United Airlines 2008 Annual Report Download - page 26

incorporation, will be treated as if such transfer never occurred. This provision may prevent a sale of
common stock by a stockholder or adversely affect the price at which a stockholder can sell common
stock and consequently make it more difficult for a stockholder to sell shares of common stock. In
addition, this limitation may have the effect of delaying or preventing a change in control of UAL,
creating a perception that a change in control cannot occur or otherwise discouraging takeover attempts
that some stockholders may consider beneficial, which could also adversely affect the prevailing market
price of the common stock. UAL cannot predict the effect that this provision in the UAL restated
certificate of incorporation may have on the market price of the common stock.
The Company is subject to economic and political instability and other risks of doing business globally.
The Company is a global business with operations outside of the United States from which it derives
approximately one-third of its operating revenues, as measured and reported to the DOT. The
Company’s operations in Asia, Latin America, the Middle East and Europe are a vital part of its
worldwide airline network. Volatile economic, political and market conditions in these international
regions may have a negative impact on the Company’s operating results and its ability to achieve its
business objectives. In addition, significant or volatile changes in exchange rates between the U.S. dollar
and other currencies, and the imposition of exchange controls or other currency restrictions, may have a
material adverse impact upon the Company’s liquidity, revenues, costs and operating results.
The Company could be adversely affected by an outbreak of a disease that affects travel behavior.
An outbreak of a disease that affects travel demand or travel behavior, such as Severe Acute
Respiratory Syndrome (“SARS”) or avian flu, or other illness, could have a material adverse impact on
the Company’s business, financial condition and results of operations.
Certain provisions of UAL’s Governance Documents could discourage or delay changes of control or changes to
the Board of Directors of UAL.
Certain provisions of the amended and restated certificate of incorporation and amended and
restated bylaws of UAL (the “Governance Documents”) may make it difficult for stockholders to change
the composition of UAL’s Board of Directors and may discourage takeover attempts that some of its
stockholders may consider beneficial.
Certain provisions of the Governance Documents may have the effect of delaying or preventing
changes in control if UAL’s Board of Directors determines that such changes in control are not in the
best interests of UAL and its stockholders.
These provisions of the Governance Documents are not intended to prevent a takeover, but are
intended to protect and maximize the value of UAL’s stockholders’ interests. While these provisions have
the effect of encouraging persons seeking to acquire control of UAL to negotiate with the UAL Board
of Directors, they could enable the Board of Directors to prevent a transaction that some, or a majority,
of its stockholders might believe to be in their best interests and, in that case, may prevent or discourage
attempts to remove and replace incumbent directors.
The issuance of UAL’s contingent senior unsecured notes could adversely impact results of operations, liquidity
and financial position and could cause dilution to the interests of its existing stockholders.
In connection with the Company’s emergence from Chapter 11 bankruptcy protection, UAL is
obligated under an indenture to issue to the PBGC 8% senior unsecured notes with an aggregate
principal amount of up to $500 million in up to eight equal tranches of $62.5 million (with no more than
one tranche issued as a result of each issuance trigger event) upon the occurrence of certain financial
triggering events. An issuance trigger event occurs when the Company’s EBITDAR (as defined in the
indenture) exceeds $3.5 billion over the prior twelve months ending June 30 or December 31 of any
applicable fiscal year, beginning with the fiscal year ending December 31, 2009 and ending with the fiscal
year ending December 31, 2017. However, if the issuance of a tranche would cause a default under any
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