United Airlines 2008 Annual Report Download - page 31

Download and view the complete annual report

Please find page 31 of the 2008 United Airlines annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 159

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159

Multiple putative class actions were also filed alleging violations of the antitrust laws with respect to
the passenger pricing practices which were the subject of the DOJ subpoena. Those lawsuits were
consolidated for pretrial activities in the United States Federal Court for the Northern District of
California (“Federal Court”). United was dismissed from the case on October 3, 2008.
The Company is currently cooperating with all ongoing investigations and analyzing whether any
potential liability may result from any of the investigating bodies. Based on its evaluation of all
information currently available, the Company has determined that no reserve for potential liability is
required and will continue to defend itself against all allegations that it was aware of or participated in
cartel activities. However, penalties for violation of competition laws can be substantial and an ultimate
finding that the Company engaged in improper activity could have a material adverse impact on our
consolidated financial position and results of operations.
United Injunction Against ALPA and Four Individual Defendants for Unlawful Slowdown Activity under the
Railway Labor Act
On July 30, 2008, United filed a lawsuit in federal court for the Northern District of Illinois (the
“Court”) seeking a preliminary injunction against ALPA and four individual pilot employees also named
as defendants for unlawful concerted activity which was disrupting the Company’s operations. The suit
focused on ALPA’s nearly two-year campaign to exert unlawful pressure on the Company through work
to rule initiatives, junior/senior manning refusals, sick leave usage, pilot driven flight delays, fuel adds
and similar measures. The Company alleged all of this activity was a violation of the Railway Labor Act
and should immediately be enjoined by the Court. The Court granted a preliminary injunction to United
in November 2008. However, the Company intends to seek a permanent injunction to conclude the
process. In addition, ALPA appealed the Court’s decision and arguments concerning the appeal were
heard on February 24, 2009.
Litigation Associated with September 11 Terrorism
Families of 94 victims of the September 11 terrorist attacks filed lawsuits asserting a variety of
claims against the airline industry. United and American Airlines (the “aviation defendants”), as the two
carriers whose flights were hijacked, are the central focus of the litigation, but a variety of additional
parties have been sued on a number of legal theories ranging from collective responsibility for airport
screening and security systems that allegedly failed to prevent the attacks to faulty design and
construction of the World Trade Center towers. In excess of 97% of the families of the deceased victims
received awards from the September 11th Victims Compensation Fund of 2001, which was established by
the federal government, and consequently are now barred from making further claims against the
aviation defendants. World Trade Center Properties, Inc., as lessee, has filed claims against the aviation
defendants and The Port Authority of New York and New Jersey, the owner of the World Trade Center.
The Port Authority has also filed cross-claims against the aviation defendants in both the wrongful death
litigation and for property damage sustained in the attacks. The insurers of various tenants at the World
Trade Center have filed subrogation claims for damages as well. In the aggregate, September 11th claims
are estimated to be well in excess of $10 billion. By statute, these matters were consolidated in the
U.S. District Court for the Southern District of New York and the aviation defendants’ exposure was
capped at the limit of the liability coverage maintained by each carrier at the time of the attacks. In the
personal injury and wrongful death matters, settlement discussions continue and the parties have reached
settlement agreements for the majority of the remaining claims. The Company anticipates that any
liability it may face arising from the events of September 11, 2001 could be significant, but by statute will
be limited to the amount of its insurance coverage.
Other Legal Proceedings
UAL and United are involved in various other claims and legal actions involving passengers,
customers, suppliers, employees and government agencies arising in the ordinary course of business.
Additionally, from time to time, the Company becomes aware of potential non-compliance with
31