United Airlines Holdings, Inc. · NASDAQ:UAL
United Airlines — IPO Roadshow (January 2021)
48 slides from United Airlines's IPO roadshow presentation, Jan 25, 2021
Slide 1: United Airlines Series 2020-1 EETC Investor Presentation
United Airlines Series 2020 - 1 EETC Investor Presentation January 25, 2021 $600mm UAL 2020 - 1 Class B EETC Financing
Slide 2: Forward-looking statements
2 Certain statements in this presentation are forward - looking and thus reflect our current expectations and beliefs with respect to certain current and future events and anti cipated financial and operating performance. Such forward - looking statements are and will be subject to many risks and un
Slide 3: Additional Information
3 Additional Information The issuer has filed a registration statement (including a prospectus) with the SEC for the offering to which this communica tio n relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC
Slide 4: Table of Contents
Table of Contents 1. Transaction Overview 2. Recent Developments 3. United Corporate Overview 4. Collateral Summary 5. 2020 - 1 EETC Structure 6. Summary of Transaction Strengths 7. Summary Term Sheet 8. Appendix A: Detailed Amortization Schedules 9. Appendix B: Additional Collateral Information 10.
Slide 5: Transaction Overview
Transaction Overview
Slide 6: Transaction Overview
6 ▪ United Airlines (“United”, the “Airline” or the “Company”) intends to raise up to approximately $600,000,000 through the offe rin g of the Class B Pass Through Certificates, Series 2020 - 1 (the “Certificates” or “UAL 2020 - 1”) ▪ United previously issued $3,000,000,000 aggregate face amount of
Slide 7: Transaction Overview (2/2)
7 Transaction Overview (2/2) ▪ Appraisals and forecasts were obtained in Q3 2020 and reflect COVID - 19 related value adjustments. Additionally, the Aircraft and Spare Engine values have been further diligenced by mba Aviation (“ mba ”) who provided maintenance condition adjustment projections. Unle
Slide 8: Initial LTV and Maximum LTV for the Class A Certificates
8 1 Initial LTV and Maximum LTV for the Class A Certificates are provided as of (i) October 28, 2020, which was the closing date of the Class A Certificates, and (ii) as of February 1, 2021 which is assumed to be the closing date of the Class B offering. Class B Certificates are calculated as of Feb
Slide 9: UAL 2020-1 EETC Structural Breakdown
9 Note: Unless otherwise noted, all metrics are as of the Class B Issuance date. 1 Based on initial outstanding principal amount of the applicable equipment note and collateral group. United Airlines Series 2020 - 1 EETC Structural Breakdown ▪ The UAL 2020 - 1 transaction is structured so that each
Slide 10: Recent Developments
Recent Developments
Slide 11: Financial foundation set and focused on long-term success
11 Financial foundation set and focused on long - term success 1 Cash burn is defined as: Net cash from operations, less investing and financing activities. Proceeds from the issuance of new d ebt (excluding expected aircraft financing), government grants associated with the Payroll Support Program
Slide 12: United believes it has built appropriate liquidity to manage through COVID-19
12 MPH secured notes and term loan 1 United received the $ 5.1bn in expected CARES Act proceeds (grants + loans) on September 30 th from the initial Payroll Support Program. United expects to receive the $2.6bn due from the Extension Agreement in 1Q21. 2 On December 8, 2020, the U.S. Treasury amende
Slide 13: Total available liquidity and cash burn
13 1 Total available liquidity includes cash and cash equivalents, short - term investments and $1 billion available under our undrawn revolving credit facility, as well as $7 billion available under the CARES Act loan program; 2 Cash burn, as previously guided, is defined as: Net cash from operatio
Slide 14: United Corporate Overview
United Corporate Overview
Slide 15: Best global network full of long-term opportunity
15 Source: OAG; reflects routes flown in 2019 Best global network full of long - term opportunity United has a balanced network across geographies supported by the best partners and renewed JVs Geography % of 2019 ASMs Domestic 57% Atlantic 18% Pacific 15% Latin 10% Diverse network Though COVID - 19
Slide 16: Prior to COVID-19, deleveraging plan positioned the balance sheet
16 1 Adjusted total debt is a non - GAAP measure that includes current and long - term debt, operating lease obligations and finance leas e obligations and noncurrent pension and postretirement obligations; adjusted EBITDAR is a non - GAAP metric that measures adjusted earnings before interest, inco
Slide 17: Business and premium traffic buyers have noticed United's success
17 Source: 2012 – 2019 Business Traveler News Airline Survey. Business and premium traffic buyers have noticed United’s success Overall scores Business Traveler News (BTN) Annual Airline Survey 2015 2017 2016 2018 2019
Slide 18: Collateral Overview
Collateral Overview
Slide 19: Collateral asset mix and composition
19 Spares Collateral Tier I Aircraft Tier II Aircraft Asset Mix / Composition (By Value) Collateral Value ($) 2 $1.95bn $1.72bn $2.16bn Collateral Value (%) 33% 29% 37% Details Spare Parts (excluding Spare Engines ) : 79% are rotable / repairable and 21% expendable Spare Engines : 46% are WB engines
Slide 20: Spares Collateral – Spare Parts
20 Spares Collateral – Spare Parts Spare Parts Collateral Security Interest in Spare Parts ▪ An airline’s Spare Parts are essential to maintaining normal business operations ▪ United obtained current market value appraisals from mba of the Spare Parts collateral, showing a value of $ 1,277mm as of A
Slide 21: Spares Collateral – Spare Engines
21 Note : General Electric (“GE ”), CFM International (“CFM”) International Aero Engines (“IAE”), Pratt & Whitney (“P&W ”), Rolls Royce (“RR ”). 1 Please note that this is a historical average and post - COVID - 19 usage will change this estimate dramatically. 2 Charts and statistics weighted by pro
Slide 22: Aircraft Collateral
22 Note: Reference date for age is August 31, 2020 . Aircraft collateral values reflect projected LMM base values from mba, ICF, BK adjusted for projected maintenance condition determined by mba and calculated to reflect Q1 2021 values. Appraisal forecasts are as of September 1, 2020. 1 Percentages
Slide 23: Aircraft Collateral Tiers I and II
23 Aircraft Collateral Aircraft collateral is bifurcated into two tiers. Tier I includes most Aircraft less than 20 yrs old and Tier II includes all Aircraft 20 or more yrs old and all 757s, 767s, 777 - 200 (other than 777 - 200ER) and 737 - 700 (regardless of age) 29% of Total Collateral Value Coun
Slide 24: Aircraft Collateral in the Context of United's Fleet
24 Aircraft Collateral in the Context of United’s Fleet 1 Note: Figures do not include aircraft that are owned or leased by United’s Regional carriers. Fleet data provided by the Comp any . 1 United’s mainline fleet includes 814 owned and leased aircraft. 2 Data provided as of September 2020. By Air
Slide 25: 2020-1 EETC Structure
2020 - 1 EETC Structure
Slide 26: Amortization and LTV Profiles (Overall)
26 Tier II Aircraft debt is fully repaid within 4 years Tier II Aircraft assets are released from the structure Note: Forward values for Aircraft and Spare Engines are based on LMM forward projections from mba, ICF and BK adjusted for projected maintenance condition determined by mba . Forward value
Slide 27: Amortization and LTV Profiles (By Group)
27 Amortization and LTV Profiles (By Group) LTV (%) LTV (%) LTV (%) The EETC is governed by a single Indenture under a single paydown profile for each series of Equipment Notes, incorporating all collateral. For purposes of LTV tests, each collateral group will be tested independently with paydown p
Slide 28: Overview of Aircraft Release Mechanics
28 Tier II assets are all released from structure Overview of Aircraft Release Mechanics The UAL 2020 - 1 structure provides United with limited flexibility to release assets (within certain maximum thresholds for releases provided) to ensure the structure is appropriately over - collateralized and
Slide 29: Summary of Transaction Strengths
Summary of Transaction Strengths
Slide 30: Key Transaction Strengths
30 Key Transaction Strengths ▪ The UAL 2020 - 1 EETC offering is fully - recourse obligation to United Airlines ▪ Collateral includes substantially all of United’s Spare Parts and Spare Engines and 43 % by count of aircraft fleet ▪ Strong essentiality of collateral as the assets are indispensable to
Slide 31: Attractive Section 1110 Collateral
31 Attractive Section 1110 Collateral ▪ Strong asset mix consisting of 43% of United’s mainline Aircraft, substantially all of United’s Spare Engines, and substantia lly all of United’s Spare Parts ▪ All Spare Parts, Spare Engines and Aircraft in the collateral pool for this transaction are eligible
Slide 32: Ongoing LTV tests, composition test and covenants
32 Ongoing LTV tests ▪ The transaction benefits from three separate semi - annual notional LTV tests – one for each collateral group – to ensure the deal maintains appropriate overcollateralization levels through the tenor of the transaction ▪ All assets will be re - appraised semi - annually by an
Slide 33: Summary Term Sheet
Summary Term Sheet
Slide 34: Indicative Terms
34 Indicative Terms Format • Enhanced Equipment Trust Certificates (“EETC”) • SEC Registered Issuer • United Airlines, Inc. Legal Framework • Single Class B Equipment Note under a single indenture Use of Proceeds • Proceeds from the offering will be used for general corporate purposes and to pay fee
Slide 35: Key Transaction Terms
35 Key Transaction Terms Note: “Tier I Aircraft” means most collateral aircraft less than 20 years from its date of manufacture and not a Tier II Airc raf t. “Tier II” means aircraft 20 or more years old or that is a 737 - 700 or 777 - 200 (other than 777 - 200 ER) or is an aircraft in the Boeing 75
Slide 36: Indicative Terms: LTV Breach, Waterfall
36 Indicative Terms LTV Breach • United is required to, no later than 90 days after the applicable Collateral Test Date; do one or more of the following, whic h i n the aggregate cures such LTV breach: • (I) grant a security interest in Additional Collateral 1 • (II) deposit cash or permitted invest
Slide 37: Indicative Terms: Composition Test, Spare Parts Covenant
37 Indicative Terms Composition Test As a condition to substitution or release of certain collateral: • Min Sum of Aggregate Appraised Value for Spare Parts and Spare Engine Collateral : 25% (as % of all collateral) • Min Sum of Aggregate Appraised Value for Rotables and Spare Engine Collateral : 55
Slide 38: Key Transaction Terms: Substitution of Collateral
38 Key Transaction Terms 1 Eligible Regional Aircraft means any 2014 vintage or younger commercial jet aircraft that is an Embraer ERJ 175, Embraer ERJ 190 , Embraer ERJ 195, Bombardier CRJ 900 or any other comparable or improved model of regional commercial jet aircraft commonly configured to have
Slide 39: Appendix A: Detailed Amortization Schedules
Appendix A: Detailed Amortization Schedules
Slide 40: Projected Debt Balance and LTVs (1/2)
40 1 Forward values for Aircraft and Spare Engines are based on projected LMM maintenance adjusted base values. Values for Spare Parts are assumed to remain the same through the tenor and reflect market values from mba as of Q3 2020 . Projected Debt Balance and LTVs (1/2) Date Collateral Value 1 Deb
Slide 41: Projected Debt Balance and LTVs (2/2)
41 Projected Debt Balance and LTVs (2/2) Date Collateral Value 1 Debt Balance Principal Amortization LTV Existing Class A Class B Existing Class A Class B Existing Class A Class B July 15, 2024 5,081,129,990 1,508,837,500 261,600,000 144,037,500 31,200,000 29.7% 35.0% October 15, 2024 4,959,038,744
Slide 42: Appendix B: Additional Collateral Information
Appendix B: Additional Collateral Information
Slide 43: Aircraft Collateral Pool Importance
43 Aircraft Collateral Pool Importance ▪ Small gauge mainline aircraft that bridges the gap between regional aircraft and mid - size narrowbody aircraft ▪ ETOPS capability enables the aircraft to fly key Latin missions ▪ Excellent takeoff performance that enables it to operate in challenging airport
Slide 44: Aircraft Collateral Pool Importance (cont.)
44 ▪ Nearly all High - J (business class) configuration aircraft that provides 46 business class seats and 22 premium economy seats for high business traffic routes ▪ Newly reconfigured with Polaris product ▪ High network utility – long range and large capacity combination for European and South Ame
Slide 45: Aircraft Spare Engines
45 Aircraft Spare Engines Spare Engines Useful Life • Useful life typically assumed to be up to ~30 yr • Life cycle of an engine is longer than that of an airframe (30 - 40yr) • Limited by the production of the supported aircraft • Rotables and repairables can be repeatedly rehabilitated to a fully
Slide 46: Appendix C: Non-GAAP Reconciliation
Appendix C: Non - GAAP Reconciliation
Slide 47: Reconciliation of GAAP to Non-GAAP financial measures
47 Appendix: Reconciliation of GAAP to Non - GAAP financial measures UAL provides financial metrics, including earnings before interest, taxes, depreciation and amortization and aircraft rent (E BIT DAR), excluding special charges and unrealized (gains) losses on investments, and adjusted debt, that
Slide 48: Reconciliation of GAAP to Non-GAAP financial measures & Cash Burn
48 Appendix: Reconciliation of GAAP to Non - GAAP financial measures & Cash Burn Reconciliation UAL evaluates its financial performance utilizing various accounting principles generally accepted in the United States of Am eri ca (GAAP) and Non - GAAP financial measures, including adjusted operating