424B2
Table of Contents

Filed Pursuant to Rule 424(b)(2)

Registration No. 333-221865-01

CALCULATION OF REGISTRATION FEE

 

 

Title of each class of

securities offered

 

Maximum aggregate

offering price

 

Amount of

registration fee

Pass Through Certificates, Series 2019-2

  $988,864,000   $119,850.32

 

 

(1)

The filing fee of $119,850.32 is calculated in accordance with Rule 457(r) of the Securities Act of 1933.


Table of Contents

 

PROSPECTUS SUPPLEMENT TO PROSPECTUS, DATED DECEMBER 1, 2017

$988,864,000

 

 

LOGO

2019-2 PASS THROUGH TRUSTS

PASS THROUGH CERTIFICATES, SERIES 2019-2

 

 

Two classes of the United Airlines Pass Through Certificates, Series 2019-2, are being offered under this prospectus supplement: Class AA and A. A separate trust will be established for each class of certificates. The proceeds from the sale of certificates will initially be held in escrow, and interest on the escrowed funds will be payable semiannually on May 1 and November 1, commencing May 1, 2020. The trusts will use the escrowed funds to acquire equipment notes. The equipment notes will be issued by United Airlines, Inc. and will be secured by nine new Boeing aircraft and 10 new Embraer aircraft scheduled for delivery from April 2019 to February 2020 (two of which have been delivered prior to the date hereof). Payments on the equipment notes held in each trust will be passed through to the holders of certificates of such trust.

Interest on the equipment notes will be payable semiannually on each May 1 and November 1 after issuance (but not before May 1, 2020). Principal payments on the equipment notes are scheduled on May 1 and November 1 of each year, beginning on November 1, 2020 for certain equipment notes and May 1, 2021 for the remaining equipment notes.

The Class AA certificates will rank senior to the Class A certificates.

National Australia Bank Limited, acting through its New York Branch, will provide the initial liquidity facility for the Class AA and Class A certificates, in each case, in an amount sufficient to make three semiannual interest payments.

The certificates will not be listed on any national securities exchange.

Investing in the certificates involves risks. See “Risk Factors” beginning on page S-18.

 

Pass Through

Certificates     

    

Face Amount

    

Interest

Rate

    

Final Expected
Distribution Date

    

Price to
Public(1)

Class AA

     $702,146,000      2.70%      May 1, 2032      100%

Class A

     $286,718,000      2.90%      May 1, 2028      100%

 

(1)

Plus accrued interest, if any, from the date of issuance.

The underwriters will purchase all of the certificates if any are purchased. The aggregate proceeds from the sale of the certificates will be $988,864,000. United will pay the underwriters a commission of $9,888,640. Delivery of the certificates in book-entry form only will be made on or about September 13, 2019.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Lead Bookrunners

 

Credit Suisse   Citigroup       Goldman Sachs & Co. LLC     Morgan Stanley
Joint Structuring Agent   Joint Structuring Agent         Joint Structuring Agent   

Bookrunners

 

Deutsche Bank Securities
Barclays    BofA Merrill Lynch            BBVA    BNP PARIBAS
Credit Agricole Securities    Standard Chartered Bank    Wells Fargo Securities

The date of this prospectus supplement is September 3, 2019.


Table of Contents

CERTAIN VOLCKER RULE CONSIDERATIONS

None of the Trusts are or, immediately after the issuance of the Certificates pursuant to the Trust Supplements, will be a “covered fund” as defined in the final regulations issued December 10, 2013, implementing the “Volcker Rule” (Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act). In making the foregoing determination, each of the Trusts is relying on an analysis that the Trusts will not be deemed to be an “investment company” under Rule 3a-7 promulgated by the Securities and Exchange Commission (the “Commission”), under the Investment Company Act of 1940, as amended (the “Investment Company Act”), although other exemptions or exclusions under the Investment Company Act may be available to the Trusts.

PRESENTATION OF INFORMATION

These offering materials consist of two documents: (a) this Prospectus Supplement, which describes the terms of the certificates that we are currently offering, and (b) the accompanying Prospectus, which provides general information about our pass through certificates, some of which may not apply to the certificates that we are currently offering. The information in this Prospectus Supplement replaces any inconsistent information included in the accompanying Prospectus.

We have given certain capitalized terms specific meanings for purposes of this Prospectus Supplement. The “Index of Terms” attached as Appendix I to this Prospectus Supplement lists the page in this Prospectus Supplement on which we have defined each such term.

At various places in this Prospectus Supplement and the Prospectus, we refer you to other sections of such documents for additional information by indicating the caption heading of such other sections. The page on which each principal caption included in this Prospectus Supplement and the Prospectus can be found is listed in the Table of Contents below. All such cross references in this Prospectus Supplement are to captions contained in this Prospectus Supplement and not in the Prospectus, unless otherwise stated.

 

S-1


Table of Contents

TABLE OF CONTENTS

Prospectus Supplement

 

   

Page

 

PROSPECTUS SUPPLEMENT SUMMARY

    S-4  

Summary of Terms of Certificates

    S-4  

Equipment Notes and the Aircraft

    S-5  

Loan to Aircraft Value Ratios

    S-6  

Cash Flow Structure

    S-7  

The Offering

    S-8  

SUMMARY FINANCIAL AND OPERATING DATA

    S-15  

Selected Operating Data

    S-17  

RISK FACTORS

    S-18  

Risk Factors Relating to the Company

    S-18  

Risk Factors Relating to the Certificates and the Offering

    S-31  

USE OF PROCEEDS

    S-34  

THE COMPANY

    S-34  

DESCRIPTION OF THE CERTIFICATES

    S-35  

General

    S-35  

Investment Company Act Exemption

    S-36  

Payments and Distributions

    S-36  

Pool Factors

    S-38  

Reports to Certificateholders

    S-39  

Indenture Defaults and Certain Rights Upon an Indenture Default

    S-40  

Purchase Rights of Certificateholders

    S-42  

PTC Event of Default

    S-42  

Merger, Consolidation and Transfer of Assets

    S-43  

Modifications of the Pass Through Trust Agreements and Certain Other Agreements

    S-43  

Obligation to Purchase Equipment Notes

    S-46  

Liquidation of Original Trusts

    S-57  

Termination of the Trusts

    S-58  

The Trustees

    S-58  

Book-Entry; Delivery and Form

    S-58  

DESCRIPTION OF THE DEPOSIT AGREEMENTS

    S-62  

General

    S-62  

Unused Deposits

    S-62  

Distribution Upon Occurrence of Triggering Event

    S-62  

Replacement of Depositary

    S-62  

Depositary

    S-63  

DESCRIPTION OF THE ESCROW AGREEMENTS

    S-64  

DESCRIPTION OF THE LIQUIDITY FACILITIES

    S-65  

General

    S-65  

Drawings

    S-65  

Replacement Liquidity Facility

    S-68  

Reimbursement of Drawings

    S-68  

Liquidity Events of Default

    S-71  

Liquidity Provider

    S-71  

DESCRIPTION OF THE INTERCREDITOR AGREEMENT

    S-72  

Intercreditor Rights

    S-72  

Post Default Appraisals

    S-74  

Priority of Distributions

    S-74  

Voting of Equipment Notes

    S-77  
   

Page

 

List of Certificateholders

    S-77  

Reports

    S-78  

The Subordination Agent

    S-78  

DESCRIPTION OF THE AIRCRAFT AND THE APPRAISALS

    S-79  

The Aircraft

    S-79  

The Appraisals

    S-79  

Timing of Financing the Aircraft

    S-80  

Substitute Aircraft

    S-81  

DESCRIPTION OF THE EQUIPMENT NOTES

    S-82  

General

    S-82  

Subordination

    S-82  

Principal and Interest Payments

    S-82  

Redemption

    S-83  

Security

    S-84  

Limitation of Liability

    S-84  

Indenture Defaults, Notice and Waiver

    S-85  

Remedies

    S-85  

Modification of Indentures

    S-86  

Indemnification

    S-87  

Certain Provisions of the Indentures

    S-87  

POSSIBLE ISSUANCE OF ADDITIONAL JUNIOR CERTIFICATES AND REFINANCING OF CERTIFICATES

    S-92  

Issuance of Additional Junior Certificates

    S-92  

Refinancing of Certificates

    S-92  

Additional Liquidity Facilities

    S-93  

CERTAIN U.S. FEDERAL TAX CONSEQUENCES

    S-94  

General

    S-94  

Tax Status of the Trusts

    S-94  

Taxation of Certificateholders Generally

    S-94  

Effect of Reallocation of Payments under the Intercreditor Agreement

    S-96  

Dissolution of Original Trusts and Formation of New Trusts

    S-97  

Sale or Other Disposition of the Certificates

    S-97  

3.8% Medicare Tax on “Net Investment Income”

    S-97  

Foreign Certificateholders

    S-97  

Backup Withholding

    S-98  

CERTAIN DELAWARE TAXES

    S-99  

CERTAIN ERISA CONSIDERATIONS

    S-100  

UNDERWRITING

    S-102  

Selling Restrictions

    S-103  

LEGAL MATTERS

    S-107  

EXPERTS

    S-107  

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

    S-108  

INDEX OF TERMS

    Appendix I  

APPRAISAL LETTERS

    Appendix II  

LOAN TO VALUE RATIO TABLES

    Appendix III  
 

 

S-2


Table of Contents

Prospectus

 

       Page  

ABOUT THIS PROSPECTUS

   1

RISK FACTORS

   2

CAUTIONARY STATEMENT CONCERNING FORWARD -LOOKING STATEMENTS

   2

THE COMPANY

   3

USE OF PROCEEDS

   3

RATIOS OF EARNINGS TO FIXED CHARGES

   4

WHERE YOU CAN FIND MORE INFORMATION

   4

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

   4

LEGAL MATTERS

   6

EXPERTS

   6

 

 

You should rely only on the information contained in this document or to which this document refers you. We have not authorized anyone to provide you with information that is different. This document may be used only where it is legal to sell these securities. The information in this document may be accurate only on the date of this document.

 

S-3


Table of Contents

PROSPECTUS SUPPLEMENT SUMMARY

This summary highlights selected information from this Prospectus Supplement and the accompanying Prospectus and may not contain all of the information that is important to you. For more complete information about the Certificates and United, you should read this entire Prospectus Supplement and the accompanying Prospectus, as well as the materials filed with the Securities and Exchange Commission that are considered to be part of this Prospectus Supplement and the Prospectus. See “Incorporation of Certain Documents by Reference” in this Prospectus Supplement and the Prospectus.

Summary of Terms of Certificates

 

     Class AA
Certificates
  Class A
Certificates

Aggregate Face Amount

   $702,146,000   $286,718,000

Interest Rate

   2.70%   2.90%

Initial Loan to Aircraft Value (cumulative)(1)

   42.5%   59.9%

Highest Loan to Aircraft Value (cumulative)(1)(2)

   42.5%   59.9%

Expected Principal Distribution Window (in years)

   1.1- 12.6   1.1- 8.6

Initial Average Life (in years from Issuance Date)

   9.2   7.1

Regular Distribution Dates

   May 1 and
November 1
  May 1 and
November 1

Final Expected Distribution Date

   May 1, 2032   May 1, 2028

Final Maturity Date

   November 1, 2033   November 1, 2029

Minimum Denomination

   $1,000   $1,000

Section 1110 Protection

   Yes   Yes

Liquidity Facility Coverage

   Three semiannual
interest payments
  Three semiannual
interest payments

 

 

(1)

These percentages are calculated assuming that United elects to finance the four Boeing 787-10 aircraft with the earliest scheduled delivery months from Boeing from among the five aircraft of such model eligible to be financed in this Offering. These percentages are determined as of May 1, 2020, the first Regular Distribution Date after all Aircraft are expected to have been financed pursuant to this Offering. In calculating these percentages, we have assumed that the financings of all Aircraft expected to be financed in this Offering are completed prior to May 1, 2020 and that the aggregate appraised value of such Aircraft, net of assumed depreciation, is $1,651,141,765 as of such date. See “—Loan to Aircraft Value Ratios”. The appraised value is only an estimate and reflects certain assumptions. See “Description of the Aircraft and the Appraisals—The Appraisals”.

(2)

See “—Loan to Aircraft Value Ratios”.



 

S-4


Table of Contents

Equipment Notes and the Aircraft

The 19 Aircraft to be financed pursuant to this Offering will consist of three new Boeing 787-9 aircraft, four new Boeing 787-10 aircraft, two new Boeing 777-300ER aircraft and 10 new Embraer ERJ 175 LL aircraft scheduled for delivery between April 2019 and February 2020 (two of which have been delivered prior to the date hereof). Such four Boeing 787-10 aircraft will be selected by United from among the five aircraft of such model eligible to be financed in this Offering. See “Description of the Aircraft and the Appraisals—The Appraisals” for a description of the 20 aircraft eligible to be financed with the proceeds of this Offering. Set forth below is certain information about the Equipment Notes expected to be held in the Trusts and the aircraft expected to secure such Equipment Notes (assuming for the purposes of the chart below that United selects from among the five Boeing 787-10 aircraft eligible to be financed pursuant to this Offering the four aircraft of such model with the earliest scheduled delivery months from Boeing). The Equipment Notes will mature no later than May 1, 2032.

 

Aircraft Model

   Registration
Number(1)
   Manufacturer’s
Serial Number(1)
   Delivery Month(1)      Principal
Amount of
Equipment Notes
     Appraised
Value(2)
 

Boeing 787-9

   N29975    66134      January 2020        $88,530,000        $149,670,000  

Boeing 787-9

   N24976    66135      February 2020        88,678,000        149,920,000  

Boeing 787-9

   N29977    66136      February 2020        88,678,000        149,920,000  

Boeing 787-10

   N16009    40938      April 2019        89,169,000        150,750,000  

Boeing 787-10

   N91007    40929      May 2019        89,464,000        151,250,000  

Boeing 787-10

   N12010    40926      December 2019        91,097,000        154,010,000  

Boeing 787-10

   N14011    40934      December 2019        91,097,000        154,010,000  

Boeing 777-300ER

   N2749U    66589      November 2019        92,191,000        155,860,000  

Boeing 777-300ER

   N2250U    66590      December 2019        92,156,000        155,800,000  

Embraer ERJ 175 LL

   N616UX    17000817      September 2019        17,727,000        29,970,000  

Embraer ERJ 175 LL

   N617UX    17000819      October 2019        17,757,000        30,020,000  

Embraer ERJ 175 LL

   N618UX    17000820      October 2019        17,757,000        30,020,000  

Embraer ERJ 175 LL

   N619UX    17000821      October 2019        17,757,000        30,020,000  

Embraer ERJ 175 LL

   N620UX    17000824      November 2019        17,786,000        30,070,000  

Embraer ERJ 175 LL

   N621UX    17000825      November 2019        17,786,000        30,070,000  

Embraer ERJ 175 LL

   N622UX    17000826      November 2019        17,786,000        30,070,000  

Embraer ERJ 175 LL

   N623UX    17000830      December 2019        17,816,000        30,120,000  

Embraer ERJ 175 LL

   N624UX    17000831      December 2019        17,816,000        30,120,000  

Embraer ERJ 175 LL

   N625UX    17000835      December 2019        17,816,000        30,120,000  

 

 

(1)

The indicated registration number, manufacturer’s serial number and delivery month for each aircraft not yet delivered to United reflect our current expectations, although these may differ for the actual aircraft financed hereunder. The deadline for purposes of financing an Aircraft pursuant to this Offering is August 31, 2020 (or later under certain circumstances). The financing pursuant to this Offering of each Aircraft is expected to be effected at or around the time of delivery of such Aircraft by the manufacturer to United, or, in the case of an Aircraft delivered to United prior to the date hereof, after United’s determination to so finance such Aircraft. The actual delivery date for any aircraft may be subject to delay or acceleration. See “Description of the Aircraft and the Appraisals—Timing of Financing the Aircraft”. United has certain rights to substitute other aircraft if the scheduled delivery date of any Aircraft is delayed for more than 30 days after the month scheduled for delivery. See “Description of the Aircraft and the Appraisals—Substitute Aircraft”.

(2)

The appraised value of each Aircraft set forth above is the lesser of the average and median values of such Aircraft as appraised by three independent appraisal and consulting firms. Such appraisals indicate appraised base value, projected as of the scheduled delivery month of the applicable Aircraft, all but two of which are in the future. These appraisals are based upon varying assumptions and methodologies. An appraisal is only an estimate of value and should not be relied upon as a measure of realizable value. See “Risk Factors—Risk Factors Relating to the Certificates and the Offering—The Appraisals are only estimates of Aircraft value”.



 

S-5


Table of Contents

Loan to Aircraft Value Ratios

The following table sets forth loan to Aircraft value ratios (“LTVs”) for each Class of Certificates as of May 1, 2020, the first Regular Distribution Date after all Aircraft are expected to have been financed pursuant to this Offering, and each Regular Distribution Date thereafter. The LTVs for any Class of Certificates for the period prior to May 1, 2020, are not meaningful, since during such period all of the Equipment Notes expected to be acquired by the Trusts and the related Aircraft will not be included in the calculation. The table should not be considered a forecast or prediction of expected or likely LTVs but simply a mathematical calculation based on one set of assumptions. See “Risk Factors—Risk Factors Relating to the Certificates and the Offering—The Appraisals are only estimates of Aircraft value”.

 

Regular Distribution Date

Assumed
Aggregate
  Aircraft Value(1)  
Outstanding Balance(2) LTV(3)
Class AA
  Certificates  
Class A
  Certificates  
Class AA
  Certificates  
Class A
  Certificates  

May 1, 2020

  $1,651,141,765   $702,146,000   $286,718,000   42.5%     59.9%  

November 1, 2020

  1,625,995,930   691,776,269   281,351,600   42.5%     59.8%  

May 1, 2021

  1,600,850,096   674,836,215   274,011,619   42.2%     59.3%  

November 1, 2021

  1,575,704,261   656,912,565   266,671,638   41.7%     58.6%  

May 1, 2022

  1,550,558,426   638,988,916   259,331,658   41.2%     57.9%  

November 1, 2022

  1,525,412,591   621,065,266   251,991,677   40.7%     57.2%  

May 1, 2023

  1,500,266,757   603,141,616   244,651,696   40.2%     56.5%  

November 1, 2023

  1,475,120,922   585,217,967   237,311,715   39.7%     55.8%  

May 1, 2024

  1,449,975,087   567,294,317   229,971,734   39.1%     55.0%  

November 1, 2024

  1,424,829,252   549,370,668   222,631,754   38.6%     54.2%  

May 1, 2025

  1,399,683,418   531,447,018   215,291,773   38.0%     53.4%  

November 1, 2025

  1,374,537,583   513,523,369   207,951,792   37.4%     52.5%  

May 1, 2026

  1,349,391,748   495,599,719   200,611,811   36.7%     51.6%  

November 1, 2026

  1,324,245,913   477,676,070   193,271,830   36.1%     50.7%  

May 1, 2027

  1,299,100,078   459,752,420   185,931,850   35.4%     49.7%  

November 1, 2027

  1,273,954,244   441,828,771   178,591,869   34.7%     48.7%  

May 1, 2028

  1,248,808,409   423,905,121   -     33.9%     -      

November 1, 2028

  1,223,662,574   405,981,471   -     33.2%     -      

May 1, 2029

  1,198,516,739   388,057,822   -     32.4%     -      

November 1, 2029

  1,173,370,905   370,134,172   -     31.5%     -      

May 1, 2030

  1,148,225,070   352,210,523   -     30.7%     -      

November 1, 2030

  1,123,079,235   334,286,873   -     29.8%     -      

May 1, 2031

  1,097,933,400   316,363,224   -     28.8%     -      

November 1, 2031

  1,072,787,565   298,439,574   -     27.8%     -      

May 1, 2032

  1,047,641,731   -     -     -         -      

 

 

(1)

We have assumed that all Aircraft will be financed under this Offering prior to May 1, 2020, and that the appraised value of each Aircraft, determined as described under “—Equipment Notes and the Aircraft”, declines from that of the initial appraised value of such Aircraft by approximately 3% per year after the year of delivery of such Aircraft, in each case prior to the final expected Regular Distribution Date. Other rates or methods of depreciation may result in materially different LTVs. We cannot assure you that the depreciation rate and method used for purposes of the table will occur or predict the actual future value of any Aircraft. See “Risk Factors—Risk Factors Relating to the Certificates and the Offering—The Appraisals are only estimates of Aircraft value”.

(2)

In calculating the outstanding balances of each Class of Certificates, we have assumed that the Trusts will acquire the Equipment Notes for all Aircraft. Outstanding balances as of each Regular Distribution Date are shown after giving effect to distributions expected to be made on such distribution date.

(3)

The LTVs for each Class of Certificates were obtained for each Regular Distribution Date by dividing (i) the expected outstanding balance of such Class (together, in the case of the Class A Certificates, with the expected outstanding balance of the Class AA Certificates) after giving effect to the distributions expected to be made on such distribution date, by (ii) the assumed value of all of the Aircraft on such date based on the assumptions described above. For purposes of these calculations, it has been assumed that United selects from among the five Boeing 787-10 aircraft eligible to be financed pursuant to this Offering the four aircraft of such model with the earliest scheduled delivery months from Boeing. The appraised value of the Boeing 787-10 aircraft with the later scheduled delivery is not less than the earlier scheduled deliveries of the same model, and therefore the loan to value ratios for the aircraft with the later scheduled delivery will not be higher than the earlier scheduled deliveries of the same model set forth in the table above. The outstanding balances and LTVs of each Class of Certificates will change if the Trusts do not acquire Equipment Notes with respect to all the Aircraft. The LTVs will also change if the Trusts acquire Equipment Notes with respect to the Boeing 787-10 aircraft with the latest scheduled delivery month from Boeing in lieu of Equipment Notes with respect to another Boeing 787-10 aircraft with an earlier scheduled delivery month as a result of the difference in appraised value of such aircraft.



 

S-6


Table of Contents

Cash Flow Structure

Set forth below is a diagram illustrating the structure for the offering of the Certificates and certain cash flows.

 

 

LOGO

 

 

(1)

The Equipment Notes with respect to each Aircraft will be issued under a separate Indenture.

(2)

The Liquidity Facility for each of the Class AA Certificates and the Class A Certificates is expected to be sufficient to cover up to three consecutive semiannual interest payments with respect to such Class, except that the Liquidity Facilities will not cover interest on the Deposits.

(3)

The proceeds of the offering of each Class of Certificates will initially be held in escrow and deposited with the Depositary, pending financing of each Aircraft. The Depositary will hold such funds as interest bearing Deposits. Each Trust will withdraw funds from the Deposits relating to such Trust to purchase Equipment Notes from time to time as each Aircraft is financed. The scheduled payments of interest on the Equipment Notes and on the Deposits relating to a Trust, taken together, will be sufficient to pay accrued interest on the outstanding Certificates of such Trust. If any funds remain as Deposits with respect to a Trust at the Delivery Period Termination Date, such funds will be withdrawn by the Escrow Agent and distributed to the holders of the Certificates issued by such Trust, together with accrued and unpaid interest thereon. No interest will accrue with respect to the Deposits after they have been fully withdrawn.



 

S-7


Table of Contents

The Offering

 

Certificates Offered

  Class AA Pass Through Certificates, Series 2019-2.

 

   

Class A Pass Through Certificates, Series 2019-2.

 

  Each Class of Certificates will represent a fractional undivided interest in a related Trust.

 

Use of Proceeds

The proceeds from the sale of the Certificates of each Trust will initially be held in escrow and deposited with the Depositary, pending financing of each Aircraft under this Offering. Each Trust will withdraw funds from the Deposits relating to such Trust to acquire Equipment Notes as these Aircraft are financed. The Equipment Notes will be issued to finance the purchase by United of 19 new aircraft.

 

Subordination Agent, Trustee, Paying
Agent and Loan Trustee


Wilmington Trust, National Association.

 

Escrow Agent

U.S. Bank National Association.

 

Depositary

Sumitomo Mitsui Banking Corporation, acting through its New York Branch.

 

Liquidity Provider

National Australia Bank Limited, acting through its New York Branch.

 

Trust Property

The property of each Trust will include:

 

   

Equipment Notes acquired by such Trust.

 

   

All monies receivable under the Liquidity Facility for such Trust.

 

   

Funds from time to time deposited with the applicable Trustee in accounts relating to such Trust, including payments made by United on the Equipment Notes held in such Trust.

 

Regular Distribution Dates

May 1 and November 1, commencing on May 1, 2020.

 

Record Dates

The fifteenth day preceding the related Distribution Date.

 

Distributions

The Trustee will distribute all payments of principal, premium (if any) and interest received on the Equipment Notes held in each Trust to the holders of the Certificates of such Trust, subject to the subordination provisions applicable to the Certificates.

 

  Scheduled payments of principal and interest made on the Equipment Notes will be distributed on the applicable Regular Distribution Dates.

 

  Payments of principal, premium (if any) and interest made on the Equipment Notes resulting from any early redemption of such Equipment Notes will be distributed on a special distribution date after not less than 15 days’ notice from the Trustee to the applicable Certificateholders.


 

S-8


Table of Contents

Subordination

Distributions on the Certificates will be made in the following order:

 

   

First, to the holders of the Class AA Certificates to pay interest on the Class AA Certificates.

 

   

Second, to the holders of Class A Certificates to pay interest on the Preferred A Pool Balance.

 

   

Third, to the holders of the Class AA Certificates to make distributions in respect of the Pool Balance of the Class AA Certificates.

 

   

Fourth, to the holders of the Class A Certificates to pay interest on the Pool Balance of the Class A Certificates not previously distributed under clause “Second” above.

 

   

Fifth, to the holders of the Class A Certificates to make distributions in respect of the Pool Balance of the Class A Certificates.

 

Control of Loan Trustee

The holders of at least a majority of the outstanding principal amount of Equipment Notes issued under each Indenture will be entitled to direct the Loan Trustee under such Indenture in taking action as long as no Indenture Default is continuing thereunder. If an Indenture Default is continuing, subject to certain conditions, the “Controlling Party” will direct the Loan Trustee under such Indenture (including in exercising remedies, such as accelerating such Equipment Notes or foreclosing the lien on the Aircraft securing such Equipment Notes).

 

  The Controlling Party will be:

 

   

The Class AA Trustee.

 

   

Upon payment of final distributions to the holders of Class AA Certificates, the Class A Trustee.

 

   

Under certain circumstances, and notwithstanding the foregoing, the Liquidity Provider (including, if any Class B Certificates are issued, any liquidity provider for the Class B Certificates) with the largest amount owed to it.

 

  In exercising remedies during the nine months after the earlier of (a) the acceleration of the Equipment Notes issued pursuant to any Indenture or (b) the bankruptcy of United, the Equipment Notes and the Aircraft subject to the lien of such Indenture may not be sold for less than certain specified minimums.

 

Right to Purchase Other Classes of Certificates

If United is in bankruptcy and certain specified circumstances then exist:

 

   

The Class A Certificateholders will have the right to purchase all but not less than all of the Class AA Certificates.



 

S-9


Table of Contents
   

If Additional Junior Certificates have been issued, the holders of such Additional Junior Certificates will have the right to purchase all but not less than all of the Class AA and Class A Certificates.

 

  The purchase price in each case described above will be the outstanding balance of the applicable Class of Certificates plus accrued and unpaid interest.

 

Liquidity Facilities

Under the Liquidity Facility for each of the Class AA and Class A Trusts, the Liquidity Provider will, if necessary, make advances in an aggregate amount sufficient to pay interest on the applicable Certificates on up to three successive semiannual Regular Distribution Dates at the interest rate for such Certificates. Drawings under the Liquidity Facilities cannot be used to pay any amount in respect of the applicable Certificates other than interest and will not cover interest payable on amounts held in escrow as Deposits with the Depositary.

 

  Notwithstanding the subordination provisions applicable to the Certificates, the holders of the Certificates to be issued by the Class AA Trust or the Class A Trust will be entitled to receive and retain the proceeds of drawings under the Liquidity Facility for such Trust.

 

  Upon each drawing under any Liquidity Facility to pay interest on the applicable Certificates, the Subordination Agent will reimburse the applicable Liquidity Provider for the amount of such drawing. Such reimbursement obligation and all interest, fees and other amounts owing to the Liquidity Provider under each Liquidity Facility and certain other agreements will rank equally with comparable obligations relating to the other Liquidity Facility and will rank senior to the Certificates in right of payment.

 

  If Class B Certificates are issued, such Class B Certificates may have the benefit of credit support similar to the Liquidity Facilities. See “Possible Issuance of Additional Junior Certificates and Refinancing of Certificates”.

 

Escrowed Funds

Funds in escrow for the Certificateholders of each Trust will be held by the Depositary as Deposits relating to such Trust. The Trustees may withdraw these funds from time to time to purchase Equipment Notes on or prior to the deadline established for purposes of this Offering. On each Regular Distribution Date, the Depositary will pay interest accrued on the Deposits relating to such Trust at a rate per annum equal to the interest rate applicable to the Certificates issued by such Trust. The Deposits relating to each Trust and interest paid thereon will not be subject to the subordination provisions applicable to the Certificates. The Deposits cannot be used to pay any other amount in respect of the Certificates.

 

Unused Escrowed Funds

All of the Deposits held in escrow may not be used to purchase Equipment Notes by the deadline established for purposes of this Offering. This may occur because of delays in the financing of Aircraft or other reasons. See “Description of the Certificates—Obligation to Purchase Equipment



 

S-10


Table of Contents
 

Notes”. If any funds remain as Deposits with respect to any Trust after such deadline, such funds will be withdrawn by the Escrow Agent for such Trust and distributed, with accrued and unpaid interest, to the Certificateholders of such Trust after at least 15 days’ prior written notice. See “Description of the Deposit Agreements—Unused Deposits”.

 

Obligation to Purchase Equipment Notes

The Trustees will be obligated to purchase the Equipment Notes issued with respect to each Aircraft pursuant to the Note Purchase Agreement. United will enter into a secured debt financing with respect to each Aircraft pursuant to financing agreements substantially in the forms attached to the Note Purchase Agreement. The terms of such financing agreements must not vary the Required Terms set forth in the Note Purchase Agreement. In addition, United must certify to the Trustees that any substantive modifications do not materially and adversely affect the Certificateholders. United must also obtain written confirmation from each Rating Agency that the use of financing agreements modified in any material respect from the forms attached to the Note Purchase Agreement will not result in a withdrawal, suspension or downgrading of the rating of any Class of Certificates. The Trustees will not be obligated to purchase Equipment Notes if, at the time of issuance, United is in bankruptcy or certain other specified events have occurred. See “Description of the Certificates—Obligation to Purchase Equipment Notes”.

 

Substitute Aircraft

If the scheduled delivery date for any aircraft that may be financed with the proceeds of this Offering is delayed by more than 30 days after the month scheduled for delivery, United may identify for delivery one or more Substitute Aircraft therefor meeting the applicable conditions described below.

 

  In the case of a Substitute Aircraft that is of the same model as the aircraft being replaced, United will be obligated to obtain written confirmation from each Rating Agency that substituting such Substitute Aircraft for the replaced aircraft will not result in a withdrawal, suspension or downgrading of the ratings of any Class of Certificates.

 

  In the case of Substitute Aircraft that consist of one or more aircraft of a different model and/or manufacturer from the aircraft being replaced, the following conditions must be satisfied:

 

   

Each Substitute Aircraft shall have a date of manufacture no earlier than one year prior to the date of manufacture of the aircraft being replaced;

 

   

United will be obligated to obtain written confirmation from each Rating Agency that substituting such Substitute Aircraft for the replaced aircraft will not result in a withdrawal, suspension or downgrading of the ratings of any Class of Certificates; and

 

   

The Substitute Aircraft shall have an appraised current market value, adjusted for its maintenance status, (or, in the case of multiple



 

S-11


Table of Contents
 

Substitute Aircraft, the sum of their current market values shall be), at least equal to the sum of the current market values of the aircraft being replaced.

 

  If any Substitute Aircraft will be substituted on other than a one for one basis with an aircraft, prior to the effectiveness of such substitution the Note Purchase Agreement will be amended to allocate among such Substitute Aircraft the amortization schedules with respect to the aircraft being replaced in a manner consistent with, and as would preserve the aggregate amortization profile of, the original amortization schedules.

 

Issuances of Additional Classes of Certificates

Additional pass through certificates of one or more separate pass through trusts, which will evidence fractional undivided ownership interests in equipment notes secured by Aircraft, may be issued. Any such transaction may relate to (a) the issuance of one or more new series of subordinated equipment notes with respect to some or all of the Aircraft at any time on or after the Issuance Date or (b) the refinancing of Series A Equipment Notes or any of such other series of subordinated equipment notes at or after repayment of any such refinanced Series A or other equipment notes issued with respect to all (but not less than all) of the Aircraft secured by such refinanced notes at any time after the Issuance Date. The holders of Additional Junior Certificates relating to other series of subordinated equipment notes, if issued, will have the right to purchase all of the Class AA and Class A Certificates under certain circumstances after a bankruptcy of United at the outstanding principal balance of the Certificates to be purchased plus accrued and unpaid interest and other amounts due to Certificateholders, but without a premium. Consummation of any such issuance of additional pass through certificates will be subject to satisfaction of certain conditions, including, if issued after the Issuance Date, receipt of confirmation from the Rating Agencies that it will not result in a withdrawal, suspension or downgrading of the rating of any Class of Certificates that remains outstanding. See “Possible Issuance of Additional Junior Certificates and Refinancing of Certificates”.

Equipment Notes

 

(a) Issuer

United. United’s executive offices are located at 233 S. Wacker Drive, Chicago, Illinois 60606. United’s telephone number is (872) 825-4000.

 

(b) Interest

The Equipment Notes held in each Trust will accrue interest at the rate per annum for the Certificates issued by such Trust set forth on the cover page of this Prospectus Supplement. Interest will be payable on May 1 and November 1 of each year, commencing on the first such date after issuance of such Equipment Notes (but not before May 1, 2020). Interest is calculated on the basis of a 360-day year consisting of twelve 30-day months.

 

(c) Principal

Principal payments on the Equipment Notes are scheduled on May 1 and November 1 of each year, commencing on November 1, 2020 for certain Equipment Notes and May 1, 2021 for the remaining Equipment Notes.

 

(d) Redemption

Aircraft Event of Loss. If an Event of Loss occurs with respect to an Aircraft, all of the Equipment Notes issued with respect to such Aircraft will be redeemed, unless United replaces such Aircraft under the related



 

S-12


Table of Contents
 

financing agreements. The redemption price in such case will be the unpaid principal amount of such Equipment Notes, together with accrued interest, but without any premium.

 

  Optional Redemption. United may elect to redeem all of the Equipment Notes issued with respect to an Aircraft prior to maturity only if all outstanding Equipment Notes with respect to all other Aircraft are simultaneously redeemed. In addition, United may elect to redeem all of the outstanding Series A Equipment Notes with respect to all of the Aircraft. The redemption price for any optional redemption will be the unpaid principal amount of the relevant Equipment Notes, together with accrued interest and Make-Whole Premium.

 

(e) Security

The Equipment Notes issued with respect to each Aircraft will be secured by a security interest in such Aircraft.

 

(f) Cross-collateralization

The Equipment Notes held in the Trusts will be cross-collateralized. This means that any proceeds from the exercise of remedies with respect to an Aircraft will be available to cover shortfalls then due under Equipment Notes issued with respect to the other Aircraft. In the absence of any such shortfall, excess proceeds will be held by the relevant Loan Trustee as additional collateral for such other Equipment Notes.

 

(g) Cross-default

There will be cross-default provisions in the Indentures. This means that if the Equipment Notes issued with respect to one Aircraft are in default and remedies are exercisable with respect to such Aircraft, the Equipment Notes issued with respect to the remaining Aircraft will also be in default, and remedies will be exercisable with respect to all Aircraft.

 

(h) Substitution of Airframe or Engine

United may elect to release any Airframe from the security interest of the related Indenture and substitute for it (1) an airframe of the same model as such Airframe or a comparable or improved model manufactured by the same airframe manufacturer as with respect to such Airframe or (2) one or more airframes with a different model (other than as referred to in clause (1) of this sentence) and/or manufacturer than such Airframe, so long as:

 

   

no Indenture Default has occurred and is continuing at the time of substitution;

 

   

the substitute airframe has a date of manufacture no earlier than one year prior to the date of manufacture of the Airframe subject to the lien of such Indenture on the issuance date of the Equipment Notes under such Indenture;

 

   

the substitute airframe has an appraised current market value, adjusted for its maintenance status, (or, in the case of multiple substitute airframes, the sum of such current market values of such substitute airframes shall be) at least equal to the sum of the current market values of each released Airframe; and

 

   

in the case of any substitute airframe referred to in clause (2) above in this sentence, United shall have obtained written confirmation from



 

S-13


Table of Contents
 

each Rating Agency that substituting such substitute airframe for such released Airframe(s) will not result in a withdrawal, suspension or downgrading of the ratings of any Class of Certificates.

 

  If any airframe will be substituted on other than a one for one basis with an Airframe, prior to the effectiveness of such substitution the applicable Indenture will be amended to allocate among such substitute airframes the principal amount of the Equipment Notes issued under each applicable Indenture and remaining amortization schedules in a manner consistent with, and as would preserve the aggregate amortization profile of, the original Equipment Notes.

 

  United may elect to release any Engine from the security interest of the related Indenture and substitute for it a replacement engine on substantially the same terms as if an Event of Loss had occurred with respect to such Engine alone.

 

(i) Section 1110 Protection

United’s outside counsel will provide its opinion to the Trustees that the benefits of Section 1110 of the U.S. Bankruptcy Code will be available with respect to the Equipment Notes.

 

Certain U.S. Federal Tax Consequences

Each person acquiring an interest in Certificates generally should report on its federal income tax return its pro rata share of income from the relevant Deposits and income from the Equipment Notes and other property held by the relevant Trust. See “Certain U.S. Federal Tax Consequences”.

 

Certain ERISA Considerations

Each person who acquires a Certificate will be deemed to have represented that either: (a) no employee benefit plan assets have been used to purchase or hold such Certificate or (b) the purchase and holding of such Certificate are exempt from the prohibited transaction restrictions of ERISA and the Code pursuant to one or more prohibited transaction statutory or administrative exemptions. See “Certain ERISA Considerations”.

 

                    

    Fitch    

                                                    Moody’s                       

Threshold Rating for the Depositary

  Long Term or Short Term         

A-

F1

            Short Term    P-1  

Depositary Rating

  The Depositary meets the Depositary Threshold Rating requirement.
                    

Fitch

                                                           Moody’s    

Threshold Rating for the Liquidity
Provider for the Class AA Trust

  Long Term          BBB                Baa2  

Threshold Rating for the Liquidity
Provider for the Class A Trust

  Long Term          BBB                Baa2  

 

  Liquidity Provider Rating

The Liquidity Provider meets the Liquidity Threshold Rating requirements.


 

S-14


Table of Contents

SUMMARY FINANCIAL AND OPERATING DATA

The following tables summarize certain consolidated financial and operating data with respect to United. This information was derived as follows:

Statement of operations data for the six months ended June 30, 2019 and 2018 was derived from the unaudited consolidated financial statements of United, including the notes thereto, included in United’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019. Statement of operations data for years ended December 31, 2018, 2017 and 2016 was derived from the audited consolidated financial statements of United, including the notes thereto, included in United’s Annual Report on Form 10-K filed with the Commission on February 28, 2019 (the “Form 10-K”).

Special charges data for the six months ended June 30, 2019 and 2018 was derived from the unaudited consolidated financial statements of United, including the notes thereto, included in United’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019. Special charges data for the years ended December 31, 2018, 2017 and 2016 was derived from the audited consolidated financial statements of United, including the notes thereto, included in the Form 10-K.

Balance sheet data as of June 30, 2019 was derived from the unaudited consolidated financial statements of United, including the notes thereto, included in United’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019. Balance sheet data as of December 31, 2018 and 2017 was derived from the audited consolidated financial statements of United, including the notes thereto, included in the Form 10-K.

On January 1, 2019, United Airlines Holdings, Inc. adopted Accounting Standards Update No. 2016-02 (Topic 842), Leases (the “New Lease Standard”). As such, the unaudited consolidated financial statements included in United’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 and the unaudited financial information for the quarters ended June 30, 2019 and 2018 were prepared on a basis consistent with the New Lease Standard. The audited financial information for the years ended December 31, 2018, 2017 and 2016 presented below has not been recast for adoption of the New Lease Standard.

 

     Six Months Ended
June 30,
     Year Ended
December 31,
 
           2019                  2018                  2018                  2017                  2016        

Statement of Operations Data(1)(in millions):

              

Operating revenue

     $20,991        $19,809        $41,303        $37,784        $36,558  

Operating expenses

     19,023        18,401        38,009        34,111        32,212  

Operating income

     1,968        1,408        3,294        3,673        4,346  

Net income

     1,345        828        2,131        2,163        2,234  

 

     As of June 30,      As of December 31,  
           2019                  2018                  2017        

Balance Sheet Data(in millions):

        

Unrestricted cash, cash equivalents and short-term investments

   $ 5,438      $ 3,944      $ 3,792  

Total assets

     52,144        44,786        42,340  

Debt and finance (capital) leases(2)

     14,512        14,728        14,392  

Stockholder’s equity

     10,282        9,957        8,696  

(Footnotes on the next page)



 

S-15


Table of Contents

 

(1)

Includes the following special charges:

 

     Six Months Ended
June 30,
     Year Ended
December 31,
 
           2019                  2018                  2018            2017                  2016        

Special Charges (in millions):

              

Operating:

              

Impairment of assets

     69          134          377          25          412    

Severance and benefit costs

     12          25          41          116          37    

Termination of a maintenance service agreement

     —          —          64          —          —    

Labor agreement costs

     —          —          —          —          171    

Cleveland airport lease restructuring

     —          —          —          —          74    

(Gains) losses on sale of assets and other special charges, net

     8          10          5          35          51    

Nonoperating:

              

Postretirement curtailment gain

     —          —          —          —          (107)    

(Gains) losses on extinguishment of debt and other, net

     —          —          —          —          (1)    

Income tax benefit related to special charges

     (19)          (38)          (109)          (63)          (229)    

Income tax adjustment(3)

     —          —          (5)          (196)          180    

 

(2)

Includes the current and noncurrent portions of debt and finance leases (prior to the New Lease Standard, finance leases were referred to as capital leases).

(3)

The Company recorded $5 million and $196 million of tax benefits in 2018 and 2017, respectively, due to the passage of the Tax Cuts and Jobs Act in the fourth quarter of 2017. Prior to the release of the deferred income tax valuation allowance in 2015, the Company recorded approximately $465 million of valuation allowance adjustments in accumulated other comprehensive income (“AOCI”). Subsequent to the release of the deferred income tax valuation allowance in 2015, the $465 million debit remained within AOCI, of which $180 million related to losses on fuel hedges designated for hedge accounting and $285 million related to pension and other postretirement liabilities. Accounting rules required the adjustments to remain in AOCI as long as the Company had fuel derivatives designated for cash flow hedge accounting and the Company continues to provide pension and postretirement benefits. In 2016, we settled all of our fuel hedges and did not enter into any new fuel derivative contracts for hedge accounting. Accordingly, the Company reclassified the $180 million to income tax expense in 2016.



 

S-16


Table of Contents

Selected Operating Data

United transports people and cargo through its mainline operations, which utilize jet aircraft with at least 126 seats, and its regional operations, which utilize smaller aircraft that are operated under contract by United Express carriers. These regional operations are an extension of United’s mainline network.

 

     Six Months Ended
June 30,
    Year Ended
December 31,
 
           2019                 2018                 2018                 2017                 2016        

Consolidated Operations:

          

Passengers (thousands)(1)

     79,046       75,553       158,330       148,067       143,177  

Revenue passenger miles (millions)(2)

     116,098       109,794       230,155       216,261       210,309  

Available seat miles (millions)(3)

     138,885       132,679       275,262       262,386       253,590  

Passenger load factor:(4)

          

Consolidated

     83.6     82.8     83.6     82.4     82.9

Domestic

     85.2     85.1     85.4     85.2     85.4

International

     81.5     79.7     81.3     78.9     80.0

Passenger revenue per available seat mile (cents)

     13.83       13.59       13.70       13.13       13.18  

Total revenue per available seat mile (cents)

     15.11       14.93       15.00       14.40       14.42  

Average yield per revenue passenger mile (cents)(5)

     16.55       16.42       16.38       15.93       15.90  

Cargo ton miles (millions)(6)

     1,636       1,672       3,425       3,316       2,805  

Aircraft in fleet at end of period

     1,344       1,308       1,329       1,262       1,231  

Average stage length (miles)(7)

     1,459       1,452       1,446       1,460       1,473  

Average full-time equivalent employees (thousands)

     89.8       86.2       86.6       86.0       83.9  

Average fuel price per gallon

     $2.11       $2.19       $2.25       $1.74       $1.49  

Fuel gallons consumed (millions)

     2,087       1,990       4,137       3,978       3,904  

 

 

(1)

The number of revenue passengers measured by each flight segment flown.

(2)

The number of scheduled miles flown by revenue passengers.

(3)

The number of seats available for passengers multiplied by the number of scheduled miles those seats are flown.

(4)

Revenue passenger miles divided by available seat miles.

(5)

The average passenger revenue received for each revenue passenger mile flown.

(6)

The number of cargo revenue tons transported multiplied by the number of miles flown.

(7)

Average stage length equals the average distance a flight travels weighted for size of aircraft.



 

S-17


Table of Contents

RISK FACTORS

Unless the context otherwise requires, references in this “Risk Factors” section and “The Company” section to “UAL”, “the Company”, “we”, “us” and “our” mean United Airlines Holdings, Inc. (“UAL”) and its consolidated subsidiaries, including United Airlines, Inc. (“United”), and references to “United” include United’s consolidated subsidiaries.

Risk Factors Relating to the Company

If we do not successfully execute our strategic operating plan, or if our strategic operating plan is unsuccessful, our business, operating results and financial condition could be materially and adversely affected.

We have announced several strategic plans in recent years, including several revenue-generating initiatives and plans to optimize our revenue, such as our plans to add capacity, including international expansion and new or increased service to mid-size airports, and initiatives and plans to optimize and control our costs. We also continue to explore opportunities to enhance our segmentation, including the introduction of Polaris, Basic Economy and United Premium Plus, and are implementing many programs and policies to improve the customer experience at all points in air travel. In developing our strategic operating plan, we make certain assumptions including, but not limited to, those related to customer demand, competition, market consolidation and the global economy. Actual economic, market and other conditions may be different from our assumptions and we may not be able to successfully execute our strategic operating plan. If we do not successfully execute our strategic operating plan, or if actual results vary significantly from our assumptions, our business, operating results and financial condition could be materially and adversely impacted.

Unfavorable economic and political conditions, in the United States and globally, may have a material adverse effect on our business, operating results and financial condition.

The Company’s business and operating results are significantly impacted by U.S. and global economic and political conditions. The airline industry is highly cyclical, and the level of demand for air travel is correlated to the strength of the U.S. and global economies. Robust demand for the Company’s air transportation services depends largely on favorable economic conditions, including the strength of the domestic and foreign economies, low unemployment levels, strong consumer confidence levels and the availability of consumer and business credit. Air transportation is often a discretionary purchase that leisure travelers may limit or eliminate during difficult economic times. Short-haul travelers, in particular, have the option to replace air travel with surface travel. In addition, during periods of unfavorable economic conditions, business travelers historically have reduced the volume of their travel, either due to cost-saving initiatives, the replacement of travel with alternatives such as videoconferencing, or as a result of decreased business activity requiring travel. During such periods, the Company’s business and operating results may be adversely affected due to significant declines in industry passenger demand, particularly with respect to the Company’s business and premium cabin travelers, and a reduction in fare levels.

As a global business with operations outside of the United States from which it derives significant operating revenues, volatile conditions in certain international regions may have a negative impact on the Company’s operating results and its ability to achieve its business objectives. The Company’s international operations are a vital part of its worldwide airline network. Political disruptions and instability in certain regions can negatively impact the demand and network availability for air travel.

Stagnant or weakening global economic conditions either in the United States or in other geographic regions may have a material adverse effect on the Company’s revenues, operating results and liquidity.

The global airline industry is highly competitive and susceptible to price discounting and changes in capacity, which could have a material adverse effect on our business, operating results and financial condition.

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

 

S-18


Table of Contents

in the airline industry, the rise of well-funded government sponsored international carriers, changes in international alliances and the creation of immunized joint business arrangements (“JBAs”) have altered and are expected to continue to alter the competitive landscape in the industry, resulting in the formation of airlines and alliances with increased financial resources, more extensive global networks and services and competitive cost structures.

Airlines also compete by increasing or decreasing their capacity, including route systems and the number of destinations served. Several of the Company’s domestic and international competitors have increased their international capacity by including service to some destinations that the Company currently serves, causing overlap in destinations served and therefore increasing competition for those destinations. This increased competition in both domestic and international markets may have a material adverse effect on the Company’s business, operating results and financial condition.

The Company’s U.S. operations are subject to competition from traditional network carriers, national point-to-point carriers, and discount carriers, including low-cost carriers and ultra-low-cost carriers. Such carriers may have lower costs and provide service at lower fares to destinations also served by the Company. The significant presence of low-cost carriers, which engage in substantial price discounting, may diminish our ability to achieve sustained profitability on domestic and international routes. Our ability to compete in the domestic market effectively depends, in part, on our ability to maintain a competitive cost structure. If we cannot maintain our costs at a competitive level, then our business, financial condition and operating results could be materially and adversely affected.

Our international operations are subject to competition from both foreign and domestic carriers. Competition is significant from government subsidized competitors from certain Middle East countries. These carriers have large numbers of international widebody aircraft on order and are increasing service to the U.S. from their hubs in the Middle East. The government support provided to these carriers has allowed them to grow quickly, reinvest in their product, invest in other airlines and expand their global presence.

Through alliance and other marketing and codesharing agreements with foreign carriers, U.S. carriers have increased their ability to sell international transportation, such as services to and beyond traditional European and Asian gateway cities. Similarly, foreign carriers have obtained increased access to interior U.S. passenger traffic beyond traditional U.S. gateway cities through these relationships. In addition, several JBAs among U.S. and foreign carriers have received grants of antitrust immunity allowing the participating carriers to coordinate schedules, pricing, sales and inventory.

If we are not able to continue participating in these types of alliance and other marketing and codesharing agreements in the future, our business, financial condition and operating results could be materially and adversely affected.

High and/or volatile fuel prices or significant disruptions in the supply of aircraft fuel could have a material adverse impact on the Company’s strategic plans, operating results, financial condition and liquidity.

Aircraft fuel is critical to the Company’s operations and is our single largest operating expense. During the year ended December 31, 2018, the Company’s fuel expense was $9.3 billion. The timely and adequate supply of fuel to meet operational demand depends on the continued availability of reliable fuel supply sources, as well as related service and delivery infrastructure. Although the Company has some ability to cover short-term fuel supply and infrastructure disruptions at some major demand locations, it depends significantly on the continued performance of its vendors and service providers to maintain supply integrity. Consequently, the Company can neither predict nor guarantee the continued timely availability of aircraft fuel throughout the Company’s system.

Aircraft fuel has historically been the Company’s most volatile operating expense due to the highly unpredictable nature of market prices for fuel. The Company generally sources fuel at prevailing market prices. Market prices for aircraft fuel have historically fluctuated substantially in short periods of time and continue to be highly volatile due to a dependence on a multitude of unpredictable factors beyond the Company’s control. These factors

 

S-19


Table of Contents

include changes in global crude oil prices, the balance between aircraft fuel supply and demand, natural disasters, prevailing inventory levels and fuel production and transportation infrastructure. Prices of fuel are also impacted by indirect factors, such as geopolitical events, economic growth indicators, fiscal/monetary policies, fuel tax policies, changes in regulations, environmental concerns and financial investments in energy markets. Both actual changes in these factors, as well as changes in market expectations of these factors, can potentially drive rapid changes in fuel price levels in short periods of time.

Given the highly competitive nature of the airline industry, the Company may not be able to increase its fares and fees sufficiently to offset the full impact of increases in fuel prices, especially if these increases are significant, rapid and sustained. Further, any such fare or fee increase may not be sustainable, may reduce the general demand for air travel and may also eventually impact the Company’s strategic growth and investment plans for the future. In addition, decreases in fuel prices for an extended period of time may result in increased industry capacity, increased competitive actions for market share and lower fares or surcharges in general. If fuel prices were to then subsequently rise quickly, there may be a lag between the rise in fuel prices and any improvement of the revenue environment.

To protect against increases in the market prices of fuel, the Company may hedge a portion of its future fuel requirements. The Company does not currently hedge its future fuel requirements. However, to the extent the Company decides to start a hedging program, such hedging program may not be successful in mitigating higher fuel costs, and any price protection provided may be limited due to choice of hedging instruments and market conditions, including breakdown of correlation between hedging instrument and market price of aircraft fuel and failure of hedge counterparties. To the extent that the Company decides to hedge a portion of its future fuel requirements and uses hedge contracts that have the potential to create an obligation to pay upon settlement if fuel prices decline significantly, such hedge contracts may limit the Company’s ability to benefit fully from lower fuel costs in the future. If fuel prices decline significantly from the levels existing at the time the Company enters into a hedge contract, the Company may be required to post collateral (margin) beyond certain thresholds. There can be no assurance that the Company’s hedging arrangements, if any, will provide any particular level of protection against rises in fuel prices or that its counterparties will be able to perform under the Company’s hedging arrangements. Additionally, deterioration in the Company’s financial condition could negatively affect its ability to enter into new hedge contracts in the future.

The Company relies heavily on technology and automated systems to operate its business and any significant failure or disruption of the technology or these systems could materially harm its business.

The Company depends on automated systems and technology to operate its business, including, but not limited to, computerized airline reservation systems, demand prediction software, flight operations systems, revenue management systems, accounting systems, technical and business operations systems, telecommunication systems and commercial websites and applications, including www.united.com and the United Airlines app. United’s website and other automated systems must be able to accommodate a high volume of traffic, maintain secure information and deliver important flight and schedule information, as well as process critical financial transactions. These systems could suffer substantial or repeated disruptions due to various events, some of which are beyond the Company’s control, including natural disasters, power failures, terrorist attacks, equipment or software failures, computer viruses or cyber security attacks. Substantial or repeated systems failures or disruptions, including failures or disruptions related to the Company’s complex integration of systems, could reduce the attractiveness of the Company’s services versus those of its competitors, materially impair its ability to market its services and operate its flights, result in the unauthorized release of confidential or otherwise protected information, result in increased costs, lost revenue and the loss or compromise of important data, and may adversely affect the Company’s business, operating results and financial condition.

The Company’s business relies extensively on third-party service providers, including certain technology providers. Failure of these parties to perform as expected, or interruptions in the Company’s relationships with these providers or their provision of services to the Company, could have an adverse effect on the Company’s business, operating results and financial condition.

The Company has engaged third-party service providers to perform a large number of functions that are integral to its business, including regional operations, operation of customer service call centers, distribution and sale

 

S-20


Table of Contents

of airline seat inventory, provision of information technology infrastructure and services, transmitting or uploading of data, provision of aircraft maintenance and repairs, provision of various utilities, performance of aircraft fueling operations and catering services, among other vital functions and services. The Company does not directly control these third-party service providers, although it does enter into agreements that define expected service performance.

Any of these third-party service providers, however, may materially fail to meet its service performance commitments to the Company or may suffer disruptions to its systems that could impact its services. For example, failures in certain third-party technology or communications systems may cause flight delays or cancellations. The failure of any of the Company’s third-party service providers to perform its service obligations adequately, or other interruptions of services, may reduce the Company’s revenues and increase its expenses, prevent the Company from operating its flights and providing other services to its customers or result in adverse publicity or harm to its brand. In addition, the Company’s business and financial performance could be materially harmed if its customers believe that its services are unreliable or unsatisfactory.

The Company may also have disagreements with such providers or such contracts may be terminated or may not be extended or renewed. For example, the number of flight reservations booked through third-party global distribution systems (“GDS”) or online travel agents (“OTAs”) may be adversely affected by disruptions in the business relationships between the Company and these suppliers. Such disruptions, including a failure to agree upon acceptable contract terms when contracts expire or otherwise become subject to renegotiation, may cause the Company’s flight information to be limited or unavailable for display by the affected GDS or OTA operator, significantly increase fees for both the Company and GDS/OTA users and impair the Company’s relationships with its customers and travel agencies. Any such disruptions or contract terminations may adversely impact our operations and financial results. If we are not able to negotiate or renew agreements with third-party service providers, or if we renew existing agreements on less favorable terms, our operations and financial results may be adversely affected.

The Company could experience adverse publicity, harm to its brand, reduced travel demand and potential tort liability as a result of an accident, catastrophe or incident involving its aircraft or its operations, the aircraft or operations of its regional carriers, the aircraft or operations of its codeshare partners, or the aircraft or operations of another airline, which may result in a material adverse effect on the Company’s business, operating results and financial condition.

An accident, catastrophe or incident involving an aircraft that the Company operates, or an aircraft that is operated by a codeshare partner, one of the Company’s regional carriers or another airline, or an incident involving the Company’s operations, or the operations of a codeshare partner, one of the Company’s regional carriers or of another airline, could have a material adverse effect on the Company if such accident, catastrophe or incident created a public perception that the Company’s operations, or the operations of its codeshare partners or regional carriers, are not safe or reliable, or are less safe or reliable than other airlines. Such public perception could, in turn, result in adverse publicity for the Company, cause harm to the Company’s brand and reduce travel demand on the Company’s flights, or the flights of its codeshare partners or regional carriers.

In addition, any such accident, catastrophe or incident involving the Company, its regional carriers or its codeshare partners could expose the Company to significant tort liability. Although the Company currently maintains liability insurance in amounts and of the type the Company believes to be consistent with industry practice to cover damages arising from any such accident, catastrophe or incident, and the Company’s codeshare partners and regional carriers carry similar insurance and generally indemnify the Company for their operations, if the Company’s liability exceeds the applicable policy limits or the ability of another carrier to indemnify it, the Company could incur substantial losses from an accident, catastrophe or incident which may result in a material adverse effect on the Company’s operating results and financial condition.

Terrorist attacks, international hostilities or other security events, or the fear of terrorist attacks or hostilities, even if not made directly on the airline industry, could negatively affect the Company and the airline industry.

Terrorist attacks or international hostilities, even if not made on or targeted directly at the airline industry, or the fear of or the precautions taken in anticipation of such attacks (including elevated national threat warnings, travel

 

S-21


Table of Contents

restrictions, selective cancellation or redirection of flights and new security regulations) could materially and adversely affect the Company and the airline industry. Security events pose a significant risk to our passenger and cargo operations. These events could include acts of violence in public areas that we cannot control. The Company’s financial resources may not be sufficient to absorb the adverse effects of any future terrorist attacks, international hostilities or other security events. Any such events could have a material adverse impact on the Company’s financial condition, liquidity and operating results.

Increasing privacy and data security obligations or a significant data breach may adversely affect the Company’s business.

The Company is subject to increasing legislative, regulatory and customer focus on privacy issues and data security. Also, a number of the Company’s commercial partners, including credit card companies, have imposed data security standards that the Company must meet. These standards continue to evolve. The Company will continue its efforts to meet its privacy and data security obligations; however, it is possible that certain new obligations may be difficult to meet and could increase the Company’s costs.

Additionally, the Company must manage evolving cybersecurity risks. Our network systems and storage applications, and those systems and storage and other business applications maintained by our third-party providers, may be subject to attempts to gain unauthorized access, breach, malfeasance or other system disruptions. In some cases, it is difficult to anticipate or to detect immediately such incidents and the damage caused thereby. While we continually work to safeguard our internal network systems and validate the security of our third-party providers, including through information security policies and employee awareness and training, there is no assurance that such actions will be sufficient to prevent cyber-attacks or security breaches. The loss, disclosure, misappropriation of or access to customers’, employees’ or business partners’ information or the Company’s failure to meet its obligations could result in legal claims or proceedings, penalties and remediation costs. A significant data breach or the Company’s failure to meet its obligations may adversely affect the Company’s reputation, business, operating results and financial condition.

The mandatory grounding of our Boeing 737 MAX 9 aircraft may have a material adverse effect on our business, operating results and financial condition.

On March 13, 2019, the Federal Aviation Administration issued an emergency order prohibiting the operation of Boeing 737 MAX series airplanes by U.S. certificated operators (the “FAA Order”). As a result, the Company grounded all 14 Boeing 737 MAX 9 aircraft in its fleet. Prior to the grounding, the Company operated approximately 50 flights a day on these aircraft and expected, given the anticipated delivery schedule, to operate approximately 110 flights a day by the end of the year. The long-term operational and financial impact of this action is uncertain and could negatively affect the Company based on a number of factors, including, among others, the period of time the aircraft are unavailable, the availability of replacement aircraft, to the extent needed, and the circumstances of any reintroduction of the grounded aircraft to service. This grounding has affected the status of the scheduled delivery of the five Boeing 737 MAX 9 aircraft that were scheduled for delivery in the second quarter of 2019 and is also expected to affect the timing of future Boeing 737 MAX aircraft deliveries. The extent of the delay of future deliveries is expected to be impacted by the length of time the FAA Order remains in place, Boeing’s production rate and the pace at which Boeing can deliver aircraft following the lifting of the FAA Order, among other factors.

Disruptions to our regional network and United Express flights provided by third-party regional carriers could adversely affect our business, operating results and financial condition.

The Company has contractual relationships with various regional carriers to provide regional aircraft service branded as United Express. These regional operations are an extension of the Company’s mainline network and complement the Company’s operations by carrying traffic that connects to mainline service and allows flights to smaller cities that cannot be provided economically with mainline aircraft. The Company’s business and operations are dependent on its regional flight network, with regional capacity accounting for approximately 11% of the Company’s total capacity for the year ended December 31, 2018.

 

S-22


Table of Contents

Although the Company has agreements with its regional carriers that include contractually agreed performance metrics, each regional carrier is a separately certificated commercial air carrier and the Company does not control the operations of these carriers. A number of factors may impact the Company’s regional network, including weather-related effects and seasonality. In addition, the decrease in qualified pilots driven by changes to federal regulations has adversely impacted and could continue to affect the Company’s regional flying. For example, the FAA’s expansion of minimum pilot qualification standards, including a requirement that a pilot have at least 1,500 total flight hours, as well as the FAA’s revised pilot flight and duty time requirements under Part 117 of the Federal Aviation Regulations, have contributed to a smaller supply of pilots available to regional carriers. The decrease in qualified pilots resulting from the regulations as well as factors including a decreased student pilot population and a shrinking U.S. military from which to hire qualified pilots, could adversely impact the Company’s operations and financial condition, and could also require the Company to reduce regional carrier flying.

If a significant disruption occurs to the Company’s regional network or flights or if one or more of the regional carriers with which the Company has relationships is unable to perform their obligations over an extended period of time, there could be a material adverse effect on the Company’s business, financial condition and operating results.

Current or future litigation and regulatory actions, or failure to comply with the terms of any settlement, order or arrangement relating to these actions, could have a material adverse impact on the Company.

From time to time, we are subject to litigation and other legal and regulatory proceedings relating to our business or investigations or other actions by governmental agencies, including as described in Part I, Item 3, Legal Proceedings, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. No assurances can be given that the results of these or new matters will be favorable to us. An adverse resolution of lawsuits, arbitrations, investigations or other proceedings or actions could have a material adverse effect on our financial condition and operating results, including as a result of non-monetary remedies, and could also result in adverse publicity. Defending ourselves in these matters may be time-consuming, expensive and disruptive to normal business operations and may result in significant expense and a diversion of management’s time and attention from the operation of our business, which could impede our ability to achieve our business objectives. Additionally, any amount that we may be required to pay to satisfy a judgment, settlement, fine or penalty may not be covered by insurance. If we fail to comply with the terms contained in any settlement, order or agreement with a governmental authority relating to these matters, we could be subject to criminal or civil penalties, which could have a material adverse impact on the Company. Under our charter and certain indemnification agreements that we have entered into (and may in the future enter into) with our officers, directors and certain third parties, we could be required to indemnify and advance expenses to them in connection with their involvement in certain actions, suits, investigations and other proceedings. There can be no assurance that any of these payments will not be material.

Our significant investments in other airlines, including in other parts of the world, and the commercial relationships that we have with those carriers may not produce the returns or results we expect.

An important part of our strategy to expand our global network includes making significant investments in airlines in other parts of the world and expanding our commercial relationships with these carriers. For example, in November 2018, United entered into a revenue-sharing joint business agreement with Aerovías del Continente Americano S.A. (“Avianca”), Copa Airlines and several of their respective affiliates, subject to regulatory approval. Concurrently with this transaction, United, as lender, entered into a Term Loan Agreement (the “BRW Loan Agreement”) with, among others, BRW Aviation Holding LLC and BRW Aviation LLC (“BRW”), as guarantor and borrower, respectively, affiliates of Synergy Aerospace Corporation, the majority shareholder of Avianca Holdings S.A. (“AVH”). Pursuant to the BRW Loan Agreement, United provided a $456 million term loan to BRW, secured by a pledge of BRW’s equity, as well as BRW’s 516 million shares of common stock of AVH (having an implied value equivalent to 64.5 million American Depositary Receipts, the class of AVH securities that trades on the New York Stock Exchange). BRW is currently in default under the BRW Loan Agreement. Additionally, on May 13, 2019, S&P Global Ratings downgraded its AVH issuer level credit ratings from B to CCC+, together with accompanying downgrades for AVH’s frequent flyer subsidiary, LifeMiles Ltd. (“LifeMiles”), and for certain outstanding debt of both AVH and LifeMiles. Following these downgrades, and in order to protect the value of its collateral, on May 24, 2019,

 

S-23


Table of Contents

United began to exercise remedies available to it under the terms of the BRW Loan Agreement and related documents. In connection with the delivery by United of a notice of default to BRW, Kingsland Holdings Limited, AVH’s largest minority shareholder, was granted, in accordance with the agreements related to the BRW Loan Agreement, independent authority to manage BRW, which remains the majority shareholder of AVH.

We also have an equity investment in Azul Linhas Aéreas Brasileiras S.A. (“Azul”). See Note 9 to the financial statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 and Note 7 and Note 8 to the financial statements included in Part I, Item 1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 for additional information regarding our investments in Avianca and Azul.

We also have investments in several domestic regional airlines. In January 2019, we completed the acquisition of a 49.9% interest in ManaAir LLC, which, as of immediately following the closing of that investment, owns 100% of the equity interests in ExpressJet Airlines, Inc., a domestic regional airline. We also have minority equity interests in Champlain Enterprises, LLC d/b/a CommutAir and Republic Airways Holdings, Inc. See Note 9 to the financial statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 for additional information regarding our investments in regional airlines.

We expect to continue exploring similar non-controlling investments in, and entering into JBAs, commercial agreements, loan transactions and strategic alliances with, other carriers as part of our regional and global business strategy. These transactions and relationships involve significant challenges and risks. We are dependent on these other carriers for significant aspects of our network in the regions in which they operate. While we work closely with these carriers, each is a separately certificated commercial air carrier and we do not have control over their operations, strategy, management or business methods. These airlines also are subject to a number of the same risks as our business, which are described in this Prospectus Supplement under the heading “Risk Factors,” or in Part I, Item 1A, Risk Factors, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 and Part II, Item 1A, Risk Factors, of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, including competitive pressures on pricing, demand and capacity; changes in aircraft fuel pricing; and the impact of global and local political and economic conditions on operations and customer travel patterns, among others.

As a result of these and other factors, we may not realize a satisfactory return on our investment, and we may not receive repayment of any invested or loaned funds. Further, these investments may not generate the revenue or operational synergies we expect, and they may distract management focus from our operations or other strategic options. Finally, our reliance on these other carriers in the regions in which they operate may negatively impact our regional and global operations and results if those carriers are impacted by general business risks or perform below our expectations or needs. Any one or more of these events could have a material adverse effect on our operating results or financial condition.

We may also be subject to consequences from any improper behavior of JBA partners, including for failure to comply with anti-corruption laws such as the U.S. Foreign Corrupt Practices Act. Furthermore, our relationships with these carriers may be subject to the laws and regulations of non-U.S. jurisdictions in which these carriers are located or conduct business. Any political or regulatory change in these jurisdictions that negatively impact or prohibit our arrangements with these carriers could have an adverse effect on our operating results or financial condition. To the extent that the operations of any of these carriers are disrupted over an extended period of time or their actions subject us to the consequences of failure to comply with laws and regulations, our operating results may be adversely affected.

The airline industry may undergo further change with respect to alliances and JBAs or due to consolidations, any of which could have a material adverse effect on the Company.

The Company faces and may continue to face strong competition from other carriers due to the modification of alliances and formation of new JBAs. Carriers may improve their competitive positions through airline alliances, slot swaps and/or JBAs. Certain types of airline JBAs further competition by allowing multiple airlines to coordinate routes, pool revenues and costs, and enjoy other mutual benefits, achieving many of the benefits of consolidation.

 

S-24


Table of Contents

“Open Skies” agreements, including the longstanding agreements between the United States and each of the European Union (“EU”), Canada, Japan, Korea, New Zealand, Australia, Colombia and Panama, as well as the more recent agreements between the United States and each of Mexico and Brazil, may also give rise to better integration opportunities among international carriers. Movement of airlines between current global airline alliances could reduce joint network coverage for members of such alliances while also creating opportunities for JBAs and bilateral alliances that did not exist before such realignment. Further airline and airline alliance consolidations or reorganizations could occur in the future. The Company routinely engages in analyses and discussions regarding its own strategic position, including current and potential alliances, asset acquisitions and divestitures and may have future discussions with other airlines regarding strategic activities. If other airlines participate in such activities, those airlines may significantly improve their cost structures or revenue generation capabilities, thereby potentially making them stronger competitors of the Company and potentially impairing the Company’s ability to realize expected benefits from its own strategic relationships.

Orders for new aircraft typically must be placed years in advance of scheduled deliveries, and changes in the Company’s network strategy over time may make aircraft on order less economic for the Company, result in costs related to modification or termination of aircraft orders or cause the Company to enter into orders for new aircraft on less favorable terms.

The Company’s orders for new aircraft are typically made years in advance of actual delivery of such aircraft, and the financial commitment required for purchases of new aircraft is substantial. At December 31, 2018, the Company had firm commitments to purchase 273 new aircraft from The Boeing Company (“Boeing”), Airbus S.A.S. and Embraer S.A. (“Embraer”), as well as related agreements with engine manufacturers, maintenance providers and others. As of December 31, 2018, the Company’s commitments relating to the acquisition of aircraft and related spare engines, aircraft improvements and other related obligations aggregated to a total of $24.7 billion.

Subsequent to the Company placing an order for new aircraft, the Company’s network strategy may change. As a result, the Company’s preference for a particular aircraft that it has ordered, often years in advance, may be decreased or eliminated. If the Company were to modify or terminate any of its existing aircraft order commitments, it may be responsible for material liabilities to its counterparties arising from any such change. Additionally, the Company may have a need for additional aircraft that are not available under its existing orders. In such cases, the Company may seek to acquire aircraft from other sources, such as through lease arrangements, which may result in higher costs or less favorable terms, or through the purchase or lease of used aircraft. The Company may not be able to acquire such aircraft when needed on favorable terms or at all.

A majority of the Company’s aircraft and certain parts are sourced from single suppliers; therefore, the Company would be materially and adversely affected if it were unable to obtain additional equipment or support from any of these suppliers.

The Company currently sources the majority of its aircraft and many related aircraft parts from Boeing. In addition, our aircraft suppliers are dependent on other suppliers for certain other aircraft parts. Therefore, if the Company was unable to acquire additional aircraft from Boeing, or if Boeing was unable or unwilling to make timely deliveries of aircraft or to provide adequate support for its products, the Company’s operations could be materially and adversely affected. The Company is also dependent on a limited number of suppliers for aircraft engines and certain other aircraft parts and could therefore also be materially and adversely affected in the event of the unavailability of these engines and other parts.

Union disputes, employee strikes or slowdowns, and other labor-related disruptions could adversely affect the Company’s operations and could result in increased costs that impair its financial performance.

United is a highly unionized company. As of December 31, 2018, the Company and its subsidiaries had approximately 92,000 active employees, of whom approximately 83% were represented by various U.S. labor organizations.

 

S-25


Table of Contents

There is a risk that unions or individual employees might pursue judicial or arbitral claims arising out of changes implemented as a result of the Company entering into collective bargaining agreements with its represented employee groups. There is also a possibility that employees or unions could engage in job actions such as slowdowns, work-to-rule campaigns, sick-outs or other actions designed to disrupt the Company’s normal operations, in an attempt to pressure the Company in collective bargaining negotiations. Although the Railway Labor Act makes such actions unlawful until the parties have been lawfully released to self-help, and the Company can seek injunctive relief against premature self-help, such actions can cause significant harm even if ultimately enjoined. In addition, collective bargaining agreements with the Company’s represented employee groups increase the Company’s labor costs, which increase could be material for any applicable reporting period.

An outbreak of a disease or similar public health threat could have a material adverse impact on the Company’s business, operating results and financial condition.

An outbreak of a disease or similar public health threat that affects travel demand, travel behavior, or travel restrictions could have a material adverse impact on the Company’s business, financial condition and operating results.

If we experience changes in, or are unable to retain, our senior management team or other key employees, our operating results could be adversely affected.

Much of our future success depends on the continued availability of skilled personnel with industry experience and knowledge, including our senior management team and other key employees. If we are unable to attract and retain talented, highly qualified senior management and other key employees, or if we are unable to effectively provide for the succession of senior management, our business may be adversely affected.

Extended interruptions or disruptions in service at major airports where we operate could have a material adverse impact on our operations.

The airline industry is heavily dependent on business models that concentrate operations in major airports in the United States and throughout the world. An extended interruption or disruption at an airport where we have significant operations could have a material impact on our business, financial condition and results of operation.

We operate principally through our domestic hubs at Newark Liberty International Airport, Chicago O’Hare International Airport, Denver International Airport, George Bush Intercontinental Airport, Los Angeles International Airport, A.B. Won Pat International Airport, San Francisco International Airport and Washington Dulles International Airport. Substantially all of our flights either originate in or fly into one of these locations. A significant interruption or disruption in service at one of our hubs or other airports where we have a significant presence resulting from air traffic control (“ATC”) delays, weather conditions, natural disasters, growth constraints, relations with third-party service providers, failure of computer systems, disruptions to government agencies or personnel, disruptions at airport facilities or other key facilities used by us to manage our operations, labor relations, power supplies, fuel supplies, terrorist activities, international hostilities or otherwise could result in the cancellation or delay of a significant portion of our flights and, as a result, could have a material impact on our business, operating results and financial condition. We have minimal control over the operation, quality or maintenance of these services or whether vendors will improve or continue to provide services that are essential to our business.

The airline industry is subject to extensive government regulation, which imposes significant costs and may adversely impact our business, operating results and financial condition.

Airlines are subject to extensive regulatory and legal oversight. Compliance with U.S. and international regulations imposes significant costs and may have adverse effects on the Company. Laws, regulations, taxes and airport rates and charges, both domestically and internationally, have been proposed from time to time that could significantly increase the cost of airline operations or reduce airline revenue.

United provides air transportation under certificates of public convenience and necessity issued by the U.S. Department of Transportation (the “DOT”). If the DOT altered, amended, modified, suspended or revoked these

 

S-26


Table of Contents

certificates, it could have a material adverse effect on the Company’s business. The FAA regulates the safety of United’s operations. United operates pursuant to an air carrier operating certificate issued by the FAA. The FAA’s regulations include stringent pilot flight and duty time requirements under Part 117 of the Federal Aviation Regulations, as well as minimum qualifications for air carrier first officers. These regulations have caused mainline airlines to hire regional pilots, while simultaneously significantly reducing the pool of new pilots from which regional carriers themselves can hire. Although this is an industry issue, it directly affects the Company and has required it to reduce regional partner flying, as several regional partners have experienced difficulty flying their schedules due to reduced pilot availability. From time to time, the FAA also issues orders, airworthiness directives and other regulations relating to the maintenance and operation of aircraft that require material expenditures or operational restrictions by the Company. These FAA orders and directives could include the temporary grounding of an entire aircraft type if the FAA identifies design, manufacturing, maintenance or other issues requiring immediate corrective action. These FAA directives or requirements could have a material adverse effect on the Company.

In 2018, the U.S. Congress approved a five-year reauthorization for the FAA, which encompasses significant aviation tax and policy-related issues. The law includes a range of policy changes related to airline customer service and aviation safety which, depending on how they are implemented, could impact our operations and costs. Additionally, the U.S. Congress may fail to continue to fund the operations of one or more federal government agencies which could negatively impact the Company and the airline industry.

The Company’s operations may also be adversely impacted due to the existing antiquated ATC system utilized by the U.S. government and regulated by the FAA. During peak travel periods in certain markets, the current ATC system’s inability to handle demand has led to short-term capacity constraints imposed by government agencies and resulted in delays and disruptions of air traffic. In addition, the current system will not be able to effectively handle projected future air traffic growth. The outdated technologies also cause the ATC to be less resilient in the event of a failure, causing flight cancellations and delays. Imposition of these ATC constraints on a long- term basis may have a material adverse effect on the Company’s operations. Failure to update the ATC system in a timely manner, and the substantial funding requirements of a modernized ATC system that may be imposed on air carriers may have an adverse impact on the Company’s financial condition or operating results.

Access to landing and take-off rights, or “slots,” at several major U.S. airports and many foreign airports served by the Company are, or recently have been, subject to government regulation. Certain of the Company’s major hubs are among the most congested airports in the United States and have been or could be the subject of regulatory action that might limit the number of flights and/or increase costs of operations at certain times or throughout the day. The FAA may limit the Company’s airport access by limiting the number of departure and arrival slots at high density traffic airports, which could affect the Company’s ownership and transfer rights, and local airport authorities may have the ability to control access to certain facilities or the cost of access to their facilities, which could have an adverse effect on the Company’s business. The FAA historically has taken actions with respect to airlines’ slot holdings that airlines have challenged; if the FAA were to take actions that adversely affect the Company’s slot holdings, the Company could incur substantial costs to preserve its slots or may lose slots. If slots are eliminated at an airport, or if the number of hours of operation governed by slots is reduced at an airport, the lack of controls on takeoffs and landings could result in greater congestion both at the affected airport or in the regional airspace (e.g., the New York City metropolitan region airspace) and could significantly impact the Company’s operations. Further, the Company’s operating costs at airports, including the Company’s major hubs, may increase significantly because of capital improvements at such airports that the Company may be required to fund, directly or indirectly. Such costs could be imposed by the relevant airport authority without the Company’s approval and may have a material adverse effect on the Company’s financial condition.

The ability of carriers to operate flights on international routes between the United States and other countries is highly regulated. Applicable arrangements between the United States and foreign governments may be amended from time to time, government policies with respect to airport operations may be revised, and the availability of appropriate slots or facilities may change. The Company currently operates a number of flights on international routes under government arrangements, regulations or policies that designate the number of carriers permitted to operate on such routes, the capacity of the carriers providing services on such routes, the airports at which carriers may operate international flights, or the number of carriers allowed access to particular airports. Any limitations, additions or

 

S-27


Table of Contents

modifications to such arrangements, regulations or policies could have a material adverse effect on the Company’s financial condition and operating results. Additionally, a change in law, regulation or policy for any of the Company’s international routes, such as Open Skies, could have a material adverse impact on the Company’s financial condition and operating results and could result in the impairment of material amounts of related tangible and intangible assets. In addition, competition from revenue-sharing JBAs and other alliance arrangements by and among other airlines could impair the value of the Company’s business and assets on the Open Skies routes. The Company’s plans to enter into or expand U.S. antitrust immunized alliances and JBAs on various international routes are subject to receipt of approvals from applicable U.S. federal authorities and obtaining other applicable foreign government clearances or satisfying the necessary applicable regulatory requirements. There can be no assurance that such approvals and clearances will be granted or will continue in effect upon further regulatory review or that changes in regulatory requirements or standards can be satisfied.

See Part I, Item 1, Business—Industry Regulation, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 for additional information on government regulation impacting the Company.

We are subject to many forms of environmental regulation and liability and risks associated with climate change, and may incur substantial costs as a result.

Many aspects of the Company’s operations are subject to increasingly stringent federal, state, local and international laws protecting the environment, including those relating to emissions to the air, water discharges, safe drinking water and the use and management of hazardous materials and wastes. Compliance with existing and future environmental laws and regulations can require significant expenditures and violations can lead to significant fines and penalties. In addition, from time to time we are identified as a responsible party for environmental investigation and remediation costs under applicable environmental laws due to the disposal of hazardous substances generated by our operations. We could also be subject to environmental liability claims from various parties, including airport authorities, related to our operations at our leased premises or the off-site disposal of waste generated at our facilities.

We may incur substantial costs as a result of changes in weather patterns due to climate change. Increases in the frequency, severity or duration of severe weather events such as thunderstorms, hurricanes, flooding, typhoons, tornados and other severe weather events could result in increases in delays and cancellations, turbulence-related injuries and fuel consumption to avoid such weather, any of which could result in significant loss of revenue and higher costs.

To address climate change risks, Carbon Offsetting and Reduction Scheme for International Aviation (“CORSIA”) has been developed by the International Civil Aviation Organization’s (“ICAO”), a UN specialized agency. CORSIA is intended to create a single global market-based measure to achieve carbon-neutral growth for international aviation after 2020 through airline purchases of carbon offset credits. Certain CORSIA program details remain to be developed and could potentially be affected by political developments in participating countries or the results of the pilot phase of the program, and thus the impact of CORSIA cannot be fully predicted. However, CORSIA is expected to increase operating costs for airlines that operate internationally.

In addition to CORSIA, the U.S. Environmental Protection Agency (“EPA”) had begun preliminary work to adopt its own aircraft engine greenhouse gas (“GHG”) emission standards which were expected to be aligned with recent ICAO carbon dioxide emission standards. The timing of any U.S. EPA aircraft engine GHG emission standards is currently unknown, but some jurisdictions in which United operates have adopted or are considering GHG emission reduction initiatives, which could impact various aspects of the Company’s business. The precise nature of future requirements and their applicability to the Company are difficult to predict, but the financial impact to the Company and the aviation industry would likely be adverse and could be significant.

See Part I, Item 1, Business—Industry Regulation—Environmental Regulation, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 for additional information on environmental regulation impacting the Company.

 

S-28


Table of Contents

The United Kingdom’s withdrawal from the EU may adversely impact our operations in the United Kingdom and elsewhere.

In June 2016, United Kingdom (“UK”) voters approved an advisory referendum for the UK to exit the EU. The UK parliament voted in favor of allowing the government to commence negotiations to determine the future terms of the UK’s relationship with the EU, including the terms of trade between the UK and the EU and other nations. The timing of the proposed exit was originally scheduled for March 29, 2019, but has since been extended and is currently scheduled for October 31, 2019. While a withdrawal plan was agreed between the EU and the UK government, which included a transition period potentially running through December 2020, such plan has been rejected by the UK parliament on a number of occasions, creating further uncertainty in negotiations and the process of withdrawal.

Depending on the outcome of these negotiations, we could face new challenges in our operations, such as instability in global financial and foreign exchange markets. This instability could include volatility in the value of the British pound and European euro, additional travel restrictions on passengers traveling between the UK and other EU countries, changes to the legal status of EU-resident employees, legal uncertainty and potentially divergent national laws and regulations. At this time, we cannot predict the impact that an actual exit from the EU will have on our business generally and our UK and European operations more specifically, and no assurance can be given that our operating results, financial condition and prospects would not be adversely impacted by the result.

The Company’s operating results fluctuate due to seasonality and other factors associated with the airline industry, many of which are beyond the Company’s control.

Due to greater demand for air travel during the spring and summer months, revenues in the airline industry in the second and third quarters of the year are generally stronger than revenues in the first and fourth quarters of the year, which are periods of lower travel demand. The Company’s operating results generally reflect this seasonality, but have also been impacted by numerous other factors that are not necessarily seasonal, including, among others, extreme or severe weather, outbreaks of disease or pandemics, ATC congestion, geological events, political instability, terrorism, natural disasters, changes in the competitive environment due to industry consolidation, tax obligations, general economic conditions and other factors. As a result, the Company’s quarterly operating results are not necessarily indicative of operating results for an entire year and historical operating results in a quarterly or annual period are not necessarily indicative of future operating results.

Increases in insurance costs or inadequate insurance coverage may materially and adversely impact our business, operating results and financial condition.

The Company could be exposed to significant liability or loss if its property or operations were to be affected by a natural catastrophe or other event, including aircraft accidents. The Company maintains insurance policies, including, but not limited to, terrorism, aviation hull and liability, workers’ compensation and property and business interruption insurance, but we are not fully insured against all potential hazards and risks incident to our business. If the Company is unable to obtain sufficient insurance with acceptable terms, the costs of such insurance increase materially, or if the coverage obtained is insufficient relative to actual liability or losses that the Company experiences, whether due to insurance market conditions, policy limitations and exclusions or otherwise, its operating results and financial condition could be materially and adversely affected.

The Company has a significant amount of financial leverage from fixed obligations, and insufficient liquidity may have a material adverse effect on the Company’s financial condition and business.

The Company has a significant amount of financial leverage from fixed obligations, including aircraft lease and debt financings, leases of airport property and other facilities, and other material cash obligations. In addition, the Company has substantial noncancelable commitments for capital expenditures, including for the acquisition of new aircraft and related spare engines.

Although the Company’s cash flows from operations and its available capital, including the proceeds from financing transactions, have been sufficient to meet these obligations and commitments to date, the Company’s future

 

S-29


Table of Contents

liquidity could be negatively affected by the risk factors discussed in this Prospectus Supplement under the heading “Risk Factors”, or in Item 1A., Risk Factors, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. If the Company’s liquidity is materially diminished, the Company might not be able to timely pay its leases and debts or comply with certain operating and financial covenants under its financing and credit card processing agreements or with other material provisions of its contractual obligations.

The Company’s substantial level of indebtedness and non-investment grade credit rating, as well as market conditions and the availability of assets as collateral for loans or other indebtedness, may make it difficult for the Company to raise additional capital if needed to meet its liquidity needs on acceptable terms, or at all. In addition, our variable rate indebtedness may use London interbank offered rates (“LIBO”) as a benchmark for establishing the rate. As announced in July 2017, LIBO is expected to be phased out by the end of 2021. Uncertainty as to the nature of alternative reference rates and as to potential changes or other reforms to LIBO may adversely impact the availability and cost of borrowings.

See Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 and in Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 for additional information regarding the Company’s liquidity.

Agreements governing our debt include financial and other covenants. Failure to comply with these covenants could result in events of default.

Our financing agreements include various financial and other covenants. Certain of these covenants require UAL or United, as applicable, to maintain minimum liquidity and/or minimum collateral coverage ratios. UAL’s or United’s ability to comply with these covenants may be affected by events beyond its control, including the overall industry revenue environment, the level of fuel costs and the appraised value of the collateral. In addition, our financing agreements contain other negative covenants customary for such financings. These covenants are subject to important exceptions and qualifications. If we fail to comply with these covenants and are unable to remedy or obtain a waiver or amendment, an event of default would result.

If an event of default were to occur, the lenders could, among other things, declare outstanding amounts due and payable. In addition, an event of default or declaration of acceleration under one financing agreement could also result in an event of default under other of our financing agreements due to cross-default and cross-acceleration provisions. The acceleration of significant amounts of debt could require us to renegotiate, repay or refinance the obligations under our financing arrangements.

The Company may never realize the full value of its intangible assets or its long-lived assets causing it to record impairments that may negatively affect its financial condition and operating results.

In accordance with applicable accounting standards, the Company is required to test its indefinite-lived intangible assets for impairment on an annual basis, or more frequently where there is an indication of impairment. In addition, the Company is required to test certain of its other assets for impairment where there is any indication that an asset may be impaired.

The Company may be required to recognize losses in the future due to, among other factors, extreme fuel price volatility, tight credit markets, government regulatory changes, decline in the fair values of certain tangible or intangible assets, such as aircraft, route authorities, airport slots and frequent flyer database, unfavorable trends in historical or forecasted results of operations and cash flows and an uncertain economic environment, as well as other uncertainties. The Company can provide no assurance that a material impairment loss of tangible or intangible assets will not occur in a future period. The value of the Company’s aircraft could be impacted in future periods by changes in supply and demand for these aircraft. Such changes in supply and demand for certain aircraft types could result from grounding of aircraft by the Company or other carriers. An impairment loss could have a material adverse effect on the Company’s financial condition and operating results.

 

S-30


Table of Contents

Risk Factors Relating to the Certificates and the Offering

The Equipment Notes will not be obligations of UAL.

The Equipment Notes to be held for the Trusts will be the obligations of United. Neither UAL nor any of its subsidiaries (other than United) is required to become an obligor with respect to, or a guarantor of, the Equipment Notes. You should not expect UAL or any of its subsidiaries (other than United) to participate in making payments in respect of the Equipment Notes.

The Appraisals are only estimates of Aircraft value.

Three independent appraisal and consulting firms have prepared appraisals of the Aircraft. Letters summarizing such appraisals are annexed to this Prospectus Supplement as Appendix II. Such appraisals are based on varying assumptions and methodologies, which differ among the appraisers, and were prepared without physical inspection of the Aircraft. In addition, the appraisals include certain assumptions regarding the equipment specifications and performance characteristics of the Aircraft. However, the Indentures relating to the Aircraft permit United to make alterations and modifications to the Aircraft and to remove parts from the Aircraft, which may impact such assumptions. See “Description of the Equipment Notes—Certain Provisions of the Indentures—Replacement of Parts; Alterations”. Appraisals that are based on other assumptions and methodologies may result in valuations that are materially different from those contained in such appraisals. See “Description of the Aircraft and the Appraisals—The Appraisals”.

There are particular uncertainties with respect to the appraised value of the Boeing 787-9 aircraft and the Boeing 787-10 aircraft because the 787-9 and the 787-10 are derivatives of the Boeing 787-8, which is a newly-developed model. The first delivery to a commercial airline of a Boeing 787-9 aircraft was in July 2014 and the first such delivery of a Boeing 787-10 aircraft was in March 2018. As a result, secondary market values for these aircraft have not been established. Also, the appraisal and consulting firms that have prepared the appraisals of the Aircraft have less experience appraising Boeing 787-9 aircraft and Boeing 787-10 aircraft as compared to other aircraft models that have been in operation in greater numbers for a longer period of time.

An appraisal is only an estimate of value. It does not indicate the price at which an Aircraft may be purchased from the Aircraft manufacturer. Nor should an appraisal be relied upon as a measure of realizable value. The proceeds realized upon a sale of any Aircraft may be less than its appraised value. In particular, the appraisals of the Aircraft are estimates of values as of delivery dates, all but two of which are in the future. The value of an Aircraft if remedies are exercised under the applicable Indenture will depend on market and economic conditions, the supply of similar aircraft, the availability of buyers, the condition of the Aircraft and other factors. Accordingly, there can be no assurance that the proceeds realized upon any such exercise of remedies would be sufficient to satisfy in full payments due on the Certificates.

Certain Certificateholders may not participate in controlling the exercise of remedies in a default scenario.

If an Indenture Default is continuing, subject to certain conditions, the Loan Trustee under such Indenture will be directed by the “Controlling Party” in exercising remedies under such Indenture, including accelerating the applicable Equipment Notes or foreclosing the lien on the Aircraft securing such Equipment Notes. See “Description of the Certificates—Indenture Defaults and Certain Rights Upon an Indenture Default”.

The Controlling Party will be:

 

   

The Class AA Trustee.

 

   

Upon payment of final distributions to the holders of Class AA Certificates, the Class A Trustee.

 

   

Under certain circumstances, and notwithstanding the foregoing, the Liquidity Provider (including, if any Class B Certificates are issued, any liquidity provider for the Class B Certificates) with the largest amount owed to it.

 

S-31


Table of Contents

As a result of the foregoing, if the Trustee for a Class of Certificates is not the Controlling Party with respect to an Indenture, the Certificateholders of that Class will have no rights to participate in directing the exercise of remedies under such Indenture.

The exercise of remedies over Equipment Notes may result in shortfalls without further recourse.

During the continuation of any Indenture Default under an Indenture, the Equipment Notes issued under such Indenture may be sold in the exercise of remedies with respect to that Indenture, subject to certain limitations. See “Description of the Intercreditor Agreement—Intercreditor Rights—Limitation on Exercise of Remedies”. The market for Equipment Notes during any Indenture Default may be very limited, and there can be no assurance as to the price at which they could be sold. If any Equipment Notes are sold for less than their outstanding principal amount, certain Certificateholders will receive a smaller amount of principal distributions under the relevant Indenture than anticipated and will not have any claim for the shortfall against United, any Liquidity Provider or any Trustee.

Escrowed funds and cash collateral will not be entitled to the benefits of Section 1110, and cross-defaults may not be required to be cured under Section 1110.

Amounts deposited under the Escrow Agreements are not property of United and are not entitled to the benefits of Section 1110 of the U.S. Bankruptcy Code. Any cash collateral held as a result of the cross-collateralization of the Equipment Notes also would not be entitled to the benefits of Section 1110 of the U.S. Bankruptcy Code. Any default arising under an Indenture solely by reason of the cross-default in such Indenture may not be of a type required to be cured under Section 1110 of the U.S. Bankruptcy Code.

Escrowed funds may be returned if they are not used to buy Equipment Notes.

Under certain circumstances, all of the funds held in escrow as Deposits may not be used to purchase Equipment Notes by the deadline established for purposes of this Offering. If any funds remain as Deposits with respect to any Trust after such deadline, they will be withdrawn by the Escrow Agent for such Trust and distributed, with accrued and unpaid interest but without any premium, to the Certificateholders of such Trust. See “Description of the Deposit Agreements—Unused Deposits”.

Any delay in the delivery of aircraft to be financed pursuant to this Offering may extend the period for financings under this Offering and could result in the return of escrowed funds.

United cannot predict the extent to which deliveries of Aircraft by Boeing or Embraer intended to be financed pursuant to this Offering may be delayed. The deadline for purposes of financing Aircraft pursuant to this Offering is August 31, 2020, subject to extension if the Equipment Notes relating to all of the Aircraft have not been purchased on or prior to such date due to any reason beyond the control of United and not occasioned by United’s fault or negligence to not later than December 31, 2020. This deadline is subject to further extension of up to 60 days if a labor strike occurs at Boeing or Embraer during the period for financings pursuant to this Offering, but excluding any period of a strike at Boeing or Embraer after all Aircraft of such manufacturer shall have been financed pursuant to this Offering. See “Description of the Aircraft and Appraisals—Timing of Financing the Aircraft”. If Equipment Notes relating to all Aircraft have not been purchased by the deadline established for purposes of this Offering, unused funds held in escrow will be returned to Certificateholders. See “—Escrowed funds may be returned if they are not used to buy Equipment Notes”.

There may be a limited market for resale of Certificates.

Prior to this Offering, there has been no public market for the Certificates. Neither United nor any Trust intends to apply for listing of the Certificates on any securities exchange or otherwise. The Underwriters may assist in resales of the Certificates, but they are not required to do so. A secondary market for the Certificates may not develop. If a secondary market does develop, it might not continue or it might not be sufficiently liquid to allow you to resell any of your Certificates.

 

S-32


Table of Contents

Credit risk retention regulation in Europe may adversely impact an investment in or the liquidity of the Certificates.

In Europe, there is increased political and regulatory scrutiny of the asset-backed securities industry. This has resulted in a number of measures for increased regulation which are currently at various stages of implementation and which may have an adverse impact on the regulatory capital charge to certain investors in securitization exposures or the incentives for certain investors to hold asset-backed securities and may thereby affect the price and liquidity of such securities.

Neither United nor any of its affiliates: (i) makes any representation as to compliance of the transactions contemplated herein with Regulation (EU) 2017/2402 (the “EU Securitization Regulation”), which has applied since January 1, 2019, or any guidelines or other materials published by the European Supervisory Authorities (jointly or individually) in relation thereto, the Draft Regulatory Technical Standards relating to risk retention published by the European Banking Authority on 31 July 2018 (the “Draft Securitization RTS”) or any other delegated regulations of the European Commission (including the final enacted form of the Draft Securitization RTS) in each case as amended from time to time (the “EU Securitization Laws”), or any regulations, guidelines or other regulatory materials in respect of similar matters in the United Kingdom that are introduced following an exit of the United Kingdom from the European Union (the “UK Securitization Laws”), or regarding the regulatory capital treatment of the investment in the Certificates on the Issuance Date or at any time in the future; or (ii) undertakes to retain a material net economic interest in the Certificates in accordance with the EU Securitization Laws or UK Securitization Laws, to provide any additional information or to take any other action that may be required to enable an affected investor to comply with any EU Securitization Laws or UK Securitization Laws or comply or enable compliance with the other requirements of the EU Securitization Laws or UK Securitization Laws; or (iii) accepts any responsibility to investors for the regulatory treatment of their investments in the Certificates by any regulatory authority in any jurisdiction. If the regulatory treatment of an investment in the Certificate is relevant to any investor’s decision whether or not to invest, the investor should consult with its own legal, accounting and other advisors or its national regulator in determining its own regulatory position. Were the Certificates considered to be a “securitization position” for the purposes of the EU Securitization Laws or UK Securitization Laws, they may not be a suitable investment for any investor which is subject to the EU Securitization Laws or UK Securitization Laws, including credit institutions, authorized alternative investment fund managers, investment fund managers, investment firms, insurance or reinsurance undertakings, institutions for occupational retirement schemes and UCITS funds. This may affect that investor’s ability to resell the Certificates and may also affect the price and liquidity of the Certificates in the secondary market. Investors must be prepared to bear the risk of holding Certificates until maturity.

Certain regulatory or legislative provisions applicable to certain investors may have the effect of limiting or restricting their ability to hold or acquire the Certificates, which, in turn, may adversely affect the ability of investors in the Certificates who are not subject to those provisions to resell their Certificates in the secondary market. No representation is made as to the proper characterization of the Certificates for legal, investment, financial institution regulatory, financial reporting or other purposes, as to the ability of particular investors to purchase the Certificates under applicable legal investment or other restrictions or as to the consequences of an investment in the Certificates for such purposes or under such restrictions.

Investors are themselves responsible for monitoring and assessing any changes to European risk retention laws and regulations (including UK Securitization Laws). There can be no assurances as to whether the transactions described herein will be affected by a change in law or regulation relating to the EU Securitization Laws or UK Securitization Laws, including as a result of any changes recommended in future reports or reviews. Investors should therefore make themselves aware of the EU Securitization Laws, the UK Securitization Laws, the EU Securitization Regulation (and any corresponding implementing rules of the relevant regulators), in addition to any other regulatory requirements that are (or may become) applicable to them or with respect to their investment in the Certificates.

 

S-33


Table of Contents

USE OF PROCEEDS

The proceeds from the sale of the Certificates being offered hereby will be used to purchase Equipment Notes issued by United during the Delivery Period. The Equipment Notes will be issued to finance United’s purchase of three new Boeing 787-9 aircraft, four new Boeing 787-10 aircraft, two new Boeing 777-300ER aircraft and 10 new Embraer ERJ 175 LL aircraft. Before the proceeds are used to buy Equipment Notes, such proceeds from the sale of the Certificates of each Trust will be held in escrow and deposited with the Depositary on behalf of the applicable Escrow Agent for the benefit of the holders of such Certificates.

THE COMPANY

United is a certificated United States air carrier. United transports people and cargo throughout North America and to destinations in Asia, Europe, the Middle East and Latin America. UAL, through United and its regional carriers, operates approximately 4,900 flights a day to 356 airports across five continents.

 

S-34


Table of Contents

DESCRIPTION OF THE CERTIFICATES

The following summary describes the material terms of the Certificates. The summary does not purport to be complete and is qualified in its entirety by reference to all of the provisions of the Basic Agreement, which was included as an exhibit to the Company’s Current Report on Form 8-K filed on October 9, 2012 with the Commission, and to all of the provisions of the Certificates, the Trust Supplements, the Deposit Agreements, the Escrow Agreements, the Intercreditor Agreement and the trust supplements applicable to the Successor Trusts, each of which will be filed as an exhibit to a Current Report on Form 8-K to be filed by United with the Commission. Except as otherwise indicated, the following summary relates to each of the Trusts and the Certificates issued by each Trust. The references to Sections in parentheses in the following summary are to the relevant Sections of the Basic Agreement unless otherwise indicated.

General

Each Pass Through Certificate (collectively, the “Certificates”) will represent a fractional undivided interest in one of the two United Airlines 2019-2 Pass Through Trusts (the “Class AA Trust” and the “Class A Trust” and, collectively, the “Trusts”). (Section 2.01) The Trusts will be formed pursuant to a pass through trust agreement between United and Wilmington Trust, National Association, as trustee (the “Trustee”), dated as of October 3, 2012 (the “Basic Agreement”), and two separate supplements thereto (each, a “Trust Supplement” and, together with the Basic Agreement, collectively, the “Pass Through Trust Agreements”) relating to such Trusts between United and the Trustee, as trustee under the Class AA Trust (the “Class AA Trustee”) and trustee under the Class A Trust (the “Class A Trustee”). The Certificates to be issued by the Class AA Trust and the Class A Trust are referred to herein as the “Class AA Certificates” and the “Class A Certificates”, respectively.

Each Certificate will represent a fractional undivided interest in the Trust created by the Basic Agreement and the applicable Trust Supplement pursuant to which such Certificate is issued. The Trust Property of each Trust (the “Trust Property”) will consist of:

 

   

Subject to the Intercreditor Agreement, Equipment Notes acquired under the Note Purchase Agreement and issued on a recourse basis by United in a separate secured loan transaction in connection with the financing by United of each Aircraft during the Delivery Period and all monies paid on such Equipment Notes and any proceeds from any sale of such Equipment Notes held in such Trust. Equipment Notes held in each Trust will be registered in the name of the Subordination Agent on behalf of such Trust for purposes of giving effect to the provisions of the Intercreditor Agreement.

 

   

The rights of such Trust to acquire Equipment Notes under the Note Purchase Agreement.

 

   

The rights of such Trust under the applicable Escrow Agreement to request the Escrow Agent to withdraw from the Depositary funds sufficient to enable such Trust to purchase Equipment Notes after the initial issuance date of the Certificates (the “Issuance Date”) during the Delivery Period.

 

   

The rights of such Trust under the Intercreditor Agreement (including all monies receivable in respect of such rights).

 

   

All monies receivable under the Liquidity Facility for such Trust.

 

   

Funds from time to time deposited with the applicable Trustee in accounts relating to such Trust (such as interest and principal payments on the Equipment Notes held in such Trust).

The Certificates of each Trust will be issued in fully registered form only and will be subject to the provisions described below under “—Book-Entry; Delivery and Form”. The Certificates will be issued only in denominations of $1,000 or integral multiples thereof, except that one Certificate of each Trust may be issued in a different denomination. (Section 3.01)

 

S-35


Table of Contents

The Certificates represent interests in the respective Trusts, and all payments and distributions thereon will be made only from the Trust Property of the related Trust. (Section 3.09) The Certificates do not represent an interest in or obligation of United, any Trustee, any of the Loan Trustees, any Liquidity Provider or any affiliate of any of the foregoing.

Pursuant to the Escrow Agreement applicable to each Trust, the Certificateholders of such Trust as holders of the Escrow Receipts affixed to each Certificate are entitled to certain rights with respect to the Deposits relating to such Trust. Accordingly, any transfer of a Certificate will have the effect of transferring the corresponding rights with respect to the Deposits, and rights with respect to the Deposits may not be separately transferred by holders of the Certificates (the “Certificateholders”). Rights with respect to the Deposits and the Escrow Agreement relating to a Trust, except for the right to request withdrawals for the purchase of Equipment Notes, will not constitute Trust Property of such Trust.

Investment Company Act Exemption

Each of the Trusts is relying on an analysis that the Trusts will not be deemed to be an “investment company” under Rule 3a-7 promulgated by the Commission under the Investment Company Act, although other exemptions or exclusions under the Investment Company Act may be available to the Trusts.

Payments and Distributions

Payments of interest on the Deposits with respect to each Trust and payments of principal, premium (if any) and interest on the Equipment Notes or with respect to other Trust Property held in each Trust will be distributed by the Paying Agent (in the case of the Deposits) or by the Trustee (in the case of Trust Property of such Trust) to Certificateholders of such Trust on the date receipt of such payment is confirmed, except in the case of certain types of Special Payments.

Interest

The Deposits held with respect to each Trust and the Equipment Notes held in each Trust will accrue interest at the applicable rate per annum for Certificates issued by such Trust set forth on the cover page of this Prospectus Supplement, payable on May 1 and November 1 of each year, commencing on May 1, 2020 (or, in the case of Equipment Notes issued on or after such date, commencing on the first May 1 or November 1 to occur after such Equipment Notes are issued). Such interest payments will be distributed to Certificateholders of such Trust on each such date until the final Distribution Date for such Trust, subject in the case of payments on the Equipment Notes to the Intercreditor Agreement. Interest is calculated on the basis of a 360-day year consisting of twelve 30-day months.

Payments of interest applicable to the Certificates issued by each of the Trusts will be supported by a separate Liquidity Facility to be provided by the Liquidity Provider for the benefit of the holders of such Certificates in an aggregate amount sufficient to pay interest thereon at the Stated Interest Rate for such Trust on up to three successive Regular Distribution Dates (without regard to any future payments of principal on such Certificates), except that no Liquidity Facility will cover interest payable by the Depositary on the Deposits. The Liquidity Facility for any Class of Certificates does not provide for drawings or payments thereunder to pay for principal of or premium, if any, on the Certificates of such Class, any interest on the Certificates of such Class in excess of the Stated Interest Rate for such Certificates, or, notwithstanding the subordination provisions of the Intercreditor Agreement, principal of or interest or premium, if any, on the Certificates of any other Class. Therefore, only the holders of the Certificates to be issued by a particular Trust will be entitled to receive and retain the proceeds of drawings under the Liquidity Facility for such Trust. See “Description of the Liquidity Facilities”.

Principal

Payments of principal of the Equipment Notes are scheduled to be received by the Trustees on May 1 and November 1 of each year, beginning on November 1, 2020 for certain Equipment Notes and May 1, 2021 for the remaining Equipment Notes.

 

S-36


Table of Contents

Scheduled Payments

Scheduled payments of interest on the Deposits and of interest or principal on the Equipment Notes are herein referred to as “Scheduled Payments”, and May 1 and November 1 of each year, commencing on May 1, 2020, until the final expected Regular Distribution Date are herein referred to as “Regular Distribution Dates”. See “Description of the Equipment Notes—Principal and Interest Payments”. The “Final Maturity Date” for the Class AA Certificates is November 1, 2033 and for the Class A Certificates is November 1, 2029.

Distributions

The Paying Agent with respect to each Escrow Agreement will distribute on each Regular Distribution Date to the Certificateholders of the Trust to which such Escrow Agreement relates all Scheduled Payments received in respect of the related Deposits, the receipt of which is confirmed by such Paying Agent on such Regular Distribution Date. The Trustee of each Trust will distribute, subject to the Intercreditor Agreement, on each Regular Distribution Date to the Certificateholders of such Trust all Scheduled Payments received in respect of Equipment Notes held on behalf of such Trust, the receipt of which is confirmed by such Trustee on such Regular Distribution Date. Each Certificateholder of each Trust will be entitled to receive its proportionate share, based upon its fractional interest in such Trust, of any distribution in respect of Scheduled Payments of interest on the Deposits relating to such Trust and, subject to the Intercreditor Agreement, of principal or interest on Equipment Notes held on behalf of such Trust. Each such distribution of Scheduled Payments will be made by the applicable Paying Agent or Trustee to the Certificateholders of record of the relevant Trust on the record date applicable to such Scheduled Payment subject to certain exceptions. (Sections 4.01 and 4.02(a); Escrow Agreements, Section 2.03) If a Scheduled Payment is not received by the applicable Paying Agent or Trustee on a Regular Distribution Date but is received within five days thereafter, it will be distributed on the date received to such holders of record. If it is received after such five-day period, it will be treated as a Special Payment and distributed as described below.

Any payment in respect of, or any proceeds of, any Equipment Note or Collateral under (and as defined in) any Indenture other than a Scheduled Payment (each, a “Special Payment”) will be distributed on, in the case of an early redemption or a purchase of any Equipment Note, the date of such early redemption or purchase (which shall be a Business Day), and otherwise on the Business Day specified for distribution of such Special Payment pursuant to a notice delivered by each Trustee as soon as practicable after such Trustee has received funds for such Special Payment (each, a “Special Distribution Date”). Any such distribution will be subject to the Intercreditor Agreement. Any unused Deposits to be distributed after the Delivery Period Termination Date or the occurrence of a Triggering Event, together with accrued and unpaid interest thereon (each, also a “Special Payment”), will be distributed on a date 25 days after the Paying Agent has received notice of the event requiring such distribution (also, a “Special Distribution Date”). However, if such date is within ten days before or after a Regular Distribution Date, such Special Payment shall be made on such Regular Distribution Date.

“Triggering Event” means (x) the occurrence of an Indenture Default under all Indentures resulting in a PTC Event of Default with respect to the most senior Class of Certificates then outstanding, (y) the acceleration of all of the outstanding Equipment Notes (provided that during the Delivery Period the aggregate principal amount thereof exceeds $400 million) or (z) certain bankruptcy or insolvency events involving United.

Each Paying Agent, in the case of the Deposits, and each Trustee, in the case of Trust Property, will mail a notice to the Certificateholders of the applicable Trust stating the scheduled Special Distribution Date, the related record date, the amount of the Special Payment and the reason for the Special Payment. In the case of a redemption or purchase of the Equipment Notes held in the related Trust or any distribution of unused Deposits after the Delivery Period Termination Date or the occurrence of a Triggering Event, such notice will be mailed not less than 15 days prior to the date such Special Payment is scheduled to be distributed, and in the case of any other Special Payment, such notice will be mailed as soon as practicable after the applicable Trustee has confirmed that it has received funds for such Special Payment. (Trust Supplements, Section 3.03; Escrow Agreements, Sections 2.03 and 2.06) Each distribution of a Special Payment, other than a final distribution, on a Special Distribution Date for any Trust will be made by the applicable Paying Agent or Trustee, as the case may be, to the Certificateholders of record of such Trust on the record date applicable to such Special Payment. (Trust Supplements, 3.03; Escrow Agreements, Section 2.03) See “—Indenture Defaults and Certain Rights Upon an Indenture Default” and “Description of the Equipment Notes—Redemption”.

 

S-37


Table of Contents

Each Pass Through Trust Agreement requires that the related Trustee establish and maintain, for the related Trust and for the benefit of the Certificateholders of such Trust, one or more non-interest bearing accounts (the “Certificate Account”) for the deposit of payments representing Scheduled Payments received by such Trustee. Each Pass Through Trust Agreement requires that the related Trustee establish and maintain, for the related Trust and for the benefit of the Certificateholders of such Trust, one or more accounts (the “Special Payments Account”) for the deposit of payments representing Special Payments received by such Trustee, which shall be non-interest bearing except in certain circumstances where such Trustee may invest amounts in such account in certain permitted investments. Pursuant to the terms of each Pass Through Trust Agreement, the related Trustee is required to deposit any Scheduled Payments relating to the applicable Trust received by it in the Certificate Account of such Trust and to deposit any Special Payments so received by it in the Special Payments Account of such Trust. (Section 4.01; Trust Supplements, Section 3.02) All amounts so deposited will be distributed by the related Trustee on a Regular Distribution Date or a Special Distribution Date, as appropriate. (Section 4.02(a); Trust Supplements, Section 3.03)

Each Escrow Agreement requires that the Paying Agent establish and maintain, for the benefit of the Receiptholders, one or more accounts (the “Paying Agent Account”), which shall be non-interest bearing. Pursuant to the terms of the Escrow Agreements, the Paying Agent is required to deposit interest on Deposits relating to a Trust and any unused Deposits withdrawn by the Escrow Agent in the related Paying Agent Account. All amounts so deposited will be distributed by the Paying Agent on a Regular Distribution Date or Special Distribution Date, as appropriate.

The final distribution for each Trust will be made only upon presentation and surrender of the Certificates for such Trust at the office or agency of the Trustee specified in the notice given by the Trustee of such final distribution. The Trustee will mail such notice of the final distribution to the Certificateholders of such Trust, specifying the date set for such final distribution and the amount of such distribution. (Trust Supplements, Section 7.01(a)) See “—Termination of the Trusts” below. Distributions in respect of Certificates issued in global form will be made as described in “—Book-Entry; Delivery and Form” below.

If any Distribution Date is a Saturday, Sunday or other day on which commercial banks are authorized or required to close in New York, New York, Chicago, Illinois or Wilmington, Delaware (any other day being a “Business Day”), distributions scheduled to be made on such Regular Distribution Date or Special Distribution Date will be made on the next succeeding Business Day without additional interest.

Pool Factors

The “Pool Balance” for each Trust or for the Certificates issued by any Trust indicates, as of any date, the original aggregate face amount of the Certificates of such Trust less the aggregate amount of all payments as of such date made in respect of the Certificates of such Trust or in respect of Deposits relating to such Trust other than payments made in respect of interest or premium or reimbursement of any costs or expenses incurred in connection therewith. The Pool Balance for each Trust or for the Certificates issued by any Trust as of any Distribution Date shall be computed after giving effect to any special distribution with respect to unused Deposits, if any, payment of principal of the Equipment Notes or payment with respect to other Trust Property held in such Trust and the distribution thereof to be made on that date. (Trust Supplements, Section 2.01)

The “Pool Factor” for each Trust as of any Distribution Date is the quotient (rounded to the seventh decimal place) computed by dividing (i) the Pool Balance by (ii) the original aggregate face amount of the Certificates of such Trust. The Pool Factor for each Trust or for the Certificates issued by any Trust as of any Distribution Date shall be computed after giving effect to any special distribution with respect to unused Deposits, payment of principal of the Equipment Notes or payments with respect to other Trust Property held in such Trust and the distribution thereof to be made on that date. (Trust Supplements, Section 2.01) The Pool Factor for each Trust will be 1.0000000 on the date of issuance of the Certificates; thereafter, the Pool Factor for each Trust will decline as described herein to reflect reductions in the Pool Balance of such Trust. The amount of a Certificateholder’s pro rata share of the Pool Balance of a Trust can be determined by multiplying the face amount of the holder’s Certificate of such Trust by the Pool Factor for such Trust as of the applicable Distribution Date. Notice of the Pool Factor and the Pool Balance for each Trust will be mailed to Certificateholders of such Trust on each Distribution Date. (Trust Supplements, Section 3.01)

 

S-38


Table of Contents

The following table sets forth the expected aggregate principal amortization schedule for the Equipment Notes held in each Trust (the “Assumed Amortization Schedule”) and resulting Pool Factors with respect to such Trust. The scheduled distribution of principal payments for any Trust would be affected if Equipment Notes with respect to any Aircraft are not acquired by such Trust prior to the Delivery Period Termination Date, if the original principal amount of any Equipment Notes held in such Trust is less than the assumed original principal amount, if any Equipment Notes held in such Trust are redeemed or purchased or if a default in payment on such Equipment Notes occurs. Accordingly, the aggregate principal amortization schedule applicable to a Trust and the resulting Pool Factors may differ from those set forth in the following table.

 

     Class AA    Class A

Date

   Scheduled Principal
Payments
   Expected Pool
Factor
   Scheduled Principal
Payments
   Expected Pool
Factor

At Issuance

     $ 0.00        1.0000000      $ 0.00        1.0000000

May 1, 2020

       0.00        1.0000000        0.00        1.0000000

November 1, 2020

       10,369,730.60        0.9852314        5,366,400.00        0.9812834

May 1, 2021

       16,940,054.81        0.9611053        7,339,980.80        0.9556834

November 1, 2021

       17,923,649.54        0.9355783        7,339,980.80        0.9300834

May 1, 2022

       17,923,649.54        0.9100514        7,339,980.80        0.9044834

November 1, 2022

       17,923,649.54        0.8845244        7,339,980.80        0.8788834

May 1, 2023

       17,923,649.54        0.8589974        7,339,980.80        0.8532834

November 1, 2023

       17,923,649.54        0.8334705        7,339,980.80        0.8276834

May 1, 2024

       17,923,649.54        0.8079435        7,339,980.80        0.8020834

November 1, 2024

       17,923,649.54        0.7824166        7,339,980.80        0.7764834

May 1, 2025

       17,923,649.54        0.7568896        7,339,980.80        0.7508834

November 1, 2025

       17,923,649.54        0.7313627        7,339,980.80        0.7252834

May 1, 2026

       17,923,649.54        0.7058357        7,339,980.80        0.6996834

November 1, 2026

       17,923,649.54        0.6803088        7,339,980.80        0.6740834

May 1, 2027

       17,923,649.54        0.6547818        7,339,980.80        0.6484834

November 1, 2027

       17,923,649.54        0.6292548        7,339,980.80        0.6228834

May 1, 2028

       17,923,649.54        0.6037279        178,591,868.80        0.0000000

November 1, 2028

       17,923,649.54        0.5782009        0.00        0.0000000

May 1, 2029

       17,923,649.54        0.5526740        0.00        0.0000000

November 1, 2029

       17,923,649.54        0.5271470        0.00        0.0000000

May 1, 2030

       17,923,649.54        0.5016201        0.00        0.0000000

November 1, 2030

       17,923,649.54        0.4760931        0.00        0.0000000

May 1, 2031

       17,923,649.54        0.4505662        0.00        0.0000000

November 1, 2031

       17,923,649.54        0.4250392        0.00        0.0000000

May 1, 2032

       298,439,574.25        0.0000000        0.00        0.0000000

The Pool Factor and Pool Balance of each Trust will be recomputed if there has been an early redemption, purchase, or default in the payment of principal or interest in respect of one or more of the Equipment Notes held in a Trust, as described in “—Indenture Defaults and Certain Rights Upon an Indenture Default” and “Description of the Equipment Notes—Redemption”, the original principal amount of any Equipment Notes held in such Trust is less than the assumed original principal amount or a special distribution has been made attributable to unused Deposits after the Delivery Period Termination Date or the occurrence of a Triggering Event, as described in “Description of the Deposit Agreements”. If the principal payments scheduled for a Regular Distribution Date prior to the Delivery Period Termination Date are changed, notice thereof will be mailed by the Trustee to the Certificateholders by no later than the 15th day prior to such Regular Distribution Date. In the event of (i) any other change in the scheduled repayments from the Assumed Amortization Schedule or (ii) any such redemption, purchase, default or special distribution, the Pool Factors and the Pool Balances of each Trust so affected will be recomputed after giving effect thereto and notice thereof will be mailed by the Trustee to the Certificateholders of such Trust promptly after the Delivery Period Termination Date in the case of clause (i) and promptly after the occurrence of any event described in clause (ii).

Reports to Certificateholders

On each Distribution Date, the applicable Paying Agent and Trustee will include with each distribution by it of a Scheduled Payment or Special Payment to Certificateholders of the related Trust a statement setting forth the

 

S-39


Table of Contents

following information (per $1,000 face amount of Certificate for such Trust, except as to the amounts described in items (a) and (f) below):

(a)          The aggregate amount of funds distributed on such Distribution Date under the Pass Through Trust Agreement and under the Escrow Agreement, indicating the amount allocable to each source, including any portion thereof paid by the Liquidity Provider.

(b)          The amount of such distribution under the Pass Through Trust Agreement allocable to principal and the amount allocable to premium, if any.

(c)          The amount of such distribution under the Pass Through Trust Agreement allocable to interest.

(d)          The amount of such distribution under the Escrow Agreement allocable to interest.

(e)          The amount of such distribution under the Escrow Agreement allocable to unused Deposits, if any.

(f)          The Pool Balance and the Pool Factor for such Trust. (Trust Supplements, Section 3.01(a))

So long as the Certificates are registered in the name of DTC or its nominee, on the record date prior to each Distribution Date, the applicable Trustee will request that DTC post on its Internet bulletin board a securities position listing setting forth the names of all DTC Participants reflected on DTC’s books as holding interests in the Certificates on such record date. On each Distribution Date, the applicable Paying Agent and Trustee will mail to each such DTC Participant the statement described above and will make available additional copies as requested by such DTC Participant for forwarding to Certificate Owners. (Trust Supplements, Section 3.01(a))

In addition, after the end of each calendar year, the applicable Trustee and Paying Agent will furnish to each Certificateholder of each Trust at any time during the preceding calendar year a statement containing the sum of the amounts determined pursuant to clauses (a), (b), (c), (d) and (e) above with respect to such Trust for such calendar year or, in the event such person was a Certificateholder of such Trust during only a portion of such calendar year, for the applicable portion of such calendar year, and such other items as are readily available to such Trustee and which a Certificateholder of such Trust shall reasonably request as necessary for the purpose of such Certificateholder’s preparation of its U.S. federal income tax returns. (Trust Supplements, Section 3.01(b)) Such statement and such other items shall be prepared on the basis of information supplied to the applicable Trustee by the DTC Participants and shall be delivered by such Trustee to such DTC Participants to be available for forwarding by such DTC Participants to Certificate Owners in the manner described above. (Trust Supplements, Section 3.01(b)) At such time, if any, as the Certificates are issued in the form of definitive certificates, the applicable Paying Agent and Trustee will prepare and deliver the information described above to each Certificateholder of record of each Trust as the name and period of ownership of such Certificateholder appears on the records of the registrar of the Certificates.

Each Trustee is required to provide promptly to Certificateholders of the related Trust all material non-confidential information received by such Trustee from United. (Trust Supplements, Section  3.01(e))

Indenture Defaults and Certain Rights Upon an Indenture Default

Upon the occurrence and continuation of an Indenture Default under an Indenture, the Controlling Party will direct the Subordination Agent, as the holder of Equipment Notes issued under such Indenture, which in turn will direct the Loan Trustee under such Indenture in the exercise of remedies thereunder and may accelerate and sell all (but not less than all) of the Equipment Notes issued under such Indenture or sell the collateral under such Indenture to any person, subject to certain limitations. See “Description of the Intercreditor Agreement—Intercreditor Rights—Limitation on Exercise of Remedies”. The proceeds of any such sale will be distributed pursuant to the provisions of the Intercreditor Agreement. Any such proceeds so distributed to any Trustee upon any such sale shall be deposited in the applicable Special Payments Account and shall be distributed to the Certificateholders of the applicable Trust on a Special Distribution Date. (Section 4.01; Trust Supplements, Sections 3.02 and 3.03) The market for Equipment Notes

 

S-40


Table of Contents

at the time of the existence of an Indenture Default may be very limited and there can be no assurance as to the price at which they could be sold. If any such Equipment Notes are sold for less than their outstanding principal amount, certain Certificateholders will receive a smaller amount of principal distributions under the relevant Indenture than anticipated and will not have any claim for the shortfall against United, any Liquidity Provider or any Trustee.

Any amount, other than Scheduled Payments received on a Regular Distribution Date or within five days thereafter, distributed to the Trustee of any Trust by the Subordination Agent on account of any Equipment Note or Collateral under (and as defined in) any Indenture held in such Trust following an Indenture Default will be deposited in the Special Payments Account for such Trust and will be distributed to the Certificateholders of such Trust on a Special Distribution Date. (Section 4.01 Trust Supplements, Section 3.02) Any funds representing payments received with respect to any defaulted Equipment Notes, or the proceeds from the sale of any Equipment Notes, held by the applicable Trustee in the Special Payments Account for such Trust will, to the extent practicable, be invested by such Trustee in certain permitted investments pending the distribution of such funds on a Special Distribution Date. (Section 4.04)

Each Pass Through Trust Agreement provides that the Trustee of the related Trust will, within 90 days after the occurrence of any default known to such Trustee, give to the Certificateholders of such Trust notice, transmitted by mail, of such uncured or unwaived default with respect to such Trust known to it, provided that, except in the case of default in a payment of principal, premium, if any, or interest on any of the Equipment Notes held in such Trust, the applicable Trustee will be protected in withholding such notice if it in good faith determines that the withholding of such notice is in the interests of such Certificateholders. The term “default” as used in this paragraph only with respect to any Trust means the occurrence of an Indenture Default under any Indenture pursuant to which Equipment Notes held by such Trust were issued, as described above, except that in determining whether any such Indenture Default has occurred, any grace period or notice in connection therewith will be disregarded. (Section 7.02)

Each Pass Through Trust Agreement contains a provision entitling the Trustee of the related Trust, subject to the duty of such Trustee during a default to act with the required standard of care, to be offered reasonable security or indemnity by the holders of the Certificates of such Trust before proceeding to exercise any right or power under such Pass Through Trust Agreement or the Intercreditor Agreement at the request of such Certificateholders. (Section 7.03(e))

Subject to certain qualifications set forth in each Pass Through Trust Agreement and to the Intercreditor Agreement, the Certificateholders of each Trust holding Certificates evidencing fractional undivided interests aggregating not less than a majority in interest in such Trust shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee with respect to such Trust or pursuant to the terms of the Intercreditor Agreement, or exercising any trust or power conferred on such Trustee under such Pass Through Trust Agreement or the Intercreditor Agreement, including any right of such Trustee as Controlling Party under the Intercreditor Agreement or as holder of the Equipment Notes. (Section 6.04)

In certain cases, the holders of the Certificates of a Trust evidencing fractional undivided interests aggregating not less than a majority in interest of such Trust may on behalf of the holders of all the Certificates of such Trust waive any past “event of default” under such Trust (i.e., any Indenture Default under any Indenture pursuant to which Equipment Notes held by such Trust were issued) and its consequences or, if the Trustee of such Trust is the Controlling Party, may direct such Trustee to instruct the applicable Loan Trustee to waive any past Indenture Default and its consequences, except (i) a default in the deposit of any Scheduled Payment or Special Payment or in the distribution thereof, (ii) a default in payment of the principal, premium, if any, or interest with respect to any of the Equipment Notes and (iii) a default in respect of any covenant or provision of the Pass Through Trust Agreement that cannot be modified or amended without the consent of each Certificateholder of such Trust affected thereby. (Section 6.05) Each Indenture will provide that, with certain exceptions, the holders of the majority in aggregate unpaid principal amount of the Equipment Notes issued thereunder may on behalf of all such holders waive any past default or Indenture Default thereunder. (Indentures, Section 5.06) Notwithstanding such provisions of the Indentures, pursuant to the Intercreditor Agreement after the occurrence and during the continuance of an Indenture Default only the Controlling Party will be entitled to waive any such past default or Indenture Default. See “Description of the Intercreditor Agreement—Intercreditor Rights—Controlling Party”.

 

S-41


Table of Contents

Purchase Rights of Certificateholders

Upon the occurrence and during the continuation of a Certificate Buyout Event, with 15 days’ written notice to the Trustee and each Certificateholder of the same Class:

 

   

The Class A Certificateholders will have the right to purchase all but not less than all of the Class AA Certificates on the third Business Day next following the expiry of such 15-day notice period.

 

   

If any Class of Additional Junior Certificates has been issued, the holders of such Additional Junior Certificates will have the right to purchase all but not less than all of the Class AA and Class A Certificates and any other Class of Additional Junior Certificates ranking senior in right of payment to such Class of Additional Junior Certificates and, if Refinancing Certificates have been issued, holders of such Refinancing Certificates will have the same right to purchase Certificates as the holders of the Class that they refinanced had. See “Possible Issuance of Additional Junior Certificates and Refinancing of Certificates”.

In each case, the purchase price will be equal to the Pool Balance of the relevant Class or Classes of Certificates to be purchased plus accrued and unpaid interest thereon to the date of purchase, without premium, but including any other amounts then due and payable to the Certificateholders of such Class or Classes. Such purchase right may be exercised by any Certificateholder of the Class or Classes entitled to such right. In each case, if prior to the end of the 15-day notice period, any other Certificateholder of the same Class notifies the purchasing Certificateholder that the other Certificateholder wants to participate in such purchase, then such other Certificateholder may join with the purchasing Certificateholder to purchase the Certificates pro rata based on the fractional undivided interest in the Trust held by each Certificateholder. If United or any of its affiliates is a Certificateholder or holder of Additional Junior Certificates or Refinancing Certificates, it will not have the purchase rights described above. (Trust Supplements, Section 4.01)

A “Certificate Buyout Event” means that a United Bankruptcy Event has occurred and is continuing and the following events have occurred: (A) (i) the 60-day period specified in Section 1110(a)(2)(A) of the U.S. Bankruptcy Code (the “60-Day Period”) has expired and (ii) United has not entered into one or more agreements under Section 1110(a)(2)(A) of the U.S. Bankruptcy Code to perform all of its obligations under all of the Indentures or, if it has entered into such agreements, has at any time thereafter failed to cure any default under any of the Indentures in accordance with Section 1110(a)(2)(B) of the U.S. Bankruptcy Code; or (B) if prior to the expiry of the 60-Day Period, United shall have abandoned any Aircraft.

PTC Event of Default

A Pass Through Certificate Event of Default (a “PTC Event of Default”) under each Pass Through Trust Agreement means the failure to pay:

 

   

The outstanding Pool Balance of the applicable Class of Certificates within ten Business Days of the Final Maturity Date for such Class.

 

   

Interest due on such Class of Certificates within ten Business Days of any Distribution Date (unless the Subordination Agent shall have made Interest Drawings, or withdrawals from the Cash Collateral Account for such Class of Certificates, with respect thereto in an aggregate amount sufficient to pay such interest and shall have distributed such amount to the Trustee entitled thereto). (Section 1.01)

Any failure to make expected principal distributions with respect to any Class of Certificates on any Regular Distribution Date (other than the Final Maturity Date) will not constitute a PTC Event of Default with respect to such Certificates. A PTC Event of Default with respect to the most senior outstanding Class of Certificates resulting from an Indenture Default under all Indentures will constitute a Triggering Event.

 

S-42


Table of Contents

Merger, Consolidation and Transfer of Assets

United will be prohibited from consolidating with or merging into any other person or transferring all or substantially all of its assets as an entirety to any other person unless:

 

   

The surviving successor or transferee person shall be organized and validly existing under the laws of the United States or any state thereof or the District of Columbia.

 

   

The surviving successor or transferee person shall be a “citizen of the United States” (as defined in Title 49 of the United States Code relating to aviation (the “Transportation Code”)) holding an air carrier operating certificate issued pursuant to Chapter 447 of Title 49, United States Code, if, and so long as, such status is a condition of entitlement to the benefits of Section 1110 of the U.S. Bankruptcy Code.

 

   

The surviving successor or transferee person shall expressly assume all of the obligations of United contained in the Basic Agreement and any Trust Supplement, the Equipment Notes, the Note Purchase Agreement, the Indentures, the Participation Agreements and any other operative documents.

 

   

United shall have delivered a certificate and an opinion or opinions of counsel indicating that such transaction, in effect, complies with such conditions.

In addition, after giving effect to such transaction, no Indenture Default shall have occurred and be continuing. (Section 5.02; Indentures, Section 4.07)

The Basic Agreement, the Trust Supplements, the Note Purchase Agreement, the Indentures and the Participation Agreements will not contain any covenants or provisions that may afford any Trustee or Certificateholder protection in the event of a highly leveraged transaction, including transactions effected by management or affiliates, which may or may not result in a change in control of United.

Modifications of the Pass Through Trust Agreements and Certain Other Agreements

Each Pass Through Trust Agreement contains provisions permitting, at the request of United, the execution of amendments or supplements to such Pass Through Trust Agreement or, if applicable, to the Deposit Agreements, the Escrow Agreements, the Intercreditor Agreement, the Note Purchase Agreement or the Liquidity Facilities, without the consent of the holders of any of the Certificates of the related Trust:

 

   

To evidence the succession of another corporation to United and the assumption by such corporation of United’s obligations under such Pass Through Trust Agreement or the Note Purchase Agreement.

 

   

To add to the covenants of United for the benefit of holders of such Certificates or to surrender any right or power conferred upon United in such Pass Through Trust Agreement, the Intercreditor Agreement, the Note Purchase Agreement or the Liquidity Facilities.

 

   

To correct or supplement any provision of such Pass Through Trust Agreement, the Deposit Agreements, the Escrow Agreements, the Intercreditor Agreement, the Note Purchase Agreement or the Liquidity Facilities which may be defective or inconsistent with any other provision in such Pass Through Trust Agreement, the Deposit Agreements, the Escrow Agreements, the Intercreditor Agreement, the Note Purchase Agreement or the Liquidity Facilities, as applicable, or to cure any ambiguity or to modify any other provision with respect to matters or questions arising under such Pass Through Trust Agreement, the Deposit Agreements, the Escrow Agreements, the Intercreditor Agreement, the Note Purchase Agreement or the Liquidity Facilities, provided that such action shall not materially adversely affect the interests of the holders of such Certificates; to correct any mistake in such Pass Through Trust Agreement, the Deposit Agreements, the Escrow Agreements, the Intercreditor Agreement, the Note Purchase Agreement or the Liquidity Facilities; or, as provided in the Intercreditor Agreement, to give effect to or provide for a Replacement Facility.

 

S-43


Table of Contents
   

To comply with any requirement of the Commission, any applicable law, rules or regulations of any exchange or quotation system on which the Certificates are listed, or any regulatory body.

 

   

To modify, eliminate or add to the provisions of such Pass Through Trust Agreement, the Deposit Agreements, the Escrow Agreements, the Intercreditor Agreement, the Note Purchase Agreement or the Liquidity Facilities to such extent as shall be necessary to continue the qualification of such Pass Through Trust Agreement (including any supplemental agreement) under the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”), or any similar federal statute enacted after the execution of such Pass Through Trust Agreement, and to add to such Pass Through Trust Agreement, the Deposit Agreements, the Escrow Agreements, the Intercreditor Agreement, the Note Purchase Agreement or the Liquidity Facilities such other provisions as may be expressly permitted by the Trust Indenture Act.

 

   

To evidence and provide for the acceptance of appointment under such Pass Through Trust Agreement, the Deposit Agreements, the Escrow Agreements, the Intercreditor Agreement, the Note Purchase Agreement or the Liquidity Facilities by a successor Trustee and to add to or change any of the provisions of such Pass Through Trust Agreement, the Deposit Agreements, the Escrow Agreements, the Intercreditor Agreement, the Note Purchase Agreement or the Liquidity Facilities as shall be necessary to provide for or facilitate the administration of the Trusts under the Basic Agreement by more than one trustee.

 

   

To provide for the issuance of Additional Junior Certificates or Refinancing Certificates after the Issuance Date, subject to certain terms and conditions. See “Possible Issuance of Additional Junior Certificates and Refinancing of Certificates”.

 

   

To provide for the replacement of one or more Aircraft by one or more Substitute Aircraft pursuant to Section 1(g) of the Note Purchase Agreement. See “Description of the Aircraft and the Appraisals—Substitute Aircraft”.

In each case, such modification or supplement may not adversely affect the status of the Trust as a grantor trust under Subpart E, Part I of Subchapter J of Chapter 1 of Subtitle A of the Internal Revenue Code of 1986, as amended (the “Code”), for U.S. federal income tax purposes. (Section 9.01; Trust Supplements, Section 6.02)

Each Pass Through Trust Agreement also contains provisions permitting the execution, with the consent of the holders of the Certificates of the related Trust evidencing fractional undivided interests aggregating not less than a majority in interest of such Trust, of amendments or supplements adding any provisions to or changing or eliminating any of the provisions of such Pass Through Trust Agreement, the Deposit Agreements, the Escrow Agreements, the Intercreditor Agreement, the Note Purchase Agreement or the Liquidity Facilities to the extent applicable to such Certificateholders or of modifying the rights and obligations of such Certificateholders under such Pass Through Trust Agreement, the Deposit Agreements, the Escrow Agreements, the Intercreditor Agreement, the Note Purchase Agreement or the Liquidity Facilities. No such amendment or supplement may, without the consent of the holder of each outstanding Certificate so affected thereby:

 

   

Reduce in any manner the amount of, or delay the timing of, any receipt by the Trustee (or, with respect to the Deposits, the Receiptholders) of payments with respect to the Equipment Notes held in such Trust or distributions in respect of any Certificate related to such Trust (or, with respect to the Deposits, payments upon the Deposits), or change the date or place of any payment in respect of any Certificate, or make distributions payable in coin or currency other than that provided for in such Certificates, or impair the right of any Certificateholder of such Trust to institute suit for the enforcement of any such payment when due.

 

   

Permit the disposition of any Equipment Note held in such Trust, except as provided in such Pass Through Trust Agreement, or otherwise deprive such Certificateholder of the benefit of the ownership of the applicable Equipment Notes.

 

   

Alter the priority of distributions specified in the Intercreditor Agreement in a manner materially adverse to such Certificateholders.

 

S-44


Table of Contents
   

Reduce the percentage of the aggregate fractional undivided interests of the Trust provided for in such Pass Through Trust Agreement, the consent of the holders of which is required for any such supplemental agreement or for any waiver provided for in such Pass Through Trust Agreement.

 

   

Modify any of the provisions relating to the rights of the Certificateholders to consent to the amendments or supplements referred to in this paragraph or in respect of certain waivers of Indenture Defaults, except to increase any such percentage or to provide that certain other provisions of such Pass Through Trust Agreement cannot be modified or waived without the consent of each Certificateholder affected thereby.

 

   

Adversely affect the status of any Trust as a grantor trust under Subpart E, Part I of Subchapter J of Chapter 1 of Subtitle A of the Code for U.S. federal income tax purposes. (Section 9.02; Trust Supplements, Section 6.03)

In the event that a Trustee, as holder (or beneficial owner through the Subordination Agent) of any Equipment Note in trust for the benefit of the Certificateholders of the relevant Trust or as Controlling Party under the Intercreditor Agreement, receives (directly or indirectly through the Subordination Agent) a request for a consent to any amendment, modification, waiver or supplement under any Indenture, any Participation Agreement, any Equipment Note or any other related document, such Trustee shall forthwith send a notice of such proposed amendment, modification, waiver or supplement to each Certificateholder of the relevant Trust as of the date of such notice, except in the case when consent of Certificateholders is not required under the applicable Pass Through Trust Agreement. Such Trustee shall request from the Certificateholders a direction as to:

 

   

Whether or not to take or refrain from taking (or direct the Subordination Agent to take or refrain from taking) any action which a holder of such Equipment Note or the Controlling Party has the option to direct.

 

   

Whether or not to give or execute (or direct the Subordination Agent to give or execute) any waivers, consents, amendments, modifications or supplements as a holder of such Equipment Note or as Controlling Party.

 

   

How to vote (or direct the Subordination Agent to vote) any Equipment Note if a vote has been called for with respect thereto.

Provided such a request for Certificateholder direction shall have been made, in directing any action or casting any vote or giving any consent as the holder of any Equipment Note (or in directing the Subordination Agent in any of the foregoing):

 

   

Other than as Controlling Party, such Trustee shall vote for or give consent to any such action with respect to such Equipment Note in the same proportion as that of (x) the aggregate face amount of all Certificates actually voted in favor of or for giving consent to such action by such direction of Certificateholders to (y) the aggregate face amount of all outstanding Certificates of the relevant Trust.

 

   

As the Controlling Party, such Trustee shall vote as directed in such Certificateholder direction by the Certificateholders evidencing fractional undivided interests aggregating not less than a majority in interest in the relevant Trust.

For purposes of the immediately preceding paragraph, a Certificate shall have been “actually voted” if the Certificateholder has delivered to the applicable Trustee an instrument evidencing such Certificateholder’s consent to such direction prior to one Business Day before such Trustee directs such action or casts such vote or gives such consent. Notwithstanding the foregoing, but subject to certain rights of the Certificateholders under the relevant Pass Through Trust Agreement and subject to the Intercreditor Agreement, a Trustee may, in its own discretion and at its own direction, consent and notify the relevant Loan Trustee of such consent (or direct the Subordination Agent to consent and notify the relevant Loan Trustee of such consent) to any amendment, modification, waiver or supplement

 

S-45


Table of Contents

under the relevant Indenture, Participation Agreement, any relevant Equipment Note or any other related document, if an Indenture Default under any Indenture shall have occurred and be continuing, or if such amendment, modification, waiver or supplement will not materially adversely affect the interests of the Certificateholders. (Section 10.01)

In determining whether the Certificateholders of the requisite fractional undivided interests of Certificates of any Class have given any direction under a Pass Through Trust Agreement, Certificates owned by United or any of its affiliates will be disregarded and deemed not to be outstanding for purposes of any such determination. Notwithstanding the foregoing, (i) if any such person owns 100% of the Certificates of any Class, such Certificates shall not be so disregarded, and (ii) if any amount of Certificates of any Class so owned by any such person have been pledged in good faith, such Certificates shall not be disregarded if the pledgee establishes to the satisfaction of the applicable Trustee the pledgee’s right so to act with respect to such Certificates and that the pledgee is not United or an affiliate of United.

Obligation to Purchase Equipment Notes

The Trustees will be obligated to purchase the Equipment Notes issued with respect to the Aircraft during the Delivery Period, subject to the terms and conditions of a note purchase agreement (the “Note Purchase Agreement”). Under the Note Purchase Agreement, United agrees to enter into a secured debt financing with respect to each Aircraft. The Note Purchase Agreement provides for the relevant parties to enter into a participation agreement (each, a “Participation Agreement”) and an indenture (each, an “Indenture”) relating to the financing of each Aircraft in substantially the form attached to the Note Purchase Agreement.

The description of such financing agreements in this Prospectus Supplement is based on the forms of such agreements attached to the Note Purchase Agreement. However, the terms of the financing agreements actually entered into may differ from the forms of such agreements and, consequently, may differ from the description of such agreements contained in this Prospectus Supplement. See “Description of the Equipment Notes”. Although such changes are permitted, under the Note Purchase Agreement, the terms of such agreements must not vary the Required Terms. In addition, United is obligated to certify to the Trustees that any substantive modifications do not materially and adversely affect the Certificateholders. United must also obtain written confirmation from each Rating Agency that the use of financing agreements modified in any material respect from the forms attached to the Note Purchase Agreement will not result in a withdrawal, suspension or downgrading of the rating of any Class of Certificates. Further, under the Note Purchase Agreement, it is a condition precedent to the obligation of each Trustee to purchase the Equipment Notes related to the financing of an Aircraft that no Triggering Event shall have occurred. The Trustees will have no right or obligation to purchase Equipment Notes after the Delivery Period Termination Date.

 

S-46


Table of Contents

The “Required Terms,” as defined in the Note Purchase Agreement, mandate that:

 

   

The initial principal amount and principal amortization schedule for each of the Equipment Notes issued with respect to each Aircraft shall be as set forth in the applicable table below for that Aircraft or, in the case of the last scheduled delivery of the five Boeing 787-10 aircraft eligible for financing under the Note Purchase Agreement, as set forth in the applicable table below for an aircraft of the same model that has not been and will not be financed under the Note Purchase Agreement (it being understood that if the Equipment Notes are issued after a scheduled payment date set forth below, such payment date will not be included in the amortization schedule and the initial principal amount shall be reduced by the amount otherwise due on such payment date):

Boeing 787-9

 

    N29975
    Equipment Note Ending Balance   Scheduled Payments of Principal

Date

  Series AA
  Equipment Note  
  Series A
 Equipment Note 
  Series AA
 Equipment Note 
  Series A
 Equipment Note 

At Issuance

     $ 62,861,000.00      $ 25,669,000.00      $  0.00      $  0.00  

May 1, 2020

    62,861,000.00       25,669,000.00       0.00       0.00  

November 1, 2020

    62,861,000.00       25,669,000.00       0.00       0.00  

May 1, 2021

    61,591,207.80       25,011,873.60       1,269,792.20       657,126.40  

November 1, 2021

    59,983,852.03       24,354,747.20       1,607,355.77       657,126.40  

May 1, 2022

    58,376,496.26       23,697,620.80       1,607,355.77       657,126.40  

November 1, 2022

    56,769,140.49       23,040,494.40       1,607,355.77       657,126.40  

May 1, 2023

    55,161,784.72       22,383,368.00       1,607,355.77       657,126.40  

November 1, 2023

    53,554,428.95       21,726,241.60       1,607,355.77       657,126.40  

May 1, 2024

    51,947,073.18       21,069,115.20       1,607,355.77       657,126.40  

November 1, 2024

    50,339,717.41       20,411,988.80       1,607,355.77       657,126.40  

May 1, 2025

    48,732,361.64       19,754,862.40       1,607,355.77       657,126.40  

November 1, 2025

    47,125,005.87       19,097,736.00       1,607,355.77       657,126.40  

May 1, 2026

    45,517,650.10       18,440,609.60       1,607,355.77       657,126.40  

November 1, 2026

    43,910,294.33       17,783,483.20       1,607,355.77       657,126.40  

May 1, 2027

    42,302,938.56       17,126,356.80       1,607,355.77       657,126.40  

November 1, 2027

    40,695,582.79       16,469,230.40       1,607,355.77       657,126.40  

May 1, 2028

    39,088,227.02       0.00       1,607,355.77       16,469,230.40  

November 1, 2028

    37,480,871.25       0.00       1,607,355.77       0.00  

May 1, 2029

    35,873,515.48       0.00       1,607,355.77       0.00  

November 1, 2029

    34,266,159.71       0.00       1,607,355.77       0.00  

May 1, 2030

    32,658,803.94       0.00       1,607,355.77       0.00  

November 1, 2030

    31,051,448.17       0.00       1,607,355.77       0.00  

May 1, 2031

    29,444,092.40       0.00       1,607,355.77       0.00  

November 1, 2031

    27,836,736.63       0.00       1,607,355.77       0.00  

May 1, 2032

    0.00       0.00       27,836,736.63       0.00  

 

S-47


Table of Contents
    N24976
    Equipment Note Ending Balance   Scheduled Payments of Principal

Date

  Series AA
  Equipment Note  
  Series A
 Equipment Note 
  Series AA
 Equipment Note 
  Series A
 Equipment Note 

At Issuance

     $ 62,966,000.00       $ 25,712,000.00      $  0.00      $  0.00  

May 1, 2020

    62,966,000.00       25,712,000.00       0.00       0.00  

November 1, 2020

    62,966,000.00       25,712,000.00       0.00       0.00  

May 1, 2021

    61,694,086.80       25,053,772.80       1,271,913.20       658,227.20  

November 1, 2021

    60,099,158.02       24,395,545.60       1,594,928.78       658,227.20  

May 1, 2022

    58,504,229.24       23,737,318.40       1,594,928.78       658,227.20  

November 1, 2022

    56,909,300.46       23,079,091.20       1,594,928.78       658,227.20  

May 1, 2023

    55,314,371.68       22,420,864.00       1,594,928.78       658,227.20  

November 1, 2023

    53,719,442.90       21,762,636.80       1,594,928.78       658,227.20  

May 1, 2024

    52,124,514.12       21,104,409.60       1,594,928.78       658,227.20  

November 1, 2024

    50,529,585.34       20,446,182.40       1,594,928.78       658,227.20  

May 1, 2025

    48,934,656.56       19,787,955.20       1,594,928.78       658,227.20  

November 1, 2025

    47,339,727.78       19,129,728.00       1,594,928.78       658,227.20  

May 1, 2026

    45,744,799.00       18,471,500.80       1,594,928.78       658,227.20  

November 1, 2026

    44,149,870.22       17,813,273.60       1,594,928.78       658,227.20  

May 1, 2027

    42,554,941.44       17,155,046.40       1,594,928.78       658,227.20  

November 1, 2027

    40,960,012.66       16,496,819.20       1,594,928.78       658,227.20  

May 1, 2028

    39,365,083.88       0.00       1,594,928.78       16,496,819.20  

November 1, 2028

    37,770,155.10       0.00       1,594,928.78       0.00  

May 1, 2029

    36,175,226.32       0.00       1,594,928.78       0.00  

November 1, 2029

    34,580,297.54       0.00       1,594,928.78       0.00  

May 1, 2030

    32,985,368.76       0.00       1,594,928.78       0.00  

November 1, 2030

    31,390,439.98       0.00       1,594,928.78       0.00  

May 1, 2031

    29,795,511.20       0.00       1,594,928.78       0.00  

November 1, 2031

    28,200,582.42       0.00       1,594,928.78       0.00  

May 1, 2032

    0.00       0.00       28,200,582.42       0.00  

 

     N29977
     Equipment Note Ending Balance    Scheduled Payments of Principal

Date

   Series AA
  Equipment Note  
   Series A
 Equipment Note 
   Series AA
 Equipment Note 
   Series A
 Equipment Note 

At Issuance

      $ 62,966,000.00       $ 25,712,000.00       $  0.00       $  0.00  

May 1, 2020

     62,966,000.00        25,712,000.00        0.00        0.00  

November 1, 2020

     62,966,000.00        25,712,000.00        0.00        0.00  

May 1, 2021

     61,694,086.80        25,053,772.80        1,271,913.20        658,227.20  

November 1, 2021

     60,099,158.02        24,395,545.60        1,594,928.78        658,227.20  

May 1, 2022

     58,504,229.24        23,737,318.40        1,594,928.78        658,227.20  

November 1, 2022

     56,909,300.46        23,079,091.20        1,594,928.78        658,227.20  

May 1, 2023

     55,314,371.68        22,420,864.00        1,594,928.78        658,227.20  

November 1, 2023

     53,719,442.90        21,762,636.80        1,594,928.78        658,227.20  

May 1, 2024

     52,124,514.12        21,104,409.60        1,594,928.78        658,227.20  

November 1, 2024

     50,529,585.34        20,446,182.40        1,594,928.78        658,227.20  

May 1, 2025

     48,934,656.56        19,787,955.20        1,594,928.78        658,227.20  

November 1, 2025

     47,339,727.78        19,129,728.00        1,594,928.78        658,227.20  

May 1, 2026

     45,744,799.00        18,471,500.80        1,594,928.78        658,227.20  

November 1, 2026

     44,149,870.22        17,813,273.60        1,594,928.78        658,227.20  

May 1, 2027

     42,554,941.44        17,155,046.40        1,594,928.78        658,227.20  

November 1, 2027

     40,960,012.66        16,496,819.20        1,594,928.78        658,227.20  

May 1, 2028

     39,365,083.88        0.00        1,594,928.78        16,496,819.20  

November 1, 2028

     37,770,155.10        0.00        1,594,928.78        0.00  

May 1, 2029

     36,175,226.32        0.00        1,594,928.78        0.00  

November 1, 2029

     34,580,297.54        0.00        1,594,928.78        0.00  

May 1, 2030

     32,985,368.76        0.00        1,594,928.78        0.00  

November 1, 2030

     31,390,439.98        0.00        1,594,928.78        0.00  

May 1, 2031

     29,795,511.20        0.00        1,594,928.78        0.00  

November 1, 2031

     28,200,582.42        0.00        1,594,928.78        0.00  

May 1, 2032

     0.00        0.00        28,200,582.42        0.00  

 

S-48


Table of Contents

Boeing 787-10

 

    N16009
    Equipment Note Ending Balance   Scheduled Payments of Principal

Date

  Series AA
  Equipment Note  
  Series A
 Equipment Note 
  Series AA
 Equipment Note 
  Series A
 Equipment Note 

At Issuance

     $ 63,315,000.00      $ 25,854,000.00      $  0.00      $  0.00  

May 1, 2020

    63,315,000.00       25,854,000.00       0.00       0.00  

November 1, 2020

    62,036,037.00       25,192,137.60       1,278,963.00       661,862.40  

May 1, 2021

    60,417,072.45       24,530,275.20       1,618,964.55       661,862.40  

November 1, 2021

    58,798,107.90       23,868,412.80       1,618,964.55       661,862.40  

May 1, 2022

    57,179,143.35       23,206,550.40       1,618,964.55       661,862.40  

November 1, 2022

    55,560,178.80       22,544,688.00       1,618,964.55       661,862.40  

May 1, 2023

    53,941,214.25       21,882,825.60       1,618,964.55       661,862.40  

November 1, 2023

    52,322,249.70       21,220,963.20       1,618,964.55       661,862.40  

May 1, 2024

    50,703,285.15       20,559,100.80       1,618,964.55       661,862.40  

November 1, 2024

    49,084,320.60       19,897,238.40       1,618,964.55       661,862.40  

May 1, 2025

    47,465,356.05       19,235,376.00       1,618,964.55       661,862.40  

November 1, 2025

    45,846,391.50       18,573,513.60       1,618,964.55       661,862.40  

May 1, 2026

    44,227,426.95       17,911,651.20       1,618,964.55       661,862.40  

November 1, 2026

    42,608,462.40       17,249,788.80       1,618,964.55       661,862.40  

May 1, 2027

    40,989,497.85       16,587,926.40       1,618,964.55       661,862.40  

November 1, 2027

    39,370,533.30       15,926,064.00       1,618,964.55       661,862.40  

May 1, 2028

    37,751,568.75       0.00       1,618,964.55       15,926,064.00  

November 1, 2028

    36,132,604.20       0.00       1,618,964.55       0.00  

May 1, 2029

    34,513,639.65       0.00       1,618,964.55       0.00  

November 1, 2029

    32,894,675.10       0.00       1,618,964.55       0.00  

May 1, 2030

    31,275,710.55       0.00       1,618,964.55       0.00  

November 1, 2030

    29,656,746.00       0.00       1,618,964.55       0.00  

May 1, 2031

    28,037,781.45       0.00       1,618,964.55       0.00  

November 1, 2031

    26,418,816.90       0.00       1,618,964.55       0.00  

May 1, 2032

    0.00       0.00       26,418,816.90       0.00  

 

    N91007
    Equipment Note Ending Balance   Scheduled Payments of Principal

Date

  Series AA
  Equipment Note  
  Series A
 Equipment Note 
  Series AA
 Equipment Note 
  Series A
 Equipment Note 

At Issuance

     $ 63,525,000.00      $ 25,939,000.00      $  0.00      $  0.00  

May 1, 2020

    63,525,000.00       25,939,000.00       0.00       0.00  

November 1, 2020

    62,241,795.00       25,274,961.60       1,283,205.00       664,038.40  

May 1, 2021

    60,617,460.75       24,610,923.20       1,624,334.25       664,038.40  

November 1, 2021

    58,993,126.50       23,946,884.80       1,624,334.25       664,038.40  

May 1, 2022

    57,368,792.25       23,282,846.40       1,624,334.25       664,038.40  

November 1, 2022

    55,744,458.00       22,618,808.00       1,624,334.25       664,038.40  

May 1, 2023

    54,120,123.75       21,954,769.60       1,624,334.25       664,038.40  

November 1, 2023

    52,495,789.50       21,290,731.20       1,624,334.25       664,038.40  

May 1, 2024

    50,871,455.25       20,626,692.80       1,624,334.25       664,038.40  

November 1, 2024

    49,247,121.00       19,962,654.40       1,624,334.25       664,038.40  

May 1, 2025

    47,622,786.75       19,298,616.00       1,624,334.25       664,038.40  

November 1, 2025

    45,998,452.50       18,634,577.60       1,624,334.25       664,038.40  

May 1, 2026

    44,374,118.25       17,970,539.20       1,624,334.25       664,038.40  

November 1, 2026

    42,749,784.00       17,306,500.80       1,624,334.25       664,038.40  

May 1, 2027

    41,125,449.75       16,642,462.40       1,624,334.25       664,038.40  

November 1, 2027

    39,501,115.50       15,978,424.00       1,624,334.25       664,038.40  

May 1, 2028

    37,876,781.25       0.00       1,624,334.25       15,978,424.00  

November 1, 2028

    36,252,447.00       0.00       1,624,334.25       0.00  

May 1, 2029

    34,628,112.75       0.00       1,624,334.25       0.00  

November 1, 2029

    33,003,778.50       0.00       1,624,334.25       0.00  

May 1, 2030

    31,379,444.25       0.00       1,624,334.25       0.00  

November 1, 2030

    29,755,110.00       0.00       1,624,334.25       0.00  

May 1, 2031

    28,130,775.75       0.00       1,624,334.25       0.00  

November 1, 2031

    26,506,441.50       0.00       1,624,334.25       0.00  

May 1, 2032

    0.00       0.00       26,506,441.50       0.00  

 

S-49


Table of Contents
    N12010
    Equipment Note Ending Balance   Scheduled Payments of Principal

Date

  Series AA
  Equipment Note  
  Series A
 Equipment Note 
  Series AA
 Equipment Note 
  Series A
 Equipment Note 

At Issuance

     $ 64,684,000.00      $ 26,413,000.00      $  0.00      $  0.00  

May 1, 2020

    64,684,000.00       26,413,000.00       0.00       0.00  

November 1, 2020

    63,377,383.20       25,736,827.20       1,306,616.80       676,172.80  

May 1, 2021

    61,723,413.32       25,060,654.40       1,653,969.88       676,172.80  

November 1, 2021

    60,069,443.44       24,384,481.60       1,653,969.88       676,172.80  

May 1, 2022

    58,415,473.56       23,708,308.80       1,653,969.88       676,172.80  

November 1, 2022

    56,761,503.68       23,032,136.00       1,653,969.88       676,172.80  

May 1, 2023

    55,107,533.80       22,355,963.20       1,653,969.88       676,172.80  

November 1, 2023

    53,453,563.92       21,679,790.40       1,653,969.88       676,172.80  

May 1, 2024

    51,799,594.04       21,003,617.60       1,653,969.88       676,172.80  

November 1, 2024

    50,145,624.16       20,327,444.80       1,653,969.88       676,172.80  

May 1, 2025

    48,491,654.28       19,651,272.00       1,653,969.88       676,172.80  

November 1, 2025

    46,837,684.40       18,975,099.20       1,653,969.88       676,172.80  

May 1, 2026

    45,183,714.52       18,298,926.40       1,653,969.88       676,172.80  

November 1, 2026

    43,529,744.64       17,622,753.60       1,653,969.88       676,172.80  

May 1, 2027

    41,875,774.76       16,946,580.80       1,653,969.88       676,172.80  

November 1, 2027

    40,221,804.88       16,270,408.00       1,653,969.88       676,172.80  

May 1, 2028

    38,567,835.00       0.00       1,653,969.88       16,270,408.00  

November 1, 2028

    36,913,865.12       0.00       1,653,969.88       0.00  

May 1, 2029

    35,259,895.24       0.00       1,653,969.88       0.00  

November 1, 2029

    33,605,925.36       0.00       1,653,969.88       0.00  

May 1, 2030

    31,951,955.48       0.00       1,653,969.88       0.00  

November 1, 2030

    30,297,985.60       0.00       1,653,969.88       0.00  

May 1, 2031

    28,644,015.72       0.00       1,653,969.88       0.00  

November 1, 2031

    26,990,045.84       0.00       1,653,969.88       0.00  

May 1, 2032

    0.00       0.00       26,990,045.84       0.00  

 

    N14011
    Equipment Note Ending Balance   Scheduled Payments of Principal

Date

  Series AA
  Equipment Note  
  Series A
 Equipment Note 
  Series AA
 Equipment Note 
  Series A
 Equipment Note 

At Issuance

     $ 64,684,000.00      $ 26,413,000.00      $  0.00      $  0.00  

May 1, 2020

    64,684,000.00       26,413,000.00       0.00       0.00  

November 1, 2020

    63,377,383.20       25,736,827.20       1,306,616.80       676,172.80  

May 1, 2021

    61,723,413.32       25,060,654.40       1,653,969.88       676,172.80  

November 1, 2021

    60,069,443.44       24,384,481.60       1,653,969.88       676,172.80  

May 1, 2022

    58,415,473.56       23,708,308.80       1,653,969.88       676,172.80  

November 1, 2022

    56,761,503.68       23,032,136.00       1,653,969.88       676,172.80  

May 1, 2023

    55,107,533.80       22,355,963.20       1,653,969.88       676,172.80  

November 1, 2023

    53,453,563.92       21,679,790.40       1,653,969.88       676,172.80  

May 1, 2024

    51,799,594.04       21,003,617.60       1,653,969.88       676,172.80  

November 1, 2024

    50,145,624.16       20,327,444.80       1,653,969.88       676,172.80  

May 1, 2025

    48,491,654.28       19,651,272.00       1,653,969.88       676,172.80  

November 1, 2025

    46,837,684.40       18,975,099.20       1,653,969.88       676,172.80  

May 1, 2026

    45,183,714.52       18,298,926.40       1,653,969.88       676,172.80  

November 1, 2026

    43,529,744.64       17,622,753.60       1,653,969.88       676,172.80  

May 1, 2027

    41,875,774.76       16,946,580.80       1,653,969.88       676,172.80  

November 1, 2027

    40,221,804.88       16,270,408.00       1,653,969.88       676,172.80  

May 1, 2028

    38,567,835.00       0.00       1,653,969.88       16,270,408.00  

November 1, 2028

    36,913,865.12       0.00       1,653,969.88       0.00  

May 1, 2029

    35,259,895.24       0.00       1,653,969.88       0.00  

November 1, 2029

    33,605,925.36       0.00       1,653,969.88       0.00  

May 1, 2030

    31,951,955.48       0.00       1,653,969.88       0.00  

November 1, 2030

    30,297,985.60       0.00       1,653,969.88       0.00  

May 1, 2031

    28,644,015.72       0.00       1,653,969.88       0.00  

November 1, 2031

    26,990,045.84       0.00       1,653,969.88       0.00  

May 1, 2032

    0.00       0.00       26,990,045.84       0.00  

 

S-50


Table of Contents

Boeing 777-300ER

 

    N2749U
    Equipment Note Ending Balance   Scheduled Payments of Principal

Date

  Series AA
  Equipment Note  
  Series A
 Equipment Note 
  Series AA
 Equipment Note 
  Series A
 Equipment Note 

At Issuance

     $ 65,461,000.00      $ 26,730,000.00      $  0.00      $  0.00  

May 1, 2020

    65,461,000.00       26,730,000.00       0.00       0.00  

November 1, 2020

    64,138,687.80       26,045,712.00       1,322,312.20       684,288.00  

May 1, 2021

    62,464,850.03       25,361,424.00       1,673,837.77       684,288.00  

November 1, 2021

    60,791,012.26       24,677,136.00       1,673,837.77       684,288.00  

May 1, 2022

    59,117,174.49       23,992,848.00       1,673,837.77       684,288.00  

November 1, 2022

    57,443,336.72       23,308,560.00       1,673,837.77       684,288.00  

May 1, 2023

    55,769,498.95       22,624,272.00       1,673,837.77       684,288.00  

November 1, 2023

    54,095,661.18       21,939,984.00       1,673,837.77       684,288.00  

May 1, 2024

    52,421,823.41       21,255,696.00       1,673,837.77       684,288.00  

November 1, 2024

    50,747,985.64       20,571,408.00       1,673,837.77       684,288.00  

May 1, 2025

    49,074,147.87       19,887,120.00       1,673,837.77       684,288.00  

November 1, 2025

    47,400,310.10       19,202,832.00       1,673,837.77       684,288.00  

May 1, 2026

    45,726,472.33       18,518,544.00       1,673,837.77       684,288.00  

November 1, 2026

    44,052,634.56       17,834,256.00       1,673,837.77       684,288.00  

May 1, 2027

    42,378,796.79       17,149,968.00       1,673,837.77       684,288.00  

November 1, 2027

    40,704,959.02       16,465,680.00       1,673,837.77       684,288.00  

May 1, 2028

    39,031,121.25       0.00       1,673,837.77       16,465,680.00  

November 1, 2028

    37,357,283.48       0.00       1,673,837.77       0.00  

May 1, 2029

    35,683,445.71       0.00       1,673,837.77       0.00  

November 1, 2029

    34,009,607.94       0.00       1,673,837.77       0.00  

May 1, 2030

    32,335,770.17       0.00       1,673,837.77       0.00  

November 1, 2030

    30,661,932.40       0.00       1,673,837.77       0.00  

May 1, 2031

    28,988,094.63       0.00       1,673,837.77       0.00  

November 1, 2031

    27,314,256.86       0.00       1,673,837.77       0.00  

May 1, 2032

    0.00       0.00       27,314,256.86       0.00  

 

    N2250U
    Equipment Note Ending Balance   Scheduled Payments of Principal

Date

  Series AA
  Equipment Note  
  Series A
 Equipment Note 
  Series AA
 Equipment Note 
  Series A
 Equipment Note 

At Issuance

     $ 65,436,000.00      $ 26,720,000.00      $  0.00      $  0.00  

May 1, 2020

    65,436,000.00       26,720,000.00       0.00       0.00  

November 1, 2020

    64,114,192.80       26,035,968.00       1,321,807.20       684,032.00  

May 1, 2021

    62,440,994.28       25,351,936.00       1,673,198.52       684,032.00  

November 1, 2021

    60,767,795.76       24,667,904.00       1,673,198.52       684,032.00  

May 1, 2022

    59,094,597.24       23,983,872.00       1,673,198.52       684,032.00  

November 1, 2022

    57,421,398.72       23,299,840.00       1,673,198.52       684,032.00  

May 1, 2023

    55,748,200.20       22,615,808.00       1,673,198.52       684,032.00  

November 1, 2023

    54,075,001.68       21,931,776.00       1,673,198.52       684,032.00  

May 1, 2024

    52,401,803.16       21,247,744.00       1,673,198.52       684,032.00  

November 1, 2024

    50,728,604.64       20,563,712.00       1,673,198.52       684,032.00  

May 1, 2025

    49,055,406.12       19,879,680.00       1,673,198.52       684,032.00  

November 1, 2025

    47,382,207.60       19,195,648.00       1,673,198.52       684,032.00  

May 1, 2026

    45,709,009.08       18,511,616.00       1,673,198.52       684,032.00  

November 1, 2026

    44,035,810.56       17,827,584.00       1,673,198.52       684,032.00  

May 1, 2027

    42,362,612.04       17,143,552.00       1,673,198.52       684,032.00  

November 1, 2027

    40,689,413.52       16,459,520.00       1,673,198.52       684,032.00  

May 1, 2028

    39,016,215.00       0.00       1,673,198.52       16,459,520.00  

November 1, 2028

    37,343,016.48       0.00       1,673,198.52       0.00  

May 1, 2029

    35,669,817.96       0.00       1,673,198.52       0.00  

November 1, 2029

    33,996,619.44       0.00       1,673,198.52       0.00  

May 1, 2030

    32,323,420.92       0.00       1,673,198.52       0.00  

November 1, 2030

    30,650,222.40       0.00       1,673,198.52       0.00  

May 1, 2031

    28,977,023.88       0.00       1,673,198.52       0.00  

November 1, 2031

    27,303,825.36       0.00       1,673,198.52       0.00  

May 1, 2032

    0.00       0.00       27,303,825.36       0.00  

 

S-51


Table of Contents

Embraer ERJ 175 LL

 

    N616UX
    Equipment Note Ending Balance   Scheduled Payments of Principal

Date

  Series AA
  Equipment Note  
  Series A
 Equipment Note 
  Series AA
 Equipment Note 
  Series A
 Equipment Note 

At Issuance

     $ 12,587,000.00      $ 5,140,000.00      $  0.00      $  0.00  

May 1, 2020

    12,587,000.00       5,140,000.00       0.00       0.00  

November 1, 2020

    12,332,742.60       5,008,416.00       254,257.40       131,584.00  

May 1, 2021

    12,010,893.01       4,876,832.00       321,849.59       131,584.00  

November 1, 2021

    11,689,043.42       4,745,248.00       321,849.59       131,584.00  

May 1, 2022

    11,367,193.83       4,613,664.00       321,849.59       131,584.00  

November 1, 2022

    11,045,344.24       4,482,080.00       321,849.59       131,584.00  

May 1, 2023

    10,723,494.65       4,350,496.00       321,849.59       131,584.00  

November 1, 2023

    10,401,645.06       4,218,912.00       321,849.59       131,584.00  

May 1, 2024

    10,079,795.47       4,087,328.00       321,849.59       131,584.00  

November 1, 2024

    9,757,945.88       3,955,744.00       321,849.59       131,584.00  

May 1, 2025

    9,436,096.29       3,824,160.00       321,849.59       131,584.00  

November 1, 2025

    9,114,246.70       3,692,576.00       321,849.59       131,584.00  

May 1, 2026

    8,792,397.11       3,560,992.00       321,849.59       131,584.00  

November 1, 2026

    8,470,547.52       3,429,408.00       321,849.59       131,584.00  

May 1, 2027

    8,148,697.93       3,297,824.00       321,849.59       131,584.00  

November 1, 2027

    7,826,848.34       3,166,240.00       321,849.59       131,584.00  

May 1, 2028

    7,504,998.75       0.00       321,849.59       3,166,240.00  

November 1, 2028

    7,183,149.16       0.00       321,849.59       0.00  

May 1, 2029

    6,861,299.57       0.00       321,849.59       0.00  

November 1, 2029

    6,539,449.98       0.00       321,849.59       0.00  

May 1, 2030

    6,217,600.39       0.00       321,849.59       0.00  

November 1, 2030

    5,895,750.80       0.00       321,849.59       0.00  

May 1, 2031

    5,573,901.21       0.00       321,849.59       0.00  

November 1, 2031

    5,252,051.62       0.00       321,849.59       0.00  

May 1, 2032

    0.00       0.00       5,252,051.62       0.00  

 

    N617UX
    Equipment Note Ending Balance   Scheduled Payments of Principal

Date

  Series AA
  Equipment Note  
  Series A
 Equipment Note 
  Series AA
 Equipment Note 
  Series A
 Equipment Note 

At Issuance

     $ 12,608,000.00      $ 5,149,000.00      $  0.00      $  0.00  

May 1, 2020

    12,608,000.00       5,149,000.00       0.00       0.00  

November 1, 2020

    12,353,318.40       5,017,185.60       254,681.60       131,814.40  

May 1, 2021

    12,030,931.84       4,885,371.20       322,386.56       131,814.40  

November 1, 2021

    11,708,545.28       4,753,556.80       322,386.56       131,814.40  

May 1, 2022

    11,386,158.72       4,621,742.40       322,386.56       131,814.40  

November 1, 2022

    11,063,772.16       4,489,928.00       322,386.56       131,814.40  

May 1, 2023

    10,741,385.60       4,358,113.60       322,386.56       131,814.40  

November 1, 2023

    10,418,999.04       4,226,299.20       322,386.56       131,814.40  

May 1, 2024

    10,096,612.48       4,094,484.80       322,386.56       131,814.40  

November 1, 2024

    9,774,225.92       3,962,670.40       322,386.56       131,814.40  

May 1, 2025

    9,451,839.36       3,830,856.00       322,386.56       131,814.40  

November 1, 2025

    9,129,452.80       3,699,041.60       322,386.56       131,814.40  

May 1, 2026

    8,807,066.24       3,567,227.20       322,386.56       131,814.40  

November 1, 2026

    8,484,679.68       3,435,412.80       322,386.56       131,814.40  

May 1, 2027

    8,162,293.12       3,303,598.40       322,386.56       131,814.40  

November 1, 2027

    7,839,906.56       3,171,784.00       322,386.56       131,814.40  

May 1, 2028

    7,517,520.00       0.00       322,386.56       3,171,784.00  

November 1, 2028

    7,195,133.44       0.00       322,386.56       0.00  

May 1, 2029

    6,872,746.88       0.00       322,386.56       0.00  

November 1, 2029

    6,550,360.32       0.00       322,386.56       0.00  

May 1, 2030

    6,227,973.76       0.00       322,386.56       0.00  

November 1, 2030

    5,905,587.20       0.00       322,386.56       0.00  

May 1, 2031

    5,583,200.64       0.00       322,386.56       0.00  

November 1, 2031

    5,260,814.08       0.00       322,386.56       0.00  

May 1, 2032

    0.00       0.00       5,260,814.08       0.00  

 

S-52


Table of Contents
    N618UX
    Equipment Note Ending Balance   Scheduled Payments of Principal

Date

  Series AA
  Equipment Note  
  Series A
 Equipment Note 
  Series AA
 Equipment Note 
  Series A
 Equipment Note 

At Issuance

     $ 12,608,000.00      $ 5,149,000.00      $  0.00      $  0.00  

May 1, 2020

    12,608,000.00       5,149,000.00       0.00       0.00  

November 1, 2020

    12,353,318.40       5,017,185.60       254,681.60       131,814.40  

May 1, 2021

    12,030,931.84       4,885,371.20       322,386.56       131,814.40  

November 1, 2021

    11,708,545.28       4,753,556.80       322,386.56       131,814.40  

May 1, 2022

    11,386,158.72       4,621,742.40       322,386.56       131,814.40  

November 1, 2022

    11,063,772.16       4,489,928.00       322,386.56       131,814.40  

May 1, 2023

    10,741,385.60       4,358,113.60       322,386.56       131,814.40  

November 1, 2023

    10,418,999.04       4,226,299.20       322,386.56       131,814.40  

May 1, 2024

    10,096,612.48       4,094,484.80       322,386.56       131,814.40  

November 1, 2024

    9,774,225.92       3,962,670.40       322,386.56       131,814.40  

May 1, 2025

    9,451,839.36       3,830,856.00       322,386.56       131,814.40  

November 1, 2025

    9,129,452.80       3,699,041.60       322,386.56       131,814.40  

May 1, 2026

    8,807,066.24       3,567,227.20       322,386.56       131,814.40  

November 1, 2026

    8,484,679.68       3,435,412.80       322,386.56       131,814.40  

May 1, 2027

    8,162,293.12       3,303,598.40       322,386.56       131,814.40  

November 1, 2027

    7,839,906.56       3,171,784.00       322,386.56       131,814.40  

May 1, 2028

    7,517,520.00       0.00       322,386.56       3,171,784.00  

November 1, 2028

    7,195,133.44       0.00       322,386.56       0.00  

May 1, 2029

    6,872,746.88       0.00       322,386.56       0.00  

November 1, 2029

    6,550,360.32       0.00       322,386.56       0.00  

May 1, 2030

    6,227,973.76       0.00       322,386.56       0.00  

November 1, 2030

    5,905,587.20       0.00       322,386.56       0.00  

May 1, 2031

    5,583,200.64       0.00       322,386.56       0.00  

November 1, 2031

    5,260,814.08       0.00       322,386.56       0.00  

May 1, 2032

    0.00       0.00       5,260,814.08       0.00  

 

    N619UX
    Equipment Note Ending Balance   Scheduled Payments of Principal

Date

  Series AA
  Equipment Note  
  Series A
 Equipment Note 
  Series AA
 Equipment Note 
  Series A
 Equipment Note 

At Issuance

     $ 12,608,000.00      $ 5,149,000.00      $  0.00      $  0.00  

May 1, 2020

    12,608,000.00       5,149,000.00       0.00       0.00  

November 1, 2020

    12,353,318.40       5,017,185.60       254,681.60       131,814.40  

May 1, 2021

    12,030,931.84       4,885,371.20       322,386.56       131,814.40  

November 1, 2021

    11,708,545.28       4,753,556.80       322,386.56       131,814.40  

May 1, 2022

    11,386,158.72       4,621,742.40       322,386.56       131,814.40  

November 1, 2022

    11,063,772.16       4,489,928.00       322,386.56       131,814.40  

May 1, 2023

    10,741,385.60       4,358,113.60       322,386.56       131,814.40  

November 1, 2023

    10,418,999.04       4,226,299.20       322,386.56       131,814.40  

May 1, 2024

    10,096,612.48       4,094,484.80       322,386.56       131,814.40  

November 1, 2024

    9,774,225.92       3,962,670.40       322,386.56       131,814.40  

May 1, 2025

    9,451,839.36       3,830,856.00       322,386.56       131,814.40  

November 1, 2025

    9,129,452.80       3,699,041.60       322,386.56       131,814.40  

May 1, 2026

    8,807,066.24       3,567,227.20       322,386.56       131,814.40  

November 1, 2026

    8,484,679.68       3,435,412.80       322,386.56       131,814.40  

May 1, 2027

    8,162,293.12       3,303,598.40       322,386.56       131,814.40  

November 1, 2027

    7,839,906.56       3,171,784.00       322,386.56       131,814.40  

May 1, 2028

    7,517,520.00       0.00       322,386.56       3,171,784.00  

November 1, 2028

    7,195,133.44       0.00       322,386.56       0.00  

May 1, 2029

    6,872,746.88       0.00       322,386.56       0.00  

November 1, 2029

    6,550,360.32       0.00       322,386.56       0.00  

May 1, 2030

    6,227,973.76       0.00       322,386.56       0.00  

November 1, 2030

    5,905,587.20       0.00       322,386.56       0.00  

May 1, 2031

    5,583,200.64       0.00       322,386.56       0.00  

November 1, 2031

    5,260,814.08       0.00       322,386.56       0.00  

May 1, 2032

    0.00       0.00       5,260,814.08       0.00  

 

S-53


Table of Contents
    N620UX
    Equipment Note Ending Balance   Scheduled Payments of Principal

Date

  Series AA
  Equipment Note  
  Series A
 Equipment Note 
  Series AA
 Equipment Note 
  Series A
 Equipment Note 

At Issuance

     $ 12,629,000.00      $ 5,157,000.00      $  0.00      $  0.00  

May 1, 2020

    12,629,000.00       5,157,000.00       0.00       0.00  

November 1, 2020

    12,373,894.20       5,024,980.80       255,105.80       132,019.20  

May 1, 2021

    12,050,970.67       4,892,961.60       322,923.53       132,019.20  

November 1, 2021

    11,728,047.14       4,760,942.40       322,923.53       132,019.20  

May 1, 2022

    11,405,123.61       4,628,923.20       322,923.53       132,019.20  

November 1, 2022

    11,082,200.08       4,496,904.00       322,923.53       132,019.20  

May 1, 2023

    10,759,276.55       4,364,884.80       322,923.53       132,019.20  

November 1, 2023

    10,436,353.02       4,232,865.60       322,923.53       132,019.20  

May 1, 2024

    10,113,429.49       4,100,846.40       322,923.53       132,019.20  

November 1, 2024

    9,790,505.96       3,968,827.20       322,923.53       132,019.20  

May 1, 2025

    9,467,582.43       3,836,808.00       322,923.53       132,019.20  

November 1, 2025

    9,144,658.90       3,704,788.80       322,923.53       132,019.20  

May 1, 2026

    8,821,735.37       3,572,769.60       322,923.53       132,019.20  

November 1, 2026

    8,498,811.84       3,440,750.40       322,923.53       132,019.20  

May 1, 2027

    8,175,888.31       3,308,731.20       322,923.53       132,019.20  

November 1, 2027

    7,852,964.78       3,176,712.00       322,923.53       132,019.20  

May 1, 2028

    7,530,041.25       0.00       322,923.53       3,176,712.00  

November 1, 2028

    7,207,117.72       0.00       322,923.53       0.00  

May 1, 2029

    6,884,194.19       0.00       322,923.53       0.00  

November 1, 2029

    6,561,270.66       0.00       322,923.53       0.00  

May 1, 2030

    6,238,347.13       0.00       322,923.53       0.00  

November 1, 2030

    5,915,423.60       0.00       322,923.53       0.00  

May 1, 2031

    5,592,500.07       0.00       322,923.53       0.00  

November 1, 2031

    5,269,576.54       0.00       322,923.53       0.00  

May 1, 2032

    0.00       0.00       5,269,576.54       0.00  

 

    N621UX
    Equipment Note Ending Balance   Scheduled Payments of Principal

Date

  Series AA
  Equipment Note  
  Series A
 Equipment Note 
  Series AA
 Equipment Note 
  Series A
 Equipment Note 

At Issuance

     $ 12,629,000.00      $ 5,157,000.00      $  0.00      $  0.00  

May 1, 2020

    12,629,000.00       5,157,000.00       0.00       0.00  

November 1, 2020

    12,373,894.20       5,024,980.80       255,105.80       132,019.20  

May 1, 2021

    12,050,970.67       4,892,961.60       322,923.53       132,019.20  

November 1, 2021

    11,728,047.14       4,760,942.40       322,923.53       132,019.20  

May 1, 2022

    11,405,123.61       4,628,923.20       322,923.53       132,019.20  

November 1, 2022

    11,082,200.08       4,496,904.00       322,923.53       132,019.20  

May 1, 2023

    10,759,276.55       4,364,884.80       322,923.53       132,019.20  

November 1, 2023

    10,436,353.02       4,232,865.60       322,923.53       132,019.20  

May 1, 2024

    10,113,429.49       4,100,846.40       322,923.53       132,019.20  

November 1, 2024

    9,790,505.96       3,968,827.20       322,923.53       132,019.20  

May 1, 2025

    9,467,582.43       3,836,808.00       322,923.53       132,019.20  

November 1, 2025

    9,144,658.90       3,704,788.80       322,923.53       132,019.20  

May 1, 2026

    8,821,735.37       3,572,769.60       322,923.53       132,019.20  

November 1, 2026

    8,498,811.84       3,440,750.40       322,923.53       132,019.20  

May 1, 2027

    8,175,888.31       3,308,731.20       322,923.53       132,019.20  

November 1, 2027

    7,852,964.78       3,176,712.00       322,923.53       132,019.20  

May 1, 2028

    7,530,041.25       0.00       322,923.53       3,176,712.00  

November 1, 2028

    7,207,117.72       0.00       322,923.53       0.00  

May 1, 2029

    6,884,194.19       0.00       322,923.53       0.00  

November 1, 2029

    6,561,270.66       0.00       322,923.53       0.00  

May 1, 2030

    6,238,347.13       0.00       322,923.53       0.00  

November 1, 2030

    5,915,423.60       0.00       322,923.53       0.00  

May 1, 2031

    5,592,500.07       0.00       322,923.53       0.00  

November 1, 2031

    5,269,576.54       0.00       322,923.53       0.00  

May 1, 2032

    0.00       0.00       5,269,576.54       0.00  

 

S-54


Table of Contents
    N622UX
    Equipment Note Ending Balance   Scheduled Payments of Principal

Date

  Series AA
  Equipment Note  
  Series A
 Equipment Note 
  Series AA
 Equipment Note 
  Series A
 Equipment Note 

At Issuance

     $ 12,629,000.00      $ 5,157,000.00      $  0.00      $  0.00  

May 1, 2020

    12,629,000.00       5,157,000.00       0.00       0.00  

November 1, 2020

    12,373,894.20       5,024,980.80       255,105.80       132,019.20  

May 1, 2021

    12,050,970.67       4,892,961.60       322,923.53       132,019.20  

November 1, 2021

    11,728,047.14       4,760,942.40       322,923.53       132,019.20  

May 1, 2022

    11,405,123.61       4,628,923.20       322,923.53       132,019.20  

November 1, 2022

    11,082,200.08       4,496,904.00       322,923.53       132,019.20  

May 1, 2023

    10,759,276.55       4,364,884.80       322,923.53       132,019.20  

November 1, 2023

    10,436,353.02       4,232,865.60       322,923.53       132,019.20  

May 1, 2024

    10,113,429.49       4,100,846.40       322,923.53       132,019.20  

November 1, 2024

    9,790,505.96       3,968,827.20       322,923.53       132,019.20  

May 1, 2025

    9,467,582.43       3,836,808.00       322,923.53       132,019.20  

November 1, 2025

    9,144,658.90       3,704,788.80       322,923.53       132,019.20  

May 1, 2026

    8,821,735.37       3,572,769.60       322,923.53       132,019.20  

November 1, 2026

    8,498,811.84       3,440,750.40       322,923.53       132,019.20  

May 1, 2027

    8,175,888.31       3,308,731.20       322,923.53       132,019.20  

November 1, 2027

    7,852,964.78       3,176,712.00       322,923.53       132,019.20  

May 1, 2028

    7,530,041.25       0.00       322,923.53       3,176,712.00  

November 1, 2028

    7,207,117.72       0.00       322,923.53       0.00  

May 1, 2029

    6,884,194.19       0.00       322,923.53       0.00  

November 1, 2029

    6,561,270.66       0.00       322,923.53       0.00  

May 1, 2030

    6,238,347.13       0.00       322,923.53       0.00  

November 1, 2030

    5,915,423.60       0.00       322,923.53       0.00  

May 1, 2031

    5,592,500.07       0.00       322,923.53       0.00  

November 1, 2031

    5,269,576.54       0.00       322,923.53       0.00  

May 1, 2032

    0.00       0.00       5,269,576.54       0.00  

 

    N623UX
    Equipment Note Ending Balance   Scheduled Payments of Principal

Date

  Series AA
  Equipment Note  
  Series A
 Equipment Note 
  Series AA
 Equipment Note 
  Series A
 Equipment Note 

At Issuance

     $ 12,650,000.00      $ 5,166,000.00      $  0.00      $  0.00  

May 1, 2020

    12,650,000.00       5,166,000.00       0.00       0.00  

November 1, 2020

    12,394,470.00       5,033,750.40       255,530.00       132,249.60  

May 1, 2021

    12,071,009.50       4,901,500.80       323,460.50       132,249.60  

November 1, 2021

    11,747,549.00       4,769,251.20       323,460.50       132,249.60  

May 1, 2022

    11,424,088.50       4,637,001.60       323,460.50       132,249.60  

November 1, 2022

    11,100,628.00       4,504,752.00       323,460.50       132,249.60  

May 1, 2023

    10,777,167.50       4,372,502.40       323,460.50       132,249.60  

November 1, 2023

    10,453,707.00       4,240,252.80       323,460.50       132,249.60  

May 1, 2024

    10,130,246.50       4,108,003.20       323,460.50       132,249.60  

November 1, 2024

    9,806,786.00       3,975,753.60       323,460.50       132,249.60  

May 1, 2025

    9,483,325.50       3,843,504.00       323,460.50       132,249.60  

November 1, 2025

    9,159,865.00       3,711,254.40       323,460.50       132,249.60  

May 1, 2026

    8,836,404.50       3,579,004.80       323,460.50       132,249.60  

November 1, 2026

    8,512,944.00       3,446,755.20       323,460.50       132,249.60  

May 1, 2027

    8,189,483.50       3,314,505.60       323,460.50       132,249.60  

November 1, 2027

    7,866,023.00       3,182,256.00       323,460.50       132,249.60  

May 1, 2028

    7,542,562.50       0.00       323,460.50       3,182,256.00  

November 1, 2028

    7,219,102.00       0.00       323,460.50       0.00  

May 1, 2029

    6,895,641.50       0.00       323,460.50       0.00  

November 1, 2029

    6,572,181.00       0.00       323,460.50       0.00  

May 1, 2030

    6,248,720.50       0.00       323,460.50       0.00  

November 1, 2030

    5,925,260.00       0.00       323,460.50       0.00  

May 1, 2031

    5,601,799.50       0.00       323,460.50       0.00  

November 1, 2031

    5,278,339.00       0.00       323,460.50       0.00  

May 1, 2032

    0.00       0.00       5,278,339.00       0.00  

 

S-55


Table of Contents
    N624UX
    Equipment Note Ending Balance   Scheduled Payments of Principal

Date

  Series AA
Equipment Note  
  Series A
 Equipment Note 
  Series AA
 Equipment Note 
  Series A
 Equipment Note 

At Issuance

     $ 12,650,000.00      $ 5,166,000.00      $  0.00      $  0.00  

May 1, 2020

    12,650,000.00       5,166,000.00       0.00       0.00  

November 1, 2020

    12,394,470.00       5,033,750.40       255,530.00       132,249.60  

May 1, 2021

    12,071,009.50       4,901,500.80       323,460.50       132,249.60  

November 1, 2021

    11,747,549.00       4,769,251.20       323,460.50       132,249.60  

May 1, 2022

    11,424,088.50       4,637,001.60       323,460.50       132,249.60  

November 1, 2022

    11,100,628.00       4,504,752.00       323,460.50       132,249.60  

May 1, 2023

    10,777,167.50       4,372,502.40       323,460.50       132,249.60  

November 1, 2023

    10,453,707.00       4,240,252.80       323,460.50       132,249.60  

May 1, 2024

    10,130,246.50       4,108,003.20       323,460.50       132,249.60  

November 1, 2024

    9,806,786.00       3,975,753.60       323,460.50       132,249.60  

May 1, 2025

    9,483,325.50       3,843,504.00       323,460.50       132,249.60  

November 1, 2025

    9,159,865.00       3,711,254.40       323,460.50       132,249.60  

May 1, 2026

    8,836,404.50       3,579,004.80       323,460.50       132,249.60  

November 1, 2026

    8,512,944.00       3,446,755.20       323,460.50       132,249.60  

May 1, 2027

    8,189,483.50       3,314,505.60       323,460.50       132,249.60  

November 1, 2027

    7,866,023.00       3,182,256.00       323,460.50       132,249.60  

May 1, 2028

    7,542,562.50       0.00       323,460.50       3,182,256.00  

November 1, 2028

    7,219,102.00       0.00       323,460.50       0.00  

May 1, 2029

    6,895,641.50       0.00       323,460.50       0.00  

November 1, 2029

    6,572,181.00       0.00       323,460.50       0.00  

May 1, 2030

    6,248,720.50       0.00       323,460.50       0.00  

November 1, 2030

    5,925,260.00       0.00       323,460.50       0.00  

May 1, 2031

    5,601,799.50       0.00       323,460.50       0.00  

November 1, 2031

    5,278,339.00       0.00       323,460.50       0.00  

May 1, 2032

    0.00       0.00       5,278,339.00       0.00  

 

    N625UX
    Equipment Note Ending Balance   Scheduled Payments of Principal

Date

  Series AA
  Equipment Note  
  Series A
 Equipment Note 
  Series AA
 Equipment Note 
  Series A
 Equipment Note 

At Issuance

     $ 12,650,000.00      $ 5,166,000.00      $  0.00      $  0.00  

May 1, 2020

    12,650,000.00       5,166,000.00       0.00       0.00  

November 1, 2020

    12,394,470.00       5,033,750.40       255,530.00       132,249.60  

May 1, 2021

    12,071,009.50       4,901,500.80       323,460.50       132,249.60  

November 1, 2021

    11,747,549.00       4,769,251.20       323,460.50       132,249.60  

May 1, 2022

    11,424,088.50       4,637,001.60       323,460.50       132,249.60  

November 1, 2022

    11,100,628.00       4,504,752.00       323,460.50       132,249.60  

May 1, 2023

    10,777,167.50       4,372,502.40       323,460.50       132,249.60  

November 1, 2023

    10,453,707.00       4,240,252.80       323,460.50       132,249.60  

May 1, 2024

    10,130,246.50       4,108,003.20       323,460.50       132,249.60  

November 1, 2024

    9,806,786.00       3,975,753.60       323,460.50       132,249.60  

May 1, 2025

    9,483,325.50       3,843,504.00       323,460.50       132,249.60  

November 1, 2025

    9,159,865.00       3,711,254.40       323,460.50       132,249.60  

May 1, 2026

    8,836,404.50       3,579,004.80       323,460.50       132,249.60  

November 1, 2026

    8,512,944.00       3,446,755.20       323,460.50       132,249.60  

May 1, 2027

    8,189,483.50       3,314,505.60       323,460.50       132,249.60  

November 1, 2027

    7,866,023.00       3,182,256.00       323,460.50       132,249.60  

May 1, 2028

    7,542,562.50       0.00       323,460.50       3,182,256.00  

November 1, 2028

    7,219,102.00       0.00       323,460.50       0.00  

May 1, 2029

    6,895,641.50       0.00       323,460.50       0.00  

November 1, 2029

    6,572,181.00       0.00       323,460.50       0.00  

May 1, 2030

    6,248,720.50       0.00       323,460.50       0.00  

November 1, 2030

    5,925,260.00       0.00       323,460.50       0.00  

May 1, 2031

    5,601,799.50       0.00       323,460.50       0.00  

November 1, 2031

    5,278,339.00       0.00       323,460.50       0.00  

May 1, 2032

    0.00       0.00       5,278,339.00       0.00  

 

S-56


Table of Contents
   

The interest rate applicable to each Series of Equipment Notes must be equal to the rate applicable to the Certificates issued by the corresponding Trust.

 

   

The payment dates for the Equipment Notes must be May 1 and November 1 (but not before May 1, 2020).

 

   

The amounts payable under the all-risk aircraft hull insurance maintained with respect to each Aircraft must be sufficient to pay the unpaid principal amount of the related Equipment Notes together with six months of interest accrued thereon, subject to certain rights of self-insurance.

 

   

(a) The past due rate in the Indentures, (b) the Make-Whole Premium payable under the Indentures, (c) the provisions relating to the redemption of Equipment Notes in the Indentures and (d) the indemnification of the Loan Trustees, Subordination Agent, Liquidity Provider, Trustees, Escrow Agents and registered holders of the Equipment Notes (in such capacity, the “Note Holders”) with respect to certain taxes and expenses, in each case shall be provided as set forth in the form of Participation Agreement attached as an exhibit to the Note Purchase Agreement.

 

   

In the case of the Indentures, modifications are prohibited in any material adverse respect (i) to the Granting Clause of the Indentures so as to deprive the Note Holders under all the Indentures of a first priority security interest in the Aircraft and certain of United’s rights under warranties with respect to the Aircraft or to eliminate the obligations intended to be secured thereby, (ii) to certain provisions relating to the issuance, redemption, payments, and ranking of the Equipment Notes (including the obligation to pay the Make-Whole Premium in certain circumstances), (iii) to certain provisions regarding Indenture Defaults (including cross-defaults among Indentures) and remedies relating thereto, (iv) to certain provisions relating to any replaced airframe or engines with respect to an Aircraft and (v) to the provision that New York law will govern the Indentures.

 

   

In the case of the Participation Agreements, modifications are prohibited in any material adverse respect (i) to certain conditions to the obligations of the Trustees to purchase the Equipment Notes issued with respect to an Aircraft involving good title to such Aircraft, the release of any recorded liens on the Aircraft, obtaining a certificate of airworthiness with respect to such Aircraft, entitlement to the benefits of Section 1110 with respect to such Aircraft and filings of certain documents with the FAA and the registration of certain interests with the International Registry under the Cape Town Convention on International Interests in Mobile Equipment and the related Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment (the “Cape Town Treaty”), (ii) to the provisions restricting the Note Holder’s ability to transfer such Equipment Notes, (iii) to certain provisions requiring the delivery of legal opinions and (iv) to the provision that New York law will govern the Participation Agreement.

 

   

In the case of all of the Participation Agreements and Indentures, modifications are prohibited in any material adverse respect as regards the interest of the Note Holders, the Subordination Agent, the Liquidity Provider or the Loan Trustee in the definition of “Make-Whole Premium”.

Notwithstanding the foregoing, any such forms of financing agreements may be modified to correct or supplement any such provision which may be defective or to cure any ambiguity or correct any mistake, provided that any such action shall not materially adversely affect the interests of the Note Holders, the Subordination Agent, the Liquidity Provider, the Loan Trustee or the Certificateholders.

Liquidation of Original Trusts

On the earlier of (i) the first Business Day after August 31, 2020 or, if later, the fifth Business Day after the Delivery Period Termination Date and (ii) the fifth Business Day after the occurrence of a Triggering Event (such Business Day, the “Transfer Date”), each of the Trusts established on the Issuance Date (the “Original Trusts”) will

 

S-57


Table of Contents

transfer and assign all of its assets and rights to a newly created successor trust (each, a “Successor Trust”) with substantially identical terms, except that (i) the Successor Trusts will not have the right to purchase new Equipment Notes and (ii) Delaware law will govern the Original Trusts and New York law will govern the Successor Trusts. The institution acting as Trustee of each of the Original Trusts (each, an “Original Trustee”) will also act as Trustee of the corresponding Successor Trust (each, a “New Trustee”). Each New Trustee will assume the obligations of the related Original Trustee under each transaction document to which such Original Trustee was a party. Upon the effectiveness of such transfer, assignment and assumption, each of the Original Trusts will be liquidated and each of the Certificates will represent the same percentage interest in the Successor Trust as it represented in the Original Trust immediately prior to such transfer, assignment and assumption. Unless the context otherwise requires, all references in this Prospectus Supplement to the Trusts, the applicable Trustees, the Pass Through Trust Agreements and similar terms shall apply to the Original Trusts until the effectiveness of such transfer, assignment and assumption, and thereafter shall be applicable with respect to the Successor Trusts. If for any reason such transfer, assignment and assumption cannot be effected to any Successor Trust, the related Original Trust will continue in existence until it is effected. The Original Trusts may be treated as partnerships for U.S. federal income tax purposes. The Successor Trusts will be treated as grantor trusts. See “Certain U.S. Federal Tax Consequences”.

Termination of the Trusts

The obligations of United and the applicable Trustee with respect to a Trust will terminate upon the distribution to Certificateholders of such Trust of all amounts required to be distributed to them pursuant to the applicable Pass Through Trust Agreement and the disposition of all property held in such Trust. The applicable Trustee will send to each Certificateholder of such Trust notice of the termination of such Trust, the amount of the proposed final payment and the proposed date for the distribution of such final payment for such Trust. The final distribution to any Certificateholder of such Trust will be made only upon surrender of such Certificateholder’s Certificates at the office or agency of the applicable Trustee specified in such notice of termination. (Trust Supplements, Section 7.01(a))

The Trustees

The Trustee for each Trust will be Wilmington Trust, National Association. The Trustee’s address is Wilmington Trust, National Association, 1100 North Market Street, Wilmington, Delaware 19890-1605, Attention: Corporate Trust Administration.

Book-Entry; Delivery and Form

General

Upon issuance, each Class of Certificates will be represented by one or more fully registered global certificates. Each global certificate will be deposited with, or on behalf of, The Depository Trust Company (“DTC”) and registered in the name of Cede & Co. (“Cede”), the nominee of DTC. DTC was created to hold securities for its participants (“DTC Participants”) and facilitate the clearance and settlement of securities transactions between DTC Participants through electronic book-entry changes in accounts of the DTC Participants, thereby eliminating the need for physical movement of certificates. DTC Participants include securities brokers and dealers, banks, trust companies and clearing corporations and certain other organizations. Indirect access to the DTC system is available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly (“Indirect DTC Participants”).

So long as such book-entry procedures are applicable, no person acquiring an interest in such Certificates (“Certificate Owner”) will be entitled to receive a certificate representing such person’s interest in such Certificates. Unless and until definitive certificates are issued under the limited circumstances described below under “—Physical Certificates”, all references to actions by Certificateholders shall refer to actions taken by DTC upon instructions from DTC Participants, and all references herein to distributions, notices, reports and statements to Certificateholders shall refer, as the case may be, to distributions, notices, reports and statements to DTC or Cede, as the registered holder of such Certificates, or to DTC Participants for distribution to Certificate Owners in accordance with DTC procedures.

 

S-58


Table of Contents

DTC is a limited purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to Section 17A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Under the New York Uniform Commercial Code, a “clearing corporation” is defined as:

 

   

a person that is registered as a “clearing agency” under the federal securities laws;

 

   

a federal reserve bank; or

 

   

any other person that provides clearance or settlement services with respect to financial assets that would require it to register as a clearing agency under the federal securities laws but for an exclusion or exemption from the registration requirement, if its activities as a clearing corporation, including promulgation of rules, are subject to regulation by a federal or state governmental authority.

A “clearing agency” is an organization established for the execution of trades by transferring funds, assigning deliveries and guaranteeing the performance of the obligations of parties to trades.

Under the rules, regulations and procedures creating and affecting DTC and its operations, DTC is required to make book-entry transfers of the Certificates among DTC Participants on whose behalf it acts with respect to the Certificates and to receive and transmit distributions with respect to the Certificates. DTC Participants and Indirect DTC Participants with which Certificate Owners have accounts similarly are required to make book-entry transfers and receive and transmit the payments on behalf of their respective customers. Certificate Owners that are not DTC Participants or Indirect DTC Participants but desire to purchase, sell or otherwise transfer ownership of, or other interests in, the Certificates may do so only through DTC Participants and Indirect DTC Participants. In addition, Certificate Owners will receive all distributions with respect to the Certificates from the Trustees through DTC Participants or Indirect DTC Participants, as the case may be.

Under a book-entry format, Certificate Owners may experience some delay in their receipt of payments, because payments with respect to the Certificates will be forwarded by the Trustees to Cede, as nominee for DTC. DTC will forward payments in same-day funds to each DTC Participant who is credited with ownership of the Certificates in an amount proportionate to the face amount of that DTC Participant’s holdings of beneficial interests in the Certificates, as shown on the records of DTC or its nominee. Each such DTC Participant will forward payments to its Indirect DTC Participants in accordance with standing instructions and customary industry practices. DTC Participants and Indirect DTC Participants will be responsible for forwarding distributions to Certificate Owners for whom they act. Accordingly, although Certificate Owners will not possess physical certificates, DTC’s rules provide a mechanism by which Certificate Owners will receive payments on the Certificates and will be able to transfer their interests.

Unless and until physical certificates are issued under the limited circumstances described under “—Physical Certificates” below, the only Certificateholder of physical certificates will be Cede, as nominee of DTC. Certificate Owners will not be recognized by the Trustees as registered owners of Certificates under the applicable Pass Through Trust Agreement. Certificate Owners will be permitted to exercise their rights under the applicable Pass Through Trust Agreement only indirectly through DTC. DTC will take any action permitted to be taken by a Certificateholder under the applicable Pass Through Trust Agreement only at the direction of one or more DTC Participants to whose accounts with DTC the Certificates are credited. In the event any action requires approval by Certificateholders of a certain percentage of the beneficial interests in a Trust, DTC will take action only at the direction of and on behalf of DTC Participants whose holdings include undivided interests that satisfy the required percentage. DTC may take conflicting actions with respect to other undivided interests to the extent that the actions are taken on behalf of DTC Participants whose holdings include those undivided interests. DTC will convey notices and other communications to DTC Participants, and DTC Participants will convey notices and other communications to Indirect DTC Participants in

 

S-59


Table of Contents

accordance with arrangements among them. Arrangements among DTC and its direct and indirect participants are subject to any statutory or regulatory requirements as may be in effect from time to time. DTC’s rules applicable to itself and DTC Participants are on file with the Commission.

A Certificate Owner’s ability to pledge its Certificates to persons or entities that do not participate in the DTC system, or otherwise to act with respect to its Certificates, may be limited due to the lack of a physical certificate to evidence ownership of the Certificates, and because DTC can only act on behalf of DTC Participants, who in turn act on behalf of Indirect DTC Participants.

Neither United nor the Trustees will have any liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Certificates held by Cede, as nominee for DTC, for maintaining, supervising or reviewing any records relating to the beneficial ownership interests or for the performance by DTC, any DTC Participant or any Indirect DTC Participant of their respective obligations under the rules and procedures governing their obligations.

As long as the Certificates of any Trust are registered in the name of DTC or its nominee, United will make all payments to the Loan Trustee under the applicable Indenture in immediately available funds. The applicable Trustee will pass through to DTC in immediately available funds all payments received from United, including the final distribution of principal with respect to the Certificates of such Trust.

Any Certificates registered in the name of DTC or its nominee will trade in DTC’s Same-Day Funds Settlement System until maturity. DTC will require secondary market trading activity in the Certificates to settle in immediately available funds. No assurance can be given as to the effect, if any, of settlement in same-day funds on trading activity in the Certificates.

Physical Certificates

Physical certificates will be issued in paper form to Certificateholders or their nominees, rather than to DTC or its nominee, only if:

 

   

United advises the applicable Trustee in writing that DTC is no longer willing or able to discharge properly its responsibilities as depository with respect to the Certificates and United is unable to locate a qualified successor;

 

   

United elects to terminate the book-entry system through DTC; or

 

   

after the occurrence of an Indenture Default under any Indenture pursuant to which Equipment Notes held by a Trust were issued, Certificate Owners owning at least a majority in fractional undivided interests in such Trust advise the applicable Trustee, United and DTC through DTC Participants that the continuation of a book-entry system through DTC or a successor to DTC is no longer in the Certificate Owners’ best interest.

Upon the occurrence of any of the events described in the three subparagraphs above, the applicable Trustee will notify all applicable Certificate Owners through DTC Participants of the occurrence of such event and the availability of physical certificates. Upon surrender by DTC of the global certificates and receipt of instructions for re-registration, the applicable Trustee will reissue the Certificates as physical certificates to the applicable Certificate Owners.

In the case of the physical certificates that are issued, the applicable Trustee or a paying agent will make distributions with respect to such Certificates directly to holders in whose names the physical certificates were registered at the close of business on the applicable record date. Except for the final payment to be made with respect to a Certificate, the applicable Trustee or a paying agent will make distributions by check mailed to the addresses of the

 

S-60


Table of Contents

registered holders as they appear on the register maintained by such Trustee. The applicable Trustee or a paying agent will make the final payment with respect to any Certificate only upon presentation and surrender of the applicable Certificate at the office or agency specified in the notice of final distribution to Certificateholders.

Physical certificates will be freely transferable and exchangeable at the office of the Trustee upon compliance with the requirements set forth in the applicable Pass Through Trust Agreement. Neither the Trustee nor any transfer or exchange agent will impose a service charge for any registration of transfer or exchange. However, the Trustee or transfer or exchange agent will require payment of a sum sufficient to cover any tax or other governmental charge attributable to a transfer or exchange.

 

S-61


Table of Contents

DESCRIPTION OF THE DEPOSIT AGREEMENTS

The following summary describes the material terms of the Deposit Agreements. The summary does not purport to be complete and is qualified in its entirety by reference to all of the provisions of the Deposit Agreements, each of which will be filed as an exhibit to a Current Report on Form 8-K to be filed by United with the Commission. The provisions of the Deposit Agreements are substantially identical except as otherwise indicated.

General

Under the Escrow Agreements, the Escrow Agent with respect to each Trust will enter into a separate Deposit Agreement with the Depositary. Pursuant to the Escrow Agreements, the Depositary will establish separate accounts into which the proceeds of this Offering attributable to Certificates of the applicable Trust will be deposited (each, a “Deposit”) on behalf of such Escrow Agent. Pursuant to the Deposit Agreement with respect to each Trust (each, a “Deposit Agreement”), on each Regular Distribution Date the Depositary will pay to the Paying Agent on behalf of the applicable Escrow Agent, for distribution to the Certificateholders of such Trust, an amount equal to interest accrued on the Deposits relating to such Trust during the relevant interest period at a rate per annum equal to the interest rate applicable to the Certificates issued by such Trust. After the Issuance Date, upon each financing of an Aircraft during the Delivery Period, the Trustee for each Trust will request the Escrow Agent relating to such Trust to withdraw from the Deposits relating to such Trust funds sufficient to enable the Trustee of such Trust to purchase the Equipment Note of the series applicable to such Trust issued with respect to such Aircraft. Accrued but unpaid interest on all such Deposits withdrawn will be paid on the next Regular Distribution Date. Any portion of any Deposit withdrawn that is not used to purchase such Equipment Note will be re-deposited by each Trustee into an account relating to the applicable Trust. The Deposits relating to each Trust and interest paid thereon will not be subject to the subordination provisions of the Intercreditor Agreement and will not be available to pay any other amount in respect of the Certificates.

Unused Deposits

The Trustees’ obligations to purchase the Equipment Notes issued with respect to each Aircraft are subject to satisfaction of certain conditions at the time of financing, as set forth in the Note Purchase Agreement. See “Description of the Certificates—Obligation to Purchase Equipment Notes”. Since the Aircraft are expected to be financed from time to time during the Delivery Period, no assurance can be given that all such conditions will be satisfied at the time of financing for each such Aircraft. Moreover, delivery of the Aircraft is subject to delays in the manufacturing process and to the Aircraft manufacturer’s right to postpone deliveries under its agreement with United. See “Description of the Aircraft and Appraisals—Timing of Financing the Aircraft”.

If any funds remain as Deposits with respect to any Trust at the end of the Delivery Period or, if earlier, upon the acquisition by the Trusts of the Equipment Notes with respect to all of the Aircraft (the “Delivery Period Termination Date”), such funds will be withdrawn by the Escrow Agent and distributed, with accrued and unpaid interest thereon but without premium, to the Certificateholders of such Trust after at least 15 days’ prior written notice.

Distribution Upon Occurrence of Triggering Event

If a Triggering Event shall occur prior to the Delivery Period Termination Date, the Escrow Agent for each Trust will withdraw any funds then held as Deposits with respect to such Trust and cause such funds, with accrued and unpaid interest thereon but without any premium, to be distributed to the Certificateholders of such Trust by the Paying Agent on behalf of the Escrow Agent, after at least 15 days’ prior written notice. Accordingly, if a Triggering Event occurs prior to the Delivery Period Termination Date, the Trusts will not acquire Equipment Notes issued with respect to Aircraft available to be financed after the occurrence of such Triggering Event.

Replacement of Depositary

If the Depositary’s long-term issuer credit rating and short-term issuer credit rating by Fitch Ratings, Inc. (“Fitch”) both fall below the Depositary Threshold Rating (or both such ratings have been withdrawn or suspended),

 

S-62


Table of Contents

or if the Depositary’s short-term unsecured debt rating by Moody’s Investors Service, Inc. (“Moody’s”) falls below the Depositary Threshold Rating (or if such rating has been withdrawn or suspended), then United must, within 35 days of such event occurring, replace the Depositary with a new depositary bank that has a long-term issuer credit rating or short-term issuer credit rating issued by Fitch and a short-term unsecured debt rating by Moody’s equal to or higher than the applicable Depositary Threshold Rating, subject to receipt of written confirmation from each nationally recognized rating agency which shall have been requested to rate the Certificates and which shall then be rating the Certificates (the “Rating Agencies”) that such replacement will not result in a withdrawal, suspension or downgrading of the ratings for any Class of Certificates then rated by such Rating Agency without regard to any withdrawal, suspension or downgrading of any rating of the Depositary being replaced.

At any time during the Delivery Period, United may replace the Depositary, or the Depositary may replace itself, with a new depositary bank that has a long-term issuer credit rating or short-term issuer credit rating issued by Fitch and short-term unsecured debt rating issued by Moody’s equal to or higher than the applicable Depositary Threshold Rating, subject to receipt of written confirmation from each Rating Agency that such replacement will not result in a withdrawal, suspension or downgrading of the ratings for any Class of Certificates then rated by such Rating Agency.

“Depositary Threshold Rating” means, in the case of Fitch, the long-term issuer credit rating of A- or short-term issuer credit rating of F1 and, in the case of Moody’s, a short-term unsecured debt rating of P-1.

Depositary

Sumitomo Mitsui Banking Corporation, acting through its New York Branch, will act as depositary (the “Depositary”).

Sumitomo Mitsui Banking Corporation (Kabushiki Kaisha Mitsui Sumitomo Ginko) (“SMBC”) is a joint stock corporation with limited liability (Kabushiki Kaisha) under the laws of Japan. The registered head office of SMBC is located at 1-2, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-0005, Japan.

SMBC is a wholly-owned subsidiary of Sumitomo Mitsui Financial Group, Inc. (“SMFG”). As of March 31, 2019, SMBC had ¥190.96 trillion in consolidated total assets. SMBC is one of the world’s leading commercial banks and provides an extensive range of banking services to its customers in Japan and overseas. Internationally, SMBC operates through a network of branches, representative offices, subsidiaries and affiliates to provide many financing products.

The New York Branch of SMBC is licensed by the State of New York Banking Department to conduct branch banking business at 277 Park Avenue, New York, New York, and is subject to examination by the State of New York Banking Department and the Federal Reserve Bank of New York.

Audited consolidated financial statements for SMFG and its consolidated subsidiaries for the most current fiscal year available, as well as other corporate data, financial information and analyses are available in English on the website of SMFG at www.smfg.co.jp/english. The information on SMFG’s website does not form part of this Prospectus Supplement and is not incorporated herein by reference.

 

S-63


Table of Contents

DESCRIPTION OF THE ESCROW AGREEMENTS

The following summary describes the material terms of the escrow and paying agent agreements (the “Escrow Agreements”). The summary does not purport to be complete and is qualified in its entirety by reference to all of the provisions of the Escrow Agreements, each of which will be filed as an exhibit to a Current Report on Form 8-K to be filed by United with the Commission. The provisions of the Escrow Agreements are substantially identical except as otherwise indicated.

U.S. Bank National Association, as escrow agent in respect of each Trust (the “Escrow Agent”), Wilmington Trust, National Association, as paying agent on behalf of the Escrow Agent in respect of each Trust (the “Paying Agent”), each Trustee and the Underwriters will enter into a separate Escrow Agreement for the benefit of the Certificateholders of each Trust as holders of the Escrow Receipts affixed thereto (in such capacity, a “Receiptholder”). The cash proceeds of the offering of Certificates of each Trust will be deposited on behalf of the Escrow Agent (for the benefit of Receiptholders) with the Depositary as Deposits relating to such Trust. Each Escrow Agent shall permit the Trustee of the related Trust to cause funds to be withdrawn from such Deposits on or prior to the Delivery Period Termination Date to allow such Trustee to purchase the related Equipment Notes pursuant to the Note Purchase Agreement. In addition, the Escrow Agent shall direct the Depositary to pay interest on the Deposits accrued in accordance with the Deposit Agreement to the Paying Agent for distribution to the Receiptholders.

Each Escrow Agreement requires that the Paying Agent establish and maintain, for the benefit of the related Receiptholders, one or more Paying Agent Account(s), which shall be non-interest-bearing. The Paying Agent shall deposit interest on Deposits and any unused Deposits withdrawn by the Escrow Agent in the related Paying Agent Account. The Paying Agent shall distribute these amounts on a Regular Distribution Date or Special Distribution Date, as appropriate.

Upon receipt by the Depositary of cash proceeds from this Offering, the Escrow Agent will issue one or more escrow receipts (“Escrow Receipts”) which will be affixed by the relevant Trustee to each Certificate. Each Escrow Receipt evidences the related Receiptholder’s interest in amounts from time to time deposited into the Paying Agent Account and is limited in recourse to amounts deposited into such account. An Escrow Receipt may not be assigned or transferred except in connection with the assignment or transfer of the Certificate to which it is affixed. Each Escrow Receipt will be registered by the Escrow Agent in the same name and manner as the Certificate to which it is affixed.

Each Receiptholder shall have the right (individually and without the need for any other action of any person, including the Escrow Agent or any other Receiptholder), upon any default in the payment of interest on the Deposits when due by the Depositary in accordance with the applicable Deposit Agreement, or upon any default in the payment of the final withdrawal when due by the Depositary in accordance with the terms of the applicable Deposit Agreement and Escrow Agreement, to proceed directly against the Depositary. The Escrow Agent will notify Receiptholders in the event of a default in any such payment and will promptly forward to Receiptholders upon receipt copies of all written communications relating to any payments due to the Receiptholders in respect of the Deposits.

 

S-64


Table of Contents

DESCRIPTION OF THE LIQUIDITY