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

10\-K 1 ual\_201810k\.htm 10\-K

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, DC 20549**

**FORM 10\-K**

|   |                                                                                |
| - | ---------------------------------------------------------------------------------------- |
| x | **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

**For the fiscal year ended** **December 31, 2018**

**OR**

|   |                                                                                |
| - | -------------------------------------------------------------------------------------------- |
| o | **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

**For the transition period from to**

![unitedcoverlogo\.jpg](https://www.example.com/unitedcoverlogo.jpg)

|                                       |                                                                                |                                       |                                                       |
| ------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------- | ----------------------------------------------------- |
| **Commission**

**File Number** | **Exact Name of Registrant as**

**Specified in its Charter, Principal Executive**

**Office Address, Zip Code and**

**Telephone Number, Including Area Code** | **State of**

**Incorporation** | **I\.R\.S\. Employer**

**Identification No\.** |
| 001\-06033                            | **United Continental Holdings, Inc\. 233 South Wacker Drive Chicago, Illinois 60606 (872) 825\-4000**                                                                              | Delaware                              | 36\-2675207                                           |
| 001\-10323                            | **United Airlines, Inc\. 233 South Wacker Drive Chicago, Illinois 60606 (872) 825\-4000**                                                                                | Delaware                              | 74\-2099724                                           |

**Securities registered pursuant to Section 12(b) of the Act:**

|                                    |                                |                                               |
| ---------------------------------- | ------------------------------ | --------------------------------------------- |
|                                    | **Title of Each Class**        | **Name of Each Exchange on Which Registered** |
| United Continental Holdings, Inc\. | Common Stock, $0\.01 par value | The Nasdaq Stock Market LLC                   |
| United Airlines, Inc\.             | None                           | None                                          |

**Securities registered pursuant to Section 12(g) of the Act:**

|                                    |      |
| ---------------------------------- | ---- |
| United Continental Holdings, Inc\. | None |
| United Airlines, Inc\.             | None |

|                                                                                |                                                                                |                                                                                |                                                                                |                                                                                |                                                                                |
| ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Indicate by check mark if the registrant is a well\-known seasoned issuer, as defined in Rule 405 of the Securities Act\.                                                                                | Indicate by check mark if the registrant is a well\-known seasoned issuer, as defined in Rule 405 of the Securities Act\.                                                                                | Indicate by check mark if the registrant is a well\-known seasoned issuer, as defined in Rule 405 of the Securities Act\.                                                                                | Indicate by check mark if the registrant is a well\-known seasoned issuer, as defined in Rule 405 of the Securities Act\.                                                                                |                                                                                |                                                                                |
| United Continental Holdings, Inc\.                                                                                | Yes  x  No  o                                                                                |                                                                                |                                                                                |                                                                                |                                                                                |
| United Airlines, Inc\.                                                                                | Yes  x  No  o                                                                                |                                                                                |                                                                                |                                                                                |                                                                                |
| Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act                                                                                | Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act                                                                                | Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act                                                                                | Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act                                                                                |                                                                                |                                                                                |
| United Continental Holdings, Inc\.                                                                                | Yes  o  No  x                                                                                |                                                                                |                                                                                |                                                                                |                                                                                |
| United Airlines, Inc\.                                                                                | Yes  o  No  x                                                                                |                                                                                |                                                                                |                                                                                |                                                                                |
| Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days\.              | Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days\.              | Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days\.              | Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days\.              | Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days\.              | Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days\.              |
| United Continental Holdings, Inc\.                                                                                | Yes  x  No  o                                                                                |                                                                                |                                                                                |                                                                                |                                                                                |
| United Airlines, Inc\.                                                                                | Yes  x  No  o                                                                                |                                                                                |                                                                                |                                                                                |                                                                                |
| Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S\-T (§232\.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files)\.                                                | Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S\-T (§232\.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files)\.                                                | Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S\-T (§232\.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files)\.                                                | Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S\-T (§232\.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files)\.                                                | Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S\-T (§232\.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files)\.                                                | Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S\-T (§232\.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files)\.                                                |
| United Continental Holdings, Inc\.                                                                                | Yes  x  No  o                                                                                |                                                                                |                                                                                |                                                                                |                                                                                |
| United Airlines, Inc\.                                                                                | Yes  x  No  o                                                                                |                                                                                |                                                                                |                                                                                |                                                                                |
| Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S\-K (§229\.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10\-K or any amendment to this Form 10\-K \. | Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S\-K (§229\.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10\-K or any amendment to this Form 10\-K \. | Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S\-K (§229\.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10\-K or any amendment to this Form 10\-K \. | Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S\-K (§229\.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10\-K or any amendment to this Form 10\-K \. | Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S\-K (§229\.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10\-K or any amendment to this Form 10\-K \. | Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S\-K (§229\.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10\-K or any amendment to this Form 10\-K \. |
| United Continental Holdings, Inc\.                                                                                | x                                                                                |                                                                                |                                                                                |                                                                                |                                                                                |
| United Airlines, Inc\.                                                                                | x                                                                                |                                                                                |                                                                                |                                                                                |                                                                                |
| Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non\-accelerated filer, a smaller reporting company, or an emerging growth company\. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b\-2 of the Exchange Act\.        | Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non\-accelerated filer, a smaller reporting company, or an emerging growth company\. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b\-2 of the Exchange Act\.        | Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non\-accelerated filer, a smaller reporting company, or an emerging growth company\. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b\-2 of the Exchange Act\.        | Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non\-accelerated filer, a smaller reporting company, or an emerging growth company\. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b\-2 of the Exchange Act\.        | Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non\-accelerated filer, a smaller reporting company, or an emerging growth company\. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b\-2 of the Exchange Act\.        | Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non\-accelerated filer, a smaller reporting company, or an emerging growth company\. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b\-2 of the Exchange Act\.        |
| United Continental Holdings, Inc\.                                                                                | Large accelerated filer  x                                                                                | Accelerated filer  o                                                                                | Non\-accelerated filer  o                                                                                | Smaller reporting company  o                                                                                | Emerging growth company  o                                                                                |
| United Airlines, Inc\.                                                                                | Large accelerated filer  o                                                                                | Accelerated filer  o                                                                                | Non\-accelerated filer  x                                                                                | Smaller reporting company  o                                                                                | Emerging growth company  o                                                                                |
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act\.                                                                                | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act\.                                                                                | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act\.                                                                                | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act\.                                                                                | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act\.                                                                                | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act\.                                                                                |
| United Continental Holdings, Inc\.                                                                                | o                                                                                |                                                                                |                                                                                |                                                                                |                                                                                |
| United Airlines, Inc\.                                                                                | o                                                                                |                                                                                |                                                                                |                                                                                |                                                                                |
| Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b\-2 of the Act)\.                                                                                | Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b\-2 of the Act)\.                                                                                | Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b\-2 of the Act)\.                                                                                | Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b\-2 of the Act)\.                                                                                | Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b\-2 of the Act)\.                                                                                |                                                                                |
| United Continental Holdings, Inc\.                                                                                | Yes  o  No  x                                                                                |                                                                                |                                                                                |                                                                                |                                                                                |
| United Airlines, Inc\.                                                                                | Yes  o  No  x                                                                                |                                                                                |                                                                                |                                                                                |                                                                                |

The aggregate market value of common stock held by non\-affiliates of United Continental Holdings, Inc\. was $17,844,650,113 as of June 29, 2018, based on the closing sale price of $69\.73 on that date\. There is no market for United Airlines, Inc\. common stock\.

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of February 22, 2019\.

|                                    |                                                                                |
| ---------------------------------- | -------------------------------------------------------------------------------------------------- |
| United Continental Holdings, Inc\. | 266,727,577 shares of common stock ($0\.01 par value)                                              |
| United Airlines, Inc\.             | 1,000 shares of common stock ($0\.01 par value) (100% owned by United Continental Holdings, Inc\.) |

This combined Form 10\-K is separately filed by United Continental Holdings, Inc\. and United Airlines, Inc\.

**OMISSION OF CERTAIN INFORMATION**

United Airlines, Inc\. meets the conditions set forth in General Instruction I(1)(a) and (b) of Form 10\-K and is therefore filing this form with the reduced disclosure format allowed under that General Instruction\.

**DOCUMENTS INCORPORATED BY REFERENCE**

Certain information required by Items 10, 11, 12 and 13 of Part III of this Form 10\-K is incorporated by reference for United Continental Holdings, Inc\. from its definitive proxy statement for its 2019 Annual Meeting of Stockholders\.


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

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

Additionally, forward\-looking statements include statements that do not relate solely to historical facts, such as statements which identify uncertainties or trends, discuss the possible future effects of current known trends or uncertainties, or which indicate that the future effects of known trends or uncertainties cannot be predicted, guaranteed or assured\. All forward\-looking statements in this report are based upon information available to us on the date of this report\. We undertake no obligation to publicly update or revise any forward\-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, except as required by applicable law\.

Our actual results could differ materially from these forward\-looking statements due to numerous factors including, without limitation, the following: general economic conditions (including interest rates, foreign currency exchange rates, investment or credit market conditions, crude oil prices, costs of aircraft fuel and energy refining capacity in relevant markets); economic and political instability and other risks of doing business globally; demand for travel and the impact that global economic and political conditions have on customer travel patterns; competitive pressures on pricing and on demand; demand for transportation in the markets in which we operate; our capacity decisions and the capacity decisions of our competitors; the effects of any hostilities, act of war or terrorist attack; the effects of any technology failures or cybersecurity breaches; the impact of regulatory, investigative and legal proceedings and legal compliance risks; disruptions to our regional network; the ability of other air carriers with whom we have alliances or partnerships to provide the services contemplated by the respective arrangements with such carriers; costs associated with any modification or termination of our aircraft orders; potential reputational or other impact from adverse events in our operations, the operations of our regional carriers or the operations of our code share partners; our ability to attract and retain customers; our ability to execute our operational plans and revenue\-generating initiatives, including optimizing our revenue; our ability to control our costs, including realizing benefits from our resource optimization efforts, cost reduction initiatives and fleet replacement programs; the impact of any management changes; our ability to cost\-effectively hedge against increases in the price of aircraft fuel if we decide to do so; any potential realized or unrealized gains or losses related to any fuel or currency hedging programs; labor costs; our ability to maintain satisfactory labor relations and the results of any collective bargaining agreement process with our union groups; any disruptions to operations due to any potential actions by our labor groups; an outbreak of a disease that affects travel demand or travel behavior; U\.S\. or foreign governmental legislation, regulation and other actions (including Open Skies agreements and environmental regulations); industry consolidation or changes in airline alliances; our ability to comply with the terms of our various financing arrangements; the costs and availability of financing; our ability to maintain adequate liquidity; the costs and availability of aviation and other insurance; weather conditions; our ability to utilize our net operating losses to offset future taxable income; the impact of changes in tax laws; the success of our investments in airlines in other parts of the world; and other risks and uncertainties set forth under Part I, Item 1A\., Risk Factors, of this report, as well as other risks and uncertainties set forth from time to time in the reports we file with the SEC\.

|                |                                                                   |
| -------------- | ----------------------------------------------------------------- |
|  **ITEM 7A\.** | **QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK\.**  |

**Interest Rates\.** Our net income is affected by fluctuations in interest rates (e\.g\. interest expense on variable rate debt and interest income earned on short\-term investments)\. The Company’s policy is to manage interest rate risk through a combination of fixed and variable rate debt\. The following table summarizes information related to the Company’s interest rate market risk at December 31 (in millions):

|                                                                                |          |          |
|:---------------------------------------------------------------------------------------- | --------:| --------:|
|                                                                                | **2017** | **2016** |
| **Variable rate debt**                                                                   |          |          |
|  Carrying value of variable rate debt at December 31                                     |  $3,342  |  $2,582  |
|  Impact of 100 basis point increase on projected interest expense for the following year |      33  |      25  |
| **Fixed rate debt**                                                                      |          |          |
|  Carrying value of fixed rate debt at December 31                                        |   9,926  |   8,185  |
|  Fair value of fixed rate debt at December 31                                            |  10,349  |   8,469  |
|  Impact of 100 basis point increase in market rates on fair value                        |    (403) |    (340) |

45


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

Other Financial and Statistical Data (Unaudited)

|                                                |                             |                             |                             |                             |                             |
| ---------------------------------------------- | --------------------------- | --------------------------- | --------------------------- | --------------------------- | --------------------------- |
|                                                | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| **Consolidated** **^(1)^**                     | **2018**                    | **2017**                    | **2016**                    | **2015**                    | **2014**                    |
| Revenue passenger miles (in millions)          | 225,243                     | 217,712                     | 213,098                     | 209,625                     | 202,925                     |
| Available seat miles (in millions)             | 263,365                     | 254,325                     | 251,867                     | 246,764                     | 239,676                     |
| Passenger mile yield                           | 17\.65¢                     | 16\.97¢                     | 16\.81¢                     | 16\.59¢                     | 17\.22¢                     |
| Passenger revenue per available seat mile      | 15\.09¢                     | 14\.53¢                     | 14\.22¢                     | 14\.10¢                     | 14\.58¢                     |
| Total revenue per available seat mile          | 16\.87¢                     | 16\.18¢                     | 15\.66¢                     | 16\.50¢                     | 16\.84¢                     |
| Operating cost per available seat mile         | 14\.87¢                     | 13\.83¢                     | 12\.89¢                     | 13\.33¢                     | 15\.92¢                     |
| Passenger load factor                          | 85\.5%                      | 85\.6%                      | 84\.6%                      | 84\.9%                      | 84\.7%                      |
| Fuel gallons consumed (in millions)            | 4,113                       | 4,032                       | 4,016                       | 3,988                       | 3,893                       |
| Average price per fuel gallon ^(2)^            | $2\.20                      | $1\.68                      | $1\.49                      | $1\.90                      | $3\.47                      |
| Full\-time equivalent employees, end of period | 88,680                      | 86,564                      | 83,756                      | 82,949                      | 79,655                      |

|       |                                                                                |
| ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| ^(1)^ | Includes the operations of our regional carriers under capacity purchase agreements\. Full\-time equivalent employees exclude employees of regional carriers that we do not own\. |

|       |                                                                           |
| ----- | ------------------------------------------------------------------------- |
| ^(2)^ | Includes the impact of fuel hedge activity and refinery segment results\. |

 26


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

|   |                                                                                |
| - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| • | Depreciation and amortization per ASM  increase d  6\.6%  in  2019  as compared to  2018  due in part to airport and other facility improvements and the harmonization of interior configurations across the mainline fleet\. Depreciation associated with aircraft acquired as part of our fleet renewal program also contributed to the increase\. |

|   |                                                                                |
| - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| • | Regional aircraft fuel and related taxes per ASM  increase d  0\.3%  in  2019  as compared to  2018  primarily due to an  8\.3 %  increase  in gallons of fuel consumed, offset in part by a  6\.4 %  decrease  in the average price per gallon of fuel including related taxes to  $2\.15  in  2019  from  $2\.30  in  2018 \. |

|   |                                                                                |
| - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| • | Regional other operating expenses per ASM increased  5\.3%  in  2019  as compared to  2018  primarily driven by an  8\.3 % increase in regional capacity, principally from our wholly\-owned regional carriers\. |

Operating Special Items, Net

|                                                                    |                              |                              |
| ------------------------------------------------------------------ | ---------------------------- | ---------------------------- |
|                                                                    | **Year Ended December 31,**  | **Year Ended December 31,**  |
|                                                                    | **2019**                     | **2018**                     |
|                                                                    | **(In millions)**            | **(In millions)**            |
| Fleet restructuring expenses  ^(1)^                                | $271                         | $422                         |
| Fleet impairment  ^(2)^                                            | 213                          | —                            |
| Merger integration expenses  ^(3)^                                 | 191                          | 268                          |
| Litigation reserve adjustments                                     | (53)                         | 45                           |
| Mark\-to\-market adjustments on bankruptcy obligations, net  ^(4)^ | (11)                         | (76)                         |
| Severance expenses  ^(5)^                                          | 11                           | 58                           |
| Intangible asset impairment  ^(6)^                                 | —                            | 26                           |
| Labor contract expenses                                            | —                            | 13                           |
| Other operating charges, net                                       | 13                           | 31                           |
| Total mainline operating special items, net                        | 635                          | 787                          |
| Regional operating special items, net                              | 6                            | 6                            |
| Total operating special items, net                                 | $641                         | $793                         |

|       |                                                                                |
| ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| ^(1)^ | Fleet restructuring expenses principally included accelerated depreciation and rent expense for aircraft and related equipment grounded or expected to be grounded earlier than planned\. |

|       |                                                                                |
| ----- | --------------------------------------------------------------------------------------------------------------------------------------- |
| ^(2)^ | Fleet impairment principally includes a non\-cash write\-down of aircraft related to the planned retirement of our Embraer E190 fleet\. |

|       |                                                                                |
| ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |
| ^(3)^ | Merger integration expenses included costs associated with integration projects, principally our technical operations, flight attendant, human resources and payroll systems\. |

|       |                                                                                |
| ----- | --------------------------------------------------------------------------------------------------------------------------- |
| ^(4)^ | Bankruptcy obligations that will be settled in shares of our common stock are marked\-to\-market based on our stock price\. |

|       |                                                                                |
| ----- | --------------------------------------------------------------------------------------------------------------------- |
| ^(5)^ | Severance expenses primarily included costs associated with reductions of management and support staff team members\. |

|       |                                                                                |
| ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------- |
| ^(6)^ | Intangible asset impairment includes a non\-cash charge to write\-off our Brazil route authority as a result of the U\.S\.\-Brazil open skies agreement\. |

55


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

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

Financial Condition and Liquidity

We expect to meet our cash needs for the next 12 months from cash flows from operations, cash and cash equivalents, short\-term investments and financing arrangements\. As of  December 31, 2017 , we had  $5\.1 billion  in unrestricted liquidity, consisting of  $2\.6 billion  in cash and cash equivalents and short\-term investments and  $2\.5 billion  in undrawn revolving credit facilities\. During  2017 , we used existing cash and cash generated from operations to fund capital expenditures of  $3\.9 billion , purchase shares of Grupo Aeroméxico and Air France\-KLM for $1\.2 billion and return  $2\.4 billion  to shareholders\. In addition, we used the proceeds from a debt offering and cash generated from operations to contribute $3\.2 billion in cash to fund our pension obligation\.

Sources of Liquidity

Operating Activities

Cash flows from operating activities continue to provide our primary source of liquidity\. We generated positive cash flows from operations of  $5\.1 billion  in  2017 ,  $7\.2 billion  in  2016  and  $7\.9 billion  in  2015 \. We also expect to generate positive cash flows from operations in  2018 \. We had lower operating cash flows in 2017 compared to prior years primarily due to incremental pension plan contributions partially funded through $2\.0 billion of debt issuance\.

Our operating cash flows can be impacted by the following factors:

Seasonality of Advance Ticket Sales \. We sell tickets for air travel in advance of the customer's travel date\. When we receive a cash payment at the time of sale, we record the cash received on advance sales as deferred revenue in air traffic liability\. The air traffic liability increases during the winter and spring as advanced ticket sales grow prior to the summer peak travel season and decreases during the summer and fall months\.

Fuel \. Including our regional carriers, fuel expense represented  19\.2%  of our total operating expenses for  2017 \. The market price for jet fuel is highly volatile, which can impact the comparability of our cash flows from operations from period to period\.

Pension Contributions\.  We sponsor defined benefit pension plans for eligible employees and retirees\. These plans are closed to new entrants and are frozen for future benefit accruals\. Our funding obligations for these plans are governed by the Employee Retirement Income Security Act, as modified by the Pension Protection Act of 2006\. In the first half of 2017, we contributed $3\.5 billion to our qualified defined benefit pension plans using net proceeds from a $2\.0 billion debt issuance, shares of our common stock from treasury with a value of $350 million and existing cash\. As a result of these contributions, we satisfied, on an accelerated basis, our 2017 required contributions for our defined benefit plans, including more than $3\.0 billion above the minimum funding requirements\. We contributed  $1\.3 billion  and $1\.2 billion in  2016  and 2015, respectively\. We have no minimum funding requirements in 2018\. However, in January 2018, we voluntarily contributed approximately  $500 million  to these plans\.

Profit Sharing\.  Our broad\-based employee profit sharing program provides that, for each year in which we have an annual pre\-tax profit, as defined by the terms of the program, we will pay a specified portion of that profit to employees\. In determining the amount of profit sharing, the program defines profit as pre\-tax profit adjusted for profit sharing and certain other items\.

We paid $1\.1 billion in February 2017, $1\.5 billion in February 2016, and $1\.1 billion in two payments, $756 million in February 2015 and more than $300 million in October 2014, to our employees in recognition of their contributions toward meeting our financial goals\. During the year ended December 2017, we recorded  $1\.1 billion  in profit sharing expense based on 2017 pre\-tax profit, which was paid to employees in February 2018\.

Effective October 1, 2017, we aligned our profit sharing plans under a single formula\. Under this formula, our profit sharing program pays 10% to all eligible employees for the first $2\.5 billion of annual profit and 20% of annual profit above $2\.5 billion\. Prior to that time, the profit sharing program for pilots used this formula but for 2016 and the first nine months of 2017, the profit sharing program for merit, ground and flight attendant employees paid 10% of annual profit (as defined by the terms of the program) and, if we exceeded our prior\-year results, the program paid 20% of the year\-over\-year increase in profit to eligible employees\. For years prior to 2016, the profit sharing program for merit, ground and flight attendant employees paid according to the current formula\. Going forward, all eligible employees will be paid profit sharing under the current formula\.

 36


Annual Report of United Continental Holdings, Inc\. and United Airlines, Inc\. for year 2019

[Table of Contents](https://www.example.com#s1B306C2BC5705F95B83EC9EC687675EF)

Defined Contribution Plans\.  Depending upon the employee group, employer contributions consist of matching contributions and/or non\-elective employer contributions\. United's employer contribution percentages vary from   1%  to   16%  of eligible earnings depending on the terms of each plan\. United recorded expenses for its defined contribution plans of   $735 million ,   $693 million  and   $656 million  in the years ended  December 31, 2019 ,  2018  and  2017 , respectively\.

Multi\-Employer Plans\.  United's participation in the IAM National Pension Plan ("IAM Plan") for the annual period ended  December 31, 2019  is outlined in the table below\. Except as described in table below, there have been no other changes that affect the comparability of  2019  and  2018  contributions\. The risks of participating in these multi\-employer plans are different from single\-employer plans, as United may be subject to additional risks that others do not meet their obligations, which in certain circumstances could revert to United\. The IAM Plan reported   $467 million  in employers' contributions for the year ended December 31,  2018 \. For  2018 , the Company's contributions to the IAM Plan represented more than   5%  of total contributions to the IAM Plan\. The 2019 information is not available as Form 5500 is not final for the plan year\.

|                                                    |                                                                                |
| -------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Pension Fund                                       | IAM National Pension Fund                                                                                |
| EIN/ Pension Plan Number                           | 51\-6031295 \- 002                                                                                |
| Pension Protection Act Zone Status (2019 and 2018) | Red Zone (2019) and Green Zone (2018)\. Plans in the Green Zone are at least 80 percent funded\. Plans in the Red Zone are less than 65% funded\. The IAM National Pension Fund Board of Trustees voluntarily elected to place the fund in the Red Zone for 2019, although the fund was over 80% funded at the time, to protect the fund's participants' core retirement benefits and strengthen the fund's financial health over the long term\.  |
| FIP/RP Status Pending/Implemented                  | A 10\-year Rehabilitation Plan effective, January 1, 2022, was adopted on April 17, 2019 that requires the Company to make an additional contribution of 2\.5% of the hourly contribution rate, compounded annually for the length of the Rehabilitation Plan, effective June 1, 2019\.                                                                                |
| United's Contributions                             | $59 million, $52 million and $50 million in the years ended December 31, 2019, 2018 and 2017, respectively                                                                                |
| Surcharge Imposed                                  | No                                                                                |
| Expiration Date of Collective Bargaining Agreement | N/A                                                                                |

Profit Sharing\.  Substantially all employees participate in profit sharing based on a percentage of pre\-tax earnings, excluding special charges, profit sharing expense and share\-based compensation\. Profit sharing percentages range from   5%  to   20%  depending on the work group, and in some cases profit sharing percentages vary above and below certain pre\-tax margin thresholds\. Eligible U\.S\. co\-workers in each participating work group receive a profit sharing payout using a formula based on the ratio of each qualified co\-worker's annual eligible earnings to the eligible earnings of all qualified co\-workers in all domestic work groups\. Eligible non\-U\.S\. co\-workers receive profit sharing based on the calculation under the U\.S\. profit sharing plan for management and administrative employees\. The Company recorded profit sharing and related payroll tax expense of   $491 million ,   $334 million  and   $349 million  in  2019 ,  2018  and  2017 , respectively\. Profit sharing expense is recorded as a component of Salaries and related costs in the Company's statements of consolidated operations\.

73


Annual Report of DELTA AIR LINES, INC\.  for year 2019

Under the Railway Labor Act, a collective bargaining agreement between an airline and a labor union does not expire, but instead becomes amendable as of a stated date\. Either party may request that the NMB appoint a federal mediator to participate in the negotiations for a new or amended agreement\. If no agreement is reached in mediation, the NMB may determine, at any time, that an impasse exists and offer binding arbitration\. If either party rejects binding arbitration, a 30\-day "cooling off" period begins\. At the end of this 30\-day period, the parties may engage in “self help,” unless the U\.S\. President appoints a Presidential Emergency Board ("PEB") to investigate and report on the dispute\. The appointment of a PEB maintains the "status quo" for an additional 60 days\. If the parties do not reach agreement during this period, the parties may then engage in self help\. Self help includes, among other things, a strike by the union or the imposition of proposed changes to the collective bargaining agreement by the airline\. Congress and the President have the authority to prevent self help by enacting legislation that, among other things, imposes a settlement on the parties\.

Collective Bargaining

As of December 31, 2019, we had approximately 91,000 full\-time equivalent employees, approximately 19% of whom were represented by unions\. The following table shows our domestic airline employee groups that are represented by unions\.

|                                            |                                            |                                            |                                                    |                                                    |  |  |  |       |       |       |                                                                 |                                                                 |                                                                 |
|:------------------------------------------ |:------------------------------------------ |:------------------------------------------ | --------------------------------------------------:| --------------------------------------------------:|:- |:- |:- | -----:| -----:| -----:| ---------------------------------------------------------------:| ---------------------------------------------------------------:| ---------------------------------------------------------------:|
| Employee Group                             | Employee Group                             | Employee Group                             | Approximate Number of Active Employees Represented | Approximate Number of Active Employees Represented |  |  |  | Union | Union | Union | Date on which Collective Bargaining Agreement Becomes Amendable | Date on which Collective Bargaining Agreement Becomes Amendable | Date on which Collective Bargaining Agreement Becomes Amendable |
| Delta Pilots                               | Delta Pilots                               | Delta Pilots                               |                                            13,082  |                                            13,082  |  |  |  |  ALPA |  ALPA |  ALPA |                                               December 31, 2019 |                                               December 31, 2019 |                                               December 31, 2019 |
| Delta Flight Superintendents (Dispatchers) | Delta Flight Superintendents (Dispatchers) | Delta Flight Superintendents (Dispatchers) |                                               443  |                                               443  |  |  |  | PAFCA | PAFCA | PAFCA |                                                November 1, 2024 |                                                November 1, 2024 |                                                November 1, 2024 |
| Endeavor Air Pilots                        | Endeavor Air Pilots                        | Endeavor Air Pilots                        |                                             1,872  |                                             1,872  |  |  |  |  ALPA |  ALPA |  ALPA |                                                 January 1, 2024 |                                                 January 1, 2024 |                                                 January 1, 2024 |
| Endeavor Air Flight Attendants             | Endeavor Air Flight Attendants             | Endeavor Air Flight Attendants             |                                             1,492  |                                             1,492  |  |  |  |   AFA |   AFA |   AFA |                                               December 31, 2018 |                                               December 31, 2018 |                                               December 31, 2018 |

We are in discussions with representatives of our pilots and Endeavor Air flight attendants regarding terms of amendable collective bargaining agreements\.

In addition to the domestic airline employee groups discussed above, 199 refinery employees of Monroe are represented by the United Steel Workers under an agreement that expires on February 28, 2022\. This agreement is governed by the National Labor Relations Act ("NLRA"), which generally allows either party to engage in self help upon the expiration of the agreement\.

Labor unions periodically engage in organizing efforts to represent various groups of our employees, including at our operating subsidiaries, that are not represented for collective bargaining purposes\.

11


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

*2017* *Compared to* *2016*

The Company's capital expenditures were $4\.0 billion and $3\.2 billion in 2017and 2016, respectively\. The Company's capital expenditures for both years were primarily attributable to the purchase of aircraft, aircraft improvements, facility and fleet\-related costs and the purchase of information technology assets\.

***Financing Activities***

Significant financing events in 2018 were as follows:

Share Repurchases

The Company used $1\.2 billion of cash to purchase approximately 17\.5 million shares of its common stock during 2018\. As of December 31, 2018, the Company had approximately $1\.8 billion remaining to purchase shares under its share repurchase program\.

Debt Issuances

During 2018, United received and recorded $1\.2 billion of proceeds as debt related to enhanced equipment trust certificate ("EETC") offerings created in 2018 to finance the purchase of aircraft\.

During 2018, United borrowed approximately $424 million aggregate principal amount from various financial institutions to finance the purchase of several aircraft delivered in 2018\.

Debt and Capital Lease Principal Payments

During the year ended December 31, 2018, the Company made debt and capital lease principal payments of $1\.9 billion\.

Significant financing events in 2017 were as follows:

Share Repurchases

The Company used $1\.8 billion of cash to purchase approximately 27\.8 million shares of its common stock during 2017, completing its July 2016 repurchase authorization\. In December 2017, UAL's Board of Directors authorized a new $3\.0 billion share repurchase program to acquire UAL's common stock\. As of December 31, 2017, the Company had approximately $3\.0 billion remaining to purchase shares under its share repurchase program\.

Debt Issuances

During 2017, United received and recorded $1\.8 billion of proceeds as debt related to enhanced equipment trust certificate ("EETC") offerings created in 2016 and 2017 to finance the purchase of aircraft\.

In 2017, UAL issued, and United guaranteed, (i) $400 million aggregate principal amount of unsecured 4\.25% Senior Notes due October 1, 2022, and (ii) $300 million aggregate principal amount of unsecured 5% Senior Notes due February 1, 2024\.

In 2017, United and UAL, as borrower and guarantor, respectively, increased the term loan under the Credit Agreement by approximately $440 million\.

During 2017, United borrowed approximately $497 million aggregate principal amount from various financial institutions to finance the purchase of several aircraft delivered in 2017\.

Debt and Capital Lease Principal Payments

During the year ended December 31, 2017, the Company made debt and capital lease principal payments of $1\.0 billion\.

Significant financing events in 2016 were as follows:

Share Repurchases

The Company used $2\.6 billion of cash to purchase 50\.3 million shares of its common stock during 2016 under its share repurchase programs\.

31


Annual Report of United Continental Holdings, Inc\. and United Airlines, Inc\. for year 2019

[Table of Contents](https://www.example.com#s1B306C2BC5705F95B83EC9EC687675EF)

Airport Access\.  Historically, access to foreign markets has been tightly controlled through bilateral agreements between the U\.S\. and each foreign country involved\. These agreements regulate the markets served, the number of carriers allowed to serve each market and the frequency of carriers' flights\. Since the early 1990s, the U\.S\. has pursued a policy of "Open Skies" (meaning all U\.S\.\-flag carriers have access to the destination), under which the U\.S\. government has negotiated a number of bilateral agreements allowing unrestricted access between U\.S\. and foreign markets\. Currently, there are more than 100 Open Skies agreements in effect\. However, even with Open Skies, many of the airports that the Company serves in Europe, Asia and Latin America maintain slot controls\. A large number of these slot controls exist due to congestion, environmental and noise protection and reduced capacity due to runway and air traffic control ("ATC") construction work, among other reasons\. London Heathrow International Airport, Frankfurt Rhein\-Main Airport, Shanghai Pudong International Airport, Beijing Capital International Airport, Sao Paulo Guarulhos International Airport and Tokyo Haneda International Airport are among the most restrictive foreign airports due to slot and capacity limitations\.

The Company's ability to serve some foreign markets and expand into certain others is limited by the absence of aviation agreements between the U\.S\. government and the relevant foreign governments\. Shifts in U\.S\. or foreign government aviation policies may lead to the alteration or termination of air service agreements\. Depending on the nature of any such change, the value of the Company's international route authorities and slot rights may be materially enhanced or diminished\. Similarly, foreign governments control their airspace and can restrict our ability to overfly their territory, enhancing or diminishing the value of the Company's existing international route authorities and slot rights\.

Environmental Regulation\.  The airline industry is subject to increasingly stringent federal, state, local and international environmental requirements, including those regulating emissions to air, water discharges, safe drinking water and the use and management of hazardous substances and wastes\.

Climate Change \. There is an increasing global regulatory focus on greenhouse gas ("GHG") emissions and their potential impacts relating to climate change\. An initiative to regulate GHG emissions from aviation known as the European Union ("EU") Emission Trading System ("ETS") was adopted in 2009, but applicability to flights arriving or departing from airports outside the EU has been postponed several times\. In December 2017, the European Parliament voted to extend exemptions for extra\-EU flights until December 2023 in order to align the extension date with the completion of the pilot phase of the International Civil Aviation Organization's ("ICAO") Carbon Offsetting and Reduction Scheme for International Aviation ("CORSIA")\. CORSIA, which was adopted in October 2016, is intended to create a single global market\-based measure to achieve carbon\-neutral growth for international aviation after 2020, which can be achieved through airline purchases of carbon offset credits\. However, the European Parliament is expected to assess CORSIA implementation and re\-assess the applicability of EU ETS to international aviation in 2024, at which point the EU could require all extra\- and intra\-EU flights to participate in EU ETS\. Certain CORSIA program details remain to be developed and could potentially be affected by political developments in participating countries or the results of the pilot phase of the program, and thus the impact of CORSIA cannot be fully predicted\. However, CORSIA is expected to increase operating costs for the Company, depending on a number of factors, including the number of its flights that are subject to CORSIA, the fuel efficiency of the Company's fleet, the Company's purchase and use of CORSIA\-eligible sustainable aviation fuels, aviation sector growth, and the price of CORSIA\-eligible offsets\. In 2017, ICAO also adopted a carbon dioxide ("CO2") emission standard for aircraft\. In 2016, the U\.S\. Environmental Protection Agency ("EPA") commenced procedural steps necessary to adopt its own standard, but has not yet taken further action\. While the precise timing and final form of these various programs and requirements continue to evolve, the Company is taking various actions that are expected to help reduce its CO2 emissions over time such as improving fuel efficiency, fleet renewal, aircraft retrofits and promoting the commercialization of sustainable aviation fuels\.

Other Regulations \. Our operations are subject to a variety of other environmental laws and regulations both in the United States and internationally\. These include noise\-related restrictions on aircraft types and operating times and state and local air quality initiatives which have, or could in the future, result in curtailments in services, increased operating costs, limits on expansion, or further emission reduction requirements\. Certain airports and/or governments, both domestically and internationally, either have or are seeking to establish environmental fees and other requirements applicable to carbon emissions, local air quality pollutants and/or noise\. The implementation of these requirements is expected to result in restrictions on mobile sources such as cars, trucks and airport ground support equipment in corresponding locations\. Finally, environmental cleanup laws could require the Company to undertake or subject the Company to liability for investigation and remediation costs at certain owned or leased locations or third\-party disposal locations\.

Until applicability of new regulations to our specific operations is better defined and/or until pending regulations are finalized, future costs to comply with such regulations will remain uncertain but are likely to increase our operating costs over time\. While we continue to monitor these developments, the precise nature of future requirements and their applicability to the Company are difficult to predict, but the financial impact to the Company and the aviation industry could be significant\.

7


Annual Report of Southwest Airlines Co\. for year 2018

**Item 9B\.** ***Other Information***

None\.

120


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

Executive Officers of the Registrant

Edward H\. Bastian, Age 61 :  Chief Executive Officer of Delta since May 2016; President of Delta (September 2007 \- May 2016); President of Delta and Chief Executive Officer Northwest Airlines, Inc\. (October 2008 \- December 2009); President and Chief Financial Officer of Delta (September 2007 \- October 2008); Executive Vice President and Chief Financial Officer of Delta (July 2005 \- September 2007); Chief Financial Officer of Acuity Brands (June 2005 \- July 2005); Senior Vice President \- Finance and Controller of Delta (2000 \- April 2005); Vice President and Controller of Delta (1998 \- 2000)\.

Peter W\. Carter, Age 55 :  Executive Vice President \- Chief Legal Officer of Delta since July 2015; Partner of Dorsey & Whitney LLP (1999 \- 2015), including co\-chair of Securities Litigation and Enforcement practice group, chair of Policy Committee and chair of trial department\.

Glen W\. Hauenstein, Age 58 :  President of Delta since May 2016; Executive Vice President \- Chief Revenue Officer of Delta (August 2013 \- May 2016); Executive Vice President \- Network Planning and Revenue Management of Delta (April 2006 \- July 2013); Executive Vice President and Chief of Network and Revenue Management of Delta (August 2005 \- April 2006); Vice General Director \- Chief Commercial Officer and Chief Operating Officer of Alitalia (2003 \- 2005); Senior Vice President\- Network of Continental Airlines (2003); Senior Vice President \- Scheduling of Continental Airlines (2001 \- 2003); Vice President Scheduling of Continental Airlines (1998 \- 2001)\.

Paul A\. Jacobson, Age 47:  Executive Vice President \- Chief Financial Officer of Delta since August 2013; Senior Vice President and Chief Financial Officer of Delta (March 2012 \- July 2013); Senior Vice President and Treasurer of Delta (December 2007 \- March 2012); Vice President and Treasurer of Delta (August 2005 \- December 2007)\.

William P\. Lentsch, Age 55 : Executive Vice President \- Flying/Air Operations of Delta since August 2018; Senior Vice President \- Delta Connection and Delta Global Services, CEO \- Endeavor Air (April 2017 \- August 2018); Senior Vice President \- Airport Customer Service and Airline Operations of Delta (September 2013 \- April 2017); Senior Vice President \- Minnesota Operations of Delta (June 2009 \- September 2013); Senior Vice President \- Flight Operations of Northwest Airlines, Inc\. (October 2008 \- June 2009); Vice President \- Flight Operations of Northwest Airlines, Inc\. (October 2007 \- October 2008); Vice President \- Customer Service \- Minneapolis of Northwest Airlines, Inc\. (May 2006 \- October 2007); Vice President \- Station Operations of Northwest Airlines, Inc\. (July 2005 \- May 2006)\.

Rahul Samant, Age 52:  Executive Vice President \- Chief Information Officer of Delta since January 2018; Senior Vice President and Chief Information Officer of Delta (February 2016 \- December 2017); Senior Vice President and Chief Digital Officer of American International Group, Inc\. (January 2015 \- February 2016); Senior Vice President and Global Head, Application Development and Management of American International Group, Inc\. (September 2012 \- December 2014); Managing Director of Bank of America (1999 \- September 2012)\.

Steven M\. Sear, Age 53 :  President, International and Executive Vice President \- Global Sales of Delta since February 2016; Senior Vice President \- Global Sales of Delta (December 2011 \- February 2016); Vice President \- Global Sales of Delta (October 2008 \- December 2011); Vice President \- Sales & Customer Care of Northwest Airlines, Inc\. (June 2005 \- October 2008)\.

Joanne D\. Smith, Age 60:  Executive Vice President and Chief Human Resources Officer of Delta since October 2014; Senior Vice President \- In\-Flight Service of Delta (March 2007 \- September 2014); Vice President \- Marketing of Delta (November 2005 \- February 2007); President of Song (January 2005 \- October 2005); Vice President \- Marketing and Customer Service of Song (November 2002 \- December 2004)\.

W\. Gil West, Age 58:  Senior Executive Vice President and Chief Operating Officer of Delta since February 2016; Executive Vice President and Chief Operating Officer of Delta (March 2014 \- February 2016); Senior Vice President \- Airport Customer Service and Technical Operations of Delta (February 2012 \- February 2014); Senior Vice President \- Airport Customer Service of Delta (March 2008 \- January 2012); President and Chief Executive Officer of Laidlaw Transit Services (2006 \- 2007)\.

Additional Information

We make available free of charge on our website at  ir\.delta\.com  our Annual Report on Form 10\-K, our Quarterly Reports on Form 10\-Q, our Current Reports on Form 8\-K and amendments to those reports as soon as reasonably practicable after these reports are filed with or furnished to the Securities and Exchange Commission\. Information on our website is not incorporated into this Form 10\-K or our other securities filings and is not a part of those filings\.

 11


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

ITEM 16\. FORM 10\-K SUMMARY

None\.

184


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

|   |                           |
| - | ------------------------- |
| • | movements in fuel prices; |

|   |                                                                                |
| - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| • | expectations regarding our capital deployment program, including any existing or potential future share repurchase programs and any future dividend payments that may be declared by our Board of Directors, or any determination to cease repurchasing stock or paying dividends; |

|   |                                                                     |
| - | ------------------------------------------------------------------- |
| • | new regulatory pronouncements and changes in regulatory guidelines; |

|   |                                                     |
| - | --------------------------------------------------- |
| • | general and industry\-specific economic conditions; |

|   |                               |
| - | ----------------------------- |
| • | changes in our key personnel; |

|   |                                                                                |
| - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| • | distributions of shares of AAG common stock pursuant to the Plan, including distributions from the disputed claims reserve established under the plan of reorganization upon the resolution of the underlying claims; |

|   |                                                                                |
| - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| • | public sales of a substantial number of shares of AAG common stock or issuances of AAG common stock upon the exercise or conversion of convertible securities, options, warrants, restricted stock unit awards, stock appreciation rights, or similar rights; |

|   |                                                                                |
| - | ------------------------------------------------------------------------------------------ |
| • | increases or decreases in reported holdings by insiders or other significant stockholders; |

|   |                                     |
| - | ----------------------------------- |
| • | fluctuations in trading volume; and |

|   |                                                                                |
| - | ------------------------------------------------------------------------------------ |
| • | changes in market values of airline companies as well as general market conditions\. |

***We cannot guarantee that we will continue to repurchase our common stock or pay dividends on our common stock or that our capital deployment program will enhance long\-term stockholder value\. Our capital deployment program could increase the volatility of the price of our common stock and diminish our cash reserves\.***

Since July 2014, as part of our capital deployment program, our Board of Directors has approved six share repurchase programs aggregating $11\.0 billion of authority\. As of December 31, 2017, $450 million remained unused under a repurchase program that expires on December 31, 2018\. Share repurchases under our repurchase programs may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades or accelerated share repurchase transactions\. These share repurchase programs do not obligate us to acquire any specific number of shares or to repurchase any specific number of shares for any fixed period, and may be suspended at any time at our discretion\. The timing and amount of repurchases, if any, will be subject to market and economic conditions, applicable legal requirements and other relevant factors\. Our repurchase of common stock may be limited, suspended or discontinued at any time without prior notice\.

Although our Board of Directors commenced declaring quarterly cash dividends in July 2014 as part of our capital deployment program, any future dividends that may be declared and paid from time to time will be subject to market and economic conditions, applicable legal requirements and other relevant factors\. We are not obligated to continue a dividend for any fixed period, and the payment of dividends may be suspended at any time at our discretion\. We will continue to retain future earnings to develop our business, as opportunities arise, and evaluate on a quarterly basis the amount and timing of future dividends based on our operating results, financial condition, capital requirements and general business conditions\. The amount and timing of any future dividends may vary, and the payment of any dividend does not assure that we will be able to pay dividends in the future\.

In addition, any future repurchases of AAG common stock or dividends, or any determination to cease repurchasing stock or paying dividends, could affect our stock price and increase its volatility\. The existence of a share repurchase program and any future dividends could cause our stock price to be higher than it would otherwise be and could potentially reduce the market liquidity for our stock\. Additionally, any future repurchases of common stock or dividends will diminish our cash reserves, which may impact our ability to finance future growth and to pursue possible future strategic opportunities and acquisitions\. Further, our repurchase of common stock may fluctuate such that our cash flow may be insufficient to fully cover our share repurchases\. Although our share repurchase programs are intended to enhance long\-term stockholder value, there is no assurance that it will do so because the market price of our common stock may decline below the levels at which we repurchased shares of stock and short\-term stock price fluctuations could reduce the program’s effectiveness\.

31


Annual Report of United Continental Holdings, Inc\. and United Airlines, Inc\. for year 2019

[Table of Contents](https://www.example.com#s1B306C2BC5705F95B83EC9EC687675EF)

UNITED AIRLINES, INC\.

CONSOLIDATED BALANCE SHEETS

(In millions, except shares)

|                                                                                |                     |                     |
| ------------------------------------------------------------------------------------------- | ------------------- | ------------------- |
|                                                                                | **At December 31,** | **At December 31,** |
| **ASSETS**                                                                                | **2019**            | **2018 (a)**        |
| Current assets:                                                                             |                     |                     |
| Cash and cash equivalents                                                                   | $2,756              | $1,688              |
| Short\-term investments                                                                     | 2,182               | 2,256               |
| Receivables, less allowance for doubtful accounts (2019—$9; 2018—$8)                        | 1,364               | 1,426               |
| Aircraft fuel, spare parts and supplies, less obsolescence allowance (2019—$425; 2018—$412) | 1,072               | 985                 |
| Prepaid expenses and other                                                                  | 814                 | 733                 |
| Total current assets                                                                        | 8,188               | 7,088               |
| Operating property and equipment:                                                           |                     |                     |
| Flight equipment                                                                            | 35,421              | 32,599              |
| Other property and equipment                                                                | 7,926               | 6,889               |
| Purchase deposits for flight equipment                                                      | 1,360               | 1,177               |
| Total operating property and equipment                                                      | 44,707              | 40,665              |
| Less—Accumulated depreciation and amortization                                              | (14,537

)    | (13,266

)    |
| Total operating property and equipment, net                                                 | 30,170              | 27,399              |
| Operating lease right\-of\-use assets                                                       | 4,758               | 5,262               |
| Other assets:                                                                               |                     |                     |
| Goodwill                                                                                | 4,523               | 4,523               |
| Intangibles, less accumulated amortization (2019—$1,440; 2018—$1,380)                       | 3,009               | 3,159               |
| Restricted cash                                                                             | 106                 | 105                 |
| Notes receivable, net                                                                       | 671                 | 516                 |
| Investments in affiliates and other, net                                                    | 1,180               | 966                 |
| Total other assets                                                                          | 9,489               | 9,269               |
| Total assets                                                                                | $52,605             | $49,018             |

(continued on next page)

51


Annual Report of United Continental Holdings, Inc\. and United Airlines, Inc\. for year 2019

[Table of Contents](https://www.example.com#s1B306C2BC5705F95B83EC9EC687675EF)

|          |                 |                                                                                |
| -------- | --------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| †10\.39  | UAL             | [Form of Share Unit Award Notice pursuant to the United Continental Holdings, Inc\. 2006 Director Equity Incentive Plan (for awards granted on or after June 2011) (filed as Exhibit 10\.9 to UAL's Form 10\-Q for the quarter ended June 30, 2014, Commission file number 1\-6033, and incorporated herein by reference)](http://www.sec.gov/Archives/edgar/data/100517/000119312514278970/d732259dex109.htm)                                                                               |
| ^10\.40  | UAL
United | [Amended and Restated A350\-900 Purchase Agreement, dated September 1, 2017, including letter agreements related thereto, between Airbus S\.A\.S\. and United Airlines, Inc\. (filed as Exhibit 10\.1 to UAL's Form 10\-Q for the quarter ended September 30, 2017, Commission file number 1\-6033, and incorporated herein by reference)](http://www.sec.gov/Archives/edgar/data/100517/000119312517313831/d437791dex101.htm)                                                               |
| ^10\.41  | UAL
United | [Amendment No\. 1, dated as of July 18, 2019, to the Amended and Restated A350\-900 Purchase Agreement, dated as of September 1, 2017, including letter agreements related thereto, between Airbus S\.A\.S\. and United Airlines, Inc\. (filed as Exhibit 10\.1 to UAL's Form 10\-Q for the quarter ended September 30, 2019, Commission file number 1\-6033, and incorporated herein by reference)](http://www.sec.gov/Archives/edgar/data/100517/000010051719000026/ual09301910qex101.htm) |
|  ^10\.42 | UAL
United | [Amendment No\. 2, dated as of December 3, 2019, to the Amended and Restated A350\-900 Purchase Agreement, dated as of September 1, 2017, including letter agreements related thereto, between Airbus S\.A\.S\. and United Airlines, Inc\.](https://www.example.com/ual12311910kex1042.htm)                                                                                |
|  ^10\.43 | UAL
United | [Aircraft General Terms Agreement, dated October 10, 1997, by and among Continental and Boeing (filed as Exhibit 10\.15 to Continental's Form 10\-K for the year ended December 31, 1997, Commission File Number 1\-10323, and incorporated herein by reference)](http://www.sec.gov/Archives/edgar/data/319687/0000319687-98-000003.txt)                                                                                |
|  ^10\.44 | 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\.45 | UAL
United | [Supplemental Agreement No\. 1 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\.46 | 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\.47 | UAL
United | [Supplemental Agreement No\. 2 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\.48 | UAL
United | [Supplemental Agreement No\. 3 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\-6033, and incorporated herein by reference)](http://www.sec.gov/Archives/edgar/data/100517/000119312515261239/d941677dex104.htm)                                                                                |
|  ^10\.49 | UAL
United | [Supplemental Agreement No\. 4 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\-6033, and incorporated herein by reference)](http://www.sec.gov/Archives/edgar/data/100517/000119312515261239/d941677dex105.htm)                                                                                |
|  ^10\.50 | 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\.51 | 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\.52 | 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\.53 | 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)                                                                 |

99