Pension and Other Postretirement Plans (Tables)

12 Months Ended

Dec. 31, 2016

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, 2016		Year Ended December 31, 2015
Accumulated benefit obligation:	$	4,158	$	3,795


Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	4,473	$	4,803
Service cost		112		124
Interest cost		200		200
Actuarial (gain) loss		738		(298)
Gross benefits paid and settlements		(243)		(343)
Other		(27)		(13)

Projected benefit obligation at end of year	$	5,253	$	4,473

Change in plan assets:
Fair value of plan assets at beginning of year	$	2,975	$	2,562
Actual gain (loss) on plan assets		230		(59)
Employer contributions		421		824
Gross benefits paid and settlements		(243)		(343)
Other		(28)		(9)

Fair value of plan assets at end of year	$	3,355	$	2,975

Funded status—Net amount recognized	$	(1,898)	$	(1,498)


	Other Postretirement Benefits
	Year Ended December 31, 2016		Year Ended December 31, 2015
Change in benefit obligation:
Benefit obligation at beginning of year	$	2,002	$	2,052
Service cost		19		21
Interest cost		86		82
Plan participants’ contributions		69		68
Benefits paid		(191)		(205)
Actuarial gain		(165)		(22)
Plan amendments		(138)		—
Other		5		6

Benefit obligation at end of year	$	1,687	$	2,002

Change in plan assets:
Fair value of plan assets at beginning of year	$	56	$	57
Actual return on plan assets		2		1
Employer contributions		119		135
Plan participants’ contributions		69		68
Benefits paid		(191)		(205)

Fair value of plan assets at end of year		55		56

Funded status—Net amount recognized	$	(1,632)	$	(1,946)

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


	Pension Benefits
	December 31, 2016		December 31, 2015
Amounts recognized in the consolidated balance sheets consist of:
Noncurrent asset	$	2	$	2
Current liability		(8)		(12)
Noncurrent liability		(1,892)		(1,488)

Total liability	$	(1,898)	$	(1,498)

Amounts recognized in accumulated other comprehensive loss consist of:
Net actuarial loss	$	(1,482)	$	(844)
Prior service loss		(1)		(1)

Total accumulated other comprehensive loss	$	(1,483)	$	(845)


	Other Postretirement Benefits
	December 31, 2016		December 31, 2015
Amounts recognized in the consolidated balance sheets consist of:
Current liability	$	(51)	$	(64)
Noncurrent liability		(1,581)		(1,882)

Total liability	$	(1,632)	$	(1,946)

Amounts recognized in accumulated other comprehensive income consist of:
Net actuarial gain	$	384	$	236
Prior service credit		245		246

Total accumulated other comprehensive income	$	629	$	482

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):


	2016		2015
Projected benefit obligation	$	5,025	$	4,292
Accumulated benefit obligation		3,985		3,655
Fair value of plan assets		3,164		2,794

Components Of Net Periodic Benefit Cost

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


	2016				2015				2014
	Pension Benefits		Other Postretirement Benefits		Pension Benefits		Other Postretirement Benefits		Pension Benefits		Other Postretirement Benefits
Service cost	$	112	$	19	$	124	$	21	$	98	$	19
Interest cost		200		86		200		82		201		88
Expected return on plan assets		(216)		(2)		(194)		(2)		(180)		(2)
Curtailment gain		—		(107)		—		—		—		—
Amortization of unrecognized actuarial (gain) loss		76		(19)		85		(22)		12		(47)
Amortization of prior service credits		—		(31)		—		(32)		—		(31)
Other		5		—		4		—		1		—

Net periodic benefit cost	$	177	$	(54)	$	219	$	47	$	132	$	27

Amortized Accumulated Other Comprehensive Income (Loss) Into Net Periodic Benefit Cost

The estimated amounts that will be amortized in 2017 out of accumulated other comprehensive income (loss) into net periodic benefit cost are as follows (in millions):


	Pension Benefits		Other Postretirement Benefits
Actuarial (gain) loss	$	127	$	(36)
Prior service credit		—		(37)

Assumptions Used for Benefit Plans

The assumptions used for the benefit plans were as follows:


	Pension Benefits
Assumptions used to determine benefit obligations	2016	2015
Discount rate	4.18%	4.58%
Rate of compensation increase	3.54%	3.66%

Assumptions used to determine net expense
Discount rate	4.58%	4.20%
Expected return on plan assets	7.04%	7.40%
Rate of compensation increase	3.53%	3.51%


	Other Postretirement Benefits
Assumptions used to determine benefit obligations	2016		2015
Discount rate		4.07%		4.49%

Assumptions used to determine net expense
Discount rate		4.49%		4.07%
Expected return on plan assets		3.00%		3.00%
Health care cost trend rate assumed for next year		6.50%		6.75%
Rate to which the cost trend rate is assumed to decline (ultimate trend rate in 2023)		5.00%		5.00%

Allocation of Plan Assets

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


	Percent of Total		Expected Long-Term Rate of Return

Equity securities		30-40 %		9.5 %
Fixed-income securities		34-44		5.0
Alternatives		14-27		7.3
Other		0-10		7.0

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, 2016	$	13	$	(11)
Effect on postretirement benefit obligation at December 31, 2016		169		(149)

Pension and Other Postretirement Plan Assets

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


	2016										2015
Pension Plan Assets:	Total		Level 1		Level 2		Level 3		Assets Measured at NAV(a)		Total		Level 1		Level 2		Level 3		Assets Measured at NAV(a)
Equity securities funds	$	1,173	$	230	$	111	$	—	$	832	$	1,135	$	254	$	135	$	—	$	746
Fixed-income securities		1,298		—		824		11		463		1,109		—		877		9		223
Alternatives		586		—		—		134		452		527		—		1		125		401
Other investments		298		47		68		87		96		204		37		56		18		93

Total	$	3,355	$	277	$	1,003	$	232	$	1,843	$	2,975	$	291	$	1,069	$	152	$	1,463

Other Postretirement Benefit Plan Assets:
Deposit administration fund	$	55	$	—	$	—	$	55	$	—	$	56	$	—	$	—	$	56	$	—

(a) In accordance with the relevant accounting standards, certain investments that are measured at fair value using the NAV per share (or its equivalent) have not been classified in the fair value hierarchy. These investments are commingled funds that invest in fixed-income instruments including bonds, debt securities, and other similar instruments issued by various U.S. and non-U.S. public- or private-sector entities. Redemption periods for these investments range from daily to annually.

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, 2016 and 2015 is as follows (in millions):


	2016		2015
Balance at beginning of year	$	208	$	188
Actual return on plan assets:
Sold during the year		4		8
Held at year end		3		(1)
Purchases, sales, issuances and settlements (net)		72		13

Balance at end of year	$	287	$	208

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, 2016 are as follows (in millions):


	Pension		Other Postretirement		Other Postretirement— subsidy receipts
2017	$	303	$	112	$	6
2018		300		117		6
2019		310		122		7
2020		319		126		7
2021		337		130		8
Years 2022 – 2026		1,782		682		44

Multi-Employer Plans


Pension Fund		IAM National Pension Fund
EIN/ Pension Plan Number		51-6031295 - 002
Pension Protection Act Zone Status (2016 and 2015)		Green Zone. Plans in the green zone are at least 80 percent funded.
FIP/RP Status Pending/Implemented		No
United’s Contributions		$41 million, $40 million and $39 million in the years ended December 31, 2016, 2015 and 2014, respectively
Surcharge Imposed		No
Expiration Date of Collective Bargaining Agreement		N/A