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United Airlines Holdings Annual Report, Year Ended Dec 31, 2004

Filing Date
Filed March 16, 2005
Period End
December 31, 2004
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 16, 2005. Cited figures are marked; the original filing is the authoritative source.

UAL Corporation, now United Airlines Holdings, Inc., filed this 2004 annual report while operating as a debtor-in-possession under Chapter 11 after filing voluntary petitions on December 9, 2002.

The company reported 2004 operating revenues of $16.39 billiona, an operating loss of $854 million, and a net loss of $1.72 billion, or $(15.25) per share, compared with a net loss of $2.81 billion in 2003. Operating cash flow fell to $99 million in 2004. The auditor's report includes a going-concern paragraph, and the company states that its outstanding equity securities are expected to have no value and be canceled under any plan of reorganization.

Management expects to file a plan providing for emergence from bankruptcy later in 2005, but says that is not assured. The restructuring centers on cutting costs by about $2 billionb annually by fiscal 2007, including roughly $725 million of average annual labor savings that the company is pursuing through Section 1113 modifications of collective bargaining agreements, plus the termination of defined benefit pension plans. The Bankruptcy Court approved amended agreements with several unions in January 2005, and interim pay reductions were ordered for the IAM and AMFA groups.

The company also reports that the ATSB denied its application for a federal loan guarantee in June 2004, so it must obtain non-guaranteed exit financing. The DIP Financing outstanding was $863 millionc at year-end 2004, and the Pension Benefit Guaranty Corporation has filed complaints seeking involuntary termination of several pension plans. On the operating side, the company reports a 10% increase in consolidated operating revenues, a passenger load factor of 79.2%, and a fuel cost of $2.94 billion, up $871 million from 2003.

The filing states it plans to reduce the mainline fleet to 455 aircraft in the first half of 2005 and to expand the Ted low-fare service from 47 to 56 aircraft. Claims filed in the bankruptcy total approximately $57 billiond across about 13,000 remaining proofs of claim, which the company states far exceed its estimate of ultimate liability.

02—Key points

Key Highlights

  1. Net loss of $1.72 billion ($15.25 per share) in 2004, narrowed from $2.81 billion ($27.36 per share) in 2003; operating loss of $854 million versus $1.36 billion in 2003.
  2. Operating revenues of $16.39 billion in 2004, up 10% from $14.93 billion in 2003; passenger load factor rose to 79.2%.
  3. Operating cash flow fell to $99 million in 2004 from $1.00 billion in 2003, and cash, cash equivalents and short-term investments including restricted cash totaled $2.2 billion at year-end.
  4. Auditor's report includes a going-concern paragraph; management expects equity securities to be canceled under any plan of reorganization and urges caution with respect to investments in UAL securities.
  5. Targeting about $2 billion in annual cash savings by fiscal 2007, including $725 million in average annual labor savings sought through Section 1113 CBA modifications and termination of defined benefit pension plans.
  6. Fleet reduction to 455 aircraft in the first half of 2005 from 497 operating jets at December 31, 2004, alongside expansion of Ted from 47 to 56 aircraft.
  7. Approximately 13,000 proofs of claim totaling $57 billion remain pending with the Bankruptcy Court, and the company expects to file a plan providing for emergence from bankruptcy later in 2005, with no assurance of confirmation.

03—Questions

Frequently Asked Questions

  1. What happens to the existing common stock?

    The company states it believes UAL's presently outstanding equity securities will have no value and will be canceled under any plan of reorganization it proposes. It urges caution regarding existing and future investments in any UAL security. Common stock traded on the OTC bulletin board under UALAQ.OB after the NYSE delisting on April 2, 2003, and the company suspended common dividends in 2002.

  2. Why did the company remain in Chapter 11 longer than originally expected?

    The ATSB denied the company's application for a federal loan guarantee in June 2004. The company then needed to qualify for non-guaranteed exit financing, which required identifying about $2 billion in additional annual cash savings, a process that extended its time in Chapter 11.

  3. How significant is the pension obligation?

    The company estimates its projected minimum pension funding obligation for 2005 through 2010 at about $4.9 billion. It ceased contributions to its qualified defined benefit plans in July 2004 and believes it must terminate and replace those plans to obtain exit financing. The PBGC has filed complaints seeking involuntary termination of the pilots' plan and of plans covering other employee groups.

  4. What is the status of the labor cost negotiations?

    On January 31, 2005, the Bankruptcy Court approved amended CBAs with AFA, ALPA, PAFCA and TWU, which the company expects to save about 60% of the $725 million labor savings target. The company had not reached ratified agreements with IAM and AMFA, so interim pay reductions of 11.5% and 9.8% were ordered for those groups. A Section 1113(c) trial was scheduled to begin May 11, 2005 if agreements were not reached.

04—Continue

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