United Airlines 2012 Annual Report Download - page 49

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2020. United also had options and purchase rights for additional aircraft. In 2013, United expects to take delivery of ten Boeing 737-900ER aircraft.
As of December 31, 2012, Continental had firm commitments to purchase 47 new aircraft (23 Boeing 737 aircraft and 24 Boeing 787 aircraft) scheduled for
delivery from January 1, 2013 through 2016. Continental also had options to purchase 74 Boeing aircraft. In 2013, Continental expects to take delivery of 14
Boeing 737-900ER aircraft and two Boeing 787-8 aircraft.
As of December 31, 2012, Continental had arranged for enhanced equipment trust certificate (“EETC”) financing of 14 Boeing 737-900ER aircraft and one
Boeing 787-8 aircraft scheduled for delivery from January through July 2013. In addition, United had secured backstop financing commitments from its
widebody aircraft and engine manufacturers for a limited number of its future aircraft deliveries, subject to certain customary conditions. However, UAL and
United do not have backstop financing or any other financing currently in place for their firm narrowbody aircraft orders with Boeing, and Continental does
not have backstop financing or any other financing currently in place for its other Boeing aircraft on order. Financing will be necessary to satisfy the
Company’s capital commitments for its firm order aircraft and other related capital expenditures. The Company can provide no assurance that any financing
not already in place for aircraft and spare engine deliveries will be available to the Company on acceptable terms when necessary or at all. See Notes 14 and 17
to the financial statements included in Item 8 of this report for additional information.
For 2013, the Company expects to make approximately $2.5 billion of gross capital expenditures ($1.4 billion net of anticipated financings, including net
purchase deposits).
As of December 31, 2012, a substantial portion of UAL’s assets, principally aircraft, spare engines, aircraft spare parts, route authorities and certain other
intangible assets, was pledged under various loan and other agreements. See Note 14 to the financial statements included in Item 8 of this report for additional
information on assets provided as collateral by the Company.
Although access to the capital markets improved in 2012 and 2011, as evidenced by our financing transactions in both years, we cannot give any assurances
that we will be able to obtain additional financing or otherwise access the capital markets in the future on acceptable terms, or at all. We must sustain our
profitability and/or access the capital markets to meet our significant long-term debt and capital lease obligations and future commitments for capital
expenditures, including the acquisition of aircraft and related spare engines.
The following is a discussion of UAL’s sources and uses of cash from 2010 to 2012. As UAL applied the acquisition method of accounting to the Merger,
UAL’s cash activities discussed below include Continental’s activities only after October 1, 2010.
Cash Flows from Operating Activities
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UAL’s cash from operating activities decreased by $1.5 billion in 2012, as compared to 2011. Cash from operations declined due to the Company’s net loss
position and the reduction of frequent flyer deferred revenue and advanced purchase of miles by $712 million in 2012.
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UAL’s cash from operating activities increased by $501 million in 2011, as compared to 2010. Cash from operations improved due to the Company’s
improved operational performance in 2011. The Company’s increased revenues were offset in part by higher cash operating expenses resulting from the
Merger, including fuel and aircraft maintenance expense.
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