As Q3 Ends, United Airlines Shifts from Surviving the COVID-19 Crisis to Positioning to Lead the Rebound

CHICAGO, Oct. 14, 2020 - United Airlines (UAL) today announced third-quarter 2020 financial results. Since the beginning of the crisis, the company has been at the forefront of the industry in delivering on its three-pillar strategy of building and maintaining liquidity, minimizing cash burn and variabilizing its cost structure. Achieving these objectives has supported the airline’s ability to manage the crisis as well as or better than its competitors and positions United to lead the industry when demand for air travel returns.In addition, United expects that third-quarter revenue performance will be the best, even in a historically difficult environment, among our large network competitors - once they have all reported their quarterly results. By almost any revenue measure, the company expects on a year-over-year basis, with our total unit revenue of down 26 percent, passenger unit revenue of down 47 percent, cargo revenue of up 50 percent and loyalty revenue of down 45 percent to be stronger results than those that will be achieved by each of our legacy competitors."Having successfully executed our initial crisis strategy, we’re ready to turn the page on seven months that have been dedicated to developing and implementing extraordinary and often painful measures, like furloughing 13,000 team members, to survive the worst financial crisis in aviation history,” said United CEO Scott Kirby. “Even though the negative impact of COVID-19 will persist in the near term, we are now focused on positioning the airline for a strong recovery that will allow United to bring our furloughed employees back to work and emerge as the global leader in aviation.”

United CleanPlus: Keeping Our Customers and Employees Safe
•Partnered with the Defense Advanced Research Projects Agency (DARPA) to study how effectively the unique airflow configuration on board an aircraft can prevent the spread of aerosolized particles among passengers and crew. •Only airline maximizing ventilation systems by running the auxiliary power on mainline aircraft during the entire boarding and deplaning process, so our customers and crew get the important safety benefits provided by high-efficiency particulate air (HEPA) filtration systems.

•First U.S. airline to announce the launch of a COVID-19 pilot testing program for customers traveling on United from San Francisco International Airport (SFO) to Hawaii. •Added Zoono Microbe Shield, an EPA-registered antimicrobial coating that forms a long-lasting bond with surfaces and inhibits the growth of microbes, to the airline's already rigorous safety and cleaning procedures and expects to add the coating to the entire mainline and express fleet before the end of the year. •Since COVID-19 began, first major U.S. airline to require flight attendants to wear masks onboard, and among first to require all customers to wear masks onboard. In the third quarter, extended mask requirements to require customers to wear a face covering in the more than 360 airports where United operates around the world, including United customer service counters and kiosks, United Club locations, United's gates, and baggage claim areas. •Launched the United Automated Assistant, a new chat function that gives customers a contactless option to receive immediate access to information about cleaning and safety procedures put in place due to COVID-19. •Began cleaning pilot flight decks with Ultraviolet C (UVC) lighting technology on most aircraft at hub airports to disinfect the flight deck interior and continue providing pilots with a sanitary work environment.

Pillar 1 – Raising and Maintaining Liquidity
•Since March, the company has raised over $22 billion through commercial debt offerings, stock issuances and the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) Payroll Support Program grant and loan, among other items. •The company's total available liquidity¹ at the end of the third quarter 2020 was approximately $19.4 billion.•Entered into the first-of-its-kind loyalty backed transaction, borrowing $6.8 billion secured against MileagePlus Holdings in the form of a $3.8 billion bond and a $3.0 billion term loan. •Secured the ability to borrow $5.2 billion with the U.S. Treasury under the CARES Act loan program between now and March 2021 and expects to have the ability to increase the borrowing capacity up to $7.5 billion, subject to government approval. •Entered into an agreement with CDB Aviation to finance, via a sale leaseback transaction, two Boeing 787-9 and ten Boeing 737 MAX aircraft that are currently subject to purchase agreements between United and The Boeing Company.
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Pillar 2 – Minimizing

Cash Burn
•Reduced total operating costs by 59 percent versus the third quarter of 2019. Excluding special charges², reduced operating costs by 48 percent versus the third quarter of 2019.•Achieved target average daily cash burn³ during the third quarter of $21 million plus $4 million of average debt principal payments and severance payments per day, compared to second-quarter average daily cash burn of $37 million plus $3 million of debt principal payments and severance payments per day.

Pillar 3 – Variabilizing Cost Structure
•Reduced non-labor operating expenses, excluding special charges and depreciation, by 63 percent in the third quarter, against a capacity reduction of 70 percent.•Restructured and significantly reduced our management and administrative functions. These reductions are expected to be largely permanent, even as demand recovers.•Reached a landmark agreement with its pilot group that avoids furloughs by securing flexibility in work hours, while also reaching agreements to provide a path to early retirement and reduce expense through voluntary leave of absence programs. These agreements position the company to rebound quickly when demand returns.•Created a program with the Association of Flight Attendants (AFA) that reduced 3,300 flight attendant furloughs while allowing the company to react more quickly to network changes.•Reduced furloughs of International Association of Machinists and Aerospace Workers (IAM) represented employees through an agreement that incentivizes employees to take a leave of absence.•Worked with the union representing dispatchers to reduce furloughs and create staffing flexibility as demand returns through an agreement that allows dispatchers to voluntarily reduce their work schedules. •Offered employees comprehensive voluntary separation packages, retirement packages and/or extended leaves of absence with approximately 9,000 employees opting to participate.

Third-Quarter Financial Results
•The company had a net loss of $1.8 billion, and an adjusted net loss⁴ of $2.4 billion.•Total operating revenues were down 78 percent year-over-year, on a 70 percent decrease in capacity year-over-year. •Passenger revenue was down 84 percent year-over-year.3

Expanding Customer Benefits
•First among U.S. global airlines to permanently eliminate change fees on all standard economy and premium cabin tickets for travel within the U.S., and starting January 1, 2021, any United customer can fly standby for free on a flight departing the day of their travel regardless of the type of ticket or class of service. •First U.S. airline to introduce the Destination Travel Guide, a new interactive map tool on united.com and the United mobile app that allows customers to filter and view destinations' COVID-19 related travel restrictions.•First U.S. airline to introduce an interactive map feature for customers on united.com, powered by Google Flight Search Enterprise Technology, to easily compare and shop for flights based on departure city, budget and location type. Customers can simultaneously compare travel to various destinations in a single search. •Announced plan to continue installing Polaris Business Class on Boeing 787 fleet.
Reimagining Our Route Network•Announced 28 new domestic routes and 9 new international routes. •Resumed nonstop service on 146 domestic routes.•Resumed and/or launched service on 78 international routes to 33 destinations in 18 countries around the world, including: Aruba, Belgium, Brazil, Canada, China, Costa Rica, Dominican Republic, El Salvador, French Polynesia (Tahiti), Guatemala, Honduras, India, Ireland, Jamaica, Philippines, Singapore, South Korea and Switzerland.•Compared to June, United had nonstop service in 127 more domestic and 29 more international markets in July, 157 more domestic and 57 more international markets in August, and 151 more domestic and 80 more international markets in September.4

United Airlines Reports Third-Quarter 2020 Performance
•Announced increased service to China from two to four weekly flights between San Francisco and Shanghai's Pudong International Airport. Once service resumes, United will be the only U.S. airline flying to mainland China directly.•Announced plans to expand global route network with new nonstop service to Ghana, Hawaii, India, Nigeria, and South Africa. With these new routes, United will offer more nonstop service to India and South Africa than any other U.S. carrier and remain the largest carrier between the U.S. mainland and Hawaii.•Announced plans to add up to 28 daily nonstop flights this winter connecting customers in Boston, Cleveland, Indianapolis, Milwaukee, New York/LaGuardia, Pittsburgh, and Columbus, Ohio to four popular Florida destinations. •Announced plans to fly roughly 40 percent of its full schedule in October 2020 compared to October of last year.•Increased cargo revenue by 50 percent by leveraging international flying and deploying strategic international cargo-only missions.

Doing Our Part to Help Fight COVID-19 Since Crisis Began

•Booked over 2,900 free flights for medical professionals to support COVID-19 response in New Jersey/New York and California. •More than 19.2 million miles donated by MileagePlus members and 7.6 million miles matched by United to help organizations providing relief during COVID-19. •Donated nearly 1.2 million pounds of food from United Polaris lounges, United Club locations, and catering kitchens to local food banks and charities. •Over 7,500 face masks were made from upcycled unused employee uniforms. •More than 800 gallons of hand sanitizer produced by United employees in San Francisco for use by United employees. •Donated 15,000 pillows, 2,800 amenity kits, and 5,000 self-care products to charities and homeless shelters. •More than 2.2 million pounds of food and household goods were processed by United employees at the Houston Food Bank. •Flew more than 146.8 million pounds of medical equipment and personal protective equipment (PPE) and 3.1 million pounds of supplies to support military troops. •More than 2,400 United employees worldwide have volunteered, with over 33,400 hours served.•United began flying a portion of its Boeing 777 and 787 fleet as dedicated cargo charter aircraft, as of March 19, to transfer freight to and from U.S. hubs and key international business locations. Since then, we have operated over 6,500 cargo-only flights and moved over 223 million pounds of a variety of goods.

United Airlines Reports Third-Quarter 2020 Performance•Through a combination of cargo-only flights and passenger flights, United has transported more than 401 million pounds of freight, which includes 154 million pounds of vital shipments, such as medical kits, PPE, pharmaceuticals and medical equipment, and more than 3 million pounds of military mail and packages.

Additional Noteworthy Accomplishments•Recognized for the fifth consecutive year as a top-scoring company and best place to work for disability inclusion with a perfect score of 100 on the 2020 Disability Equality Index (DEI).•Selected by the Commission on Presidential Debates as the official airline for the 2020 Presidential and Vice Presidential Debates.•Announced signing of The Board Challenge and committed to adding a second Black board member to the Board of Directors.

¹ Total available liquidity includes cash and cash equivalents, short-term investments and $1 billion available under our undrawn revolving credit facility, as well as $4.7 billion available under the CARES Act Loan program.
² Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in the tables accompanying this release.³ Cash burn is defined as: Net cash from operations, less investing and financing activities. Proceeds from the issuance of new debt (excluding expected aircraft financing), government grants associated with the Payroll Support Program of the CARES Act, issuance of new stock, net proceeds from the sale of short-term and other investments and changes in certain restricted cash balances are not included in this figure. Cash burn excludes the borrowing and replacement of the $200 million short-term loan associated with the CARES Act Loan Program.
⁴ Excludes special charges, nonoperating special termination benefits and settlement losses and unrealized gains and losses on investments. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in the tables accompanying this release.