View:
Download DOC
Download PDF
Download XLS
8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 7, 2014

 

 

UNITED CONTINENTAL HOLDINGS, INC.

UNITED AIRLINES, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-06033   36-2675207
Delaware   001-10323   74-2099724

(State or other jurisdiction

of incorporation)

  

(Commission

File Number)

  

(IRS Employer

Identification Number)

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

(827) 825-4000

(827) 825-4000

Registrant’s telephone number, including area code 

 

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

Item 7.01 Regulation FD Disclosure

James E. Compton, Vice Chairman and Chief Revenue Officer, of United Continental Holdings, Inc., the holding company whose primary subsidiary is United Airlines, Inc. (“United”), and John Gebo, Senior Vice President Financial Planning and Analysis, of United will speak at the Bank of America Merrill Lynch 2014 Global Transportation Conference on May 7, 2014. Attached hereto as Exhibit 99.1 are slides that will be presented at that time.

The information in this Item 7.01, including Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section and shall not be deemed incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

 

Item 9.01 Financial Statements and Exhibits.

 

Exhibit No.

   

Description

99.1*

    United Continental Holdings, Inc. slide presentation delivered on May 7, 2014

 

* Furnished herewith electronically.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

UNITED CONTINENTAL HOLDINGS, INC.
UNITED AIRLINES, INC.
By:   /s/ John D. Rainey
Name:   John D. Rainey
Title:   Executive Vice President
and Chief Financial Officer

Date: May 7, 2014

EXHIBIT INDEX

 

Exhibit No.

   

Description

99.1*

    United Continental Holdings, Inc. slide presentation delivered on May 7, 2014

 

* Furnished herewith electronically.
EX-99.1
Jim Compton
Vice Chairman & Chief Revenue Officer
John Gebo
Senior Vice President Financial Planning & Analysis
Exhibit 99.1

Safe Harbor Statement
2
Certain
statements
included
in
this
investor
update
are
forward-looking
and
thus
reflect
our
current
expectations
and
beliefs
with
respect
to
certain
current
and
future
events
and
financial
performance.
Such
forward-looking
statements
are
and
will
be
subject
to
many
risks
and
uncertainties
relating
to
our
operations
and
business
environment
that
may
cause
actual
results
to
differ
materially
from
any
future
results
expressed
or
implied
in
such
forward-looking
statements.
Words
such
as
“expects,”
“will,”
“plans,”
“anticipates,”
“indicates,”
“believes,”
“forecast,”
“guidance,”
“outlook”
and
similar
expressions
are
intended
to
identify
forward-looking
statements.
Additionally,
forward-
looking
statements
include
statements
that
do
not
relate
solely
to
historical
facts,
such
as
statements
which
identify
uncertainties
or
trends,
discuss
the
possible
future
effects
of
current
known
trends
or
uncertainties
or
which
indicate
that
the
future
effects
of
known
trends
or
uncertainties
cannot
be
predicted,
guaranteed
or
assured.
All
forward-looking
statements
in
this
report
are
based
upon
information
available
to
us
on
the
date
of
this
report.
We
undertake
no
obligation
to
publicly
update
or
revise
any
forward-looking
statement,
whether
as
a
result
of
new
information,
future
events,
changed
circumstances
or
otherwise,
except
as
required
by
applicable
law.
Our
actual
results
could
differ
materially
from
these
forward-looking
statements
due
to
numerous
factors
including,
without
limitation,
the
following:
our
ability
to
comply
with
the
terms
of
our
various
financing
arrangements;
the
costs
and
availability
of
financing;
our
ability
to
maintain
adequate
liquidity;
our
ability
to
execute
our
operational
plans
and
revenue-generating
initiatives,
including
optimizing
our
revenue;
our
ability
to
control
our
costs,
including
realizing
benefits
from
our
resource
optimization
efforts,
cost
reduction
initiatives
and
fleet
replacement
programs;
our
ability
to
utilize
our
net
operating
losses;
our
ability
to
attract
and
retain
customers;
demand
for
transportation
in
the
markets
in
which
we
operate;
an
outbreak
of
a
disease
that
affects
travel
demand
or
travel
behavior;
demand
for
travel
and
the
impact
that
global
economic
conditions
have
on
customer
travel
patterns;
excessive
taxation
and
the
inability
to
offset
future
taxable
income;
general
economic
conditions
(including
interest
rates,
foreign
currency
exchange
rates,
investment
or
credit
market
conditions,
crude
oil
prices,
costs
of
aircraft
fuel
and
energy
refining
capacity
in
relevant
markets);
economic
and
political
instability
and
other
risks
of
doing
business
globally;
our
ability
to
cost-effectively
hedge
against
increases
in
the
price
of
aircraft
fuel;
any
potential
realized
or
unrealized
gains
or
losses
related
to
fuel
or
currency
hedging
programs;
the
effects
of
any
hostilities,
act
of
war
or
terrorist
attack;
the
ability
of
other
air
carriers
with
whom
we
have
alliances
or
partnerships
to
provide
the
services
contemplated
by
the
respective
arrangements
with
such
carriers;
disruptions
to
our
regional
network;
the
costs
and
availability
of
aviation
and
other
insurance;
industry
consolidation
or
changes
in
airline
alliances;
competitive
pressures
on
pricing
and
on
demand;
our
capacity
decisions
and
the
capacity
decisions
of
our
competitors;
U.S.
or
foreign
governmental
legislation,
regulation
and
other
actions
(including
open
skies
agreements
and
environmental
regulations);
labor
costs;
our
ability
to
maintain
satisfactory
labor
relations
and
the
results
of
the
collective
bargaining
agreement
process
with
our
union
groups;
any
disruptions
to
operations
due
to
any
potential
actions
by
our
labor
groups;
weather
conditions;
the
possibility
that
expected
merger
synergies
will
not
be
realized
or
will
not
be
realized
within
the
expected
time
period;
and
other
risks
and
uncertainties
set
forth
under
Part
I,
Item
1A,
Risk
Factors,
of
UAL’s
Annual
Report
on
Form
10-K,
as
well
as
other
risks
and
uncertainties
set
forth
from
time
to
time
in
the
reports
we
file
with
the
SEC.

Committed to running a great airline and improving returns
3
Deliver
reliability
Expand revenue
Improve efficiency
and quality
Strengthen
balance sheet

Operational investments have paid off
4
+6%
Apr. 2014
Apr. 2013
Mainline on-time
arrival
On-time boarding
Maintenance cancellations (%)
On-time departures (D:0)
+5%
Apr. 2014
Apr. 2013
+3%
Apr. 2014
Apr. 2013
-56%
Apr. 2014
Apr. 2013
Implemented new arrival
and departure
procedures to reduce
aircraft turn times
Enhanced boarding
process and new agent
interface to improve
speed and experience
Implemented programs
to improve fleet
reliability

Capacity discipline is central to our strategy
5
United’s capacity vs.
U.S. GDP growth
(year-over-year)
Installing slimline economy seats
10 –
15% lighter than seats
they’re replacing
Expect to install on ~350 aircraft
by YE 2014
Up-gauging regional fleet
Adding 27 76-seat E175s in
2014, replacing 50 seaters
Adding new Pacific service and
down-gauging certain existing
routes to B787
2.4%
1.9%
2.8%
(1.4%)
(1.5%)
2014E
0.5%-
1.5%
2013
2012
Efficient capacity growth in 2014
Sources:
SEC
filings
and
IHS
Global
Insight;
2014E
capacity
from
Apr.
24
Investor
Update
United consolidated capacity
GDP

Taking near-term actions to improve our revenue
6
Improve value of network
Optimize revenue management practices
Restructuring Pacific network
Optimizing 747 deployment after improving reliability
Re-banking schedules at DEN and IAH
De-hubbing CLE
Made phased recalibrations to demand forecast
Restructuring domestic and short-haul Latin premium
cabin fares to improve revenue
2Q
End of Year
2Q
End of Year
-
Not yet implemented
-
Full benefit achieved

Enhancing our Pacific network
7
Launching non-stop service to
Taipei and Chengdu, China
Moving Seattle to Tokyo
service to second daily
Houston-Tokyo
Reducing UA intra-Asia service
and increasing connectivity
with ANA
Expect traffic connecting on
ANA to increase 30% in 2
nd
quarter
Deploying B747 from Chicago
to Tokyo and Shanghai
Downgauging Sydney to B777
Optimizing B747
deployment
Restructuring
Pacific network
Improving joint
venture
coordination
Chicago
Seoul
Sydney
Taipei
Houston
San Francisco
Melbourne
Chengdu
Shanghai
Tokyo
Added or
up-gauged
Eliminated or
down-gauged
Bangkok
Hong Kong
Seattle
Los Angeles
Denver

Strengthening our powerful digital tools
8

$3.0
$2.8
$2.5
$2.4
$2.2
2014E
$3.5+
2017E
+7% CAGR
2013
2012
2011
2010
Expect to make meaningful progress in 2014 toward $3.5 billion
ancillary revenue goal
9
Comprehensive and
relevant portfolio
Powerful and nimble
technology platforms
Dynamic pricing
capabilities
Expand availability
through other channels
Ancillary revenue
($B)
1
1: 2010 results are pro-forma

Expect to achieve $2 billion
in annual cost savings by 2017
10
Maintenance
~$100M
Fuel
consumption
~$1B
Productivity
~$500M
Distribution
~$100M
Sourcing
~$150M
Efficiency benefit
from new aircraft,
engineering
upgrades and
efficient operating
processes
Realign work with
our strengths and
implement lean
practices
Reduce overtime,
improve efficiency
and deploy self-
service technology
Shift traffic
mix towards
optimal
distribution
channels
Reduce sourcing
costs through total
cost of ownership

Expect to achieve $250 -
$300 million in non-fuel cost
savings in 2014 across every aspect of our business
11
Productivity
Sourcing
Bring engine contracts in line with market rates
Implement best sourcing initiatives
Restructure airport rental agreements
Redesign airports to improve passenger flows
and better match staffing with demand
Improve technology and tools employees and
customers use
Optimize staffing to reduce overtime
Two areas with meaningful impact in 2014

Fuel efficiency to drive $1 billion in annual savings by 2017
12
Firm aircraft deliveries
13
17
Average: 25
mainline AC
per year
2017E
15
9
6
2016E
16
2
14
2015E
46
23
10
2014E
52
29
6
B737
B787
E175
Expect to achieve nearly $200M in fuel efficiency savings in 2014

Expect 2014 CASM ex-fuel to grow between 1 and 2% YOY
13
3.1%
0.0%
2.0%
4.0%
FY 2014E
1% –
2%
2H 2014E
~1.0%
2Q 2014E
1.25% -
2.25%
1Q 2014
YOY CASM ex-fuel
1
1: CASM ex-fuel numbers also exclude profit sharing, third party business expense and special charges
Expect
2015 –
2017
non-fuel unit
costs to grow
less than
inflation

1.2
0.8
2Q -
4Q
2014
0.8
0.8
1.2
2015
2.0
2017
0.8
0.8
2016
1.2
Notes:
-
Convertible
notes
with
maturity
or
put/call
date
through
2017
not
shown
as
payments,
assumed
to
be
settled
in
stock
1 -
Includes
capital
lease
payments;
scheduled
payments
include
all
commitments
for
which
company
has
secured
financing
2 –
2010
data
is
pro
forma
Aircraft
Non aircraft
Actual debt payments¹
($B)
Future debt payments¹
($B)
0.6
1Q 2014
2012
1.5
2011
2.6
2010
2
2.5
2013
2.3
Made $10 billion of debt payments since 2009; upcoming
scheduled debt payments manageable
14

Improving balance sheet
15
Total debt outstanding¹
($B)
1: Includes annualized aircraft rent capitalized at 7x
2: 2009 and 2010 data is pro forma
1Q 2014
$1.6
2012
$2.4
2011
$1.8
2010
2
$1.5
Unfunded pension liability
($B)
1Q 2014
$18.9
2012
$20.1
2009
2
$23.8

Improving long-term shareholder value
16
Balance free cash flow allocation
Increase earnings by 2-4x
Improve capital structure
Generate ROIC greater than 10%

17