US Airways 2005 Annual Report Download - page 142

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
In connection with its previous reorganization under Chapter 11 of the Bankruptcy Code, US Airways terminated the Retirement Income Plan for Pilots of
US Airways, Inc. and the related nonqualified pilot plan effective March 31, 2003. The Company implemented a qualified and nonqualified defined
contribution plan for pilots effective April 1, 2003. The defined contribution amount was individually determined based on a target normal retirement date
balance of approximately $1 million for a career US Airways pilot. The target balance included the estimated value of other retirement benefits including, but
not limited to, the estimated benefit pilots are expected to receive from the PBGC, the trustee for the terminated pilot defined benefit plan. Effective
October 15, 2004, each pilot's contribution rate became the lessor of the original rate or 10% of eligible compensation. Expenses for this plan of $10 million
for the three months ended December 31, 2005 are included in the Company's consolidated results for the year ended December 31, 2005.
Effective January 1, 2005 America West Holdings initiated a new defined contribution plan covering pilots under the collective bargaining agreement with
the Air Line Pilots Association. Under this plan, AWA is required to make a non-elective discretionary employer contribution equal to 7% of each pilot's
compensation (as defined in the plan and subject to statutory annual maximums). Such contributions are in addition to the existing AWA company match
under the 401(k) defined contribution plan covering all employees discussed above. AWA's contribution expense to this plan totaled $13 million for 2005.
(c) Postemployment benefits
The Company provides certain postemployment benefits to its employees. These benefits include disability-related and workers' compensation benefits for
certain employees. The Company accrues for the cost of such benefit expenses once an appropriate triggering event has occurred.
(d) Profit sharing plans
Under the Defined Contribution Retirement Program, the Company makes additional contributions to participant accounts for certain employees when
certain prescribed pre-tax margin levels are achieved. The Company did not make any profit sharing contributions relating to 2005.
Since the emergence from bankruptcy in September 2005, most non-executive employees of US Airways are eligible to participate in the 2005 Profit
Sharing Plan, an annual bonus program. Annual bonus awards are paid from a profit-sharing pool equal to (i) ten percent of the annual profits of US Airways
Group (excluding unusual items) for pre-tax profit margins up to ten percent, plus (ii) 15% of the annual profits of US Airways Group (excluding unusual
items) for pre-tax profit margins greater than ten percent. Awards are paid as a lump sum no later than March 15 after the end of each fiscal year. The profit-
sharing pool is shared among eligible employee groups in proportion to each group's share of overall cost savings achieved through US Airways' 2005
transformation plan; however, the represented pilots' and flight attendants' portions of the pool will not be less than 36% and 14.5%, respectively. An
employee's share of the pool is based on the ratio that the employee's compensation bears to the respective employee group's aggregate compensation.
Because of significant losses, no benefits are accrued under the plan in 2005.
11. Income Taxes
AWA is included in America West Holdings' consolidated income tax returns for the periods ending on December 31, 2004 and for the period beginning
January 1, 2005 ending on September 27, 2005, the date of the merger. America West Holdings and AWA, as part of the merger, became members of the
consolidated US Airways Group on September 28, 2005. Income tax expense in the accompanying statements of operations has been determined on a
consolidated basis which includes the full year financial 136