US Airways 2004 Annual Report Download - page 50

Table of Contents
AMERICA WEST HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2004, 2003 AND 2002
America West Holdings Corporation ("Holdings" or the "Company") is a holding company that owns all of the stock of America West Airlines, Inc.
("AWA" or the "Airline"). AWA accounted for most of the Company's revenues and expenses in 2004. Based on 2004 operating revenues and available seat
miles ("ASMs"), AWA is the eighth largest passenger airline in the United States with the lowest cost structure of the eight major hub-and-spoke airlines. At
the end of 2004, AWA operated a fleet of 138 aircraft with an average fleet age of 10.7 years and served 63 destinations in North America, including eight in
Mexico, three in Canada and one in Costa Rica. Through regional alliance and code share arrangements with other airlines, AWA served an additional 51
destinations in North America and the Middle East as of December 31, 2004. In 2004, AWA flew approximately 21.1 million passengers and generated
revenues of approximately $2.3 billion. Prior to 2004, Holdings owned the outstanding stock of The Leisure Company ("TLC"), which sells individual and
group travel packages, including air transportation of AWA and Hawaiian Airlines, hotel accommodations, car rentals, cruise packages and other travel
products, directly to consumers as well as through retail travel agencies in the United States, Canada, Mexico and Costa Rica. As of January 1, 2004, TLC has
been merged into AWA and continues to operate as the America West Vacations division of AWA.
1. Summary of Significant Accounting Policies
(a) Basis of Presentation
The consolidated financial statements include the accounts of Holdings and its wholly owned subsidiary AWA, which includes its wholly owned
subsidiary Flight Training Center Hangar Plan. All significant intercompany balances and transactions have been eliminated in consolidation. Certain
reclassifications have been made to the prior years' consolidated financial statements to conform to the current year's presentation.
(b) Cash, Cash Equivalents and Short-term Investments
Cash equivalents consist of all highly liquid debt instruments purchased with original maturities of three months or less. Short-term investments consist of
cash invested in certain debt securities with original maturities greater than 90 days and less than one year. The debt securities are classified as held to
maturity and are carried at amortized cost that approximates fair value.
The Company reclassified investments in auction rate securities previously classified as cash equivalents to short-term investments on the accompanying
consolidated balance sheets. Investments reclassified in 2004 and 2003 were $58.4 million and $249.7 million, respectively.
(c) Expendable Spare Parts and Supplies
Flight equipment expendable spare parts and supplies are valued at average cost. An allowance for obsolescence is provided, over the estimated useful life
of the related aircraft and engines, for spare parts expected to be on hand at the date the aircraft are retired from service.
(d) Property and Equipment
Property and equipment are recorded at cost. Interest capitalized on advance payments for aircraft acquisitions and on expenditures for aircraft
improvements are part of these costs. Interest capitalized for the years ended December 31, 2004, 2003 and 2002, was $2.2 million, $1.6 million and
$3.0 million, respectively. Property and equipment is depreciated and amortized to residual values over the estimated useful lives or the lease term, whichever
is less, using the straight-line method.
The estimated useful lives for the Company's ground property and equipment range from three to 12 years for owned property and equipment and up to
30 years for the flight training facility. The estimated useful lives of the Company's owned aircraft, jet engines, flight equipment and rotable parts range from
five to 25 years. Leasehold improvements relating to flight equipment and other property on operating leases are amortized over the life of the lease or the life
of the asset, whichever is shorter.
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