United Airlines 2008 Annual Report Download - page 60

value of $2.0 billion. See Note 12, “Debt Obligations and Card Processing Agreements,” in Combined
Notes to Consolidated Financial Statements for additional information on assets provided as collateral by
the Company.
See the Cash Flows from Investing Activities section,above, for a discussion of the Company’s 2008
sale-leaseback transactions.
2007 Activity
In 2007, the Company made a $1.0 billion prepayment on its Amended Credit Facility and made
$1.1 billion of additional debt payments, which included $590 million related to the early retirement of
debt. The Company prepaid an additional $500 million of the Amended Credit Facility in December
2007. In addition, the Company completed a $694 million debt issuance, which effectively refinanced the
aforementioned early debt retirement and refinanced three aircraft that had been previously financed
through operating lease agreements.
In 2007, the Company completed financing transactions totaling approximately $964 million which
included the $694 million EETC secured financing and the $270 million Denver Airport financing. A
portion of the proceeds of the $694 million EETC transaction was used to repay $590 million of debt
obligations that were secured by ten previously mortgaged, owned aircraft and to finance three
previously unencumbered owned aircraft. The proceeds of the Denver Airport bonds were used to
refinance the former $261 million of Denver Series 1992A bonds.
In 2007, cash from aircraft lease deposits increased $80 million primarily due to the use of the
deposits to purchase the three previously leased assets described above in Cash Flows from Investing
Activities. This was reported as a financing cash inflow as the prepayment of the initial deposits were
recorded as a financing cash outflow.
2006 Activity
During 2006, we generated proceeds of $3.0 billion from United’s new credit facility, but used
approximately $2.1 billion of these proceeds to repay the $1.2 billion DIP Financing and make other
scheduled and revolving payments under long-term debt and capital lease agreements.
Other 2008 and 2009 Financing Matters
In January 2009, the Company entered into a sale-leaseback agreement of nine aircraft for
approximately $95 million. In addition, in January 2009, the Company generated net proceeds of
$62 million from the issuance of 4.0 million shares and settlement of unsettled trades at December 31,
2008 under its $200 million common stock distribution agreement. After issuance of these shares, the
Company had issued shares for gross proceeds of $172 million of the $200 million available under this
stock offering, leaving $28 million available for future issuance under this program.
In January 2009, the Company entered into an amendment to its O’Hare cargo building site lease
with the City of Chicago. The Company agreed to vacate its current cargo facility at O’Hare to allow the
land to be used for the development of a future runway. In January 2009, the Company received
$160 million from O’Hare in accordance with the lease amendment. In addition, the lease amendment
requires that the City of Chicago provide the Company with another site at O’Hare upon which a
replacement cargo facility could be constructed.
Future Financing. Subject to the restrictions of its Amended Credit Facility, the Company could
raise additional capital by issuing unsecured debt, equity or equity-like securities, monetizing or
borrowing against certain assets or refinancing existing obligations to generate net cash proceeds.
However, the availability and capacity of these funding sources cannot be assured or predicted. General
economic conditions, poor credit market conditions and any adverse changes in the Company’s credit
ratings could adversely impact the Company’s ability to raise capital, if needed, and could increase the
Company’s cost of capital.
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