SEC Filing - United Airlines Holdings, Inc.

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8-K

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): November 6, 2014

UNITED CONTINENTAL HOLDINGS, INC.

UNITED AIRLINES, INC.

(Exact name of registrant as specified in its charter)


Delaware	001-06033	36-2675207
Delaware	001-10323	74-2099724
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification Number)


233 S. Wacker Drive, Chicago, IL		60606
233 S. Wacker Drive, Chicago, IL		60606
(Address of principal executive offices)		(Zip Code)

(827) 825-4000

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

James E. Compton, Vice Chairman and Chief Revenue Officer, of United Continental Holdings, Inc., the holding company whose primary subsidiary is United Airlines, Inc. (“United”), and Sarah R. Murphy, Vice President Financial Planning and Analysis, of United will speak at the Raymond James Global Airline and Transportation Conference on November 6, 2014. 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*		United Continental Holdings, Inc. slide presentation delivered on November 6, 2014

*	Furnished herewith electronically.

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.


		UNITED CONTINENTAL HOLDINGS, INC.
		UNITED AIRLINES, INC.

		By:		/s/ James E. Compton
		Name:		James E. Compton
		Title:		Vice Chairman and Chief Revenue Officer

Date: November 6, 2014

EXHIBIT INDEX


Exhibit No.		Description

99.1*		United Continental Holdings, Inc. slide presentation delivered on November 6, 2014

*	Furnished herewith electronically.

EX-99.1

Raymond James Global

Airline and Transportation

Conference

United Continental Holdings, Inc.

November 6, 2014

Exhibit 99.1

Jim Compton

Vice Chairman and Chief Revenue Officer

Safe Harbor Statement

Certain statements included in this investor update 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 report are based upon information available to us on the date

of this report. 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, except as required by applicable law. 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 various financing arrangements; the costs and availability of financing;

our ability to maintain adequate liquidity; our ability to execute our operational plans and revenue-generating initiatives,

including optimizing our revenue; our ability to control our costs, including realizing benefits from our resource optimization

efforts, cost reduction initiatives and fleet replacement programs; 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 that global economic conditions have on

customer travel patterns; excessive taxation and the inability to offset future taxable income; general economic conditions

(including interest rates, foreign currency exchange rates, investment or credit market conditions, crude oil prices, costs of

aircraft fuel and energy refining capacity in relevant markets); economic and political instability and other risks of doing

business globally; our ability to cost-effectively hedge against increases in the price of aircraft 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

the respective arrangements with such carriers; disruptions to our regional network; the costs and availability of aviation and

other insurance; industry consolidation or changes in airline alliances; competitive pressures on pricing and on demand; our

capacity decisions and the capacity decisions of our competitors; U.S. or foreign governmental legislation, regulation and

other actions (including open skies agreements and environmental regulations); 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; the possibility that expected

merger synergies will not be realized or will not be realized within the expected time period; and other risks and uncertainties

set forth under Part I, Item 1A., Risk Factors, of UAL’s Annual Report on Form 10-K, as well as other risks and uncertainties

set forth from time to time in the reports we file with the SEC.

Improving long-term shareholder value

Balance cash flow allocation

Increase earnings 2x –

Generate ROIC greater than 10%

Expand revenue

Grow CASM less than inflation

Taking action to expand revenue

Efficient capacity growth

Improve core passenger

revenue

Grow ancillary revenue

Capacity discipline and efficient growth are central to our

strategy

United’s capacity vs.

U.S. GDP growth

(year-over-year)

Installing slimline economy seats

–

15%

lighter

Install on ~350 aircraft by YE 2014

Up-gauging regional fleet

32 76-seat Embraer 175s, replacing

45 50-seaters by YE 2014

Adding new Pacific service and right-

sizing certain existing routes

2014E

0.2% -

0.4%

2013

2012

GDP

United consolidated capacity

Drivers of capacity growth in 2014

Original FY14

capacity guidance

1% -

2.3%

1.9%

2.8%

(1.4%)

(1.5%)

Sources: SEC filings and IHS Global Insight; 2014E capacity from October 23 Investor Update

Expect to grow capacity 1.5% to 2.5% in 2015; below US

GDP growth estimates

Drivers of capacity growth in 2015

3% to 4%

International

Pacific

3% to 5% YOY

Latin

4% to 6% YOY

Transatlantic

1% to 3% YOY

Domestic

0.5% -

1.5%

United’s 2015 capacity

Three initiatives contribute to consolidated

capacity growth in 2015:

50% due to slimline seats

Installed on ~450 aircraft by end of 2015

40% from more aircraft available to schedule

Equivalent to adding 11 mainline aircraft

10% driven by up-gauging regional aircraft

53 E175s replace ~90 50-seaters

US GDP source: IHS Global Insights

Reducing dependence on smaller regional aircraft

~30%

~50%

YE 2012

31%

69%

Regional Fleet Mix

YE 2015

~40%

~60%

YE 2012

44%

56%

United Fleet Mix

Total

aircraft

1,253

1,188

Total

aircraft

551

480

~20%

YE 2015

Taking steps to improve our reliability

More efficiently re-route

passengers during

irregular operations

Use multi-variable

decision tool to inform

cancellation decisions

Reduce number of

regional carriers and

fleet types in hubs

Reduce ~25% of

regional maintenance

bases

Reducing variability

Leveraging technology

Simplifying operations

Become more

predictable and

consistent in operation

Improve positioning of

spare parts

Improving the value of the network

Re-banking at DEN (in progress), IAH (in progress) and ORD (1Q15)

Better align service to seasonal demand trends

~25% difference in capacity between high-demand and low-demand

periods

Increase gauge by 5% while reducing departures by 3% in 2015

Fewer departures allow for better management of congested

airspace surrounding many of our hubs

De-hubbed operations in Cleveland to better match supply to demand

Restructuring Pacific flying

Beyond Narita capacity is ~50% lower 2014 vs. 2012

Re-banking and

seasonal shaping

Consolidating

frequencies

Optimizing

network structure

2012

2011

2010

$3.5+

2017E

2014E

2013

Ancillary revenue

($B)

1: 2010 results are pro-forma

Expect to continue steadily growing ancillary revenue,

providing better choice and experience to our customers

New products

Powerful and nimble

technology platforms

Dynamic pricing

capabilities

Expand availability

+7% CAGR

$3.0

$2.8

$2.5

$2.4

$2.2

Improving long-term shareholder value

Balance cash flow allocation

Increase earnings 2x –

Generate ROIC greater than 10%

Expand revenue

Grow CASM less than inflation

Sarah Murphy

Vice President Financial Planning & Analysis

Improving long-term shareholder value

Balance cash flow allocation

Increase earnings 2x –

Generate ROIC greater than 10%

Grow CASM less than inflation

Expand revenue

Expect 2014 CASM ex-fuel to grow less than inflation,

with similar performance through 2017

YoY CASM ex-fuel

Sources: SEC filings; 2014E capacity from October 23 Investor Update

CASM ex-fuel numbers also exclude profit sharing, third party business expense and special charges

1.0%

6.4%

(0.2%)

7.0%

3.1%

11.1%

1¼% -

2¼%

0.6%

2013

2014

(0.3%)

(0.1%)

0.5%

0.5% -

1.5%

0.2% -

0.4%

1.2% -

1.6%

6.3%

YoY capacity H/(L)

Full Year

More than one

point lower than

original FY14

guidance

Making good progress in achieving $2 billion in annual

cost savings by 2017

Expect to achieve more than $300M in non-fuel savings

and nearly $200M in fuel savings in 2014

Maintenance

~$100M

Fuel

consumption

~$1B

Productivity

~$500M

Distribution

~$100M

Sourcing

~$150M

Productivity and fuel initiatives drive significant savings

Adding fuel efficient aircraft 2014 -

2015:

85 Embraer 175s

10%+ more fuel efficient

52 Boeing 737-900ERs

15%+ more fuel efficient

17 Boeing 787s

15 -20% more fuel efficient

Process improvements

Better use of ground power

Single engine taxi

Fuel Initiatives

YoY Productivity Improvement

1Q14

4.0%

3.7%

2Q14

3Q14

FY14 Goal

1.4%

3.0%

Percent change in YOY ASMs/FTEs

Revenue and cost initiatives driving improved earnings

Return on invested capital

Pre-tax margin

(Trailing twelve months)

Pre-tax margin excludes special items; FY2013 and FY2014 exclude impact of non-cash fuel hedge

FY2012

8.0%

12.3%

10.0%

FY2013

TME3Q14

FY2012

1.6%

4.5%

2.7%

FY2013

TME3Q14

Improving balance sheet

Total

debt

outstanding

($B)

1: Includes annualized aircraft rent capitalized at 7x

2: 2009 and 2010 data is pro forma

Unfunded pension liability

($B)

$1.5

2012

$2.4

3Q 2014

2010

$1.8

$1.5

2011

2009

$23.8

$20.1

Target

3Q 2014

2012

$18.4

~$15B

Cash flow priorities

Maintain unrestricted liquidity balance of $5B -

$6B, including

revolver

Average capital expenditure of $2.8B -

$3.0B from 2014 -

2017

Achieve ~$15B gross debt target and improve leverage ratios

Consistently fund $125M -

$150M in excess of minimum required

to ensure manageable pension obligations

Complete $1B share repurchase program within the next 3 years

and continue to evolve shareholder compensation

Liquidity

balance

Capital

investment

Debt reduction

Pension

funding

Shareholder

compensation

Shareholder

Improving long-term shareholder value

Balance cash flow allocation

Increase earnings 2x –

Generate ROIC greater than 10%

Expand revenue

Grow CASM less than inflation