01—Abstract
Summary
Summary of the 10-Q filed April 17, 2024. Cited figures are marked; the original filing is the authoritative source.
United Airlines Holdings, Inc. (UAL) and its wholly-owned subsidiary United Airlines, Inc. filed a combined Form 10-Q for the quarter ended March 31, 2024.
UAL reported operating revenue of $12.54 billiona, up from $11.43 billion a year earlier, and swung to operating income of $99 million from an operating loss of $43 million. The company still posted a net loss of $124 million, or $(0.38) per share, compared with a net loss of $194 million, or $(0.59) per share, in the first quarter of 2023. Results were weighed down by nonoperating expense of $263 million, including $37 million of unrealized investment losses and $35 million of debt extinguishment and modification fees tied to refinancing the 2021 term loans.
Liquidity was $14.0 billionb in unrestricted cash, cash equivalents and short-term investments at March 31, 2024, versus $14.4 billion at December 31, 2023. Total debt was reduced in the quarter: the company made $5.0 billion in debt and financing payments, including a $3.9 billion prepayment of its 2021 term loan, and borrowed $2.5 billion under a new term loan facility. Long-term debt fell to $23.06 billion from $25.06 billion.
The company stated it had $2.87 billionc undrawn under its revolving credit facility, and that its credit ratings remain below investment grade (BB-/Ba2/BB-). The filing also discloses firm aircraft commitments totaling $57.8 billion, and an April 14, 2024 arrangement with Boeing providing credit memos for use on future purchases, tied to the FAA grounding of the 737 MAX 9 and certification delays for the 737 MAX 10.
The company expects to account for these as reductions to the cost basis of certain aircraft, which is expected to reduce future depreciation expense. Passenger revenue rose 10.1%d on a 9.1% increase in capacity, and the company had approximately 104,500 employees at quarter end.
02—Key points
Key Highlights
- Total operating revenue rose to $12.54 billion from $11.43 billion, up 9.7%, with passenger revenue up 10.1%.
- Operating income was $99 million, compared with an operating loss of $43 million in the prior-year quarter.
- Net loss narrowed to $124 million, or $(0.38) per share, from $194 million, or $(0.59) per share.
- Aircraft fuel expense fell 6.9% to $2.95 billion as the average price per gallon dropped to $2.88 from $3.33.
- Unrestricted cash, cash equivalents and short-term investments totaled $14.0 billion, versus $14.4 billion at December 31, 2023.
- Long-term debt declined to $23.06 billion from $25.06 billion after a $3.9 billion prepayment of the 2021 term loan and a new $2.5 billion term loan.
- Firm aircraft purchase commitments totaled $57.8 billion, and an April 14, 2024 Boeing arrangement will provide credit memos tied to 737 MAX 9 grounding and 737 MAX 10 delays.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed April 17, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $12.54B$11.43B | +9.7% |
| Operating Expenses | $12.44B$11.47B | +8.4% |
| Operating Income | $99.00M-$43.00M | +330.2% |
| Net Income | -$124.00M-$194.00M | +36.1% |
| EPS (Basic) | $-0.38$-0.59 | +35.6% |
| EPS (Diluted) | $-0.38$-0.59 | +35.6% |
| Shares Outstanding (Basic) | 328.30M327.40M | +0.3% |
| Shares Outstanding (Diluted) | 328.30M327.40M | +0.3% |
05—Questions
Frequently Asked Questions
Did United Airlines return to operating profitability in the first quarter of 2024?
Yes, on an operating basis. The company reported operating income of $99 million, compared with an operating loss of $43 million in the first quarter of 2023. The company still reported a net loss of $124 million after $263 million of nonoperating expense, net.
What drove the change in nonoperating expense?
Nonoperating expense, net rose to $263 million from $213 million. The filing cites $37 million of unrealized losses on investments, primarily from changes in the market value of equity securities, and $35 million of debt extinguishment and modification fees from refinancing the 2021 term loans. Interest expense declined $32 million to $454 million.
How did the company's debt and liquidity change during the quarter?
The company made $5.0 billion of debt, finance lease and other financing liability payments, including a $3.9 billion prepayment of the 2021 term loan, and borrowed $2.5 billion under a new term loan facility. Unrestricted cash and short-term investments were $14.0 billion at March 31, 2024, and the company had $2.87 billion undrawn under its revolving credit facility.
What is the Boeing arrangement and how will it affect the financials?
On April 14, 2024, the company entered into confidential arrangements with Boeing to compensate for damages from the FAA grounding of the 737 MAX 9 and to accommodate certification delays for the 737 MAX 10. Compensation is in the form of credit memos for future Boeing purchases. The company plans to account for these as reductions to the cost basis of certain aircraft, which is expected to reduce future depreciation expense.
What are the company's credit ratings and aircraft commitments?
As of the filing date, UAL's corporate credit ratings were BB- (S&P), Ba2 (Moody's) and BB- (Fitch), all below investment grade. Firm aircraft and related commitments totaled $57.8 billion, with $7.1 billion due in the last nine months of 2024 and $27.1 billion after 2028.
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