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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM
10-Q
 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
 
 
 
 
 
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13151970&doc=14
 
Commission
File Number
 
Exact Name of Registrant as Specified in its Charter, 
Principal Executive Office Address and Telephone Number
 
State of
Incorporation
 
I.R.S. Employer
Identification No.
 
001-06033
 
United Airlines Holdings, Inc.
 
Delaware
 
36-2675207
 
 
 
233 South Wacker Drive,
Chicago,
Illinois
60606
 
 
 
 
 
 
 
(872)
825-4000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
001-10323
 
United Airlines, Inc.
 
Delaware
 
74-2099724
 
 
 
233 South Wacker Drive,
Chicago,
Illinois
60606
 
 
 
 
 
 
 
(872)
825-4000
 
 
 
 
 
 
 
 
 
 
 
 
 
Securities registered pursuant to Section 12(b) of the Act
Registrant
 
Title of Each Class
 
Trading Symbol
 
Name on Each Exchange on Which Registered
United Airlines Holdings, Inc.
 
Common Stock,
$0.01 par value
 
UAL
 
The Nasdaq Stock Market LLC
United Airlines, Inc.
 
None
 
 
None
 
None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
United Airlines Holdings, Inc.
 
Yes
No
 
United Airlines, Inc.
 
Yes
No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this Chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). 
United Airlines Holdings, Inc.
 
Yes
No
 
United Airlines, Inc.
 
Yes
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
United Airlines Holdings, Inc.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
United Airlines, Inc.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
United Airlines Holdings, Inc.
 
United Airlines, Inc.
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
United Airlines Holdings, Inc.
 
Yes    
No
United Airlines, Inc.
  
Yes
No
The number of shares outstanding of each of the issuer's classes of common stock as of October 11, 2019 is shown below:
United Airlines Holdings, Inc.
 
253,043,650

shares of common stock ($0.01 par value)
United Airlines, Inc.
  
1,000

shares of common stock ($0.01 par value) (100% owned by United Airlines Holdings, Inc.)
OMISSION OF CERTAIN INFORMATION
This combined Quarterly Report on Form 10-Q is separately filed by United Airlines Holdings, Inc. and United Airlines, Inc. United Airlines, Inc. meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format allowed under that General Instruction.



United Airlines Holdings, Inc.
United Airlines, Inc.
Quarterly Report on Form 10-Q
For the Quarterly Period Ended September 30, 2019

Table of Contents
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

UNITED AIRLINES HOLDINGS, INC.
STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)
(In millions, except per share amounts)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018 (a)
 
2019
 
2018 (a)
Operating revenue:
 
 
 
 
 
 
 
Passenger revenue
$
10,481

 
$
10,120

 
$
29,692

 
$
28,150

Cargo
282

 
296

 
863

 
903

Other operating revenue
617

 
587

 
1,816

 
1,759

Total operating revenue
11,380

 
11,003

 
32,371

 
30,812

 
 
 
 
 
 
 
 
Operating expense:
 
 
 
 
 
 
 
Salaries and related costs
3,063

 
2,930

 
8,993

 
8,534

Aircraft fuel
2,296

 
2,572

 
6,704

 
6,927

Regional capacity purchase
721

 
676

 
2,124

 
1,999

Landing fees and other rent
645

 
618

 
1,893

 
1,822

Depreciation and amortization
575

 
545

 
1,682

 
1,607

Aircraft maintenance materials and outside repairs
490

 
455

 
1,319

 
1,333

Distribution expenses
432

 
427

 
1,234

 
1,162

Aircraft rent
67

 
109

 
221

 
355

Special charges
27

 
17

 
116

 
186

Other operating expenses
1,591

 
1,467

 
4,645

 
4,293

Total operating expenses
9,907

 
9,816

 
28,931

 
28,218

Operating income
1,473

 
1,187

 
3,440

 
2,594

 
 
 
 
 
 
 
 
Nonoperating income (expense):
 
 
 
 
 
 
 
Interest expense
(191
)
 
(172
)
 
(570
)
 
(497
)
Interest capitalized
22

 
16

 
65

 
46

Interest income
36

 
28

 
103

 
70

Miscellaneous, net
9

 
(1
)
 
32

 
(118
)
Total nonoperating expense, net
(124
)
 
(129
)
 
(370
)
 
(499
)
Income before income taxes
1,349

 
1,058

 
3,070

 
2,095

Income tax expense
325

 
225

 
702

 
434

Net income
$
1,024

 
$
833

 
$
2,368

 
$
1,661

Earnings per share, basic
$
4.01

 
$
3.06

 
$
9.07

 
$
6.00

Earnings per share, diluted
$
3.99

 
$
3.05

 
$
9.04

 
$
5.98


(a) Amounts adjusted due to the adoption of Accounting Standards Update No. 2016-02, Leases (Topic 842). See Note 1 to the financial statements contained in Part I, Item 1 of this report for additional information.

The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.



3


UNITED AIRLINES HOLDINGS, INC.
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (UNAUDITED)
(In millions)

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018 (a)
 
2019
 
2018 (a)
Net income
$
1,024

 
$
833

 
$
2,368

 
$
1,661

 
 
 
 
 
 
 
 
Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
Employee benefit plans
304

 
12

 
294

 
54

Investments and other
(1
)
 
1

 
5

 
(3
)
Total other comprehensive income (loss), net of tax
303

 
13

 
299

 
51

 
 
 
 
 
 
 
 
Total comprehensive income, net
$
1,327

 
$
846

 
$
2,667

 
$
1,712


(a) Amounts adjusted due to the adoption of Accounting Standards Update No. 2016-02, Leases (Topic 842). See Note 1 to the financial statements contained in Part I, Item 1 of this report for additional information.

The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.




4


UNITED AIRLINES HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions, except shares)
 
 
September 30, 2019
 
December 31, 2018 (a)
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
2,959

 
$
1,694

Short-term investments
2,167

 
2,256

Receivables, less allowance for doubtful accounts (2019 — $11; 2018 — $8)
1,617

 
1,426

Aircraft fuel, spare parts and supplies, less obsolescence allowance (2019 — $403; 2018 — $412)
1,065

 
985

Prepaid expenses and other
725

 
733

Total current assets
8,533

 
7,094

Operating property and equipment:
 
 
 
Flight equipment
34,413

 
32,599

Other property and equipment
7,626

 
6,889

Purchase deposits for flight equipment
1,446

 
1,177

Total operating property and equipment, at cost
43,485

 
40,665

Less — Accumulated depreciation and amortization
(14,153
)
 
(13,266
)
Total operating property and equipment, net
29,332

 
27,399

 
 
 
 
Operating lease right-of-use assets
4,937

 
5,262

 
 
 
 
Other assets:
 
 
 
Goodwill
4,523

 
4,523

Intangibles, less accumulated amortization (2019 — $1,425; 2018 — $1,380)
3,114

 
3,159

Restricted cash
100

 
105

Notes receivable, net
529

 
516

Investments in affiliates and other, net
1,131

 
966

Total other assets
9,397

 
9,269

Total assets
$
52,199

 
$
49,024

(continued on next page)


















5


UNITED AIRLINES HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions, except shares)
 
September 30, 2019
 
December 31, 2018 (a)
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Current liabilities:
 
 
 
Advance ticket sales
$
5,515

 
$
4,381

Accounts payable
2,848

 
2,363

Frequent flyer deferred revenue
2,537

 
2,286

Accrued salaries and benefits
2,104

 
2,184

Current maturities of long-term debt
1,243

 
1,230

Current maturities of finance leases
92

 
123

Current maturities of operating leases
778

 
719

Other
574

 
553

Total current liabilities
15,691

 
13,839

 
 
 
 
Long-term debt
12,900

 
12,215

Long-term obligations under finance leases
186

 
224

Long-term obligations under operating leases
4,941

 
5,276

 
 
 
 
Other liabilities and deferred credits:
 
 
 
Frequent flyer deferred revenue
2,682

 
2,719

Postretirement benefit liability
836

 
1,295

Pension liability
1,087

 
1,576

Deferred income taxes
1,594

 
828

Other
981

 
1,010

Total other liabilities and deferred credits
7,180

 
7,428

Commitments and contingencies

 

Stockholders' equity:
 
 
 
Preferred stock

 

Common stock at par, $0.01 par value; authorized 1,000,000,000 shares; outstanding 253,624,406 and 269,914,769 shares at September 30, 2019 and December 31, 2018, respectively
3

 
3

Additional capital invested
6,111

 
6,120

Retained earnings
9,075

 
6,715

Stock held in treasury, at cost
(3,384
)
 
(1,993
)
Accumulated other comprehensive loss
(504
)
 
(803
)
Total stockholders' equity
11,301

 
10,042

Total liabilities and stockholders' equity
$
52,199

 
$
49,024


(a) Amounts adjusted due to the adoption of Accounting Standards Update No. 2016-02, Leases (Topic 842). See Note 1 to the financial statements contained in Part I, Item 1 of this report for additional information.

The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.





6


UNITED AIRLINES HOLDINGS, INC.
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
(In millions)
 
Nine Months Ended September 30,
 
2019
 
2018 (a)
Cash Flows from Operating Activities:
 
 
 
Net cash provided by operating activities
$
5,728

 
$
5,035

 
 
 
 
Cash Flows from Investing Activities:
 
 
 
Capital expenditures
(3,336
)
 
(2,496
)
Purchases of short-term and other investments
(2,168
)
 
(1,975
)
Proceeds from sale of short-term and other investments
2,282

 
1,979

Investment in affiliates
(36
)
 
(139
)
Proceeds from sale of property and equipment
47

 
30

Loans made to affiliates
(10
)
 
(10
)
Other, net
(10
)
 
104

Net cash used in investing activities
(3,231
)
 
(2,507
)
 
 
 
 
Cash Flows from Financing Activities:
 
 
 
Proceeds from issuance of long-term debt
1,109

 
1,241

Payments of long-term debt
(726
)
 
(1,519
)
Repurchases of common stock
(1,431
)
 
(1,010
)
Principal payments under finance leases
(105
)
 
(57
)
Capitalized financing costs
(51
)
 
(31
)
Other, net
(29
)
 
(17
)
Net cash used in financing activities
(1,233
)
 
(1,393
)
Net increase in cash, cash equivalents and restricted cash
1,264

 
1,135

Cash, cash equivalents and restricted cash at beginning of the period
1,799

 
1,591

Cash, cash equivalents and restricted cash at end of the period (b)
$
3,063

 
$
2,726

 
 
 
 
Investing and Financing Activities Not Affecting Cash:
 
 
 
Property and equipment acquired through the issuance of debt
$
306

 
$
125

Operating lease conversions to finance lease
36

 
52

Right-of-use assets acquired through operating leases
344

 
537

Property and equipment acquired through finance leases
8

 


(a) Amounts adjusted due to the adoption of Accounting Standards Update No. 2016-02, Leases (Topic 842). See Note 1 to the financial statements contained in Part I, Item 1 of this report for additional information.

(b) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheet:
Cash and cash equivalents
$
2,959

 
$
2,621

Restricted cash (included in Prepaid expenses and other)
4

 

Restricted cash
100

 
105

Total cash, cash equivalents and restricted cash
$
3,063

 
$
2,726



The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

7


UNITED AIRLINES HOLDINGS, INC.
STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY
(In millions)
 
Common
Stock
 
Additional
Capital Invested
 
Treasury Stock
 
Retained Earnings
 
Accumulated
Other Comprehensive Income (Loss)
 
Total
 
Shares
 
Amount
 
 
 
 
 
Balance at June 30, 2019
257.7

 
$
3

 
$
6,096

 
$
(3,022
)
 
$
8,050

 
$
(807
)
 
$
10,320

Net income

 

 

 

 
1,024

 

 
1,024

Other comprehensive loss

 

 

 

 

 
303

 
303

Stock settled share-based compensation

 

 
18

 

 

 

 
18

Repurchases of common stock
(4.1
)
 

 

 
(363
)
 

 

 
(363
)
Net treasury stock issued for share-based awards

 

 
(3
)
 
1

 
1

 

 
(1
)
Balance at September 30, 2019
253.6

 
$
3

 
$
6,111

 
$
(3,384
)
 
$
9,075

 
$
(504
)
 
$
11,301

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2018 (a)
269.9

 
$
3

 
$
6,120

 
$
(1,993
)
 
$
6,715

 
$
(803
)
 
$
10,042

Net income

 

 

 

 
2,368

 

 
2,368

Other comprehensive loss

 

 

 

 

 
299

 
299

Stock settled share-based compensation

 

 
49

 

 

 

 
49

Repurchases of common stock
(16.8
)
 

 

 
(1,426
)
 

 

 
(1,426
)
Net treasury stock issued for share-based awards
0.5

 

 
(58
)
 
35

 
(8
)
 

 
(31
)
Balance at September 30, 2019
253.6

 
$
3

 
$
6,111

 
$
(3,384
)
 
$
9,075


$
(504
)
 
$
11,301

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2018 (a)
273.0

 
$
3

 
$
6,091

 
$
(1,720
)
 
$
5,419

 
$
(1,102
)
 
$
8,691

Net income (a)

 

 

 

 
833

 

 
833

Other comprehensive income

 

 

 

 

 
13

 
13

Stock settled share-based compensation

 

 
16

 

 

 

 
16

Repurchases of common stock
(0.5
)
 

 

 
(34
)
 

 

 
(34
)
Net treasury stock issued for share-based awards

 

 
(2
)
 
1

 

 

 
(1
)
Balance at September 30, 2018 (a)
272.5

 
$
3

 
$
6,105

 
$
(1,753
)
 
$
6,252

 
$
(1,089
)
 
$
9,518

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2017 (a)
287.0

 
$
3

 
$
6,098

 
$
(769
)
 
$
4,603

 
$
(1,147
)
 
$
8,788

Net income (a)

 

 

 

 
1,661

 

 
1,661

Other comprehensive income

 

 

 

 

 
51

 
51

Stock settled share-based compensation

 

 
45

 

 

 

 
45

Repurchases of common stock
(14.7
)
 

 

 
(1,010
)
 

 

 
(1,010
)
Net treasury stock issued for share-based awards
0.2

 

 
(38
)
 
26

 
(5
)
 

 
(17
)
Adoption of accounting standard related to equity investments

 

 

 

 
(7
)
 
7

 

Balance at September 30, 2018 (a)
272.5

 
$
3

 
$
6,105

 
$
(1,753
)
 
$
6,252

 
$
(1,089
)
 
$
9,518


(a) Amounts adjusted due to the adoption of Accounting Standards Update No. 2016-02, Leases (Topic 842). See Note 1 to the financial statements contained in Part I, Item 1 of this report for additional information.


The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

8



UNITED AIRLINES, INC.
STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)
(In millions)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018 (a)
 
2019
 
2018 (a)
Operating revenue:
 
 
 
 
 
 
 
Passenger revenue
$
10,481

 
$
10,120

 
$
29,692

 
$
28,150

Cargo
282

 
296

 
863

 
903

Other operating revenue
617

 
587

 
1,816

 
1,759

Total operating revenue
11,380

 
11,003

 
32,371

 
30,812

 
 
 
 
 
 
 
 
Operating expense:
 
 
 
 
 
 
 
Salaries and related costs
3,063

 
2,930

 
8,993

 
8,534

Aircraft fuel
2,296

 
2,572

 
6,704

 
6,927

Regional capacity purchase
721

 
676

 
2,124

 
1,999

Landing fees and other rent
645

 
618

 
1,893

 
1,822

Depreciation and amortization
575

 
545

 
1,682

 
1,607

Aircraft maintenance materials and outside repairs
490

 
455

 
1,319

 
1,333

Distribution expenses
432

 
427

 
1,234

 
1,162

Aircraft rent
67

 
109

 
221

 
355

Special charges
27

 
17

 
116

 
186

Other operating expenses
1,590

 
1,467

 
4,643

 
4,292

Total operating expense
9,906

 
9,816

 
28,929

 
28,217

Operating income
1,474