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Commitments and Contingencies | 9 Months Ended
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Sep. 30, 2024
Commitments and Contingencies Disclosure [Abstract] |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Commitments. As of September 30, 2024, United had firm commitments to purchase aircraft from The Boeing Company ("Boeing") and Airbus S.A.S. ("Airbus") as presented in the table below:
|  |  |  | Contractual Aircraft Deliveries |  | Expected Aircraft Deliveries (b)
Aircraft Type |  | Number of Firm Commitments (a) |  | Last Three Months of 2024 |  | 2025 |  | After 2025 |  | Last Three Months of 2024 |  | 2025 |  | After 2025
787 |  | 150 |  |  | 8 |  |  | 18 |  |  | 124 |  |  | 3 |  |  | 11 |  |  | 136 |
737 MAX 8 |  | 18 |  |  | 18 |  |  | — |  |  | — |  |  | 2 |  |  | 16 |  |  | — |
737 MAX 9 |  | 141 |  |  | 31 |  |  | 40 |  |  | 70 |  |  | 3 |  |  | 28 |  |  | 110 |
737 MAX 10 |  | 167 |  |  | — |  |  | — |  |  | 167 |  |  | — |  |  | — |  |  | 167 |
A321neo |  | 115 |  |  | 14 |  |  | 23 |  |  | 78 |  |  | 14 |  |  | 23 |  |  | 78 |
A321XLR |  | 50 |  |  | — |  |  | — |  |  | 50 |  |  | — |  |  | — |  |  | 50 |
A350 |  | 45 |  |  | — |  |  | — |  |  | 45 |  |  | — |  |  | — |  |  | 45 |
(a) United also has options and purchase rights for additional aircraft.
(b) Expected aircraft deliveries reflect adjustments to contractual delivery schedules as communicated by Boeing and Airbus, as otherwise agreed between the relevant parties, or as estimated by United. However, aircraft deliveries are subject to a number of variables, as further described in Part I, Item 1A. Risk Factors of the 2023 Form 10-K, and we cannot guarantee delivery of any particular aircraft at any specific time notwithstanding firm purchase commitments.
The aircraft listed in the table above are scheduled for delivery through 2033. The amount and timing of the Company's future capital commitments could change to the extent that: (i) the Company and the aircraft manufacturers, with whom the Company has existing orders for new aircraft, agree to modify (or further modify) the contracts governing those orders; (ii) rights are exercised pursuant to the relevant agreements to cancel deliveries or modify the timing of deliveries; or (iii) the aircraft manufacturers are unable to deliver in accordance with the terms of those orders. On April 14, 2024, the Company entered into confidential arrangements with Boeing with respect to compensation for financial damages incurred in the first quarter of 2024 due to the Federal Aviation Administration grounding of the Boeing 737 MAX 9 aircraft, and a confidential agreement to accommodate certification delays for the Boeing 737 MAX 10 aircraft. The compensation provided by Boeing for the grounding damages and in connection with rescheduling deliveries was in the form of credit memos for use on future purchases from Boeing. The Company is accounting for these arrangements as a reduction to the cost basis of the previously-delivered Boeing 737 MAX 9 aircraft and future deliveries of the Boeing 737 MAX 9 and Boeing 737 MAX 10 aircraft, which will reduce future depreciation expense associated with these aircraft. The table below summarizes United's firm commitments as of September 30, 2024, which include aircraft and related spare engines, aircraft improvements and non-aircraft capital commitments. Aircraft commitments are based on contractual scheduled aircraft deliveries.
(in billions) |  |
Last three months of 2024 |  | $ | 4.1 |
2025 |  | 7.2 |
2026 |  | 5.6 |
2027 |  | 4.8 |
2028 |  | 7.3 |
After 2028 |  | 27.8 |
|  | $ | 56.8 |
In the third quarter of 2024, the Company entered into definitive agreements with major aircraft leasing companies to lease 40 Airbus A321neo aircraft with expected deliveries in 2026 and 2027. As of September 30, 2024, we had entered into leases with rental obligations of approximately $4.0 billion for several mainline aircraft, regional aircraft under CPAs, airport facilities and office space, none of which had commenced as of such date. These leases will commence between 2024 and 2027 with lease terms of up to 12 years. Regional CPAs. During the nine months ended September 30, 2024, United amended several of its CPAs with certain of its regional carriers to increase the contractually agreed fees (carrier costs) paid to those carriers, modify the terms for certain aircraft, and modify service entry dates for certain previously grounded aircraft. Our future commitments under our CPAs are dependent on numerous variables, and are, therefore, difficult to predict. The most important of these variables is the number of scheduled block hours. Although we are not required to purchase a minimum number of block hours under certain of our CPAs, we have set forth below estimates of our future payments under the CPAs based on our assumptions. The actual amounts we pay to our regional operators under CPAs could differ materially from these estimates. United's estimates of its future payments under all of the CPAs do not include the portion of the underlying obligation for any aircraft leased to a regional carrier, or deemed to be leased from other regional carriers, and facility rent. For purposes of calculating these estimates, we have assumed (1) the number of block hours flown is based on our anticipated level of flight activity or at any contractual minimum utilization levels if applicable, whichever is higher, (2) that we will reduce the fleet as rapidly as contractually allowed under each CPA, (3) that aircraft utilization, stage length and load factors will remain constant, (4) that each carrier's operational performance will remain at recent historic levels and (5) an annual projected inflation rate. Based on these assumptions as of September 30, 2024, our estimated future payments through the end of the terms of our CPAs are presented in the table below:
(in billions) |  |
Last three months of 2024 |  | $ | 0.7 |
2025 |  | 2.7 |
2026 |  | 2.5 |
2027 |  | 1.9 |
2028 |  | 1.6 |
After 2028 |  | 4.7 |
|  | $ | 14.1 |
Guarantees. As of September 30, 2024, United is the guarantor of approximately $1.8 billion in aggregate principal amount of tax-exempt special facilities revenue bonds and interest thereon. These bonds, issued by various airport municipalities, are payable solely from rentals paid under long-term agreements with the respective governing bodies. The leasing arrangements associated with these obligations are accounted for as operating leases recognized on the Company's consolidated balance sheet with the associated expense recorded on a straight-line basis over the expected lease term. All of these bonds are due between 2027 and 2041. As of September 30, 2024, United is the guarantor of $66 million of aircraft mortgage debt issued by one of United's regional carriers. The aircraft mortgage debt is subject to similar increased cost provisions as described below for the Company's debt, and the Company would potentially be responsible for those costs under the guarantees. Increased Cost Provisions. In United's financing transactions that include loans in which United is the borrower, United typically agrees to reimburse lenders for any reduced returns with respect to the loans due to any change in capital requirements and, in the case of loans with respect to which the interest rate is based on the Secured Overnight Financing Rate ("SOFR"), for certain other increased costs that the lenders incur in carrying these loans as a result of any change in law, subject, in most cases, to obligations of the lenders to take certain limited steps to mitigate the requirement for, or the amount of, such increased costs. At September 30, 2024, the Company had $8.5 billion of floating rate debt with remaining terms of up to approximately 12 years that are subject to these increased cost provisions. In several financing transactions involving loans or leases from non-U.S. entities, with remaining terms of up to approximately 12 years and an aggregate balance of $5.4 billion, the Company bears the risk of any change in tax laws that would subject loan or lease payments thereunder to non-U.S. entities to withholding taxes, subject to customary exclusions. Labor. As of September 30, 2024, the Company had approximately 106,500 employees, of whom approximately 82% were represented by various U.S. labor organizations. On February 23, 2024, United's International Association of Machinists and Aerospace Workers ("IAM"), which represents security guards in California and central load planners, ratified new collective bargaining agreements. The ratified agreements are effective through 2025. On February 28, 2024, United and the International Brotherhood of Teamsters (IBT) reached a tentative agreement for an extension to their labor contract, which covers United's technicians and related employees. On April 17, 2024, the United technicians declined the proposed four-year contract extension and will continue to work under their current agreement, which becomes amendable in December 2024.

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