Pension and Other Postretirement Plans (Tables)

12 Months Ended

Dec. 31, 2017

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, 2017		Year Ended December 31, 2016
Accumulated benefit obligation:	$	4,739	$	4,158


Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	5,253	$	4,473
Service cost		195		112
Interest cost		220		200
Actuarial loss		525		738
Gross benefits paid and settlements		(366)		(243)
Other		25		(27)

Projected benefit obligation at end of year	$	5,852	$	5,253

Change in plan assets:
Fair value of plan assets at beginning of year	$	3,355	$	2,975
Actual return on plan assets		510		230
Employer contributions		419		421
Gross benefits paid and settlements		(366)		(243)
Other		14		(28)

Fair value of plan assets at end of year	$	3,932	$	3,355

Funded status—Net amount recognized	$	(1,920)	$	(1,898)


	Other Postretirement Benefits
	Year Ended December 31, 2017		Year Ended December 31, 2016
Change in benefit obligation:
Benefit obligation at beginning of year	$	1,687	$	2,002
Service cost		13		19
Interest cost		66		86
Plan participants’ contributions		68		69
Benefits paid		(178)		(191)
Actuarial loss (gain)		40		(165)
Plan amendments		—		(138)
Other		14		5

Benefit obligation at end of year	$	1,710	$	1,687

Change in plan assets:
Fair value of plan assets at beginning of year	$	55	$	56
Actual return on plan assets		1		2
Employer contributions		108		119
Plan participants’ contributions		68		69
Benefits paid		(178)		(191)

Fair value of plan assets at end of year		54		55

Funded status—Net amount recognized	$	(1,656)	$	(1,632)

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

	Pension Benefits
		December 31, 2017		December 31, 2016
Amounts recognized in the consolidated balance sheets consist of:
Noncurrent asset		$	9	$	2
Current liability			(8)		(8)
Noncurrent liability			(1,921)		(1,892)

Total liability		$	(1,920)	$	(1,898)

Amounts recognized in accumulated other comprehensive loss consist of:
Net actuarial loss		$	(1,610)	$	(1,482)
Prior service cost			(1)		(1)

Total accumulated other comprehensive loss		$	(1,611)	$	(1,483)


	Other Postretirement Benefits
	December 31, 2017		December 31, 2016
Amounts recognized in the consolidated balance sheets consist of:
Current liability	$	(54)	$	(51)
Noncurrent liability		(1,602)		(1,581)

Total liability	$	(1,656)	$	(1,632)

Amounts recognized in accumulated other comprehensive income consist of:
Net actuarial gain	$	301	$	384
Prior service credit		208		245

Total accumulated other comprehensive income	$	509	$	629

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):


	2017		2016
Projected benefit obligation	$	5,637	$	5,025
Accumulated benefit obligation		4,567		3,985
Fair value of plan assets		3,709		3,164

Components Of Net Periodic Benefit Cost

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


	2017				2016				2015
	Pension Benefits		Other Postretirement Benefits		Pension Benefits		Other Postretirement Benefits		Pension Benefits		Other Postretirement Benefits
Service cost	$	195	$	13	$	112	$	19	$	124	$	21
Interest cost		220		66		200		86		200		82
Expected return on plan assets		(243)		(2)		(216)		(2)		(194)		(2)
Curtailment gain		—		—		—		(107)		—		—
Amortization of unrecognized actuarial (gain) loss		128		(33)		76		(19)		85		(22)
Amortization of prior service credits		—		(37)		—		(31)		—		(32)
Other		5		—		5		—		4		—

Net periodic benefit cost (credit)	$	305	$	7	$	177	$	(54)	$	219	$	47

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

The estimated amounts that will be amortized in 2018 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	$	132	$	(32)
Prior service (credit) cost		—		(37)

Assumptions Used for Benefit Plans

The assumptions used for the benefit plans were as follows:


	Pension Benefits
Assumptions used to determine benefit obligations	2017	2016
Discount rate	3.65%	4.18%
Rate of compensation increase	3.89%	3.54%

Assumptions used to determine net expense
Discount rate	4.19%	4.58%
Expected return on plan assets	7.02%	7.04%
Rate of compensation increase	3.54%	3.53%


	Other Postretirement Benefits
Assumptions used to determine benefit obligations	2017		2016
Discount rate		3.63%		4.07%

Assumptions used to determine net expense
Discount rate		4.07%		4.49%
Expected return on plan assets		3.00%		3.00%
Health care cost trend rate assumed for next year		6.25%		6.50%
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		27-42 %		9.5 %
Fixed-income securities		30-40		5.5
Alternatives		10-25		7.3
Other		0-10		7.3

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, 2017	$	11	$	(8)
Effect on postretirement benefit obligation at December 31, 2017		170		(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):


	2017										2016
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	$	1,406	$	269	$	133	$	—	$	1,004	$	1,173	$	230	$	111	$	—	$	832
Fixed-income securities		1,470		—		834		18		618		1,298		—		824		11		463
Alternatives		637		—		—		139		498		586		—		—		134		452
Other investments		419		32		124		172		91		298		47		68		87		96

Total	$	3,932	$	301	$	1,091	$	329	$	2,211	$	3,355	$	277	$	1,003	$	232	$	1,843

Other Postretirement Benefit Plan Assets:
Deposit administration fund	$	54	$	—	$	—	$	54	$	—	$	55	$	—	$	—	$	55	$	—

(a) In accordance with the relevant accounting standards, certain investments that are measured at fair value using the net asset value (“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, 2017 and 2016 is as follows (in millions):


	2017		2016
Balance at beginning of year	$	287	$	208
Actual return on plan assets:
Sold during the year		7		4
Held at year end		16		3
Purchases, sales, issuances and settlements (net)		73		72

Balance at end of year	$	383	$	287

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, 2017 are as follows (in millions):


	Pension		Other Postretirement		Other Postretirement— subsidy receipts
2018	$	305	$	113	$	6
2019		326		118		6
2020		331		121		6
2021		357		124		7
2022		369		126		7
Years 2023 – 2027		1,912		646		43

Multi-Employer Plans


Pension Fund		IAM National Pension Fund
EIN/ Pension Plan Number		51-6031295 - 002
Pension Protection Act Zone Status (2017 and 2016)		Green Zone. Plans in the green zone are at least 80 percent funded.
FIP/RP Status Pending/Implemented		No
United’s Contributions		$50 million, $41 million and $40 million in the years ended December 31, 2017, 2016 and 2015, respectively
Surcharge Imposed		No
Expiration Date of Collective Bargaining Agreement		N/A