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Item 2. Management’s Discussion and Analysis

2025-04-16 compared with 2024-10-16 · 84 added, 220 removed, 189 unchanged (62% of the section changed)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

This Management's Discussion and Analysis of Financial Condition and Results of Operations is provided as a supplement to and should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q to enhance the understanding of our results of operations, financial condition and cash flows.

This Management's Discussion and Analysis of Financial Condition and Results of Operations is provided as a supplement to and should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q to enhance the understanding of our results of operations, financial condition and cash flows.

EXECUTIVE SUMMARY

United Airlines Holdings, Inc.

(together with its consolidated subsidiaries, "UAL" or the "Company") is a holding company and its wholly-owned subsidiary is United Airlines, Inc.

(together with its consolidated subsidiaries, "UAL" or the "Company") is a holding company incorporated in Delaware and its wholly-owned subsidiary is United Airlines, Inc.

(together with its consolidated subsidiaries, "United").

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As UAL consolidates United for financial statement purposes, disclosures that relate to activities of United also apply to UAL, unless otherwise noted.

United's operating revenues and operating expenses comprise nearly 100% of UAL's revenues and operating expenses.

In addition, United comprises approximately the entire balance of UAL's assets, liabilities and operating cash flows.

United comprises substantially all of UAL's operating revenues, operating expenses, 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.

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

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

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

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

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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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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 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;

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.

changes in government travel patterns;

and changes in general economic conditions in the markets in which the Company operates, including an economic downturn or macroeconomic uncertainty 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.

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Compliance with laws, regulations, administrative practices and other restrictions or legal requirements in the countries in which we do business is onerous and expensive.

In addition, changes to existing legal requirements or the

implementation of new legal requirements and any failure to comply with such legal requirements could negatively impact our business, operations, financial condition, future results of operations, liquidity and financial flexibility by increasing the Company's costs, limiting the Company's ability to offer a product, service or feature to customers, impacting customer demand for the Company's products and services and requiring changes to the Company's supply chain and its business.

In addition, changes to existing legal requirements or the implementation of new legal requirements and any failure to comply with such legal requirements could negatively impact our business, operations, financial condition, future results of operations, liquidity and financial flexibility by increasing the Company's costs, limiting the Company's ability to offer a product, service or feature to customers, impacting customer demand for the Company's products and services and requiring changes to the Company's supply chain and its business.

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

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

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.

increased Federal Aviation Administration oversight of the aircraft production process;

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 trade tariffs and any potential changes to them that we are unable to mitigate;

and certain rules and regulations proposed by the U.S.

Department of Transportation 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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RESULTS OF OPERATIONS

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

The following discussion provides an analysis of our results of operations and reasons for material changes therein for the three months ended March 31, 2025, as compared to the corresponding period in 2024.

First Quarter 2025 Compared to First Quarter 2024

The Company recorded net income of $387 million for the first quarter of 2025 as compared to a net loss of $124 million for the first quarter of 2024.

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

2025 2024 Increase (Decrease) % Change (a)

Operating revenue $ 13,213 $ 12,539 $ 674 5.4

Operating expense 12,605 12,440 165 1.3

Operating income 1,565 1,739 (174) (10.0)

Operating income 607 99 508 NM

Nonoperating expense, net (129) (263) (134) (51.0)

Income before income taxes 1,286 1,485 (199) (13.4)

Income tax expense 321 348 (27) (7.8)

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

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

Income (loss) before income taxes 478 (164) 642 NM

Income tax expense (benefit) 91 (40) 131 NM

Net income (loss) $ 387 $ (124) $ 511 NM

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

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

2025 2024 Increase (Decrease) % Change

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Fuel gallons consumed (millions) 1,067 1,025 42 4.1

Employee headcount, as of September 30

Employee headcount, as of March 31

109,200 104,500 4,700 4.5

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Operating Revenue.

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

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

2025 2024 Increase (Decrease) % Change

Passenger $ 13,561 $ 13,349 $ 212 1.6

Cargo 417 333 84 25.2

Other 865 802 63 7.9

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

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:

Domestic Atlantic Pacific Latin Total

Passenger revenue (in millions) $ 187 $ (106) $ 90 $ 41 $ 212

Passenger revenue $ 11,860 $ 11,313 $ 547 4.8

Average fare per passenger — % 0.3 % (8.5) % (2.4) % (1.0) %

Yield (0.4) % 1.4 % (9.9) % (0.9) % (1.1) %

PRASM (0.8) % 0.6 % (15.7) % (0.8) % (2.4) %

Passengers 2.4 % (3.4) % 17.2 % 6.3 % 2.7 %

RPMs 2.9 % (4.5) % 19.1 % 4.7 % 2.7 %

ASMs 3.3 % (3.8) % 27.2 % 4.6 % 4.1 %

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

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 September 30 (in millions, except for percentage changes):

2024 2023 Increase (Decrease) % Change (a)

Salaries and related costs $ 4,323 $ 3,914 $ 409 10.4

Aircraft fuel 2,993 3,342 (349) (10.4)

Landing fees and other rent 866 801 65 8.1

Aircraft maintenance materials and outside repairs 765 684 81 11.8

Depreciation and amortization 742 663 79 11.9

Regional capacity purchase 651 592 59 10.0

Distribution expenses 574 516 58 11.2

Aircraft rent 65 46 19 41.3

Special charges (5) 29 (34) NM

Other 2,304 2,158 146 6.8

Total operating expenses $ 13,278 $ 12,745 $ 533 4.2

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

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

Fuel expense $ 2,993 $ 3,342 $ (349) (10.4) %

Fuel consumption (gallons) 1,170 1,132 38 3.4 %

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

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

Labor contract ratification bonuses — 1

Special charges $ (5) $ 29

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 $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 September 30 (in millions, except for percentage changes):

2024 2023 Increase (Decrease) % Change

Interest expense $ (379) $ (493) $ (114) (23.1)

Interest income 187 234 (47) (20.1)

Interest capitalized 53 48 5 10.4

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

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 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

Operating revenue $ 42,368 $ 40,091 $ 2,277 5.7

Operating expense 38,775 36,878 1,897 5.1

Operating income 3,593 3,213 380 11.8

Nonoperating expense, net (732) (597) 135 22.6

Income before income taxes 2,861 2,616 245 9.4

Income tax expense 697 598 99 16.6

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

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

2024 2023 Increase (Decrease) % Change

Passengers (thousands) 129,259 123,148 6,111 5.0

RPMs (millions) 194,040 183,764 10,276 5.6

ASMs (millions) 232,887 217,606 15,281 7.0

Passenger load factor 83.3 % 84.4 % (1.1) pts.

PRASM (cents) 16.55 16.83 (0.28) (1.7)

TRASM (cents) 18.19 18.42 (0.23) (1.2)

Yield (cents) 19.87 19.93 (0.06) (0.3)

CTM (millions) 2,623 2,265 358 15.8

CASM (cents) 16.65 16.95 (0.30) (1.8)

Average price per gallon of fuel, including fuel taxes $ 2.73 $ 2.97 $ (0.24) (8.1)

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

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 nine months ended September 30 (in millions, except for percentage changes):

2024 2023 Increase (Decrease) % Change

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

Cargo 1,222 1,093 129 11.8

Other 2,592 2,373 219 9.2

Cargo revenue 429 391 38 9.7

Other operating revenue 923 835 88 10.5

Total operating revenue $ 13,213 $ 12,539 $ 674 5.4

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:

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

Increase (decrease) from 2024:

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Passenger load factor (points) (3.4) (0.8) 6.3 (0.9) (0.9)

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.

Passenger revenue increased $547 million, or 4.8%, in the first quarter of 2025 as compared to the year-ago period, primarily due to a 4.9% increase in capacity, a 3.8% increase in the number of passengers flown and a 1.2% increase in yield.

Cargo revenue increased $38 million, or 9.7%, in the first quarter of 2025 as compared to the year-ago period, primarily due to higher tonnage and yields.

Other operating revenue increased $88 million, or 10.5%, in the first quarter of 2025 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 an increase in the purchases of United Club memberships.

Operating Expenses.

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

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

2025 2024 Increase (Decrease) % Change

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Aircraft rent 51 43 8 18.6

Special charges 44 902 (858) NM

Special charges (credits) (108) 13 (121) NM

Other operating expenses 2,326 2,148 178 8.3

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

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

Fuel expense $ 9,080 $ 9,336 $ (256) (2.7) %

Fuel consumption (gallons) 3,329 3,146 183 5.8 %

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

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

Labor contract ratification bonuses — 814

Special charges $ 44 $ 902

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 $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.

Total operating expense $ 12,605 $ 12,440 $ 165 1.3

Salaries and related costs increased $223 million, or 5.7%, in the first quarter of 2025 as compared to the year-ago period, primarily due to increased pay as a result of the increase in flying activity, a 4.5% increase in headcount, and increase in pay rates for eligible employee groups.

Aircraft fuel decreased by $253 million, or 8.6%, in the first quarter of 2025 as compared to the year-ago period, due to a lower average price per gallon of fuel, partially offset by increased consumption from higher flying activity.

Landing fees and other rent increased $69 million, or 8.6%, in the first quarter of 2025 as compared to the year-ago period, primarily due to rate increases at various airports and higher landed weight volume due to increased flight activity.

Aircraft maintenance materials and outside repairs decreased $42 million, or 5.4%, in the first quarter of 2025 as compared to the year-ago period, primarily due to lower volumes of engine overhauls.

Regional capacity purchase increased $65 million, or 11.1%, in the first quarter of 2025 as compared to the year-ago period, primarily due to an approximately 17% increase in regional capacity.

For details on the Company's Special charges (credits), see Note 10 to the financial statements included in Part I, Item 1 of this report for additional information.

Other operating expenses increased $178 million, or 8.3%, in the first quarter of 2025 as compared to the year ago period, primarily due to an increase in flying activity, including increased costs for onboard catering and amenities, ground and cargo handling, airport lounge operations and passenger services, as well as expenditures related to employee uniforms and information technology projects and services.

Nonoperating Income (Expense ).

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

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

2025 2024 Increase (Decrease) % Change

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Interest capitalized 48 61 (13) (21.3)

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

Unrealized losses on investments, net (21) (37) (16) NM

Miscellaneous, net 36 (10) 46 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 $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.

Total nonoperating expense $ (129) $ (263) $ (134) (51.0)

Interest expense decreased $98 million, or 21.6%, in the first quarter of 2025 as compared to the year-ago period, primarily due to lower debt balances as a result of various debt prepayments and scheduled amortization.

Miscellaneous, net changed by $46 million in the first quarter of 2025 as compared to the year-ago period, primarily due to $35 million of debt extinguishment and modification fees related to the refinancing of the Company's 2021 term loans recorded in the year-ago period.

I ncome Taxes.

See Note 5 to the financial statements included in Part I, Item 1 of this report for information related to income taxes.

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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 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.

As of March 31, 2025, the Company had $15.3 billion in unrestricted cash, cash equivalents and short-term investments, as compared to $14.5 billion at December 31, 2024.

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.

The Company has a $2.965 billion revolving credit facility as of March 31, 2025, of which $2.95 billion expires February 15, 2029 and $15 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 September 30, 2024.

No borrowings were outstanding under the revolving credit facility as of March 31, 2025.

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

As of September 30, 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.

As of March 31, 2025, the Company had approximately $32.9 billion of debt, finance lease, operating lease and other financial liabilities, including $3.8 billion that will become due in the next 12 months.

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

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

As of September 30, 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.

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

As of March 31, 2025, the Company was in compliance with its debt covenants under these agreements.

As of March 31, 2025, 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.

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See Note 9 to the financial statements included in Part I, Item 1 of this report for additional information on commitments.

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

As of March 31, 2025, United had firm commitments to purchase aircraft from The Boeing Company ("Boeing") and Airbus S.A.S.

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

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Aircraft Type Number of Firm

Commitments (a) Last Three Months

of 2024 2025 After 2025 Last Three Months

Commitments (a) Last Nine Months

of 2025 2026 After 2026 Last Nine Months

of 2025 2026 After 2026

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

(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.

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

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

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(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;

(ii) rights are

exercised pursuant to the relevant agreements to cancel deliveries or modify the timing of deliveries;

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

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

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

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

The table below summarizes United's firm commitments as of 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 three months of 2024 $ 4.1

After 2028 27.8

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.

See Note 9 to the financial statements included in Part I, Item 1 of this report for additional information on these purchase commitments.

Sources and Uses of Cash

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

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

2025 2024 Increase (Decrease)

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Operating Activities.

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.

Cash flows provided by operating activities increased approximately $0.9 billion in the first three months of 2025 as compared to the year-ago period, primarily due to an operating income increase period-over-period and a net change in various working capital items.

Investing Activities.

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.

Cash flows used in investing activities increased $2.9 billion in the first three months of 2025 as compared to the year-ago period, primarily due to a decrease in net proceeds of short-term and other investments.

Financing Activities.

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 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.

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.

Significant financing events in the three months ended March 31, 2025 were as follows:

Debt, Finance Lease and Other Financial Liability Principal Payments .

During the three months ended March 31, 2025, the Company made payments for debt, finance leases, and other financial liabilities of $1.0 billion.

Share repurchase.

As part of our capital deployment program, the Company's Board of Directors authorized a share repurchase program in October 2024.

In the three months ended March 31, 2025, the Company repurchased, through open market purchases, approximately 4.0 million shares of UAL common stock for a total of approximately $0.4 billion as part of its share repurchase program.

See Note 3 to the financial statements in Part I, Item 1 of this report and Note 3 to the financial statements in Part II, Item 8 of the 2024 Form 10-K for additional information on the share repurchase program.

Credit Ratings.

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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 enhanced equipment trust certificates, 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.

Commitments, Contingencies and Liquidity Matters.

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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 (the "Exchange Act"), including in Part I, Item 2.

capacity, fleet plan strategy, 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, 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.

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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;

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;

adverse 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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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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our failure to realize the full value of our intangible assets or our long-lived assets, causing us to record impairments;

fluctuations in the price of our common stock;

fluctuations in the price of our

common stock;

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

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

Risk Factors, of the 2023 Form 10-K, and under "Economic and Market Factors" and "Governmental Actions" in Part I, Item 2.

Risk Factors, of our 2024 Form 10-K, and under "Economic and Market Factors" and "Governmental Actions" in Part I, Item 2.

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis