R
|
QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the quarterly period ended September 30, 2009
|
|
OR
|
|
£
|
TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the transition period from ______ to
______
|
Commission
File Number
|
Exact Name of Registrant as Specified in its Charter, Principal Office Address and Telephone Number |
State
of Incorporation
|
I.R.S.
Employer Identification No
|
|||
001-06033
|
UAL Corporation |
Delaware
|
36-2675207
|
|||
001-11355
|
United Air Lines, Inc. |
Delaware
|
36-2675206
|
|||
77 W. Wacker Drive | ||||||
Chicago, Illinois 60601 | ||||||
(312) 997-8000 |
UAL
Corporation
|
Yes
R No
£
|
United
Air Lines, Inc.
|
Yes
R No
£
|
UAL
Corporation
|
Large
accelerated filer R
|
Accelerated
filer £
|
Non-accelerated
filer £
|
Smaller
reporting company £
|
(Do
not check if a smaller reporting company)
|
||||
United
Air Lines, Inc.
|
Large
accelerated filer £
|
Accelerated
filer £
|
Non-accelerated
filer R
|
Smaller
reporting company £
|
(Do
not check if a smaller reporting company)
|
UAL
Corporation
|
Yes
£ No
R
|
United
Air Lines, Inc.
|
Yes
£ No
R
|
UAL
Corporation
|
Yes
R No
£
|
United
Air Lines, Inc.
|
Yes
R No
£
|
UAL
Corporation
United
Air Lines, Inc.
|
167,040,862
shares of common stock ($0.01 par value)
205
(100% owned by UAL Corporation)
|
There
is no market for United Air Lines, Inc. common
stock.
|
Page
|
||
PART
I. FINANCIAL INFORMATION
|
||
UAL
Corporation:
|
||
3
|
||
5
|
||
7
|
||
United
Air Lines, Inc.:
|
||
8
|
||
10
|
||
12
|
||
13
|
||
(UAL
Corporation and United Air Lines, Inc.)
|
||
32
|
||
49
|
||
50
|
||
PART
II. OTHER INFORMATION
|
||
50
|
||
51
|
||
51
|
||
51
|
||
52
|
||
53
|
Three
Months Ended September
30,
|
||||||||
|
2009
|
2008
|
||||||
(Adjusted)
|
||||||||
Operating
revenues:
|
||||||||
Passenger
— United Airlines
|
$ | 3,267 | $ | 4,280 | ||||
Passenger
— Regional Affiliates
|
844 | 834 | ||||||
Cargo
|
125 | 219 | ||||||
Other
operating revenues
|
197 | 232 | ||||||
4,433 | 5,565 | |||||||
Operating
expenses:
|
||||||||
Aircraft
fuel
|
1,064 | 2,461 | ||||||
Salaries
and related costs
|
954 | 1,037 | ||||||
Regional
Affiliates
|
775 | 882 | ||||||
Purchased
services
|
279 | 327 | ||||||
Aircraft
maintenance materials and outside repairs
|
253 | 256 | ||||||
Landing
fees and other rent
|
226 | 222 | ||||||
Depreciation
and amortization
|
220 | 234 | ||||||
Distribution
expenses
|
145 | 181 | ||||||
Aircraft
rent
|
88 | 115 | ||||||
Cost
of third party sales
|
59 | 75 | ||||||
Other
impairments and special items (Note 14)
|
43 | (9 | ) | |||||
Other
operating expenses
|
239 | 275 | ||||||
4,345 | 6,056 | |||||||
Earnings
(loss) from operations
|
88 | (491 | ) | |||||
Other
income (expense):
|
||||||||
Interest
expense
|
(146 | ) | (144 | ) | ||||
Interest
income
|
3 | 24 | ||||||
Interest
capitalized
|
3 | 6 | ||||||
Miscellaneous,
net
|
(10 | ) | (186 | ) | ||||
(150 | ) | (300 | ) | |||||
Loss
before income taxes and equity in earnings of affiliates
|
(62 | ) | (791 | ) | ||||
Income
tax expense (benefit)
|
(4 | ) | 2 | |||||
Loss
before equity in earnings of affiliates
|
(58 | ) | (793 | ) | ||||
Equity
in earnings of affiliates, net of tax
|
1 | 1 | ||||||
Net
loss
|
$ | (57 | ) | $ | (792 | ) | ||
Loss
per share, basic and diluted
|
$ | (0.39 | ) | $ | (6.22 | ) |
Nine
Months Ended September
30,
|
||||||||
|
2009
|
2008
|
||||||
(Adjusted)
|
||||||||
Operating
revenues:
|
||||||||
Passenger
— United Airlines
|
$ | 8,909 | $ | 11,924 | ||||
Passenger
— Regional Affiliates
|
2,252 | 2,346 | ||||||
Cargo
|
370 | 674 | ||||||
Other
operating revenues
|
611 | 703 | ||||||
12,142 | 15,647 | |||||||
Operating
expenses:
|
||||||||
Salaries
and related costs
|
2,838 | 3,262 | ||||||
Aircraft
fuel
|
2,528 | 5,884 | ||||||
Regional
Affiliates
|
2,154 | 2,508 | ||||||
Purchased
services
|
852 | 1,047 | ||||||
Aircraft
maintenance materials and outside repairs
|
718 | 868 | ||||||
Landing
fees and other rent
|
676 | 651 | ||||||
Depreciation
and amortization
|
675 | 670 | ||||||
Distribution
expenses
|
402 | 558 | ||||||
Aircraft
rent
|
265 | 314 | ||||||
Cost
of third party sales
|
172 | 204 | ||||||
Goodwill
impairment (Note 14)
|
- | 2,277 | ||||||
Other
impairments and special items (Note 14)
|
250 | 214 | ||||||
Other
operating expenses
|
699 | 816 | ||||||
12,229 | 19,273 | |||||||
Loss
from operations
|
(87 | ) | (3,626 | ) | ||||
Other
income (expense):
|
||||||||
Interest
expense
|
(415 | ) | (428 | ) | ||||
Interest
income
|
15 | 100 | ||||||
Interest
capitalized
|
8 | 16 | ||||||
Miscellaneous,
net
|
19 | (177 | ) | |||||
(373 | ) | (489 | ) | |||||
Loss
before income taxes and equity in earnings of affiliates
|
(460 | ) | (4,115 | ) | ||||
Income
tax benefit
|
(46 | ) | (30 | ) | ||||
Loss
before equity in earnings of affiliates
|
(414 | ) | (4,085 | ) | ||||
Equity
in earnings of affiliates, net of tax
|
3 | 4 | ||||||
Net
loss
|
$ | (411 | ) | $ | (4,081 | ) | ||
Loss
per share, basic and diluted
|
$ | (2.83 | ) | $ | (32.62 | ) |
September
30, 2009
|
December
31, 2008
|
|||||||
(Adjusted)
|
||||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 2,525 | $ | 2,039 | ||||
Restricted
cash
|
99 | 54 | ||||||
Receivables,
less allowance for doubtful accounts (2009—$14; 2008—$24)
|
843 | 714 | ||||||
Prepaid
fuel
|
285 | 219 | ||||||
Aircraft
fuel, spare parts and supplies, less obsolescence allowance (2009—$70;
2008—$48)
|
216 | 237 | ||||||
Deferred
income taxes
|
92 | 268 | ||||||
Fuel
hedge collateral deposits
|
62 | 953 | ||||||
Prepaid
expenses and other
|
404 | 382 | ||||||
4,526 | 4,866 | |||||||
Operating
property and equipment:
|
||||||||
Owned—
|
||||||||
Flight
equipment
|
8,414 | 8,766 | ||||||
Other
property and equipment
|
1,722 | 1,751 | ||||||
10,136 | 10,517 | |||||||
Less—accumulated
depreciation and amortization
|
(1,932 | ) | (1,598 | ) | ||||
8,204 | 8,919 | |||||||
Capital
leases:
|
||||||||
Flight
equipment
|
1,795 | 1,578 | ||||||
Other
property and equipment
|
43 | 39 | ||||||
1,838 | 1,617 | |||||||
Less—accumulated
amortization
|
(310 | ) | (224 | ) | ||||
1,528 | 1,393 | |||||||
9,732 | 10,312 | |||||||
Other
assets:
|
||||||||
Intangibles,
less accumulated amortization (2009—$391; 2008—$339)
|
2,472 | 2,693 | ||||||
Aircraft
lease deposits
|
307 | 297 | ||||||
Restricted
cash
|
210 | 218 | ||||||
Investments
|
90 | 81 | ||||||
Other,
net
|
1,010 | 998 | ||||||
4,089 | 4,287 | |||||||
$ | 18,347 | $ | 19,465 |
September
30, 2009
|
December
31, 2008
|
|||||||
(Adjusted)
|
||||||||
Liabilities
and Stockholders’ Deficit
|
||||||||
Current
liabilities:
|
||||||||
Advance
ticket sales
|
$ | 1,675 | $ | 1,530 | ||||
Mileage
Plus deferred revenue
|
1,428 | 1,414 | ||||||
Accounts
payable
|
807 | 833 | ||||||
Accrued
salaries, wages and benefits
|
731 | 756 | ||||||
Long-term
debt maturing within one year
|
651 | 782 | ||||||
Fuel
purchase commitments
|
285 | 219 | ||||||
Current
obligations under capital leases
|
177 | 168 | ||||||
Accrued
interest
|
120 | 112 | ||||||
Derivative
instruments
|
76 | 718 | ||||||
Other
|
687 | 749 | ||||||
6,637 | 7,281 | |||||||
Long-term
debt
|
5,767 | 5,862 | ||||||
Long-term
obligations under capital leases
|
1,212 | 1,192 | ||||||
Other
liabilities and deferred credits:
|
||||||||
Mileage
Plus deferred revenue
|
2,823 | 2,768 | ||||||
Postretirement
benefit liability
|
1,808 | 1,812 | ||||||
Advanced
purchase of miles
|
1,087 | 1,087 | ||||||
Deferred
income taxes
|
576 | 804 | ||||||
Other
|
1,082 | 980 | ||||||
7,376 | 7,451 | |||||||
Commitments
and contingent liabilities (Note 12)
|
||||||||
Stockholders’
deficit:
|
||||||||
Preferred
stock
|
— | — | ||||||
Common
stock at par, $0.01 par value; authorized 1,000,000,000 shares;
outstanding 148,032,041 and 140,037,928 shares at September 30, 2009 and
December 31, 2008, respectively
|
2 | 1 | ||||||
Additional
capital invested
|
3,001 | 2,919 | ||||||
Retained
deficit
|
(5,719 | ) | (5,308 | ) | ||||
Stock
held in treasury, at cost
|
(28 | ) | (26 | ) | ||||
Accumulated
other comprehensive income
|
99 | 93 | ||||||
(2,645 | ) | (2,321 | ) | |||||
$ | 18,347 | $ | 19,465 |
|
Nine
Months Ended September
30,
|
|||||||
|
2009
|
2008
|
||||||
(Adjusted)
|
||||||||
Cash
flows provided (used) by operating activities:
|
||||||||
Net
loss
|
$ | (411 | ) | $ | (4,081 | ) | ||
Adjustments
to reconcile to net cash provided (used) by operating
activities—
|
||||||||
Goodwill
impairment
|
- | 2,277 | ||||||
Other
impairments and special items
|
250 | 214 | ||||||
Depreciation
and amortization
|
675 | 670 | ||||||
Proceeds
from lease amendment
|
160 | — | ||||||
Increase
in Mileage Plus deferred revenue and advanced purchase of
miles
|
140 | 584 | ||||||
Increase
in advance ticket sales
|
145 | 333 | ||||||
Net
change in fuel derivative instruments and related pending
settlements
|
(870 | ) | 272 | |||||
(Increase)
decrease in fuel hedge collateral
|
903 | (378 | ) | |||||
Increase
in receivables
|
(44 | ) | (166 | ) | ||||
Other,
net
|
(70 | ) | 25 | |||||
878 | (250 | ) | ||||||
Cash
flows provided (used) by investing activities:
|
||||||||
Net
sales of short-term investments
|
- | 2,295 | ||||||
(Increase)
decrease in restricted cash
|
(37 | ) | 508 | |||||
Proceeds
from asset sale-leasebacks
|
135 | 59 | ||||||
Proceeds
from litigation on advance deposits
|
- | 41 | ||||||
Additions
to property, equipment and deferred software
|
(230 | ) | (384 | ) | ||||
Proceeds
from asset dispositions
|
77 | 43 | ||||||
Other,
net
|
3 | 14 | ||||||
(52 | ) | 2,576 | ||||||
Cash
flows provided (used) by financing activities:
|
||||||||
Proceeds
from issuance of long-term debt
|
321 | 337 | ||||||
Proceeds
from issuance of common stock
|
90 | — | ||||||
Decrease
in lease deposits
|
22 | 154 | ||||||
Repayment
of Credit Facility
|
(18 | ) | (18 | ) | ||||
Repayment
of other debt
|
(615 | ) | (538 | ) | ||||
Special
distribution to common shareholders
|
- | (253 | ) | |||||
Principal
payments under capital leases
|
(129 | ) | (209 | ) | ||||
Increase
in deferred financing costs
|
(9 | ) | (118 | ) | ||||
Other,
net
|
(2 | ) | (9 | ) | ||||
(340 | ) | (654 | ) | |||||
Increase
in cash and cash equivalents during the period
|
486 | 1,672 | ||||||
Cash
and cash equivalents at beginning of the period
|
2,039 | 1,259 | ||||||
Cash
and cash equivalents at end of the period
|
$ | 2,525 | $ | 2,931 |
|
Three
Months Ended September
30,
|
|||||||
|
2009
|
2008
|
||||||
(Adjusted)
|
||||||||
Operating
revenues:
|
||||||||
Passenger
— United Airlines
|
$ | 3,267 | $ | 4,280 | ||||
Passenger
— Regional Affiliates
|
844 | 834 | ||||||
Cargo
|
125 | 219 | ||||||
Other
operating revenues
|
199 | 273 | ||||||
4,435 | 5,606 | |||||||
Operating
expenses:
|
||||||||
Aircraft
fuel
|
1,064 | 2,461 | ||||||
Salaries
and related costs
|
954 | 1,036 | ||||||
Regional
Affiliates
|
775 | 882 | ||||||
Purchased
services
|
279 | 327 | ||||||
Aircraft
maintenance materials and outside repairs
|
253 | 256 | ||||||
Landing
fees and other rent
|
226 | 222 | ||||||
Depreciation
and amortization
|
220 | 234 | ||||||
Distribution
expenses
|
145 | 181 | ||||||
Aircraft
rent
|
88 | 116 | ||||||
Cost
of third party sales
|
58 | 75 | ||||||
Other
impairments and special items (Note 14)
|
43 | (9 | ) | |||||
Other
operating expenses
|
240 | 276 | ||||||
4,345 | 6,057 | |||||||
Earnings
(loss) from operations
|
90 | (451 | ) | |||||
Other
income (expense):
|
||||||||
Interest
expense
|
(145 | ) | (144 | ) | ||||
Interest
income
|
3 | 24 | ||||||
Interest
capitalized
|
3 | 6 | ||||||
Miscellaneous,
net
|
(11 | ) | (185 | ) | ||||
(150 | ) | (299 | ) | |||||
Loss
before income taxes and equity in earnings of affiliates
|
(60 | ) | (750 | ) | ||||
Income
tax expense (benefit)
|
(4 | ) | 3 | |||||
Loss
before equity in earnings of affiliates
|
(56 | ) | (753 | ) | ||||
Equity
in earnings of affiliates, net of tax
|
1 | 1 | ||||||
Net
loss
|
$ | (55 | ) | $ | (752 | ) |
Nine
Months Ended September
30,
|
||||||||
|
2009
|
2008
|
||||||
(Adjusted)
|
||||||||
Operating
revenues:
|
||||||||
Passenger
— United Airlines
|
$ | 8,909 | $ | 11,924 | ||||
Passenger
— Regional Affiliates
|
2,252 | 2,346 | ||||||
Cargo
|
370 | 674 | ||||||
Other
operating revenues
|
618 | 744 | ||||||
12,149 | 15,688 | |||||||
Operating
expenses:
|
||||||||
Salaries
and related costs
|
2,838 | 3,262 | ||||||
Aircraft
fuel
|
2,528 | 5,884 | ||||||
Regional
Affiliates
|
2,154 | 2,508 | ||||||
Purchased
services
|
852 | 1,047 | ||||||
Aircraft
maintenance materials and outside repairs
|
718 | 868 | ||||||
Landing
fees and other rent
|
676 | 651 | ||||||
Depreciation
and amortization
|
675 | 670 | ||||||
Distribution
expenses
|
402 | 558 | ||||||
Aircraft
rent
|
267 | 316 | ||||||
Cost
of third party sales
|
171 | 203 | ||||||
Goodwill
impairment (Note 14)
|
- | 2,277 | ||||||
Other
impairments and special items (Note 14)
|
250 | 214 | ||||||
Other
operating expenses
|
699 | 844 | ||||||
12,230 | 19,302 | |||||||
Loss
from operations
|
(81 | ) | (3,614 | ) | ||||
Other
income (expense):
|
||||||||
Interest
expense
|
(414 | ) | (427 | ) | ||||
Interest
income
|
15 | 100 | ||||||
Interest
capitalized
|
8 | 16 | ||||||
Miscellaneous,
net
|
18 | (177 | ) | |||||
(373 | ) | (488 | ) | |||||
Loss
before income taxes and equity in earnings of affiliates
|
(454 | ) | (4,102 | ) | ||||
Income
tax benefit
|
(46 | ) | (30 | ) | ||||
Loss
before equity in earnings of affiliates
|
(408 | ) | (4,072 | ) | ||||
Equity
in earnings of affiliates, net of tax
|
3 | 4 | ||||||
Net
loss
|
$ | (405 | ) | $ | (4,068 | ) |
|
September
30, 2009
|
December
31, 2008
|
||||||
(Adjusted)
|
||||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 2,519 | $ | 2,033 | ||||
Restricted
cash
|
99 | 50 | ||||||
Receivables,
less allowance for doubtful accounts (2009 — $14; 2008 —
$24)
|
843 | 704 | ||||||
Prepaid
fuel
|
285 | 219 | ||||||
Aircraft
fuel, spare parts and supplies, less obsolescence allowance (2009 — $70;
2008 — $48)
|
216 | 237 | ||||||
Deferred
income taxes
|
87 | 265 | ||||||
Fuel
hedge collateral deposits
|
62 | 953 | ||||||
Receivables
from related parties
|
56 | 214 | ||||||
Prepaid
expenses and other
|
382 | 376 | ||||||
4,549 | 5,051 | |||||||
Operating
property and equipment:
|
||||||||
Owned
—
|
||||||||
Flight
equipment
|
8,414 | 8,766 | ||||||
Other
property and equipment
|
1,722 | 1,751 | ||||||
10,136 | 10,517 | |||||||
Less
— accumulated depreciation and amortization
|
(1,932 | ) | (1,598 | ) | ||||
8,204 | 8,919 | |||||||
Capital
leases:
|
||||||||
Flight
equipment
|
1,795 | 1,578 | ||||||
Other
property and equipment
|
43 | 39 | ||||||
1,838 | 1,617 | |||||||
Less
— accumulated amortization
|
(310 | ) | (224 | ) | ||||
1,528 | 1,393 | |||||||
9,732 | 10,312 | |||||||
Other
assets:
|
||||||||
Intangibles,
less accumulated amortization (2009 — $391; 2008 — $339)
|
2,472 | 2,693 | ||||||
Aircraft
lease deposits
|
307 | 297 | ||||||
Restricted
cash
|
210 | 217 | ||||||
Investments
|
90 | 81 | ||||||
Other,
net
|
997 | 984 | ||||||
4,076 | 4,272 | |||||||
$ | 18,357 | $ | 19,635 |
September
30, 2009
|
December
31, 2008
|
|||||||
(Adjusted)
|
||||||||
Liabilities
and Stockholder’s Deficit
|
||||||||
Current
liabilities:
|
||||||||
Advance
ticket sales
|
$ | 1,675 | $ | 1,530 | ||||
Mileage
Plus deferred revenue
|
1,428 | 1,414 | ||||||
Accounts
payable
|
807 | 833 | ||||||
Accrued
salaries, wages and benefits
|
731 | 756 | ||||||
Long-term
debt maturing within one year
|
650 | 780 | ||||||
Fuel
purchase commitments
|
285 | 219 | ||||||
Current
obligations under capital leases
|
177 | 168 | ||||||
Accrued
interest
|
120 | 112 | ||||||
Derivative
instruments
|
76 | 718 | ||||||
Other
|
770 | 1,016 | ||||||
6,719 | 7,546 | |||||||
Long-term
debt
|
5,768 | 5,861 | ||||||
Long-term
obligations under capital leases
|
1,212 | 1,192 | ||||||
Other
liabilities and deferred credits:
|
||||||||
Mileage
Plus deferred revenue
|
2,823 | 2,768 | ||||||
Postretirement
benefit liability
|
1,808 | 1,812 | ||||||
Advanced
purchase of miles
|
1,087 | 1,087 | ||||||
Deferred
income taxes
|
494 | 724 | ||||||
Other
|
1,082 | 981 | ||||||
7,294 | 7,372 | |||||||
Commitments
and contingent liabilities (Note 12)
|
||||||||
Stockholder’s
deficit:
|
||||||||
Common
stock at par, $5 par value; authorized 1,000 shares; outstanding 205 at
both September 30, 2009 and December 31, 2008
|
— | — | ||||||
Additional
capital invested
|
2,929 | 2,831 | ||||||
Retained
deficit
|
(5,664 | ) | (5,260 | ) | ||||
Accumulated
other comprehensive income
|
99 | 93 | ||||||
(2,636 | ) | (2,336 | ) | |||||
$ | 18,357 | $ | 19,635 |
|
Nine
Months Ended September
30,
|
|||||||
|
2009
|
2008
|
||||||
(Adjusted)
|
||||||||
Cash
flows provided (used) by operating activities:
|
||||||||
Net
loss
|
$ | (405 | ) | $ | (4,068 | ) | ||
Adjustments
to reconcile to net cash provided (used) by operating
activities—
|
||||||||
Goodwill
impairment
|
- | 2,277 | ||||||
Other
impairments and special items
|
250 | 214 | ||||||
Depreciation
and amortization
|
675 | 670 | ||||||
Proceeds
from lease amendment
|
160 | — | ||||||
Increase
in Mileage Plus deferred revenue and advanced purchase of
miles
|
140 | 584 | ||||||
Increase
in advance ticket sales
|
145 | 333 | ||||||
Net
change in fuel derivative instruments and related pending
settlements
|
(870 | ) | 272 | |||||
(Increase)
decrease in fuel hedge collateral
|
903 | (378 | ) | |||||
Increase
in receivables
|
(38 | ) | (168 | ) | ||||
Other,
net
|
(80 | ) | 71 | |||||
880 | (193 | ) | ||||||
Cash
flows provided (used) by investing activities:
|
||||||||
Net
sales of short-term investments
|
- | 2,259 | ||||||
Proceeds
from asset sale-leasebacks
|
135 | 59 | ||||||
(Increase)
decrease in restricted cash
|
(42 | ) | 479 | |||||
Additions
to property, equipment and deferred software
|
(230 | ) | (384 | ) | ||||
Proceeds
from asset dispositions
|
77 | 42 | ||||||
Other,
net
|
4 | 15 | ||||||
(56 | ) | 2,470 | ||||||
Cash
flows provided (used) by financing activities:
|
||||||||
Proceeds
from issuance of long-term debt
|
321 | 337 | ||||||
Capital
contribution from parent
|
89 | — | ||||||
Decrease
in lease deposits
|
22 | 154 | ||||||
Dividend
to parent
|
- | (258 | ) | |||||
Repayment
of Credit Facility
|
(18 | ) | (18 | ) | ||||
Repayment
of other debt
|
(614 | ) | (537 | ) | ||||
Principal
payments under capital leases
|
(129 | ) | (209 | ) | ||||
Increase
in deferred financing costs
|
(9 | ) | (118 | ) | ||||
Other,
net
|
- | 1 | ||||||
(338 | ) | (648 | ) | |||||
Increase
in cash and cash equivalents during the period
|
486 | 1,629 | ||||||
Cash
and cash equivalents at beginning of the period
|
2,033 | 1,239 | ||||||
Cash
and cash equivalents at end of the period
|
$ | 2,519 | $ | 2,868 |
(In millions, except per
share)
|
UAL
|
United
|
|||||||||||||||||||||||
As
Reported
|
As
Adjusted
|
Effect
of Change
|
As
Reported
|
As
Adjusted
|
Effect
of
Change
|
Interest
expense
|
$ | (131 | ) | $ | (144 | ) | $ | (13 | ) | $ | (132 | ) | $ | (144 | ) | $ | (12 | ) | |||||||
Nonoperating
expense
|
(287 | ) | (300 | ) | (13 | ) | (287 | ) | (299 | ) | (12 | ) | |||||||||||||
Loss
before income taxes and equity earnings in affiliates
|
(778 | ) | (791 | ) | (13 | ) | (738 | ) | (750 | ) | (12 | ) | |||||||||||||
Net
loss
|
(779 | ) | (792 | ) | (13 | ) | (740 | ) | (752 | ) | (12 | ) | |||||||||||||
Loss
per share, basic and diluted
|
(6.13 | ) | (6.22 | ) | (0.09 | ) |
NA
|
NA
|
NA
|
||||||||||||||||
Total
comprehensive loss
|
(791 | ) | (804 | ) | (13 | ) | (752 | ) | (764 | ) | (12 | ) |
Interest
expense
|
$ | (392 | ) | $ | (428 | ) | $ | (36 | ) | $ | (392 | ) | $ | (427 | ) | $ | (35 | ) | ||||||
Nonoperating
expense
|
(453 | ) | (489 | ) | (36 | ) | (453 | ) | (488 | ) | (35 | ) | ||||||||||||
Loss
before income taxes and equity earnings in affiliates
|
(4,079 | ) | (4,115 | ) | (36 | ) | (4,067 | ) | (4,102 | ) | (35 | ) | ||||||||||||
Net
loss
|
(4,045 | ) | (4,081 | ) | (36 | ) | (4,033 | ) | (4,068 | ) | (35 | ) | ||||||||||||
Loss
per share, basic and diluted
|
(32.34 | ) | (32.62 | ) | (0.28 | ) |
NA
|
NA
|
NA
|
|||||||||||||||
Total
comprehensive loss
|
(4,084 | ) | (4,120 | ) | (36 | ) | (4,072 | ) | (4,107 | ) | (35 | ) |
Long-term
debt
|
$ | 6,007 | $ | 5,862 | $ | (145 | ) | $ | 6,007 | $ | 5,861 | $ | (146 | ) | ||||||||||
Additional
capital invested
|
2,666 | 2,919 | 253 | 2,578 | 2,831 | 253 | ||||||||||||||||||
Retained
deficit
|
(5,199 | ) | (5,308 | ) | (109 | ) | (5,151 | ) | (5,260 | ) | (109 | ) |
|
(a)
|
The
adoption of the ASC 470 Update also had minor impacts on Other assets and
Deferred income taxes as reported in the Company’s Financial Statements.
The adoption required an increase to the Company’s deferred tax liability
and a decrease to its additional paid in capital. However, these impacts
were substantially offset by a corresponding decrease in the valuation
allowance for deferred tax assets and increase to additional paid in
capital.
|
|
September 30, 2009
|
December 31, 2008
|
||||||||||||||
($ and shares in millions, except conversion
prices)
|
$726
million notes
|
$150
million notes
|
$726
million notes
|
$150
million notes
|
||||||||||||
Carrying
amount of the equity component
|
$ | 216 | $ | 38 | $ | 216 | $ | 38 | ||||||||
Principal
amount of the liability component
|
726 | 150 | 726 | 150 | ||||||||||||
Unamortized
discount of liability component
|
92 | 13 | 126 | 20 | ||||||||||||
Net
carrying amount of liability component
|
634 | 137 | 600 | 130 | ||||||||||||
Remaining
amortization period of discount
|
21
months
|
16
months
|
(a)
|
(a)
|
||||||||||||
Conversion
price
|
$ | 32.64 | $ | 43.90 |
(a)
|
(a)
|
||||||||||
Number
of shares to be issued upon conversion
|
22.2 | 3.4 |
(a)
|
(a)
|
||||||||||||
Effective
interest rate on liability component
|
12.8 | % | 12.1 | % |
(a)
|
(a)
|
(a)
|
Not
required to be disclosed.
|
$726 million notes
|
$150 million notes
|
|||||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||
(In millions)
|
September 30,
|
September 30,
|
September 30,
|
September 30,
|
||||||||||||||||||||||||||||
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||||||||||||||
Non-cash
interest cost recognized (a)
|
$ | 12 | $ | 11 | $ | 34 | $ | 30 | $ | 2 | $ | 2 | $ | 6 | $ | 6 | ||||||||||||||||
Cash
interest cost recognized
|
8 | 8 | 24 | 24 | 2 | 2 | 6 | 6 |
(a)
|
Amounts
represent the adoption impact of the ASC 470 Update on interest expense
for the three and nine months ended September 30, 2009 and 2008. The
related negative adoption impact on loss per share for the three and nine
months ended September 30, 2009 is $0.10 and $0.28,
respectively.
|
(In millions)
|
||||||||
Reserve Activity
|
Severance
|
Leased Aircraft
|
||||||
Balance
at December 31, 2008
|
$ | 81 | $ | 16 | ||||
Payments
|
(44 | ) | (14 | ) | ||||
Accruals
|
23 | 41 | ||||||
Balance
at September 30, 2009
|
$ | 60 | $ | 43 |
Three
Months Ended
September 30,
|
Nine
Months Ended
September 30,
|
|||||||||||||||
Expense Recognized
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
Severance
|
$ | 22 | $ | 6 | $ | 23 | $ | 88 | ||||||||
Leased
aircraft
|
24 | - | 48 | - |
|
B737s (Mainline)
|
All Other Mainline
|
Total
|
Regional
|
|||||||||||||
|
Owned
|
Leased
|
Total
|
Owned
|
Leased
|
Total
|
Mainline
|
Affiliates
|
Total
|
||||||||
Aircraft
at December 31, 2008
|
18 | 28 | 46 | 191 | 172 | 363 | 409 | 280 | 689 | ||||||||
Added
to (removed from) operating fleet
|
(18 | ) | (17 | ) | (35 | ) | (2 | ) | (1 | ) | (3 | ) | (38 | ) | 12 | (26) | |
Transferred
from owned to leased
|
— | — | — | (14 | ) | 14 | — | — | — | — | |||||||
Transferred
from leased to owned
|
— | — | — | 1 | (1 | ) | — | — | — | — | |||||||
Aircraft
at September 30, 2009
|
— | 11 | 11 | 176 | 184 | 360 | 371 | 292 | 663 | ||||||||
Nonoperating
at December 31, 2008 (a)
|
24 | 12 | 36 | 3 | — | 3 | 39 | — | 39 | ||||||||
Removed
from operating fleet
|
18 | 17 | 35 | 2 | 1 | 3 | 38 | — | 38 | ||||||||
Returned
to lessors
|
— | (9 | ) | (9 | ) | — | — | — | (9 | ) | — | (9) | |||||
Nonoperating
at September 30, 2009 (a)
|
42 | 20 | 62 | 5 | 1 | 6 | 68 | — | 68 |
(a)
|
At
December 31, 2008 and September 30, 2009, United had one less owned and
one more leased nonoperating B737 aircraft as compared to the UAL amounts
shown in this table.
|
(4)
|
Common Stockholders’
Deficit
|
|
Three
Months Ended
September 30,
|
Nine
Months Ended
September 30,
|
||||||||||||||
(In millions, except per
share)
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
(Adjusted)
|
(Adjusted)
|
|||||||||||||||
Basic
loss per share:
|
||||||||||||||||
Net
loss
|
$ | (57 | ) | $ | (792 | ) | $ | (411 | ) | $ | (4,081 | ) | ||||
Preferred
stock dividend requirements
|
- | - | - | (2 | ) | |||||||||||
Loss
available to common stockholders (a)
|
$ | (57 | ) | $ | (792 | ) | $ | (411 | ) | $ | (4,083 | ) | ||||
Basic
weighted average shares outstanding
|
145.6 | 127.3 | 145.1 | 125.2 | ||||||||||||
Loss
per basic share
|
$ | (0.39 | ) | $ | (6.22 | ) | $ | (2.83 | ) | $ | (32.62 | ) | ||||
Diluted
loss per share:
|
||||||||||||||||
Loss
available to common stockholders
|
$ | (57 | ) | $ | (792 | ) | $ | (411 | ) | $ | (4,083 | ) | ||||
Diluted
weighted average shares outstanding
|
145.6 | 127.3 | 145.1 | 125.2 | ||||||||||||
Loss
per share, diluted
|
$ | (0.39 | ) | $ | (6.22 | ) | $ | (2.83 | ) | $ | (32.62 | ) | ||||
Potentially
dilutive shares excluded from diluted per share amounts:
|
||||||||||||||||
Stock
options
|
6.6 | 4.4 | 6.6 | 4.4 | ||||||||||||
Restricted
shares (a)
|
0.8 | 1.5 | 0.8 | 1.5 | ||||||||||||
2%
preferred securities
|
- | 2.1 | - | 4.1 | ||||||||||||
4.5%
senior limited-subordination convertible notes
|
22.2 | 22.2 | 22.2 | 22.2 | ||||||||||||
5%
convertible notes
|
3.4 | 3.4 | 3.4 | 3.4 | ||||||||||||
33.0 | 33.6 | 33.0 | 35.6 |
(a)
|
Losses
are not allocated to participating securities in the computation of loss
per common share.
|
|
Options
|
Outstanding
at beginning of period
|
4,353,672
|
Granted
|
2,517,000
|
Exercised
|
(10,000)
|
Canceled
|
(276,472)
|
Outstanding
at end of period
|
6,584,200
|
Exercisable
(vested) at end of period
|
2,863,555
|
Restricted Stock Units
|
Restricted Stock
|
|||||||
Nonvested
at beginning of period
|
- | 1,430,675 | ||||||
Granted
|
1,815,600 | 42,400 | ||||||
Vested
|
- | (608,306 | ) | |||||
Terminated
|
(47,800 | ) | (36,727 | ) | ||||
Nonvested
at end of period
|
1,767,800 | 828,042 |
Pension
Benefits
|
Other
Benefits
|
|||||||||||||||||||||||||||||||
(In millions)
|
Three
Months Ended
September 30,
|
Nine
Months Ended
September 30,
|
Three
Months Ended
September 30,
|
Nine
Months Ended
September 30,
|
||||||||||||||||||||||||||||
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||||||||||||||
Service
cost
|
$ | 2 | $ | 2 | $ | 5 | $ | 5 | $ | 7 | $ | 8 | $ | 21 | $ | 24 | ||||||||||||||||
Interest
cost
|
2 | 2 | 6 | 7 | 29 | 31 | 86 | 91 | ||||||||||||||||||||||||
Expected
return on plan assets
|
(2 | ) | (2 | ) | (5 | ) | (8 | ) | (2 | ) | (1 | ) | (3 | ) | (3 | ) | ||||||||||||||||
Gain
due to curtailment
|
— | — | — | — | — | — | (7 | ) | — | |||||||||||||||||||||||
Amortization
of unrecognized gain and prior service cost
|
— | (1 | ) | — | (2 | ) | (5 | ) | (4 | ) | (15 | ) | (12 | ) | ||||||||||||||||||
Net
periodic benefit costs
|
$ | 2 | $ | 1 | $ | 6 | $ | 2 | $ | 29 | $ | 34 | $ | 82 | $ | 100 |
Three
Months Ended
|
Nine Months
Ended
|
|||||||||||||||
(In millions)
|
September 30,
|
September 30,
|
||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
UAL
segment information
|
|
(Adjusted)
|
|
(Adjusted)
|
||||||||||||
Revenue:
|
||||||||||||||||
Mainline
|
$ | 3,589 | $ | 4,731 | $ | 9,890 | $ | 13,301 | ||||||||
Regional
Affiliates
|
844 | 834 | 2,252 | 2,346 | ||||||||||||
Total
|
$ | 4,433 | $ | 5,565 | $ | 12,142 | $ | 15,647 | ||||||||
Segment
earnings (loss):
|
||||||||||||||||
Mainline
|
$ | (87 | ) | $ | (751 | ) | $ | (305 | ) | $ | (1,458 | ) | ||||
Regional
Affiliates
|
69 | (48 | ) | 98 | (162 | ) | ||||||||||
Goodwill
impairment
|
- | - | - | (2,277 | ) | |||||||||||
Other
impairments and special items (a)
|
(43 | ) | 9 | (250 | ) | (214 | ) | |||||||||
Less:
equity earnings (b)
|
(1 | ) | (1 | ) | (3 | ) | (4 | ) | ||||||||
Consolidated
loss before income taxes and equity in earnings of
affiliates
|
$ | (62 | ) | $ | (791 | ) | $ | (460 | ) | $ | (4,115 | ) |
United segment
information
|
||||||||||||||||
Revenue:
|
||||||||||||||||
Mainline
|
$ | 3,591 | $ | 4,772 | $ | 9,897 | $ | 13,342 | ||||||||
Regional
Affiliates
|
844 | 834 | 2,252 | 2,346 | ||||||||||||
Total
|
$ | 4,435 | $ | 5,606 | $ | 12,149 | $ | 15,688 | ||||||||
Segment
earnings (loss):
|
||||||||||||||||
Mainline
|
$ | (85 | ) | $ | (710 | ) | $ | (299 | ) | $ | (1,445 | ) | ||||
Regional
Affiliates
|
69 | (48 | ) | 98 | (162 | ) | ||||||||||
Goodwill
impairment
|
- | - | - | (2,277 | ) | |||||||||||
Asset
impairment and special items (a)
|
(43 | ) | 9 | (250 | ) | (214 | ) | |||||||||
Less:
equity earnings (b)
|
(1 | ) | (1 | ) | (3 | ) | (4 | ) | ||||||||
Consolidated
loss before income taxes and equity in earnings of
affiliates
|
$ | (60 | ) | $ | (750 | ) | $ | (454 | ) | $ | (4,102 | ) |
(a)
|
Asset
impairment and special items are only applicable to the Mainline
segment.
|
(b)
|
Equity
earnings are part of the Mainline
segment.
|
|
Level
1
|
Unadjusted
quoted prices in active markets that are accessible at the measurement
date for identical, unrestricted assets or
liabilities.
|
|
Level
2
|
Observable
inputs other than quoted prices included in Level 1, such as quoted prices
for similar assets and liabilities in active markets; quoted prices for
identical or similar assets and liabilities in markets that are not
active; or other inputs that are observable or can be corroborated by
observable market data.
|
|
Level
3
|
Unobservable
inputs that are supported by little or no market activity and that are
significant to the fair value of the assets or
liabilities.
|
|
Fair Value Measurements at Reporting Date
Using
|
|||||||||||||||||||
(In millions)
|
September 30, 2009
|
Quoted
Prices in Active Markets for Identical Assets
(Level 1)
|
Significant
Other Observable Inputs
(Level 2)
|
Significant
Unobservable Inputs
(Level 3)
|
Total
Gains/(Losses)
(Level 3)
|
|||||||||||||||
Assets
and Liabilities Measured at Fair Value on a Recurring
Basis:
|
||||||||||||||||||||
Financial
assets:
|
||||||||||||||||||||
Noncurrent
EETC available-for-sale securities
|
$ | 55 | $ | — | $ | — | $ | 55 | $ | 12 | ||||||||||
Current
fuel derivative instruments
|
105 | — | 105 | — | — | |||||||||||||||
Fuel
derivative instrument receivables (a)
|
7 | — | 7 | — | — | |||||||||||||||
Total
financial assets
|
$ | 167 | $ | — | $ | 112 | $ | 55 | $ | 12 | ||||||||||
Financial
liabilities:
|
||||||||||||||||||||
Current
fuel derivative instruments
|
$ | 73 | $ | — | $ | 73 | ||||||||||||||
Current
foreign currency derivative instruments
|
3 | — | 3 | |||||||||||||||||
Noncurrent
fuel derivative instruments
|
1 | — | 1 | |||||||||||||||||
Fuel
derivative instrument payables (a)
|
35 | — | 35 | |||||||||||||||||
Total
financial liabilities
|
$ | 112 | $ | — | $ | 112 |
(a)
|
Fuel
derivative instrument receivables and payables represent pending
settlements of contract premiums and expired
contracts.
|
|
Asset Derivatives
|
Liability Derivatives
|
|||||||||
(In millions)
|
Balance
Sheet Location
|
September 30,
2009
|
Balance
Sheet Location
|
September 30,
2009
|
|||||||
Derivatives
not receiving hedge accounting treatment:
|
|||||||||||
Fuel
contracts due within one year
|
Receivables
|
$ | 105 |
Derivative
instruments
|
$ | 73 | |||||
Foreign
currency contracts due within one year
|
— |
Derivative
instruments
|
3 | ||||||||
Fuel
contracts due after one year
|
— |
Other
Liabilities
|
1 | ||||||||
Total
derivatives
|
$ | 105 | $ | 77 |
Available-for-Sale
Securities
|
||||||||
(In millions)
|
Three
Months Ended
September 30, 2009
|
Nine
Months Ended
September 30, 2009
|
||||||
Balance
at beginning of period
|
$ | 44 | $ | 46 | ||||
Unrealized
gains relating to instruments held at reporting date
|
12 | 12 | ||||||
Return
of principal
|
(1 | ) | (3 | ) | ||||
Balance
at end of period
|
$ | 55 | $ | 55 |
|
September 30, 2009
|
|||||||
(In millions)
|
Carrying
Amount
|
Fair
Value
|
||||||
Long-tem
debt (including current portion)
|
$ | 6,418 | $ | 5,400 | ||||
Lease
deposits
|
335 | 359 |
Description
|
Fair
Value Methodology
|
|
Cash,
Cash Equivalents, Restricted Cash, Accounts Receivable, Fuel Hedge
Collateral Deposits, Accounts Payable and Other Accrued
Liabilities
|
The
carrying amounts approximate fair value because of the short-term maturity
of these investments.
|
|
Enhanced Equipment
Trust
Certificates
|
The
EETCs are not actively traded on an exchange. Fair value is based on the
trading prices of United’s EETCs or similar EETC instruments
issued by other airlines. The Company uses internal models and observable
and unobservable inputs to corroborate third party quotes. Because certain
inputs are unobservable, the Company categorized inputs to the EETC fair
value valuation as Level 3. Significant inputs to the valuation models
include contractual terms, risk-free interest rates and credit
spreads.
|
|
Fuel
Derivative Instruments
|
Derivative
contracts are privately negotiated contracts and are not exchange traded.
Fair value measurements are estimated with option pricing models that
employ observable and unobservable inputs. Inputs to the valuation models
include contractual terms, market prices, yield curves, fuel price curves
and measures of volatility, among others.
|
|
Foreign
Currency Derivative Instruments
|
Fair
value is determined with a formula utilizing observable inputs.
Significant inputs to the valuation models include contractual terms,
risk-free interest rates and forward exchange rates.
|
|
Long-Term
Debt
|
The
fair value is based on the quoted market prices for the same or similar
issues, discounted cash flow models using appropriate market rates and the
Black-Scholes model to value conversion rights in UAL’s convertible debt
instruments. The Company’s credit risk was considered in estimating fair
value.
|
|
Mainline Fuel
|
Nonoperating
Income (Expense)
|
Total
|
|||||||||||||||||||||
|
Three
Months Ended
September 30,
|
Three
Months Ended
September 30,
|
Three
Months Ended
September 30,
|
|||||||||||||||||||||
(In millions)
|
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
||||||||||||||||||
Fuel
hedges (a):
|
||||||||||||||||||||||||
Cash
net gains (losses) on settled contracts
|
$ | (92 | ) | $ | 39 | $ | (39 | ) | $ | (22 | ) | $ | (131 | ) | $ | 17 | ||||||||
Non-cash
net mark-to-market gains (losses)
|
25 | (336 | ) | 34 | (183 | ) | 59 | (519 | ) | |||||||||||||||
Total
fuel hedge gains (losses)
|
$ | (67 | ) | $ | (297 | ) | $ | (5 | ) | $ | (205 | ) | $ | (72 | ) | $ | (502 | ) |
|
Mainline Fuel
|
Nonoperating
Income (Expense)
|
Total
|
|||||||||||||||||||||
Nine
Months Ended
September 30,
|
Nine
Months Ended
September 30,
|
Nine
Months Ended
September 30,
|
||||||||||||||||||||||
(In millions)
|
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
||||||||||||||||||
Fuel
hedges (a):
|
||||||||||||||||||||||||
Cash
net gains (losses) on settled contracts
|
$ | (491 | ) | $ | 102 | $ | (215 | ) | $ | (21 | ) | $ | (706 | ) | $ | 81 | ||||||||
Non-cash
net mark-to-market gains (losses)
|
521 | (119 | ) | 241 | (162 | ) | 762 | (281 | ) | |||||||||||||||
Total
fuel hedge gains (losses)
|
$ | 30 | $ | (17 | ) | $ | 26 | $ | (183 | ) | $ | 56 | $ | (200 | ) |
|
(a)
|
Fuel
hedge gains (losses) are not allocated to Regional Affiliates
expense.
|
Barrels hedged (in 000s)
|
Weighted-average crude equivalent price per barrel
(a)
|
|||||||||||||||||||||||||||||||||||
Percentage
of Projected Fuel Requirements
|
Purchased
|
Sold
|
Swaps/
Purchased
|
Sold
|
Payment
Obligation
|
Payment
Obligation
|
Hedge
Protection
|
Hedge
Protection
|
||||||||||||||||||||||||||||
Hedged
|
Puts
|
Puts
|
Calls
|
Calls
|
Ends
|
Begins
|
Begins
|
Ends
|
||||||||||||||||||||||||||||
Fourth
Quarter 2009:
|
% | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
Calls
|
31 | - | - | 4,150 | - |
NA
|
NA
|
66 |
NA
|
|||||||||||||||||||||||||||
Swaps
|
13 | - | - | 1,800 | - |
NA
|
62 | 62 |
NA
|
|||||||||||||||||||||||||||
Collars
|
1 | - | 300 | 150 | - |
NA
|
112 | 138 |
NA
|
|||||||||||||||||||||||||||
3-way
collars
|
8 | - | 1,425 | 1,050 | 1,050 |
NA
|
100 | 120 | 160 | |||||||||||||||||||||||||||
4-way
collars
|
2 | 225 | 225 | 225 | 225 | 63 | 78 | 95 | 135 | |||||||||||||||||||||||||||
Total
|
55 | 225 | 1,950 | 7,375 | 1,275 | |||||||||||||||||||||||||||||||
Purchased
puts
|
14 | 1,800 | - | - | - |
NA
|
NA
|
52 |
NA
|
|||||||||||||||||||||||||||
Full
Year 2010:
|
||||||||||||||||||||||||||||||||||||
Calls
|
9 | - | - | 4,900 | - |
NA
|
NA
|
73 |
NA
|
|||||||||||||||||||||||||||
Swaps
|
6 | - | - | 3,075 | - |
NA
|
74 | 74 |
NA
|
|||||||||||||||||||||||||||
Collars
|
- | - | 300 | 300 | - |
NA
|
93 | 98 |
NA
|
|||||||||||||||||||||||||||
Total
(b)
|
15 | - | 300 | 8,275 | - |
(a)
|
Instruments
in heating oil and jet fuel are converted to crude oil price
equivalents.
|
(b)
|
The
Company has hedged approximately 40% of its first quarter 2010
consolidated consumption.
|
Fair Value Measurements at Reporting Date Using | ||||||||||||||||||||
(In millions)
|
September 30, 2009
|
Quoted
Prices in Active Markets for Identical Assets
(Level 1)
|
Significant
Other Observable Inputs
(Level 2)
|
Significant
Unobservable Inputs
(Level 3)
|
Total
Gains/(Losses)
(Level 3)
|
|||||||||||||||
Nonfinancial
Assets Measured at Fair Value on a Nonrecurring
Basis:
|
||||||||||||||||||||
Five
B747 aircraft - nonoperating
|
$ | 184 | $ | — | $ | — | $ | 184 | $ | (19 | ) |
(12)
|
Commitments, Contingent
Liabilities and
Uncertainties
|
(In millions)
|
|
|||
Balance
at December 31, 2008
|
$ | 96 | ||
Payments
|
(34 | ) | ||
Accruals
|
30 | |||
Balance
at September 30, 2009
|
$ | 92 |
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
(In
millions)
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
Goodwill
impairment
|
$ | - | $ | - | $ | - | $ | 2,277 | ||||||||
Indefinite-lived
intangible assets:
|
||||||||||||||||
Codeshare
agreements
|
- | (16 | ) | - | 44 | |||||||||||
Tradenames
|
- | - | 150 | 20 | ||||||||||||
Intangible
asset impairments
|
- | (16 | ) | 150 | 64 | |||||||||||
Tangible
assets:
|
||||||||||||||||
Pre-delivery
advance deposits including related capitalized interest
|
- | - | - | 105 | ||||||||||||
B737
and B747 aircraft, B737 spare parts and other
|
19 | - | 19 | 38 | ||||||||||||
Aircraft
and related deposit impairments
|
19 | - | 19 | 143 | ||||||||||||
Total
impairments
|
$ | 19 | $ | (16 | ) | $ | 169 | $ | 2,484 |
|
●
|
In
October 2009, the Company significantly enhanced its liquidity from
several financing transactions including the issuance of 19.0 million
shares of UAL common stock, generating gross proceeds of $138
million, and $345 million aggregate principal amount of UAL 6.0%
Convertible Senior Notes due 2029. The Company’s October 2009 financings
also include agreements with one of the Company’s regional flying partners
that enhanced the Company’s liquidity by $129 million. In addition, the
Company completed a secured aircraft financing which refinanced existing
debt obligations and financed two previously unencumbered aircraft
providing net proceeds to the Company in October 2009 with additional
proceeds to be received in January 2010. See Liquidity and Capital
Resources, below, and Note 16, “Subsequent Events,” in the
Footnotes for additional information on these and other financing
transactions completed in 2009.
|
|
●
|
Following
an extensive review of multiple sites in the Chicago area, the Company
selected the Willis Tower (formerly the Sears Tower) as the new location
of United’s Operations Center, offering much improved workspaces,
technology and other resources. United expects to occupy approximately
460,000 square feet within the Willis Tower and expects to obtain
approximately $36 million of incentives and grants from the City of
Chicago as well as incentives from the landlord which will primarily
be applied toward leasehold improvements. The Company’s rental obligations
and possession of the building will commence in late 2010. The lease,
which became effective in October 2009, has an initial 15-year term with
renewal options.
|
|
●
|
During
the second quarter of 2009, the Company initiated a fleet modernization
review with a request for proposal that has the potential to result in a
large order of next-generation wide body and narrow body aircraft to
replace its older fleet types. This process could present a unique
opportunity for the Company to improve its cost structure and fleet
strategy.
|
|
●
|
The
Company has completed the upgrade of all B767 and B747 aircraft, which are
used for international flights, with new first and business class premium
seats, entertainment systems and other product enhancements. This new
premium travel product features, among other improvements, 180-degree, lie
flat beds in business class. In addition, the reconfiguration of its
international B777 fleet will commence in early
2010.
|
|
●
|
The
Company is taking appropriate actions to respond to the current economic
environment as indicated by its significant capacity reductions. However,
consolidated passenger revenue per available seat mile was down 15% and
14% in the three and nine months ended September 30, 2009, respectively,
as compared to the comparable year-ago periods as a result of the severe
global recession.
|
|
●
|
In
July 2009, the Company announced plans to reduce its international
capacity by an additional 7% during the last four months of 2009. The
Company continues to monitor its capacity levels and will make additional
adjustments, as appropriate.
|
|
●
|
The
Company continues to focus on cost control through various cost savings
initiatives. As shown in the table below, Mainline fuel and non-fuel unit
costs decreased in the third quarter of 2009 as compared to the year-ago
period. Fuel costs are mostly uncontrollable by the Company. See Results of Operations,
below, for further discussion of year-over-year expense fluctuations for
both the three and nine month periods ended September 30,
2009.
|
Three
Months Ended
|
2009 expense per ASM | 2008 expense per ASM | % change | |||||||||||||||||
September 30,
|
(in cents)
|
(in cents)
|
per ASM
|
|||||||||||||||||
(In millions, except unit
costs)
|
2009
|
2008
|
||||||||||||||||||
Mainline
ASMs
|
32,193 | 35,082 | (8.2 | ) | ||||||||||||||||
Mainline
fuel expense
|
$ | 1,064 | $ | 2,461 | 3.31 | 7.01 | (52.9 | ) | ||||||||||||
Other
impairments and special items
|
43 | (9 | ) | 0.13 | (0.03 | ) | - | |||||||||||||
Other
operating expenses (a)
|
2,463 | 2,722 | 7.65 | 7.76 | (1.4 | ) | ||||||||||||||
Total
mainline operating expense
|
3,570 | 5,174 | 11.09 | 14.75 | (24.8 | ) | ||||||||||||||
Regional
affiliate expense
|
775 | 882 | ||||||||||||||||||
Consolidated
operating expense
|
$ | 4,345 | $ | 6,056 |
(a)
|
Included
in Other operating expenses for the 2009 and 2008 periods are total
charges of $17 million and $14 million, respectively, which relate to the
Company’s operational plans, asset sales, and other items. An itemization
of these charges is included in the table
below.
|
Three Months Ended September
30,
|
Nine Months Ended September
30,
|
||||||||||||||||||||||||||||
Favorable(unfavorable)
|
Favorable(unfavorable)
|
||||||||||||||||||||||||||||
(In millions)
|
2009
|
2008
|
$ Change
|
% Change
|
2009
|
2008
|
$ Change
|
% Change
|
|||||||||||||||||||||
(Adjusted
(a))
|
(Adjusted
(a))
|
||||||||||||||||||||||||||||
UAL Information
|
|||||||||||||||||||||||||||||
Total
revenues
|
$ | 4,433 | $ | 5,565 | $ | (1,132 | ) | (20.3) | $ | 12,142 | $ | 15,647 | $ | (3,505 | ) | (22.4) | |||||||||||||
Mainline
fuel purchase cost
|
997 | 2,164 | 1,167 | 53.9 | 2,558 | 5,867 | 3,309 | 56.4 | |||||||||||||||||||||
Operating
non-cash fuel hedge (gains) losses
|
(25 | ) | 336 | 361 | - | (521 | ) | 119 | 640 | - | |||||||||||||||||||
Operating
cash fuel hedge (gains) losses
|
92 | (39 | ) | (131 | ) | - | 491 | (102 | ) | (593 | ) | - | |||||||||||||||||
Regional
Affiliate fuel expense (b)
|
222 | 377 | 155 | 41.1 | 564 | 1,010 | 446 | 44.2 | |||||||||||||||||||||
Asset
impairments and special items (see below)
|
43 | (9 | ) | (52 | ) | - | 250 | 2,491 | 2,241 | 90.0 | |||||||||||||||||||
Other
operating expenses
|
3,016 | 3,227 | 211 | 6.5 | 8,887 | 9,888 | 1,001 | 10.1 | |||||||||||||||||||||
Nonoperating
non-cash fuel hedge (gains) losses
|
(34 | ) | 183 | 217 | - | (241 | ) | 162 | 403 | - | |||||||||||||||||||
Nonoperating
cash fuel hedge (gains) losses
|
39 | 22 | (17 | ) | (77.3) | 215 | 21 | (194 | ) |
NM
|
|||||||||||||||||||
Other
nonoperating expense (c)
|
144 | 94 | (50 | ) | (53.2) | 396 | 302 | (94 | ) | (31.1) | |||||||||||||||||||
Income
tax expense (benefit)
|
(4 | ) | 2 | 6 | - | (46 | ) | (30 | ) | 16 | 53.3 | ||||||||||||||||||
Net
loss
|
$ | (57 | ) | $ | (792 | ) | $ | 735 | 92.8 | $ | (411 | ) | $ | (4,081 | ) | $ | 3,670 | 89.9 | |||||||||||
United
Net loss
|
$ | (55 | ) | $ | (752 | ) | $ | 697 | 92.7 | $ | (405 | ) | $ | (4,068 | ) | $ | 3,663 | 90.0 |
(a)
|
As
discussed in Note 2, “New Accounting Pronouncements,” in the
Footnotes,
certain amounts have been adjusted from the Company’s historical results
due to the retrospective adoption of new accounting guidance related to
accounting for certain of the Company’s convertible debt
instruments.
|
(b)
|
Regional
Affiliates’ fuel expense is classified as part of Regional Affiliates
expense in the Company’s Financial Statements.
|
(c)
|
Includes
equity in earnings of affiliates.
|
Three
Months Ended
September 30,
|
Nine
Months Ended
September 30,
|
||||||||||||||||
(In millions)
|
2009
|
2008
|
2009
|
2008
|
Income statement
classification
|
||||||||||||
Goodwill
impairment
|
$ | - | $ | - | $ | - | $ | 2,277 |
Goodwill
impairment
|
||||||||
Intangible
asset impairments
|
- | (16 | ) | 150 | 64 | ||||||||||||
Aircraft
and related deposit impairments
|
19 | - | 19 | 143 | |||||||||||||
LAX
municipal bond secured interest
|
- | - | 27 | - | |||||||||||||
Lease
termination and other special items
|
24 | 7 | 54 | 7 | |||||||||||||
Other
impairments and special items
|
43 | (9 | ) | 250 | 214 |
Other
impairments and special items
|
|||||||||||
Total
asset impairments and special items
|
43 | (9 | ) | 250 | 2,491 | ||||||||||||
Severance
|
22 | 6 | 23 | 88 |
Salaries
and related costs
|
||||||||||||
Employee
benefit obligation adjustment
|
- | (6 | ) | (33 | ) | 28 |
Salaries
and related costs
|
||||||||||
(Gain)
loss on asset sales
|
(11 | ) | 8 | (11 | ) | 8 |
Other
operating expenses
|
||||||||||
Litigation-related
settlement gain
|
- | - | - | (29 | ) |
Other
operating expenses
|
|||||||||||
Charges
related to terminated/deferred projects
|
- | - | - | 26 |
Purchased
services
|
||||||||||||
Accelerated
depreciation related to aircraft groundings
|
6 | 6 | 38 | 8 |
Depreciation
and amortization
|
||||||||||||
Severance
and other charges
|
17 | 14 | 17 | 129 | |||||||||||||
Total
asset impairments, special items and other charges
|
60 | 5 | 267 | 2,620 | |||||||||||||
Net
operating non-cash fuel hedge (gains) losses
|
(25 | ) | 336 | (521 | ) | 119 |
Aircraft
fuel
|
||||||||||
Net
nonoperating non-cash fuel hedge (gains) losses
|
(34 | ) | 183 | (241 | ) | 162 |
Miscellaneous,
net
|
||||||||||
Total
non-cash fuel hedge (gains) losses
|
(59 | ) | 519 | (762 | ) | 281 | |||||||||||
Income
tax expense (benefit) on impairments and other charges
|
(7 | ) | 3 | (59 | ) | (26 | ) |
Income
tax benefit
|
|||||||||
Impairments
and other charges (net of tax) and non-cash fuel hedge
gains/losses
|
$ | (6 | ) | $ | 527 | $ | (554 | ) | $ | 2,875 |
(In millions)
|
As
of September 30, 2009
|
As
of December 31, 2008
|
||||||
Cash
and cash equivalents
|
$ | 2,525 | $ | 2,039 | ||||
Restricted
cash
|
309 | 272 | ||||||
Total
cash
|
$ | 2,834 | $ | 2,311 |
|
Nine
Months Ended September
30,
|
|||||||
|
2009
|
2008
|
||||||
Net
cash provided (used) by operating activities
|
$ | 878 | $ | (250 | ) | |||
Net
cash provided (used) by investing activities
|
(52 | ) | 2,576 | |||||
Net
cash used by financing activities
|
(340 | ) | (654 | ) |
|
Three
Months Ended
September 30,
|
$ | % | ||||||||||||
(In millions)
|
2009
|
2008
|
Change
|
Change
|
|||||||||||
Passenger—United
Airlines
|
$ | 3,267 | $ | 4,280 | $ | (1,013 | ) | (23.7) | |||||||
Passenger—Regional
Affiliates
|
844 | 834 | 10 | 1.2 | |||||||||||
Cargo
|
125 | 219 | (94 | ) | (42.9) | ||||||||||
Other
operating revenues
|
197 | 232 | (35 | ) | (15.1) | ||||||||||
UAL
total
|
$ | 4,433 | $ | 5,565 | $ | (1,132 | ) | (20.3) | |||||||
United
total
|
$ | 4,435 | $ | 5,606 | $ | (1,171 | ) | (20.9) |
Domestic
|
Pacific
|
Atlantic
|
Latin
|
Mainline
|
Regional
Affiliates
|
Consolidated
|
||||||||||||||||||||||
Increase
(decrease) from 2008:
|
||||||||||||||||||||||||||||
Passenger
revenues (in millions)
|
$ | (579 | ) | $ | (260 | ) | $ | (124 | ) | $ | (50 | ) | $ | (1,013 | ) | $ | 10 | $ | (1,003 | ) | ||||||||
Passenger
revenues
|
(22.9 | )% | (30.0 | )% | (16.3 | )% | (40.2 | )% | (23.7 | )% | 1.2 | % | (19.6 | )% | ||||||||||||||
Available
seat miles (“ASMs”) (a)
|
(10.2 | )% | (7.9 | )% | (0.3 | )% | (18.4 | )% | (8.2 | )% | 15.3 | % | (5.7 | )% | ||||||||||||||
Revenue
passenger miles (“RPMs”) (b)
|
(8.0 | )% | (2.0 | )% | 1.3 | % | (14.8 | )% | (5.4 | )% | 19.0 | % | (2.9 | )% | ||||||||||||||
Passenger
revenues per ASM (“PRASM”)
|
(14.2 | )% | (23.9 | )% | (16.1 | )% | (26.7 | )% | (16.8 | )% | (12.3 | )% | (14.7 | )% | ||||||||||||||
Yield
(c)
|
(18.5 | )% | (24.8 | )% | (13.7 | )% | (26.8 | )% | (19.4 | )% | (15.0 | )% | (17.1 | )% | ||||||||||||||
Passenger
load factor (points) (d)
|
2.0
pts.
|
5.0
pts.
|
1.4
pts.
|
3.4
pts.
|
2.6
pts.
|
2.5
pts.
|
2.5
pts.
|
a)
|
ASMs
are the number of seats available for passengers multiplied by the number
of scheduled miles those seats are flown.
|
b)
|
RPMs
are the number of scheduled miles flown by revenue
passengers.
|
c)
|
Yield
is a measure of average price paid per passenger mile, which is calculated
by dividing passenger revenues by RPMs. Yields for geographic regions
exclude charter revenue and RPMs.
|
d)
|
Passenger
load factor is derived by dividing RPMs by
ASMs.
|
|
Three
Months Ended
September 30,
|
$ | % | ||||||||||||
(In millions)
|
2009
|
2008
|
Change
|
Change
|
|||||||||||
Aircraft
fuel
|
$ | 1,064 | $ | 2,461 | $ | (1,397 | ) | (56.8) | |||||||
Salaries
and related costs
|
954 | 1,037 | (83 | ) | (8.0) | ||||||||||
Regional
Affiliates
|
775 | 882 | (107 | ) | (12.1) | ||||||||||
Purchased
services
|
279 | 327 | (48 | ) | (14.7) | ||||||||||
Aircraft
maintenance materials and outside repairs
|
253 | 256 | (3 | ) | (1.2) | ||||||||||
Landing
fees and other rent
|
226 | 222 | 4 | 1.8 | |||||||||||
Depreciation
and amortization
|
220 | 234 | (14 | ) | (6.0) | ||||||||||
Distribution
expenses
|
145 | 181 | (36 | ) | (19.9) | ||||||||||
Aircraft
rent
|
88 | 115 | (27 | ) | (23.5) | ||||||||||
Cost
of third party sales
|
59 | 75 | (16 | ) | (21.3) | ||||||||||
Other
impairments and special items
|
43 | (9 | ) | 52 | - | ||||||||||
Other
operating expenses
|
239 | 275 | (36 | ) | (13.1) | ||||||||||
UAL
total
|
$ | 4,345 | $ | 6,056 | $ | (1,711 | ) | (28.3) | |||||||
United
total
|
$ | 4,345 | $ | 6,057 | $ | (1,712 | ) | (28.3) |
|
Three Months Ended September
30,
|
|||||||||||||||||||||
Average price per gallon (in
cents)
|
||||||||||||||||||||||
(In millions, except per
gallon)
|
2009
|
2008
|
%
Change
|
2009
|
2008
|
%
Change
|
||||||||||||||||
Mainline
fuel purchase cost
|
$ | 997 | $ | 2,164 | (53.9) | 195.1 | 383.7 | (49.2) | ||||||||||||||
Non-cash
fuel hedge (gains) losses in Mainline fuel (a)
|
(25 | ) | 336 | - | (4.9 | ) | 59.6 | - | ||||||||||||||
Cash
fuel hedge (gains) losses in Mainline fuel (a)
|
92 | (39 | ) | - | 18.0 | (7.0 | ) | - | ||||||||||||||
Total
Mainline fuel expense
|
1,064 | 2,461 | (56.8) | 208.2 | 436.3 | (52.3) | ||||||||||||||||
Regional
Affiliates fuel expense (b)
|
222 | 377 | (41.1) | 211.4 | 405.4 | (47.9) | ||||||||||||||||
UAL
system operating fuel expense
|
$ | 1,286 | $ | 2,838 | (54.7) | 208.8 | 432.0 | (51.7) | ||||||||||||||
Mainline
fuel consumption (gallons)
|
511 | 564 | (9.4) | |||||||||||||||||||
Regional
Affiliates fuel consumption (gallons)
|
105 | 93 | 12.9 | |||||||||||||||||||
Total
fuel consumption (gallons)
|
616 | 657 | (6.2) |
(a)
|
The
Company incurred additional fuel hedge gains/losses which are classified
in nonoperating expense as described
below.
|
(b)
|
Regional
Affiliate fuel costs are classified as part of Regional Affiliate expense
in the Company's Financial
Statements.
|
|
Three
Months Ended
September 30,
|
Favorable/(Unfavorable)
Change
|
|||||||||||||
(In millions)
|
2009
|
2008
|
$ | % | |||||||||||
(Adjusted)
|
|||||||||||||||
Interest
expense
|
$ | (146 | ) | $ | (144 | ) | $ | (2 | ) | (1.4) | |||||
Interest
income
|
3 | 24 | (21 | ) | (87.5) | ||||||||||
Interest
capitalized
|
3 | 6 | (3 | ) | (50.0) | ||||||||||
Miscellaneous,
net:
|
|||||||||||||||
Non-cash
fuel hedge gains (losses)
|
34 | (183 | ) | 217 | - | ||||||||||
Cash
fuel hedge losses
|
(39 | ) | (22 | ) | (17 | ) | (77.3) | ||||||||
Other
miscellaneous, net
|
(5 | ) | 19 | (24 | ) | - | |||||||||
UAL
total
|
$ | (150 | ) | $ | (300 | ) | $ | 150 | 50.0 | ||||||
United
total
|
$ | (150 | ) | $ | (299 | ) | $ | 149 | 49.8 |
|
Nine
Months Ended
September 30,
|
$ | % | ||||||||||||
(In
millions)
|
2009
|
2008
|
Change
|
Change
|
|||||||||||
Passenger—United
Airlines
|
$ | 8,909 | $ | 11,924 | $ | (3,015 | ) | (25.3) | |||||||
Passenger—Regional
Affiliates
|
2,252 | 2,346 | (94 | ) | (4.0) | ||||||||||
Cargo
|
370 | 674 | (304 | ) | (45.1) | ||||||||||
Other
operating revenues
|
611 | 703 | (92 | ) | (13.1) | ||||||||||
UAL
total
|
$ | 12,142 | $ | 15,647 | $ | (3,505 | ) | (22.4) | |||||||
United
total
|
$ | 12,149 | $ | 15,688 | $ | (3,539 | ) | (22.6) |
|
Domestic
|
Pacific
|
Atlantic
|
Latin
|
Mainline
|
Regional
Affiliates
|
Consolidated
|
|||||||||||||||||||||
Increase
(decrease) from 2008:
|
||||||||||||||||||||||||||||
Passenger
revenues (in millions)
|
$ | (1,652 | ) | $ | (805 | ) | $ | (396 | ) | $ | (162 | ) | $ | (3,015 | ) | $ | (94 | ) | $ | (3,109 | ) | |||||||
Passenger
revenues
|
(23.6 | )% | (32.6 | )% | (19.5 | )% | (39.1 | )% | (25.3 | )% | (4.0 | )% | (21.8 | )% | ||||||||||||||
Available
seat miles (“ASMs”)
|
(12.0 | )% | (12.3 | )% | (2.5 | )% | (17.3 | )% | (10.7 | )% | 9.3 | % | (8.6 | )% | ||||||||||||||
Revenue
passenger miles (“RPMs”)
|
(10.8 | )% | (13.5 | )% | (3.9 | )% | (20.6 | )% | (10.6 | )% | 11.7 | % | (8.4 | )% | ||||||||||||||
Passenger
revenues per ASM (“PRASM”)
|
(13.1 | )% | (23.1 | )% | (17.5 | )% | (26.4 | )% | (16.4 | )% | (12.2 | )% | (14.4 | )% | ||||||||||||||
Yield
|
(17.2 | )% | (17.4 | )% | (12.3 | )% | (18.1 | )% | (16.5 | )% | (14.0 | )% | (14.6 | )% | ||||||||||||||
Passenger
load factor (points)
|
1.3
pts.
|
(1.1)
pts.
|
(1.2)
pts.
|
(3.1)
pts.
|
0.1
pts.
|
1.6
pts.
|
0.2
pts.
|
|
Nine
Months Ended
September 30,
|
$ | % | ||||||||||||
(In millions)
|
2009
|
2008
|
Change
|
Change
|
|||||||||||
Salaries
and related costs
|
$ | 2,838 | $ | 3,262 | $ | (424 | ) | (13.0) | |||||||
Aircraft
fuel
|
2,528 | 5,884 | (3,356 | ) | (57.0) | ||||||||||
Regional
Affiliates
|
2,154 | 2,508 | (354 | ) | (14.1) | ||||||||||
Purchased
services
|
852 | 1,047 | (195 | ) | (18.6) | ||||||||||
Aircraft
maintenance materials and outside repairs
|
718 | 868 | (150 | ) | (17.3) | ||||||||||
Landing
fees and other rent
|
676 | 651 | 25 | 3.8 | |||||||||||
Depreciation
and amortization
|
675 | 670 | 5 | 0.7 | |||||||||||
Distribution
expenses
|
402 | 558 | (156 | ) | (28.0) | ||||||||||
Aircraft
rent
|
265 | 314 | (49 | ) | (15.6) | ||||||||||
Cost
of third party sales
|
172 | 204 | (32 | ) | (15.7) | ||||||||||
Goodwill
impairment
|
- | 2,277 | (2,277 | ) | (100.0) | ||||||||||
Other
impairments and special items
|
250 | 214 | 36 | 16.8 | |||||||||||
Other
operating expenses
|
699 | 816 | (117 | ) | (14.3) | ||||||||||
UAL
total (a)
|
$ | 12,229 | $ | 19,273 | $ | (7,044 | ) | (36.5) | |||||||
United
total (a)
|
$ | 12,230 | $ | 19,302 | $ | (7,072 | ) | (36.6) |
|
(a)
|
The
difference between UAL and United operating expenses in the 2008 period is
primarily due to a $29 million gain recorded at UAL for a litigation
settlement resulting in reduced Other operating
expenses.
|
|
Nine Months Ended September
30,
|
|||||||||||||||||||||
Average price per gallon (in
cents)
|
||||||||||||||||||||||
(In millions, except per
gallon)
|
2009
|
2008
|
%
Change
|
2009
|
2008
|
%
Change
|
||||||||||||||||
Mainline
fuel purchase cost
|
$ | 2,558 | $ | 5,867 | (56.4) | 172.8 | 347.0 | (50.2) | ||||||||||||||
Non-cash
fuel hedge (gains) losses in Mainline fuel (a)
|
(521 | ) | 119 | - | (35.2 | ) | 7.0 | - | ||||||||||||||
Cash
fuel hedge (gains) losses in Mainline fuel (a)
|
491 | (102 | ) | - | 33.2 | (6.0 | ) | - | ||||||||||||||
Total
Mainline fuel expense
|
2,528 | 5,884 | (57.0) | 170.8 | 348.0 | (50.9) | ||||||||||||||||
Regional
Affiliates fuel expense (b)
|
564 | 1,010 | (44.2) | 191.8 | 362.0 | (47.0) | ||||||||||||||||
UAL
system operating fuel expense
|
$ | 3,092 | $ | 6,894 | (55.1) | 174.3 | 349.9 | (50.2) | ||||||||||||||
Mainline
fuel consumption (gallons)
|
1,480 | 1,691 | (12.5) | |||||||||||||||||||
Regional
Affiliates fuel consumption (gallons)
|
294 | 279 | 5.4 | |||||||||||||||||||
Total
fuel consumption (gallons)
|
1,774 | 1,970 | (9.9) |
(a)
|
The
Company incurred fuel hedge gains/losses which are classified in
nonoperating expense as described
below.
|
(b)
|
Regional
Affiliate fuel costs are classified as part of Regional Affiliate expense
in the Company's Financial
Statements.
|
Nine
Months Ended
|
||||||||
September 30,
|
||||||||
(In
millions)
|
2009
|
2008
|
||||||
Goodwill
impairment
|
$ | - | $ | 2,277 | ||||
Indefinite-lived
intangible assets:
|
||||||||
Codeshare
agreements
|
- | 44 | ||||||
Tradenames
|
150 | 20 | ||||||
Intangible
asset impairments
|
150 | 64 | ||||||
Tangible
assets:
|
||||||||
Pre-delivery
advance deposits including related capitalized interest
|
- | 105 | ||||||
B737
and B747 aircraft, B737 spare parts and other
|
19 | 38 | ||||||
Aircraft
and related deposit impairments
|
19 | 143 | ||||||
Total
impairments
|
$ | 169 | $ | 2,484 |
Nine
Months Ended
September
30,
|
Favorable/(Unfavorable)
Change
|
|||||||||||||||
(In
millions)
|
2009
|
2008
|
$ | % | ||||||||||||
(Adjusted)
|
||||||||||||||||
Interest
expense
|
$ | (415 | ) | (428 | ) | $ | 13 | 3.0 | ||||||||
Interest
income
|
15 | 100 | (85 | ) | (85.0 | ) | ||||||||||
Interest
capitalized
|
8 | 16 | (8 | ) | (50.0 | ) | ||||||||||
Miscellaneous,
net:
|
||||||||||||||||
Non-cash
fuel hedge gains (losses)
|
241 | (162 | ) | 403 | - | |||||||||||
Cash
fuel hedge losses
|
(215 | (21 | ) | (194 | ) |
NM
|
||||||||||
Other
miscellaneous, net
|
(7 | ) | 6 | (13 | ) | - | ||||||||||
UAL
total
|
$ | (373 | ) | (489 | ) | $ | 116 | 23.7 | ||||||||
United
total
|
$ | (373 | ) | (488 | $ | 115 | 23.6 |
●
|
Higher
jet fuel prices and the cost and effectiveness of hedging jet fuel prices
may require the use of significant liquidity in future periods. The
Company may hedge against future price increases using calls,
collar-strategies, fixed price swaps or other derivative instruments and
structures. The Company has been, and may in the future be, required to
make significant payments at the settlement dates of the hedge contracts
if the settlement price is below the floor price of the collars or the
fixed swap price. Furthermore, the Company has been, and may in the future
be, further required to provide counterparties with additional cash
collateral prior to such settlement dates. While the Company’s results of
operations benefit from lower fuel prices on its unhedged fuel
consumption, the Company may not realize the full benefit of lower fuel
prices due to unfavorable fuel hedge cash settlements. See Note 11, “Fair
Value Measurements and Derivative Instruments,” in the Footnotes, as well
as Item 3. Quantitative
and Qualitative Disclosures Above Market Risk, for further
information regarding the Company’s fuel derivative
instruments.
|
●
|
Poor
general economic conditions have had, and may in the future continue to
have, a significant adverse impact on travel demand, which has resulted in
decreased revenues and may adversely affect revenues in future periods. In
addition, the Company’s current operational plans to address the severe
weakness of the global economy may not be successful in improving its
results of operations and
liquidity.
|
●
|
A
significant increase in future cash reserve requirements by the Company’s
credit card processors could materially reduce the Company’s liquidity. As
of September 30, 2009, the Company had cash reserves under credit card
processing agreements of $74 million, which are classified as current
restricted cash in the accompanying Financial
Statements.
|
●
|
Our
high level of indebtedness, our non-investment grade credit rating, the
current poor credit market conditions and the nature of the Company’s
remaining assets available as collateral for financings are factors that,
in the aggregate, may limit the Company’s ability to raise capital to meet
liquidity needs and/or may increase its cost of
borrowing.
|
●
|
Due
to the factors above, and other factors, we may be unable to comply with
our Amended Credit Facility covenant that currently requires the Company
to maintain an unrestricted cash balance of $1.0 billion and also requires
the Company to maintain a minimum ratio of EBITDAR to fixed charges. If
the Company does not comply with these covenants, the lenders may
accelerate repayment of these debt obligations, which would have a
material adverse impact on the Company’s financial position and
liquidity.
|
●
|
If
a default occurs under our Amended Credit Facility or other debt
obligations, the cost to cure any such default may materially and
adversely impact our financial position and liquidity, and no assurance
can be provided that such a default will be mitigated or
cured.
|
●
|
The
Company received proceeds of approximately $0.8 billion in the nine months
ended September 30, 2009 from financing agreements, UAL common stock
sales, asset sales and other transactions. In October 2009, the Company
completed additional financing transactions to enhance its
liquidity, as described below. One of these transactions reduced the
Company’s scheduled 2010 and 2011 debt payments by $218 million and
$101 million, respectively.
|
●
|
As
of September 30, 2009, the Company has approximately $0.9 billion of
unencumbered aircraft and other assets that may be sold or otherwise used
as collateral to obtain additional financing. As described under Credit Card Processing
Agreements below, in October 2009 the Company gave notice to cancel
its collateral substitution agreement with one of its credit
card processors. As a result of this cancellation, aircraft with a book
value of approximately $0.7 billion will be available to the Company for
liquidity initiatives. This increase in available collateral was
partially offset by additional collateral provided in the October
2009 financing transactions described
herein.
|
●
|
The
Company is taking aggressive actions to right-size its business including
significant capacity reductions, disposition of underperforming assets and
a large workforce reduction, among other actions to improve financial
performance.
|
|
Nine
Months Ended
September 30,
|
|||||||
(In millions)
|
2009
|
2008
|
||||||
Net
cash provided (used) by operating activities
|
$ | 878 | $ | (250 | ) | |||
Net
cash provided (used) by investing activities
|
(52 | ) | 2,576 | |||||
Net
cash used by financing activities
|
(340 | ) | (654 | ) |
As
of September 30,
2009
|
As
of December 31,
2008
|
|||||||
Cash
and cash equivalents
|
$ | 2,525 | $ | 2,039 | ||||
Restricted
cash
|
309 | 272 | ||||||
Total
cash
|
$ | 2,834 | $ | 2,311 |
|
●
|
$158
million from the issuance of senior secured notes secured by certain
aircraft spare parts;
|
|
●
|
$134
million mortgage financing which is secured by certain of the Company’s
spare engines;
|
|
●
|
$90
million from the issuance of UAL common stock;
and
|
|
●
|
$30
million of financing secured by one
aircraft.
|
|
●
|
$253
million was used by the Company for UAL’s special distribution to its
common stockholders in January
2008;
|
|
●
|
In
May 2008, United used cash of $109 million in connection with an amendment
to its Amended Credit Facility, as further discussed
below;
|
|
●
|
Capital
expenditures were $335 million in the first nine months of 2008, during
which time the Company acquired nine aircraft that were being operated
under existing capital leases. These aircraft were acquired pursuant to
existing lease terms. Aircraft lease deposits of $154 million provided
financing cash that was utilized by the Company to make the final payments
due under these lease obligations. These aircraft were
previously recorded as capital lease assets and are now owned assets;
and
|
|
●
|
The
Company used cash of $765 million during the nine months ended September
30, 2008 for scheduled long-term debt and capital lease
payments.
|
|
●
|
United issued
approximately $659 million aggregate principal amount of Pass Through
Certificates, Series 2009-1A to finance 31 aircraft owned by United. The
proceeds from this transaction will be used to refinance 29 aircraft
financed by an existing EETC facility. This aircraft financing is expected
to be completed in January 2010 when the notes under the existing EETC
facility are redeemed. The transaction also financed two previously
unencumbered aircraft and will significantly reduce 2010 and 2011 debt
maturities, as described above;
|
|
●
|
UAL
issued $345 million principal amount of 6% Convertible Senior
Notes;
|
|
●
|
UAL
sold 19.0 million shares of UAL common stock in
an underwritten, public offering for a price of $7.24 per share,
generating net proceeds of approximately $132 million;
and
|
|
●
|
The
Company entered into a $129 million financing with one of its
regional flying partners.
|
Barrels hedged (in 000s)
|
Weighted-average crude equivalent price per barrel
(a)
|
|||||||||||||||||||||||||||||||||||
Percentage
of Projected Fuel Requirements
Hedged
|
Purchased
Puts
|
Sold
Puts
|
Swaps/
Purchased
Calls
|
Sold
Calls
|
Payment
Obligation
Ends
|
Payment
Obligation
Begins
|
Hedge
Protection
Begins
|
Hedge
Protection
Ends
|
||||||||||||||||||||||||||||
Fourth
Quarter 2009:
|
% | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
Calls
|
31 | - | - | 4,150 | - |
NA
|
NA
|
66 |
NA
|
|||||||||||||||||||||||||||
Swaps
|
13 | - | - | 1,800 | - |
NA
|
62 | 62 |
NA
|
|||||||||||||||||||||||||||
Collars
|
1 | - | 300 | 150 | - |
NA
|
112 | 138 |
NA
|
|||||||||||||||||||||||||||
3-way
collars
|
8 | - | 1,425 | 1,050 | 1,050 |
NA
|
100 | 120 | 160 | |||||||||||||||||||||||||||
4-way
collars
|
2 | 225 | 225 | 225 | 225 | 63 | 78 | 95 | 135 | |||||||||||||||||||||||||||
Total
|
55 | 225 | 1,950 | 7,375 | 1,275 | |||||||||||||||||||||||||||||||
Purchased
puts
|
14 | 1,800 | - | - | - |
NA
|
NA
|
52 |
NA
|
|||||||||||||||||||||||||||
Full
Year 2010:
|
||||||||||||||||||||||||||||||||||||
Calls
|
9 | - | - | 4,900 | - |
NA
|
NA
|
73 |
NA
|
|||||||||||||||||||||||||||
Swaps
|
6 | - | - | 3,075 | - |
NA
|
74 | 74 |
NA
|
|||||||||||||||||||||||||||
Collars
|
- | - | 300 | 300 | - |
NA
|
93 | 98 |
NA
|
|||||||||||||||||||||||||||
Total
(b)
|
15 | - | 300 | 8,275 | - |
(a)
|
Instruments
in heating oil and jet fuel are converted to crude oil price
equivalents.
|
(b)
|
The
Company has hedged approximately 40% of its first quarter 2010
consolidated consumption.
|
Period
|
Total
number of shares purchased(a)
|
Average
price paid per share
|
Total
number of shares purchased as part of publicly announced plans or programs
|
Maximum
number of shares (or approximate dollar value) of shares that may yet be
purchased under the plans or
programs
|
||||||
07/01/09
– 07/31/09
|
1,796 | $ | 3.41 | — |
(b)
|
|||||
08/01/09
– 08/31/09
|
1,021 | 4.74 | — |
(b)
|
||||||
09/01/09
– 09/30/09
|
481 | 5.67 | — |
(b)
|
||||||
Total
|
3,298 | 4.15 | — |
(b)
|
(a)
|
Shares
withheld from employees to satisfy certain tax obligations due upon the
vesting of restricted stock.
|
(b)
|
The
UAL Corporation 2008 Incentive Compensation Plan provides for the
withholding of shares to satisfy tax obligations due upon the vesting of
restricted stock or restricted stock units. However, this plan does not
specify a maximum number of shares that may be
repurchased.
|
UAL
CORPORATION
|
|||
(Registrant)
|
|||
Date:
October 21, 2009
|
By:
|
/s/ Kathryn A.
Mikells
|
|
Kathryn
A. Mikells
|
|||
Executive Vice President and Chief Financial Officer | |||
(principal financial and accounting officer) | |||
UNITED
AIR LINES, INC.
|
|||
(Registrant)
|
|||
Date:
October 21, 2009
|
By:
|
/s/ Kathryn A.
Mikells
|
|
Kathryn A. Mikells | |||
Executive Vice President and Chief Financial Officer | |||
(principal
financial officer)
|
|||
Date:
October 21, 2009
|
By:
|
/s/ David M.
Wing
|
|
David
M. Wing
|
|||
Vice President and Controller | |||
(principal accounting officer) |
*4.1
|
Indenture,
dated as of October 7, 2009, between UAL Corporation, as Issuer, and The
Bank of New York Mellon Trust Company, N.A., as Trustee, providing for
issuance of 6% Convertible Senior Notes due 2029 (filed as exhibit 4.1 to
UAL’s Form 8-K dated October 7, 2009, Commission file number 1-6033, and
incorporated herein by reference)
|
|
*4.2
|
Form
of Note representing all 6.0% Convertible Senior Notes due 2029 (filed as
exhibit 4.2 to UAL’s Form 8-K dated October 7, 2009, Commission file
number 1-6033, and incorporated herein by reference)
|
|
Amendment
No. 2 to the UAL Corporation 2006 Director Equity Incentive
Plan
|
||
Form
of Share Unit Award Notice pursuant to the UAL Corporation 2006 Director
Equity Incentive Plan
|
||
UAL
Corporation Computation of Ratio of Earnings to Fixed Charges and Ratio of
Earnings to Fixed Charges and Preferred Stock Dividend
Requirements
|
||
United
Air Lines, Inc. Computation of Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Fixed Charges and Preferred Stock Dividend
Requirements
|
||
Certification
of the Principal Executive Officer of UAL Pursuant to 15 U.S.C. 78m(a) or
78o(d) (Section 302 of the Sarbanes-Oxley Act of 2002)
|
||
Certification
of the Principal Financial Officer of UAL Pursuant to 15 U.S.C. 78m(a) or
78o(d) (Section 302 of the Sarbanes-Oxley Act of 2002)
|
||
Certification
of the Principal Executive Officer of United Pursuant to 15 U.S.C. 78m(a)
or 78o(d) (Section 302 of the Sarbanes-Oxley Act of
2002)
|
||
Certification
of the Principal Financial Officer of United Pursuant to 15 U.S.C. 78m(a)
or 78o(d) (Section 302 of the Sarbanes-Oxley Act of
2002)
|
||
Certification
of the Chief Executive Officer and Chief Financial Officer of UAL Pursuant
to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of
2002)
|
||
Certification
of the Chief Executive Officer and Chief Financial Officer of United
Pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of
2002)
|
||