United Airlines 2011 Annual Report Download - page 22

Table of Contents
significant liability or loss. If the Company is unable to obtain sufficient insurance (including aviation hull and liability insurance and property and business
interruption coverage) to cover such liabilities or losses, whether due to insurance market conditions or otherwise, its results of operations and financial
condition could be materially and adversely affected.
The Company could experience adverse publicity, harm to its brand, reduced travel demand and potential tort liability as a result of an accident or
other catastrophe involving its aircraft, the aircraft of its regional carriers or the aircraft of its codeshare partners, which may result in a material
adverse effect on the Company’s results of operations or financial position.
An accident or catastrophe involving an aircraft that the Company operates, or an aircraft that is operated by a codeshare partner or one of the Company’s
regional carriers, could have a material adverse effect on the Company if such accident created a public perception that the Company’s operations, or the
operations of its codeshare partners or regional carriers, are less safe or reliable than other airlines. Such public perception could in turn cause harm to the
Company’s brand and reduce travel demand on the Company’s flights, or the flights of its codeshare partners or regional carriers.
In addition, any such accident could expose the Company to significant tort liability. Although the Company currently maintains liability insurance in
amounts and of the type the Company believes to be consistent with industry practice to cover damages arising from any such accident, and the Company’s
codeshare partners and regional carriers carry similar insurance and generally indemnify the Company for their operations, if the Company’s liability exceeds
the applicable policy limits or the ability of another carrier to indemnify it, the Company could incur substantial losses from an accident which may result in
a material adverse effect on the Company’s results of operations or financial position.
The Company’s results of operations fluctuate due to seasonality and other factors associated with the airline industry.
Due to greater demand for air travel during the spring and summer months, revenues in the airline industry in the second and third quarters of the year are
generally stronger than revenues in the first and fourth quarters of the year, which are periods of lower travel demand. The Company’s results of operations
generally reflect this seasonality, but have also been impacted by numerous other factors that are not necessarily seasonal including, among others, the
imposition of excise and similar taxes, extreme or severe weather, air traffic control congestion, geological events, natural disasters, changes in the competitive
environment due to industry consolidation and other factors and general economic conditions. As a result, the Company’s quarterly operating results are not
necessarily indicative of operating results for an entire year and historical operating results in a quarterly or annual period are not necessarily indicative of
future operating results.
Terrorist attacks or international hostilities, or the fear of terrorist attacks or hostilities, even if not made directly on the airline industry, could
negatively affect the Company and the airline industry.
The terrorist attacks on September 11, 2001 involving commercial aircraft severely and adversely impacted each of United’s and Continental’s financial
condition and results of operations, as well as the prospects for the airline industry. Among the effects experienced from the September 11, 2001 terrorist
attacks were substantial flight disruption costs caused by the FAA-imposed temporary grounding of the U.S. airline industry’s fleet, significantly increased
security costs and associated passenger inconvenience, increased insurance costs, substantially higher ticket refunds and significantly decreased traffic and
passenger revenue.
Additional terrorist attacks, even if not made directly on the airline industry, or the fear of or the precautions taken in anticipation of such attacks (including
elevated national threat warnings or selective cancellation or redirection of flights) could materially and adversely affect the Company and the airline industry.
Wars and other international hostilities could also have a material adverse impact on the Company’s financial condition, liquidity
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