UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1995, Commission File Number 1-6033
UAL CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 36-2675207
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1200 East Algonquin Road, Elk Grove Township, Illinois 60007
Mailing Address: P. O. Box 66919, Chicago, Illinois 60666
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 952-4000
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.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Outstanding at
Class July 31, 1995
Common Stock ($0.01 par value) 12,624,019
UAL Corporation and Subsidiary Companies Report on Form 10-Q
For the Quarter Ended June 30, 1995
Index
Part I. Financial Information Page No.
Item 1. Financial statements:
Condensed statement of consolidated 3
financial position - as of June 30, 1995
(unaudited) and December 31, 1994
Statement of consolidated operations 5
(unaudited) - for the three months and
six months ended June 30, 1995 and 1994
Condensed statement of consolidated 7
cash flows (unaudited) - for the six
months ended June 30, 1995 and 1994
Notes to consolidated financial 8
statements (unaudited)
Item 2. Management's discussion and analysis 13
of financial condition and results of
operations
Part II. Other Information
Item 1. Legal Proceedings 21
Item 4. Submission of Matters to a Vote of
Security Holders 21
Item 6. Exhibits and Reports on Form 8-K 23
Signatures 26
Exhibit Index 27
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
UAL Corporation and Subsidiary Companies
Condensed Statement of Consolidated Financial Position
(In Millions)
June 30,
1995 December 31,
Assets (Unaudited) 1994
Current assets:
Cash and cash equivalents $ 380 $ 500
Short-term investments 1,566 1,032
Receivables, net 1,040 889
Inventories, net 307 285
Deferred income taxes 141 151
Prepaid expenses and other 260 335
3,694 3,192
Operating property and equipment:
Owned 10,723 10,824
Accumulated depreciation and amortization (4,961) (4,786)
5,762 6,038
Capital leases 1,315 1,132
Accumulated amortization (475) (447)
840 685
6,602 6,723
Other assets:
Intangibles, net 787 814
Deferred income taxes 450 480
Other 569 555
1,806 1,849
$12,102 $11,764
See accompanying notes to consolidated financial statements.
UAL Corporation and Subsidiary Companies
Condensed Statement of Consolidated Financial Position
(In Millions)
June 30,
1995 December 31,
Liabilities and Stockholders' Equity (Unaudited) 1994
Current liabilities:
Short-term borrowings $ - $ 269
Current portions of long-term debt
and capital lease obligations 396 460
Advance ticket sales 1,378 1,020
Accounts payable 628 651
Other 2,569 2,506
4,971 4,906
Long-term debt 3,120 2,887
Long-term obligations under capital leases 872 730
Other liabilities and deferred credits:
Deferred pension liability 617 520
Postretirement benefit liability 1,190 1,148
Deferred gains 1,333 1,363
Other 467 477
3,607 3,508
Minority interest 54 49
Stockholders' equity:
Preferred stock - -
Common stock at par - -
Additional capital invested 952 1,287
Retained earnings (deficit) (1,211) (1,335)
Unearned ESOP preferred stock (79) (83)
Other (184) (185)
(522) (316)
Commitments and contingent liabilities
(See note)
$12,102 $11,764
See accompanying notes to consolidated financial statements.
UAL Corporation and Subsidiary Companies
Statement of Consolidated Operations (Unaudited)
(In Millions, Except Per Share)
Three Months
Ended June 30
1995 1994
Operating revenues:
Passenger $3,392 $3,102
Cargo 185 168
Other operating revenues 238 232
3,815 3,502
Operating expenses:
Salaries and related costs 1,146 1,216
ESOP compensation expense 108 -
Aircraft fuel 412 379
Commissions 364 360
Aircraft rent 261 230
Purchased services 266 236
Depreciation and amortization 174 177
Landing fees and other rent 211 147
Food services 135 123
Aircraft maintenance 95 118
Personnel expenses 70 65
Other operating expenses 271 284
3,513 3,335
Earnings from operations 302 167
Other income (expense):
Interest expense (101) (83)
Interest capitalized 10 9
Interest income 26 24
Equity in earnings of affiliates 13 8
Miscellaneous, net 1 (18)
(51) (60)
Earnings before income taxes 251 107
Provision for income taxes 100 52
Net earnings $ 151 $ 55
Net earnings per share:
Primary $12.00 $ 1.89
Fully-diluted $10.94 $ 1.89
Average shares:
Primary 15.4 24.5
Fully-diluted 17.4 24.5
See accompanying notes to consolidated financial statements.
UAL Corporation and Subsidiary Companies
Statement of Consolidated Operations (Unaudited)
(In Millions, Except Per Share)
Six Months
Ended June 30
1995 1994
Operating revenues:
Passenger $6,312 $5,873
Cargo 360 332
Other operating revenues 477 492
7,149 6,697
Operating expenses:
Salaries and related costs 2,259 2,418
ESOP compensation expense 197 -
Aircraft fuel 790 749
Commissions 706 694
Aircraft rent 510 456
Purchased services 505 454
Depreciation and amortization 337 355
Landing fees and other rent 380 299
Food services 254 214
Aircraft maintenance 202 227
Personnel expenses 133 124
Other operating expenses 536 576
6,809 6,566
Earnings from operations 340 131
Other income (expense):
Interest expense (203) (166)
Interest capitalized 22 19
Interest income 48 41
Equity in earnings of affiliates 27 14
Miscellaneous, net 23 (40)
(83) (132)
Earnings (loss) before income taxes and
cumulative effect of accounting change 257 (1)
Provision (credit) for income taxes 103 15
Earnings (loss) before cumulative
effect of accounting change 154 (16)
Cumulative effect of accounting change,
net of tax - (26)
Net earnings (loss) $ 154 $ (42)
Per share, primary:
Earnings (loss) before cumulative effect of
accounting change $11.74 $(1.43)
Cumulative effect of accounting change - (1.05)
Net earnings (loss) $11.74 $(2.48)
Net earnings (loss) per share, fully-diluted $11.03 $(2.48)
Average shares:
Primary 14.9 24.5
Fully-diluted 17.0 24.5
See accompanying notes to consolidated financial statements.
UAL Corporation and Subsidiary Companies
Condensed Statement of Consolidated Cash Flows (Unaudited)
(In Millions)
Six Months
Ended June 30
1995 1994
Cash and cash equivalents at beginning of
period $ 500 $ 437
Cash flows from operating activities 1,150 988
Cash flows from investing activities:
Additions to property and equipment (330) (187)
Proceeds on disposition of property and
equipment 423 122
Decrease (increase) in short-term
investments (535) 365
Other, net (20) 14
(462) 314
Cash flows from financing activities:
Repayment of long-term debt (414) (34)
Principal payments under capital
lease obligations (49) (63)
Decrease in short-term borrowings (269) (46)
Other, net (76) (17)
(808) (160)
Increase (decrease) in cash
and cash equivalents (120) 1,142
Cash and cash equivalents at end of period $ 380 $ 1,579
Cash paid during the period for:
Interest (net of amounts capitalized) $ 176 $ 140
Income taxes $ 62 $ 12
Non-cash transactions:
Capital lease obligations incurred $ 185 $ -
Long-term debt incurred in connection
with additions to equipment $ 12 $ 12
Long-term debt issued in exchange for
Series A preferred stock $ 546 $ -
Unrealized gain (loss) on investments $ 4 $ (3)
See accompanying notes to consolidated financial statements.
UAL Corporation and Subsidiary Companies
Notes to Consolidated Financial Statements (Unaudited)
The Company
UAL Corporation ("UAL") is a holding company whose principal
subsidiary is United Air Lines, Inc. ("United").
Interim Financial Statements
The consolidated financial statements included herein have been
prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to or as permitted by such rules and regulations, although UAL
believes that the disclosures are adequate to make the information
presented not misleading. In management's opinion, all adjustments
(which, except for the effects on the 1994 periods of the employee
investment transaction, include only normal recurring adjustments)
necessary for a fair presentation of the results of operations for the
three and six month periods have been made. These financial statements
should be read in conjunction with the consolidated financial statements
and footnotes thereto included in UAL's Annual Report on Form 10-K for
the year 1994.
ESOP Compensation Expense
"ESOP compensation expense" in the 1995 second quarter and
six-month period represents the estimated average fair value of ESOP
convertible preferred stock committed to be released to employees for
the period, net of amounts used to satisfy dividend requirements for
previously allocated ESOP convertible preferred shares, under Employee
Stock Ownership Plans which were created as a part of the July 1994
employee investment transaction and recapitalization. ESOP compensation
expense was credited to additional capital invested during the 1995
periods.
Other Income (Expense) - Miscellaneous
Included in "Miscellaneous, net" in the 1995 six-month period was
a $41 million gain on disposition of aircraft owned by Air Wisconsin,
Inc. Included in the 1994 second quarter and six-month period were
charges of $22 million and $41 million, respectively, for costs incurred
in connection with the employee investment transaction and
recapitalization. Also included were foreign exchange gains of $10
million in both the 1995 and 1994 second quarters, $2 million in the
1995 six-month period and $9 million in the 1994 six-month period.
Charges for minority interests in Apollo Travel Services were $6 million
in the 1995 and 1994 second quarters and $12 million in the 1995 and
1994 six-month periods.
Income Taxes
The provisions for income taxes for the 1995 second quarter and
six-month period are based on the estimated annual effective tax rate,
which differs from the federal statutory rate of 35% principally due to
state income taxes and certain nondeductible expenses. The provisions
for income taxes for the 1994 second quarter and six-month period were
based on the actual effective tax rate for the periods, and include the
effects of nondeductible expenses related to the employee investment
transaction and recapitalization. Deferred tax assets are recognized
based upon UAL's history of operating earnings and expectations for
future taxable income.
Accounting Change
UAL adopted Statement of Financial Accounting Standards ("SFAS")
No. 112, "Employers' Accounting for Postemployment Benefits," effective
January 1, 1994. The effect of adopting SFAS No. 112 was a cumulative
charge for recognition of the transition liability of $42 million,
before tax benefits of $16 million.
Per Share Amounts
In April 1995, UAL issued convertible subordinated debentures in
exchange for Series A preferred stock (See Preferred Stock
Transactions). As a result of the exchange, UAL recorded a non-cash
increase of $45 million in additional capital invested representing the
excess of the carrying value of the preferred stock exchanged over the
fair value of the new debentures. In May 1995, UAL repurchased 420
shares of its Series B preferred stock, resulting in a $1.9 million
decrease in equity (See Preferred Stock Transactions). These
transactions had no effect on earnings; however, their net impact on
UAL's equity is included in the computation of earnings per share. The
impact on earnings per share for the 1995 periods was as follows:
Periods Ended June 30, 1995
Three Months Six Months
Per share, primary:
Net earnings before preferred
stock transactions $ 9.20 $ 8.85
Preferred stock transactions 2.80 2.89
$12.00 $11.74
Per share, fully-diluted:
Net earnings before preferred
stock transactions $ 8.46 $ 8.50
Preferred stock transactions 2.48 2.53
$10.94 $11.03
Per share amounts were calculated after providing for cash
dividends on preferred stock of $10 million in the 1995 second quarter,
$9 million in the 1994 second quarter, $23 million in the 1995 six-month
period and $19 million in the 1994 six-month period.
Primary per share amounts for the 1995 second quarter and
six-month period were based on weighted average common shares and common
equivalents outstanding, including ESOP shares committed to be released.
In addition, fully-diluted per share amounts assume the conversion of
convertible debentures and elimination of related interest. Common
stock equivalents were not included in the 1994 computations as they did
not have a dilutive effect.
In connection with the July 1994 recapitalization, each old common
share was exchanged for one half new common share. As required under
generally accepted accounting principles for transactions of this type,
the historical weighted average shares outstanding have not been
restated. Thus, direct comparisons between per share amounts for the
1995 and 1994 periods presented are not meaningful.
Affiliates
United owns 38% of the Galileo International Partnership
("Galileo") through a wholly-owned subsidiary. United's investment in
Galileo, which owns the Apollo and Galileo computer reservations
systems, is carried on the equity basis. United also owns 77% of the
Apollo Travel Services Partnership and its accounts are consolidated.
Under operating agreements with Galileo, United purchases computer
reservation services from Galileo and provides marketing, sales and
communication services to Galileo. Revenues derived from the sale of
services to Galileo amounted to approximately $62 million in the 1995
second quarter, $59 million in the 1994 second quarter, $124 million in
the 1995 six-month period and $118 million in the 1994 six-month period.
The cost to United of services purchased from Galileo amounted to
approximately $27 million in the 1995 second quarter, $25 million in the
1994 second quarter, $52 million in the 1995 six-month period and $46
million in the 1994 six-month period.
Short-term Borrowings
In the second quarter of 1995, United repaid the entire balance of
short-term borrowings outstanding, which amounted to $269 million at
March 31, 1995. United has the ability to borrow up to $160 million
under this facility, which expires in September 1995.
Long-term Debt
In addition to scheduled principal payments in the first six
months of 1995, United repaid $150 million in principal amount of
debentures and $223 million in principal amount of secured notes,
resulting in an insignificant loss.
In May 1995, United issued $246 million of pass through
certificates under an effective shelf registration statement UAL and
United have on file with the Securities and Exchange Commission. The
pass through certificates were issued to finance or refinance certain
aircraft under operating leases. At June 30, 1995, up to $789 million
of securities could be issued under the shelf registration statement,
including secured and unsecured debt, equipment trust and pass through
certificates, equity or a combination thereof. UAL's ability to issue
equity securities is limited by its certificate of incorporation, which
was restated in connection with the recapitalization.
Preferred Stock Transactions
In April 1995, UAL issued $600 million in principal amount of
6 3/8% convertible subordinated debentures due 2025 in exchange for all
outstanding shares of its Series A convertible preferred stock. As a
result of the difference between the carrying value of the preferred
stock exchanged and the fair value of the new debentures, the exchange
resulted in a net decrease in additional capital invested of only $546
million. The debentures are convertible into a combination of $541.90
in cash and approximately 3.192 shares of UAL common stock (equivalent
to a conversion price of $143.50 per share of common stock) for each
$1,000 in principal amount. The debentures are redeemable after May 1,
1996, at UAL's option, initially at a redemption price of 104.375% of
the principal amount, declining ratably to 100% of the principal amount
over seven years. UAL may only exercise this option if the market value
of its common stock exceeds 120% of the conversion price of the
debentures for at least 20 of 30 consecutive trading days prior to the
redemption, subject to certain conditions. Additionally, UAL has the
right to defer the payment of interest on the debentures for up to 20
consecutive quarters. In July 1995, a holder of $3 million in principal
amount of debentures notified UAL of its intention to convert.
In May 1995, UAL repurchased 420,000 depositary shares,
representing 420 shares of its Series B 12 1/4% preferred stock, at an
aggregate cost of $12.4 million to be held in treasury.
Contingencies and Commitments
UAL has certain contingencies resulting from litigation and claims
(including environmental issues) incident to the ordinary course of
business. Management believes, after considering a number of factors,
including (but not limited to) the views of legal counsel, the nature of
contingencies to which UAL is subject and its prior experience, that the
ultimate disposition of these contingencies is not expected to
materially affect UAL's consolidated financial position or results of
operations.
At June 30, 1995, commitments for the purchase of property and
equipment, principally aircraft, approximated $3.9 billion, after
deducting advance payments. An estimated $0.9 billion will be spent
during the remainder of 1995, $1.1 billion in 1996, $1.3 billion in
1997, $0.4 billion in 1998 and $0.2 billion in 1999 and therafter. The
major commitments are for the purchase of 29 B777 aircraft, two B747
aircraft and four B757 aircraft. The B777s are expected to be delivered
between 1995 and 1999 and the B747s and B757s are expected to be
delivered in 1996.
In addition to aircraft orders, United has arrangements with
Airbus Industrie and International Aero Engines to lease an additional
21 A320 aircraft, which are scheduled for delivery through 1998. At
June 30, 1995, United also had options for an additional 150 B737
aircraft, 33 B757 aircraft, 34 B777 aircraft, 43 B747 aircraft, 6 B767
aircraft and 50 A320 aircraft. These option amounts have been reduced
to reflect the recent confirmation of two B747 options, the replacement
of two B767 options with the B757 orders mentioned above and
cancellation of certain options. Under the terms of certain of these
remaining options which are exercisable during 1996 and 1997, United
would forfeit significant deposits on such options it does not exercise.
Sale of Aircraft
In the first six months of 1995, Air Wisconsin, Inc. sold ten Dash
8 aircraft and related spare parts to Mesa Airlines. The sale resulted
in a pre-tax gain of $41 million. In connection with the sale, United
agreed to a ten-year extension of its United Express marketing agreement
with Mesa Airlines.
Subsequent Event
In July 1995, United gave notice of its intention to retire all
$229 million of its outstanding Japanese yen-denominated deferred
purchase certificates. The certificates, which will be retired
throughout the third and fourth quarters, were scheduled for repayment
periodically through 1998. In connection with the Japanese
yen-denominated obligations referred to above, United had entered into a
foreign currency swap contract to reduce exposure to currency
fluctuations. This swap contract, which was designated as a hedge, will
be terminated at the same time as the obligations. The retirement,
which will result in a net cash outflow of approximately $194 million
including accrued interest but net of amounts to be received under the
swap contract, will result in an insignificant loss.
At the same time, United also gave notice of its intention to
terminate related operating leases for 39 aircraft, by exercising its
right to acquire the aircraft. Operating property and equipment will
increase by approximately $400 million by December 31, 1995 as a result
of this transaction. Termination of these leases will reduce future
minimum lease payments, as reported at December 31, 1994, by $130
million in each of 1996 and 1997 and by $166 million in 1998.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
UAL's total of cash and cash equivalents and short-term
investments was $1.946 billion at June 30, 1995, compared to $1.532
billion at December 31, 1994. Cash flows from operating activities
amounted to $1.150 billion. Investing activities, excluding the
increase in short-term investments, resulted in cash flows of $73
million. Financing activities included principal payments under debt
and capital lease obligations of $414 million and $49 million,
respectively, and the repayment of $269 million of short-term borrowings.
In April 1995, UAL issued $600 million in principal amount of
convertible subordinated debentures in exchange for all outstanding
shares of its Series A convertible preferred stock. As a result of the
exchange, UAL recorded a non-cash increase of $45 million in additional
capital invested representing the excess of the carrying value of the
preferred stock exchanged over the fair value of the new debentures.
In the first six months of 1995, United took delivery of eight
A320 aircraft under operating leases. During the period, United also
took delivery of five B777 aircraft, two under capital leases and three
which were initially purchased, then sold and leased back under
operating leases. Property additions, including the three B777s and
aircraft spare parts, amounted to $330 million. Property dispositions,
including the sale and leaseback of the three B777s and the sale of Dash
8 aircraft by Air Wisconsin, Inc., resulted in proceeds of $423 million.
In July 1995, United gave notice of its intention to retire all
$229 million of its outstanding Japanese yen-denominated deferred
purchase certificates during the third and fourth quarters of 1995. At
the same time, United gave notice of its intention to terminate related
operating leases for 39 aircraft, by exercising its right to acquire the
aircraft. The net acquisition cost of such aircraft is expected to
aggregate $436 million after making all scheduled rent payments.
At June 30, 1995, commitments for the purchase of property and
equipment, principally aircraft, approximated $3.9 billion, after
deducting advance payments. An estimated $0.9 billion will be spent
during the remainder of 1995, $1.1 billion in 1996, $1.3 billion in
1997, $0.4 billion in 1998 and $0.2 billion in 1999 and thereafter. The
major commitments are for the purchase of 29 B777 aircraft, two B747
aircraft and four B757 aircraft. The B777s are expected to be delivered
between 1995 and 1999 and the B747s and B757s are expected to be
delivered in 1996.
In addition to aircraft orders, United has arrangements with
Airbus Industrie and International Aero Engines to lease 21 A320
aircraft, which are scheduled for delivery through 1998. At June 30,
1995, United also had options for an additional 150 B737 aircraft, 33
B757 aircraft, 34 B777 aircraft, 43 B747 aircraft, 6 B767 aircraft and
50 A320 aircraft. Under the terms of certain of these options which are
exercisable during 1996 and 1997, United would forfeit significant
deposits on such options it does not exercise.
In April 1995, United announced that, under a revised fleet plan,
it would use most of the new aircraft to be delivered through 1997 to
replace older aircraft in its fleet. As a result, the number of
aircraft in United's operating fleet is expected to increase by 19
during that time, compared to an increase of 48 aircraft called for by
United's previous fleet plan. Funds necessary to finance aircraft
acquisitions are expected to be obtained from internally generated
funds, irrevocable external financing arrangements or other external
sources.
In May 1995, United issued $246 million of pass through
certificates under an effective shelf registration statement UAL and
United have on file with the Securities and Exchange Commission. The
pass through certificates were issued to finance or refinance certain
aircraft under operating leases. At June 30, 1995, up to $789 million
of securities could be issued under the shelf registration statement,
including secured and unsecured debt, equipment trust and pass through
certificates, equity or a combination thereof. UAL's ability to issue
equity securities is limited by its certificate of incorporation, which
was restated in connection with the recapitalization.
In June 1995, the Indianapolis Airport Authority issued $221
million of special facility bonds, guaranteed by United, related to the
maintenance facilities being constructed at its Indianapolis Maintenance
Center. In connection with the construction of the Indianapolis
Maintenance Center, United agreed to reach an $800 million capital
spending target by the year 2001 and employ at least 7,500 individuals
by the year 2004. In the event that such targets are not reached,
United may be required to make certain additional payments under related
agreements.
RESULTS OF OPERATIONS
UAL's results of operations for interim periods are not
necessarily indicative of those for an entire year, as a result of
seasonal factors to which United is subject. First and fourth quarter
results are normally affected by reduced travel demand in the fall and
winter and United's operations, particularly at its Chicago and Denver
hubs, are adversely affected by winter weather on occasion.
The results of operations in the airline business historically
fluctuate significantly in response to general economic conditions.
This is because small fluctuations in yield (passenger revenue per
revenue passenger mile) and cost per available seat mile can have a
significant effect on operating results. UAL anticipates industrywide
fare levels, low-cost competition, general economic conditions, fuel
costs, international governmental policies and other factors will
continue to affect its operating results.
The July 1994 employee investment transaction and recapitalization
resulted in wage and benefit reductions and work-rule changes which were
designed to reduce cash operating expenses. These cash expense
reductions are offset by non-cash compensation charges for stock
periodically committed to be released to employees under the ESOPs and
additional interest expense on the debentures issued at the time of the
recapitalization.
As a result of the recapitalization, UAL's capital structure
became more highly leveraged. With the increase in debt and reduction
in equity resulting from the recapitalization, UAL's exposure to certain
industry risks could be greater than might have been the case prior to
the recapitalization. In addition, the transaction resulted in new
labor agreements for certain employee groups and a new corporate
governance structure, which was designed to achieve balance between the
various employee-owner groups and public stockholders. The new labor
agreements and governance structure could inhibit management's ability
to alter strategy in a volatile, competitive industry by restricting
certain operating and financing activities, including the sale of assets
and the issuance of equity securities and the ability to furlough
employees. UAL's ability to react to competition may be hampered
further by the fixed long-term nature of these various agreements. The
continued success of the recapitalization will be dependent upon a
number of factors, including the state of the competitive environment in
the airline industry, competitive responses to United's efforts,
United's ability to achieve enduring cost savings through productivity
improvements and the renegotiation of labor agreements at the end of the
investment period.
United generates revenues and incurs expenses in numerous foreign
currencies. These expenses include reservation and ticket office
services, customer service, aircraft maintenance, catering, commissions,
aircraft leases and personnel costs. Changes in foreign currency
exchange rates impact operating income through changes in foreign
currency-denominated operating revenues and expenses. Despite the
adverse (favorable) effects a strengthening (weakening) foreign currency
will have on U.S. originating traffic, a strengthening (weakening) of
foreign currencies tends to increase (decrease) reported revenue and
operating income because United's foreign currency-denominated operating
revenue generally exceeds its foreign currency-denominated operating
expense for each currency. United's biggest net exposures are for
Japanese yen and Australian dollars. During the first six months of
1995, yen-denominated operating revenue net of yen-denominated operating
expense was approximately 19.9 billion yen (approximately $215 million),
and Australian dollar-denominated operating revenue net of Australian
dollar-denominated operating expense was approximately 84 million
Australian dollars (approximately $62 million).
Other non-operating income (expense) is also affected as a result
of transaction gains and losses resulting from rate fluctuation. The
foreign exchange gains and losses recorded by United result from the
impact of exchange rate changes on foreign currency denominated assets
and liabilities, primarily yen-denominated balances. To the extent
yen-denominated liability balances are predictable, United attempts to
minimize transaction gains and losses by investing in yen-denominated
time deposits to offset the impact of rate changes. In addition, United
entered into a foreign currency swap contract in 1994 to reduce exposure
to currency fluctuations in connection with other long-term
yen-denominated obligations. Where no significant liability exists to
offset, United mitigates its exposure to foreign exchange rate
fluctuations by converting excess local currencies generated to U.S.
dollars. At June 30, 1995, yen-denominated assets were approximately
equal to yen-denominated liabilities.
United expects that it will continue to be affected by the above
mentioned factors, but cannot predict how foreign currency exchange
rates will move in the future.
The Omnibus Budget Reconciliation Act of 1993 signed into law on
August 10, 1993, imposes a 4.3 cent per gallon tax on commercial
aviation jet fuel purchased for use in domestic operations. This new
fuel tax is scheduled to become effective October 1, 1995, and continue
until October 1, 1998. Based on United's 1994 domestic fuel consumption
of 1.7 billion gallons, the new fuel tax, when effective, is expected to
increase United's operating expenses by approximately $75 million
annually. United, through the Air Transportation Association, is
actively lobbying for repeal of this tax.
In the first quarter of 1995, United implemented a new travel
agency commission payment plan that offers a maximum of $50 for
round-trip domestic tickets and a maximum of $25 for one-way domestic
tickets. The new commission plan resulted in a reduction of
approximately $30 million in United's commission expense for the first
six months of 1995; however, United estimates the reduction of
commission expense in the second half of 1995 will be between $50
million and $60 million. Litigation challenging this payment plan is
pending. A decision on the defendant airlines' motion for summary
judgment and the plaintiff travel agencies' motion for preliminary
injunction is expected during the third quarter of 1995. (See Part II,
Item 1. Legal Proceedings)
Summary of Results and Impact of Recapitalization
UAL's earnings from operations were $340 million in the first six
months of 1995, compared to operating earnings of $131 million in the
first six months of 1994. UAL's net earnings in the 1995 six-month
period were $154 million ($11.74 per share, primary; $11.03 per share,
fully diluted), compared to a net loss of $42 million in the same period
of 1994 ($2.48 per share). The 1994 loss includes a $26 million after
tax charge for the cumulative effect of adopting Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits," which UAL adopted effective January 1, 1994.
In the second quarter of 1995, UAL's earnings from operations were
$302 million, compared to $167 million in the second quarter of 1994.
UAL's net earnings in the second quarter of 1995 were $151 million
($12.00 per share, primary; $10.94 per share, fully diluted), compared
to net earnings of $55 million in the first quarter of 1994 ($1.89 per
share).
The 1995 per share amounts above include the effects on equity of
the exchange of convertible debentures for Series A convertible
preferred stock, which had the effect of increasing additional capital
invested by $45 million, and the repurchase of Series B preferred stock,
which decreased equity by $2 million. See "Per Share Amounts" in the
notes to consolidated financial statements. Excluding the preferred
stock transactions, UAL's earnings per share were $9.20, primary, and
$8.46, fully diluted, for the 1995 second quarter and $8.85, primary,
and $8.50, fully diluted, for the 1995 six-month period.
In connection with the July 1994 recapitalization, each share of
old common stock was converted to one half share of new common stock
(and cash in lieu of fractional shares) and $84.81 in cash. As a
result, the number of outstanding shares was reduced proportionately.
Accordingly, the weighted average shares in the earnings per share
calculations are based on the number of old common shares outstanding
prior to the recapitalization and the reduced number of new common
shares outstanding subsequent to the transaction. Thus, direct
comparisons between per share amounts for the 1995 and 1994 periods
presented are not meaningful.
Management believes that a more complete understanding of UAL's
results can be gained by viewing them on a pro forma, "fully
distributed" basis. This approach considers all ESOP shares which will
ultimately be distributed to employees throughout the ESOP (rather than
just the shares committed to be released) to be immediately outstanding
and thus fully distributed. Consistent with this method, the ESOP
compensation expense is excluded from fully distributed net earnings.
On a fully distributed basis, UAL's net earnings for the 1995 second
quarter would have been $215 million compared to $151 million as
reported under generally accepted accounting principles. On a fully
distributed basis, UAL's net earnings for the 1995 six-month period
would have been $274 million compared to $154 million as reported under
generally accepted accounting principles. Per share amounts would be as
follows:
Three Months Ended Six Months Ended
June 30, 1995 June 30, 1995
GAAP Fully GAAP Fully
(Primary) Distributed (Primary) Distributed
Earnings before
preferred stock
transactions $ 9.20 $ 6.51 $ 8.85 $ 8.13
Preferred stock
transactions 2.80 1.32 2.89 1.33
$ 12.00 $ 7.83 $ 11.74 $ 9.46
Specific factors affecting UAL's consolidated operations for the
second quarter and first six months of 1995 are described below.
Second Quarter 1995 Compared with Second Quarter 1994.
Operating revenues increased $313 million (9%). United's revenue
per available seat mile increased 5% to 9.68 cents. Passenger revenues
increased $290 million (9%) due to a 5% increase in yield to 11.97 cents
and a 4% increase in revenue passenger miles. Domestic revenue
passenger miles increased 5% and Pacific increased 6%. Atlantic revenue
passenger miles decreased 1% and Latin America was relatively unchanged.
Available seat miles increased 4% systemwide, as increases of 11% and
3% on Pacific and Domestic routes, respectively, were partially offset
by a 4% decrease in the Atlantic and a 1% decrease in Latin America.
United's system passenger load factor increased 0.3 points to 71.9%.
Cargo revenues increased $17 million (10%), as both freight and
mail revenues increased due to higher cargo volumes. Other operating
revenues increased $6 million (3%).
Operating expenses increased $178 million (5%); however, United's
cost per available seat mile increased only 2% from 8.77 cents to 8.91
cents, including ESOP compensation expense. Without the ESOP
compensation expense, United's 1995 second quarter cost per available
seat mile would have been 8.64 cents, a decrease of 1% from 1994. ESOP
compensation expense of $108 million in the 1995 second quarter
represents the estimated average fair value of ESOP stock committed to
be released to employees for the quarter, net of amounts used to satisfy
dividend requirements for previously allocated ESOP convertible
preferred shares. Landing fees and other rent increased $64 million
(44%) due to increased facilities rent, particularly due to new
facilities at Denver. Aircraft fuel expense increased $33 million (9%)
due to a 4% increase in consumption and a 4% increase in the average
price per gallon of fuel to 58.9 cents. Aircraft rent increased $31
million (13%) as a result of new aircraft acquired on operating leases.
Purchased services increased $30 million (13%) due principally to
volume-related increases in computer reservations fees and credit card
discounts. Food services increased $12 million (10%) due to the new
catering arrangements resulting from the 1994 sale of flight kitchens
and increased passenger volumes.
Salaries and related costs decreased $70 million (6%) primarily
due to savings resulting from wage and benefit concessions made by
employees participating in the ESOPs, partially offset by higher average
wage rates for other employee groups. Aircraft maintenance decreased
$23 million (19%) due principally to the removal of certain older
aircraft from United's operating fleet and the timing of maintenance
cycles.
Other expense amounted to $51 million in the second quarter of
1995 compared to $60 million in the second quarter of 1994. Interest
expense increased $18 million (22%) due primarily to interest on the
debentures issued in connection with the recapitalization. Included in
the second quarter of 1994 was a charge of $22 million for costs
incurred in connection with the employee investment transaction. In
addition, both the 1995 and 1994 periods included foreign exchange gains
of $10 million.
Six Months 1995 Compared with Six Months 1994.
Operating revenues increased $452 million (7%). United's revenue
per available seat mile increased 2% to 9.27 cents. Passenger revenues
increased $439 million (7%) due principally to a 6% increase in revenue
passenger miles and a 1% increase in yield to 11.77 cents. Domestic and
Pacific revenue passenger miles increased 7% and Latin America increased
1%. Atlantic revenue passenger miles decreased 3%. Available seat
miles increased 5% systemwide, as increases of 13% and 4% on Pacific and
Domestic routes, respectively, were partially offset by a 4% decrease in
the Atlantic. As a result, United's system passenger load factor
increased 0.9 points to 69.5%.
Cargo revenues increased $28 million (8%), as both freight and
mail revenues increased due to higher cargo volumes. Other operating
revenues decreased $15 million (3%) due primarily to a decrease in fuel
sales.
Operating expenses increased $243 million (4%); however, United's
cost per available seat mile decreased 1% from 8.90 cents to 8.82 cents,
including ESOP compensation expense. Without the ESOP compensation
expense, United's 1995 six month cost per available seat mile would have
been 8.57 cents, a decrease of 4% from 1994. ESOP compensation expense
of $197 million in the first six months of 1995 represents the estimated
average fair value of ESOP stock committed to be released to employees
for the period, net of amounts used to satisfy dividend requirements for
previously allocated ESOP convertible preferred shares. Landing fees
and other rent increased $81 million (27%) due to increased facilities
rent, primarily due to new facilities at Denver, and increased landing
fees as the number of departures increased 9%. Aircraft rent increased
$54 million (12%) as a result of new A320 and B777 aircraft on operating
leases. Purchased services increased $51 million (11%) due principally
to volume-related increases in computer reservations fees and credit
card discounts. Aircraft fuel expense increased $41 million (5%) as
fuel consumption increased 5% and the average price per gallon of fuel
remained relatively unchanged at 57.9 cents. Food services increased
$40 million (19%) due to the new catering arrangements resulting from
the 1994 sale of flight kitchens and increased passenger volumes.
Salaries and related costs decreased $159 million (7%) primarily
due to savings resulting from wage and benefit concessions made by
employees participating in the ESOPs, partially offset by higher average
wage rates for other employee groups. Aircraft maintenance decreased
$25 million (11%) due principally to the removal of certain older
aircraft from United's operating fleet and the timing of maintenance
cycles. Depreciation and amortization expense decreased $18 million
(5%), as certain assets, principally B727 aircraft, are now fully
depreciated. Other operating expenses decreased $40 million (7%) due
mainly to lower fuel sales.
Other expense amounted to $83 million in the first six months of
1995 compared to $132 million in the same period of 1994. Interest
expense increased $37 million (22%) due primarily to interest on the
debentures issued in connection with the recapitalization and the
convertible debentures issued in exchange for the Series A preferred
stock. Included in "Miscellaneous, net" in the 1995 six-month period
was a $41 million gain on the disposition of ten Dash 8 aircraft and
spare parts owned by Air Wisconsin, Inc. Included in the 1994 six-month
period was a charge of $41 million for costs incurred in connection with
the employee investment transaction. In addition, the 1995 and 1994
periods included foreign exchange gains of $2 million and $9 million,
respectively. Charges for minority interests in Apollo Travel Services
were $12 million in both the 1995 and 1994 six-month periods.
The income tax provision for the first six months of 1994 was
significantly impacted by the nondeductibility of certain
recapitalization costs.
Part II
Other Information
Item 1. Legal Proceedings.
In Re Airline Travel Agency Commission Litigation. On
February 13, l995 and dates thereafter United Air Lines, Inc.
("United"), a wholly owned subsidiary of UAL Corporation ("UAL"),
and six other airlines were sued in various courts around the
nation by travel agents and the American Society of Travel Agents
claiming as a class action that the carriers acted collusively in
violation of federal antitrust laws when they imposed a cap on
ticket sales commissions payable to travel agencies by the
carriers. As a result of an order by the multi-district panel,
the suits are now consolidated before the federal court in
Minneapolis. A discovery and motion filing schedule has been
established by this court, under which a hearing was held on July
7, 1995 on plaintiffs' motion for a preliminary injunction and the
carriers' motion for summary judgment. As relief, the plaintiffs
seek an order declaring the carriers' commission cap action to be
illegal and the recovery of damages (trebled) to the agencies
resulting from that action.
Summers et al. v. State Street Bank and Trust Company et al.
On April 14, 1995, plaintiffs filed a class action complaint
against State Street Bank and Trust Company ("State Street"), the
UAL Corporation Employee Stock Ownership Plan and the UAL
Corporation Supplemental Employee Stock Ownership Plan (together,
the "Plans") in the United States District Court for the Northern
District of Illinois. The complaint is brought on behalf of a
putative class of all persons who are, or were as of July 12,
1994, participants or beneficiaries of the Plans. Plaintiffs
allege that State Street breached various fiduciary duties under
the Employee Retirement Income Security Act of 1974 ("ERISA") in
connection with the 1994 purchase of UAL preferred stock by the
Plans. The Plans are nominal defendants; no relief is sought from
them. The complaint seeks a declaration that State Street
violated ERISA, restoration to the Plans by State Street of the
amount of an alleged "overpayment" for the stock, and other
relief. United is obligated, subject to certain exceptions, to
indemnify State Street for part or all of an adverse judgment and
State Street's defense costs. On July 12, 1995, the defendants
filed a motion to dismiss the complaint in its entirety. A ruling
is expected on that motion on or before the September 20, 1995
hearing set by the presiding judge.
Item 4. Submission of Matters to a Vote of Security Holders.
At the annual meeting of the stockholders of UAL Corporation
on May 18, 1995, the following matters were voted upon:
Description Votes
1. Election of Board of Directors
Public Directors:
John A. Edwardson 10,963,337 For
61,973 Withheld
Description Votes
Gerald Greenwald 10,963,063 For
62,247 Withheld
John F. McGillicuddy 10,958,961 For
66,349 Withheld
James J. O'Connor 10,954,344 For
70,966 Withheld
Paul E. Tierney, Jr. 10,929,222 For
96,088 Withheld
Independent Directors:
Duane D. Fitzgerald 4 For
0 Withheld
Richard D. McCormick 4 For
0 Withheld
John K. Van de Kamp 4 For
0 Withheld
Paul A. Volcker 4 For
0 Withheld
ALPA Director:
Harlow B. Osteboe 1 For
0 Withheld
IAM Director:
John R. Peterpaul 1 For
0 Withheld
Salaried/Management Employee Director:
Joseph V. Vittoria 3 For
0 Withheld
2. Approval of UAL Corporation 23,884,487 For
1995 Directors Plan 1,628,103 Against
646,716 Abstain
0 Broker Non-Votes
Description Votes
3. Approval of Charter 24,309,051 For
Amendments - Certain 1,082,107 Against
Definitions 768,148 Abstain
0 Broker Non-Votes
4. Approval of Charter 23,952,838 For
Amendments - Board 1,447,138 Against
Committee Matters 759,330 Abstain
0 Broker Non-Votes
5. Appointment of Independent 24,221,239 For
Public Accountants 1,316,834 Against
621,233 Abstain
0 Broker Non-Votes
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 3.1 - Certificate of Amendment of the Restated
Certificate of Incorporation of UAL Corporation (the
"Company") as filed in Delaware on May 25, 1995 (filed as
Exhibit 3.1 to the Company's Form 8-K dated June 27, 1995
and incorporated herein by reference).
Exhibit 10.1 - UAL Corporation 1995 Directors Plan (filed
as Exhibit 10.19 to the Company's Form 10-K/A (Amendment
No. 1) for the year ended December 31, 1994 and
incorporated herein by reference).
Exhibit 10.2 - Letter Agreement dated April 28, 1995
between UAL Corporation and United Air Lines, Inc. and
Joseph R. O'Gorman.
Exhibit 10.3 - UAL Corporation Retirement Plan for
Outside Directors, as supplemented March 30, 1995.
Exhibit 10.4 - Side Letter Agreement dated June 8, 1995
to Letter Agreement No. 6-1162-DLJ-1123 to the Agreement
dated December 18, 1990 between Boeing and United (and
United Worldwide Corporation) for acquisition of 777-200
aircraft (as previously amended and supplemented, the
"777-200 Purchase Agreement" (filed as Exhibit 10.7 to
the Company's Form 10-K for the year ended December 31,
1990, and incorporated herein by reference; supplements
thereto filed as (i) Exhibits 10.1, 10.2 and 10.22 to the
Company's Form 10-Q for the quarter ended June 30, 1993,
(ii) Exhibit 10.2 to the Company's Form 10-K for the year
ended December 31, 1993, (iii) Exhibit 10.14 to the
Company's Form 10-Q for the quarter ended June 30, 1994,
(iv) Exhibits 10.27 and 10.28 to the Company's Form 10-K
for the year ended December 31, 1994, and (v) Exhibits
10.2 and 10.3 to the Company's Form 10-Q for the quarter
ended March 31, 1995, and incorporated herein by
reference)). (Exhibit 10.4 hereto is filed with a
request for confidential treatment of certain portions
thereof.)
Exhibit 10.5 - Change Order No. 6 dated February 21, 1995
to the 777-200 Purchase Agreement. (Exhibit 10.5 hereto
is filed with a request for confidential treatment of
certain portions thereof.)
Exhibit 10.6 - Letter Agreement No. 6-1162-RCN-916 dated
May 23, 1995 to the 777-200 Purchase Agreement. (Exhibit
10.6 hereto is filed with a request for confidential
treatment of certain portions thereof.)
Exhibit 10.7 - Side Letter Agreement dated June 8, 1995
to Letter Agreement No. 6-1162-DLJ-1124 to the Agreement
dated December 18, 1990 between Boeing and United (and
United Worldwide Corporation) for acquisition of 747-400
aircraft (as previously amended and supplemented, the
"747-400 Purchase Agreement" (filed as Exhibit 10.8 to
the Company's Form 10-K for the year ended December 31,
1990, and incorporated herein by reference; supplements
thereto filed as (i) Exhibits 10.4 and 10.5 to the
Company's Form 10-K for the year ended December 31, 1991,
(ii) Exhibits 10.3, 10.4, 10.5, 10.6 and 10.22 to the
Company's Form 10-Q for the quarter ended June 30, 1993,
(iii) Exhibit 10.3 to the Company's Form 10-K for the
year ended December 31, 1993, (iv) Exhibit 10.14 to the
Company's Form 10-Q for the quarter ended June 30, 1994,
(v) Exhibits 10.29 and 10.30 to the Company's Form 10-K
for the year ended December 31, 1994, and (vi) Exhibits
10.4 through 10.8 to the Company's Form 10-Q for the
quarter ended March 31, 1995, and incorporated herein by
reference)). (Exhibit 10.7 hereto is filed with a
request for confidential treatment of certain portions
thereof.)
Exhibit 10.8 - Change Order No. 1 to the 747-400 Purchase
Agreement. (Exhibit 10.8 hereto is filed with a request
for confidential treatment of certain portions thereof.)
Exhibit 10.9 - Amendment No. 3 dated as of March __, 1995
to the Agreement dated August 10, 1992 between AVSA,
S.A.R.L., as seller, and United Air Lines, Inc., as
buyer, for the acquisition of Airbus Industrie A320-200
model aircraft (as previously amended and supplemented,
"A320-200 Purchase Agreement" (filed as Exhibit 10.14 to
the Company's Form 10-K for the year ended December 31,
1992, and incorporated herein by reference; supplements
thereto filed as (i) Exhibits 10.4 and 10.5 to the
Company's Form 10-K for the year ended December 31, 1993,
(ii) Exhibits 10.15 and 10.16 to the Company's Form 10-Q
for the quarter ended June 30, 1994, and (iii) Exhibit
10.31 to the Company's Form 10-K for the year ended
December 31, 1994, and incorporated herein by
reference)). (Exhibit 10.9 hereto is filed with a
request for confidential treatment of certain portions
thereof.)
Exhibit 11 - Calculation of fully diluted net
earnings per share.
Exhibit 12.1 - Computation of Ratio of
Earnings to Fixed Charges.
Exhibit 12.2 - Computation of Ratio of
Earnings to Fixed Charges and Preferred Stock
Dividend Requirements.
Exhibit 27 - Financial Data Schedule.
(b) Form 8-K dated June 27, 1995 to report UAL Corporation's
Certificate of Amendment of the Restated Certificate of
Incorporation as filed with the Secretary of State of
Delaware on May 25, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
UAL CORPORATION
By: /s/ Gerald Greenwald
Gerald Greenwald
Chairman and Chief
Executive Officer
By: /s/ Douglas A. Hacker
Douglas A. Hacker
Senior Vice President-Finance
(Principal Financial and
Accounting Officer)
Dated: August 9, 1995
Exhibit Index
Exhibit No. Description
3.1 Certificate of Amendment of the Restated Certificate of
Incorporation of UAL Corporation (the "Company") as
filed in Delaware on May 25, 1995 (filed as Exhibit 3.1
to the Company's Form 8-K dated June 27, 1995 and
incorporated herein by reference).
10.1 UAL Corporation 1995 Directors Plan (filed as Exhibit
10.19 to the Company's Form 10-K/A (Amendment No. 1) for
the year ended December 31, 1994 and incorporated herein
by reference).
10.2 Letter Agreement dated April 28, 1995 between UAL
Corporation, United Air Lines, Inc. and Joseph R.
O'Gorman.
10.3 UAL Corporation Retirement Plan for Outside Directors,
as supplemented March 30, 1995.
10.4 Side Letter Agreement dated June 8, 1995 to Letter
Agreement No. 6-1162-DLJ-1123 to the Agreement dated
December 18, 1990 between Boeing and United (and United
Worldwide Corporation) for acquisition of 777-200
aircraft (as previously amended and supplemented, the
"777-200 Purchase Agreement" (filed as Exhibit 10.7 to
the Company's Form 10-K for the year ended December 31,
1990, and incorporated herein by reference; supplements
thereto filed as (i) Exhibits 10.1, 10.2 and 10.22 to
the Company's Form 10-Q for the quarter ended June 30,
1993, (ii) Exhibit 10.2 to the Company's Form 10-K for
the year ended December 31, 1993, (iii) Exhibit 10.14 to
the Company's Form 10-Q for the quarter ended June 30,
1994, (iv) Exhibits 10.27 and 10.28 to the Company's
Form 10-K for the year ended December 31, 1994, and (v)
Exhibits 10.2 and 10.3 to the Company's Form 10-Q for
the quarter ended March 31, 1995, and incorporated
herein by reference)). (Exhibit 10.4 hereto is filed
with a request for confidential treatment of certain
portions thereof.)
10.5 Change Order No. 6 dated February 21, 1995 to the 777-
200 Purchase Agreement. (Exhibit 10.5 hereto is filed
with a request for confidential treatment of certain
portions thereof.)
10.6 Letter Agreement No. 6-1162-RCN-916 dated May 23, 1995
to the 777-200 Purchase Agreement. (Exhibit 10.6 hereto
is filed with a request for confidential treatment of
certain portions thereof.)
10.7 Side Letter Agreement dated June 8, 1995 to Letter
Agreement No. 6-1162-DLJ-1124 to the Agreement dated
December 18, 1990 between Boeing and United (and United
Worldwide Corporation) for acquisition of 747-400
aircraft (as previously amended and supplemented, the
"747-400 Purchase Agreement" (filed as Exhibit 10.8 to
the Company's Form 10-K for the year ended December 31,
1990, and incorporated herein by reference; supplements
thereto filed as (i) Exhibits 10.4 and 10.5 to the
Company's Form 10-K for the year ended December 31,
1991, (ii) Exhibits 10.3, 10.4, 10.5, 10.6 and 10.22 to
the Company's Form 10-Q for the quarter ended June 30,
1993, (iii) Exhibit 10.3 to the Company's Form 10-K for
the year ended December 31, 1993, (iv) Exhibit 10.14 to
the Company's Form 10-Q for the quarter ended June 30,
1994, (v) Exhibits 10.29 and 10.30 to the Company's Form
10-K for the year ended December 31, 1994, and (vi)
Exhibits 10.4 through 10.8 to the Company's Form 10-Q
for the quarter ended March 31, 1995, and incorporated
herein by reference)). (Exhibit 10.7 hereto is filed
with a request for confidential treatment of certain
portions thereof.)
10.8 Change Order No. 1 to the 747-400 Purchase Agreement.
(Exhibit 10.8 hereto is filed with a request for
confidential treatment of certain portions thereof.)
10.9 Amendment No. 3 dated as of March __, 1995 to the
Agreement dated August 10, 1992 between AVSA, S.A.R.L.,
as seller, and United Air Lines, Inc., as buyer, for the
acquisition of Airbus Industrie A320-200 model aircraft
(as previously amended and supplemented, "A320-200
Purchase Agreement" (filed as Exhibit 10.14 to the
Company's Form 10-K for the year ended December 31,
1992, and incorporated herein by reference; supplements
thereto filed as (i) Exhibits 10.4 and 10.5 to the
Company's Form 10-K for the year ended December 31,
1993, (ii) Exhibits 10.15 and 10.16 to the Company's
Form 10-Q for the quarter ended June 30, 1994, and (iii)
Exhibit 10.31 to the Company's Form 10-K for the year
ended December 31, 1994, and incorporated herein by
reference)). (Exhibit 10.9 hereto is filed with a
request for confidential treatment of certain portions
thereof.)
11 Calculation of fully diluted net earnings per
share.
12.1 Computation of Ratio of Earnings to Fixed
Charges.
12.2 Computation of Ratio of Earnings to Fixed
Charges and Preferred Stock Dividend Requirements.
27 Financial Data Schedule.