01—Abstract
Summary
Summary of the 10-K filed February 29, 2024. Cited figures are marked; the original filing is the authoritative source.
United Airlines Holdings, Inc. (UAL) reported operating revenue of $53.72 billiona for 2023, up from $44.96 billion in 2022, and operating income of $4.21 billion versus $2.34 billion a year earlier.
Net income was $2.62 billionb, or $7.89 per diluted share, compared with $737 million in 2022. Passenger revenue rose $9.0 billion, or 22.5%, driven by a 17.5% increase in capacity, while cargo revenue fell 31.1%. Operating expenses included $949 million of special charges, including $814 million of labor contract ratification bonuses tied to new agreements with pilots and other work groups.
Aircraft fuel expense fell 3.5% to $12.65 billionc as the average price per gallon declined to $3.01 from $3.63. The company ended 2023 with $14.4 billion in unrestricted cash, cash equivalents and short-term investments, versus about $16.4 billion a year earlier. It had approximately $36.7 billion of debt, finance lease, operating lease and other financial liabilities, including $4.8 billion due within 12 months.
Net cash from operating activities was $6.91 billiond, while capital expenditures, net of deposit returns, were $7.17 billion. For 2024 the company expects approximately $8 billion of adjusted capital expenditures.
Its credit ratings are below investment grade (BB- at S&P and Fitch, Ba2 at Moody's). The filing also highlights the United Next fleet plan, which includes over 700 new narrow and widebody aircraft to be delivered by the end of 2033, and notes that the FAA grounded all 79 of the company's Boeing 737 MAX 9 aircraft in January 2024.
02—Key points
Key Highlights
- Operating revenue rose to $53.72 billion in 2023 from $44.96 billion in 2022, with passenger revenue up 22.5% on 17.5% higher capacity.
- Net income was $2.62 billion ($7.89 diluted EPS) versus $737 million in 2022; operating income reached $4.21 billion versus $2.34 billion.
- Special charges of $949 million in 2023 included $814 million of labor contract ratification bonuses, notably for pilots represented by ALPA.
- Fuel expense fell 3.5% to $12.65 billion as average price per gallon dropped to $3.01 from $3.63, despite 16.5% higher gallons consumed.
- Liquidity was $14.4 billion in unrestricted cash and short-term investments at year-end 2023, down from about $16.4 billion; the company has about $36.7 billion of debt and lease-related obligations.
- United Next plan calls for over 700 new narrow and widebody aircraft by the end of 2033; 2024 adjusted capital expenditures are expected to be about $8 billion.
- Credit ratings remain below investment grade (BB-/Ba2/BB-), and the FAA grounded all 79 Boeing 737 MAX 9 aircraft in January 2024, which the company says hurt first-quarter 2024 results.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 29, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $53.72B$44.95B | +19.5% |
| Operating Expenses | $49.51B$42.62B | +16.2% |
| Operating Income | $4.21B$2.34B | +80.2% |
| Net Income | $2.62B$737.00M | +255.2% |
| EPS (Basic) | $7.98$2.26 | +253.1% |
| EPS (Diluted) | $7.89$2.23 | +253.8% |
| Shares Outstanding (Basic) | 327.80M326.40M | +0.4% |
| Shares Outstanding (Diluted) | 331.90M330.10M | +0.5% |
05—Questions
Frequently Asked Questions
How did UAL's profitability change in 2023?
Operating income rose to $4.21 billion from $2.34 billion, and net income increased to $2.62 billion from $737 million. Diluted EPS was $7.89 versus $2.23. Revenue growth of $8.76 billion, driven mainly by passenger revenue, outpaced the rise in operating expenses of $6.89 billion.
What are the main cost pressures the company disclosed?
Salaries and related costs increased $3.3 billion, or 29.0%, due to headcount growth, new collective bargaining agreements and higher profit sharing. Other cost increases included distribution expenses (up 28.8%), aircraft maintenance (up 27.1%) and landing fees (up 19.4%). Special charges of $949 million also weighed on results.
How is the company's balance sheet and liquidity position?
Unrestricted cash and short-term investments were $14.4 billion at December 31, 2023. Total debt, finance lease, operating lease and other financial liabilities were about $36.7 billion, including $4.8 billion due within 12 months. The company's credit ratings are below investment grade, and a substantial portion of its assets is pledged under loan agreements.
What is the United Next growth plan?
United Next is the company's strategic plan to expand its fleet and network. The company expects to take delivery of over 700 new narrow and widebody aircraft by the end of 2033 and plans to replace older mainline jets and at least 200 single-class regional jets. It also plans to hire over 50,000 new employees and expects a 17-25% reduction in carbon emissions per seat compared with older planes.
What operational risks did the filing highlight?
The FAA's January 2024 emergency directive grounded all 79 Boeing 737 MAX 9 aircraft, which the company said negatively affected first-quarter 2024 financial performance. Delays in 737 MAX 10 certification and supplier constraints may reduce Boeing deliveries over the next couple of years, and the company identified fuel price volatility and labor costs as material risks.
06—Continue