United Airlines 2014 Annual Report Download - page 111

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Table of Contents

Integration-related costs and special items classified as special charges in the statements of consolidated operations consisted of the following for the years
ended December 31 (in millions):
Operating:   
Severance and benefit costs $ 199 $ 105 $ 125
Integration-related costs 96 205 739
Costs associated with permanently grounding Embraer ERJ
135 aircraft 66 — —
Impairment of assets 49 33 30
Labor agreement costs — 127 475
(Gains) losses on sale of assets and other special (gains)
losses, net 33 50 (46)
Special charges $ 443 $ 520 $ 1,323
Nonoperating:
Loss on extinguishment of debt and other, net $ 74 $ — $ —
Income tax benefit (10) (7) (11)
Total operating and nonoperating special
charges, net of income taxes $ 507 $ 513 $ 1,312
2014
The Company recorded $141 million of severance and benefit costs related primarily to a voluntary early-out program for its flight attendants. More than
2,500 participants elected a one-time opportunity to voluntarily separate from the Company and will receive a severance payment, with a maximum value of
$100,000 per participant, based on years of service, with retirement dates from November 30, 2014 through the end of 2015. The Company will record
approximately $100 million of additional expense associated with this program through 2015 over the remaining required service periods. In addition, the
Company recorded $58 million of severance and benefits primarily related to reductions of management and front-line employees, including from Cleveland,
as part of its cost savings initiatives. The Company is currently evaluating its options regarding its long-term contractual lease commitments at
Cleveland. The capacity reductions at Cleveland may result in further special charges, which could be significant, related to our contractual commitments.
Integration-related costs include compensation costs related to systems integration, training, severance and relocation for employees.
The Company recorded $66 million for the permanent grounding of 21 of the Company’s Embraer ERJ 135 regional aircraft under lease through 2018, which
includes an accrual for remaining lease payments and an amount for maintenance return conditions. As a result of fuel prices, new Embraer E175 regional jet
deliveries and impact of pilot shortages at regional carriers, the Company decided to permanently ground these 21 Embraer ERJ 135 aircraft. The Company
continues to operate nine Embraer ERJ 135 aircraft and will assess the possibility of grounding those aircraft when the term of the current capacity purchase
contract ends in 2015.
The Company recorded a charge of $16 million ($10 million net of related income tax benefits) related to its annual assessment of impairment of its
indefinite-lived intangible assets (certain international Pacific routes). In addition, the Company recorded $33 million for charges related primarily to
impairment of its flight equipment held for disposal associated with its Boeing 737-300 and 737-500 fleets.
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