Employee Benefit Plans

3 Months Ended

Mar. 31, 2013

Employee Benefit Plans

NOTE 5—EMPLOYEE BENEFIT PLANS

Defined Benefit Pension and Other Postretirement Benefit Plans. The Company’s net periodic benefit cost includes the following components (in millions):

	Pension Benefits						Other Postretirement Benefits
	Three Months Ended March 31,						Three Months Ended March 31,
	2013			2012			2013			2012
Service cost	$	33		$	25		$	14		$	13
Interest cost		47			46			28			31
Expected return on plan assets		(40	)		(35	)		(1	)		(1	)
Amortization of unrecognized (gain) loss and prior service cost		18			5			3			(1	)
Net periodic benefit costs	$	58		$	41		$	44		$	42

During the three months ended March 31, 2013, the Company contributed $41 million to its tax-qualified defined benefit pension plans.

Share-Based Compensation. In February 2013, UAL granted share-based compensation awards pursuant to the United Continental Holdings, Inc. 2008 Incentive Compensation Plan. These share-based compensation awards include approximately 0.5 million shares of restricted stock and 0.5 million restricted stock units (“RSUs”) that vest pro-rata over three years on the anniversary of the grant date. The time-vested RSUs are cash-settled based on the 20-day average closing price of UAL common stock immediately prior to the vesting date. In addition, the Company granted 1.3 million performance-based RSUs that will vest based on the Company’s return on invested capital for the three years ending December 31, 2015. If this performance condition is achieved, cash payments will be made after the end of the performance period based on the 20-day average closing price of UAL common stock immediately prior to the vesting date. The Company accounts for the RSUs as liability awards. The table below presents information related to share-based compensation (in millions):

	Three Months Ended March 31,
	2013		2012
Share-based compensation expense (a)	$	27	$	15
	March 31, 2013		December 31, 2012
Unrecognized share-based compensation expense	$	58	$	33

(a) Includes $8 million and $4 million of expense recognized in Merger integration-related costs for the three months ended March 31, 2013 and 2012, respectively.

Profit Sharing Plans. In 2013, substantially all employees participate in profit sharing plans, which pay 15% of total pre-tax earnings, excluding special items and share-based compensation expense, to eligible employees when pre-tax profit, excluding special items, profit sharing expense and share-based compensation program expense, exceeds $10 million. Eligible U.S. co-workers in each participating work group receive a profit sharing payout using a formula based on the ratio of each qualified co-worker’s annual eligible earnings to the eligible earnings of all qualified co-workers in all domestic workgroups. The international profit sharing plan pays eligible non-U.S. co-workers the same percentage of eligible pay that is calculated under the U.S. profit sharing plan. Profit sharing expense is recorded as a component of salaries and related costs in the consolidated statements of operations.