Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 21, 2011

 

 

UNITED CONTINENTAL HOLDINGS, INC.

UNITED AIR LINES, INC.

CONTINENTAL AIRLINES, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-06033   36-2675207
Delaware   001-11355   36-2675206
Delaware   001-10323   74-2099724

(State or other jurisdiction

of incorporation)

  (Commission File Number)  

(IRS Employer

Identification Number)

 

77 W. Wacker Drive, Chicago, IL   60601
77 W. Wacker Drive, Chicago, IL   60601
1600 Smith Street, Dept. HQSEO, Houston, Texas   77002
(Address of principal executive offices)   (Zip Code)

(312) 997-8000

(312) 997-8000

(713) 324-2950

Registrant’s telephone number, including area code 

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 2.02 Results of Operations and Financial Condition.

On April 21, 2011, United Continental Holdings, Inc. (“UAL”), the holding company whose primary subsidiaries are United Air Lines, Inc. (“United”) and Continental Airlines, Inc. (“Continental”), issued a press release announcing the financial results of United and Continental for the first quarter of 2011. The press release is attached as Exhibit 99.1 and is incorporated herein by reference.

The information in this Item 2.02, including Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section and shall not be deemed incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Item 7.01 Regulation FD Disclosure.

On April 21, 2011, UAL will provide an investor update related to the financial and operational outlook for United and Continental for the second quarter and full year of 2011. A copy of the investor update is attached as Exhibit 99.2 and is incorporated herein by reference.

The information in this Item 7.01, including Exhibit 99.2, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section and shall not be deemed incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

 

Exhibit No.

  

Description

99.1*    Press Release issued by United Continental Holdings, Inc. dated April 21, 2011
99.2*    United Continental Holdings, Inc. Investor Update dated April 21, 2011

 

* Furnished herewith electronically.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

UNITED CONTINENTAL HOLDINGS, INC.
UNITED AIR LINES, INC.
CONTINENTAL AIRLINES, INC.
By:  

/s/ Chris Kenny

Name:   Chris Kenny
Title:   Vice President and Controller

Date: April 21, 2011


EXHIBIT INDEX

 

Exhibit No.

  

Description

99.1*    Press Release issued by United Continental Holdings, Inc. dated April 21, 2011
99.2*    United Continental Holdings, Inc. Investor Update dated April 21, 2011

 

* Furnished herewith electronically.
Press Release issued by United Continental Holdings, Inc. dated April 21, 2011

Exhibit 99.1

LOGO

UNITED CONTINENTAL HOLDINGS, INC. ANNOUNCES

FIRST-QUARTER 2011 RESULTS

UAL REPORTS FIRST-QUARTER $136 MILLION NET LOSS EXCLUDING SPECIAL CHARGES,

$213 MILLION NET LOSS ON GAAP BASIS

CHICAGO, April 21, 2011 – United Continental Holdings, Inc. (NYSE: UAL) today announced first-quarter 2011 financial results. UAL results for the first quarter include the financial results of its two operating subsidiaries, United Airlines and Continental Airlines. Prior to the merger on Oct. 1, 2010, UAL results included only the financial results of United Airlines. Pro forma results that consolidate the financial results for Continental for first-quarter 2010 are included for meaningful year-over-year comparisons.

 

   

UAL reported a first-quarter 2011 net loss of $136 million or $0.41 loss per share excluding $77 million of special charges consisting primarily of integration-related costs, an improvement of $47 million compared to the pro forma results year-over-year. On a GAAP basis, UAL reported a first-quarter 2011 net loss of $213 million or $0.65 loss per share.

 

   

UAL consolidated passenger revenue increased 11.5 percent in the first quarter of 2011 compared to the pro forma results for the same period in 2010. First-quarter 2011 consolidated passenger revenue per available seat mile (PRASM) increased 9.9 percent compared to the pro forma results year-over-year.

 

   

Rising fuel prices largely offset the improvement in revenue. First-quarter 2011 consolidated fuel expense, excluding the impact of hedges, increased 34.5 percent, or $725 million, year-over-year on a pro forma basis.

 

   

UAL ended the quarter with $8.9 billion in unrestricted cash, cash equivalents and short-term investments.

“My co-workers did a great job running an on-time and efficient operation this past quarter, and I especially want to thank my co-workers who conducted our Japan operations, overcoming tremendous personal hardship to help our customers and keep our operation safe and reliable after the tragic earthquake and tsunami,” said Jeff Smisek, UAL’s president and chief executive officer. “With our people, and the power of our network, product and fleet, United and Continental are much better positioned to manage through the current high-cost fuel environment as a combined carrier than either would have been as stand-alone carriers.”

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LOGO


UNITED CONTINENTAL HOLDINGS, INC. ANNOUNCES FIRST-QUARTER 2011 RESULTS/Page 2

 

First-Quarter Revenue and Capacity

For the first quarter of 2011, total revenue was $8.2 billion, an increase of 10.8 percent compared to the pro forma results for the same period in 2010. Consolidated passenger revenue for the first quarter rose 11.5 percent to $7.2 billion, as compared to the pro forma results for the same period in 2010.

Consolidated revenue passenger miles (RPMs) for the first quarter of 2011 decreased 1.0 percent on a pro forma basis, while capacity (available seat miles or ASMs) increased 1.4 percent year-over-year on a pro forma basis, resulting in a first-quarter consolidated load factor of 78.0 percent.

Consolidated yield for the first quarter of 2011 increased 12.7 percent year-over-year on a pro forma basis. First-quarter 2011 consolidated PRASM increased 9.9 percent compared to the pro forma results for the same period in 2010.

Mainline RPMs in the first quarter of 2011 decreased 1.0 percent on a mainline capacity increase of 1.5 percent year-over-year on a pro forma basis, resulting in a first-quarter mainline load factor of 78.8 percent. Mainline yield for the first quarter of 2011 increased 13.0 percent over the pro forma results for the same period in 2010. First-quarter 2011 mainline PRASM increased 10.2 percent year-over-year on a pro forma basis.

“Our strong revenue performance is a result of my co-workers’ focus on operational performance and delivering products and services our customers value,” said Jim Compton, UAL’s executive vice president and chief revenue officer. “We will continue to focus on growing revenue by tailoring our products to meet our customers’ needs.”

Due to the decline in demand for travel to Japan following the March 11, 2011, earthquake and tsunami, first-quarter consolidated passenger revenue decreased approximately $30 million. In response, UAL reduced trans-Pacific capacity to Japan by approximately 10 percent in April and 14 percent in May, compared to the same periods in 2010.

Passenger revenue for the first quarter of 2011 and period-to-period comparisons of related pro forma statistics for UAL’s mainline and regional operations are as follows:

 

     1Q 2011
Passenger
Revenue
(millions)
     Passenger
Revenue vs.
1Q 2010
    PRASM vs.
1Q 2010
    Yield vs.
1Q 2010
    ASM vs.
1Q 2010
 

Domestic

   $ 2,923         9.6     11.8     12.3     (2.0 %) 

Atlantic

     1,131         8.0     1.3     8.5     6.7

Pacific

     1,055         17.9     13.4     15.7     4.0

Latin America

     654         20.9     15.4     19.9     4.7
                 

International

   $ 2,840         14.4     8.6     13.6     5.3

Mainline

   $ 5,763         11.9     10.2     13.0     1.5

Regional

     1,424         10.0     8.8     11.5     1.1
                 

Consolidated

   $ 7,187         11.5     9.9     12.7     1.4

 

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UNITED CONTINENTAL HOLDINGS, INC. ANNOUNCES FIRST-QUARTER 2011 RESULTS/Page 3

 

Cargo and other revenue in the first quarter of 2011 increased 6.3 percent, or $60 million, year-over-year on a pro forma basis driven by increased cargo fuel surcharges and continued growth in ancillary revenue.

First-Quarter Costs

Total consolidated expenses increased $825 million, or 11.2 percent, compared to the pro forma results for the first quarter of 2010, of which $725 million was due to higher fuel costs, excluding the impact of fuel hedges. First-quarter 2011 consolidated expenses, excluding fuel, profit-sharing and special items, increased $187 million, or 3.6 percent, year-over-year on a pro forma basis on 1.4 percent higher capacity.

Consolidated costs per available seat mile (CASM), excluding special items, increased 8.6 percent and mainline CASM, excluding special items, increased 8.2 percent in the first quarter of 2011 compared to the pro forma results for the same period last year. First-quarter 2011 consolidated and mainline CASM increased 9.6 and 9.4 percent year-over-year on a pro forma basis, respectively.

On a pro forma basis, consolidated fuel prices, excluding the impact of hedges, for the first quarter of 2011 increased 34.5 percent compared to the first quarter of 2010. The company has hedged approximately 46 percent of its expected remaining fuel needs for 2011.

In response to rising fuel prices, the company announced capacity reductions resulting in a one percentage- point reduction in consolidated ASMs effective with its May 2011 schedule and a four percentage-point reduction of consolidated ASMs effective with its September 2011 schedule compared to previous plans. Full-year 2011 consolidated capacity is now expected to be roughly flat year-over-year.

In the first quarter, consolidated and mainline CASM, excluding special items and holding fuel rate and profit sharing constant, increased 1.5 percent and 1.6 percent, respectively, compared to the pro forma results for the same period of 2010.

“The whole team did a good job controlling costs while running a great operation despite significant challenges this quarter,” said Zane Rowe, UAL’s executive vice president and chief financial officer. “We will continue to improve our cost performance and focus on further operational efficiencies.”

First-Quarter Liquidity

UAL ended the first quarter of 2011 with $8.9 billion in unrestricted cash, cash equivalents and short-term investments, including approximately $200 million of counterparty hedge collateral posted with the company. During the first quarter, the company generated $1 billion of operating cash flow and had gross capital expenditures of $268 million. The company made scheduled debt and net capital lease payments of $459 million, including the $150 million UAL 5% convertible notes, and prepaid $194 million of debt.

Merger Integration

While United and Continental continued to operate as two separate airlines, the company made progress toward integrating products, services and policies during the quarter. The company announced that it will retain United’s Economy Plus seating and expand it to Continental aircraft beginning in 2012. It also unveiled a new interim advertising campaign that began to roll out at airports, through customer communications and other media. The carriers’ check-in, ticket counter and gate facilities are now co-located at 36 airports, and more than 30 percent of the total fleet, or 460 aircraft, including the first Boeing 747-400, are now repainted in the new United livery. The company remained focused on building its Working Together culture to ensure that employees share in the success they help create. During the quarter, United introduced the 2011 Go Forward Plan that outlines the company’s most important goals for the year, and new perfect-attendance, profit-sharing and pass-travel programs for employees.

 

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UNITED CONTINENTAL HOLDINGS, INC. ANNOUNCES FIRST-QUARTER 2011 RESULTS/Page 4

 

Notable First-Quarter 2011 Accomplishments

 

   

United and Continental delivered solid operational results during the quarter, despite being impacted by winter snow storms in several hubs. United and Continental recorded U.S. Department of Transportation domestic on-time arrival rates of 82.7 percent and 76.6 percent, respectively, and completion factors of 97.9 percent and 97.6 percent, respectively, for the first quarter. For international flights, United and Continental recorded on-time arrival rates of 81.4 percent and 78.8 percent respectively. The on-time arrival rates are based on flights arriving within 14 minutes of scheduled arrival time.

 

   

Employees of the combined company earned cash incentive payments for operational performance totaling $18 million during the first quarter of 2011.

 

   

The company reached a tentative agreement with the International Brotherhood of Teamsters representing United’s maintenance technicians and related employees, and reached consensus with Continental’s passenger service airport and reservation agents on improvements to pay, benefits and work rules.

 

   

Customers and employees donated more than $2.5 million to the American Red Cross and Mileage Plus® and OnePass® members gave more than 63 million frequent flyer miles to the charity through the airlines’ programs to help those affected by the Japan earthquake.

 

   

The company inaugurated nonstop flights between New York/Newark and Providenciales, Turks and Caicos Islands. In addition, the company announced new service beginning June 2011 between New York/Newark and Stuttgart, Germany, and Port-au-Prince, Haiti, and between San Francisco and Guadalajara, Mexico. Daily service between Los Angeles and Guadalajara, Mexico, is scheduled to begin in May 2011.

 

   

The company continued to install flat-bed seats in first and business class and now has the new seats on 118 United and Continental aircraft, more than any other U.S. carrier.

 

   

The company signed a letter of intent to offer Wi-Fi on more than 200 Continental Boeing 737 and 757 aircraft through our partnership with LiveTV. United currently offers Wi-Fi on all p.s.® flights between New York Kennedy and Los Angeles and San Francisco.

 

   

Continental placed into service two new fuel-efficient Boeing 737-800s and removed from service two older, less efficient Boeing 737-500s.

 

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UNITED CONTINENTAL HOLDINGS, INC. ANNOUNCES FIRST-QUARTER 2011 RESULTS/Page 5

 

About United Continental Holdings, Inc.

United Continental Holdings, Inc. (NYSE: UAL) is the holding company for both United Airlines and Continental Airlines. Together with United Express, Continental Express and Continental Connection, these airlines operate an average of 5,820 flights a day to 373 airports on six continents from their hubs in Chicago, Cleveland, Denver, Guam, Houston, Los Angeles, New York/Newark Liberty, San Francisco, Tokyo and Washington, D.C.

United and Continental are members of Star Alliance, which offers 21,000 daily flights to 1,160 airports in 181 countries worldwide through its 27 member airlines. United and Continental’s more than 80,000 employees reside in every U.S. state and in many countries around the world. For more information about United Continental Holdings, Inc., go to unitedcontinentalholdings.com. For more information about the airlines, see united.com and continental.com, and follow each company on Twitter and Facebook.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Certain statements included in this release are forward-looking and thus reflect our current expectations and beliefs with respect to certain current and future events and financial performance. Such forward-looking statements are and will be subject to many risks and uncertainties relating to our operations and business environment that may cause actual results to differ materially from any future results expressed or implied in such forward-looking statements. Words such as “expects,” “will,” “plans,” “anticipates,” “indicates,” “believes,” “forecast,” “guidance,” “outlook” and similar expressions are intended to identify forward-looking statements. Additionally, forward-looking statements include statements which do not relate solely to historical facts, such as statements which identify uncertainties or trends, discuss the possible future effects of current known trends or uncertainties, or which indicate that the future effects of known trends or uncertainties cannot be predicted, guaranteed or assured. All forward-looking statements in this release are based upon information available to us on the date of this release. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, except as required by applicable law. Our actual results could differ materially from these forward-looking statements due to numerous factors including, without limitation, the following: our ability to comply with the terms of our various financing arrangements; the costs and availability of financing; our ability to maintain adequate liquidity; our ability to execute our operational plans; our ability to control our costs, including realizing benefits from our resource optimization efforts, cost reduction initiatives and fleet replacement programs; our ability to utilize our net operating losses; our ability to attract and retain customers; demand for transportation in the markets in which we operate; an outbreak of a disease that affects travel demand or travel behavior; demand for travel and the impact that global economic conditions have on customer travel patterns; excessive taxation and the inability to offset future taxable income; general economic conditions (including interest rates, foreign currency exchange rates, investment or credit market conditions, crude oil prices, costs of aviation fuel and energy refining capacity in relevant markets); our ability to cost-effectively hedge against increases in the price of aviation fuel; any potential realized or unrealized gains or losses related to fuel or currency hedging programs; the effects of any hostilities, act of war or terrorist attack; the ability of other air carriers with whom we have alliances or partnerships to provide the services contemplated by the respective arrangements with such carriers; the costs and availability of aviation and other insurance; the costs associated with security measures and practices; industry consolidation or changes in airline alliances; competitive pressures on pricing and on demand; our capacity decisions and the capacity decisions of our competitors; U.S. or foreign governmental legislation, regulation and other actions (including open skies agreements); labor costs; our ability to maintain satisfactory labor relations and the results of the collective bargaining agreement process with our union groups; any disruptions to operations due to any potential actions by our labor groups; weather conditions; the possibility that expected merger synergies will not be realized or will not be realized within the expected time period; and other risks and uncertainties set forth under Item 1A., Risk Factors of Annual Report on Form 10-K, as well as other risks and uncertainties set forth from time to time in the reports we file with the SEC. Consequently, forward-looking statements should not be regarded as representations or warranties by us that such matters will be realized.

-tables attached-

 

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UNITED CONTINENTAL HOLDINGS, INC. ANNOUNCES FIRST-QUARTER 2011 RESULTS/Page 6

 

UNITED CONTINENTAL HOLDINGS, INC.

STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)

ACTUAL GAAP RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND PRO FORMA RESULTS

FOR THE THREE MONTHS ENDED MARCH 31, 2010

 

     Three Months Ended
March  31,
    %
Increase/
(Decrease)
 
(In millions, except per share data)    2011     2010
Pro Forma (A)
   

Operating Revenue:

      

Passenger:

      

Mainline

     $5,763        $5,151        11.9

Regional

     1,424        1,295        10.0
                  

Total Passenger Revenue

     7,187        6,446        11.5

Cargo

     283        259        9.3

Other

     732        696        5.2
                  

Total Operating Revenue

     8,202        7,401        10.8
                  

Operating Expenses:

      

Aircraft fuel (B)

     2,672        2,081        28.4

Salaries and related costs

     1,806        1,758        2.7

Regional capacity purchase (C)

     573        584        (1.9 %) 

Landing fees and other rent

     473        475        (0.4 %) 

Aircraft maintenance materials and outside repairs

     439        358        22.6

Depreciation and amortization

     388        386        0.5

Distribution expenses

     350        317        10.4

Aircraft rent

     253        254        (0.4 %) 

Special charges (D)

     77        28        NM   

Other operating expense

     1,137        1,102        3.2
                  

Total Operating Expenses

     8,168        7,343        11.2
                  

Operating Income

     34        58        (41.4 %) 

Nonoperating Income (Expense):

      

Interest expense

     (254     (266     (4.5 %) 

Interest capitalized

     6        9        (33.3 %) 

Interest income

     4        3        33.3

Miscellaneous, net

     (1     13        NM   
                  

Total Nonoperating Expense

     (245     (241     1.7
                  

Loss before income taxes and equity in earnings of affiliates

     (211     (183     15.3

Income tax expense (E)

     2        1        100.0
                  

Loss before equity in earnings of affiliates

     (213     (184     15.8

Equity in earnings of affiliates

     —          1        (100.0 %) 
                  

Net Loss

     ($213     ($183     16.4
                  

Loss per share, basic and diluted

     ($0.65     ($0.58     12.1
                  

Weighted average shares, basic and diluted

     328        313        4.8
      

 

NM Not meaningful

 

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UNITED CONTINENTAL HOLDINGS, INC. ANNOUNCES FIRST-QUARTER 2011 RESULTS/Page 7

 

UNITED CONTINENTAL HOLDINGS, INC.

STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)

 

     Three Months Ended
March 31,
 
(In millions, except per share data)    2011     2010  

Operating Revenue:

    

Passenger:

    

Mainline

     $  5,763        $  2,869   

Regional

     1,424        788   
                

Total Passenger Revenue

     7,187        3,657   

Cargo

     283        157   

Other

     732        427   
                

Total Operating Revenue

     8,202        4,241   
                

Operating Expenses:

    

Aircraft fuel (B)

     2,672        1,207   

Salaries and related costs

     1,806        990   

Regional capacity purchase (C)

     573        388   

Landing fees and other rent

     473        257   

Aircraft maintenance materials and outside repairs

     439        222   

Depreciation and amortization

     388        221   

Distribution expenses

     350        172   

Aircraft rent

     253        81   

Special charges (D)

     77        18   

Other operating expense

     1,137        609   
                

Total Operating Expenses

     8,168        4,165   
                

Operating Income

     34        76   

Nonoperating Income (Expense):

    

Interest expense

     (254     (185

Interest capitalized

     6        2   

Interest income

     4        1   

Miscellaneous, net

     (1     24   
                

Total Nonoperating Expense

     (245     (158
                

Loss before income taxes and equity in earnings of affiliates

     (211     (82

Income tax expense (E)

     2        1   
                

Loss before equity in earnings of affiliates

     (213     (83

Equity in earnings of affiliates

     —          1   
                

Net Loss

     ($213     ($82
                

Loss per share, basic and diluted

     ($0.65     ($0.49
                

Weighted average shares, basic and diluted

     328        167   

 

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UNITED CONTINENTAL HOLDINGS, INC. ANNOUNCES FIRST-QUARTER 2011 RESULTS/Page 8

 

UNITED CONTINENTAL HOLDINGS, INC.

CONSOLIDATED NOTES (UNAUDITED)

 

(A) United Continental Holdings, Inc. (“UAL”) is a holding company and its principal, wholly owned subsidiaries are United Air Lines, Inc. (“United”) and, effective October 1, 2010, Continental Airlines, Inc. (“Continental”). Continental became a subsidiary of UAL as a result of a merger transaction. Included in this investor release are pro forma financial information for the combined company for first quarter of 2010. All pro forma combined company information is based on financial information previously published in our Investor Update and Earnings Release issued Jan. 26, 2011, which can be found on our website at http:\\ir.unitedcontinentalholdings.com under the title Pro Forma Results in the Investor Resources section of the website, except for certain income statement reclassifications.

 

(B) UAL’s results of operations include aircraft fuel expense for both mainline and regional operations.

 

(in millions, except per gallon)    Three Months Ended
March 31,
    %
Increase/
(Decrease)
 
     2011      2010
Pro Forma (A)
   

Total mainline fuel expense

     $2,136         $1,679        27.2

Exclude impact of non-cash net mark-to-market (“MTM”) gains

     —           31        (100.0 %) 
                   

Mainline fuel expense excluding MTM impact

     2,136         1,710        24.9

Add: Regional fuel expense

     536         402        33.3
                   

Consolidated fuel expense excluding MTM impact

     2,672         2,112        26.5

Exclude impact of fuel hedge settlements

     154         (11     NM   
                   

Consolidated fuel expense excluding hedge impacts (a)

     $2,826         $2,101        34.5
                   

Mainline fuel consumption (gallons)

     785         774        1.4

Mainline average jet fuel price per gallon (cents)

     272.1         216.9        25.4

Mainline average jet fuel price per gallon excluding non-cash net MTM impact (cents)

     272.1         220.9        23.2

Mainline average jet fuel price per gallon excluding fuel hedge impacts (cents)

     291.7         219.5        32.9

Regional fuel consumption (gallons)

     175         172        1.7

Regional average jet fuel price per gallon (cents)

     306.3         233.7        31.1

Consolidated consumption (gallons)

     960         946        1.5

Consolidated average jet fuel price per gallon (cents)

     278.3         220.0        26.5

Consolidated average jet fuel price per gallon excluding non-cash net MTM impact (cents)

     278.3         223.3        24.6

Consolidated average jet fuel price per gallon excluding fuel hedge impacts (cents)

     294.4         222.1        32.6

 

(a) Beginning April 1, 2010, UAL designated substantially all of its outstanding fuel derivative contracts as cash flow hedges under GAAP. As of March 31, 2011, UAL has recognized $610 million of accumulated other comprehensive gains on its balance sheet for its designated cash flow hedges.

 

(C) UAL has contractual relationships with various regional carriers to provide regional jet and turboprop service branded as United Express, Continental Express and Continental Connection. Under these agreements, UAL pays the regional carriers contractually agreed fees for crew expenses, maintenance expenses and other costs of operating these flights. These costs include aircraft rent of $172 million for the three months ended March 31, 2011, of which $121 million and $51 million is included in regional capacity purchase expense and aircraft rentals, respectively, in our Statements of Consolidated Operations.

 

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UNITED CONTINENTAL HOLDINGS, INC. ANNOUNCES FIRST-QUARTER 2011 RESULTS/Page 9

 

UNITED CONTINENTAL HOLDINGS, INC.

CONSOLIDATED NOTES (UNAUDITED)

 

(D) Special items include the following:
     Three Months Ended
March 31,
 
(In millions)    2011     2010
Pro Forma (A)
    2010  

Integration-related costs

   $ 79        $—        $ —     

Aircraft (gains) losses on sale and related asset impairments

     (2     23        17   

Lease termination and other special charges

     —          5        1   
                        

Total special charges

     77        28        18   

Operating non-cash net MTM gains on undesignated fuel hedges

     —          (31     (31

Accelerated depreciation related to early asset retirement

     —          4        4   

Severance

     —          (2     (2
                        

Total special items operating expense impact

     77        (1     (11

Income tax expense

     —          1        1   
                        

Special items, net of tax

   $ 77        $—        ($ 10
                        

2011

Integration-related costs include costs to terminate certain service contracts that will not be used by the combined company, costs to write-off system assets that are no longer used or planned to be used by the combined company, and payments to third-party consultants to assist with integration planning and organization design. Integration-related costs also include salary and severance related costs primarily associated with administrative headcount reductions and compensation costs related to the integration.

2010

Aircraft and related asset impairments consist of a United $17 million charge to decrease the value of aircraft related assets and a Continental $6 million charge related to grounded Boeing 737-300 aircraft, which is net of gains on the sale of two Boeing 737-500 aircraft.

Non-cash MTM gains on undesignated fuel hedges relates to United’s MTM gains on fuel hedge contracts that were not designated as cash flow hedges. Under applicable accounting standards, MTM gains/losses on undesignated contracts are immediately recorded to fuel expense each period unlike MTM gains/losses on designated cash flow hedges which are initially deferred through other comprehensive income.

 

(E) Effective tax rates differ from the federal statutory rate of 35% primarily due to the following: changes in the valuation allowance, expenses that are not deductible for federal income tax purposes, and foreign and state income taxes. We are required to provide a valuation allowance for our deferred tax assets in excess of deferred tax liabilities because UAL concluded that it is more likely than not that such deferred tax assets will ultimately not be realized. As a result, pre-tax losses for the three months ending March 31, 2011 and 2010 were not reduced by any tax benefits.

 

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UNITED CONTINENTAL HOLDINGS, INC. ANNOUNCES FIRST-QUARTER 2011 RESULTS/Page 10

 

UNITED CONTINENTAL HOLDINGS, INC.

STATISTICS

 

     Three Months Ended
March 31,
    %
Increase/
(Decrease)
 
     2011     2010
Pro Forma (A)
   

Mainline Operations:

      

Passengers (thousands)

     22,420        23,025        (2.6 %) 

Revenue passenger miles (millions)

     41,266        41,673        (1.0 %) 

Available seat miles (millions)

     52,377        51,624        1.5

Cargo ton miles (millions)

     686        725        (5.4 %) 

Passenger load factor

      

Mainline

     78.8     80.7     (1.9 ) pts. 

Domestic

     81.2     81.6     (0.4 ) pts. 

International

     76.3     79.8     (3.5 ) pts. 

Passenger revenue per available seat mile (cents)

     11.00        9.98        10.2

Average yield per revenue passenger mile (cents)

     13.97        12.36        13.0

Average fare per passenger

     $257.05        $223.71        14.9

Cost per available seat mile (CASM) (cents):

      

CASM (a)

     12.70        11.61        9.4

CASM, excluding special items (b)

     12.56        11.61        8.2

CASM, excluding special items and fuel (b)

     8.48        8.30        2.2

CASM, holding fuel rate and profit sharing constant, excluding special items (b)

     11.79        11.61        1.6

Average price per gallon of jet fuel (cents) (c)

     272.1        216.9        25.4

Average price per gallon of jet fuel excluding non-cash net MTM impact (cents) (c)

     272.1        220.9        23.2

Average price per gallon of jet fuel excluding fuel hedge impact (cents) (c)

     291.7        219.5        32.9

Fuel gallons consumed (millions)

     785        774        1.4

Aircraft in fleet at end of period

     710        692        2.6

Average stage length (miles) (d)

     1,795        1,760        2.0

Average daily utilization of each aircraft (hours)

     10:31        10:35        (0.6 %) 

 

(a) Includes impact of special items (See Note D).
(b) These financial measures provide management and investors the ability to monitor the Company's performance on a consistent basis.
(c) Fuel price per gallon includes aircraft fuel and related taxes.
(d) Average stage length equals the average distance a seat travels adjusted for size of aircraft (available seat miles/seats).

 

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UNITED CONTINENTAL HOLDINGS, INC. ANNOUNCES FIRST-QUARTER 2011 RESULTS/Page 11

 

UNITED CONTINENTAL HOLDINGS, INC.

STATISTICS (Continued)

 

     Three Months Ended
March 31,
    %
Increase/
(Decrease)
 
     2011     2010
Pro Forma (A)
   

Regional:

      

Passengers (thousands)

     10,169        10,365        (1.9 %) 

Revenue passenger miles (millions)

     5,698        5,779        (1.4 %) 

Available seat miles (millions)

     7,795        7,711        1.1

Passenger load factor

     73.1     74.9     (1.8 ) pts. 

Passenger revenue per available seat mile (cents)

     18.27        16.79        8.8

Average yield per revenue passenger mile (cents)

     24.99        22.41        11.5

Aircraft in fleet at end of period

     559        545        2.6

Average stage length (miles) (d)

     538        541        (0.6 %) 

Consolidated Operations (Mainline and Regional):

      

Passengers (thousands)

     32,589        33,390        (2.4 %) 

Revenue passenger miles (millions)

     46,964        47,452        (1.0 %) 

Available seat miles (millions)

     60,172        59,335        1.4

Passenger load factor

     78.0     80.0     (2.0 ) pts. 

Passenger revenue per available seat mile (cents)

     11.94        10.86        9.9

Total revenue per available seat miles (cents)

     13.63        12.47        9.3

Average yield per revenue passenger mile (cents)

     15.30        13.58        12.7

CASM (a)

     13.57        12.38        9.6

CASM, excluding special items (b)

     13.45        12.38        8.6

CASM, excluding special items and fuel (b)

     9.01        8.82        2.2

CASM, holding fuel rate and profit sharing constant, excluding special items (b)

     12.57        12.38        1.5

Average price per gallon of jet fuel (cents) (c)

     278.3        220.0        26.5

Average price per gallon of jet fuel excluding non-cash net MTM impact (cents) (c)

     278.3        223.3        24.6

Average price per gallon of jet fuel excluding fuel hedge impacts (cents) (c)

     294.4        222.1        32.6

Fuel gallons consumed (millions)

     960        946        1.5

Average full-time equivalent employees (thousands)

     82.0        82.2        (0.2 %) 

 

(a) Includes impact of special items (See Note D).
(b) These financial measures provide management and investors the ability to monitor the Company's performance on a consistent basis.
(c) Fuel price per gallon includes aircraft fuel and related taxes.
(d) Average stage length equals the average distance a seat travels adjusted for size of aircraft (available seat miles/seats).

 

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UNITED CONTINENTAL HOLDINGS, INC. ANNOUNCES FIRST-QUARTER 2011 RESULTS/Page 12

 

UNITED CONTINENTAL HOLDINGS, INC.

NON-GAAP FINANCIAL RECONCILIATION

UAL evaluates its financial performance utilizing various GAAP and non-GAAP financial measures including, net income/loss, net earnings/loss per share and CASM, among others. CASM is a common metric used in the airline industry to measure an airline's cost structure and efficiency. Pursuant to SEC Regulation G, UAL has included the following reconciliation of reported non-GAAP financial measures to comparable financial measures reported on a GAAP basis. UAL believes that excluding fuel costs from certain measures is useful to investors because it provides an additional measure of management's performance excluding the effects of a significant cost item over which management has limited influence. UAL also believes that adjusting for special items, and other items unusual or infrequent in nature, is useful to investors because they are non-recurring items not indicative of UAL's on-going performance. UAL began to apply cash flow hedge accounting effective April 1, 2010. Prior to the designation of fuel hedge instruments as cash flow hedges, MTM gains and losses were immediately recognized in fuel expense. UAL believes that the net fuel hedge adjustments provide management and investors with a better perspective of its performance and comparison to its peers because the adjustments reflect the economic fuel cost during the periods presented and many of our peers apply cash flow hedge accounting.

 

(in millions)    Three Months Ended
March 31,
    $
Increase/
(Decrease)
    %
Increase/
(Decrease)
 
     2011     2010
Pro Forma (A)
     

Consolidated Operating Expenses

     $8,168        $7,343        $825        11.2

Special items (D)

     (77     1        (78     NM   
                          

Consolidated Operating Expenses, excluding special items

     8,091        7,344        747        10.2

Consolidated fuel expense (excluding non-cash net MTM impact)

     (2,672     (2,112     (560     26.5

Profit sharing, including taxes

     —          —          —          NM   
                          

Consolidated Operating Expenses, excluding fuel, profit sharing and special items

     $5,419        $5,232        $187        3.6
                          
(in millions)    Three Months Ended
March 31,
    $
Increase/
(Decrease)
    %
Increase/
(Decrease)
 
     2011     2010
Pro Forma (A)
     

Net Loss

     ($213     ($183     $30        16.4

Special items (D)

     77        —          77        NM   
                          

Net Loss, excluding special items

     ($136     ($183     ($47     (25.7 %) 
                          
     Three Months Ended
March 31,
             
     2011     2010
Pro Forma (A)
             

Diluted loss per share

   ($ 0.65     ($0.58    

Special items (D)

     0.24        —         
                    

Diluted loss per share, excluding special items

   ($ 0.41     ($0.58    
                    

 

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UNITED CONTINENTAL HOLDINGS, INC. ANNOUNCES FIRST-QUARTER 2011 RESULTS/Page 13

 

UNITED CONTINENTAL HOLDINGS, INC.

NON-GAAP FINANCIAL RECONCILIATION (Continued)

 

     Three Months Ended
March  31,
    %
Increase/
(Decrease)
 
     2011     2010
Pro Forma (A)
   

CASM Mainline Operations (cents)

      

Cost per available seat mile (CASM)

     12.70        11.61        9.4

Less: Special items (D)

     (0.14     —          NM   
                  

CASM, excluding special items

     12.56        11.61        8.2

Less: Fuel cost per available seat mile

     (4.08     (3.31     23.3
                  

CASM, excluding special items and fuel

     8.48        8.30        2.2

Less: Profit sharing cost per available seat mile

     —          —          NM   
                  

CASM, excluding special items, fuel and profit sharing

     8.48        8.30        2.2

Add: Profit sharing held constant at prior year expense per available seat mile

     —          —          NM   

Add: Current year fuel cost at prior year fuel price per available seat mile

     3.31        —          NM   

Add: Prior year fuel cost per available seat mile

     —          3.31        NM   
                  

CASM, holding fuel and profit sharing constant and excluding special items

     11.79        11.61        1.6
                  

CASM Consolidated Operations (cents)

      

Cost per available seat mile (CASM)

     13.57        12.38        9.6

Less: Special items (D)

     (0.12     —          NM   
                  

CASM, excluding special items

     13.45        12.38        8.6

Less: Fuel cost per available seat mile

     (4.44     (3.56     24.7
                  

CASM, excluding special items and fuel

     9.01        8.82        2.2

Less: Profit sharing cost per available seat mile

     —          —          NM   
                  

CASM, excluding special items, fuel and profit sharing

     9.01        8.82        2.2

Add: Profit sharing held constant at prior year expense per available seat mile

     —          —          NM   

Add: Current year fuel cost at prior year fuel price per available seat mile

     3.56        —          NM   

Add: Prior year fuel cost per available seat mile

     —          3.56        NM   
                  

CASM, holding fuel and profit sharing constant and excluding special items

     12.57        12.38        1.5
                  

###

 

United Continental Holdings, Inc. Investor Update dated April 21, 2011

Exhibit 99.2

LOGO

Issue Date: Apr. 21, 2011

Investor Update

This investor update provides forward-looking information about United Continental Holdings, Inc. (“the Company”) for the second quarter and full year of 2011. All year-over-year comparisons are based on the pro forma combined company financial statements published in our Nov. 2010, Dec. 2010 and Apr. 2011 Investor Updates and can be found on our website at http:\\ir.unitedcontinentalholdings.com under the title Pro Forma Results in the Investor Resources section of the website.

United Continental Holdings, Inc. Outlook Highlights

Capacity

The Company estimates its second quarter consolidated domestic available seat miles (ASMs) to be down between 0.6% and 1.6%, and its consolidated international ASMs to be up between 4.1% and 5.1% for a consolidated system ASMs increase of between 0.8% and 1.8% year-over-year. For the full year, the Company estimates consolidated domestic ASMs to be down between 2.0% and 3.0%, and consolidated international capacity to be up between 3.0% and 4.0% and consolidated system ASMs to be approximately flat, year-over-year.

Non-Fuel Expense Guidance

Second quarter consolidated cost per ASM (CASM), excluding fuel, profit sharing, certain accounting charges and merger-related expenses for the Company, is expected to be up 3.5% to 4.5%. For the full year, the Company estimates consolidated CASM, excluding fuel, profit sharing, certain accounting charges and merger-related expenses, will be up 1.5% to 2.5%.

Fuel Expense

The Company estimates its consolidated fuel price, including the impact of settled cash hedges, to be $3.09 per gallon for the second quarter and $3.14 per gallon for the full year based on the forward curve as of Apr. 18, 2011.

Non-Operating Income/(Expense)

Non-operating expense for the Company is estimated to be between $240 million and $250 million for the second quarter and between $910 million and $950 million for the full year. Non-operating income/(expense) includes interest expense, capitalized interest, interest income and other non-operating income/(expense).

Capital Expenditures and Scheduled Debt and Capital Lease Payments

In the second quarter, the Company expects a total of $0.3 billion of gross capital expenditures and $0.2 billion of net capital expenditures, both excluding purchase deposits of $39 million. For the full year, excluding approximately $200 million of purchase deposits, the Company expects gross capital expenditures to be approximately $1.1 billion and net capital expenditures to be approximately $0.9 billion.

Scheduled debt payments for the second quarter are estimated to be $1.2 billion, including $726 million in cash that the Company expects to pay to repurchase the UAL 4.5% convertible debt that noteholders can put to the Company in June 2011. Full year scheduled debt payments are estimated to be $2.6 billion.

Pension Expense and Contributions

The Company estimates that its non-cash pension expense will be approximately $100 million for 2011. This amount excludes non-cash settlement charges related to lump-sum distributions. In April, the Company made $33 million of cash contributions to its defined benefit pension plans for a total of $71 million in year to date contributions. The Company has a remaining minimum funding requirement of approximately $65 million for calendar year 2011.

Taxes

The Company currently expects to record minimal cash taxes in 2011.

Advance Booked Seat Factor (Percentage of Available Seats that are Sold)

Compared to the same period last year, for the next six weeks, mainline domestic advance booked seat factor is up 4.3 points, mainline international advance booked seat factor is down 1.8 points, mainline Atlantic advance booked seat factor is down 2.0 points, mainline Pacific advance booked seat factor is down 3.6 points and mainline Latin America advance booked seat factor is flat. Regional advance booked seat factor is up 1.2 points.


LOGO

Company Outlook

Second Quarter 2011 Operational Outlook

 

         Estimated
2Q 2011
     Year-Over-Year %
Change

Higher/(Lower)1
    Estimated
Full Year 2011
     Year-Over-Year %
Change

Higher/(Lower)1
 

Capacity (Million ASM)

                                  

Mainline Capacity

                                  

Domestic

       28,287         —           28,578         (2.8 %)      —           (1.8 %)                 

Atlantic

       13,070         —           13,192         7.3     —           8.3                

Pacific

       9,611         —           9,708         (1.0 %)      —           0.0                

Latin America

       5,231         —           5,280         7.2     —           8.2                

Total Mainline Capacity

       56,119         —           56,758         0.6     —           1.6                

Regional Capacity2

       8,663         —           8,748         2.3     —           3.3                

Consolidated Capacity

                                  

Domestic

       36,534         —           36,906         (1.6 %)      —           (0.6 %)      142,019         —           143,483         (3.0 %)      —           (2.0 %) 

International

       28,328         —           28,600         4.1     —           5.1     109,884         —           110,951         3.0     —           4.0

Total Consolidated Capacity

       64,862         —           65,506         0.8     —           1.8     251,903         —           254,434         (0.5 %)      —           0.5

Traffic (Million RPM)

                                  

Mainline Traffic

         Traffic guidance to be provided at future date   

Domestic

      

Atlantic

      

Pacific

      

Latin America

      

Total Mainline System Traffic

      

Regional System Traffic2

      

Consolidated System Traffic

      

Domestic System

      

International System

      

Total Consolidated System Traffic

      
                       

Load Factor

                                  

Mainline Load Factor

         Traffic guidance to be provided at future date   

Domestic

      

Atlantic

      

Pacific

      

Latin America

      

Total Mainline Load Factor

      

Regional Load Factor2

      

Consolidated Load Factor

      

Domestic

      

International

      

Total Consolidated Load Factor

                                                                                                          

 

1. Year-over-year comparisons to 2010 pro forma operating statistics for United Airlines and Continental Airlines
2. Regional results reflect flights operated under capacity purchase agreements and flights operated as part of our joint venture with Aer Lingus.

 


LOGO

Company Outlook

Second Quarter 2011 Financial Outlook

 

         Estimated
2Q 2011
     Year-Over-Year %
Change

Higher/(Lower)1
    Estimated
Full Year 2011
     Year-Over-Year %
Change

Higher/(Lower)1
 

Revenue

                                  

Mainline Passenger Unit Revenue (¢/ASM)

         Revenue guidance to be provided at future date   

Regional Affiliates Passenger Unit Revenue (¢/ASM)

      

Consolidated Passenger Unit Revenue (¢/ASM)

      

Cargo, Mail and Other Revenue ($M)

      
                       

Operating Expense2 (¢/ASM)

                                  

Mainline Unit Cost Excluding Profit Sharing

       12.68         —           12.76         12.5     —           13.2     12.85         —           12.93         11.2     —           11.9

Regional Affiliates Unit Cost

       19.11         —           19.19         9.1     —           9.6     19.18         —           19.34         9.5     —           10.4

Consolidated Unit Cost Excluding Profit Sharing

       13.54         —           13.62         12.0     —           12.6     13.71         —           13.80         11.1     —           11.8

Non-Fuel Expense2 (¢/ASM)

                                  

Mainline Unit Cost Excluding Fuel and Profit Sharing

       8.12         —           8.20         5.0     —           6.0     8.21         —           8.29         2.0     —           3.0

Regional Affiliates Unit Cost Excluding Fuel

       11.64         —           11.72         (3.2 %)      —           (2.5 %)      11.85         —           12.01         (1.9 %)      —           (0.7 %) 

Consolidated Unit Cost Excluding Fuel and Profit Sharing

       8.59         —           8.67         3.5     —           4.5     8.70         —           8.79         1.5     —           2.5

Select Expense Measures ($M)

                                  

Aircraft Rent

       $255                           

Depreciation and Amortization

       $385                           

Fuel Expense

                                  

Mainline Fuel Consumption (Million Gallons)

       855                3,305           

Regional Affiliates Fuel Consumption (Million Gallons)

       190                735           

Consolidated Fuel Consumption (Million Gallons)

       1,045                4,040           

Consolidated Fuel Price Excluding Hedges

       $3.40 / Gallon                $3.32 / Gallon           

Consolidated Fuel Price Including Cash Settled Hedges

       $3.09 / Gallon                $3.14 / Gallon           

Non-Operating Income/(Expense) ($M)

       ($240) - ($250)                ($910) - ($950)           

Income Taxes

                                  

Income Tax Rate

       0%                0%           

Capital Expenditures ($B)

                                  

Gross Capital Expenditures ex Purchase Deposits

       $0.3                $1.1           

Net Capital Expenditures ex Purchase Deposits

       $0.2                $0.9           

Purchase Deposits ($M)

       $39                $200           

Debt and Capital Lease Obligations ($B)

                                  

Scheduled Debt and Capital Lease Obligations 3

       $1.2                $2.6           

 

1. Year-over-year comparisons to 2010 pro forma financials for UAL
2. Excludes special charges. See non-GAAP to GAAP reconciliations
3. Second quarter includes $726M of the UAL 4.5% convertible notes which can be put to the Company in June

 


LOGO

Company Outlook

Historical Frequent Flyer Expense Reclassification

Effective Jan. 1, 2011, the Company reclassified expenses associated with the redemption of frequent flyer miles for awards other than travel on the United or Continental subsidiaries from net revenue to gross expense. As such, this change increases revenue and expenses by a like amount in each period but has no effect on earnings. In order to create meaningful year-over-year comparisons, we have restated the pro-forma financial statements to reflect this accounting standard for 2010. The adjustment that has been made from the prior pro-forma is:

 

     2010  

Better / (Worse) in $M

   1Q
Pro Forma
     2Q
Pro Forma
     3Q
Pro Forma
     4Q
Combined
 

Revenue

           

Passenger Revenue

           

Mainline Passenger Revenue

           

Domestic

     $7         $8         $8         $14   

Atlantic

     2         3         3         5   

Pacific

     3         3         3         6   

Latin America

     1         1         1         1   

Total Mainline Passenger Revenue

     13         15         15         26   

Regional Passenger Revenue

     2         3         3         4   
                                   

Consolidated Passenger Revenue

     15         18         18         30   

Other Revenue

           

Other Operating Revenue

     4         5         5         —     
                                   

Total Revenue

     $19         $23         $23         $30   

Operating Expense

           

Other Operating Expense - Cost of Sales

     19         23         23         30   
                                   

Total Operating Expense

     $19         $23         $23         $30   

The following are pro-forma financial statements that include the reclassification in 2010:

 

     2010  

(in $M, except per share data)

   1Q
Pro Forma
    2Q
Pro Forma
    3Q
Pro Forma
    4Q
Combined
 

Operating Revenue

        

Passenger:

        

Mainline

     $5,151        $6,224        $6,657        $5,965   

Regional Capacity Purchase

     1,295        1,591        1,624        1,475   
                                

Total Passenger

     6,446        7,815        8,281        7,440   

Cargo

     259        301        290        310   

Other Operating Revenue

     696        773        784        713   
                                

Total operating revenue

     7,401        8,889        9,355        8,463   
                                

Operating Expenses

        

Aircraft Fuel

     2,081        2,478        2,540        2,459   

Salaries and Related Costs

     1,758        1,881        2,028        1,822   

Regional Capacity Purchase

     584        610        624        602   

Landing Fees and Other Rents

     475        491        501        511   

Depreciation and Amortization

     386        372        383        403   

Aircraft Maintenance Materials and Outside Repairs

     358        370        382        386   

Distribution Expenses

     317        359        373        338   

Aircraft Rent

     254        255        256        256   

Other Impairments, Merger-related Costs and Special Items

     28        84        21        482   

Other Operating Expenses

     1,102        1,127        1,166        1,286   
                                

Total Operating Expenses

     7,343        8,027        8,274        8,545   
                                

Earnings/(Loss) from Operations

     $58        $862        $1,081        ($82 ) 

Other Income/(Expense)

        

Interest Expense, net

     (254     (244     (252     (243

Miscellaneous, net

     13        (11     22        —     
                                

Total Other Income/(Expense), net

     (241     (255     (230     (243
                                

Income/(Loss) before Income Taxes and Equity in Earnings of Affiliates

     (183     607        851        (325

Income Tax Benefit/(expense)

     (1     2        —          1   
                                

Income/(Loss) Before Equity in Earnings of Affiliates

     (184     609        851        (326

Equity in Earnings of Affiliates, net of tax

     1        2        1        1   
                                

Net Income/(Loss)

     ($183 )      $611        $852        ($325 ) 
                                

Earnings/(Loss) per share, basic

     ($0.58 )      $1.94        $2.70        ($1.01 ) 

Earnings/(Loss) per share, diluted

     (0.58 )      1.57        2.16        (1.01 ) 

Weighted average shares outstanding, basic

     313        315        316        322   

Weighted average shares outstanding, diluted

     313        410        411        322   

Share Count

These share count charts are based upon several assumptions including market stock price and number of shares outstanding. The number of shares used in the actual earnings per share calculation will likely be different from those set forth above.

 

     2Q 2011
(Estimated)
 

Net Income

   Basic Share Count
(in millions)
     Diluted Share Count
(in millions)
     Interest Add-back
(in $ millions)
 

Less than or equal to $0

     329         329       $ —     

$1 million - $36 million

     329         332       $ —     

$37 million - $61 million

     329         372       $ 4   

$62 million - $369 million

     329         384       $ 7   

$370 million or greater

     329         388       $ 11   
     Full Year 2011
(Estimated)
 

Net Income

   Basic Share Count
(in millions)
     Diluted Share Count
(in millions)
     Interest Add-back
(in $ millions)
 

Less than or equal to $0

     329         329       $ —     

$1 million - $144 million

     329         331       $ —     

$145 million - $247 million

     329         371       $ 17   

$248 million - $1,474 million

     329         383       $ 26   

$1,475 million or greater

     329         387       $ 43   

 


LOGO

Company Outlook

Fuel Hedge Positions by Quarter

As of Apr. 18, 2011, the Company had hedged approximately 46% of its remaining 2011 expected consolidated fuel consumption, further details are as follows:

 

           2Q 2011      3Q 2011      4Q 2011  
           % of Expected
Consumption
    Weighted
Average

Strike Price
     % of Expected
Consumption
    Weighted
Average
Strike Price
     % of Expected
Consumption
    Weighted
Average
Strike Price
 

WTI Crude Oil Swaps

   ($ /bbl     20     $88.92         12     $90.43         10     $92.03   

Heating Oil Swaps

   ($ /gal     12     2.20         6     2.24         —       

WTI Crude Oil Call Options

   ($ /bbl     3     91.00         14     96.00         12     98.79   

Heating Oil Call Options

   ($ /gal     12     2.21         6     2.24         —       

WTI Crude Oil Collars

   ($ /bbl     4     94.53         65.00         —                —          

Heating Oil Collars

   ($ /gal     7     3.37         2.60         10     3.32         2.58         9     3.38         2.64   
                                           

Total

       58           48           31     
                                           

Fuel Price Sensitivity

The table below outlines the company’s estimated settled hedge impacts at various crude oil prices, based on the hedge portfolio as of Apr. 18, 2011:

 

Crude Oil Price*    Cash Settled Hedge Impact    1Q11     2Q11     3Q11     4Q11     FY11  
                                     
$130 per Barrel    Fuel Price Excluding Hedge** ($/gal)      $2.94        $3.95        $4.01        $3.99        $3.74   
   Increase/(Decrease) to Fuel Expense ($/gal)      ($0.16     ($0.56     ($0.41     ($0.19     ($0.34
             
             
$120 per Barrel    Fuel Price Excluding Hedge** ($/gal)      $2.94        $3.71        $3.77        $3.76        $3.56   
   Increase/(Decrease) to Fuel Expense ($/gal)      ($0.16     ($0.45     ($0.30     ($0.13     ($0.26
             
             
$110 per Barrel    Fuel Price Excluding Hedge** ($/gal)      $2.94        $3.47        $3.53        $3.52        $3.37   
   Increase/(Decrease) to Fuel Expense ($/gal)      ($0.16     ($0.34     ($0.20     ($0.06     ($0.19
             
             
$107.12 per Barrel    Fuel Price Excluding Hedge** ($/gal)      $2.94        $3.40        $3.46        $3.45        $3.32   
   Increase/(Decrease) to Fuel Expense ($/gal)      ($0.16     ($0.32     ($0.20     ($0.04     ($0.18
             
             
$100 per Barrel    Fuel Price Excluding Hedge** ($/gal)      $2.94        $3.23        $3.29        $3.28        $3.19   
   Increase/(Decrease) to Fuel Expense ($/gal)      ($0.16     ($0.24     ($0.10     ($0.00     ($0.13
             
             
$90 per Barrel    Fuel Price Excluding Hedge** ($/gal)      $2.94        $3.00        $3.06        $3.04        $3.01   
   Increase/(Decrease) to Fuel Expense ($/gal)      ($0.16     ($0.14     ($0.03     $0.03        ($0.08
             
             
$80 per Barrel    Fuel Price Excluding Hedge** ($/gal)      $2.94        $2.76        $2.82        $2.80        $2.83   
   Increase/(Decrease) to Fuel Expense ($/gal)      ($0.16     ($0.05     $0.03        $0.05        ($0.03
                                            

 

* Projected impacts assume a common, parallel jet fuel refining crack spread consistent with April 18th, 2011 forward prices, and a parallel crude forward price curve consistent with Apr. 18, 2011 forward prices. Row headings refer to illustrative spot closing prices on Apr. 18, 2011.
** Fuel price per gallon excluding hedge impacts, but including taxes and transportation costs.

 


LOGO

Company Outlook

Fleet Plan

As of Apr. 21, 2011, the Company’s fleet plan, including aircraft operated by the Company or on the Company’s behalf under a capacity purchase agreement, is as follows:

Mainline Aircraft

 

     United & Continental Airlines Combined  
     YE 2010      1Q 2011 D     2Q 2011 D      3Q 2011 D      4Q 2011 D     YE 2011      FY YOY D  

B747-400

     25         (1     —           —           (1     23         (2

B777-200

     74         —          —           —           —          74         —     

B767-200/300/400

     61         —          —           —           —          61         —     

B757-200/300

     158         —          —           —           —          158         —     

B737-500/700/800/900

     240         1        1         1         —          243         3   

A319/A320

     152         —          —           —           —          152         —     
                                                            

Total Mainline Aircraft

     710         —          1         1         (1     711         1   

Regional Aircraft

 

     United & Continental Airlines Combined  
     YE 2010      1Q 2011 D     2Q 2011 D     3Q 2011 D     4Q 2011 D     YE 2011      FY YOY D  

Q400

     20         6        3        1        —          30         10   

Q300

     —           —          4        1        —          5         5   

Q200

     16         —          —          —          —          16         —     

ERJ-145

     273         3        (7     (1     —          268         (5

CRJ200

     81         (2     —          —          —          79         (2

CRJ700

     115         —          —          —          —          115         —     

EMB 120

     9         —          —          —          —          9         —     

EMB 170

     38         —          —          —          —          38         —     
                                                          

Total Regional Aircraft

     552         7        —          1        —          560         8   

Total Aircraft

     1,262         7        1        2        (1     1,271         9   

 


LOGO

Non-GAAP To GAAP Reconciliations

Pursuant to SEC Regulation G, the Company has included the following reconciliation of reported non-GAAP financial measures to comparable financial measures reported on a GAAP basis. The Company believes that excluding fuel costs and certain other items from some measures is useful to investors because it provides an additional measure of management’s performance excluding the effects of a significant cost item over which management has limited influence, and the effects of certain other items that would otherwise make analysis of the Company’s operating performance more difficult.

 

Mainline operating expense per ASM – CASM (cents)    2Q 2011 Estimate     FY 2011
Estimate
 
     Low     High     Low     High  

Mainline operating expense excluding profit sharing

     12.68        12.76        12.85        12.93   

Special items and other exclusions (a)

     —          —          —          —     
                                

Mainline operating expense excluding profit sharing and special items (b)

     12.68        12.76        12.85        12.93   

Less: fuel expense (c)

     (4.56     (4.56     (4.64     (4.64
                                

Mainline operating expense excluding fuel, profit sharing and special items (c)

     8.12        8.20     

 

8.21

  

 

 

8.29

  

Regional expense per ASM – CASM (cents)    2Q 2011 Estimate     FY 2011
Estimate
 
     Low     High     Low     High  

Regional operating expense

     19.11        19.19        19.18        19.34   

Less: Regional fuel expense

     (7.47     (7.47     (7.33     (7.33
                                

Regional CASM excluding fuel

     11.64        11.72        11.85        12.01   
Consolidated operating expense per ASM – CASM (cents)    2Q 2011 Estimate     FY 2011
Estimate
 
     Low     High     Low     High  

Consolidated operating expense excluding profit sharing

     13.54        13.62        13.71        13.80   

Special items and other exclusions (a)

     —          —          —          —     
                                

Consolidated operating expense excluding profit sharing and special items (b)

     13.54        13.62        13.71        13.80   

Less: fuel expense (c)

     (4.95     (4.95     (5.01     (5.01
                                

Consolidated expense excluding fuel, profit sharing and special items (c)

     8.59        8.67        8.70        8.79   

 

(a) Operating expense per ASM – CASM excludes special items, the impact of certain primarily non-cash impairment, severance and other similar accounting charges. While the Company anticipates that it will record such special items and charges throughout the year and may record profit sharing, at this time the Company is unable to provide an estimate of these items with reasonable certainty.
(b) These financial measures provide management and investors the ability to measure and monitor the Company’s performance on a consistent basis.
(c) Both the cost and availability of fuel are subject to many economic and political factors and are therefore beyond the Company’s control.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

Certain statements included in this investor update are forward-looking and thus reflect our current expectations and beliefs with respect to certain current and future events and financial performance. Such forward-looking statements are and will be subject to many risks and uncertainties relating to our operations and business environment that may cause actual results to differ materially from any future results expressed or implied in such forward-looking statements. Words such as “expects,” “will,” “plans,” “anticipates,” “indicates,” “believes,” “forecast,” “guidance,” “outlook” and similar expressions are intended to identify forward-looking statements. Additionally, forward-looking statements include statements which do not relate solely to historical facts, such as statements which identify uncertainties or trends, discuss the possible future effects of current known trends or uncertainties, or which indicate that the future effects of known trends or uncertainties cannot be predicted, guaranteed or assured. All forward-looking statements in this investor update are based upon information available to us on the date of this investor update. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, except as required by applicable law. Our actual results could differ materially from these forward-looking statements due to numerous factors including, without limitation, the following: our ability to comply with the terms of our various financing arrangements; the costs and availability of financing; our ability to maintain adequate liquidity; our ability to execute our operational plans; our ability to control our costs, including realizing benefits from our resource optimization efforts, cost reduction initiatives and fleet replacement programs; our ability to utilize our net operating losses; our ability to attract and retain customers; demand for transportation in the markets in which we operate; an outbreak of a disease that affects travel demand or travel behavior; demand for travel and the impact that global economic conditions have on customer travel patterns; excessive taxation and the inability to offset future taxable income; general economic conditions (including interest rates, foreign currency exchange rates, investment or credit market conditions, crude oil prices, costs of aviation fuel and energy refining capacity in relevant markets); our ability to cost-effectively hedge against increases in the price of aviation fuel; any potential realized or unrealized gains or losses related to fuel or currency hedging programs; the effects of any hostilities, act of war or terrorist attack; the ability of other air carriers with whom we have alliances or partnerships to provide the services contemplated by the respective arrangements with such carriers; the costs and availability of aviation and other insurance; the costs associated with security measures and practices; industry consolidation or changes in airline alliances; competitive pressures on pricing and on demand; our capacity decisions and the capacity decisions of our competitors; U.S. or foreign governmental legislation, regulation and other actions (including open skies agreements); labor costs; our ability to maintain satisfactory labor relations and the results of the collective bargaining agreement process with our union groups; any disruptions to operations due to any potential actions by our labor groups; weather conditions; the possibility that expected merger synergies will not be realized or will not be realized within the expected time period; and other risks and uncertainties set forth under Item 1A., Risk Factors of Annual Report on Form 10-K, as well as other risks and uncertainties set forth from time to time in the reports we file with the SEC. Consequently, forward-looking statements should not be regarded as representations or warranties by us that such matters will be realized.

For further questions, contact Investor Relations at (312) 997-8610 or investorrelations@united.com