UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 20, 2009
UAL CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 001-06033 | 36-2675207 | ||
| (State or other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
| 77 W. Wacker Drive, Chicago, IL |
60601 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (312) 997-8000
| (Former name or former address if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 7.01 Regulation FD Disclosure.
On March 20, 2009, UAL Corporation, the holding company whose primary subsidiary is United Air Lines, Inc., provided an investor update related to its financial and operational outlook for the first quarter of 2009. A copy of the investor update is attached as Exhibit 99.1 and is incorporated herein by reference.
The information in this Item 7.01, including Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section and shall not be deemed incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
| Exhibit No. | Description | |
99.1
|
UAL Investor Update dated March 20, 2009 |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
UAL CORPORATION
By: /s/ Kathryn A. Mikells
Name: Kathryn A. Mikells
Title: Senior Vice President and
Chief Financial Officer
Date: March 20, 2009
3
EXHIBIT INDEX
| Exhibit No. | Description | |
99.1*
|
UAL Investor Update dated March 20, 2009 |
| * | Furnished herewith electronically. |
4
Exhibit
99.1
UAL
Investor Update: March 20, 2009
Outlook Highlights
Capacity
First quarter 2009 consolidated capacity (ASMs) is expected to be down 11.7% year-over-year, in line with the outlook
provided on January 21, 2009. First quarter 2009 consolidated traffic (RPMs) is estimated to be down 13.5% to 14.5%
year-over-year. Capacity and traffic details are shown on the table on the following page.
Revenue
The company anticipates consolidated passenger unit revenue (PRASM) to be down 11.0% to 12.0% year-over-year for the
first quarter, and mainline PRASM to be down 12.25% to 13.25% year-over-year.
Non-Fuel Expense
The company estimates first quarter 2009 mainline non-fuel unit costs (CASM), excluding profit sharing and certain
accounting charges, to be up 1.0% to 1.5% year-over-year, and consolidated CASM, excluding profit sharing and certain
accounting charges, to be up 1.5% to 2.0% year-over-year. This compares to the outlook provided January 21, 2009 of an
increase of 4.0% to 5.0% year-over-year for both mainline and consolidated CASM excluding profit sharing and certain
accounting charges. The reduction in estimate reflects both the results of continued efforts to drive cost savings
across the company and the impact of softening demand on revenue-driven and traffic-driven expenses.
Fuel Expense
The company expects mainline fuel price, including the impact of cash settled hedges, to be $2.10 per gallon for the
first quarter. The company has previously posted cash collateral with its fuel hedge counterparties that will be used
to cover hedge losses as contracts settle.
Non-Operating Income/Expense
A portion of the company’s total fuel hedge impact is recorded as non-operating expense, with the rest recorded as fuel
expense. Based on March 13 forward prices, the company expects $80 million of cash losses on settled hedge contracts
in non-operating expense in the first quarter. Excluding hedge impacts, non-operating expense is expected to be $105
million to $115 million for the first quarter.*
Income Taxes
Because of its net operating loss carry-forwards, the company expects to pay minimal cash taxes for
the foreseeable future and is not recording incremental tax benefits at this time. The company
expects an effective tax rate of 0% for the first quarter of 2009.
Unrestricted and Restricted Cash
The company expects an unrestricted cash balance of $2.1 billion to $2.2 billion, a restricted cash balance of $0.3
billion, and fuel hedge collateral posted with counterparties of $0.6 billion at the end of the first quarter.
* The company believes that excluding fuel hedge expenses from non-operating expense is useful to investors because it more clearly depicts the performance of other non-operating revenue and expense items.
The United Building: 77 West Wacker Drive, Chicago, IL 60601
2009
Financial and Operational Outlook
| Estimated | Year-Over-Year % | |||
| First Quarter | Change | |||
| 2009 | Higher/(Lower) | |||
Revenue |
||||
Mainline Passenger Unit Revenue (¢/ASM) |
8.91¢ – 9.01¢ | (13.25%) – (12.25%) | ||
Regional Affiliate Passenger Unit Revenue (¢/ASM) |
16.08¢ – 16.28¢ | (12.7%) – (11.6%) | ||
Consolidated Passenger Unit Revenue (¢/ASM) |
9.76¢ – 9.87¢ | (12.0%) – (11.0%) | ||
Cargo and Other Revenue ($ millions) |
$320M – $330M | |||
Non-Fuel Expense |
||||
Mainline Unit Cost Excluding Fuel & Profit Sharing
Programs (¢/ASM) |
8.17¢ – 8.21¢ | 1.0% – 1.5% | ||
Regional Affiliate Unit Cost Excluding Fuel (¢/ASM) |
12.72¢ – 12.77¢ | (1.5%) – (1.1%) | ||
Consolidated Unit Cost Excluding Fuel & Profit
Sharing Programs (¢/ASM) |
8.71¢ – 8.75¢ | 1.5% – 2.0% | ||
Fuel Expense |
||||
Mainline Fuel Consumption |
476 Million Gallons | |||
Mainline Fuel Price Excluding Hedges |
$1.59 / Gallon | |||
Mainline Fuel Price Including Cash Settled Hedges |
$2.10 / Gallon | |||
Mainline Fuel Price Including Cash Settled Hedges
and Non-Cash Net Mark-to-Market Gains/(Losses)
(GAAP fuel expense per gallon) |
$1.76 / Gallon | |||
Regional Affiliates Fuel Consumption |
92 Million Gallons | |||
Regional Affiliates Fuel Price |
$1.77 / Gallon | |||
Non-Operating Income/(Expense) |
||||
Non-Operating Income/(Expense) Excluding Hedge
Gains/Losses |
($105M) – ($115M) | |||
Cash Gains/(Losses) on Settled Fuel Hedge Contracts |
($80M) | |||
Total Non-Operating Income/(Expense) Excluding
Non-Cash Net Mark-to-Market Fuel Hedge
Gains/(Losses) |
($185M) – ($195M) | |||
Non-Cash Net Mark-to-Market Fuel Hedge
Gains/(Losses) |
$56M | |||
Total GAAP Non-Operating Income/(Expense) |
($129M) – ($139M) | |||
Income Taxes |
||||
Effective Tax Rate |
0% | |||
Traffic and Capacity |
||||
Mainline Domestic Capacity (Million ASM’s) |
16,956 | (13.0%) | ||
Mainline International Capacity (Million ASM’s) |
12,945 | (13.9%) | ||
Mainline System Capacity (Million ASM’s) |
29,901 | (13.4%) | ||
Regional Affiliates Capacity (Million ASM’s) |
4,017 | 3.5% | ||
Consolidated Domestic Capacity (Million ASM’s) |
20,973 | (10.3%) | ||
Consolidated System Capacity (Million ASM’s) |
33,918 | (11.7%) | ||
Mainline System Traffic (Million RPM’s) |
22,559 – 22,829 | (16.2%) – (15.2%) | ||
Regional Affiliates Traffic (Million RPM’s) |
2,865 – 2,893 | 2.0% – 3.0% | ||
Consolidated System Traffic (Million RPM’s) |
25,424 – 25,722 | (14.5%) – (13.5%) | ||
The United Building: 77 West Wacker Drive, Chicago, IL 60601
Fuel Hedge Positions and Collateral
A detailed description of the company’s fuel hedge positions can be found in the 2008 Form 10-K, Item 7A, page 75.
Since the filing of the 2008 Form 10-K, the company has purchased additional crude oil call options on an incremental
2.6% of full year 2009 consolidated consumption at an average strike price of $52 per barrel. The table below outlines
the company’s estimated settled hedge impacts at various crude oil prices, based on the hedge portfolio as of March 13,
2009:
| Crude Oil Price* | Cash Settled Hedge Impact | 1Q09 | 2Q09 | 3Q09 | 4Q09 | FY09 | ||||||||||||||||
| $70 per Barrel | Mainline Fuel Price Excluding Hedge** ($/gal) |
$ | 2.03 | $ | 2.15 | $ | 2.15 | $ | 1.99 | |||||||||||||
Impact to Fuel Expense ($/gal) |
$ | 0.21 | $ | 0.12 | $ | 0.04 | $ | 0.22 | ||||||||||||||
Impact to Non-Operating Expense ($ millions) |
$ | 71M | $ | 33M | $ | 33M | $ | 217M | ||||||||||||||
| $60 per Barrel | Mainline Fuel Price Excluding Hedge** ($/gal) |
$ | 1.80 | $ | 1.91 | $ | 1.92 | $ | 1.81 | |||||||||||||
Impact to Fuel Expense ($/gal) |
$ | 0.31 | $ | 0.20 | $ | 0.07 | $ | 0.27 | ||||||||||||||
Impact to Non-Operating Expense ($ millions) |
$ | 91M | $ | 43M | $ | 44M | $ | 258M | ||||||||||||||
| $50 per Barrel | Mainline Fuel Price Excluding Hedge** ($/gal) |
$ | 1.56 | $ | 1.67 | $ | 1.68 | $ | 1.62 | |||||||||||||
Impact to Fuel Expense ($/gal) |
$ | 0.39 | $ | 0.27 | $ | 0.10 | $ | 0.32 | ||||||||||||||
Impact to Non-Operating Expense ($ millions) |
$ | 110M | $ | 54M | $ | 54M | $ | 298M | ||||||||||||||
| $46.25 per Barrel*** | Mainline Fuel Price Excluding Hedge** ($/gal) |
$ | 1.59 | $ | 1.47 | $ | 1.58 | $ | 1.59 | $ | 1.56 | |||||||||||
Impact to Fuel Expense ($/gal) |
$ | 0.51 | $ | 0.42 | $ | 0.29 | $ | 0.10 | $ | 0.33 | ||||||||||||
Impact to Non-Operating Expense ($ millions) |
$ | 80M | $ | 117M | $ | 58M | $ | 58M | $ | 313M | ||||||||||||
| $40 per Barrel | Mainline Fuel Price Excluding Hedge** ($/gal) |
$ | 1.32 | $ | 1.43 | $ | 1.44 | $ | 1.44 | |||||||||||||
Impact to Fuel Expense ($/gal) |
$ | 0.44 | $ | 0.30 | $ | 0.11 | $ | 0.34 | ||||||||||||||
Impact to Non-Operating Expense ($ millions) |
$ | 130M | $ | 61M | $ | 60M | $ | 331M | ||||||||||||||
| $30 per Barrel | Mainline Fuel Price Excluding Hedge** ($/gal) |
$ | 1.08 | $ | 1.20 | $ | 1.20 | $ | 1.26 | |||||||||||||
Impact to Fuel Expense ($/gal) |
$ | 0.49 | $ | 0.32 | $ | 0.11 | $ | 0.36 | ||||||||||||||
Impact to Non-Operating Expense ($ millions) |
$ | 149M | $ | 67M | $ | 60M | $ | 356M | ||||||||||||||
| $20 per Barrel | Mainline Fuel Price Excluding Hedge** ($/gal) |
$ | 0.84 | $ | 0.96 | $ | 0.96 | $ | 1.08 | |||||||||||||
Impact to Fuel Expense ($/gal) |
$ | 0.53 | $ | 0.34 | $ | 0.11 | $ | 0.38 | ||||||||||||||
Impact to Non-Operating Expense ($ millions) |
$ | 169M | $ | 72M | $ | 60M | $ | 381M | ||||||||||||||
| * | Projected impacts assume a common, parallel jet fuel refining crack spread consistent with March 13, 2009 forward prices, and a parallel crude forward price curve consistent with March 13, 2009 forward prices. Row headings refer to illustrative spot closing prices on March 13, 2009. | |
| ** | Mainline fuel price per gallon excluding hedge impacts, but including taxes and transportation costs. | |
| *** | The row labeled $46.25 per barrel is consistent with the March 13th fuel forward price curve used to provide the outlook on each of the collateral tables shown below, as well as the 2009 Financial and Operational Outlook table on the prior page. |
The table below outlines the company’s estimated posted hedge collateral balances at each quarter end, based on the
company’s hedge position and the closing forward prices as of March 13, 2009:
Projected Fuel Hedge Collateral Balance at Each Quarter End
| 1Q09 | 2Q09 | 3Q09 | 4Q09 | |||||||||||||
Based on March 13, 2009 Closing
Forward Prices |
$ | 645M | $ | 340M | $ | 120M | $ | 30M | ||||||||
The table below outlines the company’s estimated collateral provisions at various crude oil prices, based on the
company’s hedge position and the closing forward prices as of March 13, 2009:
| Approximate Change in Cash Collateral For Each $5 | ||
| Price of Crude Oil, in Dollars per Barrel: | per Barrel Change in the Price of Crude Oil | |
Above $110 |
No Collateral Required | |
Above $90,
but Less than or Equal to $110 |
$46 million | |
Above $30,
but Less than or Equal to $90 |
$52 million | |
Less than or Equal to $30 |
$34 million |
For example, at an illustrative $45 per barrel, the company’s March 13, 2009 required collateral provision to its derivative counterparties would be approximately $652 million.
The United Building: 77 West Wacker Drive, Chicago, IL 60601
Share Count
Shown below, for illustrative purposes only, are estimated basic and dilutive share counts for the
first quarter of 2009 and the full year 2009. The calculation of share counts is based on a number
of assumptions including, but not limited to, an assumed market stock price, number of shares
outstanding and a statutory tax rate of 37%. Actual share counts may be different from those shown
below.
| 1Q 2009 | ||||||||||||
| (Estimated) | ||||||||||||
| Basic Share Count | Diluted Share Count | Interest Add-back | ||||||||||
| Net Income | (in millions) | (in millions) | (in millions) | |||||||||
Less than or equal to $0 |
145.6 | 145.6 | $ | — | ||||||||
$1 million – $73 million |
145.6 | 145.7 | $ | — | ||||||||
$74 million – $113 million |
145.6 | 167.9 | $ | 11.3 | ||||||||
$114 million
or greater |
145.6 | 171.3 | $ | 13.8 | ||||||||
| Full Year 2009 | ||||||||||||
| (Estimated) | ||||||||||||
| Basic Share Count | Diluted Share Count | Interest Add-back | ||||||||||
| Net Income | (in millions) | (in millions) | (in millions) | |||||||||
Less than or equal to $0 |
145.8 | 145.8 | $ | — | ||||||||
$1 million – $303 million |
145.8 | 145.9 | $ | — | ||||||||
$304 million – $466 million |
145.8 | 168.2 | $ | 46.3 | ||||||||
$467 million
or greater |
145.8 | 171.6 | $ | 56.6 | ||||||||
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Certain statements included in this
investor update are forward-looking and thus reflect our current expectations and beliefs with respect to certain
current and future events and financial performance. Such forward-looking statements are and will be subject to many
risks and uncertainties relating to our operations and business environment that may cause actual results to differ
materially from any future results expressed or implied in such forward-looking statements. Words such as “expects,”
“will,” “plans,” “anticipates,” “indicates,” “believes,” “forecast,” “guidance,” “outlook” and similar expressions are
intended to identify forward-looking statements. Additionally, forward-looking statements include statements that do
not relate solely to historical facts, such as statements which identify uncertainties or trends, discuss the possible
future effects of current known trends or uncertainties, or which indicate that the future effects of known trends or
uncertainties cannot be predicted, guaranteed or assured. All forward-looking statements in this report are based upon
information available to us on the date of this report. We undertake no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise.
Our actual results could differ materially from these forward-looking statements due to numerous factors including,
without limitation, the following: our ability to comply with the terms of our Amended Credit Facility and other
financing arrangements; the cost and availability of financing; our ability to maintain adequate liquidity; our ability
to execute our operational plans; our ability to realize benefits from our resource optimization efforts and cost
reduction initiatives; our ability to utilize our net operating losses; our ability to attract, motivate and/or retain
key employees; our ability to attract and retain customers; demand for transportation in the markets in which we
operate; general economic conditions (including interest rates, foreign currency exchange rates, investment or credit
market conditions, crude oil prices, costs of aviation fuel and refining capacity in relevant markets); our ability to
cost-effectively hedge against increases in the price of aviation fuel; any potential realized or unrealized gains or
losses related to fuel or currency hedging programs; the effects of any hostilities, act of war or terrorist attack;
the ability of other air carriers with whom we have alliances or partnerships to provide the services contemplated by
the respective arrangements with such carriers; the costs and availability of aircraft insurance; the costs associated
with security measures and practices; labor costs; industry consolidation; competitive pressures on pricing and on
demand; capacity decisions of United and/or our competitors; U.S. or foreign governmental legislation, regulation and
other actions (including open skies agreements); our ability to maintain satisfactory labor relations; any disruptions
to operations due to any potential actions by our labor groups; weather conditions; and other risks and uncertainties
set forth under the caption “Risk Factors” in Item 1A. of the 2008 Annual Report, as well as other risks and
uncertainties set forth from time to time in the reports we file with U.S. Securities and Exchange Commission (“SEC”).
Consequently, forward- looking statements should not be regarded as representations or warranties by UAL or United that
such matters will be realized.
The United Building: 77 West Wacker Drive, Chicago, IL 60601
Non-GAAP To GAAP Reconciliations
Pursuant to SEC Regulation G, the company has included the following reconciliation of reported non-GAAP financial
measures to comparable financial measures reported on a GAAP basis. The company believes that excluding fuel costs and
certain other items from some measures is useful to investors because it provides an additional measure of management’s
performance excluding the effects of a significant cost item over which management has limited influence, and the
effects of certain other items that would otherwise make analysis of the company’s operating performance more
difficult.
| Three Months Ending March 31, 2009 | ||||||||||||||||||||
| Year-over-Year | ||||||||||||||||||||
| 2009 Estimate | 2008 | % Change | ||||||||||||||||||
| Operating expense per ASM — CASM (cents) | Low | High | Actual | Low | High | |||||||||||||||
Mainline operating expense |
— | — | 12.67 | — | — | |||||||||||||||
Less: profit sharing programs |
— | — | — | — | — | |||||||||||||||
Mainline operating expense excluding profit sharing |
10.97 | 11.01 | 12.67 | (13.4 | %) | (13.1 | %) | |||||||||||||
Less: fuel expense |
(2.80 | ) | (2.80 | ) | (4.57 | ) | (38.7 | %) | (38.7 | %) | ||||||||||
Mainline operating expense excluding fuel |
8.17 | 8.21 | 8.10 | 0.9 | % | 1.4 | % | |||||||||||||
Special
items and other exclusions* |
— | — | (0.01 | ) | — | — | ||||||||||||||
Mainline operating expense excluding fuel and
special items |
8.17 | 8.21 | 8.09 | 1.0 | % | 1.5 | % | |||||||||||||
| Three Months Ending March 31, 2009 | ||||||||||||||||||||
| Year-over-Year | ||||||||||||||||||||
| Regional Affiliate expense per ASM — | 2009 Estimate | 2008 | % Change | |||||||||||||||||
| CASM (cents) | Low | High | Actual | Low | High | |||||||||||||||
Regional Affiliate operating expense |
16.77 | 16.82 | 20.07 | (16.4 | %) | (16.2 | %) | |||||||||||||
Less: Regional Affiliate fuel expense |
(4.05 | ) | (4.05 | ) | (7.16 | ) | (43.4 | %) | (43.4 | %) | ||||||||||
Regional CASM excluding fuel |
12.72 | 12.77 | 12.91 | (1.5 | %) | (1.1 | %) | |||||||||||||
| Three Months Ending March 31, 2009 | ||||||||||||||||||||
| Year-over-Year | ||||||||||||||||||||
| 2009 Estimate | 2008 | % Change | ||||||||||||||||||
| Operating expense per ASM — CASM (cents) | Low | High | Actual | Low | High | |||||||||||||||
Consolidated operating expense |
— | — | 13.41 | — | — | |||||||||||||||
Less: profit sharing programs |
— | — | — | — | — | |||||||||||||||
Consolidated operating expense excluding
profit sharing |
11.66 | 11.70 | 13.41 | (13.0 | %) | (12.8 | %) | |||||||||||||
Less: fuel expense |
(2.95 | ) | (2.95 | ) | (4.82 | ) | (38.8 | %) | (38.8 | %) | ||||||||||
Consolidated operating expense excluding fuel |
8.71 | 8.75 | 8.59 | 1.4 | % | 1.9 | % | |||||||||||||
Special
items and other exclusions* |
— | — | (0.01 | ) | — | — | ||||||||||||||
Consolidated expense excluding fuel and
special items |
8.71 | 8.75 | 8.58 | 1.5 | % | 2.0 | % | |||||||||||||
| * | Operating expense per ASM — CASM also excludes the impact of certain primarily non-cash impairment, severance, and other similar accounting charges. While we anticipate that we will record such charges in the first quarter, at this time the company is unable to accurately estimate the amounts of these charges. |
The United Building: 77 West Wacker Drive, Chicago, IL 60601