United Airlines 2014 Annual Report Download - page 41

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Table of Contents
Liquidity and Capital Resources
As of December 31, 2014, the Company had $4.4 billion in unrestricted cash, cash equivalents and short-term investments, a decrease of $0.7 billion from
December 31, 2013. The Company had its entire commitment capacity of $1.35 billion under the Credit Agreement available for letters of credit or
borrowings as of December 31, 2014. As of December 31, 2014, the Company had $320 million of restricted cash and cash equivalents, which is primarily
collateral for performance bonds, letters of credit, credit card processing agreements and estimated future workers’ compensation claims. We may be required
to post significant additional cash collateral to provide security for obligations that are not currently backed by cash. Restricted cash and cash equivalents at
December 31, 2013 totaled $395 million. As of December 31, 2014, the Company had cash collateralized $74 million of letters of credit. Approximately
$100 million of the Company’s unrestricted cash balance was held as Venezuelan bolivars as of December 31, 2014 based on a mix of historical rates in effect
at the time of submission for repatriation. United is working with Venezuelan authorities regarding the timing and exchange rate applicable to the
repatriation of funds held in local currency.
As is the case with many of our principal competitors, we have a high proportion of debt compared to capital. We have a significant amount of fixed
obligations, including debt, aircraft leases and financings, leases of airport property and other facilities and pension funding obligations. At December 31,
2014, the Company had approximately $12.1 billion of debt and capital lease obligations, including $1.4 billion that are due within the next 12 months. In
addition, we have substantial non-cancelable commitments for capital expenditures, including the acquisition of new aircraft and related spare engines. The
Company had principal payments of debt and capital lease obligations totaling $2.6 billion in 2014.
The Company will continue to evaluate opportunities to prepay its debt, including open market repurchases, to reduce its indebtedness and the amount of
interest paid on its indebtedness.
For 2015, the Company expects between $3.0 billion and $3.2 billion of gross capital expenditures. See Notes 11 and 15 to the financial statements included
in Part II, Item 8 of this report for additional information on commitments.
As of December 31, 2014, a substantial portion of the Company’s assets, principally aircraft, route authorities and certain other intangible assets, were
pledged under various loan and other agreements. See Note 11 to the financial statements included in Part II, Item 8 of this report for additional information
on assets provided as collateral by the Company.
Although access to the capital markets improved in recent years as evidenced by our financing transactions, we cannot give any assurances that we will be
able to obtain additional financing or otherwise access the capital markets in the future on acceptable terms, or at all. We must sustain our profitability and/or
access the capital markets to meet our significant long-term debt and capital lease obligations and future commitments for capital expenditures, including the
acquisition of aircraft and related spare engines.
The following is a discussion of the Company’s sources and uses of cash from 2012 through 2014.
Cash Flows from Operating Activities

The Company’s cash from operating activities increased by $1.2 billion in 2014, as compared to 2013. Cash from operations increased primarily due to an
increase in operating income and advanced ticket sales and a decrease in other working capital items in 2014.

The Company’s cash from operating activities increased by $509 million in 2013, as compared to 2012. Cash from operations increased primarily due to the
Company’s improvement in earnings in 2013.
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