United Airlines 2010 Annual Report Download - page 106

The following table provides additional information related to amounts recorded related to UAL’s frequent
flyer programs. Continental’s results are included in UAL’s results from October 1, 2010 to December 31,
2010.
(In millions)
Year Ended December 31,
Cash Proceeds
from Miles Sold
(a)
Other Revenue
Recognized
Upon Award of
Miles to Third-
Party
Customers (b)
Increase in
Frequent Flyer
Deferred
Revenue for
Miles Awarded
(c)
Net Increase in
Advanced
Purchase of Miles
(d)
2010 United ................. $1,863 $(300) $(1,477) $ (86)
2010 Continental Successor .... 293 (31) (262) —
2010 UAL Consolidated ....... $2,156 $(331) $(1,739) $ (86)
2009 UAL / United ........... $1,703 $(256) $(1,377) $ (70)
2008 UAL / United ........... $2,204 $(260) $(1,550) $(394)
(a) Cash proceeds for the year ended December 31, 2008 include $500 million of proceeds from one significant
advanced sales transaction to United’s co-branded credit card partner.
(b) This amount represents other revenue recognized during the period from the sale of miles to third parties,
representing the marketing services component of the sale.
(c) This amount represents the increase to frequent flyer deferred revenue during the period.
(d) This amount represents the net increase in the advance purchase of miles obligation due to cash payments for the
sale of miles in excess of miles awarded to customers.
See Note 19 for additional information related to the Company’s frequent flyer program. Continental’s
frequent flyer program accounting changed significantly as a result of the Merger. See Continental
Predecessor Accounting Policies, below, for the Continental Predecessor policy.
(i) Deferred Gains (Losses)—Gains and losses on aircraft sale and leaseback transactions are amortized over
the related lease terms.
(j) Regional Capacity Purchase—Payments made to regional carriers under capacity purchase agreements are
reported in regional capacity purchase in our consolidated statement of operations. As of December 31,
2010, United has call options on 189 regional jet aircraft currently being operated by certain regional
carriers. At December 31, 2010, none of the call options were exercisable because none of the required
conditions to make an option exercisable by United were met.
(k) Advertising—Advertising costs, which are included in other operating expenses, are expensed as incurred.
Advertising expenses for the three years ended December 31 were as follows (in millions):
UAL United
Continental
Successor
Continental
Predecessor
2010 .......................................... $90 $67 $ 23 $ 74
2009 .......................................... 44 44 N/A 102
2008 .......................................... 63 63 N/A 93
(l) Intangibles—The Company has finite-lived and indefinite-lived intangible assets, including goodwill. As of
December 31, 2010, goodwill represents the excess purchase price over the fair values of tangible and
identifiable intangible assets acquired and liabilities assumed from Continental in the Merger. Finite-lived
intangible assets are amortized over their estimated useful lives. Goodwill and indefinite-lived intangible
assets are not amortized but are reviewed for impairment annually or more frequently if events or
circumstances indicate that the asset may be impaired. Goodwill and indefinite-lived assets are reviewed for
impairment on an annual basis as of October 1, or on an interim basis whenever a triggering event occurs.
See Notes 4 and 21 for additional information related to intangibles, including impairments recognized in
2010, 2009 and 2008.
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