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 June 30, 1996, Commission File Number 33-21220*
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UNITED AIR LINES, INC.
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(Exact name of Registrant as specified in its charter)
Delaware 36-2675206
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(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
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(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
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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 July 31, 1996
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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
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For the Quarter Ended June 30, 1996
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Index
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Part I. Financial Information Page No.
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Item 1. Financial statements:
Condensed statements of consolidated 3
financial position - as of June 30, 1996
(unaudited) and December 31, 1995
Statements of consolidated operations 5
(unaudited) - for the three months and six
months ended June 30, 1996 and 1995
Condensed statements of consolidated 7
cash flows (unaudited) - for the six
months ended June 30, 1996 and 1995
Notes to consolidated financial 8
statements (unaudited)
Item 2. Management's discussion and analysis 11
of financial condition and results of
operations
Part II. Other Information
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Item 1. Legal Proceedings 16
Item 6. Exhibits and Reports on Form 8-K 17
Signatures 21
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Exhibit Index 22
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
United Air Lines, Inc. and Subsidiary Companies
Condensed Statements of Consolidated Financial Position
(In Millions)
June 30,
1996 December 31,
Assets (Unaudited) 1995
- ------ ----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 165 $ 142
Short-term investments 434 425
Receivables, net 1,053 947
Inventories, net 321 298
Deferred income taxes 235 240
Prepaid expenses and other 298 380
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2,506 2,432
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Operating property and equipment:
Owned 11,355 11,213
Accumulated depreciation and
amortization (5,285) (5,153)
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6,070 6,060
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Capital leases 1,710 1,464
Accumulated amortization (540) (503)
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1,170 961
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7,240 7,021
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Other assets:
Intangibles, net 724 736
Deferred income taxes 227 238
Related party receivables 452 482
Aircraft lease deposits 128 71
Other 458 413
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1,989 1,940
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$ 11,735 $ 11,393
====== ======
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
United Air Lines, Inc. and Subsidiary Companies
Condensed Statements of Consolidated Financial Position
(In Millions)
June 30,
1996 December 31,
(Unaudited) 1995
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Liabilities and Stockholders' Equity
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<S> <C> <C>
Current liabilities:
Long-term debt maturing within
one year $ 105 $ 84
Related party debt maturing
within one year 48 43
Current obligations under
capital leases 117 98
Advance ticket sales 1,396 1,100
Accounts payable 733 682
Other 2,575 2,396
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4,974 4,403
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Long-term debt 1,825 2,338
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Long-term obligations under
capital leases 1,188 990
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Other liabilities and deferred credits:
Deferred pension liability 6 368
Postretirement benefit liability 1,271 1,225
Deferred gains 1,181 1,214
Other 547 598
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3,005 3,405
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Minority interest 28 59
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Preferred stock committed to
Supplemental ESOP 88 60
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Stockholders' equity:
Common stock at par - -
Additional capital invested 8 -
ESOP capital 1,113 822
Accumulated deficit (240) (413)
Unearned ESOP preferred stock (163) (175)
Other (91) (96)
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627 138
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Commitments and contingent
liabilities (See note)
$ 11,735 $ 11,393
====== ======
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
United Air Lines, Inc. and Subsidiary Companies
Statements of Consolidated Operations (Unaudited)
(In Millions)
Three Months
Ended June 30
1996 1995
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<S> <C> <C>
Operating revenues:
Passenger $ 3,694 $ 3,392
Cargo 192 185
Other 267 227
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4,153 3,804
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Operating expenses:
Salaries and related costs 1,173 1,147
ESOP compensation expense 168 108
Aircraft fuel 493 412
Commissions 373 364
Purchased services 297 266
Aircraft rent 241 261
Landing fees and other rent 214 213
Depreciation and amortization 182 174
Aircraft maintenance 118 95
Other 494 461
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3,753 3,501
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Earnings from operations 400 303
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Other income (expense):
Interest expense (74) (91)
Interest capitalized 24 10
Interest income 10 23
Equity in earnings of affiliates 17 13
Miscellaneous, net (7) (1)
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(30) (46)
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Earnings before income taxes and
extraordinary item 370 257
Provision for income taxes 144 103
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Earnings before extraordinary item 226 154
Extraordinary loss on early
extinguishment of debt, net of tax (30) -
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Net earnings $ 196 $ 154
====== ======
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
United Air Lines, Inc. and Subsidiary Companies
Statements of Consolidated Operations (Unaudited)
(In Millions)
Six Months
Ended June 30
1996 1995
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<S> <C> <C>
Operating revenues:
Passenger $ 6,972 $ 6,312
Cargo 367 360
Other 537 452
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7,876 7,124
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Operating expenses:
Salaries and related costs 2,342 2,260
ESOP compensation expense 331 197
Aircraft fuel 967 790
Commissions 711 706
Purchased services 573 505
Aircraft rent 480 510
Landing fees and other rent 422 384
Depreciation and amortization 372 337
Aircraft maintenance 230 202
Other 984 892
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7,412 6,783
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Earnings from operations 464 341
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Other income (expense):
Interest expense (156) (185)
Interest capitalized 39 22
Interest income 21 42
Equity in earnings of affiliates 37 27
Miscellaneous, net (25) (19)
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(84) (113)
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Earnings before income taxes and
extraordinary item 380 228
Provision for income taxes 149 91
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Earnings before extraordinary item 231 137
Extraordinary loss on early
extinguishment of debt, net of tax (59) -
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$ 172 $ 137
====== ======
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
United Air Lines, Inc. and Subsidiary Companies
Condensed Statements of Consolidated Cash Flows (Unaudited)
(In Millions)
Six Months
Ended June 30
1996 1995
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<S> <C> <C>
Cash and cash equivalents at
beginning of period $ 142 $ 444
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Cash flows from operating activities 1,039 1,209
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Cash flows from investing activities:
Additions to property and
equipment (372) (330)
Proceeds on disposition of
property and equipment 13 306
Increase in short-term investments (9) (603)
Decrease in related party receivable 30 85
Other, net 28 (12)
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(310) (554)
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Cash flows from financing activities:
Repayment of long-term debt (584) (407)
Principal payments under capital
lease obligations (64) (49)
Decrease in short-term borrowings - (269)
Other, net (58) (1)
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(706) (726)
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Increase (decrease) in cash and
cash equivalents 23 (71)
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Cash and cash equivalents at end
of period $ 165 $ 373
====== ======
Cash paid during the period for:
Interest (net of amounts
capitalized) $ 139 $ 163
Income taxes $ 143 $ 5
Non-cash transactions:
Capital lease obligations
incurred $ 293 $ 182
See accompanying notes to consolidated financial statements.
</TABLE>
United Air Lines, Inc. and Subsidiary Companies
Notes to Consolidated Financial Statements (Unaudited)
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The Company
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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 and six 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
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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 employees. Notes 2 and 14 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
1,536,986 shares of Class 1 and Class 2 ESOP Preferred
Stock have been committed to be released by the company
since January 1, 1996.
Other Income (Expense) - Miscellaneous
- --------------------------------------
"Miscellaneous, net" consisted of the following:
<TABLE>
<CAPTION>
Second Quarter Six-month Period
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Foreign exchange
gains (losses) $ (1) $ 10 $ (6) $ 2
Minority interests (5) (6) (12) (12)
Other (1) (5) (7) (9)
---- ---- ----- -----
$ (7) $ (1) $ (25) $ (19)
==== ==== ===== =====
</TABLE>
Income Taxes
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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.
Long-Term Obligations
- ---------------------
During the six months ended June 30, 1996, United
repaid prior to maturity $466 million in principal amount
of various debt securities, resulting in an extraordinary
loss of $59 million, after a tax benefit of $36 million.
Of this amount, $230 million was repaid during the second
quarter, resulting in a $30 million extraordinary loss, net
of tax benefits of $18 million. The securities were
scheduled for repayment periodically through 2021.
In connection with the financing of certain aircraft
accounted for as capital leases, United had on deposit at
June 30, 1996, an aggregate 14 billion yen ($128 million) in
certain banks and had pledged an irrevocable security
interest in such deposits to the aircraft lessors. While
this transaction does not qualify as an in-substance
defeasance for financial reporting purposes, these deposits
will be used to pay off an equivalent amount of recorded
capital lease obligations.
Short-Term Borrowings
- ---------------------
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 (LIBOR) 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.
During the second quarter, United reduced the maximum
available amount of borrowings under a separate short-term
borrowing facility from $270 million to $227 million.
Related Party Transactions
- --------------------------
At June 30, 1996 and December 31, 1995, United had
accounts receivable from UAL of $452 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 June 30, 1996, commitments for the purchase of
property and equipment, principally aircraft, approximated
$6.8 billion, after deducting advance payments. An
estimated $1.3 billion will be spent during the remainder
of 1996, $2.6 billion in 1997, $1.1 billion in 1998, and
$1.8 billion in 1999 and thereafter. The major commitments
are for the purchase of B777, B747 and B757 aircraft, which
are scheduled to be delivered through 2002.
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 involved in 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 $599 million at June 30, 1996,
compared to $567 million at December 31, 1995. Cash flows
from operating activities for the six-month period amounted
to $1.039 billion, which was net of $487 million in
accelerated pension contributions. Investing activities
resulted in cash flows of $310 million, primarily due to
additions to property. Financing activities included
principal payments under debt and capital lease obligations
of $584 million and $64 million, respectively. Included in
the debt payments was the retirement of $466 million of
long-term debt prior to maturity.
In the first six months of 1996, United took delivery
of five A320, four B777 and one B757 aircraft. Two of
these aircraft were purchased, five were acquired under
operating leases and three were acquired under capital
leases. Property additions, including aircraft spare
parts, facilities and ground equipment, amounted to $372
million, while property dispositions resulted in proceeds
of $13 million.
At June 30, 1996, commitments for the purchase of
property and equipment, principally aircraft, approximated
$6.8 billion, after deducting advance payments. An
estimated $1.3 billion will be spent during the remainder
of 1996, $2.6 billion in 1997, $1.1 billion in 1998, and $1.8
billion in 1999 and thereafter. The major commitments are
for the purchase of B777 aircraft, B747 aircraft and B757
aircraft, which are scheduled to be delivered through 2002.
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 (LIBOR) 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.
During the second quarter, United reduced the maximum
available borrowings under a separate short-term borrowing
facility from $270 million to $227 million.
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.
Consistent with UAL's strategic plan and the company's
focus on attracting more high yield passengers, management
is considering making a substantial investment in its on-
board product including new aircraft seats and new inflight
entertainment products. If this plan is approved, an
assessment will have to be made as to the status of the
carrying value of the seats and inflight entertainment
products currently in service. Accordingly, depending upon
the ultimate plan adopted and the period over which such a
replacement program would take place, the company may be
required to either shorten the periods over which the
current investments in such assets are being depreciated
and/or record a significant one-time additional depreciation
provision. It is anticipated this assessment will be made
during the third quarter.
Summary of Results
------------------
United's earnings from operations were $464 million
in the first six months of 1996, compared to operating
earnings of $341 million in the first six months of 1995.
United's net earnings were $172 million compared to net
earnings of $137 million during the same period in 1995.
The 1996 six-month period includes an extraordinary loss of
$59 million on early extinguishment of debt.
In the second quarter of 1996, United's earnings from
operations were $400 million compared to operating earnings
of $303 million in the second quarter of 1995. United had
net earnings in the 1996 second quarter of $196 million
compared to net earnings of $154 million in the same period
of 1995. The 1996 second quarter results include an
extraordinary loss of $30 million on early extinguishment
of debt.
Specific factors affecting United's consolidated
operations for the second quarter and first six months of
1996 are described below.
Second Quarter 1996 Compared with Second Quarter 1995
- -----------------------------------------------------
Operating revenues increased $349 million (9%).
United's revenue per available seat mile increased 6% to
10.30 cents. Passenger revenues increased $302 million
(9%) due to a 4% increase in yield to 12.48 cents and a 4%
increase in revenue passenger miles. The following
analysis by market is based on information reported to the
U.S. Department of Transportation:
Latin America revenue passenger miles increased 7%
over the same period last year, with a nearly 5% increase
in yield. In the Pacific, revenue passenger miles also
increased 7%; however, yield decreased 10% from the same
period last year, largely due to a weakening Japanese yen.
Domestic revenue passenger miles increased 4% and Atlantic
revenue passenger miles increased 2%. Domestic yield
increased 11% as a result of a larger proportion of high
yield business traffic and fare levels influenced by the
expiration of the Federal passenger excise tax. Available
seat miles increased 3% systemwide, reflecting increases of
6% in Latin America, 4% in the Pacific and 2% on Domestic
routes. The system passenger load factor increased 1.2
points to 73.1%.
Cargo revenues increased $7 million (4%) primarily
due to increased freight revenues. Freight ton miles
increased 3% and mail ton miles increased 5%. However, a
1% higher freight yield was offset by a 3% decrease in mail
yield. Other operating revenues increased $40 million
(18%) due to increases in Mileage Plus partner-related
revenues and contract maintenance and fuel sales to third
parties.
Operating expenses increased $252 million (7%) and
United's cost per available seat mile increased 4%, from
8.91 cents to 9.30 cents, including ESOP compensation
expense. Without the ESOP compensation expense, United's
cost per available seat mile would have increased 3%, from
8.64 cents to 8.89. ESOP compensation expense increased
$60 million (56%), reflecting the increase in the estimated
average fair value of ESOP preferred stock committed to be
released to employees as a result of UAL's higher common
stock price. Aircraft maintenance increased $23 million
(24%) due to the timing of maintenance cycles. Fuel
expense increased $81 million (20%) due to a 2% increase in
consumption and a 17% increase in the average price per
gallon of fuel to 69.04 cents. The federal jet fuel tax
which went into effect October 1, 1995, accounted for
approximately $20 million of this increase. Purchased
services increased $31 million (12%) due principally to
volume-related increases in computer reservations fees and
credit card discounts. Other operating expenses increased
$33 million (7%) due principally to costs associated with
sales to third parties of fuel, contract maintenance and
other work. Depreciation and amortization increased $8
million (5%) due primarily to the acquisition of 39
aircraft off operating leases in 1995 and new B777 aircraft
accounted for under capital leases. Aircraft rent
decreased $20 million (8%) due to a decrease in the number
of aircraft on operating leases.
Other expense amounted to $30 million in the second
quarter of 1996 compared to $46 million in the second
quarter of 1995. Interest capitalized, primarily on
aircraft advance payments, increased $14 million (140%).
Interest expense decreased $17 million (19%) due to the
prepayment of long-term debt in 1995 and 1996. Equity in
earnings of affiliates increased $4 million (31%) due
primarily to higher Galileo earnings resulting from
increased booking revenues. Included in "Miscellaneous,
net" in the 1996 second quarter were foreign exchange
losses of $1 million compared to foreign exchange gains of
$10 million in the 1995 second quarter.
Six Months 1996 Compared with Six Months 1995
- ---------------------------------------------
Operating revenues increased $752 million (11%).
United's revenue per available seat mile increased 7% to
9.94 cents. Passenger revenue increased $660 million
(10%), due principally to a 5% increase in revenue
passenger miles and a 5% increase in yield to 12.36 cents.
The following analysis by market is based on information
reported to the U.S. Department of Transportation:
Latin America revenue passenger miles increased 5%
over the same period last year, with a 1% increase in
yield. In the Pacific, revenue passenger miles increased
8%; however, yield decreased 7% from the same period last
year, largely due to a weakening Japanese yen. Atlantic
revenue passenger miles increased 8% and domestic revenue
passenger miles increased 4%. Domestic yield increased 10%
as a result of a larger proportion of high yield business
traffic and fare levels influenced by the expiration of the
Federal passenger excise tax. Available seat miles
increased 3% systemwide, reflecting increases of 8% in
Latin America, 5% in the Atlantic, 4% in the Pacific and
2% on Domestic routes. The system passenger load factor
increased 1.4 points to 70.9%.
Cargo revenues increased $7 million (2%) due primarily
to increased mail revenues. Mail ton miles increased 7% and
freight ton miles increased 3%. However, yields for both
mail and freight decreased 2% from the same period in 1995.
Other operating revenues increased $85 million (19%) due to
increases in Mileage Plus partner-related revenues and
contract maintenance and fuel sales to third parties.
Operating expenses increased $629 million (9%) and
United's cost per available seat mile increased 6%, from
8.82 to 9.35 cents, including ESOP compensation expense.
Without the ESOP compensation expense, United's 1996 six
month cost per available seat mile would have been 8.93
cents, an increase of 4% from 1995. ESOP compensation
expense increased $134 million (68%), 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 increased $177
million (22%) due to a 3% increase in consumption and a 19%
increase in the average price per gallon of fuel to 68.70
cents. The federal jet fuel tax which went into effect
October 1, 1995, accounted for approximately $40 million of
this increase. Purchased services increased $68 million
(14%) due principally to volume-related increases in
computer reservations fees, credit card discounts and
communication charges. Aircraft maintenance increased $28
million (14%) due to the timing of maintenance cycles.
Other operating expenses increased $92 million (10%) due
principally to costs associated with sales to third parties
of fuel, contract maintenance and other work. Landing fees
and other rent increased $38 million (10%) due to increased
facilities rent, particularly at the new Denver
International Airport. Depreciation and amortization
increased $35 million (10%) due primarily to the
acquisition of 39 aircraft off operating leases in 1995 and
new B777 aircraft accounted for under capital leases.
Aircraft rent decreased $30 million (6%) due to a decrease
in the number of aircraft on operating leases.
Other expense amounted to $84 million for the first
six months of 1996 compared to $113 million for the first
six months of 1995. Interest capitalized, primarily on
aircraft advance payments, increased $17 million (77%).
Interest expense decreased $29 million (16%) due to the
prepayment of long-term debt in 1995 and 1996. Equity in
earnings of affiliates increased $10 million (37%) due
primarily to higher Galileo earnings resulting from
increased booking revenues.
OUTLOOK FOR 1996
Given first and second quarter trends, available seat
miles are expected to grow approximately 3% for the full
year over 1995, with a 1 to 2 point increase in load
factor. Third quarter yields are expected to remain
strong. It is likely that the Federal passenger excise tax
will be reinstated during the third quarter; however, it is
uncertain whether the tax will remain in effect
permanently. As a result, United is unable to determine at
this time, what effect, if any, a temporary or permanent
reinstatement of the excise tax will have on the domestic
pricing environment. Pacific unit revenue is expected to
turn positive relative to 1995, assuming the negative yen
exchange rate effect is less than in the second quarter.
Unit cost for the full year, excluding the ESOP
compensation expense, is expected to increase approximately
3% due largely to volume-driven costs and fuel prices. Net
interest expense for the year should be lower due to the
early repayments of relatively high-interest rate
debentures and the conversion of $597 million in principal
amount of 6 3/8% convertible 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, willingness of customers to travel,
fuel costs, low-fare carrier expansion, capacity decisions
of other carriers, actions of the U.S. and foreign
governments, foreign currency exchange rate fluctuations,
the price of UAL common stock, inflation, the general
economic environment, and other factors discussed herein
and in United's 1995 Annual Report on Form 10-K.
Part II
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Other Information
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Item 1. Legal Proceedings.
- ------ -----------------
Travel Agency Commission Litigation - On February 13, l995
and dates thereafter United Air Lines, Inc. ("United") and six
other airlines were sued in various courts around the nation by
travel agents and the American Society of Travel Agents claiming
as a class action that the carriers acted collusively in
violation of federal antitrust laws when they imposed a cap on
ticket sales commissions payable to travel agencies by the
carriers. The cases are now consolidated before the federal
court in Minneapolis. The court, on August 23, 1995, denied the
plaintiffs' motion for preliminary injunction as well as the
defendants' motion for summary judgment. As relief, the
plaintiffs seek an order declaring the carriers' commission cap
action to be illegal and the recovery of damages (trebled) to the
agencies resulting from that action. One of the six co-
defendants, TWA, entered into a court-approved settlement
agreement. On May 28, 1996, the defendants, upon the close of
discovery, filed renewed motions for summary judgment. Oral
argument on the motions was heard on July 26, 1996. The case has
been set for trial on September 4, 1996.
Mileage Plus Class Actions - As reported in United's Form 10-
Q for the quarter ended March 31, 1996, 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. In December 1994,
one of the cases was dismissed by the court on United's motions,
the dismissal subsequently affirmed by the Illinois Appellate
Court on June 7, 1996. On October 13, 1995, the court granted
United's motion to dismiss the three remaining cases with
prejudice but permitted the plaintiffs to file an amended
complaint. The amended complaint, 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. On April 29, 1996,
the plaintiffs filed an appeal with the Appellate Court of
Illinois for the First District.
GEC-Marconi Claim - On April 4, 1996 United filed suit in
the Circuit Court of Cook County, Illinois, Law Division, against
GEC-Marconi Inflight Systems Overseas, Ltd. ("GMIS"), its 777
inseat video vendor, claiming breach of contract for GMIS's
failure to deliver the contracted product in the specified time
frame, and seeking monetary and injunctive relief. United also
named in the suit GEC-Marconi Inflight Systems, Inc. ("GMIS,
Inc."), its 777 video maintenance provider, seeking declaratory
relief on the maintenance contract. On July 19, 1996 GMIS and
GMIS, Inc. filed a counterclaim against United seeking in excess
of $240 million for various alleged breaches of contract by
United, plus consequential damages and attorney's fees and costs,
relating to the same product purchase agreement (which, in
addition, included a 747 and 767 retrofit order that United
terminated on April 4, 1996) and maintenance service agreement
which form the basis of United's complaint, as well as an alleged
June 1996 "agreement" that had been the subject of negotiations
between the parties but was never signed by United regarding
interim arrangements between the parties. GMIS and GMIS, Inc.
also seek injunctive relief to enforce the alleged "agreement"
and prevent United from obtaining substitute goods from other
vendors. On August 1, GMIS and GMIS, Inc. filed an emergency
motion on the claims for injunctive relief. The court has set
August 28 as the hearing date on the issue of whether, as a
matter of law, GMIS and GMIS, Inc. should be denied its emergency
motion. GMIS and GMIS, Inc. also filed a motion to dismiss
United's complaint.
Item 6. Exhibits and Reports on Form 8-K.
- ------ --------------------------------
(a) Exhibit 10.1 - Supplemental Agreement No. 8 dated as of
May 30, 1996 to the Agreement dated December 18, 1990
between The Boeing Company ("Boeing") and United Air
Lines, Inc. ("United") (and United Worldwide
Corporation) for acquisition of Boeing 747-400 aircraft
(as previously amended and supplemented, the "747-400
Purchase Agreement" (filed as Exhibit 10.8 to UAL
Corporation's ("UAL") Form 10-K for the year ended
December 31, 1990, and incorporated herein by reference;
supplements thereto filed as (i) Exhibits 10.4 and 10.5
to UAL's Form 10-K for the year ended December 31, 1991,
(ii) Exhibits 10.3, 10.4, 10.5, 10.6 and 10.22 to UAL's
Form 10-Q for the quarter ended June 30, 1993, (iii)
Exhibit 10.3 to UAL's Form 10-K for the year ended
December 31, 1993, (iv) Exhibit 10.14 to UAL's Form 10-Q
for the quarter ended June 30, 1994, (v) Exhibits 10.29
and 10.30 to UAL's Form 10-K for the year ended December
31, 1994, (vi) Exhibits 10.4 through 10.8 to UAL's Form
10-Q for the quarter ended March 31, 1995, (vii)
Exhibits 10.7 and 10.8 to UAL's Form 10-Q for the
quarter ended June 30, 1995, and (viii) Exhibit 10.41 to
UAL's Form 10-K for the year ended December 31, 1995)).
(Exhibit 10.1 hereto is filed as Exhibit 10.4 to UAL's
Form 10-Q for the quarter ended June 30, 1996, and is
incorporated herein by reference with a request for
confidential treatment of certain portions thereof.)
Exhibit 10.2 - Supplemental Agreement No. 9 dated as of
July 12, 1996 to the 747-400 Purchase Agreement.
(Exhibit 10.2 hereto is filed as Exhibit 10.5 to UAL's
Form 10-Q for the quarter ended June 30, 1996, and is
incorporated herein by reference with a request for
confidential treatment of certain portions thereof.)
Exhibit 10.3 - Letter Agreement No. 1670-06 dated July
12, 1996 to the 747-400 Purchase Agreement. (Exhibit
10.3 hereto is filed as Exhibit 10.6 to UAL's Form 10-Q
for the quarter ended June 30, 1996, and is incorporated
herein by reference with a request for confidential
treatment of certain portions thereof.)
Exhibit 10.4 - Letter Agreement No. 6-1162-DLJ-891R3
dated May 30, 1996 to the 747-400 Purchase Agreement.
(Exhibit 10.4 hereto is filed as Exhibit 10.7 to UAL's
Form 10-Q for the quarter ended June 30, 1996, and is
incorporated herein by reference with a request for
confidential treatment of certain portions thereof.)
Exhibit 10.5 - Letter Agreement No. 6-1162-DLJ-891R4
dated July 12, 1996 to the 747-400 Purchase Agreement.
(Exhibit 10.5 hereto is filed as Exhibit 10.8 to UAL's
Form 10-Q for the quarter ended June 30, 1996, and is
incorporated herein by reference with a request for
confidential treatment of certain portions thereof.)
Exhibit 10.6 - Supplemental Agreement No. 4 dated as of
May 30, 1996 to the Agreement dated December 18, 1990
between Boeing and United (and United Worldwide
Corporation) for acquisition of Boeing 777-200 aircraft
(as previously amended and supplemented, the "777-200
Purchase Agreement" (filed as Exhibit 10.7 to UAL's Form
10-K for the year ended December 31, 1990, and
incorporated herein by reference; supplements thereto
filed as (i) Exhibits 10.1, 10.2 and 10.22 to UAL's Form
10-Q for the quarter ended June 30, 1993, (ii) Exhibit
10.2 to UAL's Form 10-K for the year ended December 31,
1993, (iii) Exhibit 10.14 to UAL's Form 10-Q for the
quarter ended June 30, 1994, (iv) Exhibits 10.27 and
10.28 to UAL's Form 10-K for the year ended December 31,
1994, (v) Exhibits 10.2 and 10.3 to UAL's Form 10-Q for
the quarter ended March 31, 1995, (vi) Exhibits 10.4,
10.5 and 10.6 to UAL's Form 10-Q for the quarter ended
June 30, 1995, and (vii) Exhibits 10.37 through 10.40 to
UAL's Form 10-K for the year ended December 31, 1995)).
(Exhibit 10.6 hereto is filed as Exhibit 10.9 to UAL's
Form 10-Q for the quarter ended June 30, 1996, and is
incorporated herein by reference with a request for
confidential treatment of certain portions thereof.)
Exhibit 10.7 - Supplemental Agreement No. 5 dated July
12, 1996 to the 777-200 Purchase Agreement. (Exhibit
10.7 hereto is filed as Exhibit 10.10 to UAL's Form 10-Q
for the quarter ended June 30, 1996, and is incorporated
herein by reference with a request for confidential
treatment of certain portions thereof.)
Exhibit 10.8 - Letter Agreement No. 6-1162-MDH-077 dated
May 6, 1996 to the 777-200 Purchase Agreement. (Exhibit
10.8 hereto is filed as Exhibit 10.11 to UAL's Form 10-Q
for the quarter ended June 30, 1996, and is incorporated
herein by reference with a request for confidential
treatment of certain portions thereof.)
Exhibit 10.9 - Letter Agreement No. 6-1162-MDH-131 dated
July 12, 1996 to the 777-200 Purchase Agreement.
(Exhibit 10.9 hereto is filed as Exhibit 10.12 to UAL's
Form 10-Q for the quarter ended June 30, 1996, and is
incorporated herein by reference with a request for
confidential treatment of certain portions thereof.)
Exhibit 10.10 - Supplemental Agreement No. 6 dated as of
May 30, 1996 to the Agreement dated October 25, 1988
between Boeing and United for acquisition of 757-200
aircraft (as previously amended and supplemented, the
"757-200 Purchase Agreement" (filed as Exhibit 10(K) to
UAL's Form 10-K for the year ended December 31, 1989,
and incorporated herein by reference; supplements
thereto filed as (i) Exhibits 10.14, 10.15, 10.16,
10.17, 10.18, 10.19 and 10.22 to UAL's Form 10-Q for the
quarter ended June 30, 1993, (ii) Exhibit 10.14 to UAL's
Form 10-Q for the quarter ended June 30, 1994, and (iii)
Exhibit 10.9 to UAL's Form 10-Q for the quarter ended
March 31, 1995)). (Exhibit 10.10 hereto is filed as
Exhibit 10.13 to UAL's Form 10-Q for the quarter ended
June 30, 1996, and is incorporated herein by reference
with a request for confidential treatment of certain
portions thereof.)
Exhibit 10.11 - Supplemental Agreement No. 7 dated July
12, 1996 to the 757-200 Purchase Agreement. (Exhibit
10.11 hereto is filed as Exhibit 10.14 to UAL's Form 10-
Q for the quarter ended June 30, 1996, and is
incorporated herein by reference with a request for
confidential treatment of certain portions thereof.)
Exhibit 10.12 - Letter Agreement No. 1485-09 dated July
12, 1996 to the 757-200 Purchase Agreement. (Exhibit
10.12 hereto is filed as Exhibit 10.15 to UAL's Form 10-
Q for the quarter ended June 30, 1996, and is
incorporated herein by reference with a request for
confidential treatment of certain portions thereof.)
Exhibit 10.13 - Change Order No. 10 dated February 1,
1996 to the 757-200 Purchase Agreement. (Exhibit 10.13
hereto is filed as Exhibit 10.16 to UAL's Form 10-Q for
the quarter ended June 30, 1996, and is incorporated
herein by reference with a request for confidential
treatment of certain portions thereof.)
Exhibit 10.14 - Letter Agreement No. 6-1162-MDH-150
dated July 12, 1996 to (a) the 747-400 Purchase
Agreement, (b) the 777-200 Purchase Agreement, (c) the
757-200 Purchase Agreement, (d) the Agreement dated as
of March 1, 1990 between Boeing and United for
acquisition of 767-300ER aircraft (as previously amended
and supplemented, the "767-300ER Purchase Agreement"
(filed as Exhibit 10(L) to UAL's Form 10-K for the year
ended December 31, 1989, and incorporated herein by
reference; supplements thereto filed as (i) Exhibits
10.7, 10.8, 10.9, 10.10, 10.11, 10.12, 10.13 and 10.22
to UAL's Form 10-Q for the quarter ended June 30, 1993,
and (ii) Exhibit 10.14 to UAL's Form 10-Q for the
quarter ended June 30, 1994, and (iii) Exhibits 10.10
and 10.11 to UAL's Form 10-Q for the quarter ended March
31, 1995)), and (e) an amended and restated agreement
dated as of March 19, 1992 between Boeing and United for
the acquisition of 737 aircraft, the "737 Purchase
Agreement" (filed as Exhibit 10.15 to UAL's Form 10-K
for the year ended December 31, 1992, and incorporated
herein by reference; supplements thereto filed as (i)
Exhibits 10.20, 10.21 and 10.22 to UAL's Form 10-Q for
the quarter ended June 30, 1993, (ii) Exhibit 10.14 to
UAL's Form 10-Q for the quarter ended June 30, 1994, and
(iii) Exhibit 10.34 to UAL's Form 10-K for the year
ended December 31, 1994)). (Exhibit 10.14 hereto is
filed as Exhibit 10.17 to UAL's Form 10-Q for the
quarter ended June 30, 1996, and is incorporated herein
by reference with a request for confidential treatment
of certain portions thereof.)
Exhibit 10.15 - Letter Agreement No. 6-1162-RCN-870R3
dated May 24, 1996 to the 737 Purchase Agreement, 747-
400 Purchase Agreement, 757-200 Purchase Agreement, 767-
300ER Purchase Agreement and 777-200 Purchase Agreement.
(Exhibit 10.15 hereto is filed as Exhibit 10.18 to UAL's
Form 10-Q for the quarter ended June 30, 1996, and is
incorporated herein by reference with a request for
confidential treatment of certain portions thereof.)
Exhibit 10.16 - Letter Agreement No. 6-1162-RCN-870R4
dated July 12, 1996 to the 737 Purchase Agreement, 747-
400 Purchase Agreement, 757-200 Purchase Agreement, 767-
300ER Purchase Agreement and 777-200 Purchase Agreement.
(Exhibit 10.16 hereto is filed as Exhibit 10.19 to UAL's
Form 10-Q for the quarter ended June 30, 1996, and is
incorporated herein by reference with a request for
confidential treatment of certain portions thereof.)
Exhibit 12.1 - Computation of Ratio of
Earnings to Fixed Charges.
Exhibit 27 - Financial Data Schedule.
(b) No reports on Form 8-K have been filed during the second
quarter of 1996.
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: August 14, 1996
Exhibit Index
-------------
Exhibit No. Description
- ---------- -----------
10.1 Supplemental Agreement No. 8 dated as of May 30, 1996
to the Agreement dated December 18, 1990 between The
Boeing Company ("Boeing") and United Air Lines, Inc.
("United") (and United Worldwide Corporation) for
acquisition of Boeing 747-400 aircraft (as previously
amended and supplemented, the "747-400 Purchase
Agreement" (filed as Exhibit 10.8 to UAL's Form 10-K
for the year ended December 31, 1990, and incorporated
herein by reference; supplements thereto filed as (i)
Exhibits 10.4 and 10.5 to UAL's Form 10-K for the year
ended December 31, 1991, (ii) Exhibits 10.3, 10.4,
10.5, 10.6 and 10.22 to UAL's Form 10-Q for the
quarter ended June 30, 1993, (iii) Exhibit 10.3 to
UAL's Form 10-K for the year ended December 31, 1993,
(iv) Exhibit 10.14 to UAL's Form 10-Q for the quarter
ended June 30, 1994, (v) Exhibits 10.29 and 10.30 to
UAL's Form 10-K for the year ended December 31, 1994,
(vi) Exhibits 10.4 through 10.8 to UAL's Form 10-Q for
the quarter ended March 31, 1995, (vii) Exhibits 10.7
and 10.8 to UAL's Form 10-Q for the quarter ended June
30, 1995, and (viii) Exhibit 10.41 to UAL's Form 10-K
for the year ended December 31, 1995)). (Exhibit 10.1
hereto is filed as Exhibit 10.4 to UAL's Form 10-Q for
the quarter ended June 30, 1996, and is incorporated
herein by reference with a request for confidential
treatment of certain portions thereof.)
10.2 Supplemental Agreement No. 9 dated as of July 12, 1996
to the 747-400 Purchase Agreement. (Exhibit 10.2
hereto is filed as Exhibit 10.5 to UAL's Form 10-Q for
the quarter ended June 30, 1996, and is incorporated
herein by reference with a request for confidential
treatment of certain portions thereof.)
10.3 Letter Agreement No. 1670-06 dated July 12, 1996 to
the 747-400 Purchase Agreement. (Exhibit 10.3 hereto
is filed as Exhibit 10.6 to UAL's Form 10-Q for the
quarter ended June 30, 1996, and is incorporated
herein by reference with a request for confidential
treatment of certain portions thereof.)
10.4 Letter Agreement No. 6-1162-DLJ-891R3 dated May 30,
1996 to the 747-400 Purchase Agreement. (Exhibit 10.4
hereto is filed as Exhibit 10.7 to UAL's Form 10-Q for
the quarter ended June 30, 1996, and is incorporated
herein by reference with a request for confidential
treatment of certain portions thereof.)
10.5 Letter Agreement No. 6-1162-DLJ-891R4 dated July 12,
1996 to the 747-400 Purchase Agreement. (Exhibit 10.5
hereto is filed as Exhibit 10.8 to UAL's Form 10-Q for
the quarter ended June 30, 1996, and is incorporated
herein by reference with a request for confidential
treatment of certain portions thereof.)
10.6 Supplemental Agreement No. 4 dated as of May 30, 1996
to the Agreement dated December 18, 1990 between
Boeing and United (and United Worldwide Corporation)
for acquisition of Boeing 777-200 aircraft (as
previously amended and supplemented, the "777-200
Purchase Agreement" (filed as Exhibit 10.7 to UAL's
Form 10-K for the year ended December 31, 1990, and
incorporated herein by reference; supplements thereto
filed as (i) Exhibits 10.1, 10.2 and 10.22 to UAL's
Form 10-Q for the quarter ended June 30, 1993, (ii)
Exhibit 10.2 to UAL's Form 10-K for the year ended
December 31, 1993, (iii) Exhibit 10.14 to UAL's Form
10-Q for the quarter ended June 30, 1994, (iv)
Exhibits 10.27 and 10.28 to UAL's Form 10-K for the
year ended December 31, 1994, (v) Exhibits 10.2 and
10.3 to UAL's Form 10-Q for the quarter ended March
31, 1995, (vi) Exhibits 10.4, 10.5 and 10.6 to UAL's
Form 10-Q for the quarter ended June 30, 1995, and
(vii) Exhibits 10.37 through 10.40 to UAL's Form 10-K
for the year ended December 31, 1995)). (Exhibit 10.6
hereto is filed as Exhibit 10.9 to UAL's Form 10-Q for
the quarter ended June 30, 1996, and is incorporated
herein by reference with a request for confidential
treatment of certain portions thereof.)
10.7 Supplemental Agreement No. 5 dated July 12, 1996 to
the 777-200 Purchase Agreement. (Exhibit 10.7 hereto
is filed as Exhibit 10.10 to UAL's Form 10-Q for the
quarter ended June 30, 1996, and is incorporated
herein by reference with a request for confidential
treatment of certain portions thereof.)
10.8 Letter Agreement No. 6-1162-MDH-077 dated May 6, 1996
to the 777-200 Purchase Agreement. (Exhibit 10.8
hereto is filed as Exhibit 10.11 to UAL's Form 10-Q
for the quarter ended June 30, 1996, and is
incorporated herein by reference with a request for
confidential treatment of certain portions thereof.)
10.9 Letter Agreement No. 6-1162-MDH-131 dated July 12,
1996 to the 777-200 Purchase Agreement. (Exhibit 10.9
hereto is filed as Exhibit 10.12 to UAL's Form 10-Q
for the quarter ended June 30, 1996, and is
incorporated herein by reference with a request for
confidential treatment of certain portions thereof.)
10.10 Supplemental Agreement No. 6 dated as of May 30, 1996
to the Agreement dated October 25, 1988 between Boeing
and United for acquisition of 757-200 aircraft (as
previously amended and supplemented, the "757-200
Purchase Agreement" (filed as Exhibit 10(K) to UAL's
Form 10-K for the year ended December 31, 1989, and
incorporated herein by reference; supplements thereto
filed as (i) Exhibits 10.14, 10.15, 10.16, 10.17,
10.18, 10.19 and 10.22 to UAL's Form 10-Q for the
quarter ended June 30, 1993, (ii) Exhibit 10.14 to
UAL's Form 10-Q for the quarter ended June 30, 1994,
and (iii) Exhibit 10.9 to UAL's Form 10-Q for the
quarter ended March 31, 1995)). (Exhibit 10.10 hereto
is filed as Exhibit 10.13 to UAL's Form 10-Q for the
quarter ended June 30, 1996, and is incorporated
herein by reference with a request for confidential
treatment of certain portions thereof.)
10.11 Supplemental Agreement No. 7 dated July 12, 1996 to
the 757-200 Purchase Agreement. (Exhibit 10.11 hereto
is filed as Exhibit 10.14 to UAL's Form 10-Q for the
quarter ended June 30, 1996, and is incorporated
herein by reference with a request for confidential
treatment of certain portions thereof.)
10.12 Letter Agreement No. 1485-09 dated July 12, 1996 to
the 757-200 Purchase Agreement. (Exhibit 10.12 hereto
is filed as Exhibit 10.15 to UAL's Form 10-Q for the
quarter ended June 30, 1996, and is incorporated
herein by reference with a request for confidential
treatment of certain portions thereof.)
10.13 Change Order No. 10 dated February 1, 1996 to the 757-
200 Purchase Agreement. (Exhibit 10.13 hereto is
filed as Exhibit 10.16 to UAL's Form 10-Q for the
quarter ended June 30, 1996, and is incorporated
herein by reference with a request for confidential
treatment of certain portions thereof.)
10.14 Letter Agreement No. 6-1162-MDH-150 dated July 12,
1996 to (a) the 747-400 Purchase Agreement, (b) the
777-200 Purchase Agreement, (c) the 757-200 Purchase
Agreement, (d) the Agreement dated as of March 1, 1990
between Boeing and United for acquisition of 767-300ER
aircraft (as previously amended and supplemented, the
"767-300ER Purchase Agreement" (filed as Exhibit 10(L)
to UAL's Form 10-K for the year ended December 31,
1989, and incorporated herein by reference;
supplements thereto filed as (i) Exhibits 10.7, 10.8,
10.9, 10.10, 10.11, 10.12, 10.13 and 10.22 to UAL's
Form 10-Q for the quarter ended June 30, 1993, and
(ii) Exhibit 10.14 to UAL's Form 10-Q for the quarter
ended June 30, 1994, and (iii) Exhibits 10.10 and
10.11 to UAL's Form 10-Q for the quarter ended March
31, 1995, and incorporated herein by reference)), and
(e) an amended and restated agreement dated as of
March 19, 1992 between Boeing and United for the
acquisition of 737 aircraft, the "737 Purchase
Agreement" (filed as Exhibit 10.15 to UAL's Form 10-K
for the year ended December 31, 1992, and incorporated
herein by reference; supplements thereto filed as (i)
Exhibits 10.20, 10.21 and 10.22 to UAL's Form 10-Q for
the quarter ended June 30, 1993, (ii) Exhibit 10.14 to
UAL's Form 10-Q for the quarter ended June 30, 1994,
and (iii) Exhibit 10.34 to UAL's Form 10-K for the
year ended December 31, 1994)). (Exhibit 10.14 hereto
is filed as Exhibit 10.17 to UAL's Form 10-Q for the
quarter ended June 30, 1996, and is incorporated
herein by reference with a request for confidential
treatment of certain portions thereof.)
10.15 Letter Agreement No. 6-1162-RCN-870R3 dated May 24,
1996 to the 737 Purchase Agreement, 747-400 Purchase
Agreement, 757-200 Purchase Agreement, 767-300ER
Purchase Agreement and 777-200 Purchase Agreement.
(Exhibit 10.15 hereto is filed as Exhibit 10.18 to
UAL's Form 10-Q for the quarter ended June 30, 1996,
and is incorporated herein by reference with a request
for confidential treatment of certain portions
thereof.)
10.16 Letter Agreement No. 6-1162-RCN-870R4 dated July 12,
1996 to the 737 Purchase Agreement, 747-400 Purchase
Agreement, 757-200 Purchase Agreement, 767-300ER
Purchase Agreement and 777-200 Purchase Agreement.
(Exhibit 10.16 hereto is filed as Exhibit 10.19 to
UAL's Form 10-Q for the quarter ended June 30, 1996,
and is incorporated herein by reference with a request
for confidential treatment of certain portions
thereof.)
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
Six Months Ended
June 30
1996 1995
(In Millions)
<S> <C> <C>
Earnings:
Earnings before income taxes and
extraordinary item $ 380 $ 228
Fixed charges, from below 460 569
Undistributed earnings of affiliates (32) (23)
Interest capitalized (39) (22)
----- -----
Earnings $ 769 $ 752
===== =====
Fixed charges:
Interest expense $ 156 $ 185
Portion of rental expense
representative of the interest
factor 304 384
----- -----
Fixed charges $ 460 $ 569
===== =====
Ratio of earnings to fixed charges 1.67 1.32
===== =====
</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 SIX MONTHS ENDED JUNE 30, 1996 AND CONDENSED STATEMENT OF
CONSOLIDATED FINANCIAL POSITION AS OF JUNE 30, 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> JUN-30-1996
<PERIOD-TYPE> 6-MOS
<CASH> 165
<SECURITIES> 434
<RECEIVABLES> 1,053
<ALLOWANCES> 0
<INVENTORY> 321
<CURRENT-ASSETS> 2,506
<PP&E> 13,065
<DEPRECIATION> 5,825
<TOTAL-ASSETS> 11,735
<CURRENT-LIABILITIES> 4,974
<BONDS> 3,013
0
0
<COMMON> 0
<OTHER-SE> 627
<TOTAL-LIABILITY-AND-EQUITY> 11,735
<SALES> 0
<TOTAL-REVENUES> 7,876
<CGS> 0
<TOTAL-COSTS> 7,412
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 156
<INCOME-PRETAX> 380
<INCOME-TAX> 149
<INCOME-CONTINUING> 231
<DISCONTINUED> 0
<EXTRAORDINARY> (59)
<CHANGES> 0
<NET-INCOME> 172
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
