filings.toolsItem 1. FINANCIAL STATEMENTS.
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Item 1. FINANCIAL STATEMENTS.
UNITED AIRLINES HOLDINGS, INC.
STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)
(In millions, except per share amounts)
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| Operating revenue: | |||||||||||||||||||||||
| Passenger | $ | 11,313 | $ | 10,274 | |||||||||||||||||||
| Cargo | 391 | 398 | |||||||||||||||||||||
| Other | 835 | 757 | |||||||||||||||||||||
| Total operating revenue | 12,539 | 11,429 | |||||||||||||||||||||
| Operating expense: | |||||||||||||||||||||||
| Salaries and related costs | 3,932 | 3,322 | |||||||||||||||||||||
| Aircraft fuel | 2,954 | 3,174 | |||||||||||||||||||||
| Landing fees and other rent | 804 | 717 | |||||||||||||||||||||
| Aircraft maintenance materials and outside repairs | 773 | 702 | |||||||||||||||||||||
| Depreciation and amortization | 708 | 655 | |||||||||||||||||||||
| Regional capacity purchase | 585 | 615 | |||||||||||||||||||||
| Distribution expenses | 480 | 403 | |||||||||||||||||||||
| Aircraft rent | 43 | 56 | |||||||||||||||||||||
| Special charges | 13 | 14 | |||||||||||||||||||||
| Other | 2,148 | 1,814 | |||||||||||||||||||||
| Total operating expense | 12,440 | 11,472 | |||||||||||||||||||||
| Operating income (loss) | 99 | (43) | |||||||||||||||||||||
| Nonoperating income (expense): | |||||||||||||||||||||||
| Interest expense | (454) | (486) | |||||||||||||||||||||
| Interest income | 177 | 170 | |||||||||||||||||||||
| Interest capitalized | 61 | 38 | |||||||||||||||||||||
| Unrealized gains (losses) on investments, net | (37) | 24 | |||||||||||||||||||||
| Miscellaneous, net | (10) | 41 | |||||||||||||||||||||
| Total nonoperating expense, net | (263) | (213) | |||||||||||||||||||||
| Loss before income tax benefit | (164) | (256) | |||||||||||||||||||||
| Income tax benefit | (40) | (62) | |||||||||||||||||||||
| Net loss | $ | (124) | $ | (194) | |||||||||||||||||||
| Loss per share, basic and diluted | $ | (0.38) | $ | (0.59) | |||||||||||||||||||
The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
| Table of Contents |
UNITED AIRLINES HOLDINGS, INC.
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
(In millions)
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| Net loss | $ | (124) | $ | (194) | |||||||||||||||||||
| Other comprehensive income (loss), net of tax: | |||||||||||||||||||||||
| Employee benefit plans | (17) | (35) | |||||||||||||||||||||
| Investments and other | (2) | 21 | |||||||||||||||||||||
| Total other comprehensive loss, net of tax | (19) | (14) | |||||||||||||||||||||
| Total comprehensive loss, net | $ | (143) | $ | (208) |
The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
| Table of Contents |
UNITED AIRLINES HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions, except shares)
| March 31, 2024 | December 31, 2023 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 8,401 | $ | 6,058 | |||||||
| Short-term investments | 5,591 | 8,330 | |||||||||
| Restricted cash | 40 | 31 | |||||||||
| Receivables, less allowance for credit losses (2024 — $19; 2023 — $18) | 2,259 | 1,898 | |||||||||
| Aircraft fuel, spare parts and supplies, less obsolescence allowance (2024 — $721; 2023 — $689) | 1,675 | 1,561 | |||||||||
| Prepaid expenses and other | 730 | 609 | |||||||||
| Total current assets | 18,696 | 18,487 | |||||||||
| Operating property and equipment: | |||||||||||
| Flight equipment | 49,277 | 48,448 | |||||||||
| Other property and equipment | 10,940 | 10,527 | |||||||||
| Purchase deposits for flight equipment | 3,558 | 3,550 | |||||||||
| Total operating property and equipment | 63,775 | 62,525 | |||||||||
| Less — Accumulated depreciation and amortization | (23,305) | (22,710) | |||||||||
| Total operating property and equipment, net | 40,470 | 39,815 | |||||||||
| Operating lease right-of-use assets | 3,895 | 3,914 | |||||||||
| Other assets: | |||||||||||
| Goodwill | 4,527 | 4,527 | |||||||||
| Intangibles, less accumulated amortization (2024 — $1,339; 2023 — $1,495) | 2,717 | 2,725 | |||||||||
| Restricted cash | 244 | 245 | |||||||||
| Investments in affiliates and other, less allowance for credit losses (2024 — $32; 2023 — $38) | 1,353 | 1,391 | |||||||||
| Total other assets | 8,841 | 8,888 | |||||||||
| Total assets | $ | 71,902 | $ | 71,104 |
(continued on next page)
| Table of Contents |
UNITED AIRLINES HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions, except shares)
| March 31, 2024 | December 31, 2023 | ||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 4,344 | $ | 3,835 | |||||||
| Accrued salaries and benefits | 2,128 | 2,940 | |||||||||
| Advance ticket sales | 9,601 | 6,704 | |||||||||
| Frequent flyer deferred revenue | 3,086 | 3,095 | |||||||||
| Current maturities of long-term debt | 3,958 | 4,018 | |||||||||
| Current maturities of operating leases | 557 | 576 | |||||||||
| Current maturities of finance leases | 117 | 172 | |||||||||
| Current maturities of other financial liabilities | 63 | 57 | |||||||||
| Other | 910 | 806 | |||||||||
| Total current liabilities | 24,764 | 22,203 | |||||||||
| Long-term debt | 23,059 | 25,057 | |||||||||
| Long-term obligations under operating leases | 4,517 | 4,503 | |||||||||
| Long-term obligations under finance leases | 78 | 91 | |||||||||
| Other liabilities and deferred credits: | |||||||||||
| Frequent flyer deferred revenue | 4,193 | 4,048 | |||||||||
| Pension liability | 985 | 968 | |||||||||
| Postretirement benefit liability | 625 | 637 | |||||||||
| Deferred income taxes | 545 | 594 | |||||||||
| Other financial liabilities | 2,495 | 2,265 | |||||||||
| Other | 1,453 | 1,414 | |||||||||
| Total other liabilities and deferred credits | 10,296 | 9,926 | |||||||||
| Commitments and contingencies | |||||||||||
| Stockholders' equity: | |||||||||||
| Preferred stock | — | — | |||||||||
| Common stock at par, $0.01 par value; authorized 1,000,000,000 shares; outstanding 328,803,086 and 328,018,739 shares at March 31, 2024 and December 31, 2023, respectively | 4 | 4 | |||||||||
| Additional capital invested | 8,973 | 8,992 | |||||||||
| Stock held in treasury, at cost | (3,372) | (3,441) | |||||||||
| Retained earnings | 3,664 | 3,831 | |||||||||
| Accumulated other comprehensive loss | (81) | (62) | |||||||||
| Total stockholders' equity | 9,188 | 9,324 | |||||||||
| Total liabilities and stockholders' equity | $ | 71,902 | $ | 71,104 |
The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
| Table of Contents |
UNITED AIRLINES HOLDINGS, INC.
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
(In millions)
| Three Months Ended March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Cash Flows from Operating Activities: | |||||||||||
| Net cash provided by operating activities | $ | 2,847 | $ | 3,142 | |||||||
| Cash Flows from Investing Activities: | |||||||||||
| Capital expenditures, net of flight equipment purchase deposit returns | (1,366) | (1,843) | |||||||||
| Purchases of short-term and other investments | (866) | (4,193) | |||||||||
| Proceeds from sale of short-term and other investments | 3,657 | 4,061 | |||||||||
| Proceeds from sale of property and equipment | 20 | 1 | |||||||||
| Other, net | (4) | 6 | |||||||||
| Net cash provided by (used in) investing activities | 1,441 | (1,968) | |||||||||
| Cash Flows from Financing Activities: | |||||||||||
| Proceeds from issuance of debt and other financing liabilities, net of discounts and fees | 3,111 | 288 | |||||||||
| Payments of long-term debt, finance leases and other financing liabilities | (5,031) | (820) | |||||||||
| Other, net | (18) | (31) | |||||||||
| Net cash used in financing activities | (1,938) | (563) | |||||||||
| Net increase in cash, cash equivalents and restricted cash | 2,350 | 611 | |||||||||
| Cash, cash equivalents and restricted cash at beginning of the period | 6,335 | 7,421 | |||||||||
| Cash, cash equivalents and restricted cash at end of the period (a) | $ | 8,685 | $ | 8,032 | |||||||
| Investing and Financing Activities Not Affecting Cash: | |||||||||||
| Property and equipment acquired through the issuance of debt, finance leases and other | $ | — | $ | 200 | |||||||
| Right-of-use assets acquired through operating leases | 132 | 295 | |||||||||
| Lease modifications and lease conversions | 14 | 23 | |||||||||
| Investment interests received in exchange for loans, goods and services | 18 | 21 |
(a) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheet:
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 8,401 | $ | 7,634 | |||||||
| Restricted cash — Current | 40 | 173 | |||||||||
| Restricted cash — Non-Current | 244 | 225 | |||||||||
| Total cash, cash equivalents and restricted cash | $ | 8,685 | $ | 8,032 |
The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
| Table of Contents |
UNITED AIRLINES HOLDINGS, INC.
STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY (UNAUDITED)
(In millions)
| Common Stock | Additional Capital Invested | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2023 | 328.0 | $ | 4 | $ | 8,992 | $ | (3,441) | $ | 3,831 | $ | (62) | $ | 9,324 | ||||||||||||||||||||||||||||
| Net loss | — | — | — | — | (124) | — | (124) | ||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | (19) | (19) | |||||||||||||||||||||||||||||||||||
| Stock-settled share-based compensation | — | — | 25 | — | — | — | 25 | ||||||||||||||||||||||||||||||||||
| Stock issued for share-based awards, net of shares withheld for tax | 0.8 | — | (44) | 69 | (43) | — | (18) | ||||||||||||||||||||||||||||||||||
| Balance at March 31, 2024 | 328.8 | $ | 4 | $ | 8,973 | $ | (3,372) | $ | 3,664 | $ | (81) | $ | 9,188 | ||||||||||||||||||||||||||||
| Balance at December 31, 2022 | 326.9 | $ | 4 | $ | 8,986 | $ | (3,534) | $ | 1,265 | $ | 175 | $ | 6,896 | ||||||||||||||||||||||||||||
| Net loss | — | — | — | — | (194) | — | (194) | ||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | (14) | (14) | ||||||||||||||||||||||||||||||||||
| Stock-settled share-based compensation | — | — | 11 | — | — | — | 11 | ||||||||||||||||||||||||||||||||||
| Stock issued for share-based awards, net of shares withheld for tax | 1.1 | — | (71) | 91 | (51) | — | (31) | ||||||||||||||||||||||||||||||||||
| Balance at March 31, 2023 | 328.0 | $ | 4 | $ | 8,926 | $ | (3,443) | $ | 1,020 | $ | 161 | $ | 6,668 | ||||||||||||||||||||||||||||
The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
| Table of Contents |
UNITED AIRLINES, INC.
STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)
(In millions)
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| Operating revenue: | |||||||||||||||||||||||
| Passenger | $ | 11,313 | $ | 10,274 | |||||||||||||||||||
| Cargo | 391 | 398 | |||||||||||||||||||||
| Other | 835 | 757 | |||||||||||||||||||||
| Total operating revenue | 12,539 | 11,429 | |||||||||||||||||||||
| Operating expense: | |||||||||||||||||||||||
| Salaries and related costs | 3,932 | 3,322 | |||||||||||||||||||||
| Aircraft fuel | 2,954 | 3,174 | |||||||||||||||||||||
| Landing fees and other rent | 804 | 717 | |||||||||||||||||||||
| Aircraft maintenance materials and outside repairs | 773 | 702 | |||||||||||||||||||||
| Depreciation and amortization | 708 | 655 | |||||||||||||||||||||
| Regional capacity purchase | 585 | 615 | |||||||||||||||||||||
| Distribution expenses | 480 | 403 | |||||||||||||||||||||
| Aircraft rent | 43 | 56 | |||||||||||||||||||||
| Special charges | 13 | 14 | |||||||||||||||||||||
| Other | 2,148 | 1,814 | |||||||||||||||||||||
| Total operating expense | 12,440 | 11,472 | |||||||||||||||||||||
| Operating income (loss) | 99 | (43) | |||||||||||||||||||||
| Nonoperating income (expense): | |||||||||||||||||||||||
| Interest expense | (454) | (486) | |||||||||||||||||||||
| Interest income | 177 | 170 | |||||||||||||||||||||
| Interest capitalized | 61 | 38 | |||||||||||||||||||||
| Unrealized gains (losses) on investments, net | (37) | 24 | |||||||||||||||||||||
| Miscellaneous, net | (10) | 41 | |||||||||||||||||||||
| Total nonoperating expense, net | (263) | (213) | |||||||||||||||||||||
| Loss before income tax benefit | (164) | (256) | |||||||||||||||||||||
| Income tax benefit | (40) | (62) | |||||||||||||||||||||
| Net loss | $ | (124) | $ | (194) |
The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
| Table of Contents |
UNITED AIRLINES, INC.
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
(In millions)
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| Net loss | $ | (124) | $ | (194) | |||||||||||||||||||
| Other comprehensive income (loss), net of tax: | |||||||||||||||||||||||
| Employee benefit plans | (17) | (35) | |||||||||||||||||||||
| Investments and other | (2) | 21 | |||||||||||||||||||||
| Total other comprehensive loss, net of tax | (19) | (14) | |||||||||||||||||||||
| Total comprehensive loss, net | $ | (143) | $ | (208) |
The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
| Table of Contents |
UNITED AIRLINES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions, except shares)
| March 31, 2024 | December 31, 2023 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 8,401 | $ | 6,058 | |||||||
| Short-term investments | 5,591 | 8,330 | |||||||||
| Restricted cash | 40 | 31 | |||||||||
| Receivables, less allowance for credit losses (2024 — $19; 2023 — $18) | 2,259 | 1,898 | |||||||||
| Aircraft fuel, spare parts and supplies, less obsolescence allowance (2024 — $721; 2023 — $689) | 1,675 | 1,561 | |||||||||
| Prepaid expenses and other | 730 | 609 | |||||||||
| Total current assets | 18,696 | 18,487 | |||||||||
| Operating property and equipment: | |||||||||||
| Flight equipment | 49,277 | 48,448 | |||||||||
| Other property and equipment | 10,940 | 10,527 | |||||||||
| Purchase deposits for flight equipment | 3,558 | 3,550 | |||||||||
| Total operating property and equipment | 63,775 | 62,525 | |||||||||
| Less — Accumulated depreciation and amortization | (23,305) | (22,710) | |||||||||
| Total operating property and equipment, net | 40,470 | 39,815 | |||||||||
| Operating lease right-of-use assets | 3,895 | 3,914 | |||||||||
| Other assets: | |||||||||||
| Goodwill | 4,527 | 4,527 | |||||||||
| Intangibles, less accumulated amortization (2024 — $1,339; 2023 — $1,495) | 2,717 | 2,725 | |||||||||
| Restricted cash | 244 | 245 | |||||||||
| Investments in affiliates and other, less allowance for credit losses (2024 — $32; 2023 —$38) | 1,353 | 1,391 | |||||||||
| Total other assets | 8,841 | 8,888 | |||||||||
| Total assets | $ | 71,902 | $ | 71,104 |
(continued on next page)
| Table of Contents |
UNITED AIRLINES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions, except shares)
| March 31, 2024 | December 31, 2023 | ||||||||||
| LIABILITIES AND STOCKHOLDER'S EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 4,344 | $ | 3,835 | |||||||
| Accrued salaries and benefits | 2,128 | 2,940 | |||||||||
| Advance ticket sales | 9,601 | 6,704 | |||||||||
| Frequent flyer deferred revenue | 3,086 | 3,095 | |||||||||
| Current maturities of long-term debt | 3,958 | 4,018 | |||||||||
| Current maturities of operating leases | 557 | 576 | |||||||||
| Current maturities of finance leases | 117 | 172 | |||||||||
| Current maturities of other financial liabilities | 63 | 57 | |||||||||
| Other | 912 | 808 | |||||||||
| Total current liabilities | 24,766 | 22,205 | |||||||||
| Long-term debt | 23,059 | 25,057 | |||||||||
| Long-term obligations under operating leases | 4,517 | 4,503 | |||||||||
| Long-term obligations under finance leases | 78 | 91 | |||||||||
| Other liabilities and deferred credits: | |||||||||||
| Frequent flyer deferred revenue | 4,193 | 4,048 | |||||||||
| Pension liability | 985 | 968 | |||||||||
| Postretirement benefit liability | 625 | 637 | |||||||||
| Deferred income taxes | 573 | 622 | |||||||||
| Other financial liabilities | 2,495 | 2,265 | |||||||||
| Other | 1,453 | 1,414 | |||||||||
| Total other liabilities and deferred credits | 10,324 | 9,954 | |||||||||
| Commitments and contingencies | |||||||||||
| Stockholder's equity: | |||||||||||
| Common stock at par, $0.01 par value; authorized 1,000 shares; issued and outstanding 1,000 shares at both March 31, 2024 and December 31, 2023 | — | — | |||||||||
| Additional capital invested | 507 | 482 | |||||||||
| Retained earnings | 6,212 | 6,336 | |||||||||
| Accumulated other comprehensive loss | (81) | (62) | |||||||||
| Payable to parent | 2,520 | 2,538 | |||||||||
| Total stockholder's equity | 9,158 | 9,294 | |||||||||
| Total liabilities and stockholder's equity | $ | 71,902 | $ | 71,104 |
The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
| Table of Contents |
UNITED AIRLINES, INC.
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
(In millions)
| Three Months Ended March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Cash Flows from Operating Activities: | |||||||||||
| Net cash provided by operating activities | $ | 2,829 | $ | 3,111 | |||||||
| Cash Flows from Investing Activities: | |||||||||||
| Capital expenditures, net of flight equipment purchase deposit returns | (1,366) | (1,843) | |||||||||
| Purchases of short-term and other investments | (866) | (4,193) | |||||||||
| Proceeds from sale of short-term and other investments | 3,657 | 4,061 | |||||||||
| Proceeds from sale of property and equipment | 20 | 1 | |||||||||
| Other, net | (4) | 6 | |||||||||
| Net cash provided by (used in) investing activities | 1,441 | (1,968) | |||||||||
| Cash Flows from Financing Activities: | |||||||||||
| Proceeds from issuance of debt and other financing liabilities, net of discounts and fees | 3,111 | 288 | |||||||||
| Payments of long-term debt, finance leases and other financing liabilities | (5,031) | (820) | |||||||||
| Net cash used in financing activities | (1,920) | (532) | |||||||||
| Net increase in cash, cash equivalents and restricted cash | 2,350 | 611 | |||||||||
| Cash, cash equivalents and restricted cash at beginning of the period | 6,335 | 7,421 | |||||||||
| Cash, cash equivalents and restricted cash at end of the period (a) | $ | 8,685 | $ | 8,032 | |||||||
| Investing and Financing Activities Not Affecting Cash: | |||||||||||
| Property and equipment acquired through the issuance of debt, finance leases and other | $ | — | $ | 200 | |||||||
| Right-of-use assets acquired through operating leases | 132 | 295 | |||||||||
| Lease modifications and lease conversions | 14 | 23 | |||||||||
| Investment interests received in exchange for loans, goods and services | 18 | 21 |
(a) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheet:
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 8,401 | $ | 7,634 | |||||||
| Restricted cash — Current | 40 | 173 | |||||||||
| Restricted cash — Non-Current | 244 | 225 | |||||||||
| Total cash, cash equivalents and restricted cash | $ | 8,685 | $ | 8,032 |
The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
| Table of Contents |
UNITED AIRLINES, INC.
STATEMENTS OF CONSOLIDATED STOCKHOLDER'S EQUITY (UNAUDITED)
(In millions)
| Additional Capital Invested | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Payable to Parent | Total | |||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | 482 | $ | 6,336 | $ | (62) | $ | 2,538 | $ | 9,294 | |||||||||||||||||||
| Net loss | — | (124) | — | — | (124) | ||||||||||||||||||||||||
| Other comprehensive loss | — | — | (19) | — | (19) | ||||||||||||||||||||||||
| Stock-settled share-based compensation | 25 | — | — | — | 25 | ||||||||||||||||||||||||
| Other | — | — | — | (18) | (18) | ||||||||||||||||||||||||
| Balance at March 31, 2024 | $ | 507 | $ | 6,212 | $ | (81) | $ | 2,520 | $ | 9,158 | |||||||||||||||||||
| Balance at December 31, 2022 | $ | 403 | $ | 3,716 | $ | 175 | $ | 2,571 | $ | 6,865 | |||||||||||||||||||
| Net loss | — | (194) | — | — | (194) | ||||||||||||||||||||||||
| Other comprehensive loss | — | — | (14) | — | (14) | ||||||||||||||||||||||||
| Stock-settled share-based compensation | 11 | — | — | — | 11 | ||||||||||||||||||||||||
| Other | — | — | — | (32) | (32) | ||||||||||||||||||||||||
| Balance at March 31, 2023 | $ | 414 | $ | 3,522 | $ | 161 | $ | 2,539 | $ | 6,636 | |||||||||||||||||||
The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
| Table of Contents |
UNITED AIRLINES HOLDINGS, INC. AND UNITED AIRLINES, INC.
COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
United Airlines Holdings, Inc. (together with its consolidated subsidiaries, "UAL" or the "Company") is a holding company and its wholly-owned subsidiary is United Airlines, Inc. (together with its consolidated subsidiaries, "United"). This Quarterly Report on Form 10-Q is a combined report of UAL and United, including their respective consolidated financial statements. As UAL consolidates United for financial statement purposes, disclosures that relate to activities of United also apply to UAL, unless otherwise noted. United's operating revenues and operating expenses comprise nearly 100% of UAL's revenues and operating expenses. In addition, United comprises approximately the entire balance of UAL's assets, liabilities and operating cash flows. When appropriate, UAL and United are named specifically for their individual contractual obligations and related disclosures, and any significant differences between the operations and results of UAL and United are separately disclosed and explained. We sometimes use the words "we," "our," "us," and the "Company" in this report for disclosures that relate to all of UAL and United.
The UAL and United unaudited condensed consolidated financial statements shown here have been prepared as required by the U.S. Securities and Exchange Commission (the "SEC"). Some information and footnote disclosures normally included in financial statements that comply with accounting principles generally accepted in the United States ("GAAP") have been condensed or omitted as permitted by the SEC. The financial statements include all adjustments, including normal recurring adjustments and other adjustments, which are considered necessary for a fair presentation of the Company's financial position and results of operations for interim periods presented. The UAL and United financial statements should be read together with the information included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the "2023 Form 10-K"). The Company's quarterly financial data is subject to seasonal fluctuations. Historically its second and third quarter financial results have reflected higher travel demand, and were better than its first and fourth quarter financial results.
NOTE 1 — REVENUE
Revenue by Geography. The table below presents the Company's operating revenue by principal geographic region (as defined by the U.S. Department of Transportation) (in millions):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| Domestic (U.S. and Canada) | $ | 7,673 | $ | 7,167 | |||||||||||||||||||
| Atlantic | 1,833 | 1,832 | |||||||||||||||||||||
| Latin America | 1,445 | 1,316 | |||||||||||||||||||||
| Pacific | 1,588 | 1,114 | |||||||||||||||||||||
| Total | $ | 12,539 | $ | 11,429 |
Advance Ticket Sales. The Company defers amounts related to future travel in its Advance ticket sales liability account. All tickets sold at any given point in time have travel dates through the next 12 months. The Company estimates the value of Advance ticket sales that will expire unused ("breakage") and recognizes revenue and any changes in estimates in proportion to the usage of the related tickets. To determine breakage, the Company uses its historical experience with expired tickets and certificates and other facts, such as recent aging trends, program changes and modifications that could affect the ultimate expiration patterns.
In the three months ended March 31, 2024 and 2023, the Company recognized approximately $4.0 billion and $3.5 billion, respectively, of passenger revenue for tickets that were included in Advance ticket sales at the beginning of those periods.
Ancillary Fees. The Company charges fees, separately from ticket sales, for certain ancillary services that are directly related to passengers' travel. This includes fees for baggage, premium seats, inflight amenities and other ticket-related fees. These ancillary fees are part of the travel performance obligation and, as such, are recognized as passenger revenue when the travel occurs. The Company recorded $984 million and $892 million of ancillary fees within passenger revenue in the three months ended March 31, 2024 and 2023, respectively.
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Frequent Flyer Accounting. The table below presents a roll forward of Frequent flyer deferred revenue (in millions):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| Total Frequent flyer deferred revenue - beginning balance | $ | 7,143 | $ | 6,675 | |||||||||||||||||||
| Total miles awarded | 840 | 747 | |||||||||||||||||||||
| Travel miles redeemed | (665) | (531) | |||||||||||||||||||||
| Non-travel miles redeemed | (39) | (31) | |||||||||||||||||||||
| Total Frequent flyer deferred revenue - ending balance | $ | 7,279 | $ | 6,860 |
In the three months ended March 31, 2024 and 2023, the Company recognized, in Other operating revenue, $714 million and $646 million, respectively, related to the marketing, advertising, non-travel miles redeemed (net of related costs) and other travel-related benefits of the mileage revenue associated with our various partner agreements including, but not limited to, our JPMorgan Chase Bank, N.A. MileagePlus co-brand agreement. The portion related to the MileagePlus miles awarded of the total amounts received from our various partner agreements is deferred and presented in the table above as an increase to the Frequent flyer deferred revenue. We determine the current portion of that account based on expected redemptions in the next 12 months.
NOTE 2 — LOSS PER SHARE
The following table shows the computation of basic and diluted earnings per share, the latter of which uses the treasury stock method to calculate the dilutive effect of UAL's potential common stock (in millions, except per share amounts):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| Loss available to common stockholders | $ | (124) | $ | (194) | |||||||||||||||||||
| Weighted-average shares outstanding, basic and diluted | 328.3 | 327.4 | |||||||||||||||||||||
| Loss per share, basic and diluted | $ | (0.38) | $ | (0.59) | |||||||||||||||||||
| Potentially dilutive securities (a) | |||||||||||||||||||||||
| Stock warrants (b) | 3.5 | 1.5 | |||||||||||||||||||||
| Employee stock awards | 0.5 | 0.7 | |||||||||||||||||||||
| (a) Weighted-average potentially dilutive securities outstanding excluded from the computation of diluted earnings per share because the securities would have had an antidilutive effect. | |||||||||||||||||||||||
| (b) Represent warrants issued to the U.S. Treasury Department ("Treasury") pursuant to the payroll support program, including extensions, and the loan program established under the Coronavirus Aid, Relief, and Economic Security Act. The Company issued to Treasury warrants to purchase up to approximately 10 million shares of UAL common stock at exercise prices ranging from $31.50 to $53.92 and expiration dates ranging from April 20, 2025 to June 10, 2026. All warrants were outstanding as of March 31, 2024. |
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NOTE 3 — ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The table below presents the components of the Company's accumulated other comprehensive income (loss), net of tax ("AOCI") (in millions):
| Pension and Other Postretirement Liabilities | Investments and Other | Deferred Taxes (a) | Total | |||||||||||||||||||||||
| Balance at December 31, 2023 | $ | 289 | $ | (4) | $ | (347) | $ | (62) | ||||||||||||||||||
| Changes in value | 3 | (2) | — | 1 | ||||||||||||||||||||||
| Amounts reclassified to earnings | (25) | (b) | — | 5 | (20) | |||||||||||||||||||||
| Balance at March 31, 2024 | $ | 267 | $ | (6) | $ | (342) | $ | (81) | ||||||||||||||||||
| Balance at December 31, 2022 | $ | 626 | $ | (35) | $ | (416) | $ | 175 | ||||||||||||||||||
| Changes in value | (9) | 27 | (4) | 14 | ||||||||||||||||||||||
| Amounts reclassified to earnings | (35) | (b) | — | 7 | (28) | |||||||||||||||||||||
| Balance at March 31, 2023 | $ | 582 | $ | (8) | $ | (413) | $ | 161 |
(a) Includes approximately $285 million of deferred income tax expense that will not be recognized in net income until the related pension and postretirement benefit obligations are fully extinguished. We consider all income sources, including other comprehensive income, in determining the amount of tax benefit allocated to results from operations.
(b) This AOCI component is included in the computation of net periodic pension and other postretirement costs, specifically the following components: amortization of unrecognized (gain) loss, amortization of prior service credit and other (see Note 5 of this report for additional information).
NOTE 4 — INCOME TAXES
The Company's effective tax rates for the three months ended March 31, 2024 and 2023 were 24.4% and 24.2%, respectively. The provision for income taxes is based on the estimated annual effective tax rate, which represents a blend of federal, state and foreign taxes and includes the impact of certain nondeductible items.
NOTE 5 — EMPLOYEE BENEFIT PLANS
Defined Benefit Pension and Other Postretirement Benefit Plans. The Company's net periodic benefit cost includes the following components for the three months ended March 31 (in millions):
| Pension Benefits | Other Postretirement Benefits | Affected Line Item in the Statements of Consolidated Operations | ||||||||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||
| Service cost | $ | 34 | $ | 31 | $ | 1 | $ | 1 | Salaries and related costs | |||||||||||||||||||||||
| Interest cost | 57 | 55 | 10 | 10 | Miscellaneous, net | |||||||||||||||||||||||||||
| Expected return on plan assets | (69) | (63) | — | — | Miscellaneous, net | |||||||||||||||||||||||||||
| Amortization of unrecognized (gain) loss | 5 | 2 | (7) | (9) | Miscellaneous, net | |||||||||||||||||||||||||||
| Amortization of prior service credit | — | — | (23) | (28) | Miscellaneous, net | |||||||||||||||||||||||||||
| Total | $ | 27 | $ | 25 | $ | (19) | $ | (26) |
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NOTE 6 — FAIR VALUE MEASUREMENTS, INVESTMENTS AND NOTES RECEIVABLE
The table below presents disclosures about the financial assets and liabilities measured at fair value on a recurring basis in UAL's financial statements (in millions):
| March 31, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 8,401 | $ | 8,401 | $ | — | $ | — | $ | 6,058 | $ | 6,058 | $ | — | $ | — | |||||||||||||||||||||||||||||||
| Restricted cash — current | 40 | 40 | — | — | 31 | 31 | — | — | |||||||||||||||||||||||||||||||||||||||
| Restricted cash — non-current | 244 | 244 | — | — | 245 | 245 | — | — | |||||||||||||||||||||||||||||||||||||||
| Short-term investments: | |||||||||||||||||||||||||||||||||||||||||||||||
| U.S. government and agency notes | 5,518 | — | 5,518 | — | 8,257 | — | 8,257 | — | |||||||||||||||||||||||||||||||||||||||
| Certificates of deposit placed through an account registry service ("CDARS") | 73 | — | 73 | — | 73 | — | 73 | — | |||||||||||||||||||||||||||||||||||||||
| Long-term investments: | |||||||||||||||||||||||||||||||||||||||||||||||
| Equity securities | 116 | 116 | — | — | 177 | 177 | — | — |
Investments presented in the table above have the same fair value as their carrying value.
Restricted cash - current — Primarily includes amounts to be used for the payment of fees, principal and interest on senior secured notes and a secured term loan facility (the "MileagePlus Financing") secured by substantially all of the assets of Mileage Plus Holdings, LLC, a direct wholly-owned subsidiary of United.
Restricted cash - non-current — Primarily includes collateral associated with the MileagePlus Financing, collateral for letters of credit and collateral associated with facility leases and other insurance-related obligations.
Short-term investments — The short-term investments shown in the table above are classified as available-for-sale and have remaining maturities of 17 months or less.
Long-term investments: Equity securities — Represents equity and equity-linked securities (such as vested warrants) that make up United's investments in Azul Linhas Aéreas Brasileiras S.A., Archer Aviation Inc., Eve Holding, Inc. and Mesa Air Group, Inc.
Other fair value information. The table below presents the carrying values and estimated fair values of financial instruments not presented in the tables above (in millions). Carrying amounts include any related discounts, premiums and issuance costs:
| March 31, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long-term debt | $ | 27,017 | $ | 26,480 | $ | — | $ | 20,319 | $ | 6,161 | $ | 29,075 | $ | 28,302 | $ | — | $ | 22,543 | $ | 5,759 |
Fair value of the financial instruments included in the tables above was determined as follows:
| Description | Fair Value Methodology | ||||
| Cash and cash equivalents and Restricted cash (current and non-current) | The carrying amounts of these assets approximate fair value. | ||||
| Short-term and Long-term investments | Fair value is based on (a) the trading prices of the investment or similar instruments or (b) broker quotes obtained by third-party valuation services. | ||||
| Long-term debt | Fair values were based on either market prices or the discounted amount of future cash flows using our current incremental rate of borrowing for similar liabilities or assets. |
Equity Method Investments. As of March 31, 2024, United holds investments, accounted for using the equity method, with a combined carrying value of approximately $230 million. Significant equity method investments are described below:
- Republic Airways Holdings Inc. United holds a 19% minority interest in Republic Airways Holdings Inc., which is the parent company of Republic Airways Inc. ("Republic"). Republic currently operates 66 regional aircraft under capacity purchase agreements ("CPAs") that have terms through 2035.
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CommuteAir LLC. United owns a 40% minority ownership stake in CommuteAir LLC. CommuteAir currently operates 53 regional aircraft under a CPA that has a term through 2026.
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United Airlines Ventures Sustainable Flight Fund (the "Fund"). During the first quarter of 2023, United launched, through its corporate venture capital arm, United Airlines Ventures, Ltd., an investment vehicle designed to support start-ups focused on decarbonizing air travel by accelerating the research, production and technologies associated with sustainable aviation fuel (SAF). As of March 31, 2024, the Company indirectly holds a 33% ownership interest in the Fund.
Other Investments. As of March 31, 2024, United has equity investments in Abra Group Limited, a multinational airline holding company, JetSuiteX, Inc., an independent air carrier doing business as JSX, as well as a number of companies with emerging technologies and sustainable solutions. None of these investments have readily determinable fair values. We account for these investments at cost less impairment, adjusted for observable price changes in orderly transactions for an identical or similar investment of the same issuer. As of March 31, 2024, the carrying value of these investments was $421 million.
Notes Receivable. As of March 31, 2024, the Company has $86 million of notes receivable, net of allowance for credit losses, the majority of which is from certain of its regional carriers. The current portions of the notes receivable are recorded in Receivables, less allowance for credit losses. The long-term portion of the notes receivable is recorded in Investments in affiliates and other, less allowance for credit losses on the Company's consolidated balance sheet.
NOTE 7 — COMMITMENTS AND CONTINGENCIES
Commitments. As of March 31, 2024, United had firm commitments to purchase aircraft from The Boeing Company ("Boeing") and Airbus S.A.S. ("Airbus") as presented in the table below:
| Contractual Aircraft Deliveries | Expected Aircraft Deliveries (b) | |||||||||||||||||||||||||||||||||||||||||||
| Aircraft Type | Number of Firm Commitments (a) | Last Nine Months of 2024 | 2025 | After 2025 | Last Nine Months of 2024 | 2025 | After 2025 | |||||||||||||||||||||||||||||||||||||
| 787 | 150 | 8 | 18 | 124 | 5 | 12 | 133 | |||||||||||||||||||||||||||||||||||||
| 737 MAX 8 | 36 | 36 | — | — | 19 | 17 | — | |||||||||||||||||||||||||||||||||||||
| 737 MAX 9 | 144 | 34 | 40 | 70 | 10 | 44 | 90 | |||||||||||||||||||||||||||||||||||||
| 737 MAX 10 | 167 | — | — | 167 | — | — | 167 | |||||||||||||||||||||||||||||||||||||
| A321neo | 123 | 23 | 38 | 62 | 22 | 24 | 77 | |||||||||||||||||||||||||||||||||||||
| A321XLR | 50 | — | 8 | 42 | — | 1 | 49 | |||||||||||||||||||||||||||||||||||||
| A350 | 45 | — | — | 45 | — | — | 45 | |||||||||||||||||||||||||||||||||||||
| (a) United also has options and purchase rights for additional aircraft. | ||||||||||||||||||||||||||||||||||||||||||||
| (b) Expected aircraft deliveries reflect adjustments to contractual delivery schedules as communicated by Boeing and Airbus or estimated by United. However, aircraft deliveries are subject to a number of variables, as further described in Part I, Item 1A. Risk Factors of the 2023 Form 10-K, and we cannot guarantee delivery of any particular aircraft at any specific time notwithstanding firm purchase commitments. |
The aircraft listed in the table above are scheduled for delivery through 2033. The amount and timing of the Company's future capital commitments could change to the extent that: (i) the Company and the aircraft manufacturers, with whom the Company has existing orders for new aircraft, agree to modify the contracts governing those orders; (ii) rights are exercised pursuant to the relevant agreements to cancel deliveries or modify the timing of deliveries; or (iii) the aircraft manufacturers are unable to deliver in accordance with the terms of those orders.
On April 14, 2024, the Company entered into confidential arrangements with Boeing with respect to compensation for financial damages incurred in first quarter of 2024 due to the Federal Aviation Administration grounding of the Boeing 737 MAX 9 aircraft, and a confidential agreement to accommodate certification delays for the Boeing 737 MAX 10 aircraft. The compensation provided by Boeing for the grounding damages and in connection with rescheduling deliveries is in the form of credit memos for use on future purchases from Boeing. The Company plans to account for these arrangements as a reduction to the cost basis of the previously-delivered Boeing 737 MAX 9 aircraft and future deliveries of the MAX 9 and MAX 10 aircraft, which is expected to reduce future depreciation expense associated with these aircraft.
The table below summarizes United's firm commitments as of March 31, 2024, which include aircraft and related spare engines, aircraft improvements and non-aircraft capital commitments. Aircraft commitments are based on contractual scheduled aircraft deliveries without any adjustments communicated by Boeing and Airbus or estimated by United but reflecting the discounts related to future deliveries offered as part of the April 14, 2024 arrangements between United and Boeing.
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| (in billions) | ||||||||
| Last nine months of 2024 | $ | 7.1 | ||||||
| 2025 | 7.4 | |||||||
| 2026 | 5.5 | |||||||
| 2027 | 4.3 | |||||||
| 2028 | 6.4 | |||||||
| After 2028 | 27.1 | |||||||
| $ | 57.8 |
In April 2024, the Company signed letters of intent to enter into future leasing arrangements with major aircraft leasing companies for 35 Airbus A321neo aircraft with expected deliveries in 2026 and 2027.
Regional CPAs. During the three months ended March 31, 2024, United amended several of its CPAs with certain of its regional carriers to increase the contractually agreed fees (carrier costs) paid to those carriers and to modify the terms for certain aircraft. Our future commitments under our CPAs are dependent on numerous variables, and are, therefore, difficult to predict. The most important of these variables is the number of scheduled block hours. Although we are not required to purchase a minimum number of block hours under certain of our CPAs, we have set forth below estimates of our future payments under the CPAs based on our assumptions. The actual amounts we pay to our regional operators under CPAs could differ materially from these estimates. United's estimates of its future payments under all of the CPAs do not include the portion of the underlying obligation for any aircraft leased to a regional carrier, or deemed to be leased from other regional carriers, and facility rent. For purposes of calculating these estimates, we have assumed (1) the number of block hours flown is based on our anticipated level of flight activity or at any contractual minimum utilization levels if applicable, whichever is higher, (2) that we will reduce the fleet as rapidly as contractually allowed under each CPA, (3) that aircraft utilization, stage length and load factors will remain constant, (4) that each carrier's operational performance will remain at recent historic levels and (5) an annual projected inflation rate. Based on these assumptions as of March 31, 2024, our estimated future payments through the end of the terms of our CPAs are presented in the table below:
| (in billions) | ||||||||
| Last nine months of 2024 | $ | 1.9 | ||||||
| 2025 | 2.3 | |||||||
| 2026 | 2.2 | |||||||
| 2027 | 1.8 | |||||||
| 2028 | 1.3 | |||||||
| After 2028 | 4.2 | |||||||
| $ | 13.7 |
Guarantees. As of March 31, 2024, United is the guarantor of approximately $1.9 billion in aggregate principal amount of tax-exempt special facilities revenue bonds and interest thereon. These bonds, issued by various airport municipalities, are payable solely from rentals paid under long-term agreements with the respective governing bodies. The leasing arrangements associated with these obligations are accounted for as operating leases recognized on the Company's consolidated balance sheet with the associated expense recorded on a straight-line basis over the expected lease term. All of these bonds are due between 2024 and 2041.
As of March 31, 2024, United is the guarantor of $73 million of aircraft mortgage debt issued by one of United's regional carriers. The aircraft mortgage debt is subject to similar increased cost provisions as described below for the Company's debt, and the Company would potentially be responsible for those costs under the guarantees.
Increased Cost Provisions. In United's financing transactions that include loans in which United is the borrower, United typically agrees to reimburse lenders for any reduced returns with respect to the loans due to any change in capital requirements and, in the case of loans with respect to which the interest rate is based on the Secured Overnight Financing Rate (SOFR), for certain other increased costs that the lenders incur in carrying these loans as a result of any change in law, subject, in most cases, to obligations of the lenders to take certain limited steps to mitigate the requirement for, or the amount of, such increased costs. At March 31, 2024, the Company had $10.1 billion of floating rate debt with remaining terms of up to approximately 12 years that are subject to these increased cost provisions. In several financing transactions involving loans or leases from non-U.S. entities, with remaining terms of up to approximately 12 years and an aggregate balance of $6.9 billion, the Company
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bears the risk of any change in tax laws that would subject loan or lease payments thereunder to non-U.S. entities to withholding taxes, subject to customary exclusions.
Labor**.** As of March 31, 2024, the Company had approximately 104,500 employees, of whom approximately 83% were represented by various U.S. labor organizations.
On February 23, 2024, United and the International Association of Machinists and Aerospace Workers ratified agreements covering security guards in California and central load planners. The ratified agreements are effective through 2025.
On February 28, 2024, United and the International Brotherhood of Teamsters reached a tentative agreement for an extension to their labor contract. The agreement, if ratified, becomes amendable in December 2028.
NOTE 8 — DEBT
On February 15, 2024, the Company entered into an Amended and Restated Revolving Credit and Guaranty Agreement (the "Revolving Credit Facility") increasing the borrowing capacity by $1.115 billion, which may be drawn upon until February 15, 2029, in the case of any Revolving Loans (as defined in the Revolving Credit Facility) made by the Extending Lenders (as defined in the Revolving Credit Facility), and April 21, 2025, in the case of any Revolving Loans made by the 2024 Non-Extending Lenders (as defined in the Revolving Credit Facility). The revolving loan commitments of the Extending Lenders equal $2.7 billion and the revolving loan commitments of the 2024 Non-Extending Lenders equal $165 million. The Revolving Loans, if any, will bear interest at a variable rate equal to Term SOFR (as defined in the Revolving Credit Facility), generally subject to a floor, plus a credit adjustment spread described in the Revolving Credit Facility, or, at United's election, another rate based on certain market interest rates, also generally subject to a floor, in each case plus a variable margin ranging from 3.00% to 3.50%, in the case of Term SOFR loans, and 2.00% to 2.50%, in the case of loans at other market rates. As of March 31, 2024, we had $2.87 billion undrawn and available under the Revolving Credit Facility.
On April 16, 2024, the Company increased the revolving loan commitments of the Extending Lenders by $100 million. The revolving loan commitments of the Extending Lenders now equal $2.8 billion and the revolving loan commitments of the 2024 Non-Extending Lenders remain $165 million.
On February 22, 2024, the Company also entered into Amendment No. 2 to Term Loan Credit and Guaranty Agreement (as amended, the "Term Loan Facility" and, together with the Revolving Credit Facility, the "Loan Facilities") and (i) used available cash in an amount equal to $1.37 billion to partially prepay the term loans under the 2021 term loans and (ii) borrowed the entire term loan commitment available under the Term Loan Facility in an amount equal to $2.5 billion and used the proceeds of such terms loans (the "Term Loans") to prepay in full the remaining outstanding principal balance under the existing term loan facility. The Term Loans will bear interest at a variable rate equal to Term SOFR (subject to a floor of 0.0%); or, at United's election, another rate based on certain market interest rates (subject to a floor of 1.0%), in each case plus a margin of 2.75%, in the case of Term SOFR loans, and 1.75%, in the case of loans at other market rates. The remaining balance of the Term Loans will mature and be due and payable on February 22, 2031.
The table below presents the Company's contractual principal payments (not including $267 million of unamortized debt discount, premiums and debt issuance costs) as of March 31, 2024 under then-outstanding long-term debt agreements (in millions):
| Last nine months of 2024 | $ | 2,936 | ||||||
| 2025 | 3,459 | |||||||
| 2026 | 5,255 | |||||||
| 2027 | 2,486 | |||||||
| 2028 | 1,648 | |||||||
| After 2028 | 11,500 | |||||||
| $ | 27,284 |
Our debt agreements contain customary terms and conditions as well as various affirmative, negative and financial covenants that, among other things, restrict the ability of the Company and its subsidiaries to incur additional indebtedness and pay dividends or repurchase stock. As of March 31, 2024, UAL and United were in compliance with their respective debt covenants.
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NOTE 9 — SPECIAL CHARGES
For the three months ended March 31, operating and nonoperating special charges and unrealized (gains) losses on investments in the statements of consolidated operations consisted of the following (in millions):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| Operating: | |||||||||||||||||||||||
| (Gains) losses on sale of assets and other special charges | $ | 13 | $ | 14 | |||||||||||||||||||
| Total operating special charges | 13 | 14 | |||||||||||||||||||||
| Nonoperating: | |||||||||||||||||||||||
| Nonoperating unrealized (gains) losses on investments, net | 37 | (24) | |||||||||||||||||||||
| Nonoperating debt extinguishment and modification fees | 35 | — | |||||||||||||||||||||
| Total nonoperating special charges and unrealized (gains) losses on investments, net | 72 | (24) | |||||||||||||||||||||
| Total operating and nonoperating special charges and unrealized (gains) losses on investments, net | 85 | (10) | |||||||||||||||||||||
| Income tax benefit, net of valuation allowance | (11) | (3) | |||||||||||||||||||||
| Total operating and nonoperating special charges and unrealized (gains) losses on investments, net of income taxes | $ | 74 | $ | (13) |
2024
(Gains) losses on sale of assets and other special charges. During the three months ended March 31, 2024, the Company incurred $13 million of charges primarily consisting of a settlement related to a certain pilot long term disability plan, accelerated depreciation on assets with shortened lives, and other losses on disposal of assets, which were partially offset by a gain from a favorable outcome related to a certain contract dispute as well as gains on sales of assets.
Nonoperating unrealized (gains) losses on investments, net. During the three months ended March 31, 2024, the Company recorded losses of $37 million primarily for the change in the market value of its investments in equity securities.
Nonoperating debt extinguishment and modification fees. During the three months ended March 31, 2024, the Company recorded $35 million of charges primarily related to the refinancing of its 2021 term loans.
2023
(Gains) losses on sale of assets and other special charges. During the three months ended March 31, 2023, the Company recorded $14 million of net charges primarily comprised of accelerated depreciation related to certain of the Company's assets that were retired early and other gains and losses on the sale of assets.
Nonoperating unrealized (gains) losses on investments, net. During the three months ended March 31, 2023, the Company recorded gains of $24 million primarily related to the change in the market value of its investments in equity securities.
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