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United Continental: Issue Date

The following excerpt is from the company's SEC filing.

This investor update provides guidance and certain forward-looking statements about United Continental Holdings, Inc. (the Company or UAL). The information in this investor update contains the preliminary financial and operational outlook for the Company for first-quarter 2016 and forward looking statements for other periods.

First-Quarter 2016 Financial Update

Estimated 1Q 2016

Consolidated Capacity Year-Over-Year Change Higher/(Lower)

Pre-Tax Margin


Consolidated PRASM (¢/ASM)



Cargo Revenue ($M)

Other Revenue ($M)



Non-Fuel Operating Expense

Consolidated CASM Excluding Profit Sharing, Fuel & Third-Party Business Expense

Aircraft Rent ($M)

Depreciation and Amortization ($M)

Consolidated Fuel Expense

Fuel Consumption (Million Gallons)

Fuel Price Excluding Hedges (Price/Gallon)

Operating Cash-Settled Hedge Loss (Price/Gallon)

Fuel Price Including Operating Cash-Settled Hedges (Price/Gallon)

Non-Operating Cash-Settled Hedge Loss

Fuel Price Including All Cash-Settled Hedges (Price/Gallon)

Non-Operating Expense

Effective Income Tax Rate

Gross Capital Expenditures

Debt and Capital Lease Payments ($M)

Diluted Share Count

Quarter End Liquidity ($B)

Unrestricted Cash, Cash Equivalents and Short-Term Investments ($B)

Undrawn Commitments Under Revolving Credit Facility ($B)

Excludes special charges

Third-party business revenue associated with third-party business expense is recorded in other revenue

Fuel price including taxes and fees

This price per gallon corresponds to the fuel expense line of the income statement

This price per gallon corresponds to the impact of non-operating hedges that appear in the non-operating line of the income statement

This price per gallon corresponds to the total economic cost of the Companys fuel consumption including all cash-settled hedges but does not directly correspond to the fuel expense line of the income statement

The Company excludes the non-cash impact of fuel hedges from its non-operating expense guidance and Non-GAAP earnings

Capital expenditures include net purchase deposits and exclude fully reimbursable capital projects and operating leases converted to capital leases

Diluted share count is approximately equal to basic share count


Passenger Revenue

The Company now expects first-quarter 2016 passenger unit revenue to decline between 7.25% and 7.75% year-over-year. The year-over-year performance was primarily impacted by a strong U.S. dollar, lower surcharges, travel reductions from energy dependent corporate customers and a softening in domestic yields. In addition, the Company experienced a larger than anticipated decrease in close-in business travel during the weeks surrounding the Easter holiday and spring break.

Cargo and Other Revenue:

First-quarter 2016 cargo and other revenue is lower than initial expectations, largely driven by cargo yield softness and the effects of a strong U.S. dollar as well as lower than anticipated change fee revenue.

Non-Fuel Expense

The Companys first-quarter 2016 non-fuel unit cost includes approximately 1.5 points of impact from the ratified labor agreements with the pilots and dispatchers. Uniteds non-fuel unit cost performance excluding new labor agreements was approximately flat year-over-year, better than original guidance largely due to the timing of certain expenses shifting into the second quarter of 2016, a stronger than expected U.S. dollar and better than anticipated cost performance.

For 2016, the Company expects to pay approximately 9.5% of total adjusted earnings as profit sharing to employees for adjusted earnings up to a 6.9% adjusted pre-tax margin and approximately 14.7% for any adjusted earnings above that amount. Adjusted earnings for the purposes of profit sharing are calculated as GAAP pre-tax earnings, excluding special items, profit sharing expense and share-based compensation program expense. These estimates are consistent with the current labor agreements. Share-based compensation expense for the purposes of the profit sharing calculation is estimated to be $10 million through the first quarter of 2016.

United expects a total first-quarter 2016 hedge loss of approximately $0.16 per gallon, or approximately $145 million, which is a combination of operating and non-operating cash-settled hedge loss in the table above and will be included in the Companys first-quarter 2016 Non-GAAP earnings. The first-quarter 2016 hedge loss that is included in fuel expense is approximately $0.16 per gallon, or approximately $140 million.

Estimates for first-quarter 2016 non-operating expense include cash-settled hedge losses of approximately $5 million.

Capital Expenditures:

First-quarter 2016 capital expenditures were higher than original guidance, as they included pre-delivery payments (PDPs) associated with the Companys aircraft order of 25 new 737-700 aircraft, to be delivered starting mid-2017, as well as PDPs associated with the acceleration of certain widebody deliveries as part of the Companys decision to accelerate the retirement of its 747s.

The Company...