United Airlines 2014 Annual Report Download - page 54
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Table of Contents
Foreign Currency. The Company generates revenues and incurs expenses in numerous foreign currencies. Changes in foreign currency exchange rates impact
the Company’s results of operations through changes in the dollar value of foreign currency-denominated operating revenues and expenses. Some of the
Company’s more significant foreign currency exposures include the Canadian dollar, Chinese renminbi, European euro and Japanese yen. At times, the
Company uses derivative financial instruments to hedge its exposure to foreign currency. The Company does not enter into derivative instruments for non-
risk management purposes. At December 31, 2014, the Company had forward contracts and collars outstanding to hedge 60% of its projected European euro-
denominated net cash inflows, primarily from passenger ticket sales, through the end of 2015.
The result of a uniform 10 percent strengthening in the value of the U.S. dollar from December 31, 2014 levels relative to each of the currencies in which the
Company has foreign currency exposure would result in a decrease in pre-tax income of approximately $262 million for the year ending December 31, 2015.
This sensitivity analysis was prepared based upon projected 2015 foreign currency-denominated revenues and expenses as of December 31, 2014 and reflects
the potential benefit of the European euro hedges mentioned above.
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