United Airlines 2015 Annual Report Download - page 92
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situation where it becomes probable that a hedged forecasted transaction will not occur, any gains and/or losses that have been recorded to AOCI would be
required to be immediately reclassified into earnings. All cash flows associated with purchasing and settling derivatives are classified as operating cash flows
in the statements of consolidated cash flows.
In addition to cash flow hedges, the Company from time to time enters into fair value hedges related to its aircraft fuel inventory using derivatives such as
swaps and futures contracts based on aircraft fuel. Under fair value hedge accounting, the Company records changes in the fair value of both the hedging
derivative and the hedged aircraft fuel inventory as fuel expense. The Company records ineffectiveness on fair value hedges as Nonoperating income
(expense): Miscellaneous, net in the statements of consolidated operations. As of December 31, 2015, fair value hedges related to aircraft fuel were not
material to the Company’s financial statements.
The Company records each derivative instrument as a derivative asset or liability (on a gross basis) in its consolidated balance sheets and, accordingly,
records any related collateral on a gross basis. The table below presents the fair value amounts of fuel derivative assets and liabilities and the location of
amounts recognized in the Company’s financial statements.
At December 31, the Company’s derivatives were reported in its consolidated balance sheets as follows (in millions):
Fuel contracts due within one year Fuel derivative instruments $ 119 $ 450
Fuel contracts with maturities greater than one year Other liabilities and deferred credits: Other — 27
$ 119 $ 477
Fuel contracts due within one year Receivables $ — $ 6
Fuel contracts due within one year Fuel derivative instruments $ 5 $ 244
Fuel contracts with maturities greater than one year Other liabilities and deferred credits: Other — 2
Total liabilities $ 5 $ 246
Fuel contracts due within one year Receivables $ — $ 6
Fuel contracts due within one year Fuel derivative instruments $ 124 $ 694
Fuel contracts with maturities greater than one year Other liabilities and deferred credits: Other — 29
Total liabilities $ 124 $ 723
Derivative Credit Risk and Fair Value
The Company is exposed to credit losses in the event of non-performance by counterparties to its derivative instruments. While the Company records
derivative instruments on a gross basis, the Company monitors its net derivative position with each counterparty to monitor credit risk. Based on the fair
value of our fuel derivative
91
Source: United Continental Holdings, Inc., 10-K, February 18, 2016 Powered by Morningstar® Document Research℠
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