| Advertising—Advertising costs, which are included\n in Other operating expenses, are expensed as incurred. Advertising\n expenses were $179 million, $178 million and $154 million for the\n years ended December 31, 2014, 2013 and 2012,\n respectively. | \n
NOTE 17 -\n INTEGRATION-RELATED COSTS AND SPECIAL ITEMS
\nIntegration-related costs\n and special items classified as special charges in the statements\n of consolidated operations consisted of the following for the years\n ended December 31 (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| Operating: | \n\n | 2014 | \n\n | \n | 2013 | \n\n | \n | 2012 | \n\n | |||
| \n Severance and benefit\n costs \n | \n \n | $ | \n199 | \n\n | \n | $ | \n105 | \n\n | \n | $ | \n125 | \n\n |
| \n Integration-related\n costs \n | \n \n | \n | 96 | \n\n | \n | \n | 205 | \n\n | \n | \n | 739 | \n\n |
| Costs associated with permanently grounding Embraer ERJ 135\n aircraft | \n\n | \n | 66 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n Impairment of\n assets \n | \n \n | \n | 49 | \n\n | \n | \n | 33 | \n\n | \n | \n | 30 | \n\n |
| \n Labor agreement\n costs \n | \n \n | \n | — | \n\n | \n | \n | 127 | \n\n | \n | \n | 475 | \n\n |
| (Gains) losses on sale of assets and other special (gains)\n losses, net | \n\n | \n | 33 | \n\n | \n | \n | 50 | \n\n | \n | \n | (46) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Special charges \n | \n \n | $ | \n443 | \n\n | \n | $ | \n520 | \n\n | \n | $ | \n1,323 | \n\n |
| \n Nonoperating: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Loss on extinguishment of\n debt and other, net \n | \n \n | $ | \n74 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n— | \n\n |
| \n Income tax\n benefit \n | \n \n | \n | (10) | \n\n | \n | \n | (7) | \n\n | \n | \n | (11) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total operating and\n nonoperating special charges, net of income taxes \n | \n \n | $ | \n507 | \n\n | \n | $ | \n513 | \n\n | \n | $ | \n1,312 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
2014
\nThe Company recorded $141\n million of severance and benefit costs related primarily to a\n voluntary early-out program for its flight attendants. More than\n 2,500 participants elected a one-time opportunity to voluntarily\n separate from the Company and will receive a severance payment,\n with a maximum value of $100,000 per participant, based on years of\n service, with retirement dates from November 30, 2014 through\n the end of 2015. The Company will record approximately $100 million\n of additional expense associated with this program through 2015\n over the remaining required service periods. In addition, the\n Company recorded $58 million of severance and benefits primarily\n related to reductions of management and front-line employees,\n including from Cleveland, as part of its cost savings initiatives.\n The Company is currently evaluating its options regarding its\n long-term contractual lease commitments at Cleveland. The\n capacity reductions at Cleveland may result in further special\n charges, which could be significant, related to our contractual\n commitments.
\nIntegration-related costs\n include compensation costs related to systems integration,\n training, severance and relocation for employees.
\nThe Company recorded $66\n million for the permanent grounding of 21 of the Company’s\n Embraer ERJ 135 regional aircraft under lease through 2018, which\n includes an accrual for remaining lease payments and an amount for\n maintenance return conditions. As a result of fuel prices, new\n Embraer E175 regional jet deliveries and impact of pilot shortages\n at regional carriers, the Company decided to permanently ground\n these 21 Embraer ERJ 135 aircraft. The Company continues to operate\n nine Embraer ERJ 135 aircraft and will assess the possibility of\n grounding those aircraft when the term of the current capacity\n purchase contract ends in 2015.
\nThe Company recorded a\n charge of $16 million ($10 million net of related income tax\n benefits) related to its annual assessment of impairment of its\n indefinite-lived intangible assets (certain international Pacific\n routes). In addition, the Company recorded $33 million for charges\n related primarily to impairment of its flight equipment held for\n disposal associated with its Boeing 737-300 and 737-500\n fleets.
\n\n
\nUnited used cash to retire,\n at par, the entire $248 million principal balance of the 6%\n Convertible Debentures and the 6% Convertible Preferred Securities,\n Term Income Deferrable Equity Securities (TIDES) and incurred $74\n million of expense primarily associated with the write-off of the\n related non-cash debt discounts recorded due to purchase accounting\n during the Company’s merger transaction in 2010.
\n2013
\nThe Company offered a\n voluntary retirement program for its fleet service, passenger\n service, storekeeper and pilot work groups. Approximately 1,200\n employees volunteered under the program during the fourth quarter\n of 2013 and United recorded approximately $64 million of severance\n and benefit costs for the programs. The Company also offered\n voluntary leave of absence programs which allowed for continued\n medical coverage for flight attendants who volunteered during the\n leave of absence period, resulting in a charge of approximately $26\n million. The remaining $15 million of severance and benefit costs\n was related to involuntary severance programs associated with\n flight attendants and other work groups.
\nIntegration-related costs\n included compensation costs related to systems integration and\n training, branding activities, new uniforms, write-off or\n acceleration of depreciation on systems and facilities that were no\n longer used or planned to be used for significantly shorter\n periods, relocation for employees and severance primarily\n associated with administrative headcount reductions.
\nThe Company recorded $32\n million of impairment charges of its flight equipment held for\n disposal associated with its Boeing 737-300 and 737-500 fleets and\n $1 million on an intangible asset for a route to Manila in order to\n reflect the estimated fair value of this asset as part of the\n Company’s annual impairment test of indefinite-lived\n intangible assets.
\nThe fleet service,\n passenger service and storekeeper employees represented by the\n International Association of Machinists ratified a joint collective\n bargaining agreement with the Company during 2013. The Company\n recorded a $127 million special charge for lump sum payments made\n in conjunction with the ratification. The lump sum payments were\n not in lieu of future pay increases. The Company completed\n substantially all cash payments in 2013.
\nThe Company recorded $18\n million associated with the temporary grounding of its Boeing 787\n aircraft. The charges were comprised of aircraft depreciation\n expense and dedicated personnel costs that the Company incurred\n while the aircraft were grounded. The aircraft returned to service\n in May 2013. In addition, the Company adjusted its reserves for\n certain legal matters by $29 million and recorded approximately $11\n million in accruals for future rent associated with the early\n retirement of four leased Boeing 757-200 aircraft. Additionally,\n the Company recorded a $5 million gain related to a contract\n termination and $3 million in gains on the sale of\n assets.
\n2012
\nThe Company recorded $125\n million of severance and benefits associated with various voluntary\n retirement and leave of absence programs for its various employee\n groups. During the first quarter of 2012, approximately 400\n mechanics offered to retire early in exchange for a cash severance\n payment that was based on the number of years of service each\n employee had accumulated. The expense for this voluntary program\n was approximately $32 million. The Company also offered a voluntary\n leave of absence program that approximately 1,800 flight attendants\n accepted, which allowed for continued medical coverage during the\n leave of absence period. The expense for this voluntary program was\n approximately $17 million. During the second quarter of 2012, as\n part of the recently amended collective bargaining agreement with\n the Association of Flight Attendants, the Company offered a\n voluntary program for flight attendants to retire early in exchange\n for a cash severance payment. The payments are dependent on the\n number of years of service each employee has accumulated.\n Approximately 1,300 flight attendants accepted this program and the\n expense for this voluntary program was approximately $76\n million.
\nIntegration-related costs\n included compensation costs related to systems integration and\n training, branding activities, write-off or acceleration of\n depreciation on systems and facilities that are either no longer\n used or planned to be used for significantly shorter periods, as\n well as relocation for employees and severance primarily associated\n with administrative headcount reductions.
\nOn December 31, 2012,\n UAL and United Air Lines, Inc. entered into an agreement with the\n Pension Benefit Guaranty Corporation (“PBGC”) that\n reduced the aggregate amount of 8% Contingent Senior Notes to be\n issued by UAL, and eliminated the contingent nature of such\n obligation by replacing the $188 million principal amount of 8%\n Contingent Senior Notes incurred as of December 31, 2012 and\n the obligation to issue any additional 8% Contingent Senior Notes\n with $400 million principal amount of new 8% Notes. In addition,\n UAL agreed to replace the $652 million principal amount outstanding\n of 6% Senior Notes due 2031 with $326 million principal amount of\n new 6% Notes due 2026 and $326 million principal amount of 6% Notes\n due 2028 (collectively, the “New 6% Notes” and together\n with the 8% Notes, the “New PBGC Notes”). The Company\n did not receive any cash proceeds in connection with the issuance\n of the New PBGC Notes. The Company accounted for this agreement as\n a debt extinguishment, resulting in a charge of $309 million in\n 2012 that represented the fair value of $212 million of 8% Notes\n that it agreed to issue and the change in the fair value of the New\n 6% Notes and the $188 million of 8% Notes versus their previous\n carrying values. The Company classified the expense as a component\n of special charges within integration-related costs because the\n note restructuring would not have occurred if it were not for the\n Company’s merger transaction in 2010.
\nThe Company recorded\n impairment charges of $30 million on an intangible asset for\n European take-off and landing slots in order to reflect the\n estimated fair value of these assets as part of its annual\n impairment test of indefinite-lived intangible assets.
\nIn December 2012, the\n pilots represented by the Air Line Pilots Association,\n International ratified a new joint collective bargaining agreement\n with the Company. The Company recorded $475 million of expense\n associated with lump sum cash payments that would be made in\n conjunction with the ratification of the contract and the\n completion of the integrated pilot seniority list. This charge also\n includes $80 million associated with changes to existing pilot\n disability plans negotiated in connection with the agreement. The\n lump sum payments are not in lieu of future pay increases. The\n Company completed substantially all cash payments in\n 2013.
\nThe Company recorded net\n gains of $46 million related to gains and losses on the disposal of\n aircraft and related parts and other assets.
\nAccrual\n Activity
\nActivity related to the\n accruals for severance and medical costs and future lease payments\n on permanently grounded aircraft is as follows (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Severance/ \n Medical Costs | \n \n | \n | Permanently \n \n Grounded Aircraft | \n \n | ||
| \n Balance at\n December 31, 2011 \n | \n \n | $ | \n55 | \n\n | \n | $ | \n31 | \n\n |
| \n Accrual \n | \n \n | \n | 170 | \n\n | \n | \n | (1) | \n\n |
| \n Payments \n | \n \n | \n | (160) | \n\n | \n | \n | (25) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Balance at\n December 31, 2012 \n | \n \n | \n | 65 | \n\n | \n | \n | 5 | \n\n |
| \n Accrual \n | \n \n | \n | 120 | \n\n | \n | \n | 10 | \n\n |
| \n Payments \n | \n \n | \n | (94) | \n\n | \n | \n | (4) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Balance at\n December 31, 2013 \n | \n \n | \n | 91 | \n\n | \n | \n | 11 | \n\n |
| \n Accrual \n | \n \n | \n | 199 | \n\n | \n | \n | 102 | \n\n |
| \n Payments \n | \n \n | \n | (181) | \n\n | \n | \n | (11) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Balance at\n December 31, 2014 \n | \n \n | $ | \n109 | \n\n | \n | $ | \n102 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
The Company’s accrual\n and payment activity is primarily related to severance and other\n compensation expense associated with voluntary employee programs\n and the Company’s merger transaction in 2010,\n respectively.
\nNOTE 15 - COMMITMENTS\n AND CONTINGENCIES
\nCommitments.\n As of December 31, 2014, United had firm commitments to\n purchase aircraft from The Boeing Company (“Boeing”),\n Embraer and Airbus S.A.S. (“Airbus”) presented in the\n table below:
\n\n
\n| \n | \n | \n | \n | \n |
| \n \n Aircraft\n Type \n | \n \n | Number of Firm \n \n Commitments (a) (b) | \n \n | |
| \n Airbus A350-1000 \n | \n \n | \n | 35 | \n\n |
| \n Boeing 737-900ER \n | \n \n | \n | 34 | \n\n |
| \n Boeing 737 MAX 9 \n | \n \n | \n | 100 | \n\n |
| \n Boeing 787-9/-10 \n | \n \n | \n | 51 | \n\n |
| \n Embraer E175 \n | \n \n | \n | 11 | \n\n |
| \n (a) United also has options\n and purchase rights for additional aircraft. \n(b) United also has\n committed to purchase two used 737-700 aircraft in 2015. \n | \n \n \n \n | \n
\n
\nThe aircraft listed in the\n table above are scheduled for delivery from 2015 through\n 2025.
\nThe table below summarizes\n United’s commitments as of December 31, 2014 (including\n those assigned from UAL), which primarily relate to the acquisition\n of aircraft and related spare engines, aircraft improvements and\n include other commitments primarily to acquire information\n technology services and assets for the years ended December 31\n (in billions):
\n\n
\n| \n | \n | \n | \n | \n |
| \n 2015 \n | \n \n | $ | \n3.2 | \n\n |
| \n 2016 \n | \n \n | \n | 2.3 | \n\n |
| \n 2017 \n | \n \n | \n | 1.3 | \n\n |
| \n 2018 \n | \n \n | \n | 2.2 | \n\n |
| \n 2019 \n | \n \n | \n | 3.3 | \n\n |
| \n After 2019 \n | \n \n | \n | 10.7 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | $ | \n23.0 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
Any incremental firm\n aircraft orders, including through the exercise of purchase options\n and purchase rights, will increase the total future capital\n commitments of the Company.
\nAs of December 31,\n 2014, United has arranged for EETC financing for 20 of our 2015\n aircraft deliveries, including 11 Boeing 737-900ER aircraft, four\n Boeing 787-9 aircraft and five Embraer E175 aircraft. In\n addition, United has secured backstop financing commitments from\n certain of its aircraft manufacturers for a limited number of its\n future aircraft deliveries, subject to certain customary\n conditions. Financing will be necessary to satisfy the\n Company’s capital commitments for its firm order aircraft and\n other related capital expenditures.
\nLegal and\n Environmental. The Company has certain contingencies\n resulting from litigation and claims incident to the ordinary\n course of business. Management believes, after considering a number\n of factors, including (but not limited to) the information\n currently available, the views of legal counsel, the nature of\n contingencies to which the Company is subject and prior experience,\n that the ultimate disposition of the litigation and claims will not\n materially affect the Company’s consolidated financial\n position or results of operations. The Company records liabilities\n for legal and environmental claims when a loss is probable and\n reasonably estimable. These amounts are recorded based on the\n Company’s assessments of the likelihood of their eventual\n disposition.
\nGuarantees and\n Indemnifications. In the normal course of business, the\n Company enters into numerous real estate leasing and aircraft\n financing arrangements that have various guarantees included in the\n contracts. These guarantees are primarily in the form of\n indemnities under which the Company typically indemnifies the\n lessors and any tax/financing parties against tort liabilities that\n arise out of the use, occupancy, operation or maintenance of the\n leased premises or financed aircraft. Currently, the Company\n believes that any future payments required under these guarantees\n or indemnities would be immaterial, as most tort liabilities and\n related indemnities are covered by insurance (subject to\n deductibles). Additionally, certain leased premises such as fueling\n stations or storage facilities include indemnities of such parties\n for any environmental liability that may arise out of or relate to\n the use of the leased premises.
\nAs of December 31,\n 2014, United is the guarantor of approximately $1.8 billion in\n aggregate principal amount of tax-exempt special facilities revenue\n bonds and interest thereon. These bonds, issued by various airport\n municipalities, are payable solely from rentals paid under\n long-term agreements with the respective governing bodies. The\n leasing arrangements associated with $1.5 billion of these\n obligations are accounted for as operating leases with the\n associated expense recorded on a straight-line basis resulting in\n ratable accrual of the lease obligation over the expected lease\n term. These tax-exempt special facilities revenue bonds are\n included in our lease commitments disclosed in Note 13 of this\n report. The leasing arrangements associated with $290 million of\n these obligations are accounted for as capital leases. All of these\n bonds are due between 2015 and 2038.
\nIn United’s financing\n transactions that include loans, United typically agrees to\n reimburse lenders for any reduced returns with respect to the loans\n due to any change in capital requirements and, in the case of loans\n in which the interest rate is based on LIBOR, for certain other\n increased costs that the lenders incur in carrying these loans as a\n result of any change in law, subject in most cases to obligations\n of the lenders to take certain limited steps to mitigate the\n requirement for, or the amount of, such increased costs. At\n December 31, 2014, the Company had $2.5 billion of floating\n rate debt and $159 million of fixed rate debt, with remaining terms\n of up to twelve years, that are subject to these increased cost\n provisions. In several financing transactions involving loans\n or leases from non-U.S. entities, with remaining terms of up to\n twelve years and an aggregate balance of $2.7 billion, the\n Company bears the risk of any change in tax laws that would subject\n loan or lease payments thereunder to non-U.S. entities to\n withholding taxes, subject to customary exclusions.
\nFuel\n Consortia. United participates in numerous fuel consortia\n with other air carriers at major airports to reduce the costs of\n fuel distribution and storage. Interline agreements govern the\n rights and responsibilities of the consortia members and provide\n for the allocation of the overall costs to operate the consortia\n based on usage. The consortia (and in limited cases, the\n participating carriers) have entered into long-term agreements to\n lease certain airport fuel storage and distribution facilities that\n are typically financed through tax-exempt bonds (either special\n facilities lease revenue bonds or general airport revenue bonds),\n issued by various local municipalities. In general, each consortium\n lease agreement requires the consortium to make lease payments in\n amounts sufficient to pay the maturing principal and interest\n payments on the bonds. As of December 31, 2014, approximately\n $1.4 billion principal amount of such bonds were secured by\n significant fuel facility leases in which United participates, as\n to which United and each of the signatory airlines has provided\n indirect guarantees of the debt. As of December 31, 2014, the\n Company’s contingent exposure was approximately\n $239 million principal amount of such bonds based on its\n recent consortia participation. The Company’s contingent\n exposure could increase if the participation of other air carriers\n decreases. The guarantees will expire when the tax-exempt bonds are\n paid in full, which ranges from 2015 to 2041. The Company did not\n record a liability at the time these indirect guarantees were\n made.
\nCredit Card\n Processing Agreements. United has agreements with financial\n institutions that process customer credit card transactions for the\n sale of air travel and other services. Under certain of\n United’s credit card processing agreements, the financial\n institutions either require, or under certain circumstances have\n the right to require, that United maintains a reserve equal to a\n portion of advance ticket sales that has been processed by that\n financial institution, but for which United has not yet provided\n the air transportation. Such financial institutions may require\n additional cash or other collateral reserves to be established or\n additional withholding of payments related to receivables collected\n if United does not maintain certain minimum levels of unrestricted\n cash, cash equivalents and short term investments. United’s\n current level of unrestricted cash, cash equivalents and short term\n investments is substantially in excess of these minimum\n levels.
\nLabor\n Negotiations. As of December 31, 2014, United,\n including its subsidiaries, had approximately 84,000 employees.\n Approximately 80% of United’s employees were represented by\n various U.S. labor organizations as of December 31, 2014.\n During 2014, United’s maintenance instructor, load planner,\n fleet technical instructor, security officer and dispatcher work\n groups ratified new joint labor agreements. We are in the process\n of negotiating joint collective bargaining agreements with our\n technicians and flight attendants.
\nNOTE 4 - EARNINGS (LOSS)\n PER SHARE
\nThe computations of\n UAL’s basic and diluted earnings (loss) per share and the\n number of securities that have been excluded from the computation\n of diluted earnings per share amounts because they were\n antidilutive are set forth below for the years ended\n December 31 (in millions, except per share\n amounts):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 2014 | \n\n | \n | 2013 | \n\n | \n | 2012 | \n\n | |||
| \n Basic earnings (loss)\n per share: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Earnings (loss) available\n to common stockholders \n | \n \n | $ | \n1,132 | \n\n | \n | $ | \n571 | \n\n | \n | $ | \n(723) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Basic weighted-average\n shares outstanding \n | \n \n | \n | 371 | \n\n | \n | \n | 348 | \n\n | \n | \n | 331 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Earnings (loss) per share,\n basic \n | \n \n | $ | \n3.05 | \n\n | \n | $ | \n1.64 | \n\n | \n | $ | \n(2.18) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Diluted earnings (loss)\n per share: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Earnings (loss) available\n to common stockholders \n | \n \n | $ | \n1,132 | \n\n | \n | $ | \n571 | \n\n | \n | $ | \n(723) | \n\n |
| \n Effect of dilutive\n securities \n | \n \n | \n | 11 | \n\n | \n | \n | 26 | \n\n | \n | \n | — | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Earnings (loss) available\n to common stockholders including the effect of dilutive\n securities \n | \n \n | $ | \n1,143 | \n\n | \n | $ | \n597 | \n\n | \n | $ | \n(723) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Diluted shares\n outstanding: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Basic weighted-average\n shares outstanding \n | \n \n | \n | 371 | \n\n | \n | \n | 348 | \n\n | \n | \n | 331 | \n\n |
| \n Effect of convertible\n notes \n | \n \n | \n | 18 | \n\n | \n | \n | 42 | \n\n | \n | \n | — | \n\n |
| \n Effect of restricted stock\n and employee stock options \n | \n \n | \n | 1 | \n\n | \n | \n | 1 | \n\n | \n | \n | — | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Diluted weighted-average\n shares outstanding \n | \n \n | \n | 390 | \n\n | \n | \n | 391 | \n\n | \n | \n | 331 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Earnings (loss) per share,\n diluted \n | \n \n | $ | \n2.93 | \n\n | \n | $ | \n1.53 | \n\n | \n | $ | \n(2.18) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| Potentially dilutive\n shares excluded from diluted per share amounts: | \n\n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Restricted stock and stock\n options \n | \n \n | \n | 1 | \n\n | \n | \n | 3 | \n\n | \n | \n | 5 | \n\n |
| \n Convertible\n notes \n | \n \n | \n | 3 | \n\n | \n | \n | 4 | \n\n | \n | \n | 61 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | 4 | \n\n | \n | \n | 7 | \n\n | \n | \n | 66 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
See Notes 3 and 11 of this\n report for additional information related to the ASR Program, open\n market share repurchases, open market purchases of the\n Company’s convertible debt and exchange of shares for\n redemption of convertible debt.
\n\n The income\n tax provision differed from amounts computed at the statutory\n federal income tax rate, as follows (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n UAL \n | \n \n | 2014 | \n\n | \n | 2013 | \n\n | \n | 2012 | \n\n | |||
| \n Income tax provision at\n statutory rate \n | \n \n | $ | \n395 | \n\n | \n | $ | \n189 | \n\n | \n | $ | \n(253) | \n\n |
| \n State income taxes, net\n of federal income tax \n | \n \n | \n | 16 | \n\n | \n | \n | 5 | \n\n | \n | \n | (15) | \n\n |
| \n Foreign income\n taxes \n | \n \n | \n | 2 | \n\n | \n | \n | 3 | \n\n | \n | \n | 7 | \n\n |
| \n Nondeductible employee\n meals \n | \n \n | \n | 15 | \n\n | \n | \n | 15 | \n\n | \n | \n | 12 | \n\n |
| \n Nondeductible interest\n expense \n | \n \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 19 | \n\n |
| \n State rate\n change \n | \n \n | \n | — | \n\n | \n | \n | (33) | \n\n | \n | \n | — | \n\n |
| \n Valuation\n allowance \n | \n \n | \n | (441) | \n\n | \n | \n | (219) | \n\n | \n | \n | 234 | \n\n |
| \n Other, net \n | \n \n | \n | 9 | \n\n | \n | \n | 8 | \n\n | \n | \n | (5) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | $ | \n(4) | \n\n | \n | $ | \n(32) | \n\n | \n | $ | \n(1) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | \n | |||||||||
| \n United \n | \n \n | 2014 | \n\n | \n | 2013 | \n\n | \n | 2012 | \n\n | |||
| \n Income tax provision at\n statutory rate \n | \n \n | $ | \n388 | \n\n | \n | $ | \n223 | \n\n | \n | $ | \n(230) | \n\n |
| \n State income taxes, net\n of federal income tax \n | \n \n | \n | 15 | \n\n | \n | \n | 5 | \n\n | \n | \n | (7) | \n\n |
| \n Foreign income\n taxes \n | \n \n | \n | 2 | \n\n | \n | \n | 3 | \n\n | \n | \n | 7 | \n\n |
| \n Nondeductible employee\n meals \n | \n \n | \n | 15 | \n\n | \n | \n | 15 | \n\n | \n | \n | 12 | \n\n |
| \n Nondeductible interest\n expense \n | \n \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 19 | \n\n |
| \n Derivative market\n adjustment \n | \n \n | \n | (7) | \n\n | \n | \n | (24) | \n\n | \n | \n | (15) | \n\n |
| \n State rate\n change \n | \n \n | \n | — | \n\n | \n | \n | (33) | \n\n | \n | \n | — | \n\n |
| \n Valuation\n allowance \n | \n \n | \n | (426) | \n\n | \n | \n | (229) | \n\n | \n | \n | 223 | \n\n |
| \n Other, net \n | \n \n | \n | 9 | \n\n | \n | \n | 23 | \n\n | \n | \n | (5) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | $ | \n(4) | \n\n | \n | $ | \n(17) | \n\n | \n | $ | \n4 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
The reconciliation of\n United’s defined benefit plan assets measured at fair value\n using unobservable inputs (Level 3) for the years ended\n December 31, 2014 and 2013 is as follows (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 2014 | \n\n | \n | 2013 | \n\n | ||
| \n Balance at beginning of\n year \n | \n \n | $ | \n293 | \n\n | \n | $ | \n256 | \n\n |
| \n Actual return\n on plan assets: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Sold during the\n year \n | \n \n | \n | 7 | \n\n | \n | \n | 15 | \n\n |
| \n Held at year\n end \n | \n \n | \n | 6 | \n\n | \n | \n | 7 | \n\n |
| \n Purchases,\n sales, issuances and settlements (net) \n | \n \n | \n | 6 | \n\n | \n | \n | 15 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Balance at end of\n year \n | \n \n | $ | \n312 | \n\n | \n | $ | \n293 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
The table below presents\n disclosures about the fair value of financial assets and financial\n liabilities measured at fair value on a recurring basis in the\n Company’s financial statements as of December 31 (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 2014 | \n\n | \n | 2013 | \n\n | ||||||||||||||||||||||||||
| \n | \n | Total | \n\n | \n | Level 1 | \n\n | \n | Level 2 | \n\n | \n | Level 3 | \n\n | \n | Total | \n\n | \n | Level 1 | \n\n | \n | Level 2 | \n\n | \n | Level 3 | \n\n | ||||||||
| \n | \n | UAL | \n\n | |||||||||||||||||||||||||||||
| \n Cash and cash\n equivalents \n | \n \n | \n | $2,002 | \n\n | \n | $ | \n2,002 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n— | \n\n | \n | $ | \n3,220 | \n\n | \n | $ | \n3,220 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n— | \n\n |
| \n Short-term\n investments: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Asset-backed\n securities \n | \n \n | \n | 901 | \n\n | \n | \n | — | \n\n | \n | \n | 901 | \n\n | \n | \n | — | \n\n | \n | \n | 694 | \n\n | \n | \n | — | \n\n | \n | \n | 694 | \n\n | \n | \n | — | \n\n |
| \n Corporate debt \n | \n \n | \n | 876 | \n\n | \n | \n | — | \n\n | \n | \n | 876 | \n\n | \n | \n | — | \n\n | \n | \n | 685 | \n\n | \n | \n | — | \n\n | \n | \n | 685 | \n\n | \n | \n | — | \n\n |
| \n Certificates of deposit\n placed through an account registry service\n (“CDARS”) \n | \n \n | \n | 256 | \n\n | \n | \n | — | \n\n | \n | \n | 256 | \n\n | \n | \n | — | \n\n | \n | \n | 301 | \n\n | \n | \n | — | \n\n | \n | \n | 301 | \n\n | \n | \n | — | \n\n |
| \n U.S. government and agency\n notes \n | \n \n | \n | 68 | \n\n | \n | \n | — | \n\n | \n | \n | 68 | \n\n | \n | \n | — | \n\n | \n | \n | 38 | \n\n | \n | \n | — | \n\n | \n | \n | 38 | \n\n | \n | \n | — | \n\n |
| \n Auction rate\n securities \n | \n \n | \n | 26 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 26 | \n\n | \n | \n | 105 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 105 | \n\n |
| \n Other fixed income\n securities \n | \n \n | \n | 255 | \n\n | \n | \n | — | \n\n | \n | \n | 255 | \n\n | \n | \n | — | \n\n | \n | \n | 78 | \n\n | \n | \n | — | \n\n | \n | \n | 78 | \n\n | \n | \n | — | \n\n |
| \n Enhanced equipment trust\n certificates (“EETC”) \n | \n \n | \n | 28 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 28 | \n\n | \n | \n | 61 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 61 | \n\n |
| \n Fuel derivatives asset\n (liability), net \n | \n \n | \n | (717) | \n\n | \n | \n | — | \n\n | \n | \n | (717) | \n\n | \n | \n | — | \n\n | \n | \n | 104 | \n\n | \n | \n | — | \n\n | \n | \n | 104 | \n\n | \n | \n | — | \n\n |
| \n Foreign currency\n derivatives \n | \n \n | \n | 2 | \n\n | \n | \n | — | \n\n | \n | \n | 2 | \n\n | \n | \n | — | \n\n | \n | \n | 1 | \n\n | \n | \n | — | \n\n | \n | \n | 1 | \n\n | \n | \n | — | \n\n |
| \n Restricted cash \n | \n \n | \n | 320 | \n\n | \n | \n | 320 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 395 | \n\n | \n | \n | 395 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n | \n | |||||||||||||||||||||||||||||||
| \n | \n | United | \n\n | |||||||||||||||||||||||||||||
| \n Cash and cash\n equivalents \n | \n \n | $ | \n1,996 | \n\n | \n | $ | \n1,996 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n— | \n\n | \n | $ | \n3,214 | \n\n | \n | $ | \n3,214 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n— | \n\n |
| \n Short-term\n investments: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Asset-backed\n securities \n | \n \n | \n | 901 | \n\n | \n | \n | — | \n\n | \n | \n | 901 | \n\n | \n | \n | — | \n\n | \n | \n | 694 | \n\n | \n | \n | — | \n\n | \n | \n | 694 | \n\n | \n | \n | — | \n\n |
| \n Corporate debt \n | \n \n | \n | 876 | \n\n | \n | \n | — | \n\n | \n | \n | 876 | \n\n | \n | \n | — | \n\n | \n | \n | 685 | \n\n | \n | \n | — | \n\n | \n | \n | 685 | \n\n | \n | \n | — | \n\n |
| \n CDARS \n | \n \n | \n | 256 | \n\n | \n | \n | — | \n\n | \n | \n | 256 | \n\n | \n | \n | — | \n\n | \n | \n | 301 | \n\n | \n | \n | — | \n\n | \n | \n | 301 | \n\n | \n | \n | — | \n\n |
| \n U.S. government and agency\n notes \n | \n \n | \n | 68 | \n\n | \n | \n | — | \n\n | \n | \n | 68 | \n\n | \n | \n | — | \n\n | \n | \n | 38 | \n\n | \n | \n | — | \n\n | \n | \n | 38 | \n\n | \n | \n | — | \n\n |
| \n Auction rate\n securities \n | \n \n | \n | 26 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 26 | \n\n | \n | \n | 105 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 105 | \n\n |
| \n Other fixed income\n securities \n | \n \n | \n | 255 | \n\n | \n | \n | — | \n\n | \n | \n | 255 | \n\n | \n | \n | — | \n\n | \n | \n | 78 | \n\n | \n | \n | — | \n\n | \n | \n | 78 | \n\n | \n | \n | — | \n\n |
| \n EETC \n | \n \n | \n | 28 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 28 | \n\n | \n | \n | 61 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 61 | \n\n |
| \n Fuel derivatives asset\n (liability), net \n | \n \n | \n | (717) | \n\n | \n | \n | — | \n\n | \n | \n | (717) | \n\n | \n | \n | — | \n\n | \n | \n | 104 | \n\n | \n | \n | — | \n\n | \n | \n | 104 | \n\n | \n | \n | — | \n\n |
| \n Foreign currency\n derivatives \n | \n \n | \n | 2 | \n\n | \n | \n | — | \n\n | \n | \n | 2 | \n\n | \n | \n | — | \n\n | \n | \n | 1 | \n\n | \n | \n | — | \n\n | \n | \n | 1 | \n\n | \n | \n | — | \n\n |
| \n Restricted cash \n | \n \n | \n | 320 | \n\n | \n | \n | 320 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 395 | \n\n | \n | \n | 395 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n Convertible debt derivative\n asset \n | \n \n | \n | 712 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 712 | \n\n | \n | \n | 480 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 480 | \n\n |
| \n Convertible debt option\n liability \n | \n \n | \n | (511) | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | (511) | \n\n | \n | \n | (270) | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | (270) | \n\n |
The following table\n presents information about the Company’s goodwill and other\n intangible assets at December 31 (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | \n | \n | 2014 | \n\n | \n | 2013 | \n\n | ||||||||||
| \n \n Item \n | \n \n | Asset life (a) | \n\n | Gross \n Carrying \n Amount | \n \n | \n | Accumulated \n Amortization | \n \n | \n | Gross \n Carrying \n Amount | \n \n | \n | Accumulated \n Amortization | \n \n | ||||
| \n Goodwill \n | \n \n | \n | \n | $ | \n4,523 | \n\n | \n | \n | \n | \n | \n | $ | \n4,523 | \n\n | \n | \n | \n | \n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Finite-lived intangible\n assets \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Airport slots and\n gates \n | \n \n | 8 | \n\n | $ | \n97 | \n\n | \n | $ | \n97 | \n\n | \n | $ | \n98 | \n\n | \n | $ | \n88 | \n\n |
| \n Hubs \n | \n \n | 20 | \n\n | \n | 145 | \n\n | \n | \n | 67 | \n\n | \n | \n | 145 | \n\n | \n | \n | 59 | \n\n |
| \n Patents and\n tradenames \n | \n \n | 3 | \n\n | \n | 108 | \n\n | \n | \n | 108 | \n\n | \n | \n | 108 | \n\n | \n | \n | 108 | \n\n |
| \n Frequent flyer database\n (b) \n | \n \n | 22 | \n\n | \n | 1,177 | \n\n | \n | \n | 624 | \n\n | \n | \n | 1,177 | \n\n | \n | \n | 536 | \n\n |
| \n Contracts \n | \n \n | 12 | \n\n | \n | 155 | \n\n | \n | \n | 86 | \n\n | \n | \n | 167 | \n\n | \n | \n | 86 | \n\n |
| \n Other \n | \n \n | 25 | \n\n | \n | 109 | \n\n | \n | \n | 67 | \n\n | \n | \n | 109 | \n\n | \n | \n | 56 | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total \n | \n \n | \n | \n | $ | \n1,791 | \n\n | \n | $ | \n1,049 | \n\n | \n | $ | \n1,804 | \n\n | \n | $ | \n933 | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Indefinite-lived intangible\n assets \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Airport slots and\n gates \n | \n \n | \n | \n | $ | \n956 | \n\n | \n | \n | \n | \n | \n | $ | \n963 | \n\n | \n | \n | \n | \n |
| \n Route\n authorities \n | \n \n | \n | \n | \n | 1,589 | \n\n | \n | \n | \n | \n | \n | \n | 1,605 | \n\n | \n | \n | \n | \n |
| \n Tradenames and\n logos \n | \n \n | \n | \n | \n | 593 | \n\n | \n | \n | \n | \n | \n | \n | 593 | \n\n | \n | \n | \n | \n |
| \n Alliances \n | \n \n | \n | \n | \n | 404 | \n\n | \n | \n | \n | \n | \n | \n | 404 | \n\n | \n | \n | \n | \n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n |
| \n Total \n | \n \n | \n | \n | $ | \n3,542 | \n\n | \n | \n | \n | \n | \n | $ | \n3,565 | \n\n | \n | \n | \n | \n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n |
\n
\n(a) Weighted average life\n expressed in years.
\n(b) The frequent flyer\n database is amortized based on an accelerated amortization schedule\n to reflect utilization of the assets. Estimated cash flows\n correlating to the expected attrition rate of customers in the\n frequent flyer database is considered in the determination of the\n amortization schedules.
\nFair value of the financial\n instruments included in the tables above was determined as\n follows:
\n\n
\n| \n | \n | \n |
| \n \n Description \n | \n \n | \n \n Fair Value\n Methodology \n | \n
| Cash and cash equivalents | \n\n | The carrying amounts approximate fair value because of the\n short-term maturity of these assets. | \n
| \n | \n | |
| Short-term investments and Restricted cash | \n\n | Fair value is based on (a) the trading prices of the investment\n or similar instruments, (b) an income approach, which uses\n valuation techniques to convert future amounts into a single\n present amount based on current market expectations about those\n future amounts when observable trading prices are not available,\n (c) internally-developed models of the expected future cash flows\n related to the securities, or (d) broker quotes obtained by\n third-party valuation services. | \n
| \n | \n | |
| \n Fuel\n derivatives \n | \n \n | Derivative contracts are privately negotiated contracts and are\n not exchange traded. Fair value measurements are estimated with\n option pricing models that employ observable inputs. Inputs to the\n valuation models include contractual terms, market prices, yield\n curves, fuel price curves and measures of volatility, among\n others. | \n
| \n | \n | |
| Foreign currency derivatives | \n\n | Fair value is determined with a formula utilizing observable\n inputs. Significant inputs to the valuation models include\n contractual terms, risk-free interest rates and forward exchange\n rates. | \n
| \n | \n | |
| \n Debt \n | \n \n | Fair values were based on either market prices or the\n discounted amount of future cash flows using our current\n incremental rate of borrowing for similar liabilities. | \n
| \n | \n | |
| Convertible debt derivative asset and option\n liability | \n\n | United used a binomial lattice model to value the conversion\n options and the supplemental derivative assets. Significant\n binomial model inputs that are not objectively determinable include\n volatility and the Company’s credit risk component of the\n discount rate. | \n
NOTE 2 - GOODWILL AND\n OTHER INTANGIBLE ASSETS
\nThe following table\n presents information about the Company’s goodwill and other\n intangible assets at December 31 (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | \n | \n | 2014 | \n\n | \n | 2013 | \n\n | ||||||||||
| \n \n Item \n | \n \n | Asset life (a) | \n\n | Gross \n Carrying \n Amount | \n \n | \n | Accumulated \n Amortization | \n \n | \n | Gross \n Carrying \n Amount | \n \n | \n | Accumulated \n Amortization | \n \n | ||||
| \n Goodwill \n | \n \n | \n | \n | $ | \n4,523 | \n\n | \n | \n | \n | \n | \n | $ | \n4,523 | \n\n | \n | \n | \n | \n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Finite-lived intangible\n assets \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Airport slots and\n gates \n | \n \n | 8 | \n\n | $ | \n97 | \n\n | \n | $ | \n97 | \n\n | \n | $ | \n98 | \n\n | \n | $ | \n88 | \n\n |
| \n Hubs \n | \n \n | 20 | \n\n | \n | 145 | \n\n | \n | \n | 67 | \n\n | \n | \n | 145 | \n\n | \n | \n | 59 | \n\n |
| \n Patents and\n tradenames \n | \n \n | 3 | \n\n | \n | 108 | \n\n | \n | \n | 108 | \n\n | \n | \n | 108 | \n\n | \n | \n | 108 | \n\n |
| \n Frequent flyer database\n (b) \n | \n \n | 22 | \n\n | \n | 1,177 | \n\n | \n | \n | 624 | \n\n | \n | \n | 1,177 | \n\n | \n | \n | 536 | \n\n |
| \n Contracts \n | \n \n | 12 | \n\n | \n | 155 | \n\n | \n | \n | 86 | \n\n | \n | \n | 167 | \n\n | \n | \n | 86 | \n\n |
| \n Other \n | \n \n | 25 | \n\n | \n | 109 | \n\n | \n | \n | 67 | \n\n | \n | \n | 109 | \n\n | \n | \n | 56 | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total \n | \n \n | \n | \n | $ | \n1,791 | \n\n | \n | $ | \n1,049 | \n\n | \n | $ | \n1,804 | \n\n | \n | $ | \n933 | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Indefinite-lived intangible\n assets \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Airport slots and\n gates \n | \n \n | \n | \n | $ | \n956 | \n\n | \n | \n | \n | \n | \n | $ | \n963 | \n\n | \n | \n | \n | \n |
| \n Route\n authorities \n | \n \n | \n | \n | \n | 1,589 | \n\n | \n | \n | \n | \n | \n | \n | 1,605 | \n\n | \n | \n | \n | \n |
| \n Tradenames and\n logos \n | \n \n | \n | \n | \n | 593 | \n\n | \n | \n | \n | \n | \n | \n | 593 | \n\n | \n | \n | \n | \n |
| \n Alliances \n | \n \n | \n | \n | \n | 404 | \n\n | \n | \n | \n | \n | \n | \n | 404 | \n\n | \n | \n | \n | \n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n |
| \n Total \n | \n \n | \n | \n | $ | \n3,542 | \n\n | \n | \n | \n | \n | \n | $ | \n3,565 | \n\n | \n | \n | \n | \n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n |
\n
\n(a) Weighted average life\n expressed in years.
\n(b) The frequent flyer\n database is amortized based on an accelerated amortization schedule\n to reflect utilization of the assets. Estimated cash flows\n correlating to the expected attrition rate of customers in the\n frequent flyer database is considered in the determination of the\n amortization schedules.
\nAmortization expense in\n 2014, 2013 and 2012 was $128 million, $142 million and $121\n million, respectively. Projected amortization expense in 2015,\n 2016, 2017, 2018 and 2019 is $105 million, $92 million, $81\n million, $72 million and $66 million, respectively.
\nSee Note 17 of this report\n for additional information related to impairment of intangible\n assets.
\nThe following information\n relates to all pension plans with an accumulated benefit obligation\n and a projected benefit obligation in excess of plan assets at\n December 31 (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 2014 | \n\n | \n | 2013 | \n\n | ||
| \n Projected benefit\n obligation \n | \n \n | $ | \n4,625 | \n\n | \n | $ | \n3,820 | \n\n |
| \n Accumulated benefit\n obligation \n | \n \n | \n | 3,930 | \n\n | \n | \n | 3,245 | \n\n |
| \n Fair value of plan\n assets \n | \n \n | \n | 2,387 | \n\n | \n | \n | 2,176 | \n\n |
At December 31, the\n Company’s derivatives were reported in its consolidated\n balance sheets as follows (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Classification \n | \n \n | \n \n Balance Sheet Location \n | \n \n | 2014 | \n\n | \n | 2013 | \n\n | ||
| \n Derivatives\n designated as cash flow hedges \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Assets: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Fuel contracts due within\n one year \n | \n \n | Receivables | \n\n | $ | \n— | \n\n | \n | $ | \n19 | \n\n |
| \n Fuel contracts with\n maturities greater than one year \n | \n \n | Other assets: Other, net | \n\n | \n | — | \n\n | \n | \n | 6 | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total assets \n | \n \n | \n | \n | $ | \n— | \n\n | \n | $ | \n25 | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Liabilities: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Fuel contracts due within\n one year \n | \n \n | Fuel derivative instruments | \n\n | $ | \n450 | \n\n | \n | $ | \n— | \n\n |
| \n Fuel contracts with\n maturities greater than one year \n | \n \n | Other liabilities and deferred credits: Other | \n\n | \n | 27 | \n\n | \n | \n | — | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | \n | $ | \n477 | \n\n | \n | $ | \n— | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Derivatives not\n designated for hedge accounting \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Assets: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Fuel contracts due within\n one year \n | \n \n | Receivables | \n\n | $ | \n6 | \n\n | \n | $ | \n70 | \n\n |
| \n Fuel contracts with\n maturities greater than one year \n | \n \n | Other assets: Other, net | \n\n | \n | — | \n\n | \n | \n | 9 | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total assets \n | \n \n | \n | \n | $ | \n6 | \n\n | \n | $ | \n79 | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Liabilities: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Fuel contracts due within\n one year \n | \n \n | Fuel derivative instruments | \n\n | $ | \n244 | \n\n | \n | $ | \n— | \n\n |
| \n Fuel contracts with\n maturities greater than one year \n | \n \n | Other liabilities and deferred credits: Other | \n\n | \n | 2 | \n\n | \n | \n | — | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total\n liabilities \n | \n \n | \n | \n | $ | \n246 | \n\n | \n | $ | \n— | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total\n derivatives \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Assets: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Fuel contracts due within\n one year \n | \n \n | Receivables | \n\n | $ | \n6 | \n\n | \n | $ | \n89 | \n\n |
| \n Fuel contracts with\n maturities greater than one year \n | \n \n | Other assets: Other, net | \n\n | \n | — | \n\n | \n | \n | 15 | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total assets \n | \n \n | \n | \n | $ | \n6 | \n\n | \n | $ | \n104 | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Liabilities: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Fuel contracts due within\n one year \n | \n \n | Fuel derivative instruments | \n\n | $ | \n694 | \n\n | \n | $ | \n— | \n\n |
| \n Fuel contracts with\n maturities greater than one year \n | \n \n | Other liabilities and deferred credits: Other | \n\n | \n | 29 | \n\n | \n | \n | — | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total\n liabilities \n | \n \n | \n | \n | $ | \n723 | \n\n | \n | $ | \n— | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
Net periodic benefit cost\n for the years ended December 31 included the following\n components (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 2014 | \n\n | \n | 2013 | \n\n | \n | 2012 | \n\n | |||||||||||||||
| \n | \n | Pension \n Benefits | \n \n | \n | Other \n Postretirement \n Benefits | \n \n | \n | Pension \n Benefits | \n \n | \n | Other \n Postretirement \n Benefits | \n \n | \n | Pension \n Benefits | \n \n | \n | Other \n Postretirement \n Benefits | \n \n | ||||||
| Service cost | \n\n | $ | \n98 | \n\n | \n | $ | \n19 | \n\n | \n | $ | \n121 | \n\n | \n | $ | \n52 | \n\n | \n | $ | \n99 | \n\n | \n | $ | \n50 | \n\n |
| Interest cost | \n\n | \n | 201 | \n\n | \n | \n | 88 | \n\n | \n | \n | 191 | \n\n | \n | \n | 110 | \n\n | \n | \n | 184 | \n\n | \n | \n | 124 | \n\n |
| Expected return on plan assets | \n\n | \n | (180) | \n\n | \n | \n | (2) | \n\n | \n | \n | (163) | \n\n | \n | \n | (2) | \n\n | \n | \n | (138) | \n\n | \n | \n | (2) | \n\n |
| Curtailment loss | \n\n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 2 | \n\n | \n | \n | 2 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| Amortization of prior service credits | \n\n | \n | — | \n\n | \n | \n | (31) | \n\n | \n | \n | — | \n\n | \n | \n | (3) | \n\n | \n | \n | (1) | \n\n | \n | \n | — | \n\n |
| Settlement (gain) loss | \n\n | \n | 1 | \n\n | \n | \n | — | \n\n | \n | \n | (10) | \n\n | \n | \n | — | \n\n | \n | \n | 1 | \n\n | \n | \n | — | \n\n |
| Amortization of unrecognized actuarial (gain) loss | \n\n | \n | 12 | \n\n | \n | \n | (47) | \n\n | \n | \n | 48 | \n\n | \n | \n | 3 | \n\n | \n | \n | 21 | \n\n | \n | \n | (3) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| Net periodic benefit cost | \n\n | $ | \n132 | \n\n | \n | $ | \n27 | \n\n | \n | $ | \n189 | \n\n | \n | $ | \n162 | \n\n | \n | $ | \n166 | \n\n | \n | $ | \n169 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
Activity related to the\n accruals for severance and medical costs and future lease payments\n on permanently grounded aircraft is as follows (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Severance/ \n Medical Costs | \n \n | \n | Permanently \n \n Grounded Aircraft | \n \n | ||
| \n Balance at\n December 31, 2011 \n | \n \n | $ | \n55 | \n\n | \n | $ | \n31 | \n\n |
| \n Accrual \n | \n \n | \n | 170 | \n\n | \n | \n | (1) | \n\n |
| \n Payments \n | \n \n | \n | (160) | \n\n | \n | \n | (25) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Balance at\n December 31, 2012 \n | \n \n | \n | 65 | \n\n | \n | \n | 5 | \n\n |
| \n Accrual \n | \n \n | \n | 120 | \n\n | \n | \n | 10 | \n\n |
| \n Payments \n | \n \n | \n | (94) | \n\n | \n | \n | (4) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Balance at\n December 31, 2013 \n | \n \n | \n | 91 | \n\n | \n | \n | 11 | \n\n |
| \n Accrual \n | \n \n | \n | 199 | \n\n | \n | \n | 102 | \n\n |
| \n Payments \n | \n \n | \n | (181) | \n\n | \n | \n | (11) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Balance at\n December 31, 2014 \n | \n \n | $ | \n109 | \n\n | \n | $ | \n102 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
NOTE 18 - SEGMENT\n INFORMATION
\nOperating segments are\n defined as components of an enterprise with separate financial\n information, which are evaluated regularly by the chief operating\n decision maker and are used in resource allocation and performance\n assessments.
\nThe Company deploys its\n aircraft across its route network through a single route scheduling\n system to maximize its value. When making resource allocation\n decisions, the Company’s chief operating decision maker\n evaluates flight profitability data, which considers aircraft type\n and route economics. The Company’s chief operating decision\n maker makes resource allocation decisions to maximize the\n Company’s consolidated financial results. Managing the\n Company as one segment allows management the opportunity to\n maximize the value of its route network.
\nThe Company’s\n operating revenue by principal geographic region (as defined by the\n U.S. Department of Transportation) for the years ended\n December 31 is presented in the table below (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n 2014 \n | \n \n | UAL | \n\n | \n | United | \n\n | ||
| \n Domestic (U.S. and\n Canada) \n | \n \n | $ | \n22,320 | \n\n | \n | $ | \n22,320 | \n\n |
| \n Pacific \n | \n \n | \n | 5,767 | \n\n | \n | \n | 5,767 | \n\n |
| \n Atlantic \n | \n \n | \n | 7,321 | \n\n | \n | \n | 7,321 | \n\n |
| \n Latin America \n | \n \n | \n | 3,493 | \n\n | \n | \n | 3,493 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total \n | \n \n | $ | \n38,901 | \n\n | \n | $ | \n38,901 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n \n 2013 \n | \n \n | \n | \n | \n | \n | \n | ||
| \n Domestic (U.S. and\n Canada) \n | \n \n | $ | \n22,092 | \n\n | \n | $ | \n22,100 | \n\n |
| \n Pacific \n | \n \n | \n | 5,794 | \n\n | \n | \n | 5,794 | \n\n |
| \n Atlantic \n | \n \n | \n | 7,132 | \n\n | \n | \n | 7,132 | \n\n |
| \n Latin America \n | \n \n | \n | 3,261 | \n\n | \n | \n | 3,261 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total \n | \n \n | $ | \n38,279 | \n\n | \n | $ | \n38,287 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n \n 2012 \n | \n \n | \n | \n | \n | \n | \n | ||
| \n Domestic (U.S. and\n Canada) \n | \n \n | $ | \n21,276 | \n\n | \n | $ | \n21,284 | \n\n |
| \n Pacific \n | \n \n | \n | 6,040 | \n\n | \n | \n | 6,040 | \n\n |
| \n Atlantic \n | \n \n | \n | 6,582 | \n\n | \n | \n | 6,582 | \n\n |
| \n Latin America \n | \n \n | \n | 3,254 | \n\n | \n | \n | 3,254 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total \n | \n \n | $ | \n37,152 | \n\n | \n | $ | \n37,160 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
The Company attributes\n revenue among the geographic areas based upon the origin and\n destination of each flight segment. The Company’s operations\n involve an insignificant level of dedicated revenue-producing\n assets in geographic regions as the overwhelming majority of the\n Company’s revenue producing assets (primarily U.S. registered\n aircraft) can be deployed in any of its geographic\n regions.
\nNOTE 16 - STATEMENT OF\n CONSOLIDATED CASH FLOWS - SUPPLEMENTAL DISCLOSURES
\nSupplemental disclosures of\n cash flow information and non-cash investing and financing\n activities for the years ended December 31 are as follows (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n 2014 \n | \n \n | UAL | \n\n | \n | United | \n\n | ||
| \n Cash paid (refunded)\n during the period for: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Interest (net\n of amounts capitalized) \n | \n \n | $ | \n748 | \n\n | \n | $ | \n748 | \n\n |
| \n Income\n taxes \n | \n \n | \n | (16) | \n\n | \n | \n | (16) | \n\n |
| \n Non-cash\n transactions: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Net property\n and equipment acquired through issuance of debt \n | \n \n | $ | \n1,114 | \n\n | \n | $ | \n1,114 | \n\n |
| \n Airport\n construction financing \n | \n \n | \n | 14 | \n\n | \n | \n | 14 | \n\n |
| \n Exchanges of\n certain 4.5% Notes and 6% Convertible Senior Notes for common\n stock \n | \n \n | \n | 260 | \n\n | \n | \n | 156 | \n\n |
| \n Transfer of UAL\n subsidiaries to United \n | \n \n | \n | — | \n\n | \n | \n | 186 | \n\n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n 2013 \n | \n \n | \n | \n | \n | \n | \n | ||
| \n Cash paid (refunded)\n during the period for: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Interest (net\n of amounts capitalized) \n | \n \n | $ | \n752 | \n\n | \n | $ | \n752 | \n\n |
| \n Income\n taxes \n | \n \n | \n | (20) | \n\n | \n | \n | (15) | \n\n |
| \n Non-cash\n transactions: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Net property\n and equipment acquired through issuance of debt \n | \n \n | $ | \n229 | \n\n | \n | $ | \n229 | \n\n |
| \n Airport\n construction financing \n | \n \n | \n | 40 | \n\n | \n | \n | 40 | \n\n |
| \n Exchanges of\n certain 6% Convertible Senior Notes for common stock \n | \n \n | \n | 240 | \n\n | \n | \n | — | \n\n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n 2012 \n | \n \n | \n | \n | \n | \n | \n | ||
| \n Cash paid during the\n period for: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Interest (net\n of amounts capitalized) \n | \n \n | $ | \n766 | \n\n | \n | $ | \n766 | \n\n |
| \n Income\n taxes \n | \n \n | \n | 2 | \n\n | \n | \n | 4 | \n\n |
| \n Non-cash\n transactions: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Net property\n and equipment acquired through issuance of debt \n | \n \n | $ | \n544 | \n\n | \n | $ | \n544 | \n\n |
| \n 8% Contingent\n Senior Notes and 6% Senior Notes due 2031, net of\n discount \n | \n \n | \n | 357 | \n\n | \n | \n | 357 | \n\n |
| \n Special\n facility payment financing \n | \n \n | \n | 101 | \n\n | \n | \n | 101 | \n\n |
| \n Airport\n construction financing \n | \n \n | \n | 50 | \n\n | \n | \n | 50 | \n\n |
The tables below present\n disclosures about the activity for “Level 3” financial\n assets and financial liabilities for the year ended\n December 31 (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 2014 | \n\n | \n | 2013 | \n\n | ||||||||||||||||||||||||||
| \n | \n | UAL and\n United | \n\n | \n | United | \n\n | \n | UAL and\n United | \n\n | \n | United | \n\n | ||||||||||||||||||||
| \n | \n | Student \n Loan-Related \n Auction Rate \n Securities | \n \n | \n | EETC | \n\n | \n | Convertible \n Debt \n Supplemental \n Derivative \n Asset | \n \n | \n | Convertible \n Debt \n Conversion \n Option \n Liability | \n \n | \n | Student \n Loan-Related \n Auction Rate \n Securities | \n \n | \n | EETC | \n\n | \n | Convertible \n Debt \n Supplemental \n Derivative \n Asset | \n \n | \n | Convertible \n Debt \n Conversion \n Option \n Liability | \n \n | ||||||||
| \n | \n | \n | \n | \n | \n | \n | \n | \n | ||||||||||||||||||||||||
| \n Balance at\n January 1 \n | \n \n | $ | \n105 | \n\n | \n | $ | \n61 | \n\n | \n | $ | \n480 | \n\n | \n | $ | \n(270) | \n\n | \n | $ | \n116 | \n\n | \n | $ | \n63 | \n\n | \n | $ | \n268 | \n\n | \n | $ | \n(128) | \n\n |
| Purchases, (sales), issuances and settlements (net) | \n\n | \n | (84) | \n\n | \n | \n | (33) | \n\n | \n | \n | (62) | \n\n | \n | \n | 34 | \n\n | \n | \n | (19) | \n\n | \n | \n | (4) | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n Gains and\n (losses): \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Reported in\n earnings: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Realized \n | \n \n | \n | 10 | \n\n | \n | \n | 1 | \n\n | \n | \n | (5) | \n\n | \n | \n | 5 | \n\n | \n | \n | 3 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n Unrealized \n | \n \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 299 | \n\n | \n | \n | (280) | \n\n | \n | \n | 1 | \n\n | \n | \n | — | \n\n | \n | \n | 212 | \n\n | \n | \n | (142) | \n\n |
| \n Reported in other\n comprehensive income (loss) \n | \n \n | \n | (5) | \n\n | \n | \n | (1) | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 4 | \n\n | \n | \n | 2 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Balance at\n December 31 \n | \n \n | $ | \n26 | \n\n | \n | $ | \n28 | \n\n | \n | $ | \n712 | \n\n | \n | $ | \n(511) | \n\n | \n | $ | \n105 | \n\n | \n | $ | \n61 | \n\n | \n | $ | \n480 | \n\n | \n | $ | \n(270) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| Intangibles—The Company has finite-lived and\n indefinite-lived intangible assets, including goodwill.\n Finite-lived intangible assets are amortized over their estimated\n useful lives. Goodwill and indefinite-lived intangible assets are\n not amortized but are reviewed for impairment annually or more\n frequently if events or circumstances indicate that the asset may\n be impaired. Goodwill and indefinite-lived assets are reviewed for\n impairment on an annual basis as of October 1, or on an\n interim basis whenever a triggering event occurs. See Notes 2 and\n 17 of this report for additional information related to\n intangibles. | \n
| (b) | \nRevenue\n Recognition—The value of unused passenger tickets is\n included in current liabilities as advance ticket sales. The\n Company records passenger ticket sales and tickets sold by other\n airlines for use on United as passenger revenue when the\n transportation is provided or upon estimated breakage. Tickets sold\n by other airlines are recorded at the estimated values to be billed\n to the other airlines. Differences between amounts billed and the\n actual amounts may be rejected and rebilled or written off if the\n amount recorded was different from the original estimate. When\n necessary, the Company records a reserve against our interline\n billings and payables if historical experience indicates that these\n amounts are different. Non-refundable tickets generally expire on\n the date of the intended flight, unless the date is extended by\n notification from the customer on or before the intended flight\n date. | \n
\n Fees charged in\n association with changes or extensions to non-refundable tickets\n are recorded as other revenue at the time the fee is incurred. The\n fare on the changed ticket, including any additional collection of\n fare, is deferred and recognized in accordance with our\n transportation revenue recognition policy at the time the\n transportation is provided. Change fees related to non-refundable\n tickets are considered a separate transaction from the air\n transportation because they represent a charge for the\n Company’s additional service to modify a previous sale.\n Therefore, the pricing of the change fee and the initial customer\n order are separately determined and represent distinct earnings\n processes.
\n\n The Company\n records an estimate of breakage revenue on the flight date for\n tickets that will expire unused. These estimates are based on the\n evaluation of actual historical results and forecasted trends.\n Refundable tickets expire after one year from the date of\n issuance.
\n\n
\n\n The Company\n recognizes cargo and other revenue as service is\n provided.
\n\n Under our\n capacity purchase agreements (“CPAs”) with regional\n carriers, we purchase all of the capacity related to aircraft\n covered by the contracts and are responsible for selling all of the\n related seat inventory. We record the passenger revenue and related\n expenses as separate operating revenue and expense in the\n consolidated statement of operations.
\n\n Accounts\n receivable primarily consist of amounts due from credit card\n companies and customers of our aircraft maintenance and cargo\n transportation services. We provide an allowance for uncollectible\n accounts equal to the estimated losses expected to be incurred\n based on historical write-offs and other specific analyses. Bad\n debt expense and write-offs were not material for the years ended\n December 31, 2014, 2013 and 2012.
\nThe following table sets\n forth the reconciliation of the beginning and ending balances of\n the benefit obligation and plan assets, the funded status and the\n amounts recognized in these financial statements for the defined\n benefit and other postretirement plans (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Pension Benefits | \n\n | |||||
| \n | \n | Year Ended \n December 31, 2014 | \n \n | \n | Year Ended \n December 31, 2013 | \n \n | ||
| \n Accumulated benefit\n obligation: \n | \n \n | $ | \n4,068 | \n\n | \n | $ | \n3,383 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Change in projected benefit\n obligation: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Projected benefit\n obligation at beginning of year \n | \n \n | $ | \n4,000 | \n\n | \n | $ | \n4,526 | \n\n |
| \n Service cost \n | \n \n | \n | 98 | \n\n | \n | \n | 121 | \n\n |
| \n Interest cost \n | \n \n | \n | 201 | \n\n | \n | \n | 191 | \n\n |
| \n Actuarial (gain)\n loss \n | \n \n | \n | 807 | \n\n | \n | \n | (464) | \n\n |
| \n Gross benefits paid and\n settlements \n | \n \n | \n | (281) | \n\n | \n | \n | (269) | \n\n |
| \n Curtailments \n | \n \n | \n | — | \n\n | \n | \n | (84) | \n\n |
| \n Other \n | \n \n | \n | (22) | \n\n | \n | \n | (21) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Projected benefit\n obligation at end of year \n | \n \n | $ | \n4,803 | \n\n | \n | $ | \n4,000 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Change in plan\n assets: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Fair value of plan assets\n at beginning of year \n | \n \n | $ | \n2,397 | \n\n | \n | $ | \n2,157 | \n\n |
| \n Actual gain on plan\n assets \n | \n \n | \n | 151 | \n\n | \n | \n | 239 | \n\n |
| \n Employer\n contributions \n | \n \n | \n | 307 | \n\n | \n | \n | 277 | \n\n |
| \n Gross benefits paid and\n settlements \n | \n \n | \n | (281) | \n\n | \n | \n | (269) | \n\n |
| \n Other \n | \n \n | \n | (12) | \n\n | \n | \n | (7) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Fair value of plan assets\n at end of year \n | \n \n | $ | \n2,562 | \n\n | \n | $ | \n2,397 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Funded status—Net\n amount recognized \n | \n \n | $ | \n(2,241) | \n\n | \n | $ | \n(1,603) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
\n
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Other Postretirement Benefits | \n\n | |||||
| \n | \n | Year Ended \n December 31, 2014 | \n \n | \n | Year Ended \n December 31, 2013 | \n \n | ||
| \n Change in benefit\n obligation: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Benefit obligation at\n beginning of year \n | \n \n | $ | \n1,819 | \n\n | \n | $ | \n2,743 | \n\n |
| \n Service cost \n | \n \n | \n | 19 | \n\n | \n | \n | 52 | \n\n |
| \n Interest cost \n | \n \n | \n | 88 | \n\n | \n | \n | 110 | \n\n |
| \n Plan participants’\n contributions \n | \n \n | \n | 67 | \n\n | \n | \n | 67 | \n\n |
| \n Actuarial (gain)\n loss \n | \n \n | \n | 262 | \n\n | \n | \n | (640) | \n\n |
| \n Federal subsidy \n | \n \n | \n | 4 | \n\n | \n | \n | 7 | \n\n |
| \n Plan amendments \n | \n \n | \n | (3) | \n\n | \n | \n | (331) | \n\n |
| \n Curtailments \n | \n \n | \n | 8 | \n\n | \n | \n | 8 | \n\n |
| \n Gross benefits\n paid \n | \n \n | \n | (212) | \n\n | \n | \n | (197) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Benefit obligation at end\n of year \n | \n \n | $ | \n2,052 | \n\n | \n | $ | \n1,819 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Change in plan\n assets: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Fair value of plan assets\n at beginning of year \n | \n \n | $ | \n57 | \n\n | \n | $ | \n58 | \n\n |
| \n Actual return on plan\n assets \n | \n \n | \n | 1 | \n\n | \n | \n | 1 | \n\n |
| \n Employer\n contributions \n | \n \n | \n | 144 | \n\n | \n | \n | 128 | \n\n |
| \n Plan participants’\n contributions \n | \n \n | \n | 67 | \n\n | \n | \n | 67 | \n\n |
| \n Benefits paid \n | \n \n | \n | (212) | \n\n | \n | \n | (197) | \n\n |
| \n Fair value of plan assets\n at end of year \n | \n \n | \n | 57 | \n\n | \n | \n | 57 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Funded status—Net\n amount recognized \n | \n \n | $ | \n(1,995) | \n\n | \n | $ | \n(1,762) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
The table below summarizes\n United’s commitments as of December 31, 2014 (including\n those assigned from UAL), which primarily relate to the acquisition\n of aircraft and related spare engines, aircraft improvements and\n include other commitments primarily to acquire information\n technology services and assets for the years ended December 31\n (in billions):
\n\n
\n| \n | \n | \n | \n | \n |
| \n 2015 \n | \n \n | $ | \n3.2 | \n\n |
| \n 2016 \n | \n \n | \n | 2.3 | \n\n |
| \n 2017 \n | \n \n | \n | 1.3 | \n\n |
| \n 2018 \n | \n \n | \n | 2.2 | \n\n |
| \n 2019 \n | \n \n | \n | 3.3 | \n\n |
| \n After 2019 \n | \n \n | \n | 10.7 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | $ | \n23.0 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
The significant components\n of the income tax expense (benefit) are as follows (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n 2014 \n | \n \n | UAL | \n\n | \n | United | \n\n | ||
| \n Current \n | \n \n | $ | \n(17) | \n\n | \n | $ | \n(17) | \n\n |
| \n Deferred \n | \n \n | \n | 13 | \n\n | \n | \n | 13 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | $ | \n(4) | \n\n | \n | $ | \n(4) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | ||||||
| \n \n 2013 \n | \n \n | \n | \n | \n | \n | \n | ||
| \n Current \n | \n \n | $ | \n(18) | \n\n | \n | $ | \n(18) | \n\n |
| \n Deferred \n | \n \n | \n | (14) | \n\n | \n | \n | 1 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | $ | \n(32) | \n\n | \n | $ | \n(17) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | ||||||
| \n \n 2012 \n | \n \n | \n | \n | \n | \n | \n | ||
| \n Current \n | \n \n | $ | \n(14) | \n\n | \n | $ | \n(9) | \n\n |
| \n Deferred \n | \n \n | \n | 13 | \n\n | \n | \n | 13 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | $ | \n(1) | \n\n | \n | $ | \n4 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
Derivatives not\n designated for hedge accounting
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Amount of Gain\n (Loss) Recognized \n in Nonoperating income (expense): \n Miscellaneous, net | \n \n | \n | \n | |||||||||
| \n | \n | 2014 | \n\n | \n | 2013 | \n\n | \n | 2012 | \n\n | \n | \n | |||
| \n Fuel contracts \n | \n \n | $ | \n(462) | \n\n | \n | $ | \n79 | \n\n | \n | $ | \n38 | \n\n | \n | \n |
The table below summarizes\n UAL’s unearned compensation and weighted-average remaining\n period to recognize costs for all outstanding share-based awards\n that are probable of being achieved for the year ended\n December 31, 2014 (in millions, except as noted):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Unearned \n Compensation | \n \n | \n | Weighted- \n Average \n Remaining \n Period (in \n years) | \n \n | ||
| \n RSUs \n | \n \n | $ | \n55 | \n\n | \n | \n | 1.4 | \n\n |
| \n Restricted stock \n | \n \n | \n | 7 | \n\n | \n | \n | 1.4 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n |
| \n Total \n | \n \n | $ | \n62 | \n\n | \n | \n | \n | \n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n |
\n Schedule II
\n\n Valuation\n and Qualifying Accounts
\n\n For the\n Years Ended December 31, 2014, 2013 and 2012
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n (In\n millions) \n\n \n\n Description \n | \n \n | Balance at \n Beginning of \n Period | \n \n | \n | Additions \n Charged to \n Costs\n and \n Expenses | \n \n | \n | Deductions \n (a) | \n \n | \n | Other \n (b) | \n \n | \n | Balance at \n End\n of \n Period | \n \n | |||||
| \n Allowance for doubtful\n accounts - UAL and United: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n 2014 \n | \n \n | $ | \n13 | \n\n | \n | $ | \n45 | \n\n | \n | $ | \n36 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n22 | \n\n |
| \n 2013 \n | \n \n | \n | 13 | \n\n | \n | \n | 35 | \n\n | \n | \n | 35 | \n\n | \n | \n | — | \n\n | \n | \n | 13 | \n\n |
| \n 2012 \n | \n \n | \n | 7 | \n\n | \n | \n | 12 | \n\n | \n | \n | 6 | \n\n | \n | \n | — | \n\n | \n | \n | 13 | \n\n |
| \n Obsolescence\n allowance—spare parts - UAL and United: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n 2014 \n | \n \n | $ | \n162 | \n\n | \n | $ | \n35 | \n\n | \n | $ | \n28 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n169 | \n\n |
| \n 2013 \n | \n \n | \n | 125 | \n\n | \n | \n | 38 | \n\n | \n | \n | 1 | \n\n | \n | \n | — | \n\n | \n | \n | 162 | \n\n |
| \n 2012 \n | \n \n | \n | 89 | \n\n | \n | \n | 40 | \n\n | \n | \n | 4 | \n\n | \n | \n | — | \n\n | \n | \n | 125 | \n\n |
| \n Valuation allowance for\n deferred tax assets - UAL: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n 2014 \n | \n \n | $ | \n4,591 | \n\n | \n | $ | \n156 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n4 | \n\n | \n | $ | \n4,751 | \n\n |
| \n 2013 \n | \n \n | \n | 5,388 | \n\n | \n | \n | 7 | \n\n | \n | \n | 888 | \n\n | \n | \n | 84 | \n\n | \n | \n | 4,591 | \n\n |
| \n 2012 \n | \n \n | \n | 4,922 | \n\n | \n | \n | 487 | \n\n | \n | \n | 21 | \n\n | \n | \n | — | \n\n | \n | \n | 5,388 | \n\n |
| \n Valuation allowance for\n deferred tax assets - United: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n 2014 \n | \n \n | $ | \n4,561 | \n\n | \n | $ | \n167 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n(7) | \n\n | \n | $ | \n4,721 | \n\n |
| \n 2013 \n | \n \n | \n | 5,288 | \n\n | \n | \n | 8 | \n\n | \n | \n | 898 | \n\n | \n | \n | 163 | \n\n | \n | \n | 4,561 | \n\n |
| \n 2012 \n | \n \n | \n | 4,833 | \n\n | \n | \n | 661 | \n\n | \n | \n | 206 | \n\n | \n | \n | — | \n\n | \n | \n | 5,288 | \n\n |
\n
\n(a) Deduction from reserve\n for purpose for which reserve was created.
\n(b) See Note 7 to the\n financial statements included in Part II, Item 8 of this\n report for additional information related to other valuation\n allowance adjustments.
\n| (d) | \nCash and Cash\n Equivalents and Restricted Cash—Highly liquid investments\n with a maturity of three months or less on their acquisition date\n are classified as cash and cash equivalents. | \n
\n Restricted cash\n primarily includes cash collateral associated with workers’\n compensation obligations, reserves for institutions that process\n credit card ticket sales and cash collateral received from fuel\n hedge counterparties. Restricted cash is classified as short-term\n or long-term in the consolidated balance sheets based on the\n expected timing of return of the assets to the Company. Airline\n industry practice includes classification of restricted cash flows\n as either investing cash flows or operating cash flows. Cash flows\n related to restricted cash activity are classified as investing\n activities because the Company considers restricted cash arising\n from these activities similar to an investment.
\nNOTE 10 - HEDGING\n ACTIVITIES
\nFuel\n Derivatives
\nThe Company routinely\n hedges a portion of its future fuel requirements. As of\n December 31, 2014, the Company had hedged approximately 22%\n and 1% of its projected fuel requirements (859 million and\n 35 million gallons, respectively) for 2015 and 2016,\n respectively, with commonly used financial hedge instruments based\n on aircraft fuel or crude oil. As of December 31, 2014, the\n Company had fuel hedges expiring through March 2016. The Company\n does not enter into derivative instruments for non-risk management\n purposes.
\nAs required, the Company\n assesses the effectiveness of each of its individual hedges on a\n quarterly basis. The Company also examines the effectiveness\n of its entire hedging program on a quarterly basis utilizing\n statistical analysis. This analysis involves utilizing\n regression and other statistical analyses that compare changes in\n the price of aircraft fuel to changes in the prices of the\n commodities used for hedging purposes.
\nUpon proper qualification,\n the Company accounts for certain fuel derivative instruments as\n cash flow hedges. All derivatives designated as hedges that\n meet certain requirements are granted hedge accounting\n treatment. The types of instruments the Company utilizes that\n qualify for special hedge accounting treatment typically include\n swaps, call options, collars (which consist of a purchased call\n option and a sold put option) and four-way collars (a collar with a\n higher strike sold call option and a lower strike purchased put\n option). Generally, utilizing hedge accounting, all periodic\n changes in fair value of the derivatives designated as hedges that\n are considered to be effective are recorded in AOCI until the\n underlying fuel is consumed and recorded in fuel expense. The\n Company is exposed to the risk that its hedges may not be effective\n in offsetting changes in the cost of fuel and that its hedges may\n not continue to qualify for hedge accounting. Hedge\n ineffectiveness results when the change in the fair value of the\n derivative instrument exceeds the change in the value of the\n Company’s expected future cash outlay to purchase and consume\n fuel. To the extent that the periodic changes in the fair\n value of the derivatives are not effective, that ineffectiveness is\n classified as Nonoperating income (expense): Miscellaneous, net in\n the statements of consolidated operations.
\nThe Company also utilizes\n certain derivative instruments that are economic hedges but do not\n qualify for hedge accounting under U.S. GAAP. As with derivatives\n that qualify for hedge accounting, the purpose of these economic\n hedges is to mitigate the adverse financial impact of potential\n increases in the price of fuel. Currently, the only such economic\n hedges in the Company’s hedging portfolio are three-way\n collars (a collar with a higher strike sold call option). The\n Company records changes in the fair value of three-way collars to\n Nonoperating income (expense): Miscellaneous, net in the statements\n of consolidated operations.
\nIf the Company settles a\n derivative prior to its contractual settlement date, then the\n cumulative gain or loss recognized in AOCI at the termination date\n remains in AOCI until the forecasted transaction occurs. In a\n situation where it becomes probable that a hedged forecasted\n transaction will not occur, any gains and/or losses that have been\n recorded to AOCI would be required to be immediately reclassified\n into earnings. All cash flows associated with purchasing and\n settling derivatives are classified as operating cash flows in the\n statements of consolidated cash flows.
\nThe Company records each\n derivative instrument as a derivative asset or liability (on a\n gross basis) in its consolidated balance sheets, and,\n accordingly, records any related collateral on a gross basis. The\n table below presents the fair value amounts of fuel derivative\n assets and liabilities and the location of amounts recognized in\n the Company’s financial statements.
\n\n
\nAt December 31, the\n Company’s derivatives were reported in its consolidated\n balance sheets as follows (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Classification \n | \n \n | \n \n Balance Sheet Location \n | \n \n | 2014 | \n\n | \n | 2013 | \n\n | ||
| \n Derivatives\n designated as cash flow hedges \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Assets: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Fuel contracts due within\n one year \n | \n \n | Receivables | \n\n | $ | \n— | \n\n | \n | $ | \n19 | \n\n |
| \n Fuel contracts with\n maturities greater than one year \n | \n \n | Other assets: Other, net | \n\n | \n | — | \n\n | \n | \n | 6 | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total assets \n | \n \n | \n | \n | $ | \n— | \n\n | \n | $ | \n25 | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Liabilities: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Fuel contracts due within\n one year \n | \n \n | Fuel derivative instruments | \n\n | $ | \n450 | \n\n | \n | $ | \n— | \n\n |
| \n Fuel contracts with\n maturities greater than one year \n | \n \n | Other liabilities and deferred credits: Other | \n\n | \n | 27 | \n\n | \n | \n | — | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | \n | $ | \n477 | \n\n | \n | $ | \n— | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Derivatives not\n designated for hedge accounting \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Assets: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Fuel contracts due within\n one year \n | \n \n | Receivables | \n\n | $ | \n6 | \n\n | \n | $ | \n70 | \n\n |
| \n Fuel contracts with\n maturities greater than one year \n | \n \n | Other assets: Other, net | \n\n | \n | — | \n\n | \n | \n | 9 | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total assets \n | \n \n | \n | \n | $ | \n6 | \n\n | \n | $ | \n79 | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Liabilities: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Fuel contracts due within\n one year \n | \n \n | Fuel derivative instruments | \n\n | $ | \n244 | \n\n | \n | $ | \n— | \n\n |
| \n Fuel contracts with\n maturities greater than one year \n | \n \n | Other liabilities and deferred credits: Other | \n\n | \n | 2 | \n\n | \n | \n | — | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total\n liabilities \n | \n \n | \n | \n | $ | \n246 | \n\n | \n | $ | \n— | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total\n derivatives \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Assets: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Fuel contracts due within\n one year \n | \n \n | Receivables | \n\n | $ | \n6 | \n\n | \n | $ | \n89 | \n\n |
| \n Fuel contracts with\n maturities greater than one year \n | \n \n | Other assets: Other, net | \n\n | \n | — | \n\n | \n | \n | 15 | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total assets \n | \n \n | \n | \n | $ | \n6 | \n\n | \n | $ | \n104 | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Liabilities: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Fuel contracts due within\n one year \n | \n \n | Fuel derivative instruments | \n\n | $ | \n694 | \n\n | \n | $ | \n— | \n\n |
| \n Fuel contracts with\n maturities greater than one year \n | \n \n | Other liabilities and deferred credits: Other | \n\n | \n | 29 | \n\n | \n | \n | — | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total\n liabilities \n | \n \n | \n | \n | $ | \n723 | \n\n | \n | $ | \n— | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
Derivative Credit\n Risk and Fair Value
\nThe Company is exposed to\n credit losses in the event of nonperformance by counterparties to\n its derivative instruments. While the Company records derivative\n instruments on a gross basis, the Company monitors its net\n derivative position with each counterparty to monitor credit risk.\n Based on the fair value of our fuel derivative instruments, our\n counterparties may require us to post collateral when the price of\n the underlying commodity decreases, and we may require our\n counterparties to provide us with collateral when the price of the\n underlying commodity increases. The Company posted $577 million of\n collateral with fuel derivative counterparties as of\n December 31, 2014. The collateral is recorded as Fuel hedge\n collateral deposits on the Company’s balance sheet. The\n Company did not post or hold collateral as of December 31,\n 2013.
\n\n
\nWe have master trading\n agreements with all of our fuel hedging counterparties that allow\n us to net our fuel hedge derivative positions. We have elected not\n to net the fair value positions and collateral recorded on our\n consolidated balance sheets. The following table shows the\n potential net fair value positions (including fuel derivatives and\n related collateral) had we elected to offset. The table reflects\n offset at the counterparty level (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | December 31, 2014 | \n\n | \n | December 31, 2013 | \n\n | ||
| \n Receivables \n | \n \n | $ | \n— | \n\n | \n | $ | \n89 | \n\n |
| \n Other assets: Other,\n net \n | \n \n | \n | — | \n\n | \n | \n | 15 | \n\n |
| \n Current liabilities:\n Other \n | \n \n | \n | (209) | \n\n | \n | \n | — | \n\n |
| \n Other liabilities and\n deferred credits: Other \n | \n \n | \n | (30) | \n\n | \n | \n | — | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Hedge derivatives assets\n (liabilities), net \n | \n \n | $ | \n(239) | \n\n | \n | $ | \n104 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
The following tables\n present the fuel hedge gains (losses) recognized during the periods\n presented and their classification in the financial statements (in\n millions):
\nDerivatives\n designated as cash flow hedges
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Amount of Gain (Loss) \n Recognized \n in AOCI on Derivatives \n (Effective\n Portion) | \n \n | \n | Gain (Loss) \n Reclassified from \n AOCI into Income \n (Fuel Expense) \n (Effective\n Portion) | \n \n | \n | Amount of Gain\n (Loss) \n Recognized in \n Nonoperating income \n (expense): Miscellaneous, net \n (Ineffective Portion) | \n \n | |||||||||||||||
| \n | \n | 2014 | \n\n | \n | 2013 | \n\n | \n | 2014 | \n\n | \n | 2013 | \n\n | \n | 2014 | \n\n | \n | 2013 | \n\n | ||||||
| \n Fuel contracts \n | \n \n | $ | \n(599) | \n\n | \n | $ | \n39 | \n\n | \n | $ | \n(89) | \n\n | \n | $ | \n18 | \n\n | \n | $ | \n(3) | \n\n | \n | $ | \n5 | \n\n |
Derivatives not\n designated for hedge accounting
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Amount of Gain\n (Loss) Recognized \n in Nonoperating income (expense): \n Miscellaneous, net | \n \n | \n | \n | |||||||||
| \n | \n | 2014 | \n\n | \n | 2013 | \n\n | \n | 2012 | \n\n | \n | \n | |||
| \n Fuel contracts \n | \n \n | $ | \n(462) | \n\n | \n | $ | \n79 | \n\n | \n | $ | \n38 | \n\n | \n | \n |
| (g) | \nProperty and\n Equipment—The Company records additions to owned\n operating property and equipment at cost when acquired. Property\n under capital leases and the related obligation for future lease\n payments are recorded at an amount equal to the initial present\n value of those lease payments. Modifications that enhance the\n operating performance or extend the useful lives of airframes or\n engines are capitalized as property and equipment. It is the\n Company’s policy to record compensation from delays in\n delivery of aircraft as a reduction of the cost of the related\n aircraft. | \n
\n Depreciation\n and amortization of owned depreciable assets is based on the\n straight-line method over the assets’ estimated useful lives.\n Leasehold improvements are amortized over the remaining term of the\n lease, including estimated facility renewal options when renewal is\n reasonably assured at key airports, or the estimated useful life of\n the related asset, whichever is less. Properties under capital\n leases are amortized on the straight-line method over the life of\n the lease or, in the case of certain aircraft, over their estimated\n useful lives, whichever is shorter. Amortization of capital lease\n assets is included in depreciation and amortization expense. The\n estimated useful lives of property and equipment are as\n follows:
\n\n
\n| \n | \n | \n | \n | \n |
| \n | \n | Estimated Useful Life (in years) | \n\n | |
| \n Aircraft and related\n rotable parts \n | \n \n | \n | 25 to 30 | \n\n |
| \n Buildings \n | \n \n | \n | 25 to 45 | \n\n |
| \n Other property and\n equipment \n | \n \n | \n | 3 to 15 | \n\n |
| \n Computer\n software \n | \n \n | \n | 5 | \n\n |
| \n Building\n improvements \n | \n \n | \n | 1 to 40 | \n\n |
\n As of\n December 31, 2014 and 2013, the Company had a carrying value\n of computer software of $281 million and $290 million,\n respectively. For the years ended December 31, 2014, 2013 and\n 2012, the Company’s depreciation expense related to computer\n software was $81 million, $72 million and $81 million,\n respectively. Aircraft and aircraft parts were assumed to have\n residual values with a range of 10% to 11% of original cost,\n depending on type, and other categories of property and equipment\n were assumed to have no residual value.
\nNOTE 19 - SELECTED\n QUARTERLY FINANCIAL DATA (UNAUDITED)
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n UAL \n \n \n | \n \n | Quarter\n Ended | \n\n | |||||||||||||
| \n \n (In millions, except per share amounts) \n | \n \n | March 31 | \n\n | \n | June 30 | \n\n | \n | September 30 | \n\n | \n | December 31 | \n\n | ||||
| \n 2014 \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Operating\n revenue \n | \n \n | $ | \n8,696 | \n\n | \n | $ | \n10,329 | \n\n | \n | $ | \n10,563 | \n\n | \n | $ | \n9,313 | \n\n |
| \n Income (loss) from\n operations \n | \n \n | \n | (349) | \n\n | \n | \n | 906 | \n\n | \n | \n | 1,191 | \n\n | \n | \n | 625 | \n\n |
| \n Net income\n (loss) \n | \n \n | \n | (609) | \n\n | \n | \n | 789 | \n\n | \n | \n | 924 | \n\n | \n | \n | 28 | \n\n |
| \n Basic earnings (loss) per\n share \n | \n \n | \n | (1.66) | \n\n | \n | \n | 2.11 | \n\n | \n | \n | 2.49 | \n\n | \n | \n | 0.08 | \n\n |
| \n Diluted earnings (loss) per\n share \n | \n \n | \n | (1.66) | \n\n | \n | \n | 2.01 | \n\n | \n | \n | 2.37 | \n\n | \n | \n | 0.07 | \n\n |
| \n 2013 \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Operating\n revenue \n | \n \n | $ | \n8,721 | \n\n | \n | $ | \n10,001 | \n\n | \n | $ | \n10,228 | \n\n | \n | $ | \n9,329 | \n\n |
| \n Income (loss) from\n operations \n | \n \n | \n | (264) | \n\n | \n | \n | 770 | \n\n | \n | \n | 508 | \n\n | \n | \n | 235 | \n\n |
| \n Net income\n (loss) \n | \n \n | \n | (417) | \n\n | \n | \n | 469 | \n\n | \n | \n | 379 | \n\n | \n | \n | 140 | \n\n |
| \n Basic earnings (loss) per\n share \n | \n \n | \n | (1.26) | \n\n | \n | \n | 1.37 | \n\n | \n | \n | 1.06 | \n\n | \n | \n | 0.39 | \n\n |
| \n Diluted earnings (loss) per\n share \n | \n \n | \n | (1.26) | \n\n | \n | \n | 1.21 | \n\n | \n | \n | 0.98 | \n\n | \n | \n | 0.37 | \n\n |
\n
\nUAL’s quarterly\n financial data is subject to seasonal fluctuations and historically\n its second and third quarter financial results, which reflect\n higher travel demand, are better than its first and fourth quarter\n financial results. UAL’s quarterly results were impacted by\n the following significant items (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Quarter\n Ended | \n\n | |||||||||||||
| \n | \n | March 31 | \n\n | \n | June 30 | \n\n | \n | September 30 | \n\n | \n | December 31 | \n\n | ||||
| \n 2014 \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Operating: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Severance and benefit\n costs \n | \n \n | $ | \n14 | \n\n | \n | $ | \n38 | \n\n | \n | $ | \n6 | \n\n | \n | $ | \n141 | \n\n |
| \n Integration-related\n costs \n | \n \n | \n | 34 | \n\n | \n | \n | 17 | \n\n | \n | \n | 28 | \n\n | \n | \n | 17 | \n\n |
| \n Costs associated with\n permanently grounding Embraer ERJ 135 aircraft \n | \n \n | \n | — | \n\n | \n | \n | 66 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n Impairment of\n assets \n | \n \n | \n | 1 | \n\n | \n | \n | 32 | \n\n | \n | \n | — | \n\n | \n | \n | 16 | \n\n |
| \n Losses on sale of assets\n and other special (gains) losses, net \n | \n \n | \n | 3 | \n\n | \n | \n | 16 | \n\n | \n | \n | 9 | \n\n | \n | \n | 5 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Special charges \n | \n \n | \n | 52 | \n\n | \n | \n | 169 | \n\n | \n | \n | 43 | \n\n | \n | \n | 179 | \n\n |
| \n Nonoperating: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Loss on extinguishment of\n debt and other, net \n | \n \n | \n | 21 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 53 | \n\n |
| \n Income tax\n benefit \n | \n \n | \n | (1) | \n\n | \n | \n | — | \n\n | \n | \n | (3) | \n\n | \n | \n | (6) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total operating and\n nonoperating special charges, net of income taxes \n | \n \n | $ | \n72 | \n\n | \n | $ | \n169 | \n\n | \n | $ | \n40 | \n\n | \n | $ | \n226 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n 2013 \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Special charges\n (income): \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Severance and benefit\n costs \n | \n \n | $ | \n14 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n— | \n\n | \n | $ | \n91 | \n\n |
| \n Integration-related\n costs \n | \n \n | \n | 70 | \n\n | \n | \n | 45 | \n\n | \n | \n | 50 | \n\n | \n | \n | 40 | \n\n |
| \n Labor agreement\n costs \n | \n \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 127 | \n\n | \n | \n | — | \n\n |
| \n Impairment of\n assets \n | \n \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 33 | \n\n |
| \n (Gains) losses on sale of\n assets and other special (gains) losses, net \n | \n \n | \n | 8 | \n\n | \n | \n | 7 | \n\n | \n | \n | 34 | \n\n | \n | \n | 1 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total special\n items \n | \n \n | \n | 92 | \n\n | \n | \n | 52 | \n\n | \n | \n | 211 | \n\n | \n | \n | 165 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Income tax\n benefit \n | \n \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | (7) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total special items, net of\n tax \n | \n \n | $ | \n92 | \n\n | \n | $ | \n52 | \n\n | \n | $ | \n211 | \n\n | \n | $ | \n158 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
See Note 17 of this report\n for additional information of these items.
\nThe tables below present\n the components of the Company’s accumulated other\n comprehensive income (loss) (“AOCI”), net of tax (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n UAL\n (a) \n | \n \n | Pension and \n Other \n Postretirement \n Unrecognized \n Actuarial \n Gains (Losses) \n and Prior \n Service Cost | \n \n | \n | Unrealized \n Gains \n (Losses) \n on\n Derivatives | \n \n | \n | Investments \n and Other | \n \n | \n | Total | \n\n | ||||
| \n Balance at\n December 31, 2011 \n | \n \n | $ | \n(312) | \n\n | \n | $ | \n(100) | \n\n | \n | $ | \n(5) | \n\n | \n | $ | \n(417) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Other comprehensive loss\n before reclassifications \n | \n \n | \n | (747) | \n(b) | \n\n | \n | (51) | \n\n | \n | \n | 11 | \n\n | \n | \n | (787) | \n\n |
| \n Amounts reclassified from\n accumulated other comprehensive income \n | \n \n | \n | 17 | \n\n | \n | \n | 141 | \n\n | \n | \n | — | \n\n | \n | \n | 158 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Net current-period other\n comprehensive income (loss) \n | \n \n | \n | (730) | \n\n | \n | \n | 90 | \n\n | \n | \n | 11 | \n\n | \n | \n | (629) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Balance at\n December 31, 2012 \n | \n \n | $ | \n(1,042) | \n\n | \n | $ | \n(10) | \n\n | \n | $ | \n6 | \n\n | \n | $ | \n(1,046) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Other comprehensive income\n before reclassifications \n | \n \n | \n | 1,584 | \n(b) | \n\n | \n | 39 | \n\n | \n | \n | 7 | \n\n | \n | \n | 1,630 | \n\n |
| \n Amounts reclassified from\n accumulated other comprehensive income \n | \n \n | \n | 42 | \n\n | \n | \n | (18) | \n\n | \n | \n | — | \n\n | \n | \n | 24 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Net current-period other\n comprehensive income (loss) \n | \n \n | \n | 1,626 | \n\n | \n | \n | 21 | \n\n | \n | \n | 7 | \n\n | \n | \n | 1,654 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Balance at\n December 31, 2013 \n | \n \n | $ | \n584 | \n\n | \n | $ | \n11 | \n\n | \n | $ | \n13 | \n\n | \n | $ | \n608 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Other comprehensive income\n before reclassifications \n | \n \n | \n | (1,106) | \n(b) | \n\n | \n | (599) | \n\n | \n | \n | — | \n\n | \n | \n | (1,705) | \n\n |
| \n Amounts reclassified from\n accumulated other comprehensive income \n | \n \n | \n | (65) | \n\n | \n | \n | 89 | \n\n | \n | \n | (6) | \n\n | \n | \n | 18 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Net current-period other\n comprehensive income (loss) \n | \n \n | \n | (1,171) | \n\n | \n | \n | (510) | \n\n | \n | \n | (6) | \n\n | \n | \n | (1,687) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Balance at\n December 31, 2014 \n | \n \n | $ | \n(587) | \n\n | \n | $ | \n(499) | \n\n | \n | $ | \n7 | \n\n | \n | $ | \n(1,079) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Details\n about AOCI Components \n | \n \n | Amount Reclassified from AOCI to \n Income | \n \n | \n | Affected Line Item\n in \n the Statement Where \n Net Income is Presented | \n |||||||||
| \n | \n | Year Ended December\n 31, | \n\n | \n | \n | |||||||||
| \n | \n | 2014 | \n\n | \n | 2013 | \n\n | \n | 2012 | \n\n | \n | \n | |||
| \n Derivatives designated as\n cash flow hedges \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Fuel\n contracts-reclassifications of (gains) losses into earnings\n (c) \n | \n \n | $ | \n89 | \n\n | \n | $ | \n(18) | \n\n | \n | $ | \n141 | \n\n | \n | Aircraft fuel | \n
| \n Amortization of pension and\n post-retirement items \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Amortization of\n unrecognized (gains) losses and prior service cost and the effect\n of curtailments and settlements (c) (d) \n | \n \n | \n | (65) | \n\n | \n | \n | 42 | \n\n | \n | \n | 17 | \n\n | \n | Salaries and related costs | \n
| \n Investments and\n other \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Available for sale\n securities—reclassifications of gains into earnings\n (c) \n | \n \n | \n | (6) | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | Miscellaneous, net | \n
\n
\n\n
\n(a) UAL and United amounts\n are substantially the same except for an additional $6 million of\n income tax benefit at United in 2013. In addition, United had\n additional gains related to investments and other of $1 million in\n both 2012 and 2013.
\n(b) For 2014, prior service\n credits increased by $3 million and actuarial losses increased by\n approximately $1.1 billion. For 2013, prior service credits\n increased by $331 million and actuarial gains increased by\n approximately $1.3 billion. The amount for 2012 was not\n material.
\n(c) Income tax expense for\n these items was offset by the Company’s valuation\n allowance.
\n(d) This accumulated other\n comprehensive income component is included in the computation of\n net periodic pension and other postretirement costs (see Note 8 of\n this report for additional information).
\nUnited’s plan assets\n are allocated within the following guidelines:
\n\n
\n| \n | \n | \n | \n | \n |
| \n | \n | \n Percent of Total \n | \n \n | \n \n Expected\n Long-Term \nRate of Return \n | \n
| \n | \n | \n | \n | \n |
| \n Equity\n securities \n | \n \n | 40-54 % | \n\n | 10 % | \n
| \n Fixed-income\n securities \n | \n \n | 26-34 | \n\n | 4 | \n
| \n Alternatives \n | \n \n | 14-20 | \n\n | 7 | \n
| \n Other \n | \n \n | 4-8 | \n\n | 6 | \n
| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n (In\n millions) \n | \n \n | At\n December 31, | \n\n | |||||
| \n | \n | 2014 | \n\n | \n | 2013 | \n\n | ||
| \n United: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Secured \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| Notes payable, fixed interest rates of 1.42% to 12.00%\n (weighted average rate of 5.86% as of December 31, 2014),\n payable through 2026 | \n\n | $ | \n7,464 | \n\n | \n | $ | \n6,279 | \n\n |
| Notes payable, floating interest rates of the London Interbank\n Offered Rate (“LIBOR”) plus 0.20% to 5.46%, payable\n through 2026 | \n\n | \n | 1,151 | \n\n | \n | \n | 1,243 | \n\n |
| Term loan, LIBOR subject to a 0.75% floor, plus 2.75%, or\n alternative rate based on certain market rates plus 1.75%, due\n 2019 | \n\n | \n | 884 | \n\n | \n | \n | 893 | \n\n |
| Term loan, LIBOR subject to a 0.75% floor, plus 3.00%, or\n alternative rate based on certain market rates plus 2%, due\n 2021 | \n\n | \n | 499 | \n\n | \n | \n | — | \n\n |
| 6.75% Senior Secured Notes due 2015 | \n\n | \n | — | \n\n | \n | \n | 800 | \n\n |
| Unsecured | \n\n | \n | \n | \n | \n | \n | \n | \n |
| 6% Notes due 2026 to 2028 (a) | \n\n | \n | 632 | \n\n | \n | \n | 652 | \n\n |
| 6% Senior Notes due 2020 (a) | \n\n | \n | 300 | \n\n | \n | \n | 300 | \n\n |
| 6.375% Senior Notes due 2018 (a) | \n\n | \n | 300 | \n\n | \n | \n | 300 | \n\n |
| 4.5% Convertible Notes due 2015 | \n\n | \n | 202 | \n\n | \n | \n | 230 | \n\n |
| 8% Notes due 2024 (a) | \n\n | \n | — | \n\n | \n | \n | 400 | \n\n |
| 6% Convertible Junior Subordinated Debentures due\n 2030 | \n\n | \n | — | \n\n | \n | \n | 248 | \n\n |
| 4.5% Senior Limited-Subordination Convertible Notes due 2021\n (a) | \n\n | \n | — | \n\n | \n | \n | 156 | \n\n |
| Other | \n\n | \n | 101 | \n\n | \n | \n | 103 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | 11,533 | \n\n | \n | \n | 11,604 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Less: unamortized debt\n discount \n | \n \n | \n | (99) | \n\n | \n | \n | (169) | \n\n |
| \n Less: current portion of\n long-term debt—United \n | \n \n | \n | (1,313) | \n\n | \n | \n | (1,368) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Long-term debt,\n net—United (b) \n | \n \n | $ | \n10,121 | \n\n | \n | $ | \n10,067 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | ||||||
| \n UAL: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n 6% Convertible Senior Notes\n due 2029 \n | \n \n | $ | \n— | \n\n | \n | $ | \n104 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Long-term debt,\n net—UAL \n | \n \n | $ | \n10,121 | \n\n | \n | $ | \n10,171 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
\n
\n(a) UAL is the issuer of\n this debt. United is a guarantor.
\n(b) As further described\n below under “Convertible Debt Securities and\n Derivatives,” there is a basis difference between UAL and\n United debt values, because we applied different accounting\n methodologies. The United debt presented above does not agree to\n United’s balance sheet by the amount of this\n adjustment.
\n| \n | \n | \n |
| \n Pension\n Fund \n | \n \n | IAM National Pension Fund | \n
| \n EIN/ Pension\n Plan Number \n | \n \n | 51-6031295 - 002 | \n
| \n Pension\n Protection Act Zone Status (2014 and 2013) \n | \n \n | Green Zone. Plans in the green zone are at least 80\n percent funded. | \n
| \n FIP/RP Status\n Pending/Implemented \n | \n \n | No | \n
| \n United’s\n Contributions \n | \n \n | $39 million, $38 million and $36 million in the years\n ended December 31, 2014, 2013 and 2012, respectively | \n
| \n Surcharge\n Imposed \n | \n \n | No | \n
| \n Expiration Date\n of Collective Bargaining Agreement \n | \n \n | N/A | \n
The following is a\n reconciliation of the beginning and ending amount of unrecognized\n tax benefits related to the Company’s uncertain tax positions\n (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 2014 | \n\n | \n | 2013 | \n\n | \n | 2012 | \n\n | |||
| \n Balance at\n January 1, \n | \n \n | $ | \n14 | \n\n | \n | $ | \n19 | \n\n | \n | $ | \n24 | \n\n |
| \n Decrease in unrecognized\n tax benefits relating to settlements with taxing\n authorities \n | \n \n | \n | (5) | \n\n | \n | \n | — | \n\n | \n | \n | (12) | \n\n |
| \n Increase in unrecognized\n tax benefits as a result of tax positions taken during a prior\n period \n | \n \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 8 | \n\n |
| \n Decrease in unrecognized\n tax benefits relating from a lapse of the statute of\n limitations \n | \n \n | \n | — | \n\n | \n | \n | (5) | \n\n | \n | \n | (1) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Balance at\n December 31, \n | \n \n | $ | \n9 | \n\n | \n | $ | \n14 | \n\n | \n | $ | \n19 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
\n NOTE 3 -\n COMMON STOCKHOLDERS’ EQUITY AND PREFERRED\n SECURITIES
\n\n During 2014,\n United used $62 million of cash to purchase and retire $28 million\n aggregate principal amount of United’s 4.5% Convertible Notes\n due 2015 (the “4.5% Convertible Notes”) in market\n transactions. UAL and United recorded reductions of additional\n paid-in capital of $34 million and $62 million, respectively, to\n record the transactions. At December 31, 2014, the remaining\n balance of these notes was $202 million. In January 2015, the\n holders of substantially all of the remaining $202 million\n principal amount of the 4.5% Convertible Notes exercised their\n conversion option resulting in the issuance of 11 million\n shares of UAL common stock.
\n\n United paid a\n dividend of $212 million to UAL in 2014. United recorded the\n dividend as a reduction of additional paid-in capital.
\n\n At\n December 31, 2013, United had receivables from two affiliates,\n which were wholly-owned subsidiaries of UAL, of $232 million that\n were classified against stockholder’s equity. UAL transferred\n all of its equity interest in each of the two subsidiaries to\n United in 2014, and United reflected the transfers as reductions in\n additional paid-in capital.
\n\n In 2014, UAL\n issued approximately 12 million shares of UAL common stock in\n exchange for, or upon conversion of, $104 million in aggregate\n principal amount of its 6% Convertible Senior Notes due 2029 (the\n “6% Convertible Senior Notes”) held by the holders of\n these notes.
\n\n
\n\n In January\n 2014, holders of substantially all of the remaining $156 million\n outstanding principal amount of the 4.5% Senior\n Limited-Subordination Convertible Notes due 2021 (the “4.5%\n Notes”) exercised their right to convert such notes into\n approximately five million shares of UAL common stock. See Note 11\n of this report for additional information related to exercises of\n rights under the 4.5% Notes.
\n\n On\n July 24, 2014, UAL announced a $1 billion share repurchase\n program, which was authorized by UAL’s Board of Directors.\n UAL may repurchase shares through the open market, privately\n negotiated transactions, block trades, or accelerated share\n repurchase transactions from time to time in accordance with\n applicable securities laws. UAL will repurchase shares of\n common stock subject to prevailing market conditions, and may\n discontinue such repurchases at any time.
\n\n On\n July 24, 2014, pursuant to the $1 billion share repurchase\n program, UAL entered into two separate agreements to repurchase an\n aggregate of $200 million of shares of UAL common stock through an\n accelerated share repurchase program (the “ASR\n Program”). UAL paid $200 million and received approximately\n 4.4 million shares. In addition to shares purchased under the\n ASR Program, UAL spent $120 million on open market repurchases of\n 2.1 million shares of UAL common stock in 2014.
\n\n At\n December 31, 2014, approximately 21 million shares of\n UAL’s common stock were reserved for future issuance related\n to the conversion of convertible debt securities and the issuance\n of equity based awards under the Company’s incentive\n compensation plans.
\n\n As of\n December 31, 2014, UAL had two shares of junior preferred\n stock (par value $0.01 per share) outstanding. In addition, UAL is\n authorized to issue 250 million shares of preferred stock\n (without par value) under UAL’s amended and restated\n certificate of incorporation.
\n \n \nNOTE 14 - VARIABLE\n INTEREST ENTITIES
\nVariable interests are\n contractual, ownership or other monetary interests in an entity\n that change with fluctuations in the fair value of the\n entity’s net assets exclusive of variable interests. A VIE\n can arise from items such as lease agreements, loan arrangements,\n guarantees or service contracts. An entity is a VIE if (a) the\n entity lacks sufficient equity or (b) the entity’s\n equity holders lack power or the obligation and right as equity\n holders to absorb the entity’s expected losses or to receive\n its expected residual returns. Therefore, if the equity owners as a\n group do not have the power to direct the entity’s activities\n that most significantly impact its economic performance, the entity\n is a VIE.
\nIf an entity is determined\n to be a VIE, the entity must be consolidated by the primary\n beneficiary. The primary beneficiary is the holder of the variable\n interests that has the power to direct the activities of a VIE that\n (i) most significantly impact the VIE’s economic\n performance and (ii) has the obligation to absorb losses of or\n the right to receive benefits from the VIE that could potentially\n be significant to the VIE. Therefore, the Company must identify\n which activities most significantly impact the VIE’s economic\n performance and determine whether it, or another party, has the\n power to direct those activities.
\nThe Company’s\n evaluation of its association with VIEs is described\n below:
\nAircraft\n Leases. We are the lessee in a number of operating\n leases covering the majority of our leased aircraft. The\n lessors are trusts established specifically to purchase, finance\n and lease aircraft to us. These leasing entities meet the\n criteria for VIEs. We are generally not the primary\n beneficiary of the leasing entities if the lease terms are\n consistent with market terms at the inception of the lease and do\n not include a residual value guarantee, fixed-price purchase option\n or similar feature that obligates us to absorb decreases in value\n or entitles us to participate in increases in the value of the\n aircraft. This is the case for many of our operating leases;\n however, leases of approximately 60 mainline jet aircraft contain a\n fixed-price purchase option that allow United to purchase the\n aircraft at predetermined prices on specified dates during the\n lease term. Additionally, leases covering approximately 239\n leased regional jet aircraft contain an option to purchase the\n aircraft at the end of the lease term at prices that, depending on\n market conditions, could be below fair value. United has not\n consolidated the related trusts because, even taking into\n consideration these purchase options, United is still not the\n primary beneficiary. United’s maximum exposure under\n these leases is the remaining lease payments, which are reflected\n in future lease commitments in Note 13 of this report.
\nEETCs. United\n evaluated whether the pass-through trusts formed for its EETC\n financings, treated as either debt or aircraft operating leases,\n are VIEs required to be consolidated by United under applicable\n accounting guidance, and determined that the pass-through trusts\n are VIEs. Based on United’s analysis as described below,\n United determined that it does not have a variable interest in the\n pass-through trusts.
\nThe primary risk of the\n pass-through trusts is credit risk (i.e. the risk that United, the\n issuer of the equipment notes, may be unable to make its principal\n and interest payments). The primary purpose of the pass-through\n trust structure is to enhance the credit worthiness of\n United’s debt obligation through certain bankruptcy\n protection provisions, a liquidity facility (in certain of the EETC\n structures) and improved loan-to-value ratios for more senior debt\n classes. These credit enhancements lower United’s total\n borrowing cost. Pass-through trusts are established to receive\n principal and interest payments on the equipment notes purchased by\n the pass-through trusts from United and remit these proceeds to the\n pass-through trusts’ certificate holders.
\nUnited does not invest in\n or obtain a financial interest in the pass-through trusts. Rather,\n United has an obligation to make interest and principal payments on\n its equipment notes held by the pass-through trusts. United did not\n intend to have any voting or non-voting equity interest in the\n pass-through trusts or to absorb variability from the pass-through\n trusts. Based on this analysis, the Company determined that it is\n not required to consolidate the pass-through trusts.
\n\n NOTE 7 -\n INCOME TAXES
\n\n The\n significant components of the income tax expense (benefit) are as\n follows (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n 2014 \n | \n \n | UAL | \n\n | \n | United | \n\n | ||
| \n Current \n | \n \n | $ | \n(17) | \n\n | \n | $ | \n(17) | \n\n |
| \n Deferred \n | \n \n | \n | 13 | \n\n | \n | \n | 13 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | $ | \n(4) | \n\n | \n | $ | \n(4) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | ||||||
| \n \n 2013 \n | \n \n | \n | \n | \n | \n | \n | ||
| \n Current \n | \n \n | $ | \n(18) | \n\n | \n | $ | \n(18) | \n\n |
| \n Deferred \n | \n \n | \n | (14) | \n\n | \n | \n | 1 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | $ | \n(32) | \n\n | \n | $ | \n(17) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | ||||||
| \n \n 2012 \n | \n \n | \n | \n | \n | \n | \n | ||
| \n Current \n | \n \n | $ | \n(14) | \n\n | \n | $ | \n(9) | \n\n |
| \n Deferred \n | \n \n | \n | 13 | \n\n | \n | \n | 13 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | $ | \n(1) | \n\n | \n | $ | \n4 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
\n
\n\n The income\n tax provision differed from amounts computed at the statutory\n federal income tax rate, as follows (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n UAL \n | \n \n | 2014 | \n\n | \n | 2013 | \n\n | \n | 2012 | \n\n | |||
| \n Income tax provision at\n statutory rate \n | \n \n | $ | \n395 | \n\n | \n | $ | \n189 | \n\n | \n | $ | \n(253) | \n\n |
| \n State income taxes, net\n of federal income tax \n | \n \n | \n | 16 | \n\n | \n | \n | 5 | \n\n | \n | \n | (15) | \n\n |
| \n Foreign income\n taxes \n | \n \n | \n | 2 | \n\n | \n | \n | 3 | \n\n | \n | \n | 7 | \n\n |
| \n Nondeductible employee\n meals \n | \n \n | \n | 15 | \n\n | \n | \n | 15 | \n\n | \n | \n | 12 | \n\n |
| \n Nondeductible interest\n expense \n | \n \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 19 | \n\n |
| \n State rate\n change \n | \n \n | \n | — | \n\n | \n | \n | (33) | \n\n | \n | \n | — | \n\n |
| \n Valuation\n allowance \n | \n \n | \n | (441) | \n\n | \n | \n | (219) | \n\n | \n | \n | 234 | \n\n |
| \n Other, net \n | \n \n | \n | 9 | \n\n | \n | \n | 8 | \n\n | \n | \n | (5) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | $ | \n(4) | \n\n | \n | $ | \n(32) | \n\n | \n | $ | \n(1) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | \n | |||||||||
| \n United \n | \n \n | 2014 | \n\n | \n | 2013 | \n\n | \n | 2012 | \n\n | |||
| \n Income tax provision at\n statutory rate \n | \n \n | $ | \n388 | \n\n | \n | $ | \n223 | \n\n | \n | $ | \n(230) | \n\n |
| \n State income taxes, net\n of federal income tax \n | \n \n | \n | 15 | \n\n | \n | \n | 5 | \n\n | \n | \n | (7) | \n\n |
| \n Foreign income\n taxes \n | \n \n | \n | 2 | \n\n | \n | \n | 3 | \n\n | \n | \n | 7 | \n\n |
| \n Nondeductible employee\n meals \n | \n \n | \n | 15 | \n\n | \n | \n | 15 | \n\n | \n | \n | 12 | \n\n |
| \n Nondeductible interest\n expense \n | \n \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 19 | \n\n |
| \n Derivative market\n adjustment \n | \n \n | \n | (7) | \n\n | \n | \n | (24) | \n\n | \n | \n | (15) | \n\n |
| \n State rate\n change \n | \n \n | \n | — | \n\n | \n | \n | (33) | \n\n | \n | \n | — | \n\n |
| \n Valuation\n allowance \n | \n \n | \n | (426) | \n\n | \n | \n | (229) | \n\n | \n | \n | 223 | \n\n |
| \n Other, net \n | \n \n | \n | 9 | \n\n | \n | \n | 23 | \n\n | \n | \n | (5) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | $ | \n(4) | \n\n | \n | $ | \n(17) | \n\n | \n | $ | \n4 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
\n
\n\n Temporary\n differences and carryforwards that give rise to deferred tax assets\n and liabilities at December 31, 2014 and 2013 were as follows\n (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | UAL | \n\n | \n | United | \n\n | ||||||||||
| \n | \n | December 31, | \n\n | \n | December 31, | \n\n | ||||||||||
| \n | \n | 2014 | \n\n | \n | 2013 | \n\n | \n | 2014 | \n\n | \n | 2013 | \n\n | ||||
| \n Deferred income tax asset\n (liability): \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Federal and state net\n operating loss (“NOL”) carryforwards \n | \n \n | $ | \n3,491 | \n\n | \n | $ | \n4,006 | \n\n | \n | $ | \n3,423 | \n\n | \n | $ | \n3,943 | \n\n |
| \n Frequent flyer deferred\n revenue \n | \n \n | \n | 2,287 | \n\n | \n | \n | 2,254 | \n\n | \n | \n | 2,287 | \n\n | \n | \n | 2,254 | \n\n |
| \n Employee benefits,\n including pension, postretirement and medical \n | \n \n | \n | 1,943 | \n\n | \n | \n | 1,701 | \n\n | \n | \n | 1,943 | \n\n | \n | \n | 1,701 | \n\n |
| \n Alternative minimum tax\n credit carryforwards \n | \n \n | \n | 214 | \n\n | \n | \n | 233 | \n\n | \n | \n | 214 | \n\n | \n | \n | 233 | \n\n |
| \n Other \n | \n \n | \n | 657 | \n\n | \n | \n | 340 | \n\n | \n | \n | 659 | \n\n | \n | \n | 340 | \n\n |
| \n Less: Valuation\n allowance \n | \n \n | \n | (4,751) | \n\n | \n | \n | (4,591) | \n\n | \n | \n | (4,721) | \n\n | \n | \n | (4,561) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total deferred tax\n assets \n | \n \n | $ | \n3,841 | \n\n | \n | $ | \n3,943 | \n\n | \n | $ | \n3,805 | \n\n | \n | $ | \n3,910 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Depreciation, capitalized\n interest and other \n | \n \n | $ | \n(3,212) | \n\n | \n | $ | \n(3,201) | \n\n | \n | $ | \n(3,212) | \n\n | \n | $ | \n(3,201) | \n\n |
| \n Intangibles \n | \n \n | \n | (1,545) | \n\n | \n | \n | (1,585) | \n\n | \n | \n | (1,545) | \n\n | \n | \n | (1,585) | \n\n |
| \n Other \n | \n \n | \n | (84) | \n\n | \n | \n | (144) | \n\n | \n | \n | (48) | \n\n | \n | \n | (111) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total deferred tax\n liabilities \n | \n \n | $ | \n(4,841) | \n\n | \n | $ | \n(4,930) | \n\n | \n | $ | \n(4,805) | \n\n | \n | $ | \n(4,897) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Net deferred tax\n liability \n | \n \n | $ | \n(1,000) | \n\n | \n | $ | \n(987) | \n\n | \n | $ | \n(1,000) | \n\n | \n | $ | \n(987) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
\n United and\n its domestic consolidated subsidiaries file a consolidated federal\n income tax return with UAL. Under an intercompany tax allocation\n policy, United and its subsidiaries compute, record and pay UAL for\n their own tax liability as if they were separate companies filing\n separate returns. In determining their own tax liabilities, United\n and each of its subsidiaries take into account all tax credits or\n benefits generated and utilized as separate companies and they are\n each compensated for the aforementioned tax benefits only if they\n would be able to use those benefits on a separate company\n basis.
\n\n The federal\n and state NOL carryforwards relate to prior years’ NOLs,\n which may be used to reduce tax liabilities in future years. These\n tax benefits are mostly attributable to federal pre-tax NOL\n carryforwards of $9.6 billion for UAL. If not utilized these\n federal pre-tax NOLs will expire as follows (in billions): $1.1 in\n 2024, $2.5 in 2025, $2.0 in 2026 and $4.0 after 2026. In addition,\n the majority of tax benefits of the state net operating losses of\n $111 million for UAL will expire over a five to 20-year\n period.
\n\n Our effective\n tax rates are lower than the federal statutory rate of 35%\n primarily because of the impact of changes to existing valuation\n allowances. We continue to provide a valuation allowance for our\n deferred tax assets in excess of deferred tax liabilities because\n we have concluded that it is more likely than not that such\n deferred tax assets will ultimately not be realized. The ultimate\n realization of deferred tax assets is dependent upon the generation\n of future taxable income (including the reversals of deferred tax\n liabilities) during the periods in which those deferred tax assets\n will become deductible. The Company’s management assesses\n available positive and negative evidence regarding the\n Company’s ability to realize its deferred tax assets and\n records a valuation allowance when it is more likely than not that\n deferred tax assets will not be realized. To form a conclusion,\n management considers positive evidence in the form of reversing\n temporary differences, projections of future taxable income and tax\n planning strategies and negative evidence such as historical\n losses. Although the Company was not in a three-year cumulative\n loss position at the end of 2014, management determined that the\n low level of cumulative pretax income, combined with uncertainty\n about forecasted results, supports the conclusion that the\n valuation allowance is still necessary. Management will continue to\n evaluate future financial performance to determine whether such\n performance is both sustained and significant enough to provide\n sufficient evidence to support reversal of the valuation\n allowance.
\n\n The\n December 31, 2014 valuation allowances of $4.8 billion and\n $4.7 billion for UAL and United, respectively, if reversed in\n future years will reduce income tax expense. The current valuation\n allowance reflects increases from December 31, 2013 of $160\n million, for both UAL and United, including amounts charged\n directly to other comprehensive income.
\n\n The\n Company’s unrecognized tax benefits related to uncertain tax\n positions were $9 million, $14 million and $19 million at 2014,\n 2013 and 2012, respectively. Included in the ending balance at 2014\n is $7 million that would affect the Company’s effective tax\n rate if recognized. The Company does not expect significant\n increases or decreases in their unrecognized tax benefits within\n the next twelve months.
\n\n There are no\n significant amounts included in the balance at December 31,\n 2014 for tax positions for which the ultimate deductibility is\n highly certain but for which there is uncertainty about the timing\n of such deductibility.
\n\n The following\n is a reconciliation of the beginning and ending amount of\n unrecognized tax benefits related to the Company’s uncertain\n tax positions (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 2014 | \n\n | \n | 2013 | \n\n | \n | 2012 | \n\n | |||
| \n Balance at\n January 1, \n | \n \n | $ | \n14 | \n\n | \n | $ | \n19 | \n\n | \n | $ | \n24 | \n\n |
| \n Decrease in unrecognized\n tax benefits relating to settlements with taxing\n authorities \n | \n \n | \n | (5) | \n\n | \n | \n | — | \n\n | \n | \n | (12) | \n\n |
| \n Increase in unrecognized\n tax benefits as a result of tax positions taken during a prior\n period \n | \n \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 8 | \n\n |
| \n Decrease in unrecognized\n tax benefits relating from a lapse of the statute of\n limitations \n | \n \n | \n | — | \n\n | \n | \n | (5) | \n\n | \n | \n | (1) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Balance at\n December 31, \n | \n \n | $ | \n9 | \n\n | \n | $ | \n14 | \n\n | \n | $ | \n19 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
\n The\n Company’s federal income tax returns for tax years after 2002\n remain subject to examination by the Internal Revenue Service\n (“IRS”) and state taxing jurisdictions. Currently,\n there are no ongoing examinations of the Company’s prior year\n tax returns being conducted by the IRS.
\n \n \n\n
\n\n NOTE 11 -\n DEBT
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n (In\n millions) \n | \n \n | At\n December 31, | \n\n | |||||
| \n | \n | 2014 | \n\n | \n | 2013 | \n\n | ||
| \n United: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Secured \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| Notes payable, fixed interest rates of 1.42% to 12.00%\n (weighted average rate of 5.86% as of December 31, 2014),\n payable through 2026 | \n\n | $ | \n7,464 | \n\n | \n | $ | \n6,279 | \n\n |
| Notes payable, floating interest rates of the London Interbank\n Offered Rate (“LIBOR”) plus 0.20% to 5.46%, payable\n through 2026 | \n\n | \n | 1,151 | \n\n | \n | \n | 1,243 | \n\n |
| Term loan, LIBOR subject to a 0.75% floor, plus 2.75%, or\n alternative rate based on certain market rates plus 1.75%, due\n 2019 | \n\n | \n | 884 | \n\n | \n | \n | 893 | \n\n |
| Term loan, LIBOR subject to a 0.75% floor, plus 3.00%, or\n alternative rate based on certain market rates plus 2%, due\n 2021 | \n\n | \n | 499 | \n\n | \n | \n | — | \n\n |
| 6.75% Senior Secured Notes due 2015 | \n\n | \n | — | \n\n | \n | \n | 800 | \n\n |
| Unsecured | \n\n | \n | \n | \n | \n | \n | \n | \n |
| 6% Notes due 2026 to 2028 (a) | \n\n | \n | 632 | \n\n | \n | \n | 652 | \n\n |
| 6% Senior Notes due 2020 (a) | \n\n | \n | 300 | \n\n | \n | \n | 300 | \n\n |
| 6.375% Senior Notes due 2018 (a) | \n\n | \n | 300 | \n\n | \n | \n | 300 | \n\n |
| 4.5% Convertible Notes due 2015 | \n\n | \n | 202 | \n\n | \n | \n | 230 | \n\n |
| 8% Notes due 2024 (a) | \n\n | \n | — | \n\n | \n | \n | 400 | \n\n |
| 6% Convertible Junior Subordinated Debentures due\n 2030 | \n\n | \n | — | \n\n | \n | \n | 248 | \n\n |
| 4.5% Senior Limited-Subordination Convertible Notes due 2021\n (a) | \n\n | \n | — | \n\n | \n | \n | 156 | \n\n |
| Other | \n\n | \n | 101 | \n\n | \n | \n | 103 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | 11,533 | \n\n | \n | \n | 11,604 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Less: unamortized debt\n discount \n | \n \n | \n | (99) | \n\n | \n | \n | (169) | \n\n |
| \n Less: current portion of\n long-term debt—United \n | \n \n | \n | (1,313) | \n\n | \n | \n | (1,368) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Long-term debt,\n net—United (b) \n | \n \n | $ | \n10,121 | \n\n | \n | $ | \n10,067 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | ||||||
| \n UAL: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n 6% Convertible Senior\n Notes due 2029 \n | \n \n | $ | \n— | \n\n | \n | $ | \n104 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Long-term debt,\n net—UAL \n | \n \n | $ | \n10,121 | \n\n | \n | $ | \n10,171 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
\n
\n\n (a) UAL is\n the issuer of this debt. United is a guarantor.
\n\n (b) As\n further described below under “Convertible Debt Securities\n and Derivatives,” there is a basis difference between UAL and\n United debt values, because we applied different accounting\n methodologies. The United debt presented above does not agree to\n United’s balance sheet by the amount of this\n adjustment.
\n\n The table\n below presents the Company’s contractual principal payments\n at December 31, 2014 under then-outstanding long-term debt\n agreements in each of the next five calendar years (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n |
| \n | \n | UAL and United | \n\n | |
| \n 2015 \n | \n \n | $ | \n1,313 | \n\n |
| \n 2016 \n | \n \n | \n | 1,195 | \n\n |
| \n 2017 \n | \n \n | \n | 755 | \n\n |
| \n 2018 \n | \n \n | \n | 1,269 | \n\n |
| \n 2019 \n | \n \n | \n | 1,721 | \n\n |
| \n After 2019 \n | \n \n | \n | 5,280 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | $ | \n11,533 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
\n
\n\n As of\n December 31, 2014, a substantial portion of the\n Company’s assets, principally aircraft, route authorities and\n certain other intangible assets, were pledged under various loan\n and other agreements. As of December 31, 2014, UAL and United\n were in compliance with their respective debt covenants. Continued\n compliance depends on many factors, some of which are beyond the\n Company’s control, including the overall industry revenue\n environment and the level of fuel costs.
\n\n United\n secured debt
\n\n 2013\n Credit and Guaranty Agreement. On March 27, 2013, United\n and UAL entered into the Credit and Guaranty Agreement (the\n “Credit Agreement”) as the borrower and guarantor,\n respectively. The Company’s Credit Agreement originally\n consisted of a $900 million term loan due April 1, 2019 and a\n $1.0 billion revolving credit facility available for drawing until\n April 1, 2018.
\n\n On\n March 27, 2013, the Company used $900 million from the Credit\n Agreement, together with approximately $300 million of cash, to\n retire the entire principal balance of a $1.2 billion term loan due\n 2014 that was outstanding under United’s Amended and Restated\n Revolving Credit, Term Loan and Guaranty Agreement, dated as of\n February 2, 2007 (the “Amended Credit Facility”).\n The Amended Credit Facility was terminated concurrently with the\n repayment of the term loan.
\n\n In March\n 2014, United amended the Credit Agreement to reduce the interest\n rate payable on the existing $893 million term loan from LIBOR plus\n a margin of 3.0% per annum to LIBOR plus a margin of\n 2.75% per annum, subject to a 0.75% floor. Borrowings under\n the revolving credit facility under the Credit Agreement bear\n interest at a variable rate equal to LIBOR plus a margin of\n 3.0% per annum, or another rate based on certain market\n interest rates, plus a margin of 2.0% per annum. The principal\n amount of the term loan must be repaid in consecutive quarterly\n installments of 0.25% of the original principal amount thereof,\n commencing on June 30, 2013, with any unpaid balance due on\n April 1, 2019. United may prepay all or a portion of the loan\n from time to time, at par plus accrued and unpaid interest. United\n pays a commitment fee equal to 0.75% per-annum on the undrawn\n amount available under the revolving credit facility.
\n\n The Credit\n Agreement requires United to repay the term loan and any other\n outstanding borrowings under the Credit Agreement at par plus\n accrued and unpaid interest if certain changes of control of UAL\n occur.
\n\n In September\n 2014, United borrowed a $500 million term loan under the Credit\n Agreement, of which $499 million is outstanding. The loan is due\n September 2021 and bears interest at LIBOR plus a margin of\n 3.0% per annum, subject to a 0.75% floor. The $500 million\n term loan ranks pari passu with the $900 million term loan that\n United originally borrowed under the Credit Agreement, of which\n $884 million is outstanding. Also in September 2014, UAL amended\n its revolving credit facility under the Credit Agreement increasing\n the capacity from $1.0 billion to $1.35 billion and establishing\n the maturity date for $1.315 billion in lender commitments as\n January 2, 2019.
\n\n As of\n December 31, 2014, United had its entire capacity of $1.35\n billion available under the revolving credit facility of the\n Company’s Credit Agreement.
\n\n As of\n December 31, 2014, United had cash collateralized $74 million\n of letters of credit. United also had $410 million of performance\n bonds and letters of credit relating to various real estate,\n customs and aircraft financing obligations at December 31,\n 2014. Most of the letters of credit have evergreen clauses and are\n expected to be renewed on an annual basis and the performance bonds\n have expiration dates through 2019.
\n\n 6.75%\n Senior Secured Notes due 2015. In September 2014, United\n retired, at par, the entire $800 million principal balance of its\n 6.75% Senior Secured Notes due 2015, which had originally been\n issued in August 2010.
\n\n EETCs. United has $7.2 billion\n principal amount of equipment notes outstanding issued under EETC\n financings included in notes payable in the table of outstanding\n debt above. Generally, the structure of these EETC financings\n consist of pass-through trusts created by United to issue\n pass-through certificates, which represent fractional undivided\n interests in the respective pass-through trusts and are not\n obligations of United. The proceeds of the issuance of the\n pass-through certificates are used to purchase equipment notes\n which are issued by United and secured\n by its aircraft. The payment obligations under the equipment notes\n are those of United. Proceeds received from the sale of\n pass-through certificates are initially held by a depositary in\n escrow for the benefit of the certificate holders until United\n issues equipment notes to the trust, which purchases such notes\n with a portion of the escrowed funds. These escrowed funds are not\n guaranteed by United and are not reported as debt on United’s\n consolidated balance sheet because the proceeds held by the\n depositary are not United’s assets.
\n\n In August\n 2014, April 2014 and August 2013, United created separate EETC\n pass-through trusts, each of which issued pass-through\n certificates. The proceeds of the issuance of the pass-through\n certificates are used to purchase equipment notes issued by United\n and secured by its aircraft. The Company records the debt\n obligation upon issuance of the equipment notes rather than upon\n the initial issuance of the pass-through certificates. United\n expects to receive all proceeds from these pass-through trusts by\n the end of 2015. Certain details of the pass-through trusts with\n proceeds received from issuance of debt in 2014 are as follows (in\n millions, except stated interest rate):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n EETC\n Date \n | \n \n | \n \n Class \n | \n \n | Principal | \n\n | \n | \n \n Final \n\n expected | \n \n | Stated \n interest \n rate | \n \n | \n | Total debt \n recorded \n as of December 31, \n 2014 | \n \n | \n | Proceeds \n received from \n issuance of \n debt during \n 2014 | \n \n | \n | Remaining \n proceeds from \n issuance of debt \n to be received \n in future \n periods | \n \n | |||||
| \n August 2014 \n | \n \n | A | \n\n | $ | \n823 | \n\n | \n | September 2026 | \n\n | \n | 3.75% | \n\n | \n | $ | \n112 | \n\n | \n | $ | \n112 | \n\n | \n | $ | \n711 | \n\n |
| \n August 2014 \n | \n \n | B | \n\n | \n | 238 | \n\n | \n | September\n 2022 | \n\n | \n | 4.625% | \n\n | \n | \n | 32 | \n\n | \n | \n | 32 | \n\n | \n | \n | 206 | \n\n |
| \n April 2014 \n | \n \n | A | \n\n | \n | 736 | \n\n | \n | April 2026 | \n\n | \n | 4.0% | \n\n | \n | \n | 736 | \n\n | \n | \n | 736 | \n\n | \n | \n | — | \n\n |
| \n April 2014 \n | \n \n | B | \n\n | \n | 213 | \n\n | \n | April 2022 | \n\n | \n | 4.75% | \n\n | \n | \n | 213 | \n\n | \n | \n | 213 | \n\n | \n | \n | — | \n\n |
| \n August 2013 \n | \n \n | A | \n\n | \n | 720 | \n\n | \n | August 2025 | \n\n | \n | 4.3% | \n\n | \n | \n | 720 | \n\n | \n | \n | 567 | \n\n | \n | \n | — | \n\n |
| \n August 2013 \n | \n \n | B | \n\n | \n | 209 | \n\n | \n | August 2021 | \n\n | \n | 5.375% | \n\n | \n | \n | 209 | \n\n | \n | \n | 165 | \n\n | \n | \n | — | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | \n | $ | \n2,939 | \n\n | \n | \n | \n | \n | \n | \n | \n | $ | \n2,022 | \n\n | \n | $ | \n1,825 | \n\n | \n | $ | \n917 | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
\n United\n unsecured debt
\n\n 6%\n Senior Notes due 2020. In November 2013, UAL\n issued $300 million aggregate principal amount of 6% Senior Notes\n due December 1, 2020 (the “6% Senior Notes”). The\n notes are fully and unconditionally guaranteed and recorded by\n United on its balance sheet as debt. The indenture for the 6%\n Senior Notes requires UAL to offer to repurchase the notes for cash\n if certain changes of control of UAL occur at a purchase price\n equal to 101% of the aggregate principal amount of notes\n repurchased plus accrued and unpaid interest.
\n\n 6.375%\n Senior Notes due 2018. In May 2013, UAL\n issued $300 million aggregate principal amount of 6.375% Senior\n Notes due June 1, 2018 (the “6.375% Senior\n Notes”). The notes are fully and unconditionally guaranteed\n and recorded by United on its balance sheet as debt. The indenture\n for the 6.375% Senior Notes includes the same change of control\n covenant as the indenture for the 6% Senior Notes.
\n\n 4.5%\n Convertible Notes due 2015. The 4.5% Convertible\n Notes were convertible by holders into shares of UAL common stock\n at a conversion price of approximately $18.93 per share. During\n 2014, United used $62 million of cash to purchase and retire $28\n million aggregate principal amount of its 4.5% Convertible Notes in\n market transactions. UAL recorded $34 million of the repurchase\n cost as a reduction of additional paid-in capital. At\n December 31, 2014, the remaining balance of these notes was\n $202 million. In January 2015, the holders of substantially all of\n the remaining $202 million principal amount of the 4.5% Convertible\n Notes exercised their conversion option resulting in the issuance\n of 11 million shares of UAL common stock.
\n\n 8%\n Notes due 2024. UAL redeemed in cash at par\n value all $400 million aggregate principal amount of the 8% Notes\n due 2024 (the “8% Notes”) on January 17, 2014. The\n 8% Notes were recorded in current liabilities as of\n December 31, 2013.
\n\n 6%\n Convertible Junior Subordinated Debentures due\n 2030. In\n October 2014, United used cash to retire, at par, the entire $248\n million principal balance of the 6% Convertible Debentures and the\n 6% Convertible Preferred Securities, Term\n Income Deferrable Equity Securities (TIDES). UAL accounted for this\n debt extinguishment in Nonoperating income (expense):\n Miscellaneous, net for approximately $64 million in the fourth\n quarter of 2014.
\n\n
\n\n 4.5%\n Senior Limited-Subordination Convertible Notes due\n 2021. On\n January 10, 2014, UAL called all of the 4.5% Notes that\n remained outstanding for redemption on February 10, 2014. As a\n result, holders of substantially all of the remaining $156 million\n outstanding principal amount of the 4.5% Notes exercised their\n right to convert such notes into approximately five million shares\n of UAL common stock at a conversion rate of 30.6419 shares of UAL\n common stock per $1,000 principal amount of 4.5% Notes.
\n\n Convertible Debt Securities and\n Derivatives. UAL, United and the trustee\n for the 6% Convertible Debentures and the 4.5% Convertible Notes\n were parties to supplemental indentures that made United’s\n convertible debt convertible into shares of UAL common stock. For\n purposes of United separate-entity reporting, as a result of the\n remaining outstanding debt having been convertible into the stock\n of a non-consolidated entity, the embedded conversion options in\n United’s convertible debt are required to be separated and\n accounted for as though they are free-standing derivatives. As a\n result, the carrying value of United’s debt, net of current\n maturities, on a separate-entity reporting basis as of\n December 31, 2014 and December 31, 2013 was $1 million\n and $47 million, respectively, lower than the consolidated UAL\n carrying value on those dates.
\n\n In addition,\n UAL’s contractual commitment to provide common stock to\n satisfy United’s obligation upon conversion of the debt is an\n embedded call option on UAL common stock that was also required to\n be separated and accounted for as though it were a free-standing\n derivative. The fair value of the indenture derivatives on a\n separate-entity reporting basis as of December 31, 2014 and\n December 31, 2013 was an asset of $712 million and $480\n million, respectively. The fair value of the embedded conversion\n options as of December 31, 2014 and December 31, 2013,\n was a liability of $511 million and $270 million, respectively. The\n 2013 balances of the indenture derivatives and conversion options\n included amounts related to the 6% Convertible Debentures and the\n 4.5% Convertible Notes. The 6% Convertible Debentures and their\n related indenture derivative and conversion options were retired in\n 2014. The initial contribution of the indenture derivatives to\n United by UAL is accounted for as additional paid-in capital in\n United’s separate-entity financial statements. Changes in\n fair value of both the indenture derivatives and the embedded\n conversion options subsequent to October 1, 2010 are\n recognized in Nonoperating income (expense).
\n\n UAL
\n\n 6%\n Convertible Senior Notes due 2029. During 2013, UAL issued\n approximately 28 million shares of UAL common stock pursuant\n to agreements that UAL entered into with certain holders of its 6%\n Convertible Senior Notes in exchange for approximately $240 million\n in aggregate principal amount of these notes held by such\n securityholders. The Company retired the 6% Convertible Senior\n Notes acquired in the exchange. In 2014, UAL issued approximately\n 12 million shares of UAL common stock in exchange for, or upon\n conversion of, $104 million in aggregate principal amount of\n UAL’s outstanding 6% Convertible Senior Notes held by the\n holders of these notes. The Company retired the 6% Convertible\n Senior Notes acquired in the exchange.
\n\n
\n\n The\n collateral, covenants and cross default provisions of the\n Company’s principal debt instruments that contain such\n provisions are summarized in the table below:
\n\n
\n| \n | \n | \n |
| Debt\n Instrument | \n\n | Collateral, Covenants and Cross Default\n Provisions | \n
| \n Credit\n Agreement \n | \n \n | \n Secured by certain of\n United’s international route authorities, specified take-off\n and landing slots at certain airports and certain other\n assets. \n\n \nThe Credit Agreement\n requires the Company to maintain at least $3.0 billion of\n unrestricted liquidity at all times, which includes unrestricted\n cash, short-term investments and any undrawn amounts under any\n revolving credit facility, and to maintain a minimum ratio of\n appraised value of collateral to the outstanding obligations under\n the Credit Agreement of 1.67 to 1.0 at all times. The Credit\n Agreement contains covenants that, among other things, restrict the\n ability of UAL and its restricted subsidiaries (as defined in the\n Credit Agreement) to incur additional indebtedness and to pay\n dividends on or repurchase stock. \n\n \nThe Credit Agreement\n contains events of default customary for this type of financing,\n including a cross default and cross acceleration provision to\n certain other material indebtedness of the Company. \n | \n
| \n \n 6% Notes due\n 2026 \n\n \n\n 6% Notes due\n 2028 \n | \n \n | \n The amended and restated\n indenture for these notes, which are unsecured, contains covenants\n that, among other things, restrict the ability of the Company and\n its restricted subsidiaries (as defined in the indenture) to incur\n additional indebtedness and pay dividends on or repurchase\n stock. \n\n \nThese covenants cease to\n be in effect when the indenture covering the 6.375% Senior Notes\n due 2018 is discharged. \n\n \nThe indenture contains\n events of default that are customary for similar\n financings. \n | \n
| \n \n 6.375% Senior\n Notes due 2018 \n\n \n\n 6% Senior\n Notes due 2020 \n | \n \n | \n The indentures for these\n notes, which are unsecured, contain covenants that, among other\n things, restrict the ability of the Company and its restricted\n subsidiaries (as defined in the indenture) to incur additional\n indebtedness and pay dividends on or repurchase stock. \n\n \nThe indentures contain\n events of default that are customary for similar\n financings. \n | \n
The estimated amounts that\n will be amortized in 2015 out of accumulated other comprehensive\n income (loss) into net periodic benefit cost are as follows (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Pension \n Benefits | \n \n | \n | Other \n Postretirement \n Benefits | \n \n | ||
| \n Actuarial (gain)\n loss \n | \n \n | $ | \n87 | \n\n | \n | $ | \n(22) | \n\n |
| \n Prior service\n credit \n | \n \n | \n | — | \n\n | \n | \n | (32) | \n\n |
Temporary differences and\n carryforwards that give rise to deferred tax assets and liabilities\n at December 31, 2014 and 2013 were as follows (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | UAL | \n\n | \n | United | \n\n | ||||||||||
| \n | \n | December 31, | \n\n | \n | December 31, | \n\n | ||||||||||
| \n | \n | 2014 | \n\n | \n | 2013 | \n\n | \n | 2014 | \n\n | \n | 2013 | \n\n | ||||
| \n Deferred income tax asset\n (liability): \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Federal and state net\n operating loss (“NOL”) carryforwards \n | \n \n | $ | \n3,491 | \n\n | \n | $ | \n4,006 | \n\n | \n | $ | \n3,423 | \n\n | \n | $ | \n3,943 | \n\n |
| \n Frequent flyer deferred\n revenue \n | \n \n | \n | 2,287 | \n\n | \n | \n | 2,254 | \n\n | \n | \n | 2,287 | \n\n | \n | \n | 2,254 | \n\n |
| \n Employee benefits,\n including pension, postretirement and medical \n | \n \n | \n | 1,943 | \n\n | \n | \n | 1,701 | \n\n | \n | \n | 1,943 | \n\n | \n | \n | 1,701 | \n\n |
| \n Alternative minimum tax\n credit carryforwards \n | \n \n | \n | 214 | \n\n | \n | \n | 233 | \n\n | \n | \n | 214 | \n\n | \n | \n | 233 | \n\n |
| \n Other \n | \n \n | \n | 657 | \n\n | \n | \n | 340 | \n\n | \n | \n | 659 | \n\n | \n | \n | 340 | \n\n |
| \n Less: Valuation\n allowance \n | \n \n | \n | (4,751) | \n\n | \n | \n | (4,591) | \n\n | \n | \n | (4,721) | \n\n | \n | \n | (4,561) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total deferred tax\n assets \n | \n \n | $ | \n3,841 | \n\n | \n | $ | \n3,943 | \n\n | \n | $ | \n3,805 | \n\n | \n | $ | \n3,910 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Depreciation, capitalized\n interest and other \n | \n \n | $ | \n(3,212) | \n\n | \n | $ | \n(3,201) | \n\n | \n | $ | \n(3,212) | \n\n | \n | $ | \n(3,201) | \n\n |
| \n Intangibles \n | \n \n | \n | (1,545) | \n\n | \n | \n | (1,585) | \n\n | \n | \n | (1,545) | \n\n | \n | \n | (1,585) | \n\n |
| \n Other \n | \n \n | \n | (84) | \n\n | \n | \n | (144) | \n\n | \n | \n | (48) | \n\n | \n | \n | (111) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total deferred tax\n liabilities \n | \n \n | $ | \n(4,841) | \n\n | \n | $ | \n(4,930) | \n\n | \n | $ | \n(4,805) | \n\n | \n | $ | \n(4,897) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Net deferred tax\n liability \n | \n \n | $ | \n(1,000) | \n\n | \n | $ | \n(987) | \n\n | \n | $ | \n(1,000) | \n\n | \n | $ | \n(987) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
The computations of\n UAL’s basic and diluted earnings (loss) per share and the\n number of securities that have been excluded from the computation\n of diluted earnings per share amounts because they were\n antidilutive are set forth below for the years ended\n December 31 (in millions, except per share\n amounts):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 2014 | \n\n | \n | 2013 | \n\n | \n | 2012 | \n\n | |||
| \n Basic earnings (loss)\n per share: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Earnings (loss) available\n to common stockholders \n | \n \n | $ | \n1,132 | \n\n | \n | $ | \n571 | \n\n | \n | $ | \n(723) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Basic weighted-average\n shares outstanding \n | \n \n | \n | 371 | \n\n | \n | \n | 348 | \n\n | \n | \n | 331 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Earnings (loss) per share,\n basic \n | \n \n | $ | \n3.05 | \n\n | \n | $ | \n1.64 | \n\n | \n | $ | \n(2.18) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Diluted earnings (loss)\n per share: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Earnings (loss) available\n to common stockholders \n | \n \n | $ | \n1,132 | \n\n | \n | $ | \n571 | \n\n | \n | $ | \n(723) | \n\n |
| \n Effect of dilutive\n securities \n | \n \n | \n | 11 | \n\n | \n | \n | 26 | \n\n | \n | \n | — | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Earnings (loss) available\n to common stockholders including the effect of dilutive\n securities \n | \n \n | $ | \n1,143 | \n\n | \n | $ | \n597 | \n\n | \n | $ | \n(723) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Diluted shares\n outstanding: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Basic weighted-average\n shares outstanding \n | \n \n | \n | 371 | \n\n | \n | \n | 348 | \n\n | \n | \n | 331 | \n\n |
| \n Effect of convertible\n notes \n | \n \n | \n | 18 | \n\n | \n | \n | 42 | \n\n | \n | \n | — | \n\n |
| \n Effect of restricted stock\n and employee stock options \n | \n \n | \n | 1 | \n\n | \n | \n | 1 | \n\n | \n | \n | — | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Diluted weighted-average\n shares outstanding \n | \n \n | \n | 390 | \n\n | \n | \n | 391 | \n\n | \n | \n | 331 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Earnings (loss) per share,\n diluted \n | \n \n | $ | \n2.93 | \n\n | \n | $ | \n1.53 | \n\n | \n | $ | \n(2.18) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| Potentially dilutive\n shares excluded from diluted per share amounts: | \n\n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Restricted stock and stock\n options \n | \n \n | \n | 1 | \n\n | \n | \n | 3 | \n\n | \n | \n | 5 | \n\n |
| \n Convertible\n notes \n | \n \n | \n | 3 | \n\n | \n | \n | 4 | \n\n | \n | \n | 61 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | 4 | \n\n | \n | \n | 7 | \n\n | \n | \n | 66 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
A 1% change in the assumed\n health care trend rate for the Company would have the following\n additional effects (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 1% Increase | \n\n | \n | 1% Decrease | \n\n | ||
| \n Effect on total service and\n interest cost for the year ended December 31, 2014 \n | \n \n | $ | \n13 | \n\n | \n | $ | \n(11) | \n\n |
| \n Effect on postretirement\n benefit obligation at December 31, 2014 \n | \n \n | \n | 254 | \n\n | \n | \n | (220) | \n\n |
The table below presents\n the Company’s contractual principal payments at\n December 31, 2014 under then-outstanding long-term debt\n agreements in each of the next five calendar years (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n |
| \n | \n | UAL and United | \n\n | |
| \n 2015 \n | \n \n | $ | \n1,313 | \n\n |
| \n 2016 \n | \n \n | \n | 1,195 | \n\n |
| \n 2017 \n | \n \n | \n | 755 | \n\n |
| \n 2018 \n | \n \n | \n | 1,269 | \n\n |
| \n 2019 \n | \n \n | \n | 1,721 | \n\n |
| \n After 2019 \n | \n \n | \n | 5,280 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | $ | \n11,533 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n UAL \n \n \n | \n \n | Quarter\n Ended | \n\n | |||||||||||||
| \n \n (In millions, except per share amounts) \n | \n \n | March 31 | \n\n | \n | June 30 | \n\n | \n | September 30 | \n\n | \n | December 31 | \n\n | ||||
| \n 2014 \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Operating\n revenue \n | \n \n | $ | \n8,696 | \n\n | \n | $ | \n10,329 | \n\n | \n | $ | \n10,563 | \n\n | \n | $ | \n9,313 | \n\n |
| \n Income (loss) from\n operations \n | \n \n | \n | (349) | \n\n | \n | \n | 906 | \n\n | \n | \n | 1,191 | \n\n | \n | \n | 625 | \n\n |
| \n Net income\n (loss) \n | \n \n | \n | (609) | \n\n | \n | \n | 789 | \n\n | \n | \n | 924 | \n\n | \n | \n | 28 | \n\n |
| \n Basic earnings (loss) per\n share \n | \n \n | \n | (1.66) | \n\n | \n | \n | 2.11 | \n\n | \n | \n | 2.49 | \n\n | \n | \n | 0.08 | \n\n |
| \n Diluted earnings (loss) per\n share \n | \n \n | \n | (1.66) | \n\n | \n | \n | 2.01 | \n\n | \n | \n | 2.37 | \n\n | \n | \n | 0.07 | \n\n |
| \n 2013 \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Operating\n revenue \n | \n \n | $ | \n8,721 | \n\n | \n | $ | \n10,001 | \n\n | \n | $ | \n10,228 | \n\n | \n | $ | \n9,329 | \n\n |
| \n Income (loss) from\n operations \n | \n \n | \n | (264) | \n\n | \n | \n | 770 | \n\n | \n | \n | 508 | \n\n | \n | \n | 235 | \n\n |
| \n Net income\n (loss) \n | \n \n | \n | (417) | \n\n | \n | \n | 469 | \n\n | \n | \n | 379 | \n\n | \n | \n | 140 | \n\n |
| \n Basic earnings (loss) per\n share \n | \n \n | \n | (1.26) | \n\n | \n | \n | 1.37 | \n\n | \n | \n | 1.06 | \n\n | \n | \n | 0.39 | \n\n |
| \n Diluted earnings (loss) per\n share \n | \n \n | \n | (1.26) | \n\n | \n | \n | 1.21 | \n\n | \n | \n | 0.98 | \n\n | \n | \n | 0.37 | \n\n |
Integration-related costs\n and special items classified as special charges in the statements\n of consolidated operations consisted of the following for the years\n ended December 31 (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| Operating: | \n\n | 2014 | \n\n | \n | 2013 | \n\n | \n | 2012 | \n\n | |||
| \n Severance and benefit\n costs \n | \n \n | $ | \n199 | \n\n | \n | $ | \n105 | \n\n | \n | $ | \n125 | \n\n |
| \n Integration-related\n costs \n | \n \n | \n | 96 | \n\n | \n | \n | 205 | \n\n | \n | \n | 739 | \n\n |
| Costs associated with permanently grounding Embraer ERJ 135\n aircraft | \n\n | \n | 66 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n Impairment of\n assets \n | \n \n | \n | 49 | \n\n | \n | \n | 33 | \n\n | \n | \n | 30 | \n\n |
| \n Labor agreement\n costs \n | \n \n | \n | — | \n\n | \n | \n | 127 | \n\n | \n | \n | 475 | \n\n |
| (Gains) losses on sale of assets and other special (gains)\n losses, net | \n\n | \n | 33 | \n\n | \n | \n | 50 | \n\n | \n | \n | (46) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Special charges \n | \n \n | $ | \n443 | \n\n | \n | $ | \n520 | \n\n | \n | $ | \n1,323 | \n\n |
| \n Nonoperating: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Loss on extinguishment of\n debt and other, net \n | \n \n | $ | \n74 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n— | \n\n |
| \n Income tax\n benefit \n | \n \n | \n | (10) | \n\n | \n | \n | (7) | \n\n | \n | \n | (11) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total operating and\n nonoperating special charges, net of income taxes \n | \n \n | $ | \n507 | \n\n | \n | $ | \n513 | \n\n | \n | $ | \n1,312 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
NOTE 1 - SIGNIFICANT\n ACCOUNTING POLICIES
\n\n
\n| (a) | \nUse of Estimates and\n Reclassifications—The preparation of financial statements\n in conformity with accounting principles generally accepted in the\n United States of America (“GAAP”) requires management\n to make estimates and assumptions that affect the amounts reported\n in these financial statements and accompanying notes. Actual\n results could differ from those estimates. | \n
\n Certain prior\n years’ cash flows from operating, investing and financing\n activities have been reclassified to conform to the current year\n presentation. Within the investing activities section, the change\n in the short-term and other investments category was further\n separated between purchases and redemptions. The net effect of this\n presentation remains unchanged for prior years.
\n\n
\n| (b) | \nRevenue\n Recognition—The value of unused passenger tickets is\n included in current liabilities as advance ticket sales. The\n Company records passenger ticket sales and tickets sold by other\n airlines for use on United as passenger revenue when the\n transportation is provided or upon estimated breakage. Tickets sold\n by other airlines are recorded at the estimated values to be billed\n to the other airlines. Differences between amounts billed and the\n actual amounts may be rejected and rebilled or written off if the\n amount recorded was different from the original estimate. When\n necessary, the Company records a reserve against our interline\n billings and payables if historical experience indicates that these\n amounts are different. Non-refundable tickets generally expire on\n the date of the intended flight, unless the date is extended by\n notification from the customer on or before the intended flight\n date. | \n
\n Fees charged in\n association with changes or extensions to non-refundable tickets\n are recorded as other revenue at the time the fee is incurred. The\n fare on the changed ticket, including any additional collection of\n fare, is deferred and recognized in accordance with our\n transportation revenue recognition policy at the time the\n transportation is provided. Change fees related to non-refundable\n tickets are considered a separate transaction from the air\n transportation because they represent a charge for the\n Company’s additional service to modify a previous sale.\n Therefore, the pricing of the change fee and the initial customer\n order are separately determined and represent distinct earnings\n processes.
\n\n The Company\n records an estimate of breakage revenue on the flight date for\n tickets that will expire unused. These estimates are based on the\n evaluation of actual historical results and forecasted trends.\n Refundable tickets expire after one year from the date of\n issuance.
\n\n
\n\n The Company\n recognizes cargo and other revenue as service is\n provided.
\n\n Under our\n capacity purchase agreements (“CPAs”) with regional\n carriers, we purchase all of the capacity related to aircraft\n covered by the contracts and are responsible for selling all of the\n related seat inventory. We record the passenger revenue and related\n expenses as separate operating revenue and expense in the\n consolidated statement of operations.
\n\n Accounts\n receivable primarily consist of amounts due from credit card\n companies and customers of our aircraft maintenance and cargo\n transportation services. We provide an allowance for uncollectible\n accounts equal to the estimated losses expected to be incurred\n based on historical write-offs and other specific analyses. Bad\n debt expense and write-offs were not material for the years ended\n December 31, 2014, 2013 and 2012.
\n\n
\n| (c) | \nFrequent Flyer\n Accounting—United’s MileagePlus program is designed\n to increase customer loyalty. Program participants earn miles by\n flying on United and certain other participating airlines. Program\n participants can also earn miles through purchases from other\n non-airline partners that participate in United’s loyalty\n program. We sell miles to these partners, which include credit card\n issuers, retail merchants, hotels, car rental companies and our\n participating airline partners. Miles can be redeemed for free\n (other than taxes and government imposed fees), discounted or\n upgraded air travel and non-travel awards. The Company records its\n obligation for future award redemptions using a deferred revenue\n model. | \n
\n Miles Earned\n in Conjunction with Flights
\n\n In the case of\n the sale of air services, the Company recognizes a portion of the\n ticket sales as revenue when the air transportation occurs and\n defers a portion of the ticket sale representing the value of the\n related miles as a multiple-deliverable revenue arrangement. The\n miles are recorded in frequent flyer deferred revenue on the\n Company’s balance sheet and recognized into revenue when the\n transportation is provided.
\n\n The Company\n determines the estimated selling price of air transportation and\n miles as if each element is sold on a separate basis. The total\n consideration from each ticket sale is then allocated to each of\n these elements individually on a pro rata basis. The\n Company’s estimated selling price of miles prior to\n April 1, 2014 was based on the price we sell miles to Star\n Alliance partners in our reciprocal frequent flyer agreements as\n the best estimate of selling price for these miles.
\n\n On\n March 30, 2014, US Airways exited Star Alliance. Effective\n with the exit date, the Company updated its estimated selling price\n for miles to a value based on the equivalent ticket value less\n fulfillment discount, which incorporates the expected redemption of\n miles. The equivalent ticket value used as the basis for the\n estimated selling price of miles is based on the prior 12\n months’ weighted average equivalent ticket value of similar\n fares as those used to settle award redemptions while taking into\n consideration such factors as redemption pattern, cabin class,\n loyalty status and geographic region. The estimated selling price\n of miles is adjusted by a fulfillment discount that considers a\n number of factors, including redemption patterns of various\n customer groups. This change in estimate was applied on a\n prospective basis beginning April 1, 2014. The impact of this\n change resulted in an increase in consolidated revenue of\n approximately $95 million (and an increase of approximately $0.26\n per UAL basic share and $0.24 per UAL diluted share) in\n 2014.
\n\n Co-branded\n Credit Card Partner Mileage Sales
\n\n United has a\n significant contract, the Consolidated Amended and Restated\n Co-Branded Card Marketing Services Agreement (the “Co-Brand\n Agreement”), to sell MileagePlus miles to its co-branded\n credit card partner, Chase Bank USA, N.A. (“Chase”).\n United identified five revenue elements in the Co-Brand Agreement:\n the air transportation element represented by the value of the mile\n (generally resulting from its redemption for future air\n transportation and whose fair value is described above); use of the\n United brand and access to MileagePlus member lists; advertising;\n baggage services; and airport lounge usage (together, excluding\n “the air transportation element,” the\n “marketing-related deliverables”).
\n\n The fair value\n of the elements is determined using management’s estimated\n selling price of each element. The objective of using the estimated\n selling price based methodology is to determine the price at which\n we would transact a sale if the product or service were sold on a\n stand-alone basis. Accordingly, we determine our best estimate of\n selling price by considering multiple inputs and methods including,\n but not limited to, discounted cash flows, brand value, volume\n discounts, published selling prices, number of miles awarded and\n number of miles redeemed. The Company estimated the selling prices\n and volumes over the term of the Co-Brand Agreement in order to\n determine the allocation of proceeds to each of the multiple\n elements to be delivered. The method for determining the selling\n price of the mile component changed March 30, 2014, as\n described above. We also evaluate volumes on an annual basis, which\n may result in a change in the allocation of estimated selling price\n on a prospective basis.
\n\n The Company\n records passenger revenue related to the air transportation element\n when the transportation is delivered. The other elements are\n generally recognized as Other operating revenue when\n earned.
\n\n Expiration\n of Miles
\n\n The Company\n accounts for miles sold and awarded that will never be redeemed by\n program members, which we refer to as breakage. The Company reviews\n its breakage estimates annually based upon the latest available\n information regarding redemption and expiration patterns. Miles\n expire after 18 months of member account inactivity.
\n\n The\n Company’s estimate of the expected expiration of miles\n requires significant management judgment. Current and future\n changes to expiration assumptions or to the expiration policy, or\n to program rules and program redemption opportunities, may result\n in material changes to the deferred revenue balance as well as\n recognized revenues from the programs.
\n\n Other\n Information
\n\n The following\n table provides additional information related to the frequent flyer\n program (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Year\n Ended \n\n December 31, \n | \n \n | Cash Proceeds \n from Miles Sold | \n \n | \n | Other Revenue \n Recognized Upon \n Award of Miles \n to Third-Party \n Customers (a) | \n \n | \n | Increase in Frequent \n Flyer Deferred \n Revenue for Miles \n Awarded (b) | \n \n | \n | Increase \n (Decrease) in \n Advanced \n Purchase of \n Miles (c) | \n \n | ||||
| \n 2014 \n | \n \n | $ | \n2,861 | \n\n | \n | $ | \n882 | \n\n | \n | $ | \n2,178 | \n\n | \n | $ | \n(199) | \n\n |
| \n 2013 \n | \n \n | \n | 2,903 | \n\n | \n | \n | 903 | \n\n | \n | \n | 2,174 | \n\n | \n | \n | (174) | \n\n |
| \n 2012 \n | \n \n | \n | 2,852 | \n\n | \n | \n | 816 | \n\n | \n | \n | 2,036 | \n\n | \n | \n | — | \n\n |
| \n \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | |||
| (a) This amount represents\n other revenue recognized during the period from the sale of miles\n to third parties, representing the marketing-related deliverable\n services component of the sale. | \n\n | |||||||||||||||
| (b) This amount represents\n the increase to frequent flyer deferred revenue during the\n period. | \n\n | |||||||||||||||
| (c) This amount represents\n the net increase (decrease) in the advance purchase of miles\n obligation due to cash payments for the sale of miles in excess of\n (less than) miles awarded to customers. | \n\n |
\n
\n| (d) | \nCash and Cash\n Equivalents and Restricted Cash—Highly liquid investments\n with a maturity of three months or less on their acquisition date\n are classified as cash and cash equivalents. | \n
\n Restricted cash\n primarily includes cash collateral associated with workers’\n compensation obligations, reserves for institutions that process\n credit card ticket sales and cash collateral received from fuel\n hedge counterparties. Restricted cash is classified as short-term\n or long-term in the consolidated balance sheets based on the\n expected timing of return of the assets to the Company. Airline\n industry practice includes classification of restricted cash flows\n as either investing cash flows or operating cash flows. Cash flows\n related to restricted cash activity are classified as investing\n activities because the Company considers restricted cash arising\n from these activities similar to an investment.
\n\n
\n| (e) | \nShort-term\n Investments—Short-term investments are classified as\n available-for-sale and are stated at fair value. Realized gains and\n losses on sales of investments are reflected in nonoperating income\n (expense) in the consolidated statements of\n operations. Unrealized gains and losses on available-for-sale\n securities are reflected as a component of accumulated other\n comprehensive income (loss). | \n
\n
\n| (f) | \nAircraft Fuel, Spare\n Parts and Supplies—The Company accounts for aircraft\n fuel, spare parts and supplies at average cost and provides an\n obsolescence allowance for aircraft spare parts with an assumed\n residual value of 10% to 11% of original cost depending on the\n fleet type. | \n
\n
\n| (g) | \nProperty and\n Equipment—The Company records additions to owned\n operating property and equipment at cost when acquired. Property\n under capital leases and the related obligation for future lease\n payments are recorded at an amount equal to the initial present\n value of those lease payments. Modifications that enhance the\n operating performance or extend the useful lives of airframes or\n engines are capitalized as property and equipment. It is the\n Company’s policy to record compensation from delays in\n delivery of aircraft as a reduction of the cost of the related\n aircraft. | \n
\n Depreciation\n and amortization of owned depreciable assets is based on the\n straight-line method over the assets’ estimated useful lives.\n Leasehold improvements are amortized over the remaining term of the\n lease, including estimated facility renewal options when renewal is\n reasonably assured at key airports, or the estimated useful life of\n the related asset, whichever is less. Properties under capital\n leases are amortized on the straight-line method over the life of\n the lease or, in the case of certain aircraft, over their estimated\n useful lives, whichever is shorter. Amortization of capital lease\n assets is included in depreciation and amortization expense. The\n estimated useful lives of property and equipment are as\n follows:
\n\n
\n| \n | \n | \n | \n | \n |
| \n | \n | Estimated Useful Life (in years) | \n\n | |
| \n Aircraft and related\n rotable parts \n | \n \n | \n | 25 to 30 | \n\n |
| \n Buildings \n | \n \n | \n | 25 to 45 | \n\n |
| \n Other property and\n equipment \n | \n \n | \n | 3 to 15 | \n\n |
| \n Computer\n software \n | \n \n | \n | 5 | \n\n |
| \n Building\n improvements \n | \n \n | \n | 1 to 40 | \n\n |
\n As of\n December 31, 2014 and 2013, the Company had a carrying value\n of computer software of $281 million and $290 million,\n respectively. For the years ended December 31, 2014, 2013 and\n 2012, the Company’s depreciation expense related to computer\n software was $81 million, $72 million and $81 million,\n respectively. Aircraft and aircraft parts were assumed to have\n residual values with a range of 10% to 11% of original cost,\n depending on type, and other categories of property and equipment\n were assumed to have no residual value.
\n\n
\n| (h) | \nMaintenance and\n Repairs—The cost of maintenance and repairs, including\n the cost of minor replacements, is charged to expense as incurred,\n except for costs incurred under our power-by-the-hour\n (“PBTH”) engine maintenance agreements. PBTH contracts\n transfer certain risk to third-party service providers and fix the\n amount we pay per flight hour or per cycle to the service provider\n in exchange for maintenance and repairs under a predefined\n maintenance program. Under PBTH agreements, the Company recognizes\n expense at a level rate per engine hour, unless the level of\n service effort and the related payments during the period are\n substantially consistent, in which case the Company recognizes\n expense based on the amounts paid. | \n
\n
\n| (i) | \nLease Fair Value\n Adjustments—Lease fair value adjustments, which arose\n from recording operating leases at fair value under fresh start or\n business combination accounting, are amortized on a straight-line\n basis over the related lease term. | \n
\n
\n| (j) | \nRegional Capacity\n Purchase—Payments made to regional carriers under CPAs\n are reported in Regional capacity purchase in our consolidated\n statements of operations. As of December 31, 2014, United had\n 281 call options to purchase regional jet aircraft being operated\n by certain regional carriers. At December 31, 2014, none of\n the call options was exercisable because none of the required\n conditions to make an option exercisable by United was\n met. | \n
\n
\n| (k) | \nAdvertising—Advertising costs, which are included\n in Other operating expenses, are expensed as incurred. Advertising\n expenses were $179 million, $178 million and $154 million for the\n years ended December 31, 2014, 2013 and 2012,\n respectively. | \n
\n
\n| (l) | \nIntangibles—The Company has finite-lived and\n indefinite-lived intangible assets, including goodwill.\n Finite-lived intangible assets are amortized over their estimated\n useful lives. Goodwill and indefinite-lived intangible assets are\n not amortized but are reviewed for impairment annually or more\n frequently if events or circumstances indicate that the asset may\n be impaired. Goodwill and indefinite-lived assets are reviewed for\n impairment on an annual basis as of October 1, or on an\n interim basis whenever a triggering event occurs. See Notes 2 and\n 17 of this report for additional information related to\n intangibles. | \n
\n
\n| (m) | \nLong-Lived Asset\n Impairments—The Company evaluates the carrying value of\n long-lived assets subject to amortization whenever events or\n changes in circumstances indicate that an impairment may exist. For\n purposes of this testing, the Company has generally identified the\n aircraft fleet type as the lowest level of identifiable cash flows\n for purposes of testing aircraft for impairment. An impairment\n charge is recognized when the asset’s carrying value exceeds\n its net undiscounted future cash flows and its fair market value.\n The amount of the charge is the difference between the\n asset’s carrying value and fair market value. See Note 17 of\n this report for additional information related to asset\n impairments. | \n
\n
\n| (n) | \nShare-Based\n Compensation—The Company measures the cost of employee\n services received in exchange for an award of equity instruments\n based on the grant-date fair value of the award. The resulting cost\n is recognized over the period during which an employee is required\n to provide service in exchange for the award, usually the vesting\n period. Obligations for restricted stock units (“RSUs”)\n are remeasured at fair value throughout the requisite service\n period on the last day of each reporting period based upon\n UAL’s stock price. In addition to the service requirement,\n certain RSUs have performance metrics that must be achieved prior\n to vesting. These awards are accrued based on the expected level of\n achievement at each reporting period. A cumulative adjustment is\n recorded on the last day of each reporting period to adjust\n compensation expense based on both UAL’s stock price and the\n then current level of expected performance achievement for the\n performance-based awards. See Note 5 of this report for additional\n information on UAL’s share-based compensation\n plans. | \n
\n
\n| (o) | \nTicket\n Taxes—Certain governmental taxes are imposed on the\n Company’s ticket sales through a fee included in ticket\n prices. The Company collects these fees and remits them to the\n appropriate government agency. These fees are recorded on a net\n basis (excluded from operating revenue). | \n
\n
\n| (p) | \nRetirement of Leased\n Aircraft—The Company accrues for estimated lease costs\n over the remaining term of the lease at the present value of future\n minimum lease payments, net of estimated sublease rentals (if any),\n in the period that aircraft are permanently removed from service.\n When reasonably estimable and probable, the Company estimates\n maintenance lease return condition obligations for items such as\n minimum aircraft and engine conditions specified in leases and\n accrues these amounts over the lease term while the aircraft are\n operating, and any remaining unrecognized estimated obligations are\n accrued in the period that an aircraft is removed from\n service. | \n
\n
\n| (q) | \nUncertain Income Tax\n Positions—The Company has recorded reserves for income\n taxes and associated interest that may become payable in future\n years. Although management believes that its positions taken on\n income tax matters are reasonable, the Company nevertheless has\n established tax and interest reserves in recognition that various\n taxing authorities may challenge certain of the positions taken by\n the Company, potentially resulting in additional liabilities for\n taxes and interest. The Company’s uncertain tax position\n reserves are reviewed periodically and are adjusted as events occur\n that affect its estimates, such as the availability of new\n information, the lapsing of applicable statutes of limitation, the\n conclusion of tax audits, the measurement of additional estimated\n liability, the identification of new tax matters, the release of\n administrative tax guidance affecting its estimates of tax\n liabilities, or the rendering of relevant court decisions. The\n Company records penalties and interest relating to uncertain tax\n positions in Other operating expense and Interest expense,\n respectively, in its consolidated statements of operations. The\n Company has not recorded any significant expense or liabilities\n related to interest or penalties in its consolidated financial\n statements. | \n
\n
\n| (r) | \nLabor\n Costs—The Company records expenses associated with\n amendable labor agreements when the employee group has earned the\n compensation and the amounts are probable and estimable. These\n include costs associated with lump sum cash payments that would be\n made in conjunction with the ratification of labor agreements. To\n the extent these upfront costs are in lieu of future pay increases,\n they would be capitalized and amortized over the term of the labor\n agreements. If not, these amounts would be expensed once earned and\n when they become probable and estimable. | \n
\n
\n| (s) | \nThird-Party\n Business—The Company has third-party business revenue\n that includes fuel sales, catering, ground handling, maintenance\n services and frequent flyer award non-air redemptions, and\n third-party business revenue is recorded in Other operating\n revenue. The Company also incurs third-party business expenses,\n such as maintenance, ground handling and catering services for\n third parties, fuel sales and non-air mileage redemptions, and\n those third-party business expenses are recorded in Other operating\n expenses. In addition, the Company previously had a contract to\n sell aircraft fuel to a third party which was earnings-neutral but\n resulted in revenue and expense, specifically cost of sales which\n was unrelated to the operation of the airline. This contract ended\n in 2014. | \n
\n
\n| (t) | \nRecently Issued\n Accounting Standards—In May 2014, the Financial\n Accounting Standards Board (“FASB”) amended the FASB\n Accounting Standards Codification and created a new Topic 606,\n Revenue from Contracts with Customers. This amendment prescribes\n that an entity should recognize revenue to depict the transfer of\n promised goods or services to customers in an amount that reflects\n the consideration to which the entity expects to be entitled in\n exchange for those goods or services. The amendment supersedes the\n revenue recognition requirements in Topic 605, Revenue Recognition,\n and most industry-specific guidance throughout the Industry Topics\n of the Codification. The amendments will become effective for the\n Company’s annual and interim reporting periods beginning\n January 1, 2017. Under the new standard, certain airline\n ancillary fees directly related to passenger revenue tickets, such\n as airline change fees and baggage fees, are likely to no longer be\n considered distinct performance obligations separate from the\n passenger travel component. In addition, the change fees which were\n previously recognized when incurred, will likely be recognized when\n transportation is provided. The Company is evaluating other impacts\n on its consolidated financial statements. | \n
NOTE 5 - SHARE-BASED\n COMPENSATION PLANS
\nUAL maintains several\n share-based compensation plans. These plans provide for grants of\n qualified and non-qualified stock options, stock appreciation\n rights, restricted stock awards, RSUs, performance compensation\n awards, performance units, cash incentive awards and other types of\n equity-based and equity-related awards.
\nAll awards are recorded as\n equity or a liability in the Company’s consolidated balance\n sheets. The share-based compensation expense is directly recorded\n in salaries and related costs or integration-related\n expense.
\nIn February 2014, UAL\n granted share-based compensation awards pursuant to the United\n Continental Holdings, Inc. 2008 Incentive Compensation Plan. These\n share-based compensation awards include approximately\n 0.3 million shares of restricted stock and 0.5 million of\n RSUs that vest pro-rata over three years on the anniversary of the\n grant date. The time vested RSUs are cash-settled based on the\n 20-day average closing price of UAL common stock immediately prior\n to the vesting date. In addition, UAL granted 0.6 million RSUs\n that will vest based on UAL’s return on invested capital for\n the three years ending December 31, 2016. If this performance\n condition is achieved, cash payments will be made after the end of\n the performance period based on the 20-day average closing price of\n UAL common stock immediately prior to the vesting date (subject to\n a maximum payment valued at two times the closing stock price on\n the grant date). The Company accounts for the RSUs as liability\n awards.
\nThe following table\n provides information related to UAL’s share-based\n compensation plan cost for the years ended December 31 (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 2014 | \n\n | \n | 2013 | \n\n | \n | 2012 | \n\n | |||
| \n Compensation cost:\n (a) \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n RSUs \n | \n \n | $ | \n104 | \n\n | \n | $ | \n88 | \n\n | \n | $ | \n37 | \n\n |
| \n Restricted stock \n | \n \n | \n | 10 | \n\n | \n | \n | 11 | \n\n | \n | \n | 13 | \n\n |
| \n Other \n | \n \n | \n | — | \n\n | \n | \n | 1 | \n\n | \n | \n | 7 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total \n | \n \n | $ | \n114 | \n\n | \n | $ | \n100 | \n\n | \n | $ | \n57 | \n\n |
| \n \n | \n \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
(a) All compensation cost\n is recorded to Salaries and related costs, with the exception of $3\n million, $9 million and $9 million in 2014, 2013 and 2012,\n respectively, that was recorded in integration-related costs as a\n component of special charges.
\nThe table below summarizes\n UAL’s unearned compensation and weighted-average remaining\n period to recognize costs for all outstanding share-based awards\n that are probable of being achieved for the year ended\n December 31, 2014 (in millions, except as noted):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Unearned \n Compensation | \n \n | \n | Weighted- \n Average \n Remaining \n Period (in \n years) | \n \n | ||
| \n RSUs \n | \n \n | $ | \n55 | \n\n | \n | \n | 1.4 | \n\n |
| \n Restricted stock \n | \n \n | \n | 7 | \n\n | \n | \n | 1.4 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n |
| \n Total \n | \n \n | $ | \n62 | \n\n | \n | \n | \n | \n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n |
RSUs and Restricted\n Stock. All outstanding RSUs are settled in cash. As of\n December 31, 2014, UAL had recorded a liability of $136\n million related to its RSUs. UAL paid $86 million, $29 million and\n $35 million related to its share-based liabilities during 2014,\n 2013 and 2012, respectively.
\n\n
\nThe table below summarizes\n UAL’s RSUs and restricted stock activity for the years ended\n December 31 (shares in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | RSUs | \n\n | \n | Restricted Stock | \n\n | \n | Weighted- \n Average \n Grant Price | \n \n | |||
| \n Non-vested at\n December 31, 2011 \n | \n \n | \n | 3.4 | \n\n | \n | \n | 1.0 | \n\n | \n | $ | \n23.33 | \n\n |
| \n Granted \n | \n \n | \n | 2.0 | \n\n | \n | \n | 0.5 | \n\n | \n | \n | 24.01 | \n\n |
| \n Vested \n | \n \n | \n | (0.6) | \n\n | \n | \n | (0.6) | \n\n | \n | \n | 23.05 | \n\n |
| \n Surrendered \n | \n \n | \n | (0.5) | \n\n | \n | \n | (0.1) | \n\n | \n | \n | 24.01 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n |
| \n Non-vested at\n December 31, 2012 \n | \n \n | \n | 4.3 | \n\n | \n | \n | 0.8 | \n\n | \n | \n | 23.94 | \n\n |
| \n Granted \n | \n \n | \n | 1.8 | \n\n | \n | \n | 0.5 | \n\n | \n | \n | 25.98 | \n\n |
| \n Vested \n | \n \n | \n | (0.5) | \n\n | \n | \n | (0.3) | \n\n | \n | \n | 23.93 | \n\n |
| \n Surrendered \n | \n \n | \n | (0.2) | \n\n | \n | \n | (0.1) | \n\n | \n | \n | 24.76 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n |
| \n Non-vested at\n December 31, 2013 \n | \n \n | \n | 5.4 | \n\n | \n | \n | 0.9 | \n\n | \n | \n | 25.02 | \n\n |
| \n Granted \n | \n \n | \n | 0.9 | \n\n | \n | \n | 0.3 | \n\n | \n | \n | 43.33 | \n\n |
| \n Vested \n | \n \n | \n | (2.2) | \n\n | \n | \n | (0.4) | \n\n | \n | \n | 24.66 | \n\n |
| \n Surrendered \n | \n \n | \n | (0.3) | \n\n | \n | \n | (0.1) | \n\n | \n | \n | 28.88 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n |
| \n Non-vested at\n December 31, 2014 \n | \n \n | \n | 3.8 | \n\n | \n | \n | 0.7 | \n\n | \n | \n | 32.55 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n |
The fair value of RSUs and\n restricted stock vested in 2014, 2013 and 2012 was $97 million, $22\n million and $27 million, respectively. The fair value of the\n restricted stock awards was primarily based upon the UAL common\n stock price on the date of grant. These awards are accounted for as\n equity awards. The fair value of the RSUs was based on the UAL\n common stock price as of the last day preceding the settlement\n date. These awards were accounted for as liability awards.\n Restricted stock vesting and the recognition of the expense is\n similar to the stock option vesting described below.
\nStock Options. UAL\n has not granted any stock options since 2010. Historically, stock\n options were awarded with exercise prices equal to the fair market\n value of UAL’s common stock on the date of grant. UAL stock\n options generally vested over a period of either three or four\n years and have a contractual life of 10 years. Expense related to\n each portion of an option grant was recognized on a straight-line\n basis over the specific vesting period for those options. The\n Company determined the fair value of stock options at the grant\n date using a Black Scholes option pricing model. As of\n December 31, 2014, there were approximately 1 million\n outstanding stock option awards, all of which were exercisable,\n with a weighted-average exercise price of $29.73.
\n\n NOTE 9 -\n FAIR VALUE MEASUREMENTS
\n\n Fair\n Value Information. Accounting standards require\n us to use valuation techniques to measure fair value that maximize\n the use of observable inputs and minimize the use of unobservable\n inputs. These inputs are prioritized as follows:
\n\n
\n| \n | \n | \n |
| \n Level 1 \n | \n \n | Unadjusted quoted prices in active markets for assets or\n liabilities identical to those to be reported at fair\n value | \n
| \n Level 2 \n | \n \n | Other inputs that are observable directly or indirectly,\n such as quoted prices for similar assets or liabilities or\n market-corroborated inputs | \n
| \n Level 3 \n | \n \n | Unobservable inputs for which there is little or no market\n data and which require us to develop our own assumptions about how\n market participants would price the assets or\n liabilities | \n
\n
\n\n The table\n below presents disclosures about the fair value of financial assets\n and financial liabilities measured at fair value on a recurring\n basis in the Company’s financial statements as of\n December 31 (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 2014 | \n\n | \n | 2013 | \n\n | ||||||||||||||||||||||||||
| \n | \n | Total | \n\n | \n | Level 1 | \n\n | \n | Level 2 | \n\n | \n | Level 3 | \n\n | \n | Total | \n\n | \n | Level 1 | \n\n | \n | Level 2 | \n\n | \n | Level 3 | \n\n | ||||||||
| \n | \n | UAL | \n\n | |||||||||||||||||||||||||||||
| \n Cash and cash\n equivalents \n | \n \n | \n | $2,002 | \n\n | \n | $ | \n2,002 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n— | \n\n | \n | $ | \n3,220 | \n\n | \n | $ | \n3,220 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n— | \n\n |
| \n Short-term\n investments: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Asset-backed\n securities \n | \n \n | \n | 901 | \n\n | \n | \n | — | \n\n | \n | \n | 901 | \n\n | \n | \n | — | \n\n | \n | \n | 694 | \n\n | \n | \n | — | \n\n | \n | \n | 694 | \n\n | \n | \n | — | \n\n |
| \n Corporate debt \n | \n \n | \n | 876 | \n\n | \n | \n | — | \n\n | \n | \n | 876 | \n\n | \n | \n | — | \n\n | \n | \n | 685 | \n\n | \n | \n | — | \n\n | \n | \n | 685 | \n\n | \n | \n | — | \n\n |
| \n Certificates of deposit\n placed through an account registry service\n (“CDARS”) \n | \n \n | \n | 256 | \n\n | \n | \n | — | \n\n | \n | \n | 256 | \n\n | \n | \n | — | \n\n | \n | \n | 301 | \n\n | \n | \n | — | \n\n | \n | \n | 301 | \n\n | \n | \n | — | \n\n |
| \n U.S. government and\n agency notes \n | \n \n | \n | 68 | \n\n | \n | \n | — | \n\n | \n | \n | 68 | \n\n | \n | \n | — | \n\n | \n | \n | 38 | \n\n | \n | \n | — | \n\n | \n | \n | 38 | \n\n | \n | \n | — | \n\n |
| \n Auction rate\n securities \n | \n \n | \n | 26 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 26 | \n\n | \n | \n | 105 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 105 | \n\n |
| \n Other fixed income\n securities \n | \n \n | \n | 255 | \n\n | \n | \n | — | \n\n | \n | \n | 255 | \n\n | \n | \n | — | \n\n | \n | \n | 78 | \n\n | \n | \n | — | \n\n | \n | \n | 78 | \n\n | \n | \n | — | \n\n |
| \n Enhanced equipment trust\n certificates (“EETC”) \n | \n \n | \n | 28 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 28 | \n\n | \n | \n | 61 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 61 | \n\n |
| \n Fuel derivatives asset\n (liability), net \n | \n \n | \n | (717) | \n\n | \n | \n | — | \n\n | \n | \n | (717) | \n\n | \n | \n | — | \n\n | \n | \n | 104 | \n\n | \n | \n | — | \n\n | \n | \n | 104 | \n\n | \n | \n | — | \n\n |
| \n Foreign currency\n derivatives \n | \n \n | \n | 2 | \n\n | \n | \n | — | \n\n | \n | \n | 2 | \n\n | \n | \n | — | \n\n | \n | \n | 1 | \n\n | \n | \n | — | \n\n | \n | \n | 1 | \n\n | \n | \n | — | \n\n |
| \n Restricted\n cash \n | \n \n | \n | 320 | \n\n | \n | \n | 320 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 395 | \n\n | \n | \n | 395 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n | \n | |||||||||||||||||||||||||||||||
| \n | \n | United | \n\n | |||||||||||||||||||||||||||||
| \n Cash and cash\n equivalents \n | \n \n | $ | \n1,996 | \n\n | \n | $ | \n1,996 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n— | \n\n | \n | $ | \n3,214 | \n\n | \n | $ | \n3,214 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n— | \n\n |
| \n Short-term\n investments: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Asset-backed\n securities \n | \n \n | \n | 901 | \n\n | \n | \n | — | \n\n | \n | \n | 901 | \n\n | \n | \n | — | \n\n | \n | \n | 694 | \n\n | \n | \n | — | \n\n | \n | \n | 694 | \n\n | \n | \n | — | \n\n |
| \n Corporate debt \n | \n \n | \n | 876 | \n\n | \n | \n | — | \n\n | \n | \n | 876 | \n\n | \n | \n | — | \n\n | \n | \n | 685 | \n\n | \n | \n | — | \n\n | \n | \n | 685 | \n\n | \n | \n | — | \n\n |
| \n CDARS \n | \n \n | \n | 256 | \n\n | \n | \n | — | \n\n | \n | \n | 256 | \n\n | \n | \n | — | \n\n | \n | \n | 301 | \n\n | \n | \n | — | \n\n | \n | \n | 301 | \n\n | \n | \n | — | \n\n |
| \n U.S. government and\n agency notes \n | \n \n | \n | 68 | \n\n | \n | \n | — | \n\n | \n | \n | 68 | \n\n | \n | \n | — | \n\n | \n | \n | 38 | \n\n | \n | \n | — | \n\n | \n | \n | 38 | \n\n | \n | \n | — | \n\n |
| \n Auction rate\n securities \n | \n \n | \n | 26 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 26 | \n\n | \n | \n | 105 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 105 | \n\n |
| \n Other fixed income\n securities \n | \n \n | \n | 255 | \n\n | \n | \n | — | \n\n | \n | \n | 255 | \n\n | \n | \n | — | \n\n | \n | \n | 78 | \n\n | \n | \n | — | \n\n | \n | \n | 78 | \n\n | \n | \n | — | \n\n |
| \n EETC \n | \n \n | \n | 28 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 28 | \n\n | \n | \n | 61 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 61 | \n\n |
| \n Fuel derivatives asset\n (liability), net \n | \n \n | \n | (717) | \n\n | \n | \n | — | \n\n | \n | \n | (717) | \n\n | \n | \n | — | \n\n | \n | \n | 104 | \n\n | \n | \n | — | \n\n | \n | \n | 104 | \n\n | \n | \n | — | \n\n |
| \n Foreign currency\n derivatives \n | \n \n | \n | 2 | \n\n | \n | \n | — | \n\n | \n | \n | 2 | \n\n | \n | \n | — | \n\n | \n | \n | 1 | \n\n | \n | \n | — | \n\n | \n | \n | 1 | \n\n | \n | \n | — | \n\n |
| \n Restricted\n cash \n | \n \n | \n | 320 | \n\n | \n | \n | 320 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 395 | \n\n | \n | \n | 395 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n Convertible debt\n derivative asset \n | \n \n | \n | 712 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 712 | \n\n | \n | \n | 480 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 480 | \n\n |
| \n Convertible debt option\n liability \n | \n \n | \n | (511) | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | (511) | \n\n | \n | \n | (270) | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | (270) | \n\n |
\n
\n\n Available-for-sale investment maturities—The\n short-term investments shown in the table above are classified as\n available-for-sale. As of December 31, 2014, asset-backed\n securities have remaining maturities of less than one year to\n approximately 40 years, corporate debt securities have remaining\n maturities of less than one year to approximately six years and\n CDARS have maturities of less than one year. U.S. government and\n other securities have maturities of less than one year to\n approximately four years.
\n\n The tables\n below present disclosures about the activity for “Level\n 3” financial assets and financial liabilities for the year\n ended December 31 (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 2014 | \n\n | \n | 2013 | \n\n | ||||||||||||||||||||||||||
| \n | \n | UAL and\n United | \n\n | \n | United | \n\n | \n | UAL and\n United | \n\n | \n | United | \n\n | ||||||||||||||||||||
| \n | \n | Student \n Loan-Related \n Auction Rate \n Securities | \n \n | \n | EETC | \n\n | \n | Convertible \n Debt \n Supplemental \n Derivative \n Asset | \n \n | \n | Convertible \n Debt \n Conversion \n Option \n Liability | \n \n | \n | Student \n Loan-Related \n Auction Rate \n Securities | \n \n | \n | EETC | \n\n | \n | Convertible \n Debt \n Supplemental \n Derivative \n Asset | \n \n | \n | Convertible \n Debt \n Conversion \n Option \n Liability | \n \n | ||||||||
| \n | \n | \n | \n | \n | \n | \n | \n | \n | ||||||||||||||||||||||||
| \n Balance at\n January 1 \n | \n \n | $ | \n105 | \n\n | \n | $ | \n61 | \n\n | \n | $ | \n480 | \n\n | \n | $ | \n(270) | \n\n | \n | $ | \n116 | \n\n | \n | $ | \n63 | \n\n | \n | $ | \n268 | \n\n | \n | $ | \n(128) | \n\n |
| Purchases, (sales), issuances and settlements (net) | \n\n | \n | (84) | \n\n | \n | \n | (33) | \n\n | \n | \n | (62) | \n\n | \n | \n | 34 | \n\n | \n | \n | (19) | \n\n | \n | \n | (4) | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n Gains and\n (losses): \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Reported in\n earnings: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Realized \n | \n \n | \n | 10 | \n\n | \n | \n | 1 | \n\n | \n | \n | (5) | \n\n | \n | \n | 5 | \n\n | \n | \n | 3 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n Unrealized \n | \n \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 299 | \n\n | \n | \n | (280) | \n\n | \n | \n | 1 | \n\n | \n | \n | — | \n\n | \n | \n | 212 | \n\n | \n | \n | (142) | \n\n |
| \n Reported in other\n comprehensive income (loss) \n | \n \n | \n | (5) | \n\n | \n | \n | (1) | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 4 | \n\n | \n | \n | 2 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Balance at\n December 31 \n | \n \n | $ | \n26 | \n\n | \n | $ | \n28 | \n\n | \n | $ | \n712 | \n\n | \n | $ | \n(511) | \n\n | \n | $ | \n105 | \n\n | \n | $ | \n61 | \n\n | \n | $ | \n480 | \n\n | \n | $ | \n(270) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
\n United’s debt-related derivatives presented in the tables\n above relate to (a) supplemental indentures that provide that\n United’s convertible debt is convertible into shares of UAL\n common stock upon the terms and conditions specified in the\n indentures, and (b) the embedded conversion options in\n United’s convertible debt that are required to be separated\n and accounted for as though they are free-standing derivatives as a\n result of the United debt becoming convertible into the common\n stock of a different reporting entity. The derivatives described\n above relate to the 6% Convertible Junior Subordinated Debentures\n due 2030 (the “6% Convertible Debentures”) and the 4.5%\n Convertible Notes. Gains (losses) on these derivatives are recorded\n in Nonoperating income (expense): Miscellaneous, net in\n United’s Statements of Consolidated Operations. These\n derivatives along with their gains (losses) are reported in\n United’s separate financial statements and are eliminated in\n consolidation for UAL.
\n\n In October\n 2014, United used cash to retire, at par, the entire $248 million\n principal balance of the 6% Convertible Debentures. In January\n 2015, the holders of substantially all of the remaining $202\n million principal amount of the 4.5% Convertible Notes exercised\n their conversion options. The derivative assets and liabilities\n associated with the 6% Convertible Debentures and the 4.5%\n Convertible Notes were settled in connection with the retirement of\n the related convertible debt. See Note 11 of this report for\n additional information related to the 6% Convertible Debentures and\n the 4.5% Convertible Notes.
\n\n
\n\n Derivative\n instruments and investments presented in the tables above have the\n same fair value as their carrying value. The table below presents\n the carrying values and estimated fair values of financial\n instruments not presented in the tables above as of\n December 31 (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Fair Value of Debt by\n Fair Value Hierarchy Level | \n\n | |||||||||||||||||||||||||||||||||||||
| \n | \n | 2014 | \n\n | \n | 2013 | \n\n | ||||||||||||||||||||||||||||||||||
| \n | \n | Carrying \n Amount | \n \n | \n | Fair\n Value | \n\n | \n | Carrying \n Amount | \n \n | \n | Fair\n Value | \n\n | ||||||||||||||||||||||||||||
| \n | \n | \n | \n | \n | Total | \n\n | \n | Level 1 | \n\n | \n | Level 2 | \n\n | \n | Level 3 | \n\n | \n | \n | \n | \n | Total | \n\n | \n | Level 1 | \n\n | \n | Level 2 | \n\n | \n | Level 3 | \n\n | ||||||||||
| \n UAL debt \n | \n \n | $ | \n11,434 | \n\n | \n | $ | \n12,386 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n8,568 | \n\n | \n | $ | \n3,818 | \n\n | \n | $ | \n11,539 | \n\n | \n | $ | \n12,695 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n8,829 | \n\n | \n | $ | \n3,866 | \n\n |
| \n United debt \n | \n \n | \n | 11,433 | \n\n | \n | \n | 12,386 | \n\n | \n | \n | — | \n\n | \n | \n | 8,568 | \n\n | \n | \n | 3,818 | \n\n | \n | \n | 11,388 | \n\n | \n | \n | 12,249 | \n\n | \n | \n | — | \n\n | \n | \n | 8,383 | \n\n | \n | \n | 3,866 | \n\n |
Quantitative Information About Level 3 Fair Value\n Measurements as of December 31, 2014 ($ in\n millions)
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Item \n | \n \n | Fair Value at \n December 31, 2014 | \n \n | \n | \n \n Valuation Technique \n | \n \n | \n \n Unobservable Input \n | \n \n | \n \n Input Value \n | \n |
| \n Auction rate\n securities \n | \n \n | $ | \n26 | \n\n | \n | Valuation Service / Broker Quotes | \n\n | Broker quotes (a) | \n\n | NA | \n
| \n EETC \n | \n \n | \n | 28 | \n\n | \n | Discounted Cash Flows | \n\n | Structure credit\n risk (b) | \n\n | 4% | \n
| \n Convertible debt\n derivative asset \n | \n \n | \n | 712 | \n\n | \n | Binomial Lattice Model | \n\n | \n Expected\n volatility (c) \nOwn credit\n risk (d) \n | \n \n | \n 40% \n5% \n | \n
| \n Convertible debt option\n liability \n | \n \n | \n | (511) | \n\n | \n | Binomial Lattice Model | \n\n | \n Expected\n volatility (c) \nOwn credit\n risk (d) \n | \n \n | \n 40% \n5% \n | \n
\n
\n\n (a) Broker\n quotes obtained by a third-party valuation service.
\n\n (b)\n Represents the credit risk premium of the EETC structure above the\n risk-free rate that the Company has determined market participants\n would use when pricing the instruments.
\n\n (c)\n Represents the volatility estimate that the Company has determined\n market participants would use when pricing the\n instruments.
\n\n (d)\n Represents the Company-specific risk adjustment that the Company\n has determined market participants would use as a model\n input.
\n\n Valuation\n Processes - Level 3 Measurements - Depending on the instrument,\n the Company utilizes broker quotes obtained from third-party\n valuation services, discounted cash flow methods, or option pricing\n methods, as indicated above. Valuations using discounted cash flow\n methods are generally conducted by the Company. Valuations using\n option pricing models are generally provided to the Company by\n third-party valuation experts. Each reporting period, the Company\n reviews the unobservable inputs used by third-party valuation\n experts for reasonableness utilizing relevant information available\n to the Company from other sources.
\n\n The Company\n uses broker quotes obtained from a valuation service (in\n replacement of a discounted cash flows method) for valuing auction\n rate securities. This approach provides the best available\n information.
\n\n Sensitivity Analysis - Level 3 Measurements - Changes in the structure\n credit risk would be unlikely to cause material changes in the fair\n value of the EETCs.
\n\n The\n significant unobservable inputs used in the fair value measurement\n of the United convertible debt derivative assets and liabilities\n are the expected volatility in UAL common stock and the\n Company’s own credit risk. Significant increases (decreases)\n in expected stock volatility would result in a higher (lower) fair\n value measurement. Significant increases (decreases) in the\n Company’s own credit risk would result in a lower (higher)\n fair value measurement. A change in one of the inputs would not\n necessarily result in a directionally similar change in the\n other.
\n\n
\n\n Fair value of\n the financial instruments included in the tables above was\n determined as follows:
\n\n
\n| \n | \n | \n |
| \n \n Description \n | \n \n | \n \n Fair Value\n Methodology \n | \n
| Cash and cash equivalents | \n\n | The carrying amounts approximate fair value because of the\n short-term maturity of these assets. | \n
| \n | \n | |
| Short-term investments and Restricted cash | \n\n | Fair value is based on (a) the trading prices of the investment\n or similar instruments, (b) an income approach, which uses\n valuation techniques to convert future amounts into a single\n present amount based on current market expectations about those\n future amounts when observable trading prices are not available,\n (c) internally-developed models of the expected future cash flows\n related to the securities, or (d) broker quotes obtained by\n third-party valuation services. | \n
| \n | \n | |
| \n Fuel\n derivatives \n | \n \n | Derivative contracts are privately negotiated contracts and are\n not exchange traded. Fair value measurements are estimated with\n option pricing models that employ observable inputs. Inputs to the\n valuation models include contractual terms, market prices, yield\n curves, fuel price curves and measures of volatility, among\n others. | \n
| \n | \n | |
| Foreign currency derivatives | \n\n | Fair value is determined with a formula utilizing observable\n inputs. Significant inputs to the valuation models include\n contractual terms, risk-free interest rates and forward exchange\n rates. | \n
| \n | \n | |
| \n Debt \n | \n \n | Fair values were based on either market prices or the\n discounted amount of future cash flows using our current\n incremental rate of borrowing for similar liabilities. | \n
| \n | \n | |
| Convertible debt derivative asset and option\n liability | \n\n | United used a binomial lattice model to value the conversion\n options and the supplemental derivative assets. Significant\n binomial model inputs that are not objectively determinable include\n volatility and the Company’s credit risk component of the\n discount rate. | \n
\n NOTE 10 -\n HEDGING ACTIVITIES
\n \n \n| (c) | \nFrequent Flyer\n Accounting—United’s MileagePlus program is designed\n to increase customer loyalty. Program participants earn miles by\n flying on United and certain other participating airlines. Program\n participants can also earn miles through purchases from other\n non-airline partners that participate in United’s loyalty\n program. We sell miles to these partners, which include credit card\n issuers, retail merchants, hotels, car rental companies and our\n participating airline partners. Miles can be redeemed for free\n (other than taxes and government imposed fees), discounted or\n upgraded air travel and non-travel awards. The Company records its\n obligation for future award redemptions using a deferred revenue\n model. | \n
\n Miles Earned\n in Conjunction with Flights
\n\n In the case of\n the sale of air services, the Company recognizes a portion of the\n ticket sales as revenue when the air transportation occurs and\n defers a portion of the ticket sale representing the value of the\n related miles as a multiple-deliverable revenue arrangement. The\n miles are recorded in frequent flyer deferred revenue on the\n Company’s balance sheet and recognized into revenue when the\n transportation is provided.
\n\n The Company\n determines the estimated selling price of air transportation and\n miles as if each element is sold on a separate basis. The total\n consideration from each ticket sale is then allocated to each of\n these elements individually on a pro rata basis. The\n Company’s estimated selling price of miles prior to\n April 1, 2014 was based on the price we sell miles to Star\n Alliance partners in our reciprocal frequent flyer agreements as\n the best estimate of selling price for these miles.
\n\n On\n March 30, 2014, US Airways exited Star Alliance. Effective\n with the exit date, the Company updated its estimated selling price\n for miles to a value based on the equivalent ticket value less\n fulfillment discount, which incorporates the expected redemption of\n miles. The equivalent ticket value used as the basis for the\n estimated selling price of miles is based on the prior 12\n months’ weighted average equivalent ticket value of similar\n fares as those used to settle award redemptions while taking into\n consideration such factors as redemption pattern, cabin class,\n loyalty status and geographic region. The estimated selling price\n of miles is adjusted by a fulfillment discount that considers a\n number of factors, including redemption patterns of various\n customer groups. This change in estimate was applied on a\n prospective basis beginning April 1, 2014. The impact of this\n change resulted in an increase in consolidated revenue of\n approximately $95 million (and an increase of approximately $0.26\n per UAL basic share and $0.24 per UAL diluted share) in\n 2014.
\n\n Co-branded\n Credit Card Partner Mileage Sales
\n\n United has a\n significant contract, the Consolidated Amended and Restated\n Co-Branded Card Marketing Services Agreement (the “Co-Brand\n Agreement”), to sell MileagePlus miles to its co-branded\n credit card partner, Chase Bank USA, N.A. (“Chase”).\n United identified five revenue elements in the Co-Brand Agreement:\n the air transportation element represented by the value of the mile\n (generally resulting from its redemption for future air\n transportation and whose fair value is described above); use of the\n United brand and access to MileagePlus member lists; advertising;\n baggage services; and airport lounge usage (together, excluding\n “the air transportation element,” the\n “marketing-related deliverables”).
\n\n The fair value\n of the elements is determined using management’s estimated\n selling price of each element. The objective of using the estimated\n selling price based methodology is to determine the price at which\n we would transact a sale if the product or service were sold on a\n stand-alone basis. Accordingly, we determine our best estimate of\n selling price by considering multiple inputs and methods including,\n but not limited to, discounted cash flows, brand value, volume\n discounts, published selling prices, number of miles awarded and\n number of miles redeemed. The Company estimated the selling prices\n and volumes over the term of the Co-Brand Agreement in order to\n determine the allocation of proceeds to each of the multiple\n elements to be delivered. The method for determining the selling\n price of the mile component changed March 30, 2014, as\n described above. We also evaluate volumes on an annual basis, which\n may result in a change in the allocation of estimated selling price\n on a prospective basis.
\n\n The Company\n records passenger revenue related to the air transportation element\n when the transportation is delivered. The other elements are\n generally recognized as Other operating revenue when\n earned.
\n\n Expiration\n of Miles
\n\n The Company\n accounts for miles sold and awarded that will never be redeemed by\n program members, which we refer to as breakage. The Company reviews\n its breakage estimates annually based upon the latest available\n information regarding redemption and expiration patterns. Miles\n expire after 18 months of member account inactivity.
\n\n The\n Company’s estimate of the expected expiration of miles\n requires significant management judgment. Current and future\n changes to expiration assumptions or to the expiration policy, or\n to program rules and program redemption opportunities, may result\n in material changes to the deferred revenue balance as well as\n recognized revenues from the programs.
\n\n Other\n Information
\n\n The following\n table provides additional information related to the frequent flyer\n program (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Year\n Ended \n\n December 31, \n | \n \n | Cash Proceeds \n from Miles Sold | \n \n | \n | Other Revenue \n Recognized Upon \n Award of Miles \n to Third-Party \n Customers (a) | \n \n | \n | Increase in Frequent \n Flyer Deferred \n Revenue for Miles \n Awarded (b) | \n \n | \n | Increase \n (Decrease) in \n Advanced \n Purchase of \n Miles (c) | \n \n | ||||
| \n 2014 \n | \n \n | $ | \n2,861 | \n\n | \n | $ | \n882 | \n\n | \n | $ | \n2,178 | \n\n | \n | $ | \n(199) | \n\n |
| \n 2013 \n | \n \n | \n | 2,903 | \n\n | \n | \n | 903 | \n\n | \n | \n | 2,174 | \n\n | \n | \n | (174) | \n\n |
| \n 2012 \n | \n \n | \n | 2,852 | \n\n | \n | \n | 816 | \n\n | \n | \n | 2,036 | \n\n | \n | \n | — | \n\n |
| \n \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | |||
| (a) This amount represents\n other revenue recognized during the period from the sale of miles\n to third parties, representing the marketing-related deliverable\n services component of the sale. | \n\n | |||||||||||||||
| (b) This amount represents\n the increase to frequent flyer deferred revenue during the\n period. | \n\n | |||||||||||||||
| (c) This amount represents\n the net increase (decrease) in the advance purchase of miles\n obligation due to cash payments for the sale of miles in excess of\n (less than) miles awarded to customers. | \n\n |
| Long-Lived Asset\n Impairments—The Company evaluates the carrying value of\n long-lived assets subject to amortization whenever events or\n changes in circumstances indicate that an impairment may exist. For\n purposes of this testing, the Company has generally identified the\n aircraft fleet type as the lowest level of identifiable cash flows\n for purposes of testing aircraft for impairment. An impairment\n charge is recognized when the asset’s carrying value exceeds\n its net undiscounted future cash flows and its fair market value.\n The amount of the charge is the difference between the\n asset’s carrying value and fair market value. See Note 17 of\n this report for additional information related to asset\n impairments. | \n
| Uncertain Income Tax\n Positions—The Company has recorded reserves for income\n taxes and associated interest that may become payable in future\n years. Although management believes that its positions taken on\n income tax matters are reasonable, the Company nevertheless has\n established tax and interest reserves in recognition that various\n taxing authorities may challenge certain of the positions taken by\n the Company, potentially resulting in additional liabilities for\n taxes and interest. The Company’s uncertain tax position\n reserves are reviewed periodically and are adjusted as events occur\n that affect its estimates, such as the availability of new\n information, the lapsing of applicable statutes of limitation, the\n conclusion of tax audits, the measurement of additional estimated\n liability, the identification of new tax matters, the release of\n administrative tax guidance affecting its estimates of tax\n liabilities, or the rendering of relevant court decisions. The\n Company records penalties and interest relating to uncertain tax\n positions in Other operating expense and Interest expense,\n respectively, in its consolidated statements of operations. The\n Company has not recorded any significant expense or liabilities\n related to interest or penalties in its consolidated financial\n statements. | \n
NOTE 13 - LEASES AND\n CAPACITY PURCHASE AGREEMENTS
\nUnited leases aircraft,\n airport passenger terminal space, aircraft hangars and related\n maintenance facilities, cargo terminals, other airport facilities,\n other commercial real estate, office and computer equipment and\n vehicles.
\nAt December 31, 2014,\n United’s scheduled future minimum lease payments under\n operating leases having initial or remaining noncancelable lease\n terms of more than one year, aircraft leases, including aircraft\n rent under CPAs and capital leases (substantially all of which are\n for aircraft) were as follows (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Capital Leases (a) | \n\n | \n | Facility and Other \n Operating Leases (b) | \n \n | \n | Aircraft Operating \n Leases (c) | \n \n | |||
| \n 2015 \n | \n \n | $ | \n168 | \n\n | \n | $ | \n1,283 | \n\n | \n | $ | \n1,446 | \n\n |
| \n 2016 \n | \n \n | \n | 154 | \n\n | \n | \n | 1,123 | \n\n | \n | \n | 1,247 | \n\n |
| \n 2017 \n | \n \n | \n | 115 | \n\n | \n | \n | 1,089 | \n\n | \n | \n | 1,147 | \n\n |
| \n 2018 \n | \n \n | \n | 104 | \n\n | \n | \n | 842 | \n\n | \n | \n | 908 | \n\n |
| \n 2019 \n | \n \n | \n | 38 | \n\n | \n | \n | 766 | \n\n | \n | \n | 682 | \n\n |
| \n After\n 2019 \n | \n \n | \n | 495 | \n\n | \n | \n | 7,919 | \n\n | \n | \n | 1,910 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Minimum lease\n payments \n | \n \n | $ | \n1,074 | \n\n | \n | $ | \n13,022 | \n\n | \n | $ | \n7,340 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Imputed interest \n | \n \n | \n | (393) | \n\n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Present value of minimum\n lease payments \n | \n \n | \n | 681 | \n\n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Current portion \n | \n \n | \n | (110) | \n\n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Long-term obligations under\n capital leases \n | \n \n | $ | \n571 | \n\n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n\n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n |
(a) As of December 31,\n 2014, United’s aircraft capital lease minimum payments relate\n to leases of 37 mainline and 38 regional aircraft as well as to\n leases of nonaircraft assets. Imputed interest rate ranges are 3.5%\n to 18.3%.
\n(b) See Note 17 of this\n report for additional information related to facility and other\n operating leases at Hopkins International Airport\n (“Cleveland”).
\n(c) The operating lease\n payments presented above include future payments of $72 million\n related to 21 nonoperating aircraft as of December 31,\n 2014.
\nAircraft operating leases\n have initial terms of six to twenty-eight years, with\n expiration dates ranging from 2015 through 2024. Under the terms of\n most leases, United has the right to purchase the aircraft at the\n end of the lease term, in some cases at fair market value, and in\n others, at fair market value or a percentage of cost. United has\n facility operating leases that extend to 2041.
\nUnited is the lessee of\n real property under long-term operating leases at a number of\n airports where we are also the guarantor of approximately $1.5\n billion of underlying debt and interest thereon as of\n December 31, 2014. These leases are typically with\n municipalities or other governmental entities, which are excluded\n from the consolidation requirements concerning a variable interest\n entity (“VIE”). To the extent United’s\n leases and related guarantees are with a separate legal entity\n other than a governmental entity, United is not the primary\n beneficiary because the lease terms are consistent with market\n terms at the inception of the lease and the lease does not include\n a residual value guarantee, fixed-price purchase option, or similar\n feature.
\n\n
\nIn September 2014, United\n entered into a 10-year lease extension through 2035 with the City\n and County of Denver to continue its use of the airport terminal\n space at Denver International Airport. This extension is expected\n to result in annual cost savings through 2025 for the\n Company.
\nIn November 2013, United\n signed a lease amendment with the City of Los Angeles and Los\n Angeles World Airports (“LAWA”) to its terminal\n facilities lease at Los Angeles International Airport\n (“LAX”). The amendment allows United to make\n approximately $450 million in renovations at LAX that we expect to\n complete in late 2017. United will fund the cost of these\n renovations and LAWA will acquire the improvements at the end of\n each designated construction phase through a cash payment at the\n construction cost. United expects to be considered the owner of the\n property during and after the construction period for accounting\n purposes. As a result, the construction project will be included on\n the Company’s balance sheet as operating property and\n equipment and with the construction obligation under other\n liabilities.
\nUnited’s nonaircraft\n rent expense was approximately $1.4 billion, $1.3 billion and $1.3\n billion for the years ended December 31, 2014, 2013 and 2012,\n respectively.
\nIn addition to nonaircraft\n rent and aircraft rent, which is separately presented in the\n consolidated statements of operations, United had aircraft rent\n related to regional aircraft operating leases, which is included as\n part of regional capacity purchase expense in United’s\n consolidated statement of operations, of $442 million, $428 million\n and $463 million for the years ended December 31, 2014, 2013\n and 2012, respectively.
\nIn connection with UAL\n Corporation’s and United Air Lines, Inc.’s fresh-start\n reporting requirements upon their exit from Chapter 11 bankruptcy\n protection in 2006 and the Company’s acquisition accounting\n adjustments related to the Company’s merger transaction in\n 2010, lease valuation adjustments for operating leases were\n initially recorded in the consolidated balance sheet, representing\n the net present value of the differences between contractual lease\n rates and the fair market lease rates for similar leased assets at\n the time. An asset (liability) results when the contractual lease\n rates are more (less) favorable than market lease terms at the\n valuation date. The lease valuation adjustment is amortized on a\n straight-line basis as an increase (decrease) to rent expense over\n the individual applicable remaining lease terms, resulting in\n recognition of rent expense as if United had entered into the\n leases at market rates. The related remaining lease terms are one\n to ten years for United. The lease valuation adjustments are\n classified within other noncurrent liabilities and the net\n accretion amounts are $160 million, $173 million and $240 million\n for the years ended December 31, 2014, 2013 and 2012,\n respectively.
\nRegional\n CPAs
\nUnited has CPAs with\n certain regional carriers. We purchase all of the capacity from the\n flights covered by the CPA at a negotiated price. We pay the\n regional carrier a pre-determined rate, subject to annual inflation\n adjustments, primarily for block hours flown (the hours from gate\n departure to gate arrival) and other operating factors and\n reimburse the regional carrier for various pass-through expenses\n related to the flights. Under the CPAs, we are responsible for the\n cost of providing fuel for all flights and for paying aircraft rent\n for all of the aircraft covered by the CPAs. Generally, the\n CPAs contain incentive bonus and rebate provisions based upon each\n regional carrier’s operational performance. United’s\n CPAs are for 566 regional aircraft, and the CPAs have terms\n expiring through 2029. Aircraft operated under CPAs include\n aircraft leased directly from the regional carriers and those owned\n by United or leased from third-party lessors and operated by the\n regional carriers.
\nIn September 2014, United\n entered into an amendment to a contract with Shuttle America\n Corporation (“Shuttle America”), a wholly-owned\n subsidiary of Republic Airways Holdings, for Shuttle America to\n operate 50 new Embraer S.A. (“Embraer”) 175 aircraft\n under the United Express brand and extend the term of 38 existing\n Embraer 170 aircraft operating under the United Express brand.\n Shuttle America will acquire fifty 76-seat Embraer E175 aircraft\n with deliveries from 2015 through 2017, although United has the\n right to acquire the aircraft under certain circumstances and lease\n the aircraft to Shuttle America. These 50 aircraft are in addition\n to United’s other 70 Embraer E175 aircraft that are currently\n being operated or will in the future be operated by different\n United Express carriers under CPAs. In a separate but related\n amendment with Republic Airways Holdings Inc. and its subsidiary,\n Republic Airline Inc. (“Republic”), United and Republic\n agreed to remove 31 Q400 aircraft from United Express service in\n 2015 and 2016.
\n\n
\nIn May 2013, United entered\n into a CPA with SkyWest Airlines, Inc. (“SkyWest”), a\n wholly-owned subsidiary of SkyWest, Inc. to operate 40 Embraer E175\n aircraft under the United Express brand. As of December 31,\n 2014, SkyWest is operating 19 of these aircraft and expects to\n bring into service the remaining 21 aircraft in 2015.
\nIn April 2013, United\n agreed to purchase 30 Embraer E175 aircraft. In August 2013, United\n entered into a CPA with Mesa Air Group, Inc. and Mesa Airlines,\n Inc. (“Mesa”), a wholly-owned subsidiary of Mesa Air\n Group, Inc., for Mesa to operate these 30 Embraer E175 aircraft\n under the United Express brand. As of December 31, 2014, Mesa\n is operating 14 of these aircraft with the remaining aircraft to be\n brought into service in 2015.
\nOur future commitments\n under our CPAs are dependent on numerous variables, and are\n therefore difficult to predict. The most important of these\n variables is the number of scheduled block hours. Although we\n are not required to purchase a minimum number of block hours under\n certain of our CPAs, we have set forth below estimates of our\n future payments under the CPAs based on our\n assumptions. United’s estimates of its future payments\n under all of the CPAs do not include the portion of the underlying\n obligation for any aircraft leased to ExpressJet or deemed to be\n leased from other regional carriers and facility rent that are\n disclosed as part of aircraft and nonaircraft operating\n leases. For purposes of calculating these estimates, we have\n assumed (1) the number of block hours flown is based on our\n anticipated level of flight activity or at any contractual minimum\n utilization levels if applicable, whichever is higher,\n (2) that we will reduce the fleet as rapidly as contractually\n allowed under each CPA, (3) that aircraft utilization, stage\n length and load factors will remain constant, (4) that each\n carrier’s operational performance will remain at historic\n levels and (5) an annual projected inflation rate. These\n amounts exclude variable pass-through costs such as fuel and\n landing fees, among others. Based on these assumptions as of\n December 31, 2014, our future payments through the end of the\n terms of our CPAs are presented in the table below (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n |
| \n 2015 \n | \n \n | $ | \n1,893 | \n\n |
| \n 2016 \n | \n \n | \n | 1,760 | \n\n |
| \n 2017 \n | \n \n | \n | 1,653 | \n\n |
| \n 2018 \n | \n \n | \n | 1,301 | \n\n |
| \n 2019 \n | \n \n | \n | 973 | \n\n |
| \n After 2019 \n | \n \n | \n | 3,497 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | $ | \n11,077 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
It is important to note\n that the actual amounts we pay to our regional operators under CPAs\n could differ materially from these estimates. For example, a\n 10% increase or decrease in scheduled block hours for all of\n United’s regional operators (whether as a result of changes\n in average daily utilization or otherwise) in 2015 would result in\n a corresponding change in annual cash obligations under the CPAs of\n approximately $152 million (8.0%).
\n| Recently Issued\n Accounting Standards—In May 2014, the Financial\n Accounting Standards Board (“FASB”) amended the FASB\n Accounting Standards Codification and created a new Topic 606,\n Revenue from Contracts with Customers. This amendment prescribes\n that an entity should recognize revenue to depict the transfer of\n promised goods or services to customers in an amount that reflects\n the consideration to which the entity expects to be entitled in\n exchange for those goods or services. The amendment supersedes the\n revenue recognition requirements in Topic 605, Revenue Recognition,\n and most industry-specific guidance throughout the Industry Topics\n of the Codification. The amendments will become effective for the\n Company’s annual and interim reporting periods beginning\n January 1, 2017. Under the new standard, certain airline\n ancillary fees directly related to passenger revenue tickets, such\n as airline change fees and baggage fees, are likely to no longer be\n considered distinct performance obligations separate from the\n passenger travel component. In addition, the change fees which were\n previously recognized when incurred, will likely be recognized when\n transportation is provided. The Company is evaluating other impacts\n on its consolidated financial statements. | \n
NOTE 8 - PENSION AND\n OTHER POSTRETIREMENT PLANS
\nThe following summarizes\n the significant pension and other postretirement plans of\n United:
\nPension\n Plans
\nUnited maintains two\n primary defined benefit pension plans, one covering certain pilot\n employees and another covering certain U.S. non-pilot employees.\n Each of these plans provide benefits based on a combination of\n years of benefit accruals service and an employee’s final\n average compensation. Additional benefit accruals were frozen under\n the plan covering certain pilot employees during 2005 and\n management and administrative employees as of December 31,\n 2013 at which time any existing accrued benefits for those\n employees were preserved. Benefit accruals for certain non-pilot\n employees under its other primary defined benefit pension plan\n continue. United maintains additional defined benefit pension\n plans, which cover certain international employees.
\nOther Postretirement\n Plans
\nWe maintain postretirement\n medical programs which provide medical benefits to certain retirees\n and eligible dependents, as well as life insurance benefits to\n certain retirees participating in the plan. Benefits provided are\n subject to applicable contributions, co-payments, deductible and\n other limits as described in the specific plan\n documentation.
\n\n
\nChanges in benefits that\n either qualified as curtailments (which reduced prior actuarial\n losses) or negative plan amendments are detailed in the tables\n below. Actuarial assumption changes are reflected as a component of\n the net actuarial gains/(losses) during 2014 and 2013. These\n amounts will be amortized over the average remaining service life\n of the covered active employees or the average life expectancy of\n inactive participants and will impact 2014 and 2013 pension and\n retiree medical expense as described below.
\nThe following table sets\n forth the reconciliation of the beginning and ending balances of\n the benefit obligation and plan assets, the funded status and the\n amounts recognized in these financial statements for the defined\n benefit and other postretirement plans (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Pension Benefits | \n\n | |||||
| \n | \n | Year Ended \n December 31, 2014 | \n \n | \n | Year Ended \n December 31, 2013 | \n \n | ||
| \n Accumulated benefit\n obligation: \n | \n \n | $ | \n4,068 | \n\n | \n | $ | \n3,383 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Change in projected benefit\n obligation: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Projected benefit\n obligation at beginning of year \n | \n \n | $ | \n4,000 | \n\n | \n | $ | \n4,526 | \n\n |
| \n Service cost \n | \n \n | \n | 98 | \n\n | \n | \n | 121 | \n\n |
| \n Interest cost \n | \n \n | \n | 201 | \n\n | \n | \n | 191 | \n\n |
| \n Actuarial (gain)\n loss \n | \n \n | \n | 807 | \n\n | \n | \n | (464) | \n\n |
| \n Gross benefits paid and\n settlements \n | \n \n | \n | (281) | \n\n | \n | \n | (269) | \n\n |
| \n Curtailments \n | \n \n | \n | — | \n\n | \n | \n | (84) | \n\n |
| \n Other \n | \n \n | \n | (22) | \n\n | \n | \n | (21) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Projected benefit\n obligation at end of year \n | \n \n | $ | \n4,803 | \n\n | \n | $ | \n4,000 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Change in plan\n assets: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Fair value of plan assets\n at beginning of year \n | \n \n | $ | \n2,397 | \n\n | \n | $ | \n2,157 | \n\n |
| \n Actual gain on plan\n assets \n | \n \n | \n | 151 | \n\n | \n | \n | 239 | \n\n |
| \n Employer\n contributions \n | \n \n | \n | 307 | \n\n | \n | \n | 277 | \n\n |
| \n Gross benefits paid and\n settlements \n | \n \n | \n | (281) | \n\n | \n | \n | (269) | \n\n |
| \n Other \n | \n \n | \n | (12) | \n\n | \n | \n | (7) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Fair value of plan assets\n at end of year \n | \n \n | $ | \n2,562 | \n\n | \n | $ | \n2,397 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Funded status—Net\n amount recognized \n | \n \n | $ | \n(2,241) | \n\n | \n | $ | \n(1,603) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Pension Benefits | \n\n | |||||
| \n | \n | December 31, 2014 | \n\n | \n | December 31, 2013 | \n\n | ||
| \n Amounts recognized in the\n consolidated balance sheets consist of: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Noncurrent asset \n | \n \n | $ | \n2 | \n\n | \n | $ | \n49 | \n\n |
| \n Current\n liability \n | \n \n | \n | (17) | \n\n | \n | \n | (2) | \n\n |
| \n Noncurrent\n liability \n | \n \n | \n | (2,226) | \n\n | \n | \n | (1,650) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total liability \n | \n \n | $ | \n(2,241) | \n\n | \n | $ | \n(1,603) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Amounts recognized in\n accumulated other comprehensive loss consist of: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Net actuarial\n loss \n | \n \n | $ | \n(982) | \n\n | \n | $ | \n(162) | \n\n |
| \n Prior service\n loss \n | \n \n | \n | (1) | \n\n | \n | \n | — | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total accumulated other\n comprehensive loss \n | \n \n | $ | \n(983) | \n\n | \n | $ | \n(162) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Other Postretirement Benefits | \n\n | |||||
| \n | \n | Year Ended \n December 31, 2014 | \n \n | \n | Year Ended \n December 31, 2013 | \n \n | ||
| \n Change in benefit\n obligation: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Benefit obligation at\n beginning of year \n | \n \n | $ | \n1,819 | \n\n | \n | $ | \n2,743 | \n\n |
| \n Service cost \n | \n \n | \n | 19 | \n\n | \n | \n | 52 | \n\n |
| \n Interest cost \n | \n \n | \n | 88 | \n\n | \n | \n | 110 | \n\n |
| \n Plan participants’\n contributions \n | \n \n | \n | 67 | \n\n | \n | \n | 67 | \n\n |
| \n Actuarial (gain)\n loss \n | \n \n | \n | 262 | \n\n | \n | \n | (640) | \n\n |
| \n Federal subsidy \n | \n \n | \n | 4 | \n\n | \n | \n | 7 | \n\n |
| \n Plan amendments \n | \n \n | \n | (3) | \n\n | \n | \n | (331) | \n\n |
| \n Curtailments \n | \n \n | \n | 8 | \n\n | \n | \n | 8 | \n\n |
| \n Gross benefits\n paid \n | \n \n | \n | (212) | \n\n | \n | \n | (197) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Benefit obligation at end\n of year \n | \n \n | $ | \n2,052 | \n\n | \n | $ | \n1,819 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Change in plan\n assets: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Fair value of plan assets\n at beginning of year \n | \n \n | $ | \n57 | \n\n | \n | $ | \n58 | \n\n |
| \n Actual return on plan\n assets \n | \n \n | \n | 1 | \n\n | \n | \n | 1 | \n\n |
| \n Employer\n contributions \n | \n \n | \n | 144 | \n\n | \n | \n | 128 | \n\n |
| \n Plan participants’\n contributions \n | \n \n | \n | 67 | \n\n | \n | \n | 67 | \n\n |
| \n Benefits paid \n | \n \n | \n | (212) | \n\n | \n | \n | (197) | \n\n |
| \n Fair value of plan assets\n at end of year \n | \n \n | \n | 57 | \n\n | \n | \n | 57 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Funded status—Net\n amount recognized \n | \n \n | $ | \n(1,995) | \n\n | \n | $ | \n(1,762) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Other Postretirement Benefits | \n\n | |||||
| \n | \n | December 31, 2014 | \n\n | \n | December 31, 2013 | \n\n | ||
| \n Amounts recognized in the\n consolidated balance sheets consist of: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Current\n liability \n | \n \n | $ | \n(62) | \n\n | \n | $ | \n(59) | \n\n |
| \n Noncurrent\n liability \n | \n \n | \n | (1,933) | \n\n | \n | \n | (1,703) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total liability \n | \n \n | $ | \n(1,995) | \n\n | \n | $ | \n(1,762) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| Amounts recognized in accumulated other comprehensive income\n consist of: | \n\n | \n | \n | \n | \n | \n | \n | \n |
| \n Net actuarial\n gain \n | \n \n | $ | \n233 | \n\n | \n | $ | \n555 | \n\n |
| \n Prior service\n credit \n | \n \n | \n | 278 | \n\n | \n | \n | 306 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total accumulated other\n comprehensive income \n | \n \n | $ | \n511 | \n\n | \n | $ | \n861 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
The following information\n relates to all pension plans with an accumulated benefit obligation\n and a projected benefit obligation in excess of plan assets at\n December 31 (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 2014 | \n\n | \n | 2013 | \n\n | ||
| \n Projected benefit\n obligation \n | \n \n | $ | \n4,625 | \n\n | \n | $ | \n3,820 | \n\n |
| \n Accumulated benefit\n obligation \n | \n \n | \n | 3,930 | \n\n | \n | \n | 3,245 | \n\n |
| \n Fair value of plan\n assets \n | \n \n | \n | 2,387 | \n\n | \n | \n | 2,176 | \n\n |
\n
\nNet periodic benefit cost\n for the years ended December 31 included the following\n components (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 2014 | \n\n | \n | 2013 | \n\n | \n | 2012 | \n\n | |||||||||||||||
| \n | \n | Pension \n Benefits | \n \n | \n | Other \n Postretirement \n Benefits | \n \n | \n | Pension \n Benefits | \n \n | \n | Other \n Postretirement \n Benefits | \n \n | \n | Pension \n Benefits | \n \n | \n | Other \n Postretirement \n Benefits | \n \n | ||||||
| Service cost | \n\n | $ | \n98 | \n\n | \n | $ | \n19 | \n\n | \n | $ | \n121 | \n\n | \n | $ | \n52 | \n\n | \n | $ | \n99 | \n\n | \n | $ | \n50 | \n\n |
| Interest cost | \n\n | \n | 201 | \n\n | \n | \n | 88 | \n\n | \n | \n | 191 | \n\n | \n | \n | 110 | \n\n | \n | \n | 184 | \n\n | \n | \n | 124 | \n\n |
| Expected return on plan assets | \n\n | \n | (180) | \n\n | \n | \n | (2) | \n\n | \n | \n | (163) | \n\n | \n | \n | (2) | \n\n | \n | \n | (138) | \n\n | \n | \n | (2) | \n\n |
| Curtailment loss | \n\n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 2 | \n\n | \n | \n | 2 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| Amortization of prior service credits | \n\n | \n | — | \n\n | \n | \n | (31) | \n\n | \n | \n | — | \n\n | \n | \n | (3) | \n\n | \n | \n | (1) | \n\n | \n | \n | — | \n\n |
| Settlement (gain) loss | \n\n | \n | 1 | \n\n | \n | \n | — | \n\n | \n | \n | (10) | \n\n | \n | \n | — | \n\n | \n | \n | 1 | \n\n | \n | \n | — | \n\n |
| Amortization of unrecognized actuarial (gain) loss | \n\n | \n | 12 | \n\n | \n | \n | (47) | \n\n | \n | \n | 48 | \n\n | \n | \n | 3 | \n\n | \n | \n | 21 | \n\n | \n | \n | (3) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| Net periodic benefit cost | \n\n | $ | \n132 | \n\n | \n | $ | \n27 | \n\n | \n | $ | \n189 | \n\n | \n | $ | \n162 | \n\n | \n | $ | \n166 | \n\n | \n | $ | \n169 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
The estimated amounts that\n will be amortized in 2015 out of accumulated other comprehensive\n income (loss) into net periodic benefit cost are as follows (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Pension \n Benefits | \n \n | \n | Other \n Postretirement \n Benefits | \n \n | ||
| \n Actuarial (gain)\n loss \n | \n \n | $ | \n87 | \n\n | \n | $ | \n(22) | \n\n |
| \n Prior service\n credit \n | \n \n | \n | — | \n\n | \n | \n | (32) | \n\n |
The assumptions used for\n the benefit plans were as follows:
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | \n | Pension Benefits | \n\n | ||||
| \n Assumptions used to\n determine benefit obligations \n | \n \n | \n | \n2014 | \n\n | \n | \n | \n2013 | \n\n |
| \n Discount rate \n | \n \n | \n | 4.20% | \n\n | \n | \n | 5.09% | \n\n |
| \n Rate of compensation\n increase \n | \n \n | \n | 3.66% | \n\n | \n | \n | 3.49% | \n\n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Assumptions used to\n determine net expense \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Discount rate \n | \n \n | \n | 5.10% | \n\n | \n | \n | 4.48% | \n\n |
| \n Expected return on plan\n assets \n | \n \n | \n | 7.36% | \n\n | \n | \n | 7.56% | \n\n |
| \n Rate of compensation\n increase \n | \n \n | \n | 3.50% | \n\n | \n | \n | 2.48% | \n\n |
\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Other Postretirement Benefits | \n\n | |||||
| Assumptions used to determine benefit\n obligations | \n\n | 2014 | \n\n | \n | 2013 | \n\n | ||
| \n Discount rate \n | \n \n | \n | 4.07% | \n\n | \n | \n | 4.94% | \n\n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Assumptions used to\n determine net expense \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Discount rate \n | \n \n | \n | 4.94% | \n\n | \n | \n | 4.12% | \n\n |
| \n Expected return on plan\n assets \n | \n \n | \n | 4.00% | \n\n | \n | \n | 4.00% | \n\n |
| \n Health care cost trend rate\n assumed for next year \n | \n \n | \n | 7.00% | \n\n | \n | \n | 7.25% | \n\n |
| \n Rate to which the cost\n trend rate is assumed to decline (ultimate trend rate in\n 2023) \n | \n \n | \n | 5.00% | \n\n | \n | \n | 5.00% | \n\n |
During 2014, the Company\n experienced changes in its benefit obligations related to changes\n in discount rates and mortality tables in its pension plans and\n other postretirement benefit plans. The Company used the Society of\n Actuaries’ 2014 mortality tables, modified to reflect the\n Social Security Administration Trustee’s Report on current\n projections regarding expected longevity improvements.
\nThe Company selected the\n 2014 discount rate for most of its plans by using a hypothetical\n portfolio of high quality bonds at December 31, 2014, that\n would provide the necessary cash flows to match projected benefit\n payments.
\nWe develop our expected\n long-term rate of return assumption for such plans based on\n historical experience and by evaluating input from the trustee\n managing the plans’ assets. Our expected long-term rate\n of return on plan assets for these plans is based on a target\n allocation of assets, which is based on our goal of earning the\n highest rate of return while maintaining risk at acceptable\n levels. The plans strive to have assets sufficiently\n diversified so that adverse or unexpected results from one security\n class will not have an unduly detrimental impact on the entire\n portfolio. Plan fiduciaries regularly review our actual asset\n allocation and the pension plans’ investments are\n periodically rebalanced to our targeted allocation when considered\n appropriate. United’s plan assets are allocated within\n the following guidelines:
\n\n
\n| \n | \n | \n | \n | \n |
| \n | \n | \n Percent of Total \n | \n \n | \n \n Expected\n Long-Term \nRate of Return \n | \n
| \n | \n | \n | \n | \n |
| \n Equity\n securities \n | \n \n | 40-54 % | \n\n | 10 % | \n
| \n Fixed-income\n securities \n | \n \n | 26-34 | \n\n | 4 | \n
| \n Alternatives \n | \n \n | 14-20 | \n\n | 7 | \n
| \n Other \n | \n \n | 4-8 | \n\n | 6 | \n
One-hundred percent of\n other postretirement plan assets are invested in a deposit\n administration fund.
\nAssumed health care cost\n trend rates have a significant effect on the amounts reported for\n the other postretirement plans. A 1% change in the assumed health\n care trend rate for the Company would have the following additional\n effects (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 1% Increase | \n\n | \n | 1% Decrease | \n\n | ||
| \n Effect on total service and\n interest cost for the year ended December 31, 2014 \n | \n \n | $ | \n13 | \n\n | \n | $ | \n(11) | \n\n |
| \n Effect on postretirement\n benefit obligation at December 31, 2014 \n | \n \n | \n | 254 | \n\n | \n | \n | (220) | \n\n |
A one percentage point\n decrease in the weighted average discount rate would increase the\n postretirement benefit liability by approximately $247 million and\n increase the estimated 2014 benefits expense by approximately $10\n million.
\n\n
\nFair Value\n Information. Accounting standards require us to use\n valuation techniques to measure fair value that maximize the use of\n observable inputs and minimize the use of unobservable\n inputs. These inputs are prioritized as follows:
\n\n
\n| \n | \n | \n |
| \n Level 1 \n | \n \n | Unadjusted quoted prices in active markets for assets or\n liabilities identical to those to be reported at fair\n value | \n
| \n Level 2 \n | \n \n | Other inputs that are observable directly or indirectly,\n such as quoted prices for similar assets or liabilities or\n market-corroborated inputs | \n
| \n Level 3 \n | \n \n | Unobservable inputs for which there is little or no market\n data and which require us to develop our own assumptions about how\n market participants would price the assets or\n liabilities | \n
Assets and liabilities\n measured at fair value are based on the valuation techniques\n identified in the tables below. The valuation techniques are as\n follows:
\n(a) Market approach.\n Prices and other relevant information generated by market\n transactions involving identical or comparable assets and\n liabilities; and
\n(b) Income approach.\n Techniques to convert future amounts to a single current value\n based on market expectations (including present value techniques,\n option-pricing and excess earnings models).
\nThe following tables\n present information about United’s pension and other\n postretirement plan assets at December 31 (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 2014 | \n\n | \n | \n | \n\n | 2013 | \n\n | ||||||||||||||||||||||||||
| Pension Plan Assets: | \n\n | Total | \n\n | \n | Level 1 | \n\n | \n | Level 2 | \n\n | \n | Level 3 | \n\n | \n | \n | \n\n | Total | \n\n | \n | Level 1 | \n\n | \n | Level 2 | \n\n | \n | Level 3 | \n\n | ||||||||
| \n Equity securities\n funds \n | \n \n | $ | \n1,181 | \n\n | \n | $ | \n388 | \n\n | \n | $ | \n793 | \n\n | \n | $ | \n— | \n\n | \n | \n | \n\n | $ | \n1,158 | \n\n | \n | $ | \n389 | \n\n | \n | $ | \n769 | \n\n | \n | $ | \n— | \n\n |
| \n Fixed-income\n securities \n | \n \n | \n | 813 | \n\n | \n | \n | — | \n\n | \n | \n | 813 | \n\n | \n | \n | — | \n\n | \n | \n | \n\n | \n | 702 | \n\n | \n | \n | — | \n\n | \n | \n | 698 | \n\n | \n | \n | 4 | \n\n |
| \n Alternatives \n | \n \n | \n | 359 | \n\n | \n | \n | — | \n\n | \n | \n | 148 | \n\n | \n | \n | 211 | \n\n | \n | \n | \n\n | \n | 405 | \n\n | \n | \n | — | \n\n | \n | \n | 199 | \n\n | \n | \n | 206 | \n\n |
| \n Insurance\n contract \n | \n \n | \n | 21 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 21 | \n\n | \n | \n | \n\n | \n | 26 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 26 | \n\n |
| \n Other\n investments \n | \n \n | \n | 188 | \n\n | \n | \n | — | \n\n | \n | \n | 165 | \n\n | \n | \n | 23 | \n\n | \n | \n | \n\n | \n | 106 | \n\n | \n | \n | — | \n\n | \n | \n | 106 | \n\n | \n | \n | — | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n\n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total \n | \n \n | $ | \n2,562 | \n\n | \n | $ | \n388 | \n\n | \n | $ | \n1,919 | \n\n | \n | $ | \n255 | \n\n | \n | \n | \n\n | $ | \n2,397 | \n\n | \n | $ | \n389 | \n\n | \n | $ | \n1,772 | \n\n | \n | $ | \n236 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n\n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| Other Postretirement Benefit Plan Assets: | \n\n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n\n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Deposit administration\n fund \n | \n \n | $ | \n57 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n— | \n\n | \n | $ | \n57 | \n\n | \n | \n | \n\n | $ | \n57 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n— | \n\n | \n | $ | \n57 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n\n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
Equity and Fixed-Income\n Securities. Equity securities include investments in both\n developed market and emerging market equity securities.\n Fixed-income securities include primarily U.S. and non-U.S.\n government fixed-income securities and U.S. and non-U.S corporate\n fixed-income securities.
\nInsurance Contract and\n Deposit Administration Fund. Each of these investments are\n stable value investment products structured to provide investment\n income.
\nAlternatives.\n Alternative investments consist primarily of investments in hedge\n funds, real estate and private equity interests.
\nOther investments.\n Other investments consist primarily of investments in currency and\n commodity commingled funds.
\n\n
\nThe reconciliation of\n United’s defined benefit plan assets measured at fair value\n using unobservable inputs (Level 3) for the years ended\n December 31, 2014 and 2013 is as follows (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 2014 | \n\n | \n | 2013 | \n\n | ||
| \n Balance at beginning of\n year \n | \n \n | $ | \n293 | \n\n | \n | $ | \n256 | \n\n |
| \n Actual return\n on plan assets: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Sold during the\n year \n | \n \n | \n | 7 | \n\n | \n | \n | 15 | \n\n |
| \n Held at year\n end \n | \n \n | \n | 6 | \n\n | \n | \n | 7 | \n\n |
| \n Purchases,\n sales, issuances and settlements (net) \n | \n \n | \n | 6 | \n\n | \n | \n | 15 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Balance at end of\n year \n | \n \n | $ | \n312 | \n\n | \n | $ | \n293 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
Funding requirements for\n tax-qualified defined benefit pension plans are determined by\n government regulations. United’s contributions reflected\n above have satisfied its required contributions through the 2014\n calendar year. In 2015, employer anticipated contributions to all\n of United’s pension and postretirement plans are at least\n $400 million and approximately $120 million,\n respectively.
\nThe estimated future\n benefit payments, net of expected participant contributions, in\n United’s pension plans and other postretirement benefit plans\n as of December 31, 2014 are as follows (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Pension | \n\n | \n | Other \n \n Postretirement | \n \n | \n | Other Postretirement— \n \n subsidy\n receipts | \n \n | |||
| \n 2015 \n | \n \n | $ | \n299 | \n\n | \n | $ | \n125 | \n\n | \n | $ | \n6 | \n\n |
| \n 2016 \n | \n \n | \n | 283 | \n\n | \n | \n | 126 | \n\n | \n | \n | 7 | \n\n |
| \n 2017 \n | \n \n | \n | 294 | \n\n | \n | \n | 129 | \n\n | \n | \n | 8 | \n\n |
| \n 2018 \n | \n \n | \n | 291 | \n\n | \n | \n | 132 | \n\n | \n | \n | 9 | \n\n |
| \n 2019 \n | \n \n | \n | 293 | \n\n | \n | \n | 135 | \n\n | \n | \n | 9 | \n\n |
| \n Years 2020 –\n 2024 \n | \n \n | \n | 1,581 | \n\n | \n | \n | 732 | \n\n | \n | \n | 56 | \n\n |
Defined Contribution\n Plans
\nDepending upon the employee\n group, employer contributions consist of matching contributions\n and/or non-elective employer contributions. United’s employer\n contribution percentages vary from 1% to 16% of eligible earnings\n depending on the terms of each plan. United recorded contributions\n to its defined contribution plans of $503 million, $433 million and\n $330 million in the years ended December 31, 2014, 2013 and\n 2012, respectively.
\n\n
\nMulti-Employer\n Plans
\nUnited’s\n participation in the IAM National Pension Plan (“IAM\n Plan”) for the annual period ended December 31, 2014 is\n outlined in the table below. There have been no significant changes\n that affect the comparability 2014 and 2013 contributions. The\n risks of participating in these multi-employer plans are different\n from single-employer plans, as United may be subject to additional\n risks that others do not meet their obligations, which in certain\n circumstances could revert to United. The IAM Plan reported $368\n million in employers’ contributions for the year ended\n December 31, 2013. For 2013, the Company’s contributions\n to the IAM Plan represented more than 5% of total contributions to\n the IAM Plan.
\n\n
\n| \n | \n | \n |
| \n Pension\n Fund \n | \n \n | IAM National Pension Fund | \n
| \n EIN/ Pension\n Plan Number \n | \n \n | 51-6031295 - 002 | \n
| \n Pension\n Protection Act Zone Status (2014 and 2013) \n | \n \n | Green Zone. Plans in the green zone are at least 80\n percent funded. | \n
| \n FIP/RP Status\n Pending/Implemented \n | \n \n | No | \n
| \n United’s\n Contributions \n | \n \n | $39 million, $38 million and $36 million in the years\n ended December 31, 2014, 2013 and 2012, respectively | \n
| \n Surcharge\n Imposed \n | \n \n | No | \n
| \n Expiration Date\n of Collective Bargaining Agreement \n | \n \n | N/A | \n
At the date the financial\n statements were issued, Forms 5500 were not available for the plan\n year ending in 2014.
\nProfit\n Sharing
\nSubstantially all employees\n participated in profit sharing, which depending on the work group\n and the Company’s earnings thresholds, determines profit\n sharing payments based on receiving a portion of 5%\n to 20% of total pre-tax earnings, excluding special items, profit\n sharing expense and share-based compensation expense, to eligible\n employees. Eligible U.S. co-workers in each participating work\n group received a profit sharing payout using a formula based on the\n ratio of each qualified co-worker’s annual eligible earnings\n to the eligible earnings of all qualified co-workers in all\n domestic work groups. The international profit sharing plan paid\n eligible non-U.S. co-workers based on the calculation under the\n U.S. profit sharing plan for management and administrative\n employees. The Company recorded profit sharing and related payroll\n tax expense of $235 million, $190 million and $119 million in 2014,\n 2013 and 2012, respectively. Profit sharing expense is recorded as\n a component of Salaries and related costs in the Company’s\n consolidated statements of operations.
\nThe Company’s\n operating revenue by principal geographic region (as defined by the\n U.S. Department of Transportation) for the years ended\n December 31 is presented in the table below (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n 2014 \n | \n \n | UAL | \n\n | \n | United | \n\n | ||
| \n Domestic (U.S. and\n Canada) \n | \n \n | $ | \n22,320 | \n\n | \n | $ | \n22,320 | \n\n |
| \n Pacific \n | \n \n | \n | 5,767 | \n\n | \n | \n | 5,767 | \n\n |
| \n Atlantic \n | \n \n | \n | 7,321 | \n\n | \n | \n | 7,321 | \n\n |
| \n Latin America \n | \n \n | \n | 3,493 | \n\n | \n | \n | 3,493 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total \n | \n \n | $ | \n38,901 | \n\n | \n | $ | \n38,901 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n \n 2013 \n | \n \n | \n | \n | \n | \n | \n | ||
| \n Domestic (U.S. and\n Canada) \n | \n \n | $ | \n22,092 | \n\n | \n | $ | \n22,100 | \n\n |
| \n Pacific \n | \n \n | \n | 5,794 | \n\n | \n | \n | 5,794 | \n\n |
| \n Atlantic \n | \n \n | \n | 7,132 | \n\n | \n | \n | 7,132 | \n\n |
| \n Latin America \n | \n \n | \n | 3,261 | \n\n | \n | \n | 3,261 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total \n | \n \n | $ | \n38,279 | \n\n | \n | $ | \n38,287 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n \n 2012 \n | \n \n | \n | \n | \n | \n | \n | ||
| \n Domestic (U.S. and\n Canada) \n | \n \n | $ | \n21,276 | \n\n | \n | $ | \n21,284 | \n\n |
| \n Pacific \n | \n \n | \n | 6,040 | \n\n | \n | \n | 6,040 | \n\n |
| \n Atlantic \n | \n \n | \n | 6,582 | \n\n | \n | \n | 6,582 | \n\n |
| \n Latin America \n | \n \n | \n | 3,254 | \n\n | \n | \n | 3,254 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total \n | \n \n | $ | \n37,152 | \n\n | \n | $ | \n37,160 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
\n | \n Pension Benefits | \n\n | ||||||
| \n | \n | December 31, 2014 | \n\n | \n | December 31, 2013 | \n\n | ||
| \n Amounts recognized in the\n consolidated balance sheets consist of: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Noncurrent\n asset \n | \n \n | $ | \n2 | \n\n | \n | $ | \n49 | \n\n |
| \n Current\n liability \n | \n \n | \n | (17) | \n\n | \n | \n | (2) | \n\n |
| \n Noncurrent\n liability \n | \n \n | \n | (2,226) | \n\n | \n | \n | (1,650) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total\n liability \n | \n \n | $ | \n(2,241) | \n\n | \n | $ | \n(1,603) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Amounts recognized in\n accumulated other comprehensive loss consist of: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Net actuarial\n loss \n | \n \n | $ | \n(982) | \n\n | \n | $ | \n(162) | \n\n |
| \n Prior service\n loss \n | \n \n | \n | (1) | \n\n | \n | \n | — | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total accumulated other\n comprehensive loss \n | \n \n | $ | \n(983) | \n\n | \n | $ | \n(162) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Other Postretirement Benefits | \n\n | |||||
| \n | \n | December 31, 2014 | \n\n | \n | December 31, 2013 | \n\n | ||
| \n Amounts recognized in the\n consolidated balance sheets consist of: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Current\n liability \n | \n \n | $ | \n(62) | \n\n | \n | $ | \n(59) | \n\n |
| \n Noncurrent\n liability \n | \n \n | \n | (1,933) | \n\n | \n | \n | (1,703) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total\n liability \n | \n \n | $ | \n(1,995) | \n\n | \n | $ | \n(1,762) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| Amounts recognized in accumulated other comprehensive income\n consist of: | \n\n | \n | \n | \n | \n | \n | \n | \n |
| \n Net actuarial\n gain \n | \n \n | $ | \n233 | \n\n | \n | $ | \n555 | \n\n |
| \n Prior service\n credit \n | \n \n | \n | 278 | \n\n | \n | \n | 306 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total accumulated other\n comprehensive income \n | \n \n | $ | \n511 | \n\n | \n | $ | \n861 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
The assumptions used for\n the benefit plans were as follows:
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | \n | Pension Benefits | \n\n | ||||
| \n Assumptions used to\n determine benefit obligations \n | \n \n | \n | \n2014 | \n\n | \n | \n | \n2013 | \n\n |
| \n Discount rate \n | \n \n | \n | 4.20% | \n\n | \n | \n | 5.09% | \n\n |
| \n Rate of compensation\n increase \n | \n \n | \n | 3.66% | \n\n | \n | \n | 3.49% | \n\n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Assumptions used to\n determine net expense \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Discount rate \n | \n \n | \n | 5.10% | \n\n | \n | \n | 4.48% | \n\n |
| \n Expected return on plan\n assets \n | \n \n | \n | 7.36% | \n\n | \n | \n | 7.56% | \n\n |
| \n Rate of compensation\n increase \n | \n \n | \n | 3.50% | \n\n | \n | \n | 2.48% | \n\n |
\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Other Postretirement Benefits | \n\n | |||||
| Assumptions used to determine benefit\n obligations | \n\n | 2014 | \n\n | \n | 2013 | \n\n | ||
| \n Discount rate \n | \n \n | \n | 4.07% | \n\n | \n | \n | 4.94% | \n\n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Assumptions used to\n determine net expense \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Discount rate \n | \n \n | \n | 4.94% | \n\n | \n | \n | 4.12% | \n\n |
| \n Expected return on plan\n assets \n | \n \n | \n | 4.00% | \n\n | \n | \n | 4.00% | \n\n |
| \n Health care cost trend rate\n assumed for next year \n | \n \n | \n | 7.00% | \n\n | \n | \n | 7.25% | \n\n |
| \n Rate to which the cost\n trend rate is assumed to decline (ultimate trend rate in\n 2023) \n | \n \n | \n | 5.00% | \n\n | \n | \n | 5.00% | \n\n |
The following tables\n present information about United’s pension and other\n postretirement plan assets at December 31 (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 2014 | \n\n | \n | \n | \n\n | 2013 | \n\n | ||||||||||||||||||||||||||
| Pension Plan Assets: | \n\n | Total | \n\n | \n | Level 1 | \n\n | \n | Level 2 | \n\n | \n | Level 3 | \n\n | \n | \n | \n\n | Total | \n\n | \n | Level 1 | \n\n | \n | Level 2 | \n\n | \n | Level 3 | \n\n | ||||||||
| \n Equity securities\n funds \n | \n \n | $ | \n1,181 | \n\n | \n | $ | \n388 | \n\n | \n | $ | \n793 | \n\n | \n | $ | \n— | \n\n | \n | \n | \n\n | $ | \n1,158 | \n\n | \n | $ | \n389 | \n\n | \n | $ | \n769 | \n\n | \n | $ | \n— | \n\n |
| \n Fixed-income\n securities \n | \n \n | \n | 813 | \n\n | \n | \n | — | \n\n | \n | \n | 813 | \n\n | \n | \n | — | \n\n | \n | \n | \n\n | \n | 702 | \n\n | \n | \n | — | \n\n | \n | \n | 698 | \n\n | \n | \n | 4 | \n\n |
| \n Alternatives \n | \n \n | \n | 359 | \n\n | \n | \n | — | \n\n | \n | \n | 148 | \n\n | \n | \n | 211 | \n\n | \n | \n | \n\n | \n | 405 | \n\n | \n | \n | — | \n\n | \n | \n | 199 | \n\n | \n | \n | 206 | \n\n |
| \n Insurance\n contract \n | \n \n | \n | 21 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 21 | \n\n | \n | \n | \n\n | \n | 26 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 26 | \n\n |
| \n Other\n investments \n | \n \n | \n | 188 | \n\n | \n | \n | — | \n\n | \n | \n | 165 | \n\n | \n | \n | 23 | \n\n | \n | \n | \n\n | \n | 106 | \n\n | \n | \n | — | \n\n | \n | \n | 106 | \n\n | \n | \n | — | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n\n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total \n | \n \n | $ | \n2,562 | \n\n | \n | $ | \n388 | \n\n | \n | $ | \n1,919 | \n\n | \n | $ | \n255 | \n\n | \n | \n | \n\n | $ | \n2,397 | \n\n | \n | $ | \n389 | \n\n | \n | $ | \n1,772 | \n\n | \n | $ | \n236 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n\n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| Other Postretirement Benefit Plan Assets: | \n\n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n\n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Deposit administration\n fund \n | \n \n | $ | \n57 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n— | \n\n | \n | $ | \n57 | \n\n | \n | \n | \n\n | $ | \n57 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n— | \n\n | \n | $ | \n57 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n\n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
The following tables\n present the fuel hedge gains (losses) recognized during the periods\n presented and their classification in the financial statements (in\n millions):
\nDerivatives\n designated as cash flow hedges
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Amount of Gain (Loss) \n Recognized \n in AOCI on Derivatives \n (Effective\n Portion) | \n \n | \n | Gain (Loss) \n Reclassified from \n AOCI into Income \n (Fuel Expense) \n (Effective\n Portion) | \n \n | \n | Amount of Gain\n (Loss) \n Recognized in \n Nonoperating income \n (expense): Miscellaneous, net \n (Ineffective Portion) | \n \n | |||||||||||||||
| \n | \n | 2014 | \n\n | \n | 2013 | \n\n | \n | 2014 | \n\n | \n | 2013 | \n\n | \n | 2014 | \n\n | \n | 2013 | \n\n | ||||||
| \n Fuel contracts \n | \n \n | $ | \n(599) | \n\n | \n | $ | \n39 | \n\n | \n | $ | \n(89) | \n\n | \n | $ | \n18 | \n\n | \n | $ | \n(3) | \n\n | \n | $ | \n5 | \n\n |
NOTE 6 - ACCUMULATED\n OTHER COMPREHENSIVE INCOME (LOSS)
\nThe tables below present\n the components of the Company’s accumulated other\n comprehensive income (loss) (“AOCI”), net of tax (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n UAL\n (a) \n | \n \n | Pension and \n Other \n Postretirement \n Unrecognized \n Actuarial \n Gains (Losses) \n and Prior \n Service Cost | \n \n | \n | Unrealized \n Gains \n (Losses) \n on\n Derivatives | \n \n | \n | Investments \n and Other | \n \n | \n | Total | \n\n | ||||
| \n Balance at\n December 31, 2011 \n | \n \n | $ | \n(312) | \n\n | \n | $ | \n(100) | \n\n | \n | $ | \n(5) | \n\n | \n | $ | \n(417) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Other comprehensive loss\n before reclassifications \n | \n \n | \n | (747) | \n(b) | \n\n | \n | (51) | \n\n | \n | \n | 11 | \n\n | \n | \n | (787) | \n\n |
| \n Amounts reclassified from\n accumulated other comprehensive income \n | \n \n | \n | 17 | \n\n | \n | \n | 141 | \n\n | \n | \n | — | \n\n | \n | \n | 158 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Net current-period other\n comprehensive income (loss) \n | \n \n | \n | (730) | \n\n | \n | \n | 90 | \n\n | \n | \n | 11 | \n\n | \n | \n | (629) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Balance at\n December 31, 2012 \n | \n \n | $ | \n(1,042) | \n\n | \n | $ | \n(10) | \n\n | \n | $ | \n6 | \n\n | \n | $ | \n(1,046) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Other comprehensive income\n before reclassifications \n | \n \n | \n | 1,584 | \n(b) | \n\n | \n | 39 | \n\n | \n | \n | 7 | \n\n | \n | \n | 1,630 | \n\n |
| \n Amounts reclassified from\n accumulated other comprehensive income \n | \n \n | \n | 42 | \n\n | \n | \n | (18) | \n\n | \n | \n | — | \n\n | \n | \n | 24 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Net current-period other\n comprehensive income (loss) \n | \n \n | \n | 1,626 | \n\n | \n | \n | 21 | \n\n | \n | \n | 7 | \n\n | \n | \n | 1,654 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Balance at\n December 31, 2013 \n | \n \n | $ | \n584 | \n\n | \n | $ | \n11 | \n\n | \n | $ | \n13 | \n\n | \n | $ | \n608 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Other comprehensive income\n before reclassifications \n | \n \n | \n | (1,106) | \n(b) | \n\n | \n | (599) | \n\n | \n | \n | — | \n\n | \n | \n | (1,705) | \n\n |
| \n Amounts reclassified from\n accumulated other comprehensive income \n | \n \n | \n | (65) | \n\n | \n | \n | 89 | \n\n | \n | \n | (6) | \n\n | \n | \n | 18 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Net current-period other\n comprehensive income (loss) \n | \n \n | \n | (1,171) | \n\n | \n | \n | (510) | \n\n | \n | \n | (6) | \n\n | \n | \n | (1,687) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Balance at\n December 31, 2014 \n | \n \n | $ | \n(587) | \n\n | \n | $ | \n(499) | \n\n | \n | $ | \n7 | \n\n | \n | $ | \n(1,079) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Details\n about AOCI Components \n | \n \n | Amount Reclassified from AOCI to \n Income | \n \n | \n | Affected Line Item\n in \n the Statement Where \n Net Income is Presented | \n |||||||||
| \n | \n | Year Ended December\n 31, | \n\n | \n | \n | |||||||||
| \n | \n | 2014 | \n\n | \n | 2013 | \n\n | \n | 2012 | \n\n | \n | \n | |||
| \n Derivatives designated as\n cash flow hedges \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Fuel\n contracts-reclassifications of (gains) losses into earnings\n (c) \n | \n \n | $ | \n89 | \n\n | \n | $ | \n(18) | \n\n | \n | $ | \n141 | \n\n | \n | Aircraft fuel | \n
| \n Amortization of pension and\n post-retirement items \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Amortization of\n unrecognized (gains) losses and prior service cost and the effect\n of curtailments and settlements (c) (d) \n | \n \n | \n | (65) | \n\n | \n | \n | 42 | \n\n | \n | \n | 17 | \n\n | \n | Salaries and related costs | \n
| \n Investments and\n other \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Available for sale\n securities—reclassifications of gains into earnings\n (c) \n | \n \n | \n | (6) | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | Miscellaneous, net | \n
\n
\n\n
\n(a) UAL and United amounts\n are substantially the same except for an additional $6 million of\n income tax benefit at United in 2013. In addition, United had\n additional gains related to investments and other of $1 million in\n both 2012 and 2013.
\n(b) For 2014, prior service\n credits increased by $3 million and actuarial losses increased by\n approximately $1.1 billion. For 2013, prior service credits\n increased by $331 million and actuarial gains increased by\n approximately $1.3 billion. The amount for 2012 was not\n material.
\n(c) Income tax expense for\n these items was offset by the Company’s valuation\n allowance.
\n(d) This accumulated other\n comprehensive income component is included in the computation of\n net periodic pension and other postretirement costs (see Note 8 of\n this report for additional information).
\nThe table below presents\n the carrying values and estimated fair values of financial\n instruments not presented in the tables above as of\n December 31 (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Fair Value of Debt by\n Fair Value Hierarchy Level | \n\n | |||||||||||||||||||||||||||||||||||||
| \n | \n | 2014 | \n\n | \n | 2013 | \n\n | ||||||||||||||||||||||||||||||||||
| \n | \n | Carrying \n Amount | \n \n | \n | Fair\n Value | \n\n | \n | Carrying \n Amount | \n \n | \n | Fair\n Value | \n\n | ||||||||||||||||||||||||||||
| \n | \n | \n | \n | \n | Total | \n\n | \n | Level 1 | \n\n | \n | Level 2 | \n\n | \n | Level 3 | \n\n | \n | \n | \n | \n | Total | \n\n | \n | Level 1 | \n\n | \n | Level 2 | \n\n | \n | Level 3 | \n\n | ||||||||||
| \n UAL debt \n | \n \n | $ | \n11,434 | \n\n | \n | $ | \n12,386 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n8,568 | \n\n | \n | $ | \n3,818 | \n\n | \n | $ | \n11,539 | \n\n | \n | $ | \n12,695 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n8,829 | \n\n | \n | $ | \n3,866 | \n\n |
| \n United debt \n | \n \n | \n | 11,433 | \n\n | \n | \n | 12,386 | \n\n | \n | \n | — | \n\n | \n | \n | 8,568 | \n\n | \n | \n | 3,818 | \n\n | \n | \n | 11,388 | \n\n | \n | \n | 12,249 | \n\n | \n | \n | — | \n\n | \n | \n | 8,383 | \n\n | \n | \n | 3,866 | \n\n |
| Maintenance and\n Repairs—The cost of maintenance and repairs, including\n the cost of minor replacements, is charged to expense as incurred,\n except for costs incurred under our power-by-the-hour\n (“PBTH”) engine maintenance agreements. PBTH contracts\n transfer certain risk to third-party service providers and fix the\n amount we pay per flight hour or per cycle to the service provider\n in exchange for maintenance and repairs under a predefined\n maintenance program. Under PBTH agreements, the Company recognizes\n expense at a level rate per engine hour, unless the level of\n service effort and the related payments during the period are\n substantially consistent, in which case the Company recognizes\n expense based on the amounts paid. | \n
\n The estimated\n useful lives of property and equipment are as follows:
\n\n
\n| \n | \n | \n | \n | \n |
| \n | \n | Estimated Useful Life (in years) | \n\n | |
| \n Aircraft and related\n rotable parts \n | \n \n | \n | 25 to 30 | \n\n |
| \n Buildings \n | \n \n | \n | 25 to 45 | \n\n |
| \n Other property and\n equipment \n | \n \n | \n | 3 to 15 | \n\n |
| \n Computer\n software \n | \n \n | \n | 5 | \n\n |
| \n Building\n improvements \n | \n \n | \n | 1 to 40 | \n\n |
Supplemental disclosures of\n cash flow information and non-cash investing and financing\n activities for the years ended December 31 are as follows (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n 2014 \n | \n \n | UAL | \n\n | \n | United | \n\n | ||
| \n Cash paid (refunded)\n during the period for: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Interest (net\n of amounts capitalized) \n | \n \n | $ | \n748 | \n\n | \n | $ | \n748 | \n\n |
| \n Income\n taxes \n | \n \n | \n | (16) | \n\n | \n | \n | (16) | \n\n |
| \n Non-cash\n transactions: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Net property\n and equipment acquired through issuance of debt \n | \n \n | $ | \n1,114 | \n\n | \n | $ | \n1,114 | \n\n |
| \n Airport\n construction financing \n | \n \n | \n | 14 | \n\n | \n | \n | 14 | \n\n |
| \n Exchanges of\n certain 4.5% Notes and 6% Convertible Senior Notes for common\n stock \n | \n \n | \n | 260 | \n\n | \n | \n | 156 | \n\n |
| \n Transfer of UAL\n subsidiaries to United \n | \n \n | \n | — | \n\n | \n | \n | 186 | \n\n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n 2013 \n | \n \n | \n | \n | \n | \n | \n | ||
| \n Cash paid (refunded)\n during the period for: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Interest (net\n of amounts capitalized) \n | \n \n | $ | \n752 | \n\n | \n | $ | \n752 | \n\n |
| \n Income\n taxes \n | \n \n | \n | (20) | \n\n | \n | \n | (15) | \n\n |
| \n Non-cash\n transactions: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Net property\n and equipment acquired through issuance of debt \n | \n \n | $ | \n229 | \n\n | \n | $ | \n229 | \n\n |
| \n Airport\n construction financing \n | \n \n | \n | 40 | \n\n | \n | \n | 40 | \n\n |
| \n Exchanges of\n certain 6% Convertible Senior Notes for common stock \n | \n \n | \n | 240 | \n\n | \n | \n | — | \n\n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n 2012 \n | \n \n | \n | \n | \n | \n | \n | ||
| \n Cash paid during the\n period for: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Interest (net\n of amounts capitalized) \n | \n \n | $ | \n766 | \n\n | \n | $ | \n766 | \n\n |
| \n Income\n taxes \n | \n \n | \n | 2 | \n\n | \n | \n | 4 | \n\n |
| \n Non-cash\n transactions: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Net property\n and equipment acquired through issuance of debt \n | \n \n | $ | \n544 | \n\n | \n | $ | \n544 | \n\n |
| \n 8% Contingent\n Senior Notes and 6% Senior Notes due 2031, net of\n discount \n | \n \n | \n | 357 | \n\n | \n | \n | 357 | \n\n |
| \n Special\n facility payment financing \n | \n \n | \n | 101 | \n\n | \n | \n | 101 | \n\n |
| \n Airport\n construction financing \n | \n \n | \n | 50 | \n\n | \n | \n | 50 | \n\n |
The following table\n provides information related to UAL’s share-based\n compensation plan cost for the years ended December 31 (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 2014 | \n\n | \n | 2013 | \n\n | \n | 2012 | \n\n | |||
| \n Compensation cost:\n (a) \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n RSUs \n | \n \n | $ | \n104 | \n\n | \n | $ | \n88 | \n\n | \n | $ | \n37 | \n\n |
| \n Restricted stock \n | \n \n | \n | 10 | \n\n | \n | \n | 11 | \n\n | \n | \n | 13 | \n\n |
| \n Other \n | \n \n | \n | — | \n\n | \n | \n | 1 | \n\n | \n | \n | 7 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total \n | \n \n | $ | \n114 | \n\n | \n | $ | \n100 | \n\n | \n | $ | \n57 | \n\n |
| \n \n | \n \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
(a) All compensation cost\n is recorded to Salaries and related costs, with the exception of $3\n million, $9 million and $9 million in 2014, 2013 and 2012,\n respectively, that was recorded in integration-related costs as a\n component of special charges.
\nThe estimated future\n benefit payments, net of expected participant contributions, in\n United’s pension plans and other postretirement benefit plans\n as of December 31, 2014 are as follows (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Pension | \n\n | \n | Other \n \n Postretirement | \n \n | \n | Other Postretirement— \n \n subsidy\n receipts | \n \n | |||
| \n 2015 \n | \n \n | $ | \n299 | \n\n | \n | $ | \n125 | \n\n | \n | $ | \n6 | \n\n |
| \n 2016 \n | \n \n | \n | 283 | \n\n | \n | \n | 126 | \n\n | \n | \n | 7 | \n\n |
| \n 2017 \n | \n \n | \n | 294 | \n\n | \n | \n | 129 | \n\n | \n | \n | 8 | \n\n |
| \n 2018 \n | \n \n | \n | 291 | \n\n | \n | \n | 132 | \n\n | \n | \n | 9 | \n\n |
| \n 2019 \n | \n \n | \n | 293 | \n\n | \n | \n | 135 | \n\n | \n | \n | 9 | \n\n |
| \n Years 2020 –\n 2024 \n | \n \n | \n | 1,581 | \n\n | \n | \n | 732 | \n\n | \n | \n | 56 | \n\n |
The table below summarizes\n UAL’s RSUs and restricted stock activity for the years ended\n December 31 (shares in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | RSUs | \n\n | \n | Restricted Stock | \n\n | \n | Weighted- \n Average \n Grant Price | \n \n | |||
| \n Non-vested at\n December 31, 2011 \n | \n \n | \n | 3.4 | \n\n | \n | \n | 1.0 | \n\n | \n | $ | \n23.33 | \n\n |
| \n Granted \n | \n \n | \n | 2.0 | \n\n | \n | \n | 0.5 | \n\n | \n | \n | 24.01 | \n\n |
| \n Vested \n | \n \n | \n | (0.6) | \n\n | \n | \n | (0.6) | \n\n | \n | \n | 23.05 | \n\n |
| \n Surrendered \n | \n \n | \n | (0.5) | \n\n | \n | \n | (0.1) | \n\n | \n | \n | 24.01 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n |
| \n Non-vested at\n December 31, 2012 \n | \n \n | \n | 4.3 | \n\n | \n | \n | 0.8 | \n\n | \n | \n | 23.94 | \n\n |
| \n Granted \n | \n \n | \n | 1.8 | \n\n | \n | \n | 0.5 | \n\n | \n | \n | 25.98 | \n\n |
| \n Vested \n | \n \n | \n | (0.5) | \n\n | \n | \n | (0.3) | \n\n | \n | \n | 23.93 | \n\n |
| \n Surrendered \n | \n \n | \n | (0.2) | \n\n | \n | \n | (0.1) | \n\n | \n | \n | 24.76 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n |
| \n Non-vested at\n December 31, 2013 \n | \n \n | \n | 5.4 | \n\n | \n | \n | 0.9 | \n\n | \n | \n | 25.02 | \n\n |
| \n Granted \n | \n \n | \n | 0.9 | \n\n | \n | \n | 0.3 | \n\n | \n | \n | 43.33 | \n\n |
| \n Vested \n | \n \n | \n | (2.2) | \n\n | \n | \n | (0.4) | \n\n | \n | \n | 24.66 | \n\n |
| \n Surrendered \n | \n \n | \n | (0.3) | \n\n | \n | \n | (0.1) | \n\n | \n | \n | 28.88 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n |
| \n Non-vested at\n December 31, 2014 \n | \n \n | \n | 3.8 | \n\n | \n | \n | 0.7 | \n\n | \n | \n | 32.55 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n |
| Share-Based\n Compensation—The Company measures the cost of employee\n services received in exchange for an award of equity instruments\n based on the grant-date fair value of the award. The resulting cost\n is recognized over the period during which an employee is required\n to provide service in exchange for the award, usually the vesting\n period. Obligations for restricted stock units (“RSUs”)\n are remeasured at fair value throughout the requisite service\n period on the last day of each reporting period based upon\n UAL’s stock price. In addition to the service requirement,\n certain RSUs have performance metrics that must be achieved prior\n to vesting. These awards are accrued based on the expected level of\n achievement at each reporting period. A cumulative adjustment is\n recorded on the last day of each reporting period to adjust\n compensation expense based on both UAL’s stock price and the\n then current level of expected performance achievement for the\n performance-based awards. See Note 5 of this report for additional\n information on UAL’s share-based compensation\n plans. | \n
| Regional Capacity\n Purchase—Payments made to regional carriers under CPAs\n are reported in Regional capacity purchase in our consolidated\n statements of operations. As of December 31, 2014, United had\n 281 call options to purchase regional jet aircraft being operated\n by certain regional carriers. At December 31, 2014, none of\n the call options was exercisable because none of the required\n conditions to make an option exercisable by United was\n met. | \n
At December 31, 2014,\n United’s scheduled future minimum lease payments under\n operating leases having initial or remaining noncancelable lease\n terms of more than one year, aircraft leases, including aircraft\n rent under CPAs and capital leases (substantially all of which are\n for aircraft) were as follows (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Capital Leases (a) | \n\n | \n | Facility and Other \n Operating Leases (b) | \n \n | \n | Aircraft Operating \n Leases (c) | \n \n | |||
| \n 2015 \n | \n \n | $ | \n168 | \n\n | \n | $ | \n1,283 | \n\n | \n | $ | \n1,446 | \n\n |
| \n 2016 \n | \n \n | \n | 154 | \n\n | \n | \n | 1,123 | \n\n | \n | \n | 1,247 | \n\n |
| \n 2017 \n | \n \n | \n | 115 | \n\n | \n | \n | 1,089 | \n\n | \n | \n | 1,147 | \n\n |
| \n 2018 \n | \n \n | \n | 104 | \n\n | \n | \n | 842 | \n\n | \n | \n | 908 | \n\n |
| \n 2019 \n | \n \n | \n | 38 | \n\n | \n | \n | 766 | \n\n | \n | \n | 682 | \n\n |
| \n After\n 2019 \n | \n \n | \n | 495 | \n\n | \n | \n | 7,919 | \n\n | \n | \n | 1,910 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Minimum lease\n payments \n | \n \n | $ | \n1,074 | \n\n | \n | $ | \n13,022 | \n\n | \n | $ | \n7,340 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Imputed interest \n | \n \n | \n | (393) | \n\n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Present value of minimum\n lease payments \n | \n \n | \n | 681 | \n\n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Current portion \n | \n \n | \n | (110) | \n\n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Long-term obligations under\n capital leases \n | \n \n | $ | \n571 | \n\n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n\n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n |
| Short-term\n Investments—Short-term investments are classified as\n available-for-sale and are stated at fair value. Realized gains and\n losses on sales of investments are reflected in nonoperating income\n (expense) in the consolidated statements of\n operations. Unrealized gains and losses on available-for-sale\n securities are reflected as a component of accumulated other\n comprehensive income (loss). | \n
The collateral, covenants\n and cross default provisions of the Company’s principal debt\n instruments that contain such provisions are summarized in the\n table below:
\n\n
\n| \n | \n | \n |
| Debt\n Instrument | \n\n | Collateral, Covenants and Cross Default\n Provisions | \n
| \n Credit Agreement \n | \n \n | \n Secured by certain of\n United’s international route authorities, specified take-off\n and landing slots at certain airports and certain other\n assets. \n\n \nThe Credit Agreement\n requires the Company to maintain at least $3.0 billion of\n unrestricted liquidity at all times, which includes unrestricted\n cash, short-term investments and any undrawn amounts under any\n revolving credit facility, and to maintain a minimum ratio of\n appraised value of collateral to the outstanding obligations under\n the Credit Agreement of 1.67 to 1.0 at all times. The Credit\n Agreement contains covenants that, among other things, restrict the\n ability of UAL and its restricted subsidiaries (as defined in the\n Credit Agreement) to incur additional indebtedness and to pay\n dividends on or repurchase stock. \n\n \nThe Credit Agreement\n contains events of default customary for this type of financing,\n including a cross default and cross acceleration provision to\n certain other material indebtedness of the Company. \n | \n
| \n \n 6% Notes due\n 2026 \n\n \n\n 6% Notes due\n 2028 \n | \n \n | \n The amended and restated\n indenture for these notes, which are unsecured, contains covenants\n that, among other things, restrict the ability of the Company and\n its restricted subsidiaries (as defined in the indenture) to incur\n additional indebtedness and pay dividends on or repurchase\n stock. \n\n \nThese covenants cease to be\n in effect when the indenture covering the 6.375% Senior Notes due\n 2018 is discharged. \n\n \nThe indenture contains\n events of default that are customary for similar\n financings. \n | \n
| \n \n 6.375% Senior\n Notes due 2018 \n\n \n\n 6% Senior Notes\n due 2020 \n | \n \n | \n The indentures for these\n notes, which are unsecured, contain covenants that, among other\n things, restrict the ability of the Company and its restricted\n subsidiaries (as defined in the indenture) to incur additional\n indebtedness and pay dividends on or repurchase stock. \n\n \nThe indentures contain\n events of default that are customary for similar\n financings. \n | \n
| Retirement of Leased\n Aircraft—The Company accrues for estimated lease costs\n over the remaining term of the lease at the present value of future\n minimum lease payments, net of estimated sublease rentals (if any),\n in the period that aircraft are permanently removed from service.\n When reasonably estimable and probable, the Company estimates\n maintenance lease return condition obligations for items such as\n minimum aircraft and engine conditions specified in leases and\n accrues these amounts over the lease term while the aircraft are\n operating, and any remaining unrecognized estimated obligations are\n accrued in the period that an aircraft is removed from\n service. | \n
| (a) | \nUse of Estimates and\n Reclassifications—The preparation of financial statements\n in conformity with accounting principles generally accepted in the\n United States of America (“GAAP”) requires management\n to make estimates and assumptions that affect the amounts reported\n in these financial statements and accompanying notes. Actual\n results could differ from those estimates. | \n
\n Certain prior\n years’ cash flows from operating, investing and financing\n activities have been reclassified to conform to the current year\n presentation. Within the investing activities section, the change\n in the short-term and other investments category was further\n separated between purchases and redemptions. The net effect of this\n presentation remains unchanged for prior years.
\nCertain details of the\n pass-through trusts with proceeds received from issuance of debt in\n 2014 are as follows (in millions, except stated interest\n rate):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n EETC\n Date \n | \n \n | \n \n Class \n | \n \n | Principal | \n\n | \n | \n \n Final \n\n expected | \n \n | Stated \n interest \n rate | \n \n | \n | Total debt \n recorded \n as of December 31, \n 2014 | \n \n | \n | Proceeds \n received from \n issuance of \n debt during \n 2014 | \n \n | \n | Remaining \n proceeds from \n issuance of debt \n to be received \n in future \n periods | \n \n | |||||
| \n August 2014 \n | \n \n | A | \n\n | $ | \n823 | \n\n | \n | September 2026 | \n\n | \n | 3.75% | \n\n | \n | $ | \n112 | \n\n | \n | $ | \n112 | \n\n | \n | $ | \n711 | \n\n |
| \n August 2014 \n | \n \n | B | \n\n | \n | 238 | \n\n | \n | September 2022 | \n\n | \n | 4.625% | \n\n | \n | \n | 32 | \n\n | \n | \n | 32 | \n\n | \n | \n | 206 | \n\n |
| \n April 2014 \n | \n \n | A | \n\n | \n | 736 | \n\n | \n | April 2026 | \n\n | \n | 4.0% | \n\n | \n | \n | 736 | \n\n | \n | \n | 736 | \n\n | \n | \n | — | \n\n |
| \n April 2014 \n | \n \n | B | \n\n | \n | 213 | \n\n | \n | April 2022 | \n\n | \n | 4.75% | \n\n | \n | \n | 213 | \n\n | \n | \n | 213 | \n\n | \n | \n | — | \n\n |
| \n August 2013 \n | \n \n | A | \n\n | \n | 720 | \n\n | \n | August 2025 | \n\n | \n | 4.3% | \n\n | \n | \n | 720 | \n\n | \n | \n | 567 | \n\n | \n | \n | — | \n\n |
| \n August 2013 \n | \n \n | B | \n\n | \n | 209 | \n\n | \n | August 2021 | \n\n | \n | 5.375% | \n\n | \n | \n | 209 | \n\n | \n | \n | 165 | \n\n | \n | \n | — | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | \n | $ | \n2,939 | \n\n | \n | \n | \n | \n | \n | \n | \n | $ | \n2,022 | \n\n | \n | $ | \n1,825 | \n\n | \n | $ | \n917 | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
\n The following\n table provides additional information related to the frequent flyer\n program (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Year\n Ended \n\n December 31, \n | \n \n | Cash Proceeds \n from Miles Sold | \n \n | \n | Other Revenue \n Recognized Upon \n Award of Miles \n to Third-Party \n Customers (a) | \n \n | \n | Increase in Frequent \n Flyer Deferred \n Revenue for Miles \n Awarded (b) | \n \n | \n | Increase \n (Decrease) in \n Advanced \n Purchase of \n Miles (c) | \n \n | ||||
| \n 2014 \n | \n \n | $ | \n2,861 | \n\n | \n | $ | \n882 | \n\n | \n | $ | \n2,178 | \n\n | \n | $ | \n(199) | \n\n |
| \n 2013 \n | \n \n | \n | 2,903 | \n\n | \n | \n | 903 | \n\n | \n | \n | 2,174 | \n\n | \n | \n | (174) | \n\n |
| \n 2012 \n | \n \n | \n | 2,852 | \n\n | \n | \n | 816 | \n\n | \n | \n | 2,036 | \n\n | \n | \n | — | \n\n |
| \n \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | |||
| (a) This amount represents\n other revenue recognized during the period from the sale of miles\n to third parties, representing the marketing-related deliverable\n services component of the sale. | \n\n | |||||||||||||||
| (b) This amount represents\n the increase to frequent flyer deferred revenue during the\n period. | \n\n | |||||||||||||||
| (c) This amount represents\n the net increase (decrease) in the advance purchase of miles\n obligation due to cash payments for the sale of miles in excess of\n (less than) miles awarded to customers. | \n\n |
Based on these assumptions\n as of December 31, 2014, our future payments through the end\n of the terms of our CPAs are presented in the table below (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n |
| \n 2015 \n | \n \n | $ | \n1,893 | \n\n |
| \n 2016 \n | \n \n | \n | 1,760 | \n\n |
| \n 2017 \n | \n \n | \n | 1,653 | \n\n |
| \n 2018 \n | \n \n | \n | 1,301 | \n\n |
| \n 2019 \n | \n \n | \n | 973 | \n\n |
| \n After 2019 \n | \n \n | \n | 3,497 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | $ | \n11,077 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
| Labor\n Costs—The Company records expenses associated with\n amendable labor agreements when the employee group has earned the\n compensation and the amounts are probable and estimable. These\n include costs associated with lump sum cash payments that would be\n made in conjunction with the ratification of labor agreements. To\n the extent these upfront costs are in lieu of future pay increases,\n they would be capitalized and amortized over the term of the labor\n agreements. If not, these amounts would be expensed once earned and\n when they become probable and estimable. | \n
UAL’s quarterly\n results were impacted by the following significant items (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Quarter\n Ended | \n\n | |||||||||||||
| \n | \n | March 31 | \n\n | \n | June 30 | \n\n | \n | September 30 | \n\n | \n | December 31 | \n\n | ||||
| \n 2014 \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Operating: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Severance and benefit\n costs \n | \n \n | $ | \n14 | \n\n | \n | $ | \n38 | \n\n | \n | $ | \n6 | \n\n | \n | $ | \n141 | \n\n |
| \n Integration-related\n costs \n | \n \n | \n | 34 | \n\n | \n | \n | 17 | \n\n | \n | \n | 28 | \n\n | \n | \n | 17 | \n\n |
| \n Costs associated with\n permanently grounding Embraer ERJ 135 aircraft \n | \n \n | \n | — | \n\n | \n | \n | 66 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n Impairment of\n assets \n | \n \n | \n | 1 | \n\n | \n | \n | 32 | \n\n | \n | \n | — | \n\n | \n | \n | 16 | \n\n |
| \n Losses on sale of assets\n and other special (gains) losses, net \n | \n \n | \n | 3 | \n\n | \n | \n | 16 | \n\n | \n | \n | 9 | \n\n | \n | \n | 5 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Special charges \n | \n \n | \n | 52 | \n\n | \n | \n | 169 | \n\n | \n | \n | 43 | \n\n | \n | \n | 179 | \n\n |
| \n Nonoperating: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Loss on extinguishment of\n debt and other, net \n | \n \n | \n | 21 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 53 | \n\n |
| \n Income tax\n benefit \n | \n \n | \n | (1) | \n\n | \n | \n | — | \n\n | \n | \n | (3) | \n\n | \n | \n | (6) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total operating and\n nonoperating special charges, net of income taxes \n | \n \n | $ | \n72 | \n\n | \n | $ | \n169 | \n\n | \n | $ | \n40 | \n\n | \n | $ | \n226 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n 2013 \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Special charges\n (income): \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Severance and benefit\n costs \n | \n \n | $ | \n14 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n— | \n\n | \n | $ | \n91 | \n\n |
| \n Integration-related\n costs \n | \n \n | \n | 70 | \n\n | \n | \n | 45 | \n\n | \n | \n | 50 | \n\n | \n | \n | 40 | \n\n |
| \n Labor agreement\n costs \n | \n \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 127 | \n\n | \n | \n | — | \n\n |
| \n Impairment of\n assets \n | \n \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 33 | \n\n |
| \n (Gains) losses on sale of\n assets and other special (gains) losses, net \n | \n \n | \n | 8 | \n\n | \n | \n | 7 | \n\n | \n | \n | 34 | \n\n | \n | \n | 1 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total special\n items \n | \n \n | \n | 92 | \n\n | \n | \n | 52 | \n\n | \n | \n | 211 | \n\n | \n | \n | 165 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Income tax\n benefit \n | \n \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | (7) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total special items, net of\n tax \n | \n \n | $ | \n92 | \n\n | \n | $ | \n52 | \n\n | \n | $ | \n211 | \n\n | \n | $ | \n158 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
The following table shows\n the potential net fair value positions (including fuel derivatives\n and related collateral) had we elected to offset. The table\n reflects offset at the counterparty level (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | December 31, 2014 | \n\n | \n | December 31, 2013 | \n\n | ||
| \n Receivables \n | \n \n | $ | \n— | \n\n | \n | $ | \n89 | \n\n |
| \n Other assets: Other,\n net \n | \n \n | \n | — | \n\n | \n | \n | 15 | \n\n |
| \n Current liabilities:\n Other \n | \n \n | \n | (209) | \n\n | \n | \n | — | \n\n |
| \n Other liabilities and\n deferred credits: Other \n | \n \n | \n | (30) | \n\n | \n | \n | — | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Hedge derivatives assets\n (liabilities), net \n | \n \n | $ | \n(239) | \n\n | \n | $ | \n104 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| Aircraft Fuel, Spare\n Parts and Supplies—The Company accounts for aircraft\n fuel, spare parts and supplies at average cost and provides an\n obsolescence allowance for aircraft spare parts with an assumed\n residual value of 10% to 11% of original cost depending on the\n fleet type. | \n
| Lease Fair Value\n Adjustments—Lease fair value adjustments, which arose\n from recording operating leases at fair value under fresh start or\n business combination accounting, are amortized on a straight-line\n basis over the related lease term. | \n
| Ticket\n Taxes—Certain governmental taxes are imposed on the\n Company’s ticket sales through a fee included in ticket\n prices. The Company collects these fees and remits them to the\n appropriate government agency. These fees are recorded on a net\n basis (excluded from operating revenue). | \n
NOTE 12 - ADVANCED\n PURCHASE OF MILES
\nUnited previously sold\n MileagePlus miles to Chase which United recorded as Advanced\n Purchase of Miles. United has the right, but is not required, to\n repurchase the pre-purchased miles from Chase during the term of\n the agreement. The balance of pre-purchased miles is eligible to be\n allocated by Chase to MileagePlus members’ accounts by a\n maximum of $224 million in 2015, $249 million in 2016 and the\n remainder in 2017. The Co-Brand Agreement contains termination\n penalties that may require United to make certain payments and\n repurchase outstanding pre-purchased miles in cases such as\n United’s insolvency, bankruptcy or other material breaches.\n The Company has recorded these amounts as advanced purchase of\n miles in the liabilities section of the Company’s\n consolidated balance sheets.
\nThe obligations of UAL,\n United and Mileage Plus Holdings, LLC to Chase under the Co-Brand\n Agreement are joint and several. Certain of United’s\n obligations under the Co-Brand Agreement are secured by a junior\n lien in all collateral pledged by United under the Credit\n Agreement. United also provides a first priority lien to Chase on\n its MileagePlus assets to secure certain of its obligations under\n the Co-Brand Agreement and its obligations under the new combined\n credit card processing agreement among United, Paymentech, LLC and\n JPMorgan Chase.
\n| Third-Party\n Business—The Company has third-party business revenue\n that includes fuel sales, catering, ground handling, maintenance\n services and frequent flyer award non-air redemptions, and\n third-party business revenue is recorded in Other operating\n revenue. The Company also incurs third-party business expenses,\n such as maintenance, ground handling and catering services for\n third parties, fuel sales and non-air mileage redemptions, and\n those third-party business expenses are recorded in Other operating\n expenses. In addition, the Company previously had a contract to\n sell aircraft fuel to a third party which was earnings-neutral but\n resulted in revenue and expense, specifically cost of sales which\n was unrelated to the operation of the airline. This contract ended\n in 2014. | \n
As of December 31,\n 2014, United had firm commitments to purchase aircraft from The\n Boeing Company (“Boeing”), Embraer and Airbus S.A.S.\n (“Airbus”) presented in the table below:
\n\n
\n| \n | \n | \n | \n | \n |
| \n \n Aircraft\n Type \n | \n \n | Number of Firm \n \n Commitments (a) (b) | \n \n | |
| \n Airbus A350-1000 \n | \n \n | \n | 35 | \n\n |
| \n Boeing 737-900ER \n | \n \n | \n | 34 | \n\n |
| \n Boeing 737 MAX 9 \n | \n \n | \n | 100 | \n\n |
| \n Boeing 787-9/-10 \n | \n \n | \n | 51 | \n\n |
| \n Embraer E175 \n | \n \n | \n | 11 | \n\n |
| \n (a) United also has options\n and purchase rights for additional aircraft. \n(b) United also has\n committed to purchase two used 737-700 aircraft in 2015. \n | \n \n \n \n | \n
\n Quantitative\n Information About Level 3 Fair Value Measurements as of\n December 31, 2014 ($ in millions)
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Item \n | \n \n | Fair Value at \n December 31, 2014 | \n \n | \n | \n \n Valuation Technique \n | \n \n | \n \n Unobservable\n Input \n | \n \n | \n \n Input Value \n | \n |
| \n Auction rate\n securities \n | \n \n | $ | \n26 | \n\n | \n | Valuation Service / Broker Quotes | \n\n | Broker quotes (a) | \n\n | NA | \n
| \n EETC \n | \n \n | \n | 28 | \n\n | \n | Discounted Cash Flows | \n\n | Structure credit\n risk (b) | \n\n | 4% | \n
| \n Convertible debt derivative\n asset \n | \n \n | \n | 712 | \n\n | \n | Binomial Lattice Model | \n\n | \n Expected\n volatility (c) \nOwn credit\n risk (d) \n | \n \n | \n 40% \n5% \n | \n
| \n Convertible debt option\n liability \n | \n \n | \n | (511) | \n\n | \n | Binomial Lattice Model | \n\n | \n Expected\n volatility (c) \nOwn credit\n risk (d) \n | \n \n | \n 40% \n5% \n | \n
\n
\n(a) Broker quotes obtained\n by a third-party valuation service.
\n(b) Represents the credit\n risk premium of the EETC structure above the risk-free rate that\n the Company has determined market participants would use when\n pricing the instruments.
\n(c) Represents the\n volatility estimate that the Company has determined market\n participants would use when pricing the instruments.
\n(d) Represents the\n Company-specific risk adjustment that the Company has determined\n market participants would use as a model input.
\n