United Airlines 2008 Annual Report Download - page 137

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At December 31, 2008, the Company’s leased aircraft, scheduled future minimum lease payments
under capital leases (substantially all of which are for aircraft) and operating leases having initial or
remaining noncancelable lease terms of more than one year were as follows:
Mainline
Aircraft
United Express
Aircraft Non-aircraft
Capital
Leases(b)
Operating Leases
Number of Leased Aircraft in Operating Fleet
UnitedandUAL.............................. 142 269 — 69
(In millions)
Payable during(a)
2009 ...................................... $ 351 $ 441 $ 553 $ 237
2010 ...................................... 323 441 518 509
2011 ...................................... 323 428 457 290
2012 ...................................... 312 383 415 149
2013 ...................................... 291 367 386 141
After 2013 ................................. 655 1,090 2,798 520
UAL minimum lease payments ................... $2,255 $3,150 $5,127 1,846
Imputed interest (at rates of 2.1% to 16.0%) ........ (486)
Present value of minimum lease payments .......... 1,360
Current portion ............................... (168)
Long-term obligations under capital leases .......... $1,192
(a) Amounts apply to both UAL and United except that United leases one nonoperating aircraft from UAL, resulting in total
United mainline aircraft operating lease payments of $2,258 million. The operating lease payments presented above also
include future payments for 12 additional nonoperating aircraft as of December 31, 2008.
(b) Aircraft capital lease obligations are for 58 mainline and 11 United Express aircraft. Includes non-aircraft capital lease
payments aggregating $19 million in years 2009 through 2013 and United Express capital lease obligations of $6 million in
2009 and $5 million in each of the years 2010 through 2013.
A portion of United’s aircraft lease obligations and related accrued interest ($306 million in
equivalent U.S. dollars at December 31, 2008) is denominated in foreign currencies that expose the
Company to risks associated with changes in foreign exchange rates. To hedge against this risk, United
has placed foreign currency deposits ($306 million in equivalent U.S. dollars at December 31, 2008),
primarily for euros, to meet foreign currency lease obligations denominated in that respective currency.
Since unrealized mark-to-market gains or losses on the foreign currency deposits are offset by the losses
or gains on the foreign currency obligations, United has hedged its overall exposure to foreign currency
exchange rate volatility with respect to its foreign lease deposits and obligations. In addition, the
Company has $20 million of U.S. dollar denominated deposits to meet U.S. dollar denominated lease
obligations. These deposits will be used to repay an equivalent amount of recorded capital lease
obligations and are classified as aircraft lease deposits in the Statements of Consolidated Financial
Position.
Aircraft operating leases have initial terms of five to 26 years, with expiration dates ranging from
2009 through 2024. The Company has facility operating leases that extend to 2032. Under the terms of
most leases, the Company has the right to purchase the aircraft at the end of the lease term, in some
cases at fair market value and in others, at fair market value or a percentage of cost. See Note 1(i),
“Summary of Significant Accounting Policies—United Express,” for additional information related to
United Express contracts and Note 2, “Company Operational Plans,” for information related to accrued
rent related to the Company’s fleet reductions.
Certain of the Company’s aircraft lease transactions contain provisions such as put options giving
the lessor the right to require us to purchase the aircraft at lease termination for a certain amount
resulting in residual value guarantees. Leases containing this or similar provisions are recorded as capital
137