US Airways 2003 Annual Report Download - page 93

Table of Contents
ERISA. In August 2000, the U.S. District Court dismissed the remaining count without prejudice, giving plaintiffs the right to reinstate their claims after
completion of the arbitration. Certain of the plaintiffs have filed a claim before the US Airways Pilot Retirement Board requesting arbitration of their claim
for benefits that they believe were erroneously calculated. The Retirement Board has selected an arbitrator to decide certain issues related to the plaintiffs'
claims for benefits. The Company is unable to predict at this time the ultimate resolution of these proceedings.
On September 29, 2000, US Airways intervened in a proceeding that was originally brought on January 26, 1998, by the Pennsylvania Department of
Environmental Protection (DEP) against Allegheny County and the ACAA alleging that a variety of airfield and aircraft deicing activities at Greater
Pittsburgh International Airport (Airport) violate the requirements of (a) a 1994 Consent Order and Adjudication issued to Allegheny County and air carrier
tenants at the Airport, (b) the Airport's National Pollutant Discharge Elimination System Permit, and (c) the Pennsylvania Clean Streams Law. The action was
brought before the Pennsylvania Environmental Hearing Board. During March 2001, the Environmental Hearing Board approved Allegheny County's motion
to withdraw the appeal without prejudice, thereby terminating the appeal. However, during the course of settlement discussions leading to the termination of
the appeal, the DEP advised Allegheny County and US Airways that DEP (i) will require additional measures to be taken to control deicing materials at the
Airport, and (ii) will assess a civil penalty against Allegheny County and US Airways for the alleged violations described above. The ACAA, US Airways and
the DEP have continued to work together with the goal of fashioning an ultimate resolution to the deicing issues. The Company does not believe that the
settlement of this matter will have a material adverse effect on its financial condition, results of operations or liquidity.
(e) Guarantees
US Airways guarantees the payment of principal and interest on certain special facility revenue bonds issued by municipalities to build or improve
certain airport and maintenance facilities which are leased to US Airways. Under such leases, US Airways is required to make rental payments sufficient to
pay maturing principal and interest payments on the related bonds. As of December 31, 2003, the principal amount outstanding of these bonds was $80
million.
The Company enters into real estate leases in substantially all cities that it serves. It is common in such commercial lease transactions for the Company
as the lessee to agree to indemnify the lessor and other related third parties for tort liabilities that arise out of or relate to the Company's use or occupancy of
the leased premises. In some cases, this indemnity extends to related liabilities arising from the negligence of the indemnified parties, but usually excludes any
liabilities caused by their gross negligence or willful misconduct. Additionally, the Company typically indemnifies such parties for any environmental liability
that arises out of or relates to its use of the leased premises.
In aircraft financing agreements, the Company typically indemnifies the financing parties, trustees acting on their behalf and other related parties
against liabilities that arise from the manufacture, design, ownership, financing, use, operation and maintenance of the aircraft and for tort liability, whether or
not these liabilities arise out of or relate to the negligence of these indemnified parties, except for their gross negligence or willful misconduct. In aircraft
financing transactions structured as leveraged leases, the Company typically indemnifies the lessor with respect to adverse changes in U.S. tax laws.
The Company expects that it would be covered by insurance (subject to deductibles) for most tort liabilities and related indemnities described above
with respect to real estate leases and aircraft it operates.
The Company cannot estimate the potential amount of future payments under the foregoing indemnities and guarantees.
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