Published on : Friday, January 17, 2014
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Fourth-Quarter Special Charges
The company expects to record special charges of $158 million ($165 million before income taxes) for the fourth quarter of 2013. Details are as follows (in millions):
Three Months Ended
Dec. 31, 2013
Severance and benefit costs $91
Integration-related costs 40
Impairments and other, net 34
Total special charges, before income taxes 165
Income tax benefit 7
Total special charges, net of income taxes $158
Severance and benefit costs: The company offered a voluntary retirement program for its fleet service, passenger service, storekeeper and pilot workgroups. Approximately 1,200 employees volunteered during the fourth quarter andUnited recorded approximately $64 million of costs for the programs. The company also offered a voluntary leave of absence program that approximately 1,100 flight attendants accepted, which allows for continued medical coverage during the leave of absence period, resulting in a charge of approximately $12 million. The remaining $15 million of severance and benefit costs is related to involuntary severance programs associated with other workgroups.
Integration-related costs: Integration-related costs include compensation costs related to systems integration and training, write-off or acceleration of depreciation on systems and facilities that are no longer used or planned to be used for significantly shorter periods, relocation for employees and severance primarily associated with administrative headcount reductions.
Impairments and other, net: The company recorded $34 million of charges related primarily to impairment of its flight equipment held for disposal associated with its 737-300 and 737-500 fleets. The charge also included accruals for future rent associated with early retirement of four leased 757-200 aircraft, adjustments to reserves for certain legal matters, gains on sale of aircraft and simulators and the impairment of the value of the intangible asset associated with a route to Manila.
Income tax benefit: The income tax benefit of $7 million is related to the sale and impairment of certain intangible assets.
Source:- United Airlines
Tags: United Airlines