Common Stockholders' Equity and Preferred Securities

12 Months Ended

Dec. 31, 2014

Common Stockholders' Equity and Preferred Securities

NOTE 3 - COMMON STOCKHOLDERS’ EQUITY AND PREFERRED SECURITIES

During 2014, United used $62 million of cash to purchase and retire $28 million aggregate principal amount of United’s 4.5% Convertible Notes due 2015 (the “4.5% Convertible Notes”) in market transactions. UAL and United recorded reductions of additional paid-in capital of $34 million and $62 million, respectively, to record the transactions. At December 31, 2014, the remaining balance of these notes was $202 million. In January 2015, the holders of substantially all of the remaining $202 million principal amount of the 4.5% Convertible Notes exercised their conversion option resulting in the issuance of 11 million shares of UAL common stock.

United paid a dividend of $212 million to UAL in 2014. United recorded the dividend as a reduction of additional paid-in capital.

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 2014, and United reflected the transfers as reductions in additional paid-in capital.

In 2014, UAL issued approximately 12 million shares of UAL common stock in exchange for, or upon conversion of, $104 million in aggregate principal amount of its 6% Convertible Senior Notes due 2029 (the “6% Convertible Senior Notes”) held by the holders of these notes.

In January 2014, holders of substantially all of the remaining $156 million outstanding principal amount of the 4.5% Senior Limited-Subordination Convertible Notes due 2021 (the “4.5% Notes”) exercised their right to convert such notes into approximately five million shares of UAL common stock. See Note 11 of this report for additional information related to exercises of rights under the 4.5% Notes.

On July 24, 2014, UAL announced a $1 billion share repurchase program, which was authorized by UAL’s Board of Directors. UAL may repurchase shares through the open market, privately negotiated transactions, block trades, or accelerated share repurchase transactions from time to time in accordance with applicable securities laws. UAL will repurchase shares of common stock subject to prevailing market conditions, and may discontinue such repurchases at any time.

On July 24, 2014, pursuant to the $1 billion share repurchase program, UAL entered into two separate agreements to repurchase an aggregate of $200 million of shares of UAL common stock through an accelerated share repurchase program (the “ASR Program”). UAL paid $200 million and received approximately 4.4 million shares. In addition to shares purchased under the ASR Program, UAL spent $120 million on open market repurchases of 2.1 million shares of UAL common stock in 2014.

At December 31, 2014, approximately 21 million shares of UAL’s common stock were reserved for future issuance related to the conversion of convertible debt securities and the issuance of equity based awards under the Company’s incentive compensation plans.

As of December 31, 2014, UAL had two shares of junior preferred stock (par value $0.01 per share) outstanding. In addition, UAL is authorized to issue 250 million shares of preferred stock (without par value) under UAL’s amended and restated certificate of incorporation.