US Airways 2005 Annual Report Download - page 237

Table of Contents
US Airways, Inc.
Notes to the Financial Statements — (Continued)
Reorganization, an additional gain of $1.24 billion was recognized as the liability associated with the postretirement medical benefits was reduced to
fair market value. See also Note 7.
(b) Also in January 2005, US Airways terminated three defined benefit plans related to the flight attendants, mechanics and certain other employees (see
Note 7). The PBGC was appointed trustee of the plans upon termination. US Airways recognized a curtailment gain of $24 million and a $91 million
minimum pension liability adjustment in connection with the terminations in the first quarter of 2005. Upon the effective date of the Plan of
Reorganization and in connection with the settlement with the PBGC, the remaining liabilities associated with these plans were written off, net of
settlement amounts.
Effective March 31, 2003, US Airways terminated its qualified and nonqualified pilot defined benefit pension plans. The PBGC was appointed trustee
of the qualified plan effective with the termination. US Airways recognized a gain in connection with the termination which is partially offset by the
estimate of the PBGC claim.
(c) Reflects the discharge of trade accounts payable and other liabilities upon emergence from bankruptcy. Most of these obligations were only entitled to
receive such distributions of cash and common stock as provided for under the plan of reorganization in each of the bankruptcies. A portion of the
liabilities subject to compromise in the bankruptcies were restructured and continued, as restructured, to be liabilities of the Successor Company.
(d) As a result of US Airways' bankruptcy filing in September 2004, US Airways was not able to secure the financing necessary to take on-time delivery of
three scheduled regional jet aircraft and therefore accrued penalties of $3 million until delivery of these aircraft was made to a US Airways Express
affiliate in August 2005. Offsetting these penalties is the reversal of $33 million in penalties recorded by US Airways in the nine months ended
December 31, 2003 due to its intention not to take delivery of certain aircraft scheduled for future delivery. In connection with the Airbus MOU, the
accrual for these penalties was reversed (see also Notes 1 and 4).
As the result of US Airways' bankruptcy filing in September 2004, it failed to meet the conditions precedent for continued financing of regional jets and
was not able to take delivery of scheduled aircraft and therefore incurred penalties of $7 million in the fourth quarter of 2004.
(e) Damage and deficiency claims are largely a result of US Airways' election to either restructure, abandon or reject aircraft debt and leases during the
bankruptcy proceedings. As a result of the confirmation of the Plan of Reorganization and the effectiveness of the merger, these claims were withdrawn
and the accruals reversed.
(f) As of September 30, 2005, US Airways recorded $1.5 billion of adjustments to reflect assets and liabilities at fair value, including an initial net write-
down of goodwill of $1.82 billion. Goodwill of $584 million was recorded to reflect the excess of the estimated fair value of liabilities and equity over
identifiable assets. Subsequent to September 30, 2005, US Airways recorded an additional $148 million of goodwill to reflect adjustments to the fair
value of certain assets and liabilities. See Note 3(b) for a description of changes in goodwill during the fourth quarter of 2005.
As of March 31, 2003, US Airways recorded $1.11 billion of adjustments to reflect assets and liabilities at fair value (including a $1.12 billion liability
increase related to the revaluation of US Airways' remaining defined benefit pension plans and postretirement benefit plans and a $333 million write-up
of gates, slots and routes) and the write-off of the Predecessor Company's equity accounts. In addition, goodwill of $2.41 billion was recorded to reflect
the excess of the estimated fair value of liabilities and equity over identifiable assets.
Subsequent to March 31, 2003, US Airways recorded an additional $62 million of adjustments to reflect assets and liabilities at fair value, including a
$281 million decrease to property and equipment, net, a $121 million decrease to long-term debt, net of current maturities, a $13 million increase to
231