United Airlines 2009 Annual Report Download - page 97

Table of Contents
(3) Asset Impairments and Intangible Assets
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 Company’s 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
Due to extreme fuel price volatility, tight credit markets, the uncertain economic environment, as well as other uncertainties, the Company can provide no
assurance that a material impairment charge will not occur in a future period. The Company will continue to monitor circumstances and events in future periods
to determine whether additional asset impairment testing is warranted.
The following is a discussion of impairment testing. See Note 12, “Fair Value Measurements and Derivative Instruments,” for additional information
related to the use of fair values in impairment testing.
Triggering Events Requiring Testing
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 and cash flows.
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 announcement of 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.
Aircraft and definite-lived intangible assets
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
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