United Airlines 2012 Annual Report Download - page 53

Table of Contents
The amended and restated indenture for the New PBGC Notes, which are unsecured, contains covenants that, among other things, restrict the ability of UAL
and its subsidiaries to incur additional indebtedness and pay dividends on or repurchase stock. These covenants cease to be in effect when the indenture
covering the Senior Notes is discharged. However, if UAL at that time or thereafter has a series of public debt securities with a principal amount of $300
million or more that has the benefit of covenants that are substantially similar to those contained in the indenture for the New PBGC Notes, then subject to
certain conditions and upon written request of the PBGC to UAL, UAL and United will use commercially reasonable efforts to amend the indenture for the
New PBGC Notes to include such covenants.
A breach of certain of the covenants or restrictions contained in the Amended Credit Facility, the Revolving Credit Facility, the indenture governing the Senior
Notes or certain other debt instruments could result in a default and a subsequent acceleration of the applicable debt obligations. The indenture governing the
Senior Notes contains a cross-default provision that would be triggered if Continental were to fail to make payment when due with respect to certain obligations
regarding frequent flyer miles purchased by Chase under the Company’s Co-Brand Agreement. The Revolving Credit Facility includes events of default
customary for similar financings. In addition, the Amended Credit Facility and the Revolving Credit Facility contain cross-default and/or cross-acceleration
provisions pursuant to which default and/or acceleration of certain other material indebtedness of the Company could result in a default under the Amended
Credit Facility, the Revolving Credit Facility, or both.
The Company has agreements with financial institutions that process customer credit card transactions for the sale of air travel and other services. Under
certain of the Company’s credit card processing agreements, the financial institutions either require, or under certain circumstances have the right to require,
that the Company maintains a reserve equal to a portion of advance ticket sales that has been processed by that financial institution, but for which the
Company has not yet provided the air transportation. Such financial institutions may require additional cash or other collateral reserves to be established or
additional withholding of payments related to receivables collected if the Company does not maintain certain minimum levels of unrestricted cash, cash
equivalents and short term investments. The Company’s current level of unrestricted cash, cash equivalents and short term investments is substantially in
excess of these minimum levels.
Capital Commitments and Off-Balance Sheet Arrangements. The Company’s business is capital intensive, requiring significant amounts of capital to
fund the acquisition of assets, particularly aircraft. In the past, the Company has funded the acquisition of aircraft through outright purchase, by issuing
debt, by entering into capital or operating leases, or through vendor financings. The Company also often enters into long-term lease commitments with airports
to ensure access to terminal, cargo, maintenance and other required facilities.
The table below provides a summary of UAL’s material contractual obligations as of December 31, 2012 (in billions):
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Long-term debt (a) $1.8 $2.1 $ 2.0 $1.0 $ 0.5 $ 5.0 $ 12.4
Capital lease obligations—principal portion 0.1 0.1 0.1 0.1 0.1 0.4 0.9
Total debt and capital lease obligations 1.9 2.2 2.1 1.1 0.6 5.4 13.3
Interest on debt and capital lease obligations (b) 0.7 0.6 0.6 0.4 0.3 2.0 4.6
Aircraft operating lease obligations 1.5 1.5 1.2 1.0 0.9 1.4 7.5
Capacity purchase agreements (c) 1.8 1.6 1.4 1.2 1.2 2.3 9.5
Other operating lease obligations 1.1 1.0 0.8 0.7 0.7 5.4 9.7
Postretirement obligations (d) 0.1 0.1 0.2 0.2 0.2 0.9 1.7
Pension obligations (e) 0.2 0.1 0.2 0.2 0.2 1.2 2.1
Capital purchase obligations (f) 1.8 1.5 2.0 3.0 2.5 7.1 17.9
Total contractual obligations $9.1 $8.6 $8.5 $7.8 $6.6 $25.7 $66.3
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