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, 2000
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, 2000
----- --------------
Common Stock ($5 par value) 205
* 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, 2000
- -------------------------------------------------------------------
Index
- -----
PART I. FINANCIAL INFORMATION Page No.
- ------ --------------------- --------
Item 1. Financial Statements
Condensed Statements of Consolidated 3
Financial Position - as of March 31, 2000
(Unaudited) and December 31, 1999
Statements of Consolidated Operations 5
(Unaudited) - for the three months
ended March 31, 2000 and 1999
Condensed Statements of Consolidated 6
Cash Flows (Unaudited) - for the three
months ended March 31, 2000 and 1999
Notes to Consolidated Financial 7
Statements (Unaudited)
Item 2. Management's Discussion and Analysis of 10
Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About 13
Market Risk
PART II. OTHER INFORMATION
- ------- -----------------
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
- ----------
Exhibit Index 16
- -------------
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)
March 31,
2000 December 31,
Assets (Unaudited) 1999
- ------ ----------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 363 $ 235
Short-term investments 364 292
Receivables, net 1,492 1,275
Related party receivables 250 256
Inventories, net 327 340
Income tax receivables 130 85
Deferred income taxes 219 226
Prepaid expenses and other 400 363
------ ------
3,545 3,072
------ ------
Operating property and equipment:
Owned 18,138 17,695
Accumulated depreciation and
amortization (5,302) (5,207)
------ ------
12,836 12,488
------ ------
Capital leases 2,921 3,022
Accumulated amortization (566) (645)
------ ------
2,355 2,377
------ ------
15,191 14,865
------ ------
Other assets:
Investments in affiliates 431 533
Intangibles, net 563 568
Related party receivables 469 465
Aircraft lease deposits 589 594
Prepaid rent 633 626
Other, net 939 820
------ ------
3,625 3,606
------ ------
$22,361 $21,543
====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
<TABLE>
<CAPTION>
United Air Lines, Inc. and Subsidiary Companies
Condensed Statements of Consolidated Financial Position
(In Millions)
March 31,
2000 December 31,
Liabilities and Stockholder's Equity (Unaudited) 1999
- ------------------------------------ ----------- ------------
<S> <C> <C>
Current liabilities:
Short-term borrowings $ - $ 61
Current portions of long-term debt
and capital lease obligations 381 282
Related party debt maturing
within one year 199 187
Advance ticket sales 1,824 1,412
Accounts payable 1,027 1,030
Other 3,152 2,657
------ ------
6,583 5,629
------ ------
Long-term debt 2,634 2,650
------ ------
Long-term obligations under
capital leases 2,257 2,336
------ ------
Other liabilities and deferred credits:
Deferred pension liability 115 70
Postretirement benefit liability 1,527 1,489
Deferred gains 968 986
Other 1,872 1,891
------ ------
4,482 4,436
------ ------
Preferred stock committed to
Supplemental ESOP 798 893
------ ------
Stockholder's equity:
Common stock at par - -
Additional capital invested 235 237
ESOP capital 3,240 3,035
Retained earnings 1,931 2,012
Unearned ESOP preferred stock (47) (28)
Accumulated other comprehensive income 257 352
Other (9) (9)
------ ------
5,607 5,599
------ ------
Commitments and contingent
liabilities (See note) ------ ------
$22,361 $21,543
====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
<TABLE>
<CAPTION>
United Air Lines, Inc. and Subsidiary Companies
Statements of Consolidated Operations (Unaudited)
(In Millions)
Three Months
Ended March 31
--------------
2000 1999
---- ----
<S> <C> <C>
Operating revenues:
Passenger $ 3,967 $ 3,680
Cargo 217 208
Other 349 262
------ ------
4,533 4,150
------ ------
Operating expenses:
Salaries and related costs 1,424 1,409
ESOP compensation expense 91 182
Aircraft fuel 539 395
Commissions 249 283
Purchased services 403 379
Aircraft rent 222 220
Landing fees and other rent 232 227
Depreciation and amortization 235 211
Aircraft maintenance 189 178
Cost of third-party sales 254 123
Other 414 403
------ ------
4,252 4,010
------ ------
Earnings from operations 281 140
------ ------
Other income (expense):
Interest expense (101) (95)
Interest capitalized 20 19
Interest income 15 11
Equity in earnings of affiliates (1) 24
Miscellaneous, net (10) 17
------ ------
(77) (24)
------ ------
Earnings before income taxes and
cumulative effect of accounting change 204 116
Provision for income taxes 76 41
------ ------
Earnings before cumulative effect
of accounting change 128 75
Cumulative effect of accounting
change, net of tax (209) -
------ ------
Net earnings (loss) $ (81) $ 75
====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
<TABLE>
<CAPTION>
United Air Lines, Inc. and Subsidiary Companies
Condensed Statements of Consolidated Cash Flows (Unaudited)
(In Millions)
Three Months
Ended March 31
--------------
2000 1999
---- ----
<S> <C> <C.
Cash and cash equivalents at
beginning of period $ 235 $ 326
------ ------
Cash flows from operating activities 889 759
------ ------
Cash flows from investing activities:
Additions to property and equipment (556) (658)
Proceeds on disposition of property
and equipment 6 113
Decrease (increase) in short-term
investments (72) 7
Increase in related party receivables (4) (18)
Other, net (112) (4)
------ ------
(738) (560)
------ ------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 200 286
Repayment of long-term debt (127) (271)
Principal payments under capital
lease obligations (58) (113)
Purchase of equipment debt certificates
under Company leases - (47)
Decrease in short-term borrowings (61) (134)
Aircraft lease deposits - (30)
Other, net 23 15
------ ------
(23) (294)
------ ------
Increase (decrease) in cash and
cash equivalents 128 (95)
------ ------
Cash and cash equivalents at
end of period $ 363 $ 231
====== ======
Cash paid during the period for:
Interest (net of amounts capitalized) $ 71 $ 55
Income taxes $ 2 $ 25
Non-cash transactions:
Capital lease obligations incurred $ 3 $ 407
Issuance of common stock to
parent company $ - $ 204
</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 1999.
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 employees. Note 2 of the Notes to
Consolidated Financial Statements in the 1999 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 1999 were allocated in March 2000
as follows: 434,465 shares of Class 2 ESOP Preferred Stock were
contributed to the Non-Leveraged ESOP and an additional 248,572
shares were allocated in "book entry" form under the
Supplemental Plan. Also, 2,390,931 shares of Class 1 ESOP
Preferred Stock were allocated under the Leveraged ESOP.
Finally, an additional 626,127 shares of Class 1 and Class 2
ESOP Preferred Stock have been committed to be released by the
Company since January 1, 2000.
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, dividends on ESOP Preferred Stock and certain
nondeductible items.
Segment Information
- -------------------
United has a global route network designed to transport
passengers and cargo between destinations in North America, the
Pacific, Latin America and Europe. These regions constitute
United's four reportable segments.
A reconciliation of the total amounts reported by reportable
segments to the applicable amounts in the financial statements
follows:
<TABLE>
<CAPTION>
(In Millions) Three Months Ended March 31, 2000
- ------------- ---------------------------------
Reportable
Latin Segment Consolidated
Domestic Pacific Atlantic America Total Other Total
-------- ------- -------- ------- ----- ----- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue $3,190 $689 $446 $208 $4,533 $ - $4,533
Fully distributed earnings
before income taxes and
special charges $ 232 $ 32 $ 11 $ 23 $ 298 $ - $ 298
</TABLE>
<TABLE>
<CAPTION>
(In Millions) Three Months Ended March 31, 1999
- ------------- ---------------------------------
Reportable
Latin Segment Consolidated
Domestic Pacific Atlantic America Total Other Total
-------- ------- -------- ------- ----- ----- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue $2,887 $648 $409 $206 $4,150 $ - $4,150
Fully distributed earnings
before income taxes $ 265 $ 1 $ 16 $ 16 $ 298 $ - $ 298
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended
March 31
------------------
(In Millions) 2000 1999
- ------------- ---- ----
<S> <C> <C>
Total fully distributed earnings
for reportable segments $ 298 $ 298
Special charges (3) -
Less: ESOP compensation expense 91 182
---- ----
Total earnings before income taxes
and cumulative effect of accounting
change $ 204 $ 116
==== ====
</TABLE>
During the first quarter, United recorded a special charge
of $3 million associated with the write-down of a non-operating
British Aerospace Advanced Turbo-Prop aircraft previously used in
the United Express operation.
Other Comprehensive Income
- --------------------------
Total comprehensive income (loss) for the three months
ending March 31, 2000 was $(176) million compared to $75 million
for the first quarter 1999. Other comprehensive income consisted
of net unrealized losses of $95 million in 2000. There was no
other comprehensive income in 1999.
Accounting Changes
- ------------------
During the first quarter of 2000, United changed its method
of accounting for the sale of mileage to participating partners
in its Mileage Plus program, in accordance with Staff Accounting
Bulletin No. 101, "Revenue Recognition in Financial Statements."
Under the new accounting method, a portion of the other revenue
from the sale of mileage is deferred and recognized as passenger
revenue when the transportation is provided. Accordingly, United
has recorded a charge of $209 million, net of tax, for the
cumulative effect of a change in accounting principle to reflect
the application of the accounting method to prior years. This
change resulted in a reduction to revenues of approximately $5
million in the first quarter 2000 and would have impacted 1999
first quarter revenues by approximately $7 million. As of March
31, 2000, the deferred revenue balance relating to Mileage Plus
was $376 million.
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, 2000, commitments for the purchase of
property and equipment, principally aircraft, approximated $4.5
billion, after deducting advance payments. An estimated $1.8
billion will be spent during the remainder of 2000, $1.8 billion
in 2001 and $0.9 billion in 2002 and thereafter. The major
commitments are for the purchase of A319, A320, B747, B767 and
B777 aircraft, which are scheduled to be delivered through 2002.
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 $727 million at March 31, 2000, compared to $527
million at December 31, 1999. Cash flows from operating
activities amounted to $889 million. Financing activities
included principal payments under debt and capital lease
obligations of $127 million and $58 million, respectively.
Additionally, the Company issued $200 million in long-term debt
during the period to finance the acquisition of aircraft.
Property additions, including aircraft and aircraft spare
parts, amounted to $556 million. Property dispositions resulted
in proceeds of $6 million. In the first quarter of 2000, United
took delivery of two A320, one B767 and one B777 aircraft. All
of these aircraft were purchased. In addition, United retired
three DC10 aircraft in the first quarter.
At March 31, 2000, commitments for the purchase of
property and equipment, principally aircraft, approximated $4.5
billion, after deducting advance payments. Of this amount, an
estimated $1.8 billion is expected to be spent during the
remainder of 2000. For further details, see "Contingencies and
Commitments" in the Notes to Consolidated Financial Statements.
RESULTS OF OPERATIONS
- ---------------------
Summary of Results
------------------
United's earnings from operations were $281 million in the
first quarter of 2000, compared to operating earnings of $140
million in the first quarter of 1999. United's net earnings
before the cumulative effect of an accounting change were $128
million, compared to net earnings of $75 million in the same
period of 1999.
Specific factors affecting United's consolidated
operations for the first quarter of 2000 are described below.
First Quarter 2000 Compared with First Quarter 1999.
----------------------------------------------------
Operating revenues increased $383 million (9%) and
United's revenue per available seat mile (unit revenue)
increased 9% to 10.66 cents. Passenger revenues increased $287
million (8%) due to an 8% increase in yield to 13.58 cents.
United's revenue passenger miles remained unchanged, while
available seat miles across the system were up 1% over the first
quarter of 1999, resulting in a passenger load factor decrease
of 0.7 point to 68.2%. The following analysis by market is
based on information reported to the U.S. Department of
Transportation:
<TABLE>
<CAPTION>
Increase (Decrease)
-------------------
Available Seat Revenue Passenger Miles Revenue Per Revenue
Miles (Capacity) (Traffic) Passenger Mile (Yield)
---------------- ----------------------- ----------------------
<S> <C> <C> <C>
Domestic 2% 1% 8%
Pacific (3%) (6%) 12%
Atlantic 3% 1% 7%
Latin America (11%) (2%) -
System 1% - 8%
</TABLE>
Cargo revenues increased $9 million (4%), despite a
decrease in cargo yield of 4%. Other operating revenues
increased $87 million (33%) due to increased fuel sales to third
parties, partially offset by the decrease in frequent-flyer
program partner-related revenues as a result of a change in
accounting principle.
Operating expenses increased $242 million (6%) and
United's cost per available seat mile (unit cost) increased 5%,
from 9.49 cents to 10.00 cents, including ESOP compensation
expense. Without the ESOP compensation expense, United's unit
cost would have been 9.78 cents, an increase of 8% from the 1999
first quarter. ESOP compensation expense decreased $91 million
(50%), reflecting the decrease in the estimated average fair
value of ESOP stock committed to be released to employees as a
result of UAL's lower common stock price. Aircraft fuel
increased $144 million (37%) due to a 34% increase in the cost
of fuel from 54.4 cents to 73.0 cents a gallon. Commissions
decreased $34 million (12%) due to a change in the commission
structure implemented in the fourth quarter of 1999.
Depreciation and amortization increased $24 million (11%) due to
an increase in the number of owned aircraft. Cost of third-
party sales increased $131 million (107%) due to costs
associated with fuel sales to third parties.
Other non-operating expense amounted to $77 million in the
first quarter of 2000 compared to $24 million in the first
quarter of 1999. Equity in earnings of affiliates decreased $25
million as a result of United discontinuing the equity method of
accounting for its investment in Galileo. Miscellaneous, net
includes $7 million in losses on currency options and $5 million
of other foreign exchange gains in 2000, compared to $14 million
in gains on written yen call options and $7 million of other
foreign exchange gains in 1999.
LABOR AGREEMENTS
- ----------------
On April 12, 2000, the Company's contract with the Air Line
Pilots' Association International ("ALPA") became amendable. The
Company has been in negotiations with ALPA since December 1998
for a new contract. However, on April 14, 2000, United and ALPA,
in a joint meeting with the National Mediation Board ("NMB"),
briefed the NMB on the status of negotiations and formally
requested their mediation assistance. Under the terms of the
Railway Labor Act, United's current agreement will remain in
effect while negotiations continue.
E-COMMERCE AND MILEAGE PLUS
- ---------------------------
United continues to deliver on its commitment to create
shareholder value by further developing its core airline
business, enhancing the Company's relationships with its
customers and building strategic businesses that leverage the
value of the United franchise.
In January, United announced its intentions to launch an e-
commerce subsidiary that will be dedicated to maximizing the
sale of travel products over the Internet and Internet- enabled
devices. Accordingly, United has established an e-commerce
division, consisting of a cross-functional team of nearly 70
employees from United's marketing and technical disciplines to
develop and expand lower-cost distribution channels and develop
new customer interfaces for enhancing customer service
opportunities; ultimately, this group will be transferred to the
new subsidiary.
A major part of this initiative is the recently redesigned
united.com web site. Gross air bookings on united.com in the
first quarter 2000 grew over 200 percent from the same period
last year. Total revenue earned over the Internet reached $153
million in the first quarter compared to $60 million in 1999.
In addition, United continues to build its Internet network by
establishing and expanding its partnerships with companies such
as GetThere.com, BuyTravel.com and Priceline.com. These
investments build upon United's long-standing investments in
technology ventures such as Galileo International, Inc. and
Equant N.V., which are valued at $384 million and $118 million,
respectively at March 31, 2000.
United's Mileage Plus frequent flyer program continues to
grow due to the success of partnerships such as First USA
Mileage Plus Visa and Master Card, MCI WorldCom and E*TRADE.
Revenue from third-party mileage sales reached $107 million
during the first quarter, compared to $91 million in 1999, as
adjusted for the change in accounting principle.
OUTLOOK FOR 2000
- ----------------
Information regarding guidance for United's 2000 outlook
can be obtained from UAL Corporation's Report on Form 10-Q for
the quarter ended March 31, 2000.
Information included in the "Outlook for 2000" paragraphs
is forward-looking and actual results could differ materially
from expected results. Factors that could significantly impact
expected capacity, international revenues and profits, unit
revenues and fully distributed unit costs include: industry
capacity decisions, the airline pricing environment, fuel prices,
the success of the Company's cost-control efforts, the impact of
the new labor agreement with the IAM, actions of the U.S.,
foreign and local governments, the Pacific economic environment
and travel patterns, foreign currency exchange rate fluctuations,
UAL common stock price fluctuations, the economic environment of
the airline industry and the general economic environment.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
For information regarding the Company's exposure to certain
market risks, see Item 7A. Quantitative and Qualitative
Disclosures About Market Risk in United's Annual Report on Form
10-K for the year 1999. Significant changes which have occurred
since year-end are as follows:
<TABLE>
<CAPTION>
Foreign Currency Risk -
(In millions, except Notional Average Estimated
average contract rates) Amount Contract Rate Fair Value
---------------------- -------- ------------- ----------
(Pay)/Receive*
<S> <C> <C> <C>
Forward exchange contracts
Japanese Yen-Purchased forwards $ 158 105.64 $ 5
-Sold forwards $ 75 108.99 $ -
Hong Kong Dollar-Sold forwards $ 73 7.83 $ -
French Franc-Purchased forwards $ 50 5.05 $ (2)
Euro-Purchased forwards $ 117 1.37 $ (6)
Currency options
Japanese Yen-Purchased put options $ 423 103.66 $ 10
Australian Dollar-Purchased put
options $ 106 0.61 $ 3
British Pound-Purchased put options $ 62 1.53 $ -
Euro-Purchased put options $ 107 0.98 $ 3
Correlation Basket Option-Sold $ 698 N/A $ (5)
</TABLE>
<TABLE>
<CAPTION>
Price Risk (Aircraft fuel) -
(In millions, except Notional Average Estimated
average contract rates) Amount Contract Rate Fair Value
---------------------- -------- ------------- ----------
(Pay)/Receive*
<S> <C> <C> <C>
Purchased call contracts-Crude oil $1,066 $22.45/bbl $ 169
</TABLE>
*Estimated fair values represent the amount United would
pay/receive on March 31, 2000 to terminate the contracts.
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 2000.
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
Executive Vice President - Finance
And Planning, and Chief Financial
Officer (principal financial officer)
By: /s/ M. Lynn Hughitt
-------------------
M. Lynn Hughitt
Vice President and Controller
(principal accounting officer)
Dated: May 5, 2000
Exhibit Index
-------------
Exhibit No. Description
- ---------- -----------
10.1 Employment Agreement between William P. Hobgood and
UAL and United, dated March 1, 2000 (filed as Exhibit
10.1 to UAL's Form 10-Q for the quarter ended March 31,
2000, and incorporated herein by reference).
10.2 Release Agreement between William P. Hobgood and United,
dated March 10, 2000 (filed as Exhibit 10.2 to UAL's Form
10-Q for the quarter ended March 31, 2000, and incorporated
herein by reference).
12 Computation of Ratio of Earnings to Fixed Charges.
27 Financial Data Schedule.
<TABLE>
<CAPTION>
Exhibit 12
United Air Lines, Inc. and Subsidiary Companies
Computation of Ratio of Earnings to Fixed Charges
Three Months Ended
March 31
--------
2000 1999
---- ----
(In Millions)
<S> <C> <C>
Earnings:
Earnings before income taxes $ 204 $ 116
Losses of affiliates - 2
Fixed charges, from below 251 248
Undistributed (earnings) losses
of affiliates 3 (19)
Interest capitalized (20) (19)
---- ----
Earnings $ 438 $ 328
==== ====
Fixed charges:
Interest expense $ 101 $ 95
Portion of rental expense representative
of the interest factor 150 153
---- ----
Fixed charges $ 251 $ 248
==== ====
Ratio of earnings to fixed charges 1.74 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 THREE MONTHS ENDED MARCH 31,
2000 AND CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL
POSITION AS OF MARCH 31, 2000 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1,000,000
<S>
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<PERIOD-TYPE> 3-MOS
<CASH> 363
<SECURITIES> 364
<RECEIVABLES> 1,742
<ALLOWANCES> 0
<INVENTORY> 327
<CURRENT-ASSETS> 3,545
<PP&E> 21,059
<DEPRECIATION> 5,868
<TOTAL-ASSETS> 22,361
<CURRENT-LIABILITIES> 6,583
<BONDS> 4,891
0
0
<COMMON> 0
<OTHER-SE> 5,607
<TOTAL-LIABILITY-AND-EQUITY> 22,361
<SALES> 0
<TOTAL-REVENUES> 4,533
<CGS> 0
<TOTAL-COSTS> 4,252
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 101
<INCOME-PRETAX> 204
<INCOME-TAX> 76
<INCOME-CONTINUING> 28
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 209
<NET-INCOME> (81)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
