United Airlines 2012 Annual Report Download - page 146

Table of Contents
increase accordingly. Subsequent to the system conversion, United transferred cash to Continental each month, such transfers being netted against amounts
owed to Continental for segments flown by Continental on United ticket stock. Revenue will continue to be recorded by the carrier that is operating the flight.
Revenue and expense allocation
Until United Air Lines, Inc. and Continental Airlines, Inc. are merged into one legal entity, revenue and expenses will continue to be recorded by each entity
based on either specific identification of the related transaction, where applicable, or appropriate allocations based on metrics that are systematic and rational.
Certain revenues and expenses that were previously recorded based on a specific identification were allocated in March 2012 in connection with the conversion
to a single passenger service system. We believe the allocated amounts will generally be comparable to historical amounts. Each airline will continue to record
actual expenses for aircraft that are owned or leased and passenger revenue will be determined on an actual basis for the carrier operating the flight. The table
below illustrates a summary of the primary allocation metrics to be used:
 

Passenger Actual ticket revenue based on specifically identified flights operated by each carrier.
Frequent flyer component of passenger revenue is allocated to Continental based on
historic revenue passenger miles (“RPMs”) split between carriers and rate at which
outstanding frequent flyer liability was transferred from Continental to United at single
passenger service system conversion for calculating frequent flyer impact. Regional
revenue, based on the carrier that contracted with the regional carrier
Cargo Actual by operating carrier
Other operating Passenger related based on passenger revenue and other based on passengers enplaned
or other similar criteria

Aircraft fuel Actual by operating carrier
Salaries and related costs Actual for operational workgroups and allocation based on historical RPMs for
administrative personnel. Profit sharing expense is allocated based on the proportional
profit of each operating entity
Regional capacity purchase Actual based on specific identification of the carrier that contracted with regional carrier
for flying
Landing fees and other rent Allocation based on passengers enplaned
Aircraft maintenance materials and outside
repairs Actual based on the specific identification of each carrier’s aircraft
Depreciation and amortization Specific identification of carriers’ operational assets (i.e. flight equipment) and
intangible assets and allocation based on historical RPMs for other assets
Distribution expenses Allocation based on passenger revenue
Aircraft rent Actual based on specific identification of each carrier’s aircraft
Special charges Specific identification. Labor agreement costs are allocated based on salaries of
respective work groups
Other operating expenses Specific identification where applicable and allocation based on historical RPMs for
other
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