SEC Filing - United Airlines Holdings, Inc.

View:

Download DOC

Download PDF

Download XLS

Download XBRL

ual-20210630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


			FORM			10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021


☐			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 Holdings, Inc.

Preferred Stock Purchase Rights

None

The Nasdaq Stock Market LLC

United Airlines, Inc.

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

☒

☐

United Airlines, Inc.

Yes

☒

☐

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

☒

☐

United Airlines, Inc.

Yes

☒

☐

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

☐

☒

United Airlines, Inc.

Yes

☐

☒

The number of shares outstanding of each of the issuer's classes of common stock as of July 14, 2021 is shown below:


United Airlines Holdings, Inc.	323,612,861	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 June 30, 2021

Table of Contents


			Page
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
United Airlines Holdings, Inc.:
Statements of Consolidated Operations			3
Statements of Consolidated Comprehensive Income (Loss)			4
Consolidated Balance Sheets			5
Condensed Statements of Consolidated Cash Flows			7
Statement of Consolidated Stockholders' Equity			8

United Airlines, Inc.:
Statements of Consolidated Operations			9
Statements of Consolidated Comprehensive Income (Loss)			10
Consolidated Balance Sheets			11
Condensed Statements of Consolidated Cash Flows			13
Statement of Consolidated Stockholder's Equity			14

Combined Notes to Condensed Consolidated Financial Statements (United Airlines Holdings, Inc. and United Airlines, Inc.)			15

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			29
Item 3. Quantitative and Qualitative Disclosures About Market Risk			41
Item 4. Controls and Procedures			41

PART II. OTHER INFORMATION

Item 1. Legal Proceedings			42
Item 1A. Risk Factors			42
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			60
Item 6. Exhibits			61
Exhibit Index			61

Signatures			63


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 June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Operating revenue:
Passenger revenue	$	4,366	$	681	$	6,682	$	7,746
Cargo	606		402		1,103		666
Other operating revenue	499		392		907		1,042
Total operating revenue	5,471		1,475		8,692		9,454

Operating expense:
Salaries and related costs	2,276		2,170		4,500		5,125
Aircraft fuel	1,232		240		2,083		1,966
Depreciation and amortization	620		618		1,243		1,233
Landing fees and other rent	564		429		1,083		1,052
Regional capacity purchase	547		388		1,026		1,125
Aircraft maintenance materials and outside repairs	302		110		571		544
Distribution expenses	139		31		224		326
Aircraft rent	52		47		107		97
Special charges (credits)	(948)		(1,449)		(2,325)		(1,386)
Other operating expenses	957		528		1,831		1,981
Total operating expense	5,741		3,112		10,343		12,063
Operating loss	(270)		(1,637)		(1,651)		(2,609)

Nonoperating income (expense):
Interest expense	(426)		(196)		(779)		(367)
Interest capitalized	22		17		39		38
Interest income	12		11		19		37
Unrealized gains (losses) on investments, net	147		9		125		(310)
Miscellaneous, net	(49)		(207)		(68)		(906)
Total nonoperating expense, net	(294)		(366)		(664)		(1,508)
Loss before income tax benefit	(564)		(2,003)		(2,315)		(4,117)
Income tax benefit	(130)		(376)		(524)		(786)
Net loss	$	(434)	$	(1,627)	$	(1,791)	$	(3,331)
Loss per share, basic and diluted	$	(1.34)	$	(5.79)	$	(5.60)	$	(12.59)

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


Table of Contents

UNITED AIRLINES HOLDINGS, INC.

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(In millions)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Net loss	$	(434)	$	(1,627)	$	(1,791)	$	(3,331)

Other comprehensive income (loss), net of tax:
Employee benefit plans	12		(501)		26		(542)
Investments and other	—		13		(1)		1
Total other comprehensive income (loss), net of tax	12		(488)		25		(541)

Total comprehensive loss, net	$	(422)	$	(2,115)	$	(1,766)	$	(3,872)

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


Table of Contents

UNITED AIRLINES HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In millions, except shares)


	June 30, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	20,838	$	11,269
Short-term investments	230		414
Restricted cash	254		255
Receivables, less allowance for credit losses (2021 — $71; 2020 — $78)	1,793		1,295
Aircraft fuel, spare parts and supplies, less obsolescence allowance (2021 — $518; 2020 — $478)	912		932
Prepaid expenses and other	646		635
Total current assets	24,673		14,800
Operating property and equipment:
Flight equipment	39,109		38,218
Other property and equipment	8,683		8,511
Purchase deposits for flight equipment	1,980		1,166
Total operating property and equipment	49,772		47,895
Less — Accumulated depreciation and amortization	(17,441)		(16,429)
Total operating property and equipment, net	32,331		31,466

Operating lease right-of-use assets	4,421		4,537

Other assets:
Goodwill	4,527		4,527
Intangibles, less accumulated amortization (2021 — $1,519; 2020 — $1,495)	2,827		2,838
Restricted cash	216		218
Deferred income taxes	647		131
Investments in affiliates and other, less allowance for credit losses (2021 — $606; 2020 — $522)	1,407		1,031
Total other assets	9,624		8,745
Total assets	$	71,049	$	59,548

(continued on next page)


Table of Contents

UNITED AIRLINES HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In millions, except shares)


	June 30, 2021		December 31, 2020
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	2,218	$	1,595
Accrued salaries and benefits	2,228		1,960
Advance ticket sales	6,960		4,833
Frequent flyer deferred revenue	2,099		908
Current maturities of long-term debt	1,881		1,911
Current maturities of operating leases	583		612
Current maturities of finance leases	144		182
Payroll Support Program deferred credit	1,132		—
Other	819		724
Total current liabilities	18,064		12,725

Long-term debt	32,303		24,836
Long-term obligations under operating leases	4,920		4,986
Long-term obligations under finance leases	250		224

Other liabilities and deferred credits:
Frequent flyer deferred revenue	4,086		5,067
Pension liability	2,501		2,460
Postretirement benefit liability	988		994
Other financial liabilities from sale-leasebacks	1,683		1,140
Other	1,350		1,156
Total other liabilities and deferred credits	10,608		10,817
Commitments and contingencies
Stockholders' equity:
Preferred stock	—		—
Common stock at par, $0.01 par value; authorized 1,000,000,000 shares; outstanding 323,610,765 and 311,845,232 shares at June 30, 2021 and December 31, 2020, respectively	4		4
Additional capital invested	9,042		8,366
Stock held in treasury, at cost	(3,832)		(3,897)
Retained earnings	804		2,626
Accumulated other comprehensive loss	(1,114)		(1,139)
Total stockholders' equity	4,904		5,960
Total liabilities and stockholders' equity	$	71,049	$	59,548

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


Table of Contents

UNITED AIRLINES HOLDINGS, INC.

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)

(In millions)


	Six Months Ended June 30,
	2021		2020
Cash Flows from Operating Activities:
Net cash provided by (used in) operating activities	$	3,122	$	(67)

Cash Flows from Investing Activities:
Capital expenditures, net of flight equipment purchase deposit returns	(1,305)		(1,998)
Purchases of short-term investments	—		(550)
Proceeds from sale of short-term investments	184		1,774
Other, net	11		14
Net cash used in investing activities	(1,110)		(760)

Cash Flows from Financing Activities:
Proceeds from issuance of debt, net of discounts and fees	11,116		4,371
Proceeds from equity issuance	532		1,135
Payments of long-term debt, finance leases and other financing liabilities	(4,072)		(564)
Repurchases of common stock	—		(353)
Other, net	(22)		(18)
Net cash provided by financing activities	7,554		4,571
Net increase in cash, cash equivalents and restricted cash	9,566		3,744
Cash, cash equivalents and restricted cash at beginning of the period	11,742		2,868
Cash, cash equivalents and restricted cash at end of the period (a)	$	21,308	$	6,612

Investing and Financing Activities Not Affecting Cash:
Property and equipment acquired through the issuance of debt, finance leases and other	$	761	$	626
Lease modifications and lease conversions	59		470
Right-of-use assets acquired through operating leases	214		48
Notes receivable and warrants received for entering into agreements	139		—

(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	$	20,838	$	6,505
Restricted cash — Current	254		34
Restricted cash — Non-Current	216		73
Total cash, cash equivalents and restricted cash	$	21,308	$	6,612

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


Table of Contents

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 March 31, 2021	323.6	$	4	$	8,923	$	(3,834)	$	1,239	$	(1,126)	$	5,206
Net loss	—	—		—		—		(434)		—		(434)
Other comprehensive income	—	—		—		—		—		12		12
Stock settled share-based compensation	—	—		68		—		—		—		68
Warrants issued	—	—		52		—		—		—		52
Stock issued for share-based awards, net of shares withheld for tax	—	—		(1)		2		(1)		—		—
Balance at June 30, 2021	323.6	$	4	$	9,042	$	(3,832)	$	804	$	(1,114)	$	4,904

Balance at December 31, 2020	311.8	$	4	$	8,366	$	(3,897)	$	2,626	$	(1,139)	$	5,960
Net loss	—	—		—		—		(1,791)		—		(1,791)
Other comprehensive income	—	—		—		—		—		25		25
Stock settled share-based compensation	—	—		100		—		—		—		100
Issuance of common stock	11.0	—		532		—		—		—		532
Warrants issued	—	—		99		—		—		—		99
Stock issued for share-based awards, net of shares withheld for tax	0.8	—		(55)		65		(31)		—		(21)
Balance at June 30, 2021	323.6	$	4	$	9,042	$	(3,832)	$	804	$	(1,114)	$	4,904

Balance at March 31, 2020	247.3	$	3	$	6,096	$	(3,901)	$	7,991	$	(771)	$	9,418
Net loss	—	—		—		—		(1,627)		—		(1,627)
Other comprehensive loss	—	—		—		—		—		(488)		(488)
Stock settled share-based compensation	—	—		20		—		—		—		20
Issuance of common stock	43.7	—		1,135		—		—		—		1,135
Warrants issued	—	—		57		—		—		—		57
Stock issued for share-based awards, net of shares withheld for tax	—	—		(1)		2		1		—		2
Balance at June 30, 2020	291.0	$	3	$	7,307	$	(3,899)	$	6,365	$	(1,259)	$	8,517

Balance at December 31, 2019	251.2	$	3	$	6,129	$	(3,599)	$	9,716	$	(718)	$	11,531
Net loss	—	—		—		—		(3,331)		—		(3,331)
Other comprehensive loss	—	—		—		—		—		(541)		(541)
Stock settled share-based compensation	—	—		42		—		—		—		42
Issuance of common stock	43.7	—		1,135		—		—		—		1,135
Repurchases of common stock	(4.4)	—		—		(342)		—		—		(342)
Warrants issued	—	—		57		—		—		—		57
Stock issued for share-based awards, net of shares withheld for tax	0.5	—		(56)		42		(3)		—		(17)
Adoption of new accounting standard (a)	—	—		—		—		(17)		—		(17)
Balance at June 30, 2020	291.0	$	3	$	7,307	$	(3,899)	$	6,365	$	(1,259)	$	8,517

(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.


Table of Contents

UNITED AIRLINES, INC.

STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)

(In millions)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Operating revenue:
Passenger revenue	$	4,366	$	681	$	6,682	$	7,746
Cargo	606		402		1,103		666
Other operating revenue	499		392		907		1,042
Total operating revenue	5,471		1,475		8,692		9,454

Operating expense:
Salaries and related costs	2,276		2,170		4,500		5,125
Aircraft fuel	1,232		240		2,083		1,966
Depreciation and amortization	620		618		1,243		1,233
Landing fees and other rent	564		429		1,083		1,052
Regional capacity purchase	547		388		1,026		1,125
Aircraft maintenance materials and outside repairs	302		110		571		544
Distribution expenses	139		31		224		326
Aircraft rent	52		47		107		97
Special charges (credits)	(948)		(1,449)		(2,325)		(1,386)
Other operating expenses	956		527		1,830		1,980
Total operating expense	5,740		3,111		10,342		12,062
Operating loss	(269)		(1,636)		(1,650)		(2,608)

Nonoperating income (expense):
Interest expense	(426)		(196)		(779)		(367)
Interest capitalized	22		17		39		38
Interest income	12		11		19		37
Unrealized losses on investments, net	147		9		125		(310)
Miscellaneous, net	(50)		(208)		(69)		(906)
Total nonoperating expense, net	(295)		(367)		(665)		(1,508)
Loss before income tax benefit	(564)		(2,003)		(2,315)		(4,116)
Income tax benefit	(130)		(377)		(524)		(786)
Net loss	$	(434)	$	(1,626)	$	(1,791)	$	(3,330)

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


Table of Contents

UNITED AIRLINES, INC.

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(In millions)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Net loss	$	(434)	$	(1,626)	$	(1,791)	$	(3,330)

Other comprehensive income (loss), net of tax:
Employee benefit plans	12		(501)		26		(542)
Investments and other	—		13		(1)		1
Total other comprehensive income (loss), net of tax	12		(488)		25		(541)

Total comprehensive loss, net	$	(422)	$	(2,114)	$	(1,766)	$	(3,871)

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


Table of Contents

UNITED AIRLINES, INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In millions, except shares)


	June 30, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	20,838	$	11,269
Short-term investments	230		414
Restricted cash	254		255
Receivables, less allowance for credit losses (2021 — $71; 2020 — $78)	1,793		1,295
Aircraft fuel, spare parts and supplies, less obsolescence allowance (2021 — $518; 2020 — $478)	912		932
Prepaid expenses and other	646		635
Total current assets	24,673		14,800
Operating property and equipment:
Flight equipment	39,109		38,218
Other property and equipment	8,683		8,511
Purchase deposits for flight equipment	1,980		1,166
Total operating property and equipment	49,772		47,895
Less — Accumulated depreciation and amortization	(17,441)		(16,429)
Total operating property and equipment, net