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Significant Accounting Policies (Policies)
9 Months Ended
Sep. 30, 2014
Frequent Flyer Accounting

Frequent Flyer Accounting. On March 30, 2014, US Airways exited Star Alliance. Effective with the exit date, the Company updated its estimated selling price for miles to a value based on the equivalent ticket value less fulfillment discount, which incorporates the expected redemption of miles. The equivalent ticket value used as the basis for the estimated selling price of miles is based on the prior 12 months’ weighted average equivalent ticket value of similar fares as those used to settle award redemptions while taking into consideration such factors as redemption pattern, cabin class, loyalty status and geographic region. The estimated selling price of miles is adjusted by a fulfillment discount that considers a number of factors, including redemption patterns of various customer groups. This change in estimate was applied on a prospective basis beginning April 1, 2014. The estimated impact of this change on consolidated revenue is expected to be an increase of approximately $75 million in 2014.

During the third quarter of 2014, the Company refined its estimate of the number of miles that have been redeemed for award travel, but for which travel has not occurred, to a computation that uses actual miles open versus a historical average. Although this change is not expected to significantly impact the reported amount of passenger revenue recognized in 2014 or in any future years, the new estimate will likely result in more seasonality in the results between quarters. The Company expects that based on historical redemption and travel patterns, using the revised method will result in lower revenue from frequent flyer awards redeemed during the first quarter and higher revenue during the third quarter in future periods than historical amounts, with minimal differences during the second and fourth quarters.

Related Party Receivables

Related Party Receivables. At December 31, 2013, United had receivables from two affiliates, which were wholly-owned subsidiaries of UAL, of $232 million that were classified against stockholder’s equity. UAL transferred all of its equity interest in each of the two subsidiaries to United in the first quarter of 2014, and the transfers have been reflected as reductions in paid in capital.

Recently Issued Accounting Standards

Recently Issued Accounting Standards. In May 2014, the Financial Accounting Standards Board (“FASB”) amended the FASB Accounting Standards Codification and created a new Topic 606, Revenue from Contracts with Customers. This amendment prescribes that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendment supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the Codification. The amendments will become effective for the Company’s annual and interim reporting periods beginning January 1, 2017. The Company is evaluating the impact on its financial statements.