Financial Instruments and Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2012

Financial Assets And Liabilities Measured At Fair Value On Recurring Basis

The table below presents disclosures about the financial assets and financial liabilities measured at fair value on a recurring basis in the Company’s financial statements as of September 30, 2012 and December 31, 2011 (in millions):


	September 30, 2012										December 31, 2011
	Total			Level 1		Level 2		Level 3			Total			Level 1		Level 2			Level 3
	UAL
Cash and cash equivalents	$	5,129		$	5,129	$	—	$	—		$	6,246		$	6,246	$	—		$	—
Short-term investments:
Asset-backed securities		647			—		647		—			478			—		478			—
Corporate debt		340			—		340		—			515			—		515			—
Certificates of deposit placed through an account registry service (“CDARS”)		404			—		404		—			355			—		355			—
Auction rate securities		115			—		—		115			113			—		—			113
U.S. government and agency notes		15			—		15		—			22			—		22			—
Other fixed income securities		30			—		30		—			33			—		33			—
Enhanced equipment trust certificates (“EETC”)		62			—		—		62			60			—		—			60
Fuel derivatives, net		33			—		33		—			73			—		73			—
Foreign currency derivatives		—			—		—		—			(1	)		—		(1	)		—
Restricted cash		471			471		—		—			569			569		—			—

	United
Cash and cash equivalents	$	3,005		$	3,005	$	—	$	—		$	3,458		$	3,458	$	—		$	—
Short-term investments:
Asset-backed securities		16			—		16		—			29			—		29			—
Corporate debt		140			—		140		—			138			—		138			—
CDARS		156			—		156		—			87			—		87			—
U.S. government and agency notes		8			—		8		—			5			—		5			—
Other fixed income securities		26			—		26		—			16			—		16			—
EETC		62			—		—		62			60			—		—			60
Fuel derivatives, net		24			—		24		—			44			—		44			—
Restricted cash		354			354		—		—			433			433		—			—

	Continental
Cash and cash equivalents	$	2,119		$	2,119	$	—	$	—		$	2,782		$	2,782	$	—		$	—
Short-term investments:
Asset-backed securities		631			—		631		—			449			—		449			—
Corporate debt		200			—		200		—			377			—		377			—
CDARS		248			—		248		—			268			—		268			—
Auction rate securities		115			—		—		115			113			—		—			113
U.S. government and agency notes		7			—		7		—			17			—		17			—
Other fixed income securities		4			—		4		—			17			—		17			—
Fuel derivatives, net		9			—		9		—			29			—		29			—
Foreign currency derivatives		—			—		—		—			(1	)		—		(1	)		—
Restricted cash		116			116		—		—			135			135		—			—
Convertible debt derivative asset		202			—		—		202			193			—		—			193
Convertible debt option liability		(91	)		—		—		(91	)		(95	)		—		—			(95	)

Activity For "Level Three" Financial Assets And Financial Liabilities

The tables below present disclosures about the activity for “Level 3” financial assets and financial liabilities for the three and nine months ended September 30 (in millions):


	Three Months Ended September 30,
	2012					2011
UAL (a)	Auction Rate Securities		EETC			Auction Rate Securities			EETC
Balance at June 30	$	112	$	63		$	121		$	65
Settlements		—		(2	)		—			(2	)
Gains (losses):
Reported in earnings—unrealized		1		—			1			—
Reported in other comprehensive income (loss)		2		1			(1	)		(3	)

Balance at September 30	$	115	$	62		$	121		$	60

(a)	For 2012 and 2011, United’s only Level 3 recurring measurements are the above EETCs.


	Nine Months Ended September 30,
	2012					2011
UAL (a)	Auction Rate Securities		EETC			Auction Rate Securities		EETC
Balance at January 1	$	113	$	60		$	119	$	66
Settlements		—		(5	)		—		(4	)
Gains (losses):
Reported in earnings—unrealized		—		—			2		—
Reported in other comprehensive income (loss)		2		7			—		(2	)

Balance at September 30	$	115	$	62		$	121	$	60

(a)	For 2012 and 2011, United’s only Level 3 recurring measurements are the above EETCs.


	Three Months Ended September 30,
	2012								2011
Continental	Auction Rate Securities		Convertible Debt Supplemental Derivative Asset (a)			Convertible Debt Conversion Option Liability (a)			Auction Rate Securities			Convertible Debt Supplemental Derivative Asset (a)			Convertible Debt Conversion Option Liability (a)
Balance at June 30	$	112	$	289		$	(147	)	$	121		$	251		$	(143	)
Sales		—		—			—			—			—			—
Gains (losses):
Reported in earnings—unrealized		1		(87	)		56			1			(52	)		40
Reported in other comprehensive income (loss)		2		—			—			(1	)		—			—

Balance at September 30	$	115	$	202		$	(91	)	$	121		$	199		$	(103	)

(a)

These derivatives are not designated as hedges. The Convertible Debt Supplemental Derivative Asset is classified in “Other Asset—Other, net”, and the Convertible Debt Conversion Option Liability is classified in “Other liabilities and deferred credits—Other” in Continental’s consolidated balance sheets. The earnings impact is classified in “Nonoperating income (expense)—Miscellaneous, net” in Continental’s statements of consolidated operations.


	Nine Months Ended September 30,
	2012							2011
Continental	Auction Rate Securities		Convertible Debt Supplemental Derivative Asset (a)		Convertible Debt Conversion Option Liability (a)			Auction Rate Securities		Convertible Debt Supplemental Derivative Asset (a)			Convertible Debt Conversion Option Liability (a)
Balance at January 1	$	113	$	193	$	(95	)	$	119	$	286		$	(164	)
Sales		—		—		—			—		—			—
Gains (losses):
Reported in earnings—unrealized		—		9		4			2		(87	)		61
Reported in other comprehensive income (loss)		2		—		—			—		—			—

Balance at September 30	$	115	$	202	$	(91	)	$	121	$	199		$	(103	)

(a)

Carrying Values And Estimated Fair Values Of Financial Instruments

The table below presents the carrying values and estimated fair values of financial instruments not presented in the tables above as of September 30, 2012 and December 31, 2011 (in millions):


	Fair Value of Debt by Fair Value Hierarchy Level
	September 30, 2012										December 31, 2011
	Carrying Amount		Fair Value								Carrying Amount		Fair Value
			Total		Level 1		Level 2		Level 3				Total		Level 1		Level 2		Level 3
UAL debt	$	11,296	$	12,320	$	—	$	7,015	$	5,305	$	11,682	$	11,992	$	—	$	859	$	11,133
United debt		5,169		5,436		—		1,994		3,442		5,745		5,630		—		—		5,630
Continental debt		5,724		6,050		—		4,187		1,863		5,528		5,503		—		—		5,503

Quantitative Information About Level 3 Fair Value Measurements

Quantitative Information About Level 3 Fair Value Measurements as of September 30, 2012 ($ in millions)



Item	Fair Value at September 30, 2012			Valuation Technique	Unobservable Input	Range (Weighted Average)
Auction rate securities	$	115		Discounted Cash Flows	Credit risk premium (a)	1%
					Illiquidity premium (b)	5%
					Expected repayments (c)	Assumed repayment in years 2013 through 2036
EETC		62		Discounted Cash Flows	Structure credit risk (d)	6% - 7% (7%)
Convertible debt derivative asset		202		Binomial Lattice Model	Expected volatility (e)	45% - 60% (48%)
					Own credit risk (f)	7% - 10% (8%)
Convertible debt option liability		(91	)	Binomial Lattice Model	Expected volatility (e)	45% - 60% (49%)
					Own credit risk (f)	7% - 10% (8%)

(a)	Represents the credit risk premium component of the discount rate that the Company has determined market participants would use in pricing the investments.

(b)	Represents the illiquidity premium component of the discount rate that the Company has determined market participants would use in pricing the investments.

(c)	Represents the estimated timing of principal repayments used in the discounted cash flow model.

(d)	Represents the credit risk premium of the EETC structure above the risk-free rate that the Company has determined market participants would use in pricing the instruments.

(e)	Represents the range in volatility estimates that the Company has determined market participants would use when pricing the instruments.

(f)	Represents the range of Company-specific risk adjustments that the Company has determined market participants would use as a model input.

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

+ References+ Details

- Definition

Tabular disclosure of the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such certain disclosures about the financial instruments, assets, and liabilities include: (1) the fair value of the required items together with their carrying amounts (as appropriate) and (2) the methodology and assumptions used in developing such estimates of fair value.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 14

-Subparagraph a

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 159

-Paragraph 18

-Subparagraph c(2), d, e, f

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 50

-Paragraph 10

-Subparagraph (a)

-URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13433-108611

Reference 4: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 15

-Subparagraph b-d

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 50

-Paragraph 11

-URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13467-108611

Reference 6: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 159

-Paragraph 19

-Subparagraph a, b, c(1), d(1)

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

-Paragraph 2

-Subparagraph (a)

-URI http://asc.fasb.org/extlink&oid=7578670&loc=d3e19207-110258

Reference 8: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 45

-Paragraph 2

-URI http://asc.fasb.org/extlink&oid=6447952&loc=d3e13220-108610

Reference 9: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

-Paragraph 32

-Subparagraph a, c(1), c(2), c(3), d

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 10: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 10

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 11: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 50

-Paragraph 12

-URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13476-108611

Reference 12: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 50

-Paragraph 30

-Subparagraph (a)

-URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612

+ Details