US Airways 2004 Annual Report Download - page 10

Table of Contents
Aircraft Approx. Qty as of 12/31 Average Age as of 12/31
Types No. Seats 2004 2005 2004 2005
737-200 113 1 — 22.6 N/A1
737-300 132 37 37 16.9 17.9
757-200 190 13 13 18.2 19.2
A319 124 33 37 4.2 4.7
A320 150 54 61 8.5 8.5
Totals 138 148 10.7 10.8
1 The last 737-200 aircraft was retired in January 2005
In August 2004, AWA amended its aircraft purchase contract with AVSA S.A.R.L., an affiliate of Airbus Industrie or "AVSA," to acquire 22 Airbus A320
family aircraft (thirteen A320s and nine A319s), all powered by V2500 engines from International Aero Engines. Of the 22 aircraft, it is anticipated that 18
will be purchased directly from the manufacturer and four have been leased under noncancelable leases from various lessors for aircraft to be delivered in
2005. In the context of this incremental order, AWA also secured extensive flexibility from Airbus with respect to its existing A318 order, allowing AWA to
better react to market conditions by enabling it to amend its 15 A318 delivery positions to A319s and A320s, if it so desires, or to take no additional aircraft
under certain conditions.
The following table illustrates AWA's committed orders, scheduled lease expirations, and lessor call and put options as of December 31, 2004.
2005 2006 2007 2008 2009
Firm orders remaining (EOY) 13 1 — — —
Lessor put options 2 4 — — —
Lease terminations:
Scheduled expirations 8 9 21 15 5
Lessor call options 9 7 7 1 —
In January 2005, AWA retired its one remaining 737-200 aircraft. While this is the only forecasted 2005 retirement, AWA has the ability to return five
additional leased Boeing 737-300 aircraft and one leased Airbus A320, and retire five owned Boeing 737-300 aircraft, if market conditions necessitate such a
response. In February 2005, AWA renewed the lease on one Airbus A320 for an additional three years. These eleven aircraft exclude the exercise of two
lessor put options on two aircraft that could require AWA to renew the leases for approximately 15 months beyond the current natural lease expiration date. In
2004, one put option on a Boeing 737-300 aircraft was exercised resulting in a lease extension of 33 months. No call options were exercised in 2004.
Assuming the exercise of all put options, as of December 31, 2004, 52 aircraft have lease expirations prior to the end of 2008.
Aircraft Jet Fuel
Jet fuel costs were our second-largest operating expense in 2004. Our average cost of jet fuel over the past five years was as follows:
Percent of
Cost Average Cost Operating
Year (Millions) per Gallon Expenses
2000 $ 373 $ 0.88 15.8%
2001 $ 336 $ 0.81 13.6%
2002 $ 299 $ 0.73 13.6%
2003 $ 376 $ 0.89 16.8%
2004 $ 557 $ 1.24 23.4%
In addition, the Company incurs fuel expense for our regional airline alliance with Mesa. For the years ended December 31, 2004, 2003 and 2002, total
fuel expense for the Mesa alliance was $102.1 million, $61.2 million and $46.3 million, respectively.
The price and supply of jet fuel are unpredictable and fluctuate based on events outside our control including geopolitical developments, regional
production patterns and environmental concerns. Price escalations or reductions in the supply of jet fuel will increase our operating expenses and cause our
operating results and net income to decline. See "Risk Factors Relating to the Company and Industry Related Risks – Fluctuations in jet fuel costs could
adversely affect our operating expenses and results."
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