United Airlines 2012 Annual Report Download - page 140

Table of Contents
EETCs. The Company evaluated whether the pass-through trusts formed for its EETC financings, treated as either debt or aircraft operating leases, are VIEs
required to be consolidated by the Company under applicable accounting guidance, and determined that the pass-through trusts are VIEs. Based on the
Company’s analysis as described below, the Company determined that it does not have a variable interest in the pass-through trusts.
The primary risk of the pass-through trusts is credit risk (i.e. the risk that United or Continental, the issuer of the equipment notes, may be unable to make
its principal and interest payments). The primary purpose of the pass-through trust structure is to enhance the credit worthiness of the Company’s debt
obligation through certain bankruptcy protection provisions, a liquidity facility (in certain of the EETC structures) and improved loan-to-value ratios for more
senior debt classes. These credit enhancements lower the Company’s total borrowing cost. Pass-through trusts are established to receive principal and interest
payments on the equipment notes purchased by the pass-through trusts from the Company and remit these proceeds to the pass-through trusts’ certificate
holders.
The Company does not invest in or obtain a financial interest in the pass-through trusts. Rather, the Company has an obligation to make interest and principal
payments on its equipment notes held by the pass-through trusts. The Company did not intend to have any voting or non-voting equity interest in the pass-
through trusts or to absorb variability from the pass-through trusts. Based on this analysis, the Company determined that it is not required to consolidate the
pass-through trusts.
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General Guarantees and Indemnifications. In the normal course of business, the Company enters into numerous real estate leasing and aircraft financing
arrangements that have various guarantees included in the contracts. These guarantees are primarily in the form of indemnities under which the Company
typically indemnifies the lessors and any tax/financing parties against tort liabilities that arise out of the use, occupancy, operation or maintenance of the leased
premises or financed aircraft. Currently, the Company believes that any future payments required under these guarantees or indemnities would be immaterial,
as most tort liabilities and related indemnities are covered by insurance (subject to deductibles). Additionally, certain leased premises such as fueling stations
or storage facilities include indemnities of such parties for any environmental liability that may arise out of or relate to the use of the leased premises.
Legal and Environmental. The Company has certain contingencies resulting from litigation and claims incident to the ordinary course of business.
Management believes, after considering a number of factors, including (but not limited to) the information currently available, the views of legal counsel, the
nature of contingencies to which the Company is subject and prior experience, that the ultimate disposition of the litigation and claims will not materially affect
the Company’s consolidated financial position or results of operations. The Company records liabilities for legal and environmental claims when a loss is
probable and reasonably estimable. These amounts are recorded based on the Company’s assessments of the likelihood of their eventual disposition.
Commitments. The table below summarizes the Company’s commitments as of December 31, 2012, which primarily relate to the acquisition of aircraft and
related spare engines, aircraft improvements and include other commitments primarily to acquire information technology services and assets (in billions):
  
2013 $ 1.8 $ 0.8 $ 1.0
2014 1.5 0.7 0.8
2015 2.0 0.9 1.1
2016 3.0 2.0 1.0
2017 2.5 2.4 0.1
After 2017 7.1 4.8 2.3
$ 17.9 $ 11.6 $ 6.3
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