United Airlines 2015 Annual Report Download - page 93

instruments, our counterparties may require us to post collateral when the price of the underlying commodity decreases, and we may require our
counterparties to provide us with collateral when the price of the underlying commodity increases. The Company had on deposit $26 million and $577
million of collateral with fuel derivative counterparties as of December 31, 2015 and December 31, 2014, respectively. The collateral is recorded as Fuel
hedge collateral deposits on the Company’s consolidated balance sheets.
We have master trading agreements with all of our fuel hedging counterparties that allow us to net our fuel hedge derivative positions. We have elected not to
net the fair value positions and collateral recorded on our consolidated balance sheets. The following table shows the potential net fair value positions
(including fuel derivatives and related collateral) had we elected to offset. The table reflects offset at the counterparty level (in millions):
 
Fuel derivative instruments $ 98 $ 209
Other liabilities and deferred credits: Other — 30
Hedge derivatives liabilities, net $ 98 $ 239
The following tables present the fuel hedge gains (losses) recognized during the periods presented and their classification in the financial statements (in
millions):



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
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
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
     
Fuel contracts $ (320) $ (599) $ (604) $ (89) $ — $ (3)



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  
Fuel contracts $ (80) $ (462) $ 79
Foreign Currency Derivatives
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, British pound and Japanese yen. At times, the
Company uses derivative financial instruments, such as options, collars and forward contracts, to hedge its exposure to foreign currency. At December 31,
2015, the Company had foreign currency derivative contracts in place to hedge European euro denominated sales. The notional amount of the hedges
equates to 18% of the Company’s projected European euro denominated net cash inflows for 2016. Net cash relates primarily to passenger ticket sales inflows
partially offset by expenses paid in local currencies. At December 31, 2015, the fair value of the Company’s foreign currency derivatives was not material to
the Company’s financial statements.
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Source: United Continental Holdings, Inc., 10-K, February 18, 2016 Powered by Morningstar® Document Research℠
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