United Airlines 2014 Annual Report Download - page 104

Table of Contents
Agreement contains termination penalties that may require United to make certain payments and repurchase outstanding pre-purchased miles in cases such as
United’s insolvency, bankruptcy or other material breaches. The Company has recorded these amounts as advanced purchase of miles in the liabilities section
of the Company’s consolidated balance sheets.
The obligations of UAL, United and Mileage Plus Holdings, LLC to Chase under the Co-Brand Agreement are joint and several. Certain of United’s
obligations under the Co-Brand Agreement are secured by a junior lien in all collateral pledged by United under the Credit Agreement. United also provides
a first priority lien to Chase on its MileagePlus assets to secure certain of its obligations under the Co-Brand Agreement and its obligations under the new
combined credit card processing agreement among United, Paymentech, LLC and JPMorgan Chase.
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United leases aircraft, airport passenger terminal space, aircraft hangars and related maintenance facilities, cargo terminals, other airport facilities, other
commercial real estate, office and computer equipment and vehicles.
At December 31, 2014, United’s scheduled future minimum lease payments under operating leases having initial or remaining noncancelable lease terms of
more than one year, aircraft leases, including aircraft rent under CPAs and capital leases (substantially all of which are for aircraft) were as follows (in
millions):





2015 $ 168 $ 1,283 $ 1,446
2016 154 1,123 1,247
2017 115 1,089 1,147
2018 104 842 908
2019 38 766 682
After 2019 495 7,919 1,910
Minimum lease payments $ 1,074 $ 13,022 $ 7,340
Imputed interest (393)
Present value of minimum lease payments 681
Current portion (110)
Long-term obligations under capital leases $ 571
(a) As of December 31, 2014, United’s aircraft capital lease minimum payments relate to leases of 37 mainline and 38 regional aircraft as well as to leases of nonaircraft assets. Imputed interest rate ranges are
3.5% to 18.3%.
(b) See Note 17 of this report for additional information related to facility and other operating leases at Hopkins International Airport (“Cleveland”).
(c) The operating lease payments presented above include future payments of $72 million related to 21 nonoperating aircraft as of December 31, 2014.
Aircraft operating leases have initial terms of six to twenty-eight years, with expiration dates ranging from 2015 through 2024. Under the terms of most
leases, United has the right to purchase the aircraft at the end of the lease term, in some cases at fair market value, and in others, at fair market value or a
percentage of cost. United has facility operating leases that extend to 2041.
United is the lessee of real property under long-term operating leases at a number of airports where we are also the guarantor of approximately $1.5 billion of
underlying debt and interest thereon as of December 31, 2014. These leases are typically with municipalities or other governmental entities, which are
excluded from the consolidation requirements concerning a variable interest entity (“VIE”). To the extent United’s leases and related guarantees are with a
separate legal entity other than a governmental entity, United is not the primary beneficiary because the lease terms are consistent with market terms at the
inception of the lease and the lease does not include a residual value guarantee, fixed-price purchase option, or similar feature.
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