US Airways 2005 Annual Report Download - page 126

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
7. Special charges (credits), net
Special charges (credits), net included within the statements of operations include the following components (in millions):
Year Ended December 31,
2005 2004 2003
Airbus restructuring $ 57(a) $ — $ —
Merger related transition expenses 28(b) — —
Sale leaseback transactions 27(c) (1)(g) —
Power by the hour program penalties 7(d) — —
Severance due to change in control 2(e) — —
Aircraft returns 1(f) 2(f) (1)(i)
Termination of V2500 power by the hour agreement — (16)(h) —
Elimination of hub operations — Columbus — — 11(j)
Reduction in workforce — — 2(k)
Impairment loss on aircraft — — 3(l)
Other (1) (1) (1)
Total $ 121 $ (16) $ 14
(a) In the third quarter of 2005, in connection with the merger and the Airbus MOU executed between Airbus, US Airways Group, US Airways and AWA,
certain aircraft firm orders were restructured. In connection with that restructuring, US Airways Group and America West Holdings were required to
pay non-refundable restructuring fees. AWA's restructuring fee of $50 million has been classified as a special charge, along with $7 million in
associated capitalized interest. The restructuring fee was paid by means of set-off against existing equipment deposits of AWA held by Airbus.
(b) In connection with the merger, America West Holdings and US Airways incurred $13 million and $15 million, respectively, of transition and merger
integration costs in the fourth quarter of 2005 related to transitioning the employees, systems and facilities of AWA and US Airways into one
consolidated company. The $13 million includes insurance premiums of $4 million related to policies for former officers and directors, compensation
expense of $3 million for special stock awards granted under a program designed to retain key employees through the integration period, professional
and technical fees of $3 million and sales and marketing program expenses of $2 million related to notifying frequent traveler program members about
the merger. The $15 million includes $7 million in insurance premiums related to policies for former officers and directors, $5 million for severance,
retention and stock awards, $1 million of aircraft livery costs, $1 million of programming service expense and $1 million in other expenses.
(c) In the third quarter of 2005, a $27 million loss was incurred related to the sale-leaseback of six Boeing 737-200 aircraft and two Boeing 757 aircraft.
(d) In the fourth quarter of 2005, in connection with the return of certain leased aircraft, AWA incurred expenses of $7 million related to penalties incurred
under an outsourced maintenance arrangement.
(e) In the third and fourth quarter of 2005, AWA recorded severance expense totaling approximately $2 million for terminated employees resulting from
the merger. The majority of the $2 million will be paid in the first quarter of 2006.
(f) In August 2004, AWA entered into definitive agreements with two lessors to return six Boeing 737-200 aircraft. Three of these aircraft were returned to
the lessors in the third quarter of 2004, two were 120