 1,308 $ 1,017 $ 1,165 $ 809 The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements. 10 Table of Contents UNITED AIRLINES, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In millions, except shares) June 30, 2024 December 31, 2023 ASSETS Current assets: Cash and cash equivalents $ 10,864 $ 6,058 Short-term investments 4,384 8,330 Restricted cash 30 31 Receivables, less allowance for credit losses (2024 — $ 20 ; 2023 — $ 18 ) 2,376 1,898 Aircraft fuel, spare parts and supplies, less obsolescence allowance (2024 — $ 754 ; 2023 — $ 689 ) 1,680 1,561 Prepaid expenses and other 669 609 Total current assets 20,003 18,487 Operating property and equipment: Flight equipment 49,814 48,448 Other property and equipment 11,295 10,527 Purchase deposits for flight equipment 3,457 3,550 Total operating property and equipment 64,566 62,525 Less — Accumulated depreciation and amortization ( 23,901 ) ( 22,710 ) Total operating property and equipment, net 40,665 39,815 Operating lease right-of-use assets 3,803 3,914 Other assets: Goodwill 4,527 4,527 Intangibles, less accumulated amortization (2024 — $ 1,347 ; 2023 — $ 1,495 ) 2,699 2,725 Restricted cash 220 245 Investments in affiliates and other, less allowance for credit losses (2024 — $ 32 ; 2023 —$ 38 ) 1,337 1,391 Total other assets 8,783 8,888 Total assets $ 73,254 $ 71,104 (continued on next page) 11 Table of Contents UNITED AIRLINES, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In millions, except shares) June 30, 2024 December 31, 2023 LIABILITIES AND STOCKHOLDER'S EQUITY Current liabilities: Accounts payable $ 4,478 $ 3,835 Accrued salaries and benefits 2,383 2,940 Advance ticket sales 9,365 6,704 Frequent flyer deferred revenue 3,252 3,095 Current maturities of long-term debt 4,757 4,018 Current maturities of operating leases 548 576 Current maturities of finance leases 110 172 Current maturities of other financial liabilities 68 57 Other 895 808 Total current liabilities 25,856 22,205 Long-term debt 21,687 25,057 Long-term obligations under operating leases 4,443 4,503 Long-term obligations under finance leases 65 91 Other liabilities and deferred credits: Frequent flyer deferred revenue 4,101 4,048 Pension liability 998 968 Postretirement benefit liability 612 637 Deferred income taxes 981 622 Other financial liabilities 2,576 2,265 Other 1,440 1,414 Total other liabilities and deferred credits 10,708 9,954 Commitments and contingencies Stockholder's equity: Common stock at par, $ 0.01 par value; authorized 1,000 shares; issued and outstanding 1,000 shares at both June 30, 2024 and December 31, 2023 — — Additional capital invested 538 482 Retained earnings 7,536 6,336 Accumulated other comprehensive loss ( 97 ) ( 62 ) Payable to parent 2,518 2,538 Total stockholder's equity 10,495 9,294 Total liabilities and stockholder's equity $ 73,254 $ 71,104 The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements. 12 Table of Contents UNITED AIRLINES, INC. CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED) (In millions) Six Months Ended June 30, 2024 2023 Cash Flows from Operating Activities: Net cash provided by operating activities $ 5,704 $ 6,910 Cash Flows from Investing Activities: Capital expenditures, net of flight equipment purchase deposit returns ( 2,530 ) ( 3,263 ) Purchases of short-term and other investments ( 1,754 ) ( 6,876 ) Proceeds from sale of short-term and other investments 5,820 6,702 Proceeds from sale of property and equipment 42 9 Other, net ( 3 ) 1 Net cash provided by (used in) investing activities 1,575 ( 3,427 ) Cash Flows from Financing Activities: Proceeds from issuance of debt and other financing liabilities, net of discounts and fees 3,718 1,591 Payments of long-term debt, finance leases and other financing liabilities ( 6,217 ) ( 2,614 ) Net cash used in financing activities ( 2,499 ) ( 1,023 ) Net increase in cash, cash equivalents and restricted cash 4,780 2,460 Cash, cash equivalents and restricted cash at beginning of the period 6,334 7,421 Cash, cash equivalents and restricted cash at end of the period (a) $ 11,114 $ 9,881 Investing and Financing Activities Not Affecting Cash: Property and equipment acquired through the issuance of debt, finance leases and other $ ( 206 ) $ 559 Right-of-use assets acquired through operating leases 143 434 Lease modifications and lease conversions 73 349 Investment interests received in exchange for loans, goods and services 18 25 (a) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheet: Current assets: Cash and cash equivalents $ 10,864 $ 9,605 Restricted cash — Current 30 38 Restricted cash — Non-Current 220 238 Total cash, cash equivalents and restricted cash $ 11,114 $ 9,881 The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements. 13 Table of Contents UNITED AIRLINES, INC. STATEMENTS OF CONSOLIDATED STOCKHOLDER'S EQUITY (UNAUDITED) (In millions) Additional Capital Invested Retained Earnings Accumulated Other Comprehensive Income (Loss) Payable to Parent Total Balance at March 31, 2024 $ 507 $ 6,212 $ ( 81 ) $ 2,520 $ 9,158 Net income — 1,324 — — 1,324 Other comprehensive loss — — ( 16 ) — ( 16 ) Stock-settled share-based compensation 31 — — — 31 Other — — — ( 2 ) ( 2 ) Balance at June 30, 2024 $ 538 $ 7,536 $ ( 97 ) $ 2,518 $ 10,495 Balance at December 31, 2023 $ 482 $ 6,336 $ ( 62 ) $ 2,538 $ 9,294 Net income — 1,200 — — 1,200 Other comprehensive loss — — ( 35 ) — ( 35 ) Stock-settled share-based compensation 56 — — — 56 Other — — — ( 20 ) ( 20 ) Balance at June 30, 2024 $ 538 $ 7,536 $ ( 97 ) $ 2,518 $ 10,495 Balance at March 31, 2023 $ 414 $ 3,522 $ 161 $ 2,539 $ 6,636 Net income — 1,075 — — 1,075 Other comprehensive loss — — ( 58 ) — ( 58 ) Stock-settled share-based compensation 21 — — — 21 Balance at June 30, 2023 $ 435 $ 4,597 $ 103 $ 2,539 $ 7,674 Balance at December 31, 2022 $ 403 $ 3,716 $ 175 $ 2,571 $ 6,865 Net income — 881 — — 881 Other comprehensive loss — — ( 72 ) — ( 72 ) Stock-settled share-based compensation 32 — — — 32 Other — — — ( 32 ) ( 32 ) Balance at June 30, 2023 $ 435 $ 4,597 $ 103 $ 2,539 $ 7,674 The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements. 14 Table of Contents UNITED AIRLINES HOLDINGS, INC. AND UNITED AIRLINES, INC. COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) United Airlines Holdings, 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"). This Quarterly Report on Form 10-Q is a combined report of UAL and United, including their respective consolidated financial statements. As UAL consolidates United for financial statement purposes, disclosures that relate to activities of United also apply to UAL, unless otherwise noted. United's operating revenues and operating expenses comprise nearly 100% of UAL's revenues and operating expenses. In addition, United comprises approximately the entire balance of UAL's assets, liabilities and operating cash flows. When appropriate, UAL and United are named specifically for their individual contractual obligations and related disclosures, and any significant differences between the operations and results of UAL and United are separately disclosed and explained. We sometimes use the words "we," "our," "us," and the "Company" in this report for disclosures that relate to all of UAL and United. The UAL and United unaudited condensed consolidated financial statements shown here have been prepared as required by the U.S. Securities and Exchange Commission (the "SEC"). Some information and footnote disclosures normally included in financial statements that comply with accounting principles generally accepted in the United States ("GAAP") have been condensed or omitted as permitted by the SEC. 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, 2023 (the "2023 Form 10-K"). The Company's quarterly financial data is subject to seasonal fluctuations. Historically its second and third quarter financial results have reflected higher travel demand and were better than its first and fourth quarter financial results. NOTE 1 — REVENUE Revenue by Geography. The table below presents the Company's operating revenue by principal geographic region (as defined by the U.S. Department of Transportation) (in millions): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Domestic (U.S. and Canada) $ 8,761 $ 8,417 $ 16,434 $ 15,584 Atlantic 3,277 3,229 5,110 5,061 Latin America 1,346 1,273 2,791 2,589 Pacific 1,602 1,259 3,190 2,373 Total $ 14,986 $ 14,178 $ 27,525 $ 25,607 Advance Ticket Sales. The Company defers amounts related to future travel in its Advance ticket sales liability account. All tickets sold at any given point in time have travel dates through the next 12 months. 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. In the six months ended June 30, 2024 and 2023, the Company recognized approximately $ 5.0 billion and $ 4.6 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. 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 $ 1.2 billion and $ 2.2 billion of ancillary fees within passenger revenue in the three and six months ended June 30, 2024, respectively. The Company recorded $ 1.0 billion and $ 1.9 billion of ancillary fees within passenger revenue in the three and six months ended June 30, 2023, respectively. 15 Table of Contents Frequent Flyer Accounting. The table below presents a roll forward of Frequent flyer deferred revenue (in millions): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Total Frequent flyer deferred revenue - beginning balance $ 7,279 $ 6,860 $ 7,143 $ 6,675 Total miles awarded 919 902 1,759 1,649 Travel miles redeemed ( 818 ) ( 712 ) ( 1,483 ) ( 1,243 ) Non-travel miles redeemed ( 27 ) ( 26 ) ( 66 ) ( 57 ) Total Frequent flyer deferred revenue - ending balance $ 7,353 $ 7,024 $ 7,353 $ 7,024 In the three and six months ended June 30, 2024, the Company recognized, in Other operating revenue, $ 0.7 billion and $ 1.5 billion, respectively, related to the marketing, advertising, non-travel miles redeemed (net of related costs) and other travel-related benefits of the mileage revenue associated with our various partner agreements including, but not limited to, our JPMorgan Chase Bank, N.A. MileagePlus co-brand agreement. The Company recognized $ 0.7 billion and $ 1.3 billion, respectively, in the three and six months ended June 30, 2023, 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 our estimate of expected redemptions in the next 12 months. NOTE 2 — EARNINGS 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 June 30, Six Months Ended June 30, 2024 2023 2024 2023 Earnings available to common stockholders $ 1,323 $ 1,075 $ 1,199 $ 881 Basic weighted-average shares outstanding 328.8 328.0 328.6 327.7 Dilutive effect of stock warrants (a) 2.7 2.3 2.2 2.3 Dilutive effect of employee stock awards 2.4 1.2 2.3 1.5 Diluted weighted-average shares outstanding 333.9 331.5 333.1 331.5 Earnings per share, basic $ 4.02 $ 3.28 $ 3.65 $ 2.69 Earnings per share, diluted $ 3.96 $ 3.24 $ 3.60 $ 2.66 Potentially dilutive securities (b) Stock warrants (a) 1.5 1.5 1.5 1.5 Employee stock awards 0.6 0.7 0.6 0.7 (a) Represent warrants for 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. These warrants were originally 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. Treasury sold these warrants at an auction held on June 6, 2024. All warrants were outstanding as of June 30, 2024. (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. 16 Table of Contents NOTE 3 — ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The table below presents the components of the Company's accumulated other comprehensive income (loss), net of tax ("AOCI") (in millions): Pension and Other Postretirement Liabilities Investments and Other Deferred Taxes (a) Total Balance at March 31, 2024 $ 267 $ ( 6 ) $ ( 342 ) $ ( 81 ) Changes in value 3 1 ( 1 ) 3 Amounts reclassified to earnings ( 25 ) (b) — 6 ( 19 ) Balance at June 30, 2024 $ 245 $ ( 5 ) $ ( 337 ) $ ( 97 ) Balance at December 31, 2023 $ 289 $ ( 4 ) $ ( 347 ) $ ( 62 ) Changes in value 6 ( 1 ) ( 1 ) 4 Amounts reclassified to earnings ( 50 ) (b) — 11 ( 39 ) Balance at June 30, 2024 $ 245 $ ( 5 ) $ ( 337 ) $ ( 97 ) Balance at March 31, 2023 $ 582 $ ( 8 ) $ ( 413 ) $ 161 Changes in value ( 8 ) ( 31 ) 8 ( 31 ) Amounts reclassified to earnings ( 35 ) (b) — 8 ( 27 ) Balance at June 30, 2023 $ 539 $ ( 39 ) $ ( 397 ) $ 103 Balance at December 31, 2022 $ 626 $ ( 35 ) $ ( 416 ) $ 175 Changes in value ( 17 ) ( 4 ) 4 ( 17 ) Amounts reclassified to earnings ( 70 ) (b) — 15 ( 55 ) Balance at June 30, 2023 $ 539 $ ( 39 ) $ ( 397 ) $ 103 (a) Includes approximately $ 285 million of deferred income tax expense that will not be recognized in net income until the related pension and postretirement benefit obligations are fully extinguished. We consider all income sources, including other comprehensive income, in determining the amount of tax benefit allocated to results from operations. (b) This AOCI component is included in the computation of net periodic pension and other postretirement costs, specifically the following components: amortization of unrecognized (gain) loss, amortization of prior service credit and other (see Note 5 of this report for additional information). NOTE 4 — INCOME TAXES The Company's effective tax rates for the three and six months ended June 30, 2024 were 23.9 % and 23.9 %, respectively. The Company's effective tax rates for the three and six months ended June 30, 2023 were 22.5 % and 22.1 %, respectively. The provision for income taxes is based on the estimated annual effective tax rate, which represents a blend of federal, state and foreign taxes and includes the impact of certain nondeductible items. NOTE 5 — EMPLOYEE BENEFIT PLANS Defined Benefit Pension and Other Postretirement Benefit Plans. The Company's net periodic benefit cost includes the following components for the three months ended June 30 (in millions): Pension Benefits Other Postretirement Benefits Affected Line Item in the Statements of Consolidated Operations 2024 2023 2024 2023 Service cost $ 34 $ 31 $ 2 $ 1 Salaries and related costs Interest cost 58 55 9 11 Miscellaneous, net Expected return on plan assets ( 69 ) ( 63 ) ( 1 ) ( 1 ) Miscellaneous, net Amortization of unrecognized (gain) loss 5 2 ( 6 ) ( 10 ) Miscellaneous, net Amortization of prior service credit — — ( 24 ) ( 28 ) Miscellaneous, net Other — 1 — — Miscellaneous, net Total $ 28 $ 26 $ ( 20 ) $ ( 27 ) 17 Table of Contents The Company's net periodic benefit cost includes the following components for the six months ended June 30 (in millions): Pension Benefits Other Postretirement Benefits Affected Line Item in the Statements of Consolidated Operations 2024 2023 2024 2023 Service cost $ 68 $ 62 $ 3 $ 2 Salaries and related costs Interest cost 115 110 19 21 Miscellaneous, net Expected return on plan assets ( 138 ) ( 126 ) ( 1 ) ( 1 ) Miscellaneous, net Amortization of unrecognized (gain) loss 10 4 ( 13 ) ( 19 ) Miscellaneous, net Amortization of prior service credit — — ( 47 ) ( 56 ) Miscellaneous, net Other — 1 — — Miscellaneous, net Total $ 55 $ 51 $ ( 39 ) $ ( 53 ) 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): June 30, 2024 December 31, 2023 Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 10,864 $ 10,864 $ — $ — $ 6,058 $ 6,058 $ — $ — Restricted cash — current 30 30 — — 31 31 — — Restricted cash — non-current 220 220 — — 245 245 — — Short-term investments: U.S. government and agency notes 4,062 — 4,062 — 8,257 — 8,257 — Certificates of deposit placed through an account registry service (CDARS) 73 — 73 — 73 — 73 — Corporate Debt 249 — 249 — — — — — Long-term investments: Equity securities 80 80 — — 177 177 — — Investments presented in the table above have the same fair value as their carrying value. Restricted cash - current — Primarily includes amounts to be used for the payment of fees, principal and interest on senior secured notes and a secured term loan facility (the "MileagePlus Financing") secured by substantially all of the assets of Mileage Plus Holdings, LLC, a direct wholly-owned subsidiary of United. 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 less than two years . 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. and Mesa Air Group, Inc. Other fair value information. The table below presents the carrying values and estimated fair values of financial instruments not presented in the tables above (in millions). Carrying amounts include any related discounts, premiums and issuance costs: June 30, 2024 December 31, 2023 Carrying Amount Fair Value Carrying Amount Fair Value Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Long-term debt $ 26,444 $ 25,978 $ — $ 19,307 $ 6,671 $ 29,075 $ 28,302 $ — $ 22,543 $ 5,759 18 Table of Contents Fair value of the financial instruments included in the tables above was determined as follows: Description Fair Value Methodology Cash and cash equivalents and Restricted cash (current and non-current) The carrying amounts of these assets approximate fair value. Short-term and Long-term investments Fair value is based on (a) the trading prices of the investment or similar instruments or (b) broker quotes obtained by third-party valuation services. Long-term debt Fair values are based on either market prices or the discounted amount of future cash flows using our current incremental rate of borrowing for similar liabilities. Equity Method Investments. As of June 30, 2024, United holds investments, accounted for using the equity method, with a combined carrying value of approximately $ 231 million. Significant equity method investments are described below: • Republic Airways Holdings Inc. United holds a 19 % minority interest in Republic Airways Holdings Inc., which is the parent company of Republic Airways Inc. ("Republic"). Republic currently operates 65 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"). United holds, through its corporate venture capital arm, United Airlines Ventures, Ltd., a 33 % ownership interest in the Fund. The Fund is an investment vehicle designed to invest in start-ups developing technologies focused on decarbonizing aviation and its associated energy supply chains, including through research and production, and technologies associated with sustainable aviation fuel (SAF). Other Investments. As of June 30, 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 June 30, 2024, the carrying value of these investments was $ 423 million. Notes Receivable. As of June 30, 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 Commitments. As of June 30, 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: Contractual Aircraft Deliveries (b) Expected Aircraft Deliveries (c) Aircraft Type Number of Firm Commitments (a) Last Six Months of 2024 2025 After 2025 Last Six Months of 2024 2025 After 2025 787 150 8 18 124 4 11 135 737 MAX 8 33 33 — — 16 17 — 737 MAX 9 143 33 40 70 9 44 90 737 MAX 10 167 — — 167 — — 167 A321neo 118 18 22 78 18 22 78 A321XLR 50 — — 50 — — 50 A350 45 — — 45 — — 45 (a) United also has options and purchase rights for additional aircraft. (b) Contractual aircraft deliveries reflect an agreement United entered into with Airbus on July 16, 2024 to adjust delivery schedules for the A321neo ("Airbus Agreement"). (c) 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. 19 Table of Contents The aircraft listed in the table above are scheduled for delivery through 2033. The amount and timing of the Company's future capital commitments could change to the extent that: (i) the Company and the aircraft manufacturers, with whom the Company has existing orders for new aircraft, agree to modify the contracts governing those orders; (ii) rights are exercised pursuant to the relevant agreements to cancel deliveries or modify the timing of deliveries; or (iii) the aircraft manufacturers are unable to deliver in accordance with the terms of those orders. On April 14, 2024, the Company entered into confidential arrangements with Boeing with respect to compensation for financial damages incurred in the 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 was in the form of credit memos for use on future purchases from Boeing. The Company is accounting for these arrangements as a reduction to the cost basis of the previously-delivered Boeing 737 MAX 9 aircraft and future deliveries of the Boeing 737 MAX 9 and Boeing 737 MAX 10 aircraft, which will reduce future depreciation expense associated with these aircraft. The table below summarizes United's firm commitments as of June 30, 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 Airbus Agreement and the April 14, 2024 arrangements between United and Boeing. (in billions) Last six months of 2024 $ 5.6 2025 6.6 2026 5.5 2027 4.7 2028 7.2 After 2028 27.8 $ 57.4 In the second quarter of 2024, the Company signed letters of intent to enter into future leasing arrangements with major aircraft leasing companies for 40 Airbus A321neo aircraft with expected deliveries in 2026 and 2027. In July 2024, the Company entered into definitive agreements to lease 35 of the 40 Airbus A321neo aircraft, which will commence between 2026 and 2027. As of the filing date of this report, we have leases of approximately $ 3.7 billion for several mainline aircraft, regional aircraft under CPAs, airport facility and office space leases, none of which had commenced as of such date. These leases will commence between 2024 and 2038 with lease terms of up to 12 years. Regional CPAs . During the six months ended June 30, 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. The most important of these variables is the number of scheduled block hours. Although we are not required to purchase a minimum number of block hours under certain of our CPAs, we have set forth below estimates of our future payments under the CPAs based on our assumptions. The actual amounts we pay to our regional operators under CPAs could differ materially from these estimates. United's estimates of its future payments under all of the CPAs do not include the portion of the underlying obligation for any aircraft leased to a regional carrier, or deemed to be leased from other regional carriers, and facility rent. 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 June 30, 2024 , our estimated future payments through the end of the terms of our CPAs are presented in the table below : 20 Table of Contents (in billions) Last six months of 2024 $ 1.3 2025 2.4 2026 2.2 2027 1.7 2028 1.4 After 2028 4.3 $ 13.3 Guarantees. As of June 30, 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. The leasing arrangements associated with these obligations are accounted for as operating leases recognized on the Company's consolidated balance sheet with the associated expense recorded on a straight-line basis over the expected lease term. All of these bonds are due between 2024 and 2041. As of June 30, 2024, United is the guarantor of $ 70 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. 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 June 30, 2024, the Company had $ 10.3 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 $ 7.2 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 to withholding taxes, subject to customary exclusions. Labor . As of June 30, 2024, the Company had approximately 106,000 employees, of whom approximately 82 % were represented by various U.S. labor organizations. On February 23, 2024, United's International Association of Machinists and Aerospace Workers ("IAM") represented security guards in California and central load planners ratified new collective bargaining agreements. The ratified agreements are effective through 2025. On February 28, 2024, United and the International Brotherhood of Teamsters (IBT) reached a tentative agreement for an extension to their labor contract, which covers United's technicians and related employees. On April 17, 2024, the United technicians declined the proposed four-year contract extension and will continue to work under their current agreement, which becomes amendable in December 2024. NOTE 8 — DEBT 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, 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. 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. As of June 30, 2024, we had $ 2.965 billion undrawn and available under the Revolving Credit Facility. 21 Table of Contents 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 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 $ 249 million of unamortized debt discount, premiums and debt issuance costs) as of June 30, 2024 under then-outstanding long-term debt agreements (in millions): Last six months of 2024 $ 3,349 2025 2,900 2026 4,694 2027 2,225 2028 1,688 After 2028 11,837 $ 26,693 During the six months ended June 30, 2024, United borrowed $ 0.9 billion aggregate principal amount from financial institutions to finance the purchase of aircraft. The notes evidencing these borrowings, which are secured by the related aircraft, mature between 2034 and 2036 and bear interest at variable rates equal to Term SOFR plus a margin of up to 2.00 %. Our debt agreements contain customary terms and conditions as well as various affirmative, negative and financial covenants that, among other things, restrict the ability of the Company and its subsidiaries to incur additional indebtedness and pay dividends or repurchase stock. As of June 30, 2024, UAL and United were in compliance with their respective debt covenants. On July 2, 2024, the Company voluntarily prepaid in full the outstanding principal balance of the term loan facility of the MileagePlus Financing, which was $ 1.8 billion as of June 30, 2024, in addition to all accrued and unpaid interest and fees under the term loan facility and terminated all commitments thereunder . NOTE 9 — SPECIAL CHARGES For the three and six months ended June 30, 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 June 30, Six Months Ended June 30, 2024 2023 2024 2023 Operating: (Gains) losses on sale of assets and other special charges $ 36 $ 46 $ 49 $ 60 Labor contract ratification bonuses — 813 — 813 Total operating special charges 36 859 49 873 Nonoperating: Nonoperating unrealized (gains) losses on investments, net 33 ( 84 ) 70 ( 108 ) Nonoperating debt extinguishment and modification fees — 11 35 11 Total nonoperating special charges and unrealized (gains) losses on investments, net 33 ( 73 ) 105 ( 97 ) Total operating and nonoperating special charges and unrealized (gains) losses on investments, net 69 786 154 776 Income tax benefit, net of valuation allowance ( 8 ) ( 194 ) ( 19 ) ( 197 ) Total operating and nonoperating special charges and unrealized (gains) losses on investments, net of income taxes $ 61 $ 592 $ 135 $ 579 22 Table of Contents 2024 (Gains) losses on sale of assets and other special charges . During the three and six months ended June 30, 2024, the Company incurred $ 36 million and $ 49 million, respectively, of charges primarily consisting of a write down to fair market value for assets held for sale, losses on the disposal of assets, a settlement related to a certain pilot long term disability plan, accelerated depreciation on assets with shortened lives and write-off of certain international slots no longer in use, 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 six months ended June 30, 2024, the Company recorded losses of $ 33 million and $ 70 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 six months ended June 30, 2024, the Company recorded $ 35 million of charges primarily related to the refinancing of its 2021 term loans. 2023 (Gains) losses on sale of assets and other special charges. During the three and six months ended June 30, 2023, the Company recorded $ 46 million and $ 60 million, respectively, of net charges primarily comprised of reserves for various legal matters, accelerated depreciation related to certain of the Company's assets that were retired early and other gains and losses on the sale of assets. Labor contract ratification bonuses. During the three and six months ended June 30, 2023, the Company recorded $ 813 million of expense associated with an Agreement in Principle with its employees represented by the Air Line Pilots Association and ratified contracts with the IAM. Nonoperating unrealized (gains) losses on investments, net. During the three and six months ended June 30, 2023, the Company recorded gains of $ 84 million and $ 108 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 three and six months ended June 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. 23 Table of Contents