FORM10-Q
| FORM | 10-Q | ||||||||||
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
2023
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
| Commission
| Specified in its Charter, Executive Office Address and Telephone Number | State of
| I.R.S. Employer
| |||||||||||||||||||||||||||||||||||||||||
| 001-06033 | United | Delaware | 36-2675207 | ||||||||||||||||||||||||||||||||||||||||
| 233 South Wacker Drive,
| Chicago, | 60606 | ||||||||||||||||||||||||||||||||||||||||||
| (872) | 825-4000 | ||||||||||||||||||||||||||||||||||||||||||
| 001-10323 | United Airlines, Inc. | Delaware | 74-2099724 | |||||||||||||||||||||||||||||||||||||||||
| 233 South Wacker Drive,
| Chicago, | 60606 | ||||||||||||||||||||||||||||||||||||||||||
| (872) | 825-4000 | |||||||||||||||||||||||||||||||||||||||||||
| Securities registered pursuant to Section 12(b) of the Act | |||||||||||||||||||||||
| Registrant | Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||||||||||||||||||||
| United Airlines Holdings, Inc. | Common Stock, $0.01 par value | UAL | The Nasdaq Stock Market LLC | ||||||||||||||||||||
| United Airlines Holdings, Inc. | Preferred Stock Purchase Rights | None | The Nasdaq Stock Market LLC | ||||||||||||||||||||
| United Airlines, Inc. | None | None | None | ||||||||||||||||||||
| United | ||||||||||||||||||||||||||||||||||||||
| Yes | ☒ | No | ☐ | United Airlines, Inc. | Yes | ☒ | No | ☐ | ||||||||||||||||||||||||||||||
| United | ||||||||||||||||||||||||||||||||||||||
| Yes | ☒ | No | ☐ | United Airlines, Inc. | Yes | ☒ | No | ☐ | ||||||||||||||||||||||||||||||
United | Large accelerated filer | ☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | ☐ | Emerging growth company | ☐ | |||||||||||||||||||||||
United Airlines, Inc. | Large accelerated filer | ☐ | Accelerated filer | ☐ | Non-accelerated filer | ☒ | Smaller reporting company | ☐ | Emerging growth company | ☐ | |||||||||||||||||||||||
| United | ☐ | ||||||||||||
| United Airlines, Inc. | ☐ | ||||||||||||
| United | Yes | ☐ | No | ☒ | ||||||||||||||||||
| United Airlines, Inc. | Yes | ☐ | No | ☒ | ||||||||||||||||||
United | 328,014,680 | |||||||||||
United Airlines, Inc. | 1,000 |
| shares of common stock ($0.01 par value) (100% owned by United
| |||||||||
(UNAUDITED Operating revenue: Passenger—Mainline Passenger—Regional Total passenger revenue Cargo Other operating revenue Total operating revenue Operating expense: Salaries and related costs Aircraft fuel Landing fees and other rent Regional capacity purchase Depreciation and amortization Aircraft maintenance materials and outside repairs Distribution expenses Aircraft rent Special charges (Note 10) Other operating expenses Total operating expenses Operating income Nonoperating income (expense): Interest expense Interest capitalized Interest income Miscellaneous, net (Note 10) Total nonoperating expense, net Income before income taxes Income tax expense Net income Earnings per share, basic Earnings per share, diluted Net income Other comprehensive income (loss), net change related to: Fuel derivative financial instruments, net of taxes Employee benefit plans, net of taxes Investments and other, net of taxes Total other comprehensive income (loss), net Total comprehensive income, net (UNAUDITED) ASSETS Current assets: Cash and cash equivalents Short-term investments Receivables, less allowance for doubtful accounts (2017 — $11; 2016 — $10) Aircraft fuel, spare parts and supplies, less obsolescence allowance (2017 — $342; 2016 — $295) Prepaid expenses and other Total current assets Operating property and equipment: Owned— Flight equipment Other property and equipment Total owned property and equipment Less — Accumulated depreciation and amortization Total owned property and equipment, net Purchase deposits for flight equipment Capital leases— Flight equipment Other property and equipment Total capital leases Less — Accumulated amortization Total capital leases, net Total operating property and equipment, net Other assets: Goodwill Intangibles, less accumulated amortization (2017 — $1,294; 2016 — $1,234) Deferred income taxes Restricted cash Investments in affiliates and other, net Total other assets Total assets (UNAUDITED) LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Advance ticket sales Accounts payable Frequent flyer deferred revenue Accrued salaries and benefits Current maturities of long-term debt Current maturities of capital leases Other Total current liabilities Long-term debt Long-term obligations under capital leases Other liabilities and deferred credits: Frequent flyer deferred revenue Postretirement benefit liability Pension liability Deferred income taxes Advanced purchase of miles Lease fair value adjustment, net Other Total other liabilities and deferred credits Commitments and contingencies Stockholders’ equity: Preferred stock Common stock at par, $0.01 par value; authorized 1,000,000,000 shares; outstanding 296,252,431 and 314,612,744 shares at September 30, 2017 and December 31, 2016, respectively Additional capital invested Retained earnings Stock held in treasury, at cost Accumulated other comprehensive loss Total stockholders’ equity Total liabilities and stockholders’ equity Cash Flows from Operating Activities: Net cash provided by operating activities Cash Flows from Investing Activities: Capital expenditures Purchases of short-term and other investments Proceeds from sale of short-term and other investments Proceeds from sale of property and equipment Investment in and loans to affiliates Other, net Net cash used in investing activities Cash Flows from Financing Activities: Proceeds from issuance of long-term debt and airport construction financing Repurchases of common stock Payments of long-term debt Principal payments under capital leases Other, net Net cash used in financing activities Net decrease in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash at beginning of the period Cash, cash equivalents and restricted cash at end of the period (a) Investing and Financing Activities Not Affecting Cash: Property and equipment acquired through the issuance of debt and capital leases Airport construction financing Operating lease conversions to capital lease Reconciliation of cash, cash equivalents and restricted cash: Current assets: Cash and cash equivalents Restricted cash included in Prepaid expenses and other Other assets: Restricted cash Total cash, cash equivalents and restricted cash Operating revenue: Passenger—Mainline Passenger—Regional Total passenger revenue Cargo Other operating revenue Total operating revenue Operating expense: Salaries and related costs Aircraft fuel Landing fees and other rent Regional capacity purchase Depreciation and amortization Aircraft maintenance materials and outside repairs Distribution expenses Aircraft rent Special charges (Note 10) Other operating expenses Total operating expense Operating income Nonoperating income (expense): Interest expense Interest capitalized Interest income Miscellaneous, net (Note 10) Total nonoperating expense, net Income before income taxes Income tax expense Net income Net income Other comprehensive income (loss), net change related to: Fuel derivative financial instruments, net of taxes Employee benefit plans, net of taxes Investments and other, net of taxes Total other comprehensive income (loss), net Total comprehensive income, net COMPREHENSIVE INCOME (LOSS) (UNAUDITED) ASSETS Current assets: Cash and cash equivalents Short-term investments Receivables, less allowance for doubtful accounts (2017 — $11; 2016 — $10) Aircraft fuel, spare parts and supplies, less obsolescence allowance (2017 — $342; 2016 — $295) Prepaid expenses and other Total current assets Operating property and equipment: Owned— Flight equipment Other property and equipment Total owned property and equipment Less — Accumulated depreciation and amortization Total owned property and equipment, net Purchase deposits for flight equipment Capital leases— Flight equipment Other property and equipment Total capital leases Less — Accumulated amortization Total capital leases, net Total operating property and equipment, net Other assets: Goodwill Intangibles, less accumulated amortization (2017 — $1,294; 2016 — $1,234) Deferred income taxes Restricted cash Investments in affiliates and other, net Total other assets Total assets Current liabilities: Advance ticket sales Accounts payable Frequent flyer deferred revenue Accrued salaries and benefits Current maturities of long-term debt Current maturities of capital leases Other Total current liabilities Long-term debt Long-term obligations under capital leases Other liabilities and deferred credits: Frequent flyer deferred revenue Postretirement benefit liability Pension liability Deferred income taxes Advanced purchase of miles Lease fair value adjustment, net Other Total other liabilities and deferred credits 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 September 30, 2017 and December 31, 2016 Additional capital invested Retained earnings Accumulated other comprehensive loss Receivable from related parties Total stockholder’s equity Total liabilities and stockholder’s equity millions) Cash Flows from Operating Activities: Net cash provided by operating activities Cash Flows from Investing Activities: Capital expenditures Purchases of short-term investments and other investments Proceeds from sale of short-term and other investments Proceeds from sale of property and equipment Investment in and loans to affiliates Other, net Net cash used in investing activities Cash Flows from Financing Activities: Proceeds from issuance of long-term debt and airport construction financing Dividend to UAL Payments of long-term debt Principal payments under capital leases Other, net Net cash used in financing activities Net decrease in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash at beginning of the period Cash, cash equivalents and restricted cash at end of the period (a) Investing and Financing Activities Not Affecting Cash: Property and equipment acquired through the issuance of debt and capital leases Airport construction financing Operating lease conversions to capital lease Reconciliation of cash, cash equivalents and restricted cash: Current assets: Cash and cash equivalents Restricted cash included in Prepaid expenses and other Other assets: Restricted cash Total cash, cash equivalents and restricted cash — REVENUE revenue. Changes in estimates of breakage are recognized prospectively in proportion to the remaining usage of the related tickets. next 12 months. March 2023. Balance at June 30, 2017 Changes in value Amounts reclassified to earnings Net change Balance at September 30, 2017 Balance at December 31, 2016 Changes in value Amounts reclassified to earnings Net change Balance at September 30, 2017 Balance at June 30, 2016 Changes in value Amounts reclassified to earnings Net change Balance at September 30, 2016 Balance at December 31, 2015 Changes in value Amounts reclassified to earnings Net change Balance at September 30, 2016 Details about AOCI Components Amortization of unrecognized losses and prior service cost (a) Reclassifications of losses into earnings Reclassifications of gains into earnings Total Total Share-based compensation expense Unrecognized share-based compensation consolidated operations. Cash and cash equivalents Short-term investments: Corporate debt Asset-backed securities Certificates of deposit placed through an account registry service (“CDARS”) U.S. government and agency notes Other fixed-income securities Other investments measured at NAV Long-term investments: Equity securities Enhanced equipment trust certificates (“EETC”) Long-term debt . Carrying amounts include any related discounts, premiums and issuance costs: Description Fair Value Methodology Fuel contracts Fuel contracts 12 years. Last three months of 2017 2018 2019 2020 2021 After 2021 nine months ended September 30, 2023 CPAs based on our assumptions. The Last three months of 2017 2018 2019 2020 2021 After 2021 are presented in the table below 2041. EETC Date Class Final expected September 2016 September 2016 247 June 2016 June 2016 Last three months of 2017 2018 2019 2020 2021 After 2021 Severance and benefit costs Impairment of assets Labor agreement costs Cleveland airport lease restructuring (Gains) losses on sale of assets and other special charges Special charges Nonoperating: Other (gain) loss Special charges before income taxes Income tax benefit related to special charges Total special charges, net of tax assets and other special charges. equity securities. Balance at December 31, 2016 Accrual Payments Balance at September 30, 2017 Balance at December 31, 2015 Accrual Payments Balance at September 30, 2016 30, 2022, the Company recorded $7 million of charges primarily related to the early redemption of $400 million of the outstanding principal amount of its 4.25% senior notes due 2022. changing and new legal requirements generally cannot be reasonably predicted and those requirements may ultimately require extensive system and operational changes, be difficult to implement, increase our operating costs and require significant capital expenditures. 2022. 2022 Operating revenue Operating expense Operating income Nonoperating expense Income tax expense Net income Passengers (thousands) (a) Revenue passenger miles (“RPMs”) (millions) (b) Available seat miles (“ASMs”) (millions) (c) Passenger load factor (d) Passenger revenue per available seat mile (“PRASM”) (cents) Average yield per revenue passenger mile (“Yield”) (cents) (e) Cost per available seat mile (“CASM”) (cents) Average price per gallon of fuel, including fuel taxes Fuel gallons consumed (millions) Average full-time equivalent employees Revenue. Passenger—Mainline Passenger—Regional Total passenger revenue Cargo Other operating revenue Total operating revenue Increase (decrease) from 2016: Passenger revenue (in millions) Average fare per passenger PRASM RPMs (traffic) Passenger load factor (points) a 15.7% increase in capacity, partially offset by a slight decrease in passenger load factor. Expenses. Salaries and related costs Aircraft fuel Landing fees and other rent Regional capacity purchase Depreciation and amortization Aircraft maintenance materials and outside repairs Distribution expenses Aircraft rent Special charges Other operating expenses Total operating expenses a change in the profit sharing formula as a result of the new pilot agreement. Total aircraft fuel purchase cost excluding fuel hedge impacts Hedge losses reported in fuel expense Fuel expense Total fuel consumption (gallons) period (in millions, except percentage change and per gallon data): passenger revenue. Severance and benefit costs Impairment of assets Labor agreement costs (Gains) losses on sale of assets and other special charges Special charges information Interest expense Interest capitalized Interest income Miscellaneous, net Total 2022 Operating revenue Operating expense Operating income Nonoperating expense Income tax expense Net income Passengers (thousands) (a) RPMs (millions) (b) ASMs (millions) (c) Passenger load factor (d) PRASM (cents) Yield (cents) (e) CASM (cents) Average price per gallon of fuel, including fuel taxes Fuel gallons consumed (millions) Average full-time equivalent employees Revenue. Passenger—Mainline Passenger—Regional Total passenger revenue Cargo Other operating revenue Total operating revenue Passenger revenue (in millions) Average fare per passenger Yield PRASM Passengers RPMs (traffic) ASMs (capacity) an 18.5% increase in capacity as well as strength in both yield and passenger load factor. Expenses. Salaries and related costs Aircraft fuel Landing fees and other rent Regional capacity purchase Depreciation and amortization Aircraft maintenance materials and outside repairs Distribution expenses Aircraft rent Special charges Other operating expenses Total operating expenses a change in the profit sharing formula as a result of the new pilot agreement Total fuel consumption (gallons) enplaned passengers. passenger revenue. Severance and benefit costs Impairment of assets Labor agreement costs Cleveland airport lease restructuring (Gains) losses on sale of assets and other special charges Special charges information Interest expense Interest capitalized Interest income Miscellaneous, net Total compliance with their respective debt covenants. As of September 30, information. *The credit agency does not issue corporate credit ratings for subsidiary entities. time by a rating agency if such rating agency decides that circumstances warrant such a change. law or regulation. 2022 Form 10-K. 2023 Period July 2017 August 2017 September 2017 Total no assurance that such approvals and clearances will be granted or will continue in effect upon further regulatory review or that changes in regulatory requirements or standards can be satisfied. Exhibit No. Exhibit The following financial statements from the combined Quarterly Report of UAL and United Date: ContinentalAirlines Holdings, Inc.QuarterQuarterly Period Ended September 30, 20172023Page Item 1.United Continental Holdings, Inc.:United Airlines, Inc.:89101213Management’s Management's Discussion and Analysis of Financial Condition and Results of Operations38Item 1.39Item 1A.39Item 2.39Item 6.394041ITEM 1.FINANCIAL STATEMENTS.(UNAUDITED) Three Months Ended
September 30, Nine Months Ended
September 30, 2017 2016 2017 2016 $ 7,083 $ 7,017 $ 19,970 $ 19,119 1,445 1,586 4,354 4,577 8,528 8,603 24,324 23,696 257 224 731 626 1,093 1,086 3,243 3,182 9,878 9,913 28,298 27,504 2,812 2,625 8,341 7,707 1,809 1,603 5,038 4,258 585 546 1,670 1,612 567 572 1,652 1,645 556 503 1,610 1,473 451 451 1,377 1,301 352 345 1,021 987 145 168 476 521 50 45 145 669 1,459 1,431 4,199 3,998 8,786 8,289 25,529 24,171 1,092 1,624 2,769 3,333 (164) (150) (472) (466) 20 20 64 48 17 14 41 31 15 2 (3) (11) (112) (114) (370) (398) 980 1,510 2,399 2,935 343 545 848 1,069 $ 637 $ 965 $ 1,551 $ 1,866 $ 2.12 $ 3.02 $ 5.06 $ 5.57 $ 2.12 $ 3.01 $ 5.04 $ 5.57 Three Months Ended September 30, Nine Months Ended
September 30, 2023 2022 2023 2022 Operating revenue: Passenger revenue $ 13,349 $ 11,653 $ 36,625 $ 28,830 Cargo 333 498 1,093 1,699 Other operating revenue 802 726 2,373 2,026 Total operating revenue 14,484 12,877 40,091 32,555 Operating expense: Salaries and related costs 3,914 2,843 10,946 8,466 Aircraft fuel 3,342 3,755 9,336 9,796 Landing fees and other rent 801 639 2,283 1,919 Aircraft maintenance materials and outside repairs 684 619 2,072 1,553 Depreciation and amortization 663 610 1,987 1,832 Regional capacity purchase 592 596 1,806 1,728 Distribution expenses 516 482 1,406 1,101 Aircraft rent 46 65 151 193 Special charges 29 20 902 124 Other operating expenses 2,158 1,790 5,989 4,883 Total operating expense 12,745 11,419 36,878 31,595 Operating income 1,739 1,458 3,213 960 Nonoperating income (expense): Interest expense (493) (455) (1,472) (1,299) Interest income 234 104 620 142 Interest capitalized 48 27 128 73 Unrealized gains (losses) on investments, net (54) 28 54 (12) Miscellaneous, net 11 (9) 73 (4) Total nonoperating expense, net (254) (305) (597) (1,100) Income (loss) before income tax expense (benefit) 1,485 1,153 2,616 (140) Income tax expense (benefit) 348 211 598 (34) Net income (loss) $ 1,137 $ 942 $ 2,018 $ (106) Earnings (loss) per share, basic $ 3.47 $ 2.88 $ 6.16 $ (0.33) Earnings (loss) per share, diluted $ 3.42 $ 2.86 $ 6.08 $ (0.33) Three Months Ended
September 30, Nine Months Ended
September 30, 2017 2016 2017 2016 $ 637 $ 965 $ 1,551 $ 1,866 — 12 1 123 3 (75) (1) (89) 17 (1) 5 (1) 20 (64) 5 33 $ 657 $ 901 $ 1,556 $ 1,899 Three Months Ended September 30, Nine Months Ended
September 30, 2023 2022 2023 2022 Net income (loss) $ 1,137 $ 942 $ 2,018 $ (106) Other comprehensive income (loss), net of tax: Employee benefit plans (20) — (89) 9 Investments and other 8 (20) 5 (31) Total other comprehensive loss, net of tax (12) (20) (84) (22) Total comprehensive income (loss), net $ 1,125 $ 922 $ 1,934 $ (128) (Unaudited)
September 30, 2017 December 31, 2016 $ 1,870 $ 2,179 2,458 2,249 1,603 1,176 937 873 1,009 832 7,877 7,309 29,043 25,873 6,186 5,652 35,229 31,525 (11,358) (9,975) 23,871 21,550 1,044 1,059 1,136 1,319 488 331 1,624 1,650 (910) (941) 714 709 25,629 23,318 4,523 4,523 3,558 3,632 — 655 96 124 882 579 9,059 9,513 $ 42,565 $ 40,140 September 30, 2023 December 31, 2022 ASSETS Current assets: Cash and cash equivalents $ 7,478 $ 7,166 Short-term investments 9,608 9,248 Restricted cash 392 45 Receivables, less allowance for credit losses (2023 — $14; 2022 — $11) 2,193 1,801 Aircraft fuel, spare parts and supplies, less obsolescence allowance (2023 — $665; 2022 — $610) 1,513 1,109 Prepaid expenses and other 728 689 Total current assets 21,912 20,058 Operating property and equipment: Flight equipment 46,938 42,775 Other property and equipment 10,157 9,334 Purchase deposits for flight equipment 3,379 2,820 Total operating property and equipment 60,474 54,929 Less — Accumulated depreciation and amortization (22,114) (20,481) Total operating property and equipment, net 38,360 34,448 Operating lease right-of-use assets 3,975 3,889 Other assets: Goodwill 4,527 4,527 Intangibles, less accumulated amortization (2023 — $1,486; 2022 — $1,472) 2,735 2,762 Restricted cash 240 210 Deferred income taxes — 91 Investments in affiliates and other, less allowance for credit losses (2023 — $27; 2022 — $21) 1,404 1,373 Total other assets 8,906 8,963 Total assets $ 73,153 $ 67,358 CONTINENTALAIRLINES HOLDINGS, INC. (Unaudited)
September 30, 2017 December 31, 2016 $ 4,537 $ 3,730 2,231 2,139 1,992 2,135 1,983 2,307 1,516 849 125 116 703 1,010 13,087 12,286 11,334 9,918 968 822 2,793 2,748 1,588 1,581 1,631 1,892 253 — 106 430 219 277 1,616 1,527 8,206 8,455 — — 3 3 6,591 6,569 4,991 3,427 (1,791) (511) (824) (829) 8,970 8,659 $ 42,565 $ 40,140 September 30, 2023 December 31, 2022 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 4,206 $ 3,395 Accrued salaries and benefits 3,815 1,971 Advance ticket sales 8,392 7,555 Frequent flyer deferred revenue 2,969 2,693 Current maturities of long-term debt 3,649 2,911 Current maturities of operating leases 598 561 Current maturities of finance leases 271 104 Current maturities of other financial liabilities 44 23 Other 812 779 Total current liabilities 24,756 19,992 Long-term debt 25,932 28,283 Long-term obligations under operating leases 4,493 4,459 Long-term obligations under finance leases 71 115 Other liabilities and deferred credits: Frequent flyer deferred revenue 4,107 3,982 Pension liability 800 747 Postretirement benefit liability 621 671 Deferred income taxes 472 — Other financial liabilities 1,648 844 Other 1,400 1,369 Total other liabilities and deferred credits 9,048 7,613 Commitments and contingencies Stockholders' equity: Preferred stock — — Common stock at par, $0.01 par value; authorized 1,000,000,000 shares; outstanding 328,013,283 and 326,930,321 shares at September 30, 2023 and December 31, 2022, respectively 4 4 Additional capital invested 8,968 8,986 Stock held in treasury, at cost (3,442) (3,534) Retained earnings 3,232 1,265 Accumulated other comprehensive income 91 175 Total stockholders' equity 8,853 6,896 Total liabilities and stockholders' equity $ 73,153 $ 67,358 Nine Months Ended
September 30, 2017 2016 $ 2,685 $ 4,884 (2,900) (2,343) (2,584) (1,989) 2,380 1,957 8 24 — (8) 142 (5) (2,954) (2,364) 2,119 510 (1,291) (2,442) (722) (911) (84) (95) (77) (40) (55) (2,978) (324) (458) 2,303 3,212 $ 1,979 $ 2,754 $ 918 $ 115 41 68 — 12 Nine Months Ended
September 30, 2023 2022 Cash Flows from Operating Activities: Net cash provided by operating activities $ 7,821 $ 4,908 Cash Flows from Investing Activities: Capital expenditures, net of flight equipment purchase deposit returns (5,105) (2,280) Purchases of short-term and other investments (8,875) (8,384) Proceeds from sale of short-term and other investments 8,614 1,061 Proceeds from sale of property and equipment 20 184 Other, net (17) (23) Net cash used in investing activities (5,363) (9,442) Cash Flows from Financing Activities: Proceeds from issuance of debt and other financing liabilities, net of discounts and fees 1,685 210 Payments of long-term debt, finance leases and other financing liabilities (3,423) (2,605) Other, net (31) (77) Net cash used in financing activities (1,769) (2,472) Net increase (decrease) in cash, cash equivalents and restricted cash 689 (7,006) Cash, cash equivalents and restricted cash at beginning of the period 7,421 18,533 Cash, cash equivalents and restricted cash at end of the period (a) $ 8,110 $ 11,527 Investing and Financing Activities Not Affecting Cash: Property and equipment acquired through the issuance of debt, finance leases and other $ 677 $ — Right-of-use assets acquired through operating leases 470 98 Lease modifications and lease conversions 438 61 Investment interests received in exchange for goods and services 25 93 $ 1,870 $ 2,630 13 1 96 123 $ 1,979 $ 2,754 Current assets: Cash and cash equivalents $ 7,478 $ 11,258 Restricted cash — Current 392 61 Restricted cash — Non-Current 240 208 Total cash, cash equivalents and restricted cash $ 8,110 $ 11,527 OPERATIONSSTOCKHOLDERS' EQUITY (UNAUDITED) Three Months Ended
September 30, Nine Months Ended
September 30, 2017 2016 2017 2016 $ 7,083 $ 7,017 $ 19,970 $ 19,119 1,445 1,586 4,354 4,577 8,528 8,603 24,324 23,696 257 224 731 626 1,093 1,086 3,243 3,182 9,878 9,913 28,298 27,504 2,812 2,625 8,341 7,707 1,809 1,603 5,038 4,258 585 546 1,670 1,612 567 572 1,652 1,645 556 503 1,610 1,473 451 451 1,377 1,301 352 345 1,021 987 145 168 476 521 50 45 145 669 1,459 1,431 4,198 3,997 8,786 8,289 25,528 24,170 1,092 1,624 2,770 3,334 (164) (150) (472) (466) 20 20 64 48 17 14 41 31 15 2 (3) (11) (112) (114) (370) (398) 980 1,510 2,400 2,936 343 545 848 1,069 $ 637 $ 965 $ 1,552 $ 1,867 Common
StockAdditional
Capital InvestedTreasury Stock Retained Earnings (Accumulated Deficit) Accumulated
Other Comprehensive Income (Loss)Total Shares Amount Balance at June 30, 2023 328.0 $ 4 $ 8,945 $ (3,442) $ 2,095 $ 103 $ 7,705 Net income — — — — 1,137 — 1,137 Other comprehensive loss — — — — — (12) (12) Stock-settled share-based compensation — — 23 — — — 23 Balance at September 30, 2023 328.0 $ 4 $ 8,968 $ (3,442) $ 3,232 $ 91 $ 8,853 Balance at December 31, 2022 326.9 $ 4 $ 8,986 $ (3,534) $ 1,265 $ 175 $ 6,896 Net income — — — — 2,018 — 2,018 Other comprehensive loss — — — — — (84) (84) Stock-settled share-based compensation — — 55 — — — 55 Stock issued for share-based awards, net of shares withheld for tax 1.1 — (73) 92 (51) — (32) Balance at September 30, 2023 328.0 $ 4 $ 8,968 $ (3,442) $ 3,232 $ 91 $ 8,853 Balance at June 30, 2022 326.7 $ 4 $ 8,970 $ (3,551) $ (515) $ (944) $ 3,964 Net income — — — — 942 — 942 Other comprehensive loss — — — — — (20) (20) Stock-settled share-based compensation — — 15 — — — 15 Stock issued for share-based awards, net of shares withheld for tax 0.2 — (15) 18 (6) — (3) Balance at September 30, 2022 326.9 $ 4 $ 8,970 $ (3,533) $ 421 $ (964) $ 4,898 Balance at December 31, 2021 323.8 $ 4 $ 9,156 $ (3,814) $ 625 $ (942) $ 5,029 Net loss — — — — (106) — (106) Other comprehensive loss — — — — — (22) (22) Stock-settled share-based compensation — — 70 — — — 70 Stock issued for share-based awards, net of shares withheld for tax 3.1 — (256) 281 (98) — (73) Balance at September 30, 2022 326.9 $ 4 $ 8,970 $ (3,533) $ 421 $ (964) $ 4,898 COMPREHENSIVE INCOME (LOSS)OPERATIONS (UNAUDITED) Three Months Ended
September 30, Nine Months Ended
September 30, 2017 2016 2017 2016 $ 637 $ 965 $ 1,552 $ 1,867 — 12 1 123 3 (75) (1) (89) 17 (1) 5 (1) 20 (64) 5 33 $ 657 $ 901 $ 1,557 $ 1,900 Three Months Ended September 30, Nine Months Ended
September 30, 2023 2022 2023 2022 Operating revenue: Passenger revenue $ 13,349 $ 11,653 $ 36,625 $ 28,830 Cargo 333 498 1,093 1,699 Other operating revenue 802 726 2,373 2,026 Total operating revenue 14,484 12,877 40,091 32,555 Operating expense: Salaries and related costs 3,914 2,843 10,946 8,466 Aircraft fuel 3,342 3,755 9,336 9,796 Landing fees and other rent 801 639 2,283 1,919 Aircraft maintenance materials and outside repairs 684 619 2,072 1,553 Depreciation and amortization 663 610 1,987 1,832 Regional capacity purchase 592 596 1,806 1,728 Distribution expenses 516 482 1,406 1,101 Aircraft rent 46 65 151 193 Special charges 29 20 902 124 Other operating expenses 2,158 1,789 5,988 4,881 Total operating expense 12,745 11,418 36,877 31,593 Operating income 1,739 1,459 3,214 962 Nonoperating income (expense): Interest expense (493) (455) (1,472) (1,299) Interest income 234 104 620 142 Interest capitalized 48 27 128 73 Unrealized gains (losses) on investments, net (54) 28 54 (12) Miscellaneous, net 12 (9) 74 (4) Total nonoperating expense, net (253) (305) (596) (1,100) Income (loss) before income tax expense (benefit) 1,486 1,154 2,618 (138) Income tax expense (benefit) 348 212 599 (33) Net income (loss) $ 1,138 $ 942 $ 2,019 $ (105) BALANCE SHEETSmillions, except shares) (Unaudited) September 30, 2017 December 31, 2016 $ 1,864 $ 2,173 2,458 2,249 1,603 1,176 937 873 1,008 832 7,870 7,303 29,043 25,873 6,186 5,652 35,229 31,525 (11,358) (9,975) 23,871 21,550 1,044 1,059 1,136 1,319 488 331 1,624 1,650 (910) (941) 714 709 25,629 23,318 4,523 4,523 3,558 3,632 — 612 96 124 882 579 9,059 9,470 $ 42,558 $ 40,091 (continued on next page)UNITED AIRLINES, INC.CONSOLIDATED BALANCE SHEETS(In millions, except shares) (Unaudited) September 30, 2017 December 31, 2016 LIABILITIES AND STOCKHOLDER’S EQUITY $ 4,537 $ 3,730 2,231 2,144 1,992 2,135 1,983 2,307 1,516 849 125 116 707 1,009 13,091 12,290 11,334 9,918 968 822 2,793 2,748 1,588 1,581 1,631 1,892 297 — 106 430 219 277 1,616 1,527 8,250 8,455 — — 2,325 3,573 7,504 5,937 (824) (829) (90) (75) 8,915 8,606 $ 42,558 $ 40,091 Three Months Ended September 30, Nine Months Ended
September 30, 2023 2022 2023 2022 Net income (loss) $ 1,138 $ 942 $ 2,019 $ (105) Other comprehensive income (loss), net of tax: Employee benefit plans (20) 0 (89) 9 Investments and other 8 (20) 5 (31) Total other comprehensive loss, net of tax (12) (20) (84) (22) Total comprehensive income (loss), net $ 1,126 $ 922 $ 1,935 $ (127) September 30, 2023 December 31, 2022 ASSETS Current assets: Cash and cash equivalents $ 7,478 $ 7,166 Short-term investments 9,608 9,248 Restricted cash 392 45 Receivables, less allowance for credit losses (2023 — $14; 2022 — $11) 2,193 1,801 Aircraft fuel, spare parts and supplies, less obsolescence allowance (2023 — $665; 2022 — $610) 1,513 1,109 Prepaid expenses and other 728 689 Total current assets 21,912 20,058 Operating property and equipment: Flight equipment 46,938 42,775 Other property and equipment 10,157 9,334 Purchase deposits for flight equipment 3,379 2,820 Total operating property and equipment 60,474 54,929 Less — Accumulated depreciation and amortization (22,114) (20,481) Total operating property and equipment, net 38,360 34,448 Operating lease right-of-use assets 3,975 3,889 Other assets: Goodwill 4,527 4,527 Intangibles, less accumulated amortization (2023 — $1,486; 2022 — $1,472) 2,735 2,762 Restricted cash 240 210 Deferred income taxes — 62 Investments in affiliates and other, less allowance for credit losses (2023 — $27; 2022 —$21) 1,404 1,373 Total other assets 8,906 8,934 Total assets $ 73,153 $ 67,329 September 30, 2023 December 31, 2022 LIABILITIES AND STOCKHOLDER'S EQUITY Current liabilities: Accounts payable $ 4,206 $ 3,395 Accrued salaries and benefits 3,815 1,971 Advance ticket sales 8,392 7,555 Frequent flyer deferred revenue 2,969 2,693 Current maturities of long-term debt 3,649 2,911 Current maturities of operating leases 598 561 Current maturities of finance leases 271 104 Current maturities of other financial liabilities 44 23 Other 814 781 Total current liabilities 24,758 19,994 Long-term debt 25,932 28,283 Long-term obligations under operating leases 4,493 4,459 Long-term obligations under finance leases 71 115 Other liabilities and deferred credits: Frequent flyer deferred revenue 4,107 3,982 Pension liability 800 747 Postretirement benefit liability 621 671 Deferred income taxes 500 — Other financial liabilities 1,648 844 Other 1,400 1,369 Total other liabilities and deferred credits 9,076 7,613 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 September 30, 2023 and December 31, 2022 — — Additional capital invested 458 403 Retained earnings 5,735 3,716 Accumulated other comprehensive income 91 175 Payable to parent 2,539 2,571 Total stockholder's equity 8,823 6,865 Total liabilities and stockholder's equity $ 73,153 $ 67,329 Nine Months Ended
September 30, 2017 2016 $ 2,671 $ 4,878 (2,900) (2,343) (2,584) (1,989) 2,380 1,957 8 24 — (8) 142 (5) (2,954) (2,364) 2,119 510 (1,291) (2,442) (722) (911) (84) (95) (63) (34) (41) (2,972) (324) (458) 2,297 3,206 $ 1,973 $ 2,748 $ 918 $ 115 41 68 — 12 Nine Months Ended
September 30, 2023 2022 Cash Flows from Operating Activities: Net cash provided by operating activities $ 7,790 $ 4,834 Cash Flows from Investing Activities: Capital expenditures, net of flight equipment purchase deposit returns (5,105) (2,280) Purchases of short-term and other investments (8,875) (8,384) Proceeds from sale of short-term and other investments 8,614 1,061 Proceeds from sale of property and equipment 20 184 Other, net (17) (23) Net cash used in investing activities (5,363) (9,442) Cash Flows from Financing Activities: Proceeds from issuance of debt and other financing liabilities, net of discounts and fees 1,685 210 Payments of long-term debt, finance leases and other financing liabilities (3,423) (2,605) Other, net — (3) Net cash used in financing activities (1,738) (2,398) Net increase (decrease) in cash, cash equivalents and restricted cash 689 (7,006) Cash, cash equivalents and restricted cash at beginning of the period 7,421 18,533 Cash, cash equivalents and restricted cash at end of the period (a) $ 8,110 $ 11,527 Investing and Financing Activities Not Affecting Cash: Property and equipment acquired through the issuance of debt, finance leases and other $ 677 $ — Right-of-use assets acquired through operating leases 470 98 Lease modifications and lease conversions 438 61 Investment interests received in exchange for goods and services 25 93 $ 1,864 $ 2,624 13 1 96 123 $ 1,973 $ 2,748 Current assets: Cash and cash equivalents $ 7,478 $ 11,258 Restricted cash — Current 392 61 Restricted cash — Non-Current 240 208 Total cash, cash equivalents and restricted cash $ 8,110 $ 11,527 CONTINENTALAIRLINES, INC. Additional
Capital InvestedRetained Earnings Accumulated
Other Comprehensive Income (Loss)Payable to Parent Total Balance at June 30, 2023 $ 435 $ 4,597 $ 103 $ 2,539 $ 7,674 Net income — 1,138 — — 1,138 Other comprehensive loss — — (12) — (12) Stock-settled share-based compensation 23 — — — 23 Balance at September 30, 2023 $ 458 $ 5,735 $ 91 $ 2,539 $ 8,823 Balance at December 31, 2022 $ 403 $ 3,716 $ 175 $ 2,571 $ 6,865 Net income — 2,019 — — 2,019 Other comprehensive loss — — (84) — (84) Stock-settled share-based compensation 55 — — — 55 Other — — — (32) (32) Balance at September 30, 2023 $ 458 $ 5,735 $ 91 $ 2,539 $ 8,823 Balance at June 30, 2022 $ 373 $ 1,930 $ (944) $ 2,574 $ 3,933 Net income — 942 — — 942 Other comprehensive loss — — (20) — (20) Stock-settled share-based compensation 14 — — — 14 Other — — — (3) (3) Balance at September 30, 2022 $ 387 $ 2,872 $ (964) $ 2,571 $ 4,866 Balance at December 31, 2021 $ 317 $ 2,977 $ (942) $ 2,646 $ 4,998 Net loss — (105) — — (105) Other comprehensive loss — — (22) — (22) Stock-settled share-based compensation 70 — — — 70 Other — — — (75) (75) Balance at September 30, 2022 $ 387 $ 2,872 $ (964) $ 2,571 $ 4,866 ContinentalAirlines Holdings, Inc. (together with its consolidated subsidiaries, “UAL”"UAL" or the “Company”"Company") is a holding company and its principal, wholly-owned subsidiary is United Airlines, Inc. (together with its consolidated subsidiaries, “United”"United"). This Quarterly Report on Form10-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’sUnited's operating revenues and operating expenses comprise nearly 100% of UAL’sUAL's revenues and operating expenses. In addition, United comprises approximately the entire balance of UAL’sUAL'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,”"we," "our," "us," and the “Company”"Company" in this report for disclosures that relate to all of UAL and United.“SEC”"SEC"). Some information and footnote disclosures normally included in financial statements that comply with accounting principles generally accepted in the United States (“GAAP”("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’sCompany's financial position and results of operations.operations for interim periods presented. The UAL and United financial statements should be read together with the information included in the Company’sCompany's Annual Report on Form10-K for the fiscal year ended December 31, 2016.2022. The Company’sCompany's quarterly financial data is subject to seasonal fluctuations and historicallyfluctuations. Historically its second and third quarter financial results which reflecthave reflected higher travel demand, areand were better than its first and fourth quarter financial results.- RECENTLY ISSUED ACCOUNTING STANDARDSFinancial Accounting Standards Board (“FASB”table below presents the Company's operating revenue by principal geographic region (as defined by the U.S. Department of Transportation) (in millions):Three Months Ended September 30, Nine Months Ended
September 30,2023 2022 2023 2022 Domestic (U.S. and Canada) $ 8,379 $ 7,718 $ 23,963 $ 20,623 Atlantic 3,543 3,186 8,604 6,756 Latin America 1,184 1,162 3,773 3,266 Pacific 1,378 811 3,751 1,910 Total $ 14,484 $ 12,877 $ 40,091 $ 32,555 amended the FASB Accounting Standards Codification and createdelectronic travel certificates ("ETCs"), primarily for ticket cancellations, which can be applied towards a purchase of a new Topic 606,Revenueticket. FFCs and ETCs are valid up to one year from Contracts with Customers. This amendment prescribesthe date of issuance; however, all credits issued on or before December 31, 2022 have been extended to December 31, 2023.an entity should recognizewill expire unused ("breakage") and recognizes revenue in proportion 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. The amendment supersedes the revenue recognition requirements in Topic 605,Revenue Recognition, and most industry-specific guidance throughout the Industry Topicsusage of the Accounting Standards Codification. Therelated tickets. To determine breakage, the Company will use the full-retrospective approach in adopting this standard on January 1, 2018. We have reached conclusions on the applicability of the standard on accounting for contractsuses its historical experience with customers. The standard impacts the classification of certain revenue streamsexpired tickets and affects the timing of revenuecertificates and expense recognition for others. The most significant impact is the reclassification of certain ancillary fees from other operating revenue into passenger revenue on the statement of consolidated operations. For 2016, the amount to be reclassified at adoption of the new standard from other operating revenue into passenger revenue under Topic 606 is approximately $2.0 billion. These ancillary fees are directly related to passenger travel,facts, such as ticket change feesrecent aging trends, program changes and baggage feesmodifications that could affect the ultimate expiration patterns. Changes in our estimates of FFCs and will no longer be considered distinct performance obligations separate from the passenger travel component. In addition, the ticket change fees, which were previously recognized when received, will be recognized when transportation is provided. While the classification of certain transactions within operating revenue and between operating revenue and operating expenses will change, the Company believesETCs that the adoption of the standard will notmay expire unused could have a material impact on its earnings.February 2016, the FASB amendednine months ended September 30, 2023 and 2022, the FASB Accounting Standards CodificationCompany recognized approximately $5.3 billion and created a new Topic 842,Leases(“Topic 842”). The guidance requires lessees to recognize aright-of-use asset and a lease liability$3.0 billion, respectively, of passenger revenue for all leases (with the exception of short-term leases)tickets that were included in Advance ticket sales at the commencement datebeginning of those periods.recognize expenses on their income statements similarother 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 $1.1 billion and $3.0 billion of ancillary fees within passenger revenue in the three and nine months endedThree Months Ended September 30, Nine Months Ended
September 30,2023 2022 2023 2022 Total Frequent flyer deferred revenue - beginning balance $ 7,024 $ 6,495 $ 6,675 $ 6,282 Total miles awarded 816 705 2,465 1,848 Travel miles redeemed (740) (601) (1,983) (1,489) Non-travel miles redeemed (24) (21) (81) (63) Total Frequent flyer deferred revenue - ending balance $ 7,076 $ 6,578 $ 7,076 $ 6,578 current Topic 840,Leases. It is effective for fiscal yearsmarketing, advertising, non-travel miles redeemed (net of related costs) and interim periods beginning after December 15, 2018, and early adoption is permitted. Lessees and lessors are required to adopt Topic 842 using a modified retrospective approach for all leases existing at or commencing after the date of initial application with an option to use certain practical expedients. We have not completed our evaluationother travel-related benefits of the impactmileage revenue associated with our various partner agreements including, but believe this standard will have a significant impact onnot limited to, our consolidated balance sheets but is not expected to have a material impact onJPMorgan Chase Bank, N.A. MileagePlus co-brand agreement. The Company recognized $0.6 billion and $1.7 billion, respectively, in the Company’s results of operations or cash flows. The primary effect of adopting the new standard will be to record assetsthree and obligations for its operating leases.In January 2016, the FASB issued Accounting Standards UpdateNo. 2016-01,Financial Instruments—Overall (Subtopic825-10) (“ASU2016-01”). This standard makes several changes, including the elimination of theavailable-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 net income. It is effective for interim and annual periods beginning after December 15, 2017. Based on its portfolio of investments as ofnine months ended September 30, 2017,2022, related to those agreements. The portion related to the Company does not expect the adoption of ASU2016-01 to have a material impact on its consolidated financial statements.In March 2017, the FASB issued Accounting Standards UpdateNo. 2017-07,Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost(“ASU2017-07”). The update requires employers to present the service cost componentMileagePlus miles awarded of the net periodic benefit costtotal amounts received from our various partner agreements is deferred and presented in the same income statement line itemtable above as other employee compensation costs arising from services rendered duringan increase to the period. The other componentsFrequent flyer deferred revenue. We determine the current portion of net benefit cost, including interest cost,that account based on 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. Employers will have to disclose the line(s) used to present the other components of net periodic benefit cost, if the components are not presented separatelyredemptions in the income statement.ASU2017-07 is effective for fiscal years and interim periods beginning after December 15, 2017, and early adoption is permitted. The Company does not expect the adoption of ASU2017-07 to have a material impact on its consolidated financial statements.-— EARNINGS (LOSS) PER SHAREUAL’sUAL's basic and diluted earnings (loss) per share are set forth below (in millions, except per share amounts): Three Months Ended
September 30, Nine Months Ended
September 30, 2017 2016 2017 2016 Earnings available to common stockholders $ 637 $ 965 $ 1,551 $ 1,866 Basic weighted-average shares outstanding 299.8 320.0 306.8 334.9 Effect of employee stock awards 0.8 0.4 0.8 0.3 Diluted weighted-average shares outstanding 300.6 320.4 307.6 335.2 Earnings per share, basic $ 2.12 $ 3.02 $ 5.06 $ 5.57 Earnings per share, diluted $ 2.12 $ 3.01 $ 5.04 $ 5.57 The numberThree Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Earnings (loss) available to common stockholders $ 1,137 $ 942 $ 2,018 $ (106) Basic weighted-average shares outstanding 328.0 326.8 327.8 326.2 Dilutive effect of stock warrants (a) 2.7 1.0 2.5 — Dilutive effect of employee stock awards 1.7 1.7 1.5 — Diluted weighted-average shares outstanding 332.4 329.5 331.8 326.2 Earnings (loss) per share, basic $ 3.47 $ 2.88 $ 6.16 $ (0.33) Earnings (loss) per share, diluted $ 3.42 $ 2.86 $ 6.08 $ (0.33) Potentially dilutive securities (b) Stock warrants (a) 1.5 3.5 1.5 3.5 Employee stock awards 0.6 0.7 0.6 0.7 (a) Represent warrants issued to the U.S. Treasury Department ("Treasury") pursuant to the payroll support program, including extensions, and the loan program established under the Coronavirus Aid, Relief, and Economic Security Act. The Company issued, to Treasury, warrants to purchase up to approximately 10 million shares of UAL common stock at exercise prices ranging from $31.50 to $53.92 and expiration dates ranging from April 20, 2025 to June 10, 2026. All warrants were outstanding as of September 30, 2023. (b) Weighted-average potentially dilutive securities outstanding excluded from the computation of diluted earnings per share because the securities would have had an antidilutive effect. antidilutive securities excluded from the computation of diluted earnings per share amounts was not material.In the three and nine months ended September 30, 2017, UAL repurchased approximately 8 million and 18up to 37 million shares of UAL common stock (the "2021 ATM Shares"). Sales of the 2021 ATM Shares under the Distribution Agreement were allowed to be made in openany transactions that were deemed to be "at the market transactions, respectively, for $0.6 billion and $1.3 billion, respectively. Asofferings" as defined in Rule 415 under the Securities Act of September 30, 2017,1933, as amended. During 2021, approximatelyhadtotaling approximately $0.6 billion remaining to purchase$250 million. No shares were sold in 2022 or 2023 under its existing share repurchase authority. UAL may repurchase shares through the open market, privately negotiated transactions, block trades or accelerated share repurchase transactions from time to time2021 ATM Offering, which expired 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.-— ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)tablestable below presentpresents the components of the Company’sCompany's accumulated other comprehensive income (loss), net of tax (“AOCI”("AOCI") (in millions): Deferred Taxes UAL Pension and
Other
Postretirement
Liabilities Fuel
Derivative
Contracts Investments
and Other Pension and
Other
Postretirement
Liabilities Fuel
Derivative
Contracts Investments
and Other Total $ (860) $ — $ (16) $ 26 $ — $ 6 $ (844) (9) — 26 3 — (9) 11 14 — — (5) — — 9 5 — 26 (2) — (9) 20 $ (855) $ — $ 10 $ 24 $ — $ (3) $ (824) $ (854) $ (2) $ 1 $ 24 $ 1 $ 1 $ (829) (42) — 9 15 — (3) (21) 41 2 — (15) (1) (1) 26 (1) 2 9 — (1) (4) 5 $ (855) $ — $ 10 $ 24 $ — $ (3) $ (824) Deferred Taxes UAL Pension and
Other
Postretirement
Liabilities Fuel
Derivative
Contracts Investments
and Other Pension and
Other
Postretirement
Liabilities Fuel
Derivative
Contracts Investments
and Other Total $ (385) $ (41) $ 3 $ (146) $ (165) $ — $ (734) (124) (6) 1 45 2 (1) (83) 6 24 (2) (2) (8) 1 19 (118) 18 (1) 43 (6) — (64) $ (503) $ (23) $ 2 $ (103) $ (171) $ — $ (798) $ (363) $ (215) $ 3 $ (154) $ (102) $ — $ (831) (157) (5) 1 57 2 (1) (103) 17 197 (2) (6) (71) 1 136 (140) 192 (1) 51 (69) — 33 $ (503) $ (23) $ 2 $ (103) $ (171) $ — $ (798) Amount Reclassified
from AOCI to Income Affected Line Item
in the Statements of
Consolidated Operations Three Months Ended
September 30, Nine Months Ended
September 30, 2017 2016 2017 2016 Pension and other postretirement liabilities $ 14 $ 6 $ 41 $ 17 Salaries and related costs Fuel derivative contracts — 24 2 197 Aircraft fuel Investments and other — (2) — (2) Miscellaneous, net Pension and Other Postretirement Liabilities Investments and Other Deferred Taxes (a) Total Balance at June 30, 2023 $ 539 $ (39) $ (397) $ 103 Changes in value 7 10 (3) 14 Amounts reclassified to earnings (33) (b) — 7 (26) Balance at September 30, 2023 $ 513 $ (29) $ (393) $ 91 Balance at December 31, 2022 $ 626 $ (35) $ (416) $ 175 Changes in value (10) 6 1 (3) Amounts reclassified to earnings (103) (b) — 22 (81) Balance at September 30, 2023 $ 513 $ (29) $ (393) $ 91 Balance at June 30, 2022 $ (834) $ (14) $ (96) $ (944) Changes in value (1) (25) 6 (20) Amounts reclassified to earnings — (b) — — — Balance at September 30, 2022 $ (835) $ (39) $ (90) $ (964) Balance at December 31, 2021 $ (847) $ — $ (95) $ (942) Changes in value 13 (39) 5 (21) Amounts reclassified to earnings (1) (b) — — (1) Balance at September 30, 2022 $ (835) $ (39) $ (90) $ (964) -— INCOME TAXESCompany’sCompany's effective tax raterates for the three and nine months ended September 30, 2017 was 35.0%2023 were 23.4% and 35.3%22.9%, respectively, and therespectively. The Company's effective tax raterates for the three and nine months ended September 30, 2016 was 36.1%2022 were 18.3% and 36.4%24.3%, respectively. The provision for income taxes is based on the estimated annual effective tax rates representedrate, which represents a blend of federal, state and foreign taxes and includedincludes the impact of certain nondeductible items.effectiveCompany's net periodic benefit cost includes the following components for the three months ended September 30 (in millions):Pension Benefits Other Postretirement Benefits Affected Line Item
in the Statements of
Consolidated Operations2023 2022 2023 2022 Service cost $ 31 $ 51 $ 1 $ 2 Salaries and related costs Interest cost 53 47 10 8 Miscellaneous, net Expected return on plan assets (62) (76) — — Miscellaneous, net Amortization of unrecognized (gain) loss 2 29 (9) (3) Miscellaneous, net Amortization of prior service credit 1 — (28) (28) Miscellaneous, net Other 1 2 — — Miscellaneous, net Total $ 26 $ 53 $ (26) $ (21) Pension Benefits Other Postretirement Benefits Affected Line Item
in the Statements of
Consolidated Operations2023 2022 2023 2022 Service cost $ 93 $ 153 $ 3 $ 6 Salaries and related costs Interest cost 163 141 31 23 Miscellaneous, net Expected return on plan assets (188) (230) (1) (1) Miscellaneous, net Amortization of unrecognized (gain) loss 6 90 (28) (10) Miscellaneous, net Amortization of prior service credit 1 — (84) (84) Miscellaneous, net Other 2 3 — — Miscellaneous, net Total $ 77 $ 157 $ (79) $ (66) rate forexpense of $301 million and $521 million in the three and nine months ended September 30, 2017 also reflects the impact2023, respectively. The Company recorded profit sharing expense of a change$8 million in the mix of domestic and foreign earnings.NOTE 5 - EMPLOYEE BENEFIT PLANSDefined Benefit Pension and Other Postretirement Benefit Plans. The Company’s net periodic benefit cost includes the following components (in millions): Pension Benefits Other Postretirement
Benefits Three Months Ended
September 30, Three Months Ended
September 30, 2017 2016 2017 2016 Service cost $ 48 $ 29 $ 4 $ 4 Interest cost 55 50 16 22 Expected return on plan assets (61) (54) — — Amortization of unrecognized (gain) loss and prior service cost (credit) 32 19 (18) (13) Settlement loss 3 2 — — Curtailment gain — — — (47) $ 77 $ 46 $ 2 $ (34) Pension Benefits Other Postretirement
Benefits Nine Months Ended
September 30, Nine Months Ended
September 30, 2017 2016 2017 2016 Service cost $ 146 $ 84 $ 10 $ 14 Interest cost 165 151 50 66 Expected return on plan assets (182) (162) (1) (1) Amortization of unrecognized (gain) loss and prior service cost (credit) 95 57 (54) (40) Settlement loss 5 4 — — Curtailment gain — — — (47) $ 229 $ 134 $ 5 $ (8) Duringboth the three and nine months ended September 30, 2017,2022. Profit sharing expense is recorded as a component of Salaries and related costs in the Company contributed $160 million and $400 million, respectively, to its U.S. domestictax-qualified defined benefit pension plans.Share-Based Compensation. During the first nine monthsCompany's statements of 2017, UAL’s Board of Directors and stockholders approved the United Continental Holdings, Inc. 2017 Incentive Compensation Plan (the “2017 Plan”). The 2017 Plan is an incentive compensation plan that allows the Company to use different forms of long-term equity incentives to attract, retain, and reward officers and employees (including prospective officers and employees). The 2017 Plan replaced the United Continental Holdings, Inc. 2008 Incentive Compensation Plan (the “2008 Plan”). Any awards granted under the 2008 Plan prior to the approval of the 2017 Plan remain in effect pursuant to their terms. Awards may not be granted under the 2017 Plan after May 24, 2027. Under the 2017 Plan, the Company may grant:non-qualified stock options, incentive stock options (within the meaning of Section 422 of the Internal Revenue Code of 1986), stock appreciation rights, restricted shares, restricted share units (“RSUs”), performance compensation awards, performance units, cash incentive awards, other equity-based and equity-related awards, and dividends and dividend equivalents.In the nine months ended September 30, 2017, UAL granted share-based compensation awards pursuant to both the 2008 Plan and the 2017 Plan. These share-based compensation awards include 1.5 million RSUs, consisting of 0.9 million time-vested RSUs and 0.6 million performance-based RSUs, and 36,000 stock options. The time-vested RSUs vestpro-rata, on February 28th of each year, over a three year period from the date of grant. These 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 the20-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 inpre-tax margin for the three years ending December 31, 2019. If this performance condition is achieved, cash payments will be made after the end of the performance period based on the20-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.The table below presents information related to share-based compensation (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 $ 10 $ 23 $ 66 $ 36 September 30,
2017 December 31,
2016 $ 90 $ 65 -— FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTSUAL’sUAL's financial statements (in millions): September 30, 2017 December 31, 2016 Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 $ 1,870 $ 1,870 $ — $ — $ 2,179 $ 2,179 $ — $ — 959 — 959 — 835 — 835 — 891 — 891 — 792 — 792 — 142 — 142 — 246 — 246 — 112 — 112 — 140 — 140 — 171 — 171 — 54 — 54 — 183 — — — 182 — — — Restricted cash 109 109 — — 124 124 — — 114 114 — — — — — — 21 — — 21 23 — — 23 Available-for-sale investment maturities - The short-term investments shown in the table above are classified asavailable-for-sale. As of September 30, 2017, asset-backed securities have remaining maturities of less than one year to approximately 17 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 other securities have maturities of less than one year to approximately two years. The EETC securities mature in 2019.Restricted cash - Restricted cash primarily includes collateral for letters of credit and collateral associated with workers’ compensation obligations.Equity securities - Equity securities represent United’s investment in Azul Linhas Aereas Brasileiras S.A. (“Azul”), which was previously accounted for as a cost-method investment. The fair value of Azul’s shares became readily determinable in the second quarter of 2017 upon its initial public offering and is now accounted for as anavailable-for-sale investment.September 30, 2023 December 31, 2022 Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 7,478 $ 7,478 $ — $ — $ 7,166 $ 7,166 $ — $ — Restricted cash - current 392 392 — — 45 45 — — Restricted cash - non-current 240 240 — — 210 210 — — Short-term investments: U.S. government and agency notes 9,506 — 9,506 — 8,914 — 8,914 — Asset-backed securities 29 — 29 — 325 — 325 — Certificates of deposit placed through an account registry service ("CDARS") 73 — 73 — — — — — Corporate debt — — — — 9 — 9 — Long-term investments: Equity securities 163 163 — — 189 189 — — : Fair Value of Debt by Fair Value Hierarchy Level September 30, 2017 December 31, 2016 Carrying
Amount Fair Value Carrying
Amount Fair Value Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 $ 12,850 $ 13,217 $ — $ 9,640 $ 3,577 $ 10,767 $ 11,055 $ — $ 8,184 $ 2,871 September 30, 2023 December 31, 2022 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 $ 29,581 $ 28,386 $ — $ 22,726 $ 5,660 $ 31,194 $ 29,371 $ — $ 23,990 $ 5,381 Cash and cash equivalents and Restricted cash (current and non-current) The carrying amounts of these assets approximate fair value because of the short-term maturity of these assets.value.Short-term and Long-term investments Short-term investments,Equity securities, EETC andRestricted cashFair 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)(b) broker quotes obtained by third-party valuation services.Other investments measured at NAVIn 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. andnon-U.S. public- or private-sector entities. The Company can redeem its shares at any time at NAV subject to athree-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.NOTE7 - HEDGING ACTIVITIESFuel Derivatives2017,2023, United holds the Company did notfollowing investments, accounted for using the equity method, with a combined carrying value of approximately $232 million:anyterms through 2036.hedging contracts outstanding to hedge its fuel consumption.("SAF"). The last of the Company’s fuel hedge derivatives designated for cash flow hedge accounting expiredFund started with more than $100 million in December 2016. The Company’s current strategy is to not enter into transactions to hedge its fuel consumption, although the Company regularly reviews its strategy based on market conditionscommitments from United and other factors.The following table presentscorporate investors, collectively, as limited partners. UAV transferred certain of its existing SAF investments to the impact of derivative instruments and their location within the Company’s unaudited statements of consolidated operations (in millions):Derivatives designated as cash flow hedges Amount of Loss
Recognized
in AOCI on Derivatives
(Effective Portion) Loss
Reclassified from
AOCI into
Fuel Expense Three Months Ended
September 30, Three Months Ended
September 30, 2017 2016 2017 2016 $ — $ (6) $ — $ (24) Amount of Loss
Recognized
in AOCI on Derivatives
(Effective Portion) Loss
Reclassified from
AOCI into
Fuel Expense (a) Nine Months Ended
September 30, Nine Months Ended
September 30, 2017 2016 2017 2016 $ — $ (5) $ (2) $ (197) (a) The 2017 loss reclassified from AOCI into fuel expense represents hedge losses on December 2016 settled trades, but for which the associated fuel purchased in December was not consumed until January 2017.NOTE8 - COMMITMENTS AND CONTINGENCIESCommitments.Fund's portfolio. As of September 30, 2017,2023, the Company indirectly holds a 38% ownership interest in the Fund and the Fund has approximately $200 million in commitments from United and other corporate investors. and options to purchase aircraft from The Boeing Company (“Boeing”("Boeing"), and Airbus S.A.S. (“Airbus”("Airbus"), and Embraer S.A. (“Embraer”) as presented in the table below:Aircraft TypeNumber of Firm Commitments (a) Airbus A35045Boeing 737 MAX161Boeing777-300ER4Boeing 78718Embraer E1755(a) United also has options and purchase rights for additional aircraft.Contractual Aircraft Deliveries Expected Aircraft Deliveries (b) Aircraft Type Number of Firm
Commitments (a)Last Three Months
of 20232024 After 2024 Last Three Months
of 20232024 After 2024 787 150 — 8 142 — 8 142 737 MAX 374 73 100 201 20 77 277 A321neo 130 4 26 100 4 26 100 A321XLR 50 — — 50 — — 50 A350 45 — — 45 — — 45 (a) United also has options and purchase rights for additional aircraft. (b) Expected aircraft deliveries reflect adjustments communicated by Boeing and Airbus or estimated by United. 2027. To2033. The amount and timing of the Company's future capital commitments could change to the extent that: (i) the Company and the aircraft manufacturers, with whom the Company has existing orders for new aircraft, agree to modify the contracts governing those orders,orders; (ii) rights are exercised pursuant to the amount andrelevant agreements to cancel deliveries or modify the timing of deliveries; or (iii) the Company’s future capitalaircraft manufacturers are unable to deliver in accordance with the terms of those orders.could change.related to these agreements as well as the contractual and expected aircraft deliveries.remainder of 2017,buyer, and simultaneous with the buyer's purchase from Boeing, United expects to takeentered into a long-term lease for such aircraft with the buyer as lessor. Upon delivery of five Embraer E175 aircraft. Additionally,the aircraft in these sale and leaseback transactions, the Company also currently expectsaccounted for these aircraft as part of Flight equipment on the Company's consolidated balance sheet and the related obligation recorded in Current maturities of other financial liabilities and Other financial liabilities since they did not qualify for sale recognition (failed sale and leaseback).take delivery of four used Airbus A319s and two used Airbus A320s for the remainder of 2017.United’sUnited's firm commitments as of September 30, 2017,2023, which primarily relate to the acquisition ofinclude aircraft and related spare engines, aircraft improvements and include othernon-aircraft capital purchase commitments. Any new firmAircraft commitments are based on contractual scheduled aircraft orders, including through deliveries without any adjustments communicated by Boeing and Airbus or estimated by United.(in billions) Last three months of 2023 $ 4.6 2024 8.8 2025 8.0 2026 6.1 2027 5.0 After 2027 29.6 $ 62.1 exercise of purchase options and purchase rights, will increase the total future capital commitments of the Company. (in billions) $ 0.9 3.0 3.1 2.2 1.4 11.4 $ 22.0 secured individual bank financing for five Embraer E175 aircraft to be delivered in the last three months of 2017. See Note 9 of this report for additional information on aircraft financing. The Company has also secured backstop financing commitments from certainamended several of its aircraft manufacturers for a limited number of its future aircraft deliveries, subject to certain customary conditions. Financing may be necessary to satisfy the Company’s capital commitments for its firm order aircraft and other related capital expenditures.Regional CPAs.In February 2017, United entered into a five-year capacity purchase agreement (“CPA”) with Air Wisconsin Airlines for regional service under the United Express brand to operate up to 65 CRJ 200 aircraft.In the third quarter of 2017, United reached agreementsCPAs with certain of its regional air partnerscarriers to accelerateincrease the retirementcontractually agreed fees21 turboprop aircraft from service, modify some aircraft service entrytheir contractual terms. Separately, the Company terminated its CPA and exit dates, as well as extend the term of up to approximately 125 aircraft under an existing CPA through December 31, 2022. Therelated regional flight operations with Air Wisconsin in June 2023. Our future commitments under our CPAs are dependent on numerous variables, and are, therefore, difficult to predict. The most important of these variables is the number of scheduled block hours. Although we are not required to purchase a minimum number of block hours under certain of our CPAs, we have been incorporated intoset forth below estimates of our future payments under the table below.table below summarizesactual amounts we pay to our regional operators under CPAs could differ materially from these estimates. United's estimates of its future payments under all of the Company’sCPAs do not include the portion of the underlying obligation for any aircraft leased to a regional carrier, or deemed to be leased from other regional carriers, and facility rent. For purposes of calculating these estimates, we have assumed (1) the number of block hours flown is based on our anticipated level of flight activity or at any contractual minimum utilization levels if applicable, whichever is higher, (2) that we will reduce the fleet as rapidly as contractually allowed under each CPA, (3) that aircraft utilization, stage length and load factors will remain constant, (4) that each carrier's operational performance will remain at recent historic levels and (5) an annual projected inflation rate. Based on these assumptions as of excluding variable pass-through costs such as fuel and landing fees, among others. (in billions) $ 0.5 2.0 1.8 1.6 1.5 4.6 $ 12.0 (in billions) Last three months of 2023 $ 0.6 2024 2.2 2025 1.9 2026 2.1 2027 1.6 After 2027 5.7 $ 14.1 2017,2023, United is the guarantor of approximately $1.8$1.9 billion in aggregate principal amount oftax-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 $1.4 billion of these obligations are accounted for as operating leases recognized on the Company's consolidated 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 associated with approximately $441 million of these obligations are accounted for as capital leases. All of these bonds are due between 20192024 and 2038.the Company’sUnited's financing transactions that include loans in which United is the Companyborrower, 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 OfferedSecured Overnight Financing Rate (“LIBOR”)(SOFR), for2017,2023, the Company had $3.3$11.4 billion of floating rate debt and $68 million of fixed rate debt with remaining terms of up to 11approximately 12 years that are subject to these increased cost provisions. In several financing transactions involving loans or leases fromnon-U.S. entities, with remaining terms of up to 11approximately 12 years and an aggregate balance of $3.2$8.2 billion, the Company bears the risk of any change in tax laws that would subject loan or lease payments thereunder tonon-U.S. entities to withholding taxes, subject to customary exclusions.2017, United is the guarantor of $159 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 and2023, the Company would potentially be responsible for those costs under the guarantees.Labor Negotiations. As of September 30, 2017, United had approximately 89,700102,000 employees, of whom approximately 80%83% were represented by various U.S. labor organizations.NOTE9 - DEBTAs of September 30, 2017, a substantial portion of the Company’s assets, principally aircraft, route authorities, airport slots and loyalty program intangible assets, was pledged under various loan and other agreements. As of September 30, 2017, UAL and United were in compliance with their debt covenants.2017 Credit and Guaranty Agreement. On March 29, 2017, United and UAL, as borrower and guarantor, respectively, entered into an Amended and Restated Credit and Guaranty Agreement (the “2017 Credit Agreement”). The 2017 Credit Agreement consists of a $1.5 billion term loan due April 1, 2024, which (i) was used to retire the entire principal balance of the term loans under the credit and guaranty agreement, dated March 27, 2013 (as amended, the “2013 Credit Agreement”), and (ii) increased the term loan balance by approximately $440 million, and a $2.0 billion revolving credit facility available for drawing until April 1, 2022, which increased the available capacity under the revolving credit facility of the 2013 Credit Agreement. As of September 30, 2017, United had its entire capacity of $2.0 billion available under the revolving credit facility. The obligations of United under the 2017 Credit Agreement are secured by liens on certain international route authorities, certaintake-off and landing rights and related assets of United.Borrowings under the 2017 Credit Agreement bear interest at a variable rate equal to LIBOR, subject to a 0% floor, plus a margin of 2.25% per annum, or another rate based on certain market interest rates, plus a margin of 1.25% per annum. The principal amount of the term loan must be repaid in consecutive quarterly installments of 0.25% of the original principal amount thereof, commencing on June 30, 2017, with any unpaid balance due on April 1, 2024. United may prepay all or a portion of the loan from time to time, at par plus accrued and unpaid interest. United pays a commitment fee equal to 0.75% per annum on the undrawn amount available under the revolving credit facility.The 2017 Credit Agreement includes covenants that, among other things, require the Company to maintain at least $2.0 billion of unrestricted liquidity and a minimum ratio of appraised value of collateral to the outstanding obligations under the Credit Agreement of 1.60 to 1.0. The 2017 Credit Agreement contains events of default customary for this type of financing, including a cross default and cross acceleration provision to certain other material indebtedness of the Company. Under the provisions of the 2017 Credit Agreement, UAL’s ability to make investments and to pay dividends on, or repurchase, UAL’s common stock is restricted.EETCs. In September 2016 and June 2016, United created EETC pass-through trusts, each of which issued pass-through certificates. The proceeds of the issuance of the pass-through certificates are used to purchase equipment notes issued by United and secured by its aircraft. The 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 2017 are as follows (in millions, except stated interest rate): Principal
distribution date Stated
interest
rate Total debt
recorded
as of September 30,
2017 Proceeds
received
from
issuance of
debt during
2017 AA $ 637 October 2028 2.875% $ 637 $ 557 A 283 October 2028 3.10% 283 AA 729 July 2028 3.10% 729 319 A 324 July 2028 3.45% 324 142 $ 1,973 $ 1,973 $ 1,265 Secured Notes Payable.In the first nine months of 2017, United borrowed approximately $392 million aggregate principal amount from various financial institutions to finance the purchase of several aircraft delivered in 2017. The notes evidencing these borrowings, which are secured by the related aircraft, mature in 2027 and each has an interest rate comprised of LIBOR plus a specified margin.4.25% Senior Notes due 2022.In September 2017, UAL issued $400 million aggregate principal amount of 4.25% Senior Notes due October 1, 2022 (the “4.25% Senior Notes due 2022”). These notes are fully and unconditionally guaranteed and recorded by United on its balance sheet as debt. The indenture for the 4.25% Senior Notes due 2022 requires UAL to offer to repurchase the notes for cash at a purchase price equal to 101% of the principal amount of notes repurchased plus accrued and unpaid interest if certain changes of control of UAL occur.5% Senior Notes due 2024.2017, UAL issued $300 million aggregate principal amount of 5% Senior Notes due February 1, 2024 (the “5% Senior Notes due 2024”). These notes are fully and unconditionally guaranteed and recorded by United on its balance sheet as debt. The indenture for2023, the 5% Senior Notes due 2024 requires UAL to offer to repurchase the notes for cash at a purchase price equal to 101% of the principal amount of notes repurchased plus accrued and unpaid interest if certain changes of control of UAL occur.The table below presents the Company’s contractual principal payments (not including debt discount or debt issuance costs) at September 30, 2017 under then-outstanding long-term debt agreements (in millions): $ 184 1,527 1,115 1,120 1,107 7,963 $ 13,016 NOTE 10 - SPECIAL CHARGESFor the three and nine months ended September 30, special charges consisted of the following (in millions): Three Months Ended
September 30, Nine Months Ended
September 30, Operating: 2017 2016 2017 2016 $ 23 $ 13 $ 101 $ 27 15 — 15 412 — 14 — 124 — — — 74 12 18 29 32 50 45 145 669 — — — (1) 50 45 145 668 (18) (16) (52) (241) $ 32 $ 29 $ 93 $ 427 During the three and nine months ended September 30, 2017, the Company recorded $16 million ($10 million net of taxes) and $73 million ($47 million net of taxes), respectively, of severance and benefit costs related to a voluntaryearly-out program for itsCompany's more than 8,000 technicians and related employees represented by the International Brotherhood of Teamsters (the “IBT”). ratified an extension to their labor contract with United. The agreement becomes amendable in December 2024 and includes a one-year early opener provision that allows for bargaining on a successor agreement to begin in December 2023.the first quarter of 2017, approximately 1,000 techniciansMay 2023, nearly 30,000 fleet service, passenger service, storekeepers, maintenance instructors and fleet technical instructors and related employees electedrepresented by the International Association of Machinists & Aerospace Workers ("IAM") ratified five agreements with United. The ratified agreements are effective through 2025. The Company recorded a one-time $48 million expense in conjunction with the ratification. Negotiations with the IAM will continue for agreements to voluntarily separate fromcover security guards in California and central load planners.receivebe due on January 15, 2036.severance payment, with2021 term loan facility. See Note 9 for information related to charges recorded as a maximum valueresult of $100,000 per participant, based on yearsthis prepayment.service, with retirement dates through early 2019. Also duringunamortized debt discount, premiums and debt issuance costs) at September 30, 2023 under then-outstanding long-term debt agreements (in millions):Last three months of 2023 $ 739 2024 3,958 2025 3,442 2026 5,235 2027 2,464 After 2027 14,046 $ 29,884 2017,operating and nonoperating special charges and unrealized (gains) losses on investments in the statements of consolidated operations consisted of the following (in millions):Three Months Ended
September 30,Nine Months Ended
September 30,2023 2022 2023 2022 Labor contract ratification bonuses $ 1 $ — $ 814 $ — (Gains) losses on sale of assets and other special charges 28 20 88 124 Total operating special charges 29 20 902 124 Nonoperating unrealized (gains) losses on investments, net 54 (28) (54) 12 Nonoperating debt extinguishment and modification fees — — 11 7 Total nonoperating special charges and unrealized (gains) losses on investments, net 54 (28) (43) 19 Total operating and nonoperating special charges and unrealized (gains) losses on investments, net 83 (8) 859 143 Income tax benefit, net of valuation allowance (7) (7) (204) (17) Total operating and nonoperating special charges and unrealized (gains) losses on investments, net of income taxes $ 76 $ (15) $ 655 $ 126 $7$814 million ($5 million net of taxes)expense associated with the agreements with ALPA, IAM and $28 million ($18 million netother work groups. See Note 7 for additional information.taxes), respectively, of severance primarily related to its management reorganization initiative.2016,2023, the Company recorded $13$28 million ($8and $88 million, net of taxes) and $27 million ($17 million net of taxes), respectively, of severance and benefit costsnet charges primarily comprised of reserves for various legala voluntaryearly-out program for itscertain of the Company's assets that will be retired early, an impairment of flight attendants.During the three months ended September 30, 2017, the Company recorded a $15 million ($10 million net of taxes) intangible asset impairment charge related to a maintenance service agreement.In April 2016, the Federal Aviation Administration (“FAA”) announcedtraining equipment that effective October 30, 2016, it would designate Newark Liberty International Airport (“Newark”) as a Level 2 schedule-facilitated airport under the International Air Transport Association Worldwide Slot Guidelines. The designation was associated with an updated demand and capacity analysis of Newark by the FAA. In the second quarter of 2016, the Company determined that the FAA’s action impaired the entire value of its Newark slots because the slots are no longer the mechanism that governstake-off and landing rights. Accordingly, the Company recorded a $412 million special charge ($264 million net of taxes) to write off the intangible asset.During the nine months ended September 30, 2016, the fleet service, passenger service, storekeeperis being sold and other employees represented bygains and losses on the International Associationsale of Machinists and Aerospace Workers (the “IAM”) ratified seven new contracts with the Company which extended the contracts through 2021. The Company also reached a tentative agreement with the IBT during the same time period.assets.2016,2023, the Company recorded $61losses of $54 million ($39and gains of $54 million, net of taxes) and $171 million ($109 million net of taxes), respectively, of special charges primarily for paymentsthe change in conjunction with the IAM and IBT agreements described above. Also, as partmarket value of its contract with the Association of Flight Attendants, the Company amended two of its flight attendant postretirement medical plans. The amendments triggered curtailment accounting, resultinginvestments in the recognition of aone-time $47 million gain ($30 million net of taxes) for accelerated recognition of a prior service credit.2016,2023, the City of Cleveland agreed to amend the Company’s lease, which runs through 2029, associated with certain excess airport terminal space (principally Terminal D) and related facilities at Hopkins International Airport. The Company recorded an accrual for remaining payments under the lease for facilities that the Companyno longer uses and will continue to incur costs under the lease without economic benefit to the Company. This liability was measured and recorded at its fair value when the Company ceased its right to use such facilities leased to it pursuant to the lease. The Company recorded a special charge$11 million of $74 million ($47 million net of taxes)charges primarily related to the amended lease.AccrualThe accrual balance for severanceprepayment of $1.0 billion of the outstanding principal amount under a 2021 term loan facility.benefits was $31 million as ofother special charges. During the three and nine months ended September 30, 2017, compared to $342022, the Company recorded $20 million asand $124 million, respectively, of net charges primarily comprised of $94 million for various legal matters.2016. The severance-related accrual as2022, the Company recorded gains of September 30, 2017 is expected to be mostly paid through early 2019. The accrual balance for future lease payments on permanently grounded aircraft was $28 million asand losses of September 30, 2017, compared$12 million, respectively, primarily related to $41 million asthe change in the market value of September 30, 2016. The grounded aircraft related accrual as of September 30, 2017 is expected to be mostly paid through 2025. The following is a reconciliation of severanceits investments in equity securities.permanently grounded aircraft accrual activity formodification fees. During the nine months ended September 30: Severance and
Benefits Permanently
Grounded
Aircraft $ 14 $ 41 101 — (84) (13) $ 31 $ 28 Severance and
Benefits Permanently
Grounded
Aircraft $ 27 $ 78 27 (17) (20) (20) $ 34 $ 41 ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.ContinentalAirlines Holdings, Inc. (together with its consolidated subsidiaries, “UAL”"UAL" or the “Company”"Company") is a holding company and its principal, wholly-owned subsidiary is United Airlines, Inc. (together with its consolidated subsidiaries, “United”"United").United’sUnited's operating revenues and operating expenses comprise nearly 100% of UAL’sUAL's revenues and operating expenses. In addition, United comprises approximately the entire balance of UAL’sUAL'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,”"we," "our," "us," and the “Company”"Company" in this report for disclosures that relate to all of UAL and United.118126 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’sworld's largest airline alliance. UAL, through Unitedits regional carriers, operates approximately 4,500 flights a dayour actual results and timing may vary materially based on various factors that include, but are not limited to, 337 airports across five continents.Third Quarter Financial HighlightsThird quarter 2017 net income was $637 million, or $2.12 diluted earnings per share, as compared to net income of $965 million, or diluted earnings per share of $3.01,those discussed below under "Economic and Market Factors", "Governmental Actions" and "Forward-Looking Information", in Part I, Item 1A. Risk Factors, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the "2022 Form 10-K") and in Part II, Item 1A. Risk Factors in this report. The Company discusses certain financial measures that are not calculated in accordance with accounting principles generally accepted in the third quarterUnited States of 2016.DuringEconomic and Market Factorsquarter,following: the execution risks associated with our United Next plan; the impact on the Company canceled approximately 8,300 flightsof significant operational challenges by third parties on which we rely; rising inflationary pressures; labor market and supply chain constraints and related costs affecting us and our partners; volatile fuel prices; aircraft delivery delays; and changes in general economic conditions in the markets in which the Company operates, including an economic downturn leading to a decrease in demand for air travel or fluctuations in foreign currency exchange rates that may impact international travel demand. We continue to monitor the potential favorable or unfavorable impacts of these and other factors on our business, operations, financial condition, future results of operations, liquidity and financial flexibility, which are dependent on future developments, including as a result of severe weatherthose factors discussed in southeast Texas, Florida and partsPart I, Item 1A. Risk Factors, of the Caribbean. The operational disruption reduced third quarter income before income taxes by an estimated $185 million.Passenger revenue decreased 0.9%2022 Form 10-K and in Part II, Item 1A. Risk Factors in this report. Our future results of operations may be subject to $8.5 billion duringvolatility and our growth plans may be delayed, particularly in the third quarter of 2017 as compared to the third quarter of 2016. Revenue was impacted by an estimated $210 millionshort term, due to the operational disruption.Third quarter 2017 aircraft fuel cost increased $206 million, 12.9% year-over-year.Unrestrictedat September 30, 2017 was $6.3 billion, including $2.0 billionand financial flexibility by increasing the Company's costs, limiting the Company's ability to offer a product, service or feature to customers, impacting customer demand for the Company's products and services and requiring changes to the Company's supply chain and its business. Legal requirements that we currently believe are or will be most impactful to our results of undrawn commitments underoperations and financial condition include the Company’s revolving credit facility.Infollowing: governmental regulations and restrictions relating to the three months ended September 30, 2017, UAL repurchased approximately 8 millionCOVID-19 global pandemic, the lasting effects of its common stockwhich we believe have changed how our customers fly in open market transactionsways that we expect to be both positive and negative for $0.6 billion. As of September 30, 2017, the Company, had $0.6 billion remaining to purchase shares under its existing share repurchase authority.Third Quarter Operational HighlightsUnited achievedincluding the best-ever third-quarter consolidatedon-time departures in its history.Consolidated traffic increased 1.7% and consolidated capacity increased 3% duringlingering impact of the third quarterpandemic on the return of 2017 as compared to the third quarter of 2016. The Company’s load factor for the third quarter of 2017 was 84.4%.The Company took delivery of one Boeing787-9 aircraft, four Boeing737-800 aircraft and nine Embraer E175 aircraft during the third quarter of 2017.OutlookThe Company expects full-year 2017 consolidated capacity to increase approximately 3.5% year-over-year. Domestic capacity is expected to increase approximately 4.5% year-over-yearbusiness and international capacity is expected travel demand—especially in our China market—to increase approximately 2.0% year-over-year.As outlined atpre-COVID-19 levels; the closure of our November 2016 Investor Day presentation,flying airspace and termination of other operations due to regional conflicts, including the Company expects to drive significant incremental value by 2020 relative to 2015. United anticipates capturing this value through a variety of initiatives including are-fleeting and upgauge program, additional customer choice through segmentation, improvements to the revenue management systems, ongoing sensible cost management, realizing our full network potential through improved schedule quality and enhancements to the MileagePlus program. In addition, the Company will continue to focus on improving reliability while increasing the efficiencycontinuation of the operation.The pricesuspension of jet fuel remains volatile. Based on projected fuel consumptionour overflying in 2017,Russian airspace as a one dollar changeresult of the Russia-Ukraine military conflict and to Tel Aviv as a result of the Israeli-Palestinian military conflict and an escalation of the broader economic consequences of the conflicts beyond their current scope; and any legal requirement that would result in a reshaping of the pricebenefits that we provide to our consumers through the co-branded credit cards issued by our partner. Changes in existing applicable legal requirements or new applicable legal requirements and the related interpretations and enforcement practices of them create uncertainty about how such laws and regulations will be interpreted and applied. As a barrelresult, the impact of crude oil would change the Company’s annual fuel expense by approximately $95 million.20172023, as compared to the corresponding periodperiods in 2016.20172023 Compared to Third Quarter 2016$637 million in$1.1 billion for the third quarter of 20172023 as compared to net income of $965$942 million infor the third quarter of 2016.2022. The Company considers a key measure of its performance to be operating income, which was $1.1$1.7 billion for the third quarter of 2017,2023, as compared to $1.6$1.5 billion for the third quarter of 2016, a $5322022, an approximately $281 million decrease year-over-year. Third quarter 2017 income before income taxes was negatively impacted by an estimated $185 millionincrease year-over-year, primarily as a result of severe weather in southeast Texas, Floridaincreased demand for air travel and parts of the Caribbean.lower fuel costs. Significant components of the Company’sCompany's operating results for the three months ended September 30 are as follows (in millions, except percentage changes): 2017 2016 Increase
(Decrease) % Increase
(Decrease) $ 9,878 $ 9,913 $ (35) (0.4) 8,786 8,289 497 6.0 1,092 1,624 (532) (32.8) (112) (114) (2) (1.8) 343 545 (202) (37.1) $ 637 $ 965 $ (328) (34.0) 2023 2022 Increase (Decrease) % Change Operating revenue $ 14,484 $ 12,877 $ 1,607 12.5 Operating expense 12,745 11,419 1,326 11.6 Operating income 1,739 1,458 281 19.3 Nonoperating expense, net (254) (305) (51) (16.7) Income tax expense 348 211 137 64.9 Net income $ 1,137 $ 942 $ 195 20.7 Company’sCompany's operations for the three months ended September 30 is as follows: 2017 2016 Increase
(Decrease) % Increase
(Decrease) 39,302 38,651 651 1.7 59,145 58,172 973 1.7 70,083 68,074 2,009 3.0 84.4% 85.5% (1.1) pts. N/A 12.17 12.64 (0.47) (3.7) 14.42 14.79 (0.37) (2.5) 12.54 12.18 0.36 3.0 $ 1.70 $ 1.52 $ 0.18 11.8 1,065 1,057 8 0.8 87,300 85,100 2,200 2.6 (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.2023 2022 Increase (Decrease) % Change Passengers (thousands) (a) 44,381 38,802 5,579 14.4 Revenue passenger miles ("RPMs" or "traffic") (millions) (b) 67,691 59,087 8,604 14.6 Available seat miles ("ASMs" or "capacity") (millions) (c) 78,348 67,695 10,653 15.7 Passenger load factor (d) 86.4 % 87.3 % (0.9) pts. N/A Passenger revenue per available seat mile ("PRASM") (cents) 17.04 17.21 (0.17) (1.0) Total revenue per ASM ("TRASM") (cents) 18.49 19.02 (0.53) (2.8) Average yield per revenue passenger mile ("Yield") (cents) (e) 19.72 19.72 — — Cargo revenue ton miles ("CTM") (millions) (f) 766 733 33 4.5 Cost per ASM ("CASM") (cents) 16.27 16.87 (0.60) (3.6) CASM-ex (Non-GAAP) (cents) (g) 11.51 11.22 0.29 2.6 Average price per gallon of fuel, including fuel taxes $ 2.95 $ 3.81 $ (0.86) (22.6) Fuel gallons consumed (millions) 1,132 985 147 14.9 Employee headcount, as of September 30 102,000 90,800 11,200 12.3 (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. (g) CASM excluding fuel, profit sharing, third-party business expense and special charges. See "Supplemental Information" below for a reconciliation to CASM, the most directly comparable GAAP measure. Revenue 2017 2016 Increase
(Decrease) % Change $ 7,083 $ 7,017 $ 66 0.9 1,445 1,586 (141) (8.9) 8,528 8,603 (75) (0.9) 257 224 33 14.7 1,093 1,086 7 0.6 $ 9,878 $ 9,913 $ (35) (0.4) 2023 2022 Increase (Decrease) % Change Passenger revenue $ 13,349 $ 11,653 $ 1,696 14.6 Cargo 333 498 (165) (33.1) Other operating revenue 802 726 76 10.5 Total operating revenue $ 14,484 $ 12,877 $ 1,607 12.5 Domestic Atlantic Pacific Latin Total
Consolidated Mainline Regional $ (2) $ 3 $ (109) $ 33 $ (75) $ 66 $ (141) Passenger revenue — % 0.2 % (9.3)% 4.7 % (0.9)% 0.9 % (8.9)% (2.2)% (0.1)% (6.0)% 3.8 % (2.5)% (4.9)% 0.4 % Yield (3.2)% (0.9)% (6.6)% 3.4 % (2.5)% (2.1)% 1.9 % (4.4)% (0.4)% (10.4)% 3.5 % (3.7)% (3.1)% (1.8)% Passengers 2.2 % 0.3 % (3.5)% 0.9 % 1.7 % 6.1 % (9.2)% 3.3 % 1.1 % (2.9)% 1.3 % 1.7 % 3.2 % (10.6)% ASMs (capacity) 4.6 % 0.6 % 1.2 % 1.3 % 3.0 % 4.2 % (7.2)% (1.1) 0.4 (3.5) — (1.1) (0.9) (3.0) Consolidated passenger revenue in the third quarter of 2017 decreased $75 million, or 0.9%, as compared to theyear-ago period primarily due to a 1.1 percentage point decrease in load factor. Third quarter 2017 consolidated PRASM and consolidated yield decreased 3.7% and 2.5%, respectively, compared to the third quarter of 2016. The Pacific region experienced a 10.4% decline in PRASM in the third quarter of 2017 as compared to theyear-ago period due to unfavorable supply and demand dynamics in China. The Domestic region experienced a 4.4% and a 3.2% decline in PRASM and yield, respectively, as compared to theyear-ago period due to severe weather in southeast Texas, Florida, and parts of the Caribbean, uncompetitive Basic Economy pricing, and competitive pricing environment withultra-low-cost carriers.CargoIncrease (decrease) from 2022: Domestic Atlantic Pacific Latin Total Passenger revenue (in millions) $ 613 $ 446 $ 599 $ 38 $ 1,696 Passenger revenue 8.7 % 15.4 % 92.7 % 3.6 % 14.6 % Average fare per passenger (4.9) % 6.8 % 7.4 % (4.3) % 0.2 % Yield (1.7) % 6.6 % 2.9 % (5.8) % — % PRASM (2.1) % 4.0 % 3.8 % (5.9) % (1.0) % Passengers 14.3 % 8.1 % 79.4 % 8.3 % 14.4 % RPMs 10.5 % 8.3 % 87.3 % 9.9 % 14.6 % ASMs 10.9 % 10.9 % 85.7 % 10.1 % 15.7 % Passenger load factor (points) (0.3) (2.2) 0.7 (0.1) (0.9) $33 million,$1.7 billion, or 14.7%14.6%, in the third quarter of 20172023 as compared to theyear-ago period, primarily due to higher international freight volume.ExpensesCompany’sCompany's operating expenses for the three months ended September 30 (in millions, except for percentage changes): 2017 2016 Increase
(Decrease) % Change $ 2,812 $ 2,625 $ 187 7.1 1,809 1,603 206 12.9 585 546 39 7.1 567 572 (5) (0.9) 556 503 53 10.5 451 451 — — 352 345 7 2.0 145 168 (23) (13.7) 50 45 5 NM 1,459 1,431 28 2.0 $ 8,786 $ 8,289 $ 497 6.0 2023 2022 Increase (Decrease) % Change (a) Salaries and related costs $ 3,914 $ 2,843 $ 1,071 37.7 Aircraft fuel 3,342 3,755 (413) (11.0) Landing fees and other rent 801 639 162 25.4 Aircraft maintenance materials and outside repairs 684 619 65 10.5 Depreciation and amortization 663 610 53 8.7 Regional capacity purchase 592 596 (4) (0.7) Distribution expenses 516 482 34 7.1 Aircraft rent 46 65 (19) (29.2) Special charges 29 20 9 NM Other operating expenses 2,158 1,790 368 20.6 Total operating expenses $ 12,745 $ 11,419 $ 1,326 11.6 (a) NM - Greater than 100% change or otherwise not meaningful. $187 million,$1.1 billion, or 7.1%37.7%, in the third quarter of 20172023 as compared to theyear-ago period, primarily due to higherapproximately 12% increase in headcount from increased flight activity, accruals for pay rates and benefit expenses driven byrate increases related to a new collective bargaining agreements finalized in 2016, agreement with employees represented by the Air Line Pilots Association ("ALPA"), annual wage rate increases across employee groups and a 2.6%an increase in average full-time equivalent employees, partially offset by a decreaseof $293 million in profit sharing expense due to both an increase in pre-tax income and other employee incentive programs expense.increased $206decreased by $413 million, or 12.9%11.0%, year-over-year primarilyin the third quarter of 2023 as compared to the year-ago period, due to an 11.8% increase in thea lower average price per gallon of aircraft fuel, in the third quarter of 2017 compared to theyear-ago period.partially offset by increased consumption from higher flight activity. The table below presents the significant changes in aircraft fuel cost per gallon in the three month periodmonths ended September 30, 20172023 as compared to theyear-ago period: (In millions) Average price per gallon 2017 2016 %
Change 2017 2016 %
Change $ 1,809 $ 1,579 14.6 $ 1.70 $ 1.49 14.1 — 24 NM — 0.03 NM $ 1,809 $ 1,603 12.9 $ 1.70 $ 1.52 11.8 1,065 1,057 0.8 2023 2022 Increase (Decrease) % Change Fuel expense $ 3,342 $ 3,755 $ (413) (11.0) % Fuel consumption (gallons) 1,132 985 147 14.9 % Average price per gallon $ 2.95 $ 3.81 $ (0.86) (22.6) % $39$162 million, or 25.4%, in the third quarter of 2023 as compared to the year-ago period, primarily due to increased flying driving higher landed weight volume and a higher number of enplaned passengers.20172023 as compared to theyear-ago period due to higher rental rates and a 3% increase in consolidated capacity.Depreciation and amortization increased $53 million, or 10.5%, in the third quarter of 2017 as compared to theyear-ago period, primarily due to additions of new aircraft, aircraft improvementshigher credit card fees, agency commissions and increasesglobal distribution fees driven by the overall increase in information technology assets.Aircraft rent decreased $23 million, or 13.7%, in the third quarter of 2017 as compared to theyear-ago period, primarily due to the purchase of leased aircraft and lower lease renewal rates.Company’sCompany's special charges include the following for the three months ended September 30 (in millions): 2017 2016 $ 23 $ 13 15 — — 14 12 18 $ 50 $ 45 2023 2022 Labor contract ratification bonuses $ 1 $ — (Gains) losses on sale of assets and other special charges 28 20 Special charges $ 29 $ 20 109 to the financial statements included in Part I, Item 1 of this report for additional information.(Expense)(Expense).The following table illustratesbelow shows year-over-year comparisons of the year-over-year dollar and percentage changes in the Company’sCompany's nonoperating income (expense) for the three months ended September 30 (in millions, except for percentage changes): 2017 2016 Increase
(Decrease) %
Change $ (164) $ (150) $ 14 9.3 20 20 — — 17 14 3 21.4 15 2 13 NM $ (112) $ (114) $ (2) (1.8) Income2023 2022 Increase (Decrease) % Change Interest expense $ (493) $ (455) $ 38 8.4 Interest income 234 104 130 NM Interest capitalized 48 27 21 77.8 Unrealized gains (losses) on investments, net (54) 28 (82) NM Miscellaneous, net 11 (9) (20) NM Total $ (254) $ (305) $ (51) (16.7) 20172023 Compared to First Nine Months 2016$1.6$2.0 billion in the first nine months of 20172023 as compared to a net incomeloss of $1.9 billion$106 million in the first nine months of 2016.2022. The Company considers a key measure of its performance to beCompany's operating income which was $2.8$3.2 billion for the first nine months of 20172023, as compared to $3.3 billion$960 million for the first nine months of 2016, a $564 million decrease year-over-year. Income before income taxes for the first nine months of 2017 was negatively impacted by2022, an estimated $185 millionapproximately $2.3 billion increase year-over-year, primarily as a result of severe weather in southeast Texas, Floridaincreased demand for air travel and parts of the Caribbean.lower fuel costs. Significant components of the Company’sCompany's operating results for the nine months ended September 30 are as follows (in millions, except percentage changes): 2017 2016 Increase
(Decrease) % Increase
(Decrease) $ 28,298 $ 27,504 $ 794 2.9 25,529 24,171 1,358 5.6 2,769 3,333 (564) (16.9) (370) (398) (28) (7.0) 848 1,069 (221) (20.7) $ 1,551 $ 1,866 $ (315) (16.9) 2023 2022 Increase (Decrease) % Change Operating revenue $ 40,091 $ 32,555 $ 7,536 23.1 Operating expense 36,878 31,595 5,283 16.7 Operating income 3,213 960 2,253 NM Nonoperating expense, net (597) (1,100) (503) (45.7) Income tax expense (benefit) 598 (34) 632 NM Net income (loss) $ 2,018 $ (106) $ 2,124 NM Company’sCompany's operations for the nine months ended September 30 is as follows: 2017 2016 Increase
(Decrease) % Increase
(Decrease) 110,654 107,154 3,500 3.3 163,112 158,771 4,341 2.7 197,358 191,072 6,286 3.3 82.6% 83.1% (0.5) pts. N/A 12.32 12.40 (0.08) (0.6) 14.91 14.92 (0.01) (0.1) 12.94 12.65 0.29 2.3 $ 1.68 $ 1.45 $ 0.23 15.9 2,998 2,942 56 1.9 86,200 83,600 2,600 3.1 (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.2023 2022 Increase (Decrease) % Change Passengers (thousands) 123,148 106,058 17,090 16.1 RPMs (millions) 183,764 152,033 31,731 20.9 ASMs (millions) 217,606 183,564 34,042 18.5 Passenger load factor 84.4 % 82.8 % 1.6 pts. N/A PRASM (cents) 16.83 15.71 1.12 7.1 TRASM (cents) 18.42 17.73 0.69 3.9 Yield (cents) 19.93 18.96 0.97 5.1 CTM (millions) 2,265 2,276 (11) (0.5) CASM (cents) 16.95 17.21 (0.26) (1.5) CASM-ex (Non-GAAP) (cents) (a) 11.94 11.74 0.20 1.7 Average price per gallon of fuel, including fuel taxes $ 2.97 $ 3.67 $ (0.70) (19.1) Fuel gallons consumed (millions) 3,146 2,672 474 17.7 Employee headcount, as of September 30 102,000 90,800 11,200 12.3 (a) See "Supplemental Information" below for a reconciliation to CASM, the most directly comparable GAAP measure. Revenue 2017 2016 Increase
(Decrease) % Change $ 19,970 $ 19,119 $ 851 4.5 4,354 4,577 (223) (4.9) 24,324 23,696 628 2.7 731 626 105 16.8 3,243 3,182 61 1.9 $ 28,298 $ 27,504 $ 794 2.9 2023 2022 Increase (Decrease) % Change Passenger revenue $ 36,625 $ 28,830 $ 7,795 27.0 Cargo 1,093 1,699 (606) (35.7) Other operating revenue 2,373 2,026 347 17.1 Total operating revenue $ 40,091 $ 32,555 $ 7,536 23.1 20172023 compared to the nine months ended September 30, 2016: Domestic Atlantic Pacific Latin Total
Consolidated Mainline Regional Increase (decrease) from 2016: $ 523 $ 37 $ (84) $ 152 $ 628 $ 851 $ (223) Passenger revenue 3.7 % 0.9 % (2.7)% 7.2 % 2.7 % 4.5 % (4.9)% (0.2)% 1.2 % (1.6)% 4.1 % (0.6)% (2.9)% 2.1 % (0.6)% 0.7 % (3.2)% 4.7 % (0.1)% 0.4 % 2.7 % (0.8)% 1.5 % (6.8)% 4.5 % (0.6)% — % 0.5 % 3.8 % (0.3)% (1.1)% 2.9 % 3.3 % 7.5 % (6.9)% 4.3 % 0.1 % 0.5 % 2.3 % 2.7 % 4.0 % (7.4)% 4.5 % (0.6)% 4.4 % 2.5 % 3.3 % 4.4 % (5.4)% Passenger load factor (points) (0.2) 0.6 (3.2) (0.1) (0.5) (0.3) (1.7) Consolidated passenger revenue in the first nine months of 2017 increased $628 million, or 2.7%, as compared to theyear-ago period primarily due to a 2.7% increase in traffic. Consolidated PRASM and consolidated yield for the first nine months of 2017 decreased 0.6% and 0.1%, respectively, as compared to the first nine months of 2016. The Pacific region experienced a 6.8% decline in PRASM in the first nine months of 2017 as compared to theyear-ago period due to unfavorable supply and demand dynamics in China. The Domestic region experienced a 0.8% and a 0.6% decline in PRASM and yield, respectively, as compared to theyear-ago period due to severe weather in southeast Texas, Florida and parts of the Caribbean, uncompetitive Basic Economy pricing, and competitive pricing environment withultra-low-cost carriers.Cargo2022:Increase (decrease) from 2022: Domestic Atlantic Pacific Latin Total Passenger revenue (in millions) $ 3,143 $ 2,085 $ 2,021 $ 546 $ 7,795 Passenger revenue 16.8 % 35.5 % NM 18.6 % 27.0 % Average fare per passenger 1.7 % 10.5 % 10.1 % 12.8 % 9.4 % Yield 4.1 % 10.7 % (1.9) % 11.8 % 5.1 % PRASM 4.0 % 11.4 % 27.7 % 18.1 % 7.1 % Passengers 14.9 % 22.6 % NM 5.2 % 16.1 % RPMs 12.2 % 22.3 % NM 6.1 % 20.9 % ASMs 12.3 % 21.6 % NM 0.5 % 18.5 % Passenger load factor (points) (0.1) 0.5 18.9 4.6 1.6 $105 million,$7.8 billion, or 16.8%27.0%, in the first nine months of 20172023 as compared to theyear-ago period, primarily due to higher international freight volume.ExpensesCompany’sCompany's operating expenses for the nine months ended September 30 (in millions, except for percentage changes): 2017 2016 Increase
(Decrease) % Change $ 8,341 $ 7,707 $ 634 8.2 5,038 4,258 780 18.3 1,670 1,612 58 3.6 1,652 1,645 7 0.4 1,610 1,473 137 9.3 1,377 1,301 76 5.8 1,021 987 34 3.4 476 521 (45) (8.6) 145 669 (524) NM 4,199 3,998 201 5.0 $ 25,529 $ 24,171 $ 1,358 5.6 2023 2022 Increase (Decrease) % Change Salaries and related costs $ 10,946 $ 8,466 $ 2,480 29.3 Aircraft fuel 9,336 9,796 (460) (4.7) Landing fees and other rent 2,283 1,919 364 19.0 Aircraft maintenance materials and outside repairs 2,072 1,553 519 33.4 Depreciation and amortization 1,987 1,832 155 8.5 Regional capacity purchase 1,806 1,728 78 4.5 Distribution expenses 1,406 1,101 305 27.7 Aircraft rent 151 193 (42) (21.8) Special charges 902 124 778 NM Other operating expenses 5,989 4,883 1,106 22.7 Total operating expenses $ 36,878 $ 31,595 $ 5,283 16.7 $634 million,$2.5 billion, or 8.2%29.3%, in the first nine months of 20172023 as compared to theyear-ago period, primarily due to higherapproximately 12% increase in headcount from increased flight activity, accruals for pay rates and benefit expenses driven byrate increases related to a new collective bargaining agreements finalized in 2016,agreement with employees represented by ALPA, annual wage rate increases across employee groups and a 3.1%an increase in average full-time equivalent employees, partially offset by a decreaseof $513 million in profit sharing expense due to both an increase in pre-tax income and other employee incentive programs expense.increased $780decreased $460 million, or 18.3%4.7%, year-over-year primarily due to a 15.9% increase in the average price per gallon of aircraft fuel in the first nine months of 20172023 as compared to theyear-ago period. period, primarily due to a lower average price per gallon of fuel, partially offset by increased consumption from higher flight activity. The table below presents the significant changes in aircraft fuel cost per gallon in the nine months ended September 30, 20172023, as compared to theyear-ago period: (In millions) Average price per gallon 2017 2016 %
Change 2017 2016 %
Change Total aircraft fuel purchase cost excluding fuel hedge impacts $ 5,036 $ 4,061 24.0 $ 1.68 $ 1.38 21.7 Hedge losses reported in fuel expense 2 197 NM — 0.07 NM Fuel expense $ 5,038 $ 4,258 18.3 $ 1.68 $ 1.45 15.9 2,998 2,942 1.9 Depreciation period (in millions, except percentage change and amortizationper gallon data):2023 2022 Increase (Decrease) % Change Fuel expense $ 9,336 $ 9,796 $ (460) (4.7) % Fuel consumption (gallons) 3,146 2,672 474 17.7 % Average price per gallon $ 2.97 $ 3.67 $ (0.70) (19.1) % $137$364 million, or 9.3%19.0%, in the first nine months of 20172023 as compared to theyear-ago period, primarily due to additionsincreased flying driving higher landed weight volume and a higher number of new aircraft, aircraft improvements, accelerated depreciation of assets related to certain fleet types and increases in information technology assets.$76$519 million, or 5.8%33.4%, in the first nine months of 20172023 as compared to theyear-ago period, primarily due to an increase inincreased flight activity and increased volumes of both engine overhauls and airframe and engineheavy maintenance visits due to the cyclical timing of these events.Aircraft rent decreased $45checks.8.6%8.5%, in the first nine months of 20172023 as compared to theyear-ago period, primarily due to thenew aircraft inducted into service.of leased aircraft and lower lease renewal rates.Other operating expenses increased $201$78 million, or 5.0%4.5%, in the first nine months of 20172023 as compared to theyear-ago period despite an approximately 16% reduction in regional capacity, primarily due to rate increases under various capacity purchase agreements with regional carriers.increaseshigher credit card fees, travel agency commissions and global distribution fees driven by the overall increase in purchased services and technology initiatives, as well as increases in food and other amenities associated with the Company’s customer experience initiatives.Company’sCompany's special charges include the following for the nine months ended September 30 (in millions): 2017 2016 $ 101 $ 27 15 412 — 124 — 74 29 32 $ 145 $ 669 2023 2022 Labor contract ratification bonuses $ 814 $ — (Gains) losses on sale of assets and other special charges 88 124 Special charges $ 902 $ 124 109 to the financial statements included in Part I, Item 1 of this report for additional information.Company’sCompany's nonoperating income (expense) for the nine months ended September 30 (in millions, except for percentage changes): 2017 2016 Increase
(Decrease) %
Change $ (472) $ (466) $ 6 1.3 64 48 16 33.3 41 31 10 32.3 (3) (11) (8) (72.7) $ (370) $ (398) $ (28) (7.0) 2023 2022 Increase (Decrease) % Change Interest expense $ (1,472) $ (1,299) $ 173 13.3 Interest income 620 142 478 NM Interest capitalized 128 73 55 75.3 Unrealized gains (losses) on investments, net 54 (12) (66) NM Miscellaneous, net 73 (4) (77) NM Total $ (597) $ (1,100) $ (503) (45.7) 2017,2023, the Company had $4.3$17.1 billion in unrestricted cash, cash equivalents and short-term investments, as compared to $4.4$16.4 billion at December 31, 2016. At September 30, 2017, the Company also had $109 million of restricted2022. We believe that our existing cash, and cash equivalents which is primarily collateraland short-term investments, together with cash generated from operations, will be sufficient to satisfy our anticipated liquidity needs for lettersthe next twelve months, and we expect to meet our long-term liquidity needs with our anticipated access to the capital markets and projected cash from operations. We regularly assess our anticipated working capital needs, debt and leverage levels, debt maturities, capital expenditure requirements (including in connection with our capital commitments for our firm order aircraft) and future investments or acquisitions in order to maximize stockholder return, efficiently finance our ongoing operations and maintain flexibility for future strategic transactions. We also regularly evaluate our liquidity and capital structure to ensure financial risks, liquidity access and cost of credit and estimated future workers’ compensation claims. As of September 30, 2017, thecapital are each managed efficiently.had its entire commitment capacity of $2.0has a $1.75 billion under the revolving credit facility of(the "Revolving Credit Facility") expiring April 21, 2025 (subject to customary extension rights). The Revolving Credit Facility is secured by certain route authorities and airport slots and gates. No borrowings were outstanding under the Company’s Amended and RestatedRevolving Credit and Guaranty Agreement, dated as of March 29, 2017 (the “2017 Credit Agreement”) available for borrowings.As is the case with many of our principal competitors, we have a high proportion of debt compared to capital and a deficit in working capital. Facility at September 30, 2023.aircraft leases and financings, leases of aircraft, airport property and other facilities, and pension funding obligations. AtAs of September 30, 2017,2023, the Company had approximately $13.9$36.7 billion of debt, finance lease, operating lease and capital lease obligations,other financial liabilities, including $1.6$4.6 billion that will become due in the next 12 months. In addition, we have2017, our current liabilities exceeded our current assets by approximately $5.2 billion. However, approximately $6.5 billion of our current liabilities are related to our advance ticket sales2023, UAL and frequent flyer deferred revenue, both of which largely represent revenue to be recognized for travelUnited were 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.2017,2023, a substantial portion of the Company's assets, principally aircraft and certain related assets, its loyalty program, certain route authorities and airport slots and gates, was pledged under various loan and other agreements. See Note 8 to the financial statements included in Part I, Item 1 of this report for additional information on aircraft financing and other debt instruments. and options to purchase aircraft from The Boeing Company (“Boeing”("Boeing"), and Airbus S.A.S. (“Airbus”("Airbus") and Embraer S.A. (“Embraer”)as presented in the table below:Aircraft TypeNumber of Firm Commitments (a) Airbus A35045 Boeing 737 MAX161 Boeing777-300ER4 Boeing 78718 Embraer E1755 (a) United also has options and purchase rights for additional aircraft.Contractual Aircraft Deliveries Expected Aircraft Deliveries (b) Aircraft Type Number of Firm
Commitments (a)Last Three Months
of 20232024 After 2024 Last Three Months
of 20232024 After 2024 787 150 — 8 142 — 8 142 737 MAX 374 73 100 201 20 77 277 A321neo 130 4 26 100 4 26 100 A321XLR 50 — — 50 — — 50 A350 45 — — 45 — — 45 (a) United also has options and purchase rights for additional aircraft. (b) Expected aircraft deliveries reflect adjustments communicated by Boeing and Airbus or estimated by United. 2027. To2033. The amount and timing of the Company's future capital commitments could change to the extent that: (i) the Company and the aircraft manufacturers, with whom the Company has existing orders for new aircraft, agree to modify the contracts governing those orders,orders; (ii) rights are exercised pursuant to the amount andrelevant agreements to cancel deliveries or modify the timing of deliveries; or (iii) the Company’s future capitalaircraft manufacturers are unable to deliver in accordance with the terms of those orders.could change. Forrelated to these agreements as well as the remainder of 2017, United expects to take delivery of five Embraer E175 aircraft. Additionally, the Company also currently expects to take delivery of four used Airbus A319scontractual and two used Airbus A320s for the remainder of 2017.Asexpected aircraft deliveries.2017, UAL and United have total capital commitments primarily related to the acquisition of2023, which include aircraft and related spare engines, aircraft improvements and includenon-aircraft capital commitments. Aircraft commitments are based on contractual scheduled aircraft deliveries without any adjustments communicated by Boeing and Airbus or estimated by United.(in billions) Last three months of 2023 $ 4.6 2024 8.8 2025 8.0 2026 6.1 2027 5.0 After 2027 29.6 $ 62.1 2023 2022 Increase (Decrease) Total cash provided by (used in): Operating activities $ 7,821 $ 4,908 $ 2,913 Investing activities (5,363) (9,442) (4,079) Financing activities (1,769) (2,472) (703) Net increase (decrease) in cash, cash equivalents and restricted cash $ 689 $ (7,006) $ 7,695 commitmentsof aircraft, aircraft improvements and advance deposits for approximately $22.0 billion,future aircraft purchases.which approximately $0.9 billion, $3.0 billion, $3.1 billion, $2.2 billion, $1.4$3.4 billion and $11.4$2.6 billion, are duerespectively. The payments in the last threefirst nine months of 20172023 included a prepayment of $1.0 billion for a 2021 term loan facility.full yearissuance by the Company of equipment notes (the "Equipment Notes") in the aggregate principal amount of $1.3 billion to finance 39 Boeing aircraft delivered new to the Company from August 2022 to May 2023. Pursuant to the Note Purchase Agreement, the Trustee purchased Equipment Notes issued under a trust indenture and mortgage (each, an "Indenture" and, collectively, the "Indentures") with respect to each aircraft entered into by the Company and Wilmington Trust, National Association, as mortgagee. Each Indenture provides for 2018, 2019, 2020, 2021 and thereafter, respectively. Any new firm aircraft orders, includingthe issuance of Equipment Notes in a single series, Series A, bearing interest at the rate of 5.80% per annum. The Equipment Notes were purchased by the Trustee, using the proceeds from the sale of Pass Through Certificates, Series 2023-1A, issued by a pass through trust newly-formed by the exercise of purchase options and purchase rights, will increaseCompany to facilitate the total future capital commitmentsfinancing of the Company.United secured individual bank financing for five Embraer E175 aircraft toaircraft. The interest on the Equipment Notes is payable semi-annually on each January 15 and July 15, beginning on January 15, 2024. The principal payments on the Equipment Notes are scheduled on January 15 and July 15 of each year, beginning on July 15, 2024. The final payments on the Equipment Notes will be delivered in the last three months of 2017. due on January 15, 2036.98 to the financial statements included in Part I, Item 1 of this report for additional information on aircraft financing. The Company has also secured backstop financing commitments from certain of its aircraft manufacturers for a limited number of its future aircraft deliveries, subject to certain customary conditions. Financing may be necessary to satisfy the Company’s capital commitments for its firm order aircraft and other related capital expenditures.As of September 30, 2017, a substantial portion of the Company’s assets, principally aircraft, route authorities, airport slots and loyalty program intangible assets, 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 lease obligations and future commitments for capital expenditures, including the acquisition of aircraft and related spare engines.S&P Moody’sMoody'sFitch UAL BB- Ba2 BBB+United BB- * BBB+levels.levels; however, the Company has been able to secure financing with investment grade credit ratings for certain enhanced equipment trust certificates, term loans and secured bond financings. Downgrades from these rating levels, among other things, could restrict the availability, or increase the cost, of future financing for the Company.Sources and UsesCompany as well as affect the fair market value of CashOperating Activities.Cash flow provided by operations was $2.7 billion forexisting debt. A rating reflects only the nine months ended September 30, 2017 compared to $4.9 billion in the same period in 2016. Operating income for the first nine months of 2017 was $2.8 billion compared to $3.3 billion versus theyear-ago period. Excluding thenon-cash impairment of the Newark slots, operating income for the first nine months of 2017 was approximately $1.0 billion lower than the first nine months of 2016. Additionally, there were approximately $1.2 billion of changes in working capital items primarily related to $0.5 billion decrease in advanced purchase of miles due to increased utilization ofpre-purchased miles, $0.4 billion increase in prepayments for maintenance contracts, and $0.2 billion decrease related to timing of accounts payable.Investing Activities.Capital expenditures were $2.9 billion and $2.3 billion in the nine months ended September 30, 2017 and 2016, respectively. Capital expenditures for the nine months ended September 30, 2017 were primarily attributable to additions of new aircraft, aircraft improvements, and increases in information technology assets.Financing Activities.During the nine months ended September 30, 2017, the Company made debt and capital lease payments of $0.8 billion.On March 29, 2017, United and UAL, as borrower and guarantor, respectively, entered into the 2017 Credit Agreement. The 2017 Credit Agreement consistsview of a $1.5 billion term loan due April 1, 2024, which (i) was usedrating agency and is not a recommendation to retire the entire principal balance of the term loans under the credit and guaranty agreement, dated March 27, 2013 (as amended, the “2013 Credit Agreement”), and (ii) increased the term loan balance by approximately $440 million, and a $2.0 billion revolving credit facility available for drawing until April 1, 2022, which increased the available capacity under the revolving credit facility of the 2013 Credit Agreement. As of September 30, 2017, United had its entire capacity of $2.0 billion available under the revolving credit facility. The obligations of United under the 2017 Credit Agreement are secured by liens on certain international route authorities, certaintake-off and landing rights and related assets of United. See Note 9 to the financial statements included in Part I, Item 1 of this report for additional information.In the nine months ended September 30, 2017, United received and recorded $1.3 billion of proceeds as debt from the two EETC pass-through trusts established in 2016. See Note 9 to the financial statements included in Part I, Item 1 of this report for additional information.In the nine months ended September 30, 2017, United borrowed approximately $392 million aggregate principal amount from various financial institutions to finance the purchase of several aircraft delivered in 2017. The notes evidencing these borrowings, which are secured by the related aircraft, mature in 2027 and each has an interest rate comprised of LIBOR plus a specified margin.In the nine months ended September 30, 2017, UAL received and recorded $400 million proceeds of the 4.25% Senior Notes due October 1, 2022, and $300 million proceeds of the 5% Senior Notes due February 1, 2024.Share Repurchase Programs.In the nine months ended September 30, 2017, UAL repurchased approximately 18 million shares of UAL common stock in open market transactions for $1.3 billion. As of September 30, 2017, the Company had approximately $0.6 billion remaining to purchase shares under its existing share repurchase authority.UAL may repurchase shares through the open market, privately negotiated transactions, block tradesbuy, sell 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 repurchaseshold securities. Ratings can be revised upward or downward at any time. See Part II, Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds” of this report for additional information.Company’s Annual Report on2022 Form10-K, for the year ended December 31, 2016 (“2016 Annual Report”), the Company’sCompany'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.2016 Annual Report2022 Form 10-K and Notes 5,6, 7 8 and 98 to the financial statements contained in Part I, Item 1 of this report for additional information.“Critical"Critical Accounting Policies”Policies" in Management’sPart II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in the 2016 Annual Report2022 Form 10-K.Note 1non-GAAP financial measures, including CASM-ex. The Company has provided CASM-ex, a non-GAAP financial measure, which is not calculated or presented in accordance with GAAP, as supplemental information and in addition to the financial measure that is calculated and presented in accordance with GAAP. Management believes that adjusting for special charges is useful to investors because special charges are not indicative of UAL's ongoing performance. Management also believes that excluding third-party business expenses, such as expenses associated with maintenance and ground handling for third parties, from CASM provides more meaningful disclosure because these expenses are not directly related to the Company's core business. Management also believes that excluding fuel costs from CASM is useful to investors because it provides an additional measure of management's performance excluding the effects of a significant cost item over which management has limited influence. Management also believes that excluding profit sharing from CASM allows investors to better understand and analyze the Company's operating cost performance and provides a more meaningful comparison of our core operating costs to the airline industry.containedand publicly-filed reports in their entirety and not to rely on any single financial measure.Three Months Ended
September 30,Nine Months Ended
September 30,2023 2022 2023 2022 CASM (GAAP) 16.27 16.87 16.95 17.21 Fuel expense 4.26 5.55 4.29 5.34 Special charges 0.04 0.03 0.42 0.07 Profit sharing 0.39 0.01 0.24 — Third-party business expenses 0.07 0.06 0.06 0.06 CASM-ex (Non-GAAP) 11.51 11.22 11.94 11.74 1,I, Item 1 of this report for a discussion of the Company’s critical accounting policies.FORWARD-LOOKING INFORMATIONCertain statements throughout Management’s2. Management's Discussion and Analysis of Financial Condition and Results of Operations and elsewhere, in this report are forward-lookingrelating to, among other things, goals, plans and thus reflect our current expectationsprojections regarding the Company's financial position, results of operations, market position, capacity, fleet, product development, ESG-related strategy initiatives and beliefs with respect to certain current and future events and anticipated financial and operating performance.business strategy. Such forward-looking statements are based on historical performance and will be subject to manycurrent expectations, estimates, forecasts and projections about the Company's future financial results, goals, plans and objectives and involve inherent risks, assumptions and uncertainties, relatingknown or unknown, including internal or external factors that could delay, divert or change any of them, that are difficult to our operationspredict, may be beyond the Company's control and business environment that maycould cause actualthe Company's future financial results, goals, plans and objectives to differ materially from any future resultsthose expressed in, or implied in such forward-lookingby, the statements. Words such as “expects,” “will,” “plans,” “anticipates,” “indicates,” “believes,” “forecast,” “guidance,” “outlook,” “goals”"should," "could," "would," "will," "may," "expects," "plans," "intends," "anticipates," "indicates," "remains," "believes," "estimates," "projects," "forecast," "guidance," "outlook," "goals," "targets," "pledge," "confident," "optimistic," "dedicated," "positioned," and other words and terms of similar expressionsmeaning and expression are intended to identify forward-looking statements.Additionally,statements, although not all forward-looking statements includecontain such terms. All statements, other than those that do not relate solely to historical facts, such asare forward-looking statements.whichinclude conditional statements and statements that identify uncertainties or trends, discuss the possible future effects of current known trends or uncertainties, or whichthat indicate that the future effects of known trends orlaw.abilitystrategic operating plan; changes in our network strategy or other factors outside our control resulting in less economic aircraft orders, costs related to modification or termination of aircraft orders or entry into less favorable aircraft orders, as well as any inability to accept or integrate new aircraft into our fleet as planned; any failure to effectively manage, and receive anticipated benefits and returns from, acquisitions, divestitures, investments, joint ventures and other portfolio actions, as well as related costs or other issues, or related exposures to unknown liabilities or other issues or underperformance as compared to our expectations; the adverse impacts of the ongoing COVID-19 global pandemic on our business, operating results, financial condition and liquidity; adverse publicity, harm to our brand, reduced travel demand, potential tort liability and voluntary or mandatory operational restrictions as a result of an accident, catastrophe or incident involving us, our regional carriers, our codeshare partners or another airline; the highly competitive nature of the global airline industry and susceptibility of the industry to price discounting and changes in capacity, including as a result of alliances, joint business arrangements or other consolidations; our reliance on a limited number of suppliers to source a majority of our aircraft and certain parts, and the impact of any failure to obtain timely deliveries, additional equipment or support from any of these suppliers; disruptions to our regional network and United Express flights provided by third-party regional carriers; unfavorable economic and political conditions in the United States and globally; reliance on third-party service providers and the impact of any significant failure of these parties to perform as expected, or interruptions in our relationships with these providers or their provision of services; extended interruptions or disruptions in service at major airports where we operate and space, facility and infrastructure constraints at our hubs or other airports; geopolitical conflict, terrorist attacks or security events (including the continuation of the suspension of our overflying in Russian airspace as a result of the Russia-Ukraine military conflict and to Tel Aviv as a result of the Israeli-Palestinian military conflict and an escalation of the broader economic consequences of the conflicts beyond their current scope); any damage to our reputation or brand image; our reliance on technology and automated systems to operate our business and the impact of any significant failure or disruption of, or failure to effectively integrate and implement, the technology or systems; increasing privacy and data security obligations or a significant data breach; increased use of social media platforms by us, our employees and others; the impacts of union disputes, employee strikes or slowdowns, and other labor-related disruptions or regulatory compliance costs on our operations or financial performance; any failure to attract, train or retain skilled personnel, including our senior management team or other key employees; the monetary and operational costs of compliance with extensive government regulation of the airline industry; current or future litigation and regulatory actions, or failure to comply with the terms of any settlement, order or arrangement relating to these actions; costs, liabilities and risks associated with environmental regulation and climate change, including our variousclimate goals; high and/or volatile fuel prices or significant disruptions in the supply of aircraft fuel; the impacts of our significant amount of financial leverage from fixed obligations and the impacts of insufficient liquidity on our financial condition and business; failure to comply with financial and other covenants governing our debt, including our MileagePlus® financing arrangements;agreements; the costs and availabilityimpacts of financing;the phase out of the London interbank offer rate; limitations on our ability to maintain adequate liquidity; our ability to execute our operational plans and revenue-generating initiatives, including optimizing our revenue; our ability to control our costs, including realizing benefits from our resource optimization efforts, cost reduction initiatives and fleet replacement programs; costs associated with any modification or termination of our aircraft orders; our ability to utilizeuse our net operating losses; our ability to attractloss carryforwards and retain customers; potential reputational orcertain other impact from adverse events in our operations; demand for transportation in the markets in which we operate; an outbreak of a disease that affects travel demand or travel behavior; demand for travel and the impact that global economic and political conditions have on customer travel patterns; excessive taxation and the inabilitytax attributes to offset future taxable income; general economic conditions (including interest rates, foreign currency exchange rates, investmentincome for U.S. federal income tax purposes; our failure to realize the full value of our intangible assets 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; our abilitylong-lived assets, causing us to cost-effectively hedge against increasesrecord impairments; fluctuations in the price of aircraft fuel if we decide to do so; any potential realized or unrealized gains or losses related to fuel or currency hedging programs;our common stock; the effectsimpacts of any hostilities, act of war or terrorist attack; the ability of other air carriers with whom we have alliances or partnerships to provide the services contemplated by the respective arrangements with such carriers; the effects of any technology failures or cybersecurity breaches; disruptions to our regional network; the costs and availability of aviationseasonality and other insurance; industry consolidationfactors associated with the airline industry; increases in insurance costs or changes in airline alliances; the success of our investments in airlines in other parts of the world; competitive pressures on pricing and on demand; our capacity decisions and the capacity decisions of our competitors; U.S. or foreign governmental legislation, regulation and other actions (including Open Skies agreements and environmental regulations); the impact of regulatory, investigative and legal proceedings and legal compliance risks; the impact of any management changes; labor costs; 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; weather conditions;inadequate insurance coverage and other risks and uncertainties set forth under Part I, Item 1A., “Risk Factors” Risk Factors, of our 2016 Annual Report,the 2022 Form 10-K and Part II, Item 1A. Risk Factors of this report, and under "Economic and Market Factors" and "Governmental Actions" in Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, 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. SecuritiesSEC.Exchange Commission (the “SEC”).should not consider this list to be a complete statement of all potential risks and uncertainties. It is routine for our internal projections and expectations to change as the year or each quarter in the year progresses, and therefore it should be clearly understood that the internal projections, beliefs and assumptions upon which we base our expectations may change. For instance, we regularly monitor future demand and booking trends and adjust capacity, as needed. As such, our actual flown capacity may differ materially from currently published flight schedules or current estimations.ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.7A. “Quantitative7A, Quantitative and Qualitative Disclosures About Market Risk”Risk, in our 2016 Annual Report.ITEM 4.CONTROLS AND PROCEDURES.The CompanySEC’sSEC'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 Company’s management of UAL and United, including the Chief Executive Officer and Chief Financial Officer, performed an evaluation to conclude with reasonable assurance that UAL’sUAL's and United’sUnited's disclosure controls and procedures were designed and operating effectively to report the information each company is required to disclose in the reports they fileit files 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 September 30, 2017,2023, disclosure controls and procedures of each of UAL and United were effective.20172017,2023, there were no changes in UAL’sUAL's or United’sUnited'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 rulesRules 13a-15(f) and15d-15(f) under the Securities Exchange Act of 1934)1934, as amended (the "Exchange Act")).ITEM 1.LEGAL PROCEEDINGS3., “Legal Proceedings”3, Legal Proceedings, of the 2016 Annual Report2022 Form 10-K for a description of legal proceedings.Item 1A.RISK FACTORSSee“RiskRisk Factors” of the 2016 Annual Report2022 Form 10-K except for a detailed discussionthe changes to the following risk factor related to the monetary and operational costs of compliance with extensive government regulation of the risk factors affecting UALairline industry:United.ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.(a) None(b) None(c)may adversely impact our business, operating results and financial condition.following table presents repurchases of UAL common stock madeDOT also regulates consumer protection and, through its investigations or rulemaking authority (including, for example, any rulemakings or initiatives in response to the Executive Order on Promoting Competition in the third quarterAmerican Economy issued by the President on July 9, 2021), could impose restrictions that materially impact the Company's business. United also operates pursuant to an air carrier operating certificate issued by the Federal Aviation Administration ("FAA"), and FAA orders and directives have previously resulted in the temporary grounding of fiscal year 2017: 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) 2,537,939 $ 73.35 2,537,939 $ 923 3,592,802 66.80 3,592,802 683 2,159,408 60.20 2,159,408 553 8,290,149 8,290,149 (a) an entire aircraft type when the FAA identifies design, manufacturing, maintenance or other issues requiring immediate corrective action (including the FAA Emergency Airworthiness Directive grounding our Boeing 777 Pratt & Whitney powered aircraft), which has had an effect that has been material to the Company's business, operating results and financial condition.July 2016, UAL’s Board2018, the U.S. Congress approved a five-year reauthorization for the FAA, which encompasses a range of Directors authorized a $2 billion share repurchase program. Aspolicy issues related to aviation tax, airline customer service and aviation safety. Depending on how the issues are implemented, our operations and costs could be materially impacted. Additionally, the U.S. Congress may consider legislation related to environmental issues relevant to the airline industry, such as implementation of September 30, 2017,Carbon Offsetting and Reduction Scheme for International Aviation, which could negatively impact the Company had approximately $0.6 billion remainingand the airline industry.purchase sharesthe existing antiquated air traffic control ("ATC") system utilized by the U.S. government and regulated by the FAA, which may not be able to effectively handle projected future air traffic growth. The outdated ATC system has led to short-term capacity constraints imposed by government agencies and has resulted in delays and disruptions of air traffic during peak travel periods in certain markets due to its inability to handleits share repurchase program. UALgovernment arrangements, regulations or policies that designate the number of carriers permitted to operate on such routes, the capacity of the carriers providing services on such routes, the airports at which carriers may repurchase shares throughoperate international flights or the open market, privately negotiated transactions, block trades or accelerated share repurchase transactionsnumber of carriers allowed access to particular airports. Applicable arrangements between the United States and foreign governments (such as "Open Skies" (meaning all U.S. and foreign carriers have access to the destination)) may be amended from time to time, in accordancegovernment policies with applicable securities laws.(b) The table does not include shares withheld from employeesrespect 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, which replaced the United Continental Holdings, Inc. 2008 Incentive Compensation Plan on May 24, 2017, provides for the withholding of shares to satisfy tax obligations due upon the vesting of restricted stock. However, this plan does not specify a maximum number of shares thatairport operations may be withheld for this purpose. A totalrevised and the availability of 8,457 shares were withheld under this planappropriate slots or facilities may change, which could have a material adverse impact on the Company's financial condition and operating results and could result in the third quarterimpairment of 2017 at an average share pricematerial amounts of $67.88. These sharesrelated tangible and intangible assets. For instance, the COVID-19 pandemic resulted in increased regulatory burdens in the U.S. and around the globe, which included closure of common stock withheldinternational borders to satisfy tax withholding obligationsflights and/or passengers from specific countries, passenger and crew quarantine requirements and other regulations promulgated to protect public health but that have had and may be deemedcontinue to have a negative impact on travel and airline operations.“issuer purchases”cancelled or diverted, which in turn could affect consumer perceptions of sharesthe safety of air travel. For example, over the past two years regulators addressed potential "5G" interference on a temporary and piecemeal basis tailored to specific aircraft and airports, which could occur again. Systematic regulation of the overlap between aviation systems and cellular networks may not occur in the near term or may not involve terms that are requiredfavorable to the Company.disclosed pursuant to this Item.Average price paid per shareNonecalculated on a settlement basis and excludes commission.defined in Item 408(a) of Regulation S-K under the Exchange Act.ITEM 6.EXHIBITS.Registrant Registrant *4.1UAL UnitedFourth Supplemental Indenture, dated as of September 29, 2017, among United Continental Holdings, Inc., United Airlines, Inc. and The Bank of New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the Commission on October 4, 2017)^*10.1UAL
UnitedUAL United 12.1UAL*10.2 UAL
United*10.3 UAL
United*10.4 UAL
United*10.5 UAL
United 12.2United*10.6 UAL
United*10.7 UAL
United*10.8 UAL
United*10.9 UAL
United*10.10 UAL
United*10.11 UAL
United*10.12 UAL
United*10.13 UAL
United*10.14 UAL
United*10.15 UAL
United*10.16 UAL
United^10.17 UAL
United*10.18 UAL
United*10.19 UAL
United*10.20 UAL
United*10.21 UAL
United*10.22 UAL
United*10.23 UAL
United*10.24 UAL
United*10.25 UAL
United*10.26 UAL
United*10.27 UAL
United*10.28 UAL
United*10.29 UAL
United*10.30 UAL
United*10.31 UAL
United^10.32 UAL
United^10.33 UAL
United^10.34 UAL
United^10.35 UAL
United^10.36 UAL
United^10.37 UAL
United†10.38 UAL
United 31.1UAL31.1 UAL 31.2UAL31.2 UAL 31.3United31.3 United 31.4United31.4 United 32.1UAL32.1 UAL 32.2United32.2 United 101.1UALUnitedXBRL Instance Document101.2101UAL
UnitedXBRL Taxonomy Extension Schema Document on Form 10-Q for the quarter ended September 30, 2023, formatted in Inline XBRL: (i) Statements of Consolidated Operations, (ii) Statements of Consolidated Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Condensed Statements of Consolidated Cash Flows, (v) Statements of Consolidated Stockholders' Equity and (vi) Combined Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags.101.3UALUnitedXBRL Taxonomy Extension Calculation Linkbase Document101.4104UAL
UnitedUALUnitedCover Page Interactive Data File - the cover page XBRL Taxonomy Extension Definition Linkbase Documenttags are embedded within the Inline XBRL document.101.5UALUnitedXBRL Taxonomy Extension Labels Linkbase Document101.6†Indicates management contract or compensatory plan or arrangement. * UALUnited^ XBRL Taxonomy Extension Presentation Linkbase DocumentPortions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K.^ Confidential portion of this exhibit has been omitted and filed separately with the SEC pursuant to a request for confidential treatment.* Previously Filed The signature for each undersigned company shall be deemed to relate only to matters having reference to such company or its subsidiaries.United Continental Holdings, Inc.United Airlines Holdings, Inc. (Registrant) October 19, 201718, 2023By: /s/ Michael Leskinen By:Michael Leskinen
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)Date: October 18, 2023 By: /s/ Andrew C. LevyChris KennyChris Kenny
Vice President and Controller
(Principal Accounting Officer)United Airlines, Inc. (Registrant) Date: October 18, 2023 By: /s/ Michael Leskinen Michael Leskinen
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)Date: October 18, 2023 By: Andrew C. LevyExecutive Vice President and Chief Financial Officer (principal financial officer)/s/ Chris KennyDate: October 19, 2017By:/s/ Chris KennyChris Kenny
Vice President and Controller
(principal accounting officer)United Airlines, Inc.(Registrant)Date: October 19, 2017By:/s/ Andrew C. LevyAndrew C. LevyExecutive Vice President and Chief Financial Officer(principal financial officer)Date: October 19, 2017By:/s/ Chris KennyChris KennyVice President and Controller(principal accounting officer)41