US Airways 2004 Annual Report Download - page 85

Table of Contents
AMERICA WEST AIRLINES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
3. Investments in Debt Securities
Cash equivalents and short-term investments as of December 31 are classified as follows:
2004 2003
(in thousands)
Cash and cash equivalents:
Corporate notes $ — $ 4,205
Cash and money market funds 126,992 128,441
U.S. government securities 1,505 1,504
Total cash and cash equivalents $ 128,497 $ 134,150
Short-term investments:
Corporate notes $ 126,651 $ 318,845
U.S. government securities — 3,770
Total short-term investments 126,651 322,615
Total cash equivalents and short-term investments $ 255,148 $ 456,765
In addition, AWA had long-term investments in debt securities of $30.0 million and $40.7 million as of December 31, 2004 and 2003, respectively. Long-
term investments consist of cash invested in certain debt securities with maturities greater than one year. The debt securities are classified as held to maturity
and are carried at amortized cost that approximates fair value.
4. Financial Instruments and Risk Management
(a) Fair Value of Financial Instruments
Cash Equivalents, Short-term Investments and Receivables
The carrying amount approximates fair value because of the short-term nature of these instruments.
Long-term Debt
At December 31, 2004 and 2003, the fair value of long-term debt was approximately $721.5 million and $845.6 million, respectively. AWA's variable rate
long-term debt with a carrying value of $545.7 million and $555.9 million at December 31, 2004 and 2003, respectively, approximates fair value because
these borrowings have variable interest rate terms that approximate market interest rates for similar debt instruments. The fair values of AWA's other long-
term debt are determined based on quoted market prices if available or market prices for comparable debt instruments.
(b) Fuel Price Risk Management
Under its fuel hedging program, AWA may enter into certain hedging transactions with approved counterparties for a period generally not exceeding
12 months. As of December 31, 2004, AWA had entered into costless collar and basis swap transactions hedging approximately 42% of its projected 2005
fuel requirements. The fair value of AWA's financial derivative instruments was a net asset of approximately $0.2 million and $2.7 million at December 31,
2004 and 2003, respectively. See Note 2, "Restatement of Previously Reported Amounts."
AWA is exposed to credit risks in the event any counterparty fails to meet its obligations. AWA does not anticipate such non-performance as
counterparties are selected based on credit ratings, exposure to any one counterparty is limited based on formal guidelines and the relative market positions
with such counterparties are closely monitored.
(c) Concentration of Credit Risk
AWA does not believe it is subject to any significant concentration of credit risk. Most of AWA's receivables result from tickets sold to individual
passengers through the use of major credit cards or from tickets sold by other airlines and used by passengers on AWA. These receivables are short-term,
generally being settled shortly after the sale.
82