(Mark One) | ||
þ
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended December 31, 2005 | ||
or | ||
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
Delaware
|
54-1194634 | |
(State or other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification No.) | |
111 West Rio Salado Parkway, Tempe, Arizona 85281
(Address of principal executive offices, including zip code) |
Title of Each Class | Name of Each Exchange on Which Registered | |
Class B Common Stock, $0.01 par value
|
New York Stock Exchange |
Delaware
|
86-0418245 | |
(State or other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification No.) | |
4000 East Sky Harbor Blvd., Phoenix, Arizona 85034
(Address of principal executive offices, including zip code) |
Delaware
|
53-0218143 | |
(State or other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification No.) | |
111 West Rio Salado Parkway, Tempe, Arizona 85281
(Address of principal executive offices, including zip code) |
US Airways Group, Inc.
|
Yes o | No þ | ||
America West Airlines, Inc.
|
Yes o | No þ | ||
US Airways, Inc.
|
Yes o | No þ |
US Airways Group, Inc.
|
Yes o | No þ | ||
America West Airlines, Inc
|
Yes o | No þ | ||
US Airways, Inc.
|
Yes o | No þ |
US Airways Group, Inc.
|
Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o | |||
America West Airlines, Inc.
|
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ | |||
US Airways, Inc.
|
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ |
US Airways Group, Inc.
|
Yes o | No þ | ||
America West Airlines, Inc.
|
Yes o | No þ | ||
US Airways, Inc.
|
Yes o | No þ |
US Airways Group, Inc.
|
Yes þ | No o | ||
US Airways, Inc.
|
Yes þ | No o |
Page | ||||||||
PART I | ||||||||
1 | ||||||||
19 | ||||||||
26 | ||||||||
26 | ||||||||
32 | ||||||||
35 | ||||||||
PART II | ||||||||
36 | ||||||||
38 | ||||||||
43 | ||||||||
91 | ||||||||
94 | ||||||||
162 | ||||||||
203 | ||||||||
268 | ||||||||
268 | ||||||||
268 | ||||||||
PART III | ||||||||
269 | ||||||||
269 | ||||||||
269 | ||||||||
269 | ||||||||
270 | ||||||||
PART IV | ||||||||
270 | ||||||||
SIGNATURES | 287 | |||||||
EX-10.74 | ||||||||
EX-10.75 | ||||||||
EX-10.79 | ||||||||
EX-10.83 | ||||||||
EX-18.1 | ||||||||
EX-23.1 | ||||||||
EX-31.1 | ||||||||
EX-31.2 | ||||||||
EX-31.3 | ||||||||
EX-31.4 | ||||||||
EX-31.5 | ||||||||
EX-31.6 | ||||||||
EX-32.1 | ||||||||
EX-32.2 | ||||||||
EX-32.3 |
i
| the impact of significant disruptions in the supply of aircraft fuel and historically high fuel prices; | |
| our high level of fixed obligations; | |
| our ability to integrate the management, operations and labor groups of US Airways Group and America West Holdings; | |
| our ability to achieve the synergies anticipated as a result of the merger and to achieve those synergies in a timely manner; | |
| the impact of continued significant operating losses; | |
| labor costs and relations with unionized employees generally and the impact and outcome of labor negotiations; | |
| changes in prevailing interest rates; | |
| reliance on automated systems and the impact of any failure of these systems; | |
| our ability to obtain and maintain normal terms with vendors and service providers; | |
| security-related and insurance costs; | |
| the impact of global instability including the continuing impact of the military presence in Iraq and Afghanistan and the terrorist attacks of September 11, 2001 and the potential impact of future hostilities, terrorist attacks, infectious disease outbreaks or other global events; | |
| changes in government legislation and regulation; | |
| our ability to use pre-merger NOLs and certain other tax attributes; | |
| competitive practices in the industry, including significant fare restructuring activities, capacity reductions and in court or out of court restructuring by major airlines; | |
| continued existence of prepetition liabilities; | |
| weather conditions; | |
| our ability to obtain and maintain any necessary financing for operations and other purposes; |
ii
| our ability to maintain adequate liquidity; | |
| our ability to maintain contracts that are critical to our operations; | |
| our ability to operate pursuant to the terms of our financing facilities (particularly the financial covenants); | |
| our ability to attract and retain customers; | |
| the cyclical nature of the airline industry; | |
| our ability to attract and retain qualified personnel; | |
| economic conditions; and | |
| other risks and uncertainties listed from time to time in our reports to the Securities and Exchange Commission. |
iii
Item 1. | Business |
1
2
US Airways Express Network |
3
Number/Type | ||||
Carrier | Agreement Type | of Aircraft | ||
PSA(1)
|
Capacity Purchase | 49 regional jets | ||
Piedmont(1)
|
Capacity Purchase | 59 turboprops | ||
Chautauqua Airlines, Inc. (Chautauqua)
|
Capacity Purchase | 30 regional jets | ||
Mesa
|
Capacity Purchase | 24 regional jets | ||
Air Wisconsin Airlines Corporation (Air Wisconsin)
|
Capacity Purchase | 60 regional jets | ||
Republic Airways (Republic)
|
Capacity Purchase | 10 regional jets | ||
Colgan Airlines, Inc.
|
Prorate | 28 turboprops | ||
Air Midwest, Inc.
|
Prorate | 14 turboprops | ||
Trans States Airlines, Inc. (Trans States)
|
Prorate | 8 regional jets(2) |
(1) | PSA and Piedmont are wholly-owned subsidiaries of US Airways Group. |
(2) | Prior to September 2005, Trans States operated up to eight turboprops under a prorate agreement and 13 regional jets under a capacity purchase agreement. In September 2005, Trans States began operating under a prorate agreement and operated eight regional jets as US Airways Express as of December 31, 2005. |
4
America West Express |
AWA |
US Airways |
5
6
7
8
Contract | ||||||||||
Union | Class or Craft | Employees(1) | Amendable | |||||||
AWA:
|
||||||||||
Air Line Pilots Association (ALPA)
|
Pilots | 1,900 | 12/30/2006 | |||||||
Association of Flight Attendants-CWA (AFA)
|
Flight Attendants | 2,500 | 05/04/2004 | (2) | ||||||
International Brotherhood of Teamsters (IBT)
|
Mechanic and Related | 800 | 10/07/2003 | (3) | ||||||
Transport Workers Union (TWU)
|
Fleet Service | 1,800 | 06/12/2005 | (4) | ||||||
TWU
|
Dispatch | 40 | 04/01/2008 | (5) | ||||||
Airline Customer Service Employee Association IBT
and CWA (the Association)
|
Passenger Service | 2,600 | 12/31/2011 | (6) | ||||||
IBT
|
Stock Clerks | 60 | 04/04/2008 | |||||||
US Airways:
|
||||||||||
ALPA
|
Pilots | 2,700 | 12/31/2009 | |||||||
AFA
|
Flight Attendants | 4,600 | 12/31/2011 | |||||||
International Association of Machinists & Aerospace
Workers (IAM)
|
Mechanic and Related | 2,600 | 12/31/2009 | |||||||
IAM
|
Fleet Service | 4,200 | 12/31/2009 | |||||||
IAM
|
Maintenance Training Specialists | 30 | 12/31/2009 |
9
Contract
Union
Class or Craft
Employees(1)
Amendable
Passenger Service
3,800
12/31/2011
(6)
Dispatch
130
12/31/2009
Flight Simulator Engineers
25
12/31/2011
Flight Crew Training Instructors
50
12/31/2011
(1) | Approximate number of active full time equivalent employees covered by the contract as of December 31, 2005. |
(2) | In contract negotiations. On September 21, 2005, AFA filed for mediation with the National Mediation Board (NMB). On December 15, 2005, the NMB recessed the negotiations indefinitely. |
(3) | In contract negotiations. |
(4) | In contract negotiations. On January 19, 2006, TWU filed for mediation with the NMB. |
(5) | On February 17, 2006, TWU served notice that it is invoking a contract provision that allows it to re-open negotiations only on the issues of wage rates and hours of service as a result of changes to AWAs loan formerly guaranteed by the ATSB. |
(6) | On December 5, 2005, US Airways and AWA reached an Interim Transition Agreement with the Association, an alliance created by the IBT, who formerly represented passenger service employees at AWA, and the Communication Workers of America (CWA), who formerly represented passenger service employees at US Airways. Pursuant to the Interim Transition Agreement, US Airways and AWA voluntarily recognized the Association as the collective bargaining representative of the AWA and US Airways passenger service employees. The parties agreed that AWA passenger service employees would transition to the US Airways-CWA collective bargaining agreement and thus AWAs separate contract negotiations with IBT were terminated. |
10
Average Price
Aircraft Fuel
Percentage of Total
Year
Gallons
per Gallon(1)
Expense(1)
Operating Expenses
842
$
1.766
$
1,486
20.0
%
884
$
1.121
$
991
13.4
%
873
$
0.883
$
771
11.0
%
(1) | Includes fuel taxes and the impact of fuel hedges. |
Percentage of | ||||||||||||||||
Average Price | Aircraft Fuel | Total Operating | ||||||||||||||
Year | Gallons | per Gallon(1) | Expense(1) | Expenses | ||||||||||||
2005
|
450 | $ | 1.636 | $ | 736 | 21.8 | % | |||||||||
2004
|
450 | $ | 1.257 | $ | 566 | 20.5 | % | |||||||||
2003
|
423 | $ | 0.930 | $ | 393 | 15.5 | % |
(1) | Includes fuel taxes and the impact of fuel hedges. |
| the impact of global political instability on crude production; | |
| unexpected changes to the availability of petroleum products due to disruptions in distribution systems or refineries, as evidenced in the third quarter of 2005 when Hurricane Katrina and Hurricane Rita caused widespread disruption to oil production, refinery operations and pipeline capacity along certain portions of the U.S. Gulf Coast. As a result of these disruptions, the price of jet fuel increased significantly and the availability of jet fuel supplies was diminished; | |
| unpredicted increases to oil demand due to weather or the pace of economic growth; | |
| inventory levels of crude, refined products and natural gas; and | |
| other factors, such as the relative fluctuation between the U.S. dollar and other major currencies and influence of speculative positions on the futures exchanges. |
11
| liability for injury to members of the public, including passengers; | |
| damage to property of US Airways Group, its subsidiaries and others; | |
| loss of or damage to flight equipment, whether on the ground or in flight; | |
| fire and extended coverage; | |
| directors and officers; | |
| travel agents errors and omissions; | |
| advertisers and media liability; | |
| fiduciary; and | |
| workers compensation and employers liability. |
FlightFund |
12
Dividend Miles |
Combined Post-Merger Dividend Miles Program |
13
14
15
16
Financing During the Chapter 11 Proceedings |
Claims Resolution |
17
18
| A decrease in revenues results in a disproportionately greater percentage decrease in earnings. | |
| We may not have sufficient liquidity to fund all of these fixed costs if our revenues decline or costs increase. | |
| We may have to use our working capital to fund these fixed costs instead of funding general corporate requirements, including capital expenditures. | |
| We may not have sufficient liquidity to respond to competitive developments and adverse economic conditions. |
19
20
21
22
23
| our operating results failing to meet the expectations of securities analysts or investors; | |
| changes in financial estimates or recommendations by securities analysts; | |
| material announcements by us or our competitors; | |
| movements in fuel prices; | |
| new regulatory pronouncements and changes in regulatory guidelines; | |
| general and industry-specific economic conditions; | |
| public sales of a substantial number of shares of our common stock; and | |
| general market conditions. |
24
| a classified board of directors with three-year staggered terms; | |
| advance notice procedures for stockholder proposals to be considered at stockholders meetings; | |
| the ability of US Airways Groups board of directors to fill vacancies on the board; | |
| a prohibition against stockholders taking action by written consent; | |
| a prohibition against stockholders calling special meetings of stockholders; | |
| a requirement for the approval of holders of at least 80% of the voting power of the shares entitled to vote in the election of directors for the stockholders to amend the second amended and restated bylaws; and | |
| super-majority voting requirements to modify or amend specified provisions of US Airways Groups amended and restated certificate of incorporation. |
25
Item 1B. | Unresolved Staff Comments |
Item 2. | Properties |
Owned/ | ||||||||||||||||||||
A/C Type | Avg. Seats | Mortgaged | Leased | Total | Avg. Age | |||||||||||||||
737-300
|
133 | | 35 | 35 | 17.8 | |||||||||||||||
A319
|
124 | | 37 | 37 | 4.7 | |||||||||||||||
A320
|
150 | | 56 | 56 | 8.6 | |||||||||||||||
757-200
|
190 | | 13 | 13 | 19.2 | |||||||||||||||
Total
|
143 | | 141 | 141 | 10.8 |
26
Owned/
A/C Type
Avg. Seats
Mortgaged
Leased
Total
Avg. Age
266
4
5
9
5.4
169
15
13
28
4.6
142
8
12
20
6.2
120
3
51
54
5.9
203
10
10
16.5
193
31
31
15.2
144
40
40
15.9
126
40
40
18.3
152
30
202
232
11.3
72
18
18
1.5
(1) | All owned aircraft are pledged as collateral for various secured financing agreements. |
(2) | The terms of the leases expire between 2006 and 2023. |
Average Seat | Average | |||||||||||||||||||
Type | Capacity | Owned | Leased(1) | Total | Age (years) | |||||||||||||||
CRJ-700
|
70 | 7 | 7 | 14 | 1.1 | |||||||||||||||
CRJ-200
|
50 | 12 | 23 | 35 | 1.8 | |||||||||||||||
De Havilland Dash 8-300
|
50 | | 12 | 12 | 14.0 | |||||||||||||||
De Havilland Dash 8-100
|
37 | 32 | 6 | 38 | 15.7 | |||||||||||||||
De Havilland Dash 8-200
|
37 | | 9 | 9 | 8.2 | |||||||||||||||
Total
|
47 | 51 | 57 | 108 | 8.5 |
(1) | The terms of the leases expire between 2006 and 2021. |
2006 | 2007 | 2008 | 2009 | 2010 | |||||||||||||||||
AWA
|
|||||||||||||||||||||
Firm orders remaining
|
2 | | | 11 | | ||||||||||||||||
Lessor put options
|
2 | | | | | ||||||||||||||||
Lease terminations:
|
|||||||||||||||||||||
Scheduled expirations
|
12 | 17 | 19 | 9 | 8 | ||||||||||||||||
Lessor call options
|
6 | 6 | | | |
27
2006
2007
2008
2009
2010
5
14
11
22
42
25
16
18
18
18
9
28
29
Average | Leased/ | |||||||||||||||||||
Type | Age (years) | Owned | Leased | Total | Subleased | |||||||||||||||
De Havilland Dash 8
|
15.6 | 1 | | 1 | |
| executive and administrative offices in Tempe, Arizona; | |
| its principal operating, overhaul and maintenance bases at the Pittsburgh International Charlotte/ Douglas International and Phoenix Sky Harbor International Airports; | |
| training facilities in Pittsburgh, Phoenix and Charlotte; | |
| central reservations offices in Winston-Salem, North Carolina, Tempe, Arizona and Reno, Nevada; and | |
| line maintenance bases and local ticket, cargo and administrative offices throughout its system. |
Approximate | ||||||||
Internal Floor | ||||||||
Principal Properties | Description | Area (sq. ft.) | Nature of Ownership | |||||
Tempe, AZ Headquarters
|
Nine story complex housing headquarters for US Airways Group | 225,000 | Lease expires April 2014. | |||||
Tempe, AZ
|
Administrative office complex | 148,000 | Lease expires May 2012. | |||||
Philadelphia International Airport
|
68 exclusive gates, ticket counter space and concourse areas | 545,000 | Lease expires June 2006. | |||||
Charlotte/ Douglas International Airport
|
36 exclusive gates, ticket counter space and concourse areas | 226,000 | Lease expires June 2016. |
30
Approximate
Internal Floor
Principal Properties
Description
Area (sq. ft.)
Nature of Ownership
42 exclusive gates, ticket counter space and administrative
offices
330,000
Airport Use Agreement expires June 2016. Gate use governed by
month-to-month rates and charges program.
32 exclusive gates, ticket counter space and concourse areas
260,000
Lease expires May 2018.
17 exclusive gates, ticket counter space and concourse areas
115,000
Lease expires June 2007.
15 gates, ticket counter space and concourse areas
80,000
Lease expires September 2016.
Hangar bays, hangar shops, ground service equipment shops,
cargo, catering and warehouse
847,000
Facilities and land leased from the City of Charlotte. Lease
expires June 2017.
Hangar bays, hangar shops, ground service equipment shops,
cargo, catering and warehouse
649,000
Facilities and land leased from Allegheny County Airport
Authority. Lease expires December 2006.
Classroom training facilities and ten full flight simulator bays
159,000
Facilities and land leased from the City of Charlotte. Lease
expires June 2017.
Four hangar bays, hangar shops, office space, warehouse and
commissary facilities
375,000
Facilities and land leased from the City of Phoenix. Lease
expires September 2019.
Complex accommodates training facilities, systems operation
control and crew scheduling functions
164,000
Facilities and land leased from the City of Phoenix. Lease
expires February 2031.
31
Item 3. | Legal Proceedings |
32
33
34
Item 4. | Submission of Matters to a Vote of Security Holders |
35
Item 5. | Market for US Airways Groups Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
(1) | As described above, the Class A common stock of pre-merger US Airways Group was cancelled upon the effectiveness of the plan of reorganization on September 27, 2005. |
36
37
(a) | (b) | (d) | ||||||||||||||
(c) | Maximum Number (or | |||||||||||||||
Total Number of | Approximate Dollar Value) | |||||||||||||||
Total Number | Shares (or Units) | of Shares (or Units) | ||||||||||||||
of Shares | Average Price | Purchased as Part of | That May Yet Be | |||||||||||||
(or Units) | Paid per Share | Publicly Announced | Purchased Under | |||||||||||||
Period | Purchased | (or Unit) | Plans or Programs | the Plans or Programs | ||||||||||||
10/1/2005 - 10/31/2005
|
7,735,770 | (1) | $ | 14.97 | 7,735,770 | | ||||||||||
11/1/2005 - 11/30/2005
|
| | | | ||||||||||||
12/1/2005 - 12/31/2005
|
| | | | ||||||||||||
Total
|
7,735,770 | 7,735,770 | | |||||||||||||
(1) | On October 1, 2005, US Airways Group entered into an agreement with the ATSB to purchase all of its outstanding warrants for an aggregate purchase price of approximately $116 million. The transaction represents the repurchase of all of the replacement warrants issued to the ATSB in connection with the merger with America West Holdings. US Airways Group repurchased 7,735,770 warrants to purchase shares of common stock that had an exercise price of $7.27 per share. The average price paid per share is calculated by dividing the total cash paid for the warrants by the number of warrants purchased. |
Item 6. | Selected Financial Data |
Year Ended December 31, | |||||||||||||||||||||
2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||||
(In millions except per share amounts) | |||||||||||||||||||||
Consolidated statements of operations data:
|
|||||||||||||||||||||
Operating revenues(a)
|
$ | 5,077 | $ | 2,748 | $ | 2,572 | $ | 2,337 | $ | 2,296 | |||||||||||
Operating expenses(a)
|
5,294 | 2,768 | 2,539 | 2,497 | 2,714 | ||||||||||||||||
Operating income (loss)(a)
|
(217 | ) | (20 | ) | 33 | (160 | ) | (418 | ) | ||||||||||||
Income (loss) before cumulative effect of change in accounting
principle(b)
|
(335 | ) | (89 | ) | 57 | (180 | ) | (250 | ) | ||||||||||||
Cumulative effect of accounting change(c)
|
202 | | | 208 | | ||||||||||||||||
Net income (loss)
|
(537 | ) | (89 | ) | 57 | (388 | ) | (250 | ) | ||||||||||||
Earnings (loss) per share before cumulative effect of change in
accounting principle:
|
|||||||||||||||||||||
Basic
|
(10.65 | ) | (5.99 | ) | 4.03 | (12.92 | ) | (17.99 | ) | ||||||||||||
Diluted
|
(10.65 | ) | (5.99 | ) | 3.07 | (12.92 | ) | (17.99 | ) | ||||||||||||
Cumulative effect of change in accounting principle
|
|||||||||||||||||||||
Basic
|
(6.41 | ) | | | (14.97 | ) | | ||||||||||||||
Diluted
|
(6.41 | ) | | | (14.97 | ) | | ||||||||||||||
Net income (loss) per share:
|
|||||||||||||||||||||
Basic
|
(17.06 | ) | (5.99 | ) | 4.03 | (27.89 | ) | (17.99 | ) | ||||||||||||
Diluted
|
(17.06 | ) | (5.99 | ) | 3.07 | (27.89 | ) | (17.99 | ) |
38
Year Ended December 31,
2005
2004
2003
2002
2001
(In millions except per share amounts)
(335
)
(142
)
52
(386
)
(252
)
(10.65
)
(9.53
)
3.71
(27.76
)
(18.12
)
(10.65
)
(9.53
)
2.87
(27.76
)
(18.12
)
31,488
14,861
14,252
13,911
13,889
31,488
14,861
23,147
13,911
13,889
$
6,964
$
1,475
$
1,614
$
1,439
$
1,469
2,749
640
697
713
225
420
36
126
68
420
(a) | Certain prior year amounts have been reclassified to conform with the 2005 presentation. These reclassifications include reclassing: fuel hedging activities from nonoperating to operating expenses, fuel-related tax expenses from other expenses to aircraft fuel and related taxes expense and the sale of frequent flier miles and related marketing services to affinity partners from other operating expense to mainline passenger and other revenue. The portion of the affinity partner revenue related to passenger ticket sales is classified as mainline passenger revenue and the marketing portion of the affinity partner revenue is classified as other revenue. | |
The Company reclassified amounts related to settled fuel hedge transactions and mark-to -market adjustments on open hedge instruments from nonoperating income (expense) to operating. The amounts for the years ended December 31, 2005, 2004 and 2003 reduced operating expenses by $75 million, $24 million and $11, respectively. For the years ended December 31, 2002 and 2001, the amounts increased operating expenses by $1 million and $7 million, respectively. | ||
The sale of frequent flier miles and related marketing services to affinity partners were reclassed from operating expenses to operating revenues. The amounts for the years ended December 31, 2005, 2004, 2003, 2002 and 2001 were $20 million, $38 million, $32 million, $29 million and $24 million. | ||
AWA Express expenses were reclassed from operating revenues to operating expenses. See also Part II, Item 8A, Note 5 Change in Method of Reporting for America West Express Results and Other Reclassifications. | ||
The 2005 results include $121 million of special charges, including $13 million of merger related transition expenses, a $27 million loss on the sale and leaseback of six 737-300 aircraft and two 757 aircraft, $7 million of power by the hour program penalties associated with the return of certain leased aircraft and a $50 million charge related to an amended Airbus purchase agreement, along with the write off of $7 million in capitalized interest. The Airbus restructuring fee was paid by means of set-off against existing equipment purchase deposits held by Airbus. | ||
AWAs 2004 results include a $16 million net credit associated with the termination of the rate per engine hour agreement with General Electric Engine Services for overhaul maintenance services on V2500-A1 engines. This credit was partially offset by $2 million of net charges related to the return of certain Boeing 737-200 aircraft, which includes termination payments of $2 million, the write-down of leasehold improvements and deferred rent of $3 million, offset by the net reversal of maintenance reserves of $3 million related to the returned aircraft. | ||
AWAs 2003 results include $16 million of changes resulting from the elimination of AWAs hub operations in Columbus, Ohio ($11 million), the reduction-in -force of certain management, professional and administrative employees ($2 million) and the impairment of certain owned |
39
Boeing 737-200 aircraft that have been grounded ($3 million), offset by a $1 million reduction due to a revision of the estimated costs related to the early termination of certain aircraft leases and a $1 million reduction related to the revision of estimated costs associated with the sale and leaseback of certain aircraft. | ||
The 2002 period includes $19 million of charges primarily related to the restructuring completed on January 18, 2002, resulting from the events of September 11, 2001. | ||
The 2001 period includes $142 million of special charges related to the impairment of reorganization value in excess of amounts allocable to identifiable assets (ERV) and owned aircraft and engines, as well as the earlier-than-planned return of seven leased aircraft and severance expenses following a reduction-in -force in 2001. See Note 7, Special Charges in US Airways Groups notes to consolidated financial statements included in Item 8A of this report. | ||
(b) | Nonoperating income (expense) in the 2005 period includes an $8 million charge related to the write-off of the unamortized value of the ATSB warrants upon their repurchase in October 2005 and an aggregate $2 million write-off of debt issue costs associated with the exchange of the 7.25% Senior Exchangeable Notes due 2023 and retirement of a portion of the loan formerly guaranteed by the ATSB. In the fourth quarter 2005 period, US Airways recorded $4 million of derivative gain attributable to stock options in Sabre, and warrants in a number of e-commerce companies. | |
The 2004 period includes a $1 million gain at AWA on the disposition of property and equipment due principally to the sale of one Boeing 737-200 aircraft and a $1 million charge for the write-off of debt issue costs in connection with the refinancing of the term loan. | ||
The 2003 period includes federal government assistance of $81 million recognized as nonoperating income under the Emergency Wartime Supplemental Appropriations Act and $9 million and $108 million recognized in 2002 and 2001, respectively, as nonoperating income under the Air Transportation Safety and System Stabilization Act. | ||
(c) | The 2005 period includes a $202 million adjustment which represents the cumulative effect on retained earnings of the adoption of the direct expense method for accounting for major scheduled airframe, engine and certain component overhaul costs as of January 1, 2005. (See Part II, Item 8A, Note 4 Change in Accounting Policy for Maintenance Costs). | |
The 2002 period includes a $208 million adjustment which represents the cumulative effect on retained earnings of the adoption of SFAS No. 142, Goodwill and other Intangible Assets which was issued by the FASB in June 2001. SFAS No. 142 primarily addresses the accounting for goodwill and intangible assets subsequent to their acquisition. Under SFAS No. 142, ERV is reported as goodwill and accounted for in the same manner as goodwill. SFAS No. 142 was effective for fiscal years beginning after December 15, 2001. | ||
(d) | Includes debt, capital leases and postretirement benefits other than pensions (noncurrent). |
40
Successor
Company(a)
Predecessor Company(a)
Three Months
Nine Months
Nine Months
Three Months
Ended
Ended
Year Ended
Ended
Ended
Year Ended
Year Ended
December 31,
September 30,
December 31,
December 31,
March 31,
December 31,
December 31,
2005
2005
2004
2003
2003
2002
2001
$
1,756
$
5,457
$
7,073
$
5,250
$
1,512
$
6,915
$
8,253
1,827
5,599
7,421
5,292
1,714
8,236
9,874
$
(71
)
$
(142
)
$
(348
)
$
(42
)
$
(202
)
$
(1,321
)
$
(1,621
)
$
(120
)
$
280
$
(578
)
$
(160
)
$
1,613
$
(1,659
)
$
(1,996
)
7
$
(120
)
$
280
$
(578
)
$
(160
)
$
1,613
$
(1,659
)
$
(1,989
)
Successor
Company(a)
Predecessor Company(a)
December 31,
2005
2004
2003
2002
2001
$
4,808
$
8,250
$
8,349
$
6,464
$
7,941
$
2,161
$
4,815
$
4,591
$
5,009
$
5,147
$
(133
)
$
(501
)
$
89
$
(4,956
)
$
(2,630
)
(a) | In connection with emergence from the first bankruptcy in March 2003 and the second bankruptcy in September 2005, US Airways adopted fresh-start reporting in accordance with AICPA Statement of Position 90-7, Financial Reporting by Entities in Reorganization Under the Bankruptcy Code. As a result of the application of fresh-start reporting, the financial statements prior to March 31, 2003 are not comparable with the financial statements for the period April 1, 2003 to September 27, 2005, nor is either period comparable to periods after September 27, 2005. References to Successor Company refer to US Airways on and after September 27, 2005, after the application of fresh-start reporting for the second bankruptcy. | |
(b) | The operating results for the three months ended December 31, 2005, the nine months ended December 31, 2003, the year ended December 31, 2002 and the year ended December 31, 2001 include the following unusual items: |
| The operating results for the three months ended December 31, 2005 include $15 million in transition and merger integration costs. These items included $7 million in insurance premiums related to policies for former officers and directors, $5 million in salaries and related benefits for severance, retention payments and stock awards, $1 million of aircraft livery costs, $1 million of programming service expense and $1 million in other expenses. | |
| The operating results for the nine months ended December 31, 2003 include: |
| A $212 million, net of amounts due to certain affiliates, reduction in operating expenses in connection with the reimbursement for certain aviation-related security expenses in connection with the Emergency Wartime Supplemental Appropriations Act. |
41
| A $35 million charge in connection with US Airways intention not to take delivery of certain aircraft scheduled for future delivery. |
| The results for the year ended December 31, 2002 include: |
| A $392 million impairment charge as a result of an impairment analysis conducted on the B737-300, B737-400, B757-200 and B767-200 aircraft fleets as a result of changes to the aircrafts recoverability periods, the planned conversion of owned aircraft to leased aircraft and indications of possible material changes to the market values of these aircraft. The analysis revealed that estimated undiscounted future cash flows generated by these aircraft were less than their carrying values for four B737-300s, 15 B737-400s, 21 B757-200s and three B767-200s. In accordance with Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the carrying values were reduced to fair market value. | |
| A curtailment credit of $120 million related to certain postretirement benefit plans and a $30 million curtailment charge related to certain defined benefit pension plans. | |
| An impairment charge of $21 million related to capitalized gates at certain airports in accordance with Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets. The carrying values of the affected gates were reduced to fair value based on a third-party appraisal. |
| The results for the year ended December 31, 2001 include: |
| An aircraft impairment and related charge of $787 million. During August 2001, US Airways conducted an impairment analysis in accordance with Statement of Financial Accounting Standards No. 121 Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of (SFAS 121) on its 36 F-100 aircraft, 16 MD-80 aircraft and 39 B737-200 aircraft as a result of changes to the fleet plan as well as indications of possible material changes to the market values of these aircraft. The analysis revealed that estimated undiscounted future cash flows generated by these aircraft were less than their carrying values. In accordance with SFAS 121, the carrying values were reduced to fair market value. This analysis resulted in a pretax charge of $403 million. In the aftermath of September 11, 2001, US Airways elected to accelerate the retirement of the aforementioned aircraft. All B737-200 aircraft retirements were accelerated to the end of 2001 while the F-100s and MD-80s were scheduled to be retired by April 2002. Based on this, US Airways conducted another impairment analysis which revealed that these aircraft were impaired. This culminated in an additional pretax charge of $173 million largely reflecting the further diminution in value of used aircraft arising from the events of September 11, 2001. Management estimated fair market value using third-party appraisals, published sources and recent sales and leasing transactions. As a result of the events of September 11, 2001, US Airways reviewed other aircraft-related assets which resulted in a pretax charge of $15 million as certain aircraft assets had carrying values in excess of their fair value less costs to sell. Management estimated fair value based on recent sales and leasing transactions. US Airways also recognized a pretax charge of $26 million in connection with the write-down to lower of cost or market of surplus parts for the F-100, B737-200 and MD-80 fleets. Management estimated market value based on recent sales activity related to these parts. During the first quarter of 2002, US Airways entered into agreements to sell 97 surplus aircraft and related spare engines and parts, including substantially all its DC-9, MD-80 and B737-200 aircraft. In connection with these agreements, US Airways reduced the carrying values of these assets resulting in a $148 million charge during the fourth quarter of 2001, including a $138 million impairment charge and a charge of $10 million to write down the related spare parts. Additionally, US Airways recognized a pretax impairment charge of $22 million in connection with the planned retirement of five B737-200 aircraft due to a third-partys early return of certain leased B737-200 aircraft, and early retirement of certain other B737-200s during the first quarter of 2001. |
42
| An $83 million charge for employee severance and benefits. In September 2001, US Airways announced that in connection with its reduced flight schedule it would terminate or furlough approximately 11,000 employees across all employee groups. Approximately 10,200 of the affected employees were terminated or furloughed on or prior to January 1, 2002. Substantially all the remaining affected employees were terminated or furloughed by May 2002. US Airways headcount reduction was largely accomplished through involuntary terminations/furloughs. In connection with this headcount reduction, US Airways offered a voluntary leave program to certain employee groups. Voluntary leave program participants generally received extended benefits (e.g. medical, dental, life insurance) but did not receive any furlough pay benefit. The nine months ended December 31, 2003 and the year ended December 31, 2002 include $1 million and $3 million, respectively, in reductions to severance pay and benefit accruals related to the involuntary termination or furlough of certain employees. | |
| Charges of $4 million and $66 million, respectively, representing the present value of the future minimum lease payments on three B737-200 aircraft and four F-100 aircraft, respectively, that were permanently removed from service. | |
| A charge of $13 million representing the unamortized leasehold improvement balance for facilities to be abandoned and aircraft to be parked as of the facility abandonment date or aircraft park date. In addition, US Airways recognized a pretax charge of $3 million representing the present value of future noncancelable lease commitments beyond the facility abandonment date. | |
| A $2 million curtailment charge related to a certain postretirement benefit plan. |
(c) | Nonoperating income (expense) for the nine months ended September 30, 2005 and the year ended December 31, 2004 include reorganization items which amounted to a $636 million net gain and a $32 million expense, respectively. The nine months ended December 31, 2003 include a $30 million gain on the sale of US Airways investment in Hotwire, Inc. In connection with US Airways first bankruptcy, a $1.89 billion gain and charges of $294 million of reorganization items, net are included for the three months ended March 31, 2003 and the year ended December 31, 2002, respectively. | |
(d) | Includes debt, capital leases and postretirement benefits other than pensions (noncurrent). Also includes liabilities subject to compromise at December 31, 2004 and December 31, 2002. |
Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
43
44
| Continued use by US Airways Group of certain leased Airbus, Boeing and regional jet aircraft, the modification of monthly lease rates, and the return to GECC of certain other leased Airbus and Boeing aircraft. | |
| GECC provided a bridge facility of approximately $56 million for use by US Airways Group during the pendency of the Chapter 11 proceedings. US Airways paid an affiliate of GE $125 million in cash on September 30, 2005 in exchange for retirement of the bridge facility, forgiveness and release of US Airways from certain prepetition obligations, deferral of certain payment obligations and amendments to maintenance agreements. The payment was funded through the issuance of 7% Senior Convertible Notes due 2020 on September 30, 2005, as discussed in more detail below. | |
| In June 2005, GECC purchased and immediately leased back to US Airways Group: (a) the assets securing the credit facility obtained from GE in 2001 and the liquidity facility obtained from GE in 2003 in connection with US Airways Groups emergence from the first bankruptcy, and other GE obligations, consisting of 11 Airbus aircraft and 28 spare engines and engine stands; and (b) ten regional jet aircraft previously debt-financed by GECC. The proceeds from the sale leaseback transaction of approximately $633 million were used to pay down balances due to GE by US Airways Group under the 2003 GE liquidity facility in full, the GECC mortgage-debt financed CRJ aircraft in full, and a portion of the 2001 GE credit facility. The 2001 GE credit facility was amended to allow certain additional borrowings up to $28 million. |
| On September 27, 2005, US Airways and AWA entered into two loan agreements with Airbus Financial Services, as Initial Lender and Loan Agent, Wells Fargo Bank Northwest, National Association, as Collateral Agent, and US Airways Group, as guarantor, with commitments in initial aggregate amounts of up to $161 million and up to $89 million. The Airbus loans bear interest at a rate of LIBOR plus a margin, subject to adjustment. In each of the separate financial statements of US Airways and AWA, the Airbus loan has also been presented as a liability, as each entity is jointly and severally liable for this obligation. | |
| Airbus rescheduled US Airways Groups A320-family and A330-200 delivery commitments and has agreed to provide backstop financing for a substantial number of aircraft, subject to certain terms and conditions, on an order of 20 A350 aircraft. US Airways Groups A320-family aircraft are now scheduled for delivery in 2009 and 2010. US Airways Groups A330-200 aircraft are scheduled for delivery in 2009 and 2010 and A350 aircraft deliveries are currently scheduled to occur beginning in 2011. The Airbus Memorandum of Understanding also eliminates cancellation penalties on US Airways Groups orders for the ten A330-200 aircraft, provided that US Airways Group has met certain predelivery payment obligations under the A350 order. In connection with the restructuring of aircraft firm orders, US Airways Group and America West Holdings were required to pay an aggregate non-refundable restructuring fee which was paid by means of set- off against existing equipment purchase deposits of US Airways Group and America West Holdings held by |
45
Airbus. US Airways recorded its restructuring fee of $39 million as a reorganization item in the third quarter of 2005. The America West Holdings restructuring fee of $50 million was recorded as a special charge in the accompanying consolidated statement of operations, along with $7 million in related capitalized interest. |
| 90% of the US Airways loan (Tranche A), which was the portion of the loan previously guaranteed by the ATSB, was originally funded through a participating lenders commercial paper conduit program and bears interest at a rate equal to the conduit providers weighted average cost related to the issuance of certain commercial paper notes and other short term borrowings plus 0.30%, provided that portions of Tranche A that were held by the ATSB or are held by an assignee and are no longer subject to such commercial paper conduit program bear interest at LIBOR plus 40 basis points, and portions of Tranche A that are under certain circumstances assigned free of the ATSB guarantee bear interest at LIBOR plus 6.0%; and | |
| 10% of the US Airways loan (Tranche B) bears interest at the greater of the Tranche A interest rate plus 6.0% and LIBOR plus 6.0% from a prior rate of LIBOR plus 4.0%. |
46
47
48
49
50
| We achieved the top ranking in on-time performance among all major airlines as reported by the DOT for the fourth quarter of 2005. | |
| We consolidated operations at 30 overlap airports, with seven airports remaining to be integrated. | |
| We signed an amended agreement with Embraer for 25 firm order and 32 additional firm order Embraer 170/190 family aircraft, with an option for up to an additional 50 aircraft. | |
| We achieved ETOPS (extended-range twin-engine operations) certification for Boeing 757 aircraft in long-range over-water service, which allowed the airline to begin new service to Hawaii. | |
| We added 52 new pieces of ground equipment and additional personnel at our Philadelphia hub, which helped the airline run a much improved 2005 holiday operation as compared to 2004. |
51
| repurchased warrants associated with AWAs ATSB loan for $116 million; and | |
| combined all of our insurance programs, which will save $41 million annually. |
| established Dividend Miles as our frequent flyer program, and created mechanisms for reciprocal benefits, accrual and redemption between Dividend Miles and AWAs FlightFund program; | |
| completed all Star Alliance joining requirements; | |
| introduced a new affinity credit card with Barclays PLC through our agreement with Juniper; | |
| announced three new European destinations, Lisbon, Milan and Stockholm, which will begin service this summer; and | |
| reduced numerous fares in several East Coast markets, including Philadelphia, Charlotte, Pittsburgh and New York/ LaGuardia. |
| recalled 55 furloughed US Airways pilots and announced several new hire flight attendant classes, which will include recalling furloughed US Airways flight attendants; | |
| began the process to bring some of the currently outsourced reservations work back in house by increasing hiring in Winston-Salem, North Carolina and Reno, Nevada; | |
| reached transition agreements with US Airways and AWAs pilots and flight attendants; | |
| reached a transition agreement with a new labor alliance between CWA and IBT, which represents US Airways and AWAs customer service employees; and | |
| received single carrier certification by the National Mediation Board, which will further the process of getting to single representation for US Airways and AWAs mechanics and fleet service workers. |
| we paid out three consecutive monthly bonuses, totaling $5 million, to employees for achieving on-time performance goals in October, November and December; | |
| we implemented new internal communication programs designed to ensure senior management visibility among all areas of the Companys operation; | |
| we unveiled one of four heritage planes that will feature throwback liveries of the four major airlines that comprise the new US Airways (Allegheny, AWA, Piedmont and PSA); and | |
| we began an aggressive leadership development training program that will ultimately touch all leaders at US Airways Group. |
52
Fourth | Full Year | |||||||||||||||
Quarter | ||||||||||||||||
2005 | 2005 | 2004 | 2003 | |||||||||||||
On-time performance(a)
|
80.7 | 77.8 | 78.1 | 80.4 | ||||||||||||
Completion factor(b)
|
98.7 | 98.2 | 98.4 | 98.6 | ||||||||||||
Mishandled baggage(c)
|
6.90 | 7.68 | 4.85 | 3.46 | ||||||||||||
Customer complaints(d)
|
1.26 | 1.55 | 1.14 | 0.88 |
(a) | Percentage of reported flight operations arriving on time. | |
(b) | Percentage of scheduled flight operations completed. | |
(c) | Rate of mishandled baggage reports per 1,000 passengers. | |
(d) | Rate of customer complaints filed with the DOT per 100,000 passengers. |
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
2005
2004
2003
Consolidated
96 Days
US Airways
US Airways
America West
America West
America West
Group
Group, Inc.
Holdings
Holdings
Holdings
$
5,077
$
1,822
$
3,255
$
2,748
$
2,572
5,294
1,914
3,380
2,768
2,539
(217
)
(92
)
(125
)
(20
)
33
(118
)
(44
)
(74
)
(69
)
24
$
(335
)
$
(136
)
$
(199
)
$
(89
)
$
57
Table of Contents
Table of Contents
2005
2004
2003
(In millions)
$
2,521
$
2,203
$
2,118
512
353
268
33
28
27
188
163
158
3,254
2,747
2,571
812
590
404
(75
)
(24
)
(11
)
701
655
658
545
374
287
327
304
298
259
206
223
176
168
155
161
153
156
106
(16
)
14
53
54
67
309
299
283
3,374
2,763
2,534
(120
)
(16
)
37
25
14
13
(94
)
(86
)
(87
)
81
2
1
10
(8
)
2
7
(75
)
(69
)
24
$
(195
)
$
(85
)
$
61
Table of Contents
Table of Contents
Year Ended December 31,
Percent
Percent
Change
Change
2005
2004
2003
2005-2004
2004-2003
24,260
23,333
21,295
4.0
9.6
30,503
30,153
27,888
1.2
8.1
79.5
77.4
76.4
2.1
pts
1.0
pt
10.39
9.44
9.95
10.1
(5.1
)
8.27
7.31
7.60
13.1
(3.8
)
8.99
7.94
8.26
13.2
(3.9
)
22,130
21,132
20,050
4.7
5.4
141
138
139
2.2
(0.7
)
11.0
10.9
10.1
0.9
7.9
564
557
519
1.3
7.3
1,028
1,052
1,005
(2.3
)
4.7
1,659
1,686
1,564
(1.6
)
7.8
449
450
423
(0.2
)
6.4
1.80
1.31
0.96
37.4
36.5
12,100
11,893
11,475
0.1
3.6
(a)
Revenue passenger mile (RPM) A basic
measure of sales volume. It is one passenger flown one mile.
(b)
Available seat mile (ASM) A basic
measure of production. It is one seat flown one statute mile.
(c)
Load factor The percentage of available seats that
are filled with revenue passengers.
(d)
Yield A measure of airline revenue derived by
dividing passenger revenue by revenue passenger miles and
expressed in cents per mile.
(e)
Passenger revenue per available seat mile
(RASM) Total passenger revenues divided
by total available seat miles.
(f)
Total revenue per available seat mile Total
operating revenues divided by total available seat miles.
(g)
Passenger enplanements The number of passengers on
board an aircraft including local, connecting and through
passengers.
(h)
Average daily aircraft utilization The average
number of block hours per day for all aircraft in service.
(i)
Block hours The hours measured from the moment an
aircraft first moves under its own power, including taxi time,
for the purposes of flight until the aircraft is docked at the
next point of landing and its power is shut down.
(j)
Average stage length The average of the distances
flown on each segment of every route.
(k)
Average passenger journey The average one-way trip
measured in statute miles for one passenger origination.
Table of Contents
Year Ended December 31,
Percent
Percent
Change
Change
2005
2004
2003
2005-2004
2004-2003
(In cents)
2.66
1.95
1.45
36.0
35.0
(0.25
)
(0.08
)
(0.04
)
2.30
2.17
2.36
5.8
(7.9
)
1.07
1.01
1.07
6.3
(5.4
)
0.85
0.68
0.80
24.5
(14.8
)
0.58
0.56
0.55
3.8
0.4
0.53
0.51
0.56
4.2
(9.2
)
0.17
0.18
0.24
(3.6
)
(24.8
)
0.35
(0.05
)
0.06
1.02
0.99
1.02
2.3
(2.5
)
9.28
7.92
8.07
17.0
(1.7
)
Aircraft fuel and related tax expense per ASM increased 36.0%
due primarily to a 37.4% increase in the average price per
gallon of fuel to $1.80 in 2005 from $1.31 in 2004.
Salaries and related costs per ASM increased 5.8% primarily due
to a $23 million increase in benefit related expenses,
including $13 million in defined contribution plan payments
that our pilots became eligible for beginning on January 1,
2005, a $5 million increase related to self-funded
disability requirements and higher medical insurance costs of
$4 million. A $9 million accrual for employee
performance bonuses also contributed to the increase.
Table of Contents
Aircraft rent expense per ASM increased 6.3% due principally to
aircraft mix, as previously owned and leased
Boeing
737-200
aircraft were retired or returned to aircraft lessors and
replaced with leased Airbus A320 and A319 aircraft at higher
monthly lease rates.
Aircraft maintenance materials and repair expense per ASM
increased 24.5% due principally to the change in AWAs
accounting policy for certain maintenance costs in 2005
discussed above. See note 3, Change in Accounting
Principle for Maintenance Costs, to the consolidated
financial statements in Item 8B of this report.
Other rent and landing fees per ASM increased 3.8% mainly due to
higher landing fees ($4 million) and airport rents
($4 million).
Selling expenses per ASM increased 4.2% due to higher credit
card fee expenses of $8 million and advertising expenses of
$2 million.
Depreciation and amortization expense per ASM decreased 3.6% due
principally to decreases in amortization expense related to
computer hardware and software ($3 million) and rotable and
repairable spare parts ($3 million) as a result of the 2005
change in accounting policy for certain maintenance costs
discussed above.
Other operating expenses per ASM increased 2.3% in 2005.
Increases in property taxes ($3 million), ground handling
services ($2 million), airport guard services
($2 million) and crew per diem ($2 million) during
2005 were offset in part by lower legal fees ($6 million).
The 2005 period included an $8 million aggregate loss
associated with two aircraft sale-leaseback transactions and a
$5 million accrual for a retroactive billing by the TSA for
passenger security fees. The 2004 period included a
$6 million charge resulting from the settlement of pending
litigation and a $5 million loss on the sale and leaseback
of two new aircraft. A $4 million gain resulting from the
settlement of a claim in bankruptcy for amounts earned under an
executory contract, a $2 million gain resulting from the
settlement of a lawsuit related to certain computer hardware and
software that had previously been written off, a $2 million
reduction in bad debt expense due to a recovery of a previously
reserved debt and a $1 million volume incentive earned due
to certain affinity card sales levels meeting certain contract
thresholds in 2004 also contributed to the year-over-year
increase.
Table of Contents
Aircraft fuel and related tax expense per ASM increased 35.0%
due primarily to a 36.5% increase in the average price per
gallon of fuel to $1.31 in 2004 from $0.96 in 2003.
Salaries and related costs per ASM decreased 7.9% due to
increased productivity. ASMs increased 8.1% in 2004, while
average full-time equivalent employees decreased 2.2% year-over
year. This increase in productivity was offset in part by a
$27 million increase in pilot payroll expense, principally
as a result of the new labor agreement with ALPA that was
effective December 30, 2003.
Aircraft rent expense per ASM decreased 5.4% due to the 7.9%
increase in aircraft utilization.
Aircraft maintenance materials and repair expense per ASM
decreased 14.8% due to decreases in capitalized maintenance
amortization expense ($23 million) and aircraft maintenance
expense ($4 million). The decrease in capitalized
maintenance amortization expense was driven by changes in the
estimated useful life of certain engines, effective
January 1, 2004, as a result of changes in aircraft
utilization ($9 million) and certain aircraft engine
overhaul costs, effective April 1, 2003, driven by a new
maintenance agreement that guarantees minimum cycles on engine
overhauls ($2 million). These decreases were partially
offset by increases in airframe maintenance ($6 million)
and engine overhaul ($4 million) expenses.
Other rents and landing fees expense per ASM remained flat year
over year as increases in airport rents ($7 million) and
landing fees ($6 million) were offset by the 8.1% increase
in ASMs.
Selling expenses per ASM decreased 9.2% due to reductions in
various travel agency incentive programs and override
commissions ($9 million) and decreases in advertising
expenses ($1 million), which were offset in part by higher
credit card expenses ($4 million), and reservation system
booking fees ($4 million).
Depreciation and amortization expense per ASM decreased 24.8%
due to lower computer hardware and software amortization
($6 million) as a result of AWAs cash conservation
program, which reduced capital expenditures, and lower
amortization on aircraft leasehold improvements
($2 million). The change in the estimated useful life
resulting from changes in aircraft utilization discussed above
contributed to the decrease in depreciation for improvements on
AWAs owned aircraft ($3 million) and rotable and
repairable spare parts ($2 million).
Other operating expenses per ASM decreased 2.5% in 2004.
Decreases in catering costs ($6 million), bad debt expense
($3 million) and traffic liability insurance
($2 million) were offset by increases in passenger traffic
related expenses ($4 million), legal fees
($4 million), airport guard services ($2 million) and
ground handling expenses ($2 million). The 2004 period
included a $6 million charge resulting from the settlement
of pending litigation and a $5 million loss on the sale and
leaseback of two new aircraft. A $4 million gain resulting
from the settlement of a claim in bankruptcy for amounts earned
under an executory contract, a $2 million gain resulting
from the settlement of a lawsuit related to certain computer
hardware and software that had previously been written off, a
$2 million reduction in bad debt expense due to a recovery
of a previously reserved
Table of Contents
debt and a $1 million volume incentive earned due to
certain affinity card sales levels meeting certain contract
thresholds in 2004 also contributed to the year-over-year
decrease. The 2003 period includes a $4 million gain
related to the purchase and subsequent exchange of an A320
airframe.
2005(a)
2004
2003(b)
$
4,861
$
4,969
$
4,943
1,620
1,379
1,208
95
132
132
636
593
479
7,212
7,073
6,762
Table of Contents
2005(a)
2004
2003(b)
1,486
991
771
1,399
2,169
2,410
1,861
1,572
1,269
392
399
398
334
299
320
366
396
400
324
360
377
15
34
189
220
216
(212
)
1,059
1,015
1,023
7,425
7,421
7,006
(213
)
(348
)
(244
)
26
12
17
(287
)
(236
)
(237
)
636
(32
)
1,888
(4
)
19
35
371
(237
)
1,703
158
(585
)
1,459
(2
)
(7
)
7
$
160
$
(578
)
$
1,452
(a)
The full year 2005 includes the combined results for the three
months ended December 31, 2005 (Successor Company) and the
nine months ended September 30, 2005 (Predecessor Company).
(b)
The full year 2003 includes the combined results for the nine
months ended December 31, 2003 and the three months ended
March 31, 2003. US Airways emerged from the first
bankruptcy effective March 31, 2003.
Table of Contents
Year Ended December 31,
Percent
Percent
Change
Change
2005
2004
2003
2005-2004
2004-2003
38,895
39,970
37,796
(2.7
)
5.8
51,518
53,229
51,584
(3.2
)
3.2
75.5
75.1
73.3
0.4
pts
1.8
pts
12.50
12.43
13.08
0.6
(5.0
)
9.44
9.33
9.58
1.2
(2.6
)
39,977
41,518
41,264
(3.7
)
(0.6
)
232
281
282
(17.4
)
0.4
928,362
960,678
956,888
(3.4
)
0.4
793
792
761
0.1
4.1
973
963
916
1.0
5.1
842
884
873
(4.8
)
1.3
1.77
1.12
0.88
58.0
27.3
21,486
26,670
26,640
(19.4
)
0.1
Table of Contents
Year Ended
December 31,
Percent
Change
2005
2004
2005-2004
2.89
1.86
55.4
2.72
4.07
(33.2
)
0.76
0.75
1.3
0.65
0.56
16.1
0.71
0.74
(4.1
)
0.63
0.68
(7.4
)
0.03
0.37
0.41
(9.8
)
2.04
1.92
6.3
10.80
10.99
(1.7
)
Aircraft fuel and related tax expense per ASM increased 55.4%
primarily due to a 58.0% increase in the average price per
gallon of fuel from $1.12 in 2004 to $1.77 in 2005, partially
offset by a 4.8% decrease in consumption.
Salaries and related costs per ASM decreased 33.2% primarily due
to lower wage and benefits rates as a result of the cost-savings
agreements achieved with each of the collective bargaining
groups, including the termination of defined benefit pension
plans and the curtailment of postretirement benefits, as well as
lower headcount as compared to the same period in 2004.
Aircraft rent expense per ASM increased 1.3% reflecting a shift
in the mix of leased to owned aircraft in 2005 as compared to
2004.
Aircraft maintenance per ASM increased 16.1% reflecting the
shift to outside vendors to perform scheduled maintenance,
partially offsetting the decrease in salaries and related costs
described above.
Other rent and landing fees per ASM decreased 4.1% primarily due
to space rent reductions negotiated during the bankruptcy
proceedings.
Selling expenses per ASM decreased 7.4% primarily due to
reduction in travel agent commissions and the termination of
certain marketing contracts and reductions in advertising
programs as a result of the bankruptcy.
US Airways recorded $15 million of special charges in
the fourth quarter of 2005 related to transition and integration
costs associated with the merger. See note 4 to
US Airways financial statements included in
Item 8C of this report.
Depreciation and amortization decreased 9.8% per ASM as a
result of fewer owned aircraft in the operating fleet and lower
book values on the continuing fleet as a result of fresh-start
reporting.
Other operating expenses increased primarily as a result of
increases to expenses associated with the redemption of Dividend
Miles on partner airlines and future travel on US Airways
as well as increases in costs associated with outsourced
aircraft cleaning services. These increases were partially
offset by decreases in insurance expense, outsourced technology
services and schedule-related costs including passenger food
expenses.
Table of Contents
Table of Contents
Year Ended
December 31,
Percent
Change
2004
2003
2004-2003
1.86
1.49
24.8
4.07
4.67
(12.8
)
0.75
0.77
(2.6
)
0.56
0.62
(9.7
)
0.74
0.78
(5.1
)
0.68
0.73
(6.8
)
0.07
0.41
0.42
(2.4
)
(0.41
)
1.92
1.98
(3.0
)
10.99
11.12
(1.2
)
Aircraft fuel and related tax expense per ASM increased 24.8%
primarily due to a 27.3% increase in the average price per
gallon of fuel from $0.88 in 2003 to $1.12 in 2004.
Salaries and related costs per ASM decreased 12.8% primarily due
to lower employee pension, medical and dental and postretirement
medical benefit expense, and an $89 million decrease in
stock-compensation expense related to the issuance of
US Airways Group Class A common stock to employees
covered by collective bargaining agreements following the
emergence from the first bankruptcy in 2003, reduced headcount
in 2004 as compared to 2003, and lower wage rates in the fourth
quarter of 2004 as a result of interim or permanent relief from
labor contracts.
Aircraft rent expense per ASM decreased 2.6% due to increases in
mainline stage length while total aircraft rent remained flat
from 2004 as compared to full year 2003.
Aircraft maintenance per ASM decreased 9.7% reflecting lower
costs associated with third-party engine and airframe repair
services and the write-off of certain surplus inventory in the
second quarter of 2003.
Selling expenses per ASM decreased 6.8% primarily due to
reduction in commissions, partially offset by increases in
advertising and computer reservations fees.
US Airways recorded $34 million of special charges in
2003 primarily related to aircraft order cancellation penalties.
See note 4 to US Airways financial statements in
Item 8C of this report.
Depreciation and amortization per ASM decreased 2.4% due to
lower book values on the existing fleet as a result of
fresh-start reporting effective March 31, 2003 and due to
reduced amortization associated with capitalized software,
partially offset by the write-off of certain ground equipment
and an indefinite lived foreign slot.
Other operating expenses per ASM decreased due to reductions in
insurance expense and schedule-related expenses including
passenger food expenses, partially offset by increases in the
cost associated with the redemption of Dividend Miles for travel
on partner airlines and future travel on US Airways as well
as increases in to costs associated with passenger and baggage
screening and navigation fees. The 2003 period also includes
$28 million in reductions to an accrual upon the resolution
of previously outstanding contingencies.
Table of Contents
Predecessor Company
Nine Months
Three Months
Ended
Year Ended
Ended
September 30,
December 31,
March 31,
2005
2004
2003
$
1,420
$
$
801
386
75
3,655
30
(7
)
7
4
2
2
(2
)
(1,892
)
(1,498
)
(1,106
)
(96
)
(57
)
(27
)
(51
)
(35
)
(5
)
946
(4
)
(9
)
(4
)
(43
)
$
636
$
(32
)
$
1,888
(a)
In January 2005, the Bankruptcy Court approved settlement
agreements between US Airways and its unions and the
court-appointed Section 1114 Committee, representing
retirees other than those represented by the IAM and TWU, to
begin the significant curtailment of postretirement medical
benefits. US Airways recognized a gain of $183 million
in connection with this curtailment in the first quarter of
2005. Upon the emergence from bankruptcy and effectiveness of
the plan of reorganization, an additional gain of
$1.24 billion was recognized as the liability associated
with the postretirement medical benefits was reduced to fair
market value. See also Note 7 to US Airways
financial statements included in Item 8C of this report.
Table of Contents
(b)
Also in January 2005, US Airways terminated three defined
benefit plans related to the flight attendants, mechanics and
certain other employees (see note 7 to
US Airways financial statements included in
Item 8C of this report). The PBGC was appointed trustee of
the plans upon termination. US Airways recognized a
curtailment gain of $24 million and a $91 million
minimum pension liability adjustment in connection with the
terminations in the first quarter of 2005. Upon the effective
date of the plan of reorganization and in connection with the
settlement with the PBGC, the remaining liabilities associated
with these plans were written off, net of settlement amounts.
Effective March 31, 2003, US Airways terminated its
qualified and nonqualified pilot defined benefit pension plans.
The PBGC was appointed trustee of the qualified plan effective
with the termination. US Airways recognized a gain in
connection with the termination which is partially offset by the
estimate of the PBGC claim.
(c)
Reflects the discharge of trade accounts payable and other
liabilities upon emergence from bankruptcy. Most of these
obligations were only entitled to receive such distributions of
cash and common stock as provided for under the plan of
reorganization in each of the bankruptcies. A portion of the
liabilities subject to compromise in the bankruptcies were
restructured and continued, as restructured, to be liabilities
of the Successor Company.
(d)
As a result of US Airways bankruptcy filing in
September 2004, US Airways was not able to secure the
financing necessary to take on-time delivery of three scheduled
regional jet aircraft and therefore accrued penalties of
$3 million until delivery of these aircraft was made to a
US Airways Express affiliate in August 2005. Offsetting
these penalties is the reversal of $33 million in penalties
recorded by US Airways in the nine months ended
December 31, 2003 due to its intention not to take delivery
of certain aircraft scheduled for future delivery. In connection
with the Airbus MOU, the accrual for these penalties were
reversed (see also notes 1 and 4 to US Airways
financial statements included in Item 8C of this report).
As the result of US Airways bankruptcy filing in
September 2004, it failed to meet the conditions precedent for
continued financing of regional jets and was not able to take
delivery of scheduled aircraft and therefore incurred penalties
of $7 million in the fourth quarter of 2004.
(e)
Damage and deficiency claims are largely a result of
US Airways election to either restructure, abandon or
reject aircraft debt and leases during the bankruptcy
proceedings. As a result of the confirmation of the plan of
reorganization and the effectiveness of the merger, these claims
were withdrawn and the accruals reversed.
(f)
As of September 30, 2005, US Airways recorded
$1.5 billion of adjustments to reflect assets and
liabilities at fair value, including an initial net write-down
of goodwill of $1.82 billion. Goodwill of $584 million
was recorded to reflect the excess of the estimated fair value
of liabilities and equity over identifiable assets. Subsequent
to September 30, 2005, US Airways recorded an
additional $148 million of goodwill to reflect adjustments
to the fair value of certain assets and liabilities.
As of March 31, 2003, US Airways recorded
$1.11 billion of adjustments to reflect assets and
liabilities at fair value (including a $1.12 billion
liability increase related to the revaluation of
US Airways remaining defined benefit pension plans
and postretirement benefit plans and a $333 million
write-up
of gates,
slots and routes) and the write-off of the Predecessor
Companys equity accounts. In addition, goodwill of
$2.41 billion was recorded to reflect the excess of the
estimated fair value of liabilities and equity over identifiable
assets.
Subsequent to March 31, 2003, US Airways recorded an
additional $62 million of adjustments to reflect assets and
liabilities at fair value, including a $281 million
decrease to property and equipment, net, a $121 million
decrease to long-term debt, net of current maturities, a
$13 million increase to deferred gains and credits, net, a
$54 million increase to other intangibles, net, a
$15 million decrease to employee benefit liabilities and
other and a $6 million decrease to accounts payable. In
addition, a $6 million adjustment was made to paid-in
capital reflecting a reallocation of US Airways Group
equity as a result of additional fair value adjustments to
assets at certain US Airways Group subsidiaries other than
US Airways.
Table of Contents
(g)
In connection with filing for bankruptcy on September 12,
2004, US Airways achieved cost-savings agreements with its
principal collective bargaining groups. In connection with the
new labor agreements, approximately 5,000 employees across
several of US Airways labor groups were involuntarily
terminated or participated in voluntary furlough and termination
programs.
(h)
In connection with the Airbus MOU, US Airways was
required to pay a restructuring fee of $39 million, which
was paid by means of offset against existing equipment deposits
held by Airbus. US Airways also received credits from
Airbus totaling $4 million in 2005, primarily related to
equipment deposits. See also Note 1 to
US Airways financial statements included in
Item 8C of this report.
(i)
The GE Merger MOU provided for the continued use of certain
leased Airbus, Boeing and regional jet aircraft, the
modification of monthly lease rates and the return of certain
other leased Airbus and Boeing aircraft. The GE Merger MOU also
provided for the sale-leaseback of assets securing various GE
obligations. In connection with these transactions,
US Airways recorded a net loss of $5 million.
In connection with the first bankruptcy, US Airways
restructured aircraft debt and lease agreements related to 119
aircraft including the conversion of 52 mortgages to operating
leases. The restructured terms generally provide for shorter
lease periods and lower lease rates.
(j)
For the three months ended March 31, 2003, reorganization
items includes expenses related to seven aircraft that were
legally abandoned as part of the first bankruptcy. Related
aircraft liabilities were adjusted for each aircrafts
expected allowed collateral value.
Sources and Uses of Cash
US Airways Group
Table of Contents
AWA
Table of Contents
US Airways
Table of Contents
Commitments
New Convertible Notes
GE
Table of Contents
Airbus Term Loans
ATSB Loans
Table of Contents
90% of the US Airways loan (Tranche A), which was the
portion of the loan previously guaranteed by the ATSB, was
originally funded through a participating lenders
commercial paper conduit program and bears interest at a rate
equal to the conduit providers weighted average cost
related to the issuance of certain commercial paper notes and
other short term borrowings plus 0.30%, provided that portions
of Tranche A that were held by the ATSB or are held by an
assignee and no longer subject to such commercial paper conduit
program bear interest at LIBOR plus 40 basis points, and
portions of Tranche A that are under certain circumstances
assigned free of the ATSB guarantee bear interest at LIBOR plus
6.0%; and
10% of the US Airways loan (Tranche B) bears interest
at the greater of the Tranche A interest rate plus 6.0% and
LIBOR plus 6.0%.
$525 million through March 2006;
$500 million through September 2006;
$475 million through March 2007;
$450 million through September 2007;
$400 million through March 2008;
$350 million through September 2008; and
$300 million through September 2010.
Table of Contents
Exchange of Common Stock for AWAs 7.25 Percent
Senior Exchangeable Notes
Restructuring of Affinity Credit Card Partner Agreement
Table of Contents
Restructuring of Credit Card Processing Agreement
Table of Contents
Asset Based Financings and Sales
Airbus Purchase Commitments
Table of Contents
Embraer Purchase Commitments
Bombardier Purchase Commitments
Covenants and Credit Rating
Table of Contents
GECC Term Loan Financing
Senior Secured Discount Notes Due 2009
Table of Contents
7.5% Convertible Senior Notes due 2009
Year
Redemption Price
103.75
%
102.50
%
101.25
%
100.00
%
Off-Balance Sheet Arrangements
Table of Contents
AWA
Table of Contents
US Airways
Table of Contents
Payments Due by Period
2006
2007
2008
2009
2010
Thereafter
Total
$
$
$
54
$
54
$
78
$
144
$
330
36
36
36
34
48
1,668
1,858
117
152
198
243
221
994
1,925
761
704
713
886
1,173
3,936
8,173
597
604
616
628
641
2,917
6,003
94
117
198
257
171
29
866
470
381
358
683
241
1,630
3,763
569
580
592
603
616
945
3,905
10
2
1
13
$
2,654
$
2,576
$
2,766
$
3,388
$
3,189
$
12,263
$
26,836
(1)
These commitments represent those specifically entered into by
US Airways Group or joint commitments entered into by
US Airways Group, AWA and US Airways under which each
entity is jointly and severally liable.
(2)
Includes $144 million aggregate principal amount of
7% Senior Convertible Notes due 2020 issued by
US Airways Group and $186 million under two loan
agreements entered into by AWA and US Airways with Airbus
Financial Services. US Airways and AWA are jointly and
severally liable for the Airbus loans.
(3)
Commitments listed separately under US Airways or AWA
represent commitments under agreements entered into separately
by those companies.
(4)
Represents operating lease commitments entered into by
US Airways Groups other airline subsidiaries Piedmont
and PSA.
Table of Contents
Income Taxes
Related Party Transactions
Table of Contents
Passenger revenue
December 31, 2005
December 31, 2004
$
788
$
195
$
218
$
195
$
570
$
615
Impairment of Goodwill
Table of Contents
Impairment of long-lived assets and intangible
assets
Frequent traveler programs
Table of Contents
Fresh-start reporting and purchase accounting
Table of Contents
Long-lived tangible and identifiable intangible assets, and
certain noncurrent liabilities, all of which may change based on
the consideration of additional analysis by US Airways and
its valuation consultants;
Accrued expenses that may change based on identification of
final fees and costs associated with emergence from bankruptcy,
resolution of disputed claims and completion of the bankruptcy
proceedings relating to the Debtors; and
Tax liabilities, which may be adjusted based upon additional
information to be received from taxing authorities.
Deferred tax asset valuation allowance
Pensions and other postretirement benefits
Table of Contents
Table of Contents
Item 7A.
Quantitative and Qualitative Disclosures About Market
Risk
Table of Contents
Commodity Price Risk
the impact of global political instability on crude production;
unexpected changes to the availability of petroleum products due
to disruptions in distribution systems or refineries as
evidenced in the third quarter of 2005 when Hurricane Katrina
and Hurricane Rita caused widespread disruption to oil
production, refinery operations and pipeline capacity along
certain portions of the U.S. Gulf Coast. As a result of
these disruptions, the price of jet fuel increased significantly
and the availability of jet fuel supplies was diminished;
unpredicted increases to oil demand due to weather or the pace
of economic growth;
inventory levels of crude, refined products and natural
gas; and
other factors, such as the relative fluctuation between the
U.S. dollar and other major currencies and influence of
speculative positions on the futures exchanges.
Interest Rate Risk
Table of Contents
Expected Maturity Date
2006
2007
2008
2009
2010
Thereafter
Total
$
8
$
5
$
4
$
116
$
4
$
254
$
391
7.1
%
7.2
%
7.2
%
7.0
%
7.0
%
7.0
%
$
203
$
264
$
447
$
435
$
493
$
888
$
2,730
9.2
%
9.1
%
8.9
%
8.8
%
8.5
%
8.5
%
Equity Price Risk
Table of Contents
Item 8A. | Consolidated Financial Statements and Supplementary Data of US Airways Group, Inc. |
| pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of US Airways Group; | |
| provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of US Airways Group are being made only in accordance with authorizations of management and directors of US Airways Group; and | |
| provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of US Airways Groups assets that could have a material effect on the financial statements. |
94
95
Table of Contents
96
Table of Contents
2005
2004
2003
$
3,695
$
2,203
$
2,118
976
353
268
58
28
27
348
164
159
5,077
2,748
2,572
1,214
590
404
(75
)
(24
)
(11
)
1,045
657
660
1,073
374
287
429
304
298
344
206
223
267
168
155
231
153
156
121
(16
)
14
88
54
67
557
302
286
5,294
2,768
2,539
(217
)
(20
)
33
30
8
6
(147
)
(80
)
(80
)
81
(1
)
3
17
(118
)
(69
)
24
(335
)
(89
)
57
(335
)
(89
)
57
202
$
(537
)
$
(89
)
$
57
(335
)
$
(142
)
$
52
$
(10.65
)
$
(5.99
)
$
4.03
(6.41
)
$
(17.06
)
$
(5.99
)
$
4.03
$
(10.65
)
$
(5.99
)
$
3.07
(6.41
)
$
(17.06
)
$
(5.99
)
$
3.07
31,488
14,861
14,252
31,488
14,861
23,147
97
2005
2004
ASSETS
$
1,125
$
149
452
127
8
41
353
109
229
58
392
141
2,559
625
1,920
927
532
291
(431
)
(625
)
2,021
593
43
63
2,064
656
732
583
792
72
234
122
2,341
194
$
6,964
$
1,475
LIABILITIES & STOCKHOLDERS EQUITY
$
211
$
155
530
174
788
195
209
43
171
33
750
65
2,659
665
2,749
640
254
43
882
91
3,885
774
1
1
1,258
632
(826
)
(289
)
(308
)
(13
)
420
36
$
6,964
$
1,475
98
2005
2004
2003
$
(537
)
$
(89
)
$
57
202
88
54
67
86
105
(23
)
(8
)
(11
)
5
6
10
12
7
8
30
36
36
11
4
3
9
1
1
5
105
(15
)
14
(3
)
(18
)
28
8
120
2
(43
)
55
(13
)
(5
)
(8
)
1
(3
)
(67
)
(49
)
(46
)
13
(45
)
(35
)
18
(54
)
20
4
(1
)
(18
)
20
(5
)
(4
)
2
(37
)
6
(1
)
186
1
1
46
21
242
(44
)
(219
)
(154
)
(711
)
(488
)
(634
)
416
708
364
279
(21
)
(35
)
(80
)
20
10
(112
)
(2
)
(24
)
592
32
26
399
16
(492
)
655
142
87
(741
)
(176
)
(17
)
732
(116
)
(1
)
(3
)
1
(6
)
531
(41
)
67
976
(4
)
(183
)
149
153
336
$
1,125
$
149
$
153
99
Accumulated
Class A
Class B
Additional
Retained
Other
Class B
Common
Common
Common
Paid-In
Earnings/
Comprehensive
Treasury
Treasury
Stock
Stock
Stock
Capital
(Deficit)
Income
Stock
Stock
Total
$
$
$
1
$
629
$
(257
)
$
2
$
$
(306
)
$
69
57
57
(2
)
(2
)
2
2
1
631
(200
)
(306
)
126
(89
)
(89
)
(2
)
(2
)
1
1
1
632
(289
)
(308
)
36
(537
)
(537
)
1
564
565
113
113
180
180
96
96
(13
)
(13
)
12
12
308
308
(1
)
(315
)
(316
)
87
87
(116
)
(116
)
5
5
$
1
$
$
$
1,258
$
(826
)
$
$
(13
)
$
$
420
(a) | Correction of Other Comprehensive Income See Note 2(k), Derivative Instruments. |
100
1. | Merger with America West Holdings Corporation |
| The GE Merger MOU provided for continued use by US Airways Group of certain leased Airbus, Boeing and regional jet aircraft, the modification of monthly lease rates, and the return to GECC of certain other leased Airbus and Boeing aircraft. | |
| GECC provided a bridge facility of approximately $56 million for use by US Airways Group during the pendency of the Chapter 11 proceedings. US Airways paid an affiliate of General Electric (GE) $125 million in cash on September 30, 2005 in exchange for retirement of the bridge facility, forgiveness and release of US Airways from certain prepetition obligations, deferral of certain payment obligations, and amendments to maintenance agreements. |
101
| In June 2005, GECC purchased and immediately leased back to US Airways Group: (a) the assets securing the credit facility obtained from GE in 2001 (the 2001 GE Credit Facility) and the liquidity facility obtained from GE in 2003 in connection with US Airways Groups emergence from the first bankruptcy (the 2003 GE Liquidity Facility), and other GE obligations, consisting of 11 Airbus aircraft and 28 spare engines and engine stands; and (b) ten regional jet aircraft previously debt financed by GECC. The proceeds from the sale leaseback transaction of approximately $633 million were used to pay down balances due to GE by US Airways Group under the 2003 GE Liquidity Facility in full, the GECC mortgage-debt financed CRJ aircraft in full, and a portion of the 2001 GE Credit Facility. The 2001 GE Credit Facility was amended to allow certain additional borrowings up to $28 million. |
| On September 27, 2005, US Airways and AWA entered into two loan agreements with Airbus Financial Services (AFS), as Initial Lender and Loan Agent, Wells Fargo Bank Northwest, National Association, as Collateral Agent, and US Airways Group, as guarantor, with commitments in initial aggregate amounts of up to $161 million and up to $89 million (the Airbus $161 Million Loan and the Airbus $89 Million Loan and, collectively, the Airbus Loans). The Airbus Loans bear interest at a rate of LIBOR plus a margin, subject to adjustment. The outstanding principal amount of the Airbus $89 Million Loan will be forgiven in writing on December 31, 2010, or an earlier date, if on that date the outstanding principal amount of, accrued interest on, and all other amounts due under the Airbus $161 Million Loan have been paid in full. | |
| Airbus has rescheduled US Airways Groups A320-family and A330-200 delivery commitments and has agreed to provide backstop financing for a substantial number of aircraft, subject to certain terms and conditions, on an order of 20 A350 aircraft. US Airways Groups A320-family aircraft are now scheduled for delivery in 2009 and 2010. US Airways Groups A330-200 aircraft are scheduled for delivery in 2009 and 2010 and A350 aircraft deliveries are currently scheduled to occur beginning in 2011. The Airbus MOU also eliminates cancellation penalties on US Airways Groups orders for the ten A330-200 aircraft, provided that US Airways Group has met certain predelivery payment obligations under the A350 order. In connection with the restructuring of aircraft firm orders, US Airways and America West Holdings were required to pay an aggregate non-refundable restructuring fee which was paid by means of set-off against existing equipment purchase deposits of US Airways Group and America West Holdings held by Airbus. US Airways recorded its restructuring fee of $39 million as a reorganization item in the third quarter of 2005. AWAs restructuring fee was $50 million, along with $7 million of capitalized interest, which was written off as a special charge upon execution of the agreement. |
102
103
104
2. | Basis of presentation and summary of significant accounting policies |
(a) | Nature of operations and operating environment |
105
(b) | Basis of presentation |
(c) | Cash equivalents and short-term investments |
106
(d) | Restricted cash |
(e) | Materials and supplies, net |
(f) | Property and equipment |
(g) | Income taxes |
107
(h) | Goodwill and other intangibles, net |
Cost | A/A | ||||||||
Airport take-off and landing slots
|
$ | 453 | $ | 4 | |||||
Airport gate leasehold rights
|
52 | 4 | |||||||
Total
|
$ | 505 | $ | 8 | |||||
(i) | Other assets, net |
108
(j) | Frequent traveler program |
(k) | Derivative instruments |
109
(l) | Deferred gains and credits, net |
(m) | Passenger revenues |
110
(n) | Stock-based compensation |
2005 | 2004 | 2003 | |||||||||||
Net income (loss), as reported
|
$ | (537 | ) | $ | (89 | ) | $ | 57 | |||||
Add: Stock-based compensation included in reported net income
(loss)
|
4 | | | ||||||||||
Deduct: Stock-based compensation determined under the fair value
based method
|
(12 | ) | (6 | ) | (4 | ) | |||||||
Pro forma net income (loss)
|
$ | (545 | ) | $ | (95 | ) | $ | 53 | |||||
Earnings (loss) per share:
|
|||||||||||||
Basic as reported
|
$ | (17.06 | ) | $ | (5.99 | ) | $ | 4.03 | |||||
Basic pro forma
|
$ | (17.30 | ) | $ | (6.39 | ) | $ | 3.73 | |||||
Diluted as reported
|
$ | (17.06 | ) | $ | (5.99 | ) | $ | 3.07 | |||||
Diluted pro forma
|
$ | (17.30 | ) | $ | (6.39 | ) | $ | 2.88 |
(o) | Maintenance and repair costs |
111
(p) | Selling expenses |
(q) | Express expenses |
Year Ended | Year Ended | Year Ended | ||||||||||
December 31, | December 31, | December 31, | ||||||||||
2005 | 2004 | 2003 | ||||||||||
Aircraft fuel and related taxes
|
$ | 256 | $ | 102 | $ | 61 | ||||||
Salaries and related costs
|
61 | | | |||||||||
Capacity purchases
|
567 | 238 | 198 | |||||||||
Other rent and landing fees
|
19 | 8 | 7 | |||||||||
Aircraft rent
|
23 | | | |||||||||
Selling expenses
|
45 | 23 | 19 | |||||||||
Aircraft maintenance
|
17 | | | |||||||||
Depreciation and amortization
|
7 | | | |||||||||
Other expenses
|
78 | 3 | 2 | |||||||||
Express expenses
|
$ | 1,073 | $ | 374 | $ | 287 | ||||||
(r) | Variable interest entities |
112
(s) | New accounting pronouncements |
113
3. | New equity structure and conversion |
4. | Change in accounting policy for maintenance costs |
114
2005 | 2004 | 2003 | ||||||||||
Earnings (loss) per share
|
||||||||||||
Basic As Reported before cumulative effect of change
in accounting principle
|
$ | (10.65 | ) | $ | (5.99 | ) | $ | 4.03 | ||||
Basic Pro Forma
|
(10.65 | ) | (9.53 | ) | 3.71 | |||||||
Diluted As Reported before cumulative effect of
change in accounting principle
|
$ | (10.65 | ) | $ | (5.99 | ) | $ | 3.07 | ||||
Diluted Pro Forma
|
(10.65 | ) | (9.53 | ) | 2.87 |
5. | Change in method of reporting for America West Express results and other reclassifications |
115
Year Ended December 31, 2004 | ||||||||||||
As Previously Reported | Reclassifications | As Reclassified | ||||||||||
Operating revenues:
|
||||||||||||
Mainline passenger
|
$ | 2,197 | $ | 6 | (1) | $ | 2,203 | |||||
Express revenue
|
| 353 | (2) | 353 | ||||||||
Cargo and other
|
142 | 50 | (2)(3) | 192 | ||||||||
Total operating revenues
|
2,339 | 409 | 2,748 | |||||||||
Operating expenses:
|
||||||||||||
Operating expenses
|
2,383 | 11 | (4)(5) | 2,394 | ||||||||
Express expenses
|
| 374 | (5) | 374 | ||||||||
Total operating expenses
|
$ | 2,383 | $ | 385 | $ | 2,768 | ||||||
116
Year Ended December 31, 2003
As Previously Reported
Reclassifications
As Reclassified
$
2,114
$
4
(6)
$
2,118
268
(7)
268
141
45
(7)(8)
186
2,255
317
2,572
2,233
19
(9)(10)
2,252
287
(10)
287
$
2,233
$
306
$
2,539
(1) | Reclassification of $6 million related to the sale of frequent flier miles and related marketing services to affinity partners from Operating expenses Other to Operating revenues Mainline passenger. | |
(2) | Reclassification of $353 million Express revenue and $371 million Express operating expenses from Operating revenues Other to Operating revenues Mainline passenger revenue and to Operating expenses other. | |
(3) | Reclassification of $32 million related to the sale of frequent flier miles and related marketing services to affinity partners from Operating expenses Other to Operating revenues Other. | |
(4) | Reclassification of $24 million credit related to fuel hedging activity from nonoperating to operating expenses. Reclassification of $38 million related to the sale of frequent flier miles and related marketing services to affinity partners from Operating expenses Other to Operating revenues Mainline passenger and Operating revenues Other. | |
(5) | Reclassification of $371 million and $3 million of Express operating expenses from Operating revenues Other and Operating expenses Other, respectively. | |
(6) | Reclassification of $4 million related to the sale of frequent flier miles and related marketing services to affinity partners from Operating expenses Other to Operating revenues Mainline passenger. | |
(7) | Reclassification of $268 million Express revenue and $285 million Express operating expenses from Operating revenues Other to Operating revenues Mainline passenger revenue and to Operating expenses Other. | |
(8) | Reclassification of $28 million related to the sale of frequent flier miles and related marketing services to affinity partners from Operating expenses Other to Operating revenues Other. | |
(9) | Reclassification of $11 million credit related to fuel hedging activity from nonoperating to operating expenses. Reclassification of $32 million related to the sale of frequent flier miles and related marketing services to affinity partners from Operating expenses Other to Operating revenues Mainline passenger and Operating revenues Other. |
(10) | Reclassification of $285 million and $2 million of Express operating expenses from Operating revenues Other and Operating expenses Other, respectively. |
117
6. | Earning/ loss per common share |
Year Ended December 31, | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Basic earnings (loss) per share:
|
|||||||||||||
Income (loss) before cumulative effect of change in accounting
principle
|
$ | (335 | ) | $ | (89 | ) | $ | 57 | |||||
Cumulative effect of change in accounting principle
|
202 | | | ||||||||||
Net income (loss)
|
$ | (537 | ) | $ | (89 | ) | $ | 57 | |||||
Weighted average common shares outstanding
|
31,487,574 | 14,860,922 | 14,252,279 | ||||||||||
Basic earnings (loss) per share:
|
|||||||||||||
Earnings (loss) before cumulative effect of change in accounting
principle
|
$ | (10.65 | ) | $ | (5.99 | ) | $ | 4.03 | |||||
Cumulative effect of change in accounting principle
|
$ | (6.41 | ) | | | ||||||||
Net earnings (loss) per share
|
$ | (17.06 | ) | $ | (5.99 | ) | $ | 4.03 | |||||
Diluted earnings (loss) per share:
|
|||||||||||||
Income (loss) before cumulative effect of change in accounting
principle
|
$ | (335 | ) | $ | (89 | ) | $ | 57 | |||||
Cumulative effect of change in accounting principle
|
202 | | | ||||||||||
Net income (loss)
|
(537 | ) | (89 | ) | 57 | ||||||||
Interest expense on 7.5% convertible senior notes
|
| | 11 | ||||||||||
Interest expense on 7.25% senior exchangeable notes
|
| | 3 | ||||||||||
Income (loss) for purposes of computing diluted net income
(loss) per share
|
$ | (537 | ) | $ | (89 | ) | $ | 71 | |||||
Share computation:
|
|||||||||||||
Weighted average common shares outstanding
|
31,487,574 | 14,860,922 | 14,252,279 | ||||||||||
Assumed exercise of stock options and warrants
|
| | 4,111,028 | ||||||||||
Assumed conversion of 7.5% convertible senior notes
|
| | 3,365,109 | ||||||||||
Assumed conversion of 7.25% senior exchangeable notes
|
| | 1,418,159 | ||||||||||
Weighted average common shares outstanding as adjusted
|
31,487,574 | 14,860,922 | 23,146,575 | ||||||||||
118
Year Ended December 31,
2005
2004
2003
$
(10.65
)
$
(5.99
)
$
3.07
(6.41
)
$
(17.06
)
$
(5.99
)
$
3.07
119
7.
Special charges (credits), net
Year Ended December 31,
2005
2004
2003
$
57
(a)
$
$
28
(b)
27
(c)
(1
)(g)
7
(d)
2
(e)
1
(f)
2
(f)
(1
)(i)
(16
)(h)
11
(j)
2
(k)
3
(l)
(1
)
(1
)
(1
)
$
121
$
(16
)
$
14
(a) | In the third quarter of 2005, in connection with the merger and the Airbus MOU executed between Airbus, US Airways Group, US Airways and AWA, certain aircraft firm orders were restructured. In connection with that restructuring, US Airways Group and America West Holdings were required to pay non-refundable restructuring fees. AWAs restructuring fee of $50 million has been classified as a special charge, along with $7 million in associated capitalized interest. The restructuring fee was paid by means of set-off against existing equipment deposits of AWA held by Airbus. | |
(b) | In connection with the merger, America West Holdings and US Airways incurred $13 million and $15 million, respectively, of transition and merger integration costs in the fourth quarter of 2005 related to transitioning the employees, systems and facilities of AWA and US Airways into one consolidated company. The $13 million includes insurance premiums of $4 million related to policies for former officers and directors, compensation expense of $3 million for special stock awards granted under a program designed to retain key employees through the integration period, professional and technical fees of $3 million and sales and marketing program expenses of $2 million related to notifying frequent traveler program members about the merger. The $15 million includes $7 million in insurance premiums related to policies for former officers and directors, $5 million for severance, retention and stock awards, $1 million of aircraft livery costs, $1 million of programming service expense and $1 million in other expenses. | |
(c) | In the third quarter of 2005, a $27 million loss was incurred related to the sale-leaseback of six Boeing 737-200 aircraft and two Boeing 757 aircraft. | |
(d) | In the fourth quarter of 2005, in connection with the return of certain leased aircraft, AWA incurred expenses of $7 million related to penalties incurred under an outsourced maintenance arrangement. | |
(e) | In the third and fourth quarter of 2005, AWA recorded severance expense totaling approximately $2 million for terminated employees resulting from the merger. The majority of the $2 million will be paid in the first quarter of 2006. | |
(f) | In August 2004, AWA entered into definitive agreements with two lessors to return six Boeing 737-200 aircraft. Three of these aircraft were returned to the lessors in the third quarter of 2004, two were |
120
returned in the fourth quarter of 2004 and one was returned in January 2005. In addition, AWA continues negotiating with one lessor on the return of its remaining two Boeing 737-200 aircraft, one of which was parked in March 2002. The other aircraft was removed from service in January 2005. In connection with the return of the aircraft, AWA recorded $2 million of special charges in 2004, which include lease termination payments of $2 million and the write-down of leasehold improvements and aircraft rent balances of $3 million, offset by the net reversal of lease return provisions of $3 million. In the first quarter of 2005, AWA recorded $1 million in special charges related to the final Boeing 737-200 aircraft, which was removed from service in January 2005. | ||
(g) | In the first quarter of 2004, AWA recorded a $1 million reduction in special charges related to the revision of estimated costs associated with the sale and leaseback of certain aircraft. | |
(h) | In December 2004, AWA and GE mutually agreed to terminate the V2500 A-1 power by hour (PBH) agreement effective January 1, 2005. This agreement was entered into March 1998 with an original term of ten years. For terminating the agreement early, AWA received a $20 million credit to be applied to amounts due for other engines under the 1998 agreement. AWA had capitalized PBH payments for V2500 A-1 engines in excess of the unamortized cost of the overhauls performed by GE of approximately $4 million. With the termination of this agreement, these payments were not realizable and as a result, AWA wrote off this amount against the $20 million credit referred to above, resulting in a $16 million net gain. | |
(i) | In the first quarter of 2003, AWA recorded a $1 million reduction in special charges related to the earlier-than-planned return of certain leased aircraft in 2001 and 2002, as all payments related to these aircraft returns had been made. | |
(j) | In February 2003, AWA announced the elimination of its hub operations in Columbus, Ohio. As a result, 12 regional jets, all of which were operated by Chautauqua Airlines under the America West Express banner, were phased out of the fleet. In addition, the hub was downsized from 49 daily departures to 15 destinations to four flights per day to Phoenix and Las Vegas. Service to New York City LaGuardia Airport was also eliminated because perimeter rules at the airport prohibit flights beyond 1,500 miles, precluding service from AWAs hubs in Phoenix and Las Vegas. In the first, second and third quarters of 2003, AWA recorded special charges totaling $11 million related to the costs associated with the termination of certain aircraft and facility contracts, employee transfer and severance expenses and the write-off of leasehold improvements in Columbus, Ohio. All payments were completed as of December 31, 2005. | |
(k) | In April 2003, as part of a cost reduction program, AWA implemented a plan to reduce management, professional and administrative payroll costs that resulted in 161 fewer employees within these workgroups. As a result, AWA recorded a special charge of $2 million related to this reduction-in -force. All payments were completed as of December 31, 2005. | |
(l) | In June 2003, AWA recorded an impairment loss of $3 million related to three owned Boeing 737-200 aircraft that were grounded and subsequently sold. |
8. | Financial instruments |
(a) | General |
121
(b) | Fair values of financial instruments |
Cash Equivalents, Short-term Investments and Receivables |
Held-to-maturity securities: | 2005 | 2004 | |||||||
Cash and cash equivalents:
|
|||||||||
Corporate notes
|
$ | 497 | $ | | |||||
Cash and money market funds
|
628 | 147 | |||||||
U.S. government securities
|
| 2 | |||||||
Total cash and cash equivalents
|
$ | 1,125 | $ | 149 | |||||
Short-term investments:
|
|||||||||
Corporate notes
|
$ | 56 | $ | 69 | |||||
U.S. government securities
|
| | |||||||
Total short-term investments
|
$ | 56 | $ | 69 | |||||
Total Held-to-maturity securities:
|
$ | 1,181 | $ | 218 | |||||
Available-for-sale securities: | 2005 | 2004 | |||||||
Short-term investments:
|
|||||||||
Auction rate securities
|
$ | 396 | $ | 58 | |||||
Total short-term investments
|
$ | 396 | $ | 58 | |||||
Total Available-for-sale securities
|
$ | 396 | $ | 58 | |||||
122
Long-term debt |
9. | Long-term debt, including capital lease obligations |
December 31, | December 31, | |||||||
2005 | 2004 | |||||||
Secured
|
||||||||
AWA Citibank Loan (formerly AWA ATSB Loan), variable interest
rate of 12.27%, installments due 2005 through 2008(a)
|
$ | 250 | $ | | ||||
Equipment notes payable, notes retired September 2005
|
| 39 | ||||||
Capital lease obligations
|
| 8 | ||||||
GECC term loan, variable interest rate of 8.43%, quarterly
installments beginning 2006 through 2010(b)
|
111 | 111 | ||||||
Senior secured discount notes, variable interest rate of 7.91%,
installments due 2005 through 2009(c)
|
34 | 36 | ||||||
Airbus Loans, variable interest rate of 9.96%, quarterly
installments beginning 2008 through 2010(d)
|
186 | | ||||||
Equipment notes payable, variable interest rates of 6.20% to
9.22%, averaging 8.50% as of December 31, 2005
|
1,240 | | ||||||
US Airways Citibank Loan (formerly US Airways ATSB
Loan), variable interest rate of 10.10%, installments due 2006
through 2010(e)
|
551 | | ||||||
Slot Financing, interest rate of 8%, installments due through
2015(f)
|
50 | | ||||||
Capital Lease Obligations, interest rate of 8%, installments due
through 2021(g)
|
46 | | ||||||
GE Credit Facility, variable interest rate of 8.30%,
installments due 2006 to 2010(h)
|
28 | | ||||||
2,496 | 194 | |||||||
123
December 31,
December 31,
2005
2004
343
144
40
112
112
253
4
16
29
29
1
1
325
10
625
794
3,121
988
(161
)
(193
)
(211
)
(155
)
$
2,749
$
640
(a) | In January 2002, AWA closed a $429 million loan backed by a $380 million federal loan guarantee provided by the ATSB. Certain third-party counter-guarantors fully and unconditionally guaranteed the payment of an aggregate of $45 million of the outstanding principal amount under the government guaranteed loan plus accrued and unpaid interest thereon. In addition, America West Holdings fully and unconditionally guaranteed the payment of all principal, premium, interest and other obligations outstanding under the government guaranteed loan and pledged the stock of AWA to secure its obligations under such guarantee. Principal amounts under this loan were scheduled to become due in ten installments of $43 million on each March 31 and September 30, commencing on March 31, 2004 and ending on September 30, 2008. In addition, AWA was charged an annual guarantee fee in respect of the ATSB guarantee equal to 8.0% of the guaranteed amount in 2005. On September 27, 2005, AWA made a voluntary prepayment of $9 million in principal, thus reducing the remaining semi-annual installments due to $42 million. Principal amounts outstanding under the government guaranteed loan bear interest at a rate per annum equal to LIBOR plus 40 basis points. | |
In connection with the consummation of the merger, on September 27, 2005, AWA, as borrower, entered into an Amended and Restated Loan Agreement (the AWA ATSB Loan) with the ATSB. The ATSB Loan amended and restated the previously outstanding loans of AWA guaranteed in part by the ATSB. On October 19, 2005, $238 million of the AWA ATSB Loan, of which $228 million was guaranteed by the ATSB, was sold by the lender by order of the ATSB to 13 fixed income investors. The sale of the debt removed the ATSB guaranty. Due to the sale on October 19, 2005, the ATSB no longer guarantees any portion of the loan and has no interest in any of AWAs debt. As a result of the sale of the loan, $11 million of the outstanding principal balance remains guaranteed by certain third party counter- guarantors. The non-guaranteed portion of the loan is no longer subject to payment of the annual guarantee fee; rather, as of the date of the loan sale, those principal amounts |
124
bear interest at a rate per annum equal to LIBOR plus 840 basis points increasing by 5 basis points on January 18 of each year, beginning January 18, 2006 through the end of the loan term, payable on a quarterly basis. All other terms associated with this loan remain unchanged. As a result of the sale of the loan, the AWA ATSB Loan is now referred to as the AWA Citibank Loan, and had an outstanding balance of $250 million at December 31, 2005. | ||
The AWA Citibank Loan is now secured debt. It requires certain prepayments from the proceeds of specified asset sales by US Airways Group and the other loan parties, and US Airways Group is required to maintain consolidated unrestricted cash and cash equivalents, less: (a) the amount of all outstanding advances by credit card processors and clearing houses in excess of 20% of the air traffic liabilities; (b) $250 million presumed necessary to fund a subsequent tax trust (to the extent not otherwise funded by US Airways Group); (c) $35 million presumed necessary to post collateral to clearing houses (to the extent not posted); and (d) any unrestricted cash or cash equivalents held in unperfected accounts; in an amount (subject to partial reduction under certain circumstances upon mandatory prepayments made with the net proceeds of future borrowings and issuances of capital stock) not less than: | ||
$525 million from September 27, 2005 through March 2006; | ||
$500 million through September 2006; | ||
$475 million through March 2007; | ||
$450 million through September 2007; | ||
$400 million through March 2008; | ||
$350 million through September 2008; and | ||
$300 million through September 2010. | ||
(b) | On September 10, 2004, AWA entered into a term loan financing with GECC providing for loans in an aggregate amount of $111 million. AWA used approximately $77 million of the proceeds from this financing to repay in full its term loan with Mizuho Corporate Bank, Ltd. and certain other lenders and to pay certain costs associated with this transaction. AWA used the remaining proceeds for general corporate purposes. The new term loan financing consists of two secured term loan facilities: a $76 million term loan facility secured primarily by spare parts, rotables and appliances (the Spare Parts Facility); and a $35 million term loan facility secured primarily by aircraft engines and parts installed in such engines (the Engine Facility). | |
The facilities are cross-collateralized on a subordinated basis, and the collateral securing the facilities also secures on a subordinated basis certain of AWAs other existing debt and lease obligations to GECC and its affiliates. | ||
The loans under the Spare Parts Facility are payable in full at maturity on September 10, 2010. The loans under the Engine Facility are payable in equal quarterly installments of approximately $1 million beginning on March 10, 2006 through June 10, 2010, with the remaining loan amount of $12 million payable at maturity on September 10, 2010. The loans under each facility may be prepaid in an amount not less than $5 million at any time after the 30th monthly anniversary of the funding date under such facility. If AWA fails to maintain a certain ratio of rotables to loans under the Spare Parts Facility, it may be required to pledge additional rotables or cash as collateral, provide a letter of credit or prepay some or all of the loans under the Spare Parts Facility. In addition, the loans under the Engine Facility are subject to mandatory prepayment upon the occurrence of certain events of loss applicable to, or certain dispositions of, aircraft engines securing the facility. Principal amounts outstanding under the loans bear interest at a rate per annum based on three-month LIBOR plus a |
125
margin. Both facilities contain customary events of default, including payment defaults, cross-defaults, breach of covenants, bankruptcy and insolvency defaults and judgment defaults. | ||
(c) | On December 27, 2004, AWA raised additional capital by financing its Phoenix maintenance facility and flight training center. The flight training center was previously unencumbered, and the maintenance facility became unencumbered earlier in 2004 when AWA refinanced its term loan. Using its leasehold interest in these two facilities as collateral, AWA, through a wholly owned subsidiary named FTCHP LLC, raised $31 million through the issuance of senior secured discount notes. The notes were issued by FTCHP at a discount pursuant to the terms of a senior secured term loan agreement among the Company, FTCHP, Heritage Bank SSB, as administrative agent, Citibank, N.A., as the initial lender, and the other lenders from time to time party thereto. Citibank, N.A. subsequently assigned all of its interests in the notes to third party lenders. | |
AWA has fully and unconditionally guaranteed the payment and performance of FTCHPs obligations under the notes and the loan agreement. The notes require aggregate principal payments of $36 million with principal payments of $2 million due on each of the first two anniversary dates and the remaining principal amount due on the fifth anniversary date. The notes may be prepaid in full at any time (subject to customary LIBOR breakage costs) and in partial amounts of $2 million on the third and fourth anniversary dates. The unpaid principal amount of the notes bears interest based on LIBOR plus a margin subject to adjustment based on a loan to collateral value ratio. | ||
The loan agreement contains customary covenants applicable to loans of this type, including obligations relating to the preservation of the collateral and restrictions on the activities of FTCHP. In addition, the loan agreement contains events of default, including payment defaults, cross-defaults to other debt of FTCHP, if any, breach of covenants, bankruptcy and insolvency defaults and judgment defaults. | ||
In connection with this financing, AWA sold all of its leasehold interests in the maintenance facility and flight training center to FTCHP and entered into subleases for the facilities with FTCHP at lease rates expected to approximate the interest payments due under the notes. In addition, AWA agreed to make future capital contributions to FTCHP in amounts sufficient to cover principal payments and other amounts owing pursuant to the notes and the loan agreement. | ||
The proceeds from this financing, together with $11 million from operating cash flow, were irrevocably deposited with the trustee for AWAs 10 3 / 4 % senior unsecured notes due 2005, and the notes were subsequently redeemed on January 26, 2005. | ||
(d) | On September 27, 2005, US Airways and AWA entered into two loan agreements with Airbus Financial Services (AFS), an affiliate of Airbus, with commitments in initial aggregate amounts of up to $161 million and up to $89 million. The Airbus loans bear interest at a rate of LIBOR plus a margin, subject to adjustment during the term of the loans under certain conditions, and have been recorded as an obligation of US Airways Group. Amounts drawn upon the Airbus loans are drawn first upon the Airbus $161 million loan until it has been drawn in its full amount, in which event the remaining portion of the $250 million total commitment is drawn upon the Airbus $89 million loan. | |
On September 27, 2005, all of the Airbus $161 million loan and $14 million of the Airbus $89 million loan were drawn and are available for use for general corporate purposes. At December 31, 2005, a total of $186 million was drawn under the Airbus loans. The remaining portion of the Airbus loans is payable in multiple draws upon the occurrence of certain conditions, including the taking of delivery of certain aircraft, on the due dates for certain amounts owing to AFS or its affiliates to refinance such amounts, after payment of certain invoices for goods and services provided by AFS or its affiliates, or upon receipt by AFS of certain amounts payable in respect of existing aircraft financing transactions. The full amount of the Airbus loans is expected to be available by the end of 2006. |
126
US Airways and AWA are jointly and severally liable for the Airbus loans; accordingly, the full amount outstanding under the loans is reflected in the financial statements of US Airways and AWA. | ||
The amortization payments under the Airbus $161 million loan will become due in equal quarterly installments of $13 million beginning on March 31, 2008, with the final installment due on December 31, 2010. The outstanding principal amount of Airbus $89 million loan will be forgiven in writing on December 31, 2010, or an earlier date, if on that date the outstanding principal amount of, accrued interest on, and all other amounts due under the Airbus $161 million loan have been paid in full and US Airways and AWA comply with the aircraft delivery schedule. | ||
(e) | In connection with the consummation of the merger, on September 27, 2005, US Airways, as borrower, entered into the US Airways ATSB Loan with the ATSB. Also on September 27, 2005, AWA entered into the Amended and Restated AWA Loan Agreement. The ATSB Loans amended and restated the previously outstanding loans of both US Airways and AWA, each guaranteed in part by the ATSB. On October 19, 2005, $539 million of US Airways ATSB Loan, of which $525 million was guaranteed by the ATSB, was sold by the lender by order of the ATSB to 13 fixed income investors. Due to the sale on October 19, 2005, the ATSB no longer guarantees any portion of the loan and has no interest in any of US Airways debt. As a result of the sale of the loan, the principal amounts bear interest as a rate per annum equal to LIBOR plus 600 basis points, payable on a quarterly basis, and are no longer subject to payment of the quarterly guarantee fee. All other terms associated with this loan remain unchanged. As a result of the sale of the loan, the US Airways ATSB Loan is now referred to as the US Airways Citibank Loan, and had an outstanding balance of $551 million at December 31, 2005. | |
Ninety percent of the US Airways Citibank Loan (Tranche A), the previously guaranteed portion of the loan, was originally funded through a participating lenders commercial paper conduit program and bears interest at a rate equal to the conduit providers weighted average cost related to the issuance of certain commercial paper notes and other short term borrowings plus 0.30%, provided that portions of Tranche A that are held by the US Airways Citibank Loan or by an assignee and no longer subject to such commercial paper conduit program bear interest at LIBOR plus 40 basis points, and portions of Tranche A that are under certain circumstances assigned free of the ATSB guarantee bear interest at LIBOR plus 6.0%. Ten percent of the US Airways Citibank Loan (Tranche B) bears interest at the greater of the Tranche A interest rate plus 6.0% and LIBOR plus 6.0%, as compared with the previous rate of LIBOR plus 4.0%. The US Airways Citibank loan also reschedules amortization payments for US Airways with semi-annual payments beginning on March 31, 2007 and continuing through September 30, 2010. | ||
The US Airways Citibank Loan requires certain prepayments from the proceeds of specified asset sales by US Airways Group and the other loan parties, and US Airways Group is required to maintain consolidated unrestricted cash and cash equivalents, less: (a) the amount of all outstanding advances by credit card processors and clearing houses in excess of 20% of the air traffic liabilities; (b) $250 million presumed necessary to fund a subsequent tax trust (to the extent not otherwise funded by US Airways Group); (c) $35 million presumed necessary to post collateral to clearing houses (to the extent not posted); and (d) any unrestricted cash or cash equivalents held in unperfected accounts; in an amount (subject to partial reduction under certain circumstances upon mandatory prepayments made with the net proceeds of future borrowings and issuances of capital stock) not less than: | ||
$525 million from September 27, 2005 through March 2006; | ||
$500 million through September 2006; | ||
$475 million through March 2007; |
127
$450 million through September 2007; | ||
$400 million through March 2008; | ||
$350 million through September 2008; and | ||
$300 million through September 2010. | ||
US Airways was required to pay down the principal of its loan with the first $125 million of net proceeds from specified asset sales identified in connection with its Chapter 11 proceedings, whether completed before or after emergence. US Airways then retains the next $83 million of net proceeds from specified assets sales, and must prepay the principal of the loan with 60% of net proceeds in excess of an aggregate of $208 million from specified asset sales to the ATSB. Any such asset sales proceeds up to $275 million are to be applied to the outstanding principal balance in order of maturity, and any such asset sales proceeds in excess of $275 million are to be applied to the outstanding principal balance on a pro rata across all maturities in accordance with the loans early amortization provisions. As a result, semi-annual payments are now scheduled to begin on September 30, 2007, instead of March 31, 2007, as originally scheduled in the loan agreement. US Airways made prepayments totaling $156 million in connection with these specified asset sales completed during 2005. | ||
(f) | In September 2005, US Airways entered into an agreement to sell and leaseback certain of its commuter slots at Ronald Reagan Washington National Airport and New York LaGuardia Airport. US Airways continues to hold the right to repurchase the slots anytime after the second anniversary of the slot sale/leaseback transaction. These transactions were accounted for as secured financings. Installments are due monthly through 2015. | |
(g) | Capital lease obligations consist principally of certain airport maintenance and facility leases which expire in 2018 and 2021. | |
(h) | GE, together with its affiliates, is US Airways Groups largest aircraft creditor, having financed or leased a substantial portion of its aircraft prior to the most recent Chapter 11 filing. In June 2005, GE purchased the assets securing the GE Credit Facility in a sale-leaseback transaction. The sale proceeds realized from the sale-leaseback transaction were applied to repay the 2003 GE Liquidity Facility, the mortgage financing associated with the CRJ aircraft and a portion of the 2001 GE Credit Facility. The balance of the GECC Credit Facility was amended to allow additional borrowings of $21 million in July 2005, which resulted in a total principal balance outstanding thereunder of $28 million. The operating leases are cross-defaulted with all other GE obligations, other than excepted obligations, and are subject to agreed upon return conditions. | |
(i) | On September 30, 2005, US Airways Group issued $144 million aggregate principal amount of 7% Senior Convertible Notes due 2020 (the 7% Senior Convertible Notes) for proceeds, net of expenses, of approximately $139 million. The 7% Senior Convertible Notes are US Airways Groups senior unsecured obligations and rank equally in right of payment to its other senior unsecured and unsubordinated indebtedness and are effectively subordinated to its secured indebtedness to the extent of the value of assets securing such indebtedness. The 7% Senior Convertible Notes are fully and unconditionally guaranteed, jointly and severally and on a senior unsecured basis, by US Airways Groups two major operating subsidiaries, US Airways and AWA. The guarantees are the guarantors unsecured obligations and rank equally in right of payment to the other senior unsecured and unsubordinated indebtedness of the guarantors and are effectively subordinated to the guarantors secured indebtedness to the extent of the value of assets securing such indebtedness. | |
The 7% Senior Convertible Notes bear interest at the rate of 7% per year payable in cash semiannually in arrears on March 30 and September 30 of each year, beginning March 30, 2006. The 7% Senior Convertible Notes mature on September 30, 2020. |
128
Holders may convert, at any time on or prior to maturity or redemption, any outstanding notes (or portions thereof) into shares of US Airways Groups common stock, initially at a conversion rate of 41.4508 shares of US Airways Groups common stock per $1,000 principal amount of notes (equivalent to an initial conversion price of approximately $24.12 per share of US Airways Groups common stock). If a holder elects to convert its notes in connection with certain specified fundamental changes that occur prior to October 5, 2015, the holder will be entitled to receive additional shares of US Airways Groups common stock as a make whole premium upon conversion. In lieu of delivery of shares of US Airways Groups common stock upon conversion of all or any portion of the notes, US Airways Group may elect to pay holders surrendering notes for conversion cash or a combination of shares and cash. | ||
Holders may require US Airways Group to purchase for cash or shares or a combination thereof, at US Airways Groups election, all or a portion of their 7% Senior Convertible Notes on September 30, 2010 and September 30, 2015 at a purchase price equal to 100% of the principal amount of the 7% Senior Convertible Notes to be repurchased plus accrued and unpaid interest, if any, to the purchase date. In addition, if US Airways Group experiences a specified fundamental change, holders may require US Airways Group to purchase for cash, shares or a combination thereof, at its election, all or a portion of their 7% Senior Convertible Notes, subject to specified exceptions, at a price equal to 100% of the principal amount of the 7% Senior Convertible Notes plus accrued and unpaid interest, if any, to the purchase date. Prior to October 5, 2010, the 7% Senior Convertible Notes will not be redeemable at US Airways Groups option. US Airways Group may redeem all or a portion of the 7% Senior Convertible Notes at any time on or after October 5, 2010, at a price equal to 100% of the principal amount of the 7% Senior Convertible Notes plus accrued and unpaid interest, if any, to the redemption date if the closing price of US Airways Groups common stock has exceeded 115% of the conversion price for at least 20 trading days in the 30 consecutive trading day period ending on the trading day before the date on which US Airways Group mails the optional redemption notice. | ||
(j) | In August 1995, AWA issued $75 million principal amount of 10 3 / 4 % senior unsecured notes due 2005, of which $40 million remained outstanding at December 31, 2004. Interest on the 10 3 / 4 % senior unsecured notes was payable semi-annually in arrears on March 1 and September 1 of each year. On December 27, 2004, AWA called for the redemption on January 26, 2005 of all of the senior unsecured notes at a redemption price of 100% of the principal amount thereof plus accrued and unpaid interest through the redemption date. In addition, AWA irrevocably deposited the $31 million raised through the maintenance facility and flight training center financing, as discussed in note (c) above, together with an additional $11 million from its operating cash flow, with the trustee for the senior unsecured notes. The senior notes were subsequently redeemed on January 26, 2005. | |
(k) | In January 2002, in connection with the closing of the original AWA ATSB loan and the related transactions, America West Holdings issued $105 million of 7.5% convertible senior notes due 2009, of which approximately $112 million remained outstanding at December 31, 2005 (including $22 million of interest paid through December 31, 2004 as a deemed loan added to the initial principal thereof). Beginning January 18, 2005, these notes are convertible into shares of common stock of US Airways Group, at the option of the holders, at an initial conversion price of $29.09 per share or a conversion ratio of approximately 34.376 shares per $1,000 principal amount of such notes, subject to standard anti-dilution adjustments. Interest on the 7.5% convertible senior notes is payable semiannually in arrears on June 1 and December 1 of each year. At America West Holdings option, the first six interest payments were payable in the form of a deemed loan added to the principal amount of these notes. The 7.5% convertible senior notes will mature on January 18, 2009 unless earlier converted or redeemed. The payment of principal, premium and interest on the 7.5% convertible senior notes is fully and unconditionally guaranteed by AWA and US Airways Group. For financial reporting purposes, America West Holdings recorded the convertible senior notes at their fair |
129
market value on the date of issuance. The balance at December 31, 2005 is net of an unamortized discount of $18 million. | ||
(l) | In July and August of 2003, AWA completed a private placement of approximately $87 million issue price of 7.25% Senior Exchangeable Notes due 2023. The notes bore cash interest at a rate of 2.49% per year, and were redeemable or exchangeable under certain conditions. Completion of the merger between US Airways Group and America West Holdings on September 27, 2005 constituted a change of control under these notes and required AWA to make an offer to holders to purchase those notes within 30 business days after the effective time of the merger at a purchase price of $343.61 per $1,000 principal amount at maturity. Under the terms of the notes and the related Guarantee and Exchange Agreement, dated as of July 30, 2003, between America West Holdings and U.S. Bank National Association, as Trustee, as supplemented by the Guarantee and Exchange Agreement Supplement No. 1 among America West Holdings, US Airways Group and the Trustee, dated as of September 27, 2005, AWAs obligation to purchase the notes was satisfied at US Airways Groups election by delivery of shares of US Airways Group common stock having a fair market value of not less than $343.61 per $1,000 principal amount at maturity. For this purpose, fair market value means 95% of the market price of US Airways Group common stock calculated as the average closing prices over the five business days ending on and including the third business day before the purchase date. | |
On October 24, 2005, US Airways Group issued a total of 4,156,411 shares of its common stock in exchange for approximately $250 million in principal amount at maturity of AWAs Senior Exchangeable Notes due 2023, which notes were fully and unconditionally guaranteed by US Airways Group. The shares were exchanged at a rate of 16 shares of US Airways Group common stock per $1,000 principal amount at maturity, in full satisfaction of the purchase price of the notes. The amount of notes exchanged represented approximately 99% of the outstanding principal amount, and approximately $2 million in principal amount at maturity of the notes remained outstanding after the exchange. On November 30, 2005, US Airways Group issued a total of 38,864 shares of its common stock to repurchase the remaining outstanding principal amount of the notes. | ||
(m) | The industrial development revenue bonds are due April 2023. Interest at 6.3% is payable semiannually on April 1 and October 1. The bonds are subject to optional redemption prior to the maturity date on or after April 1, 2008, in whole or in part, on any interest payment date at the following redemption prices: 102% on April 1 or October 1, 2008; 101% on April 1 or October 1, 2009; and 100% on April 1, 2010 and thereafter. | |
(n) | In connection with the merger, AWA, US Airways Group and Juniper, entered into an agreement on August 8, 2005 amending AWAs co-branded credit card agreement with Juniper, dated January 25, 2005. Pursuant to the amended credit card agreement, Juniper agreed to offer and market an airline mileage award credit card program to the general public to participate in US Airways Groups Dividend Miles program through the use of a co-branded credit card. | |
US Airways Groups credit card program is currently administered by Bank of America, N.A. (USA). On December 28, 2005, US Airways issued a notice of termination under its agreement with Bank of America and that notice will become effective on December 28, 2007. Pending termination of the Bank of America agreement, both Juniper and Bank of America will run separate credit card programs for US Airways Group. The amended credit card agreement is the subject of pending litigation filed by Bank of America against US Airways Group, US Airways and AWA (See Note 12(d)). | ||
The amended credit card agreement took effect at the effective time of the merger. The credit card services provided by Juniper under the amended credit card agreement began in January 2006, and will continue until the expiration date, which is the later of December 31, 2012 or seven years from the date on which Juniper commences marketing to the general public. |
130
Under the amended credit card agreement, Juniper will pay to US Airways Group fees for each mile awarded to each credit card account administered by Juniper, subject to certain exceptions. Pursuant to the original credit card agreement, Juniper paid to AWA a bonus of $20 million. Juniper also agreed to pay a one-time bonus payment of $130 million, following the effectiveness of the merger, subject to certain conditions. The $130 million bonus payment was made to AWA on October 3, 2005. The entire $150 million balance for bonus payments are included in Deferred gains and other liabilities in the accompanying consolidated balance sheet as of December 31, 2005. US Airways Group will not recognize any revenue from the bonus payments until the dual branding period has expired, approximately February 2008. At that time the Company expects to begin recognizing revenue from the bonus payments on a straight-line basis through December 2012, the expiration date of the Juniper agreement. Further, if Juniper is not granted exclusivity to offer a co-branded credit card after the dual branding period, US Airways Group must repay the bonus payments and repurchase unused pre-paid miles with interest, plus $50 million in liquidated damages. Juniper will pay an annual bonus of $5 million to US Airways Group, subject to certain exceptions, for each year after Juniper becomes the exclusive issuer of the co-branded credit card. | ||
In addition, Juniper pre-paid for miles from US Airways Group for an aggregate of $325 million, subject to the same conditions as apply to the $130 million bonus payment. To the extent that the miles are not used by Juniper as allowed under with the co-branded credit card program in certain circumstances, US Airways Group will repurchase these miles in 12 equal quarterly installments beginning on the fifth year prior to the expiration date of the amended credit card agreement until paid in full. US Airways Group will make monthly interest payments at LIBOR plus 4.75% to Juniper, beginning on November 1, 2005, based on the amount of pre- purchased miles that have not been used by Juniper in connection with the co-branded credit card program and have not been repurchased by US Airways Group. US Airways Group will be required to repurchase pre-purchased miles under certain reductions in the collateral held under the credit card processing agreement with JP Morgan Chase Bank, N.A. Accordingly, the prepayment has been recorded as additional indebtedness. | ||
Juniper requires US Airways Group to maintain an average quarterly balance of cash, cash equivalents and short-term investments of at least $1 billion for the entirety of the agreement. Further, the agreement requires US Airways Group to maintain certain financial ratios beginning January 1, 2006. Juniper may, at its option, terminate the amended credit card agreement, make payments to US Airways Group under the amended credit card agreement in the form of pre-purchased miles rather than cash, or require US Airways Group to repurchase the pre-purchased miles before the fifth year prior to the expiration date in the event that US Airways Group breaches its obligations under the amended credit card agreement, or upon the occurrence of certain events. | ||
(o) | In connection with US Airways Groups emergence from bankruptcy in September 2005, it reached a settlement with the PBGC related to the termination of three of its defined benefit pension plans. The settlement included the issuance of a $10 million note which matures in 2012 and bears interest at 6% payable annually in arrears. |
131
211
269
450
554
470
1,167
$
3,121
10. | Employee pension and benefit plans |
132
(a) | Defined benefit and other postretirement benefit plans |
Other | |||||||||
Defined Benefit | Postretirement | ||||||||
Pension Plans(1) | Benefits | ||||||||
Year Ended | Year Ended | ||||||||
Dec. 31, 2005 | Dec. 31, 2005 | ||||||||
Fair value of plan assets at beginning of period
|
$ | 37 | $ | | |||||
Actual return on plan assets
|
1 | | |||||||
Employer contributions
|
| | |||||||
Plan participants contributions
|
| | |||||||
Gross benefits paid
|
(1 | ) | | ||||||
Fair value of plan assets at end of period
|
37 | | |||||||
Benefit obligation at beginning of period
|
64 | 233 | |||||||
Service cost
|
| 1 | |||||||
Interest cost
|
1 | 3 | |||||||
Plan participants contributions
|
| | |||||||
Actuarial (gain) loss
|
(4 | ) | (3 | ) | |||||
Gross benefits paid
|
(1 | ) | | ||||||
Benefit obligation at end of period
|
60 | 234 | |||||||
Funded status of the plan
|
(23 | ) | (234 | ) | |||||
Unrecognized actuarial (gain)/ loss
|
(4 | ) | (3 | ) | |||||
Contributions for October to December
|
| 9 | |||||||
Net liability recognized
|
$ | (27 | ) | $ | (228 | ) | |||
Other | ||||||||
Defined Benefit | Postretirement | |||||||
Pension Plans | Benefits | |||||||
Dec. 31, 2005 | Dec. 31, 2005 | |||||||
Accrued benefit cost
|
$ | (27 | ) | $ | (228 | ) | ||
Net amount recognized
|
$ | (27 | ) | $ | (228 | ) | ||
(1) | For plans with accumulated benefit obligations in excess of plan assets, the aggregate accumulated benefit obligations, projected benefit obligations and plan assets were $56 million, $60 million and $37 million, respectively at December 31, 2005. |
133
Other
Defined Benefit
Postretirement
Pension Plans
Benefits
Year Ended
Year Ended
Dec. 31, 2005
Dec. 31, 2005
5.75%
5.30%
4.00%
4.00%
1% Increase | 1% Decrease | |||||||
Effect on total service and interest costs
|
$ | 1 | $ | | ||||
Effect on postretirement benefit obligation
|
$ | 10 | $ | (9 | ) |
Other | ||||||||
Defined Benefit | Postretirement | |||||||
Pension Plans | Benefits | |||||||
Year Ended | Year Ended | |||||||
Dec. 31, 2005 | Dec. 31, 2005 | |||||||
Discount rate
|
5.75 | % | 5.30 | % | ||||
Expected return on plan assets
|
8.00 | % | | |||||
Rate of compensation increase
|
4.00 | % | 4.00 | % |
Year Ended | ||||
Dec. 31, 2005 | ||||
Service cost
|
$ | | ||
Interest cost
|
1 | |||
Expected return on plan assets
|
(1 | ) | ||
Total periodic cost
|
$ | | ||
134
Year Ended
Dec. 31, 2005
$
1
3
$
4
Other | ||||||||||||
Postretirement | ||||||||||||
Defined Benefit | Benefits before | |||||||||||
Pension Plans | Medicare Subsidy | Medicare Subsidy | ||||||||||
2006
|
$ | 2 | $ | 27 | $ | | ||||||
2007
|
2 | 25 | | |||||||||
2008
|
3 | 24 | | |||||||||
2009
|
3 | 22 | 1 | |||||||||
2010
|
3 | 21 | 1 | |||||||||
2011 to 2015
|
27 | 80 | 2 |
Equity securities
|
68 | % | ||
Debt securities
|
27 | |||
Real estate
|
| |||
Other
|
5 | |||
Total
|
100 | % | ||
(b) | Defined contribution pension plans |
135
(c) | Postemployment benefits |
(d) | Profit sharing plans |
11. | Income Taxes |
136
Year Ended December 31, | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Income tax expense (benefit) at the federal statutory income tax
rate
|
$ | (188 | ) | $ | (31 | ) | $ | 20 | |||||
State income tax expense (benefit), net of federal income tax
expense (benefit)
|
| (3 | ) | 2 | |||||||||
Change in state deferreds
|
(15 | ) | | (3 | ) | ||||||||
Change in valuation allowance
|
218 | 32 | (17 | ) | |||||||||
Book expense not deductible for tax
|
(4 | ) | | | |||||||||
Indefinite lived asset to goodwill
|
(13 | ) | | | |||||||||
Other, net
|
2 | 2 | (2 | ) | |||||||||
Total
|
$ | | $ | | $ | | |||||||
137
Composition of Deferred Tax Items:
2005
2004
$
569
$
184
13
14
296
13
4
7
3
4
25
1
193
3
1,103
226
(391
)
(95
)
(27
)
(142
)
(128
)
(2
)
(688
)
(97
)
415
129
(446
)
(129
)
$
(31
)
$
138
12. | Commitments and Contingencies |
(a) | Commitments to purchase flight equipment and maintenance services |
Airbus Purchase Commitments |
Embraer Purchase Commitments |
139
Bombardier Purchase Commitments |
Engine Maintenance Commitments |
(b) | Leases |
140
Capital Leases
Operating Leases
$
5
$
1,156
5
1,054
5
974
5
872
5
792
55
5,566
80
$
10,414
80
(34
)
46
(5
)
$
41
2005 | 2004 | ||||||||
Ground property
|
$ | 32 | $ | 34 | |||||
Less accumulated amortization
|
(1 | ) | (3 | ) | |||||
Total net book value of capital leases
|
$ | 31 | $ | 31 | |||||
141
(c) | Regional jet capacity purchase agreements |
(d) | Legal proceedings |
142
143
144
145
146
(e) | Guarantees (including revenue bonds) |
147
(e) | Concentration of credit risks |
13. | Nonoperating income (expenses) other, net |
148
14.
Supplemental cash flow information
Year Ended
December 31,
2005
2004
2003
$
30
$
26
$
29
5,568
5,451
(1
)
(10
)
9
17
5
(21
)
(7
)
(7
)
9
9
2
88
24
17
1
(4
)
15. | Related party transactions |
149
16. | Merger Accounting and Pro Forma Information |
(a) | Purchase price allocation |
Fair value of common shares issued to US Airways
Groups unsecured creditors
|
$ | 96 | |||
Estimated merger costs
|
21 | ||||
Total purchase price
|
$ | 117 | |||
Current assets
|
$ | 1,098 | |||
Property and equipment
|
2,367 | ||||
Other intangible assets
|
592 | ||||
Other assets
|
779 | ||||
Goodwill
|
732 | ||||
Liabilities assumed
|
(5,451 | ) | |||
Total purchase price
|
$ | 117 | |||
150
Goodwill reported as of September 30, 2005
|
$ | 584 | |||
Property and equipment
|
23 | ||||
Other assets
|
23 | ||||
Air traffic liability
|
11 | ||||
Other accrued expenses
|
49 | ||||
Deferred gains and credits
|
50 | ||||
Postretirement benefits other than pensions
|
(10 | ) | |||
Employee benefit liabilities and other
|
2 | ||||
Goodwill reported as of December 31, 2005
|
$ | 732 | |||
(b) | Pro forma information |
151
Year Ended | Year Ended | |||||||
December 31, | December 31, | |||||||
2005 | 2004 | |||||||
Operating revenues
|
$ | 10,440 | $ | 9,456 | ||||
Operating expenses
|
10,799 | 9,858 | ||||||
Operating loss
|
(359 | ) | (402 | ) | ||||
Net loss
|
$ | (891 | ) | $ | (652 | ) | ||
Basic and fully diluted loss per share
|
$ | (13.89 | ) | $ | (10.93 | ) | ||
Basic and diluted shares (in thousands)
|
64,159 | 59,654 |
17. | Operating segments and related disclosures |
Year Ended | Year Ended | Year Ended | |||||||||||
December 31, | December 31, | December 31, | |||||||||||
2005 | 2004 | 2003 | |||||||||||
United States
|
$ | 4,575 | $ | 2,572 | $ | 2,431 | |||||||
Foreign
|
502 | 176 | 141 | ||||||||||
Total
|
$ | 5,077 | $ | 2,748 | $ | 2,572 | |||||||
18. | Stockholders Equity |
(a) | Common Stock |
(b) | Warrants |
152
19. | Stock options and awards |
153
154
Weighted
Number of
Average
1994 Plan
Shares
Exercise Price
2,439,270
$
33.96
(97,208
)
$
14.75
(448,831
)
$
37.01
1,893,231
$
34.19
(9,760
)
$
9.21
(211,211
)
$
23.94
1,672,260
$
35.63
(167,411
)
$
18.28
(237,809
)
$
33.74
1,267,040
$
38.28
Weighted
Number of
Average
2002 Plan
Shares
Exercise Price
834,025
$
12.11
734,480
$
8.92
(88,992
)
$
11.57
(75,343
)
$
11.57
1,404,170
$
10.51
813,870
$
24.49
(62,139
)
$
8.79
(61,705
)
$
16.84
2,094,196
$
15.80
806,075
$
14.52
(786,014
)
$
11.37
(66,519
)
$
16.35
2,047,738
$
16.98
155
Weighted
Number of
Average
2005 Plan
Shares
Exercise Price
2,034,000
$
23.08
696,375
(61,500
)
$
20.64
(9,200
)
2,659,675
$
23.15
Weighted | Options | Weighted | ||||||||||||||||||
Options | Average | Weighted | and Awards | Average | ||||||||||||||||
and Awards | Remaining | Average | Currently | Exercise | ||||||||||||||||
Range of Exercise Prices | Outstanding | Contractual Life | Exercise Price | Exercisable | Price | |||||||||||||||
$0.00 to $0.00
|
687,175 | 2.03 | | | | |||||||||||||||
$0.01 to $9.21
|
485,879 | 6.82 | $ | 7.39 | 485,879 | $ | 7.39 | |||||||||||||
$9.22 to $24.05
|
2,145,485 | 8.73 | $ | 17.24 | 887,735 | $ | 13.94 | |||||||||||||
$24.06 to $26.06
|
645,790 | 7.95 | $ | 25.56 | 645,790 | $ | 25.56 | |||||||||||||
$26.07 to $43.48
|
1,439,920 | 7.62 | $ | 29.14 | 518,920 | $ | 31.96 | |||||||||||||
$43.49 to $70.76
|
570,204 | 2.81 | $ | 52.41 | 570,204 | $ | 52.41 | |||||||||||||
5,974,453 | 6.89 | $ | 21.58 | 3,108,528 | $ | 25.40 | ||||||||||||||
2005 | 2004 | 2003 | ||||||||||
Risk free interest rate
|
3.4 | % | 3.4 | % | 2.8 | % | ||||||
Expected dividend yield
|
0 | % | 0 | % | 0 | % | ||||||
Expected life (in years)
|
4.0 | 4.8 | 4.8 | |||||||||
Volatility
|
54 | % | 54 | % | 70 | % |
156
20.
Valuation and Qualifying Accounts (in millions)
Balance at
Balance
Beginning
at End
Description
of Period
Additions
Deductions
of Period
$
1
$
12(a
)
$
3
$
10
$
6
$
1
$
6
$
1
$
7
$
1
$
2
$
6
$
15
$
9
$
$
24
$
12
$
3
$
$
15
$
9
$
3
$
$
12
$
127
$
976
$
657
$
446
$
96
$
55
$
24
$
127
$
79
$
39
$
22
$
96
$
32
$
2
$
34
$
$
27
$
7
$
2
$
32
$
22
$
9
$
4
$
27
$
$
50(b
)
$
24
$
26
$
$
$
$
$
$
$
$
(a) | Allowance for doubtful receivables additions in the 2005 period include $8 million from the opening balance sheet of US Airways at September 27, 2005. | |
(b) | Reserves for workforce reduction additions in the 2005 period include $53 million from the opening balance sheet of US Airways at September 27, 2005. |
21. | Select quarterly financial information (unaudited) |
157
1st Quarter | 2nd Quarter | |||||||||||||||
2005 | (As | (As Previously | (As | (As Previously | ||||||||||||
Adjusted) | Reported) | Adjusted) | Reported) | |||||||||||||
Operating revenues
|
$ | 733 | (1) | $ | 723 | $ | 842 | (2) | $ | 833 | ||||||
Operating expenses
|
688 | (1) | 673 | 829 | (2) | 803 | ||||||||||
Operating income
|
45 | 50 | 13 | 30 | ||||||||||||
Nonoperating expenses, net
|
(16 | ) | (16 | ) | (17 | ) | (16 | ) | ||||||||
Income tax expense
|
| | | | ||||||||||||
Income (loss) before cumulative effect of change in accounting
policy
|
29 | 34 | (4 | ) | 14 |
3rd Quarter | 4th Quarter | |||||||||||||||
2005 | (As | (As Previously | (As Previously | |||||||||||||
Adjusted) | Reported) | Reported) | ||||||||||||||
Operating revenues
|
$ | 926 | $ | 926 | $ | 2,576 | ||||||||||
Operating expenses
|
1,009 | (3) | 997 | 2,768 | ||||||||||||
Operating income
|
(83 | ) | (71 | ) | (192 | ) | ||||||||||
Nonoperating expenses, net
|
(16 | ) | (16 | ) | (69 | ) | ||||||||||
Income tax expense
|
| | | |||||||||||||
Income (loss) before cumulative effect of change in accounting
policy
|
(99 | ) | (87 | ) | (261 | ) |
1st Quarter | 2nd Quarter | |||||||||||||||
2004 | (Pro Forma | (As Previously | (Pro Forma | (As Previously | ||||||||||||
as Adjusted) | Reported) | as Adjusted) | Reported) | |||||||||||||
Operating revenues
|
$ | 657 | (4) | $ | 648 | $ | 705 | (5) | $ | 694 | ||||||
Operating expenses
|
648 | (4) | 634 | 692 | (5) | 668 | ||||||||||
Operating income
|
9 | 14 | 13 | 26 | ||||||||||||
Nonoperating expenses
|
(16 | ) | (16 | ) | (15 | ) | (15 | ) | ||||||||
Income tax expense
|
| | | | ||||||||||||
Income (loss) before cumulative effect of change in accounting
policy
|
(7 | ) | (2 | ) | (2 | ) | 11 |
3rd Quarter | 4th Quarter | |||||||||||||||
2004 | (Pro Forma | (As Previously | (Pro Forma | (As Previously | ||||||||||||
as Adjusted) | Reported) | as Adjusted) | Reported) | |||||||||||||
Operating revenues
|
$ | 689 | (6) | $ | 679 | $ | 697 | (7) | $ | 580 | ||||||
Operating expenses
|
714 | (6) | 689 | 757 | (7) | 618 | ||||||||||
Operating income
|
(25 | ) | (10 | ) | (60 | ) | (38 | ) | ||||||||
Nonoperating expenses
|
(19 | ) | (19 | ) | (19 | ) | (31 | ) | ||||||||
Income tax expense
|
| | | | ||||||||||||
Income (loss) before cumulative effect of change in accounting
policy
|
(44 | ) | (29 | ) | (79 | ) | (69 | ) |
158
(1) | Reflects reclassification of $2 million and $8 million related to the sale of frequent flier miles and related marketing services to affinity partners from Other expenses to Mainline passenger and Other revenues. Reflects $5 million additional maintenance expense, resulting from the accounting policy change from the deferral method for maintenance costs to the direct expense method. |
(2) | Reflects reclassification of $2 million and $7 million related to the sale of frequent flier miles and related marketing services to affinity partners from Other expenses to Mainline passenger and Other revenues. Reflects $17 million additional maintenance expense, resulting from the accounting policy change from the deferral method for maintenance costs to the direct expense method. |
(3) | Reflects $12 million additional maintenance expense, resulting from the accounting policy change from the deferral method for maintenance costs to the direct expense method. |
(4) | Reflects reclassification of $2 million and $7 million related to the sale of frequent flier miles and related marketing services to affinity partners from Other expenses to Mainline passenger and Other revenues. Reflects $5 million additional pro forma maintenance expense presented for comparative purposes, resulting from the accounting policy change from the deferral method for maintenance costs to the direct expense method. |
(5) | Reflects reclassification of $2 million and $9 million related to the sale of frequent flier miles and related marketing services to affinity partners from Other expenses to Mainline passenger and Other revenues. Reflects $13 million additional pro forma maintenance expense presented for comparative purposes, resulting from the accounting policy change from the deferral method for maintenance costs to the direct expense method. |
(6) | Reflects reclassification of $2 million and $8 million related to the sale of frequent flier miles and related marketing services to affinity partners from Other expenses to Mainline passenger and Other revenues. Reflects $15 million additional pro forma maintenance expense presented for comparative purposes, resulting from the accounting policy change from the deferral method for maintenance costs to the direct expense method. |
(7) | Reflects reclassification of $1 million and $7 million related to the sale of frequent flier miles and related marketing services to affinity partners from Other expenses to Mainline passenger and Other revenues, reclassification of $109 million of Express operating expenses from operating revenues to operating expenses and reclassification of $12 million net loss related to fuel hedging activity for settled and mark-to -market changes from nonoperating to operating expenses. Reflects $10 million additional pro forma maintenance expense presented for comparative purposes, resulting from the accounting policy change from the deferral method for maintenance costs to the direct expense method. |
159
Year Ended December 31, 2005
1st Quarter
2nd Quarter
3rd Quarter
$
34
$
14
$
(87
)
(5
)
(18
)
(15
)
$
29
$
(4
)
$
(102
)
$
2.25
$
0.94
$
(5.04
)
(0.36
)
(1.22
)
(0.85
)
$
1.89
$
(0.28
)
$
(5.89
)
$
1.49
$
0.94
$
(5.04
)
(0.20
)
(1.22
)
(0.85
)
$
1.29
$
(0.28
)
$
(5.89
)
14,913
14,863
17,262
25,728
14,863
17,262
160
Year Ended December 31, 2004
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Total
$
(2
)
$
11
$
(29
)
$
(69
)
$
(89
)
(7
)
(15
)
(19
)
(12
)
(53
)
$
(9
)
$
(4
)
$
(48
)
$
(81
)
$
(142
)
$
(0.11
)
$
0.72
$
(1.92
)
$
(4.66
)
$
(5.99
)
(0.48
)
(1.02
)
(1.25
)
(0.79
)
(3.54
)
$
(0.59
)
$
(0.30
)
$
(3.17
)
$
(5.45
)
$
(9.53
)
$
(0.11
)
$
0.72
$
(1.92
)
$
(4.66
)
$
(5.99
)
(0.48
)
(1.02
)
(1.25
)
(0.79
)
(3.54
)
$
(0.59
)
$
(0.30
)
$
(3.17
)
$
(5.45
)
$
(9.53
)
14,789
14,852
14,896
14,907
14,861
14,789
14,852
14,896
14,907
14,861
22.
Subsequent event
Purchase of 757 aircraft |
161
Item 8B. | Consolidated Financial Statements and Supplementary Data of America West Airlines, Inc. |
162
2005
2004
2003
$
2,521
$
2,203
$
2,118
512
353
268
33
28
27
188
163
158
3,254
2,747
2,571
812
590
404
(75
)
(24
)
(11
)
701
655
658
545
374
287
327
304
298
259
206
223
176
168
155
161
153
156
106
(16
)
14
53
54
67
309
299
283
3,374
2,763
2,534
(120
)
(16
)
37
25
14
13
(94
)
(86
)
(87
)
81
2
1
10
(8
)
2
7
(75
)
(69
)
24
(195
)
(85
)
61
(195
)
(85
)
61
202
$
(397
)
$
(85
)
$
61
(195
)
$
(138
)
$
56
163
164
165
166
167
168
169
170
171
172
173
174
175
176
177
178
179
180
181
182
183
184
185
186
187
188
189
190
191
192
193
194
195
196
197
198
199
200
201
202
203
204
205
206
207
208
209
210
211
212
213
214
215
216
217
218
219
220
221
222
223
224
225
226
227
228
229
230
231
232
233
234
235
236
237
238
239
240
241
242
243
244
245
246
247
248
249
250
251
252
253
254
255
256
257
258
259
260
261
262
263
264
265
266
267
Table of Contents
2005
2004
2003
$
(397
)
$
(85
)
$
61
202
53
54
67
86
105
(8
)
(8
)
(11
)
5
6
10
12
7
8
30
36
36
5
4
3
1
1
(3
)
106
(15
)
14
(18
)
28
7
41
1
(43
)
(10
)
(13
)
4
(3
)
1
(2
)
(53
)
(49
)
(46
)
(37
)
(3
)
(7
)
(37
)
9
23
20
4
12
(18
)
20
998
4
(3
)
(17
)
(7
)
6
(2
)
23
1
1
974
20
226
(37
)
(219
)
(154
)
(579
)
(488
)
(634
)
416
708
364
(35
)
(80
)
20
10
(157
)
(2
)
(24
)
74
32
26
(283
)
16
(492
)
142
87
(183
)
(176
)
(17
)
(1
)
(3
)
(4
)
(7
)
(2
)
(187
)
(42
)
65
504
(6
)
(201
)
128
134
335
$
632
$
128
$
134
Table of Contents
Additional
Accumulated Other
Paid-In
Accumulated
Comprehensive
Capital
Deficit
Income
Total
$
555
$
(244
)
$
2
$
313
61
61
(2
)
(2
)
$
555
$
(183
)
$
$
372
(85
)
(85
)
$
555
$
(268
)
$
$
287
(397
)
(397
)
$
555
$
(665
)
$
$
(110
)
(a)
Correction of Other Comprehensive Income See
Note 2 (j), Derivative Instruments.
Table of Contents
1.
Merger Agreement between US Airways Group and America
West Holdings
GE agreed to the early return to GECC of ten leased aircraft
including six Boeing
737-300
and four Airbus
A320-200 aircraft. Five of these aircraft, including one Boeing
737-300s
and four
Airbus
A320-200s
were
already returned and the remaining aircraft are scheduled for
return by the fourth quarter of 2006.
GE also agreed to waive certain return conditions, as provided
in the underlying lease agreements, related to the early return
aircraft described above.
On September 27, 2005, US Airways and AWA entered into
two loan agreements with Airbus Financial Services, as Initial
Lender and Loan Agent, Wells Fargo Bank Northwest, National
Association, as Collateral Agent, and US Airways Group, as
guarantor, with commitments in initial aggregate amounts of up
to $161 million and up to $89 million. The Airbus
loans bear interest at a rate of LIBOR plus a margin, subject to
adjustment, and have been recorded as an obligation of
US Airways Group.
AVSA and AWA agreed to reschedule the delivery dates of 11
aircraft to be purchased under an existing amended agreement,
including three
A319-100
and eight
A320-200
aircraft. All
of the A320-200 aircraft and two of the A319-100 aircraft were
originally scheduled for delivery in 2006
Table of Contents
with the last A319-100 to be delivered in the first quarter of
2007. As rescheduled, these aircraft will be from March through
December 2009.
In connection with the restructuring of aircraft firm orders,
US Airways Group and America West Holdings were required to
pay an aggregate non-refundable restructuring fee which was paid
by means of set-off against existing equipment purchase deposits
of US Airways Group and America West Holdings held by
Airbus. The America West Holdings restructuring fee of
$50 million has been recorded as a special charge in the
accompanying consolidated statement of operations, along with
$7 million in related capitalized interest.
Table of Contents
Table of Contents
2.
Basis of Presentation and Summary of Significant Accounting
Policies
(a)
Nature of operations and operating environment
(b)
Basis of Presentation
Table of Contents
(c)
Cash, Cash Equivalents and Short-term Investments
(d)
Restricted Cash
(e)
Materials and supplies, net
(f)
Property and Equipment
Table of Contents
(g)
Income Taxes
(h)
Other assets, net
(i)
Frequent Traveler Program
(j)
Derivative Instruments
Table of Contents
(k)
Deferred Credits
(l)
Passenger Revenue
(m)
Stock-based Compensation
Table of Contents
2005
2004
2003
$
(397
)
$
(85
)
$
61
3
(11
)
(6
)
(4
)
$
(405
)
$
(91
)
$
57
(n)
Maintenance and Repair Costs
(o)
Selling expenses
(p)
Express expenses
Table of Contents
Year Ended
Year Ended
Year Ended
December 31,
December 31,
December 31,
2005
2004
2003
$
182
$
102
$
61
317
238
198
11
8
7
32
23
19
3
3
2
$
545
$
374
$
287
(q)
Recent Accounting Pronouncements
Table of Contents
3.
Change in Accounting Policy for Maintenance Costs
4.
Change in Method of Reporting for America West Express
Results and Other Reclassifications
Table of Contents
Table of Contents
Year Ended December 31, 2004
As Previously
As
Reported
Reclassifications
Reclassified
$
2,197
$
6
(1)
$
2,203
353
(2)
353
141
50
(2)(3)
191
$
2,338
$
409
$
2,747
$
2,378
$
11
(4)(5)
$
2,389
374
(5)
374
$
2,378
$
385
$
2,763
Year Ended December 31, 2003
As Previously
As
Reported
Reclassifications
Reclassified
$
2,114
$
4
(6)
$
2,118
268
(7)
268
140
45
(7)(8)
185
$
2,254
$
317
$
2,571
$
2,228
$
19
(9)(10)
$
2,247
287
(10)
287
$
2,228
$
306
$
2,534
(1)
Reclassification of $6 million related to the sale of
frequent flier miles and related marketing services to affinity
partners from Operating expenses Other
to Operating revenues Mainline passenger.
(2)
Reclassification of $353 million Express revenue and
$371 million Express operating expenses from
Operating revenues Other to
Mainline passenger revenue and to Operating
expenses Other.
(3)
Reclassification of $32 million related to the sale of
frequent flier miles and related marketing services to affinity
partners from Operating expenses Other
to Operating revenues Other.
(4)
Reclassification of $24 million credit related to fuel
hedging activity from nonoperating to operating expenses.
Reclassification of $38 million related to the sale of
frequent flier miles and related marketing services to affinity
partners from Operating expenses Other
to Operating revenues Mainline passenger
and Operating revenues Other.
(5)
Reclassification of $371 million and $3 million of
Express operating expenses from Operating
revenues Other and Operating
expenses Other, respectively.
Table of Contents
(6)
Reclassification of $4 million related to the sale of
frequent flier miles and related marketing services to affinity
partners from Operating expenses Other
to Operating revenues Mainline passenger.
(7)
Reclassification of $268 million Express revenue and
$285 million Express operating expenses from
Operating revenues Other to
Mainline passenger revenue and to Operating
expenses Other.
(8)
Reclassification of $28 million related to the sale of
frequent flier miles and related marketing services to affinity
partners from Operating expenses Other
to Operating revenues Other.
(9)
Reclassification of $11 million credit related to fuel
hedging activity from nonoperating to operating expenses.
Reclassification of $32 million related to the sale of
frequent flier miles and related marketing services to affinity
partners from Operating expenses Other
to Operating revenues Mainline passenger
and Operating revenues Other.
(10)
Reclassification of $285 million and $2 million of
Express operating expenses from Operating
revenues Other and Operating
expenses Other, respectively.
5.
Special Charges
Year Ended December 31,
2005
2004
2003
$
57
(a)
$
$
27
(b)
(1
)(g)
13
(c)
7
(d)
2
(e)
1
(f)
2
(f)
(1
)(i)
(16
)(h)
11
(j)
2
(k)
3
(l)
(1
)
(1
)
(1
)
$
106
$
(16
)
$
14
(a)
In the third quarter of 2005, in connection with the merger and
the Airbus MOU executed between Airbus, US Airways Group,
US Airways and AWA, certain aircraft firm orders were
restructured. In connection with that restructuring,
US Airways Group and America West Holdings were required to
pay non-refundable restructuring fees. AWAs restructuring
fee of $50 million has been classified as a special charge,
along with $7 million in associated capitalized interest.
The restructuring fee was paid by means of set-off against
existing equipment deposits of AWA held by Airbus.
(b)
In the third quarter of 2005, a $27 million loss was
incurred related to the sale-leaseback of six
737-300
aircraft and
two 757 aircraft.
Table of Contents
(c)
In the fourth quarter of 2005, AWA recorded $13 million of
merger related expenses related to transitioning the employees,
systems and facilities of AWA and US Airways into one
consolidated company. The $13 million includes insurance
premiums of $4 million related to policies for former
officers and directors, compensation expense of $3 million
for special stock awards, granted under a program designed to
retain key employees through the integration period,
professional and technical fees of $3 million and sales and
marketing program expenses of $2 million related to
notifying frequent traveler program members about the merger.
(d)
In the fourth quarter of 2005, in connection with the return of
certain leased aircraft, AWA incurred expenses of
$7 million related to penalties incurred under the
outsourced maintenance arrangement.
(e)
In the third and fourth quarter of 2005, AWA recorded severance
expense totaling approximately $2 million for terminated
employees resulting from the merger. The majority of the
$2 million will be paid in the first quarter of 2006.
(f)
In August 2004, AWA entered into definitive agreements with two
lessors to return six Boeing
737-200
aircraft. Three
of these aircraft were returned to the lessors in the third
quarter of 2004, two were returned in the fourth quarter of 2004
and one was returned in January 2005. In addition, AWA continues
negotiating with one lessor on the return of its remaining two
Boeing 737-200 aircraft, one of which was parked in March 2002.
The other aircraft was removed from service in January 2005. In
connection with the return of the aircraft, AWA recorded
$2 million of special charges in 2004, which include lease
termination payments of $2 million and the write-down of
leasehold improvements and aircraft rent balances of
$3 million, offset by the net reversal of lease return
provisions of $3 million. In the first quarter of 2005, AWA
recorded $1 million in special charges related to the final
Boeing 737-200 aircraft which was removed from service in
January 2005.
(g)
In the first quarter of 2004, AWA recorded a $1 million
reduction in special charges related to the revision of
estimated costs associated with the sale and leaseback of
certain aircraft.
(h)
In December 2004, AWA and GE mutually agreed to terminate the
V2500
A-1
power by hour
(PBH) agreement effective January 1, 2005. This
agreement was entered into March 1998 with an original term of
ten years. For terminating the agreement early, AWA received a
$20 million credit to be applied to amounts due for other
engines under the 1998 agreement. AWA had capitalized PBH
payments for V2500
A-1
engines in excess of the unamortized cost of the overhauls
performed by GE of approximately $4 million. With the
termination of this agreement, these payments were not
realizable and as a result, AWA wrote off this amount against
the $20 million credit referred to above, resulting in a
$16 million net gain.
(i)
In the first quarter of 2003, AWA recorded a $1 million
reduction in special charges related to the earlier-than-planned
return of certain leased aircraft in 2001 and 2002, as all
payments related to these aircraft returns had been made.
(j)
In February 2003, AWA announced the elimination of its hub
operations in Columbus, Ohio. As a result, 12 regional jets, all
of which were operated by Chautauqua Airlines under the America
West Express banner, were phased out of the fleet. In addition,
the hub was downsized from 49 daily departures to 15
destinations to four flights per day to Phoenix and Las Vegas.
Service to New York City La Guardia Airport was also
eliminated because perimeter rules at the airport prohibit
flights beyond 1,500 miles, precluding service from
AWAs hubs in Phoenix and Las Vegas. In the first, second
and third quarters of 2003, AWA recorded special charges
totaling $11 million related to the costs associated with
the termination of certain aircraft and facility contracts,
employee transfer and severance expenses and the write-off of
leasehold improvements in Columbus, Ohio. All payments were
completed as of December 31, 2005.
(k)
In April 2003, as part of a cost reduction program, AWA
implemented a plan to reduce management, professional and
administrative payroll costs that resulted in 161 fewer
employees within these
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workgroups. As a result, AWA recorded a special charge of
$2 million related to this
reduction-in
-force. All
payments were completed as of December 31, 2005.
(l)
In June 2003, AWA recorded an impairment loss of $3 million
related to three owned Boeing
737-200
aircraft that
were grounded and subsequently sold.
6.
Stock Options and Awards
7.
Financial Instruments
(a)
Fair Value of Financial Instruments
Cash Equivalents, Short-term Investments and Receivables
Held-to-maturity securities:
2005
2004
$
318
$
314
127
1
$
632
$
128
$
55
$
69
55
69
$
687
$
197
Available-for-sale securities:
2005
2004
264
58
264
58
$
264
$
58
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Long-term Debt
(b)
Fuel Price Risk Management
8.
Debt, Including Capital Lease Obligations
December 31,
December 31,
2005
2004
$
250
$
39
8
111
111
34
36
186
581
194
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December 31,
December 31,
2005
2004
343
40
112
112
253
4
16
29
29
1
1
325
471
794
1,052
988
(22
)
(194
)
(94
)
(154
)
$
936
$
640
(a)
In January 2002, AWA closed a $429 million loan backed by a
$380 million federal loan guarantee provided by the ATSB.
Certain third-party counter-guarantors fully and unconditionally
guaranteed the payment of an aggregate of $45 million of
the outstanding principal amount under the government guaranteed
loan plus accrued and unpaid interest thereon. In addition,
America West Holdings fully and unconditionally guaranteed the
payment of all principal, premium, interest and other
obligations outstanding under the government guaranteed loan and
pledged the stock of AWA to secure its obligations under such
guarantee. Principal amounts under this loan were scheduled to
become due in ten installments of $43 million on each
March 31 and September 30, commencing on
March 31, 2004 and ending on September 30, 2008. In
addition, AWA was charged an annual guarantee fee in respect of
the ATSB guarantee equal to 8.0% of the guaranteed amount in
2005. On September 27, 2005, AWA made a voluntary
prepayment of $9 million in principal, thus reducing the
remaining semi-annual installments due to $42 million.
Principal amounts outstanding under the government guaranteed
loan bear interest at a rate per annum equal to LIBOR plus
40 basis points.
In connection with the consummation of the merger, on
September 27, 2005, AWA, as borrower, entered into an
Amended and Restated Loan Agreement (the AWA ATSB
Loan) with the ATSB. The ATSB Loan amended and restated
the previously outstanding loans of AWA guaranteed in part by
the ATSB. On October 19, 2005, $238 million of
AWAs ATSB Loan, of which $228 million was guaranteed
by the ATSB, was sold by the lender by order of the ATSB to 13
fixed income investors. The sale of the debt removed the ATSB
guaranty. Due to the sale on October 19, 2005, the ATSB no
longer guarantees any portion of the loan and has no interest in
any of AWAs debt. As a result of the sale of the loan,
$11 million of the outstanding principal balance remains
guaranteed by certain third party counter- guarantors. The
non-guaranteed portion of the loan is no longer subject to
payment of the annual guarantee fee; rather, as of the date of
the loan sale, those principal amounts bear interest at a rate
per annum equal to LIBOR plus 840 basis points increasing
by 5 basis points on January 18 of each year, beginning
January 18, 2006 through the end of the loan term, payable
on a quarterly basis. All other terms associated with this loan
remain unchanged. As a result of the sale
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of the loan, the AWA ATSB Loan is now called the AWA Citibank
Loan, and had an outstanding balance of $250 million at
December 31, 2005.
The AWA Citibank Loan is now secured debt. It requires certain
prepayments from the proceeds of specified asset sales by
US Airways Group and the other loan parties, and
US Airways Group is required to maintain consolidated
unrestricted cash and cash equivalents, less: (a) the
amount of all outstanding advances by credit card processors and
clearing houses in excess of 20% of the air traffic liabilities;
(b) $250 million presumed necessary to fund a
subsequent tax trust (to the extent not otherwise funded by
US Airways Group); (c) $35 million presumed
necessary to post collateral to clearing houses (to the extent
not posted); and (d) any unrestricted cash or cash
equivalents held in unperfected accounts; in an amount (subject
to partial reduction under certain circumstances upon mandatory
prepayments made with the net proceeds of future borrowings and
issuances of capital stock) not less than:
$525 million from September 27, 2005
through March 2006;
$500 million through September 2006;
$475 million through March 2007;
$450 million through September 2007;
$400 million through March 2008;
$350 million through September 2008; and
$300 million through September 2010.
(b)
On September 10, 2004, AWA entered into a term loan
financing with GECC providing for loans in an aggregate amount
of $111 million. AWA used approximately $77 million of
the proceeds from this financing to repay in full its term loan
with Mizuho Corporate Bank, Ltd. and certain other lenders and
to pay certain costs associated with this transaction. AWA used
the remaining proceeds for general corporate purposes. The new
term loan financing consists of two secured term loan
facilities: a $76 million term loan facility secured
primarily by spare parts, rotables and appliances (the
Spare Parts Facility); and a $35 million term
loan facility secured primarily by aircraft engines and parts
installed in such engines (the Engine Facility).
The facilities are cross-collateralized on a subordinated basis,
and the collateral securing the facilities also secures on a
subordinated basis certain of AWAs other existing debt and
lease obligations to GECC and its affiliates.
The loans under the Spare Parts Facility are payable in full at
maturity on September 10, 2010. The loans under the Engine
Facility are payable in equal quarterly installments of
approximately $1 million beginning on March 10, 2006
through June 10 2010, with the remaining loan amount of
$12 million payable at maturity on September 10, 2010.
The loans under each facility may be prepaid in an amount not
less than $5 million at any time after the
30th monthly anniversary of the funding date under such
facility. If AWA fails to maintain a certain ratio of rotables
to loans under the Spare Parts Facility, it may be required to
pledge additional rotables or cash as collateral, provide a
letter of credit or prepay some or all of the loans under the
Spare Parts Facility. In addition, the loans under the Engine
Facility are subject to mandatory prepayment upon the occurrence
of certain events of loss applicable to, or certain dispositions
of, aircraft engines securing the facility. Principal amounts
outstanding under the loans bear interest at a rate per annum
based on three-month LIBOR plus a margin. Both facilities
contain customary events of default, including payment defaults,
cross-defaults, breach of covenants, bankruptcy and insolvency
defaults and judgment defaults.
(c)
On December 27, 2004, AWA raised additional capital by
financing its Phoenix maintenance facility and flight training
center. The flight training center was previously unencumbered,
and the maintenance facility became unencumbered in 2004 when
AWA refinanced its term loan. Using its
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leasehold interest in these two facilities as collateral, AWA,
through a wholly owned subsidiary named FTCHP LLC, raised
$31 million through the issuance of senior secured discount
notes. The notes were issued by FTCHP at a discount pursuant to
the terms of a senior secured term loan agreement among AWA,
FTCHP, Heritage Bank SSB, as administrative agent, Citibank,
N.A., as the initial lender, and the other lenders from time to
time party thereto. Citibank, N.A. subsequently assigned all of
its interests in the notes to third party lenders.
AWA has fully and unconditionally guaranteed the payment and
performance of FTCHPs obligations under the notes and the
loan agreement. The notes require aggregate principal payments
of $36 million with principal payments of $2 million
due on each of the first two anniversary dates and the remaining
principal amount due on the fifth anniversary date. The notes
may be prepaid in full at any time (subject to customary LIBOR
breakage costs) and in partial amounts of $2 million on the
third and fourth anniversary dates. The unpaid principal amount
of the notes bears interest based on LIBOR plus a margin subject
to adjustment based on a loan to collateral value ratio.
The loan agreement contains customary covenants applicable to
loans of this type, including obligations relating to the
preservation of the collateral and restrictions on the
activities of FTCHP. In addition, the loan agreement contains
events of default, including payment defaults, cross-defaults to
other debt of FTCHP, if any, breach of covenants, bankruptcy and
insolvency defaults and judgment defaults.
In connection with this financing, AWA sold all of its leasehold
interests in the maintenance facility and flight training center
to FTCHP and entered into subleases for the facilities with
FTCHP at lease rates expected to approximate the interest
payments due under the notes. In addition, AWA agreed to make
future capital contributions to FTCHP in amounts sufficient to
cover principal payments and other amounts owing pursuant to the
notes and the loan agreement.
The proceeds from this financing, together with $11 million
from operating cash flow, were irrevocably deposited with the
trustee for AWAs
10
3
/
4
% senior
unsecured notes due 2005, and the notes were subsequently
redeemed on January 26, 2005.
(d)
On September 27, 2005, US Airways and AWA entered into
two loan agreements with Airbus Financial Services
(AFS), an affiliate of Airbus, with commitments in
initial aggregate amounts of up to $161 million and up to
$89 million. The Airbus loans bear interest at a rate of
LIBOR plus a margin, subject to adjustment during the term of
the loans under certain conditions and have been recorded as an
obligation of US Airways Group. Amounts drawn upon the
Airbus loans are drawn first upon the Airbus $161 million
loan until it has been drawn in its full amount, in which event
the remaining portion of the $250 million total commitment
is drawn upon the Airbus $89 million loan.
On September 27, 2005, all of the Airbus $161 million
loan and $14 million of the Airbus $89 million loan
were drawn and are available for use for general corporate
purposes. At December 31, 2005, a total of
$186 million was drawn under the Airbus loans. The
remaining portion of the Airbus loans is payable in multiple
draws upon the occurrence of certain conditions, including the
taking of delivery of certain aircraft, on the due dates for
certain amounts owing to AFS or its affiliates to refinance such
amounts, after payment of certain invoices for goods and
services provided by AFS or its affiliates, or upon receipt by
AFS of certain amounts payable in respect of existing aircraft
financing transactions. The full amount of the Airbus loans is
expected to be available by the end of 2006. US Airways and
AWA are jointly and severally liable for the Airbus loans;
accordingly, the full amount outstanding under the loans is
reflected in the financial statements of US Airways and AWA.
The amortization payments under the Airbus $161 million
loan will become due in equal quarterly installments of
$13 million beginning on March 31, 2008, with the
final installment due on December 31, 2010. The outstanding
principal amount of Airbus $89 million loan will be
forgiven in writing on December 31, 2010, or an earlier
date, if on that date the outstanding principal amount of,
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accrued interest on, and all other amounts due under the Airbus
$161 million loan have been paid in full and
US Airways and AWA comply with the aircraft delivery
schedule.
(e)
In August 1995, AWA issued $75 million principal amount of
10
3
/
4
% senior
unsecured notes due 2005, of which $40 million remained
outstanding at December 31, 2004. Interest on the
10
3
/
4
% senior
unsecured notes was payable semi-annually in arrears on
March 1 and September 1 of each year. On
December 27, 2004, AWA called for the redemption on
January 26, 2005 of all of the senior unsecured notes at a
redemption price of 100% of the principal amount thereof plus
accrued and unpaid interest through the redemption date. In
addition, AWA irrevocably deposited the $31 million raised
through the maintenance facility and flight training center
financing, as discussed in note (c) above, together with an
additional $11 million from its operating cash flow, with
the trustee for the senior unsecured notes. The senior notes
were subsequently redeemed on January 26, 2005.
(f)
In January 2002, in connection with the closing of the original
AWA ATSB loan and the related transactions, America West
Holdings issued $105 million of 7.5% convertible
senior notes due 2009, of which approximately $112 million
remained outstanding at December 31, 2005 (including
$22 million of interest paid through December 31, 2004
as a deemed loan added to the initial principal thereof).
Beginning January 18, 2005, these notes are convertible
into shares of common stock of US Airways Group, at the
option of the holders, at an initial conversion price of
$29.09 per share or a conversion ratio of approximately
34.376 shares per $1,000 principal amount of such notes,
subject to standard anti-dilution adjustments. Interest on the
7.5% convertible senior notes is payable semiannually in
arrears on June 1 and December 1 of each year. At
America West Holdings option, the first six interest
payments were payable in the form of a deemed loan added to the
principal amount of these notes. The 7.5% convertible
senior notes will mature on January 18, 2009 unless earlier
converted or redeemed. The payment of principal, premium and
interest on the 7.5% convertible senior notes is fully and
unconditionally guaranteed by AWA and US Airways Group. For
financial reporting purposes, America West Holdings recorded the
convertible senior notes at their fair market value on the date
of issuance. The balance at December 31, 2005 is net of an
unamortized discount of $18 million.
(g)
In July and August of 2003, AWA completed a private placement of
approximately $87 million issue price of 7.25% Senior
Exchangeable Notes due 2023. The notes bore cash interest at a
rate of 2.49% per year, and were redeemable or exchangeable
under certain conditions. Completion of the merger between
US Airways Group and America West Holdings on
September 27, 2005 constituted a change of
control under these notes and required AWA to make an
offer to holders to purchase those notes within 30 business days
after the effective time of the merger at a purchase price of
$343.61 per $1,000 principal amount at maturity. Under the
terms of the notes and the related Guarantee and Exchange
Agreement, dated as of July 30, 2003, between America West
Holdings and U.S. Bank National Association, as Trustee, as
supplemented by the Guarantee and Exchange Agreement Supplement
No. 1 among America West Holdings, US Airways Group
and the Trustee, dated as of September 27, 2005, AWAs
obligation to purchase the notes was satisfied at
US Airways Groups election by delivery of shares of
US Airways Group common stock having a fair market
value of not less than $343.61 per $1,000 principal
amount at maturity. For this purpose, fair market
value means 95% of the market price of US Airways
Group common stock calculated as the average closing prices over
the five business days ending on and including the third
business day before the purchase date.
On October 24, 2005, US Airways Group issued a total
of 4,156,411 shares of its common stock in exchange for
approximately $250 million in principal amount at maturity
of AWAs Senior Exchangeable Notes due 2023, which notes
were fully and unconditionally guaranteed by US Airways
Group. The shares were exchanged at a rate of 16 shares of
US Airways Group common stock per $1,000 principal amount
at maturity, in full satisfaction of the purchase price of the
notes. The
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amount of notes exchanged represented approximately 99% of the
outstanding principal amount, and approximately $2 million
in principal amount at maturity of the notes remained
outstanding after the exchange. On November 30, 2005,
US Airways Group issued a total of 38,864 shares of
its common stock to repurchase the remaining outstanding
principal amount of the notes.
(h)
The industrial development revenue bonds are due April 2023.
Interest at 6.3% is payable semiannually on April 1 and
October 1. The bonds are subject to optional redemption prior to
the maturity date on or after April 1, 2008, in whole or in
part, on any interest payment date at the following redemption
prices: 102% on April 1 or October 1, 2008; 101% on
April 1 or October 1, 2009; and 100% on April 1,
2010 and thereafter.
(i)
In connection with the merger, AWA, US Airways Group and
Juniper Bank, a subsidiary of Barclays PLC (Juniper), entered
into an agreement on August 8, 2005 amending AWAs
co-branded credit card agreement with Juniper, dated
January 25, 2005. Pursuant to the amended credit card
agreement, Juniper agreed to offer and market an airline mileage
award credit card program to the general public to participate
in US Airways Groups Dividend Miles program through
the use of a co-branded credit card.
US Airways Groups credit card program is currently
administered by Bank of America, N.A. (USA). On
December 28, 2005, US Airways issued a notice of
termination under its agreement with Bank of America and that
notice will become effective on December 28, 2007. Pending
termination of the Bank of America agreement, both Juniper and
Bank of America will run separate credit card programs for
US Airways Group. The amended credit card agreement is the
subject of pending litigation filed by Bank of America against
US Airways Group, US Airways and AWA (See
Note 9(e)).
The amended credit card agreement took effect at the effective
time of the merger. The credit card services provided by Juniper
under the amended credit card agreement began in January 2006,
and will continue until the expiration date, which is the later
of December 31, 2012 or seven years from the date on which
Juniper commences marketing to the general public.
Under the amended credit card agreement, Juniper will pay to
US Airways Group fees for each mile awarded to each credit
card account administered by Juniper, subject to certain
exceptions. Pursuant to the original credit card agreement,
Juniper paid to AWA a bonus of $20 million. Juniper also
agreed to pay a one-time bonus payment of $130 million,
following the effectiveness of the merger, subject to certain
conditions. The $130 million bonus payment was made to AWA
on October 3, 2005. The entire $150 million balance
for bonus payments are included in Deferred gains and
other liabilities in the accompanying consolidated balance
sheet as of December 31, 2005. US Airways Group will
not recognize any revenue from the bonus payments until the dual
branding period has expired, approximately February 2008. At
that time the Company expects to begin recognizing revenue from
the bonus payments on a straight-line basis through December
2012, the expiration date of the Juniper agreement. Further, if
Juniper is not granted exclusivity to offer a co-branded credit
card after the dual branding period, US Airways Group must
repay the bonus payments and repurchase unused pre-paid miles
with interest, plus $50 million in liquidated damages.
Juniper will pay an annual bonus of $5 million to
US Airways Group, subject to certain exceptions, for each
year after Juniper becomes the exclusive issuer of the
co-branded credit card.
On October 3, 2005, Juniper pre-paid for miles from
US Airways Group totaling $325 million, subject to the
same conditions as apply to the $130 million bonus payment.
To the extent that these miles are not used by Juniper as
allowed under the co-branded credit card program in certain
circumstances, US Airways Group will repurchase these miles
in 12 equal quarterly installments beginning on the fifth year
prior to the expiration date of the co-branded credit card
agreement with Juniper, until paid in full. US Airways
Group makes monthly interest payments at LIBOR plus 4.75% to
Juniper, beginning on November 1, 2005, based on the amount
of pre-purchased miles that have not been used
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by Juniper in connection with the co-branded credit card program
and have not been repurchased by US Airways Group.
US Airways Group will be required to repurchase
pre-purchased miles under certain reductions in the collateral
held under the credit card processing agreement with JP Morgan
Chase Bank, N.A. Accordingly, the prepayment has been recorded
as additional indebtedness.
Juniper requires US Airways Group to maintain an average
quarterly balance of cash, cash equivalents and short-term
investments of at least $1 billion for the entirety of the
agreement. Further, the agreement requires US Airways Group
to maintain certain financial ratios beginning January 1,
2006. Juniper may, at its option, terminate the amended credit
card agreement, make payments to US Airways Group under the
amended credit card agreement in the form of pre-purchased miles
rather than cash, or require US Airways Group to repurchase
the pre-purchased miles before the fifth year prior to the
expiration date of the co-branded credit card agreement with
Juniper in the event that US Airways Group breaches its
obligations under the amended credit card agreement, or upon the
occurrence of certain events.
At December 31, 2005, the estimated maturities of long-term
debt are as follows (in millions):
94
117
252
310
250
29
$
1,052
9.
Commitments and Contingencies
(a)
Leases
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Operating
Years Ending December 31,
Leases
$
384
360
309
271
243
1,629
$
3,196
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(b)
Revenue Bonds
(c)
Commitments to purchase flight equipment and maintenance
services
Airbus Purchase Commitments
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Engine Purchase Commitments
$
86
20
48
413
$
567
Engine Maintenance Commitments
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(d)
Sale-Leaseback Transactions
(e)
Legal Proceedings
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(f)
General Guarantees and Indemnifications
(g)
Concentration of credit risk
10.
Income Taxes
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Year Ended December 31,
2005
2004
2003
$
(139
)
$
(30
)
$
21
(3
)
3
(15
)
(3
)
156
31
(18
)
(2
)
2
(3
)
$
$
$
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Composition of Deferred Tax Items
2005
2004
$
235
$
183
13
13
21
13
4
7
3
4
1
1
1
3
278
224
9
(95
)
(1
)
(2
)
(2
)
6
(97
)
284
127
(284
)
(127
)
$
$
11.
Employee Benefit Plan
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12.
Stockholders Equity
(a)
Common Stock
(b)
Warrants
13.
Advances to Parent Company and Affiliate
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14.
Nonoperating Income (Expenses) Other, Net
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15.
Supplemental Information to Statements of Cash Flows
Year Ended December 31,
2005
2004
2003
(In millions)
$
30
$
26
$
29
325
(325
)
130
(130
)
186
(186
)
87
(1
)
(10
)
9
17
5
(21
)
(7
)
(7
)
9
9
48
24
17
(2
)
16.
Related Party Transactions
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17.
Valuation and Qualifying Accounts (in millions)
Balance at
Balance
Beginning
at End
Description
of Period
Additions
Deduction
of Period
$
1
$
2
$
1
$
2
$
6
$
1
$
6
$
1
$
7
$
1
$
2
$
6
$
15
$
8
$
$
23
$
12
$
3
$
$
15
$
9
$
3
$
$
12
$
127
$
157
$
$
284
$
96
$
55
$
24
$
127
$
79
$
39
$
22
$
96
$
32
$
2
$
34
$
$
27
$
7
$
2
$
32
$
22
$
9
$
4
$
27
18.
Quarterly Financial Data (Unaudited)
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1st Quarter
2nd Quarter
(As adjusted)
(As reported)
(As adjusted)
(As reported)
$
733
(1)
$
723
$
842
(2)
$
833
687
(1)
672
827
(2)
801
46
51
15
32
(17
)
(17
)
(17
)
(17
)
29
34
(2
)
15
3rd Quarter
4th Quarter
(As adjusted)
(As reported)
(As reported)
$
846
$
846
$
833
916
(3)
904
944
(70
)
(58
)
(111
)
(13
)
(13
)
(28
)
(83
)
(71
)
(139
)
1st Quarter
2nd Quarter
(Pro forma
(As previously
(Pro forma
(As previously
as adjusted)
reported)
as adjusted)
reported)
$
658
(4)
$
649
$
705
(5)
$
694
647
(4)
633
691
(5)
667
11
16
14
27
(17
)
(17
)
(15
)
(15
)
(6
)
(1
)
(1
)
12
3rd Quarter
4th Quarter
(Pro forma
(As previously
(Pro forma
(As previously
as adjusted)
reported)
as adjusted)
reported)
$
688
(6)
$
678
$
696
(7)
$
579
712
(6)
687
756
(7)
617
(24
)
(9
)
(60
)
(38
)
(19
)
(19
)
(18
)
(30
)
(43
)
(28
)
(78
)
(68
)
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(1)
Reflects reclassification of $2 million and $8 million
related to the sale of frequent flier miles and related
marketing services to affinity partners from Other
expenses to Mainline passenger and Other
revenues. Reflects $5 million additional maintenance
expense, resulting from the accounting policy change from the
deferral method for maintenance costs to the direct expense
method.
(2)
Reflects reclassification of $2 million and $7 million
related to the sale of frequent flier miles and related
marketing services to affinity partners from Other
expenses to Mainline passenger and Other
revenues. Reflects $17 million additional maintenance
expense, resulting from the accounting policy change from the
deferral method for maintenance costs to the direct expense
method.
(3)
Reflects $12 million additional maintenance expense,
resulting from the accounting policy change from the deferral
method for maintenance costs to the direct expense method.
(4)
Reflects reclassification of $2 million and $7 million
related to the sale of frequent flier miles and related
marketing services to affinity partners from Other
expenses to Mainline passenger and Other
revenues. Reflects $5 million additional pro forma
maintenance expense presented for comparative purposes,
resulting from the accounting policy change from the deferral
method for maintenance costs to the direct expense method.
(5)
Reflects reclassification of $2 million and $9 million
related to the sale of frequent flier miles and related
marketing services to affinity partners from Other
expenses to Mainline passenger and Other
revenues. Reflects $13 million additional pro forma
maintenance expense presented for comparative purposes,
resulting from the accounting policy change from the deferral
method for maintenance costs to the direct expense method.
(6)
Reflects reclassification of $2 million and $8 million
related to the sale of frequent flier miles and related
marketing services to affinity partners from Other
expenses to Mainline passenger and Other
revenues. Reflects $15 million additional pro forma
maintenance expense presented for comparative purposes,
resulting from the accounting policy change from the deferral
method for maintenance costs to the direct expense method.
(7)
Reflects reclassification of $1 million and $7 million
related to the sale of frequent flier miles and related
marketing services to affinity partners from Other
expenses to Mainline passenger and Other
revenues, reclassification of $109 million of Express
operating expenses from operating revenues to operating expenses
and reclassification of $12 million net loss related to
fuel hedging activity for settled and
mark-to
-market changes
from nonoperating to operating expenses. Reflects
$10 million additional pro forma maintenance expense
presented for comparative purposes, resulting from the
accounting policy change from the deferral method for
maintenance costs to the direct expense method.
Year Ended December 31, 2005
1st Quarter
2nd Quarter
3rd Quarter
$
34
$
15
$
(71
)
(5
)
(18
)
(15
)
$
29
$
(3
)
$
(86
)
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Year Ended December 31, 2004
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Total
$
(1
)
$
12
$
(28
)
$
(68
)
$
(85
)
(7
)
(15
)
(19
)
(12
)
(53
)
$
(8
)
$
(3
)
$
(47
)
$
(80
)
$
(138
)
19.
Operating Segments and Related Disclosures
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Item 8C.
Financial Statements and Supplementary Data of
US Airways, Inc.
pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and
dispositions of the assets of US Airways;
provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and
that receipts and expenditures of US Airways are being made
only in accordance with authorizations of management and
directors of US Airways; and
provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of
US Airways assets that could have a material effect
on the financial statements.
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Successor
Company
Predecessor Company
Three Months
Nine Months
Nine Months
Three Months
Ended
Ended
Year Ended
Ended
Ended
December 31,
September 30,
December 31,
December 31,
March 31,
2005
2005
2004
2003
2003
$
1,123
$
3,738
$
4,969
$
3,819
$
1,124
442
1,178
1,378
967
241
25
71
132
97
35
166
470
594
367
112
1,756
5,457
7,073
5,250
1,512
375
1,111
991
574
197
329
1,070
2,169
1,848
562
490
1,371
1,572
987
282
98
293
399
298
101
81
252
299
250
70
87
280
396
301
99
67
257
360
293
83
15
34
37
153
220
153
63
(212
)
248
812
1,015
766
257
1,827
5,599
7,421
5,292
1,714
(71
)
(142
)
(348
)
(42
)
(202
)
11
15
12
15
2
(65
)
(222
)
(236
)
(164
)
(73
)
636
(32
)
1,888
5
(9
)
19
37
(2
)
(49
)
420
(237
)
(112
)
1,815
(120
)
278
(585
)
(154
)
1,613
(2
)
(7
)
6
$
(120
)
$
280
$
(578
)
$
(160
)
$
1,613
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Successor
Company
Predecessor Company
Three Months
Nine Months
Nine Months
Three Months
Ended
Ended
Year Ended
Ended
Ended
December 31,
September 30,
December 31,
December 31,
March 31,
2005
2005
2004
2003
2003
$
(120
)
$
280
$
(578
)
$
(160
)
$
1,613
(697
)
17
(2,549
)
37
158
223
161
66
555
(255
)
1
(2
)
(4
)
(14
)
(66
)
(79
)
(66
)
(10
)
10
50
124
6
(8
)
3
4
88
65
(42
)
(5
)
40
(10
)
(1
)
(25
)
(42
)
28
(7
)
(77
)
175
(15
)
(89
)
140
(15
)
89
287
6
(100
)
154
53
(10
)
8
44
60
29
26
(322
)
(95
)
108
(189
)
(33
)
(92
)
(11
)
(90
)
(7
)
(414
)
(106
)
108
(279
)
(5
)
(136
)
(198
)
(201
)
(7
)
36
153
18
19
2
(132
)
358
(290
)
(19
)
125
(69
)
(76
)
24
(57
)
237
32
(8
)
24
(52
)
102
(416
)
148
140
240
52
1,081
125
131
503
58
34
(434
)
(215
)
(425
)
(50
)
(466
)
69
108
(185
)
36
746
86
(358
)
(189
)
(272
)
615
376
734
923
1,195
580
$
462
$
376
$
734
$
923
$
1,195
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Accumulated Other
Comprehensive Income (Loss),
Net of Income Tax Effect
Unrealized
Gain
Unrealized
Adjustment
Receivable
(Loss) on
Gain
for
from
Available-
(Loss) on
Minimum
Comprehensive
Common
Paid-in
Accumulated
Parent
Deferred
for-Sale
Cash Flow
Pension
Income
Stock
Capital
Deficit
Company
Compensation
Securities
Hedges
Liability
Total
(Loss)
$
$
2,661
$
(4,485
)
$
(2,262
)
$
$
$
10
$
(880
)
$
(4,956
)
(11
)
(11
)
$
(11
)
85
85
85
1,613
1,613
1,613
(2,481
)
2,872
2,025
1
795
3,212
796
237
237
169
(169
)
$
2,483
$
$
349
$
$
$
(169
)
$
$
$
$
180
124
124
31
31
$
31
(86
)
(86
)
(86
)
(160
)
(160
)
(160
)
$
(215
)
349
(160
)
(45
)
31
(86
)
89
31
31
(9
)
(9
)
$
(9
)
(34
)
(34
)
(34
)
(578
)
(578
)
(578
)
$
(621
)
$
$
349
$
(738
)
$
$
(14
)
$
$
22
$
(120
)
$
(501
)
10
10
(17
)
(17
)
$
(17
)
29
29
29
280
280
280
(348
)
444
4
(5
)
91
186
86
$
378
$
$
1
$
(14
)
$
$
$
$
$
$
(13
)
(120
)
(120
)
(120
)
$
(120
)
$
$
1
$
(134
)
$
$
$
$
$
$
(133
)
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1.
Chapter 11 reorganization and merger agreement
The GE Merger MOU provided for continued use by
US Airways Group of certain leased Airbus, Boeing and
regional jet aircraft, the modification of monthly lease rates,
and the return to GECC of certain other leased Airbus and Boeing
aircraft.
GECC provided a bridge facility of approximately
$56 million for use by US Airways Group during the
pendency of the Chapter 11 proceedings. US Airways
paid an affiliate of General Electric (GE)
$125 million in cash on September 30, 2005 in exchange
for retirement of the bridge facility, forgiveness and release
of US Airways from certain prepetition obligations,
deferral of
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certain payment obligations, and amendments to maintenance
agreements. The payment was funded through the issuance of
7% Senior Convertible Notes due 2020, as discussed in more
detail below.
In June 2005, GECC purchased and immediately leased back to
US Airways Group: (a) the assets securing the credit
facility obtained from GE in 2001 (the 2001 GE Credit
Facility) and the liquidity facility obtained from GE in
2003 in connection with US Airways Groups emergence
from the first bankruptcy (the 2003 GE Liquidity
Facility), and other GE obligations, consisting of 11
Airbus aircraft and 28 spare engines and engine stands; and
(b) ten regional jet aircraft previously debt financed by
GECC. The proceeds from the sale leaseback transaction of
approximately $633 million were used to pay down balances
due to GE by US Airways Group under the 2003
GE Liquidity Facility in full, the GECC mortgage-debt
financed CRJ aircraft in full, and a portion of the 2001
GE Credit Facility. The 2001 GE Credit Facility was
amended to allow certain additional borrowings up to
$28 million.
On September 27, 2005, US Airways and AWA entered into
two loan agreements with Airbus Financial Services
(AFS), as Initial Lender and Loan Agent, Wells
Fargo Bank Northwest, National Association, as Collateral Agent,
and US Airways Group, as guarantor, with commitments in
initial aggregate amounts of up to $161 million and up to
$89 million (the Airbus $161 Million Loan
and the Airbus $89 Million Loan and,
collectively, the Airbus Loans). The Airbus Loans
bear interest at a rate of LIBOR plus a margin, subject to
adjustment. The outstanding principal amount of the Airbus
$89 Million Loan will be forgiven in writing on
December 31, 2010, or an earlier date, if on that date the
outstanding principal amount of, accrued interest on, and all
other amounts due under the Airbus $161 Million Loan have
been paid in full.
Airbus has rescheduled US Airways Groups
A320-family
and
A330-200
delivery
commitments and has agreed to provide backstop financing for a
substantial number of aircraft, subject to certain terms and
conditions, on an order of 20 A350 aircraft. US Airways
Groups
A320-family
aircraft
are now scheduled for delivery in 2009 and 2010. US Airways
Groups
A330-200
aircraft are scheduled for delivery in 2009 and 2010 and A350
aircraft deliveries are currently scheduled to occur beginning
in 2011. The Airbus MOU also eliminates cancellation penalties
on US Airways Groups orders for the ten
A330-200
aircraft,
provided that US Airways Group has met certain predelivery
payment obligations under the A350 order. In connection
with the restructuring of aircraft firm orders, US Airways
and America West Holdings were required to pay an aggregate
non-refundable restructuring fee which was paid by means of
set-off against existing equipment purchase deposits of
US Airways Group and America West Holdings held by Airbus.
US Airways recorded its restructuring fee of
$39 million as a reorganization item in the third quarter
of 2005. AWAs restructuring fee was $50 million.
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2.
Basis of presentation and summary of significant accounting
policies
(a)
Nature of operations and operating environment
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(b)
Basis of presentation and use of estimates
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(c)
Cash equivalents and short-term investments
(d)
Restricted cash
(e)
Materials and supplies, net
(f)
Property and equipment
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(g)
Goodwill and other intangibles, net
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December 31,
December 31,
2005
2004
Cost
A/A
Cost
A/A
$
411
$
4
$
425
$
30
52
4
32
10
50
38
$
463
$
8
$
507
$
78
(h)
Other assets, net
(i)
Frequent traveler program
(j)
Derivative financial instruments
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(k)
Deferred gains and credits, net
(l)
Passenger revenue
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(m)
Stock-based compensation
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(n)
Maintenance and repair costs
(o)
Selling expenses
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(p)
Express expenses
Successor
Company
Predecessor Company
Three Months
Nine Months
Nine Months
Three Months
Ended
Ended
Year Ended
Ended
Ended
December 31,
September 30,
December 31,
December 31,
March 31,
2005
2005
2004
2003
2003
$
19
$
54
$
21
$
$
10
32
26
8
3
388
1,058
1,267
862
241
1
5
3
9
21
15
12
34
34
23
8
3
9
1
5
3
48
153
202
94
30
$
490
$
1,371
$
1,572
$
987
$
282
(q)
Variable interest entities
(r)
Recent accounting pronouncements
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(a)
Emergence and claims resolution
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(b)
Fresh-start reporting and purchase accounting
$
96
21
$
117
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$
922
2,271
548
778
732
(5,250
)
$
1
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$
584
23
23
11
49
50
(10
)
2
$
732
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(a)
Reflects the discharge or reclassification of estimated
liabilities subject to compromise. Most of these obligations are
only entitled to receive such distributions of cash and common
stock as provided for under the Plan of Reorganization. A
portion of the estimated liabilities subject to compromise was
restructured and will continue, as restructured, to be
liabilities of the Successor Company.
(b)
Includes adjustments to reflect assets and liabilities at fair
value and the write-off of the Predecessor Companys equity
accounts.
(c)
In conjunction with the merger and application of purchase
accounting, US Airways adjusted certain balances to conform
its accounting policies to those of America West Holdings.
(c)
Reorganization items, net
Predecessor Company
Nine Months
Three Months
Ended
Year Ended
Ended
September 30, 2005
December 31, 2004
March 31, 2003
$
1,420
$
$
801
386
75
3,655
30
(7
)
7
4
2
2
(2
)
(1,892
)
(1,498
)
(1,106
)
(96
)
(57
)
(27
)
(51
)
(35
)
(5
)
946
(4
)
(9
)
(4
)
(43
)
$
636
$
(32
)
$
1,888
(a)
In January 2005, the Bankruptcy Court approved settlement
agreements between US Airways and its unions and the
court-appointed Section 1114 Committee, representing
retirees other than those represented by the IAM and TWU, to
begin the significant curtailment of postretirement medical
benefits. US Airways recognized a gain of $183 million
in connection with this curtailment in the first quarter of
2005. Upon the emergence from bankruptcy and effectiveness of
the Plan of
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Reorganization, an additional gain of $1.24 billion was
recognized as the liability associated with the postretirement
medical benefits was reduced to fair market value. See also
Note 7.
(b)
Also in January 2005, US Airways terminated three defined
benefit plans related to the flight attendants, mechanics and
certain other employees (see Note 7). The PBGC was
appointed trustee of the plans upon termination. US Airways
recognized a curtailment gain of $24 million and a
$91 million minimum pension liability adjustment in
connection with the terminations in the first quarter of 2005.
Upon the effective date of the Plan of Reorganization and in
connection with the settlement with the PBGC, the remaining
liabilities associated with these plans were written off, net of
settlement amounts.
Effective March 31, 2003, US Airways terminated its
qualified and nonqualified pilot defined benefit pension plans.
The PBGC was appointed trustee of the qualified plan effective
with the termination. US Airways recognized a gain in
connection with the termination which is partially offset by the
estimate of the PBGC claim.
(c)
Reflects the discharge of trade accounts payable and other
liabilities upon emergence from bankruptcy. Most of these
obligations were only entitled to receive such distributions of
cash and common stock as provided for under the plan of
reorganization in each of the bankruptcies. A portion of the
liabilities subject to compromise in the bankruptcies were
restructured and continued, as restructured, to be liabilities
of the Successor Company.
(d)
As a result of US Airways bankruptcy filing in
September 2004, US Airways was not able to secure the
financing necessary to take on-time delivery of three scheduled
regional jet aircraft and therefore accrued penalties of
$3 million until delivery of these aircraft was made to a
US Airways Express affiliate in August 2005. Offsetting
these penalties is the reversal of $33 million in penalties
recorded by US Airways in the nine months ended
December 31, 2003 due to its intention not to take delivery
of certain aircraft scheduled for future delivery. In connection
with the Airbus MOU, the accrual for these penalties was
reversed (see also Notes 1 and 4).
As the result of US Airways bankruptcy filing in
September 2004, it failed to meet the conditions precedent for
continued financing of regional jets and was not able to take
delivery of scheduled aircraft and therefore incurred penalties
of $7 million in the fourth quarter of 2004.
(e)
Damage and deficiency claims are largely a result of
US Airways election to either restructure, abandon or
reject aircraft debt and leases during the bankruptcy
proceedings. As a result of the confirmation of the Plan of
Reorganization and the effectiveness of the merger, these claims
were withdrawn and the accruals reversed.
(f)
As of September 30, 2005, US Airways recorded
$1.5 billion of adjustments to reflect assets and
liabilities at fair value, including an initial net write-down
of goodwill of $1.82 billion. Goodwill of $584 million
was recorded to reflect the excess of the estimated fair value
of liabilities and equity over identifiable assets. Subsequent
to September 30, 2005, US Airways recorded an
additional $148 million of goodwill to reflect adjustments
to the fair value of certain assets and liabilities. See
Note 3(b) for a description of changes in goodwill during
the fourth quarter of 2005.
As of March 31, 2003, US Airways recorded
$1.11 billion of adjustments to reflect assets and
liabilities at fair value (including a $1.12 billion
liability increase related to the revaluation of
US Airways remaining defined benefit pension plans
and postretirement benefit plans and a $333 million
write-up
of gates,
slots and routes) and the write-off of the Predecessor
Companys equity accounts. In addition, goodwill of
$2.41 billion was recorded to reflect the excess of the
estimated fair value of liabilities and equity over identifiable
assets.
Subsequent to March 31, 2003, US Airways recorded an
additional $62 million of adjustments to reflect assets and
liabilities at fair value, including a $281 million
decrease to property and equipment, net, a $121 million
decrease to long-term debt, net of current maturities, a
$13 million increase to
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deferred gains and credits, net, a $54 million increase to
other intangibles, net, a $15 million decrease to employee
benefit liabilities and other and a $6 million decrease to
accounts payable. In addition, a $6 million adjustment was
made to paid-in capital reflecting a reallocation of
US Airways Group equity as a result of additional fair
value adjustments to assets at certain US Airways Group
subsidiaries other than US Airways.
(g)
In connection with filing for bankruptcy on September 12,
2004, US Airways achieved cost-savings agreements with its
principal collective bargaining groups. In connection with the
new labor agreements, approximately 5,000 employees across
several of US Airways labor groups were involuntarily
terminated or participated in voluntary furlough and termination
programs.
(h)
In connection with the Airbus MOU, US Airways was required
to pay a restructuring fee of $39 million, which was paid
by means of offset against existing equipment deposits held by
Airbus. US Airways also received credits from Airbus
totaling $4 million in 2005, primarily related to equipment
deposits. See also Note 1.
(i)
The GE Merger MOU provided for the continued use of certain
leased Airbus, Boeing and regional jet aircraft, the
modification of monthly lease rates and the return of certain
other leased Airbus and Boeing aircraft. The GE Merger MOU also
provided for the sale-leaseback of assets securing various GE
obligations. In connection with these transactions,
US Airways recorded a net loss of $5 million.
In connection with the first bankruptcy, US Airways
restructured aircraft debt and lease agreements related to 119
aircraft including the conversion of 52 mortgages to operating
leases. The restructured terms generally provide for shorter
lease periods and lower lease rates.
(j)
For the three months ended March 31, 2003, reorganization
items includes expenses related to seven aircraft that were
legally abandoned as part of the first bankruptcy. Related
aircraft liabilities were adjusted for each aircrafts
expected allowed collateral value.
(d)
Liabilities subject to compromise
$
2,400
2,858
565
162
93
$
6,078
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(a)
Special items, net
Successor Company
Predecessor Company
Three Months Ended
Nine Months Ended
December 31, 2005
December 31, 2003
$
15
(a)
$
35
(b)
(1
)(c)
$
15
$
34
(a)
In connection with the merger with America West Holdings,
US Airways incurred $15 million of transition and
merger integration costs in the fourth quarter of 2005. These
items included $7 million in insurance premiums related to
policies for former officers and directors, $5 million for
severance, retention payments and stock awards, $1 million
of aircraft livery costs, $1 million of programming service
expense and $1 million in other expenses.
(b)
During the quarter ended June 30, 2003, US Airways
recorded a $35 million charge in connection with its
intention not to take delivery of certain aircraft scheduled for
future delivery. In connection with the Airbus MOU,
$33 million of this charge was reversed as a reorganization
item in 2005 (see Notes 1 and 3(c)).
(c)
In September 2001, US Airways announced that in connection
with its reduced flight schedule it would terminate or furlough
approximately 11,000 employees across all employee groups.
Approximately 10,200 of the affected employees were terminated
or furloughed on or prior to January 1, 2002. Substantially
all the remaining affected employees were terminated or
furloughed by May 2002. US Airways headcount
reduction was largely accomplished through involuntary
terminations/furloughs. In connection with this headcount
reduction, US Airways offered a voluntary leave program to
certain employee groups. Voluntary leave program participants
generally received extended benefits, such as medical, dental
and life insurance, but did not receive any furlough pay
benefit. In accordance with Emerging Issues Task Force Issue
No.
94-3,
US Airways recorded a pretax charge of $75 million
representing the involuntary severance pay and the benefits for
affected employees during the third quarter of 2001. In the
fourth quarter of 2001, US Airways recognized a
$10 million charge representing the estimated costs of
extended benefits for those employees who elected to take
voluntary leave and a $2 million reduction in accruals
related to the involuntary severance as a result of employees
electing to accept voluntary furlough. During the quarters ended
June 30, 2003 and 2002, the US Airways recognized
$1 million and $3 million, respectively, in reductions
to severance pay and benefit accruals related to the involuntary
termination or furlough of certain employees.
(b)
Government compensation
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(c)
Gain on sale of Hotwire, Inc.
(a)
General
(b)
Fair value of financial instruments
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December 31, 2005
December 31, 2004
Carrying
Estimated
Carrying
Estimated
Amount
Fair Value
Amount
Fair Value
$
432
$
432
$
700
$
700
132
132
571
571
626
626
3
3
10
10
10
10
(1,926
)
(1,926
)
(3,198
)
(d
)
(a)
Classified as available for sale in accordance with
SFAS 115. See also Note 2(c).
(b)
Carrying amount included in receivables, net on the balance
sheets.
(c)
Carrying amount included in other assets, net on the balance
sheets.
(d)
As a result of the Chapter 11 filing, the fair value of the
debt outstanding could not be reasonably determined as of
December 31, 2004. In connection with bankruptcy emergence
in September 2005, the carrying amount of debt was adjusted to
fair market value.
December 31,
December 31,
2005
2004
$
1,240
$
1,948
551
718
50
46
49
28
354
158
20
186
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December 31,
December 31,
2005
2004
10
2,111
3,247
(139
)
(126
)
(2,400
)
(117
)
(721
)
$
1,855
$
(a)
In connection with the consummation of the merger, on
September 27, 2005, US Airways, as borrower, entered
into the US Airways ATSB Loan with the ATSB. Also on
September 27, 2005, AWA entered into an Amended and
Restated Loan Agreement (the AWA ATSB Loan). The
ATSB Loans amended and restated the previously outstanding loans
of both US Airways and AWA, each guaranteed in part by the
ATSB. On October 19, 2005, $539 million of
US Airways ATSB Loan, of which $525 million was
guaranteed by the ATSB, was sold by the lender by order of the
ATSB to 13 fixed income investors. Due to the sale on
October 19, 2005, the ATSB no longer guarantees any portion
of the loan and has no interest in any of US Airways
debt. As a result of the sale of the loan, the principal amounts
bear interest as a rate per annum equal to LIBOR plus
600 basis points, payable on a quarterly basis, and are no
longer subject to payment of the quarterly guarantee fee. All
other terms associated with this loan remain unchanged. As a
result of the sale of the loan, the US Airways ATSB Loan is
now referred to as the US Airways Citibank Loan, and had an
outstanding balance of $551 million at December 31,
2005.
Ninety percent of the US Airways Citibank Loan
(Tranche A), the previously guaranteed portion of the loan,
was originally funded through a participating lenders
commercial paper conduit program and bears interest at a rate
equal to the conduit providers weighted average cost
related to the issuance of certain commercial paper notes and
other short term borrowings plus 0.30%, provided that portions
of Tranche A that are held by the US Airways Citibank
Loan or by an assignee and no longer subject to such commercial
paper conduit program bear interest at LIBOR plus 40 basis
points, and portions of Tranche A that are under certain
circumstances assigned free of the ATSB guarantee bear interest
at LIBOR plus 6.0%. Ten percent of the US Airways Citibank
Loan (Tranche B) bears interest at the greater of the
Tranche A interest rate plus 6.0% and LIBOR plus 6.0%, as
compared with the previous rate of LIBOR plus 4.0%. The
US Airways Citibank loan also reschedules amortization
payments for US Airways with semi-annual payments beginning
on March 31, 2007 and continuing through September 30,
2010.
The US Airways Citibank Loan requires certain prepayments
from the proceeds of specified asset sales by US Airways
Group and the other loan parties, and US Airways Group is
required to maintain consolidated unrestricted cash and cash
equivalents, less: (a) the amount of all outstanding
advances by credit card processors and clearing houses in excess
of 20% of the air traffic liabilities;
(b) $250 million presumed necessary to fund a
subsequent tax trust (to the extent not otherwise funded by
US Airways Group); (c) $35 million presumed
necessary to post collateral to clearing houses (to the extent
not posted); and (d) any unrestricted cash or cash
equivalents held in unperfected accounts; in an amount (subject
to partial reduction under certain circumstances upon
Table of Contents
mandatory prepayments made with the net proceeds of future
borrowings and issuances of capital stock) not less than:
$525 million from September 27, 2005
through March 2006;
$500 million through September 2006;
$475 million through March 2007;
$450 million through September 2007;
$400 million through March 2008;
$350 million through September 2008; and
$300 million through September 2010.
US Airways was required to pay down the principal of its
loan with the first $125 million of net proceeds from
specified asset sales identified in connection with its
Chapter 11 proceedings, whether completed before or after
emergence. US Airways then retains the next
$83 million of net proceeds from specified assets sales,
and must prepay the principal of the loan with 60% of net
proceeds in excess of an aggregate of $208 million from
specified asset sales. Any such asset sales proceeds up to
$275 million are to be applied to the outstanding principal
balance in order of maturity, and any such asset sales proceeds
in excess of $275 million are to be applied to the
outstanding principal balance on a pro rata across all
maturities in accordance with the loans early amortization
provisions. As a result, semi-annual payments are now scheduled
to begin on September 30, 2007, instead of March 31,
2007, as originally scheduled in the loan agreement.
US Airways made prepayments totaling $156 million in
connection with these specified asset sales completed during
2005.
(b)
In September 2005, US Airways entered into an agreement to
sell and leaseback certain of its commuter slots at Ronald
Reagan Washington National Airport and New York LaGuardia
Airport. US Airways continues to hold the right to
repurchase the slots anytime after the second anniversary of the
slot sale-leaseback transaction. These transactions were
accounted for as secured financings. Installments are due
monthly through 2015 at a rate of 8%.
(c)
Capital lease obligations consist principally of certain airport
maintenance and facility leases which expire in 2018 and 2021.
(d)
General Electric together with its affiliates (collectively,
GE) finances or leases a substantial portion of
US Airways aircraft prior to the most recent
Chapter 11 filing. In addition, in November 2001,
US Airways obtained a $404 million credit facility
from GE (the GE Credit Facility), which was secured
by collateral including 11 A320-family aircraft and 28 spare
engines. In connection with the first bankruptcy,
US Airways reached a settlement with GE that resolved
substantially all aircraft, aircraft engine and loan-related
issues, and provided US Airways with additional financing
from GE in the form of a liquidity facility of up to
$360 million that bore interest at the rate of LIBOR plus
4.25% (the GE Liquidity Facility). Most obligations
to GE are cross-defaulted to the US Airways GE Liquidity
Facility, GE regional jet leases and GE regional jet mortgage
financings.
In November 2004, US Airways reached a comprehensive
agreement with GE and its affiliates, as described in a Master
Memorandum of Understanding (GE Master MOU), that
was approved by the Bankruptcy Court on December 16, 2004.
The GE Master MOU, together with the transactions contemplated
by the term sheets attached to the GE Master MOU, provided
short-term liquidity, reduced debt, lower aircraft ownership
costs, enhanced engine maintenance services and operating leases
for new regional jets, while preserving the vast majority of
US Airways mainline fleet owned or otherwise financed
by GE. In connection with the merger, US Airways and
America West Holdings renegotiated certain of their respective
existing agreements, and entered into new agreements, with GE.
These agreements are set forth in a comprehensive agreement with
GE and certain of its affiliates in a Master Merger Memorandum
of Understanding, referred to as the GE Merger MOU,
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that was approved by the Bankruptcy Court in June 2005. In part,
the GE Merger MOU modified and supplemented the agreements
reached between US Airways and GE in the GE Master MOU,
which was further amended by an amendment dated
September 9, 2005. The amendment provided that, in lieu of
the issuance to an affiliate of GE of a convertible note in the
amount of $125 million, US Airways Group would pay
cash in the amount of $125 million. The $125 million
was paid to GE before September 30, 2005.
The bridge facility entered into between US Airways and GE
pursuant to the GE Master MOU on December 20, 2004 (the
GE Bridge Facility) continued in effect during the
pendency of the Chapter 11 cases. The GE Bridge Facility
provided for a loan in the amount of up to approximately
$56 million, which was drawn down in 2004 and 2005. The GE
Bridge Facility bore interest at the rate of LIBOR plus 4.25%
and matured on the date US Airways Group emerged from the
Chapter 11 cases, and was settled in cash by
US Airways by September 30, 2005 in connection with
the $125 million payment.
In June 2005, GE purchased the assets securing the GE Credit
Facility in a sale-leaseback transaction. The sale proceeds
realized from the sale-leaseback transaction were applied to
repay the 2003 GE Liquidity Facility, the mortgage financing
associated with the CRJ aircraft and a portion of the 2001 GE
Credit Facility. The balance of the GE Credit Facility was
amended to allow additional borrowings of $21 million in
July 2005, which resulted in a total principal balance
outstanding thereunder of $28 million. The operating leases
are cross-defaulted with all other GE obligations, other than
excepted obligations, and are subject to agreed upon return
conditions.
(e)
On September 27, 2005, US Airways and AWA entered into
two loan agreements with Airbus Financial Services
(AFS), an affiliate of Airbus, with commitments in
initial aggregate amounts of up to $161 million and up to
$89 million. The Airbus loans bear interest at a rate of
LIBOR plus a margin, subject to adjustment during the term of
the loans under certain conditions and have been recorded as an
obligation of US Airways Group. Amounts drawn upon the
Airbus loans are drawn first upon the Airbus $161 million
loan until it has been drawn in its full amount, in which event
the remaining portion of the $250 million total commitment
is drawn upon the Airbus $89 million loan.
On September 27, 2005, all of the Airbus $161 million
loan and $14 million of the Airbus $89 million loan
were drawn and are available for use for general corporate
purposes. At December 31, 2005, a total of
$186 million was drawn under the Airbus loans. The
remaining portion of the Airbus loans is payable in multiple
draws upon the occurrence of certain conditions, including the
taking of delivery of certain aircraft, on the due dates for
certain amounts owing to AFS or its affiliates to refinance such
amounts, after payment of certain invoices for goods and
services provided by AFS or its affiliates, or upon receipt by
AFS of certain amounts payable in respect of existing aircraft
financing transactions. The full amount of the Airbus loans is
expected to be available by the end of 2006. US Airways and
AWA are jointly and severally liable for the Airbus loans;
accordingly, the full amount outstanding under the loans is
reflected in financial statements of US Airways.
The amortization payments under the Airbus $161 million
loan will become due in equal quarterly installments of
$13 million beginning on March 31, 2008, with the
final installment due on December 31, 2010. The outstanding
principal amount of the Airbus $89 million loan will be
forgiven in writing December 31, 2010, or an earlier date,
if on that date the outstanding principal amount of, accrued
interest on, and all other amounts due under the Airbus
$161 million loan have been paid in full and
US Airways and AWA comply with the aircraft delivery
schedule.
(f)
In connection with US Airways Groups emergence from
bankruptcy in September 2005, it reached a settlement with the
PBGC related to the termination of three of its defined benefit
pension plans which included the issuance of a $10 million
note which matures in 2012 and bears interest at 6% payable
annually in arrears.
Table of Contents
$
117
152
252
297
299
994
$
2,111
(a)
Defined benefit and other postretirement benefit
plans
Table of Contents
Table of Contents
Defined Benefit Pension Plans(1)
Other Postretirement Benefits
Successor
Successor
Company
Predecessor Company
Company
Predecessor Company
Three Months
Nine Months
Three Months
Nine Months
Ended
Ended
Year Ended
Ended
Ended
Year Ended
Dec. 31, 2005
Sept. 30, 2005
Dec. 31, 2004
Dec. 31, 2005
Sept. 30, 2005
Dec. 31, 2004
$
$
1,706
$
1,634
$
$
$
98
166
1
29
51
51
23
16
(44
)
(123
)
(74
)
(67
)
(1,761
)
1,706
2,690
2,550
229
1,367
1,651
1
40
1
8
39
6
152
3
22
88
23
16
(1,089
)
59
71
(4
)
(16
)
(360
)
(2,712
)
(12
)
(44
)
(123
)
(74
)
(67
)
2,690
229
229
1,367
Table of Contents
Defined Benefit Pension Plans(1)
Other Postretirement Benefits
Successor
Successor
Company
Predecessor Company
Company
Predecessor Company
Three Months
Nine Months
Three Months
Nine Months
Ended
Ended
Year Ended
Ended
Ended
Year Ended
Dec. 31, 2005
Sept. 30, 2005
Dec. 31, 2004
Dec. 31, 2005
Sept. 30, 2005
Dec. 31, 2004
(984
)
(229
)
(229
)
(1,367
)
105
(4
)
(329
)
(71
)
1
10
15
$
$
$
(878
)
$
(223
)
$
(229
)
$
(1,752
)
Defined Benefit Pension Plans(1)
Other Postretirement Benefits
Successor
Predecessor
Successor
Company
Company
Company
Predecessor Company
Dec. 31,
Sept. 30,
Dec. 31,
Dec. 31,
Sept. 30,
Dec. 31,
2005
2005
2004
2005
2005
2004
$
$
$
(878
)
$
(223
)
$
(229
)
$
(1,752
)
(120
)
120
$
$
$
(878
)
$
(223
)
$
(229
)
$
(1,752
)
(1)
For plans with accumulated benefit obligations in excess of plan
assets, the aggregate projected benefit obligations, accumulated
benefit obligations and plan assets were $2.70 billion,
$2.68 billion and $1.72 billion, respectively, as of
September 30, 2004.
(2)
In 2005, US Airways recognized curtailments and settlements
related to the termination of its remaining material defined
benefit pension plans. These curtailments and settlements were
recognized in accordance with SFAS No. 88,
Employers Accounting for Settlements and
Curtailments of Defined Benefit Pension Plans and for
Termination Benefits. In 2005, US Airways recognized
curtailments related to the significant redesign of the other
post retirement benefit plans (primarily medical and dental
benefits). These curtailments were recognized in accordance with
SFAS No. 106, Employers Accounting for
Postretirement Benefits Other Than Pensions.
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Defined Benefit
Pension Plans
Other Postretirement Benefits
Predecessor
Successor
Predecessor
Company
Company
Company
Dec. 31, 2004
Dec. 31, 2005
Dec. 31, 2004
6.00%
5.30%
6.00%
3.73%
n.a.
1% Increase
1% Decrease
$
$
$
10
$
(8
)
Defined Benefit Pension Plans
Other Postretirement Benefits
Successor
Predecessor Company
Company
Predecessor Company
Nine Months
Three Months
Nine Months
Ended
Year Ended
Ended
Ended
Year Ended
Sept. 30, 2005
Dec. 31, 2004
Dec. 31, 2005
Sept. 30, 2005
Dec. 31, 2004
6.00
%
6.00
%
5.30
%
5.80
%
6.19
%
7.33
%
8.00
%
3.73
%
3.73
%
Table of Contents
Predecessor Company
Nine Months
Nine Months
Three Months
Ended
Year Ended
Ended
Ended
Sept. 30, 2005
Dec. 31, 2004
Dec. 31, 2003
March 31, 2003
$
1
$
40
$
27
$
27
6
152
113
89
(5
)
(128
)
(89
)
(69
)
1
1
2
64
51
49
(801
)
(1,391
)
1,004
$
(799
)
$
64
$
51
$
(338
)
Successor
Company
Predecessor Company
Three Months
Nine Months
Nine Months
Three Months
Ended
Ended
Year Ended
Ended
Ended
Dec. 31, 2005
Sept. 30, 2005
Dec. 31, 2004
Dec. 31, 2003
Mar. 31, 2003
$
1
$
8
$
39
$
30
$
11
3
22
88
76
29
(76
)
(13
)
(10
)
(10
)
(11
)
(9
)
6
4
(57
)
105
96
36
(183
)
(1,247
)
118
$
4
$
(1,487
)
$
105
$
96
$
154
Table of Contents
Other Postretirement
Benefits before
Medicare Subsidy
Medicare Subsidy
$
27
$
25
24
22
1
20
1
76
2
49
%
42
8
1
100
%
(b)
Defined contribution pension plans
Table of Contents
(c)
Postemployment benefits
(d)
Employee stock ownership plan (ESOP)
(e)
Profit sharing plans
Table of Contents
8.
Income Taxes
Successor
Company
Predecessor Company
Three Months
Nine Months
Nine Months
Three Months
Ended
Ended
Year Ended
Ended
Ended
December 31,
September 30,
December 31,
December 31,
March 31,
2005
2005
2004
2003
2003
$
$
$
(3
)
$
3
$
(2
)
(3
)
3
(2
)
(6
)
6
(1
)
(1
)
$
$
(2
)
$
(7
)
$
6
$
Table of Contents
Successor
Company
Predecessor Company
Three Months
Nine Months
Nine Months
Three Months
Ended
Ended
Year Ended
Ended
Ended
December 31,
September 30,
December 31,
December 31,
March 31,
2005
2005
2004
2003
2003
$
(56
)
$
723
$
(206
)
$
399
$
200
56
(723
)
205
(399
)
(200
)
$
$
$
(1
)
$
$
Successor
Company
Predecessor Company
Three Months
Nine Months
Nine Months
Three Months
Ended
Ended
Year Ended
Ended
Ended
December 31,
September 30,
December 31,
December 31,
March 31,
2005
2005
2004
2003
2003
$
(42
)
$
97
$
(205
)
$
(54
)
$
564
(3
)
615
1
11
(200
)
(1
)
(2
)
3
45
(753
)
181
(140
)
(371
)
40
180
5
19
13
(13
)
7
$
$
(2
)
$
(7
)
$
6
$
%
(1
)%
1
%
4
%
%
Table of Contents
2005
2004
$
266
$
1,154
309
299
185
179
25
25
9
(156
)
(822
)
629
844
364
641
145
112
28
123
105
660
858
31
14
$
31
$
14
Table of Contents
Predecessor Company
Three Months
Nine Months
Year
Nine Months
Three Months
Ended
Ended
Ended
Ended
Ended
DSuccessor1,
September 30,
December 31,
December 31,
March 31,
Company
2005
2004
2003
2003
$
(120
)
$
278
$
(585
)
$
(154
)
$
1,613
226
(418
)
(558
)
149
262
(a)
Commitments to purchase flight equipment and maintenance
services
Airbus Purchase Commitments
Embraer Purchase Commitments
Table of Contents
Bombardier Purchase Commitments
Engine Maintenance Commitments
(b)
Leases
Table of Contents
2005
2004
$
32
$
34
(1
)
(3
)
$
31
$
31
Capital Leases
Operating Leases
$
5
$
761
5
691
5
664
5
602
5
551
55
3,936
80
7,205
(708
)
80
$
6,497
(34
)
46
(5
)
$
41
2005
2004
$
283
$
491
(3
)
(14
)
$
280
$
477
Table of Contents
(c)
Regional jet capacity purchase agreements
(d)
Legal proceedings
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
(e)
Guarantees
(f)
Concentration of credit risk
Table of Contents
Predecessor Company
Nine Months
Nine Months
Three Months
Ended
Year Ended
Ended
Ended
September 30,
December 31,
December 31,
March 31,
2005
2004
2003
2003
$
(17
)
$
(75
)
$
(14
)
$
(16
)
66
45
5
(17
)
(9
)
31
(11
)
29
(34
)
(86
)
85
86
796
$
98
$
(43
)
$
(55
)
$
870
Table of Contents
11.
Related party transactions
December 31,
2005
2004
$
(269
)
$
(53
)
(20
)
(19
)
(17
)
(12
)
(6
)
(16
)
8
$
(336
)
$
(68
)
(a)
Parent company
(b)
Airline subsidiaries of US Airways Group
Table of Contents
(c)
Other US Airways Group subsidiaries
(d)
RSA
Table of Contents
12.
Stockholders equity and dividend restrictions
13.
Operating segments and related disclosures
Successor
Company
Predecessor Company
Three Months
Nine Months
Nine Months
Three Months
Ended
Ended
Year Ended
Ended
Ended
December 31,
September 30,
December 31,
December 31,
March 31,
2005
2005
2004
2003
2003
$
1,502
$
4,513
$
5,225
$
4,456
$
1,314
254
944
1,848
794
198
$
1,756
$
5,457
$
7,073
$
5,250
$
1,512
14.
Stock-based compensation
Table of Contents
Weighted
Weighted
Avg.
Avg.
Stock Options
Exercise Price
Warrants
Exercise Price
$
2,227,576
$
7.42
(11,050
)
7.42
2,216,526
7.42
466,640
1.53
49,200
7.42
(109,250
)
1.51
(147,236
)
7.42
357,390
1.54
2,118,490
7.42
(357,390
)
1.57
(2,118,490
)
7.42
$
$
Table of Contents
Predecessor Company
Nine Months
Year Ended
Ended
December 31,
December 31,
2004
2005
65%
65%
2.9%
2.2%
4 Years
3 Years
15.
2003 Fresh-start reporting
Table of Contents
16.
Supplemental information to statement of cash flows
Three Months
Nine Months
Nine Months
Three Months
Ended
Ended
Year Ended
Ended
Ended
December 31,
September 30,
December 31,
December 31,
March 31,
2005
2005
2004
2003
2003
$
$
99
$
345
$
30
$
633
167
22
186
$
40
$
200
$
160
$
126
$
72
12
(18
)
2
Table of Contents
17.
Valuation and qualifying accounts and reserves (in
millions)
Sales,
Additions
Retire-
Balance at
Charged
Write-offs
ments
Balance
Beginning
to
(Net of
and
at End
of Period
Expense
Payments
Recoveries)
transfers
Other
of Period
$
$
1
$
$
$
$
$
1
8
2
(2
)
8
53
(3
)
(24
)
26
13
5
(1
)
(17
)(b)
22
5
(19
)
8
9
78
(58
)
24
(c)
53
5
8
13
17
7
(2
)
22
10
5
(6
)
9
5
5
18
6
(7
)
17
46
3
(39
)
10
104
2
(106
)(b)
17
2
(1
)
18
78
(32
)
46
68
(68
)
(a)
See Notes 3(c) and 4.
(b)
Allowance for obsolescence of inventories eliminated upon
adoption of fresh-start reporting. See Notes 3(b) and 15.
(c)
In connection with purchase accounting, US Airways accrued
severance and benefits related to planned reductions in force
for its non union employees. See Note 3(b).
Table of Contents
18.
Selected quarterly financial information (in millions)
(unaudited)
Successor
Predecessor Company
Company
First
Second
Third
Fourth
Quarter
Quarter
Quarter
Quarter
$
1,622
$
1,953
$
1,882
$
1,756
$
(182
)
$
59
$
(19
)
$
(71
)
$
(259
)
$
(44
)
$
584
$
(120
)
Predecessor Company
$
1,684
$
1,947
$
1,788
$
1,654
$
(146
)
$
85
$
(158
)
$
(128
)
$
(181
)
$
35
$
(214
)
$
(218
)
19.
Subsequent event
Purchase of 757 aircraft
Table of Contents
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
Item 9A. | Controls and Procedures |
Item 9B. | Other Information |
268
Item 10. | Directors and Executive Officers of the Registrants |
Item 11. | Executive Compensation |
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
Item 13. | Certain Relationships and Related Transactions |
269
Item 14. | Principal Accountant Fees and Services |
Item 15. | Exhibits and Financial Statement Schedules |
| Consolidated Statements of Operations for the years ended December 31, 2005, 2004 and 2003 | |
| Consolidated Balance Sheets as of December 31, 2005 and 2004 | |
| Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003 | |
| Consolidated Statements of Stockholders Equity (Deficit) for the years ended December 31, 2005, 2004 and 2003 |
| Consolidated Statements of Operations for the years ended December 31, 2005, 2004 and 2003 | |
| Consolidated Balance Sheets as of December 31, 2005 and 2004 | |
| Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003 | |
| Consolidated Statements of Stockholders Equity (Deficit) for the years ended December 31, 2005, 2004 and 2003 | |
| Notes to Consolidated Financial Statements |
| Statements of Operations for the three months ended December 31, 2005 (Successor Company), the nine months ended September 30, 2005, the year ended December 31, 2004, the nine months ended December 31, 2003 and the three months ended March 31, 2003 (Predecessor Company) | |
| Balance Sheets as of December 31, 2005 (Successor Company) and December 31, 2004 (Predecessor Company) | |
| Statements of Cash Flows for the three months ended December 31, 2005 (Successor Company), the nine months ended September 30, 2005, the year ended December 31, 2004, the nine months ended December 31, 2003 and the three months ended March 31, 2003 (Predecessor Company) | |
| Statements of Stockholders Equity (Deficit) for the three years ended December 31, 2005, 2004 and 2003 | |
| Notes to Financial Statements |
270
Exhibit | ||||
Number | Description | |||
2 | .1 | Agreement and Plan of Merger, dated May 19, 2005, by and among US Airways Group and America West Holdings Corporation (incorporated by reference to Exhibit 2.1 to US Airways Groups Registration Statement on Form S-4 filed on June 28, 2005) (Pursuant to item 601(b)(2) of Regulation S-K promulgated by the SEC, the exhibits and schedules to the Agreement and Plan of Merger have been omitted. Such exhibits and schedules are described in the Agreement and Plan of Merger. US Airways Group hereby agrees to furnish to the SEC, upon its request, any or all of such omitted exhibits or schedules) (Registration No. 333-126162). | ||
2 | .2 | Letter Agreement, dated July 7, 2005 by and among US Airways Group, America West Holdings Corporation, Barbell Acquisition Corp., ACE Aviation America West Holdings, Inc., Eastshore Aviation, LLC, Par Investment Partners, L.P., Peninsula Investment Partners, L.P. and Wellington Management Company, LLP (incorporated by reference to Exhibit 2.2 to Amendment No. 1 to US Airways Groups Registration Statement on Form S-4 filed on August 8, 2005) (Registration No. 333-126162). | ||
2 | .3 | Joint Plan of Reorganization of US Airways, Inc. and Its Affiliated Debtors and Debtors-in-Possession. | ||
2 | .4 | Findings of Fact, Conclusions of Law and Order Under 11 USC Sections 1129(a)and (b)of Fed. R. Bankr. P. 3020 Confirming the Joint Plan of Reorganization of US Airways, Inc. and Its Affiliated Debtors and Debtors-in-Possession. | ||
2 | .5 | Agreement and Plan of Merger, dated as of December 19, 1996, by and among America West Holdings Corporation (America West Holdings), AWA (AWA) and AWA Merger, Inc., with an effective date and time as of midnight on December 31, 1996 (incorporated by reference to Exhibit 2.1 to America West Holdings Registration Statement on Form 8-B dated January 13, 1997) (Registration No. 001-12649). | ||
3 | .1 | Amended and Restated Certificate of Incorporation of US Airways Group, effective as of September 27, 2005 (incorporated by reference to Exhibit 3.1 to US Airways Groups Current Report on Form 8-K filed on October 3, 2005). | ||
3 | .2 | Amended and Restated Bylaws of US Airways Group, effective as of September 27, 2005 (incorporated by reference to Exhibit 3.2 to US Airways Groups Current Report on Form 8-K filed on October 3, 2005). | ||
3 | .3 | Restated Certificate of Incorporation of AWA (incorporated by reference to Exhibit 2.1 to America West Holdings Registration Statement on Form 8-B dated January 13, 1997) (Registration No. 001-12649). | ||
3 | .4 | Bylaws of AWA (incorporated by reference to Exhibit 3.2 to AWAs Annual Report on Form 10-K for the year ended December 31, 2004). | ||
3 | .5 | Certificate of Incorporation of America West Holdings. | ||
3 | .6 | Bylaws of America West Holdings. |
271
Exhibit
Number
Description
3
.7
Amended and Restated Certificate of Incorporation of
US Airways, effective as of March 31, 2003
(incorporated by reference to Plan Exhibit C-2 to the First
Amended Joint Plan of Reorganization of US Airways Group
and Its Affiliated Debtors and Debtors-in-Possession, As
Modified (incorporated by reference to Exhibit 2.1 to
US Airways Current Report on Form 8-K dated
March 18, 2003).
3
.8
Amended and restated By-Laws of US Airways, effective as of
March 31, 2003 (incorporated by reference to
Exhibit 3.1 to US Airways Quarterly Report on
Form 10-Q for the quarter ended March 31, 2003)
4
.1
Indenture, dated as of July 30, 2003, between AWA and
U.S. Bank National Association, as trustee and not in its
individual capacity, for AWA Senior Exchangeable Notes due 2023
(incorporated by reference to Exhibit 4.1 to America West
Holdings and AWAs Quarterly Report on Form 10-Q
for the quarter ended September 30, 2003).
4
.2
Form of AWA Senior Exchangeable Note due 2023 (incorporated by
reference to Exhibit 4.2 to America West Holdings and
AWAs Quarterly Report on Form 10-Q for the quarter
ended September 30, 2003).
4
.3
Indenture, dated as of September 30, 2005, between
US Airways Group, the guarantors listed therein and
U.S. Bank National Association, as trustee (incorporated by
reference to Exhibit 4.1 to US Airways Groups
Current Report on Form 8-K Filed on October 31, 2005).
4
.4
Registration Rights Agreement, dated as of July 30, 2003,
with respect to shares of Class B Common Stock underlying
the AWA Senior Exchangeable Notes due 2023 (incorporated by
reference to Exhibit 4.3 to America West Holdings and
AWAs Quarterly Report on Form 10-Q for the quarter
ended September 30, 2003).
4
.5
Guarantee and Exchange Agreement, dated as of July 30,
2003, between America West Holdings Corporation and
U.S. Bank, National Association, as exchange agent and
trustee and not in its individual capacity, for AWA Inc. Senior
Exchangeable Notes due 2023 (incorporated by reference to
Exhibit 4.4 to America West Holdings and AWAs
Quarterly Report on Form 10-Q for the quarter ended
September 30, 2003).
4
.6
Guarantee and Exchange Agreement Supplement No. 1, dated as
of September 27, 2005, among America West Holdings
Corporation, US Airways Group and U.S. Bank National
Association (incorporated by reference to Exhibit 10.2 to
US Airways Groups Current Report on Form 8-K
filed on October 3, 2005).
4
.7
Stock Option Agreement, dated as of December 31, 1996,
between America West Holdings and AWA (incorporated by reference
to Exhibit 4.5 to America West Holdings Registration
Statement on Form 8-B dated January 13, 1997)
(Registration No. 001-12649).
4
.8
Registration Rights Agreement dated as of August 25, 1994,
among AWA, AmWest Partners, L.P. and other holders (incorporated
by reference to Exhibit 4.6 to the AWAs Current
Report on Form 8-K dated August 25, 1994).
4
.9
Assumption of Certain Obligations Under Registration Rights
Agreement executed by America West Holdings for the benefit of
TPG Partners, L.P., TPG Parallel I, L.P., Air
Partners II, L.P., Continental Airlines, Inc., Mesa
Airlines, Inc., Lehman Brothers, Inc., Belmont Capital
Partners II, L.P. and Belmont Fund, L.P. (incorporated by
reference to Exhibit 4.7 to America West Holdings
Registration Statement on Form 8-B dated January 13,
1997) (Registration No. 001-12649).
4
.10
Form of Pass Through Trust Agreement, dated as of
November 26, 1996, between AWA and Fleet National Bank, as
Trustee (incorporated by reference to Exhibit 4.1 to
AWAs Current Report on Form 8-K dated
November 26, 1996).
4
.11
Form of Pass Through Trust Agreement, dated as of June 17,
1997, between AWA and Fleet National Bank, as Trustee
(incorporated by reference to Exhibit 4.5 to AWAs
Registration Statement on Form S-3 dated June 4, 1997)
(Registration No. 333-27351).
272
Exhibit
Number
Description
4
.12
Forms of Pass Through Trust Agreements, dated as of
October 6, 1998, between AWA and Wilmington Trust Company,
as Trustee (incorporated by reference to Exhibits 4.4, 4.5,
4.6, 4.7, 4.8 and 4.9 to AWAs Registration Statement on
Form S-4 dated March 25, 1999) (Registration
No. 333-71615).
4
.13
Pass Through Trust Agreements, dated as of September 21,
1999, between AWA and Wilmington Trust Company, as Trustee, made
with respect to the formation of AWA Pass Through Trusts,
Series 1999-1G-S, 1999-1G-O, 1999-1C-S and 1999-1C-O and
the issuance of 7.93% Initial Pass Through Certificates
Series 1999-1G-S and 1999-1G-O, the issuance of 8.54%
Initial Pass Through Certificates, Series 1999-1C-S and
1999-1C-O, the issuance of 7.93% Exchange Pass Through
Certificates, Series 1999-1G-S and 1999 1G-O, and the
issuance of 8.54% Exchange Pass Through Certificates,
Series 1999-1C-S and 1999-1C-O (incorporated by reference
to AWAs Quarterly Report on Form 10-Q for the period
ended September 30, 1999).
4
.14
Insurance and Indemnity Agreement, dated as of
September 21, 1999, among AWA, Ambac Assurance Corporation
as Policy Provider and Wilmington Trust Company as Subordination
Agent and Trustee under the Pass Through Trust 1999-1G-O
(incorporated by reference to Exhibits 4.15 to AWAs
Registration Statement on Form S-4 dated March 16,
2000) (Registration No. 333-93393).
4
.15
Pass Through Trust Agreement, dated as of July 7, 2000,
between AWA, and Wilmington Trust Company, as Trustee, made with
respect to the formation of AWA Pass Through Trust,
Series 2000-1G-0, 2000-1G-S, 2000-1C-O and 2000-1C-S, the
issuance of 8.057% Initial Pass Through Certificates, Series
2000-1G-O and 2000-1G-S, the issuance of 9.244% Initial Pass
Through Certificates, Series 2000-1C-O and 2000-1C-S, the
issuance of 8.057% Exchange Pass Through Certificates,
Series 2000-1G-O and 2000-1G-S and the issuance of 9.244%
Exchange Pass Through Certificates, Series 2000-1C-O and
2000-1C-S (incorporated by reference to Exhibits 4.3, 4.4,
4.5 and 4.6 to AWAs Registration Statement on
Form S-4 dated September 12, 2002) (Registration
No. 333-44930).
4
.16
Insurance and Indemnity Agreement, dated as of July 7,
2000, among AWA, Ambac Assurance Corporation as Policy Provider
and Wilmington Trust company as Subordination Agent and Trustee
under the Pass Through Trust 2000-1G (incorporated by reference
to Exhibits 4.15 to AWAs Registration Statement on
Form S-4 dated September 12, 2002) (Registration
No. 333-44930).
4
.17
Insurance and Indemnity Agreement (Series G), dated as of
May 17, 2001, among AWA, Ambac Assurance Corporation as
Policy Provider and Wilmington Trust company as Subordination
Agent (incorporated by reference to Exhibit 4.20 to
AWAs Registration Statement on Form S-4 dated
February 14, 2002) (Registration No. 333-69356).
4
.18
Indenture, dated as of January 18, 2002, between America
West Holdings Corporation and Wilmington Trust Company, as
Trustee and not in its individual capacity, for America West
Holdings Corporation 7.5% Convertible Senior Notes due 2009
(incorporated by reference to Exhibit 4.15 to America West
Holdings and AWAs Current Report on Form 8-K
dated January 31, 2002).
4
.19
Supplemental Indenture No. 1, dated as of
September 27, 2005, among America West Holdings
Corporation, US Airways Group, Inc. and Wilmington Trust
Company.
4
.20
Form of America West Holdings Corporation 7.5% Convertible
Senior Notes due 2009 (incorporated by reference to
Exhibit 4.16 to America West Holdings and AWAs
Current Report on Form 8-K dated January 31, 2002).
4
.21
Registration Rights Agreement, dated January 18, 2002, with
respect to shares of Class B Common Stock underlying the
America West Holdings Corporation 7.5% Convertible Senior
Notes due 2009 (incorporated by reference to Exhibit 4.17
to America West Holdings and AWAs Current Report on
Form 8-K dated January 31, 2002).
4
.22
Guaranty, dated as of January 18, 2002, by AWA, in favor of
the Holders and the Trustee under the Indenture dated
January 18, 2002 (incorporated by reference to
Exhibit 4.18 to America West Holdings and AWAs
Current Report on Form 8-K dated January 31, 2002).
273
Exhibit
Number
Description
4
.23
Warrant Registration Rights Agreement between America West
Holdings Corporation and certain warrant recipients
(incorporated by reference to Exhibit 4.21 to America West
Holdings and AWAs Current Report on Form 8-K
dated January 31, 2002).
4
.24
Indenture, dated as of September 30, 2005, between
US Airways Group, the guarantors listed therein and
U.S. Bank National Association, as trustee (incorporated by
reference to Exhibit 4.1 to US Airways Groups
Current Report on Form 8-K filed on October 3, 2005).
4
.25
Registration Rights Agreement, dated as of September 30,
2005, between US Airways Group, AWA and US Airways, as
guarantors, and the initial purchaser named therein
(incorporated by reference to Exhibit 4.2 to
US Airways Groups Current Report on Form 8-K
filed on October 3, 2005).
4
.26
US Airways Group Warrant to Purchase Common Stock, dated
September 27, 2005, issued to AFS Cayman Limited
(incorporated by reference to Exhibit 10.2 to
US Airways Groups Current Report on Form 8-K
filed on October 3, 2005).
10
.1
Loan Agreement dated March 31, 2003 among US Airways
and Phoenix American Financial Services, Inc., Bank of America,
N.A. and the Air Transportation Stabilization Board
(incorporated by reference to Exhibit 10.5 to
US Airways Quarterly Report on Form 10-Q for the
quarter ended March 31, 2003).
10
.2
Amendment No. 1 dated December 18, 2003 to Loan
Agreement dated March 31, 2003 among US Airways and
Phoenix American Financial Services, Inc., Bank of America, N.A.
and the Air Transportation Stabilization Board (incorporated by
reference to Exhibit 10.1 to US Airways
Quarterly Report on Form 10-Q for the quarter ended
March 31, 2004).
10
.3
Amendment No. 2 dated March 12, 2004 to Loan Agreement
dated March 31, 2003 among US Airways and Phoenix
American Financial Services, Inc., Bank of America, N.A. and the
Air Transportation Stabilization Board. (incorporated by
reference to Exhibit 10.2 to US Airways
Quarterly Report on Form 10-Q for the quarter ended
March 31, 2004).
10
.4
Amendment No. 3 dated May 21, 2004 to Loan Agreement
dated March 31, 2004 among US Airways and Phoenix
American Financial Services, Inc., Bank of America, N.A. and the
Air Transportation Stabilization Board (incorporated by
reference to Exhibit 10.1 to US Airways
Quarterly Report on Form 10-Q for the quarter ended
June 30, 2004).
10
.5
Amendment No. 4 dated July 13, 2004 to Loan Agreement
dated March 31, 2004 among US Airways and Phoenix
American Financial Services, Inc., Bank of America, N.A. and the
Air Transportation Stabilization Board (incorporated by
reference to Exhibit 10.2 to US Airways
Quarterly Report for the quarter ended June 30, 2004).
10
.6
Amendment No. 5 dated December 28, 2004 to Loan
Agreement dated March 31, 2004 among US Airways and
Phoenix American Financial Services, Inc., Bank of America, N.A.
and the Air Transportation Stabilization Board (incorporated by
reference to Exhibit 10.6 to US Airways Groups
Registration Statement on Form S-4 filed with the SEC on
June 28, 2005) (Registration No. 333-126162).
10
.7
Final Order (I) Authorizing Debtors Use of Cash
Collateral and (II) Providing Adequate Protection Pursuant
to Bankruptcy Rules 4001(b) and 4001(d) (incorporated by
reference to Exhibit 99.1 to US Airways Groups
Current Report on Form 8-K dated October 14, 2004).
10
.8
Motion to Authorize and Approve (1) The Primary
Tranche A Lender Assignment, (2) The Alternate
Tranche A Lender Assignment, and (3) Amendment
No. 5 to the Loan Agreement pursuant to 11 U.S.C.
Sections 105, 363, 1108, and Bankruptcy Rules 4001 and
6004 (incorporated by reference to Exhibit 99.1 to
US Airways Groups Current Report on Form 8-K
dated December 28, 2004).
10
.9
Order Approving (1) The Primary Tranche A Lender
Assignment, (2) The Alternate Tranche A Lender
Assignment, and (3) Amendment No. 5 to Loan Agreement
pursuant to 11 U.S.C. Sections 105, 363, 1108, and
Bankruptcy Rules 4001 and 6004 (incorporated by reference
to Exhibit 99.2 to US Airways Groups Current
Report on Form 8-K dated December 28, 2004).
274
Exhibit
Number
Description
10
.10
Master Memorandum of Understanding among US Airways Group,
US Airways, and General Electric Capital Corporation acting
through its agent GE Capital Aviation Services, Inc. and
General Electric Company, GE Transportation Component
(incorporated by reference to Exhibit 10.9 to
US Airways Groups Annual Report on Form 10-K/A
for the year ended December 31, 2004).*
10
.11
First Supplemental Order (I). Authorizing Debtors Use
of Cash Collateral (II). Providing Adequate Protection
Pursuant to Bankruptcy Rules 4001(b). and 4001(d).
(incorporated by reference to Exhibit 99.1 to
US Airways Groups Current Report on Form 8-K
dated January 13, 2005).
10
.12
Master Merger Memorandum of Understanding, dated as of
June 13, 2005, among US Airways, US Airways
Group, America West Holdings Corporation, AWA, General Electric
Capital Corporation, acting through its agent GE Commercial
Aviation Services LLC, GE Engine Services, Inc.,
GE Engine Services Dallas, LP and General
Electric Company, GE Transportation Component (incorporated by
reference to Exhibit 10.9 to US Airways Groups
Quarterly Report on Form 10-Q/A for the quarter ended
June 30, 2005).*
10
.13
A319/A320/A321 Purchase Agreement dated as of October 31,
1997 between US Airways Group and AVSA, S.A.R.L., an
affiliate of aircraft manufacturer Airbus Industrie G.I.E.
(incorporated by reference to Exhibit 10.1 to
US Airways Groups Quarterly Report on Form 10-Q
for the quarter ended September 30, 1997).*
10
.14
Amendment No. 1 dated as of June 10, 1998 to
A319/A320/A321 Purchase Agreement dated October 31, 1997
between US Airways Group and AVSA, S.A.R.L. (incorporated
by reference to Exhibit 10.2 to US Airways
Groups Annual Report on Form 10-K for the year ended
December 31, 1998).*
10
.15
Amendment No. 2 dated as of January 19, 1999 to
A319/A320/A321 Purchase Agreement dated October 31, 1997
between US Airways Group and AVSA, S.A.R.L. (incorporated
by reference to Exhibit 10.3 to US Airways
Groups Annual Report on Form 10-K for the year ended
December 31, 1998).*
10
.16
Amendment No. 3 dated as of March 31, 1999 to
A319/A320/A321 Purchase Agreement dated October 31, 1997
between US Airways Group and AVSA, S.A.R.L. (incorporated
by reference to Exhibit 10.1 to US Airways
Groups Quarterly Report on Form 10-Q for the quarter
ended September 30, 1999).*
10
.17
Amendment No. 4 dated as of August 31, 1999 to
A319/A320/A321 Purchase Agreement dated October 31, 1997
between US Airways Group and AVSA, S.A.R.L. (incorporated
by reference to Exhibit 10.2 to US Airways
Groups Quarterly Report on Form 10-Q for the quarter
ended September 30, 1999).*
10
.18
Amendment No. 5 dated as of October 29, 1999 to
A319/A320/A321 Purchase Agreement dated October 31, 1997
between US Airways Group and AVSA, S.A.R.L. (incorporated
by reference to Exhibit 10.6 to US Airways
Groups Annual Report on Form 10-K for the year ended
December 31, 1999).*
10
.19
Amendment No. 6 dated as of April 19, 2000 to
A319/A320/A321 Purchase Agreement dated October 31, 1997
between US Airways Group and AVSA, S.A.R.L. (incorporated
by reference to Exhibit 10.1 to US Airways
Groups Quarterly Report on Form 10-Q for the quarter
ended March 31, 2000).*
10
.20
Amendment No. 7 dated as of June 29, 2000 to
A319/A320/A321 Purchase Agreement dated October 31, 1997
between US Airways Group and AVSA, S.A.R.L. (incorporated
by reference to Exhibit 10.1 to US Airways
Groups Quarterly Report on Form 10-Q for the quarter
ended June 30, 2000).*
10
.21
Amendment No. 8 dated as of November 27, 2000 to
A319/A320/A321 Purchase Agreement dated October 31, 1997
between US Airways Group and AVSA, S.A.R.L. (incorporated
by reference to Exhibit 10.9 to US Airways
Groups Annual Report on Form 10-K for the year ended
December 31, 2000).*
275
Exhibit
Number
Description
10
.22
Amendment No. 9 dated as of December 29, 2000 to
A319/A320/A321 Purchase Agreement dated October 31, 1997
between US Airways Group and AVSA, S.A.R.L. (incorporated
by reference to Exhibit 10.10 to US Airways
Groups Annual Report on Form 10-K for the year ended
December 31, 2000).*
10
.23
Amendment No. 10 dated as of April 9, 2001 to
A319/A320/A321 Purchase Agreement dated October 31, 1997
between US Airways Group and AVSA, S.A.R.L. (incorporated
by reference to Exhibit 10.1 to US Airways
Groups Quarterly Report on Form 10-Q for the quarter
ended March 31, 2001).*
10
.24
Amendment No. 11 dated as of July 17, 2002 to
A319/A320/A321 Purchase Agreement dated October 31, 1997
between US Airways Group and AVSA, S.A.R.L. (incorporated
by reference to Exhibit 10.1 to US Airways
Groups Quarterly Report on Form 10-Q for the quarter
ended June 30, 2002).*
10
.25
Amendment No. 12 dated as of March 29, 2003 to
A319/A320/A321 Purchase Agreement dated October 31, 1997
between US Airways Group and AVSA, S.A.R.L. (incorporated
by reference to Exhibit 10.1 to US Airways
Groups Quarterly Report on Form 10-Q for the quarter
ended March 31, 2003).*
10
.26
Amendment No. 13 dated August 30, 2004 to the Airbus
A319/A320/A321 Purchase Agreement dated October 31, 1997
between US Airways Group and AVSA, S.A.R.L. (incorporated
by reference to Exhibit 10.2 to US Airways
Quarterly Report on Form 10-Q for the quarter ended
September 30, 2004).*
10
.27
Amendment No. 14 dated December 22, 2004 to the Airbus
A319/A320/A321 Purchase Agreement dated October 31, 1997
between US Airways Group and AVSA, S.A.R.L. (incorporated
by reference to Exhibit 10.4 to US Airways
Groups Quarterly Report on Form 10-Q for the quarter
ended March 31, 2005).*
10
.28
Amendment No. 15 dated January 17, 2005 to the Airbus
A319/A320/A321 Purchase Agreement dated October 31, 1997
between US Airways Group and AVSA, S.A.R.L. (incorporated
by reference to Exhibit 10.5 to US Airways
Groups Quarterly Report on Form 10-Q for the quarter
ended March 31, 2005).*
10
.29
A330/A340 Purchase Agreement dated as of November 24, 1998
between US Airways Group and AVSA, S.A.R.L. (incorporated
by reference to Exhibit 10.4 to US Airways
Groups Annual Report on Form 10-K for the year ended
December 31, 1998).*
10
.30
Amendment No. 1 dated as of March 23, 2000 to
A330/A340 Purchase Agreement dated November 24, 1998
between US Airways Group and AVSA, S.A.R.L. (incorporated
by reference to Exhibit 10.2 to US Airways
Groups Quarterly Report on Form 10-Q for the quarter
ended March 31, 2000).*
10
.31
Amendment No. 2 dated as of June 29, 2000 to A330/A340
Purchase Agreement dated November 24, 1998 between
US Airways Group and AVSA, S.A.R.L. (incorporated by
reference to Exhibit 10.2 to US Airways Groups
Quarterly Report on Form 10-Q for the quarter ended
June 30, 2000).*
10
.32
Amendment No. 3 dated as of November 27, 2000 to
A330/A340 Purchase Agreement dated November 24, 1998
between US Airways Group and AVSA, S.A.R.L. (incorporated
by reference to Exhibit 10.14 to US Airways
Groups Annual Report on Form 10-K for the year ended
December 31, 2000).*
10
.33
Amendment No. 4 dated as of September 20, 2001 to
A330/A340 Purchase Agreement dated November 24, 1998
between US Airways Group and AVSA, S.A.R.L. (incorporated
by reference to Exhibit 10.16 to US Airways
Groups Annual Report on Form 10-K for the year ended
December 31, 2001).*
10
.34
Amendment No. 5 dated as of July 17, 2002 to A330/A340
Purchase Agreement dated November 24, 1998 between
US Airways Group and AVSA, S.A.R.L. (incorporated by
reference to Exhibit 10.2 to US Airways Groups
Quarterly Report on Form 10-Q for the quarter ended
June 30, 2002).*
276
Exhibit
Number
Description
10
.35
Amendment No. 6 dated as of March 29, 2003 to
A330/A340 Purchase Agreement dated November 24, 1998
between US Airways Group and AVSA, S.A.R.L. (incorporated
by reference to Exhibit 10.2 to US Airways
Groups Quarterly Report on Form 10-Q for the quarter
ended March 31, 2003).*
10
.36
Amendment No. 7 dated August 30, 2004 to the Airbus
A330/A340 Purchase Agreement dated November 24, 1998
between US Airways Group and AVSA, S.A.R.L. (incorporated
by reference to Exhibit 10.3 to US Airways
Quarterly Report on Form 10-Q for the quarter ended
September 30, 2004).*
10
.37
Amendment No. 8 dated December 22, 2004 to the Airbus
A330/A340 Purchase Agreement dated as of November 24, 1998
between US Airways Group and AVSA, S.A.R.L. (incorporated
by reference to Exhibit 10.6 to US Airways
Groups Quarterly Report on Form 10-Q/A for the
quarter ended March 31, 2005).*
10
.38
Amendment No. 9 dated November 24, 1998 to the Airbus
A330/A340 Purchase Agreement between US Airways Group and
AVSA, S.A.R.L. (incorporated by reference to Exhibit 10.7
to US Airways Groups Quarterly Report on
Form 10-Q for the quarter ended March 31, 2005).*
10
.39
Letter Agreement dated December 17, 2004 between
US Airways Group and US Airways and Airbus North
America Sales Inc. (incorporated by reference to
Exhibit 99.2 to US Airways Groups Current Report
on Form 8-K dated February 3, 2005).
10
.40
Form of Airbus A350 Purchase Agreement, dated as of
September 27, 2005, among AVSA, S.A.R.L. and
US Airways, AWA and US Airways Group (incorporated by
reference to Exhibit 10.165 to US Airways Groups
Registration Statement on Form S-1/A filed on
September 27, 2005) (Registration No. 333-126226).
10
.41
Embraer Aircraft Purchase Agreement dated as of May 9, 2003
between US Airways Group and Empresa Brasileira de
Aeronautica S.A. (incorporated by reference to Exhibit 10.1
to US Airways Groups Quarterly Report on
Form 10-Q for the quarter ended June 30, 2003).*
10
.42
Amendment No. 1 dated as of November 4, 2003 to
Embraer Aircraft Purchase Agreement dated as of May 9, 2003
between US Airways Group and Empresa Brasileira de
Aeronautica S.A. (incorporated by reference to
Exhibit 10.22 to US Airways Groups Annual Report
on Form 10-K for the year ended December 31, 2003).*
10
.43
Amendment No. 2 dated as of November 21, 2003 to
Embraer Aircraft Purchase Agreement dated as of May 9, 2003
between US Airways Group and Empresa Brasileira de
Aeronautica S.A. (incorporated by reference to
Exhibit 10.23 to US Airways Groups Annual Report
on Form 10-K for the year ended December 31, 2003).*
10
.44
Amendment No. 3 dated as of February 9, 2004 to
Embraer Aircraft Purchase Agreement dated as of May 9, 2003
between US Airways Group and Empresa Brasileira de
Aeronautica S.A. (incorporated by reference to Exhibit 10.4
to US Airways Groups Quarterly Report on
Form 10-Q for the quarter ended March 31, 2004).*
10
.45
Amendment No. 4 dated as of August 4, 2004 to Embraer
Aircraft Purchase Agreement dated as of May 9, 2003 between
US Airways Group and Empresa Brasileira de Aeronautica S.A.
(incorporated by reference to Exhibit 10.4 to
US Airways Groups Quarterly Report on Form 10-Q
for the quarter ended September 30, 2004).*
10
.46
Amendment No. 5 dated as of September 3, 2004 to
Embraer Aircraft Purchase Agreement dated as of May 9, 2003
between US Airways Group and Empresa Brasileira de
Aeronautica S.A. (incorporated by reference to Exhibit 10.5
to US Airways Groups Quarterly Report on
Form 10-Q for the quarter ended September 30, 2004).*
10
.47
Amendment No. 6 dated as of January 25, 2005 to
Embraer Aircraft Purchase Agreement dated as of May 9, 2003
between US Airways Group and Empresa Brasileira de
Aeronautica S.A. (incorporated by reference to Exhibit 10.9
to US Airways Groups Quarterly Report on
Form 10-Q for the quarter ended March 31, 2005).*
277
Exhibit
Number
Description
10
.48
Amendment No. 1 dated January 6, 2004 to the Letter
Agreement DCT-022/03 dated May 9, 2003 between
US Airways Group and Empresa Brasileira de Aeronautica S.A.
(incorporated by reference to Exhibit 10.5 to
US Airways Groups Quarterly Report on Form 10-Q
for the quarter ended March 31, 2004).*
10
.49
Post-Petition Purchase Agreement Modification and Aircraft
Financing Term Sheet between US Airways, Embraer-Empresa
Brasileira de Aeronautica S.A., dated December 16, 2004
(incorporated by reference to Exhibit 10.8 of
US Airways Groups Quarterly Report on Form 10-Q
for the quarter ended March 31, 2005).
10
.50
Bombardier CRJ Aircraft Master Purchase Agreement dated as of
May 9, 2003 between US Airways Group and Bombardier,
Inc. (incorporated by reference to Exhibit 10.2 to
US Airways Groups Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003).*
10
.51
Contract Change Order 1 dated January 27, 2004 to
Bombardier CRJ Aircraft Master Purchase Agreement dated as of
May 9, 2003 between US Airways Group and Bombardier,
Inc. (incorporated by reference to Exhibit 10.6 to
US Airways Groups Quarterly Report on Form 10-Q
for the quarter ended March 31, 2004).*
10
.52
Contract Change Order 2 dated February 9, 2004 to
Bombardier CRJ Aircraft Master Purchase Agreement dated as of
May 9, 2003 between US Airways Group and Bombardier,
Inc. (incorporated by reference to Exhibit 10.7 to
US Airways Groups Quarterly Report on Form 10-Q
for the quarter ended March 31, 2004).*
10
.53
Contract Change Order 3 dated February 26, 2004 to
Bombardier CRJ Aircraft Master Purchase Agreement dated as of
May 9, 2003 between US Airways Group and Bombardier,
Inc. (incorporated by reference to Exhibit 10.8 to
US Airways Groups Quarterly Report on Form 10-Q
for the quarter ended March 31, 2004).*
10
.54
Registration Rights Agreement made and entered into as of
March 31, 2003 by and between US Airways Group and
ATSB Securities Trust u/a/d March 31, 2003 (incorporated by
reference to Exhibit 10.2 to US Airways Groups
Registration Statement on Form 8-A filed on May 14,
2003) (Registration No. 000-50288).
10
.55
First Amendment dated as of June 25, 2003 to the
Registration Rights Agreement made and entered into as of
March 31, 2003 by and between US Airways Group and
ATSB Securities Trust u/a/d March 31, 2003 (incorporated by
reference to Exhibit 10.6 to US Airways Groups
Quarterly Report on Form 10-Q for the quarter ended
June 30, 2003).
10
.56
Registration Rights Agreement made and entered into as of
March 31, 2003 by and between US Airways Group and
General Electric Capital Corporation (incorporated by reference
to Exhibit 10.3 to US Airways Groups
Registration Statement on Form 8-A filed on May 14,
2003) (Registration No. 000-50288).
10
.57
Registration Rights Agreement made and entered into as of
March 31, 2003 by and between US Airways Group and
Bank of America, N.A. (incorporated by reference to
Exhibit 10.4 to US Airways Groups Registration
Statement on Form 8-A filed on May 14, 2003)
(Registration No. 000-50288).
10
.58
US Airways Funded Executive Defined Contribution Plan
(incorporated by reference to Exhibit 10.1 to
US Airways Annual Report on Form 10-K for the
year ended December 31, 2003).
10
.59
First Amendment to the US Airways Funded Executive Defined
Contribution Plan dated January 26, 2004 (incorporated by
reference to Exhibit 10.4 to US Airways
Quarterly Report for the quarter ended June 30, 2004).
10
.60
Second Amendment to the US Airways Funded Executive Defined
Contribution Plan (incorporated by reference to
Exhibit 10.5 to US Airways Quarterly Report for
the quarter ended June 30, 2004).
10
.61
Third Amendment to the US Airways Funded Executive Defined
Contribution Plan (incorporated by reference to
Exhibit 10.6 to US Airways Quarterly Report for
the quarter ended June 30, 2004).
278
Exhibit
Number
Description
10
.62
US Airways Unfunded Executive Defined Contribution Plan
(incorporated by reference to Exhibit 10.2 to
US Airways Annual Report on Form 10-K for the
year ended December 31, 2003).
10
.63
First Amendment to the US Airways Unfunded Executive
Defined Contribution Plan dated January 26, 2004
(incorporated by reference to Exhibit 10.7 to
US Airways Quarterly Report for the quarter ended
June 30, 2004).
10
.64
Second Amendment to the US Airways Unfunded Executive
Defined Contribution Plan (incorporated by reference to
Exhibit 10.8 to US Airways Quarterly Report for
the quarter ended June 30, 2004).
10
.65
Third Amendment to the US Airways Unfunded Executive
Defined Contribution Plan (incorporated by reference to
Exhibit 10.9 to US Airways Quarterly Report for
the quarter ended June 30, 2004).
10
.66
Employment Agreement between US Airways Group and
US Airways and its President and Chief Executive Officer
effective May 19, 2004 (incorporated by reference to
Exhibit 10.6 to US Airways Quarterly Report for
the quarter ended September 30, 2004).
10
.67
Letter Agreement, dated as of September 27, 2005, between
US Airways Group and Bruce R. Lakefield (incorporated by
reference to Exhibit 10.2 to US Airways Groups
Current Report on Form 8-K filed on October 3,
2005).
10
.68
Employment Agreement, dated as of September 27, 2005,
between US Airways Group and Elizabeth K. Lanier
(incorporated by reference to Exhibit 10.5 to
US Airways Groups Current Report on Form 8-K
filed on October 3, 2005).
10
.69
Employment Agreement, dated as of September 27, 2005,
between US Airways Group and Alan W. Crellin (incorporated
by reference to Exhibit 10.3 to US Airways
Groups Current Report on Form 8-K filed on
October 3, 2005).
10
.70
Employment Agreement, dated as of September 27, 2005,
between US Airways Group and Jerrold A. Glass (incorporated
by reference to Exhibit 10.4 to US Airways
Groups Current Report on Form 8-K filed on
October 3, 2005).
10
.71
Agreement between US Airways and its Senior Vice
President Marketing with respect to certain
employment arrangements effective July 25, 2002
(incorporated by reference to Exhibit 10.18 to Amendment
No. 1 to US Airways Annual Report on
Form 10-K for the year ended December 31, 2003).
10
.72
US Airways Group 2005 Equity Incentive Plan (incorporated
by reference to Exhibit 10.1 to US Airways
Groups Current Report on Form 8-K filed on
October 3, 2005).
10
.73
Stock Unit Award Agreement, dated as of September 27, 2005,
between US Airways Group and W. Douglas Parker
(incorporated by reference to Exhibit 10.6 to
US Airways Groups Current Report on Form 8-K
filed on October 3, 2005).
10
.74
Form of Stock Unit Agreement under US Airways Groups
2005 Equity Incentive Plan.
10
.75
Form of Stock Appreciation Rights Award Agreement under
US Airways Groups 2005 Equity Incentive Plan.
10
.76
Form of Indemnity Agreement (incorporated by reference to
Exhibit 10.1 to US Airways Groups Current Report
on Form 8-K filed on October 6, 2005).
10
.77
Amended and Restated America West 1994 Incentive Equity Plan
(incorporated by reference to Exhibit 10.21 to AWAs
Quarterly Report on Form 10-Q for the quarter ended
March 31, 2001).
10
.78
2002 Incentive Equity Plan (incorporated by reference to
Appendix A to America West Holdings Proxy Statement on Schedule
14A filed on April 17, 2002).
10
.79
Performance-Based Award Plan (as Amended and Restated effective
November 2, 2005).
10
.80
Form of Offer Letter (incorporated by reference to
Exhibit 10.47 to America West Holdings and AWAs
Annual Report on Form 10-K for the year ended
December 31, 2004).
279
Exhibit
Number
Description
10
.81
Form of Change of Control and Severance Benefit Agreement for
Vice Presidents (incorporated by reference to Exhibit 10.48 to
America West Holdings and AWAs Annual Report on
Form 10-K for the year ended December 31, 2004).
10
.82
Form of Change of Control and Severance Benefit Agreement for
Senior Vice Presidents (incorporated by reference to
Exhibit 10.49 to America West Holdings and America
West Airlines, Inc.s Annual Report on Form 10-K for
the year ended December 31, 2004).
10
.83
Summary of Director Compensation and Benefits.
10
.84
Form of Letter Agreement for Directors Travel
(incorporated by reference to Exhibit 10.32 to America West
America West Holdings and AWAs Annual Report on
Form 10-K for the period ended December 31,
2003).
10
.85
Employment Agreement, dated February 24, 2004, by and among
America West Holdings Corporation, AWA and W. Douglas Parker
(incorporated by reference to Exhibit 10.53 to America West
Holdings and America West Airlines, Inc.s Annual
Report on Form 10-K for the year ended December 31,
2004).
10
.86
Annual Incentive Bonus Plan (incorporated by reference to
Exhibit 10.1 to America West Holdings and America
West Airlines, Inc.s Quarterly Report for the quarter
ending March 31, 2005).
10
.87
US Airways Group, Inc. Incentive Compensation Plan
(incorporated by reference to Exhibit 10.1 to
US Airways Groups Current Report on Form 8-K
filed January 23, 2006).
10
.88
Investment Agreement, dated as of March 15, 2005 among
Wexford Capital LLC, Republic US Airways America West
Holdings Inc., US Airways Group and US Airways
(incorporated by reference to Exhibit 10.3 to
US Airways Groups Quarterly Report on
Form 10-Q/A for the quarter ended March 31, 2005).*
10
.89
Investment Agreement, dated as of May 19, 2005, by and
among Peninsula Investment Partners, L.P., US Airways,
US Airways Group, Inc. and its successors and America West
Holdings Corporation (incorporated by reference to
Exhibit 10.3 to the Current Report on Form 8-K filed
by America West Holdings Corporation on May 25, 2005).
10
.90
Investment Agreement, dated as of May 19, 2005, by and
among ACE Aviation America West Holdings, Inc., US Airways,
US Airways Group, Inc. and its successors and America West
Holdings Corporation (incorporated by reference to
Exhibit 10.4 to the Current Report on Form 8-K filed
by America West Holdings Corporation on May 25, 2005).
10
.91
Investment Agreement, dated as of May 19, 2005, by and
among Par Investment Partners, L.P., US Airways,
US Airways Group, Inc. and its successors and America West
Holdings Corporation (incorporated by reference to
Exhibit 10.2 to the Current Report on Form 8-K filed
by America West Holdings Corporation on May 25, 2005).
10
.92
Investment Agreement, dated as of May 19, 2005, by and
among Eastshore Aviation, LLC, US Airways, US Airways
Group, Inc. and its successors and America West Holdings
Corporation (incorporated by reference to Exhibit 10.1 to
the Current Report on Form 8-K filed by America West
Holdings Corporation on May 25, 2005).
10
.93
Investment Agreement, dated May 27, 2005, by and among
Wellington Investment Management Company, LLP, America West
Holdings Corporation and US Airways Group (incorporated by
reference to Exhibit 10.1 to the Current Report on
Form 8-K filed by America West Holdings Corporation on
June 2, 2005).
10
.94
Investment Agreement, dated July 7, 2005, among Tudor
Proprietary Trading, L.L.C. and certain investors listed on
Schedule 1 thereto for which Tudor Investment Corp. acts as
investment advisor, US Airways Group and America West
Holdings Corporation (incorporated by reference to
Exhibit 10.1 to the Current Report on Form 8-K filed
by America West Holdings Corporation on July 13, 2005).
10
.95
Voting Agreement, dated May 19, 2005, among TPG Partners,
L.P., TPG Parallel I, L.P., Air Partners II, L.P. and
US Airways Group (incorporated by reference to
Exhibit 2.1 to the Current Report on Form 8-K filed by
America West Holdings Corporation on May 25, 2005).
280
Exhibit
Number
Description
10
.96
Letter Agreement dated September 16, 2005 by and among
US Airways Group, America West Holdings Corporation,
Barbell Acquisition Corp., ACE Aviation America West Holdings,
Inc., Eastshore Aviation, LLC, Par Investment Partners, L.P.,
Peninsula Investment Partners, L.P. and Wellington Management
Company, LLP.
10
.97
Junior Secured Debtor-in-Possession Credit Facility Agreement
dated as of February 18, 2005 among US Airways, as
Debtor and Debtor-in-Possession under Chapter 11 of the
Bankruptcy Code as Borrower, US Airways Group, PSA
Airlines, Inc., and Material Services, Inc., Debtors and
Debtors-in-Possession under Chapter 11 of the Bankruptcy
Code as Guarantors, and Eastshore Aviation, LLC, as Lender
(incorporated by reference to Exhibit 99 to US Airways
Groups Current Report on Form 8-K dated
February 28, 2005).
10
.98
Amendment No. 1 dated as of May 19, 2005 to Junior
Secured Debtor-in-Possession Credit Facility Agreement dated as
of February 18, 2005 among US Airways, as Debtor and
Debtor-in-Possession under Chapter 11 of the Bankruptcy
Code as Borrower, US Airways Group, PSA Airlines, Inc., and
Material Services, Inc., Debtors and Debtors-in-Possession under
Chapter 11 of the Bankruptcy Code as Guarantors, and
Eastshore Aviation, LLC, as Lender (incorporated by reference to
Exhibit 10.105 to US Airways Groups Registration
Statement on Form S-4 filed with the SEC on June 28,
2005) (Registration No. 333-126162).
10
.99
Amended and Restated Participation Agreement, dated as of
July 7, 2005, between America West Holdings Corporation and
Par Investment Partners, L.P. (incorporated by reference to
Exhibit 10.1 to the Current Report on Form 8-K filed
by America West Holdings Corporation on July 13, 2005).
10
.100
Amended and Restated Participation Agreement, dated as of
July 7, 2005, between America West Holdings Corporation and
Peninsula Investment Partners, L.P. (incorporated by reference
to Exhibit 10.1 to the Current Report on Form 8-K
filed by America West Holdings Corporation on July 13,
2005).
10
.101
Assignment and First Amendment to America West Co-Branded Card
Agreement, dated as of August 8, 2005, between AWA,
US Airways Group and Juniper Bank. (incorporated by
reference to Exhibit 10.110 to Amendment No. 2 to the
Registration Statement on Form S-4 filed by US Airways
Group on August 10, 2005) (Registration
No. 333-126162).*
10
.102
First Amendment to Merchant Services Bankcard Agreement, dated
as of August 8, 2005, among AWA, JPMorgan Chase Bank, N.A.,
and Chase Merchant Services, L.L.C. (incorporated by reference
to Exhibit 10.111 to Amendment No. 2 to the
Registration Statement on Form S-4 filed by US Airways
Group on August 10, 2005) (Registration
No. 333-126162).*
10
.103
America West Co-Branded Card Agreement, dated as of
January 25, 2005, between AWA and Juniper Bank.
(incorporated by reference to Exhibit 10.112 to Amendment
No. 2 to the Registration Statement on Form S-4 filed
by US Airways Group on August 10, 2005) (Registration
No. 333-126162).*
10
.104
Merchant Services Bankcard Agreement, dated as of April 16,
2003, between AWA, The Leisure Company, JPMorgan Chase Bank, and
Chase Merchant Services L.L.C. (incorporated by reference to
Exhibit 10.113 to Amendment No. 2 to the Registration
Statement on Form S-4 filed by US Airways Group on
August 10, 2005) (Registration No. 333-126162).*
10
.105
Airport Use Agreement, dated as of July 1, 1989, among the
City of Phoenix, The Industrial Development Authority of the
City of Phoenix, Arizona and AWA (Airport Use
Agreement). (incorporated by reference to
Exhibit 10-(D)(9) to AWAs Annual Report on
Form 10-K for the year ended December 31, 1989).
10
.106
First Amendment to Airport Use Agreement, dated as of
August 1, 1990 (incorporated by reference to
Exhibit 10-(D)(9) to AWAs Quarterly Report on
Form 10-Q for the quarter ended September 30, 1990).
10
.107
Management Rights Agreement, dated as of August 25, 1994,
between TPG Partners L.P., TPG Genpar, L.P. and AWA
(incorporated by reference to Exhibit 10.47 to AWAs
Registration Statement on Form S-1 dated August 23,
1994, as amended) (Registration No. 333-54243).
281
Exhibit
Number
Description
10
.108
Financing Agreement, dated as of April 1, 1998, between the
Industrial Development Authority of the City of Phoenix, Arizona
and AWA (incorporated by reference to Exhibit 10.29 to
America West Holdings Quarterly Report on Form 10-Q
for the quarter ended June 30, 1998).
10
.109
Indenture of Trust, dated as of April 1, 1998, from the
Industrial Development Authority of the City of Phoenix, Arizona
to Norwest Bank, Arizona N.A. (incorporated by reference to
Exhibit 10.30 to America West Holdings Quarterly
Report on Form 10-Q for the quarter ended June 30,
1998).
10
.110
Second Amendment to Airport Use Agreement, dated as of
August 25, 1995 (incorporated by reference to
Exhibit 10.34 to AWAs Annual Report on Form 10-K
for the year ended December 31, 1998).
10
.111
Indenture of Trust, dated as of June 1, 1999, from The
Industrial Development Authority of the City of Phoenix, Arizona
to Bank One Arizona, N.A. (incorporated by reference to
Exhibit 10.35 to AWAs Quarterly Report on
Form 10-Q for the quarter ended June 30, 1999).
10
.112
Airbus A320/A319 Purchase Agreement, dated as of
September 12, 1997, between AVSA S.A.R.L and AWA, including
Letter Agreements Nos. 1-10 (incorporated by reference to
Exhibit 10.26 to America West Holdings Quarterly
Report on Form 10-Q for the quarter ended
September 30, 1997).*
10
.113
Amendment No. 1, dated as of March 31, 1998, to the
Airbus A320/A319 Purchase Agreement, dated as of
September 12, 1997, between AVSA S.A.R.L. and AWA
(incorporated by reference to Exhibit 10.28 to America West
Holdings Quarterly Report on Form 10-Q for the
quarter ended June 30, 1998).*
10
.114
Amendment No. 2, dated as of December 9, 1998, to the
Airbus A320/A319 Purchase Agreement, dated as of
September 12, 1997, between AVSA S.A.R.L. and AWA
(incorporated by reference to Exhibit 10.32 to AWAs
Annual Report on Form 10-K for the year ended
December 31, 1998).*
10
.115
Amendment No. 3, dated as of October 14, 1999, to the
Airbus A320/319 Purchase Agreement, dated as of
September 12, 1997, between AVSA, S.A.R.L. and AWA,
including Letter Agreement Nos. 1-8 thereto (incorporated
by reference to Exhibit 10.36 to America West
Holdings and AWAs Annual Report on Form 10-K
for the year ended December 31, 1999).*
10
.116
Amendment No. 4, dated as of July 1, 2000, to the
Airbus A320/319 Purchase Agreement, dated as of
September 12, 1997, between AVSA S.A.R.L. and AWA
(incorporated by reference to Exhibit 10.38 to AWAs
Quarterly Report on Form 10-Q for the quarter ended
September 30, 2000).*
10
.117
Amendment No. 5, dated as of October 12, 2000, to the
Airbus A320/319 Purchase Agreement, dated as of
September 12, 1997, between AVSA S.A.R.L. and AWA
(incorporated by reference to Exhibit 10.39 to AWAs
Quarterly Report on Form 10-Q for the quarter ended
September 30, 2000).*
10
.118
Amendment No. 7, dated July 30, 2004, to the A319/A320
Purchase Agreement dated September 12, 1997, between AVSA,
S.A.R.L. and AWA and Letter Agreement Nos. 2-8
(incorporated by reference to Exhibit 10.15 to America West
Holdings and AWAs Quarterly Report on Form 10-Q
for the quarter ended September 30, 2004).*
10
.119
Amendment No. 9, dated as of September 27, 2005, to
the Airbus A320/319 Purchase Agreement, dated as of
September 12, 1997, between AWA and AVSA S.A.R.L Letter
Agreement, dated as of September 27, 2005, between
US Airways Group and Bruce R. Lakefield (incorporated by
reference to Exhibit 10.8 to US Airways Groups
Quarterly Report on Form 10-Q for the quarter ended
September 30, 2005).*
10
.120
Amendment No. 10, dated as of September 27, 2005, to
the Airbus A320/319 Purchase Agreement, dated as of
September 12, 1997, between AWA and AVSA S.A.R.L. (Letter
Agreement, dated as of September 27, 2005, between
US Airways Group and Bruce R. Lakefield (incorporated by
reference to Exhibit 10.9 to US Airways Groups
Quarterly Report on Form 10-Q for the quarter ended
September 30, 2005).*
282
Exhibit
Number
Description
10
.121
Amended and Restated V2500 Support Contract, dated as of
October 7, 1998, between AWA and IAE International Aero
Engines AG and Side Letters Nos. 1 and 2 thereto
(incorporated by reference to Exhibit 10.20 to America West
Holdings and AWAs Annual Report on Form 10-K
for the year ended December 31, 1998).*
10
.122
Side Letter No. 15, dated May 26, 2004, to the Amended
and Restated V2500 Support Contract, dated October 7, 1998,
between AWA and IAE International Aero Engines AG
(incorporated by reference to Exhibit 10.16 to America West
Holdings and AWAs Quarterly Report on Form 10-Q
for the quarter ended September 30, 2004).*
10
.123
Purchase Agreement, dated as of December 27, 2000, between
America West Holdings, AWA and Continental Airlines, Inc.,
including Letter Agreement (incorporated by reference to
Exhibit 10.40 to America West Holdings and AWAs
Annual Report on Form 10-K for the year ended
December 31, 2000).
10
.124
Priority Distribution Agreement, dated as of August 25,
1994, between TPG Partners, L.P., TPG Parallel I, L.P., Air
Partners II, L.P., and Continental Airlines, Inc.
(incorporated by reference to Exhibit 3 to
Schedule 13D filed by TPG Partners, L.P. on
September 6, 1994).
10
.125
Disposition and Redevelopment Agreement, dated as of
February 5, 2001, between AWA and the City of Phoenix, AZ
(incorporated by reference to Exhibit 10.44 to AWAs
Quarterly Report on Form 10-Q for the quarter ended
March 31, 2001).
10
.126
Unsubordinated Ground Lease, dated as of February 5, 2001,
between AWA and the City of Phoenix, AZ (incorporated by
reference to Exhibit 10.45 to AWAs Quarterly Report
on Form 10-Q for the quarter ended March 31, 2001).*
10
.127
Code Share and Revenue Sharing Agreement, dated as of
March 20, 2001, between AWA and Mesa Airlines, Inc.
(incorporated by reference to Exhibit 10.46 to AWAs
Quarterly Report on Form 10-Q for the quarter ended
March 31, 2001).*
10
.128
$429,000,000 Loan Agreement, dated as of January 18, 2002,
among AWA, Citibank, N.A., as Agent, KPMG Consulting, Inc., as
Loan Administrator, Citibank, N.A., as Initial Lender and the
Air Transportation Stabilization Board (incorporated by
reference to Exhibit 10.51 to America West Holdings
and AWAs Current Report on Form 8-K dated
January 31, 2002).*
10
.129
Undertaking (regarding restrictions on transfer of Class A
Common Stock), dated as of January 18, 2002, among America
West Holdings Corporation, TPG Partners, L.P., TPG
Parallel I, L.P. and Air Partners II, L.P. for the
benefit of the Air Transportation Stabilization Board
(incorporated by reference to Exhibit 10.53 to America West
Holdings and AWAs Current Report on Form 8-K
dated January 31, 2002).
10
.130
Second Amendment to Code Share and Revenue Sharing Agreement, as
amended, dated as of October 24, 2002, by and among AWA,
Mesa Airlines, Inc., Freedom Airlines, Inc. and Air Midwest,
Inc. (incorporated by reference to Exhibit 10.56 of America
West Holdings and AWAs Annual Report on
Form 10-K for the year ended December 31, 2002).
10
.131
Third Amendment to Code Share and Revenue Sharing Agreement
dated as of January 29, 2003 among AWA, Mesa Airlines, Inc.
and Freedom Airlines, Inc. (incorporated by reference to
Exhibit 10.1 to America West Holdings and AWAs
Quarterly Report on Form 10-Q for the quarter ended
September 30, 2003).
10
.132
Fourth Amendment to Code Share and Revenue Sharing Agreement and
Release dated as of September 5, 2003 among AWA, Mesa
Airlines, Inc., Air Midwest, Inc. and Freedom Airlines, Inc.
(incorporated by reference to Exhibit 10.2 to America West
Holdings and AWAs Amendment No. 1 to Quarterly
Report on Form 10-Q for the quarter ended
September 30, 2003).*
10
.133
Loan Agreement [Engines], dated as of September 3, 2004,
among AWA, GECC, as administrative agent, original Series A
lender and original Series B lender, Wells Fargo Bank
Northwest, National Association (Wells Fargo), as
security trustee and the lenders from time to time party thereto
(incorporated by reference to Exhibit 10.1 to America West
Holdings and AWAs Quarterly Report on Form 10-Q
for the quarter ended September 30, 2004).
283
Exhibit
Number
Description
10
.134
Engine Mortgage and Security Agreement, dated as of
September 3, 2004, between AWA and Wells Fargo
(incorporated by reference to Exhibit 10.2 to America West
Holdings and AWAs Quarterly Report on Form 10-Q
for the quarter ended September 30, 2004).
10
.135
Mortgage and Security Agreement Supplement No. 1, dated
September 10, 2004, of AWA (incorporated by reference to
Exhibit 10.3 to America West Holdings and AWAs
Quarterly Report on Form 10-Q for the quarter ended
September 30, 2004).
10
.136
Subordinated Engine Mortgage and Security Agreement, dated as of
September 3, 2004, between AWA and Wells Fargo
(incorporated by reference to Exhibit 10.4 to America West
Holdings and AWAs Quarterly Report on Form 10-Q
for the quarter ended September 30, 2004).
10
.137
Subordinated Mortgage and Security Agreement Supplement
No. 1, dated September 10, 2004, of AWA (incorporated
by reference to Exhibit 10.5 to America West Holdings
and AWAs Quarterly Report on Form 10-Q for the
quarter ended September 30, 2004).
10
.138
Security Trustee Agreement [Engines], dated as of
September 3, 2004, among Wells Fargo, as security trustee
and the beneficiaries named therein (incorporated by reference
to Exhibit 10.6 to America West Holdings and
AWAs Quarterly Report on Form 10-Q for the quarter
ended September 30, 2004).
10
.139
Payment and Indemnity Agreement [Engines], dated as of
September 3, 2004, among AWA, certain beneficiaries listed
on Schedule 1 and Wells Fargo (incorporated by reference to
Exhibit 10.7 to America West Holdings and AWAs
Quarterly Report on Form 10-Q for the quarter ended
September 30, 2004).
10
.140
Restructure Letter Agreement [Engines], dated as of
September 3, 2004, among AWA and GECC (incorporated by
reference to Exhibit 10.8 to America West Holdings
and AWAs Quarterly Report on Form 10-Q for the
quarter ended September 30, 2004).
10
.141
Loan Agreement [Spare Parts], dated as of September 3,
2004, among AWA, GECC, as administrative agent, original
Series A lender and original Series B lender, Wells
Fargo, as security trustee and the lenders from time to time
party thereto (incorporated by reference to Exhibit 10.9 to
America West Holdings and AWAs Quarterly Report on
Form 10-Q for the quarter ended September 30, 2004).
10
.142
Spare Parts Mortgage and Security Agreement, dated as of
September 3, 2004, between AWA and Wells Fargo
(incorporated by reference to Exhibit 10.10 to America West
Holdings and AWAs Quarterly Report on Form 10-Q
for the quarter ended September 30, 2004).
10
.143
Subordinated Spare Parts Mortgage and Security Agreement, dated
as of September 3, 2004, between AWA and Wells Fargo
(incorporated by reference to Exhibit 10.11 to America West
Holdings and AWAs Quarterly Report on Form 10-Q
for the quarter ended September 30, 2004).
10
.144
Security Trustee Agreement [Spare Parts], dated as of
September 3, 2004, among Wells Fargo, as security trustee
and the beneficiaries named therein (incorporated by reference
to Exhibit 10.12 to America West Holdings and
AWAs Quarterly Report on Form 10-Q for the quarter
ended September 30, 2004).
10
.145
Payment and Indemnity Agreement [Spare Parts], dated as of
September 3, 2004, among AWA, certain beneficiaries listed
on Schedule 1 and Wells Fargo (incorporated by reference to
Exhibit 10.13 to America West Holdings and AWAs
Quarterly Report on Form 10-Q for the quarter ended
September 30, 2004).
10
.146
Restructure Letter Agreement [Spare Parts], dated as of
September 3, 2004, among AWA and GECC (incorporated by
reference to Exhibit 10.14 to America West Holdings
and AWAs Quarterly Report on Form 10-Q for the
quarter ended September 30, 2004).
10
.147
$30,790,000 Senior Secured Term Loan Agreement, dated
December 23, 2004, among FTCHP LLC, as Borrower, AWA, as
Guarantor, Heritage Bank, SSB, as Administrative Agent and
Citibank, N.A. (and other lenders named therein) as Lenders
(incorporated by reference to Exhibit 10.41 to America West
Holdings and AWAs Annual Report on Form 10-K
for the year ended December 31, 2004).
284
Exhibit
Number
Description
10
.148
Senior Secured Discount Note, dated December 23, 2004,
issued by FTCHP LLC (incorporated by reference to
Exhibit 10.42 to America West Holdings and AWAs
Annual Report on Form 10-K for the year ended
December 31, 2004).
10
.149
Unconditional Guaranty Agreement, dated December 23, 2004,
by AWA in favor of Citibank, N.A. (incorporated by reference to
Exhibit 10.43 to America West Holdings and AWAs
Annual Report on Form 10-K for the year ended
December 31, 2004).
10
.150
Advisory Agreement, dated May 19, 2005, between America
West America West Holdings Corporation and TPG Advisory, Inc.
(incorporated by reference to Exhibit 10.1 to America West
Holdings Current Report on Form 8-K filed on
May 25, 2005).
10
.151
Amended and Restated Loan Agreement, dated as of
September 27, 2005, by and among US Airways,
US Airways Group, the affiliates of US Airways party
thereto, the lenders from time to time party thereto, Citibank,
N.A., as Agent, Citicorp North America, Inc., as Govco
Administrative Agent, Wilmington Trust Company, as Collateral
Agent, and the Air Transportation Stabilization Board
(incorporated by reference to Exhibit 10.1 to
US Airways Groups Quarterly Report on Form 10-Q
for the quarter ended September 30, 2005).
10
.152
Amended and Restated Loan Agreement, dated as of
September 27, 2005, by and among AWA, US Airways
Group, the other affiliates of AWA party thereto, the several
lenders from time to time party thereto, Citibank, N.A., as
Agent, Wilmington Trust Company, as Collateral Agent, and the
Air Transportation Stabilization Board (incorporated by
reference to Exhibit 10.2 to US Airways Groups
Quarterly Report on Form 10-Q for the quarter ended
September 30, 2005).
10
.153
Loan Agreement, dated as of September 27, 2005, by and
among US Airways, AWA, US Airways Group, as guarantor,
Airbus Financial Services, as Initial Lender and
Loan Agent, and Wells Fargo Bank Northwest, National
Association, as Collateral Agent, with commitments in an initial
aggregate amount of $161,000,000 (incorporated by reference to
Exhibit 10.3 to US Airways Groups Quarterly
Report on Form 10-Q for the quarter ended
September 30, 2005).
10
.154
Loan Agreement, dated as of September 27, 2005, by and
among US Airways, AWA, US Airways Group, as guarantor,
Airbus Financial Services, as Initial Lender and
Loan Agent, and Wells Fargo Bank Northwest, National
Association, as Collateral Agent, with commitments in an initial
aggregate amount of $89,000,000 (incorporated by reference to
Exhibit 10.4 to US Airways Groups Quarterly
Report on Form 10-Q for the quarter ended
September 30, 2005).
10
.155
Purchase Agreement, dated as of September 27, 2005, between
US Airways Group and Merrill Lynch, Pierce,
Fenner & Smith Incorporated (incorporated by reference
to Exhibit 10.1 to US Airways Groups Current
Report on Form 8-K filed on October 3, 2005).
10
.156
Stockholders Agreement, dated as of September 27,
2005, among US Airways Group and ACE Aviation America West
Holdings Inc. (incorporated by reference to Exhibit 10.1 to
US Airways Groups Current Report on Form 8-K
filed on October 3, 2005).
10
.157
Stockholders Agreement, dated as of September 27,
2005, among US Airways Group and Eastshore Aviation LLC
(incorporated by reference to Exhibit 10.2 to
US Airways Groups Current Report on Form 8-K
filed on October 3, 2005).
10
.158
Stockholders Agreement, dated as of September 27,
2005, among US Airways Group and Par Investment Partners,
L.P. (incorporated by reference to Exhibit 10.3 to
US Airways Groups Current Report on Form 8-K
filed on October 3, 2005).
10
.159
Stockholders Agreement, dated as of September 27,
2005, among US Airways Group and Peninsula Investment
Partners, L.P. (incorporated by reference to Exhibit 10.4
to US Airways Groups Current Report on Form 8-K
filed on October 3, 2005).
10
.160
Stockholders Agreement, dated as of September 27,
2005, among US Airways Group and the US Airways Group
of investors named therein under the management of Wellington
Management Company, LLP (incorporated by reference to
Exhibit 10.5 to US Airways Groups Current Report
on Form 8-K filed on October 3, 2005).
285
Exhibit
Number
Description
10
.161
Stockholders Agreement, dated as of September 27,
2005, among US Airways Group, Tudor Proprietary Trading
L.L.C. and the US Airways Group of investors named therein
for which Tudor Investment Corp. acts as investment advisor
(incorporated by reference to Exhibit 10.6 to
US Airways Groups Current Report on Form 8-K
filed on October 3, 2005).
18
.1
Letter from KPMG LLP regarding change in accounting
principle.
21
.1
Subsidiaries of US Airways Group (incorporated by reference
to Exhibit 21.1 to US Airways Groups
Registration Statement on Form S-1/A filed on
September 27, 2005) (Registration No. 333-126226).
23
.1
Consents of KPMG LLP, Independent Registered Public
Accounting Firm of US Airways Group.
24
.1
Powers of Attorney, pursuant to which amendments to this Annual
Report on Form 10-K may be filed, is included on the
signature pages of this Annual Report on Form 10-K
31
.1
Certification of US Airways Groups Chief Executive
Officer pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934, as amended.
31
.2
Certification of US Airways Groups Chief Financial
Officer pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934, as amended.
31
.3
Certification of AWAs Chief Executive Officer pursuant to
Rule 13a-14(a) under the Securities Exchange Act of 1934,
as amended.
31
.4
Certification of AWAs Chief Financial Officer pursuant to
Rule 13a-14(a) under the Securities Exchange Act of 1934,
as amended.
31
.5
Certification of US Airways Chief Executive Officer
pursuant to Rule 13a-14(a) under the Securities Exchange
Act of 1934, as amended.
31
.6
Certification of US Airways Chief Financial Officer
pursuant to Rule 13a-14(a) under the Securities Exchange
Act of 1934, as amended.
32
.1
Certification of US Airways Groups Chief Executive
Officer and Chief Financial Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
32
.2
Certification of AWAs Chief Executive Officer and Chief
Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
32
.3
Certification of US Airways Chief Executive Officer
and Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
* | Portions of this exhibit have been omitted under a request for confidential treatment and filed separately with the United States Securities and Exchange Commission. |
| Management contract or compensatory plan or arrangement. |
286
US AIRWAYS GROUP, INC. |
By: | /s/ W. Douglas Parker |
|
|
W. Douglas Parker | |
Chairman, President and Chief Executive Officer |
AMERICA WEST AIRLINES, INC. |
By: | /s/ W. Douglas Parker |
|
|
W. Douglas Parker | |
Chairman, President and Chief Executive Officer |
US AIRWAYS, INC. |
By: | /s/ W. Douglas Parker |
|
|
W. Douglas Parker | |
Chairman, President and Chief Executive Officer |
287
Signature | Title | Date | ||||
/s/ W. Douglas Parker
W. Douglas Parker |
Chairman, President and Chief Executive Officer
(Principal Executive Officer) |
March 14, 2006 | ||||
/s/ Derek J. Kerr
Derek J. Kerr |
Senior Vice President and Chief Financial Officer (Principal
Financial and Accounting Officer) |
March 14, 2006 | ||||
/s/ Bruce R. Lakefield
Bruce R. Lakefield |
Director | March 14, 2006 | ||||
/s/ Richard Bartlett
Richard Bartlett |
Director | March 14, 2006 | ||||
/s/ Herbert M. Baum
Herbert M. Baum |
Director | March 14, 2006 | ||||
/s/ Richard C. Kraemer
Richard C. Kraemer |
Director | March 14, 2006 | ||||
/s/ Cheryl G. Krongard
Cheryl G. Krongard |
Director | March 14, 2006 | ||||
/s/ Robert A. Milton
Robert A. Milton |
Director | March 14, 2006 | ||||
/s/ Hans Mirka
Hans Mirka |
Director | March 14, 2006 | ||||
/s/ Denise M. OLeary
Denise M. OLeary |
Director | March 14, 2006 | ||||
/s/ George M. Philip
George M. Philip |
Director | March 14, 2006 | ||||
/s/ Richard P. Schifter
Richard P. Schifter |
Director | March 14, 2006 | ||||
/s/ Edward L. Shapiro
Edward L. Shapiro |
Director | March 14, 2006 | ||||
/s/ J. Steven Whisler
J. Steven Whisler |
Director | March 14, 2006 |
288
Exhibit
Number
Description
10
.74
Form of Stock Unit Agreement under US Airways Groups
2005 Equity Incentive Plan.
10
.75
Form of Stock Appreciation Rights Award Agreement under
US Airways Groups 2005 Equity Incentive Plan.
10
.79
Performance-Based Award Plan (as Amended and Restated effective
November 2, 2005).
10
.83
Summary of Director Compensation and Benefits.
18
.1
Letter from KPMG LLP regarding change in accounting principle.
23
.1
Consents of KPMG LLP, Independent Registered Public Accounting
Firm of US Airways Group.
31
.1
Certification of US Airways Groups Chief Executive
Officer pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934, as amended.
31
.2
Certification of US Airways Groups Chief Financial
Officer pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934, as amended.
31
.3
Certification of AWAs Chief Executive Officer pursuant to
Rule 13a-14(a) under the Securities Exchange Act of 1934,
as amended.
31
.4
Certification of AWAs Chief Financial Officer pursuant to
Rule 13a-14(a) under the Securities Exchange Act of 1934,
as amended.
31
.5
Certification of US Airways Chief Executive Officer
pursuant to Rule 13a-14(a) under the Securities Exchange
Act of 1934, as amended.
31
.6
Certification of US Airways Chief Financial Officer
pursuant to Rule 13a-14(a) under the Securities Exchange
Act of 1934, as amended.
32
.1
Certification of US Airways Groups Chief Executive
Officer and Chief Financial Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
32
.2
Certification of AWAs Chief Executive Officer and Chief
Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
32
.3
Certification of Airways Chief Executive Officer and Chief
Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
Management contract or compensatory plan or arrangement.
| Focus management efforts on the creation of long-term stockholder value. | |
| Encourage strategic decision-making by providing rewards for the long-term achievement of Company goals. |
Page 1
Officer Level | Threshold | Target | Maximum | |||
CEO
|
54% | 125% | 200% | |||
EVP
|
43% | 100% | 175% | |||
SVP
|
30% | 70% | 140% | |||
VP
|
20% | 45% | 90% |
A) | Performance Cycles and Transition Performance Cycles | |
A performance cycle, over which TSR is measured, is the three-year period beginning January 1 of a given year and ending December 31 of the second following year (each a Performance Cycle). The Committee, in its sole discretion, may authorize Performance Cycles, and it is anticipated, although not assured, that a three-year Performance Cycle will begin each January 1. | ||
All officers of the Company (or an Affiliate) otherwise eligible to participate in the Plan will be eligible to participate in a special Performance Cycle commencing September 27, 2005, and ending December 31, 2008. |
Page 2
In addition to the Performance Cycles described in the preceding paragraphs, there will be two transition performance cycles over which TSR is measured (each a Transition Performance Cycle). Those officers who were not entitled to participate in Performance Cycles beginning before September 27, 2005, will be eligible to participate in two Transition Performance Cycles beginning on September 27, 2005, and ending on December 31, 2006, and December 31, 2007, respectively. | ||
B) | Peer Group and Award Payout Percentages | |
The competitive peer group consists of the following thirteen companies: AirTran, Alaska, American, ATA Holdings, Continental, Delta, Frontier, Hawaiian, JetBlue, Midwest Express, Northwest, Southwest, and United. Such competitive peer group is subject to modification, in the Committees sole discretion, to take account of unforeseen events such as mergers, dispositions, bankruptcies and other significant business changes. | ||
Award payout percentages will be based on the TSR of the Company relative to the TSRs of competitive peer group companies, as follows: |
Company TSR | Payout as a % | |||||||||||||
Relative Rank | of Base Salary | |||||||||||||
VP | SVP | EVP | CEO | |||||||||||
1 of 14
|
90 | % | 140 | % | 175 | % | 200 | % | Maximum | |||||
2 of 14
|
82.5 | % | 128.33 | % | 162.5 | % | 187.5 | % | ||||||
3 of 14
|
75 | % | 116.67 | % | 150 | % | 175 | % | ||||||
4 of 14
|
67.5 | % | 105 | % | 137.5 | % | 162.5 | % | ||||||
5 of 14
|
60 | % | 93.33 | % | 125 | % | 150 | % | ||||||
6 of 14
|
52.5 | % | 81.67 | % | 112.5 | % | 137.5 | % | ||||||
7 of 14
|
45 | % | 70 | % | 100 | % | 125 | % | Target | |||||
8 of 14
|
38.75 | % | 60 | % | 86 | % | 108 | % | ||||||
9 of 14
|
32.5 | % | 50 | % | 71 | % | 89 | % | ||||||
10 of 14
|
26.25 | % | 40 | % | 57 | % | 71 | % | ||||||
11 of 14
|
20 | % | 30 | % | 43 | % | 54 | % | Threshold | |||||
12 of 14
|
0 | % | 0 | % | 0 | % | 0 | % | ||||||
13 of 14
|
0 | % | 0 | % | 0 | % | 0 | % | ||||||
14 of 14
|
0 | % | 0 | % | 0 | % | 0 | % |
Page 3
Page 4
Page 5
America West Airlines, Inc.:
1. | I have reviewed this Annual Report on Form 10-K of US Airways Group, Inc.; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ W. Douglas Parker | ||||
Name: | W. Douglas Parker | |||
Title: | Chief Executive Officer | |||
1. | I have reviewed this Annual Report on Form 10-K of US Airways Group, Inc.; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Derek J. Kerr | ||||
Name: | Derek J. Kerr | |||
Title: | Chief Financial Officer | |||
1. | I have reviewed this Annual Report on Form 10-K of America West Airlines, Inc.; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | [paragraph omitted pursuant to SEC Release Nos. 33-8238 and 34-47986] | ||
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ W. Douglas Parker | ||||
Name: | W. Douglas Parker | |||
Title: | Chief Executive Officer | |||
1. | I have reviewed this Annual Report on Form 10-K of America West Airlines, Inc.; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | [paragraph omitted pursuant to SEC Release Nos. 33-8238 and 34-47986] | ||
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Derek J. Kerr | ||||
Name: | Derek J. Kerr | |||
Title: | Chief Financial Officer | |||
1. | I have reviewed this Annual Report on Form 10-K of US Airways, Inc.; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ W. Douglas Parker | ||||
Name: | W. Douglas Parker | |||
Title: | Chief Executive Officer | |||
1. | I have reviewed this Annual Report on Form 10-K of US Airways, Inc.; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Derek J. Kerr | ||||
Name: | Derek J. Kerr | |||
Title: | Chief Financial Officer | |||
/s/ W. Douglas Parker | ||||
Name:
|
W. Douglas Parker | |||
Title:
|
Chief Executive Officer | |||
Date:
|
March 14, 2006 | |||
|
||||
/s/ Derek J. Kerr | ||||
Name:
|
Derek J. Kerr | |||
Title:
|
Chief Financial Officer | |||
Date:
|
March 14, 2006 |
/s/ W. Douglas Parker | ||||
Name:
|
W. Douglas Parker
|
|||
Title:
|
Chief Executive Officer | |||
Date:
|
March 14, 2006 | |||
|
||||
/s/ Derek J. Kerr | ||||
Name:
|
Derek J. Kerr | |||
Title:
|
Chief Financial Officer | |||
Date:
|
March 14, 2006 |
/s/ W. Douglas Parker | ||||
Name:
|
W. Douglas Parker | |||
Title:
|
Chief Executive Officer | |||
Date:
|
March 14, 2006 | |||
|
||||
/s/ Derek J. Kerr | ||||
Name:
|
Derek J. Kerr | |||
Title:
|
Chief Financial Officer | |||
Date:
|
March 14, 2006 |