United Airlines 2012 Annual Report Download - page 46

Table of Contents
Expense allocations between United and Continental are based on metrics that are systematic and rational; however, the amounts allocated for 2012 and 2011
may not be representative of the actual expenses incurred. See Note 20 to the financial statements included in Item 8 of this report for additional information.
United’s operating expenses increased approximately $1.4 billion, or 6.9%, in 2012 as compared to 2011, which was primarily due to the following:
• An increase of approximately $350 million, or 4.9%, in aircraft fuel expense, which was primarily driven by volatility in market prices for aircraft
fuel, as highlighted in the fuel table in 2012 compared to 2011 - Operating Expense, above;
• An increase of $62 million, or 1.5%, in salaries and related costs which was primarily driven by new collective bargaining agreements for the
Company’s pilots, flight attendants and mechanics;
• A decrease of $64 million, or 8.6%, in distribution expenses due to lower credit card discount fees driven by legislation reducing costs on debit
card sales and lower volumes on global distributions systems fees paid in 2012 as compared to 2011;
• An increase of $551 million in special charges in 2012 as compared to the year-ago period primarily due to modification of the Company’s
obligations to the PBGC, the United and Continental pilots’ ratification of a new joint collective bargaining agreement with the Company and
voluntary severance; and
• An increase of $561 million, or 19.8%, in other operating expenses in 2012 as compared to the year-ago period primarily due to the cost of fuel
sales to Continental that are eliminated upon consolidation of the Company’s financial results, additional trip interruption costs, hotel and per diem
expenses, personnel-related expenses and additional denied boarding costs.
United’s nonoperating expense decreased $128 million, or 21.2%, in 2012 as compared to 2011, which was primarily due to the pay down of debt obligations
in 2012 and 2011.
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