United Airlines 2011 Annual Report Download - page 18

Table of Contents
directives and other regulations relating to the maintenance and operation of aircraft that require material expenditures or operational restrictions by the
Company. These FAA orders and directives could include the temporary grounding of an entire aircraft type if the FAA identifies design, manufacturing,
maintenance or other issues requiring immediate corrective action. FAA requirements cover, among other things, retirement of older aircraft, security measures,
collision avoidance systems, airborne windshear avoidance systems, noise abatement and other environmental concerns, aircraft operation and safety and
increased inspections and maintenance procedures to be conducted on older aircraft. These FAA directives or requirements could have a material adverse effect
on the Company.
In addition, the Company’s operations may be adversely impacted due to the existing antiquated air traffic control (“ATC”) system utilized by the U.S.
government. During peak travel periods in certain markets, the current ATC system’s inability to handle existing travel demand has led to short-term capacity
constraints imposed by government agencies and resulted in delays and disruptions of air traffic. In addition, the current system will not be able to effectively
handle projected future air traffic growth. Imposition of these ATC constraints on a long-term basis may have a material adverse effect on our results of
operations. Failure to update the ATC system in a timely manner, and the substantial funding requirements of a modernized ATC system that may be imposed
on air carriers may have an adverse impact on the Company’s financial condition or results of operations.
The airline industry is subject to extensive federal, state and local taxes and fees that increase the cost of the Company’s operations. In addition to taxes and
fees that the Company is currently subject to, proposed taxes and fees are currently pending and if imposed, would increase the Company’s operating
expenses.
Access to landing and take-off rights, or “slots,” at several major U.S. airports and many foreign airports served by the Company are, or recently have been,
subject to government regulation. Certain of the Company’s major hubs are among increasingly congested airports in the United States and have been or could
be the subject of regulatory action that might limit the number of flights and/or increase costs of operations at certain times or throughout the day. The FAA
may limit the Company’s airport access by limiting the number of departure and arrival slots at high density traffic airports, which could affect the
Company’s ownership and transfer rights, and local airport authorities may have the ability to control access to certain facilities or the cost of access to its
facilities, which could have an adverse effect on the Company’s business. In addition, in 2008, the FAA planned to withdraw and auction a certain number of
slots held by airlines at the three primary New York area airports, which the airlines challenged and the FAA terminated in 2009. If the FAA were to plan
another auction that survived legal challenge by the airlines, the Company could incur substantial costs to obtain such slots. Further, the Company’s
operating costs at airports at which it operates, including the Company’s major hubs, may increase significantly because of capital improvements at such
airports that the Company may be required to fund, directly or indirectly. In some circumstances, such costs could be imposed by the relevant airport
authority without the Company’s approval and may have a material adverse effect on the Company’s financial condition.
The ability of U.S. carriers to operate international routes is subject to change because the applicable arrangements between the United States and foreign
governments may be amended from time to time, or because appropriate slots or facilities may not be made available. The Company currently operates on a
number of international routes under government arrangements that limit the number of carriers permitted to operate on the route, the capacity of the carriers
providing services on the route, or the number of carriers allowed access to particular airports. If an open skies policy were to be adopted for any of these
routes, such an event could have a material adverse impact on the Company’s financial position and results of operations and could result in the impairment
of material amounts of related tangible and intangible assets. In addition, competition from revenue-sharing joint ventures and other alliance arrangements by
and among other airlines could impair the value of the Company’s business and assets on the open skies routes.
The Company’s plans to enter into or expand U.S. antitrust immunized alliances and joint ventures on various international routes are subject to receipt of
approvals from applicable U.S. federal authorities and obtaining
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