01—Abstract
Summary
Summary of the 10-K filed February 16, 2023. Cited figures are marked; the original filing is the authoritative source.
United Airlines Holdings, Inc. (UAL) reported 2022 operating revenue of $44.96 billiona, up from $24.63 billion in 2021, and operating income of $2.34 billion, compared with an operating loss of $1.02 billion in 2021.
Net income was $737 millionb, versus a net loss of $1.96 billion in 2021. Passenger revenue rose $19.8 billion, or 98.2%, driven by the ongoing recovery in air travel and strong pricing as inflationary pressures lifted fares. Aircraft fuel expense reached $13.11 billion, with the average price per gallon rising to $3.63 from $2.11, and the company does not currently hedge fuel.
Operating income reflected a recovery from the pandemic, though the company still operated at approximately 87% of its 2019 capacity during 2022. The balance sheet remains heavily leveraged. As of December 31, 2022, the company had $16.4 billionc in unrestricted cash, cash equivalents and short-term investments, and approximately $37.3 billion of debt, finance lease, operating lease and other financial liabilities, including $3.6 billion due in the next 12 months.
Long-term debt, net, was $28.28 billion, and stockholders' equity increased to $6.90 billiond. UAL's credit ratings are below investment grade (S&P B+, Moody's Ba2, Fitch B+). Management expects approximately $8.5 billion of gross capital expenditures in 2023, and the company has a firm order book of about 700 narrow- and widebody aircraft to be delivered by the end of 2033 under its United Next plan.
Key risks highlighted in the filing include fuel price volatility, competitive pressure from low-cost carriers, labor costs and union activity (approximately 84% of employees are represented by U.S. labor organizations), dependence on a limited number of aircraft suppliers, covenant and cross-default provisions in its financing agreements, and a $13.2 billion federal NOL carryforward whose use may be limited under Section 382. The company also faces a pending antitrust class action alleging capacity collusion among U.S. airlines.
02—Key points
Key Highlights
- Operating revenue of $44.96 billion in 2022, up from $24.63 billion in 2021; passenger revenue increased 98.2% to $40.03 billion.
- Operating income of $2.34 billion in 2022, compared with an operating loss of $1.02 billion in 2021; net income of $737 million versus a net loss of $1.96 billion.
- Aircraft fuel expense rose to $13.11 billion, with average price per gallon of $3.63 versus $2.11 in 2021; the company does not currently hedge fuel.
- Unrestricted cash, cash equivalents and short-term investments totaled $16.4 billion at year-end 2022; approximately $37.3 billion of debt and lease obligations, including $3.6 billion due within 12 months.
- Credit ratings remain below investment grade (S&P B+, Moody's Ba2, Fitch B+), and the company has $12.8 billion of variable rate indebtedness with partial LIBOR exposure.
- United Next plan includes firm orders for about 700 new narrow and widebody aircraft by the end of 2033; 2023 gross capital expenditures are expected to be approximately $8.5 billion.
- Federal NOL carryforwards of approximately $13.2 billion, though their use may be limited by ownership-change rules under Section 382.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 16, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $44.95B$24.63B | +82.5% |
| Operating Expenses | $42.62B$25.66B | +66.1% |
| Operating Income | $2.34B-$1.02B | +328.7% |
| Net Income | $737.00M-$1.96B | +137.5% |
| EPS (Basic) | $2.26$-6.10 | +137.0% |
| EPS (Diluted) | $2.23$-6.10 | +136.6% |
| Shares Outstanding (Basic) | 326.40M321.90M | +1.4% |
| Shares Outstanding (Diluted) | 330.10M321.90M | +2.5% |
05—Questions
Frequently Asked Questions
How did UAL's financial performance change in 2022 compared with 2021?
Total operating revenue rose to $44.96 billion from $24.63 billion, and the company posted operating income of $2.34 billion after an operating loss of $1.02 billion in 2021. Net income was $737 million, compared with a net loss of $1.96 billion. The filing attributes the improvement primarily to the ongoing recovery in air travel and strength in pricing.
What is the company's exposure to fuel prices?
Aircraft fuel was the largest single expense at $13.11 billion, or 31% of total operating expense, in 2022. The average price per gallon rose to $3.63 from $2.11. The company's current strategy is not to enter into financial transactions to hedge fuel price exposure, although it reviews this policy regularly.
How much debt does UAL carry and what liquidity does it have?
As of December 31, 2022, the company had approximately $37.3 billion of debt, finance lease, operating lease and other financial liabilities, including $3.6 billion due in the next 12 months. Long-term debt, net, was $28.28 billion. Unrestricted cash, cash equivalents and short-term investments totaled $16.4 billion, and a $1.75 billion revolving credit facility was undrawn.
What are the company's main growth plans?
Under its United Next plan, UAL expects to take delivery of about 700 new narrow and widebody aircraft by the end of 2033, including 100 Boeing 787 Dreamliners ordered in December 2022. The plan is expected to increase average gauge, add seats per departure, and reduce carbon emissions per seat by an expected 17-25% compared with older planes. The company also said it has delayed part of its planned capacity increases for full-year 2023.
What regulatory or legal matters could affect the company?
The company is a defendant in class action lawsuits alleging collusion among U.S. airlines on capacity affecting airfares, which seek treble damages; it is vigorously defending these claims. The Department of Justice also issued a Civil Investigative Demand in 2015 related to the same subject, and the company has completed its response. Management believes the pending legal proceedings will not materially affect financial position, results of operations or cash flows.
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