01—Abstract
Summary
Summary of the 10-K filed February 18, 2022. Cited figures are marked; the original filing is the authoritative source.
United Airlines Holdings, Inc. (UAL) reported a 2021 net loss of $1.96 billiona on operating revenue of $24.63 billion, up from $15.36 billion in 2020, as passenger demand recovered with the easing of COVID-19 travel restrictions.
The company operated approximately 63% of its 2019 capacity during 2021. Operating expense rose to $25.66 billionb, though the year included a $4.02 billion CARES Act grant credit recorded in special charges. Aircraft fuel expense was $5.76 billion, with the average price per gallon rising to $2.11 from $1.57.
Management stated that the COVID-19 pandemic has materially and adversely affected the business and that recovery has not been linear. Liquidity was strengthened through debt issuance. As of December 31, 2021, unrestricted cash, cash equivalents and short-term investments totaled $18.4 billionc, while debt, finance lease, operating lease and sale-leaseback obligations reached approximately $41.1 billion, including $4.5 billion due within twelve months.
Long-term debt, net was $30.36 billiond. The company's credit ratings are below investment grade (UAL: S&P B+, Moody's Ba2, Fitch B+). The company expects full-year 2022 scheduled capacity to be down versus 2019, and CASM-ex to be higher than 2019, and projects approximately $5.9 billion of gross capital expenditures for 2022.
Strategically, the company's United Next plan targets an almost 30% increase in average gauge by 2026 versus 2019, and includes firm orders for 270 aircraft. The company has also committed to becoming 100% green by eliminating greenhouse gas emissions by 2050 and to reducing carbon intensity by 50% by 2035 compared with 2019. Key risks disclosed include fuel price volatility (the company does not currently hedge fuel), reliance on a limited number of aircraft suppliers, regional pilot shortages, and a $9.9 billion federal NOL carryforward whose use could be limited by an ownership change.
02—Key points
Key Highlights
- 2021 operating revenue of $24.63 billion, up from $15.36 billion in 2020; passenger revenue of $20.20 billion, up 71.1%.
- Net loss of $1.96 billion in 2021 (loss per share of $6.10), compared with a net loss of $7.07 billion in 2020.
- Special charges (credits) were a net credit of $3.37 billion in 2021, driven by a $4.02 billion CARES Act grant recorded as income.
- Liquidity of $18.4 billion in unrestricted cash, cash equivalents and short-term investments at December 31, 2021, against about $41.1 billion of debt, lease and sale-leaseback obligations.
- Credit ratings are below investment grade: UAL is rated B+ (S&P), Ba2 (Moody's) and B+ (Fitch) as of the filing date.
- 2022 outlook: scheduled capacity expected to be down versus 2019, CASM-ex expected to be higher than 2019, and gross capital expenditures of approximately $5.9 billion.
- United Next plan includes firm orders for 270 aircraft and targets a 30%+ increase in average gauge by 2026 versus 2019; the company reports $9.9 billion in federal NOL carryforwards.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 18, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $24.63B$15.36B | +60.4% |
| Operating Expenses | $25.66B$21.71B | +18.2% |
| Operating Income | -$1.02B-$6.36B | +83.9% |
| Net Income | -$1.96B-$7.07B | +72.2% |
| EPS (Basic) | $-6.10$-25.30 | +75.9% |
| EPS (Diluted) | $-6.10$-25.30 | +75.9% |
| Shares Outstanding (Basic) | 321.90M279.40M | +15.2% |
| Shares Outstanding (Diluted) | 321.90M279.40M | +15.2% |
05—Questions
Frequently Asked Questions
How did United's revenue and net loss change in 2021?
Total operating revenue rose 60.4% to $24.63 billion from $15.36 billion, driven mainly by a 71.1% increase in passenger revenue as travel demand recovered. The company still posted a net loss of $1.96 billion in 2021, smaller than the $7.07 billion loss in 2020, and operating expense rose 18.2% to $25.66 billion.
How much debt does United carry, and how is it financed?
Long-term debt, net was $30.36 billion at year-end 2021, with current maturities of $3.00 billion. Total debt, finance lease, operating lease and sale-leaseback obligations were approximately $41.1 billion, up from $20.5 billion at December 31, 2019. In 2021 the company issued $4.0 billion of 2026 and 2029 senior secured notes, drew $5.0 billion of 2021 term loans, and received $1.7 billion from PSP2 and PSP3 notes.
What are the main risks to the business highlighted in the filing?
Key risks include the continuing effects of the COVID-19 pandemic on travel demand, high and volatile aircraft fuel prices (the company does not currently hedge), dependence on Boeing and Airbus for aircraft, pilot shortages affecting regional carriers, competition from low-cost and government-subsidized carriers, and cybersecurity threats. Liquidity risk is also significant given the company's below-investment-grade ratings and heavy fixed obligations.
What are United's climate commitments?
The company has pledged to become 100% green by eliminating greenhouse gas emissions by 2050 without relying on traditional carbon offsets, and has set a mid-term objective of reducing carbon intensity by 50% by 2035 compared with 2019. Its strategy centers on sustainable aviation fuel, fleet modernization under United Next, and investments in carbon reduction technologies.
What is the outlook for 2022?
The company expects full-year 2022 scheduled capacity to be down versus 2019 and adjusted cost per available seat mile (CASM-ex) to be higher than 2019. It expects approximately $5.9 billion of gross capital expenditures in 2022 and says it expects to maintain an elevated level of liquidity in the near term, which may include additional debt issuance or equity issuance.
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