US Airways 2003 Annual Report Download - page 27

Table of Contents
operations. The Company has targeted mid-year 2004 for implementation of many of the actions needed to achieve the cost reductions. However, since the
plan will require changes in the Company's collective bargaining agreements, there can be no assurance that this date can be met. Failure by the Company to
achieve the above-described competitive cost structure will force it to reexamine its strategic options.
Chapter 11 Reorganization
Background
On August 11, 2002 (Petition Date), US Airways filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code
(Bankruptcy Code) in the United States Bankruptcy Court for the Eastern District of Virginia, Alexandria Division (Bankruptcy Court) (Case No. 02-83985-
SSM). On the same date, US Airways Group, US Airways' parent company, and six of its other subsidiaries (collectively with US Airways, the Filing
Entities) also filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. The reorganization cases were jointly
administered under the caption "In re US Airways Group, Inc., et al., Case No. 02-83984-SSM." During the pendency of the Chapter 11 cases, US Airways
continued to operate its business as a debtor-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of
the Bankruptcy Code and orders of the Bankruptcy Court.
The Filing Entities emerged from bankruptcy protection under the First Amended Joint Plan of Reorganization of US Airways Group, Inc. and
Affiliated Debtors and Debtors-in-Possession, As Modified (Plan of Reorganization), which (i) was confirmed pursuant to an order of the Bankruptcy Court
on March 18, 2003 and (ii) after each of the conditions precedent to consummation was satisfied or waived, became effective on March 31, 2003 (Effective
Date). In accordance with AICPA Statement of Position 90-7, "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code," (SOP 90-7)
the Company adopted fresh-start reporting on the Effective Date.
The Plan of Reorganization constituted a separate plan of reorganization for each of the Filing Entities. In accordance with the Bankruptcy Code, the
Plan of Reorganization divided claims against, and interests in, each of the Filing Entities into classes according to their relative seniority and other criteria
and provided the same treatment for each claim or interest of a particular class unless the holder of a particular claim or interest agreed to a less favorable
treatment of its claim or interest. Among other things, the Plan of Reorganization generally provided for full payment of all allowed administrative and
priority claims, and the distribution of shares (or warrants to purchase shares) of new equity in the reorganized US Airways Group, Inc. (Reorganized US
Airways Group) to the Stabilization Board, the Retirement Systems of Alabama Holdings LLC (RSA), the Company's management and labor unions, General
Electric Capital Corporation and Bank of America, N.A., and to unsecured creditors of the Filing Entities, including the Pension Benefit Guarantee
Corporation (PBGC), in satisfaction of their allowed claims. The distribution to unsecured creditors is currently estimated to have a value of between 0.65
percent and 0.90 percent of total allowed unsecured claims. The ultimate distribution percentage may fall outside of this range. See "Claims Resolution"
below. Persons holding equity in US Airways Group prior to the Effective Date were not entitled to any distribution under the Plan of Reorganization and
their shares of common stock were cancelled. For a complete discussion of the distributions provided for under the Plan of Reorganization, investors should
refer to the Plan of Reorganization confirmed by the Bankruptcy Court on March 18,
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