United Airlines Holdings UAL Form 10-Q filing Q2 FY2025

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

(a) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheets:

The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

(a) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheets:

The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

UNITED AIRLINES HOLDINGS, INC.

UNITED AIRLINES, INC.

COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION

United Airlines Holdings, Inc. (together with its consolidated subsidiaries, "UAL" or the "Company") is a holding company incorporated in Delaware and its wholly-owned subsidiary is United Airlines, Inc. (together with its consolidated subsidiaries, "United"). This Quarterly Report on Form 10-Q is a combined report of UAL and United, including their respective consolidated financial statements. As UAL consolidates United for financial statement purposes, disclosures that relate to activities of United also apply to UAL, unless otherwise noted. United comprises substantially all of UAL's operating revenues, operating expenses, assets, liabilities and operating cash flows. When appropriate, UAL and United are named specifically for their individual contractual obligations and related disclosures, and any significant differences between the operations and results of UAL and United are separately disclosed and explained.

The UAL and United unaudited condensed consolidated financial statements shown here have been prepared as required by the U.S. Securities and Exchange Commission (the "SEC"). Some information and footnote disclosures normally included in financial statements that comply with accounting principles generally accepted in the United States ("GAAP") have been condensed or omitted as permitted by the SEC. The financial statements include all adjustments, including normal recurring adjustments and other adjustments, which are considered necessary for a fair presentation of the Company's financial position and results of operations for the interim periods presented. The UAL and United financial statements should be read together with the information included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the "2024 Form 10-K").

The Company consolidates variable interest entities where it has been determined that the Company is the primary beneficiary of those entities' operations. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current period presentation.

The Company's quarterly financial data is subject to seasonal fluctuations, and its second and third quarter financial results have historically reflected higher travel demand than its first and fourth quarter financial results. Due to these fluctuations, quarterly financial results are not necessarily indicative of financial results for the entire year.

Change in Presentation. In the first quarter of 2025, the Company changed its rounding presentation to the nearest whole number in millions of reported amounts, except per share data or as otherwise designated. As such, certain columns and rows within the financial statements and tables presented may not sum due to rounding. Per unit amounts have been calculated from the underlying whole-dollar amounts. This change is not material and does not impact the comparability of our condensed consolidated financial statements.

Segments. The Company manages it operations as one segment. The Company's chief executive officer is its chief operating decision maker ("CODM"). The CODM assesses performance of the Company and makes resource allocation decisions based on Net income as reported in the Company's statement of consolidated operations. The measure of segment assets is reported on the Company's consolidated balance sheets as Total assets.

NOTE 2 - REVENUE RECOGNITION

Revenue by Geography. The table below presents the Company's operating revenue by principal geographic region (in millions):

Advance ticket sales. In the six months ended June 30, 2025 and 2024, the Company recognized approximately $5.5 billion and $5.0 billion, respectively, of passenger revenue for tickets that were included in Advance ticket sales at the beginning of those periods.

Ancillary services. The Company recorded approximately $1.2 billion and $2.2 billion of ancillary fees within passenger revenue in the three and six months ended June 30, 2025, respectively. The Company recorded approximately $1.2 billion and $2.2 billion of ancillary fees within passenger revenue in the three and six months ended June 30, 2024, respectively.

Frequent flyer deferred revenue. The table below presents a roll forward of Frequent flyer deferred revenue (in millions):

In the three and six months ended June 30, 2025, the Company recognized, in Other operating revenue, $0.8 billion and $1.6 billion, respectively, related to the marketing, advertising, non-travel miles redeemed (net of related costs) and other travel-related benefits of the mileage revenue associated with our various partner agreements including, but not limited to, our JPMorgan Chase Bank, N.A. MileagePlus co-brand agreement. In the three and six months ended June 30, 2024, the Company recognized, in Other operating revenue, $0.7 billion and $1.5 billion, respectively, related to those agreements. The portion related to the MileagePlus miles awarded of the total amounts received from our various partner agreements is deferred and presented in the table above as an increase to Frequent flyer deferred revenue.

NOTE 3 - EARNINGS PER SHARE

The following table shows the computation of UAL's basic and diluted earnings per share, the latter of which uses the treasury stock method to calculate the dilutive effect of UAL's potential common stock (in millions, except per share amounts):

In 2020 and 2021, the Company issued to the United States Department of the Treasury (the "U.S. Treasury") warrants (the "Warrants") to purchase 9,928,349 shares of UAL common stock in connection with the Payroll Support Program established under Division A, Title IV, Subtitle B of the Coronavirus Aid, Relief, and Economic Security ("CARES") Act, the Payroll Support Program Extension established under Division N, Title IV, Subtitle A of the Consolidated Appropriations Act, 2021, the Payroll Support Program 3 established under Title VII, Subtitle C of the American Rescue Plan Act of 2021, and the Airline Loan Program established under Division A, Title IV, Subtitle A of the CARES Act. In August 2024, the holder of the Warrants exercised 6,414,635 of the Warrants in a net share settlement for 2,043,906 shares of UAL common stock. In March 2025, the remaining 3,513,714 Warrants were exercised in a net share settlement for 1,801,430 shares of UAL common stock.

In the three and six months ended June 30, 2025, the Company repurchased, through open market purchases, approximately 3.5 million and 7.6 million shares, respectively, of UAL common stock for a total of approximately $0.2 billion and $0.6 billion, respectively, as part of its share repurchase program. As of July 10, 2025, the dollar value of shares that may yet be purchased under the program is approximately $0.8 billion.

NOTE 4 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The table below presents the components of the Company's accumulated other comprehensive income (loss), net of tax ("AOCI") (in millions):

NOTE 5 - INCOME TAXES

The Company's effective tax rates for the three and six months ended June 30, 2025 were 22.0% and 21.2%, respectively. The Company's effective tax rate for both the three and six months ended June 30, 2024 was 23.9%. The provision for income taxes is based on the estimated annual effective tax rate, which represents a blend of federal, state and foreign taxes and includes the impact of certain nondeductible items. The decrease in the effective tax rate in the three months ended June 30, 2025, as compared to the same period in 2024, was primarily due to a release of valuation allowance related to realized capital gains. The decrease in the effective tax rate in the six months ended June 30, 2025, as compared to the same period in 2024, was primarily due to an increase in excess tax benefits related to stock-based compensation and a release of valuation allowance related to realized capital gains.

NOTE 6 - PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

The Company's net periodic benefit cost includes the following components for the three months ended June 30 (in millions):

The Company's net periodic benefit cost includes the following components for the six months ended June 30 (in millions):

During the three and six months ended June 30, 2025, the Company contributed $59 million to its U.S. domestic tax-qualified defined benefit pension plans.

NOTE 7 - FAIR VALUE MEASUREMENTS, INVESTMENTS AND NOTES RECEIVABLE

The table below presents the value of financial assets measured at fair value on a recurring basis in the Company's financial statements (in millions):

Investments presented in the table above have the same fair value as their carrying amount.

Short-term investments — The short-term investments shown in the table above are classified as available-for-sale and have remaining maturities of less than two years.

Long-term investments: Equity securities — Represents equity and equity-linked securities (such as vested warrants) that make up United's investments in Azul Linhas Aéreas Brasileiras S.A. ("Azul"), Archer Aviation Inc., Eve Holding, Inc. and

Mesa Air Group, Inc. ("Mesa"). United concluded that Mesa is a variable interest entity as of June 30, 2025. United holds a variable interest in Mesa in the form of an approximately 10% equity interest and several loans to Mesa, but United is not the primary beneficiary because it does not have power to direct the activities that most significantly impact Mesa's economic performance.

On May 28, 2025, Azul announced it had entered into restructuring agreements with its key stakeholders and strategic partners, including United, to effectuate a proactive reorganization process. Under the agreement, United and another key Azul stakeholder may provide equity investments of up to $300 million in the aggregate in connection with the reorganization process, subject to the satisfaction of certain conditions.

Other fair value information. The table below presents the carrying amounts and estimated fair values of financial instruments not presented in the table above (in millions). Carrying amounts include any related discounts, premiums and issuance costs.

Fair value of the financial instruments included in the tables above was determined as follows:

Description Fair Value Methodology

Cash and cash equivalents and Restricted cash (current and non-current) The carrying amounts of these assets approximate fair value.

Short-term and Long-term investments Fair values are based on (a) the trading prices of the investment or similar instruments or (b) broker quotes obtained by third-party valuation services.

Long-term debt Fair values are based on either market prices or the discounted amount of future cash flows using our current incremental rate of borrowing for similar liabilities.

Equity Method Investments. As of June 30, 2025, United holds investments, accounted for using the equity method, with a combined carrying amount of approximately $255 million, including the following:

• Republic Airways Holdings Inc. ("Republic Airways"). United holds a 19% minority interest in Republic Airways, which is the parent company of Republic Airways Inc. ("Republic"). Republic currently operates 66 regional aircraft under capacity purchase agreements ("CPAs") with United that have terms through 2037.
• CommuteAir LLC ("CommuteAir"). United owns a 40% minority ownership stake in CommuteAir. CommuteAir currently operates 59 regional aircraft under a CPA with United that has a term through 2028.
• United Airlines Ventures Sustainable Flight Fund (the "Fund"). United holds, through its corporate venture capital arm, United Airlines Ventures, Ltd., a 33% ownership interest in the Fund. The Fund is an investment vehicle designed to invest in start-ups developing technologies focused on decarbonizing aviation and its associated energy supply chains, including through research and production, and technologies associated with sustainable aviation fuel (SAF).

Other Investments. As of June 30, 2025, United has equity investments in a number of companies including a multinational airline holding company, an independent air carrier and others with emerging technologies and sustainable solutions. None of these investments have readily determinable fair values. We account for these investments at cost less impairment, adjusted for observable price changes in orderly transactions for an identical or similar investment of the same issuer. As of June 30, 2025, the carrying amount of these investments was $283 million.

Notes Receivable. As of June 30, 2025, the Company has $74 million of notes receivable, net of allowance for credit losses, the majority of which is from certain of its regional carriers. The current portions of the notes receivable are recorded in Receivables, net. The long-term portion of the notes receivable is recorded in Investments in affiliates and other, net on the Company's consolidated balance sheets.

On April 4, 2025, Mesa entered into an Agreement, Plan of Conversion and Plan of Merger (the "Merger Agreement") with Republic Airways. Subject to the terms and conditions of the Merger Agreement, Republic Airways will merge with and into Mesa, with Mesa continuing as the surviving corporation following the merger (the "Surviving Entity"). At the effective time of

the merger, our equity holdings in both Mesa and Republic Airways will be converted into shares of the new Surviving Entity. Concurrent with the execution of the Merger Agreement, Republic Airways, Mesa and its affiliates, and United entered into a Three Party Agreement that provides for certain actions to be taken subject to the terms and conditions therein to facilitate transactions related to the merger, including United's commitment to facilitate, by making certain financial contributions to Mesa, Mesa's disposition of certain assets and its extinguishment of certain liabilities in exchange for United receiving shares of up to 6% of equity interests of the Surviving Entity.

NOTE 8 - DEBT

As of June 30, 2025, we had $3.0 billion undrawn and available under our revolving credit facility.

The table below presents the Company's contractual principal payments (not including $155 million of unamortized debt discount, premiums and debt issuance costs) as of June 30, 2025 under then-outstanding long-term debt agreements (in millions):

Our debt agreements contain customary terms and conditions as well as various affirmative, negative and financial covenants that, among other things, limit the ability of the Company and its subsidiaries, under certain circumstances, to incur additional indebtedness and pay dividends or repurchase stock. As of June 30, 2025, the Company was in compliance with its debt covenants under these agreements.

On July 7, 2025, the Company voluntarily prepaid in full the outstanding principal balance of the MileagePlus senior secured notes secured by substantially all of the assets of Mileage Plus Holdings, LLC (the "MileagePlus Notes"), which outstanding principal balance was $1.52 billion as of June 30, 2025, in addition to all accrued and unpaid interest under the MileagePlus Notes, and terminated all commitments thereunder.

NOTE 9 - COMMITMENTS, CONTINGENCIES, AND GUARANTEES

Commitments. The table below summarizes United's firm commitments as of June 30, 2025, which include aircraft and related spare engines, aircraft improvements and non-aircraft capital commitments (in billions):

Aircraft commitments are based on contractual scheduled aircraft deliveries. The amount and timing of these commitments could change to the extent that: (i) the Company and the aircraft manufacturers, with whom the Company has existing orders for new aircraft, agree to modify (or further modify) the contracts governing those orders, (ii) rights are exercised pursuant to the relevant agreements to cancel deliveries or modify the timing of deliveries, or (iii) the aircraft manufacturers are unable to deliver in accordance with the terms of those orders.

Guarantees. As of June 30, 2025, United is the guarantor of approximately $2.9 billion in aggregate principal amount of tax-exempt special facility revenue bonds and interest thereon. These bonds, which are issued by various airport authorities or other conduit issuers, are payable solely from rentals paid under long-term agreements with the respective airport authorities or from payments under loan agreements with the respective issuing authorities. The leasing arrangements associated with these obligations are accounted for as operating leases in the Company's financial statements. All of these bonds are due between 2027 and 2041.

Increased Cost Provisions. In United's financing transactions that include loans in which United is the borrower, United typically agrees to reimburse lenders for any reduced returns with respect to the loans due to any change in capital requirements and, in the case of loans with respect to which the interest rate is based on the Secured Overnight Financing Rate ("SOFR"), for certain other increased costs that the lenders incur in carrying these loans as a result of any change in law, subject, in most cases, to obligations of the lenders to take certain limited steps to mitigate the requirement for, or the amount of, such increased costs. At June 30, 2025, the Company had $8.3 billion of floating rate debt with remaining terms of up to approximately 12 years that are subject to these increased cost provisions. In several financing transactions involving loans or leases from non-U.S. entities, with remaining terms of up to approximately 12 years and an aggregate balance of $5.1 billion, the Company

bears the risk of any change in tax laws that would subject loan or lease payments thereunder to non-U.S. entities to withholding taxes, subject to customary exclusions.

Labor Relations. As of June 30, 2025, the Company had approximately 111,300 employees, of whom approximately 82% were represented by various U.S. labor organizations.

In May 2025, the Company reached a Tentative Agreement ("TA") with its employees represented by the Association of Flight Attendants ("AFA") regarding a contract that became amendable in August 2021. The TA includes improvements with respect to scheduling, reserve requirements and other quality of life improvements, as well as pay rate increases during its five-year term. The TA also includes a provision for a one-time payment to employees represented by the AFA upon ratification. Voting to ratify the TA started on July 7, 2025 and will close on July 29, 2025. In the three and six months ended June 30, 2025, the Company recorded, in Special charges, $561 million of expenses relating to this ratification payment.

NOTE 10 - SPECIAL CHARGES

For the three and six months ended June 30, operating and nonoperating special charges and unrealized (gains) losses on investments in the statements of consolidated operations consisted of the following (in millions):

Operating and nonoperating special charges and unrealized (gains) losses on investments included the following:

During the three and six months ended June 30, 2025, the Company recorded $114 million and $222 million, respectively, of net gains on sale of assets and other special charges, which were primarily comprised of $151 million and $261 million, respectively, of gains on various aircraft sale-leaseback transactions. The Company also recorded a $561 million special charge in connection with the TA with its flight attendants represented by the AFA. See Note 9 for more information related to the TA.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

This Management's Discussion and Analysis of Financial Condition and Results of Operations is provided as a supplement to and should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q to enhance the understanding of our results of operations, financial condition and cash flows.

EXECUTIVE SUMMARY

Overview

United Airlines Holdings, Inc. (together with its consolidated subsidiaries, "UAL" or the "Company") is a holding company incorporated in Delaware and its wholly-owned subsidiary is United Airlines, Inc. (together with its consolidated subsidiaries, "United").

This Quarterly Report on Form 10-Q is a combined report of UAL and United, including their respective consolidated financial statements. As UAL consolidates United for financial statement purposes, disclosures that relate to activities of United also apply to UAL, unless otherwise noted. United comprises substantially all of UAL's operating revenues, operating expenses, assets, liabilities and operating cash flows. When appropriate, UAL and United are named specifically for their individual contractual obligations and related disclosures, and any significant differences between the operations and results of UAL and United are separately disclosed and explained. We sometimes use the words "we," "our," "us," and the "Company" in this report for disclosures that relate to all of UAL and United.

Our shared purpose is "Connecting People. Uniting the World." We have the most comprehensive route network among North American carriers, including U.S. mainland hubs in Chicago, Denver, Houston, Los Angeles, New York/Newark, San Francisco and Washington, D.C. The Company transports people and cargo through its mainline operations, which utilize jet aircraft with at least 126 seats, and regional operations, which utilize smaller aircraft that are operated under contract by United's regional carriers. The Company serves virtually every major market around the world, either directly or through participation in Star Alliance®, the world's largest airline alliance network.

Our current expectations described below are forward-looking statements and our actual results and timing may vary materially based on various factors that include, but are not limited to, those discussed below under "Economic and Market Factors," "Governmental Actions" and "Forward-Looking Information" and in Part I, Item 1A. Risk Factors, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the "2024 Form 10-K"). The results presented in this report are not necessarily indicative of future operating results.

Economic and Market Factors

The airline industry is highly competitive, marked by significant competition with respect to routes, fares, airline capacity, schedules (both timing and frequency), services, products, customer service and frequent flyer programs. We, like other companies in our industry, have been subject to these and other industry-specific competitive dynamics. In addition, our operations, supply chain, partners and suppliers have been subject to various global macroeconomic factors. We expect to continue to remain vulnerable to a number of industry-specific and global macroeconomic factors that may cause our actual results of operations to differ from our historical results of operations or current expectations. The economic and market factors and trends that we currently believe are or will be most impactful to our results of operations and financial condition include the following: the execution and effect of our business strategies, including our United Next plan, especially relating to our focus on expanding market and product opportunities and the growth in the scale of our operations; the impact on the Company of significant operational challenges by third parties on which we rely; aircraft delivery delays; rising inflationary pressures; labor market and supply chain constraints and related costs affecting us and our partners; volatile fuel prices; increasing maintenance expenses; changes in interest rates; changes in travel patterns; and changes in general economic conditions in the markets in which the Company operates, including an economic downturn or macroeconomic uncertainty leading to a decrease in demand for air travel or fluctuations in foreign currency exchange rates that may impact international travel demand. We continue to monitor the potential favorable or unfavorable impacts of these and other factors on our business, operations, financial condition, future results of operations, liquidity and financial flexibility, which are dependent on future developments, including as a result of those factors discussed in Part I, Item 1A. Risk Factors, of the 2024 Form 10-K. Our future results of operations may be subject to volatility and our growth plans may be delayed, particularly in the short term, due to the impact of the above factors and trends.

Governmental Actions

We operate in complex, highly regulated environments in the U.S., the European Union, the United Kingdom and other regions around the world. Compliance with laws, regulations, administrative practices and other restrictions or legal requirements in the countries in which we do business is onerous and expensive. In addition, changes to existing legal requirements or the implementation of new legal requirements and any failure to comply with such legal requirements could negatively impact our business, operations, financial condition, future results of operations, liquidity and financial flexibility by increasing the Company's costs, limiting the Company's ability to offer a product, service or feature to customers, impacting customer demand for the Company's products and services and requiring changes to the Company's supply chain and its business. Legal requirements that we currently believe are or will be most impactful to our results of operations and financial condition include the following: the closure of our flying airspace and termination of other operations due to regional conflicts, including the suspension of our overflying in Russian airspace as a result of the Russia-Ukraine military conflict and interruptions of our flying as a result of the military conflicts in the Middle East, as well as any escalation of the broader economic consequences of any conflicts beyond their current scope; delays in aircraft certification (especially relating to the 737 MAX 10 aircraft); increased Federal Aviation Administration oversight of the aircraft production process; any legal requirement that would result in a reshaping of the benefits that we provide to our consumers through our loyalty program or the co-branded credit cards issued by our partner; the effect of trade tariffs and any potential changes to them that we are unable to mitigate; and certain rules and regulations proposed by the U.S. Department of Transportation that would impose additional costs and operational restrictions on airlines. Changes in existing applicable legal requirements or new applicable legal requirements as well as the related interpretations and enforcement practices regarding them, create uncertainty about how such laws and regulations will be understood and applied. As a result, the impact of changing and new legal requirements generally cannot be reasonably predicted and those requirements may ultimately require extensive system and operational changes, be difficult to implement, increase our operating costs and require significant capital expenditures.

RESULTS OF OPERATIONS

The following discussion provides an analysis of our results of operations and reasons for material changes therein for the three and six months ended June 30, 2025, as compared to the corresponding period in 2024.

Second Quarter 2025 Compared to Second Quarter 2024

The Company recorded net income of $1.0 billion for the second quarter of 2025 as compared to $1.3 billion for the second quarter of 2024. Significant components of the Company's operating results for the three months ended June 30 are as follows (in millions, except percentage changes):

Certain consolidated statistical information for the Company's operations for the three months ended June 30 is as follows:

Operating Revenue. The table below shows year-over-year comparisons by type of operating revenue for the three months ended June 30 (in millions, except for percentage changes):

The table below presents selected passenger revenue and operating data, broken out by geographic region, expressed as year-over-year changes:

Passenger revenue increased $0.2 billion, or 1.1%, in the second quarter of 2025 as compared to the year-ago period, primarily due to a 5.9% increase in capacity and a 4.1% increase in the number of passengers flown, partially offset by a 3.2% decrease in yield.

Other operating revenue increased $78 million, or 8.8%, in the second quarter of 2025 as compared to the year-ago period, primarily due to an increase in mileage revenue from non-airline partners, including credit card spending with our co-branded credit card partner, JPMorgan Chase Bank, N.A., as well as an increase in the purchases of United Club memberships.

Operating Expenses. The table below includes data related to the Company's operating expenses for the three months ended June 30 (in millions, except for percentage changes):

Salaries and related costs increased $0.3 billion, or 7.7%, in the second quarter of 2025 as compared to the year-ago period, primarily due to increased pay as a result of the increase in flying activity, a 5.0% increase in headcount, and an increase in pay rates for eligible employee groups.

Aircraft fuel decreased by $0.4 billion, or 11.4%, in the second quarter of 2025 as compared to the year-ago period, due to a lower average price per gallon of fuel, partially offset by increased consumption from increased flying activity.

Landing fees and other rent increased $95 million, or 11.0%, in the second quarter of 2025 as compared to the year-ago period, primarily due to rate increases at various airports and higher landed weight volume due to increased flight activity.

Aircraft maintenance materials and outside repairs increased $149 million, or 20.8%, in the second quarter of 2025 as compared to the year-ago period, primarily due to higher volumes of engine overhauls as well as the timing of repair work.

Regional capacity purchase increased $64 million, or 10.5%, in the second quarter of 2025 as compared to the year-ago period, primarily due to an approximately 9% increase in regional capacity.

Distribution expenses decreased $139 million, or 22.2%, in the second quarter of 2025 as compared to the year-ago period, primarily due to a change in the mix of sales channels as well as the refinement of assumptions used in determining our credit card fees expense.

Aircraft rent increased $27 million, or 67.2%, in the second quarter of 2025 as compared to the year-ago period, primarily due to the addition of new leased aircraft to the Company's fleet.

For details on the Company's Special charges, see Note 10 to the financial statements included in Part I, Item 1 of this report.

Other operating expenses increased $0.3 billion, or 12.5%, in the second quarter of 2025 as compared to the year-ago period, primarily due to an increase in flying activity, including increased costs for onboard catering, supplies and amenities, ground and cargo handling, airport lounge operations and passenger services, as well as expenditures related to employee uniforms and information technology projects and services.

Nonoperating Income (Expense). The table below shows year-over-year comparisons of the Company's nonoperating income (expense) for the three months ended June 30 (in millions, except for percentage changes):

Interest expense decreased $66 million, or 15.5%, in the second quarter of 2025 as compared to the year-ago period, primarily due to lower debt balances as a result of various debt prepayments and scheduled amortization and a reduction in the average cost of debt.

Unrealized gains on investments, net, was $26 million in the second quarter of 2025 as compared to $33 million in unrealized losses in the year-ago period, primarily due to changes in the market value of the Company's investments in equity securities. See Note 7 to the financial statements included in Part I, Item 1 of this report for information related to these equity investments.

Income Taxes. See Note 5 to the financial statements included in Part I, Item 1 of this report for information related to income taxes.

First Six Months 2025 Compared to First Six Months 2024

The Company recorded net income of $1.4 billion in the first six months of 2025 as compared to net income of $1.2 billion in the first six months of 2024. Significant components of the Company's operating results for the six months ended June 30 are as follows (in millions, except percentage changes):

Certain consolidated statistical information for the Company's operations for the six months ended June 30 is as follows:

Operating Revenue. The table below shows year-over-year comparisons by type of operating revenue for the six months ended June 30 (in millions, except for percentage changes):

The table below presents selected passenger revenue and operating data, broken out by geographic region, expressed as year-over-year changes for the six months ended June 30, 2025 compared to the six months ended June 30, 2024:

Passenger revenue increased $0.7 billion, or 2.8%, in the first six months of 2025 as compared to the year-ago period, primarily due to a 5.4% increase in capacity as well as a 3.9% increase in passengers.

Cargo revenue increased $54 million, or 6.7%, in the first six months of 2025 as compared to the year-ago period, primarily due to higher tonnage and higher yields.

Other operating revenue increased $0.2 billion, or 9.6%, in the first six months of 2025 as compared to the year-ago period, primarily due to an increase in mileage revenue from non-airline partners, including credit card spending with our co-branded credit card partner, JPMorgan Chase Bank, N.A., as well as increases in the purchases of United Club memberships, visitor volume and purchases of one-time United Club passes.

Operating Expenses. The table below presents data related to the Company's operating expenses for the six months ended June 30 (in millions, except for percentage changes):

Salaries and related costs increased $0.5 billion, or 6.7%, in the first six months of 2025 as compared to the year-ago period, primarily due to annual wage rate increases across certain employee groups, increased flight activity, and a 5.0% increase in headcount.

Aircraft fuel expense decreased $0.6 billion, or 10.0%, in the first six months of 2025 as compared to the year-ago period, primarily due to a lower average price per gallon of fuel, partially offset by increased consumption from increased flying activity.

Landing fees and other rent increased $164 million, or 9.8%, in the first six months of 2025 as compared to the year-ago period, primarily due to rate increases at various airports, terminal expansions and other increases in the number of airport gates, and higher landed weight volume due to increased flight activity.

Aircraft maintenance materials and outside repairs increased $107 million, or 7.2%, in the first six months of 2025 as compared to the year-ago period, primarily due to engine overhauls and component part repairs driven by higher volumes and cost of materials.

Depreciation expense increased $34 million, or 2.4%, in the first six months of 2025 as compared to the year-ago period, primarily due to the induction of new aircraft and related spare parts, as well as certain capital improvement projects.

Regional capacity purchase increased $129 million, or 10.8%, in the first six months of 2025 as compared to the year-ago period, primarily due to an approximately 13% increase in regional capacity.

Distribution expenses decreased $123 million, or 11.1%, in the first six months of 2025 as compared to the year-ago period, primarily due to a change in the mix of sales channels as well as the refinement of assumptions used in determining our credit card fees expense.

Aircraft rent increased $35 million, or 42.4%, in the first six months of 2025 as compared to the year-ago period, primarily due to the addition of new leased aircraft to the Company's fleet.

For details on the Company's Special charges, see Note 10 to the financial statements included in Part I, Item 1 of this report.

Other operating expenses increased $455 million, or 10.4%, in the first six months of 2025 as compared to the year-ago period, primarily due to an increase in flight activity, including increased costs for onboard catering and amenities, ground and cargo handling, airport lounge operations and passenger services, as well as expenditures related to employee uniforms and information technology projects and services.

Nonoperating Income (Expense). The following table illustrates the year-over-year dollar and percentage changes in the Company's nonoperating income (expense) for the six months ended June 30 (in millions, except for percentage changes):

Interest expense decreased $164 million, or 18.6%, in the first six months of 2025 as compared to the year-ago period, primarily due to lower debt balances as a result of various debt prepayments and scheduled amortization and a reduction in the average cost of debt.

Interest income decreased $36 million, or 9.8%, in the first six months of 2025 as compared to the year-ago period, primarily due to lower interest rates.

Unrealized gains on investments, net, was $5 million in the first six months of 2025 as compared to $70 million in unrealized losses in the year-ago period, primarily due to the change in the market value of the Company's investments in equity securities. See Note 7 to the financial statements included in Part I, Item 1 of this report for information related to these equity investments.

Miscellaneous, net, changed by $67 million in the first six months of 2025 as compared to the year-ago period, primarily due to $35 million of debt extinguishment and modification fees related to the refinancing of the Company's 2021 term loans recorded in the year-ago period, foreign exchange gains recorded in the current period as compared to losses in the year-ago-period and an increase in the benefit from the Company's net periodic benefit cost of its pensions and postretirement benefit plans.

Income Taxes. See Note 5 to the financial statements included in Part I, Item 1 of this report for information related to income taxes.

LIQUIDITY AND CAPITAL RESOURCES

Current Liquidity

We deploy a disciplined and balanced approach to capital allocation, including returns to shareholders through potential share repurchases. As of June 30, 2025, the Company had $15.6 billion in unrestricted cash, cash equivalents and short-term investments, as compared to $14.5 billion at December 31, 2024. We believe that our existing cash, cash equivalents and short-term investments, together with cash generated from operations, will be sufficient to satisfy our anticipated liquidity needs for the next 12 months, and we expect to meet our long-term liquidity needs with our anticipated access to the capital markets and projected cash from operations.

The Company has a $3.0 billion revolving credit facility as of June 30, 2025. The revolving credit facility is secured by certain route authorities and airport slots and gates. No borrowings were outstanding under the revolving credit facility as of June 30, 2025.

On July 7, 2025, the Company voluntarily prepaid in full the outstanding principal balance of the MileagePlus senior secured notes secured by substantially all of the assets of Mileage Plus Holdings, LLC (the "MileagePlus Notes"), which outstanding principal balance was $1.52 billion as of June 30, 2025, in addition to all accrued and unpaid interest under the MileagePlus Notes, and terminated all commitments thereunder.

We have a significant amount of fixed obligations, including debt, leases of aircraft, airport and other facilities, and pension funding obligations. As of June 30, 2025, the Company had approximately $32.8 billion of debt, finance lease, operating lease and other financial liabilities, including $6.7 billion that will become due in the next 12 months. In addition, we have substantial noncancelable commitments for capital expenditures, including the acquisition of certain new aircraft and related spare engines. Our debt agreements contain customary terms and conditions as well as various affirmative, negative and financial covenants that, among other things, limit the ability of the Company and its subsidiaries, under certain circumstances, to incur additional indebtedness and pay dividends or repurchase stock. As of June 30, 2025, the Company was in compliance with its debt covenants under these agreements. As of June 30, 2025, a substantial portion of the Company's assets, principally aircraft and certain related assets, its loyalty program, certain route authorities and airport slots and gates, was pledged under various loan and other agreements. See Note 8 to the financial statements included in Part I, Item 1 of this report for additional information on aircraft financing and other debt instruments.

The Company has backstop financing commitments available from certain of its aircraft manufacturers for a limited number of its future aircraft deliveries, subject to certain customary conditions. See Note 9 to the financial statements included in Part I, Item 1 of this report for additional information on commitments.

As of June 30, 2025, United had firm commitments to purchase aircraft from The Boeing Company ("Boeing") and Airbus S.A.S. ("Airbus") as presented in the table below:

The aircraft listed in the table above are scheduled for delivery through 2033. The amount and timing of the Company's future capital commitments could change to the extent that: (i) the Company and the aircraft manufacturers, with whom the Company has existing orders for new aircraft, agree to modify (or further modify) the contracts governing those orders; (ii) rights are

exercised pursuant to the relevant agreements to cancel deliveries or modify the timing of deliveries; or (iii) the aircraft manufacturers are unable to deliver in accordance with the terms of those orders. See Note 9 to the financial statements included in Part I, Item 1 of this report for additional information on these purchase commitments.

Sources and Uses of Cash

The following table summarizes our cash flows for the six months ended June 30 (in millions):

Operating Activities. Cash flows provided by operating activities increased approximately $0.2 billion in the first six months of 2025 as compared to the year-ago period, primarily due to net working capital changes and higher profitability in the first six months of 2025.

Investing Activities. Cash flows used in investing activities were $3.0 billion in the first six months of 2025 compared to cash flows provided by investing activities of $1.6 billion in the year-ago period, a change of $4.6 billion, primarily due to an increase in the purchase of short-term and other investments as well as a decrease in proceeds from the sale of short-term and other investments.

Financing Activities. Significant financing events in the six months ended June 30, 2025 were as follows:

Debt, Finance Lease and Other Financial Liability Principal Payments. During the six months ended June 30, 2025, the Company made payments for debt, finance leases, and other financial liabilities of $1.6 billion.

Share repurchase. As part of our capital deployment program, the Company's Board of Directors authorized a share repurchase program in October 2024. In the three and six months ended June 30, 2025, the Company repurchased, through open market purchases, approximately 3.5 million and 7.6 million shares, respectively, of UAL common stock for a total of approximately $0.2 billion and $0.6 billion, respectively, as part of its share repurchase program. See Note 3 to the financial statements in Part I, Item 1 of this report and Note 3 to the financial statements in Part II, Item 8 of the 2024 Form 10-K for additional information on the share repurchase program.

Credit Ratings. As of the filing date of this report, UAL and United had the following corporate credit ratings:

S&P Moody's Fitch

UAL BB Ba2 BB

United BB * BB

*The credit agency does not issue corporate credit ratings for subsidiary entities.

The Company has been able to secure financing with investment grade credit ratings for certain enhanced equipment trust certificates ("EETCs"), term loans and secured bond financings. Downgrades from these rating levels, among other things, could restrict the availability, or increase the cost, of future financing for the Company as well as affect the fair market value of existing debt. A rating reflects only the view of a rating agency and is not a recommendation to buy, sell or hold securities. Ratings can be revised upward or downward at any time by a rating agency if such rating agency decides that circumstances warrant such a change. Currently Moody's and Fitch have assigned the Company a positive outlook, while S&P maintains a stable outlook.

Commitments, Contingencies and Liquidity Matters. As described in the 2024 Form 10-K, the Company's liquidity may be adversely impacted by a variety of factors, including, but not limited to, pension funding obligations, reserve requirements associated with credit card processing agreements, guarantees, commitments and contingencies.

See the 2024 Form 10-K and Notes 7, 8 and 9 to the financial statements contained in Part I, Item 1 of this report for additional information.

CRITICAL ACCOUNTING POLICIES

See "Critical Accounting Policies" in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in the 2024 Form 10-K.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

There have been no material changes in market risk from the information provided in Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk, in our 2024 Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Control and Procedures

UAL and United each maintains controls and procedures that are designed to ensure that information required to be disclosed in the reports filed or submitted by UAL and United to the SEC is recorded, processed, summarized and reported, within the time periods specified by the SEC's rules and forms, and is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The management of UAL and United, including the Chief Executive Officer and Chief Financial Officer, performed an evaluation to conclude with reasonable assurance that UAL's and United's disclosure controls and procedures were designed and operating effectively to report the information each company is required to disclose in the reports it files with the SEC on a timely basis. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer of UAL and United have concluded that as of June 30, 2025, disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting during the Quarter Ended June 30, 2025

During the three months ended June 30, 2025, there were no changes in UAL's or United's internal control over financial reporting that materially affected, or are reasonably likely to materially affect, their internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Part I, Item 3, Legal Proceedings, of the 2024 Form 10-K for a description of legal proceedings.

ITEM 1A. RISK FACTORS

See Part I, Item 1A. Risk Factors of the 2024 Form 10-K for a discussion of the risk factors affecting UAL and United.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) None.

(b) None.

(c) Issuer Purchases of Equity Securities

The following table presents information with respect to the Company's repurchases of its UAL common stock during the quarter ended June 30, 2025:

ITEM 5. OTHER INFORMATION

(a) None.

(b) None.

(c) During the three months ended June 30, 2025, no director or "officer" (as defined in Rule 16a-1(f) under the Exchange Act) of the Company or United informed the Company or United of the adoption, modification or termination of a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K under the Exchange Act.

ITEM 6. EXHIBITS.

EXHIBIT INDEX

Exhibit No. / †10.1 / ^10.2 Registrant / UAL / UALUnited Exhibit / Form of Share Unit Award Notice pursuant to the United Airlines Holdings, Inc. 2006 Director Equity Incentive Plan (for awards granted on or after May 2025) / Amendment No. 7, dated as of June 30, 2025, to the Amended and Restated A350-900 Purchase Agreement, dated as of September 1, 2017, including letter agreements related thereto, between Airbus S.A.S. and United Airlines, Inc.

31.1 UAL Certification of the Principal Executive Officer of United Airlines Holdings, Inc. Pursuant to 15 U.S.C. 78m(a) or 78o(d) (Section 302 of the Sarbanes-Oxley Act of 2002) 31.2 UAL Certification of the Principal Financial Officer of United Airlines Holdings, Inc. Pursuant to 15 U.S.C. 78m(a) or 78o(d) (Section 302 of the Sarbanes-Oxley Act of 2002) 31.3 United Certification of the Principal Executive Officer of United Airlines, Inc. Pursuant to 15 U.S.C. 78m(a) or 78o(d) (Section 302 of the Sarbanes-Oxley Act of 2002) 31.4 United Certification of the Principal Financial Officer of United Airlines, Inc. Pursuant to 15 U.S.C. 78m(a) or 78o(d) (Section 302 of the Sarbanes-Oxley Act of 2002) 32.1 UAL Certification of the Chief Executive Officer and Chief Financial Officer of United Airlines Holdings, Inc. Pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002) 32.2 United Certification of the Chief Executive Officer and Chief Financial Officer of United Airlines, Inc. Pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002) (101) UALUnited The following financial statements from the combined Quarterly Report of UAL and United on Form 10-Q for the quarter ended June 30, 2025, formatted in Inline XBRL: (i) Statements of Consolidated Operations, (ii) Statements of Consolidated Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Condensed Statements of Consolidated Cash Flows, (v) Statements of Consolidated Stockholders' Equity and (vi) Combined Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags. (104) UALUnited Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. † Indicates management contract or compensatory plan or arrangement. Pursuant to Item 601(b)(10), United is permitted to omit certain compensation-related exhibits from this report and therefore only UAL is identified as the registrant for purposes of those items. ^ Portions of the referenced exhibit have been omitted pursuant to Item 601(b) of Regulation S-K.