United Airlines 2011 Annual Report Download - page 155

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In December 2009, Continental agreed with ExpressJet to amend their capacity purchase agreement to permit ExpressJet to fly eight ERJ-145 aircraft for
another carrier. These eight aircraft are subleased from Continental and were previously flown for them under capacity purchase agreements. Continental also
recorded a $13 million charge based on the difference between the sublease rental and the contracted rental payments on those aircraft during the two and one-
half year average initial term of the related sublease agreement.
In July 2009, Continental entered into agreements to sublease five temporarily grounded ERJ-135 aircraft to Chautauqua beginning in the third quarter of
2009. These aircraft are not operated for Continental. The subleases have terms of five years, but may be canceled by the lessee under certain conditions after
an initial term of two years. Continental recorded a $6 million charge for the difference between the sublease rental income and the contracted rental payments
on those aircraft during the initial term of the agreement. Continental has also temporarily grounded 25 leased 37-seat ERJ-135 aircraft and has subleased five
others for terms of five years. The leases on these 30 ERJ-135 aircraft expire in 2016 through 2018.
In 2009, Continental recorded a $12 million non-cash charge to write off intangible route assets related to certain Mexican and Central American locations as a
result of its annual impairment analysis. Continental determined that these routes had no fair value since they are subject to open skies agreements and there
are no other barriers to flying to these locations.
Other special charges in 2009 related primarily to an adjustment to Continental Predecessor’s reserve for unused facilities due to reductions in expected
sublease income for a maintenance hangar in Denver.
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Activity related to the accruals for severance and medical costs and future lease payments on permanently grounded aircraft and unused facilities is as follows
(in millions):








Balance at December 31, 2008 $ 81 $16 $ —
Accrual 33 87 —
Payments (69) (20) —
Balance at December 31, 2009 45 83 —
Liability assumed due to Merger, October 1, 2010 3 — 33
Accrual 155 (3) —
Payments (101) (39) (26)
Balance at December 31, 2010 102 41 7
Accrual 21 5 —
Payments (68) (15) (3)
Balance at December 31, 2011 $55 $31 $4

Balance at December 31, 2009 $ 45 $83 $ —
Accrual 74 (3) —
Payments (77) (39) —
Balance at December 31, 2010 42 41 —
Accrual 28 5 —
Payments (42) (15) —
Balance at December 31, 2011 $ 28 $31 $ —
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