Issuer Free Writing Prospectus
Filed pursuant to Rule 433(d)
Registration No. 333-181014-01
July 28, 2014
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Issuer Free Writing Prospectus
Filed pursuant to Rule 433(d)
Registration No. 333-181014-01
July 28, 2014
2014-2 EETC
Investor Presentation
United Airlines, Inc. July 28, 2014
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The issuer has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the issuer, any underwriter, or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling Credit Suisse toll-free at 1-800-221-1037 or Morgan Stanley toll-free at 1-866-718-1649.
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United Airlines 2014-2 EETC
United Airlines, Inc. (“United”) intends to raise $1,061,489,000 of Pass Through Certificates, Series 2014-2 in two classes:
– Class A of $823,071,000
– Class B of $238,418,000
The proceeds from the offering will be used by United to finance 27 aircraft:
– 11 new Boeing 737-924ER aircraft scheduled for delivery between January 2015 and July 2015(1)
– 4 new Boeing 787-9 aircraft scheduled for delivery between January 2015 and July 2015(2)
– 12 new Embraer ERJ 175 LR aircraft scheduled for delivery between November 2014 and July 2015(3)
Lead Bookrunners: Credit Suisse, Morgan Stanley
Bookrunners: Deutsche Bank Securities, Goldman, Sachs & Co., Citigroup, Barclays, BNP Paribas, Credit Agricole Securities
Liquidity Facility Provider and Depositary: BNP Paribas, New York Branch
Notes:
1. United will have the right to select 11 out of 17 eligible Boeing 737-924ER aircraft scheduled for delivery between January and July 2015 to be part of the collateral pool for this transaction.
2. United will have the right to select 4 out of 5 eligible Boeing 787-9 aircraft scheduled for delivery between January and July 2015 to be part of the collateral pool for this transaction.
3. United will have the right to select 12 out of 18 eligible Embraer ERJ 175 LR aircraft scheduled for delivery between November 2014 and July 2015 to be part of the collateral pool for this transaction.
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United 2014-2 EETC Structural Summary
Class A Class B
Face Amount $823,071,000 $238,418,000
Expected Ratings (S&P / Fitch) A- / A BB+ / BB+
Initial LTV(1) 55.1% 71.0%
Interest Rate Fixed, semi-annual, 30/360 day count
Initial Average Life (in years) 8.8 5.9
Regular Distribution Dates March 3 & September 3
Expected Principal Distribution Window (in years) 1.6 – 12.1 1.6 – 8.1
Final Expected Distribution Date September 3, 2026 September 3, 2022
Final Maturity Date March 3, 2028 March 3, 2024
Section 1110 Protection Yes Yes
Liquidity Facility 3 semi-annual 3 semi-annual
interest payments interest payments
Depositary Funds raised will be held in escrow with the Depositary and
withdrawn from time to time to purchase Equipment Notes as
the aircraft are financed
Note:
1. Calculated as of the first regular distribution date following the date on which all aircraft are expected to have been financed pursuant to this offering, assumed to be September 3, 2015.
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Key Structural Elements Classes Offered: Two tranches of amortizing debt offered, both of which will benefit from a liquidity facility covering three semi-annual interest payments
Waterfall: Interest on the Preferred Pool Balance on the Class B Certificates is paid ahead of Class A Certificates’ principal (same as UAL 2014-1)
Buy-Out Rights: Class B Certificateholders have the right to purchase all (but not less than all) of then outstanding Class A Certificates at par plus accrued and unpaid interest upon certain events during a United bankruptcy
Cross-Default: Yes, from day one
Cross-Collateralization: Yes, from day one
Collateral: Strategically core aircraft types to United’s fleet operations, all of which are expected to be delivered new in 2014 or 2015. United expects to finance 11 of 17 eligible Boeing 737-924ER aircraft, 4 of 5 eligible Boeing 787-9 aircraft and 12 of 18 eligible Embraer ERJ 175 LR aircraft with the proceeds of this transaction
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Collateral Summary(1)
Aircraft Aircraft Fuselage Manufacturer’s Registration Engine Delivery Aircraft New Base Values
No. Type Type Serial Number Number Type MTOW Date Age AISI BK mba LMM (2)
1 Boeing 737-924ER Narrow 42181 N66841 CFM56-7B27 187,700 January-15 New $53,470,000 $53,400,000 $51,900,000 $52,923,333
2 Boeing 737-924ER Narrow 42182 N68842 CFM56-7B27 187,700 January-15 New 53,470,000 53,400,000 51,900,000 52,923,333
3 Boeing 737-924ER Narrow 42183 N68843 CFM56-7B27 187,700 January-15 New 53,470,000 53,400,000 51,900,000 52,923,333
4 Boeing 737-924ER Narrow 60317 N69840 CFM56-7B27 187,700 February-15 New 53,560,000 53,400,000 51,940,000 52,966,667
5 Boeing 737-924ER Narrow 42184 N64844 CFM56-7B27 187,700 February-15 New 53,560,000 53,400,000 51,940,000 52,966,667
6 Boeing 737-924ER Narrow 42185 N67845 CFM56-7B27 187,700 February-15 New 53,560,000 53,400,000 51,940,000 52,966,667
7 Boeing 737-924ER Narrow 42186 N67846 CFM56-7B27 187,700 February-15 New 53,560,000 53,400,000 51,940,000 52,966,667
8 Boeing 737-924ER Narrow 42187 N69847 CFM56-7B27 187,700 March-15 New 53,650,000 53,400,000 51,990,000 53,013,333
9 Boeing 737-924ER Narrow 42188 N66848 CFM56-7B27 187,700 March-15 New 53,650,000 53,400,000 51,990,000 53,013,333
10 Boeing 737-924ER Narrow 42199 N62849 CFM56-7B27 187,700 April-15 New 53,740,000 53,600,000 52,030,000 53,123,333
11 Boeing 737-924ER Narrow 42204 N68850 CFM56-7B27 187,700 April-15 New 53,740,000 53,600,000 52,030,000 53,123,333
12 Boeing 787-9 Wide 36403 N26952 GEnx-1B74/75 557,000 January-15 New 150,520,000 151,050,000 133,620,000 145,063,333
13 Boeing 787-9 Wide 36404 N35953 GEnx-1B74/75 557,000 March-15 New 151,020,000 151,050,000 133,840,000 145,303,333
14 Boeing 787-9 Wide 36405 N13954 GEnx-1B74/75 557,000 March-15 New 151,020,000 151,050,000 133,840,000 145,303,333
15 Boeing 787-9 Wide 37814 N38955 GEnx-1B74/75 557,000 May-15 New 151,520,000 151,800,000 134,070,000 145,796,667
16 Embraer ERJ 175 LR Regional Jet 17000432 N89313 CF34-8E5 85,517 November-14 New 31,010,000 27,950,000 29,440,000 29,440,000
17 Embraer ERJ 175 LR Regional Jet 17000433 N82314 CF34-8E5 85,517 November-14 New 31,010,000 27,950,000 29,440,000 29,440,000
18 Embraer ERJ 175 LR Regional Jet 17000436 N89315 CF34-8E5 85,517 November-14 New 31,010,000 27,950,000 29,440,000 29,440,000
19 Embraer ERJ 175 LR Regional Jet 17000437 N86316 CF34-8E5 85,517 December-14 New 31,060,000 27,950,000 29,490,000 29,490,000
20 Embraer ERJ 175 LR Regional Jet 17000438 N89317 CF34-8E5 85,517 December-14 New 31,060,000 27,950,000 29,490,000 29,490,000
21 Embraer ERJ 175 LR Regional Jet 17000442 N87318 CF34-8E5 85,517 December-14 New 31,060,000 27,950,000 29,490,000 29,490,000
22 Embraer ERJ 175 LR Regional Jet 17000443 N87319 CF34-8E5 85,517 December-14 New 31,060,000 27,950,000 29,490,000 29,490,000
23 Embraer ERJ 175 LR Regional Jet 17000448 N85320 CF34-8E5 85,517 February-15 New 31,160,000 28,000,000 29,550,000 29,550,000
24 Embraer ERJ 175 LR Regional Jet TBD N89321 CF34-8E5 85,517 March-15 New 31,210,000 28,000,000 29,580,000 29,580,000
25 Embraer ERJ 175 LR Regional Jet TBD N86322 CF34-8E5 85,517 April-15 New 31,270,000 28,100,000 29,600,000 29,600,000
26 Embraer ERJ 175 LR Regional Jet TBD N85323 CF34-8E5 85,517 April-15 New 31,270,000 28,100,000 29,600,000 29,600,000
27 Embraer ERJ 175 LR Regional Jet TBD N86324 CF34-8E5 85,517 April-15 New 31,270,000 28,100,000 29,600,000 29,600,000
Target aircraft total: $1,566,960,000 $1,528,700,000 $1,461,080,000 $1,518,586,667(3)
Notes:
1. Collateral summary shown assumes that United elects to finance the aircraft with the earliest scheduled delivery dates from among the total aircraft of each type eligible to be financed with the proceeds of the Certificates.
2. Appraised value is the lesser of the mean and median base value of each aircraft as appraised by Aircraft Information Services, Inc. (“AISI”), BK
Associates, Inc. (“BK”) and Morten Beyer & Agnew, Inc. (“mba”). An appraisal is only an estimate of value and should not be relied upon as a measure of realizable value.
3. Appraised value as of July 2014. The aggregate appraised value as of September 3, 2015, after all such aircraft are expected to have been financed pursuant to this offering, is expected to be $1,494 million (using an assumed depreciation rate of 3% of the initial appraised value per year after the year of delivery of each Aircraft).
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Collateral Pool
The collateral pool benefits from diversification of three strategically core aircraft types
– 39% Narrowbody / 38% Widebody / 23% Regional Jet
– 100% New
United 2014-2 Collateral Mix
Distribution of LMM Appraised Value (1)
Embraer ERJ 175 LR, $354.2 mm
23%
Boeing 737-924ER $582.9mm
39%
Boeing 787-9 $581.5mm
38%
Vintage: 0% New: 100%
Total: $1,519MM (1)
Notes:
1. Total Aircraft Value as of July 2014 using the lesser of the mean and median of three base value appraisals for the aircraft. Assumes that United finances the first 11 out of 17 Boeing 737-924ER aircraft, the first of 4 out of 5 Boeing 787-9 aircraft and the first 12 out of 18 Embraer ERJ 175 LR aircraft scheduled for delivery from which United may select.
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Aircraft Appraisals
United has obtained base value desktop appraisals from three appraisers (AISI, BK and mba)
Aggregate aircraft appraised value of approximately $1,519 million(1)
Appraisals available in the Preliminary Prospectus Supplement
Appraisals indicate an initial collateral cushion of 44.9% and 29.0% on the Class A and B Certificates respectively(2), which increases over time as the debt amortizes
Notes:
1. Total Aircraft Value as of July 2014 using the lesser of the mean and median of three base value appraisals for the aircraft. Assumes that United finances the first 11 out of 17 Boeing 737-924ER aircraft, the first of 4 out of 5 Boeing 787-9 aircraft and the first 12 out of 18 Embraer ERJ 175 LR aircraft scheduled for delivery from which United may select. The aggregate appraised value as of September 3, 2015, after all such aircraft are expected to have been financed pursuant to this offering, is expected to be $1,494 million (using an assumed depreciation rate of 3% of the initial appraised value per year after the year of delivery of each Aircraft).
2. Initial collateral cushion is calculated as of September 3, 2015, the first Regular Distribution Date after all aircraft are expected to have been financed.
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Collateral Overview
Boeing 737-900ER
Overview: The Boeing 737-900ER is the largest variant of world’s all-time best selling
737NG family of narrowbody commercial aircraft – 179 passengers in United’s standard two-class configuration (20 first / 159 premium and regular economy)
Strengths(1):
– US transcontinental range for the Boeing 737-900ER is better than the current Airbus 321 (without auxiliary fuel tanks)
– Lowest fuel consumption per seat/seat-mile cost of any twin-engine narrowbody
– 526 cumulative orders with 17 customers
– United and Delta, in 2012 and 2011 respectively, placed orders to replace Boeing 757s, marking a key win for the aircraft type
– Ease of remarketing to secondary operators due to sole source engine and commonality with other 737NG variants
Importance to United:
– United (and others) view the 737-900ER as a good replacement for the aging Boeing 757-200s—covers 96% of current 757-200 routes at significantly lower trip cost
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1. Source: United Airlines, Ascend Market Commentaries Q2 2014, Morten Beyer & Agnew, The Boeing Company.
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Boeing 737-900ER Market
17 Customers for 526 Cumulative Orders(1)
(163) (139) (100) (49) (15) (8) (8) (7) (6) (6) (5) (5)
(4) (4) (3) (2) (2)
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1. Source: The Boeing Company; orders (including deliveries) are through June 2014.
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Collateral Overview
Boeing 787-9
Overview: New generation long range aircraft with size similar to current Boeing 777-200ERs in fleet – 252 passengers in United’s standard two-class configuration (48 business / 204 premium and regular economy)
Strengths(1):
– First Boeing 787-9 flew in September 2013 and was delivered in July 2014 to first customer, Air New Zealand
– Strong order book expresses operator enthusiasm. As of June 30, 2014, there are 409 cumulative orders with 26 customers
– Approximately 20 feet longer and over 50,000lb higher MTOW than the Boeing 787-8 (33 more seats than 787-8)
– Composite fuselage is expected to reduce costs over span of aircraft’s useful life.
Overall the Boeing 787 is delivering up to 20% better fuel burn than the Boeing 767
– Improvements to the aircraft include: carbon composite fuselage and wings, health monitoring systems that allow the aircraft to self-monitor and new fuel efficient engines
Importance to United:
– Increased range of up to 300 nautical miles more than the Boeing 787-8
– Larger payload / passenger count (252 passengers)
– Fills gap between Boeing 787-8 and Boeing 777-200ER
1. Source: United Airlines, Ascend Market Commentaries Q2 2014, The Boeing Company.
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Boeing 787-9 Market
26 Customers for 409 Cumulative Orders(1)
(49) (41) (30) (26) (26) (25) (22) (22) (20) (16) (15) (15) (13) (10) (10) (10) (10) (8) (8) (7) (6) (6) (5) (4) (3) (2)
1. Source: The Boeing Company; orders are through June 2014.
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Collateral Overview
Embraer ERJ 175 LR
Overview: Good level of commonality with other E-Jet family members – 76 passengers in United’s standard two-class configuration (12 first / 64 premium and regular economy)
Strengths(1):
– Combines improved operating economics with larger cabin for increased passenger comfort
– Better useful volume and cross-section than the CRJ family
– Current fleet of 211 aircraft delivered and a backlog of 167 aircraft, making a firm order total of 378 aircraft (as of June 2014)
– Demand for the Embraer ERJ 175 has picked up as major US carriers seek to replace 50-seaters with 76 seats; Both United and American have placed key ERJ 175 orders
– Long term, the Embraer ERJ 175 is expected to have superior seat mile costs to the Embraer ERJ 170 and better residual values
Importance to United:
– United will utilize the “LR” variant of the Embraer ERJ 175
– Will be used to replace 50-seat aircraft currently in the fleet
– Embraer ERJ 175 LR has a larger first-class cabin, increased fuselage and larger overhead bins than competing regional jets
1. Source: United Airlines, Ascend Market Commentaries Q2 2014, Embraer.
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Embraer ERJ 175 LR Market
20 customers with 378 firm orders
ERJ 175 LR Orderbook (1)
As of June 30, 2014
Customer Firm Orders Delivered Firm Backlog
Air Canada 15 15 -
Air Lease 8 8 -
Aldus 5 — 5
Alitalia 2 2 -
American Airlines 60 — 60
Azul/Trip 5 5 -
CIT 4 4 -
ECC Leasing 1 1 -
Flybe 35 11 24
GECAS 5 5 -
Jetscape 4 4 -
LOT Polish 12 12 -
Northwest 36 36 -
Oman Air 5 5 -
Republic Airlines 101 84 17
Royal Jordanian 2 2 -
Skywest 40 8 32
Suzuyo 5 5 -
United Airlines 30 4 26
Undisclosed 3 — 3
Total 378 211 167
1. Source; Embraer as of June 30, 2014.
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