UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1994 Commission File Number 33-21220*
UNITED AIR LINES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 36-2675206
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1200 East Algonquin Road, Elk Grove Township, Illinois 60007
Mailing Address: P. O. Box 66100, Chicago, Illinois 60666
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 952-4000
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date (applicable only to
corporate issuers).
Outstanding at
Class October 31, 1993
Common Stock ($5 par value) 200
* Registrant is the wholly-owned subsidiary of UAL Corporation (File
1-6033). Registrant became subject to filing periodic reports under the
Securities Exchange Act of 1934 as a result of a public offering of
securities which became effective June 3, 1988 (Registration Nos. 33-21220
and 22-18246).
Page 1 of 19
Index at Page 2
United Air Lines, Inc. and Subsidiary Companies
Report on Form 10-Q
For the Quarter Ended March 31, 1994
Index
Part I. Financial Information Page No.
Item 1. Financial statements:
Condensed statement of consolidated 3
financial position - as of March 31,
1994 (unaudited) and December 31, 1993
Statement of consolidated operations 5
(unaudited) - for the three months
ended March 31, 1994 and 1993
Condensed statement of consolidated 6
cash flows (unaudited) - for the three
months ended March 31, 1994 and 1993
Notes to consolidated financial 7
statements (unaudited)
Item 2. Management's discussion and analysis 12
of financial condition and results of
operations
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 17
Signatures 18
Index To Exhibits 19
Page 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
United Air Lines, Inc. and Subsidiary Companies
Condensed Statement of Consolidated Financial Position
(In Millions)
<TABLE>
<CAPTION>
March 31,
1994 December 31,
Assets (Unaudited) 1993
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 666 $ 285
Short-term investments 542 681
Receivables, net 1,104 1,092
Related party receivables 382 397
Inventories, net 266 277
Deferred income taxes 127 127
Prepaid expenses and other 362 408
3,449 3,267
Operating property and equipment:
Owned 11,079 11,146
Accumulated depreciation and amortization (4,755) (4,678)
6,324 6,468
Capital leases 1,132 1,131
Accumulated amortization (409) (395)
723 736
7,047 7,204
Other assets:
Intangibles, net 778 789
Deferred income taxes 606 570
Other 316 323
1,700 1,682
$12,196 $12,153
</TABLE>
See accompanying notes to consolidated financial statements.
United Air Lines, Inc. and Subsidiary Companies
Condensed Statement of Consolidated Financial Position
(In Millions)
<TABLE>
<CAPTION>
March 31,
1994 December 31,
Liabilities and Shareholder's Equity (Unaudited) 1993
<S> <C> <C>
Current liabilities:
Short-term borrowings $ 269 $ 315
Current portions of long-term debt
and capital lease obligations 197 187
Advance ticket sales 1,191 1,036
Accounts payable 632 632
Other 2,650 2,705
4,939 4,875
Long-term debt 2,596 2,603
Long-term obligations under capital leases 774 824
Other liabilities and deferred credits:
Deferred pension liability 652 571
Postretirement benefit liability 1,081 1,058
Deferred gains 1,377 1,400
Other 167 113
3,277 3,142
Minority interest 40 35
Shareholder's equity 570 674
Commitments and contingent liabilities
(See note)
$12,196 $12,153
</TABLE>
See accompanying notes to consolidated financial statements.
United Air Lines, Inc. and Subsidiary Companies
Statement of Consolidated Operations (Unaudited)
(In Millions)
<TABLE>
<CAPTION>
Three Months
Ended March 31
1994 1993
<S> <C> <C>
Operating revenues:
Passenger $2,771 $2,690
Cargo 164 143
Other operating revenues 238 168
3,173 3,001
Operating expenses:
Salaries and related costs 1,202 1,142
Commissions 334 298
Aircraft fuel 370 420
Rentals and landing fees 380 351
Purchased services 218 237
Depreciation and amortization 178 178
Aircraft maintenance 109 93
Food and beverages 91 75
Personnel expenses 59 64
Advertising and promotion 27 35
Other operating expenses 249 215
3,217 3,108
Loss from operations (44) (107)
Other income (expense):
Interest expense (81) (92)
Interest capitalized 10 20
Interest income 11 12
Equity in earnings of affiliates 6 3
Miscellaneous, net (22) (27)
(76) (84)
Loss before income taxes, cumulative effect of
accounting change and extraordinary item (120) (191)
Provision (credit) for income taxes (41) (62)
Loss before cumulative effect of accounting
change and extraordinary item (79) (129)
Cumulative effect of accounting change,
net of tax (26) -
Extraordinary loss on early extinguishment
of debt, net of tax - (19)
Net loss $ (105) $ (148)
</TABLE>
See accompanying notes to consolidated financial statements.
United Air Lines, Inc. and Subsidiary Companies
Condensed Statement of Consolidated Cash Flows (Unaudited)
(In Millions)
<TABLE>
<CAPTION>
Three Months
Ended March 31
1994 1993
<S> <C> <C>
Cash and cash equivalents at beginning of
period $ 285 $ 454
Cash flows from operating activities 287 231
Cash flows from investing activities:
Additions to property and equipment (66) (487)
Proceeds on disposition of property and
equipment 93 231
Decrease (increase) in short-term
investments 155 254
Other, net 22 (44)
204 (46)
Cash flows from financing activities:
Repayment of long-term debt (9) (12)
Principal payments under capital
lease obligations (55) (30)
Increase (decrease) in short-term
borrowings (46) 38
(110) (4)
Increase in cash and cash equivalents 381 181
Cash and cash equivalents at end of period $ 666 $ 635
Cash paid during the period for:
Interest (net of amounts capitalized) $ 84 $ 78
Income taxes $ 1 $ 1
Non-cash transactions:
Long-term debt incurred in connection
with additions to equipment $ 5 $ 157
Capital lease obligations incurred $ - $ 69
Unrealized loss on investments $ 3 $ -
</TABLE>
See accompanying notes to consolidated financial statements.
United Air Lines, Inc. and Subsidiary Companies
Notes to Consolidated Financial Statements (Unaudited)
The Company
United Air Lines, Inc. ("United") is a wholly-owned subsidiary of
UAL Corporation ("UAL").
Interim Financial Statements
The consolidated financial statements included herein have been
prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to or as permitted by such rules and regulations, although
United believes that the disclosures are adequate to make the
information presented not misleading. In management's opinion, all
adjustments (which include only normal recurring adjustments) necessary
for a fair presentation of the results of operations for the three month
periods have been made. These financial statements should be read in
conjunction with the consolidated financial statements and footnotes
thereto included in United's Annual Report on Form 10-K for the year
1993.
Proposed Employee Investment Transaction
On March 24, 1994, the Board of Directors of UAL approved a plan
of recapitalization, dated March 25, 1994, that would provide a majority
equity interest in UAL to the employees of United in
exchange for wage concessions and work-rule changes. The transaction is
subject to approval by UAL shareholders and certain closing conditions.
Reclassification
In the first quarter of 1994, United began recording certain air
transportation price adjustments, which were previously recorded as
commissions, as adjustments to revenue. Certain amounts in the
Statement of Consolidated Operations for the first quarter of 1993 have
been reclassified to conform with the current presentation.
Other Income (Expense) - Miscellaneous
Included in "Miscellaneous, net" in the first quarter of 1994 was
a charge of $19 million for costs incurred in connection with the
proposed employee investment transaction. In addition, the 1994 and
1993 periods included foreign exchange losses of $1 million and $22
million, respectively.
Income Taxes
The provisions (credits) for income taxes are based on estimated
annual effective tax rates which differ from the federal statutory rate of
35% principally due to state income taxes and certain nondeductible
expenses. The estimated annual effective tax rate for the first quarter of
1994 is based on the actual effective tax rate for the quarter. Deferred
tax assets are recognized based upon United's history of operating
earnings, available carrybacks, expectations for the future and potential
tax planning strategies.
Accounting Changes
United adopted Statement of Financial Accounting Standards ("SFAS")
No. 112, "Employers' Accounting for Postemployment Benefits," effective
January 1, 1994. SFAS No. 112 requires recognition of the liability for
postemployment benefits during the period of employment. Such benefits
include company paid continuation of group life insurance and medical and
dental coverage for certain employees after employment but before
retirement. The effect of adopting SFAS No. 112 was a cumulative charge
for recognition of the transition liability of $42 million, before tax
benefits of $16 million. The ongoing expenses related to postemployment
benefits will vary based on actual claims experience.
United also adopted SFAS No. 115, "Accounting for Certain Investments
in Debt and Equity Securities," effective January 1, 1994. United's
investments in such securities are included in "Cash and cash equivalents"
and "Short-term investments." The following information pertains to
United's investments in such securities at March 31, 1994 (in millions):
<TABLE>
<CAPTION>
Gross Gross
Aggregate Unrealized Unrealized Average
Fair Holding Holding Cost Maturity
Value Gains Losses Basis (Months)
<S> <C> <C> <C> <C> <C>
Available-for-sale:
U.S. government
agency debt
securities $167 $ - $ 2 $169 10
Corporate debt
securities $128 $ - $ 1 $129 13
Other debt
securities $ 37 $ - $ - $ 37 12
Held-to-maturity:
U.S. government
agency debt
securities $ 46 $ - $ - $ 46 3
Corporate debt
securities $450 $ - $ - $450 2
Other debt
securities $374 $ - $ - $374 1
</TABLE>
The net unrealized holding loss on available-for-sale securities
of $3 million has been recorded as a component of shareholder's equity,
net of related tax benefits. The proceeds from sales of
available-for-sale securities for the three months ended March 31, 1994
were $94 million, which, based on the cost of securities sold, resulted
in insignificant gross realized gains and losses. These gains and
losses were included in interest income for the period.
Affiliates
United owns 38% of the Galileo International Partnership
("Galileo") through a wholly-owned subsidiary. United's investment in
Galileo, which owns the Apollo and Galileo computer reservations
systems, is carried on the equity basis. United also owns 77% of the
Apollo Travel Services Partnership ("ATS") and, accordingly, its
accounts are consolidated for the first quarter of 1994. Prior to a
September 1993 merger, United owned 50% of the Covia Partnership
("Covia"), one of Galileo's and ATS's predecessor companies, which was
accounted for on the equity basis.
Under operating agreements with Covia prior to the merger, United
provided certain computer support services for, and purchased computer
reservation services, communications and other information from, Covia.
Revenues derived from the sale of services to Covia amounted to
approximately $12 million and the cost of services purchased from Covia
amounted to approximately $58 million in the first quarter of 1993.
Under operating agreements with Galileo subsequent to the merger, United
purchases computer reservation services from Galileo and provides
marketing, sales and communication services for Galileo. Revenues
derived from the sale of services to Galileo amounted to approximately
$59 million and the cost of services purchased from Galileo amounted to
approximately $21 million in the first quarter of 1994.
<TABLE>
<CAPTION>
Summarized financial information of Galileo follows (in millions):
March 31, December 31,
1994 1993
<S> <C> <C>
Current assets $155 $141
Non-current assets 457 467
Total assets 612 608
Current liabilities 165 173
Long-term liabilities 435 440
Total liabilities 600 613
Net assets $ 12 $ (5)
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1994
<S> <C>
Services revenues $198
Costs and expenses 181
Net earnings $ 17
</TABLE>
Long-term Debt
In the second quarter of 1993, United retired $500 million of
senior subordinated notes. The notes were scheduled to mature in 1995
and 1998 for $150 million and $350 million, respectively. An
extraordinary loss of $19 million, net of tax benefits of $9 million,
was recorded in the first quarter of 1993, based on United's stated
intention to retire the notes.
Contingencies and Commitments
United has certain contingencies resulting from litigation and
claims (including environmental issues) incident to the ordinary course
of business. Management believes, after considering a number of
factors, including (but not limited to) the views of legal counsel, the
nature of contingencies to which United is subject and its prior
experience, that the ultimate disposition of these contingencies is not
expected to materially affect United's consolidated financial position
or results of operations.
At March 31, 1994, commitments for the purchase of property and
equipment, principally aircraft, approximated $4.4 billion, after
deducting advance payments. An estimated $0.7 billion will be spent
during the remainder of 1994, $1.1 billion in 1995, $0.8 billion in
1996, $1.2 billion in 1997, $0.4 billion in 1998, and $0.2 billion after
1998. The major commitments are for the purchase of two B747 aircraft
to be delivered this year and thirty-four B777 aircraft which are
expected to be delivered between 1995 and 1999. These amounts reflect
United's revised capital spending plan and an agreement with The Boeing
Company, announced in April 1993, to convert certain aircraft orders
into options. Under the terms of the agreement, if United does not
elect to confirm the delivery of these option aircraft before 1998, it
would forfeit significant deposits.
In addition to the B747 and B777 orders, United has arrangements
with Airbus Industrie and International Aero Engines to lease 41 A320
aircraft, which are scheduled for delivery through 1998. At March 31,
1994, United also had options for an additional 180 B737 aircraft, 49
B757 aircraft, 34 B777 aircraft, 49 B747 aircraft, 8 B767 aircraft and
50 A320 aircraft.
Foreign Currency Transactions
In the first quarter of 1994, United entered into a foreign
currency swap contract to replace existing short-term foreign currency
call options and forward contracts in order to reduce exposure to
currency fluctuations in connection with certain Japanese
yen-denominated obligations. The currency swap contract, which was
designated as a hedge, had a notional amount of $499 million at March
31, 1994. The notional amount will reduce periodically as payments are
made. Foreign currency gains and losses on the portion of the contract
hedging recorded obligations are included in income currently, exactly
offsetting the foreign currency losses and gains on the obligations.
Currency gains and losses on the difference between the gross future
cash flows and the recorded obligations are deferred and included in
interest as it accrues. United's theoretical risk in the swap is the
cost of replacing the contract at current market rates in the event of
default by the counterparty; however, United does not anticipate such
default.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Proposed Employee Investment Transaction
On March 24, 1994, the Board of Directors of UAL approved a plan
of recapitalization, dated March 25, 1994, that would provide a minimum
53% equity interest in UAL to the employees of United in exchange for
wage concessions and work-rule changes. The transaction would be
implemented through the creation of Employee Stock Ownership Plans
("ESOPs") for United employees. The employee interest may increase to
up to 63%, depending on the average market value of UAL common stock in
the year after the transaction closes. Pursuant to the terms of the
plan of recapitalization, current UAL shareholders would receive the
remaining 37% to 47% of the common stock and $88 per share in cash and
face amount of debt and preferred stock. The transaction is subject to
approval by UAL shareholders and certain closing conditions.
If approved, the employee investment transaction would put in
place a lower cost structure and allow for the creation of a low-cost
short-haul operation. The purpose of these changes is to create a cost
structure which would allow United to compete effectively against the
low-cost carriers currently influencing the domestic marketplace and
improve United's long-term financial viability.
Liquidity and Capital Resources
United's total of cash, cash equivalents and short-term
investments increased $242 million in the first quarter of 1994 to a
balance of $1.208 billion at March 31, 1994. Cash flows from operating
activities amounted to $287 million. Partially offsetting this was cash
used in financing activities of $110 million, which included principal
payments under capital lease and debt obligations of $55 million and $9
million, respectively, and a $46 million reduction of short-term
borrowings.
In the first quarter of 1994, United took delivery of four A320
aircraft, which were acquired under operating leases. Other 1994 first
quarter property additions, primarily spare parts, amounted to $66
million, while property dispositions resulted in proceeds of $93 million.
At March 31, 1994, commitments for the purchase of property and
equipment, principally aircraft, approximated $4.4 billion, after deducting
advance payments. An estimated $0.7 billion will be spent during the
remainder of 1994, $1.1 billion in 1995, $0.8 billion in 1996, $1.2 billion
in 1997, $0.4 billion in 1998, and $0.2 billion after 1998. The major
commitments are for the purchase of two B747 aircraft to be delivered this
year and thirty-four B777 aircraft which are expected to be delivered
between 1995 and 1999. These amounts reflect United's revised capital
spending plan and an agreement with The Boeing Company, announced in April
1993, to convert certain aircraft orders into options. Under the terms of
the agreement, if United does not elect to confirm the delivery of these
option aircraft before 1998, it would forfeit significant deposits.
In addition to the B747 and B777 orders, United has arrangements with
Airbus Industrie and International Aero Engines to lease 41 A320 aircraft,
which are scheduled for delivery through 1998. At March 31, 1994, United
also had options for an additional 180 B737 aircraft, 49 B757 aircraft, 34
B777 aircraft, 49 B747 aircraft, 8 B767 aircraft and 50 A320 aircraft.
United continually reviews its fleet to determine whether aircraft
acquisitions will be used to expand the fleet or to replace older aircraft,
depending on market and regulatory conditions at the time of delivery.
Funds necessary to finance aircraft acquisitions are expected to be
obtained from internally generated funds, irrevocable external financing
arrangements or other external sources.
UAL and United have a shelf registration statement on file with the
Securities and Exchange Commission under which up to $1.776 billion of
securities may be offered, including secured and unsecured debt, equipment
trust and pass through certificates, equity or a combination thereof. The
shelf registration statement is being utilized for purposes of registering
$900 million principal amount of debentures to be issued upon consummation
of the employee investment transaction or thereafter upon conversion of
outstanding securities currently convertible into, or exercise of
outstanding options currently exercisable for, UAL common stock.
The employee investment transaction, if approved, would have an
initial adverse effect on United's cash flow as a result of the payment of
certain fees and transaction expenses. However, the transaction is
expected to result in an improvement to cash flow through the term of the
employee investment. This improvement is expected to result from the
employee concessions which reduce cash expenses, partially offset by the
additional interest expense on the debentures.
Results of Operations
United's results of operations for interim periods are not
necessarily indicative of those for an entire year, as a result of seasonal
factors to which United is subject. First and fourth quarter results are
normally affected by reduced travel demand in the fall and winter, and
United's operations, particularly at its Chicago and Denver hubs, are
adversely affected by winter weather on occasion.
The results of operations in the airline business historically
fluctuate significantly in response to general economic conditions. This
is because small fluctuations in yield (passenger revenue per revenue
passenger mile) and cost per available seat mile can have a significant
effect on operating results. United anticipates industrywide fare levels,
increasing low-cost competition, general economic conditions, fuel costs,
international governmental policies and other factors will continue to
affect its operating results.
The employee investment transaction would impact United's results as
operating expenses would be reduced due to wage and benefit reductions,
work-rule changes and the startup of a new short-haul, low-cost operation.
These expense reductions would be offset by non-cash compensation charges
for stock periodically released to employees from the ESOPs and additional
interest expense on the debentures. The amount of the non-cash
compensation expense cannot be predicted, since it is based on the future
fair value of UAL's stock.
Due to the delay in the opening of the new Denver International
Airport, United's 1994 operating expenses are not expected to increase as
much as originally anticipated.
First Quarter 1994 Compared with First Quarter 1993.
United's results of operations in the first quarter of 1994
improved as compared to 1993. In the first quarter of 1994, United
recorded a net loss of $105 million, compared to a 1993 first quarter
net loss of $148 million. The 1994 first quarter results include a $26
million cumulative effect charge for the adoption of Statement of
Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits," which UAL adopted effective January 1, 1994.
The first quarter 1993 results include an extraordinary loss of $19
million on the early extinguishment of debt.
United's financial statements have been affected by recent
structural changes. The September 1993 merger of the Covia Partnership
and The Galileo Company Limited resulted in the formation of Apollo
Travel Services ("ATS"), which is 77% owned by United, and the
consolidation of ATS's accounts with those of United. In addition, the
sales of flight kitchen assets in late 1993 and early 1994 had the
effect of reducing United's salaries and related costs and increasing,
to a lesser degree, catering costs.
In the first quarter of 1994, United also began recording certain
air transportation price adjustments, which were previously recorded as
commissions, as adjustments to revenue. Operating revenue and expense
amounts and related operating statistics for the first quarter of 1993
have been adjusted to conform with the current presentation.
The significant factors affecting United's consolidated operations
for the first quarter of 1994 are described below.
Operating revenues increased $172 million (6%). Passenger
revenues increased $81 million (3%) due to a 4% increase in United's
revenue passenger miles, offset by a 1% decrease in yield to 11.85
cents. The increase in United's revenue passenger miles occurred
systemwide, with the Atlantic increase the largest at 7%. Available
seat miles generally increased, except in Latin America, where available
seat miles decreased 10%, resulting in an increase of 7.8 points in the
Latin American load factor to 64.9%. Domestic passenger load factor
increased 1.7 points to 62.4%. On a system basis, United's available
seat miles increased 1% and passenger load factor increased 1.7 points
to 65.4%.
Cargo revenues increased $21 million (15%), due primarily to
increased freight revenues, as mail revenues were relatively unchanged.
Freight and mail revenue ton miles increased 5% and 6%, respectively;
however, freight yield increased 15% while mail yield decreased 5%.
Other operating revenues increased $70 million (42%) primarily as a
result of the consolidation of ATS and an increase in fuel sales.
Operating expenses increased $109 million (4%). United's cost per
available seat mile increased 2% to 9.04 cents. Salaries and related
costs increased $60 million (5%) primarily due to higher average wage
rates and higher costs associated with pensions and medical benefits,
partially offset by a lower number of employees as a result of the
flight kitchen sales. Commissions increased $36 million (12%) due
principally to increased travel agency sales and higher freight volumes.
Food and beverages increased $16 million (21%) due to the new catering
arrangements resulting from the flight kitchen sales. An increase of
$29 million (8%) in rentals and landing fees reflects rent associated
with new aircraft acquired on operating leases, primarily B767, B747 and
A320 aircraft. Aircraft maintenance increased $16 million (17%) as a
result of higher vendor-provided maintenance. Other operating expenses
increased $34 million (16%) due to higher fuel sales and the
consolidation of ATS.
Aircraft fuel expense decreased $50 million (12%), due to an 11%
decrease in United's average price per gallon of fuel to 58.6 cents and
a 1% decrease in United's consumption. Purchased services decreased $19
million (8%), as certain services, principally computer reservations and
communications, are now provided by ATS.
Other expense amounted to $76 million in the first quarter of 1994
compared to $84 million in the first quarter of 1993. Interest expense
decreased $11 million (12%) due primarily to the extinguishment of $500
million of subordinated debt in 1993. Interest capitalized decreased
$10 million (50%) as a result of lower advance payments on new aircraft.
Included in "Miscellaneous, net" in the first quarter of 1994 was a
charge of $19 million for fees and costs incurred in connection with the
proposed employee investment transaction. In addition, the 1994 and
1993 periods included foreign exchange losses of $1 million and $22
million, respectively.
The reduction in the foreign currency loss from 1993 was due to
increased hedging activity which minimized the impact of foreign
exchange rate changes on reported financial results. In the first
quarter of 1994, United also entered into a foreign currency swap
contract to replace short-term foreign currency call options and forward
contracts previously used to hedge certain yen-denominated obligations.
Foreign currency gains and losses on the portion of the swap contract
hedging recorded obligations are included in income currently, exactly
offsetting the foreign currency losses and gains on the obligations.
Currency gains and losses on the difference between the gross future
cash flows and the recorded obligations are deferred and included in
interest as it accrues.
Part II
Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 12.1 - Computation of Ratio of Earnings To Fixed
Charges.
(b) 1. Form 8-K dated March 29, 1994 - Registrant's parent company,
UAL Corporation, reported entering into an Agreement and
Plan of Recapitalization dated as of March 25, 1994 with Air
Line Pilots Association, International UA-MEC and the
International Association of Machinists and Aerospace
Workers related to the Employee Stock Ownership Plans.
2. Form 8-K dated April 22, 1994 - Registrant submitted a
report to incorporate portions of Registrant's parent
company's and Registrant's Preliminary Proxy Statement/Joint
Prospectus.
3. Form 8-K dated April 28, 1994 to report Registrant's parent
company's financial information for the first quarter of
1994 and certain financial information for the Registrant.
4. Form 8-K dated May 3, 1994 to report information provided
to investment analysts by Registrant's parent company
summarizing the effect on prior period financial statements
for UAL and subsidiary companies of certain air
transportation price adjustments.
Page 17
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 thereunto duly authorized.
UNITED AIR LINES, INC.
By: /s/ John C. Pope
John C. Pope
President and Chief
Operating Officer
(Principal Financial
Officer)
By: /s/ Frederic F. Brace
Frederic F. Brace
Vice President-Corporate
Development and Controller
(Principal Accounting
Officer)
Dated: May __, 1994
Page 18
Exhibit List
Exhibit No. Description
12.1 Computation of Ratio of Earnings to
Fixed Charges.
Page 19
Exhibit 12.1
United Air Lines, Inc. and Subsidiary Companies
Computation of Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Three Months Ended
March 31
1994 1993
(In Millions)
Earnings:
<S> <C> <C>
Loss before income taxes $ (120) $ (191)
Fixed charges, from below 254 271
Interest capitalized (10) (20)
Earnings $ 124 $ 60
Fixed charges:
Interest expense $ 81 $ 92
Portion of rental expense
representative of the
interest factor 173 179
Fixed charges $ 254 $ 271
Ratio of earnings to
fixed charges (a) (a)
</TABLE>
(a) Earnings were inadequate to cover fixed charges by $130 million in the
first quarter of 1994 and $211 million in the first quarter of 1993.
