Annual Report of American Airlines Group Inc\. for year 2017

|                               |                                                                                |
| ----------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| **Exhibit**

**Number** | **Description**                                                                                |
| 4\.34                         | [Revolving Credit Agreement (2014\-1B), dated as of September 16, 2014, between Wilmington Trust Company, as Subordination Agent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2014\-1B, as Borrower, and Crédit Agricole Corporate and Investment Bank, acting through its New York Branch, as Liquidity Provider (incorporated by reference to Exhibit 4\.15 to American’s Current Report on Form 8\-K filed on September 17, 2014 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312514343482/d790263dex415.htm)                                                                               |
| 4\.35                         | [Indenture, dated as of September 25, 2014, among American Airlines Group Inc\., the Guarantors (as defined therein) and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4\.1 to AAG’s Current Report on Form 8\-K filed on September 26, 2014 (Commission File No\. 1\-8400))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312514353554/d794803dex41.htm)                                                                                |
| 4\.36                         | [First Supplemental Indenture, dated as of December 30, 2015, among American Airlines Group Inc\., American Airlines, Inc\. and Wilmington Trust, National Association, as trustee, to the Indenture dated as of September 25, 2014 (incorporated by reference to Exhibit 4\.2 to AAG’s Current Report on Form 8\-K filed on December 31, 2015 (Commission File No\. 1\-8400))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312515418305/d110614dex42.htm)                                                                                |
| 4\.37                         | [Indenture, dated as of March 5, 2015, among American Airlines Group Inc\., the Guarantors (as defined therein) and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4\.1 to AAG’s Current Report on Form 8\-K filed on March 12, 2015 (Commission File No\. 1\-8400))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312515088934/d891899dex41.htm)                                                                                |
| 4\.38                         | [Form of 6\.125% Senior Notes due 2018 (incorporated by reference to Exhibit A to Exhibit 4\.2 to US Airways Group’s Current Report on Form 8\-K filed on May 24, 2013 (Commission File No\. 1\-8444))\.](http://www.sec.gov/Archives/edgar/data/701345/000119312513235868/d544095dex42.htm)                                                                                |
| 4\.39                         | [Form of 5\.50% Senior Notes due 2019 (incorporated by reference to Exhibit A to Exhibit 4\.1 to AAG’s Current Report on Form 8\-K filed on September 26, 2014 (Commission File No\. 1\-8400))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312514353554/d794803dex41.htm)                                                                                |
| 4\.40                         | [Form of 4\.625% Senior Notes due 2020 (incorporated by reference to Exhibit A to Exhibit 4\.1 to AAG’s Current Report on Form 8\-K filed on March 12, 2015 (Commission File No\. 1\-8400))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312515088934/d891899dex41.htm)                                                                                |
| 4\.41                         | [First Supplemental Indenture, dated as of December 30, 2015, among American Airlines Group Inc\., American Airlines, Inc\. and Wilmington Trust, National Association, as trustee, to the Indenture dated as of March 5, 2015 (incorporated by reference to Exhibit 4\.3 to AAG’s Current Report on Form 8\-K filed on December 31, 2015 (Commission File No\. 1\-8400))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312515418305/d110614dex43.htm)                                                                                |
| 4\.42                         | [Trust Supplement No\. 2015\-1A, dated as of March 16, 2015, between American Airlines, Inc\. and Wilmington Trust Company, as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4\.2 to American’s Current Report on Form 8\-K filed on March 16, 2015 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312515093938/d890456dex42.htm)                                                                                |
| 4\.43                         | [Trust Supplement No\. 2015\-1B, dated as of March 16, 2015, between American Airlines, Inc\. and Wilmington Trust Company, as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4\.3 to American’s Current Report on Form 8\-K filed on March 16, 2015 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312515093938/d890456dex43.htm)                                                                                |
| 4\.44                         | [Intercreditor Agreement (2015\-1), dated as of March 16, 2015, among Wilmington Trust Company, as Trustee of the American Airlines Pass Through Trust 2015\-1A and as Trustee of the American Airlines Pass Through Trust 2015\-1B, Crédit Agricole Corporate and Investment Bank, acting through its New York Branch, as Class A Liquidity Provider and Class B Liquidity Provider, and Wilmington Trust Company, as Subordination Agent (incorporated by reference to Exhibit 4\.4 to American’s Current Report on Form 8\-K filed on March 16, 2015 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312515093938/d890456dex44.htm) |
| 4\.45                         | [Note Purchase Agreement, dated as of March 16, 2015, among American Airlines, Inc\., Wilmington Trust Company, as Pass Through Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent, Wilmington Trust, National Association, as Escrow Agent, and Wilmington Trust Company, as Paying Agent (incorporated by reference to Exhibit 4\.9 to American’s Current Report on Form 8\-K filed on March 16, 2015 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312515093938/d890456dex49.htm)                                                                                |
| 4\.46                         | [Form of Participation Agreement (Participation Agreement among American Airlines, Inc\., Wilmington Trust Company, as Pass Through Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent, Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individual capacity as set forth therein) (incorporated by reference to Exhibit 4\.10 to American’s Current Report on Form 8\-K filed on March 16, 2015 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312515093938/d890456dex410.htm)                                                                 |
| 4\.47                         | [Form of Indenture and Security Agreement (Indenture and Security Agreement between American Airlines, Inc\., and Wilmington Trust Company, as Loan Trustee) (incorporated by reference to Exhibit 4\.11 to American’s Current Report on Form 8\-K filed on March 16, 2015 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312515093938/d890456dex411.htm)                                                                                |
| 4\.48                         | [Form of Pass Through Trust Certificate, Series 2015\-1A (incorporated by reference to Exhibit A to Exhibit 4\.2 to American’s Current Report on Form 8\-K filed on March 16, 2015 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312515093938/d890456dex42.htm)                                                                                |
| 4\.49                         | [Form of Pass Through Trust Certificate, Series 2015\-1B (incorporated by reference to Exhibit A to Exhibit 4\.3 to American’s Current Report on Form 8\-K filed on March 16, 2015 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312515093938/d890456dex43.htm)                                                                                |

179


Annual Report of DELTA AIR LINES, INC\.  for year 2017

[Table of Contents](http://ir.delta.com/.#s38B278257A885660AB93394F5F0EFBED)

Part II

ITEM 5\. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND  ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is listed on the New York Stock Exchange ("NYSE")\. The following table sets forth for the periods indicated the highest and lowest sales price for our common stock as reported on the NYSE and dividends declared during these periods\.

|                 |                  |                  |                                         |
| --------------- | ---------------- | ---------------- | --------------------------------------- |
|                 | **Common Stock** | **Common Stock** | **Cash Dividends Declared (per share)** |
|                 | **High**         | **Low**          | **Cash Dividends Declared (per share)** |
| **Fiscal 2017** |                  |                  |                                         |
| Fourth Quarter  | $56\.84          | $47\.90          | $0\.305                                 |
| Third Quarter   | $55\.75          | $44\.59          | $0\.305                                 |
| Second Quarter  | $54\.53          | $43\.81          | $0\.2025                                |
| First Quarter   | $52\.00          | $44\.47          | $0\.2025                                |
| **Fiscal 2016** |                  |                  |                                         |
| Fourth Quarter  | $52\.76          | $37\.91          | $0\.2025                                |
| Third Quarter   | $41\.35          | $34\.08          | $0\.2025                                |
| Second Quarter  | $49\.80          | $32\.60          | $0\.135                                 |
| First Quarter   | $50\.50          | $40\.03          | $0\.135                                 |

Holders

As of January 31, 2018, there were approximately 2,560 holders of record of our common stock\.

Dividends

Our Board of Directors initiated a quarterly dividend program in the September 2013 quarter of $0\.06 per share\. As reflected above, the Board has increased the quarterly dividend payment several times, most recently to $0\.305 per share in the September 2017 quarter\. The Board expects to be able to continue to pay cash dividends for the foreseeable future, subject to applicable limitations under Delaware law\. Dividend payments will be dependent upon our results of operations, financial condition, cash requirements, future prospects and other factors deemed relevant by the Board of Directors\. In addition, our ability to pay future dividends is subject to compliance with covenants in several of our credit facilities\.

 23


Annual Report of American Airlines Group Inc\. for year 2017

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC\.**

***Benefit Payments***

The following benefit payments, which reflect expected future service as appropriate, are expected to be paid (approximately, in millions):

|                                                   |          |          |          |          |          |                |
| ------------------------------------------------- | -------- | -------- | -------- | -------- | -------- | -------------- |
|                                                   | **2018** | **2019** | **2020** | **2021** | **2022** | **2023\-2027** |
| Pension benefits                                  | $712     | $750     | $795     | $839     | $879     | $4,951         |
| Retiree medical and other postretirement benefits | 96       | 92       | 80       | 75       | 70       | 314            |

***Plan Assets***

The objectives of American’s investment policies are to: maintain sufficient income and liquidity to pay retirement benefits; produce a long\-term rate of return that meets or exceeds the assumed rate of return for plan assets; limit the volatility of asset performance and funded status; and diversify assets among asset classes and investment managers\.

Based on these investment objectives, a long\-term strategic asset allocation has been established\. This strategic allocation seeks to balance the potential benefit of improving funded position with the potential risk that the funded position would decline\. The current strategic target asset allocation is as follows:

|                                 |                   |
| ------------------------------- | ----------------- |
| **Asset Class/Sub\-Class**      | **Allowed Range** |
| Equity                          | 65% \- 90%        |
| Public:                         |                   |
| U\.S\. Large                    | 20% \- 50%        |
| U\.S\. Small/Mid                | 0% \- 10%         |
| International                   | 17% \- 27%        |
| Emerging Markets                | 5% \- 11%         |
| Alternative Investments         | 5% \- 20%         |
| Fixed Income                    | 15% \- 40%        |
| Public:                         |                   |
| U\.S\. Long Duration            | 15% \- 30%        |
| High Yield and Emerging Markets | 0% \- 10%         |
| Private Income                  | 0% \- 10%         |
| Other                           | 0% \- 5%          |
| Cash Equivalents                | 0% \- 5%          |

Public equity and emerging market fixed income securities are used to provide diversification and are expected to generate higher returns over the long\-term than U\.S\. long duration bonds\. Public stocks are managed using a value investment approach in order to participate in the returns generated by stocks in the long\-term, while reducing year\-over\-year volatility\. U\.S\. long duration bonds are used to partially hedge the assets from declines in interest rates\. Alternative (private) investments are used to provide expected returns in excess of the public markets over the long\-term\. Additionally, the pension plan’s master trust engages currency overlay managers in an attempt to increase returns by protecting non\-U\.S\. dollar denominated assets from a rise in the relative value of the U\.S\. dollar\. The pension plan’s master trust also participates in securities lending programs to generate additional income by loaning plan assets to borrowers on a fully collateralized basis\. These programs are subject to market risk\.

Investments in securities traded on recognized securities exchanges are valued at the last reported sales price on the last business day of the year\. Securities traded in the over\-the\-counter market are valued at the last bid price\. The money market fund is valued at fair value which represents the net asset value of the shares of such fund as of the close of business at the end of the period\. Investments in limited partnerships are carried at estimated net asset value as determined by and reported by the general partners of the partnerships and represent the proportionate share of the estimated fair value of the underlying assets of the limited partnerships\. Common/collective trusts are valued at net asset value based on the fair values of the underlying investments of the trusts as determined by the sponsor of the trusts\. The pension plan’s master trust also invests in a 103\-12 investment entity (the 103\-12 Investment Trust) which is designed to invest plan assets of more than one unrelated employer\. The 103\-12 Investment Trust is valued

155


Annual Report of DELTA AIR LINES, INC\.  for year 2018

Extended interruptions or disruptions in service at major airports in which we operate could have a material adverse impact on our operations\.

The airline industry is heavily dependent on business models that concentrate operations in major airports in the United States and throughout the world\. An extended interruption or disruption at an airport where we have significant operations could have a material impact on our business, financial condition and results of operations\.

The airline industry is subject to extensive government regulation, and new regulations may increase our operating costs\.

Airlines are subject to extensive regulatory and legal compliance requirements that result in significant costs\. For instance, the FAA from time to time issues directives and other regulations relating to the maintenance and operation of aircraft that necessitate significant expenditures\. We expect to continue incurring significant expenses to comply with the FAA's regulations\.

Other laws, regulations, taxes and airport rates and charges have also been imposed from time to time that significantly increase the cost of airline operations or reduce revenues\. The industry is heavily taxed\. Additional taxes and fees, if implemented, could negatively impact our results of operations\.

Airport slot access is subject to government regulation and changes in slot regulations or allocations could impose a significant cost on the airlines operating in airports subject to such regulations or allocations\. In addition, the failure of the federal government to upgrade the U\.S\. air traffic control system has resulted in delays and disruptions of air traffic during peak travel periods in certain congested markets\. The failure to improve the air traffic control system could lead to increased delays and inefficiencies in flight operations as demand for U\.S\. air travel increases, having a material adverse effect on our operations\. Failure to update the air traffic control system in a timely manner, and the substantial funding requirements of an updated system that may be imposed on air carriers, may have an adverse impact on our financial condition and results of operations\.

Future regulatory action concerning climate change, aircraft emissions and noise emissions could have a significant effect on the airline industry\. While the specific nature of future actions is hard to predict, new environmental laws or regulations adopted in the U\.S\. or other countries could impose significant additional costs on our operations, either through direct costs in our operations or through increases in costs that our suppliers pass along to us\.

We and other U\.S\. carriers are subject to domestic and foreign laws regarding privacy of passenger and employee data that are not consistent in all countries in which we operate\. In addition to the heightened level of concern regarding privacy of passenger data in the U\.S\., certain European government agencies have recently updated privacy regulations applicable to private industry, including airlines\. Ongoing compliance with these evolving regulatory regimes is expected to result in additional operating costs and could impact our operations and any future expansion\.

Because of the global nature of our business, unfavorable global economic conditions or volatility in currency exchange rates could have a material adverse effect on our business, financial condition and operating results\.

As a result of the discretionary nature of air travel, the airline industry has been cyclical and particularly sensitive to changes in economic conditions\. Because we operate globally, with approximately 30% of our revenues from operations outside of the U\.S\., our business is subject to economic conditions throughout the world\. During periods of unfavorable or volatile economic conditions in the global economy, demand for air travel can be significantly impacted as business and leisure travelers choose not to travel, seek alternative forms of transportation for short trips or conduct business through videoconferencing\. If unfavorable economic conditions occur, particularly for an extended period, our business, financial condition and results of operations may be adversely affected\. In addition, significant or volatile changes in exchange rates between the U\.S\. dollar and other currencies, and the imposition of exchange controls or other currency restrictions, may have a material adverse effect on our liquidity, financial conditions and results of operations\.

 18


Annual Report of ALASKA AIR GROUP, INC\. for year 2019

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors

Alaska Air Group, Inc\.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Alaska Air Group, Inc\. and subsidiaries (the Company) as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive operations, shareholders’ equity, and cash flows for each of the years in the three\-year period ended December 31, 2019, and the related notes (collectively, the consolidated financial statements)\. In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three\-year period ended December 31, 2019, in conformity with U\.S\. generally accepted accounting principles\.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in  Internal Control – Integrated Framework (2013)  issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 12, 2020 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting\.

Change in Accounting Principle

As discussed in Note 6 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2019 due to the adoption of Accounting Standards Codification Topic 842 –  Leases \.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management\. Our responsibility is to express an opinion on these consolidated financial statements based on our audits\. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U\.S\. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB\.

We conducted our audits in accordance with the standards of the PCAOB\. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud\. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks\. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements\. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements\. We believe that our audits provide a reasonable basis for our opinion\.

48


Annual Report of United Continental Holdings, Inc\. and United Airlines, Inc\. for year 2017

##### [Table of Contents](https://www.example.com#toc) #####

***Economic Conditions\.*** The aviation industry in 2018 is expected to show continued growth in the demand for air travel\. Passenger numbers are expected to increase\. Cargo volumes are also expected to grow, with some recovery in yields\. Passenger revenue in all regions are expected to demonstrate improved performance in 2018\.

***Capacity\.*** In 2018, the Company expects its consolidated ASMs to grow between 4% and 6% year\-over\-year\. Most of this growth will be concentrated in our domestic network, especially in our mid\-continent hubs\. We believe greater scale and connectivity at our hubs reinforces our relevance and value proposition to our customers\. Rebanking at our hubs is expected to drive significant additional connection opportunities\. We will also expand flights in non\-peak times of the year to more efficiently use our aircraft and facilities with the objective of driving an increase in profitability\.

***Fuel\.*** The Company’s average aircraft fuel price per gallon including related taxes was $1\.74 in 2017 as compared to $1\.49 in 2016\. The price of jet fuel has increased since January 2016 and remains volatile\. Based on projected fuel consumption in 2018, a one dollar change in the price of a barrel of crude oil would change the Company’s annual fuel expense by approximately $96 million\.

**Results of Operations**

In this section, we compare results of operations for the year ended December 31, 2017 with results of operations for the year ended December 31, 2016, and results of operations for the year ended December 31, 2016 with results of operations for the year ended December 31, 2015\.

*2017 compared to 2016*

***Operating Revenue***

The table below illustrates the year\-over\-year percentage change in the Company’s operating revenues for the years ended December 31 (in millions, except percentage changes):

|                         |           |           |                              |              |
|:----------------------- | ---------:| ---------:| ----------------------------:| ------------:|
|                         |  **2017** |  **2016** | **Increase  <br>(Decrease)** | **% Change** |
| Passenger—Mainline      |  $26,552  |  $25,414  |                      $1,138  |        4\.5  |
| Passenger—Regional      |    5,852  |    6,043  |                        (191) |       (3\.2) |
| Total passenger revenue |   32,404  |   31,457  |                         947  |        3\.0  |
| Cargo                   |    1,035  |      876  |                         159  |       18\.2  |
| Other operating revenue |    4,297  |    4,223  |                          74  |        1\.8  |
| Total operating revenue |  $37,736  |  $36,556  |                      $1,180  |        3\.2  |

29


Annual Report of American Airlines Group Inc\. for year 2017

|                               |                                                                                |
| ----------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| **Exhibit**

**Number** | **Description**                                                                                |
| 4\.164                        | [Form of American Airlines Group Inc\. Indenture for Debt Securities (incorporated by reference to Exhibit 4\.1 to AAG’s Registration Statement on Form S\-3ASR filed on February 22, 2017 (Commission File No\. 333\-216167)\. ](http://www.sec.gov/Archives/edgar/data/4515/000119312517052055/d366751dex41.htm)                                                                                |
| 4\.165                        | [Form of American Airlines, Inc\. Indenture for Debt Securities (incorporated by reference to Exhibit 4\.2 to AAG’s Registration Statement on Form S\-3ASR filed on February 22, 2017 (Commission File No\. 333\-216167)\.](http://www.sec.gov/Archives/edgar/data/4515/000119312517052055/d366751dex42.htm)                                                                                |
| 4\.166                        | [Trust Supplement No\. 2017\-2AA, dated as of August 14, 2017, between American Airlines, Inc\. and Wilmington Trust Company, as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4\.2 to American’s Current Report on Form 8\-K filed on August 14, 2017 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312517257245/d376721dex42.htm)                                                                                |
| 4\.167                        | [Trust Supplement No\. 2017\-2A, dated as of August 14, 2017, between American Airlines, Inc\. and Wilmington Trust Company, as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4\.3 to American’s Current Report on Form 8\-K filed on August 14, 2017 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312517257245/d376721dex43.htm)                                                                                |
| 4\.168                        | [Intercreditor Agreement (2017\-2), dated as of August 14, 2017, among Wilmington Trust Company, as Trustee of the American Airlines Pass Through Trust 2017\-2AA and as Trustee of the American Airlines Pass Through Trust 2017\-2A, National Australia Bank Limited, as Class AA Liquidity Provider and Class A Liquidity Provider, and Wilmington Trust Company, as Subordination Agent (incorporated by reference to Exhibit 4\.4 to American’s Current Report on Form 8\-K filed on August 14, 2017 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312517257245/d376721dex44.htm)                                                                                |
| 4\.169                        | [Deposit Agreement (Class AA), dated as of August 14, 2017, between Wilmington Trust, National Association, as Escrow Agent, and Natixis S\.A\., acting through its New York Branch, as Depositary (incorporated by reference to Exhibit 4\.5 to American’s Current Report on Form 8\-K filed on August 14, 2017 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312517257245/d376721dex45.htm)                                                                                |
| 4\.170                        | [Deposit Agreement (Class A), dated as of August 14, 2017, between Wilmington Trust, National Association, as Escrow Agent, and Natixis S\.A\., acting through its New York Branch, as Depositary (incorporated by reference to Exhibit 4\.6 to American’s Current Report on Form 8\-K filed on August 14, 2017 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312517257245/d376721dex46.htm)                                                                                |
| 4\.171                        | [Escrow and Paying Agent Agreement (Class AA), dated as of August 14, 2017, among Wilmington Trust, National Association, as Escrow Agent, Goldman Sachs & Co\. LLC, Credit Suisse Securities (USA) LLC and Deutsche Bank Securities Inc\., for themselves and on behalf of the several Underwriters, Wilmington Trust Company, not in its individual capacity, but solely as Pass Through Trustee for and on behalf of American Airlines Pass Through Trust 2017\-2AA, and Wilmington Trust Company, as Paying Agent (incorporated by reference to Exhibit 4\.7 to American’s Current Report on Form 8\-K filed on August 14, 2017 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312517257245/d376721dex47.htm) |
| 4\.172                        | [Escrow and Paying Agent Agreement (Class A), dated as of August 14, 2017, among Wilmington Trust, National Association, as Escrow Agent, Goldman Sachs & Co\. LLC, Credit Suisse Securities (USA) LLC and Deutsche Bank Securities Inc\., for themselves and on behalf of the several Underwriters, Wilmington Trust Company, not in its individual capacity, but solely as Pass Through Trustee for and on behalf of American Airlines Pass Through Trust 2017\-2A, and Wilmington Trust Company, as Paying Agent (incorporated by reference to Exhibit 4\.8 to American’s Current Report on Form 8\-K filed on August 14, 2017 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312517257245/d376721dex48.htm)   |
| 4\.173                        | [Note Purchase Agreement, dated as of August 14, 2017, among American Airlines, Inc\., Wilmington Trust Company, as Pass Through Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent, Wilmington Trust, National Association, as Escrow Agent, and Wilmington Trust Company, as Paying Agent (incorporated by reference to Exhibit 4\.9 to American’s Current Report on Form 8\-K filed on August 14, 2017 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312517257245/d376721dex49.htm)                                                                                |
| 4\.174                        | [Form of Participation Agreement (Participation Agreement among American Airlines, Inc\., Wilmington Trust Company, as Pass Through Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent, Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individual capacity as set forth therein) (incorporated by reference to Exhibit B to Exhibit 4\.9 to American’s Current Report on Form 8\-K filed on August 14, 2017 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312517257245/d376721dex49.htm)                                                                                |
| 4\.175                        | [Form of Indenture and Security Agreement (Indenture and Security Agreement between American Airlines, Inc\., and Wilmington Trust Company, as Loan Trustee) (incorporated by reference to Exhibit C to Exhibit 4\.9 to American’s Current Report on Form 8\-K filed on August 14, 2017 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312517257245/d376721dex49.htm)                                                                                |
| 4\.176                        | [Form of Pass Through Trust Certificate, Series 2017\-2AA (incorporated by reference to Exhibit A to Exhibit 4\.2 to American’s Current Report on Form 8\-K filed on August 14, 2017 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312517257245/d376721dex42.htm)                                                                                |
| 4\.177                        | [Form of Pass Through Trust Certificate, Series 2017\-2A (incorporated by reference to Exhibit A to Exhibit 4\.3 to American’s Current Report on Form 8\-K filed on August 14, 2017 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312517257245/d376721dex43.htm)                                                                                |
| 4\.178                        | [Revolving Credit Agreement (2017\-2AA), dated as of August 14, 2017, between Wilmington Trust Company, as Subordination Agent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2017\-2AA, as Borrower, and National Australia Bank Limited, as Liquidity Provider (incorporated by reference to Exhibit 4\.14 to American’s Current Report on Form 8\-K filed on August 14, 2017 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312517257245/d376721dex414.htm)                                                                                |

188


Annual Report of ALASKA AIR GROUP, INC\. for year 2019

Net adjusted debt to earnings before interest, taxes, depreciation, amortization, special items and rent

|                                         |                                         |                                         |                               |
|:--------------------------------------- |:--------------------------------------- |:--------------------------------------- | -----------------------------:|
| *(in millions)*                         | *(in millions)*                         | *(in millions)*                         |             December 31, 2019 |
| Adjusted debt                           | Adjusted debt                           | Adjusted debt                           |                       $2,972  |
| Current portion of long\-term debt      | Current portion of long\-term debt      | Current portion of long\-term debt      |                          235  |
| Total adjusted debt                     | Total adjusted debt                     | Total adjusted debt                     |                        3,207  |
| Less: Cash and marketable securities    | Less: Cash and marketable securities    | Less: Cash and marketable securities    |                       (1,521) |
| Net adjusted debt                       | Net adjusted debt                       | Net adjusted debt                       |                       $1,686  |
| *(in millions)*                         | *(in millions)*                         | *(in millions)*                         | Year\-ended December 31, 2019 |
| GAAP Operating Income                   | GAAP Operating Income                   | GAAP Operating Income                   |                       $1,063  |
| Adjusted for:                           | Adjusted for:                           | Adjusted for:                           |                               |
| Special items                           | Special items                           | Special items                           |                           44  |
| Mark\-to\-market fuel hedge adjustments | Mark\-to\-market fuel hedge adjustments | Mark\-to\-market fuel hedge adjustments |                           (6) |
| Depreciation and amortization           | Depreciation and amortization           | Depreciation and amortization           |                          423  |
| Aircraft rent                           | Aircraft rent                           | Aircraft rent                           |                          331  |
| EBITDAR                                 | EBITDAR                                 | EBITDAR                                 |                       $1,855  |
| Net adjusted debt to EBITDAR            | Net adjusted debt to EBITDAR            | Net adjusted debt to EBITDAR            |                         0\.9x |

The following discussion summarizes the primary drivers of the increase in our cash and marketable securities balance and our expectation of future cash requirements\.

ANALYSIS OF OUR CASH FLOWS

Cash Provided by Operating Activities

Net cash provided by operating activities was $1\.7 billion in 2019 compared to $1\.2 billion in 2018\. The increase of $527 million is primarily due to a $332 million increase in our net income and an increase in advance ticket sales on an expected increase in first quarter capacity as compared to the prior year\. These increases were partially offset by a $65 million voluntary pension contribution\.

We typically generate positive cash flows from operations, and expect to use that cash flow to buy aircraft and capital equipment, to make debt payments, and to return capital to shareholders\.

Cash Used in Investing Activities

Cash used in investing activities was $791 million during 2019, compared to $631 million in 2018\. Our capital expenditures were $696 million, or $264 million lower than in 2018, primarily driven by lower cash outlays for deliveries of and advance deposits on aircraft in 2019 as compared to the same period of 2018\. Our net purchases of marketable securities were $136 million in 2019, compared to net sales of $282 million in 2018\. The shift to net purchases is primarily driven by stronger operating cash flows as compared to 2018\. Internally, we analyze and manage our cash and marketable securities balance in the aggregate\.

Cash Used in Financing Activities

Cash used in financing activities was $813 million during 2019, compared to cash used in financing activities of $647 million in 2018\. During the year, we made debt payments of $1\.1 billion, repurchased $75 million of our common stock and paid cash dividends of $173 million\. These payments were partially offset by the receipt of funds from new secured debt financing of $450 million in 2019\. This compares to our activity in 2018, which consisted of net debt payments of $468 million, repurchases of $50 million of our common stock and cash dividend payments of $158 million\.

We plan to meet our future capital and operating commitments through our cash and investments on hand, internally generated cash from operations, along with additional debt financing if necessary\.

42


Annual Report of DELTA AIR LINES, INC\.  for year 2018

Supplemental Information

We sometimes use information ("non\-GAAP financial measures") that is derived from the Consolidated Financial Statements, but that is not presented in accordance with GAAP\. Under the U\.S\. Securities and Exchange Commission rules, non\-GAAP financial measures may be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results\. Reconciliations below may not calculate exactly due to rounding\.

The following table shows a reconciliation of pre\-tax income (a GAAP measure) to pre\-tax income, adjusted (a non\-GAAP financial measure)\. We adjust pre\-tax income for mark\-to\-market ("MTM") adjustments and settlements on fuel hedge contracts, the MTM adjustments recorded by our equity method investees, Virgin Atlantic and Aeroméxico, and unrealized gains/losses on our equity investments accounted for at fair value, to determine pre\-tax income, adjusted\.

MTM Adjustments and Settlements\.  MTM adjustments are defined as fair value changes recorded in periods other than the settlement period\. Such fair value changes are not necessarily indicative of the actual settlement value of the underlying hedge in the contract settlement period\. Settlements represent cash received or paid on hedge contracts settled during the period\.

Equity Investment MTM Adjustments\.  We record our proportionate share of earnings/loss from our equity investments in Virgin Atlantic and Aeroméxico in non\-operating expense\. We adjust for our equity method investees' hedge portfolio MTM adjustments to allow investors to better understand and analyze our core operational performance in the periods shown\.

Unrealized Gain/Loss on Investments\.  We record the unrealized gains/losses on our equity investments accounted for at fair value in non\-operating expense\. Adjusting for these gains/losses allows investors to better understand and analyze our core operational performance in the periods shown\.

|                                     |                             |                             |
| ----------------------------------- | --------------------------- | --------------------------- |
|                                     | **Year Ended December 31,** | **Year Ended December 31,** |
| **(in millions)**                   | **2018**                    | **2017**                    |
| Pre\-tax income                     | $5,151                      | $5,500                      |
| Adjusted for:                       |                             |                             |
| MTM adjustments and settlements     | (53)                        | (259)                       |
| Equity investment MTM adjustments   | 29                          | 8                           |
| Unrealized gain/loss on investments | (14)                        | —                           |
| Pre\-tax income, adjusted           | $5,113                      | $5,250                      |

The following table shows a reconciliation of TRASM (a GAAP measure) to TRASM, adjusted (a non\-GAAP financial measure)\.

|   |                                                                                |
| - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| • | *Third\-party Refinery Sales\.*  We adjust TRASM for refinery sales to third parties to determine TRASM, adjusted because these revenues are not related to our airline segment\. TRASM, adjusted therefore provides a more meaningful comparison of revenue from our airline operations to the rest of the airline industry\.  |

|                             |                             |                             |
| --------------------------- | --------------------------- | --------------------------- |
|                             | **Year Ended December 31,** | **Year Ended December 31,** |
|                             | **2018**                    | **2017**                    |
| TRASM                       | 16\.87¢                     | 16\.18¢                     |
| Adjusted for:               |                             |                             |
| Third\-party refinery sales | (0\.21)                     | (0\.20)                     |
| TRASM, adjusted             | 16\.66¢                     | 15\.98¢                     |

 48


Annual Report of DELTA AIR LINES, INC\.  for year 2018

Segment Reporting

Segment results are prepared based on our internal accounting methods described below, with reconciliations to consolidated amounts in accordance with GAAP\. Our segments are not designed to measure operating income or loss directly related to the products and services included in each segment on a stand\-alone basis\.

|                                  |             |               |                              |       |                  |
| -------------------------------- | ----------- | ------------- | ---------------------------- | ----- | ---------------- |
| **(in millions)**                | **Airline** | **Refinery**  | **Intersegment Sales/Other** |       | **Consolidated** |
| **Year Ended December 31, 2018** |             |               |                              |       |                  |
| Operating revenue:               | $43,890     | $5,458        |                              |       | $44,438          |
| Sales to airline segment         |             |               | $

(962

)       | ^(1)^ |                  |
| Exchanged products               |             |               | (3,596

)              | ^(2)^ |                  |
| Sales of refined products        |             |               | (352

)                | ^(3)^ |                  |
| Operating income                 | 5,206       | 58            |                              |       | 5,264            |
| Interest expense (income), net   | 334         | (23

)  |                              |       | 311              |
| Depreciation and amortization    | 2,262       | 67            |                              |       | 2,329            |
| Total assets, end of period      | 58,561      | 1,705         |                              |       | 60,266           |
| Capital expenditures             | 5,005       | 163           |                              |       | 5,168            |
| **Year Ended December 31, 2017** |             |               |                              |       |                  |
| Operating revenue:               | $40,636     | $5,039        |                              |       | $41,138          |
| Sales to airline segment         |             |               | $

(886

)       | ^(1)^ |                  |
| Exchanged products               |             |               | (3,240

)              | ^(2)^ |                  |
| Sales of refined products        |             |               | (411

)                | ^(3)^ |                  |
| Operating income                 | 5,856       | 110           |                              |       | 5,966            |
| Interest expense (income), net   | 403         | (7

)   |                              |       | 396              |
| Depreciation and amortization    | 2,175       | 47            |                              |       | 2,222            |
| Total assets, end of period      | 51,544      | 2,127         |                              |       | 53,671           |
| Capital expenditures             | 3,743       | 148           |                              |       | 3,891            |
| **Year Ended December 31, 2016** |             |               |                              |       |                  |
| Operating revenue:               | $39,217     | $3,843        |                              |       | $39,450          |
| Sales to airline segment         |             |               | $

(695

)       | ^(1)^ |                  |
| Exchanged products               |             |               | (2,658

)              | ^(2)^ |                  |
| Sales of refined products        |             |               | (257

)                | ^(3)^ |                  |
| Operating income (loss) ^(4)^    | 7,121       | (125

) |                              |       | 6,996            |
| Interest expense, net            | 386         | 2             |                              |       | 388              |
| Depreciation and amortization    | 1,846       | 40            |                              |       | 1,886            |
| Total assets, end of period      | 50,519      | 1,331         |                              |       | 51,850           |
| Capital expenditures             | 3,270       | 121           |                              |       | 3,391            |

|       |                                                                                |
| ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| ^(1)^ | Represents transfers, valued on a market price basis, from the refinery to the airline segment for use in airline operations\. We determine market price by reference to the market index for the primary delivery location, which is New York Harbor, for jet fuel from the refinery\. |

|       |                                                                                |
| ----- | ------------------------------------------------------------------------------------------------------------------------------ |
| ^(2)^ | Represents value of products delivered under our exchange agreements, as discussed above, determined on a market price basis\. |

|       |                                                                                |
| ----- | ---------------------------------------------------------------------------------------- |
| ^(3)^ | These sales were at or near cost; accordingly, the margin on these sales is de minimis\. |

|       |                                                                                |
| ----- | -------------------------------------------------------------------------------------------------------------------------------------------- |
| ^(4)^ | Includes the impact of pricing arrangements between the airline and refinery segments with respect to the refinery's inventory price risk\.  |

Geographic Information

See  Note 2 , "Revenue Recognition," for information on revenues by geographic region\.

Our tangible assets consist primarily of flight equipment, which is mobile across geographic markets\. Accordingly, assets are not allocated to specific geographic regions\.

 95


Annual Report of Southwest Airlines Co\. for year 2017

|          |                                                                                |
| -------- | ----------------------------------------------------------------------------------------------------------------------------------------- |
| 21       | [Subsidiaries of the Company\.](https://www.example.com/luv-12312017xex21.htm)                                                            |
| 23       | [Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm\.](https://www.example.com/luv-12312017xex23.htm)            |
| 31\.1    | [Rule 13a\-14(a) Certification of Chief Executive Officer\.](https://www.example.com/luv-12312017xex311.htm)                              |
| 31\.2    | [Rule 13a\-14(a) Certification of Chief Financial Officer\.](https://www.example.com/luv-12312017xex312.htm)                              |
| 32       | [Section 1350 Certification of Chief Executive Officer and Chief Financial Officer\. ](https://www.example.com/luv-12312017xex32.htm) (3) |
| 101\.INS | XBRL Instance Document                                                                                |
| 101\.SCH | XBRL Taxonomy Extension Schema Document                                                                                |
| 101\.CAL | XBRL Taxonomy Extension Calculation Linkbase Document                                                                                |
| 101\.DEF | XBRL Taxonomy Extension Definition Linkbase Document                                                                                |
| 101\.LAB | XBRL Extension Labels Linkbase Document                                                                                |
| 101\.PRE | XBRL Taxonomy Extension Presentation Linkbase Document                                                                                |

|     |                                                                                |
| --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| (1) | Pursuant to 17 CFR 240\.24b\-2, confidential information has been omitted and has been filed separately with the Securities and Exchange Commission pursuant to a Confidential Treatment Application filed with the Commission\. |

|     |                                                           |
| --- | --------------------------------------------------------- |
| (2) | Management contract or compensatory plan or arrangement\. |

|     |                                                                                |
| --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| (3) | This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S\-K\. |

A copy of each exhibit may be obtained at a price of 15 cents per page, $10\.00 minimum order, by writing to: Investor Relations, Southwest Airlines Co\., P\.O\. Box 36611, Dallas, Texas 75235\-1611\.

**Item 16\.** ***10\-K Summary***

None\.

122


Annual Report of American Airlines Group Inc\. for year 2019

particularly for our regional subsidiaries and our other regional partners who are being required by market conditions to pay significantly increased wages and large signing bonuses to their pilots in an attempt to achieve desired staffing levels\. The foregoing factors have also led to increased competition from large, mainline carriers attempting to meet their hiring needs\. We believe that this industry\-wide pilot shortage is becoming an increasing problem for airlines in the United States\. Our regional partners have recently been unable to hire adequate numbers of pilots to meet their needs, resulting in a reduction in the number of flights offered, disruptions, increased costs of operations, financial difficulties and other adverse effects, and these circumstances may become more severe in the future and thereby cause a material adverse effect on our business\.

Increases in insurance costs or reductions in insurance coverage may adversely impact our operations and financial results\.

The terrorist attacks of September 11, 2001 led to a significant increase in insurance premiums and a decrease in the insurance coverage available to commercial air carriers\. Accordingly, our insurance costs increased significantly, and our ability to continue to obtain insurance even at current prices remains uncertain\. If we are unable to maintain adequate insurance coverage, our business could be materially and adversely affected\. Additionally, severe disruptions in the domestic and global financial markets could adversely impact the claims paying ability of some insurers\. Future downgrades in the ratings of enough insurers could adversely impact both the availability of appropriate insurance coverage and its cost\. Because of competitive pressures in our industry, our ability to pass along additional insurance costs to passengers is limited\. As a result, further increases in insurance costs or reductions in available insurance coverage could have an adverse impact on our financial results\.

The airline industry is heavily taxed\.

The airline industry is subject to extensive government fees and taxation that negatively impact our revenue and profitability\. The U\.S\. airline industry is one of the most heavily taxed of all industries\. These fees and taxes have grown significantly in the past decade for domestic flights, and various U\.S\. fees and taxes also are assessed on international flights\. For example, as permitted by federal legislation, most major U\.S\. airports impose a per\-passenger facility charge on us\. In addition, the governments of foreign countries in which we operate impose on U\.S\. airlines, including us, various fees and taxes, and these assessments have been increasing in number and amount in recent years\. Moreover, we are obligated to collect a federal excise tax, commonly referred to as the “ticket tax,” on domestic and international air transportation\. We collect the excise tax, along with certain other U\.S\. and foreign taxes and user fees on air transportation (such as passenger security fees), and pass along the collected amounts to the appropriate governmental agencies\. Although these taxes and fees are not our operating expenses, they represent an additional cost to our customers\. There are continuing efforts in Congress and in other countries to raise different portions of the various taxes, fees, and charges imposed on airlines and their passengers, including the passenger facility charge, and we may not be able to recover all of these charges from our customers\. Increases in such taxes, fees and charges could negatively impact our business, results of operations and financial condition\.

Under DOT regulations, all governmental taxes and fees must be included in the prices we quote or advertise to our customers\. Due to the competitive revenue environment, many increases in these fees and taxes have been absorbed by the airline industry rather than being passed on to the customer\. Further increases in fees and taxes may reduce demand for air travel, and thus our revenues\.

Our ability to utilize our NOL Carryforwards may be limited\.

Under the Internal Revenue Code of 1986, as amended (the Code), a corporation is generally allowed a deduction for net operating losses (NOLs) carried over from prior taxable years (NOL Carryforwards)\. As of  December 31, 2019 , we had available NOL Carryforwards of approximately  $9\.1 billion  for regular federal income tax purposes that will expire, if unused, beginning in 2023, and approximately  $3\.0 billion  for state income tax purposes that will expire, if unused, between 2020 and 2039\. Our NOL Carryforwards are subject to adjustment on audit by the Internal Revenue Service and the respective state taxing authorities\.

A corporation’s ability to deduct its federal NOL Carryforwards and to utilize certain other available tax attributes can be substantially constrained under the general annual limitation rules of Section 382 of the Code (Section 382) if it undergoes an “ownership change” as defined in Section 382 (generally where cumulative stock ownership changes among material stockholders exceed 50 percent during a rolling three\-year period)\. In 2013, we experienced an ownership change in connection with our emergence from bankruptcy and US Airways Group experienced an ownership change in connection with the Merger\. The general limitation rules for a debtor in a bankruptcy case are liberalized where the ownership change occurs upon emergence from bankruptcy\. We elected to be covered by certain special rules for federal income tax purposes that permitted approximately  $9\.0 billion  (with  $7\.3 billion  of unlimited NOL still remaining at  December 31, 2019 ) of our

32


Annual Report of American Airlines Group Inc\. for year 2018

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC\.**

***Impacts to*** ***2016*** ***Results***

The effects of the adoption of the New Revenue Standard and New Retirement Standard to American’s consolidated statement of operations for the twelve months ended December 31, 2016 were as follows (in millions):

|                                       |                 |                             |                                         |                                   |                             |               |
| ------------------------------------- | --------------- | --------------------------- | --------------------------------------- | --------------------------------- | --------------------------- | ------------- |
|                                       |                 | **New Revenue Standard**    | **New Revenue Standard**                | **New Revenue Standard**          | **New Retirement Standard** |               |
| **Year Ended  <br>December 31, 2016** | **As Reported** | **Deferred Revenue Method** | **Ancillary Revenue Reclassifications** | **Gross Versus Net Presentation** | **Reclassifications**       | **As Recast** |
| Operating revenues:                   |                 |                             |                                         |                                   |                             |               |
|  Passenger                            | $34,579         | $(147)                      | $2,571                                  | $42                               | $—                          | $37,045       |
|  Cargo                                | 700             | —                           | 36                                      | 49                                | —                           | 785           |
|  Other                                | 4,884           | —                           | (2,607)                                 | 18                                | —                           | 2,295         |
|  Total operating revenues             | 40,163          | (147)                       | —                                       | 109                               | —                           | 40,125        |
|  Total operating expenses             | 34,859          | —                           | —                                       | 109                               | 77                          | 35,045        |
| Operating income                      | 5,304           | (147)                       | —                                       | —                                 | (77)                        | 5,080         |
| Total nonoperating expense, net       | (861)           | —                           | —                                       | —                                 | 77                          | (784)         |
| Income before income taxes            | 4,443           | (147)                       | —                                       | —                                 | —                           | 4,296         |
| Income tax provision                  | 1,662           | (55)                        | —                                       | —                                 | —                           | 1,607         |
| Net income                            | $2,781          | $(92)                       | $—                                      | $—                                | $—                          | $2,689        |

*Standards Effective for 2019 Reporting Periods*

***ASU 2018\-02: Income Statement \- Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income***

This ASU provides financial statement preparers with an option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings due to the U\.S\. federal corporate income tax rate change as a result of the 2017 Tax Act\. The amount of the reclassification is the difference between the amount initially charged or credited directly to other comprehensive income at the previously enacted U\.S\. federal corporate income tax rate that remains in accumulated other comprehensive income and the amount that would have been charged or credited directly to other comprehensive income using the newly enacted U\.S\. federal corporate income tax rate, excluding the effect of any valuation allowance previously charged to income from continuing operations\. This standard is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted\. American will adopt this standard effective January 1, 2019\. The adoption of the standard may impact tax amounts stranded in accumulated other comprehensive income related to American's pension and retiree medical and other postretirement benefit plans\.

***(c) Short\-term Investments***

Short\-term investments are classified as available\-for\-sale and stated at fair value\. Realized gains and losses are recorded in nonoperating expense on American’s consolidated statements of operations\. Unrealized gains and losses are recorded in accumulated other comprehensive loss on American’s consolidated balance sheets\.

***(d) Restricted Cash and Short\-term Investments***

American has restricted cash and short\-term investments related primarily to collateral held to support workers’ compensation obligations\.

***(e) Aircraft Fuel, Spare Parts and Supplies, Net***

Aircraft fuel is recorded on a first\-in, first\-out basis\. Spare parts and supplies are recorded at average costs less an allowance for obsolescence\. These items are expensed when used\.

***(f) Operating Property and Equipment***

Operating property and equipment is recorded at cost and depreciated or amortized to residual values over the asset’s estimated useful life or the lease term, whichever is less, using the straight\-line method\. Residual values for aircraft, engines and related rotable parts are generally 5% to 10% of original cost\. Costs of major improvements that enhance the usefulness

138


Annual Report of Southwest Airlines Co\. for year 2018

in the future\. This is due to the fact that future price changes in these refined products may not be consistent with historical price changes\. Increased volatility in these commodity markets for an extended period of time, especially if such volatility were to worsen, could cause the Company to lose hedge accounting altogether for the commodities used in its fuel hedging program, which would create further volatility in the Company’s GAAP financial results\.

As discussed in Note 10 to the Consolidated Financial Statements, any changes in fair value of cash flow derivatives designated as hedges are offset within AOCI until the period in which the expected future cash flow impacts earnings\. Any changes in the fair value of fuel derivatives that do not qualify for hedge accounting are reflected in earnings within Other (gains) losses, net, in the period of the change\. Because the Company has extensive historical experience in valuing the derivative instruments it holds, and such experience is continually evaluated against its counterparties each period when such instruments expire and are settled for cash, the Company believes it is unlikely that an independent third party would value the Company’s derivative contracts at a significantly different amount than what is reflected in the Company’s financial statements\. In addition, the Company also has bilateral credit provisions in some of its counterparty agreements, which provide for parties (or the Company) to provide cash collateral when the fair value of fuel derivatives with a single party exceeds certain threshold levels\. Since this cash collateral is based on the estimated fair value of the Company’s outstanding fuel derivative contracts, this provides further validation to the Company’s estimate of fair values\.

***Loyalty Accounting***

The Company utilizes estimates in the recognition of revenues and liabilities associated with its loyalty program\. These estimates primarily include the liability associated with Rapid Rewards loyalty member ("Member") account balances that are expected to be redeemed for travel or other products at a future date\. Loyalty account balances include points earned through flights taken, points sold to Customers, or points earned through business partners participating in the loyalty program\.

Under the Southwest Rapid Rewards loyalty program, Members earn points for every dollar spent\. The amount of points earned under the program is based on the fare and fare class purchased, with higher fare products (e\.g\., Business Select) earning more points than lower fare products (e\.g\., Wanna Get Away)\. Each fare class is associated with a points earning multiplier, and points for flights are calculated by multiplying the fare for the flight by the fare class multiplier\. Likewise, the amount of points required to be redeemed for a flight can differ based on the fare purchased\. Under the program, (i) Members are able to redeem their points for every available seat, every day, on every flight, with no blackout dates; and (ii) points do not expire so long as the Member has points\-earning activity during a 24\-month time period\. In addition, Members are able to redeem their points for items other than travel on Southwest Airlines, such as international flights on other airlines, cruises, hotel stays, rental cars, gift cards, event tickets, and more\. In addition to earning points for revenue flights and qualifying purchases with Rapid Rewards Partners, Members also have the ability to purchase, gift, and transfer points, as well as the ability to donate points to selected charities\.

The Company utilizes the deferred revenue method of accounting for points earned through flights taken in its loyalty program\. The Company also sells points and related services to business partners participating in the loyalty program\. Liabilities are recorded for the relative standalone selling price of the Rapid Rewards points which are awarded each period\. The liabilities recorded represent the total number of points expected to be redeemed by Members, regardless of whether the Members may have enough to qualify for a full travel award\. At December 31, 2018, the loyalty liabilities were approximately $3\.0 billion, including $2\.1 billion classified within Air traffic liability and $936 million classified as Air traffic liability – noncurrent\.

In order to determine the value of each loyalty point, certain assumptions must be made at the time of measurement, which include the following:

|   |                                                                                |
| - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| • | *Allocation of Passenger Revenue*  \- Revenues from Passengers, related to travel, who also earn Rapid Rewards Points have been allocated between flight (recognized as revenue when transportation is provided) and Rapid Rewards Points (deferred until points are redeemed or spoil) based on each obligation’s relative standalone selling price\. The Company utilizes historical earning patterns to assist in this allocation\. |

61


Annual Report of American Airlines Group Inc\. for year 2019

If we encounter problems with any of our third\-party regional operators or third\-party service providers, our operations could be adversely affected by a resulting decline in revenue or negative public perception about our services\.

A significant portion of our regional operations are conducted by third\-party operators on our behalf, substantially all of which are provided for under capacity purchase agreements\. Due to our reliance on third parties to provide these essential services, we are subject to the risk of disruptions to their operations, which has in the past and may in the future result from many of the same risk factors disclosed in this report, such as the impact of adverse economic conditions, the inability of third parties to hire or retain skilled personnel, including pilots and mechanics, and other risk factors, such as an out\-of\-court or bankruptcy restructuring of any of our regional operators\. Several of these third\-party regional operators provide significant regional capacity that we would be unable to replace in a short period of time should that operator fail to perform its obligations to us\. Disruptions to capital markets, shortages of skilled personnel and adverse economic conditions in general have subjected certain of these third\-party regional operators to significant financial pressures, which have in the past and may in the future lead to bankruptcies among these operators\. We may also experience disruption to our regional operations if we terminate the capacity purchase agreement with one or more of our current operators and transition the services to another provider\. Any significant disruption to our regional operations would have a material adverse effect on our business, results of operations and financial condition\.

In addition, our reliance upon others to provide essential services on behalf of our operations may result in our relative inability to control the efficiency and timeliness of contract services\. We have entered into agreements with contractors to provide various facilities and services required for our operations, including distribution and sale of airline seat inventory, reservations, provision of information technology and services, regional operations, aircraft maintenance, ground services and facilities and baggage handling\. Similar agreements may be entered into in any new markets we decide to serve\. These agreements are generally subject to termination after notice by the third\-party service provider\. We are also at risk should one of these service providers cease operations, and there is no guarantee that we could replace these providers on a timely basis with comparably priced providers, or at all\. Any material problems with the efficiency and timeliness of contract services, resulting from financial hardships or otherwise, could have a material adverse effect on our business, results of operations and financial condition\.

We rely on third\-party distribution channels and must manage effectively the costs, rights and functionality of these channels\.

We rely on third\-party distribution channels, including those provided by or through global distribution systems (GDSs) (e\.g\., Amadeus, Sabre and Travelport), conventional travel agents, travel management companies and online travel agents (OTAs) (e\.g\., Expedia, including its booking sites Orbitz and Travelocity, and Booking Holdings, including its booking sites Kayak and Priceline), to distribute a significant portion of our airline tickets, and we expect in the future to continue to rely on these channels\. We are also dependent upon the ability and willingness of these distribution channels to expand their ability to distribute and collect revenues for ancillary products (e\.g\., fees for selective seating)\. These distribution channels are more expensive and at present have less functionality in respect of ancillary product offerings than those we operate ourselves, such as our website at  www\.aa\.com \. Certain of these distribution channels also effectively restrict the manner in which we distribute our products generally\. To remain competitive, we will need to manage successfully our distribution costs and rights, increase our distribution flexibility and improve the functionality of our distribution channels, while maintaining an industry\-competitive cost structure\. Further, as distribution technology changes we will need to continue to update our technology by acquiring new technology from third parties, building the functionality ourselves, or a combination, which in any event will likely entail significant technological and commercial risk and involve potentially material investments\. These imperatives may affect our relationships with conventional travel agents ,  travel management companies, GDSs and OTAs, including if consolidation of conventional travel agents, travel management companies, GDSs or OTAs continues, or should any of these parties seek to acquire other technology providers thereby potentially limiting our technology alternatives, such as the proposed acquisition of Farelogix by Sabre\. Any inability to manage our third\-party distribution costs, rights and functionality at a competitive level or any material diminishment or disruption in the distribution of our tickets could have a material adverse effect on our business, results of operations and financial condition\.

29


Annual Report of ALASKA AIR GROUP, INC\. for year 2019

(i) the amount qualified for reimbursement from maintenance deposits held by the lessor associated with the specific major maintenance event or (ii) the qualifying costs related to the specific major maintenance event\. The Company establishes accounting maintenance deposits based on the anticipated timing and cost of the specific major maintenance events, such that the accounting deposits do not exceed the amount qualified for reimbursement\. Aircraft maintenance deposits were $143 million and $90 million as of December 31, 2019 and December 31, 2018\.

Leased Aircraft Return Costs

Cash payments associated with returning leased aircraft are accrued when it is probable that a cash payment will be made and that amount is reasonably estimable, usually no sooner than after the last scheduled maintenance event prior to lease return\. Any accrual is based on the time remaining on the lease, planned aircraft usage and the provisions included in the lease agreement, although the actual amount due to any lessor upon return may not be known with certainty until lease termination\.

As leased aircraft are returned, any payments are charged against the established accrual\. The accrual is part of other current and long\-term liabilities and was not material as of December 31, 2019 and December 31, 2018\. The expense is included in Aircraft maintenance in the consolidated statements of operations\.

Advertising Expenses

The Company's advertising expenses include advertising and promotional costs\. Advertising production costs are expensed as incurred\. Advertising expense was $72 million, $79 million and $91 million during the years ended December 31, 2019, 2018 and 2017\.

Derivative Financial Instruments

The Company's operations are significantly impacted by changes in aircraft fuel prices and interest rates\. In an effort to manage exposure to these risks, the Company periodically enters into fuel and interest rate derivative instruments\. These derivative instruments are recognized at fair value on the balance sheet and changes in the fair value are recognized in AOCL or in the consolidated statements of operations, depending on the nature of the instrument\.

The Company does not apply hedge accounting to its derivative fuel hedge contracts nor does it hold or issue them for trading purposes\. For cash flow hedges related to interest rate swaps, the effective portion of the derivative represents the change in fair value of the hedge that offsets the change in fair value of the hedged item\. To the extent the change in the fair value of the hedge does not perfectly offset the change in the fair value of the hedged item, the ineffective portion of the hedge is immediately recognized in interest expense\.

Fair Value Measurements

Accounting standards define fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date\. The standards also establish a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value\. There are three levels of inputs that may be used to measure fair value:

Level 1  \- Quoted prices in active markets for identical assets or liabilities\.

Level 2  \- Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities\.

Level 3  \- Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities\.

The Company has elected not to use the fair value option provided in the accounting standards for non\-financial instruments\. Accordingly, those assets and liabilities are carried at amortized cost\. For financial instruments, the assets and liabilities are carried at fair value, which is determined based on the market approach or income approach, depending upon the level of inputs used\.

58


Annual Report of United Continental Holdings, Inc\. and United Airlines, Inc\. for year 2017

##### [Table of Contents](https://www.example.com#toc) #####

|               |                                                                                |
| ------------- | ------------------------------------------------------------------------------------------- |
|  **ITEM 9\.** | **CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE\.**  |

None\.

|                |                              |
| -------------- | ---------------------------- |
|  **ITEM 9A\.** | **CONTROLS AND PROCEDURES**  |

***Evaluation of Disclosure Control and Procedures***

UAL and United each maintain 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 they file 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 December 31, 2017, disclosure controls and procedures were effective\.

***Changes in Internal Control over Financial Reporting during the Quarter Ended December 31, 2017***

During the three months ended December 31, 2017, there was no change in UAL’s or United’s internal control over financial reporting that materially affected, or is reasonably likely to materially affect, their internal control over financial reporting\.

102


Annual Report of ALASKA AIR GROUP, INC\. for year 2017

***Economic uncertainty, or another recession, would likely impact demand for our product and could harm our financial condition and results of operations\.***

The airline industry, which is subject to relatively high fixed costs and highly variable and unpredictable demand, is particularly sensitive to changes in economic conditions\. We are also highly dependent on U\.S\. consumer confidence and the health of the U\.S\. economy\. Unfavorable U\.S\. economic conditions have historically driven changes in travel patterns and have resulted in reduced spending for both leisure and business travel\. For some consumers, leisure travel is a discretionary expense, and shorter distance travelers, in particular, have the option to replace air travel with surface travel\. Businesses are able to forgo air travel by using communication alternatives such as videoconferencing or may be more likely to purchase less expensive tickets to reduce costs, which can result in a decrease in average revenue per seat\. Unfavorable economic conditions also hamper the ability of airlines to raise fares to counteract increased fuel, labor and other costs\. Unfavorable or even uncertain economic conditions could negatively affect our financial condition and results of operations\.

***INFORMATION TECHNOLOGY***

***We rely heavily on automated systems to operate our business, and a failure to invest in new technology or a disruption of our current systems or their operators could harm our business\.***

We depend on automated systems to operate our business, including our airline reservation system, our telecommunication systems, our website, our maintenance systems, our check\-in kiosks, mobile devices, and other systems\. Substantially all of our tickets are issued to our guests as electronic tickets, and the majority of our customers check in using our website, airport kiosks, or our mobile application\. We depend on our reservation system to be able to issue, track and accept these electronic tickets\. In order for our operations to work efficiently, we must continue to invest in new technology to ensure that our website, reservation system and check\-in systems are able to accommodate a high volume of traffic, maintain information security and deliver important flight information\. Substantial or repeated website, reservations system or telecommunication systems failures or service disruptions could reduce the attractiveness of our services and cause our guests to do business with another airline\. In addition, we rely on other automated systems for crew scheduling, flight dispatch and other operational needs\. We also plan to move our primary data center location\. Disruptions, failed migration, untimely recovery, or a breach of these systems or the data center could result in the loss of important data, an increase of our expenses, an impact on our operational performance, or a possible temporary cessation of our operations\.

***If we do not maintain the privacy and security of our information, we could damage our reputation and incur substantial legal and regulatory costs\.***

We accept, store and transmit information about our guests, our employees, our business partners, and our business\. In addition, we frequently rely on third\-party hosting sites and data processors, including cloud providers\. Our sensitive information relies on secure transmission over public and private networks\. A compromise of our systems, the security of our infrastructure or those of other business partners that result in our information being accessed or stolen by unauthorized persons could adversely affect our operations and our reputation\.

***FINANCIAL CONDITION AND FINANCIAL MARKETS***

***Our business, financial condition and results of operations are substantially exposed to the volatility of jet fuel prices\. Significant increases in jet fuel costs would harm our business\.***

Fuel costs constitute a significant portion of our total operating expenses\. Future increases in the price of jet fuel may harm our business, financial condition and results of operations unless we are able to increase fares and fees or add additional ancillary services to attempt to recover increasing fuel costs\.

***Our indebtedness and other fixed obligations could lead to liquidity constraints that may restrict our activities\.***

We incurred a significant amount of new debt to finance our acquisition of Virgin America\. We now have, and will continue to have for the foreseeable future, a substantial amount of debt\. Due to our high fixed costs, including aircraft lease commitments and debt service, a decrease in revenues would result in a disproportionately greater decrease in earnings\.

 25


Annual Report of United Continental Holdings, Inc\. and United Airlines, Inc\. for year 2018

[Table of Contents](https://www.example.com#sCFFD9DA26B5659A3A528A4B51B718F87)

|           |                 |                                                                                |
| --------- | --------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
|  ^10\.137 | UAL
United | [Supplemental Agreement No\. 12 to Purchase Agreement No\. 03784, dated June 24, 2016, between The Boeing Company and United Airlines, Inc\. (filed as Exhibit 10\.7 to UAL's Form 10\-Q for the quarter ended June 30, 2016, Commission file number 1\-6033, and incorporated herein by reference)](http://www.sec.gov/Archives/edgar/data/100517/000119312516651221/d188420dex107.htm)                                                            |
|  ^10\.138 | UAL
United | [Supplemental Agreement No\. 13 to Purchase Agreement No\. 03784, dated December 27, 2016, between The Boeing Company and United Airlines, Inc\. (filed as Exhibit 10\.174 to UAL's Form 10\-K for the year ended December 31, 2016, Commission file number 1\-6033, and incorporated herein by reference)](http://www.sec.gov/Archives/edgar/data/100517/000119312517054129/d300268dex10174.htm)                                                   |
|  ^10\.139 | UAL
United | [Purchase Agreement No\. PA\-03776, dated July 12, 2012, between The Boeing Company and United Continental Holdings, Inc\. (filed as Exhibit 10\.3 to UAL's Form 10\-Q for the quarter ended September 30, 2012, Commission file number 1\-6033, and incorporated herein by reference)](http://www.sec.gov/Archives/edgar/data/100517/000119312512435658/d408868dex103.htm)                                                                         |
|  ^10\.140 | UAL
United | [Supplemental Agreement No\. 01 to Purchase Agreement No\. 03776, dated June 17, 2013 (filed as Exhibit 10\.5 to UAL's Form 10\-Q for the quarter ended June 30, 2013, Commission file number 1\-6033, and incorporated herein by reference)](http://www.sec.gov/Archives/edgar/data/100517/000119312513302696/d552832dex105.htm)                                                                                |
|  ^10\.141 | UAL
United | [Purchase Agreement Assignment to Purchase Agreement No\. 03776, dated October 23, 2013, between United Continental Holdings, Inc\. and United Airlines, Inc\. (filed as Exhibit 10\.3 to UAL's Form 10\-Q for the quarter ended September 30, 2013, Commission file number 1\-6033, and incorporated herein by reference)](http://www.sec.gov/Archives/edgar/data/100517/000119312513409916/d578285dex103.htm)                                     |
|  ^10\.142 | UAL
United | [Supplemental Agreement No\. 02 to Purchase Agreement No\. 03776, dated January 14, 2015 (filed as Exhibit 10\.5 to UAL's Form 10\-Q for the quarter ended March 31, 2015, Commission file number 1\-6033, and incorporated herein by reference)](http://www.sec.gov/Archives/edgar/data/100517/000119312515144255/d891332dex105.htm)                                                                                |
|  ^10\.143 | UAL
United | [Supplemental Agreement No\. 03 to Purchase Agreement No\. 03776, dated May 26, 2015 (filed as Exhibit 10\.4 to UAL's Form 10\-Q for the quarter ended June 30, 2015, Commission file number 1\-10323, and incorporated herein by reference)](http://www.sec.gov/Archives/edgar/data/100517/000119312515261239/d941677dex104.htm)                                                                                |
|  ^10\.144 | UAL
United | [Supplemental Agreement No\. 04 to Purchase Agreement No\. 03776, dated June 12, 2015 (filed as Exhibit 10\.5 to UAL's Form 10\-Q for the quarter ended June 30, 2015, Commission file number 1\-10323, and incorporated herein by reference)](http://www.sec.gov/Archives/edgar/data/100517/000119312515261239/d941677dex105.htm)                                                                                |
|  ^10\.145 | UAL
United | [Supplemental Agreement No\. 5 to Purchase Agreement No\. 03776, dated January 20, 2016, between The Boeing Company and United Airlines, Inc\. (filed as Exhibit 10\.1 to UAL's Form 10\-Q for the quarter ended March 31, 2016, Commission file number 1\-6033, and incorporated herein by reference)](http://www.sec.gov/Archives/edgar/data/100517/000119312516550432/d116267dex101.htm)                                                         |
|  ^10\.146 | UAL
United | [Supplemental Agreement No\. 6 to Purchase Agreement No\. 03776, dated February 8, 2016, between The Boeing Company and United Airlines, Inc\. (filed as Exhibit 10\.3 to UAL's Form 10\-Q for the quarter ended March 31, 2016, Commission file number 1\-6033, and incorporated herein by reference)](http://www.sec.gov/Archives/edgar/data/100517/000119312516550432/d116267dex103.htm)                                                         |
|  ^10\.147 | UAL
United | [Supplemental Agreement No\. 7 to Purchase Agreement No\. 03776, dated December 27, 2016, between The Boeing Company and United Airlines, Inc\. (filed as Exhibit 10\.183 to UAL's Form 10\-K for the year ended December 31, 2016, Commission file number 1\-6033, and incorporated herein by reference)](http://www.sec.gov/Archives/edgar/data/100517/000119312517054129/d300268dex10183.htm)                                                    |
|  ^10\.148 | UAL
United | [Supplemental Agreement No\. 8, including exhibits and side letters, to Purchase Agreement No\. 03776, dated June 7, 2017, between The Boeing Company and United Airlines, Inc\. (filed as Exhibit 10\.3 to UAL's Form 10\-Q for the quarter ended June 30, 2017, Commission file number 1\-6033, and incorporated herein by reference)](http://www.sec.gov/Archives/edgar/data/100517/000119312517231250/d414345dex103.htm)                        |
|  ^10\.149 | UAL
United | [Supplemental Agreement No\. 9, including exhibits and side letters, to Purchase Agreement No\. 03776, dated June 15, 2017, between The Boeing Company and United Airlines, Inc\. (filed as Exhibit 10\.4 to UAL's Form 10\-Q for the quarter ended June 30, 2017, Commission file number 1\-6033, and incorporated herein by reference)](http://www.sec.gov/Archives/edgar/data/100517/000119312517231250/d414345dex104.htm)                       |
|  ^10\.150 | UAL
United | [Supplemental Agreement No\. 10, including exhibits and side letters, to Purchase Agreement No\. 03776, dated as of May 15, 2018, between The Boeing Company and United Airlines, Inc\. (filed as Exhibit 10\.2 to UAL's Form 10\-Q for the quarter ended June 30, 2018, Commission file number 1\-6033, and incorporated herein by reference)](http://www.sec.gov/Archives/edgar/data/100517/000010051718000012/ual_06301810qex102.htm)            |
|  ^10\.151 | UAL
United | [Supplemental Agreement No\. 11, including exhibits and side letters, to Purchase Agreement No\. 03776, dated as of September 25, 2018, between The Boeing Company and United Airlines, Inc\. (filed as Exhibit 10\.1 to UAL's Form 10\-Q for the quarter ended September 30, 2018, Commission file number 1\-6033, and incorporated herein by reference)](http://www.sec.gov/Archives/edgar/data/100517/000010051718000028/ual_09301810qex101.htm) |

106