United Airlines 2015 Annual Report Download - page 6

Eurowings, Germanwings, Great Lakes Airlines, Hawaiian Airlines, Island Air, Jet Airways and Silver Airways. United also offers a train-to-plane codeshare
and frequent flyer alliance with Amtrak from Newark Liberty on select city pairs in the Northeastern United States.
United also participates in joint ventures, one with Air Canada and the Lufthansa Group (which includes Lufthansa and its affiliates Austrian Airlines,
Brussels Airlines and SWISS) covering transatlantic routes, and another with ANA covering certain transpacific routes. These joint ventures enable the
participating carriers to integrate the services they provide in the respective regions, capturing revenue synergies and delivering highly competitive flight
schedules, fares and services.
Loyalty Program. United’s MileagePlus program builds customer loyalty by offering awards and services to program participants. Members in this program
earn mileage credit for flights on United, United Express, airlines in Star Alliance and certain other airlines that participate in the program. Members can also
earn miles by purchasing the goods and services of our network of non-airline partners, such as credit card issuers, retail merchants, hotels and car rental
companies. Members can redeem mileage credits for free (other than taxes and government imposed fees), discounted or upgraded travel and non-travel
awards.
The Company has an agreement with Chase Bank USA, N.A. (“Chase”), pursuant to which members of the Company’s MileagePlus loyalty program earn
miles for making purchases using a MileagePlus credit card issued by Chase. The agreement also provides for joint marketing and other support for the
MileagePlus credit card and provides Chase with other benefits such as permission to market to the Company’s customer database.
Approximately 5.0 million and 4.8 million MileagePlus flight awards were used on United in 2015 and 2014, respectively. These awards represented 7.5%
and 7.1% of United’s total revenue passenger miles in 2015 and 2014, respectively. Total miles redeemed for flights on United in 2015, including class-of-
service upgrades, represented approximately 83% of the total miles redeemed.
In addition, excluding miles redeemed for flights on United, MileagePlus members redeemed miles for approximately 1.8 million other awards in 2015 as
compared to 1.75 million in 2014. These awards include United Club memberships, car and hotel awards, merchandise and flights on other air carriers.
Aircraft Fuel. The table below summarizes UAL’s aircraft fuel consumption and expense during the last three years.












 3,886 $ 7,522 $ 1.94 23%
 3,905 $ 11,675 $ 2.99 32%
 3,947 $ 12,345 $ 3.13 34%
(a) Calculation excludes special charges identified in Note 16 to the financial statements included in Part II, Item 8 of this report.
The availability and price of aircraft fuel significantly affect the Company’s operations, results of operations, financial position and liquidity. To provide
adequate supplies of fuel, the Company routinely enters into short-term and long-term purchase contracts that are generally indexed to floating market prices
for aircraft fuel, and the Company has some ability to store fuel close to its major hub locations. To lower its exposure to unpredictable increases in the
floating market prices of aircraft fuel, the Company may hedge a portion of its planned fuel requirements. The Company generally employs commonly used
financial hedge instruments based on aircraft fuel or closely related commodities including diesel fuel and crude oil.
Third-Party Business. United generates third-party business revenue that includes fuel sales, catering, ground handling, maintenance services and frequent
flyer award non-air redemptions, and third-party business revenue is recorded in Other operating revenue. United also incurs third-party business expenses,
such as maintenance, ground handling and catering services for third parties, fuel sales and non-air mileage redemptions, and those third-party business
expenses are recorded in Other operating expenses.
5
®
®
®
Source: United Continental Holdings, Inc., 10-K, February 18, 2016 Powered by Morningstar® Document Research℠
The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,
except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.