United Airlines 2012 Annual Report Download - page 14

Table of Contents
The Company cannot predict the outcome of negotiations with its unionized employee groups, although significant increases in the pay and benefits resulting
from new collective bargaining agreements would have an adverse financial impact on the Company.
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
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The Merger may present certain material risks to the Company’s business and operations.
The Merger, described in Item 1, Business, may present certain risks to the Company’s business and operations including, among other things, risks that:
• we may be unable to successfully integrate the businesses and workforces of United and Continental;
• we may be unable to successfully manage the expanded business with respect to monitoring new operations and associated increased costs and
complexity;
• we may be unable to avoid potential liabilities and unforeseen increased expenses or delays associated with the Merger and integration, including in
connection with any legal merger of United Air Lines, Inc. and Continental Airlines, Inc. into a single corporation;
• we may be unable to successfully manage the complex integration of systems, technology, aircraft fleets, networks and other assets of United and
Continental in a manner that minimizes any adverse impact on the Company and the Company’s customers, vendors, suppliers, employees and
other constituencies; and
• we may experience disruption of, or inconsistencies in, each of United’s and Continental’s standards, controls, reports on operations, procedures,
policies and services.
Accordingly, there can be no assurance that the Merger will result in the realization of the full benefits of synergies, innovation and operational efficiencies that
we currently expect, that these benefits will be achieved within the anticipated timeframe or that we will be able to fully and accurately measure any such
synergies.
Continued periods of historically high fuel prices or significant disruptions in the supply of aircraft fuel could have a material adverse impact on
the Company’s operating results, financial position and liquidity.
Aircraft fuel has been the Company’s single largest and most volatile operating expense for the last several years. The availability and price of aircraft fuel
significantly affect the Company’s operations, results of operations, financial position and liquidity. While the Company has been able to obtain adequate
supplies of fuel under various supply contracts and also stores fuel close to major hub locations to ensure supply continuity in the short term, the Company
cannot predict the continued future availability or price of aircraft fuel.
Continued volatility in fuel prices may negatively impact the Company’s liquidity in the future. Aircraft fuel prices can fluctuate based on a multitude of
factors including market expectations of supply and demand balance, inventory levels, geopolitical events, economic growth expectations, fiscal/monetary
policies and financial investment flows. The Company may not be able to increase its fares or other fees if fuel prices rise in the future and any such fare or
fee increases may not be sustainable in the highly competitive airline industry. In addition, any increases in fares or other fees may not sufficiently offset the
full impact of such rises in fuel prices and may also reduce the general demand for air travel.
To protect against increases in the prices of aircraft fuel, the Company routinely hedges a portion of its future fuel requirements. However, the Company’s
hedging program may not be successful in controlling fuel costs, and price protection provided may be limited due to market conditions and other factors. To
the extent that the Company uses hedge contracts that have the potential to create an obligation to pay upon settlement if prices decline significantly, including
swaps or sold put options as
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