UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 9, 2010
UAL CORPORATION
UNITED AIR LINES, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-06033 | 36-2675207 | ||
| Delaware | 001-11355 | 36-2675206 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification Number) |
| 77 W. Wacker Drive, Chicago, IL | 60601 | |
| (Address of principal executive offices) | (Zip Code) |
(312) 997-8000
Registrant’s telephone number, including area code
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 7.01 | Regulation FD Disclosure. |
Kathryn A. Mikells, Executive Vice President and Chief Financial Officer of UAL Corporation and United Air Lines, Inc., will speak at the JP Morgan Aviation and Transportation Conference on Tuesday, March 9, 2010. Attached hereto as Exhibit 99.1 are slides that will be presented at that time.
The information in this Item 7.01, including Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section and shall not be deemed incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
| Exhibit No. |
Description | |
| 99.1* | UAL slide presentation delivered on March 9, 2010 | |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| UAL CORPORATION | ||
| UNITED AIR LINES, INC. | ||
| By: | /s/ Ricks P. Frazier | |
| Name: | Ricks P. Frazier | |
| Title: | General Counsel and Secretary (Interim) | |
Date: March 9, 2010
3
EXHIBIT INDEX
| Exhibit No. |
Description | |
| 99.1* | UAL slide presentation delivered on March 9, 2010 | |
4
 J.P.
Morgan Aviation and Transportation Conference Kathryn Mikells, Chief Financial Officer New York, NY March 9, 2010 Exhibit 99.1 |
 p.
2 Safe Harbor Statement And Non-GAAP Reconciliation Safe Harbor Statement And Non-GAAP Reconciliation presentation are forward-looking and thus reflect our current expectations and beliefs with respect to
certain current and future events and financial performance. Such forward-looking
statements are and will be subject to many risks and uncertainties relating to our operations
and business environment that may cause actual results to differ materially from any future results expressed or implied in such forward-looking statements. Words such as “expects,” “will,”
“plans,” “anticipates,” “indicates,” “believes,” “forecast,” “guidance,” “outlook” and similar expressions are intended to identify forward-looking statements.
Additionally, forward-looking statements include statements that do not relate solely to
historical facts, such as statements which identify uncertainties or trends, discuss the possible future effects of current known trends or uncertainties, or which indicate that the future effects of known
trends or uncertainties cannot be predicted, guaranteed or assured. All forward-looking
statements in this presentation are based upon information available to us on the date of this
presentation. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise. Our actual results could
differ materially from these forward-looking statements due to numerous factors including,
without limitation, the following: our ability to comply with the terms of our amended credit
facility and other financing arrangements; the costs and availability of financing; our ability to maintain adequate liquidity; our ability to execute our operational plans; our ability to control our costs, including
realizing benefits from our resource optimization efforts, cost reduction initiatives and fleet
replacement program; our ability to utilize our net operating losses; our ability to attract
and retain customers; demand for transportation in the markets in which we operate; an outbreak of a disease that affects travel demand or travel behavior; demand for travel and the impact the economic recession has on customer travel
patterns; the increasing reliance on enhanced video-conferencing and other technology as a
means of conducting virtual meetings; general economic conditions (including interest rates,
foreign currency exchange rates, investment or credit market conditions, crude oil prices, costs of aviation fuel and refining capacity in relevant markets); our ability to cost-effectively hedge against
increases in the price of aviation fuel; any potential realized or unrealized gains or losses
related to fuel or currency hedging programs; the effects of any hostilities, act of war or
terrorist attack; the ability of other air carriers with whom we have alliances or partnerships to provide the services contemplated by our respective arrangements with such carriers; the costs and availability of aviation and
other insurance; the costs associated with security measures and practices; industry
consolidation; competitive pressures on pricing and on demand; capacity decisions of United
and/or our competitors; U.S. or foreign governmental legislation, regulation and other actions (including open skies agreements); labor costs; our ability to maintain satisfactory labor relations and the results of the
collective bargaining agreement process with our union groups; any disruptions to operations
due to any potential actions by our labor groups; weather conditions; and other risks and
uncertainties, including those set forth under the caption “Risk Factors” in Item 1A. of the 2009 Annual Report, as well as other risks and uncertainties set forth from time to time in the reports we file with the U.S.
Securities and Exchange Commission (“SEC”). Consequently, forward-looking
statements should not be regarded as representations or warranties by UAL or United that such
matters will be realized. Information regarding reconciliation of certain non-GAAP financial measures contained in this
presentation is available on the Company's web site at www.united.com/ir Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Certain statements included in this |
 p.
3 On The Path To Reach Our Full Potential On The Path To Reach Our Full Potential Focused On Achieving Margin Leadership Focused On Achieving Margin Leadership |
 p.
4 Jan- 10 10% -6% Nov- 09 -12% -20% Sep- 09 -25% -29% Jul- 09 -32% -41% May- 09 -42% -43% Mar- 09 -36% -35% Jan- 09 -33% 13% 25% 28% 15% -1% -5% -18% -23% -23% -32% -35% -39% -36% -38% -38% Jan- 10 Nov- 09 Sep- 09 Jul- 09 May- 09 Mar- 09 Jan- 09 Our Revenue Recovery Is Outpacing The Industry Feb ’10 18.0%* Jan ’10 10.5%* 3.5% Dec ’09 1.5% -0.2% Nov ’09 -4.4% -2.7% Oct ’ 09 -11.3% -9.7% Sep ’09 -14.2% -14.7% United PRASM YOY Change ATA Industry PRASM YOY Change PRASM Change – United and Industry 7pts higher than ATA industry average *Mid-point of disclosed range United’s International Premium Cabin Bookings YOY United’s Corporate Customer Revenue YOY Source: United ticketing data. |
 p.
5 Reduced Premium Seats – New international premium cabins contain 20% fewer premium seats – Reconfiguration of 767s and 747s to new premium cabins completed in 2009 – Began converting 777s last month Maintained Network – Maintained network breadth – Serving approximately 20 more destinations than 2006 – Right-sized markets by removing mainline aircraft and replacing with regional jets – Aggressive inventory management – Grounded 6 747’s – Down-gauged flights to areas like London and China – Unit revenue now improving faster in these markets – Redeployed aircraft to new markets such as Dubai, Zurich, and Moscow Strategic Capacity Reductions We Made The Right Decisions During The Downturn We Made The Right Decisions During The Downturn |
 p.
6 We Are Achieving Positive Results From Our Actions We Are Achieving Positive Results From Our Actions Latin America 1.7 pts Atlantic 3.3 pts Pacific 4.3 pts United 4Q 2009 YOY PRASM B/(W) Than ATA Industry We Took More Aggressive Capacity Actions Internationally Than Other Carriers We Took More Aggressive Capacity Actions Internationally Than Other Carriers 8.8% -3.0% -4.7% -7.4% -8.7% 2009 International Capacity Changes |
 Maximizing
Our Alliance Opportunities Is Critical Maximizing Our Alliance Opportunities Is Critical • Addition of Continental to the Star Alliance in October 2009 • Expanding Joint Venture Structures in the Atlantic and Pacific* • Critical to Attracting Corporate Contracts • Addition of Continental to the Star Alliance in October 2009 • Expanding Joint Venture Structures in the Atlantic and Pacific* • Critical to Attracting Corporate Contracts Global Capacity Share By Alliance With Continental In Star 16% 16% 27% p. 7 * Subject to regulatory approval |
 Increasing
Network Breadth – First-ever service to Africa (Accra, Ghana and Lagos, Nigeria) – Extending existing daily Washington-Kuwait flight to include Bahrain – New non-stop flights from Chicago to Brussels and Rome – Applied for service to Haneda Airport in Tokyo Improving United Express Partnerships – Extended our long-term partnership with Skywest and ASA with addition of 14 aircraft – Added a quality regional partner in ExpressJet – Reduced exposure to Mesa which is currently in bankruptcy restructuring – Added Continental and Air Canada to existing trans- Atlantic joint venture – Applied to DOT for trans- Pacific joint venture with Continental and ANA – Added Brussels Airlines to Star Alliance – Started joint venture with Aer Lingus on Washington to Madrid Route Expanding International Joint Ventures Our Network Improvements Are Continuing Our Network Improvements Are Continuing p. 8 |
 p. 9 $7.75 2009 +39.1% 2008 +22.2% 2007 $10.78 $13.17 Ancillary Revenue Per Passenger ($) We Have Been A Leader In Creating New Revenue Streams We Have Been A Leader In Creating New Revenue Streams - We Generate $13 Per Passenger – The Highest of Any US Airline - • First to introduce second bag fee • Unbundling is Here to Stay – First & Second Bag Fees – Buy on Board Food • Providing Customers With Choice Presents a Growing Opportunity – First and Business Class Upsell – Economy Plus Upsell – Premier Line Access – Red Carpet Club Day Passes – Premier For A Day • First to introduce second bag fee • Unbundling is Here to Stay – First & Second Bag Fees – Buy on Board Food • Providing Customers With Choice Presents a Growing Opportunity – First and Business Class Upsell – Economy Plus Upsell – Premier Line Access – Red Carpet Club Day Passes – Premier For A Day |
 Building
The Industry’s Best Loyalty Program Building The Industry’s Best Loyalty
Program Hotel & Car Awards for All Members Unlimited Domestic Upgrades for Elite Members Miles & Money Awards One-Way Awards • Improves the value proposition for our customers • Enhances our capture of premium revenue flyers • Makes the program more attractive to retailers and partners A Strong Loyalty Program Is Good For Business Recent Improvements In The Mileage Plus Program p. 10 |
 p. 11 We Are Narrowing The Cost Gap To The Industry Leader We Are Narrowing The Cost Gap To The Industry Leader 1st 5th 2nd 4th 8.5% Better 1.9% Worse 2.4% Better 9.5% Worse 3rd Full Year 2007 Mainline CASM Ex Fuel Full Year 2007 Mainline CASM Ex Fuel Rank Rank vs. United vs. United 1st 5th 2nd 4th 7.3% Better 9.3% Worse 1.3% Worse 11.0% Worse 3rd Rank Rank vs. United vs. United Full Year 2010 Mainline CASM Ex Fuel Full Year 2010 Mainline CASM Ex Fuel NOTE: DAL’s CASM excludes third party business expense; All numbers exclude specials and are
adjusted for stage-length and seat density Non-Fuel Unit Costs Up Less Than 1%
From 2007 - 2009 Non-Fuel Unit Costs Up Less Than 1% From 2007 - 2009 |
 p. 12 Improved Asset Efficiency And Utilization – Retirement of older aircraft (737s) – Improved real estate utilization – Improved spare parts inventory management – Streamlined maintenance cycle timing Increased Overhead Efficiency And Productivity – Streamlined processes and reduced complexity to drive productivity improvements – Nearly 25% reduction in management overhead since 2008 – Front line productivity improved 2% from 2007 to 2009 despite 11% lower capacity – Crew hotels – Catering – Commission rates – Regional Carrier Contracts – Navigation Charges – Global Distribution Systems (GDS) rates Aggressively Reduced Outside Service Costs By Reducing Costs Across The Company By Reducing Costs Across The Company |
 p. 13 And Removing Waste Through Operational Improvements And Removing Waste Through Operational Improvements • Reduces crew reserve costs • Allows more effective utilization of resources such as aircraft and gates • Minimizes re-accommodation costs • Frontline Employees Each Earned $800 Incentive Bonus in 2009 • Reduces crew reserve costs • Allows more effective utilization of resources such as aircraft and gates • Minimizes re-accommodation costs • Frontline Employees Each Earned $800 Incentive Bonus in 2009 United Rises to First in On-Time Arrivals in 2009 Among the U.S. Five Largest Global Carriers* *According to recently published arrival data in the U.S. Department of Transportation Air Travel Consumer Report, United ranked highest in on-time performance for domestic scheduled flights as measured by the U.S. DOT (flights arriving within 14 minutes of scheduled arrival time) between 1/1/09-12/31/09, when compared to the largest U.S. global carriers based on available seat miles, enplaned passengers or passenger revenue, which includes Delta (including its Northwest subsidiary), American, Continental and US Airways. |
 p. 14 Our Liquidity Is Among The Strongest In The Industry Our Liquidity Is Among The Strongest In The Industry • More than $3.0 billion in unrestricted cash at end of 2009 • Additional $950 million raised in early 2010 – Approximately $250 million in January 2010 from EETC transactions – Net proceeds coming in April 2010 from $700 million senior secured notes and senior second lien notes • More than $3.0 billion in unrestricted cash at end of 2009 • Additional $950 million raised in early 2010 – Approximately $250 million in January 2010 from EETC transactions – Net proceeds coming in April 2010 from $700 million senior secured notes and senior second lien notes 14.4% 19.1% 22.1% 24.4% 18.6% 22.7% 24.1% Liquidity Balance As a Percentage of Revenue – Year End 2009 Announced Transactions *Announced Transactions include UAUA Secured Notes transaction (announced in Jan 2010) and EETC proceeds and CAL 2009-2 EETC |
 p. 15 We Have Successfully Reduced Our Fixed Obligations We Have Successfully Reduced Our Fixed Obligations Capital Leases Debt Restructured 2010 $717 Prior 2010 $1,166 $449 Reduction United 2010 Debt and Capital Lease Principal Payments (In Millions) Principal Payments Reduced By More Than $700 Million Over The Two-Year Period 2010-2011 Principal Payments Reduced By More Than $700 Million Over The Two-Year Period 2010-2011 $979 $1,108 LCC $511 $717 $1,792 2010 Debt and Capital Lease Principal Payments (In Millions) $180 $180 $537 $986 |
 p. 16 75% 20% 47% 30% 50% 11% 24% 35% 51% 1Q 2010 FY 2010 Sources: Company press releases and earnings calls Southwest did not disclose Q1 hedge coverage; coverage to 20% at WTI prices between $100/bbl and $120/bbl and coverage to 40% at WTI prices above $120/bbl Continental and Southwest crude equivalent numbers estimated based on their hedging disclosures Systematic Hedging Program Has Resulted In A Strong Hedge Book Relative To Peers Systematic Hedging Program Has Resulted In A Strong Hedge Book Relative To Peers • We continue to maintain a strong hedge book with conservative instruments – 75% Coverage for Q1 2010 – Roughly 50% calls and 50% swaps • 80% full year 2010 downside participation if fuel prices fall significantly • We continue to maintain a strong hedge book with conservative instruments – 75% Coverage for Q1 2010 – Roughly 50% calls and 50% swaps • 80% full year 2010 downside participation if fuel prices fall significantly Fuel Hedge Coverage (%) Crude Cap 1Q 10 FY 10 $75
$72 $97 $79 N/A $86 $77
N/A $93 $88 N/A $94 |
 p. 17 We Will Use Future Operating Cash Flow To Improve Balance Sheet We Will Use Future Operating Cash Flow To Improve Balance Sheet $7.9 B Year End 2009 $10.0 B -21.0% Net Debt Balance* • United’s debt levels have been managed prudently through the business cycle • Aircraft debt structured to allow fleet and financing flexibility • Future operating cash-flow will enable de-levering • United’s debt levels have been managed prudently through the business cycle • Aircraft debt structured to allow fleet and financing flexibility • Future operating cash-flow will enable de-levering * Includes operating leases at 7X rent February 2006 |
 p. 18 Next-Generation Aircraft Order – Smart aircraft purchase at the bottom of the cycle – Negotiated significant flexibility – Limited near term cash payments - approximately $60 Million over next 3 years – Significant improvements in range, fuel burn and maintenance costs Other Customer Facing Investments – Leather seating in domestic first class – New uniforms for our employees – Increased employee training – New and remodeled Red Carpet Clubs at O’Hare – Fully lie-flat first and business class seats – Large screen on-demand audio and video – Improved dining menu Industry Leading First And Business Class Running A Better Company Has Allowed Us To Make Smart Investments In Our Future Running A Better Company Has Allowed Us To Make Smart Investments In Our Future |
 p. 19 On The Path To Achieve Our Full Potential On The Path To Achieve Our Full Potential • Our goal is margin leadership – Recent revenue improvements outpacing the industry – Narrowing unit cost gap to industry leader • Cash and risk management ensuring financial stability • Making smart, strategic investments in our future • Our goal is margin leadership – Recent revenue improvements outpacing the industry – Narrowing unit cost gap to industry leader • Cash and risk management ensuring financial stability • Making smart, strategic investments in our future We Are Well Positioned To Take Full Advantage Of The Economic Recovery |
 Non-GAAP Reconciliations |
 p. 21 GAAP To Non-GAAP Reconciliation GAAP To Non-GAAP Reconciliation Operating Expense per ASM - CASM (cents) Twelve Months Ending December 31, December 31, December 31, 2009 Actual 2008 Actual 2007 Actual Mainline operating expense 11.05 15.74 11.39 Special items & other exclusions (0.33) (2.07) 0.03 Mainline operating expense excluding special items 10.72 13.67 11.42 Plus: Net non-cash mark-to-market hedge impact 0.48 (0.42) 0.01 Mainline operating expense excluding net non-cash mark-to- market hedge impact and special items 11.20 13.25 11.43 Less: fuel expense (excluding net non-cash mark-to-market fuel hedge impact) (3.25) (5.27) (3.53) Mainline operating expense excluding fuel and special items 7.95 7.99 7.90 Year over Year % Change (0.5%) 1.1% 2009 vs. 2007 % Change 0.6% |