United Airlines 2015 Annual Report Download - page 103

The aircraft listed in the table above are scheduled for delivery from 2016 through 2024.
The table below summarizes United’s commitments as of December 31, 2015, which primarily relate to the acquisition of aircraft and related spare engines,
aircraft improvements and include other commitments primarily to acquire information technology services and assets for the years ended December 31 (in
billions). The table below is adjusted to include the impact of the January 2016 Boeing 737NG aircraft order discussed above. Any new firm aircraft orders,
including through the exercise of purchase options and purchase rights, will increase the total future capital commitments of the Company.
2016 $ 3.4
2017 3.1
2018 3.3
2019 2.9
2020 2.8
After 2020 7.7
$ 23.2
As of December 31, 2015 (as adjusted to include the order discussed above), United has secured backstop financing commitments from certain of its aircraft
manufacturers for a limited number of its future aircraft deliveries, subject to certain customary conditions. Financing may be necessary to satisfy the
Company’s capital commitments for its firm order aircraft and other related capital expenditures.
Legal and Environmental. The Company has certain contingencies resulting from litigation and claims incident to the ordinary course of business. As of
December 31, 2015, management believes, after considering a number of factors, including (but not limited to) the information currently available, the views
of legal counsel, the nature of contingencies to which the Company is subject and prior experience, that the ultimate disposition of the litigation and claims
will not materially affect the Company’s consolidated financial position or results of operations. The Company records liabilities for legal and environmental
claims when a loss is probable and reasonably estimable. These amounts are recorded based on the Company’s assessments of the likelihood of their eventual
disposition.
Guarantees and Indemnifications. In the normal course of business, the Company enters into numerous real estate leasing and aircraft financing
arrangements that have various guarantees included in the contracts. These guarantees are primarily in the form of indemnities under which the Company
typically indemnifies the lessors and any tax/financing parties against tort liabilities that arise out of the use, occupancy, operation or maintenance of the
leased premises or financed aircraft. Currently, the Company believes that any future payments required under these guarantees or indemnities would be
immaterial, as most tort liabilities and related indemnities are covered by insurance (subject to deductibles). Additionally, certain leased premises such as
fueling stations or storage facilities include indemnities of such parties for any environmental liability that may arise out of or relate to the use of the leased
premises.
As of December 31, 2015, United is the guarantor of approximately $1.9 billion in aggregate principal amount of tax-exempt special facilities revenue bonds
and interest thereon. These bonds, issued by various airport municipalities, are payable solely from rentals paid under long-term agreements with the
respective governing bodies. The leasing arrangements associated with $1.5 billion of these obligations are accounted for as operating leases with the
associated expense recorded on a straight-line basis resulting in ratable accrual of the lease obligation over the expected lease term. These tax-exempt special
facilities revenue bonds are included in our lease commitments disclosed in Note 13 of this report. The leasing arrangements associated with $302 million of
these obligations are accounted for as capital leases. All of these bonds are due between 2017 and 2038.
In United’s financing transactions that include loans, United typically agrees to reimburse lenders for any reduced returns with respect to the loans due to any
change in capital requirements and, in the case of loans in
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Source: United Continental Holdings, Inc., 10-K, February 18, 2016 Powered by Morningstar® Document Research℠
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