US Airways 2005 Annual Report Download - page 18

Table of Contents
To reduce the exposure to changes in fuel prices, AWA has periodically entered into certain fixed price swaps, collar structures and other similar
derivative contracts. US Airways' recent financial position and credit rating have negatively affected its ability to enter into these kinds of arrangements.
Insurance
US Airways Group and its subsidiaries maintain insurance of the types and in amounts deemed adequate to protect themselves and their property.
Principal coverage includes:
• liability for injury to members of the public, including passengers;
• damage to property of US Airways Group, its subsidiaries and others;
• loss of or damage to flight equipment, whether on the ground or in flight;
• fire and extended coverage;
• directors and officers;
• travel agents' errors and omissions;
• advertiser's and media liability;
• fiduciary; and
• workers' compensation and employer's liability.
Since September 11, 2001, US Airways Group and other airlines have been unable to obtain coverage for liability to persons other than employees and
passengers for claims resulting from acts of terrorism, war or similar events, which is called war risk coverage, at reasonable rates from the commercial
insurance market. US Airways and AWA therefore purchased their war risk coverage through a special program administered by the FAA, as have most other
U.S. airlines. The Emergency Wartime Supplemental Appropriations Act extended this insurance protection until August 2005. The program was
subsequently extended, with the same conditions and premiums, until August 31, 2006. Under Vision 100, the President may continue the insurance program
until March 30, 2008. If the federal insurance program terminates, we would likely face a material increase in the cost of war risk coverage, and because of
competitive pressures in the industry, our ability to pass this additional cost to passengers may be limited.
Frequent Traveler Program
All major United States airlines offer frequent flyer programs to encourage travel on their respective airlines and customer loyalty. Prior to the merger,
US Airways and AWA operated separate frequent flyer programs, known as "Dividend Miles" and "FlightFund," respectively.
FlightFund
AWA's FlightFund program allows members to earn mileage credit by flying AWA and America West Express, by flying on certain partner airlines and
by using the services of a wide variety of other program participants such as hotels, rental car agencies and other specialty services. AWA also sells mileage
credits to credit card companies, telephone companies, hotels, car rental agencies and others that participate in the FlightFund program.
Through the FlightFund program, accumulated mileage credits can be redeemed for free travel on AWA, America West Express and certain partner
airlines and for first class upgrades on AWA. Use of mileage credits is subject to industry standard restrictions including availability and blackout dates.
AWA must purchase space on other airlines to accommodate FlightFund redemption travel on those airlines. AWA reserves the right to terminate the
FlightFund program or portions of the program at any time. Program rules, partners, special offers, blackout dates, awards and requisite mileage levels for
awards are subject to change. 12