United Airlines 2009 Annual Report Download - page 59

Table of Contents
2008 compared to 2007
Net sales of short-term investments provided cash of $2.3 billion for UAL in 2008, as compared to cash used for net purchases of short-term investments
of $2.0 billion in 2007. In 2008, the Company invested most of its excess cash in money market funds, whereas in 2007, excess cash was largely invested in
short-term investments such as commercial paper. During 2008, the Company also received $357 million of cash that was previously restricted cash held by the
Company’s largest credit card processor and was released as a part of an amendment to the Company’s agreement with this processor. See Credit Card
Processing Agreements, below, for further discussion of the amended agreement and future cash reserve requirements.
In 2008, cash expenditures for property, equipment and software totaled approximately $475 million. Additions to property in 2008 included $20 million
of capitalized interest. In 2007, cash expenditures for property and equipment, software and capitalized interest were $639 million, $65 million and $19 million,
respectively. This year-over-year decrease is primarily due to the Company’s efforts to optimize its available cash and a reduction in cash used to acquire aircraft
as the 2007 capital expenditures included cash used to acquire six aircraft that were previously financed as operating leases.
During 2008, the Company generated $94 million from various asset sales including the sale of five B737 aircraft, spare parts, engines and slots. Investing
cash of $274 million was generated from aircraft sold under sale-leaseback financing agreements. In 2008, United entered into a $125 million sale-leaseback
involving nine previously unencumbered aircraft and a $149 million sale-leaseback involving 15 aircraft. See Note 14, “Lease Obligations” and Note 15,
“Statement of Consolidated Cash Flows—Supplemental Disclosures,” in the Footnotes for additional information related to these transactions. In addition, the
Company’s investing cash flows benefited from $41 million of cash proceeds from a litigation settlement that resulted in the recognition of a $29 million gain
during 2008. The litigation settlement related to pre-delivery advance aircraft deposits.
Cash Flows from Financing Activities.
2009 Activity
In 2009, the Company generated gross proceeds of approximately $900 million from the following debt issuances:
• $158 million from the issuance of $175 million aggregate principal amount of 12.75% Senior Secured Notes due 2012 secured by certain aircraft
spare parts;
• $134 million from a mortgage financing secured by certain of the Company’s spare engines;
• $30 million from an aircraft mortgage financing secured by one B777 aircraft;
• $345 million from the issuance of 6% Senior Convertible Notes due 2029 (the “6% Senior Convertible Notes”);
• $129 million from a financing with one of the Company’s regional flying partners, consisting of an $80 million secured note and a $49 million
deferral of future obligations under an amendment to the Company’s capacity agreement;
• $47 million from the issuance of equipment notes relating to the issuance of $659 million aggregate face amount of enhanced equipment trust
certificates (“EETCs”), Series 2009-1; and
• $114 million from the issuance of equipment notes relating to the issuance of $810 million aggregate face amount of EETCs, Series 2009-2. See
EETC Financing, below, for further information related to the Series 2009-1 and 2009-2 financings.
In addition, in 2009, the Company generated net proceeds of $222 million from the following equity issuances:
• $90 million from the completion of the Company’s equity offering program that began in 2008, resulting in aggregate gross proceeds under the
program of approximately $200 million; and
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