FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
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
- ------------------------------------------------------------------
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, 1997
----- --------------
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, 1997
------------------------------------
Index
- -----
PART I. FINANCIAL INFORMATION Page No.
- ------ --------------------- --------
Item 1. Financial statements:
Condensed statements of consolidated 3
financial position - as of March 31, 1997
(unaudited) and December 31, 1996
Statements of consolidated operations 5
(unaudited) - for the three months
ended March 31, 1997 and 1996
Condensed statements of consolidated 6
cash flows (unaudited) - for the three
months ended March 31, 1997 and 1996
Notes to consolidated financial 7
statements (unaudited)
Item 2. Management's Discussion and Analysis 9
of Financial Condition and Results of
Operations
PART II. OTHER INFORMATION
- ------- -----------------
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
- ----------
Exhibit Index 15
- -------------
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,
1997 December 31,
Assets (Unaudited) 1996
----------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 412 $ 203
Short-term investments 458 421
Receivables, net 1,113 955
Inventories, net 326 369
Deferred income taxes 223 228
Prepaid expenses and other 381 446
------- -------
2,913 2,622
------- -------
Operating property and equipment:
Owned 12,646 12,325
Accumulated depreciation and
amortization (5,476) (5,380)
------- -------
7,170 6,945
------- -------
Capital leases 2,060 1,881
Accumulated amortization (603) (583)
------- -------
1,457 1,298
------- -------
8,627 8,243
------- -------
Other assets:
Intangibles, net 517 522
Deferred income taxes 77 122
Related party receivables 395 374
Aircraft lease deposits 213 168
Other 836 850
------- -------
2,038 2,036
------- -------
$ 13,578 $ 12,901
======= =======
</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,
1997 December 31,
Liabilities and Stockholder's Equity (Unaudited) 1996
----------- ------------
<S> <C> <C>
Current liabilities:
Current portions of long-term debt
and capital lease obligations $ 326 $ 294
Related party debt maturing
within one year 70 60
Advance ticket sales 1,486 1,189
Accounts payable 834 987
Other 2,579 2,473
------- -------
5,295 5,003
------- -------
Long-term debt 1,612 1,633
------- -------
Long-term obligations under
capital leases 1,468 1,322
------- -------
Other liabilities and deferred credits:
Postretirement benefit liability 1,311 1,290
Deferred gains 1,147 1,151
Other 891 944
------- -------
3,349 3,385
------- -------
Minority interest 36 31
------- -------
Preferred stock committed to
Supplemental ESOP 211 165
------- -------
Stockholder's equity:
Common stock at par - -
Additional capital invested 17 15
ESOP capital 1,569 1,441
Retained earnings 226 121
Unearned ESOP preferred stock (193) (202)
Other (12) (13)
------- -------
1,607 1,362
------- -------
Commitments and contingent
liabilities (See note)
$ 13,578 $ 12,901
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
United Air Lines, Inc. and Subsidiary Companies
Statements of Consolidated Operations (Unaudited)
(In Millions)
<TABLE>
<CAPTION>
Three Months Ended
March 31
1997 1996
---- ----
<S> <C> <C>
Operating revenues:
Passenger $ 3,626 $ 3,278
Cargo 195 175
Other 288 270
------- -------
4,109 3,723
------- -------
Operating expenses:
Salaries and related costs 1,240 1,169
ESOP compensation expense 184 163
Aircraft fuel 554 474
Commissions 364 337
Purchased services 307 276
Aircraft rent 237 240
Landing fees and other rent 222 208
Depreciation and amortization 176 189
Aircraft maintenance 138 112
Other 498 491
------- -------
3,920 3,659
------- -------
Earnings from operations 189 64
------- -------
Other income (expense):
Interest expense (70) (81)
Interest capitalized 24 15
Interest income 11 11
Equity in earnings of affiliates 25 20
Miscellaneous, net (13) (19)
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(23) (54)
------- -------
Earnings before income taxes and
extraordinary item 166 10
Provision for income taxes 63 4
------- -------
Earnings before extraordinary item 103 6
Extraordinary loss on early
extinguishment of debt, net of tax - (29)
------- -------
Net earnings (loss) $ 103 $ (23)
======= =======
</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
1997 1996
---- ----
<S> <C> <C>
Cash and cash equivalents at
beginning of period $ 203 $ 142
------ ------
Cash flows from operating activities 679 370
------ ------
Cash flows from investing activities:
Additions to property and equipment (308) (67)
Proceeds on disposition of
property and equipment 14 9
Decrease (increase) in short-term
investments (37) 95
Increase in related party receivables (21) (41)
Other, net - 39
------ ------
(352) 35
------ ------
Cash flows from financing activities:
Repayment of long-term debt (13) (298)
Principal payments under capital
lease obligations (59) (48)
Aircraft lease deposits (56) (63)
Other, net 10 2
------ ------
(118) (407)
------ ------
Increase (decrease) in cash and
cash equivalents 209 (2)
------ ------
Cash and cash equivalents at end
of period $ 412 $ 140
====== ======
Cash paid during the period for:
Interest (net of amounts
capitalized) $ 51 $ 71
Income taxes $ 2 $ -
Non-cash transactions:
Capital lease obligations incurred $ 239 $ 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 1996.
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. Note 2 of the
Notes to Consolidated Financial Statements in the 1996 Annual
Report on Form 10-K contains additional discussion of the
agreements, stock to be issued to employees and the related
accounting treatment. Shares earned in 1996 were allocated in
March 1997 as follows: 190,307 shares of Class 2 ESOP
Preferred Stock were contributed to the Non-Leveraged ESOP and
an additional 537,917 shares were allocated in "book entry" form
under the Supplemental Plan. Also, 2,345,745 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 committed to be released by the
Company since January 1, 1997.
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 Long-Term 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.
Related Party Transactions
- --------------------------
At March 31, 1997 and December 31, 1996, United had
accounts receivable from UAL of $398 million and $378 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, 1997, commitments for the purchase of
property and equipment, principally aircraft, approximated $6.7
billion, after deducting advance payments. An estimated $2.6
billion will be spent during the remainder of 1997, $2.0 billion
in 1998, $1.0 billion in 1999, and $1.1 billion in 2000 and
thereafter. The above amounts reflect firm orders for 18 B777
aircraft, 21 B747 aircraft, 6 B757 aircraft, 16 A320 aircraft
and 28 A319 aircraft to be delivered through 2002. However,
these amounts do not include a recent order for an additional
three B747 aircraft which are scheduled to be delivered in 1999.
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 $870 million at March 31, 1997, compared to $624
million at December 31, 1996. Cash flows from operating
activities amounted to $679 million. Financing activities
included principal payments under debt and capital lease
obligations of $13 million and $59 million, respectively, and
deposits of an equivalent $56 million in Japanese yen with
certain banks in connection with the financing of certain
capital lease transactions.
In the first quarter of 1997, United took delivery of one
A320 aircraft and two B777 aircraft. The A320 aircraft was
purchased and the B777s were acquired under capital leases.
Property additions, including the A320 aircraft and aircraft
spare parts, amounted to $308 million. Property dispositions
resulted in proceeds of $14 million.
At March 31, 1997, commitments for the purchase of
property and equipment, principally aircraft, approximated $6.7
billion, after deducting advance payments. An estimated $2.6
billion will be spent during the remainder of 1997, $2.0 billion
in 1998, $1.0 billion in 1999 and $1.1 billion in 2000 and
thereafter. The above amounts reflect firm orders for 18 B777
aircraft, 21 B747 aircraft, 6 B757 aircraft, 16 A320 aircraft
and 28 A319 aircraft to be delivered through 2002. However,
these amounts do not include a recent order for an additional
three B747 aircraft which are scheduled to be delivered in 1999.
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 1997, Standard & Poor's raised its credit rating
on United's senior unsecured debt to BB+ from BB.
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,
capacity growth, low-cost competition, general economic
conditions, labor and fuel costs, taxes, U.S. and international
governmental policies and other factors will continue to affect
its operating results.
Summary of Results
------------------
United's earnings from operations were $189 million in the
first quarter of 1997, compared to operating earnings of $64
million in the first quarter of 1996. United had net earnings
in the 1997 first quarter of $103 million, compared to a net
loss of $23 million in the same period of 1996. 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 1997 are described below.
First Quarter 1997 Compared with First Quarter 1996.
----------------------------------------------------
Operating revenues increased $386 million (10%). United's
revenue per available seat mile increased 7% to 10.19 cents.
Passenger revenues increased $348 million (11%) due to a 5%
increase in yield to 12.80 cents and a 5% increase in revenue
passenger miles. In total, the Company believes that passenger
revenues benefited by approximately $25 million due to the
threat of a labor strike at a major competitor. 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 13% increase in yield largely
due to the strengthening Latin America economy. Atlantic
revenue passenger miles increased 11% and yield increased nearly
5% for the period. In the Pacific, revenue passenger miles
increased 3% and yield increased 1% from the same period last
year. Pacific yields continue to be negatively impacted by the
weakness of the Japanese yen to the dollar. Domestic revenue
passenger miles increased 5% with a 6% increase in yield. The
increase in domestic yield is a result of a strong market
industry-wide coupled with continued success in attracting a
better mix of higher-yield business travelers. Available seat
miles increased 4% systemwide, reflecting increases of 13% in
the Atlantic, 1% in the Pacific and 4% on Domestic routes,
offset by a decrease of 4% in Latin America. The system
passenger load factor increased 1.2 points to 69.9%.
Cargo revenues increased $20 million (11%) as freight
revenues increased 13% and mail revenues increased 9%. Cargo
yield decreased 2% from the same period last year. Other
operating revenues increased $18 million (7%) due to increases
in Mileage Plus partner-related revenues and fuel sales to third
parties.
Operating expenses increased $261 million (7%) and
United's cost per available seat mile increased 3%, from 8.98
cents to 9.27 cents. ESOP compensation expense increased $21
million (13%), reflecting a higher average UAL common stock
price in 1997. Aircraft fuel expense increased $80 million
(17%) due to a 2% increase in consumption and a 15% increase in
the average price per gallon of fuel to 78.3 cents. Without the
increases in ESOP compensation expense and aircraft fuel,
United's cost per available seat mile would have increased 2%.
Salaries and related costs increased $71 million (6%) due mainly
to increased staffing in certain customer-oriented positions.
Landing fees and other rent increased $14 million (7%) due to
increased landing fees and facilities rent at various airports.
Purchased services increased $31 million (11%) due principally
to volume-related increases in computer reservations fees and
credit card discounts. Aircraft maintenance increased $26
million (23%) due to increased purchased maintenance, as well as
the timing of maintenance cycles. Commissions increased $27
million (8%) due primarily to increased commissionable revenues.
Depreciation and amortization decreased $13 million (7%) due to
lower depreciation on DC10-10 aircraft, which are being
exchanged for B727 hushkits.
Other expense amounted to $23 million in the first quarter
of 1997 compared to $54 million in the first quarter of 1996.
Interest expense decreased $11 million (14%) due to the
prepayment of long-term debt in 1996. Interest capitalized,
primarily on aircraft advance payments, increased $9 million
(60%). Equity in earnings of affiliates increased $5 million
(25%) due primarily to higher earnings from the Galileo
International Partnership resulting from increased booking
revenues. Included in "Miscellaneous, net" in the 1997 and 1996
first quarters were foreign exchange losses of $5 million and $6
million, respectively.
LABOR AGREEMENTS AND WAGE ADJUSTMENTS
Both the Air Line Pilots Association, International
("ALPA") and the International Association of Machinists and
Aerospace Workers ("IAM") ratified previously announced mid-term
wage adjustments. Included in the agreements are a 5% increase
to wage rates for each union group in July 1997 and a second 5%
increase in July 1998. Further, the agreement with ALPA calls
for a corresponding 5% increase in both 1997 and 1998 to "book
rates" (book rates are used to compute certain other employee
benefits), and the agreement with the IAM provides for lump sum
payments for all IAM employees and increases in hourly license
premium and skill pay for mechanics. These agreements also
provide for restoration of wage rates for the two groups in the
year 2000 to levels that existed prior to the recapitalization in
July 1994, as well as restoration of the Company's contribution
to the pilots defined contribution plan from its current rate of
1% to its pre-ESOP rate of 9% in the year 2000.
In March, the Company also announced the details of mid-
term wage adjustments for non-union United States salaried and
management employees. Salaried employees will receive a 5%
increase in both July 1997 and July 1998, as well as a lump-sum
payment in July 1997. Management employees will receive a 4%
increase in both July 1997 and July 1998, and management
employees not participating in the Company's Incentive
Compensation Plan will participate in a three-year profit-sharing
plan that could pay an additional amount in 1998, 1999 and 2000,
if the Company meets specific pre-tax earnings objectives in
1997, 1998 and 1999, respectively. The cost to the Company in
1997 for these wage and benefit adjustments is approximately $120
million.
OUTLOOK FOR 1997
In 1997, available seat miles are expected to increase
approximately 3.5%, with total system revenue per available seat
mile up approximately 3%. Costs per available seat mile
excluding ESOP charges are expected to increase approximately
2%. This unit cost forecast assumes the average cost of jet
fuel per gallon is lower in 1997 than in 1996.
For the second quarter, United expects total system revenue
per available seat mile to increase approximately 3% versus the
same period last year, on 3% higher capacity. System load factor
is forecast to increase slightly compared to second quarter 1996.
Costs per available seat mile excluding ESOP charges are expected
to increase 3% over the same period last year.
The Federal passenger excise tax, which expired on December
31, 1996, was reinstated during the first quarter. While the
authority to collect this tax is scheduled to expire once again
at the end of the third quarter, the Company expects a
replacement funding mechanism, either reinstatement of the
current tax or a substitute user-based fee system, to go into
effect at the end of this period.
The information included in the previous paragraphs 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, load factors,
revenues, unit revenues and unit costs include the airline
pricing environment, fuel costs, low-fare carrier expansion,
cost of safety and security measures, actions of the U.S.,
foreign and local governments, foreign currency exchange rate
fluctuations, the economic environment of the airline industry,
the general economic environment, and other factors discussed
herein.
PART II. OTHER INFORMATION
---------------------------
Item 6. Exhibits and Reports on Form 8-K.
- ------ --------------------------------
(a) Exhibits
A list of exhibits included as part of this Form 10-Q is
set forth in an Exhibit Index which immediately precedes
such exhibits.
(b) No reports on Form 8-K have been filed during the first
quarter of 1997.
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/ 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 8, 1997
Exhibit Index
-------------
Exhibit No. Description
- ---------- -----------
10.1 Supplemental Agreement No. 10 dated as of April 11, 1997
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, (viii) Exhibit 10.41 to UAL's Form 10-K
for the year ended December 31, 1995, and (ix) Exhibits
10.4 and 10.5 to UAL's Form 10-Q for the quarter ended
June 30, 1996, as amended)). (Exhibit 10.1 hereto is
filed as Exhibit 10.1 to UAL's Form 10-Q for the quarter
ended March 31, 1997, and is incorporated herein by
reference with a request for confidential treatment of
certain portions thereof.)
10.2 Supplemental Agreement No. 11 dated as of April 11, 1997
to the 747-400 Purchase Agreement. (Exhibit 10.2 hereto
is filed as Exhibit 10.2 to UAL's Form 10-Q for the
quarter ended March 31, 1997, and is incorporated herein
by reference with a request for confidential treatment
of certain portions thereof.)
10.3 Letter Agreement No. 6-1162-DLJ-891R5 dated April 11,
1997 to the 747-400 Purchase Agreement. (Exhibit 10.3
hereto is filed as Exhibit 10.3 to UAL's Form 10-Q for
the quarter ended March 31, 1997, and is incorporated
herein by reference with a request for confidential
treatment of certain portions thereof.)
10.4 Amendment No. 5 dated August 22, 1996 to the Agreement
dated August 10, 1992 between AVSA, S.A.R.L., as seller,
and United, as buyer, for the acquisition of Airbus
Industrie A320-200 model aircraft (as previously amended
and supplemented, "A320-200 Purchase Agreement" (filed
as Exhibit 10.14 to UAL's Form 10-K for the year ended
December 31, 1992, and incorporated herein by reference;
supplements thereto filed as (i) Exhibits 10.4 and 10.5
to UAL's Form 10-K for the year ended December 31, 1993,
(ii) Exhibits 10.15 and 10.16 to UAL's Form 10-Q for the
quarter ended June 30, 1994, (iii) Exhibit 10.31 to
UAL's Form 10-K for the year ended December 31, 1994,
(iv) Exhibit 10.9 to UAL's Form 10-Q for the quarter
ended June 30, 1995, and (v) Exhibit 10.42 to UAL's Form
10-K for the year ended December 31, 1995)). (Exhibit
10.4 hereto is filed as Exhibit 10.4 to UAL's Form 10-Q
for the quarter ended March 31, 1997, and is
incorporated herein by reference with a request for
confidential treatment of certain portions thereof.)
10.5 Amendment No. 6 dated January 31, 1997 to the A320-200
Purchase Agreement dated August 10, 1992. (Exhibit 10.5
hereto is filed as Exhibit 10.5 to UAL's Form 10-Q for
the quarter ended March 31, 1997, and is incorporated
herein by reference with a request for confidential
treatment of certain portions thereof.)
10.6 Amendment No. 7 dated January __, 1997 to the A320-200
Purchase Agreement dated August 10, 1992. (Exhibit 10.6
hereto is filed as Exhibit 10.6 to UAL's Form 10-Q for
the quarter ended March 31, 1997, 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.
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
1997 1996
(In Millions)
Earnings: -------------
<S> <C> <C>
Earnings before income taxes and
extraordinary item $ 166 $ 10
Fixed charges, from below 235 270
Undistributed earnings of affiliates (25) (20)
Interest capitalized (24) (15)
----- -----
Earnings $ 352 $ 245
===== =====
Fixed charges:
Interest expense $ 70 $ 81
Portion of rental expense
representative of the interest factor 165 189
----- -----
Fixed charges $ 235 $ 270
===== =====
Ratio of earnings to fixed charges 1.50 (a)
===== =====
</TABLE>
- --------------
(a) Earnings were inadequate to cover fixed charges by $25
million in the first quarter of 1996.
<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, 1997 AND CONDENSED STATEMENT OF
CONSOLIDATED FINANCIAL POSITION AS OF MARCH 31, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1,000,000
<S>
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<PERIOD-TYPE> 3-MOS
<CASH> 412
<SECURITIES> 458
<RECEIVABLES> 1,113
<ALLOWANCES> 0
<INVENTORY> 326
<CURRENT-ASSETS> 2,913
<PP&E> 14,706
<DEPRECIATION> 6,079
<TOTAL-ASSETS> 13,578
<CURRENT-LIABILITIES> 5,295
<BONDS> 3,080
0
0
<COMMON> 0
<OTHER-SE> 1,607
<TOTAL-LIABILITY-AND-EQUITY> 13,578
<SALES> 0
<TOTAL-REVENUES> 4,109
<CGS> 0
<TOTAL-COSTS> 3,920
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 70
<INCOME-PRETAX> 166
<INCOME-TAX> 63
<INCOME-CONTINUING> 103
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 103
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
