United Airlines 2012 Annual Report Download - page 22

Table of Contents
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, general economic conditions and other factors. 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 and results of operations.
The Company’s financial resources may not be sufficient to absorb the adverse effects of any future terrorist attacks or other international hostilities.
An outbreak of a disease or similar public health threat could have a material adverse impact on the Company’s business, financial position and
results of operations.
An outbreak of a disease or similar public health threat that affects travel demand or travel behavior, or travel restrictions or reduction in the demand for air
travel caused by an outbreak of a disease or similar public health threat in the future, could have a material adverse impact on the Company’s business,
financial condition and results of operations.
The Company may never realize the full value of its intangible assets or its long-lived assets causing it to record impairments that may negatively
affect its financial position and results of operations.
In accordance with applicable accounting standards, the Company is required to test its indefinite-lived intangible assets for impairment on an annual basis on
October 1 of each year, or more frequently if conditions indicate that an impairment may have occurred. In addition, the Company is required to test certain of
its other assets for impairment if conditions indicate that an impairment may have occurred.
The Company may be required to recognize impairments in the future due to, among other factors, extreme fuel price volatility, tight credit markets, a decline
in the fair value of certain tangible or intangible assets, unfavorable trends in historical or forecasted results of operations and cash flows and an uncertain
economic environment, as well as other uncertainties. The Company can provide no assurance that a material impairment charge of tangible or intangible
assets will not occur in a future period. The value of our aircraft could be impacted in future periods by changes in supply and demand for these aircraft.
Such changes in supply and demand for certain aircraft types could result from grounding of aircraft by the Company or other carriers. An impairment
charge could have a material adverse effect on the Company’s financial position and results of operations.
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