424B3
Table of Contents

Filed Pursuant to Rule 424(b)(3)
Registration No. 333-221865-01

 

This preliminary prospectus supplement relates to an effective registration statement under the Securities Act of 1933, as amended, but it is not complete and may be changed. This preliminary prospectus supplement and the accompanying prospectus are not an offer to sell these securities and are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

SUBJECT TO COMPLETION, DATED SEPTEMBER 3, 2019

PROSPECTUS SUPPLEMENT TO PROSPECTUS, DATED DECEMBER 1, 2017

$232,381,000

 

LOGO

2019-2 PASS THROUGH TRUSTS

CLASS B PASS THROUGH CERTIFICATES, SERIES 2019-2

 

 

United Airlines Class B Pass Through Certificates, Series 2019-2, are being offered under this prospectus supplement. The Class AA Pass Through Certificates and the Class A Pass Through Certificates of the same series are being offered under a separate prospectus supplement of United Airlines, Inc. dated the date hereof and are not being offered under this prospectus supplement. The Class B certificates offered hereby will not be issued unless the Class AA and Class A certificates are simultaneously or have previously been issued.

The Class B certificates will rank junior in right of distributions to the Class AA and Class A certificates. The Class B certificates represent interests in the Class B trust to be established in connection with this offering. The proceeds from the sale of the Class B 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 Class B trust will use the escrowed funds to acquire Series B equipment notes. The Series B 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 Series B equipment notes held in the Class B trust will be passed through to the holders of Class B certificates.

Interest on the Series B 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 Series B 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.

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

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

Investing in the Class B certificates involves risks. See “Risk Factors” beginning on page S-19.

 

Pass Through
Certificates

    

Face Amount

    

Interest
Rate

    

Final Expected
  Distribution Date  

    

Price to
Public(1)

Class B

     $232,381,000          %      May 1, 2028      100%

 

(1)

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

The underwriters will purchase all of the Class B certificates if any are purchased. The aggregate proceeds from the sale of the Class B certificates will be $232,381,000. United will pay the underwriters a commission of $        . Delivery of the Class B certificates in book-entry form only will be made on or about                     , 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                     , 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-16  

Selected Operating Data

    S-18  

RISK FACTORS

    S-19  

Risk Factors Relating to the Company

    S-19  

Risk Factors Relating to the Class B Certificates and the Offering

    S-32  

USE OF PROCEEDS

    S-35  

THE COMPANY

    S-35  

DESCRIPTION OF THE CERTIFICATES

    S-36  

General

    S-36  

Investment Company Act Exemption

    S-37  

Payments and Distributions

    S-37  

Pool Factors

    S-40  

Reports to Certificateholders

    S-42  

Indenture Defaults and Certain Rights Upon an Indenture Default

    S-43  

Purchase Rights of Certificateholders

    S-44  

PTC Event of Default

    S-45  

Merger, Consolidation and Transfer of Assets

    S-45  

Modifications of the Pass Through Trust Agreements and Certain Other Agreements

    S-46  

Obligation to Purchase Equipment Notes

    S-49  

Liquidation of Original Trusts

    S-60  

Termination of the Trusts

    S-61  

The Trustees

    S-61  

Book-Entry; Delivery and Form

    S-61  

DESCRIPTION OF THE DEPOSIT AGREEMENTS

    S-65  

General

    S-65  

Unused Deposits

    S-65  

Distribution Upon Occurrence of Triggering Event

    S-65  

Replacement of Depositary

    S-65  

Depositary

    S-66  

DESCRIPTION OF THE ESCROW AGREEMENTS

    S-67  

DESCRIPTION OF THE LIQUIDITY FACILITIES

    S-68  

General

    S-68  

Drawings

    S-68  

Replacement Liquidity Facility

    S-71  

Reimbursement of Drawings

    S-71  

Liquidity Events of Default

    S-74  

Liquidity Provider

    S-74  

DESCRIPTION OF THE INTERCREDITOR AGREEMENT

    S-75  

Intercreditor Rights

    S-75  

Post Default Appraisals

    S-77  

Priority of Distributions

    S-77  

Voting of Equipment Notes

    S-81  
   

Page

 

List of Certificateholders

    S-81  

Reports

    S-81  

The Subordination Agent

    S-82  

DESCRIPTION OF THE AIRCRAFT AND THE APPRAISALS

    S-83  

The Aircraft

    S-83  

The Appraisals

    S-83  

Timing of Financing the Aircraft

    S-84  

Substitute Aircraft

    S-85  

DESCRIPTION OF THE EQUIPMENT NOTES

    S-86  

General

    S-86  

Subordination

    S-86  

Principal and Interest Payments

    S-87  

Redemption

    S-87  

Security

    S-88  

Limitation of Liability

    S-89  

Indenture Defaults, Notice and Waiver

    S-89  

Remedies

    S-89  

Modification of Indentures

    S-90  

Indemnification

    S-91  

Certain Provisions of the Indentures

    S-91  

POSSIBLE ISSUANCE OF ADDITIONAL JUNIOR CERTIFICATES AND REFINANCING OF CERTIFICATES

    S-97  

Issuance of Additional Junior Certificates

    S-97  

Refinancing of Certificates

    S-97  

Additional Liquidity Facilities

    S-98  

CERTAIN U.S. FEDERAL  TAX CONSEQUENCES

    S-99  

General

    S-99  

Tax Status of the Class B Trust

    S-99  

Taxation of Certificateholders Generally

    S-99  

Effect of Reallocation of Payments under the Intercreditor Agreement

    S-101  

Dissolution of Original Class B Trust and Formation of New Class  B Trust

    S-102  

Sale or Other Disposition of the Class B Certificates

    S-102  

3.8% Medicare Tax on “Net Investment Income”

    S-102  

Foreign Certificateholders

    S-102  

Backup Withholding

    S-103  

CERTAIN DELAWARE TAXES

    S-104  

CERTAIN ERISA CONSIDERATIONS

    S-105  

UNDERWRITING

    S-107  

Selling Restrictions

    S-108  

LEGAL MATTERS

    S-112  

EXPERTS

    S-112  

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

    S-113  

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 Class B 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

 

     Offered Separately(1)  

 

     Class AA Certificates   Class A Certificates   Class B Certificates

Aggregate Face Amount

   $702,146,000   $286,718,000   $232,381,000

Interest Rate

           %           %           %

Initial Loan to Aircraft Value (cumulative)(2)

   42.5%   59.9%   74.0%

Highest Loan to Aircraft Value (cumulative)(2)(3)

   42.5%   59.9%   74.0%

Expected Principal Distribution Window (in years from applicable original issuance date)

   1.1- 12.6   1.1- 8.6   1.1- 8.6

Initial Average Life (in years from applicable original issuance date)

   9.2   7.1   5.1

Regular Distribution Dates

   May 1 and
November 1
  May 1 and
November 1
  May 1 and
November 1

Final Expected Distribution Date

   May 1, 2032   May 1, 2028   May 1, 2028

Final Maturity Date

   November 1, 2033   November 1, 2029   November 1, 2029

Minimum Denomination

   $1,000   $1,000   $1,000

Section 1110 Protection

   Yes   Yes   Yes

Liquidity Facility Coverage

   Three semiannual
interest payments
  Three semiannual
interest payments
  Three semiannual
interest payments

 

(1)

The Class AA Certificates and Class A Certificates are being offered under a separate prospectus supplement of United dated the date hereof. The Class AA Certificates and Class A Certificates are not being offered pursuant to this Prospectus Supplement. The Class B Certificates offered hereby will not be issued unless the Class AA Certificates and Class A Certificates are simultaneously or have previously been issued.

(2)

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 and the Senior Certificates 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 and the Senior Certificates 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”.

(3)

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 and the Senior Certificates 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 and the Senior Certificates 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 and the Senior Certificates 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 and the Senior Certificates Offering the four aircraft of such model with the earliest scheduled delivery months from Boeing). The Series B Equipment Notes will mature no later than May 1, 2028.

 

Aircraft Model

   Registration
Number(1)
   Manufacturer’s
Serial
Number(1)
   Delivery
Month(1)
   Principal
Amount of
Senior
Equipment
Notes(2)
     Principal
Amount of
Series B
Equipment
Notes
     Appraised
Value(3)
 

Boeing 787-9

   N29975    66134    January 2020    $ 88,530,000      $ 20,804,000      $ 149,670,000  

Boeing 787-9

   N24976    66135    February 2020      88,678,000        20,839,000        149,920,000  

Boeing 787-9

   N29977    66136    February 2020      88,678,000        20,839,000        149,920,000  

Boeing 787-10

   N16009    40938    April 2019      89,169,000        20,954,000        150,750,000  

Boeing 787-10

   N91007    40929    May 2019      89,464,000        21,024,000        151,250,000  

Boeing 787-10

   N12010    40926    December 2019      91,097,000        21,407,000        154,010,000  

Boeing 787-10

   N14011    40934    December 2019      91,097,000        21,407,000        154,010,000  

Boeing 777-300ER

   N2749U    66589    November 2019      92,191,000        21,665,000        155,860,000  

Boeing 777-300ER

   N2250U    66590    December 2019      92,156,000        21,656,000        155,800,000  

Embraer ERJ 175 LL

   N616UX    17000817    September 2019      17,727,000        4,166,000        29,970,000  

Embraer ERJ 175 LL

   N617UX    17000819    October 2019      17,757,000        4,173,000        30,020,000  

Embraer ERJ 175 LL

   N618UX    17000820    October 2019      17,757,000        4,173,000        30,020,000  

Embraer ERJ 175 LL

   N619UX    17000821    October 2019      17,757,000        4,173,000        30,020,000  

Embraer ERJ 175 LL

   N620UX    17000824    November 2019      17,786,000        4,180,000        30,070,000  

Embraer ERJ 175 LL

   N621UX    17000825    November 2019      17,786,000        4,180,000        30,070,000  

Embraer ERJ 175 LL

   N622UX    17000826    November 2019      17,786,000        4,180,000        30,070,000  

Embraer ERJ 175 LL

   N623UX    17000830    December 2019      17,816,000        4,187,000        30,120,000  

Embraer ERJ 175 LL

   N624UX    17000831    December 2019      17,816,000        4,187,000        30,120,000  

Embraer ERJ 175 LL

   N625UX    17000835    December 2019      17,816,000        4,187,000        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 and the Senior Certificates Offering is August 31, 2020 (or later under certain circumstances). The financing pursuant to this Offering and the Senior Certificates 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 principal amount of Senior Equipment Notes for an Aircraft represents the sum of the principal amount of the Series AA and Series A Equipment Notes for such Aircraft.

(3)

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 Class B 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 the Senior Certificates 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 Class B 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(4)
     Class A
Certificates(4)
     Class B
Certificates
     Class AA
Certificates
    Class A
Certificates
    Class B
Certificates
 

May 1, 2020

   $ 1,651,141,765      $ 702,146,000      $ 286,718,000      $ 232,381,000        42.5     59.9     74.0

November 1, 2020

     1,625,995,930        691,776,269        281,351,600        222,153,080        42.5     59.8     73.5

May 1, 2021

     1,600,850,096        674,836,215        274,011,619        208,163,744        42.2     59.3     72.3

November 1, 2021

     1,575,704,261        656,912,565        266,671,638        194,174,408        41.7     58.6     70.9

May 1, 2022

     1,550,558,426        638,988,916        259,331,658        180,185,072        41.2     57.9     69.6

November 1, 2022

     1,525,412,591        621,065,266        251,991,677        166,195,735        40.7     57.2     68.1

May 1, 2023

     1,500,266,757        603,141,616        244,651,696        152,206,399        40.2     56.5     66.7

November 1, 2023

     1,475,120,922        585,217,967        237,311,715        138,217,063        39.7     55.8     65.1

May 1, 2024

     1,449,975,087        567,294,317        229,971,734        124,227,727        39.1     55.0     63.6

November 1, 2024

     1,424,829,252        549,370,668        222,631,754        110,238,391        38.6     54.2     61.9

May 1, 2025

     1,399,683,418        531,447,018        215,291,773        96,249,054        38.0     53.4     60.2

November 1, 2025

     1,374,537,583        513,523,369        207,951,792        82,259,718        37.4     52.5     58.5

May 1, 2026

     1,349,391,748        495,599,719        200,611,811        68,270,382        36.7     51.6     56.7

November 1, 2026

     1,324,245,913        477,676,070        193,271,830        54,281,046        36.1     50.7     54.8

May 1, 2027

     1,299,100,078        459,752,420        185,931,850        40,291,710        35.4     49.7     52.8

November 1, 2027

     1,273,954,244        441,828,771        178,591,869        26,302,373        34.7     48.7     50.8

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 and the Senior Certificates 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 Class B 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 and Class B Certificates, with the expected outstanding balance of the Certificates ranking senior in right of payment to such Class) 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 and the Senior Certificates 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.

(4)

The Class AA Certificates and Class A Certificates are being offered under a separate prospectus supplement of United dated the date hereof. The Class AA Certificates and Class A Certificates are not being offered pursuant to this Prospectus Supplement. The Class B Certificates offered hereby will not be issued unless the Class AA Certificates and Class A Certificates are simultaneously or have previously been issued.



 

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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, the Class A Certificates and the Class B 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.



 

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The Offering

 

Certificates Offered

  Class B Pass Through Certificates, Series 2019-2.

 

  The Class AA and Class A Certificates of the same series are being offered under a separate prospectus supplement of United dated the date hereof and are not being offered under this Prospectus Supplement. The Class B Certificates will not be issued unless the Class AA Certificates and the Class A Certificates are simultaneously or have been previously issued. Each Class of Certificates will represent a fractional undivided interest in a related Trust.

 

Use of Proceeds

The proceeds from the sale of the Class B Certificates will initially be held in escrow and deposited with the Depositary, pending financing of each Aircraft under this Offering and the Senior Certificates Offering. The proceeds from the sale of the Class AA Certificates and Class A Certificates will similarly be held in escrow. Each Trust (including the Class B 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 the Class B Trust will include:

 

   

Series B Equipment Notes acquired by the Class B Trust.

 

   

All monies receivable under the Liquidity Facility for the Class B Trust.

 

   

Funds from time to time deposited with the Class B Trustee in accounts relating to the Class B Trust, including payments made by United on the Series B Equipment Notes held in the Class B 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 Class B Trustee will distribute all payments of principal, premium (if any) and interest received on the Series B Equipment Notes held in the Class B Trust to the holders of the Class B Certificates, subject to the subordination provisions of the Intercreditor Agreement applicable to the Class B Certificates.


 

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

 

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

 

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 B Certificates to pay interest on the Preferred B Pool Balance.

 

   

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

 

   

Fifth, 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.

 

   

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

 

   

Seventh, to the holders of the Class B Certificates to pay interest on the Pool Balance of the Class B Certificates not previously distributed under clause “Third” above.

 

   

Eighth, to the holders of the Class B Certificates to make distributions in respect of the Pool Balance of the Class B 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.



 

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

 

   

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

 

   

Under certain circumstances, and notwithstanding the foregoing, the Liquidity Provider 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.

 

   

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

 

   

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, Class A and Class B 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, Class A and Class B 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, the Class A Trust or the Class B 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



 

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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 Facilities and will rank senior to the Certificates in right of payment.

 

Escrowed Funds

Funds in escrow for the Certificateholders of the Class B Trust will be held by the Depositary as Deposits relating to the Class B Trust. The Class B Trust may withdraw these funds from time to time to purchase Series B 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 the Class B Trust at a rate per annum equal to the interest rate applicable to the Class B Certificates. The Deposits relating to the Class B Trust and interest paid thereon will not be subject to the subordination provisions applicable to the Class B Certificates. The Deposits cannot be used to pay any other amount in respect of the Class B Certificates.

 

Unused Escrowed Funds

All of the Deposits relating to the Class B Trust held in escrow may not be used to purchase Series B 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 Notes”. If any funds remain as Deposits with respect to the Class B Trust after such deadline, such funds will be withdrawn by the Escrow Agent for the Class B Trust and distributed, with accrued and unpaid interest, to the Class B Certificateholders after at least 15 days’ prior written notice. See “Description of the Deposit Agreements—Unused Deposits”.

 

Obligation to Purchase Equipment Notes

The Class B Trustee will be obligated to purchase the Series B Equipment Notes, and the other Trustees will be obligated to purchase the applicable Senior 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



 

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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 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, Series B Equipment Notes or any of such other series of subordinated equipment notes at or after repayment of any such refinanced Series A Equipment Notes, Series B Equipment Notes 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, Class A and Class B 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”.


 

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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 Series B Equipment Notes held in the Class B Trust will accrue interest at the rate per annum for the Class B Certificates 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 Series B 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 Series B 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 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 or Series B 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.


 

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(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 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 Class B Trustee that the benefits of Section 1110 of the U.S. Bankruptcy Code will be available with respect to the Series B Equipment Notes.

 

Certain U.S. Federal Tax Consequences

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


 

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Certain ERISA Considerations

Each person who acquires a Class B Certificate will be deemed to have represented that either: (a) no employee benefit plan assets have been used to purchase or hold such Class B Certificate or (b) the purchase and holding of such Class B 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 and Class A Trust

   Long Term    BBB        Baa2

Threshold Rating for the Liquidity Provider for the Class B Trust

   Long Term    BBB-       Baa2

Liquidity Provider Rating

   The Liquidity Provider meets the Liquidity Threshold Rating requirements.


 

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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)



 

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(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.



 

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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.



 

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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 in the airline industry, the rise of well-funded government sponsored international carriers, changes in international

 

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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 include changes in global crude oil prices, the balance between aircraft fuel supply and demand, natural disasters,

 

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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.

 

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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 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

 

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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 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.

 

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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.

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

 

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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, 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.

 

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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. “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.

 

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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.

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.

 

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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 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.

 

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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 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.

 

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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.

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.

 

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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 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

 

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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.

Risk Factors Relating to the Class B Certificates and the Offering

The Series B Equipment Notes will not be obligations of UAL.

The Series B Equipment Notes to be held for the Class B Trust 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.

Class B 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.

 

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

 

   

Under certain circumstances, and notwithstanding the foregoing, the Liquidity Provider with the largest amount owed to it.

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 Series B Equipment Notes.

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

There may be a limited market for resale of Class B Certificates.

Prior to this Offering, there has been no public market for the Class B Certificates. Neither United nor the Class B Trust intends to apply for listing of the Class B Certificates on any securities exchange or otherwise. The Underwriters may assist in resales of the Class B Certificates, but they are not required to do so. A secondary market

 

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for the Class B 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 Class B Certificates.

Credit risk retention regulation in Europe may adversely impact an investment in or the liquidity of the Class B 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 Class B Certificates on the Issuance Date or at any time in the future; or (ii) undertakes to retain a material net economic interest in the Class B 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 Class B Certificates by any regulatory authority in any jurisdiction. If the regulatory treatment of an investment in the Class B 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 Class B 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 Class B Certificates and may also affect the price and liquidity of the Class B Certificates in the secondary market. Investors must be prepared to bear the risk of holding Class B 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 Class B Certificates, which, in turn, may adversely affect the ability of investors in the Class B Certificates who are not subject to those provisions to resell their Class B Certificates in the secondary market. No representation is made as to the proper characterization of the Class B Certificates for legal, investment, financial institution regulatory, financial reporting or other purposes, as to the ability of particular investors to purchase the Class B Certificates under applicable legal investment or other restrictions or as to the consequences of an investment in the Class B 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 Class B Certificates.

 

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USE OF PROCEEDS

The proceeds from the sale of the Class B Certificates being offered hereby will be used to purchase Series B Equipment Notes issued by United during the Delivery Period. The Series B Equipment Notes, together with the Series AA Equipment Notes and Series A 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 Series B Equipment Notes, such proceeds from the sale of the Class B Certificates will be held in escrow and deposited with the Depositary on behalf of the applicable Escrow Agent for the benefit of the holders of the Class B Certificates. The proceeds from the sale of the Class AA Certificates and Class A Certificates will similarly be held in escrow.

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.

 

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DESCRIPTION OF THE CERTIFICATES

The following summary describes the material terms of the Class B 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.

We are offering only the Class B Certificates pursuant to this Prospectus Supplement. The Class AA Certificates and Class A Certificates are being offered under a separate prospectus supplement of United dated the date hereof (the “Senior Certificates Offering”), and are not being offered under this Prospectus Supplement. The Class B Certificates will not be issued unless the Class AA Certificates and Class A Certificates are simultaneously or have previously been issued.

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

Under the terms of the Senior Certificates Offering, we are entitled to sell Series B Equipment Notes secured by the Aircraft. Accordingly, we have arranged the sale of the Class B Certificates so that we may sell such Series B Equipment Notes to the Class B Trust.

Each Class B Certificate will represent a fractional undivided interest in the United Airlines Pass Through Trust 2019-2B (the “Class B Trust”). Each Class AA Certificate will represent a fractional undivided interest in the United Airlines Pass Through Trust 2019-2AA (the “Class AA Trust”). Each Class A Certificate will represent a fractional undivided interest in the United Airlines Pass Through Trust 2019-2A (the “Class A Trust” and, collectively with the Class AA Trust and Class B Trust, the “Trusts”). (Section 2.01)

The Class B Trust 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 a separate supplement thereto (the “Class B Trust Supplement” and, together with the Basic Agreement, the “Class B Pass Through Trust Agreement”), between United and the Trustee, as trustee under the Class B Trust (the “Class B Trustee”). The Class AA Trust and the Class A Trust will be formed pursuant to the Basic Agreement and two separate supplements thereto relating to such Trusts (each, together with the Class B Trust Supplement, a “Trust Supplement” and, each Trust Supplement together with the Basic Agreement, collectively, the “Pass Through Trust Agreements”) 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” and, together with the Class B Trustee and the Class AA Trustee, the “Trustees”). The pass through certificates issued by the Class AA Trust, the Class A Trust and the Class B Trust are referred to herein as the “Class AA Certificates”, the “Class A Certificates” and the “Class B Certificates”, respectively, and collectively as the “Certificates”.

Each Class B Certificate will represent a fractional undivided interest in the Class B Trust created by the Basic Agreement and the Class B Trust Supplement. The Trust Property of the Class B Trust (the “Trust Property”) will consist of:

 

   

Subject to the Intercreditor Agreement, Series B 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 Series B Equipment Notes and any proceeds from any sale of such Series B Equipment Notes held in the Class B Trust. Series B Equipment Notes held in the Class B Trust will be registered in the name of the Subordination Agent on behalf of the Class B Trust for purposes of giving effect to the provisions of the Intercreditor Agreement.

 

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The rights of the Class B Trust to acquire Series B Equipment Notes under the Note Purchase Agreement.

 

   

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

 

   

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

 

   

All monies receivable under the Liquidity Facility for the Class B Trust.

 

   

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

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

The Class B Certificates represent interests in the Class B Trust, and all payments and distributions thereon will be made only from the Trust Property of the Class B Trust. (Section 3.09) The Class B 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 the Class B Trust, the Class B Certificateholders as holders of the Escrow Receipts affixed to each Class B Certificate are entitled to certain rights with respect to the Deposits relating to the Class B Trust. Accordingly, any transfer of a Class B 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 Class B Certificates (the “Class B Certificateholders”, and, together with the holders of the Class AA Certificates and Class A Certificates, the “Certificateholders”). Rights with respect to the Deposits and the Escrow Agreement relating to the Class B Trust, except for the right to request withdrawals for the purchase of Series B Equipment Notes, will not constitute Trust Property of the Class B Trust.

Investment Company Act Exemption

The Class B Trust is relying on an analysis that the Class B Trust 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 Class B Trust.

Payments and Distributions

Payments of interest on the Deposits with respect to the Class B Trust and payments of principal, premium (if any) and interest on the Series B Equipment Notes or with respect to other Trust Property held in the Class B Trust will be distributed by the Paying Agent (in the case of the Deposits) or by the Class B Trustee (in the case of Trust Property of the Class B Trust) to Class B Certificateholders 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 the Class B Trust and the Series B Equipment Notes held in the Class B Trust will accrue interest at the applicable rate per annum for Class B Certificates, which is 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

 

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the case of Series B Equipment Notes issued on or after such date, commencing on the first May 1 or November 1 to occur after such Series B Equipment Notes are issued). Such interest payments will be distributed to Class B Certificateholders on each such date until the final Distribution Date for the Class B Trust, subject in the case of payments on the Series B Equipment Notes to the Intercreditor Agreement. The Class AA Certificates and related Deposits and Equipment Notes bear interest at a rate per annum of     %, and the Class A Certificates and related Deposits and Equipment Notes bear interest at a rate per annum of     % (together with the rate per annum of the Class B Certificates, in each case, the “Stated Interest Rate”). 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.

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 applicable 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, for the Class A Certificates is November 1, 2029 and for the Class B 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.

 

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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”.

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.

 

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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 original issuance of the Certificates of such Trust; 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)

 

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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.

 

     Offered Separately(1)                
     Class AA      Class A      Class B  

Date

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

At Issuance

   $ 0.00        1.0000000          $ 0.00        1.0000000          $ 0.00        1.0000000      

May 1, 2020

     0.00        1.0000000            0.00        1.0000000            0.00        1.0000000      

November 1, 2020

     10,369,730.60        0.9852314            5,366,400.00        0.9812834            10,227,919.80        0.9559864      

May 1, 2021

     16,940,054.81        0.9611053            7,339,980.80        0.9556834            13,989,336.20        0.8957864      

November 1, 2021

     17,923,649.54        0.9355783            7,339,980.80        0.9300834            13,989,336.20        0.8355864      

May 1, 2022

     17,923,649.54        0.9100514            7,339,980.80        0.9044834            13,989,336.20        0.7753864      

November 1, 2022

     17,923,649.54        0.8845244            7,339,980.80        0.8788834            13,989,336.20        0.7151864      

May 1, 2023

     17,923,649.54        0.8589974            7,339,980.80        0.8532834            13,989,336.20        0.6549864      

November 1, 2023

     17,923,649.54        0.8334705            7,339,980.80        0.8276834            13,989,336.20        0.5947864      

May 1, 2024

     17,923,649.54        0.8079435            7,339,980.80        0.8020834            13,989,336.20        0.5345864      

November 1, 2024

     17,923,649.54        0.7824166            7,339,980.80        0.7764834            13,989,336.20        0.4743864      

May 1, 2025

     17,923,649.54        0.7568896            7,339,980.80        0.7508834            13,989,336.20        0.4141864      

November 1, 2025

     17,923,649.54        0.7313627            7,339,980.80        0.7252834            13,989,336.20        0.3539864      

May 1, 2026

     17,923,649.54        0.7058357            7,339,980.80        0.6996834            13,989,336.20        0.2937864      

November 1, 2026

     17,923,649.54        0.6803088            7,339,980.80        0.6740834            13,989,336.20        0.2335864      

May 1, 2027

     17,923,649.54        0.6547818            7,339,980.80        0.6484834            13,989,336.20        0.1733864      

November 1, 2027

     17,923,649.54        0.6292548            7,339,980.80        0.6228834            13,989,336.20        0.1131864      

May 1, 2028

     17,923,649.54        0.6037279            178,591,868.80        0.0000000            26,302,373.40        0.0000000      

November 1, 2028

     17,923,649.54        0.5782009            0.00        0.0000000            0.00        0.0000000      

May 1, 2029

     17,923,649.54        0.5526740            0.00        0.0000000            0.00        0.0000000      

November 1, 2029

     17,923,649.54        0.5271470            0.00        0.0000000            0.00        0.0000000      

May 1, 2030

     17,923,649.54        0.5016201            0.00        0.0000000            0.00        0.0000000      

November 1, 2030

     17,923,649.54        0.4760931            0.00        0.0000000            0.00        0.0000000      

May 1, 2031

     17,923,649.54        0.4505662            0.00        0.0000000            0.00        0.0000000      

November 1, 2031

     17,923,649.54        0.4250392            0.00        0.0000000            0.00        0.0000000      

May 1, 2032

     298,439,574.25        0.0000000            0.00        0.0000000            0.00        0.0000000      

 

 

(1)

The Class AA Certificates and Class A Certificates are being offered under a separate prospectus supplement of United dated the date hereof. The Class AA Certificates and Class A Certificates are not being offered pursuant to this Prospectus Supplement. The Class B Certificates offered hereby will not be issued unless the Class AA Certificates and Class A Certificates are simultaneously or have previously been issued.

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).

 

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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 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 a Class of Certificates is 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 such 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))

(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.

 

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(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 a Class of Certificates is 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 such 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 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)

 

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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”.

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.

 

   

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

 

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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 Certificates, Class A Certificates, Class B 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.

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.

 

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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.

 

   

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

 

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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.

 

   

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.

 

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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 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)

 

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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 Class B Trustee will be obligated to purchase the Series B Equipment Notes, and the other Trustees will be obligated to purchase the applicable Senior Equipment Notes, issued with respect to the Aircraft during the Delivery Period, subject to the terms and conditions of a note purchase agreement (as amended in connection with the Offering, 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.

 

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

At Issuance

      $ 62,861,000.00          $ 25,669,000.00          $ 20,804,000.00          $ 0.00          $ 0.00          $ 0.00   

May 1, 2020

    62,861,000.00       25,669,000.00       20,804,000.00       0.00       0.00       0.00  

November 1, 2020

    62,861,000.00       25,669,000.00       20,804,000.00       0.00       0.00       0.00  

May 1, 2021

    61,591,207.80       25,011,873.60       19,551,599.20       1,269,792.20       657,126.40       1,252,400.80  

November 1, 2021

    59,983,852.03       24,354,747.20       18,299,198.40       1,607,355.77       657,126.40       1,252,400.80  

May 1, 2022

    58,376,496.26       23,697,620.80       17,046,797.60       1,607,355.77       657,126.40       1,252,400.80  

November 1, 2022

    56,769,140.49       23,040,494.40       15,794,396.80       1,607,355.77       657,126.40       1,252,400.80  

May 1, 2023

    55,161,784.72       22,383,368.00       14,541,996.00       1,607,355.77       657,126.40       1,252,400.80  

November 1, 2023

    53,554,428.95       21,726,241.60       13,289,595.20       1,607,355.77       657,126.40       1,252,400.80  

May 1, 2024

    51,947,073.18       21,069,115.20       12,037,194.40       1,607,355.77       657,126.40       1,252,400.80  

November 1, 2024

    50,339,717.41       20,411,988.80       10,784,793.60       1,607,355.77       657,126.40       1,252,400.80  

May 1, 2025

    48,732,361.64       19,754,862.40       9,532,392.80       1,607,355.77       657,126.40       1,252,400.80  

November 1, 2025

    47,125,005.87       19,097,736.00       8,279,992.00       1,607,355.77       657,126.40       1,252,400.80  

May 1, 2026

    45,517,650.10       18,440,609.60       7,027,591.20       1,607,355.77       657,126.40       1,252,400.80  

November 1, 2026

    43,910,294.33       17,783,483.20       5,775,190.40       1,607,355.77       657,126.40       1,252,400.80  

May 1, 2027

    42,302,938.56       17,126,356.80       4,522,789.60       1,607,355.77       657,126.40       1,252,400.80  

November 1, 2027

    40,695,582.79       16,469,230.40       3,270,388.80       1,607,355.77       657,126.40       1,252,400.80  

May 1, 2028

    39,088,227.02       0.00       0.00       1,607,355.77       16,469,230.40       3,270,388.80  

November 1, 2028

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

May 1, 2029

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

November 1, 2029

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

May 1, 2030

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

November 1, 2030

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

May 1, 2031

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

November 1, 2031

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

May 1, 2032

    0.00       0.00       0.00       27,836,736.63       0.00       0.00  

 

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    N24976
    Equipment Note Ending Balance   Scheduled Payments of Principal

Date

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

At Issuance

      $ 62,966,000.00          $ 25,712,000.00          $ 20,839,000.00          $ 0.00          $ 0.00          $ 0.00   

May 1, 2020

    62,966,000.00       25,712,000.00       20,839,000.00       0.00       0.00       0.00  

November 1, 2020

    62,966,000.00       25,712,000.00       20,839,000.00       0.00       0.00       0.00  

May 1, 2021

    61,694,086.80       25,053,772.80       19,584,492.20       1,271,913.20       658,227.20       1,254,507.80  

November 1, 2021

    60,099,158.02       24,395,545.60       18,329,984.40       1,594,928.78       658,227.20       1,254,507.80  

May 1, 2022

    58,504,229.24       23,737,318.40       17,075,476.60       1,594,928.78       658,227.20       1,254,507.80  

November 1, 2022

    56,909,300.46       23,079,091.20       15,820,968.80       1,594,928.78       658,227.20       1,254,507.80  

May 1, 2023

    55,314,371.68       22,420,864.00       14,566,461.00       1,594,928.78       658,227.20       1,254,507.80  

November 1, 2023

    53,719,442.90       21,762,636.80       13,311,953.20       1,594,928.78       658,227.20       1,254,507.80  

May 1, 2024

    52,124,514.12       21,104,409.60       12,057,445.40       1,594,928.78       658,227.20       1,254,507.80  

November 1, 2024

    50,529,585.34       20,446,182.40       10,802,937.60       1,594,928.78       658,227.20       1,254,507.80  

May 1, 2025

    48,934,656.56       19,787,955.20       9,548,429.80       1,594,928.78       658,227.20       1,254,507.80  

November 1, 2025

    47,339,727.78       19,129,728.00       8,293,922.00       1,594,928.78       658,227.20       1,254,507.80  

May 1, 2026

    45,744,799.00       18,471,500.80       7,039,414.20       1,594,928.78       658,227.20       1,254,507.80  

November 1, 2026

    44,149,870.22       17,813,273.60       5,784,906.40       1,594,928.78       658,227.20       1,254,507.80  

May 1, 2027

    42,554,941.44       17,155,046.40       4,530,398.60       1,594,928.78       658,227.20       1,254,507.80  

November 1, 2027

    40,960,012.66       16,496,819.20       3,275,890.80       1,594,928.78       658,227.20       1,254,507.80  

May 1, 2028

    39,365,083.88       0.00       0.00       1,594,928.78       16,496,819.20       3,275,890.80  

November 1, 2028

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

May 1, 2029

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

November 1, 2029

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

May 1, 2030

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

November 1, 2030

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

May 1, 2031

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

November 1, 2031

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

May 1, 2032

    0.00       0.00       0.00       28,200,582.42       0.00       0.00  

 

    N29977
    Equipment Note Ending Balance   Scheduled Payments of Principal

Date

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

At Issuance

      $ 62,966,000.00          $ 25,712,000.00          $ 20,839,000.00          $ 0.00         $ 0.00          $ 0.00   

May 1, 2020

    62,966,000.00       25,712,000.00       20,839,000.00       0.00       0.00       0.00  

November 1, 2020

    62,966,000.00       25,712,000.00       20,839,000.00       0.00       0.00       0.00  

May 1, 2021

    61,694,086.80       25,053,772.80       19,584,492.20       1,271,913.20       658,227.20       1,254,507.80  

November 1, 2021

    60,099,158.02       24,395,545.60       18,329,984.40       1,594,928.78       658,227.20       1,254,507.80  

May 1, 2022

    58,504,229.24       23,737,318.40       17,075,476.60       1,594,928.78       658,227.20       1,254,507.80  

November 1, 2022

    56,909,300.46       23,079,091.20       15,820,968.80       1,594,928.78       658,227.20       1,254,507.80  

May 1, 2023

    55,314,371.68       22,420,864.00       14,566,461.00       1,594,928.78       658,227.20       1,254,507.80  

November 1, 2023

    53,719,442.90       21,762,636.80       13,311,953.20       1,594,928.78       658,227.20       1,254,507.80  

May 1, 2024

    52,124,514.12       21,104,409.60       12,057,445.40       1,594,928.78       658,227.20       1,254,507.80  

November 1, 2024

    50,529,585.34       20,446,182.40       10,802,937.60       1,594,928.78       658,227.20       1,254,507.80  

May 1, 2025

    48,934,656.56       19,787,955.20       9,548,429.80       1,594,928.78       658,227.20       1,254,507.80  

November 1, 2025

    47,339,727.78       19,129,728.00       8,293,922.00       1,594,928.78       658,227.20       1,254,507.80  

May 1, 2026

    45,744,799.00       18,471,500.80       7,039,414.20       1,594,928.78       658,227.20       1,254,507.80  

November 1, 2026

    44,149,870.22       17,813,273.60       5,784,906.40       1,594,928.78       658,227.20       1,254,507.80  

May 1, 2027

    42,554,941.44       17,155,046.40       4,530,398.60       1,594,928.78       658,227.20       1,254,507.80  

November 1, 2027

    40,960,012.66       16,496,819.20       3,275,890.80       1,594,928.78       658,227.20       1,254,507.80  

May 1, 2028

    39,365,083.88       0.00       0.00       1,594,928.78       16,496,819.20       3,275,890.80  

November 1, 2028

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

May 1, 2029

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

November 1, 2029

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

May 1, 2030

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

November 1, 2030

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

May 1, 2031

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

November 1, 2031

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

May 1, 2032

    0.00       0.00       0.00       28,200,582.42       0.00       0.00  

 

S-51


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

At Issuance

      $ 63,315,000.00          $ 25,854,000.00          $ 20,954,000.00          $ 0.00          $ 0.00          $ 0.00   

May 1, 2020

    63,315,000.00       25,854,000.00       20,954,000.00       0.00       0.00       0.00  

November 1, 2020

    62,036,037.00       25,192,137.60       19,692,569.20       1,278,963.00       661,862.40       1,261,430.80  

May 1, 2021

    60,417,072.45       24,530,275.20       18,431,138.40       1,618,964.55       661,862.40       1,261,430.80  

November 1, 2021

    58,798,107.90       23,868,412.80       17,169,707.60       1,618,964.55       661,862.40       1,261,430.80  

May 1, 2022

    57,179,143.35       23,206,550.40       15,908,276.80       1,618,964.55       661,862.40       1,261,430.80  

November 1, 2022

    55,560,178.80       22,544,688.00       14,646,846.00       1,618,964.55       661,862.40       1,261,430.80  

May 1, 2023

    53,941,214.25       21,882,825.60       13,385,415.20       1,618,964.55       661,862.40       1,261,430.80  

November 1, 2023

    52,322,249.70       21,220,963.20       12,123,984.40       1,618,964.55       661,862.40       1,261,430.80  

May 1, 2024

    50,703,285.15       20,559,100.80       10,862,553.60       1,618,964.55       661,862.40       1,261,430.80  

November 1, 2024

    49,084,320.60       19,897,238.40       9,601,122.80       1,618,964.55       661,862.40       1,261,430.80  

May 1, 2025

    47,465,356.05       19,235,376.00       8,339,692.00       1,618,964.55       661,862.40       1,261,430.80  

November 1, 2025

    45,846,391.50       18,573,513.60       7,078,261.20       1,618,964.55       661,862.40       1,261,430.80  

May 1, 2026

    44,227,426.95       17,911,651.20       5,816,830.40       1,618,964.55       661,862.40       1,261,430.80  

November 1, 2026

    42,608,462.40       17,249,788.80       4,555,399.60       1,618,964.55       661,862.40       1,261,430.80  

May 1, 2027

    40,989,497.85       16,587,926.40       3,293,968.80       1,618,964.55       661,862.40       1,261,430.80  

November 1, 2027

    39,370,533.30       15,926,064.00       2,032,538.00       1,618,964.55       661,862.40       1,261,430.80  

May 1, 2028

    37,751,568.75       0.00       0.00       1,618,964.55       15,926,064.00       2,032,538.00  

November 1, 2028

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

May 1, 2029

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

November 1, 2029

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

May 1, 2030

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

November 1, 2030

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

May 1, 2031

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

November 1, 2031

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

May 1, 2032

    0.00       0.00       0.00       26,418,816.90       0.00       0.00  

 

    N91007
    Equipment Note Ending Balance   Scheduled Payments of Principal

Date

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

At Issuance

      $ 63,525,000.00          $ 25,939,000.00          $ 21,024,000.00          $ 0.00          $ 0.00          $ 0.00   

May 1, 2020

    63,525,000.00       25,939,000.00       21,024,000.00       0.00       0.00       0.00  

November 1, 2020

    62,241,795.00       25,274,961.60       19,758,355.20       1,283,205.00       664,038.40       1,265,644.80  

May 1, 2021

    60,617,460.75       24,610,923.20       18,492,710.40       1,624,334.25       664,038.40       1,265,644.80  

November 1, 2021

    58,993,126.50       23,946,884.80       17,227,065.60       1,624,334.25       664,038.40       1,265,644.80  

May 1, 2022

    57,368,792.25       23,282,846.40       15,961,420.80       1,624,334.25       664,038.40       1,265,644.80  

November 1, 2022

    55,744,458.00       22,618,808.00       14,695,776.00       1,624,334.25       664,038.40       1,265,644.80  

May 1, 2023

    54,120,123.75       21,954,769.60       13,430,131.20       1,624,334.25       664,038.40       1,265,644.80  

November 1, 2023

    52,495,789.50       21,290,731.20       12,164,486.40       1,624,334.25       664,038.40       1,265,644.80  

May 1, 2024

    50,871,455.25       20,626,692.80       10,898,841.60       1,624,334.25       664,038.40       1,265,644.80  

November 1, 2024

    49,247,121.00       19,962,654.40       9,633,196.80       1,624,334.25       664,038.40       1,265,644.80  

May 1, 2025

    47,622,786.75       19,298,616.00       8,367,552.00       1,624,334.25       664,038.40       1,265,644.80  

November 1, 2025

    45,998,452.50       18,634,577.60       7,101,907.20       1,624,334.25       664,038.40       1,265,644.80  

May 1, 2026

    44,374,118.25       17,970,539.20       5,836,262.40       1,624,334.25       664,038.40       1,265,644.80  

November 1, 2026

    42,749,784.00       17,306,500.80       4,570,617.60       1,624,334.25       664,038.40       1,265,644.80  

May 1, 2027

    41,125,449.75       16,642,462.40       3,304,972.80       1,624,334.25       664,038.40       1,265,644.80  

November 1, 2027

    39,501,115.50       15,978,424.00       2,039,328.00       1,624,334.25       664,038.40       1,265,644.80  

May 1, 2028

    37,876,781.25       0.00       0.00       1,624,334.25       15,978,424.00       2,039,328.00  

November 1, 2028

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

May 1, 2029

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

November 1, 2029

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

May 1, 2030

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

November 1, 2030

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

May 1, 2031

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

November 1, 2031

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

May 1, 2032

    0.00       0.00       0.00       26,506,441.50       0.00       0.00  

 

S-52


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

Date

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

At Issuance

      $ 64,684,000.00          $ 26,413,000.00          $ 21,407,000.00          $ 0.00          $ 0.00          $ 0.00   

May 1, 2020

    64,684,000.00       26,413,000.00       21,407,000.00       0.00       0.00       0.00  

November 1, 2020

    63,377,383.20       25,736,827.20       20,118,298.60       1,306,616.80       676,172.80       1,288,701.40  

May 1, 2021

    61,723,413.32       25,060,654.40       18,829,597.20       1,653,969.88       676,172.80       1,288,701.40  

November 1, 2021

    60,069,443.44       24,384,481.60       17,540,895.80       1,653,969.88       676,172.80       1,288,701.40  

May 1, 2022

    58,415,473.56       23,708,308.80       16,252,194.40       1,653,969.88       676,172.80       1,288,701.40  

November 1, 2022

    56,761,503.68       23,032,136.00       14,963,493.00       1,653,969.88       676,172.80       1,288,701.40  

May 1, 2023

    55,107,533.80       22,355,963.20       13,674,791.60       1,653,969.88       676,172.80       1,288,701.40  

November 1, 2023

    53,453,563.92       21,679,790.40       12,386,090.20       1,653,969.88       676,172.80       1,288,701.40  

May 1, 2024

    51,799,594.04       21,003,617.60       11,097,388.80       1,653,969.88       676,172.80       1,288,701.40  

November 1, 2024

    50,145,624.16       20,327,444.80       9,808,687.40       1,653,969.88       676,172.80       1,288,701.40  

May 1, 2025

    48,491,654.28       19,651,272.00       8,519,986.00       1,653,969.88       676,172.80       1,288,701.40  

November 1, 2025

    46,837,684.40       18,975,099.20       7,231,284.60       1,653,969.88       676,172.80       1,288,701.40  

May 1, 2026

    45,183,714.52       18,298,926.40       5,942,583.20       1,653,969.88       676,172.80       1,288,701.40  

November 1, 2026

    43,529,744.64       17,622,753.60       4,653,881.80       1,653,969.88       676,172.80       1,288,701.40  

May 1, 2027

    41,875,774.76       16,946,580.80       3,365,180.40       1,653,969.88       676,172.80       1,288,701.40  

November 1, 2027

    40,221,804.88       16,270,408.00       2,076,479.00       1,653,969.88       676,172.80       1,288,701.40  

May 1, 2028

    38,567,835.00       0.00       0.00       1,653,969.88       16,270,408.00       2,076,479.00  

November 1, 2028

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

May 1, 2029

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

November 1, 2029

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

May 1, 2030

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

November 1, 2030

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

May 1, 2031

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

November 1, 2031

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

May 1, 2032

    0.00       0.00       0.00       26,990,045.84       0.00       0.00  

 

    N14011
    Equipment Note Ending Balance   Scheduled Payments of Principal

Date

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

At Issuance

      $ 64,684,000.00          $ 26,413,000.00          $ 21,407,000.00          $ 0.00          $ 0.00          $ 0.00   

May 1, 2020

    64,684,000.00       26,413,000.00       21,407,000.00       0.00       0.00       0.00  

November 1, 2020

    63,377,383.20       25,736,827.20       20,118,298.60       1,306,616.80       676,172.80       1,288,701.40  

May 1, 2021

    61,723,413.32       25,060,654.40       18,829,597.20       1,653,969.88       676,172.80       1,288,701.40  

November 1, 2021

    60,069,443.44       24,384,481.60       17,540,895.80       1,653,969.88       676,172.80       1,288,701.40  

May 1, 2022

    58,415,473.56       23,708,308.80       16,252,194.40       1,653,969.88       676,172.80       1,288,701.40  

November 1, 2022

    56,761,503.68       23,032,136.00       14,963,493.00       1,653,969.88       676,172.80       1,288,701.40  

May 1, 2023

    55,107,533.80       22,355,963.20       13,674,791.60       1,653,969.88       676,172.80       1,288,701.40  

November 1, 2023

    53,453,563.92       21,679,790.40       12,386,090.20       1,653,969.88       676,172.80       1,288,701.40  

May 1, 2024

    51,799,594.04       21,003,617.60       11,097,388.80       1,653,969.88       676,172.80       1,288,701.40  

November 1, 2024

    50,145,624.16       20,327,444.80       9,808,687.40       1,653,969.88       676,172.80       1,288,701.40  

May 1, 2025

    48,491,654.28       19,651,272.00       8,519,986.00       1,653,969.88       676,172.80       1,288,701.40  

November 1, 2025

    46,837,684.40       18,975,099.20       7,231,284.60       1,653,969.88       676,172.80       1,288,701.40  

May 1, 2026

    45,183,714.52       18,298,926.40       5,942,583.20       1,653,969.88       676,172.80       1,288,701.40  

November 1, 2026

    43,529,744.64       17,622,753.60       4,653,881.80       1,653,969.88       676,172.80       1,288,701.40  

May 1, 2027

    41,875,774.76       16,946,580.80       3,365,180.40       1,653,969.88       676,172.80       1,288,701.40  

November 1, 2027

    40,221,804.88       16,270,408.00       2,076,479.00       1,653,969.88       676,172.80       1,288,701.40  

May 1, 2028

    38,567,835.00       0.00       0.00       1,653,969.88       16,270,408.00       2,076,479.00  

November 1, 2028

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

May 1, 2029

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

November 1, 2029

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

May 1, 2030

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

November 1, 2030

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

May 1, 2031

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

November 1, 2031

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

May 1, 2032

    0.00       0.00       0.00       26,990,045.84       0.00       0.00  

 

S-53


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

At Issuance

  $ 65,461,000.00      $ 26,730,000.00      $ 21,665,000.00      $ 0.00      $ 0.00      $ 0.00   

May 1, 2020

    65,461,000.00       26,730,000.00       21,665,000.00       0.00       0.00       0.00  

November 1, 2020

    64,138,687.80       26,045,712.00       20,360,767.00       1,322,312.20       684,288.00       1,304,233.00  

May 1, 2021

    62,464,850.03       25,361,424.00       19,056,534.00       1,673,837.77       684,288.00       1,304,233.00  

November 1, 2021

    60,791,012.26       24,677,136.00       17,752,301.00       1,673,837.77       684,288.00       1,304,233.00  

May 1, 2022

    59,117,174.49       23,992,848.00       16,448,068.00       1,673,837.77       684,288.00       1,304,233.00  

November 1, 2022

    57,443,336.72       23,308,560.00       15,143,835.00       1,673,837.77       684,288.00       1,304,233.00  

May 1, 2023

    55,769,498.95       22,624,272.00       13,839,602.00       1,673,837.77       684,288.00       1,304,233.00  

November 1, 2023

    54,095,661.18       21,939,984.00       12,535,369.00       1,673,837.77       684,288.00       1,304,233.00  

May 1, 2024

    52,421,823.41       21,255,696.00       11,231,136.00       1,673,837.77       684,288.00       1,304,233.00  

November 1, 2024

    50,747,985.64       20,571,408.00       9,926,903.00       1,673,837.77       684,288.00       1,304,233.00  

May 1, 2025

    49,074,147.87       19,887,120.00       8,622,670.00       1,673,837.77       684,288.00       1,304,233.00  

November 1, 2025

    47,400,310.10       19,202,832.00       7,318,437.00       1,673,837.77       684,288.00       1,304,233.00  

May 1, 2026

    45,726,472.33       18,518,544.00       6,014,204.00       1,673,837.77       684,288.00       1,304,233.00  

November 1, 2026

    44,052,634.56       17,834,256.00       4,709,971.00       1,673,837.77       684,288.00       1,304,233.00  

May 1, 2027

    42,378,796.79       17,149,968.00       3,405,738.00       1,673,837.77       684,288.00       1,304,233.00  

November 1, 2027

    40,704,959.02       16,465,680.00       2,101,505.00       1,673,837.77       684,288.00       1,304,233.00  

May 1, 2028

    39,031,121.25       0.00       0.00       1,673,837.77       16,465,680.00       2,101,505.00  

November 1, 2028

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

May 1, 2029

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

November 1, 2029

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

May 1, 2030

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

November 1, 2030

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

May 1, 2031

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

November 1, 2031

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

May 1, 2032

    0.00       0.00       0.00       27,314,256.86       0.00       0.00  

 

    N2250U
    Equipment Note Ending Balance   Scheduled Payments of Principal

Date

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

At Issuance

      $ 65,436,000.00         $ 26,720,000.00         $ 21,656,000.00         $ 0.00         $ 0.00         $ 0.00  

May 1, 2020

    65,436,000.00       26,720,000.00       21,656,000.00       0.00       0.00       0.00  

November 1, 2020

    64,114,192.80       26,035,968.00       20,352,308.80       1,321,807.20       684,032.00       1,303,691.20  

May 1, 2021

    62,440,994.28       25,351,936.00       19,048,617.60       1,673,198.52       684,032.00       1,303,691.20  

November 1, 2021

    60,767,795.76       24,667,904.00       17,744,926.40       1,673,198.52       684,032.00       1,303,691.20  

May 1, 2022

    59,094,597.24       23,983,872.00       16,441,235.20       1,673,198.52       684,032.00       1,303,691.20  

November 1, 2022

    57,421,398.72       23,299,840.00       15,137,544.00       1,673,198.52       684,032.00       1,303,691.20  

May 1, 2023

    55,748,200.20       22,615,808.00       13,833,852.80       1,673,198.52       684,032.00       1,303,691.20  

November 1, 2023

    54,075,001.68       21,931,776.00       12,530,161.60       1,673,198.52       684,032.00       1,303,691.20  

May 1, 2024

    52,401,803.16       21,247,744.00       11,226,470.40       1,673,198.52       684,032.00       1,303,691.20  

November 1, 2024

    50,728,604.64       20,563,712.00       9,922,779.20       1,673,198.52       684,032.00       1,303,691.20  

May 1, 2025

    49,055,406.12       19,879,680.00       8,619,088.00       1,673,198.52       684,032.00       1,303,691.20  

November 1, 2025

    47,382,207.60       19,195,648.00       7,315,396.80       1,673,198.52       684,032.00       1,303,691.20  

May 1, 2026

    45,709,009.08       18,511,616.00       6,011,705.60       1,673,198.52       684,032.00       1,303,691.20  

November 1, 2026

    44,035,810.56       17,827,584.00       4,708,014.40       1,673,198.52       684,032.00       1,303,691.20  

May 1, 2027

    42,362,612.04       17,143,552.00       3,404,323.20       1,673,198.52       684,032.00       1,303,691.20  

November 1, 2027

    40,689,413.52       16,459,520.00       2,100,632.00       1,673,198.52       684,032.00       1,303,691.20  

May 1, 2028

    39,016,215.00       0.00       0.00       1,673,198.52       16,459,520.00       2,100,632.00  

November 1, 2028

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

May 1, 2029

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

November 1, 2029

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

May 1, 2030

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

November 1, 2030

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

May 1, 2031

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

November 1, 2031

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

May 1, 2032

    0.00       0.00       0.00       27,303,825.36       0.00       0.00  

 

S-54


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

At Issuance

       $ 12,587,000.00            $ 5,140,000.00            $ 4,166,000.00          $ 0.00          $ 0.00          $ 0.00   

May 1, 2020

    12,587,000.00       5,140,000.00       4,166,000.00       0.00       0.00       0.00  

November 1, 2020

    12,332,742.60       5,008,416.00       3,915,206.80       254,257.40       131,584.00       250,793.20  

May 1, 2021

    12,010,893.01       4,876,832.00       3,664,413.60       321,849.59       131,584.00       250,793.20  

November 1, 2021

    11,689,043.42       4,745,248.00       3,413,620.40       321,849.59       131,584.00       250,793.20  

May 1, 2022

    11,367,193.83       4,613,664.00       3,162,827.20       321,849.59       131,584.00       250,793.20  

November 1, 2022

    11,045,344.24       4,482,080.00       2,912,034.00       321,849.59       131,584.00       250,793.20  

May 1, 2023

    10,723,494.65       4,350,496.00       2,661,240.80       321,849.59       131,584.00       250,793.20  

November 1, 2023

    10,401,645.06       4,218,912.00       2,410,447.60       321,849.59       131,584.00       250,793.20  

May 1, 2024

    10,079,795.47       4,087,328.00       2,159,654.40       321,849.59       131,584.00       250,793.20  

November 1, 2024

    9,757,945.88       3,955,744.00       1,908,861.20       321,849.59       131,584.00       250,793.20  

May 1, 2025

    9,436,096.29       3,824,160.00       1,658,068.00       321,849.59       131,584.00       250,793.20  

November 1, 2025

    9,114,246.70       3,692,576.00       1,407,274.80       321,849.59       131,584.00       250,793.20  

May 1, 2026

    8,792,397.11       3,560,992.00       1,156,481.60       321,849.59       131,584.00       250,793.20  

November 1, 2026

    8,470,547.52       3,429,408.00       905,688.40       321,849.59       131,584.00       250,793.20  

May 1, 2027

    8,148,697.93       3,297,824.00       654,895.20       321,849.59       131,584.00       250,793.20  

November 1, 2027

    7,826,848.34       3,166,240.00       404,102.00       321,849.59       131,584.00       250,793.20  

May 1, 2028

    7,504,998.75       0.00       0.00       321,849.59       3,166,240.00       404,102.00  

November 1, 2028

    7,183,149.16       0.00       0.00       321,849.59       0.00       0.00  

May 1, 2029

    6,861,299.57       0.00       0.00       321,849.59       0.00       0.00  

November 1, 2029

    6,539,449.98       0.00       0.00       321,849.59       0.00       0.00  

May 1, 2030

    6,217,600.39       0.00       0.00       321,849.59       0.00       0.00  

November 1, 2030

    5,895,750.80       0.00       0.00       321,849.59       0.00       0.00  

May 1, 2031

    5,573,901.21       0.00       0.00       321,849.59       0.00       0.00  

November 1, 2031

    5,252,051.62       0.00       0.00       321,849.59       0.00       0.00  

May 1, 2032

    0.00       0.00       0.00       5,252,051.62       0.00       0.00  

 

    N617UX
    Equipment Note Ending Balance   Scheduled Payments of Principal

Date

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

At Issuance

       $ 12,608,000.00            $ 5,149,000.00            $ 4,173,000.00          $ 0.00          $ 0.00          $ 0.00   

May 1, 2020

    12,608,000.00       5,149,000.00       4,173,000.00       0.00       0.00       0.00  

November 1, 2020

    12,353,318.40       5,017,185.60       3,921,785.40       254,681.60       131,814.40       251,214.60  

May 1, 2021

    12,030,931.84       4,885,371.20       3,670,570.80       322,386.56       131,814.40       251,214.60  

November 1, 2021

    11,708,545.28       4,753,556.80       3,419,356.20       322,386.56       131,814.40       251,214.60  

May 1, 2022

    11,386,158.72       4,621,742.40       3,168,141.60       322,386.56       131,814.40       251,214.60  

November 1, 2022

    11,063,772.16       4,489,928.00       2,916,927.00       322,386.56       131,814.40       251,214.60  

May 1, 2023

    10,741,385.60       4,358,113.60       2,665,712.40       322,386.56       131,814.40       251,214.60  

November 1, 2023

    10,418,999.04       4,226,299.20       2,414,497.80       322,386.56       131,814.40       251,214.60  

May 1, 2024

    10,096,612.48       4,094,484.80       2,163,283.20       322,386.56       131,814.40       251,214.60  

November 1, 2024

    9,774,225.92       3,962,670.40       1,912,068.60       322,386.56       131,814.40       251,214.60  

May 1, 2025

    9,451,839.36       3,830,856.00       1,660,854.00       322,386.56       131,814.40       251,214.60  

November 1, 2025

    9,129,452.80       3,699,041.60       1,409,639.40       322,386.56       131,814.40       251,214.60  

May 1, 2026

    8,807,066.24       3,567,227.20       1,158,424.80       322,386.56       131,814.40       251,214.60  

November 1, 2026

    8,484,679.68       3,435,412.80       907,210.20       322,386.56       131,814.40       251,214.60  

May 1, 2027

    8,162,293.12       3,303,598.40       655,995.60       322,386.56       131,814.40       251,214.60  

November 1, 2027

    7,839,906.56       3,171,784.00       404,781.00       322,386.56       131,814.40       251,214.60  

May 1, 2028

    7,517,520.00       0.00       0.00       322,386.56       3,171,784.00       404,781.00  

November 1, 2028

    7,195,133.44       0.00       0.00       322,386.56       0.00       0.00  

May 1, 2029

    6,872,746.88       0.00       0.00       322,386.56       0.00       0.00  

November 1, 2029

    6,550,360.32       0.00       0.00       322,386.56       0.00       0.00  

May 1, 2030

    6,227,973.76       0.00       0.00       322,386.56       0.00       0.00  

November 1, 2030

    5,905,587.20       0.00       0.00       322,386.56       0.00       0.00  

May 1, 2031

    5,583,200.64       0.00       0.00       322,386.56       0.00       0.00  

November 1, 2031

    5,260,814.08       0.00       0.00       322,386.56       0.00       0.00  

May 1, 2032

    0.00       0.00       0.00       5,260,814.08       0.00       0.00  

 

S-55


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

Date

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

At Issuance

        $ 12,608,000.00            $ 5,149,000.00              $ 4,173,000.00           $ 0.00           $ 0.00           $ 0.00   

May 1, 2020

    12,608,000.00       5,149,000.00       4,173,000.00       0.00       0.00       0.00  

November 1, 2020

    12,353,318.40       5,017,185.60       3,921,785.40       254,681.60       131,814.40       251,214.60  

May 1, 2021

    12,030,931.84       4,885,371.20       3,670,570.80       322,386.56       131,814.40       251,214.60  

November 1, 2021

    11,708,545.28       4,753,556.80       3,419,356.20       322,386.56       131,814.40       251,214.60  

May 1, 2022

    11,386,158.72       4,621,742.40       3,168,141.60       322,386.56       131,814.40       251,214.60  

November 1, 2022

    11,063,772.16       4,489,928.00       2,916,927.00       322,386.56       131,814.40       251,214.60  

May 1, 2023

    10,741,385.60       4,358,113.60       2,665,712.40       322,386.56       131,814.40       251,214.60  

November 1, 2023

    10,418,999.04       4,226,299.20       2,414,497.80       322,386.56       131,814.40       251,214.60  

May 1, 2024

    10,096,612.48       4,094,484.80       2,163,283.20       322,386.56       131,814.40       251,214.60  

November 1, 2024

    9,774,225.92       3,962,670.40       1,912,068.60       322,386.56       131,814.40       251,214.60  

May 1, 2025

    9,451,839.36       3,830,856.00       1,660,854.00       322,386.56       131,814.40       251,214.60  

November 1, 2025

    9,129,452.80       3,699,041.60       1,409,639.40       322,386.56       131,814.40       251,214.60  

May 1, 2026

    8,807,066.24       3,567,227.20       1,158,424.80       322,386.56       131,814.40       251,214.60  

November 1, 2026

    8,484,679.68       3,435,412.80       907,210.20       322,386.56       131,814.40       251,214.60  

May 1, 2027

    8,162,293.12       3,303,598.40       655,995.60       322,386.56       131,814.40       251,214.60  

November 1, 2027

    7,839,906.56       3,171,784.00       404,781.00       322,386.56       131,814.40       251,214.60  

May 1, 2028

    7,517,520.00       0.00       0.00       322,386.56       3,171,784.00       404,781.00  

November 1, 2028

    7,195,133.44       0.00       0.00       322,386.56       0.00       0.00  

May 1, 2029

    6,872,746.88       0.00       0.00       322,386.56       0.00       0.00  

November 1, 2029

    6,550,360.32       0.00       0.00       322,386.56       0.00       0.00  

May 1, 2030

    6,227,973.76       0.00       0.00       322,386.56       0.00       0.00  

November 1, 2030

    5,905,587.20       0.00       0.00       322,386.56       0.00       0.00  

May 1, 2031

    5,583,200.64       0.00       0.00       322,386.56       0.00       0.00  

November 1, 2031

    5,260,814.08       0.00       0.00       322,386.56       0.00       0.00  

May 1, 2032

    0.00       0.00       0.00       5,260,814.08       0.00       0.00  

 

    N619UX
    Equipment Note Ending Balance   Scheduled Payments of Principal

Date

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

At Issuance

        $ 12,608,000.00             $ 5,149,000.00              $ 4,173,000.00           $ 0.00           $ 0.00           $ 0.00   

May 1, 2020

    12,608,000.00       5,149,000.00       4,173,000.00       0.00       0.00       0.00  

November 1, 2020

    12,353,318.40       5,017,185.60       3,921,785.40       254,681.60       131,814.40       251,214.60  

May 1, 2021

    12,030,931.84       4,885,371.20       3,670,570.80       322,386.56       131,814.40       251,214.60  

November 1, 2021

    11,708,545.28       4,753,556.80       3,419,356.20       322,386.56       131,814.40       251,214.60  

May 1, 2022

    11,386,158.72       4,621,742.40       3,168,141.60       322,386.56       131,814.40       251,214.60  

November 1, 2022

    11,063,772.16       4,489,928.00       2,916,927.00       322,386.56       131,814.40       251,214.60  

May 1, 2023

    10,741,385.60       4,358,113.60       2,665,712.40       322,386.56       131,814.40       251,214.60  

November 1, 2023

    10,418,999.04       4,226,299.20       2,414,497.80       322,386.56       131,814.40       251,214.60  

May 1, 2024

    10,096,612.48       4,094,484.80       2,163,283.20       322,386.56       131,814.40       251,214.60  

November 1, 2024

    9,774,225.92       3,962,670.40       1,912,068.60       322,386.56       131,814.40       251,214.60  

May 1, 2025

    9,451,839.36       3,830,856.00       1,660,854.00       322,386.56       131,814.40       251,214.60  

November 1, 2025

    9,129,452.80       3,699,041.60       1,409,639.40       322,386.56       131,814.40       251,214.60  

May 1, 2026

    8,807,066.24       3,567,227.20       1,158,424.80       322,386.56       131,814.40       251,214.60  

November 1, 2026

    8,484,679.68       3,435,412.80       907,210.20       322,386.56       131,814.40       251,214.60  

May 1, 2027

    8,162,293.12       3,303,598.40       655,995.60       322,386.56       131,814.40       251,214.60  

November 1, 2027

    7,839,906.56       3,171,784.00       404,781.00       322,386.56       131,814.40       251,214.60  

May 1, 2028

    7,517,520.00       0.00       0.00       322,386.56       3,171,784.00       404,781.00  

November 1, 2028

    7,195,133.44       0.00       0.00       322,386.56       0.00       0.00  

May 1, 2029

    6,872,746.88       0.00       0.00       322,386.56       0.00       0.00  

November 1, 2029

    6,550,360.32       0.00       0.00       322,386.56       0.00       0.00  

May 1, 2030

    6,227,973.76       0.00       0.00       322,386.56       0.00       0.00  

November 1, 2030

    5,905,587.20       0.00       0.00       322,386.56       0.00       0.00  

May 1, 2031

    5,583,200.64       0.00       0.00       322,386.56       0.00       0.00  

November 1, 2031

    5,260,814.08       0.00       0.00       322,386.56       0.00       0.00  

May 1, 2032

    0.00       0.00       0.00       5,260,814.08       0.00       0.00  

 

S-56


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

Date

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

At Issuance

        $ 12,629,000.00           $ 5,157,000.00             $ 4,180,000.00          $ 0.00          $ 0.00          $ 0.00  

May 1, 2020

    12,629,000.00       5,157,000.00       4,180,000.00       0.00       0.00       0.00  

November 1, 2020

    12,373,894.20       5,024,980.80       3,928,364.00       255,105.80       132,019.20       251,636.00  

May 1, 2021

    12,050,970.67       4,892,961.60       3,676,728.00       322,923.53       132,019.20       251,636.00  

November 1, 2021

    11,728,047.14       4,760,942.40       3,425,092.00       322,923.53       132,019.20       251,636.00  

May 1, 2022

    11,405,123.61       4,628,923.20       3,173,456.00       322,923.53       132,019.20       251,636.00  

November 1, 2022

    11,082,200.08       4,496,904.00       2,921,820.00       322,923.53       132,019.20       251,636.00  

May 1, 2023

    10,759,276.55       4,364,884.80       2,670,184.00       322,923.53       132,019.20       251,636.00  

November 1, 2023

    10,436,353.02       4,232,865.60       2,418,548.00       322,923.53       132,019.20       251,636.00  

May 1, 2024

    10,113,429.49       4,100,846.40       2,166,912.00       322,923.53       132,019.20       251,636.00  

November 1, 2024

    9,790,505.96       3,968,827.20       1,915,276.00       322,923.53       132,019.20       251,636.00  

May 1, 2025

    9,467,582.43       3,836,808.00       1,663,640.00       322,923.53       132,019.20       251,636.00  

November 1, 2025

    9,144,658.90       3,704,788.80       1,412,004.00       322,923.53       132,019.20       251,636.00  

May 1, 2026

    8,821,735.37       3,572,769.60       1,160,368.00       322,923.53       132,019.20       251,636.00  

November 1, 2026

    8,498,811.84       3,440,750.40       908,732.00       322,923.53       132,019.20       251,636.00  

May 1, 2027

    8,175,888.31       3,308,731.20       657,096.00       322,923.53       132,019.20       251,636.00  

November 1, 2027

    7,852,964.78       3,176,712.00       405,460.00       322,923.53       132,019.20       251,636.00  

May 1, 2028

    7,530,041.25       0.00       0.00       322,923.53       3,176,712.00       405,460.00  

November 1, 2028

    7,207,117.72       0.00       0.00       322,923.53       0.00       0.00  

May 1, 2029

    6,884,194.19       0.00       0.00       322,923.53       0.00       0.00  

November 1, 2029

    6,561,270.66       0.00       0.00       322,923.53       0.00       0.00  

May 1, 2030

    6,238,347.13       0.00       0.00       322,923.53       0.00       0.00  

November 1, 2030

    5,915,423.60       0.00       0.00       322,923.53       0.00       0.00  

May 1, 2031

    5,592,500.07       0.00       0.00       322,923.53       0.00       0.00  

November 1, 2031

    5,269,576.54       0.00       0.00       322,923.53       0.00       0.00  

May 1, 2032

    0.00       0.00       0.00       5,269,576.54       0.00       0.00  

 

    N621UX
    Equipment Note Ending Balance   Scheduled Payments of Principal

Date

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

At Issuance

        $ 12,629,000.00            $ 5,157,000.00              $ 4,180,000.00           $ 0.00           $ 0.00           $ 0.00   

May 1, 2020

    12,629,000.00       5,157,000.00       4,180,000.00       0.00       0.00       0.00  

November 1, 2020

    12,373,894.20       5,024,980.80       3,928,364.00       255,105.80       132,019.20       251,636.00  

May 1, 2021

    12,050,970.67       4,892,961.60       3,676,728.00       322,923.53       132,019.20       251,636.00  

November 1, 2021

    11,728,047.14       4,760,942.40       3,425,092.00       322,923.53       132,019.20       251,636.00  

May 1, 2022

    11,405,123.61       4,628,923.20       3,173,456.00       322,923.53       132,019.20       251,636.00  

November 1, 2022

    11,082,200.08       4,496,904.00       2,921,820.00       322,923.53       132,019.20       251,636.00  

May 1, 2023

    10,759,276.55       4,364,884.80       2,670,184.00       322,923.53       132,019.20       251,636.00  

November 1, 2023

    10,436,353.02       4,232,865.60       2,418,548.00       322,923.53       132,019.20       251,636.00  

May 1, 2024

    10,113,429.49       4,100,846.40       2,166,912.00       322,923.53       132,019.20       251,636.00  

November 1, 2024

    9,790,505.96       3,968,827.20       1,915,276.00       322,923.53       132,019.20       251,636.00  

May 1, 2025

    9,467,582.43       3,836,808.00       1,663,640.00       322,923.53       132,019.20       251,636.00  

November 1, 2025

    9,144,658.90       3,704,788.80       1,412,004.00       322,923.53       132,019.20       251,636.00  

May 1, 2026

    8,821,735.37       3,572,769.60       1,160,368.00       322,923.53       132,019.20       251,636.00  

November 1, 2026

    8,498,811.84       3,440,750.40       908,732.00       322,923.53       132,019.20       251,636.00  

May 1, 2027

    8,175,888.31       3,308,731.20       657,096.00       322,923.53       132,019.20       251,636.00  

November 1, 2027

    7,852,964.78       3,176,712.00       405,460.00       322,923.53       132,019.20       251,636.00  

May 1, 2028

    7,530,041.25       0.00       0.00       322,923.53       3,176,712.00       405,460.00  

November 1, 2028

    7,207,117.72       0.00       0.00       322,923.53       0.00       0.00  

May 1, 2029

    6,884,194.19       0.00       0.00       322,923.53       0.00       0.00  

November 1, 2029

    6,561,270.66       0.00       0.00       322,923.53       0.00       0.00  

May 1, 2030

    6,238,347.13       0.00       0.00       322,923.53       0.00       0.00  

November 1, 2030

    5,915,423.60       0.00       0.00