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United Announces Second-Quarter 2014 Profit

July 24, 2014

UAL Reports $919 Million Second-Quarter 2014 Profit Excluding Special Items; $789 Million Profit Including Special Items

CHICAGO, July 24, 2014 /PRNewswire/ — United Airlines (UAL) today reported second-quarter 2014 net income of $919 million, an increase of 51 percent year-over-year, or $2.34 per diluted share, excluding $130 million of special items. Including special items, UAL reported second-quarter 2014 net income of $789 million, or $2.01 per diluted share.

    --  United's consolidated passenger revenue per available seat mile (PRASM)
        increased 3.7 percent in the second quarter of 2014 compared to the
        second quarter of 2013.
    --  Second-quarter 2014 consolidated unit costs (CASM), excluding special
        charges, third-party business expenses, fuel and profit sharing,
        decreased 0.2 percent year-over-year on a consolidated capacity
        reduction of 0.1 percent. Second-quarter 2014 CASM, including those
        items, increased 2.2 percent year-over-year.
    --  The company generated $1.5 billion of operating cash flow in the second
        quarter of 2014.
    --  UAL ended the second quarter with $6.8 billion in unrestricted
        liquidity.
    --  The company earned a 10.3 percent return on invested capital for the 12
        months ended June 30, 2014.
    --  UAL's Board of Directors authorized a $1.0 billion share repurchase
        program, which the company expects to complete within the next three
        years.

“I am encouraged by the solid progress we made in the second quarter. Our team is focused on improving our operations and service and on continuing to improve year-over-year revenue performance and cost control,” said Jeff Smisek, UAL’s chairman, president and chief executive officer. “The $1 billion share repurchase program we announced today demonstrates our progress and commitment to increasing value for our shareholders and the confidence we have in our plan.”

Second-Quarter Revenue and Capacity

For the second quarter of 2014, total revenue was $10.3 billion, an increase of 3.3 percent year-over-year. Second-quarter consolidated passenger revenue increased 3.6 percent to $9.0 billion, compared to the same period in 2013. Ancillary revenue per passenger in the second quarter increased 7.9 percent year-over-year to more than $21 per passenger. Second-quarter cargo revenue decreased 1.7 percent versus the second quarter of 2013 to $232 million. Other revenue in the second quarter increased 1.7 percent year-over-year to $1.1 billion.

Consolidated revenue passenger miles increased 0.6 percent and consolidated available seat miles decreased 0.1 percent year-over-year for the second quarter, resulting in a second-quarter consolidated load factor of 85.3 percent.

Second-quarter 2014 consolidated PRASM increased 3.7 percent and consolidated yield increased 3.0 percent compared to the second quarter of 2013. The company’s consolidated domestic PRASM, including both mainline and regional flying, increased 5.6 percent year-over-year.

“We are beginning to see the benefits of the changes we’re implementing to our network and revenue management processes,” said Jim Compton, UAL’s vice chairman and chief revenue officer. “We have more work to do, however, and will continue to make the appropriate adjustments to accelerate our revenue growth.”

Passenger revenue for the second quarter of 2014 and period-to-period comparisons of related statistics for UAL’s mainline and regional operations are as follows:


                    2Q 2014    Passenger   PRASM vs. 2Q  Yield
                   Passenger  Revenue vs.       2013     vs. 2Q
                    Revenue                               2013     Available

                  (millions)    2Q 2013                          Seat Miles
                                                                     vs.

                                                                   2Q 2013
                                                                   -------

    Domestic           $3,517         6.3%          7.8%    6.8%       (1.4%)

    Atlantic            1,710         2.8%          2.5%    2.1%         0.3%

    Pacific             1,190       (0.3%)        (2.6%)  (0.8%)         2.4%

    Latin America         731        10.3%          4.4%    1.5%         5.6%
                          ---

    International       3,631         3.2%          1.0%    1.0%         2.1%

    Mainline            7,148         4.7%          4.4%    3.8%         0.3%

    Regional            1,833       (0.3%)          2.4%    0.6%       (2.7%)
                        -----

    Consolidated       $8,981         3.6%          3.7%    3.0%       (0.1%)

Second-Quarter Costs

Second-quarter consolidated CASM, excluding special charges, third-party business expense, fuel and profit sharing, decreased 0.2 percent compared to the second quarter of 2013. Second-quarter consolidated CASM, including those items, increased 2.2 percent year-over-year. The company’s strong cost performance in the quarter was largely driven by execution on its cost-savings initiatives, as well as by the timing of certain expenses moving to the second half of the year.

Second-quarter total operating expenses, excluding special charges, increased $75 million, or 0.8 percent, year-over-year. Including special charges, total operating expenses increased $192 million, or 2.1 percent, in the second quarter versus the same period in 2013. Third-party business expense was $215 million in the second quarter of 2014.

Second-Quarter Liquidity and Cash Flow

UAL ended the second quarter with $6.8 billion in unrestricted liquidity, including $1.0 billion of undrawn commitments under a revolving credit facility. The company generated $1.5 billion of operating cash flow in the second quarter. During the second quarter, the company had gross capital expenditures of $871 million, excluding fully reimbursable projects. The company made debt and capital lease principal payments of $333 million in the second quarter. For the 12 months ended June 30, 2014, the company’s return on invested capital was 10.3 percent.

The company’s long-term capital structure goals include reducing its non-aircraft related debt and achieving a total gross debt balance, including capitalized operating leases, of approximately $15 billion while maintaining an unrestricted liquidity balance of $5 billion to $6 billion, including its undrawn revolver.

Share Repurchase Program

UAL’s Board authorized a $1.0 billion share repurchase program, which the company expects to complete within the next three years. This amount represents approximately 6 percent of the company’s market capitalization as of yesterday’s closing stock price. Additionally, in the second quarter, the company spent $62 million to retire convertible debt that would have converted into approximately 1.5 million shares of UAL common stock.

“We have laid a sound financial foundation over the last few years by paying off debt and investing in our business. Our earnings profile, coupled with measured capital expenditures and manageable debt maturities, enable us to take this initial step toward returning cash to our shareholders,” said John Rainey, UAL’s executive vice president and chief financial officer. “This action helps us achieve a more balanced allocation of our cash flow.”

UAL may repurchase shares through the open market, privately negotiated transactions, block trades, or accelerated share repurchase transactions from time to time in accordance with applicable securities laws. UAL will repurchase shares of common stock subject to prevailing market conditions and may discontinue such repurchases at any time.

Second-Quarter 2014 Accomplishments

Operations, Employees and Network

    --  United Airlines reported a second-quarter mainline on-time arrival rate
        (domestic and international) of 76.4 percent, adversely affected by
        multi-month runway closures in its San Francisco and Newark hubs. The
        on-time arrival rate is based on flights arriving within 14 minutes of
        scheduled arrival time.
    --  The company reached a joint collective bargaining agreement with the
        Professional Airline Flight Control Association (PAFCA) and the
        Transport Workers Union (TWU) for United's dispatchers. The dispatchers
        subsequently ratified the new agreement.
    --  The company began a facilitated negotiations process with the
        Association of Flight Attendants and held further discussions in advance
        of scheduled mediation with the International Brotherhood of Teamsters,
        representing United's technicians.
    --  United expanded its industry-leading global route network, launching
        nonstop flights from Houston to Munich; Newark to Santiago, Dominican
        Republic; and new seasonal service between Chicago and Edinburgh,
        Scotland, and from Washington, D.C., to both Madrid and Nassau, Bahamas.
        The company continued to develop its industry-leading Pacific gateway in
        San Francisco by launching service to Chengdu, China, and announcing
        service to Tokyo's Haneda airport. The company also announced new
        service from Houston to Santiago, Chile, and announced new routes from
        Chicago to Belize City, Belize; Denver to Panama City; Houston to Punta
        Cana, Dominican Republic; and San Francisco to Kelowna, British
        Columbia. The airline announced nine new domestic markets and launched
        14 new domestic routes in the second quarter, including United's first
        service to Atlantic City, N.J.; Bangor, Maine; Pueblo, Colorado; and St.
        Cloud, Minnesota.

Finance and Fleet

    --  United raised $949 million of debt financing through enhanced equipment
        trust certificates at a blended rate of 4.13 percent. The debt proceeds
        are being used to finance the acquisition of 13 Boeing 737-900ERs, nine
        Embraer 175s, two 787-8 Dreamliners and one 787-9 Dreamliner.
    --  The company took delivery of 10 Boeing 737-900ERs and one 787-8
        Dreamliner, and also exited from scheduled service nine 757-200s during
        the quarter.
    --  The company introduced seven highly efficient Embraer 175 aircraft to
        the United Express fleet. The modern and spacious 76-seat aircraft is
        the newest addition to the United Express fleet, enabling the airline to
        offer an improved regional jet experience. These aircraft will largely
        replace less-efficient 50-seat regional jets, and the company expects to
        reduce its 50-seat regional jet fleet by 38 aircraft by the end of the
        year.
    --  United continued installing slimmer, next-generation economy-class seats
        on certain aircraft, which enables one to two additional rows per
        aircraft. The airline now offers these seats, which are 10 to 15 percent
        lighter than the seats they are replacing, on approximately 240
        aircraft.

Flyer-Friendly Product, Loyalty Program and Facilities

    --  The company now offers Wi-Fi on more than 290 aircraft, including its
        entire Airbus fleet, and expects to have more than 450 Wi-Fi-equipped
        aircraft by the end of 2014.
    --  United began installing its new personal device entertainment system on
        select aircraft, enabling customers to choose from more than 150 movies
        and nearly 200 television shows and watch them on their laptops or iOS
        devices.
    --  United launched its all-new mobile application for the Android platform,
        offering innovative new features, smoother functionality and an improved
        touch-friendly design. The new Android app follows the airline's
        redesign of its mobile app for the iOS platform.
    --  United announced its 2015 MileagePlus program. Members will earn award
        miles based on ticket price - specifically the base fare and
        carrier-imposed surcharges - and MileagePlus status, rather than
        distance flown.
    --  United consolidated its London Heathrow operation into one terminal in
        the new Terminal 2: The Queen's Terminal. United's 22 Star Alliance
        partners serving Heathrow are progressively moving to Terminal 2,
        enabling faster, more convenient connections for customers. United
        operates more daily flights to Heathrow than any other U.S. carrier.
    --  The company unveiled a new 10-gate, 97,000-square-foot concourse in
        Boston Logan International Airport's Terminal B that offers modern
        conveniences that streamline the airport experience, including
        self-tagging baggage kiosks, automated self-boarding gates and a new
        customer service center.
    --  The airline opened new United Clubs at London Heathrow, Boston and San
        Francisco, featuring the latest airport lounge design concept that it
        unveiled at United Clubs in Chicago, San Diego and Seattle. The company
        also opened a new United Global First Lounge in London, offering premium
        customers more privacy and personal service.

About United

United Airlines and United Express operate an average of more than 5,200 flights a day to 374 airports across six continents. In 2013, United and United Express operated nearly two million flights carrying 139 million customers. With hubs in Chicago, Denver, Houston, Los Angeles, Newark, San Francisco and Washington, D.C., United operates more than 700 mainline aircraft and, in 2014, will take delivery of 35 new Boeing aircraft, including the 787-9 as the North American launch customer, and will welcome 32 new Embraer 175 aircraft to United Express. The airline is a founding member of Star Alliance, which provides service to 192 countries via 27 member airlines. More than 85,000 United employees reside in every U.S. state and in countries around the world. For more information, visit united.com, follow @United on Twitter or connect on Facebook. The common stock of United’s parent, United Continental Holdings, Inc., is traded on the NYSE under the symbol UAL.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Certain statements included in this release are forward-looking and thus reflect our current expectations and beliefs with respect to certain current and future events and financial performance. Such forward-looking statements are and will be subject to many risks and uncertainties relating to our operations and business environment that may cause actual results to differ materially from any future results expressed or implied in such forward-looking statements. Words such as “expects,” “will,” “plans,” “anticipates,” “indicates,” “believes,” “forecast,” “guidance,” “outlook” and similar expressions are intended to identify forward-looking statements. Additionally, forward-looking statements include statements that do not relate solely to historical facts, such as statements which identify uncertainties or trends, discuss the possible future effects of current known trends or uncertainties or which indicate that the future effects of known trends or uncertainties cannot be predicted, guaranteed or assured. All forward-looking statements in this report are based upon information available to us on the date of this report. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, except as required by applicable law. Our actual results could differ materially from these forward-looking statements due to numerous factors including, without limitation, the following: our ability to comply with the terms of our various financing arrangements; the costs and availability of financing; our ability to maintain adequate liquidity; our ability to execute our operational plans, including optimizing our revenue; our ability to control our costs, including realizing benefits from our resource optimization efforts, cost reduction initiatives and fleet replacement programs; our ability to utilize our net operating losses; our ability to attract and retain customers; demand for transportation in the markets in which we operate; an outbreak of a disease that affects travel demand or travel behavior; demand for travel and the impact that global economic conditions have on customer travel patterns; excessive taxation and the inability to offset future taxable income; general economic conditions (including interest rates, foreign currency exchange rates, investment or credit market conditions, crude oil prices, costs of aircraft fuel and energy refining capacity in relevant markets); our ability to cost-effectively hedge against increases in the price of aircraft fuel; any potential realized or unrealized gains or losses related to fuel or currency hedging programs; the effects of any hostilities, act of war or terrorist attack; the ability of other air carriers with whom we have alliances or partnerships to provide the services contemplated by the respective arrangements with such carriers; the costs and availability of aviation and other insurance; industry consolidation or changes in airline alliances; competitive pressures on pricing and on demand; our capacity decisions and the capacity decisions of our competitors; U.S. or foreign governmental legislation, regulation and other actions (including open skies agreements and environmental regulations); labor costs; our ability to maintain satisfactory labor relations and the results of the collective bargaining agreement process with our union groups; any disruptions to operations due to any potential actions by our labor groups; weather conditions; the possibility that expected merger synergies will not be realized or will not be realized within the expected time period; and other risks and uncertainties set forth under Item 1A., Risk Factors, of UAL’s Annual Report on Form 10-K, as well as other risks and uncertainties set forth from time to time in the reports we file with the SEC.

-tables attached-


                                                  UNITED CONTINENTAL HOLDINGS, INC.

                                          STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)

                                          THREE AND SIX MONTHS ENDED JUNE 30, 2014, AND 2013

                                           Three Months Ended                                                           Six Months Ended

                                                 June 30,                      %                                            June 30,                %
                                            --------                                                                --------

     (In millions, except per share data)     2014                  2013                   Increase/ (Decrease)                      2014      2013   Increase/ (Decrease)
                                            ----

     Operating revenue:

     Passenger:

     Mainline                               $7,148                $6,829                                        4.7                $12,996   $12,767                        1.8

     Regional                                1,833                 1,839                                      (0.3)                 3,369     3,460                      (2.6)
                                           -----

     Total passenger revenue                 8,981                 8,668                                        3.6                 16,365    16,227                        0.9

     Cargo                                     232                   236                                      (1.7)                   441       463                      (4.8)

     Other operating revenue                 1,116                 1,097                                        1.7                  2,219     2,032                        9.2
                                           -----

     Total operating revenue                10,329                10,001                                        3.3                 19,025    18,722                        1.6
                                          ------

     Operating expense:

     Aircraft fuel (A)                       3,101                 3,068                                        1.1                  6,018     6,118                      (1.6)

     Salaries and related costs              2,187                 2,175                                        0.6                  4,340     4,302                        0.9

     Regional capacity purchase                591                   628                                      (5.9)                 1,150     1,216                      (5.4)

     Landing fees and other rent               567                   507                                       11.8                  1,139     1,004                       13.4

     Aircraft maintenance materials and        471                   480                                      (1.9)                   929       918                        1.2
     outside repairs

     Depreciation and amortization             417                   425                                      (1.9)                   826       833                      (0.8)

     Distribution expenses                     346                   347                                      (0.3)                   664       675                      (1.6)

     Aircraft rent                             222                   235                                      (5.5)                   446       475                      (6.1)

     Special charges (B)                       169                    52                                         NM                   221       144                         NM

     Other operating expenses                1,352                 1,314                                        2.9                  2,735     2,531                        8.1
                                           -----

     Total operating expense                 9,423                 9,231                                        2.1                 18,468    18,216                        1.4
                                           -----

     Operating income                          906                   770                                       17.7                    557       506                       10.1

     Nonoperating income (expense):

     Interest expense                        (186)                (194)                                     (4.1)                 (373)    (395)                     (5.6)

     Interest capitalized                       13                    12                                        8.3                     27        23                       17.4

     Interest income                             4                     6                                     (33.3)                     9        11                     (18.2)

     Miscellaneous, net (B)                     54                 (123)                                        NM                  (35)    (100)                    (65.0)
                                             ---

     Total nonoperating expense              (115)                (299)                                    (61.5)                 (372)    (461)                    (19.3)
                                           -----

     Income before income taxes                791                   471                                       67.9                    185        45                      311.1

     Income tax expense (benefit) (C)            2                     2                                          -                     5       (7)                        NM
                                             ---

     Net income                               $789                  $469                                       68.2                   $180       $52                      246.2
                                            ====

     Earnings per share, basic               $2.11                 $1.37                                       54.0                  $0.48     $0.15                      220.0
                                           =====

     Earnings per share, diluted             $2.01                 $1.21                                       66.1                  $0.47     $0.15                      213.3
                                           =====

     Weighted average shares, basic            373                   341                                        9.4                    371       337                       10.1

     Weighted average shares, diluted          396                   394                                        0.5                    392       337                       16.3

     NM Not meaningful



                                                                                    UNITED CONTINENTAL HOLDINGS, INC.

                                                                                            NOTES (UNAUDITED)

         UAL's results of operations include fuel expense for both mainline and
         regional operations.

    (A)

                                                      Three Months Ended                                                           Six Months Ended

                                                           June 30,             %                                                      June 30,             %
                                                           --------                                                                    --------

        (In millions, except per gallon)                             2014           2013                   Increase/ (Decrease)                       2014      2013  Increase/ (Decrease)
                                                                     ----           ----                   --------------------                       ----      ----  --------------------

         Mainline fuel expense excluding hedge
         impacts                                                   $2,527         $2,486                                         1.6                 $4,892    $4,947                     (1.1)

        Hedge losses reported in fuel expense (a)                       1              9                                          NM                     4        18                        NM
                                                                      ---            ---                                                               ---       ---

        Total mainline fuel expense                                 2,528          2,495                                         1.3                  4,896     4,965                     (1.4)

        Regional fuel expense                                         573            573                                           -                 1,122     1,153                     (2.7)
                                                                      ---            ---                                                             -----     -----

        Consolidated fuel expense                                   3,101          3,068                                         1.1                  6,018     6,118                     (1.6)

         Cash received on settled hedges that do
         not qualify for hedge accounting (b)                           5              5                                          NM                    12        22                        NM

         Fuel expense including all gains from
         settled hedges                                            $3,096         $3,063                                         1.1                 $6,006    $6,096                     (1.5)
                                                                   ======         ======                                                            ======    ======

        Mainline fuel consumption (gallons)                           822            827                                       (0.6)                 1,568     1,575                     (0.4)

         Mainline average aircraft fuel price per
         gallon excluding hedge losses recorded
         in fuel expense                                            $3.07          $3.01                                         2.0                  $3.12     $3.14                     (0.6)

         Mainline average aircraft fuel price per
         gallon                                                     $3.08          $3.02                                         2.0                  $3.12     $3.15                     (1.0)

         Mainline average aircraft fuel price per
         gallon including cash received on
         settled hedges that do not qualify for
         hedge accounting                                           $3.07          $3.01                                         2.0                  $3.11     $3.14                     (1.0)

        Regional fuel consumption (gallons)                           182            189                                       (3.7)                   352       365                     (3.6)

         Regional average aircraft fuel price per
         gallon                                                     $3.15          $3.03                                         4.0                  $3.19     $3.16                       0.9

        Consolidated fuel consumption (gallons)                     1,004          1,016                                       (1.2)                 1,920     1,940                     (1.0)

         Consolidated average aircraft fuel price
         per gallon excluding hedge losses
         recorded in fuel expense                                   $3.09          $3.01                                         2.7                  $3.13     $3.14                     (0.3)

         Consolidated average aircraft fuel price
         per gallon                                                 $3.09          $3.02                                         2.3                  $3.13     $3.15                     (0.6)

         Consolidated average aircraft fuel price
         per gallon including cash received on
         settled hedges that do not qualify for
         hedge accounting                                           $3.08          $3.01                                         2.3                  $3.13     $3.14                     (0.3)

    (a)              Includes losses from settled
                     hedges that were designated
                     for hedge accounting. UAL
                     allocates 100 percent of
                     hedge accounting losses to
                     mainline fuel expense.

    (b)              Includes ineffectiveness gains
                     (losses) on settled hedges
                     and gains (losses) on settled
                     hedges that were not
                     designated for hedge
                     accounting. Ineffectiveness
                     gains (losses) and gains
                     (losses) on hedges that do
                     not qualify for hedge
                     accounting are recorded in
                     Nonoperating income
                     (expense): Miscellaneous,
                     net.



                                                                                        UNITED CONTINENTAL HOLDINGS, INC.

                                                                                                NOTES (UNAUDITED)

    (B) Special items include the following:

                                                                                                                           Three Months
                                                                                                                              Ended      Six Months Ended

                                                                                                                          June 30,          June 30,
                                                                                                                          --------          --------

        (In millions)                                                                                                               2014               2013   2014  2013
                                                                                                                                  ----

        Costs associated with permanently grounding Embraer ERJ 135 aircraft                                                         $66                 $-   $66    $-

        Severance and benefits                                                                                                        38                  -    52    14

        Impairment of assets held for disposal                                                                                        32                  -    33     -

        Integration-related costs                                                                                                     17                 45     51   115

        Losses on sale of assets and other special (gains) losses, net                                                                16                  -    19   (3)

        Additional costs associated with the temporarily grounded Boeing 787 aircraft                                                  -                 7      -   18
                                                                                                                                   ---

             Special charges                                                                                                        $169                $52   $221  $144

        Venezuela local currency loss                                                                                                 $-                $-   $21    $-

        Income tax benefit                                                                                                             -                 -   (1)    -
                                                                                                                                   ---

                  Total operating and nonoperating special charges, net of income taxes                                             $169                $52   $241  $144

        Mark-to-market (MTM) (gains) losses from fuel hedges settling in future periods                                            ($46)               $62  ($33)  $23

        Prior period gains on fuel contracts settled in the current period                                                             7                 25     42    31

                  Total special items, net of income taxes                                                                          $130               $139   $250  $198
                                                                                                                                  ====

                     2014 - Special items
                     --------------------

                     Costs associated with
                      permanently
                      grounding Embraer
                      ERJ 135 aircraft:
                      During the three
                      months ended June
                      30, 2014, the
                      company recorded $66
                      million for the
                      permanent grounding
                      of 21 of the
                      company's Embraer
                      ERJ 135 regional
                      aircraft under lease
                      through 2018, which
                      includes an accrual
                      for remaining lease
                      payments and an
                      amount for
                      maintenance return
                      conditions. As a
                      result of the
                      current fuel prices,
                      new Embraer 175
                      regional jet
                      deliveries and
                      impact of pilot
                      shortages at
                      regional carriers,
                      the company decided
                      to permanently
                      ground these 21
                      Embraer ERJ 135
                      aircraft. The
                      company continues to
                      operate nine Embraer
                      ERJ 135 aircraft and
                      will assess the
                      possibility of
                      grounding those
                      aircraft when the
                      current capacity
                      purchase contracts
                      end in the fourth
                      quarter of 2014.
                     ---------------------

                     Severance and
                      benefits: During the
                      three and six months
                      ended June 30, 2014,
                      the company recorded
                      $38 million and $52
                      million,
                      respectively,
                      related to
                      reductions of
                      management and
                      front-line
                      employees, including
                      from Cleveland
                      airport, as part of
                      its cost savings
                      initiatives. The
                      company reduced its
                      average daily
                      departures from
                      Cleveland by over 60
                      percent during the
                      second quarter. The
                      company is currently
                      evaluating its
                      options regarding
                      its long-term
                      contractual
                      commitments at
                      Cleveland. The
                      capacity reductions
                      at Cleveland may
                      result in further
                      special charges,
                      which could be
                      significant, related
                      to our contractual
                      commitments.
                     ---------------------

                     Impairment of assets
                      held for disposal:
                      During the three and
                      six months ended
                      June 30, 2014, the
                      company recorded $32
                      million and $33
                      million,
                      respectively, for
                      charges related
                      primarily to
                      impairment of its
                      flight equipment
                      held for disposal
                      associated with its
                      Boeing 737-300 and
                      737-500 fleets.
                     ---------------------

                     Integration-related
                      costs: Integration-
                      related costs
                      include compensation
                      costs related to
                      systems integration
                      and training and
                      relocation for
                      employees.
                     --------------------

                     Losses on sale of
                      assets and other
                      special (gains)
                      losses, net: The
                      company incurred
                      losses on sales of
                      aircraft and other
                      assets and other
                      special losses
                      totaling $16 million
                      and $19 million
                      during the three and
                      six months ended
                      June 30, 2014,
                      respectively.
                     ---------------------

                     Venezuela local
                      currency loss:
                      During the three
                      months ended March
                      31, 2014, the
                      company recorded $21
                      million of losses as
                      part of Nonoperating
                      income (expense):
                      Miscellaneous, net
                      due to ongoing
                      negotiations
                      applicable to funds
                      held in local
                      Venezuelan currency.
                      Approximately $100
                      million of the
                      company's
                      unrestricted cash
                      balance was held as
                      Venezuelan bolivars
                      as of June 30, 2014.
                     ---------------------

                     MTM (gains) losses
                      from fuel hedges
                      settling in future
                      periods and prior
                      period gains on fuel
                      contracts settled in
                      the current period:
                      The company utilizes
                      certain derivative
                      instruments that are
                      economic hedges but
                      do not qualify for
                      hedge accounting
                      under U.S. generally
                      accepted accounting
                      principles. The
                      company records
                      changes in the fair
                      value of these
                      economic hedges to
                      Nonoperating income
                      (expense):
                      Miscellaneous, net
                      in the statements of
                      consolidated
                      operations. During
                      the three and six
                      months ended June
                      30, 2014, the
                      company recorded $46
                      million and $33
                      million,
                      respectively, in MTM
                      gains on economic
                      hedges that will
                      settle in future
                      periods. For
                      economic hedges that
                      settled in the three
                      and six months ended
                      June 30, 2014, the
                      company recorded MTM
                      gains of $7 million
                      and $42 million,
                      respectively, in
                      prior periods. The
                      figures above also
                      include an
                      insignificant amount
                      of ineffectiveness
                      on hedges that are
                      designated for hedge
                      accounting.

                     2013 - Special items

                     Integration-related
                      costs: Integration-
                      related costs
                      included
                      compensation costs
                      related to systems
                      integration and
                      training, branding
                      activities, new
                      uniforms, write-off
                      or acceleration of
                      depreciation on
                      systems and
                      facilities that were
                      no longer used or
                      planned to be used
                      for significantly
                      shorter periods,
                      relocation for
                      employees and
                      severance primarily
                      associated with
                      administrative
                      headcount
                      reductions.

                     Voluntary severance
                      and benefits: During
                      the six months ended
                      June 30, 2013, the
                      company recorded $14
                      million associated
                      with a voluntary
                      program offered by
                      United in which
                      flight attendants
                      took an unpaid
                      13-month leave of
                      absence. The flight
                      attendants continue
                      to receive medical
                      benefits and other
                      company benefits
                      while on leave under
                      this program.
                      Approximately 1,300
                      flight attendants
                      opted to participate
                      in the program.

                     Charges for
                      temporarily grounded
                      787 aircraft: The
                      company recorded $18
                      million associated
                      with the temporary
                      grounding of its
                      Boeing 787 aircraft.
                      The charges were
                      comprised of
                      aircraft
                      depreciation expense
                      and dedicated
                      personnel costs that
                      the company incurred
                      while the aircraft
                      were grounded.

                     Gains on sales of
                      assets and other
                      special items, net:
                      The company recorded
                      a $5 million gain
                      related to a
                      contract termination
                      and $2 million in
                      losses on the sale
                      of assets.

                     MTM (gains) losses
                      from fuel hedges
                      settling in future
                      periods and prior
                      period gains on fuel
                      contracts settled in
                      the current period:
                      During the three and
                      six months ended
                      June 30, 2013, the
                      company recorded $62
                      million and $23
                      million,
                      respectively, in MTM
                      losses on economic
                      hedges that settled
                      in later periods.
                      For economic hedges
                      that settled in the
                      three and six months
                      ended June 30, 2013,
                      the company recorded
                      MTM gains of $25
                      million and $31
                      million,
                      respectively, in
                      prior periods. The
                      figures above also
                      include an
                      insignificant amount
                      of ineffectiveness
                      on hedges that are
                      designated for hedge
                      accounting.
                     ---------------------

     (C)              No federal income tax
                      expense was
                      recognized related
                      to the company's
                      pretax income for
                      the three months
                      ended June 30, 2014,
                      and 2013 and the six
                      months ended June
                      30, 2014, and 2013
                      due to the
                      utilization of book
                      net operating loss
                      carry forwards for
                      which no benefit has
                      previously been
                      recognized. The
                      company is required
                      to provide a
                      valuation allowance
                      for its deferred tax
                      assets in excess of
                      deferred tax
                      liabilities because
                      UAL concluded that
                      it is more likely
                      than not that such
                      deferred tax assets
                      will ultimately not
                      be realized.


                                 UNITED CONTINENTAL HOLDINGS, INC.

                                             STATISTICS

                                                                   Three Months Ended                                  Six Months Ended

                                                                        June 30,      %         June 30,      %
                                                                        --------                --------

                                                                                 2014      2013             Increase/                       2014             2013             Increase/
                                                                                                          (Decrease)                                                      (Decrease)
                                                                                 ----     ----           ----------                       ----            ----           ----------

    Mainline:

    Passengers (thousands)                                                     23,852    23,592                    1.1                     45,081           45,071                      -

    Revenue passenger miles
     (millions)                                                                47,101    46,720                    0.8                     87,438           87,267                    0.2

    Available seat miles
     (millions)                                                                55,192    55,009                    0.3                    104,989          104,829                    0.2

    Cargo ton miles (millions)                                                    604       573                    5.4                      1,189            1,119                    6.3

    Passenger load factor:

        Mainline                                                               85.3 %   84.9 %                   0.4                pts.          83.3 %          83.2 %                  0.1 pts.

        Domestic                                                               87.6 %   86.8 %                   0.8                pts.          86.4 %          85.6 %                  0.8 pts.

        International                                                          83.2 %   83.1 %                   0.1                pts.          80.3 %          81.0 %                (0.7) pts.

    Passenger revenue per
     available seat mile (cents)                                                12.95     12.41                    4.4                      12.38            12.18                    1.6

    Average yield per revenue
     passenger mile (cents)                                                     15.18     14.62                    3.8                      14.86            14.63                    1.6

    Average aircraft fuel price
     per gallon excluding hedge
     losses recorded in fuel
     expense (a)                                                                $3.07     $3.01                    2.0                      $3.12            $3.14                  (0.6)

    Average aircraft fuel price
     per gallon (a)                                                             $3.08     $3.02                    2.0                      $3.12            $3.15                  (1.0)

    Average aircraft fuel price
     per gallon including cash                                                  $3.07     $3.01                    2.0                      $3.11            $3.14                  (1.0)

    received on settled hedges
     that do not qualify for

    hedge accounting  (a)

    Fuel gallons consumed
     (millions)                                                                   822       827                  (0.6)                     1,568            1,575                  (0.4)

    Aircraft in fleet at end of
     period                                                                       701       696                    0.7                        701              696                    0.7

    Average stage length (miles)
     (b)                                                                        1,971     1,958                    0.7                      1,946            1,918                    1.5

    Average daily utilization of
     each aircraft (hours)                                                      10:44    10:52                 (1.2)                     10:21           10:25                 (0.6)

    Regional:

    Passengers (thousands)                                                     11,985    12,360                  (3.0)                    22,656           23,236                  (2.5)

    Revenue passenger miles
     (millions)                                                                 6,799     6,861                  (0.9)                    12,845           12,858                  (0.1)

    Available seat miles
     (millions)                                                                 8,022     8,242                  (2.7)                    15,441           15,794                  (2.2)

    Passenger load factor                                                      84.8 %   83.2 %                   1.6                pts.          83.2 %          81.4 %                  1.8 pts.

    Passenger revenue per
     available seat mile (cents)                                                22.85     22.31                    2.4                      21.82            21.91                  (0.4)

    Average yield per revenue
     passenger mile (cents)                                                     26.96     26.80                    0.6                      26.23            26.91                  (2.5)

    Aircraft in fleet at end of
     period                                                                       561       570                  (1.6)                       561              570                  (1.6)

    Average stage length (miles)
     (b)                                                                          559       542                    3.1                        556              539                    3.2


                                                                             UNITED CONTINENTAL HOLDINGS, INC.

                                                                                  STATISTICS (Continued)

                                                                Three Months Ended                                                               Six Months Ended

                                                                     June 30,                          %                      June 30,                           %
                                                                     --------                                                 --------

                                                                   2014                     2013                 Increase/               2014                      2013               Increase/
                                                                                                                 (Decrease)                                                         (Decrease)
                                                                   ----                    ----               ----------               ----                     ----             ----------

    Consolidated (Mainline and
     Regional):

                               Passengers (thousands)              35,837                   35,952                      (0.3)            67,737                    68,307                    (0.8)

                                Revenue passenger miles
                                (millions)                         53,900                   53,581                        0.6            100,283                   100,125                      0.2

                                Available seat miles
                                (millions)                         63,214                   63,251                      (0.1)           120,430                   120,623                    (0.2)

                               Passenger load factor               85.3 %                  84.7 %                       0.6     pts.                 83.3 %                83.0 %                   0.3 pts.

                                Passenger revenue per
                                available seat mile (cents)         14.21                    13.70                        3.7              13.59                     13.45                      1.0

                                Total revenue per available
                                seat mile (cents)                   16.34                    15.81                        3.4              15.80                     15.52                      1.8

                                Average yield per revenue
                                passenger mile (cents)              16.66                    16.18                        3.0              16.32                     16.21                      0.7

                                Average aircraft fuel price
                                per gallon excluding hedge
                                losses recorded in fuel
                                expense (a)                         $3.09                    $3.01                        2.7              $3.13                     $3.14                    (0.3)

                                Average aircraft fuel price
                                per gallon (a)                      $3.09                    $3.02                        2.3              $3.13                     $3.15                    (0.6)

                               Average aircraft fuel price
                                per gallon including cash
                                received on settled hedges
                                that do not qualify for hedge
                                accounting (a)                      $3.08                    $3.01                        2.3              $3.13                     $3.14                    (0.3)

                                Fuel gallons consumed
                                (millions)                          1,004                    1,016                      (1.2)             1,920                     1,940                    (1.0)

                                Average full-time equivalent
                                employees (thousands)                82.0                     85.2                      (3.8)              82.6                      85.0                    (2.8)

    (a)                        Fuel price per gallon includes aircraft fuel and related taxes.

    (b)                         Average stage length equals the average distance a flight travels weighted for size of
                                aircraft.





                                                                                                                          UNITED CONTINENTAL HOLDINGS, INC.

                                                                                                                          NON-GAAP FINANCIAL RECONCILIATION

    UAL evaluates its financial performance utilizing various accounting principles generally accepted in the United States of America (GAAP) and Non-GAAP financial measures, including net income/loss excluding special items, net earnings/loss per share excluding special items, and
     CASM, among others. CASM is a common metric used in the airline industry to measure an airline's cost structure and efficiency. Pursuant to SEC Regulation G, UAL has included the following reconciliation of reported Non-GAAP financial measures to comparable financial measures
     reported on a GAAP basis. UAL believes that adjusting for special items is useful to investors because special charges are non-recurring charges not indicative of UAL's ongoing performance. In addition, the company believes that adjusting for MTM (gains) losses from fuel hedges
     settling in future periods and prior period gains on fuel contracts settled in the current period is useful because the adjustments allow investors to better understand the cash impact of settled hedges in a given period. UAL also believes that excluding third-party business
     expenses, such as maintenance, ground handling and catering services for third parties, fuel sales and non-air mileage redemptions, provides more meaningful disclosure because these expenses are not directly related to UAL's core business. UAL also believes that excluding fuel costs
     from certain measures is useful to investors because it provides an additional measure of management's performance excluding the effects of a significant cost item over which management has limited influence. UAL excludes profit sharing because this exclusion allows investors to
     better understand and analyze our recurring cost performance and provides a more meaningful comparison of our core operating costs to the airline industry.

                                            Three Months Ended                                                                                                     Six Months Ended

    (in millions)                               June 30,                      $                                      %                                               June 30,                            $                                      %
                                                --------                                                                                                             --------

                                                2014                  2013                   Increase/ (Decrease)                      Increase/ (Decrease)                      2014                   2013                    Increase/ (Decrease)                      Increase/ (Decrease)
                                                ----                  ----                   --------------------                      --------------------                      ----                   ----                    --------------------                      --------------------

    Operating expenses                        $9,423                $9,231                                       $192                                        2.1                $18,468                $18,216                                        $252                                        1.4

    Less: Special charges
     (B)                                         169                    52                                        117                                         NM                   221                    144                                          77                                         NM
                                                 ---                   ---                                        ---                                                              ---                    ---                                         ---

    Operating expenses,
     excluding special
     charges                                   9,254                 9,179                                         75                                        0.8                 18,247                 18,072                                         175                                        1.0

    Less: Third-party
     business                                    215                   170                                         45                                       26.5                    408                    291                                         117                                       40.2
    expenses

    Less: Fuel expense                         3,101                 3,068                                         33                                        1.1                  6,018                  6,118                                       (100)                                     (1.6)

    Less: Profit sharing,
     including                                    53                    42                                         11                                       26.2                     53                     42                                          11                                       26.2
    taxes

    Operating expenses,
     excluding fuel,
     profit sharing,
     special charges and
     third-party
     business expenses                        $5,885                $5,899                                      $(14)                                     (0.2)               $11,768                $11,621                                        $147                                        1.3
                                              ======                ======                                       ====                                                          =======                =======                                        ====

    Net income                                  $789                  $469                                       $320                                       68.2                   $180                    $52                                        $128                                      246.2

    Less: Special items,
     net (B)                                     130                   139                                        (9)                                        NM                   250                    198                                          52                                         NM
                                                 ---                   ---                                                                                                        ---                    ---

    Net income, excluding
     special items, net                         $919                  $608                                       $311                                       51.2                   $430                   $250                                        $180                                       72.0
                                                ====                  ====                                       ====                                                             ====                   ====                                        ====

    Diluted earnings per
     share                                     $2.01                 $1.21                                      $0.80                                       66.1                  $0.47                  $0.15                                       $0.32                                      213.3

    Add back: Special
     items, net of tax                          0.33                  0.35                                     (0.02)                                        NM                  0.64                   0.51                                        0.13                                         NM

    Add back: Impact of
     dilution                                      -                 0.01                                     (0.01)                                        NM                     -                  0.02                                      (0.02)                                        NM
                                                 ---                 ----                                      -----                                                              ---                  ----                                       -----

    Diluted earnings per
     share, excluding
     special items, net                        $2.34                 $1.57                                      $0.77                                       49.0                  $1.11                  $0.68                                       $0.43                                       63.2
                                               =====                 =====                                      =====                                                            =====                  =====                                       =====


                                                    UNITED CONTINENTAL HOLDINGS, INC.

                                              NON-GAAP FINANCIAL RECONCILIATION (Continued)

                          Three Months Ended                                                       Six Months Ended

                                June 30,                %                                              June 30,            %
                                --------                                                               --------

                                         2014      2013                   Increase/ (Decrease)                       2014     2013  Increase/ (Decrease)
                                         ----      ----                   --------------------                       ----     ----  --------------------

    CASM Mainline
     Operations (cents)

    Cost per available
     seat mile (CASM)                   14.09     13.83                                        1.9                   14.47    14.34                       0.9

    Less: Special charges
     (B)                                 0.31      0.10                                         NM                   0.21     0.14                        NM
                                         ----      ----                                                              ----     ----

    CASM, excluding
     special charges                    13.78     13.73                                        0.4                   14.26    14.20                       0.4

    Less: Third-party
     business expenses                   0.39      0.31                                       25.8                    0.39     0.28                      39.3
                                         ----      ----                                                              ----     ----

    CASM, excluding
     special charges and
     third-party
     business expenses                  13.39     13.42                                      (0.2)                  13.87    13.92                     (0.4)

    Less: Fuel expense                   4.58      4.53                                        1.1                    4.66     4.73                     (1.5)
                                         ----      ----                                                              ----     ----

    CASM, excluding
     special charges,
     third-party
     business expenses
     and fuel                            8.81      8.89                                      (0.9)                   9.21     9.19                       0.2

    Less: Profit sharing
     per available seat
     mile                                0.10      0.08                                       25.0                    0.05     0.04                      25.0
                                         ----      ----                                                              ----     ----

    CASM, excluding
     special charges,
     third-party
     business expenses,
     fuel, and profit
     sharing                             8.71      8.81                                      (1.1)                   9.16     9.15                       0.1
                                         ====      ====                                                              ====     ====

    CASM Consolidated
     Operations (cents)

    Cost per available
     seat mile (CASM)                   14.91     14.59                                        2.2                   15.34    15.10                       1.6

    Less: Special charges
     (B)                                 0.27      0.08                                         NM                   0.19     0.12                        NM
                                         ----      ----                                                              ----     ----

    CASM, excluding
     special charges                    14.64     14.51                                        0.9                   15.15    14.98                       1.1

    Less: Third-party
     business expenses                   0.34      0.27                                       25.9                    0.34     0.24                      41.7
                                         ----      ----                                                              ----     ----

    CASM, excluding
     special charges and
     third-party
     business expenses                  14.30     14.24                                        0.4                   14.81    14.74                       0.5

    Less: Fuel expense                   4.91      4.85                                        1.2                    4.99     5.07                     (1.6)
                                         ----      ----                                                              ----     ----

    CASM, excluding
     special charges,
     third-party
     business expenses
     and fuel                            9.39      9.39                                          -                   9.82     9.67                       1.6

    Less: Profit sharing
     per available seat
     mile                                0.08      0.06                                       33.3                    0.05     0.04                      25.0
                                         ----      ----                                                              ----

    CASM, excluding
     special charges,
     third-party
     business expenses,
     fuel, and profit
     sharing                             9.31      9.33                                      (0.2)                   9.77     9.63                       1.5
                                         ====      ====                                                              ====     ====


      UNITED CONTINENTAL HOLDINGS, INC.

      RETURN ON INVESTED CAPITAL (ROIC)

    Return on Invested Capital ("ROIC")
     is a non-GAAP financial measure
     that we believe provides useful
     supplemental information for
     management and investors by
     measuring the effectiveness of our
     operations' use of invested capital
     to generate profits. We use ROIC to
     track how much value we are creating
     for our shareholders as it
     represents an important financial
     metric that we believe provides
     meaningful information as to how
     well we generate profits relative to
     the capital invested in our
     business.

    (in millions)                                 Twelve Months Ended

                                                      June 30, 2014
                                                      -------------

    Net Operating Profit After Tax (NOPAT)

    Pre-tax income excluding special
     items (a)                                                  $1,207

    Add: Interest expense (b)                                   770

    Add: Interest component of capitalized
     aircraft rent (b)                                          450

    Add: Net interest on pension (b)                            126

    Less: Adjusted income tax benefit                            14
                                                                ---

    NOPAT                                                    $2,567
                                                             ======

    Effective tax rate                                       (1.2%)

    Invested Capital (five-quarter
     average)

    Total assets                                            $37,434

    Add: Capitalized aircraft rent (@
     7.0x)                                                    6,553

    Less:

                  Advance ticket sales                        (4,432)

                   Frequent flier deferred
                   revenue                                    (6,457)

                  Deferred income taxes                         2,443

                  Tax valuation allowance                     (4,036)

                   Other non-interest bearing
                   liabilities                                (6,608)
                                                            -------

                  Average Invested Capital                    $24,897
                                                            =======

    Return on Invested Capital                                10.3%
                                                               ====

                                               Twelve Months Ended

                                                   June 30, 2014
                                                   -------------

    (a) Non-GAAP Financial Reconciliation

    Pre-tax income                                             $679

    Add: Special items                                          528
                                                                ---

    Pre-tax income excluding special items                   $1,207
                                                             ======

    (b) Net of tax shield

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SOURCE United Airlines


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