United Airlines Holdings (UAL) 10-K risk factor changes: FY2018 vs FY2017

[removed: _The] [added: The] following risk factors should be read carefully when evaluating the [removed: Company’s] [added: Company's] business and the forward-looking statements contained in this report and other statements the Company or its representatives make from time to time.

Any of the following risks could materially and adversely affect the [removed: Company’s] [added: Company's] business, operating results, financial condition and the actual outcome of matters as to which forward-looking statements are made in this [removed: report._][added: report.]

[removed: _Global economic, political] [added: Unfavorable economic] and [removed: industry conditions constantly change] [added: political conditions, in the United States] and [removed: unfavorable conditions] [added: globally,] may have a material adverse effect on [removed: the Company’s business and] [added: our business, operating] results [removed: of operations._][added: and financial condition.]

The [removed: Company’s] [added: Company's] business and [added: operating] results [removed: of operations] are significantly impacted by [added: U.S. and] global economic and [removed: industry] [added: political] conditions.

[removed: The Company is] [added: As] a global business with operations outside of the United States from which it derives significant operating [removed: revenues.][added: revenues, volatile conditions in certain international regions may have a negative impact on the Company's operating results and its ability to achieve its business objectives.]

In addition, during periods of unfavorable economic conditions, business travelers [removed: usually reduce] [added: historically have reduced] the volume of their travel, either due to cost-saving [removed: initiatives] [added: initiatives, the replacement of travel with alternatives such as videoconferencing,] or as a result of decreased business activity requiring travel.

During such periods, the [removed: Company’s] [added: Company's] business and [added: operating] results [removed: of operations] may be adversely affected due to significant declines in industry passenger demand, particularly with respect to the [removed: Company’s] [added: Company's] business and premium cabin travelers, and a reduction in fare levels.

Stagnant or weakening global economic conditions either in the United States or in other geographic [removed: regions, and any future volatility in U.S. and global financial and credit markets] [added: regions] may have a material adverse effect on the [removed: Company’s] [added: Company's] revenues, [added: operating] results [removed: of operations] and liquidity.

In June 2016, United Kingdom [removed: (“UK”)] [added: ("UK")] voters [removed: voted] [added: approved an advisory referendum] for the UK to exit the EU.

[removed: Depending on the outcome of these negotiations, we could face new challenges in our operations, such as] [added: This] instability [removed: in global financial and foreign exchange markets, including] [added: could include] volatility in the value of the British pound and European euro, additional travel restrictions on passengers traveling between the UK and other EU [removed: countries and] [added: countries, changes to the] legal [added: status of EU-resident employees, legal] uncertainty and potentially divergent national laws and regulations.

[removed: _The] [added: The global] airline industry is highly competitive and susceptible to price discounting and changes in capacity, which could have a material adverse effect on [removed: the Company._][added: our business, operating results and financial condition.]

The significant [removed: market] presence of low-cost carriers, which engage in substantial price discounting, may diminish our ability to achieve sustained profitability on domestic and international routes.

Airlines also compete [removed: for market share] by increasing or decreasing their capacity, including route systems and the number of [removed: markets] [added: destinations] served.

This increased competition in both domestic and international markets may have a material adverse effect on the [removed: Company’s] [added: Company's business, operating] results [removed: of operations,] [added: and] financial [removed: condition or liquidity.][added: condition.]

[removed: _Terrorist attacks or] [added: Terrorist attacks,] international [removed: hostilities,] [added: hostilities] or [added: other security events, or] the fear of terrorist attacks or hostilities, even if not made directly on the airline industry, could negatively affect the Company and the airline [removed: industry._][added: industry.]

[removed: Additional terrorist attacks,] [added: Terrorist attacks or international hostilities,] even if not made [removed: directly] on [added: or targeted directly at] the airline industry, or the fear of or the precautions taken in anticipation of such attacks (including elevated national threat warnings, travel [removed: restrictions or] [added: restrictions,] selective cancellation or redirection of [removed: flights)] [added: flights and new security regulations)] could materially and adversely affect the Company and the airline industry.

[removed: Wars and other international hostilities] [added: Any such events] could [removed: also] have a material adverse impact on the [removed: Company’s] [added: Company's] financial condition, liquidity and [removed: results of operations.][added: operating results.]

The [removed: Company’s] [added: Company's] financial resources may not be sufficient to absorb the [removed: adverse effects of any future terrorist attacks or other international hostilities.]

[removed: _Increasing] [added: Increasing] privacy and data security obligations or a significant data breach may adversely affect the [removed: Company’s business._][added: Company's business.]

Also, a number of the [removed: Company’s] [added: Company's] commercial partners, including credit card companies, have imposed data security standards that the Company must [removed: meet and these standards continue to evolve.][added: meet.]

The loss, disclosure, misappropriation of or access to [removed: customers’, employees’] [added: customers', employees'] or business [removed: partners’] [added: partners'] information or the [removed: Company’s] [added: Company's] failure to meet its obligations could result in legal claims or proceedings, [removed: liability or regulatory penalties.][added: penalties and remediation costs.]

A significant data breach or the [removed: Company’s] [added: Company's] failure to meet its obligations may adversely affect the [removed: Company’s] [added: Company's] reputation, business, [added: operating] results [removed: of operations] and financial condition.

[removed: _The] [added: The] Company relies heavily on technology and automated systems to operate its business and any significant failure or disruption of the technology or these systems could materially harm its [removed: business._][added: business.]

The Company depends on automated systems and technology to operate its business, [removed: including] [added: including, but not limited to,] computerized airline reservation systems, [added: demand prediction software,] flight operations systems, revenue management systems, accounting systems, [added: technical and business operations systems,] telecommunication systems and commercial [removed: websites,] [added: websites and applications,] including [removed: www.united.com.][added: www.united.com and the United Airlines app.]

Substantial or repeated systems failures or disruptions, including failures or disruptions related to the [removed: Company’s] [added: Company's] complex integration of systems, could reduce the attractiveness of the [removed: Company’s] [added: Company's] services versus those of its competitors, materially impair its ability to market its services and operate its flights, result in the unauthorized release of confidential or otherwise protected information, result in increased costs, lost revenue and the loss or compromise of important data, and may adversely affect the [removed: Company’s] [added: Company's] business, [added: operating] results [removed: of operations] and financial condition.

[removed: _Current] [added: Current] or future litigation and regulatory actions, or failure to comply with the terms of any settlement, order or arrangement relating to these actions, could have a material adverse impact on the [removed: Company._][added: Company.]

An adverse resolution of lawsuits, arbitrations, investigations or other proceedings or actions could have a material adverse effect on our financial condition and [removed: results of operations,] [added: operating results,] including as a result of non-monetary remedies, and could also result in adverse publicity.

Under our charter and certain indemnification agreements that we have entered into (and may in the future enter into) with our officers, directors and certain third parties, we [removed: could be required to indemnify and advance expenses to them in connection with their involvement in certain actions, suits, investigations and other proceedings.]

[removed: _Disruptions] [added: Disruptions] to [removed: the Company’s] [added: our] regional network and United Express flights provided by third-party regional carriers could adversely affect [removed: the Company’s operations] [added: our business, operating results] and financial [removed: condition._][added: condition.]

The [removed: Company’s] [added: Company's] business and operations are dependent on its regional flight network, with regional capacity accounting for approximately 11% of the [removed: Company’s] [added: Company's] total capacity for the year ended December 31, [removed: 2017.][added: 2018.]

Although the Company has agreements with its regional carriers that include contractually agreed performance metrics, [added: each regional carrier is a separately certificated commercial air carrier and] the Company does not control the operations of these carriers.

In addition, the decrease in qualified pilots driven by [added: changes to] federal regulations has adversely impacted and could continue to affect the [removed: Company’s] [added: Company's] regional flying.

For example, the [removed: FAA’s] [added: FAA's] expansion of minimum pilot qualification standards, including a requirement that a pilot have at least 1,500 total flight hours, as well as the [removed: FAA’s] [added: FAA's] revised pilot flight and duty time [removed: rules, effective January 2014,] [added: requirements under Part 117 of the Federal Aviation Regulations,] have contributed to a smaller supply of pilots available to regional carriers.

The decrease in qualified pilots resulting from the regulations as well as factors including a decreased student pilot population and a shrinking U.S. military from which to hire qualified pilots, could adversely impact the [removed: Company’s] [added: Company's] operations and financial condition, and [added: could] also require the Company to reduce regional carrier flying.

If a significant disruption occurs to the [removed: Company’s] [added: Company's] regional network or flights or if one or more of the regional carriers with which the Company has relationships is unable to perform their obligations over an extended period of time, there could be a material adverse effect on the [removed: Company’s] [added: Company's] business, financial condition and [removed: operations.][added: operating results.]

[removed: _The Company’s] [added: The Company's] business relies extensively on third-party service [added: providers, including certain technology] providers.

Failure of these parties to perform as expected, or interruptions in the [removed: Company’s] [added: Company's] relationships with these providers or their provision of services to the Company, could have an adverse effect on the [removed: Company’s financial position and] [added: Company's business, operating] results [removed: of operations._][added: and financial condition.]

The Company has engaged third-party service providers to perform a large number of functions that are integral to its business, including regional operations, operation of customer service call centers, distribution and sale of airline seat inventory, provision of information technology infrastructure and services, transmitting or uploading of data, provision of aircraft maintenance and repairs, provision of various [removed: utilities and] [added: utilities,] performance of aircraft [added: fueling operations and catering services, among other vital functions and services.]

The Company does not directly control these third-party service providers, although it does enter into agreements [removed: with most of them] that define expected service performance.

Any of these third-party service providers, however, may materially fail to meet [removed: their] [added: its] service performance commitments to the [removed: Company,] [added: Company or] may suffer disruptions to [removed: their] [added: its] systems that could impact [removed: their services, or the agreements with such providers may be terminated.][added: its services.]

If we do not successfully execute our strategic operating plan, or if our strategic operating plan is unsuccessful, our business, operating results and financial condition could be materially and adversely affected.

We have announced several strategic plans in recent years, including several revenue-generating initiatives and plans to optimize our revenue, such as our plans to add capacity, including international expansion and new or increased service to mid-size airports, and initiatives and plans to optimize and control our costs.

We also continue to explore opportunities to enhance our segmentation, including the introduction of Polaris, Basic Economy and United Premium Plus, and are implementing many programs and policies to improve the customer experience at all points in air travel.

In developing our strategic operating plan, we make certain assumptions including, but not limited to, those related to customer demand, competition, market consolidation and the global economy.

Actual economic, market and other conditions may be different from our assumptions and we may not be able to successfully execute our strategic operating plan.

If we do not successfully execute our strategic operating plan, or if actual results vary significantly from our assumptions, our business, operating results and financial condition could be materially and adversely impacted.

Short-haul travelers, in particular, have the option to replace air travel with surface travel.

Political disruptions and instability in certain regions can negatively impact the demand and network availability for air travel.

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.

Consolidation in the airline industry, the rise of well-funded government sponsored international carriers, changes in international alliances and the creation of immunized JBAs have altered and are expected to continue to alter the competitive landscape in the industry, resulting in the formation of airlines and alliances with increased financial resources, more extensive global networks and services and competitive cost structures.

The Company's U.S. operations are subject to competition from traditional network carriers, national point-to-point carriers, and discount carriers, including low-cost carriers and ultra-low-cost carriers.

Such carriers may have lower costs and provide service at lower fares to destinations also served by the Company.

Our ability to compete in the domestic market effectively depends, in part, on our ability to maintain a competitive cost structure.

If we cannot maintain our costs at a competitive level, then our business, financial condition and operating results could be materially and adversely affected.

Our international operations are subject to competition from both foreign and domestic carriers.

Competition is significant from government subsidized competitors from certain Middle East countries.

These carriers have large numbers of international widebody aircraft on order and are increasing service to the U.S. from their hubs in the Middle East.

The government support provided to these carriers has allowed them to grow quickly, reinvest in their product, invest in other airlines and expand their global presence.

Through alliance and other marketing and codesharing agreements with foreign carriers, U.S. carriers have increased their ability to sell international transportation, such as services to and beyond traditional European and Asian gateway cities.

Similarly, foreign carriers have obtained increased access to interior U.S. passenger traffic beyond traditional U.S. gateway cities through these relationships.

In addition, several JBAs among U.S. and foreign carriers have received grants of antitrust immunity allowing the participating carriers to coordinate schedules, pricing, sales and inventory.

If we are not able to continue participating in these types of alliance and other marketing and codesharing agreements in the future, our business, financial condition and operating results could be materially and adversely affected.

During the year ended December 31, 2018, the Company's fuel expense was $9.3 billion.

Consequently, the Company can neither predict nor guarantee the continued timely availability of aircraft fuel throughout the Company's system.

The Company does not currently hedge its future fuel requirements.

For example, failures in certain third-party technology or communications systems may cause flight delays or cancellations.

The Company may also have disagreements with such providers or such contracts may be terminated or may not be extended or renewed.

Any such disruptions or contract terminations may adversely impact our operations and financial results.

If we are not able to negotiate or renew agreements with third-party service providers, or if we renew existing agreements on less favorable terms, our operations and financial results may be adversely affected.

Security events pose a significant risk to our passenger and cargo operations.

These events could include acts of violence in public areas that we cannot control.

adverse effects of any future terrorist attacks, international hostilities or other security events.

These standards continue to evolve.

Our network systems and storage applications, and those systems and storage and other business applications maintained by our third-party providers, may be subject to attempts to gain unauthorized access, breach, malfeasance or other system disruptions.

In some cases, it is difficult to anticipate or to detect immediately such incidents and the damage caused thereby.

While we continually work to safeguard our internal network systems and validate the security of our third-party providers, including through information security policies and employee awareness and training, there is no assurance that such actions will be sufficient to prevent cyber-attacks or security breaches.

could be required to indemnify and advance expenses to them in connection with their involvement in certain actions, suits, investigations and other proceedings.

For example, in November 2018, United entered into a revenue-sharing joint business agreement with Avianca, Copa and several of their respective affiliates, subject to regulatory approval.

Concurrently with this transaction, United advanced a loan of $456 million to affiliates of Synergy Aerospace Corporation ("Synergy"), the majority shareholder of Avianca Holdings S.A. ("AVH"), the parent company of Avianca, and entered into certain other related agreements, including a put arrangement with Avianca's significant minority shareholder, Kingsland Holdings Limited ("Kingsland").

The loan is secured by a pledge of Synergy's equity and Synergy's shares of AVH stock, and the loan and other agreements contain several provisions whereby the Company may acquire AVH stock.

Volatile economic, political and market conditions in these international regions may have a negative impact on the Company’s operating results and its ability to achieve its business objectives.

If such economic conditions were to disrupt capital markets in the future, the Company may be unable to obtain financing on acceptable terms (or at all) to refinance certain maturing debt and to satisfy future capital commitments.

A process of negotiation is now taking place to determine the future terms of the UK’s relationship with the EU.

These adverse effects in European market conditions could negatively impact the Company’s business, results of operations and financial condition.

In addition, significant or volatile changes in exchange rates between the U.S. dollar and other currencies may have a material adverse impact upon the Company’s liquidity, revenues, costs and operating results.

The U.S. airline industry is characterized by substantial price competition including from low-cost carriers.

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The terrorist attacks on September 11, 2001 involving commercial aircraft severely and adversely impacted the Company’s financial condition and results of operations, as well as the prospects for the airline industry.

Among the effects experienced from the September 11, 2001 terrorist attacks were substantial flight disruption costs caused by the FAA-imposed temporary grounding of the U.S. airline industry’s fleet, significantly increased security costs and associated passenger inconvenience, increased insurance costs, substantially higher ticket refunds and significantly decreased traffic and passenger revenue.

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fueling operations, and catering services, among other vital functions and services.

However, the Company expects that any such change that it makes would be in the long-term best economic interest of the Company.

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another carrier to indemnify it, the Company could incur substantial losses from an accident, catastrophe or incident which may result in a material adverse effect on the Company’s results of operations or financial position.

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_Extensive government regulation could increase the Company’s operating costs and restrict its ability to conduct its business._

Additionally, minimum qualifications took effect for air carrier first officers.

As with previous reauthorization legislation, the U.S. Congress may consider a range of policy changes that could impact the Company’s operations and costs.

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Future environmental regulatory developments, such as climate change regulations in the United States and abroad could adversely affect operations and increase operating costs in the airline industry.

In addition, there is the potential for additional regulatory actions in regard to the emission of GHGs by the aviation industry.

_Extensive government regulation on international routes could restrict the Company’s ability to conduct its business and have a material adverse effect on the Company’s financial position and results of operations._

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material adverse impact on the Company’s financial position and results of operations and could result in the impairment of material amounts of related tangible and intangible assets.

There is ongoing speculation that further airline and airline alliance consolidations or reorganizations could occur in the future, especially if new “Open Skies” agreements between Brazil and the United States are fully implemented.

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If the Company does not timely pay its leases and debts or comply with such covenants, a variety of adverse consequences could result.

These potential adverse consequences include an increase of required reserves under credit card processing agreements, withholding of credit card sale proceeds by its credit card service providers, loss of undrawn lines of credit, the occurrence of one or more events of default under the relevant agreements, the acceleration of the maturity of debt and/or the exercise of other remedies by its creditors and equipment lessors that could result in a material adverse effect on the Company’s financial position and results of operations.

The Company cannot provide assurance that it would have sufficient liquidity to repay or refinance such debt if it were accelerated.

Furthermore, insufficient liquidity may limit the Company’s ability to withstand competitive pressures and downturns in the travel business and the economy in general.

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_The Company’s ability to use its net operating loss carryforwards to offset future taxable income for U.S. federal income tax purposes may be significantly limited due to various circumstances, including certain possible future transactions involving the sale or issuance of UAL common stock, or if taxable income does not reach sufficient levels._

As of December 31, 2017, UAL reported consolidated federal net operating loss (“NOL”) carryforwards of approximately $2.4 billion.

The Company’s ability to use its NOL carryforwards may be limited if it experiences an “ownership change” as defined in Section 382 (“Section 382”) of the Internal Revenue Code of 1986, as amended (the “Code”).

An ownership change generally occurs if certain stockholders increase their aggregate percentage ownership of a corporation’s stock by more than 50 percentage points over their lowest percentage ownership at any time during the testing period, which is generally the three-year period preceding any potential ownership change.

There is no assurance that the Company will not experience a future ownership change under Section 382 that may significantly limit or possibly eliminate its ability to use its NOL carryforwards.

Potential future transactions involving the sale or issuance of UAL common stock, including the exercise of conversion options under the terms of any convertible debt that UAL may issue in the future, the repurchase of such debt with UAL common stock, any issuance of UAL common stock for cash, and the acquisition or disposition of such stock by a stockholder owning 5% or more of UAL common stock, or a combination of such transactions, may increase the possibility that the Company will experience a future ownership change under Section 382.

Under Section 382, a future ownership change would subject the Company to additional annual limitations that apply to the amount of pre-ownership change NOLs that may be used to offset post-ownership change taxable income.

This limitation is generally determined by multiplying the value of a corporation’s stock immediately before the ownership change by the applicable long-term tax-exempt rate.

[removed: Overview][added: Overview]

[removed: 2017] [added: 2018] Financial [removed: Highlights][added: Highlights]

| [removed: |] • | [removed: | 2017] [added: 2018] net income was $2.1 billion, or [removed: $7.02] [added: $7.70] diluted earnings per [removed: share.] [added: share, as compared to $2.1 billion, or $7.06 diluted earnings per share, in 2017.] |

[removed: | | • | | United’s consolidated] PRASM decreased 0.4% in 2017 [added: as] compared to 2016. [removed: |]

| [removed: |] • | [removed: |] Aircraft fuel cost [added: for 2018] increased [removed: 18.9% year-over-year due] [added: 34.6% over 2017] mainly [added: due] to higher fuel prices. |

| [removed: |] • | [removed: |] In [removed: 2017,] [added: 2018,] UAL repurchased approximately [removed: 28] [added: 17.5] million shares of [removed: UAL] [added: its] common stock for [removed: $1.8 billion, completing the $2.0 billion share repurchase program authorized by UAL’s Board of Directors in July 2016. In December 2017, UAL’s Board of Directors authorized a new $3.0 billion share repurchase program to acquire UAL’s common stock.] [added: $1.2 billion.] As of December 31, [removed: 2017,] [added: 2018,] the Company had approximately [removed: $3.0] [added: $1.8] billion remaining to purchase shares under its share repurchase program. |

| [removed: |] • | [removed: |] UAL ended [removed: the year] [added: 2018] with [removed: $5.8] [added: $6.0] billion in unrestricted liquidity, which consisted of unrestricted cash, cash equivalents, short-term investments and available capacity under the revolving credit [removed: facility.] [added: facility of its Amended and Restated Credit and Guaranty Agreement (as amended, the "Credit Agreement").] |

[removed: 2017] [added: 2018] Operational [removed: Highlights][added: Highlights]

| [removed: |] • | [removed: | Consolidated] RPMs for [removed: 2017] [added: 2018] increased [removed: 2.8%] [added: 6.4%] as compared to [removed: 2016,] [added: 2017,] and [removed: consolidated] ASMs increased [removed: 3.5%] [added: 4.9%] from the prior year, resulting in a [removed: consolidated] load factor of [removed: 82.4%] [added: 83.6%] in [removed: 2017] [added: 2018] versus [removed: 82.9%] [added: 82.4%] in [removed: 2016.] [added: 2017.] |

| [removed: |] • | [removed: |] For [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] the Company recorded [removed: a DOT] [added: U.S. Department of Transportation] on-time arrival [removed: rate] [added: rates] of [removed: 81.9%] [added: 79.8%] and [removed: 81.3%,] [added: 81.9%,] respectively, and [removed: a system] [added: mainline] completion [removed: factor] [added: factors] of [removed: 99.0% for each year.] [added: 99.2% and 99.0%, respectively.] |

[removed: Outlook][added: Outlook]

Set forth below is a discussion of [removed: the principal] matters that we believe could impact our financial and operating performance and cause our results of operations in future periods to differ materially from our historical operating results and/or from our anticipated results of operations described in the forward-looking statements in this report.

Our priorities for [removed: 2018] [added: 2019] are [removed: continued] [added: delivering] top-tier operational reliability [added: and customer service] while [added: continuing to execute on our growth plan by] strengthening our domestic network through [removed: growth, driving efficiency] [added: strategic] and [removed: productivity] [added: efficient growth] and [removed: continued investment] [added: investing] in our [removed: employees, product] [added: people] and [removed: technology.][added: product.]

[removed: _Fuel._] The [removed: Company’s] [added: Company's] average aircraft fuel price per gallon including related taxes was [removed: $1.74] [added: $2.25] in [removed: 2017] [added: 2018] as compared to [removed: $1.49] [added: $1.74] in [removed: 2016.][added: 2017.]

Based on [added: the Company's] projected fuel consumption in [removed: 2018,] [added: 2019,] a [removed: one dollar] [added: one-dollar] change in the price of a barrel of crude oil would change the [removed: Company’s annual] [added: Company's projected] fuel expense by approximately [removed: $96] [added: $104] million.

[removed: Results] [added: Results] of [removed: Operations][added: Operations]

[removed: _2017 compared] [added: 2017 Compared] to [removed: 2016_][added: 2016]

[removed: _Operating Revenue_][added: Operating Revenue]

| | [removed: | 2017 |] [added: 2017] | | | [removed: 2016] | [added: 2016] | | | [removed: Increase (Decrease)] | [added: Increase (Decrease)] | | | [removed: % Change] | [added: % Change] | |

| | [removed: | Increase] [added: Increase] (decrease) [added: in 2017] from 2016 [removed: (a): | | | | | | | |] [added: (a):] | | | | | | | | | | | | | | | | | | |

| | | [removed: Domestic | | | | Atlantic | | | | Pacific] [added: Domestic] | | | | [removed: Latin] [added: Atlantic] | | | | [removed: Total Consolidated] [added: Pacific] | | | | [removed: Mainline] [added: Latin] | | | | [removed: Regional] [added: Total] | | |

| Passengers | [removed: | |] 4.2 [removed: %] | | [removed: | | 0.5%] [added: %] | | [added: 0.5] | | [removed: (3.1)%] [added: %] | | [added: (3.1] | | [removed: 1.7%] [added: )%] | | [added: 1.7] | | [removed: 3.4] % | | [added: 3.4] | | [removed: 6.9] % | [removed: | | | (5.0)% | |]

| RPMs (traffic) | [removed: | |] 4.7 [removed: %] | | [removed: | | 0.9%] [added: %] | | [added: 0.9] | | [removed: (0.9)%] [added: %] | | [added: (0.9] | | [removed: 1.6%] [added: )%] | | [added: 1.6] | | [removed: 2.8] % | | [added: 2.8] | | [removed: 3.9] % | [removed: | | | (5.4)% | |]

| ASMs (capacity) | [removed: | |] 4.9 [removed: %] | | [removed: | | 0.4% | | | | 2.9] % | | [added: 0.4] | | [removed: 2.4%] [added: %] | | [added: 2.9] | | [removed: 3.5] % | | [added: 2.4] | | [removed: 4.4] % | | [removed: |] [added: 3.5] | [removed: (3.8)%] | [added: %] |

| Passenger load factor (points) | [removed: | | (0.2)] [added: (0.2] | | [added: )] | | 0.4 | | | | [removed: (3.0) | | | | (0.7) | | |] [added: (3.0] | [removed: (0.5)] | [added: )] | | [added: (0.7] | [removed: (0.4)] | [added: )] | | [added: (0.5] | [removed: (1.5)] | [added: )] |

[added: |] (a) See Part II, Item 6, Selected Financial Data, of this report for the definition of these statistics. [added: | | | | | | | | | | | | | | | | | | | | |]

[removed: Consolidated passenger] [added: Passenger] revenue increased [removed: $0.9] [added: $1.0] billion, or [removed: 3.0%,] [added: 3.1%,] in 2017 as compared to [removed: 2016] [added: 2016,] primarily due to a 2.8% increase in traffic.

Cargo revenue increased [removed: $159] [added: $180] million, or [removed: 18.2%,] [added: 19.3%,] in 2017 as compared to 2016 due to higher year-over-year international freight volume and yield.

[removed: _Operating Expense_][added: Operating Expense]

| | [removed: | 2017 |] [added: 2017] | | | [removed: 2016] | [added: 2016] | | | [removed: Increase (Decrease)] | [added: Increase (Decrease)] | | | [removed: % Change] | [added: % Change] | |

| Salaries and related costs | [removed: |] $ | [removed: 11,045] [added: 10,941] | | | $ | [removed: 10,275] [added: 10,176] | | | $ | [removed: 770 |] [added: 765] | | | 7.5 | |

| Aircraft fuel | [removed: | |] 6,913 | | | | 5,813 | | | | 1,100 | | | | 18.9 | |

| Landing fees and other rent | [removed: | |] 2,240 | | | | 2,165 | | | | 75 | | | | 3.5 | |

| Regional capacity purchase | [removed: | |] 2,232 | | | | 2,197 | | | | 35 | | | | 1.6 | |

| Depreciation and amortization | [removed: | |] 2,149 | | | | 1,977 | | | | 172 | | | | 8.7 | |

| Aircraft maintenance materials and outside repairs | [removed: | |] 1,856 | | | | 1,749 | | | | 107 | | | | 6.1 | |

| Aircraft rent | [removed: | |] 621 | | | | 680 | | | | [removed: (59)] [added: (59] | | [added: )] | | [removed: (8.7)] [added: (8.7] | [added: )] |

| Special charges | [removed: | | 176] [added: 487] | | | | [removed: 638] [added: 176] | | | | [removed: (462)] [added: 311] | | | | NM | |

| Other operating expenses | [removed: | | 5,657] [added: 5,550] | | | | [removed: 5,421] [added: 5,317] | | | | [removed: 236] [added: 233] | | | | 4.4 | |

Salaries and related costs increased [removed: $770] [added: $765] million, or 7.5%, in 2017 as compared to [removed: 2016] [added: 2016,] primarily due to higher pay rates and benefit expenses driven by collective bargaining agreements finalized in 2016, and a 2.5% increase [added: in average full-time equivalent employees, partially offset by a decrease in profit sharing and other employee incentives.]

| | |

| | |

| • | Revenue for 2018 increased $3.5 billion over 2017 due to a 4.9% growth in ASMs and a PRASM increase of 4.3% in 2018 compared to 2017. |

| | |

| | |

| | |

| | |

| | |

Growth Strategy.

In 2018, the Company completed the first year of its multi-year growth strategy, increasing ASMs 4.9% compared to 2017.

Fuel.

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| | | | | | | | | | | | | | |

| Passenger revenue | $ | 37,706 | | | $ | 34,460 | | | $ | 3,246 | | | 9.4 |

| Cargo | 1,237 | | | | 1,114 | | | | 123 | | | | 11.0 |

| Other operating revenue | 2,360 | | | | 2,210 | | | | 150 | | | | 6.8 |

| Total operating revenue | $ | 41,303 | | | $ | 37,784 | | | $ | 3,519 | | | 9.3 |

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| | | | | | | | | | | | | | | | | | | | | |

| Passenger revenue (in millions) | | $ | 2,340 | | | $ | 688 | | | $ | 185 | | | $ | 33 | | | $ | 3,246 | |

| Passenger revenue | | 11.1 | | % | | 11.7 | | % | | 4.3 | | % | | 1.0 | | % | | 9.4 | | % |

| Average fare per passenger | | 2.8 | | % | | 0.2 | | % | | 8.5 | | % | | 2.5 | | % | | 2.3 | | % |

| Yield | | 3.8 | | % | | (0.4 | | )% | | 2.7 | | % | | (0.3 | | )% | | 2.8 | | % |

| PRASM | | 4.1 | | % | | 6.3 | | % | | 3.0 | | % | | 0.8 | | % | | 4.3 | | % |

| Passengers | | 8.1 | | % | | 11.5 | | % | | (3.9 | | )% | | (1.4 | | )% | | 6.9 | | % |

| RPMs (traffic) | | 7.0 | | % | | 12.1 | | % | | 1.5 | | % | | 1.3 | | % | | 6.4 | | % |

| ASMs (capacity) | | 6.7 | | % | | 5.1 | | % | | 1.3 | | % | | 0.3 | | % | | 4.9 | | % |

| Passenger load factor (points) | | 0.2 | | | | 5.1 | | | | 0.2 | | | | 0.8 | | | | 1.2 | | |

Passenger revenue increased $3.2 billion, or 9.4%, in 2018 as compared to 2017, primarily due to a 6.4% increase in traffic.

PRASM increased 4.3% in 2018 as compared to 2017.

The increase in PRASM was driven by improvements in scheduling, higher corporate demand, increases in close-in bookings in the domestic markets and premium cabin demand improvements in the Atlantic and Pacific markets.

Cargo revenue increased $123 million, or 11.0%, in 2018 as compared to 2017, primarily due to freight volume and higher yield in the Atlantic and Pacific markets.

Other operating revenue increased $150 million, or 6.8%, in 2018 as compared to 2017, primarily due to increased revenue related to MileagePlus miles sales.

| | | | | | | | | | | | | | | |

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| | | | | | | | | | | | | | | |

| Salaries and related costs | $ | 11,458 | | | $ | 10,941 | | | $ | 517 | | | 4.7 | |

| Aircraft fuel | 9,307 | | | | 6,913 | | | | 2,394 | | | | 34.6 | |

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| --- | --- | --- | --- |

| --- | --- | --- | --- |

| --- | --- | --- | --- |

| --- | --- | --- | --- |

| --- | --- | --- | --- |

| --- | --- | --- | --- |

| | • | | During 2017, the Company took delivery of three new Boeing 787-9s, four new Boeing 737-800s, 12 new Boeing 777-300ERs, 24 new Embraer E175s, two used Airbus A320s and six used Airbus A319s and retired 20 Boeing 747-400s. |

| --- | --- | --- | --- |

In 2017, the Company had its best operational performance in its post-merger history.

Operational reliability, service and experience underpin the Company’s long-term strategy.

##### [Table of Contents](#toc)

_Economic Conditions._ The aviation industry in 2018 is expected to show continued growth in the demand for air travel.

Passenger numbers are expected to increase.

Cargo volumes are also expected to grow, with some recovery in yields.

Passenger revenue in all regions are expected to demonstrate improved performance in 2018.

_Capacity._ In 2018, the Company expects its consolidated ASMs to grow between 4% and 6% year-over-year.

Most of this growth will be concentrated in our domestic network, especially in our mid-continent hubs.

We believe greater scale and connectivity at our hubs reinforces our relevance and value proposition to our customers.

Rebanking at our hubs is expected to drive significant additional connection opportunities.

We will also expand flights in non-peak times of the year to more efficiently use our aircraft and facilities with the objective of driving an increase in profitability.

The price of jet fuel has increased since January 2016 and remains volatile.

In this section, we compare results of operations for the year ended December 31, 2017 with results of operations for the year ended December 31, 2016, and results of operations for the year ended December 31, 2016 with results of operations for the year ended December 31, 2015.

| | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Passenger—Mainline | | $ | 26,552 | | | $ | 25,414 | | | $ | 1,138 | | | | 4.5 | |

| Passenger—Regional | | | 5,852 | | | | 6,043 | | | | (191) | | | | (3.2) | |

| | | | | | | | | | | | | | | | | |

| Total passenger revenue | | | 32,404 | | | | 31,457 | | | | 947 | | | | 3.0 | |

| Cargo | | | 1,035 | | | | 876 | | | | 159 | | | | 18.2 | |

| Other operating revenue | | | 4,297 | | | | 4,223 | | | | 74 | | | | 1.8 | |

| | | | | | | | | | | | | | | | | |

| Total operating revenue | | $ | 37,736 | | | $ | 36,556 | | | $ | 1,180 | | | | 3.2 | |

| | | | | | | | | | | | | | | | | |

##### [Table of Contents](#toc)

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Passenger revenue (in millions) | | $ | 809 | | | $ | 103 | | | $ | (128) | | | $ | 163 | | | $ | 947 | | | $ | 1,138 | | | $ | (191) | |

| Passenger revenue | | | 4.2 % | | | | 1.9% | | | | (3.1)% | | | | 5.8% | | | | 3.0 % | | | | 4.5 % | | | | (3.2)% | |

| Average fare per passenger | | | 0.1 % | | | | 1.4% | | | | — % | | | | 4.1% | | | | (0.4)% | | | | (2.3)% | | | | 2.0 % | |

[removed: Interest Rates.] Our net income is affected by fluctuations in interest rates (e.g. interest expense on variable rate debt and interest income earned on short-term investments).

| [removed: Variable] [added: Variable] rate [removed: debt |] [added: debt] | | | | | | | |

| Carrying value of variable rate debt at December 31 | [removed: |] $ | [removed: 3,342] [added: 3,500] | | | $ | [removed: 2,582] [added: 3,342] | |

| Impact of 100 basis point increase on projected interest expense for the following year | [removed: |] [added: 35] | [removed: 33] | | | [added: 33] | [removed: 25] | |

| [removed: Fixed] [added: Fixed] rate [removed: debt |] [added: debt] | | | | | | | |

| Carrying value of fixed rate debt at December 31 | [removed: |] [added: 9,945] | [removed: 9,926] | | | [added: 9,926] | [removed: 8,185] | |

| Fair value of fixed rate debt at December 31 | [removed: |] [added: 9,901] | [removed: 10,349] | | | [added: 10,349] | [removed: 8,469] | |

| Impact of 100 basis point increase in market rates on fair value | [removed: |] [added: (378] | [removed: (403)] | [added: )] | | [added: (403] | [removed: (340)] | [added: )] |

Assuming our cash, cash equivalents and short-term investments remain at their average [removed: 2017] [added: 2018] levels, a 100 basis point increase in interest rates would result in a corresponding increase in the [removed: Company’s] [added: Company's] interest income of approximately $45 million during [removed: 2018.][added: 2019.]

[removed: _Commodity Price Risk (Aircraft Fuel)._] The price level of aircraft fuel can significantly affect the [removed: Company’s] [added: Company's] operations, results of operations, financial position and liquidity.

The [removed: Company’s 2018] [added: Company's 2019] forecasted fuel consumption is presently approximately [removed: four] [added: 4.3] billion gallons, and based on this forecast, a [removed: one dollar] [added: one-dollar] change in the price of a barrel of crude oil would change the [removed: Company’s] [added: Company's] annual fuel expense by approximately [removed: $96] [added: $104] million.

[removed: _Foreign Currency._] The Company generates revenues and incurs expenses in numerous foreign currencies.

The result of a uniform [removed: 10 percent] [added: 1%] strengthening in the value of the U.S. dollar from December 31, [removed: 2017] [added: 2018] levels relative to each of the currencies in which the Company has foreign currency exposure would result in a decrease in pre-tax income of approximately [removed: $245] [added: $24] million for the year ending December 31, [removed: 2018.][added: 2019.]

This sensitivity analysis was prepared based upon projected [removed: 2018] [added: 2019] foreign currency-denominated revenues and expenses as of December 31, [removed: 2017.][added: 2018.]

Interest Rates.

| | | | | | | | |

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| | | | | | | | |

| | 2018 | | | | 2017 | | |

Commodity Price Risk (Aircraft Fuel).

Foreign Currency.

| --- | --- |

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | 2017 | | | | 2016 | | |

##### [Table of Contents](#toc)

The price of aircraft fuel has fluctuated substantially in the past several years and in order to lower its exposure to unpredictable increases in the market prices of aircraft fuel, the Company has historically hedged a portion of its planned fuel requirements.

##### [Table of Contents](#toc)

[removed: Overview][added: Overview]

The information contained on or connected to the [removed: Company’s website] [added: Company's websites] is not incorporated by reference into this [removed: annual report] [added: Annual Report] on Form 10-K and should not be considered part of this or any other report filed with the U.S. Securities and Exchange Commission [removed: (“SEC”).][added: ("SEC").]

[removed: Through this website, the Company’s] [added: The Company's] filings with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports, as well as [removed: our] [added: UAL's] proxy statement for [removed: our] [added: its] annual meeting of stockholders, are accessible without [removed: charge,] [added: charge on the Company's investor relations website,] as soon as reasonably practicable, after such material is electronically filed [removed: with] [added: with,] or furnished [removed: to] [added: to,] the SEC.

[removed: Operations][added: Operations]

UAL, through United and its regional carriers, operates more than [removed: 4,500] [added: 4,800] flights a day to [removed: 338] [added: 353] airports across five continents, with hubs at Newark Liberty International Airport [removed: (“Newark”),] [added: ("Newark"),] Chicago [removed: O’Hare] [added: O'Hare] International Airport [removed: (“Chicago O’Hare”),] [added: ("Chicago O'Hare"),] Denver International Airport [removed: (“Denver”),] [added: ("Denver"),] George Bush Intercontinental Airport [removed: (“Houston Bush”),] [added: ("Houston Bush"),] Los Angeles International Airport [removed: (“LAX”),] [added: ("LAX"),] A.B. Won Pat International Airport [removed: (“Guam”),] [added: ("Guam"),] San Francisco International Airport [removed: (“SFO”)] [added: ("SFO")] and Washington Dulles International Airport [removed: (“Washington Dulles”).][added: ("Washington Dulles").]

[added: The] hub system also allows us to add service to a new destination from a large number of cities using only one or a limited number of aircraft.

As discussed under [removed: _Alliances_] [added: Alliances] below, United is a member of Star Alliance, the [removed: world’s] [added: world's] largest alliance network.

[removed: _Regional._] The Company has contractual relationships with various regional carriers to provide regional aircraft service branded as United Express.

This regional service complements our operations by carrying traffic that connects to our [removed: mainline service] [added: hubs] and allows flights to smaller cities that cannot be provided economically with mainline aircraft.

Under these CPAs, the Company pays the regional carriers contractually agreed fees (carrier costs) for operating these flights plus a variable reimbursement (incentive payment for operational performance) based on agreed performance metrics, subject [removed: to annual inflation adjustments.]

Under these CPAs, the Company is responsible for all fuel costs incurred, as well as landing fees and other costs, which are either passed through by the regional carrier to the Company without any markup or directly incurred by the [removed: Company.][added: Company, and, in some cases, the Company owns or leases some or all of the aircraft subject to the CPA, and leases or subleases, as applicable, such aircraft to the regional carrier.]

In return, the regional carriers operate [removed: this] [added: the] capacity [added: of the aircraft included within the scope of such CPA] exclusively for United, on schedules determined by the Company.

[removed: _Alliances._] United is a member of Star Alliance, a global integrated airline network and the largest and most comprehensive airline alliance in the world.

As of January 1, [removed: 2018,] [added: 2019,] Star Alliance carriers served [added: over] 1,300 airports in [removed: 191] [added: 193] countries with [removed: 18,400] [added: 18,800] daily departures.

Star Alliance members, in addition to United, are Adria Airways, Aegean Airlines, Air Canada, Air China, Air India, Air New Zealand, All Nippon Airways [removed: (“ANA”),] [added: ("ANA"),] Asiana Airlines, Austrian Airlines, [removed: Avianca,] [added: Aerovías del Continente Americano S.A. ("Avianca"),] Avianca Brasil, Brussels Airlines, Copa Airlines, Croatia Airlines, EGYPTAIR, Ethiopian Airlines, EVA Air, LOT Polish Airlines, Lufthansa, SAS Scandinavian Airlines, Shenzhen Airlines, Singapore Airlines, South African Airways, SWISS, TAP Air Portugal, THAI Airways International and Turkish Airlines.

In [removed: May 2017,] [added: addition to its members,] Star Alliance [removed: added] [added: includes] Shanghai-based Juneyao Airlines as [removed: an additional] [added: a] connecting partner.

In addition to the alliance agreements with Star Alliance members, United currently maintains independent marketing alliance agreements with other air carriers, including Aeromar, Aer Lingus, Air Dolomiti, [removed: Azul,] [added: Azul Linhas Aéreas Brasileiras S.A. ("Azul"), Boutique Air,] Cape Air, Eurowings, [removed: Great Lakes Airlines,] Hawaiian Airlines, and Silver Airways.

United also participates in [removed: three] [added: four] passenger joint [removed: ventures,] [added: business arrangements ("JBAs"):] one with Air Canada and the Lufthansa Group (which includes Lufthansa and its affiliates Austrian Airlines, Brussels Airlines, Eurowings and SWISS) covering transatlantic routes, one with ANA covering certain transpacific [removed: routes and] [added: routes,] one with Air New Zealand covering certain routes between the United States and New [removed: Zealand.][added: Zealand and one with Avianca and Copa Airlines, which, upon receipt of regulatory approvals will cover routes between the United States and Central and South America, excluding Brazil.]

These passenger [removed: joint ventures] [added: JBAs] enable the participating carriers to integrate the services they provide in the respective regions, capturing revenue synergies and delivering [added: enhanced customer benefits, such as] highly competitive flight schedules, fares and services.

[removed: ventures] [added: United also participates in cargo JBAs] with ANA for transpacific cargo services and [removed: continues to implement a cargo joint venture] with Lufthansa for transatlantic cargo services.

These cargo [removed: joint ventures] [added: JBAs] offer expanded and more seamless access to cargo space across the [removed: carriers’] [added: carriers'] respective combined networks.

[removed: _Loyalty Program._ United’s] [added: United's] MileagePlus [added: loyalty] program builds customer loyalty by offering awards, benefits and services to program participants.

United has an agreement with Chase Bank USA, N.A. [removed: (“Chase”),] [added: ("Chase"),] pursuant to which members of [removed: United’s] [added: United's] MileagePlus loyalty program who are residents of the United States can earn miles for making purchases using a MileagePlus credit card issued by [removed: Chase.][added: Chase (the "Co-Brand Agreement").]

The [removed: agreement] [added: Co-Brand Agreement] also provides for joint marketing and other support for the MileagePlus credit card and provides Chase with other benefits such as permission to market to the [removed: Company’s] [added: Company's] customer database.

Approximately [removed: 5.4] [added: 5.6] million and [removed: 5.2] [added: 5.4] million MileagePlus flight awards were used on United in [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] respectively.

These awards represented [removed: 7.5%] [added: 7.1%] and [removed: 7.7%] [added: 7.5%] of [removed: United’s] [added: United's] total revenue passenger miles in [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] respectively.

Total miles redeemed for flights on United in [removed: 2017,] [added: 2018,] including class-of-service upgrades, represented approximately [removed: 85%] [added: 86%] of the total miles redeemed.

In addition, excluding miles redeemed for flights on United, MileagePlus members redeemed miles for approximately [removed: 2.3] [added: 2.4] million other awards in [removed: 2017] [added: 2018] as compared to [removed: 2.0] [added: 2.3] million [added: other awards] in [removed: 2016.][added: 2017.]

[removed: _Aircraft Fuel._] The table below summarizes [removed: UAL’s] [added: UAL's] aircraft fuel consumption and expense during the last three years.

| [removed: | | Year |] [added: Year] | [removed: Gallons Consumed (in millions)] | [added: Gallons Consumed (in millions)] | | | [removed: Fuel Expense (in millions)] [added: Fuel Expense (in millions)] | | | | [removed: Average] [added: Average] Price Per [removed: Gallon] [added: Gallon] | | | | [removed: Percentage] [added: Percentage] of Total Operating [removed: Expense | | |] [added: Expense] | | | [added: Available Seat Miles per Fuel Gallon] |

| [removed: | 2017 |] [added: 2017] | | 3,978 | | | $ | 6,913 | | | $ | 1.74 | | | [removed: | 20% | | |] [added: 20] | [added: %] | | [added: 66] |

| [removed: | 2016 |] [added: 2016] | | 3,904 | | | $ | 5,813 | | | $ | 1.49 | | | [removed: | 18% | | |] [added: 18] | [added: %] | | [added: 65] |

To provide adequate supplies of fuel, the Company routinely enters into purchase contracts that are customarily indexed to market prices for aircraft fuel, and the Company generally has some ability to cover short-term fuel supply and infrastructure disruptions at [removed: some] [added: certain] major demand locations.

[removed: _Third-Party Business._] United generates third-party business revenue that includes frequent flyer award non-air redemptions, maintenance services, catering and ground handling.

Expenses associated with third-party [removed: business] [added: business, except non-air redemptions,] are recorded in Other operating expenses.

[removed: _Distribution Channels._] The [removed: Company’s] [added: Company's] airline seat inventory and fares are distributed through the [removed: Company’s] [added: Company's] direct channels, traditional travel agencies and on-line travel agencies.

[added: Agency sales are] primarily sold using global distribution systems [removed: (“GDS”).][added: ("GDS").]

United has developed [added: and expects to continue to develop] capabilities to sell certain ancillary products through the GDS channel to provide an enhanced buying experience for customers who purchase in that channel.

[removed: Industry Conditions][added: Industry Conditions]

[removed: _Domestic Competition._] The domestic airline industry is highly competitive and dynamic.

The Company's website is located at www.united.com and its investor relations website is located at ir.united.com.

The Company transports people and cargo throughout North America and to destinations in Asia, Europe, the Middle East and Latin America.

Regional.

to annual adjustments.

Alliances.

Loyalty Program.

Aircraft Fuel.

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| | | | | | | | | | | | | | | | | |

| 2018 | | 4,137 | | | $ | 9,307 | | | $ | 2.25 | | | 24 | % | | 67 |

Third-Party Business.

Non-air redemptions expenses are recorded to Other operating revenue.

Distribution Channels.

Domestic Competition.

International Competition.

Seasonality.

Airport Access.

Legislation.

The law includes a range of policy changes related to airline customer service and aviation safety which, depending on how they are implemented, could impact our operations and costs.

Additionally, the U.S. Congress may fail to continue to fund the operations of one or more federal government agencies which could negatively impact the Company and the airline industry.

Catering Operations.

Some of the Company's kitchens also prepare ready-to-eat food for other domestic and international airlines.

Legislation.

Airport Access.

Climate Change.

Other Regulations.

| | | | | |

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| | | | | |

| Passenger Service - United Ground Express, Inc. | 2,923 | | IAM | March 2025 |

(a) On October 23, 2018, United's Catering Operations employees voted to unionize under the RLA.

In an election overseen by the National Mediation Board, UNITE HERE received the majority of the votes and was officially certified to represent United's frontline Catering Operations employees.

The Company expects contract negotiations to begin in 2019.

| | |

The Company’s website is www.united.com.

The Company transports people and cargo through its mainline and regional operations.

With key global aviation rights in North America, Asia-Pacific, Europe, Middle East and Latin America, UAL has the world’s most comprehensive global route network.

The

##### [Table of Contents](#toc)

Financial information on the Company’s operating revenues by geographic region, as reported to the U.S. Department of Transportation (the “DOT”), can be found in Note 15 to the financial statements included in Part II, Item 8 of this report.

These regional operations are an extension of the Company’s mainline network.

United has also implemented cargo joint

##### [Table of Contents](#toc)

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| | 2015 | | | 3,886 | | | $ | 7,522 | | | $ | 1.94 | | | | 23% | | | | | | |

As of December 31, 2017, the Company did not have any outstanding fuel hedging contracts.

Agency sales are

##### [Table of Contents](#toc)

To increase the Company’s opportunities to sell its full range of products and services and lower distribution costs, the Company will continue to develop new selling capabilities in third-party channels and expand the capabilities of its website and mobile applications.

The DOT has

##### [Table of Contents](#toc)

_Legislation_.

As with previous reauthorization legislation, the U.S. Congress may consider a range of policy changes that could impact operations and costs.

Finally, aviation security continues to be the subject of legislative and regulatory action, requiring changes to the Company’s security processes, potentially increasing the cost of its security procedures and affecting its operations.

In addition, the Cleveland flight kitchen produces a small volume of food products for retail sale.

##### [Table of Contents](#toc)

_Climate Change_.

_Other Regulations_.

##### [Table of Contents](#toc)

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UNITE HERE is attempting to organize United’s Catering Operations employees, who are currently unrepresented, and filed an application to do so with the National Mediation Board on January 24, 2018.

##### [Table of Contents](#toc)

[removed: _Other] [added: Other] Legal [removed: Proceedings_][added: Proceedings]

| | |

##### [Table of Contents](#toc)

[removed: 10-K 1 d471340d10k.htm] FORM 10-K

[removed: UNITED STATES][added: UNITED STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Washington,] [added: Washington,] DC [removed: 20549][added: 20549]

| [removed: ☒] [added: x] | [removed: ANNUAL] [added: ANNUAL] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |

[removed: For] [added: For] the fiscal year ended December 31, [removed: 2017][added: 2018]

| [removed: ☐] [added: o] | [removed: TRANSITION] [added: TRANSITION] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |

[removed: For] [added: For] the transition period from [removed: to][added: to]

[removed: ][added: ]

| [removed: Commission File Number] [added: Commission File Number] | | [removed: Exact] [added: Exact] Name of Registrant [removed: as Specified] [added: as Specified] in its Charter, Principal [removed: Executive Office] [added: Executive Office] Address, Zip Code [removed: and Telephone] [added: and Telephone] Number, Including Area [removed: Code] [added: Code] | | [removed: State of Incorporation] [added: State of Incorporation] | | [removed: I.R.S. Employer Identification No.] [added: I.R.S. Employer Identification No.] |

| 001-06033 | | [removed: United] [added: United] Continental Holdings, Inc. 233 South Wacker Drive Chicago, Illinois 60606 (872) [removed: 825-4000] [added: 825-4000] | | Delaware | | 36-2675207 |

| 001-10323 | | [removed: United] [added: United] Airlines, Inc. 233 South Wacker Drive Chicago, Illinois 60606 (872) [removed: 825-4000] [added: 825-4000] | | Delaware | | 74-2099724 |

[removed: Securities] [added: Securities] registered pursuant to Section 12(b) of the [removed: Act:][added: Act:]

| | | [removed: Title] [added: Title] of Each [removed: Class] [added: Class] | | [removed: Name] [added: Name] of Each Exchange on Which [removed: Registered] [added: Registered] |

| United Continental Holdings, Inc. | | Common Stock, $0.01 par value | | [removed: New York] [added: The Nasdaq] Stock [removed: Exchange] [added: Market LLC] |

[removed: Securities] [added: Securities] registered pursuant to Section 12(g) of the [removed: Act:][added: Act:]

| | | [added: |] United Continental Holdings, Inc. | | [removed: |] None | | | [removed: |]

| | | [added: |] United Airlines, Inc. | | [removed: |] None | | | [removed: |]

[added: |] Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. [added: | | | | | | | | | | |]

| [removed: | |] United Continental Holdings, Inc. | | Yes [removed: ☒] [added: x] No [removed: ☐] [added: o] | | | [added: | | | | | |]

| [removed: | |] United Airlines, Inc. | | Yes [removed: ☒] [added: x] No [removed: ☐] [added: o] | | | [added: | | | | | |]

[added: |] Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act [added: | | | | | | | | | | |]

| [removed: | |] United Continental Holdings, Inc. | | Yes [removed: ☐] [added: o] No [removed: ☒] [added: x] | | | [added: | | | | | |]

| [removed: | |] United Airlines, Inc. | | Yes [removed: ☐] [added: o] No [removed: ☒] [added: x] | | | [added: | | | | | |]

[added: |] 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. [added: | | | | | | | | | | |]

| [removed: | |] United Continental Holdings, Inc. | | Yes [removed: ☒] [added: x] No [removed: ☐] [added: o] | | | [added: | | | | | |]

| [removed: | |] United Airlines, Inc. | | Yes [removed: ☒] [added: x] No [removed: ☐] [added: o] | | | [added: | | | | | |]

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

| [removed: | |] United Continental Holdings, Inc. | | Yes [removed: ☒] [added: x] No [removed: ☐] [added: o] | | | [added: | | | | | |]

| [removed: | |] United Airlines, Inc. | | Yes [removed: ☒] [added: x] No [removed: ☐] [added: o] | | | [added: | | | | | |]

[added: |] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of [removed: Registrant’s] [added: Registrant's] knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [added: | | | | | | | | | | |]

| [removed: | |] United Continental Holdings, Inc. | | [removed: ☒] [added: x] | | | [added: | | | | | |]

| [removed: | |] United Airlines, Inc. | | [removed: ☒] [added: x] | | | [added: | | | | | |]

[added: |] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. [added: See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. | | | | | | | | | | |]

[removed: See the definitions of “large] [added: | United Airlines, Inc. | | Large] accelerated [removed: filer,” “accelerated filer,” “smaller] [added: filer o | | Accelerated filer o | | Non-accelerated filer x | | Smaller] reporting [removed: company,” and “emerging] [added: company o | | Emerging] growth [removed: company” in Rule 12b-2 of the Exchange Act.][added: company o |]

| United Continental Holdings, Inc. | | Large accelerated filer [removed: ☒] [added: x] | | Accelerated filer [removed: ☐] [added: o] | | Non-accelerated filer [removed: ☐] [added: o] | | Smaller reporting company [removed: ☐] [added: o] | | Emerging growth company [removed: ☐] [added: o] |

[added: |] 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. [added: | | | | | | | | | | |]

| [removed: | |] United Continental Holdings, Inc. | | [removed: ☐] [added: o] | | | [added: | | | | | |]

| [removed: | |] United Airlines, Inc. | | [removed: ☐] [added: o] | | | [added: | | | | | |]

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

10-K 1 ual_201810k.htm 10-K

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##### [Table of Contents](#toc)

FORM 10-K

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(Check one):

| United Airlines, Inc. | | Large accelerated filer ☐ | | Accelerated filer ☐ | | Non-accelerated filer ☒ | | Smaller reporting company ☐ | | Emerging growth company ☐ |

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##### [Table of Contents](#toc)

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##### [Table of Contents](#toc)

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[removed: Fleet][added: Fleet]

Including aircraft operated by [removed: United’s] [added: United's] regional carriers, [removed: United’s] [added: United's] fleet consisted of [removed: 1,262] [added: 1,329] aircraft as of December 31, [removed: 2017,] [added: 2018,] the details of which are presented in the tables below:

| [removed: Aircraft Type | | Total | |] [added: Aircraft Type] | | [removed: Owned] [added: Total] | | | [added: Owned] | [removed: Leased] | | [added: Leased] | | | | | | [removed: Seats] [added: Seats] in Standard [removed: Configuration | | | |] [added: Configuration] | | | | [removed: Average] [added: Average] Age (In [removed: Years) |] [added: Years)] | |

| [removed: Mainline: | | | | | | | | |] [added: Mainline:] | | | | | | | | | | | | | | | | | | | |

| 777-300ER | | [removed: | 14 | |] [added: 18] | | [removed: 14] | [added: 18] | | | — | | | | | | [removed: | | 366 | | | |] [added: 350-366] | | | | [removed: 0.7] [added: 1.5] | |

| 777-200ER | | [removed: |] 55 | | | [removed: | 40 | | | | 15 | | |] [added: 46] | | | [added: 9] | | [removed: 267-269] | | | | [added: 269-274] | | | | [removed: 17.8] [added: 18.8] | |

| 777-200 | | [removed: |] 19 | | | [removed: |] 19 | | | [removed: |] — | | | | | | [removed: | |] 364 | | | | [removed: | | | | 20.5] [added: 21.5] | |

| 787-9 | | [removed: | 21 | |] [added: 25] | | [removed: 21] | [added: 25] | | | — | | | | | | [removed: | |] 252 | | | | [removed: | | | | 2.1] [added: 2.8] | |

| 787-8 | | [removed: |] 12 | | | [removed: |] 12 | | | [removed: |] — | | | | | | [removed: | |] 219 | | | | [removed: | | | | 4.5] [added: 5.5] | |

| 767-400ER | | [removed: |] 16 | | | [removed: |] 14 | | | [removed: |] 2 | | | | | | [removed: | |] 242 | | | | [removed: | | | | 16.3] [added: 17.3] | |

| 767-300ER | | [removed: | 35 | |] [added: 38] | | [removed: 22] | [added: 25] | | | 13 | | | | | | [removed: | | 183-214 | | | |] [added: 167-214] | | | | [removed: 22.5] [added: 22.9] | |

| 757-300 | | [removed: |] 21 | | | [removed: |] 9 | | | [removed: |] 12 | | | | | | [removed: | | 213 | | | |] [added: 213-234] | | | | [removed: 15.3] [added: 16.3] | |

| 757-200 | | [removed: |] 56 | | | [removed: |] 50 | | | [removed: |] 6 | | | | | | [removed: | |] 142-169 | | | | [removed: | | | | 21.7] [added: 22.8] | |

| 737-900ER | | [removed: |] 136 | | | [removed: |] 136 | | | [removed: |] — | | | | | | [removed: | |] 179 | | | | [removed: | | | | 5.0] [added: 6.0] | |

| 737-900 | | [removed: |] 12 | | | [removed: |] 8 | | | [removed: |] 4 | | | | | | [removed: | |] 179 | | | | [removed: | | | | 16.3] [added: 17.3] | |

| 737-800 | | [removed: |] 141 | | | [removed: | 77 | | | | 64 | | |] [added: 90] | | | [added: 51] | | [removed: 154-166] | | | | [added: 166] | | | | [removed: 13.8] [added: 14.8] | |

| 737-700 | | [removed: |] 40 | | | [removed: | 20 | | | | 20 | | |] [added: 25] | | | [added: 15] | | [removed: 118-126] | | | | [added: 126] | | | | [removed: 18.8] [added: 19.8] | |

| A320-200 | | [removed: |] 99 | | | [removed: | 66 | | |] [added: 70] | [removed: 33] | | [added: 29] | | | | | | 150 | | | | [removed: | | | | 19.3] [added: 20.3] | |

| A319-100 | | [removed: | 67 | | | | 50] [added: 70] | | | [added: 55] | [removed: 17] | | [added: 15] | | | | | | 128 | | | | [removed: | | | | 16.7] [added: 17.6] | |

| [removed: Aircraft Type] [added: Aircraft Type] | | [removed: Capacity] [added: Capacity] Purchase Agreement [removed: Total | | |] [added: Total] | [removed: Owned] | | [added: Owned] | | [removed: Leased] | [added: Leased] | | | [removed: Owned] [added: Owned] or Leased by Regional [removed: Carrier |] [added: Carrier] | | | [removed: Regional] [added: Regional] Carrier Operator [removed: and Number of Aircraft | | | |] [added: and Number of Aircraft] | | | | [removed: Seats] [added: Seats] in Standard [removed: Configuration |] [added: Configuration] | |

| [removed: Regional: | | | | | | | | |] [added: Regional:] | | | | | | | | | | | | | | | | | | | |

| Embraer E175 | | [removed: | 152 |] [added: 153] | | | 54 | | | [removed: |] — | | | [removed: | 98 |] [added: 99] | | | SkyWest: Mesa: Republic: | [removed: | | |] 65 [removed: 59] [added: 60] 28 | | | [removed: |] 76 | |

| Embraer 170 | | [removed: |] 38 | | | [removed: |] — | | | [removed: |] — | | | [removed: |] 38 | | | [removed: |] Republic: | [removed: | | |] 38 | | | [removed: |] 70 | |

| CRJ700 | | [removed: | 65 |] [added: 64] | | | — | | | [removed: |] — | | | [removed: | 65 |] [added: 64] | | | SkyWest: GoJet: Mesa: | [removed: | | | 20] [added: 19] 25 20 | | | [removed: |] 70 | |

| CRJ200 | | [removed: | 85 |] [added: 128] | | | — | | | [removed: |] — | | | [removed: | 85 |] [added: 128] | | | SkyWest: Air Wisconsin: [removed: | | | | 55 30] [added: ExpressJet:] | [added: 60 56 12] | | | 50 | |

| Embraer ERJ 145 (XR/LR/ER) | | [removed: | 168 | | | | 29] [added: 176] | | | [added: 82] | [removed: 139] | | [added: 90] | | [removed: —] | [added: 4] | | | ExpressJet: Trans States: CommutAir: | [removed: | | | 110 36 22 |] [added: 105 40 31] | | | 50 | |

In addition to the aircraft presented in the tables above, United [removed: owns or leases] [added: owned] the following aircraft listed below as of December 31, [removed: 2017:][added: 2018:]

| [removed: |] • | [removed: |] One [removed: owned] Boeing 767-200, which is being subleased to another airline; |

| [removed: |] • | [removed: | 12 owned and three leased] [added: Nine] Boeing 747s, which are permanently grounded; and |

| [removed: |] • | [removed: | 11 owned] [added: Three] Embraer ERJ 145s, which are temporarily grounded. |

As of December 31, [removed: 2017,] [added: 2018,] United had firm commitments and options to purchase [added: new] aircraft from [removed: Boeing and] [added: Boeing,] Airbus [added: and Embraer as] presented in the table below:

| [removed: Aircraft Type] [added: Aircraft Type] | | [removed: Number] [added: Number] of Firm Commitments [removed: (a)] [added: (a)] |

| Boeing 737 MAX | | [removed: 161] [added: 175] |

| Boeing 787 | | [removed: 18] [added: 24] |

The aircraft listed in the table above are scheduled for delivery from [removed: 2018] [added: 2019] through 2027.

In [removed: 2018,] [added: 2019,] United expects to take delivery of [removed: 10] [added: 25 Embraer E175 aircraft, 20] Boeing 737 MAX aircraft, [removed: seven] [added: 8] Boeing 787 aircraft and [removed: four] [added: 2] Boeing 777-300ER aircraft.

[removed: Facilities][added: Facilities]

United has major terminal facility leases at SFO, Washington Dulles, Chicago [removed: O’Hare,] [added: O'Hare,] LAX, Denver, Newark, Houston [removed: Bush, Cleveland Hopkins International Airport] [added: Bush] and Guam with expiration dates ranging from [removed: 2018] [added: 2019] through [removed: 2054.][added: 2055.]

[added: In addition,] United [removed: also] has multiple leases, which expire from [removed: 2018] [added: 2019] through 2029, for its principal executive office and operations center in downtown Chicago and administrative offices in downtown Houston.

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| 787-10 | | 3 | | | 3 | | | — | | | | | | 318 | | | | 0.1 | |

| 737 MAX 9 | | 9 | | | 9 | | | — | | | | | | 179 | | | | 0.4 | |

| Total mainline | | 770 | | | 614 | | | 156 | | | | | | | | | | 15.1 | |

| Total regional | | 559 | | | 136 | | | 90 | | | 333 | | | | | | | | |

| Total | | 1,329 | | | 750 | | | 246 | | | 333 | | | | | | | | |

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| • | One Boeing 737 MAX 9 and one Airbus 319-100, which were delivered in December 2018 but were awaiting operating certificates as of December 31, 2018; |

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| Embraer E175 | | 25 |

United also has agreements to purchase 20 used Airbus A319 aircraft with expected delivery dates through 2022.

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| Total mainline | | | 744 | | | | 558 | | | | 186 | | | | | | | | | | | | | | | | 14.3 | |

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| Q200 (a) | | | 7 | | | | — | | | | — | | | | 7 | | | | CommutAir: | | | | 7 | | | | 37 | |

| Embraer ERJ 135 (a) | | | 3 | | | | — | | | | 3 | | | | — | | | | ExpressJet: | | | | 3 | | | | 37 | |

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| Total regional | | | 518 | | | | 83 | | | | 142 | | | | 293 | | | | | | | | | | | | | |

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| Total | | | 1,262 | | | | 641 | | | | 328 | | | | 293 | | | | | | | | | | | | | |

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(a) United exited service of both the Q200 and ERJ 135 aircraft types in January 2018.

##### [Table of Contents](#toc)

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Additionally, the Company has entered into a contract to purchase three used Boeing 767-300ER aircraft from Hawaiian Airlines, Inc. with expected delivery dates in the second half of 2018.

[removed: PART II][added: PART II]

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##### [Table of Contents](#toc)

As of February [removed: 14, 2018,] [added: 22, 2019,] there were [removed: 7,534] [added: 5,615] holders of record of UAL common stock.

The following graph shows the cumulative total stockholder return for [removed: UAL’s] [added: UAL's] common stock during the period from December 31, [removed: 2012] [added: 2013] to December 31, [removed: 2017.][added: 2018.]

The comparison assumes $100 was invested on December 31, [removed: 2012] [added: 2013] in [added: each of] UAL common stock, the SPX and the XAL.

[removed: ][added: ]

[removed: _Note:_] [added: Note:] The stock price performance shown in the graph above should not be considered indicative of potential future stock price performance.

The following table presents repurchases of UAL common stock made in the fourth quarter of [removed: 2017:][added: 2018:]

| [removed: Period | |] [added: Period] | | [removed: Total] [added: Total] number of shares purchased [removed: (a)(b) |] [added: (a) (b)] | | | [removed: Average] [added: Average] price paid per share [removed: (b)(c)] [added: (b)(c)] | | | | [removed: Total] [added: Total] number of shares purchased as part of publicly announced plans or programs [removed: (a) |] [added: (a)] | | | [removed: Approximate] [added: Approximate] dollar value of shares that may yet be purchased under the plans or programs (in millions) [removed: (a)] [added: (a)] | | |

In December 2017, [removed: UAL’s] [added: UAL's] Board of Directors authorized a [removed: new] $3.0 billion share repurchase program to acquire [removed: UAL’s] [added: UAL's] common stock.

As of December 31, [removed: 2017,] [added: 2018,] the Company had approximately [removed: $3.0] [added: $1.8] billion remaining to purchase shares under its share repurchase program.

(b) The table does not include shares withheld from employees to satisfy certain tax obligations due upon the vesting of restricted [removed: stock units.][added: stock.]

The United Continental Holdings, Inc. 2017 Incentive Compensation Plan and the United Continental Holdings, Inc. 2008 Incentive Compensation Plan, [added: each] provide for the withholding of shares to satisfy tax obligations due upon the vesting of restricted [removed: stock units.][added: stock.]

However, [removed: the] [added: these] plans do not specify a maximum number of shares that may be withheld for this purpose.

A total of [removed: 1,446] [added: 1,368] shares were withheld under the plans in the fourth quarter of [removed: 2017] [added: 2018] at an average price of [removed: $64.46] [added: $91.79] per share.

Since September 7, 2018, UAL's common stock has traded on the Nasdaq Global Select Market ("Nasdaq") under the symbol "UAL." Previously, UAL's common stock was traded on the New York Stock Exchange ("NYSE").

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| October 2018 | | 572,349 | | | $ | 85.76 | | | 572,349 | | | $ | 1,941 | |

| November 2018 | | 927,969 | | | 91.76 | | | | 927,969 | | | 1,856 | | |

| December 2018 | | 1,228,339 | | | 85.87 | | | | 1,228,339 | | | 1,750 | | |

| Total | | 2,728,657 | | | | | | | 2,728,657 | | | | | |

(a) In 2018, UAL repurchased approximately 17.5 million shares of UAL common stock for $1.2 billion.

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UAL’s common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “UAL.” The following table sets forth the ranges of high and low sales prices per share of UAL common stock during the last two fiscal years, as reported by the NYSE:

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