United Airlines 2010 Annual Report Download - page 156

Contingent Senior Unsecured Notes. UAL would be obligated under an indenture to issue to the PBGC up
to $500 million aggregate principal amount of 8% Notes if certain financial triggering events occur. The 8%
Notes would be issued to the PBGC in up to eight equal tranches of $62.5 million (with each tranche issued no
later than 45 days following the end of any applicable fiscal year). A triggering event occurs when UAL’s
EBITDAR (as defined in the PBGC indenture) exceeds $3.5 billion over the prior twelve months ending June 30
or December 31 of any applicable fiscal year. The twelve month measurement periods will end with the fiscal
year ending December 31, 2017. In certain circumstances, UAL common stock may be issued in lieu of issuance
of the 8% Notes.
Other Contingencies. United is a party to a multiyear technology services agreement and has engaged in
discussions with the counterparty to amend or restructure certain performance obligations. In the event that these
discussions are not successful, the counterparty may assert claims for damages. The ultimate outcome of these
discussions and the exact amount of the damages and costs, if any, to the Company cannot be predicted with
certainty at this time.
Commitments. The table below summarizes the Company’s commitments as of December 31, 2010, which
primarily relate to the acquisition of aircraft and related spare engines, aircraft improvements and include other
commitments primarily to acquire information technology services and assets (in millions).
UAL United Continental
2011 ............................................................. $ 422 $ 225 $ 197
2012 ............................................................. 1,082 119 963
2013 ............................................................. 765 71 694
2014 ............................................................. 988 95 893
2015 ............................................................. 1,642 372 1,270
After 2015 ........................................................ 7,494 6,834 660
$12,393 $7,716 $4,677
United Aircraft Commitments
As of December 31, 2010, United had firm commitments to purchase 25 Boeing 787 aircraft and 25 Airbus
A350XWB aircraft for delivery from 2016 through 2019. United also has purchase options for 42 Airbus A319
and A320 aircraft and purchase rights for 50 Boeing 787 aircraft and 50 Airbus A350XWB aircraft. United has
secured considerable backstop financing commitments from its aircraft and engine manufacturers, subject to
certain customary conditions. However, there is no guarantee that United will be able to obtain any or all of the
backstop financing, or any other financing, for the aircraft and engines on acceptable terms when necessary.
Continental Aircraft Commitments
As of December 31, 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
additional Boeing aircraft.
As discussed in Note 14, Continental does not have backstop financing or any other financing currently in
place for most of the Boeing aircraft on order. Further financing will be needed to satisfy Continental’s capital
commitments for its firm order aircraft and other related capital expenditures. Continental can provide no
assurance that backstop financing or any other financing not already in place for aircraft deliveries will be
available to Continental when needed on acceptable terms or at all.
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