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Item 7. Management’s Discussion and Analysis

2025-02-27 compared with 2024-02-29 · 145 added, 176 removed, 265 unchanged (55% of the section changed)

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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.

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.

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

Our United Next plan is our fundamental strategic evolution for driving future growth that we believe will have a transformational effect on the customer experience and earnings power of our business.

As part of our United Next plan, in September 2023, United exercised options to purchase 50 Boeing 787-9 aircraft scheduled for delivery between 2028 and 2031 and was granted options to purchase up to an additional 50 Boeing 787 aircraft.

In addition, United exercised purchase rights to purchase 60 A321neo aircraft scheduled for delivery between 2028 and 2030 and was granted purchase rights to purchase up to an additional 40 A321neo aircraft.

We now expect to take delivery of over 700 new narrow and widebody aircraft by the end of 2033.

Our groundbreaking United Next strategy is expected to increase United's average gauge in North America, to increase the total number of available seats per departure and to significantly lower carbon emissions per seat.

United is in the process of retrofitting its mainline, narrow-body planes with its signature interior that includes seat-back entertainment in every seat, larger overhead bins for every passenger's carry-on bag and the industry's fastest available in-flight Wi-Fi, as well as a bright look-and-feel with LED lighting.

The carrier's international widebodies will feature the United Polaris® business class seat as well as United Premium Plus® seating.

The Company plans to replace older, smaller mainline jets and at least 200 single-class regional jets with larger aircraft, which we expect will lead to fuel efficiency benefits compared to older planes, including an expected 17-25% lower carbon emissions per seat compared to older planes.

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

The Company will be squarely focused on delivering on four strategic pillars:

We are the largest airline measured by available seat miles in the world, helping to connect around 174 million passengers to more than 360 destinations across six continents.

The Company remains focused on delivering on four strategic pillars, which it believes has helped, and will continue, to differentiate United from the rest of the industry:

• United Next:

Along with the items mentioned above, additional elements of the United Next plan include hiring over 50,000 new employees, expanding our leading global network to underserved countries and making significant technology changes designed to improve the customer experience and drive operational efficiency.

In 2024 we continued to make progress with our United Next plan to align our network and product with the potential of our hubs while remaining focused on protecting the safety of our employees and customers and providing a superior customer experience.

United Next aims to increase customer choice and win brand-loyal customers by offering a diversity of products ranging from Basic Economy to Polaris and growing our leading global network, which the Company expects will lead to diverse revenue streams for the Company.

As part of our United Next growth plan, we expect to take delivery of over 660 new narrow- and widebody aircraft by the end of 2033.

The new aircraft that the Company has taken delivery of to date have increased our gauge, scale, and connectivity, as well as improved the Company's fuel efficiency.

Other key highlights of our United Next plan include:

– increasing our employee headcount by more than 30,000 employees since 2020;

– surpassing 300 new and retrofit aircraft featuring our signature interior with bigger bins, seatback screens at every seat and Bluetooth connectivity;

– expanding our leading global network to destinations like Ulaanbaatar, Mongolia;

Nuuk, Greenland;

Kaohsiung, Taiwan;

Palermo, Italy;

Bilbao, Spain;

Faro, Portugal;

Madeira Island, Portugal;

Puerto Escondido, Mexico;

and Dakar, Senegal;

– launching Kinective Media SM (the first media network that uses insights from travel behaviors to connect customers to personalized advertising, experiences and offers from leading brands);

– announcing an industry-leading agreement with SpaceX to bring Starlink's Wi-Fi service (the world's fastest, most reliable Wi-Fi in the sky) to the Company's aircraft;

– making significant technology changes that empower our employees and improve the customer experience.

• Operational excellence:

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That backdrop means that United needs to be a leader at using technology to overcome these challenges.

We believe that we have been working strategically to overcome operational challenges, but we continue to innovate in order to make advancements in this area.

We have been working strategically to overcome operational challenges and continue to innovate in order to make advancements in this area.

• Pre-tax margin:

We believe that best-in-class margin performance will enable us to provide the cash flow needed to support our planned investments in growth.

We believe that best-in-class margin performance will provide the cash flow needed to support our planned investments in growth.

• Customer service:

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Our people are our greatest asset and they are by far the most important part of our product.

Aspects of the customer experience such as a great route network, new aircraft, and great Wi-Fi are necessary, but not sufficient, conditions for a great airline brand.

Ultimately our people provide customers with the service they expect.

Economic and Market Factors

The airline industry is highly competitive, marked by significant competition with respect to routes, fares, schedules (both timing and frequency), services, products, customer service and frequent flyer programs.

The airline industry is highly competitive, marked by significant competition with respect to routes, fares, airline capacity, schedules (both timing and frequency), services, products, customer service and frequent flyer programs.

We, like other companies in our industry, have been subject to these and other industry-specific competitive dynamics.

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We expect to continue to remain vulnerable to a number of industry-specific and global macroeconomic factors that may cause our actual results of operations to differ from our historical results of operations or current expectations.

The economic and market factors and trends that we currently

believe are or will be most impactful to our results of operations and financial condition include the following:

the execution risks associated with our United Next plan, especially relating to the growth in the scale of our operations as a result of the plan;

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

the execution and effect of our business strategies, including our United Next plan, especially relating to our focus on expanding market and product opportunities and the growth in the scale of our operations;

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

aircraft delivery delays;

rising inflationary pressures;

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volatile fuel prices;

aircraft delivery delays;

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.

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

Risk Factors, of this Form 10-K.

Risk Factors.

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

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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:

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 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.

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;

the effect of any potential changes in trade tariffs that we are unable to mitigate;

and certain rules and regulations proposed by the DOT that would impose additional costs and operational restrictions on airlines.

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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Operating expense 51,967 49,506 42,618

Operating income (loss) 4,211 2,337 (1,022)

Operating income 5,096 4,211 2,337

Nonoperating expense, net (928) (824) (1,347)

Income (loss) before income taxes 3,387 990 (2,557)

Income tax expense (benefit) 769 253 (593)

Net income (loss) $ 2,618 $ 737 $ (1,964)

Income before income taxes 4,168 3,387 990

Income tax expense 1,019 769 253

Net income $ 3,149 $ 2,618 $ 737

2024 2023 2022

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16.70 16.99 17.19

Average price per gallon of fuel, including fuel taxes $ 2.65 $ 3.01 $ 3.63

Fuel gallons consumed (millions) 4,444 4,205 3,608

Average stage length (miles) (g) 1,490 1,479 1,437

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Passenger load factor (points) — (0.7) (3.1) (1.2) (0.8)

Passenger revenue increased $9.0 billion, or 22.5%, in 2023 as compared to 2022, primarily due to a 17.5% increase in capacity, strength in yield, and a 0.5 point increase in passenger load factor.

Cargo revenue decreased $676 million, or 31.1%, in 2023 as compared to 2022, primarily due to lower yields as a result of increased market capacity and rate pressures.

Other operating revenue increased $424 million, or 15.4%, in 2023 as compared to 2022, primarily due to an increase in mileage revenue from non-airline partners, including credit card spending and new credit card member acquisitions with the co-branded credit card partner, JPMorgan Chase Bank, N.A., as well as increases in the purchases of United Club memberships and one-time lounge passes as compared to the year-ago period.

Passenger revenue increased $2.8 billion, or 5.7%, in 2024 as compared to 2023, primarily due to a 6.8% increase in capacity as well as a 5.3% increase in passengers.

Cargo revenue increased $248 million, or 16.6%, in 2024 as compared to 2023, primarily due to higher tonnage, partially offset by lower yields.

Other operating revenue increased $315 million, or 9.9%, in 2024 as compared to 2023, 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 primarily due to a 5.3% increase in passengers.

Operating Expense.

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

Salaries and related costs increased $3.3 billion, or 29.0%, in 2023 as compared to 2022, primarily due to an approximately 11% increase in headcount from increased flight activity, pay rate increases related to a new collective bargaining agreement with employees represented by ALPA, annual wage rate increases across employee groups and an increase of $548 million in profit sharing expense due to both an increase in pre-tax income and a change in the profit sharing formula as a result of the new collective bargaining agreement with employees represented by ALPA.

Salaries and related costs increased $1.9 billion, or 12.8%, in 2024 as compared to 2023, primarily due to annual wage rate increases across certain employee groups and a nearly 4% increase in headcount largely due to increased flight activity.

Aircraft fuel expense decreased $895 million, or 7.1%, in 2024 as compared to 2023, 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 for the years ended December 31 (in millions, except percentage changes and per gallon data):

2023 2022 % Change

Fuel expense $ 12,651 $ 13,113 (3.5)

Total fuel consumption (gallons) 4,205 3,608 16.5

Average price per gallon $ 3.01 $ 3.63 (17.1)

Landing fees and other rent increased $500 million, or 19.4%, in 2023 as compared to 2022, primarily due to increased rates and increased flight activity driving higher landed weight volume and a higher number of enplaned passengers as well as expansion in airport rental space at certain hubs.

Aircraft maintenance materials and outside repairs increased $583 million, or 27.1%, in 2023 as compared to 2022, primarily due to increased flight activity and increased volumes of both engine overhauls and airframe heavy maintenance checks.

Depreciation expense increased $215 million, or 8.8%, in 2023 as compared to 2022, primarily due to new aircraft inducted into service.

Regional capacity purchase costs increased $101 million, or 4.4%, in 2023 as compared to 2022, despite an approximately 13% reduction in regional capacity, primarily due to rate increases under various capacity purchase agreements with regional carriers.

Landing fees and other rent increased $361 million, or 11.7%, in 2024 as compared to 2023, primarily due to rate increases at various airports, terminal expansions and other increases in the number of airport gates as well as higher landed weight volume due to increased flight activity.

Aircraft maintenance materials and outside repairs increased $327 million, or 12.0%, in 2024 as compared to 2023, primarily due to increased volumes of engine overhauls, airframe maintenance, materials use and component repair costs mainly as a result of increased flight activity and fleet growth.

Depreciation and amortization expense increased $257 million, or 9.6%, in 2024 as compared to 2023, primarily due to the induction of new aircraft and related spare parts, as well as certain aircraft improvements.

Regional capacity purchase costs increased $116 million, or 4.8%, in 2024 as compared to 2023, primarily due to an 8% increase in regional capacity as well as increases in contractual rates.

Distribution expenses increased $254 million, or 12.8%, in 2024 as compared to 2023, primarily due to higher credit card fees, travel agency commissions and global distribution fees driven by the overall increase in passenger revenue.

Also, starting in the fourth quarter of 2023, the Company reclassified certain commissions totaling $80 million from contra-revenue to distribution expense as an immaterial reclassification correction.

Also, starting in the fourth quarter of 2023, the Company reclassified certain commissions from contra-revenue to distribution expense as an immaterial reclassification correction, which increased distribution expense by $187 million compared to the prior year.

The table below presents special charges recorded by the Company during the years ended December 31 (in millions):

Labor contract ratification bonuses $ 814 $ —

(Gains) losses on sale of assets and other special charges $ 112 $ 135

Labor contract ratification bonuses — 814

Total special charges $ 112 $ 949

See Note 13 to the financial statements included in Part II, Item 8 of this report for additional information.

Other operating expenses increased $1.4 billion, or 21.6%, in 2023 as compared to 2022, primarily as a direct result of the increase in flight activity and the impacts of inflationary pressures.

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

Other operating expenses increased $1.0 billion, or 12.3%, in 2024 as compared to 2023, 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).

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Interest expense $ (1,629) $ (1,956) $ (327) (16.7)

Interest income 827 298 529 NM

Interest income 726 827 (101) (12.2)

Interest capitalized 227 182 45 24.7

Unrealized gains on investments, net 27 20 7 35.0

Unrealized gains (losses) on investments, net (199) 27 (226) NM

Miscellaneous, net (53) 96 (149) NM

Total nonoperating expense, net $ (928) $ (824) $ 104 12.6

Interest expense increased $178 million, or 10.0%, in 2023 as compared to 2022, primarily due to higher interest rates on variable rate debt and new debt issuances in the current period, partially offset by reduced interest expense on the prepayment of $1.0 billion of the outstanding principal amount under a 2021 term loan facility in the second quarter of 2023.

Interest income increased $529 million in 2023 as compared to 2022, primarily due to higher interest rates on the Company's cash balances and U.S.

government and agency notes.

Interest expense decreased $327 million, or 16.7%, in 2024 as compared to 2023, 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 $101 million, or 12.2%, in 2024 as compared to 2023, primarily due to lower balances in our short-term investment portfolio, which were partially offset by higher interest rates.

See Note 9 to the financial statements included in Part II, Item 8 of this report for additional information.

Interest capitalized increased $77 million in 2023 as compared to 2022, primarily due to increased capitalization associated with aircraft purchases and increased interest rates.

Unrealized gains on investments, net was $27 million in 2023 as compared to $20 million in 2022, primarily due to the change in the market value of the Company's investments in equity securities.

Interest capitalized increased $45 million in 2024 as compared to 2023, primarily due to an increase in accumulated spend on capital projects.

Unrealized losses on investments, net was $199 million in 2024 as compared to $27 million in unrealized gains, net in 2023, primarily due to the change in the market value of the Company's investments in equity securities.

See Notes 9 and 13 to the financial statements included in Part II, Item 8 of this report for additional information.

Miscellaneous, net changed by $88 million in 2023 as compared to the year-ago period, primarily due to lower foreign exchange losses and lower net cost from the pensions and postretirement benefit plans.

Miscellaneous, net changed by $149 million in 2024 as compared to 2023, primarily due to debt extinguishment and modification fees related to debt prepayments and refinancing, 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.

See Notes 10 and 13 to the financial statements included in Part II, Item 8 of this report for additional information on the debt prepayments and refinancing.

Income Taxes.

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Liquidity and Capital Resources

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

As of December 31, 2024, the Company had $14.5 billion in unrestricted cash, cash equivalents and short-term investments as compared to approximately $14.4 billion as of 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, adequate liquidity access and cost of capital are efficiently managed.

The Revolving Credit and Guaranty Agreement, under the Term Loan Credit and Guaranty Agreement, provides revolving loan commitments of up to $1.75 billion until April 21, 2025, subject to certain customary conditions.

No borrowings were outstanding under this facility at December 31, 2023.

On February 15, 2024, the Company amended its 2021 revolving credit

facility to increase its borrowing capacity by $1.115 billion.

Also, on February 22, 2024, the Company refinanced its 2021 term loans by paying down $1.37 billion of its outstanding balance and lowering the margin applied to these term loans by 1.00%.

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 12 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 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 stockholder 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 February 15, 2024, the Company entered into an Amended and Restated Revolving Credit and Guaranty Agreement (the "Revolving Credit Facility"), increasing its borrowing capacity by $1.115 billion, bringing the total amount available under the Revolving Credit Facility to $2.865 billion.

On April 16, 2024, the Company further increased its revolving loan commitments by $100 million for a total amount of $2.965 billion as of December 31, 2024.

Of this total, $2.95 billion expires February 15, 2029 and $15 million expires April 21, 2025, after the extension of the maturity of $150 million from April 21, 2025 to February 15, 2029.

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

No borrowings were outstanding under the Revolving Credit Facility at December 31, 2024.

See Note 10 to the financial statements included in Part II, Item 8 of this report for additional information on these financing transactions.

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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 December 31, 2023, UAL and United were in compliance with their respective debt covenants.

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

Our debt agreements contain customary terms and conditions as well as various affirmative, negative and financial covenants that, among other things, limit our ability under certain circumstances to create liens on collateral, make certain dividends, stock repurchases, restricted investments and other restricted payments, and consolidate, merge, sell, or otherwise dispose of all or substantially all of our assets.

Our debt agreements also contain events of default customary for similar financings including, in certain cases, cross-payment default and cross-acceleration to other material indebtedness.

Certain of our debt agreements contain financial covenants that require the Company to maintain at least $2.0 billion of unrestricted liquidity at all times, which includes unrestricted cash, certain liquid and short-term investments and any undrawn amounts under any revolving credit facility, and to maintain a minimum ratio of appraised value of collateral to the outstanding debt secured by such collateral on a senior basis of 1.6 to 1.0, tested semi-annually.

As of December 31, 2024, UAL and United were in compliance with their respective debt covenants under these agreements.

As of December 31, 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 10 to the financial statements included in Part II, Item 8 of this report for additional information on aircraft financing and other debt instruments.

For 2024, the Company expects approximately $8 billion of adjusted capital expenditures.

Adjusted capital expenditures is a financial measure not calculated in accordance of generally accepted accounting principles ("GAAP").

For 2025, the Company expects less than $7.0 billion of adjusted capital expenditures, in light of certain aircraft delivery delays.

Adjusted capital expenditures is a financial measure not calculated in accordance with generally accepted accounting principles ("GAAP").

It is calculated as capital expenditures, net of flight equipment purchase deposit returns, plus property and equipment acquired through the issuance of debt, finance leases and other financial liabilities.

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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.

Sources and Uses of Cash

The following table summarizes our cash flow for the years ended December 31 (in millions):

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Operating Activities.

Cash flows provided by operating activities for 2023 were $0.8 billion higher than 2022 primarily due to an approximately $1.9 billion increase in operating income as improvements in the demand for air travel continued partially offset by a decrease in various working capital items.

Cash flows provided by operating activities for 2024 were $2.5 billion higher than 2023 primarily due to an approximately $0.9 billion increase in operating income and an approximately $0.9 billion increase in advance ticket sales due to capacity growth as demand trends for air travel continued to accelerate.

Investing Activities.

Cash flows used in investing activities decreased $7.7 billion in 2023 as compared to the year-ago period mainly related to approximately $10.2 billion due to lower purchase and higher sales activity in short-term and other investments, partially offset by a $2.4 billion increase in capital expenditures.

Capital expenditures were primarily attributable to the purchase of aircraft, aircraft improvements and advance deposits for future aircraft purchases.

Cash flows used in investing activities decreased $3.5 billion in 2024 as compared to the year-ago period mainly related to approximately $1.8 billion lower net activity in purchases and sales of short-term and other investments, as well as a $1.6 billion decrease in capital expenditures.

Capital expenditures primarily consisted of the purchase of aircraft, aircraft improvements and advance deposits for future aircraft purchases.

Financing Activities.

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Debt, Finance Lease and Other Financial Liability Principal Payments .

During 2023, the Company made $4.2 billion of principal payments on debt, finance leases, and other financial liabilities.

The payments in 2023 included a prepayment of $1.0 billion of the outstanding principal amount under a 2021 term loan facility.

During 2024, the Company made payments for debt, finance leases, and other financial liabilities of $10.1 billion, including the $3.9 billion prepayment of its 2021 term loan, $1.8 billion prepayment of the outstanding principal balance of its MileagePlus term loan, and a $0.4 billion prepayment of its 2024 term loan.

Debt Issuances.

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

The Note Purchase Agreement provides for the

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

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

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

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

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

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

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

Also, during 2023, United borrowed $1.1 billion for aircraft financings.

In 2024, the Company raised:

• $2.5 billion under the new term loan facility;

• $1.4 billion through the issuance of equipment notes (the "2024 Equipment Notes") secured by 48 Boeing aircraft delivered new from the manufacturer from October 2010 to December 2023 ;

• $2.2 billion through the issuance of debt, not including the 2024 Equipment Notes, and other financial liabilities on aircraft.

See Note 10 and Note 11 to the financial statements included in Part II, Item 8 of this report for additional information on aircraft financing.

Share Repurchases.

As part of our capital deployment program, the Company announced on October 15, 2024 that its 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.

During the quarter ended December 31, 2024, the Company repurchased 997,076 shares of UAL common stock at an average price of $81.26 for a total investment of approximately $81 million as part of the share repurchase program.

As of February 24, 2025, the dollar value of shares that may yet be purchased under the program is approximately $1.3 billion.

See Note 3 to the financial statements included in Part II, Item 8 of this report for additional information on the share repurchase program.

Significant financing events in 2023 were as follows:

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During 2023, the Company made $4.2 billion of principal payments on debt, finance leases, and other financial liabilities.

The payments in 2023 included a prepayment of $1.0 billion of the outstanding principal amount under a 2021 term loan facility.

Debt Issuances.

During 2022, United borrowed $0.8 billion for aircraft financings.

In 2023, the Company issued equipment notes (the "2023 Equipment Notes") in the aggregate principal amount of $1.3 billion to finance 39 Boeing aircraft delivered new to the Company from August 2022 to May 2023.

Also, during 2023, United borrowed $1.1 billion for aircraft financings.

For additional information regarding these Liquidity and Capital Resource matters, see Notes 10, 11 and 12 to the financial statements included in Part II, Item 8 of this report.

For information regarding non-cash investing and financing activities, see the Company's statements of consolidated cash flows.

For a discussion of the Company's sources and uses of cash in 2022 as compared to 2021, see "Liquidity and Capital Resources" in Part II, Item 7.

For a discussion of the Company's sources and uses of cash in 2023 as

compared to 2022, see "Liquidity and Capital Resources" in Part II, Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations in the 2023 Annual Report.

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

These credit ratings are below investment grade levels;

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

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

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

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

Currently Moody's and Fitch have assigned the Company a positive outlook, while S&P maintains a stable outlook.

Other Liquidity Matters

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Long-term debt and debt covenants Note 10

Leases and capacity purchase agreements Note 10

Commitments and contingencies Note 12

Leases Note 11

Commitments, contingencies and capacity purchase agreements Note 12

The Company's business is capital intensive, requiring significant amounts of capital to fund the acquisition of assets, particularly aircraft.

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2025 2026 2027 2028 2029 After 2029

Long-term debt (a) $ 4.0 $ 3.5 $ 5.2 $ 2.5 $ 5.3 $ 8.9

Finance leases—principal portion 0.2 0.1 — — — —

Interest on debt and finance leases (b) 1.5 1.3 1.1 0.9 0.6 0.8

Operating leases (c) 0.8 0.7 0.7 0.9 0.7 2.9

Leases not yet commenced (d) — 0.1 0.1 0.2 0.2 1.0

Long-term debt and related interest (a) $ 4.1 $ 5.8 $ 3.2 $ 2.5 $ 3.5 $ 11.4

Finance leases 0.2 — — — — —

Operating leases (b) 0.8 0.7 0.9 0.7 0.5 3.1

Leases not yet commenced (c) 0.1 0.2 0.4 0.4 0.4 4.2

Other financial liabilities 0.5 0.3 0.6 0.3 0.3 3.2

Regional CPAs (e) 2.4 2.1 2.1 1.6 1.3 4.1

Postretirement benefit payments (f) 0.1 0.1 0.1 0.1 0.1 0.3

Pension funding (g) — 0.2 0.3 0.2 0.2 0.3

Capital and other purchases (h) 12.1 7.9 6.0 4.5 6.1 23.5

Regional CPAs (d) 2.7 2.8 2.1 1.8 1.4 4.1

Postretirement benefit payments and pension funding (e) 0.2 0.5 0.3 0.1 0.1 0.4

Capital and other purchases (f) 9.6 6.0 4.7 6.5 8.1 19.5

Total $ 18.2 $ 16.3 $ 12.2 $ 12.3 $ 14.3 $ 45.9

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Cash requirements do not include the debt discount, premiums and debt issuance costs.

(b) Future interest payments on variable rate debt were computed using the rates as of December 31, 2023.

Future interest payments on variable rate debt were computed using the rates as of December 31, 2024.

(b) Represents future payments under fixed rate operating lease obligations.

See Note 11 to the financial statements included in Part II, Item 8 of this report for information on variable rate and short-term operating leases.

(d) Represents future payments under leases that have not yet commenced and are not included in the consolidated balance sheet.

(c) Represents future payments under leases that have not yet commenced and are not included in the consolidated balance sheet.

See Note 11 to the financial statements included in Part II, Item 8 of this report for information on these leases.

(e) Represents our estimates of future minimum noncancelable commitments under our CPAs and does not include the portion of the underlying obligations for aircraft and facility rent that is disclosed as part of operating lease obligations.

(d) Represents our estimates of future minimum noncancelable commitments under our CPAs and does not include the portion of the underlying obligations for aircraft and facility rent that is disclosed as part of operating lease obligations.

Amounts also exclude a portion of United's finance lease obligations recorded for certain of its CPAs.

See Note 12 to the financial statements included in Part II, Item 8 of this report for the significant assumptions used to estimate the payments.

(f) Amounts represent postretirement benefit payments through 2033.

Benefit payments approximate plan contributions as plans are substantially unfunded.

(g) Represents an estimate of the minimum funding requirements as determined by government regulations for United's U.S.

pension plans.

(e) Amounts represent postretirement benefit payments and an estimate of the minimum funding requirements as determined by government regulations for United's U.S.

pension plans through 2034.

Amounts are subject to change based on numerous assumptions, including the performance of assets in the plans and bond rates.

(h) Represents contractual commitments for firm order aircraft, spare engines and other capital purchase commitments.

Postretirement benefit payments approximate plan contributions as plans are substantially unfunded.

See Note 8 to the financial statements included in Part II, Item 8 of this report for additional information on these benefit plans.

(f) Represents contractual commitments for firm order aircraft, spare engines and other purchase commitments.

See Note 12 to the financial statements included in Part II, Item 8 of this report for a discussion of our purchase commitments.

In addition to the material cash requirements discussed above, the Company has made certain guarantees that could have a material future effect on the Company's cash requirements:

Letters of Credit and Surety Bonds.

As of December 31, 2023, United had approximately $518 million of letters of credit and surety bonds securing various obligations with expiration dates through 2033.

Certain of these amounts are cash collateralized and reported within Restricted cash on our statement of financial position.

See Note 12 to the financial statements included in Part II, Item 8 of this report for more information related to these letters of credit and surety bonds.

Guarantee of Debt of Others.

As of December 31, 2023, United is the guarantor of $77 million of aircraft mortgage debt issued by one of United's regional carriers.

The aircraft mortgage debt is subject to increased cost provisions and the Company would potentially be responsible for those costs under the guarantees.

The increased cost provisions in the $77 million of aircraft mortgage debt are similar to those in certain of the Company's debt agreements.

See discussion under Increased Cost Provisions, below, for additional information on increased cost provisions related to the Company's debt.

Fuel Consortia.

United participates in numerous fuel consortia with other air carriers at major airports to reduce the costs of fuel distribution and storage.

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

The Company has significant financial obligations and guarantees that could impact its future cash flow.

As of December 31, 2024, the Company has $490 million in letters of credit and surety bonds with expiration dates through 2035, some of which are cash collateralized.

Additionally, United is involved in fuel consortia at major airports, which help reduce fuel distribution and storage costs.

The consortia (and in limited cases, the participating carriers) have entered into long-term agreements to lease certain airport fuel storage and distribution facilities that are typically financed through various debt obligations.

In general, each consortium lease agreement requires the consortium to make lease payments in amounts sufficient to pay the maturing principal and interest payments on these debt obligations.

As of December 31, 2023, approximately $2.5 billion principal amount of such loans was secured by significant fuel facility leases in which United participates, as to which United and each of the signatory airlines has provided indirect guarantees of the debt.

As of December 31, 2023, the Company's contingent exposure was approximately $447 million principal amount of such obligations based on its recent consortia participation.

The Company's contingent exposure could increase if the participation of other air carriers decreases.

The guarantees will expire when these obligations are paid in full, which ranges from 2027 to 2056.

The Company concluded it was not necessary to record a liability for these indirect 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.

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

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

At December 31, 2023, the Company had $11.3 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 $8.1 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.

The Company has indirect guarantees for approximately $2.7 billion in loans secured by fuel facility leases in which United participates, with a contingent exposure of about $504 million.

These indirect guarantees are set to expire between 2027 and 2056.

The Company's contingent exposure could increase in the future if the participation of other air carriers in such fuel consortia decreases.

See Note 12 to the financial statements included in Part II, Item 8 of this report for more information related to these guarantees and increased cost provisions.

Critical Accounting Policies

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The Company has prepared the financial statements in conformity with GAAP, which requires management to make estimates and assumptions that affect the reported amounts in the financial statements.

Actual results could differ from those estimates under different assumptions or conditions.

Actual results could differ from those estimates.

See Note 1 and Note 2 to the financial statements included in Part II, Item 8 of this report for additional discussion of these estimates and our other significant accounting policies.

The Company has identified the following critical accounting policies that impact the preparation of the financial statements.

Revenue Recognition .

Passenger revenue is recognized when transportation is provided.

Passenger Revenue Recognition .

As discussed in Note 2 to the financial statements, passenger revenue is recognized when transportation is provided.

Passenger tickets and related ancillary services sold by the Company for flights are purchased primarily via credit card transactions, with payments collected by the Company in advance of the performance of related services.

The Company initially records ticket sales in its Advance ticket sales liability, deferring revenue recognition until the travel occurs.

For travel that has more than one flight segment, the Company deems each segment as a separate performance obligation and recognizes revenue for each segment as travel occurs.

Tickets sold by other airlines where the Company provides the transportation are recognized as passenger revenue at the estimated value to be billed to the other airline when travel is provided.

Differences between amounts billed and the actual amounts may be rejected and rebilled or written off if the amount recorded was different from the original estimate.

When necessary, the Company records a reserve against its billings and payables with other airlines based on historical experience.

The Company sells certain tickets with connecting flights with one or more segments operated by its other airline partners.

For segments operated by its other airline partners, the Company has determined that it is acting as an agent on behalf of the other airlines as they are responsible for their portion of the contract (i.e.

transportation of the passenger).

The Company, as the agent, recognizes revenue within Other operating revenue at the time of the travel for the net amount representing commission to be retained by the Company for any segments flown by other airlines.

Advance ticket sales represent the Company's liability to provide air transportation in the future.

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

The Company defers amounts related to future travel in its Advance ticket sales liability account.

The Company 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.

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

To determine ticket 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.

Frequent Flyer Accounting.

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Members can also earn miles by purchasing goods and services from our network of non-airline partners.

We have contracts to sell miles to these partners with the terms extending from one to six years.

We have contracts to sell miles to these partners with the terms extending from approximately one to five years.

These partners include domestic and international credit card issuers, retail merchants, hotels, car rental companies and our participating airline partners.

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• MileagePlus miles awarded – United has a performance obligation to provide MileagePlus cardholders with miles to be used for air travel and non-travel award redemptions.

The Company records Passenger revenue related to the travel awards when the transportation is provided and records Other revenue related to the non-travel awards when the goods

or services are delivered.

The Company records Passenger revenue related to the travel awards when the transportation is provided and records Other operating revenue related to the non-travel awards when the goods or services are delivered.

The Company records the cost associated with non-travel awards in Other operating revenue, as an agent.

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The Company estimated the selling prices and volumes over the term of the Co-Brand Agreement, at the inception of the contract, in order to determine the allocation of proceeds to each of the components to be delivered.

We also evaluate volumes on an annual basis, which may result in a change in the allocation of the estimated consideration from the Co-Brand Agreement on a prospective basis.

Indefinite-lived intangible assets.

The Company has indefinite-lived intangible assets, including goodwill.

Goodwill and indefinite-lived intangible assets are not amortized but are reviewed for impairment on an annual basis as of October 1, or more frequently if events or circumstances indicate that the asset may be impaired.

When there is a triggering event, the Company typically determines fair value using either market or variation of the income approach valuation techniques.

These measurements include the following key assumptions:

(1) forecasted revenues, expenses, margin and cash flows, (2) terminal period growth rate, (3) an estimated weighted average cost of capital, (4) asset-specific risk factor and (5) a tax rate.

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

Because we are required to make estimates and assumptions when evaluating goodwill and indefinite-lived intangible assets for impairment, actual results may differ materially from these estimates.

Actual results will be influenced by the competitive environment, fuel costs and other expenses, and potentially other unforeseen events or circumstances that could have a material impact on future results.

We recognize an impairment when the fair value of an intangible asset is less than its carrying value.

Every year, the Company evaluates its indefinite-lived intangible assets for possible impairments.

As discussed in Note 1 to the financial statements, goodwill and indefinite-lived intangible assets are assessed for impairment on an annual basis as of October 1, or more frequently if events or circumstances indicate that the asset may be impaired.

For the Company's China route authority, the Company performed a quantitative assessment which involved determining the fair value of the asset and comparing that amount to the asset's carrying value.

For all other intangible assets, the Company performed a qualitative assessment of whether it was more likely than not that an impairment had occurred.

To determine the fair value of the China route authority, the Company used a discounted cash flow method.

Key inputs into the models included forecasted revenues, fuel costs, other operating costs, margin and an overall discount rate.

Key assumptions used in the valuation model included forecasted revenues, margin and an overall discount rate.

These assumptions are inherently uncertain as they relate to future events and circumstances.

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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 II, Item 7.

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

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, airline capacity, fleet plan strategy, fares, announced routes (which may be subject to government approval), booking trends, product development, Corporate Citizenship-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.

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

all forward-looking statements contain such terms.

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

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

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execution risks associated with our strategic operating plan;

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

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

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

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

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

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

the highly competitive nature of the global airline industry and susceptibility of the industry to price discounting and changes in capacity, including as a result of alliances, joint business arrangements or other consolidations;

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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 to Tel Aviv as a result of the Israeli-Hamas military conflict and an escalation of the broader economic consequences of the 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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current or future litigation and regulatory actions, or failure to comply with the terms of any settlement, order or agreement relating to these actions;

costs, liabilities and risks associated with environmental regulation and climate change, and any failure to achieve or demonstrate progress towards our climate goals;

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

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

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

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

failure to comply with financial and other covenants governing our debt, including our MileagePlus® senior secured notes;

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

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

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

Risk Factors, of this Form 10-K, and under "Economic and Market Factors" and "Governmental Actions" in Part II, Item 7.

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.

Risk Factors, and under "Economic and Market Factors" and "Governmental Actions" in Part II, Item 7.

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

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

What changed 10-K

Item 7. Management’s Discussion and Analysis