United Airlines 2009 Annual Report Download - page 68

Table of Contents
liability. The Company’s estimate of the expected expiration of miles requires significant management judgment. Current and future changes to expiration
assumptions or to the expiration policy, or to program rules and program redemption opportunities, may result in material changes to the deferred revenue
balance, as well as recognized revenues from the program.
Asset Impairments.
The Company recorded impairment charges during the years ended December 31, 2009 and 2008, as presented in the table below. All of these impairment
charges are within the Mainline segment. All of the impairments, other than the goodwill impairment which is separately identified, are classified within “Other
impairments and special items” in the Financial Statements.
Year Ended December 31,
(In millions) 2009 2008
Goodwill impairment $ — $ 2,277
Indefinite-lived intangible assets:
Codeshare agreements — 44
Tradenames 150 20
Intangible asset impairments 150 64
Tangible assets:
Pre-delivery advance deposits including related capitalized interest — 105
Nonoperating aircraft, spare engines and parts and other 93 145
Tangible asset impairments 93 250
Total impairments $ 243 $ 2,591
During 2009, the Company performed interim and annual impairment tests of its intangible assets and certain of its long-lived assets, principally aircraft
and related spare engines and spare parts, due to events and changes in circumstances that indicated an impairment might have occurred. The primary factors
deemed by management to have constituted a potential impairment triggering event were a significant decline in unit revenues experienced in early 2009 and
decreases in forecasted revenues. The Company performed a second interim impairment test of certain aircraft fleet types in 2009 due to an additional decrease in
market prices, as further discussed below.
Similarly during 2008, the Company performed an interim impairment test of its goodwill, all intangible assets and certain of its long-lived assets,
principally aircraft and related spare engines and spare parts, as of May 31, 2008 due to events and changes in circumstances during the first and second quarters
of 2008 that indicated an impairment might have occurred. Factors deemed by management to have collectively constituted an impairment triggering event
included record high fuel prices, significant losses in the first and second quarters of 2008, a softening U.S. economy, analyst downgrade of UAL common stock,
rating agency changes in outlook for the Company’s debt instruments from stable to negative, the planned removal from UAL’s fleet of 100 aircraft and a
significant decrease in the fair value of the Company’s outstanding equity and debt securities, including a decline in UAL’s market capitalization to significantly
below book value.
Discussed below is the methodology used for each type of asset impairment shown in the table above.
Aircraft and Definite-lived Intangible Asset Impairments
2009 Impairment Testing
The Company tested certain of its definite-lived intangible assets at February 28, 2009 and determined that the carrying value of its definite-lived
intangible assets was fully recoverable because their carrying amount
64