UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
| FORM | |||||||||||
(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
| 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. | |||||||||||||||||||||||||||||||||||
| 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. | $0.01 par value | ||||||||||||||||||||||
| United Airlines Holdings, Inc. | |||||||||||||||||||||||
| 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. | ☒ | No | ☐ | United Airlines, Inc. | ☒ | 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. | ☒ | No | ☐ | United Airlines, Inc. | ☒ | 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. | ☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | Emerging growth company | |||||||||||||||||||||||||
| United Airlines, Inc. | Large accelerated filer | ☐ | 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 20, 2021 is shown below:
| United Airlines Holdings, Inc. | shares of common stock ($0.01 par value) | ||||||||||
| United Airlines, Inc. | 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, | |||||||||||
| 2021 | 2020 | ||||||||||
| Operating revenue: | |||||||||||
| Passenger revenue | $ | $ | |||||||||
| Cargo | |||||||||||
| Other operating revenue | |||||||||||
| Total operating revenue | |||||||||||
| Operating expense: | |||||||||||
| Salaries and related costs | |||||||||||
| Aircraft fuel | |||||||||||
| Depreciation and amortization | |||||||||||
| Landing fees and other rent | |||||||||||
| Regional capacity purchase | |||||||||||
| Aircraft maintenance materials and outside repairs | |||||||||||
| Distribution expenses | |||||||||||
| Aircraft rent | |||||||||||
| Special charges (credits) | ( | ||||||||||
| Other operating expenses | |||||||||||
| Total operating expense | |||||||||||
| Operating loss | ( | ( | |||||||||
| Nonoperating income (expense): | |||||||||||
| Interest expense | ( | ( | |||||||||
| Interest capitalized | |||||||||||
| Interest income | |||||||||||
| Unrealized losses on investments, net | ( | ( | |||||||||
| Miscellaneous, net | ( | ( | |||||||||
| Total nonoperating expense, net | ( | ( | |||||||||
| Loss before income tax benefit | ( | ( | |||||||||
| Income tax benefit | ( | ( | |||||||||
| Net loss | $ | ( | $ | ( | |||||||
| Loss per share, basic and diluted | $ | ( | $ | ( | |||||||
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, | |||||||||||
| 2021 | 2020 | ||||||||||
| Net loss | $ | ( | $ | ( | |||||||
| Other comprehensive income (loss), net of tax: | |||||||||||
| Employee benefit plans | ( | ||||||||||
| Investments and other | ( | ( | |||||||||
| Total other comprehensive income (loss), net of tax | ( | ||||||||||
| Total comprehensive loss, net | $ | ( | $ | ( | |||||||
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, 2021 | December 31, 2020 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Short-term investments | |||||||||||
| Restricted cash | |||||||||||
Receivables, less allowance for credit losses (2021 — $ | |||||||||||
Aircraft fuel, spare parts and supplies, less obsolescence allowance (2021 — $ | |||||||||||
| Prepaid expenses and other | |||||||||||
| Total current assets | |||||||||||
| Operating property and equipment: | |||||||||||
| Flight equipment | |||||||||||
| Other property and equipment | |||||||||||
| Purchase deposits for flight equipment | |||||||||||
| Total operating property and equipment | |||||||||||
| Less — Accumulated depreciation and amortization | ( | ( | |||||||||
| Total operating property and equipment, net | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Other assets: | |||||||||||
| Goodwill | |||||||||||
Intangibles, less accumulated amortization (2021 — $ | |||||||||||
| Restricted cash | |||||||||||
| Deferred income taxes | |||||||||||
Investments in affiliates and other, less allowance for credit losses (2021 — $ | |||||||||||
| Total other assets | |||||||||||
| Total assets | $ | $ | |||||||||
(continued on next page)
5
UNITED AIRLINES HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions, except shares)
| March 31, 2021 | December 31, 2020 | ||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued salaries and benefits | |||||||||||
| Advance ticket sales | |||||||||||
| Frequent flyer deferred revenue | |||||||||||
| Current maturities of long-term debt | |||||||||||
| Current maturities of operating leases | |||||||||||
| Current maturities of finance leases | |||||||||||
| Other | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Long-term obligations under operating leases | |||||||||||
| Long-term obligations under finance leases | |||||||||||
| Other liabilities and deferred credits: | |||||||||||
| Frequent flyer deferred revenue | |||||||||||
| Pension liability | |||||||||||
| Postretirement benefit liability | |||||||||||
| Other financial liabilities from sale-leasebacks | |||||||||||
| Other | |||||||||||
| Total other liabilities and deferred credits | |||||||||||
| Commitments and contingencies | |||||||||||
| Stockholders' equity: | |||||||||||
| Preferred stock | |||||||||||
Common stock at par, $ | |||||||||||
| Additional capital invested | |||||||||||
| Stock held in treasury, at cost | ( | ( | |||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total stockholders' equity | |||||||||||
| Total liabilities and stockholders' equity | $ | $ | |||||||||
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, | |||||||||||
| 2021 | 2020 | ||||||||||
| Cash Flows from Operating Activities: | |||||||||||
| Net cash provided by operating activities | $ | $ | |||||||||
| Cash Flows from Investing Activities: | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Purchases of short-term and other investments | ( | ||||||||||
| Proceeds from sale of short-term and other investments | |||||||||||
| Other, net | |||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash Flows from Financing Activities: | |||||||||||
| Proceeds from issuance of debt, net of discounts and fees | |||||||||||
| Proceeds from equity issuance | |||||||||||
| Payments of long-term debt, finance leases and other financing liabilities | ( | ( | |||||||||
| Repurchases of common stock | ( | ||||||||||
| Other, net | ( | ( | |||||||||
| Net cash provided by financing activities | |||||||||||
| Net increase in cash, cash equivalents and restricted cash | |||||||||||
| Cash, cash equivalents and restricted cash at beginning of the period | |||||||||||
| Cash, cash equivalents and restricted cash at end of the period (a) | $ | $ | |||||||||
| Investing and Financing Activities Not Affecting Cash: | |||||||||||
| Property and equipment acquired through the issuance of debt, finance leases and other | $ | $ | |||||||||
| Lease modifications and lease conversions | |||||||||||
| Right-of-use assets acquired through operating leases | |||||||||||
Warrants received for entering into agreements with Archer Aviation Inc ("Archer") | |||||||||||
(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 | $ | $ | |||||||||
| Restricted cash — Current | |||||||||||
| Restricted cash — Non-Current | |||||||||||
| Total cash, cash equivalents and restricted cash | $ | $ | |||||||||
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 Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2020 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Stock settled share-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock | — | — | — | ||||||||||||||||||||||||||||||||||||||
| Warrants issued | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Net treasury stock issued for share-based awards | — | ( | ( | — | ( | ||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2021 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
| Balance at December 31, 2019 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Stock settled share-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Repurchases of common stock | ( | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Net treasury stock issued for share-based awards | — | ( | ( | — | ( | ||||||||||||||||||||||||||||||||||||
| — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||
| Balance at March 31, 2020 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
(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, | |||||||||||
| 2021 | 2020 | ||||||||||
| Operating revenue: | |||||||||||
| Passenger revenue | $ | $ | |||||||||
| Cargo | |||||||||||
| Other operating revenue | |||||||||||
| Total operating revenue | |||||||||||
| Operating expense: | |||||||||||
| Salaries and related costs | |||||||||||
| Aircraft fuel | |||||||||||
| Depreciation and amortization | |||||||||||
| Landing fees and other rent | |||||||||||
| Regional capacity purchase | |||||||||||
| Aircraft maintenance materials and outside repairs | |||||||||||
| Distribution expenses | |||||||||||
| Aircraft rent | |||||||||||
| Special charges (credits) | ( | ||||||||||
| Other operating expenses | |||||||||||
| Total operating expense | |||||||||||
| Operating loss | ( | ( | |||||||||
| Nonoperating income (expense): | |||||||||||
| Interest expense | ( | ( | |||||||||
| Interest capitalized | |||||||||||
| Interest income | |||||||||||
| Unrealized losses on investments, net | ( | ( | |||||||||
| Miscellaneous, net | ( | ( | |||||||||
| Total nonoperating expense, net | ( | ( | |||||||||
| Loss before income tax benefit | ( | ( | |||||||||
| Income tax benefit | ( | ( | |||||||||
| Net loss | $ | ( | $ | ( | |||||||
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, | |||||||||||
| 2021 | 2020 | ||||||||||
| Net loss | $ | ( | $ | ( | |||||||
| Other comprehensive income (loss), net of tax: | |||||||||||
| Employee benefit plans | ( | ||||||||||
| Investments and other | ( | ( | |||||||||
| Total other comprehensive income (loss), net of tax | ( | ||||||||||
| Total comprehensive loss, net | $ | ( | $ | ( | |||||||
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, 2021 | December 31, 2020 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Short-term investments | |||||||||||
| Restricted cash | |||||||||||
Receivables, less allowance for credit losses (2021 — $ | |||||||||||
Aircraft fuel, spare parts and supplies, less obsolescence allowance (2021 — $ | |||||||||||
| Prepaid expenses and other | |||||||||||
| Total current assets | |||||||||||
| Operating property and equipment: | |||||||||||
| Flight equipment | |||||||||||
| Other property and equipment | |||||||||||
| Purchase deposits for flight equipment | |||||||||||
| Total operating property and equipment | |||||||||||
| Less — Accumulated depreciation and amortization | ( | ( | |||||||||
| Total operating property and equipment, net | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Other assets: | |||||||||||
| Goodwill | |||||||||||
Intangibles, less accumulated amortization (2021 — $ | |||||||||||
| Restricted cash | |||||||||||
| Deferred income taxes | |||||||||||
Investments in affiliates and other, less allowance for credit losses (2021 — $ | |||||||||||
| Total other assets | |||||||||||
| Total assets | $ | $ | |||||||||
(continued on next page)
11
UNITED AIRLINES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions, except shares)
| March 31, 2021 | December 31, 2020 | ||||||||||
| LIABILITIES AND STOCKHOLDER'S EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued salaries and benefits | |||||||||||
| Advance ticket sales | |||||||||||
| Frequent flyer deferred revenue | |||||||||||
| Current maturities of long-term debt | |||||||||||
| Current maturities of operating leases | |||||||||||
| Current maturities of finance leases | |||||||||||
| Other | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Long-term obligations under operating leases | |||||||||||
| Long-term obligations under finance leases | |||||||||||
| Other liabilities and deferred credits: | |||||||||||
| Frequent flyer deferred revenue | |||||||||||
| Pension liability | |||||||||||
| Postretirement benefit liability | |||||||||||
| Other financial liabilities from sale-leasebacks | |||||||||||
| Other | |||||||||||
| Total other liabilities and deferred credits | |||||||||||
| Commitments and contingencies | |||||||||||
| Stockholder's equity: | |||||||||||
Common stock at par, $ | |||||||||||
| Additional capital invested | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Payable to parent | |||||||||||
| Total stockholder's equity | |||||||||||
| Total liabilities and stockholder's equity | $ | $ | |||||||||
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, | |||||||||||
| 2021 | 2020 | ||||||||||
| Cash Flows from Operating Activities: | |||||||||||
| Net cash provided by operating activities | $ | $ | |||||||||
| Cash Flows from Investing Activities: | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Purchases of short-term investments and other investments | ( | ||||||||||
| Proceeds from sale of short-term and other investments | |||||||||||
| Other, net | |||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash Flows from Financing Activities: | |||||||||||
| Proceeds from issuance of debt, net of discounts and fees | |||||||||||
| Proceeds from issuance of parent company stock | |||||||||||
| Payments of long-term debt, finance leases and other financing liabilities | ( | ( | |||||||||
| Dividend to UAL | ( | ||||||||||
| Net cash provided by financing activities | |||||||||||
| Net increase in cash, cash equivalents and restricted cash | |||||||||||
| Cash, cash equivalents and restricted cash at beginning of the period | |||||||||||
| Cash, cash equivalents and restricted cash at end of the period (a) | $ | $ | |||||||||
| Investing and Financing Activities Not Affecting Cash: | |||||||||||
| Property and equipment acquired through the issuance of debt, finance leases and other | $ | $ | |||||||||
| Lease modifications and lease conversions | |||||||||||
| Right-of-use assets acquired through operating leases | |||||||||||
Warrants received for entering into agreements with Archer | |||||||||||
(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 | $ | $ | |||||||||
| Restricted cash — Current | |||||||||||
| Restricted cash — Non-Current | |||||||||||
| Total cash, cash equivalents and restricted cash | $ | $ | |||||||||
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 Earnings | Accumulated Other Comprehensive Income (Loss) | (Receivable from) Payable to Related Parties, Net | Total | |||||||||||||||||||||||||
| Balance at December 31, 2020 | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||
| Net loss | — | ( | — | — | ( | ||||||||||||||||||||||||
| Other comprehensive income | — | — | — | ||||||||||||||||||||||||||
| Stock-settled share-based compensation | — | — | — | ||||||||||||||||||||||||||
| Impact of UAL common stock issuance | — | — | — | ||||||||||||||||||||||||||
| Other | — | — | — | ||||||||||||||||||||||||||
| Balance at March 31, 2021 | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||
| Balance at December 31, 2019 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||
| Net loss | — | ( | — | — | ( | ||||||||||||||||||||||||
| Other comprehensive loss | — | — | ( | — | ( | ||||||||||||||||||||||||
| Dividend to UAL | ( | ( | — | — | ( | ||||||||||||||||||||||||
| Stock-settled share-based compensation | — | — | — | ||||||||||||||||||||||||||
| — | ( | — | — | ( | |||||||||||||||||||||||||
| Other | — | — | — | ( | ( | ||||||||||||||||||||||||
| Balance at March 31, 2020 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||
(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, | |||||||||||
| 2021 | 2020 | ||||||||||
| Domestic (U.S. and Canada) | $ | $ | |||||||||
| Atlanti | |||||||||||