United Airlines 2014 Annual Report Download - page 112

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Table of Contents
United used cash to retire, at par, the entire $248 million principal balance of the 6% Convertible Debentures and the 6% Convertible Preferred Securities,
Term Income Deferrable Equity Securities (TIDES) and incurred $74 million of expense primarily associated with the write-off of the related non-cash debt
discounts recorded due to purchase accounting during the Company’s merger transaction in 2010.
2013
The Company offered a voluntary retirement program for its fleet service, passenger service, storekeeper and pilot work groups. Approximately 1,200
employees volunteered under the program during the fourth quarter of 2013 and United recorded approximately $64 million of severance and benefit costs
for the programs. The Company also offered voluntary leave of absence programs which allowed for continued medical coverage for flight attendants who
volunteered during the leave of absence period, resulting in a charge of approximately $26 million. The remaining $15 million of severance and benefit costs
was related to involuntary severance programs associated with flight attendants and other work groups.
Integration-related costs included compensation costs related to systems integration and training, branding activities, new uniforms, write-off or acceleration
of depreciation on systems and facilities that were no longer used or planned to be used for significantly shorter periods, relocation for employees and
severance primarily associated with administrative headcount reductions.
The Company recorded $32 million of impairment charges of its flight equipment held for disposal associated with its Boeing 737-300 and 737-500 fleets
and $1 million on an intangible asset for a route to Manila in order to reflect the estimated fair value of this asset as part of the Company’s annual impairment
test of indefinite-lived intangible assets.
The fleet service, passenger service and storekeeper employees represented by the International Association of Machinists ratified a joint collective
bargaining agreement with the Company during 2013. The Company recorded a $127 million special charge for lump sum payments made in conjunction
with the ratification. The lump sum payments were not in lieu of future pay increases. The Company completed substantially all cash payments in 2013.
The Company recorded $18 million associated with the temporary grounding of its Boeing 787 aircraft. The charges were comprised of aircraft depreciation
expense and dedicated personnel costs that the Company incurred while the aircraft were grounded. The aircraft returned to service in May 2013. In addition,
the Company adjusted its reserves for certain legal matters by $29 million and recorded approximately $11 million in accruals for future rent associated with
the early retirement of four leased Boeing 757-200 aircraft. Additionally, the Company recorded a $5 million gain related to a contract termination and $3
million in gains on the sale of assets.
2012
The Company recorded $125 million of severance and benefits associated with various voluntary retirement and leave of absence programs for its various
employee groups. During the first quarter of 2012, approximately 400 mechanics offered to retire early in exchange for a cash severance payment that was
based on the number of years of service each employee had accumulated. The expense for this voluntary program was approximately $32 million. The
Company also offered a voluntary leave of absence program that approximately 1,800 flight attendants accepted, which allowed for continued medical
coverage during the leave of absence period. The expense for this voluntary program was approximately $17 million. During the second quarter of 2012, as
part of the recently amended collective bargaining agreement with the Association of Flight Attendants, the Company offered a voluntary program for flight
attendants to retire early in exchange for a cash severance payment. The payments are dependent on the number of years of service each employee has
accumulated. Approximately 1,300 flight attendants accepted this program and the expense for this voluntary program was approximately $76 million.
Integration-related costs included compensation costs related to systems integration and training, branding activities, write-off or acceleration of depreciation
on systems and facilities that are either no longer used or
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