US Airways 2005 Annual Report Download - page 23

Table of Contents
US Airways Group common stock outstanding prior to the merger received no distribution on account of their interests and their existing stock was cancelled.
Financing During the Chapter 11 Proceedings
As part of its reorganization under its 2003 bankruptcy, US Airways received a $900 million loan guarantee under the Air Transportation Safety and
System Stabilization Act from the Air Transportation Stabilization Board ("ATSB") in connection with a $1 billion term loan financing. In connection with
the September 12, 2004 Chapter 11 filing, the ATSB and the lenders under the ATSB loan agreed to allow pre-merger US Airways Group to continue, on an
interim basis, to use cash collateral securing the ATSB loan. By virtue of that interim agreement, pre-merger US Airways Group had access to the cash
collateralizing the ATSB loan as working capital, subject to certain on-going conditions and limitations. As a result, pre-merger US Airways Group was able
to use this cash instead of obtaining debtor in possession financing. This interim agreement was approved by the Bankruptcy Court on September 13, 2004 as
part of the first day motions, and was subsequently extended, subject to certain conditions and limitations. Under the interim agreement, pre-merger
US Airways Group was permitted to continue to access this cash collateral to support daily operations so long as it maintained an agreed upon minimum
amount of cash on hand each week. An August 18, 2005 extension of the interim agreement also allowed US Airways, under certain circumstances, to retain
approximately 40% of the proceeds from the sale of certain designated assets on which the ATSB held liens. See Item 7. "Management's Discussion and
Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources" for a complete discussion of the secured loan.
Claims Resolution
The plan of reorganization classified claims into classes according to their relative seniority and other criteria and provides for the treatment for each class
of claims. Pursuant to the bankruptcy process, the Debtors' claims agent received approximately 4,800 timely-filed proofs of claims as of the general bar date
totaling approximately $26.4 billion in the aggregate, and approximately 380 proofs of claims timely filed by governmental entities totaling approximately
$13.4 billion in the aggregate. As of December 31, 2005, there are $19.6 billion of unresolved claims. The ultimate resolution of certain of the claims asserted
against the Debtors in the Chapter 11 cases will be subject to negotiations, elections and Bankruptcy Court procedures. The value of stock ultimately
distributed to any particular general unsecured creditor under the plan of reorganization will depend on a number of variables, including the value of any
claims filed by that creditor, the aggregate of all general unsecured claims and the value of shares of the new common stock of US Airways Group in the
marketplace at the time of distribution. The unsecured creditors eligible to receive stock distributions are expected, in the aggregate, to recover between
approximately 3.1% and 17.4% of the value of their claim.
PBGC Claim — On November 12, 2004, US Airways filed a motion requesting a determination from the Bankruptcy Court that US Airways satisfied the
financial requirements for a "distress termination" under section 4041(c)(2)(B)(ii)(IV) of the Employee Retirement Security Act of 1974, as amended
("ERISA"), of the Retirement Plan for Flight Attendants in the Service of US Airways, Inc. (the "AFA Plan"), the Pension Plan for Employees of
US Airways, Inc. Who Are Represented by the International Association of Machinists and Aerospace Workers (the "IAM Plan"), and the Retirement Plan for
Certain Employees of US Airways, Inc. (the "CE Plan"), as well as approval of each plan's termination. These plans had aggregate benefit obligations of
$2.71 billion and aggregate plan assets of only $1.76 billion, as of the plans' termination dates in January 2005. On January 6, 2005, the Bankruptcy Court
entered an order (i) finding that the financial requirements for a distress termination of the plans had been met and (ii) approving termination of the plans. The
AFA Plan and the IAM Plan were terminated effective January 10, 2005, which was the date agreed to by the Pension Benefit Guaranty Corporation (the
"PBGC") and US Airways. The CE Plan was terminated effective January 17, 2005, which was the date agreed to by the PBGC and US Airways. Effective
February 1, 2005, the PBGC was appointed trustee for each of the three plans. As a result of these terminations, the PBGC filed claims
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