United Airlines 2010 Annual Report Download - page 76
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Foreign Currency. The Company generates revenues and incurs expenses in numerous foreign currencies.
Changes in foreign currency exchange rates impact the Company’s results of operations through changes in the
dollar value of foreign currency-denominated operating revenues and expenses. Some of the Company’s more
significant foreign currency exposures include the Canadian dollar, Chinese renminbi, Japanese yen, British
pound and the European euro. The Company does not enter into derivative instruments for 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. At December 31, 2010, the fair value of those
hedges was $7 million and is included in other current liabilities in Continental’s consolidated balance
sheets. Continental estimates that a uniform strengthening of 10% in the value of the U.S. dollar relative to the
Japanese yen at December 31, 2010 would increase the fair value of its yen hedges by $10 million and increase
its underlying exposure by $40 million, resulting in a net loss of $30 million.
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