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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM10-Q
(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, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
https://cdn.kscope.io/14a802df517445f68ce8d363caac4571-ual-20210331_g1.jpg
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.
001-06033United Airlines Holdings, Inc.Delaware36-2675207
233 South Wacker Drive,Chicago,Illinois60606
(872) 825-4000
001-10323United Airlines, Inc.Delaware74-2099724
233 South Wacker Drive, Chicago,Illinois60606
(872)825-4000
Securities registered pursuant to Section 12(b) of the Act
RegistrantTitle of Each ClassTrading SymbolName of Each Exchange on Which Registered
United Airlines Holdings, Inc.Common Stock, $0.01 par valueUALThe Nasdaq Stock Market LLC
United Airlines Holdings, Inc.Preferred Stock Purchase RightsNoneThe Nasdaq Stock Market LLC
United Airlines, Inc.NoneNoneNone
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.YesNoUnited Airlines, Inc.YesNo
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.YesNoUnited Airlines, Inc.YesNo
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 filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth company
United Airlines, Inc.Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging 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.YesNo
United Airlines, Inc.YesNo
The number of shares outstanding of each of the issuer's classes of common stock as of April 20, 2021 is shown below:
United Airlines Holdings, Inc. 323,578,254 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, 2021

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 March 31,
 20212020
Operating revenue: 
Passenger revenue$2,316 $7,065 
Cargo497 264 
Other operating revenue408 650 
Total operating revenue3,221 7,979 
Operating expense:
Salaries and related costs2,224 2,955 
Aircraft fuel851 1,726 
Depreciation and amortization623 615 
Landing fees and other rent519 623 
Regional capacity purchase479 737 
Aircraft maintenance materials and outside repairs269 434 
Distribution expenses85 295 
Aircraft rent55 50 
Special charges (credits)(1,377)63 
Other operating expenses874 1,453 
Total operating expense4,602 8,951 
Operating loss(1,381)(972)
Nonoperating income (expense):
Interest expense(353)(171)
Interest capitalized17 21 
Interest income7 26 
Unrealized losses on investments, net(22)(319)
Miscellaneous, net (19)(699)
Total nonoperating expense, net(370)(1,142)
Loss before income tax benefit(1,751)(2,114)
Income tax benefit(394)(410)
Net loss$(1,357)$(1,704)
Loss per share, basic and diluted$(4.29)$(6.86)


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 (LOSS) (UNAUDITED)
(In millions)

 Three Months Ended March 31,
 20212020
Net loss$(1,357)$(1,704)
Other comprehensive income (loss), net of tax:
Employee benefit plans14 (41)
Investments and other(1)(12)
Total other comprehensive income (loss), net of tax13 (53)
Total comprehensive loss, net$(1,344)$(1,757)


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)
 
 March 31, 2021December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents$12,666 $11,269 
Short-term investments309 414 
Restricted cash254 255 
Receivables, less allowance for credit losses (2021 — $74; 2020 — $78)
1,389 1,295 
Aircraft fuel, spare parts and supplies, less obsolescence allowance (2021 — $502; 2020 — $478)
918 932 
Prepaid expenses and other483 635 
Total current assets16,019 14,800 
Operating property and equipment:
Flight equipment38,851 38,218 
Other property and equipment8,581 8,511 
Purchase deposits for flight equipment1,439 1,166 
Total operating property and equipment48,871 47,895 
Less — Accumulated depreciation and amortization(16,956)(16,429)
Total operating property and equipment, net31,915 31,466 
Operating lease right-of-use assets4,516 4,537 
Other assets:
Goodwill4,527 4,527 
Intangibles, less accumulated amortization (2021 — $1,507; 2020 — $1,495)
2,840 2,838 
Restricted cash218 218 
Deferred income taxes520 131 
Investments in affiliates and other, less allowance for credit losses (2021 — $526; 2020 — $522)
1,107 1,031 
Total other assets9,212 8,745 
Total assets$61,662 $59,548 
(continued on next page)















5



UNITED AIRLINES HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions, except shares)
 March 31, 2021December 31, 2020
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$1,838 $1,595 
Accrued salaries and benefits2,267 1,960 
Advance ticket sales5,502 4,833 
Frequent flyer deferred revenue1,251 908 
Current maturities of long-term debt1,783 1,911 
Current maturities of operating leases623 612 
Current maturities of finance leases179 182 
Other724 724 
Total current liabilities14,167 12,725 
Long-term debt25,849 24,836 
Long-term obligations under operating leases4,985 4,986 
Long-term obligations under finance leases240 224 
Other liabilities and deferred credits:
Frequent flyer deferred revenue4,858 5,067 
Pension liability2,478 2,460 
Postretirement benefit liability1,013 994 
Other financial liabilities from sale-leasebacks1,568 1,140 
Other1,298 1,156 
Total other liabilities and deferred credits11,215 10,817 
Commitments and contingencies
Stockholders' equity:
Preferred stock  
Common stock at par, $0.01 par value; authorized 1,000,000,000 shares; outstanding 323,577,438 and 311,845,232 shares at March 31, 2021 and December 31, 2020, respectively
4 4 
Additional capital invested8,923 8,366 
Stock held in treasury, at cost(3,834)(3,897)
Retained earnings1,239 2,626 
Accumulated other comprehensive loss(1,126)(1,139)
Total stockholders' equity5,206 5,960 
Total liabilities and stockholders' equity$61,662 $59,548 

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)
 Three Months Ended March 31,
 20212020
Cash Flows from Operating Activities:
Net cash provided by operating activities$447 $63 
Cash Flows from Investing Activities:
Capital expenditures(444)(1,959)
Purchases of short-term and other investments (541)
Proceeds from sale of short-term and other investments105 927 
Other, net10 1 
Net cash used in investing activities(329)(1,572)
Cash Flows from Financing Activities:
Proceeds from issuance of debt, net of discounts and fees1,336 2,813 
Proceeds from equity issuance532  
Payments of long-term debt, finance leases and other financing liabilities(569)(253)
Repurchases of common stock (353)
Other, net(21)(18)
Net cash provided by financing activities1,278 2,189 
Net increase in cash, cash equivalents and restricted cash1,396 680 
Cash, cash equivalents and restricted cash at beginning of the period11,742 2,868 
Cash, cash equivalents and restricted cash at end of the period (a)$13,138 $3,548 
Investing and Financing Activities Not Affecting Cash:
Property and equipment acquired through the issuance of debt, finance leases and other$509 $128 
Lease modifications and lease conversions22 439 
Right-of-use assets acquired through operating leases180 30 
Warrants received for entering into agreements with Archer Aviation Inc ("Archer")
81  

(a) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheet:
Current assets:
Cash and cash equivalents$12,666 $3,442 
Restricted cash — Current254  
Restricted cash — Non-Current218 106 
Total cash, cash equivalents and restricted cash $13,138 $3,548 

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 (UNAUDITED)
(In millions)
 Common
Stock
Additional
Capital Invested
Treasury StockRetained EarningsAccumulated
Other Comprehensive Income (Loss)
Total
SharesAmount
Balance at December 31, 2020311.8 $4 $8,366 $(3,897)$2,626 $(1,139)$5,960 
Net loss— — — — (1,357)— (1,357)
Other comprehensive income— — — — — 13 13 
Stock settled share-based compensation— — 32 — — — 32 
Issuance of common stock11.0 — 532  — — 532 
Warrants issued— — 47 — — — 47 
Net treasury stock issued for share-based awards0.8 — (54)63 (30)— (21)
Balance at March 31, 2021323.6 $4 $8,923 $(3,834)$1,239 $(1,126)$5,206 
Balance at December 31, 2019251.2 $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 awards0.5 — (55)40 (4)— (19)
Adoption of new accounting standard (a)— — — — (17)— (17)
Balance at March 31, 2020247.3 $3 $6,096 $(3,901)$7,991 $(771)$9,418 

(a) Transition adjustment due to the adoption of Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses.

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 March 31,
 20212020
Operating revenue: 
Passenger revenue$2,316 $7,065 
Cargo497 264 
Other operating revenue408 650 
Total operating revenue3,221 7,979 
Operating expense:
Salaries and related costs2,224 2,955 
Aircraft fuel851 1,726 
Depreciation and amortization623 615 
Landing fees and other rent519 623 
Regional capacity purchase479 737 
Aircraft maintenance materials and outside repairs269 434 
Distribution expenses85 295 
Aircraft rent55 50 
Special charges (credits)(1,377)63 
Other operating expenses874 1,453 
Total operating expense4,602 8,951 
Operating loss(1,381)(972)
Nonoperating income (expense): 
Interest expense(353)(171)
Interest capitalized17 21 
Interest income7 26 
Unrealized losses on investments, net(22)(319)
Miscellaneous, net (19)(698)
Total nonoperating expense, net(370)(1,141)
Loss before income tax benefit(1,751)(2,113)
Income tax benefit(394)(409)
Net loss$(1,357)$(1,704)
The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.



9

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

 Three Months Ended March 31,
 20212020
Net loss$(1,357)$(1,704)
Other comprehensive income (loss), net of tax:
Employee benefit plans14 (41)
Investments and other(1)(12)
Total other comprehensive income (loss), net of tax13 (53)
Total comprehensive loss, net$(1,344)$(1,757)
The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

10

UNITED AIRLINES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions, except shares)
 
 March 31, 2021December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents$12,666 $11,269 
Short-term investments309 414 
Restricted cash254 255 
Receivables, less allowance for credit losses (2021 — $74; 2020 — $78)
1,389 1,295 
Aircraft fuel, spare parts and supplies, less obsolescence allowance (2021 — $502; 2020 — $478)
918 932 
Prepaid expenses and other483 635 
Total current assets16,019 14,800 
Operating property and equipment:
Flight equipment38,851 38,218 
Other property and equipment8,581 8,511 
Purchase deposits for flight equipment1,439 1,166 
Total operating property and equipment48,871 47,895 
Less — Accumulated depreciation and amortization(16,956)(16,429)
Total operating property and equipment, net31,915 31,466 
Operating lease right-of-use assets4,516 4,537 
Other assets:
Goodwill4,527 4,527 
Intangibles, less accumulated amortization (2021 — $1,507; 2020 — $1,495)
2,840 2,838 
Restricted cash218 218 
Deferred income taxes492 103 
Investments in affiliates and other, less allowance for credit losses (2021 — $526; 2020 — $522)
1,107 1,031 
Total other assets9,184 8,717 
Total assets$61,634 $59,520 

(continued on next page)

11

UNITED AIRLINES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions, except shares)
 
 March 31, 2021December 31, 2020
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable$1,838 $1,595 
Accrued salaries and benefits2,267 1,960 
Advance ticket sales5,502 4,833 
Frequent flyer deferred revenue1,251 908 
Current maturities of long-term debt1,783 1,911 
Current maturities of operating leases623 612 
Current maturities of finance leases179 182 
Other727 728 
Total current liabilities14,170 12,729 
Long-term debt25,849 24,836 
Long-term obligations under operating leases4,985 4,986 
Long-term obligations under finance leases240 224 
Other liabilities and deferred credits:
Frequent flyer deferred revenue4,858 5,067 
Pension liability2,478 2,460 
Postretirement benefit liability1,013 994 
Other financial liabilities from sale-leasebacks1,568 1,140 
Other1,298 1,156 
Total other liabilities and deferred credits11,215 10,817 
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, 2021 and December 31, 2020
  
Additional capital invested117 85 
Retained earnings3,582 4,939 
Accumulated other comprehensive loss(1,126)(1,139)
Payable to parent2,602 2,043 
Total stockholder's equity5,175 5,928 
Total liabilities and stockholder's equity$61,634 $59,520 

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





12

UNITED AIRLINES, INC.
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
(In millions)
 Three Months Ended March 31,
 20212020
Cash Flows from Operating Activities:
Net cash provided by operating activities$426 $45 
Cash Flows from Investing Activities:
Capital expenditures(444)(1,959)
Purchases of short-term investments and other investments (541)
Proceeds from sale of short-term and other investments105 927 
Other, net10 1 
Net cash used in investing activities(329)(1,572)
Cash Flows from Financing Activities:
Proceeds from issuance of debt, net of discounts and fees1,336 2,813 
Proceeds from issuance of parent company stock532  
Payments of long-term debt, finance leases and other financing liabilities(569)(253)
Dividend to UAL (353)
Net cash provided by financing activities1,299 2,207 
Net increase in cash, cash equivalents and restricted cash1,396 680 
Cash, cash equivalents and restricted cash at beginning of the period11,742 2,862 
Cash, cash equivalents and restricted cash at end of the period (a)$13,138 $3,542 
Investing and Financing Activities Not Affecting Cash:
Property and equipment acquired through the issuance of debt, finance leases and other$509 $128 
Lease modifications and lease conversions22 439 
Right-of-use assets acquired through operating leases180 30 
Warrants received for entering into agreements with Archer
81  

(a) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheet:
Current assets:
Cash and cash equivalents$12,666 $3,436 
Restricted cash — Current254  
Restricted cash — Non-Current218 106 
Total cash, cash equivalents and restricted cash$13,138 $3,542 

The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
13

UNITED AIRLINES, INC.
STATEMENTS OF CONSOLIDATED STOCKHOLDER'S EQUITY (UNAUDITED)
(In millions)
 Additional
Capital Invested
Retained EarningsAccumulated
Other Comprehensive Income (Loss)
(Receivable from) Payable to Related Parties, NetTotal
Balance at December 31, 2020$85 $4,939 $(1,139)$2,043 $5,928 
Net loss— (1,357)— — (1,357)
Other comprehensive income— — 13 — 13 
Stock-settled share-based compensation32 — — — 32 
Impact of UAL common stock issuance— — — 532 532 
Other— — — 27 27 
Balance at March 31, 2021$117 $3,582 $(1,126)$2,602 $5,175 
Balance at December 31, 2019$ $12,353 $(718)$(143)$11,492 
Net loss— (1,704)— — (1,704)
Other comprehensive loss— — (53)— (53)
Dividend to UAL(12)(330)— — (342)
Stock-settled share-based compensation22 — — — 22 
Adoption of new accounting standard (a)— (17)— — (17)
Other— — — (18)(18)
Balance at March 31, 2020$10 $10,302 $(771)$(161)$9,380 

(a) Transition adjustment due to the adoption of Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses.


The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
14

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, 2020 (the "2020 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 "Impact of the COVID-19 Pandemic" section below.
Impact of the COVID-19 Pandemic
The novel coronavirus (COVID-19) pandemic, together with the measures implemented or recommended by governmental authorities and private organizations in response to the pandemic, has had an adverse impact that has been material to the Company's business, operating results, financial condition and liquidity.
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 Company cut, relative to first quarter 2019 capacity, approximately 54% of its scheduled capacity for the first quarter of 2021. However, since March 2021, the Company has seen increasing demand for travel both domestically and in countries where entry is permitted. The Company expects its second quarter scheduled capacity to be down approximately 45% versus the second quarter of 2019. 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, including those outside our control related to the efficacy and speed of vaccination programs in curbing the spread of the virus, the introduction and spread of new variants of the virus which may be resistant to currently approved vaccines and the continuation of existing or implementing of new government travel restrictions.
The Company entered into a number of transactions to improve its liquidity. In the first quarter of 2021, the Company has:
issued or entered into approximately $1.4 billion in new enhanced equipment trust certificate ("EETC") and government loans; and
raised approximately $0.5 billion in net cash proceeds from the issuance and sale of UAL common stock.
Furthermore, on January 15, 2021, United entered into a Payroll Support Program Extension Agreement (the "PSP2 Agreement") with the U.S. Treasury Department ("Treasury") providing the Company with total funding of approximately $2.6 billion, pursuant to the Payroll Support Program established under Subtitle A of Title IV of Division N of the Consolidated Appropriations Act, 2021 (the "PSP Extension Law"). These funds were used to pay for the wages, salaries and benefits of United employees, including the payment of lost wages, salaries and benefits to returning employees. Approximately $1.9 billion was provided as a direct grant and $753 million as indebtedness evidenced by a 10-year senior unsecured promissory note (the "PSP2 Note"). The Company expects to receive an additional amount of approximately $391 million under the PSP2 Agreement, of which $117 million is expected to be in the form of an unsecured loan. See Note 2 of this report for additional information on the warrants issued in connection with the PSP2 Note and Note 8 of this report for a discussion of the PSP2 Note. As a result of the PSP2 Agreement, the Company offered an opportunity to return to active employment to employees who were impacted by involuntary furloughs.
15

The American Rescue Plan Act of 2021 ("PSP3") was enacted on March 11, 2021, authorizing Treasury to provide additional assistance to a passenger air carrier or contractor that (1) received financial assistance under the PSP Extension Law; (2) provided air transportation as of March 31, 2021 and (3) has not conducted involuntary terminations or furloughs or reduced pay rates or benefits between March 31, 2021 and the date on which the air carrier makes certain certifications that will be included in its PSP3 agreement with Treasury. The Company expects to enter into a PSP3 agreement with Treasury and expects to receive assistance of approximately $2.8 billion, of which approximately $0.8 billion is expected to be in the form of an unsecured loan. The Company also expects to issue, to Treasury, warrants to purchase up to approximately 1.5 million shares of UAL common stock at a strike price of $53.92.
During the first quarter of 2021, the Company offered Voluntary Separation Leave ("VSL") programs to certain U.S. based front-line employees. The Company offered, based on employee group, age and completed years of service, pay continuation, health care coverage and travel benefits. Approximately 4,500 employees elected to voluntarily separate from the Company. See Note 5 and Note 9 of this report for additional information on charges related to these programs.
On April 21, 2021, United issued, through a private offering to eligible purchasers, $4.0 billion in aggregate principal amount of two series of notes, consisting of $2.0 billion in aggregate principal amount of 4.375% senior secured notes due 2026 (the "2026 Notes") and $2.0 billion in aggregate principal amount of 4.625% senior secured notes due 2029 (the "2029 Notes" and, together with the 2026 Notes, the "Notes," and each a "series" of Notes). Concurrently with the closing of the offering of the Notes, United also entered into a new Term Loan Credit and Guaranty Agreement (the "New Term Loan Facility") initially providing term loans (the "New Term Loans") up to an aggregate amount of $5.0 billion and a new Revolving Credit and Guaranty Agreement (the "New Revolving Credit Facility" and, together with the New Term Loan Facility, the "New Loan Facilities") initially providing revolving loan commitments of up to $1.75 billion. United borrowed the full amount of the New Term Loans on April 21, 2021. United used the net proceeds from the offering of the Notes and borrowings under the New Term Loan Facility (i) to repay in full the $1.4 billion aggregate principal amount outstanding under the term loan facility (the "2017 Term Loan Facility") included in the Amended and Restated Credit and Guaranty Agreement, dated as of March 29, 2017 (the "Existing Credit Agreement"), the $1.0 billion aggregate principal amount outstanding under the revolving credit facility (the "2017 Revolving Credit Facility") included in the Existing Credit Agreement and the $520 million aggregate principal amount outstanding under the Loan and Guarantee Agreement, dated as of September 28, 2020, among United, UAL, Treasury and the Bank of New York Mellon, as administrative agent, as amended (the "CARES Act Loan” and, together with the 2017 Term Loan Facility and the 2017 Revolving Credit Facility, the "Facilities") entered into pursuant to the loan program established pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), (ii) to pay fees and expenses relating to the offering of the Notes and (iii) for United's general corporate purposes. As a result of such repayments, the Facilities were terminated on April 21, 2021 and no further borrowings may be made thereunder. See Note 8 of this report for additional information on the Notes and the New Loan Facilities.
NOTE 1 - REVENUE
Revenue by Geography. The table below presents the Company's operating revenue by principal geographic region (as defined by the U.S. Department of Transportation) (in millions):
Three Months Ended March 31,
20212020
Domestic (U.S. and Canada)$2,111 $5,078 
Atlantic410 1,215 
Pacific308 806 
Latin America392 880 
Total$3,221 $7,979 
Advance Ticket Sales. All tickets sold at any given point in time have travel dates through the next 12 months. The Company defers amounts related to future travel in its Advance ticket sales liability account. The Company's Advance ticket sales liability also includes credits issued to customers on electronic travel certificates ("ETCs") and future flight credits ("FFCs"), primarily for ticket cancellations, which can be applied towards a purchase of a new ticket. In February 2021, the Company extended the expiration dates for all tickets issued between May 1, 2019 and March 31, 2021 to March 31, 2022. As of March 31, 2021, the Company's Advance ticket sales liability included $2.8 billion related to these ETCs and FFCs. The Company records breakage revenue on the travel date for its estimate of tickets that will expire unused. To determine breakage, the Company uses its historical experience with refundable and nonrefundable expired tickets and other facts, such as recent aging trends, program changes and modifications that could affect the ultimate expiration patterns of tickets. Given the uncertainty of travel demand caused by COVID-19, a significant portion of the ETCs and FFCs may expire unused in future periods and get recognized as breakage. The Company will update its breakage estimates as future information is received.
16

The Company is unable to estimate the amount of the ETCs and FFCs that will be used within the next 12 months and has classified the entire amount of the Advance ticket sales liability in current liabilities even though some of the ETCs and FFCs could be used after the next 12 months. Also, the Company is unable to estimate the amount of the March 31, 2021 Advance ticket sales that will be recognized in revenue in 2021 compared to amounts refunded to customers or exchanged into ETCs.
In the three months ended March 31, 2021 and 2020, the Company recognized approximately $0.7 billion and $2.6 billion, respectively, of passenger revenue for tickets that were included in Advance ticket sales at the beginning of those periods.
Ancillary Fees. The Company charges fees, separately from ticket sales, for certain ancillary services that are directly related to passengers' travel, such as baggage fees, premium seat fees, inflight amenities fees and other ticket-related fees. These ancillary fees are part of the travel performance obligation and, as such, are recognized as passenger revenue when the travel occurs. The Company recorded $308 million and $705 million of ancillary fees within passenger revenue in the three months ended March 31, 2021 and 2020, respectively.
Frequent Flyer Accounting. The table below presents a roll forward of Frequent flyer deferred revenue (in millions):
Three Months Ended March 31,
20212020
Total Frequent flyer deferred revenue - beginning balance$5,975 $5,276 
Total miles awarded272 559