UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



	FORM	10-Q

(Mark One)



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

For the quarterly period ended June 30, ~~2018~~2019



o☐	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.

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

001-06033

United ~~Continental~~Airlines Holdings, Inc.

Delaware

36-2675207

United Continental Holdings, Inc.

233 South Wacker Drive,

Chicago

Illinois

60606

(872)

825-4000

001-10323

United Airlines, Inc.

Delaware

74-2099724

N/A

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 on Each Exchange on Which Registered
United Airlines Holdings, Inc.	Common Stock,	$0.01 par value	UAL	The Nasdaq Stock Market LLC
United Airlines, Inc.	None		None	None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

United ~~Continental~~Airlines Holdings, Inc.

Yesx

☒

Noo

☐

United Airlines, Inc.

Yes

☒

~~Yes~~ x No o☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files).

United ~~Continental~~Airlines Holdings, Inc.

Yesx

☒

Noo

☐

United Airlines, Inc.

Yesx

☒

Noo

☐

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 ~~Continental~~Airlines Holdings, Inc.	Large accelerated filerx	☒	Accelerated filero	☐	Non-accelerated filero	☐	Smaller reporting companyo	☐	Emerging growth companyo	☐
United Airlines, Inc.	Large accelerated filero	☐	Accelerated filero	☐	Non-accelerated filerx	☒	Smaller reporting companyo	☐	Emerging growth companyo	☐

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 ~~Continental~~Airlines Holdings, Inc.		o☐
United Airlines, Inc.		o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



United ~~Continental~~Airlines Holdings, Inc.	Yes o	☐	Nox	☒
United Airlines, Inc.	Yeso	☐	Nox	☒

The number of shares outstanding of each of the issuer's classes of common stock as of July ~~13, 2018~~12, 2019 is shown below:



United ~~Continental~~Airlines Holdings, Inc.	~~272,603,972~~ 256,921,469	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 ~~Continental~~Airlines Holdings, Inc.)

OMISSION OF CERTAIN INFORMATION

This combined Quarterly Report on Form 10-Q is separately filed by United ~~Continental~~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 ~~Continental~~Airlines Holdings, Inc.

United Airlines, Inc.

Quarterly Report on Form 10-Q

For the Quarterly Period Ended June 30, ~~2018~~2019



	Page
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
United ~~Continental~~Airlines Holdings, Inc.:
Statements of Consolidated Operations	3
~~Statement~~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	8
~~Statements of Consolidated Comprehensive Income (Loss)~~	9
Statements of Consolidated ~~Balance Sheets~~Comprehensive Income	10
Consolidated Balance Sheets	11
Condensed Statements of Consolidated Cash Flows	1213
Statement of Consolidated Stockholder's Equity	14

Combined Notes to Condensed Consolidated Financial Statements (United ~~Continental~~Airlines Holdings, Inc. and United Airlines, Inc.)	1315

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	2728
Item 3. Quantitative and Qualitative Disclosures About Market Risk	3637
Item 4. Controls and Procedures	3637

PART II. OTHER INFORMATION

Item 1. Legal Proceedings	3738
Item 1A. Risk Factors	3738
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	3739
Item 6. Exhibits	3740
Exhibit Index	3840

Signatures	3941



Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

UNITED ~~CONTINENTAL~~AIRLINES HOLDINGS, INC.

STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)

(In millions, except per share amounts)


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017 (a)			2018			2017 (a)			2019			2018 (a)			2019			2018 (a)
Operating revenue:
Passenger revenue	$	9,880		$	9,151		$	18,030		$	16,804		$	10,486		$	9,880		$	19,211		$	18,030
Cargo	314			273			607			511			295			314			581			607
Other operating revenue	583			584			1,172			1,119			621			583			1,199			1,172
Total operating revenue	10,777			10,008			19,809			18,434			11,402			10,777			20,991			19,809

Operating expense:
Salaries and related costs	2,878			2,842			5,604			5,478			3,057			2,878			5,930			5,604
Aircraft fuel	2,390			1,669			4,355			3,229			2,385			2,390			4,408			4,355
Regional capacity purchase	681			549			1,300			1,085			715			693			1,403			1,323
Landing fees and other rent	603			541			1,161			1,085			660			625			1,248			1,204
Depreciation and amortization	557			536			1,098			1,054			560			538			1,107			1,062
Aircraft maintenance materials and outside repairs	438			472			878			926			421			438			829			878
Distribution expenses	393			385			735			704			442			393			802			735
Aircraft rent	119			152			246			331			73			119			154			246
Special charges (Note 10)	129			44			169			95
Special charges													71			129			89			169
Other operating expenses	1,428			1,381			2,826			2,690			1,546			1,429			3,054			2,826
Total operating expenses	9,616			8,571			18,372			16,677			9,930			9,632			19,024			18,402
Operating income	1,161			1,437			1,437			1,757			1,472			1,145			1,967			1,407

Nonoperating income (expense):
Interest expense	(177		)	(167		)	(353		)	(329		)	(191		)	(163		)	(379		)	(325		)
Interest capitalized	14			21			33			44			21			12			43			30
Interest income	25			13			42			24			38			25			67			42
Miscellaneous, net	(166		)	(27		)	(118		)	(69		)	14			(164		)	23			(117		)
Total nonoperating expense, net	(304		)	(160		)	(396		)	(330		)	(118		)	(290		)	(246		)	(370		)
Income before income taxes	857			1,277			1,041			1,427			1,354			855			1,721			1,037
Income tax expense	173			456			210			507			302			172			377			209
Net income	$	684		$	821		$	831		$	920		$	1,052		$	683		$	1,344		$	828
Earnings per share, basic	$	2.49		$	2.67		$	2.97		$	2.96		$	4.03		$	2.48		$	5.09		$	2.96
Earnings per share, diluted	$	2.48		$	2.67		$	2.96		$	2.96		$	4.02		$	2.48		$	5.07		$	2.95

(a) Amounts adjusted due to the adoption of Accounting Standards Update No. ~~2014-09,~~ ~~Revenue from Contracts with Customers~~2016-02, Leases (Topic ~~606)~~ ~~andAccounting Standards Update No. 2017-07,~~ ~~Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.~~ 842). See Note 1 to the financial statements contained in Part I, Item 1 of this report for additional information.

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



Table of Contents

UNITED ~~CONTINENTAL~~AIRLINES HOLDINGS, INC.

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME ~~(LOSS)~~ (UNAUDITED)

(In millions)

Three Months Ended June 30, Six Months Ended June 30,
2018 2017 (a) 2018 2017 (a)
Net income $ 684
$ 821
$ 831
$ 920

Other comprehensive income (loss), net change related to:
Employee benefit plans, net of taxes 12
4
42
(4 )
Investments and other, net of taxes —
(12 ) 3
(11 )
Total other comprehensive income (loss), net 12
(8 ) 45
(15 )

Total comprehensive income, net $ 696
$ 813
$ 876
$ 905



	Three Months Ended June 30,					Six Months Ended June 30,
	2019			2018 (a)		2019			2018 (a)
Net income	$	1,052		$	683	$	1,344		$	828

Other comprehensive income (loss), net of tax:
Employee benefit plans	(17		)	12		(10		)	42
Investments and other	3			—		6			(4		)
Total other comprehensive income (loss), net of tax	(14		)	12		(4		)	38

Total comprehensive income, net	$	1,038		$	695	$	1,340		$	866

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



~~Table of Contents~~

~~UNITED CONTINENTAL HOLDINGS, INC.~~

~~CONSOLIDATED BALANCE SHEETS (UNAUDITED)~~

~~(In millions, except shares)~~

June 30, 2018 December 31, 2017 (a)
ASSETS
Current assets:
Cash and cash equivalents $ 2,884
$ 1,482
Short-term investments 2,187
2,316
Receivables, less allowance for doubtful accounts (2018 — $7; 2017 — $7) 1,840
1,340
Aircraft fuel, spare parts and supplies, less obsolescence allowance (2018 — $380; 2017 — $354) 942
924
Prepaid expenses and other 1,028
1,071
Total current assets 8,881
7,133

Operating property and equipment:
Owned—
Flight equipment 30,143
28,692
Other property and equipment 7,481
6,946
Total owned property and equipment 37,624
35,638
Less — Accumulated depreciation and amortization (11,974 ) (11,159 )
Total owned property and equipment, net 25,650
24,479

Purchase deposits for flight equipment 894
1,344

Capital leases—
Flight equipment 1,224
1,151
Other property and equipment 11
11
Total capital leases 1,235
1,162
Less — Accumulated amortization (833 ) (777 )
Total capital leases, net 402
385
Total operating property and equipment, net 26,946
26,208

Other assets:
Goodwill 4,523
4,523
Intangibles, less accumulated amortization (2018 — $1,346; 2017 — $1,313) 3,399
3,539
Restricted cash 94
91
Investments in affiliates and other, net 848
852
Total other assets 8,864
9,005
Total assets $ 44,691
$ 42,346

~~(continued on next page)~~



Table of Contents

UNITED ~~CONTINENTAL~~AIRLINES HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In millions, except shares)



	June 30, 2019			December 31, 2018 (a)
ASSETS
Current assets:
Cash and cash equivalents	$	3,221		$	1,694
Short-term investments	2,223			2,256
Receivables, less allowance for doubtful accounts (2019 — $9; 2018 — $8)	1,762			1,426
Aircraft fuel, spare parts and supplies, less obsolescence allowance (2019 — $387; 2018 — $412)	996			985
Prepaid expenses and other	708			733
Total current assets	8,910			7,094
Operating property and equipment:
Flight equipment	33,890			32,599
Other property and equipment	7,371			6,889
Purchase deposits for flight equipment	1,351			1,177
Total operating property and equipment, at cost	42,612			40,665
Less — Accumulated depreciation and amortization	(13,694		)	(13,266		)
Total operating property and equipment, net	28,918			27,399

Operating lease right-of-use assets	4,908			5,262

Other assets:
Goodwill	4,523			4,523
Intangibles, less accumulated amortization (2019 — $1,410; 2018 — $1,380)	3,129			3,159
Restricted cash	105			105
Notes receivable, net	518			516
Investments in affiliates and other, net	1,139			966
Total other assets	9,414			9,269
Total assets	$	52,150		$	49,024

(continued on next page)



Table of Contents

UNITED AIRLINES HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In millions, except shares)


	June 30, 2018			December 31, 2017 (a)			June 30, 2019			December 31, 2018 (a)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Advance ticket sales	$	5,826		$	3,940		$	6,126		$	4,381
Accounts payable	2,703			2,196			3,033			2,363
Frequent flyer deferred revenue	2,206			2,192			2,435			2,286
Accrued salaries and benefits	1,782			2,166			1,871			2,184
Current maturities of long-term debt	887			1,565			1,255			1,230
Current maturities of capital leases	117			128
Current maturities of finance leases							117			123
Current maturities of operating leases							637			719
Other	571			576			604			553
Total current liabilities	14,092			12,763			16,078			13,839

Long-term debt	12,460			11,703			12,938			12,215
Long-term obligations under capital leases	1,039			996
Long-term obligations under finance leases							202			224
Long-term obligations under operating leases							5,034			5,276

Other liabilities and deferred credits:
Frequent flyer deferred revenue	2,783			2,591			2,763			2,719
Postretirement benefit liability	1,585			1,602			1,277			1,295
Pension liability	1,815			1,921			1,366			1,576
Deferred income taxes	419			204			1,192			828
Lease fair value adjustment, net	155			198
Other	1,704			1,634			980			1,010
Total other liabilities and deferred credits	8,461			8,150			7,578			7,428
Commitments and contingencies
Stockholders' equity:
Preferred stock	—			—			—			—
Common stock at par, $0.01 par value; authorized 1,000,000,000 shares; outstanding 273,017,840 and 286,973,195 shares at June 30, 2018 and December 31, 2017, respectively	3			3
Common stock at par, $0.01 par value; authorized 1,000,000,000 shares; outstanding 257,729,166 and 269,914,769 shares at June 30, 2019 and December 31, 2018, respectively							3			3
Additional capital invested	6,091			6,098			6,096			6,120
Retained earnings	5,367			4,549			8,050			6,715
Stock held in treasury, at cost	(1,720		)	(769		)	(3,022		)	(1,993		)
Accumulated other comprehensive loss	(1,102		)	(1,147		)	(807		)	(803		)
Total stockholders' equity	8,639			8,734			10,320			10,042
Total liabilities and stockholders' equity	$	44,691		$	42,346		$	52,150		$	49,024

(a) Amounts adjusted due to the adoption of Accounting Standards Update No. ~~2014-09,~~ ~~Revenue from Contracts with Customers~~2016-02, Leases (Topic ~~606)~~842). See Note 1 to the financial statements contained in Part I, Item 1 of this report for additional information.

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



Table of Contents

UNITED ~~CONTINENTAL~~AIRLINES HOLDINGS, INC.

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)

(In millions)


	Six Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2019			2018 (a)
Cash Flows from Operating Activities:
Net cash provided by operating activities	$	4,175		$	2,108		$	4,625		$	4,152

Cash Flows from Investing Activities:
Capital expenditures	(1,734		)	(1,780		)	(2,467		)	(1,671		)
Purchases of short-term and other investments	(1,326		)	(1,587		)	(1,443		)	(1,326		)
Proceeds from sale of short-term and other investments	1,455			1,561			1,484			1,455
Investment in affiliates	(139		)	—			(27		)	(139		)
Proceeds from sale of property and equipment	20			5
Loans made to others							—			(10		)
Other, net	7			123			17			38
Net cash used in investing activities	(1,717		)	(1,678		)	(2,436		)	(1,653		)

Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt and airport construction financing	1,308			1,139
Proceeds from issuance of long-term debt							996			1,241
Payments of long-term debt							(473		)	(1,294		)
Repurchases of common stock	(969		)	(712		)	(1,062		)	(969		)
Payments of long-term debt	(1,294		)	(525		)
Principal payments under capital leases	(62		)	(59		)
Principal payments under finance leases							(63		)	(35		)
Capitalized financing costs							(30		)	(25		)
Other, net	(41		)	(75		)	(30		)	(17		)
Net cash used in financing activities	(1,058		)	(232		)	(662		)	(1,099		)
Net increase in cash, cash equivalents and restricted cash	1,400			198			1,527			1,400
Cash, cash equivalents and restricted cash at beginning of the period	1,591			2,303			1,799			1,591
Cash, cash equivalents and restricted cash at end of the period (a)	$	2,991		$	2,501
Cash, cash equivalents and restricted cash at end of the period (b)							$	3,326		$	2,991

Investing and Financing Activities Not Affecting Cash:
Property and equipment acquired through the issuance of debt and capital leases	$	139		$	907
Airport construction financing	12			32
Property and equipment acquired through the issuance of debt							$	220		$	125
Operating lease conversions to finance lease							36			—
Right-of-use assets acquired through operating leases							99			103
Property and equipment acquired through finance leases							8			—

(a) Amounts adjusted due to the adoption of Accounting Standards Update No. 2016-02, Leases (Topic 842). See Note 1 to the financial statements contained in Part I, Item 1 of this report for additional information.

(b) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheet:



Cash and cash equivalents	$	3,221	$	2,884
Restricted cash (included in Prepaid expenses and other)	—		13
Restricted cash	105		94
Total cash, cash equivalents and restricted cash	$	3,326	$	2,991

Reconciliation of cash, cash equivalents and restricted cash:
Current assets:
Cash and cash equivalents $ 2,884
$ 2,371
Restricted cash included in Prepaid expenses and other 13
15
Other assets:
Restricted cash 94
115
Total cash, cash equivalents and restricted cash $ 2,991
$ 2,501

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 ~~OPERATIONS (UNAUDITED)~~STOCKHOLDERS' EQUITY

(In millions)

Three Months Ended June 30, Six Months Ended June 30,
2018 2017 (a) 2018 2017 (a)
Operating revenue:
Passenger revenue $ 9,880
$ 9,151
$ 18,030
$ 16,804
Cargo 314
273
607
511
Other operating revenue 583
584
1,172
1,119
Total operating revenue 10,777
10,008
19,809
18,434

Operating expense:
Salaries and related costs 2,878
2,842
5,604
5,478
Aircraft fuel 2,390
1,669
4,355
3,229
Regional capacity purchase 681
549
1,300
1,085
Landing fees and other rent 603
541
1,161
1,085
Depreciation and amortization 557
536
1,098
1,054
Aircraft maintenance materials and outside repairs 438
472
878
926
Distribution expenses 393
385
735
704
Aircraft rent 119
152
246
331
Special charges (Note 10) 129
44
169
95
Other operating expenses 1,428
1,380
2,825
2,689
Total operating expense 9,616
8,570
18,371
16,676
Operating income 1,161
1,438
1,438
1,758

Nonoperating income (expense):
Interest expense (177 ) (167 ) (353 ) (329 )
Interest capitalized 14
21
33
44
Interest income 25
13
42
24
Miscellaneous, net (167 ) (28 ) (119 ) (69 )
Total nonoperating expense, net (305 ) (161 ) (397 ) (330 )
Income before income taxes 856
1,277
1,041
1,428
Income tax expense 172
457
210
508
Net income $ 684
$ 820
$ 831
$ 920



	Common Stock				Additional Capital Invested			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
	Shares		Amount		Additional Capital Invested			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance at March 31, 2019	264.3		$	3	$	6,080		$	(2,487	)	$	6,999		$	(793	)	$	9,802
Net income	—		—		—			—			1,052			—			1,052
Other comprehensive loss	—		—		—			—			—			(14		)	(14		)
Stock settled share-based compensation	—		—		17			—			—			—			17
Repurchases of common stock	(6.6	)	—		—			(536		)	—			—			(536		)
Net treasury stock issued for share-based awards	—		—		(1		)	1			(1		)	—			(1		)
Balance at June 30, 2019	257.7		$	3	$	6,096		$	(3,022	)	$	8,050		$	(807	)	$	10,320

Balance at December 31, 2018 (a)	269.9		$	3	$	6,120		$	(1,993	)	$	6,715		$	(803	)	$	10,042
Net income	—		—		—			—			1,344			—			1,344
Other comprehensive loss	—		—		—			—			—			(4		)	(4		)
Stock settled share-based compensation	—		—		31			—			—			—			31
Repurchases of common stock	(12.7	)	—		—			(1,063		)	—			—			(1,063		)
Net treasury stock issued for share-based awards	0.5		—		(55		)	34			(9		)	—			(30		)
Balance at June 30, 2019	257.7		$	3	$	6,096		$	(3,022	)	$	8,050		$	(807	)	$	10,320

Balance at March 31, 2018 (a)	279.4		$	3	$	6,077		$	(1,314	)	$	4,736		$	(1,114	)	$	8,388
Net income (a)	—		—		—			—			683			—			683
Other comprehensive income	—		—		—			—			—			12			12
Stock settled share-based compensation	—		—		14			—			—			—			14
Repurchases of common stock	(6.4	)	—		—			(407		)	—			—			(407		)
Net treasury stock issued for share-based awards	—		—		—			1			—			—			1
Balance at June 30, 2018 (a)	273.0		$	3	$	6,091		$	(1,720	)	$	5,419		$	(1,102	)	$	8,691

Balance at December 31, 2017 (a)	287.0		$	3	$	6,098		$	(769	)	$	4,603		$	(1,147	)	$	8,788
Net income (a)	—		—		—			—			828			—			828
Other comprehensive income	—		—		—			—			—			38			38
Stock settled share-based compensation	—		—		29			—			—			—			29
Repurchases of common stock	(14.2	)	—		—			(976		)	—			—			(976		)
Net treasury stock issued for share-based awards	0.2		—		(36		)	25			(5		)	—			(16		)
Adoption of accounting standard related to equity investments	—		—		—			—			(7		)	7			—
Balance at June 30, 2018 (a)	273.0		$	3	$	6,091		$	(1,720	)	$	5,419		$	(1,102	)	$	8,691

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



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UNITED AIRLINES, INC.

STATEMENTS OF CONSOLIDATED ~~COMPREHENSIVE INCOME (LOSS)~~OPERATIONS (UNAUDITED)

(In millions)

Three Months Ended June 30, Six Months Ended June 30,
2018 2017 (a) 2018 2017 (a)
Net income $ 684
$ 820
$ 831
$ 920

Other comprehensive income (loss), net change related to:
Employee benefit plans, net of taxes 12
4
42
(4 )
Investments and other, net of taxes —
(12 ) 3
(11 )
Total other comprehensive income (loss), net 12
(8 ) 45
(15 )

Total comprehensive income, net $ 696
$ 812
$ 876
$ 905



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018 (a)			2019			2018 (a)
Operating revenue:
Passenger revenue	$	10,486		$	9,880		$	19,211		$	18,030
Cargo	295			314			581			607
Other operating revenue	621			583			1,199			1,172
Total operating revenue	11,402			10,777			20,991			19,809

Operating expense:
Salaries and related costs	3,057			2,878			5,930			5,604
Aircraft fuel	2,385			2,390			4,408			4,355
Regional capacity purchase	715			693			1,403			1,323
Landing fees and other rent	660			625			1,248			1,204
Depreciation and amortization	560			538			1,107			1,062
Aircraft maintenance materials and outside repairs	421			438			829			878
Distribution expenses	442			393			802			735
Aircraft rent	73			119			154			246
Special charges	71			129			89			169
Other operating expenses	1,546			1,428			3,053			2,825
Total operating expense	9,930			9,631			19,023			18,401
Operating income	1,472			1,146			1,968			1,408

Nonoperating income (expense):
Interest expense	(191		)	(163		)	(379		)	(325		)
Interest capitalized	21			12			43			30
Interest income	38			25			67			42
Miscellaneous, net	14			(164		)	23			(117		)
Total nonoperating expense, net	(118		)	(290		)	(246		)	(370		)
Income before income taxes	1,354			856			1,722			1,038
Income tax expense	302			173			377			210
Net income	$	1,052		$	683		$	1,345		$	828

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



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UNITED AIRLINES, INC.

STATEMENTS OF CONSOLIDATED ~~BALANCE SHEETS~~COMPREHENSIVE INCOME (UNAUDITED)

(In ~~millions, except shares)~~millions)

June 30, 2018 December 31, 2017 (a)
ASSETS
Current assets:
Cash and cash equivalents $ 2,878
$ 1,476
Short-term investments 2,187
2,316
Receivables, less allowance for doubtful accounts (2018 — $7; 2017 — $7) 1,840
1,340
Aircraft fuel, spare parts and supplies, less obsolescence allowance (2018 — $380; 2017 — $354) 942
924
Prepaid expenses and other 1,028
1,071
Total current assets 8,875
7,127
Operating property and equipment:
Owned—
Flight equipment 30,143
28,692
Other property and equipment 7,481
6,946
Total owned property and equipment 37,624
35,638
Less — Accumulated depreciation and amortization (11,974 ) (11,159 )
Total owned property and equipment, net 25,650
24,479

Purchase deposits for flight equipment 894
1,344

Capital leases—
Flight equipment 1,224
1,151
Other property and equipment 11
11
Total capital leases 1,235
1,162
Less — Accumulated amortization (833 ) (777 )
Total capital leases, net 402
385
Total operating property and equipment, net 26,946
26,208
Other assets:
Goodwill 4,523
4,523
Intangibles, less accumulated amortization (2018 — $1,346; 2017 — $1,313) 3,399
3,539
Restricted cash 94
91
Investments in affiliates and other, net 848
852
Total other assets 8,864
9,005
Total assets $ 44,685
$ 42,340



	Three Months Ended June 30,					Six Months Ended June 30,
	2019			2018 (a)		2019			2018 (a)
Net income	$	1,052		$	683	$	1,345		$	828

Other comprehensive income (loss), net of tax:
Employee benefit plans	(17		)	12		(10		)	42
Investments and other	3			—		6			(4		)
Total other comprehensive income (loss), net of tax	(14		)	12		(4		)	38

Total comprehensive income, net	$	1,038		$	695	$	1,341		$	866

~~(continued on next page)~~



~~Table of Contents~~

~~UNITED AIRLINES, INC.~~

~~CONSOLIDATED BALANCE SHEETS (UNAUDITED)~~

~~(In millions, except shares)~~

June 30, 2018 December 31, 2017 (a)
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Advance ticket sales $ 5,826
$ 3,940
Accounts payable 2,703
2,196
Frequent flyer deferred revenue 2,206
2,192
Accrued salaries and benefits 1,782
2,166
Current maturities of long-term debt 887
1,565
Current maturities of capital leases 117
128
Other 575
581
Total current liabilities 14,096
12,768

Long-term debt 12,460
11,703
Long-term obligations under capital leases 1,039
996

Other liabilities and deferred credits:
Frequent flyer deferred revenue 2,783
2,591
Postretirement benefit liability 1,585
1,602
Pension liability 1,815
1,921
Deferred income taxes 446
231
Lease fair value adjustment, net 155
198
Other 1,704
1,634
Total other liabilities and deferred credits 8,488
8,177
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 June 30, 2018 and December 31, 2017 —
—
Additional capital invested 841
1,787
Retained earnings 8,971
8,146
Accumulated other comprehensive loss (1,102 ) (1,147 )
Receivable from related parties (108 ) (90 )
Total stockholder's equity 8,602
8,696
Total liabilities and stockholder's equity $ 44,685
$ 42,340

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, 2019			December 31, 2018 (a)
ASSETS
Current assets:
Cash and cash equivalents	$	3,215		$	1,688
Short-term investments	2,223			2,256
Receivables, less allowance for doubtful accounts (2019 — $9; 2018 — $8)	1,762			1,426
Aircraft fuel, spare parts and supplies, less obsolescence allowance (2019 — $387; 2018 — $412)	996			985
Prepaid expenses and other	708			733
Total current assets	8,904			7,088
Operating property and equipment:
Flight equipment	33,890			32,599
Other property and equipment	7,371			6,889
Purchase deposits for flight equipment	1,351			1,177
Total operating property and equipment, at cost	42,612			40,665
Less — Accumulated depreciation and amortization	(13,694		)	(13,266		)
Total operating property and equipment, net	28,918			27,399

Operating lease right-of-use assets	4,908			5,262

Other assets:
Goodwill	4,523			4,523
Intangibles, less accumulated amortization (2019 — $1,410; 2018 — $1,380)	3,129			3,159
Restricted cash	105			105
Notes receivable, net	518			516
Investments in affiliates and other, net	1,139			966
Total other assets	9,414			9,269
Total assets	$	52,144		$	49,018

(continued on next page)



Table of Contents

UNITED AIRLINES, INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In millions, except shares)



	June 30, 2019			December 31, 2018 (a)
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Advance ticket sales	$	6,126		$	4,381
Accounts payable	3,033			2,363
Frequent flyer deferred revenue	2,435			2,286
Accrued salaries and benefits	1,871			2,184
Current maturities of long-term debt	1,255			1,230
Current maturities of finance leases	117			123
Current maturities of operating leases	637			719
Other	608			558
Total current liabilities	16,082			13,844

Long-term debt	12,938			12,215
Long-term obligations under finance leases	202			224
Long-term obligations under operating leases	5,034			5,276

Other liabilities and deferred credits:
Frequent flyer deferred revenue	2,763			2,719
Postretirement benefit liability	1,277			1,295
Pension liability	1,366			1,576
Deferred income taxes	1,220			855
Other	980			1,010
Total other liabilities and deferred credits	7,606			7,455
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 June 30, 2019 and December 31, 2018	—			—
Additional capital invested	—			598
Retained earnings	11,230			10,319
Accumulated other comprehensive loss	(807		)	(803		)
Receivable from related parties	(141		)	(110		)
Total stockholder's equity	10,282			10,004
Total liabilities and stockholder's equity	$	52,144		$	49,018

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



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UNITED AIRLINES, INC.

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)

(In millions)


	Six Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2019			2018 (a)

Cash Flows from Operating Activities:
Net cash provided by operating activities	$	4,158		$	2,095		$	4,596		$	4,135

Cash Flows from Investing Activities:
Capital expenditures	(1,734		)	(1,780		)	(2,467		)	(1,671		)
Purchases of short-term investments and other investments	(1,326		)	(1,587		)	(1,443		)	(1,326		)
Proceeds from sale of short-term and other investments	1,455			1,561			1,484			1,455
Investment in affiliates	(139		)	—			(27		)	(139		)
Proceeds from sale of property and equipment	20			5
Loans made to others							—			(10		)
Other, net	7			123			17			38
Net cash used in investing activities	(1,717		)	(1,678		)	(2,436		)	(1,653		)

Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt and airport construction financing	1,308			1,139
Proceeds from issuance of long-term debt							996			1,241
Payments of long-term debt							(473		)	(1,294		)
Dividend to UAL	(969		)	(712		)	(1,062		)	(969		)
Payments of long-term debt	(1,294		)	(525		)
Principal payments under capital leases	(62		)	(59		)
Principal payments under finance leases							(63		)	(35		)
Capitalized financing costs							(30		)	(25		)
Other, net	(24		)	(62		)	(1		)	—
Net cash used in financing activities	(1,041		)	(219		)	(633		)	(1,082		)
Net increase in cash, cash equivalents and restricted cash	1,400			198			1,527			1,400
Cash, cash equivalents and restricted cash at beginning of the period	1,585			2,297			1,793			1,585
Cash, cash equivalents and restricted cash at end of the period (a)	$	2,985		$	2,495
Cash, cash equivalents and restricted cash at end of the period (b)							$	3,320		$	2,985

Investing and Financing Activities Not Affecting Cash:
Property and equipment acquired through the issuance of debt and capital leases	$	139		$	907
Airport construction financing	12			32
Property and equipment acquired through the issuance of debt							$	220		$	125
Operating lease conversions to finance lease							36			—
Right-of-use assets acquired through operating leases							99			103
Property and equipment acquired through finance leases							8			—

(b) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheet:



Cash and cash equivalents	$	3,215	$	2,878
Restricted cash (included in Prepaid expenses and other)	—		13
Restricted cash	105		94
Total cash, cash equivalents and restricted cash	$	3,320	$	2,985

Reconciliation of cash, cash equivalents and restricted cash:
Current assets:
Cash and cash equivalents $ 2,878
$ 2,365
Restricted cash included in Prepaid expenses and other 13
15
Other assets:
Restricted cash 94
115
Total cash, cash equivalents and restricted cash $ 2,985
$ 2,495

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



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UNITED ~~CONTINENTAL~~AIRLINES, INC.

STATEMENTS OF CONSOLIDATED STOCKHOLDER'S EQUITY

(In millions)



	Additional Capital Invested			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Receivable from Related Parties, Net			Total
	Additional Capital Invested			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Receivable from Related Parties, Net			Total
Balance at March 30, 2019	$	84		$	10,612		$	(793	)	$	(140	)	$	9,763
Net income	—			1,052			—			—			1,052
Other comprehensive loss	—			—			(14		)	—			(14		)
Dividend to UAL	(102		)	(434		)	—			—			(536		)
Share-based compensation	17			—			—			—			17
Other	1			—			—			(1		)	—
Balance at June 30, 2019	$	—		$	11,230		$	(807	)	$	(141	)	$	10,282

Balance at December 31, 2018 (a)	$	598		$	10,319		$	(803	)	$	(110	)	$	10,004
Net income	—			1,345			—			—			1,345
Other comprehensive loss	—			—			(4		)	—			(4		)
Dividend to UAL	(629		)	(434		)	—			—			(1,063		)
Stock settled share-based compensation	31			—			—			—			31
Other	—			—			—			(31		)	(31		)
Balance at June 30, 2019	$	—		$	11,230		$	(807	)	$	(141	)	$	10,282

Balance at March 31, 2018 (a)	$	1,233		$	8,339		$	(1,114	)	$	(108	)	$	8,350
Net income	—			683			—			—			683
Other comprehensive income	—			—			12			—			12
Dividend to UAL	(407		)	—			—			—			(407		)
Share-based compensation	14			—			—			—			14
Other	1			—			—			—			1
Balance at June 30, 2018 (a)	$	841		$	9,022		$	(1,102	)	$	(108	)	$	8,653

Balance at December 31, 2017 (a)	$	1,787		$	8,201		$	(1,147	)	$	(90	)	$	8,751
Net income (a)	—			828			—			—			828
Other comprehensive income	—			—			38			—			38
Dividend to UAL	(976		)	—			—			—			(976		)
Stock settled share-based compensation	29			—			—			—			29
Other	1			(7		)	7			(18		)	(17		)
Balance at June 30, 2018 (a)	$	841		$	9,022		$	(1,102	)	$	(108	)	$	8,653

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



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UNITED AIRLINES HOLDINGS, INC. AND UNITED AIRLINES, INC.

COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

United ~~Continental~~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"). Effective June 27, 2019, the Company amended its Certificate of Incorporation to change its name to "United Airlines Holdings, Inc." 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 year ended December 31, ~~2017~~.2018. The Company's quarterly financial data is subject to seasonal fluctuations and historically its second and third quarter financial results, which reflect higher travel demand, are better than its first and fourth quarter financial results.

NOTE 1 - RECENTLY ISSUED ACCOUNTING STANDARDS

The Company adopted Financial Accounting Standards Board ("FASB") Accounting Standards Codification Topic ~~606,~~ ~~Revenue from Contracts with Customers~~ ~~(the~~842, Leases (the "New ~~Revenue~~Lease Standard"), effective January 1, ~~2018 using~~2019. The Company used the ~~full-retrospective method. Topic 606~~modified retrospective approach for all leases existing at or commencing after January 1, 2017 and elected the package of transition practical expedients for expired or existing contracts, which does not require reassessment of: (1) whether any of our contracts are or contain leases, (2) lease classification and (3) initial direct costs. The New Lease Standard prescribes that an entity should recognize ~~revenue~~a right-of-use asset and a lease liability for all leases at the commencement date of each lease and recognize expenses on their income statements similar to ~~depict~~ the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. For the Company, the most significant impactprior FASB Accounting Standards Codification Topic 840, Leases ("Topic 840").

The adoption of the standard is the reclassification of certain ancillary fees from other operating revenue into passenger revenue on the statement of consolidated operations. These ancillary fees are directly related to passenger travel, such as ticket change fees and baggage fees, and are no longer considered distinct performance obligations separate from the passenger travel component. In addition, the ticket change fees, which were previously recognized when received, are now recognized when transportation is provided. Adoption of the standard had no impact on the Company's consolidated cash flows statements.

~~The Company adopted Accounting Standards Update No. 2017-07,~~ ~~Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~ ~~(the "New Retirement Standard"), effective January 1, 2018 using the full-retrospective method. The~~ New ~~Retirement~~Lease Standard requires employers to present the service cost component of the net periodic benefit cost in the same income statement line item as other employee compensation costs arising from services rendered during the period. The other components of net benefit cost, including interest cost, expected return on plan assets, amortization of prior service cost/credit and actuarial gain/loss, and settlement and curtailment effects, are to be presented outside of any subtotal of operating income. The Company elected to apply the practical expedient and use the amounts disclosed in Note 5 to the financial statements included in Part I, Item 1 of the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2017 as the estimation basis for applying the retrospective presentation requirements of the standard.



~~Table of Contents~~

~~The new standards~~ had the same impact on the financial statements of United as ~~they~~it had on the financial statements of UAL. The table below presents the impact of the adoption of the New ~~Revenue Standard and the New Retirement~~Lease Standard on select accounts and captions of ~~the~~UAL's statement of consolidated operations ~~for the three months ended June 30, 2017~~ (in millions, except per share amounts):



	Three Months Ended June 30, 2018									Six Months Ended June 30, 2018
	As Reported			New Lease Standard Adjustments			As Adjusted			As Reported			New Lease Standard Adjustments			As Adjusted
Regional capacity purchase	$	681		$	12		$	693		$	1,300		$	23		$	1,323
Landing fees and other rent	603			22			625			1,161			43			1,204
Depreciation and amortization	557			(19		)	538			1,098			(36		)	1,062
Interest expense	(177		)	14			(163		)	(353		)	28			(325		)
Interest capitalized	14			(2		)	12			33			(3		)	30
Net income	684			(1		)	683			831			(3		)	828
Earnings per share, basic	2.49			(0.01		)	2.48			2.97			(0.01		)	2.96
Earnings per share, diluted	2.48			—			2.48			2.96			(0.01		)	2.95

Three Months Ended June 30, 2017
As Previously Reported
New Revenue
Standard
Adjustments

New Retirement
Standard
Adjustments
As Adjusted
Passenger revenue $ 8,622
$ 529
$ —
$ 9,151
Cargo 254
19
—
273
Other operating revenue 1,124
(540 ) —
584
Total operating revenue 10,000
8
—
10,008

Salaries and related costs 2,868
—
(26 ) 2,842
Distribution expenses 362
23
—
385
Other operating expenses 1,408
(27 ) —
1,381
Total operating expenses 8,601
(4 ) (26 ) 8,571

Operating income 1,399
12
26
1,437

Interest expense (158 ) (9 ) —
(167 )
Miscellaneous, net (1 ) —
(26 ) (27 )
Total nonoperating expense, net (125 ) (9 ) (26 ) (160 )

Income before income taxes 1,274
3
—
1,277
Income tax expense 456
—
—
456
Net income 818
3
—
821

Earnings per share, basic 2.67
—
—
2.67
Earnings per share, diluted 2.66
0.01
—
2.67
The expense for leases under the New Lease Standard will continue to be classified in their historical income statement captions (primarily in Aircraft rent, Landing fees and other rent and Regional capacity purchase in our statements of consolidated operations). The adoption of the New Lease Standard resulted in the recharacterization of certain leases from capital leases under Topic 840 to operating leases under the New Lease Standard. This change resulted in less depreciation and amortization and interest expense associated with capital leases offset by higher lease expense associated with operating leases.



Table of Contents

The recharacterization is associated with leases of certain airport facilities that were derecognized as part of the build-to-suit transition guidance under the New Lease Standard. The reduction in capitalized interest is also associated with the same airport facilities leases.

The table below presents the impact of the adoption of the New Lease Standard on UAL's balance sheet accounts and captions (in millions):



	December 31, 2018
	As Reported			New Lease Standard Adjustments			As Adjusted
Receivables, less allowance for doubtful accounts	$	1,346		$	80		$	1,426
Prepaid expenses and other	913			(180		)	733
Flight equipment, owned and finance leases (a)	32,636			(37		)	32,599
Other property and equipment, owned and finance leases (a)	7,930			(1,041		)	6,889
Accumulated depreciation and amortization, owned and finance leases (a)	(13,414		)	148			(13,266		)
Operating lease right-of-use assets	—			5,262			5,262
Current maturities of finance leases (a)	149			(26		)	123
Current maturities of operating leases	—			719			719
Other current liabilities	619			(66		)	553
Long-term obligations under finance leases (a)	1,134			(910		)	224
Long-term obligations under operating leases	—			5,276			5,276
Deferred income taxes	814			14			828
Other long-term liabilities	1,832			(822		)	1,010
Retained earnings	6,668			47			6,715

(a) Finance leases, under the New Lease Standard, are the equivalent of capital leases under Topic 840.

The table below presents the impact of the adoption of the New ~~Revenue Standard and the New Retirement~~Lease Standard on select ~~accounts and captions~~line items of ~~the~~UAL's statement of consolidated ~~operations for the six months ended June 30, 2017~~cash flows (in ~~millions, except per share amounts)~~millions):



	Six Months Ended June 30, 2018
	As Reported			New Lease Standard Adjustments			As Adjusted
Cash Flows from Operating Activities:
Net cash provided by operating activities	$	4,175		$	(23	)	$	4,152

Cash Flows from Investing Activities:
Capital expenditures	(1,734		)	63			(1,671		)

Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt	1,308			(67		)	1,241
Principal payments under finance leases	(62		)	27			(35		)

Six Months Ended June 30, 2017
As Previously Reported
New Revenue
Standard
Adjustments

New Retirement
Standard
Adjustments
As Adjusted
Passenger revenue $ 15,796
$ 1,008
$ —
$ 16,804
Cargo 474
37
—
511
Other operating revenue 2,150
(1,031 ) —
1,119
Total operating revenue 18,420
14
—
18,434

Salaries and related costs 5,529
—
(51 ) 5,478
Distribution expenses 669
35
—
704
Other operating expenses 2,740
(50 ) —
2,690
Total operating expenses 16,743
(15 ) (51 ) 16,677

Operating income 1,677
29
51
1,757

Interest expense (308 ) (21 ) —
(329 )
Miscellaneous, net (18 ) —
(51 ) (69 )
Total nonoperating expense, net (258 ) (21 ) (51 ) (330 )

Income before income taxes 1,419
8
—
1,427
Income tax expense 505
2
—
507
Net income 914
6
—
920

Earnings per share, basic 2.95
0.01
—
2.96
Earnings per share, diluted 2.94
0.02
—
2.96

The ~~table below presents the impact of the~~ adoption of the New ~~Revenue~~Lease Standard primarily resulted in the recording of assets and liabilities of our operating leases on ~~UAL's~~our consolidated balance ~~sheet accounts~~sheets. Certain amounts recorded for prepaid and ~~captions~~accrued rent associated with historical operating leases were reclassified to the newly captioned Operating lease right-of-use assets in the consolidated balance sheets. Also, certain leases designated under Topic 840 as ~~of December 31, 2017 (in millions):~~owned assets and capital leases are not considered to be assets under the New Lease Standard and have been removed from the consolidated balance sheets, along with the related capital lease liability, due to the leases having variable lease payments.

At December 31, 2017
As Previously Reported
New Revenue Standard
Adjustments
As Adjusted
Prepaid expenses and other $ 1,051
$ 20
$ 1,071
Total current assets 7,113
20
7,133
Total assets 42,326
20
42,346

Advance ticket sales 3,876
64
3,940
Frequent flyer deferred revenue 2,176
16
2,192
Other 569
7
576
Total current liabilities 12,676
87
12,763

Frequent flyer deferred revenue - long-term 2,565
26
2,591
Deferred income taxes 225
(21 ) 204
Total other liabilities and deferred credits 8,145
5
8,150

Retained earnings 4,621
(72 ) 4,549
Total stockholders' equity 8,806
(72 ) 8,734
Total liabilities and stockholders' equity 42,326
20
42,346

In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses ("ASU 2016-13"). The main objective is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.



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The ~~Company adopted Accounting Standards Update No. 2016-01,~~ ~~Financial Instruments—Overall~~ ~~(Subtopic 825-10) effective January 1, 2018. This standard makes several changes, including~~amendments in this update replace the ~~elimination~~incurred loss methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to calculate credit loss estimates. For trade receivables, loans and held-to-maturity debt securities, entities will be required to estimate lifetime expected credit losses. For available-for-sale debt securities, entities will be required to recognize an allowance for credit losses rather than a reduction to the carrying value of the available-for-sale classification of equity investments, and requires equity investments with readily determinable fair values to be measured at fair value with changes in fair value recognized in earnings.asset. The Company reclassified to retained earnings $7 million of unrealized loss on the Company's investment in Azul, S.A. ("Azul") which was previously classified as an available-for-sale security. See Notes 4 and 7 to the financial statements included in this Part I, Item 1amendments are effective for ~~additional information.~~

~~Accounting for Leases.~~ ~~In February 2016, the FASB amended the FASB Accounting Standards Codification and created a new Topic 842,~~ ~~Leases~~. The guidance requires lessees to recognize a right-of-use asset and a lease liability for all leases (with the exception of short-term leases) at the commencement date and recognize expenses on their income statements similar to the current Topic 840, ~~Leases. The new lease standard is effective~~public business entities for fiscal years and interim periods beginning after December 15, ~~2018,~~2019 and early adoption is ~~permitted. Lessees and lessors are required to adopt~~permitted as of the ~~new lease standard using a modified retrospective approach for all leases existing at or commencing~~fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is evaluating the ~~date~~impact the adoption of ~~initial application with an option to use certain practical expedients. We have not finalized our assessment but believe this standard~~ASU 2016-13 will have ~~a significant impact~~ on ~~our~~its consolidated ~~balance sheets. The standard is not expected to have a material impact on the Company's results of operations or cash flows.The primary effect of adopting the new standard will be to record assets and obligations for our operating leases.~~financial statements.

NOTE 2 - REVENUE

Revenue by Geography.The ~~Company~~following table presents ~~Passenger revenue, Cargo revenue and Other~~ operating revenue on its income statement. Passenger revenue is recognized when transportation is provided and Cargo revenue is recognized when shipments are delivered. Other operating revenue is recognized as the related performance obligations are satisfied.by geographic region (in millions):



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Domestic (U.S. and Canada)	$	7,087	$	6,689	$	12,962	$	12,165
Atlantic	2,066		1,965		3,524		3,354
Pacific	1,306		1,285		2,587		2,516
Latin America	943		838		1,918		1,774
Total	$	11,402	$	10,777	$	20,991	$	19,809

The Company sells passenger ticket and related ancillary services for mainline and regional flights primarily via credit cards with payments collected by the Company in advance of the performance of related services. The Company initially records ticket sales in its Advance ticket sales liability, deferring revenue recognition until the travel occurs. For travel that has more than one flight segment, the Company deems each segment as a separate performance obligation and recognizes revenue for each segment as travel occurs. Tickets sold by other airlines where the Company provides the transportation are recognized as passenger revenue at the estimated value to be billed to the other airline when travel is provided. Differences between amounts billed and the actual amounts may be rejected and rebilled or written off if the amount recorded was different from the original estimate. When necessary, the Company records a reserve against its billings and payables with other airlines based on historical experience.

The Company sells certain tickets with connecting flights with one or more segments operated by its other airline partners. For segments operated by its other airline partners, the Company has determined that it is acting as an agent on behalf of the other airlines as they are responsible for their portion of the contract (i.e. transportation of the passenger). The Company, as the agent, recognizes revenue within Other operating revenue at the time of the travel for the net amount representing commission to be retained by the Company for any segments flown by other airlines.

Refundable tickets expire after one year from the date of issuance. Non-refundable tickets generally expire on the date of the intended travel, unless the date is extended by notification from the customer on or before the intended travel date.

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. Fees charged in association with changes or extensions to non-refundable tickets are considered part of the Company's passenger travel obligation. As such, those fees are deferred at the time of collection and recognized at the time the travel is provided.

United initially capitalizes the costs of selling airline travel tickets and then recognizes those costs as Distribution expense at the time of travel. Passenger ticket costs include credit card fees, travel agency and other commissions paid, as well as global distribution systems booking fees.

~~Ticket Taxes.~~ Certain governmental taxes are imposed on the Company's ticket sales through a fee included in ticket prices. The Company collects these fees and remits them to the appropriate government agency. These fees are recorded on a net basis and, as a result, are excluded from revenue.

~~Accounts Receivable.~~ Accounts receivable primarily consist of amounts due from credit card companies, non-airline partners, and cargo transportation customers. We provide an allowance for uncollectible accounts equal to the estimated losses expected to be incurred based on historical write-offs and other specific analyses. Bad debt expense and write-offs were not material for the three and six months ended June 30, 2018 and 2017.



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Advance Ticket Sales. Advance ticket sales represent the Company's liability to provide air transportation in the future. In the three and six months ended June 30, 2018, the Company recognized approximately $2.7 billion and $2.2 billion, respectively, and in the three and six months ended June 30, 2017, the Company recognized approximately $2.6 billion and $2.2 billion respectively, of passenger revenue for tickets that were included in Advance ticket sales at the beginning of those periods. All tickets sold at any given point of time have travel dates extending up to ~~twelve~~12 months. The Company defers amounts related to future travel in its Advance ticket sales liability account. As a result, the balance of the Company's Advance ticket sales liability represents activity that will be recognized in the next ~~twelve~~12 months.

~~Frequent Flyer Accounting.~~ ~~United's MileagePlus program builds customer loyalty by offering awards, benefits~~ In the three and services to program participants. Members in this program earn miles for travel on United, United Express, Star Alliance members and certain other airlines that participate in the program. Members can also earn miles by purchasing the goods and services of our network of non-airline partners. We have contracts to sell miles to these partners with the terms extending from one to eight years. These partners include domestic and international credit card issuers, retail merchants, hotels, car rental companies and our participating airline partners. Miles can be redeemed for free (other than taxes and government imposed fees), discounted or upgraded air travel and non-travel awards. Miles expire after 18six months ~~of member account inactivity.~~

~~Miles Earned in Conjunction with Travel.~~ ~~When frequent flyers earn miles for flights,~~ended June 30, 2019, the Company ~~recognizes a portion of the ticket sales as revenue when the travel occurs~~recognized approximately $3.9 billion and ~~defers a portion of the ticket sale representing the value of the related miles as a separate performance obligation. The Company determines the estimated selling price of travel~~$3.2 billion, respectively, and miles as if each element is sold on a separate basis. The total consideration from each ticket sale is then allocated to each of these elements, individually, on a pro rata basis. At the time of travel, the Company records the portion allocated to the miles to Frequent flyer deferred revenue on the Company's consolidated balance sheet and subsequently recognizes it into revenue when miles are redeemed for air travel and non-air travel awards.

The Company's estimated selling price of miles is based on an equivalent ticket value less breakage, which incorporates the expected redemption of miles, as the best estimate of selling price for these miles. The equivalent ticket value is based on the prior 12 months' weighted average equivalent ticket value of similar fares as those used to settle award redemptions while taking into consideration such factors as redemption pattern, cabin class, loyalty status and geographic region. The estimated selling price of miles is adjusted by breakage that considers a number of factors, including redemption patterns of various customer groups. The Company reviews its breakage estimates annually based upon the latest available information regarding redemption and expiration patterns. The Company's estimate of the expected expiration of miles requires significant management judgment. Current and future changes to expiration assumptions or to the expiration policy, or to program rules and program redemption opportunities, may result in material changes to the deferred revenue balance as well as recognized revenues from the program. For the portion of the outstanding miles that we estimate will not be redeemed, we recognize the associated value proportionally as the remaining miles are redeemed.

~~Co-Brand Agreement~~. United has a significant contract to sell MileagePlus miles to its co-branded credit card partner Chase Bank USA, N.A. ("Chase"). Chase awards miles to MileagePlus members based on their credit card activity. United identified the following significant separately identifiable performance obligations in the co-brand agreement:

MileagePlus miles awarded - United has a performance obligation to provide MileagePlus cardholders with miles to be used for air travel and non-travel award redemptions. The Company records Passenger revenue related to the travel awards when the transportation is provided and records Other revenue related to the non-travel awards when the goods or services are delivered. The Company records the cost associated with non-travel awards in Other operating revenue.

Marketing - United's performance obligation is to provide Chase access to its customer list and the use of its brand. United determined access to its customer list and use of the United brand constitute a single performance obligation by virtue of being highly interdependent and interrelated. Marketing revenue is recorded to Other operating revenue over the term of the co-brand agreement based on customers' use of the MileagePlus credit card.

Advertising - United has a performance obligation to provide advertising in support of the MileagePlus card in various customer contact points such as United's website, email promotions, direct mail campaigns, airport advertising and in-flight advertising. Advertising revenue is recorded to Other operating revenue as advertising is provided over the term of the co-brand agreement in accordance with customers' use of the MileagePlus credit card.

Other travel-related benefits - United's performance obligations are comprised of various items such as waived bag fees, seat upgrades, and lounge passes. Lounge passes are recorded to Other operating revenue as customers use the lounge passes. Bag fees and seat upgrades are recorded to Passenger revenue at the time of the associated travel.

The fair value of the separately identifiable performance obligations is determined using management's estimated selling price of each component. The objective of using the estimated selling price based methodology is to determine the price at which we



~~Table of Contents~~

would transact a sale if the product or service were sold on a stand-alone basis. Accordingly, we determine our best estimate of selling price by considering multiple inputs and methods including, but not limited to, discounted cash flows, brand value, volume discounts, published selling prices, number of miles awarded and number of miles redeemed. The Company estimated the selling prices and volumes over the term of the co-brand agreement in order to determine the allocation of proceeds to each of the components to be delivered. We also evaluate volumes on an annual basis, which may result in a change in the allocation of the estimated consideration from the co-brand agreement on a prospective basis.

~~Frequent flyer deferred revenue.~~ Miles in MileagePlus members' accounts are combined into one homogeneous pool and are thus not separately identifiable, for award redemption purposes, between miles earned in the current period and those in their beginning balance. Of the miles expected to be redeemed, the Company expects the majority of these miles to be redeemed within two years. The table below presents a roll forward of Frequent flyer deferred revenue (in millions):

Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 2017
Total Frequent flyer deferred revenue - beginning balance $ 4,937
$ 4,940
$ 4,783
$ 4,889
Total miles awarded 607
531
1,210
1,019
Travel miles redeemed (Passenger revenue) (519 ) (535 ) (928 ) (933 )
Non-travel miles redeemed (Other operating revenue) (36 ) (45 ) (76 ) (84 )
Total Frequent flyer deferred revenue - ending balance $ 4,989
$ 4,891
$ 4,989
$ 4,891

In the three and six months ended June 30, 2018, the Company recognized ~~in Other operating revenue, $480 million~~approximately $3.5 billion and ~~$974 million,~~$2.9 billion, respectively, ~~related to the marketing, advertising, non-travel miles redeemed (net~~ of related costs) and other travel-related benefits of the mileage revenue associated with our various partner agreements including, but not limited to, our Chase co-brand agreement. The portion related to the MileagePlus miles awarded of the total amounts received is deferred and presented in the table above as an increase to the frequent flyer liability. The Company recognized $459 million and $873 million, respectively, in the three and six months ended June 30, 2017, related to those revenues.

~~Passenger Revenue by Geography.~~ ~~The Company further disaggregates~~ passenger revenue ~~by geographic regions and by mainline versus regional. The following table presents passenger revenue by geographic region and by mainline versus regional~~ for tickets that were included in Advance ticket sales at the ~~three and six months ended June 30 (in millions):~~beginning of those periods.

Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 2017
Mainline $ 4,395
$ 4,043
$ 7,881
$ 7,315
Regional 1,786
1,615
3,269
2,994
Domestic 6,181
5,658
11,150
10,309

Atlantic 1,824
1,615
3,076
2,732
Pacific 1,103
1,064
2,172
2,117
Latin America 772
814
1,632
1,646
International 3,699
3,493
6,880
6,495

Consolidated $ 9,880
$ 9,151
$ 18,030
$ 16,804

Mainline 8,045
7,492
14,661
13,719
Regional 1,835
1,659
3,369
3,085
Consolidated $ 9,880
$ 9,151
$ 18,030
$ 16,804

Ancillary Fees.The Company charges fees, separately from ticket sales, for certain ancillary services that are directly related to passengers' travel, such as ticket change fees, baggage 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 ~~$555~~$636 million and ~~$1,052 million~~$1.2 billion of ancillary fees within passenger revenue in the three and six months ended June 30, 2019, respectively. The Company recorded $555 million and $1.1 billion of ancillary fees within passenger revenue in the three and six months ended June 30, 2018, respectively.

Frequent Flyer Accounting. The table below presents a roll forward of Frequent flyer deferred revenue (in millions):



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Total Frequent flyer deferred revenue - beginning balance	$	5,138		$	4,937		$	5,005		$	4,783
Miles awarded	682			607			1,289			1,210
Travel miles redeemed (Passenger revenue)	(589		)	(519		)	(1,027		)	(928		)
Non-travel miles redeemed (Other operating revenue)	(33		)	(36		)	(69		)	(76		)
Total Frequent flyer deferred revenue - ending balance	$	5,198		$	4,989		$	5,198		$	4,989

In the three and six months ended June 30, 2019, the Company recognized, in Other operating revenue, $499 million and $972 million, respectively, related to the marketing, advertising, non-travel miles redeemed (net of related costs) and other travel-related benefits of the mileage revenue associated with our various partner agreements including, but not limited to, our Chase co-brand agreement. The Company recognized $480 million and $974 million, respectively, in the three and six months ended June 30, 2018, related to those revenues. The portion related to the MileagePlus miles awarded of the total amounts received from our various partner agreements is deferred and presented in the table above as an increase to the frequent flyer liability.



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~~ended June 30, 2018, respectively, and recorded $524 million and $1,002 million of such fees in the three and six months ended June 30, 2017, respectively.~~

NOTE 3 - EARNINGS PER SHARE

The computations of UAL's basic and diluted earnings per share are set forth below (in millions, except per share amounts):



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Earnings available to common stockholders	$	1,052	$	683	$	1,344	$	828

Basic weighted-average shares outstanding	260.8		274.7		263.9		279.3
Effect of employee stock awards	0.8		0.9		1.0		0.9
Diluted weighted-average shares outstanding	261.6		275.6		264.9		280.2

Earnings per share, basic	$	4.03	$	2.48	$	5.09	$	2.96
Earnings per share, diluted	$	4.02	$	2.48	$	5.07	$	2.95

Three Months Ended
June 30, Six Months Ended
June 30,
2018 2017 2018 2017
Earnings available to common stockholders $ 684
$ 821
$ 831
$ 920

Basic weighted-average shares outstanding 274.7
306.9
279.3
310.3
Effect of employee stock awards 0.9
0.8
0.9
0.8
Diluted weighted-average shares outstanding 275.6
307.7
280.2
311.1

Earnings per share, basic $ 2.49
$ 2.67
$ 2.97
$ 2.96
Earnings per share, diluted $ 2.48
$ 2.67
$ 2.96
$ 2.96

~~The number of potentially dilutive securities excluded from the computation of diluted earnings per share amounts was not material.~~

In the three and six months ended June 30, ~~2018,~~2019, UAL repurchased approximately ~~5.9~~6.4 million and ~~14.3~~12.7 million shares, respectively, of UAL common stock in open market transactions for ~~$0.4~~$0.5 billion and ~~$1.0~~$1.1 billion, respectively. As of June 30, ~~2018,~~2019, the Company had approximately ~~$2.0~~$0.7 billion remaining to purchase shares under its December 2017 repurchase authorization. On July 15, 2019, UAL’s Board of Directors authorized a new $3.0 billion share repurchase ~~program.~~program to acquire UAL’s common stock. UAL may repurchase shares through the open market, privately negotiated transactions, block trades or accelerated share repurchase transactions from time to time in accordance with applicable securities laws. UAL will repurchase shares of UAL common stock subject to prevailing market conditions, and may discontinue such repurchases at any time. See Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds of this report for additional information.



~~Table of Contents~~

NOTE 4 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The tables below present the components of the Company's accumulated other comprehensive income (loss), net of tax ("AOCI") (in millions):



UAL	Pension and Other Postretirement Liabilities				Investments and Other			Deferred Taxes			Total
UAL	Pension and Other Postretirement Liabilities				Investments and Other			Deferred Taxes			Total
Balance at March 31, 2019	$	(654	)		$	1		$	(140	)	$	(793	)
Changes in value	(29		)		2			7			(20		)
Amounts reclassified to earnings	8				—			(2		)	6
Balance at June 30, 2019	$	(675	)		$	3		$	(135	)	$	(807	)
Balance at December 31, 2018	$	(663	)		$	(4	)	$	(136	)	$	(803	)
Changes in value	(24		)		7			4			(13		)
Amounts reclassified to earnings	12			(a)	—			(3		)	9
Balance at June 30, 2019	$	(675	)		$	3		$	(135	)	$	(807	)

Balance at March 31, 2018	$	(1,063	)		$	(3	)	$	(48	)	$	(1,114	)
Changes in value	1				1			—			2
Amounts reclassified to earnings	14				—			(4		)	10
Balance at June 30, 2018	$	(1,048	)		$	(2	)	$	(52	)	$	(1,102	)
Balance at December 31, 2017	$	(1,102	)		$	(6	)	$	(39	)	$	(1,147	)
Changes in value	24				(3		)	(6		)	15
Amounts reclassified to earnings	30			(a)	—			(7		)	23
Amounts reclassified to retained earnings	—				7			—			7
Balance at June 30, 2018	$	(1,048	)		$	(2	)	$	(52	)	$	(1,102	)

UAL Pension and Other Postretirement Liabilities
Investments and Other
Income Taxes
Total

Balance at March 31, 2018 $ (1,063 )
$ (3 )
$ (48 )
$ (1,114 )
Changes in value 1
1
—
2
Amounts reclassified to earnings 14
—
(4 ) 10
Net change 15

1

(4 )
12
Balance at June 30, 2018 $ (1,048 )
$ (2 )
$ (52 )
$ (1,102 )
Balance at December 31, 2017 $ (1,102 )
$ (6 )
$ (39 )
$ (1,147 )
Changes in value 24
(3 ) (6 ) 15
Amounts reclassified to earnings 30
—
(7 ) 23
Amounts reclassified to retained earnings —
7
—
7
Net change 54

4

(13 )
45
Balance at June 30, 2018 $ (1,048 )
$ (2 )
$ (52 )
$ (1,102 )

Balance at March 31, 2017 $ (867 ) $ 1
$ 30
$ (836 )
Changes in value (7 ) (17 ) 8
(16 )
Amounts reclassified to earnings 14
—
(6 ) 8
Net change 7
(17 ) 2
(8 )
Balance at June 30, 2017 $ (860 ) $ (16 ) $ 32
$ (844 )
Balance at December 31, 2016 $ (854 ) $ (1 ) $ 26
$ (829 )
Changes in value (33 ) (17 ) 18
(32 )
Amounts reclassified to earnings 27
2
(12 ) 17
Net change (6 ) (15 ) 6
(15 )
Balance at June 30, 2017 $ (860 ) $ (16 ) $ 32
$ (844 )

Details for AOCI Components Reclassified to Income Three Months Ended June 30, Six Months Ended June 30,
Affected Line Item
in the Statements of
Consolidated Operations
2018 2017 2018 2017
Pension and other postretirement liabilities
Amortization of unrecognized losses and prior service cost (a)
$ 14
$ 14
$ 30
$ 27
Miscellaneous, net
Investments and Other
Reclassifications of losses into earnings related to fuel derivative contracts —
—
—
2
Aircraft fuel

(a) This AOCI component is included in the computation of net periodic pension and other postretirement costs ~~(see~~(See Note 6 to the financial statements included in ~~this~~ Part I, Item 1 for additional information).



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NOTE 5 - INCOME TAXES

The Company's effective tax rate for the three and six months ended June 30, ~~2018~~2019 was ~~20.2%~~22.3% and 21.9%, ~~and the~~respectively. The effective tax rate for the three and six months ended June 30, ~~2017~~2018 was ~~35.7%~~20.1% and ~~35.5%~~20.2%, respectively. The effective tax rate represents a blend of federal, state and foreign taxes and ~~included~~includes the impact of certain nondeductible items. The effective tax rate for the three and six months ended June 30, 2018 also reflects the reduced federal corporate income tax rate as a result of the enactment of the Tax Cuts and Jobs Act (the "Tax Act") in December 2017items and the impact of a change in the Company's mix of domestic and foreign earnings. ~~We continue to analyze the different aspects of the Tax Act which could potentially affect the provisional estimates that were recorded at December 31, 2017.~~

NOTE 6 - EMPLOYEE BENEFIT PLANS

Defined Benefit Pension and Other Postretirement Benefit Plans. The Company's net periodic benefit cost includes the following components for the three months ended June 30 (in millions):


	Pension Benefits						Other Postretirement Benefits						Affected Line Item in the Statements of Consolidated Operations	Pension Benefits						Other Postretirement Benefits						Affected Line Item in the Statements of Consolidated Operations
	2018			2017			2018			2017				2019			2018			2019			2018
Service cost	$	57		$	49		$	3		$	4		Salaries and related costs	$	46		$	57		$	3		$	3		Salaries and related costs
Interest cost	54			55			15			17			Miscellaneous, net	57			54			14			15			Miscellaneous, net
Expected return on plan assets	(73		)	(61		)	—			(1		)	Miscellaneous, net	(73		)	(73		)	(1		)	—			Miscellaneous, net
Amortization of unrecognized (gain) loss and prior service cost (credit)	32			32			(18		)	(18		)	Miscellaneous, net
Amortization of unrecognized (gain) loss														29			32			(15		)	(8		)	Miscellaneous, net
Amortization of prior service credit														—			—			(9		)	(10		)	Miscellaneous, net
Settlement loss	—			1			—			—			Miscellaneous, net	3			—			—			—			Miscellaneous, net
Total	$	70		$	76		$	—		$	2			$	62		$	70		$	(8	)	$	—

The Company's net periodic benefit cost includes the following components for the six months ended June 30 (in millions):


	Pension Benefits						Other Postretirement Benefits						Affected Line Item in the Statements of Consolidated Operations	Pension Benefits						Other Postretirement Benefits						Affected Line Item in the Statements of Consolidated Operations
	2018			2017			2018			2017				2019			2018			2019			2018
Service cost	$	114		$	98		$	6		$	6		Salaries and related costs	$	92		$	114		$	5		$	6		Salaries and related costs
Interest cost	108			110			30			34			Miscellaneous, net	114			108			29			30			Miscellaneous, net
Expected return on plan assets	(146		)	(121		)	—			(1		)	Miscellaneous, net	(145		)	(146		)	(1		)	—			Miscellaneous, net
Amortization of unrecognized (gain) loss and prior service cost (credit)	65			63			(35		)	(36		)	Miscellaneous, net
Amortization of unrecognized (gain) loss														58			65			(30		)	(16		)	Miscellaneous, net
Amortization of prior service credit														—			—			(19		)	(19		)	Miscellaneous, net
Settlement loss	—			2			—			—			Miscellaneous, net	3			—			—			—			Miscellaneous, net
Total	$	141		$	152		$	1		$	3			$	122		$	141		$	(16	)	$	1

During the three and six months ended June 30, ~~2018,~~2019, the Company contributed ~~$47~~$150 million and ~~$160~~$300 million, respectively, to its U.S. domestic tax-qualified defined benefit pension ~~plans, respectively.~~plans.

Share-Based Compensation. In the six months ended June 30, ~~2018,~~2019, UAL granted share-based compensation awards pursuant to the United Continental Holdings, Inc. 2017 Incentive Compensation Plan. These share-based compensation awards include ~~1.8~~1.1 million ~~RSUs~~restricted stock units ("RSUs"), consisting of ~~1.1~~0.8 million time-vested RSUs and ~~0.7~~0.3 million performance-based RSUs. The time-vested RSUs vest pro-rata, on February 28th of each year, over a ~~three-year~~ period of three years from the date of grant. ~~These~~The amount of performance-based RSUs vest based on the Company's relative improvement in pre-tax margin, as compared to a group of industry peers, for the three years ending December 31, 2021. RSUs are generally equity awards settled in stock for domestic employees and liability awards settled in cash for international employees. The cash payments are based on the 20-day average closing price of UAL common stock immediately prior to the vesting date. The performance-based RSUs vest based on the Company's relative improvement in pre-tax margin, as compared to a group of industry peers, for the three years ending December 31, 2020. If this performance condition is achieved, cash payments will be made after the end of the performance period based on the 20-day average closing price of UAL common stock immediately prior to the vesting date. The Company accounts for the performance-based RSUs as liability awards.



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The table below presents information related to share-based compensation (in millions):



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Share-based compensation expense	$	21	$	27	$	37	$	44

	June 30, 2019		December 31, 2018
Unrecognized share-based compensation	$	110	$	68

Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 2017
Share-based compensation expense $ 27
$ 33
$ 44
$ 56

June 30, 2018 December 31, 2017
Unrecognized share-based compensation $ 86
$ 53

NOTE 7 - BRW TERM LOAN

In November 2018, United, as lender, entered into a Term Loan Agreement (the "BRW Loan Agreement") with, among others, BRW Aviation Holding LLC and BRW Aviation LLC (“BRW”), as guarantor and borrower, respectively, affiliates of Synergy Aerospace Corporation (“Synergy”), the majority shareholder of Avianca Holdings S.A. (“AVH”), as guarantor and borrower, respectively. Pursuant to the BRW Loan Agreement, United provided a $456 million term loan to BRW (the "BRW Term Loan"), secured by a pledge of BRW's equity, as well as BRW's 516 million shares of common stock of AVH (having an implied value equivalent to 64.5 million American Depositary Receipts ("ADRs"), the class of AVH securities that trades on the New York Stock Exchange (the "NYSE")), the parent company of Aerovías del Continente Americano S.A. BRW is currently in default under the BRW Loan Agreement.

On May 13, 2019, S&P Global Ratings downgraded its AVH issuer level credit ratings from B to CCC+, together with accompanying downgrades for AVH’s frequent flyer subsidiary LifeMiles Ltd. ("LifeMiles") and for certain outstanding debt of both AVH and LifeMiles. Following these downgrades, and in order to protect the value of its collateral, on May 24, 2019, United began to exercise remedies available to it under the terms of the BRW Loan Agreement and related documents. In connection with the delivery by United of a notice of default to BRW, Kingsland Holdings Limited ("Kingsland"), AVH’s largest minority shareholder, was granted, in accordance with the agreements related to the BRW Loan Agreement, independent authority to manage BRW, which remains the majority shareholder of AVH. As a result of these developments, United evaluated the $489 million carrying value of the BRW Term Loan as of June 30, 2019 using the fair value of the collateral and determined that the value of the collateral is sufficient to recover the carrying value of the loan and, accordingly, concluded that the BRW Term Loan is not impaired.

The fair market value of AVH equity was estimated using an income approach and a market approach with equal weight applied to each approach. Under the income approach, the value was estimated by discounting expected future cash flows at a weighted average cost of capital to a single present value amount. Under the market approach, the value was estimated by reference to multiples of enterprise value to earnings before interest, taxes, depreciation, amortization and rent ("EBITDAR") for a group of publicly-traded market comparable companies, along with AVH's own EBITDAR levels.



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NOTE 78 - FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

The table below presents disclosures about the financial assets and liabilities measured at fair value on a recurring basis in UAL's financial statements (in millions):



	June 30, 2019								December 31, 2018
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	3,221	$	3,221	$	—	$	—	$	1,694	$	1,694	$	—	$	—
Short-term investments:
Corporate debt	1,053		—		1,053		—		1,023		—		1,023		—
Asset-backed securities	697		—		697		—		746		—		746		—
U.S. government and agency notes	116		—		116		—		108		—		108		—
Certificates of deposit placed through an account registry service ("CDARS")	59		—		59		—		75		—		75		—
Other fixed-income securities	107		—		107		—		116		—		116		—
Other investments measured at net asset value ("NAV")	191		—		—		—		188		—		—		—
Restricted cash	105		105		—		—		105		105		—		—
Long-term investments:
Equity securities	301		301		—		—		249		249		—		—
Enhanced equipment trust certificates ("EETC")	16		—		—		16		18		—		—		18
AVH Derivative Assets (defined below)	10		—		—		10		11		—		—		11

June 30, 2018 December 31, 2017
Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3
Cash and cash equivalents $ 2,884
$ 2,884
$ —
$ —
$ 1,482
$ 1,482
$ —
$ —
Short-term investments:
Corporate debt 958
—
958
—
958
—
958
—
Asset-backed securities 722
—
722
—
753
—
753
—
U.S. government and agency notes 102
—
102
—
113
—
113
—
Certificates of deposit placed through an account registry service ("CDARS") 49
—
49
—
120
—
120
—
Other fixed-income securities 170
—
170
—
188
—
188
—
Other investments measured at net asset value ("NAV") 186
—
—
—
184
—
—
—
Restricted cash 107
107
—
—
109
109
—
—
Long-term investments:

Equity securities 147
147
—
—
99
99
—
—
Enhanced equipment trust certificates ("EETC") 19
—
—
19
22
—
—
22

Available-for-sale investment maturities - The short-term investments shown in the table above are classified as available-for-sale, with the exception of investments measured at NAV. As of June 30, ~~2018~~,2019, asset-backed securities have remaining maturities of less than one year to approximately 1615 years, corporate debt securities have remaining maturities of less than one year to approximately three years and CDARS have maturities of less than one year. U.S. government and agency notes have maturities of approximately three years or less and other fixed-income securities have maturities of ~~less than one year to approximately 13 years.~~two years or less. The EETC securities mature in July 2019.

Restricted cash - Restricted cash primarily includes collateral for letters of credit and collateral associated with ~~obligations for~~ facility leases and ~~workers' compensation.~~other insurance-related obligations.

Equity securities - Equity securities represent United's investment in ~~Azul. In April 2018, through~~Azul Linhas Aéreas Brasileiras S.A. ("Azul"), consisting of a ~~wholly-owned subsidiary, the Company invested $138 million in Azul thus increasing its~~ preferred equity stake toof approximately 8% (approximately 2% of the total capital stock of Azul). The Company recognizes changes to the fair market value of its equity investment in Azul in Miscellaneous, net in its statements of consolidated operations.

AVH Derivative Assets - As part of the BRW Loan Agreement and related agreements with Kingsland, United obtained AVH share call options, AVH share appreciation rights, and an AVH share-based upside sharing agreement (collectively, the "AVH Derivative Assets"). The AVH Derivative Assets are recorded at fair value as Other assets on the Company's balance sheet and are included in the table above. Changes in the fair value of the AVH Derivative Assets are recorded as part of Nonoperating income (expense): Miscellaneous, net on the Company's statements of consolidated operations.

Investments presented in the table above have the same fair value as their carrying value. The table below presents the carrying values and estimated fair values of financial instruments not presented in the tables above (in millions):



	June 30, 2019										December 31, 2018
	Carrying Amount		Fair Value								Carrying Amount		Fair Value
			Total		Level 1		Level 2		Level 3				Total		Level 1		Level 2		Level 3
Long-term debt	$	14,193	$	14,691	$	—	$	10,915	$	3,776	$	13,445	$	13,450	$	—	$	9,525	$	3,925

Fair Value of Debt by Fair Value Hierarchy Level
June 30, 2018 December 31, 2017
Carrying Amount Fair Value Carrying Amount Fair Value
Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3
Long-term debt $ 13,347
$ 13,443
$ —
$ 9,879
$ 3,564
$ 13,268
$ 13,787
$ —
$ 10,115
$ 3,672



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Fair value of the financial instruments included in the tables above was determined as follows:



Description		Fair Value Methodology
Cash and cash equivalents		The carrying amounts approximate fair value because of the short-term maturity of these assets.

Short-term investments, Equity securities, EETC and Restricted cash		Fair value is based on (a) the trading prices of the investment or similar instruments, (b) an income approach, which uses valuation techniques to convert future amounts into a single present amount based on current market expectations about those future amounts when observable trading prices are not available, or (c) broker quotes obtained by third-party valuation services.

Other investments measured at NAV		In accordance with the relevant accounting standards, certain investments that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the table above are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position. The investments measured using NAV are shares of mutual funds that invest in fixed-income instruments including bonds, debt securities, and other similar instruments issued by various U.S. and non-U.S. public- or private-sector entities. The Company can redeem its shares at any time at NAV subject to a three-day settlement period.

Long-term debt		Fair values were based on either market prices or the discounted amount of future cash flows using our current incremental rate of borrowing for similar ~~liabilities.~~liabilities or assets.
AVH Derivative Assets	Fair values are calculated using a Monte Carlo simulation approach. Unobservable inputs include expected volatility, expected dividend yield and control and acquisition premiums.

NOTE 9 - LEASES

United leases aircraft, airport passenger terminal space, aircraft hangars and related maintenance facilities, cargo terminals, other airport facilities, other commercial real estate, office and computer equipment and vehicles, among other items. Certain of these leases include provisions for variable lease payments which are based on several factors, including, but not limited to, relative leased square footage, available seat miles, enplaned passengers, passenger facility charges, terminal equipment usage fees, departures, and airports’ annual operating budgets. Due to the variable nature of the rates, these leases are not recorded on our balance sheet as a right-of-use asset and lease liability.

For leases with terms greater than 12 months, we record the related asset and lease liability at the present value of lease payments over the lease term. Leases with an initial term of 12 months or less with purchase options or extension options that are not reasonably certain to be exercised are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the term of the lease. We combine lease and non-lease components, such as common area maintenance costs, in calculating the right-of-use assets and lease liabilities for all asset groups except for our capacity purchase agreements ("CPAs"), which contain embedded leases for regional aircraft. In addition to the lease component cost for regional aircraft, our CPAs also include non-lease components primarily related to the regional carriers’ operating costs incurred in providing regional aircraft services. We allocate consideration separately for the lease components and non-lease components of each CPA based on their relative standalone values.

Lease Cost. The Company's lease cost for the three and six months ended June 30 included the following components (in millions):



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Operating lease cost	$	259		$	312		$	531		$	638
Variable and short-term lease cost	661			669			1,267			1,280
Amortization of finance lease assets	18			17			36			40
Interest on finance lease liabilities	32			4			59			9
Sublease income	(9		)	(11		)	(17		)	(21		)
Total lease cost	$	961		$	991		$	1,876		$	1,946



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Lease terms and commitments. United's leases include aircraft leases for aircraft that are directly leased by United and aircraft that are operated by regional carriers on United's behalf under CPAs (but excluding aircraft owned by United) and non-aircraft leases. Aircraft operating leases relate to leases of 121 mainline and 339 regional aircraft while finance leases relate to leases of 26 mainline and 47 regional aircraft. United's aircraft leases have remaining lease terms of 1 month to 10 years with expiration dates ranging from 2019 through 2029. Under the terms of most aircraft leases, United has the right to purchase the aircraft at the end of the lease term, in some cases at fair market value, and in others, at a percentage of cost.

Non-aircraft leases have remaining lease terms of 1 month to 34 years, with expiration dates ranging from 2019 through 2053.

The table below summarizes the Company's scheduled future minimum lease payments under operating and finance leases, recorded on the balance sheet, as of June 30, 2019 (in millions):



	Operating Leases			Finance Leases
Last six months of 2019	$	428		$	157
2020	989			58
2021	766			54
2022	634			44
2023	621			33
After 2023	4,331			70
Minimum lease payments	7,769			416
Imputed interest	2,098			97
Present value of minimum lease payments	5,671			319
Less: current maturities of lease obligations	(637		)	(117		)
Long-term lease obligations	$	5,034		$	202

As of June 30, 2019, we have additional leases of approximately $570 million for regional jets under a CPA and a maintenance facility that have not yet commenced. These leases will commence between 2019 and 2020 with lease terms of up to 34 years.

To the extent a lease agreement includes an extension option that is reasonably certain to be exercised, we have recognized those amounts as part of our right-of-use assets and lease liabilities.

Our lease agreements do not provide a readily determinable implicit rate nor is it available to us from our lessors. Instead, we estimate United's incremental borrowing rate based on information available at lease commencement in order to discount lease payments to present value. The table below presents additional information related to our leases as of June 30:



	2019			2018
Weighted-average remaining lease term - operating leases	10 years			10 years
Weighted-average remaining lease term - finance leases	5 years			5 years
Weighted-average discount rate - operating leases	5.3	%		5.1	%
Weighted-average discount rate - finance leases	53.2	%	(a)	6.7	%

(a) During the third quarter of 2018, United entered into an agreement with the lessor of 54 Embraer ERJ 145 aircraft to purchase those aircraft in 2019. The provisions of these lease agreements resulted in a change in accounting classification of these leases from operating leases to finance leases up until the purchase date. The discount rates used for these leases were adjusted so that the present value of lease payments did not exceed the fair value of the asset being recognized.

The table below presents supplemental cash flow information related to leases during the six months ended June 30 (in millions):



	2019		2018
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	507	$	552
Operating cash flows for finance leases	47		9
Financing cash flows for finance leases	63		35



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NOTE 810 - COMMITMENTS AND CONTINGENCIES

Commitments. As of June 30, ~~2018~~2019, United had firm commitments and options to purchase aircraft from The Boeing Company ("Boeing") ~~and~~, Airbus S.A.S. ("Airbus") and Embraer S.A. ("Embraer") presented in the table below:



		Scheduled Aircraft Deliveries
Aircraft Type	Number of Firm Commitments (a)	Last Six Months of 2019	2020	After 2020
Airbus A350	45	—	—	45
Boeing 737 MAX	171	16	28	127
Boeing 777-300ER	4	2	2	—
Boeing 787	18	2	15	1
Embraer E175	38	18	20	—
(a) United also has options and purchase rights for additional aircraft.



~~Aircraft Type~~		~~Number of Firm~~ ~~Commitments (a)~~
~~Airbus A350~~		45
~~Boeing 737 MAX~~		~~155~~
~~Boeing 777-300ER~~		1
~~Boeing 787~~		18
~~(a) United also has options, purchase and other rights for additional aircraft.~~

The aircraft listed in the table above are scheduled for delivery through 2027. To the extent the Company and the aircraft manufacturers with whom the Company has existing orders for new aircraft agree to modify the contracts governing those orders, the amount and timing of the Company's future capital commitments could change. For the remainder of 2018, the Company expects to take delivery of three Boeing 787 aircraft, four Boeing 737 MAX aircraft, one Boeing 777-300ER aircraft and three used Boeing 767-300ER aircraft. In July 2018, United entered into an agreement to purchase 25 new Embraer E175 aircraft with expected delivery dates scheduled in 2019. United also has ~~an agreement~~agreements to purchase 20 used Airbus A319 aircraft with expected delivery dates through 2022 and 19 used Boeing 737-700 aircraft with expected delivery dates in 2019 through 2021.

During the second quarter of 2019, the Company placed an order for 20 additional Embraer E175 aircraft which will be operated by a regional carrier.

During the third quarter of 2018, United entered into an agreement with the lessor of 54 Embraer ERJ 145 aircraft to purchase those aircraft in 2019. As of June 30, 2019, United had purchased 17 of those aircraft.

The table below summarizes United's commitments as of June 30, ~~2018,~~2019, which ~~primarily relate to the acquisition of~~include aircraft and related spare engines, aircraft improvements and ~~include~~all non-aircraft capital commitments:



	(in billions)
Last six months of 2019	$	2.2
2020 (a)	5.9
2021	4.0
2022	3.3
2023	2.0
After 2023	6.9
	$	24.3

(a) Commitments for 2020 are expected to be higher than other ~~capital purchase commitments. Any~~years displayed in the table above due to the large number of wide-body aircraft deliveries (17 new ~~firm~~aircraft) scheduled in that year. Amounts are not adjusted for any potential changes in the delivery schedule of the Boeing 737 MAX aircraft.

Regional CPAs. In June 2019, United entered into a ten-year CPA with GoJet Airlines for regional service under the United Express brand to operate 54 CRJ-550 aircraft ~~orders, including~~commencing in the second half of 2019.

The table below summarizes the Company's expected future payments through the ~~exercise of purchase options and purchase rights, will increase the total future capital commitments~~end of the ~~Company.~~terms of our CPAs, excluding aircraft ownership costs and variable pass-through costs such as fuel and landing fees, among others.



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	(in billions)
Last six months of 2019	$	1.1
2020	2.1
2021	2.1
2022	1.7
2023	1.1
After 2023	4.4
	$	12.5

(in billions)
Last six months of 2018 $ 1.7
2019 3.3
2020 3.0
2021 2.8
2022 1.8
After 2022 9.8
$ 22.4

~~Facility and Other Operating Leases.~~ In March 2018, United entered into a new Airline Use and Lease Agreement at Chicago O'Hare International Airport ("Chicago O'Hare") with the City of Chicago with a lease term of approximately 15 years, effective May 12, 2018 through December 31, 2033. In the second quarter of 2018, United entered into several new ground and facility leases at Chicago O'Hare, effective May 12, 2018, for hangars, a ground equipment maintenance building, and employee parking with lease terms ranging from 15 years to 30 years.

The table below summarizes the Company's scheduled future minimum lease payments under facility operating leases having initial or remaining noncancelable lease terms of more than one year as of June 30, 2018 (in millions):

Facility and Other Operating Leases
Last six months of 2018 $ 689
2019 1,244
2020 1,338
2021 1,104
2022 966
After 2022 7,934
$ 13,275

Guarantees. As of June 30, ~~2018,~~2019, United is the guarantor of approximately ~~$2.0~~$1.9 billion in aggregate principal amount of tax-exempt special facilities revenue bonds and interest thereon. These bonds, issued by various airport municipalities, are payable solely from rentals paid under long-term agreements with the respective governing bodies. The leasing arrangements associated with ~~approximately $1.4 billion of~~ these obligations are accounted for as operating leases recognized on the Company's balance sheet with the associated expense recorded on a straight-line basis resulting in ratable accrual of the lease obligation over the expected lease term. The ~~leasing arrangements~~obligations associated with ~~approximately $454 million~~these tax-exempt special facilities revenue bonds are included in our lease commitments disclosed in Note 9 of ~~these obligations are accounted for as capital leases.~~this report. All of these bonds are due between 2019 and 2038.

AsIn connection with funding the BRW Loan Agreement, the Company entered into an agreement with Kingsland, pursuant to which, in return for Kingsland's pledge of ~~June 30,~~its 144.8 million shares of AVH common stock (having an implied value equivalent to 18.1 million ADRs) and its consent to Synergy's pledge of its AVH common stock to United under the BRW Loan Agreement and related agreements, United (1) granted to Kingsland the right to put its shares of AVH common stock to United at market price on the fifth anniversary of the BRW Loan Agreement, and (2) guaranteed Synergy's obligation to pay Kingsland (which amount, if paid by United, will increase United's secured loan to Synergy by such amount) if the market price of AVH common stock on the fifth anniversary is less than $12 per ADR on the NYSE, for an aggregate maximum possible combined put payment and guarantee amount on the fifth anniversary of $217 million. In 2018, ~~United is~~ the ~~guarantor~~Company recorded a liability of ~~$151~~$31 million ~~of aircraft mortgage debt issued by one of United's regional carriers. The aircraft mortgage debt is subject to similar increased cost provisions as described above~~ for the ~~Company's debt,~~fair value of its guarantee to loan additional funds to Synergy if required. Any such additional loans to Synergy would be collateralized by BRW's shares of AVH stock and ~~the Company would potentially be responsible for those costs under the guarantees.~~other collateral.

Increased Cost Provisions. In ~~the Company's~~United's financing transactions that include loans in which United is the ~~Company~~borrower, United typically agrees to reimburse lenders for any reduced returns with respect to the loans due to any change in capital requirements and, in the case of loans inwith respect to which the interest rate is based on the London Interbank Offered Rate, for certain other increased costs that the lenders incur in carrying these loans as a result of any change in law, subject, in most cases, to obligations of the lenders to take certain limited steps to mitigate the requirement for, or the amount of, such increased costs. At June 30, ~~2018~~2019, the Company had ~~$3.3~~$3.4 billion of floating rate debt and ~~$44~~$9 million of fixed rate debt with remaining terms of up to 11 years that are subject to these increased cost provisions. In several financing transactions involving loans or leases from non-U.S. entities, with remaining terms of up to 11 years and an aggregate balance of $3.2 billion, the Company bears the risk of any change in tax laws that would subject loan or lease payments thereunder to non-U.S. entities to withholding taxes, subject to customary exclusions.

~~Labor Negotiations.~~As of June 30, ~~2018,~~2019, United is the guarantor of $139 million of aircraft mortgage debt issued by one of United's regional carriers. The aircraft mortgage debt is subject to similar increased cost provisions as described above for the Company's debt, and the Company would potentially be responsible for those costs under the guarantees.

Labor Negotiations. As of June 30, 2019, the Company had approximately ~~91,400~~95,000 employees, of whom approximately ~~80%~~84% were represented by various U.S. labor organizations. On February 1, 2019, the collective bargaining agreement with the Air Line Pilots Association ("ALPA"), the labor union representing United’s pilots, became amendable. The Company and ALPA are in negotiations for an amended agreement. The Company and UNITE HERE, ~~is attempting to organize~~the labor union representing United's Catering Operations employees, ~~who are currently unrepresented, and filed an application to do so with the National Mediation Board on January 24, 2018.~~started negotiations for a first collective bargaining agreement in March 2019.



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NOTE 911 - DEBT

As of June 30, ~~2018, a substantial portion of the Company's assets, principally aircraft, certain route authorities and airport slots, was pledged under various loan and other agreements. As of~~ ~~June 30, 2018~~2019, UAL and United were in compliance with their respective debt covenants. ~~In May 2018, the Company's Amended and Restated Credit and Guaranty Agreement (as amended, the "2017 Credit Agreement") was amended to reduce the interest rate on the term loan by 0.25%.~~ As of June 30, ~~2018,~~2019, United had its entire capacity of $2.0 billion available under the revolving credit facility of the ~~2017~~Amended and Restated Credit and Guaranty Agreement.

EETCs. In February ~~and May 2018,~~2019, United created ~~three~~two new EETC pass-through trusts, each of which issued pass-through ~~certificates.~~certificates (such certificates, the "2019-1 Pass Through Certificates"). The proceeds offrom the issuance of the pass-through certificates are used to purchase equipment notes issued by United and secured by its ~~aircraft.~~aircraft financed with the proceeds of such notes. The



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Company records the debt obligation upon issuance of the equipment notes rather than upon the initial issuance of the pass-through certificates. The pass-through certificates represent fractional undivided interests in the respective pass-through trusts and are not obligations of United. The payment obligations under the equipment notes are those of United. Proceeds received from the sale of pass-through certificates are initially held by a depositary in escrow for the benefit of the certificate holders until United issues equipment notes to the trust, which purchases such notes with a portion of the escrowed funds. These escrowed funds are not guaranteed by United and are not reported as debt on our consolidated balance sheet because the proceeds held by the depositary are not United's assets. Certain details of the pass-through trusts with proceeds received from issuance of debt in ~~2018~~2019 are as follows (in millions, except stated interest rate):



EETC Issuance Date	Class	Face Amount		Final expected distribution date	Stated interest rate	Total proceeds received from issuance of debt during 2019 and recorded as debt as of June 30, 2019		Remaining proceeds from issuance of certificates to be received in future periods
February 2019	AA	$	717	August 2031	4.15%	$	612	$	105
February 2019	A	296		August 2031	4.55%	253		43
		$	1,013			$	865	$	148

EETC Date Class Principal Final expected distribution date Stated interest rate
Total proceeds received
from issuance of debt
during 2018 and
recorded as debt as of
June 30, 2018

February 2018 AA $ 677
March 2030 3.50% $ 677

February 2018 A 258
March 2030 3.70% 258

May 2018 B 226
March 2026 4.60% 226

$ 1,161
$ 1,161

Certain of the proceeds from the issuance of the 2019-1 Pass Through Certificates were expected to be used to purchase equipment notes issued by United and secured by three Boeing 737 MAX aircraft, which aircraft were scheduled for delivery by Boeing in March, April and May of 2019. However, as a result of the FAA Order, United has not yet taken delivery of these three aircraft. If United is not in a position to take delivery of such 737 MAX aircraft on or prior to November 30, 2019, any funds remaining with the depositary in escrow at such time, together with accrued and unpaid interest thereon but without premium, will be distributed to the holders of the 2019-1 Pass Through Certificates.

4.875% Senior Note due 2025. In May 2019, UAL issued $350 million aggregate principal amount of 4.875% Senior Notes due January 15, 2025 (the "4.875% Senior Notes due 2025"), which are fully and unconditionally guaranteed and recorded by United on its balance sheet. The indenture for the 4.875% Senior Notes due 2025 requires that, if certain changes of control of UAL occur, UAL offer to repurchase the 4.875% Senior Notes due 2025 for cash at a purchase price equal to 101% of the principal amount of such notes repurchased plus accrued and unpaid interest.

The table below presents the Company's contractual principal payments (not including debt discount or debt issuance costs) at June 30, ~~2018~~2019 under then-outstanding long-term debt agreements (in millions):



Last six months of 2019	$	757
2020	1,350
2021	1,344
2022	1,697
2023	747
After 2023	8,484
	$	14,379

Last six months of 2018 $ 394
2019 1,244
2020 1,242
2021 1,230
2022 1,565
After 2022 7,838
$ 13,513

~~NOTE 10 - SPECIAL CHARGES~~

~~For the three and six months ended~~ ~~June 30, special charges consisted of the following (in millions):~~

Three Months Ended
June 30, Six Months Ended
June 30,
Operating: 2018 2017 2018 2017
Impairment of assets $ 111
$ —
$ 134
$ —
Severance and benefit costs 11
41
25
78
(Gains) losses on sale of assets and other special charges 7
3
10
17
Special charges 129
44
169
95
Income tax benefit related to special charges (29 ) (16 ) (38 ) (34 )
Total special charges, net of tax $ 100

$ 28
$ 131
$ 61



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NOTE 12 - SPECIAL CHARGES AND MARK-TO-MARKET ("MTM") ADJUSTMENTS

For the three and six months ended June 30, special charges and MTM adjustments consisted of the following (in millions):



	Three Months Ended June 30,						Six Months Ended June 30,
Operating:	2019			2018			2019			2018
Impairment of assets	$	61		$	111		$	69		$	134
Severance and benefit costs	6			11			12			25
(Gains) losses on sale of assets and other special charges	4			7			8			10
Total operating special charges	71			129			89			169
Nonoperating MTM (gains) losses on financial instruments	(34		)	135			(51		)	90
Total special charges and MTM (gains) losses on financial instruments	37			264			38			259
Income tax benefit	(8		)	(59		)	(8		)	(58		)
Total special charges and MTM (gains) losses on financial instruments, net of income tax	$	29		$	205		$	30		$	201

2019

During the three months ended June 30, 2019, the Company recorded a $47 million impairment for aircraft engines removed from operations, a $6 million charge for the early termination of several regional aircraft finance leases and $8 million in other miscellaneous impairments. During the six months ended June 30, 2019, in addition to the charges described above, the Company recorded an $8 million fair value adjustment for aircraft purchased off lease.

During the three and six months ended June 30, 2019, the Company recorded management severance of $6 million and $10 million, respectively. During the six months ended June 30, 2019, the Company recorded $2 million of severance and benefit costs related to a voluntary early-out program for its technicians and related employees represented by the International Brotherhood of Teamsters (the "IBT"). In the first quarter of 2017, approximately 1,000 technicians and related employees elected to voluntarily separate from the Company and received a severance payment, with a maximum value of $100,000 per participant, based on years of service, with retirement dates through early 2019.

During the three and six months ended June 30, 2019, the Company recorded gains of $38 million and $52 million, respectively, for the change in market value of its investment in Azul. Also, during the three and six months ended June 30, 2019, the Company recorded losses of $4 million and $1 million, respectively, for the change in fair value of the AVH Derivative Assets. For equity investments and derivative assets subject to MTM accounting, the Company records gains and losses as part of Nonoperating income (expense): Miscellaneous, net in its statements of consolidated operations.

2018

In May 2018, the Brazil–United States open skies agreement was ratified, which provides air carriers with unrestricted access between the United States and Brazil. The Company determined that the approval of the open skies agreement impaired the entire value of its Brazil route authorities because the agreement removes all limitations or reciprocity requirements for flights between the United States and Brazil. Accordingly, the Company recorded a $105 million special charge ~~($82 million net of taxes)~~ to write off the entire value of the intangible asset associated with its Brazil routes. This asset is not part of any collateral pledged against any of the Company's borrowings. The Company continues to maintain its slot assets related to Brazil since airport access is still restricted by slot allocations that are limited by airport facility constraints. For

During the three and six months ended June 30, 2018, the Company ~~also~~ recorded $6 million ~~($5 million net of taxes)~~ and $29 million, ~~($22 million net of taxes),~~ respectively, of fair value adjustments ~~related to~~for aircraft purchased off lease and ~~other~~ impairments related to certain fleet types and international slots no longer in use.

During the three and six months ended June 30, 2018, the Company recorded ~~severance and benefit costs related to a voluntary early-out program for its technicians and related employees represented by the International Brotherhood of Teamsters of~~ $6 million ~~($4 million net of taxes)~~ and $14 million, ($11 million net of taxes), respectively. In the first quarter of 2017, approximately 1,000 technicians and related employees elected to voluntarily separate from the Company and will receive a severance payment, with a maximum value of $100,000 per participant, based on years of service, with retirement dates through 2018. Also during the three and six months ended June 30, 2018, the Company recorded other management severance of $5 million ($4 million net of taxes) and $11 million ($8 million net of taxes), respectively.

~~During the three and six months ended June 30, 2017, the Company recorded $36 million ($23 million net of taxes) and $57 million ($37 million net of taxes),~~ respectively, of severance and benefit costs related to the ~~voluntary~~ early-out program ~~for its technicians~~described above and ~~related employees, and~~management severance of $5 million ~~($3~~and $11 million, ~~net of taxes) and $21 million ($13 million net of taxes), respectively, of management severance.~~respectively.

During the three and six months ended June 30, 2018, the Company recorded $7losses of $135 million ~~($5~~and $90 million, ~~net~~respectively, for the change in market value of ~~taxes) and $10 million ($8 million net of taxes), respectively, of other special charges related primarily to contract termination of regional aircraft operations~~its investment in ~~Guam.~~Azul.

~~Accrual Activity~~

The severance-related accrual as of June 30, 2018 is primarily related to severance and other compensation expense associated with voluntary employee early retirement programs and is expected to be mostly paid in the second half of 2018. The accrual balance for future lease payments on permanently grounded aircraft as of June 30, 2018 is expected to be mostly paid through 2025. Activity related to these accruals is as follows (in millions):

Severance and Benefits Permanently Grounded Aircraft
Balance at December 31, 2017 $ 37
$ 22
Accrual 25
—
Payments (34 ) (2 )
Balance at June 30, 2018 $ 28
$ 20

Severance and Benefits Permanently Grounded Aircraft
Balance at December 31, 2016 $ 14
$ 41
Accrual 78
—
Payments (65 ) (12 )
Balance at June 30, 2017 $ 27
$ 29



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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Overview

United ~~Continental~~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"). Effective June 27, 2019, the Company amended its Certificate of Incorporation to change its name to "United Airlines Holdings, Inc." 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 Company transports people and cargo through its mainline operations, which utilize jet aircraft with at least ~~118~~126 seats, and regional operations, which utilize smaller aircraft that are operated under contract by United Express carriers. The Company serves virtually every major market around the world, either directly or through participation in Star Alliance^®, the world's largest airline alliance. UAL, through United and its regional carriers, operates approximately ~~4,600~~4,900 flights a day to ~~357~~356 airports across five continents.

Second Quarter Highlights

Second quarter ~~2018~~2019 net income was ~~$684 million,~~$1.1 billion, or ~~$2.48~~$4.02 diluted earnings per share, as compared to net income of ~~$821~~$683 million, or diluted earnings per share of ~~$2.67,~~$2.48, in the second quarter of ~~2017.~~2018.

Passenger revenue increased ~~8.0%~~6.1% to ~~$9.9~~$10.5 billion during the second quarter of ~~2018~~2019 as compared to the second quarter of ~~2017.~~2018.

~~Second quarter 2018 aircraft fuel cost~~Traffic increased ~~$721 million, 43.2% year-over-year.~~

In the three months ended June 30, 2018, UAL repurchased approximately 5.9 million shares of its common stock in open market transactions for $407 million. As of June 30, 2018, the Company had approximately $2.0 billion remaining to purchase shares under its share repurchase program.

~~Consolidated traffic increased 6.4%~~5.1% and ~~consolidated~~ capacity increased ~~4.8%~~3.6% during the second quarter of ~~2018~~2019 as compared to the second quarter of ~~2017.~~2018. The Company's passenger load factor for the second quarter of ~~2018~~2019 was ~~84.8%~~86.0%.

~~Completed the best second-quarter on-time departure performance in United's history.~~

Outlook

InSet forth below is a discussion of matters that we believe could impact our financial and operating performance and cause our results of operations in future periods to differ materially from our historical operating results and/or from our anticipated results of operations described in the forward-looking statements in this report. See Part I, Item 1A., Risk Factors, of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018 ~~the Company expects its consolidated available seat miles to grow between 4.5%~~(the "2018 Annual Report") and ~~5.0% year-over-year. Most~~Part II, Item 1A., Risk Factors of this report for a detailed discussion of the risk factors affecting UAL and United, and the factors described under "Forward-Looking Information" below for additional discussion of these and other factors that could affect us.

Growth Strategy. Our priorities for 2019 are delivering top-tier operational reliability and customer service while continuing to execute on our growth ~~will be concentrated in~~plan by strengthening our domestic network ~~especially~~through strategic and efficient growth and investing in our ~~mid-continent hubs. We believe greater scale~~people and connectivity at our hubs reinforces our relevance and value proposition to our customers. Rebanking at our hubs is expected to drive significant additional connection opportunities. We will also expand flights in non-peak times of the year to more efficiently use our aircraft and facilities with the objective of driving an increase in profitability.product.

Fuel.The price of jet fuel remains volatile. Based on projected fuel consumption in ~~2018,~~2019, a ~~one dollar~~one-dollar change in the price of a barrel of crude oil would change the Company's annual fuel expense by approximately ~~$98~~$103 million.



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RESULTS OF OPERATIONS

The following discussion provides an analysis of our results of operations and reasons for material changes therein for the three months ended June 30, ~~2018~~2019 as compared to the corresponding period in ~~2017~~.2018.

Second Quarter~~2018~~ 2019 Compared to Second Quarter~~2017~~ 2018

The Company recorded net income of ~~$684 million~~$1.1 billion in the second quarter of ~~2018~~2019 as compared to net income of ~~$821~~$683 million in the second quarter of ~~2017~~.2018. The Company considers a key measure of its performance to be operating income, which was ~~$1.2~~$1.5 billion for the second quarter of ~~2018,~~2019, as compared to ~~$1.4~~$1.1 billion for the second quarter of ~~2017, a $276 million decrease year-over-year.~~2018. Significant components of the Company's operating results for the three months ended June 30 are as follows (in millions, except percentage changes):


	2018			2017			Increase (Decrease)			% Change		2019			2018			Increase (Decrease)			% Change
Operating revenue	$	10,777		$	10,008		$	769		7.7		$	11,402		$	10,777		$	625		5.8
Operating expense	9,616			8,571			1,045			12.2		9,930			9,632			298			3.1
Operating income	1,161			1,437			(276		)	(19.2	)	1,472			1,145			327			28.6
Nonoperating expense	(304		)	(160		)	144			90.0
Nonoperating income (expense)												(118		)	(290		)	(172		)	(59.3	)
Income tax expense	173			456			(283		)	(62.1	)	302			172			130			75.6
Net income	$	684		$	821		$	(137	)	(16.7	)	$	1,052		$	683		$	369		54.0

Certain consolidated statistical information for the Company's operations for the three months ended June 30 is as follows:


	2018			2017			Increase (Decrease)		% Change	2019			2018			Increase (Decrease)			% Change
Passengers (thousands) (a)	41,058			38,247			2,811		7.3	42,592			41,058			1,534			3.7
Revenue passenger miles ("RPMs") (millions) (b)	59,945			56,356			3,589		6.4
Available seat miles ("ASMs") (millions) (c)	70,702			67,467			3,235		4.8
Revenue passenger miles ("RPMs" or "traffic") (millions) (b)										63,001			59,945			3,056			5.1
Available seat miles ("ASMs" or "capacity") (millions) (c)										73,240			70,702			2,538			3.6
Passenger load factor (d)	84.8		%	83.5		%	1.3 pts.		N/A	86.0		%	84.8		%	1.2 pts.			N/A
Passenger revenue per available seat mile ("PRASM") (cents)	13.97			13.56			0.41		3.0	14.32			13.97			0.35			2.5
Average yield per revenue passenger mile ("Yield") (cents) (e)	16.48			16.24			0.24		1.5	16.64			16.48			0.16			1.0
Cargo ton miles ("CTM") (millions) (f)										831			855			(24		)	(2.8	)
Cost per available seat mile ("CASM") (cents)	13.60			12.70			0.90		7.1	13.56			13.62			(0.06		)	(0.4	)
Average price per gallon of fuel, including fuel taxes	$	2.26		$	1.63		$	0.63	38.7	$	2.16		$	2.26		$	(0.10	)	(4.4	)
Fuel gallons consumed (millions)	1,058			1,023			35		3.4	1,102			1,058			44			4.2
Average full-time equivalent employees	86,700			86,000			700		0.8	90,779			86,743			4,036			4.7
(a) The number of revenue passengers measured by each flight segment flown.	(a) The number of revenue passengers measured by each flight segment flown.
(b) The number of scheduled miles flown by revenue passengers.																					(c) The number of seats available for passengers multiplied by the number of scheduled miles those seats are flown.	(d) Revenue passenger miles divided by available seat miles.	(e) The average passenger revenue received for each revenue passenger mile flown.
(f) The number of cargo revenue tons transported multiplied by the number of miles flown.



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Operating Revenue. The table below shows year-over-year comparisons by type of operating revenue for the three months ended June 30 (in millions, except for percentage changes):


	2018		2017		Increase (Decrease)			% Change		2019		2018		Increase (Decrease)			% Change
Passenger revenue	$	9,880	$	9,151	$	729		8.0		$	10,486	$	9,880	$	606		6.1
Cargo	314		273		41			15.0		295		314		(19		)	(6.1	)
Other operating revenue	583		584		(1		)	(0.2	)	621		583		38			6.5
Total operating revenue	$	10,777	$	10,008	$	769		7.7		$	11,402	$	10,777	$	625		5.8

The table below presents selected second quarter passenger revenue and operating data, broken out by geographic region, expressed as year-over-year changes:


	Domestic			Atlantic			Pacific			Latin			Consolidated			Increase (decrease) from 2018:
Increase (decrease) from 2017:
																Domestic			Atlantic			Pacific			Latin			Total
Passenger revenue (in millions)	$	523		$	209		$	39		$	(42	)	$	729		$	366		$	103		$	32		$	105		$	606
Passenger revenue	9.2		%	12.9		%	3.7		%	(5.2		)%	8.0		%	5.9		%	5.6		%	2.9		%	13.6		%	6.1		%
Average fare per passenger	—		%	1.3		%	12.7		%	0.4		%	0.6		%	2.7		%	(1.5		)%	(2.1		)%	6.3		%	2.3		%
Yield	1.3		%	0.9		%	4.3		%	(4.2		)%	1.5		%	1.5		%	(1.5		)%	(1.1		)%	6.5		%	1.0		%
PRASM	1.7		%	7.9		%	3.4		%	(2.9		)%	3.0		%	1.9		%	0.6		%	2.8		%	9.1		%	2.5		%
Passengers	9.2		%	11.5		%	(8.0		)%	(5.5		)%	7.3		%	3.1		%	7.3		%	5.1		%	6.9		%	3.7		%
RPMs (traffic)	7.8		%	11.9		%	(0.6		)%	(1.0		)%	6.4		%	4.4		%	7.2		%	4.0		%	6.6		%	5.1		%
ASMs (capacity)	7.4		%	4.7		%	0.2		%	(2.3		)%	4.8		%	4.0		%	5.0		%	0.1		%	4.1		%	3.6		%
Passenger load factor (points)	0.3			5.2			(0.7)			1.1			1.3			0.4			1.8			3.1			2.0			1.2

Passenger revenue increased $606 million, or 6.1%, in the second quarter of ~~2018 increased $729 million, or 8.0%,~~2019 as compared to the year-ago period primarily due to a ~~6.4%~~5.1% increase in ~~traffic and a 1.3 point increase in load factor.~~traffic. Second quarter ~~2018~~ PRASM ~~and yield~~ increased ~~3.0% and 1.5%, respectively,~~2.5% compared to the second quarter of ~~2017,~~2018 primarily as a result of ~~improved close in~~increased close-in demand in the domestic markets and overall demand improvements in the Atlantic and Latin markets.

~~Cargo~~Other operating revenue increased ~~$41~~$38 million, or ~~15.0%~~6.5%, in the second quarter of ~~2018~~2019 as compared to the year-ago period primarily due to ~~higher yields~~increased revenue related to MileagePlus miles sales and ~~higher international freight volume.~~one-time passes to the United Club. See Note 2 to the financial statements included in Item I, Part 1 of this report for additional information related to revenue.

Operating Expenses. The table below includes data related to the Company's operating expenses for the three months ended June 30 (in millions, except for percentage changes):


	2018		2017		Increase (Decrease)			% Change		2019		2018		Increase (Decrease)			% Change
Salaries and related costs	$	2,878	$	2,842	$	36		1.3		$	3,057	$	2,878	$	179		6.2
Aircraft fuel	2,390		1,669		721			43.2		2,385		2,390		(5		)	(0.2	)
Regional capacity purchase	681		549		132			24.0		715		693		22			3.2
Landing fees and other rent	603		541		62			11.5		660		625		35			5.6
Depreciation and amortization	557		536		21			3.9		560		538		22			4.1
Aircraft maintenance materials and outside repairs	438		472		(34		)	(7.2	)	421		438		(17		)	(3.9	)
Distribution expenses	393		385		8			2.1		442		393		49			12.5
Aircraft rent	119		152		(33		)	(21.7	)	73		119		(46		)	(38.7	)
Special charges	129		44		85			NM		71		129		(58		)	NM
Other operating expenses	1,428		1,381		47			3.4		1,546		1,429		117			8.2
Total operating expenses	$	9,616	$	8,571	$	1,045		12.2		$	9,930	$	9,632	$	298		3.1

Salaries and related costs increased ~~$36~~$179 million, or ~~1.3%~~6.2%, in the second quarter of ~~2018~~2019 as compared to the year-ago period primarily due to contractually higher pay rates, ~~and~~higher benefit expenses ~~driven by collective bargaining agreements,~~(primarily healthcare-related) and a ~~0.8%~~4.7% increase in average full-time equivalent employees.

Aircraft fuel expense increased $721 million, or 43.2%, in the second quarter of 2018 as compared to the year-ago period primarily due to a 38.7% increase in the average price per gallon of aircraft fuel and a 4.8% increase in capacity.



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~~Regional capacity purchase increased $132~~Aircraft fuel expense decreased by $5 million, or ~~24.0%~~0.2%, in the second quarter of ~~2018~~2019 as compared to the year-ago period. The table below presents the significant changes in aircraft fuel cost per gallon in the three month period ended June 30, 2019 as compared to the year-ago period:



	(In millions)						Average price per gallon
	2019		2018		% Change		2019		2018		% Change
Fuel expense	$	2,385	$	2,390	(0.2	)%	$	2.16	$	2.26	(4.4	)%
Total fuel consumption (gallons)	1,102		1,058		4.2	%

Landing fees and other rent increased $35 million, or 5.6%, in the second quarter of 2019 as compared to the year-ago period primarily due to increased ~~regional flying related to the Company's initiative to improve connectivity at its domestic hubs, as well as rate increases under various~~rates and capacity ~~purchase agreements with regional carriers.~~growth.

~~Landing fees and other rent~~Distribution expenses increased ~~$62~~$49 million, or ~~11.5%~~12.5%, in the second quarter of ~~2018 as compared to the year-ago period due to increased rates and capacity growth.~~

~~Aircraft maintenance materials and outside repairs decreased $34 million, or 7.2%, in the second quarter of 2018~~2019 as compared to the year-ago period primarily due to ~~lower rates~~higher credit card and ~~volume mix~~travel agency booking fees as a result of ~~maintenance events.~~the overall increase in passenger revenue.

Aircraft rent decreased ~~$33~~$46 million, or ~~21.7%~~38.7%, in the second quarter of ~~2018~~2019 as compared to the year-ago period, primarily due to the purchase of leased aircraft and ~~lease term expirations.~~the conversion of certain operating leases to finance leases.

Other operating expenses increased $47 million, or 3.4%, in the second quarter of 2018 as compared to the year-ago period due to increases in purchased services related to our airport operations, technology initiatives, and trucking and handling of cargo shipments.

Details of the Company's special charges include the following for the three months ended June 30 (in millions):


	2018		2017		2019		2018
Impairment of assets	$	111	$	—	$	61	$	111
Severance and benefit costs	11		41		6		11
(Gains) losses on sale of assets and other special charges	7		3		4		7
Special charges	$	129	$	44	$	71	$	129

See Note 1012 to the financial statements included in Part I, Item 1 of this report for additional information.

Other operating expenses increased $117 million, or 8.2%, in the second quarter of 2019 as compared to the year-ago period, primarily due to an increase in purchased services related to our airport operations resulting from capacity growth and weather-related events, technology initiatives, facility projects and crew-related expenses.

Nonoperating Income (Expense). The following table illustrates the year-over-year dollar and percentage changes in the Company's nonoperating income (expense) for the three months ended June 30 (in millions, except for percentage changes):


	2018			2017			Increase (Decrease)			% Change		2019			2018			Increase (Decrease)			% Change
Interest expense	$	(177	)	$	(167	)	$	10		6.0		$	(191	)	$	(163	)	$	28		17.2
Interest capitalized	14			21			(7		)	(33.3	)	21			12			9			75.0
Interest income	25			13			12			92.3		38			25			13			52.0
Miscellaneous, net	(166		)	(27		)	139			NM		14			(164		)	(178		)	(108.5	)
Total	$	(304	)	$	(160	)	$	144		90.0		$	(118	)	$	(290	)	$	(172	)	(59.3	)

~~Miscellaneous, net includes,~~Interest expense increased $28 million, or 17.2%, in the second quarter of ~~2018, a $135 million loss~~2019 as compared to the year-ago period, primarily due to the conversion of certain operating leases to finance leases and debt issued for the ~~change~~acquisition of new aircraft.

Miscellaneous, net decreased $178 million, or 108.5%, in ~~market value~~the second quarter of 2019 as compared to the ~~Company's equity investment~~year-ago period, primarily due to fluctuations in ~~Azul, S.A. ("Azul").~~the mark-to-market of certain financial instruments.

Income Taxes.See Note 5 to the financial statements included in Part I, Item 1 of this report for information related to income taxes.

First Six Months ~~2018~~2019 Compared to First Six Months ~~2017~~2018

The Company recorded net income of ~~$831 million~~$1.3 billion in the first six months of ~~2018~~2019 as compared to net income of ~~$920 million~~$0.8 billion in the first six months of ~~2017.~~2018. The Company considers a key measure of its performance to be operating income, which was $2.0 billion for the first six months of 2019, as compared to $1.4 billion for the first six months of 2018, ~~as compared to $1.8 billion for the first six months of 2017,~~ a ~~$320~~$560 million ~~decrease~~increase year-over-year. Significant components of the Company's operating results for the six months ended June 30 are as follows (in



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~~follows (in~~ millions, except percentage changes):


	2018			2017			Increase (Decrease)			% Increase (Decrease)		2019			2018			Increase (Decrease)			% Change
Operating revenue	$	19,809		$	18,434		$	1,375		7.5		$	20,991		$	19,809		$	1,182		6.0
Operating expense	18,372			16,677			1,695			10.2		19,024			18,402			622			3.4
Operating income	1,437			1,757			(320		)	(18.2	)	1,967			1,407			560			39.8
Nonoperating expense	(396		)	(330		)	66			20.0
Nonoperating income (expense)												(246		)	(370		)	(124		)	(33.5	)
Income tax expense	210			507			(297		)	(58.6	)	377			209			168			80.4
Net income	$	831		$	920		$	(89	)	(9.7	)	$	1,344		$	828		$	516		62.3

Certain consolidated statistical information for the Company's operations for the six months ended June 30 is as follows:


	2018			2017			Increase (Decrease)		% Increase (Decrease)	2019			2018			Increase (Decrease)			% Change
Passengers (thousands) ~~(a)~~	75,553			71,352			4,201		5.9	79,046			75,553			3,493			4.6
RPMs (millions) ~~(b)~~	109,794			103,967			5,827		5.6	116,098			109,794			6,304			5.7
ASMs (millions) ~~(c)~~	132,679			127,275			5,404		4.2	138,885			132,679			6,206			4.7
Passenger load factor ~~(d)~~	82.8		%	81.7		%	1.1 pts.		N/A	83.6		%	82.8		%	0.8 pts.			N/A
PRASM (cents)	13.59			13.20			0.39		3.0	13.83			13.59			0.24			1.8
Yield (cents) ~~(e)~~	16.42			16.16			0.26		1.6	16.55			16.42			0.13			0.8
CTM (millions)										1,636			1,672			(36		)	(2.2	)
CASM (cents)	13.85			13.10			0.75		5.7	13.70			13.87			(0.17		)	(1.2	)
Average price per gallon of fuel, including fuel taxes	$	2.19		$	1.67		$	0.52	31.1	$	2.11		$	2.19		$	(0.08	)	(3.7	)
Fuel gallons consumed (millions)	1,990			1,933			57		2.9	2,087			1,990			97			4.9
Average full-time equivalent employees	86,200			85,600			600		0.7	89,761			86,157			3,604			4.2
(a) The number of revenue passengers measured by each flight segment flown.
(b) The number of scheduled miles flown by revenue passengers.
(c) The number of seats available for passengers multiplied by the number of scheduled miles those seats are flown.
(d) Revenue passenger miles divided by available seat miles.
(e) The average passenger revenue received for each revenue passenger mile flown.

Operating Revenue

The table below shows year-over-year comparisons by type of operating revenue for the six months ended June 30 (in millions, except for percentage changes):


	2018		2017		Increase (Decrease)		% Change	2019		2018		Increase (Decrease)			% Change
Passenger revenue	$	18,030	$	16,804	$	1,226	7.3	$	19,211	$	18,030	$	1,181		6.6
Cargo	607		511		96		18.8	581		607		(26		)	(4.3	)
Other operating revenue	1,172		1,119		53		4.7	1,199		1,172		27			2.3
Total operating revenue	$	19,809	$	18,434	$	1,375	7.5	$	20,991	$	19,809	$	1,182		6.0

The table below presents selected passenger revenue and operating data, broken out by geographic region, expressed as year-over-year changes for the six months ended June 30, ~~2018~~2019 compared to the six months ended June 30, ~~2017:~~2018:



	Domestic			Atlantic			Pacific			Latin			Consolidated
Increase (decrease) from 2018:
Passenger revenue (in millions)	$	764		$	182		$	84		$	151		$	1,181
Passenger revenue	6.9		%	5.9		%	3.9		%	9.3		%	6.6		%
Average fare per passenger	2.4		%	(2.6		)%	(0.8		)%	4.3		%	1.8		%
Yield	1.1		%	(2.8		)%	0.5		%	4.3		%	0.8		%
PRASM	1.2		%	(0.8		)%	3.7		%	5.7		%	1.8		%
Passengers	4.3		%	8.7		%	4.7		%	4.7		%	4.6		%
RPMs (traffic)	5.7		%	9.0		%	3.3		%	4.8		%	5.7		%
ASMs (capacity)	5.5		%	6.8		%	0.2		%	3.4		%	4.7		%
Passenger load factor (points)	0.1			1.6			2.4			1.1			0.8



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Domestic Atlantic Pacific Latin Consolidated
Increase (decrease) from 2017:
Passenger revenue (in millions) $ 841
$ 344
$ 55
$ (14 ) $ 1,226
Passenger revenue 8.2 % 12.6 % 2.6 % (0.9 )% 7.3 %
Average fare per passenger 0.8 % 1.3 % 8.8 % 2.9 % 1.3 %
Yield 1.7 % 1.0 % 1.3 % (0.6 )% 1.6 %
PRASM 1.7 % 8.2 % 0.9 % 1.1 % 3.0 %
Passengers 7.3 % 11.1 % (5.7 )% (3.7 )% 5.9 %
RPMs (traffic) 6.3 % 11.5 % 1.3 % (0.3 )% 5.6 %
ASMs (capacity) 6.4 % 4.0 % 1.6 % (1.9 )% 4.2 %
Passenger load factor (points) (0.1)
5.2
(0.2)
1.5
1.1

~~Consolidated passenger~~Passenger revenue in the first six months of ~~2018~~2019 increased $1.2 billion, or ~~7.3%~~6.6%, as compared to the year-ago period primarily due to a ~~5.6%~~5.7% increase in traffic. Consolidated PRASM ~~and consolidated yield~~ for the first six months of ~~2018~~2019 increased ~~3.0% and 1.6%~~1.8%, ~~respectively,~~ as compared to the first six months of ~~2017~~2018, as a result of ~~improved close in~~increased close-in demand in the domestic markets and overall demand improvements in the Atlantic ~~markets.~~

~~Cargo revenue increased $96 million, or 18.8%, in the first six months of 2018 as compared to the year-ago period primarily due to higher volumes~~ and ~~yield on international freight.~~Latin markets.

Operating Expenses

The table below includes data related to the Company's operating expenses for the six months ended June 30 (in millions, except for percentage changes):


	2018		2017		Increase (Decrease)			% Change		2019		2018		Increase (Decrease)			% Change
Salaries and related costs	$	5,604	$	5,478	$	126		2.3		$	5,930	$	5,604	$	326		5.8
Aircraft fuel	4,355		3,229		1,126			34.9		4,408		4,355		53			1.2
Regional capacity purchase	1,300		1,085		215			19.8		1,403		1,323		80			6.0
Landing fees and other rent	1,161		1,085		76			7.0		1,248		1,204		44			3.7
Depreciation and amortization	1,098		1,054		44			4.2		1,107		1,062		45			4.2
Aircraft maintenance materials and outside repairs	878		926		(48		)	(5.2	)	829		878		(49		)	(5.6	)
Distribution expenses	735		704		31			4.4		802		735		67			9.1
Aircraft rent	246		331		(85		)	(25.7	)	154		246		(92		)	(37.4	)
Special charges	169		95		74			NM		89		169		(80		)	NM
Other operating expenses	2,826		2,690		136			5.1		3,054		2,826		228			8.1
Total operating expenses	$	18,372	$	16,677	$	1,695		10.2		$	19,024	$	18,402	$	622		3.4

Salaries and related costs increased ~~$126~~$326 million, or ~~2.3%~~5.8%, in the first six months of ~~2018~~2019 as compared to the year-ago period primarily due to contractually higher pay rates, higher benefit expenses (primarily healthcare-related), and a 4.2% increase in average full-time equivalent employees.

Aircraft fuel expense increased $53 million, or 1.2%, in the first six months of 2019 as compared to the year-ago period. The table below presents the significant changes in aircraft fuel cost per gallon in the six month period ended June 30, 2019 as compared to the year-ago period:



	(In millions)						Average price per gallon
	2019		2018		% Change		2019		2018		% Change
Fuel expense	$	4,408	$	4,355	1.2	%	$	2.11	$	2.19	(3.7	)%
Total fuel consumption (gallons)	2,087		1,990		4.9	%

Regional capacity purchase increased $80 million, or 6.0%, in the first six months of 2019 as compared to the year-ago period primarily due to a 5.2% increase in the 50-seat aircraft capacity and rate increases under various capacity purchase agreements with regional carriers.

Aircraft maintenance materials and outside repairs decreased $49 million, or 5.6%, in the first six months of 2019 as compared to the year-ago period primarily due to timing of maintenance events and rate changes under certain engine maintenance contracts.

Distribution expenses increased $67 million, or 9.1%, in the first six months of 2019 as compared to the year-ago period, primarily due to higher ~~pay rates~~credit card and ~~benefit expenses driven by collective bargaining agreements, and~~travel agency booking fees as a ~~0.7%~~result of the overall increase in ~~average full-time equivalent employees, partially offset by a decrease in employee incentive programs expense.~~passenger revenue.

Aircraft ~~fuel increased $1.1 billion,~~rent decreased $92 million, or ~~34.9%~~37.4%, in the first six months of ~~2018 as compared to the year-ago period primarily due to a 31.1% increase in the average price per gallon of aircraft fuel and a 4.2% increase in capacity.~~

Regional capacity purchase increased $215 million, or 19.8%, in the first six months of 2018 as compared to the year-ago period primarily due to increased regional flying related to the Company's initiative to improve connectivity at its domestic hubs, as well as rate increases under various capacity purchase agreements with regional carriers.

~~Landing fees and other rent increased $76 million, or 7.0%, in the first six months of 2018 as compared to the year-ago period, primarily due to increased rates and capacity growth.~~

~~Aircraft rent decreased $85 million, or 25.7%, in the first six months of 2018~~2019 as compared to the year-ago period, primarily due to the purchase of leased aircraft and ~~lease term expirations.~~the conversion of certain operating leases to finance leases.



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Other operating expenses increased $136 million, or 5.1%, in the first six months of 2018 as compared to the year-ago period primarily due to increases in purchased services related to our airport operations, technology initiatives, trucking and handling of cargo shipments, and increased volumes of onboard food and beverages.

Details of the Company's special charges include the following for the six months ended June 30 (in millions):


	2018		2017		2019		2018
Impairment of assets	$	134	$	—	$	69	$	134
Severance and benefit costs	25		78		12		25
(Gains) losses on sale of assets and other special charges	10		17		8		10
Special charges	$	169	$	95	$	89	$	169

See Note 1012 to the financial statements included in Part I, Item 1 of this report for additional information.

Other operating expenses increased $228 million, or 8.1%, in the first six months of 2019 as compared to the year-ago period primarily due to an increase in purchased services related to our airport operations resulting from capacity growth and weather-related events, technology initiatives, facility projects and crew-related expenses.

Nonoperating Income (Expense). The following table illustrates the year-over-year dollar and percentage changes in the Company's nonoperating income (expense) for the six months ended June 30 (in millions, except for percentage changes):


	2018			2017			Increase (Decrease)			% Change		2019			2018			Increase (Decrease)			% Change
Interest expense	$	(353	)	$	(329	)	$	24		7.3		$	(379	)	$	(325	)	$	54		16.6
Interest capitalized	33			44			(11		)	(25.0	)	43			30			13			43.3
Interest income	42			24			18			75.0		67			42			25			59.5
Miscellaneous, net	(118		)	(69		)	49			71.0		23			(117		)	(140		)	(119.7	)
Total	$	(396	)	$	(330	)	$	66		20.0		$	(246	)	$	(370	)	$	(124	)	(33.5	)

~~Miscellaneous, net includes,~~Interest expense increased $54 million, or 16.6%, in the first six months of 2018, a $90 million loss for the change in market value of the Company's equity investment in Azul, and $22 million of non-service cost component of the pension and postretirement net periodic benefit cost2019 as compared to ~~$51~~the year-ago period, primarily due to the conversion of certain operating leases to finance leases and debt issued for the acquisition of new aircraft.

Miscellaneous, net decreased $140 million, or 119.7%, in the first six months of 2019 as compared to the year-ago ~~period.~~period, primarily due to fluctuations in the mark-to-market of certain financial instruments.

Income Taxes. See Note 5 to the financial statements included in Part I, Item 1 of this report for information related to income taxes.

LIQUIDITY AND CAPITAL RESOURCES

Current Liquidity

As of June 30, ~~2018~~2019, the Company had ~~$5.1~~$5.4 billion in unrestricted cash, cash equivalents and short-term investments, as compared to ~~$3.8~~$4.0 billion at December 31, ~~2017. The~~2018. As of June 30, 2019, the Company had its entire commitment capacity of $2.0 billion under the revolving credit facility of the ~~the~~ Amended and Restated Credit and Guaranty Agreement ~~(as amended, the "2017 Credit Agreement")~~ available for borrowings. ~~In May 2018, the 2017 Credit Agreement was amended to reduce the interest rate on the term loan by 0.25%.~~ At June 30, ~~2018~~2019, the Company also had ~~$107~~$105 million of restricted cash and cash equivalents, which is primarily collateral for letters of credit and collateral associated with ~~obligations for~~ facility leases and ~~workers' compensation.~~other insurance-related obligations.

We have a significant amount of fixed obligations, including debt ~~aircraft leases~~ and ~~financings,~~ leases of aircraft, airport ~~property~~ and other facilities, and pension funding obligations. At As of June 30, ~~2018~~2019, the Company had approximately $14.5 billion of debt and ~~capital~~finance lease obligations, including ~~$1.0~~$1.4 billion that will become due in the next 12 months. In addition, we have substantial noncancelable commitments for capital expenditures, including the acquisition of certain new aircraft and related spare engines. As of June 30, ~~2018,~~2019, our current liabilities exceeded our current assets by approximately ~~$5.2~~$7.2 billion. However, approximately ~~$8.0~~$8.6 billion of our current liabilities are related to our advance ticket sales and frequent flyer deferred revenue, both of which largely represent revenue to be recognized for travel in the near future and not actual cash outlays. The deficit in working capital does not have an adverse impact to our cash flows, liquidity or operations.

As of June 30, ~~2018,~~2019, United had firm commitments and options to purchase aircraft from The Boeing Company ("Boeing") ~~and~~, Airbus S.A.S. ("Airbus") and Embraer S.A. ("Embraer") presented in the table below:



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~~Aircraft Type~~		~~Number of Firm~~ ~~Commitments (a)~~
~~Airbus A350~~		45
~~Boeing 737 MAX~~		~~155~~
~~Boeing 777-300ER~~		1
~~Boeing 787~~		18
~~(a) United also has options, purchase and other rights for additional aircraft.~~



		Scheduled Aircraft Deliveries
Aircraft Type	Number of Firm Commitments (a)	Last Six Months of 2019	2020	After 2020
Airbus A350	45	—	—	45
Boeing 737 MAX	171	16	28	127
Boeing 777-300ER	4	2	2	—
Boeing 787	18	2	15	1
Embraer E175	38	18	20	—
(a) United also has options and purchase rights for additional aircraft.

The aircraft listed in the table above are scheduled for delivery through 2027. To the extent the Company and the aircraft manufacturers with whom the Company has existing orders for new aircraft agree to modify the contracts governing those orders, the amount and timing of the Company's future capital commitments could change. For the remainder of 2018, the Company expects to take delivery of three Boeing 787 aircraft, four Boeing 737 MAX aircraft, one Boeing 777-300ER aircraft and three used Boeing 767-300ER aircraft. In July 2018, United entered into an agreement to purchase 25 new Embraer E175 aircraft with expected delivery dates scheduled in 2019. United also has ~~an agreement~~agreements to purchase 20 used Airbus A319 aircraft with expected delivery dates ~~scheduled~~through 2022 and 19 used Boeing 737-700 aircraft with expected delivery dates in ~~2020 and~~2019 through 2021.

As of June 30, ~~2018,~~2019, United had $148 million in financing available through a previously issued enhanced equipment trust certificates (“EETC”) transaction that it intends to use for the financing of certain aircraft delivered in the second half of 2019. Certain of these EETC proceeds were expected to be used to purchase equipment notes issued by United and secured by three Boeing 737 MAX aircraft, which aircraft were scheduled for delivery by Boeing in March, April and May of 2019. However, as a result of the FAA Order, United has not yet taken delivery of these three aircraft. If United is not in a position to take delivery of such 737 MAX aircraft on or prior to November 30, 2019, any funds remaining with the depositary in escrow at such time, together with accrued and unpaid interest thereon but without premium, will be distributed to the holders of the 2019-1 Pass Through Certificates. See Note 11 to the financial statements included in Part I, Item 1 of this report for additional information on aircraft financing.

As of June 30, 2019, UAL and United have total capital commitments ~~primarily~~ related to the acquisition of aircraft and related spare engines, aircraft improvements and ~~include other~~all non-aircraft capital ~~purchase~~ commitments for approximately ~~$22.4~~$24.3 billion, of which approximately ~~$1.7~~$2.2 billion, $5.9 billion, $4.0 billion, $3.3 billion, ~~$3.0 billion, $2.8 billion, $1.8~~$2.0 billion and ~~$9.8~~$6.9 billion are due in the last six months of ~~2018~~2019 and for the full year for ~~2019,~~ 2020, 2021, 2022, 2023 and thereafter, respectively. ~~Any~~Commitments for 2020 are expected to be higher than other years due to the large number of wide-body aircraft deliveries (17 new ~~firm aircraft orders, including through~~aircraft) scheduled in that year. Amounts are not adjusted for any potential changes in the ~~exercise of purchase options and purchase rights, will increase the total future capital commitments~~delivery schedule of the ~~Company.~~Boeing 737 MAX aircraft.

Financing may be necessary to satisfy the Company's capital commitments for its firm order aircraft and other related capital expenditures. The Company has ~~secured~~ backstop financing commitments available from certain of its aircraft manufacturers for a limited number of its future aircraft deliveries, subject to certain customary conditions. See Note 911 to the financial statements included in Part I, Item 1 of this report for additional information on aircraft financing.

As of June 30, ~~2018,~~2019, a substantial portion of the Company's assets, principally aircraft, certain route authorities and airport slots, was pledged under various loan and other agreements. We must sustain our profitability and/or access the capital markets to meet our significant long-term debt and ~~capital~~finance lease obligations and future commitments for capital expenditures, including the acquisition of aircraft and related spare engines.

Credit Ratings. As of the filing date of this report, UAL and United had the following corporate credit ratings:



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	S&P	Moody's	Fitch
UAL	BB	Ba2	BB
United	BB	*	BB
* The credit agency does not issue corporate credit ratings for subsidiary entities.

These credit ratings are below investment grade ~~levels.~~levels; however, the Company has been able to secure financing with investment grade credit ratings for certain enhanced equipment trust certificates ("EETCs") and term loans. Downgrades from ~~these~~current rating levels, among other things, could restrict the availability and/or increase the cost of future financing for the Company.

Sources and Uses of Cash

Operating Activities.Cash ~~flow~~flows provided by operations ~~was $4.2~~were $4.6 billion for the six months ended June 30, ~~2018~~2019 compared to ~~$2.1~~$4.2 billion in the same period in ~~2017. Operating~~2018. The increase is primarily attributable to an increase in operating income which was $2.0 billion for the first six months of 2018 was $1.4 billion, compared to $1.8 billion in 2017. Changes in working capital items increased $2.3 billion year-over-year, which accounted for the increase in cash flow from operations, including a $0.5 billion increase in advance ticket sales associated with our overall traffic growth, a $0.5 billion increase in mileage sales to our co-branded credit card partner due to full utilization of the pre-purchased miles in 2017, a $0.4 billion increase related to timing of accounts payable, a $0.3 billion decrease in employee incentive payments in the first six months of 20182019 as compared to ~~the year-ago period, a $0.2~~$1.4 billion ~~increase in prepayments~~ in the ~~first six months of 2017 and $0.4 billion increase~~same period in ~~other accrued liabilities.~~2018.

Investing Activities.Capital expenditures were approximately ~~$1.7~~$2.5 billion and ~~$1.8~~$1.7 billion in the six months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively. Capital expenditures for the six months ended June 30, ~~2018~~2019 were primarily attributable to additions of new aircraft, aircraft improvements, and increases in facility and information technology assets.



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Financing Activities.During the six months ended June 30, ~~2018,~~2019, the Company made debt and ~~capital~~finance lease payments of ~~$1.4 billion.~~$536 million.

In the six months ended June 30, ~~2018,~~2019, United received and recorded ~~$1.2 billion~~$865 million of proceeds as debt from the EETC pass-through trusts established in February ~~and May 2018.~~2019. See Note 911 to the financial statements included in Part I, Item 1 of this report for additional information.

In the six months ended June 30, 2019, United received and recorded $350 million of proceeds from the 4.875% Senior Notes due January 15, 2025.

Share Repurchase Programs. In the three and six months ended June 30, ~~2018,~~2019, UAL repurchased approximately ~~5.9~~6.4 million and ~~14.3~~12.7 million shares, respectively, of UAL common stock in open market transactions for ~~$0.4~~$0.5 billion and ~~$1.0~~$1.1 billion, respectively. As of June 30, ~~2018,~~2019, the Company had approximately ~~$2.0~~$0.7 billion remaining to purchase shares under its December 2017 share repurchase program.

On July 15, 2019, UAL's Board of Directors authorized a new $3.0 billion share repurchase program to acquire UAL's common stock. UAL may repurchase shares through the open market, privately negotiated transactions, block trades or accelerated share repurchase transactions from time to time in accordance with applicable securities laws. UAL will repurchase shares of UAL common stock subject to prevailing market conditions, and may discontinue such repurchases at any time. See Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds of this report for additional information.

Commitments, Contingencies and Liquidity Matters. As described in the ~~Company's~~2018 Annual Report, ~~on Form 10-K for the fiscal year ended December 31, 2017 (the "2017~~ ~~Annual Report"),~~ the Company's liquidity may be adversely impacted by a variety of factors, including, but not limited to, pension funding obligations, reserve requirements associated with credit card processing agreements, guarantees, commitments and contingencies.

See the ~~2017~~2018 Annual Report and Notes 6, 7, 8, 9, 10 and 11 to the financial statements contained in Part I, Item 1 of this report for additional information.

CRITICAL ACCOUNTING POLICIES

See "Critical Accounting Policies" in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in the ~~2017~~2018 Annual Report. Also see Note 2 to the financial statements contained in Part I, Item 1 of this report for a discussion of the Company's updated accounting policies on Revenue Recognition and Frequent Flyer Accounting.

FORWARD-LOOKING INFORMATION

Certain statements throughout Part I, Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations, and elsewhere in this report are forward-looking and thus reflect the Company's current expectations and beliefs with respect to certain current and future events and anticipated financial and operating performance. Such forward-looking statements are and will be subject to many risks and uncertainties relating to the Company's 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," "estimates," "forecast," "guidance," "outlook," "goals", "targets" 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, except as required by applicable law.



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Our actual results could differ materially from these forward-looking statements due to numerous factors including, without limitation, the following: our ability to execute our strategic operating plan, including our growth, revenue-generating and cost-control initiatives; general economic conditions (including interest rates, foreign currency exchange rates, investment or credit market conditions, crude oil prices, costs of aircraft fuel and energy refining capacity in relevant markets); ~~economic and political instability and other~~ risks of doing business globally, including instability and political developments that may impact our operations in certain countries; demand for travel and the impact that global economic and political conditions have on customer travel patterns; ~~competitive pressures on pricing and on demand; demand for transportation in the markets in which we operate;~~ our capacity decisions and the capacity decisions of our competitors; competitive pressures on pricing and on demand; changes in aircraft fuel prices; disruptions in our supply of aircraft fuel; our ability to cost-effectively hedge against increases in the ~~effects~~price of ~~any hostilities, act of war or terrorist attack;~~aircraft fuel, if we decide to do so; the effects of any technology failures or cybersecurity breaches; disruptions to services provided by third-party service providers; potential reputational or other impact from adverse events involving our aircraft or operations, the aircraft or operations of our regional carriers or our code share partners or the aircraft or operations of another airline; our ability to attract and retain customers; the effects of any terrorist attacks, international hostilities or other security events, or the fear of such events; the mandatory grounding of aircraft in our fleet; disruptions to our regional network; the impact of regulatory, investigative and legal proceedings and legal compliance risks; ~~disruptions to~~the success of our ~~regional network;~~investments in other airlines, including in other parts of the world; industry consolidation or changes in airline alliances; 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; costs associated with any modification or termination of our aircraft orders; ~~potential reputational~~disruptions in the availability of aircraft, parts or other impact from adverse events in our operations, the operations of our regional carriers or the operations of our code share partners; our ability to attract and retain customers; our ability to execute our operational plans and revenue-generating initiatives, including optimizing our revenue; our ability to



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~~control our costs, including realizing benefits~~support from our resource optimization efforts, cost reduction initiatives and fleet replacement programs; the impact of any management changes; our ability to cost-effectively hedge against increases in the price of aircraft fuel if we decide to do so; any potential realized or unrealized gains or losses related to any fuel or currency hedging programs; labor costs;suppliers; our ability to maintain satisfactory labor relations and the results of any collective bargaining agreement process with our union groups; any disruptions to operations due to any potential actions by our labor groups; labor costs; an outbreak of a disease that affects travel demand or travel behavior; the impact of any management changes; extended interruptions or disruptions in service at major airports where we operate; U.S. or foreign governmental legislation, regulation and other actions (including Open Skies agreements, environmental regulations and ~~environmental regulations)~~the United Kingdom's withdrawal from the European Union); ~~industry consolidation or changes in~~the seasonality of the airline ~~alliances;~~industry; weather conditions; the costs and availability of aviation and other insurance; the costs and availability of financing; our ability to maintain adequate liquidity; our ability to comply with the terms of our various financing arrangements; ~~the costs and availability of financing;~~ our ability to ~~maintain adequate liquidity;~~realize the costs and availability of aviation and other insurance; weather conditions; our ability to utilize our net operating losses to offset future taxable income; the impact of changes in tax laws; the successfull value of our ~~investments in airlines in other parts of the world;~~intangible assets and long-lived assets; and other risks and uncertainties set forth under Part I, Item 1A., Risk Factors, of our ~~2017~~2018 Annual Report, and Part II, Item 1A., Risk Factors, of this report, as well as other risks and uncertainties set forth from time to time in the reports we file with the U.S. Securities and Exchange Commission (the "SEC").

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

There have been no material changes in market risk from the information provided in Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk, in our ~~2017~~2018 Annual Report.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Control and Procedures

UAL and United each maintain controls and procedures that are designed to ensure that information required to be disclosed in the reports filed or submitted by UAL and United to the SEC is recorded, processed, summarized and reported, within the time periods specified by the SEC's rules and forms, and is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The management of UAL and United, including the Chief Executive Officer and Chief Financial Officer, performed an evaluation to conclude with reasonable assurance that UAL's and United's disclosure controls and procedures were designed and operating effectively to report the information each company is required to disclose in the reports they file with the SEC on a timely basis. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer of UAL and United have concluded that as of June 30, ~~2018~~2019, disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting during the Quarter Ended June 30, ~~2018~~2019

During the three months ended June 30, ~~2018,~~2019, there were no changes in UAL's or United's internal control over financial reporting that materially affected, or are reasonably likely to materially affect, their internal control over financial reporting (as defined in rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934).



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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Part I, Item 3, Legal Proceedings, of the ~~2017~~2018 Annual Report for a description of legal proceedings.

ITEM 1A. RISK FACTORS

See Part I, Item 1A, Risk Factors, of the ~~2017~~2018 Annual Report for a detailed discussion of the risk factors affecting UAL and ~~United.~~United, and as set forth below:

The mandatory grounding of our Boeing 737 MAX 9 aircraft may have a material adverse effect on our business, operating results and financial condition.

On March 13, 2019, the Federal Aviation Administration issued an emergency order prohibiting the operation of Boeing 737 MAX series airplanes by U.S. certificated operators (the "FAA Order"). As a result, the Company grounded all 14 Boeing 737 MAX 9 aircraft in its fleet. Prior to the grounding, the Company operated approximately 50 flights a day on these aircraft and expected, given the anticipated delivery schedule, to operate approximately 110 flights a day by the end of the year. The long-term operational and financial impact of this action is uncertain and could negatively affect the Company based on a number of factors, including, among others, the period of time the aircraft are unavailable, the availability of replacement aircraft, to the extent needed, and the circumstances of any reintroduction of the grounded aircraft to service. This grounding has affected the status of the scheduled delivery of the five Boeing 737 MAX 9 aircraft that were scheduled for delivery in the second quarter of 2019 and is also expected to affect the timing of future Boeing 737 MAX aircraft deliveries. The extent of the delay of future deliveries is expected to be impacted by the length of time the FAA Order remains in place, Boeing's production rate and the pace at which Boeing can deliver aircraft following the lifting of the FAA Order, among other factors.

Our significant investments in other airlines, including in other parts of the world, and the commercial relationships that we have with those carriers may not produce the returns or results we expect.

An important part of our strategy to expand our global network includes making significant investments in airlines in other parts of the world and expanding our commercial relationships with these carriers. For example, in November 2018, United entered into a revenue-sharing joint business agreement with Aerovías del Continente Americano S.A. ("Avianca"), Copa Airlines and several of their respective affiliates, subject to regulatory approval. Concurrently with this transaction, United, as lender, entered into a Term Loan Agreement (the "BRW Loan Agreement") with, among others, BRW Aviation Holding LLC and BRW Aviation LLC ("BRW"), as guarantor and borrower, respectively, affiliates of Synergy Aerospace Corporation, the majority shareholder of Avianca Holdings S.A. ("AVH"). Pursuant to the BRW Loan Agreement, United provided a $456 million term loan to BRW, secured by a pledge of BRW's equity, as well as BRW's 516 million shares of common stock of AVH (having an implied value equivalent to 64.5 million American Depositary Receipts, the class of AVH securities that trades on the New York Stock Exchange). BRW is currently in default under the BRW Loan Agreement. Additionally, on May 13, 2019, S&P Global Ratings downgraded its AVH issuer level credit ratings from B to CCC+, together with accompanying downgrades for AVH's frequent flyer subsidiary, LifeMiles Ltd. ("LifeMiles"), and for certain outstanding debt of both AVH and LifeMiles. Following these downgrades, and in order to protect the value of its collateral, on May 24, 2019, United began to exercise remedies available to it under the terms of the BRW Loan Agreement and related documents. In connection with the delivery by United of a notice of default to BRW, Kingsland Holdings Limited, AVH's largest minority shareholder, was granted, in accordance with the agreements related to the BRW Loan Agreement, independent authority to manage BRW, which remains the majority shareholder of AVH.

We also have an equity investment in Azul Linhas Aéreas Brasileiras S.A. ("Azul"). See Note 9 to the financial statements included in Part II, Item 8 of the Company's Annual Report on Form 10-K for the year ended December 31, 2018 and Note 7 and Note 8 to the financial statements included in Part I, Item 1 of this report for additional information regarding our investments in Avianca and Azul.

We also have investments in several domestic regional airlines. In January 2019, we completed the acquisition of a 49.9% interest in ManaAir LLC, which, as of immediately following the closing of that investment, owns 100% of the equity interests in ExpressJet Airlines, Inc., a domestic regional airline. We also have minority equity interests in Champlain Enterprises, LLC d/b/a CommutAir and Republic Airways Holdings, Inc. See Note 9 to the financial statements included in Part II, Item 8 of the Company's Annual Report on Form 10-K for the year ended December 31, 2018 for additional information regarding our investments in regional airlines.



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We expect to continue exploring similar non-controlling investments in, and entering into JBAs, commercial agreements, loan transactions and strategic alliances with, other carriers as part of our regional and global business strategy. These transactions and relationships involve significant challenges and risks. We are dependent on these other carriers for significant aspects of our network in the regions in which they operate. While we work closely with these carriers, each is a separately certificated commercial air carrier and we do not have control over their operations, strategy, management or business methods. These airlines also are subject to a number of the same risks as our business, which are described in the Company's Annual Report on Form 10-K for the year ended December 31, 2018 and Part II, Item 1A, Risk Factors, of this report, including competitive pressures on pricing, demand and capacity; changes in aircraft fuel pricing; and the impact of global and local political and economic conditions on operations and customer travel patterns, among others.

As a result of these and other factors, we may not realize a satisfactory return on our investment, and we may not receive repayment of any invested or loaned funds. Further, these investments may not generate the revenue or operational synergies we expect, and they may distract management focus from our operations or other strategic options. Finally, our reliance on these other carriers in the regions in which they operate may negatively impact our regional and global operations and results if those carriers are impacted by general business risks or perform below our expectations or needs. Any one or more of these events could have a material adverse effect on our operating results or financial condition.

We may also be subject to consequences from any improper behavior of JBA partners, including for failure to comply with anti-corruption laws such as the U.S. Foreign Corrupt Practices Act. Furthermore, our relationships with these carriers may be subject to the laws and regulations of non-U.S. jurisdictions in which these carriers are located or conduct business. Any political or regulatory change in these jurisdictions that negatively impact or prohibit our arrangements with these carriers could have an adverse effect on our operating results or financial condition. To the extent that the operations of any of these carriers are disrupted over an extended period of time or their actions subject us to the consequences of failure to comply with laws and regulations, our operating results may be adversely affected.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

(a) None

(b) None

(c) The following table presents repurchases of UAL common stock made in the second quarter of fiscal year ~~2018:~~2019:

Period
Total number of shares purchased (a)(b)

Average price paid per share (b)(c)

Total number of shares purchased as part of publicly announced plans or programs (a)

Approximate dollar value of shares that may yet be purchased under the plans or programs (in millions) (a)
April 2018 3,224,922
$ 68.11
3,224,922
$ 2,212
May 2018 1,789,844
68.42
1,789,844
2,089
June 2018 916,248
71.15
916,248
2,024
Total 5,931,014
5,931,014



Period	Total number of shares purchased (a)(b)	Average price paid per share (b)(c)		Total number of shares purchased as part of publicly announced plans or programs (a)	Approximate dollar value of shares that may yet be purchased under the plans or programs (in millions) (a)
April 2019	1,861,200	$	85.91	1,861,200	$	1,063
May 2019	2,471,287	82.49		2,471,287	859
June 2019	2,037,089	84.31		2,037,089	687
Total	6,369,576			6,369,576

(a) In December 2017, UAL's Board of Directors authorized a $3.0 billion share repurchase program to acquire UAL's common stock. As of June 30, ~~2018,~~2019, the Company had approximately ~~$2.0~~$0.7 billion remaining to purchase shares under its December 2017 repurchase authorization. On July 15, 2019, UAL’s Board of Directors authorized a new $3.0 billion share repurchase ~~program.~~program to acquire UAL’s common stock. UAL may repurchase shares through the open market, privately negotiated transactions, block trades or accelerated share repurchase transactions from time to time in accordance with applicable securities laws.

(b) The table does not include shares withheld from employees to satisfy certain tax obligations due upon the vesting of restricted stock awards and restricted stock units. The United Continental Holdings, Inc. 2017 Incentive Compensation Plan and the United Continental Holdings, Inc. 2008 Incentive Compensation Plan each provide for the withholding of shares to satisfy tax obligations due upon the vesting of restricted stock. However, these plans do not specify a maximum number of shares that may be withheld for this purpose. A total of ~~1,226~~2,174 shares were withheld under these plans in the second quarter of ~~2018~~2019 at an average price per share of ~~$69.17.~~$83.97. These shares of common stock withheld to satisfy tax withholding obligations may be deemed to be "issuer purchases" of shares that are required to be disclosed pursuant to this Item.



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ITEM 6. EXHIBITS.

EXHIBIT INDEX



Exhibit No.	Registrant	Exhibit

~~10.1~~3.1	UAL ~~United~~	~~Second Amendment, dated as of May 16, 2018, to~~ Amended and Restated ~~Credit Guaranty Agreement~~Certificate of Incorporation of United Airlines Holdings, Inc. (filed as Exhibit 3.1 to UAL’s Form 8-K filed June 27, 2019, Commission file number 1-6033, and incorporated herein by reference)

~~^10.2~~3.2	UAL ~~United~~	~~Supplemental Agreement No. 10, including exhibits~~Amended and ~~side letters, to Purchase Agreement No. 03776, dated as~~Restated Bylaws of ~~May 15, 2018, between The Boeing Company and~~ United Airlines Holdings, Inc. (filed as Exhibit 3.2 to UAL’s Form 8-K filed June 27, 2019, Commission file number 1-6033, and incorporated herein by reference)

~~^10.3~~4.1	UAL United	Fifth Supplemental ~~Agreement No. 9, including exhibits and side letters, to Purchase Agreement No. 3860,~~Indenture, dated as of May ~~31, 2018, between The Boeing Company and~~9, 2019, among United Continental Holdings, Inc., United Airlines, Inc. and The Bank of New York Mellon Trust Company, N.A., as Trustee (filed as Exhibit 4.2 to UAL’s Form 8-K filed May 10, 2019, Commission file 1-6033 and incorporated herein by reference)

~~12.1~~4.2	UAL United	~~United Continental Holdings, Inc.~~Form of 4.875% Senior Notes due 2025 (filed as Exhibit A to Exhibit 4.2 to UAL’s Form 8-K filed May 10, 2019, Commission file 1-6033 and ~~Subsidiary Companies Computation of Ratio of Earnings to Fixed Charges~~incorporated herein by reference)

~~12.2~~4.3	UAL United	~~United Airlines, Inc.~~Form of Notation of Note Guarantee (filed as Exhibit B to Exhibit 4.2 to UAL’s Form 8-K filed May 10, 2019, Commission file 1-6033 and ~~Subsidiary Companies Computation of Ratio of Earnings to Fixed Charges~~incorporated herein by reference)

31.1	UAL	Certification of the Principal Executive Officer of United ~~Continental~~Airlines Holdings, Inc. Pursuant to 15U.S.C. 78m(a) or 78o(d) (Section 302 of the Sarbanes-Oxley Act of 2002)

31.2	UAL	Certification of the Principal Financial Officer of United ~~Continental~~Airlines Holdings, Inc. Pursuant to 15U.S.C. 78m(a) or 78o(d) (Section 302 of the Sarbanes-Oxley Act of 2002)

31.3	United	Certification of the Principal Executive Officer of United Airlines, Inc. Pursuant to 15 U.S.C. 78m(a) or 78o(d) (Section 302 of the Sarbanes-Oxley Act of 2002)

31.4	United	Certification of the Principal Financial Officer of United Airlines, Inc. Pursuant to 15 U.S.C. 78m(a) or 78o(d) (Section 302 of the Sarbanes-Oxley Act of 2002)

32.1	UAL	Certification of the Chief Executive Officer and Chief Financial Officer of United ~~Continental~~Airlines Holdings, Inc. Pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)

32.2	United	Certification of the Chief Executive Officer and Chief Financial Officer of United Airlines, Inc. Pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)

101.1	UAL United	XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

101.2	UAL United	XBRL Taxonomy Extension Schema Document

101.3	UAL United	XBRL Taxonomy Extension Calculation Linkbase Document

101.4	UAL United	XBRL Taxonomy Extension Definition Linkbase Document

101.5	UAL United	XBRL Taxonomy Extension Labels Linkbase Document

101.6	UAL United	XBRL Taxonomy Extension Presentation Linkbase Document

~~^ Confidential portion of this exhibit has been omitted and filed separately with the SEC pursuant to a request for confidential treatment.~~



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.




		United ~~Continental~~Airlines Holdings, Inc.
		(Registrant)

Date:	July ~~18, 2018~~17, 2019	By:	/s/ Gerald Laderman
			Gerald Laderman ~~Senior~~ Executive Vice President ~~Finance~~ and ~~acting~~ Chief Financial Officer (Principal Financial Officer)

Date:	July ~~18, 2018~~17, 2019	By:	/s/ Chris Kenny
			Chris Kenny Vice President and Controller (Principal Accounting Officer)


		United Airlines, Inc.
		(Registrant)

Date:	July ~~18, 2018~~17, 2019	By:	/s/ Gerald Laderman
			Gerald Laderman ~~Senior~~ Executive Vice President ~~Finance~~ and ~~acting~~ Chief Financial Officer (Principal Financial Officer)

Date:	July ~~18, 2018~~17, 2019	By:	/s/ Chris Kenny
			Chris Kenny Vice President and Controller (Principal Accounting Officer)

3941



	Three Months Ended June 30, 2017
	As Previously Reported			New Revenue Standard Adjustments			New Retirement Standard Adjustments			As Adjusted
Passenger revenue	$	8,622		$	529		$	—		$	9,151
Cargo	254			19			—			273
Other operating revenue	1,124			(540		)	—			584
Total operating revenue	10,000			8			—			10,008

Salaries and related costs	2,868			—			(26		)	2,842
Distribution expenses	362			23			—			385
Other operating expenses	1,408			(27		)	—			1,381
Total operating expenses	8,601			(4		)	(26		)	8,571

Operating income	1,399			12			26			1,437

Interest expense	(158		)	(9		)	—			(167		)
Miscellaneous, net	(1		)	—			(26		)	(27		)
Total nonoperating expense, net	(125		)	(9		)	(26		)	(160		)

Income before income taxes	1,274			3			—			1,277
Income tax expense	456			—			—			456
Net income	818			3			—			821

Earnings per share, basic	2.67			—			—			2.67
Earnings per share, diluted	2.66			0.01			—			2.67



	Six Months Ended June 30, 2017
	As Previously Reported			New Revenue Standard Adjustments			New Retirement Standard Adjustments			As Adjusted
Passenger revenue	$	15,796		$	1,008		$	—		$	16,804
Cargo	474			37			—			511
Other operating revenue	2,150			(1,031		)	—			1,119
Total operating revenue	18,420			14			—			18,434

Salaries and related costs	5,529			—			(51		)	5,478
Distribution expenses	669			35			—			704
Other operating expenses	2,740			(50		)	—			2,690
Total operating expenses	16,743			(15		)	(51		)	16,677

Operating income	1,677			29			51			1,757

Interest expense	(308		)	(21		)	—			(329		)
Miscellaneous, net	(18		)	—			(51		)	(69		)
Total nonoperating expense, net	(258		)	(21		)	(51		)	(330		)

Income before income taxes	1,419			8			—			1,427
Income tax expense	505			2			—			507
Net income	914			6			—			920

Earnings per share, basic	2.95			0.01			—			2.96
Earnings per share, diluted	2.94			0.02			—			2.96



	At December 31, 2017
	As Previously Reported		New Revenue Standard Adjustments		As Adjusted
Prepaid expenses and other	$	1,051	$	20	$	1,071
Total current assets	7,113		20		7,133
Total assets	42,326		20		42,346



Advance ticket sales	3,876	64		3,940
Frequent flyer deferred revenue	2,176	16		2,192
Other	569	7		576
Total current liabilities	12,676	87		12,763

Frequent flyer deferred revenue - long-term	2,565	26		2,591
Deferred income taxes	225	(21	)	204
Total other liabilities and deferred credits	8,145	5		8,150

Retained earnings	4,621	(72	)	4,549
Total stockholders' equity	8,806	(72	)	8,734
Total liabilities and stockholders' equity	42,326	20		42,346



UAL	Pension and Other Postretirement Liabilities			Investments and Other			Income Taxes			Total
UAL	Pension and Other Postretirement Liabilities			Investments and Other			Income Taxes			Total
Balance at March 31, 2018	$	(1,063	)	$	(3	)	$	(48	)	$	(1,114	)
Changes in value	1			1			—			2
Amounts reclassified to earnings	14			—			(4		)	10
Net change	15			1			(4		)	12
Balance at June 30, 2018	$	(1,048	)	$	(2	)	$	(52	)	$	(1,102	)
Balance at December 31, 2017	$	(1,102	)	$	(6	)	$	(39	)	$	(1,147	)
Changes in value	24			(3		)	(6		)	15
Amounts reclassified to earnings	30			—			(7		)	23
Amounts reclassified to retained earnings	—			7			—			7
Net change	54			4			(13		)	45
Balance at June 30, 2018	$	(1,048	)	$	(2	)	$	(52	)	$	(1,102	)

Balance at March 31, 2017	$	(867	)	$	1		$	30		$	(836	)
Changes in value	(7		)	(17		)	8			(16		)
Amounts reclassified to earnings	14			—			(6		)	8
Net change	7			(17		)	2			(8		)
Balance at June 30, 2017	$	(860	)	$	(16	)	$	32		$	(844	)
Balance at December 31, 2016	$	(854	)	$	(1	)	$	26		$	(829	)
Changes in value	(33		)	(17		)	18			(32		)
Amounts reclassified to earnings	27			2			(12		)	17
Net change	(6		)	(15		)	6			(15		)
Balance at June 30, 2017	$	(860	)	$	(16	)	$	32		$	(844	)



	June 30, 2018								December 31, 2017
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	2,884	$	2,884	$	—	$	—	$	1,482	$	1,482	$	—	$	—
Short-term investments:
Corporate debt	958		—		958		—		958		—		958		—
Asset-backed securities	722		—		722		—		753		—		753		—
U.S. government and agency notes	102		—		102		—		113		—		113		—
Certificates of deposit placed through an account registry service ("CDARS")	49		—		49		—		120		—		120		—
Other fixed-income securities	170		—		170		—		188		—		188		—
Other investments measured at net asset value ("NAV")	186		—		—		—		184		—		—		—
Restricted cash	107		107		—		—		109		109		—		—
Long-term investments:
Equity securities	147		147		—		—		99		99		—		—
Enhanced equipment trust certificates ("EETC")	19		—		—		19		22		—		—		22



	(in billions)
Last six months of 2018	$	1.7
2019	3.3
2020	3.0
2021	2.8
2022	1.8
After 2022	9.8
	$	22.4



	Facility and Other Operating Leases
Last six months of 2018	$	689
2019	1,244
2020	1,338
2021	1,104
2022	966
After 2022	7,934
	$	13,275



EETC Date	Class	Principal		Final expected distribution date	Stated interest rate	Total proceeds received from issuance of debt during 2018 and recorded as debt as of June 30, 2018
February 2018	AA	$	677	March 2030	3.50%	$	677
February 2018	A	258		March 2030	3.70%	258
May 2018	B	226		March 2026	4.60%	226
		$	1,161			$	1,161



	Severance and Benefits			Permanently Grounded Aircraft
Balance at December 31, 2017	$	37		$	22
Accrual	25			—
Payments	(34		)	(2		)
Balance at June 30, 2018	$	28		$	20