United Airlines 2009 Annual Report Download - page 23

Table of Contents
United and certain of its competitors implemented significant capacity reductions in 2008 and 2009. The Company’s unit revenues may not be favorably
impacted by the capacity reductions and its unit costs may be adversely impacted. Further, certain of the Company’s competitors may not reduce capacity or may
increase capacity, thereby diminishing the expected benefit to the Company from capacity reductions.
Additional security requirements may increase the Company’s costs and decrease its revenues and traffic.
Since September 11, 2001, the DHS and the Transportation Security Administration have implemented numerous security measures that affect airline
operations and costs and are likely to implement additional measures in the future. In addition, foreign governments have also instituted additional security
measures at foreign airports United serves. A substantial portion of the costs of these security measures is borne by the airlines and their passengers, increasing
the Company’s costs and/or reducing its revenue and traffic. Additional measures taken to enhance either passenger or cargo security procedures and/or to
recover associated costs in the future may result in similar adverse effects on United’s results of operations.
Extensive government regulation could increase the Company’s operating costs and restrict its ability to conduct its business.
Airlines are subject to extensive regulatory and legal compliance requirements that result in significant costs. In addition to the enactment of the Aviation
and Transportation Security Act, laws, regulations, taxes and airport rates and charges have been proposed from time to time that could significantly increase the
cost of airline operations or reduce airline revenue. The FAA from time to time also issues directives and other regulations relating to the maintenance and
operation of aircraft that require significant expenditures by United. The Company expects to continue incurring material expenses to comply with the
regulations of the FAA and other agencies.
United operates under a certificate of public convenience and necessity issued by the DOT. If the DOT altered, amended, modified, suspended or revoked
our certificate, it could have a material adverse effect on the Company’s business. The FAA can also limit United’s airport access by limiting the number of
departure and arrival slots at high density traffic airports and local airport authorities may have the ability to control access to certain facilities or the cost of
access to such facilities, which could have an adverse effect on the Company’s business.
In addition, access to landing and take-off rights, or “slots,” at several major U.S. airports and many foreign airports served by United are, or recently have
been, subject to government regulation. As passenger travel has continued to increase in recent years, many U.S. and foreign airports have become increasingly
congested. Certain of United’s major hubs are among the more congested airports in the United States and have been or could be the subject of regulatory action
that might limit the number of flights and/or increase costs of operations at certain times or throughout the day.
In addition, the Company’s operations may be adversely impacted due to the existing outdated air traffic control (“ATC”) system utilized by the U.S.
government. During peak travel periods in certain markets the current ATC system’s inability to handle existing travel demand has led to short-term capacity
constraints imposed by government agencies, as discussed above, and has also resulted in delays and disruptions of air traffic. In addition, the current system will
not be able to effectively handle projected future air traffic growth. Therefore, imposition of these ATC constraints on a long-term basis may have a material
adverse effect on our results of operations. Failure to update the ATC system in a timely manner, and the substantial funding requirements of a modernized ATC
system that may be imposed on carriers like United, may have an adverse impact on the Company’s financial condition or results of operations.
The Company has been subject to federal, state and local taxes and fees that increase the cost of the Company’s operations. In addition to taxes and fees
that the Company is currently subject to, proposed taxes and fees are currently pending. If any of these additional taxes and fees were to be imposed on the
Company, they would increase the Company’s operating expenses.
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