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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ÈANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2010
OR
‘TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission
File Number
Exact Name of Registrant as
Specified in its Charter, Principal
Office Address and
Telephone Number
State of
Incorporation
I.R.S. Employer
Identification No
001-06033 United Continental Holdings, Inc.
77 W. Wacker Drive
Chicago, Illinois 60601
(312) 997-8000
Delaware 36-2675207
001-11355 United Air Lines, Inc.
77 W. Wacker Drive
Chicago, Illinois 60601
(312) 997-8000
Delaware 36-2675206
001-10323 Continental Airlines, Inc.
1600 Smith Street,
Dept. HQSEO
Houston, Texas 77002
(713) 324-2950
Delaware 74-2099724
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
United Continental Holdings, Inc. Common Stock, $0.01 par value New York Stock Exchange
United Air Lines, Inc. None None
Continental Airlines, Inc. None None
Securities registered pursuant to Section 12 (g) of the Act:
United Continental Holdings, Inc. None United Air Lines, Inc. None
Continental Airlines, Inc. None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
United Continental Holdings, Inc. Yes ÈNo ‘United Air Lines, Inc. Yes ÈNo ‘
Continental Airlines, Inc. Yes ÈNo ‘
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
United Continental Holdings, Inc. Yes ‘No ÈUnited Air Lines, Inc. Yes ‘No È
Continental Airlines, Inc. Yes ‘No È
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
United Continental Holdings, Inc. Yes ÈNo ‘United Air Lines, Inc. Yes ÈNo ‘
Continental Airlines, Inc. Yes ÈNo ‘
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit and post such files).
United Continental Holdings, Inc. Yes ‘No ‘United Air Lines, Inc. Yes ‘No ‘
Continental Airlines, Inc. Yes ÈNo ‘

Table of contents

  • Page 1
    ... 10-K È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2010 OR ' TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from Commission File Number 001-06033...

  • Page 2
    ... a plan confirmed by a court. United Continental Holdings, Inc. Yes È No ' United Air Lines, Inc. Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of February 15, 2011. United Continental Holdings, Inc. United Air Lines, Inc. Continental Airlines, Inc...

  • Page 3
    ... Holdings, Inc. and Subsidiary Companies United Air Lines, Inc. and Subsidiary Companies Continental Airlines, Inc. and Subsidiary Companies Report on Form 10-K For the Year Ended December 31, 2010 Page Item 1. Item 1A. Item 1B. Item 2. Item 3. Item 4. Item 5. PART I Business ...Risk Factors...

  • Page 4

  • Page 5
    ... filings are also available on the SEC's website at www.sec.gov. Each of UAL and Continental has a code of ethics for directors, officers and employees. The codes serve as a "Code of Ethics" as defined by SEC regulations, and as a "Code of Business Conduct and Ethics" under the NYSE's Listed Company...

  • Page 6
    ...global route network. UAL, through United and Continental and their regional carriers, operates approximately 5,800 flights a day to more than 375 U.S. domestic and international destinations from the Company's hubs at A.B. Won Pat International Airport ("Guam"), Chicago O'Hare International Airport...

  • Page 7
    ... for Mileage Plus® program members who qualify based on the number of paid flight miles or fares purchased in a calendar year. Premier® status passengers receive priority treatment in check-in and boarding areas, the ability to check up to two bags without fees and access to special security lanes...

  • Page 8
    ...flight schedules; and other resource-sharing activities. United and Continental are members of Star Alliance, a global integrated airline network co-founded by United in 1997 and the most comprehensive airline alliance in the world. As of January 1, 2011, Star Alliance carriers served 1,160 airports...

  • Page 9
    ... be earned by purchasing the goods and services of our non-airline partners, such as retail merchants, hotels, car rental companies and credit card issuers. Mileage credits can be redeemed for free, discounted or upgraded travel and non-travel awards. At December 31, 2010, United and Continental had...

  • Page 10
    ... hotel award program in the fourth quarter of 2009. Total miles redeemed for travel on United in 2010, including class-of-service upgrades, represented 86% of the total miles redeemed (for both completed and future travel). Distribution Channels. The majority of the Company's airline seat inventory...

  • Page 11
    ...from carrying passengers to points beyond designated international gateway cities due to limitations in air service agreements and restrictions imposed unilaterally by foreign governments. To compensate partially for these structural limitations, U.S. and foreign carriers have entered into alliances...

  • Page 12
    ... air traffic control operations, capacity control issues, airline competition issues, aircraft and airport technology requirements, safety issues, taxes, fees and other funding sources. Congress may also pass other legislation that could increase labor and operating costs. Climate change legislation...

  • Page 13
    ...Narita International Airport are among the most restrictive airports due to capacity limitations. United and Continental have significant operations at these locations. The Company's ability to serve some foreign markets and expand into certain others is limited by the absence of aviation agreements...

  • Page 14
    ... hub cities, have established airport restrictions to limit noise, including restrictions on aircraft types to be used and limits on the number and scheduling of hourly or daily operations. In some instances, these restrictions have caused curtailments in services or increased operating costs, and...

  • Page 15
    ... agreement: United Employee Group Number of Employees Union Contract Open for Amendment Public Contact/Ramp & Stores/Food Service Employees/Security Officers/Maintenance Instructors/Fleet Technical Instructors Flight Attendants 14,471 International Association of Machinists and Aerospace Workers...

  • Page 16
    ... service employees at United. Also in January 2011, the AFA announced that it had filed a similar request with the NMB for purposes of union representation for United and Continental flight attendants. The Company anticipates that other applications will be filed by various unions covering smaller...

  • Page 17
    ... time. Any of the following risks could materially adversely affect the Company's business, operating results, financial condition and the actual outcome of matters as to which forward-looking statements are made in this report. The Merger may present certain material risks to the Company's business...

  • Page 18
    ...air travel and other services. Under certain of United's and Continental's credit card processing agreements, the financial institutions either require, or under certain circumstances have the right to require, that United and Continental maintain a reserve equal to a portion of advance ticket sales...

  • Page 19
    ... and commitments to date, the Company's future liquidity could be negatively impacted by the risk factors discussed in this Item 1A, including, but not limited to, substantial volatility in the price of fuel, adverse economic conditions and disruptions in the global capital markets. In the event...

  • Page 20
    ... close to its major hub locations to ensure supply continuity in the short term, the Company cannot predict the continued future availability of aircraft fuel. At times, due to the highly competitive nature of the airline industry, the Company has not been able to increase its fares or other fees...

  • Page 21
    ... network carriers to exercise pricing power and maintain sufficient fare levels in domestic markets to achieve sustained profitability. Airlines also compete for market share by increasing or decreasing their capacity, including route systems and the number of markets served. Several of the Company...

  • Page 22
    ...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 increase the Company's costs and/or decrease the demand for air travel...

  • Page 23
    ...the number of flights and/or increase costs of operations at certain times or throughout the day. The FAA may limit the Company's airport access by limiting the number of departure and arrival slots at high density traffic airports, which could affect the Company's ownership and transfer rights, and...

  • Page 24
    ... taxes, extreme or severe weather, air traffic control congestion, geological events, natural disasters, changes in the competitive environment due to industry consolidation and other factors and general economic conditions. As a result, the Company's quarterly operating results are not necessarily...

  • Page 25
    ...under Continental's plans depend upon a number of factors, including labor negotiations with the applicable employee groups and changes to pension plan benefits as well as factors outside of UAL's control, such as the number of applicable retiring employees, asset returns, interest rates and changes...

  • Page 26
    ... the Company's results of operations and financial condition. The terrorist attacks of September 11, 2001 led to a significant increase in insurance premiums and a decrease in the insurance coverage available to commercial airlines. Accordingly, the Company's insurance costs increased significantly...

  • Page 27
    ... limit or possibly eliminate its ability to use its NOL carryforwards. Potential future transactions involving the sale or issuance of UAL common stock, including the exercise of conversion options under the terms of the Company's convertible debt, repurchase of such debt with UAL common stock...

  • Page 28
    ...its business objectives. In addition, significant or volatile changes in exchange rates between the U.S. dollar and other currencies, and the imposition of exchange controls or other currency restrictions, may have a material adverse impact upon the Company's liquidity, revenues, costs and operating...

  • Page 29
    ... tranche by issuing UAL common stock having a market value equal to $62.5 million. Each issued tranche will mature 15 years from its respective triggering event date, with interest payable in cash in semiannual installments, and will be callable, at UAL's option, at any time at par, plus accrued and...

  • Page 30
    ... to the repurchase price divided by an average price of UAL common stock for a 20-consecutive trading day period. See Note 14 to the financial statements included in Item 8 of this report for additional information related to these convertible notes. The number of shares issued could be significant...

  • Page 31
    ... on their behalf, Continental and United operated 607 and 655 aircraft, respectively, as of December 31, 2010. UAL's combined fleet as of December 31, 2010 is presented in the table below: Aircraft Type Mainline: Total Owned Leased Seats in Standard Configuration Average Age (In Years) 747-400...

  • Page 32
    ...and Analysis of Financial Condition and Results of Operations, and Note 17 in Item 8 of this report for information related to future capital commitments to purchase these aircraft. Facilities United's and Continental's principal facilities relate to leases of airport facilities, gates, hangar sites...

  • Page 33
    ... an international investigation into what government officials described as a possible price fixing conspiracy relating to certain surcharges included in tariffs for carrying air cargo. The DOJ issued a grand jury subpoena to United and the Commission conducted an inspection at the Company's offices...

  • Page 34
    ... be accommodated in their current position are given the opportunity to apply and compete for available positions. If the medically restricted employee is similarly qualified to others who are competing for an open position, under United's policy, the medically restricted employee will be given...

  • Page 35
    ...UAL's announcement of the Merger on May 2, 2010, three class action lawsuits were filed against Continental, members of Continental's board of directors and UAL in the Texas District Court for Harris County. The lawsuits purported to represent a class of Continental stockholders opposed to the terms...

  • Page 36
    ... dioxide emissions from flights to and from member states of the EU with such allowances then surrendered on an annual basis to the government. On December 17, 2009, the Air Transportation Association, joined by United, Continental and American Airlines, filed a lawsuit in the United Kingdom's High...

  • Page 37
    ...2010, UAL common stock was listed on the NASDAQ Global Select Market ("NASDAQ") under the symbol "UAUA." The following table sets forth the ranges of high and low sales prices per share of UAL common stock during the last two fiscal years, as reported by the NASDAQ for 2009 through the third quarter...

  • Page 38
    ... potential future stock price performance. During the fourth quarter of 2010, repurchases of UAL common stock totaled 25,972 shares at an average price of $24.65 per share. These shares were withheld from employees to satisfy certain tax obligations due upon the vesting of restricted stock. UAL does...

  • Page 39
    ... Continental after the Merger. Mainline Passengers (thousands) (a) ...Revenue passenger miles ("RPMs") (millions) (b) ...Available seat miles ("ASMs") (millions) (c) ...Cargo ton miles (millions) ...Passenger load factor (d) Mainline ...Domestic ...International ...2010 Year Ended December 31, 2009...

  • Page 40
    ... length calculated as total ASMs divided by the number of seat departures. The average number of hours per day that an aircraft flown in revenue service is operated (from gate departure to gate arrival). (i) (j) Reconciliation of GAAP to non-GAAP Financial Measures Non-GAAP financial measures are...

  • Page 41
    aircraft fuel and related taxes provides management and investors the ability to measure UAL's cost performance absent special items and fuel price volatility. Fuel hedge mark to market ("MTM") gains (losses) are excluded as UAL did not apply cash flow hedge accounting for many of the periods ...

  • Page 42
    ... - 20 (47) 62 $ - - - - 22,934 36 22,970 - 22,970 (22) (2) - (24) (7) $22,939 (a) The $89 million special charge in 2007 consists of a $45 million operating revenue item and a $44 million operating expense item. (b) See Note 21 to the financial statements in Item 8 for additional information on...

  • Page 43
    ... 2010 as compared to 2009 primarily due to higher fares and an increase in high-yield business traffic resulting from improved economic conditions in 2010 and the impact of Continental passenger revenue after the closing date of the Merger. UAL's unrestricted cash, cash equivalents and short-term...

  • Page 44
    ... inventory management strategies, allowing it to create new revenue opportunities and other efficiencies for the combined company. In addition, the Company has begun to align its employee incentive programs, including its on-time bonus, perfect attendance and profit sharing programs. During 2011 and...

  • Page 45
    ... the products and services they wish to purchase. An example of a new service that we have introduced is Continental's FareLock, introduced in December 2010, which is an option that offers customers the opportunity, for a fee, to hold reservations and lock-in ticket prices for either 72 hours or...

  • Page 46
    ... change in UAL's operating revenues for the years ended December 31 (in millions, except percentage changes): $ Change $ Increase due to Merger $ Change Excluding Merger Impact % Change Excluding Merger Impact 2010 2009 Passenger-Mainline ...Passenger-Regional ...Total passenger revenue ...Cargo...

  • Page 47
    ... illustrates the year-over-year percentage change in UAL's operating revenues for the years ended December 31 (in millions, except percentage changes): 2009 2008 $ Change % Change Passenger-Mainline ...Passenger-Regional ...Total passenger revenue ...Cargo ...Other operating revenue ... $11,313...

  • Page 48
    ... compared to 2009 The table below includes data related to UAL's operating expenses for the year ended December 31 (in millions, except percentage changes): $ Increase due to Merger $ Change Excluding Merger Impact % Change Excluding Merger Impact 2010 2009 $ Change Aircraft fuel ...Salaries and...

  • Page 49
    ... in passenger revenue on higher traffic and yields driving increases in commissions, credit card fees and GDS fees. Excluding the impact of the Merger, aircraft rent expense decreased by $20 million, or 6%, in 2010 as compared to 2009, primarily as a result of United's retirement of its entire fleet...

  • Page 50
    ... to Boeing 737 aircraft lease terminations. During the fourth quarter of 2010, UAL recorded $130 million to other operating expense, $65 million each for United and Continental, due to revenue sharing obligations related to the trans-Atlantic joint venture with Lufthansa and Air Canada. This expense...

  • Page 51
    ... due to the mainline capacity reductions also benefited mainline fuel expense in 2009 as compared to the prior year. Prior to April 1, 2010, UAL did not designate any of its fuel hedge contracts under applicable accounting standards. Therefore, UAL marked-to-market changes in the fair value of its...

  • Page 52
    ...of 100 aircraft from its operating fleet and the timing of maintenance on other fleet types. Distribution expenses decreased $176 million, or 21%, in 2009 as compared to 2008 primarily due to lower passenger revenues on lower traffic and yields driving reductions in commissions, credit card fees and...

  • Page 53
    ... as a result of decreased market rates. As described in the discussion of changes in aircraft fuel expense above, prior to April 1, 2010, UAL did not designate any of its fuel hedges as cash flow hedges under applicable accounting standards. UAL had a significant amount of hedges that it did not...

  • Page 54
    ... to United's results of operations (in millions, except percentage changes): 2010 2009 % Change Operating Revenue: Passenger revenue ...Cargo and other revenue ...Total revenue ...Operating Expenses: Aircraft fuel ...Salaries and related costs ...Regional capacity purchase ...Landing fees and...

  • Page 55
    ...market prices for aircraft fuel, as highlighted in the fuel table in Operating Expenses-2010 compared to 2009, above; An increase of $293 million in salaries and related costs, which was primarily due to increased accruals for profit sharing and other annual incentive plans. In 2010, United's profit...

  • Page 56
    ...Ended September 30, 2010 Predecessor Year Ended December 31, 2009 (in millions) Combined 2010 % Change Operating Revenue: Passenger revenue ...Cargo and other revenue ...Total revenue ...Operating Expenses: Aircraft fuel ...Salaries and related costs ...Regional capacity purchase ...Landing fees...

  • Page 57
    ... accounting. During the fourth quarter of 2010, Continental recorded $65 million to other operating expense due to the revenue sharing obligations related to the trans-Atlantic joint venture with Lufthansa and Air Canada for the first three quarters of 2010. Merger-related costs and special...

  • Page 58
    Cash Flows from Operating Activities. 2010 compared to 2009 UAL's cash from operating activities increased by $941 million in 2010, as compared to 2009. This yearover-year increase was primarily due to increased cash from passenger and cargo services. Higher cash operating expenses, including fuel, ...

  • Page 59
    ...shares of UAL common stock in an underwritten public offering for a price of $7.24 per share. The proceeds from these transactions were partially offset by $984 million used for scheduled long-term debt and capital lease payments during 2009, as well as $49 million used for payment of various costs...

  • Page 60
    ...UAL ...United ...Continental ... B B B "B2" "B2" "B2" B-(outlook positive) B-(outlook positive) B-(outlook positive) These credit ratings are below investment grade levels. Downgrades from these rating levels, among other things, could restrict the availability and/or increase the cost of future...

  • Page 61
    ...air travel and other services. Under certain of United's and Continental's credit card processing agreements, the financial institutions either require, or under certain circumstances have the right to require, that United and Continental maintain a reserve equal to a portion of advance ticket sales...

  • Page 62
    ... airline industry. There are certain laws and regulations relating to climate change that apply to the Company, including the EU Emissions Trading Scheme ("ETS") (which is subject to legal challenge), environmental taxes for certain international flights (including the United Kingdom's Air Passenger...

  • Page 63
    ... emissions from flights to and from EU member states with such allowances then surrendered on an annual basis to the government. In December 2009, the Air Transportation Association, joined by United, Continental and American Airlines, filed a lawsuit in the United Kingdom challenging regulations...

  • Page 64
    ... Continental's $250 million of fixed rate debt), with remaining terms of up to ten years, that are subject to these increased cost provisions. In several financing transactions involving loans or leases from non-U.S. entities, with remaining terms of up to ten years and an aggregate carrying value...

  • Page 65
    ... passenger and cargo services. Higher cash operating expenses, including fuel, distribution costs and interest expense, partially offset the benefit from increased revenues. Net cash required for fuel increased in the 2010 period due to higher aircraft fuel prices. Operating cash flows in the 2009...

  • Page 66
    ... earnings processes. Refundable tickets expire after one year. MCOs can be exchanged for a passenger ticket. The Company estimates the amount of MCO breakage revenue based on historical experience. See Note 3 to the financial statements in Item 8 for additional information related to accounting...

  • Page 67
    ..., credit card issuers, hotels and car rental companies, among others. Miles can be redeemed for free, discounted or upgraded air travel and non-travel awards. The Company records its obligation for future award redemptions using a deferred revenue model. In the case of the sale of air services...

  • Page 68
    ... to the Company's frequent flyer deferred revenue: UAL United Continental Frequent flyer deferred revenue at December 31, 2010 (in millions) ...% of miles earned expected to expire or go unredeemed ...Impact of 1% change in outstanding miles or weighted average ticket value on deferred revenue (in...

  • Page 69
    ... using both market approaches included a control premium similar to those observed for historical airline and transportation company market transactions. Under the income approach, the fair value of the mainline reporting unit was estimated based upon the present value of estimated future cash flows...

  • Page 70
    ... reached the end of their physical life. Both depreciable lives and residual values are revised periodically to recognize changes in the Company's fleet plan and other relevant information. A one year increase in the average depreciable life of UAL's flight equipment would reduce annual depreciation...

  • Page 71
    ... are valued at the net asset value of shares held by the plans' trusts at year end. The allocation of assets was as follows at December 31, 2010: Percent of Total Expected Long-Term Rate of Return Equity security funds: U.S. companies ...International companies ...Fixed-income securities ...Private...

  • Page 72
    ... for its other postretirement benefit plans. Business Combination Measurements. In accordance with applicable accounting standards, UAL estimated the fair value of Continental's assets and liabilities as of the closing date of the Merger, October 1, 2010. These fair value measurements did not result...

  • Page 73
    ... of outstanding miles at October 1, 2010 that were expected to be redeemed. The weighted-average equivalent ticket value reflects differing classes of service, domestic and international itineraries and the carrier providing the award travel. See the Frequent Flyer Awards critical accounting policy...

  • Page 74
    ...hedges a portion of its future fuel requirements, provided the hedges are expected to be cost effective. The Company uses fixed price swaps, purchased call options, collars or other such commonly used financial hedge instruments. These hedge instruments are based directly on aircraft fuel or closely...

  • Page 75
    ... to the Company's cost of aircraft fuel and hedging (in millions, except percentages): UAL United Continental Fuel Costs In 2010, fuel cost as a percent of total operating expenses (a) ...Impact of $1 increase in price per barrel of fuel on annual fuel expense (b) ...Fuel Hedges Asset fair value at...

  • Page 76
    ... non-risk management purposes. At December 31, 2010 and 2009, United did not have any foreign currency hedges. At December 31, 2010, Continental had forward contracts outstanding to hedge 24% of its projected Japanese yen-denominated cash inflows, primarily from passenger ticket sales, through 2011...

  • Page 77
    ...financial statements, the Company has elected to change its method of accounting for frequent flyer award breakage in 2010. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting...

  • Page 78
    ... financial statements present fairly, in all material respects, the financial position of United Continental Holdings, Inc. and subsidiaries as of December 31, 2009, and the results of their operations and their cash flows for the years ended December 31, 2009 and 2008, in conformity with accounting...

  • Page 79
    ... fairly, in all material respects, the information set forth therein. As discussed in Note 2 to the consolidated financial statements, the Company has elected to change its method of accounting for frequent flyer award breakage in 2010. /s/ ERNST & YOUNG LLP Chicago, Illinois February 22, 2011 77

  • Page 80
    ... financial statements present fairly, in all material respects, the financial position of United Air Lines, Inc. and subsidiaries as of December 31, 2009, and the results of their operations and their cash flows for the years ended December 31, 2009 and 2008, in conformity with accounting...

  • Page 81
    ... balance sheets of Continental Airlines, Inc. (the "Company") as of December 31, 2010 (Successor) and December 31, 2009 (Predecessor), and the related statements of consolidated operations, cash flows and stockholder's equity for the period from October 1, 2010 to December 31, 2010 (Successor), the...

  • Page 82
    UNITED CONTINENTAL HOLDINGS, INC. STATEMENTS OF CONSOLIDATED OPERATIONS (In millions, except per share amounts) Year Ended December 31, 2010 2009 2008 Operating revenues: Passenger-Mainline ...Passenger-Regional ...Cargo ...Other operating revenue ...Operating expenses: Aircraft fuel ...Salaries ...

  • Page 83
    ... assets: Cash and cash equivalents ...Short-term investments ...Total unrestricted cash, cash equivalents and short-term investments ...Restricted cash ...Receivables, less allowance for doubtful accounts (2010-$6; 2009-$14) ...Aircraft lease deposits maturing within one year ...Aircraft fuel, spare...

  • Page 84
    UNITED CONTINENTAL HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS (In millions, except shares) At December 31, 2010 2009 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Advance ticket sales ...Frequent flyer deferred revenue ...Accounts payable ...Accrued salaries, wages and ...

  • Page 85
    ...advance ticket sales ...(205) (38) (388) Increase (decrease) in frequent flyer deferred revenue and advanced purchase of miles ...(67) 123 738 (Increase) decrease in other assets ...26 (25) 257 Increase (decrease) in accounts payable ...255 94 (48) Net cash provided by (used in) operating activities...

  • Page 86
    ... Net change related to employee benefit plans ...- Total comprehensive income, net ...Shares issued in exchange for Continental common stock ...Equity component of Continental convertible debt assumed in Merger ...Shares issued in exchange for redemption of Continental convertible debt ...Fair value...

  • Page 87
    UNITED AIR LINES, INC. STATEMENTS OF CONSOLIDATED OPERATIONS (In millions) Year Ended December 31, 2010 2009 2008 Operating revenues: Passenger-Mainline ...Passenger-Regional ...Cargo ...Other operating revenue ...Operating expenses: Aircraft fuel ...Salaries and related costs ...Regional capacity ...

  • Page 88
    UNITED AIR LINES, INC. CONSOLIDATED BALANCE SHEETS (In millions, except shares) At December 31, 2010 2009 ASSETS Current assets: Cash and cash equivalents ...Restricted cash ...Receivables, less allowance for doubtful accounts (2010-$5; 2009-$14) ...Aircraft lease deposits maturing within one year ...

  • Page 89
    ... (In millions, except shares) At December 31, 2010 2009 LIABILITIES AND STOCKHOLDER'S DEFICIT Current liabilities: Advance ticket sales ...Frequent flyer deferred revenue ...Accounts payable ...Accrued salaries, wages and benefits ...Current maturities of long-term debt ...Current maturities of...

  • Page 90
    ... accounts payable ...221 94 (49) Increase (decrease) in advance ticket sales ...44 (38) (388) Increase (decrease) in frequent flyer deferred revenue and advanced purchase of miles ...(126) 123 738 (Increase) decrease in other current assets ...(103) (19) 257 Net cash provided by (used in) operating...

  • Page 91
    ... 31, 2009 ...Net income ...Other comprehensive income (loss): Net change in unrealized gains on derivative instruments and other ...Net change related to employee benefit plans ...Total comprehensive income, net ...Share-based compensation ...Parent Company contribution related to stock plans...

  • Page 92
    ...Ended December 31, 2010 Predecessor Nine Months Year Ended Ended December 31, September 30, 2010 2009 2008 Operating revenue: Passenger-Mainline ...Passenger-Regional ...Cargo ...Other operating revenue ...Operating expenses: Aircraft fuel ...Salaries and related costs ...Regional capacity purchase...

  • Page 93
    ... At December 31, 2010 Predecessor At December 31, 2009 ASSETS Current assets: Cash and cash equivalents ...Short-term investments ...Total cash, cash equivalents and short-term investments ...Receivables, less allowance for doubtful accounts (2010-$1; 2009-$7) ...Aircraft fuel, spare parts and...

  • Page 94
    ..., except shares) Successor At December 31, 2010 Predecessor At December 31, 2009 LIABILITIES AND STOCKHOLDER'S EQUITY Current liabilities: Advance ticket sales ...Frequent flyer ...Accounts payable ...Accrued salaries, wages and benefits ...Current maturities of long-term debt ...Current maturities...

  • Page 95
    ...) in accounts payable ...Increase (decrease) in advance ticket sales ...Increase in frequent flyer deferred revenue ...Increase (decrease) in accrued liabilities ...Net cash provided by (used in) operating activities ...Cash Flows from Investing Activities: Capital expenditures ...Aircraft purchase...

  • Page 96
    ... ...Net change related to employee benefit plans ...Tax expense on other comprehensive income ...Total comprehensive income ...Issuance of common stock pursuant to stock plans ...Issuance of common stock pursuant to stock offerings ...Share-based compensation ...Balance at December 31, 2009 ...Net...

  • Page 97
    CONTINENTAL AIRLINES, INC. STATEMENTS OF CONSOLIDATED STOCKHOLDER'S EQUITY (In millions) Additional Paid in Capital Retained Earnings (Deficit) Accumulated Other Comprehensive Income (Loss) Common Stock Shares Amount Total Successor Company Merger Impact: Elimination of equity accounts in ...

  • Page 98
    ...closing price of $23.66 per share of UAL common stock on September 30, 2010, the last trading day before the closing of the Merger, the aggregate value of the consideration paid in connection with the Merger was approximately $3.7 billion. The Merger was accounted for as a business combination using...

  • Page 99
    ...Shares of UAL common stock issued ...Price per share (closing market price of UAL common stock on acquisition date) ...Fair value of UAL shares issued ...Fair value of UAL options issued in exchange for Continental options and equity component of Continental convertible securities ...Purchase price...

  • Page 100
    ...OnePass frequent flyer program liability was determined based on the weighted average equivalent ticket value of outstanding miles which were expected to be redeemed at October 1, 2010. The weighted average equivalent ticket value contemplates differing classes of service, domestic and international...

  • Page 101
    ... 2010, UAL and United changed their classification of certain revenue and expenses in their statements of consolidated operations. Baggage fees, unaccompanied minor fees and miscellaneous fees moved from mainline and regional passenger revenue to other operating revenue. Purchased services and cost...

  • Page 102
    ...2010 As Reclassified Historical Year Ended December 31, 2009 As Reclassified Historical Year Ended December 31, 2008 As Reclassified Historical Operating revenues: Passenger-Mainline ...Passenger-Regional ...Other operating revenues ...Operating expenses: Aircraft fuel ...Regional Capacity Purchase...

  • Page 103
    ... fair value of available-for-sale securities are included in other comprehensive income. Restricted cash primarily includes cash collateral associated with workers' compensation obligations, reserves for institutions that process credit card ticket sales and cash collateral received from fuel hedge...

  • Page 104
    ..., credit card issuers, hotels and car rental companies, among others. Miles can be redeemed for free, discounted or upgraded air travel and non-travel awards. The Company records its obligation for future award redemptions using a deferred revenue model. In the case of the sale of air services...

  • Page 105
    ... because breakage will be recognized as a component of the rate at which actual miles are redeemed. UAL and United estimate these changes increased passenger revenue by approximately $250 million, or $1.21 per UAL basic share ($0.99 per UAL diluted share), in the year ended December 31, 2010. 103

  • Page 106
    ... Increase in Frequent Flyer Deferred Revenue for Miles Awarded (c) (In millions) Year Ended December 31, Cash Proceeds from Miles Sold (a) Net Increase in Advanced Purchase of Miles (d) 2010 United ...2010 Continental Successor ...2010 UAL Consolidated ...2009 UAL / United ...2008 UAL / United...

  • Page 107
    ... future cash flows and its fair market value. The amount of the charge is the difference between the asset's carrying value and fair market value. See Note 21 for information related to asset impairments recognized in 2010, 2009 and 2008. (n) Share-Based Compensation-The Company measures the cost...

  • Page 108
    ... 5 years Frequent Flyer Program Accounting-Continental accounted for mileage credits earned by flying on Continental under an incremental cost model, rather than a deferred revenue model. For those frequent flyer accounts that had sufficient mileage credits to claim the lowest level of free travel...

  • Page 109
    ... 31 (dollars in millions): UAL Asset life (a) 2010 Gross Carrying Accumulated Amount Amortization 2009 Gross Carrying Accumulated Amount Amortization Goodwill Amortized intangible assets Airport slots and gates ...Hubs ...Patents and tradenames ...Frequent flyer database ...Contracts ...Other...

  • Page 110
    (a) Weighted average life expressed in years. (b) The United and Continental frequent flyer databases are amortized based on an accelerated amortization schedule to reflect utilization of the assets. Estimated cash flows correlating to the expected attrition rate of customers in the frequent flyer ...

  • Page 111
    ...issue 250 million shares of preferred stock (without par value) under UAL's amended and restated certificate of incorporation. Continental Common Stock. In connection with the Merger, on October 1, 2010, all outstanding 141 million shares of Continental common stock were converted into and exchanged...

  • Page 112
    ... of $615 million as of December 31, 2010, are callable at any time at 100% of par value, and can be redeemed with either cash or UAL common stock at UAL's option. These notes are not included in the diluted earnings per share calculation, as it is UAL's intent to use cash to redeem these notes. 110

  • Page 113
    ...options, stock appreciation rights, restricted stock awards, restricted stock units ("RSUs"), performance compensation awards, performance units, cash incentive awards and other types of equity-based and equity-related awards. As part of the Merger, UAL assumed all of Continental's outstanding share...

  • Page 114
    ... applicable to Continental prior to the Merger. The following table provides information related to UAL share-based compensation plan cost, for the years ended December 31 (in millions): 2010 2009 2008 Compensation cost: (a), (b) Share-based awards converted to cash awards (c) ...Restricted stock...

  • Page 115
    ...price per share of Continental common stock for the 20 trading days preceding the completion of the Merger. Merger Impacts- United Share-Based Awards. In May 2010, the UAL Board of Directors made a determination that the Merger should be considered a change of control for purposes of all outstanding...

  • Page 116
    ...Continental Predecessor options in 2010 which were valued at the Merger closing date: Weighted-average fair value assumptions: 2010 2009 2008 Risk-free interest rate ...0.1 - 1.8% 1.9 - 3.1% 1.9 - 3.6% Dividend yield Expected market price volatility of UAL common stock ...75% 93% 55% Expected life...

  • Page 117
    ... 2010, and the years ended December 31, 2009 and 2008 was $57 million, $(3) million and $47 million, respectively. Stock Options. Stock options were awarded with exercise prices equal to the fair market value of Continental's common stock on the date of grant. Management level employee stock options...

  • Page 118
    ...the next year), subject to a limit on the number of years payments could be carried forward. Payment amounts were calculated based on the number of PBRSUs subject to the award, the average closing price of Continental common stock during the 20 trading days preceding the payment date and the payment...

  • Page 119
    ...) Year Ended December 31, 2010 UAL United Continental Successor Continental Predecessor Income tax provision at statutory rate ...State income taxes, net of federal income tax benefit ...Nondeductible acquisition costs ...Nondeductible employee meals ...Nondeductible interest expense ...Change in...

  • Page 120
    ..., (In millions) 2010 2009 United December 31, 2010 2009 Continental December 31, Successor Predecessor 2010 2009 Deferred income tax asset (liability): Federal and state net operating loss carryforwards ...$ 3,429 $ 2,707 $ 2,217 $ 2,697 $ 1,179 Frequent flyer deferred revenue ...2,358 1,644 1,609...

  • Page 121
    ... benefits of the net operating losses of $187 million for UAL expires over a five to 20 year period. Both UAL Corporation and Continental experienced an "ownership change" as defined under Section 382 of the Internal Revenue Code of 1986, as amended, as a result of the Merger. However, the Company...

  • Page 122
    ... of the beginning and ending amount of unrecognized tax benefits related to UAL's uncertain tax positions (in millions): 2010 2009 2008 Balance at January 1, ...Increase due to Continental's uncertain tax positions at the Merger closing date ...Increase in unrecognized tax benefits as a result of...

  • Page 123
    ... ...Foreign currency exchange rate changes ...Lump sum settlement ...Special termination benefits ...Gross benefits paid ...Projected benefit obligation at end of year ...Change in plan assets: Fair value of plan assets at beginning of year ...Merger impact (b) ...Actual return on plan assets...

  • Page 124
    Other Postretirement Benefits Year Ended December 31, 2010 (In millions) UAL United Continental (a) Year Ended December 31, 2009 UAL & Continental United Predecessor Change in benefit obligation: Benefit obligation at beginning of year ...Merger impact (b) ...Service cost ...Interest cost ...Plan ...

  • Page 125
    ...special items, are non-cash charges related to lump sum distributions from the Continental pilot-only defined benefit pension plan to pilots who retired. Settlement accounting is required if, for a given year, the cost of all settlements exceeds, or is expected to exceed, the sum of the service cost...

  • Page 126
    ...return on plan assets ...Health care cost trend rate assumed for next year (b) ...Rate to which the cost trend rate is assumed to decline (ultimate trend rate in 2016) ... (a) The 2010 discount rate used to determine benefit obligations at the Merger closing date is 4.58%. (b) The 2010 discount rate...

  • Page 127
    ... A 1% change in the assumed health care trend rate for the Company would have the following additional effects (in millions): UAL 1% Increase 1% Decrease United 1% Increase 1% Decrease Continental 1% Increase 1% Decrease Effect on total service and interest cost for the year ended December 31, 2010...

  • Page 128
    ... 58 Total UAL and United - 2009 Level 1 Level 2 Level 3 Pension Plan Assets: Fixed income funds ...Equity security funds ...Annuity insurance contract ...Other investments ...Total ...Other Postretirement Benefit Plan Assets: Deposit administration fund ...Continental Successor - 2010 Total Level...

  • Page 129
    ... equity funds are valued at the net asset value of shares held by the plans' trust at year end. The reconciliation of our defined benefit plan assets measured at fair value using unobservable inputs (Level 3) for the years ended December 31, 2010 and 2009 is as follows (in millions): 2010 UAL United...

  • Page 130
    ...%, respectively, of eligible earnings depending on the terms of each plan. The Company's contributions to its defined contribution plans for the years ended December 31 were as follows (in millions): UAL (a) United (a) Continental Successor Continental Predecessor 2010 ...2009 ...2008 ... $254 244...

  • Page 131
    ... profits, excluding special items and stock compensation expense, to the employees of United when pre-tax profit excluding special items, profit sharing expense and stock-based compensation program expense exceeds $10 million. Continental's profit sharing plan creates an award pool of 15% of annual...

  • Page 132
    The Company's operating revenue by principal geographic region (as defined by the U.S. Department of Transportation) for the years ended December 31, is presented in the table below (in millions): 2010 UAL United Continental Successor Continental Predecessor Domestic (U.S. and Canada) ...Pacific ...

  • Page 133
    ... Gain (Loss) on Derivatives and other Financial Instruments UAL Total Balance at December 31, 2007 ...Change in fair value of financial instruments ...Employee benefit plans: Reclassification unrecognized net actuarial gains into earnings ...Current year actuarial gain ...Balance at December 31...

  • Page 134
    ... service cost into earnings ...Current year actuarial loss ...Balance at December 31, 2008 ...Derivative financial instruments: Reclassification of losses into earnings ...Change in fair value of derivatives ...Unrealized gain on student loan-related auction rate securities ...Employee benefit plans...

  • Page 135
    ... measured at fair value on a recurring basis in the Company's financial statements as of December 31 (in millions): Total 2010 Level 1 Level 2 Level 3 Total UAL 2009 Level 1 Level 2 Level 3 Cash and cash equivalents ...EETC ...Short-term investments: Auction rate securities ...CDARS ...Asset-backed...

  • Page 136
    ...activity for "Level Three" financial assets and financial liabilities (in millions): 2010 Student Loan-Related Auction Rate Securities 2009 UAL (a) EETC EETC Balance at beginning of year ...Purchases, sales, issuances and settlements (net) ...Acquired in Merger ...Reported in other comprehensive...

  • Page 137
    ... as trading securities and elected the fair value option under applicable accounting standards for the put right, with changes in the fair value of the put right and the underlying auction rate securities recognized in earnings currently. Continental recognized gains on the sales using the specific...

  • Page 138
    ... models include contractual terms, risk-free interest rates and credit spreads. Fair value is estimated taking into consideration the limited sales and offers to purchase such securities and using internally-developed models of the expected future cash flows related to the securities. Our models...

  • Page 139
    ...the market approach to estimate the fair value of its aircraft. In 2010, the estimated fair value of the routes was determined using an income approach. In 2009, the Company estimated the fair value of its tradename using a discounted cash flow model. The key inputs to the discounted cash flow model...

  • Page 140
    ...operations. To protect against increases in the prices of aircraft fuel, the Company routinely hedges a portion of its future fuel requirements, provided the hedges are expected to be cost effective. The Company uses fixed price swaps, purchased call options, collars or other commonly used financial...

  • Page 141
    ...'s financial statements. As of December 31, 2010, all of the Company's fuel derivatives were designated as cash flow hedges. As of December 31, 2009, none of United's fuel derivatives were designated as cash flow hedges. For each year in the three year period ended December 31, 2010, Continental did...

  • Page 142
    ... costs, customer service expense and aircraft maintenance. Changes in foreign currency exchange rates impact the Company's results of operations and cash flows through changes in the dollar value of foreign currencydenominated operating revenues and expenses. When management believes risk...

  • Page 143
    ...: current portion of long-term debt-United ...Long-term debt, net-United ...$ Continental: Secured Notes payable, fixed interest rates of 4.75% to 9.25% (weighted average rate of 7.0% as of December 31, 2010), payable through 2022 ...$ Floating rate notes, LIBOR plus 0.35% to 5.0%, payable through...

  • Page 144
    ... 31, 2010, UAL, United and Continental were in compliance with their respective debt covenants. Continued compliance depends on many factors, some of which are beyond the Company's control, including the overall industry revenue environment and the level of fuel costs. The Company's significant...

  • Page 145
    ... and unpaid interest if certain changes in control of UAL occur. The UAL 5% Notes are callable, at UAL's option, at any time at par, plus accrued and unpaid interest, and can be redeemed with cash, shares of UAL common stock or a combination thereof, beginning in February 2011. In the case of any...

  • Page 146
    ... certain changes in control of UAL occur. The UAL 6% Senior Notes are callable, at UAL's option, at any time at par, plus accrued and unpaid interest, and can be redeemed with cash, shares of UAL common stock or a combination thereof. United Amended Credit Facility. United's Amended Credit Facility...

  • Page 147
    ... are used to purchase equipment notes which are issued by United and secured by United's aircraft. The payment obligations of United under the equipment notes are fully and unconditionally guaranteed by UAL. In 2009, through two transactions, United created three pass through trusts to issue a total...

  • Page 148
    ... 2009, Continental entered into an amendment of its Debit Card Marketing Agreement with JPMorgan Chase Bank, N.A. ("JPMorgan Chase") under which JPMorgan Chase purchases frequent flyer mileage credits to be earned by One Pass members for making purchases using a Continental branded debit card issued...

  • Page 149
    ...the indenture derivatives to Continental by UAL was accounted for as additional-paid-in-capital in Continental's separate-entity financial statements. Changes in fair value of both the indenture derivatives and the embedded conversion options subsequent to October 1, 2010 are recognized currently in...

  • Page 150
    ... common stock at a conversion price of $20 per share. The amount of interest expense recognized and effective interest rate for the Continental 5% Convertible Notes for the periods shown below, were as follows (in millions): Nine Months Ended September 30, 2010 Year Ended December 31, 2009 2008...

  • Page 151
    ..., airport passenger terminal space, aircraft hangars and related maintenance facilities, cargo terminals, other airport facilities, other commercial real estate, office and computer equipment and vehicles. At December 31, 2010, the Company's scheduled future minimum lease payments under operating...

  • Page 152
    .... Under the terms of most leases, the Company has the right to purchase the aircraft at the end of the lease term, in some cases at fair market value, and in others, at fair market value or a percentage of cost. In 2009, United entered into multiple sale-leaseback financings with sales proceeds of...

  • Page 153
    ... year. Based on these assumptions as of December 31, 2010, our future payments through the end of the terms of our CPAs are presented in the table below. These amounts exclude variable pass-through costs such as fuel and landing fees, among others. (In millions) UAL United Continental 2011 ...2012...

  • Page 154
    ... specified dates during the lease term. Additionally, leases covering substantially all of Continental's 256 leased regional jet aircraft contain an option to purchase the aircraft at the end of the lease term at prices that, depending on market conditions, could be below fair value. The Company has...

  • Page 155
    ... December 2010, pursuant to antitrust immunity approval granted by the DOT, United, Continental, Air Canada and Lufthansa executed a revenue-sharing joint venture agreement covering transatlantic routes. The joint venture is expected to deliver highly competitive flight schedules, fares and service...

  • Page 156
    ..., 2010, Continental had firm commitments to purchase 75 new aircraft (50 Boeing 737 aircraft and 25 Boeing 787 aircraft) scheduled for delivery from 2011 through 2016. Continental is currently scheduled to take delivery of four Boeing 737 aircraft in 2011. Continental also has options to purchase 94...

  • Page 157
    ...air travel and other services. Under certain of United's and Continental's credit card processing agreements, the financial institutions either require, or under certain circumstances have the right to require, that United and Continental maintain a reserve equal to a portion of advance ticket sales...

  • Page 158
    ... value of unused tickets (for travel at a future date) purchased by customers using the American Express card. The percentage for purposes of this calculation is the same as the percentage applied under the JPMorgan Chase processing agreement, after taking into account certain other risk protection...

  • Page 159
    ... 2009. Consistent with commitments contained in its current labor contracts, United has filed for mediation assistance in conjunction with four of its six unions-the Air Line Pilots Association ("ALPA"), the Association of Flight Attendants-Communication Workers of America ("AFA"), the International...

  • Page 160
    ... service employees at United. Also in January 2011, the AFA announced that it had filed a similar request with the NMB for purposes of union representation for United and Continental flight attendants. The Company anticipates that other applications will be filed by various unions covering smaller...

  • Page 161
    ... one year is classified as "Advanced purchase of miles" in the non-current liabilities section of UAL's and United's financial statements. The Amendment specifies the maximum amount of the pre-purchased miles that the co-branded credit card partner can award to its cardholders each year from 2011 to...

  • Page 162
    ... would require the application of new accounting guidance, which may result in materially different revenue recognition. Continental also has an advanced purchase of miles agreement with the same credit card partner. However, the United and Continental agreements have different terms, which required...

  • Page 163
    ... For the years ended December 31, merger-related costs and special charges consisted of the following (in millions): 2010 UAL United Continental Successor Continental Predecessor Merger costs: Merger-related costs ...Salary and severance related ...Integration-related costs ...Aircraft impairments...

  • Page 164
    ... future cash flows due to poor economic conditions. In 2008, United recorded a total $64 million impairment of tradename and code sharing agreements, which was primarily due to decreases in expected revenue. These impairments were based on estimated fair values, which were primarily developed using...

  • Page 165
    ...-500 aircraft fleets and spare parts experienced further declines in fair values during the fourth quarter of 2009 primarily as the result of additional 737 aircraft being grounded by other airlines. During 2009, Continental sold eight 737-500 aircraft to foreign buyers. Its gain on these sales was...

  • Page 166
    ... and Central American locations as a result of its annual impairment analysis. Continental determined that these routes had no fair value since they are subject to "open skies" agreements and there are no other barriers to flying to these locations. Other special charges in 2009 related primarily...

  • Page 167
    ... associated with the Merger. The expected total salary-related expense is reflected in the 2010 accrual and is expected to be paid by 2011. The UAL and United accrual activity in 2009 and 2008 primarily relates to the UAL and United operational plans that included a fleet retirement of 100 aircraft...

  • Page 168
    ... termination and other special items ...Goodwill impairment credit ...Total merger-related costs and special charges in operating income (loss) ...Non-cash fuel hedge mark-to-market (gains) losses ...Frequent flyer accounting change (Note 2(h)) ...2009 Operating earnings: Asset impairments ...LAX...

  • Page 169
    ... the reports they file with the SEC on a timely basis. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer of UAL, United and Continental have concluded that as of December 31, 2010, disclosure controls and procedures were effective. Changes in Internal Control over...

  • Page 170
    ... OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of United Continental Holdings, Inc. Chicago, Illinois We have audited United Continental Holdings, Inc.'s (the "Company") internal control over financial reporting as of December 31, 2010, based on criteria...

  • Page 171
    ... Reporting February 22, 2011 To the Stockholder of Continental Airlines, Inc. Chicago, Illinois The management of Continental Airlines, Inc. ("Continental") is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange...

  • Page 172
    ... UAL common stock. The number of shares available for issuance under the Incentive Plan 2010 and various other share limitations under such plan were also adjusted based on the exchange ratio that applied in connection with the Merger. Annual Incentive Program On February 17, 2011, the Compensation...

  • Page 173
    ...fair market value of UAL common stock (which fair market value is determined based on an average closing price over 20 trading days at the end of the period) provided that UAL's return on invested capital ("ROIC") meets or exceeds the entry level ROIC set by the Compensation Committee. The number of...

  • Page 174
    ... to the restricted shares at the time the restricted shares vest, if at all. Merger Performance Incentive Awards On February 17, 2011, the Compensation Committee approved the form of Merger Performance Incentive Award Notice to be used to make grants of restricted stock units (the "Merger Incentive...

  • Page 175
    ...respective Merger Performance Incentive Award Notices. PBGC After the May 2010 announcement of the Merger agreement, the Pension Benefit Guaranty Corporation (the "PBGC") requested certain information from Continental to assess the Merger's impact on Continental's qualified defined benefit programs...

  • Page 176
    ... to the PBGC Indenture and the production of information by Continental. Continental provided to the PBGC the information that the PBGC requested and, although the standstill agreement has expired, the parties continue to try to resolve these matters. UAL cannot predict any further action that...

  • Page 177
    ... Executive Vice President of UAL, United and Continental and President of Mileage Plus Holdings, LLC since October 2010. From January 2009 to September 2010, Mr. Foland served as Senior Vice President Worldwide Sales and Marketing of United. From September 2006 to January 2009, Mr. Foland served as...

  • Page 178
    ... and Chief Financial Officer of UAL, United and Continental since October 2010. From August 2008 to September 2010, Mr. Rowe served as Executive Vice President and Chief Financial Officer of Continental. From September 2006 to August 2008, Mr. Rowe served as Senior Vice President-Network Strategy of...

  • Page 179
    ... FEES For 2010, audit fees consist primarily of the audit and quarterly reviews of the consolidated financial statements (including an audit of the effectiveness of the Company's internal control over financial reporting), including audits covering United Continental Holdings, Inc. and its wholly...

  • Page 180
    ...tax filings. For Continental, fees for other services in 2009 include agreed upon procedures work on system security controls over real-time traffic data used by Continental. PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES. (a)(1) Financial Statements. The financial statements required...

  • Page 181
    ... duly authorized. UNITED CONTINENTAL HOLDINGS, INC. UNITED AIR LINES, INC. CONTINENTAL AIRLINES, INC. (Registrants) By /s/ ZANE C. ROWE Zane C. Rowe Executive Vice President and Chief Financial Officer Date: February 22, 2011 Pursuant to the requirements of the Securities Exchange Act of 1934...

  • Page 182
    ... Munoz /s/ JAMES J. O'CONNOR Director James J. O'Connor /s/ LAURENCE E. SIMMONS Director Laurence E. Simmons /s/ DAVID J. VITALE Director David J. Vitale /s/ JOHN H. WALKER Director John H. Walker /s/ CHARLES A. YAMARONE Director Charles A. Yamarone Date: February 22, 2011 180

  • Page 183
    ...and Director (Principal Financial Officer) Vice President and Controller (Principal Accounting Officer) Director /s/ ZANE C. ROWE Zane C. Rowe /s/ CHRIS KENNY Chris Kenny /s/ JAMES E. COMPTON James E. Compton /s/ PETER D. MCDONALD Director Peter D. McDonald Date: February 22, 2011 181

  • Page 184
    ...and Director (Principal Financial Officer) Vice President and Controller (Principal Accounting Officer) Director /s/ ZANE C. ROWE Zane C. Rowe /s/ CHRIS KENNY Chris Kenny /s/ JAMES E. COMPTON James E. Compton /s/ PETER D. MCDONALD Director Peter D. McDonald Date: February 22, 2011 182

  • Page 185
    ...and Deductions End of Period Adjustment Expenses (a) Period (In millions) Description Allowance for doubtful accounts-UAL: 2010 ...2009 ...2008 ...Allowance for doubtful accounts-United: 2010 ...2009 ...2008 ...Allowance for doubtful accounts-Continental: Oct. 1 to Dec. 31, 2010 (Successor Company...

  • Page 186
    ... Plan of Merger *2.1 UAL United Continental Agreement and Plan of Merger, dated as of May 2, 2010, by and among UAL Corporation, Continental Airlines, Inc. and JT Merger Sub Inc. (schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K) (filed as Exhibit 2.1 to UAL...

  • Page 187
    ... 2007, Commission file number 1-6033, and incorporated herein by reference) Second Amendment to the Amended and Restated Revolving Credit, Term Loan and Guaranty Agreement, dated as of May 5, 2008, by and among United Air Lines, Inc., UAL Corporation and certain subsidiaries of United Air Lines, Inc...

  • Page 188
    ...) Form of Guarantee of 9.875% Senior Secured Notes due 2013 (filed as Exhibit 4.3 to UAL's Form 8-K filed January 15, 2010, Commission file number 1-6033, and incorporated herein by reference) Indenture, dated as of January 15, 2010, by and among United Air Lines, Inc., each of the Guarantors party...

  • Page 189
    ... 4.11 to Continental's S-3 dated September 8, 2003, Commission file number 1-0323, and incorporated herein by reference) First Supplemental Indenture, dated as of October 1, 2010, by and among Continental Airlines, Inc., United Continental Holdings, Inc. and The Bank of New York Mellon Trust Company...

  • Page 190
    ...Holdings, Inc. Success Sharing Program-Profit Sharing Plan, as amended and restated, effective January 1, 2011 Employment Agreement, dated as of September 5, 2002, by and among United Air Lines, Inc., UAL Corporation and Glenn F. Tilton (filed as Exhibit 10.3 to UAL's Form 10-Q for the quarter ended...

  • Page 191
    ... Retention Agreement, dated as of May 2, 2010 (filed as Exhibit 10.2 to UAL's Form S-4 dated June 25, 2010, Commission file number 16033, and incorporated herein by reference) Employment Agreement, dated as of October 1, 2010, by and among United Continental Holdings, Inc., Continental Airlines, Inc...

  • Page 192
    ... of Benefits for Officers of United Continental Holdings, Inc., United Air Lines, Inc., and Continental Airlines, Inc. United Continental Holdings, Inc. Officer Travel Policy UAL Corporation 2009 Annual Incentive Plan (filed as Exhibit 10.4 to United's Air Lines, Inc.'s Form 10-K for the year ended...

  • Page 193
    ... 10-Q for the quarter ended June 30, 2010, Commission file number 1-6033, and incorporated herein by reference) Form of Merger Performance Incentive Award Notice pursuant to the United Continental Holdings, Inc. 2008 Incentive Compensation Plan Form of Restricted Share Award Notice pursuant to the...

  • Page 194
    ... Agreement, dated October 1, 2010, by and among United Continental Holdings, Inc. and Glenn F. Tilton Form of Outside Director Stock Option Grant pursuant to the 1998 Incentive Plan (filed as Exhibit 10.12(c) to Continental's Form 10-K for the year ended December 31, 2006, Commission file number...

  • Page 195
    ... Option Plan (filed as Exhibit 10.9 to Continental's Form 10-Q for the quarter ended March 31, 2005, Commission file number 1-10323, and incorporated herein by reference) Purchase Agreement Number 3427, dated February 19, 2010, by and among The Boeing Company and United Air Lines, Inc. (filed...

  • Page 196
    ... Exhibit *10.74 UAL United Letter Agreement No. 3427-05 to Purchase Agreement No. 3427, dated February 19, 2010, by and among The Boeing Company and United Air Lines, Inc. (filed as Exhibit 10.3 to UAL's Form 10-Q for quarter ended March 31, 2010, Commission file number 1-6033, and incorporated...

  • Page 197
    ...Purchase Agreement No. 3427, dated February 19, 2010, by and among The Boeing Company and United Air Lines, Inc. (filed as Exhibit 10.25 to UAL's Form 10-Q for quarter ended March 31, 2010, Commission file number 1-6033, and incorporated herein by reference) *^10.86 UAL United *^10.87 UAL United...

  • Page 198
    ...(s) Exhibit *^10.96 UAL United Letter Agreement No. 6-1162-NIW-2015 to Purchase Agreement No. 3427, dated February 19, 2010, by and among The Boeing Company and United Air Lines, Inc. (filed as Exhibit 10.26 to UAL's Form 10-Q for quarter ended March 31, 2010, Commission file number 1-6033, and...

  • Page 199
    ...S.A.S and United Air Lines, Inc. (filed as Exhibit 10.6 to UAL's Form 10-Q for quarter ended June 30, 2010, Commission file number 1-6033, and incorporated herein by reference) Purchase Agreement No. 1951, including exhibits and side letters thereto, dated July 23, 1996, by and among Continental and...

  • Page 200
    ... Continental's Form 10K for the year ended December 31, 2008, Commission file number 1-10323, and incorporated herein by reference) Letter Agreement No. 6-1162-GOC-131R1 to Purchase Agreement No. 1951, dated March 26, 1998 (filed as Exhibit 10.1 to Continental's Form 10-Q for the quarter ended March...

  • Page 201
    ... 10K for the year ended December 31, 2000, Commission file number 1-10323, and incorporated herein by reference) Supplemental Agreement No. 21, including side letters, to Purchase Agreement No. 1951, dated March 30, 2001 (filed as Exhibit 10.1 to Continental's Form 10-Q for the quarter ended March...

  • Page 202
    ...Purchase Agreement No. 1951, dated June 6, 2006 (filed as Exhibit 10.3 to Continental's Form 10-Q for the quarter ended June 30, 2006, Commission file number 1-10323, and incorporated herein by reference) *^10.141 UAL Continental *^10.142 UAL Continental *^10.143 UAL Continental *^10.144 UAL...

  • Page 203
    ... to Purchase Agreement No. 1951, dated July 23, 2009 (filed as Exhibit 10.2 to Continental's Form 10-Q for the quarter ended September 30, 2009, Commission file number 1-10323, and incorporated herein by reference) *^10.153 UAL Continental *^10.154 UAL Continental UAL Continental UAL Continental...

  • Page 204
    ... 10-Q for the quarter ended September 30, 2010, Commission File Number 1-10323, and incorporated herein by reference) Aircraft General Terms Agreement, dated October 10, 1997, by and among Continental and Boeing (filed as Exhibit 10.15 to Continental's Form 10-K for the year ended December 31, 1997...

  • Page 205
    .... 15 to Purchase Agreement No. 2061, dated October 15, 2008 (filed as Exhibit 10.5 to Continental's Form 10-Q for the quarter ended June 30, 2009, Commission file number 1-10323, and incorporated herein by reference) 203 *^10.177 UAL Continental *^10.178 UAL Continental UAL Continental *^10.179...

  • Page 206
    ...for the year ended December 31, 2009, Commission file number 1-10323, and incorporated herein by reference) Supplemental Agreement No. 19 to Purchase Agreement No. 2061, dated March 2, 2010 (filed as Exhibit 10.4 to Continental's Form 10-Q for the quarter ended March 31, 2010, Commission file number...

  • Page 207
    ...dated April 27, 2010, regarding the change in accounting principle (filed as Exhibit 18 to UAL's Form 10-Q for quarter ended March 31, 2010, Commission file number 1-6033, and incorporated herein by reference) List of Subsidiaries *18 21 UAL United Continental List of United Continental Holdings...

  • Page 208
    ... of the Chief Executive Officer and Chief Financial Officer of Continental Airlines, Inc. pursuant to 18 U.S.C. 1350 (Section 906 of the SarbanesOxley Act of 2002) 32.2 United 32.3 Continental * †^ Previously filed Indicates management contract or compensatory plan or arrangement...

  • Page 209
    ... of revenue and expenses in its statements of consolidated operations and an explanatory paragraph relating to a change in reportable segments) appearing in this Annual Report on Form 10-K of United Continental Holdings, Inc. for the year ended December 31, 2010. /s/ Deloitte & Touche LLP Chicago...

  • Page 210
    ... Holdings, Inc. and the effectiveness of internal control over financial reporting of United Continental Holdings, Inc., included in this Annual Report (Form 10-K) of United Continental Holdings, Inc. for the year ended December 31, 2010. /s/ ERNST & YOUNG LLP Chicago, IL February 22, 2011

  • Page 211
    ... of revenue and expenses in its statements of consolidated operations and an explanatory paragraph relating to a change in reportable segments) appearing in this Annual Report on Form 10-K of United Air Lines, Inc. for the year ended December 31, 2010. /s/ Deloitte & Touche LLP Chicago, Illinois...

  • Page 212
    ... of United Air Lines, Inc. of our report dated February 22, 2011, with respect to the consolidated financial statements and schedule of United Air Lines, Inc., included in this Annual Report (Form 10-K) of United Air Lines, Inc. for the year ended December 31, 2010. /s/ ERNST & YOUNG LLP Chicago, IL...

  • Page 213
    ... related Prospectus, of our report dated February 22, 2011, with respect to the consolidated financial statements and schedule of Continental Airlines, Inc. included in this Annual Report on Form 10-K of Continental Airlines, Inc. for the year ended December 31, 2010. /s/ ERNST & YOUNG LLP Houston...

  • Page 214
    ... 2002) I, Jeffery A. Smisek, certify that: (1) I have reviewed this annual report on Form 10-K for the period ended December 31, 2010 of United Continental Holdings, Inc. (the "Company"); (2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state...

  • Page 215
    ... of 2002) I, Zane C. Rowe, certify that: (1) I have reviewed this annual report on Form 10-K for the period ended December 31, 2010 of United Continental Holdings, Inc. (the "Company"); (2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state...

  • Page 216
    ...information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting. /s/ Jeffery A. Smisek Jeffery A. Smisek Chairman, President and Chief Executive Officer Date: February 22, 2011

  • Page 217
    ... information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting. /s/ Zane C. Rowe Zane C. Rowe Executive Vice President and Chief Financial Officer Date: February 22, 2011

  • Page 218
    ...information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting. /s/ Jeffery A. Smisek Jeffery A. Smisek Chairman, President and Chief Executive Officer Date: February 22, 2011

  • Page 219
    ... information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting. /s/ Zane C. Rowe Zane C. Rowe Executive Vice President and Chief Financial Officer Date: February 22, 2011

  • Page 220
    ... Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of United Continental Holdings, Inc. Date: February 22, 2011 /s/ Jeffery A. Smisek Jeffery A. Smisek President and Chief...

  • Page 221
    ... Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of United Air Lines, Inc. Date: February 22, 2011 /s/ Jeffery A. Smisek Jeffery A. Smisek Chairman, President and Chief...

  • Page 222
    ... Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Continental Airlines, Inc. Date: February 22, 2011 /s/ Jeffery A. Smisek Jeffery A. Smisek Chairman, President...

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