United Airlines 2013 Annual Report Download - page 107

Table of Contents
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United previously sold frequent flyer miles to Chase which United recorded as Advanced Purchase of Miles. United has the right, but is not required, to
repurchase the pre-purchased miles from Chase during the term of the agreement. The balance of pre-purchased miles is eligible to be allocated by Chase to
MileagePlus members’ accounts by a maximum of $199 million in 2014, $224 million in 2015, $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.
The obligations of UAL, United and Mileage Plus Holdings, LLC to Chase under the Co-Brand Agreement are joint and several. Certain of United’s
obligations under the Co-Brand Agreement in an amount not more than $850 million are secured by a junior lien in all collateral pledged by United under the
Credit Agreement. All of United’s obligations under the Co-Brand Agreement are secured by a junior lien in all collateral pledged by United to secure its 6.75%
Senior Notes due 2015. United also provides a first priority lien to Chase on its MileagePlus assets to secure certain of its obligations under the Co-Brand
Agreement and its obligations under the new combined credit card processing agreement among United, Paymentech, LLC and JPMorgan Chase.
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United leases aircraft, airport passenger terminal space, aircraft hangars and related maintenance facilities, cargo terminals, other airport facilities, other
commercial real estate, office and computer equipment and vehicles.
At December 31, 2013, United’s scheduled future minimum lease payments under operating leases having initial or remaining noncancelable lease terms of
more than one year, aircraft leases, including aircraft rent under CPAs and capital leases (substantially all of which are for aircraft) were as follows (in
millions):
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2014 $ 206 $ 1,192 $ 1,601
2015 183 987 1,381
2016 168 864 1,150
2017 123 831 1,053
2018 106 710 786
After 2018 678 6,002 1,819
Minimum lease payments $ 1,464 $ 10,586 $ 7,790
Imputed interest (594)
Present value of minimum lease payments 870
Current portion (117)
Long-term obligations under capital leases $ 753
(a) As of December 31, 2013, United’s aircraft capital lease minimum payments relate to leases of 47 mainline and 38 regional aircraft as well as to leases of nonaircraft assets. Imputed interest rate ranges are 4.8% to
18.5%.
(b) The operating lease payments presented above include future payments of $103 million related to 25 nonoperating aircraft as of December 31, 2013.
Aircraft operating leases have initial terms of six to twenty-six years, with expiration dates ranging from 2014 through 2024. Under the terms of most leases,
United has the right to purchase the aircraft at the end of the lease term, in some cases at fair market value, and in others, at fair market value or a percentage
of cost. United has facility operating leases that extend to 2041.
United is the lessee of real property under long-term operating leases at a number of airports where we are also the guarantor of approximately $1.6 billion of
underlying debt and interest thereon as of December 31,
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