United Airlines 2012 Annual Report Download - page 91

Table of Contents

The following table provides additional information related to the frequent flyer program at the UAL consolidated level (in millions):


















2012 $ 2,852 $ 816 $ 2,036 $ —
2011 3,121 566 2,357 198
2010 2,156 331 1,739 86
(a) This amount represents other revenue recognized during the period from the sale of miles to third parties, representing the marketing services component of the sale.
(b) This amount represents the increase to frequent flyer deferred revenue during the period.
(c) This amount represents the net increase in the advance purchase of miles obligation due to cash payments for the sale of miles in excess of miles awarded to customers.
Continental’s frequent flyer program accounting changed significantly as a result of the Merger. See 
, below, for the Continental Predecessor policy.
(d)  Highly liquid investments with a maturity of three months or less on their acquisition
date are classified as cash and cash equivalents.
Restricted cash primarily includes cash collateral associated with workers’ compensation obligations, reserves for institutions that process credit
card ticket sales and cash collateral received from fuel hedge counterparties. Restricted cash, cash equivalents and investments are classified as
short-term or long-term in the consolidated balance sheets based on the expected timing of return of the assets to the Company. Airline industry
practice includes classification of restricted cash flows as either investing cash flows or operating cash flows. Cash flows related to restricted cash
activity are classified as investing activities because the Company considers restricted cash arising from these activities similar to an investment.
(e) Short-term investments are classified as available-for-sale and are stated at fair value. Realized gains and losses on
sales of investments are reflected in nonoperating income (expense) in the consolidated statements of operations. Unrealized gains and losses on
available-for-sale securities are reflected as a component of accumulated other comprehensive income/loss.
(f) The Company accounts for aircraft fuel, spare parts and supplies at average cost and provides an
obsolescence allowance for aircraft spare parts and supplies.
(g) The Company records additions to owned operating property and equipment at cost when acquired. Property under
capital leases and the related obligation for future lease payments are recorded at an amount equal to the initial present value of those lease payments.
Modifications that enhance the operating performance or extend the useful lives of airframes or engines are capitalized as property and equipment. It
is the Company’s policy to record liquidated damages from late delivery of aircraft as a reduction of the cost of the related aircraft.
Depreciation and amortization of owned depreciable assets is based on the straight-line method over the assets’ estimated useful lives. Leasehold
improvements are amortized over the remaining term of the lease, including estimated facility renewal options when renewal is reasonably assured at
key airports, or the estimated useful life of the related asset, whichever is less. Properties under capital leases are
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