United Airlines 2010 Annual Report Download - page 60

United completed a $241 million credit agreement secured by 26 of United’s currently owned and
mortgaged Airbus A319 and A320 aircraft. Borrowings under the agreement were at a variable interest rate based
on the London Interbank Offered Rate (“LIBOR”) plus a margin. The agreement requires periodic principal and
interest payments through its final maturity in June 2019. United may not prepay the loan prior to July 2012.
United also entered into an $84 million loan agreement secured by three aircraft, including two Airbus A320
aircraft and one Boeing 777 aircraft.
UAL generated net proceeds of $107 million in 2008 related to the $200 million equity offering program
described above in the 2009 financing activities.
See Cash Flows from Investing Activities, above, for a discussion of United’s 2008 sale-leaseback
transactions.
For additional information regarding these matters and other liquidity events, see Notes 5, 14 and 15 to the
financial statements in Item 8.
Credit Ratings. As of the filing date of this report, UAL, United and Continental had the following corporate
credit ratings:
S&P Moody’s Fitch
UAL ............................. B “B2” B-(outlook positive)
United ............................ B “B2” B-(outlook positive)
Continental ........................ B “B2” 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 financing for the Company.
Other Liquidity Matters
Below is a summary of additional liquidity matters. See the indicated notes to our consolidated financial
statements contained in Item 8 for additional details related to these and other matters affecting our liquidity and
commitments.
Long-term debt and related covenants ........................................... Note 14
Operating leases ............................................................ Note 15
Investment in student loan-related auction rate securities ............................ Note 12
Fuel hedges ................................................................ Note 13
Pension and other postretirement benefit obligations ............................... Note 9
Regional capacity purchase agreements .......................................... Note 15
Guarantees and indemnifications, credit card processing agreements, and environmental
liabilities ................................................................ Note 17
Debt Covenants. Certain of the Company’s financing agreements impose certain operating and financial
covenants, as applicable, on the Company, on United and its material subsidiaries, or on Continental and its
subsidiaries. Among other covenants, the Amended Credit Facility requires UAL, United and certain of United’s
material subsidiaries who are guarantors under the Amended Credit Facility to maintain a minimum unrestricted
cash balance (as defined in the Amended Credit Facility) of $1.0 billion at all times; a minimum ratio of
collateral value to debt obligations (that may increase if a specified dollar value of the route collateral is
released); and a minimum fixed charge coverage ratio of 1.5 to 1.0 for twelve month periods measured at the end
of each calendar quarter. Among other covenants, the indentures governing the Senior Notes require the issuer to
maintain a minimum ratio of collateral value to debt obligations. If the value of the collateral underlying that
issuer’s Senior Notes declines such that the issuer no longer maintains the minimum required ratio of collateral
value to debt obligations, the issuer may be required to pay additional interest at the rate of 2% per annum,
provide additional collateral to secure the noteholders’ lien or repay a portion of the Senior Notes. A breach of
certain of the covenants or restrictions contained in the Amended Credit Facility or indentures governing the
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