UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM10-Q

FORM10-Q
(Mark One)

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

For the quarterly period ended September 30, 2017

2023

OR

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

For the transition period from to

LOGO

unitedcoverlogoa01.jpg
Commission


File Number

Exact Name of Registrant as

Specified in its Charter,

Principal

Executive Office Address and

Telephone Number

State of


Incorporation

I.R.S. Employer


Identification No.

001-06033

001-06033

United ContinentalAirlines Holdings, Inc.

Delaware36-2675207
233 South Wacker Drive,

Chicago, Illinois 60606

(872)825-4000

Chicago,DelawareIllinois6060636-2675207

001-10323

(872)825-4000
001-10323United Airlines, Inc.

Delaware74-2099724
233 South Wacker Drive,

Chicago, Illinois 60606

(872)825-4000

Chicago,DelawareIllinois6060674-2099724
(872)825-4000

Securities registered pursuant to Section 12(b) of the Act
RegistrantTitle of Each ClassTrading SymbolName of Each Exchange on Which Registered
United Airlines Holdings, Inc.Common Stock, $0.01 par valueUALThe Nasdaq Stock Market LLC
United Airlines Holdings, Inc.Preferred Stock Purchase RightsNoneThe Nasdaq Stock Market LLC
United Airlines, Inc.NoneNoneNone

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

United ContinentalAirlines Holdings, Inc.Yes  ☒    No  ☐
YesNoUnited Airlines, Inc.Yes  ☒    No  ☐YesNo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of RegulationS-T (§232.405 of this Chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

United ContinentalAirlines Holdings, Inc.Yes  ☒    No  ☐
YesNoUnited Airlines, Inc.Yes  ☒    No  ☐YesNo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large"large accelerated filer,” “accelerated" "accelerated filer,” “smaller" "smaller reporting company," and “emerging"emerging growth company”company" in Rule12b-2 of the Exchange Act.

United ContinentalAirlines Holdings, Inc.

Large accelerated filer ☒Accelerated filer ☐Non-accelerated filer ☐Smaller reporting company ☐Emerging growth company

United Airlines, Inc.

Large accelerated filer ☐Accelerated filer ☐Non-accelerated filer ☒Smaller reporting company ☐Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

United ContinentalAirlines Holdings, Inc.
United Airlines, Inc.

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act).

United ContinentalAirlines Holdings, Inc.Yes  ☐    No  ☒No
United Airlines, Inc.Yes  ☐    No  ☒YesNo

The number of shares outstanding of each of the issuer’sissuer's classes of common stock as of October 12, 20172023 is shown below:

United ContinentalAirlines Holdings, Inc.

328,014,680 296,252,435 shares of common stock ($0.01 par value)

United Airlines, Inc.

1,000 

1,000

shares of common stock ($0.01 par value) (100% owned by United ContinentalAirlines Holdings, Inc.)

There is no market for United Airlines, Inc. common stock.

OMISSION OF CERTAIN INFORMATION

This combined Quarterly Report on Form10-Q is separately filed by United ContinentalAirlines Holdings, Inc. and United Airlines, Inc. United Airlines, Inc. meets the conditions set forth in General Instruction H(1)(a) and (b) of Form10-Q and is therefore filing this form with the reduced disclosure format allowed under that General Instruction.




United ContinentalAirlines Holdings, Inc.

United Airlines, Inc.

Quarterly Report on Form10-Q

For the QuarterQuarterly Period Ended September 30, 2017

2023

Table of Contents
Page

Item 1.

Financial Statements

United Continental Holdings, Inc.:

United Airlines, Inc.:

8

9

10

12
13

Management’s Management's Discussion and Analysis of Financial Condition and Results of Operations

Quantitative and Qualitative Disclosures About Market Risk

Controls and Procedures

38



Item 1.

Legal Proceedings

39

Item 1A.

Risk Factors

39

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

39

Item 6.

Exhibits

39

Exhibit Index

40

Signatures

41


PART I. FINANCIAL INFORMATION


ITEM 1.FINANCIAL STATEMENTS.

ITEM 1. FINANCIAL STATEMENTS.

UNITED CONTINENTALAIRLINES HOLDINGS, INC.

STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)

(UNAUDITED)

(In millions, except per share amounts)

   Three Months Ended
September 30,
   Nine Months  Ended
September 30,
 
       2017           2016           2017           2016     

Operating revenue:

        

Passenger—Mainline

   $7,083     $7,017     $19,970     $19,119  

Passenger—Regional

   1,445     1,586     4,354     4,577  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total passenger revenue

   8,528     8,603     24,324     23,696  

Cargo

   257     224     731     626  

Other operating revenue

   1,093     1,086     3,243     3,182  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating revenue

   9,878     9,913     28,298     27,504  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expense:

        

Salaries and related costs

   2,812     2,625     8,341     7,707  

Aircraft fuel

   1,809     1,603     5,038     4,258  

Landing fees and other rent

   585     546     1,670     1,612  

Regional capacity purchase

   567     572     1,652     1,645  

Depreciation and amortization

   556     503     1,610     1,473  

Aircraft maintenance materials and outside repairs

   451     451     1,377     1,301  

Distribution expenses

   352     345     1,021     987  

Aircraft rent

   145     168     476     521  

Special charges (Note 10)

   50     45     145     669  

Other operating expenses

   1,459     1,431     4,199     3,998  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

   8,786     8,289     25,529     24,171  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

   1,092     1,624     2,769     3,333  
        

Nonoperating income (expense):

        

Interest expense

   (164)    (150)    (472)    (466) 

Interest capitalized

   20     20     64     48  

Interest income

   17     14     41     31  

Miscellaneous, net (Note 10)

   15         (3)    (11) 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total nonoperating expense, net

   (112)    (114)    (370)    (398) 
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

   980     1,510     2,399     2,935  

Income tax expense

   343     545     848     1,069  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

  $637    $965    $1,551    $1,866  
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share, basic

  $2.12    $3.02    $5.06    $5.57  
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share, diluted

  $2.12    $3.01    $5.04    $5.57  
  

 

 

   

 

 

   

 

 

   

 

 

 

 Three Months Ended September 30,Nine Months Ended
September 30,
 2023202220232022
Operating revenue: 
Passenger revenue$13,349 $11,653 $36,625 $28,830 
Cargo333 498 1,093 1,699 
Other operating revenue802 726 2,373 2,026 
Total operating revenue14,484 12,877 40,091 32,555 
Operating expense:
Salaries and related costs3,914 2,843 10,946 8,466 
Aircraft fuel3,342 3,755 9,336 9,796 
Landing fees and other rent801 639 2,283 1,919 
Aircraft maintenance materials and outside repairs684 619 2,072 1,553 
Depreciation and amortization663 610 1,987 1,832 
Regional capacity purchase592 596 1,806 1,728 
Distribution expenses516 482 1,406 1,101 
Aircraft rent46 65 151 193 
Special charges29 20 902 124 
Other operating expenses2,158 1,790 5,989 4,883 
Total operating expense12,745 11,419 36,878 31,595 
Operating income1,739 1,458 3,213 960 
Nonoperating income (expense):
Interest expense(493)(455)(1,472)(1,299)
Interest income234 104 620 142 
Interest capitalized48 27 128 73 
Unrealized gains (losses) on investments, net(54)28 54 (12)
Miscellaneous, net11 (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)

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



3

UNITED CONTINENTALAIRLINES HOLDINGS, INC.

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(In millions)

   Three Months  Ended
September 30,
   Nine Months  Ended
September 30,
 
       2017           2016           2017           2016     

Net income

   $637     $965     $1,551     $1,866  
        

Other comprehensive income (loss), net change related to:

        

Fuel derivative financial instruments, net of taxes

   —     12         123  

Employee benefit plans, net of taxes

       (75)    (1)    (89) 

Investments and other, net of taxes

   17     (1)        (1) 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other comprehensive income (loss), net

   20     (64)        33  
        
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income, net

   $657     $901     $1,556     $1,899  
  

 

 

   

 

 

   

 

 

   

 

 

 


 Three Months Ended September 30,Nine Months Ended
September 30,
 2023202220232022
Net income (loss)$1,137 $942 $2,018 $(106)
Other comprehensive income (loss), net of tax:
Employee benefit plans(20)— (89)
Investments and other(20)(31)
Total other comprehensive loss, net of tax(12)(20)(84)(22)
Total comprehensive income (loss), net$1,125 $922 $1,934 $(128)


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




4

UNITED CONTINENTALAIRLINES HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In millions, except shares)

   (Unaudited)
September 30, 2017
   December 31, 2016 

ASSETS

    

Current assets:

    

Cash and cash equivalents

  $1,870    $2,179  

Short-term investments

   2,458     2,249  

Receivables, less allowance for doubtful accounts (2017 — $11; 2016 — $10)

   1,603     1,176  

Aircraft fuel, spare parts and supplies, less obsolescence allowance (2017 — $342; 2016 — $295)

   937     873  

Prepaid expenses and other

   1,009     832  
  

 

 

   

 

 

 

Total current assets

   7,877     7,309  
  

 

 

   

 

 

 

Operating property and equipment:

    

Owned—

    

Flight equipment

   29,043     25,873  

Other property and equipment

   6,186     5,652 
  

 

 

   

 

 

 

Total owned property and equipment

   35,229     31,525  

Less — Accumulated depreciation and amortization

   (11,358)    (9,975) 
  

 

 

   

 

 

 

Total owned property and equipment, net

   23,871     21,550  
  

 

 

   

 

 

 
    

Purchase deposits for flight equipment

   1,044     1,059  
    

Capital leases—

    

Flight equipment

   1,136     1,319  

Other property and equipment

   488     331  
  

 

 

   

 

 

 

Total capital leases

   1,624     1,650  

Less — Accumulated amortization

   (910)    (941) 
  

 

 

   

 

 

 

Total capital leases, net

   714     709  
  

 

 

   

 

 

 

Total operating property and equipment, net

   25,629     23,318  
  

 

 

   

 

 

 

Other assets:

    

Goodwill

   4,523     4,523  

Intangibles, less accumulated amortization (2017 — $1,294; 2016 — $1,234)

   3,558     3,632  

Deferred income taxes

   —     655  

Restricted cash

   96     124  

Investments in affiliates and other, net

   882     579  
  

 

 

   

 

 

 

Total other assets

   9,059     9,513  
  

 

 

   

 

 

 

Total assets

  $42,565    $40,140  
  

 

 

   

 

 

 

 September 30, 2023December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents$7,478 $7,166 
Short-term investments9,608 9,248 
Restricted cash392 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 other728 689 
Total current assets21,912 20,058 
Operating property and equipment:
Flight equipment46,938 42,775 
Other property and equipment10,157 9,334 
Purchase deposits for flight equipment3,379 2,820 
Total operating property and equipment60,474 54,929 
Less — Accumulated depreciation and amortization(22,114)(20,481)
Total operating property and equipment, net38,360 34,448 
Operating lease right-of-use assets3,975 3,889 
Other assets:
Goodwill4,527 4,527 
Intangibles, less accumulated amortization (2023 — $1,486; 2022 — $1,472)2,735 2,762 
Restricted cash240 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 assets8,906 8,963 
Total assets$73,153 $67,358 
(continued on next page)
















5



UNITED CONTINENTALAIRLINES HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In millions, except shares)

   (Unaudited)
September 30, 2017
   December 31, 2016 

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

Current liabilities:

    

Advance ticket sales

   $4,537     $3,730  

Accounts payable

   2,231     2,139  

Frequent flyer deferred revenue

   1,992     2,135  

Accrued salaries and benefits

   1,983     2,307  

Current maturities of long-term debt

   1,516     849  

Current maturities of capital leases

   125     116  

Other

   703     1,010  
  

 

 

   

 

 

 

Total current liabilities

   13,087     12,286  
  

 

 

   

 

 

 
    

Long-term debt

   11,334     9,918  

Long-term obligations under capital leases

   968     822  
    

Other liabilities and deferred credits:

    

Frequent flyer deferred revenue

   2,793     2,748  

Postretirement benefit liability

   1,588     1,581  

Pension liability

   1,631     1,892  

Deferred income taxes

   253     —  

Advanced purchase of miles

   106     430  

Lease fair value adjustment, net

   219     277  

Other

   1,616     1,527  
  

 

 

   

 

 

 

Total other liabilities and deferred credits

   8,206     8,455  
  

 

 

   

 

 

 

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

   6,591     6,569  

Retained earnings

   4,991     3,427  

Stock held in treasury, at cost

   (1,791)    (511) 

Accumulated other comprehensive loss

   (824)    (829) 
  

 

 

   

 

 

 

Total stockholders’ equity

   8,970     8,659  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $42,565     $40,140  
  

 

 

   

 

 

 

 September 30, 2023December 31, 2022
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$4,206 $3,395 
Accrued salaries and benefits3,815 1,971 
Advance ticket sales8,392 7,555 
Frequent flyer deferred revenue2,969 2,693 
Current maturities of long-term debt3,649 2,911 
Current maturities of operating leases598 561 
Current maturities of finance leases271 104 
Current maturities of other financial liabilities44 23 
Other812 779 
Total current liabilities24,756 19,992 
Long-term debt25,932 28,283 
Long-term obligations under operating leases4,493 4,459 
Long-term obligations under finance leases71 115 
Other liabilities and deferred credits:
Frequent flyer deferred revenue4,107 3,982 
Pension liability800 747 
Postretirement benefit liability621 671 
Deferred income taxes472 — 
Other financial liabilities1,648 844 
Other1,400 1,369 
Total other liabilities and deferred credits9,048 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
Additional capital invested8,968 8,986 
Stock held in treasury, at cost(3,442)(3,534)
Retained earnings3,232 1,265 
Accumulated other comprehensive income91 175 
Total stockholders' equity8,853 6,896 
Total liabilities and stockholders' equity$73,153 $67,358 

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





6

UNITED CONTINENTALAIRLINES HOLDINGS, INC.

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)

(In millions)

   Nine Months  Ended
September 30,
 
   2017   2016 

Cash Flows from Operating Activities:

    

Net cash provided by operating activities

   $2,685     $4,884  
    

Cash Flows from Investing Activities:

    

Capital expenditures

   (2,900)    (2,343) 

Purchases of short-term and other investments

   (2,584)    (1,989) 

Proceeds from sale of short-term and other investments

   2,380     1,957  

Proceeds from sale of property and equipment

       24  

Investment in and loans to affiliates

   —      (8) 

Other, net

   142     (5) 
  

 

 

   

 

 

 

Net cash used in investing activities

   (2,954)    (2,364) 
  

 

 

   

 

 

 
    

Cash Flows from Financing Activities:

    

Proceeds from issuance of long-term debt and airport construction financing

   2,119     510  

Repurchases of common stock

   (1,291)    (2,442) 

Payments of long-term debt

   (722)    (911) 

Principal payments under capital leases

   (84)    (95) 

Other, net

   (77)    (40) 
  

 

 

   

 

 

 

Net cash used in financing activities

   (55)    (2,978) 
  

 

 

   

 

 

 

Net decrease in cash, cash equivalents and restricted cash

   (324)    (458) 

Cash, cash equivalents and restricted cash at beginning of the period

   2,303     3,212  
  

 

 

   

 

 

 

Cash, cash equivalents and restricted cash at end of the period (a)

   $1,979     $2,754  
  

 

 

   

 

 

 
    

Investing and Financing Activities Not Affecting Cash:

    

Property and equipment acquired through the issuance of debt and capital leases

   $918     $115  

Airport construction financing

   41     68  

Operating lease conversions to capital lease

   —      12  

 

    

 Nine Months Ended
September 30,
 20232022
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 investments8,614 1,061 
Proceeds from sale of property and equipment20 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 fees1,685 210 
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 cash689 (7,006)
Cash, cash equivalents and restricted cash at beginning of the period7,421 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 leases470 98 
Lease modifications and lease conversions438 61 
Investment interests received in exchange for goods and services25 93 

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

Reconciliation of cash, cash equivalents and restricted cash:

   

Current assets:

   

Cash and cash equivalents

   $1,870       $  2,630  

Restricted cash included in Prepaid expenses and other

   13     

Other assets:

   

Restricted cash

   96    123  
  

 

 

  

 

 

 

Total cash, cash equivalents and restricted cash

   $  1,979    $2,754  
  

 

 

  

 

 

 

Current assets:
Cash and cash equivalents$7,478 $11,258 
Restricted cash — Current392 61 
Restricted cash — Non-Current240 208 
Total cash, cash equivalents and restricted cash$8,110 $11,527 

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

7

UNITED AIRLINES HOLDINGS, INC.

STATEMENTS OF CONSOLIDATED OPERATIONSSTOCKHOLDERS' EQUITY (UNAUDITED)

(In millions)

   Three Months  Ended
September 30,
   Nine Months  Ended
September 30,
 
   2017   2016   2017   2016 

Operating revenue:

        

Passenger—Mainline

  $7,083    $7,017    $19,970    $19,119  

Passenger—Regional

   1,445     1,586     4,354     4,577  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total passenger revenue

   8,528     8,603     24,324     23,696  

Cargo

   257     224     731     626  

Other operating revenue

   1,093     1,086     3,243     3,182  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating revenue

   9,878     9,913     28,298     27,504  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expense:

        

Salaries and related costs

   2,812     2,625     8,341     7,707  

Aircraft fuel

   1,809     1,603     5,038     4,258  

Landing fees and other rent

   585     546     1,670     1,612  

Regional capacity purchase

   567     572     1,652     1,645  

Depreciation and amortization

   556     503     1,610     1,473  

Aircraft maintenance materials and outside repairs

   451     451     1,377     1,301  

Distribution expenses

   352     345     1,021     987  

Aircraft rent

   145     168     476     521  

Special charges (Note 10)

   50     45     145     669  

Other operating expenses

   1,459     1,431     4,198     3,997  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expense

   8,786     8,289     25,528     24,170  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

   1,092     1,624     2,770     3,334  
        

Nonoperating income (expense):

        

Interest expense

   (164)    (150)    (472)    (466) 

Interest capitalized

   20     20     64     48  

Interest income

   17     14     41     31  

Miscellaneous, net (Note 10)

   15         (3)    (11) 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total nonoperating expense, net

   (112)    (114)    (370)    (398) 
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

   980     1,510     2,400     2,936  

Income tax expense

   343     545     848     1,069  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

  $637    $965    $1,552    $1,867  
  

 

 

   

 

 

   

 

 

   

 

 

 

 Common
Stock
Additional
Capital Invested
Treasury StockRetained Earnings (Accumulated Deficit)Accumulated
Other Comprehensive Income (Loss)
Total
SharesAmount
Balance at June 30, 2023328.0 $$8,945 $(3,442)$2,095 $103 $7,705 
Net income— — — — 1,137 — 1,137 
Other comprehensive loss— — — — — (12)(12)
Stock-settled share-based compensation— — 23 — — — 23 
Balance at September 30, 2023328.0 $$8,968 $(3,442)$3,232 $91 $8,853 
Balance at December 31, 2022326.9$$8,986 $(3,534)$1,265 $175 $6,896 
Net income— — — — 2,018 — 2,018 
Other comprehensive loss— — — — — (84)(84)
Stock-settled share-based compensation— — 55 — — — 55 
Stock issued for share-based awards, net of shares withheld for tax1.1 — (73)92 (51)— (32)
Balance at September 30, 2023328.0 $$8,968 $(3,442)$3,232 $91 $8,853 
Balance at June 30, 2022326.7 $$8,970 $(3,551)$(515)$(944)$3,964 
Net income— — — — 942 — 942 
Other comprehensive loss— — — — — (20)(20)
Stock-settled share-based compensation— — 15 — — — 15 
Stock issued for share-based awards, net of shares withheld for tax0.2 — (15)18 (6)— (3)
Balance at September 30, 2022326.9 $$8,970 $(3,533)$421 $(964)$4,898 
Balance at December 31, 2021323.8 $$9,156 $(3,814)$625 $(942)$5,029 
Net loss— — — — (106)— (106)
Other comprehensive loss— — — — — (22)(22)
Stock-settled share-based compensation— — 70 — — — 70 
Stock issued for share-based awards, net of shares withheld for tax3.1 — (256)281 (98)— (73)
Balance at September 30, 2022326.9 $$8,970 $(3,533)$421 $(964)$4,898 


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

8


UNITED AIRLINES, INC.

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

(In millions)

   Three Months Ended
September 30,
   Nine Months Ended
September 30,
 
       2017           2016           2017           2016     

Net income

   $637     $965     $1,552     $1,867  
        

Other comprehensive income (loss), net change related to:

        

Fuel derivative financial instruments, net of taxes

   —      12         123  

Employee benefit plans, net of taxes

       (75)    (1)    (89) 

Investments and other, net of taxes

   17     (1)        (1) 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other comprehensive income (loss), net

   20     (64)        33  
        
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income, net

   $657     $901     $1,557     $1,900  
  

 

 

   

 

 

   

 

 

   

 

 

 

 Three Months Ended September 30,Nine Months Ended
September 30,
 2023202220232022
Operating revenue: 
Passenger revenue$13,349 $11,653 $36,625 $28,830 
Cargo333 498 1,093 1,699 
Other operating revenue802 726 2,373 2,026 
Total operating revenue14,484 12,877 40,091 32,555 
Operating expense:
Salaries and related costs3,914 2,843 10,946 8,466 
Aircraft fuel3,342 3,755 9,336 9,796 
Landing fees and other rent801 639 2,283 1,919 
Aircraft maintenance materials and outside repairs684 619 2,072 1,553 
Depreciation and amortization663 610 1,987 1,832 
Regional capacity purchase592 596 1,806 1,728 
Distribution expenses516 482 1,406 1,101 
Aircraft rent46 65 151 193 
Special charges29 20 902 124 
Other operating expenses2,158 1,789 5,988 4,881 
Total operating expense12,745 11,418 36,877 31,593 
Operating income1,739 1,459 3,214 962 
Nonoperating income (expense): 
Interest expense(493)(455)(1,472)(1,299)
Interest income234 104 620 142 
Interest capitalized48 27 128 73 
Unrealized gains (losses) on investments, net(54)28 54 (12)
Miscellaneous, net12 (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)
The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.




9

UNITED AIRLINES, INC.

STATEMENTS OF CONSOLIDATED BALANCE SHEETS

COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(In millions, except shares)

  (Unaudited)    
  September 30, 2017  December 31, 2016 

ASSETS

  

Current assets:

  

Cash and cash equivalents

  $1,864    $2,173  

Short-term investments

  2,458    2,249  

Receivables, less allowance for doubtful accounts (2017 — $11; 2016 — $10)

  1,603    1,176  

Aircraft fuel, spare parts and supplies, less obsolescence allowance (2017 — $342; 2016 — $295)

  937    873  

Prepaid expenses and other

  1,008    832  
 

 

 

  

 

 

 

Total current assets

  7,870    7,303  
 

 

 

  

 

 

 

Operating property and equipment:

  

Owned—

  

Flight equipment

  29,043    25,873  

Other property and equipment

  6,186    5,652  
 

 

 

  

 

 

 

Total owned property and equipment

  35,229    31,525  

Less — Accumulated depreciation and amortization

  (11,358)   (9,975) 
 

 

 

  

 

 

 

Total owned property and equipment, net

  23,871    21,550  
 

 

 

  

 

 

 
  

Purchase deposits for flight equipment

  1,044    1,059  
  

Capital leases—

  

Flight equipment

  1,136    1,319  

Other property and equipment

  488    331  
 

 

 

  

 

 

 

Total capital leases

  1,624    1,650  

Less — Accumulated amortization

  (910)   (941) 
 

 

 

  

 

 

 

Total capital leases, net

  714    709  
 

 

 

  

 

 

 

Total operating property and equipment, net

  25,629    23,318  
 

 

 

  

 

 

 

Other assets:

  

Goodwill

  4,523    4,523  

Intangibles, less accumulated amortization (2017 — $1,294; 2016 — $1,234)

  3,558    3,632  

Deferred income taxes

  —    612  

Restricted cash

  96    124  

Investments in affiliates and other, net

  882    579  
 

 

 

  

 

 

 

Total other assets

  9,059    9,470  
 

 

 

  

 

 

 

Total assets

  $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      

Current liabilities:

  

Advance ticket sales

  $4,537    $3,730  

Accounts payable

  2,231    2,144  

Frequent flyer deferred revenue

  1,992    2,135  

Accrued salaries and benefits

  1,983    2,307  

Current maturities of long-term debt

  1,516    849  

Current maturities of capital leases

  125    116  

Other

  707    1,009  
 

 

 

  

 

 

 

Total current liabilities

  13,091    12,290  
 

 

 

  

 

 

 
  

Long-term debt

  11,334    9,918  

Long-term obligations under capital leases

  968    822  
  

Other liabilities and deferred credits:

  

Frequent flyer deferred revenue

  2,793    2,748  

Postretirement benefit liability

  1,588    1,581  

Pension liability

  1,631    1,892  

Deferred income taxes

  297    —   

Advanced purchase of miles

  106    430  

Lease fair value adjustment, net

  219    277  

Other

  1,616    1,527  
 

 

 

  

 

 

 

Total other liabilities and deferred credits

  8,250    8,455  
 

 

 

  

 

 

 

Commitments and contingencies

  

Stockholder’s equity:

  

Common stock at par, $0.01 par value; authorized 1,000 shares; issued and outstanding 1,000 shares at both September 30, 2017 and December 31, 2016

  —     —   

Additional capital invested

  2,325    3,573  

Retained earnings

  7,504    5,937  

Accumulated other comprehensive loss

  (824)   (829) 

Receivable from related parties

  (90)   (75) 
 

 

 

  

 

 

 

Total stockholder’s equity

  8,915    8,606  
 

 

 

  

 

 

 

Total liabilities and stockholder’s equity

 $42,558    $40,091  
 

 

 

  

 

 

 

millions)


 Three Months Ended September 30,Nine Months Ended
September 30,
 2023202220232022
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(20)(31)
Total other comprehensive loss, net of tax(12)(20)(84)(22)
Total comprehensive income (loss), net$1,126 $922 $1,935 $(127)
The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.


10

UNITED AIRLINES, INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions, except shares)
 September 30, 2023December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents$7,478 $7,166 
Short-term investments9,608 9,248 
Restricted cash392 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 other728 689 
Total current assets21,912 20,058 
Operating property and equipment:
Flight equipment46,938 42,775 
Other property and equipment10,157 9,334 
Purchase deposits for flight equipment3,379 2,820 
Total operating property and equipment60,474 54,929 
Less — Accumulated depreciation and amortization(22,114)(20,481)
Total operating property and equipment, net38,360 34,448 
Operating lease right-of-use assets3,975 3,889 
Other assets:
Goodwill4,527 4,527 
Intangibles, less accumulated amortization (2023 — $1,486; 2022 — $1,472)2,735 2,762 
Restricted cash240 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 assets8,906 8,934 
Total assets$73,153 $67,329 

(continued on next page)
11

UNITED AIRLINES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions, except shares)
 September 30, 2023December 31, 2022
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable$4,206 $3,395 
Accrued salaries and benefits3,815 1,971 
Advance ticket sales8,392 7,555 
Frequent flyer deferred revenue2,969 2,693 
Current maturities of long-term debt3,649 2,911 
Current maturities of operating leases598 561 
Current maturities of finance leases271 104 
Current maturities of other financial liabilities44 23 
Other814 781 
Total current liabilities24,758 19,994 
Long-term debt25,932 28,283 
Long-term obligations under operating leases4,493 4,459 
Long-term obligations under finance leases71 115 
Other liabilities and deferred credits:
Frequent flyer deferred revenue4,107 3,982 
Pension liability800 747 
Postretirement benefit liability621 671 
Deferred income taxes500 — 
Other financial liabilities1,648 844 
Other1,400 1,369 
Total other liabilities and deferred credits9,076 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 invested458 403 
Retained earnings5,735 3,716 
Accumulated other comprehensive income91 175 
Payable to parent2,539 2,571 
Total stockholder's equity8,823 6,865 
Total liabilities and stockholder's equity$73,153 $67,329 

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





12

UNITED AIRLINES, INC.
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)

(In millions)

   Nine Months Ended
September 30,
 
   2017   2016 

Cash Flows from Operating Activities:

    

Net cash provided by operating activities

   $2,671     $4,878  
    

Cash Flows from Investing Activities:

    

Capital expenditures

   (2,900)    (2,343) 

Purchases of short-term investments and other investments

   (2,584)    (1,989) 

Proceeds from sale of short-term and other investments

   2,380     1,957  

Proceeds from sale of property and equipment

       24  

Investment in and loans to affiliates

   —      (8) 

Other, net

   142     (5) 
  

 

 

   

 

 

 

Net cash used in investing activities

   (2,954)    (2,364) 
  

 

 

   

 

 

 
    

Cash Flows from Financing Activities:

    

Proceeds from issuance of long-term debt and airport construction financing

   2,119     510  

Dividend to UAL

   (1,291)    (2,442) 

Payments of long-term debt

   (722)    (911) 

Principal payments under capital leases

   (84)    (95) 

Other, net

   (63)    (34) 
  

 

 

   

 

 

 

Net cash used in financing activities

   (41)    (2,972) 
  

 

 

   

 

 

 

Net decrease in cash, cash equivalents and restricted cash

   (324)    (458) 

Cash, cash equivalents and restricted cash at beginning of the period

   2,297     3,206  
  

 

 

   

 

 

 

Cash, cash equivalents and restricted cash at end of the period (a)

   $1,973     $2,748  
  

 

 

   

 

 

 
    

Investing and Financing Activities Not Affecting Cash:

    

Property and equipment acquired through the issuance of debt and capital leases

   $918     $115  

Airport construction financing

   41     68  

Operating lease conversions to capital lease

   —      12  

 

    

 Nine Months Ended
September 30,
 20232022
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 investments8,614 1,061 
Proceeds from sale of property and equipment20 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 fees1,685 210 
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 cash689 (7,006)
Cash, cash equivalents and restricted cash at beginning of the period7,421 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 leases470 98 
Lease modifications and lease conversions438 61 
Investment interests received in exchange for goods and services25 93 

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

Reconciliation of cash, cash equivalents and restricted cash:

   

Current assets:

   

Cash and cash equivalents

   $1,864       $  2,624  

Restricted cash included in Prepaid expenses and other

   13     

Other assets:

   

Restricted cash

   96    123  
  

 

 

  

 

 

 

Total cash, cash equivalents and restricted cash

   $  1,973    $2,748  
  

 

 

  

 

 

 

Current assets:
Cash and cash equivalents$7,478 $11,258 
Restricted cash — Current392 61 
Restricted cash — Non-Current240 208 
Total cash, cash equivalents and restricted cash$8,110 $11,527 

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

13

UNITED CONTINENTALAIRLINES, INC.
STATEMENTS OF CONSOLIDATED STOCKHOLDER'S EQUITY (UNAUDITED)
(In millions)
 Additional
Capital Invested
Retained EarningsAccumulated
Other Comprehensive Income (Loss)
Payable to ParentTotal
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 compensation23 — — — 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 compensation55 — — — 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 compensation14 — — — 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 compensation70 — — — 70 
Other— — — (75)(75)
Balance at September 30, 2022$387 $2,872 $(964)$2,571 $4,866 



The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
14

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

COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

United 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.

The UAL and United unaudited condensed consolidated financial statements shown here have been prepared as required by the U.S. Securities and Exchange Commission (the “SEC”"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.

NOTE 1 - RECENTLY ISSUED ACCOUNTING STANDARDS

— REVENUE

Revenue by Geography.The Financial 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,
2023202220232022
Domestic (U.S. and Canada)$8,379 $7,718 $23,963 $20,623 
Atlantic3,543 3,186 8,604 6,756 
Latin America1,184 1,162 3,773 3,266 
Pacific1,378 811 3,751 1,910 
Total$14,484 $12,877 $40,091 $32,555 
Advance Ticket Sales. The Company defers amounts related to future travel in its Advance ticket sales liability account. All tickets sold at any given point in time have travel dates through the next 12 months. The Company's Advance ticket sales liability also includes credits issued to customers for future flights ("FFCs") 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.
The Company estimates the value of Advance ticket sales that 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.

revenue. Changes in estimates of breakage are recognized prospectively in proportion to the remaining usage of the related tickets.

In 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.
Ancillary Fees. The Company charges fees, separately from ticket sales, for certain ancillary services that are directly related to passengers' travel, such as baggage fees, premium seat fees, inflight amenity fees and 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 ended
15

September 30, 2023, respectively. The Company recorded $0.9 billion and $2.4 billion of ancillary fees within passenger revenue in the three and nine months ended September 30, 2022, respectively.
Frequent Flyer Accounting. The table below presents a roll forward of Frequent flyer deferred revenue (in millions):
Three Months Ended September 30,Nine Months Ended
September 30,
2023202220232022
Total Frequent flyer deferred revenue - beginning balance$7,024 $6,495 $6,675 $6,282 
Total miles awarded816 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 
In the three and nine months ended September 30, 2023, the Company recognized, in Other operating revenue, $0.7 billion and $2.0 billion, respectively, related to the 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.

next 12 months.

NOTE2 - EARNINGS (LOSS) PER SHARE

The computations of UAL’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 number

Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Earnings (loss) available to common stockholders$1,137 $942 $2,018 $(106)
Basic weighted-average shares outstanding328.0 326.8 327.8 326.2 
Dilutive effect of stock warrants (a)2.7 1.0 2.5 — 
Dilutive effect of employee stock awards1.7 1.7 1.5 — 
Diluted weighted-average shares outstanding332.4 329.5 331.8 326.2 
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 awards0.6 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.
On March 3, 2021, the Company entered into an equity distribution agreement (the "Distribution Agreement") with several financial institutions (collectively, the "Managers"), relating to the issuance and sale from time to time by UAL (the "2021 ATM Offering"), through the Managers, of 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, approximately

16

4 million shares were sold in the 2021 ATM Offering at an average price of $57.50 per share, with net proceeds to the Company hadtotaling 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.

March 2023.

NOTE3 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The 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 

Balance at June 30, 2017

   $(860)   $—    $(16)   $26    $—    $   $(844) 

Changes in value

   (9)   —    26       —    (9)   11  

Amounts reclassified to earnings

   14    —    —    (5)   —    —     
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net change

      —    26    (2)   —    (9)   20  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance at September 30, 2017

   $(855)   $—    $10    $24    $—    $(3)   $(824) 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance at December 31, 2016

   $(854)   $(2)   $   $24    $   $   $(829) 

Changes in value

   (42)   —       15    —    (3)   (21) 

Amounts reclassified to earnings

   41       —    (15)   (1)   (1)   26  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net change

   (1)         —    (1)   (4)    
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance at September 30, 2017

   $(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 

Balance at June 30, 2016

   $(385)   $(41)   $   $(146)   $(165)   $—    $(734) 

Changes in value

   (124)   (6)      45       (1)   (83) 

Amounts reclassified to earnings

      24    (2)   (2)   (8)      19  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net change

   (118)   18    (1)   43    (6)   —    (64) 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance at September 30, 2016

   $(503)   $(23)   $   $(103)   $(171)   $—    $(798) 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance at December 31, 2015

   $(363)   $(215)   $   $(154)   $(102)   $—    $(831) 

Changes in value

   (157)   (5)      57       (1)   (103) 

Amounts reclassified to earnings

   17    197    (2)   (6)   (71)      136  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net change

   (140)   192    (1)   51    (69)   —    33  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance at September 30, 2016

   $(503)   $(23)   $   $(103)   $(171)   $—    $  (798) 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Details about AOCI Components      

  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          

Amortization of unrecognized losses and prior service cost (a)

    $            14       $            6       $            41       $            17      Salaries and related costs 
Fuel derivative contracts          

Reclassifications of losses into earnings

   —      24      2      197      Aircraft fuel 
Investments and other          

Reclassifications of gains into earnings

   —      (2)    —      (2)    Miscellaneous, net 

Pension and Other Postretirement LiabilitiesInvestments and OtherDeferred Taxes (a)Total
Balance at June 30, 2023$539 $(39)$(397)$103 
Changes in value10 (3)14 
Amounts reclassified to earnings(33)(b)— (26)
Balance at September 30, 2023$513 $(29)$(393)$91 
Balance at December 31, 2022$626 $(35)$(416)$175 
Changes in value(10)(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)$(944)
Changes in value(1)(25)(20)
Amounts reclassified to earnings— (b)— — — 
Balance at September 30, 2022$(835)$(39)$(90)$(964)
Balance at December 31, 2021$(847)$— $(95)$(942)
Changes in value13 (39)(21)
Amounts reclassified to earnings(1)(b)— — (1)
Balance at September 30, 2022$(835)$(39)$(90)$(964)

(a) Includes approximately $285 million of deferred income tax expense that will not be recognized in net income until the related pension and postretirement benefit obligations are fully extinguished. We consider all income sources, including other comprehensive income, in determining the amount of tax benefit allocated to results from operations.
(b) This AOCI component is included in the computation of net periodic pension and other postretirement costs, specifically the following components: amortization of unrecognized (gain) loss, amortization of prior service credit and other (see Note 5 of this report for additional information).

NOTE 4 - INCOME TAXES

The Company’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.
17

NOTE 5 — EMPLOYEE BENEFIT PLANS
Defined Benefit Pension and Other Postretirement Benefit Plans. The effectiveCompany's net periodic benefit cost includes the following components for the three months ended September 30 (in millions):
Pension BenefitsOther Postretirement BenefitsAffected Line Item
in the Statements of
 Consolidated Operations
2023202220232022
Service cost$31 $51 $$Salaries and related costs
Interest cost53 47 10 Miscellaneous, net
Expected return on plan assets(62)(76)— — Miscellaneous, net
Amortization of unrecognized (gain) loss29 (9)(3)Miscellaneous, net
Amortization of prior service credit— (28)(28)Miscellaneous, net
Other— — Miscellaneous, net
Total$26 $53 $(26)$(21)
The Company's net periodic benefit cost includes the following components for the nine months ended September 30 (in millions):
Pension BenefitsOther Postretirement BenefitsAffected Line Item
in the Statements of
 Consolidated Operations
2023202220232022
Service cost$93 $153 $$Salaries and related costs
Interest cost163 141 31 23 Miscellaneous, net
Expected return on plan assets(188)(230)(1)(1)Miscellaneous, net
Amortization of unrecognized (gain) loss90 (28)(10)Miscellaneous, net
Amortization of prior service credit— (84)(84)Miscellaneous, net
Other— — Miscellaneous, net
Total$77 $157 $(79)$(66)
Profit Sharing. Substantially all employees participate in profit sharing based on a percentage of pre-tax earnings, excluding special or non-recurring charges, profit sharing expense and share-based compensation. Profit sharing percentages range from 5% to 20% depending on the work group, and in some cases profit sharing percentages vary above and below certain thresholds. As part of the new collective bargaining agreement with the Air Line Pilots Association ("ALPA"), the thresholds were lowered retroactive to January 1, 2023 for the pilot work group. Eligible U.S. co-workers in each participating work group receive a profit sharing payout using a formula based on the ratio of each qualified co-worker's annual eligible earnings to the eligible earnings of all qualified co-workers in all domestic work groups. Eligible non-U.S. co-workers receive profit sharing based on the calculation under the U.S. profit sharing plan for management and administrative employees. The Company recorded profit sharing and related payroll tax 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 PLANS

Defined 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     $    $ 
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           —     —  
Curtailment gain   —     —     —     (47) 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $77     $46     $    $(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           —     —  
Curtailment gain   —     —     —     (47) 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $229     $134     $    $(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 

Share-based compensation expense

   $10     $23     $66     $36  
   September 30,
2017
   December 31,
2016
         

Unrecognized share-based compensation

   $90     $65      

consolidated operations.

18

NOTE6 - FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

The table below presents disclosures about the financial assets and liabilities measured at fair value on a recurring basis in UAL’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 

Cash and cash equivalents

   $    1,870    $    1,870    $—    $—    $    2,179    $    2,179    $—    $—  

Short-term investments:

                

Corporate debt

   959     —     959     —     835     —     835     —  

Asset-backed securities

   891     —     891     —     792     —     792     —  

Certificates of deposit placed through an account registry service (“CDARS”)

   142     —     142     —     246     —     246     —  

U.S. government and agency notes

   112     —     112     —     140     —     140     —  

Other fixed-income securities

   171     —     171     —     54     —     54     —  

Other investments measured at NAV

   183     —     —     —     182     —     —     —  
Restricted cash   109     109     —     —     124     124    —     —  

Long-term investments:

                

Equity securities

   114     114     —     —     —     —     —     —  

Enhanced equipment trust certificates (“EETC”)

   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, 2023December 31, 2022
TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3
Cash and cash equivalents$7,478 $7,478 $— $— $7,166 $7,166 $— $— 
Restricted cash - current392 392 — — 45 45 — — 
Restricted cash - non-current240 240 — — 210 210 — — 
Short-term investments:
U.S. government and agency notes9,506 — 9,506 — 8,914 — 8,914 — 
Asset-backed securities29 — 29 — 325 — 325 — 
Certificates of deposit placed through an account registry service ("CDARS")73 — 73 — — — — — 
Corporate debt— — — — — — 
Long-term investments:
Equity securities163 163 — — 189 189 — — 
Investments presented in the table above have the same fair value as their carrying value.
Restricted cash - current — Primarily includes amounts to be used for the payment of fees, principal and interest on senior secured notes and a secured term loan facility (the "MileagePlus Financing") secured by substantially all of the assets of Mileage Plus Holdings, LLC, a direct wholly-owned subsidiary of United.
Restricted cash - non-current — Primarily includes collateral associated with the MileagePlus Financing, collateral for letters of credit and collateral associated with facility leases and other insurance-related obligations.
Short-term investments — The short-term investments shown in the table above are classified as available-for-sale and have remaining maturities of approximately 18 months or less.
Long-term investments: Equity securities — Represents equity and equity-linked securities (such as vested warrants) that make upUnited's investments in Azul Linhas Aéreas Brasileiras S.A., Archer Aviation Inc., Eve Holding, Inc., Mesa Air Group, Inc. and Clear Secure, Inc.
Other fair value information. The table below presents the carrying values and estimated fair values of financial instruments not presented in the tables above (in millions):

   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 

Long-term debt

   $ 12,850     $ 13,217     $  —     $ 9,640     $ 3,577     $ 10,767     $ 11,055     $  —     $ 8,184     $ 2,871  

. Carrying amounts include any related discounts, premiums and issuance costs:

September 30, 2023December 31, 2022
Carrying AmountFair ValueCarrying AmountFair Value
TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3
Long-term debt$29,581 $28,386 $— $22,726 $5,660 $31,194 $29,371 $— $23,990 $5,381 
Fair value of the financial instruments included in the tables above was determined as follows:

Description

Fair Value Methodology

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 and

Restricted cash

Fair value is based on (a) the trading prices of the investment or similar instruments (b) an income approach, which uses valuation techniques to convert future amounts into a single present amount based on current market expectations about those future amounts when observable trading prices are not available, or (c)(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 debtFair 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 ACTIVITIES

Fuel Derivatives

Equity Method Investments. As of September 30, 2017,2023, United holds the Company did notfollowing investments, accounted for using the equity method, with a combined carrying value of approximately $232 million:
19

CommuteAir LLC. United owns a 40% minority ownership stake in CommuteAir LLC. CommuteAir currently operates 53 regional aircraft under a capacity purchase agreement ("CPA") that has a term through 2026.
Republic Airways Holdings Inc. United holds a 19% minority interest in Republic Airways Holdings Inc., which is the parent company of Republic Airways Inc. ("Republic"). Republic currently operates 66 regional aircraft under CPAs that have anyterms through 2036.
United Airlines Ventures Sustainable Flight Fund (the "Fund"). During the first quarter of 2023, United launched, through its corporate venture capital arm, United Airlines Ventures ("UAV"), an investment vehicle designed to support start-ups focused on decarbonizing air travel by accelerating the research, production and technologies associated with sustainable aviation fuel 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       

Fuel contracts

   $—     $(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 

Fuel contracts

   $—     $(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 CONTINGENCIES

Commitments.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.

Other Investments. As of September 30, 2023, United has equity investments in Abra Group Limited, a multinational airline holding company, JetSuiteX, Inc., an independent air carrier doing business as JSX as well as a number of companies with emerging technologies and sustainable solutions. None of these investments have readily determinable fair values. We account for these investments at cost less impairment, adjusted for observable price changes in orderly transactions for an identical or similar investment of the same issuer. As of September 30, 2023, the carrying value of these investments was $425 million.
NOTE 7 — COMMITMENTS AND CONTINGENCIES
Commitments. As of September 30, 2023, United had firm commitments 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 Type

Number of Firm
      Commitments (a)       

Airbus A350

45

Boeing 737 MAX

161

Boeing777-300ER

4

Boeing 787

18

Embraer E175

5
(a) United also has options and purchase rights for additional aircraft.

Contractual Aircraft DeliveriesExpected Aircraft Deliveries (b)
Aircraft TypeNumber of Firm
 Commitments (a)
Last Three Months
of 2023
2024After 2024Last Three Months
of 2023
2024After 2024
787150 — 142 — 142 
737 MAX374 73 100 201 20 77 277 
A321neo130 26 100 26 100 
A321XLR50 — — 50 — — 50 
A35045 — — 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.
The aircraft listed in the table above are scheduled for delivery through 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.
On September 28, 2023, United entered into a supplemental agreement with Boeing, pursuant to which United exercised options to purchase 50 Boeing 787-9 aircraft scheduled for delivery between 2028 and 2031 and was granted options to purchase up to an additional 50 Boeing 787 aircraft. In addition, on September 29, 2023, United entered into an amendment to the A320 Family Purchase Agreement, dated December 19, 2019, as amended, with Airbus, pursuant to which United exercised purchase rights to purchase 60 A321neo aircraft scheduled for delivery between 2028 and 2030 and was granted purchase rights to purchase up to an additional 40 A321neo aircraft. The table above reflects the number of firm commitments could change.related to these agreements as well as the contractual and expected aircraft deliveries.
During the nine months ended September 30, 2023, United entered into agreements with third parties to finance through sale and leaseback transactions new Boeing model 737 MAX aircraft subject to purchase agreements between United and Boeing. For certain aircraft, United assigned its right to purchase such aircraft to the 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).
20

As of September 30, 2023, United had additional leases for 47 Embraer E175/E175LL regional jets under a CPA, 12 A321neo mainline aircraft, airport facilities and office space, none of which had commenced as of such date. These leases will commence between fourth quarter 2023 and 2026 with lease terms of up to take delivery of four used Airbus A319s and two used Airbus A320s for the remainder of 2017.

12 years.

The table below summarizes 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 
20248.8 
20258.0 
20266.1 
20275.0 
After 202729.6 
$62.1 
Regional CPAs. During the exercise of purchase options and purchase rights, will increase the total future capital commitments of the Company.

   (in billions) 

Last three months of 2017

   $                    0.9  

2018

   3.0  

2019

   3.1  

2020

   2.2  

2021

   1.4  

After 2021

   11.4  
  

 

 

 
   $22.0  
  

 

 

 

nine months ended September 30, 2023, United 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 fees (carrier costs) paid to those carriers and to add additional aircraft that will replace existing aircraft near the end of 21 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.

CPAs based on our assumptions. The 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 September 30, 2023, our estimated future payments through the end of the terms of our CPAs excluding variable pass-through costs such as fuel and landing fees, among others.

   (in billions) 

Last three months of 2017

   $                    0.5  

2018

   2.0  

2019

   1.8  

2020

   1.6  

2021

   1.5  

After 2021

   4.6  
  

 

 

 
   $12.0  
  

 

 

 

are presented in the table below:

(in billions)
Last three months of 2023$0.6 
20242.2 
20251.9 
20262.1 
20271.6 
After 20275.7 
$14.1 
Guarantees.As of September 30, 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.

2041.

As of September 30, 2023, United is the guarantor of $81 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 below for the Company's debt, and the Company would potentially be responsible for those costs under the guarantees.
Increased Cost Provisions. In 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), for
21

certain other increased costs that the lenders incur in carrying these loans as a result of any change in law, subject, in most cases, to obligations of the lenders to take certain limited steps to mitigate the requirement for, or the amount of, such increased costs. The Company elected to apply the guidance in Accounting Standards Codification 848, Reference Rate Reform, to contracts and transactions that transitioned from the London Interbank Offered Rate (LIBOR) to SOFR. The application of this guidance did not have any material impact on the Company's financial statements. At September 30, 2017,2023, 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.

Labor.As of September 30, 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 - DEBT

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. 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):

EETC Date            

  

Class

  Principal   

Final expected
distribution date

  Stated
interest
rate
   Total  debt
recorded
as of September 30,

2017
   Proceeds
received
from
issuance of
debt during
2017
 

September 2016

  AA   $            637    October 2028   2.875%     $637     $557  

September 2016

  A   283    October 2028   3.10%     283    

 

247 

 

June 2016

  AA   729    July 2028   3.10%     729     319  

June 2016

  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.

In January 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):

Last three months of 2017

   $184  

2018

   1,527  

2019

   1,115  

2020

   1,120  

2021

   1,107  

After 2021

   7,963  
  

 

 

 
   $                13,016  
  

 

 

 

NOTE 10 - SPECIAL CHARGES

For 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 

Severance and benefit costs

   $23     $13     $101     $27  

Impairment of assets

   15     —     15     412  

Labor agreement costs

   —     14     —     124  

Cleveland airport lease restructuring

   —     —     —     74  

(Gains) losses on sale of assets and other special charges

   12     18     29     32  
  

 

 

   

 

 

   

 

 

   

 

 

 

Special charges

   50     45     145     669  

Nonoperating:

        

Other (gain) loss

   —     —     —     (1) 
  

 

 

   

 

 

   

 

 

   

 

 

 

Special charges before income taxes

   50     45     145     668  

Income tax benefit related to special charges

   (18)    (16)    (52)    (241) 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total special charges, net of tax

   $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.

In 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.
In September 2023, the Company's pilots represented by ALPA ratified an agreement with United. The agreement includes numerous work rule changes and pay rate increases during the four-year term. The agreement also includes a provision for a one-time $765 million payment upon ratification.
NOTE 8 — DEBT
As of September 30, 2023, we had $1.75 billion undrawn and available under our revolving credit facility.
Our debt agreements contain customary terms and conditions as well as various affirmative, negative and financial covenants that, among other things, restrict the ability of the Company and its subsidiaries to incur additional indebtedness and pay dividends or repurchase stock. As of September 30, 2023, UAL and United were in compliance with their respective debt covenants.
22

Equipment Notes. On June 20, 2023, the Company and Wilmington Trust, National Association, as subordination agent and pass through trustee (the "Trustee") under a certain pass through trust newly formed by the Company, entered into the Note Purchase Agreement, dated as of June 20, 2023 (the "Note Purchase Agreement"). The Note Purchase Agreement provides for the issuance 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 the 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 Company to facilitate the financing of the aircraft. 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 receivebe due on January 15, 2036.

In the second quarter of 2023, United prepaid $1.0 billion of a 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.
The table below presents the Company's contractual principal payments (not including $303 million of 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 
20243,958 
20253,442 
20265,235 
20272,464 
After 202714,046 
$29,884 
NOTE 9 — SPECIAL CHARGES
For the three and nine months ended September 30, 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,
2023202220232022
Labor contract ratification bonuses$$— $814 $— 
(Gains) losses on sale of assets and other special charges28 20 88 124 
Total operating special charges29 20 902 124 
Nonoperating unrealized (gains) losses on investments, net54 (28)(54)12 
Nonoperating debt extinguishment and modification fees— — 11 
Total nonoperating special charges and unrealized (gains) losses on investments, net54 (28)(43)19 
Total operating and nonoperating special charges and unrealized (gains) losses on investments, net83 (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 
2023
Labor contract ratification bonuses. During the nine months ended September 30, 2023, the Company recorded $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.
(Gains) losses on sale of taxes), respectively, of severance primarily related to its management reorganization initiative.

assets and other special charges.During the three and nine months ended September 30, 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 legal

23

matters, accelerated depreciation related to a 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.

Nonoperating unrealized (gains) losses on investments, net. During the three and nine months ended September 30, 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.

equity securities.

Nonoperating debt extinguishment and modification fees. During the nine months ended September 30, 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 Company

no 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.

Accrual

The accrual balance for severanceprepayment of $1.0 billion of the outstanding principal amount under a 2021 term loan facility.

2022
(Gains) losses on sale of assets and 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.
Nonoperating unrealized (gains) losses on investments, net. During the three and nine months ended September 30, 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.
Nonoperating debt extinguishment and permanently grounded aircraft accrual activity formodification fees. During the nine months ended September 30:

   Severance and
Benefits
   Permanently
Grounded
Aircraft
 

Balance at December 31, 2016

   $14     $41  

Accrual

   101     —  

Payments

   (84)    (13) 
  

 

 

   

 

 

 

Balance at September 30, 2017

   $31     $28  
  

 

 

   

 

 

 
   Severance and
Benefits
   Permanently
Grounded
Aircraft
 

Balance at December 31, 2015

   $27     $78  

Accrual

   27     (17) 

Payments

   (20)    (20) 
  

 

 

   

 

 

 

Balance at September 30, 2016

   $                    34     $                    41  
  

 

 

   

 

 

 

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.

24

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

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
This Management's Discussion and Analysis of Financial Condition and Results of Operations is provided as a supplement to and should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q to enhance the understanding of our results of operations, financial condition and cash flows.
EXECUTIVE SUMMARY
Overview

United 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.

Our shared purpose is "Connecting People. Uniting the World." We have the most comprehensive route network among North American carriers, including U.S. mainland hubs in Chicago, Denver, Houston, Los Angeles, New York/Newark, San Francisco and Washington, D.C. The Company transports people and cargo through its mainline operations, which utilize jet aircraft with at least 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 United
Our current expectations described below are forward-looking statements and its 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 Highlights

Third 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.

America ("GAAP"); refer to "Supplemental Information" below for further details. The results presented in this report are not necessarily indicative of future operating results.

DuringEconomic and Market Factors

The airline industry is highly competitive, marked by significant competition with respect to routes, fares, schedules (both timing and frequency), services, products, customer service and frequent flyer programs. We, like other companies in our industry, have been subject to these and other industry-specific competitive dynamics. In addition, our operations, supply chain, partners and suppliers have been subject to various global macroeconomic factors. We expect to continue to remain vulnerable to a number of industry-specific and global macroeconomic factors that may cause our actual results of operations to differ from our historical results of operations or current expectations. The economic and market factors and trends that we currently believe are or will be most impactful to our results of operations and financial condition include the quarter,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.

impact of the above factors and trends.

Third quarter 2017 aircraft fuel cost increased $206 million, 12.9% year-over-year.

25


Unrestricted

Governmental Actions
We operate in complex, highly regulated environments in the U.S., the European Union, the UK and other regions around the world. Compliance with laws, regulations, administrative practices and other restrictions or legal requirements in the countries in which we do business is onerous and expensive. In addition, changes to existing legal requirements, new legal requirements and any failure to comply with legal requirements could negatively impact our business, operations, financial condition, future results of operations, liquidity at 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 Highlights

United 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.

Outlook

The 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.

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.

RESULTS OF OPERATIONS

The following discussion provides an analysis of our results of operations and reasons for material changes therein for the three and nine months ended September 30, 20172023, as compared to the corresponding periodperiods in 2016.

2022.

Third Quarter 20172023 Compared to Third Quarter 2016

2022

The Company recorded net income of $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)
 

Operating revenue

   $9,878     $9,913     $(35)    (0.4) 

Operating expense

   8,786     8,289     497     6.0  
  

 

 

   

 

 

   

 

 

   

Operating income

   1,092     1,624     (532)    (32.8) 

Nonoperating expense

   (112)    (114)    (2)    (1.8) 

Income tax expense

   343     545     (202)    (37.1) 
  

 

 

   

 

 

   

 

 

   

Net income

    $637     $965     $(328)    (34.0) 
  

 

 

   

 

 

   

 

 

   

20232022Increase (Decrease)% Change
Operating revenue$14,484 $12,877 $1,607 12.5 
Operating expense12,745 11,419 1,326 11.6 
Operating income1,739 1,458 281 19.3 
Nonoperating expense, net(254)(305)(51)(16.7)
Income tax expense348 211 137 64.9 
Net income$1,137 $942 $195 20.7 

26

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

   2017   2016   Increase
(Decrease)
   %  Increase
(Decrease)
 

Passengers (thousands) (a)

   39,302       38,651       651     1.7  

Revenue passenger miles (“RPMs”) (millions) (b)

   59,145       58,172       973     1.7  

Available seat miles (“ASMs”) (millions) (c)

   70,083       68,074       2,009     3.0  

Passenger load factor (d)

   84.4%    85.5%    (1.1) pts.     N/A  

Passenger revenue per available seat mile (“PRASM”) (cents)

   12.17       12.64       (0.47)    (3.7) 

Average yield per revenue passenger mile (“Yield”) (cents) (e)

   14.42       14.79       (0.37)    (2.5) 

Cost per available seat mile (“CASM”) (cents)

   12.54       12.18       0.36     3.0  

Average price per gallon of fuel, including fuel taxes

   $1.70      $1.52       $0.18     11.8  

Fuel gallons consumed (millions)

   1,065       1,057           0.8  

Average full-time equivalent employees

   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.

20232022Increase (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 30102,000 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.

Operating Revenue

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

    2017   2016   Increase
(Decrease)
   % Change 

Passenger—Mainline

   $7,083     $7,017     $66     0.9  

Passenger—Regional

   1,445     1,586     (141)    (8.9) 
  

 

 

   

 

 

   

 

 

   

Total passenger revenue

   8,528     8,603     (75)    (0.9) 

Cargo

   257     224     33     14.7  

Other operating revenue

   1,093     1,086         0.6  
  

 

 

   

 

 

   

 

 

   

Total operating revenue

   $9,878     $9,913     $(35)    (0.4) 
  

 

 

   

 

 

   

 

 

   

20232022Increase (Decrease)% Change
Passenger revenue$13,349 $11,653 $1,696 14.6 
Cargo333 498 (165)(33.1)
Other operating revenue802 726 76 10.5 
Total operating revenue$14,484 $12,877 $1,607 12.5 

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

       Domestic         Atlantic         Pacific         Latin           Total
     Consolidated    
           Mainline         Regional     

Increase (decrease) from 2016:

                    

Passenger revenue (in millions)

   $(2)       $3       $(109)       $33           $(75)          $66       $(141)     
Passenger revenue   — %    0.2 %    (9.3)%    4.7 %       (0.9)%       0.9 %    (8.9)% 

Average fare per passenger

   (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 % 

PRASM

   (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)% 

RPMs (traffic)

   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)% 

Passenger load factor (points)

   (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.

Cargo
Increase (decrease) from 2022:
 DomesticAtlanticPacificLatinTotal
Passenger revenue (in millions)$613 $446 $599 $38 $1,696 
Passenger revenue8.7 %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)%
Passengers14.3 %8.1 %79.4 %8.3 %14.4 %
RPMs10.5 %8.3 %87.3 %9.9 %14.6 %
ASMs10.9 %10.9 %85.7 %10.1 %15.7 %
Passenger load factor (points)(0.3)(2.2)0.7 (0.1)(0.9)

Passenger revenue increased $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.

a 15.7% increase in capacity, partially offset by a slight decrease in passenger load factor.

27

Cargo revenue decreased $165 million, or 33.1%, in the third quarter of 2023 as compared to the year-ago period, primarily due to lower yields as a result of increased market capacity and rate pressures.
Other operating revenue increased $76 million, or 10.5%, in the third quarter of 2023 as compared to the year-ago period, primarily due to an increase in mileage revenue from non-airline partners, including credit card spending with the co-branded credit card partner, JPMorgan Chase Bank, N.A., as well as an increase in the purchases of United Club memberships, visitor volume and purchases of one-time lounge passes.
Operating Expenses

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

    2017   2016   Increase
(Decrease)
   % Change 

Salaries and related costs

   $2,812     $2,625     $187     7.1  

Aircraft fuel

   1,809     1,603     206     12.9  

Landing fees and other rent

   585     546     39     7.1  

Regional capacity purchase

   567     572     (5)    (0.9) 

Depreciation and amortization

   556     503     53     10.5  

Aircraft maintenance materials and outside repairs

   451     451     —     —  

Distribution expenses

   352     345         2.0  

Aircraft rent

   145     168     (23)    (13.7) 

Special charges

   50     45         NM  

Other operating expenses

   1,459     1,431     28     2.0  
  

 

 

   

 

 

   

 

 

   

Total operating expenses

   $8,786     $8,289     $497     6.0  
  

 

 

   

 

 

   

 

 

   

20232022Increase (Decrease)% Change (a)
Salaries and related costs$3,914 $2,843 $1,071 37.7 
Aircraft fuel3,342 3,755 (413)(11.0)
Landing fees and other rent801 639 162 25.4 
Aircraft maintenance materials and outside repairs684 619 65 10.5 
Depreciation and amortization663 610 53 8.7 
Regional capacity purchase592 596 (4)(0.7)
Distribution expenses516 482 34 7.1 
Aircraft rent46 65 (19)(29.2)
Special charges29 20 NM
Other operating expenses2,158 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.

Salaries and related costs increased $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.

a change in the profit sharing formula as a result of the new pilot agreement.

Aircraft fuel 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
 

Total aircraft fuel purchase cost excluding fuel hedge impacts

   $1,809     $1,579     14.6     $1.70     $1.49     14.1  

Hedge losses reported in fuel expense

   —     24     NM     —     0.03     NM  
  

 

 

   

 

 

     

 

 

   

 

 

   

Fuel expense

   $1,809     $1,603     12.9     $1.70     $1.52     11.8  
  

 

 

   

 

 

     

 

 

   

 

 

   

Total fuel consumption (gallons)

   1,065     1,057     0.8        

period (in millions, except percentage change and per gallon data):

20232022Increase (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)%
Landing fees and other rent increased $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.
Aircraft maintenance materials and outside repairs increased $65 million, or 10.5%, in the third quarter of 2023 as compared to the year-ago period, primarily due to increased flight activity driving higher maintenance materials usage and increased volumes of both engine overhauls and airframe heavy maintenance checks.
Depreciation expense increased $53 million, or 8.7%, in the third quarter of 2023 as compared to the year-ago period, primarily due to new aircraft inducted into service.
Distribution expenses increased $34 million, or 7.1%, in the third quarter of 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.

passenger revenue.

28

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

   2017   2016 

Severance and benefit costs

   $23     $13  

Impairment of assets

   15     —  

Labor agreement costs

   —     14  

(Gains) losses on sale of assets and other special charges

   12     18  
  

 

 

   

 

 

 

Special charges

   $50     $45  
  

 

 

   

 

 

 

2023 2022
Labor contract ratification bonuses$$— 
(Gains) losses on sale of assets and other special charges28 20 
Special charges$29 $20 

See Note 109 to the financial statements included in Part I, Item 1 of this report for additional information.

informationon the Company's special charges.

Other operating expenses increased $368 million, or 20.6%, in the third quarter of 2023 as compared to the year ago period, primarily due to increases in ground handling, passenger services, food and beverage offerings and consumption, navigation fees and personnel-related costs as a direct result of the increase in flight activity and inflationary pressures and higher expenditures on information technology projects and services.
Nonoperating Income (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
 

Interest expense

   $(164)    $(150)    $14     9.3  

Interest capitalized

   20     20     —     —  

Interest income

   17     14         21.4  

Miscellaneous, net

   15         13     NM  
  

 

 

   

 

 

   

 

 

   

Total

   $(112)    $(114)    $(2)    (1.8) 
  

 

 

   

 

 

   

 

 

   

Income
20232022Increase (Decrease)% Change
Interest expense$(493)$(455)$38 8.4 
Interest income234 104 130 NM
Interest capitalized48 27 21 77.8 
Unrealized gains (losses) on investments, net(54)28 (82)NM
Miscellaneous, net11 (9)(20)NM
Total$(254)$(305)$(51)(16.7)

Interest expense increased $38 million, or 8.4%, in the third quarter of 2023 as compared to the year-ago period, primarily due to higher interest rates on variable rate debt and new debt issuances in the current period, partially offset by reduced interest expense on the prepayment of $1.0 billion of debt in the second quarter of 2023.
Interest income increased $130 million in the third quarter of 2023 as compared to the year-ago period, primarily due to higher short-term investments in U.S. government and agency notes.
Unrealized losses on investments, net, was $54 million in the third quarter of 2023 as compared to $28 million in unrealized gains in the year-ago period, primarily due to the change in the market value of the Company's investments in equity securities. See Note 6 to the financial statements included in Part I, Item 1 of this report for information related to these equity investments.
Income Taxes.See Note 4 to the financial statements included in Part I, Item 1 of this report for information related to income taxes.

First Nine Months 20172023 Compared to First Nine Months 2016

2022

The Company recorded net income of $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)
 

Operating revenue

   $28,298     $27,504     $794     2.9  

Operating expense

   25,529     24,171     1,358     5.6  
  

 

 

   

 

 

   

 

 

   

Operating income

   2,769     3,333     (564)    (16.9) 

Nonoperating expense

   (370)    (398)    (28)    (7.0) 

Income tax expense

   848     1,069     (221)    (20.7) 
  

 

 

   

 

 

   

 

 

   

Net income

   $1,551     $1,866     $(315)    (16.9) 
  

 

 

   

 

 

   

 

 

   

20232022Increase (Decrease)% Change
Operating revenue$40,091 $32,555 $7,536 23.1 
Operating expense36,878 31,595 5,283 16.7 
Operating income3,213 960 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

29

Certain consolidated statistical information for the Company’sCompany's operations for the nine months ended September 30 is as follows:

   2017   2016   Increase
(Decrease)
   %  Increase
(Decrease)
 

Passengers (thousands) (a)

   110,654       107,154       3,500     3.3  

RPMs (millions) (b)

   163,112       158,771       4,341     2.7  

ASMs (millions) (c)

   197,358       191,072       6,286     3.3  

Passenger load factor (d)

   82.6%    83.1%    (0.5) pts.     N/A  

PRASM (cents)

   12.32       12.40       (0.08)    (0.6) 

Yield (cents) (e)

   14.91       14.92       (0.01)    (0.1) 

CASM (cents)

   12.94       12.65       0.29     2.3  

Average price per gallon of fuel, including fuel taxes

   $1.68       $1.45      $0.23     15.9  

Fuel gallons consumed (millions)

   2,998       2,942       56     1.9  

Average full-time equivalent employees

   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.

20232022Increase (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 factor84.4 %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 30102,000 90,800 11,200 12.3 
(a) See "Supplemental Information" below for a reconciliation to CASM, the most directly comparable GAAP measure.

Operating Revenue

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

    2017   2016   Increase
(Decrease)
   % Change 

Passenger—Mainline

   $19,970     $19,119     $851     4.5  

Passenger—Regional

   4,354     4,577     (223)    (4.9) 
  

 

 

   

 

 

   

 

 

   

Total passenger revenue

   24,324     23,696     628     2.7  

Cargo

   731     626     105     16.8  

Other operating revenue

   3,243     3,182     61     1.9  
  

 

 

   

 

 

   

 

 

   

Total operating revenue

   $28,298     $27,504     $794     2.9  
  

 

 

   

 

 

   

 

 

   

20232022Increase (Decrease)% Change
Passenger revenue$36,625 $28,830 $7,795 27.0 
Cargo1,093 1,699 (606)(35.7)
Other operating revenue2,373 2,026 347 17.1 
Total operating revenue$40,091 $32,555 $7,536 23.1 

The table below presents selected passenger revenue and operating data, broken out by geographic region, expressed as year-over-year changes for the nine months ended September 30, 20172023 compared to the nine months ended September 30, 2016:

       Domestic         Atlantic         Pacific         Latin         Total
     Consolidated    
       Mainline       Regional   
Increase (decrease) from 2016:                

Passenger revenue (in millions)

  $523       $37       $(84)       $152        $628        $851       $(223)     
Passenger revenue   3.7 %    0.9 %    (2.7)%    7.2 %     2.7 %     4.5 %    (4.9)% 

Average fare per passenger

   (0.2)%    1.2 %    (1.6)%    4.1 %     (0.6)%     (2.9)%    2.1 % 

Yield

   (0.6)%    0.7 %    (3.2)%    4.7 %     (0.1)%     0.4 %    2.7 % 

PRASM

   (0.8)%    1.5 %    (6.8)%    4.5 %     (0.6)%     — %    0.5 % 

Passengers

   3.8 %    (0.3)%    (1.1)%    2.9 %     3.3 %     7.5 %    (6.9)% 

RPMs (traffic)

   4.3 %    0.1 %    0.5 %    2.3 %     2.7 %     4.0 %    (7.4)% 

ASMs (capacity)

   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:
 DomesticAtlanticPacificLatinTotal
Passenger revenue (in millions)$3,143 $2,085 $2,021 $546 $7,795 
Passenger revenue16.8 %35.5 %NM18.6 %27.0 %
Average fare per passenger1.7 %10.5 %10.1 %12.8 %9.4 %
Yield4.1 %10.7 %(1.9)%11.8 %5.1 %
PRASM4.0 %11.4 %27.7 %18.1 %7.1 %
Passengers14.9 %22.6 %NM5.2 %16.1 %
RPMs12.2 %22.3 %NM6.1 %20.9 %
ASMs12.3 %21.6 %NM0.5 %18.5 %
Passenger load factor (points)(0.1)0.5 18.9 4.6 1.6 

Passenger revenue increased $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.

an 18.5% increase in capacity as well as strength in both yield and passenger load factor.

Cargo revenue decreased $606 million, or 35.7%, in the first nine months of 2023 as compared to the year-ago period, primarily due to lower yields as a result of increased market capacity and rate pressures.
Other operating revenue increased $347 million, or 17.1%, in the first nine months of 2023 as compared to the year-ago period, primarily due to an increase in mileage revenue from non-airline partners, including credit card spending and new credit card member acquisitions with the co-branded credit card partner, JPMorgan Chase Bank, N.A., as well as United Club re-openings and related increases in the purchases of United Club memberships and one-time lounge passes as compared to the year-ago period.
30

Operating Expenses

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

    2017   2016   Increase
(Decrease)
   % Change 

Salaries and related costs

   $8,341     $7,707     $634     8.2  

Aircraft fuel

   5,038     4,258     780     18.3  

Landing fees and other rent

   1,670     1,612     58     3.6  

Regional capacity purchase

   1,652     1,645         0.4  

Depreciation and amortization

   1,610     1,473     137     9.3  

Aircraft maintenance materials and outside repairs

   1,377     1,301     76     5.8  

Distribution expenses

   1,021     987     34     3.4  

Aircraft rent

   476     521     (45)    (8.6) 

Special charges

   145     669     (524)    NM  

Other operating expenses

   4,199     3,998     201     5.0  
  

 

 

   

 

 

   

 

 

   

Total operating expenses

   $25,529     $24,171     $1,358     5.6  
  

 

 

   

 

 

   

 

 

   

20232022Increase (Decrease)% Change
Salaries and related costs$10,946 $8,466 $2,480 29.3 
Aircraft fuel9,336 9,796 (460)(4.7)
Landing fees and other rent2,283 1,919 364 19.0 
Aircraft maintenance materials and outside repairs2,072 1,553 519 33.4 
Depreciation and amortization1,987 1,832 155 8.5 
Regional capacity purchase1,806 1,728 78 4.5 
Distribution expenses1,406 1,101 305 27.7 
Aircraft rent151 193 (42)(21.8)
Special charges902 124 778 NM
Other operating expenses5,989 4,883 1,106 22.7 
Total operating expenses$36,878 $31,595 $5,283 16.7 

Salaries and related costs increased $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.

a change in the profit sharing formula as a result of the new pilot agreement.

Aircraft fuel 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       197     NM     —     0.07     NM  
  

 

 

   

 

 

     

 

 

   

 

 

   
Fuel expense   $5,038     $4,258     18.3     $1.68     $1.45     15.9  
  

 

 

   

 

 

     

 

 

   

 

 

   

Total fuel consumption (gallons)

   2,998     2,942     1.9        

Depreciation period (in millions, except percentage change and amortizationper gallon data):

20232022Increase (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)%
Landing fees and other rent increased $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.

enplaned passengers.

Aircraft maintenance materials and outside repairs increased $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.

Depreciation expense increased $155 million, or 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.
Regional capacity purchase 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.

Distribution expenses increased $305 million, or 27.7%, in the first nine months of 2023 as compared to the year-ago period, primarily due to 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.

passenger revenue.

Details of the Company’sCompany's special charges include the following for the nine months ended September 30 (in millions):

   2017   2016 

Severance and benefit costs

   $101     $27  

Impairment of assets

   15     412  

Labor agreement costs

   —     124  

Cleveland airport lease restructuring

   —     74  

(Gains) losses on sale of assets and other special charges

   29     32  
  

 

 

   

 

 

 

Special charges

   $145     $669  
  

 

 

   

 

 

 

2023 2022
Labor contract ratification bonuses$814 $— 
(Gains) losses on sale of assets and other special charges88 124 
Special charges$902 $124 

31

See Note 109 to the financial statements included in Part I, Item 1 of this report for additional information.

informationon the Company's special charges.

Other operating expenses increased $1.1 billion, or 22.7%, in the first nine months of 2023 as compared to the year-ago period, primarily due to increases in ground handling, passenger services, food and beverage offerings and consumption, navigation fees and personnel-related costs as a direct result of the increase in flight activity and inflationary pressures and higher expenditures on information technology projects and services.
Nonoperating Income (Expense).The following table illustrates the year-over-year dollar and percentage changes in the Company’sCompany's nonoperating income (expense) for the nine months ended September 30 (in millions, except for percentage changes):

   2017   2016   Increase
(Decrease)
   %
Change
 

Interest expense

   $(472)    $(466)    $    1.3  

Interest capitalized

   64     48     16     33.3  

Interest income

   41     31     10     32.3  

Miscellaneous, net

   (3)    (11)    (8)    (72.7) 
  

 

 

   

 

 

   

 

 

   

Total

   $(370)    $(398)    $(28)    (7.0) 
  

 

 

   

 

 

   

 

 

   

20232022Increase (Decrease)% Change
Interest expense$(1,472)$(1,299)$173 13.3 
Interest income620 142 478 NM
Interest capitalized128 73 55 75.3 
Unrealized gains (losses) on investments, net54 (12)(66)NM
Miscellaneous, net73 (4)(77)NM
Total$(597)$(1,100)$(503)(45.7)

Interest expense increased $173 million, or 13.3%, in the first nine months of 2023 as compared to the year-ago period, primarily due to higher interest rates on variable rate debt and new debt issuances in the current period, partially offset by reduced interest expense on the prepayment of $1.0 billion of debt in the second quarter of 2023.
Interest income increased $478 million in the first nine months of 2023 as compared to the year-ago period, primarily due to higher short-term investments in U.S. government and agency notes. See Note 6 to the financial statements included in Part I, Item 1 of this report for additional information.
Unrealized gains on investments, net, was $54 million in the first nine months of 2023 as compared to $12 million in unrealized losses in the year-ago period, primarily due to the change in the market value of the Company's investments in equity securities. See Note 6 to the financial statements included in Part I, Item 1 of this report for information related to these equity investments.
Miscellaneous, net changed by $77 million in the first nine months of 2023 as compared to the year-ago period, primarily due to lower foreign exchange losses and higher benefit from the pensions and postretirement benefit plans.
Income Taxes.See Note 4 to the financial statements included in Part I, Item 1 of this report for information related to income taxes.

LIQUIDITY AND CAPITAL RESOURCES

Current Liquidity

As of September 30, 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.
The Company 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.

We have a significant amount of fixed obligations, including debt, aircraft leases and financings, leases of aircraft, airport property and other facilities, and pension funding obligations. 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 have
32

substantial noncancelable commitments for capital expenditures, including the acquisition of certain new aircraft and related spare engines. Our debt agreements contain customary terms and conditions as well as various affirmative, negative and financial covenants that, among other things, restrict the ability of the Company and its subsidiaries to incur additional indebtedness and pay dividends or repurchase stock. As of September 30, 2017, 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.

compliance with their respective debt covenants. As of September 30, 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.

The Company has backstop financing commitments available from certain of its aircraft manufacturers for a limited number of its future aircraft deliveries, subject to certain customary conditions. See Note 7 to the financial statements included in Part I, Item I of this report for additional information on commitments.
As of September 30, 2023, United had firm commitments 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 Type

Number of Firm
         Commitments (a)        

Airbus A350

45 

Boeing 737 MAX

161 

Boeing777-300ER

Boeing 787

18 

Embraer E175

(a) United also has options and purchase rights for additional aircraft.

Contractual Aircraft DeliveriesExpected Aircraft Deliveries (b)
Aircraft TypeNumber of Firm
 Commitments (a)
Last Three Months
of 2023
2024After 2024Last Three Months
of 2023
2024After 2024
787150 — 142 — 142 
737 MAX374 73 100 201 20 77 277 
A321neo130 26 100 26 100 
A321XLR50 — — 50 — — 50 
A35045 — — 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.
The aircraft listed in the table above are scheduled for delivery through 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.
On September 28, 2023, United entered into a supplemental agreement with Boeing, pursuant to which United exercised options to purchase 50 Boeing 787-9 aircraft scheduled for delivery between 2028 and 2031 and was granted options to purchase up to an additional 50 Boeing 787 aircraft. In addition, on September 29, 2023, United entered into an amendment to the A320 Family Purchase Agreement, dated December 19, 2019, as amended, with Airbus, pursuant to which United exercised purchase rights to purchase 60 A321neo aircraft scheduled for delivery between 2028 and 2030 and was granted purchase rights to purchase up to an additional 40 A321neo aircraft. The table above reflects the number of firm commitments 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.

The table below summarizes United's firm commitments as of September 30, 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 
20248.8 
20258.0 
20266.1 
20275.0 
After 202729.6 
$62.1 
33

Sources and Uses of Cash
The following table summarizes our cash flows for the nine months ended September 30 (in millions):
20232022Increase (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 
Operating Activities.Cash flows provided by operations increased $2.9 billion in the first nine months of 2023 as compared to the year-ago period, primarily due to an increase in operating income as improvements in the demand for air travel continued.
Investing Activities.Cash flows used in investing activities decreased $4.1 billion in the first nine months of 2023 as compared to the year-ago period, primarily due to a $7.6 billion increase in proceeds from the sale of short-term and other investments, partially offset by a $2.8 billion increase in capital expenditures. Capital expenditures were primarily attributable to the purchase commitmentsof aircraft, aircraft improvements and advance deposits for approximately $22.0 billion,future aircraft purchases.
Financing Activities. Significant financing events in the nine months ended September 30, 2023 were as follows:
Debt, Finance Lease and Other Financing Liability Principal Payments. During the nine months ended September 30, 2023 and 2022, the Company made payments for debt, finance leases, and other financing liabilities of 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.
Debt and Other Financing Liabilities Issuances. On June 20, 2023, the Company and Wilmington Trust, National Association, as subordination agent and pass through trustee (the "Trustee") under a certain pass through trust newly formed by the Company, entered into the Note Purchase Agreement, dated as of June 20, 2023 (the "Note Purchase Agreement"). The Note Purchase Agreement provides for the 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.

See Note 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.

information.

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

S&PMoody’sMoody'sFitch
UALBB-Ba2BBB+
UnitedBB-*BBB+

*The credit agency does not issue corporate credit ratings for subsidiary entities.


These credit ratings are below investment grade levels.levels; however, the Company has been able to secure financing with investment grade credit ratings for certain enhanced equipment trust certificates, 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 Cash

Operating 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.

time by a rating agency if such rating agency decides that circumstances warrant such a change.

Commitments, Contingencies and Liquidity Matters.As described in the 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.

34

See the 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 ACCOUNTING POLICIES

See “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.
Supplemental Information
The Company evaluates its financial performance utilizing various GAAP and 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.
Because this non-GAAP financial measure is not calculated in accordance with GAAP, it should not be considered superior to, and is not intended to be considered in isolation or as a substitute for, the related GAAP financial measure and may not be the same as or comparable to any similarly titled measures presented by other companies due to possible differences in method and in the items being adjusted. We encourage investors to review our financial statements containedand publicly-filed reports in their entirety and not to rely on any single financial measure.
Below is a reconciliation of the non-GAAP financial measure provided in this report (CASM-ex) to the most directly comparable GAAP financial measure (CASM) (in cents):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023202220232022
CASM (GAAP)16.27 16.87 16.95 17.21 
Fuel expense4.26 5.55 4.29 5.34 
Special charges0.04 0.03 0.42 0.07 
Profit sharing0.39 0.01 0.24 — 
Third-party business expenses0.07 0.06 0.06 0.06 
CASM-ex (Non-GAAP)11.51 11.22 11.94 11.74 
FORWARD-LOOKING INFORMATION
This report contains certain "forward-looking statements," within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including in Part 1,I, Item 1 of this report for a discussion of the Company’s critical accounting policies.

FORWARD-LOOKING INFORMATION

Certain 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.

Additionally, 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 or
35

uncertainties cannot be predicted, guaranteed or assured. All forward-looking statements in this report are based upon information available to us on the date of this report. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, except as required by applicable law.

law or regulation.

Our actual results could differ materially from these forward-looking statements due to numerous factors including, without limitation, the following: execution risks associated with our 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.
The foregoing list sets forth many, but not all, of the factors that could impact our ability to achieve results described in any forward-looking statements. Investors should understand that it is not possible to predict or identify all such factors and 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.
36

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
There have been no material changes in market risk from the information provided in Part II, Item 7A. “Quantitative7A, Quantitative and Qualitative Disclosures About Market Risk”Risk, in our 2016 Annual Report.

2022 Form 10-K.

ITEM 4.CONTROLS AND PROCEDURES.

ITEM 4.     CONTROLS AND PROCEDURES.
Evaluation of Disclosure Control and Procedures

The Company

UAL and United each maintains controls and procedures that are designed to ensure that information required to be disclosed in the reports filed or submitted by UAL and United to the SEC is recorded, processed, summarized and reported, within the time periods specified by the SEC’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.

Changes in Internal Control over Financial Reporting during the Quarter Ended September 30, 2017

2023

During the three months ended September 30, 2017,2023, 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")).

PART II. OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

ITEM 1. LEGAL PROCEEDINGS
See Part I, Item 3., “Legal Proceedings”3, Legal Proceedings, of the 2016 Annual Report2022 Form 10-K for a description of legal proceedings.

Item 1A.RISK FACTORS

See

ITEM 1A. RISK FACTORS
There have been no material changes from the risk factors disclosed in Part I, Item 1A., “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:
The airline industry is subject to extensive government regulation, which imposes significant costs and 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.

Airlines are subject to extensive regulatory and legal oversight. Compliance with U.S. and international regulations imposes significant costs and may have adverse effects on the Company.
United provides air transportation under certificates of public convenience and necessity issued by the U.S. Department of Transportation ("DOT"). If the DOT modified, suspended or revoked these certificates, it could have a material adverse effect on the Company's business. The 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:

Period

  Total number of
shares
purchased (a)(b)
   Average price paid
per share (b)(c)
   Total number of
shares purchased as
part of publicly
announced plans or
programs (a)
   Approximate dollar
value of shares that

may yet be purchased
under the plans or
programs (in millions) (a)
 

July 2017

   2,537,939     $73.35      2,537,939     $923   

August 2017

   3,592,802      66.80      3,592,802      683   

September 2017

   2,159,408      60.20      2,159,408      553   
  

 

 

     

 

 

   

Total

   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.

In 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.
The Company's operations may also be adversely impacted due to 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 handle
37

demand and reduced resiliency in the event of a failure causing flight cancellations and delays. Failure to update the ATC system in a timely manner and the substantial funding requirements of a modernized ATC system that may be imposed on air carriers may have an adverse impact on the Company's financial condition or operating results.
Access to slots at several major U.S. airports and many foreign airports served by the Company is subject to government regulation on airspace management and competition that might limit the number of slots or change the rules on the use and transfer of slots. If slots are eliminated at one of our hubs or other airports, or if the number of hours of operation governed by slots is reduced at an airport, the lack of controls on take-offs and landings could result in greater congestion both at the affected airport and in the regional airspace and could significantly impact the Company's operations. Similarly, a government or regulatory agency, including DOT, could choose to impose slot restrictions at one of our hubs or other airports or grant increased access to another carrier and limit or reduce our operations at an airport, whether or not slot-controlled, which could have significant impact on our operations. The DOT (including FAA) may limit the Company's airport access by limiting the number of departure and arrival slots at congested airports, which could affect the Company's ownership and transfer rights, and local airport authorities may have the ability to control access to certain facilities or the cost to access their facilities, which could have an adverse effect on the Company's business. If the DOT were to take actions that adversely affect the Company's slot holdings, the Company could incur substantial costs to preserve its slots or may lose slots.
The Company currently operates a number of flights on international routes under its 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.

In addition, disruptions to the Company's business could result from the deployment of new cellular networks (e.g., "5G") by wireless carriers, which, due to potential interference with aircraft systems, could cause flights to be “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.
Moreover, any legislation that would result in a reshaping of the benefits that the Company is able to provide to its consumers through the co-branded credit cards issued by our partner could also materially negatively affect the Company's profitability and competitive position.
In addition, competition from revenue-sharing joint business arrangements ("JBAs") and other alliance arrangements by and among other airlines could impair the value of the Company's business and assets on the Open Skies routes. The Company's plans to enter into or expand U.S. antitrust immunized alliances and JBAs on various international routes are subject to receipt of approvals from applicable U.S. federal authorities and other applicable foreign government clearances or satisfaction of other applicable regulatory requirements. There can be disclosed pursuant to this Item.

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.

See Part I, Item 1. Business—Industry Regulation, of the 2022 Form 10-K, for additional information on government regulation impacting the Company.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES
(a) None
(b) None
(c) Average price paid per shareNone
ITEM 5. OTHER INFORMATION
(a) None.
(b) None.
38

(c) During the three months ended September 30, 2023, no director or "officer" (as defined in Rule 16a-1(f) under the Exchange Act) of the Company or United informed the Company or United of the adoption, modification or termination of a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement," as each term is calculated on a settlement basis and excludes commission.

defined in Item 408(a) of Regulation S-K under the Exchange Act.
39

ITEM 6. EXHIBITS.
EXHIBIT INDEX
ITEM 6.EXHIBITS.

EXHIBIT INDEX

Exhibit No.

Registrant

Registrant

Exhibit

  *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
United
UAL United
  12.1UAL
*10.2UAL
United
*10.3UAL
United
*10.4UAL
United
*10.5UAL
United
  12.2United
*10.6UAL
United
*10.7UAL
United
*10.8UAL
United
*10.9UAL
United
*10.10UAL
United
*10.11UAL
United
*10.12UAL
United
*10.13UAL
United
*10.14UAL
United
*10.15UAL
United
*10.16UAL
United
^10.17UAL
United
40

*10.18UAL
United
*10.19UAL
United
*10.20UAL
United
*10.21UAL
United
*10.22UAL
United
*10.23UAL
United
*10.24UAL
United
*10.25UAL
United
*10.26UAL
United
*10.27UAL
United
*10.28UAL
United
*10.29UAL
United
*10.30UAL
United
*10.31UAL
United
^10.32UAL
United
^10.33UAL
United
^10.34UAL
United
^10.35UAL
United
41

^10.36UAL
United
^10.37UAL
United
†10.38UAL
United
  31.1UAL
31.1UAL
  31.2UAL
31.2UAL
  31.3United
31.3United
  31.4United
31.4United
  32.1UAL
32.1UAL
  32.2United
32.2United
101.1

UAL

United

XBRL Instance Document
101.2101UAL
United

The following financial statements from the combined Quarterly Report of UAL

and United

XBRL 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.
101.3

UAL

United

XBRL Taxonomy Extension Calculation Linkbase Document
101.4104UAL
United

UAL

United

Cover Page Interactive Data File - the cover page XBRL Taxonomy Extension Definition Linkbase Documenttags are embedded within the Inline XBRL document.
101.5

UAL

United

XBRL Taxonomy Extension Labels Linkbase Document
101.6Indicates management contract or compensatory plan or arrangement.
*

UAL

United

Filed with this Quarterly Report on Form 10-Q solely for the purpose of transitioning these previously-filed exhibits, which are the subject of expiring confidential treatment orders, to the rules governing the filing of redacted exhibits under Regulation S-K Item 601(b)(10)(iv). Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K.
^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



42

SIGNATURES


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

Date:

October 19, 2017

18, 2023
By:/s/ Michael Leskinen
By:Michael Leskinen
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)

Date:October 18, 2023By:/s/ Andrew C. Levy

Chris Kenny
Chris Kenny
Vice President and Controller
(Principal Accounting Officer)
United Airlines, Inc.
(Registrant)
Date:October 18, 2023By:/s/ Michael Leskinen
Michael Leskinen
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Date:October 18, 2023By:Andrew C. Levy
Executive Vice President and Chief Financial Officer (principal financial officer)/s/ Chris Kenny

Date: October 19, 2017

By:

/s/ Chris Kenny

Chris Kenny


Vice President and Controller


(principal accounting officer)

United Airlines, Inc.
(Registrant)

Date: October 19, 2017

By:

/s/ Andrew C. Levy

Andrew C. Levy
Executive Vice President and Chief Financial Officer
(principal financial officer)

Date: October 19, 2017

By:

/s/ Chris Kenny

Chris Kenny

Vice President and Controller

(principal accounting officer)

Principal Accounting Officer)

41


43