UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20212022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to             
ual-20220930_g1.jpg
Commission
File Number
Exact Name of Registrant as Specified in its Charter,
Principal Executive Office Address and Telephone Number
State of
Incorporation
I.R.S. Employer
Identification No.
001-06033United Airlines Holdings, Inc.Delaware36-2675207
233 South Wacker Drive,Chicago,Illinois60606
(872)825-4000
001-10323United Airlines, Inc.Delaware74-2099724
233 South Wacker Drive,Chicago,Illinois60606
(872)825-4000
Securities registered pursuant to Section 12(b) of the Act
RegistrantTitle of Each ClassTrading SymbolName of Each Exchange on Which Registered
United Airlines Holdings, Inc.Common Stock, $0.01 par valueUALThe Nasdaq Stock Market LLC
United Airlines Holdings, Inc.Preferred Stock Purchase RightsNoneThe Nasdaq Stock Market LLC
United Airlines, Inc.NoneNoneNone
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
United Airlines Holdings, Inc.YesNoUnited Airlines, Inc.YesNo
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this Chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
United Airlines Holdings, Inc.YesNoUnited Airlines, Inc.YesNo
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
United Airlines Holdings, Inc.Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth company
United Airlines, Inc.Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
United Airlines Holdings, Inc.
United Airlines, Inc.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
United Airlines Holdings, Inc.YesNo
United Airlines, Inc.YesNo
The number of shares outstanding of each of the issuer's classes of common stock as of October 14, 202113, 2022 is shown below:
United Airlines Holdings, Inc. 323,806,517326,927,831 shares of common stock ($0.01 par value)
United Airlines, Inc.1,000 shares of common stock ($0.01 par value) (100% owned by United Airlines Holdings, Inc.)
OMISSION OF CERTAIN INFORMATION
This combined Quarterly Report on Form 10-Q is separately filed by United Airlines Holdings, Inc. and United Airlines, Inc. United Airlines, Inc. meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format allowed under that General Instruction.



United Airlines Holdings, Inc.
United Airlines, Inc.
Quarterly Report on Form 10-Q
For the Quarterly Period Ended September 30, 20212022

Table of Contents
 
 Page



PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

UNITED AIRLINES HOLDINGS, INC.
STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)
(In millions, except per share amounts)
Three Months Ended September 30,Nine Months Ended
 September 30,
Three Months Ended September 30,Nine Months Ended
September 30,
2021202020212020 2022202120222021
Operating revenue:Operating revenue: Operating revenue: 
Passenger revenuePassenger revenue$6,637 $1,649 $13,319 $9,395 Passenger revenue$11,653 $6,637 $28,830 $13,319 
CargoCargo519 422 1,622 1,088 Cargo498 519 1,699 1,622 
Other operating revenueOther operating revenue594 418 1,501 1,460 Other operating revenue726 594 2,026 1,501 
Total operating revenueTotal operating revenue7,750 2,489 16,442 11,943 Total operating revenue12,877 7,750 32,555 16,442 
Operating expense:Operating expense:Operating expense:
Aircraft fuelAircraft fuel3,755 1,710 9,796 3,793 
Salaries and related costsSalaries and related costs2,487 2,229 6,987 7,354 Salaries and related costs2,843 2,487 8,466 6,987 
Aircraft fuel1,710 508 3,793 2,474 
Landing fees and other rentLanding fees and other rent639 652 1,919 1,735 
Aircraft maintenance materials and outside repairsAircraft maintenance materials and outside repairs619 346 1,553 917 
Depreciation and amortizationDepreciation and amortization623 626 1,866 1,859 Depreciation and amortization610 623 1,832 1,866 
Landing fees and other rent652 500 1,735 1,552 
Regional capacity purchaseRegional capacity purchase520 425 1,546 1,550 Regional capacity purchase596 520 1,728 1,546 
Aircraft maintenance materials and outside repairs346 115 917 659 
Distribution expensesDistribution expenses218 53 442 379 Distribution expenses482 218 1,101 442 
Aircraft rentAircraft rent58 50 165 147 Aircraft rent65 58 193 165 
Special charges (credits)Special charges (credits)(1,098)(1,081)(3,423)(2,467)Special charges (credits)20 (1,098)124 (3,423)
Other operating expensesOther operating expenses1,197 679 3,028 2,660 Other operating expenses1,790 1,197 4,883 3,028 
Total operating expenseTotal operating expense6,713 4,104 17,056 16,167 Total operating expense11,419 6,713 31,595 17,056 
Operating income (loss)Operating income (loss)1,037 (1,615)(614)(4,224)Operating income (loss)1,458 1,037 960 (614)
Nonoperating income (expense):Nonoperating income (expense):Nonoperating income (expense):
Interest expenseInterest expense(449)(345)(1,228)(712)Interest expense(455)(449)(1,299)(1,228)
Interest capitalizedInterest capitalized18 16 57 54 Interest capitalized27 18 73 57 
Interest incomeInterest income11 30 45 Interest income104 11 142 30 
Unrealized gains (losses) on investments, netUnrealized gains (losses) on investments, net(34)15 91 (295)Unrealized gains (losses) on investments, net28 (34)(12)91 
Miscellaneous, netMiscellaneous, net20 (411)(48)(1,317)Miscellaneous, net(9)20 (4)(48)
Total nonoperating expense, netTotal nonoperating expense, net(434)(717)(1,098)(2,225)Total nonoperating expense, net(305)(434)(1,100)(1,098)
Income (loss) before income taxes603 (2,332)(1,712)(6,449)
Income (loss) before income tax expense (benefit)Income (loss) before income tax expense (benefit)1,153 603 (140)(1,712)
Income tax expense (benefit)Income tax expense (benefit)130 (491)(394)(1,277)Income tax expense (benefit)211 130 (34)(394)
Net income (loss)Net income (loss)$473 $(1,841)$(1,318)$(5,172)Net income (loss)$942 $473 $(106)$(1,318)
Earnings (loss) per share, basicEarnings (loss) per share, basic$1.46 $(6.33)$(4.10)$(18.91)Earnings (loss) per share, basic$2.88 $1.46 $(0.33)$(4.10)
Earnings (loss) per share, dilutedEarnings (loss) per share, diluted$1.44 $(6.33)$(4.10)$(18.91)Earnings (loss) per share, diluted$2.86 $1.44 $(0.33)$(4.10)

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


3

UNITED AIRLINES HOLDINGS, INC.
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
(In millions)

 Three Months Ended September 30,Nine Months Ended
 September 30,
 2021202020212020
Net income (loss)$473 $(1,841)$(1,318)$(5,172)
Other comprehensive income (loss), net of tax:
Employee benefit plans(9)250 17 (292)
Investments and other(1)— (2)
Total other comprehensive income (loss), net of tax(10)250 15 (291)
Total comprehensive income (loss), net$463 $(1,591)$(1,303)$(5,463)
 Three Months Ended September 30,Nine Months Ended
September 30,
 2022202120222021
Net income (loss)$942 $473 $(106)$(1,318)
Other comprehensive income (loss), net of tax:
Employee benefit plans— (9)17 
Investments and other(20)(1)(31)(2)
Total other comprehensive income (loss), net of tax(20)(10)(22)15 
Total comprehensive income (loss), net$922 $463 $(128)$(1,303)


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



4

UNITED AIRLINES HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions, except shares)
 
September 30, 2021December 31, 2020 September 30, 2022December 31, 2021
ASSETSASSETSASSETS
Current assets:Current assets:Current assets:
Cash and cash equivalentsCash and cash equivalents$19,256 $11,269 Cash and cash equivalents$11,258 $18,283 
Short-term investmentsShort-term investments166 414 Short-term investments7,437 123 
Restricted cashRestricted cash254 255 Restricted cash61 37 
Receivables, less allowance for credit losses (2021 — $70; 2020 — $78)1,709 1,295 
Aircraft fuel, spare parts and supplies, less obsolescence allowance (2021 — $532; 2020 — $478)955 932 
Receivables, less allowance for credit losses (2022 — $28; 2021 — $28)Receivables, less allowance for credit losses (2022 — $28; 2021 — $28)2,034 1,663 
Aircraft fuel, spare parts and supplies, less obsolescence allowance (2022 — $595; 2021 — $546)Aircraft fuel, spare parts and supplies, less obsolescence allowance (2022 — $595; 2021 — $546)1,116 983 
Prepaid expenses and otherPrepaid expenses and other717 635 Prepaid expenses and other783 745 
Total current assetsTotal current assets23,057 14,800 Total current assets22,689 21,834 
Operating property and equipment:Operating property and equipment:Operating property and equipment:
Flight equipmentFlight equipment39,312 38,218 Flight equipment40,867 39,584 
Other property and equipmentOther property and equipment8,633 8,511 Other property and equipment9,195 8,764 
Purchase deposits for flight equipmentPurchase deposits for flight equipment2,179 1,166 Purchase deposits for flight equipment2,532 2,215 
Total operating property and equipmentTotal operating property and equipment50,124 47,895 Total operating property and equipment52,594 50,563 
Less — Accumulated depreciation and amortizationLess — Accumulated depreciation and amortization(17,996)(16,429)Less — Accumulated depreciation and amortization(20,088)(18,489)
Total operating property and equipment, netTotal operating property and equipment, net32,128 31,466 Total operating property and equipment, net32,506 32,074 
Operating lease right-of-use assetsOperating lease right-of-use assets4,697 4,537 Operating lease right-of-use assets4,280 4,645 
Other assets:Other assets:Other assets:
GoodwillGoodwill4,527 4,527 Goodwill4,527 4,527 
Intangibles, less accumulated amortization (2021 — $1,532; 2020 — $1,495)2,815 2,838 
Intangibles, less accumulated amortization (2022 — $1,462; 2021 — $1,544)Intangibles, less accumulated amortization (2022 — $1,462; 2021 — $1,544)2,772 2,803 
Restricted cashRestricted cash215 218 Restricted cash208 213 
Deferred income taxesDeferred income taxes519 131 Deferred income taxes701 659 
Investments in affiliates and other, less allowance for credit losses (2021 — $611; 2020 — $522)1,336 1,031 
Investments in affiliates and other, less allowance for credit losses (2022 — $695; 2021 — $622)Investments in affiliates and other, less allowance for credit losses (2022 — $695; 2021 — $622)1,285 1,420 
Total other assetsTotal other assets9,412 8,745 Total other assets9,493 9,622 
Total assetsTotal assets$69,294 $59,548 Total assets$68,968 $68,175 
(continued on next page)















5



UNITED AIRLINES HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions, except shares)
September 30, 2021December 31, 2020 September 30, 2022December 31, 2021
LIABILITIES AND STOCKHOLDERS' EQUITYLIABILITIES AND STOCKHOLDERS' EQUITYLIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:Current liabilities:Current liabilities:
Accounts payableAccounts payable$2,199 $1,595 Accounts payable$3,534 $2,562 
Accrued salaries and benefitsAccrued salaries and benefits2,207 1,960 Accrued salaries and benefits1,841 2,121 
Advance ticket salesAdvance ticket sales6,363 4,833 Advance ticket sales8,747 6,354 
Frequent flyer deferred revenueFrequent flyer deferred revenue2,129 908 Frequent flyer deferred revenue2,642 2,239 
Current maturities of long-term debtCurrent maturities of long-term debt2,269 1,911 Current maturities of long-term debt2,955 3,002 
Current maturities of other financial liabilitiesCurrent maturities of other financial liabilities906 834 
Current maturities of operating leasesCurrent maturities of operating leases569 612 Current maturities of operating leases546 556 
Current maturities of finance leasesCurrent maturities of finance leases116 182 Current maturities of finance leases72 76 
OtherOther1,083 724 Other746 560 
Total current liabilitiesTotal current liabilities16,935 12,725 Total current liabilities21,989 18,304 
Long-term debtLong-term debt31,520 24,836 Long-term debt28,490 30,361 
Long-term obligations under operating leasesLong-term obligations under operating leases5,163 4,986 Long-term obligations under operating leases4,803 5,152 
Long-term obligations under finance leasesLong-term obligations under finance leases250 224 Long-term obligations under finance leases112 219 
Other liabilities and deferred credits:Other liabilities and deferred credits:Other liabilities and deferred credits:
Frequent flyer deferred revenueFrequent flyer deferred revenue4,088 5,067 Frequent flyer deferred revenue3,936 4,043 
Pension liabilityPension liability2,180 2,460 Pension liability1,948 1,920 
Postretirement benefit liabilityPostretirement benefit liability961 994 Postretirement benefit liability946 1,000 
Other financial liabilities from sale-leasebacks1,406 1,140 
Other financial liabilitiesOther financial liabilities492 863 
OtherOther1,360 1,156 Other1,354 1,284 
Total other liabilities and deferred creditsTotal other liabilities and deferred credits9,995 10,817 Total other liabilities and deferred credits8,676 9,110 
Commitments and contingenciesCommitments and contingencies00Commitments and contingencies
Stockholders' equity:Stockholders' equity:Stockholders' equity:
Preferred stockPreferred stock— — Preferred stock— — 
Common stock at par, $0.01 par value; authorized 1,000,000,000 shares; outstanding 323,806,610 and 311,845,232 shares at September 30, 2021 and December 31, 2020, respectively
Common stock at par, $0.01 par value; authorized 1,000,000,000 shares; outstanding 326,926,963 and 323,810,825 shares at September 30, 2022 and December 31, 2021, respectivelyCommon stock at par, $0.01 par value; authorized 1,000,000,000 shares; outstanding 326,926,963 and 323,810,825 shares at September 30, 2022 and December 31, 2021, respectively
Additional capital investedAdditional capital invested9,094 8,366 Additional capital invested8,970 9,156 
Stock held in treasury, at costStock held in treasury, at cost(3,814)(3,897)Stock held in treasury, at cost(3,533)(3,814)
Retained earningsRetained earnings1,271 2,626 Retained earnings421 625 
Accumulated other comprehensive lossAccumulated other comprehensive loss(1,124)(1,139)Accumulated other comprehensive loss(964)(942)
Total stockholders' equityTotal stockholders' equity5,431 5,960 Total stockholders' equity4,898 5,029 
Total liabilities and stockholders' equityTotal liabilities and stockholders' equity$69,294 $59,548 Total liabilities and stockholders' equity$68,968 $68,175 

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




6

UNITED AIRLINES HOLDINGS, INC.
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
(In millions)
Nine Months Ended
 September 30,
Nine Months Ended
September 30,
20212020 20222021
Cash Flows from Operating Activities:Cash Flows from Operating Activities:Cash Flows from Operating Activities:
Net cash provided by (used in) operating activities$2,336 $(1,956)
Net cash provided by operating activitiesNet cash provided by operating activities$4,908 $2,336 
Cash Flows from Investing Activities:Cash Flows from Investing Activities:Cash Flows from Investing Activities:
Capital expenditures, net of flight equipment purchase deposit returnsCapital expenditures, net of flight equipment purchase deposit returns(1,571)(1,630)Capital expenditures, net of flight equipment purchase deposit returns(2,280)(1,571)
Purchases of short-term and other investmentsPurchases of short-term and other investments(47)(552)Purchases of short-term and other investments(8,384)(47)
Proceeds from sale of short-term and other investmentsProceeds from sale of short-term and other investments271 2,182 Proceeds from sale of short-term and other investments1,061 271 
Proceeds from sale of property and equipmentProceeds from sale of property and equipment184 25 
Other, netOther, net23 10 Other, net(23)(2)
Net cash provided by (used in) investing activities(1,324)10 
Net cash used in investing activitiesNet cash used in investing activities(9,442)(1,324)
Cash Flows from Financing Activities:Cash Flows from Financing Activities:Cash Flows from Financing Activities:
Proceeds from issuance of debt, net of discounts and feesProceeds from issuance of debt, net of discounts and fees11,098 12,730 Proceeds from issuance of debt, net of discounts and fees210 11,098 
Proceeds from equity issuanceProceeds from equity issuance532 1,135 Proceeds from equity issuance— 532 
Payments of long-term debt, finance leases and other financing liabilitiesPayments of long-term debt, finance leases and other financing liabilities(4,632)(1,017)Payments of long-term debt, finance leases and other financing liabilities(2,605)(4,632)
Repurchases of common stock— (353)
Other, netOther, net(27)(19)Other, net(77)(27)
Net cash provided by financing activities6,971 12,476 
Net increase in cash, cash equivalents and restricted cash7,983 10,530 
Net cash provided by (used in) financing activitiesNet cash provided by (used in) financing activities(2,472)6,971 
Net increase (decrease) in cash, cash equivalents and restricted cashNet increase (decrease) in cash, cash equivalents and restricted cash(7,006)7,983 
Cash, cash equivalents and restricted cash at beginning of the periodCash, cash equivalents and restricted cash at beginning of the period11,742 2,868 Cash, cash equivalents and restricted cash at beginning of the period18,533 11,742 
Cash, cash equivalents and restricted cash at end of the period (a)Cash, cash equivalents and restricted cash at end of the period (a)$19,725 $13,398 Cash, cash equivalents and restricted cash at end of the period (a)$11,527 $19,725 
Investing and Financing Activities Not Affecting Cash:Investing and Financing Activities Not Affecting Cash:Investing and Financing Activities Not Affecting Cash:
Property and equipment acquired through the issuance of debt, finance leases and otherProperty and equipment acquired through the issuance of debt, finance leases and other$801 $1,513 Property and equipment acquired through the issuance of debt, finance leases and other$— $801 
Lease modifications and lease conversionsLease modifications and lease conversions111 503 Lease modifications and lease conversions61 111 
Right-of-use assets acquired through operating leasesRight-of-use assets acquired through operating leases627 64 Right-of-use assets acquired through operating leases98 627 
Notes receivable and warrants received for entering into aircraft and other ancillary business agreements129 — 
Investment interests received in exchange for goods and servicesInvestment interests received in exchange for goods and services93 129 

(a) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheet:
Current assets:Current assets:Current assets:
Cash and cash equivalentsCash and cash equivalents$19,256 $13,150 Cash and cash equivalents$11,258 $19,256 
Restricted cash — CurrentRestricted cash — Current254 76 Restricted cash — Current61 254 
Restricted cash — Non-CurrentRestricted cash — Non-Current215 172 Restricted cash — Non-Current208 215 
Total cash, cash equivalents and restricted cashTotal cash, cash equivalents and restricted cash$19,725 $13,398 Total cash, cash equivalents and restricted cash$11,527 $19,725 

The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
7

UNITED AIRLINES HOLDINGS, INC.
STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY (UNAUDITED)
(In millions)
Common
Stock
Additional
Capital Invested
Treasury StockRetained EarningsAccumulated
Other Comprehensive Income (Loss)
Total Common
Stock
Additional
Capital Invested
Treasury StockRetained Earnings (Accumulated Deficit)Accumulated
Other Comprehensive Income (Loss)
Total
SharesAmount
Balance at June 30, 2022Balance at June 30, 2022326.7 $$8,970 $(3,551)$(515)$(944)$3,964 
Net incomeNet income— — — — 942 — 942 
Other comprehensive lossOther comprehensive loss— — — — — (20)(20)
Stock-settled share-based compensationStock-settled share-based compensation— — 15 — — — 15 
Stock issued for share-based awards, net of shares withheld for taxStock issued for share-based awards, net of shares withheld for tax0.2 — (15)18 (6)— (3)
Balance at September 30, 2022Balance at September 30, 2022326.9 $$8,970 $(3,533)$421 $(964)$4,898 
Balance at December 31, 2021Balance at December 31, 2021323.8$$9,156 $(3,814)$625 $(942)$5,029 
Net lossNet loss— — — — (106)— (106)
Other comprehensive lossOther comprehensive loss— — — — — (22)(22)
Stock-settled share-based compensationStock-settled share-based compensation— — 70 — — — 70 
Stock issued for share-based awards, net of shares withheld for taxStock issued for share-based awards, net of shares withheld for tax3.1 — (256)281 (98)— (73)
Balance at September 30, 2022Balance at September 30, 2022326.9 $$8,970 $(3,533)$421 $(964)$4,898 
SharesAmountAdditional
Capital Invested
Treasury StockRetained EarningsAccumulated
Other Comprehensive Income (Loss)
Total
Balance at June 30, 2021Balance at June 30, 2021323.6 $Balance at June 30, 2021323.6 $$9,042 $(3,832)$804 $(1,114)$4,904 
Net incomeNet income— — — — 473 — 473 Net income— — — — 473 — 473 
Other comprehensive lossOther comprehensive loss— — — — — (10)(10)Other comprehensive loss— — — — — (10)(10)
Stock-settled share-based compensationStock-settled share-based compensation— — 69 — — — 69 Stock-settled share-based compensation— — 69 — — — 69 
Stock issued for share-based awards, net of shares withheld for taxStock issued for share-based awards, net of shares withheld for tax0.2 — (17)18 (6)— (5)Stock issued for share-based awards, net of shares withheld for tax0.2 — (17)18 (6)— (5)
Balance at September 30, 2021Balance at September 30, 2021323.8 $$9,094 $(3,814)$1,271 $(1,124)$5,431 Balance at September 30, 2021323.8 $$9,094 $(3,814)$1,271 $(1,124)$5,431 
Balance at December 31, 2020Balance at December 31, 2020311.8$$8,366 $(3,897)$2,626 $(1,139)$5,960 Balance at December 31, 2020311.8 $$8,366 $(3,897)$2,626 $(1,139)$5,960 
Net lossNet loss— — — — (1,318)— (1,318)Net loss— — — — (1,318)— (1,318)
Other comprehensive incomeOther comprehensive income— — — — — 15 15 Other comprehensive income— — — — — 15 15 
Stock-settled share-based compensationStock-settled share-based compensation— — 169 — — — 169 Stock-settled share-based compensation— — 169 — — — 169 
Issuance of common stockIssuance of common stock11.0 — 532 — — — 532 Issuance of common stock11.0 — 532 — — — 532 
Warrants issuedWarrants issued— — 99 — — — 99 Warrants issued— — 99 — — — 99 
Stock issued for share-based awards, net of shares withheld for taxStock issued for share-based awards, net of shares withheld for tax1.0 — (72)83 (37)— (26)Stock issued for share-based awards, net of shares withheld for tax1.0 — (72)83 (37)— (26)
Balance at September 30, 2021Balance at September 30, 2021323.8 $$9,094 $(3,814)$1,271 $(1,124)$5,431 Balance at September 30, 2021323.8 $$9,094 $(3,814)$1,271 $(1,124)$5,431 
Balance at June 30, 2020291.0 $$7,307 $(3,899)$6,365 $(1,259)$8,517 
Net loss— — — — (1,841)— (1,841)
Other comprehensive income— — — — — 250 250 
Stock-settled share-based compensation— — 38 — — — 38 
Warrants issued— — 40 — — — 40 
Stock issued for share-based awards, net of shares withheld for tax— — (2)— — (1)
Balance at September 30, 2020291.0 $$7,383 $(3,898)$4,524 $(1,009)$7,003 
Balance at December 31, 2019251.2 $$6,129 $(3,599)$9,716 $(718)$11,531 
Net loss— — — — (5,172)— (5,172)
Other comprehensive loss— — — — — (291)(291)
Stock-settled share-based compensation— — 80 — — — 80 
Issuance of common stock43.7 — 1,135 — — — 1,135 
Repurchases of common stock(4.4)— — (342)— — (342)
Stock issued for share-based awards, net of shares withheld for tax0.5 — (58)43 (3)— (18)
Warrants issued— — 97 — — — 97 
Adoption of new accounting standard (a)— — — — (17)— (17)
Balance at September 30, 2020291.0 $$7,383 $(3,898)$4,524 $(1,009)$7,003 

(a) Transition adjustment due to the adoption of Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses.

The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
8


UNITED AIRLINES, INC.
STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)
(In millions)
Three Months Ended September 30,Nine Months Ended
 September 30,
Three Months Ended September 30,Nine Months Ended
September 30,
2021202020212020 2022202120222021
Operating revenue:Operating revenue: Operating revenue: 
Passenger revenuePassenger revenue$6,637 $1,649 $13,319 $9,395 Passenger revenue$11,653 $6,637 $28,830 $13,319 
CargoCargo519 422 1,622 1,088 Cargo498 519 1,699 1,622 
Other operating revenueOther operating revenue594 418 1,501 1,460 Other operating revenue726 594 2,026 1,501 
Total operating revenueTotal operating revenue7,750 2,489 16,442 11,943 Total operating revenue12,877 7,750 32,555 16,442 
Operating expense:Operating expense:Operating expense:
Aircraft fuelAircraft fuel3,755 1,710 9,796 3,793 
Salaries and related costsSalaries and related costs2,487 2,229 6,987 7,354 Salaries and related costs2,843 2,487 8,466 6,987 
Aircraft fuel1,710 508 3,793 2,474 
Landing fees and other rentLanding fees and other rent639 652 1,919 1,735 
Aircraft maintenance materials and outside repairsAircraft maintenance materials and outside repairs619 346 1,553 917 
Depreciation and amortizationDepreciation and amortization623 626 1,866 1,859 Depreciation and amortization610 623 1,832 1,866 
Landing fees and other rent652 500 1,735 1,552 
Regional capacity purchaseRegional capacity purchase520 425 1,546 1,550 Regional capacity purchase596 520 1,728 1,546 
Aircraft maintenance materials and outside repairs346 115 917 659 
Distribution expensesDistribution expenses218 53 442 379 Distribution expenses482 218 1,101 442 
Aircraft rentAircraft rent58 50 165 147 Aircraft rent65 58 193 165 
Special charges (credits)Special charges (credits)(1,098)(1,081)(3,423)(2,467)Special charges (credits)20 (1,098)124 (3,423)
Other operating expensesOther operating expenses1,197 679 3,027 2,659 Other operating expenses1,789 1,197 4,881 3,027 
Total operating expenseTotal operating expense6,713 4,104 17,055 16,166 Total operating expense11,418 6,713 31,593 17,055 
Operating income (loss)Operating income (loss)1,037 (1,615)(613)(4,223)Operating income (loss)1,459 1,037 962 (613)
Nonoperating income (expense):Nonoperating income (expense): Nonoperating income (expense): 
Interest expenseInterest expense(449)(345)(1,228)(712)Interest expense(455)(449)(1,299)(1,228)
Interest capitalizedInterest capitalized18 16 57 54 Interest capitalized27 18 73 57 
Interest incomeInterest income11 30 45 Interest income104 11 142 30 
Unrealized gains (losses) on investments, netUnrealized gains (losses) on investments, net(34)15 91 (295)Unrealized gains (losses) on investments, net28 (34)(12)91 
Miscellaneous, netMiscellaneous, net21 (411)(48)(1,317)Miscellaneous, net(9)21 (4)(48)
Total nonoperating expense, netTotal nonoperating expense, net(433)(717)(1,098)(2,225)Total nonoperating expense, net(305)(433)(1,100)(1,098)
Income (loss) before income taxes604 (2,332)(1,711)(6,448)
Income (loss) before income tax expense (benefit)Income (loss) before income tax expense (benefit)1,154 604 (138)(1,711)
Income tax expense (benefit)Income tax expense (benefit)130 (491)(394)(1,277)Income tax expense (benefit)212 130 (33)(394)
Net income (loss)Net income (loss)$474 $(1,841)$(1,317)$(5,171)Net income (loss)$942 $474 $(105)$(1,317)
The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.



9

UNITED AIRLINES, INC.
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
(In millions)

Three Months Ended September 30,Nine Months Ended
 September 30,
Three Months Ended September 30,Nine Months Ended
September 30,
2021202020212020 2022202120222021
Net income (loss)Net income (loss)$474 $(1,841)$(1,317)$(5,171)Net income (loss)$942 $474 $(105)$(1,317)
Other comprehensive income (loss), net of tax:Other comprehensive income (loss), net of tax:Other comprehensive income (loss), net of tax:
Employee benefit plansEmployee benefit plans(9)250 17 (292)Employee benefit plans— (9)917 
Investments and otherInvestments and other(1)— (2)Investments and other(20)(1)(31)(2)
Total other comprehensive income (loss), net of taxTotal other comprehensive income (loss), net of tax(10)250 15 (291)Total other comprehensive income (loss), net of tax(20)(10)(22)15 
Total comprehensive income (loss), netTotal comprehensive income (loss), net$464 $(1,591)$(1,302)$(5,462)Total comprehensive income (loss), net$922 $464 $(127)$(1,302)
The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

10

UNITED AIRLINES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions, except shares)
 
September 30, 2021December 31, 2020 September 30, 2022December 31, 2021
ASSETSASSETSASSETS
Current assets:Current assets:Current assets:
Cash and cash equivalentsCash and cash equivalents$19,256 $11,269 Cash and cash equivalents$11,258 $18,283 
Short-term investmentsShort-term investments166 414 Short-term investments7,437 123 
Restricted cashRestricted cash254 255 Restricted cash61 37 
Receivables, less allowance for credit losses (2021 — $70; 2020 — $78)1,709 1,295 
Aircraft fuel, spare parts and supplies, less obsolescence allowance (2021 — $532; 2020 — $478)955 932 
Receivables, less allowance for credit losses (2022 — $28; 2021 — $28)Receivables, less allowance for credit losses (2022 — $28; 2021 — $28)2,034 1,663 
Aircraft fuel, spare parts and supplies, less obsolescence allowance (2022 — $595; 2021 — $546)Aircraft fuel, spare parts and supplies, less obsolescence allowance (2022 — $595; 2021 — $546)1,116 983 
Prepaid expenses and otherPrepaid expenses and other717 635 Prepaid expenses and other783 745 
Total current assetsTotal current assets23,057 14,800 Total current assets22,689 21,834 
Operating property and equipment:Operating property and equipment:Operating property and equipment:
Flight equipmentFlight equipment39,312 38,218 Flight equipment40,867 39,584 
Other property and equipmentOther property and equipment8,633 8,511 Other property and equipment9,195 8,764 
Purchase deposits for flight equipmentPurchase deposits for flight equipment2,179 1,166 Purchase deposits for flight equipment2,532 2,215 
Total operating property and equipmentTotal operating property and equipment50,124 47,895 Total operating property and equipment52,594 50,563 
Less — Accumulated depreciation and amortizationLess — Accumulated depreciation and amortization(17,996)(16,429)Less — Accumulated depreciation and amortization(20,088)(18,489)
Total operating property and equipment, netTotal operating property and equipment, net32,128 31,466 Total operating property and equipment, net32,506 32,074 
Operating lease right-of-use assetsOperating lease right-of-use assets4,697 4,537 Operating lease right-of-use assets4,280 4,645 
Other assets:Other assets:Other assets:
GoodwillGoodwill4,527 4,527 Goodwill4,527 4,527 
Intangibles, less accumulated amortization (2021 — $1,532; 2020 — $1,495)2,815 2,838 
Intangibles, less accumulated amortization (2022 — $1,462; 2021 — $1,544)Intangibles, less accumulated amortization (2022 — $1,462; 2021 — $1,544)2,772 2,803 
Restricted cashRestricted cash215 218 Restricted cash208 213 
Deferred income taxesDeferred income taxes491 103 Deferred income taxes673 631 
Investments in affiliates and other, less allowance for credit losses (2021 — $611; 2020 — $522)1,336 1,031 
Investments in affiliates and other, less allowance for credit losses (2022 — $695; 2021 —$622)Investments in affiliates and other, less allowance for credit losses (2022 — $695; 2021 —$622)1,285 1,420 
Total other assetsTotal other assets9,384 8,717 Total other assets9,465 9,594 
Total assetsTotal assets$69,266 $59,520 Total assets$68,940 $68,147 

(continued on next page)

11

UNITED AIRLINES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions, except shares)
 
September 30, 2021December 31, 2020 September 30, 2022December 31, 2021
LIABILITIES AND STOCKHOLDER'S EQUITYLIABILITIES AND STOCKHOLDER'S EQUITYLIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:Current liabilities:Current liabilities:
Accounts payableAccounts payable$2,199 $1,595 Accounts payable$3,534 $2,562 
Accrued salaries and benefitsAccrued salaries and benefits2,207 1,960 Accrued salaries and benefits1,841 2,121 
Advance ticket salesAdvance ticket sales6,363 4,833 Advance ticket sales8,747 6,354 
Frequent flyer deferred revenueFrequent flyer deferred revenue2,129 908 Frequent flyer deferred revenue2,642 2,239 
Current maturities of long-term debtCurrent maturities of long-term debt2,269 1,911 Current maturities of long-term debt2,955 3,002 
Current maturities of other financial liabilitiesCurrent maturities of other financial liabilities906 834 
Current maturities of operating leasesCurrent maturities of operating leases569 612 Current maturities of operating leases546 556 
Current maturities of finance leasesCurrent maturities of finance leases116 182 Current maturities of finance leases72 76 
OtherOther1,087 728 Other749 563 
Total current liabilitiesTotal current liabilities16,939 12,729 Total current liabilities21,992 18,307 
Long-term debtLong-term debt31,520 24,836 Long-term debt28,490 30,361 
Long-term obligations under operating leasesLong-term obligations under operating leases5,163 4,986 Long-term obligations under operating leases4,803 5,152 
Long-term obligations under finance leasesLong-term obligations under finance leases250 224 Long-term obligations under finance leases112 219 
Other liabilities and deferred credits:Other liabilities and deferred credits:Other liabilities and deferred credits:
Frequent flyer deferred revenueFrequent flyer deferred revenue4,088 5,067 Frequent flyer deferred revenue3,936 4,043 
Pension liabilityPension liability2,180 2,460 Pension liability1,948 1,920 
Postretirement benefit liabilityPostretirement benefit liability961 994 Postretirement benefit liability946 1,000 
Other financial liabilities from sale-leasebacks1,406 1,140 
Other financial liabilitiesOther financial liabilities492 863 
OtherOther1,360 1,156 Other1,355 1,284 
Total other liabilities and deferred creditsTotal other liabilities and deferred credits9,995 10,817 Total other liabilities and deferred credits8,677 9,110 
Commitments and contingenciesCommitments and contingencies00Commitments and contingencies
Stockholder's equity:Stockholder's equity:Stockholder's equity:
Common stock at par, $0.01 par value; authorized 1,000 shares; issued and outstanding 1,000 shares at both September 30, 2021 and December 31, 2020— — 
Common stock at par, $0.01 par value; authorized 1,000 shares; issued and outstanding 1,000 shares at both September 30, 2022 and December 31, 2021Common stock at par, $0.01 par value; authorized 1,000 shares; issued and outstanding 1,000 shares at both September 30, 2022 and December 31, 2021— — 
Additional capital investedAdditional capital invested254 85 Additional capital invested387 317 
Retained earningsRetained earnings3,622 4,939 Retained earnings2,872 2,977 
Accumulated other comprehensive lossAccumulated other comprehensive loss(1,124)(1,139)Accumulated other comprehensive loss(964)(942)
Payable to parentPayable to parent2,647 2,043 Payable to parent2,571 2,646 
Total stockholder's equityTotal stockholder's equity5,399 5,928 Total stockholder's equity4,866 4,998 
Total liabilities and stockholder's equityTotal liabilities and stockholder's equity$69,266 $59,520 Total liabilities and stockholder's equity$68,940 $68,147 

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





12

UNITED AIRLINES, INC.
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
(In millions)
Nine Months Ended
 September 30,
Nine Months Ended
September 30,
20212020 20222021
Cash Flows from Operating Activities:Cash Flows from Operating Activities:Cash Flows from Operating Activities:
Net cash provided by (used in) operating activities$2,309 $(1,968)
Net cash provided by operating activitiesNet cash provided by operating activities$4,834 $2,309 
Cash Flows from Investing Activities:Cash Flows from Investing Activities:Cash Flows from Investing Activities:
Capital expenditures, net of flight equipment purchase deposit returnsCapital expenditures, net of flight equipment purchase deposit returns(1,571)(1,630)Capital expenditures, net of flight equipment purchase deposit returns(2,280)(1,571)
Purchases of short-term and other investmentsPurchases of short-term and other investments(47)(552)Purchases of short-term and other investments(8,384)(47)
Proceeds from sale of short-term and other investmentsProceeds from sale of short-term and other investments271 2,182 Proceeds from sale of short-term and other investments1,061 271 
Proceeds from sale of property and equipmentProceeds from sale of property and equipment184 25 
Other, netOther, net23 10 Other, net(23)(2)
Net cash provided by (used in) investing activities(1,324)10 
Net cash used in investing activitiesNet cash used in investing activities(9,442) (1,324)
Cash Flows from Financing Activities:Cash Flows from Financing Activities:Cash Flows from Financing Activities:
Proceeds from issuance of debt, net of discounts and feesProceeds from issuance of debt, net of discounts and fees11,098 12,730 Proceeds from issuance of debt, net of discounts and fees210 11,098 
Proceeds from issuance of parent company stockProceeds from issuance of parent company stock532 1,135 Proceeds from issuance of parent company stock— 532 
Payments of long-term debt, finance leases and other financing liabilitiesPayments of long-term debt, finance leases and other financing liabilities(4,632)(1,017)Payments of long-term debt, finance leases and other financing liabilities(2,605)(4,632)
Dividend to UAL— (353)
Other, netOther, net— (1)Other, net(3)— 
Net cash provided by financing activities6,998 12,494 
Net increase in cash, cash equivalents and restricted cash7,983 10,536 
Net cash provided by (used in) financing activitiesNet cash provided by (used in) financing activities(2,398)6,998 
Net increase (decrease) in cash, cash equivalents and restricted cashNet increase (decrease) in cash, cash equivalents and restricted cash(7,006)7,983 
Cash, cash equivalents and restricted cash at beginning of the periodCash, cash equivalents and restricted cash at beginning of the period11,742 2,862 Cash, cash equivalents and restricted cash at beginning of the period18,533 11,742 
Cash, cash equivalents and restricted cash at end of the period (a)Cash, cash equivalents and restricted cash at end of the period (a)$19,725 $13,398 Cash, cash equivalents and restricted cash at end of the period (a)$11,527 $19,725 
Investing and Financing Activities Not Affecting Cash:Investing and Financing Activities Not Affecting Cash:Investing and Financing Activities Not Affecting Cash:
Property and equipment acquired through the issuance of debt, finance leases and otherProperty and equipment acquired through the issuance of debt, finance leases and other$801 $1,513 Property and equipment acquired through the issuance of debt, finance leases and other$— $801 
Lease modifications and lease conversionsLease modifications and lease conversions111 503 Lease modifications and lease conversions61 111 
Right-of-use assets acquired through operating leasesRight-of-use assets acquired through operating leases627 64 Right-of-use assets acquired through operating leases98 627 
Notes receivable and warrants received for entering into aircraft and other ancillary business agreements129 — 
Investment interests received in exchange for goods and servicesInvestment interests received in exchange for goods and services93 129

(a) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheet:
Current assets:Current assets:Current assets:
Cash and cash equivalentsCash and cash equivalents$19,256 $13,150 Cash and cash equivalents$11,258 $19,256 
Restricted cash — CurrentRestricted cash — Current254 76 Restricted cash — Current61 254 
Restricted cash — Non-CurrentRestricted cash — Non-Current215 172 Restricted cash — Non-Current208 215 
Total cash, cash equivalents and restricted cashTotal cash, cash equivalents and restricted cash$19,725 $13,398 Total cash, cash equivalents and restricted cash$11,527 $19,725 

The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
13

UNITED AIRLINES, INC.
STATEMENTS OF CONSOLIDATED STOCKHOLDER'S EQUITY (UNAUDITED)
(In millions)
Additional
Capital Invested
Retained EarningsAccumulated
Other Comprehensive Income (Loss)
(Receivable from) Payable to Related Parties, NetTotal Additional
Capital Invested
Retained EarningsAccumulated
Other Comprehensive Income (Loss)
Payable to ParentTotal
Balance at June 30, 2022Balance at June 30, 2022$373 $1,930 $(944)$2,574 $3,933 
Net incomeNet income— 942 — — 942 
Other comprehensive lossOther comprehensive loss— — (20)— (20)
Stock-settled share-based compensationStock-settled share-based compensation14 — — — 14 
OtherOther— — — (3)(3)
Balance at September 30, 2022Balance at September 30, 2022$387 $2,872 $(964)$2,571 $4,866 
Balance at December 31, 2021Balance at December 31, 2021$317 $2,977 $(942)$2,646 $4,998 
Net lossNet loss— (105)— — (105)
Other comprehensive lossOther comprehensive loss— — (22)— (22)
Stock-settled share-based compensationStock-settled share-based compensation70 — — — 70 
OtherOther— — — (75)(75)
Balance at September 30, 2022Balance at September 30, 2022$387 $2,872 $(964)$2,571 $4,866 
Additional
Capital Invested
Retained EarningsAccumulated
Other Comprehensive Income (Loss)
(Receivable from) Payable to Related Parties, NetTotal
Balance at June 30, 2021$185 $3,148 $(1,114)$2,653 $4,872 
Net incomeNet income— 474 — — 474 Net income— 474 — — 474 
Other comprehensive lossOther comprehensive loss— — (10)— (10)Other comprehensive loss— — (10)— (10)
Stock-settled share-based compensationStock-settled share-based compensation69 — — — 69 Stock-settled share-based compensation69 — — — 69 
OtherOther— — — (6)(6)Other— — — (6)(6)
Balance at September 30, 2021Balance at September 30, 2021$254 $3,622 $(1,124)$2,647 $5,399 Balance at September 30, 2021$254 $3,622 $(1,124)$2,647 $5,399 
Balance at December 31, 2020Balance at December 31, 2020$85 $4,939 $(1,139)$2,043 $5,928 Balance at December 31, 2020$85 $4,939 $(1,139)$2,043 $5,928 
Net lossNet loss— (1,317)— — (1,317)Net loss— (1,317)— — (1,317)
Other comprehensive incomeOther comprehensive income— — 15 — 15 Other comprehensive income— — 15 — 15 
Stock-settled share-based compensationStock-settled share-based compensation169 — — — 169 Stock-settled share-based compensation169 — — — 169 
Impact of UAL common stock issuanceImpact of UAL common stock issuance— — — 532 532 Impact of UAL common stock issuance— — — 532 532 
OtherOther— — — 72 72 Other— — — 72 72 
Balance at September 30, 2021Balance at September 30, 2021$254 $3,622 $(1,124)$2,647 $5,399 Balance at September 30, 2021$254 $3,622 $(1,124)$2,647 $5,399 
Balance at June 30, 2020$30 $8,676 $(1,259)$1,038 $8,485 
Net loss— (1,841)— — (1,841)
Other comprehensive income— — 250 — 250 
Stock-settled share-based compensation38 — — — 38 
Other— — — 40 40 
Balance at September 30, 2020$68 $6,835 $(1,009)$1,078 $6,972 
Balance at December 31, 2019$— $12,353 $(718)$(143)$11,492 
Net loss— (5,171)— — (5,171)
Other comprehensive loss— — (291)— (291)
Dividend to UAL(12)(330)— — (342)
Stock-settled share-based compensation80 — — — 80 
Impact of UAL common stock issuance1,135 1,135 
Adoption of new accounting standard (a)— (17)— — (17)
Other— — — 86 86 
Balance at September 30, 2020$68 $6,835 $(1,009)$1,078 $6,972 

(a) Transition adjustment due to the adoption of Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses.


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

UNITED AIRLINES HOLDINGS, INC. AND UNITED AIRLINES, INC.
COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
United Airlines Holdings, Inc. (together with its consolidated subsidiaries, "UAL" or the "Company") is a holding company, and its principal, 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, 20202021 (the "2020"2021 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; however, see Part I, Item 2 of this report for additional discussion regarding trends associated with the matters discussed in the "Impact of the COVID-19 Pandemic" section below.
Impact of the COVID-19 Pandemic
The novel coronavirus (COVID-19) pandemic, together with the measures implemented or recommended by governmental authorities and private organizations in response to the pandemic, has had an adverse impact that has been material to the Company's business, operating results, financial condition and liquidity. The Company has seen increasing demand for travel both domestically and in countries where entry is permitted; however, as the situation surrounding the COVID-19 pandemic remains fluid, the pandemic has continued to negatively impact travel demand. It remains difficult to reasonably assess or predict the full extent of the ongoing impact of the COVID-19 pandemic on the Company's longer-term operational and financial performance, which will depend on a number of future developments, many of which are outside the Company's control, such as the ultimate duration of and factors impacting the recovery from the pandemic (including the efficacy and speed of vaccination programs in curbing the spread of the virus in different markets, the introduction and spread of new variants of the virus that may be resistant to currently approved vaccines and the continuation of existing or implementation of new government travel restrictions), the volatility of aircraft fuel prices, customer behavior changes and fluctuations in demand for air travel, among others. The Company's recovery from the COVID-19 pandemic has not followed a linear path, and due to the significant uncertainty that remains, its future operating performance, particularly in the short-term, may be subject to volatility. The Company is taking steps to be prepared for recovery as demand for travel continues to increase in line with recent customer booking trends, which include making certain investments in the recovery.
Capacity.The Company cut, relative to third quarter 2019 capacity, approximately 28% of its scheduled capacity for the third quarter of 2021 and expects its fourth quarter scheduled capacity to be down approximately 23% versus the fourth quarter of 2019. The Company will continue to monitor booking trends for future travel and adjust its capacity as needed.
Cost Reductions. The Company has identified various permanent structural cost reductions including improvements in labor efficiencies. During the first quarter of 2021, the Company offered voluntary leaves of absence to certain U.S.-based front-line employees. This program included (based on employee group, age and completed years of service) a partially-paid leave of absence with active health care coverage and travel privileges. Employees who separate from the Company after the end of such program receive certain separation benefits, such as post-employment health benefits and travel privileges. Approximately 4,500 employees elected to participate in this program, and it is expected that the majority of them will separate from employment at the end of their leave of absence. See Note 5 and Note 9 of this report for additional information on charges related to these programs.
Liquidity. The Company entered into a number of transactions to improve its liquidity and manage its capital. In the first nine months of 2021, the Company:
issued, through a private offering to eligible purchasers, $4.0 billion in aggregate principal amount of two series of notes, consisting of $2.0 billion in aggregate principal amount of 4.375% senior secured notes due 2026 (the "2026
15

Notes") and $2.0 billion in aggregate principal amount of 4.625% senior secured notes due 2029 (the "2029 Notes" and, together with the 2026 Notes, the "Notes");
entered into a new Term Loan Credit and Guaranty Agreement (the "New Term Loan Facility") initially providing term loans (the "New Term Loans") up to an aggregate amount of $5.0 billion and a new Revolving Credit and Guaranty Agreement (the "New Revolving Credit Facility" and, together with the New Term Loan Facility, the "New Loan Facilities") initially providing revolving loan commitments of up to $1.75 billion;
repaid in full the $1.4 billion aggregate principal amount outstanding under the term loan facility (the "2017 Term Loan Facility") included in the Amended and Restated Credit and Guaranty Agreement, dated as of March 29, 2017 (the "Existing Credit Agreement");
repaid in full the $1.0 billion aggregate principal amount outstanding under the revolving credit facility (the "2017 Revolving Credit Facility") included in the Existing Credit Agreement;
repaid in full the $520 million aggregate principal amount outstanding under the Loan and Guarantee Agreement, dated as of September 28, 2020, among United, UAL, the U.S. Treasury Department ("Treasury") and the Bank of New York Mellon, as administrative agent, as amended (the "CARES Act Loan" and, together with the 2017 Term Loan Facility and the 2017 Revolving Credit Facility, the "Existing Loan Facilities"), which was entered into pursuant to the loan program established pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act");
entered into approximately $0.6 billion in new enhanced equipment trust certificates ("EETC"); and
raised approximately $0.5 billion in net cash proceeds from the issuance and sale of UAL common stock.
In addition to the foregoing transactions, United entered into the following agreements with Treasury:
PSP2. On January 15, 2021, United entered into a Payroll Support Program Extension Agreement (the "PSP2 Agreement") with Treasury providing the Company with total funding of approximately $3.0 billion, pursuant to the Payroll Support Program established under Subtitle A of Title IV of Division N of the Consolidated Appropriations Act, 2021. These funds were used to pay for the wages, salaries and benefits of United employees, including the payment of lost wages, salaries and benefits to returning employees who were previously impacted by involuntary furloughs. Approximately $2.1 billion was provided as a direct grant and $870 million as indebtedness evidenced by a 10-year senior unsecured promissory note (the "PSP2 Note"). See Note 2 of this report for additional information on the warrants issued in connection with the PSP2 Note and Note 8 of this report for a discussion of the PSP2 Note.
PSP3. On April 29, 2021, in connection with the Payroll Support Program established under Section 7301 of the American Rescue Plan Act of 2021, United entered into a Payroll Support Program 3 Agreement (the "PSP3 Agreement") with Treasury providing the Company with total funding of approximately $2.8 billion. Approximately $2.0 billion was provided as a direct grant and $810 million as indebtedness evidenced by a 10-year senior unsecured promissory note (the "PSP3 Note"). These funds will be used by United exclusively for the continuation of payment of its employee wages, salaries and benefits. See Note 2 of this report for additional information on the warrants issued in connection with the PSP3 Note and Note 8 of this report for a discussion of the PSP3 Note.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 September 30,Nine Months Ended
 September 30,
Three Months Ended September 30,Nine Months Ended
September 30,
20212020202120202022202120222021
Domestic (U.S. and Canada)Domestic (U.S. and Canada)$5,412 $1,672 $11,290 $7,675 Domestic (U.S. and Canada)$7,718 $5,412 $20,623 $11,290 
AtlanticAtlantic1,116 365 2,111 1,799 Atlantic3,186 1,116 6,756 2,111 
Latin AmericaLatin America1,162 849 3,266 1,968 
PacificPacific373 282 1,073 1,346 Pacific811 373 1,910 1,073 
Latin America849 170 1,968 1,123 
TotalTotal$7,750 $2,489 $16,442 $11,943 Total$12,877 $7,750 $32,555 $16,442 
Advance Ticket Sales. All tickets sold at any given point in time have travel dates through the next 12 months. The Company defers amounts related to future travel in its Advance ticket sales liability account. The Company's Advance ticket sales liability also includes credits issued to customers on future flight credits ("FFCs") and electronic travel certificates ("ETCs") and future flight credits ("FFCs"), primarily for ticket cancellations, which can be applied towards a purchase of a new ticket. FFCs and ETCs are valid up to two yearsone year from the date
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of issuance; however, all ETCs due to expire prior tocredits issued on or before December 31, 2022 have been extended untilto December 31, 2022. FFCs are valid for 12 months from the original ticket date; however, all FFCs issued on or before December 31, 2021 have been extended to be valid until December 31, 2022. As of September 30, 2021, the Company's Advance ticket sales liability included $3.0 billion related to these ETCs and FFCs.2023. The Company is unable to estimate the amount of the ETCsFFCs and FFCsETCs that will be used within the next 12 months and has classified the entire amount of the Advance ticket sales liability in current liabilities even though some of the ETCsFFCs and FFCsETCs could be used after the next 12 months.
The Company estimates the value of Advance tickets sales that will expire unused ("breakage") and recognizes revenue at the scheduled flight date. To determine breakage, the Company uses its historical experience with expired tickets and other facts, such as recent aging trends, program changes and modifications that could affect the ultimate expiration patterns of tickets. Given the uncertainty of travel demand caused by COVID-19, a significant portionthe novel coronavirus ("COVID-19") pandemic, changes in our estimates of theFFCs and ETCs and FFCsthat may expire unused could have a significant impact on revenue. Changes in future periodsestimates of breakage are recognized prospectively in proportion to the remaining usage of the related tickets.
In the three and getnine months ended September 30, 2022, the Company recognized as breakage. The Company will update its breakage estimates as future information is received.
approximately $5.1 billion and $3.0 billion, respectively, of passenger revenue for tickets that were included in Advance ticket sales at the beginning of those periods. In the three and nine months ended September 30, 2021, the Company recognized approximately $2.8 billion and $1.6 billion, respectively, of passenger revenue for tickets that were included in Advance ticket sales at the beginning of those periods. In the three and nine months ended September 30, 2020, the Company recognized approximately $0.5 billion and $2.9 billion, respectively, of passenger revenue for tickets that were included in Advance ticket sales at the beginning of those periods.
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Ancillary Fees. The Company charges fees, separately from ticket sales, for certain ancillary services that are directly related to passengers' travel, such as baggage fees, premium 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 $707 million$0.9 billion and $2.4 billion of ancillary fees within passenger revenue in the three and nine months ended September 30, 2022, respectively. The Company recorded $0.7 billion and $1.5 billion of ancillary fees within passenger revenue in the three and nine months ended September 30, 2021, respectively. The Company recorded $205 million and $981 million of ancillary fees within passenger revenue in the three and nine months ended September 30, 2020, respectively.
Frequent Flyer Accounting. The table below presents a roll forward of Frequent flyer deferred revenue (in millions):
Three Months Ended September 30,Nine Months Ended
 September 30,
Three Months Ended September 30,Nine Months Ended
September 30,
20212020202120202022202120222021
Total Frequent flyer deferred revenue - beginning balanceTotal Frequent flyer deferred revenue - beginning balance$6,185 $5,670 $5,975 $5,276 Total Frequent flyer deferred revenue - beginning balance$6,495 $6,185 $6,282 $5,975 
Total miles awardedTotal miles awarded439 268 1,071 1,056 Total miles awarded705 439 1,848 1,071 
Travel miles redeemed (Passenger revenue)(391)(87)(781)(444)
Non-travel miles redeemed (Other operating revenue)(16)(16)(48)(53)
Travel miles redeemedTravel miles redeemed(601)(391)(1,489)(781)
Non-travel miles redeemedNon-travel miles redeemed(21)(16)(63)(48)
Total Frequent flyer deferred revenue - ending balanceTotal Frequent flyer deferred revenue - ending balance$6,217 $5,835 $6,217 $5,835 Total Frequent flyer deferred revenue - ending balance$6,578 $6,217 $6,578 $6,217 
In the three and nine months ended September 30, 2021,2022, the Company recognized, in Other operating revenue, $484 million$0.6 billion and $1.3$1.7 billion, 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 Company recognized $378 million$0.5 billion and $1.2$1.3 billion, respectively, in the three and nine months ended September 30, 2020,2021, related to those agreements. 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 liability. We determine the current portion of our frequent flyer liability based on expected redemptions in the next 12 months (with the majority of these miles historically being redeemed within two years).months.
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NOTE 2 - EARNINGS (LOSS) PER SHARE
The computations of UAL's basic and diluted earnings (loss) per share are set forth below (in millions, except per share amounts):
Three Months Ended
September 30,
Nine Months Ended
 September 30,
2021202020212020
Earnings (loss) available to common stockholders$473 $(1,841)$(1,318)$(5,172)
Basic weighted-average shares outstanding323.7 291.0 321.3 273.5 
Dilutive effect of employee stock awards3.0 — — — 
Dilutive effect of stock warrants2.3 — — — 
Diluted weighted-average shares outstanding329.0 291.0 321.3 273.5 
Earnings (loss) per share, basic$1.46 $(6.33)$(4.10)$(18.91)
Earnings (loss) per share, diluted$1.44 $(6.33)$(4.10)$(18.91)
During the first quarter of 2021, UAL entered into a warrant agreement with Treasury pursuant to which UAL issued to Treasury warrants to purchase up to approximately 2.0 million shares of UAL common stock (the "PSP2 Warrants"). The relative fair value of the PSP2 Warrants was calculated using a Black-Scholes options pricing model, and approximately $56 million was recorded within stockholders' equity with an offset to the CARES Act grant credit. During the second quarter of 2021, UAL entered into an additional warrant agreement with Treasury, pursuant to which UAL issued to Treasury warrants to purchase up to approximately 1.5 million shares of UAL common stock (the "PSP3 Warrants"). The relative fair value of the PSP3 Warrants was calculated using a Black-Scholes options pricing model, and approximately $43 million was recorded within stockholders' equity with an offset to the CARES Act grant credit. The PSP2 Warrants and PSP3 Warrants are exercisable either through net share settlement in cash or in shares of UAL common stock, at UAL's option. The PSP2 Warrants and PSP3 Warrants contain customary anti-dilution provisions and registration rights and are freely transferable. Pursuant to the terms of the PSP2 Warrants and PSP3 Warrants, warrant holders do not have any voting rights. As of September 30, 2021, the Company had the following warrants outstanding:
Warrant DescriptionNumber of Shares of UAL Common Stock (in millions)Exercise PriceExpiration Dates
PSP1 Warrants (a)4.8 $31.50 4/20/20259/30/2025
CARES Act Loan Warrants1.7 31.50 9/28/2025
PSP2 Warrants2.0 43.26 1/15/20264/29/2026
PSP3 Warrants1.5 53.92 4/29/20266/10/2026
Total10.0 
(a)Warrants issued in connection with the $1.5 billion 10-year senior unsecured promissory note with Treasury provided under the Payroll Support Program of the CARES Act ("PSP1").
On June 15, 2020, UAL entered into an equity distribution agreement relating to the issuance and sale from time to time by UAL (the "2020 ATM Offering"), of up to 28 million shares of UAL common stock. In the first quarter of 2021, the Company sold approximately 7 million shares at an average price of $42.98 per share, with net proceeds to the Company of approximately $282 million. With these sales, the Company sold all of the shares authorized under the 2020 ATM Offering.
On March 3, 2021, the Company entered into an equity distribution agreement (the "Distribution Agreement") with several financial institutions (collectively, the "Managers"), relating to the issuance and sale from time to time by UAL (the "2021 ATM Offering"), through the Managers, of up to 37 million shares of UAL common stock (the "2021 ATM Shares"). Sales of the 2021 ATM Shares under the Distribution Agreement may be made in any transactions that are deemed to be "at the market offerings" as defined in Rule 415 under the Securities Act of 1933, as amended. Under the terms of the Distribution Agreement, UAL may also sell the 2021 ATM Shares to any Manager, as principal for its own account, at a price agreed upon at the time of sale. If UAL sells the 2021 ATM Shares to a Manager as principal, UAL will enter into a separate terms agreement with such
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Earnings (loss) available to common stockholders$942 $473 $(106)$(1,318)
Basic weighted-average shares outstanding326.8 323.7 326.2 321.3 
Dilutive effect of employee stock awards1.7 3.0 — — 
Dilutive effect of stock warrants1.0 2.3 — — 
Diluted weighted-average shares outstanding329.5 329.0 326.2 321.3 
Earnings (loss) per share, basic$2.88 $1.46 $(0.33)$(4.10)
Earnings (loss) per share, diluted$2.86 $1.44 $(0.33)$(4.10)
Potentially dilutive securities (a)
Stock warrants (b)3.5 1.5 3.5 0.7 
Employee stock awards0.7 0.7 0.7 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 "CARES Act"). The Company issued, to Treasury, warrants to purchase up to approximately 10 million shares of UAL common stock at exercise prices ranging from $31.50 to $53.92 and expiration dates ranging from April 20, 2025 to June 10, 2026. All warrants were outstanding as of September 30, 2022.
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Manager. During the nine months ended September 30, 2021, approximately 4 million shares were sold in the 2021 ATM Offering at an average price of $57.50 per share, with net proceeds to the Company totaling approximately $250 million.

NOTE 3 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The tablestable below presentpresents the components of the Company's accumulated other comprehensive income (loss), net of tax ("AOCI") (in millions):
Pension and Other Postretirement LiabilitiesInvestments and OtherDeferred TaxesTotalPension and Other Postretirement LiabilitiesInvestments and OtherDeferred Taxes (a)Total
Balance at June 30, 2022Balance at June 30, 2022$(834)$(14)$(96)$(944)
Changes in valueChanges in value(1)(25)(20)
Amounts reclassified to earningsAmounts reclassified to earnings— (b)— — — 
Balance at September 30, 2022Balance at September 30, 2022$(835)$(39)$(90)$(964)
Balance at December 31, 2021Balance at December 31, 2021$(847)$— $(95)$(942)
Changes in valueChanges in value13 (39)(21)
Amounts reclassified to earningsAmounts reclassified to earnings(1)(b)— — (1)
Balance at September 30, 2022Balance at September 30, 2022$(835)$(39)$(90)$(964)
Pension and Other Postretirement LiabilitiesInvestments and OtherDeferred TaxesTotal
Balance at June 30, 2021$(1,068)$$(47)$(1,114)
Changes in valueChanges in value(19)(1)(16)Changes in value(19)(1)(16)
Amounts reclassified to earningsAmounts reclassified to earnings(a)— (1)Amounts reclassified to earnings(b)— (1)
Balance at September 30, 2021Balance at September 30, 2021$(1,080)$— $(44)$(1,124)Balance at September 30, 2021$(1,080)$— $(44)$(1,124)
Balance at December 31, 2020Balance at December 31, 2020$(1,102)$$(39)$(1,139)Balance at December 31, 2020$(1,102)$$(39)$(1,139)
Changes in valueChanges in value(2)(1)Changes in value(2)(1)
Amounts reclassified to earningsAmounts reclassified to earnings17 (a)— (4)13 Amounts reclassified to earnings17 (b)— (4)13 
Balance at September 30, 2021Balance at September 30, 2021$(1,080)$— $(44)$(1,124)Balance at September 30, 2021$(1,080)$— $(44)$(1,124)
Balance at June 30, 2020$(1,257)$$(5)$(1,259)
Changes in value(11)— (9)
Amounts reclassified to earnings333 (a)— (74)259 
Balance at September 30, 2020$(935)$$(77)$(1,009)
Balance at December 31, 2019$(560)$$(160)$(718)
Changes in value(781)173 (607)
Amounts reclassified to earnings406 (a)— (90)316 
Balance at September 30, 2020$(935)$$(77)$(1,009)
(a) Includes approximately $285 million of deferred income tax expense that will not be recognized in net income until the related pension and other 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 (see Note 5 of this report for additional information).
NOTE 4 - INCOME TAXES
The Company's effective tax rates for the three and nine months ended September 30, 20212022 were 21.6%18.3% and 23.0%24.3%, respectively. The effective tax rates for the three and nine months ended September 30, 20202021 were 21.1%21.6% and 19.8%23.0%, 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. The effective tax rate was impacted by $52 million of additional valuation allowance related to unrealized capital losses for the three months ended September 30, 2021, and by $27 million of valuation allowance release related to unrealized capital gains and state attributes for the nine months ended September 30, 2021. The effective tax rates for the three and nine months ended September 30, 2020 were impacted by $27 million and $157 million, respectively, of changes in valuation allowance related to unrealized capital losses.
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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 September 30 (in millions):
Pension BenefitsOther Postretirement BenefitsAffected Line Item
in the Statements of
 Consolidated Operations
Pension BenefitsOther Postretirement BenefitsAffected Line Item
in the Statements of
 Consolidated Operations
20212020202120202022202120222021
Service costService cost$59 $58 $$Salaries and related costsService cost$51 $59 $$Salaries and related costs
Interest costInterest cost46 52 Miscellaneous, netInterest cost47 46 Miscellaneous, net
Expected return on plan assetsExpected return on plan assets(70)(77)— — Miscellaneous, netExpected return on plan assets(76)(70)— — Miscellaneous, net
Amortization of unrecognized (gain) lossAmortization of unrecognized (gain) loss42 48 (7)(9)Miscellaneous, netAmortization of unrecognized (gain) loss29 42 (3)(7)Miscellaneous, net
Amortization of prior service creditAmortization of prior service credit— — (30)(31)Miscellaneous, netAmortization of prior service credit— — (28)(30)Miscellaneous, net
Special termination benefits— 19 — 76 Miscellaneous, net
Settlement loss — Voluntary Programs (defined below)— 319 — — Miscellaneous, net
OtherOther— — Miscellaneous, netOther— — Miscellaneous, net
TotalTotal$79 $425 $(29)$46 Total$53 $79 $(21)$(29)
The Company's net periodic benefit cost includes the following components for the nine months ended September 30 (in millions):
Pension BenefitsOther Postretirement BenefitsAffected Line Item
in the Statements of
 Consolidated Operations
Pension BenefitsOther Postretirement BenefitsAffected Line Item
in the Statements of
 Consolidated Operations
20212020202120202022202120222021
Service costService cost$179 $165 $$Salaries and related costsService cost$153 $179 $$Salaries and related costs
Interest costInterest cost138 164 19 21 Miscellaneous, netInterest cost141 138 23 19 Miscellaneous, net
Expected return on plan assetsExpected return on plan assets(212)(259)(1)(1)Miscellaneous, netExpected return on plan assets(230)(212)(1)(1)Miscellaneous, net
Amortization of unrecognized (gain) lossAmortization of unrecognized (gain) loss127 120 (21)(31)Miscellaneous, netAmortization of unrecognized (gain) loss90 127 (10)(21)Miscellaneous, net
Amortization of prior service creditAmortization of prior service credit— — (92)(93)Miscellaneous, netAmortization of prior service credit— — (84)(92)Miscellaneous, net
Special termination benefitsSpecial termination benefits— 54 46 201 Miscellaneous, netSpecial termination benefits— — — 46 Miscellaneous, net
Settlement loss — Voluntary Programs (defined below)— 390— — Miscellaneous, net
OtherOther20 — — Miscellaneous, netOther— — Miscellaneous, net
TotalTotal$235 $654 $(42)$105 Total$157 $235 $(66)$(42)
The Company does not have any minimum required contributions for 2021; however, during the third quarter of 2021, the Company made a voluntary contribution of $375 million to its U.S. domestic tax-qualified defined benefit pension plan covering certain U.S. non-pilot employees.
In 2020 and 2021, the Company offered several voluntary leave programs and voluntary separation programs ("Voluntary Programs") to certain eligible employees, which in some cases included a partially-paid leave of absence with active health benefits and travel privileges. Under these Voluntary Programs, employees generally separated (or will separate) from employment with certain post-employment health benefits and travel privileges.
Included in the Voluntary Programs offered duringDuring the first quarter of 2021, the Company offered special separation benefits in the form of additional subsidies for retiree medical costs for certain U.S.-based front-line employees. The subsidies are in the form of a one-time contribution to a notional Retiree Health Account of $125,000 for full-time employees and $75,000 for part-time employees. As a result, the Company recorded $46 million for those additional benefits in the three months ended March 31, 2021.
During the second and third quarters of 2020, the Company offered certain of its eligible front-line employees special separation benefits in the form of additional years of pension service and additional subsidies for retiree medical costs (based on employee group, age and completed years of service) as a part of the Voluntary Programs. As a result, the Company recorded, in the three and nine months ended September 30, 2020, $19 million and $54 million, respectively, for those additional pension benefits. In the three and nine months ended September 30, 2020, the Company recorded $76 million and $201 million,
2018

respectively, for those additional retiree medical benefits. Also, the Company recognized, in the three and nine months ended September 30, 2020, $319 million and $390 million, respectively, in settlement losses related to the defined benefit pension plan covering certain U.S. non-pilot employees.
Share-Based Compensation. During the nine months ended September 30, 2021, UAL's Board of Directors and stockholders approved the United Airlines Holdings, Inc. 2021 Incentive Compensation Plan (the "2021 Plan"). The 2021 Plan is an incentive compensation plan that allows the Company to use different forms of equity incentives to attract, retain and reward officers and employees. Under the 2021 Plan, the Company may grant: nonqualified stock options; incentive stock options (within the meaning of Section 422 of the Internal Revenue Code of 1986); stock appreciation rights ("SARs"); restricted shares; restricted stock units ("RSUs"); performance units; cash incentive awards and other equity-based and equity-related awards. An award (other than an option, SAR or cash incentive award) may provide the holder with dividends or dividend equivalents. The 2021 Plan replaces the United Continental Holdings, Inc. 2017 Incentive Compensation Plan (the "2017 Plan"). Any awards granted under the 2017 Plan prior to the approval of the 2021 Plan remain in effect pursuant to their terms.
During the nine months ended September 30, 2021, UAL granted share-based compensation awards pursuant to both the 2017 Plan and the 2021 Plan. These share-based compensation awards included 2.9 million RSUs, consisting of 1.3 million time-vested RSUs and 1.6 million short-term performance-based RSUs. A majority of the time-vested RSUs vest equally in 25% increments every 6 months over a two-year period from the date of grant. The short-term performance-based RSUs vest upon the achievement of established goals based on financial and customer satisfaction metrics for the performance period January 1, 2021 to December 31, 2021. RSUs are generally equity awards settled in stock for domestic employees and liability awards settled in cash for international employees. The cash payments are based on the 20-day average closing price of UAL common stock immediately prior to the vesting date.
The table below presents information related to share-based compensation (in millions):
Three Months Ended
September 30,
Nine Months Ended
 September 30,
2021202020212020
Share-based compensation expense$71 $41 $174 $83 
September 30, 2021December 31, 2020
Unrecognized share-based compensation$128 $88 
NOTE 6 - FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
The table below presents disclosures about the financial assets and liabilities measured at fair value on a recurring basis in UAL's financial statements (in millions):
September 30, 2021December 31, 2020September 30, 2022December 31, 2021
TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3
Cash and cash equivalentsCash and cash equivalents$19,256 $19,256 $— $— $11,269 $11,269 $— $— Cash and cash equivalents$11,258 $11,258 $— $— $18,283 $18,283 $— $— 
Restricted cash - currentRestricted cash - current254 254 — — 255 255 — — Restricted cash - current61 61 — — 37 37 — — 
Restricted cash - non-currentRestricted cash - non-current215 215 — — 218 218 — — Restricted cash - non-current208 208 — — 213 213 — — 
Short-term investments:Short-term investments:Short-term investments:
U.S. government and agency notesU.S. government and agency notes6,954 — 6,954 — — — 
Asset-backed securitiesAsset-backed securities460 — 460 — 26 — 26 — 
Corporate debtCorporate debt130 — 130 — 330 — 330 — Corporate debt23 — 23 — 95 — 95 — 
Asset-backed securities34 — 34 — 51 — 51 — 
U.S. government and agency notes— — 33 — 33 — 
Long-term investments:Long-term investments:Long-term investments:
Equity securitiesEquity securities420 420 — — 241 205 — 36 Equity securities156 156 — — 229 229 — — 
Investments presented in the table above have the same fair value as their carrying value.
Restricted cash - current — Primarily includes $217 million of cash collateral for a standby letter of credit associated with guarantees related to the BRW Term Loan (as defined below). See Note 7 of this report for additional information on the BRW Term Loan and guarantees. The balance also 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.
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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. As of September 30, 2021, corporate debt securitiesavailable-for-sale and have remaining maturities of less than two years, asset-backed securities have remaining maturities of less thanapproximately one year to approximately eight years and U.S. government and agency notes have maturities of less than one year.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., Clear Secure, Inc. (formerly, Alclear, Inc.) and, Archer Aviation Inc. ("Archer"). The Company received equity securities in exchange for assisting Archer in the development of battery-powered, short haul aircraft. The Company will account for equity securities it receives from Archer as a deferred credit that will either be recognized into income upon United satisfying certain performance obligations or as a reduction to the cost of the aircraft received in future periods.and Eve Holding, 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:
September 30, 2021December 31, 2020
Carrying AmountFair ValueCarrying AmountFair Value
TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3
Long-term debt$33,789 $35,324 $— $29,779 $5,545 $26,747 $27,441 $— $21,985 $5,456 
September 30, 2022December 31, 2021
Carrying AmountFair ValueCarrying AmountFair Value
TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3
Long-term debt$31,445 $28,951 $— $24,109 $4,842 $33,363 $34,550 $— $29,088 $5,462 
Fair value of the financial instruments included in the tables above was determined as follows:
DescriptionFair Value Methodology
Cash and cash equivalents and Restricted cash (current and non-current)The carrying amounts of these assets approximate fair value.
Short-term investments and Equity securitiesFair value is based on (a) the trading prices of the investment or similar instruments, (b) an income approach, which uses valuation techniques to convert future amounts into a single present amount based on current market expectations about those future amounts when observable trading prices are not available, or (c) broker quotes obtained by third-party valuation services.
Long-term debtFair values were based on either market prices or the discounted amount of future cash flows using our current incremental rate of borrowing for similar liabilities or assets.
Notes ReceivableInvestments in Regional Carriers. .The Company has a debtor-in-possession ("DIP") term loan ("DIP Loan") receivable under the terms of the DIP credit agreement filed, on May 10, 2020, by Avianca Holdings S.A. ("AVH") and certain of its affiliates as part of the voluntary reorganization proceedings under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. The DIP Loan is not convertible. It bears paid-in-kind interest at a rate of 14.5% per annum and has a scheduled maturity date in November 2021. The DIP Loan becomes immediately payable upon AVH's emergence from bankruptcy, in either cash or shares of AVH stock, at AVH's election. AVH has filed a plan of reorganization in the U.S. Bankruptcy Court for the Southern District of New York, pursuant to which it plans to repay the Company’s DIP Loan in shares of stock of the reorganized AVH upon AVH's emergence from bankruptcy. As of September 30, 2021, the DIP Loan had a balance of $176 million and was recorded in Receivables on the Company's consolidated balance sheet. The Company also received a $120 million note receivable (the "Boom Note") from Boom Technology, Inc. ("Boom") related to a commercial agreement to add supersonic aircraft to its global fleet as well as a cooperative sustainability initiative. As of September 30, 2021, the Boom Note had a carrying value of $44 million and was recorded in Investments in affiliates and other, less allowance for credit losses on the Company's consolidated balance sheet. The initial value of the Boom Note was recorded as a deferred credit that will either be recognized into income upon United satisfying certain performance obligations or as a reduction to the cost of the aircraft received in future periods.
Investments in Regional Carriers.2022, United holds investments in severaltwo regional carriers that fly or used to fly for the Company as United Express under its capacity purchase agreements ("CPAs"). The combined carrying value of the investments was approximately $160$183 million as of September 30, 2021.2022. United accounts for each investment using the equity method. Each investment and United's ownership stake are listed below.
Champlain Enterprises, LLC ("Champlain"). United owns a 40% minority ownership stake in Champlain. Champlain does business as CommutAir. CommutAir currently operates 78 regional aircraft under a CPA that has a term through 2026.
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Republic Airways Holdings Inc. ("Republic Holdings"). United holds a 19% minority interest in Republic Holdings. Republic Holdings is the parent company of Republic Airways Inc. ("Republic"). Republic currently operates 66 regional aircraft under CPAs that have terms through 2036.
ManaAir, LLC ("ManaAir"). United holds a 49.9% minority ownership stake in ManaAir. ManaAir is the parent company of ExpressJet Airlines LLC ("ExpressJet"). The Company terminated its CPA with ExpressJet. ExpressJet flew its last commercial flight, on behalf of United, on September 30, 2020.
Other Investments. United holds other equity investments in emerginga number of companies with new aircraftemerging technologies orand sustainable aviation fuel solutions, suchsolutions. United also has equity investments in Avianca Group International Limited, a multinational airline holding company, and JetSuiteX, Inc., an independent air carrier doing business as Fulcrum BioEnergy, Inc., Boom, Alder Fuels LLC and Heart Aerospace Incorporated, which do notJSX. None of these investments have readily determinable fair values. We account for these investments using a measurement alternative that allows entities to measure these investments at cost less impairment, adjusted for observable price changes in orderly transactions for an identical or similar investment of the same issuer. As of September 30, 2021,2022, the carrying value of these investments was $79$330 million.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
Commitments. As of September 30, 2021,2022, United had firm commitments and options to purchase aircraft from The Boeing Company ("Boeing") and Airbus S.A.S. ("Airbus") as presented in the table below:
Scheduled Aircraft DeliveriesScheduled Aircraft Deliveries
Aircraft TypeAircraft TypeNumber of Firm
 Commitments (a)
Last Three Months
of 2021
20222023After 2023Aircraft TypeNumber of Firm
 Commitments (a)
Last Three Months
of 2022
2023After 2023
Airbus A321XLRAirbus A321XLR50 — — — 50 Airbus A321XLR50 — — 50 
Airbus A321neoAirbus A321neo70 — — 16 54 Airbus A321neo70 — 12 58 
Airbus A350Airbus A35045 — — — 45 Airbus A35045 — — 45 
Boeing 737 MAXBoeing 737 MAX371 48 114 205 Boeing 737 MAX353 27 121 205 
Boeing 787Boeing 787— — Boeing 787— — 
(a) United also has options and purchase rights for additional aircraft.(a) United also has options and purchase rights for additional aircraft.(a) United also has options and purchase rights for additional aircraft.
During the third quarter of 2021, the Company elected to accelerate the delivery of 8 Boeing 737 MAX aircraft from 2023 to 2022. The aircraft listed in the table above are scheduled for delivery through 2030. ToThe 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, or to the extentorders; (ii) rights are exercised pursuant to the relevant agreements to modify the timing of deliveries,deliveries; or (iii) the amountaircraft manufacturers are unable to deliver in accordance with the terms of those orders. Furthermore, Boeing notified United that three Boeing 787 aircraft scheduled for delivery in 2022 and timing of15 Boeing 737 MAX aircraft scheduled for delivery in 2023, all as shown in the Company's future capital commitments could change.table above, are now expected to deliver in 2023 and 2024, respectively. In addition to Boeing’s notification, United estimates that seven additional Boeing 737 MAX aircraft scheduled for delivery in 2022, as shown in the table above, will deliver in 2023.
United intends to exercise options to purchase, in 2023, eight Boeing 737 MAX aircraft that are currently leased under sale and leaseback arrangements.
United has an agreement to purchase 10eight used Airbus A319Bombardier CRJ550 aircraft which it intends to sell, with expected delivery dates in 2021 and 2022.
In 2020, United entered into agreements with third parties to finance through sale and leaseback transactions new Boeing model 787 aircraft and Boeing model 737 MAX aircraft subject to purchase agreements between United and Boeing. In connection with the delivery of each aircraft from Boeing, United assigned its right to purchase such aircraft to the buyer, and simultaneous with the buyer's purchase from Boeing, United entered into a long-term lease for such aircraft with the buyer as lessor. NaN Boeing model aircraft were delivered in the first nine months of 2021 under these transactions (and each is presently subject to a long-term lease to United). Remaining aircraft in the agreements are scheduled to be delivered in the last three months of 2021. Upon delivery of aircraft in these sale and leaseback transactions in 2021, the Company accounted for 7 of these aircraft, which have a repurchase option at a price other than fair value, as part of Flight equipment on the Company's consolidated balance sheet and the related obligation recorded in Other current liabilities and Other financial liabilities from sale-leasebacks (noncurrent) since they do not qualify for sale recognition. The remaining 13 aircraft that qualified for sale recognition were recorded as Operating lease right-of-use assets and Current/Long-term obligations under operating leases on the Company's consolidated balance sheet after recognition of related gains on such sale.2022.
The table below summarizes United's commitments as of September 30, 2021,2022, which include aircraft and related spare engines, aircraft improvements and all non-aircraft capital commitments. Aircraft commitments (in billions):are based on contractual scheduled aircraft deliveries without any adjustments for the delays communicated by Boeing or estimated by United.
(in billions)
Last three months of 2022$3.0 
20238.4 
20246.9 
20254.4 
20263.4 
After 20268.5 
$34.6 
Legal Contingencies. The Company has certain contingencies resulting from litigation and claims incident to the ordinary course of business. As of September 30, 2022, management believes, after considering a number of factors, including (but not limited to) the information currently available, the views of legal counsel, the nature of the contingencies to which the Company is subject and prior experience, that its defenses and assertions in pending legal proceedings have merit and the ultimate disposition of any pending matter will not materially affect the Company's financial position, results of operations or cash flows. The Company records liabilities for legal claims when it is probable that a loss will be incurred and the amount is reasonably estimable. These amounts are recorded based on the Company's assessments of the likelihood of their eventual disposition.
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Last three months of 2021$0.9 
20225.3 
20237.0 
20244.8 
20254.3 
After 202512.2 
$34.5 
Regional CPAs. InDuring the nine months ended September 2021, United entered into30, 2022, the Company recorded charges of $94 million as a new CPA with Republic for Republicresult of a number of recent decisions, including one involving another carrier, that appear to operate 38 Embraer E175LL aircraft on United's behalf starting in 2022 for a 12-year term. The new Embraer E175LL aircraft will replace the Embraer E170 aircraft currently being flown by Republic for United. The table below summarizesimpact the Company's expected future payments through the end of the terms of our CPAs, excluding aircraft ownership costsability to successfully assert, in certain cases, that federal law preempts state and variable pass-through costs such as fuel and landing fees, among others. Our future commitments under our CPAs are dependent on numerous variables, and are, therefore, difficult to predict. We have set forth below estimates based on our current assumptions of our anticipated level of flight activity local laws that conflict with union contracts and/or any contractual minimum utilization levels if applicable, whichever is higher. Based on these assumptions as of September 30, 2021, our estimated future payments through the end of the terms of our CPAs are presented in the table below (in billions):
Last three months of 2021$0.6 
20222.1 
20232.0 
20241.9 
20251.6 
After 20255.5 
$13.7 
federal requirements.
Guarantees. As of September 30, 2021,2022, United is the guarantor of approximately $2.1$2.0 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 2023 and 2041.
In August 2021, at the request of United, the City of Houston, Texas issued its approximately $289 million special facilities revenue bonds for the purpose of (a) financing the costs of construction of a multi-terminal baggage handling system, tenant improvements, fixtures, equipment, personnel areas, and related facilities, and an early baggage system building (together with a related fire pump room) at George Bush Intercontinental Airport (IAH), all to be installed by and for use by United and (b) paying related costs of issuance. The bonds bear interest at 4.0% per annum, payable semiannually, commencing January 2022 through the July 2041 maturity date. United is accounting for the payments for these special facilities revenue bonds as lease payments under an operating lease recognized as a right-of-use asset and lease liability on the Company's balance sheet.
In November 2018, United, as lender, entered into a Term Loan Agreement (the "BRW Term Loan Agreement") with, among others, BRW Aviation Holding LLC and BRW Aviation LLC ("BRW"), as guarantor and borrower, respectively. BRW Aviation Holding LLC and BRW are affiliates of Synergy Aerospace Corporation, and BRW is the majority shareholder of AVH. Pursuant to the BRW Term Loan Agreement, United provided to BRW a $456 million term loan (the "BRW Term Loan"). In November 2018, in connection with funding the BRW Term Loan Agreement, the Company entered into an agreement with Kingsland Holdings Limited ("Kingsland"), AVH's largest minority shareholder, pursuant to which, in return for Kingsland's pledge of its 144.8 million common shares of AVH (which are eligible to be converted into the same number of preferred shares, which may be deposited with the depositary for AVH's American Depositary Receipts ("ADRs"), the class of AVH securities that trades on the NYSE, in exchange for 18.1 million ADRs) and its consent to BRW's pledge of its AVH common shares to United under the BRW Term Loan Agreement and related agreements, United (1) granted to Kingsland the right to put its AVH common shares to United at market price on the fifth anniversary of the BRW Term Loan Agreement or upon certain sales of AVH common shares owned by BRW, including upon a foreclosure of United's security interest, and (2) guaranteed BRW's obligation to pay Kingsland the difference if the market price of AVH common shares on the fifth anniversary, or upon any such sale, as applicable, is less than $12 per ADR on the NYSE, for an aggregate maximum possible combined put payment and guarantee amount on the fifth anniversary of $217 million. Due to AVH's financial uncertainty and
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subsequent bankruptcy filing in 2019, the Company recorded the full amount of the guarantee as a liability, and pursuant to the plan of reorganization that AVH has filed in the U.S. Bankruptcy Court for the Southern District of New York, existing common shares of AVH would be cancelled and extinguished and holders would not be entitled to any recovery upon AVH’s exit from bankruptcy, planned to occur in the fourth quarter of 2021, and accordingly the expected value is zero per ADR. Additionally, the Company posted $217 million as cash collateral for a standby letter of credit in favor of Citibank, N.A. that serves as security for a loan from Citibank to Kingsland (recorded in Restricted cash – current on the Company's consolidated balance sheet). Any drawings under the letter of credit would offset the Company's maximum possible put and guarantee payment to Kingsland by an equal amount. The posting of this collateral, and any potential credit against the Company's put and guarantee payment, are entirely related to the original transactions entered in 2018 and do not represent any new or incremental investment.
As of September 30, 2021,2022, United is the guarantor of $109$95 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 London Interbank Offered Rate (LIBOR), 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 September 30, 2021,2022, the Company had $13.3$12.8 billion of floating rate debt with remaining terms of up to approximately 1110 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 1110 years and an aggregate balance of $10.1$9.7 billion, the Company 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 Negotiations. As of September 30, 2021, the Company had approximately 85,300 employees, of whom approximately 85% were represented by various U.S. labor organizations. This total includes employees who elected to voluntarily separate from the Company pursuant to Company-offered Voluntary Programs but who still remained on pay and benefit continuation. During the third quarter of 2021, the Company announced its decision to transition, in October 2021, its catering operations to a combination of 3 outside suppliers who will operate 5 kitchens and oversee the functions related to menu design and administration. Impacted employees who were in good standing have been offered jobs at one of the three suppliers, and about 70% will continue to have union representation following the transition.
Credit Card Processing Agreements. The Company has agreements with financial institutions that process customer credit card transactions for the sale of air travel and other services. Under certain of the Company's credit card processing agreements, the financial institutions in certain circumstances have the right to require that the Company maintain a reserve equal to a portion of advance ticket sales that has been processed by that financial institution, but for which the Company has not yet provided the air transportation. Such financial institutions may require additional cash or other collateral reserves to be established or additional withholding of payments related to receivables to be collected including if the Company does not maintain certain minimum levels of unrestricted cash, cash equivalents and short-term investments.investments (collectively, "Unrestricted Liquidity"). The Company's level of Unrestricted Liquidity as of September 30, 2022 is substantially in excess of these minimum levels.
Labor. As of September 30, 2022, the Company had approximately 90,800 employees, of whom approximately 85% were represented by various U.S. labor organizations.
NOTE 8 - DEBT
On April 21, 2021, United paid all amounts outstanding under the 2017 Revolving Credit Facility and the 2017 Term Loan Facility, terminated the 2017 Revolving Credit Facility and the 2017 Term Loan Facility and entered into the New Loan Facilities described below. As of September 30, 2021, United2022, we had $1.75 billion available for borrowing under the New Revolving Credit Facility at any time until April 21, 2025. No borrowings were outstanding under the New Revolving Credit Facility at September 30, 2021.
EETCs. In February 2021, United created EETC pass-through trusts which issued pass-through certificates. The proceeds from the issuance of the pass-through certificates are used to purchase equipment notes issued by Unitedundrawn and secured by its aircraft financed with the proceeds of such notes. The Company records the debt obligation upon issuance of the equipment notes rather than upon the initial issuance of the pass-through certificates. The pass-through certificates represent fractional undivided interests in the respective pass-through trusts and are not obligations of United. The payment obligations under the equipment notes are those of United. Proceeds received from the sale of pass-through certificates are initially held by a depositary in escrow for the benefit of the certificate holders until United issues equipment notes to the trust, which purchases such notes with a portion of the escrowed funds. These escrowed funds are not guaranteed by United and are not reported as debt on our consolidated balance sheet because the proceeds held by the depositary are not United's assets. Certain details of the pass-through trusts with proceeds received from issuance of debt in 2021 are as follows (in millions, except stated interest rate):
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EETC Issuance DateClassFace AmountStated interest rateTotal proceeds received from issuance of debt and recorded as debt as of September 30, 2021
February 2021B$600 4.88%$600 
PSP2 Note. Duringthe nine months ended September 30, 2021, UAL issued an $870 million PSP2 Note to Treasury evidencing senior unsecured indebtedness of UAL. The PSP2 Note is guaranteed by United and will mature ten years after issuance on January 15, 2031 (the "PSP2 Note Maturity Date"). If any subsidiary of UAL (other than United) guarantees other unsecured indebtedness of UAL with a principal balance in excess of a specified amount, then such subsidiary shall be required to guarantee the obligations of UAL under the PSP2 Note. UAL may, at its option, prepay the PSP2 Note, at any time, and from time to time, at par. UAL is required to prepay the PSP2 Note upon the occurrence of certain change of control triggering events. The PSP2 Note does not require any amortization and is to be repaid in full on the PSP2 Note Maturity Date. Interest on the PSP2 Note is payable semi-annually in arrears on the last business day of March and September of each year, beginning on March 31, 2021, at a rate of 1.00% in years 1 through 5, and at the Secured Overnight Financing Rate (SOFR) plus 2.00% in years 6 through 10.
PSP3 Note. Duringthe nine months ended September 30, 2021, UAL issued an $810 million PSP3 Note to Treasury evidencing senior unsecured indebtedness of UAL. The PSP3 Note is guaranteed by United and will mature ten years after issuance on April 29, 2031 (the "PSP3 Note Maturity Date"). If any subsidiary of UAL (other than United) guarantees other unsecured indebtedness of UAL with a principal balance in excess of a specified amount, then such subsidiary shall be required to guarantee the obligations of UAL under the PSP3 Note. UAL may, at its option, prepay the PSP3 Note, at any time, and from time to time, at par. UAL is required to prepay the PSP3 Note upon the occurrence of certain change of control triggering events. The PSP3 Note does not require any amortization and is to be repaid in full on the PSP3 Note Maturity Date. Interest on the PSP3 Note is payable semi-annually in arrears on the last business day of March and September of each year, beginning on September 30, 2021, at a rate of 1.00% in years 1 through 5, and at the Secured Overnight Financing Rate (SOFR) plus 2.00% in years 6 through 10.
Notes. On April 21, 2021, United issued, through a private offering to eligible purchasers, $4.0 billion in aggregate principal amount of two series of Notes, consisting of $2.0 billion in aggregate principal amount of the 2026 Notes and $2.0 billion in aggregate principal amount of the 2029 Notes. The 2026 Notes, issued at a price of 100% of their principal amount, bear interest at a rate of 4.375% per annum and will mature on April 15, 2026. The 2029 Notes, issued at a price of 100% of their principal amount, bear interest at a rate of 4.625% per annum and will mature on April 15, 2029. The Notes are guaranteed on an unsecured basis by UAL.
New Loan Facilities. Concurrently with the closing of the offering of the Notes, United also entered into the New Loan Facilities, consisting of the New Term Loan Facility initially providing New Term Loans up to an aggregate amount of $5.0 billion and the New Revolving Credit Facility initially providing revolving loan commitments of up to $1.75 billion. United borrowed the full amount of the New Term Loans on April 21, 2021, which bear interest at a variable rate equal to LIBOR (but not less than 0.75% per annum) plus a margin of 3.75% per annum. The principal amount of the New Term Loan Facility must be repaid in consecutive quarterly installments of 0.25% of the original principal amount thereof with the balance due at maturity. Borrowings under the New Revolving Credit Facility bear interest at a variable rate equal to LIBOR plus a margin of 3.00% to 3.50% per annum. United pays a commitment fee equal to 0.75% per annum on the undrawn amount available under the New Revolving Credit Facility.
United used the net proceeds from the offering of the Notes and borrowings under the New Term Loan Facility (i) to repay in full all of the Existing Loan Facilities, including the $1.4 billion aggregate principal amount outstanding under the 2017 Term Loan Facility, the $1.0 billion aggregate principal amount outstanding under the 2017 Revolving Credit Facility and the $520 million aggregate principal amount outstanding under the CARES Act Loan, (ii) to pay fees and expenses relating to the offering of the Notes and (iii) for United's general corporate purposes. As a result of such repayments, the Existing Loan Facilities were terminated on April 21, 2021, and no further borrowings may be made thereunder.
The Notes and the New Loan Facilities are secured on a senior basis by security interests granted by United to the collateral trustee for the benefit of the holders of the Notes and the lenders under the New Loan Facilities, among other parties, on the following: (i) all of United's route authorities granted by the U.S. Department of Transportation to operate scheduled service between any international airport located in the United States and any international airport located in any country other than the United States (except Cuba), (ii) United's rights to substantially all of its landing and take-off slots at foreign and domestic airports, including at John F. Kennedy International Airport, LaGuardia Airport and Ronald Reagan Washington National Airport (subject to certain exclusions), and (iii) United's rights to use or occupy space at airport terminals, each to the extent necessary at the relevant time for servicing scheduled air carrier service authorized by an applicable route authority.
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our revolving credit facility.
Our debt agreements contain customary terms and conditions as well as various affirmative, negative and financial covenants that, among other things, restrict the ability of the Company and its subsidiaries to incur additional indebtedness and pay dividends or repurchase stock. As of September 30, 2021,2022, UAL and United were in compliance with their respective debt covenants.
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The table below presents the Company's contractual principal payments (not including $558$412 million of unamortized debt discount, premiums and debt issuance costs) at September 30, 20212022 under then-outstanding long-term debt agreements (in millions):
Last three months of 2021$519 
20222,967 
Last three months of 2022Last three months of 2022$759 
202320232,852 20232,929 
202420243,908 20243,908 
202520253,378 20253,358 
After 202520,723 
202620265,148 
After 2026After 202615,755 
$34,347 $31,857 
During the nine months ended September 30, 2022, United borrowed $220 million aggregate principal amount from a financial institution to finance the purchase of aircraft. The notes evidencing these borrowings, which are secured by the related aircraft, mature in 2034 and have interest rates of 4%.
NOTE 9 - SPECIAL CHARGES (CREDITS)
For the three and nine months ended September 30, operating and nonoperating special charges (credits), and unrealized (gains) losses on investments debt extinguishment and modification fees, special termination benefits and settlement losses and certain credit losses in the statements of consolidated operations consisted of the following (in millions):
Three Months Ended
September 30,
Nine Months Ended
September 30,
Three Months Ended
September 30,
Nine Months Ended
September 30,
20212020202120202022202120222021
CARES Act grantCARES Act grant$(1,132)$(1,494)$(4,021)$(3,083)CARES Act grant$— $(1,132)$— $(4,021)
Severance and benefit costsSeverance and benefit costs— — 433 
Impairment of assetsImpairment of assets46 38 105 168 Impairment of assets— 46 — 105 
Severance and benefit costs350 433 413 
(Gains) losses on sale of assets and other special charges(Gains) losses on sale of assets and other special charges(17)25 60 35 (Gains) losses on sale of assets and other special charges20 (17)124 60 
Total operating special charges (credits)Total operating special charges (credits)(1,098)(1,081)(3,423)(2,467)Total operating special charges (credits)20 (1,098)124 (3,423)
Nonoperating unrealized (gains) losses on investments, netNonoperating unrealized (gains) losses on investments, net34 (15)(91)295 Nonoperating unrealized (gains) losses on investments, net(28)34 12 (91)
Nonoperating debt extinguishment and modification feesNonoperating debt extinguishment and modification fees(12)— 50 — Nonoperating debt extinguishment and modification fees— (12)50 
Nonoperating special termination benefits and settlement losses— 415 46 646 
Nonoperating credit loss on BRW Term Loan and related guarantee— — — 697 
Nonoperating special termination benefitsNonoperating special termination benefits— — — 46 
Total nonoperating special charges and unrealized (gains) losses on investments, netTotal nonoperating special charges and unrealized (gains) losses on investments, net22 400 1,638 Total nonoperating special charges and unrealized (gains) losses on investments, net(28)22 19 
Total operating and nonoperating special charges (credits) and unrealized (gains) losses on investments, netTotal operating and nonoperating special charges (credits) and unrealized (gains) losses on investments, net(1,076)(681)(3,418)(829)Total operating and nonoperating special charges (credits) and unrealized (gains) losses on investments, net(8)(1,076)143 (3,418)
Income tax expense, net of valuation allowance274 148 768 375 
Income tax (benefit) expense, net of valuation allowanceIncome tax (benefit) expense, net of valuation allowance(7)274 (17)768 
Total operating and nonoperating special charges (credits) and unrealized (gains) losses on investments, net of income taxesTotal operating and nonoperating special charges (credits) and unrealized (gains) losses on investments, net of income taxes$(802)$(533)$(2,650)$(454)Total operating and nonoperating special charges (credits) and unrealized (gains) losses on investments, net of income taxes$(15)$(802)$126 $(2,650)
2022
(Gains) losses on sale of assets and other special charges. During the three and nine months ended September 30, 2022, the Company recorded $20 million and $124 million, respectively, of net charges primarily comprised of $94 million for various legal matters. See Note 7 of this report for a discussion of the legal matters.
Nonoperating unrealized (gains) losses on investments, net. During the three and nine months ended September 30, 2022, the Company recorded gains of $28 million and losses of $12 million, respectively.
Nonoperating debt extinguishment and modification fees. During the nine months ended September 30, 2022, the Company recorded $7 million of charges primarily related to the early redemption of $400 million of its outstanding principal amount of the 4.25% senior notes due 2022.
2021
CARES Act grant. During the nine months ended September 30, 2021, the Company received approximately $5.8 billion in funding pursuant to two Payroll Support Program Extension Agreements (collectively, the PSP2 Agreement"PSP2 and PSP3 Agreements") under the PSP3 Agreement,CARES Act, which included an approximately $1.7 billion aggregate principal amount of unsecured loan. promissory notes.
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The Company recorded $1.1 billion and $4.0 billion as grant income in Special charges (credits) during the three and nine months ended September 30, 2021, respectively. The Company also recorded $99 million for the PSP2 Warrants and PSP3 Warrantswarrants to purchase shares of UAL common stock issued to the U.S. Treasury Department as part of the PSP2 Agreement and PSP3 Agreement,Agreements, within stockholders' equity, as an offset to the grant income in the nine months ended September 30, 2021.
Impairment of assets. During the three months ended September 30, 2021, the Company recorded $46 million of impairment charges for 9 Airbus A319 aircraft and 13 Boeing 737-700 airframes as a result of current market conditions for used aircraft. These aircraft are all considered held for sale and classified as part of other assets. During the nine months ended September 30, 2021, in addition to the third quarter impairments described above, the Company recorded $59 million of
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impairments primarily related to 64 Embraer EMB 145LR aircraft and related spare engines that United retired from its regional fleet. The decision to retire these aircraft was triggered by the United Next aircraft order. In February 2021, the Company voluntarily and temporarily removed all 52 Boeing 777-200/200ER aircraft powered by Pratt & Whitney 4000 series engines from its schedule due to an engine failure incident with one of its aircraft. The Company viewed this incident as an indicator of potential impairment. Accordingly, as required under relevant accounting standards, United performed forecasted cash flow analyses and determined that the carrying value of the Boeing 777-200/200ER fleet is expected to be recoverable from future cash flows expected to be generated by that fleet and, consequently, no impairment was recorded.
Severance and benefit costs. During the three and nine months ended September 30, 2021, the Company recorded charges of $5 million and $433 million, respectively, related to pay continuation and benefits-related costs provided to employees who chose to voluntarily separate from the Company. The Company offered, based on employee group, age and completed years of service, pay continuation, health care coverage, and travel benefits.privileges. Approximately 4,500 employees elected to voluntarily separate from the Company.
Impairment of assets. During the three months ended September 30, 2021, the Company recorded $46 million of impairment charges for nine Airbus A319 aircraft and 13 Boeing 737-700 airframes as a result of market conditions for used aircraft. During the nine months ended September 30, 2021, in addition to the third quarter 2021 impairments, the Company recorded $59 million of impairments primarily related to 64 Embraer EMB 145LR aircraft and related engines that United retired from its regional aircraft fleet. The decision to retire these aircraft was triggered by the United Next aircraft order.
(Gains) losses on sale of assets and other special charges. During the three months ended September 30, 2021, the Company recorded net gains of $17 million primarily related to gains on aircraft sale-leaseback transactions and aircraft component manufacturer credits. During the nine months ended September 30, 2021, the Company recorded net charges of $60 million primarily related to incentives for certain of its front-line employees to receive a COVID-19 vaccination and the termination of the lease associated with three floors of its headquarters at the Willis Tower in Chicago in the first quarter of 2021, which were partially offset by the net gains in the third quarter's gains.quarter of 2021 described above.
Nonoperating unrealized (gains) losses on investments, net. During the three and nine months ended September 30, 2021, the Company recorded losses of $34 million and gains of $91 million, respectively primarily for the change in the market value of its investments in equity securities. Substantially all of the gains and losses were related to equity securities held by the Company as of September 30, 2021. See Note 6 of this report for information related to these equity investments..
Nonoperating debt extinguishment and modification fees. During the nine months ended September 30, 2021, the Company recorded $50 million of charges for fees and discounts related to the issuance of the New Loan Facilitiesa new term loan and revolving credit facility and the prepayment of the Existing Loan Facilities.a CARES Act loan and a 2017 term loan and revolving credit facility.
Nonoperating special termination benefits and settlement losses.benefits. During the nine months ended September 30, 2021, as part of the first quarter Voluntary Programs,2021 voluntary leave programs, the Company recorded $46 million of special termination benefits in the form of additional subsidies for retiree medical costs for certain U.S.-based front-line employees. The subsidies were in the form of a one-time contribution tointo a notional Retiree Health Account of $125,000 for full-time employees and $75,000 for part-time employees.
2020
CARES Act grant. During the nine months ended September 30, 2020, the Company received approximately $5.1 billion in funding pursuant to PSP1, which consisted of a $3.6 billion grant and a $1.5 billion unsecured loan. The Company recognized $3.1 billion of the grant as a credit to Special charges (credits) and $66 million in warrants issued to Treasury, within stockholders' equity, as an offset to the grant income.
Impairment of assets. During the three and nine months ended September 30, 2020, the Company recorded an impairment charge of $38 million related to the right-of-use asset associated with the embedded aircraft lease in one of our CPAs. Also, during the nine months ended September 30, 2020, the Company recorded impairment charges of $130 million for its China routes, which were primarily caused by the COVID-19 pandemic, the Company's subsequent suspension of flights to China and a further delay in the expected return of full capacity to the China markets.
Severance and benefit costs. During the three and nine months ended September 30, 2020, the Company recorded $350 million and $413 million, respectively, related to the workforce reduction and voluntary plans for employee severance, pay continuance from voluntary retirements and benefits-related costs.
Nonoperating unrealized gains (losses) on investments, net. During the three and nine months ended September 30, 2020, the Company recorded gains of $15 million and losses of $271 million, respectively, primarily for the change in the market value of its investment in equity securities. Also, during the nine months ended September 30, 2020, the Company recorded losses of $24 million for the decrease in fair value of the AVH share call options, AVH share appreciation rights and AVH share-based upside sharing agreement.
Nonoperating special termination benefits and settlement losses. During the three and nine months ended September 30, 2020, the Company recorded $415 million and $646 million, respectively, of settlement losses related to the Company's primary defined benefit pension plan covering certain U.S. non-pilot employees, and special termination benefits offered under
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Voluntary Programs to certain front-line U.S.-based employees participating in the non-pilot defined benefit pension plan and postretirement medical programs.
Nonoperating credit loss on BRW Term Loan and related guarantee. During the nine months ended September 30, 2020, the Company recorded a $697 million expected credit loss allowance for the BRW Term Loan and related guarantee. AVH is currently in bankruptcy. See Notes 6 and 7 of this report for additional information.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
This Management's Discussion and Analysis of Financial Condition and Results of Operations is provided as a supplement to and should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q to enhance the understanding of our results of operations, financial condition and cash flows.
EXECUTIVE SUMMARY
Overview
United Airlines Holdings, Inc. (together with its consolidated subsidiaries, "UAL" or the "Company") is a holding company, and its principal, wholly-owned subsidiary is United Airlines, Inc. (together with its consolidated subsidiaries, "United"). The Company's shared purpose is "Connecting People. Uniting the World." The Company has the most comprehensive route network among North American carriers, including U.S. mainland hubs in Chicago, Denver, Houston, Los Angeles, New York/Newark, San Francisco and Washington, D.C.
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 Company transports people and cargo through its mainline operations, which utilize jet aircraft with at least 126 seats, and regional operations, which utilize smaller aircraft that are operated under contract by United Express carriers. The Company serves virtually every major market around the world, either directly or through participation in Star Alliance®, the world's largest airline alliance.
Third Quarter 2021 Overview
Our business and operating results for 2021 continue to be significantly impacted byGiven the novel coronavirus (COVID-19) pandemic. Given themore significant impact of the COVID-19 pandemic on our business and operating results in 2020 and 2021, we believe that a comparison of our third quarter 2022 results in 2021 to third quarter of 2019 results for certain key metrics in this financial overview discussion is more reflective of the impact of the COVID-19 pandemic.
Our current expectations described below are forward-looking statements and our actual results and timing may vary materially based on various factors that include, but are not limited to, those discussed below under "Economic and Market Factors" and "Forward-Looking Information" and in Part I, Item 1A. Risk Factors, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the "2021 Form 10-K"). The Company cut, relativediscusses certain non-GAAP forward-looking projections and is unable to predict certain items contained in the corresponding GAAP measures without unreasonable efforts; refer to "Supplemental Information" below for further details. The results presented in this report are not necessarily indicative of future operating results.
Economic and Market Factors
The airline industry is highly competitive, marked by significant competition with respect to routes, fares, schedules (both timing and frequency), services, products, customer service and frequent flyer programs. We, like other companies in our industry, have been subject to these and other industry-specific competitive dynamics. In addition, our operations, supply chain, partners and suppliers have been subject to various global macroeconomic factors. We expect to continue to remain vulnerable to a number of industry-specific and global macroeconomic factors that may cause our actual results of operations to differ from our historical results of operations or current expectations. The factors and trends that we currently believe are or will be most impactful to our results of operations and financial condition include the following: the adverse impacts of the ongoing COVID-19 global pandemic, including the gradual return of business travel demand to pre-COVID-19 levels; the execution risks associated with our United Next plan; the impact on the Company of significant operational challenges by third parties on which we rely; inflationary pressures; potential labor and supply chain shortages affecting us and our partners; volatile fuel prices; aircraft delivery delays; the closure of our flying airspace and termination of other operations due to regional conflicts, including the continuation of the suspension of our overflying in Russian airspace as well as third-party general sales agent services in Russia as a result of the Russia-Ukraine military conflict and an escalation of the broader economic consequences of the conflict beyond their current scope; and changes in general economic conditions in the markets in which the Company operates, including an economic downturn leading to a decrease in demand for air travel or fluctuations in foreign currency exchange rates that may impact international travel demand. We continue to monitor the potential favorable or unfavorable
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impacts of these and other factors on our business, operations, financial condition and future results of operations, which are dependent on future developments, including as a result of those factors discussed in Item 1A. Risk Factors in the 2021 Form 10-K. Our future results of operations may be subject to volatility and our growth plans may be delayed, particularly in the short term, due to the third quarterimpact of 2019, approximately 28%the above factors and trends. For instance, we have delayed a portion of its scheduledour previously planned capacity increases for full year 2022 and 2023 in response to several factors and trends noted above and may need to implement further modifications. However, we believe that the long-term outlook for the third quarter of 2021 and expects its scheduled capacity in the fourth quarter of 2021 to be down approximately 23% versus the fourth quarter of 2019.
Operating revenue for the third quarter of 2021 decreased by $3.6 billion to $7.8 billion, or 31.9%, versus the third quarter of 2019. Operating revenue is expected to decrease between 25% and 30% in the fourth quarter of 2021 as comparedCompany remains positive due to the same periodexpected continued return of travel demand. We believe that this expected long-term increase in 2019.demand will offset increased costs and that the expected operational challenges can be managed in a manner that will allow us to support increased demand.
Operating expense for the third quarter of 2021 decreased by $3.2 billion to $6.7 billion, or 32.2%, versus the third quarter of 2019.
Impact of the COVID-19 Pandemic and Outlook
Pandemic.The COVID-19 pandemic, together with the measures implemented or recommended by governmental authorities and private organizations in response to the pandemic, has had an adverse impact that has been material to the Company's business, operating results, financial condition and liquidity. The Company has seen increasing demand for travel both domestically and in countries where entry is permitted; however, as the situation surrounding the COVID-19 pandemic remains fluid, with intermittent periods of decelerated demand that have coincided with surges in the pandemic has continued to negatively impact travel demand. Itnumber of COVID-19 cases, it remains difficult to reasonably assess or predict the full extent of the ongoing impact of the COVID-19 pandemic on the Company's longer-term operational and financial performance, which will depend on a number of future developments, many of which are outside the Company's control, such as the ultimate duration of and factors impacting the long-term recovery from the pandemic (including the efficacy and speed of vaccination programs in curbing the spread of the virus in different markets, the efficacy and availability of various treatment options, the introduction and spread of new variants of the virus that may be resistant to currently approved vaccines or treatment options, and the continuation of existing or implementation of new government travel restrictions)restrictions and testing requirements), the volatility of aircraft fuel prices, customer behavior changes and fluctuations in demand for air travel, among others. The COVID-19 pandemic and the measures taken in response may continue to impact many aspects of our business, operating results, financial condition and liquidity in a number of ways, including labor shortages (including reductions in available skilled labor and related impacts to the Company's flight schedules and reputation), facility closures and related costs, disruptions to the Company's and its business partners' operations, reduced travel demand and consumer spending, increased fuel and other operating costs, supply chain disruptions, logistics constraints, inflation, volatility in the price of our securities, our ability to access capital markets and volatility in the global economy and financial markets generally.
We operated at approximately 90% of our third quarter 2019 capacity during the third quarter of 2022. At the beginning of the COVID-19 pandemic, we suspended portions of our international operations, but we resumed service to several international destinations as travel restrictions were eased and demand for travel increased. The Company has been taking steps to be prepared for recovery as demand for travel continues to generally increase, which have included investing in innovative technology, focusing on process improvements and implementing the United Next transformative strategy.
We have also taken steps to strengthen our financial position during this period of market uncertainty, which has resulted in an increase in our overall debt levels. As of September 30, 2022, unrestricted cash, cash equivalents and short-term investments totaled $18.7 billion, an increase of approximately $13.6 billion from September 30, 2019. We had approximately $38.4 billion of debt, finance lease, operating lease and sale-leaseback obligations as of September 30, 2022 (including $4.5 billion that will become due in the next 12 months), up from approximately $18.2 billion as of September 30, 2019.
The Company's recovery from the COVID-19 pandemic has not followed a linear path, and due to the significant uncertainty that remains, its future operating performance, particularly in the short-term, may be subject to volatility. Risks and uncertainties related to the COVID-19 pandemic are further described in Part I, Item 1A. Risk Factors— "The COVID-19 pandemic has materially and adversely impacted our business, operating results, financial condition and liquidity. The full extent of the impact will depend on future developments and how quickly we can return to more normal operations, among other things. If the impacts from the COVID-19 pandemic extend beyond our assumed timelines, our actual results may vary significantly from our expectations" of the 2021 Form 10-K.
Strategic Operating Plan Execution. In the second quarter of 2021, United announced its United Next plan, which we believe will have a transformational effect on the customer experience and earnings power of the business. We continued executing our United Next plan during the third quarter of 2022. We believe United Next will allow us to differentiate our network and segment our products with a greater premium offering, while also maintaining fare competitiveness with low-cost carriers.
Third Quarter 2022 Overview
Capacity. Relative to the third quarter of 2019, the Company is taking stepsoperated approximately 90% of its capacity for the third quarter of 2022 compared to be prepared for recovery as demand for travel continues to increase in line with recent customer booking trends, which include making certain investmentsapproximately 72% of its capacity in the recovery.third quarter of 2021.
Operating revenue. For the third quarter of 2022, operating revenue increased by $1.5 billion, or 13.2%, versus the third quarter of 2019 and increased by $5.1 billion, or 66.2%, versus the third quarter of 2021 due to the ongoing recovery from the
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Risks and uncertainties related to the COVID-19 pandemic are further describedaccompanied by an increase in Part II, Item 1A. Risk Factors— "The global pandemic resulting from a novel strain of coronavirus has had an adverse impact that has been material tothe average yield. In fact, the Company's business, operating results, financial condition and liquidity, andTRASM (as defined below) for the duration and spreadmonth of September was the pandemic could result in additional adverse impacts. The outbreakthird best of another disease or similar public health threatany month in the future could also have an adverse effect onCompany's history, excluding pandemic months.
Operating expense. For the Company's business,third quarter of 2022, operating results, financial conditionexpense increased by $1.5 billion, or 15.3%, versus the third quarter of 2019, mostly due to a $1.5 billion increase in fuel costs, and liquidity" in our Quarterly Report on Form 10-Q forby $4.7 billion, or 70.1%, versus the quarterly period ended June 30, 2021.
As the COVID-19 pandemic affected global aviation as well as major economic and financial markets, we have taken steps to mitigate the effects of the COVID-19 pandemic on our business and have remained focused on protecting the health and safety of our workforce and customers and transforming our customers' onboard experience in preparation for an eventual recovery from the COVID-19 pandemic:
Cost Reductions. The Company has identified approximately $2.2 billion of annual permanent structural cost reductions including improvements in labor efficiencies. During the firstthird quarter of 2021, the Company offered voluntary leaves of absencemostly due to certain U.S.-based front-line employees. This program included (based on employee group, age and completed years of service) a partially-paid leave of absence with active health care coverage and travel privileges. Employees who separate from the Company after the end of such program receive certain separation benefits, such as post-employment health benefits and travel privileges. Approximately 4,500 employees elected to participate in this program, and it is expected that the majority of them will separate from employment at the end of their leave of absence. See Note 5 and Note 9 to the financial statements included in Part I, Item 1 of this report for additional information on charges related to these programs.
Liquidity. The Company entered into a number of transactions to improve its liquidity and manage its capital. In the first nine months of 2021, the Company:
issued, through a private offering to eligible purchasers, $4.0 billion in aggregate principal amount of two series of notes, consisting of $2.0 billion increase in aggregate principal amount of 4.375% senior secured notes due 2026 (the "2026 Notes") and $2.0fuel costs, a $1.1 billion in aggregate principal amount of 4.625% senior secured notes due 2029 (the "2029 Notes" and, together with the 2026 Notes, the "Notes");
entered into a new Term Loan Credit and Guaranty Agreement (the "New Term Loan Facility") initially providing term loans up to an aggregate amount of $5.0 billion and a new Revolving Credit and Guaranty Agreement (the "New Revolving Credit Facility" and, together with the New Term Loan Facility, the "New Loan Facilities") initially providing revolving loan commitments of up to $1.75 billion;
repaid in full the $1.4 billion aggregate principal amount outstanding under the term loan facility (the "2017 Term Loan Facility") included in the Amended and Restated Credit and Guaranty Agreement, dated as of March 29, 2017 (the "Existing Credit Agreement");
repaid in full the $1.0 billion aggregate principal amount outstanding under the revolving credit facility (the "2017 Revolving Credit Facility") included in the Existing Credit Agreement;
repaid in full the $520 million aggregate principal amount outstanding under the Loan and Guarantee Agreement, dated as of September 28, 2020, among United, UAL, the U.S. Treasury Department ("Treasury") and the Bank of New York Mellon, as administrative agent, as amended (the "CARES Act Loan"), which was entered into pursuant to the loan program established pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"); grant in the prior year period that did not repeat and other increased operating costs from flight activity. We expect fuel costs to remain elevated or increase further throughout 2022.
Fourth Quarter 2022 Outlook
Capacity. The Company expects its scheduled capacity to be down approximately 9% to 10% in the fourth quarter of 2022 as compared to the same period in 2019.
Total revenue per available seat mile ("TRASM").entered into The Company expects TRASM to increase approximately $0.6 billion24% to 25% in new enhanced equipment trust certificates ("EETC"); andthe fourth quarter of 2022 as compared to the same period in 2019.
Adjusted cost per available seat mile ("CASM-ex").raised The Company expects CASM-ex (a non-GAAP financial measure defined as cost or operating expense per available seat mile ("CASM") excluding fuel, profit sharing, third-party business expense and special charges (credits)) to increase approximately $0.5 billion11% to 12% in net cash proceeds from the issuance and salefourth quarter of UAL common stock.
In addition2022 as compared to the foregoing transactions, United entered into the following agreements with Treasury:same period in 2019.
PSP2.Adjusted operating margin. On January 15, 2021, United entered into a Payroll Support Program Extension Agreement (the "PSP2 Agreement") with Treasury providing theThe Company with total fundingexpects adjusted operating margin (a non-GAAP financial measure defined as operating margin excluding special charges (credits)) of approximately $3.0 billion, pursuant to the Payroll Support Program established under Subtitle A of Title IV of Division N of the Consolidated Appropriations Act, 2021. These funds were used to pay10% for the wages, salaries and benefits of United employees, including the payment of lost wages, salaries and benefits to returning employees who were previously impacted by involuntary furloughs. Approximately $2.1 billion was provided as a direct grant and $870 million as indebtedness evidenced by a 10-year senior unsecured promissory note (the "PSP2 Note"). See Note 2 to the financial statements included in Part I, Item 1 of this report for additional information on the warrants issued in connection with the PSP2 Note and Note 8 of this report for a discussion of the PSP2 Note.
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PSP3. On April 29, 2021, in connection with the Payroll Support Program established under Section 7301 of the American Rescue Plan Act of 2021, United entered into a Payroll Support Program 3 Agreement (the "PSP3 Agreement") with Treasury providing the Company with total funding of approximately $2.8 billion. Approximately $2.0 billion was provided as a direct grant and $810 million as indebtedness evidenced by a 10-year senior unsecured promissory note (the "PSP3 Note"). These funds will be used by United exclusively for the continuation of payment of its employee wages, salaries and benefits. See Note 2 to the financial statements included in Part I, Item 1 of this report for additional information on the warrants issued in connection with the PSP3 Note and Note 8 of this report for a discussion of the PSP3 Note.
United Next. In the secondfourth quarter of 2021, United entered into firm narrow-body aircraft orders for 200 Boeing 737 MAX aircraft and 70 Airbus A321neo aircraft. The "United Next" plan will have a transformational effect on the customer experience and is expected to increase the total number of available seats per domestic departure by almost 30% by 2026 and significantly lower carbon emissions per seat. The new aircraft will come with a new signature interior that includes seat-back entertainment in every seat, larger overhead bins for every passenger's carry-on bag and the industry's fastest available in-flight WiFi, as well as a bright look-and-feel with LED lighting. The new aircraft will allow the Company to replace older, smaller mainline jets and at least 200 single-class regional jets with larger aircraft, which we expect will lead to significant sustainability benefits compared to older planes: an expected 11% overall improvement in fuel efficiency and an expected 17-20% lower carbon emission per seat compared to older planes.2022.
Environmental Sustainability
During the third quarter of 2021, the Company entered into a non-binding off-take agreement for the purchase of sustainable aviation fuel with Alder Fuels LLC to advance its previously announced commitments of reducing its carbon emission footprint.
In 2020, United pledged to become 100% green by reducing, compared to 2019, its greenhouse gas emissions by 100% by 2050 without relying on voluntary carbon offsets, and in 2021, United pledged to reduce, compared to 2019, its carbon intensity by 50% by 2035.
Our current expectations described above are forward-looking statements and our actual results and timing may vary materially based on various factors that include, but are not limited to, those discussed below under "Forward-Looking Information" and in Part II, Item 1A. Risk Factors, in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021.
RESULTS OF OPERATIONS
The following discussion provides an analysis of our results of operations and reasons for material changes therein for the three and nine months ended September 30, 20212022, as compared to the corresponding periodsperiod in 2020.2021.
Third Quarter 20212022 Compared to Third Quarter 20202021
The Company recorded net income of $473$942 million infor the third quarter of 20212022 as compared to a net lossincome of $1.8 billion in$473 million for the third quarter of 2020.2021. The Company considers a key measure of its performance to be operating income, (loss), which was $1.5 billion for the third quarter of 2022 as compared to $1.0 billion of income for the third quarter of 2021, as compared to a $1.6 billion loss for the third quarter of 2020, an approximately $2.7 billion$421 million increase year-over-year, primarily as a result of improvements in demand for air travel.year-over-year. Significant components of the Company's operating results for the three months ended September 30 are as follows (in millions, except percentage changes):
20212020Increase (Decrease)% Change20222021Increase (Decrease)% Change
Operating revenueOperating revenue$7,750 $2,489 $5,261 211.4 Operating revenue$12,877 $7,750 $5,127 66.2 
Operating expenseOperating expense6,713 4,104 2,609 63.6 Operating expense11,419 6,713 4,706 70.1 
Operating income (loss)1,037 (1,615)2,652 164.2 
Operating incomeOperating income1,458 1,037 421 40.6 
Nonoperating expense, netNonoperating expense, net(434)(717)(283)(39.5)Nonoperating expense, net(305)(434)(129)(29.7)
Income tax expense (benefit)130(491)621 NM
Net income (loss)$473 $(1,841)$2,314 125.7 
Income tax expenseIncome tax expense211 130 81 62.3 
Net incomeNet income$942 $473 $469 99.2 
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Certain consolidated statistical information for the Company's operations for the three months ended September 30 is as follows:
20212020Increase (Decrease)% Change20222021Increase (Decrease)% Change
Passengers (thousands) (a)Passengers (thousands) (a)32,145 9,739 22,406 230.1 Passengers (thousands) (a)38,802 32,145 6,657 20.7 
Revenue passenger miles ("RPMs" or "traffic") (millions) (b)Revenue passenger miles ("RPMs" or "traffic") (millions) (b)41,031 10,613 30,418 286.6 Revenue passenger miles ("RPMs" or "traffic") (millions) (b)59,087 41,031 18,056 44.0 
Available seat miles ("ASMs" or "capacity") (millions) (c)Available seat miles ("ASMs" or "capacity") (millions) (c)53,886 22,212 31,674 142.6 Available seat miles ("ASMs" or "capacity") (millions) (c)67,695 53,886 13,809 25.6 
Passenger load factor (d)Passenger load factor (d)76.1 %47.8 %28.3 pts.N/APassenger load factor (d)87.3 %76.1 %11.2 pts.N/A
Passenger revenue per available seat mile ("PRASM") (cents)Passenger revenue per available seat mile ("PRASM") (cents)12.32 7.42 4.90 66.0 Passenger revenue per available seat mile ("PRASM") (cents)17.21 12.32 4.89 39.7 
TRASM (cents)TRASM (cents)19.02 14.38 4.64 32.3 
Average yield per revenue passenger mile ("Yield") (cents) (e)Average yield per revenue passenger mile ("Yield") (cents) (e)16.18 15.54 0.64 4.1 Average yield per revenue passenger mile ("Yield") (cents) (e)19.72 16.18 3.54 21.9 
Cargo revenue ton miles ("CTM") (millions) (f)Cargo revenue ton miles ("CTM") (millions) (f)758 685 73 10.7 Cargo revenue ton miles ("CTM") (millions) (f)733 758 (25)(3.3)
Cost per available seat mile ("CASM") (cents)12.46 18.48 (6.02)(32.6)
CASM (cents)CASM (cents)16.87 12.46 4.41 35.4 
CASM-ex (Non-GAAP) (cents) (g)CASM-ex (Non-GAAP) (cents) (g)11.22 11.26 (0.04)(0.4)
Average price per gallon of fuel, including fuel taxesAverage price per gallon of fuel, including fuel taxes$2.14 $1.31 $0.83 63.4 Average price per gallon of fuel, including fuel taxes$3.81 $2.14 $1.67 78.0 
Fuel gallons consumed (millions)Fuel gallons consumed (millions)800 387 413 106.7 Fuel gallons consumed (millions)985 800 185 23.1 
Employee headcount, as of September 30Employee headcount, as of September 3085,300 87,900 (2,600)(3.0)Employee headcount, as of September 3090,800 85,300 5,500 6.4 
(a) The number of revenue passengers measured by each flight segment flown.(a) The number of revenue passengers measured by each flight segment flown.(a) The number of revenue passengers measured by each flight segment flown.
(b) The number of scheduled miles flown by revenue passengers.(b) The number of scheduled miles flown by revenue passengers.(b) The number of scheduled miles flown by revenue passengers.
(c) The number of seats available for passengers multiplied by the number of scheduled miles those seats are flown.(c) The number of seats available for passengers multiplied by the number of scheduled miles those seats are flown.(c) The number of seats available for passengers multiplied by the number of scheduled miles those seats are flown.
(d) Revenue passenger miles divided by available seat miles.(d) Revenue passenger miles divided by available seat miles.(d) Revenue passenger miles divided by available seat miles.
(e) The average passenger revenue received for each revenue passenger mile flown.(e) The average passenger revenue received for each revenue passenger mile flown.(e) The average passenger revenue received for each revenue passenger mile flown.
(f) The number of cargo revenue tons transported multiplied by the number of miles flown.(f) The number of cargo revenue tons transported multiplied by the number of miles flown.(f) The number of cargo revenue tons transported multiplied by the number of miles flown.
(g) Cost or operating expense per available seat mile ("CASM") excluding fuel, profit sharing, third-party business expense and special charges (credits). See "Supplemental Information" below for a reconciliation to CASM, the most directly comparable GAAP measure.(g) Cost or operating expense per available seat mile ("CASM") excluding fuel, profit sharing, third-party business expense and special charges (credits). See "Supplemental Information" below for a reconciliation to CASM, the most directly comparable GAAP measure.
Operating Revenue. The table below shows year-over-year comparisons by type of operating revenue for the three months ended September 30 (in millions, except for percentage changes):
20212020Increase (Decrease)% Change20222021Increase (Decrease)% Change
Passenger revenuePassenger revenue$6,637 $1,649 $4,988 302.5 Passenger revenue$11,653 $6,637 $5,016 75.6 
CargoCargo519 422 97 23.0 Cargo498 519 (21)(4.0)
Other operating revenueOther operating revenue594 418 176 42.1 Other operating revenue726 594 132 22.2 
Total operating revenueTotal operating revenue$7,750 $2,489 $5,261 211.4 Total operating revenue$12,877 $7,750 $5,127 66.2 
The table below presents selected third quarter passenger revenue and operating data, broken out by geographic region, expressed as year-over-year changes:
Increase (decrease) from 2020:Increase (decrease) from 2021:
DomesticAtlanticPacificLatinTotal DomesticAtlanticPacificLatinTotal
Passenger revenue (in millions)Passenger revenue (in millions)$3,599 $658 $112 $619 $4,988 Passenger revenue (in millions)$2,212 $2,057 $437 $310 $5,016 
Passenger revenuePassenger revenue288.8 %361.5 %115.5 %499.2 %302.5 %Passenger revenue45.7 %244.9 %209.1 %41.7 %75.6 %
Average fare per passengerAverage fare per passenger25.9 %(14.8)%(9.1)%4.2 %21.9 %Average fare per passenger27.4 %30.2 %0.4 %41.3 %45.5 %
YieldYield10.6 %(8.7)%(3.7)%(2.0)%4.1 %Yield24.0 %38.2 %(21.7)%28.3 %21.9 %
PRASMPRASM67.6 %91.9 %33.6 %40.3 %66.0 %PRASM31.0 %84.6 %88.0 %49.7 %39.7 %
PassengersPassengers208.8 %442.0 %137.1 %474.9 %230.1 %Passengers14.3 %164.8 %207.8 %0.3 %20.7 %
RPMs (traffic)251.7 %405.8 %123.8 %511.6 %286.6 %
ASMs (capacity)132.0 %140.5 %61.4 %327.1 %142.6 %
RPMsRPMs17.4 %149.4 %294.6 %10.4 %44.0 %
ASMsASMs11.2 %86.9 %64.4 %(5.3)%25.6 %
Passenger load factor (points)Passenger load factor (points)28.0 35.0 9.5 22.6 28.3 Passenger load factor (points)4.6 22.3 47.9 12.5 11.2 
Passenger revenue increased $5.0 billion, or 302.5%75.6%, in the third quarter of 20212022 as compared to the year-ago period, primarily due to improvementsthe ongoing recovery in demand for air travel asthat was impacted by the COVID-19 vaccinations are increasingly availablepandemic and strength in the United Statespricing environment as a result of inflationary pressures on fuel prices and certain other jurisdictions and as more governments are lifting travel and quarantine restrictions.
Cargo revenue increased $97 million, or 23.0%, in the third quarter of 2021 as compared to the year-ago period, primarily due to stronger yields on freight revenue and higher cargo tonnage from increased widebody departures of passenger flights.costs.
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Other operatingCargo revenue increased $176decreased $21 million, or 42.1%4.0%, in the third quarter of 20212022 as compared to the year-ago period, primarily due to lower yields as a result of increased market capacity and lower domestic mail volumes.
Other operating revenue increased $132 million, or 22.2%, in the third quarter of 2022 as compared to the year-ago period, primarily due to an increase in mileage revenue from non-airline partners, including credit card spending recovery with the co-branded credit card partner, JPMorgan Chase Bank, N.A., and higher revenue fromN.A, as well as an increase in the purchases of United Club lounges due to increased travelers' visitsmemberships and lounge passes in the third quarter of 2021.current year.
Operating Expenses. The table below includes data related to the Company's operating expenses for the three months ended September 30 (in millions, except for percentage changes):
20212020Increase (Decrease)% Change20222021Increase (Decrease)% Change
Aircraft fuelAircraft fuel$3,755 $1,710 $2,045 119.6 
Salaries and related costsSalaries and related costs$2,487 $2,229 $258 11.6 Salaries and related costs2,843 2,487 356 14.3 
Aircraft fuel1,710 508 1,202 236.6 
Landing fees and other rentLanding fees and other rent639 652 (13)(2.0)
Aircraft maintenance materials and outside repairsAircraft maintenance materials and outside repairs619 346 273 78.9 
Depreciation and amortizationDepreciation and amortization623 626 (3)(0.5)Depreciation and amortization610 623 (13)(2.1)
Landing fees and other rent652 500 152 30.4 
Regional capacity purchaseRegional capacity purchase520 425 95 22.4 Regional capacity purchase596 520 76 14.6 
Aircraft maintenance materials and outside repairs346 115 231 200.9 
Distribution expensesDistribution expenses218 53 165 311.3 Distribution expenses482 218 264 121.1 
Aircraft rentAircraft rent58 50 16.0 Aircraft rent65 58 12.1 
Special charges (credits)Special charges (credits)(1,098)(1,081)17 NMSpecial charges (credits)20 (1,098)1,118 NM
Other operating expensesOther operating expenses1,197 679 518 76.3 Other operating expenses1,790 1,197 593 49.5 
Total operating expensesTotal operating expenses$6,713 $4,104 $2,609 63.6 Total operating expenses$11,419 $6,713 $4,706 70.1 
Salaries and related costsAircraft fuel expense increased $258 million,by $2 billion, or 11.6%119.6%, in the third quarter of 2021 as compared to the year-ago period, despite the 3.0% decrease in headcount, primarily due to several factors including an increase in front-line employees' wages from higher flight activity, prior year schedule reductions for management and administrative employees and prior year Company offered leaves of absence for front-line employees.
Aircraft fuel expense increased by $1.2 billion, or 236.6%, in the third quarter of 20212022 as compared to the year-ago period, due to both a higher average price per gallon of fuel and increased consumption. consumption from higher flight activity. We expect elevated fuel prices to continue or increase further throughout 2022.
The table below presents the significant changes in aircraft fuel cost per gallon in the three months ended September 30, 20212022 as compared to the year-ago period:
(In millions)Average price per gallon(In millions)Average price per gallon
20212020% Change20212020% Change20222021% Change20222021% Change
Fuel expenseFuel expense$1,710 $508 236.6 %$2.14 $1.31 63.4 %Fuel expense$3,755 $1,710 119.6 %$3.81 $2.14 78.0 %
Fuel consumption (gallons)Fuel consumption (gallons)800 387 106.7 %Fuel consumption (gallons)985 800 23.1 %
Landing feesSalaries and other rentrelated costs increased $152$356 million, or 30.4%14.3%, in the third quarter of 20212022 as compared to the year-ago period primarily due to an increase in capacity-based rentheadcount, volume-driven pay from increased flight activity in the third quarter of 2022 and landing fees.
Regional capacity purchase increased $95$57 million or 22.4%,of employee retention credits under the CARES Act in the third quarter of 2021 as compared tothat did not occur in the year-agocurrent period, primarily due to increased regional flying and increased pass-through maintenance costs.among other factors.
Aircraft maintenance materials and outside repairs increased $231$273 million, or 200.9%78.9%, in the third quarter of 20212022 as compared to the year-ago period, primarily due to higher volumes of flying, increased engine overhauls, contractual rate escalations, increased materials purchases and the timing of heavy check maintenance events.checks.
Distribution expensesRegional capacity purchase increased $165$76 million, or 311.3%14.6%, in the third quarter of 20212022 as compared to the year-ago period, primarily due to rate increases under various capacity purchase agreements with regional carriers as a result of the expiration of the CARES Act credits received in the prior year, partially offset by lower regional capacity.
Distribution expenses increased $264 million, or 121.1%, in the third quarter of 2022 as compared to the year-ago period, primarily due to higher credit card fees, andhigher travel agency commissions and higher volumevolumes of global distribution fees as a result of the overall increase in passenger revenue.
Detailsrevenue and impacted by the mix of leisure travel and business travel, which requires the Company's special charges (credits) include the following for the three months ended September 30 (in millions):
2021 2020
CARES Act grant$(1,132)$(1,494)
Impairment of assets46 38 
Severance and benefit costs350 
(Gains) losses on sale of assets and other special charges(17)25 
Special charges (credits)$(1,098)$(1,081)
use of higher cost distribution channels and forms of payment.
3428

Details of the Company's special charges (credits) include the following for the three months ended September 30 (in millions):
2022 2021
CARES Act grant$— $(1,132)
Severance and benefit costs— 
Impairment of assets— 46 
(Gains) losses on sale of assets and other special charges20 (17)
Special charges (credits)$20 $(1,098)
See Note 9 to the financial statements included in Part I, Item 1 of this report for additional information on the Company's special charges (credits).
Other operating expenses increased $518$593 million, or 76.3%49.5%, in the third quarter of 20212022 as compared to the year ago period, primarily due to increasedincreases in ground handling, passenger services, food and beverage offerings, navigation fees and personnel-related costs as a direct result of the increase in flight activity which resulted in an increase in our catering, airport ground handling, navigation fees,and inflationary pressures and higher expenditures on information technology projects and crew-related expenses.services.
Nonoperating Income (Expense). The table below shows year-over-year comparisons of the Company's nonoperating income (expense) for the three months ended September 30 (in millions, except for percentage changes):
20212020Increase (Decrease)% Change20222021Increase (Decrease)% Change
Interest expenseInterest expense$(449)$(345)$104 30.1 Interest expense$(455)$(449)$1.3 
Interest capitalizedInterest capitalized18 16 12.5 Interest capitalized27 18 50.0 
Interest incomeInterest income11 37.5 Interest income104 11 93 NM
Unrealized gains (losses) on investments, netUnrealized gains (losses) on investments, net(34)15 (49)NMUnrealized gains (losses) on investments, net28 (34)62 NM
Miscellaneous, netMiscellaneous, net20 (411)(431)NMMiscellaneous, net(9)20 (29)(145.0)
TotalTotal$(434)$(717)$(283)(39.5)Total$(305)$(434)$(129)(29.7)
Interest expenseincome increased $104$93 million or 30.1%, in the third quarter of 20212022 as compared to the year-ago period, primarily due to the issuance of additional debt in the current year to provide additional liquidity to the Company during the COVID-19 pandemic.
Unrealized losses on investments, net, was $34 million in the third quarter of 2021 as compared to gains of $15 million in the year-ago period, primarily due to the change in the market value of the Company'shigher short-term investments in equity securities.U.S. government and agency notes. See Note 6 to the financial statements included in Part I, Item 1 of this report for information related to these equity investments.
Miscellaneous, net changed by $431 million in the third quarter of 2021 as compared to the year-ago period, primarily due to $415 million of special termination benefits and settlement losses related to furloughs and voluntary separation programs under the Company's defined benefit pension plan covering certain non-pilot U.S. employees and postretirement medical programs recorded in 2020. See Notes 5, 6, 7 and 9 to the financial statements included in Part I, Item 1 of this report for additional information.
Income Taxes.See Note 4 to the financial statements included in Part I, Item 1 of this report for information related to income taxes.
First Nine Months 2021 Compared to First Nine Months 2020
The Company recorded a net loss of $1.3 billion in the first nine months of 2021 as compared to a net loss of $5.2 billion in the first nine months of 2020. The Company considers a key measure of its performance to be operating income (loss), which was a $614 million loss for the first nine months of 2021, as compared to a $4.2 billion loss for the first nine months of 2020, a $3.6 billion decrease year-over-year, primarily as a result of improvements in demand for air travel. Significant components of the Company's operating results for the nine months ended September 30 are as follows (in millions, except percentage changes):
20212020Increase (Decrease)% Change
Operating revenue$16,442 $11,943 $4,499 37.7 
Operating expense17,056 16,167 889 5.5 
Operating loss(614)(4,224)(3,610)(85.5)
Nonoperating expense, net(1,098)(2,225)(1,127)(50.7)
Income tax benefit(394)(1,277)(883)(69.1)
Net loss$(1,318)$(5,172)$(3,854)(74.5)
35

Certain consolidated statistical information for the Company's operations for the nine months ended September 30 is as follows:
20212020Increase (Decrease)% Change
Passengers (thousands)70,728 42,911 27,817 64.8 
RPMs (millions)86,793 56,812 29,981 52.8 
ASMs (millions)123,869 92,113 31,756 34.5 
Passenger load factor70.1 %61.7 %8.4 pts.N/A
PRASM (cents)10.75 10.20 0.55 5.4 
Yield (cents)15.35 16.54 (1.19)(7.2)
CTM (millions)2,415 1,876 539 28.7 
CASM (cents)13.77 17.55 (3.78)(21.5)
Average price per gallon of fuel, including fuel taxes$1.98 $1.65 $0.33 20.0 
Fuel gallons consumed (millions)1,915 1,501 414 27.6 
Employee headcount, as of September 3085,300 87,900 (2,600)(3.0)
Operating Revenue. The table below shows year-over-year comparisons by type of operating revenue for the nine months ended September 30 (in millions, except for percentage changes):
20212020Increase (Decrease)% Change
Passenger revenue$13,319 $9,395 $3,924 41.8 
Cargo1,622 1,088 534 49.1 
Other operating revenue1,501 1,460 41 2.8 
Total operating revenue$16,442 $11,943 $4,499 37.7 
The table below presents selected passenger revenue and operating data, broken out by geographic region, expressed as year-over-year changes for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020:
Increase (decrease) from 2020:
 DomesticAtlanticPacificLatinConsolidated
Passenger revenue (in millions)$3,553 $57 $(389)$703 $3,924 
Passenger revenue56.5 %4.3 %(47.5)%72.3 %41.8 %
Average fare per passenger(5.6)%(16.5)%32.9 %(20.6)%(14.0)%
Yield(8.3)%(21.1)%68.6 %(12.1)%(7.2)%
PRASM14.7 %(19.7)%(23.9)%(16.0)%5.4 %
Passengers65.7 %25.0 %(60.5)%117.0 %64.8 %
RPMs (traffic)70.7 %32.4 %(68.9)%96.1 %52.8 %
ASMs (capacity)36.4 %30.1 %(31.0)%105.3 %34.5 %
Passenger load factor (points)15.8 1.0 (32.1)(3.1)8.4 
Passenger revenue increased $3.9 billion, or 41.8%, in the first nine months of 2021 as compared to the year-ago period, primarily due to the increased availability of the COVID-19 vaccine and a recovery in the demand for air travel, as demonstrated by a 64.8% increase in passengers year-over-year.
Cargo revenue increased $534 million, or 49.1%, in the first nine months of 2021 as compared to the year-ago period, primarily due to strong yields of cargo-only flights as a result of increased demand for critical goods during the course of the COVID-19 pandemic.
Other operating revenue increased $41 million, or 2.8%, in the first nine months of 2021 as compared to the year-ago period, primarily due to the impact of the partial demand recovery on co-brand credit card spending and increased credit card acquisitions.
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Operating Expenses. The table below includes data related to the Company's operating expenses for the nine months ended September 30 (in millions, except for percentage changes):
20212020Increase (Decrease)% Change
Salaries and related costs$6,987 $7,354 $(367)(5.0)
Aircraft fuel3,793 2,474 1,319 53.3 
Depreciation and amortization1,866 1,859 0.4 
Landing fees and other rent1,735 1,552 183 11.8 
Regional capacity purchase1,546 1,550 (4)(0.3)
Aircraft maintenance materials and outside repairs917 659 258 39.2 
Distribution expenses442 379 63 16.6 
Aircraft rent165 147 18 12.2 
Special charges (credits)(3,423)(2,467)956 NM
Other operating expenses3,028 2,660 368 13.8 
Total operating expenses$17,056 $16,167 $889 5.5 
Salaries and related costs decreased $367 million, or 5.0%, in the first nine months of 2021 as compared to the year-ago period, primarily due to lower headcount as a result of various employee voluntary separation programs since the start of the COVID-19 pandemic and a $233 million increase in tax credits provided by the Employee Retention Credit under the CARES Act.
Aircraft fuel expense increased $1.3 billion, or 53.3%, in the first nine months of 2021 as compared to the year-ago period, primarily due to a higher average price per gallon of fuel and increased consumption. The table below presents the significant changes in aircraft fuel cost per gallon in the nine months ended September 30, 2021 as compared to the year-ago period:
(In millions)Average price per gallon
20212020% Change20212020% Change
Fuel expense$3,793 $2,474 53.3 %$1.98 $1.65 20.0 %
Fuel consumption (gallons)1,915 1,501 27.6 %
Landing fees and other rent increased $183 million, or 11.8%, in the first nine months of 2021 as compared to the year-ago period, primarily due to an increase in capacity-based rent and landing fees.
Aircraft maintenance materials and outside repairs increased $258 million, or 39.2%, in the first nine months of 2021 as compared to the year-ago period, primarily due to higher volumes of flying and increased heavy check maintenance events.
Distribution expenses increased $63 million, or 16.6%, in the first nine months of 2021 as compared to the year-ago period, primarily due to higher credit card fees and commissions and higher volume of global distribution fees as a result of the overall increase in passenger revenue. Distribution expenses were also impacted by the mix of leisure travel versus business travel, which requires the use of different distribution channels and forms of payment.
Details of the Company's special charges (credits) include the following for the nine months ended September 30 (in millions):
2021 2020
CARES Act grant$(4,021)$(3,083)
Impairment of assets105 168 
Severance and benefit costs433 413 
(Gains) losses on sale of assets and other special charges60 35 
Special charges (credits)$(3,423)$(2,467)
See Note 9 to the financial statements included in Part I, Item 1 of this report for additional informationon the Company's special charges (credits).
Other operating expenses increased $368 million, or 13.8%, in the first nine months of 2021 as compared to the year-ago period, primarily due to increases in ground handling, passenger services, and personnel-related costs from increased flying and higher expenditures on information technology projects.
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Nonoperating Income (Expense).The following table illustrates the year-over-year dollar and percentage changes in the Company's nonoperating income (expense) for the nine months ended September 30 (in millions, except for percentage changes):
20212020Increase (Decrease)% Change
Interest expense$(1,228)$(712)$516 72.5 
Interest capitalized57 54 5.6 
Interest income30 45 (15)(33.3)
Unrealized gains (losses) on investments, net91 (295)(386)NM
Miscellaneous, net(48)(1,317)(1,269)(96.4)
Total$(1,098)$(2,225)$(1,127)(50.7)
Interest expense increased $516 million, or 72.5%, in the first nine months of 2021 as compared to the year-ago period, primarily due to the issuance of additional debt in the current year period to provide additional liquidity to the Company during the COVID-19 pandemic.
Unrealized gains on investments, net, was $91$28 million in the first nine monthsthird quarter of 20212022 as compared to $295$34 million in unrealized losses in the year-ago period, primarily due to the change in the market value of the Company's investments in equity securities. See Note 6 to the financial statements included in Part I, Item 1 of this report for information related to these equity investments.
Miscellaneous, net decreased $29 million in the third quarter of 2022 as compared to the year-ago period, primarily due to higher foreign exchange losses recorded in 2022 and adjustments relating to debt extinguishment and modification fees recorded in 2021. See Note 9 to the financial statements included in Part I, Item 1 of this report for additional information related to debt extinguishment and modification fees.
Income Taxes.See Note 4 to the financial statements included in Part I, Item 1 of this report for information related to income taxes.
First Nine Months 2022 Compared to First Nine Months 2021
The Company recorded a net loss of $106 million in the first nine months of 2022 as compared to a net loss of $1.3 billion in the first nine months of 2021. The Company considers a key measure of its performance to be operating income, which was $960 million for the first nine months of 2022, as compared to an operating loss of $614 million for the first nine months of 2021, an approximately $1.6 billion increase year-over-year, primarily as a result of increased demand for air travel. Significant components of the Company's operating results for the nine months ended September 30 are as follows (in millions, except
29

percentage changes):
20222021Increase (Decrease)% Change
Operating revenue$32,555 $16,442 $16,113 98.0 
Operating expense31,595 17,056 14,539 85.2 
Operating income (loss)960 (614)1,574 256.4 
Nonoperating expense, net(1,100)(1,098)0.2 
Income tax benefit(34)(394)(360)(91.4)
Net loss$(106)$(1,318)$(1,212)(92.0)
Certain consolidated statistical information for the Company's operations for the nine months ended September 30 is as follows:
20222021Increase (Decrease)% Change
Passengers (thousands)106,058 70,728 35,330 50.0 
RPMs (millions)152,033 86,793 65,240 75.2 
ASMs (millions)183,564 123,869 59,695 48.2 
Passenger load factor82.8 %70.1 %12.7 pts.N/A
PRASM (cents)15.71 10.75 4.96 46.1 
TRASM (cents)17.73 13.27 4.46 33.6 
Yield (cents)18.96 15.35 3.61 23.5 
CTM (millions)2,276 2,415 (139)(5.8)
CASM (cents)17.21 13.77 3.44 25.0 
CASM-ex (Non-GAAP) (cents) (a)11.74 13.40 (1.66)(12.4)
Average price per gallon of fuel, including fuel taxes$3.67 $1.98 $1.69 85.4 
Fuel gallons consumed (millions)2,672 1,915 757 39.5 
Employee headcount, as of September 3090,800 85,300 5,500 6.4 
(a) See "Supplemental Information" below for a reconciliation to CASM, the most directly comparable GAAP measure.
Operating Revenue. The table below shows year-over-year comparisons by type of operating revenue for the nine months ended September 30 (in millions, except for percentage changes):
20222021Increase (Decrease)% Change
Passenger revenue$28,830 $13,319 $15,511 116.5 
Cargo1,699 1,622 77 4.7 
Other operating revenue2,026 1,501 525 35.0 
Total operating revenue$32,555 $16,442 $16,113 98.0 
The table below presents selected passenger revenue and operating data, broken out by geographic region, expressed as year-over-year changes for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021:
Increase (decrease) from 2021:
 DomesticAtlanticPacificLatinConsolidated
Passenger revenue (in millions)$8,876 $4,511 $871 $1,253 $15,511 
Passenger revenue90.2 %329.5 %202.6 %74.8 %116.5 %
Average fare per passenger32.2 %26.3 %(3.6)%33.0 %44.4 %
Yield26.9 %39.5 %(21.0)%20.2 %23.5 %
PRASM37.5 %104.3 %88.0 %49.3 %46.1 %
Passengers43.9 %240.1 %213.8 %31.4 %50.0 %
RPMs49.9 %207.9 %282.9 %45.5 %75.2 %
ASMs38.3 %110.1 %60.8 %17.1 %48.2 %
Passenger load factor (points)6.6 26.2 36.5 16.1 12.7 
30

Passenger revenue increased $15.5 billion, or 116.5%, in the first nine months of 2022 as compared to the year-ago period, primarily due to the $697ongoing recovery in air travel which was impacted by the COVID-19 pandemic and strength in the pricing environment as a result of inflationary pressures on fuel prices and other costs.
Cargo revenue increased $77 million, or 4.7%, in the first nine months of credit loss allowances associated with2022 as compared to the Company's Term Loan Agreement, with, among others, BRW Aviation Holding LLC and BRW Aviation LLC, and the related guarantee recordedyear-ago period, primarily due to higher yields on freight revenue from strong global demand, primarily in the first quarter of 2020,2022. Cargo revenue was especially high in 2021 due to the limited market capacity, lower passenger load factors and lowerthe utilization of cargo-only flights in the first half of 2021.
Other operating revenue increased $525 million, or 35.0%, in the first nine months of 2022 as compared to the year-ago period, primarily due to an increase in mileage revenue from non-airline partners, including credit card spending recovery with our co-branded credit card partner, JPMorgan Chase Bank, N.A., as well as United Club re-openings and increased member volumes compared to the prior year.
Operating Expenses. The table below includes data related to the Company's operating expenses for the nine months ended September 30 (in millions, except for percentage changes):
20222021Increase (Decrease)% Change
Aircraft fuel$9,796 $3,793 $6,003 158.3 
Salaries and related costs8,466 6,987 1,479 21.2 
Landing fees and other rent1,919 1,735 184 10.6 
Depreciation and amortization1,832 1,866 (34)(1.8)
Regional capacity purchase1,728 1,546 182 11.8 
Aircraft maintenance materials and outside repairs1,553 917 636 69.4 
Distribution expenses1,101 442 659 149.1 
Aircraft rent193 165 28 17.0 
Special charges (credits)124 (3,423)3,547 NM
Other operating expenses4,883 3,028 1,855 61.3 
Total operating expenses$31,595 $17,056 $14,539 85.2 
Aircraft fuel expense increased $6.0 billion, or 158.3%, in the first nine months of 2022 as compared to the year-ago period, primarily due to both a higher average price per gallon of fuel and increased consumption from higher flight activity. We expect elevated fuel prices to continue throughout 2022.
The table below presents the significant changes in aircraft fuel cost per gallon in the nine months ended September 30, 2022, as compared to the year-ago period:
(In millions)Average price per gallon
20222021% Change20222021% Change
Fuel expense$9,796 $3,793 158.3 %$3.67 $1.98 85.4 %
Fuel consumption (gallons)2,672 1,915 39.5 %
Salaries and related costs increased $1.5 billion, or 21.2%, in the first nine months of 2022 as compared to the year-ago period, primarily due to increased headcount, volume-driven pay from increased flight activity and $405 million of employee retention credits under the CARES Act in the first nine months of 2021 that did not occur in the current period, among other factors.
Landing fees and other rent increased $184 million, or 10.6%, in the first nine months of 2022 as compared to the year-ago period, primarily due to an increase in landed weight volume as a result of increased flight activity.
Regional capacity purchase increased $182 million, or 11.8%, in the third quarter of 2022 as compared to the year-ago period, primarily due to rate increases under various capacity purchase agreements with regional carriers as a result of the expiration of the CARES Act credits received in the prior year.
Aircraft maintenance materials and outside repairs increased $636 million, or 69.4%, in the first nine months of 2022 as compared to the year-ago period, primarily due to higher volumes of flying, increased engine overhauls, higher repair volumes, heavy airframe checks and contractual rate escalations.
31

Distribution expenses increased $659 million, or 149.1%, in the first nine months of 2022 as compared to the year-ago period, primarily due to higher credit card fees, higher travel agency commissions and higher volumes of global distribution fees as a result of the overall increase in passenger revenue. Distribution expenses were also impacted by the mix of leisure travel and business travel, which requires the use of different distribution channels and forms of payment.
Details of the Company's special charges (credits) include the following for the nine months ended September 30 (in millions):
2022 2021
CARES Act grant$— $(4,021)
Severance and benefit costs— 433 
Impairment of assets— 105 
(Gains) losses on sale of assets and other special charges124 60 
Special charges (credits)$124 $(3,423)
See Note 9 to the financial statements included in Part I, Item 1 of this report for additional informationon the Company's special charges (credits).
Other operating expenses increased $1.9 billion, or 61.3%, in the first nine months of 2022 as compared to the year-ago period, primarily due to increases in ground handling, passenger services, food and beverage offerings, navigation fees and personnel-related costs as a direct result of the increase in flight activity and inflationary pressures and higher expenditures on information technology projects and services.
Nonoperating Income (Expense).The following table illustrates the year-over-year dollar and percentage changes in the Company's nonoperating income (expense) for the nine months ended September 30 (in millions, except for percentage changes):
20222021Increase (Decrease)% Change
Interest expense$(1,299)$(1,228)$71 5.8 
Interest capitalized73 57 16 28.1 
Interest income142 30 112 373.3 
Unrealized gains (losses) on investments, net(12)91 (103)NM
Miscellaneous, net(4)(48)(44)(91.7)
Total$(1,100)$(1,098)$0.2 
Interest expense increased $71 million, or 5.8%, in the first nine months of 2022 as compared to the year-ago period, primarily due to higher interest rates on variable rate debt.
Interest income increased $112 million, or 373.3%, in the first nine months of 2022 as compared to the year-ago period, primarily due to higher short-term investments in U.S. government and agency notes. See Note 6 to the financial statements included in Part I, Item 1 of this report for additional information.
Unrealized losses on investments, net, was $12 million in the first nine months of 2022 as compared to $91 million in unrealized gains in the year-ago period, primarily due to the change in the market value of the Company's investments in equity securities. See Note 6 to the financial statements included in Part I, Item 1 of this report for information related to these equity investments.
Miscellaneous, net decreased $44 million in the first nine months of 2022 as compared to the year-ago period, primarily due to special termination benefits related to voluntary separation programs underand debt extinguishment and modification fees recorded in the Company's defined benefit pension plan covering certain non-pilot U.S. employees and postretirement medical programs.first nine months of 2021 partially offset by higher foreign exchange losses recorded in 2022. See Notes 5 6, 7 and 9 to the financial statements included in Part I, Item 1 of this report for additional information.
Income Taxes. See Note 4 to the financial statements included in Part I, Item 1 of this report for information related to income taxes.
LIQUIDITY AND CAPITAL RESOURCES
Current Liquidity
32

As of September 30, 2021,2022, the Company had $19.4$18.7 billion in unrestricted cash, cash equivalents and short-term investments, as compared to $11.7$18.4 billion at December 31, 2020.2021. We believe that our existing cash, cash equivalents and short-term investments, together with cash generated from operations, will be sufficient to satisfy our anticipated liquidity needs for the next twelve months, and we expect to meet our long-term liquidity needs with our anticipated access to the capital markets and projected cash from operations. We regularly assess our anticipated working capital needs, debt and leverage levels, debt maturities, capital expenditure requirements (including in connection with our capital commitments for our firm order aircraft) and future investments or acquisitions in order to maximize shareholder return, efficiently finance our ongoing operations and maintain flexibility for future strategic transactions. We also regularly evaluate our liquidity and capital structure to ensure financial risks, adequate liquidity access and lower cost of capital are efficiently managed. We expect to maintain an elevated level of liquidity in the near term as we navigate through the remainder of 2021, which may lead to the issuance of additional debt securities, the repurchase or redemption of debt securities prior to maturity or the issuance of common stock, as well as to the pursuit of financing options for our firm aircraft order and other related capital expenditures consistent with our historical practice prior to the onset of the COVID-19 pandemic.each managed efficiently. While we have been able to access the capital markets to meet our significant long-term debt and finance lease obligations and future commitments for capital expenditures, including the acquisition of aircraft and related spare engines, we must return to sustained profitability in order to service our debt and maintain appropriate liquidity levels for our long-term operating needs.
On January 15, 2021, United entered into the PSP2 Agreement with Treasury, providing theThe Company with total funding of approximately $3.0has a $1.75 billion consisting of approximately $2.1 billion as a direct grant and $870 million as indebtedness evidenced by the PSP2 Note. See Note 8revolving credit facility (the "Revolving Credit Facility") expiring April 21, 2025 (subject to the financial statements included in Part I, Item 1 of this report for a discussion of the PSP2 Note.
On April 29, 2021, United entered into a PSP3 Agreement with Treasury, providing the Company with total funding of approximately $2.8 billion, consisting of approximately $2.0 billion as a direct grant and $810 million as indebtedness
38

evidenced by the PSP3 Note. See Note 8 to the financial statements included in Part I, Item 1 of this report for a discussion of the PSP3 Note.
customary extension rights). The New Revolving Credit Facility provides revolving loan commitments of up to $1.75 billion until April 21, 2025.is secured by certain route authorities and airport slots and gates. No borrowings were outstanding under the New Revolving Credit Facilityfacility at September 30, 2021.
In addition, the Company has backstop financing commitments available from certain of its aircraft manufacturers for a limited number of its future aircraft deliveries, subject to certain customary conditions.2022.
We have a significant amount of fixed obligations, including debt, leases of aircraft, airport and other facilities, and pension funding obligations. As of September 30, 2021,2022, the Company had approximately $41.6$38.4 billion of debt, finance lease, operating lease and sale-leaseback obligations, including $3.3$4.5 billion that will become due in the next 12 months. In addition, we have substantial noncancelable commitments for capital expenditures, including the acquisition of certain new aircraft and related spare engines.
Our debt agreements contain customary terms and conditions as well as various affirmative, negative and financial covenants that, among other things, restrict the ability of the Company and its subsidiaries to incur additional indebtedness and pay dividends or repurchase stock. As of September 30, 2021,2022, UAL and United were in compliance with their respective debt covenants.
As of September 30, 2021,2022, a substantial portion of the Company's assets, principally aircraft and certain related assets, its loyalty program, certain route authorities and airport slots and gates, was pledged under various loan and other agreements. As of April 21, 2021, the Company pledged as collateral for the Notes and the New Loan Facilities the following: (i) all of United's route authorities granted by the U.S. Department of Transportation to operate scheduled service between any international airport located in the United States and any international airport located in any country other than the United States (except Cuba), (ii) United's rights to substantially all of its landing and take-off slots at foreign and domestic airports, including at John F. Kennedy International Airport, LaGuardia Airport and Ronald Reagan Washington National Airport (subject to certain exclusions), and (iii) United's rights to use or occupy space at airport terminals, each to the extent necessary at the relevant time for servicing scheduled air carrier service authorized by an applicable route authority.
See Note 8 to the financial statements included in Part I, Item 1 of this report for additional information on aircraft financing and other debt instruments.
For 2022, the Company expects approximately $4.7 billion of adjusted capital expenditures (a non-GAAP financial measure defined as GAAP capital expenditures including expenditures for assets acquired through the issuance of debt, finance leases and other financial liabilities). The Company has backstop financing commitments available from certain of its aircraft manufacturers for a limited number of its future aircraft deliveries, subject to certain customary conditions. See "Supplemental Information" for additional information on non-GAAP financial measures and Note 7 to the financial statements included in Part I, Item I of this report for additional information on commitments.
As of September 30, 2021,2022, United had firm commitments and options to purchase aircraft from The Boeing Company ("Boeing") and Airbus S.A.S. ("Airbus") as presented in the table below:
Scheduled Aircraft DeliveriesScheduled Aircraft Deliveries
Aircraft TypeAircraft TypeNumber of Firm
 Commitments (a)
Last Three Months
of 2021
20222023After 2023Aircraft TypeNumber of Firm
 Commitments (a)
Last Three Months
of 2022
2023After 2023
Airbus A321XLRAirbus A321XLR50 — — — 50 Airbus A321XLR50 — — 50 
Airbus A321neoAirbus A321neo70 — — 16 54 Airbus A321neo70 — 12 58 
Airbus A350Airbus A35045 — — — 45 Airbus A35045 — — 45 
Boeing 737 MAXBoeing 737 MAX371 48 114 205 Boeing 737 MAX353 27 121 205 
Boeing 787Boeing 787— — Boeing 787— — 
(a) United also has options and purchase rights for additional aircraft.(a) United also has options and purchase rights for additional aircraft.(a) United also has options and purchase rights for additional aircraft.
During the third quarter of 2021, the Company elected to accelerate the delivery of eight Boeing 737 MAX aircraft from 2023 to 2022. The aircraft listed in the table above are scheduled for delivery through 2030. ToThe 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, or to the extentorders; (ii) rights are exercised pursuant to the relevant agreements to modify the timing of deliveries,deliveries; or (iii) the amountaircraft manufacturers are unable to deliver in accordance with the terms of those orders. Furthermore, Boeing notified United that three Boeing 787 aircraft scheduled for delivery in 2022 and timing of15 Boeing 737 MAX aircraft scheduled for delivery in 2023, all as shown in the Company's future capital commitments could change.table above, are now expected to deliver in 2023 and 2024, respectively. In addition to Boeing’s notification, United estimates that seven additional Boeing 737 MAX aircraft scheduled for delivery in 2022, as shown in the table above, will deliver in 2023.
United has an agreement to purchase teneight used Airbus A319Bombardier CRJ550 aircraft which it intends to sell, with expected delivery dates in 2021 and 2022.
In 2020, United entered into agreements with third parties to finance through sale and leaseback transactions new Boeing model 787 aircraft and Boeing model 737 MAX aircraft subject to purchase agreements between United and Boeing. In connection with the delivery of each aircraft from Boeing, United assigned its right to purchase such aircraft to the buyer, and simultaneous with the buyer's purchase from Boeing, United entered into a long-term lease for such aircraft with the buyer as lessor. Twenty Boeing model aircraft were delivered in the first ninelast three months of 2021 under these transactions (and each is presently subject to2022.
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a long-term lease to United). Remaining aircraft in the agreements are scheduled to be delivered in the last three months of 2021.
AsThe table below summarizes United's commitments as of September 30, 2021, UAL and United have total capital commitments related to the acquisition of2022, which include aircraft and related spare engines, aircraft improvements and non-aircraft capital commitments. Aircraft commitments for approximately $34.5 billion, of which approximately $0.9 billion, $5.3 billion, $7 billion, $4.8 billion, $4.3 billion and $12.2 billion are due in the last three months of 2021,based on contractual scheduled aircraft deliveries without any adjustments for the full years 2022, 2023, 2024, and 2025, and after 2025, respectively. To the extent the Company anddelays communicated by Boeing agree to modify the timing of Boeing 737 MAX deliveries, the amount and timing of the Company's future capital commitments could change.or estimated by United.
Credit Ratings. As of the filing date of this report, UAL and United had the following corporate credit ratings:
S&PMoody'sFitch
UALB+Ba2B+
UnitedB+*B+
 * The credit agency does not issue corporate credit ratings for subsidiary entities.
These credit ratings are below investment grade levels; however, the Company has been able to secure financing with investment grade credit ratings for certain enhanced equipment trust certificates ("EETCs"), term loans, and secured bond financings. Downgrades from current rating levels, among other things, could affect the fair market value of existing debt and restrict the availability and/or increase the cost of future financing for the Company.
(in billions)
Last three months of 2022$3.0 
20238.4 
20246.9 
20254.4 
20263.4 
After 20268.5 
$34.6 
Sources and Uses of Cash
The following table summarizes our cash flows for the nine months ended September 30 (in millions):
20222021Increase (Decrease)
Total cash provided by (used in):
Operating activities$4,908 $2,336 $2,572 
Investing activities(9,442)(1,324)8,118 
Financing activities(2,472)6,971 (9,443)
Net increase (decrease) in cash, cash equivalents and restricted cash$(7,006)$7,983 $(14,989)
Operating Activities. Cash flows provided by operations increased $2.6 billion in the first nine months of 2022 as compared to the year-ago period, primarily due to higher profitability as improvements in the demand for air travel continued and an approximately $0.9 billion increase in advance ticket sales associated with the overall travel demand recovery.
Investing Activities.Cash flows used in investing activities increased $8.1 billion in the first nine months of 2022 as compared to the year-ago period, primarily due to the purchase of short-term and other investments. Capital expenditures were approximately $2.3 billion and $1.6 billion for the nine months ended September 30, 2022 and 2021, compared to cash flows used in operations of $2.0 billion for the same period in 2020. The increase is primarily attributable to partial improvements in the demand for passenger travel as well as total government grant funding provided under the PSP2 Agreement and PSP3 Agreement of $4.1 billion, partially offset by continuing operating losses as a result of the COVID-19 pandemic.
Investing Activities.respectively. Capital expenditures were approximately $1.6 billion in each offor the nine months ended September 30, 20212022 were primarily attributable to the purchase of aircraft and 2020.aircraft improvements. Capital expenditures for the nine months ended September 30, 2021 were primarily attributable to advance deposits for future aircraft purchases.
Financing Activities. Significant financing events in the nine months ended September 30, 2022 and 2021 were as follows:
Debt, Finance Lease and Other Financing Liability Principal Payments. During the nine months ended September 30, 2022, the Company made payments for debt, finance leases, and other financing liabilities of $2.6 billion. During the nine months ended September 30, 2021, the Company made payments for debt, finance leases and other financing liabilities of $4.6 billion, primarily for repayments of $1.4 billion aggregate principal amount outstanding under thea 2017 Term Loan Facility,term loan facility, $1.0 billion aggregate principal amount outstanding under thea 2017 Revolving Credit Facility,revolving credit facility and $520 million aggregate principal amount outstanding under thea CARES Act Loan.loan.
Debt Issuances. During the nine months ended September 30, 2022, United received and recorded $220 million from aircraft financings.
During the nine months ended September 30, 2021, United received and recorded:
$870 million1.7 billion from senior unsecured notes under the PSP2 Note;Payroll Support Program Extension Agreements of the CARES Act;
$600 million of proceeds as debt from the EETCenhanced equipment trust certificates pass-through trusts established in February 2021;
$810 million from the PSP3 Note;
$5.0 billion from the New Term Loan Facility;a new term loan; and
$4.0 billion from the Notes.
See Note 8 to the financial statements included in Part I, Item 1issuance of this report for additional information.
Share Issuance. During the nine months ended September 30, 2021, the Company raised approximately $532 million in net cash proceeds from the issuance4.375% senior secured notes due 2026 and sale of UAL common stock through "at the market offerings" under equity distribution agreements entered into in June 2020 and March 2021. During the quarter ended September 30, 2021, no shares were sold through "at the market offerings".4.625% senior secured notes due 2029.
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See Note 8 to the financial statements included in Part I, Item 1 of this report for additional information.
Commitments, Contingencies and Liquidity Matters. As described in the Company's Annual Report on2021 Form 10-K, for the fiscal year ended December 31, 2020 (the "2020 Form 10-K"), the Company's liquidity may be adversely impacted by a variety of factors, including, but not limited to, pension funding obligations, reserve requirements associated with credit card processing agreements, guarantees, commitments, contingencies and the ongoing impact of the COVID-19 pandemic.
See the 20202021 Form 10-K and Notes 5, 6, 7, 8 and 9 to the financial statements contained in Part I, Item 1 of this report for additional information.
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CRITICAL ACCOUNTING POLICIES
See "Critical Accounting Policies" in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in the 20202021 Form 10-K.
Supplemental Information
The Company evaluates its financial performance utilizing various GAAP and non-GAAP financial measures, including CASM-ex, adjusted operating margin and adjusted capital expenditures. The Company has provided CASM-ex, adjusted operating margin and adjusted capital expenditures, non-GAAP financial measures that are not calculated or presented in accordance with GAAP, as supplemental information and in addition to the financial measures that are calculated and presented in accordance with GAAP. Management believes that adjusting CASM and operating margin for special charges (credits) is useful to investors because special charges (credits) are not indicative of UAL's ongoing performance. Management also believes that excluding third-party business expenses, such as expenses associated with maintenance and ground handling for third parties, from CASM provides more meaningful disclosure because these expenses are not directly related to the Company's core business. Management also believes that excluding fuel costs from CASM is useful to investors because it provides an additional measure of management's performance excluding the effects of a significant cost item over which management has limited influence. Management also believes that excluding profit sharing from CASM allows investors to better understand and analyze the Company's operating cost performance and provides a more meaningful comparison of our core operating costs to the airline industry. The Company believes that adjusting capital expenditures for assets acquired through the issuance of debt, finance leases and other financial liabilities is useful to investors in order to appropriately reflect the total amounts spent on capital expenditures.
Because these non-GAAP financial measures are not calculated in accordance with GAAP, they should not be considered superior to, and are not intended to be considered in isolation or as substitutes for, the related GAAP financial measures and may not be the same as or comparable to any similarly titled measures presented by other companies due to possible differences in methods and in the items being adjusted. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.
The Company is not providing targets for CASM or operating margin, or reconciliations for CASM-ex projections to CASM or adjusted operating margin projections to operating margin, the most directly comparable respective GAAP measures, because the Company is unable to predict certain items contained in the GAAP measures without unreasonable efforts, and it does not provide a reconciliation of forward-looking measures where it believes such a reconciliation would imply a degree of precision and certainty that could be misleading. This is due to the inherent difficulty of forecasting the timing or amount of various items that have not yet occurred and are out of the Company's control or cannot be reasonably predicted. For the same reasons, the Company is unable to address the probable significance of the unavailable information. Forward-looking measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures. See "Forward-Looking Information" below. Below are reconciliations of CASM-ex and adjusted operating margin to the most directly comparable GAAP financial measures (CASM and operating margin, respectively) for the three and nine months ended September 30, 2022, September 30, 2021, and September 30, 2019, and the three months and the year ended December 31, 2019 (in cents):
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Three Months Ended
September 30,
Nine Months Ended
September 30,
Three Months Ended December 31,Year Ended December 31,
20222021201920222021201920192019
(in cents)
CASM (GAAP)16.87 12.46 13.20 17.21 13.77 13.52 14.11 13.67 
Special charges (credits)0.03 (2.04)0.04 0.07 (2.76)0.05 0.18 0.09 
Third-party business expenses0.06 0.07 0.07 0.06 0.07 0.06 0.07 0.06 
Fuel expense5.55 3.17 3.05 5.34 3.06 3.13 3.16 3.14 
Profit sharing0.01 — 0.24 — — 0.17 0.17 0.17 
CASM-ex (Non-GAAP)11.22 11.26 9.80 11.74 13.40 10.11 10.53 10.21 
(in millions, except percentages)
Operating income (loss) (GAAP)$1,458 $1,037 $1,473 $960 $(614)$3,440 $861 $4,301 
Special charges (credits)20(1,098)27 124 (3,423)116 130 246 
Adjusted operating income (loss) (Non-GAAP)$1,478 $(61)$1,500 $1,084 $(4,037)$3,556 $991 $4,547 
Operating margin11.3 %13.4 %12.9 %2.9 %(3.7)%10.6 %7.9 %9.9 %
Adjusted operating margin (Non-GAAP)11.5 %(0.8)%13.2 %3.3 %(24.6)%11.0 %9.1 %10.5 %
Non-cash capital expenditures, which may be significant, are not determinable at this time. Accordingly, the Company does not provide capital expenditures guidance on a GAAP basis.
FORWARD-LOOKING INFORMATION
This report contains certain "forward-looking statements," within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including in Part I, Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this report, relating to, among other things, the potential impacts of the COVID-19 pandemic and other macroeconomic factors and steps the Company plans to take in response thereto and goals, plans and projections regarding the Company’sCompany's financial position, results of operations, market position, capacity, fleet, product development ESG targets and business strategy. Such forward-looking statements are based on historical performance and current expectations, estimates, forecasts and projections about the Company’sCompany's future financial results, goals, plans, commitments, strategies and objectives and involve inherent risks, assumptions and uncertainties, known or unknown, including internal or external factors that could delay, divert or change any of them, that are difficult to predict, may be beyond the Company's control and could cause the Company's future financial results, goals, plans, commitments, strategies and objectives to differ materially from those expressed in, or implied by, the statements. Words such as "should," "could," "expects,"would," "will," "may," "expects," "plans," "intends," "anticipates," "indicates," "remains," "believes," "estimates," "may," "projects," "forecast," "guidance," "outlook," "goals", "targets""goals," "targets," "confident," "optimistic," "dedicated" and other words and terms of similar meaning and expression are intended to identify forward-looking statements, although not all forward-looking statements contain such terms. All statements, other than those that relate solely to historical facts, are forward-looking statements.
Additionally, forward-looking statements include statements that do not relate solely to historical facts, such as conditional statements and statements whichthat identify uncertainties or trends, discuss the possible future effects of current known trends or uncertainties, or whichthat indicate that the future effects of known trends or 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 or regulation.
Our actual results could differ materially from these forward-looking statements due to numerous factors including, without limitation, the following: the adverse impacts of the ongoing COVID-19 global pandemic and possible outbreaks of another disease or similar public health threat in the future, on our business, operating results, financial condition liquidity and near-term and long-termliquidity; execution risks associated with our strategic operating plan, including possible additionalplan; changes in our network strategy or other factors outside our control resulting in less economic aircraft orders, costs related to modification or termination of
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aircraft orders or entry into less favorable aircraft orders, as well as any inability to accept or integrate new aircraft into our fleet as planned; any failure to effectively manage, and receive anticipated benefits and returns from, acquisitions, divestitures, investments, joint ventures and other portfolio actions; adverse impacts resulting from the durationpublicity, harm to our brand, reduced travel demand, potential tort liability and spreadvoluntary or mandatory operational restrictions as a result of the pandemic; unfavorable economic and political conditions in the United States and globally;an accident, catastrophe or incident involving us, our regional carriers, our codeshare partners or another airline; the highly competitive nature of the global airline industry and susceptibility of the industry to price discounting and changes in capacity; high and/capacity, including as a result of alliances, joint business arrangements or volatile fuel pricesother consolidations; our reliance on a limited number of suppliers to source a majority of our aircraft and certain parts, and the impact of any failure to obtain timely deliveries, additional equipment or support from any of these suppliers; disruptions to our regional network and United Express flights provided by third-party regional carriers; unfavorable economic and political conditions in the United States and globally (including inflationary pressures); reliance on third-party service providers and the impact of any significant failure of these parties to perform as expected, or interruptions in our relationships with these providers or their provision of services; extended interruptions or disruptions in the supply of aircraft fuel;service at major airports where we operate and space, facility and infrastructure constrains at our hubs or other airports; geopolitical conflict, terrorist attacks or security events; any damage to our reputation or brand image; our reliance on technology and automated systems to operate our business and the impact of any significant failure or disruption of, or failure to effectively integrate and implement, the technology or systems; our reliance on third-party service providers and the impact of any significant failure of these parties to perform as expected, or interruptions in our relationships with these providers or their provision of services; adverse publicity, harm to our brand; reduced travel demand, potential tort liability and voluntary or mandatory operational restrictions as a result of an accident, catastrophe or incident involving us, our regional carriers, our codeshare partners, or another airline; terrorist attacks, international hostilities or other security events, or the fear of terrorist attacks or hostilities, even if not made directly on the airline industry; increasing privacy and data security obligations or a significant data breach; disruptions toincreased use of social media platforms by us, our regional networkemployees and United Express flights provided by third-party regional carriers; the failure of our significant investments in other airlines, equipment manufacturers and other aviation industry participants to produce the returns or results we expect; further changes to the airline industry with respect to alliances and joint business arrangements or due to consolidations; changes in our network strategy or other factors outside our control resulting in less economic aircraft orders, costs related to modification or termination of aircraft orders or entry into less favorable aircraft orders, as well as any inability to accept or integrate new aircraft into our fleet as planned; our reliance on single suppliers to source a majority of our aircraft and certain parts, and the impact of any failure to obtain timely deliveries, additional equipment or support from any of these suppliers;others; the impacts of union disputes, employee strikes or slowdowns, and other labor-related disruptions on our operations; extended interruptions or disruptions in service at major airports where we operate; the impacts of seasonality and other factors associated with the airline industry; ourany failure to realizeattract, train or retain skilled personnel, including our senior management team or other key employees; the full value of our intangible assets or our long-lived assets, causing us to record impairments; any damage to our reputation or brand image; the limitation of our ability to use our net operating loss carryforwardsmonetary and certain other tax attributes to offset future taxable income for U.S. federal income tax purposes; theoperational costs of compliance with extensive government regulation of the airline industry; current or future litigation and regulatory actions, or failure to comply with the terms of any settlement, order or arrangement relating to these actions; costs, liabilities and risks associated with environmental regulation and climate change;change, including our climate goals; high and/or volatile fuel prices or significant disruptions in the supply of aircraft fuel (including as a result of the Russia-Ukraine military conflict); the impacts of our significant amount of financial leverage from fixed obligations, the possibility we may seek material amounts of additional financial liquidity in the short-term, and the impacts of insufficient liquidity on our financial condition and business; failure to comply with the covenants in the MileagePlus financing agreements, resulting in the possible acceleration of the MileagePlus indebtedness, foreclosure upon the collateral securing the
42

MileagePlus indebtedness or the exercise of other remedies; failure to comply with financial and other covenants governing our debt, including our MileagePlus® financing agreements; the impacts of the proposed phaseout of the London interbank offer rate; limitations on our ability to use our net operating loss carryforwards and certain other debt; changes in, ortax attributes to offset future taxable income for U.S. federal income tax purposes; our failure to retain,realize the full value of our senior management teamintangible assets or our long-lived assets, causing us to record impairments; fluctuations in the price of our common stock; the impacts of seasonality and other key employees; current or future litigation and regulatory actions, or failure to complyfactors associated with the terms of any settlement, order or arrangement relating to these actions;airline industry; increases in insurance costs or inadequate insurance coverage; and other risks and uncertainties set forth underin Part II,I, Item 1A., Risk Factors, of our Quarterly Report on2021 Form 10-Q for the quarter ended June 30, 2021,10-K, as well as other risks and uncertainties set forth from time to time in the reports we file with the U.S. Securities and Exchange Commission (the "SEC").SEC.
The foregoing list sets forth many, but not all, of the factors that could impact our ability to achieve results described in any forward-looking statements. Investors should understand that it is not possible to predict or identify all such factors and should not consider this list to be a complete statement of all potential risks and uncertainties. In addition, certain forward-looking outlook provided in this report relies on assumptions about the duration and severity of the COVID-19 pandemic, the timing of the return to a more stable business environment, the volatility of aircraft fuel prices, customer behavior changes and return in demand for air travel, among other things (together, the "Recovery Process"). If the actual Recovery Process differs materially from our assumptions, the impact of the COVID-19 pandemic on our business could be worse than expected, and our actual results may be negatively impacted and may vary materially from our expectations and projections. It is routine for our internal projections and expectations to change as the year or each quarter in the year progresses, and therefore it should be clearly understood that the internal projections, beliefs and assumptions upon which we base our expectations may change. For instance, forward capacity is matched with current observed bookings trends and published flight schedules for the quarter and we willregularly monitor future demand and booking trends and adjust capacity, as needed. As such, our actual flown capacity may differ materially from currently published flight schedules or current estimations.
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ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
There have been no material changes in market risk from the information provided in Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk, in our 20202021 Form 10-K.
ITEM 4.     CONTROLS AND PROCEDURES.
Evaluation of Disclosure Control and Procedures
UAL and United each maintains controls and procedures that are designed to ensure that information required to be disclosed in the reports filed or submitted by UAL and United to the SEC is recorded, processed, summarized and reported, within the time periods specified by the SEC's rules and forms, and is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The management of UAL and United, including the Chief Executive Officer and Chief Financial Officer, performed an evaluation to conclude with reasonable assurance that UAL's and United's disclosure controls and procedures were designed and operating effectively to report the information each company is required to disclose in the reports it files with the SEC on a timely basis. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer of UAL and United have concluded that as of September 30, 2021,2022, disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting during the Quarter Ended September 30, 20212022
During the three months ended September 30, 2021,2022, there were no changes in UAL's or United's internal control over financial reporting that materially affected, or are reasonably likely to materially affect, their internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934).
43


PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Part I, Item 3, Legal Proceedings, of the 20202021 Form 10-K for a description of legal proceedings.

ITEM 1A. RISK FACTORS
There have been no material changes fromSee Part I, Item 1A, Risk Factors, of the 2021 Form 10-K for a detailed discussion of the risk factors disclosed in Part II, Item 1A., Risk Factors, of our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021.affecting UAL and United.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) None
(b) None
(c) None
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ITEM 6. EXHIBITS.
EXHIBIT INDEX
Exhibit No.RegistrantExhibit
^3.110.1
UAL
United
^†10.110.2
UAL
United
^10.3
UAL
United
^10.4
UAL
United
31.1UAL
31.2UAL
31.3United
31.4United
32.1UAL
32.2United
101UAL
United
The following financial statements from the combined Quarterly Report of UAL and United on Form 10-Q for the quarter ended September 30, 2021,2022, formatted in Inline XBRL: (i) Statements of Consolidated Operations, (ii) Statements of Consolidated Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Condensed Statements of Consolidated Cash Flows, (v) Statements of Consolidated Stockholders' Equity and (vi) Combined Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
104UAL
United
Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.
† Indicates management contract or compensatory plan or arrangement. Pursuant to Item 601(b)(10), United is permitted to omit certain compensation-related exhibits from this report and therefore only UAL is identified as the registrant for purposes of those items.
^ Portions of the referenced exhibit have been omitted pursuant to Item 601(b) of Regulation S-K.


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 United Airlines Holdings, Inc.
 (Registrant)
Date:October 20, 202119, 2022 By:/s/ Gerald Laderman
 Gerald Laderman
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Date:October 20, 202119, 2022By:/s/ Chris Kenny
 Chris Kenny
Vice President and Controller
(Principal Accounting Officer)
 
United Airlines, Inc.
(Registrant)
Date:October 20, 202119, 2022 By:/s/ Gerald Laderman
 Gerald Laderman
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Date:October 20, 202119, 2022 By:/s/ Chris Kenny
 Chris Kenny
Vice President and Controller
(Principal Accounting Officer)

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