Pension and Other Postretirement Plans (Tables)

12 Months Ended

Dec. 31, 2012

Reconciliation of Change in Projected Benefit Obligation and Plan Assets

The following table sets forth the reconciliation of the beginning and ending balances of the benefit obligation and plan assets, the funded status and the amounts recognized in these financial statements for the defined benefit and other postretirement plans (in millions):

	Pension Benefits
	Year Ended  December 31, 2012			Year Ended  December 31, 2011
Accumulated benefit obligation:	$	3,978		$	3,321
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	3,708		$	3,322
Service cost		99			88
Interest cost		184			178
Actuarial (gain) loss		702			251
Gross benefits paid		(162	)		(137	)
Other		(5	)		6
Projected benefit obligation at end of year	$	4,526		$	3,708
Change in plan assets:
Fair value of plan assets at beginning of year	$	1,868		$	1,871
Actual gain (loss) on plan assets		223			(47	)
Employer contributions		228			194
Benefits paid		(162	)		(137	)
Other		—			(13	)
Fair value of plan assets at end of year	$	2,157		$	1,868
Funded status—Net amount recognized	$	(2,369	)	$	(1,840	)

	Pension Benefits
	December 31, 2012			December 31, 2011
Amounts recognized in the consolidated balance sheets consist of:
Noncurrent asset	$	35		$	31
Current liability		(4	)		(9	)
Noncurrent liability		(2,400	)		(1,862	)
Total liability	$	(2,369	)	$	(1,840	)
Amounts recognized in accumulated other comprehensive income (loss) consist of:
Net actuarial gain (loss)	$	(826	)	$	(231	)
Prior service credit (cost)		2			3
Total accumulated other comprehensive income (loss)	$	(824	)	$	(228	)
	Other Postretirement Benefits
	Year Ended  December 31, 2012			Year Ended  December 31, 2011
Change in benefit obligation:
Benefit obligation at beginning of year	$	2,541		$	2,494
Service cost		50			47
Interest cost		124			127
Plan participants’ contributions		77			73
Actuarial (gain) loss		110			(2	)
Federal subsidy		13			13
Plan amendments		22			3
Gross benefits paid		(194	)		(214	)
Benefit obligation at end of year	$	2,743		$	2,541
Change in plan assets:
Fair value of plan assets at beginning of year	$	58		$	58
Actual return on plan assets		1			1
Employer contributions		116			141
Plan participants’ contributions		77			72
Benefits paid		(194	)		(214	)
Fair value of plan assets at end of year	$	58		$	58
Funded status—Net amount recognized	$	(2,685	)	$	(2,483	)

Amounts Recognized in Consolidated Balance Sheet and Accumulated Other Comprehensive Income (Loss)

Other Postretirement Benefits
	December 31, 2012			December 31, 2011
Amounts recognized in the consolidated balance sheets consist of:
Current liability	$	(71	)	$	(76	)
Noncurrent liability		(2,614	)		(2,407	)
Total liability	$	(2,685	)	$	(2,483	)
Amounts recognized in accumulated other comprehensive income (loss) consist of:
Net actuarial gain (loss)	$	(79	)	$	33
Prior service cost		(24	)		(2	)
Total accumulated other comprehensive income (loss)	$	(103	)	$	31

Accumulated Benefit Obligation and Projected Benefit Obligation in Excess of Plan Assets

The following information relates to all pension plans with an accumulated benefit obligation and a projected benefit obligation in excess of plan assets at December 31 (in millions):

	2012		2011
Projected benefit obligation	$	4,387	$	3,594
Accumulated benefit obligation		3,869		3,230
Fair value of plan assets		1,991		1,731

Components Of Net Periodic Benefit Cost

Net periodic benefit cost for the years ended December 31 included the following components (in millions):

	2012						2011						2010
	Pension Benefits			Other Postretirement Benefits			Pension Benefits			Other Postretirement Benefits			Pension Benefits			Other Postretirement Benefits
Service cost	$	99		$	50		$	88		$	47		$	27		$	33
Interest cost		184			124			178			127			51			120
Expected return on plan assets		(138	)		(2	)		(140	)		(2	)		(39	)		(2	)
Curtailment gain		—			—			—			—			(7	)		—
Amortization of prior service cost (credit)		(1	)		—			(2	)		—			(2	)		—
Special termination benefits		—			—			—			—			4			—
Settlement (gain) loss		1			—			1			—			—			—
Amortization of unrecognized actuarial (gain) loss		21			(3	)		(20	)		(2	)		1			(12	)
Net periodic benefit cost	$	166		$	169		$	105		$	170		$	35		$	139

Amortized Accumulated Other Comprehensive Income Into Net Periodic Benefit Cost

The estimated amounts that will be amortized in 2013 for actuarial losses are as follows (in millions):

	Pension Benefits		Other Postretirement Benefits
Actuarial loss to be reclassified from accumulated other comprehensive income into net periodic benefit cost	$	73	$	7

Assumption Used for Benefit Plans

The assumptions used for the benefit plans were as follows:

	Pension Benefits
Assumptions used to determine benefit obligations	2012			2011
Discount rate		4.19	%		5.00	%
Rate of compensation increase		2.49	%		2.48	%
Assumptions used to determine net expense
Discount rate		5.02	%		5.39	%
Expected return on plan assets		7.54	%		7.55	%
Rate of compensation increase		2.48	%		2.49	%
	Other Postretirement Benefits
Assumptions used to determine benefit obligations	2012			2011
Discount rate		4.12	%		4.91	%
Assumptions used to determine net expense
Discount rate		4.92	%		5.13	%
Expected return on plan assets		4.00	%		4.00	%
Health care cost trend rate assumed for next year		6.75	%		7.00	%
Rate to which the cost trend rate is assumed to decline (ultimate trend rate in 2020)		5.00	%		5.00	%

Allocation of Plan Asset

United’s plan assets are allocated within the following guidelines:

	Percent of Total			Expected Long-Term Rate of Return
Equity securities		38-54	%		9.5	%
Fixed-income securities		27-33			6.0
Alternatives		17-23			7.3
Other		2-6			3.8

Effect of One-Percentage-Point Change in Assumed Health Care Trend Rate

A 1% change in the assumed health care trend rate for the Company would have the following additional effects (in millions):

	1% Increase		1% Decrease
Effect on total service and interest cost for the year ended December 31, 2012	$	22	$	(18	)
Effect on postretirement benefit obligation at December 31, 2012		338		(280	)

Pension and Other Postretirement Plan Assets

The following tables present information about the United’s pension and other postretirement plan assets at December 31 (in millions):

	2012								2011
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Pension Plan Assets:
Equity securities funds	$	1,034	$	383	$	651	$	—	$	872	$	355	$	517	$	—
Fixed-income securities		611		—		609		2		530		—		530		—
Alternatives		394		—		234		160		344		—		195		149
Insurance contract		36		—		—		36		42		—		—		42
Other investments		82		—		82		—		80		—		80		—
Total	$	2,157	$	383	$	1,576	$	198	$	1,868	$	355	$	1,322	$	191
Other Postretirement Benefit Plan Assets:
Deposit administration fund	$	58	$	—	$	—	$	58	$	58	$	—	$	—	$	58

Defined Benefit Plan Assets Measured at Fair Value Using Unobservable Inputs (Level Three)

The reconciliation of United’s defined benefit plan assets measured at fair value using unobservable inputs (Level 3) for the years ended December 31, 2012 and 2011 is as follows (in millions):

	2012			2011
Balance at beginning of year	$	249		$	250
Actual return on plan assets:
Unrealized gains (losses) relating to assets still held at year end		(47	)		6
Purchases, sales, issuances and settlements (net)		54			(7	)
Balance at end of year	$	256		$	249

Estimated Future Benefit Payments

The estimated future benefit payments, net of expected participant contributions, in United’s pension plans and other postretirement benefit plans as of December 31, 2012 are as follows (in millions):

	Pension		Other Postretirement		Other Postretirement— subsidy receipts
2013	$	312	$	136	$	7
2014		317		143		8
2015		321		150		9
2016		320		159		10
2017		317		166		11
Years 2018 – 2022		1,579		964		61

Multi-Employer Plans

Pension Fund	IAM National Pension Fund
EIN/ Pension Plan Number	51-6031295 - 002
Pension Protection Act Zone Status (2012 and 2011)*	Green Zone
FIP/RP Status Pending/Implemented	No
United’s Contributions	$36 million and $34 million in the years ended December 31, 2012 and 2011, respectively
Surcharge Imposed	No
Expiration Date of Collective Bargaining Agreement	N/A

* Plans in the green zone are at least 80 percent funded.