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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One) |
| |
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2020
OR |
| |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
|
| | | | | | | | | | | | |
| 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 of 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 April 30, 2020 is shown below: |
| | | | |
United Airlines Holdings, Inc. | | 290,432,163 |
| 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 March 31, 2020
Table of Contents
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 March 31, |
| 2020 | | 2019 |
Operating revenue: | | | |
Passenger revenue | $ | 7,065 |
| | $ | 8,725 |
|
Cargo | 264 |
| | 286 |
|
Other operating revenue | 650 |
| | 578 |
|
Total operating revenue | 7,979 |
| | 9,589 |
|
| | | |
Operating expense: | | | |
Salaries and related costs | 2,955 |
| | 2,873 |
|
Aircraft fuel | 1,726 |
| | 2,023 |
|
Regional capacity purchase | 737 |
| | 688 |
|
Landing fees and other rent | 623 |
| | 588 |
|
Depreciation and amortization | 615 |
| | 547 |
|
Aircraft maintenance materials and outside repairs | 434 |
| | 408 |
|
Distribution expenses | 295 |
| | 360 |
|
Aircraft rent | 50 |
| | 81 |
|
Special charges | 63 |
| | 18 |
|
Other operating expenses | 1,453 |
| | 1,508 |
|
Total operating expenses | 8,951 |
| | 9,094 |
|
Operating income (loss) | (972 | ) | | 495 |
|
| | | |
Nonoperating income (expense): | | | |
Interest expense | (171 | ) | | (188 | ) |
Interest capitalized | 21 |
| | 22 |
|
Interest income | 26 |
| | 29 |
|
Unrealized gains (losses) on investments, net | (319 | ) | | 17 |
|
Miscellaneous, net | (699 | ) | | (8 | ) |
Total nonoperating expense, net | (1,142 | ) | | (128 | ) |
Income (loss) before income taxes | (2,114 | ) | | 367 |
|
Income tax expense (benefit) | (410 | ) | | 75 |
|
Net income (loss) | $ | (1,704 | ) | | $ | 292 |
|
Earnings (loss) per share, basic and diluted | $ | (6.86 | ) | | $ | 1.09 |
|
The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
UNITED AIRLINES HOLDINGS, INC.
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
(In millions)
|
| | | | | | | |
| Three Months Ended March 31, |
| 2020 | | 2019 |
Net income (loss) | $ | (1,704 | ) | | $ | 292 |
|
| | | |
Other comprehensive income (loss), net of tax: | | | |
Employee benefit plans | (41 | ) | | 7 |
|
Investments and other | (12 | ) | | 3 |
|
Total other comprehensive income (loss), net of tax | (53 | ) | | 10 |
|
| | | |
Total comprehensive income (loss), net | $ | (1,757 | ) | | $ | 302 |
|
The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
UNITED AIRLINES HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions, except shares)
|
| | | | | | | |
| March 31, 2020 | | December 31, 2019 |
ASSETS | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 3,442 |
| | $ | 2,762 |
|
Short-term investments | 1,779 |
| | 2,182 |
|
Receivables, less allowance for credit losses (2020 — $30; 2019 — $9) | 792 |
| | 1,364 |
|
Aircraft fuel, spare parts and supplies, less obsolescence allowance (2020 — $446; 2019 — $425) | 1,070 |
| | 1,072 |
|
Prepaid expenses and other | 822 |
| | 814 |
|
Total current assets | 7,905 |
| | 8,194 |
|
Operating property and equipment: | | | |
Flight equipment | 36,763 |
| | 35,421 |
|
Other property and equipment | 8,200 |
| | 7,926 |
|
Purchase deposits for flight equipment | 1,859 |
| | 1,360 |
|
Total operating property and equipment | 46,822 |
| | 44,707 |
|
Less — Accumulated depreciation and amortization | (15,011 | ) | | (14,537 | ) |
Total operating property and equipment, net | 31,811 |
| | 30,170 |
|
| | | |
Operating lease right-of-use assets | 4,853 |
| | 4,758 |
|
| | | |
Other assets: | | | |
Goodwill | 4,523 |
| | 4,523 |
|
Intangibles, less accumulated amortization (2020 — $1,454; 2019 — $1,440) | 2,945 |
| | 3,009 |
|
Restricted cash | 106 |
| | 106 |
|
Notes receivable, less allowance for credit losses (2020 — $549) | 149 |
| | 671 |
|
Investments in affiliates and other, net | 763 |
| | 1,180 |
|
Total other assets | 8,486 |
| | 9,489 |
|
Total assets | $ | 53,055 |
| | $ | 52,611 |
|
(continued on next page)
UNITED AIRLINES HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions, except shares)
|
| | | | | | | |
| March 31, 2020 | | December 31, 2019 |
LIABILITIES AND STOCKHOLDERS' EQUITY | | | |
Current liabilities: | | | |
Advance ticket sales | $ | 5,309 |
| | $ | 4,819 |
|
Accounts payable | 2,436 |
| | 2,703 |
|
Frequent flyer deferred revenue | 1,355 |
| | 2,440 |
|
Accrued salaries and benefits | 1,647 |
| | 2,271 |
|
Current maturities of long-term debt | 4,055 |
| | 1,407 |
|
Current maturities of finance leases | 59 |
| | 46 |
|
Current maturities of operating leases | 688 |
| | 686 |
|
Other | 538 |
| | 566 |
|
Total current liabilities | 16,087 |
| | 14,938 |
|
| | | |
Long-term debt | 13,198 |
| | 13,145 |
|
Long-term obligations under finance leases | 369 |
| | 220 |
|
Long-term obligations under operating leases | 5,060 |
| | 4,946 |
|
| | | |
Other liabilities and deferred credits: | | | |
Frequent flyer deferred revenue | 4,133 |
| | 2,836 |
|
Postretirement benefit liability | 775 |
| | 789 |
|
Pension liability | 1,514 |
| | 1,446 |
|
Deferred income taxes | 1,322 |
| | 1,736 |
|
Other | 1,179 |
| | 1,024 |
|
Total other liabilities and deferred credits | 8,923 |
| | 7,831 |
|
Commitments and contingencies |
| |
|
Stockholders' equity: | | | |
Preferred stock | — |
| | — |
|
Common stock at par, $0.01 par value; authorized 1,000,000,000 shares; outstanding 247,256,855 and 251,216,381 shares at March 31, 2020 and December 31, 2019, respectively | 3 |
| | 3 |
|
Additional capital invested | 6,096 |
| | 6,129 |
|
Retained earnings | 7,991 |
| | 9,716 |
|
Stock held in treasury, at cost | (3,901 | ) | | (3,599 | ) |
Accumulated other comprehensive loss | (771 | ) | | (718 | ) |
Total stockholders' equity | 9,418 |
| | 11,531 |
|
Total liabilities and stockholders' equity | $ | 53,055 |
| | $ | 52,611 |
|
The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
UNITED AIRLINES HOLDINGS, INC.
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
(In millions)
|
| | | | | | | |
| Three Months Ended March 31, |
| 2020 | | 2019 |
Cash Flows from Operating Activities: | | | |
Net cash provided by operating activities | $ | 63 |
| | $ | 1,915 |
|
| | | |
Cash Flows from Investing Activities: | | | |
Capital expenditures | (1,959 | ) | | (1,609 | ) |
Purchases of short-term and other investments | (541 | ) | | (724 | ) |
Proceeds from sale of short-term and other investments | 927 |
| | 768 |
|
Other, net | 1 |
| | (15 | ) |
Net cash used in investing activities | (1,572 | ) | | (1,580 | ) |
| | | |
Cash Flows from Financing Activities: | | | |
Proceeds from issuance of short-term debt | 2,500 |
| | — |
|
Proceeds from issuance of long-term debt | 348 |
| | 646 |
|
Payments of long-term debt | (235 | ) | | (250 | ) |
Repurchases of common stock | (353 | ) | | (513 | ) |
Principal payments under finance leases | (18 | ) | | (20 | ) |
Capitalized financing costs | (35 | ) | | (17 | ) |
Other, net | (18 | ) | | (29 | ) |
Net cash provided (used) in financing activities | 2,189 |
| | (183 | ) |
Net increase in cash, cash equivalents and restricted cash | 680 |
| | 152 |
|
Cash, cash equivalents and restricted cash at beginning of the period | 2,868 |
| | 1,799 |
|
Cash, cash equivalents and restricted cash at end of the period (a) | $ | 3,548 |
| | $ | 1,951 |
|
| | | |
Investing and Financing Activities Not Affecting Cash: | | | |
Property and equipment acquired through the issuance of debt | $ | 109 |
| | $ | 92 |
|
Lease modifications and lease conversions | 439 |
| | 36 |
|
Right-of-use assets acquired through operating leases | 30 |
| | 51 |
|
Property and equipment acquired through finance leases | 19 |
| | 8 |
|
(a)
|
| | | | | | | |
Cash and cash equivalents | $ | 3,442 |
| | $ | 1,848 |
|
Restricted cash | 106 |
| | 103 |
|
Total cash, cash equivalents and restricted cash | $ | 3,548 |
| | $ | 1,951 |
|
The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
UNITED AIRLINES HOLDINGS, INC.
STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY (UNAUDITED)
(In millions)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common Stock | | Additional Capital Invested | | Treasury Stock | | Retained Earnings | | Accumulated Other Comprehensive Income (Loss) | | Total |
| Shares | | Amount | | | | | |
Balance at December 31, 2019 | 251.2 |
| | $ | 3 |
| | $ | 6,129 |
| | $ | (3,599 | ) | | $ | 9,716 |
| | $ | (718 | ) | | $ | 11,531 |
|
Net loss | — |
| | — |
| | — |
| | — |
| | (1,704 | ) | | — |
| | (1,704 | ) |
Other comprehensive loss | — |
| | — |
| | — |
| | — |
| | — |
| | (53 | ) | | (53 | ) |
Stock settled share-based compensation | — |
| | — |
| | 22 |
| | — |
| | — |
| | — |
| | 22 |
|
Repurchases of common stock | (4.4 | ) | | — |
| | — |
| | (342 | ) | | — |
| | — |
| | (342 | ) |
Net treasury stock issued for share-based awards | 0.5 |
| | — |
| | (55 | ) | | 40 |
| | (4 | ) | | — |
| | (19 | ) |
Adoption of new accounting standard (a) | — |
| | — |
| | — |
| | — |
| | (17 | ) | | — |
| | (17 | ) |
Balance at March 31, 2020 | 247.3 |
| | $ | 3 |
| | $ | 6,096 |
| | $ | (3,901 | ) | | $ | 7,991 |
| | $ | (771 | ) | | $ | 9,418 |
|
| | | | | | | | | | | | | |
Balance at December 31, 2018 | 269.9 |
| | $ | 3 |
| | $ | 6,120 |
| | $ | (1,993 | ) | | $ | 6,715 |
| | $ | (803 | ) | | $ | 10,042 |
|
Net income | — |
| | — |
| | — |
| | — |
| | 292 |
| | — |
| | 292 |
|
Other comprehensive income | — |
| | — |
| | — |
| | — |
| | — |
| | 10 |
| | 10 |
|
Stock settled share-based compensation | — |
| | — |
| | 14 |
| | — |
| | — |
| | — |
| | 14 |
|
Repurchases of common stock | (6.1 | ) | | — |
| | — |
| | (527 | ) | | — |
| | — |
| | (527 | ) |
Net treasury stock issued for share-based awards | 0.5 |
| | — |
| | (54 | ) | | 33 |
| | (8 | ) | | — |
| | (29 | ) |
Balance at March 31, 2019 | 264.3 |
| | $ | 3 |
| | $ | 6,080 |
| | $ | (2,487 | ) | | $ | 6,999 |
| | $ | (793 | ) | | $ | 9,802 |
|
(a) Financial Instruments—Credit Losses. 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.
UNITED AIRLINES, INC.
STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)
(In millions)
|
| | | | | | | |
| Three Months Ended March 31, |
| 2020 | | 2019 |
Operating revenue: | | | |
Passenger revenue | $ | 7,065 |
| | $ | 8,725 |
|
Cargo | 264 |
| | 286 |
|
Other operating revenue | 650 |
| | 578 |
|
Total operating revenue | 7,979 |
| | 9,589 |
|
| | | |
Operating expense: | | | |
Salaries and related costs | 2,955 |
| | 2,873 |
|
Aircraft fuel | 1,726 |
| | 2,023 |
|
Regional capacity purchase | 737 |
| | 688 |
|
Landing fees and other rent | 623 |
| | 588 |
|
Depreciation and amortization | 615 |
| | 547 |
|
Aircraft maintenance materials and outside repairs | 434 |
| | 408 |
|
Distribution expenses | 295 |
| | 360 |
|
Aircraft rent | 50 |
| | 81 |
|
Special charges | 63 |
| | 18 |
|
Other operating expenses | 1,453 |
| | 1,507 |
|
Total operating expense | 8,951 |
| | 9,093 |
|
Operating income (loss) | (972 | ) | | 496 |
|
| | | |
Nonoperating income (expense): | | | |
Interest expense | (171 | ) | | (188 | ) |
Interest capitalized | 21 |
| | 22 |
|
Interest income | 26 |
| | 29 |
|
Unrealized gains (losses) on investments, net | (319 | ) | | 17 |
|
Miscellaneous, net | (698 | ) | | (8 | ) |
Total nonoperating expense, net | (1,141 | ) | | (128 | ) |
Income (loss) before income taxes | (2,113 | ) | | 368 |
|
Income tax expense (benefit) | (409 | ) | | 75 |
|
Net income (loss) | $ | (1,704 | ) | | $ | 293 |
|
The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
UNITED AIRLINES, INC.
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
(In millions)
|
| | | | | | | |
| Three Months Ended March 31, |
| 2020 | | 2019 |
Net income (loss) | $ | (1,704 | ) | | $ | 293 |
|
| | | |
Other comprehensive income (loss), net of tax: | | | |
Employee benefit plans | (41 | ) | | 7 |
|
Investments and other | (12 | ) | | 3 |
|
Total other comprehensive income (loss), net of tax | (53 | ) | | 10 |
|
| | | |
Total comprehensive income (loss), net | $ | (1,757 | ) | | $ | 303 |
|
The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
UNITED AIRLINES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions, except shares)
|
| | | | | | | |
| March 31, 2020 | | December 31, 2019 |
ASSETS | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 3,436 |
| | $ | 2,756 |
|
Short-term investments | 1,779 |
| | 2,182 |
|
Receivables, less allowance for credit losses (2020 — $30; 2019 — $9) | 792 |
| | 1,364 |
|
Aircraft fuel, spare parts and supplies, less obsolescence allowance (2020 — $446; 2019 — $425) | 1,070 |
| | 1,072 |
|
Prepaid expenses and other | 822 |
| | 814 |
|
Total current assets | 7,899 |
| | 8,188 |
|
Operating property and equipment: | | | |
Flight equipment | 36,763 |
| | 35,421 |
|
Other property and equipment | 8,200 |
| | 7,926 |
|
Purchase deposits for flight equipment | 1,859 |
| | 1,360 |
|
Total operating property and equipment | 46,822 |
| | 44,707 |
|
Less — Accumulated depreciation and amortization | (15,011 | ) | | (14,537 | ) |
Total operating property and equipment, net | 31,811 |
| | 30,170 |
|
| | | |
Operating lease right-of-use assets | 4,853 |
| | 4,758 |
|
| | | |
Other assets: | | | |
Goodwill | 4,523 |
| | 4,523 |
|
Intangibles, less accumulated amortization (2020 — $1,454; 2019 — $1,440) | 2,945 |
| | 3,009 |
|
Restricted cash | 106 |
| | 106 |
|
Notes receivable, less allowance for credit losses (2020 — $549) | 149 |
| | 671 |
|
Investments in affiliates and other, net | 763 |
| | 1,180 |
|
Total other assets | 8,486 |
| | 9,489 |
|
Total assets | $ | 53,049 |
| | $ | 52,605 |
|
(continued on next page)
UNITED AIRLINES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions, except shares)
|
| | | | | | | |
| March 31, 2020 | | December 31, 2019 |
LIABILITIES AND STOCKHOLDER'S EQUITY | | | |
Current liabilities: | | | |
Advance ticket sales | $ | 5,309 |
| | $ | 4,819 |
|
Accounts payable | 2,436 |
| | 2,703 |
|
Frequent flyer deferred revenue | 1,355 |
| | 2,440 |
|
Accrued salaries and benefits | 1,647 |
| | 2,271 |
|
Current maturities of long-term debt | 4,055 |
| | 1,407 |
|
Current maturities of finance leases | 59 |
| | 46 |
|
Current maturities of operating leases | 688 |
| | 686 |
|
Other | 542 |
| | 571 |
|
Total current liabilities | 16,091 |
| | 14,943 |
|
| | | |
Long-term debt | 13,198 |
| | 13,145 |
|
Long-term obligations under finance leases | 369 |
| | 220 |
|
Long-term obligations under operating leases | 5,060 |
| | 4,946 |
|
| | | |
Other liabilities and deferred credits: | | | |
Frequent flyer deferred revenue | 4,133 |
| | 2,836 |
|
Postretirement benefit liability | 775 |
| | 789 |
|
Pension liability | 1,514 |
| | 1,446 |
|
Deferred income taxes | 1,350 |
| | 1,763 |
|
Other | 1,179 |
| | 1,025 |
|
Total other liabilities and deferred credits | 8,951 |
| | 7,859 |
|
Commitments and contingencies |
| |
|
Stockholder's equity: | | | |
Common stock at par, $0.01 par value; authorized 1,000 shares; issued and outstanding 1,000 shares at both March 31, 2020 and December 31, 2019 | — |
| | — |
|
Additional capital invested | 10 |
| | — |
|
Retained earnings | 10,302 |
| | 12,353 |
|
Accumulated other comprehensive loss | (771 | ) | | (718 | ) |
Receivable from related parties | (161 | ) | | (143 | ) |
Total stockholder's equity | 9,380 |
| | 11,492 |
|
Total liabilities and stockholder's equity | $ | 53,049 |
| | $ | 52,605 |
|
The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
UNITED AIRLINES, INC.
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
(In millions)
|
| | | | | | | |
| Three Months Ended March 31, |
| 2020 | | 2019 |
| | | |
Cash Flows from Operating Activities: | | | |
Net cash provided by operating activities | $ | 45 |
| | $ | 1,886 |
|
| | | |
Cash Flows from Investing Activities: | | | |
Capital expenditures | (1,959 | ) | | (1,609 | ) |
Purchases of short-term investments and other investments | (541 | ) | | (724 | ) |
Proceeds from sale of short-term and other investments | 927 |
| | 768 |
|
Other, net | 1 |
| | (15 | ) |
Net cash used in investing activities | (1,572 | ) | | (1,580 | ) |
| | | |
Cash Flows from Financing Activities: | | | |
Proceeds from issuance of short-term debt | 2,500 |
| | — |
|
Proceeds from issuance of long-term debt | 348 |
| | 646 |
|
Payments of long-term debt | (235 | ) | | (250 | ) |
Dividend to UAL | (353 | ) | | (513 | ) |
Principal payments under finance leases | (18 | ) | | (20 | ) |
Capitalized financing costs | (35 | ) | | (17 | ) |
Net cash provided (used) in financing activities | 2,207 |
| | (154 | ) |
Net increase in cash, cash equivalents and restricted cash | 680 |
| | 152 |
|
Cash, cash equivalents and restricted cash at beginning of the period | 2,862 |
| | 1,793 |
|
Cash, cash equivalents and restricted cash at end of the period (a) | $ | 3,542 |
| | $ | 1,945 |
|
| | | |
Investing and Financing Activities Not Affecting Cash: | | | |
Property and equipment acquired through the issuance of debt | $ | 109 |
| | $ | 92 |
|
Lease modifications and lease conversions | 439 |
| | 36 |
|
Right-of-use assets acquired through operating leases | 30 |
| | 51 |
|
Property and equipment acquired through finance leases | 19 |
| | 8 |
|
(a)
|
| | | | | | | |
Cash and cash equivalents | $ | 3,436 |
| | $ | 1,842 |
|
Restricted cash | 106 |
| | 103 |
|
Total cash, cash equivalents and restricted cash | $ | 3,542 |
| | $ | 1,945 |
|
The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
UNITED AIRLINES, INC.
STATEMENTS OF CONSOLIDATED STOCKHOLDER'S EQUITY (UNAUDITED)
(In millions)
|
| | | | | | | | | | | | | | | | | | | | |
| | | Additional Capital Invested | | Retained Earnings | | Accumulated Other Comprehensive Income (Loss) | | Receivable from Related Parties, Net | | Total |
| |
| | Balance at December 31, 2019 | $ | — |
| | $ | 12,353 |
| | $ | (718 | ) | | $ | (143 | ) | | $ | 11,492 |
|
| | Net loss | — |
| | (1,704 | ) | | — |
| | — |
| | (1,704 | ) |
| | Other comprehensive loss | — |
| | — |
| | (53 | ) | | — |
| | (53 | ) |
| | Dividend to UAL | (12 | ) | | (330 | ) | | — |
| | — |
| | (342 | ) |
| | Share-based compensation | 22 |
| | — |
| | — |
| | — |
| | 22 |
|
| | Adoption of new accounting standard (a) | — |
| | (17 | ) | | — |
| | — |
| | (17 | ) |
| | Other | — |
| | — |
| | — |
| | (18 | ) | | (18 | ) |
| | Balance at March 31, 2020 | $ | 10 |
| | $ | 10,302 |
| | $ | (771 | ) | | $ | (161 | ) | | $ | 9,380 |
|
| | | | | | | | | | | |
| | Balance at December 31, 2018 | $ | 598 |
| | $ | 10,319 |
| | $ | (803 | ) | | $ | (110 | ) | | $ | 10,004 |
|
| | Net income | — |
| | 293 |
| | — |
| | — |
| | 293 |
|
| | Other comprehensive income | — |
| | — |
| | 10 |
| | — |
| | 10 |
|
| | Dividend to UAL | (528 | ) | | — |
| | — |
| | — |
| | (528 | ) |
| | Share-based compensation | 14 |
| | — |
| | — |
| | — |
| | 14 |
|
| | Other | — |
| | — |
| | — |
| | (30 | ) | | (30 | ) |
| | Balance at March 31, 2019 | $ | 84 |
| | $ | 10,612 |
| | $ | (793 | ) | | $ | (140 | ) | | $ | 9,763 |
|
(a) Financial Instruments—Credit Losses. 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.
UNITED AIRLINES HOLDINGS, INC. AND UNITED AIRLINES, INC.
COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
United Airlines Holdings, Inc. (together with its consolidated subsidiaries, "UAL" or the "Company") is a holding company and its principal, wholly-owned subsidiary is United Airlines, Inc. (together with its consolidated subsidiaries, "United"). This Quarterly Report on Form 10-Q is a combined report of UAL and United, including their respective consolidated financial statements. As UAL consolidates United for financial statement purposes, disclosures that relate to activities of United also apply to UAL, unless otherwise noted. United's operating revenues and operating expenses comprise nearly 100% of UAL's revenues and operating expenses. In addition, United comprises approximately the entire balance of UAL's assets, liabilities and operating cash flows. When appropriate, UAL and United are named specifically for their individual contractual obligations and related disclosures and any significant differences between the operations and results of UAL and United are separately disclosed and explained. We sometimes use the words "we," "our," "us," and the "Company" in this report for disclosures that relate to all of UAL and United.
The UAL and United unaudited condensed consolidated financial statements shown here have been prepared as required by the U.S. Securities and Exchange Commission (the "SEC"). Some information and footnote disclosures normally included in financial statements that comply with accounting principles generally accepted in the United States ("GAAP") have been condensed or omitted as permitted by the SEC. The financial statements include all adjustments, including normal recurring adjustments and other adjustments, which are considered necessary for a fair presentation of the Company's financial position and results of operations. The UAL and United financial statements should be read together with the information included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the "2019 Form 10-K"). The Company's quarterly financial data is subject to seasonal fluctuations. Historically its second and third quarter financial results have reflected higher travel demand, and were better than its first and fourth quarter financial results; however, see Part I, Item 2 of this report for additional discussion regarding trends associated with the matters discussed in the "Recent Developments" section below.
Recent Developments
In December 2019, a novel strain of coronavirus ("COVID-19") was reported in Wuhan, China, and the World Health Organization (the "WHO") subsequently declared COVID-19 a "Public Health Emergency of International Concern." As a result of COVID-19, the U.S. Department of State issued a Level 4 "do not travel" advisory for China and subsequently issued multiple Level 3 "reconsider travel" advisories for other jurisdictions, including Italy and South Korea.
On March 11, 2020, the WHO declared COVID-19 a "pandemic" and the U.S. Department of State issued a global Level 3 "reconsider travel" advisory for all travel abroad. On March 13, 2020, the U.S. government declared a national emergency. On March 19, 2020, the U.S. Department of State issued a global Level 4 "do not travel" advisory advising U.S. citizens to avoid all international travel due to the global impact of COVID-19. The U.S. government has also implemented enhanced screenings, mandatory 14-day quarantine requirements and other travel restrictions in connection with the COVID-19 pandemic, including restrictions on travel from Europe, Mexico and Canada, and many foreign and U.S. state governments have instituted similar measures (including travel restrictions to and within the European Union) and declared states of emergency.
As of April 15, 2020, approximately 316 million people in at least 42 states, the District of Columbia and Puerto Rico were under instructions to stay home or "shelter in place," and to avoid any non-essential travel. In the United States and other locations around the world, public events, such as conferences, sporting events and concerts, have been canceled, attractions, including theme parks and museums, have been closed, cruise lines have suspended operations and schools and businesses are operating with remote attendance, among other actions. Other governmental restrictions and regulations in the future in response to COVID-19 could include additional travel restrictions (including restrictions on domestic air travel within the United States), quarantines of additional populations (including our personnel), restrictions on our ability to access our facilities or aircraft or requirements to collect additional passenger data. In addition, governments, non-governmental organizations and entities in the private sector have issued and may continue to issue non-binding advisories or recommendations regarding air travel or other social distancing measures, including limitations on the number of persons that should be present at public gatherings.
The Company began experiencing a significant decline in international and domestic demand related to COVID-19 during the first quarter of 2020, and this reduction in demand has continued through the date of this report. The decline in demand caused a material deterioration in our revenues in the first quarter, resulting in a first quarter net loss of $1.7 billion. The full extent of the ongoing impact of COVID-19 on the Company's longer-term operational and financial performance will depend on future developments, many of which are outside of our control, and all of which are highly uncertain and cannot be predicted; however, the Company currently expects our results of operations for full-year 2020 to be materially impacted and that we will
incur a net loss for full-year 2020. For planning purposes, the Company has assumed that demand will remain suppressed for the remainder of 2020 and likely into 2021.
In response to decreased demand, the Company cut, relative to 2019 scheduled capacity, approximately 80% of its scheduled capacity for April 2020 and approximately 90% of its scheduled capacity for May 2020, with similar cuts expected for June 2020. The Company plans to proactively evaluate and cancel flights on a rolling 60-day basis until it sees signs of a recovery in demand.
The Company has taken a number of actions in response to decreased demand. In addition to the schedule reductions discussed above, the Company has:
| |
• | reduced its planned capital expenditures and reduced operating expenditures for the remainder of 2020 (including by postponing projects deemed non-critical to the Company's operations); |
| |
• | suspended share repurchases under its share repurchase program on February 24, 2020 and subsequently terminated its share repurchase program on April 24, 2020; |
| |
• | entered into approximately $3.0 billion in secured term loan facilities and new aircraft financings; |
| |
• | raised approximately $1.1 billion in cash proceeds in an underwritten public offering of 43,175,000 shares of UAL com |
