United Airlines 2012 Annual Report Download - page 128

Table of Contents
The following tables present the fuel hedge gains (losses) recognized during the periods presented and their classification in the financial statements (in
millions):
















     
UAL $ (51) $ 163 $ (141) $ 503 $ (1) $ (59)
United (23) 172 (76) 417 — (21)
Continental (28) (9) (65) 86 (1) (38)

 

 
        
UAL
$
—
$
—
$ (35) $ 38 $
—
$
—
$ 38 $
—
$ (35)
United — — (35) 22 — — 22 — (35)
Continental — — — 16 — — 16 — —
Derivative Credit Risk and Fair Value
The Company is exposed to credit losses in the event of nonperformance by counterparties to its derivative instruments. While the Company records derivative
instruments on a gross basis, the Company monitors its net derivative position with each counterparty to monitor credit risk. Based on the fair value of our
fuel derivative instruments, our counterparties may require us to post collateral when the price of the underlying commodity decreases, and we may require our
counterparties to provide us with collateral when the price of the underlying commodity increases. The following table presents information related to the
Company’s derivative credit risk as of December 31 (in millions):
 
     
Net derivative assets with counterparties $46 $ 28 $ 18 $73 $ 44 $ 29
Collateral held by the Company (a) — — — — — —
Potential loss related to the failure of the Company’s
counterparties to perform $46 $ 28 $ 18 $73 $ 44 $ 29
(a) Classified as an other current liability.
The Company considers counterparty credit risk in determining its exposure and the fair value of its financial instruments, and generally monitors and limits
its exposure to any single counterparty. The Company considers credit risk to have a minimal impact on fair value because cash collateral is provided by the
Company’s hedging counterparties periodically based on current market exposure and the credit-worthiness of the counterparties.
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