US Airways 2003 Annual Report Download - page 72

Table of Contents
(b) Reorganization Items
In accordance with SOP 90-7, expenses and income of the Predecessor Company directly incurred or realized as a result of the Chapter 11 filing are
presented separately in the Company's Consolidated Statements of Operations. The major components for the three months ended March 31, 2003 and for the
year ended December 31, 2002 are as follows (in millions):
Predecessor Company
Three
Months Ended
March 31,
2003
Year Ended
December 31,
2002
Discharge of liabilities (a) $ 3,655 $ —
Restructured aircraft financings (b) 946 —
Termination of pension plans, net (c) 386 —
Damage and deficiency claims (d) (1,892) —
Revaluation of assets and liabilities (a) (1,106) —
Severance including benefits (e) — (89)
Loss on aircraft abandonment (f) (9) (68)
Professional fees (51) (61)
Write-off of ESOP deferred compensation — (50)
Other (41) (26)
Reorganization items, net $ 1,888 $ (294)
(a) See description under Fresh-start Reporting above.
(b) As of March 31, 2003, the Company had restructured aircraft debt and lease agreements related to 119 aircraft in connection with its Chapter 11
reorganization including the conversion of 52 mortgages to operating leases. The restructured terms generally provide for shorter lease periods and
lower lease rates.
(c) 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. The Company recognized a gain in connection with the termination which was partially offset by
the Company's estimate of the PBGC claim. See Note 8(d) "Legal Proceedings" for more information.
(d) Damage and deficiency claims largely arose as a result of the Company electing to either restructure, abandon or reject aircraft debt and leases during
the bankruptcy proceedings.
(e) As a result of schedule reductions made in connection with the Company's Chapter 11 reorganization, US Airways terminated or furloughed
approximately 6,600 employees across all employee groups. Substantially all affected employees were terminated or furloughed prior to March 31,
2003. 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.
(f) Includes aircraft (seven A319s for 2003 and 34 F-100s, two B757-200s and one B737-400 for 2002) that were legally abandoned as part of US Airways'
Chapter 11 reorganization. Related aircraft liabilities were adjusted for each aircraft's expected allowed collateral value.
(c) Liabilities Subject to Compromise
Under the Bankruptcy Code, certain claims against the Company in existence prior to the Petition Date were stayed while the Company continued to
operate as a debtor-in-possession. As of December 31, 2002, the Company received approval from the Court to (a) pay pre-petition and post-petition
employee wages, salaries, benefits and other employee obligations; (b) pay vendors and other providers in the ordinary course for goods and services received
from and after the Petition Date; (c) honor customer service programs, including the Debtors' Dividend Miles program and its ticketing
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