US Airways 2005 Annual Report Download - page 229

Table of Contents
US Airways, Inc.
Notes to the Financial Statements — (Continued)
(p) Express expenses
Expenses associated with US Airways' MidAtlantic division, US Airways Group's wholly owned regional airlines and affiliate regional airlines operating
as US Airways Express have been classified as "Express expenses" on the statements of operations and prior periods have been reclassified. Express expenses
on the statements of operations consists of the following (in millions):
Successor
Company Predecessor Company
Three Months Nine Months Nine Months Three Months
Ended Ended Year Ended Ended Ended
December 31, September 30, December 31, December 31, March 31,
2005 2005 2004 2003 2003
Aircraft fuel and related taxes $ 19 $ 54 $ 21 $ — $ —
Salaries and related costs 10 32 26 8 3
Capacity purchases 388 1,058 1,267 862 241
Other rent and landing fees 1 5 3 — —
Aircraft rent 9 21 15 — —
Selling expenses 12 34 34 23 8
Aircraft maintenance 3 9 1 — —
Depreciation and amortization — 5 3 — —
Other expenses 48 153 202 94 30
Express expenses $ 490 $ 1,371 $ 1,572 $ 987 $ 282
(q) Variable interest entities
In 2003, US Airways Group and US Airways adopted Financial Accounting Standards Board Interpretation No. 46 "Consolidation of Variable Interest
Entities," as revised ("FIN 46(R)"). The adoption of FIN 46 did not materially affect US Airways Group's, AWA's or US Airways' financial statements. In the
fourth quarter of 2005, as a result of entering into new jet service agreements, US Airways determined that certain entities with which it has capacity purchase
agreements are considered variable interest entities under FIN 46. US Airways has determined that it is not the primary beneficiary of any of these variable
interest entities, and accordingly, does not consolidate any of the entities with which it has jet service agreements. (See also Notes 9(b), 9(c) and 9(e)).
(r) Recent accounting pronouncements
In December 2004, the FASB issued SFAS No. 123R, "Share-Based Payment" ("SFAS 123R"). SFAS 123R is a revision of SFAS No. 123, "Accounting
for Stock Based Compensation", and supersedes APB 25. Among other items, SFAS 123R eliminates the use of APB 25 and the intrinsic value method of
accounting, and requires US Airways to recognize the cost of employee services received in exchange for awards of equity instruments, based on the grant
date fair value of those awards, in the financial statements. Pro forma disclosure is no longer an alternative under the new standard. Although early adoption
was allowed, US Airways adopted SFAS 123R as of January 1, 2006, the required effective date for calendar year companies.
SFAS 123R permits companies to adopt its requirements using either a "modified prospective" method, or a "modified retrospective" method. Under the
"modified prospective" method, compensation cost is recognized in the financial statements beginning with the effective date, based on the requirements of
SFAS 123R for all share-based payments granted after that date, and based on the requirements of SFAS 123 for all unvested awards granted prior to the
effective date of SFAS 123R. Under the "modified 223