US Airways 2005 Annual Report Download - page 199

Table of Contents
America West Airlines, Inc.
Notes to Consolidated Financial Statements — (Continued)
US Airways in order to deprive them of the benefits they are due as US Airways pilots pursuant to the US Airways collective bargaining agreement. Plaintiffs'
claims against the airline defendants include breach of collective bargaining agreement, violation of the Railway Labor Act and racketeering under the
Racketeering Influenced and Corrupt Organizations Act ("RICO"). Plaintiffs' complaint requests $2 billion in damages from the airline defendants and
injunctive relief.
AWA is unable to estimate at this time the amount of loss or probable losses, if any, that might result from an adverse resolution of the proceedings
discussed above, and currently is unable to predict whether the outcome of these proceedings will have a material adverse effect on its results of operations or
financial condition. AWA intends, however, to vigorously pursue all available defenses and claims in these matters.
AWA is party 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, AWA
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, AWA will record an accrual at the low end of the range.
(f) General Guarantees and Indemnifications
AWA 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 AWA 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 AWA'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. Additionally, in the case of real estate leases, AWA typically indemnifies such parties for any
environmental liability that arises out of or relates to AWA's use of the leased premises. AWA 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.
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.
(g) Concentration of credit risk
AWA does not believe it is subject to any significant concentration of credit risk. Most of AWA's receivables result from tickets sold to individual
passengers through the use of major credit cards or from tickets sold by other airlines and used by passengers on AWA. These receivables are short-term,
generally being settled shortly after the sale.
10. Income Taxes
AWA is a wholly owned subsidiary of America West Holdings. AWA is included in America West Holdings' consolidated income tax returns for the
periods ending December 31, 2004 and for the period beginning January 1, 2005 ending on September 27, 2005. On September 27, 2005, US Airways Group
consummated the transactions contemplated by its plan of reorganization, including the merger transaction with America West Holdings. As a result of the
merger, America West Holdings became a wholly owned subsidiary of US Airways Group. America West Holdings and AWA, as part of the merger, became
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