United Airlines 2012 Annual Report Download - page 50

Table of Contents
Cash Flows from Investing Activities
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UAL’s capital expenditures, including aircraft purchase deposits, were $2 billion and $840 million in 2012 and 2011, respectively. UAL’s capital
expenditures for 2012 were primarily attributable to the purchase of new Boeing aircraft and other fleet-related expenditures to improve the onboard experience
of our existing aircraft.
UAL increased its short-term investments, net of proceeds, by $245 million in 2012 in order to improve interest income.
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UAL’s capital expenditures, including aircraft purchase deposits, were $840 million and $416 million in 2011 and 2010, respectively. Approximately half of
the capital expenditures in 2011 related to aircraft upgrades across the Company’s fleet for its international premium travel product as well as various facility
and ground equipment projects. Some of these capital expenditures relate to improvements to assets as a result of the Merger. Also, in 2011, the Company
purchased nine aircraft that were operated under leases for $88 million and were immediately sold to third parties upon acquisition for proceeds of $72
million.
In December 2011, United cash collateralized $194 million of its letters of credit that had previously been issued and collateralized under the Amended Credit
Facility, resulting in an increase in restricted cash.
UAL increased its short-term investments, net of proceeds, by $898 million in 2011 as compared to 2010. This was primarily due to the placement of
additional funds with outside money managers and movement of liquid assets from cash to short-term investments. United’s short-term investments, net of
proceeds, increased by $269 million while Continental’s short-term investments, net of proceeds, increased by $629 million in 2011 as compared to 2010.
Cash Flows from Financing Activities
Significant financing events in 2012 were as follows:
• In March 2012, Continental created two pass-through trusts that issued an aggregate principal amount of $892 million of pass-through certificates.
Continental received all $892 million in proceeds raised by the pass-through trusts as of December 31, 2012 in exchange for Continental’s issuance
of an equivalent principal amount of equipment notes, which has been recorded as debt. The proceeds were used to fund the acquisition of new
aircraft, and in the case of currently owned aircraft, for general corporate purposes;
• In October 2012, Continental created two pass-through trusts, one of which issued $712 million aggregate principal amount of Class A pass-
through certificates with a stated interest rate of 4% and the second of which issued $132 million aggregate principal amount of Class B pass-
through certificates with a stated interest rate of 5.5%. The proceeds of the issuance of the Class A and Class B pass-through certificates, which
amounted to $844 million, are used to purchase equipment notes issued by Continental. Of the $844 million in proceeds raised by the pass-through
trusts, Continental received $293 million as of December 31, 2012. Continental expects to receive the remaining proceeds from the issuance during
the first seven months of 2013 as aircraft are delivered to Continental and Continental issues equipment notes to the trusts. Continental records the
debt obligation upon issuance of the equipment notes rather than upon the initial issuance of the pass-through certificates. The proceeds have been
and are expected to be used to fund the acquisition of new aircraft;
• In December 2012, Continental created one pass-through trust which issued $425 million aggregate principal amount of Class C pass-through
certificates with a stated interest rate of 6.125%. The proceeds of the issuance of the Class C pass-through certificates are used to purchase
equipment notes issued by Continental related to the aircraft financed in both the March and October 2012 EETC financings. Of the $425 million
in proceeds raised by the pass-through trust, Continental received $278 million as of December 31, 2012. Continental expects to receive the
remaining proceeds from the issuance during the
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