United Airlines 2008 Annual Report Download - page 100

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• As discussed in Note 23, “Subsequent Events,” in January 2009, the Company completed several
financing-related transactions which generated approximately $315 million of proceeds.
The following is a discussion of expenses associated with implementing the Company’s plans. In
addition, see Note 3, “Asset Impairments and Intangible Assets,” for a discussion of the impairment
charges recorded during the year ended December 31, 2008.
Severance. During 2008, the Company reduced its workforce in operations and corporate functions
through attrition and both voluntary and involuntary furloughs. The Company is streamlining its
workforce to match the reduced capacity of its operations. The Company reduced its workforce in 2008
and plans to further reduce its workforce in 2009. Workforce reductions include salaried and
management positions and certain of the Company’s unionized workforce. The Company’s standard
severance policies provide the affected employees with salary continuation as well as certain insurance
benefits for a specified period of time. The Company recognizes its severance obligations in accordance
with Statement of Financial Accounting Standards No. 112 (As Amended), Employers’ Accounting for
Postemployment Benefits—an amendment of FASB Statements No. 5 and 43, except for voluntary
programs which are accounted for under Statement of Financial Accounting Standards No. 88,
Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for
Termination Benefits.
The following is a reconciliation of the Company’s severance accrual activity:
(In millions)
Balance at January 1, 2008 ........................... $ —
Accruals ........................................ 106
Payments . . . .................................... (25)
Balance at December 31, 2008 ........................ $ 81
In addition to involuntary furloughs, the Company is currently offering furlough-mitigation
programs, such as voluntary early-out options, primarily to certain union groups. Termination benefits
expected to be paid under such voluntary programs are not recognized until the employees accept the
termination benefit offer. Therefore, as the Company continues to implement its reductions in force
during 2009, additional severance costs may be incurred. Severance expense is classified within salaries
and related costs in the Company’s Statements of Consolidated Operations. Severance charges are
expected to be primarily within the mainline segment where the fleet reductions will occur.
Aircraft. The following table provides additional information regarding UAL and United aircraft
including the impacts of the fleet reductions discussed above.
Owned Leased Total Owned Leased Total
Total
Mainline
Regional
Affiliates Total
B737s (Mainline) All Other Mainline
Operating:
Aircraft at December 31, 2007 (a) .......... 47 47 94 208 158 366 460 279 739
Added (removed) from operating fleet ..... (29) (19) (48) (3) — (3) (51) 1 (50)
Converted from owned to leased (b). . ..... — — — (24) 24 — — — —
Converted from leased to owned (c) . . ..... — — — 10 (10) — — — —
Aircraft at December 31, 2008 (d) .......... 18 28 46 191 172 363 409 280 689
Removed from operating fleet in 2008 (e) . . . 29 19 48 3 — 3 51 — 51
Sold/returned to lessor during 2008 . . ..... (5) (7) (12) — — — (12) — (12)
Nonoperating at December 31, 2008 (a) (e) . . . 24 12 36 3 — 3 39 — 39
(a) At December 31, 2007, the Company had 113 unencumbered aircraft. In 2007, United leased one operating aircraft from
UAL and therefore had one less owned B737 aircraft and one more leased aircraft as compared to UAL’s fleet. This
particular aircraft became nonoperational in 2008; therefore, United has one less nonoperating owned B737 aircraft and one
more leased aircraft as compared to UAL’s fleet at December 31, 2008.
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