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United Airlines Holdings Annual Report, Year Ended Dec 31, 2003

Filing Date
Filed March 2, 2004
Period End
December 31, 2003
Security
UAL
In the record · 2016–202610-K1110-Q338-K265

UAL filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 265 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Apr ’17Apr ’17
  2. Material agreement8-K · May ’19May ’19
  3. Leadership change8-K · Jul ’21Jul ’21
  4. Leadership change8-K · May ’25May ’25

01—Abstract

Summary

Summary of the 10-K filed March 2, 2004. Cited figures are marked; the original filing is the authoritative source.

UAL Corporation, the holding company for United Air Lines, Inc., reported a 2003 net loss of $2.81 billiona ($27.36 per share) on operating revenues of $13.72 billion, compared with a net loss of $3.21 billion ($53.55 per share) on revenues of $14.29 billion in 2002.

The company has operated as a debtor-in-possession under Chapter 11 since filing on December 9, 2002. The filing states that UAL's presently outstanding equity securities are expected to be canceled under any plan of reorganization, and it urges caution regarding any investment in UAL securities. The financial statements do not purport to reflect the consequences of the bankruptcy, and the auditor's report raises substantial doubt about the company's ability to continue as a going concern.

Management says it is working to emerge from Chapter 11 in the first half of 2004, but that timing depends on confirmation of a plan of reorganization. The company's exclusive period to file a plan expires April 7, 2004. Key pending items include a $1.6 billionb federal loan guarantee application to the Air Transportation Stabilization Board (which had not yet been decided as of the filing date), a $2.0 billion exit financing commitment from JP Morgan Chase and Citicorp, and the company's estimate that it could be required to contribute approximately $4.1 billion to its qualified defined benefit pension plan trusts by the end of 2008.

Operationally, the filing reports that 2003 passenger load factor rose to 76.5% from 73.5%, and unit cost fell to 10.52 cents from 11.37 cents. Labor agreements ratified in 2003 are expected to yield approximately $2.5 billionc in average annual labor savings by 2005, and business transformation initiatives are expected to deliver $1.4 billion in profit improvements in 2004. Ted, a new low-fare carrier, began flying in February 2004.

02—Key points

Key Highlights

  1. Net loss of $2.81 billion ($27.36 per share) in 2003, versus a net loss of $3.21 billion ($53.55 per share) in 2002.
  2. Operating revenues of $13.72 billion in 2003, down from $14.29 billion in 2002; loss from operations narrowed to $1.36 billion from $2.84 billion.
  3. Operating in Chapter 11 since December 9, 2002, with a DIP Financing facility of $1.5 billion; $663 million was outstanding at December 31, 2003.
  4. Stockholders' equity was a deficit of $5.92 billion at December 31, 2003, and liabilities subject to compromise totaled $13.96 billion.
  5. The company expects to emerge from bankruptcy in the first half of 2004, with an exclusive plan-filing period expiring April 7, 2004; the filing states UAL's outstanding equity is expected to be canceled.
  6. Pending $2.0 billion exit financing depends on a $1.6 billion ATSB federal loan guarantee, which had not been decided as of the filing date.
  7. Labor agreements are expected to reduce average annual labor costs by approximately $2.5 billion per year by 2005 versus previous contracts.

03—Questions

Frequently Asked Questions

  1. Will UAL common stockholders receive any value from the bankruptcy?

    The filing states that UAL's presently outstanding equity securities are believed to have no value and are expected to be canceled under any plan of reorganization the company proposes. The company urges caution with respect to existing and future investments in any UAL security.

  2. When does the company expect to emerge from Chapter 11?

    Management is working toward emerging in the first half of 2004, but states that the timing depends on the timely and successful confirmation and implementation of a plan of reorganization. The exclusive period to file a plan expires April 7, 2004.

  3. What financing does the company have to support its operations during and after bankruptcy?

    The company has $663 million outstanding under its DIP Financing at December 31, 2003. For exit, JP Morgan Chase and Citicorp committed a $2.0 billion Exit Facility, which depends on a $1.6 billion ATSB federal loan guarantee; the ATSB had not yet decided the application as of the filing date. Without the guarantee, the company states it might be unable to obtain sufficient funding.

  4. What are the main pension and cost challenges?

    The company estimates it could be required to contribute approximately $4.1 billion to its qualified defined benefit pension plan trusts by the end of 2008. It has applied for pension funding waivers from the IRS. The filing also reports 2003 salaries and related costs fell to $5.26 billion from $7.03 billion, and the company expects approximately $5 billion in average annual cash savings by 2005 compared with pre-bankruptcy projections.

04—Continue

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