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 RegulationS-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, anon-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act).

The number of shares outstanding of each of the issuer’s classes of common stock as of ~~October~~April 12, ~~2017~~2018 is shown below:

This combined Quarterly Report on Form10-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 Form10-Q and is therefore filing this form with the reduced disclosure format allowed under that General Instruction.

For the ~~Quarter~~Quarterly Period Ended ~~September 30, 2017~~March 31, 2018


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2017		2016		2017		2016		2018		2017 (a)
Operating revenue:
Passenger—Mainline	$	7,083	$	7,017	$	19,970	$	19,119
Passenger—Regional		1,445		1,586		4,354		4,577

Total passenger revenue		8,528		8,603		24,324		23,696
Passenger revenue									$	8,149	$	7,653
Cargo		257		224		731		626		293		238
Other operating revenue		1,093		1,086		3,243		3,182		590		535

Total operating revenue		9,878		9,913		28,298		27,504		9,032		8,426

Operating expense:
Salaries and related costs		2,812		2,625		8,341		7,707		2,726		2,636
Aircraft fuel		1,809		1,603		5,038		4,258		1,965		1,560
Regional capacity purchase										619		536
Landing fees and other rent		585		546		1,670		1,612		558		544
Regional capacity purchase		567		572		1,652		1,645
Depreciation and amortization		556		503		1,610		1,473		541		518
Aircraft maintenance materials and outside repairs		451		451		1,377		1,301		440		454
Distribution expenses		352		345		1,021		987		342		319
Aircraft rent		145		168		476		521		127		179
Special charges (Note 10)		50		45		145		669		40		51
Other operating expenses		1,459		1,431		4,199		3,998		1,398		1,309

Total operating expenses		8,786		8,289		25,529		24,171		8,756		8,106

Operating income		1,092		1,624		2,769		3,333		276		320

Nonoperating income (expense):
Interest expense		(164)		(150)		(472)		(466)		(176)		(162)
Interest capitalized		20		20		64		48		19		23
Interest income		17		14		41		31		17		11
Miscellaneous, net (Note 10)		15		2		(3)		(11)
Miscellaneous, net										48		(42)

Total nonoperating expense, net		(112)		(114)		(370)		(398)		(92)		(170)

Income before income taxes		980		1,510		2,399		2,935		184		150
Income tax expense		343		545		848		1,069		37		51

Net income	$	637	$	965	$	1,551	$	1,866	$	147	$	99

Earnings per share, basic	$	2.12	$	3.02	$	5.06	$	5.57
Earnings per share, basic and diluted									$	0.52	$	0.32

Earnings per share, diluted	$	2.12	$	3.01	$	5.04	$	5.57

(a) Amounts adjusted due to the adoption of Accounting StandardsUpdate No. 2014-09, Revenue from Contracts with Customers (Topic 606)andAccounting Standards UpdateNo. 2017-07,Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.See Note 1 to the financial statements contained in Part I, Item 1 of this report for additional information.

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


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2017		2016		2017		2016		2018		2017 (a)
Net income	$	637	$	965	$	1,551	$	1,866	$	147	$	99

Other comprehensive income (loss), net change related to:
Fuel derivative financial instruments, net of taxes		—		12		1		123
Employee benefit plans, net of taxes		3		(75)		(1)		(89)		30		(8)
Investments and other, net of taxes		17		(1)		5		(1)		3		1

Total other comprehensive income (loss), net		20		(64)		5		33		33		(7)


Total comprehensive income, net	$	657	$	901	$	1,556	$	1,899	$	180	$	92

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


	(Unaudited) September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017 (a)
ASSETS
Current assets:
Cash and cash equivalents	$	1,870	$	2,179	$	2,404	$	1,482
Short-term investments		2,458		2,249		2,071		2,316
Receivables, less allowance for doubtful accounts (2017 — $11; 2016 — $10)		1,603		1,176
Aircraft fuel, spare parts and supplies, less obsolescence allowance (2017 — $342; 2016 — $295)		937		873
Receivables, less allowance for doubtful accounts (2018 — $7; 2017 — $7)						1,760		1,340
Aircraft fuel, spare parts and supplies, less obsolescence allowance (2018 — $365; 2017 — $354)						924		924
Prepaid expenses and other		1,009		832		1,128		1,071

Total current assets		7,877		7,309		8,287		7,133

Operating property and equipment:
Owned—
Flight equipment		29,043		25,873		29,651		28,692
Other property and equipment		6,186		5,652		7,193		6,946

Total owned property and equipment		35,229		31,525		36,844		35,638
Less — Accumulated depreciation and amortization		(11,358)		(9,975)		(11,538)		(11,159)

Total owned property and equipment, net		23,871		21,550		25,306		24,479


Purchase deposits for flight equipment		1,044		1,059		1,025		1,344

Capital leases—
Flight equipment		1,136		1,319		1,205		1,151
Other property and equipment		488		331		11		11

Total capital leases		1,624		1,650		1,216		1,162
Less — Accumulated amortization		(910)		(941)		(808)		(777)

Total capital leases, net		714		709		408		385

Total operating property and equipment, net		25,629		23,318		26,739		26,208

Other assets:
Goodwill		4,523		4,523		4,523		4,523
Intangibles, less accumulated amortization (2017 — $1,294; 2016 — $1,234)		3,558		3,632
Deferred income taxes		—		655
Intangibles, less accumulated amortization (2018 — $1,329; 2017 — $1,313)						3,521		3,539
Restricted cash		96		124		95		91
Investments in affiliates and other, net		882		579		853		852

Total other assets		9,059		9,513		8,992		9,005

Total assets	$	42,565	$	40,140	$	44,018	$	42,346


	(Unaudited) September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017 (a)
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Advance ticket sales	$	4,537	$	3,730	$	5,501	$	3,940
Accounts payable		2,231		2,139		2,399		2,196
Frequent flyer deferred revenue		1,992		2,135		2,221		2,192
Accrued salaries and benefits		1,983		2,307		1,637		2,166
Current maturities of long-term debt		1,516		849		1,655		1,565
Current maturities of capital leases		125		116		124		128
Other		703		1,010		646		576

Total current liabilities		13,087		12,286		14,183		12,763


Long-term debt		11,334		9,918		12,166		11,703
Long-term obligations under capital leases		968		822		1,019		996

Other liabilities and deferred credits:
Frequent flyer deferred revenue		2,793		2,748		2,716		2,591
Postretirement benefit liability		1,588		1,581		1,593		1,602
Pension liability		1,631		1,892		1,828		1,921
Deferred income taxes		253		—		250		204
Advanced purchase of miles		106		430
Lease fair value adjustment, net		219		277		171		198
Other		1,616		1,527		1,756		1,634

Total other liabilities and deferred credits		8,206		8,455		8,314		8,150

Commitments and contingencies
Stockholders’ equity:
Preferred stock		—		—		—		—
Common stock at par, $0.01 par value; authorized 1,000,000,000 shares; outstanding 296,252,431 and 314,612,744 shares at September 30, 2017 and December 31, 2016, respectively		3		3
Common stock at par, $0.01 par value; authorized 1,000,000,000 shares; outstanding 279,410,451 and 286,973,195 shares at March 31, 2018 and December 31, 2017, respectively						3		3
Additional capital invested		6,591		6,569		6,077		6,098
Retained earnings		4,991		3,427		4,684		4,549
Stock held in treasury, at cost		(1,791)		(511)		(1,314)		(769)
Accumulated other comprehensive loss		(824)		(829)		(1,114)		(1,147)

Total stockholders’ equity		8,970		8,659		8,336		8,734

Total liabilities and stockholders’ equity	$	42,565	$	40,140	$	44,018	$	42,346

(a) Amounts adjusted due to the adoption of Accounting StandardsUpdate No. 2014-09, Revenue from Contracts with Customers (Topic 606).See Note 1 to the financial statements contained in Part I, Item 1 of this report for additional information.

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

~~(a) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheet:~~


						Three Months Ended March 31,
						2018		2017
Cash Flows from Operating Activities:
Net cash provided by operating activities						$	1,733	$	547

Cash Flows from Investing Activities:
Capital expenditures							(979)		(691)
Purchases of short-term and other investments							(596)		(774)
Proceeds from sale of short-term and other investments							840		810
Proceeds from sale of property and equipment							3		4
Other, net							2		8

Net cash used in investing activities							(730)		(643)


Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt and airport construction financing							696		755
Repurchases of common stock							(529)		(258)
Payments of long-term debt							(189)		(315)
Principal payments under capital leases							(30)		(31)
Other, net							(32)		(65)

Net cash provided (used) in financing activities							(84)		86

Net increase (decrease) in cash, cash equivalents and restricted cash							919		(10)
Cash, cash equivalents and restricted cash at beginning of the period							1,591		2,303

Cash, cash equivalents and restricted cash at end of the period (a)						$	2,510	$	2,293


Investing and Financing Activities Not Affecting Cash:
Property and equipment acquired through the issuance of debt and capital leases						$	74	$	711
Airport construction financing							12		21

(a) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheet:					(a) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheet:
Reconciliation of cash, cash equivalents and restricted cash:
Current assets:
Cash and cash equivalents	$	1,870	$	2,630		$	2,404	$	2,164
Restricted cash included in Prepaid expenses and other		13		1			11		—
Other assets:
Restricted cash		96		123			95		129

Total cash, cash equivalents and restricted cash	$	1,979	$	2,754		$	2,510	$	2,293

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


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2017		2016		2017		2016		2018		2017 (a)
Operating revenue:
Passenger—Mainline	$	7,083	$	7,017	$	19,970	$	19,119
Passenger—Regional		1,445		1,586		4,354		4,577

Total passenger revenue		8,528		8,603		24,324		23,696
Passenger revenue									$	8,149	$	7,653
Cargo		257		224		731		626		293		238
Other operating revenue		1,093		1,086		3,243		3,182		590		535

Total operating revenue		9,878		9,913		28,298		27,504		9,032		8,426

Operating expense:
Salaries and related costs		2,812		2,625		8,341		7,707		2,726		2,636
Aircraft fuel		1,809		1,603		5,038		4,258		1,965		1,560
Regional capacity purchase										619		536
Landing fees and other rent		585		546		1,670		1,612		558		544
Regional capacity purchase		567		572		1,652		1,645
Depreciation and amortization		556		503		1,610		1,473		541		518
Aircraft maintenance materials and outside repairs		451		451		1,377		1,301		440		454
Distribution expenses		352		345		1,021		987		342		319
Aircraft rent		145		168		476		521		127		179
Special charges (Note 10)		50		45		145		669		40		51
Other operating expenses		1,459		1,431		4,198		3,997		1,397		1,309

Total operating expense		8,786		8,289		25,528		24,170		8,755		8,106

Operating income		1,092		1,624		2,770		3,334		277		320

Nonoperating income (expense):
Interest expense		(164)		(150)		(472)		(466)		(176)		(162)
Interest capitalized		20		20		64		48		19		23
Interest income		17		14		41		31		17		11
Miscellaneous, net (Note 10)		15		2		(3)		(11)
Miscellaneous, net										48		(41)

Total nonoperating expense, net		(112)		(114)		(370)		(398)		(92)		(169)

Income before income taxes		980		1,510		2,400		2,936		185		151
Income tax expense		343		545		848		1,069		38		51

Net income	$	637	$	965	$	1,552	$	1,867	$	147	$	100

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


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2017		2016		2017		2016		2018		2017 (a)
Net income	$	637	$	965	$	1,552	$	1,867	$	147	$	100

Other comprehensive income (loss), net change related to:
Fuel derivative financial instruments, net of taxes		—		12		1		123
Employee benefit plans, net of taxes		3		(75)		(1)		(89)		30		(8)
Investments and other, net of taxes		17		(1)		5		(1)		3		1

Total other comprehensive income (loss), net		20		(64)		5		33		33		(7)


Total comprehensive income, net	$	657	$	901	$	1,557	$	1,900	$	180	$	93

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


	(Unaudited)
	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017 (a)
ASSETS
Current assets:
Cash and cash equivalents	$	1,864	$	2,173	$	2,398	$	1,476
Short-term investments		2,458		2,249		2,071		2,316
Receivables, less allowance for doubtful accounts (2017 — $11; 2016 — $10)		1,603		1,176
Aircraft fuel, spare parts and supplies, less obsolescence allowance (2017 — $342; 2016 — $295)		937		873
Receivables, less allowance for doubtful accounts (2018 — $7; 2017 — $7)						1,760		1,340
Aircraft fuel, spare parts and supplies, less obsolescence allowance (2018 — $365; 2017 — $354)						924		924
Prepaid expenses and other		1,008		832		1,129		1,071

Total current assets		7,870		7,303		8,282		7,127

Operating property and equipment:
Owned—
Flight equipment		29,043		25,873		29,651		28,692
Other property and equipment		6,186		5,652		7,193		6,946

Total owned property and equipment		35,229		31,525		36,844		35,638
Less — Accumulated depreciation and amortization		(11,358)		(9,975)		(11,538)		(11,159)

Total owned property and equipment, net		23,871		21,550		25,306		24,479


Purchase deposits for flight equipment		1,044		1,059		1,025		1,344

Capital leases—
Flight equipment		1,136		1,319		1,205		1,151
Other property and equipment		488		331		11		11

Total capital leases		1,624		1,650		1,216		1,162
Less — Accumulated amortization		(910)		(941)		(808)		(777)

Total capital leases, net		714		709		408		385

Total operating property and equipment, net		25,629		23,318		26,739		26,208

Other assets:
Goodwill		4,523		4,523		4,523		4,523
Intangibles, less accumulated amortization (2017 — $1,294; 2016 — $1,234)		3,558		3,632
Deferred income taxes		—		612
Intangibles, less accumulated amortization (2018 — $1,329; 2017 — $1,313)						3,521		3,539
Restricted cash		96		124		95		91
Investments in affiliates and other, net		882		579		853		852

Total other assets		9,059		9,470		8,992		9,005

Total assets	$	42,558	$	40,091	$	44,013	$	42,340


	(Unaudited)
	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017 (a)
LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Advance ticket sales	$	4,537	$	3,730	$	5,501	$	3,940
Accounts payable		2,231		2,144		2,399		2,196
Frequent flyer deferred revenue		1,992		2,135		2,221		2,192
Accrued salaries and benefits		1,983		2,307		1,637		2,166
Current maturities of long-term debt		1,516		849		1,655		1,565
Current maturities of capital leases		125		116		124		128
Other		707		1,009		652		581

Total current liabilities		13,091		12,290		14,189		12,768


Long-term debt		11,334		9,918		12,166		11,703
Long-term obligations under capital leases		968		822		1,019		996

Other liabilities and deferred credits:
Frequent flyer deferred revenue		2,793		2,748		2,716		2,591
Postretirement benefit liability		1,588		1,581		1,593		1,602
Pension liability		1,631		1,892		1,828		1,921
Deferred income taxes		297		—		277		231
Advanced purchase of miles		106		430
Lease fair value adjustment, net		219		277		171		198
Other		1,616		1,527		1,756		1,634

Total other liabilities and deferred credits		8,250		8,455		8,341		8,177

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 September 30, 2017 and December 31, 2016		—		—
Common stock at par, $0.01 par value; authorized 1,000 shares; issued and outstanding 1,000 shares at both March 31, 2018 and December 31, 2017						—		—
Additional capital invested		2,325		3,573		1,233		1,787
Retained earnings		7,504		5,937		8,287		8,146
Accumulated other comprehensive loss		(824)		(829)		(1,114)		(1,147)
Receivable from related parties		(90)		(75)		(108)		(90)

Total stockholder’s equity		8,915		8,606		8,298		8,696

Total liabilities and stockholder’s equity	$	42,558	$	40,091	$	44,013	$	42,340

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

~~(a) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheet:~~


						Three Months Ended March 31,
						2018		2017
Cash Flows from Operating Activities:
Net cash provided by operating activities						$	1,717	$	535

Cash Flows from Investing Activities:
Capital expenditures							(979)		(691)
Purchases of short-term investments and other investments							(596)		(774)
Proceeds from sale of short-term and other investments							840		810
Proceeds from sale of property and equipment							3		4
Other, net							2		8

Net cash used in investing activities							(730)		(643)


Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt and airport construction financing							696		755
Dividend to UAL							(529)		(258)
Payments of long-term debt							(189)		(315)
Principal payments under capital leases							(30)		(31)
Other, net							(16)		(53)

Net cash provided (used) in financing activities							(68)		98

Net increase (decrease) in cash, cash equivalents and restricted cash							919		(10)
Cash, cash equivalents and restricted cash at beginning of the period							1,585		2,297

Cash, cash equivalents and restricted cash at end of the period (a)						$	2,504	$	2,287


Investing and Financing Activities Not Affecting Cash:
Property and equipment acquired through the issuance of debt and capital leases						$	74	$	711
Airport construction financing							12		21

(a) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheet:					(a) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheet:
Reconciliation of cash, cash equivalents and restricted cash:
Current assets:
Cash and cash equivalents	$	1,864	$	2,624		$	2,398	$	2,158
Restricted cash included in Prepaid expenses and other		13		1			11		—
Other assets:
Restricted cash		96		123			95		129

Total cash, cash equivalents and restricted cash	$	1,973	$	2,748		$	2,504	$	2,287

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 Form10-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 Form10-K for the year ended December 31, ~~2016.~~2017. 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.

The ~~Financial Accounting Standards Board (“FASB”) amended the~~Company adopted FASB Accounting Standards Codification ~~and created a new~~ Topic 606,Revenue from Contracts with ~~Customers.~~Customers ~~This amendment~~(the “New Revenue Standard”), effective January 1, 2018 using the full-retrospective method. Topic 606 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~~For the ~~revenue recognition requirements in Topic 605,~~~~Revenue Recognition~~~~, and~~Company, the most ~~industry-specific guidance throughout the Industry Topics~~significant impact of the ~~Accounting Standards Codification. The Company will use the full-retrospective approach in adopting this~~ standard on January 1, 2018. We have reached conclusions on the applicability of the standard on accounting for contracts with customers. The standard impacts the classification of certain revenue streams and affects the timing of revenue and expense recognition for others. The most significant impact is the reclassification of certain ancillary fees from other operating revenue into passenger revenue on the statement of consolidated operations. ~~For 2016, the amount to be reclassified at adoption of the new standard from other operating revenue into passenger revenue under Topic 606 is approximately $2.0 billion.~~ These ancillary fees are directly related to passenger travel, such as ticket change fees and baggage fees, and ~~will~~are no longer be considered distinct performance obligations separate from the passenger travel component. In addition, the ticket change fees, which were previously recognized when received, ~~will be~~are now recognized when transportation is provided. ~~While~~Adoption of the ~~classification~~standard had no impact on the Company’s consolidated cash flows statements.

The Company adopted Accounting Standards UpdateNo. 2017-07,Improving the Presentation of ~~certain transactions within~~Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost(the “New Retirement Standard”), effective January 1, 2018 using the full-retrospective method. The New Retirement Standard requires employers to present the service cost component of the net periodic benefit cost in the same income statement line item as other employee compensation costs arising from services rendered during the period. The other components of net benefit cost, including interest cost, expected return on plan assets, amortization of prior service cost/credit and actuarial gain/loss, and settlement and curtailment effects, are to be presented outside of any subtotal of operating ~~revenue~~income. The Company elected to apply the practical expedient and ~~between operating revenue and operating expenses will change,~~use the ~~Company believes that~~amounts disclosed in Note 5 to the financial statements included in Part I, Item 1 of the Company’s Quarterly Report on Form10-Q for the quarterly period ended March 31, 2017 as the estimation basis for applying the retrospective presentation requirements of the standard.

The new standards had the same impact on the financial statements of United as they had on the financial statements of UAL. The table below presents the impact of the adoption of the New Revenue Standard and the New Retirement Standard on select accounts and captions of the statement of consolidated operations for the first quarter of 2017 (in millions, except per share amounts):

The table below presents the impact of the adoption of the New Revenue Standard on UAL’s balance sheet accounts and captions as of December 31, 2017 (in millions):

The Company adopted Accounting Standards UpdateNo. 2016-01,Financial Instruments—Overall (Subtopic825-10) (“ASU2016-01”) effective January 1, 2018. This standard ~~will~~makes several changes, including the elimination of theavailable-for-sale classification of equity investments, and requires equity investments with readily determinable fair values to be measured at fair value with changes in fair value recognized in earnings. The adoption did not have a material impact on ~~its earnings.~~our financial statements. See Note 4 and 7 included in this Part I, Item 1 for additional information.

Accounting for Leases.In February 2016, the FASB amended the FASB Accounting Standards Codification and created a new Topic 842,Leases(~~“Topic 842”~~the “New Lease Standard”). The guidance requires lessees to recognize aright-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. Lessees and lessors are required to adopt ~~Topic 842~~the New Lease Standard using a modified retrospective approach for all leases existing at or commencing after the date of initial application with an option to use certain practical expedients. We have not completed our evaluation of the impact but believe this standard will have a significant impact on our consolidated balance sheets but is not expected to have a material impact on the Company’s results of operations or cash flows. The primary effect of adopting the new standard will be to record assets and obligations for its operating leases.

~~In January 2016, the FASB issued Accounting Standards UpdateNo. 2016-01,~~~~Financial Instruments—Overall~~ ~~(Subtopic825-10)~~ ~~(“ASU2016-01”).~~ ~~This standard makes several changes, including the elimination of theavailable-for-sale~~ classification of equity investments, and requires equity investments with readily determinable fair values to be measured at fair value with changes in fair value recognized in net income. It is effective for interim and annual periods beginning after December 15, 2017. Based on its portfolio of investments as of September 30, 2017, the Company does not expect the adoption of ASU~~2016-01~~ ~~to have a material impact on its consolidated financial statements.~~

~~In March 2017, the FASB issued Accounting Standards UpdateNo. 2017-07,~~~~Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~~~(“ASU2017-07”).~~ The update requires employers to present the service cost component of the net periodic benefit cost in the same income statement line item as other employee compensation costs arising from services rendered during the period. The other components of net benefit cost, including interest cost, expected return on plan assets, amortization of prior service cost/credit and actuarial gain/loss, and settlement and curtailment effects, are to be presented outside of any subtotal of operating income. Employers will have to disclose the line(s) used to present the other components of net periodic benefit cost, if the components are not presented separately in the income statement.~~ASU2017-07~~ ~~is effective for fiscal years and interim periods beginning after December 15, 2017, and early adoption is permitted. The Company does not expect the adoption of ASU2017-07~~ ~~to have a material impact on its consolidated financial statements.~~

The Company presents Passenger revenue, Cargo revenue and Other operating revenue on its income statement. Passenger revenue is recognized when transportation is provided and Cargo revenue is recognized when shipments are delivered. Other operating revenue is recognized as the related performance obligations are satisfied.

The Company sells passenger ticket and related ancillary services for mainline and regional flights primarily via credit cards with payments collected by the Company in advance of the performance of related services. The Company initially records ticket sales in its Advance ticket sales liability, deferring revenue recognition until the travel occurs. For travel that has more than one flight segment, the Company deems each segment as a separate performance obligation and recognizes revenue for each segment as travel occurs. Tickets sold by other airlines where the Company provides the transportation are recognized as passenger revenue at the estimated value to be billed to the other airline when travel is provided. Differences between amounts billed and the actual amounts may be rejected and rebilled or written off if the amount recorded was different from the original estimate. When necessary, the Company records a reserve against its billings and payables with other airlines based on historical experience.

The Company sells certain tickets with connecting flights with one or more segments operated by its other airline partners. For segments operated by its other airline partners, the Company has determined that it is acting as an agent on behalf of the other airlines as they are responsible for their portion of the contract (i.e. transportation of the passenger). The Company, as the agent, recognizes revenue within Other operating revenue at the time of the travel for the net amount representing commission to be retained by the Company for any segments flown by other airlines.

Refundable tickets expire after one year from the date of issuance.Non-refundable tickets generally expire on the date of the intended travel, unless the date is extended by notification from the customer on or before the intended travel date. The Company records breakage revenue on the travel date for its estimate of tickets that will expire unused. To determine breakage, the Company uses its historical experience with refundable and non-refundable expired tickets and other facts, such as recent aging trends, program changes and modifications that could affect the ultimate expiration patterns of tickets. Fees charged in association with changes or extensionsto non-refundable tickets are considered part of the Company’s passenger travel obligation. As such, those fees are deferred at the time of collection and recognized at the time the travel is provided.

United initially capitalizes the costs of selling airline travel tickets and then recognizes those costs as Distribution expense at the time of travel. Passenger ticket costs include credit card fees, travel agency and other commissions paid, as well as global distribution systems booking fees.

Ticket Taxes.Certain governmental taxes are imposed on the Company’s ticket sales through a fee included in ticket prices. The Company collects these fees and remits them to the appropriate government agency. These fees are recorded on a net basis and, as a result, are excluded from revenue.

Accounts Receivable. Accounts receivable primarily consist of amounts due from credit card companies,non-airline partners, and cargo transportation customers. We provide an allowance for uncollectible accounts equal to the estimated losses expected to be incurred based on historical write-offs and other specific analyses. Bad debt expense and write-offs were not material for the three months ended March 31, 2018 and 2017.

Advance Ticket Sales. Advance ticket sales represent the Company’s liability to provide air transportation in the future. In both the three months ended March 31, 2018 and 2017, the Company recognized approximately $1.9 billion of passenger revenue for tickets that were included in Advance ticket sales at the beginning of those periods. All tickets sold at any given point of time have travel dates extending up to twelve months. As a result, the balance of the Company’s Advance ticket sales liability represents activity that will be recognized in the next twelve months.

Frequent Flyer Accounting. United’s MileagePlus program builds customer loyalty by offering awards, benefits and services to program participants. Members in this program earn miles for travel on United, United Express, Star Alliance members and certain other airlines that participate in the program. Members can also earn miles by purchasing the goods and services of our networkof non-airline partners. We have contracts to sell miles to these partners with the terms extending from one to eight years. These partners include domestic and international credit card issuers, retail merchants, hotels, car rental companies and our participating airline partners. Miles can be redeemed for free (other than taxes and government imposed fees), discounted or upgraded air traveland non-travel awards. Miles expire after 18 months of member account inactivity.

Miles Earned in Conjunction with Travel. When frequent flyers earn miles for flights, the Company recognizes a portion of the ticket sales as revenue when the travel occurs and defers a portion of the ticket sale representing the value of the related miles as a separate performance obligation. The Company determines the estimated selling price of travel and miles as if each element is sold on a separate basis. The total consideration from each ticket sale is then allocated to each of these elements, individually, on a pro rata basis. At the time of travel, the Company records the portion allocated to the miles to Frequent flyer deferred revenue on the Company’s consolidated balance sheet and subsequently recognizes it into revenue when miles are redeemed for air travel andnon-travel awards.

The Company’s estimated selling price of miles is based on an equivalent ticket value less breakage, which incorporates the expected redemption of miles, as the best estimate of selling price for these miles. The equivalent ticket value is based on the prior 12 months’ weighted average equivalent ticket value of similar fares as those used to settle award redemptions while taking into consideration such factors as redemption pattern, cabin class, loyalty status and geographic region. The estimated selling price of miles is adjusted by breakage that considers a number of factors, including redemption patterns of various customer groups. The Company reviews its breakage estimates annually based upon the latest available information regarding redemption and expiration patterns. The Company’s estimate of the expected expiration of miles requires significant management judgment. Current and future changes to expiration assumptions or to the expiration policy, or to program rules and program redemption opportunities, may result in material changes to the deferred revenue balance as well as recognized revenues from the program.

Co-Brand Agreement. United has a significant contract to sell MileagePlus miles to itsco-branded credit card partner Chase Bank USA, N.A. (“Chase”). Chase awards miles to MileagePlus members based on their credit card activity. United identified the following significant separately identifiable performance obligations in theco-brand agreement:

The fair value of the separately identifiable performance obligations is determined using management’s estimated selling price of each component. The objective of using the estimated selling price based methodology is to determine the price at which we would transact a sale if the product or service were sold on a stand-alone basis. Accordingly, we determine our best estimate of selling price by considering multiple inputs and methods including, but not limited to, discounted cash flows, brand value, volume discounts, published selling prices, number of miles awarded and number of miles redeemed. The Company estimated the selling prices and volumes over the term of theco-brand agreement in order to determine the allocation of proceeds to each of the components to be delivered. We also evaluate volumes on an annual basis, which may result in a change in the allocation of the estimated consideration from theco-brand agreement on a prospective basis.

Frequent flyer deferred revenue. Miles in MileagePlus members’ accounts are combined into one homogeneous pool and are thus not separately identifiable, for award redemption purposes, between miles earned in the current period and those in their beginning balance. The Company expects the majority of these miles to be redeemed within the first four years with the highest redemption rate in year one. The table below presents a roll forward of Frequent flyer deferred revenue (in millions):

In the three months ended March 31, 2018 and 2017, the Company recognized, in Other operating revenue, $482 million and $403 million, respectively, related to the marketing, advertising and other travel-related benefits of the mileage revenue associated with our various partner agreements including, but not limited to, our Chaseco-brand agreement. The portion related to the MileagePlus miles awarded of the total amounts received is deferred and presented in the table above as an increase to the frequent flyer liability. The Company also recognized, in Other operating revenue, $28 million in costs associated with thenon-travel miles redeemed in the three months ended March 31, 2018 and 2017.

Passenger Revenue by Geography. The Company further disaggregates passenger revenue by geographic regions and by mainline versus regional. The following table presents passenger revenue by geographic region and by mainline versus regional for the three months ended March 31 (in millions):

Ancillary Fees.The Company charges fees, separately from ticket sales, for certain ancillary services that are directly related to passengers’ travel, such as ticket change fees, baggage fees, inflight amenities fees, and other ticket-related fees. These ancillary fees are part of the travel performance obligation and, as such, are recognized as passenger revenue when the travel occurs. The Company recorded $497 million and $478 million of ancillary fees within passenger revenue in the first three months of 2018 and 2017, respectively.

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


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2017		2016		2017		2016		2018		2017
Earnings available to common stockholders	$	637	$	965	$	1,551	$	1,866	$	147	$	99


Basic weighted-average shares outstanding		299.8		320.0		306.8		334.9		283.9		313.7
Effect of employee stock awards		0.8		0.4		0.8		0.3		1.0		0.9

Diluted weighted-average shares outstanding		300.6		320.4		307.6		335.2		284.9		314.6

Earnings per share, basic	$	2.12	$	3.02	$	5.06	$	5.57
Earnings per share, diluted	$	2.12	$	3.01	$	5.04	$	5.57

Earnings per share, basic and diluted									$	0.52	$	0.32

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

In the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2018, UAL repurchased approximately ~~8 million and 18~~8.4 million shares of UAL common stock in open market transactions ~~respectively,~~ for $0.6 ~~billion and $1.3 billion, respectively.~~billion. As of ~~September 30, 2017,~~March 31, 2018, the Company had approximately ~~$0.6~~$2.4 billion remaining to purchase shares under its ~~existing~~ share repurchase ~~authority.~~program. UAL may repurchase shares through the open market, privately negotiated transactions, block trades or accelerated share repurchase transactions from time to time in accordance with applicable securities laws. UAL will repurchase shares of UAL common stock subject to prevailing market conditions, and may discontinue such repurchases at any time. See Part II, Item ~~2., “Unregistered~~2, Unregistered Sales of Equity Securities and Use of ~~Proceeds”~~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
UAL	Pension and Other Postretirement Liabilities		Fuel Derivative Contracts		Investments and Other		Pension and Other Postretirement Liabilities		Fuel Derivative Contracts		Investments and Other		Total		Pension and Other Postretirement Liabilities		Investments and Other		Income Taxes		Total
Balance at June 30, 2017	$	(860)	$	—	$	(16)	$	26	$	—	$	6	$	(844)
Balance at December 31, 2017															$	(1,102)	$	(6)	$	(39)	$	(1,147)
Changes in value		(9)		—		26		3		—		(9)		11		23		(4)		(6)		13
Amounts reclassified to earnings		14		—		—		(5)		—		—		9		16		—		(3)		13
Amounts reclassified to retained earnings (a)																—		7		—		7

Net change		5		—		26		(2)		—		(9)		20		39		3		(9)		33

Balance at September 30, 2017	$	(855)	$	—	$	10	$	24	$	—	$	(3)	$	(824)
Balance at March 31, 2018															$	(1,063)	$	(3)	$	(48)	$	(1,114)

Balance at December 31, 2016	$	(854)	$	(2)	$	1	$	24	$	1	$	1	$	(829)	$	(854)	$	(1)	$	26	$	(829)
Changes in value		(42)		—		9		15		—		(3)		(21)		(26)		—		10		(16)
Amounts reclassified to earnings		41		2		—		(15)		(1)		(1)		26		13		2		(6)		9

Net change		(1)		2		9		—		(1)		(4)		5		(13)		2		4		(7)

Balance at September 30, 2017	$	(855)	$	—	$	10	$	24	$	—	$	(3)	$	(824)
Balance at March 31, 2017															$	(867)	$	1	$	30	$	(836)


							Deferred Taxes
UAL	Pension and Other Postretirement Liabilities		Fuel Derivative Contracts		Investments and Other		Pension and Other Postretirement Liabilities		Fuel Derivative Contracts		Investments and Other		Total
Balance at June 30, 2016	$	(385)	$	(41)	$	3	$	(146)	$	(165)	$	—	$	(734)
Changes in value		(124)		(6)		1		45		2		(1)		(83)
Amounts reclassified to earnings		6		24		(2)		(2)		(8)		1		19

Net change		(118)		18		(1)		43		(6)		—		(64)

Balance at September 30, 2016	$	(503)	$	(23)	$	2	$	(103)	$	(171)	$	—	$	(798)

Balance at December 31, 2015	$	(363)	$	(215)	$	3	$	(154)	$	(102)	$	—	$	(831)
Changes in value		(157)		(5)		1		57		2		(1)		(103)
Amounts reclassified to earnings		17		197		(2)		(6)		(71)		1		136

Net change		(140)		192		(1)		51		(69)		—		33

Balance at September 30, 2016	$	(503)	$	(23)	$	2	$	(103)	$	(171)	$	—	$	(798)

(a) This amount represents the unrealized loss on the Company’s investment in Azul, S.A. (“Azul”) which was previously classified as anavailable-for-sale security.

(a) This AOCI component is included in the computation of net periodic pension and other postretirement costs (see Note 5 ofto the financial statements included in this ~~report~~Part I, Item 1 for additional information).

The Company’s effective tax rate for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 was ~~35.0%~~20.3% and ~~35.3%, respectively, and the effective tax rate for the three and nine months ended September 30, 2016 was 36.1% and 36.4%~~33.6%, respectively. The effective tax ~~rates represented~~rate represents a blend of federal, state and foreign taxes and included the impact of certain nondeductible items. The effective tax rate for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 also reflects the reduced federal corporate income tax rate as a result of the enactment of the Tax Cuts and Jobs Act (the “Tax Act”) in December 2017 ~~also reflects~~and the impact of a change in the Company’s mix of domestic and foreign earnings. We continue to analyze the different aspects of the Tax Act which could potentially affect the provisional estimates that were recorded at December 31, 2017.

Defined Benefit Pension and Other Postretirement Benefit Plans. The Company’s net periodic benefit cost includes the following components for the three months ended March 31 (in millions):


	Pension Benefits				Other Postretirement Benefits
	Three Months Ended September 30,				Three Months Ended September 30,				Pension Benefits				Other Postretirement Benefits				Affected Line Item in the Statements of Consolidated Operations
	2017		2016		2017		2016		2018		2017		2018		2017
Service cost	$	48	$	29	$	4	$	4	$	57	$	49	$	3	$	2		Salaries and related costs
Interest cost		55		50		16		22		54		55		15		17		Miscellaneous, net
Expected return on plan assets		(61)		(54)		—		—		(73)		(60)		—		—		Miscellaneous, net
Amortization of unrecognized (gain) loss and prior service cost (credit)		32		19		(18)		(13)		33		31		(17)		(18)		Miscellaneous, net
Settlement loss		3		2		—		—		—		1		—		—		Miscellaneous, net
Curtailment gain		—		—		—		(47)

Total	$	77	$	46	$	2	$	(34)	$	71	$	76	$	1	$	1


	Pension Benefits				Other Postretirement Benefits
	Nine Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Service cost	$	146	$	84	$	10	$	14
Interest cost		165		151		50		66
Expected return on plan assets		(182)		(162)		(1)		(1)
Amortization of unrecognized (gain) loss and prior service cost (credit)		95		57		(54)		(40)
Settlement loss		5		4		—		—
Curtailment gain		—		—		—		(47)

Total	$	229	$	134	$	5	$	(8)

During the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2018, the Company contributed ~~$160~~$113 million ~~and $400 million, respectively,~~ to its U.S. domestictax-qualified defined benefit pension plans.

Share-Based Compensation. ~~During~~In the ~~first nine~~three months ~~of 2017, UAL’s Board of Directors and stockholders approved~~ended March 31, 2018, UAL granted share-based compensation awards pursuant to the United Continental Holdings, Inc. 2017 Incentive Compensation Plan (the “2017 Plan”). The 2017 Plan is an incentive compensation plan that allows the Company to use different forms of long-term equity incentives to attract, retain, and reward officers and employees (including prospective officers and employees). The 2017 Plan replaced the United Continental Holdings, Inc. 2008 Incentive Compensation Plan (the “2008 Plan”). Any awards granted under the 2008 Plan prior to the approval of the 2017 Plan remain in effect pursuant to their terms. Awards may not be granted under the 2017 Plan after May 24, 2027. Under the 2017 Plan, the Company may grant:~~non-qualified~~ stock options, incentive stock options (within the meaning of Section 422 of the Internal Revenue Code of 1986), stock appreciation rights, restricted shares, restricted share units (“RSUs”), performance compensation awards, performance units, cash incentive awards, other equity-based and equity-related awards, and dividends and dividend equivalents.

~~In the nine months ended September 30, 2017, UAL granted share-based compensation awards pursuant to both the 2008 Plan and the 2017~~ Plan. These share-based compensation awards include ~~1.5~~1.7 million RSUs consisting of ~~0.9~~1.0 million time-vested RSUs and ~~0.6~~0.7 million performance-based ~~RSUs, and 36,000 stock options.~~RSUs. The time-vested RSUs vestpro-rata, on February 28th of each year, over a ~~three year~~three-year period from the date of grant. These RSUs are generally equity awards settled in stock for domestic employees and liability awards settled in cash for international employees. The cash payments are based on the20-day average closing price of UAL common stock immediately prior to the vesting date. The performance-based RSUs vest based on the Company’s relative improvement inpre-tax margin, as compared to a group of industry peers, for the three years ending December 31, ~~2019.~~2020. If this performance condition is achieved, cash payments will be made after the end of the performance period based on the20-day average closing price of UAL common stock immediately prior to the vesting date. The Company accounts for the performance-based RSUs as liability awards.

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


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2017		2016		2017		2016		2018		2017
Share-based compensation expense	$	10	$	23	$	66	$	36	$	17	$	23

	September 30, 2017		December 31, 2016						March 31, 2018		December 31, 2017
Unrecognized share-based compensation	$	90	$	65					$	102	$	53

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


	September 30, 2017								December 31, 2016								March 31, 2018								December 31, 2017
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	1,870	$	1,870	$	—	$	—	$	2,179	$	2,179	$	—	$	—	$	2,404	$	2,404	$	—	$	—	$	1,482	$	1,482	$	—	$	—
Short-term investments:
Corporate debt		959		—		959		—		835		—		835		—		945		—		945		—		958		—		958		—
Asset-backed securities		891		—		891		—		792		—		792		—		606		—		606		—		753		—		753		—
U.S. government and agency notes																		110		—		110		—		113		—		113		—
Certificates of deposit placed through an account registry service (“CDARS”)		142		—		142		—		246		—		246		—		53		—		53		—		120		—		120		—
U.S. government and agency notes		112		—		112		—		140		—		140		—
Other fixed-income securities		171		—		171		—		54		—		54		—		172		—		172		—		188		—		188		—
Other investments measured at NAV		183		—		—		—		182		—		—		—
Other investments measured at net asset value (“NAV”)																		185		—		—		—		184		—		—		—
Restricted cash		109		109		—		—		124		124		—		—		106		106		—		—		109		109		—		—
Long-term investments:
Equity securities		114		114		—		—		—		—		—		—		144		144		—		—		99		99		—		—
Enhanced equipment trust certificates (“EETC”)		21		—		—		21		23		—		—		23		19		—		—		19		22		—		—		22

Available-for-sale investment maturities - The short-term investments shown in the table above are classified as~~available-for-sale.~~available-for-sale, with the exception of investments measured at NAV. As of ~~September 30, 2017,~~March 31, 2018, asset-backed securities have remaining maturities of less than one year to approximately 17 years, corporate debt securities have remaining maturities of less than one year to approximately three 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 ~~two~~three years. The EETC securities mature in 2019.

Restricted cash - Restricted cash primarily includes collateral for letters of credit and collateral associated with obligations for facility leases and workers’ ~~compensation obligations.~~compensation.

Equity securities - Equity securities represent United’s investment in ~~Azul Linhas Aereas Brasileiras S.A. (“Azul”), which was previously accounted for as a cost-method investment.~~Azul. The Company recognizes changes in Azul’s fair market value in Miscellaneous, net in its statements of ~~Azul’s shares became readily determinable in the second quarter of 2017 upon its initial public offering and is now accounted for as anavailable-for-sale~~ ~~investment.~~consolidated operations.

Investments presented in the table 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:

As of September 30, 2017, the Company did not have any fuel hedging contracts outstanding to hedge its fuel consumption. The last of the Company’s fuel hedge derivatives designated for cash flow hedge accounting expired in December 2016. The Company’s current strategy is to not enter into transactions to hedge its fuel consumption, although the Company regularly reviews its strategy based on market conditions and other factors.

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

(a) The 2017 loss reclassified from AOCI into fuel expense represents hedge losses on December 2016 settled trades, but for which the associated fuel purchased in December was not consumed until January 2017.

Commitments.As of ~~September 30, 2017,~~March 31, 2018, United had firm commitments and options to purchase aircraft from The Boeing Company (“Boeing”), and Airbus S.A.S. (“Airbus”~~), and Embraer S.A. (“Embraer”~~) presented in the table below:

The aircraft listed in the table above are scheduled for delivery through 2027. To the extent the Company and the aircraft manufacturers with whom the Company has existing orders for new aircraft agree to modify the contracts governing those orders, the amount and timing of the Company’s future capital commitments could change. For the remainder of ~~2017,~~2018, United expects to take delivery of ~~five Embraer E175~~two Boeing777-300ER aircraft, three Boeing 787 aircraft, 10 Boeing 737 MAX aircraft and three usedBoeing 767-300ER aircraft. ~~Additionally, the Company also currently expects~~ In March 2018, United entered into an agreement to ~~take delivery of four~~purchase 20 used Airbus ~~A319s~~A319 aircraft with expected delivery dates scheduled in 2020 and ~~two used Airbus A320s for the remainder of 2017.~~2021.

The table below summarizes United’s commitments as of ~~September 30, 2017,~~March 31, 2018, which primarily relate to the acquisition of aircraft and related spare engines, aircraft improvements and include other capital purchase commitments. 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 billions)		(in billions)
Last three months of 2017	$	0.9
2018		3.0
Last nine months of 2018			$	2.4
2019		3.1		3.7
2020		2.2		2.0
2021		1.4		2.7
After 2021		11.4
2022				1.8
After 2022				9.8

	$	22.0	$	22.4

United secured individual bank financing for five Embraer E175 aircraft to be delivered in the last three months of 2017. See Note 9 of this report for additional information on aircraft financing. The Company has also 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.

~~Regional CPAs.~~Facility and Other Operating Leases.In ~~February 2017,~~March 2018, United ~~entered into~~executed a ~~five-year capacity purchase agreement (“CPA”)~~new Airline Use and Lease Agreement at O’Hare International Airport with ~~Air Wisconsin Airlines for regional service under~~ the ~~United Express brand to operate up to 65 CRJ 200 aircraft.~~

~~In the third quarter~~City of ~~2017, United reached agreements~~Chicago with ~~certain of its regional air partners to accelerate the retirement of 21 turboprop aircraft from service, modify some aircraft service entry and exit dates, as well as extend the~~a lease term of ~~up to~~ approximately ~~125 aircraft under an existing CPA~~15 years effective May 12, 2018 through December 31, ~~2022. The future commitments have been incorporated into the table below.~~2033.

The table below summarizes the Company’s scheduled future minimum lease payments ~~through the end of the~~under facility operating leases having initial or remaining noncancelable lease terms of ~~our CPAs, excluding variable pass-through costs such~~more than one year as ~~fuel and landing fees, among others.~~of March 31, 2018 (in millions):


	(in billions)		Facility and Other Operating Leases
Last three months of 2017	$	0.5
2018		2.0
Last nine months of 2018			$	1,010
2019		1.8		1,209
2020		1.6		1,302
2021		1.5		1,068
After 2021		4.6
2022				930
After 2022				7,576

	$	12.0	$	13,095

Guarantees.As of ~~September 30, 2017,~~March 31, 2018, United is the guarantor of approximately ~~$1.8~~$2.0 billion in aggregate principal amount oftax-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 approximately $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 approximately ~~$441~~$454 million of these obligations are accounted for as capital leases. All of these bonds are due between 2019 and 2038.

Increased Cost Provisions.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, ~~(“LIBOR”),~~ for certain other increased costs that the lenders incur in carrying these loans as a result of any change in law, subject, in most cases, to obligations of the lenders to take certain limited steps to mitigate the requirement for, or the amount of, such increased costs. At ~~September 30, 2017,~~March 31, 2018, the Company had ~~$3.3~~$3.4 billion of floating rate debt and ~~$68~~$52 million of fixed rate debt with remaining terms of up to 11 years that are subject to these increased cost provisions. In several financing transactions involving loans or leases fromnon-U.S. entities, with remaining terms of up to 11 years and an aggregate balance of ~~$3.2~~$3.3 billion, the Company bears the risk of any change in tax laws that would subject loan or lease payments thereunder tonon-U.S. entities to withholding taxes, subject to customary exclusions.

As of ~~September 30, 2017,~~March 31, 2018, United is the guarantor of ~~$159~~$154 million of aircraft mortgage debt issued by one of United’s regional carriers. The aircraft mortgage debt is subject to similar increased cost provisions as described above for the Company’s debt, and the Company would potentially be responsible for those costs under the guarantees.

Labor Negotiations. As of ~~September 30, 2017,~~March 31, 2018, United had approximately ~~89,700~~90,800 employees, of whom approximately ~~80%~~79% were represented by various U.S. labor organizations. UNITE HERE is attempting to organize United’s Catering Operations employees, who are currently unrepresented, and filed an application to do so with the National Mediation Board on January 24, 2018.

As of ~~September 30, 2017,~~March 31, 2018, 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 ~~September 30, 2017,~~March 31, 2018, UAL and United were in compliance with their respective debt covenants.

~~2017 Credit and Guaranty Agreement.~~ On March 29, 2017, United and UAL, as borrower and guarantor, respectively, entered into an Amended and Restated Credit and Guaranty Agreement (the “2017 Credit Agreement”). The 2017 Credit Agreement consists of a $1.5 billion term loan due April 1, 2024, which (i) was used to retire the entire principal balance of the term loans under the credit and guaranty agreement, dated March 27, 2013 (as amended, the “2013 Credit Agreement”), and (ii) increased the term loan balance by approximately $440 million, and a $2.0 billion revolving credit facility available for drawing until April 1, 2022, which increased the available capacity under the revolving credit facility of the 2013 Credit Agreement. As of ~~September 30, 2017,~~March 31, 2018, United had its entire capacity of $2.0 billion available under the revolving credit ~~facility. The obligations of United under the 2017 Credit Agreement are secured by liens on certain international route authorities, certaintake-off~~ ~~and landing rights and related assets of United.~~

Borrowings under the 2017 Credit Agreement bear interest at a variable rate equal to LIBOR, subject to a 0% floor, plus a margin of 2.25% per annum, or another rate based on certain market interest rates, plus a margin of 1.25% per annum. The principal amountfacility of the ~~term loan must be repaid in consecutive quarterly installments of 0.25% of~~Company’s Amended and Restated Credit and Guaranty Agreement (as amended, the original principal amount thereof, commencing on June 30, 2017, with any unpaid balance due on April 1, 2024. United may prepay all or a portion of the loan from time to time, at par plus accrued and unpaid interest. United pays a commitment fee equal to 0.75% per annum on the undrawn amount available under the revolving credit facility.

~~The 2017~~“2017 Credit Agreement includes covenants that, among other things, require the Company to maintain at least $2.0 billion of unrestricted liquidity and a minimum ratio of appraised value of collateral to the outstanding obligations under the Credit Agreement of 1.60 to 1.0. The 2017 Credit Agreement contains events of default customary for this type of financing, including a cross default and cross acceleration provision to certain other material indebtedness of the Company. Under the provisions of the 2017 Credit Agreement, UAL’s ability to make investments and to pay dividends on, or repurchase, UAL’s common stock is restricted.Agreement”).

EETCs. In ~~September 2016 and June 2016,~~February 2018, United created two new 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 ~~2017~~2018 are as follows (in millions, except stated interest rate):

EETC Date

Class
   Principal
Final expected
distribution date
   Stated
interest
rate    Total debt
recorded
as of September 30,
2017    Proceeds
received
from
issuance of
debt during
2017
September 2016
   AA    $             637    October 2028    2.875%    $ 637    $ 557
September 2016
   A    283    October 2028    3.10%    283

247

June 2016
   AA    729    July 2028    3.10%    729    319
June 2016
   A    324    July 2028    3.45%    324    142






      $          1,973          $                       1,973    $             1,265

~~Secured Notes Payable.~~In the first nine months of 2017, United borrowed approximately $392 million aggregate principal amount from various financial institutions to finance the purchase of several aircraft delivered in 2017. The notes evidencing these borrowings, which are secured by the related aircraft, mature in 2027 and each has an interest rate comprised of LIBOR plus a specified margin.

~~4.25% Senior Notes due 2022.~~In September 2017, UAL issued $400 million aggregate principal amount of 4.25% Senior Notes due October 1, 2022 (the “4.25% Senior Notes due 2022”). These notes are fully and unconditionally guaranteed and recorded by United on its balance sheet as debt. The indenture for the 4.25% Senior Notes due 2022 requires UAL to offer to repurchase the notes for cash at a purchase price equal to 101% of the principal amount of notes repurchased plus accrued and unpaid interest if certain changes of control of UAL occur.

~~5% Senior Notes due 2024.~~In January 2017, UAL issued $300 million aggregate principal amount of 5% Senior Notes due February 1, 2024 (the “5% Senior Notes due 2024”). These notes are fully and unconditionally guaranteed and recorded by United on its balance sheet as debt. The indenture for the 5% Senior Notes due 2024 requires UAL to offer to repurchase the notes for cash at a purchase price equal to 101% of the principal amount of notes repurchased plus accrued and unpaid interest if certain changes of control of UAL occur.

The table below presents the Company’s contractual principal payments (not including debt discount or debt issuance costs) at ~~September 30, 2017~~March 31, 2018 under then-outstanding long-term debt agreements (in millions):


Last nine months of 2018	$	1,380
2019		1,218
2020		1,207
2021		1,194
2022		1,529
After 2022		7,457

	$	13,985

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


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
Operating:	2017		2016		2017		2016		2018		2017
Severance and benefit costs	$	23	$	13	$	101	$	27	$	14	$	37
Impairment of assets		15		—		15		412		23		—
Labor agreement costs		—		14		—		124
Cleveland airport lease restructuring		—		—		—		74
(Gains) losses on sale of assets and other special charges		12		18		29		32		3		14

Special charges		50		45		145		669		40		51
Nonoperating:
Other (gain) loss		—		—		—		(1)

Special charges before income taxes		50		45		145		668
Income tax benefit related to special charges		(18)		(16)		(52)		(241)		(9)		(18)

Total special charges, net of tax	$	32	$	29	$	93	$	427	$	31	$	33

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017, the Company recorded ~~$16 million ($10 million net of taxes) and $73 million ($47 million net of taxes), respectively, of~~ severance and benefit costs related to a voluntaryearly-out program for its technicians and related employees represented by the International Brotherhood of Teamsters (the “IBT”). of $8 million ($7 million net of taxes) and $21 million ($14 million net of taxes) respectively. In the first quarter of 2017, approximately 1,000 technicians and related employees 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 early 2019. Also during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017, the Company recorded ~~$7 million ($5 million net of taxes) and $28 million ($18 million net of taxes), respectively, of~~ severance primarily related to its management reorganization ~~initiative.~~

~~During the three and nine months ended September 30, 2016, the Company recorded $13~~initiative of $6 million ($84 million net of taxes) and ~~$27~~$16 million ($10 million net of taxes) respectively.

During the three months ended March 31, 2018, the Company recorded a $23 million ($17 million net of taxes)~~, respectively, of severance~~ fair value adjustment for aircraft purchased off lease and ~~benefit costs primarily~~impairments related to ~~a voluntaryearly-out~~ ~~program for its flight attendants.~~

~~During the three months ended September 30, 2017, the Company recorded a $15 million ($10 million net of taxes) intangible asset impairment charge related to a maintenance service agreement.~~

In April 2016, the Federal Aviation Administration (“FAA”) announced that, effective October 30, 2016, it would designate Newark Liberty International Airport (“Newark”) as a Level 2 schedule-facilitated airport under the International Air Transport Association Worldwide Slot Guidelines. The designation was associated with an updated demandcertain fleet types and ~~capacity analysis of Newark by the FAA. In the second quarter of 2016, the Company determined that the FAA’s action impaired the entire value of its Newark~~certain international slots ~~because the slots are~~ no longer ~~the mechanism that governstake-off~~ ~~and landing rights. Accordingly, the Company recorded a $412 million special charge ($264 million net of taxes) to write off the intangible asset.~~

During the nine months ended September 30, 2016, the fleet service, passenger service, storekeeper and other employees represented by the International Association of Machinists and Aerospace Workers (the “IAM”) ratified seven new contracts with the Company which extended the contracts through 2021. The Company also reached a tentative agreement with the IBT during the same time period. During the three and nine months ended September 30, 2016, the Company recorded $61 million ($39 million net of taxes) and $171 million ($109 million net of taxes), respectively, of special charges primarily for payments in conjunction with the IAM and IBT agreements described above. Also, as part of its contract with the Association of Flight Attendants, the Company amended two of its flight attendant postretirement medical plans. The amendments triggered curtailment accounting, resulting in the recognition of a~~one-time~~ ~~$47 million gain ($30 million net of taxes) for accelerated recognition of a prior service credit.~~

During the nine months ended September 30, 2016, the City of Cleveland agreed to amend the Company’s lease, which runs through 2029, associated with certain excess airport terminal space (principally Terminal D) and related facilities at Hopkins International Airport. The Company recorded an accrual for remaining payments under the lease for facilities that the Companyuse.

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 recorded a special charge of $74 million ($47 million net of taxes) related to the amended lease.

~~The accrual balance for severance and benefits was $31 million as of September 30, 2017, compared to $34 million as of September 30, 2016.~~ The severance-related accrual as of ~~September 30, 2017~~March 31, 2018 is primarily related to severance and other compensation expense associated with voluntary employee early retirement programs and is expected to be mostly paid through early 2019. The accrual balance for future lease payments on permanently grounded aircraft ~~was $28 million~~ as of ~~September 30, 2017, compared to $41 million as of September 30, 2016. The grounded aircraft related accrual as of September 30, 2017~~March 31, 2018 is expected to be mostly paid through 2025. ~~The following~~Activity related to these accruals is ~~a reconciliation of severance and permanently grounded aircraft accrual activity for the nine months ended September 30:~~as follows (in millions):


					Severance and Benefits		Permanently Grounded Aircraft
Balance at December 31, 2017					$	37	$	22
Accrual						14		—
Payments						(19)		(1)

Balance at March 31, 2018					$	32	$	21


	Severance and Benefits		Permanently Grounded Aircraft		Severance and Benefits		Permanently Grounded Aircraft
Balance at December 31, 2016	$	14	$	41	$	14	$	41
Accrual		101		—		37		—
Payments		(84)		(13)		(23)		(1)

Balance at September 30, 2017	$	31	$	28
Balance at March 31, 2017					$	28	$	40


	Severance and Benefits		Permanently Grounded Aircraft
Balance at December 31, 2015	$	27	$	78
Accrual		27		(17)
Payments		(20)		(20)

Balance at September 30, 2016	$	34	$	41

ITEM 2.

~~ITEM 2.~~

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

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 Form10-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 approximately ~~4,500~~4,600 flights a day to ~~337~~354 airports across five continents.

~~The~~In 2018, the Company expects ~~full-year 2017~~its consolidated ~~capacity~~available seat miles to ~~increase approximately 3.5%~~grow between 4.5% and 5.5% year-over-year. ~~Domestic capacity~~Most of this growth will be concentrated in our domestic network, especially in ourmid-continent hubs. We believe greater scale and connectivity at our hubs reinforces our relevance and value proposition to our customers. Rebanking at our hubs is expected to ~~increase approximately 4.5% year-over-year and international capacity is expected to increase approximately 2.0% year-over-year.~~

~~As outlined at our November 2016 Investor Day presentation, the Company expects to~~ drive significant ~~incremental value by 2020 relative to 2015. United anticipates capturing this value through a variety of initiatives including a~~additional connection opportunities. We will also expand flights in~~re-fleeting~~non-peak and upgauge program, additional customer choice through segmentation, improvements to the revenue management systems, ongoing sensible cost management, realizing our full network potential through improved schedule quality and enhancements to the MileagePlus program. In addition, the Company will continue to focus on improving reliability while increasing the efficiencytimes of the ~~operation.~~year to more efficiently use our aircraft and facilities with the objective of driving an increase in profitability.

The price of jet fuel remains volatile. Based on projected fuel consumption in ~~2017,~~2018, a one dollar change in the price of a barrel of crude oil would change the Company’s annual fuel expense by approximately ~~$95~~$97 million.

The following discussion provides an analysis of our results of operations and reasons for material changes therein for the three months ended ~~September 30, 2017~~March 31, 2018 as compared to the corresponding period in ~~2016.~~2017.

~~Third~~First Quarter ~~2017~~2018 Compared to ~~Third~~First Quarter ~~2016~~2017

The Company recorded net income of ~~$637~~$147 million in the ~~third~~first quarter of ~~2017~~2018 as compared to net income of ~~$965~~$99 million in the ~~third~~first quarter of ~~2016.~~2017. The Company considers a key measure of its performance to be operating income, which was ~~$1.1 billion~~$276 million for the ~~third~~first quarter of 2018, as compared to $320 million for the first quarter of 2017, ~~as compared to $1.6 billion for the third quarter of 2016,~~ a ~~$532~~$44 million decrease year-over-year. ~~Third quarter 2017 income before income taxes was negatively impacted by an estimated $185 million as a result of severe weather in southeast Texas, Florida and parts of the Caribbean.~~ Significant components of the Company’s operating results for the three months ended ~~September 30~~March 31 are as follows (in millions, except percentage changes):

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


	2017		2016		Increase (Decrease)		% Change		2018		2017		Increase (Decrease)		% Change
Passenger—Mainline	$	7,083	$	7,017	$	66		0.9
Passenger—Regional		1,445		1,586		(141)		(8.9)

Total passenger revenue		8,528		8,603		(75)		(0.9)
Passenger revenue										8,149		7,653		496		6.5
Cargo		257		224		33		14.7		293		238		55		23.1
Other operating revenue		1,093		1,086		7		0.6		590		535		55		10.3

Total operating revenue	$	9,878	$	9,913	$	(35)		(0.4)	$	9,032	$	8,426	$	606		7.2

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


	Domestic		Atlantic		Pacific		Latin		Total Consolidated		Mainline		Regional		Domestic		Atlantic		Pacific		Latin		Total
Increase (decrease) from 2016:
Increase (decrease) from 2017:
Passenger revenue (in millions)	$	(2)	$	3	$	(109)	$	33	$	(75)	$	66	$	(141)	$	317	$	135	$	16	$	28	$	496
Passenger revenue		— %		0.2 %		(9.3)%		4.7 %		(0.9)%		0.9 %		(8.9)%		6.8 %		12.1 %		1.5 %		3.4 %		6.5 %
Average fare per passenger		(2.2)%		(0.1)%		(6.0)%		3.8 %		(2.5)%		(4.9)%		0.4 %		1.6 %		1.4 %		5.0 %		5.3 %		2.2 %
Yield		(3.2)%		(0.9)%		(6.6)%		3.4 %		(2.5)%		(2.1)%		1.9 %		2.2 %		1.0 %		(1.9)%		2.9 %		1.7 %
PRASM		(4.4)%		(0.4)%		(10.4)%		3.5 %		(3.7)%		(3.1)%		(1.8)%		1.6 %		8.8 %		(1.5)%		5.1 %		2.7 %
Passengers		2.2 %		0.3 %		(3.5)%		0.9 %		1.7 %		6.1 %		(9.2)%		5.1 %		10.5 %		(3.4)%		(1.9)%		4.2 %
RPMs (traffic)		3.3 %		1.1 %		(2.9)%		1.3 %		1.7 %		3.2 %		(10.6)%		4.5 %		11.0 %		3.4 %		0.4 %		4.7 %
ASMs (capacity)		4.6 %		0.6 %		1.2 %		1.3 %		3.0 %		4.2 %		(7.2)%		5.2 %		3.1 %		3.0 %		(1.6)%		3.6 %
Passenger load factor (points)		(1.1)		0.4		(3.5)		—		(1.1)		(0.9)		(3.0)		(0.5)		5.2		0.3		1.7		0.8

~~Consolidated passenger~~Passenger revenue in the ~~third~~first quarter of ~~2017 decreased $75~~2018 increased $496 million, or ~~0.9%~~6.5%, as compared to theyear-ago period primarily due to a ~~1.1 percentage point decrease~~4.7% increase in traffic and 0.8 points increase in load factor. ~~Third~~First quarter ~~2017 consolidated~~2018 PRASM and ~~consolidated~~ yield ~~decreased 3.7%~~increased 2.7% and ~~2.5%~~1.7%, respectively, compared to the ~~third~~first quarter of ~~2016. The Pacific region experienced a 10.4% decline in PRASM in the third quarter of 2017 as compared to theyear-ago~~ ~~period due to unfavorable supply and demand dynamics in China. The Domestic region experienced a 4.4% and a 3.2% decline in PRASM and yield, respectively, as compared to theyear-ago~~ ~~period due to severe weather in southeast Texas, Florida, and parts of the Caribbean, uncompetitive Basic Economy pricing, and competitive pricing environment withultra-low-cost~~ ~~carriers.~~2017.

Cargo revenue increased ~~$33~~$55 million, or ~~14.7%~~23.1%, in the ~~third~~first quarter of ~~2017~~2018 as compared to theyear-ago period primarily due to higher ~~international freight~~yield and volume.

Other operating revenue increased $55 million, or 10.3%, in the first quarter of 2018 as compared to theyear-ago period primarily due to an approximately $50 millionone-time payment of MileagePlus related revenue.

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


	2017		2016		Increase (Decrease)		% Change		2018		2017		Increase (Decrease)		% Change
Salaries and related costs	$	2,812	$	2,625	$	187		7.1	$	2,726	$	2,636	$	90		3.4
Aircraft fuel		1,809		1,603		206		12.9		1,965		1,560		405		26.0
Regional capacity purchase										619		536		83		15.5
Landing fees and other rent		585		546		39		7.1		558		544		14		2.6
Regional capacity purchase		567		572		(5)		(0.9)
Depreciation and amortization		556		503		53		10.5		541		518		23		4.4
Aircraft maintenance materials and outside repairs		451		451		—		—		440		454		(14)		(3.1)
Distribution expenses		352		345		7		2.0		342		319		23		7.2
Aircraft rent		145		168		(23)		(13.7)		127		179		(52)		(29.1)
Special charges		50		45		5		NM		40		51		(11)		NM
Other operating expenses		1,459		1,431		28		2.0		1,398		1,309		89		6.8

Total operating expenses	$	8,786	$	8,289	$	497		6.0	$	8,756	$	8,106	$	650		8.0

Salaries and related costs increased ~~$187~~$90 million, or ~~7.1%~~3.4%, in the ~~third~~first quarter of ~~2017~~2018 as compared to theyear-ago period primarily due to contractually higher pay rates and benefit expenses driven by collective bargaining agreements ~~finalized in 2016,~~ and a ~~2.6%~~0.5% increase in average full-time equivalent ~~employees, partially offset by a decrease in profit sharing and other employee incentive programs expense.~~employees.

Aircraft fuel expense increased ~~$206~~$405 million, or ~~12.9%~~26.0%, year-over-year primarily due to ~~an 11.8%~~a 23.4% increase in the average price per gallon of aircraft fuel in the ~~third~~first quarter of ~~2017~~2018 compared to theyear-ago period. ~~The table below presents the significant changes in aircraft fuel cost per gallon in the three month period ended September 30, 2017 as compared to theyear-ago~~ ~~period:~~

~~Landing fees and other rent~~Regional capacity purchase increased ~~$39~~$83 million, or ~~7.1%~~15.5%, in the ~~third~~first quarter of ~~2017~~2018 as compared to theyear-ago period due to ~~higher rental rates and~~ a 3%6.3% increase in ~~consolidated capacity.~~

~~Depreciation and amortization increased $53 million, or 10.5%, in~~regional capacity related to the ~~third quarter of 2017 as compared~~Company’s initiative to ~~theyear-ago~~ ~~period, primarily due to additions of new aircraft, aircraft improvements and increases in information technology assets.~~improve connectivity at its domestic hubs.

Aircraft rent decreased ~~$23~~$52 million, or ~~13.7%~~29.1%, in the ~~third~~first quarter of ~~2017~~2018 as compared to theyear-ago period, primarily due to the purchase of leased aircraft and ~~lower~~ lease ~~renewal rates.~~term expirations.

Other operating expenses increased $89 million, or 6.8%, in the first quarter of 2018 as compared to theyear-ago period due to increases in purchased services related to our airport operations, technology initiatives, trucking and handling of cargo shipments, and due to increased volumes of onboard food and beverages.

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


	2018		2017
Severance and benefit costs	$	14	$	37
Impairment of assets		23		—
(Gains) losses on sale of assets and other special charges		3		14

Special charges	$	40	$	51

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

Nonoperating Income ~~(Expense)~~(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 ~~September 30~~March 31 (in millions, except for percentage changes):


	2017		2016		Increase (Decrease)		% Change		2018		2017		Increase (Decrease)		% Change
Interest expense	$	(164)	$	(150)	$	14		9.3	$	(176)	$	(162)	$	14		8.6
Interest capitalized		20		20		—		—		19		23		(4)		(17.4)
Interest income		17		14		3		21.4		17		11		6		54.5
Miscellaneous, net		15		2		13		NM		48		(42)		(90)		NM

Total	$	(112)	$	(114)	$	(2)		(1.8)	$	(92)	$	(170)	$	(78)		(45.9)

~~Income Taxes.~~~~See Note 4 to the financial statements included in Part I, Item 1 of this report for information related to income taxes.~~

~~The Company recorded~~Miscellaneous, net ~~income of $1.6 billion~~includes, in the first ~~nine months~~quarter of ~~2017~~2018, a $45 million gain for the change in market value of the Company’s equity investment in Azul, S.A. and $12 million ofnon-service cost component of the pension and postretirement net periodic benefit cost as compared to ~~net income of $1.9 billion~~$26 million in the first nine months of 2016. The Company considers a key measure of its performance to be operating income, which was $2.8 billion for the first nine months of 2017 as compared to $3.3 billion for the first nine months of 2016, a $564 million decrease year-over-year. Income before income taxes for the first nine months of 2017 was negatively impacted by an estimated $185 million as a result of severe weather in southeast Texas, Florida and parts of the Caribbean. Significant components of the Company’s operating results for the nine months ended September 30 are as follows (in millions, except percentage changes):

~~Certain consolidated statistical information for the Company’s operations for the nine months ended September 30 is as follows:~~

~~(c) The number of seats available for passengers multiplied by the number of scheduled miles those seats are flown.~~

~~(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 nine months ended September 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 nine months ended September 30, 2017 compared to the nine months ended September 30, 2016:

~~Consolidated passenger revenue in the first nine months of 2017 increased $628 million, or 2.7%, as compared to~~ theyear-ago period primarily due to a 2.7% increase in traffic. Consolidated PRASM and consolidated yield for the first nine months of 2017 decreased 0.6% and 0.1%, respectively, as compared to the first nine months of 2016. The Pacific region experienced a 6.8% decline in PRASM in the first nine months of 2017 as compared to the~~year-ago~~ ~~period due to unfavorable supply and demand dynamics in China. The Domestic region experienced a 0.8% and a 0.6% decline in PRASM and yield, respectively, as compared to theyear-ago~~ ~~period due to severe weather in southeast Texas, Florida and parts of the Caribbean, uncompetitive Basic Economy pricing, and competitive pricing environment withultra-low-cost~~ ~~carriers.~~

~~Cargo revenue increased $105 million, or 16.8%, in the first nine months of 2017 as compared to theyear-ago~~ ~~period primarily due to higher international freight volume.~~period.

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

~~Salaries and related costs increased $634 million, or 8.2%, in the first nine months of 2017 as compared to theyear-ago~~ period primarily due to higher pay rates and benefit expenses driven by collective bargaining agreements finalized in 2016, and a 3.1% increase in average full-time equivalent employees, partially offset by a decrease in profit sharing and other employee incentive programs expense.

Aircraft fuel expense increased $780 million, or 18.3%, year-over-year primarily due to a 15.9% increase in the average price per gallon of aircraft fuel in the first nine months of 2017 compared to the~~year-ago~~ ~~period. The table below presents the significant changes in aircraft fuel cost per gallon in the nine months ended September 30, 2017 as compared to theyear-ago~~ ~~period:~~

~~Depreciation and amortization increased $137 million, or 9.3%, in the first nine months of 2017 as compared to theyear-ago~~ ~~period, primarily due to additions of new aircraft, aircraft improvements, accelerated depreciation of assets related to certain fleet types and increases in information technology assets.~~

~~Aircraft maintenance materials and outside repairs increased $76 million, or 5.8%, in the first nine months of 2017 as compared to theyear-ago~~ ~~period, primarily due to an increase in airframe and engine maintenance visits due to the cyclical timing of these events.~~

~~Aircraft rent decreased $45 million, or 8.6%, in the first nine months of 2017 as compared to theyear-ago~~ ~~period, primarily due to the purchase of leased aircraft and lower lease renewal rates.~~

~~Other operating expenses increased $201 million, or 5.0%, in the first nine months of 2017 as compared to theyear-ago~~ ~~period primarily due to increases in purchased services and technology initiatives, as well as increases in food and other amenities associated with the Company’s customer experience initiatives.~~

~~Details of the Company’s special charges include the following for the nine months ended September 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 nine months ended September 30 (in millions, except for percentage changes):

~~Income Taxes.~~~~See Note 4~~5 to the financial statements included in Part I, Item 1 of this report for information related to income taxes.

As of ~~September 30, 2017,~~March 31, 2018, the Company had ~~$4.3~~$4.5 billion in unrestricted cash, cash equivalents and short-term investments, as compared to ~~$4.4~~$3.8 billion at December 31, 2016. At September 30, 2017, the Company also had $109 million of restricted cash and cash equivalents, which is primarily collateral for letters of credit and estimated future workers’ compensation claims. As of September 30, 2017, the2017. The Company had its entire commitment capacity of $2.0 billion under the revolving credit facility of the Company’s Amended and Restated Credit and Guaranty Agreement ~~dated as of March 29, 2017 (the “2017 Credit Agreement”)~~ available for borrowings. At March 31, 2018, the Company also had $106 million of restricted cash and cash equivalents, which is primarily collateral for letters of credit and collateral associated with obligations for facility leases and workers’ compensation.

~~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 ~~September 30, 2017,~~March 31, 2018, the Company had approximately ~~$13.9~~$15.0 billion of debt and capital lease obligations, including ~~$1.6~~$1.8 billion that will become due in the next 12 months. In addition, we have substantial noncancelable commitments for capital expenditures, including the acquisition of certain new aircraft and related spare engines. As of ~~September 30, 2017,~~March 31, 2018, our current liabilities exceeded our current assets by approximately ~~$5.2~~$5.9 billion. However, approximately ~~$6.5~~$7.7 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.

As of ~~September 30, 2017,~~March 31, 2018, United had firm commitments and options to purchase aircraft from The Boeing Company (“Boeing”), and Airbus S.A.S. (“Airbus”~~) and Embraer S.A. (“Embraer”~~) presented in the table below:

As of ~~September 30, 2017,~~March 31, 2018, UAL and United have total capital commitments primarily related to the acquisition of aircraft and related spare engines, aircraft improvements and include other capital purchase commitments for approximately ~~$22.0~~$22.4 billion, of which approximately ~~$0.9~~$2.4 billion, ~~$3.0~~$3.7 billion, ~~$3.1~~$2.0 billion, ~~$2.2~~$2.7 billion, ~~$1.4~~$1.8 billion and ~~$11.4~~$9.8 billion are due in the last ~~three~~nine months of ~~2017~~2018 and for the full year for ~~2018,~~ 2019, 2020, 2021, 2022 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.

~~United secured individual bank financing for five Embraer E175 aircraft to be delivered in the last three months of 2017.~~ See Note 9 to the financial statements included in Part I, Item 1 of this report for additional information on aircraft financing. The Company has also 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.

As of ~~September 30, 2017,~~March 31, 2018, 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 was ~~$2.7~~$1.7 billion for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 compared to ~~$4.9~~$0.5 billion in the same period in ~~2016.~~2017. Operating income for the first ~~nine~~three months of 2018 and 2017 was ~~$2.8 billion compared to $3.3 billion versus theyear-ago~~ ~~period. Excluding thenon-cash~~ ~~impairment of the Newark slots, operating income for the first nine months of 2017 was approximately $1.0 billion lower than the first nine months of 2016. Additionally, there were~~$0.3 billion. Working capital items changed by approximately $1.2 billion ~~of changes~~year-over-year primarily due to a $0.3 billion increase in ~~working capital items primarily related to $0.5~~advance ticket sales associated with our overall traffic growth, a $0.3 billion decrease in ~~advanced purchase~~employee incentive payments in the first three months of ~~miles due~~2018 as compared to ~~increased utilization of~~the~~pre-purchased~~year-ago ~~miles, $0.4~~period, a $0.2 billion increase in ~~prepayments for maintenance contracts,~~mileage sales to ourco-branded credit card partner due to full utilization of thepre-purchased miles in 2017, and ~~$0.2~~a $0.3 billion ~~decrease~~increase related to timing of accounts payable.

Investing Activities.Capital expenditures were ~~$2.9~~approximately $1.0 billion and ~~$2.3~~$0.7 billion in the ~~nine~~three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ respectively. Capital expenditures for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 were primarily attributable to additions of new aircraft, aircraft improvements, and increases in facility and information technology assets.

Financing Activities.During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2018, the Company made debt and capital lease payments of ~~$0.8~~$0.2 billion.

On In the three months ended March ~~29, 2017,~~31, 2018, United received and ~~UAL,~~recorded $0.7 billion of proceeds as ~~borrower and guarantor, respectively, entered into~~debt from the 2017 Credit Agreement. The 2017 Credit Agreement consists of a $1.5 billion term loan due April 1, 2024, which (i) was used to retire the entire principal balance of the term loans under the credit and guaranty agreement, dated March 27, 2013 (as amended, the “2013 Credit Agreement”), and (ii) increased the term loan balance by approximately $440 million, and a $2.0 billion revolving credit facility available for drawing until April 1, 2022, which increased the available capacity under the revolving credit facility of the 2013 Credit Agreement. As of September 30, 2017, United had its entire capacity of $2.0 billion available under the revolving credit facility. The obligations of United under the 2017 Credit Agreement are secured by liens on certain international route authorities, certain~~take-off~~ ~~and landing rights and related assets of United.~~EETC pass-through trusts established in February 2018. See Note 9 to the financial statements included in Part I, Item 1 of this report for additional information.

In the nine months ended September 30, 2017, United received and recorded $1.3 billion of proceeds as debt from the two EETC pass-through trusts established in 2016. See Note 9 to the financial statements included in Part I, Item 1 of this report for additional information.

In the nine months ended September 30, 2017, United borrowed approximately $392 million aggregate principal amount from various financial institutions to finance the purchase of several aircraft delivered in 2017. The notes evidencing these borrowings, which are secured by the related aircraft, mature in 2027 and each has an interest rate comprised of LIBOR plus a specified margin.

In the nine months ended September 30, 2017, UAL received and recorded $400 million proceeds of the 4.25% Senior Notes due October 1, 2022, and $300 million proceeds of the 5% Senior Notes due February 1, 2024.

Share Repurchase Programs.In the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2018, UAL repurchased approximately 188.4 million shares of UAL common stock in open market transactions for ~~$1.3~~$0.6 billion. As of ~~September 30, 2017,~~March 31, 2018, the Company had approximately ~~$0.6~~$2.4 billion remaining to purchase shares under its ~~existing~~ share repurchase ~~authority.~~program.

UAL may repurchase shares through the open market, privately negotiated transactions, block trades or accelerated share repurchase transactions from time to time in accordance with applicable securities laws. UAL will repurchase shares of 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”~~Proceeds of this report for additional information.

Commitments, Contingencies and Liquidity Matters.As described in the Company’s Annual Report on Form10-K for the fiscal year ended December 31, ~~2016 (“2016~~2017 (the “2017 Annual Report”), the Company’s liquidity may be adversely impacted by a variety of factors, including, but not limited to, pension funding obligations, reserve requirements associated with credit card processing agreements, guarantees, commitments and contingencies.

See the ~~2016~~2017 Annual Report and Notes ~~5, 7,~~6, 8, ~~and~~ 9 to the financial statements contained in Part I, Item 1 of this report for additional information.

See “Critical Accounting Policies” in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in the ~~2016~~2017 Annual ~~Report and~~Report. Also see Note 12 to the financial statements contained in Part 1,I, Item 1 of this report for a discussion of the Company’s ~~critical~~updated accounting ~~policies.~~policies on Revenue Recognition and Frequent Flyer Accounting.

Certain statements throughout Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this report are forward-looking and thus reflect ~~our~~the Company’s current expectations and beliefs with respect to certain current and 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~~the Company’s 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,” “estimates,” “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; our ability to maintain adequate liquidity; our ability to execute our operational plans and revenue-generating initiatives, including optimizing our revenue; our ability to control our costs, including realizing benefits from our resource optimization efforts, cost reduction initiatives and fleet replacement programs; costs associated with any modification or termination of our aircraft orders; our ability to utilize our net operating losses; our ability to attract and retain customers; potential reputational or other impact from adverse events in our operations; 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 and political 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;~~globally, including political developments that may impact our operations in certain countries; demand for travel and the impact that global economic and political conditions have on customer travel patterns; competitive pressures on pricing and on demand; demand for transportation in the markets in which we operate; our capacity decisions and the capacity decisions of our competitors; the effects of any hostilities, act of war or terrorist attack; the effects of any technology failures or cybersecurity breaches; the impact of regulatory, investigative and legal proceedings and legal compliance risks; disruptions to our regional network; 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; costs associated with any modification or termination of our aircraft orders; potential reputational or other impact from adverse events in our operations, the operations of our regional carriers or the operations of our code share partners; our ability to attract and retain customers; our ability to execute our operational plans and revenue-generating initiatives, including optimizing our revenue; our ability to control our costs, including realizing benefits from our resource optimization efforts, cost reduction initiatives and fleet replacement programs; the impact of any management changes; our ability to cost-effectively hedge against increases in the price of aircraft fuel if we decide to do so; any potential realized or unrealized gains or losses related to any fuel or currency hedging programs; the effects of any hostilities, act of war or terrorist attack; the ability of other air carriers with whom we have alliances or partnerships to provide the services contemplated by the respective arrangements with such carriers; the effects of any technology failures or cybersecurity breaches; disruptions to our regional network; the costs and availability of aviation and other insurance; industry consolidation or changes in airline alliances; the success of our investments in airlines in other parts of the world; competitive pressures on pricing and on demand; our capacity decisions and the capacity decisions of our competitors; U.S. or foreign governmental legislation, regulation and other actions (including Open Skies agreements and environmental regulations); 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 any collective bargaining agreement process with our union groups; any disruptions to operations due to any potential actions by our labor groups; an outbreak of a disease that affects travel demand or travel behavior; U.S. or foreign governmental legislation, regulation and other actions (including Open Skies agreements and environmental regulations); industry consolidation or changes in airline alliances; our ability to comply with the terms of our various financing arrangements; the costs and availability of financing; our ability to maintain adequate liquidity; the costs and availability of aviation and other insurance; weather conditions; our ability to utilize our net operating losses to offset future taxable income; the impact of changes in tax laws; the success of our investments in airlines in other parts of the world; and other risks and uncertainties set forth under Part I, Item 1A., ~~“Risk Factors”~~Risk Factors, of our ~~2016~~2017 Annual Report, 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~~7A, Quantitative and Qualitative Disclosures About Market ~~Risk”~~Risk, in our ~~2016~~2017 Annual Report.

~~The Company maintains~~UAL and United each maintain controls and procedures that are designed to ensure that information required to be disclosed in the reports filed or submitted by UAL and United to the SEC is recorded, processed, summarized and reported, within the time periods specified by the SEC’s rules and forms, and is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The ~~Company’s~~ management of UAL and United, including the Chief Executive Officer and Chief Financial Officer, performed an evaluation to conclude with reasonable assurance that UAL’s and United’s disclosure controls and procedures were designed and operating effectively to report the information each company is required to disclose in the reports they file with the SEC on a timely basis. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer of UAL and United have concluded that as of ~~September 30, 2017,~~March 31, 2018, disclosure controls and procedures ~~of each of UAL and United~~ were effective.

Changes in Internal Control over Financial Reporting ~~during~~During the Quarter Ended ~~September 30, 2017~~March 31, 2018

During the three months ended ~~September 30, 2017,~~March 31, 2018, 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 rules13a-15(f) and15d-15(f) under the Securities Exchange Act of 1934).

See Part I, Item ~~3., “Legal Proceedings”~~3, Legal Proceedings, of the ~~2016~~2017 Annual Report for a description of legal proceedings.

See Part I, Item ~~1A., “Risk~~1A, Risk Factors,” of the ~~2016~~2017 Annual Report for a detailed discussion of the risk factors affecting UAL and United.

(c) The following table presents repurchases of UAL common stock made in the ~~third~~first quarter of fiscal year ~~2017:~~2018:

(a) In ~~July 2016,~~December 2017, UAL’s Board of Directors authorized a $2$3.0 billion share repurchase ~~program.~~program to acquire UAL’s common stock. As of ~~September 30, 2017,~~March 31, 2018, the Company had approximately ~~$0.6~~$2.4 billion remaining to purchase shares under its share repurchase program. 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.

(b) The table does not include shares withheld from employees to satisfy certain tax obligations due upon the vesting of restricted stock awards and restricted stock units. The United Continental Holdings, Inc. 2017 Incentive Compensation Plan ~~which replaced~~and the United Continental Holdings, Inc. 2008 Incentive Compensation Plan ~~on May 24, 2017, provides~~each provide for the withholding of shares to satisfy tax obligations due upon the vesting of restricted stock. However, ~~this plan does~~these plans do not specify a maximum number of shares that may be withheld for this purpose. A total of ~~8,457~~243,003 shares were withheld under ~~this plan~~these plans in the ~~third~~first quarter of ~~2017~~2018 at an average price per share ~~price~~ of ~~$67.88.~~$67.72. These shares of common stock withheld to satisfy tax withholding obligations may be deemed to be “issuer purchases” of shares that are required to be disclosed pursuant to this Item.

~~^ Confidential portion of this exhibit has been omitted and filed separately with the SEC pursuant to a request for confidential treatment.~~

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 ☒	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting company ☐	Emerging growth company ☐
United Airlines, Inc.	Large accelerated filer ☐	Accelerated filer ☐	Non-accelerated filer ☒	Smaller reporting company ☐	Emerging growth 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		2526
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		3732
Item 4.	Controls and Procedures		3833

	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		3934
Item 1A.	Risk Factors		3934
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		3934
Item 6.	Exhibits		3934
Exhibit Index			4035
Signatures			4136


	Three Months Ended March 31,
	2018		2017
Total Frequent flyer deferred revenue—beginning balance	$	4,783	$	4,889
Total miles awarded		603		488
Travel miles redeemed (Passenger revenue)		(409)		(398)
Non-travel miles redeemed (Other operating revenue)		(40)		(39)

Total Frequent flyer deferred revenue—ending balance	$	4,937	$	4,940


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, Equity securities, EETC 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, or (c) broker quotes obtained by third-party valuation services.

Other investments measured at NAV		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 the table above 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. andnon-U.S. public- or private-sector entities. The Company can redeem its shares at any time at NAV subject to athree-day settlement period.

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


		United Continental Holdings, Inc.		Yes ☒ No ☐
		United Airlines, Inc.		Yes ☒ No ☐


		United Continental Holdings, Inc.		Yes ☐ No ☒
		United Airlines, Inc.		Yes ☐ No ☒


	Three Months Ended March 31, 2017
	As Previously Reported		New Revenue Standard Adjustments		New Retirement Standard Adjustments		As Adjusted
Passenger revenue	$	7,174	$	479	$	—	$	7,653
Cargo		220		18		—		238
Other operating revenue		1,026		(491)		—		535
Total operating revenue		8,420		6		—		8,426

Salaries and related costs		2,661		—		(25)		2,636
Distribution expenses		307		12		—		319
Other operating expenses		1,332		(23)		—		1,309
Total operating expenses		8,142		(11)		(25)		8,106

Operating income		278		17		25		320

Interest expense		(150)		(12)		—		(162)
Miscellaneous, net		(17)		—		(25)		(42)
Total nonoperating expense, net		(133)		(12)		(25)		(170)

Income before income taxes		145		5		—		150
Income tax expense		49		2		—		51
Net income		96		3		—		99

Earnings per share, basic and diluted		0.31		0.01		—		0.32


	At December 31, 2017
	As Previously Reported		New Revenue Standard Adjustments		As Adjusted
Prepaid expenses and other	$	1,051	$	20	$	1,071
Total current assets		7,113		20		7,133
Total assets		42,326		20		42,346

Advance ticket sales		3,876		64		3,940
Frequent flyer deferred revenue		2,176		16		2,192
Other		569		7		576
Total current liabilities		12,676		87		12,763

Frequent flyer deferred revenue - long-term		2,565		26		2,591
Deferred income taxes		225		(21)		204
Total other liabilities and deferred credits		8,145		5		8,150

Retained earnings		4,621		(72)		4,549
Total stockholders’ equity		8,806		(72)		8,734
Total liabilities and stockholders’ equity		42,326		20		42,346


Details about AOCI Components	Amount Reclassified from AOCI to Income								Affected Line Item in the Statements of Consolidated Operations
	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Pension and other postretirement liabilities
Amortization of unrecognized losses and prior service cost (a)		$ 14		$ 6		$ 41		$ 17		Salaries and related costs
Fuel derivative contracts
Reclassifications of losses into earnings		—		24		2		197		Aircraft fuel
Investments and other
Reclassifications of gains into earnings		—		(2)		—		(2)		Miscellaneous, net


Details for AOCI Components Reclassified to Income	Three Months Ended March 31,				Affected Line Item in the Statements of Consolidated Operations
	2018		2017
Pension and other postretirement liabilities
Amortization of unrecognized losses and prior service cost (a)	$	16	$	13		Miscellaneous, net
Investments and Other
Reclassifications of losses into earnings related to fuel derivative contracts		—		2		Aircraft fuel


	Fair Value of Debt by Fair Value Hierarchy Level
	September 30, 2017										December 31, 2016
	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	$	12,850	$	13,217	$	—	$	9,640	$	3,577	$	10,767	$	11,055	$	—	$	8,184	$	2,871


	Amount of Loss Recognized in AOCI on Derivatives (Effective Portion)				Loss Reclassified from AOCI into Fuel Expense
	Three Months Ended September 30,				Three Months Ended September 30,
	2017		2016		2017		2016
Fuel contracts	$	—	$	(6)	$	—	$	(24)

	Amount of Loss Recognized in AOCI on Derivatives (Effective Portion)				Loss Reclassified from AOCI into Fuel Expense (a)
	Nine Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Fuel contracts	$	—	$	(5)	$	(2)	$	(197)


Aircraft Type	Number of Firm Commitments (a)
Airbus A350		45
Boeing 737 MAX		161
Boeing777-300ER		42
Boeing 787		1814
~~Embraer E175~~			5
(a) United also has options and purchase rights for additional aircraft.


EETC Date	Class	Principal		Final expected distribution date	Stated interest rate		Total debt recorded as of September 30, 2017		Proceeds received from issuance of debt during 2017
September 2016	AA	$	637	October 2028		2.875%	$	637	$	557
September 2016	A		283	October 2028		3.10%		283		247
June 2016	AA		729	July 2028		3.10%		729		319
June 2016	A		324	July 2028		3.45%		324		142

		$	1,973				$	1,973	$	1,265


	(In millions)						Average price per gallon
	2017		2016		% Change		2017		2016		% Change
Total aircraft fuel purchase cost excluding fuel hedge impacts	$	1,809	$	1,579		14.6	$	1.70	$	1.49		14.1
Hedge losses reported in fuel expense		—		24		NM		—		0.03		NM

Fuel expense	$	1,809	$	1,603		12.9	$	1.70	$	1.52		11.8

Total fuel consumption (gallons)		1,065		1,057		0.8


	S&P	Moody’s	Fitch
UAL	~~BB-~~BB	Ba2	BB
United	~~BB-~~BB	*	BB
* The credit agency does not issue corporate credit ratings for subsidiary entities.


Period	Total number of shares purchased (a)(b)		Average price paid per share (b)(c)		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)
July 2017		2,537,939	$	73.35		2,537,939	$	923
August 2017		3,592,802		66.80		3,592,802		683
September 2017		2,159,408		60.20		2,159,408		553

Total		8,290,149				8,290,149


Exhibit No.	Registrant		Exhibit
*4.1		~~UAL United~~		Fourth Supplemental Indenture, dated as of September 29, 2017, among United Continental Holdings, Inc., United Airlines, Inc. and The Bank of New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the Commission on October 4, 2017)
~~^10.1~~	~~UAL United~~		~~Amended and RestatedA350-900~~ ~~Purchase Agreement, dated September 1, 2017, including letter agreements related thereto, between Airbus S.A.S. 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


	United Continental Holdings, Inc.
	(Registrant)

Date: ~~October 19, 2017~~April 18, 2018	By:	/s/ Andrew C. Levy

		Andrew C. Levy
		Executive Vice President and Chief Financial Officer ~~(principal financial officer)~~ (Principal Financial Officer)

Date: ~~October 19, 2017~~April 18, 2018	By:	/s/ Chris Kenny

		Chris Kenny
		Vice President and Controller (~~principal accounting officer)~~Principal Accounting Officer)

	United Airlines, Inc.
	(Registrant)

Date: ~~October 19, 2017~~April 18, 2018	By:	/s/ Andrew C. Levy

		Andrew C. Levy
		Executive Vice President and Chief Financial Officer (~~principal financial officer)~~Principal Financial Officer)

Date: ~~October 19, 2017~~April 18, 2018	By:	/s/ Chris Kenny

		Chris Kenny
		Vice President and Controller (~~principal accounting officer)~~Principal Accounting Officer)