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, 1996, 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 (847) 700-4000
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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.
Outstanding at
Class April 30, 1996
----- --------------
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).
United Air Lines, Inc. and Subsidiary Companies Report on Form 10-Q
-------------------------------------------------------------------
For the Quarter Ended March 31, 1996
------------------------------------
Index
- -----
Part I. Financial Information Page No.
- ------ --------------------- -------
Item 1. Financial statements:
Condensed statement of consolidated 3
financial position - as of March 31, 1996
(unaudited) and December 31, 1995
Statement of consolidated operations 5
(unaudited) - for the three months
ended March 31, 1996 and 1995
Condensed statement of consolidated 6
cash flows (unaudited) - for the three
months ended March 31, 1996 and 1995
Notes to consolidated financial 7
statements (unaudited)
Item 2. Management's discussion and analysis 10
of financial condition and results of
operations
Part II. Other Information
- ------- -----------------
Item 1. Legal Proceedings 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
- ----------
Exhibit Index 16
- -------------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
United Air Lines, Inc. and Subsidiary Companies
Condensed Statements of Consolidated Financial Position
-------------------------------------------------------
(In Millions)
<TABLE>
<CAPTION>
March 31,
1996 December 31,
Assets (Unaudited) 1995
- ------ ----------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 140 $ 142
Short-term investments 330 425
Receivables, net 1,038 947
Inventories, net 230 298
Deferred income taxes 240 240
Prepaid expenses and other 397 380
-------- --------
2,375 2,432
-------- --------
Operating property and equipment:
Owned 11,146 11,213
Accumulated depreciation and
amortization (5,205) (5,153)
-------- --------
5,941 6,060
-------- --------
Capital leases 1,709 1,464
Accumulated amortization (521) (503)
-------- --------
1,188 961
-------- --------
7,129 7,021
-------- --------
Other assets:
Intangibles, net 730 736
Deferred income taxes 238 238
Related party receivables 523 482
Other 560 484
-------- --------
2,051 1,940
-------- --------
$ 11,555 $ 11,393
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
United Air Lines, Inc. and Subsidiary Companies
Condensed Statements of Consolidated Financial Position
-------------------------------------------------------
(In Millions)
<TABLE>
<CAPTION>
March 31,
1996 December 31,
(Unaudited) 1995
----------- ------------
Liabilities and Stockholder's Equity
- ------------------------------------
<S> <C> <C>
Current liabilities:
Current portions of long-term
debt and capital lease
obligations $ 274 $ 182
Related party debt maturing
within one year 45 43
Advance ticket sales 1,299 1,100
Accounts payable 651 682
Other 2,472 2,396
-------- --------
4,741 4,403
-------- --------
Long-term debt 2,011 2,338
-------- --------
Long-term obligations under capital
leases 1,211 990
-------- --------
Other liabilities and deferred credits:
Deferred pension liability 197 368
Postretirement benefit liability 1,248 1,225
Deferred gains 1,198 1,214
Other 539 598
-------- --------
3,182 3,405
-------- --------
Minority interest 63 59
-------- --------
Preferred stock committed to
Supplemental ESOP 78 60
-------- --------
Stockholder's equity:
Common stock at par - -
Additional capital invested 7 -
ESOP capital 961 822
Accumulated deficit (436) (413)
Unearned ESOP preferred stock (169) (175)
Other (94) (96)
-------- --------
269 138
-------- --------
Commitments and contingent
liabilities (See note)
$ 11,555 $ 11,393
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
United Air Lines, Inc. and Subsidiary Companies
Statements of Consolidated Operations (Unaudited)
-------------------------------------------------
(In Millions, Except Per Share)
<TABLE>
<CAPTION>
Three Months
Ended March 31
1996 1995
---- ----
<S> <C> <C>
Operating revenues:
Passenger $ 3,278 $ 2,920
Cargo 175 175
Other 270 225
-------- --------
3,723 3,320
-------- --------
Operating expenses:
Salaries and related costs 1,169 1,113
ESOP compensation expense 163 89
Aircraft fuel 474 378
Commissions 337 342
Purchased services 276 239
Aircraft rent 240 249
Landing fees and other rent 208 171
Depreciation and amortization 189 163
Food services 125 119
Aircraft maintenance 112 107
Personnel expenses 73 63
Other 293 249
-------- --------
3,659 3,282
-------- --------
Earnings from operations 64 38
-------- --------
Other income (expense):
Interest expense (81) (94)
Interest capitalized 15 12
Interest income 11 19
Equity in earnings of affiliates 20 14
Miscellaneous, net (19) (18)
-------- --------
(54) (67)
-------- --------
Earnings (loss) before income taxes
and extraordinary item 10 (29)
Provision (credit) for income taxes 4 (12)
-------- --------
Earnings (loss) before
extraordinary item 6 (17)
-------- --------
Extraordinary loss on early
extinguishment of debt, net of tax (29) -
-------- --------
Net loss $ (23) $ (17)
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
United Air Lines, Inc. and Subsidiary Companies
Condensed Statements of Consolidated Cash Flows (Unaudited)
-----------------------------------------------------------
(In Millions)
<TABLE>
<CAPTION>
Three Months
Ended March 31
1996 1995
---- ----
<S> <C> <C>
Cash and cash equivalents at
beginning of period $ 142 $ 444
------- -------
Cash flows from operating activities 370 473
------- -------
Cash flows from investing activities:
Additions to property and
equipment (67) (82)
Proceeds on disposition of
property and equipment 9 14
Decrease (increase) in short-
term investments 95 (163)
Decrease (increase) in related
party receivables (41) 82
Other, net 39 -
------- -------
35 (149)
------- -------
Cash flows from financing activities:
Repayment of long-term debt (298) (262)
Principal payments under capital
lease obligations (48) (40)
Other, net (61) 24
------- -------
(407) (278)
------- -------
Increase (decrease) in cash and
cash equivalents (2) 46
------- -------
Cash and cash equivalents at end of
period $ 140 $ 490
======= =======
Cash paid during the period for:
Interest (net of amounts
capitalized) $ 71 $ 78
Income taxes $ - $ -
Non-cash transactions:
Capital lease obligations incurred $ 293 $ -
</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 1995.
Employee Stock Ownership Plans
- ------------------------------
Pursuant to amended labor agreements which provide for
wage and benefit reductions and work-rule changes which
commenced July 1994, UAL has agreed to issue convertible
preferred stock to United employees. Notes 2 and 10 of the
Notes to Consolidated Financial Statements in the 1995 Annual
Report on Form 10-K contain additional discussion of the
agreements, stock to be issued to employees and the related
accounting treatment. Shares earned in 1995 were allocated in
March 1996 as follows: 359,577 shares of Class 2 ESOP Preferred
Stock were contributed to the Non-Leveraged ESOP and an
additional 312,086 shares were allocated in "book entry" form
under the Supplemental Plan. Additionally, 2,402,310 shares of
Class 1 ESOP Preferred Stock were allocated under the Leveraged
ESOP. Finally, an additional 768,493 shares of Class 1 and
Class 2 ESOP Preferred Stock have been earned by employees in 1996.
Other Income (Expense) - Miscellaneous
- --------------------------------------
Included in "Miscellaneous, net" in the first quarter of
1996 and 1995 were foreign exchange losses of $6 million and $8
million, respectively.
Income Taxes
- ------------
The provisions for income taxes are based on the
estimated annual effective tax rate, which differs from the
federal statutory rate of 35% principally due to state income
taxes and certain nondeductible expenses. Deferred tax assets
are recognized based upon United's history of operating
earnings and expectations for future taxable income.
Prepayment of Obligations
- -------------------------
In the first quarter of 1996, United repaid prior to
maturity $236 million in principal amount of various debt
securities, resulting in an aggregate extraordinary loss of $29
million, after a tax benefit of $18 million. The securities
were scheduled for repayment periodically through 2021.
Revolving Credit Facility
- -------------------------
In April 1996, United entered into an agreement with a
syndicate of banks for a $750 million revolving credit facility
expiring in 1999. Interest on drawn amounts under the facility
is calculated at floating rates based on the London interbank
offered rate plus a margin which is subject to adjustment based
on certain changes in the credit ratings of United's long-term
senior unsecured debt. Among other restrictions, the credit
facility contains a covenant which restricts United's ability to
grant liens on or otherwise encumber certain identified assets
with a market value of approximately $1.1 billion.
Related Party Transactions
- --------------------------
At March 31, 1996 and December 31, 1995, United had
accounts receivable from UAL of $523 million and $482 million,
respectively.
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, 1996, commitments for the purchase of
property and equipment, principally aircraft, approximated $3.6
billion, after deducting advance payments. An estimated $1.3
billion will be spent during the remainder of 1996, $1.6 billion
in 1997, $0.5 billion in 1998 and $0.2 billion in 1999 and
thereafter. The major commitments are for the purchase of 23
B777 aircraft, 4 B747 aircraft and 4 B757 aircraft. The B777s
are scheduled to be delivered through 1999 and the B747s and
B757s are expected to be delivered in 1996.
In addition to aircraft orders, United has arrangements
with Airbus Industrie and International Aero Engines to lease an
additional 19 A320 aircraft, which are scheduled for delivery
through 1998. At March 31, 1996, United also had options for an
additional 131 B737 aircraft, 23 B757 aircraft, 34 B777
aircraft, 40 B747 aircraft, 5 B767 aircraft and 43 A320
aircraft. Under the terms of certain of these options which are
exercisable during 1996 and 1997, United would forfeit
significant deposits on such options not exercised.
United's contract with the Association of Flight Attendants
("AFA") became amendable March 1, 1996. On April 9, 1996, United
announced that the flight attendants had rejected a previously
announced tentative agreement. United and the AFA are now
scheduled to resume traditional negotiations under the Railway
Labor Act, which historically have taken two to three years to
complete. While negotiations continue, the terms of United's
current flight attendant agreement will remain in effect.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
- ------- CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
United's total of cash and cash equivalents and short-term
investments was $470 million at March 31, 1996, compared to $567
million at December 31, 1995. Cash flows from operating
activities amounted to $370 million, which was net of a $250
million discretionary pension contribution. Investing
activities resulted in cash flows of $35 million, mainly due to
the decrease in short-term investments. Financing activities
included principal payments under debt and capital lease
obligations of $298 million and $48 million, respectively.
Included in the debt payments above was the retirement of $236
million of long-term debt prior to maturity.
In the first quarter of 1996, United took delivery of two
A320 aircraft under operating leases and three B777 aircraft
under capital leases. Property additions, including aircraft
spare parts, amounted to $67 million. Property dispositions
resulted in proceeds of $9 million.
At March 31, 1996, commitments for the purchase of
property and equipment, principally aircraft, approximated $3.6
billion, after deducting advance payments. An estimated $1.3
billion will be spent during the remainder of 1996, $1.6 billion
in 1997, $0.5 billion in 1998 and $0.2 billion in 1999 and
thereafter. The major commitments are for the purchase of 23
B777 aircraft, 4 B747 aircraft and 4 B757 aircraft. The B777s
are scheduled to be delivered through 1999 and the B747s and
B757s are expected to be delivered in 1996.
In addition to aircraft orders, United has arrangements
with Airbus Industrie and International Aero Engines to lease 19
A320 aircraft, which are scheduled for delivery through 1998.
At March 31, 1996, United also had options for an additional 131
B737 aircraft, 23 B757 aircraft, 34 B777 aircraft, 40 B747
aircraft, 5 B767 aircraft and 43 A320 aircraft. Under the terms
of certain of these options which are exercisable during 1996
and 1997, United would forfeit significant deposits on such
options not exercised. Funds necessary to finance aircraft
acquisitions are expected to be obtained from internally
generated funds, irrevocable external financing arrangements or
other external sources.
In April 1996, United entered into an agreement with a
syndicate of banks for a $750 million revolving credit facility
expiring in 1999. Interest on drawn amounts under the facility
is calculated at floating rates based on the London interbank
offered rate plus a margin which is subject to adjustment based
on certain changes in the credit ratings of United's long-term
senior unsecured debt. Among other restrictions, the credit
facility contains a covenant which restricts United's ability to
grant liens on or otherwise encumber certain identified assets
with a market value of approximately $1.1 billion.
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 and at certain east
coast cities, 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.
Summary of Results
------------------
United's earnings from operations were $64 million in the
first quarter of 1996, compared to operating earnings of $38
million in the first quarter of 1995. United had a net loss in
the 1996 first quarter of $23 million, compared to a net loss of
$17 million in the same period of 1995. The 1996 first quarter
results include an extraordinary loss of $29 million on early
extinguishment of debt.
Specific factors affecting United's consolidated
operations for the first quarter of 1996 are described below.
First Quarter 1996 Compared with First Quarter 1995.
----------------------------------------------------
Operating revenues increased $403 million (12%). United's
revenue per available seat mile increased 8% to 9.57 cents.
Passenger revenues increased $358 million (12%) due to a 6%
increase in yield to 12.22 cents and a 6% increase in revenue
passenger miles. The following analysis by market is based on
information reported to the U.S. Department of Transportation:
Atlantic revenue passenger miles increased 17% over the
same period last year, with a nearly 5% increase in yield. In
the Pacific, revenue passenger miles increased 9% and yield
decreased 3% from the same period last year, largely due to a
weakening Japanese yen to the dollar. Domestic revenue
passenger miles increased 4% and Latin America increased 3%.
Domestic yield increased 10% as a result of depressed yields in
1995's first quarter, a larger proportion of high yield business
traffic and fare levels influenced by the expiration of the
Federal passenger excise tax. United is unable to determine at
this time whether or not the tax will be reinstated, and if it
is, what effect it will have on the domestic pricing
environment. Available seat miles increased 4% systemwide,
reflecting increases of 9% in both the Atlantic and Latin
America, 4% in the Pacific and 2% on Domestic routes. The
system passenger load factor increased 1.7 points to 68.7%.
Cargo revenues remained unchanged as a slight increase in
freight revenues was offset by a decrease in mail revenues.
Other operating revenues increased $45 million (20%) due to
increases in Mileage Plus partner-related revenues and fuel
sales to third parties.
Operating expenses increased $377 million (11%) and
United's cost per available seat mile increased 8%, from 8.73
cents to 9.40 cents, including ESOP compensation expense.
Without the ESOP compensation expense, United's cost per
available seat mile would have increased 6%, from 8.49 cents to
8.98. ESOP compensation expense increased $74 million (83%),
reflecting the increase in the estimated average fair value of
ESOP stock committed to be released to employees as a result of
UAL's higher common stock price. Aircraft fuel expense
increased $96 million (25%) due to a 4% increase in consumption
and a 20% increase in the average price per gallon of fuel to
68.40 cents. The federal jet fuel tax which went into effect
October 1, 1995, accounted for approximately $20 million of this
increase. Salaries and related costs increased $56 million (5%)
due mainly to increased staffing in certain customer-oriented
positions. Other operating expenses increased $44 million (17%)
due principally to higher fuel sales. Landing fees and other
rent increased $37 million (22%) due to increased facilities
rent, particularly at the new Denver International Airport.
Purchased services increased $37 million (16%) due principally
to volume-related increases in computer reservations fees and
credit card discounts. Depreciation and amortization increased
$26 million (16%) due primarily to the acquisition of 39
aircraft off operating leases in 1995 and new B777 aircraft
accounted for under capital leases. Personnel expenses
increased $10 million (16%), reflecting increased layover costs
incurred principally in support of international operations.
Food services increased $6 million (5%) due primarily to higher
passenger volumes. Aircraft maintenance increased $5 million
(5%) due to the timing of maintenance cycles.
Aircraft rent decreased $9 million (4%) due to a decrease
in the number of aircraft on operating leases. Commissions
decreased $5 million (2%) due to savings recognized as a result
of a new travel agent commission payment plan implemented in
March 1995, partly offset by higher commissionable revenues.
Other expense amounted to $54 million in the first quarter
of 1996 compared to $67 million in the first quarter of 1995.
Interest expense decreased $13 million (14%) due to the
prepayment of long-term debt in 1995 and 1996. Equity in
earnings of affiliates increased $6 million (43%) due primarily
to higher Galileo earnings resulting from increased booking
revenues. Included in "Miscellaneous, net" in the 1996 and 1995
first quarters were foreign exchange losses of $6 million and $8
million, respectively.
OUTLOOK FOR 1996
- ----------------
Given first quarter results, available seat miles are
expected to grow approximately 3% for the full year over 1995.
While yields are expected to remain strong, United does not
necessarily expect to maintain the year-over-year growth levels
reached in the first quarter. Unit cost for the full year is
expected to increase 2% to 3% excluding the ESOP compensation
expense due largely to higher revenues and fuel prices. Net
interest expense for the year should be lower due to the early
repayments of relatively high-interest rate debentures.
The information included in the previous paragraph is
forward-looking and involves risks and uncertainties that could
result in actual results differing materially from expected
results. It is not reasonably possible to itemize all of the
many factors and specific events that could affect the outlook
of an airline operating in the global economy. Some factors
that could significantly impact expected capacity, yields and
expenses include the airline pricing environment, fuel costs,
low-fare carrier expansion, capacity decisions of other
carriers, actions of the U.S. and foreign governments, foreign
currency exchange rate fluctuations, inflation, the general
economic environment, and other factors discussed herein and in
United's 1995 Annual Report on Form 10-K.
Part II
Other Information
-----------------
Item 1. Legal Proceedings.
- ------ -----------------
Summers et al. v. State Street Bank and Trust Company et al.
On April 14, 1995, plaintiffs filed a class action complaint
against State Street Bank and Trust Company ("State Street"), the
UAL Corporation Employee Stock Ownership Plan and the UAL
Corporation Supplemental ESOP (together, the "Plans") in the
United States District Court for the Northern District of
Illinois. The complaint was brought on behalf of a putative class
of all persons who are, or were as of July 12, 1994, participants
or beneficiaries of the Plans. Plaintiffs alleged that State
Street breached various fiduciary duties under the Employee
Retirement Income Security Act of 1974 ("ERISA") in connection
with the 1994 purchase of UAL Corporation ("UAL") preferred stock
by the Plans. The Plans were nominal defendants; no relief was
sought from them. The complaint sought a declaration that State
Street violated ERISA, restoration to the Plans by State Street of
the amount of an alleged "overpayment" for the stock, and other
relief. United Air Lines, Inc. ("United") is obligated, subject
to certain exceptions, to indemnify State Street for part or all
of an adverse judgment and State Street's defense costs. The
defendants filed a motion to dismiss the complaint in its entirety
on July 12, 1995. On March 29, 1996 the judge granted defendants'
motion to dismiss in its entirety. On April 15, 1996 the
defendants filed with the court a motion for attorneys' fees and
costs under ERISA. Thereafter, plaintiffs filed a notice of
appeal of the judge's decision in favor of State Street and an
opposition to defendants' motion for attorneys' fees and costs.
Mileage Plus Class Actions - On December 10, 1993, January
18, 1994, November 3, 1994 and February 9, 1995 class actions were
brought in the Circuit Court of Cook County, Illinois, Chancery
Division, on behalf of members of the Mileage Plus Program. The
actions, as amended, claimed that various changes instituted by
United in the Mileage Plus Program breached United's contracts
with its program members. On October 13, 1995, the court granted
United's motion to dismiss the cases with prejudice but permitted
the plaintiffs to file an amended complaint. The amended
complaint which was filed solely on behalf of program members who
joined prior to 1988, was dismissed by the court on United's
motion on March 29, 1996.
Item 6. Exhibits and Reports on Form 8-K.
- ------ --------------------------------
(a) Exhibit 12.1 - Computation of Ratio of Earnings to Fixed
Charges.
Exhibit 27 - Financial Data Schedule.
(b) Form 8-K dated February 2,1996 to report certain
documents relating to United Airlines Pass Through
Certificates, Series 1996-A.
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/ Gerald Greenwald
--------------------
Gerald Greenwald
Chairman and Chief
Executive Officer
By: /s/ Douglas A. Hacker
---------------------
Douglas A. Hacker
Senior Vice President and
Chief Financial Officer
(principal financial
officer)
By: /s/ Frederic F. Brace
---------------------
Frederic F. Brace
Vice President - Financial
Analysis and
Controller (principal
accounting officer)
Dated: May 3, 1996
Exhibit Index
-------------
Exhibit No. Description
- ---------- -----------
12.1 Computation of Ratio of Earnings to Fixed Charges.
27 Financial Data Schedule.
<TABLE>
<CAPTION>
Exhibit 12.1
United Air Lines, Inc. and Subsidiary Companies
Computation of Ratio of Earnings to Fixed Charges
-------------------------------------------------
Three Months Ended
March 31
1996 1995
---- ----
(In Millions)
<S> <C> <C>
Earnings:
Earnings before income taxes and
extraordinary item $ 10 $ (29)
Fixed charges, from below 270 275
Undistributed earnings of affiliates (20) (14)
Interest capitalized (15) (12)
----- -----
Earnings $ 245 $ 220
===== =====
Fixed charges:
Interest expense $ 81 $ 94
Portion of rental expense
representative of the
interest factor 189 181
----- -----
Fixed charges $ 270 $ 275
===== =====
Ratio of earnings to fixed charges (a) (a)
===== =====
- -------------
(a) Earnings were inadequate to cover fixed charges by $25
million in the first quarter of 1996 and $55 million
in the first quarter of 1995.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM UNITED AIR LINES, INC.'S STATEMENT OF
CONSOLIDATED OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31,
1996 AND CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL
POSITION AS OF MARCH 31, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1,000,000
<S>
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<PERIOD-TYPE> 3-MOS
<CASH> 140
<SECURITIES> 330
<RECEIVABLES> 1,038
<ALLOWANCES> 0
<INVENTORY> 230
<CURRENT-ASSETS> 2,375
<PP&E> 12,855
<DEPRECIATION> 5,726
<TOTAL-ASSETS> 11,555
<CURRENT-LIABILITIES> 4,741
<BONDS> 3,222
0
0
<COMMON> 0
<OTHER-SE> 269
<TOTAL-LIABILITY-AND-EQUITY> 11,555
<SALES> 0
<TOTAL-REVENUES> 3,723
<CGS> 0
<TOTAL-COSTS> 3,659
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 81
<INCOME-PRETAX> 10
<INCOME-TAX> 4
<INCOME-CONTINUING> 6
<DISCONTINUED> 0
<EXTRAORDINARY> (29)
<CHANGES> 0
<NET-INCOME> (23)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
