US Airways 2005 Annual Report Download - page 153

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
US Airways Group and its subsidiaries are parties to various legal proceedings, including some purporting to be class action suits, and some that demand
large monetary damages or other relief, which, if granted, would require significant expenditures. In certain cases where it is probable that the outcome will
result in monetary damages, the Company will consider all available information and record an accrual. For those cases where a range of loss is probable but
no amount within the range is a better estimate than any other amount, the Company will record an accrual at the low end of the range.
(e) Guarantees (including revenue bonds)
The Company guarantees the payment of principal and interest on certain special facility revenue bonds issued by municipalities to build or improve
certain airport and maintenance facilities which are leased to US Airways and AWA. Under such leases, US Airways and AWA are required to make rental
payments, sufficient to pay maturing principal and interest payments on the related bonds. As of December 31, 2005, the principal amount outstanding of
these bonds was $99 million. Remaining lease payments guaranteeing the principal and interest on these bonds will be $171 million.
The Company enters into real estate leases in substantially all cities that it serves. It is common in such commercial lease transactions for the Company as
the lessee to agree to indemnify the lessor and other related third parties for tort liabilities that arise out of or relate to the use or occupancy of the leased
premises. In some cases, this indemnity extends to related liabilities arising from the negligence of the indemnified parties, but usually excludes any liabilities
caused by their gross negligence or willful misconduct. With respect to certain special facility bonds, the Company agreed to indemnify the municipalities for
any claims arising out of the issuance and sale of the bonds and the use and occupancy of the concourses financed by these bonds and the old bonds
Additionally, the Company typically indemnifies such parties for any environmental liability that arises out of or relates to its use of the leased premises.
The Company is the lessee under many aircraft financing agreements (including leveraged lease financings of aircraft under the pass through trusts) and
real estate leases. It is common in such transactions for the Company as the lessee to agree to indemnify the lessor and other related third parties for the
manufacture, design, ownership, financing, use, operation and maintenance of the aircraft, and for tort liabilities that arise out of or relate to the Company's
use or occupancy of the leased asset. In some cases, this indemnity extends to related liabilities arising from the negligence of the indemnified parties, but
usually excludes any liabilities caused by their gross negligence or willful misconduct.
The Company expects that it would be covered by insurance (subject to deductibles) for most tort liabilities and related indemnities described above with
respect to leased real estate and operated aircraft. The Company cannot estimate the potential amount of future payments under the foregoing indemnities and
guarantees
The Company reviewed its long-term operating leases at a number of airports, including leases where the Company is also the guarantor of the underlying
debt. Such leases are typically with municipalities or other governmental entities. The arrangements are not required to be consolidated based on the
provisions of FIN 46(R).
US Airways Group's 7% Senior Convertible Notes are fully and unconditionally guaranteed, jointly and severally and on a senior unsecured basis, by
US Airways Group's two major operating subsidiaries, US Airways and AWA.
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