| (k) | \nAdvertising—Advertising\n costs, which are included in Other operating expenses, are expensed\n as incurred. Advertising expenses were $217 million,\n $220 million and $201 million for the years ended\n December 31, 2017, 2016 and 2015, respectively. | \n
| (d) | \nCash and Cash Equivalents and\n Restricted Cash— Highly liquid investments with a\n maturity of three months or less on their acquisition date are\n classified as cash and cash equivalents. | \n
\n Restricted cash primarily includes cash collateral for letters of\n credit and collateral associated with obligations for facility\n leases and workers’ compensation. Restricted cash is\n classified as short-term or long-term in the consolidated balance\n sheets based on the expected timing of return of the assets to the\n Company.
\n\n
\nThe following table provides a reconciliation of\n cash, cash equivalents and restricted cash reported within the\n consolidated balance sheets that sum to the total of the same such\n amounts shown in the 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 December 31, | \n\n | \n | At December 31, | \n\n | ||||||||||||||||||
| \n | \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2015 | \n\n | \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2015 | \n\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 \n Cash and cash equivalents \n | \n \n | $ | \n1,482 | \n\n | \n | $ | \n2,179 | \n\n | \n | $ | \n3,006 | \n\n | \n | $ | \n1,476 | \n\n | \n | $ | \n2,173 | \n\n | \n | $ | \n3,000 | \n\n |
| \n \n Restricted cash included in Prepaid expenses and other \n | \n \n | \n | 18 | \n\n | \n | \n | — | \n\n | \n | \n | 2 | \n\n | \n | \n | 18 | \n\n | \n | \n | — | \n\n | \n | \n | 2 | \n\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 \n Restricted cash \n | \n \n | \n | 91 | \n\n | \n | \n | 124 | \n\n | \n | \n | 204 | \n\n | \n | \n | 91 | \n\n | \n | \n | 124 | \n\n | \n | \n | 204 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \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\n shown in the statement of consolidated cash flows | \n\n | $ | \n1,591 | \n\n | \n | $ | \n2,303 | \n\n | \n | $ | \n3,212 | \n\n | \n | $ | \n1,585 | \n\n | \n | $ | \n2,297 | \n\n | \n | $ | \n3,206 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \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 13 - COMMITMENTS AND CONTINGENCIES
\n\n Commitments. As of December 31, 2017, United had\n firm commitments and options to purchase aircraft from The Boeing\n Company (“Boeing”) and Airbus presented in the table\n below:
\n\n
\n| \n | \n | \n | \n | \n |
| \n Aircraft Type \n | \n \n | Number of Firm \n Commitments (a) | \n \n | |
| \n \n Airbus A350 \n | \n \n | \n | 45 | \n\n |
| \n \n Boeing 737 MAX \n | \n \n | \n | 161 | \n\n |
| \n \n Boeing 777-300ER \n | \n \n | \n | 4 | \n\n |
| \n \n Boeing 787 \n | \n \n | \n | 18 | \n\n |
| (a)\n United also has options and purchase rights for additional\n aircraft. | \n\n |
\n The aircraft listed in the table above are scheduled for delivery\n from 2018 through 2027. In 2018, United expects to take delivery of\n 10 Boeing 737 MAX aircraft, seven Boeing 787 aircraft and four\n Boeing 777-300ER aircraft.\n To the extent the Company and the aircraft manufacturers with whom\n the Company has existing orders for new aircraft agree to modify\n the contracts governing those orders, the amount and timing of the\n Company’s future capital commitments could change.\n Additionally, the Company has entered into a contract to purchase\n three used Boeing 767-300ER aircraft from Hawaiian\n Airlines, Inc. with expected delivery dates in the second half of\n 2018.
\n\n The table below summarizes United’s commitments as of\n December 31, 2017, which primarily relate to the acquisition\n of aircraft and related spare engines, aircraft improvements and\n include other capital purchase commitments for the years ended\n December 31 (in billions). Any new firm aircraft orders,\n including through the exercise of purchase options and purchase\n rights, will increase the total future capital commitments of the\n Company.
\n\n
\n| \n | \n | \n | \n | \n |
| \n \n 2018 \n | \n \n | $ | \n\n 3.2 | \n\n |
| \n \n 2019 \n | \n \n | \n | 2.9 | \n\n |
| \n \n 2020 \n | \n \n | \n | 2.1 | \n\n |
| \n \n 2021 \n | \n \n | \n | 2.4 | \n\n |
| \n \n 2022 \n | \n \n | \n | 1.8 | \n\n |
| \n \n After 2022 \n | \n \n | \n | 9.8 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n | \n | $ | \n22.2 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n |
\n In February 2018, the Company secured $935 million of EETC\n financing to finance certain aircraft deliveries in 2017 and the\n first half of 2018. The Company has also secured backstop financing\n commitments from certain of its aircraft manufacturers for a\n limited number of its future aircraft deliveries, subject to\n certain customary conditions. Financing may be necessary to satisfy\n the Company’s capital commitments for its firm order aircraft\n and other related capital expenditures.
\n\n Legal and Environmental. The Company has certain\n contingencies resulting from litigation and claims incident to the\n ordinary course of business. As of December 31, 2017,\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 disposition.
\n\n Guarantees and Indemnifications. In the normal course\n of business, the Company enters into numerous real estate leasing\n and 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 December 31, 2017, United is the guarantor of\n approximately $1.8 billion in aggregate principal amount of\n tax-exempt special\n facilities revenue bonds and interest thereon. These bonds, issued\n by various airport municipalities, are payable solely from rentals\n paid under long-term agreements with the respective governing\n bodies. The leasing arrangements associated with $1.4 billion\n of these 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\n special facilities revenue bonds are included in our lease\n commitments disclosed in Note 11 of this report. The leasing\n arrangements associated with approximately $441 million of\n these obligations are accounted for as capital leases. All of these\n bonds are due between 2019 and 2038.
\n\n Increased Cost Provisions. In United’s\n financing transactions that include loans, United typically agrees\n to reimburse lenders for any reduced returns with respect to the\n loans due to any change in capital requirements and, in the case of\n loans in which the interest rate is based on LIBOR, for certain\n other increased costs that the lenders incur in carrying these\n loans as a result of any change in law, subject, in most cases, to\n obligations of the lenders to take certain limited steps to\n mitigate the requirement for, or the amount of, such increased\n costs. At December 31, 2017, the Company had $3.4 billion\n of floating rate debt and $60 million of fixed rate debt, with\n remaining terms of up to 11 years, that are subject to these\n increased cost provisions. In several financing transactions\n involving loans or leases from non-U.S. entities, with remaining\n terms of up to 11 years and an aggregate balance of\n $3.3 billion, the Company bears the risk of any change in tax\n laws that would subject loan or lease payments thereunder to\n non-U.S. entities to\n withholding taxes, subject to customary exclusions.
\n\n As of December 31, 2017, United is the guarantor of\n $157 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 Consortia. United participates in numerous fuel\n consortia with other air carriers at major airports to reduce the\n costs of fuel distribution and storage. Interline agreements govern\n the rights and responsibilities of the consortia members and\n provide for the allocation of the overall costs to operate the\n consortia based on usage. The consortia (and in limited cases, the\n participating carriers) have entered into long-term agreements to\n lease certain airport fuel storage and distribution facilities that\n are typically financed through tax-exempt bonds (either special\n facilities lease revenue bonds or general airport revenue bonds),\n issued by various local municipalities. In general, each consortium\n lease agreement requires the consortium to make lease payments in\n amounts sufficient to pay the maturing principal and interest\n payments on the bonds. As of December 31, 2017, 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, 2017, the\n Company’s contingent exposure was approximately\n $244 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,\n which ranges from 2022 to 2049. The Company did not record a\n liability at the time these indirect guarantees were made.
\n\n Regional Capacity Purchase. As of December 31,\n 2017, United had 257 call options to purchase regional jet aircraft\n being operated by certain of its regional carriers with contract\n dates extending until 2029. These call options are exercisable upon\n wrongful termination or breach of contract, among other conditions.\n None of the call options were exercisable at December 31,\n 2017.
\n\n Credit 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 Negotiations. As of December 31, 2017,\n United, including its subsidiaries, had approximately 89,800\n employees. Approximately 80% of United’s employees were\n represented by various U.S. labor organizations as of\n December 31, 2017. The agreement with the International\n Brotherhood of Teamsters (the “IBT”) contains\n provisions that require the Company to align contract terms with\n other airlines’ workgroups under certain conditions.
\n\n UNITE HERE is attempting to organize United’s Catering\n Operations employees, who are currently unrepresented, and filed an\n application to do so with the National Mediation Board on\n January 24, 2018.
\n\n NOTE 5 - SHARE-BASED COMPENSATION PLANS
\n\n UAL maintains several share-based compensation plans. In May 2017,\n UAL’s Board of Directors and stockholders approved the United\n Continental Holdings, Inc. 2017 Incentive Compensation Plan (the\n “2017 Plan”). The 2017 Plan is an incentive\n compensation plan that allows the Company to use different forms of\n long-term equity incentives to attract, retain, and reward officers\n and employees (including prospective officers and employees). The\n 2017 Plan replaced the United Continental Holdings, Inc. 2008\n Incentive Compensation Plan (the “2008 Plan”). Any\n awards granted under the 2008 Plan prior to the approval of the\n 2017 Plan remain in effect pursuant to their terms. Awards may not\n be granted under the 2017 Plan after May 24, 2027. Under the\n 2017 Plan, the Company may grant: non-qualified stock options, incentive\n stock options (within the meaning of Section 422 of the\n Internal Revenue Code of 1986), stock appreciation rights,\n restricted shares, RSUs, performance compensation awards,\n performance units, cash incentive awards, other equity-based and\n equity-related awards, and dividends and dividend equivalents.
\n\n All awards are recorded as either equity or a liability in the\n Company’s consolidated balance sheets. The share-based\n compensation expense is recorded in salaries and related costs.
\n\n During 2017, UAL granted share-based compensation awards pursuant\n to both the 2008 Plan and the 2017 Plan. These share-based\n compensation awards include approximately 1.6 million RSUs,\n consisting of 1.0 million time-vested RSUs and\n 0.6 million performance-based RSUs, and approximately 36,000\n stock options. The time-vested RSUs vest pro-rata, a majority of which vest on\n February 28th of each year over a three year period from the date\n of grant. These RSUs are generally equity awards settled in stock\n for domestic employees and liability awards settled in cash for\n international employees. The cash payments are based on the\n 20-day average closing\n price of UAL common stock immediately prior to the vesting date.\n The performance-based RSUs vest based on the Company’s\n relative improvement in pre-tax margin compared to a group of\n airline industry peers for the three years ending December 31,\n 2019. If the performance condition is achieved, cash payments will\n be made after the end of the performance period based on the\n 20-day average closing\n price of UAL common stock immediately prior to the vesting date and\n based on the level, if any, of the performance goal achieved. The\n Company accounts for the performance-based RSUs as liability\n awards. The stock options have a ten-year term and vest pro-rata over the third, fourth and\n fifth anniversaries of the date of grant.
\n\n The following table provides information related to UAL’s\n share-based compensation plan cost for the years ended\n December 31 (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | \n 2017 | \n\n | \n | \n 2016 | \n\n | \n | \n 2015 | \n\n | |||
| \n \n Compensation cost: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n RSUs \n | \n \n | $ | \n63 | \n\n | \n | $ | \n58 | \n\n | \n | $ | \n52 | \n\n |
| \n \n Restricted stock \n | \n \n | \n | 8 | \n\n | \n | \n | 11 | \n\n | \n | \n | 6 | \n\n |
| \n \n Stock options \n | \n \n | \n | 2 | \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 Total \n | \n \n | $ | \n73 | \n\n | \n | $ | \n70 | \n\n | \n | $ | \n58 | \n\n |
| \n | \n | \n \n \n | \n \n \n \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 UAL’s unearned compensation and\n weighted-average remaining period to recognize costs for all\n outstanding share-based awards that are probable of being achieved\n as of December 31, 2017 (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 years) | \n \n | ||
| \n \n RSUs \n | \n \n | $ | \n46 | \n\n | \n | \n | 1.9 | \n\n |
| \n \n Stock options \n | \n \n | \n | 4 | \n\n | \n | \n | 3.9 | \n\n |
| \n \n Restricted stock \n | \n \n | \n | 3 | \n\n | \n | \n | 1.2 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n | \n | \n |
| \n \n Total \n | \n \n | $ | \n53 | \n\n | \n | \n | \n | \n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n | \n | \n |
\n RSUs and Restricted Stock. All performance-based RSUs, as\n well as a portion of the outstanding time-vested RSUs, will be\n settled in cash. As of December 31, 2017, UAL had recorded a\n liability of $38 million related to its RSUs. UAL paid\n $50 million, $69 million and $85 million related to\n its RSUs during 2017, 2016 and 2015, respectively.
\n\n
\n\n The table below summarizes UAL’s RSUs and restricted stock\n activity for the years ended December 31 (shares in\n 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 \n Outstanding at December 31, 2014 \n | \n \n | \n | 3.8 | \n\n | \n | \n | 0.7 | \n\n | \n | $ | \n32.55 | \n\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 \n Vested \n | \n \n | \n | (1.6) | \n\n | \n | \n | (0.4) | \n\n | \n | \n | 31.14 | \n\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 | \n | \n | \n |
| \n \n Outstanding at December 31, 2015 \n | \n \n | \n | 2.6 | \n\n | \n | \n | 0.3 | \n\n | \n | \n | 48.68 | \n\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 \n Vested \n | \n \n | \n | (1.4) | \n\n | \n | \n | (0.1) | \n\n | \n | \n | 41.47 | \n\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 | \n | \n | \n |
| \n \n Outstanding at December 31, 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 | \n | \n | \n | \n |
| \n \n Granted \n | \n \n | \n | 1.6 | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n |
| \n \n Vested \n | \n \n | \n | (1.0) | \n\n | \n | \n | (0.2) | \n\n | \n | \n | 51.60 | \n\n |
| \n \n Forfeited \n | \n \n | \n | (0.3) | \n\n | \n | \n | \n — | \n\n | \n | \n | 51.88 | \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 Outstanding at December 31, 2017 \n | \n \n | \n | 3.2 | \n\n | \n | \n | 0.3 | \n\n | \n | \n | 52.30 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n | \n | \n |
\n The fair value of RSUs and restricted stock that vested in 2017,\n 2016 and 2015 was $76 million, $80 million and\n $92 million, respectively. The fair value of the restricted\n stock and the stock-settled RSUs was based upon the UAL common\n stock price on the date of grant. These awards are accounted for as\n equity awards. The fair value of the cash-settled RSUs was based on\n the UAL common stock price as of the last day preceding the\n settlement date. These awards are accounted for as liability\n awards. Restricted stock vesting and the recognition of the expense\n is similar to the stock option vesting described below.
\n\n Stock Options. During 2017, UAL granted approximately 36,000\n stock options with exercise prices equal to the fair market value\n of UAL’s common stock on the date of grant with a\n weighted-average exercise price of $77.56 and a weighted-average\n grant date fair value of approximately $0.7 million. In 2016,\n UAL granted approximately 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 approximately\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. UAL did\n not grant any stock options in 2015. Expense related to each\n portion of an option grant is recognized on a straight-line basis\n over the specific vesting period for those options.
\n\n The Company determined the grant date fair value of stock options\n using a Black Scholes option pricing model, which requires the use\n of several assumptions. The risk-free interest rate is based on the\n U.S. treasury yield curve in effect for the expected term of the\n option at the time of grant. The dividend yield on UAL’s\n common stock was assumed to be zero since UAL did not have any\n plans to pay dividends at the time of the option grants. The\n volatility assumptions were based upon historical volatilities of\n UAL using daily stock price returns equivalent to the expected term\n of the option. The expected term of the options was determined\n based upon a simplified assumption that the option will be\n exercised evenly from vesting to expiration due to the\n Company’s lack of relevant historical data related to stock\n options.
\n\n
\n\n As of December 31, 2017, there were approximately\n 0.5 million outstanding stock option awards, 0.1 million\n of which were exercisable, with weighted-average exercise prices of\n $51.67 and $34.74, respectively, intrinsic values of\n $8 million and $5 million, respectively, and\n weighted-average remaining contractual lives (in years) of 6.3 and\n 3.7, respectively.
\n \n \n| (t) | \n\n Recently Issued Accounting Standards— In\n 2014, the Financial Accounting Standards Board (“FASB”)\n amended the FASB Accounting Standards Codification and created a\n new Topic 606, Revenue from Contracts with Customers\n (“Topic 606”). This amendment prescribes that an\n entity should recognize revenue to depict the transfer of promised\n goods or services to customers in an amount that reflects the\n consideration to which the entity expects to be entitled in\n exchange for those goods or services. The amendment supersedes the\n revenue recognition requirements in Topic 605, Revenue\n Recognition, and most industry-specific guidance throughout the\n Industry Topics of the Accounting Standards Codification. The\n Company used the full-retrospective approach in adopting this\n standard on January 1, 2018. The standard impacts the\n classification of certain revenue streams and affects the timing of\n revenue and expense recognition for others. For the Company, the\n most significant impact of this standard is the reclassification of\n certain ancillary fees from other operating revenue into passenger\n revenue on the statement of consolidated operations. These\n ancillary fees are directly related to passenger travel, such as\n ticket change fees and baggage fees, and will 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, will be recognized\n when transportation is provided. While the classification of\n certain transactions within operating revenue and between operating\n revenue and operating expenses will change, the adoption of the\n standard will not have a material impact on our earnings. Further,\n adoption of the standard will have no impact on cash provided by or\n used in operating, financing, or investing activities in our\n consolidated cash flows statements. Adoption of Topic 606 is\n expected to impact our reported results as shown in the table\n below: \n | \n
Statements of Consolidated Operations for the\n Years Ended December 31,
\n\n
\n| \n | \n | \n | \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 Reported | \n\n | \n | Adjustment | \n\n | \n | As Adjusted \n for Adoption of \n Topic 606 | \n \n | |||||||||||||||
| \n | \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2017 | \n\n | \n | 2016 | \n\n | ||||||
| \n \n Operating revenue: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Passenger—Mainline \n | \n \n | $ | \n26,552 | \n\n | \n | $ | \n25,414 | \n\n | \n | $ | \n1,707 | \n\n | \n | $ | \n1,615 | \n\n | \n | $ | \n28,259 | \n\n | \n | $ | \n27,029 | \n\n |
| \n \n Passenger—Regional \n | \n \n | \n | 5,852 | \n\n | \n | \n | 6,043 | \n\n | \n | \n | 349 | \n\n | \n | \n | 357 | \n\n | \n | \n | 6,201 | \n\n | \n | \n | 6,400 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 passenger revenue \n | \n \n | \n | 32,404 | \n\n | \n | \n | 31,457 | \n\n | \n | \n | 2,056 | \n\n | \n | \n | 1,972 | \n\n | \n | \n | 34,460 | \n\n | \n | \n | 33,429 | \n\n |
| \n \n Cargo \n | \n \n | \n | 1,035 | \n\n | \n | \n | 876 | \n\n | \n | \n | 79 | \n\n | \n | \n | 58 | \n\n | \n | \n | 1,114 | \n\n | \n | \n | 934 | \n\n |
| \n \n Other operating revenue \n | \n \n | \n | 4,297 | \n\n | \n | \n | 4,223 | \n\n | \n | \n | (2,087) | \n\n | \n | \n | (2,028) | \n\n | \n | \n | 2,210 | \n\n | \n | \n | 2,195 | \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 \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 revenue \n | \n \n | \n | 37,736 | \n\n | \n | \n | 36,556 | \n\n | \n | \n | 48 | \n\n | \n | \n | 2 | \n\n | \n | \n | 37,784 | \n\n | \n | \n | 36,558 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Operating expenses \n | \n \n | \n | 34,238 | \n\n | \n | \n | 32,218 | \n\n | \n | \n | (21) | \n\n | \n | \n | (12) | \n\n | \n | \n | 34,217 | \n\n | \n | \n | 32,206 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Operating income \n | \n \n | \n | 3,498 | \n\n | \n | \n | 4,338 | \n\n | \n | \n | 69 | \n\n | \n | \n | 14 | \n\n | \n | \n | 3,567 | \n\n | \n | \n | 4,352 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Nonoperating expense, net \n | \n \n | \n | (499) | \n\n | \n | \n | (519) | \n\n | \n | \n | (28) | \n\n | \n | \n | (60) | \n\n | \n | \n | (527) | \n\n | \n | \n | (579) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Income before income taxes \n | \n \n | \n | 2,999 | \n\n | \n | \n | 3,819 | \n\n | \n | \n | 41 | \n\n | \n | \n | (46) | \n\n | \n | \n | 3,040 | \n\n | \n | \n | 3,773 | \n\n |
| \n \n Income tax expense (benefit) \n | \n \n | \n | 868 | \n\n | \n | \n | 1,556 | \n\n | \n | \n | 28 | \n\n | \n | \n | (17) | \n\n | \n | \n | 896 | \n\n | \n | \n | 1,539 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 income \n | \n \n | $ | \n2,131 | \n\n | \n | $ | \n2,263 | \n\n | \n | $ | \n13 | \n\n | \n | $ | \n(29) | \n\n | \n | $ | \n2,144 | \n\n | \n | $ | \n2,234 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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, basic \n | \n \n | $ | \n7.04 | \n\n | \n | $ | \n6.86 | \n\n | \n | $ | \n0.04 | \n\n | \n | $ | \n(0.09) | \n\n | \n | $ | \n7.08 | \n\n | \n | $ | \n6.77 | \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 \n | \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, diluted \n | \n \n | $ | \n7.02 | \n\n | \n | $ | \n6.85 | \n\n | \n | $ | \n0.04 | \n\n | \n | $ | \n(0.09) | \n\n | \n | $ | \n7.06 | \n\n | \n | $ | \n6.76 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
Consolidated Balance Sheets as of\n December 31,
\n\n
\n| \n | \n | \n | \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 Reported | \n\n | \n | Adjustment | \n\n | \n | As Adjusted \n for Adoption of \n Topic 606 | \n \n | |||||||||||||||
| \n | \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2017 | \n\n | \n | 2016 | \n\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 \n Prepaid expenses and other \n | \n \n | $ | \n1,051 | \n\n | \n | $ | \n832 | \n\n | \n | $ | \n20 | \n\n | \n | $ | \n20 | \n\n | \n | $ | \n1,071 | \n\n | \n | $ | \n852 | \n\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 \n Deferred income taxes \n | \n \n | \n | \n — | \n\n | \n | \n | 655 | \n\n | \n | \n | \n — | \n\n | \n | \n | 48 | \n\n | \n | \n | \n — | \n\n | \n | \n | 703 | \n\n |
| \n \n Current liabilities: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Advance ticket sales \n | \n \n | \n | 3,876 | \n\n | \n | \n | 3,730 | \n\n | \n | \n | 64 | \n\n | \n | \n | 65 | \n\n | \n | \n | 3,940 | \n\n | \n | \n | 3,795 | \n\n |
| \n \n Frequent flyer deferred revenue \n | \n \n | \n | 2,176 | \n\n | \n | \n | 2,135 | \n\n | \n | \n | 16 | \n\n | \n | \n | 14 | \n\n | \n | \n | 2,192 | \n\n | \n | \n | 2,149 | \n\n |
| \n \n Other \n | \n \n | \n | 569 | \n\n | \n | \n | 1,010 | \n\n | \n | \n | 7 | \n\n | \n | \n | 79 | \n\n | \n | \n | 576 | \n\n | \n | \n | 1,089 | \n\n |
| \n \n Other liabilities and deferred credits: \n | \n \n | \n | \n | \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 deferred revenue \n | \n \n | \n | 2,565 | \n\n | \n | \n | 2,748 | \n\n | \n | \n | 26 | \n\n | \n | \n | (8 | \n) | \n\n | \n | 2,591 | \n\n | \n | \n | 2,740 | \n\n |
| \n \n Advanced purchase of miles \n | \n \n | \n | \n — | \n\n | \n | \n | 430 | \n\n | \n | \n | \n — | \n\n | \n | \n | 3 | \n\n | \n | \n | \n — | \n\n | \n | \n | 433 | \n\n |
| \n \n Deferred income taxes \n | \n \n | \n | 225 | \n\n | \n | \n | \n — | \n\n | \n | \n | (21) | \n\n | \n | \n | \n — | \n\n | \n | \n | 204 | \n\n | \n | \n | \n — | \n\n |
| \n \n Stockholders’ equity: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Retained earnings \n | \n \n | \n | 4,621 | \n\n | \n | \n | 3,427 | \n\n | \n | \n | (72) | \n\n | \n | \n | (85 | \n) | \n\n | \n | 4,549 | \n\n | \n | \n | 3,342 | \n\n |
\n
\n\n In 2016, the FASB amended the FASB Accounting Standards\n Codification and created a new Topic 842, Leases\n (“Topic 842”). The guidance requires lessees to\n 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. We have not completed our evaluation of the\n impact of the new standard, but believe that it will have a\n significant impact on our consolidated balance sheets. The new\n standard is not expected to have a material impact on the\n Company’s results of operations or cash flows. The primary\n effect of adopting the new standard will be to record assets and\n obligations for its operating leases.
\n\n In 2016, the FASB issued Accounting Standards Update No. 2016-01, Financial\n Instruments—Overall (Subtopic 825-10) (“ASU 2016-01”). This standard makes\n several changes, including the elimination of the available-for-sale\n classification of equity investments, and requires equity\n investments with readily determinable fair values to be measured at\n fair value with changes in fair value recognized in net income. It\n is effective for interim and annual periods beginning after\n December 15, 2017. Based on its portfolio of investments as of\n December 31, 2017, the Company does not expect the adoption of\n ASU 2016-01 to have a\n material impact on its consolidated financial statements.
\n\n In 2017, the FASB issued Accounting Standards Update No. 2017-07, Improving the\n Presentation of Net Periodic Pension Cost and Net Periodic\n Postretirement Benefit Cost (“ASU 2017-07”). The update requires\n employers to present the service cost component of the net periodic\n benefit cost in the same income statement line item as other\n employee compensation costs arising from services rendered during\n the period. The other components of net benefit cost, including\n interest cost, expected return on plan assets, amortization of\n prior service cost/credit and actuarial gain/loss, and settlement\n and curtailment effects, are to be presented outside of any\n subtotal of operating income. Employers will have to disclose the\n line(s) used to present the other components of net periodic\n benefit cost, if the components are not presented separately in the\n income statement. ASU 2017-07 is effective for fiscal years\n and interim periods beginning after December 15, 2017, and\n early adoption is permitted. The Company does not expect the\n adoption of ASU 2017-07 to\n have a material impact on its consolidated financial statements.\n Early adoption of ASU 2017-07 would have impacted the\n statement of consolidated operations as shown in the table\n below:
\nStatements of Consolidated Operations for the\n Years Ended December 31,
\n\n
\n| \n | \n | \n | \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 Reported | \n\n | \n | Adjustment | \n\n | \n | As Adjusted for \n Adoption of \n ASU 2017-07 | \n \n | |||||||||||||||
| \n | \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2017 | \n\n | \n | 2016 | \n\n | ||||||
| \n \n Operating expense: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Salaries and related costs \n | \n \n | $ | \n11,045 | \n\n | \n | $ | \n10,275 | \n\n | \n | $ | \n(104) | \n\n | \n | $ | \n(99 | \n) | \n\n | $ | \n10,941 | \n\n | \n | $ | \n10,176 | \n\n |
| \n \n Special charges \n | \n \n | \n | 176 | \n\n | \n | \n | 638 | \n\n | \n | \n | \n — | \n\n | \n | \n | 107 | \n\n | \n | \n | 176 | \n\n | \n | \n | 745 | \n\n |
| \n \n Nonoperating income (expense): \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Miscellaneous, net \n | \n \n | \n | 3 | \n\n | \n | \n | (19) | \n\n | \n | \n | (104) | \n\n | \n | \n | 8 | \n\n | \n | \n | (101) | \n\n | \n | \n | (11) | \n\n |
\n In February 2018, the FASB issued Accounting Standards Update\n No. 2018-02,\n Income Statement—Reporting Comprehensive Income (Topic\n 220): Reclassification of Certain Tax Effects from Accumulated\n Other Comprehensive Income (“ASU 2018-02”). This standard focuses\n on a targeted improvement to reclassify stranded tax effects\n resulting from the Tax Cuts and Jobs Act (the “Tax\n Act”) enacted on December 22, 2017 from accumulated\n other comprehensive income (“AOCI”) to retained\n earnings (“RE”). The amount of the reclassification\n would be the difference between the amount initially charged or\n credited directly to other comprehensive income at the previously\n enacted U.S. federal corporate income tax rate that remains in AOCI\n and the amount that would have been charged or credited directly to\n other comprehensive income using the newly enacted U.S. federal\n corporate income tax rate, excluding the effect of any valuation\n allowance previously charged to income from continuing operations.\n ASU 2018-02 is effective\n for interim and annual periods beginning after December 15,\n 2018, and early adoption is permitted. We have elected to early\n adopt this standard for the year ended December 31, 2017. We\n have reclassified $118 million from AOCI to RE as a result of\n this adoption. See Note 6 of this report for additional\n information.
\n \n \n\n The tables below present the components of the Company’s\n AOCI, net of tax (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 | 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 | Deferred \n Taxes | \n \n | \n | Total | \n\n | |||||
| \n \n Balance at December 31, 2014 \n | \n \n | $ | \n(472) | \n\n | \n | $ | \n(499) | \n\n | \n | $ | \n8 | \n\n | \n | $ | \n(116) | \n\n | \n | $ | \n(1,079) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Other comprehensive income (loss) before reclassifications \n | \n \n | \n | 78 | \n(a) | \n\n | \n | (320) | \n\n | \n | \n | (5) | \n\n | \n | \n | 88 | \n\n | \n | \n | (159) | \n\n |
| \n \n Amounts reclassified from accumulated other comprehensive\n income \n | \n \n | \n | 31 | \n\n | \n | \n | 604 | \n\n | \n | \n | \n — | \n\n | \n | \n | (228) | \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 \n |
| \n \n Net other comprehensive income (loss) \n | \n \n | \n | 109 | \n\n | \n | \n | 284 | \n\n | \n | \n | (5) | \n\n | \n | \n | (140) | \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 \n |
| \n \n Balance at December 31, 2015 \n | \n \n | $ | \n(363) | \n\n | \n | $ | \n(215) | \n\n | \n | $ | \n3 | \n\n | \n | $ | \n(256) | \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 \n |
| \n \n Other comprehensive income (loss) before reclassifications \n | \n \n | \n | (517) | \n(a) | \n\n | \n | (4) | \n\n | \n | \n | \n — | \n\n | \n | \n | 187 | \n\n | \n | \n | (334) | \n\n |
| \n \n Amounts reclassified from accumulated other comprehensive\n income \n | \n \n | \n | 26 | \n\n | \n | \n | 217 | \n\n | \n | \n | (2) | \n\n | \n | \n | 95 | \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 \n |
| \n \n Net other comprehensive income (loss) \n | \n \n | \n | (491) | \n\n | \n | \n | 213 | \n\n | \n | \n | (2) | \n\n | \n | \n | 282 | \n\n | \n | \n | 2 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Balance at December 31, 2016 \n | \n \n | $ | \n(854) | \n\n | \n | $ | \n(2) | \n\n | \n | $ | \n1 | \n\n | \n | $ | \n26 | \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 Other comprehensive income (loss) before reclassifications \n | \n \n | \n | (306) | \n(a) | \n\n | \n | \n — | \n\n | \n | \n | (7) | \n\n | \n | \n | 74 | \n\n | \n | \n | (239) | \n\n |
| \n \n Amounts reclassified from accumulated other comprehensive\n income \n | \n \n | \n | 58 | \n\n | \n | \n | 2 | \n\n | \n | \n | \n — | \n\n | \n | \n | (21) | \n\n | \n | \n | 39 | \n\n |
| \n \n Reclassification of stranded tax effects \n | \n \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | (118) | \n(b) | \n\n | \n | (118) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 other comprehensive income (loss) \n | \n \n | \n | (248) | \n\n | \n | \n | 2 | \n\n | \n | \n | (7) | \n\n | \n | \n | (65) | \n\n | \n | \n | (318) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 December 31, 2017 \n | \n \n | $ | \n(1,102) | \n\n | \n | $ | \n\n — | \n\n | \n | $ | \n(6) | \n\n | \n | $ | \n(39) | \n(c) | \n\n | $ | \n(1,147) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \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 about AOCI Components \n | \n \n | Amount Reclassified\n from AOCI to \n Income | \n \n | \n | Affected Line Item\n in \n the Statement Where \n Net Income is Presented | \n \n | ||||||||||
| \n | \n | Year Ended\n December 31, | \n\n | \n | \n | \n | ||||||||||
| \n | \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2015 | \n\n | \n | \n | \n | ||||
| \n \n Fuel derivative contracts \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Fuel contracts-reclassifications of losses into\n earnings (d) \n | \n \n | $ | \n2 | \n\n | \n | $ | \n217 | \n\n | \n | $ | \n604 | \n\n | \n | \n | Aircraft fuel | \n\n |
| \n \n Pension and Postretirement liabilities \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Amortization of unrecognized (gains) losses and prior service cost\n (e) \n | \n \n | \n | 58 | \n\n | \n | \n | 26 | \n\n | \n | \n | 31 | \n\n | \n | \n | Salaries and related costs | \n\n |
| \n \n Investments and other \n | \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 earnings \n | \n \n | \n | \n — | \n\n | \n | \n | (2 | \n) | \n\n | \n | \n — | \n\n | \n | \n | Miscellaneous, net | \n\n |
\n
\n\n
\n\n (a) Prior service credits increased by $0 million,\n $30 million and $0 million and actuarial losses increased\n by approximately $306 million, $560 million and\n $78 million for 2017, 2016 and 2015, respectively.
\n\n (b) This amount represents the reclassification from AOCI to RE of\n the stranded tax effects resulting from the enactment of the Tax\n Act.
\n\n (c) Deferred tax balance relates mainly to Pension and Other\n Postretirement Liabilities.
\n\n (d) The last of the Company’s fuel hedge derivatives\n designated for cash flow hedge accounting expired in December 2016.\n The 2017 amount reclassified from AOCI into fuel expense represents\n hedge losses on December 2016 settled trades, but for which the\n associated fuel purchased in December 2016 was not consumed until\n January 2017. The Company’s current strategy is to not enter\n into transactions to hedge its fuel consumption, although the\n Company regularly reviews its strategy based on market conditions\n and other factors.
\n\n (e) This AOCI component is included in the computation of net\n periodic pension and other postretirement costs (see Note 8 of this\n report for additional information).
\n\n The estimated amounts that will be amortized in 2018 out of\n accumulated other comprehensive income (loss) into net periodic\n benefit cost are as follows (in 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 \n Actuarial (gain) loss \n | \n \n | $ | \n132 | \n\n | \n | $ | \n(32) | \n\n |
| \n \n Prior service (credit) cost \n | \n \n | \n | \n — | \n\n | \n | \n | (37) | \n\n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n (In millions) \n | \n \n | At December 31, | \n\n | |||||
| \n | \n | 2017 | \n\n | \n | 2016 | \n\n | ||
| \n \n Secured \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| Notes payable, fixed interest rates of 2.88% to\n 9.52% (weighted average rate of 4.39% as of December 31,\n 2017), payable through 2028 | \n\n | $ | \n8,661 | \n\n | \n | $ | \n7,586 | \n\n |
| Notes payable, floating interest rates of the\n London interbank offered rate (“LIBOR”) plus 0.2% to\n 2.25%, payable through 2028 | \n\n | \n | 1,880 | \n\n | \n | \n | 1,546 | \n\n |
| Term loan, LIBOR plus 2.00%, or alternative rate\n based on certain market rates plus 1.00%, due 2024 | \n\n | \n | 1,489 | \n\n | \n | \n | \n — | \n\n |
| Term loan, LIBOR subject to a 0.75% floor, plus\n 2.50%, or alternative rate based on certain market rates plus\n 1.50%, due 2019 | \n\n | \n | \n — | \n\n | \n | \n | 866 | \n\n |
| Term loan, LIBOR subject to a 0.75% floor, plus\n 2.75%, or alternative rate based on certain market rates plus\n 1.75%, due 2021 | \n\n | \n | \n — | \n\n | \n | \n | 192 | \n\n |
| Unsecured | \n\n | \n | \n | \n | \n | \n | \n | \n |
| 6.375% Senior Notes due 2018 (a) | \n\n | \n | 300 | \n\n | \n | \n | 300 | \n\n |
| 6% Senior Notes due 2020 (a) | \n\n | \n | 300 | \n\n | \n | \n | 300 | \n\n |
| 4.25% Senior Notes due 2022 (a) | \n\n | \n | 400 | \n\n | \n | \n | \n — | \n\n |
| 5% Senior Notes due 2024 (a) | \n\n | \n | 300 | \n\n | \n | \n | \n — | \n\n |
| Other | \n\n | \n | 101 | \n\n | \n | \n | 101 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n | \n | \n | 13,431 | \n\n | \n | \n | 10,891 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Less: unamortized debt discount, premiums and debt issuance\n costs \n | \n \n | \n | (163) | \n\n | \n | \n | (124) | \n\n |
| \n \n Less: current portion of long-term debt \n | \n \n | \n | (1,565) | \n\n | \n | \n | (849) | \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 debt, net | \n\n | $ | \n\n 11,703 | \n\n | \n | $ | \n\n 9,918 | \n\n |
| \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) UAL is the issuer of this debt. United is a guarantor.
\n\n A 1% change in the assumed health care trend rate for the Company\n would have the following additional effects (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 1% Increase | \n\n | \n | 1% Decrease | \n\n | ||
| \n \n Effect on total service and interest cost for the year ended\n December 31, 2017 \n | \n \n | $ | \n11 | \n\n | \n | $ | \n(8) | \n\n |
| \n \n Effect on postretirement benefit obligation at December 31,\n 2017 \n | \n \n | \n | 170 | \n\n | \n | \n | (149) | \n\n |
\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 | 2017 | \n\n | \n | 2016 | \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 Cash and cash equivalents \n | \n \n | $ | \n\n 1,482 | \n\n | \n | $ | \n\n 1,482 | \n\n | \n | $ | \n\n — | \n\n | \n | $ | \n\n — | \n\n | \n | $ | \n\n 2,179 | \n\n | \n | $ | \n\n 2,179 | \n\n | \n | $ | \n\n — | \n\n | \n | $ | \n\n — | \n\n |
| \n \n Short-term 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 \n Corporate debt \n | \n \n | \n | 958 | \n\n | \n | \n | \n — | \n\n | \n | \n | 958 | \n\n | \n | \n | \n — | \n\n | \n | \n | 835 | \n\n | \n | \n | \n — | \n\n | \n | \n | 835 | \n\n | \n | \n | \n — | \n\n |
| \n \n Asset-backed securities \n | \n \n | \n | 753 | \n\n | \n | \n | \n — | \n\n | \n | \n | 753 | \n\n | \n | \n | \n — | \n\n | \n | \n | 792 | \n\n | \n | \n | \n — | \n\n | \n | \n | 792 | \n\n | \n | \n | \n — | \n\n |
| \n \n Certificates of deposit placed through an account registry service\n (“CDARS”) \n | \n \n | \n | 120 | \n\n | \n | \n | \n — | \n\n | \n | \n | 120 | \n\n | \n | \n | \n — | \n\n | \n | \n | 246 | \n\n | \n | \n | \n — | \n\n | \n | \n | 246 | \n\n | \n | \n | \n — | \n\n |
| \n \n U.S. government and agency notes \n | \n \n | \n | 113 | \n\n | \n | \n | \n — | \n\n | \n | \n | 113 | \n\n | \n | \n | \n — | \n\n | \n | \n | 140 | \n\n | \n | \n | \n — | \n\n | \n | \n | 140 | \n\n | \n | \n | \n — | \n\n |
| \n \n Other fixed-income securities \n | \n \n | \n | 188 | \n\n | \n | \n | \n — | \n\n | \n | \n | 188 | \n\n | \n | \n | \n — | \n\n | \n | \n | 54 | \n\n | \n | \n | \n — | \n\n | \n | \n | 54 | \n\n | \n | \n | \n — | \n\n |
| \n \n Other investments measured at NAV \n | \n \n | \n | 184 | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | 182 | \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 | 109 | \n\n | \n | \n | 109 | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | 124 | \n\n | \n | \n | 124 | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n |
| \n \n Long-term 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 \n Equity securities \n | \n \n | \n | 99 | \n\n | \n | \n | 99 | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n |
| \n \n Enhanced equipment trust certificates (“EETC”) \n | \n \n | \n | 22 | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | 22 | \n\n | \n | \n | 23 | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | 23 | \n\n |
\n The following table presents information about the Company’s\n goodwill and other intangible 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 | 2017 | \n\n | \n | 2016 | \n\n | |||||||||||
| \n Item \n | \n \n | \n Asset life (a) | \n\n | \n | \n Gross Carrying \n Amount | \n \n | \n | Accumulated \n Amortization | \n \n | \n | \n Gross Carrying \n Amount | \n \n | \n | Accumulated \n Amortization | \n \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 | \n | \n | \n |
| \n \n Finite-lived intangible 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 Frequent flyer database (b) \n | \n \n | \n | 22 | \n\n | \n | $ | \n1,177 | \n\n | \n | $ | \n832 | \n\n | \n | $ | \n1,177 | \n\n | \n | $ | \n771 | \n\n |
| \n \n Hubs \n | \n \n | \n | 20 | \n\n | \n | \n | 145 | \n\n | \n | \n | 89 | \n\n | \n | \n | 145 | \n\n | \n | \n | 82 | \n\n |
| \n \n Contracts \n | \n \n | \n | 13 | \n\n | \n | \n | 121 | \n\n | \n | \n | 103 | \n\n | \n | \n | 135 | \n\n | \n | \n | 95 | \n\n |
| \n \n Patents and 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 \n Airport slots and 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 \n Other \n | \n \n | \n | 25 | \n\n | \n | \n | 109 | \n\n | \n | \n | 84 | \n\n | \n | \n | 109 | \n\n | \n | \n | 81 | \n\n |
| \n | \n | \n | \n | \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 | $ | \n1,757 | \n\n | \n | $ | \n1,313 | \n\n | \n | $ | \n1,771 | \n\n | \n | $ | \n1,234 | \n\n |
| \n | \n | \n | \n | \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 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 Route authorities \n | \n \n | \n | \n | \n | \n | $ | \n1,562 | \n\n | \n | \n | \n | \n | \n | $ | \n1,562 | \n\n | \n | \n | \n | \n |
| \n \n Airport slots and gates \n | \n \n | \n | \n | \n | \n | \n | 536 | \n\n | \n | \n | \n | \n | \n | \n | 536 | \n\n | \n | \n | \n | \n |
| \n \n Tradenames and 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 \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 | \n | \n | \n |
| \n \n Total \n | \n \n | \n | \n | \n | \n | $ | \n3,095 | \n\n | \n | \n | \n | \n | \n | $ | \n3,095 | \n\n | \n | \n | \n | \n |
| \n | \n | \n | \n | \n | \n | \n \n \n | \n \n \n \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 expressed in years.
\n\n (b) The frequent flyer database is amortized based on an\n accelerated amortization schedule to reflect utilization of the\n assets. Estimated cash flows correlating to the expected attrition\n rate of customers in the frequent flyer database is considered in\n the determination of the amortization schedules.
\nThe following table provides a reconciliation of\n cash, cash equivalents and restricted cash reported within the\n consolidated balance sheets that sum to the total of the same such\n amounts shown in the 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 December 31, | \n\n | \n | At December 31, | \n\n | ||||||||||||||||||
| \n | \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2015 | \n\n | \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2015 | \n\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 \n Cash and cash equivalents \n | \n \n | $ | \n1,482 | \n\n | \n | $ | \n2,179 | \n\n | \n | $ | \n3,006 | \n\n | \n | $ | \n1,476 | \n\n | \n | $ | \n2,173 | \n\n | \n | $ | \n3,000 | \n\n |
| \n \n Restricted cash included in Prepaid expenses and other \n | \n \n | \n | 18 | \n\n | \n | \n | — | \n\n | \n | \n | 2 | \n\n | \n | \n | 18 | \n\n | \n | \n | — | \n\n | \n | \n | 2 | \n\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 \n Restricted cash \n | \n \n | \n | 91 | \n\n | \n | \n | 124 | \n\n | \n | \n | 204 | \n\n | \n | \n | 91 | \n\n | \n | \n | 124 | \n\n | \n | \n | 204 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \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\n shown in the statement of consolidated cash flows | \n\n | $ | \n1,591 | \n\n | \n | $ | \n2,303 | \n\n | \n | $ | \n3,212 | \n\n | \n | $ | \n1,585 | \n\n | \n | $ | \n2,297 | \n\n | \n | $ | \n3,206 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \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 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 | \n 2017 | \n\n | \n | \n 2016 | \n\n | \n | \n 2015 | \n\n | |||
| \n \n Severance and benefit costs \n | \n \n | $ | \n\n 116 | \n\n | \n | $ | \n\n 37 | \n\n | \n | $ | \n\n 107 | \n\n |
| \n \n Impairment of assets \n | \n \n | \n | 25 | \n\n | \n | \n | 412 | \n\n | \n | \n | 79 | \n\n |
| \n \n Cleveland airport lease restructuring \n | \n \n | \n | \n — | \n\n | \n | \n | 74 | \n\n | \n | \n | \n — | \n\n |
| \n \n Labor agreement costs \n | \n \n | \n | \n — | \n\n | \n | \n | 64 | \n\n | \n | \n | 18 | \n\n |
| (Gains) losses on sale of assets and other special\n charges | \n\n | \n | 35 | \n\n | \n | \n | 51 | \n\n | \n | \n | 122 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \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 special charges \n | \n \n | \n | 176 | \n\n | \n | \n | 638 | \n\n | \n | \n | 326 | \n\n |
| \n \n Nonoperating: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| (Gains) losses on extinguishment of debt and\n other | \n\n | \n | \n — | \n\n | \n | \n | (1) | \n\n | \n | \n | 202 | \n\n |
| \n | \n | \n \n \n | \n \n \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 nonoperating special charges\n before income taxes | \n\n | \n | 176 | \n\n | \n | \n | 637 | \n\n | \n | \n | 528 | \n\n |
| Income tax benefit related to special charges | \n\n | \n | (63) | \n\n | \n | \n | (229) | \n\n | \n | \n | (11) | \n\n |
| Income tax adjustments (Notes 6 and 7) | \n\n | \n | (192) | \n\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 \n |
| \n \n Total operating and nonoperating special charges, net of income\n taxes and income tax adjustments \n | \n \n | $ | \n(79) | \n\n | \n | $ | \n588 | \n\n | \n | $ | \n(2,613) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \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 UAL’s RSUs and restricted stock\n activity for the years ended December 31 (shares in\n 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 \n Outstanding at December 31, 2014 \n | \n \n | \n | 3.8 | \n\n | \n | \n | 0.7 | \n\n | \n | $ | \n32.55 | \n\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 \n Vested \n | \n \n | \n | (1.6) | \n\n | \n | \n | (0.4) | \n\n | \n | \n | 31.14 | \n\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 | \n | \n | \n |
| \n \n Outstanding at December 31, 2015 \n | \n \n | \n | 2.6 | \n\n | \n | \n | 0.3 | \n\n | \n | \n | 48.68 | \n\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 \n Vested \n | \n \n | \n | (1.4) | \n\n | \n | \n | (0.1) | \n\n | \n | \n | 41.47 | \n\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 | \n | \n | \n |
| \n \n Outstanding at December 31, 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 | \n | \n | \n | \n |
| \n \n Granted \n | \n \n | \n | 1.6 | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n |
| \n \n Vested \n | \n \n | \n | (1.0) | \n\n | \n | \n | (0.2) | \n\n | \n | \n | 51.60 | \n\n |
| \n \n Forfeited \n | \n \n | \n | (0.3) | \n\n | \n | \n | \n — | \n\n | \n | \n | 51.88 | \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 Outstanding at December 31, 2017 \n | \n \n | \n | 3.2 | \n\n | \n | \n | 0.3 | \n\n | \n | \n | 52.30 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n | \n | \n |
\n
\n \n \n\n The table below summarizes UAL’s unearned compensation and\n weighted-average remaining period to recognize costs for all\n outstanding share-based awards that are probable of being achieved\n as of December 31, 2017 (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 years) | \n \n | ||
| \n \n RSUs \n | \n \n | $ | \n46 | \n\n | \n | \n | 1.9 | \n\n |
| \n \n Stock options \n | \n \n | \n | 4 | \n\n | \n | \n | 3.9 | \n\n |
| \n \n Restricted stock \n | \n \n | \n | 3 | \n\n | \n | \n | 1.2 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n | \n | \n |
| \n \n Total \n | \n \n | $ | \n53 | \n\n | \n | \n | \n | \n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n | \n | \n |
\n
\n \n \n\n NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
\n\n
\n| (a) | \nUse of Estimates—The\n preparation of financial statements in conformity with accounting\n principles generally accepted in the United States of America\n (“GAAP”) requires management to make estimates and\n assumptions that affect the amounts reported in these financial\n statements and accompanying notes. Actual results could differ from\n those estimates. | \n
\n
\n| (b) | \nRevenue Recognition—The\n Company records passenger ticket sales and tickets sold by other\n airlines for use on United as passenger revenue when the\n transportation is provided or upon estimated breakage. The value of\n unused passenger tickets is included in current liabilities as\n Advance ticket sales. Tickets sold by other airlines are recorded\n at the estimated values to be billed to the other airlines.\n Differences between amounts billed and the actual amounts may be\n rejected and rebilled or written off if the amount recorded was\n different from the original estimate. When necessary, the Company\n records a reserve against its interline billings and payables if\n historical experience indicates that these amounts are different.\n Non-refundable tickets\n generally expire on the date of the intended flight, unless the\n date is extended by notification from the customer on or before the\n intended flight date. Basic Economy tickets cannot be extended and\n refunds are not allowed except for ticket cancellations that are\n within 24 hours of purchase and one week or more prior to the\n original scheduled departure flight. | \n
\n Fees charged in association with changes or extensions to\n non-refundable tickets are\n recorded as other revenue at the time the fee is incurred. The fare\n on the changed ticket, including any additional collection of fare,\n is 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 records an estimate of breakage revenue on the flight\n date for tickets that will expire unused. These estimates are based\n on the evaluation of actual historical results and forecasted\n trends. Refundable tickets expire after one year from the date of\n issuance.
\n\n The Company recognizes cargo and other revenue as service is\n provided.
\n\n Under our capacity purchase agreements (“CPAs”) with\n regional carriers, we purchase all of the capacity related to\n aircraft covered by the contracts and are responsible for selling\n all of the related seat inventory. We record the passenger revenue\n and related expenses as separate operating revenue and expense in\n the consolidated statement of operations.
\n\n
\n\n Accounts receivable primarily consist of amounts due from credit\n card 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, 2017, 2016 and 2015.
\n\n
\n| (c) | \nFrequent Flyer\n Accounting—United’s MileagePlus program builds\n customer loyalty by offering awards, benefits and services to\n program participants. Members in this program earn miles for\n flights on United, United Express, Star Alliance members and\n certain other airlines that participate in the program. Members can\n also earn miles by purchasing the goods and services of our network\n of non-airline partners.\n We sell miles to these partners, which include domestic and\n international credit card issuers, retail merchants, hotels, car\n rental companies and our participating airline partners. Miles can\n be redeemed for free (other than taxes and government imposed\n fees), discounted or 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 Miles Earned in Conjunction with Flights
\n\n When frequent flyers earn miles for flights, the Company recognizes\n a portion of the ticket sales as revenue when the air\n transportation occurs and defers a portion of the ticket sale\n representing the value of the related miles as a\n multiple-deliverable revenue arrangement. The Company determines\n the estimated selling price of air transportation and miles as if\n each element is sold on a separate basis. The total consideration\n from each ticket sale is then allocated to each of these elements,\n individually, on a pro rata basis. The miles are recorded in\n Frequent flyer deferred revenue on the Company’s consolidated\n balance sheet and recognized into revenue when the transportation\n is provided.
\n\n The 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\n Partner Mileage Sales
\n\n United has a significant contract, the Second Amended and Restated\n Co-Branded Card Marketing\n Services 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 of the elements is determined using\n management’s estimated selling price of each element. The\n objective of using the estimated selling price based methodology is\n to determine the price at which we would transact a sale if the\n product or service were sold on a stand-alone basis. Accordingly,\n we determine our best estimate of selling price by considering\n multiple inputs and methods including, but not limited to,\n discounted cash flows, brand value, volume discounts, published\n selling prices, number of miles awarded and number of miles\n redeemed. The Company estimated the selling prices and volumes over\n the term of the Co-Brand\n Agreement in order to determine the allocation of proceeds to each\n of the multiple elements to be delivered. We also evaluate volumes\n on an annual basis, which may result in a change in the allocation\n of estimated selling price on a prospective basis.
\n\n
\n\n The Company records passenger revenue related to the air\n transportation element when the transportation is delivered. The\n other elements are generally recognized as Other operating revenue\n when earned.
\n\n Expiration of Miles
\n\n The Company accounts for miles sold and awarded that will never be\n redeemed by program members, which we refer to as breakage. The\n Company reviews its breakage estimates annually based upon the\n latest available information regarding redemption and expiration\n patterns. Miles expire after 18 months of member account\n inactivity.
\n\n The 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 Information
\n\n The following table provides additional information related to the\n frequent flyer program (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Year Ended \nDecember 31, \n | \n \n | \n Cash Proceeds \n from Miles Sold \n and Earned | \n \n | \n | \n Other Revenue \n Recognized Upon \n Award of Miles \n to Third-Party \n Customers (a) | \n \n | \n | \n Increase in Frequent \n Flyer Deferred \n Revenue for Miles \n Awarded (b) | \n \n | \n | \n Decrease in \n Advanced \n Purchase \n of Miles (c) | \n \n | ||||
| \n \n 2017 \n | \n \n | $ | \n2,343 | \n\n | \n | $ | \n1,183 | \n\n | \n | $ | \n2,025 | \n\n | \n | $ | \n(865) | \n\n |
| \n \n 2016 \n | \n \n | \n | 3,022 | \n\n | \n | \n | 1,221 | \n\n | \n | \n | 2,050 | \n\n | \n | \n | (249) | \n\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 \n \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | |||
| (a) This\n amount represents other revenue recognized during the period from\n the sale of miles to third parties, representing the\n marketing-related deliverable services component of the\n sale. | \n\n | |||||||||||||||
| (b) This\n amount represents the increase to Frequent flyer deferred revenue\n during the period. | \n\n | |||||||||||||||
| (c) This\n amount represents the net decrease in the advance purchase of miles\n obligation due to cash payments for the sale of miles less than\n miles awarded to customers. | \n\n |
\n
\n| (d) | \nCash and Cash Equivalents and\n Restricted Cash— Highly liquid investments with a\n maturity of three months or less on their acquisition date are\n classified as cash and cash equivalents. | \n
\n Restricted cash primarily includes cash collateral for letters of\n credit and collateral associated with obligations for facility\n leases and workers’ compensation. Restricted cash is\n classified as short-term or long-term in the consolidated balance\n sheets based on the expected timing of return of the assets to the\n Company.
\n\n
\nThe following table provides a reconciliation of\n cash, cash equivalents and restricted cash reported within the\n consolidated balance sheets that sum to the total of the same such\n amounts shown in the 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 December 31, | \n\n | \n | At December 31, | \n\n | ||||||||||||||||||
| \n | \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2015 | \n\n | \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2015 | \n\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 \n Cash and cash equivalents \n | \n \n | $ | \n1,482 | \n\n | \n | $ | \n2,179 | \n\n | \n | $ | \n3,006 | \n\n | \n | $ | \n1,476 | \n\n | \n | $ | \n2,173 | \n\n | \n | $ | \n3,000 | \n\n |
| \n \n Restricted cash included in Prepaid expenses and other \n | \n \n | \n | 18 | \n\n | \n | \n | — | \n\n | \n | \n | 2 | \n\n | \n | \n | 18 | \n\n | \n | \n | — | \n\n | \n | \n | 2 | \n\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 \n Restricted cash \n | \n \n | \n | 91 | \n\n | \n | \n | 124 | \n\n | \n | \n | 204 | \n\n | \n | \n | 91 | \n\n | \n | \n | 124 | \n\n | \n | \n | 204 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \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\n shown in the statement of consolidated cash flows | \n\n | $ | \n1,591 | \n\n | \n | $ | \n2,303 | \n\n | \n | $ | \n3,212 | \n\n | \n | $ | \n1,585 | \n\n | \n | $ | \n2,297 | \n\n | \n | $ | \n3,206 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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\n losses 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 Parts and\n Supplies—The Company accounts for aircraft fuel, spare\n parts and supplies at average cost and provides an obsolescence\n allowance for aircraft spare parts with an assumed residual value\n 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 and amortization of owned depreciable assets is based\n on the straight-line method over the assets’ estimated useful\n lives. Leasehold improvements are amortized over the remaining term\n of the lease, including estimated facility renewal options when\n renewal is reasonably assured at key airports, or the estimated\n useful life of the related asset, whichever is less. Properties\n under capital leases are amortized on the straight-line method over\n the life of the lease or, in the case of certain aircraft, over\n their estimated useful lives, whichever is shorter. Amortization of\n capital lease assets is included in depreciation and amortization\n expense. The estimated useful lives of property and equipment are\n as follows:
\n\n
\n| \n | \n | \n | \n | \n |
| \n | \n | \n Estimated Useful Life (in years) | \n\n | |
| \n \n Aircraft and related rotable parts \n | \n \n | \n | 25 to 30 | \n\n |
| \n \n Buildings \n | \n \n | \n | 25 to 45 | \n\n |
| \n \n Other property and equipment \n | \n \n | \n | 3 to 15 | \n\n |
| \n \n Computer software \n | \n \n | \n | 5 to 15 | \n\n |
| \n \n Building improvements \n | \n \n | \n | 1 to 40 | \n\n |
\n As of December 31, 2017 and 2016, the Company had a carrying\n value of computer software of $345 million and\n $356 million, respectively. For the years ended\n December 31, 2017, 2016 and 2015, the Company’s\n depreciation expense related to computer software was\n $117 million, $108 million and $93 million,\n respectively. Aircraft and aircraft spare parts were assumed to\n have residual values of approximately 10% of original cost, and\n other categories of property and equipment were assumed to have no\n 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\n costs, which are included in Other operating expenses, are expensed\n as incurred. Advertising expenses were $217 million,\n $220 million and $201 million for the years ended\n December 31, 2017, 2016 and 2015, respectively. | \n
\n
\n| (l) | \nIntangibles—The Company\n has finite-lived and indefinite-lived intangible assets, including\n goodwill. Finite-lived intangible assets are amortized over their\n estimated useful lives. Goodwill and indefinite-lived intangible\n assets are not amortized but are reviewed for impairment annually\n or more frequently if events or circumstances indicate that the\n asset may be impaired. Goodwill and indefinite-lived assets are\n reviewed for impairment on an annual basis as of October 1, or\n on an interim basis whenever a triggering event occurs. See Note 2\n of this report for additional information related to\n intangibles. | \n
\n
\n| (m) | \nLong-Lived Asset\n Impairments—The Company evaluates the carrying value of\n long-lived assets subject to amortization whenever events or\n changes in circumstances indicate that an impairment may exist. For\n purposes of this testing, the Company has generally identified the\n aircraft fleet type as the lowest level of identifiable cash flows.\n 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 14\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 Taxes—Certain\n governmental taxes are imposed on the Company’s ticket sales\n through a fee included in ticket prices. The Company collects these\n fees and remits them to the appropriate government agency. These\n fees are recorded on a net basis (excluded from operating\n revenue). | \n
\n
\n| (p) | \nRetirement of Leased\n Aircraft—The Company accrues for estimated lease costs\n over the remaining term of the lease at the present value of future\n minimum lease payments, net of estimated sublease rentals (if any),\n in the period that aircraft are permanently removed from service.\n When reasonably estimable and probable, the Company estimates\n maintenance lease return condition obligations for items such as\n minimum aircraft and engine conditions specified in leases and\n accrues these amounts over the lease term while the aircraft are\n operating, and any remaining unrecognized estimated obligations are\n accrued in the period that an aircraft is removed from\n service. | \n
\n
\n| (q) | \nUncertain Income Tax\n Positions—The Company has recorded reserves for income\n taxes and associated interest that may become payable in future\n years. Although management believes that its positions taken on\n income tax matters are reasonable, the Company nevertheless has\n established tax and interest reserves in recognition that various\n taxing authorities may challenge certain of the positions taken by\n the Company, potentially resulting in additional liabilities for\n taxes and interest. The Company’s uncertain tax position\n reserves are reviewed periodically and are adjusted as events occur\n that affect its estimates, such as the availability of new\n information, the lapsing of applicable statutes of limitation, the\n conclusion of tax audits, the measurement of additional estimated\n liability, the identification of new tax matters, the release of\n administrative tax guidance affecting its estimates of tax\n liabilities, or the rendering of relevant court decisions. The\n Company records penalties and interest relating to uncertain tax\n positions as part of income tax expense in its consolidated\n statements of operations. The Company has not recorded any material\n expense or liabilities related to interest or penalties in its\n consolidated financial statements. | \n
\n
\n| (r) | \nLabor Costs—The Company\n records expenses associated with amendable labor agreements when\n the amounts are probable and estimable. These include costs\n associated with lump sum cash payments that would be made in\n conjunction with the ratification of labor agreements. To the\n extent these upfront costs are in lieu of future pay increases,\n they would be capitalized and amortized over the term of the labor\n agreements. If not, these amounts would be expensed. | \n
\n
\n| (s) | \nThird-Party Business—The\n Company has third-party business revenue that includes fuel sales,\n catering, ground handling, maintenance services and frequent flyer\n award non-air redemptions.\n Third-party business revenue is recorded in Other operating\n revenue. The Company also incurs third-party business expenses,\n such as maintenance, ground handling and catering services for\n third parties, fuel sales and non-air mileage redemptions. The\n third-party business expenses are recorded in Other operating\n expenses. | \n
\n
\n| (t) | \n\n Recently Issued Accounting Standards— In\n 2014, the Financial Accounting Standards Board (“FASB”)\n amended the FASB Accounting Standards Codification and created a\n new Topic 606, Revenue from Contracts with Customers\n (“Topic 606”). This amendment prescribes that an\n entity should recognize revenue to depict the transfer of promised\n goods or services to customers in an amount that reflects the\n consideration to which the entity expects to be entitled in\n exchange for those goods or services. The amendment supersedes the\n revenue recognition requirements in Topic 605, Revenue\n Recognition, and most industry-specific guidance throughout the\n Industry Topics of the Accounting Standards Codification. The\n Company used the full-retrospective approach in adopting this\n standard on January 1, 2018. The standard impacts the\n classification of certain revenue streams and affects the timing of\n revenue and expense recognition for others. For the Company, the\n most significant impact of this standard is the reclassification of\n certain ancillary fees from other operating revenue into passenger\n revenue on the statement of consolidated operations. These\n ancillary fees are directly related to passenger travel, such as\n ticket change fees and baggage fees, and will 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, will be recognized\n when transportation is provided. While the classification of\n certain transactions within operating revenue and between operating\n revenue and operating expenses will change, the adoption of the\n standard will not have a material impact on our earnings. Further,\n adoption of the standard will have no impact on cash provided by or\n used in operating, financing, or investing activities in our\n consolidated cash flows statements. Adoption of Topic 606 is\n expected to impact our reported results as shown in the table\n below: \n | \n
Statements of Consolidated Operations for the\n Years Ended December 31,
\n\n
\n| \n | \n | \n | \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 Reported | \n\n | \n | Adjustment | \n\n | \n | As Adjusted \n for Adoption of \n Topic 606 | \n \n | |||||||||||||||
| \n | \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2017 | \n\n | \n | 2016 | \n\n | ||||||
| \n \n Operating revenue: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Passenger—Mainline \n | \n \n | $ | \n26,552 | \n\n | \n | $ | \n25,414 | \n\n | \n | $ | \n1,707 | \n\n | \n | $ | \n1,615 | \n\n | \n | $ | \n28,259 | \n\n | \n | $ | \n27,029 | \n\n |
| \n \n Passenger—Regional \n | \n \n | \n | 5,852 | \n\n | \n | \n | 6,043 | \n\n | \n | \n | 349 | \n\n | \n | \n | 357 | \n\n | \n | \n | 6,201 | \n\n | \n | \n | 6,400 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 passenger revenue \n | \n \n | \n | 32,404 | \n\n | \n | \n | 31,457 | \n\n | \n | \n | 2,056 | \n\n | \n | \n | 1,972 | \n\n | \n | \n | 34,460 | \n\n | \n | \n | 33,429 | \n\n |
| \n \n Cargo \n | \n \n | \n | 1,035 | \n\n | \n | \n | 876 | \n\n | \n | \n | 79 | \n\n | \n | \n | 58 | \n\n | \n | \n | 1,114 | \n\n | \n | \n | 934 | \n\n |
| \n \n Other operating revenue \n | \n \n | \n | 4,297 | \n\n | \n | \n | 4,223 | \n\n | \n | \n | (2,087) | \n\n | \n | \n | (2,028) | \n\n | \n | \n | 2,210 | \n\n | \n | \n | 2,195 | \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 \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 revenue \n | \n \n | \n | 37,736 | \n\n | \n | \n | 36,556 | \n\n | \n | \n | 48 | \n\n | \n | \n | 2 | \n\n | \n | \n | 37,784 | \n\n | \n | \n | 36,558 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Operating expenses \n | \n \n | \n | 34,238 | \n\n | \n | \n | 32,218 | \n\n | \n | \n | (21) | \n\n | \n | \n | (12) | \n\n | \n | \n | 34,217 | \n\n | \n | \n | 32,206 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Operating income \n | \n \n | \n | 3,498 | \n\n | \n | \n | 4,338 | \n\n | \n | \n | 69 | \n\n | \n | \n | 14 | \n\n | \n | \n | 3,567 | \n\n | \n | \n | 4,352 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Nonoperating expense, net \n | \n \n | \n | (499) | \n\n | \n | \n | (519) | \n\n | \n | \n | (28) | \n\n | \n | \n | (60) | \n\n | \n | \n | (527) | \n\n | \n | \n | (579) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Income before income taxes \n | \n \n | \n | 2,999 | \n\n | \n | \n | 3,819 | \n\n | \n | \n | 41 | \n\n | \n | \n | (46) | \n\n | \n | \n | 3,040 | \n\n | \n | \n | 3,773 | \n\n |
| \n \n Income tax expense (benefit) \n | \n \n | \n | 868 | \n\n | \n | \n | 1,556 | \n\n | \n | \n | 28 | \n\n | \n | \n | (17) | \n\n | \n | \n | 896 | \n\n | \n | \n | 1,539 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 income \n | \n \n | $ | \n2,131 | \n\n | \n | $ | \n2,263 | \n\n | \n | $ | \n13 | \n\n | \n | $ | \n(29) | \n\n | \n | $ | \n2,144 | \n\n | \n | $ | \n2,234 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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, basic \n | \n \n | $ | \n7.04 | \n\n | \n | $ | \n6.86 | \n\n | \n | $ | \n0.04 | \n\n | \n | $ | \n(0.09) | \n\n | \n | $ | \n7.08 | \n\n | \n | $ | \n6.77 | \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 \n | \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, diluted \n | \n \n | $ | \n7.02 | \n\n | \n | $ | \n6.85 | \n\n | \n | $ | \n0.04 | \n\n | \n | $ | \n(0.09) | \n\n | \n | $ | \n7.06 | \n\n | \n | $ | \n6.76 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
Consolidated Balance Sheets as of\n December 31,
\n\n
\n| \n | \n | \n | \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 Reported | \n\n | \n | Adjustment | \n\n | \n | As Adjusted \n for Adoption of \n Topic 606 | \n \n | |||||||||||||||
| \n | \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2017 | \n\n | \n | 2016 | \n\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 \n Prepaid expenses and other \n | \n \n | $ | \n1,051 | \n\n | \n | $ | \n832 | \n\n | \n | $ | \n20 | \n\n | \n | $ | \n20 | \n\n | \n | $ | \n1,071 | \n\n | \n | $ | \n852 | \n\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 \n Deferred income taxes \n | \n \n | \n | \n — | \n\n | \n | \n | 655 | \n\n | \n | \n | \n — | \n\n | \n | \n | 48 | \n\n | \n | \n | \n — | \n\n | \n | \n | 703 | \n\n |
| \n \n Current liabilities: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Advance ticket sales \n | \n \n | \n | 3,876 | \n\n | \n | \n | 3,730 | \n\n | \n | \n | 64 | \n\n | \n | \n | 65 | \n\n | \n | \n | 3,940 | \n\n | \n | \n | 3,795 | \n\n |
| \n \n Frequent flyer deferred revenue \n | \n \n | \n | 2,176 | \n\n | \n | \n | 2,135 | \n\n | \n | \n | 16 | \n\n | \n | \n | 14 | \n\n | \n | \n | 2,192 | \n\n | \n | \n | 2,149 | \n\n |
| \n \n Other \n | \n \n | \n | 569 | \n\n | \n | \n | 1,010 | \n\n | \n | \n | 7 | \n\n | \n | \n | 79 | \n\n | \n | \n | 576 | \n\n | \n | \n | 1,089 | \n\n |
| \n \n Other liabilities and deferred credits: \n | \n \n | \n | \n | \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 deferred revenue \n | \n \n | \n | 2,565 | \n\n | \n | \n | 2,748 | \n\n | \n | \n | 26 | \n\n | \n | \n | (8 | \n) | \n\n | \n | 2,591 | \n\n | \n | \n | 2,740 | \n\n |
| \n \n Advanced purchase of miles \n | \n \n | \n | \n — | \n\n | \n | \n | 430 | \n\n | \n | \n | \n — | \n\n | \n | \n | 3 | \n\n | \n | \n | \n — | \n\n | \n | \n | 433 | \n\n |
| \n \n Deferred income taxes \n | \n \n | \n | 225 | \n\n | \n | \n | \n — | \n\n | \n | \n | (21) | \n\n | \n | \n | \n — | \n\n | \n | \n | 204 | \n\n | \n | \n | \n — | \n\n |
| \n \n Stockholders’ equity: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Retained earnings \n | \n \n | \n | 4,621 | \n\n | \n | \n | 3,427 | \n\n | \n | \n | (72) | \n\n | \n | \n | (85 | \n) | \n\n | \n | 4,549 | \n\n | \n | \n | 3,342 | \n\n |
\n
\n\n In 2016, the FASB amended the FASB Accounting Standards\n Codification and created a new Topic 842, Leases\n (“Topic 842”). The guidance requires lessees to\n 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. We have not completed our evaluation of the\n impact of the new standard, but believe that it will have a\n significant impact on our consolidated balance sheets. The new\n standard is not expected to have a material impact on the\n Company’s results of operations or cash flows. The primary\n effect of adopting the new standard will be to record assets and\n obligations for its operating leases.
\n\n In 2016, the FASB issued Accounting Standards Update No. 2016-01, Financial\n Instruments—Overall (Subtopic 825-10) (“ASU 2016-01”). This standard makes\n several changes, including the elimination of the available-for-sale\n classification of equity investments, and requires equity\n investments with readily determinable fair values to be measured at\n fair value with changes in fair value recognized in net income. It\n is effective for interim and annual periods beginning after\n December 15, 2017. Based on its portfolio of investments as of\n December 31, 2017, the Company does not expect the adoption of\n ASU 2016-01 to have a\n material impact on its consolidated financial statements.
\n\n In 2017, the FASB issued Accounting Standards Update No. 2017-07, Improving the\n Presentation of Net Periodic Pension Cost and Net Periodic\n Postretirement Benefit Cost (“ASU 2017-07”). The update requires\n employers to present the service cost component of the net periodic\n benefit cost in the same income statement line item as other\n employee compensation costs arising from services rendered during\n the period. The other components of net benefit cost, including\n interest cost, expected return on plan assets, amortization of\n prior service cost/credit and actuarial gain/loss, and settlement\n and curtailment effects, are to be presented outside of any\n subtotal of operating income. Employers will have to disclose the\n line(s) used to present the other components of net periodic\n benefit cost, if the components are not presented separately in the\n income statement. ASU 2017-07 is effective for fiscal years\n and interim periods beginning after December 15, 2017, and\n early adoption is permitted. The Company does not expect the\n adoption of ASU 2017-07 to\n have a material impact on its consolidated financial statements.\n Early adoption of ASU 2017-07 would have impacted the\n statement of consolidated operations as shown in the table\n below:
\nStatements of Consolidated Operations for the\n Years Ended December 31,
\n\n
\n| \n | \n | \n | \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 Reported | \n\n | \n | Adjustment | \n\n | \n | As Adjusted for \n Adoption of \n ASU 2017-07 | \n \n | |||||||||||||||
| \n | \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2017 | \n\n | \n | 2016 | \n\n | ||||||
| \n \n Operating expense: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Salaries and related costs \n | \n \n | $ | \n11,045 | \n\n | \n | $ | \n10,275 | \n\n | \n | $ | \n(104) | \n\n | \n | $ | \n(99 | \n) | \n\n | $ | \n10,941 | \n\n | \n | $ | \n10,176 | \n\n |
| \n \n Special charges \n | \n \n | \n | 176 | \n\n | \n | \n | 638 | \n\n | \n | \n | \n — | \n\n | \n | \n | 107 | \n\n | \n | \n | 176 | \n\n | \n | \n | 745 | \n\n |
| \n \n Nonoperating income (expense): \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Miscellaneous, net \n | \n \n | \n | 3 | \n\n | \n | \n | (19) | \n\n | \n | \n | (104) | \n\n | \n | \n | 8 | \n\n | \n | \n | (101) | \n\n | \n | \n | (11) | \n\n |
\n In February 2018, the FASB issued Accounting Standards Update\n No. 2018-02,\n Income Statement—Reporting Comprehensive Income (Topic\n 220): Reclassification of Certain Tax Effects from Accumulated\n Other Comprehensive Income (“ASU 2018-02”). This standard focuses\n on a targeted improvement to reclassify stranded tax effects\n resulting from the Tax Cuts and Jobs Act (the “Tax\n Act”) enacted on December 22, 2017 from accumulated\n other comprehensive income (“AOCI”) to retained\n earnings (“RE”). The amount of the reclassification\n would be the difference between the amount initially charged or\n credited directly to other comprehensive income at the previously\n enacted U.S. federal corporate income tax rate that remains in AOCI\n and the amount that would have been charged or credited directly to\n other comprehensive income using the newly enacted U.S. federal\n corporate income tax rate, excluding the effect of any valuation\n allowance previously charged to income from continuing operations.\n ASU 2018-02 is effective\n for interim and annual periods beginning after December 15,\n 2018, and early adoption is permitted. We have elected to early\n adopt this standard for the year ended December 31, 2017. We\n have reclassified $118 million from AOCI to RE as a result of\n this adoption. See Note 6 of this report for additional\n information.
\n\n NOTE 2 - GOODWILL AND OTHER INTANGIBLE ASSETS
\n\n The following table presents information about the Company’s\n goodwill and other intangible 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 | 2017 | \n\n | \n | 2016 | \n\n | |||||||||||
| \n Item \n | \n \n | \n Asset life (a) | \n\n | \n | \n Gross Carrying \n Amount | \n \n | \n | Accumulated \n Amortization | \n \n | \n | \n Gross Carrying \n Amount | \n \n | \n | Accumulated \n Amortization | \n \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 | \n | \n | \n |
| \n \n Finite-lived intangible 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 Frequent flyer database (b) \n | \n \n | \n | 22 | \n\n | \n | $ | \n1,177 | \n\n | \n | $ | \n832 | \n\n | \n | $ | \n1,177 | \n\n | \n | $ | \n771 | \n\n |
| \n \n Hubs \n | \n \n | \n | 20 | \n\n | \n | \n | 145 | \n\n | \n | \n | 89 | \n\n | \n | \n | 145 | \n\n | \n | \n | 82 | \n\n |
| \n \n Contracts \n | \n \n | \n | 13 | \n\n | \n | \n | 121 | \n\n | \n | \n | 103 | \n\n | \n | \n | 135 | \n\n | \n | \n | 95 | \n\n |
| \n \n Patents and 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 \n Airport slots and 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 \n Other \n | \n \n | \n | 25 | \n\n | \n | \n | 109 | \n\n | \n | \n | 84 | \n\n | \n | \n | 109 | \n\n | \n | \n | 81 | \n\n |
| \n | \n | \n | \n | \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 | $ | \n1,757 | \n\n | \n | $ | \n1,313 | \n\n | \n | $ | \n1,771 | \n\n | \n | $ | \n1,234 | \n\n |
| \n | \n | \n | \n | \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 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 Route authorities \n | \n \n | \n | \n | \n | \n | $ | \n1,562 | \n\n | \n | \n | \n | \n | \n | $ | \n1,562 | \n\n | \n | \n | \n | \n |
| \n \n Airport slots and gates \n | \n \n | \n | \n | \n | \n | \n | 536 | \n\n | \n | \n | \n | \n | \n | \n | 536 | \n\n | \n | \n | \n | \n |
| \n \n Tradenames and 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 \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 | \n | \n | \n |
| \n \n Total \n | \n \n | \n | \n | \n | \n | $ | \n3,095 | \n\n | \n | \n | \n | \n | \n | $ | \n3,095 | \n\n | \n | \n | \n | \n |
| \n | \n | \n | \n | \n | \n | \n \n \n | \n \n \n \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 expressed in years.
\n\n (b) The frequent flyer database is amortized based on an\n accelerated amortization schedule to reflect utilization of the\n assets. Estimated cash flows correlating to the expected attrition\n rate of customers in the frequent flyer database is considered in\n the determination of the amortization schedules.
\n\n Amortization expense in 2017, 2016 and 2015 was $79 million,\n $90 million and $105 million, respectively. Projected\n amortization expense in 2018, 2019, 2020, 2021 and 2022 is\n $67 million, $61 million, $55 million,\n $50 million and $40 million, respectively.
\n\n See Note 14 of this report for additional information related to\n impairment of intangible assets.
\n\n NOTE 7 - INCOME TAXES
\n\n The income tax provision (benefit) differed from amounts computed\n at the statutory federal income tax rate and consisted of the\n following significant components, as follows (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n UAL \n | \n \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2015 | \n\n | |||
| \n \n Income tax provision at statutory rate \n | \n \n | $ | \n1,050 | \n\n | \n | $ | \n1,337 | \n\n | \n | $ | \n1,477 | \n\n |
| \n \n State income taxes, net of federal income tax benefit \n | \n \n | \n | 29 | \n\n | \n | \n | 38 | \n\n | \n | \n | 38 | \n\n |
| \n \n Foreign tax rate differential \n | \n \n | \n | (43) | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n |
| \n \n Foreign income taxes \n | \n \n | \n | 3 | \n\n | \n | \n | 3 | \n\n | \n | \n | 4 | \n\n |
| \n \n Nondeductible employee meals \n | \n \n | \n | 17 | \n\n | \n | \n | 16 | \n\n | \n | \n | 15 | \n\n |
| \n \n Impact of Tax Act \n | \n \n | \n | (192) | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n |
| \n \n Income tax adjustment from AOCI \n | \n \n | \n | \n — | \n\n | \n | \n | 180 | \n\n | \n | \n | \n — | \n\n |
| \n \n State rate change \n | \n \n | \n | 12 | \n\n | \n | \n | (12) | \n\n | \n | \n | \n — | \n\n |
| \n \n Valuation allowance \n | \n \n | \n | (16) | \n\n | \n | \n | 20 | \n\n | \n | \n | (4,662) | \n\n |
| \n \n Other, net \n | \n \n | \n | 8 | \n\n | \n | \n | (26) | \n\n | \n | \n | 7 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n | \n | $ | \n868 | \n\n | \n | $ | \n1,556 | \n\n | \n | $ | \n(3,121) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Current \n | \n \n | $ | \n(77) | \n\n | \n | $ | \n(92) | \n\n | \n | $ | \n56 | \n\n |
| \n \n Deferred \n | \n \n | \n | 945 | \n\n | \n | \n | 1,648 | \n\n | \n | \n | (3,177) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n | \n | $ | \n868 | \n\n | \n | $ | \n1,556 | \n\n | \n | $ | \n(3,121) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \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 | 2017 | \n\n | \n | 2016 | \n\n | \n | 2015 | \n\n | |||
| \n \n Income tax provision at statutory rate \n | \n \n | $ | \n1,051 | \n\n | \n | $ | \n1,338 | \n\n | \n | $ | \n1,477 | \n\n |
| \n \n State income taxes, net of federal income tax \n | \n \n | \n | 29 | \n\n | \n | \n | 38 | \n\n | \n | \n | 38 | \n\n |
| \n \n Foreign tax rate differential \n | \n \n | \n | (43) | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n |
| \n \n Foreign income taxes \n | \n \n | \n | 3 | \n\n | \n | \n | 3 | \n\n | \n | \n | 4 | \n\n |
| \n \n Nondeductible employee meals \n | \n \n | \n | 17 | \n\n | \n | \n | 16 | \n\n | \n | \n | 15 | \n\n |
| \n \n Impact of Tax Act \n | \n \n | \n | (209) | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n |
| \n \n Income tax adjustment from AOCI \n | \n \n | \n | \n — | \n\n | \n | \n | 180 | \n\n | \n | \n | \n — | \n\n |
| \n \n State rate change \n | \n \n | \n | 12 | \n\n | \n | \n | (12) | \n\n | \n | \n | \n — | \n\n |
| \n \n Valuation allowance \n | \n \n | \n | (16) | \n\n | \n | \n | 20 | \n\n | \n | \n | (4,621) | \n\n |
| \n \n Other, net \n | \n \n | \n | 8 | \n\n | \n | \n | (25) | \n\n | \n | \n | 7 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n | \n | $ | \n852 | \n\n | \n | $ | \n1,558 | \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 | \n \n \n | \n \n \n \n | \n \n |
| \n \n Current \n | \n \n | $ | \n(77) | \n\n | \n | $ | \n(92) | \n\n | \n | $ | \n56 | \n\n |
| \n \n Deferred \n | \n \n | \n | 929 | \n\n | \n | \n | 1,650 | \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 \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n | \n | $ | \n852 | \n\n | \n | $ | \n1,558 | \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 | \n \n \n | \n \n \n \n | \n \n |
\n The Company’s effective tax rate for the year ended\n December 31, 2017 differed from the federal statutory rate of\n 35% primarily because of the\n provisional one-timeincome tax benefit of\n $192 million as a result of the enactment of the Tax Act. This\n provisional benefit is the result of the remeasurement of deferred\n tax assets and liabilities, partially offset by a write-down of the\n employee benefit deferred tax asset for\n future non-deductible compensation,\n and a one-time transition\n tax on foreign earnings and profits. The Company’s effective\n tax rate for the year ended December 31, 2016 differed from\n the federal statutory rate of 35% primarily because of\n 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.
\n\n Total income tax expense in 2017 includes the\n provisional one-time transition\n tax of $19 million on previously deferred foreign earnings.\n The undistributed cumulative earnings of foreign subsidiaries\n contributing to the one-time transition\n tax were $122 million. The Company expects to repatriate these\n earnings in 2018.
\n\n As of December 31, 2017, we had not completed our analysis of\n all aspects of the Tax Act. However, we have made a provisional\n estimate for its effect on our existing deferred tax balances and\n the one-time transition\n tax. We remeasured certain deferred tax assets and liabilities\n based on the rates at which they are expected to reverse in the\n future, which is generally 21%. We are still analyzing certain\n aspects of the Tax Act and refining our calculations, which could\n potentially affect the measurement of these balances or potentially\n give rise to new deferred tax amounts.
\n\n Temporary differences and carryforwards that give rise to deferred\n tax assets and liabilities at December 31, 2017 and 2016 were\n as follows (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | UAL | \n\n | \n | United | \n\n | ||||||||||
| \n | \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2017 | \n\n | \n | 2016 | \n\n | ||||
| \n \n Deferred income tax asset (liability): \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Federal and state net operating loss (“NOL”)\n carryforwards \n | \n \n | $ | \n601 | \n\n | \n | $ | \n1,613 | \n\n | \n | $ | \n574 | \n\n | \n | $ | \n1,571 | \n\n |
| \n \n Deferred revenue \n | \n \n | \n | 1,069 | \n\n | \n | \n | 2,096 | \n\n | \n | \n | 1,069 | \n\n | \n | \n | 2,096 | \n\n |
| \n \n Employee benefits, including pension, postretirement and\n medical \n | \n \n | \n | 1,051 | \n\n | \n | \n | 1,662 | \n\n | \n | \n | 1,051 | \n\n | \n | \n | 1,662 | \n\n |
| \n \n Alternative minimum tax credit carryforwards \n | \n \n | \n | \n — | \n\n | \n | \n | 116 | \n\n | \n | \n | \n — | \n\n | \n | \n | 116 | \n\n |
| \n \n Other \n | \n \n | \n | 351 | \n\n | \n | \n | 523 | \n\n | \n | \n | 351 | \n\n | \n | \n | 522 | \n\n |
| \n \n Less: Valuation allowance \n | \n \n | \n | (63) | \n\n | \n | \n | (68) | \n\n | \n | \n | (63) | \n\n | \n | \n | (68) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 assets \n | \n \n | $ | \n\n 3,009 | \n\n | \n | $ | \n5,942 | \n\n | \n | $ | \n2,982 | \n\n | \n | $ | \n5,899 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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(2,431) | \n\n | \n | $ | \n(3,961) | \n\n | \n | $ | \n(2,431) | \n\n | \n | $ | \n(3,961) | \n\n |
| \n \n Intangibles \n | \n \n | \n | (803) | \n\n | \n | \n | (1,326) | \n\n | \n | \n | (803) | \n\n | \n | \n | (1,326) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 liabilities \n | \n \n | $ | \n(3,234) | \n\n | \n | $ | \n(5,287) | \n\n | \n | $ | \n(3,234) | \n\n | \n | $ | \n(5,287) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 asset (liability) \n | \n \n | $ | \n(225) | \n\n | \n | $ | \n655 | \n\n | \n | $ | \n(252) | \n\n | \n | $ | \n612 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \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 consolidated subsidiaries file a\n consolidated federal income tax return with UAL. Under an\n intercompany tax allocation policy, United and its subsidiaries\n compute, record and pay UAL for their own tax liability as if they\n were separate companies filing separate returns. In determining\n their own tax liabilities, United and each of its subsidiaries take\n into account all tax credits or benefits generated and utilized as\n separate companies and they are each compensated for the\n aforementioned tax benefits only if they would be able to use those\n benefits on a separate company basis.
\n\n The Company’s federal and state NOL carryforwards relate to\n prior years’ NOLs, which may be used to reduce tax\n liabilities in future years. These tax benefits are mostly\n attributable to federal pre-tax NOL\n carryforwards of $2.4 billion for UAL. If not utilized these\n federal pre-tax NOLs will\n expire as follows (in billions): $0.2 in 2026, $0.5 in 2028 and\n $1.7 thereafter. In addition, for UAL the majority of tax benefits\n of the state NOLs of $49 million, net of a valuation allowance\n of $52 million, will expire over a five\n to 20-year period.
\n\n The Company periodically assesses whether it is more likely than\n not that it will generate sufficient taxable income to realize its\n deferred income tax assets. The Company establishes valuation\n allowances if it is not more likely than not that it will realize\n its deferred income tax assets. In making this determination, the\n Company considers all available positive and negative evidence and\n makes certain assumptions. The Company considers, among other\n things, projected future taxable income, scheduled reversals of\n deferred tax liabilities, the overall business environment, the\n Company’s historical financial results and tax planning\n strategies. In evaluating the likelihood of utilizing the\n Company’s net deferred income tax assets, the significant\n factors that the Company considers include (1) the\n Company’s recent history and forecasted profitability;\n (2) growth in the U.S. and global economies; and (3) the\n future impact of taxable temporary differences. In 2015, the\n Company concluded that its deferred income tax assets were more\n likely than not to be realized and released almost all of its\n valuation allowance in 2015, resulting in a $3.1 billion\n benefit in its provision for income taxes.
\n\n The Company has a valuation allowance of $63 million for\n certain state and local NOLs and credit carryforwards. The\n Company expects these NOLs and credits will expire unused due to\n limited carryforward periods. The ability to utilize these state\n NOLs and credits will be evaluated on a quarterly basis to\n determine if there are any significant events or any prudent and\n feasible tax planning strategies that would affect the\n Company’s ability to realize these deferred tax assets.
\n\n The Company’s unrecognized tax benefits related to uncertain\n tax positions were $21 million, $74 million and\n $24 million at December 31, 2017, 2016 and 2015,\n respectively. Included in the ending balance at December 31,\n 2017 is $21 million that would affect the Company’s\n effective tax rate if recognized. The changes in unrecognized tax\n benefits relating to settlements with taxing authorities,\n unrecognized tax benefits as a result of tax positions taken during\n a prior period and unrecognized tax benefits relating from a lapse\n of the statute of limitations were immaterial during 2017, 2016 and\n 2015. The Company does not expect significant increases or\n decreases in their unrecognized tax benefits within the next 12\n months.
\n\n There are no material amounts included in the balance at\n December 31, 2017 for tax positions for which the ultimate\n deductibility is highly certain but for which there is uncertainty\n about the timing of such deductibility.
\n\n The Company’s federal income tax returns for tax years after\n 2001 remain subject to examination by the Internal Revenue Service\n (“IRS”) and state taxing jurisdictions. Currently,\n there are no ongoing examinations of the Company’s prior year\n tax returns being conducted by the IRS.
\n| (q) | \nUncertain Income Tax\n Positions—The Company has recorded reserves for income\n taxes and associated interest that may become payable in future\n years. Although management believes that its positions taken on\n income tax matters are reasonable, the Company nevertheless has\n established tax and interest reserves in recognition that various\n taxing authorities may challenge certain of the positions taken by\n the Company, potentially resulting in additional liabilities for\n taxes and interest. The Company’s uncertain tax position\n reserves are reviewed periodically and are adjusted as events occur\n that affect its estimates, such as the availability of new\n information, the lapsing of applicable statutes of limitation, the\n conclusion of tax audits, the measurement of additional estimated\n liability, the identification of new tax matters, the release of\n administrative tax guidance affecting its estimates of tax\n liabilities, or the rendering of relevant court decisions. The\n Company records penalties and interest relating to uncertain tax\n positions as part of income tax expense in its consolidated\n statements of operations. The Company has not recorded any material\n expense or liabilities related to interest or penalties in its\n consolidated financial statements. | \n
\n NOTE 11 - LEASES AND CAPACITY PURCHASE AGREEMENTS
\n\n United leases aircraft, airport passenger terminal space, aircraft\n hangars and related maintenance facilities, cargo terminals, other\n airport facilities, other commercial real estate, office and\n computer equipment and vehicles.
\n\n
\n\n At December 31, 2017, United’s scheduled future minimum\n lease payments under operating leases having initial or remaining\n noncancelable lease terms of more than one year, aircraft leases,\n including aircraft rent under CPAs and capital leases\n (substantially all of which are for aircraft) were as follows (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Capital Leases (a) | \n\n | \n | Facility and Other \n Operating Leases | \n \n | \n | Aircraft Operating \n Leases | \n \n | |||
| \n \n 2018 \n | \n \n | $ | \n200 | \n\n | \n | $ | \n1,234 | \n\n | \n | $ | \n1,038 | \n\n |
| \n \n 2019 \n | \n \n | \n | 133 | \n\n | \n | \n | 1,075 | \n\n | \n | \n | 855 | \n\n |
| \n \n 2020 \n | \n \n | \n | 113 | \n\n | \n | \n | 1,169 | \n\n | \n | \n | 628 | \n\n |
| \n \n 2021 \n | \n \n | \n | 110 | \n\n | \n | \n | 935 | \n\n | \n | \n | 510 | \n\n |
| \n \n 2022 \n | \n \n | \n | 105 | \n\n | \n | \n | 797 | \n\n | \n | \n | 388 | \n\n |
| \n \n After 2022 \n | \n \n | \n | 1,156 | \n\n | \n | \n | 6,109 | \n\n | \n | \n | 1,513 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \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 payments \n | \n \n | $ | \n1,817 | \n\n | \n | $ | \n11,319 | \n\n | \n | $ | \n4,932 | \n\n |
| \n | \n | \n | \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 | (693) | \n\n | \n | \n | \n | \n | \n | \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 lease payments \n | \n \n | \n | 1,124 | \n\n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Current portion \n | \n \n | \n | (128) | \n\n | \n | \n | \n | \n | \n | \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 capital leases \n | \n \n | $ | \n996 | \n\n | \n | \n | \n | \n | \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) Includes airport construction projects managed by United in\n which United has construction risk, including project cost\n overruns. The Company recorded an asset for project costs and a\n related liability equal to project costs funded by parties other\n than United. As of December 31, 2017, United had an asset\n balance of $814 million recorded in operating property and\n equipment and $777 million recorded in current and long-term\n obligations under capital leases for these airport construction\n projects.
\n\n As of December 31, 2017, United’s aircraft capital lease\n minimum payments relate to leases of 31 mainline and 43 regional\n aircraft as well as to leases of nonaircraft assets. Imputed\n interest rate ranges are 3.5% to 20.8%.
\n\n Aircraft operating leases have initial terms of five to 26 years,\n with expiration dates ranging from 2018 through 2029. Under the\n terms of most leases, United has the right to purchase the aircraft\n at the end of the lease term, in some cases, at fair market value,\n and in others, at fair market value or a percentage of cost.
\n\n During 2015, the Company reached an agreement with AerCap Holdings\n N.V., a major aircraft leasing company, to lease used Airbus S.A.S\n (“Airbus”) A319s. Eleven aircraft have been delivered\n since the inception of this agreement, and seven more aircraft are\n expected to be delivered between 2019 and 2020. In addition, United\n has options for seven more A319 aircraft, subject to certain\n conditions.
\n\n United is the lessee of real property under long-term operating\n leases at a number of airports where we are also the guarantor of\n approximately $1.4 billion of underlying debt and interest\n thereon as of December 31, 2017. These leases are\n typically with municipalities or other governmental entities, which\n are excluded from the consolidation requirements concerning a\n variable interest entity (“VIE”). To the extent\n United’s leases and related guarantees are with a separate\n legal entity other than a governmental entity, United is not the\n primary beneficiary because the lease terms are consistent with\n market terms at the inception of the lease and the lease does not\n include a residual value guarantee, fixed-price purchase option, or\n similar feature. United has facility operating leases that extend\n to 2054.
\n\n United’s nonaircraft rent expense was approximately\n $1.3 billion, $1.2 billion and $1.3 billion for the\n years ended December 31, 2017, 2016 and 2015,\n respectively.
\n\n In addition to nonaircraft rent and aircraft rent, which is\n separately presented in the consolidated statements of operations,\n United had aircraft rent related to regional aircraft operating\n leases, which is included as part of Regional capacity purchase\n expense in United’s consolidated statement of operations, of\n $458 million, $439 million and $461 million for the\n years ended December 31, 2017, 2016 and 2015,\n respectively.
\n\n In connection with UAL Corporation’s and United Air Lines,\n Inc.’s (predecessors to UAL and United) fresh-start reporting\n requirements upon their exit from Chapter 11 bankruptcy protection\n in 2006 and the Company’s acquisition accounting adjustments\n related to the Company’s merger transaction in 2010, lease\n valuation adjustments for operating leases were initially recorded\n in the consolidated balance sheet, representing the net present\n value of the differences between contractual lease rates and the\n fair market lease rates for similar leased assets at the time. An\n asset (liability) results when the contractual lease rates are more\n (less) favorable than market lease terms at the valuation date. The\n lease valuation adjustment is amortized on a straight-line basis as\n an increase (decrease) to rent expense over the individual\n applicable remaining lease terms, resulting in recognition of rent\n expense as if United had entered into the leases at market rates.\n The related remaining lease terms, primarily related to aircraft\n which make up the majority of the fair value lease adjustment\n balance, are one to seven years for United. The lease\n valuation adjustments are classified within other noncurrent\n liabilities and the net accretion amounts are $79 million,\n $82 million and $107 million for the years ended\n December 31, 2017, 2016 and 2015, respectively.
\n\n Regional CPAs
\n\n United has contractual relationships with various regional carriers\n to provide regional aircraft service branded as United Express.\n Under these CPAs, the Company pays the regional carriers\n contractually agreed fees (carrier costs) for operating these\n flights plus a variable reimbursement (incentive payment for\n operational performance) based on agreed performance metrics,\n subject to annual inflation adjustments. The fees for carrier costs\n are based on specific rates for various operating expenses of the\n regional carriers, such as crew expenses, maintenance and aircraft\n ownership, some of which are multiplied by specific operating\n statistics (e.g., block hours, departures), while others are\n fixed monthly amounts. Under these CPAs, the Company is responsible\n for all fuel costs incurred, as well as landing fees and other\n costs, which are either passed through by the regional carrier to\n the Company without any markup or directly incurred by the Company.\n United’s CPAs are for 518 regional aircraft as of\n December 31, 2017, and the CPAs have terms expiring through\n 2029. Aircraft operated under CPAs include aircraft leased directly\n from the regional carriers and those owned by United or leased from\n third-party lessors and operated by the regional carriers. See Part\n I, Item 2, Properties, of this report for additional\n information.
\n\n In 2017, United entered into a five-year CPA with Air Wisconsin\n Airlines for regional service under the United Express brand to\n operate up to 65 CRJ200 aircraft. In addition, United extended the\n term of its existing CPA with ExpressJet Airlines to operate up to\n approximately 125 aircraft through December 31, 2022. In\n January 2018, United removed all Bombardier Q200 turboprop aircraft\n and Embraer ERJ 135 aircraft from service.
\n\n United holds a minority equity interest in two of its regional\n carriers, Champlain Enterprises, Inc. and Republic Airways\n Holdings, Inc. The contracts with these related parties are\n executed in the ordinary course of business. United recorded\n approximately $538 million, $486 million and\n $366 million in expenses related to its capacity purchase\n agreements with these regional carriers for the years ended\n December 31, 2017, 2016 and 2015, respectively. There were\n approximately $24 million and $32 million in accounts\n payable due to these companies as of December 31, 2017 and\n December 31, 2016, respectively. There were no material\n accounts receivable due from these companies as of\n December 31, 2017 and December 31, 2016.
\n\n Our future commitments under our CPAs are dependent on numerous\n variables, and are, therefore, difficult to predict. The most\n important of these variables is the number of scheduled block\n hours. Although we are not required to purchase a minimum\n number of block hours under certain of our CPAs, we have set forth\n below estimates of our 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, 2017, 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 | \n |
| \n \n 2018 \n | \n \n | $ | \n2.0 | \n\n |
| \n \n 2019 \n | \n \n | \n | 1.8 | \n\n |
| \n \n 2020 \n | \n \n | \n | 1.6 | \n\n |
| \n \n 2021 \n | \n \n | \n | 1.5 | \n\n |
| \n \n 2022 \n | \n \n | \n | 1.4 | \n\n |
| \n \n After 2022 \n | \n \n | \n | 3.2 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n | \n | $ | \n\n 11.5 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n |
\n The actual amounts we pay to our regional operators under CPAs\n could differ materially from these estimates. For example, a\n 10% increase or decrease in scheduled block hours for all of\n United’s regional operators (whether as a result of changes\n in average daily utilization or otherwise) in 2018 would result in\n a corresponding change in annual cash obligations under the CPAs of\n approximately $147 million.
\n\n The table below summarizes United’s commitments as of\n December 31, 2017, which primarily relate to the acquisition\n of aircraft and related spare engines, aircraft improvements and\n include other capital purchase commitments for the years ended\n December 31 (in billions). Any new firm aircraft orders,\n including through the exercise of purchase options and purchase\n rights, will increase the total future capital commitments of the\n Company.
\n\n
\n| \n | \n | \n | \n | \n |
| \n \n 2018 \n | \n \n | $ | \n\n 3.2 | \n\n |
| \n \n 2019 \n | \n \n | \n | 2.9 | \n\n |
| \n \n 2020 \n | \n \n | \n | 2.1 | \n\n |
| \n \n 2021 \n | \n \n | \n | 2.4 | \n\n |
| \n \n 2022 \n | \n \n | \n | 1.8 | \n\n |
| \n \n After 2022 \n | \n \n | \n | 9.8 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n | \n | $ | \n22.2 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n |
\n The estimated useful lives of property and equipment are as\n follows:
\n\n
\n| \n | \n | \n | \n | \n |
| \n | \n | \n Estimated Useful Life (in years) | \n\n | |
| \n \n Aircraft and related rotable parts \n | \n \n | \n | 25 to 30 | \n\n |
| \n \n Buildings \n | \n \n | \n | 25 to 45 | \n\n |
| \n \n Other property and equipment \n | \n \n | \n | 3 to 15 | \n\n |
| \n \n Computer software \n | \n \n | \n | 5 to 15 | \n\n |
| \n \n Building improvements \n | \n \n | \n | 1 to 40 | \n\n |
| (b) | \nRevenue Recognition—The\n Company records passenger ticket sales and tickets sold by other\n airlines for use on United as passenger revenue when the\n transportation is provided or upon estimated breakage. The value of\n unused passenger tickets is included in current liabilities as\n Advance ticket sales. Tickets sold by other airlines are recorded\n at the estimated values to be billed to the other airlines.\n Differences between amounts billed and the actual amounts may be\n rejected and rebilled or written off if the amount recorded was\n different from the original estimate. When necessary, the Company\n records a reserve against its interline billings and payables if\n historical experience indicates that these amounts are different.\n Non-refundable tickets\n generally expire on the date of the intended flight, unless the\n date is extended by notification from the customer on or before the\n intended flight date. Basic Economy tickets cannot be extended and\n refunds are not allowed except for ticket cancellations that are\n within 24 hours of purchase and one week or more prior to the\n original scheduled departure flight. | \n
\n Fees charged in association with changes or extensions to\n non-refundable tickets are\n recorded as other revenue at the time the fee is incurred. The fare\n on the changed ticket, including any additional collection of fare,\n is 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 records an estimate of breakage revenue on the flight\n date for tickets that will expire unused. These estimates are based\n on the evaluation of actual historical results and forecasted\n trends. Refundable tickets expire after one year from the date of\n issuance.
\n\n The Company recognizes cargo and other revenue as service is\n provided.
\n\n Under our capacity purchase agreements (“CPAs”) with\n regional carriers, we purchase all of the capacity related to\n aircraft covered by the contracts and are responsible for selling\n all of the related seat inventory. We record the passenger revenue\n and related expenses as separate operating revenue and expense in\n the consolidated statement of operations.
\n\n
\n\n Accounts receivable primarily consist of amounts due from credit\n card 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, 2017, 2016 and 2015.
\n\n The Company’s operating revenue by principal geographic\n region (as defined by the U.S. Department of Transportation) for\n the years ended December 31 is presented in the table below\n (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | \n 2017 | \n\n | \n | \n 2016 | \n\n | \n | \n 2015 | \n\n | |||
| \n \n Domestic (U.S. and Canada) \n | \n \n | $ | \n23,131 | \n\n | \n | $ | \n22,202 | \n\n | \n | $ | \n21,931 | \n\n |
| \n \n Pacific \n | \n \n | \n | 4,898 | \n\n | \n | \n | 4,959 | \n\n | \n | \n | 5,498 | \n\n |
| \n \n Atlantic \n | \n \n | \n | 6,285 | \n\n | \n | \n | 6,157 | \n\n | \n | \n | 7,068 | \n\n |
| \n \n Latin America \n | \n \n | \n | 3,422 | \n\n | \n | \n | 3,238 | \n\n | \n | \n | 3,367 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \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 | $ | \n37,736 | \n\n | \n | $ | \n36,556 | \n\n | \n | $ | \n37,864 | \n\n |
| \n | \n | \n \n \n | \n \n \n \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 assumptions used for the benefit plans were as follows:
\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 Assumptions used to determine benefit obligations \n | \n \n | \n | \n\n 2017 | \n\n | \n | \n | \n\n 2016 | \n\n |
| \n \n Discount rate \n | \n \n | \n | 3.65% | \n\n | \n | \n | 4.18% | \n\n |
| \n \n Rate of compensation increase \n | \n \n | \n | 3.89% | \n\n | \n | \n | 3.54% | \n\n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Assumptions used to determine net expense \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Discount rate \n | \n \n | \n | 4.19% | \n\n | \n | \n | 4.58% | \n\n |
| \n \n Expected return on plan assets \n | \n \n | \n | 7.02% | \n\n | \n | \n | 7.04% | \n\n |
| \n \n Rate of compensation increase \n | \n \n | \n | 3.54% | \n\n | \n | \n | 3.53% | \n\n |
\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n \n | \n \n | \n Other Postretirement Benefits | \n\n | |||||
| \n \n Assumptions used to determine benefit obligations \n | \n \n | \n 2017 | \n\n | \n | \n 2016 | \n\n | ||
| \n \n Discount rate \n | \n \n | \n | 3.63% | \n\n | \n | \n | 4.07% | \n\n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Assumptions used to determine net expense \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Discount rate \n | \n \n | \n | 4.07% | \n\n | \n | \n | 4.49% | \n\n |
| \n \n Expected return on plan assets \n | \n \n | \n | 3.00% | \n\n | \n | \n | 3.00% | \n\n |
| \n \n Health care cost trend rate assumed for next year \n | \n \n | \n | 6.25% | \n\n | \n | \n | 6.50% | \n\n |
| \n \n Rate to which the cost trend rate is assumed to decline (ultimate\n trend rate in 2023) \n | \n \n | \n | 5.00% | \n\n | \n | \n | 5.00% | \n\n |
\n Temporary differences and carryforwards that give rise to deferred\n tax assets and liabilities at December 31, 2017 and 2016 were\n as follows (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | UAL | \n\n | \n | United | \n\n | ||||||||||
| \n | \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2017 | \n\n | \n | 2016 | \n\n | ||||
| \n \n Deferred income tax asset (liability): \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Federal and state net operating loss (“NOL”)\n carryforwards \n | \n \n | $ | \n601 | \n\n | \n | $ | \n1,613 | \n\n | \n | $ | \n574 | \n\n | \n | $ | \n1,571 | \n\n |
| \n \n Deferred revenue \n | \n \n | \n | 1,069 | \n\n | \n | \n | 2,096 | \n\n | \n | \n | 1,069 | \n\n | \n | \n | 2,096 | \n\n |
| \n \n Employee benefits, including pension, postretirement and\n medical \n | \n \n | \n | 1,051 | \n\n | \n | \n | 1,662 | \n\n | \n | \n | 1,051 | \n\n | \n | \n | 1,662 | \n\n |
| \n \n Alternative minimum tax credit carryforwards \n | \n \n | \n | \n — | \n\n | \n | \n | 116 | \n\n | \n | \n | \n — | \n\n | \n | \n | 116 | \n\n |
| \n \n Other \n | \n \n | \n | 351 | \n\n | \n | \n | 523 | \n\n | \n | \n | 351 | \n\n | \n | \n | 522 | \n\n |
| \n \n Less: Valuation allowance \n | \n \n | \n | (63) | \n\n | \n | \n | (68) | \n\n | \n | \n | (63) | \n\n | \n | \n | (68) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 assets \n | \n \n | $ | \n\n 3,009 | \n\n | \n | $ | \n5,942 | \n\n | \n | $ | \n2,982 | \n\n | \n | $ | \n5,899 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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(2,431) | \n\n | \n | $ | \n(3,961) | \n\n | \n | $ | \n(2,431) | \n\n | \n | $ | \n(3,961) | \n\n |
| \n \n Intangibles \n | \n \n | \n | (803) | \n\n | \n | \n | (1,326) | \n\n | \n | \n | (803) | \n\n | \n | \n | (1,326) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 liabilities \n | \n \n | $ | \n(3,234) | \n\n | \n | $ | \n(5,287) | \n\n | \n | $ | \n(3,234) | \n\n | \n | $ | \n(5,287) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 asset (liability) \n | \n \n | $ | \n(225) | \n\n | \n | $ | \n655 | \n\n | \n | $ | \n(252) | \n\n | \n | $ | \n612 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \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 present information about United’s\n pension and other postretirement plan assets at December 31\n (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 2017 | \n\n | \n | \n | \n | \n\n | 2016 | \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 \n Equity securities funds \n | \n \n | $ | \n1,406 | \n\n | \n | $ | \n269 | \n\n | \n | $ | \n133 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n1,004 | \n\n | \n | \n | \n | \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 Fixed-income securities \n | \n \n | \n | 1,470 | \n\n | \n | \n | — | \n\n | \n | \n | 834 | \n\n | \n | \n | 18 | \n\n | \n | \n | 618 | \n\n | \n | \n | \n | \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 Alternatives \n | \n \n | \n | 637 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 139 | \n\n | \n | \n | 498 | \n\n | \n | \n | \n | \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 Other investments \n | \n \n | \n | 419 | \n\n | \n | \n | 32 | \n\n | \n | \n | 124 | \n\n | \n | \n | 172 | \n\n | \n | \n | 91 | \n\n | \n | \n | \n | \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 \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n | \n | \n | \n\n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 | $ | \n3,932 | \n\n | \n | $ | \n301 | \n\n | \n | $ | \n1,091 | \n\n | \n | $ | \n329 | \n\n | \n | $ | \n2,211 | \n\n | \n | \n | \n | \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 \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n | \n | \n | \n\n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| Other Postretirement Benefit Plan Assets: | \n\n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n\n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| Deposit administration fund | \n\n | $ | \n54 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n— | \n\n | \n | $ | \n54 | \n\n | \n | $ | \n— | \n\n | \n | \n | \n | \n | \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 \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n | \n | \n | \n\n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \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 relevant accounting standards, certain\n investments that are measured at fair value using the net asset\n value (“NAV”) per share (or its equivalent) have not\n been classified in the fair value hierarchy. These investments are\n commingled funds that invest in fixed-income instruments including\n bonds, debt securities, and other similar instruments issued by\n various U.S. and non-U.S.\n public- or private-sector entities. Redemption periods for these\n investments range from daily to annually.
\n\n The computations of UAL’s basic and diluted earnings per\n share are set forth below for the years ended December 31 (in\n millions, except per share amounts):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | \n 2017 | \n\n | \n | \n 2016 | \n\n | \n | \n 2015 | \n\n | |||
| \n \n Earnings available to common stockholders \n | \n \n | $ | \n2,131 | \n\n | \n | $ | \n2,263 | \n\n | \n | $ | \n7,340 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Basic weighted-average shares outstanding \n | \n \n | \n | 302.7 | \n\n | \n | \n | 329.9 | \n\n | \n | \n | 376.1 | \n\n |
| \n \n Effect of convertible notes \n | \n \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | 0.3 | \n\n |
| \n \n Effect of employee stock awards \n | \n \n | \n | 0.9 | \n\n | \n | \n | 0.4 | \n\n | \n | \n | 0.5 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Diluted weighted-average shares outstanding \n | \n \n | \n | 303.6 | \n\n | \n | \n | 330.3 | \n\n | \n | \n | 376.9 | \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 \n \n | \n \n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Earnings per share, basic \n | \n \n | $ | \n7.04 | \n\n | \n | $ | \n6.86 | \n\n | \n | $ | \n19.52 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \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, diluted \n | \n \n | $ | \n7.02 | \n\n | \n | $ | \n6.85 | \n\n | \n | $ | \n19.47 | \n\n |
| \n | \n | \n \n \n | \n \n \n \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 the Company’s contractual principal\n payments (not including debt discount or debt issuance costs) at\n December 31, 2017 under then-outstanding long-term debt\n agreements in each of the next five calendar years (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n |
| \n \n 2018 \n | \n \n | $ | \n1,565 | \n\n |
| \n \n 2019 \n | \n \n | \n | 1,165 | \n\n |
| \n \n 2020 \n | \n \n | \n | 1,170 | \n\n |
| \n \n 2021 \n | \n \n | \n | 1,157 | \n\n |
| \n \n 2022 \n | \n \n | \n | 1,492 | \n\n |
| \n \n After 2022 \n | \n \n | \n | 6,882 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n | \n | $ | \n\n 13,431 | \n\n |
| \n | \n | \n \n \n | \n \n \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
\n NOTE 12 - VARIABLE INTEREST ENTITIES
\n\n Variable interests are contractual, ownership or other monetary\n interests in an entity that change with fluctuations in the fair\n value of the entity’s net assets exclusive of variable\n interests. A VIE can arise from items such as lease agreements,\n loan arrangements, guarantees or service contracts. An entity is a\n VIE if (a) the entity lacks sufficient equity or (b) the\n entity’s equity holders lack power or the obligation and\n right as equity holders to absorb the entity’s expected\n losses or to receive its expected residual returns. Therefore, if\n the equity owners as a group do not have the power to direct the\n entity’s activities that most significantly impact its\n economic performance, the entity is a VIE.
\n\n If an entity is determined to be a VIE, the entity must be\n consolidated by the primary beneficiary. The primary beneficiary is\n the holder of the variable interests that has the power to direct\n the activities of a VIE that (i) most significantly impact the\n VIE’s economic performance and (ii) has the obligation\n to absorb losses of or the right to receive benefits from the VIE\n that could potentially be significant to the VIE. Therefore, the\n Company must identify which activities most significantly impact\n the VIE’s economic performance and determine whether it, or\n another party, has the power to direct those activities.
\n\n The Company’s evaluation of its association with VIEs is\n described below:
\n\n Aircraft Leases. We are the lessee in a number\n of operating leases covering the majority of our leased\n aircraft. The lessors are trusts established specifically to\n purchase, finance and lease aircraft to us. These leasing\n entities meet the criteria for VIEs. We are generally not the\n primary 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 38 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 158 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 11 of this report.
\n\n EETCs. United evaluated whether the pass-through\n trusts formed for its EETC financings, treated as either debt or\n aircraft operating leases, are VIEs required to be consolidated by\n United under applicable accounting guidance, and determined that\n the pass-through trusts are VIEs. Based on United’s analysis\n as described below, United determined that it does not have a\n variable interest in the pass-through trusts.
\n\n
\n\n The primary risk of the pass-through trusts is credit risk (i.e.\n the risk that United, the issuer of the equipment notes, may be\n unable to make its principal and interest payments). The primary\n purpose of the pass-through trust structure is to enhance the\n credit worthiness of United’s debt obligation through certain\n bankruptcy protection provisions, a liquidity facility (in certain\n of the EETC 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 holders.
\n\n United does not invest in or obtain a financial interest in the\n pass-through trusts. Rather, United has an obligation to make\n interest and principal payments on its equipment notes held by the\n pass-through trusts. United did not intend to have any voting or\n non-voting equity interest\n in the pass-through trusts or to absorb variability from the\n pass-through trusts. Based on this analysis, the Company determined\n that it is not required to consolidate the pass-through trusts.
\n\n NOTE 14 - SPECIAL CHARGES
\n\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 | \n 2017 | \n\n | \n | \n 2016 | \n\n | \n | \n 2015 | \n\n | |||
| \n \n Severance and benefit costs \n | \n \n | $ | \n\n 116 | \n\n | \n | $ | \n\n 37 | \n\n | \n | $ | \n\n 107 | \n\n |
| \n \n Impairment of assets \n | \n \n | \n | 25 | \n\n | \n | \n | 412 | \n\n | \n | \n | 79 | \n\n |
| \n \n Cleveland airport lease restructuring \n | \n \n | \n | \n — | \n\n | \n | \n | 74 | \n\n | \n | \n | \n — | \n\n |
| \n \n Labor agreement costs \n | \n \n | \n | \n — | \n\n | \n | \n | 64 | \n\n | \n | \n | 18 | \n\n |
| (Gains) losses on sale of assets and other special\n charges | \n\n | \n | 35 | \n\n | \n | \n | 51 | \n\n | \n | \n | 122 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \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 special charges \n | \n \n | \n | 176 | \n\n | \n | \n | 638 | \n\n | \n | \n | 326 | \n\n |
| \n \n Nonoperating: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| (Gains) losses on extinguishment of debt and\n other | \n\n | \n | \n — | \n\n | \n | \n | (1) | \n\n | \n | \n | 202 | \n\n |
| \n | \n | \n \n \n | \n \n \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 nonoperating special charges\n before income taxes | \n\n | \n | 176 | \n\n | \n | \n | 637 | \n\n | \n | \n | 528 | \n\n |
| Income tax benefit related to special charges | \n\n | \n | (63) | \n\n | \n | \n | (229) | \n\n | \n | \n | (11) | \n\n |
| Income tax adjustments (Notes 6 and 7) | \n\n | \n | (192) | \n\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 \n |
| \n \n Total operating and nonoperating special charges, net of income\n taxes and income tax adjustments \n | \n \n | $ | \n(79) | \n\n | \n | $ | \n588 | \n\n | \n | $ | \n(2,613) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
\n 2017
\n\n During 2017, the Company recorded $83 million\n ($53 million net of taxes) of severance and benefit costs\n related to a voluntary early-out program for its technicians\n and related employees represented by the IBT. In the first quarter\n of 2017, approximately 1,000 technicians and related employees\n elected to voluntarily separate from the Company and will receive a\n severance payment, with a maximum value of $100,000 per\n participant, based on years of service, with retirement dates\n through early 2019. Also during 2017, the Company recorded\n $33 million ($21 million net of taxes) of severance\n primarily related to its management reorganization initiative.
\n\n During 2017 the Company recorded a $10 million\n ($6 million net of taxes) impairment charge related to\n obsolete spare parts inventory and a $15 million\n ($10 million net of taxes) intangible asset impairment charge\n related to a maintenance service agreement.
\n\n 2016
\n\n In April 2016, the Federal Aviation Administration\n (“FAA”) announced that it will designate Newark Liberty\n International Airport (“Newark”) as a Level 2\n schedule-facilitated airport under the International Air Transport\n Association Worldwide Slot Guidelines. The designation was\n associated with an updated demand and capacity analysis of Newark\n 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.
\n\n In 2016, the City of Cleveland agreed to amend the Company’s\n lease, which runs through 2029, associated with certain excess\n airport terminal space (principally Terminal D) and related\n facilities at Hopkins International Airport\n (“Cleveland”). The Company recorded an accrual for\n remaining payments under the lease for facilities that the Company\n no longer uses and will continue to incur costs under the lease\n without economic benefit to the Company. This liability was\n measured and recorded at its fair value when the Company ceased its\n right to use such facilities leased to it pursuant to the lease.\n The Company recorded a net charge of $74 million\n ($47 million net of taxes) related to the amended lease.
\n\n The fleet service, passenger service, storekeeper and other\n employees represented by the International Association of\n Machinists and Aerospace Workers (the “IAM”) ratified\n seven new contracts with the Company which extended the contracts\n through 2021. The technicians and related employees represented by\n 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 Association of Flight Attendants, the\n Company amended two of its flight attendant postretirement medical\n plans. The amendments triggered curtailment accounting, resulting\n in the recognition of a one-time $47 million gain\n ($30 million net of taxes) for accelerated recognition of a\n prior service credit.
\n\n During 2016, the Company recorded $37 million\n ($24 million net of taxes) of severance and benefit costs\n 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.
\n\n 2015
\n\n During its annual assessment in the fourth quarter, the Company\n recorded $33 million ($22 million net of related income\n tax 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.
\n\n The Company recorded $107 million of severance and benefit\n costs primarily related to a voluntary early-out program for its flight\n attendants. In 2014, more than 2,500 flight attendants elected to\n voluntarily separate from the Company for a severance payment, with\n a maximum value of $100,000 per participant, based on years of\n service, with retirement dates through the end of 2016.
\n\n During 2015, the Company also recorded $18 million related to\n collective bargaining agreements, $60 million of\n integration-related costs primarily related to systems integration\n and training for employees, $32 million related to charges for\n settlements in connection with legal matters, $16 million for\n the cease use of an aircraft under lease and $14 million for\n losses on the sale of aircraft and other miscellaneous gains and\n losses.
\n\n The Company recorded $202 million of losses as part of\n Nonoperating income (expense): Miscellaneous, net due primarily to\n the write-off of\n $134 million related 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 Accrual Activity
\n\n Activity related to the accruals for severance and medical costs\n and future lease payments on permanently grounded aircraft is as\n follows (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Severance/ \n Benefit Costs | \n \n | \n | Permanently \n Grounded Aircraft | \n \n | ||
| \n \n Balance at December 31, 2014 \n | \n \n | $ | \n109 | \n\n | \n | $ | \n102 | \n\n |
| \n \n Accrual \n | \n \n | \n | 107 | \n\n | \n | \n | 30 | \n\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 \n | \n \n |
| \n \n Balance at December 31, 2015 \n | \n \n | \n | 27 | \n\n | \n | \n | 78 | \n\n |
| \n \n Accrual and related adjustments \n | \n \n | \n | 37 | \n\n | \n | \n | (17) | \n\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 \n | \n \n |
| \n \n Balance at December 31, 2016 \n | \n \n | \n | 14 | \n\n | \n | \n | 41 | \n\n |
| \n \n Accrual \n | \n \n | \n | 116 | \n\n | \n | \n | (4) | \n\n |
| \n \n Payments \n | \n \n | \n | (93) | \n\n | \n | \n | (15) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Balance at December 31, 2017 \n | \n \n | $ | \n37 | \n\n | \n | $ | \n22 | \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 accrual and payment activity is primarily\n related to severance and other compensation expense associated with\n voluntary employee early retirement programs.
\n\n NOTE 6 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
\n\n The tables below present the components of the Company’s\n AOCI, net of tax (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 | 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 | Deferred \n Taxes | \n \n | \n | Total | \n\n | |||||
| \n \n Balance at December 31, 2014 \n | \n \n | $ | \n(472) | \n\n | \n | $ | \n(499) | \n\n | \n | $ | \n8 | \n\n | \n | $ | \n(116) | \n\n | \n | $ | \n(1,079) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Other comprehensive income (loss) before reclassifications \n | \n \n | \n | 78 | \n(a) | \n\n | \n | (320) | \n\n | \n | \n | (5) | \n\n | \n | \n | 88 | \n\n | \n | \n | (159) | \n\n |
| \n \n Amounts reclassified from accumulated other comprehensive\n income \n | \n \n | \n | 31 | \n\n | \n | \n | 604 | \n\n | \n | \n | \n — | \n\n | \n | \n | (228) | \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 \n |
| \n \n Net other comprehensive income (loss) \n | \n \n | \n | 109 | \n\n | \n | \n | 284 | \n\n | \n | \n | (5) | \n\n | \n | \n | (140) | \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 \n |
| \n \n Balance at December 31, 2015 \n | \n \n | $ | \n(363) | \n\n | \n | $ | \n(215) | \n\n | \n | $ | \n3 | \n\n | \n | $ | \n(256) | \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 \n |
| \n \n Other comprehensive income (loss) before reclassifications \n | \n \n | \n | (517) | \n(a) | \n\n | \n | (4) | \n\n | \n | \n | \n — | \n\n | \n | \n | 187 | \n\n | \n | \n | (334) | \n\n |
| \n \n Amounts reclassified from accumulated other comprehensive\n income \n | \n \n | \n | 26 | \n\n | \n | \n | 217 | \n\n | \n | \n | (2) | \n\n | \n | \n | 95 | \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 \n |
| \n \n Net other comprehensive income (loss) \n | \n \n | \n | (491) | \n\n | \n | \n | 213 | \n\n | \n | \n | (2) | \n\n | \n | \n | 282 | \n\n | \n | \n | 2 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Balance at December 31, 2016 \n | \n \n | $ | \n(854) | \n\n | \n | $ | \n(2) | \n\n | \n | $ | \n1 | \n\n | \n | $ | \n26 | \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 Other comprehensive income (loss) before reclassifications \n | \n \n | \n | (306) | \n(a) | \n\n | \n | \n — | \n\n | \n | \n | (7) | \n\n | \n | \n | 74 | \n\n | \n | \n | (239) | \n\n |
| \n \n Amounts reclassified from accumulated other comprehensive\n income \n | \n \n | \n | 58 | \n\n | \n | \n | 2 | \n\n | \n | \n | \n — | \n\n | \n | \n | (21) | \n\n | \n | \n | 39 | \n\n |
| \n \n Reclassification of stranded tax effects \n | \n \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | (118) | \n(b) | \n\n | \n | (118) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 other comprehensive income (loss) \n | \n \n | \n | (248) | \n\n | \n | \n | 2 | \n\n | \n | \n | (7) | \n\n | \n | \n | (65) | \n\n | \n | \n | (318) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 December 31, 2017 \n | \n \n | $ | \n(1,102) | \n\n | \n | $ | \n\n — | \n\n | \n | $ | \n(6) | \n\n | \n | $ | \n(39) | \n(c) | \n\n | $ | \n(1,147) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \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 about AOCI Components \n | \n \n | Amount Reclassified\n from AOCI to \n Income | \n \n | \n | Affected Line Item\n in \n the Statement Where \n Net Income is Presented | \n \n | ||||||||||
| \n | \n | Year Ended\n December 31, | \n\n | \n | \n | \n | ||||||||||
| \n | \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2015 | \n\n | \n | \n | \n | ||||
| \n \n Fuel derivative contracts \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Fuel contracts-reclassifications of losses into\n earnings (d) \n | \n \n | $ | \n2 | \n\n | \n | $ | \n217 | \n\n | \n | $ | \n604 | \n\n | \n | \n | Aircraft fuel | \n\n |
| \n \n Pension and Postretirement liabilities \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Amortization of unrecognized (gains) losses and prior service cost\n (e) \n | \n \n | \n | 58 | \n\n | \n | \n | 26 | \n\n | \n | \n | 31 | \n\n | \n | \n | Salaries and related costs | \n\n |
| \n \n Investments and other \n | \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 earnings \n | \n \n | \n | \n — | \n\n | \n | \n | (2 | \n) | \n\n | \n | \n — | \n\n | \n | \n | Miscellaneous, net | \n\n |
\n
\n\n
\n\n (a) Prior service credits increased by $0 million,\n $30 million and $0 million and actuarial losses increased\n by approximately $306 million, $560 million and\n $78 million for 2017, 2016 and 2015, respectively.
\n\n (b) This amount represents the reclassification from AOCI to RE of\n the stranded tax effects resulting from the enactment of the Tax\n Act.
\n\n (c) Deferred tax balance relates mainly to Pension and Other\n Postretirement Liabilities.
\n\n (d) The last of the Company’s fuel hedge derivatives\n designated for cash flow hedge accounting expired in December 2016.\n The 2017 amount reclassified from AOCI into fuel expense represents\n hedge losses on December 2016 settled trades, but for which the\n associated fuel purchased in December 2016 was not consumed until\n January 2017. The Company’s current strategy is to not enter\n into transactions to hedge its fuel consumption, although the\n Company regularly reviews its strategy based on market conditions\n and other factors.
\n\n (e) This AOCI component is included in the computation of net\n periodic pension and other postretirement costs (see Note 8 of this\n report for additional information).
\n\n Prior to the release of the deferred income tax valuation allowance\n in the third quarter of 2015, the Company recorded approximately\n $465 million of valuation allowance adjustments in AOCI.\n Subsequent to the release of the deferred income tax valuation\n allowance in 2015, the $465 million debit remained within\n AOCI, of which $180 million related to losses on fuel hedges\n designated for hedge accounting and $285 million related to\n pension and other postretirement liabilities. Accounting rules\n required the adjustments to remain in AOCI as long as the Company\n had fuel derivatives designated for cash flow hedge accounting and\n the Company continues to provide pension and postretirement\n benefits. In 2016, the Company settled all of its fuel hedges and\n has not entered into any new fuel derivative contracts for hedge\n accounting. Accordingly, the Company reclassified the\n $180 million to income tax expense in 2016.
\n| (l) | \nIntangibles—The Company\n has finite-lived and indefinite-lived intangible assets, including\n goodwill. Finite-lived intangible assets are amortized over their\n estimated useful lives. Goodwill and indefinite-lived intangible\n assets are not amortized but are reviewed for impairment annually\n or more frequently if events or circumstances indicate that the\n asset may be impaired. Goodwill and indefinite-lived assets are\n reviewed for impairment on an annual basis as of October 1, or\n on an interim basis whenever a triggering event occurs. See Note 2\n of this report for additional information related to\n intangibles. | \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 NOTE 8 - PENSION AND OTHER POSTRETIREMENT PLANS
\n\n The following summarizes the significant pension and other\n postretirement plans of United:
\n\n Pension Plans
\n\n United maintains two primary defined benefit pension plans, one\n covering certain pilot employees and another covering certain U.S.\n non-pilot employees. Each\n of these plans provide benefits based on a combination of years of\n benefit 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.
\n\n Other Postretirement Plans
\n\n United maintains postretirement medical programs which provide\n medical benefits to certain retirees and eligible dependents, as\n well as life insurance benefits to certain retirees participating\n in the plan. Benefits provided are subject to applicable\n contributions, co-payments, deductibles and other\n limits as described in the specific plan documentation.
\n\n Actuarial assumption changes are reflected as a component of the\n net actuarial gains/(losses) during 2017 and 2016. These amounts\n will be amortized over the average remaining service life of the\n covered active employees or the average life expectancy of inactive\n participants and will impact 2017 and 2016 pension and retiree\n medical expense as described below.
\n\n
\n\n The following table sets forth the reconciliation of the beginning\n and ending balances of the benefit obligation and plan assets, the\n funded status and the amounts recognized in these financial\n statements for the defined benefit and other postretirement plans\n (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, 2017 | \n \n | \n | Year Ended \n December 31, 2016 | \n \n | ||
| \n \n Accumulated benefit obligation: \n | \n \n | $ | \n4,739 | \n\n | \n | $ | \n4,158 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Change in projected benefit obligation: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Projected benefit obligation at beginning of year \n | \n \n | $ | \n5,253 | \n\n | \n | $ | \n4,473 | \n\n |
| \n \n Service cost \n | \n \n | \n | 195 | \n\n | \n | \n | 112 | \n\n |
| \n \n Interest cost \n | \n \n | \n | 220 | \n\n | \n | \n | 200 | \n\n |
| \n \n Actuarial loss \n | \n \n | \n | 525 | \n\n | \n | \n | 738 | \n\n |
| \n \n Gross benefits paid and settlements \n | \n \n | \n | (366) | \n\n | \n | \n | (243) | \n\n |
| \n \n Other \n | \n \n | \n | 25 | \n\n | \n | \n | (27) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Projected benefit obligation at end of year \n | \n \n | $ | \n5,852 | \n\n | \n | $ | \n5,253 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Change in plan assets: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Fair value of plan assets at beginning of year \n | \n \n | $ | \n3,355 | \n\n | \n | $ | \n2,975 | \n\n |
| \n \n Actual return on plan assets \n | \n \n | \n | 510 | \n\n | \n | \n | 230 | \n\n |
| \n \n Employer contributions \n | \n \n | \n | 419 | \n\n | \n | \n | 421 | \n\n |
| \n \n Gross benefits paid and settlements \n | \n \n | \n | (366) | \n\n | \n | \n | (243) | \n\n |
| \n \n Other \n | \n \n | \n | 14 | \n\n | \n | \n | (28) | \n\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 plan assets at end of year \n | \n \n | $ | \n3,932 | \n\n | \n | $ | \n3,355 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Funded status—Net amount recognized \n | \n \n | $ | \n(1,920) | \n\n | \n | $ | \n(1,898) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \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, 2017 | \n\n | \n | December 31, 2016 | \n\n | ||
| \n \n Amounts recognized in the consolidated balance sheets consist\n of: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Noncurrent asset \n | \n \n | $ | \n9 | \n\n | \n | $ | \n2 | \n\n |
| \n \n Current liability \n | \n \n | \n | (8) | \n\n | \n | \n | (8) | \n\n |
| \n \n Noncurrent liability \n | \n \n | \n | (1,921) | \n\n | \n | \n | (1,892) | \n\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 liability \n | \n \n | $ | \n(1,920) | \n\n | \n | $ | \n(1,898) | \n\n |
| \n | \n | \n \n \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 loss consist\n of: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Net actuarial loss \n | \n \n | $ | \n(1,610) | \n\n | \n | $ | \n(1,482) | \n\n |
| \n \n Prior service cost \n | \n \n | \n | (1) | \n\n | \n | \n | (1) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Total accumulated other comprehensive loss \n | \n \n | $ | \n(1,611) | \n\n | \n | $ | \n(1,483) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \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, 2017 | \n \n | \n | Year Ended \n December 31, 2016 | \n \n | ||
| \n \n Change in benefit obligation: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Benefit obligation at beginning of year \n | \n \n | $ | \n1,687 | \n\n | \n | $ | \n2,002 | \n\n |
| \n \n Service cost \n | \n \n | \n | 13 | \n\n | \n | \n | 19 | \n\n |
| \n \n Interest cost \n | \n \n | \n | 66 | \n\n | \n | \n | 86 | \n\n |
| \n \n Plan participants’ contributions \n | \n \n | \n | 68 | \n\n | \n | \n | 69 | \n\n |
| \n \n Benefits paid \n | \n \n | \n | (178) | \n\n | \n | \n | (191) | \n\n |
| \n \n Actuarial loss (gain) \n | \n \n | \n | 40 | \n\n | \n | \n | (165) | \n\n |
| \n \n Plan amendments \n | \n \n | \n | \n — | \n\n | \n | \n | (138) | \n\n |
| \n \n Other \n | \n \n | \n | 14 | \n\n | \n | \n | 5 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Benefit obligation at end of year \n | \n \n | $ | \n1,710 | \n\n | \n | $ | \n1,687 | \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 Change in plan assets: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Fair value of plan assets at beginning of year \n | \n \n | $ | \n55 | \n\n | \n | $ | \n56 | \n\n |
| \n \n Actual return on plan assets \n | \n \n | \n | 1 | \n\n | \n | \n | 2 | \n\n |
| \n \n Employer contributions \n | \n \n | \n | 108 | \n\n | \n | \n | 119 | \n\n |
| \n \n Plan participants’ contributions \n | \n \n | \n | 68 | \n\n | \n | \n | 69 | \n\n |
| \n \n Benefits paid \n | \n \n | \n | (178) | \n\n | \n | \n | (191) | \n\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 plan assets at end of year \n | \n \n | \n | 54 | \n\n | \n | \n | 55 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Funded status—Net amount recognized \n | \n \n | $ | \n(1,656) | \n\n | \n | $ | \n(1,632) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \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, 2017 | \n\n | \n | December 31, 2016 | \n\n | ||
| \n \n Amounts recognized in the consolidated balance sheets consist\n of: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Current liability \n | \n \n | $ | \n(54) | \n\n | \n | $ | \n(51) | \n\n |
| \n \n Noncurrent liability \n | \n \n | \n | (1,602) | \n\n | \n | \n | (1,581) | \n\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 liability \n | \n \n | $ | \n(1,656) | \n\n | \n | $ | \n(1,632) | \n\n |
| \n | \n | \n \n \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 |
| \n \n Net actuarial gain \n | \n \n | $ | \n301 | \n\n | \n | $ | \n384 | \n\n |
| \n \n Prior service credit \n | \n \n | \n | 208 | \n\n | \n | \n | 245 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Total accumulated other comprehensive income \n | \n \n | $ | \n509 | \n\n | \n | $ | \n629 | \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 information relates to all pension plans with an\n accumulated benefit obligation and a projected benefit obligation\n in excess of plan assets at December 31 (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | \n 2017 | \n\n | \n | \n 2016 | \n\n | ||
| \n \n Projected benefit obligation \n | \n \n | $ | \n5,637 | \n\n | \n | $ | \n5,025 | \n\n |
| \n \n Accumulated benefit obligation \n | \n \n | \n | 4,567 | \n\n | \n | \n | 3,985 | \n\n |
| \n \n Fair value of plan assets \n | \n \n | \n | 3,709 | \n\n | \n | \n | 3,164 | \n\n |
\n
\n\n Net periodic benefit cost for the years ended December 31\n included the following 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 | 2017 | \n\n | \n | 2016 | \n\n | \n | 2015 | \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 | ||||||
| \n \n Service cost \n | \n \n | $ | \n195 | \n\n | \n | $ | \n13 | \n\n | \n | $ | \n112 | \n\n | \n | $ | \n19 | \n\n | \n | $ | \n124 | \n\n | \n | $ | \n21 | \n\n |
| \n \n Interest cost \n | \n \n | \n | 220 | \n\n | \n | \n | 66 | \n\n | \n | \n | 200 | \n\n | \n | \n | 86 | \n\n | \n | \n | 200 | \n\n | \n | \n | 82 | \n\n |
| \n \n Expected return on plan assets \n | \n \n | \n | (243) | \n\n | \n | \n | (2) | \n\n | \n | \n | (216) | \n\n | \n | \n | (2) | \n\n | \n | \n | (194) | \n\n | \n | \n | (2) | \n\n |
| \n \n Curtailment gain \n | \n \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | (107) | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n |
| Amortization of unrecognized actuarial (gain)\n loss | \n\n | \n | 128 | \n\n | \n | \n | (33) | \n\n | \n | \n | 76 | \n\n | \n | \n | (19) | \n\n | \n | \n | 85 | \n\n | \n | \n | (22) | \n\n |
| Amortization of prior service credits | \n\n | \n | \n — | \n\n | \n | \n | (37) | \n\n | \n | \n | \n — | \n\n | \n | \n | (31) | \n\n | \n | \n | \n — | \n\n | \n | \n | (32) | \n\n |
| \n \n Other \n | \n \n | \n | 5 | \n\n | \n | \n | \n — | \n\n | \n | \n | 5 | \n\n | \n | \n | \n — | \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 | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 (credit) \n | \n \n | $ | \n305 | \n\n | \n | $ | \n7 | \n\n | \n | $ | \n177 | \n\n | \n | $ | \n(54) | \n\n | \n | $ | \n219 | \n\n | \n | $ | \n47 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \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 14 of this report for additional information related to\n the curtailment gain recorded in 2016.
\n\n The estimated amounts that will be amortized in 2018 out of\n accumulated other comprehensive income (loss) into net periodic\n benefit cost are as follows (in 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 \n Actuarial (gain) loss \n | \n \n | $ | \n132 | \n\n | \n | $ | \n(32) | \n\n |
| \n \n Prior service (credit) cost \n | \n \n | \n | \n — | \n\n | \n | \n | (37) | \n\n |
\n The assumptions used for the benefit plans were as follows:
\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 Assumptions used to determine benefit obligations \n | \n \n | \n | \n\n 2017 | \n\n | \n | \n | \n\n 2016 | \n\n |
| \n \n Discount rate \n | \n \n | \n | 3.65% | \n\n | \n | \n | 4.18% | \n\n |
| \n \n Rate of compensation increase \n | \n \n | \n | 3.89% | \n\n | \n | \n | 3.54% | \n\n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Assumptions used to determine net expense \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Discount rate \n | \n \n | \n | 4.19% | \n\n | \n | \n | 4.58% | \n\n |
| \n \n Expected return on plan assets \n | \n \n | \n | 7.02% | \n\n | \n | \n | 7.04% | \n\n |
| \n \n Rate of compensation increase \n | \n \n | \n | 3.54% | \n\n | \n | \n | 3.53% | \n\n |
\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n \n | \n \n | \n Other Postretirement Benefits | \n\n | |||||
| \n \n Assumptions used to determine benefit obligations \n | \n \n | \n 2017 | \n\n | \n | \n 2016 | \n\n | ||
| \n \n Discount rate \n | \n \n | \n | 3.63% | \n\n | \n | \n | 4.07% | \n\n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Assumptions used to determine net expense \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Discount rate \n | \n \n | \n | 4.07% | \n\n | \n | \n | 4.49% | \n\n |
| \n \n Expected return on plan assets \n | \n \n | \n | 3.00% | \n\n | \n | \n | 3.00% | \n\n |
| \n \n Health care cost trend rate assumed for next year \n | \n \n | \n | 6.25% | \n\n | \n | \n | 6.50% | \n\n |
| \n \n Rate to which the cost trend rate is assumed to decline (ultimate\n trend rate in 2023) \n | \n \n | \n | 5.00% | \n\n | \n | \n | 5.00% | \n\n |
\n The Company used the Society of Actuaries’ 2014 mortality\n tables, modified to reflect the Social Security Administration\n Trustee’s Report on current projections regarding expected\n longevity improvements.
\n\n The Company selected the 2017 discount rate for substantially all\n of its plans by using a hypothetical portfolio of high quality\n bonds at December 31, 2017, that would provide the necessary\n cash flows to match projected benefit payments.
\n\n We develop our expected long-term rate of return assumption for our\n defined benefit plans based on historical experience and by\n evaluating input from the trustee managing the plans’\n assets. Our expected long-term rate of return on plan assets\n for these plans is based on a target allocation of assets, which is\n based on our goal of earning the highest rate of return while\n maintaining risk at acceptable levels. The plans strive to\n have assets sufficiently diversified so that adverse or unexpected\n results from one security class will not have an unduly detrimental\n impact on the entire portfolio. Plan fiduciaries regularly\n review our actual asset allocation and the pension plans’\n investments are periodically rebalanced to our targeted allocation\n when 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 Expected Long-Term \nRate of Return \n | \n \n | ||
| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Equity securities \n | \n \n | \n | 27-42 % | \n\n | \n | \n | \n 9.5 % | \n\n |
| \n \n Fixed-income securities \n | \n \n | \n | 30-40 | \n\n | \n | \n | \n 5.5 | \n\n |
| \n \n Alternatives \n | \n \n | \n | 10-25 | \n\n | \n | \n | \n 7.3 | \n\n |
| \n \n Other \n | \n \n | \n | 0-10 | \n\n | \n | \n | \n 7.3 | \n\n |
\n One-hundred percent of\n other postretirement plan assets are invested in a deposit\n administration fund.
\n\n Assumed health care cost trend rates have a significant effect on\n the amounts reported for the other postretirement plans. A 1%\n change in the assumed health care trend rate for the Company would\n have the following additional effects (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 1% Increase | \n\n | \n | 1% Decrease | \n\n | ||
| \n \n Effect on total service and interest cost for the year ended\n December 31, 2017 \n | \n \n | $ | \n11 | \n\n | \n | $ | \n(8) | \n\n |
| \n \n Effect on postretirement benefit obligation at December 31,\n 2017 \n | \n \n | \n | 170 | \n\n | \n | \n | (149) | \n\n |
\n A one percentage point decrease in the weighted average discount\n rate would increase the Company’s postretirement benefit\n liability by approximately $185 million and increase the\n estimated 2017 benefits expense by approximately\n $8 million.
\n\n
\n\n Fair Value Information. Accounting standards require\n us to use valuation techniques to measure fair value that maximize\n the use of observable inputs and minimize the use of unobservable\n inputs. These inputs are prioritized as follows:
\n\n
\n| \n | \n | \n |
| \n \n Level 1 \n | \n \n | Unadjusted quoted prices in active markets for\n assets or liabilities identical to those to be reported at fair\n value | \n
| \n \n Level 2 \n | \n \n | Other inputs that are observable directly or\n indirectly, such as quoted prices for similar assets or liabilities\n or market-corroborated inputs | \n
| \n \n Level 3 \n | \n \n | Unobservable inputs for which there is little\n or no market data and which require us to develop our own\n assumptions about how market participants would price the assets or\n liabilities | \n
\n Assets and liabilities measured at fair value are based on the\n valuation techniques identified in the tables below. The valuation\n techniques are as follows:
\n\n (a) Market approach. Prices and other relevant information\n generated by market transactions involving identical or comparable\n assets and liabilities; and
\n\n (b) Income approach. Techniques to convert future amounts to\n a single current value based on market expectations (including\n present value techniques, option-pricing and excess earnings\n models).
\n\n The following tables present information about United’s\n pension and other postretirement plan assets at December 31\n (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 2017 | \n\n | \n | \n | \n | \n\n | 2016 | \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 \n Equity securities funds \n | \n \n | $ | \n1,406 | \n\n | \n | $ | \n269 | \n\n | \n | $ | \n133 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n1,004 | \n\n | \n | \n | \n | \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 Fixed-income securities \n | \n \n | \n | 1,470 | \n\n | \n | \n | — | \n\n | \n | \n | 834 | \n\n | \n | \n | 18 | \n\n | \n | \n | 618 | \n\n | \n | \n | \n | \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 Alternatives \n | \n \n | \n | 637 | \n\n | \n | \n | — | \n\n | \n | \n | — | \n\n | \n | \n | 139 | \n\n | \n | \n | 498 | \n\n | \n | \n | \n | \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 Other investments \n | \n \n | \n | 419 | \n\n | \n | \n | 32 | \n\n | \n | \n | 124 | \n\n | \n | \n | 172 | \n\n | \n | \n | 91 | \n\n | \n | \n | \n | \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 \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n | \n | \n | \n\n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 | $ | \n3,932 | \n\n | \n | $ | \n301 | \n\n | \n | $ | \n1,091 | \n\n | \n | $ | \n329 | \n\n | \n | $ | \n2,211 | \n\n | \n | \n | \n | \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 \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n | \n | \n | \n\n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| Other Postretirement Benefit Plan Assets: | \n\n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n\n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| Deposit administration fund | \n\n | $ | \n54 | \n\n | \n | $ | \n— | \n\n | \n | $ | \n— | \n\n | \n | $ | \n54 | \n\n | \n | $ | \n— | \n\n | \n | \n | \n | \n | \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 \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n | \n | \n | \n\n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \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 relevant accounting standards, certain\n investments that are measured at fair value using the net asset\n value (“NAV”) per share (or its equivalent) have not\n been classified in the fair value hierarchy. These investments are\n commingled funds that invest in fixed-income instruments including\n bonds, debt securities, and other similar instruments issued by\n various U.S. and non-U.S.\n public- or private-sector entities. Redemption periods for these\n investments range from daily to annually.
\n\n Equity and Fixed-Income. Equities include investments in\n both developed market and emerging market equity securities.\n Fixed-income includes primarily U.S. and non-U.S. government fixed-income\n securities and U.S. and non-U.S corporate fixed-income\n securities.
\n\n Deposit Administration Fund. This investment is a stable\n value investment product structured to provide investment\n income.
\n\n Alternatives. Alternative investments consist primarily of\n investments in hedge funds, real estate and private equity\n interests.
\n\n Other investments. Other investments consist of cash,\n insurance contracts and other funds.
\n\n
\n\n The reconciliation of United’s defined benefit plan assets\n measured at fair value using unobservable inputs (Level 3) for the\n years ended December 31, 2017 and 2016 is as follows (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 2017 | \n\n | \n | 2016 | \n\n | ||
| \n \n Balance at beginning of year \n | \n \n | $ | \n287 | \n\n | \n | $ | \n208 | \n\n |
| \n \n Actual return on plan assets: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Sold during the year \n | \n \n | \n | 7 | \n\n | \n | \n | 4 | \n\n |
| \n \n Held at year end \n | \n \n | \n | 16 | \n\n | \n | \n | 3 | \n\n |
| \n \n Purchases, sales, issuances and settlements (net) \n | \n \n | \n | 73 | \n\n | \n | \n | 72 | \n\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 end of year \n | \n \n | $ | \n383 | \n\n | \n | $ | \n287 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
\n Funding requirements for tax-qualified defined benefit pension\n plans are determined by government regulations. United’s\n contributions reflected above have satisfied its required\n contributions through the 2017 calendar year. In 2018, employer\n anticipated contributions to all of United’s pension and\n postretirement plans are at least $420 million and\n approximately $109 million, respectively.
\n\n The estimated future benefit payments, net of expected participant\n contributions, in United’s pension plans and other\n postretirement benefit plans as of December 31, 2017 are as\n follows (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | \n Pension | \n\n | \n | Other \n Postretirement | \n \n | \n | \n Other Postretirement— \n subsidy receipts | \n \n | |||
| \n \n 2018 \n | \n \n | $ | \n305 | \n\n | \n | $ | \n113 | \n\n | \n | $ | \n6 | \n\n |
| \n \n 2019 \n | \n \n | \n | 326 | \n\n | \n | \n | 118 | \n\n | \n | \n | 6 | \n\n |
| \n \n 2020 \n | \n \n | \n | 331 | \n\n | \n | \n | 121 | \n\n | \n | \n | 6 | \n\n |
| \n \n 2021 \n | \n \n | \n | 357 | \n\n | \n | \n | 124 | \n\n | \n | \n | 7 | \n\n |
| \n \n 2022 \n | \n \n | \n | 369 | \n\n | \n | \n | 126 | \n\n | \n | \n | 7 | \n\n |
| \n \n Years 2023 – 2027 \n | \n \n | \n | 1,912 | \n\n | \n | \n | 646 | \n\n | \n | \n | 43 | \n\n |
\n Defined Contribution Plans
\n\n Depending upon the employee group, employer contributions consist\n of matching contributions and/or non-elective employer contributions.\n United’s employer contribution percentages vary from 1% to\n 16% of eligible earnings depending on the terms of each plan.\n United recorded contributions to its defined contribution plans of\n $656 million, $592 million and $522 million in the\n years ended December 31, 2017, 2016 and 2015,\n respectively.
\n\n
\n\n Multi-Employer Plans
\n\n United’s participation in the IAM National Pension Plan\n (“IAM Plan”) for the annual period ended\n December 31, 2017 is outlined in the table below. There have\n been no significant changes that affect the comparability of 2017\n and 2016 contributions. The risks of participating in these\n multi-employer plans are different from single-employer plans, as\n United may be subject to additional risks that others do not meet\n their obligations, which in certain circumstances could revert to\n United. The IAM Plan reported $414 million in employers’\n contributions for the year ended December 31, 2016. For 2016,\n the Company’s contributions to the IAM Plan represented more\n than 5% of total contributions to the IAM Plan.
\n\n
\n| \n | \n | \n |
| \n \n Pension Fund \n | \n \n | IAM National Pension Fund | \n
| \n \n EIN/ Pension Plan Number \n | \n \n | 51-6031295 - 002 | \n
| \n \n Pension Protection Act Zone Status (2017 and 2016) \n | \n \n | Green Zone. Plans in the green zone are at\n least 80 percent funded. | \n
| \n \n FIP/RP Status Pending/Implemented \n | \n \n | No | \n
| \n \n United’s Contributions \n | \n \n | $50 million, $41 million and\n $40 million in the years ended December 31, 2017, 2016\n and 2015, respectively | \n
| \n \n Surcharge Imposed \n | \n \n | No | \n
| \n \n Expiration Date of Collective Bargaining Agreement \n | \n \n | N/A | \n
\n At the date the Consolidated Financial Statements were issued,\n Forms 5500 were not available for the plan year ending in 2017.
\n\n Profit Sharing
\n\n Substantially all employees participate in profit sharing based on\n a percentage of pre-tax\n earnings, excluding special charges, profit sharing expense and\n share-based compensation. Profit sharing percentages range from 5%\n to 20% depending on the work group, and in some cases profit\n sharing percentages vary above and below certain pre-tax margin thresholds. Eligible\n U.S. co-workers in each\n participating work group receive a profit sharing payout using a\n formula based on the 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 $349 million, $628 million and $698 million in 2017,\n 2016 and 2015, respectively. Profit sharing expense is recorded as\n a component of Salaries and related costs in the Company’s\n statements of consolidated operations.
\n\n United’s plan assets are allocated within the following\n guidelines:
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | \n Percent of Total \n | \n \n | \n | \n Expected Long-Term \nRate of Return \n | \n \n | ||
| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Equity securities \n | \n \n | \n | 27-42 % | \n\n | \n | \n | \n 9.5 % | \n\n |
| \n \n Fixed-income securities \n | \n \n | \n | 30-40 | \n\n | \n | \n | \n 5.5 | \n\n |
| \n \n Alternatives \n | \n \n | \n | 10-25 | \n\n | \n | \n | \n 7.3 | \n\n |
| \n \n Other \n | \n \n | \n | 0-10 | \n\n | \n | \n | \n 7.3 | \n\n |
\n | \n Pension Benefits | \n\n | ||||||
| \n | \n | December 31, 2017 | \n\n | \n | December 31, 2016 | \n\n | ||
| \n \n Amounts recognized in the consolidated balance sheets consist\n of: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Noncurrent asset \n | \n \n | $ | \n9 | \n\n | \n | $ | \n2 | \n\n |
| \n \n Current liability \n | \n \n | \n | (8) | \n\n | \n | \n | (8) | \n\n |
| \n \n Noncurrent liability \n | \n \n | \n | (1,921) | \n\n | \n | \n | (1,892) | \n\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 liability \n | \n \n | $ | \n(1,920) | \n\n | \n | $ | \n(1,898) | \n\n |
| \n | \n | \n \n \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 loss consist\n of: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Net actuarial loss \n | \n \n | $ | \n(1,610) | \n\n | \n | $ | \n(1,482) | \n\n |
| \n \n Prior service cost \n | \n \n | \n | (1) | \n\n | \n | \n | (1) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Total accumulated other comprehensive loss \n | \n \n | $ | \n(1,611) | \n\n | \n | $ | \n(1,483) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \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, 2017 | \n\n | \n | December 31, 2016 | \n\n | ||
| \n \n Amounts recognized in the consolidated balance sheets consist\n of: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Current liability \n | \n \n | $ | \n(54) | \n\n | \n | $ | \n(51) | \n\n |
| \n \n Noncurrent liability \n | \n \n | \n | (1,602) | \n\n | \n | \n | (1,581) | \n\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 liability \n | \n \n | $ | \n(1,656) | \n\n | \n | $ | \n(1,632) | \n\n |
| \n | \n | \n \n \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 |
| \n \n Net actuarial gain \n | \n \n | $ | \n301 | \n\n | \n | $ | \n384 | \n\n |
| \n \n Prior service credit \n | \n \n | \n | 208 | \n\n | \n | \n | 245 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Total accumulated other comprehensive income \n | \n \n | $ | \n509 | \n\n | \n | $ | \n629 | \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 provides a reconciliation of\n cash, cash equivalents and restricted cash reported within the\n consolidated balance sheets that sum to the total of the same such\n amounts shown in the 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 December 31, | \n\n | \n | At December 31, | \n\n | ||||||||||||||||||
| \n | \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2015 | \n\n | \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2015 | \n\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 \n Cash and cash equivalents \n | \n \n | $ | \n1,482 | \n\n | \n | $ | \n2,179 | \n\n | \n | $ | \n3,006 | \n\n | \n | $ | \n1,476 | \n\n | \n | $ | \n2,173 | \n\n | \n | $ | \n3,000 | \n\n |
| \n \n Restricted cash included in Prepaid expenses and other \n | \n \n | \n | 18 | \n\n | \n | \n | — | \n\n | \n | \n | 2 | \n\n | \n | \n | 18 | \n\n | \n | \n | — | \n\n | \n | \n | 2 | \n\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 \n Restricted cash \n | \n \n | \n | 91 | \n\n | \n | \n | 124 | \n\n | \n | \n | 204 | \n\n | \n | \n | 91 | \n\n | \n | \n | 124 | \n\n | \n | \n | 204 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \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\n shown in the statement of consolidated cash flows | \n\n | $ | \n1,591 | \n\n | \n | $ | \n2,303 | \n\n | \n | $ | \n3,212 | \n\n | \n | $ | \n1,585 | \n\n | \n | $ | \n2,297 | \n\n | \n | $ | \n3,206 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \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 provides information related to UAL’s\n share-based compensation plan cost for the years ended\n December 31 (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | \n 2017 | \n\n | \n | \n 2016 | \n\n | \n | \n 2015 | \n\n | |||
| \n \n Compensation cost: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n RSUs \n | \n \n | $ | \n63 | \n\n | \n | $ | \n58 | \n\n | \n | $ | \n52 | \n\n |
| \n \n Restricted stock \n | \n \n | \n | 8 | \n\n | \n | \n | 11 | \n\n | \n | \n | 6 | \n\n |
| \n \n Stock options \n | \n \n | \n | 2 | \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 Total \n | \n \n | $ | \n73 | \n\n | \n | $ | \n70 | \n\n | \n | $ | \n58 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \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 income tax provision (benefit) differed from amounts computed\n at the statutory federal income tax rate and consisted of the\n following significant components, as follows (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n UAL \n | \n \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2015 | \n\n | |||
| \n \n Income tax provision at statutory rate \n | \n \n | $ | \n1,050 | \n\n | \n | $ | \n1,337 | \n\n | \n | $ | \n1,477 | \n\n |
| \n \n State income taxes, net of federal income tax benefit \n | \n \n | \n | 29 | \n\n | \n | \n | 38 | \n\n | \n | \n | 38 | \n\n |
| \n \n Foreign tax rate differential \n | \n \n | \n | (43) | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n |
| \n \n Foreign income taxes \n | \n \n | \n | 3 | \n\n | \n | \n | 3 | \n\n | \n | \n | 4 | \n\n |
| \n \n Nondeductible employee meals \n | \n \n | \n | 17 | \n\n | \n | \n | 16 | \n\n | \n | \n | 15 | \n\n |
| \n \n Impact of Tax Act \n | \n \n | \n | (192) | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n |
| \n \n Income tax adjustment from AOCI \n | \n \n | \n | \n — | \n\n | \n | \n | 180 | \n\n | \n | \n | \n — | \n\n |
| \n \n State rate change \n | \n \n | \n | 12 | \n\n | \n | \n | (12) | \n\n | \n | \n | \n — | \n\n |
| \n \n Valuation allowance \n | \n \n | \n | (16) | \n\n | \n | \n | 20 | \n\n | \n | \n | (4,662) | \n\n |
| \n \n Other, net \n | \n \n | \n | 8 | \n\n | \n | \n | (26) | \n\n | \n | \n | 7 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n | \n | $ | \n868 | \n\n | \n | $ | \n1,556 | \n\n | \n | $ | \n(3,121) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Current \n | \n \n | $ | \n(77) | \n\n | \n | $ | \n(92) | \n\n | \n | $ | \n56 | \n\n |
| \n \n Deferred \n | \n \n | \n | 945 | \n\n | \n | \n | 1,648 | \n\n | \n | \n | (3,177) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n | \n | $ | \n868 | \n\n | \n | $ | \n1,556 | \n\n | \n | $ | \n(3,121) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \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 | 2017 | \n\n | \n | 2016 | \n\n | \n | 2015 | \n\n | |||
| \n \n Income tax provision at statutory rate \n | \n \n | $ | \n1,051 | \n\n | \n | $ | \n1,338 | \n\n | \n | $ | \n1,477 | \n\n |
| \n \n State income taxes, net of federal income tax \n | \n \n | \n | 29 | \n\n | \n | \n | 38 | \n\n | \n | \n | 38 | \n\n |
| \n \n Foreign tax rate differential \n | \n \n | \n | (43) | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n |
| \n \n Foreign income taxes \n | \n \n | \n | 3 | \n\n | \n | \n | 3 | \n\n | \n | \n | 4 | \n\n |
| \n \n Nondeductible employee meals \n | \n \n | \n | 17 | \n\n | \n | \n | 16 | \n\n | \n | \n | 15 | \n\n |
| \n \n Impact of Tax Act \n | \n \n | \n | (209) | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n |
| \n \n Income tax adjustment from AOCI \n | \n \n | \n | \n — | \n\n | \n | \n | 180 | \n\n | \n | \n | \n — | \n\n |
| \n \n State rate change \n | \n \n | \n | 12 | \n\n | \n | \n | (12) | \n\n | \n | \n | \n — | \n\n |
| \n \n Valuation allowance \n | \n \n | \n | (16) | \n\n | \n | \n | 20 | \n\n | \n | \n | (4,621) | \n\n |
| \n \n Other, net \n | \n \n | \n | 8 | \n\n | \n | \n | (25) | \n\n | \n | \n | 7 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n | \n | $ | \n852 | \n\n | \n | $ | \n1,558 | \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 | \n \n \n | \n \n \n \n | \n \n |
| \n \n Current \n | \n \n | $ | \n(77) | \n\n | \n | $ | \n(92) | \n\n | \n | $ | \n56 | \n\n |
| \n \n Deferred \n | \n \n | \n | 929 | \n\n | \n | \n | 1,650 | \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 \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n | \n | $ | \n852 | \n\n | \n | $ | \n1,558 | \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 | \n \n \n | \n \n \n \n | \n \n |
\n The estimated future benefit payments, net of expected participant\n contributions, in United’s pension plans and other\n postretirement benefit plans as of December 31, 2017 are as\n follows (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | \n Pension | \n\n | \n | Other \n Postretirement | \n \n | \n | \n Other Postretirement— \n subsidy receipts | \n \n | |||
| \n \n 2018 \n | \n \n | $ | \n305 | \n\n | \n | $ | \n113 | \n\n | \n | $ | \n6 | \n\n |
| \n \n 2019 \n | \n \n | \n | 326 | \n\n | \n | \n | 118 | \n\n | \n | \n | 6 | \n\n |
| \n \n 2020 \n | \n \n | \n | 331 | \n\n | \n | \n | 121 | \n\n | \n | \n | 6 | \n\n |
| \n \n 2021 \n | \n \n | \n | 357 | \n\n | \n | \n | 124 | \n\n | \n | \n | 7 | \n\n |
| \n \n 2022 \n | \n \n | \n | 369 | \n\n | \n | \n | 126 | \n\n | \n | \n | 7 | \n\n |
| \n \n Years 2023 – 2027 \n | \n \n | \n | 1,912 | \n\n | \n | \n | 646 | \n\n | \n | \n | 43 | \n\n |
\n Net periodic benefit cost for the years ended December 31\n included the following 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 | 2017 | \n\n | \n | 2016 | \n\n | \n | 2015 | \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 | ||||||
| \n \n Service cost \n | \n \n | $ | \n195 | \n\n | \n | $ | \n13 | \n\n | \n | $ | \n112 | \n\n | \n | $ | \n19 | \n\n | \n | $ | \n124 | \n\n | \n | $ | \n21 | \n\n |
| \n \n Interest cost \n | \n \n | \n | 220 | \n\n | \n | \n | 66 | \n\n | \n | \n | 200 | \n\n | \n | \n | 86 | \n\n | \n | \n | 200 | \n\n | \n | \n | 82 | \n\n |
| \n \n Expected return on plan assets \n | \n \n | \n | (243) | \n\n | \n | \n | (2) | \n\n | \n | \n | (216) | \n\n | \n | \n | (2) | \n\n | \n | \n | (194) | \n\n | \n | \n | (2) | \n\n |
| \n \n Curtailment gain \n | \n \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | (107) | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n |
| Amortization of unrecognized actuarial (gain)\n loss | \n\n | \n | 128 | \n\n | \n | \n | (33) | \n\n | \n | \n | 76 | \n\n | \n | \n | (19) | \n\n | \n | \n | 85 | \n\n | \n | \n | (22) | \n\n |
| Amortization of prior service credits | \n\n | \n | \n — | \n\n | \n | \n | (37) | \n\n | \n | \n | \n — | \n\n | \n | \n | (31) | \n\n | \n | \n | \n — | \n\n | \n | \n | (32) | \n\n |
| \n \n Other \n | \n \n | \n | 5 | \n\n | \n | \n | \n — | \n\n | \n | \n | 5 | \n\n | \n | \n | \n — | \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 | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 (credit) \n | \n \n | $ | \n305 | \n\n | \n | $ | \n7 | \n\n | \n | $ | \n177 | \n\n | \n | $ | \n(54) | \n\n | \n | $ | \n219 | \n\n | \n | $ | \n47 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \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 sets forth the reconciliation of the beginning\n and ending balances of the benefit obligation and plan assets, the\n funded status and the amounts recognized in these financial\n statements for the defined benefit and other postretirement plans\n (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, 2017 | \n \n | \n | Year Ended \n December 31, 2016 | \n \n | ||
| \n \n Accumulated benefit obligation: \n | \n \n | $ | \n4,739 | \n\n | \n | $ | \n4,158 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Change in projected benefit obligation: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Projected benefit obligation at beginning of year \n | \n \n | $ | \n5,253 | \n\n | \n | $ | \n4,473 | \n\n |
| \n \n Service cost \n | \n \n | \n | 195 | \n\n | \n | \n | 112 | \n\n |
| \n \n Interest cost \n | \n \n | \n | 220 | \n\n | \n | \n | 200 | \n\n |
| \n \n Actuarial loss \n | \n \n | \n | 525 | \n\n | \n | \n | 738 | \n\n |
| \n \n Gross benefits paid and settlements \n | \n \n | \n | (366) | \n\n | \n | \n | (243) | \n\n |
| \n \n Other \n | \n \n | \n | 25 | \n\n | \n | \n | (27) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Projected benefit obligation at end of year \n | \n \n | $ | \n5,852 | \n\n | \n | $ | \n5,253 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Change in plan assets: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Fair value of plan assets at beginning of year \n | \n \n | $ | \n3,355 | \n\n | \n | $ | \n2,975 | \n\n |
| \n \n Actual return on plan assets \n | \n \n | \n | 510 | \n\n | \n | \n | 230 | \n\n |
| \n \n Employer contributions \n | \n \n | \n | 419 | \n\n | \n | \n | 421 | \n\n |
| \n \n Gross benefits paid and settlements \n | \n \n | \n | (366) | \n\n | \n | \n | (243) | \n\n |
| \n \n Other \n | \n \n | \n | 14 | \n\n | \n | \n | (28) | \n\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 plan assets at end of year \n | \n \n | $ | \n3,932 | \n\n | \n | $ | \n3,355 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Funded status—Net amount recognized \n | \n \n | $ | \n(1,920) | \n\n | \n | $ | \n(1,898) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \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, 2017 | \n \n | \n | Year Ended \n December 31, 2016 | \n \n | ||
| \n \n Change in benefit obligation: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Benefit obligation at beginning of year \n | \n \n | $ | \n1,687 | \n\n | \n | $ | \n2,002 | \n\n |
| \n \n Service cost \n | \n \n | \n | 13 | \n\n | \n | \n | 19 | \n\n |
| \n \n Interest cost \n | \n \n | \n | 66 | \n\n | \n | \n | 86 | \n\n |
| \n \n Plan participants’ contributions \n | \n \n | \n | 68 | \n\n | \n | \n | 69 | \n\n |
| \n \n Benefits paid \n | \n \n | \n | (178) | \n\n | \n | \n | (191) | \n\n |
| \n \n Actuarial loss (gain) \n | \n \n | \n | 40 | \n\n | \n | \n | (165) | \n\n |
| \n \n Plan amendments \n | \n \n | \n | \n — | \n\n | \n | \n | (138) | \n\n |
| \n \n Other \n | \n \n | \n | 14 | \n\n | \n | \n | 5 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Benefit obligation at end of year \n | \n \n | $ | \n1,710 | \n\n | \n | $ | \n1,687 | \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 Change in plan assets: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Fair value of plan assets at beginning of year \n | \n \n | $ | \n55 | \n\n | \n | $ | \n56 | \n\n |
| \n \n Actual return on plan assets \n | \n \n | \n | 1 | \n\n | \n | \n | 2 | \n\n |
| \n \n Employer contributions \n | \n \n | \n | 108 | \n\n | \n | \n | 119 | \n\n |
| \n \n Plan participants’ contributions \n | \n \n | \n | 68 | \n\n | \n | \n | 69 | \n\n |
| \n \n Benefits paid \n | \n \n | \n | (178) | \n\n | \n | \n | (191) | \n\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 plan assets at end of year \n | \n \n | \n | 54 | \n\n | \n | \n | 55 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Funded status—Net amount recognized \n | \n \n | $ | \n(1,656) | \n\n | \n | $ | \n(1,632) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
\n
\n
\n
\n Activity related to the accruals for severance and medical costs\n and future lease payments on permanently grounded aircraft is as\n follows (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Severance/ \n Benefit Costs | \n \n | \n | Permanently \n Grounded Aircraft | \n \n | ||
| \n \n Balance at December 31, 2014 \n | \n \n | $ | \n109 | \n\n | \n | $ | \n102 | \n\n |
| \n \n Accrual \n | \n \n | \n | 107 | \n\n | \n | \n | 30 | \n\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 \n | \n \n |
| \n \n Balance at December 31, 2015 \n | \n \n | \n | 27 | \n\n | \n | \n | 78 | \n\n |
| \n \n Accrual and related adjustments \n | \n \n | \n | 37 | \n\n | \n | \n | (17) | \n\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 \n | \n \n |
| \n \n Balance at December 31, 2016 \n | \n \n | \n | 14 | \n\n | \n | \n | 41 | \n\n |
| \n \n Accrual \n | \n \n | \n | 116 | \n\n | \n | \n | (4) | \n\n |
| \n \n Payments \n | \n \n | \n | (93) | \n\n | \n | \n | (15) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Balance at December 31, 2017 \n | \n \n | $ | \n37 | \n\n | \n | $ | \n22 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
Schedule II
\nValuation and Qualifying Accounts
\nFor the Years Ended December 31, 2017, 2016\n and 2015
\n\n
\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 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 and \n Expenses | \n \n | \n | Deductions \n (a) | \n \n | \n | Other | \n\n | \n | Balance at \n End of \n Period | \n \n | |||||
| \n \n Allowance for doubtful 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 \n 2017 \n | \n \n | $ | \n10 | \n\n | \n | $ | \n20 | \n\n | \n | $ | \n23 | \n\n | \n | $ | \n\n — | \n\n | \n | $ | \n7 | \n\n |
| \n \n 2016 \n | \n \n | \n | 18 | \n\n | \n | \n | 18 | \n\n | \n | \n | 26 | \n\n | \n | \n | \n — | \n\n | \n | \n | 10 | \n\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 | \n | 18 | \n\n |
| \n \n Obsolescence allowance—spare parts—UAL and\n United: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n 2017 \n | \n \n | $ | \n295 | \n\n | \n | $ | \n75 | \n\n | \n | $ | \n17 | \n\n | \n | $ | \n1 | \n\n | \n | $ | \n354 | \n\n |
| \n \n 2016 \n | \n \n | \n | 235 | \n\n | \n | \n | 61 | \n\n | \n | \n | 16 | \n\n | \n | \n | 15 | \n\n | \n | \n | 295 | \n\n |
| \n \n 2015 \n | \n \n | \n | 169 | \n\n | \n | \n | 38 | \n\n | \n | \n | \n — | \n\n | \n | \n | 28 | \n\n | \n | \n | 235 | \n\n |
| \n \n Valuation allowance for 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 \n 2017 \n | \n \n | $ | \n68 | \n\n | \n | $ | \n11 | \n\n | \n | $ | \n27 | \n\n | \n | $ | \n11 | \n\n | \n | $ | \n63 | \n\n |
| \n \n 2016 \n | \n \n | \n | 48 | \n\n | \n | \n | 47 | \n\n | \n | \n | 27 | \n\n | \n | \n | \n — | \n\n | \n | \n | 68 | \n\n |
| \n \n 2015 \n | \n \n | \n | 4,751 | \n\n | \n | \n | \n — | \n\n | \n | \n | 4,703 | \n\n | \n | \n | \n — | \n\n | \n | \n | 48 | \n\n |
| \n \n Valuation allowance for deferred tax\n 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 \n 2017 \n | \n \n | $ | \n68 | \n\n | \n | $ | \n11 | \n\n | \n | $ | \n27 | \n\n | \n | $ | \n11 | \n\n | \n | $ | \n63 | \n\n |
| \n \n 2016 \n | \n \n | \n | 48 | \n\n | \n | \n | 47 | \n\n | \n | \n | 27 | \n\n | \n | \n | \n — | \n\n | \n | \n | 68 | \n\n |
| \n \n 2015 \n | \n \n | \n | 4,721 | \n\n | \n | \n | \n — | \n\n | \n | \n | 4,673 | \n\n | \n | \n | \n — | \n\n | \n | \n | 48 | \n\n |
\n
\n\n (a) Deduction from reserve for purpose for which reserve was\n created.
\n\n NOTE 3 – COMMON STOCKHOLDERS’ EQUITY AND PREFERRED\n SECURITIES
\n\n In 2017, UAL repurchased approximately 28 million shares of\n UAL common stock for $1.8 billion, completing its July 2016\n repurchase authorization. In December 2017, UAL’s Board of\n Directors authorized a new $3.0 billion share repurchase\n program to acquire UAL’s common stock. As of\n December 31, 2017, the Company had approximately\n $3.0 billion remaining to purchase shares under its existing\n share repurchase authority. UAL may repurchase shares through the\n open 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 stockholder\n matters and issuer purchases of equity securities, of this report\n for additional information.
\n\n
\n\n In 2017, the Company retired 25 million treasury shares that\n were originally acquired at an average cost of approximately $63\n per share.
\n\n At December 31, 2017, approximately 10 million shares of\n UAL’s common stock were reserved for future issuance related\n to the issuance of equity-based awards under the Company’s\n incentive compensation plans.
\n\n As of December 31, 2017, UAL had two shares of junior\n preferred stock (par value $0.01 per share) outstanding. In\n addition, UAL is authorized to issue 250 million shares of\n preferred stock (without par value) under UAL’s amended and\n restated certificate of incorporation.
\n| (a) | \nUse of Estimates—The\n preparation of financial statements in conformity with accounting\n principles generally accepted in the United States of America\n (“GAAP”) requires management to make estimates and\n assumptions that affect the amounts reported in these financial\n statements and accompanying notes. Actual results could differ from\n those estimates. | \n
\n NOTE 4 - EARNINGS PER SHARE
\n\n The computations of UAL’s basic and diluted earnings per\n share are set forth below for the years ended December 31 (in\n millions, except per share amounts):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | \n 2017 | \n\n | \n | \n 2016 | \n\n | \n | \n 2015 | \n\n | |||
| \n \n Earnings available to common stockholders \n | \n \n | $ | \n2,131 | \n\n | \n | $ | \n2,263 | \n\n | \n | $ | \n7,340 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Basic weighted-average shares outstanding \n | \n \n | \n | 302.7 | \n\n | \n | \n | 329.9 | \n\n | \n | \n | 376.1 | \n\n |
| \n \n Effect of convertible notes \n | \n \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | 0.3 | \n\n |
| \n \n Effect of employee stock awards \n | \n \n | \n | 0.9 | \n\n | \n | \n | 0.4 | \n\n | \n | \n | 0.5 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Diluted weighted-average shares outstanding \n | \n \n | \n | 303.6 | \n\n | \n | \n | 330.3 | \n\n | \n | \n | 376.9 | \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 \n \n | \n \n |
| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Earnings per share, basic \n | \n \n | $ | \n7.04 | \n\n | \n | $ | \n6.86 | \n\n | \n | $ | \n19.52 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \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, diluted \n | \n \n | $ | \n7.02 | \n\n | \n | $ | \n6.85 | \n\n | \n | $ | \n19.47 | \n\n |
| \n | \n | \n \n \n | \n \n \n \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 securities excluded from the computation\n of diluted earnings per share amounts was not material.
\n\n The table below presents the carrying values and estimated fair\n values of financial instruments not presented in the tables above\n as of 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\n Debt by Fair Value Hierarchy Level | \n\n | |||||||||||||||||||||||||||||||||||||
| \n | \n | 2017 | \n\n | \n | 2016 | \n\n | ||||||||||||||||||||||||||||||||||
| \n | \n | Carrying \n Amount | \n \n | \n | Fair Value | \n\n | \n | Carrying \n Amount | \n \n | \n | Fair 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 \n Long-term debt \n | \n \n | $ | \n13,268 | \n\n | \n | $ | \n13,787 | \n\n | \n | $ | \n\n — | \n\n | \n | $ | \n10,115 | \n\n | \n | $ | \n3,672 | \n\n | \n | $ | \n10,767 | \n\n | \n | $ | \n11,055 | \n\n | \n | $ | \n\n — | \n\n | \n | $ | \n8,184 | \n\n | \n | $ | \n2,871 | \n\n |
\n NOTE 9 - FAIR VALUE MEASUREMENTS AND INVESTMENTS
\n\n Fair Value Information. Accounting standards require\n us to use valuation techniques to measure fair value that maximize\n the use of observable inputs and minimize the use of unobservable\n inputs. These inputs are 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 | 2017 | \n\n | \n | 2016 | \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 Cash and cash equivalents \n | \n \n | $ | \n\n 1,482 | \n\n | \n | $ | \n\n 1,482 | \n\n | \n | $ | \n\n — | \n\n | \n | $ | \n\n — | \n\n | \n | $ | \n\n 2,179 | \n\n | \n | $ | \n\n 2,179 | \n\n | \n | $ | \n\n — | \n\n | \n | $ | \n\n — | \n\n |
| \n \n Short-term 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 \n Corporate debt \n | \n \n | \n | 958 | \n\n | \n | \n | \n — | \n\n | \n | \n | 958 | \n\n | \n | \n | \n — | \n\n | \n | \n | 835 | \n\n | \n | \n | \n — | \n\n | \n | \n | 835 | \n\n | \n | \n | \n — | \n\n |
| \n \n Asset-backed securities \n | \n \n | \n | 753 | \n\n | \n | \n | \n — | \n\n | \n | \n | 753 | \n\n | \n | \n | \n — | \n\n | \n | \n | 792 | \n\n | \n | \n | \n — | \n\n | \n | \n | 792 | \n\n | \n | \n | \n — | \n\n |
| \n \n Certificates of deposit placed through an account registry service\n (“CDARS”) \n | \n \n | \n | 120 | \n\n | \n | \n | \n — | \n\n | \n | \n | 120 | \n\n | \n | \n | \n — | \n\n | \n | \n | 246 | \n\n | \n | \n | \n — | \n\n | \n | \n | 246 | \n\n | \n | \n | \n — | \n\n |
| \n \n U.S. government and agency notes \n | \n \n | \n | 113 | \n\n | \n | \n | \n — | \n\n | \n | \n | 113 | \n\n | \n | \n | \n — | \n\n | \n | \n | 140 | \n\n | \n | \n | \n — | \n\n | \n | \n | 140 | \n\n | \n | \n | \n — | \n\n |
| \n \n Other fixed-income securities \n | \n \n | \n | 188 | \n\n | \n | \n | \n — | \n\n | \n | \n | 188 | \n\n | \n | \n | \n — | \n\n | \n | \n | 54 | \n\n | \n | \n | \n — | \n\n | \n | \n | 54 | \n\n | \n | \n | \n — | \n\n |
| \n \n Other investments measured at NAV \n | \n \n | \n | 184 | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | 182 | \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 | 109 | \n\n | \n | \n | 109 | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | 124 | \n\n | \n | \n | 124 | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n |
| \n \n Long-term 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 \n Equity securities \n | \n \n | \n | 99 | \n\n | \n | \n | 99 | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n |
| \n \n Enhanced equipment trust certificates (“EETC”) \n | \n \n | \n | 22 | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | 22 | \n\n | \n | \n | 23 | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | 23 | \n\n |
\n Available-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, 2017, asset-backed securities have remaining\n maturities of less than one year to approximately 17 years,\n corporate debt securities have remaining maturities of less than\n one year to approximately three 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.
\n\n Restricted cash—Restricted cash primarily includes\n cash collateral for letters of credit and collateral associated\n with obligations for facility leases and workers’\n compensation.
\n\n Equity securities—Equity securities represent\n United’s investment in Azul Linhas Aereas Brasileiras S.A.\n (“Azul”), which was previously accounted for as a\n cost-method investment. The fair value of Azul’s shares\n became readily determinable in the second quarter of 2017 upon its\n initial public offering and the investment is now accounted for as\n available-for-sale.
\n\n
\n\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\n Debt by Fair Value Hierarchy Level | \n\n | |||||||||||||||||||||||||||||||||||||
| \n | \n | 2017 | \n\n | \n | 2016 | \n\n | ||||||||||||||||||||||||||||||||||
| \n | \n | Carrying \n Amount | \n \n | \n | Fair Value | \n\n | \n | Carrying \n Amount | \n \n | \n | Fair 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 \n Long-term debt \n | \n \n | $ | \n13,268 | \n\n | \n | $ | \n13,787 | \n\n | \n | $ | \n\n — | \n\n | \n | $ | \n10,115 | \n\n | \n | $ | \n3,672 | \n\n | \n | $ | \n10,767 | \n\n | \n | $ | \n11,055 | \n\n | \n | $ | \n\n — | \n\n | \n | $ | \n8,184 | \n\n | \n | $ | \n2,871 | \n\n |
\n Fair value of the financial instruments included in the tables\n above was determined as follows:
\n\n
\n| \n | \n | \n |
| \n \n Description \n | \n \n | \n Fair Value Methodology \n | \n
| Cash and cash equivalents | \n\n | The carrying amounts approximate fair value\n because of the short-term maturity of these assets. | \n
| \n | \n | |
| \n \n Short-term investments, \n\n Equity securities, EETC and Restricted cash \n | \n \n | Fair value is based on (a) the trading prices\n of the investment or similar instruments, (b) an income\n approach, which uses valuation techniques to convert future amounts\n into a single present amount based on current market expectations\n about those future amounts when observable trading prices are not\n available, or (c) broker quotes obtained by third-party\n valuation services. | \n
| \n | \n | |
| Other investments measured at NAV | \n\n | In accordance with the relevant accounting\n standards, certain investments that are measured at fair value\n using the NAV per share (or its equivalent) practical expedient\n have not been classified in the fair value hierarchy. The fair\n value amounts presented in the table above are intended to permit\n reconciliation of the fair value hierarchy to the amounts presented\n in the statement of financial position. The investments measured\n using NAV are shares of mutual 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. The Company can redeem its shares at any time at NAV\n subject to a three-day\n settlement period. | \n
| \n | \n | |
| Long-term debt | \n\n | Fair values were based on either market prices or\n the discounted amount of future cash flows using our current\n incremental rate of borrowing for similar liabilities. | \n
| (c) | \nFrequent Flyer\n Accounting—United’s MileagePlus program builds\n customer loyalty by offering awards, benefits and services to\n program participants. Members in this program earn miles for\n flights on United, United Express, Star Alliance members and\n certain other airlines that participate in the program. Members can\n also earn miles by purchasing the goods and services of our network\n of non-airline partners.\n We sell miles to these partners, which include domestic and\n international credit card issuers, retail merchants, hotels, car\n rental companies and our participating airline partners. Miles can\n be redeemed for free (other than taxes and government imposed\n fees), discounted or 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 Miles Earned in Conjunction with Flights
\n\n When frequent flyers earn miles for flights, the Company recognizes\n a portion of the ticket sales as revenue when the air\n transportation occurs and defers a portion of the ticket sale\n representing the value of the related miles as a\n multiple-deliverable revenue arrangement. The Company determines\n the estimated selling price of air transportation and miles as if\n each element is sold on a separate basis. The total consideration\n from each ticket sale is then allocated to each of these elements,\n individually, on a pro rata basis. The miles are recorded in\n Frequent flyer deferred revenue on the Company’s consolidated\n balance sheet and recognized into revenue when the transportation\n is provided.
\n\n The 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\n Partner Mileage Sales
\n\n United has a significant contract, the Second Amended and Restated\n Co-Branded Card Marketing\n Services 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 of the elements is determined using\n management’s estimated selling price of each element. The\n objective of using the estimated selling price based methodology is\n to determine the price at which we would transact a sale if the\n product or service were sold on a stand-alone basis. Accordingly,\n we determine our best estimate of selling price by considering\n multiple inputs and methods including, but not limited to,\n discounted cash flows, brand value, volume discounts, published\n selling prices, number of miles awarded and number of miles\n redeemed. The Company estimated the selling prices and volumes over\n the term of the Co-Brand\n Agreement in order to determine the allocation of proceeds to each\n of the multiple elements to be delivered. We also evaluate volumes\n on an annual basis, which may result in a change in the allocation\n of estimated selling price on a prospective basis.
\n\n
\n\n The Company records passenger revenue related to the air\n transportation element when the transportation is delivered. The\n other elements are generally recognized as Other operating revenue\n when earned.
\n\n Expiration of Miles
\n\n The Company accounts for miles sold and awarded that will never be\n redeemed by program members, which we refer to as breakage. The\n Company reviews its breakage estimates annually based upon the\n latest available information regarding redemption and expiration\n patterns. Miles expire after 18 months of member account\n inactivity.
\n\n The 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 Information
\n\n The following table provides additional information related to the\n frequent flyer program (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Year Ended \nDecember 31, \n | \n \n | \n Cash Proceeds \n from Miles Sold \n and Earned | \n \n | \n | \n Other Revenue \n Recognized Upon \n Award of Miles \n to Third-Party \n Customers (a) | \n \n | \n | \n Increase in Frequent \n Flyer Deferred \n Revenue for Miles \n Awarded (b) | \n \n | \n | \n Decrease in \n Advanced \n Purchase \n of Miles (c) | \n \n | ||||
| \n \n 2017 \n | \n \n | $ | \n2,343 | \n\n | \n | $ | \n1,183 | \n\n | \n | $ | \n2,025 | \n\n | \n | $ | \n(865) | \n\n |
| \n \n 2016 \n | \n \n | \n | 3,022 | \n\n | \n | \n | 1,221 | \n\n | \n | \n | 2,050 | \n\n | \n | \n | (249) | \n\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 \n \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | |||
| (a) This\n amount represents other revenue recognized during the period from\n the sale of miles to third parties, representing the\n marketing-related deliverable services component of the\n sale. | \n\n | |||||||||||||||
| (b) This\n amount represents the increase to Frequent flyer deferred revenue\n during the period. | \n\n | |||||||||||||||
| (c) This\n amount represents the net decrease in the advance purchase of miles\n obligation due to cash payments for the sale of miles less than\n miles awarded to 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 14\n of this report for additional information related to asset\n impairments. | \n
\n NOTE 10 - DEBT
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n (In millions) \n | \n \n | At December 31, | \n\n | |||||
| \n | \n | 2017 | \n\n | \n | 2016 | \n\n | ||
| \n \n Secured \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| Notes payable, fixed interest rates of 2.88% to\n 9.52% (weighted average rate of 4.39% as of December 31,\n 2017), payable through 2028 | \n\n | $ | \n8,661 | \n\n | \n | $ | \n7,586 | \n\n |
| Notes payable, floating interest rates of the\n London interbank offered rate (“LIBOR”) plus 0.2% to\n 2.25%, payable through 2028 | \n\n | \n | 1,880 | \n\n | \n | \n | 1,546 | \n\n |
| Term loan, LIBOR plus 2.00%, or alternative rate\n based on certain market rates plus 1.00%, due 2024 | \n\n | \n | 1,489 | \n\n | \n | \n | \n — | \n\n |
| Term loan, LIBOR subject to a 0.75% floor, plus\n 2.50%, or alternative rate based on certain market rates plus\n 1.50%, due 2019 | \n\n | \n | \n — | \n\n | \n | \n | 866 | \n\n |
| Term loan, LIBOR subject to a 0.75% floor, plus\n 2.75%, or alternative rate based on certain market rates plus\n 1.75%, due 2021 | \n\n | \n | \n — | \n\n | \n | \n | 192 | \n\n |
| Unsecured | \n\n | \n | \n | \n | \n | \n | \n | \n |
| 6.375% Senior Notes due 2018 (a) | \n\n | \n | 300 | \n\n | \n | \n | 300 | \n\n |
| 6% Senior Notes due 2020 (a) | \n\n | \n | 300 | \n\n | \n | \n | 300 | \n\n |
| 4.25% Senior Notes due 2022 (a) | \n\n | \n | 400 | \n\n | \n | \n | \n — | \n\n |
| 5% Senior Notes due 2024 (a) | \n\n | \n | 300 | \n\n | \n | \n | \n — | \n\n |
| Other | \n\n | \n | 101 | \n\n | \n | \n | 101 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n | \n | \n | 13,431 | \n\n | \n | \n | 10,891 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Less: unamortized debt discount, premiums and debt issuance\n costs \n | \n \n | \n | (163) | \n\n | \n | \n | (124) | \n\n |
| \n \n Less: current portion of long-term debt \n | \n \n | \n | (1,565) | \n\n | \n | \n | (849) | \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 debt, net | \n\n | $ | \n\n 11,703 | \n\n | \n | $ | \n\n 9,918 | \n\n |
| \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) UAL is the issuer of this debt. United is a guarantor.
\n\n The table below presents the Company’s contractual principal\n payments (not including debt discount or debt issuance costs) at\n December 31, 2017 under then-outstanding long-term debt\n agreements in each of the next five calendar years (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n |
| \n \n 2018 \n | \n \n | $ | \n1,565 | \n\n |
| \n \n 2019 \n | \n \n | \n | 1,165 | \n\n |
| \n \n 2020 \n | \n \n | \n | 1,170 | \n\n |
| \n \n 2021 \n | \n \n | \n | 1,157 | \n\n |
| \n \n 2022 \n | \n \n | \n | 1,492 | \n\n |
| \n \n After 2022 \n | \n \n | \n | 6,882 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n | \n | $ | \n\n 13,431 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n |
\n Secured debt
\n\n 2017 Credit and Guaranty Agreement. On\n March 29, 2017, United and UAL, as borrower and guarantor,\n respectively, entered into an Amended and Restated Credit and\n Guaranty Agreement (as amended by the First Amendment to the\n Amended and Restated Credit and Guaranty Agreement, dated as of\n November 15, 2017, the “November 2017 Amendment,”\n and as so amended, the “2017 Credit Agreement”). The\n 2017 Credit Agreement consists of a $1.5 billion term loan due\n April 1, 2024, which was used to retire the entire principal\n balance of the term loans under the credit and guaranty agreement,\n dated March 27, 2013 (as amended, the “2013 Credit\n Agreement”), and increased the term loan balance by\n approximately $440 million. The 2017 Credit Agreement also\n includes a $2.0 billion revolving credit facility available\n for drawing until April 1, 2022, which increased the available\n capacity under the revolving credit facility by $650 million\n as compared to that in the 2013 Credit Agreement. The primary\n purpose of the November 2017 Amendment was to reduce the interest\n rate on borrowings by 0.25%. The obligations of United under the\n amended 2017 Credit Agreement are secured by liens on certain\n international route authorities, certain take-off and landing rights and\n related assets of United.
\n\n Borrowings under the 2017 Credit Agreement bear interest at a\n variable rate equal to LIBOR plus a margin of 2.00% per annum,\n or another rate based on certain market interest rates, plus a\n margin of 1.00% per annum. The principal amount of the term\n loan must be repaid in consecutive quarterly installments of 0.25%\n of the original principal amount thereof, commencing on\n June 30, 2017, with any unpaid balance due on April 1,\n 2024. United may prepay all or a portion of the loan 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.
\n\n As of December 31, 2017, United had its entire capacity of\n $2.0 billion available under the revolving credit facility of\n the Company’s 2017 Credit Agreement.
\n\n As of December 31, 2017, United had cash collateralized\n $75 million of letters of credit. United also had\n $362 million of surety bonds securing various obligations at\n December 31, 2017. Most of the letters of credit have\n evergreen clauses and are expected to be renewed on an annual\n basis. The surety bonds have expiration dates through 2021.
\n\n EETCs. As of December 31, 2017, United had\n $8.6 billion principal amount of equipment notes outstanding\n issued under EETC financings included in notes payable in the table\n of outstanding debt above. Generally, the structure of these EETC\n financings consists of pass-through trusts created by United to\n issue pass-through certificates, which represent fractional\n undivided interests in the respective pass-through trusts and are\n not obligations of United. The proceeds of the issuance of the\n pass-through certificates are used to purchase equipment notes\n which are issued by United and secured by its aircraft. The payment\n obligations under the equipment notes are those of United. Proceeds\n received from the sale of pass-through certificates are initially\n held by a depositary in escrow for the benefit of the certificate\n holders until United issues equipment notes to the trust, which\n purchases such notes with a portion of the escrowed funds. These\n escrowed funds are not guaranteed by United and are not reported as\n debt on United’s consolidated balance sheet because the\n proceeds held by the depositary are not United’s assets.
\n\n In February 2018, November 2017, September 2016 and June 2016,\n United created separate EETC pass-through trusts, each of which\n issued pass-through certificates. The proceeds of the issuance of\n the pass-through certificates are used to purchase equipment notes\n issued by United and secured by its aircraft. The Company records\n the debt obligation upon issuance of the equipment notes rather\n than upon the initial issuance of the pass-through certificates.\n Certain details of the pass-through trusts with proceeds received\n from issuance of debt in 2017 are as follows (in millions, except\n 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 EETC 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 \n 2017 | \n \n | \n | Proceeds \n received from \n issuance of \n debt during \n 2017 | \n \n | \n | Remaining \n proceeds from \n issuance of debt \n to be received \n in future \n periods | \n \n | |||||
| \n \n February 2018 \n | \n \n | AA | \n\n | $ | \n677 | \n\n | \n | \n March 2030 | \n\n | \n | 3.50% | \n\n | \n | $ | \n\n — | \n\n | \n | $ | \n\n — | \n\n | \n | $ | \n677 | \n\n |
| \n \n February 2018 \n | \n \n | A | \n\n | \n | 258 | \n\n | \n | March 2030 | \n\n | \n | 3.70% | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | 258 | \n\n |
| \n \n November 2017 \n | \n \n | B | \n\n | \n | 258 | \n\n | \n | \n January 2026 | \n\n | \n | 3.65% | \n\n | \n | \n | 258 | \n\n | \n | \n | 258 | \n\n | \n | \n | \n — | \n\n |
| \n \n November 2017 \n | \n \n | B | \n\n | \n | 236 | \n\n | \n | \n October 2025 | \n\n | \n | 3.65% | \n\n | \n | \n | 236 | \n\n | \n | \n | 236 | \n\n | \n | \n | \n — | \n\n |
| \n \n September 2016 \n | \n \n | AA | \n\n | \n | 637 | \n\n | \n | \n October 2028 | \n\n | \n | 2.875% | \n\n | \n | \n | 637 | \n\n | \n | \n | 557 | \n\n | \n | \n | \n — | \n\n |
| \n \n September 2016 \n | \n \n | A | \n\n | \n | 283 | \n\n | \n | October\n 2028 | \n\n | \n | 3.10% | \n\n | \n | \n | 283 | \n\n | \n | \n | 247 | \n\n | \n | \n | \n — | \n\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 | 729 | \n\n | \n | \n | 319 | \n\n | \n | \n | \n — | \n\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 | 324 | \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 | \n \n \n | \n \n \n \n | \n \n |
| \n | \n | \n | \n | $ | \n3,402 | \n\n | \n | \n | \n | \n | \n | \n | \n | $ | \n2,467 | \n\n | \n | $ | \n1,759 | \n\n | \n | $ | \n935 | \n\n |
| \n | \n | \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n \n \n | \n \n \n \n | \n \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 2017, United borrowed approximately $497 million aggregate\n principal amount from various financial institutions to finance the\n purchase of several aircraft delivered in 2017. The notes\n evidencing these borrowings, which are secured by the related\n aircraft, mature in 2027 and have interest rates comprised of the\n LIBOR plus a specified margin.
\n\n Unsecured debt
\n\n 4.25% Senior Notes due 2022. In September 2017, UAL\n issued $400 million aggregate principal amount of 4.25% Senior\n Notes due October 1, 2022 (the “4.25% Senior Notes due\n 2022”). These notes are fully and unconditionally guaranteed\n and recorded by United on its balance sheet as debt. The indenture\n for the 4.25% Senior Notes due 2022 requires UAL to offer to\n repurchase the notes for cash if certain changes of control of UAL\n occur at a purchase price equal to 101% of the principal amount of\n notes repurchased plus accrued and unpaid interest.
\n\n 5% Senior Notes due 2024. In January 2017, UAL issued\n $300 million aggregate principal amount of 5% Senior Notes due\n February 1, 2024 (the “5% Senior Notes due 2024”).\n These notes are fully and unconditionally guaranteed and recorded\n by United on its balance sheet as debt. The indenture for the 5%\n Senior Notes due 2024 requires UAL to offer to repurchase the notes\n for cash if certain changes of control of UAL occur at a purchase\n price equal to 101% of the principal amount of notes repurchased\n plus accrued and unpaid interest.
\n\n
\n\n As of December 31, 2017, UAL and United were in compliance\n with their respective debt covenants. The collateral, covenants and\n 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 Instrument | \n\n | Collateral, Covenants and Cross Default\n Provisions | \n
| \n \n Various equipment notes and other notes payable \n | \n \n | Secured by certain aircraft. The indentures contain\n events of default that are customary for aircraft financing,\n including in certain cases cross default to other related\n aircraft. | \n
| \n \n Credit Agreement \n | \n \n | \n \n Secured by certain of United’s international route\n authorities, specified take-off and landing slots at certain\n airports and certain other assets. \n\n \n\n The 2017 Credit Agreement requires the Company to maintain at least\n $2.0 billion of unrestricted liquidity at all times, which\n includes unrestricted cash, short-term investments and any undrawn\n amounts under any revolving credit facility, and to maintain a\n minimum ratio of appraised value of collateral to the outstanding\n obligations under the 2017 Credit Agreement of 1.6 to 1.0 at all\n times. The 2017 Credit Agreement contains covenants that, among\n other things, restrict the ability of UAL and its restricted\n subsidiaries (as defined in the 2017 Credit Agreement) to incur\n additional indebtedness and to pay dividends on or repurchase\n stock, although the Company currently has ample ability under these\n restrictions to repurchase stock under the Company’s share\n repurchase program. \n\n \n\n The 2017 Credit Agreement contains events of default customary for\n this type of financing, including a cross default and cross\n acceleration provision to certain other material indebtedness of\n the Company. \n | \n
| \n \n 6.375% Senior Notes due 2018 \n\n \n\n 6% Senior Notes due 2020 \n\n \n\n 4.25% Senior Notes due 2022 \n\n \n\n 5% Senior Notes due 2024 \n | \n \n | The indentures for these notes contain covenants\n that, among other things, restrict the ability of the Company and\n its restricted subsidiaries (as defined in the indentures) 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
\n
\n \n \n| (g) | \nProperty and\n Equipment—The Company records additions to owned\n operating property and equipment at cost when acquired. Property\n under capital leases and the related obligation for future lease\n payments are recorded at an amount equal to the initial present\n value of those lease payments. Modifications that enhance the\n operating performance or extend the useful lives of airframes or\n engines are capitalized as property and equipment. It is the\n Company’s policy to record compensation from delays in\n delivery of aircraft as a reduction of the cost of the related\n aircraft. | \n
\n Depreciation and amortization of owned depreciable assets is based\n on the straight-line method over the assets’ estimated useful\n lives. Leasehold improvements are amortized over the remaining term\n of the lease, including estimated facility renewal options when\n renewal is reasonably assured at key airports, or the estimated\n useful life of the related asset, whichever is less. Properties\n under capital leases are amortized on the straight-line method over\n the life of the lease or, in the case of certain aircraft, over\n their estimated useful lives, whichever is shorter. Amortization of\n capital lease assets is included in depreciation and amortization\n expense. The estimated useful lives of property and equipment are\n as follows:
\n\n
\n| \n | \n | \n | \n | \n |
| \n | \n | \n Estimated Useful Life (in years) | \n\n | |
| \n \n Aircraft and related rotable parts \n | \n \n | \n | 25 to 30 | \n\n |
| \n \n Buildings \n | \n \n | \n | 25 to 45 | \n\n |
| \n \n Other property and equipment \n | \n \n | \n | 3 to 15 | \n\n |
| \n \n Computer software \n | \n \n | \n | 5 to 15 | \n\n |
| \n \n Building improvements \n | \n \n | \n | 1 to 40 | \n\n |
\n As of December 31, 2017 and 2016, the Company had a carrying\n value of computer software of $345 million and\n $356 million, respectively. For the years ended\n December 31, 2017, 2016 and 2015, the Company’s\n depreciation expense related to computer software was\n $117 million, $108 million and $93 million,\n respectively. Aircraft and aircraft spare parts were assumed to\n have residual values of approximately 10% of original cost, and\n other categories of property and equipment were assumed to have no\n residual value.
\n\n NOTE 16 - SELECTED 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 Ended | \n\n | |||||||||||||
| \n \n (In millions, except per share amounts) \n | \n \n | \n March 31 | \n\n | \n | \n June 30 | \n\n | \n | \n September 30 | \n\n | \n | \n December 31 | \n\n | ||||
| \n \n 2017 \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Operating revenue \n | \n \n | $ | \n\n 8,420 | \n\n | \n | $ | \n\n 10,000 | \n\n | \n | $ | \n9,878 | \n\n | \n | $ | \n9,438 | \n\n |
| \n \n Income from operations \n | \n \n | \n | 278 | \n\n | \n | \n | 1,399 | \n\n | \n | \n | 1,092 | \n\n | \n | \n | 729 | \n\n |
| \n \n Net income \n | \n \n | \n | 96 | \n\n | \n | \n | 818 | \n\n | \n | \n | 637 | \n\n | \n | \n | 580 | \n\n |
| \n \n Basic earnings per share \n | \n \n | \n | 0.31 | \n\n | \n | \n | 2.67 | \n\n | \n | \n | 2.12 | \n\n | \n | \n | 1.99 | \n\n |
| \n \n Diluted earnings per share \n | \n \n | \n | 0.31 | \n\n | \n | \n | 2.66 | \n\n | \n | \n | 2.12 | \n\n | \n | \n | 1.99 | \n\n |
| \n \n 2016 \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Operating revenue \n | \n \n | $ | \n8,195 | \n\n | \n | $ | \n9,396 | \n\n | \n | $ | \n9,913 | \n\n | \n | $ | \n9,052 | \n\n |
| \n \n Income from 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 \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 \n Basic earnings per 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 \n Diluted earnings per 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
\n\n UAL’s quarterly financial data is subject to seasonal\n fluctuations and historically its second and third quarter\n financial results, which reflect higher travel demand, are better\n than its first and fourth quarter financial results. UAL’s\n quarterly results were impacted by the following significant items\n (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Quarter Ended | \n\n | |||||||||||||
| \n | \n | \n March 31 | \n\n | \n | \n June 30 | \n\n | \n | September 30 | \n\n | \n | December 31 | \n\n | ||||
| \n \n 2017 \n | \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 \n Severance and benefit costs \n | \n \n | $ | \n37 | \n\n | \n | $ | \n41 | \n\n | \n | $ | \n23 | \n\n | \n | $ | \n15 | \n\n |
| \n \n Impairment of assets \n | \n \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | 15 | \n\n | \n | \n | 10 | \n\n |
| \n \n (Gains) losses on sale of assets and other special charges \n | \n \n | \n | 14 | \n\n | \n | \n | 3 | \n\n | \n | \n | 12 | \n\n | \n | \n | 6 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Total operating special charges \n | \n \n | \n | 51 | \n\n | \n | \n | 44 | \n\n | \n | \n | 50 | \n\n | \n | \n | 31 | \n\n |
| \n \n Income taxes: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Income tax benefit related to special charges \n | \n \n | \n | (18) | \n\n | \n | \n | (16) | \n\n | \n | \n | (18) | \n\n | \n | \n | (11) | \n\n |
| \n \n Income tax adjustments (Note 7) \n | \n \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | (192) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 special charges, net of income taxes and income tax\n adjustments \n | \n \n | $ | \n\n 33 | \n\n | \n | $ | \n\n 28 | \n\n | \n | $ | \n32 | \n\n | \n | $ | \n(172) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 | \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 \n Labor agreement costs and related items \n | \n \n | $ | \n100 | \n\n | \n | $ | \n10 | \n\n | \n | $ | \n14 | \n\n | \n | $ | \n(60) | \n\n |
| \n \n Cleveland airport lease restructuring \n | \n \n | \n | 74 | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n |
| \n \n Severance and benefit costs \n | \n \n | \n | 8 | \n\n | \n | \n | 6 | \n\n | \n | \n | 13 | \n\n | \n | \n | 10 | \n\n |
| \n \n Impairment of assets \n | \n \n | \n | \n — | \n\n | \n | \n | 412 | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n |
| \n \n (Gains) losses on sale of 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 \n | \n \n \n \n | \n \n |
| \n \n Total operating 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 \n Nonoperating and income taxes: \n | \n \n | \n | \n | \n | \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 | \n | 8 | \n\n | \n | \n | (9) | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n |
| \n \n Income tax expense (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 \n Income tax adjustments (Note 6) \n | \n \n | \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 \n | \n \n \n \n | \n \n |
| \n \n Total operating and nonoperating special charges, net of income\n taxes and income tax adjustments \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 \n | \n \n \n \n | \n \n |
\n The following information relates to all pension plans with an\n accumulated benefit obligation and a projected benefit obligation\n in excess of plan assets at December 31 (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | \n 2017 | \n\n | \n | \n 2016 | \n\n | ||
| \n \n Projected benefit obligation \n | \n \n | $ | \n5,637 | \n\n | \n | $ | \n5,025 | \n\n |
| \n \n Accumulated benefit obligation \n | \n \n | \n | 4,567 | \n\n | \n | \n | 3,985 | \n\n |
| \n \n Fair value of plan assets \n | \n \n | \n | 3,709 | \n\n | \n | \n | 3,164 | \n\n |
\n The reconciliation of United’s defined benefit plan assets\n measured at fair value using unobservable inputs (Level 3) for the\n years ended December 31, 2017 and 2016 is as follows (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | 2017 | \n\n | \n | 2016 | \n\n | ||
| \n \n Balance at beginning of year \n | \n \n | $ | \n287 | \n\n | \n | $ | \n208 | \n\n |
| \n \n Actual return on plan assets: \n | \n \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Sold during the year \n | \n \n | \n | 7 | \n\n | \n | \n | 4 | \n\n |
| \n \n Held at year end \n | \n \n | \n | 16 | \n\n | \n | \n | 3 | \n\n |
| \n \n Purchases, sales, issuances and settlements (net) \n | \n \n | \n | 73 | \n\n | \n | \n | 72 | \n\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 end of year \n | \n \n | $ | \n383 | \n\n | \n | $ | \n287 | \n\n |
| \n | \n | \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 Fund \n | \n \n | IAM National Pension Fund | \n
| \n \n EIN/ Pension Plan Number \n | \n \n | 51-6031295 - 002 | \n
| \n \n Pension Protection Act Zone Status (2017 and 2016) \n | \n \n | Green Zone. Plans in the green zone are at\n least 80 percent funded. | \n
| \n \n FIP/RP Status Pending/Implemented \n | \n \n | No | \n
| \n \n United’s Contributions \n | \n \n | $50 million, $41 million and\n $40 million in the years ended December 31, 2017, 2016\n and 2015, respectively | \n
| \n \n Surcharge Imposed \n | \n \n | No | \n
| \n \n Expiration Date of 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 Ended | \n\n | |||||||||||||
| \n \n (In millions, except per share amounts) \n | \n \n | \n March 31 | \n\n | \n | \n June 30 | \n\n | \n | \n September 30 | \n\n | \n | \n December 31 | \n\n | ||||
| \n \n 2017 \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Operating revenue \n | \n \n | $ | \n\n 8,420 | \n\n | \n | $ | \n\n 10,000 | \n\n | \n | $ | \n9,878 | \n\n | \n | $ | \n9,438 | \n\n |
| \n \n Income from operations \n | \n \n | \n | 278 | \n\n | \n | \n | 1,399 | \n\n | \n | \n | 1,092 | \n\n | \n | \n | 729 | \n\n |
| \n \n Net income \n | \n \n | \n | 96 | \n\n | \n | \n | 818 | \n\n | \n | \n | 637 | \n\n | \n | \n | 580 | \n\n |
| \n \n Basic earnings per share \n | \n \n | \n | 0.31 | \n\n | \n | \n | 2.67 | \n\n | \n | \n | 2.12 | \n\n | \n | \n | 1.99 | \n\n |
| \n \n Diluted earnings per share \n | \n \n | \n | 0.31 | \n\n | \n | \n | 2.66 | \n\n | \n | \n | 2.12 | \n\n | \n | \n | 1.99 | \n\n |
| \n \n 2016 \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Operating revenue \n | \n \n | $ | \n8,195 | \n\n | \n | $ | \n9,396 | \n\n | \n | $ | \n9,913 | \n\n | \n | $ | \n9,052 | \n\n |
| \n \n Income from 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 \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 \n Basic earnings per 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 \n Diluted earnings per 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 NOTE 15 - SEGMENT INFORMATION
\n\n Operating segments are defined as components of an enterprise with\n separate financial information, which are evaluated regularly by\n the chief operating decision maker and are used in resource\n allocation and performance assessments.
\n\n The Company deploys its aircraft across its route network through a\n single route scheduling system to maximize its value. When making\n resource allocation decisions, the Company’s chief operating\n decision maker evaluates flight profitability data, which considers\n aircraft type and route economics. The Company’s chief\n operating decision maker makes resource allocation decisions to\n maximize the Company’s consolidated financial results.\n Managing the Company as one segment allows management the\n opportunity to maximize the value of its route network.
\n\n The Company’s operating revenue by principal geographic\n region (as defined by the U.S. Department of Transportation) for\n the years ended December 31 is presented in the table below\n (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | \n 2017 | \n\n | \n | \n 2016 | \n\n | \n | \n 2015 | \n\n | |||
| \n \n Domestic (U.S. and Canada) \n | \n \n | $ | \n23,131 | \n\n | \n | $ | \n22,202 | \n\n | \n | $ | \n21,931 | \n\n |
| \n \n Pacific \n | \n \n | \n | 4,898 | \n\n | \n | \n | 4,959 | \n\n | \n | \n | 5,498 | \n\n |
| \n \n Atlantic \n | \n \n | \n | 6,285 | \n\n | \n | \n | 6,157 | \n\n | \n | \n | 7,068 | \n\n |
| \n \n Latin America \n | \n \n | \n | 3,422 | \n\n | \n | \n | 3,238 | \n\n | \n | \n | 3,367 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \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 | $ | \n37,736 | \n\n | \n | $ | \n36,556 | \n\n | \n | $ | \n37,864 | \n\n |
| \n | \n | \n \n \n | \n \n \n \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 attributes revenue among the geographic areas based\n upon the origin and destination of each flight segment. The\n Company’s operations involve an insignificant level of\n dedicated revenue-producing assets in geographic regions as the\n overwhelming majority of the Company’s revenue producing\n assets (primarily U.S. registered aircraft) can be deployed in any\n of its geographic regions.
\n| (r) | \nLabor Costs—The Company\n records expenses associated with amendable labor agreements when\n the amounts are probable and estimable. These include costs\n associated with lump sum cash payments that would be made in\n conjunction with the ratification of labor agreements. To the\n extent these upfront costs are in lieu of future pay increases,\n they would be capitalized and amortized over the term of the labor\n agreements. If not, these amounts would be expensed. | \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
| (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 UAL’s quarterly financial data is subject to seasonal\n fluctuations and historically its second and third quarter\n financial results, which reflect higher travel demand, are better\n than its first and fourth quarter financial results. UAL’s\n quarterly results were impacted by the following significant items\n (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Quarter Ended | \n\n | |||||||||||||
| \n | \n | \n March 31 | \n\n | \n | \n June 30 | \n\n | \n | September 30 | \n\n | \n | December 31 | \n\n | ||||
| \n \n 2017 \n | \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 \n Severance and benefit costs \n | \n \n | $ | \n37 | \n\n | \n | $ | \n41 | \n\n | \n | $ | \n23 | \n\n | \n | $ | \n15 | \n\n |
| \n \n Impairment of assets \n | \n \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | 15 | \n\n | \n | \n | 10 | \n\n |
| \n \n (Gains) losses on sale of assets and other special charges \n | \n \n | \n | 14 | \n\n | \n | \n | 3 | \n\n | \n | \n | 12 | \n\n | \n | \n | 6 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Total operating special charges \n | \n \n | \n | 51 | \n\n | \n | \n | 44 | \n\n | \n | \n | 50 | \n\n | \n | \n | 31 | \n\n |
| \n \n Income taxes: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Income tax benefit related to special charges \n | \n \n | \n | (18) | \n\n | \n | \n | (16) | \n\n | \n | \n | (18) | \n\n | \n | \n | (11) | \n\n |
| \n \n Income tax adjustments (Note 7) \n | \n \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | (192) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 special charges, net of income taxes and income tax\n adjustments \n | \n \n | $ | \n\n 33 | \n\n | \n | $ | \n\n 28 | \n\n | \n | $ | \n32 | \n\n | \n | $ | \n(172) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 | \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 \n Labor agreement costs and related items \n | \n \n | $ | \n100 | \n\n | \n | $ | \n10 | \n\n | \n | $ | \n14 | \n\n | \n | $ | \n(60) | \n\n |
| \n \n Cleveland airport lease restructuring \n | \n \n | \n | 74 | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n |
| \n \n Severance and benefit costs \n | \n \n | \n | 8 | \n\n | \n | \n | 6 | \n\n | \n | \n | 13 | \n\n | \n | \n | 10 | \n\n |
| \n \n Impairment of assets \n | \n \n | \n | \n — | \n\n | \n | \n | 412 | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n |
| \n \n (Gains) losses on sale of 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 \n | \n \n \n \n | \n \n |
| \n \n Total operating 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 \n Nonoperating and income taxes: \n | \n \n | \n | \n | \n | \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 | \n | 8 | \n\n | \n | \n | (9) | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n |
| \n \n Income tax expense (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 \n Income tax adjustments (Note 6) \n | \n \n | \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 \n | \n \n \n \n | \n \n |
| \n \n Total operating and nonoperating special charges, net of income\n taxes and income tax adjustments \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 \n | \n \n \n \n | \n \n |
\n At December 31, 2017, United’s scheduled future minimum\n lease payments under operating leases having initial or remaining\n noncancelable lease terms of more than one year, aircraft leases,\n including aircraft rent under CPAs and capital leases\n (substantially all of which are for aircraft) were as follows (in\n millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n | \n | Capital Leases (a) | \n\n | \n | Facility and Other \n Operating Leases | \n \n | \n | Aircraft Operating \n Leases | \n \n | |||
| \n \n 2018 \n | \n \n | $ | \n200 | \n\n | \n | $ | \n1,234 | \n\n | \n | $ | \n1,038 | \n\n |
| \n \n 2019 \n | \n \n | \n | 133 | \n\n | \n | \n | 1,075 | \n\n | \n | \n | 855 | \n\n |
| \n \n 2020 \n | \n \n | \n | 113 | \n\n | \n | \n | 1,169 | \n\n | \n | \n | 628 | \n\n |
| \n \n 2021 \n | \n \n | \n | 110 | \n\n | \n | \n | 935 | \n\n | \n | \n | 510 | \n\n |
| \n \n 2022 \n | \n \n | \n | 105 | \n\n | \n | \n | 797 | \n\n | \n | \n | 388 | \n\n |
| \n \n After 2022 \n | \n \n | \n | 1,156 | \n\n | \n | \n | 6,109 | \n\n | \n | \n | 1,513 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \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 payments \n | \n \n | $ | \n1,817 | \n\n | \n | $ | \n11,319 | \n\n | \n | $ | \n4,932 | \n\n |
| \n | \n | \n | \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 | (693) | \n\n | \n | \n | \n | \n | \n | \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 lease payments \n | \n \n | \n | 1,124 | \n\n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Current portion \n | \n \n | \n | (128) | \n\n | \n | \n | \n | \n | \n | \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 capital leases \n | \n \n | $ | \n996 | \n\n | \n | \n | \n | \n | \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) Includes airport construction projects managed by United in\n which United has construction risk, including project cost\n overruns. The Company recorded an asset for project costs and a\n related liability equal to project costs funded by parties other\n than United. As of December 31, 2017, United had an asset\n balance of $814 million recorded in operating property and\n equipment and $777 million recorded in current and long-term\n obligations under capital leases for these airport construction\n projects.
\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\n losses on available-for-sale securities\n are reflected as a component of accumulated other comprehensive\n income (loss). | \n
\n Based on these assumptions as of December 31, 2017, our future\n payments through the end of the terms of our CPAs are presented in\n the table below (in billions):
\n\n
\n| \n | \n | \n | \n | \n |
| \n \n 2018 \n | \n \n | $ | \n2.0 | \n\n |
| \n \n 2019 \n | \n \n | \n | 1.8 | \n\n |
| \n \n 2020 \n | \n \n | \n | 1.6 | \n\n |
| \n \n 2021 \n | \n \n | \n | 1.5 | \n\n |
| \n \n 2022 \n | \n \n | \n | 1.4 | \n\n |
| \n \n After 2022 \n | \n \n | \n | 3.2 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n | \n | $ | \n\n 11.5 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n |
| (o) | \nTicket Taxes—Certain\n governmental taxes are imposed on the Company’s ticket sales\n through a fee included in ticket prices. The Company collects these\n fees and remits them to the appropriate government agency. These\n fees are recorded on a net basis (excluded from operating\n revenue). | \n
\n The collateral, covenants and cross default provisions of the\n Company’s principal debt instruments that contain such\n provisions are summarized in the table below:
\n\n
\n| \n | \n | \n |
| Debt Instrument | \n\n | Collateral, Covenants and Cross Default\n Provisions | \n
| \n \n Various equipment notes and other notes payable \n | \n \n | Secured by certain aircraft. The indentures contain\n events of default that are customary for aircraft financing,\n including in certain cases cross default to other related\n aircraft. | \n
| \n \n Credit Agreement \n | \n \n | \n \n Secured by certain of United’s international route\n authorities, specified take-off and landing slots at certain\n airports and certain other assets. \n\n \n\n The 2017 Credit Agreement requires the Company to maintain at least\n $2.0 billion of unrestricted liquidity at all times, which\n includes unrestricted cash, short-term investments and any undrawn\n amounts under any revolving credit facility, and to maintain a\n minimum ratio of appraised value of collateral to the outstanding\n obligations under the 2017 Credit Agreement of 1.6 to 1.0 at all\n times. The 2017 Credit Agreement contains covenants that, among\n other things, restrict the ability of UAL and its restricted\n subsidiaries (as defined in the 2017 Credit Agreement) to incur\n additional indebtedness and to pay dividends on or repurchase\n stock, although the Company currently has ample ability under these\n restrictions to repurchase stock under the Company’s share\n repurchase program. \n\n \n\n The 2017 Credit Agreement contains events of default customary for\n this type of financing, including a cross default and cross\n acceleration provision to certain other material indebtedness of\n the Company. \n | \n
| \n \n 6.375% Senior Notes due 2018 \n\n \n\n 6% Senior Notes due 2020 \n\n \n\n 4.25% Senior Notes due 2022 \n\n \n\n 5% Senior Notes due 2024 \n | \n \n | The indentures for these notes contain covenants\n that, among other things, restrict the ability of the Company and\n its restricted subsidiaries (as defined in the indentures) 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
\n Certain details of the pass-through trusts with proceeds received\n from issuance of debt in 2017 are as follows (in millions, except\n 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 EETC 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 \n 2017 | \n \n | \n | Proceeds \n received from \n issuance of \n debt during \n 2017 | \n \n | \n | Remaining \n proceeds from \n issuance of debt \n to be received \n in future \n periods | \n \n | |||||
| \n \n February 2018 \n | \n \n | AA | \n\n | $ | \n677 | \n\n | \n | \n March 2030 | \n\n | \n | 3.50% | \n\n | \n | $ | \n\n — | \n\n | \n | $ | \n\n — | \n\n | \n | $ | \n677 | \n\n |
| \n \n February 2018 \n | \n \n | A | \n\n | \n | 258 | \n\n | \n | March 2030 | \n\n | \n | 3.70% | \n\n | \n | \n | \n — | \n\n | \n | \n | \n — | \n\n | \n | \n | 258 | \n\n |
| \n \n November 2017 \n | \n \n | B | \n\n | \n | 258 | \n\n | \n | \n January 2026 | \n\n | \n | 3.65% | \n\n | \n | \n | 258 | \n\n | \n | \n | 258 | \n\n | \n | \n | \n — | \n\n |
| \n \n November 2017 \n | \n \n | B | \n\n | \n | 236 | \n\n | \n | \n October 2025 | \n\n | \n | 3.65% | \n\n | \n | \n | 236 | \n\n | \n | \n | 236 | \n\n | \n | \n | \n — | \n\n |
| \n \n September 2016 \n | \n \n | AA | \n\n | \n | 637 | \n\n | \n | \n October 2028 | \n\n | \n | 2.875% | \n\n | \n | \n | 637 | \n\n | \n | \n | 557 | \n\n | \n | \n | \n — | \n\n |
| \n \n September 2016 \n | \n \n | A | \n\n | \n | 283 | \n\n | \n | October\n 2028 | \n\n | \n | 3.10% | \n\n | \n | \n | 283 | \n\n | \n | \n | 247 | \n\n | \n | \n | \n — | \n\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 | 729 | \n\n | \n | \n | 319 | \n\n | \n | \n | \n — | \n\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 | 324 | \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 | \n \n \n | \n \n \n \n | \n \n |
| \n | \n | \n | \n | $ | \n3,402 | \n\n | \n | \n | \n | \n | \n | \n | \n | $ | \n2,467 | \n\n | \n | $ | \n1,759 | \n\n | \n | $ | \n935 | \n\n |
| \n | \n | \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \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
| (f) | \nAircraft Fuel, Spare Parts and\n Supplies—The Company accounts for aircraft fuel, spare\n parts and supplies at average cost and provides an obsolescence\n allowance for aircraft spare parts with an assumed residual value\n of 10% of original cost. | \n
\n The following table provides additional information related to the\n frequent flyer program (in millions):
\n\n
\n| \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n Year Ended \nDecember 31, \n | \n \n | \n Cash Proceeds \n from Miles Sold \n and Earned | \n \n | \n | \n Other Revenue \n Recognized Upon \n Award of Miles \n to Third-Party \n Customers (a) | \n \n | \n | \n Increase in Frequent \n Flyer Deferred \n Revenue for Miles \n Awarded (b) | \n \n | \n | \n Decrease in \n Advanced \n Purchase \n of Miles (c) | \n \n | ||||
| \n \n 2017 \n | \n \n | $ | \n2,343 | \n\n | \n | $ | \n1,183 | \n\n | \n | $ | \n2,025 | \n\n | \n | $ | \n(865) | \n\n |
| \n \n 2016 \n | \n \n | \n | 3,022 | \n\n | \n | \n | 1,221 | \n\n | \n | \n | 2,050 | \n\n | \n | \n | (249) | \n\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 \n \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | |||
| (a) This\n amount represents other revenue recognized during the period from\n the sale of miles to third parties, representing the\n marketing-related deliverable services component of the\n sale. | \n\n | |||||||||||||||
| (b) This\n amount represents the increase to Frequent flyer deferred revenue\n during the period. | \n\n | |||||||||||||||
| (c) This\n amount represents the net decrease in the advance purchase of miles\n obligation due to cash payments for the sale of miles less than\n miles awarded to customers. | \n\n |
| (s) | \nThird-Party Business—The\n Company has third-party business revenue that includes fuel sales,\n catering, ground handling, maintenance services and frequent flyer\n award non-air redemptions.\n Third-party business revenue is recorded in Other operating\n revenue. The Company also incurs third-party business expenses,\n such as maintenance, ground handling and catering services for\n third parties, fuel sales and non-air mileage redemptions. The\n third-party business expenses are recorded in Other operating\n expenses. | \n
Statements of Consolidated Operations for the\n Years Ended December 31,
\n\n
\n| \n | \n | \n | \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 Reported | \n\n | \n | Adjustment | \n\n | \n | As Adjusted \n for Adoption of \n Topic 606 | \n \n | |||||||||||||||
| \n | \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2017 | \n\n | \n | 2016 | \n\n | ||||||
| \n \n Operating revenue: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Passenger—Mainline \n | \n \n | $ | \n26,552 | \n\n | \n | $ | \n25,414 | \n\n | \n | $ | \n1,707 | \n\n | \n | $ | \n1,615 | \n\n | \n | $ | \n28,259 | \n\n | \n | $ | \n27,029 | \n\n |
| \n \n Passenger—Regional \n | \n \n | \n | 5,852 | \n\n | \n | \n | 6,043 | \n\n | \n | \n | 349 | \n\n | \n | \n | 357 | \n\n | \n | \n | 6,201 | \n\n | \n | \n | 6,400 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 passenger revenue \n | \n \n | \n | 32,404 | \n\n | \n | \n | 31,457 | \n\n | \n | \n | 2,056 | \n\n | \n | \n | 1,972 | \n\n | \n | \n | 34,460 | \n\n | \n | \n | 33,429 | \n\n |
| \n \n Cargo \n | \n \n | \n | 1,035 | \n\n | \n | \n | 876 | \n\n | \n | \n | 79 | \n\n | \n | \n | 58 | \n\n | \n | \n | 1,114 | \n\n | \n | \n | 934 | \n\n |
| \n \n Other operating revenue \n | \n \n | \n | 4,297 | \n\n | \n | \n | 4,223 | \n\n | \n | \n | (2,087) | \n\n | \n | \n | (2,028) | \n\n | \n | \n | 2,210 | \n\n | \n | \n | 2,195 | \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 \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 revenue \n | \n \n | \n | 37,736 | \n\n | \n | \n | 36,556 | \n\n | \n | \n | 48 | \n\n | \n | \n | 2 | \n\n | \n | \n | 37,784 | \n\n | \n | \n | 36,558 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Operating expenses \n | \n \n | \n | 34,238 | \n\n | \n | \n | 32,218 | \n\n | \n | \n | (21) | \n\n | \n | \n | (12) | \n\n | \n | \n | 34,217 | \n\n | \n | \n | 32,206 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Operating income \n | \n \n | \n | 3,498 | \n\n | \n | \n | 4,338 | \n\n | \n | \n | 69 | \n\n | \n | \n | 14 | \n\n | \n | \n | 3,567 | \n\n | \n | \n | 4,352 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Nonoperating expense, net \n | \n \n | \n | (499) | \n\n | \n | \n | (519) | \n\n | \n | \n | (28) | \n\n | \n | \n | (60) | \n\n | \n | \n | (527) | \n\n | \n | \n | (579) | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
| \n \n Income before income taxes \n | \n \n | \n | 2,999 | \n\n | \n | \n | 3,819 | \n\n | \n | \n | 41 | \n\n | \n | \n | (46) | \n\n | \n | \n | 3,040 | \n\n | \n | \n | 3,773 | \n\n |
| \n \n Income tax expense (benefit) \n | \n \n | \n | 868 | \n\n | \n | \n | 1,556 | \n\n | \n | \n | 28 | \n\n | \n | \n | (17) | \n\n | \n | \n | 896 | \n\n | \n | \n | 1,539 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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 income \n | \n \n | $ | \n2,131 | \n\n | \n | $ | \n2,263 | \n\n | \n | $ | \n13 | \n\n | \n | $ | \n(29) | \n\n | \n | $ | \n2,144 | \n\n | \n | $ | \n2,234 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \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, basic \n | \n \n | $ | \n7.04 | \n\n | \n | $ | \n6.86 | \n\n | \n | $ | \n0.04 | \n\n | \n | $ | \n(0.09) | \n\n | \n | $ | \n7.08 | \n\n | \n | $ | \n6.77 | \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 \n | \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, diluted \n | \n \n | $ | \n7.02 | \n\n | \n | $ | \n6.85 | \n\n | \n | $ | \n0.04 | \n\n | \n | $ | \n(0.09) | \n\n | \n | $ | \n7.06 | \n\n | \n | $ | \n6.76 | \n\n |
| \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n | \n | \n \n \n | \n \n \n \n | \n \n |
Consolidated Balance Sheets as of\n December 31,
\n\n
\n| \n | \n | \n | \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 Reported | \n\n | \n | Adjustment | \n\n | \n | As Adjusted \n for Adoption of \n Topic 606 | \n \n | |||||||||||||||
| \n | \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2017 | \n\n | \n | 2016 | \n\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 \n Prepaid expenses and other \n | \n \n | $ | \n1,051 | \n\n | \n | $ | \n832 | \n\n | \n | $ | \n20 | \n\n | \n | $ | \n20 | \n\n | \n | $ | \n1,071 | \n\n | \n | $ | \n852 | \n\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 \n Deferred income taxes \n | \n \n | \n | \n — | \n\n | \n | \n | 655 | \n\n | \n | \n | \n — | \n\n | \n | \n | 48 | \n\n | \n | \n | \n — | \n\n | \n | \n | 703 | \n\n |
| \n \n Current liabilities: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Advance ticket sales \n | \n \n | \n | 3,876 | \n\n | \n | \n | 3,730 | \n\n | \n | \n | 64 | \n\n | \n | \n | 65 | \n\n | \n | \n | 3,940 | \n\n | \n | \n | 3,795 | \n\n |
| \n \n Frequent flyer deferred revenue \n | \n \n | \n | 2,176 | \n\n | \n | \n | 2,135 | \n\n | \n | \n | 16 | \n\n | \n | \n | 14 | \n\n | \n | \n | 2,192 | \n\n | \n | \n | 2,149 | \n\n |
| \n \n Other \n | \n \n | \n | 569 | \n\n | \n | \n | 1,010 | \n\n | \n | \n | 7 | \n\n | \n | \n | 79 | \n\n | \n | \n | 576 | \n\n | \n | \n | 1,089 | \n\n |
| \n \n Other liabilities and deferred credits: \n | \n \n | \n | \n | \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 deferred revenue \n | \n \n | \n | 2,565 | \n\n | \n | \n | 2,748 | \n\n | \n | \n | 26 | \n\n | \n | \n | (8 | \n) | \n\n | \n | 2,591 | \n\n | \n | \n | 2,740 | \n\n |
| \n \n Advanced purchase of miles \n | \n \n | \n | \n — | \n\n | \n | \n | 430 | \n\n | \n | \n | \n — | \n\n | \n | \n | 3 | \n\n | \n | \n | \n — | \n\n | \n | \n | 433 | \n\n |
| \n \n Deferred income taxes \n | \n \n | \n | 225 | \n\n | \n | \n | \n — | \n\n | \n | \n | (21) | \n\n | \n | \n | \n — | \n\n | \n | \n | 204 | \n\n | \n | \n | \n — | \n\n |
| \n \n Stockholders’ equity: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Retained earnings \n | \n \n | \n | 4,621 | \n\n | \n | \n | 3,427 | \n\n | \n | \n | (72) | \n\n | \n | \n | (85 | \n) | \n\n | \n | 4,549 | \n\n | \n | \n | 3,342 | \n\n |
Statements of Consolidated Operations for the\n Years Ended December 31,
\n\n
\n| \n | \n | \n | \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 Reported | \n\n | \n | Adjustment | \n\n | \n | As Adjusted for \n Adoption of \n ASU 2017-07 | \n \n | |||||||||||||||
| \n | \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2017 | \n\n | \n | 2016 | \n\n | \n | 2017 | \n\n | \n | 2016 | \n\n | ||||||
| \n \n Operating expense: \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Salaries and related costs \n | \n \n | $ | \n11,045 | \n\n | \n | $ | \n10,275 | \n\n | \n | $ | \n(104) | \n\n | \n | $ | \n(99 | \n) | \n\n | $ | \n10,941 | \n\n | \n | $ | \n10,176 | \n\n |
| \n \n Special charges \n | \n \n | \n | 176 | \n\n | \n | \n | 638 | \n\n | \n | \n | \n — | \n\n | \n | \n | 107 | \n\n | \n | \n | 176 | \n\n | \n | \n | 745 | \n\n |
| \n \n Nonoperating income (expense): \n | \n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n |
| \n \n Miscellaneous, net \n | \n \n | \n | 3 | \n\n | \n | \n | (19) | \n\n | \n | \n | (104) | \n\n | \n | \n | 8 | \n\n | \n | \n | (101) | \n\n | \n | \n | (11) | \n\n |
\n As of December 31, 2017, United had firm commitments and\n options to purchase aircraft from The Boeing Company\n (“Boeing”) and Airbus presented in the table below:
\n\n
\n| \n | \n | \n | \n | \n |
| \n Aircraft Type \n | \n \n | Number of Firm \n Commitments (a) | \n \n | |
| \n \n Airbus A350 \n | \n \n | \n | 45 | \n\n |
| \n \n Boeing 737 MAX \n | \n \n | \n | 161 | \n\n |
| \n \n Boeing 777-300ER \n | \n \n | \n | 4 | \n\n |
| \n \n Boeing 787 \n | \n \n | \n | 18 | \n\n |
| (a)\n United also has options and purchase rights for additional\n aircraft. | \n\n |