US Airways 2005 Annual Report Download - page 121

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
expense method is the predominant method used in the airline industry and because it eliminates significant judgment and estimation inherent under the
deferral method.
The effect of this change in accounting for aircraft maintenance and repairs is recorded as a cumulative effect of a change in accounting principle. The
effect of the change in 2005 was to increase net loss by approximately $48 million (or $1.52 per share). The increase in the 2005 net loss of $202 million is
the cumulative effect on retained earnings of the adoption as of January 1, 2005. The cumulative effect of the change in accounting principle is not presented
net of tax as any tax effects resulting from the change have been immediately offset by the recording of a valuation allowance through the same financial
statement caption.
The pro forma net income (loss) shown on the consolidated statements of operations have been adjusted for the effects of retroactive application of the
impact of maintenance costs. The following pro forma earnings (loss) per share amounts show the effect of the retroactive application of the change in
accounting.
2005 2004 2003
Earnings (loss) per share
Basic — As Reported before cumulative effect of change in accounting principle $ (10.65) $ (5.99) $ 4.03
Basic — Pro Forma (10.65) (9.53) 3.71
Diluted — As Reported before cumulative effect of change in accounting principle $ (10.65) $ (5.99) $ 3.07
Diluted — Pro Forma (10.65) (9.53) 2.87
The 2005 quarterly financial data presented in Note 21 has been adjusted to reflect the change in accounting policy as if the change occurred on January 1,
2005. In addition, pro forma quarterly financial data for 2004 has been presented to reflect comparable information as if the newly adopted accounting policy
for maintenance costs had been applied during all periods affected.
5. Change in method of reporting for America West Express results and other reclassifications
Certain prior year amounts have been reclassified to conform with the 2005 presentation. These reclassifications include reclassing: fuel hedging activities
from nonoperating to operating expenses, fuel-related tax expenses from other expenses to aircraft fuel and related taxes expense and the sale of frequent flier
miles and related marketing services to affinity partners from other operating expense to mainline passenger and other revenue. The portion of the affinity
partner revenue related to passenger ticket sales is classified as mainline passenger revenue and the marketing portion of the affinity partner revenue is
classified as other revenue.
AWA has a regional airline alliance agreement with Mesa (the "Mesa Agreement") that commenced in February 2001. Mesa, operating as America West
Express, provides feeder service for AWA. As of December 31, 2005, the America West Express fleet included 62 aircraft comprised of 38 86-seat CRJ 900
aircraft, 18 50-seat CRJ 200 aircraft and six 37-seat Dash 8 turboprop aircraft. The Mesa Agreement is anticipated to expire in June 2012.
Under the Mesa Agreement, Mesa is required to fly the routes and flights designated by AWA using Mesa's aircraft, flight crews and other related
services. Mesa maintains and operates the aircraft; employs, trains, manages and compensates personnel necessary to provide the flight services; and provides
related passenger handling services for and on the flights. AWA is responsible for establishing the routes, scheduling Express flights, pricing of the tickets,
marketing and selling the tickets, collecting all sales 115