UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 15, 2010
UAL CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 001-06033 | 36-2675207 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification Number) | ||
| 77 W. Wacker Drive, Chicago, IL | 60601 | |||
| (Address of principal executive offices) | (Zip Code) | |||
(312) 997-8000
Registrant’s telephone number, including area code
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 7.01 | Regulation FD Disclosure. |
On September 15, 2010, UAL Corporation, the holding company whose primary subsidiary is United Air Lines, Inc., provided an investor update related to its financial and operational outlook for the third quarter of 2010. A copy of the investor update is attached as Exhibit 99.1 and is incorporated herein by reference.
The information in this Item 7.01, including Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section and shall not be deemed incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
| Item 9.01 | Financial Statements and Exhibits. |
| Exhibit No. |
Description | |
| 99.1 | UAL Investor Update dated September 15, 2010 | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| UAL CORPORATION | ||||||
| By: | /s/ Kathryn A. Mikells | |||||
| Name: | Kathryn A. Mikells | |||||
| Title: | Executive Vice President and Chief Financial Officer | |||||
| Date: September 15, 2010 | ||||||
EXHIBIT INDEX
| Exhibit No. |
Description | |
| 99.1* | UAL Investor Update dated September 15, 2010 | |
| * | Furnished herewith electronically. |
Exhibit 99.1
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UAL Investor Update: September 15, 2010
Outlook Highlights
Capacity
Third quarter 2010 consolidated available seat miles (ASMs) are estimated to be up 2.5% year-over-year. Third quarter 2010 consolidated revenue passenger miles (RPMs) are estimated to be up 3.2% to 4.2% year-over-year.
Revenue
The company estimates consolidated passenger unit revenue (PRASM) to be up 18.0% to 19.0% year-over-year for the third quarter, and mainline PRASM to be up 18.5% to 19.5% year-over-year.
Non-Fuel Expense
The company estimates third quarter 2010 mainline non-fuel unit cost per ASM (CASM), excluding profit sharing and certain accounting charges, to be up 3.2% to 3.7% year-over-year, and consolidated non-fuel CASM, excluding profit sharing and certain accounting charges, to be up 2.7% to 3.2% year-over-year.
Profit Sharing
The company pays 15% of total GAAP pre-tax profits, excluding special items and stock compensation expense, as profit sharing to employees when pre-tax profit excluding special items and stock compensation expense exceeds $10 million. Profit sharing expense is accrued on a year-to-date basis, and $63 million has been accrued through the second quarter of 2010. Stock compensation expense in the third quarter is estimated to be $8 million, and $29 million year-to-date through the third quarter 2010.
Fuel Expense
The company estimates mainline fuel price, including the impact of cash settled hedges, to be $2.36 per gallon for the third quarter based on the September 10th forward curve.
Non-Operating Income/Expense
Non-operating expense is estimated to be $170 million to $180 million for the third quarter.
Income Taxes
Because of its net operating loss carry-forwards, the company expects to pay minimal cash taxes for the foreseeable future and expects an effective tax rate of 0% for the third quarter 2010.
Unrestricted and Restricted Cash
The company expects to end the third quarter with an unrestricted cash balance of approximately $4.9 billion, which includes scheduled debt and capital lease payments of $220 million and debt pre-payments of approximately $145 million. The company expects to end the third quarter with a restricted cash balance of approximately $240 million.
Credit Facility Fixed Charge Coverage Ratio Covenant
The company expects to be in full compliance with its credit facility covenants in the third quarter.
The United Building: 77 West Wacker Drive, Chicago, IL 60601
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Third Quarter 2010 Financial and Operational Outlook
| Third Quarter 2010 |
Year-Over-Year % Change Higher/(Lower) | |||
| Revenue |
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| Mainline Passenger Unit Revenue (¢/ASM) |
12.03¢ - 12.13¢ | 18.5% - 19.5% | ||
| Regional Affiliate Passenger Unit Revenue (¢/ASM) |
19.32¢ - 19.50¢ | 10.8% - 11.9% | ||
| Consolidated Passenger Unit Revenue (¢/ASM) |
13.10¢ - 13.21¢ | 18.0% - 19.0% | ||
| Cargo and Other Revenue ($ millions) |
400 - 410 | |||
| Operating Expense* |
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| Mainline Unit Cost Excluding Profit Sharing and Non-Cash Net Mark-to-Market Impacts (¢/ASM) |
11.62¢ - 11.66¢ | 5.8% - 6.2% | ||
| Regional Affiliate Unit Cost (¢/ASM) |
16.25¢ - 16.28¢ | 1.5% - 1.7% | ||
| Consolidated Unit Cost Excluding Profit Sharing and Non-Cash Net Mark-to-Market Impacts (¢/ASM) |
12.30¢ - 12.34¢ | 5.7% - 6.0% | ||
| Non-Fuel Expense* |
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| Mainline Unit Cost Excluding Fuel & Profit Sharing (¢/ASM) |
7.84¢ - 7.88¢ | 3.2% - 3.7% | ||
| Regional Affiliate Unit Cost Excluding Fuel (¢/ASM) |
11.11¢ - 11.14¢ | (2.7%) - (2.5%) | ||
| Consolidated Unit Cost Excluding Fuel & Profit Sharing (¢/ASM) |
8.32¢ - 8.36¢ | 2.7% - 3.2% | ||
| Fuel Expense |
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| Mainline Fuel Consumption |
519 Million Gallons | |||
| Mainline Fuel Price Excluding Hedges |
$2.25 / Gallon | |||
| Mainline Fuel Price Including Cash Settled Hedges |
$2.36 / Gallon | |||
| Mainline Fuel Price Including Cash Settled Hedges and Non-Cash Net Mark-to-Market Gains/(Losses) (GAAP fuel expense per gallon) |
$2.39 / Gallon | |||
| Regional Affiliates Fuel Consumption |
117 Million Gallons | |||
| Regional Affiliates Fuel Price* (Fuel hedge gains and losses are not allocated to Regional Affiliates) |
$2.45 / Gallon | |||
| Non-Operating Income/(Expense) |
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| Non-Operating Income/(Expense) |
($170M) - ($180M) | |||
| Income Taxes |
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| Effective Tax Rate |
0% | |||
| Capacity and Traffic |
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| Mainline Domestic Capacity (Million ASMs) |
17,677 | (2.9%) | ||
| Mainline International Capacity (Million ASMs) |
14,709 | 5.2% | ||
| Mainline System Capacity (Million ASMs) |
32,386 | 0.6% | ||
| Regional Affiliates Capacity (Million ASMs)** |
5,574 | 15.1% | ||
| Consolidated Domestic Capacity (Million ASMs) |
23,066 | 0.1% | ||
| Consolidated System Capacity (Million ASMs) |
37,960 | 2.5% | ||
| Mainline System Traffic (Million RPMs) |
27,972 - 28,248 | 1.3% - 2.3% | ||
| Regional Affiliates Traffic (Million RPMs)** |
4,459 - 4,497 | 16.9% - 17.9% | ||
| Consolidated System Traffic (Million RPMs) |
32,431 - 32,745 | 3.2% - 4.2% | ||
| * | Excludes special items and certain accounting charges |
| ** | Regional Affiliates results only reflect flights operated under capacity purchase agreements and flights operated as part of our joint venture with Aer Lingus. |
The United Building: 77 West Wacker Drive, Chicago, IL 60601
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Fuel Hedge Positions
For the third quarter, the company has hedged approximately 80% of its estimated consolidated fuel requirements at an average crude oil price of $79 per barrel.
Share Count
Shown below, for illustrative purposes only, are estimated basic and dilutive share counts for the third quarter of 2010 and the full year 2010. The calculation of share counts is based on a number of assumptions including, but not limited to, an assumed market stock price and number of shares outstanding. Actual share counts may be different from those shown below.
| 3Q
2010 (Estimated) | |||||||
| Net Income |
Basic Share Count (in millions) |
Diluted Share Count (in millions) |
Interest Add-back (in millions) | ||||
| Less than or equal to $0 |
168.2 | 168.2 | $ | — | |||
| $1 million - $22 million |
168.2 | 170.0 | $ | — | |||
| $23 million - $196 million |
168.2 | 209.7 | $ | 5.2 | |||
| $197 million - $271 million |
168.2 | 231.9 | $ | 26.5 | |||
| $272 million or greater |
168.2 | 235.3 | $ | 30.9 | |||
| Full Year 2010 (Estimated) | |||||||
| Net Income |
Basic Share Count (in millions) |
Diluted Share Count (in millions) |
Interest Add-back (in millions) | ||||
| Less than or equal to $0 |
168.0 | 168.0 | $ | — | |||
| $1 million - $88 million |
168.0 | 169.6 | $ | — | |||
| $89 million - $776 million |
168.0 | 209.3 | $ | 20.7 | |||
| $777 million - $1,076 million |
168.0 | 231.6 | $ | 105.3 | |||
| $1,077 million or greater |
168.0 | 235.0 | $ | 122.7 | |||
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Certain statements included in this investor update are forward-looking and thus reflect our current expectations and beliefs with respect to certain current and future events and financial performance. Such forward-looking statements are and will be subject to many risks and uncertainties relating to our operations and business environment that may cause actual results to differ materially from any future results expressed or implied in such forward-looking statements. Words such as “expects,” “will,” “plans,” “anticipates,” “indicates,” “believes,” “forecast,” “guidance,” “outlook” and similar expressions are intended to identify forward-looking statements. Additionally, forward-looking statements include statements which do not relate solely to historical facts, such as statements which identify uncertainties or trends, discuss the possible future effects of current known trends or uncertainties, or which indicate that the future effects of known trends or uncertainties cannot be predicted, guaranteed or assured. All forward-looking statements in this investor update are based upon information available to us on the date of this investor update. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise. Our actual results could differ materially from these forward-looking statements due to numerous factors including, without limitation, the following: our ability to comply with the terms of our amended credit facility and other financing arrangements; the costs and availability of financing; our ability to maintain adequate liquidity; our ability to execute our operational plans; our ability to control our costs, including realizing benefits from our resource optimization efforts, cost reduction initiatives and fleet replacement programs; our ability to utilize our net operating losses; our ability to attract and retain customers; demand for transportation in the markets in which we operate; an outbreak of a disease that affects travel demand or travel behavior; demand for travel and the impact the economic recession has on customer travel patterns; the increasing reliance on enhanced video-conferencing and other technology as a means of conducting virtual meetings; general economic conditions (including interest rates, foreign currency exchange rates, investment or credit market conditions, crude oil prices, costs of aviation fuel and energy refining capacity in relevant markets); our ability to cost-effectively hedge against increases in the price of aviation fuel; any potential realized or unrealized gains or losses related to fuel or currency hedging programs; the effects of any hostilities, act of war or terrorist attack; the ability of other air carriers with whom we have alliances or partnerships to provide the services contemplated by the respective arrangements with such carriers; the costs and availability of aviation or other insurance; the costs associated with security measures and practices; industry consolidation; competitive pressures on pricing and on demand; capacity decisions of United and/or our competitors; U.S. or foreign governmental legislation, regulation and other actions (including open skies agreements); labor costs; our ability to maintain satisfactory labor relations and the results of the collective bargaining agreement process with our union groups; any disruptions to operations due to any potential actions by our labor groups; weather conditions; our ability to complete the planned merger with Continental Airlines Inc. and other risks and uncertainties set forth under the caption “Risk Factors” in Item 1A. of the 2009 Annual Report, as well as other risks and uncertainties set forth from time to time in the reports we file with the U.S. Securities and Exchange Commission (“SEC”). Consequently, forward-looking statements should not be regarded as representations or warranties by UAL Corporation or United that such matters will be realized.
The United Building: 77 West Wacker Drive, Chicago, IL 60601
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Non-GAAP To GAAP Reconciliations
Pursuant to SEC Regulation G, the company has included the following reconciliation of reported non-GAAP financial measures to comparable financial measures reported on a GAAP basis. The company believes that excluding fuel costs and certain other items from some measures is useful to investors because it provides an additional measure of management’s performance excluding the effects of a significant cost item over which management has limited influence, and the effects of certain other items that would otherwise make analysis of the company’s operating performance more difficult.
| Q3 2010 Estimate | ||||||
| Mainline operating expense per ASM – CASM (cents) | Low | High | ||||
| Mainline operating expense excluding profit sharing |
11.67 | 11.71 | ||||
| Special items and other exclusions* |
— | — | ||||
| Mainline operating expense excluding profit sharing and special items |
11.67 | 11.71 | ||||
| Less: net non-cash mark-to-market impact |
(0.05 | ) | (0.05 | ) | ||
| Mainline operating expense excluding profit sharing, net non-cash mark-to-market impact and special items |
11.62 | 11.68 | ||||
| Less: fuel expense (excluding net non-cash mark-to-market impact) |
(3.78 | ) | (3.78 | ) | ||
| Mainline operating expense excluding fuel, profit sharing and special items |
7.84 | 7.88 | ||||
| Q3 2010 Estimate | ||||||
| Regional Affiliate operating expense per ASM – CASM (cents) | Low | High | ||||
| Regional Affiliate operating expense |
16.25 | 16.28 | ||||
| Less: Regional Affiliate fuel expense |
(5.14 | ) | (5.14 | ) | ||
| Regional Affiliate operating expense excluding fuel |
11.11 | 11.14 | ||||
| Q3 2010 Estimate | ||||||
| Consolidated operating expense per ASM – CASM (cents) | Low | High | ||||
| Consolidated operating expense excluding profit sharing |
12.34 | 12.38 | ||||
| Special items and other exclusions* |
— | — | ||||
| Consolidated operating expense excluding profit sharing and special items |
12.34 | 12.38 | ||||
| Less: net non-cash mark-to-market impact |
(0.04 | ) | (0.04 | ) | ||
| Consolidated operating expense excluding profit sharing, net non-cash mark-to-market impact and special items |
12.30 | 12.34 | ||||
| Less: fuel expense (excluding net non-cash mark-to-market impact) |
(3.98 | ) | (3.98 | ) | ||
| Consolidated operating expense excluding fuel, profit sharing and special items |
8.32 | 8.36 | ||||
| * | Operating expense per ASM – CASM also excludes the impact of specials and other certain accounting charges. While United anticipates that it will record such charges in the third quarter, at this time the company is unable to accurately estimate the amounts of these charges. |
The United Building: 77 West Wacker Drive, Chicago, IL 60601
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