United Airlines 2015 Annual Report Download - page 98
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The collateral, covenants and cross default provisions of the Company’s principal debt instruments that contain such provisions are summarized in the table
below:
Various equipment notes and other notes payable
Secured by certain aircraft. The indentures contain events of default that are
customary for aircraft financing, including in certain cases cross default to
other related aircraft.
Credit Agreement
Secured by certain of United’s international route authorities, specified take-
off and landing slots at certain airports and certain other assets.
The Credit Agreement requires the Company to maintain at least $3.0 billion
of unrestricted liquidity at all times, which includes unrestricted cash, short-
term investments and any undrawn amounts under any revolving credit
facility, and to maintain a minimum ratio of appraised value of collateral to
the outstanding obligations under the Credit Agreement of 1.67 to 1.0 at all
times. The Credit Agreement contains covenants that, among other things,
restrict the ability of UAL and its restricted subsidiaries (as defined in the
Credit Agreement) to incur additional indebtedness and to pay dividends on
or repurchase stock, although the Company currently has ample ability under
these restrictions to repurchase stock under the Company’s share repurchase
program.
The Credit Agreement contains events of default customary for this type of
financing, including a cross default and cross acceleration provision to
certain other material indebtedness of the Company.
6.375% Senior Notes due 2018
6% Senior Notes due 2020
The indentures for these notes contain covenants that, among other things,
restrict the ability of the Company and its restricted subsidiaries (as defined
in the indenture) to incur additional indebtedness and pay dividends on or
repurchase stock, although the Company currently has ample ability under
these restrictions to repurchase stock under the Company’s share repurchase
program.
The indentures contain events of default that are customary for similar
financings.
United previously sold MileagePlus miles to Chase which United recorded as Advanced purchase of miles. The balance of pre-purchased miles is eligible to
be allocated by Chase to MileagePlus members’ accounts by a maximum of $249 million in 2016 and the remainder in 2017. The Co-Brand Agreement
contains termination penalties that may require United to make certain payments and repurchase outstanding pre-purchased miles in cases such as United’s
insolvency, bankruptcy or other material breaches. The Company has recorded these amounts as Advanced purchase of miles in the liabilities section of the
Company’s consolidated balance sheets.
97
Source: United Continental Holdings, Inc., 10-K, February 18, 2016 Powered by Morningstar® Document Research℠
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