US Airways 2005 Annual Report Download - page 111

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
become a party to the amended card processing agreement at the time that Chase begins processing for US Airways.
The amended card processing agreement took effect at the effective time of the merger and continues until the expiration of the initial term, which is three
years from the effective date. Upon expiration of the initial term, the amended card processing agreement will automatically renew for successive one-year
periods pursuant to the terms of the agreement.
Under the amended card processing agreement, AWA will pay to Chase fees in connection with card processing services such as sales authorization,
settlement services and customer service. AWA and US Airways are also required to maintain a reserve account to secure Chase's exposure to outstanding air
traffic liability
Asset Based Financings and Sales — In addition to the sale-leaseback transactions completed in June 2005 related to the GE Merger MOU described
above, US Airways also executed flight equipment asset sale and sale-leaseback transactions in the third and fourth quarters of 2005. While transactions
completed prior to the merger date by US Airways are not reflected in the US Airways Group financial statements as a result of accounting for the merger as a
reverse acquisition, these transactions provided additional liquidity and reductions to debt for US Airways Group. US Airways received net proceeds of
$209 million and a reduction in aircraft related debt of $561 million. Additionally during the third quarter, US Airways received net proceeds of $51 million
in connection with an agreement to sell and leaseback certain of its commuter slots at Ronald Reagan Washington National Airport and New York LaGuardia
Airport. US Airways was required to use proceeds totaling $156 million to pay down the US Airways ATSB Loan.
For 2005, AWA executed flight equipment asset sale and leaseback transactions resulting in net proceeds of $23 million and a reduction in aircraft related
debt of $38 million.
2. Basis of presentation and summary of significant accounting policies
(a) Nature of operations and operating environment
US Airways Group's primary business activity is the operation of a major network air carrier through its ownership of the common stock of US Airways,
America West Holdings, Piedmont Airlines, Inc. ("Piedmont"), PSA Airlines, Inc. ("PSA"), Material Services Company, Inc. ("MSC") and Airways
Assurance Limited, LLC ("AAL").
US Airways and AWA are the Company's principal operating subsidiaries. US Airways and America West Airlines are both certificated air carriers
engaged primarily in the business of transporting passengers, property and mail. US Airways and AWA enplaned approximately 42 million and 22 million
passengers, respectively, in 2005. Combined, US Airways and America West Airlines are the fifth largest U.S. air carrier, as ranked by domestic revenue
passenger miles ("RPMs") and domestic available seat miles ("ASMs"). As of December 31, 2005, US Airways operated 232 jet aircraft and 18 regional jet
aircraft and AWA operated 141 jet aircraft and 62 regional jet aircraft. During 2005, US Airways provided regularly scheduled service or seasonal service at
91 airports in the continental United States, Canada, Mexico, France, Germany, Italy, Spain, Ireland, the Netherlands, the United Kingdom and the Caribbean
and AWA provided regularly scheduled service at 64 airports in North America, including eight in Mexico, four in Canada and one in Costa Rica.
Most of the airline operations are in competitive markets. Competitors include other air carriers along with other modes of transportation. As of
December 31, 2005, US Airways Group employed approximately 36,600 active full time equivalent employees. Approximately 80% of US Airways Group's
employees are covered by collective bargaining agreements with various labor unions.
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