NOTE 8 - COMMITMENTS AND CONTINGENCIES

Commitments. As of June 30, 2014, United had firm commitments to purchase aircraft from The Boeing Company (“Boeing”), Embraer S.A. (“Embraer”) and Airbus S.A.S. (“Airbus”) presented in the table below:


Aircraft Type	Number of Firm Commitments (a)
Airbus A350-1000		35
Boeing 737-900ER		43
Boeing 737 MAX 9		100
Boeing 787-8/-9/-10		54
Embraer 175		26
(a) United also has options and purchase rights for additional aircraft.

The aircraft listed in the table above are scheduled for delivery for the remainder of 2014 through 2025. In the remainder of 2014, United expects to take delivery of nine Boeing 737-900ER aircraft, one Boeing 787-8 aircraft, two Boeing 787-9 aircraft and 15 Embraer 175 aircraft.

The table below summarizes United’s commitments as of June 30, 2014, which primarily relate to the acquisition of aircraft and related spare engines, aircraft improvements and include other commitments primarily to acquire information technology services and assets. The table below is adjusted to include the impact of the Company’s July 2014 agreement with Boeing to convert seven Boeing 787-8 aircraft originally scheduled to be delivered between 2017 and 2018, to seven Boeing 787-10 aircraft scheduled to be delivered starting after 2018 and other scheduled adjustments.


	(in billions)
Last six months of 2014	$	1.7
2015		2.9
2016		1.6
2017		1.2
2018		2.1
After 2018		13.8

	$	23.3

Any incremental firm aircraft orders, including through the exercise of purchase options and purchase rights, will increase the total future capital commitments of the Company.

As of June 2014, United has arranged for EETC and bank debt financing for all 2014 aircraft deliveries other than seven Embraer 175 aircraft. In addition, United has secured backstop financing commitments from certain of its aircraft manufacturers for a limited number of its future aircraft deliveries, subject to certain customary conditions. Financing will be necessary to satisfy the Company’s capital commitments for its firm order aircraft and other related capital expenditures. The Company can provide no assurance that any financing not already in place for aircraft and spare engine deliveries will be available to the Company on acceptable terms when necessary or at all. See Note 9 of this report for additional information on aircraft financing.

Guarantees and Off-Balance Sheet Financing

Guarantees. United is the guarantor of approximately $1.6 billion in aggregate principal amount of tax-exempt special facilities revenue bonds and interest thereon. These bonds, issued by various airport municipalities, are payable solely from rentals paid under long-term agreements with the respective governing bodies. The leasing arrangements associated with $1.3 billion of these obligations are accounted for as operating leases with the associated expense recorded on a straight-line basis resulting in ratable accrual of the lease obligation over the expected lease term. The leasing arrangements associated with $272 million of these obligations are accounted for as capital leases. All of these bonds are due between 2015 and 2038.

In the Company’s financing transactions that include loans, the Company typically agrees to reimburse lenders for any reduced returns with respect to the loans due to any change in capital requirements and, in the case of loans in which the interest rate is based on the London Interbank Offered Rate (“LIBOR”), for certain other increased costs that the lenders incur in carrying these loans as a result of any change in law, subject in most cases to obligations of the lenders to take certain limited steps to mitigate the requirement for, or the amount of, such increased costs. At June 30, 2014, the Company had $1.9 billion of floating rate debt and $246 million of fixed rate debt, with remaining terms of up to twelve years, that are subject to these increased cost provisions. In several financing transactions involving loans or leases from non-U.S. entities, with remaining terms of up to twelve years and an aggregate balance of $2.1 billion, the Company bears the risk of any change in tax laws that would subject loan or lease payments thereunder to non-U.S. entities to withholding taxes, subject to customary exclusions.

Credit Facilities. As of June 30, 2014, United had the entire capacity of $1.0 billion available under the revolving credit facility of the Company’s Credit and Guaranty Agreement (the “Credit Agreement”). See Note 9 of this report for additional information.

Labor Negotiations. As of June 30, 2014, United had approximately 86,000 active employees, of whom approximately 80% were represented by various labor organizations. We are currently in the process of negotiating amended collective bargaining agreements with our employee groups without joint collective bargaining agreements, including our technicians and flight attendants.