What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-10-16 compared with 2024-07-18 · 112 added, 96 removed, 297 unchanged (41% of the section changed)

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increasing maintenance expenses;

high interest rates;

changes in interest rates;

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

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

increased oversight by the Federal Aviation Administration ("FAA") of the Company’s operations in connection with its evaluation of the Company;

the closure of our flying airspace and termination of other operations due to regional conflicts, including the suspension of our overflying in Russian airspace as a result of the Russia-Ukraine military conflict and interruptions of our flying to Tel Aviv as a result of the Israeli-Hamas military conflict, as well as any escalation of the broader economic consequences of these conflicts beyond their current scope;

the closure of our flying airspace and termination of other operations due to regional conflicts, including the suspension of our overflying in Russian airspace as a result of the Russia-Ukraine military conflict and interruptions of our flying as a result of the military conflict in the Middle East, as well as any escalation of the broader economic consequences of these conflicts beyond their current scope;

delays in aircraft certification (especially relating to the 737 MAX 10 aircraft);

increased FAA oversight of the aircraft production process;

and any legal requirement that would result in a reshaping of the benefits that we provide to our consumers through the co-branded credit cards issued by our partner.

increased Federal Aviation Administration ("FAA") oversight of the aircraft production process;

and any legal requirement that would result in a reshaping of the benefits that we provide to our consumers through our loyalty program or the co-branded credit cards issued by our partner.

Changes in existing applicable legal requirements or new applicable legal requirements as well as the related interpretations and enforcement practices regarding them, create uncertainty about how such laws and regulations will be understood and applied.

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RESULTS OF OPERATIONS

The following discussion provides an analysis of our results of operations and reasons for material changes therein for the three and six months ended June 30, 2024, as compared to the corresponding period in 2023.

Second Quarter 2024 Compared to Second Quarter 2023

The Company recorded net income of $1.3 billion for the second quarter of 2024 as compared to net income of $1.1 billion for the second quarter of 2023.

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

The following discussion provides an analysis of our results of operations and reasons for material changes therein for the three and nine months ended September 30, 2024, as compared to the corresponding period in 2023.

Third Quarter 2024 Compared to Third Quarter 2023

The Company recorded net income of $1.0 billion for the third quarter of 2024 as compared to net income of $1.1 billion for the third quarter of 2023.

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

2024 2023 Increase (Decrease) % Change

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Net income $ 965 $ 1,137 $ (172) (15.1)

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

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

2024 2023 Increase (Decrease) % Change

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Fuel gallons consumed (millions) 1,170 1,132 38 3.4

Employee headcount, as of June 30

Employee headcount, as of September 30

106,500 102,000 4,500 4.4

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Operating Revenue.

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

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

2024 2023 Increase (Decrease) % Change

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Total operating revenue $ 14,843 $ 14,484 $ 359 2.5

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

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

Increase (decrease) from 2023:

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Passenger load factor (points) (0.3) (0.6) (5.3) 0.1 (1.1)

Passenger revenue increased $0.7 billion, or 5.2%, in the second quarter of 2024 as compared to the year-ago period, primarily due to an 8.3% increase in capacity and a 5.8% increase in passengers.

Cargo revenue increased $52 million, or 14.4%, in the second quarter of 2024 as compared to the year-ago period, primarily due to higher tonnage and partially offset by lower yields.

Other operating revenue increased $78 million, or 9.6%, in the second quarter of 2024 as compared to the year-ago period, primarily due to an increase in mileage revenue from non-airline partners, including credit card spending with our co-branded

credit card partner, JPMorgan Chase Bank, N.A., as well as increases in the purchases of United Club memberships, visitor volume and purchases of one-time United Club passes.

Passenger revenue increased $212 million, or 1.6%, in the third quarter of 2024 as compared to the year-ago period, primarily due to a 4.1% increase in capacity, partially offset by lower yields in all geographic regions except Atlantic.

Cargo revenue increased $84 million, or 25.2%, in the third quarter of 2024 as compared to the year-ago period, primarily due to higher tonnage.

Other operating revenue increased $63 million, or 7.9%, in the third quarter of 2024 as compared to the year-ago period, primarily due to an increase in mileage revenue from non-airline partners, including credit card spending with our co-branded credit card partner, JPMorgan Chase Bank, N.A., as well as increases in the purchases of United Club memberships, visitor volume and purchases of one-time United Club passes.

Operating Expenses.

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

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

2024 2023 Increase (Decrease) % Change (a)

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(a) NM - Greater than 100% change or otherwise not meaningful.

Salaries and related costs increased $388 million, or 10.5%, in the second quarter of 2024 as compared to the year-ago period, primarily due to annual wage rate increases across certain employee groups and a 6.2% increase in headcount largely due to increased flight activity.

Aircraft fuel expense increased by $313 million, or 11.1%, in the second quarter of 2024 as compared to the year-ago period, due to increased consumption from higher flight activity and a higher average price per gallon of fuel.

The table below presents the significant changes in aircraft fuel cost per gallon in the three months ended June 30 (in millions, except percentage change and per gallon data):

Salaries and related costs increased $409 million, or 10.4%, in the third quarter of 2024 as compared to the year-ago period, primarily due to annual wage rate increases across certain employee groups and a 4.4% increase in headcount largely due to increased flight activity.

Aircraft fuel expense decreased by $349 million, or 10.4%, in the third quarter of 2024 as compared to the year-ago period, due to a lower average price per gallon of fuel, partially offset by increased consumption from higher flight activity.

The table below presents the significant changes in aircraft fuel cost per gallon in the three months ended September 30 (in millions, except percentage change and per gallon data):

2024 2023 Increase (Decrease) % Change

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Average price per gallon $ 2.56 $ 2.95 $ (0.39) (13.2) %

Landing fees and other rent increased $101 million, or 13.2%, in the second quarter of 2024 as compared to the year-ago period, primarily due to rate increases at various airports, terminal expansions and other increases in the number of airport gates and higher landed weight volume due to increased flight activity.

Depreciation expense increased $50 million, or 7.5%, in the second quarter of 2024 as compared to the year-ago period, primarily due to the induction of new aircraft and related spare parts, as well as certain aircraft improvements.

Distribution expenses increased $139 million, or 28.5%, in the second quarter of 2024 as compared to the year-ago period, primarily due to higher credit card fees, agency commissions and global distribution fees driven by the overall increase in passenger revenue and $64 million of commissions that were recorded as contra-revenue in 2023.

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

Landing fees and other rent increased $65 million, or 8.1%, in the third quarter of 2024 as compared to the year-ago period, primarily due to rate increases at various airports, terminal expansions and other increases in the number of airport gates and higher landed weight volume due to increased flight activity.

Aircraft maintenance materials and outside repairs increased $81 million, or 11.8%, in the third quarter of 2024 as compared to the year-ago period, primarily due to increased volumes of engine overhauls and component repair costs.

Depreciation expense increased $79 million, or 11.9%, in the third quarter of 2024 as compared to the year-ago period, primarily due to the induction of new aircraft and related spare parts, as well as certain aircraft improvements.

Regional capacity purchase expense increased $59 million, or 10.0%, in the third quarter of 2024 as compared to the year-ago period, primarily due to an increase in regional capacity.

Distribution expenses increased $58 million, or 11.2%, in the third quarter of 2024 as compared to the year-ago period, primarily due to $68 million of commissions that were recorded as contra-revenue in 2023.

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

(Gains) losses on sale of assets and other special charges $ (5) $ 28

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

Other operating expenses increased $194 million, or 9.6%, in the second quarter of 2024 as compared to the year ago period, primarily as a direct result of the increase in flight activity and onboard passengers as well as the impacts of inflationary pressures.

Other operating expenses increased $146 million, or 6.8%, in the third quarter of 2024 as compared to the year ago period, primarily due to increased flight activity and onboard passengers as well as the impacts of inflationary pressures.

Other operating expenses include expenditures related to information technology projects and services, food and beverage offerings, passenger services, personnel-related costs and ground handling.

Nonoperating Income (Expense ).

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

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

2024 2023 Increase (Decrease) % Change

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Unrealized gains (losses) on investments, net (90) (54) 36 NM

Miscellaneous, net 20 21 (1) (4.8)

Total $ (190) $ (130) $ 60 46.2

Interest expense decreased $66 million, or 13.4%, in the second quarter of 2024 as compared to the year-ago period, primarily due to declining debt balances and lower interest rates on refinanced debt.

Interest income decreased $26 million, or 12.0%, in the second quarter of 2024 as compared to the year-ago period, primarily due to lower short-term investments in U.S.

government and agency notes, which was partially offset by higher interest rates.

Unrealized losses on investments, net, was $33 million in the second quarter of 2024 as compared to $84 million in unrealized gains in the year-ago period, primarily due to the change in the market value of the Company's investments in equity securities.

Miscellaneous, net (50) 11 (61) NM

Total nonoperating income (expense) $ (279) $ (254) $ 25 9.8

Interest expense decreased $114 million, or 23.1%, in the third quarter of 2024 as compared to the year-ago period, primarily due to lower debt balances as a result of various debt prepayments and scheduled amortization combined with lower interest rates on refinanced debt.

Interest income decreased $47 million, or 20.1%, in the third quarter of 2024 as compared to the year-ago period, primarily due to lower balances in our short-term investment portfolio, which was partially offset by higher interest rates.

Unrealized losses on investments, net, was $90 million in the third quarter of 2024 as compared to $54 million in the year-ago period, primarily due to the change in the market value of the Company's investments in equity securities.

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

Miscellaneous, net changed by $61 million in the third quarter of 2024 as compared to the year-ago period, primarily due to $75 million of charges related to the prepayment in full of the outstanding principal balance of its MileagePlus term loan in July 2024.

I ncome Taxes.

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

First Six Months 2024 Compared to First Six Months 2023

The Company recorded net income of $1.2 billion in the first six months of 2024 as compared to net income of $0.9 billion in the first six months of 2023.

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

First Nine Months 2024 Compared to First Nine Months 2023

The Company recorded net income of $2.2 billion in the first nine months of 2024 as compared to net income of $2.0 billion in the first nine months of 2023.

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

2024 2023 Increase (Decrease) % Change

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Net income $ 2,164 $ 2,018 $ 146 7.2

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

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

2024 2023 Increase (Decrease) % Change

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Fuel gallons consumed (millions) 3,329 3,146 183 5.8

Employee headcount, as of June 30

Employee headcount, as of September 30

106,500 102,000 4,500 4.4

Operating Revenue.

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

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

2024 2023 Increase (Decrease) % Change

Passenger revenue $ 24,993 $ 23,276 $ 1,717 7.4

Passenger $ 38,554 $ 36,625 $ 1,929 5.3

Cargo 1,222 1,093 129 11.8

Other operating revenue 1,727 1,571 156 9.9

Other 2,592 2,373 219 9.2

Total operating revenue $ 42,368 $ 40,091 $ 2,277 5.7

The table below presents selected passenger revenue and operating data, broken out by geographic region, expressed as year-over-year changes for the six months ended June 30, 2024 compared to the six months ended June 30, 2023:

The table below presents selected passenger revenue and operating data, broken out by geographic region, expressed as year-over-year changes for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023:

Increase (decrease) from 2023:

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Passenger load factor (points) 0.5 (1.3) (6.6) (1.5) (1.1)

Passenger revenue increased $1.7 billion, or 7.4%, in the first six months of 2024 as compared to the year-ago period, primarily due to an 8.7% increase in capacity as well as a 6.3% increase in passengers.

Cargo revenue increased $45 million, or 5.9%, in the first six months of 2024 as compared to the year-ago period, primarily due to higher tonnage and partially offset by lower yields.

Other operating revenue increased $156 million, or 9.9%, in the first six months of 2024 as compared to the year-ago period, primarily due to an increase in mileage revenue from non-airline partners, including credit card spending with our co-branded credit card partner, JPMorgan Chase Bank, N.A., as well as increases in the purchases of United Club memberships, visitor volume and purchases of one-time United Club passes.

Passenger revenue increased $1.9 billion, or 5.3%, in the first nine months of 2024 as compared to the year-ago period, primarily due to a 7.0% increase in capacity as well as a 5.0% increase in passengers.

Cargo revenue increased $129 million, or 11.8%, in the first nine months of 2024 as compared to the year-ago period, primarily due to higher tonnage, partially offset by lower yields.

Other operating revenue increased $219 million, or 9.2%, in the first nine months of 2024 as compared to the year-ago period, primarily due to an increase in mileage revenue from non-airline partners, including credit card spending with our co-branded credit card partner, JPMorgan Chase Bank, N.A., as well as increases in the purchases of United Club memberships, visitor volume and purchases of one-time United Club passes.

Operating Expenses.

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

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

2024 2023 Increase (Decrease) % Change

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Total operating expenses $ 38,775 $ 36,878 $ 1,897 5.1

Salaries and related costs increased $1.0 billion, or 14.2%, in the first six months of 2024 as compared to the year-ago period, primarily due to annual wage rate increases across certain employee groups and a 6.2% increase in headcount largely due to increased flight activity.

Aircraft fuel expense increased $93 million, or 1.6%, in the first six months of 2024 as compared to the year-ago period, primarily due to increased consumption from higher flight activity and partially offset by a lower average price per gallon of fuel.

The table below presents the significant changes in aircraft fuel cost per gallon in the six months ended June 30 (in millions, except percentage change and per gallon data):

Salaries and related costs increased $1.4 billion, or 12.9%, in the first nine months of 2024 as compared to the year-ago period, primarily due to annual wage rate increases across certain employee groups and a 4.4% increase in headcount largely due to increased flight activity.

Aircraft fuel expense decreased $256 million, or 2.7%, in the first nine months of 2024 as compared to the year-ago period, primarily due to a lower average price per gallon of fuel, partially offset by increased consumption from higher flight activity.

The table below presents the significant changes in aircraft fuel cost per gallon in the nine months ended September 30 (in millions, except percentage change and per gallon data):

2024 2023 Increase (Decrease) % Change

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Average price per gallon $ 2.73 $ 2.97 $ (0.24) (8.1) %

Landing fees and other rent increased $188 million, or 12.7%, in the first six months of 2024 as compared to the year-ago period, primarily due to rate increases at various airports, terminal expansions and other increases in the number of airport gates and higher landed weight volume due to increased flight activity.

Aircraft maintenance materials and outside repairs increased $101 million, or 7.3%, in the first six months of 2024 as compared to the year-ago period, primarily due to increased flight activity and increased volumes of engine overhauls, materials use, and component repair costs.

Depreciation expense increased $103 million, or 7.8%, in the first six months of 2024 as compared to the year-ago period, primarily due the induction of new aircraft and related spare parts, as well as certain aircraft improvements.

Distribution expenses increased $216 million, or 24.3%, in the first six months of 2024 as compared to the year-ago period, primarily due to higher credit card fees driven by an increase in passenger revenue and $120 million of commissions that were recorded as contra-revenue in 2023.

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

Landing fees and other rent increased $253 million, or 11.1%, in the first nine months of 2024 as compared to the year-ago period, primarily due to rate increases at various airports, terminal expansions and other increases in the number of airport gates and higher landed weight volume due to increased flight activity.

Aircraft maintenance materials and outside repairs increased $182 million, or 8.8%, in the first nine months of 2024 as compared to the year-ago period, primarily due to increased flight activity and increased volumes of engine overhauls, materials use and component repair costs.

Depreciation expense increased $182 million, or 9.2%, in the first nine months of 2024 as compared to the year-ago period, primarily due to the induction of new aircraft and related spare parts, as well as certain aircraft improvements.

Distribution expenses increased $274 million, or 19.5%, in the first nine months of 2024 as compared to the year-ago period, primarily due to higher credit card fees, travel agency commissions and global distribution fees driven by the overall increase in passenger revenue and $187 million of commissions that were recorded as contra-revenue in 2023.

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

(Gains) losses on sale of assets and other special charges $ 44 $ 88

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

Other operating expenses increased $0.5 billion, or 13.8%, in the first six months of 2024 as compared to the year-ago period, primarily as a direct result of the increase in flight activity and onboard passengers, as well as the impacts of inflationary pressures.

Other operating expenses increased $674 million, or 11.3%, in the first nine months of 2024 as compared to the year-ago period, primarily due to increased flight activity and onboard passengers, as well as the impacts of inflationary pressures.

Other operating expenses include expenditures related to information technology projects and services, food and beverage offerings, passenger services, personnel-related costs and ground handling.

Nonoperating Income (Expense).

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

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

2024 2023 Increase (Decrease) % Change

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Unrealized gains (losses) on investments, net (160) 54 (214) NM

Miscellaneous, net 10 62 (52) (83.9)

Total $ (453) $ (343) $ 110 32.1

Interest expense decreased $98 million, or 10.0%, in the first six months of 2024 as compared to the year-ago period, primarily due to declining debt balances and lower interest rates on refinanced debt.

Interest capitalized increased $41 million, or 51.3%, in the first six months of 2024 as compared to the year-ago period, primarily due to an increase in accumulated spend on capital projects and an increase in aircraft purchase deposit balances.

Unrealized losses on investments, net, was $70 million in the first six months of 2024 as compared to $108 million in unrealized gains in the year-ago period, primarily due to the change in the market value of the Company's investments in equity securities.

Miscellaneous, net (40) 73 (113) NM

Total nonoperating income (expense) $ (732) $ (597) $ 135 22.6

Interest expense decreased $212 million, or 14.4%, in the first nine months of 2024 as compared to the year-ago period, primarily due to lower debt balances as a result of various debt prepayments and scheduled amortization combined with lower interest rates on refinanced debt.

Interest income decreased $66 million, or 10.6%, in the first nine months of 2024 as compared to the year-ago period, primarily due to lower balances in our short-term investment portfolio, which were partially offset by higher interest rates.

Interest capitalized increased $46 million, or 35.9%, in the first nine months of 2024 as compared to the year-ago period, primarily due to an increase in accumulated spend on capital projects and an increase in aircraft purchase deposit balances.

Unrealized losses on investments, net, was $160 million in the first nine months of 2024 as compared to $54 million in unrealized gains in the year-ago period, primarily due to the change in the market value of the Company's investments in equity securities.

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

Miscellaneous, net changed by $52 million in the first six months of 2024 as compared to the year-ago period, primarily due to debt extinguishment and modification fees related to the refinancing of the Company's 2021 term loans, higher foreign exchange losses and a decrease in the benefit from the Company's net periodic benefit cost of its pension and postretirement benefit plans.

Miscellaneous, net changed by $113 million in the first nine months of 2024 as compared to the year-ago period, primarily due to debt extinguishment and modification fees related to the prepayment of the outstanding principal balance of its MileagePlus term loan and the refinancing of the Company's 2021 term loans, higher foreign exchange losses and a decrease in the benefit from the Company's net periodic benefit cost of its pension and postretirement benefit plans.

Income Taxes.

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Current Liquidity

As of June 30, 2024, the Company had $15.2 billion in unrestricted cash, cash equivalents and short-term investments, as compared to $14.4 billion at December 31, 2023.

We deploy a disciplined and balanced approach to capital allocation, including returns to shareholders through potential share repurchases.

As of September 30, 2024, the Company had $14.2 billion in unrestricted cash, cash equivalents and short-term investments, as compared to $14.4 billion at December 31, 2023.

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

We regularly assess our anticipated working capital needs, debt and leverage levels, debt maturities, capital expenditure requirements (including in connection with our capital commitments for our firm order aircraft) and future investments or acquisitions in order to maximize shareholder return, efficiently finance our ongoing operations and maintain flexibility for future strategic transactions.

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

On April 16, 2024, the Company increased its revolving credit facility (the "Revolving Credit Facility") loan commitments by $100 million for a total amount of $2.965 billion as of June 30, 2024, of which $2.8 billion expires February 15, 2029 and $165 million expires April 21, 2025.

We regularly assess our anticipated working capital needs, debt and leverage levels, debt maturities, capital expenditure requirements (including in connection with our capital commitments for our firm order aircraft and any changes to such commitments), planned UAL common stock or Warrant purchases under our share repurchase program and future investments or acquisitions in order to maximize shareholder return, efficiently finance our ongoing operations and maintain flexibility for future strategic transactions.

We also regularly evaluate our liquidity and capital structure to efficiently manage financial risks, liquidity access and cost of capital.

On April 16, 2024, the Company increased its revolving credit facility (the "Revolving Credit Facility") loan commitments by $100 million for a total amount of $2.965 billion as of September 30, 2024, of which $2.8 billion expires February 15, 2029 and $165 million expires April 21, 2025.

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

No borrowings were outstanding under the Revolving Credit Facility as of June 30, 2024.

No borrowings were outstanding under the Revolving Credit Facility as of September 30, 2024.

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

As of June 30, 2024, the Company had approximately $34.3 billion of debt, finance lease, operating lease and other financial liabilities, including $5.5 billion that will become due in the next 12 months.

As of September 30, 2024, the Company had approximately $33.4 billion of debt, finance lease, operating lease and other financial liabilities, including $3.9 billion that will become due in the next 12 months.

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

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

As of June 30, 2024, UAL and United were in compliance with their respective debt covenants.

As of June 30, 2024, a substantial portion of the Company's assets, principally aircraft and certain related assets, its loyalty program, certain route authorities and airport slots and gates, was pledged under various loan and other agreements.

As of September 30, 2024, UAL and United were in compliance with their respective debt covenants.

As of September 30, 2024, a substantial portion of the Company's assets, principally aircraft and certain related assets, its loyalty program, certain route authorities and airport slots and gates, was pledged under various loan and other agreements.

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

On July 2, 2024, the Company voluntarily prepaid in full the outstanding principal balance of the term loan facility of our MileagePlus term loan, 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.

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

See Note 7 to the financial statements included in Part I, Item 1 of this report for additional information on commitments.

As of June 30, 2024, United had firm commitments to purchase aircraft from The Boeing Company ("Boeing") and Airbus S.A.S.

As of September 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)

Contractual Aircraft Deliveries Expected Aircraft Deliveries (b)

Aircraft Type Number of Firm

Commitments (a) Last Six Months

of 2024 2025 After 2025 Last Six Months

Commitments (a) Last Three Months

of 2024 2025 After 2025 Last Three Months

of 2024 2025 After 2025

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(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.

(b) Expected aircraft deliveries reflect adjustments to contractual delivery schedules as communicated by Boeing and Airbus, as otherwise agreed between the relevant parties, or as estimated by United.

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

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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;

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

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

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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.

The table below summarizes United's firm commitments as of September 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.

(in billions)

Last six months of 2024 $ 5.6

Last three months of 2024 $ 4.1

After 2028 27.8

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.

In the third quarter of 2024, the Company entered into definitive agreements with major aircraft leasing companies to lease 40 Airbus A321neo aircraft with expected deliveries in 2026 and 2027.

As of September 30, 2024, we had entered into leases with rental obligations of approximately $4.0 billion for several mainline aircraft, regional aircraft under CPAs, airport facilities and office space, none of which had commenced as of such date.

These leases will commence between 2024 and 2027 with lease terms of up to 12 years.

Share Repurchase Program

As part of our capital deployment program, the Company announced on October 15, 2024 that its Board of Directors ("Board") authorized a new share repurchase program, allowing for purchases of up to $1.5 billion in the aggregate of outstanding UAL common stock and Warrants, subject to a limit of $500 million in the aggregate through 2024.

Unless suspended or terminated earlier by the Board, this program has no set expiration date and will therefore terminate when the Company has completed all purchases authorized under the program, which it expects to complete by the end of 2025.

See Note 2 to the financial statements included in Part I, Item 1 of this report for additional information.

Sources and Uses of Cash

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

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

2024 2023 Increase (Decrease)

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Operating Activities.

Cash flows provided by operations decreased $1.2 billion in the first six months of 2024 as compared to the year-ago period, primarily due to changes in various working capital items, including higher payments for employee wages and incentives in 2024 as compared to 2023.

Cash flows provided by operating activities decreased $0.6 billion in the first nine months of 2024 as compared to the year-ago period, primarily due to changes in various working capital items, including higher payments for employee wages and incentives in 2024 as compared to 2023.

Investing Activities.

Cash flows used in investing activities decreased $5.0 billion in the first six months of 2024 as compared to the year-ago period, primarily due to a decrease in the purchase of short-term and other investments.

Cash flows used in investing activities decreased $4.4 billion in the first nine months of 2024 as compared to the year-ago period, primarily due to a decrease in the purchase of short-term and other investments.

Financing Activities.

Significant financing events in the six months ended June 30, 2024 were as follows:

Significant financing events in the nine months ended September 30, 2024 were as follows:

Debt, Finance Lease and Other Financing Liability Principal Payments .

During the six months ended June 30, 2024, the Company made payments for debt, finance leases, and other financing liabilities of $6.2 billion, including the $3.9 billion prepayment of its 2021 term loan.

During the nine months ended September 30, 2024, the Company made payments for debt, finance leases, and other financing liabilities of $8.8 billion, including the $3.9 billion prepayment of its 2021 term loan and the $1.8 billion prepayment of the outstanding principal balance of its MileagePlus term loan.

Debt and Other Financing Liabilities Issuances.

The Company borrowed the entire term loan commitment available under the new term loan facility in an amount equal to $2.5 billion.

Also, the Company borrowed $895 million for aircraft financings.

During the nine months ended September 30, 2024, the Company raised:

• $2.5 billion under the new term loan facility;

• $1.4 billion in equipment notes:

On August 5, 2024, the Company and Wilmington Trust, National Association, as subordination agent and pass through trustee (the "Trustee") under certain pass through trusts newly formed by the Company, entered into the Note Purchase Agreement (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 approximately $1.4 billion secured by 48 Boeing aircraft delivered new from the manufacturer from October 2010 to December 2023 (collectively, the "Aircraft").

Pursuant to the Note Purchase Agreement, on August 5, 2024, 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 two series:

Series AA, bearing interest at the rate of 5.450% per annum, and Series A, bearing interest at the rate of 5.875% per annum, in aggregate principal amounts equal to $969 million and $385 million , respectively.

The Equipment Notes were purchased by the Trustee, using the proceeds from the sale of Pass Through Certificates, Series 2024-1AA, and Pass Through Certificates, Series 2024-1A, issued by two pass through trusts newly-formed by the Company.

The interest on the Equipment Notes is payable semi-annually on each February 15 and August 15, beginning on February 15, 2025.

The principal payments on the Equipment Notes are scheduled on February 15 and August 15 of each year, beginning on February 15, 2025 for certain Equipment Notes and August 15, 2025 for the remaining Equipment Notes.

The final payments on the Equipment Notes will be due on or prior to February 15, 2037 ;

• $1.5 billion through the issuance of debt, not including the equipment notes, and other financial liabilities on aircraft.

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

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FORWARD-LOOKING INFORMATION

This report contains certain "forward-looking statements," within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including in Part I, Item 2.

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

capacity, fleet plan strategy, product development, ESG-related strategy initiatives and business strategy.

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

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

geopolitical conflict, terrorist attacks or security events (including the suspension of our overflying in Russian airspace as a result of the Russia-Ukraine military conflict and interruptions of our flying to Tel Aviv as a result of the Israeli-Hamas military conflict, as well as

any escalation of the broader economic consequences of these conflicts beyond their current scope);

geopolitical conflict, terrorist attacks or security events (including the suspension of our overflying in Russian airspace as a result of the Russia-Ukraine military conflict and interruptions of our flying as a result of the military conflict in the Middle East, as well as any escalation of the broader economic consequences of these conflicts beyond their current scope);

any damage to our reputation or brand image;

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increases in insurance costs or inadequate insurance coverage;

risks relating to our repurchase program for UAL common stock and Warrants;

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

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

There have been no material changes in market risk from the information provided in Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk, in our 2023 Form 10-K.

There have been no material changes in market risk from the information provided in Part II, Item 7A.

Quantitative and Qualitative Disclosures About Market Risk, in our 2023 Form 10-K.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis