United Airlines 2013 Annual Report Download - page 115

Table of Contents
In December 2012, the pilots represented by the Air Line Pilots Association, International ratified a new joint collective bargaining agreement with the
Company. The Company recorded $475 million of expense associated with lump sum cash payments that would be made in conjunction with the ratification
of the contract and the completion of the integrated pilot seniority list. This charge also includes $80 million associated with changes to existing pilot disability
plans negotiated in connection with the agreement. The lump sum payments are not in lieu of future pay increases. The Company completed substantially all
cash payments in 2013.
Severance and benefits
During 2013, the Company offered a voluntary retirement program for its fleet service, passenger service, storekeeper and pilot workgroups. Approximately
1,200 employees volunteered under the program during the fourth quarter of 2013 and United recorded approximately $64 million of costs for the programs.
The Company also offered voluntary leave of absence programs which allows for continued medical coverage for flight attendants who volunteered during the
leave of absence period, resulting in a charge of approximately $26 million. The remaining $15 million of severance and benefit costs is related to involuntary
severance programs associated with flight attendants and other workgroups.
During 2012, the Company recorded $125 million of severance and benefits associated with various voluntary retirement and leave of absence programs for
its various employee groups. During the first quarter of 2012, approximately 400 mechanics offered to retire early in exchange for a cash severance payment
that was based on the number of years of service each employee had accumulated. The expense for this voluntary program was approximately $32 million.
The Company also offered a voluntary leave of absence program that approximately 1,800 flight attendants accepted, which allows for continued medical
coverage during the leave of absence period. The expense for this voluntary program was approximately $17 million. During the second quarter of 2012, as
part of the recently amended collective bargaining agreement with the Association of Flight Attendants, the Company offered a voluntary program for flight
attendants to retire early in exchange for a cash severance payment. The payments are dependent on the number of years of service each employee has
accumulated. Approximately 1,300 flight attendants accepted this program and the expense for this voluntary program is approximately $76 million.
Asset impairments
During 2013 and 2012, the Company recorded impairment charges of $1 million and $30 million, respectively, on certain intangible assets including a route
to Manila and European take-off and landing slots, respectively, in order to reflect the estimated fair value of these assets as part of its annual impairment test
of indefinite-lived intangible assets.
In addition, during 2013, the Company recorded $32 million of impairment charges of its flight equipment held for disposal associated with its Boeing 737-
300 and 737-500 fleets.
Temporary grounding of Boeing 787 aircraft
During 2013, the Company recorded $18 million associated with the temporary grounding of its Boeing 787 aircraft. The charges are comprised of aircraft
depreciation expense and dedicated personnel costs that the Company incurred while the aircraft were grounded. The aircraft returned to service in May 2013.
Termination charges
During 2011, the Company recorded $58 million of charges related to the early termination of a maintenance service contract.
Gains on sale of assets and other special charges
During 2013, the Company adjusted its reserves for certain legal matters by $29 million and recorded approximately $11 million in accruals for future rent
associated with the early retirement of four leased 757-200
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