United Airlines 2015 Annual Report Download - page 15

renegotiation, may cause the Company’s flight information to be limited or unavailable for display, significantly increase fees for both the Company and
GDS users, and impair the Company’s relationships with its customers and travel agencies. The failure of any of the Company’s third-party service providers
to perform their service obligations adequately, or other interruptions of services, may reduce the Company’s revenues and increase its expenses, prevent the
Company from operating its flights and providing other services to its customers or result in adverse publicity or harm to its brand. In addition, the
Company’s business and financial performance could be materially harmed if its customers believe that its services are unreliable or unsatisfactory.
The Company could experience adverse publicity, harm to its brand, reduced travel demand and potential tort liability as a result of an accident,
catastrophe, or incident involving its aircraft, the aircraft of its regional carriers or the aircraft of its codeshare partners, which may result in a material
adverse effect on the Company’s results of operations or financial position.
An accident, catastrophe, or incident involving an aircraft that the Company operates, or an aircraft that is operated by a codeshare partner or one of the
Company’s regional carriers, could have a material adverse effect on the Company if such accident, catastrophe, or incident created a public perception that
the Company’s operations, or the operations of its codeshare partners or regional carriers, are not safe or reliable, or are less safe or reliable than other airlines.
Such public perception could in turn result in adverse publicity for the Company, cause harm to the Company’s brand and reduce travel demand on the
Company’s flights, or the flights of its codeshare partners or regional carriers.
In addition, any such accident, catastrophe, or incident could expose the Company to significant tort liability. Although the Company currently maintains
liability insurance in amounts and of the type the Company believes to be consistent with industry practice to cover damages arising from any such accident
or catastrophe, and the Company’s codeshare partners and regional carriers carry similar insurance and generally indemnify the Company for their operations,
if the Company’s liability exceeds the applicable policy limits or the ability of another carrier to indemnify it, the Company could incur substantial losses
from an accident, catastrophe or incident which may result in a material adverse effect on the Company’s results of operations or financial position.
If we experience changes in, or are unable to retain, our senior management team or other key employees, our operating results could be adversely
affected.
Much of our future success depends on the continued availability of skilled personnel with industry experience and knowledge, including our senior
management team and other key employees. If we are unable to attract and retain talented, highly qualified senior management and other key employees, or if
we are unable to effectively provide for the succession of senior management, including our Chief Executive Officer and Chief Financial Officer, our business
may be adversely affected.
High and/or volatile fuel prices or significant disruptions in the supply of aircraft fuel could have a material adverse impact on the Company’s strategic
plans, operating results, financial position and liquidity.
Aircraft fuel is critical to the Company’s operations and is one of its largest operating expenses. Aircraft fuel has also been the Company’s most volatile
operating expense for the past several years. The Company generally sources adequate supplies of fuel at prevailing market prices and has some ability to
store fuel close to major hub locations to ensure supply continuity in the short term. Timely and adequate supply of aircraft fuel depends on the continued
availability of reliable fuel supply sources and delivery infrastructure. Although the Company has some ability to cover short-term supply and infrastructure
disruptions at its major demand locations, it can neither predict nor guarantee the continued timely availability of aircraft fuel throughout the Company’s
system.
Market prices for aircraft fuel depend on a multitude of unpredictable factors beyond the Company’s control. These factors include changes in global crude
oil prices, aircraft fuel supply-demand balance, inventory levels and fuel production and transportation capacity, as well as indirect factors, such as
geopolitical events, economic
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Source: United Continental Holdings, Inc., 10-K, February 18, 2016 Powered by Morningstar® Document Research℠
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