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.

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

The number of shares outstanding of each of the issuer’s classes of common stock as of ~~April 11,~~July 12, 2016 is shown below:

This combined Quarterly Report on Form 10-Q is separately filed by United Continental 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.


	Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015		2016		2015
Operating revenue:
Passenger—Mainline	$	5,577	$	5,938	$	6,525	$	6,961	$	12,102	$	12,899
Passenger—Regional		1,413		1,482		1,578		1,715		2,991		3,197

Total passenger revenue		6,990		7,420		8,103		8,676		15,093		16,096
Cargo		194		242		208		229		402		471
Other operating revenue		1,011		946		1,085		1,009		2,096		1,955

		8,195		8,608		9,396		9,914		17,591		18,522

Operating expense:
Salaries and related costs		2,490		2,301		2,592		2,454		5,082		4,755
Aircraft fuel		1,218		1,864		1,437		2,106		2,655		3,970
Regional capacity purchase						551		583		1,073		1,153
Landing fees and other rent		525		543		541		553		1,066		1,096
Regional capacity purchase		522		570
Depreciation and amortization		479		429		491		445		970		874
Aircraft maintenance materials and outside repairs		402		397		448		431		850		828
Distribution expenses		303		312		339		348		642		660
Aircraft rent		178		201		175		194		353		395
Special charges (Note 10)		190		64		434		55		624		119
Other operating expenses		1,239		1,186		1,328		1,300		2,567		2,486

		7,546		7,867		8,336		8,469		15,882		16,336

Operating income		649		741		1,060		1,445		1,709		2,186

Nonoperating income (expense):
Interest expense		(159)		(173)		(157)		(167)		(316)		(340)
Interest capitalized		14		12		14		13		28		25
Interest income		8		5		9		6		17		11
Miscellaneous, net (Note 10)		(18)		(74)		5		(100)		(13)		(174)

		(155)		(230)		(129)		(248)		(284)		(478)

Income before income taxes		494		511		931		1,197		1,425		1,708
Income tax expense		181		3		343		4		524		7

Net income	$	313	$	508	$	588	$	1,193	$	901	$	1,701

Earnings per share, basic	$	0.88	$	1.33	$	1.78	$	3.14	$	2.63	$	4.46

Earnings per share, diluted	$	0.88	$	1.32	$	1.78	$	3.14	$	2.63	$	4.45

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


	Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015		2016		2015
Net income	$	313	$	508	$	588	$	1,193	$	901	$	1,701

Other comprehensive income (loss), net change related to:
Fuel derivative financial instruments		78		86		33		147		111		233
Employee benefit plans		(24)		2		10		28		(14)		30
Investments and other		—		14		—		(10)		—		4

		54		102		43		165		97		267

Total comprehensive income, net	$	367	$	610	$	631	$	1,358	$	998	$	1,968

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


	(Unaudited) March 31, 2016		December 31, 2015		(Unaudited) June 30, 2016		December 31, 2015
ASSETS
Current assets:
Cash and cash equivalents	$	1,795	$	3,006	$	2,483	$	3,006
Short-term investments		2,177		2,190		2,202		2,190
Receivables, less allowance for doubtful accounts (2016—$11; 2015—$18)		1,581		1,128
Aircraft fuel, spare parts and supplies, less obsolescence allowance (2016—$249; 2015—$235)		759		738
Receivables, less allowance for doubtful accounts (2016—$12; 2015—$18)						1,450		1,128
Aircraft fuel, spare parts and supplies, less obsolescence allowance (2016—$261; 2015—$235)						798		738
Prepaid expenses and other		912		766		911		766

		7,224		7,828		7,844		7,828

Operating property and equipment:
Owned—
Flight equipment		24,348		23,728		24,853		23,728
Other property and equipment		4,715		4,542		4,947		4,542

		29,063		28,270		29,800		28,270
Less—Accumulated depreciation and amortization		(8,743)		(8,339)		(9,148)		(8,339)

		20,320		19,931		20,652		19,931


Purchase deposits for flight equipment		866		788		919		788

Capital leases—
Flight equipment		1,497		1,527		1,511		1,527
Other property and equipment		331		332		331		332

		1,828		1,859		1,842		1,859
Less—Accumulated amortization		(1,008)		(998)		(1,025)		(998)

		820		861		817		861

		22,006		21,580		22,388		21,580

Other assets:
Goodwill		4,523		4,523		4,523		4,523
Intangibles, less accumulated amortization (2016—$1,167; 2015—$1,144)		4,112		4,136
Intangibles, less accumulated amortization (2016—$1,190; 2015—$1,144)						3,677		4,136
Deferred income taxes		1,800		2,037		1,392		2,037
Restricted cash		162		204		124		204
Other, net		546		553		528		553

		11,143		11,453		10,244		11,453

	$	40,373	$	40,861	$	40,476	$	40,861


	(Unaudited) March 31, 2016		December 31, 2015		(Unaudited) June 30, 2016		December 31, 2015
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Advance ticket sales	$	4,958	$	3,753	$	5,323	$	3,753
Accounts payable						2,240		1,869
Frequent flyer deferred revenue		2,098		2,117		2,132		2,117
Accounts payable		2,065		1,869
Accrued salaries and benefits		1,822		2,350		1,969		2,350
Current maturities of long-term debt		1,295		1,224		1,272		1,224
Current maturities of capital leases		114		135		128		135
Fuel derivative instruments		32		124		7		124
Other		996		842		911		842

		13,380		12,414		13,982		12,414


Long-term debt		9,472		9,673		9,275		9,673
Long-term obligations under capital leases		725		727		740		727

Other liabilities and deferred credits:
Frequent flyer deferred revenue		2,884		2,826		2,830		2,826
Postretirement benefit liability		1,879		1,882		1,880		1,882
Pension liability		1,469		1,488		1,409		1,488
Advanced purchase of miles		871		1,010		725		1,010
Lease fair value adjustment, net		336		359		317		359
Other		1,517		1,516		1,534		1,516

		8,956		9,081		8,695		9,081

Commitments and contingencies
Stockholders’ equity:
Preferred stock		—		—		—		—
Common stock at par, $0.01 par value; authorized 1,000,000,000 shares; outstanding 339,304,625 and 364,609,108 shares at March 31, 2016 and December 31, 2015, respectively		4		4
Common stock at par, $0.01 par value; authorized 1,000,000,000 shares; outstanding 322,932,096 and 364,609,108 shares at June 30, 2016 and December 31, 2015, respectively						4		4
Additional capital invested		7,956		7,946		7,965		7,946
Retained earnings		3,770		3,457		4,358		3,457
Stock held in treasury, at cost		(3,113)		(1,610)		(3,809)		(1,610)
Accumulated other comprehensive loss		(777)		(831)		(734)		(831)

		7,840		8,966		7,784		8,966

	$	40,373	$	40,861	$	40,476	$	40,861

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


	Three Months Ended March 31,				Six Months Ended June 30,
	2016		2015		2016		2015
Cash Flows from Operating Activities:
Net cash provided by operating activities	$	1,199	$	1,825	$	3,746	$	3,577
Cash Flows from Investing Activities:
Capital expenditures		(816)		(210)		(1,654)		(1,311)
Purchases of short-term and other investments		(638)		(633)		(1,273)		(1,202)
Proceeds from sale of short-term and other investments		653		762		1,264		1,397
Investment in and loans to affiliates		(40)		—		(8)		(130)
Decrease in restricted cash		26		19		39		37
Proceeds from sale of property and equipment		17		17		19		36
Other		1		—		(6)		—

Net cash used in investing activities		(797)		(45)		(1,619)		(1,173)

Cash Flows from Financing Activities:
Payments of long-term debt		(227)		(296)		(453)		(1,319)
Repurchases of common stock		(1,392)		(195)		(2,182)		(445)
Proceeds from issuance of long-term debt		42		100		75		228
Principal payments under capital leases		(34)		(24)		(66)		(53)
Other, net		(2)		(15)		(24)		(21)

Net cash used in financing activities		(1,613)		(430)		(2,650)		(1,610)

Net (decrease) increase in cash and cash equivalents		(1,211)		1,350		(523)		794
Cash and cash equivalents at beginning of the period		3,006		2,002		3,006		2,002

Cash and cash equivalents at end of the period	$	1,795	$	3,352	$	2,483	$	2,796

Investing and Financing Activities Not Affecting Cash:
Property and equipment acquired through the issuance of debt	$	59	$	599	$	59	$	776
Airport construction financing		9		—		35		—
Operating lease conversions to capital lease		7		—		7		—
Exchanges of certain convertible notes for common stock		—		201		—		201

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


	Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015		2016		2015
Operating revenue:
Passenger—Mainline	$	5,577	$	5,938	$	6,525	$	6,961	$	12,102	$	12,899
Passenger—Regional		1,413		1,482		1,578		1,715		2,991		3,197

Total passenger revenue		6,990		7,420		8,103		8,676		15,093		16,096
Cargo		194		242		208		229		402		471
Other operating revenue		1,011		946		1,085		1,009		2,096		1,955

		8,195		8,608		9,396		9,914		17,591		18,522

Operating expense:
Salaries and related costs		2,490		2,301		2,592		2,454		5,082		4,755
Aircraft fuel		1,218		1,864		1,437		2,106		2,655		3,970
Regional capacity purchase						551		583		1,073		1,153
Landing fees and other rent		525		543		541		553		1,066		1,096
Regional capacity purchase		522		570
Depreciation and amortization		479		429		491		445		970		874
Aircraft maintenance materials and outside repairs		402		397		448		431		850		828
Distribution expenses		303		312		339		348		642		660
Aircraft rent		178		201		175		194		353		395
Special charges (Note 10)		190		64		434		55		624		119
Other operating expenses		1,238		1,186		1,328		1,299		2,566		2,485

		7,545		7,867		8,336		8,468		15,881		16,335

Operating income		650		741		1,060		1,446		1,710		2,187

Nonoperating income (expense):
Interest expense		(159)		(173)		(157)		(167)		(316)		(340)
Interest capitalized		14		12		14		13		28		25
Interest income		8		5		9		6		17		11
Miscellaneous, net (Note 10)		(18)		(74)		5		(101)		(13)		(175)

		(155)		(230)		(129)		(249)		(284)		(479)

Income before income taxes		495		511		931		1,197		1,426		1,708
Income tax expense		181		2		343		4		524		6

Net income	$	314	$	509	$	588	$	1,193	$	902	$	1,702

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


	Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015		2016		2015
Net income	$	314	$	509	$	588	$	1,193	$	902	$	1,702

Other comprehensive income (loss), net change related to:
Fuel derivative financial instruments		78		86		33		147		111		233
Employee benefit plans		(24)		2		10		28		(14)		30
Investments and other		—		14		—		(9)		—		5

		54		102		43		166		97		268

Total comprehensive income, net	$	368	$	611	$	631	$	1,359	$	999	$	1,970

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


	(Unaudited)				(Unaudited)
	March 31, 2016		December 31, 2015		June 30, 2016		December 31, 2015
ASSETS
Current assets:
Cash and cash equivalents	$	1,789	$	3,000	$	2,477	$	3,000
Short-term investments		2,177		2,190		2,202		2,190
Receivables, less allowance for doubtful accounts (2016—$11; 2015—$18)		1,581		1,128
Aircraft fuel, spare parts and supplies, less obsolescence allowance (2016—$249; 2015—$235)		759		738
Receivables, less allowance for doubtful accounts (2016—$12; 2015—$18)						1,450		1,128
Aircraft fuel, spare parts and supplies, less obsolescence allowance (2016—$261; 2015—$235)						798		738
Prepaid expenses and other		961		813		960		813

		7,267		7,869		7,887		7,869

Operating property and equipment:
Owned—
Flight equipment		24,348		23,728		24,853		23,728
Other property and equipment		4,715		4,542		4,947		4,542

		29,063		28,270		29,800		28,270
Less—Accumulated depreciation and amortization		(8,743)		(8,339)		(9,148)		(8,339)

		20,320		19,931		20,652		19,931


Purchase deposits for flight equipment		866		788		919		788

Capital leases—
Flight equipment		1,497		1,527		1,511		1,527
Other property and equipment		331		332		331		332

		1,828		1,859		1,842		1,859
Less—Accumulated amortization		(1,008)		(998)		(1,025)		(998)

		820		861		817		861

		22,006		21,580		22,388		21,580

Other assets:
Goodwill		4,523		4,523		4,523		4,523
Intangibles, less accumulated amortization (2016—$1,167; 2015—$1,144)		4,112		4,136
Intangibles, less accumulated amortization (2016—$1,190; 2015—$1,144)						3,677		4,136
Deferred income taxes		1,759		1,995		1,351		1,995
Restricted cash		162		204		124		204
Other, net		544		554		527		554

		11,100		11,412		10,202		11,412

	$	40,373	$	40,861	$	40,477	$	40,861


	(Unaudited)				(Unaudited)
	March 31, 2016		December 31, 2015		June 30, 2016		December 31, 2015
LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Advance ticket sales	$	4,958	$	3,753	$	5,323	$	3,753
Accounts payable						2,245		1,874
Frequent flyer deferred revenue		2,098		2,117		2,132		2,117
Accounts payable		2,069		1,874
Accrued salaries and benefits		1,822		2,350		1,969		2,350
Current maturities of long-term debt		1,295		1,224		1,272		1,224
Current maturities of capital leases		114		135		128		135
Fuel derivative instruments		32		124		7		124
Other		996		840		911		840

		13,384		12,417		13,987		12,417


Long-term debt		9,472		9,673		9,275		9,673
Long-term obligations under capital leases		725		727		740		727

Other liabilities and deferred credits:
Frequent flyer deferred revenue		2,884		2,826		2,830		2,826
Postretirement benefit liability		1,879		1,882		1,880		1,882
Pension liability		1,469		1,488		1,409		1,488
Advanced purchase of miles		871		1,010		725		1,010
Lease fair value adjustment, net		336		359		317		359
Other		1,517		1,516		1,534		1,516

		8,956		9,081		8,695		9,081

Commitments and contingencies
Stockholder’s equity:
Common stock at par, $0.01 par value; authorized 1,000 shares; issued and outstanding 1,000 shares at both March 31, 2016 and December 31, 2015		—		—
Common stock at par, $0.01 par value; authorized 1,000 shares; issued and outstanding 1,000 shares at both June 30, 2016 and December 31, 2015						—		—
Additional capital invested		4,648		6,138		3,964		6,138
Retained earnings		3,987		3,673		4,575		3,673
Accumulated other comprehensive loss		(777)		(831)		(734)		(831)
Receivable from related parties		(22)		(17)		(25)		(17)

		7,836		8,963		7,780		8,963

	$	40,373	$	40,861	$	40,477	$	40,861

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


	Three Months Ended March 31,				Six Months Ended June 30,
	2016		2015		2016		2015
Cash Flows from Operating Activities:
Net cash provided by operating activities	$	1,195	$	1,816	$	3,740	$	3,568
Cash Flows from Investing Activities:
Capital expenditures		(816)		(210)		(1,654)		(1,311)
Purchases of short-term investments and other investments		(638)		(633)		(1,273)		(1,202)
Proceeds from sale of short-term and other investments		653		762		1,264		1,397
Investment in and loans to affiliates		(40)		—		(8)		(130)
Decrease in restricted cash		26		19		39		37
Proceeds from sale of property and equipment		17		17		19		36
Other		1		—		(6)		—

Net cash used in investing activities		(797)		(45)		(1,619)		(1,173)

Cash Flows from Financing Activities:
Payments of long-term debt		(227)		(296)		(453)		(1,319)
Dividend to UAL		(1,392)		(195)		(2,182)		(445)
Proceeds from issuance of long-term debt		42		100		75		228
Principal payments under capital leases		(34)		(24)		(66)		(53)
Other, net		2		(6)		(18)		(12)

Net cash used in financing activities		(1,609)		(421)		(2,644)		(1,601)

Net (decrease) increase in cash and cash equivalents		(1,211)		1,350		(523)		794
Cash and cash equivalents at beginning of the period		3,000		1,996		3,000		1,996

Cash and cash equivalents at end of the period	$	1,789	$	3,346	$	2,477	$	2,790

Investing and Financing Activities Not Affecting Cash:
Property and equipment acquired through the issuance of debt	$	59	$	599	$	59	$	776
Airport construction financing		9		—		35		—
Operating lease conversions to capital lease		7		—		7		—

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

United Continental 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. 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 year ended December 31, 2015. The Company’s quarterly financial data is subject to seasonal fluctuations and historically its second and third quarter financial results, which reflect higher travel demand, are better than its first and fourth quarter financial results.

~~Recently Issued Accounting Standards.~~~~In March 2016, the~~The Financial Accounting Standards Board (“FASB”) ~~issued Accounting Standards Update No. 2016-09,~~~~Improvements to Employee Share-Based Payment Accounting~~as part of its simplification initiative, which involves several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company is evaluating the impact the adoption of this standard will have on its consolidated financial statements.

~~In February 2016, the FASB amended the FASB Accounting Standards Codification and created a new Topic 842,~~~~Leases~~. The final guidance requires lessees to recognize a right-of-use asset and a lease liability for all leases (with the exception of short-term leases) at the commencement date and recognize expenses on their income statements similar to the current Topic 840,~~Leases~~. It is effective for fiscal years and interim periods beginning after December 15, 2018, and early adoption is permitted. The Company is evaluating the impact the adoption of this standard will have on its consolidated financial statements.

~~The FASB~~ amended the FASB Accounting Standards Codification and created a new Topic 606,Revenue from Contracts with Customers. This amendment prescribes that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendment supersedes the revenue recognition requirements in Topic 605,Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the Accounting Standards Codification, and is effective for annual and interim reporting periods beginning after December 15, 2017. Under the new standard, certain airline ancillary fees directly related to passenger revenue tickets, such as airline change fees and baggage fees, are likely to no longer be considered distinct performance obligations separate from the passenger travel component. In addition, the change fees which were previously recognized when received, will likely be recognized when transportation is provided. The Company is evaluating other possible impacts on its consolidated financial statements.

In February 2016, the FASB amended the FASB Accounting Standards Codification and created a new Topic 842,Leases. The guidance requires lessees to recognize a right-of-use asset and a lease liability for all leases (with the exception of short-term leases) at the commencement date and recognize expenses on their income statements similar to the current Topic 840,Leases. It is effective for fiscal years and interim periods beginning after December 15, 2018, and early adoption is permitted. The Company is evaluating the impact the adoption of this standard will have on its consolidated financial statements.

In March 2016, the FASB issued Accounting Standards Update No. 2016-09,Improvements to Employee Share-Based Payment Accounting.The update requires excess tax benefits and tax deficiencies, which arise due to differences between the measure of compensation expense and the amount deductible for tax purposes, to be recorded directly through earnings as a component of income tax expense. Under current GAAP, these differences are generally recorded in additional paid-in capital and thus have no impact on net income. The change in treatment of excess tax benefits and tax deficiencies will also impact the computation of diluted earnings per share, and the cash flows associated with those items will be classified as operating activities on the condensed statements of consolidated cash flows. Additionally, entities will be permitted to make an accounting policy election for the impact of forfeitures on the recognition of expense for share-based payment awards. Forfeitures can be estimated, as required under current GAAP, or recognized when they occur. The amendments in this update are effective for annual periods

beginning after December 15, 2016, and interim periods within those annual periods. The Company is evaluating the impact the adoption of this standard update will have on its consolidated financial statements and whether to early adopt the standard update.

The FASB issued Accounting Standards Update No. 2015-07,Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent).Under the standard, investments for which fair value is measured at net asset value (“NAV”) per share (or its equivalent) using the practical expedient will no longer be categorized in the fair value hierarchy. The Company adopted this standard on January 1, 2016. As of ~~March 31,~~June 30, 2016, the Company had approximately $201 million of such investments as part of its Short-term investments balance sheet total. In addition, pension plan investments measured at NAV per share will no longer be categorized within the fair value hierarchy. As of ~~March 31,~~June 30, 2016, the Company had approximately ~~$1.6~~$1.7 billion of such investments.

The computations of UAL’s basic and diluted earnings per share are set forth below (in millions, except per share amounts):


	Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015		2016		2015
Basic earnings per share:
Earnings available to common stockholders	$	313	$	508	$	588	$	1,193	$	901	$	1,701

Basic weighted-average shares outstanding		354		382		331		380		342		381

Earnings per share, basic	$	0.88	$	1.33	$	1.78	$	3.14	$	2.63	$	4.46

Diluted earnings per share:
Earnings available to common stockholders including the effect of dilutive securities	$	313	$	508	$	588	$	1,193	$	901	$	1,701

Diluted shares outstanding:
Basic weighted-average shares outstanding		354		382		331		380		342		381
Effect of convertible notes		—		1
Effect of employee stock awards		1		1		—		—		1		1

Diluted weighted-average shares outstanding		355		384		331		380		343		382

Earnings per share, diluted	$	0.88	$	1.32	$	1.78	$	3.14	$	2.63	$	4.45

The number of antidilutive securities excluded from the computation of diluted earnings per share amounts was not material.

In the three and six months ended ~~March 31,~~June 30, 2016, UAL repurchased 2715 million and 42 million shares of UAL common stock in open market transactions, respectively, for ~~$1.5~~$694 million and $2.2 billion, ~~of which $0.1 billion settled in April 2016.~~respectively. As of ~~March 31,~~June 30, 2016, the Company had ~~$948~~$255 million remaining to purchase shares under its 2015 $3 billion share repurchase authorization.

In July 2016, UAL’s Board of Directors authorized a new $2 billion share repurchase program ~~(the “2015 Program”). The Company expects~~ to ~~complete its repurchases under~~acquire UAL’s common stock.

UAL may repurchase shares through the ~~2015 Program by September 30, 2016.~~open market, privately negotiated transactions, block trades or accelerated share repurchase transactions from time to time in accordance with applicable securities laws. UAL will repurchase shares of UAL common stock subject to prevailing market conditions, and may discontinue such repurchases at any time. See Part II, Item 2, ~~��Unregistered~~“Unregistered Sales of Equity Securities and Use of Proceeds” of this report for additional information.

The tables below present the components of the Company’s accumulated other comprehensive income (loss), net of tax (“AOCI”) (in millions):


							Deferred Taxes													Deferred Taxes
UAL	Pension and Other Postretirement Liabilities		Derivative Contracts		Investments and Other		Pension and Other Postretirement Liabilities		Derivative Contracts			Total
Balance at December 31, 2015	$	(363)	$	(215)	$	3	$	(154)	$	(102)		$	(831)
UAL (a)														Pension and Other Postretirement Liabilities		Fuel Derivative Contracts		Investments and Other		Pension and Other Postretirement Liabilities		Fuel Derivative Contracts			Total
Balance at March 31, 2016														$	(401)	$	(93)	$	3	$	(140)	$	(146)		$	(777)
Changes in value		(43)		(16)		—		16		6			(37)		10		17		—		(4)		(6)			17
Amounts reclassified to earnings		5		138		—		(2)		(50)			91		6		35		—		(2)		(13)			26

Net change		(38)		122		—		14		(44)			54		16		52		—		(6)		(19)			43

Balance at March 31, 2016	$	(401)	$	(93)	$	3	$	(140)	$	(146)		$	(777)
Balance at June 30, 2016														$	(385)	$	(41)	$	3	$	(146)	$	(165)		$	(734)

Balance at December 31, 2014	$	(472)	$	(499)	$	7	$	(115)	$	—	(b)	$	(1,079)
Balance at December 31, 2015														$	(363)	$	(215)	$	3	$	(154)	$	(102)		$	(831)
Changes in value ~~(a)~~		(8)		(75)		15		—		—			(68)		(33)		1		—		12		—			(20)
Amounts reclassified to earnings (a)		10		161		(1)		—		—			170
Amounts reclassified to earnings															11		173		—		(4)		(63)			117

Net change		2		86		14		—		—			102		(22)		174		—		8		(63)			97

Balance at June 30, 2016														$	(385)	$	(41)	$	3	$	(146)	$	(165)		$	(734)


																				Deferred Taxes
UAL (a)														Pension and Other Postretirement Liabilities		Fuel Derivative Contracts		Investments and Other		Pension and Other Postretirement Liabilities		Fuel Derivative Contracts			Total
Balance at March 31, 2015	$	(470)	$	(413)	$	21	$	(115)	$	—		$	(977)	$	(470)	$	(413)	$	21	$	(115)	$	—	(c)	$	(977)
Changes in value (b)															20		29		(10)		—		—			39
Amounts reclassified to earnings (b)															8		118		—		—		—			126

Net change															28		147		(10)		—		—			165

Balance at June 30, 2015														$	(442)	$	(266)	$	11	$	(115)	$	—	(c)	$	(812)

Balance at December 31, 2014														$	(472)	$	(499)	$	7	$	(115)	$	—	(c)	$	(1,079)
Changes in value (b)															12		(46)		5		—		—			(29)
Amounts reclassified to earnings (b)															18		279		(1)		—		—			296

Net change															30		233		4		—		—			267

Balance at June 30, 2015														$	(442)	$	(266)	$	11	$	(115)	$	—	(c)	$	(812)


Details about AOCI Components	Amount Reclassified from AOCI to Income				Affected Line Item in the Statements of Consolidated Operations	Amount Reclassified from AOCI to Income								Affected Line Item in the Statements of Consolidated Operations
	Three Months Ended March 31,					Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015			2016		2015		2016		2015
Derivatives designated as cash flow hedges
Fuel contracts-reclassifications of losses into earnings	$	138	$	161	Aircraft fuel
Amortization of pension and post-retirement items
Fuel derivative contracts
Reclassifications of losses into earnings						$	35	$	118	$	173	$	279	Aircraft fuel
Pension and other postretirement liabilities
Amortization of unrecognized losses and prior service cost (credit) ~~(c)~~(d)		5		10	Salaries and related costs		6		8		11		18	Salaries and related costs
Investments and other
Available-for-sale securities-reclassifications of gains into earnings		—		(1)	Miscellaneous, net		—		—		—		(1)	Miscellaneous, net

(a) UAL and United amounts are substantially the same except for additional gains related to investments and other of $1 million at United for the three and six months ended June 30, 2015.

(b) Income tax expense for these items was offset by the Company’s valuation allowance.

~~(b)~~(c) Deferred tax balance was offset by the Company’s valuation allowance.

~~(c)~~(d) 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).

The Company’s effective tax rate for the three and six months ended ~~March 31,~~June 30, 2016 was ~~36.6%~~36.9% and 36.8%, respectively, which represented a blend of federal, state and foreign taxes and the impact of certain nondeductible items. The effective tax rate for the ~~three~~six months ended ~~March 31,~~June 30, 2015 was ~~0.5%~~0.4% due primarily to the existing income tax valuation allowance against net operating losses and other deferred income tax ~~assets, primarily net operating losses.~~assets. During 2015, after considering all positive and negative evidence, the Company concluded that its deferred income taxes would be more likely than not to be realized. The Company released substantially all of its valuation allowance in the third quarter of 2015.

Defined Benefit Pension and Other Postretirement Benefit Plans.The Company’s net periodic benefit cost includes the following components (in millions):


	Pension Benefits				Other Postretirement Benefits				Pension Benefits				Other Postretirement Benefits
	Three Months Ended March 31,				Three Months Ended March 31,				Three Months Ended June 30,				Three Months Ended June 30,
	2016		2015		2016		2015		2016		2015		2016		2015
Service cost	$	28	$	31	$	4	$	5	$	27	$	31	$	6	$	5
Interest cost		51		50		22		20		50		50		22		21
Expected return on plan assets		(54)		(49)		—		—		(54)		(49)		(1)		(1)
Amortization of unrecognized (gain) loss and prior service cost (credit)		18		22		(13)		(13)		20		22		(14)		(14)
Settlement loss		1		1		—		—		1		—		—		—

Total	$	44	$	55	$	13	$	12	$	44	$	54	$	13	$	11


									Pension Benefits				Other Postretirement Benefits
									Six Months Ended June 30, 2016				Six Months Ended June 30, 2016
									2016		2015		2016		2015
Service cost									$	55	$	62	$	10	$	10
Interest cost										101		100		44		41
Expected return on plan assets										(108)		(98)		(1)		(1)
Amortization of unrecognized (gain) loss and prior service cost (credit)										38		44		(27)		(27)
Settlement loss										2		1		—		—

Total									$	88	$	109	$	26	$	23

During the three and six months ended ~~March 31,~~June 30, 2016, the Company contributed $80 million and $160 million, respectively, to its U.S. domestic tax-qualified defined benefit pension plans.

Share-Based Compensation. ~~The Company generally grants incentive compensation awards, including long-term equity-based awards, during the first quarter of the calendar year.~~ During ~~the three months ended March 31,~~ 2016, UAL granted share-based compensation awards pursuant to the United Continental Holdings, Inc. 2008 Incentive Compensation Plan. These share-based compensation awards include approximately 0.3 million shares of restricted stock and 0.8 million restricted stock units (“RSUs”) that vest pro-rata over three years on the anniversary of the grant date. The time-vested RSUs are stock-settled for domestic employees and cash-settled based on the 20-day average closing price of UAL common stock immediately prior to the vesting date for international employees. The Company also granted 0.6 million performance-based RSUs that will vest based on the Company’s return on invested capital and the Company’s relative improvement in pre-tax margin for the three years ending December 31, 2018. If these performance conditions are achieved, cash payments will be made after the end of the performance period based on the 20-day average closing price of UAL common stock immediately prior to the vesting date. The Company accounts for the stock-settled RSUs as equity awards and the cash-settled RSUs as liability awards.

The table below presents information related to share-based compensation (in millions):


	Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015		2016		2015
Share-based compensation expense	$	10	$	17	$	3	$	16	$	13	$	33

	March 31, 2016		December 31, 2015		June 30, 2016		December 31, 2015
Unrecognized share-based compensation	$	93	$	41	$	71	$	41

Profit Sharing Plans.Substantially all employees participate in profit sharing based on a percentage of pre-tax earnings, excluding special items, profit sharing expense and share-based compensation. Profit sharing percentages range from 5% to 20% depending on the work group, and in some cases profit sharing percentages vary above and below certain pre-tax margin

thresholds. Eligible U.S. co-workers in each participating work group receive a profit sharing payout using a formula based on the ratio of each qualified co-worker’s annual eligible earnings to the eligible earnings of all qualified co-workers in all domestic work groups. Eligible non-U.S. co-workers receive profit sharing based on the calculation under the U.S. profit sharing plan for management and administrative employees. Profit sharing expense is recorded as a component of Salaries and related costs in the Company’s statements of consolidated operations.

The table below presents disclosures about the financial assets and liabilities measured at fair value on a recurring basis in the Company’s financial statements (in millions):

~~Note: Amounts for UAL and United are substantially the same as of March 31, 2016 and December 31, 2015.~~

(a) In accordance with the relevant accounting standards, certain investments that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position. The investments measured using NAV are shares of mutual funds that invest in fixed-income instruments including bonds, debt securities, and other similar instruments issued by various U.S. and non-U.S. public- or private-sector entities. The Company can redeem its shares at any time at NAV subject to a three-day settlement period.

Available-for-sale investment maturities - The short-term investments shown in the table above are classified as available-for-sale. As of ~~March 31,~~June 30, 2016, asset-backed securities have remaining maturities of less than one year to approximately 3433 years, corporate debt securities have remaining maturities of less than one year to approximately six years and CDARS have maturities of less than one year. U.S. government and other securities have maturities of less than one year to approximately three years. The EETC securities mature in 2019.

Derivative instruments and investments presented in the tables above have the same fair value as their carrying value. The table below presents the carrying values and estimated fair values of financial instruments not presented in the tables above (in millions):

Fair value of the financial instruments included in the tables above was determined as follows:

The Company may hedge a portion of its future fuel requirements to protect against increases in the price of fuel. The Company may restructure hedges in response to market conditions prior to their original settlement dates which may result in changes in hedge coverage levels and the potential recognition of gains or losses on such hedge contracts. As of ~~March 31,~~June 30, 2016, the Company had hedged approximately 12% of its projected fuel requirements ~~(378~~(252 million gallons) for the remainder of 2016 with commonly used financial hedge instruments based on aircraft fuel or crude oil. As of ~~March 31,~~June 30, 2016, the Company had fuel hedges expiring through December 2016.

As required, the Company assesses the effectiveness of each of its individual hedges on a quarterly basis. The Company also examines the effectiveness of its entire hedging program on a quarterly basis utilizing statistical analysis. This analysis involves utilizing regression and other statistical analyses that compare changes in the price of aircraft fuel to changes in the prices of the commodities used for hedging purposes.

Upon proper qualification, the Company accounts for certain fuel derivative instruments as cash flow hedges. All derivatives designated as hedges that meet certain requirements are granted hedge accounting treatment. The types of instruments the Company utilizes that qualify for hedge accounting treatment typically include swaps, call options, collars (which consist of a purchased call option and a sold put option), four-way collars (a collar with a higher strike sold call option and a lower strike purchased put option) and other combinations of options. Generally, utilizing hedge accounting, all periodic changes in the fair value of derivatives designated as hedges that are considered to be effective are recorded in AOCI until the underlying fuel is consumed and recorded in fuel expense. The Company is exposed to the risk that its hedges may not be effective in offsetting changes in the cost of fuel and that its hedges may not continue to qualify for hedge accounting. Hedge ineffectiveness results when the change in the fair value of the derivative instrument exceeds the change in the value of the Company’s expected future cash outlay to purchase and consume fuel. To the extent that the periodic changes in the fair value of the derivatives are not effective, that ineffectiveness is classified as Nonoperating income (expense): Miscellaneous, net in the statements of consolidated operations.

The Company also uses certain combinations of derivative contracts that are economic hedges but do not qualify for hedge accounting under GAAP. Additionally, the Company may enter into contracts at different times and later combine those contracts into structures designated for hedge accounting. As with derivatives that qualify for hedge accounting, the economic hedges and individual contracts are part of the Company’s program to mitigate the adverse financial impact of potential increases in the price of fuel. The Company records changes in the fair value of these various contracts that are not designated for hedge accounting to Nonoperating income (expense): Miscellaneous, net in the statements of consolidated operations.

If the Company settles a derivative prior to its contractual settlement date, then the cumulative gain or loss recognized in AOCI at the termination date remains in AOCI until the forecasted transaction occurs. In a situation where it becomes probable that a hedged forecasted transaction will not occur, any gains and/or losses that have been recorded to AOCI would be required to be immediately reclassified into earnings. All cash flows associated with purchasing and settling derivatives are classified as operating cash flows in the condensed statements of consolidated cash flows.

In addition to cash flow hedges, the Company from time to time enters into fair value hedges related to its aircraft fuel inventory using derivatives such as swaps and futures contracts based on aircraft fuel. Under fair value hedge accounting, the Company records changes in the fair value of both the hedging derivative and the hedged aircraft fuel inventory as fuel expense. The Company records ineffectiveness on fair value hedges as Nonoperating income (expense): Miscellaneous, net in the statements of consolidated operations. As of ~~March 31,~~June 30, 2016, ~~the Company did not have any~~ fair value hedges ~~in place.~~related to aircraft fuel were not material to the Company’s financial statements.

The Company records each derivative instrument as a derivative asset or liability (on a gross basis) in its consolidated balance sheets, and, accordingly, records any related collateral on a gross basis. The table below presents the fair value amounts of fuel derivative assets and liabilities and the location of amounts recognized in the Company’s financial statements.

The Company’s derivatives were reported in its consolidated balance sheets as follows (in millions):


Classification	Balance Sheet Location	March 31, 2016		December 31, 2015		Balance Sheet Location	June 30, 2016		December 31, 2015
Derivatives designated as cash flow hedges
Liabilities:
Fuel contracts due within one year	Fuel derivative instruments	$	32	$	119	Fuel derivative instruments	$	7	$	119
Derivatives not designated for hedge accounting
Liabilities:
Fuel contracts due within one year	Fuel derivative instruments	$	—	$	5	Fuel derivative instruments	$	—	$	5

Total derivatives
Total liabilities		$	32	$	124		$	7	$	124

The Company is exposed to credit losses in the event of non-performance by counterparties to its derivative instruments. While the Company records derivative instruments on a gross basis, the Company monitors its net derivative position with each counterparty to monitor credit risk. Based on the fair value of our fuel derivative instruments, our counterparties may require us to post collateral when the price of the underlying commodity decreases, and we may require our counterparties to provide us with collateral when the price of the underlying commodity increases. The Company did not hold or post collateral as of ~~March 31,~~June 30, 2016. The Company had on deposit $26 million of collateral with fuel derivative counterparties as of December 31, 2015. The collateral is recorded as Prepaid expenses and other on the Company’s balance sheets.

We have master trading agreements with all of our fuel hedging counterparties that allow us to net our fuel hedge derivative positions. We have elected not to net the fair value positions recorded on our consolidated balance sheets. The following table shows the potential net fair value positions (including fuel derivatives and related collateral) had we elected to offset. The table reflects offset at the counterparty level (in millions):

The following tables present the impact of derivative instruments and their location within the Company’s unaudited statements of consolidated operations (in millions):

The Company generates revenues and incurs expenses in numerous foreign currencies. Changes in foreign currency exchange rates impact the Company’s results of operations through changes in the dollar value of foreign currency-denominated operating revenues and expenses. Some of the Company’s more significant foreign currency exposures include the Canadian dollar, Chinese renminbi, European euro, British pound and Japanese yen. At times, the Company uses derivative financial instruments, such as options, collars and forward contracts, to hedge its exposure to foreign currency. At ~~March 31,~~June 30, 2016, the Company had foreign currency derivative contracts in place to hedge both European euro denominated sales and Japanese yen denominated sales. The notional amount of the hedges equates to ~~22%~~21% of the Company’s projected European euro denominated net cash inflows for the remainder of 2016; and ~~17%~~26% of the Company’s projected Japanese yen denominated net cash inflows for the remainder of 2016. Net cash relates primarily to passenger ticket sales inflows, partially offset by expenses paid in local currencies. At ~~March 31,~~June 30, 2016, the fair value of the Company’s foreign currency derivatives was a liability of $1 million.

Commitments.As of ~~March 31,~~June 30, 2016, United had firm commitments and options to purchase aircraft from The Boeing Company (“Boeing”), Embraer S.A. (“Embraer”) and Airbus S.A.S. (“Airbus”) presented in the table below:

The aircraft listed in the table above are scheduled for delivery through 2024. For the remainder of 2016, United expects to take delivery of 1311 Boeing 737NG aircraft, one Boeing 777-300ER aircraft ~~two Boeing 787-9 aircraft~~ and ~~nine~~five Embraer E175 aircraft. United expects to assign the ~~nine~~five Embraer E175 aircraft immediately prior to each aircraft’s delivery by Embraer to a designated United Express operator.

As of ~~March 31,~~June 30, 2016, United has secured backstop financing commitments from certain of its aircraft manufacturers for a limited number of its future aircraft deliveries, subject to certain customary conditions. Financing may be necessary to satisfy the Company’s capital commitments for its firm order aircraft and other related capital expenditures. See Note 9 of this report for additional information on aircraft financing.

The table below summarizes United’s commitments as of ~~March 31,~~June 30, 2016, which primarily relate to the acquisition of aircraft and related spare engines, aircraft improvements and include other commitments primarily to acquire information technology services and assets. Any new firm aircraft orders, including through the exercise of purchase options and purchase rights, will increase the total future capital commitments of the Company.

In March 2016, the Company announced that it will retire its fleet of Boeing 747 aircraft from scheduled service by the end of 2018. The Company does not expect there to be a material impact to depreciation and amortization expense.

Guarantees.As of ~~March 31,~~June 30, 2016, United is the guarantor of approximately $1.9 billion in aggregate principal amount of tax-exempt special facilities revenue bonds and interest thereon. These bonds, issued by various airport municipalities, are payable solely from rentals paid under long-term agreements with the respective governing bodies. The leasing arrangements associated with $1.4 billion of these obligations are accounted for as operating leases with the associated expense recorded on a straight-line basis resulting in ratable accrual of the lease obligation over the expected lease term. The leasing arrangements associated with ~~$316~~$342 million of these obligations are accounted for as capital leases. All of these bonds are due between 2017 and 2038.

As of June 30, 2016, United is the guarantor of $43 million of aircraft mortgage debt issued by one of United’s regional carriers and is expected to be the guarantor of up to an additional $129 million of aircraft mortgage debt the regional carrier plans to issue in 2016.

In the Company’s financing transactions that include loans, the Company 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 in which the interest rate is based on the London Interbank Offered Rate, for certain other increased costs that the lenders incur in carrying these loans as a result of any change in law, subject, in most cases, to obligations of the lenders to take certain limited steps to mitigate the requirement for, or the amount of, such increased costs. At ~~March 31,~~June 30, 2016, the Company had $2.4 billion of floating rate debt and ~~$111~~$104 million of fixed rate debt, with remaining terms of up to 12 years, that are subject to these increased cost provisions. In several financing transactions involving loans or leases from non-U.S. entities, with remaining terms of up to 12 years and an aggregate balance of ~~$2.5~~$2.4 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 ~~March 31,~~June 30, 2016, United had approximately ~~86,000~~87,500 active employees, of whom approximately 80% were represented by various labor organizations.

In January 2016, United’s pilots, represented by the Air Line Pilots Association, International, agreed to extend their contract through January 31, 2019. In March 2016, the Company’s dispatchers, represented by the Professional Airline Flight Control Association, agreed to extend their current contract through 2021. In April 2016, the fleet service, passenger service, storekeeper and other employees represented by the Int’l Association of Machinists and Aerospace Workers (“IAM”) ratified seven new contracts with the Company which extended the contracts through 2021. In June 2016, United and The Association of Flight Attendants (“AFA”) reached a tentative agreement. The AFA Joint Master Executive Council approved the agreement and will submit it to AFA members for ratification. The Company continues to negotiate in mediation for a joint ~~flight attendant collective bargaining agreement and a joint~~ technician and related employees’ collective bargaining agreement. ~~See Note 10 of this report for additional information.~~

As of ~~March 31,~~June 30, 2016, a substantial portion of the Company’s assets, principally aircraft, route authorities, airport slots and loyalty program intangible assets, was pledged under various loan and other agreements. As of ~~March 31,~~June 30, 2016, UAL and United were in compliance with their debt covenants. As of ~~March 31,~~June 30, 2016, United had its entire capacity of $1.35 billion available under the revolving credit facility of the Company’s 2013 Credit and Guaranty Agreement (the “Credit Agreement”).

EETCs. In June 2016, United created EETC pass-through trusts, each of which issued pass-through certificates. The proceeds of the issuance of the pass-through certificates are used to purchase equipment notes issued by United and secured by its aircraft. 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 2016 are as follows (in millions, except stated interest rate):

4.5% Convertible Notes due 2015.~~At December 31, 2014,~~In the ~~remaining balance~~first quarter of ~~these notes was $202 million. In January~~ 2015, the holders of substantially all of the remaining $202 million principal amount of the 4.5% Convertible Notes due 2015 exercised their conversion option resulting in the issuance of 11 million shares of UAL common stock.

6% Notes due 2026.In the first quarter of 2015, UAL used cash to repurchase $18 million par value 6% Notes due 2026 (the “2026 Notes”) in market transactions. On April 1, 2015, UAL used cash to redeem, at par, the remaining $303 million balance of the 2026 Notes.

6% Notes due 2028.In the first quarter of 2015, UAL used cash to repurchase $13 million par value 6% Notes due 2028 (the “2028 Notes”) in market transactions. On May 1, 2015, UAL used cash to redeem, at par, the remaining $298 million balance of the 2028 Notes.

~~EETCs~~. ~~In the first quarter of 2015, United issued $0.7 billion of debt related to a 2014 EETC offering to finance new aircraft.~~

For the three and six months ended ~~March 31,~~June 30, special charges consisted of the following (in millions):


	Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
Operating:	2016		2015		2016		2015		2016		2015
Impairment of intangible asset related to Newark Liberty International Airport (“Newark”) slots					$	412	$	—	$	412	$	—
Labor agreement costs	$	100	$	—		10		—		110		—
Severance and benefit costs						6		25		14		75
Cleveland airport lease restructuring		74		—		—		—		74		—
Severance and benefit costs		8		50
(Gains) losses on sale of assets and other special charges		8		14		6		30		14		44

Special charges		190		64		434		55		624		119
Nonoperating and income taxes:
Loss on extinguishment of debt and other		8		6
(Gain) loss on extinguishment of debt and other						(9)		128		(1)		134
Income tax benefit related to special charges		(72)		—		(153)		—		(225)		—

Total special charges, net of tax	$	126	$	70	$	272	$	183	$	398	$	253

In April 2016, the Federal Aviation Administration (“FAA”) announced that it will designate Newark as a Level 2 schedule-facilitated airport under the International Air Transport Association Worldwide Slot Guidelines effective October 30, 2016. The designation was associated with an updated demand and capacity analysis of Newark by the FAA. In the second quarter of 2016, the Company has determined that the FAA’s action has impaired the entire value of its Newark slots because the slots will no longer be the mechanism that governs take-off and landing rights. Accordingly, the Company recorded a $412 million special charge ($264 million net of taxes) to write off the intangible asset. The Newark slots served as part of the collateral for the term loans under the Company’s Credit Agreement and under the Second Amended and Restated Co-Branded Card Marketing Services Agreement with Chase Bank USA, N.A. (the “Chase Agreement”). The Credit Agreement and the Chase Agreement have been amended to remove the Newark slots as collateral with no replacement collateral required.

The fleet service, passenger service, storekeeper and other employees represented by the IAM ratified seven new contracts with the Company which extended the contracts through 2021. ~~The~~During the three and six months ended June 30, 2016, the Company recorded ~~a $100~~$10 million ($646 million net of taxes) and $110 million ($70 million net of taxes), respectively, of special ~~charge~~charges primarily for bonus payments to be made in conjunction with the ratification of these contracts.

During the three and six months ended ~~March 31,~~June 30, 2016, the Company recorded $6 million ($4 million net of taxes) and $14 million ($9 million net of taxes), respectively, of severance and benefit costs. During the three and six months ended June 30, 2015, the Company recorded $25 million and $75 million, respectively, of severance and benefit costs. The severance and benefit costs primarily related to a voluntary early-out program for its flight attendants. In 2014, more than 2,500 flight attendants elected to voluntarily separate from the Company and will receive a severance payment, with a maximum value of $100,000 per participant, based on years of service, with retirement dates through the end of 2016.

During the six months ended June 30, 2016, the City of Cleveland agreed to amend the lease, which runs through 2029, associated with certain excess airport terminal space (principally Terminal D) and related facilities at Hopkins International ~~Airport (“Cleveland”).~~Airport. The Company recorded an accrual for remaining payments under the lease for facilities that the Company no longer uses and will continue to incur costs under the lease without economic benefit to the Company. This liability was measured and recorded at its fair value when the Company ceased its right to use such facilities leased to it pursuant to the lease. The Company ~~reduced its flight operations at Cleveland in 2014 and had been evaluating its options for the excess space. The Company~~ recorded a net charge of $74 million ($47 million net of taxes) related to the amended lease.

During the three and six months ended ~~March 31,~~June 30, 2016, the Company recorded gains and ~~2015,~~losses on sale of assets and other special charges of $6 million ($4 million net of taxes) and $14 million ($9 million net of taxes), respectively.

During the six months ended June 30, 2016, the Company recorded $8 million ($5 million net of taxes) and $50 million, respectively, of severance and benefit costs primarily related to a voluntary early-out program for its flight attendants. In 2014, more than 2,500 flight attendants elected to voluntarily separate from the Company and will receive a severance payment, with a maximum value of $100,000 per participant, based on years of service, with retirement dates through the end of 2016.

~~During the three months ended March 31, 2016, the Company recorded $8 million~~ of losses due to exchange rate changes in Venezuela applicable to funds held in local ~~currency.~~currency, and the Company recorded a $9 million ($6 million net of taxes) gain on the sale of an affiliate.

During the three and six months ended June 30, 2015, the Company recorded $30 million and $44 million, respectively, for integration costs, impairment of assets and other special gains and losses.

During the three and six months ended ~~March 31,~~June 30, 2015, the Company recorded ~~$18~~$128 million ~~of integration-related charges, $5~~and $134 million, ~~of other charges, and approximately $9 million of gains on the sale of assets.~~

~~During the three months ended March 31, 2015, the Company recorded $6 million~~respectively, of losses as part of Nonoperating income (expense): Miscellaneous, net due to the write-off of the unamortized non-cash debt discount related to the ~~redemption~~extinguishment of the 6% Notes due 2026 and 6% Notes ~~and 2028 Notes.~~due 2028.

In April 2016, the Federal Aviation Administration (“FAA”) announced that it will designate Newark Liberty International Airport (“Newark”) as a Level 2 schedule-facilitated airport under the International Air Transport Association Worldwide Slot Guidelines effective October 30, 2016. Newark is currently designated as a Level 3 slot-controlled airport. The Company is evaluating the impact, if any, of the change in designation on its $412 million intangible asset related to its Newark slots. Further, the Newark slots serve as part of the collateral for the term loans under the Credit Agreement and under the security agreements related to the Second Amended and Restated Co-Branded Card Marketing Services Agreement with Chase Bank USA, N.A.~~The Company is evaluating the impact of the FAA’s action on the Newark slot collateral for the term loans and to the extent necessary, the Company will substitute other collateral.~~

The accrual balance for severance and benefits was ~~$29~~$30 million as of ~~March 31,~~June 30, 2016, compared to ~~$96~~$104 million as of ~~March 31,~~June 30, 2015. The severance-related accrual as of ~~March 31,~~June 30, 2016 is expected to be mostly paid through 2016. The following is a reconciliation of severance accrual activity for the period:

United Continental 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 Company transports people and cargo through its mainline operations, which utilize jet aircraft with at least 118 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. UAL, through United and its regional carriers, operates ~~an average of 5,000~~more than 4,500 flights a day to ~~336~~339 airports across ~~six~~five continents.

The Company expects full-year 2016 consolidated capacity to increase between 1.0% and ~~2.0%~~1.5% year-over-year.

The Company expects ~~full year 2016~~to drive $3.1 billion of incremental value by 2018. United anticipates to capture this value through benefits from improved operations by focusing on re-attracting premium customers, reducing cost ~~per available~~of irregular operations, reducing re-accommodations and improving schedule quality. In addition, the Company will introduce new products to its industry-leading existing portfolio of products such as our recently announced Polaris business class seats and enhance revenue through various MileagePlus program initiatives. Finally, the Company plans to improve its costs structure through an upgauge and slimline seat ~~mile (“CASM”) excluding profit sharing, third-party business expense, fuel~~program and special charges to be up between 2.0% and 3.0% year-over-year. Second quarter 2016 pre-tax margin is expected to be between 13.0% and 15.0%, excluding special charges. We are unable to project CASM or pre-tax margin on a GAAP basis, as defined below, as the nature and amount of special charges are not determinable at this time.ongoing sensible cost management.

In the first quarter of 2016, United reached contract extensions with its pilots and ~~dispatchers, and in April 2016,~~dispatchers. In the second quarter, United also reached amended collective bargaining agreements with its Int’l Association of Machinists and Aerospace Workers (“IAM”) represented employees and ~~continues to negotiate in mediation~~reached a tentative agreement for a joint flight attendant collective bargaining ~~agreement and~~agreement. United continues to negotiate in mediation for a joint technician and related employees’ collective bargaining agreement. The cost associated with the ratification of the pilots’ agreement, ~~added~~the dispatchers and the IAM will add an additional approximate 1.5 points of non-fuel unit costs infor full-year 2016, primarily due to the ~~first-quarter~~pilots’ agreement, and ~~full-year 2016. There is no material impact to~~will add an additional approximate 0.75 points of non-fuel unit costs ~~in 2016 associated with~~for full-year 2017, primarily due to the ~~ratification of the dispatchers’ or IAM’s respective agreements.~~IAM agreement. The Company cannot predict the outcome of ongoing and future negotiations with its unionized employee ~~groups, although significant~~groups. Significant increases in the pay and benefits resulting from new collective bargaining agreements would have a material financial impact on the Company.

~~Since the summer of 2014, the~~The price of jet fuel ~~declined and~~ remains volatile. Based on projected fuel consumption in 2016, a one dollar change in the price of a barrel of crude oil would change the Company’s annual fuel expense by approximately $93 million. To protect against increases in the prices of aircraft fuel, the Company may hedge a portion of its future fuel requirements.

The following discussion provides an analysis of results of operations and reasons for material changes therein for the three months ended ~~March 31,~~June 30, 2016 as compared to the corresponding period in 2015. See “Reconciliation of GAAP to Non-GAAP Financial Measures” at the end of this item for additional information related to accounting principles generally accepted in the United States (“GAAP”) and Non-GAAP financial measures used in this report.

The Company recorded net income of ~~$313~~$588 million in the ~~first~~second quarter of 2016 as compared to net income of ~~$508 million~~$1.2 billion in the ~~first~~second quarter of 2015. ~~First~~Second quarter 2016 net income reflects ~~$181~~$343 million of income tax expense primarily due to the release of the income tax valuation allowance in the third quarter of 2015. Excluding special charges and with Hedge Program Adjustments, the Company had net income of $435 million in the first quarter of 2016 as compared to net income of $582 million in the first quarter of 2015. The Company considers a key measure of its performance to be operating income, which was ~~$649 million~~$1.1 billion for the ~~first~~second quarter of 2016, as compared to ~~$741 million~~$1.4 billion for the ~~first~~second quarter of 2015, a ~~$92~~$385 million decrease year-over-year. Significant components of the Company’s operating results for the three months ended ~~March 31~~June 30 are as follows (in millions, except percentage changes):


	2016			2015			Increase (Decrease)			% Increase (Decrease)			2016			2015			Increase (Decrease)			% Increase (Decrease)
Operating revenue	$	8,195		$	8,608		$	(413	)		(4.8	)	$	9,396		$	9,914		$	(518	)		(5.2	)
Operating expense		7,546			7,867			(321	)		(4.1	)		8,336			8,469			(133	)		(1.6	)

Operating income		649			741			(92	)		(12.4	)		1,060			1,445			(385	)		(26.6	)
Nonoperating expense		(155	)		(230	)		(75	)		(32.6	)		(129	)		(248	)		(119	)		(48.0	)
Income tax expense		181			3			178			NM			343			4			339			NM

Net income	$	313		$	508		$	(195	)		(38.4	)	$	588		$	1,193		$	(605	)		(50.7	)

Certain consolidated statistical information for the Company’s operations for the three months ended ~~March 31~~June 30 is as follows:


	2016		2015		Increase (Decrease)			% Increase (Decrease)			2016		2015		Increase (Decrease)			% Increase (Decrease)
Passengers (thousands) (a)		32,087		31,522		565			1.8			36,416		36,231		185			0.5
Revenue passenger miles (“RPMs”) (millions) (b)		46,582		46,444		138			0.3			54,017		54,289		(272	)		(0.5	)
Available seat miles (“ASMs”) (millions) (c)		58,273		57,269		1,004			1.8			64,725		64,685		40			0.1
Passenger load factor (d)		79.9 %		81.1 %		(1.2	)		N/A			83.5 %		83.9 %		(0.4) pts.			N/A
Passenger revenue per available seat mile (“PRASM”) (cents)		12.00		12.96		(0.96	)		(7.4	)		12.52		13.41		(0.89	)		(6.6	)
Average yield per revenue passenger mile (“Yield”) (cents) (e)		15.01		15.98		(0.97	)		(6.1	)		15.00		15.98		(0.98	)		(6.1	)
CASM (cents)		12.95		13.74		(0.79	)		(5.7	)
Cost per available seat mile (“CASM”) (cents)												12.88		13.09		(0.21	)		(1.6	)
Average price per gallon of fuel, including fuel taxes	$	1.37	$	2.08	$	(0.71	)		(34.1	)	$	1.44	$	2.10	$	(0.66	)		(31.4	)
Fuel gallons consumed (millions)		890		896		(6	)		(0.7	)		995		1,004		(9	)		(0.9	)
Average full-time equivalent employees		82,500		81,700		800			1.0			83,200		82,300		900			1.1

(e) The average passenger revenue received for each revenue passenger mile flown.

The table below shows year-over-year comparisons by type of operating revenue for the three months ended ~~March 31~~June 30 (in millions, except for percentage changes):


	2016		2015		Increase (Decrease)			% Change			2016		2015		Increase (Decrease)			% Change
Passenger—Mainline	$	5,577	$	5,938	$	(361	)		(6.1	)	$	6,525	$	6,961	$	(436	)		(6.3	)
Passenger—Regional		1,413		1,482		(69	)		(4.7	)		1,578		1,715		(137	)		(8.0	)

Total passenger revenue		6,990		7,420		(430	)		(5.8	)		8,103		8,676		(573	)		(6.6	)
Cargo		194		242		(48	)		(19.8	)		208		229		(21	)		(9.2	)
Other operating revenue		1,011		946		65			6.9			1,085		1,009		76			7.5

	$	8,195	$	8,608	$	(413	)		(4.8	)	$	9,396	$	9,914	$	(518	)		(5.2	)

The table below presents selected ~~first~~second quarter passenger revenue and operating data, broken out by geographic region, expressed as year-over-year changes:


	Domestic		Pacific		Atlantic		Latin		Total Mainline		Regional		Consolidated		Domestic		Atlantic		Pacific		Latin		Total Mainline		Regional		Consolidated
Increase (decrease) from 2015:
Passenger revenue (in millions)	$	(83)	$	(107)	$	(141)	$	(30)	$	(361)	$	(69)	$	(430)	$	(130)	$	(129)	$	(95)	$	(82)	$	(436)	$	(137)	$	(573)
Passenger revenue		(2.8)%		(10.1)%		(11.9)%		(4.0)%		(6.1)%		(4.7)%		(5.8)%		(3.7)%		(7.9)%		(8.6)%		(11.8)%		(6.3)%		(8.0)%		(6.6)%
Average fare per passenger		(7.0)%		(7.9)%		(4.0)%		(15.9)%		(9.9)%		(1.4)%		(7.5)%		(8.0)%		(5.0)%		(6.8)%		(13.1)%		(9.1)%		(2.9)%		(7.1)%
Yield		(4.3)%		(7.8)%		(4.1)%		(15.1)%		(6.5)%		(3.7)%		(6.1)%		(4.7)%		(4.8)%		(8.0)%		(13.5)%		(6.2)%		(4.2)%		(6.1)%
PRASM		(5.5)%		(9.4)%		(8.9)%		(14.5)%		(8.0)%		(4.1)%		(7.4)%		(4.6)%		(10.3)%		(7.6)%		(10.5)%		(6.9)%		(3.4)%		(6.6)%
Passengers		4.5 %		(2.4)%		(8.2)%		14.2 %		4.2 %		(3.3)%		1.8 %		4.7 %		(3.1)%		(1.9)%		1.5 %		3.1 %		(5.2)%		0.5 %
RPMs (traffic)		1.6 %		(2.5)%		(8.2)%		13.0 %		0.5 %		(1.0)%		0.3 %		1.1 %		(3.2)%		(0.7)%		2.0 %		— %		(4.0)%		(0.5)%
ASMs (capacity)		2.8 %		(0.8)%		(3.3)%		12.3 %		2.1 %		(0.5)%		1.8 %		0.9 %		2.7 %		(1.1)%		(1.5)%		0.7 %		(4.8)%		0.1 %
Passenger load factor (points)		(1.0)		(1.4)		(3.7)		0.5		(1.2)		(0.4)		(1.2)		0.2		(4.6)		0.3		2.8		(0.6)		0.7		(0.4)

Consolidated passenger revenue in the second quarter of 2016 decreased 6.6% as compared to the year-ago period primarily due to a decrease in consolidated yield of 6.1% year-over-year. Yields were impacted by a strong U.S. dollar, lower surcharges, travel reductions from customers impacted by declining oil prices, competitive actions and higher yielding demand not keeping pace with industry capacity.

Cargo revenue decreased $21 million, or 9.2%, in the second quarter of 2016 as compared to the year-ago period due to lower freight yields, partially offset by higher freight volume year-over-year. Yields were negatively impacted as air freighter competitors increased capacity in response to lower fuel prices.

Other operating revenue in the second quarter of 2016 increased $76 million, or 7.5%, as compared to the year-ago period primarily due to the impact of the Second Amended and Restated Co-Branded Card Marketing Services Agreement with Chase Bank USA, N.A. (the “Chase Agreement”), which became effective in the third quarter of 2015.

The table below includes data related to the Company’s operating expenses for the three months ended June 30 (in millions, except for percentage changes):

Salaries and related costs increased $138 million, or 5.6%, in the second quarter of 2016 as compared to the year-ago period primarily due to higher pay rates and benefit expenses driven by the extension of current collective bargaining agreements, an increase in employee incentive expenses due to improvements in operational performance and a 1.1% increase in average full-time equivalent employees.

Aircraft fuel expense decreased $669 million, or 31.8%, year-over-year primarily due to a 31.4% decrease in the average price per gallon of aircraft fuel in the second quarter of 2016 compared to the year-ago period. Second quarter 2016 fuel expense includes the benefit of a $20 million fuel tax refund. The table below presents the significant changes in aircraft fuel cost per gallon in the three month period ended June 30, 2016 as compared to the year-ago period:

Regional capacity purchase decreased $32 million or 5.5%, in the second quarter of 2016 as compared to the year-ago period primarily due to a decrease in regional capacity and a decrease in one-time start-up and exit costs, partially offset by an increase in Embraer 170 maintenance costs and certain contractual rate increases.

Depreciation and amortization increased $46 million, or 10.3%, in the second quarter of 2016 as compared to the year-ago period primarily due to additions of new aircraft, conversions of operating leases to capital leases, aircraft improvements, and accelerated depreciation of certain assets related to several fleet types.

Details of the Company’s special charges include the following for the three months ended June 30 (in millions):

See Note 10 to the financial statements included in Part I, Item 1 of this report for additional information.

Nonoperating Income (Expense).The following table illustrates the year-over-year dollar and percentage changes in the Company’s nonoperating income (expense) for the three months ended June 30 (in millions, except for percentage changes):

In the second quarter of 2016, Miscellaneous, net did not include any gains or losses from derivatives not qualifying for hedge accounting as compared to gains of $41 million in the year-ago period. Foreign currency losses were approximately $12 million in the second quarters of 2016 and 2015. Second quarter 2016 Miscellaneous, net includes a $9 million special gain on the sale of an affiliate. Second quarter 2015 Miscellaneous, net includes a $128 million special charge related to the write off of unamortized non-cash debt discounts for the early redemption of the 6% Notes due 2026 (the “2026 Notes”) and the 6% Notes due 2028 (the “2028 Notes”). See Note 10 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 additional information related to income taxes.

The Company recorded net income of $901 million in the first six months of 2016 as compared to net income of $1.7 billion in the first six months of 2015. The first six months 2016 net income reflects $524 million of income tax expense primarily due to the release of the income tax valuation allowance in the third quarter of 2015. The Company considers a key measure of its performance to be operating income, which was $1.7 billion for the first six months of 2016, as compared to $2.2 billion for the first six months of 2015, a $0.5 billion decrease year-over-year. Significant components of the Company’s operating results for the six months ended June 30 are as follows (in millions, except percentage changes):

Certain consolidated statistical information for the Company’s operations for the six months ended June 30 is as follows:

(e) The average passenger revenue received for each revenue passenger mile flown.

The table below shows year-over-year comparisons by type of operating revenue for the six months ended June 30 (in millions, except for percentage changes):

The table below presents selected passenger revenue and operating data, broken out by geographic region, expressed as year-over-year changes for the six months ended June 30, 2016 compared to the six months ended June 30, 2015:

Consolidated passenger revenue in the first ~~quarter~~six months of 2016 decreased ~~5.8%~~6.2% as compared to the year-ago period due to a decrease in consolidated yield of 6.1% year-over-year. Yields were impacted by a ~~competitive domestic fare environment, unfavorable foreign currency results due to the strengthening of the~~strong U.S. dollar, ~~international surcharge declines~~lower surcharges, travel reductions from customers impacted by declining oil prices, competitive actions and ~~a larger than anticipated decrease in close-in business travel during the weeks surrounding the Easter holiday and spring break.~~higher yielding demand not keeping pace with industry capacity. The decline in yields was partially offset by a ~~0.3% and 1.8%~~0.9% year-over-year increase in ~~traffic and capacity, respectively.~~capacity.

Cargo revenue decreased ~~$48~~$69 million or ~~19.8%~~14.6%, in the first ~~quarter~~six months of 2016 as compared to the year-ago period due to lower freight yields ~~partially offset by higher freight~~ and lower mail volumes year-over-year. ~~Yields~~Freight yields were negatively impacted as air freighter competitors increased capacity in response to lower fuel prices. Another contributing factor to the year-over-year decrease was a U.S. West Coast port labor dispute that helped increase air freight results in the first quarter of 2015. The labor dispute was resolved during the first quarter of 2015.

Other operating revenue in the first ~~quarter~~six months of 2016 increased ~~$65~~$141 million or ~~6.9%~~7.2%, as compared to the year-ago period primarily due to the impact of the ~~Second Amended and Restated Co-Branded Card Marketing Services~~Chase Agreement, ~~with Chase Bank USA, N.A.,~~ which became effective in the third quarter of 2015.

The table below includes data related to the Company’s operating expenses for the ~~three~~six months ended ~~March 31~~June 30 (in millions, except for percentage changes):


	2016		2015		Increase (Decrease)		% Change		2016		2015		Increase (Decrease)		% Change
Salaries and related costs	$	2,490	$	2,301	$	189		8.2	$	5,082	$	4,755	$	327		6.9
Aircraft fuel		1,218		1,864		(646)		(34.7)		2,655		3,970		(1,315)		(33.1)
Regional capacity purchase										1,073		1,153		(80)		(6.9)
Landing fees and other rent		525		543		(18)		(3.3)		1,066		1,096		(30)		(2.7)
Regional capacity purchase		522		570		(48)		(8.4)
Depreciation and amortization		479		429		50		11.7		970		874		96		11.0
Aircraft maintenance materials and outside repairs		402		397		5		1.3		850		828		22		2.7
Distribution expenses		303		312		(9)		(2.9)		642		660		(18)		(2.7)
Aircraft rent		178		201		(23)		(11.4)		353		395		(42)		(10.6)
Special charges		190		64		126		NM		624		119		505		NM
Other operating expenses		1,239		1,186		53		4.5		2,567		2,486		81		3.3

	$	7,546	$	7,867	$	(321)		(4.1)	$	15,882	$	16,336	$	(454)		(2.8)

Salaries and related costs increased ~~$189~~$327 million or ~~8.2%~~6.9%, in the first ~~quarter~~six months of 2016 as compared to the year-ago period primarily due to higher pay rates and benefit expenses driven by the extension of ~~the~~ current collective bargaining ~~agreement with the pilots,~~agreements, an increase in ~~profit sharing primarily~~employee incentive expenses due to ~~increased profitability~~improvements in operational performance and a 1.0% increase in average full-time equivalent employees.

Aircraft fuel expense decreased ~~$646 million,~~$1.3 billion or ~~34.7%~~33.1%, year-over-year primarily due to a ~~34.1%~~32.5% decrease in the average price per gallon of aircraft fuel in the first ~~quarter~~six months of 2016 compared to the year-ago period. 2016 fuel expense includes the benefit of a $20 million fuel tax refund. The table below presents the significant changes in aircraft fuel cost per gallon in the ~~three month period~~six months ended ~~March 31,~~June 30, 2016 as compared to the year-ago period:


	(In millions)						Average price per gallon						(In millions)						Average price per gallon
	2016		2015		% Change		2016		2015		% Change		2016		2015		% Change		2016		2015		% Change
Total aircraft fuel purchase cost excluding fuel hedge impacts	$	1,080	$	1,703		(36.6)	$	1.21	$	1.90		(36.3)	$	2,482	$	3,691		(32.8)	$	1.32	$	1.94		(32.0)
Hedge losses reported in fuel expense		(138)		(161)		NM		(0.16)		(0.18)		NM		(173)		(279)		NM		(0.09)		(0.15)		NM

Fuel expense as reported		1,218		1,864		(34.7)		1.37		2.08		(34.1)	$	2,655	$	3,970		(33.1)	$	1.41	$	2.09		(32.5)
Cash paid on settled hedges that did not qualify for hedge accounting		(5)		(39)		NM		—		(0.04)		NM

Fuel expense including all gains (losses) from settled hedges	$	1,223	$	1,903		(35.7)	$	1.37	$	2.12		(35.4)

Total fuel consumption (gallons)		890		896		(0.7)								1,885		1,900		(0.8)

Regional capacity purchase decreased ~~$48~~$80 million or ~~8.4%~~6.9%, in the first ~~quarter~~six months of 2016 as compared to the year-ago period primarily due to a decrease in regional capacity and a decrease in one-time start-up and exit ~~costs and timing of pass-through maintenance~~ costs, partially offset by contractual rate increases.

Depreciation and amortization increased ~~$50~~$96 million or ~~11.7%~~11.0%, in the first ~~quarter~~six months of 2016 as compared to the year-ago period primarily due to additions inof new aircraft, ~~aircraft improvements and~~ conversions of operating leases to capital ~~leases.~~

~~Aircraft rent decreased $23 million, or 11.4%, in the first quarter~~leases, aircraft improvements, and accelerated depreciation of ~~2016 as compared~~certain assets related to ~~the year-ago period primarily due to the purchase or capital lease conversion of~~ several ~~operating leased aircraft, lower lease renewal rates for certain aircraft and lease expirations.~~fleet types.

Details of the Company’s special charges include the following for the ~~three~~six months ended ~~March 31~~June 30 (in millions):


	2016		2015		2016		2015
Impairment of intangible asset related to Newark slots					$	412	$	—
Labor agreement costs	$	100	$	—		110		—
Cleveland airport lease restructuring		74		—		74		—
Severance and benefit costs		8		50		14		75
(Gains) losses on sale of assets and other special charges		8		14		14		44

Special charges	$	190	$	64	$	624	$	119

See Note 10 to the financial statements included in Part I, Item 1 of this report for additional information.

Other operating expenses increased $53 million, or 4.5%, in the first quarter of 2016 as compared to the year-ago period primarily due to food and technology costs associated with the Company’s enhanced customer experience initiatives, increases in ground handling costs due to higher rates at certain stations, and rate-driven increases in personnel-related expenses.

Nonoperating Income (Expense).The following table illustrates the year-over-year dollar and percentage changes in the Company’s nonoperating income (expense) for the ~~three~~six months ended ~~March 31~~June 30 (in millions, except for percentage changes):


	2016		2015		Increase (Decrease)		% Change		2016		2015		Increase (Decrease)		% Change
Interest expense	$	(159)	$	(173)	$	(14)		(8.1)	$	(316)	$	(340)	$	(24)		(7.1)
Interest capitalized		14		12		2		16.7		28		25		3		12.0
Interest income		8		5		3		60.0		17		11		6		54.5
Miscellaneous, net		(18)		(74)		(56)		(75.7)		(13)		(174)		(161)		(92.5)

Total	$	(155)	$	(230)	$	(75)		(32.6)	$	(284)	$	(478)	$	(194)		(40.6)

In the first ~~quarter~~six months of 2016, Miscellaneous, net did not include any gains or losses from derivatives not qualifying for hedge accounting as compared to losses of ~~$43~~$2 million in the year-ago period. Foreign currency losses were approximately ~~$15~~$27 million and ~~$26~~$36 million in the first ~~quarters~~six months of 2016 and 2015, respectively. ~~The~~Foreign currency results in 2016 ~~foreign currency loss includes~~include $8 million of losses due to exchange rate changes in Venezuela applicable to funds held in local currency. Miscellaneous, net for 2016 includes a $9 million gain on the sale of an affiliate. Miscellaneous, net for the first six months of 2015 includes a $134 million special charge related to the write off of unamortized non-cash debt discounts for the early redemption of the 2026 Notes and the 2028 Notes. See Note 10 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 additional information related to income taxes.

As of ~~March 31,~~June 30, 2016, the Company had ~~$4.0~~$4.7 billion in unrestricted cash, cash equivalents and short-term investments, as compared to $5.2 billion at December 31, 2015. At ~~March 31,~~June 30, 2016, the Company also had ~~$180~~$167 million of restricted cash and cash equivalents, which is primarily collateral for performance bonds, letters of credit, estimated future workers’ compensation claims and credit card processing agreements. As of ~~March 31,~~June 30, 2016, the Company had its entire commitment capacity of $1.35 billion under the revolving credit facility of the Company’s 2013 Credit and Guaranty Agreement (the “Credit Agreement”) available for letters of credit or borrowings.

As is the case with many of our principal competitors, we have a high proportion of debt compared to capital and a deficit in working capital. We have a significant amount of fixed obligations, including debt, aircraft leases and financings, leases of airport property and other facilities, and pension funding obligations. At ~~March 31,~~June 30, 2016, the Company had approximately ~~$11.6~~$11.4 billion of debt and capital lease obligations, including $1.4 billion that will become due in the next 12 months. In addition, we have substantial noncancelable commitments for capital expenditures, including the acquisition of new aircraft and related spare engines. As of ~~March 31,~~June 30, 2016, our current liabilities exceeded our current assets by approximately ~~$6.2~~$6.1 billion. However, approximately ~~$7.1~~$7.5 billion of our current liabilities are related to our Advance ticket sales and Frequent flyer deferred revenue, both of which largely represent revenue to be recognized for travel in the near future and not actual cash outlays. The deficit in working capital does not have an adverse impact to our cash flows, liquidity or operations.

~~The Company will continue to evaluate opportunities to prepay its debt, including open market repurchases, to reduce its indebtedness and related interest.~~

As of ~~March 31,~~June 30, 2016, United had firm commitments and options to purchase aircraft from The Boeing Company (“Boeing”), Embraer S.A. (“Embraer”) and Airbus S.A.S. (“Airbus”) presented in the table below:

As of ~~March 31,~~June 30, 2016, United has secured backstop financing commitments from certain of its aircraft manufacturers for a limited number of its future aircraft deliveries, subject to certain customary conditions. Financing may be necessary to satisfy the Company’s capital commitments for its firm order aircraft and other related capital expenditures. See Note 9 to the financial statements included in Part I, Item 1 of this report for additional information on aircraft financing.

As of ~~March 31,~~June 30, 2016, UAL and United have total capital commitments primarily related to the acquisition of aircraft and related spare engines, aircraft improvements and acquisition of information technology services and assets of approximately ~~$23.2~~$23.7 billion, of which approximately ~~$2.9~~$2.3 billion, ~~$3.9~~$4.3 billion, ~~$3.9~~$4.3 billion, ~~$3.2~~$3.3 billion, ~~$2.4~~$2.6 billion and $6.9 billion are due in the last ~~nine~~six months of 2016 and for the full year for 2017, 2018, 2019, 2020 and thereafter, respectively. Any new firm aircraft orders, including through the exercise of purchase options and purchase rights, will increase the total future capital commitments of the Company.

As of ~~March 31,~~June 30, 2016, a substantial portion of the Company’s assets, principally aircraft, route authorities, airport slots and loyalty program intangible assets, was pledged under various loan and other agreements. We must sustain our profitability and/or access the capital markets to meet our significant long-term debt and capital lease obligations and future commitments for capital expenditures, including the acquisition of aircraft and related spare engines.

Credit Ratings.As of the filing date of this report, UAL and United had the following corporate credit ratings:

These credit ratings are below investment grade levels. Downgrades from these rating levels, among other things, could restrict the availability or increase the cost of future financing for the Company.

Operating Activities.Cash flow provided by operations for the ~~three~~six months ended ~~March 31,~~June 30, 2016 was ~~$1.2~~$3.7 billion compared to ~~$1.8~~$3.6 billion in the same period in 2015. ~~The decrease is primarily attributable to differences in working capital changes in~~Net income for the first ~~quarter~~six months of 2016 decreased $0.8 billion versus the ~~prior year. The following were significant working capital~~year-ago period. However, net income in 2016 includes $0.9 billion more in non-cash expenses versus the year-ago period. Significant non-cash items in ~~2016: Cash flows decreased as~~2016 include the ~~company paid approximately $0.7~~$0.4 billion ~~in profit sharing to qualified employees in 2016 (as compared to approximately $0.2~~impairment of the Newark slots and $0.5 billion ~~in 2015). Further, credit card receivables increased by approximately $0.2 billion as a result~~ of ~~a temporary cash transfer issue with a credit card company, which was resolved in April 2016.~~income tax expense. Frequent flyer deferred revenue and advanced purchase of miles decreased by approximately ~~$0.1~~$0.2 billion due to increased utilization of pre-purchased miles. ~~These decreases from~~Other changes in working capital items were ~~partially offset by $0.1~~largely offsetting in the first six months of 2016 versus the first six months of 2015. Significant cash payments in 2016 included $0.7 billion in ~~lower~~profit sharing and $0.2 billion in pension ~~obligation~~ funding.

Investing Activities.Capital expenditures were ~~$0.8~~$1.7 billion and ~~$0.2~~$1.3 billion in the ~~three~~six months ended ~~March 31,~~June 30, 2016 and 2015, respectively. Capital expenditures for the ~~three~~six months ended ~~March 31,~~June 30, 2016 were primarily attributable to the purchase of aircraft, facility and fleet-related costs. In addition to capital expenditures during the ~~three~~six months ended ~~March 31,~~June 30, 2016, we acquired one aircraft through the issuance of debt. In June 2015, through a wholly-owned subsidiary, we invested $100 million for an ownership stake of approximately five percent in Azul Linhas Aereas Brasileiras S.A., Brazil’s third-largest airline, which provides a range of customer benefits including codesharing of flights (subject to government approval), joint loyalty-program participation and expanded connection opportunities on routes between the U.S. and Brazil, a key market for United, in addition to other points in North and South America.

Financing Activities.During the ~~three~~six months ended ~~March 31,~~June 30, 2016, the Company made debt and capital lease payments of ~~$261~~$519 million.

In ~~January~~the second quarter of 2016, United completed an enhanced equipment trust certificates (“EETC”) offering for a total principal amount of $1.1 billion. United had not received any of the proceeds and accordingly had not recorded any debt related to the EETC offering as of June 30, 2016. United expects to receive all proceeds from the pass-through trusts by the end of the first quarter of 2017. See Note 9 to the financial statements included in Part I, Item 1 of this report for additional information on EETC pass-through trusts.

In the first quarter of 2015, the holders of substantially all of the remaining $202 million principal amount of United’s 4.5% Convertible Notes due 2015 exercised their conversion option resulting in the issuance of 11 million shares of UAL common stock.

In the first quarter of 2015, UAL used cash to repurchase $18 million par value 6%2026 Notes ~~due 2026 (the “2026 Notes”)~~ in market transactions. On April 1, 2015, UAL used cash to redeem, at par, the remaining $303 million balance of the 2026 Notes.

In the first quarter of 2015, UAL used cash to repurchase $13 million par value 6%2028 Notes ~~due 2028 (the “2028 Notes”)~~ in market transactions. On May 1, 2015, UAL used cash to redeem, at par, the remaining $298 million balance of the 2028 Notes.

In the first ~~quarter~~six months of 2015, United issued ~~$0.7~~$0.9 billion of debt related to a 2014 ~~enhanced equipment trust certificates~~EETC offering to finance new aircraft.

As of ~~March 31,~~June 30, 2016, United had its entire capacity of $1.35 billion available under the revolving credit facility of the Company’s Credit Agreement. See Note 11 in the Annual Report on Form 10-K for the year ended December 31, 2015 (the “2015 Annual Report”) for additional information on the terms of the Credit Agreement.

The obligations of United under the Credit Agreement are secured by liens on certain international route authorities between certain specified cities, certain take-off and landing rights and related assets of United. Certain covenants in the Credit Agreement and in the Company’s indentures are summarized in Note 11 of the 2015 Annual Report. The Company was in compliance with all of these covenants as of ~~March 31,~~June 30, 2016.

Share Repurchase ~~Program.~~Programs.In the three and six months ended ~~March 31,~~June 30, 2016, UAL repurchased 2715 million and 42 million shares of UAL common stock in open market transactions, respectively, for ~~$1.5~~$694 million and $2.2 billion, ~~of which $0.1 billion settled in April 2016.~~respectively. As of ~~March 31,~~June 30, 2016, the Company had ~~$948~~$255 million remaining to purchase shares under its 2015 $3 billion share repurchase authorization.

In July 2016, UAL’s Board of Directors authorized a new $2 billion share repurchase program to acquire UAL’s common stock.

UAL may repurchase shares through the ~~2015 Program. The Company expects~~open market, privately negotiated transactions, block trades or accelerated share repurchase transactions from time to ~~complete its repurchases under the 2015 Program by September 30, 2016.~~time in accordance with applicable securities laws. UAL will repurchase shares of UAL common stock subject to prevailing market conditions, and may discontinue such repurchases at any time. See Part II, Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds” of this report for additional information.

Commitments, Contingencies and Liquidity Matters.As described in the 2015 Annual Report, the Company’s liquidity may be adversely impacted by a variety of factors, including, but not limited to, obligations associated with fuel hedge settlements and related collateral requirements, pension funding obligations, reserve requirements associated with credit card processing agreements, guarantees, commitments and contingencies.

See the 2015 Annual Report and Notes 5, 7, 8 and 9 to the financial statements contained in Part I, Item 1 of this report for additional information.

~~Other.~~In April 2016, the Federal Aviation Administration (“FAA”) announced that it will designate Newark Liberty International Airport (“Newark”) as a Level 2 schedule-facilitated airport under the International Air Transport Association Worldwide Slot Guidelines effective October 30, 2016. Newark is currently designated as a Level 3 slot-controlled airport. The Company is evaluating the impact, if any, of the change in designation on its $412 million intangible asset related to its Newark slots. Further, the Newark slots serve as part of the collateral for the term loans under the Credit Agreement and under the Second Amended and Restated Co-Branded Card Marketing Services Agreement with Chase Bank USA, N.A.~~The Company is evaluating the impact of the FAA’s action on the Newark slot collateral for the term loans and to the extent necessary, the Company will substitute other collateral.~~

The Company evaluates its financial performance utilizing various GAAP and Non-GAAP financial measures, including CASM and Non-GAAP net income (net income excluding special charges and reflecting Hedge Program Adjustments). CASM is a common metric used in the airline industry to measure an airline’s cost structure and efficiency. The Non-GAAP financial measures in this report are presented because they provide management and investors the ability to measure and monitor the

Company’s performance on a consistent basis. The Company believes that adjusting for special charges is useful to investors because they are nonrecurring charges not indicative of UAL’s ongoing performance. In addition, the Company believes that reflecting Hedge Program Adjustments is useful because the adjustments allow investors to better understand the cash impact of settled fuel derivative contracts in a given period. Reconciliations of net income and diluted earnings per share to the Non-GAAP financial measures of net income and diluted earnings per share, excluding special charges and reflecting Hedge Program Adjustments, for the three months ended March 31 are as follows in the tables below (in millions, except per share amounts):

~~(a) See Note 10 to the financial statements included in Part I, Item 1 of this report for additional information related to special charges, net.~~

See “Critical Accounting Policies” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2015 Annual Report for a discussion of the Company’s critical accounting policies.

Certain statements throughout Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this report are forward-looking and thus reflect our current expectations and beliefs with respect to certain future events and anticipated financial and operating performance. Such forward-looking statements are and will be subject to many risks and uncertainties relating to our operations and business environment that may cause actual results to differ materially from any future results expressed or implied in such forward-looking statements. Words such as “expects,” “will,” “plans,” “anticipates,” “indicates,” “believes,” “forecast,” “guidance,” “outlook,” “goals” and similar expressions are intended to identify forward-looking statements.

Additionally, forward-looking statements include statements that do not relate solely to historical facts, such as statements which identify uncertainties or trends, discuss the possible future effects of current known trends or uncertainties, or which indicate that the future effects of known trends or uncertainties cannot be predicted, guaranteed or assured. All forward-looking statements in this report are based upon information available to us on the date of this report. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, except as required by applicable law.

Our actual results could differ materially from these forward-looking statements due to numerous factors including, without limitation, the following: our ability to comply with the terms of our various financing arrangements; the costs and availability of financing; its ability to maintain adequate liquidity; our ability to execute our operational plans and revenue-generating initiatives, including optimizing its revenue; our ability to control our costs, including realizing benefits from our resource

optimization efforts, cost reduction initiatives and fleet replacement programs; our ability to utilize our net operating losses; our ability to attract and retain customers; demand for transportation in the markets in which we operate; an outbreak of a disease that affects travel demand or travel behavior; demand for travel and the impact that global economic conditions have on customer travel patterns; excessive taxation and the inability to offset future taxable income; general economic conditions (including interest rates, foreign currency exchange rates, investment or credit market conditions, crude oil prices, costs of

aircraft fuel and energy refining capacity in relevant markets); economic and political instability and other risks of doing business globally; its ability to cost-effectively hedge against increases in the price of aircraft fuel; any potential realized or unrealized gains or losses related to fuel or currency hedging programs; the effects of any hostilities, act of war or terrorist attack; the ability of other air carriers with whom we have alliances or partnerships to provide the services contemplated by the respective arrangements with such carriers; disruptions to our regional network; the costs and availability of aviation and other insurance; industry consolidation or changes in airline alliances; competitive pressures on pricing and on demand; its capacity decisions and the capacity decisions of our competitors; U.S. or foreign governmental legislation, regulation and other actions (including open skies agreements and environmental regulations); the impact of regulatory, investigative and legal proceedings and legal compliance risks; the impact of any management changes; labor costs; our ability to maintain satisfactory labor relations and the results of the collective bargaining agreement process with our union groups; any disruptions to operations due to any potential actions by our labor groups; weather conditions; and other risks and uncertainties set forth under Part I, Item 1A., “Risk Factors” of ~~UAL’s~~the 2015 Annual Report, ~~on Form 10-K,~~ as well as other risks and uncertainties set forth from time to time in the reports we file with the U.S. Securities and Exchange Commission (the “SEC”).

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 2015 Annual Report except as follows:

Aircraft Fuel. As of ~~March 31,~~June 30, 2016, the Company had hedged approximately 12% of its projected fuel requirements ~~(378~~(252 million gallons) for the remainder of 2016 with commonly used financial hedge instruments based on aircraft fuel or crude oil. As of ~~March 31,~~June 30, 2016, the Company had fuel hedges expiring through December 2016.

At ~~March 31,~~June 30, 2016, fuel derivatives were in a net liability position of ~~$32~~$7 million. See Note 7 to the financial statements included in Part I, Item 1 of this report for additional information related to fuel hedges.

The fuel derivative portfolio is comprised of many individual derivative contracts (primarily option contracts) on multiple underlying commodities and entered into at various points in time, resulting in a wide range of strike prices with several hedge counterparties. The table below provides a view of the economic impact of the fuel derivative portfolio on the Company’s fuel costs given significant moves (up to +/-30%) in market fuel prices from ~~March 31,~~June 30, 2016 (in millions).


Period from April 1, 2016 to December 31, 2016
Period from July 1, 2016 to December 31, 2016									Period from July 1, 2016 to December 31, 2016
Change in market fuel prices (a)	(Increase) decrease to unhedged fuel cost (b)			Fuel derivative gain (c)		Net (increase) decrease to fuel cost				(Increase) decrease to unhedged fuel cost (b)			Fuel derivative gain (loss) (c)			Net (increase) decrease to fuel cost
30%	$	(1,060	)	$	47	$	(1,013	)		$	(863	)	$	38		$	(825	)
20%		(707	)		44		(663	)			(576	)		21			(555	)
10%		(353	)		15		(338	)			(288	)		9			(279	)
(10)%		353			—		353				288			(11	)		277
(20)%		707			—		707				576			(19	)		557
(30)%		1,060			—		1,060				863			(23	)		840

(a) Projected using equal shifts in spot and forward prices for aircraft fuel and crude oil underlying hedge contracts at ~~March 31,~~June 30, 2016 levels.

(b) Projections based on an average forward price of ~~$1.16~~$1.42 per gallon, excluding taxes and other delivery costs and estimated consumption of ~~3.0~~2.0 billion gallons for the ~~nine~~six months ending December 31, 2016.

(c) Change in projected cash gain/(loss) on existing fuel derivatives as of ~~March 31,~~June 30, 2016. Includes all fuel derivatives whether or not the fuel derivatives are designated for hedge accounting. Within these price ranges, the Company would neither receive nor post collateral.

The Company maintains controls and procedures that are designed to ensure that information required to be disclosed in the reports filed or submitted 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 acting Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The Company’s management, including the Chief Executive Officer and acting 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 they file with the SEC on a timely basis. Based on that evaluation, the Chief Executive Officer and the acting Chief Financial Officer of UAL and United have concluded that as of ~~March 31,~~June 30, 2016, disclosure controls and procedures of each of UAL and United were effective.

Changes in Internal Control over Financial Reporting during the Quarter Ended ~~March 31,~~June 30, 2016

During the three months ended ~~March 31,~~June 30, 2016, 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).

See Part I, Item 3., “Legal Proceedings” of the 2015 Annual Report for a description of legal proceedings. The disclosure below includes an update to the legal proceedings disclosures included in the 2015 Annual Report, which is in addition to, and not in lieu of, those disclosures contained in the 2015 Annual Report.

As disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 and the 2015 Annual Report, the Company and certain of its current and former executive officers and employees received federal grand jury subpoenas requesting records and testimony related to certain individuals formerly associated with the Port Authority of New York and New Jersey and related operations of the Company. As announced in September 2015, certain of the Company’s executives stepped down in connection with its related internal investigation. The Company cooperated with the investigation by the U.S. Attorney’s Office for the District of New Jersey (the “USAO”) in respect of the Port Authority matter and, as announced on July 14, 2016, the Company reached a resolution in the form of a Non-Prosecution Agreement with the USAO. The Company continues to cooperate with the ongoing and related investigation by the SEC and has participated in discussions with representatives of the SEC.

See Part I, Item 1A., “Risk Factors,” of the 2015 Annual Report for a detailed discussion of the risk factors affecting UAL and United. The disclosures below include updates to certain risk factor disclosures included in the 2015 Annual Report, which are in addition to, and not in lieu of, those disclosures contained in the 2015 Annual Report.

Global economic, political and industry conditions constantly change and unfavorable conditions may have a material adverse effect on the Company’s business and results of operations.

The Company’s business and results of operations are significantly impacted by general economic and industry conditions. The airline industry is highly cyclical, and the level of demand for air travel is correlated to the strength of the U.S. and global economies. The Company is a global business with operations outside of the United States from which it derives significant operating revenues. The Company’s international operations are a vital part of its worldwide airline network. Volatile economic, political and market conditions in these international regions may have a negative impact on the Company’s operating results and its ability to achieve its business objectives.

Robust demand for the Company’s air transportation services depends largely on favorable economic conditions, including the strength of the domestic and foreign economies, low unemployment levels, strong consumer confidence levels and the availability of consumer and business credit. Air transportation is often a discretionary purchase that leisure travelers may limit or eliminate during difficult economic times. In addition, during periods of unfavorable economic conditions, business travelers usually reduce the volume of their travel, either due to cost-saving initiatives or as a result of decreased business activity requiring travel. During such periods, the Company’s business and results of operations may be adversely affected due to significant declines in industry passenger demand, particularly with respect to the Company’s business and premium cabin travelers, and a reduction in fare levels.

Stagnant or weakening global economic conditions either in the United States or in other geographic regions, and any future volatility in U.S. and global financial and credit markets may have a material adverse effect on the Company’s revenues, results of operations and liquidity. If such economic conditions were to disrupt capital markets in the future, the Company may be unable to obtain financing on acceptable terms (or at all) to refinance certain maturing debt and to satisfy future capital commitments.

Recently, United Kingdom (“UK”) voters voted for the UK to exit the European Union (“EU”), a non-binding referendum that, if passed into law, could adversely affect European and worldwide economic and market conditions and could contribute to instability in global financial and foreign exchange markets, including volatility in the value of the British pound and European euro, additional travel restrictions on passengers traveling between the UK and other EU countries and legal uncertainty and potentially divergent national laws and regulations. These adverse effects in European market conditions could negatively impact the Company’s business, results of operations, and financial condition.

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

Current or future litigation and regulatory actions, or failure to comply with the terms of our Non-Prosecution Agreement with the USAO, could have a material adverse impact on the Company.

From time to time, we are subject to litigation and other legal and regulatory proceedings relating to our business or investigations or other actions by governmental agencies, including as described in Part I, Item 3 “Legal Proceedings” of the 2015 Annual Report and in Part II, Item 1 “Legal Proceedings” of this report. No assurances can be given that the results of these or new matters will be favorable to us. An adverse resolution of lawsuits, arbitrations, investigations or other proceedings or actions could have a material adverse effect on our financial condition and results of operations, including as a result of non-monetary remedies. Defending ourselves in these matters may be time-consuming, expensive and disruptive to normal business operations and may result in significant expense and a diversion of management’s time and attention from the operation of our business, which could impede our ability to achieve our business objectives. Additionally, any amount that we may be required to pay to satisfy a judgment, settlement, fine or penalty may not be covered by insurance. Under our charter and certain indemnification agreements that we have entered into (and may in the future enter into) with our officers, directors and certain third parties, we could be required to indemnify and advance expenses to them in connection with their involvement in certain actions, suits, investigations and other proceedings. There can be no assurance that any of these payments will not be material.

We entered into a Non-Prosecution Agreement with the USAO on July 14, 2016 in connection with the previously disclosed Port Authority investigation conducted by the USAO. In the event we violate the terms of this Non- Prosecution Agreement during its two year term, we could be subject to criminal prosecution by the USAO. Any such prosecution could have a material adverse effect on the Company.

(c) The following table presents repurchases of UAL common stock made in the ~~first~~second quarter of fiscal year 2016:

(a) OnIn the three and six months ended June 30, 2016, UAL repurchased 15 million and 42 million shares of UAL common stock in open market transactions, respectively, for $694 million and $2.2 billion, respectively. As of June 30, 2016, the Company had $255 million remaining to purchase shares under its 2015 $3 billion share repurchase authorization.

In July ~~21, 2015,~~2016, UAL’s Board of Directors authorized a new $3$2 billion share repurchase ~~program.~~ program to acquire UAL’s common stock.

UAL may repurchase shares through the open market, privately negotiated transactions, block trades or accelerated share repurchase transactions from time to time in accordance with applicable securities laws. In the three months ended March 31, 2016, UAL repurchased 27 million shares of UAL common stock in open market transactions for $1.5 billion, of which $0.1 billion settled in April 2016. As of March 31, 2016, the Company had $948 million remaining to purchase shares under the 2015 Program. The Company expects to complete its repurchases under the 2015 Program by September 30, 2016. UAL will repurchase shares of UAL common stock subject to prevailing market conditions, and may discontinue such repurchases at any time.

The table does not include shares withheld from employees to satisfy certain tax obligations due upon the vesting of restricted stock. The United Continental Holdings, Inc. 2008 Incentive Compensation Plan provides for the withholding of shares to satisfy tax obligations due upon the vesting of restricted stock. However, this plan does not specify a maximum number of shares that may be withheld for this purpose. A total of 60,275 shares were withheld under this plan in the first quarter of 2016 at an average share price of $55.35.

(b) Average price paid per share is calculated on a settlement basis and excludes commission.

A list of exhibits included as part of this Form 10-Q is set forth in an Exhibit Index that immediately precedes the exhibits.

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. The signature for each undersigned company shall be deemed to relate only to matters having reference to such company or its subsidiaries.


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.
001-06033	United Continental Holdings, Inc. 233 South Wacker Drive, Chicago, Illinois 60606 (872) 825-4000	Delaware	36-2675207
001-10323	United Airlines, Inc. 233 South Wacker Drive, Chicago, Illinois 60606 (872) 825-4000	Delaware	74-2099724


United Continental Holdings, Inc.	Large accelerated filer x	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company ¨
United Airlines, Inc.	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer x	Smaller reporting company ¨


		Page

	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	United Continental Holdings, Inc.:
	Statements of Consolidated Operations		3
	Statements of Consolidated Comprehensive Income (Loss)		4
	Consolidated Balance Sheets		5
	Condensed Statements of Consolidated Cash Flows		7
	United Airlines, Inc.:
	Statements of Consolidated Operations		8
	Statements of Consolidated Comprehensive Income (Loss)		9
	Consolidated Balance Sheets		10
	Condensed Statements of Consolidated Cash Flows		12
	Combined Notes to Condensed Consolidated Financial Statements (United Continental Holdings, Inc. and United Airlines, Inc.)		13
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		2625
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		3536
Item 4.	Controls and Procedures		3637

	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		38
Item 1A.	Risk Factors		38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		3738
Item 6.	Exhibits		3738
Signatures			3839
Exhibit Index			3940


Description		Fair Value Methodology
Cash and cash equivalents		The carrying amounts approximate fair value because of the short-term maturity of these assets.

Short-term investments and Restricted cash		Fair 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, (c) internally-developed models of the expected future cash flows related to the securities, or (d) broker quotes obtained by third-party valuation services.

Fuel derivatives		Derivative contracts are privately negotiated contracts and are not exchange traded. Fair value measurements are estimated with option pricing models that employ observable inputs. Inputs to the valuation models include contractual terms, market prices, yield curves, fuel price curves and measures of volatility, among others.

Foreign currency derivatives		Fair value is determined with a formula utilizing observable inputs. Significant inputs to the valuation models include contractual terms, risk-free interest rates and forward exchange rates.

Debt		Fair values were based on either market prices or the discounted amount of future cash flows using our current incremental rate of borrowing for similar liabilities.


Aircraft Type	Number of Firm Commitments (a)
Airbus A350-1000		35
Boeing 737NG/737 MAX 9		~~178~~176
Boeing 777-300ER		14
Boeing 787-8/-9/-10		2321
Embraer E175		95
(a) United also has options and purchase rights for additional aircraft.


		United Continental Holdings, Inc.		Yes x No ¨
		United Airlines, Inc.		Yes x No ¨


		United Continental Holdings, Inc.		Yes ¨ No x
		United Airlines, Inc.		Yes ¨ No x


	Fair Value of Debt by Fair Value Hierarchy Level
	March 31, 2016										December 31, 2015
	Carrying Amount		Fair Value								Carrying Amount		Fair Value
			Total		Level 1		Level 2		Level 3				Total		Level 1		Level 2		Level 3
Long-term debt	$	10,767	$	11,180	$	—	$	8,309	$	2,871	$	10,897	$	11,371	$	—	$	8,646	$	2,725


	March 31, 2016		December 31, 2015
Fuel derivative instruments, net of collateral	$	32	$	98


	Amount of Loss Recognized in AOCI on Derivatives (Effective Portion)						Loss Reclassified from AOCI into Fuel Expense						Amount of Loss Recognized in Nonoperating income (expense): Miscellaneous, net (Ineffective Portion)
	Three Months Ended March 31,						Three Months Ended March 31,						Three Months Ended March 31,
	2016			2015			2016			2015			2016		2015
Fuel contracts	$	(16	)	$	(75	)	$	(138	)	$	(161	)	$	—	$	—


	Amount of Gain Recognized in AOCI on Derivatives (Effective Portion)				Loss Reclassified from AOCI into Fuel Expense						Amount of Loss Recognized in Nonoperating income (expense): Miscellaneous, net (Ineffective Portion)
	Three Months Ended June 30,				Three Months Ended June 30,						Three Months Ended June 30,
	2016		2015		2016			2015			2016		2015
Fuel contracts	$	17	$	29	$	(35	)	$	(118	)	$	—	$	—


	Amount of Gain (Loss) Recognized in AOCI on Derivatives (Effective Portion)					Loss Reclassified from AOCI into Fuel Expense						Amount of Loss Recognized in Nonoperating income (expense): Miscellaneous, net (Ineffective Portion)
	Six Months Ended June 30,					Six Months Ended June 30,						Six Months Ended June 30,
	2016		2015			2016			2015			2016		2015
Fuel contracts	$	1	$	(46	)	$	(173	)	$	(279	)	$	—	$	—


	(in billions)
Last nine months of 2016	$	2.9
2017		3.9
2018		3.9
2019		3.2
2020		2.4
After 2020		6.9

	$	23.2


	(in billions)
Last six months of 2016	$	2.3
2017		4.3
2018		4.3
2019		3.3
2020		2.6
After 2020		6.9

	$	23.7


EETC Date	Class	Principal		Final expected distribution date	Stated interest rate		Total debt recorded as of June 30, 2016		Remaining proceeds from issuance of debt to be received in future periods
June 2016	AA		$ 729	March 2017		3.10%		$ —		$ 729
June 2016	A		324	March 2017		3.45%		—		324

			$ 1,053					$ —		$ 1,053


	Severance and Benefits
Balance at December 31, 2015	$	27
Accrual		814
Payments		~~(6)~~(11)

Balance at ~~March 31,~~June 30, 2016	$	2930


Aircraft Type	Number of Firm Commitments (a)
Airbus A350-1000		35
Boeing 737NG/737 MAX 9		~~178~~176
Boeing 777-300ER		14
Boeing 787-8/-9/-10		2321
Embraer E175		95

(a) United also has options and purchase rights for additional aircraft.


	S&P	Moody’s	Fitch
UAL	BB-	Ba3	BB-
United	BB-	*	BB-
* The credit agency does not issue corporate credit ratings for subsidiary entities.


	Three Months Ended March 31,
	Net Income 2016		Diluted Earnings per Share 2016		Net Income 2015		Diluted Earnings per Share 2015
Net income—GAAP	$	313	$	0.88	$	508	$	1.32
Special charges, net of tax (a)		126		0.36		70		0.18
Mark-to-market losses from fuel derivative contracts settling in future periods		—		—		36		0.10
Prior period losses on fuel derivative contracts settled in the current period		(4)		(0.01)		(32)		(0.08)

Net income excluding special charges, net and reflecting Hedge Program Adjustments—Non-GAAP	$	435	$	1.23	$	582	$	1.52


Period	Total number of shares purchased (a)		Average price paid per share (b)		Total number of shares purchased as part of publicly announced plans or programs (a)		Approximate dollar value of shares that may yet be purchased under the plans or programs (in millions) (a)
January 1, 2016 through January 31, 2016		3,312,112	$	48.28		3,312,112	$	2,288
February 1, 2016 through February 29, 2016		9,316,774		51.17		9,316,774		1,812
March 1, 2016 through March 31, 2016		14,753,555		58.52		14,753,555		948

Total		27,382,441				27,382,441


	United Continental Holdings, Inc.
	(Registrant)

Date: ~~April 21,~~July 19, 2016	By:	/s/ Gerald Laderman

		Gerald Laderman
		Senior Vice President Finance and acting Chief Financial Officer
		(principal financial officer)

Date: ~~April 21,~~July 19, 2016	By:	/s/ Chris Kenny

		Chris Kenny
		Vice President and Controller
		(principal accounting officer)

	United Airlines, Inc.
	(Registrant)

Date: ~~April 21,~~July 19, 2016	By:	/s/ Gerald Laderman

		Gerald Laderman
		Senior Vice President Finance and acting Chief Financial Officer
		(principal financial officer)

Date: ~~April 21,~~July 19, 2016	By:	/s/ Chris Kenny

		Chris Kenny
		Vice President and Controller
		(principal accounting officer)


Exhibit No.	Registrant	Exhibit

~~3.1~~*10.1	UAL	~~Amended~~Agreement, dated April 19, 2016, by and ~~Restated Bylaws of~~among PAR Capital Management, Inc., Altimeter Capital Management, LP, United Continental Holdings, Inc.~~, adopted~~ and the other signatories listed on ~~February 18,~~the signature page thereto (filed as Exhibit 10.1 to UAL’s Form 8-K filed April 20, 2016, Commission file number 1-6033, and incorporated herein by reference)

~~^10.1~~	~~UAL~~ ~~United~~	~~Supplemental Agreement No. 5 to Purchase Agreement No. 03776, dated January 20, 2016, between The Boeing Company and United Airlines, Inc.~~

^*10.2	UAL United	~~Supplemental~~Amendment to Employment Agreement, ~~No. 9~~dated April 19, 2016, by and among United Continental Holdings, Inc., United Airlines, Inc. and Oscar Munoz. (filed as Exhibit 10.1 to ~~Purchase Agreement No. 03784, dated January~~UAL’s Form 8-K filed April 20, 2016, ~~between The Boeing Company~~Commission file number 1-6033, and ~~United Airlines, Inc.~~incorporated herein by reference)

^10.3	UAL United	~~Supplemental~~Performance Award Agreement, ~~No. 6 to Purchase Agreement No. 03776,~~ dated ~~February 8,~~May 5, 2016, ~~between The Boeing Company~~by and among United Continental Holdings, Inc., United Airlines, Inc. and Brett J. Hart

^10.4	UAL United	~~Supplemental~~Fourth Amendment to Credit and Guaranty Agreement, ~~No. 10 to Purchase Agreement No. 03784,~~ dated ~~February 8,~~as of May 24, 2016 ~~between The Boeing Company and United Airlines, Inc.~~

^10.5	UAL United	~~Supplemental~~Letter Agreement ~~No. 7~~ to Purchase Agreement No. ~~3860,~~03860, dated ~~March 7,~~May 5, 2016, between The Boeing Company and United Airlines, Inc.

^10.6	UAL United	~~Supplemental~~Letter Agreement No. 1114 to the Airbus A350-900XWB Purchase Agreement, dated May 6, 2016, between Airbus S.A.S. and United Airlines, Inc.

^10.7	UAL United	Supplement Agreement No. 12 to Purchase Agreement ~~Number~~ No. 03784, dated ~~March 7,~~June 24, 2016, between The Boeing Company and United Airlines, Inc.

12.1	UAL	United Continental Holdings, Inc. and Subsidiary Companies Computation of Ratio of Earnings to Fixed Charges

12.2	United	United Airlines, Inc. and Subsidiary Companies Computation of Ratio of Earnings to Fixed Charges

31.1	UAL	Certification of the Principal Executive Officer of United Continental Holdings, Inc. Pursuant to 15 U.S.C. 78m(a) or 78o(d) (Section 302 of the Sarbanes-Oxley Act of 2002)

31.2	UAL	Certification of the Principal Financial Officer of United Continental Holdings, Inc. Pursuant to 15 U.S.C. 78m(a) or 78o(d) (Section 302 of the Sarbanes-Oxley Act of 2002)

31.3	United	Certification of the Principal Executive Officer of United Airlines, Inc. Pursuant to 15 U.S.C. 78m(a) or 78o(d) (Section 302 of the Sarbanes-Oxley Act of 2002)

31.4	United	Certification of the Principal Financial Officer of United Airlines, Inc. Pursuant to 15 U.S.C. 78m(a) or 78o(d) (Section 302 of the Sarbanes-Oxley Act of 2002)

32.1	UAL	Certification of the Chief Executive Officer and Chief Financial Officer of United Continental Holdings, Inc. Pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)

32.2	United	Certification of the Chief Executive Officer and Chief Financial Officer of United Airlines, Inc. Pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)

101.1	UAL United	XBRL Instance Document

101.2	UAL United	XBRL Taxonomy Extension Schema Document

101.3	UAL United	XBRL Taxonomy Extension Calculation Linkbase Document

101.4	UAL United	XBRL Taxonomy Extension Definition Linkbase Document

101.5	UAL United	XBRL Taxonomy Extension Labels Linkbase Document

101.6	UAL United	XBRL Taxonomy Extension Presentation Linkbase Document