United Airlines 2010 Annual Report Download - page 159

participation, was approximately $212 million and $64 million, respectively. The Company’s contingent
exposure could increase if the participation of other air carriers decreases. The guarantees will expire when the
tax-exempt bonds are paid in full, which ranges from 2011 to 2040. The Company did not record a liability at the
time these indirect guarantees were made.
Guarantees. United has guaranteed interest and principal payments on $270 million of the Denver
International Airport bonds, which were originally issued in 1992, but were subsequently redeemed and reissued
in 2007 and are due in 2032 unless United elects not to extend its equipment and ground lease in which case the
bonds are due in 2023. The bonds were issued in two tranches—approximately $170 million aggregate principal
amount of 5.25% discount bonds and $100 million aggregate principal amount of 5.75% premium bonds. The
related lease obligation is accounted for as an operating lease with the associated expense recorded on a straight-
line basis resulting in ratable accrual of the final $270 million lease obligation over the expected lease term
through 2032, and is included in our lease commitments disclosed in Note 15.
In the Company’s financing transactions that include loans, the Company typically agrees to reimburse
lenders for any reduced returns with respect to the loans due to any change in capital requirements and, in the
case of loans in which the interest rate is based on the London Interbank Offered Rate (“LIBOR”), for certain
other increased costs that the lenders incur in carrying these loans as a result of any change in law, subject in
most cases to certain mitigation obligations of the lenders. At December 31, 2010, UAL had $3.3 billion of
floating rate debt (consisting of United’s $2.3 billion and Continental’s $1.0 billion of floating rate debt) and
$483 million of fixed rate debt (consisting of United’s $233 million and Continental’s $250 million of fixed-rate
debt), with remaining terms of up to ten years, that is 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 of $3.7 billion (consisting of United’s $2.6 billion and Continental’s $1.1 billion
of carrying value), the Company bears the risk of any change in tax laws that would subject loan or lease
payments thereunder to non-U.S. entities to withholding taxes, subject to customary exclusions.
Continental is contingently liable for US Airways’ obligations under a lease agreement between US
Airways and the Port Authority of New York and New Jersey related to the East End Terminal at
LaGuardia. These obligations include the payment of ground rentals to the Port Authority and the payment of
other rentals in respect of the full amounts owed on special facilities revenue bonds issued by the Port Authority
having an outstanding par amount of $95 million at December 31, 2010, and a final scheduled maturity in
2015. If US Airways defaults on these obligations, Continental would be obligated to cure the default and would
have the right to occupy the terminal after US Airways’ interest in the lease had been terminated. See Note 16 for
information related to Continental guarantees associated with certain of its airport leases.
Labor Negotiations. As of December 31, 2010, UAL and its subsidiaries had approximately 86,000 active
employees, of whom approximately 72% were represented by various U.S. labor organizations. United and
Continental had approximately 82% and 60%, respectively, of their active employees represented by various U.S.
labor organizations. United has been in negotiations for amended collective bargaining agreements with all of its
unions since 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 Association of
Machinists (“IAM”) and the Aerospace Workers and the Professional Airline Flight Control Association. While
the labor contract with the International Brotherhood of Teamsters also contemplates filing for mediation, the
parties have agreed to continue in direct negotiations. The current contract with the International Federation of
Professional and Technical Engineers does not stipulate filing for mediation.
In March 2010, Continental reached a tentative agreement on a new four-year labor contract with the union
that represents its dispatchers, which was ratified in April 2010. In September 2010, Continental reached a
tentative agreement on a new labor contract with the union that represents its aircraft maintenance technicians
and related employees, which was ratified in November 2010. Continental negotiated a collective bargaining
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