| (k) | \nAdvertising—Advertising costs, which are included\n in Other operating expenses, are expensed as incurred. Advertising\n expenses were $220 million, $201 million and\n $179 million for the years ended December 31, 2016, 2015\n and 2014, respectively. | \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 and reserves for institutions that process\n credit card ticket sales. Restricted cash is classified as\n short-term or long-term in the consolidated balance sheets based on\n the expected timing of return of the assets to the\n Company.
\n\n The following\n table provides a reconciliation of cash, cash equivalents and\n restricted cash reported within the consolidated balance sheets\n that sum to the total of the same such amounts shown in the\n statements of consolidated cash flows:
\n\n
\n| \n | \n | \n | \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 | United | \n\n | ||||||||||||||||||
| \n | \n | At\n December 31, | \n\n | \n | At\n December 31, | \n\n | ||||||||||||||||||
| \n | \n | 2016 | \n\n | \n | 2015 | \n\n | \n | 2014 | \n\n | \n | 2016 | \n\n | \n | 2015 | \n\n | \n | 2014 | \n\n | ||||||
| \n Current 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 Cash and cash\n equivalents \n | \n \n | $ | \n2,179 | \n\n | \n | $ | \n3,006 | \n\n | \n | $ | \n2,002 | \n\n | \n | $ | \n2,173 | \n\n | \n | $ | \n3,000 | \n\n | \n | $ | \n1,996 | \n\n |
| \n Restricted cash included in\n Prepaid expenses and other \n | \n \n | \n | — | \n\n | \n | \n | 2 | \n\n | \n | \n | 44 | \n\n | \n | \n | — | \n\n | \n | \n | 2 | \n\n | \n | \n | 44 | \n\n |
| \n Other 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 Restricted cash \n | \n \n | \n | 124 | \n\n | \n | \n | 204 | \n\n | \n | \n | 276 | \n\n | \n | \n | 124 | \n\n | \n | \n | 204 | \n\n | \n | \n | 276 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \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 cash, cash equivalents and restricted cash shown in the\n statement of consolidated cash flows | \n\n | $ | \n2,303 | \n\n | \n | $ | \n3,212 | \n\n | \n | $ | \n2,322 | \n\n | \n | $ | \n2,297 | \n\n | \n | $ | \n3,206 | \n\n | \n | $ | \n2,316 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \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 15 -\n COMMITMENTS AND CONTINGENCIES
\n\n Commitments. As of\n December 31, 2016, United had firm commitments and options to\n purchase aircraft from The Boeing Company (“Boeing”),\n Embraer and 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) | \n \n | |
| \n Airbus\n A350-1000 \n | \n \n | \n | 35 | \n\n |
| \n Boeing\n 737NG/737MAX \n | \n \n | \n | 165 | \n\n |
| \n Boeing 777-300ER \n | \n \n | \n | 12 | \n\n |
| \n Boeing 787-8/-9/-10 \n | \n \n | \n | 21 | \n\n |
| \n Embraer E175 \n | \n \n | \n | 24 | \n\n |
| (a) United also has\n options and purchase rights for additional aircraft. | \n\n |
\n The aircraft\n listed in the table above are scheduled for delivery from 2017\n through 2027. To the extent the Company and the aircraft\n manufacturers with whom the Company has existing orders for new\n aircraft agree to modify the contracts governing those orders, the\n amount and timing of the Company’s future capital commitments\n could change.
\n\n
\n\n The table\n below summarizes United’s commitments as of December 31,\n 2016, which primarily relate to the acquisition of aircraft and\n related spare engines, aircraft improvements and include other\n capital purchase commitments for the years ended December 31\n (in billions). Any new firm aircraft orders, including through the\n exercise of purchase options and purchase rights, will increase the\n total future capital commitments of the Company.
\n\n
\n| \n | \n | \n | \n | \n |
| \n 2017 \n | \n \n | $ | \n4.5 | \n\n |
| \n 2018 \n | \n \n | \n | 3.2 | \n\n |
| \n 2019 \n | \n \n | \n | 3.1 | \n\n |
| \n 2020 \n | \n \n | \n | 2.5 | \n\n |
| \n 2021 \n | \n \n | \n | 2.2 | \n\n |
| \n After 2021 \n | \n \n | \n | 7.8 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | $ | \n23.3 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
\n In the first\n quarter of 2017, the Company announced that it will retire its\n fleet of Boeing 747 aircraft from scheduled service by the end of\n 2017. The Company does not expect there to be a material impact to\n depreciation and amortization expense.
\n\n As of\n December 31, 2016, United had $1.3 billion in financing\n available through EETC transactions for the financing of all of its\n aircraft deliveries scheduled in the first half of 2017. See Note\n 11 of this report for additional information on aircraft financing.\n The Company has also 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 may be necessary to satisfy the\n Company’s capital commitments for its firm order aircraft and\n other related capital expenditures.
\n\n Legal\n and Environmental. The Company has\n certain contingencies resulting from litigation and claims incident\n to the ordinary course of business. As of December 31, 2016,\n management believes, after considering a number of factors,\n including (but not limited to) the information currently available,\n the views of legal counsel, the nature of contingencies to which\n the Company is subject and prior experience, that the ultimate\n disposition of the litigation and claims will not materially affect\n the Company’s consolidated financial position or results of\n operations. The Company records liabilities for legal and\n environmental claims when a loss is probable and reasonably\n estimable. These amounts are recorded based on the Company’s\n assessments of the likelihood of their eventual\n disposition.
\n\n Guarantees and Indemnifications. In the normal course of\n business, the Company enters into numerous real estate leasing and\n aircraft financing arrangements that have various guarantees\n included in the contracts. These guarantees are primarily in the\n form of indemnities under which the Company typically indemnifies\n the lessors and any tax/financing parties against tort liabilities\n that arise out of the use, occupancy, operation or maintenance of\n the 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.
\n\n As of\n December 31, 2016, United is the guarantor of approximately\n $1.9 billion in 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 $1.4 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\n bonds are included in our lease commitments disclosed in Note 13 of\n this report. The leasing arrangements associated with\n $400 million of these obligations are accounted for as capital\n leases. All of these bonds are due between 2017 and\n 2038.
\n\n
\n\n In\n United’s financing transactions that include loans, United\n typically agrees to reimburse lenders for any reduced returns with\n respect to the loans due to any change in capital requirements and,\n in the case of loans in which the interest rate is based on LIBOR,\n for certain other increased costs that the lenders incur in\n carrying these loans as a result of any change in law, subject, in\n most cases, to obligations of the lenders to take certain limited\n steps to mitigate the requirement for, or the amount of, such\n increased costs. At December 31, 2016, the Company had\n $2.6 billion of floating rate debt and $90 million of\n fixed rate debt, with remaining terms of up to 12 years, that are\n subject to these increased cost provisions. In several\n financing transactions involving loans or leases from non-U.S. entities, with remaining terms\n of up to 12 years and an aggregate balance of $2.6 billion,\n the Company bears the risk of any change in tax laws that would\n subject loan or lease payments thereunder to non-U.S. entities to withholding taxes,\n subject to customary exclusions.
\n\n As of\n December 31, 2016, United is the guarantor of\n $168 million of aircraft mortgage debt issued by one of\n United’s regional carriers. The aircraft mortgage debt is\n subject to similar increased cost provisions as described above for\n the Company’s debt and the Company would potentially be\n responsible for those costs under the guarantees.
\n\n Fuel\n Consortia. United participates in\n numerous fuel consortia with other air carriers at major airports\n to reduce the costs of fuel distribution and storage. Interline\n agreements govern the rights and responsibilities of the consortia\n members and provide for the allocation of the overall costs to\n operate the consortia based on usage. The consortia (and in limited\n cases, the participating carriers) have entered into long-term\n agreements to lease certain airport fuel storage and distribution\n facilities that 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, 2016, approximately\n $1.5 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, 2016, the\n Company’s contingent exposure was approximately\n $234 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 paid in full, which\n ranges from 2017 to 2049. The Company did not record a liability at\n the time these indirect guarantees were made.
\n\n Regional Capacity Purchase. As of\n December 31, 2016, United had 223 call options to purchase\n regional jet aircraft being operated by certain regional carriers.\n At December 31, 2016, none of the call options were\n exercisable because none of the required conditions to make an\n option exercisable by United was met.
\n\n Credit\n Card Processing Agreements. The Company has\n agreements with financial institutions that process customer credit\n card transactions for the sale of air travel and other services.\n Under certain of the Company’s credit card processing\n agreements, the financial institutions in certain circumstances\n have the right to require that the Company maintain a reserve equal\n to a portion of advance ticket sales that has been processed by\n that financial institution, but for which the Company has not yet\n provided the air transportation. Such financial institutions may\n require additional cash or other collateral reserves to be\n established or additional withholding of payments related to\n receivables collected if the Company does not maintain certain\n minimum levels of unrestricted cash, cash equivalents and\n short-term investments (collectively, “Unrestricted\n Liquidity”). The Company’s current level of\n Unrestricted Liquidity is substantially in excess of these minimum\n levels.
\n\n Labor\n Negotiations. As of December 31, 2016,\n United, including its subsidiaries, had approximately 88,000\n employees. Approximately 80% of United’s employees were\n represented by various U.S. labor organizations as of\n December 31, 2016. In January 2016,\n United’s pilots, represented by the Air Line Pilots\n Association, International (“ALPA”), agreed to extend\n their contract through January 31, 2019. In March 2016, the\n Company’s dispatchers, represented by the Professional\n Airline Flight Control Association, agreed to extend their current\n contract through 2021. In April 2016, the fleet service, passenger\n service, storekeeper and other employees represented by the\n International Association of Machinists and Aerospace Workers\n (“IAM”) ratified seven new contracts with the Company\n which extended the contracts through 2021. In August 2016,\n United’s flight attendants, represented by the AFA, ratified\n a five-year joint collective bargaining agreement through 2021. In\n December 2016, the technicians and related employees, represented\n by the IBT, ratified a six-year joint collective bargaining\n agreement which extended the contract through 2022. The agreements\n with ALPA and IBT contain provisions that require the Company to\n align contract terms with other airlines’ workgroups under\n certain conditions.
\nNOTE 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\n appreciation rights, restricted stock awards, RSUs, performance\n compensation awards, performance units, cash incentive awards and\n other types of equity-based and equity-related awards.
\nAll awards are recorded as\n either equity or a liability in the Company’s consolidated\n balance sheets. The share-based compensation expense is\n directly recorded in salaries and related costs or\n integration-related expense.
\nDuring 2016, UAL granted\n share-based compensation awards pursuant to the United Continental\n Holdings, Inc. 2008 Incentive Compensation Plan. These share-based\n compensation awards include approximately 1.9 million RSUs,\n 0.4 million shares of restricted stock and 0.4 million\n stock options. The time-vested RSUs and the restricted stock awards\n vest in one-third\n increments over the first three anniversaries of the date of grant.\n The time-vested RSUs are generally stock-settled for domestic\n employees and cash-settled for international employees based on the\n 20-day average closing\n price of UAL common stock immediately prior to the vesting date.\n The remainder of the RSUs are performance-based and vest based on\n the Company’s return on invested capital and the\n Company’s relative improvement in pre-tax margin for the three years\n ending December 31, 2018. If the applicable performance\n conditions are achieved, cash payments will be made after the end\n of the performance period based on the 20-day average closing price of UAL\n common stock immediately prior to the vesting date. The stock\n options vest in one-third\n increments over either (i) the first three anniversaries of\n the date of grant (for seven-year term options) or (ii) the\n fourth, fifth and sixth anniversaries of the date of grant (for\n ten-year term\n options).
\n\n
\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 | 2016 | \n\n | \n | 2015 | \n\n | \n | 2014 | \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 | $ | \n58 | \n\n | \n | $ | \n52 | \n\n | \n | $ | \n104 | \n\n |
| \n Restricted stock \n | \n \n | \n | 11 | \n\n | \n | \n | 6 | \n\n | \n | \n | 10 | \n\n |
| \n Stock options \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 \n | \n \n | $ | \n70 | \n\n | \n | $ | \n58 | \n\n | \n | $ | \n114 | \n\n |
| \n \n | \n \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\n $3 million in 2014 that was recorded in integration-related\n costs as a component of special items.
\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 as of December 31, 2016\n (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 \n (in\n years) | \n \n | ||
| \n RSUs \n | \n \n | $ | \n49 | \n\n | \n | \n | 1.5 | \n\n |
| \n Restricted stock \n | \n \n | \n | 11 | \n\n | \n | \n | 1.5 | \n\n |
| \n Stock options \n | \n \n | \n | 5 | \n\n | \n | \n | 3.2 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n |
| \n Total \n | \n \n | $ | \n65 | \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 performance-based RSUs, as well as a portion of the\n time-vested RSUs, will be settled in cash. As of December 31,\n 2016, UAL had recorded a liability of $70 million related to\n its RSUs. UAL paid $69 million, $85 million and\n $86 million related to its RSUs during 2016, 2015 and 2014,\n 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 December 31,\n 2013 \n | \n \n | \n | 5.4 | \n\n | \n | \n | 0.9 | \n\n | \n | $ | \n25.02 | \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 Forfeited \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 December 31,\n 2014 \n | \n \n | \n | 3.8 | \n\n | \n | \n | 0.7 | \n\n | \n | \n | 32.55 | \n\n |
| \n Granted \n | \n \n | \n | 1.0 | \n\n | \n | \n | 0.2 | \n\n | \n | \n | 66.53 | \n\n |
| \n Vested \n | \n \n | \n | (1.6) | \n\n | \n | \n | (0.4) | \n\n | \n | \n | 31.14 | \n\n |
| \n Forfeited \n | \n \n | \n | (0.6) | \n\n | \n | \n | (0.2) | \n\n | \n | \n | 46.23 | \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 December 31,\n 2015 \n | \n \n | \n | 2.6 | \n\n | \n | \n | 0.3 | \n\n | \n | \n | 48.68 | \n\n |
| \n Granted \n | \n \n | \n | 1.9 | \n\n | \n | \n | 0.4 | \n\n | \n | \n | 50.63 | \n\n |
| \n Vested \n | \n \n | \n | (1.4) | \n\n | \n | \n | (0.1) | \n\n | \n | \n | 41.47 | \n\n |
| \n Forfeited \n | \n \n | \n | (0.2) | \n\n | \n | \n | (0.1) | \n\n | \n | \n | 53.42 | \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 December 31,\n 2016 \n | \n \n | \n | 2.9 | \n\n | \n | \n | 0.5 | \n\n | \n | \n | 52.00 | \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 that vested in 2016, 2015 and 2014 was\n $80 million, $92 million and $97 million,\n respectively. The fair value of the restricted stock awards was\n based upon the UAL common stock price on the date of grant. These\n awards are accounted for as equity awards. The fair value of the\n RSUs was based on the UAL common stock price as of the last day\n preceding the settlement date. These awards were accounted for as\n either equity or liability awards based on their method of\n settlement. Restricted stock vesting and the recognition of the\n expense is similar to the stock option vesting described\n below.
\nStock Options.\n During 2016, UAL granted 0.1 million stock options with\n exercise prices equal to the fair market value of UAL’s\n common stock on the date of grant and an additional\n 0.3 million stock options with exercise prices at a 25%\n premium of the grant date fair market value resulting in a\n weighted-average exercise price of $56.19 and a weighted-average\n grant date fair value of approximately $2.3 million. Prior to\n 2016, UAL had not granted any stock options since 2010. Expense\n related to each portion of an option grant is recognized on a\n straight-line basis over the specific vesting period for those\n options.
\nThe Company determined the\n fair value of stock options at the grant date using a Black Scholes\n option pricing model, which requires the use of several\n assumptions. The risk-free interest rate is based on the U.S.\n treasury yield curve in effect for the expected term of the option\n at the time of grant. The dividend yield on UAL’s common\n stock was assumed to be zero since UAL did not have any plans to\n pay dividends at the time of the option grants. The volatility\n assumptions were based upon historical volatilities of UAL using\n daily stock price returns equivalent to the expected term of the\n option. The expected lives of the options were determined based\n upon a simplified assumption that the option will be exercised\n evenly from vesting to expiration due to the Company’s lack\n of relevant historical data.
\nAs of December 31,\n 2016, there were approximately 0.5 million outstanding stock\n option awards, 0.1 million of which were exercisable, with\n weighted-average exercise prices of $46.83 and $18.58,\n respectively, intrinsic values of $14 million and\n $7 million, respectively, and weighted-average remaining\n contractual lives (in years) of 6.3 and 1.6,\n respectively.
\n| (t) | \nRecently Issued\n Accounting Standards—The Financial Accounting Standards\n Board (“FASB”) amended the FASB Accounting Standards\n Codification and created a new Topic 606, Revenue from Contracts\n with Customers. This amendment prescribes that an entity should\n recognize revenue to depict the transfer of promised goods or\n services to customers in an amount that reflects the consideration\n to which the entity expects to be entitled in exchange for those\n goods or services. The amendment supersedes the revenue recognition\n requirements in Topic 605, Revenue Recognition, and most\n industry-specific guidance throughout the Industry Topics of the\n Accounting Standards Codification. The Company currently plans to\n use the full-retrospective approach in adopting this standard on\n January 1, 2018. Under the new standard, certain airline\n ancillary fees directly related to passenger revenue tickets, such\n as ticket 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 ticket change fees\n which were previously recognized when received and booking fees\n when paid, will likely be recognized when transportation is\n provided. The Company has previously recorded ancillary fees and\n change fees in other operating revenue but will record these in\n passenger revenue under the new standard. The Company is evaluating\n other possible impacts from the new standard on its consolidated\n financial statements. | \n
\n In 2016, the\n FASB amended the FASB Accounting Standards Codification and created\n a new Topic 842, Leases (“Topic 842”). The\n guidance requires lessees to recognize a right-of-use asset and a lease\n liability for all leases (with the exception of short-term leases)\n at the commencement date and recognize expenses on their income\n statements similar to the current Topic 840, Leases. It is\n effective for fiscal years and interim periods beginning after\n December 15, 2018, and early adoption is permitted. Lessees\n and lessors are required to adopt Topic 842 using a modified\n retrospective approach for all leases existing at or commencing\n after the date of initial application with an option to use certain\n practical expedients. The Company is evaluating the impact the\n adoption of this standard will have on its consolidated financial\n statements and believes this standard will have a significant\n impact on its consolidated balance sheets.
\n\n In 2016, the\n FASB issued Accounting Standards Update No. 2016-09, Improvements to\n Employee Share-Based Payment Accounting (“ASU\n 2016-09”).\n The update requires excess tax benefits and tax deficiencies, which\n arise due to differences between the measure of compensation\n expense and the amount deductible for tax purposes, to be recorded\n directly through earnings as a component of income tax expense.\n Under current GAAP, these differences are generally recorded in\n additional paid-in capital\n and thus have no impact on net income. The change in treatment of\n excess tax benefits and tax deficiencies will also impact the\n computation of diluted earnings per share and the cash flows\n associated with those items will be classified as operating\n activities on the statements of consolidated cash flows.\n Additionally, entities will be permitted to make an accounting\n policy election for the impact of forfeitures on the recognition of\n expense for share-based payment awards. Forfeitures can be\n estimated, as required under current GAAP, or recognized when they\n occur. The amendments in this update are effective for annual\n periods beginning after December 15, 2016, and interim periods\n within those annual periods. The Company does not expect the\n adoption of ASU 2016-09 to\n have a material impact on its consolidated financial\n statements.
\n\n In 2016, the\n FASB issued Accounting Standards Update No. 2016-15, Statement of Cash\n Flows (Topic 230): Classification of Certain Cash Receipts and Cash\n Payments (“ASU 2016-15”). The update amends the\n guidance in Accounting Standards Codification 230, Statement of\n Cash Flows (“ASC 230”), and clarifies how entities\n should classify certain cash receipts and cash payments on the\n statement of cash flows with the objective of reducing the existing\n diversity in practice related to eight specific cash flow issues.\n The Company adopted ASU 2016-15 as of December 31, 2016\n and the standard did not have a material impact on its consolidated\n financial statements.
\n\n In 2016, the\n FASB issued Accounting Standards Update No. 2016-18, Statement of Cash\n Flows (Topic 230): Restricted Cash. The update amends ASC 230\n to add guidance on the classification and presentation of\n restricted cash in the statement of cash flows. Furthermore, a\n reconciliation between the statement of financial position and the\n statement of cash flows must be disclosed when the statement of\n financial position includes more than one line item for cash, cash\n equivalents, restricted cash, and restricted cash equivalents. The\n Company adopted this standard as of December 31, 2016 and\n included $124 million, $206 million and $320 million\n of restricted cash in the total of cash, cash equivalents and\n restricted cash in its statements of consolidated cash flows for\n the year ended December 31, 2016, 2015 and 2014, respectively.\n A reconciliation of restricted cash for each period of the\n Company’s balance sheet to its statement of consolidated cash\n flows is included in Note 1(d) Cash and Cash Equivalents and\n Restricted Cash of this report.
\n\n The FASB issued\n Accounting Standards Update No. 2015-07, Fair Value\n Measurement (Topic 820): Disclosures for Investments in Certain\n Entities That Calculate Net Asset Value per Share (or Its\n Equivalent). Under the standard, investments for which fair\n value is measured at net asset value (“NAV”) per share\n (or its equivalent) using the practical expedient are no longer\n categorized in the fair value hierarchy. The Company adopted this\n standard on January 1, 2016. As of December 31, 2016, the\n Company had approximately $182 million of such investments as\n part of Short-term investments on its consolidated balance sheets.\n In addition, pension plan investments measured at NAV per share are\n no longer categorized within the fair value hierarchy. As of\n December 31, 2016, the Company had approximately\n $1.8 billion of such investments.
\n \n \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 | \n | \n | \n | \n | \n | \n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | Deferred\n Taxes | \n\n | \n | \n | \n | |||||||||
| \n | \n | Pension and \n Other \n Postretirement \n Liabilities | \n \n | \n | Fuel \n Derivatives \n Contracts | \n \n | \n | Investments \n and Other | \n \n | \n | Pension and \n Other \n Postretirement \n Liabilities | \n \n | \n | Fuel \n Derivative \n Contracts | \n \n | \n | Total | \n\n | ||||||
| \n Balance at\n December 31, 2013 \n | \n \n | $ | \n699 | \n\n | \n | $ | \n11 | \n\n | \n | $ | \n13 | \n\n | \n | $ | \n(115) | \n\n | \n | $ | \n— | \n(c) | \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 | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Other comprehensive loss\n before reclassifications (a) \n | \n \n | \n | (1,106) | \n(b) | \n\n | \n | (599) | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | (1,705) | \n\n |
| \n Amounts reclassified from\n accumulated other comprehensive income (a) \n | \n \n | \n | (65) | \n\n | \n | \n | 89 | \n\n | \n | \n | (6) | \n\n | \n | \n | — | \n\n | \n | \n | — | \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 | \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 | — | \n\n | \n | \n | — | \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 | \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(472) | \n\n | \n | $ | \n(499) | \n\n | \n | $ | \n7 | \n\n | \n | $ | \n(115) | \n\n | \n | $ | \n— | \n(c) | \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 Other comprehensive income\n (loss) before reclassifications \n | \n \n | \n | 78 | \n(b) | \n\n | \n | (320) | \n\n | \n | \n | (4) | \n\n | \n | \n | (28) | \n\n | \n | \n | 115 | \n\n | \n | \n | (159) | \n\n |
| \n Amounts reclassified from\n accumulated other comprehensive income \n | \n \n | \n | 31 | \n\n | \n | \n | 604 | \n\n | \n | \n | — | \n\n | \n | \n | (11) | \n\n | \n | \n | (217) | \n\n | \n | \n | 407 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \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 | 109 | \n\n | \n | \n | 284 | \n\n | \n | \n | (4) | \n\n | \n | \n | (39) | \n\n | \n | \n | (102) | \n\n | \n | \n | 248 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \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, 2015 \n | \n \n | $ | \n(363) | \n\n | \n | $ | \n(215) | \n\n | \n | $ | \n3 | \n\n | \n | $ | \n(154) | \n\n | \n | $ | \n(102) | \n\n | \n | $ | \n(831) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \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 (loss) before reclassifications \n | \n \n | \n | (517) | \n(b) | \n\n | \n | (4) | \n\n | \n | \n | — | \n\n | \n | \n | 186 | \n\n | \n | \n | 1 | \n\n | \n | \n | (334) | \n\n |
| \n Amounts reclassified from\n accumulated other comprehensive income \n | \n \n | \n | 26 | \n\n | \n | \n | 217 | \n\n | \n | \n | (1) | \n\n | \n | \n | (8) | \n\n | \n | \n | 102 | \n\n | \n | \n | 336 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \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 | (491) | \n\n | \n | \n | 213 | \n\n | \n | \n | (1) | \n\n | \n | \n | 178 | \n\n | \n | \n | 103 | \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 Balance at\n December 31, 2016 \n | \n \n | $ | \n(854) | \n\n | \n | $ | \n(2) | \n\n | \n | $ | \n2 | \n\n | \n | $ | \n24 | \n\n | \n | $ | \n1 | \n\n | \n | $ | \n(829) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \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\n AOCI to \n Income | \n \n | \n | Affected Line Item\n in \n the Statement Where \n Net Income is Presented | \n \n | ||||||||||
| \n | \n | Year Ended\n December 31, | \n\n | \n | \n | \n | ||||||||||
| \n | \n | 2016 | \n\n | \n | 2015 | \n\n | \n | 2014 | \n\n | \n | \n | \n | ||||
| \n Fuel derivative\n contracts \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Fuel\n contracts-reclassifications of losses into earnings \n | \n \n | $ | \n217 | \n\n | \n | $ | \n604 | \n\n | \n | $ | \n89 | \n\n | \n | \n | Aircraft fuel | \n\n |
| \n Pension and Postretirement\n liabilities \n | \n \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 (d) \n | \n \n | \n | 26 | \n\n | \n | \n | 31 | \n\n | \n | \n | (65) | \n\n | \n | \n | Salaries and related costs | \n\n |
| \n Investments and\n other \n | \n \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\n earnings \n | \n \n | \n | (1) | \n\n | \n | \n | — | \n\n | \n | \n | (6) | \n\n | \n | \n | Miscellaneous, net | \n\n |
\n
\n\n
\n(a) Income tax expense for\n these items was offset by the Company’s valuation\n allowance.
\n(b) Prior service credits\n increased by $30 million, $0 million and $3 million\n and actuarial gains (losses) increased (decreased) by approximately\n $560 million, $78 million and $(1.1) billion for 2016,\n 2015 and 2014, respectively.
\n(c) Deferred tax balance\n was offset by the Company’s valuation allowance.
\n(d) This AOCI component is\n included in the computation of net periodic pension and other\n postretirement costs (see Note 8 of this report for additional\n information).
\nThe estimated amounts that\n will be amortized in 2017 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 | $ | \n127 | \n\n | \n | $ | \n(36) | \n\n |
| \n Prior service\n credit \n | \n \n | \n | — | \n\n | \n | \n | (37) | \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 2016 \n | \n \n | UAL | \n\n | \n | United | \n\n | ||
| \n Current \n | \n \n | $ | \n(92) | \n\n | \n | $ | \n(92) | \n\n |
| \n Deferred \n | \n \n | \n | 1,648 | \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 | \n | $ | \n1,556 | \n\n | \n | $ | \n1,558 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | ||||||
| \n \n 2015 \n | \n \n | \n | \n | \n | \n | \n | ||
| \n Current \n | \n \n | $ | \n56 | \n\n | \n | $ | \n56 | \n\n |
| \n Deferred \n | \n \n | \n | (3,177) | \n\n | \n | \n | (3,136) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | $ | \n(3,121) | \n\n | \n | $ | \n(3,080) | \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 | \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 | \n | \n | \n | \n |
| \n \n (In\n millions) \n | \n \n | At\n December 31, | \n\n | |||||
| \n | \n | 2016 | \n\n | \n | 2015 | \n\n | ||
| \n Secured \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| Notes payable, fixed interest rates of 1.42% to 9.75% (weighted\n average rate of 4.85% as of December 31, 2016), payable\n through 2028 | \n\n | $ | \n7,586 | \n\n | \n | $ | \n7,971 | \n\n |
| Notes payable, floating interest rates of the London Interbank\n Offered Rate (“LIBOR”) plus 0.20% to 2.85%, payable\n through 2028 | \n\n | \n | 1,546 | \n\n | \n | \n | 1,302 | \n\n |
| Term loan, LIBOR subject to a 0.75% floor, plus 2.50%, or\n alternative rate based on certain market rates plus 1.50%, due\n 2019 | \n\n | \n | 866 | \n\n | \n | \n | 875 | \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 2021 | \n\n | \n | 192 | \n\n | \n | \n | 194 | \n\n |
| Unsecured | \n\n | \n | \n | \n | \n | \n | \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 |
| Other | \n\n | \n | 101 | \n\n | \n | \n | 100 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | 10,891 | \n\n | \n | \n | 11,042 | \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, premiums and debt issuance costs \n | \n \n | \n | (124) | \n\n | \n | \n | (145) | \n\n |
| \n Less: current portion of\n long-term debt \n | \n \n | \n | (849) | \n\n | \n | \n | (1,224) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| Long-term debt, net | \n\n | $ | \n9,918 | \n\n | \n | $ | \n9,673 | \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.
\nA 1% change in the assumed health care trend rate\n for the Company would have the following additional effects (in\n 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, 2016 \n | \n \n | $ | \n13 | \n\n | \n | $ | \n(11) | \n\n |
| \n Effect on postretirement\n benefit obligation at December 31, 2016 \n | \n \n | \n | 169 | \n\n | \n | \n | (149) | \n\n |
The table below presents\n disclosures about the fair value of financial assets and\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 | 2016 | \n\n | \n | 2015 | \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 | $ | \n2,179 | \n\n | \n | $ | \n2,179 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n— | \n\n | \n | $ | \n3,006 | \n\n | \n | $ | \n3,006 | \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 Corporate debt \n | \n \n | \n | 835 | \n\n | \n | \n | — | \n\n | \n | \n | 835 | \n\n | \n | \n | — | \n\n | \n | \n | 891 | \n\n | \n | \n | — | \n\n | \n | \n | 891 | \n\n | \n | \n | — | \n\n |
| \n Asset-backed\n securities \n | \n \n | \n | 792 | \n\n | \n | \n | — | \n\n | \n | \n | 792 | \n\n | \n | \n | — | \n\n | \n | \n | 710 | \n\n | \n | \n | — | \n\n | \n | \n | 710 | \n\n | \n | \n | — | \n\n |
| \n Certificates of deposit\n placed through an account registry service\n (“CDARS”) \n | \n \n | \n | 246 | \n\n | \n | \n | — | \n\n | \n | \n | 246 | \n\n | \n | \n | — | \n\n | \n | \n | 281 | \n\n | \n | \n | — | \n\n | \n | \n | 281 | \n\n | \n | \n | — | \n\n |
| \n U.S. government and agency\n notes \n | \n \n | \n | 140 | \n\n | \n | \n | — | \n\n | \n | \n | 140 | \n\n | \n | \n | — | \n\n | \n | \n | 72 | \n\n | \n | \n | — | \n\n | \n | \n | 72 | \n\n | \n | \n | — | \n\n |
| \n Auction rate\n securities \n | \n \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 9 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 9 | \n\n |
| \n Other fixed-income\n securities \n | \n \n | \n | 54 | \n\n | \n | \n | — | \n\n | \n | \n | 54 | \n\n | \n | \n | — | \n\n | \n | \n | 26 | \n\n | \n | \n | — | \n\n | \n | \n | 26 | \n\n | \n | \n | — | \n\n |
| \n Other investments measured\n at NAV (a) \n | \n \n | \n | 182 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 201 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n Restricted cash \n | \n \n | \n | 124 | \n\n | \n | \n | 124 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 206 | \n\n | \n | \n | 206 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n Enhanced equipment trust\n certificates (“EETC”) \n | \n \n | \n | 23 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 23 | \n\n | \n | \n | 26 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 26 | \n\n |
| \n Fuel derivatives liability,\n net \n | \n \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 124 | \n\n | \n | \n | — | \n\n | \n | \n | 124 | \n\n | \n | \n | — | \n\n |
\n
\n(a) In accordance with the\n relevant accounting standards, certain investments that are\n measured at fair value using the NAV per share (or its equivalent)\n practical expedient have not been classified in the fair value\n hierarchy. The fair value amounts presented in this table are\n intended to permit reconciliation of the fair value hierarchy to\n the amounts presented in the statement of financial position. The\n investments measured using NAV are shares of mutual funds that\n invest in fixed-income instruments including bonds, debt\n securities, and other similar instruments issued by various U.S.\n and non-U.S. public- or\n private-sector entities. The Company can redeem its shares at any\n time at NAV subject to a three-day settlement\n period.
\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 | \n | \n | \n | 2016 | \n\n | \n | 2015 | \n\n | |||||||||||
| \n \n Item \n | \n \n | Asset life (a) | \n\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 | \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 | \n \n \n | \n \n | \n | \n | \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 | \n |
| \n Frequent flyer database\n (b) \n | \n \n | \n | 22 | \n\n | \n | $ | \n1,177 | \n\n | \n | $ | \n771 | \n\n | \n | $ | \n1,177 | \n\n | \n | $ | \n702 | \n\n |
| \n Hubs \n | \n \n | \n | 20 | \n\n | \n | \n | 145 | \n\n | \n | \n | 82 | \n\n | \n | \n | 145 | \n\n | \n | \n | 74 | \n\n |
| \n Contracts \n | \n \n | \n | 13 | \n\n | \n | \n | 135 | \n\n | \n | \n | 95 | \n\n | \n | \n | 135 | \n\n | \n | \n | 86 | \n\n |
| \n Patents and\n tradenames \n | \n \n | \n | 3 | \n\n | \n | \n | 108 | \n\n | \n | \n | 108 | \n\n | \n | \n | 108 | \n\n | \n | \n | 108 | \n\n |
| \n Airport slots and\n gates \n | \n \n | \n | 8 | \n\n | \n | \n | 97 | \n\n | \n | \n | 97 | \n\n | \n | \n | 97 | \n\n | \n | \n | 97 | \n\n |
| \n Other \n | \n \n | \n | 25 | \n\n | \n | \n | 109 | \n\n | \n | \n | 81 | \n\n | \n | \n | 109 | \n\n | \n | \n | 77 | \n\n |
| \n | \n | \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \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 | \n | \n | $ | \n1,771 | \n\n | \n | $ | \n1,234 | \n\n | \n | $ | \n1,771 | \n\n | \n | $ | \n1,144 | \n\n |
| \n | \n | \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \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 | \n |
| \n Route\n authorities \n | \n \n | \n | \n | \n | \n | $ | \n1,562 | \n\n | \n | \n | \n | \n | \n | $ | \n1,570 | \n\n | \n | \n | \n | \n |
| \n Airport slots and\n gates \n | \n \n | \n | \n | \n | \n | \n | 536 | \n\n | \n | \n | \n | \n | \n | \n | 942 | \n\n | \n | \n | \n | \n |
| \n Tradenames and\n logos \n | \n \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 | \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 | \n |
| \n Total \n | \n \n | \n | \n | \n | \n | $ | \n3,095 | \n\n | \n | \n | \n | \n | \n | $ | \n3,509 | \n\n | \n | \n | \n | \n |
| \n | \n | \n | \n | \n | \n | \n \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.
\n\n The following\n table provides a reconciliation of cash, cash equivalents and\n restricted cash reported within the consolidated balance sheets\n that sum to the total of the same such amounts shown in the\n statements of consolidated cash flows:
\n\n
\n| \n | \n | \n | \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 | United | \n\n | ||||||||||||||||||
| \n | \n | At\n December 31, | \n\n | \n | At\n December 31, | \n\n | ||||||||||||||||||
| \n | \n | 2016 | \n\n | \n | 2015 | \n\n | \n | 2014 | \n\n | \n | 2016 | \n\n | \n | 2015 | \n\n | \n | 2014 | \n\n | ||||||
| \n Current 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 Cash and cash\n equivalents \n | \n \n | $ | \n2,179 | \n\n | \n | $ | \n3,006 | \n\n | \n | $ | \n2,002 | \n\n | \n | $ | \n2,173 | \n\n | \n | $ | \n3,000 | \n\n | \n | $ | \n1,996 | \n\n |
| \n Restricted cash included in\n Prepaid expenses and other \n | \n \n | \n | — | \n\n | \n | \n | 2 | \n\n | \n | \n | 44 | \n\n | \n | \n | — | \n\n | \n | \n | 2 | \n\n | \n | \n | 44 | \n\n |
| \n Other 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 Restricted cash \n | \n \n | \n | 124 | \n\n | \n | \n | 204 | \n\n | \n | \n | 276 | \n\n | \n | \n | 124 | \n\n | \n | \n | 204 | \n\n | \n | \n | 276 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \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 cash, cash equivalents and restricted cash shown in the\n statement of consolidated cash flows | \n\n | $ | \n2,303 | \n\n | \n | $ | \n3,212 | \n\n | \n | $ | \n2,322 | \n\n | \n | $ | \n2,297 | \n\n | \n | $ | \n3,206 | \n\n | \n | $ | \n2,316 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \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 items classified as\n special charges in the statements of consolidated operations\n consisted of the following 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 |
| Operating: | \n\n | 2016 | \n\n | \n | 2015 | \n\n | \n | 2014 | \n\n | |||
| \n Impairment of\n assets \n | \n \n | $ | \n412 | \n\n | \n | $ | \n79 | \n\n | \n | $ | \n49 | \n\n |
| \n Cleveland airport lease\n restructuring \n | \n \n | \n | 74 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n Labor agreement\n costs \n | \n \n | \n | 64 | \n\n | \n | \n | 18 | \n\n | \n | \n | — | \n\n |
| \n Severance and benefit\n costs \n | \n \n | \n | 37 | \n\n | \n | \n | 107 | \n\n | \n | \n | 199 | \n\n |
| (Gains) losses on sale of assets and other special\n charges | \n\n | \n | 51 | \n\n | \n | \n | 122 | \n\n | \n | \n | 195 | \n\n |
| \n | \n | \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 | 638 | \n\n | \n | \n | 326 | \n\n | \n | \n | 443 | \n\n |
| \n Nonoperating and income\n taxes: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| Losses (gain) on extinguishment of debt and other | \n\n | \n | (1) | \n\n | \n | \n | 202 | \n\n | \n | \n | 74 | \n\n |
| Income tax benefit related to special charges | \n\n | \n | (229) | \n\n | \n | \n | (11) | \n\n | \n | \n | (10) | \n\n |
| Income tax adjustments (Notes 6 and 7) | \n\n | \n | 180 | \n\n | \n | \n | (3,130 | \n) | \n\n | \n | — | \n\n |
| \n | \n | \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 items, net of income taxes \n | \n \n | $ | \n588 | \n\n | \n | $ | \n(2,613 | \n) | \n\n | $ | \n507 | \n\n |
| \n | \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 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 December 31,\n 2013 \n | \n \n | \n | 5.4 | \n\n | \n | \n | 0.9 | \n\n | \n | $ | \n25.02 | \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 Forfeited \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 December 31,\n 2014 \n | \n \n | \n | 3.8 | \n\n | \n | \n | 0.7 | \n\n | \n | \n | 32.55 | \n\n |
| \n Granted \n | \n \n | \n | 1.0 | \n\n | \n | \n | 0.2 | \n\n | \n | \n | 66.53 | \n\n |
| \n Vested \n | \n \n | \n | (1.6) | \n\n | \n | \n | (0.4) | \n\n | \n | \n | 31.14 | \n\n |
| \n Forfeited \n | \n \n | \n | (0.6) | \n\n | \n | \n | (0.2) | \n\n | \n | \n | 46.23 | \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 December 31,\n 2015 \n | \n \n | \n | 2.6 | \n\n | \n | \n | 0.3 | \n\n | \n | \n | 48.68 | \n\n |
| \n Granted \n | \n \n | \n | 1.9 | \n\n | \n | \n | 0.4 | \n\n | \n | \n | 50.63 | \n\n |
| \n Vested \n | \n \n | \n | (1.4) | \n\n | \n | \n | (0.1) | \n\n | \n | \n | 41.47 | \n\n |
| \n Forfeited \n | \n \n | \n | (0.2) | \n\n | \n | \n | (0.1) | \n\n | \n | \n | 53.42 | \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 December 31,\n 2016 \n | \n \n | \n | 2.9 | \n\n | \n | \n | 0.5 | \n\n | \n | \n | 52.00 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \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 as of December 31, 2016\n (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 \n (in\n years) | \n \n | ||
| \n RSUs \n | \n \n | $ | \n49 | \n\n | \n | \n | 1.5 | \n\n |
| \n Restricted stock \n | \n \n | \n | 11 | \n\n | \n | \n | 1.5 | \n\n |
| \n Stock options \n | \n \n | \n | 5 | \n\n | \n | \n | 3.2 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n |
| \n Total \n | \n \n | $ | \n65 | \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\n Estimates—The preparation of financial statements in\n 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
\n| (b) | \nRevenue\n Recognition—The Company records passenger ticket sales\n and tickets sold by other airlines for use on United as passenger\n revenue when the transportation is provided or upon estimated\n breakage. The value of unused passenger tickets is included in\n current liabilities as Advance ticket sales. Tickets sold by other\n airlines are recorded at the estimated values to be billed to the\n other airlines. Differences between amounts billed and the actual\n amounts may be rejected and rebilled or written off if the amount\n recorded was different from the original estimate. When necessary,\n the Company records a reserve against its interline billings and\n payables if historical experience indicates that these amounts are\n different. Non-refundable\n tickets generally expire on the date of the intended flight, unless\n the date is extended by notification from the customer on or before\n the intended flight date. | \n
\n Fees charged in\n association with changes or extensions to non-refundable tickets are recorded as\n other revenue at the time the fee is incurred. The fare on the\n changed ticket, including any additional collection of fare, is\n deferred and recognized in accordance with our transportation\n revenue recognition policy at the time the transportation is\n provided. Change fees related to non-refundable tickets are considered\n a separate transaction from the air transportation because they\n represent a charge for the Company’s additional service to\n modify a previous sale. Therefore, the pricing of the change fee\n and the initial customer order are separately determined and\n represent distinct earnings 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 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, 2016, 2015 and 2014.
\n\n
\n| (c) | \n\n Frequent Flyer Accounting—United’s\n MileagePlus®\n program builds customer loyalty by offering awards, benefits and\n services to program participants. Members in this program earn\n miles for flights on United, United Express, Star Alliance members\n and certain other airlines that participate in the program. Members\n can also earn miles by purchasing the goods and services of our\n network of non-airline\n partners. We sell miles to these partners, which include credit\n card issuers, retail merchants, hotels, car rental companies and\n our 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\n its obligation for future award redemptions using a deferred\n revenue model. \n | \n
\n Miles Earned\n in Conjunction with Flights
\n\n When frequent\n flyers earn miles for flights, the Company recognizes a portion of\n the 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 Company determines the estimated selling price of air\n transportation and miles as if each element is sold on a separate\n basis. The total consideration from each ticket sale is then\n allocated to each of these elements, individually, on a pro rata\n basis. The miles are recorded in Frequent flyer deferred revenue on\n the Company’s consolidated balance sheet and recognized into\n revenue when the transportation is provided.
\n\n The\n Company’s estimated selling price of miles is based on an\n equivalent ticket value less fulfillment discount, which\n incorporates the expected redemption of miles, as the best estimate\n of selling price for these miles. The equivalent ticket value is\n based on the prior 12 months’ weighted average equivalent\n ticket value of similar fares as those used to settle award\n redemptions while taking into consideration such factors as\n redemption pattern, cabin class, loyalty status and geographic\n region. The estimated selling price of miles is adjusted by a\n fulfillment discount that considers a number of factors, including\n redemption patterns of various customer groups.
\n\n Co-branded Credit Card Partner Mileage\n Sales
\n\n United has a\n significant contract, the Second Amended and Restated Co-Branded Card Marketing Services\n Agreement (the “Co-Brand Agreement”), to\n sell MileagePlus miles to its co-branded credit card partner, Chase\n Bank USA, N.A. (“Chase”). United identified the\n following significant revenue elements in the Co-Brand Agreement: the air\n 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 and other travel related benefits.
\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. We also evaluate volumes on an annual\n basis, which may result in a change in the allocation of estimated\n selling price 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
\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 | Cash Proceeds \n from Miles Sold \n and Earned | \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 | Decrease in \n Advanced \n Purchase \n of Miles (c) | \n \n | ||||
| \n 2016 \n | \n \n | $ | \n3,022 | \n\n | \n | $ | \n1,221 | \n\n | \n | $ | \n2,050 | \n\n | \n | $ | \n(249) | \n\n |
| \n 2015 \n | \n \n | \n | 2,999 | \n\n | \n | \n | 1,050 | \n\n | \n | \n | 2,173 | \n\n | \n | \n | (224) | \n\n |
| \n 2014 \n | \n \n | \n | 2,861 | \n\n | \n | \n | 882 | \n\n | \n | \n | 2,178 | \n\n | \n | \n | (199) | \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 decrease in the advance purchase of miles obligation due to\n cash payments for the sale of miles less than miles awarded to\n 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 and reserves for institutions that process\n credit card ticket sales. Restricted cash is classified as\n short-term or long-term in the consolidated balance sheets based on\n the expected timing of return of the assets to the\n Company.
\n\n The following\n table provides a reconciliation of cash, cash equivalents and\n restricted cash reported within the consolidated balance sheets\n that sum to the total of the same such amounts shown in the\n statements of consolidated cash flows:
\n\n
\n| \n | \n | \n | \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 | United | \n\n | ||||||||||||||||||
| \n | \n | At\n December 31, | \n\n | \n | At\n December 31, | \n\n | ||||||||||||||||||
| \n | \n | 2016 | \n\n | \n | 2015 | \n\n | \n | 2014 | \n\n | \n | 2016 | \n\n | \n | 2015 | \n\n | \n | 2014 | \n\n | ||||||
| \n Current 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 Cash and cash\n equivalents \n | \n \n | $ | \n2,179 | \n\n | \n | $ | \n3,006 | \n\n | \n | $ | \n2,002 | \n\n | \n | $ | \n2,173 | \n\n | \n | $ | \n3,000 | \n\n | \n | $ | \n1,996 | \n\n |
| \n Restricted cash included in\n Prepaid expenses and other \n | \n \n | \n | — | \n\n | \n | \n | 2 | \n\n | \n | \n | 44 | \n\n | \n | \n | — | \n\n | \n | \n | 2 | \n\n | \n | \n | 44 | \n\n |
| \n Other 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 Restricted cash \n | \n \n | \n | 124 | \n\n | \n | \n | 204 | \n\n | \n | \n | 276 | \n\n | \n | \n | 124 | \n\n | \n | \n | 204 | \n\n | \n | \n | 276 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \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 cash, cash equivalents and restricted cash shown in the\n statement of consolidated cash flows | \n\n | $ | \n2,303 | \n\n | \n | $ | \n3,212 | \n\n | \n | $ | \n2,322 | \n\n | \n | $ | \n2,297 | \n\n | \n | $ | \n3,206 | \n\n | \n | $ | \n2,316 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
\n
\n| (e) | \nShort-term\n Investments—Short-term investments are classified as\n available-for-sale and are\n stated at fair value. Realized gains and losses on sales of\n investments are reflected in nonoperating income (expense) in the\n consolidated statements of operations. Unrealized gains and losses\n on available-for-sale securities\n are reflected as a component of accumulated other comprehensive\n 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% of original cost. | \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, 2016 and 2015, the Company had a carrying value\n of computer software of $356 million and $279 million,\n respectively. For the years ended December 31, 2016, 2015 and\n 2014, the Company’s depreciation expense related to computer\n software was $108 million, $93 million and\n $81 million, respectively. Aircraft and aircraft spare parts\n were assumed to have residual values of approximately 10% of\n original cost, and other categories of property and equipment were\n 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. | \n
\n
\n| (k) | \nAdvertising—Advertising costs, which are included\n in Other operating expenses, are expensed as incurred. Advertising\n expenses were $220 million, $201 million and\n $179 million for the years ended December 31, 2016, 2015\n and 2014, 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 Note 2 of\n 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 An impairment charge is recognized when the asset’s carrying\n value exceeds its net undiscounted future cash flows and its fair\n market value. The amount of the charge is the difference between\n the asset’s carrying value and fair market value. See Note 16\n of 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 cash-settled restricted stock units\n (“RSUs”) are remeasured at fair value throughout the\n requisite service period on the last day of each reporting period\n based upon UAL’s stock price. In addition to the service\n requirement, certain RSUs have performance metrics that must be\n achieved prior to vesting. These awards are accrued based on the\n expected level of achievement at each reporting period. A\n cumulative adjustment is recorded on the last day of each reporting\n period to adjust compensation expense based on both UAL’s\n stock price and the then current level of expected performance\n achievement for the performance-based awards. See Note 5 of this\n report for additional information on UAL’s share-based\n compensation 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) | \n\n Uncertain Income Tax Positions—The Company has\n recorded reserves for income taxes and associated interest that may\n become payable in future years. Although management believes that\n its positions taken on income tax matters are reasonable, the\n Company nevertheless has established tax and interest reserves in\n recognition that various taxing authorities may challenge certain\n of the positions taken by the Company, potentially resulting in\n additional liabilities for taxes and interest. The Company’s\n uncertain tax position reserves are reviewed periodically and are\n adjusted as events occur that affect its estimates, such as the\n availability of new information, the lapsing of applicable statutes\n of limitation, the conclusion of tax audits, the measurement of\n additional estimated liability, the identification of new tax\n matters, the release of administrative tax guidance affecting its\n estimates of tax liabilities, or the rendering of relevant court\n decisions. The Company records penalties and interest relating to\n uncertain tax positions in Other operating expense and Interest\n expense, respectively, in its consolidated statements of\n operations. The Company has not recorded any material expense or\n liabilities related to interest or penalties in its consolidated\n financial statements. \n | \n
\n
\n| (r) | \nLabor\n Costs—The Company records expenses associated with\n amendable labor agreements when the amounts are probable and\n estimable. These include costs associated with lump sum cash\n payments that would be made in conjunction with the ratification of\n labor agreements. To the extent these upfront costs are in lieu of\n future pay increases, they would be capitalized and amortized over\n the term of the labor agreements. If not, these amounts would be\n expensed. | \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 third-party\n business revenue is recorded in Other operating revenue. The\n Company also incurs third-party business expenses, such as\n maintenance, ground handling and catering services for third\n parties, fuel sales and non-air mileage redemptions, and those\n third-party business expenses are recorded in Other operating\n expenses. | \n
\n
\n| (t) | \nRecently Issued\n Accounting Standards—The Financial Accounting Standards\n Board (“FASB”) amended the FASB Accounting Standards\n Codification and created a new Topic 606, Revenue from Contracts\n with Customers. This amendment prescribes that an entity should\n recognize revenue to depict the transfer of promised goods or\n services to customers in an amount that reflects the consideration\n to which the entity expects to be entitled in exchange for those\n goods or services. The amendment supersedes the revenue recognition\n requirements in Topic 605, Revenue Recognition, and most\n industry-specific guidance throughout the Industry Topics of the\n Accounting Standards Codification. The Company currently plans to\n use the full-retrospective approach in adopting this standard on\n January 1, 2018. Under the new standard, certain airline\n ancillary fees directly related to passenger revenue tickets, such\n as ticket 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 ticket change fees\n which were previously recognized when received and booking fees\n when paid, will likely be recognized when transportation is\n provided. The Company has previously recorded ancillary fees and\n change fees in other operating revenue but will record these in\n passenger revenue under the new standard. The Company is evaluating\n other possible impacts from the new standard on its consolidated\n financial statements. | \n
\n In 2016, the\n FASB amended the FASB Accounting Standards Codification and created\n a new Topic 842, Leases (“Topic 842”). The\n guidance requires lessees to recognize a right-of-use asset and a lease\n liability for all leases (with the exception of short-term leases)\n at the commencement date and recognize expenses on their income\n statements similar to the current Topic 840, Leases. It is\n effective for fiscal years and interim periods beginning after\n December 15, 2018, and early adoption is permitted. Lessees\n and lessors are required to adopt Topic 842 using a modified\n retrospective approach for all leases existing at or commencing\n after the date of initial application with an option to use certain\n practical expedients. The Company is evaluating the impact the\n adoption of this standard will have on its consolidated financial\n statements and believes this standard will have a significant\n impact on its consolidated balance sheets.
\n\n In 2016, the\n FASB issued Accounting Standards Update No. 2016-09, Improvements to\n Employee Share-Based Payment Accounting (“ASU\n 2016-09”).\n The update requires excess tax benefits and tax deficiencies, which\n arise due to differences between the measure of compensation\n expense and the amount deductible for tax purposes, to be recorded\n directly through earnings as a component of income tax expense.\n Under current GAAP, these differences are generally recorded in\n additional paid-in capital\n and thus have no impact on net income. The change in treatment of\n excess tax benefits and tax deficiencies will also impact the\n computation of diluted earnings per share and the cash flows\n associated with those items will be classified as operating\n activities on the statements of consolidated cash flows.\n Additionally, entities will be permitted to make an accounting\n policy election for the impact of forfeitures on the recognition of\n expense for share-based payment awards. Forfeitures can be\n estimated, as required under current GAAP, or recognized when they\n occur. The amendments in this update are effective for annual\n periods beginning after December 15, 2016, and interim periods\n within those annual periods. The Company does not expect the\n adoption of ASU 2016-09 to\n have a material impact on its consolidated financial\n statements.
\n\n In 2016, the\n FASB issued Accounting Standards Update No. 2016-15, Statement of Cash\n Flows (Topic 230): Classification of Certain Cash Receipts and Cash\n Payments (“ASU 2016-15”). The update amends the\n guidance in Accounting Standards Codification 230, Statement of\n Cash Flows (“ASC 230”), and clarifies how entities\n should classify certain cash receipts and cash payments on the\n statement of cash flows with the objective of reducing the existing\n diversity in practice related to eight specific cash flow issues.\n The Company adopted ASU 2016-15 as of December 31, 2016\n and the standard did not have a material impact on its consolidated\n financial statements.
\n\n In 2016, the\n FASB issued Accounting Standards Update No. 2016-18, Statement of Cash\n Flows (Topic 230): Restricted Cash. The update amends ASC 230\n to add guidance on the classification and presentation of\n restricted cash in the statement of cash flows. Furthermore, a\n reconciliation between the statement of financial position and the\n statement of cash flows must be disclosed when the statement of\n financial position includes more than one line item for cash, cash\n equivalents, restricted cash, and restricted cash equivalents. The\n Company adopted this standard as of December 31, 2016 and\n included $124 million, $206 million and $320 million\n of restricted cash in the total of cash, cash equivalents and\n restricted cash in its statements of consolidated cash flows for\n the year ended December 31, 2016, 2015 and 2014, respectively.\n A reconciliation of restricted cash for each period of the\n Company’s balance sheet to its statement of consolidated cash\n flows is included in Note 1(d) Cash and Cash Equivalents and\n Restricted Cash of this report.
\n\n The FASB issued\n Accounting Standards Update No. 2015-07, Fair Value\n Measurement (Topic 820): Disclosures for Investments in Certain\n Entities That Calculate Net Asset Value per Share (or Its\n Equivalent). Under the standard, investments for which fair\n value is measured at net asset value (“NAV”) per share\n (or its equivalent) using the practical expedient are no longer\n categorized in the fair value hierarchy. The Company adopted this\n standard on January 1, 2016. As of December 31, 2016, the\n Company had approximately $182 million of such investments as\n part of Short-term investments on its consolidated balance sheets.\n In addition, pension plan investments measured at NAV per share are\n no longer categorized within the fair value hierarchy. As of\n December 31, 2016, the Company had approximately\n $1.8 billion of such investments.
\nNOTE 10—HEDGING\n ACTIVITIES
\nFuel\n Derivatives
\nAs of December 31,\n 2016, the Company did not have any fuel hedging contracts\n outstanding to hedge its fuel consumption. The last of the\n Company’s fuel hedge derivatives designated for cash flow\n hedge accounting expired in December 2016. The Company’s\n current strategy is to not enter into transactions to hedge its\n fuel consumption, although the Company regularly reviews its\n strategy based on market conditions and other factors.
\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.
\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\n Sheet Location \n | \n \n | 2016 | \n\n | \n | 2015 | \n\n | ||
| \n Derivatives\n designated as cash flow hedges \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 | $ | \n— | \n\n | \n | $ | \n119 | \n\n |
| \n Derivatives not\n designated for hedge accounting \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 | $ | \n— | \n\n | \n | $ | \n5 | \n\n |
| \n Total\n derivatives \n | \n \n | \n | \n | \n | \n | \n | \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 | $ | \n— | \n\n | \n | $ | \n124 | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
\n
\nThe 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 \n Loss \n Recognized \n in AOCI on Derivatives \n (Effective\n Portion) | \n \n | \n | Loss Reclassified from \n AOCI into Income \n (Fuel Expense) \n (Effective Portion) | \n \n | \n | Amount of Loss \n Recognized in \n Nonoperating income \n (expense): Miscellaneous, \n net (Ineffective Portion) | \n \n | |||||||||||||||
| \n | \n | 2016 | \n\n | \n | 2015 | \n\n | \n | 2016 | \n\n | \n | 2015 | \n\n | \n | 2016 | \n\n | \n | 2015 | \n\n | ||||||
| \n Fuel contracts \n | \n \n | $ | \n(4) | \n\n | \n | $ | \n(320) | \n\n | \n | $ | \n(217) | \n\n | \n | $ | \n(604) | \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 Loss\n Recognized \n in Nonoperating income (expense): \n Miscellaneous, net | \n \n | \n | \n | |||||||||
| \n | \n | 2016 | \n\n | \n | 2015 | \n\n | \n | 2014 | \n\n | \n | \n | |||
| \n Fuel contracts \n | \n \n | $ | \n— | \n\n | \n | $ | \n(80 | \n) | \n\n | $ | \n(462) | \n\n | \n | \n |
Foreign Currency\n Derivatives
\nAs of December 31,\n 2016, the Company did not have any foreign currency contracts\n outstanding to hedge its foreign currency sales. The last of the\n Company’s foreign currency derivatives designated for cash\n flow hedge accounting expired in December 2016. The Company’s\n current strategy is to not enter into transactions to hedge its\n foreign currency sales, although the Company regularly reviews its\n strategy based on market conditions and other factors.
\nNOTE 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 | \n | \n | \n | 2016 | \n\n | \n | 2015 | \n\n | |||||||||||
| \n \n Item \n | \n \n | Asset life (a) | \n\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 | \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 | \n \n \n | \n \n | \n | \n | \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 | \n |
| \n Frequent flyer database\n (b) \n | \n \n | \n | 22 | \n\n | \n | $ | \n1,177 | \n\n | \n | $ | \n771 | \n\n | \n | $ | \n1,177 | \n\n | \n | $ | \n702 | \n\n |
| \n Hubs \n | \n \n | \n | 20 | \n\n | \n | \n | 145 | \n\n | \n | \n | 82 | \n\n | \n | \n | 145 | \n\n | \n | \n | 74 | \n\n |
| \n Contracts \n | \n \n | \n | 13 | \n\n | \n | \n | 135 | \n\n | \n | \n | 95 | \n\n | \n | \n | 135 | \n\n | \n | \n | 86 | \n\n |
| \n Patents and\n tradenames \n | \n \n | \n | 3 | \n\n | \n | \n | 108 | \n\n | \n | \n | 108 | \n\n | \n | \n | 108 | \n\n | \n | \n | 108 | \n\n |
| \n Airport slots and\n gates \n | \n \n | \n | 8 | \n\n | \n | \n | 97 | \n\n | \n | \n | 97 | \n\n | \n | \n | 97 | \n\n | \n | \n | 97 | \n\n |
| \n Other \n | \n \n | \n | 25 | \n\n | \n | \n | 109 | \n\n | \n | \n | 81 | \n\n | \n | \n | 109 | \n\n | \n | \n | 77 | \n\n |
| \n | \n | \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \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 | \n | \n | $ | \n1,771 | \n\n | \n | $ | \n1,234 | \n\n | \n | $ | \n1,771 | \n\n | \n | $ | \n1,144 | \n\n |
| \n | \n | \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \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 | \n |
| \n Route\n authorities \n | \n \n | \n | \n | \n | \n | $ | \n1,562 | \n\n | \n | \n | \n | \n | \n | $ | \n1,570 | \n\n | \n | \n | \n | \n |
| \n Airport slots and\n gates \n | \n \n | \n | \n | \n | \n | \n | 536 | \n\n | \n | \n | \n | \n | \n | \n | 942 | \n\n | \n | \n | \n | \n |
| \n Tradenames and\n logos \n | \n \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 | \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 | \n |
| \n Total \n | \n \n | \n | \n | \n | \n | $ | \n3,095 | \n\n | \n | \n | \n | \n | \n | $ | \n3,509 | \n\n | \n | \n | \n | \n |
| \n | \n | \n | \n | \n | \n | \n \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 2016, 2015 and 2014 was $90 million, $105 million and\n $128 million, respectively. Projected amortization expense in\n 2017, 2018, 2019, 2020 and 2021 is $79 million,\n $70 million, $64 million, $58 million and\n $53 million, respectively.
\nSee Note 16 of this report\n for additional information related to impairment of intangible\n assets.
\nNOTE\n 7 - INCOME TAXES
\nThe 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 2016 \n | \n \n | UAL | \n\n | \n | United | \n\n | ||
| \n Current \n | \n \n | $ | \n(92) | \n\n | \n | $ | \n(92) | \n\n |
| \n Deferred \n | \n \n | \n | 1,648 | \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 | \n | $ | \n1,556 | \n\n | \n | $ | \n1,558 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | ||||||
| \n \n 2015 \n | \n \n | \n | \n | \n | \n | \n | ||
| \n Current \n | \n \n | $ | \n56 | \n\n | \n | $ | \n56 | \n\n |
| \n Deferred \n | \n \n | \n | (3,177) | \n\n | \n | \n | (3,136) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | $ | \n(3,121) | \n\n | \n | $ | \n(3,080) | \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 | \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
\nThe income tax provision\n differed from amounts computed at the statutory federal income tax\n 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 | 2016 | \n\n | \n | 2015 | \n\n | \n | 2014 | \n\n | |||
| \n Income tax provision at\n statutory rate \n | \n \n | $ | \n1,337 | \n\n | \n | $ | \n1,477 | \n\n | \n | $ | \n395 | \n\n |
| \n State income taxes, net of\n federal income tax \n | \n \n | \n | 38 | \n\n | \n | \n | 38 | \n\n | \n | \n | 10 | \n\n |
| \n Foreign income\n taxes \n | \n \n | \n | 3 | \n\n | \n | \n | 4 | \n\n | \n | \n | 2 | \n\n |
| \n Nondeductible employee\n meals \n | \n \n | \n | 16 | \n\n | \n | \n | 15 | \n\n | \n | \n | 15 | \n\n |
| \n Income tax\n adjustment \n | \n \n | \n | 180 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n State rate\n change \n | \n \n | \n | (12) | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n Valuation\n allowance \n | \n \n | \n | 20 | \n\n | \n | \n | (4,662) | \n\n | \n | \n | (435) | \n\n |
| \n Other, net \n | \n \n | \n | (26) | \n\n | \n | \n | 7 | \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 | \n \n \n | \n \n |
| \n | \n | $ | \n1,556 | \n\n | \n | $ | \n(3,121) | \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 \n | \n \n |
| \n | \n | \n | \n | |||||||||
| \n United \n | \n \n | 2016 | \n\n | \n | 2015 | \n\n | \n | 2014 | \n\n | |||
| \n Income tax provision at\n statutory rate \n | \n \n | $ | \n1,338 | \n\n | \n | $ | \n1,477 | \n\n | \n | $ | \n388 | \n\n |
| \n State income taxes, net of\n federal income tax \n | \n \n | \n | 38 | \n\n | \n | \n | 38 | \n\n | \n | \n | 10 | \n\n |
| \n Foreign income\n taxes \n | \n \n | \n | 3 | \n\n | \n | \n | 4 | \n\n | \n | \n | 2 | \n\n |
| \n Nondeductible employee\n meals \n | \n \n | \n | 16 | \n\n | \n | \n | 15 | \n\n | \n | \n | 15 | \n\n |
| \n Derivative market\n adjustment \n | \n \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | (7) | \n\n |
| \n Income tax\n adjustment \n | \n \n | \n | 180 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n State rate\n change \n | \n \n | \n | (12) | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n Valuation\n allowance \n | \n \n | \n | 20 | \n\n | \n | \n | (4,621) | \n\n | \n | \n | (421) | \n\n |
| \n Other, net \n | \n \n | \n | (25) | \n\n | \n | \n | 7 | \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 | \n \n \n | \n \n |
| \n | \n | $ | \n1,558 | \n\n | \n | $ | \n(3,080) | \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 \n | \n \n |
The Company’s\n effective tax rate for the year ended December 31, 2016\n differed from the federal statutory rate of 35% primarily because\n of the non-cash income tax\n expense of $180 million that was related to losses on fuel\n derivatives designated for hedge accounting. Subsequent to the\n release of the valuation allowance in 2015, this deferred income\n tax expense of $180 million remained in AOCI until all fuel\n derivatives were settled in December 2016. The change in the\n effective tax rate each period is impacted by a number of factors,\n including the relative mix of domestic and state income tax expense\n in the U.S., adjustments to the valuation allowances and discrete\n items.
\n\n
\nTemporary differences and\n carryforwards that give rise to deferred tax assets and liabilities\n at December 31, 2016 and 2015 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 | 2016 | \n\n | \n | 2015 | \n\n | \n | 2016 | \n\n | \n | 2015 | \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 | $ | \n1,613 | \n\n | \n | $ | \n2,897 | \n\n | \n | $ | \n1,571 | \n\n | \n | $ | \n2,855 | \n\n |
| \n Deferred revenue \n | \n \n | \n | 2,096 | \n\n | \n | \n | 2,160 | \n\n | \n | \n | 2,096 | \n\n | \n | \n | 2,160 | \n\n |
| \n Employee benefits,\n including pension, postretirement and medical \n | \n \n | \n | 1,662 | \n\n | \n | \n | 1,662 | \n\n | \n | \n | 1,662 | \n\n | \n | \n | 1,662 | \n\n |
| \n Alternative minimum tax\n (“AMT”) credit carryforwards \n | \n \n | \n | 116 | \n\n | \n | \n | 232 | \n\n | \n | \n | 116 | \n\n | \n | \n | 232 | \n\n |
| \n Other \n | \n \n | \n | 523 | \n\n | \n | \n | 566 | \n\n | \n | \n | 522 | \n\n | \n | \n | 566 | \n\n |
| \n Less: Valuation\n allowance \n | \n \n | \n | (68) | \n\n | \n | \n | (48) | \n\n | \n | \n | (68) | \n\n | \n | \n | (48) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \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 | $ | \n5,942 | \n\n | \n | $ | \n7,469 | \n\n | \n | $ | \n5,899 | \n\n | \n | $ | \n7,427 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \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 \n | \n \n | $ | \n(3,961) | \n\n | \n | $ | \n(3,921) | \n\n | \n | $ | \n(3,961) | \n\n | \n | $ | \n(3,921) | \n\n |
| \n Intangibles \n | \n \n | \n | (1,326) | \n\n | \n | \n | (1,511) | \n\n | \n | \n | (1,326) | \n\n | \n | \n | (1,511) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \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(5,287) | \n\n | \n | $ | \n(5,432) | \n\n | \n | $ | \n(5,287) | \n\n | \n | $ | \n(5,432) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \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 asset \n | \n \n | $ | \n655 | \n\n | \n | $ | \n2,037 | \n\n | \n | $ | \n612 | \n\n | \n | $ | \n1,995 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \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 its domestic\n consolidated subsidiaries file a consolidated federal income tax\n return with UAL. Under an intercompany tax allocation policy,\n United and its subsidiaries compute, record and pay UAL for their\n 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.
\nThe Company’s 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 carryforwards of\n $4.4 billion for UAL. If not utilized these federal\n pre-tax NOLs will expire\n as follows (in billions): $0.5 in 2026, $1.4 in 2027 and $2.5 after\n 2028. In addition, the majority of tax benefits of the state net\n operating losses of $56 million, net of a valuation allowance\n of $36 million, for UAL will expire over a five to\n 20-year period.\n Additionally, the Company has $108 million of AMT credit\n carryforwards, net of a valuation allowance of $8 million,\n which do not expire.
\nThe Company periodically\n assesses whether it is more likely than not that it will generate\n sufficient taxable income to realize its deferred income tax\n assets. The Company establishes valuation allowances if it is not\n likely it will realize its deferred income tax assets. In making\n this determination, the Company considers all available positive\n and negative evidence and makes certain assumptions. The Company\n considers, among other things, projected future taxable income,\n scheduled reversals of deferred tax liabilities, the overall\n business environment, the Company’s historical financial\n results and tax planning strategies. In evaluating the likelihood\n of utilizing the Company’s net deferred income tax assets,\n the significant factors that the Company considers include\n (1) the Company’s recent history and forecasted\n profitability; (2) growth in the U.S. and global economies;\n and (3) future impact of taxable temporary differences. In\n 2015, the Company concluded that its deferred income tax assets\n were more likely than not to be realized and released almost all of\n its valuation allowance in 2015, resulting in a $3.1 billion\n benefit in its provision for income taxes. The valuation allowance\n recorded in AOCI in prior years was released through the income\n statement.
\n\n
\nThe Company has a valuation\n allowance of $68 million for certain state and local NOLs and\n credit carryforwards. The Company expects these NOLs and\n credits will expire unused due to limited carryforward periods. The\n ability to utilize these state NOLs and credits will be evaluated\n on a quarterly basis to determine if there are any significant\n events or any prudent and feasible tax planning strategies that\n would affect the Company’s ability to realize these deferred\n tax assets.
\nThe Company’s\n unrecognized tax benefits related to uncertain tax positions were\n $74 million, $24 million and $9 million at 2016,\n 2015 and 2014, respectively. Included in the ending balance at 2016\n is $20 million that would affect the Company’s effective\n tax rate if recognized. The changes in unrecognized tax benefits\n relating to settlements with taxing authorities, unrecognized tax\n benefits as a result of tax positions taken during a prior period\n and unrecognized tax benefits relating from a lapse of the statute\n of limitations were immaterial during 2016, 2015 and 2014. The\n Company does not expect significant increases or decreases in their\n unrecognized tax benefits within the next 12 months.
\nThere are no material\n amounts included in the balance at December 31, 2016 for tax\n positions for which the ultimate deductibility is highly certain\n but for which there is uncertainty about the timing of such\n deductibility.
\nThe Company’s federal\n income tax returns for tax years after 2002 remain subject to\n examination by the Internal Revenue Service (“IRS”) and\n state taxing jurisdictions. Currently, there are no ongoing\n examinations of the Company’s prior year tax returns being\n conducted by the IRS.
\n| (q) | \n\n Uncertain Income Tax Positions—The Company has\n recorded reserves for income taxes and associated interest that may\n become payable in future years. Although management believes that\n its positions taken on income tax matters are reasonable, the\n Company nevertheless has established tax and interest reserves in\n recognition that various taxing authorities may challenge certain\n of the positions taken by the Company, potentially resulting in\n additional liabilities for taxes and interest. The Company’s\n uncertain tax position reserves are reviewed periodically and are\n adjusted as events occur that affect its estimates, such as the\n availability of new information, the lapsing of applicable statutes\n of limitation, the conclusion of tax audits, the measurement of\n additional estimated liability, the identification of new tax\n matters, the release of administrative tax guidance affecting its\n estimates of tax liabilities, or the rendering of relevant court\n decisions. The Company records penalties and interest relating to\n uncertain tax positions in Other operating expense and Interest\n expense, respectively, in its consolidated statements of\n operations. The Company has not recorded any material expense or\n liabilities related to interest or penalties in its consolidated\n financial statements. \n | \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, 2016,\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 | \n\n | \n | Facility and Other \n Operating Leases | \n \n | \n | Aircraft Operating \n Leases | \n \n | |||
| \n 2017 \n | \n \n | $ | \n183 | \n\n | \n | $ | \n1,256 | \n\n | \n | $ | \n1,271 | \n\n |
| \n 2018 \n | \n \n | \n | 170 | \n\n | \n | \n | 1,106 | \n\n | \n | \n | 1,074 | \n\n |
| \n 2019 \n | \n \n | \n | 105 | \n\n | \n | \n | 991 | \n\n | \n | \n | 894 | \n\n |
| \n 2020 \n | \n \n | \n | 85 | \n\n | \n | \n | 1,104 | \n\n | \n | \n | 669 | \n\n |
| \n 2021 \n | \n \n | \n | 84 | \n\n | \n | \n | 888 | \n\n | \n | \n | 551 | \n\n |
| \n After\n 2021 \n | \n \n | \n | 915 | \n\n | \n | \n | 6,702 | \n\n | \n | \n | 2,049 | \n\n |
| \n | \n | \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 | $ | \n1,542 | \n\n | \n | $ | \n12,047 | \n\n | \n | $ | \n6,508 | \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 | (604) | \n\n | \n | \n | \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 | 938 | \n\n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Current portion \n | \n \n | \n | (116) | \n\n | \n | \n | \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 | $ | \n822 | \n\n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n |
As of December 31,\n 2016, United’s aircraft capital lease minimum payments relate\n to leases of 38 mainline and 29 regional aircraft as well as to\n leases of nonaircraft assets. Imputed interest rate ranges are 3.5%\n to 20.8%.
\nAircraft operating leases\n have initial terms of five to 26 years, with expiration dates\n ranging from 2017 through 2028. Under the terms of most leases,\n United has the right to purchase the aircraft at the end of the\n lease term, in some cases at fair market value, and in others, at\n fair market value or a percentage of cost. United has facility\n operating leases that extend to 2041.
\nDuring 2015, the Company\n reached an agreement with AerCap Holdings N.V., a major aircraft\n leasing company, to lease used Airbus S.A.S (“Airbus”)\n A319s. Five such aircraft are expected to be delivered in 2017. In\n addition, up to 14 more aircraft may be delivered over the next\n four years subject to certain conditions.
\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\n $1.4 billion of underlying debt and interest thereon as of\n December 31, 2016. 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.
\nIn 2016, United signed a\n seven year lease extension through 2024 with the Metropolitan\n Washington Airports Authority to continue its use of terminals at\n Washington Dulles International Airport.
\nUnited’s nonaircraft\n rent expense was approximately $1.2 billion, $1.3 billion\n and $1.4 billion for the years ended December 31, 2016,\n 2015 and 2014, 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 $439 million,\n $461 million and $442 million for the years ended\n December 31, 2016, 2015 and 2014, respectively.
\n\n
\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,\n primarily related to aircraft which make up the majority of the\n fair value lease adjustment balance, are one to eight years\n for United. The lease valuation adjustments are classified within\n other noncurrent liabilities and the net accretion amounts are\n $82 million, $107 million and $160 million for the\n years ended December 31, 2016, 2015 and 2014,\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 predetermined 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 494 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. See Part I, Item 2, “Properties” of\n this report for additional information.
\nIn 2016 and 2015, Republic\n Airline Inc. (“Republic”), a wholly-owned subsidiary of\n Republic Airways Holdings (“Republic Airways”),\n purchased and took delivery of 16 new 76-seat Embraer S.A.\n (“Embraer”) E175 aircraft, and placed these aircraft\n into service under the United Express brand. Subsequent to the\n Chapter 11 bankruptcy filing by Republic Airways and certain of its\n subsidiaries in the first quarter of 2016, United entered into\n amendments to its CPA with Republic in 2016 for Republic to operate\n a total of 28 Embraer E175 aircraft, 16 of which were delivered as\n previously described and 12 of which remain to be delivered in\n 2017. In connection with the amended CPA, United will own the 12\n remaining Embraer E175 aircraft.
\nIn 2016, United agreed to\n purchase 12 new Embraer E175 aircraft that were previously expected\n to be purchased by one of its United Express operators, and in the\n first quarter of 2017, United entered into a CPA amendment with\n Mesa Air Group, Inc. (“Mesa Air Group”) and Mesa\n Airlines, Inc. (“Mesa”), a wholly-owned subsidiary of\n Mesa Air Group, for Mesa to operate these 12 additional Embraer\n E175 aircraft under the United Express brand. As of\n December 31, 2016, all 12 of these aircraft are expected to be\n delivered in 2017.
\nIn 2015, United entered\n into amendments to the CPA with SkyWest Airlines, Inc.\n (“SkyWest”), a wholly-owned subsidiary of SkyWest,\n Inc., to operate an additional 25 new 76-seat Embraer E175 aircraft under\n the United Express brand. SkyWest purchased all of these\n 76-seat aircraft directly\n from the manufacturer with seven deliveries remaining in\n 2017.
\nIn 2015, United entered\n into a new CPA with Champlain Enterprises, LLC d/b/a CommutAir\n (“CommutAir”), pursuant to which CommutAir will operate\n 40 used Embraer ERJ145 aircraft under the United Express brand that\n are currently being operated by a different United Express regional\n carrier, with transfers that are continuing through 2018. As of\n December 31, 2016, 28 aircraft are still pending\n transfer.
\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 a regional carrier or deemed\n to be leased from other regional carriers and facility rent that\n are 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, 2016, our future payments through the end of the\n terms of our CPAs are presented in the table below (in\n billions):
\n\n
\n| \n | \n | \n | \n | \n |
| \n 2017 \n | \n \n | $ | \n1.9 | \n\n |
| \n 2018 \n | \n \n | \n | 1.9 | \n\n |
| \n 2019 \n | \n \n | \n | 1.3 | \n\n |
| \n 2020 \n | \n \n | \n | 1.0 | \n\n |
| \n 2021 \n | \n \n | \n | 1.0 | \n\n |
| \n After 2021 \n | \n \n | \n | 4.3 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | $ | \n11.4 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
The actual amounts we pay\n to our regional operators under CPAs could differ materially from\n these estimates. For example, a 10% increase or decrease in\n scheduled block hours for all of United’s regional operators\n (whether as a result of changes in average daily utilization or\n otherwise) in 2017 would result in a corresponding change in annual\n cash obligations under the CPAs of approximately\n $147 million.
\n\n The table\n below summarizes United’s commitments as of December 31,\n 2016, which primarily relate to the acquisition of aircraft and\n related spare engines, aircraft improvements and include other\n capital purchase commitments for the years ended December 31\n (in billions). Any new firm aircraft orders, including through the\n exercise of purchase options and purchase rights, will increase the\n total future capital commitments of the Company.
\n\n
\n| \n | \n | \n | \n | \n |
| \n 2017 \n | \n \n | $ | \n4.5 | \n\n |
| \n 2018 \n | \n \n | \n | 3.2 | \n\n |
| \n 2019 \n | \n \n | \n | 3.1 | \n\n |
| \n 2020 \n | \n \n | \n | 2.5 | \n\n |
| \n 2021 \n | \n \n | \n | 2.2 | \n\n |
| \n After 2021 \n | \n \n | \n | 7.8 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | $ | \n23.3 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \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 |
| (b) | \nRevenue\n Recognition—The Company records passenger ticket sales\n and tickets sold by other airlines for use on United as passenger\n revenue when the transportation is provided or upon estimated\n breakage. The value of unused passenger tickets is included in\n current liabilities as Advance ticket sales. Tickets sold by other\n airlines are recorded at the estimated values to be billed to the\n other airlines. Differences between amounts billed and the actual\n amounts may be rejected and rebilled or written off if the amount\n recorded was different from the original estimate. When necessary,\n the Company records a reserve against its interline billings and\n payables if historical experience indicates that these amounts are\n different. Non-refundable\n tickets generally expire on the date of the intended flight, unless\n the date is extended by notification from the customer on or before\n the intended flight date. | \n
\n Fees charged in\n association with changes or extensions to non-refundable tickets are recorded as\n other revenue at the time the fee is incurred. The fare on the\n changed ticket, including any additional collection of fare, is\n deferred and recognized in accordance with our transportation\n revenue recognition policy at the time the transportation is\n provided. Change fees related to non-refundable tickets are considered\n a separate transaction from the air transportation because they\n represent a charge for the Company’s additional service to\n modify a previous sale. Therefore, the pricing of the change fee\n and the initial customer order are separately determined and\n represent distinct earnings 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 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, 2016, 2015 and 2014.
\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 | 2016 | \n\n | |
| \n Domestic (U.S. and\n Canada) \n | \n \n | $ | \n22,202 | \n\n |
| \n Pacific \n | \n \n | \n | 4,959 | \n\n |
| \n Atlantic \n | \n \n | \n | 6,157 | \n\n |
| \n Latin America \n | \n \n | \n | 3,238 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
| \n Total \n | \n \n | $ | \n36,556 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | |||
| \n | \n | 2015 | \n\n | |
| \n Domestic (U.S. and\n Canada) \n | \n \n | $ | \n21,931 | \n\n |
| \n Pacific \n | \n \n | \n | 5,498 | \n\n |
| \n Atlantic \n | \n \n | \n | 7,068 | \n\n |
| \n Latin America \n | \n \n | \n | 3,367 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
| \n Total \n | \n \n | $ | \n37,864 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | |||
| \n | \n | 2014 | \n\n | |
| \n Domestic (U.S. and\n Canada) \n | \n \n | $ | \n22,320 | \n\n |
| \n Pacific \n | \n \n | \n | 5,767 | \n\n |
| \n Atlantic \n | \n \n | \n | 7,321 | \n\n |
| \n Latin America \n | \n \n | \n | 3,493 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
| \n Total \n | \n \n | $ | \n38,901 | \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 \n | \n | Pension Benefits | \n\n | ||||
| \n \n Assumptions\n used to determine benefit obligations \n | \n \n | \n | \n2016 | \n\n | \n | \n | \n2015 | \n\n |
| \n Discount rate \n | \n \n | \n | 4.18% | \n\n | \n | \n | 4.58% | \n\n |
| \n Rate of compensation\n increase \n | \n \n | \n | 3.54% | \n\n | \n | \n | 3.66% | \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 | 4.58% | \n\n | \n | \n | 4.20% | \n\n |
| \n Expected return on plan\n assets \n | \n \n | \n | 7.04% | \n\n | \n | \n | 7.40% | \n\n |
| \n Rate of compensation\n increase \n | \n \n | \n | 3.53% | \n\n | \n | \n | 3.51% | \n\n |
\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n | \n \n | Other Postretirement Benefits | \n\n | |||||
| \n Assumptions used to\n determine benefit obligations \n | \n \n | 2016 | \n\n | \n | 2015 | \n\n | ||
| \n Discount rate \n | \n \n | \n | 4.07% | \n\n | \n | \n | 4.49% | \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 | 4.49% | \n\n | \n | \n | 4.07% | \n\n |
| \n Expected return on plan\n assets \n | \n \n | \n | 3.00% | \n\n | \n | \n | 3.00% | \n\n |
| \n Health care cost trend rate\n assumed for next year \n | \n \n | \n | 6.50% | \n\n | \n | \n | 6.75% | \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 |
Temporary differences and\n carryforwards that give rise to deferred tax assets and liabilities\n at December 31, 2016 and 2015 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 | 2016 | \n\n | \n | 2015 | \n\n | \n | 2016 | \n\n | \n | 2015 | \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 | $ | \n1,613 | \n\n | \n | $ | \n2,897 | \n\n | \n | $ | \n1,571 | \n\n | \n | $ | \n2,855 | \n\n |
| \n Deferred revenue \n | \n \n | \n | 2,096 | \n\n | \n | \n | 2,160 | \n\n | \n | \n | 2,096 | \n\n | \n | \n | 2,160 | \n\n |
| \n Employee benefits,\n including pension, postretirement and medical \n | \n \n | \n | 1,662 | \n\n | \n | \n | 1,662 | \n\n | \n | \n | 1,662 | \n\n | \n | \n | 1,662 | \n\n |
| \n Alternative minimum tax\n (“AMT”) credit carryforwards \n | \n \n | \n | 116 | \n\n | \n | \n | 232 | \n\n | \n | \n | 116 | \n\n | \n | \n | 232 | \n\n |
| \n Other \n | \n \n | \n | 523 | \n\n | \n | \n | 566 | \n\n | \n | \n | 522 | \n\n | \n | \n | 566 | \n\n |
| \n Less: Valuation\n allowance \n | \n \n | \n | (68) | \n\n | \n | \n | (48) | \n\n | \n | \n | (68) | \n\n | \n | \n | (48) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \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 | $ | \n5,942 | \n\n | \n | $ | \n7,469 | \n\n | \n | $ | \n5,899 | \n\n | \n | $ | \n7,427 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \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 \n | \n \n | $ | \n(3,961) | \n\n | \n | $ | \n(3,921) | \n\n | \n | $ | \n(3,961) | \n\n | \n | $ | \n(3,921) | \n\n |
| \n Intangibles \n | \n \n | \n | (1,326) | \n\n | \n | \n | (1,511) | \n\n | \n | \n | (1,326) | \n\n | \n | \n | (1,511) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \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(5,287) | \n\n | \n | $ | \n(5,432) | \n\n | \n | $ | \n(5,287) | \n\n | \n | $ | \n(5,432) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \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 asset \n | \n \n | $ | \n655 | \n\n | \n | $ | \n2,037 | \n\n | \n | $ | \n612 | \n\n | \n | $ | \n1,995 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \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 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 | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 2016 | \n\n | \n | \n | \n | \n\n | 2015 | \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 | Assets \n Measured \n at NAV(a) | \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 | Assets \n Measured \n at NAV(a) | \n \n | |||||||||||
| \n Equity securities\n funds \n | \n \n | $ | \n1,173 | \n\n | \n | $ | \n230 | \n\n | \n | $ | \n111 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n832 | \n\n | \n | \n | \n | \n | \n\n | $ | \n1,135 | \n\n | \n | $ | \n254 | \n\n | \n | $ | \n135 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n746 | \n\n |
| \n Fixed-income\n securities \n | \n \n | \n | 1,298 | \n\n | \n | \n | — | \n\n | \n | \n | 824 | \n\n | \n | \n | 11 | \n\n | \n | \n | 463 | \n\n | \n | \n | \n | \n | \n\n | \n | 1,109 | \n\n | \n | \n | — | \n\n | \n | \n | 877 | \n\n | \n | \n | 9 | \n\n | \n | \n | 223 | \n\n |
| \n Alternatives \n | \n \n | \n | 586 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 134 | \n\n | \n | \n | 452 | \n\n | \n | \n | \n | \n | \n\n | \n | 527 | \n\n | \n | \n | — | \n\n | \n | \n | 1 | \n\n | \n | \n | 125 | \n\n | \n | \n | 401 | \n\n |
| \n Other\n investments \n | \n \n | \n | 298 | \n\n | \n | \n | 47 | \n\n | \n | \n | 68 | \n\n | \n | \n | 87 | \n\n | \n | \n | 96 | \n\n | \n | \n | \n | \n | \n\n | \n | 204 | \n\n | \n | \n | 37 | \n\n | \n | \n | 56 | \n\n | \n | \n | 18 | \n\n | \n | \n | 93 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n | \n\n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \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 | $ | \n3,355 | \n\n | \n | $ | \n277 | \n\n | \n | $ | \n1,003 | \n\n | \n | $ | \n232 | \n\n | \n | $ | \n1,843 | \n\n | \n | \n | \n | \n | \n\n | $ | \n2,975 | \n\n | \n | $ | \n291 | \n\n | \n | $ | \n1,069 | \n\n | \n | $ | \n152 | \n\n | \n | $ | \n1,463 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n | \n\n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \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\n Postretirement \nBenefit Plan\n 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 | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| Deposit administration fund | \n\n | $ | \n55 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n— | \n\n | \n | $ | \n55 | \n\n | \n | $ | \n— | \n\n | \n | \n | \n | \n | \n\n | $ | \n56 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n— | \n\n | \n | $ | \n56 | \n\n | \n | $ | \n— | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n | \n\n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \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) In accordance with the\n relevant accounting standards, certain investments that are\n measured at fair value using the NAV per share (or its equivalent)\n have not been classified in the fair value hierarchy. These\n investments are commingled funds that invest in fixed-income\n instruments including bonds, debt securities, and other similar\n instruments issued by various U.S. and non-U.S. public- or private-sector\n entities. Redemption periods for these investments range from daily\n to annually.
\nThe 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 \n Loss \n Recognized \n in AOCI on Derivatives \n (Effective\n Portion) | \n \n | \n | Loss Reclassified from \n AOCI into Income \n (Fuel Expense) \n (Effective Portion) | \n \n | \n | Amount of Loss \n Recognized in \n Nonoperating income \n (expense): Miscellaneous, \n net (Ineffective Portion) | \n \n | |||||||||||||||
| \n | \n | 2016 | \n\n | \n | 2015 | \n\n | \n | 2016 | \n\n | \n | 2015 | \n\n | \n | 2016 | \n\n | \n | 2015 | \n\n | ||||||
| \n Fuel contracts \n | \n \n | $ | \n(4) | \n\n | \n | $ | \n(320) | \n\n | \n | $ | \n(217) | \n\n | \n | $ | \n(604) | \n\n | \n | $ | \n— | \n\n | \n | $ | \n— | \n\n |
The table below presents the fair value amounts\n of fuel derivative assets and liabilities and the location of\n amounts recognized in the Company’s financial\n statements.
\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\n Sheet Location \n | \n \n | 2016 | \n\n | \n | 2015 | \n\n | ||
| \n Derivatives\n designated as cash flow hedges \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 | $ | \n— | \n\n | \n | $ | \n119 | \n\n |
| \n Derivatives not\n designated for hedge accounting \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 | $ | \n— | \n\n | \n | $ | \n5 | \n\n |
| \n Total\n derivatives \n | \n \n | \n | \n | \n | \n | \n | \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 | $ | \n— | \n\n | \n | $ | \n124 | \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 per share are set forth\n below for the years ended December 31 (in millions, except per\n share amounts):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 2016 | \n\n | \n | 2015 | \n\n | \n | 2014 | \n\n | |||
| \n Basic earnings per\n share: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Earnings available to\n common stockholders \n | \n \n | $ | \n2,263 | \n\n | \n | $ | \n7,340 | \n\n | \n | $ | \n1,132 | \n\n |
| \n | \n | \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 | 329.9 | \n\n | \n | \n | 376.1 | \n\n | \n | \n | 371.1 | \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 Earnings per share,\n basic \n | \n \n | $ | \n6.86 | \n\n | \n | $ | \n19.52 | \n\n | \n | $ | \n3.05 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \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 per\n share: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Earnings available to\n common stockholders \n | \n \n | $ | \n2,263 | \n\n | \n | $ | \n7,340 | \n\n | \n | $ | \n1,132 | \n\n |
| \n Effect of dilutive\n securities \n | \n \n | \n | — | \n\n | \n | \n | — | \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 Earnings available to\n common stockholders including the effect of dilutive\n securities \n | \n \n | $ | \n2,263 | \n\n | \n | $ | \n7,340 | \n\n | \n | $ | \n1,143 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \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 | 329.9 | \n\n | \n | \n | 376.1 | \n\n | \n | \n | 371.1 | \n\n |
| \n Effect of convertible\n notes \n | \n \n | \n | — | \n\n | \n | \n | 0.3 | \n\n | \n | \n | 17.7 | \n\n |
| \n Effect of employee stock\n awards \n | \n \n | \n | 0.4 | \n\n | \n | \n | 0.5 | \n\n | \n | \n | 0.9 | \n\n |
| \n | \n | \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 | 330.3 | \n\n | \n | \n | 376.9 | \n\n | \n | \n | 389.7 | \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 Earnings per share,\n diluted \n | \n \n | $ | \n6.85 | \n\n | \n | $ | \n19.47 | \n\n | \n | $ | \n2.93 | \n\n |
| \n | \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 table below presents\n the Company’s contractual principal payments at\n December 31, 2016 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 2017 \n | \n \n | $ | \n849 | \n\n |
| \n 2018 \n | \n \n | \n | 1,427 | \n\n |
| \n 2019 \n | \n \n | \n | 1,852 | \n\n |
| \n 2020 \n | \n \n | \n | 1,007 | \n\n |
| \n 2021 \n | \n \n | \n | 1,174 | \n\n |
| \n After 2021 \n | \n \n | \n | 4,582 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | $ | \n10,891 | \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 Loss\n Recognized \n in Nonoperating income (expense): \n Miscellaneous, net | \n \n | \n | \n | |||||||||
| \n | \n | 2016 | \n\n | \n | 2015 | \n\n | \n | 2014 | \n\n | \n | \n | |||
| \n Fuel contracts \n | \n \n | $ | \n— | \n\n | \n | $ | \n(80 | \n) | \n\n | $ | \n(462) | \n\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 cash-settled restricted stock units\n (“RSUs”) are remeasured at fair value throughout the\n requisite service period on the last day of each reporting period\n based upon UAL’s stock price. In addition to the service\n requirement, certain RSUs have performance metrics that must be\n achieved prior to vesting. These awards are accrued based on the\n expected level of achievement at each reporting period. A\n cumulative adjustment is recorded on the last day of each reporting\n period to adjust compensation expense based on both UAL’s\n stock price and the then current level of expected performance\n achievement for the performance-based awards. See Note 5 of this\n report for additional information on UAL’s share-based\n compensation plans. | \n
NOTE 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 37 mainline jet aircraft contain a fixed-price\n purchase option that allow United to purchase the aircraft at\n predetermined prices on specified dates during the lease\n term. Additionally, leases covering 192 leased regional jet\n aircraft contain an option to purchase the aircraft at the end of\n the lease term at prices that, depending on market conditions,\n could be below fair value. United has not consolidated the\n related trusts because, even taking into consideration these\n purchase options, United is still not the primary\n beneficiary. United’s maximum exposure under these\n leases is the remaining lease payments, which are reflected in\n 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\n senior debt classes. These credit enhancements lower United’s\n total borrowing cost. Pass-through trusts are established to\n receive principal and interest payments on the equipment notes\n purchased by the pass-through trusts from United and remit these\n proceeds to the pass-through trusts’ certificate\n 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.
\nNOTE 16 - SPECIAL\n ITEMS
\nSpecial items classified as\n special charges in the statements of consolidated operations\n consisted of the following 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 |
| Operating: | \n\n | 2016 | \n\n | \n | 2015 | \n\n | \n | 2014 | \n\n | |||
| \n Impairment of\n assets \n | \n \n | $ | \n412 | \n\n | \n | $ | \n79 | \n\n | \n | $ | \n49 | \n\n |
| \n Cleveland airport lease\n restructuring \n | \n \n | \n | 74 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n Labor agreement\n costs \n | \n \n | \n | 64 | \n\n | \n | \n | 18 | \n\n | \n | \n | — | \n\n |
| \n Severance and benefit\n costs \n | \n \n | \n | 37 | \n\n | \n | \n | 107 | \n\n | \n | \n | 199 | \n\n |
| (Gains) losses on sale of assets and other special\n charges | \n\n | \n | 51 | \n\n | \n | \n | 122 | \n\n | \n | \n | 195 | \n\n |
| \n | \n | \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 | 638 | \n\n | \n | \n | 326 | \n\n | \n | \n | 443 | \n\n |
| \n Nonoperating and income\n taxes: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| Losses (gain) on extinguishment of debt and other | \n\n | \n | (1) | \n\n | \n | \n | 202 | \n\n | \n | \n | 74 | \n\n |
| Income tax benefit related to special charges | \n\n | \n | (229) | \n\n | \n | \n | (11) | \n\n | \n | \n | (10) | \n\n |
| Income tax adjustments (Notes 6 and 7) | \n\n | \n | 180 | \n\n | \n | \n | (3,130 | \n) | \n\n | \n | — | \n\n |
| \n | \n | \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 items, net of income taxes \n | \n \n | $ | \n588 | \n\n | \n | $ | \n(2,613 | \n) | \n\n | $ | \n507 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
2016
\nIn April 2016, the Federal\n Aviation Administration (“FAA”) announced that it will\n designate Newark Liberty International Airport\n (“Newark”) as a Level 2 schedule-facilitated\n airport under the International Air Transport Association Worldwide\n Slot Guidelines effective October 30, 2016. The designation\n was associated with an updated demand and capacity analysis of\n Newark by the FAA. In 2016, the Company determined that the\n FAA’s action impaired the entire value of its Newark slots\n because the slots are no longer the mechanism that governs\n take-off and landing\n rights. Accordingly, the Company recorded a $412 million\n special charge ($264 million net of taxes) to write off the\n intangible asset.
\nIn 2016, the City of\n Cleveland agreed to amend the Company’s lease, which runs\n through 2029, associated with certain excess airport terminal space\n (principally Terminal D) and related facilities at Hopkins\n International Airport (“Cleveland”). The Company\n recorded an accrual for remaining payments under the lease for\n facilities that the Company no longer uses and will continue to\n incur costs under the lease without economic benefit to the\n Company. This liability was measured and recorded at its fair value\n when the Company ceased its right to use such facilities leased to\n it pursuant to the lease. The Company recorded a net charge of\n $74 million ($47 million net of taxes) related to the\n amended lease.
\nThe fleet service,\n passenger service, storekeeper and other employees represented by\n the IAM ratified seven new contracts with the Company which\n extended the contracts through 2021. The technicians and related\n employees represented by the IBT ratified a six-year joint collective bargaining\n agreement which extended the contract through 2022. During 2016,\n the Company recorded $171 million ($110 million net of\n taxes) of special charges primarily for payments in conjunction\n with the IAM and IBT agreements described above. As part of the\n ratified contract with the IBT, the Company amended some of its\n technicians and related employees’ postretirement medical\n plans. The amendments triggered curtailment accounting, resulting\n in the recognition of a one-time $60 million gain\n ($38 million net of taxes) for accelerated recognition of a\n prior service credit in one of the plans. Also, as part of the\n ratified contract with the AFA, the Company amended two of its\n flight attendant postretirement medical plans. The amendments\n triggered curtailment accounting, resulting in the recognition of a\n one-time $47 million\n gain ($30 million net of taxes) for accelerated recognition of\n a prior service credit.
\nDuring 2016, the Company\n recorded $37 million ($24 million net of taxes) of\n severance and benefit costs related to a voluntary early-out program for the\n Company’s flight attendants and other severance agreements.\n In 2014, more than 2,500 flight attendants elected to voluntarily\n separate from the Company for a severance payment, with a maximum\n value of $100,000 per participant, based on years of service, with\n retirement dates through the end of 2016.
\nDuring 2016, the Company\n recorded gains and losses on sale of assets and other special\n charges of $51 million ($33 million net of taxes). In\n addition, the Company recorded $8 million ($5 million net\n of taxes) of losses due to exchange rate changes in Venezuela\n applicable to funds held in local currency and recorded a\n $9 million ($6 million net of taxes) gain on the sale of\n an affiliate.
\n2015
\nDuring its annual\n assessment in the fourth quarter, the Company recorded\n $33 million ($22 million net of related income tax\n benefit) related to the impairment of its indefinite-lived\n intangible assets (certain domestic slots and international Pacific\n routes), $8 million for the write-off of unexercised aircraft\n purchase options and $7 million for inventory held for sale.\n For the full-year 2015, the Company also recorded other\n impairments, including $10 million for discontinued internal\n software projects and $10 million for the impairment of\n several engines held for sale.
\nThe Company recorded\n $107 million of severance and benefit costs primarily related\n to a voluntary early-out\n program for its flight attendants. In 2014, more than 2,500 flight\n attendants elected to voluntarily separate from the Company for a\n severance payment, with a maximum value of $100,000 per\n participant, based on years of service, with retirement dates\n through the end of 2016.
\nDuring 2015, the Company\n also recorded $18 million related to collective bargaining\n agreements, $60 million of integration-related costs primarily\n related to systems integration and training for employees,\n $32 million related to charges for settlements in connection\n with legal matters, $16 million for the cease use of an\n aircraft under lease and $14 million for losses on the sale of\n aircraft and other miscellaneous gains and losses.
\nThe Company recorded\n $202 million of losses as part of Nonoperating income\n (expense): Miscellaneous, net due primarily to the write-off of $134 million related\n to the unamortized non-cash debt discount from the\n extinguishment of the 6% Notes due 2026 and the 6% Notes due 2028.\n During 2015, the Company also recorded a $61 million foreign\n exchange loss related to its cash holdings in Venezuela. The\n Venezuelan government has maintained currency controls and fixed\n official exchange rates (i.e. Sistema Complementario de\n Administracion de Divisas (“SICAD”), and Sistema\n Marginal de Divisas (“SIMADI”)) for many\n years. Previously, airlines were permitted to use the more\n favorable SICAD rate (13.5 Venezuelan bolivars to one U.S. dollar)\n if repatriating profits and for payments of local goods and\n services in Venezuela. During 2015, many of the payments for local\n goods and services transitioned to utilizing the SIMADI rate (200\n Venezuelan bolivars to one U.S. dollar) or were required to be paid\n in U.S. dollars. Furthermore, the Venezuelan government has not\n permitted the exchange and repatriations of local currency since\n mid-2014. As a\n result, the Company changed the exchange rate from historical SICAD\n rates to a combination of SIMADI and SICAD rates based on\n projections of future cash payments. Including this\n adjustment, the Company’s resulting cash balance held in\n Venezuelan bolivars at December 31, 2015 was approximately\n $13 million.
\n\n
\n2014
\nThe Company recorded a\n charge of $16 million ($10 million net of related income\n tax benefits) related to its annual assessment of impairment of its\n indefinite-lived intangible assets (certain international Pacific\n routes). The Company also 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 fleets.
\nThe Company recorded\n $141 million of severance and benefit costs related primarily\n to a voluntary early-out\n program for its flight attendants. More than 2,500 participants\n elected a one-time\n opportunity to voluntarily separate from the Company for a\n severance payment, with a maximum value of $100,000 per\n participant, based on years of service, with retirement dates\n through the end of 2016. In addition, the Company recorded\n $58 million of severance and benefits primarily related to\n reductions of management and front-line employees, including from\n Cleveland, as part of its cost savings initiatives.
\nThe Company recorded\n $66 million for the permanent grounding of 21 of the\n Company’s Embraer ERJ 135 regional aircraft under lease\n through 2018, which included an accrual for remaining lease\n payments and an amount for maintenance return conditions. The\n Company decided to permanently ground these 21 Embraer ERJ 135\n aircraft as a result of new Embraer E175 regional jet deliveries,\n the impact of pilot shortages at regional carriers and fuel prices.\n The Company also recorded $33 million for losses on the sale\n of assets and other special charges. In addition, $96 million\n of integration-related costs included compensation costs related to\n systems integration, training, severance and relocation for\n employees.
\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\n $64 million of expense primarily associated with the\n write-off of the related\n non-cash debt discounts.\n The Company also recorded $10 million of foreign exchange\n losses in Venezuela in 2014.
\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 Benefit Costs | \n \n | \n | Permanently \n \n Grounded Aircraft | \n \n | ||
| \n Balance at\n December 31, 2013 \n | \n \n | $ | \n91 | \n\n | \n | $ | \n11 | \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 | \n | 109 | \n\n | \n | \n | 102 | \n\n |
| \n Accrual \n | \n \n | \n | 107 | \n\n | \n | \n | 30 | \n\n |
| \n Payments \n | \n \n | \n | (189) | \n\n | \n | \n | (54) | \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, 2015 \n | \n \n | \n | 27 | \n\n | \n | \n | 78 | \n\n |
| \n Accrual and related\n adjustments \n | \n \n | \n | 37 | \n\n | \n | \n | (17) | \n\n |
| \n Payments \n | \n \n | \n | (50) | \n\n | \n | \n | (20) | \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, 2016 \n | \n \n | $ | \n14 | \n\n | \n | $ | \n41 | \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 early\n retirement programs.
\nNOTE 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 | \n | \n | \n | \n | \n | \n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | Deferred\n Taxes | \n\n | \n | \n | \n | |||||||||
| \n | \n | Pension and \n Other \n Postretirement \n Liabilities | \n \n | \n | Fuel \n Derivatives \n Contracts | \n \n | \n | Investments \n and Other | \n \n | \n | Pension and \n Other \n Postretirement \n Liabilities | \n \n | \n | Fuel \n Derivative \n Contracts | \n \n | \n | Total | \n\n | ||||||
| \n Balance at\n December 31, 2013 \n | \n \n | $ | \n699 | \n\n | \n | $ | \n11 | \n\n | \n | $ | \n13 | \n\n | \n | $ | \n(115) | \n\n | \n | $ | \n— | \n(c) | \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 | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Other comprehensive loss\n before reclassifications (a) \n | \n \n | \n | (1,106) | \n(b) | \n\n | \n | (599) | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | (1,705) | \n\n |
| \n Amounts reclassified from\n accumulated other comprehensive income (a) \n | \n \n | \n | (65) | \n\n | \n | \n | 89 | \n\n | \n | \n | (6) | \n\n | \n | \n | — | \n\n | \n | \n | — | \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 | \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 | — | \n\n | \n | \n | — | \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 | \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(472) | \n\n | \n | $ | \n(499) | \n\n | \n | $ | \n7 | \n\n | \n | $ | \n(115) | \n\n | \n | $ | \n— | \n(c) | \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 Other comprehensive income\n (loss) before reclassifications \n | \n \n | \n | 78 | \n(b) | \n\n | \n | (320) | \n\n | \n | \n | (4) | \n\n | \n | \n | (28) | \n\n | \n | \n | 115 | \n\n | \n | \n | (159) | \n\n |
| \n Amounts reclassified from\n accumulated other comprehensive income \n | \n \n | \n | 31 | \n\n | \n | \n | 604 | \n\n | \n | \n | — | \n\n | \n | \n | (11) | \n\n | \n | \n | (217) | \n\n | \n | \n | 407 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \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 | 109 | \n\n | \n | \n | 284 | \n\n | \n | \n | (4) | \n\n | \n | \n | (39) | \n\n | \n | \n | (102) | \n\n | \n | \n | 248 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \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, 2015 \n | \n \n | $ | \n(363) | \n\n | \n | $ | \n(215) | \n\n | \n | $ | \n3 | \n\n | \n | $ | \n(154) | \n\n | \n | $ | \n(102) | \n\n | \n | $ | \n(831) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \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 (loss) before reclassifications \n | \n \n | \n | (517) | \n(b) | \n\n | \n | (4) | \n\n | \n | \n | — | \n\n | \n | \n | 186 | \n\n | \n | \n | 1 | \n\n | \n | \n | (334) | \n\n |
| \n Amounts reclassified from\n accumulated other comprehensive income \n | \n \n | \n | 26 | \n\n | \n | \n | 217 | \n\n | \n | \n | (1) | \n\n | \n | \n | (8) | \n\n | \n | \n | 102 | \n\n | \n | \n | 336 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \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 | (491) | \n\n | \n | \n | 213 | \n\n | \n | \n | (1) | \n\n | \n | \n | 178 | \n\n | \n | \n | 103 | \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 Balance at\n December 31, 2016 \n | \n \n | $ | \n(854) | \n\n | \n | $ | \n(2) | \n\n | \n | $ | \n2 | \n\n | \n | $ | \n24 | \n\n | \n | $ | \n1 | \n\n | \n | $ | \n(829) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \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\n AOCI to \n Income | \n \n | \n | Affected Line Item\n in \n the Statement Where \n Net Income is Presented | \n \n | ||||||||||
| \n | \n | Year Ended\n December 31, | \n\n | \n | \n | \n | ||||||||||
| \n | \n | 2016 | \n\n | \n | 2015 | \n\n | \n | 2014 | \n\n | \n | \n | \n | ||||
| \n Fuel derivative\n contracts \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Fuel\n contracts-reclassifications of losses into earnings \n | \n \n | $ | \n217 | \n\n | \n | $ | \n604 | \n\n | \n | $ | \n89 | \n\n | \n | \n | Aircraft fuel | \n\n |
| \n Pension and Postretirement\n liabilities \n | \n \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 (d) \n | \n \n | \n | 26 | \n\n | \n | \n | 31 | \n\n | \n | \n | (65) | \n\n | \n | \n | Salaries and related costs | \n\n |
| \n Investments and\n other \n | \n \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\n earnings \n | \n \n | \n | (1) | \n\n | \n | \n | — | \n\n | \n | \n | (6) | \n\n | \n | \n | Miscellaneous, net | \n\n |
\n
\n\n
\n(a) Income tax expense for\n these items was offset by the Company’s valuation\n allowance.
\n(b) Prior service credits\n increased by $30 million, $0 million and $3 million\n and actuarial gains (losses) increased (decreased) by approximately\n $560 million, $78 million and $(1.1) billion for 2016,\n 2015 and 2014, respectively.
\n(c) Deferred tax balance\n was offset by the Company’s valuation allowance.
\n(d) This AOCI component is\n included in the computation of net periodic pension and other\n postretirement costs (see Note 8 of this report for additional\n information).
\nPrior to the release of the\n deferred income tax valuation allowance in the third quarter of\n 2015, the Company recorded approximately $465 million of\n valuation allowance adjustments in AOCI. Subsequent to the release\n of the deferred income tax valuation allowance in 2015, the\n $465 million debit remained within AOCI, of which\n $180 million related to losses on fuel hedges designated for\n hedge accounting and $285 million related to pension and other\n postretirement liabilities. Accounting rules required the\n adjustments to remain in AOCI as long as the Company had fuel\n derivatives designated for cash flow hedge accounting and the\n Company continues to provide pension and postretirement benefits.\n In 2016, we settled all of our fuel hedges and have not entered\n into any new fuel derivative contracts for hedge accounting.\n Accordingly, the Company reclassified the $180 million to\n income tax expense in 2016.
\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 Note 2 of\n this report for additional information related to\n intangibles. | \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
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. Each of these\n plans provide benefits based on a combination of years of benefit\n accruals service and an employee’s final average\n compensation. Additional benefit accruals are frozen under the plan\n covering certain pilot employees and management and administrative\n employees. Benefit accruals for certain non-pilot employees continue. United\n maintains additional defined benefit pension plans, which cover\n certain international employees.
\nOther Postretirement\n Plans
\nUnited maintains\n postretirement medical programs which provide medical benefits to\n certain retirees and eligible dependents, as well as life insurance\n benefits to certain retirees participating in the plan. Benefits\n provided are subject to applicable contributions, co-payments, deductibles and other\n limits as described in the specific plan documentation.
\nActuarial assumption\n changes are reflected as a component of the net actuarial\n gains/(losses) during 2016 and 2015. These amounts will be\n amortized over the average remaining service life of the covered\n active employees or the average life expectancy of inactive\n participants and will impact 2016 and 2015 pension and retiree\n medical expense as described below.
\n\n
\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, 2016 | \n \n | \n | Year Ended \n December 31, 2015 | \n \n | ||
| \n Accumulated benefit\n obligation: \n | \n \n | $ | \n4,158 | \n\n | \n | $ | \n3,795 | \n\n |
| \n | \n | \n \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 | $ | \n4,473 | \n\n | \n | $ | \n4,803 | \n\n |
| \n Service cost \n | \n \n | \n | 112 | \n\n | \n | \n | 124 | \n\n |
| \n Interest cost \n | \n \n | \n | 200 | \n\n | \n | \n | 200 | \n\n |
| \n Actuarial (gain)\n loss \n | \n \n | \n | 738 | \n\n | \n | \n | (298) | \n\n |
| \n Gross benefits paid and\n settlements \n | \n \n | \n | (243) | \n\n | \n | \n | (343) | \n\n |
| \n Other \n | \n \n | \n | (27) | \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 Projected benefit\n obligation at end of year \n | \n \n | $ | \n5,253 | \n\n | \n | $ | \n4,473 | \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 | $ | \n2,975 | \n\n | \n | $ | \n2,562 | \n\n |
| \n Actual gain (loss) on plan\n assets \n | \n \n | \n | 230 | \n\n | \n | \n | (59) | \n\n |
| \n Employer\n contributions \n | \n \n | \n | 421 | \n\n | \n | \n | 824 | \n\n |
| \n Gross benefits paid and\n settlements \n | \n \n | \n | (243) | \n\n | \n | \n | (343) | \n\n |
| \n Other \n | \n \n | \n | (28) | \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 Fair value of plan assets\n at end of year \n | \n \n | $ | \n3,355 | \n\n | \n | $ | \n2,975 | \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(1,898) | \n\n | \n | $ | \n(1,498) | \n\n |
| \n | \n | \n \n | \n \n \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, 2016 | \n\n | \n | December 31, 2015 | \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 | $ | \n2 | \n\n |
| \n Current\n liability \n | \n \n | \n | (8) | \n\n | \n | \n | (12) | \n\n |
| \n Noncurrent\n liability \n | \n \n | \n | (1,892) | \n\n | \n | \n | (1,488) | \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(1,898) | \n\n | \n | $ | \n(1,498) | \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(1,482) | \n\n | \n | $ | \n(844) | \n\n |
| \n Prior service\n loss \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 Total accumulated other\n comprehensive loss \n | \n \n | $ | \n(1,483) | \n\n | \n | $ | \n(845) | \n\n |
| \n | \n | \n \n | \n \n \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\n Benefits | \n\n | |||||
| \n | \n | Year Ended \n December 31, 2016 | \n \n | \n | Year Ended \n December 31, 2015 | \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 | $ | \n2,002 | \n\n | \n | $ | \n2,052 | \n\n |
| \n Service cost \n | \n \n | \n | 19 | \n\n | \n | \n | 21 | \n\n |
| \n Interest cost \n | \n \n | \n | 86 | \n\n | \n | \n | 82 | \n\n |
| \n Plan participants’\n contributions \n | \n \n | \n | 69 | \n\n | \n | \n | 68 | \n\n |
| \n Benefits paid \n | \n \n | \n | (191) | \n\n | \n | \n | (205) | \n\n |
| \n Actuarial gain \n | \n \n | \n | (165) | \n\n | \n | \n | (22) | \n\n |
| \n Plan amendments \n | \n \n | \n | (138) | \n\n | \n | \n | — | \n\n |
| \n Other \n | \n \n | \n | 5 | \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 Benefit obligation at end\n of year \n | \n \n | $ | \n1,687 | \n\n | \n | $ | \n2,002 | \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 | $ | \n56 | \n\n | \n | $ | \n57 | \n\n |
| \n Actual return on plan\n assets \n | \n \n | \n | 2 | \n\n | \n | \n | 1 | \n\n |
| \n Employer\n contributions \n | \n \n | \n | 119 | \n\n | \n | \n | 135 | \n\n |
| \n Plan participants’\n contributions \n | \n \n | \n | 69 | \n\n | \n | \n | 68 | \n\n |
| \n Benefits paid \n | \n \n | \n | (191) | \n\n | \n | \n | (205) | \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 | \n | 55 | \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 Funded status—Net\n amount recognized \n | \n \n | $ | \n(1,632) | \n\n | \n | $ | \n(1,946) | \n\n |
| \n | \n | \n \n | \n \n \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\n Benefits | \n\n | |||||
| \n | \n | December 31, 2016 | \n\n | \n | December 31, 2015 | \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(51) | \n\n | \n | $ | \n(64) | \n\n |
| \n Noncurrent\n liability \n | \n \n | \n | (1,581) | \n\n | \n | \n | (1,882) | \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(1,632) | \n\n | \n | $ | \n(1,946) | \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 | $ | \n384 | \n\n | \n | $ | \n236 | \n\n |
| \n Prior service\n credit \n | \n \n | \n | 245 | \n\n | \n | \n | 246 | \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 | $ | \n629 | \n\n | \n | $ | \n482 | \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 | 2016 | \n\n | \n | 2015 | \n\n | ||
| \n Projected benefit\n obligation \n | \n \n | $ | \n5,025 | \n\n | \n | $ | \n4,292 | \n\n |
| \n Accumulated benefit\n obligation \n | \n \n | \n | 3,985 | \n\n | \n | \n | 3,655 | \n\n |
| \n Fair value of plan\n assets \n | \n \n | \n | 3,164 | \n\n | \n | \n | 2,794 | \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 | 2016 | \n\n | \n | 2015 | \n\n | \n | 2014 | \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 | $ | \n112 | \n\n | \n | $ | \n19 | \n\n | \n | $ | \n124 | \n\n | \n | $ | \n21 | \n\n | \n | $ | \n98 | \n\n | \n | $ | \n19 | \n\n |
| Interest cost | \n\n | \n | 200 | \n\n | \n | \n | 86 | \n\n | \n | \n | 200 | \n\n | \n | \n | 82 | \n\n | \n | \n | 201 | \n\n | \n | \n | 88 | \n\n |
| Expected return on plan assets | \n\n | \n | (216) | \n\n | \n | \n | (2) | \n\n | \n | \n | (194) | \n\n | \n | \n | (2) | \n\n | \n | \n | (180) | \n\n | \n | \n | (2) | \n\n |
| Curtailment gain | \n\n | \n | — | \n\n | \n | \n | (107) | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| Amortization of unrecognized actuarial (gain) loss | \n\n | \n | 76 | \n\n | \n | \n | (19) | \n\n | \n | \n | 85 | \n\n | \n | \n | (22) | \n\n | \n | \n | 12 | \n\n | \n | \n | (47) | \n\n |
| Amortization of prior service credits | \n\n | \n | — | \n\n | \n | \n | (31) | \n\n | \n | \n | — | \n\n | \n | \n | (32) | \n\n | \n | \n | — | \n\n | \n | \n | (31) | \n\n |
| Other | \n\n | \n | 5 | \n\n | \n | \n | — | \n\n | \n | \n | 4 | \n\n | \n | \n | — | \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 \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 | $ | \n177 | \n\n | \n | $ | \n(54) | \n\n | \n | $ | \n219 | \n\n | \n | $ | \n47 | \n\n | \n | $ | \n132 | \n\n | \n | $ | \n27 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
As part of the ratified\n contract with the Association of Flight Attendants\n (“AFA”) in 2016, the Company amended two of its flight\n attendant postretirement medical plans. The amendments triggered\n curtailment accounting, resulting in the recognition of a\n one-time $47 million\n gain for accelerated recognition of a prior service credit in one\n of the plans. Also, as part of the ratified contract with the\n International Brotherhood of Teamsters (the “IBT”) in\n 2016, the Company amended some of its technicians and related\n employees’ postretirement medical plans. The amendments\n triggered curtailment accounting, resulting in the recognition of a\n one-time $60 million\n gain for accelerated recognition of a prior service credit in one\n of the plans.
\nThe estimated amounts that\n will be amortized in 2017 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 | $ | \n127 | \n\n | \n | $ | \n(36) | \n\n |
| \n Prior service\n credit \n | \n \n | \n | — | \n\n | \n | \n | (37) | \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 \n | \n | Pension Benefits | \n\n | ||||
| \n \n Assumptions\n used to determine benefit obligations \n | \n \n | \n | \n2016 | \n\n | \n | \n | \n2015 | \n\n |
| \n Discount rate \n | \n \n | \n | 4.18% | \n\n | \n | \n | 4.58% | \n\n |
| \n Rate of compensation\n increase \n | \n \n | \n | 3.54% | \n\n | \n | \n | 3.66% | \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 | 4.58% | \n\n | \n | \n | 4.20% | \n\n |
| \n Expected return on plan\n assets \n | \n \n | \n | 7.04% | \n\n | \n | \n | 7.40% | \n\n |
| \n Rate of compensation\n increase \n | \n \n | \n | 3.53% | \n\n | \n | \n | 3.51% | \n\n |
\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n | \n \n | Other Postretirement Benefits | \n\n | |||||
| \n Assumptions used to\n determine benefit obligations \n | \n \n | 2016 | \n\n | \n | 2015 | \n\n | ||
| \n Discount rate \n | \n \n | \n | 4.07% | \n\n | \n | \n | 4.49% | \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 | 4.49% | \n\n | \n | \n | 4.07% | \n\n |
| \n Expected return on plan\n assets \n | \n \n | \n | 3.00% | \n\n | \n | \n | 3.00% | \n\n |
| \n Health care cost trend rate\n assumed for next year \n | \n \n | \n | 6.50% | \n\n | \n | \n | 6.75% | \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 Company used the\n Society of Actuaries’ 2014 mortality tables, modified to\n reflect the Social Security Administration Trustee’s Report\n on current projections regarding expected longevity\n improvements.
\nThe Company selected the\n 2016 discount rate for substantially all of its plans by using a\n hypothetical portfolio of high quality bonds at December 31,\n 2016, that would provide the necessary cash flows to match\n projected benefit payments.
\nWe develop our expected\n long-term rate of return assumption for our defined benefit plans\n based on historical experience and by evaluating input from the\n trustee managing the plans’ assets. Our expected\n long-term rate of return on plan assets for these plans is based on\n a target allocation of assets, which is based on our goal of\n earning the highest rate of return while maintaining risk at\n acceptable levels. The plans strive to have assets\n sufficiently diversified so that adverse or unexpected results from\n one security class will not have an unduly detrimental impact on\n the entire portfolio. Plan fiduciaries regularly review our\n actual asset allocation and the pension plans’ investments\n are periodically rebalanced to our targeted allocation when\n considered appropriate. United’s plan assets are\n allocated within the following guidelines:
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | \n Percent of Total \n | \n \n | \n | \n \n Expected Long-Term \nRate of Return \n | \n \n | ||
| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Equity\n securities \n | \n \n | \n | 30-40 % | \n\n | \n | \n | 9.5 % | \n\n |
| \n Fixed-income\n securities \n | \n \n | \n | 34-44 | \n\n | \n | \n | 5.0 | \n\n |
| \n Alternatives \n | \n \n | \n | 14-27 | \n\n | \n | \n | 7.3 | \n\n |
| \n Other \n | \n \n | \n | 0-10 | \n\n | \n | \n | 7.0 | \n\n |
One-hundred percent of other\n postretirement plan assets are invested in a deposit administration\n 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, 2016 \n | \n \n | $ | \n13 | \n\n | \n | $ | \n(11) | \n\n |
| \n Effect on postretirement\n benefit obligation at December 31, 2016 \n | \n \n | \n | 169 | \n\n | \n | \n | (149) | \n\n |
A one percentage point\n decrease in the weighted average discount rate would increase the\n postretirement benefit liability by approximately $181 million\n and increase the estimated 2016 benefits expense by approximately\n $11 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 | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 2016 | \n\n | \n | \n | \n | \n\n | 2015 | \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 | Assets \n Measured \n at NAV(a) | \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 | Assets \n Measured \n at NAV(a) | \n \n | |||||||||||
| \n Equity securities\n funds \n | \n \n | $ | \n1,173 | \n\n | \n | $ | \n230 | \n\n | \n | $ | \n111 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n832 | \n\n | \n | \n | \n | \n | \n\n | $ | \n1,135 | \n\n | \n | $ | \n254 | \n\n | \n | $ | \n135 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n746 | \n\n |
| \n Fixed-income\n securities \n | \n \n | \n | 1,298 | \n\n | \n | \n | — | \n\n | \n | \n | 824 | \n\n | \n | \n | 11 | \n\n | \n | \n | 463 | \n\n | \n | \n | \n | \n | \n\n | \n | 1,109 | \n\n | \n | \n | — | \n\n | \n | \n | 877 | \n\n | \n | \n | 9 | \n\n | \n | \n | 223 | \n\n |
| \n Alternatives \n | \n \n | \n | 586 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 134 | \n\n | \n | \n | 452 | \n\n | \n | \n | \n | \n | \n\n | \n | 527 | \n\n | \n | \n | — | \n\n | \n | \n | 1 | \n\n | \n | \n | 125 | \n\n | \n | \n | 401 | \n\n |
| \n Other\n investments \n | \n \n | \n | 298 | \n\n | \n | \n | 47 | \n\n | \n | \n | 68 | \n\n | \n | \n | 87 | \n\n | \n | \n | 96 | \n\n | \n | \n | \n | \n | \n\n | \n | 204 | \n\n | \n | \n | 37 | \n\n | \n | \n | 56 | \n\n | \n | \n | 18 | \n\n | \n | \n | 93 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n | \n\n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \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 | $ | \n3,355 | \n\n | \n | $ | \n277 | \n\n | \n | $ | \n1,003 | \n\n | \n | $ | \n232 | \n\n | \n | $ | \n1,843 | \n\n | \n | \n | \n | \n | \n\n | $ | \n2,975 | \n\n | \n | $ | \n291 | \n\n | \n | $ | \n1,069 | \n\n | \n | $ | \n152 | \n\n | \n | $ | \n1,463 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n | \n\n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \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\n Postretirement \nBenefit Plan\n 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 | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| Deposit administration fund | \n\n | $ | \n55 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n— | \n\n | \n | $ | \n55 | \n\n | \n | $ | \n— | \n\n | \n | \n | \n | \n | \n\n | $ | \n56 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n— | \n\n | \n | $ | \n56 | \n\n | \n | $ | \n— | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n | \n\n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \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) In accordance with the\n relevant accounting standards, certain investments that are\n measured at fair value using the NAV per share (or its equivalent)\n have not been classified in the fair value hierarchy. These\n investments are commingled funds that invest in fixed-income\n instruments including bonds, debt securities, and other similar\n instruments issued by various U.S. and non-U.S. public- or private-sector\n entities. Redemption periods for these investments range from daily\n to annually.
\nEquity and\n Fixed-Income. Equities include investments in both developed\n market and emerging market equity securities. Fixed-income includes\n primarily U.S. and non-U.S. government fixed-income\n securities and U.S. and non-U.S corporate fixed-income\n securities.
\nDeposit Administration\n Fund. This investment is a stable value investment product\n structured to provide investment 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 of cash, insurance contracts and other\n 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, 2016 and 2015 is as follows (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 2016 | \n\n | \n | 2015 | \n\n | ||
| \n Balance at beginning of\n year \n | \n \n | $ | \n208 | \n\n | \n | $ | \n188 | \n\n |
| \n Actual return on plan\n assets: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Sold during the\n year \n | \n \n | \n | 4 | \n\n | \n | \n | 8 | \n\n |
| \n Held at year end \n | \n \n | \n | 3 | \n\n | \n | \n | (1) | \n\n |
| \n Purchases, sales, issuances\n and settlements (net) \n | \n \n | \n | 72 | \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 Balance at end of\n year \n | \n \n | $ | \n287 | \n\n | \n | $ | \n208 | \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\n benefit pension plans are determined by government\n regulations. United’s contributions reflected above have\n satisfied its required contributions through the 2016 calendar\n year. In 2017, employer anticipated contributions to all of\n United’s pension and postretirement plans are at least\n $400 million and approximately $108 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, 2016 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 2017 \n | \n \n | $ | \n303 | \n\n | \n | $ | \n112 | \n\n | \n | $ | \n6 | \n\n |
| \n 2018 \n | \n \n | \n | 300 | \n\n | \n | \n | 117 | \n\n | \n | \n | 6 | \n\n |
| \n 2019 \n | \n \n | \n | 310 | \n\n | \n | \n | 122 | \n\n | \n | \n | 7 | \n\n |
| \n 2020 \n | \n \n | \n | 319 | \n\n | \n | \n | 126 | \n\n | \n | \n | 7 | \n\n |
| \n 2021 \n | \n \n | \n | 337 | \n\n | \n | \n | 130 | \n\n | \n | \n | 8 | \n\n |
| \n Years 2022 –\n 2026 \n | \n \n | \n | 1,782 | \n\n | \n | \n | 682 | \n\n | \n | \n | 44 | \n\n |
Defined Contribution\n Plans
\nDepending upon the employee\n group, employer contributions consist of matching contributions\n and/or non-elective\n employer contributions. United’s employer contribution\n percentages vary from 1% to 16% of eligible earnings depending on\n the terms of each plan. United recorded contributions to its\n defined contribution plans of $592 million, $522 million\n and $503 million in the years ended December 31, 2016,\n 2015 and 2014, 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, 2016 is\n outlined in the table below. There have been no significant changes\n that affect the comparability 2016 and 2015 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\n $395 million in employers’ contributions for the year\n ended December 31, 2015. For 2015, the Company’s\n contributions to the IAM Plan represented more than 5% of total\n contributions to the IAM Plan.
\n\n
\n| \n | \n | \n |
| \n Pension Fund \n | \n \n | IAM National Pension Fund | \n
| \n EIN/ Pension Plan\n Number \n | \n \n | 51-6031295 -\n 002 | \n
| \n Pension Protection Act Zone\n Status (2016 and 2015) \n | \n \n | Green Zone. Plans in the green zone are at least\n 80 percent funded. | \n
| \n FIP/RP Status\n Pending/Implemented \n | \n \n | No | \n
| \n United’s\n Contributions \n | \n \n | $41 million, $40 million and $39 million in\n the years ended December 31, 2016, 2015 and 2014,\n respectively | \n
| \n Surcharge\n Imposed \n | \n \n | No | \n
| \n Expiration Date of\n 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 2016.
\nProfit\n Sharing
\nSubstantially all employees\n participate in profit sharing based on a percentage of pre-tax earnings, excluding special\n items, profit sharing expense and share-based compensation. Profit\n sharing percentages range from 5% to 20% depending on the work\n group, and in some cases profit sharing percentages vary above and\n below certain pre-tax\n margin thresholds. Eligible U.S. co-workers in each participating work\n group receive a profit sharing payout using a formula based on the\n ratio of each qualified co-worker’s annual eligible\n earnings to the eligible earnings of all qualified co-workers in all domestic work\n groups. Eligible non-U.S.\n co-workers receive profit\n sharing based on the calculation under the U.S. profit sharing plan\n for management and administrative employees. The Company recorded\n profit sharing and related payroll tax expense of\n $628 million, $698 million and $235 million in 2016,\n 2015 and 2014, respectively. Profit sharing expense is recorded as\n a component of Salaries and related costs in the Company’s\n statements of consolidated operations.
\nUnited’s plan assets are allocated within\n the following guidelines:
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | \n Percent of Total \n | \n \n | \n | \n \n Expected Long-Term \nRate of Return \n | \n \n | ||
| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Equity\n securities \n | \n \n | \n | 30-40 % | \n\n | \n | \n | 9.5 % | \n\n |
| \n Fixed-income\n securities \n | \n \n | \n | 34-44 | \n\n | \n | \n | 5.0 | \n\n |
| \n Alternatives \n | \n \n | \n | 14-27 | \n\n | \n | \n | 7.3 | \n\n |
| \n Other \n | \n \n | \n | 0-10 | \n\n | \n | \n | 7.0 | \n
| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Pension Benefits | \n\n | |||||
| \n | \n | December 31, 2016 | \n\n | \n | December 31, 2015 | \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 | $ | \n2 | \n\n |
| \n Current\n liability \n | \n \n | \n | (8) | \n\n | \n | \n | (12) | \n\n |
| \n Noncurrent\n liability \n | \n \n | \n | (1,892) | \n\n | \n | \n | (1,488) | \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(1,898) | \n\n | \n | $ | \n(1,498) | \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(1,482) | \n\n | \n | $ | \n(844) | \n\n |
| \n Prior service\n loss \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 Total accumulated other\n comprehensive loss \n | \n \n | $ | \n(1,483) | \n\n | \n | $ | \n(845) | \n\n |
| \n | \n | \n \n | \n \n \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\n Benefits | \n\n | |||||
| \n | \n | December 31, 2016 | \n\n | \n | December 31, 2015 | \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(51) | \n\n | \n | $ | \n(64) | \n\n |
| \n Noncurrent\n liability \n | \n \n | \n | (1,581) | \n\n | \n | \n | (1,882) | \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(1,632) | \n\n | \n | $ | \n(1,946) | \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 | $ | \n384 | \n\n | \n | $ | \n236 | \n\n |
| \n Prior service\n credit \n | \n \n | \n | 245 | \n\n | \n | \n | 246 | \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 | $ | \n629 | \n\n | \n | $ | \n482 | \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 a reconciliation of cash, cash equivalents and\n restricted cash reported within the consolidated balance sheets\n that sum to the total of the same such amounts shown in the\n statements of consolidated cash flows:
\n\n
\n| \n | \n | \n | \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 | United | \n\n | ||||||||||||||||||
| \n | \n | At\n December 31, | \n\n | \n | At\n December 31, | \n\n | ||||||||||||||||||
| \n | \n | 2016 | \n\n | \n | 2015 | \n\n | \n | 2014 | \n\n | \n | 2016 | \n\n | \n | 2015 | \n\n | \n | 2014 | \n\n | ||||||
| \n Current 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 Cash and cash\n equivalents \n | \n \n | $ | \n2,179 | \n\n | \n | $ | \n3,006 | \n\n | \n | $ | \n2,002 | \n\n | \n | $ | \n2,173 | \n\n | \n | $ | \n3,000 | \n\n | \n | $ | \n1,996 | \n\n |
| \n Restricted cash included in\n Prepaid expenses and other \n | \n \n | \n | — | \n\n | \n | \n | 2 | \n\n | \n | \n | 44 | \n\n | \n | \n | — | \n\n | \n | \n | 2 | \n\n | \n | \n | 44 | \n\n |
| \n Other 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 Restricted cash \n | \n \n | \n | 124 | \n\n | \n | \n | 204 | \n\n | \n | \n | 276 | \n\n | \n | \n | 124 | \n\n | \n | \n | 204 | \n\n | \n | \n | 276 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \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 cash, cash equivalents and restricted cash shown in the\n statement of consolidated cash flows | \n\n | $ | \n2,303 | \n\n | \n | $ | \n3,212 | \n\n | \n | $ | \n2,322 | \n\n | \n | $ | \n2,297 | \n\n | \n | $ | \n3,206 | \n\n | \n | $ | \n2,316 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \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\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 | 2016 | \n\n | \n | 2015 | \n\n | \n | 2014 | \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 | $ | \n58 | \n\n | \n | $ | \n52 | \n\n | \n | $ | \n104 | \n\n |
| \n Restricted stock \n | \n \n | \n | 11 | \n\n | \n | \n | 6 | \n\n | \n | \n | 10 | \n\n |
| \n Stock options \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 \n | \n \n | $ | \n70 | \n\n | \n | $ | \n58 | \n\n | \n | $ | \n114 | \n\n |
| \n \n | \n \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\n $3 million in 2014 that was recorded in integration-related\n costs as a component of special items.
\nThe income tax provision\n differed from amounts computed at the statutory federal income tax\n 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 | 2016 | \n\n | \n | 2015 | \n\n | \n | 2014 | \n\n | |||
| \n Income tax provision at\n statutory rate \n | \n \n | $ | \n1,337 | \n\n | \n | $ | \n1,477 | \n\n | \n | $ | \n395 | \n\n |
| \n State income taxes, net of\n federal income tax \n | \n \n | \n | 38 | \n\n | \n | \n | 38 | \n\n | \n | \n | 10 | \n\n |
| \n Foreign income\n taxes \n | \n \n | \n | 3 | \n\n | \n | \n | 4 | \n\n | \n | \n | 2 | \n\n |
| \n Nondeductible employee\n meals \n | \n \n | \n | 16 | \n\n | \n | \n | 15 | \n\n | \n | \n | 15 | \n\n |
| \n Income tax\n adjustment \n | \n \n | \n | 180 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n State rate\n change \n | \n \n | \n | (12) | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n Valuation\n allowance \n | \n \n | \n | 20 | \n\n | \n | \n | (4,662) | \n\n | \n | \n | (435) | \n\n |
| \n Other, net \n | \n \n | \n | (26) | \n\n | \n | \n | 7 | \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 | \n \n \n | \n \n |
| \n | \n | $ | \n1,556 | \n\n | \n | $ | \n(3,121) | \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 \n | \n \n |
| \n | \n | \n | \n | |||||||||
| \n United \n | \n \n | 2016 | \n\n | \n | 2015 | \n\n | \n | 2014 | \n\n | |||
| \n Income tax provision at\n statutory rate \n | \n \n | $ | \n1,338 | \n\n | \n | $ | \n1,477 | \n\n | \n | $ | \n388 | \n\n |
| \n State income taxes, net of\n federal income tax \n | \n \n | \n | 38 | \n\n | \n | \n | 38 | \n\n | \n | \n | 10 | \n\n |
| \n Foreign income\n taxes \n | \n \n | \n | 3 | \n\n | \n | \n | 4 | \n\n | \n | \n | 2 | \n\n |
| \n Nondeductible employee\n meals \n | \n \n | \n | 16 | \n\n | \n | \n | 15 | \n\n | \n | \n | 15 | \n\n |
| \n Derivative market\n adjustment \n | \n \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | (7) | \n\n |
| \n Income tax\n adjustment \n | \n \n | \n | 180 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n State rate\n change \n | \n \n | \n | (12) | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n Valuation\n allowance \n | \n \n | \n | 20 | \n\n | \n | \n | (4,621) | \n\n | \n | \n | (421) | \n\n |
| \n Other, net \n | \n \n | \n | (25) | \n\n | \n | \n | 7 | \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 | \n \n \n | \n \n |
| \n | \n | $ | \n1,558 | \n\n | \n | $ | \n(3,080) | \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 \n | \n \n |
The 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, 2016 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 2017 \n | \n \n | $ | \n303 | \n\n | \n | $ | \n112 | \n\n | \n | $ | \n6 | \n\n |
| \n 2018 \n | \n \n | \n | 300 | \n\n | \n | \n | 117 | \n\n | \n | \n | 6 | \n\n |
| \n 2019 \n | \n \n | \n | 310 | \n\n | \n | \n | 122 | \n\n | \n | \n | 7 | \n\n |
| \n 2020 \n | \n \n | \n | 319 | \n\n | \n | \n | 126 | \n\n | \n | \n | 7 | \n\n |
| \n 2021 \n | \n \n | \n | 337 | \n\n | \n | \n | 130 | \n\n | \n | \n | 8 | \n\n |
| \n Years 2022 –\n 2026 \n | \n \n | \n | 1,782 | \n\n | \n | \n | 682 | \n\n | \n | \n | 44 | \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 | 2016 | \n\n | \n | 2015 | \n\n | \n | 2014 | \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 | $ | \n112 | \n\n | \n | $ | \n19 | \n\n | \n | $ | \n124 | \n\n | \n | $ | \n21 | \n\n | \n | $ | \n98 | \n\n | \n | $ | \n19 | \n\n |
| Interest cost | \n\n | \n | 200 | \n\n | \n | \n | 86 | \n\n | \n | \n | 200 | \n\n | \n | \n | 82 | \n\n | \n | \n | 201 | \n\n | \n | \n | 88 | \n\n |
| Expected return on plan assets | \n\n | \n | (216) | \n\n | \n | \n | (2) | \n\n | \n | \n | (194) | \n\n | \n | \n | (2) | \n\n | \n | \n | (180) | \n\n | \n | \n | (2) | \n\n |
| Curtailment gain | \n\n | \n | — | \n\n | \n | \n | (107) | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| Amortization of unrecognized actuarial (gain) loss | \n\n | \n | 76 | \n\n | \n | \n | (19) | \n\n | \n | \n | 85 | \n\n | \n | \n | (22) | \n\n | \n | \n | 12 | \n\n | \n | \n | (47) | \n\n |
| Amortization of prior service credits | \n\n | \n | — | \n\n | \n | \n | (31) | \n\n | \n | \n | — | \n\n | \n | \n | (32) | \n\n | \n | \n | — | \n\n | \n | \n | (31) | \n\n |
| Other | \n\n | \n | 5 | \n\n | \n | \n | — | \n\n | \n | \n | 4 | \n\n | \n | \n | — | \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 \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 | $ | \n177 | \n\n | \n | $ | \n(54) | \n\n | \n | $ | \n219 | \n\n | \n | $ | \n47 | \n\n | \n | $ | \n132 | \n\n | \n | $ | \n27 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \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 sets forth the reconciliation of the beginning and ending\n balances of the benefit obligation and plan assets, the funded\n status and the amounts recognized in these financial statements for\n the defined benefit and other postretirement plans (in\n 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, 2016 | \n \n | \n | Year Ended \n December 31, 2015 | \n \n | ||
| \n Accumulated benefit\n obligation: \n | \n \n | $ | \n4,158 | \n\n | \n | $ | \n3,795 | \n\n |
| \n | \n | \n \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\n benefit obligation: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Projected benefit\n obligation at beginning of year \n | \n \n | $ | \n4,473 | \n\n | \n | $ | \n4,803 | \n\n |
| \n Service cost \n | \n \n | \n | 112 | \n\n | \n | \n | 124 | \n\n |
| \n Interest cost \n | \n \n | \n | 200 | \n\n | \n | \n | 200 | \n\n |
| \n Actuarial (gain)\n loss \n | \n \n | \n | 738 | \n\n | \n | \n | (298) | \n\n |
| \n Gross benefits paid and\n settlements \n | \n \n | \n | (243) | \n\n | \n | \n | (343) | \n\n |
| \n Other \n | \n \n | \n | (27) | \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 Projected benefit\n obligation at end of year \n | \n \n | $ | \n5,253 | \n\n | \n | $ | \n4,473 | \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 | $ | \n2,975 | \n\n | \n | $ | \n2,562 | \n\n |
| \n Actual gain (loss) on\n plan assets \n | \n \n | \n | 230 | \n\n | \n | \n | (59) | \n\n |
| \n Employer\n contributions \n | \n \n | \n | 421 | \n\n | \n | \n | 824 | \n\n |
| \n Gross benefits paid and\n settlements \n | \n \n | \n | (243) | \n\n | \n | \n | (343) | \n\n |
| \n Other \n | \n \n | \n | (28) | \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 Fair value of plan assets\n at end of year \n | \n \n | $ | \n3,355 | \n\n | \n | $ | \n2,975 | \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(1,898) | \n\n | \n | $ | \n(1,498) | \n\n |
| \n | \n | \n \n | \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\n Benefits | \n\n | |||||
| \n | \n | Year Ended \n December 31, 2016 | \n \n | \n | Year Ended \n December 31, 2015 | \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 | $ | \n2,002 | \n\n | \n | $ | \n2,052 | \n\n |
| \n Service cost \n | \n \n | \n | 19 | \n\n | \n | \n | 21 | \n\n |
| \n Interest cost \n | \n \n | \n | 86 | \n\n | \n | \n | 82 | \n\n |
| \n Plan participants’\n contributions \n | \n \n | \n | 69 | \n\n | \n | \n | 68 | \n\n |
| \n Benefits paid \n | \n \n | \n | (191) | \n\n | \n | \n | (205) | \n\n |
| \n Actuarial gain \n | \n \n | \n | (165) | \n\n | \n | \n | (22) | \n\n |
| \n Plan\n amendments \n | \n \n | \n | (138) | \n\n | \n | \n | — | \n\n |
| \n Other \n | \n \n | \n | 5 | \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 Benefit obligation at end\n of year \n | \n \n | $ | \n1,687 | \n\n | \n | $ | \n2,002 | \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 | $ | \n56 | \n\n | \n | $ | \n57 | \n\n |
| \n Actual return on plan\n assets \n | \n \n | \n | 2 | \n\n | \n | \n | 1 | \n\n |
| \n Employer\n contributions \n | \n \n | \n | 119 | \n\n | \n | \n | 135 | \n\n |
| \n Plan participants’\n contributions \n | \n \n | \n | 69 | \n\n | \n | \n | 68 | \n\n |
| \n Benefits paid \n | \n \n | \n | (191) | \n\n | \n | \n | (205) | \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 | \n | 55 | \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 Funded status—Net\n amount recognized \n | \n \n | $ | \n(1,632) | \n\n | \n | $ | \n(1,946) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
\n
\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 Benefit Costs | \n \n | \n | Permanently \n \n Grounded Aircraft | \n \n | ||
| \n Balance at\n December 31, 2013 \n | \n \n | $ | \n91 | \n\n | \n | $ | \n11 | \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 | \n | 109 | \n\n | \n | \n | 102 | \n\n |
| \n Accrual \n | \n \n | \n | 107 | \n\n | \n | \n | 30 | \n\n |
| \n Payments \n | \n \n | \n | (189) | \n\n | \n | \n | (54) | \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, 2015 \n | \n \n | \n | 27 | \n\n | \n | \n | 78 | \n\n |
| \n Accrual and related\n adjustments \n | \n \n | \n | 37 | \n\n | \n | \n | (17) | \n\n |
| \n Payments \n | \n \n | \n | (50) | \n\n | \n | \n | (20) | \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, 2016 \n | \n \n | $ | \n14 | \n\n | \n | $ | \n41 | \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, 2016, 2015 and 2014
\n\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\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 2016 \n | \n \n | $ | \n18 | \n\n | \n | $ | \n18 | \n\n | \n | $ | \n26 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n10 | \n\n |
| \n 2015 \n | \n \n | \n | 22 | \n\n | \n | \n | 25 | \n\n | \n | \n | 29 | \n\n | \n | \n | — | \n\n | \n | \n | 18 | \n\n |
| \n 2014 \n | \n \n | \n | 13 | \n\n | \n | \n | 45 | \n\n | \n | \n | 36 | \n\n | \n | \n | — | \n\n | \n | \n | 22 | \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 2016 \n | \n \n | $ | \n235 | \n\n | \n | $ | \n61 | \n\n | \n | $ | \n16 | \n\n | \n | $ | \n15 | \n\n | \n | $ | \n295 | \n\n |
| \n 2015 \n | \n \n | \n | 169 | \n\n | \n | \n | 38 | \n\n | \n | \n | — | \n\n | \n | \n | 28 | \n\n | \n | \n | 235 | \n\n |
| \n 2014 \n | \n \n | \n | 162 | \n\n | \n | \n | 35 | \n\n | \n | \n | 28 | \n\n | \n | \n | — | \n\n | \n | \n | 169 | \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 2016 \n | \n \n | $ | \n48 | \n\n | \n | $ | \n47 | \n\n | \n | $ | \n27 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n68 | \n\n |
| \n 2015 \n | \n \n | \n | 4,751 | \n\n | \n | \n | — | \n\n | \n | \n | 4,703 | \n\n | \n | \n | — | \n\n | \n | \n | 48 | \n\n |
| \n 2014 \n | \n \n | \n | 4,591 | \n\n | \n | \n | 156 | \n\n | \n | \n | — | \n\n | \n | \n | 4 | \n\n | \n | \n | 4,751 | \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 2016 \n | \n \n | $ | \n48 | \n\n | \n | $ | \n47 | \n\n | \n | $ | \n27 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n68 | \n\n |
| \n 2015 \n | \n \n | \n | 4,721 | \n\n | \n | \n | — | \n\n | \n | \n | 4,673 | \n\n | \n | \n | — | \n\n | \n | \n | 48 | \n\n |
| \n 2014 \n | \n \n | \n | 4,561 | \n\n | \n | \n | 167 | \n\n | \n | \n | — | \n\n | \n | \n | (7) | \n\n | \n | \n | 4,721 | \n\n |
\n
\n(a) Deduction from reserve\n for purpose for which reserve was created.
\nNOTE 3 - COMMON\n STOCKHOLDERS’ EQUITY AND PREFERRED SECURITIES
\nIn 2016, UAL repurchased\n approximately 50 million shares of UAL common stock for\n $2.6 billion. As of December 31, 2016, the Company had\n approximately $1.8 billion remaining to purchase shares under\n its share program. UAL may repurchase shares through the open\n market, privately negotiated transactions, block trades or\n accelerated share repurchase transactions from time to time in\n accordance with applicable securities laws. UAL may repurchase\n shares of UAL common stock subject to prevailing market conditions,\n and may discontinue such repurchases at any time. See Part II, Item\n 5, “Market for registrant’s common equity, related\n stockholder matters and issuer purchases of equity\n securities” of this report for additional\n information.
\nIn 2016, the Company retired\n 70 million treasury shares that were originally acquired at an\n average cost of approximately $53 per share.
\nAt December 31, 2016,\n approximately 5 million shares of UAL’s common stock\n were reserved for future issuance related to the issuance of\n equity-based awards under the Company’s incentive\n compensation plans.
\nAs of December 31,\n 2016, UAL had two shares of junior preferred stock (par value $0.01\n per share) outstanding. In addition, UAL is authorized to issue\n 250 million shares of preferred stock (without par value)\n under UAL’s amended and restated certificate of\n incorporation.
\n| Use of\n Estimates—The preparation of financial statements in\n 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
NOTE 4 - EARNINGS PER\n SHARE
\nThe computations of\n UAL’s basic and diluted earnings per share are set forth\n below for the years ended December 31 (in millions, except per\n share amounts):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 2016 | \n\n | \n | 2015 | \n\n | \n | 2014 | \n\n | |||
| \n Basic earnings per\n share: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Earnings available to\n common stockholders \n | \n \n | $ | \n2,263 | \n\n | \n | $ | \n7,340 | \n\n | \n | $ | \n1,132 | \n\n |
| \n | \n | \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 | 329.9 | \n\n | \n | \n | 376.1 | \n\n | \n | \n | 371.1 | \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 Earnings per share,\n basic \n | \n \n | $ | \n6.86 | \n\n | \n | $ | \n19.52 | \n\n | \n | $ | \n3.05 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \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 per\n share: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Earnings available to\n common stockholders \n | \n \n | $ | \n2,263 | \n\n | \n | $ | \n7,340 | \n\n | \n | $ | \n1,132 | \n\n |
| \n Effect of dilutive\n securities \n | \n \n | \n | — | \n\n | \n | \n | — | \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 Earnings available to\n common stockholders including the effect of dilutive\n securities \n | \n \n | $ | \n2,263 | \n\n | \n | $ | \n7,340 | \n\n | \n | $ | \n1,143 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \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 | 329.9 | \n\n | \n | \n | 376.1 | \n\n | \n | \n | 371.1 | \n\n |
| \n Effect of convertible\n notes \n | \n \n | \n | — | \n\n | \n | \n | 0.3 | \n\n | \n | \n | 17.7 | \n\n |
| \n Effect of employee stock\n awards \n | \n \n | \n | 0.4 | \n\n | \n | \n | 0.5 | \n\n | \n | \n | 0.9 | \n\n |
| \n | \n | \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 | 330.3 | \n\n | \n | \n | 376.9 | \n\n | \n | \n | 389.7 | \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 Earnings per share,\n diluted \n | \n \n | $ | \n6.85 | \n\n | \n | $ | \n19.47 | \n\n | \n | $ | \n2.93 | \n\n |
| \n | \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 number of antidilutive\n securities excluded from the computation of diluted earnings per\n share amounts was not material.
\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 | 2016 | \n\n | \n | 2015 | \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 Long-term debt \n | \n \n | $ | \n10,767 | \n\n | \n | $ | \n11,055 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n8,184 | \n\n | \n | $ | \n2,871 | \n\n | \n | $ | \n10,897 | \n\n | \n | $ | \n11,371 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n8,646 | \n\n | \n | $ | \n2,725 | \n\n |
NOTE 9 - FAIR VALUE\n MEASUREMENTS
\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 described in Note 8 of this report.\n The table below presents disclosures about the fair value of\n financial assets and liabilities measured at fair value on a\n recurring 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 | 2016 | \n\n | \n | 2015 | \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 | $ | \n2,179 | \n\n | \n | $ | \n2,179 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n— | \n\n | \n | $ | \n3,006 | \n\n | \n | $ | \n3,006 | \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 Corporate debt \n | \n \n | \n | 835 | \n\n | \n | \n | — | \n\n | \n | \n | 835 | \n\n | \n | \n | — | \n\n | \n | \n | 891 | \n\n | \n | \n | — | \n\n | \n | \n | 891 | \n\n | \n | \n | — | \n\n |
| \n Asset-backed\n securities \n | \n \n | \n | 792 | \n\n | \n | \n | — | \n\n | \n | \n | 792 | \n\n | \n | \n | — | \n\n | \n | \n | 710 | \n\n | \n | \n | — | \n\n | \n | \n | 710 | \n\n | \n | \n | — | \n\n |
| \n Certificates of deposit\n placed through an account registry service\n (“CDARS”) \n | \n \n | \n | 246 | \n\n | \n | \n | — | \n\n | \n | \n | 246 | \n\n | \n | \n | — | \n\n | \n | \n | 281 | \n\n | \n | \n | — | \n\n | \n | \n | 281 | \n\n | \n | \n | — | \n\n |
| \n U.S. government and agency\n notes \n | \n \n | \n | 140 | \n\n | \n | \n | — | \n\n | \n | \n | 140 | \n\n | \n | \n | — | \n\n | \n | \n | 72 | \n\n | \n | \n | — | \n\n | \n | \n | 72 | \n\n | \n | \n | — | \n\n |
| \n Auction rate\n securities \n | \n \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 9 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 9 | \n\n |
| \n Other fixed-income\n securities \n | \n \n | \n | 54 | \n\n | \n | \n | — | \n\n | \n | \n | 54 | \n\n | \n | \n | — | \n\n | \n | \n | 26 | \n\n | \n | \n | — | \n\n | \n | \n | 26 | \n\n | \n | \n | — | \n\n |
| \n Other investments measured\n at NAV (a) \n | \n \n | \n | 182 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 201 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n Restricted cash \n | \n \n | \n | 124 | \n\n | \n | \n | 124 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 206 | \n\n | \n | \n | 206 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n Enhanced equipment trust\n certificates (“EETC”) \n | \n \n | \n | 23 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 23 | \n\n | \n | \n | 26 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 26 | \n\n |
| \n Fuel derivatives liability,\n net \n | \n \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 124 | \n\n | \n | \n | — | \n\n | \n | \n | 124 | \n\n | \n | \n | — | \n\n |
\n
\n(a) In accordance with the\n relevant accounting standards, certain investments that are\n measured at fair value using the NAV per share (or its equivalent)\n practical expedient have not been classified in the fair value\n hierarchy. The fair value amounts presented in this table are\n intended to permit reconciliation of the fair value hierarchy to\n the amounts presented in the statement of financial position. The\n investments measured using NAV are shares of mutual funds that\n invest in fixed-income instruments including bonds, debt\n securities, and other similar instruments issued by various U.S.\n and non-U.S. public- or\n private-sector entities. The Company can redeem its shares at any\n time at NAV subject to a three-day settlement\n period.
\nAvailable-for-sale investment\n maturities—The short-term investments shown in the table\n above are classified as available-for-sale. As of\n December 31, 2016, asset-backed securities have remaining\n maturities of less than one year to approximately 30 years,\n corporate debt securities have remaining maturities of less than\n one year to approximately five years and CDARS have maturities of\n less than one year. U.S. government and other securities have\n maturities of less than one year to approximately three years. The\n EETC securities mature in 2019.
\nDerivative instruments and\n investments presented in the table above have the same fair value\n as their carrying value. The table below presents the carrying\n values and estimated fair values of financial instruments not\n presented in the tables above 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 | \n | \n | \n | \n | \n | \n |
| \n | \n | Fair Value of Debt by\n Fair Value Hierarchy Level | \n\n | |||||||||||||||||||||||||||||||||||||
| \n | \n | 2016 | \n\n | \n | 2015 | \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 Long-term debt \n | \n \n | $ | \n10,767 | \n\n | \n | $ | \n11,055 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n8,184 | \n\n | \n | $ | \n2,871 | \n\n | \n | $ | \n10,897 | \n\n | \n | $ | \n11,371 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n8,646 | \n\n | \n | $ | \n2,725 | \n\n |
\n
\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\n Restricted cash | \n\n | Fair value is based on (a) the trading prices of the\n investment or similar instruments, (b) an income approach,\n which uses valuation techniques to convert future amounts into a\n single present amount based on current market expectations about\n those future amounts when observable trading prices are not\n available, (c) internally-developed models of the expected\n future cash flows related to the securities, or (d) broker\n quotes obtained by 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 | |
| Debt | \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
| (c) | \n\n Frequent Flyer Accounting—United’s\n MileagePlus®\n program builds customer loyalty by offering awards, benefits and\n services to program participants. Members in this program earn\n miles for flights on United, United Express, Star Alliance members\n and certain other airlines that participate in the program. Members\n can also earn miles by purchasing the goods and services of our\n network of non-airline\n partners. We sell miles to these partners, which include credit\n card issuers, retail merchants, hotels, car rental companies and\n our 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\n its obligation for future award redemptions using a deferred\n revenue model. \n | \n
\n Miles Earned\n in Conjunction with Flights
\n\n When frequent\n flyers earn miles for flights, the Company recognizes a portion of\n the 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 Company determines the estimated selling price of air\n transportation and miles as if each element is sold on a separate\n basis. The total consideration from each ticket sale is then\n allocated to each of these elements, individually, on a pro rata\n basis. The miles are recorded in Frequent flyer deferred revenue on\n the Company’s consolidated balance sheet and recognized into\n revenue when the transportation is provided.
\n\n The\n Company’s estimated selling price of miles is based on an\n equivalent ticket value less fulfillment discount, which\n incorporates the expected redemption of miles, as the best estimate\n of selling price for these miles. The equivalent ticket value is\n based on the prior 12 months’ weighted average equivalent\n ticket value of similar fares as those used to settle award\n redemptions while taking into consideration such factors as\n redemption pattern, cabin class, loyalty status and geographic\n region. The estimated selling price of miles is adjusted by a\n fulfillment discount that considers a number of factors, including\n redemption patterns of various customer groups.
\n\n Co-branded Credit Card Partner Mileage\n Sales
\n\n United has a\n significant contract, the Second Amended and Restated Co-Branded Card Marketing Services\n Agreement (the “Co-Brand Agreement”), to\n sell MileagePlus miles to its co-branded credit card partner, Chase\n Bank USA, N.A. (“Chase”). United identified the\n following significant revenue elements in the Co-Brand Agreement: the air\n 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 and other travel related benefits.
\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. We also evaluate volumes on an annual\n basis, which may result in a change in the allocation of estimated\n selling price 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
\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 | Cash Proceeds \n from Miles Sold \n and Earned | \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 | Decrease in \n Advanced \n Purchase \n of Miles (c) | \n \n | ||||
| \n 2016 \n | \n \n | $ | \n3,022 | \n\n | \n | $ | \n1,221 | \n\n | \n | $ | \n2,050 | \n\n | \n | $ | \n(249) | \n\n |
| \n 2015 \n | \n \n | \n | 2,999 | \n\n | \n | \n | 1,050 | \n\n | \n | \n | 2,173 | \n\n | \n | \n | (224) | \n\n |
| \n 2014 \n | \n \n | \n | 2,861 | \n\n | \n | \n | 882 | \n\n | \n | \n | 2,178 | \n\n | \n | \n | (199) | \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 decrease in the advance purchase of miles obligation due to\n cash payments for the sale of miles less than miles awarded to\n customers. | \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 An impairment charge is recognized when the asset’s carrying\n value exceeds its net undiscounted future cash flows and its fair\n market value. The amount of the charge is the difference between\n the asset’s carrying value and fair market value. See Note 16\n of this report for additional information related to asset\n impairments. | \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 | 2016 | \n\n | \n | 2015 | \n\n | ||
| \n Secured \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| Notes payable, fixed interest rates of 1.42% to 9.75% (weighted\n average rate of 4.85% as of December 31, 2016), payable\n through 2028 | \n\n | $ | \n7,586 | \n\n | \n | $ | \n7,971 | \n\n |
| Notes payable, floating interest rates of the London Interbank\n Offered Rate (“LIBOR”) plus 0.20% to 2.85%, payable\n through 2028 | \n\n | \n | 1,546 | \n\n | \n | \n | 1,302 | \n\n |
| Term loan, LIBOR subject to a 0.75% floor, plus 2.50%, or\n alternative rate based on certain market rates plus 1.50%, due\n 2019 | \n\n | \n | 866 | \n\n | \n | \n | 875 | \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 2021 | \n\n | \n | 192 | \n\n | \n | \n | 194 | \n\n |
| Unsecured | \n\n | \n | \n | \n | \n | \n | \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 |
| Other | \n\n | \n | 101 | \n\n | \n | \n | 100 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | 10,891 | \n\n | \n | \n | 11,042 | \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, premiums and debt issuance costs \n | \n \n | \n | (124) | \n\n | \n | \n | (145) | \n\n |
| \n Less: current portion of\n long-term debt \n | \n \n | \n | (849) | \n\n | \n | \n | (1,224) | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| Long-term debt, net | \n\n | $ | \n9,918 | \n\n | \n | $ | \n9,673 | \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\n
\nThe table below presents\n the Company’s contractual principal payments at\n December 31, 2016 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 2017 \n | \n \n | $ | \n849 | \n\n |
| \n 2018 \n | \n \n | \n | 1,427 | \n\n |
| \n 2019 \n | \n \n | \n | 1,852 | \n\n |
| \n 2020 \n | \n \n | \n | 1,007 | \n\n |
| \n 2021 \n | \n \n | \n | 1,174 | \n\n |
| \n After 2021 \n | \n \n | \n | 4,582 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | $ | \n10,891 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
As of December 31,\n 2016, a substantial portion of the Company’s assets,\n principally aircraft, route authorities, airport slots and loyalty\n program intangible assets, was pledged under various loan and other\n agreements. As of December 31, 2016, UAL and United were in\n 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.
\nSecured\n debt
\n2013 Credit and\n Guaranty Agreement. United and UAL are parties to a Credit\n and Guaranty Agreement (the “Credit Agreement”) as the\n borrower and guarantor, respectively. The Credit Agreement consists\n of a $900 million term loan due April 2019 (of which\n $866 million was outstanding as of December 31, 2016)\n (the “Term Loan due 2019”), a $500 million term\n loan due September 2021 (of which $192 million was outstanding\n as of December 31, 2016) (the “Term Loan due\n 2021”) and a $1.35 billion revolving credit facility,\n with $1.35 billion being available for drawing until April\n 2018 and $1.315 billion being available for drawing until\n January 2019.
\nBorrowings under the\n revolving credit facility of the Credit Agreement bear interest at\n a variable rate equal to LIBOR plus a margin of 3.0% per annum, or\n another rate based on certain market interest rates, plus a margin\n of 2.0% per annum. The principal amount of the term loans must be\n repaid in consecutive quarterly installments of 0.25% of the\n original principal amount thereof, with any unpaid balance due, in\n the case of the Term Loan due 2019, on April 1, 2019 and, in\n the case of the Term Loan due 2021, on September 15, 2021.\n United may prepay all or a portion of the term loans from time to\n time, at par plus accrued and unpaid interest. United pays a\n commitment fee equal to 0.75% per-annum on the undrawn amount\n available under the revolving credit facility.
\nThe Term Loan due 2021\n ranks pari passu with the Term Loan due 2019 that United originally\n borrowed under the Credit Agreement. The Credit Agreement requires\n United to repay the term loans and any other outstanding borrowings\n under the Credit Agreement at par plus accrued and unpaid interest\n if certain changes of control of UAL occur.
\nAs of December 31,\n 2016, United had its entire capacity of $1.35 billion\n available under the revolving credit facility of the\n Company’s Credit Agreement.
\nAs of December 31,\n 2016, United had cash collateralized $72 million of letters of\n credit. United also had $383 million of surety bonds securing\n various obligations at December 31, 2016. Most of the letters\n of credit have evergreen clauses and are expected to be renewed on\n an annual basis and the surety bonds have expiration dates through\n 2021.
\nEETCs. United\n has $7.5 billion principal amount of equipment notes\n outstanding issued under EETC financings included in notes payable\n in the table of outstanding debt above. Generally, the structure of\n these EETC financings consists of pass-through trusts created by\n United to issue pass-through certificates, which represent\n fractional undivided interests in the respective pass-through\n trusts and are not obligations of United. The proceeds of the\n issuance of the pass-through certificates are used to purchase\n equipment notes which are issued by United and secured by its\n aircraft. The payment obligations under the equipment notes are\n those of United. Proceeds received from the sale of pass-through\n certificates are initially held by a depositary in escrow for the\n benefit of the certificate holders until United issues equipment\n notes to the trust, which purchases such notes with a portion of\n the escrowed funds. These escrowed funds are not guaranteed by\n United and are not reported as debt on United’s consolidated\n balance sheet because the proceeds held by the depositary are not\n United’s assets.
\nIn September 2016 and June\n 2016, United created separate EETC pass-through trusts, each of\n which issued pass-through certificates. The proceeds of the\n issuance of the pass-through certificates are used to purchase\n equipment notes issued by United and secured by its aircraft. The\n Company records the debt obligation upon issuance of the equipment\n notes rather than upon the initial issuance of the pass-through\n certificates. United expects to receive all proceeds from the\n September 2016 and June 2016 pass-through trusts by the end of the\n second quarter of 2017. Certain details of the pass-through trusts\n with proceeds received from issuance of debt in 2016 are as follows\n (in 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 | Class | \n\n | Principal | \n\n | \n | Final expected \n distribution \n date | \n \n | Stated \n interest \n rate | \n \n | \n | Total debt \n recorded \n as of December 31, \n 2016 | \n \n | \n | Proceeds \n received from \n issuance of \n debt during \n 2016 | \n \n | \n | Remaining \n proceeds from \n issuance of debt \n to be received \n in future \n periods | \n \n | |||||
| \n September 2016 \n | \n \n | AA | \n\n | $ | \n637 | \n\n | \n | October 2028 | \n\n | \n | 2.875% | \n\n | \n | $ | \n80 | \n\n | \n | $ | \n80 | \n\n | \n | $ | \n557 | \n\n |
| \n September 2016 \n | \n \n | A | \n\n | \n | 283 | \n\n | \n | October 2028 | \n\n | \n | 3.10% | \n\n | \n | \n | 36 | \n\n | \n | \n | 36 | \n\n | \n | \n | 247 | \n\n |
| \n June 2016 \n | \n \n | AA | \n\n | \n | 729 | \n\n | \n | July 2028 | \n\n | \n | 3.10% | \n\n | \n | \n | 410 | \n\n | \n | \n | 410 | \n\n | \n | \n | 319 | \n\n |
| \n June 2016 \n | \n \n | A | \n\n | \n | 324 | \n\n | \n | July 2028 | \n\n | \n | 3.45% | \n\n | \n | \n | 182 | \n\n | \n | \n | 182 | \n\n | \n | \n | 142 | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | \n | $ | \n1,973 | \n\n | \n | \n | \n | \n | \n | \n | \n | $ | \n708 | \n\n | \n | $ | \n708 | \n\n | \n | $ | \n1,265 | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n | \n | \n | \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 2016, United borrowed\n approximately $369 million aggregate principal amount from\n various financial institutions to finance the purchase of several\n aircraft delivered in 2016. The notes evidencing these borrowings,\n which are secured by the related aircraft, have maturity dates\n ranging from 2026 to 2028 and have interest rates comprised of the\n LIBOR plus a specified margin.
\nUnsecured\n debt
\n5% Senior Notes due\n 2024. In January 2017, United issued $300 million\n aggregate principal amount of 5% Senior Notes due February 1,\n 2024 (the “5% Senior Notes due 2024”). These notes are\n fully and unconditionally guaranteed and recorded by United on its\n balance sheet as debt. The indenture for the 5% Senior Notes due\n 2024 requires UAL to offer to repurchase the notes for cash if\n certain changes of control of UAL occur at a purchase price equal\n to 101% of the principal amount of notes repurchased plus accrued\n and unpaid interest.
\n\n
\nThe 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 \n Default Provisions | \n
| \n Various equipment notes and\n other notes payable \n | \n \n | Secured by certain aircraft. The indentures contain events of\n default that are customary for aircraft financing, including in\n certain cases cross default to other related aircraft. | \n
| \n Credit Agreement \n | \n \n | \n Secured by certain of\n United’s international route authorities, specified\n take-off and landing slots\n at certain airports and certain other 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, although the Company currently\n has ample ability under these restrictions to repurchase stock\n under the Company’s share repurchase program. \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 6.375% Senior\n Notes due 2018 \n\n \n\n 6% Senior Notes\n due 2020 \n\n \n5% Senior Notes due\n 2024 \n | \n \n | The indentures for these notes contain covenants that, among\n other things, restrict the ability of the Company and its\n restricted subsidiaries (as defined in the indenture) to incur\n additional indebtedness and pay dividends on or repurchase stock,\n although the Company currently has ample ability under these\n restrictions to repurchase stock under the Company’s share\n repurchase program. | \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, 2016 and 2015, the Company had a carrying value\n of computer software of $356 million and $279 million,\n respectively. For the years ended December 31, 2016, 2015 and\n 2014, the Company’s depreciation expense related to computer\n software was $108 million, $93 million and\n $81 million, respectively. Aircraft and aircraft spare parts\n were assumed to have residual values of approximately 10% of\n original cost, and other categories of property and equipment were\n assumed to have no residual value.
\nNOTE 18 - 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\n millions, except per share\n amounts) \n | \n \n | March 31 | \n\n | \n | June 30 | \n\n | \n | September 30 | \n\n | \n | December 31 | \n\n | ||||
| \n 2016 \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 | $ | \n8,195 | \n\n | \n | $ | \n9,396 | \n\n | \n | $ | \n9,913 | \n\n | \n | $ | \n9,052 | \n\n |
| \n Income from\n operations \n | \n \n | \n | 649 | \n\n | \n | \n | 1,060 | \n\n | \n | \n | 1,624 | \n\n | \n | \n | 1,005 | \n\n |
| \n Net income \n | \n \n | \n | 313 | \n\n | \n | \n | 588 | \n\n | \n | \n | 965 | \n\n | \n | \n | 397 | \n\n |
| \n Basic earnings per\n share \n | \n \n | \n | 0.88 | \n\n | \n | \n | 1.78 | \n\n | \n | \n | 3.02 | \n\n | \n | \n | 1.26 | \n\n |
| \n Diluted earnings per\n share \n | \n \n | \n | 0.88 | \n\n | \n | \n | 1.78 | \n\n | \n | \n | 3.01 | \n\n | \n | \n | 1.26 | \n\n |
| \n 2015 \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 | $ | \n8,608 | \n\n | \n | $ | \n9,914 | \n\n | \n | $ | \n10,306 | \n\n | \n | $ | \n9,036 | \n\n |
| \n Income from\n operations \n | \n \n | \n | 741 | \n\n | \n | \n | 1,445 | \n\n | \n | \n | 1,899 | \n\n | \n | \n | 1,081 | \n\n |
| \n Net income \n | \n \n | \n | 508 | \n\n | \n | \n | 1,193 | \n\n | \n | \n | 4,816 | \n\n | \n | \n | 823 | \n\n |
| \n Basic earnings per\n share \n | \n \n | \n | 1.33 | \n\n | \n | \n | 3.14 | \n\n | \n | \n | 12.83 | \n\n | \n | \n | 2.24 | \n\n |
| \n Diluted earnings per\n share \n | \n \n | \n | 1.32 | \n\n | \n | \n | 3.14 | \n\n | \n | \n | 12.82 | \n\n | \n | \n | 2.24 | \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 2016 \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 Impairment of\n assets \n | \n \n | $ | \n— | \n\n | \n | $ | \n412 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n— | \n\n |
| \n Cleveland airport lease\n restructuring \n | \n \n | \n | 74 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n Labor agreement costs and\n related items \n | \n \n | \n | 100 | \n\n | \n | \n | 10 | \n\n | \n | \n | 14 | \n\n | \n | \n | (60) | \n\n |
| \n Severance and benefit\n costs \n | \n \n | \n | 8 | \n\n | \n | \n | 6 | \n\n | \n | \n | 13 | \n\n | \n | \n | 10 | \n\n |
| \n (Gains) losses on sale of\n assets and other special charges \n | \n \n | \n | 8 | \n\n | \n | \n | 6 | \n\n | \n | \n | 18 | \n\n | \n | \n | 19 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \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 | 190 | \n\n | \n | \n | 434 | \n\n | \n | \n | 45 | \n\n | \n | \n | (31) | \n\n |
| \n Nonoperating and income\n taxes: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Losses (gain) on\n extinguishment of debt and other \n | \n \n | \n | 8 | \n\n | \n | \n | (9) | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n Income tax expense\n (benefit) related to special charges \n | \n \n | \n | (72) | \n\n | \n | \n | (153) | \n\n | \n | \n | (16) | \n\n | \n | \n | 12 | \n\n |
| \n Income tax adjustments\n (Note 6) \n | \n \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 180 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \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 items, net of income taxes \n | \n \n | $ | \n126 | \n\n | \n | $ | \n272 | \n\n | \n | $ | \n29 | \n\n | \n | $ | \n161 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n 2015 \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 Impairment of\n assets \n | \n \n | $ | \n2 | \n\n | \n | $ | \n11 | \n\n | \n | $ | \n18 | \n\n | \n | $ | \n48 | \n\n |
| \n Labor agreement costs and\n related items \n | \n \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 18 | \n\n |
| \n Severance and benefit\n costs \n | \n \n | \n | 50 | \n\n | \n | \n | 25 | \n\n | \n | \n | 28 | \n\n | \n | \n | 4 | \n\n |
| \n (Gains) losses on sale of\n assets and other special charges \n | \n \n | \n | 12 | \n\n | \n | \n | 19 | \n\n | \n | \n | 30 | \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 | \n \n \n | \n \n |
| \n Special charges \n | \n \n | \n | 64 | \n\n | \n | \n | 55 | \n\n | \n | \n | 76 | \n\n | \n | \n | 131 | \n\n |
| \n Nonoperating and income\n taxes: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Losses on extinguishment of\n debt and other \n | \n \n | \n | 6 | \n\n | \n | \n | 128 | \n\n | \n | \n | 61 | \n\n | \n | \n | 7 | \n\n |
| \n Income tax benefit related\n to special charges \n | \n \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | (11) | \n\n |
| \n Income tax expense\n (benefit) associated with valuation allowance release \n | \n \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | (3,218) | \n\n | \n | \n | 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 \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total operating and\n nonoperating special items, net of income taxes \n | \n \n | $ | \n70 | \n\n | \n | $ | \n183 | \n\n | \n | $ | \n(3,081) | \n\n | \n | $ | \n215 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \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 16 of this report\n for additional information of these items.
\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 | 2016 | \n\n | \n | 2015 | \n\n | ||
| \n Projected benefit\n obligation \n | \n \n | $ | \n5,025 | \n\n | \n | $ | \n4,292 | \n\n |
| \n Accumulated benefit\n obligation \n | \n \n | \n | 3,985 | \n\n | \n | \n | 3,655 | \n\n |
| \n Fair value of plan\n assets \n | \n \n | \n | 3,164 | \n\n | \n | \n | 2,794 | \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, 2016 and 2015 is as follows (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 2016 | \n\n | \n | 2015 | \n\n | ||
| \n Balance at beginning of\n year \n | \n \n | $ | \n208 | \n\n | \n | $ | \n188 | \n\n |
| \n Actual return on plan\n assets: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n Sold during the\n year \n | \n \n | \n | 4 | \n\n | \n | \n | 8 | \n\n |
| \n Held at year end \n | \n \n | \n | 3 | \n\n | \n | \n | (1) | \n\n |
| \n Purchases, sales, issuances\n and settlements (net) \n | \n \n | \n | 72 | \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 Balance at end of\n year \n | \n \n | $ | \n287 | \n\n | \n | $ | \n208 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n |
| \n Pension Fund \n | \n \n | IAM National Pension Fund | \n
| \n EIN/ Pension Plan\n Number \n | \n \n | 51-6031295 -\n 002 | \n
| \n Pension Protection Act Zone\n Status (2016 and 2015) \n | \n \n | Green Zone. Plans in the green zone are at least\n 80 percent funded. | \n
| \n FIP/RP Status\n Pending/Implemented \n | \n \n | No | \n
| \n United’s\n Contributions \n | \n \n | $41 million, $40 million and $39 million in\n the years ended December 31, 2016, 2015 and 2014,\n respectively | \n
| \n Surcharge\n Imposed \n | \n \n | No | \n
| \n Expiration Date of\n Collective Bargaining Agreement \n | \n \n | N/A | \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\n millions, except per share\n amounts) \n | \n \n | March 31 | \n\n | \n | June 30 | \n\n | \n | September 30 | \n\n | \n | December 31 | \n\n | ||||
| \n 2016 \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 | $ | \n8,195 | \n\n | \n | $ | \n9,396 | \n\n | \n | $ | \n9,913 | \n\n | \n | $ | \n9,052 | \n\n |
| \n Income from\n operations \n | \n \n | \n | 649 | \n\n | \n | \n | 1,060 | \n\n | \n | \n | 1,624 | \n\n | \n | \n | 1,005 | \n\n |
| \n Net income \n | \n \n | \n | 313 | \n\n | \n | \n | 588 | \n\n | \n | \n | 965 | \n\n | \n | \n | 397 | \n\n |
| \n Basic earnings per\n share \n | \n \n | \n | 0.88 | \n\n | \n | \n | 1.78 | \n\n | \n | \n | 3.02 | \n\n | \n | \n | 1.26 | \n\n |
| \n Diluted earnings per\n share \n | \n \n | \n | 0.88 | \n\n | \n | \n | 1.78 | \n\n | \n | \n | 3.01 | \n\n | \n | \n | 1.26 | \n\n |
| \n 2015 \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 | $ | \n8,608 | \n\n | \n | $ | \n9,914 | \n\n | \n | $ | \n10,306 | \n\n | \n | $ | \n9,036 | \n\n |
| \n Income from\n operations \n | \n \n | \n | 741 | \n\n | \n | \n | 1,445 | \n\n | \n | \n | 1,899 | \n\n | \n | \n | 1,081 | \n\n |
| \n Net income \n | \n \n | \n | 508 | \n\n | \n | \n | 1,193 | \n\n | \n | \n | 4,816 | \n\n | \n | \n | 823 | \n\n |
| \n Basic earnings per\n share \n | \n \n | \n | 1.33 | \n\n | \n | \n | 3.14 | \n\n | \n | \n | 12.83 | \n\n | \n | \n | 2.24 | \n\n |
| \n Diluted earnings per\n share \n | \n \n | \n | 1.32 | \n\n | \n | \n | 3.14 | \n\n | \n | \n | 12.82 | \n\n | \n | \n | 2.24 | \n\n |
NOTE 17 - 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.
\n\n
\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 | 2016 | \n\n | |
| \n Domestic (U.S. and\n Canada) \n | \n \n | $ | \n22,202 | \n\n |
| \n Pacific \n | \n \n | \n | 4,959 | \n\n |
| \n Atlantic \n | \n \n | \n | 6,157 | \n\n |
| \n Latin America \n | \n \n | \n | 3,238 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
| \n Total \n | \n \n | $ | \n36,556 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | |||
| \n | \n | 2015 | \n\n | |
| \n Domestic (U.S. and\n Canada) \n | \n \n | $ | \n21,931 | \n\n |
| \n Pacific \n | \n \n | \n | 5,498 | \n\n |
| \n Atlantic \n | \n \n | \n | 7,068 | \n\n |
| \n Latin America \n | \n \n | \n | 3,367 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
| \n Total \n | \n \n | $ | \n37,864 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | |||
| \n | \n | 2014 | \n\n | |
| \n Domestic (U.S. and\n Canada) \n | \n \n | $ | \n22,320 | \n\n |
| \n Pacific \n | \n \n | \n | 5,767 | \n\n |
| \n Atlantic \n | \n \n | \n | 7,321 | \n\n |
| \n Latin America \n | \n \n | \n | 3,493 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
| \n Total \n | \n \n | $ | \n38,901 | \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.
\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 | Cash Proceeds \n from Miles Sold \n and Earned | \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 | Decrease in \n Advanced \n Purchase \n of Miles (c) | \n \n | ||||
| \n 2016 \n | \n \n | $ | \n3,022 | \n\n | \n | $ | \n1,221 | \n\n | \n | $ | \n2,050 | \n\n | \n | $ | \n(249) | \n\n |
| \n 2015 \n | \n \n | \n | 2,999 | \n\n | \n | \n | 1,050 | \n\n | \n | \n | 2,173 | \n\n | \n | \n | (224) | \n\n |
| \n 2014 \n | \n \n | \n | 2,861 | \n\n | \n | \n | 882 | \n\n | \n | \n | 2,178 | \n\n | \n | \n | (199) | \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 decrease in the advance purchase of miles obligation due to\n cash payments for the sale of miles less than miles awarded to\n customers. | \n\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
Certain details of the\n pass-through trusts with proceeds received from issuance of debt in\n 2016 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 | Class | \n\n | Principal | \n\n | \n | Final expected \n distribution \n date | \n \n | Stated \n interest \n rate | \n \n | \n | Total debt \n recorded \n as of December 31, \n 2016 | \n \n | \n | Proceeds \n received from \n issuance of \n debt during \n 2016 | \n \n | \n | Remaining \n proceeds from \n issuance of debt \n to be received \n in future \n periods | \n \n | |||||
| \n September 2016 \n | \n \n | AA | \n\n | $ | \n637 | \n\n | \n | October 2028 | \n\n | \n | 2.875% | \n\n | \n | $ | \n80 | \n\n | \n | $ | \n80 | \n\n | \n | $ | \n557 | \n\n |
| \n September 2016 \n | \n \n | A | \n\n | \n | 283 | \n\n | \n | October 2028 | \n\n | \n | 3.10% | \n\n | \n | \n | 36 | \n\n | \n | \n | 36 | \n\n | \n | \n | 247 | \n\n |
| \n June 2016 \n | \n \n | AA | \n\n | \n | 729 | \n\n | \n | July 2028 | \n\n | \n | 3.10% | \n\n | \n | \n | 410 | \n\n | \n | \n | 410 | \n\n | \n | \n | 319 | \n\n |
| \n June 2016 \n | \n \n | A | \n\n | \n | 324 | \n\n | \n | July 2028 | \n\n | \n | 3.45% | \n\n | \n | \n | 182 | \n\n | \n | \n | 182 | \n\n | \n | \n | 142 | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | \n | \n | $ | \n1,973 | \n\n | \n | \n | \n | \n | \n | \n | \n | $ | \n708 | \n\n | \n | $ | \n708 | \n\n | \n | $ | \n1,265 | \n\n |
| \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \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% of original cost. | \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 third-party\n business revenue is recorded in Other operating revenue. The\n Company also incurs third-party business expenses, such as\n maintenance, ground handling and catering services for third\n parties, fuel sales and non-air mileage redemptions, and those\n third-party business expenses are recorded in Other operating\n expenses. | \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 \n Default Provisions | \n
| \n Various equipment notes and\n other notes payable \n | \n \n | Secured by certain aircraft. The indentures contain events of\n default that are customary for aircraft financing, including in\n certain cases cross default to other related aircraft. | \n
| \n Credit Agreement \n | \n \n | \n Secured by certain of\n United’s international route authorities, specified\n take-off and landing slots\n at certain airports and certain other 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, although the Company currently\n has ample ability under these restrictions to repurchase stock\n under the Company’s share repurchase program. \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 6.375% Senior\n Notes due 2018 \n\n \n\n 6% Senior Notes\n due 2020 \n\n \n5% Senior Notes due\n 2024 \n | \n \n | The indentures for these notes contain covenants that, among\n other things, restrict the ability of the Company and its\n restricted subsidiaries (as defined in the indenture) to incur\n additional indebtedness and pay dividends on or repurchase stock,\n although the Company currently has ample ability under these\n restrictions to repurchase stock under the Company’s share\n repurchase program. | \n
| Short-term\n Investments—Short-term investments are classified as\n available-for-sale and are\n stated at fair value. Realized gains and losses on sales of\n investments are reflected in nonoperating income (expense) in the\n consolidated statements of operations. Unrealized gains and losses\n on available-for-sale securities\n are reflected as a component of accumulated other comprehensive\n income (loss). | \n
At December 31, 2016,\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 | \n\n | \n | Facility and Other \n Operating Leases | \n \n | \n | Aircraft Operating \n Leases | \n \n | |||
| \n 2017 \n | \n \n | $ | \n183 | \n\n | \n | $ | \n1,256 | \n\n | \n | $ | \n1,271 | \n\n |
| \n 2018 \n | \n \n | \n | 170 | \n\n | \n | \n | 1,106 | \n\n | \n | \n | 1,074 | \n\n |
| \n 2019 \n | \n \n | \n | 105 | \n\n | \n | \n | 991 | \n\n | \n | \n | 894 | \n\n |
| \n 2020 \n | \n \n | \n | 85 | \n\n | \n | \n | 1,104 | \n\n | \n | \n | 669 | \n\n |
| \n 2021 \n | \n \n | \n | 84 | \n\n | \n | \n | 888 | \n\n | \n | \n | 551 | \n\n |
| \n After\n 2021 \n | \n \n | \n | 915 | \n\n | \n | \n | 6,702 | \n\n | \n | \n | 2,049 | \n\n |
| \n | \n | \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 | $ | \n1,542 | \n\n | \n | $ | \n12,047 | \n\n | \n | $ | \n6,508 | \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 | (604) | \n\n | \n | \n | \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 | 938 | \n\n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Current portion \n | \n \n | \n | (116) | \n\n | \n | \n | \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 | $ | \n822 | \n\n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n |
\n
Based on these assumptions as of\n December 31, 2016, our future payments through the end of the\n terms of our CPAs are presented in the table below (in\n billions):
\n\n
\n| \n | \n | \n | \n | \n |
| \n 2017 \n | \n \n | $ | \n1.9 | \n\n |
| \n 2018 \n | \n \n | \n | 1.9 | \n\n |
| \n 2019 \n | \n \n | \n | 1.3 | \n\n |
| \n 2020 \n | \n \n | \n | 1.0 | \n\n |
| \n 2021 \n | \n \n | \n | 1.0 | \n\n |
| \n After 2021 \n | \n \n | \n | 4.3 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n |
| \n | \n | $ | \n11.4 | \n\n |
| \n | \n | \n \n | \n \n \n | \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. The remaining balance of pre-purchased miles is eligible to be\n allocated by Chase to MileagePlus members’ accounts in 2017.\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. 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\n breaches.
\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
\n UAL’s\n quarterly financial data is subject to seasonal fluctuations and\n historically its second and third quarter financial results, which\n reflect higher travel demand, are better than its first and fourth\n quarter financial results. UAL’s quarterly results were\n 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 2016 \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 Impairment of\n assets \n | \n \n | $ | \n— | \n\n | \n | $ | \n412 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n— | \n\n |
| \n Cleveland airport lease\n restructuring \n | \n \n | \n | 74 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n Labor agreement costs and\n related items \n | \n \n | \n | 100 | \n\n | \n | \n | 10 | \n\n | \n | \n | 14 | \n\n | \n | \n | (60) | \n\n |
| \n Severance and benefit\n costs \n | \n \n | \n | 8 | \n\n | \n | \n | 6 | \n\n | \n | \n | 13 | \n\n | \n | \n | 10 | \n\n |
| \n (Gains) losses on sale of\n assets and other special charges \n | \n \n | \n | 8 | \n\n | \n | \n | 6 | \n\n | \n | \n | 18 | \n\n | \n | \n | 19 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \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\n charges \n | \n \n | \n | 190 | \n\n | \n | \n | 434 | \n\n | \n | \n | 45 | \n\n | \n | \n | (31) | \n\n |
| \n Nonoperating and\n income taxes: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Losses (gain) on\n extinguishment of debt and other \n | \n \n | \n | 8 | \n\n | \n | \n | (9) | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n |
| \n Income tax expense\n (benefit) related to special charges \n | \n \n | \n | (72) | \n\n | \n | \n | (153) | \n\n | \n | \n | (16) | \n\n | \n | \n | 12 | \n\n |
| \n Income tax adjustments\n (Note 6) \n | \n \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 180 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \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 items, net of income taxes \n | \n \n | $ | \n126 | \n\n | \n | $ | \n272 | \n\n | \n | $ | \n29 | \n\n | \n | $ | \n161 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n 2015 \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 Impairment of\n assets \n | \n \n | $ | \n2 | \n\n | \n | $ | \n11 | \n\n | \n | $ | \n18 | \n\n | \n | $ | \n48 | \n\n |
| \n Labor agreement costs and\n related items \n | \n \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 18 | \n\n |
| \n Severance and benefit\n costs \n | \n \n | \n | 50 | \n\n | \n | \n | 25 | \n\n | \n | \n | 28 | \n\n | \n | \n | 4 | \n\n |
| \n (Gains) losses on sale of\n assets and other special charges \n | \n \n | \n | 12 | \n\n | \n | \n | 19 | \n\n | \n | \n | 30 | \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 | \n \n \n | \n \n |
| \n Special\n charges \n | \n \n | \n | 64 | \n\n | \n | \n | 55 | \n\n | \n | \n | 76 | \n\n | \n | \n | 131 | \n\n |
| \n Nonoperating and\n income taxes: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Losses on extinguishment\n of debt and other \n | \n \n | \n | 6 | \n\n | \n | \n | 128 | \n\n | \n | \n | 61 | \n\n | \n | \n | 7 | \n\n |
| \n Income tax benefit\n related to special charges \n | \n \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | (11) | \n\n |
| \n Income tax expense\n (benefit) associated with valuation allowance release \n | \n \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | (3,218) | \n\n | \n | \n | 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 \n | \n \n | \n | \n \n | \n \n \n | \n \n |
| \n Total operating and\n nonoperating special items, net of income taxes \n | \n \n | $ | \n70 | \n\n | \n | $ | \n183 | \n\n | \n | $ | \n(3,081) | \n\n | \n | $ | \n215 | \n\n |
| \n | \n | \n \n | \n \n \n | \n \n | \n | \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 16\n of this report for additional information of these\n items.
\n \n \n| Labor\n Costs—The Company records expenses associated with\n amendable labor agreements when the amounts are probable and\n estimable. These include costs associated with lump sum cash\n payments that would be made in conjunction with the ratification of\n labor agreements. To the extent these upfront costs are in lieu of\n future pay increases, they would be capitalized and amortized over\n the term of the labor agreements. If not, these amounts would be\n expensed. | \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
| 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. | \n
Commitments.\n As of December 31, 2016, United had firm commitments and\n options to purchase aircraft from The Boeing Company\n (“Boeing”), Embraer and Airbus presented in the table\n below:
\n\n
\n| \n | \n | \n | \n | \n |
| \n \n Aircraft\n Type \n | \n \n | Number of Firm \n \n Commitments (a) | \n \n | |
| \n Airbus A350-1000 \n | \n \n | \n | 35 | \n\n |
| \n Boeing\n 737NG/737MAX \n | \n \n | \n | 165 | \n\n |
| \n Boeing 777-300ER \n | \n \n | \n | 12 | \n\n |
| \n Boeing 787-8/-9/-10 \n | \n \n | \n | 21 | \n\n |
| \n Embraer E175 \n | \n \n | \n | 24 | \n\n |
| (a) United also has options\n and purchase rights for additional aircraft. | \n\n |