US Airways 2005 Annual Report Download - page 239

Table of Contents
US Airways, Inc.
Notes to the Financial Statements — (Continued)
4. Unusual items
(a) Special items, net
Special items as shown on the statements of operations include the following components (in millions):
Successor Company Predecessor Company
Three Months Ended Nine Months Ended
December 31, 2005 December 31, 2003
Transition and merger integration $ 15(a) $ —
Aircraft order cancellation penalty — 35(b)
Employee severance including benefits — (1)(c)
$ 15 $ 34
(a) In connection with the merger with America West Holdings, US Airways incurred $15 million of transition and merger integration costs in the fourth
quarter of 2005. These items included $7 million in insurance premiums related to policies for former officers and directors, $5 million for severance,
retention payments and stock awards, $1 million of aircraft livery costs, $1 million of programming service expense and $1 million in other expenses.
(b) During the quarter ended June 30, 2003, US Airways recorded a $35 million charge in connection with its intention not to take delivery of certain
aircraft scheduled for future delivery. In connection with the Airbus MOU, $33 million of this charge was reversed as a reorganization item in 2005 (see
Notes 1 and 3(c)).
(c) In September 2001, US Airways announced that in connection with its reduced flight schedule it would terminate or furlough approximately 11,000
employees across all employee groups. Approximately 10,200 of the affected employees were terminated or furloughed on or prior to January 1, 2002.
Substantially all the remaining affected employees were terminated or furloughed by May 2002. US Airways' headcount reduction was largely
accomplished through involuntary terminations/furloughs. In connection with this headcount reduction, US Airways offered a voluntary leave program
to certain employee groups. Voluntary leave program participants generally received extended benefits, such as medical, dental and life insurance, but
did not receive any furlough pay benefit. In accordance with Emerging Issues Task Force Issue No. 94-3, US Airways recorded a pretax charge of
$75 million representing the involuntary severance pay and the benefits for affected employees during the third quarter of 2001. In the fourth quarter of
2001, US Airways recognized a $10 million charge representing the estimated costs of extended benefits for those employees who elected to take
voluntary leave and a $2 million reduction in accruals related to the involuntary severance as a result of employees electing to accept voluntary
furlough. During the quarters ended June 30, 2003 and 2002, the US Airways recognized $1 million and $3 million, respectively, in reductions to
severance pay and benefit accruals related to the involuntary termination or furlough of certain employees.
(b) Government compensation
In April 2003, President George W. Bush signed into law the Emergency Wartime Supplemental Appropriations Act, which included $2.4 billion for
reimbursement to the airlines for certain aviation-related security expenses. Certain airlines that received the aviation-related assistance were required to agree
to limit the total cash compensation for certain executive officers during the 12-month period beginning April 1, 2003 to an amount equal to the annual salary
paid to that officer during the air carrier's fiscal year 2002. Any violation of this agreement would require the carrier to repay to the government the amount
reimbursed for airline security fees. US Airways complied with this limitation on executive compensation. US Airways' security fee reimbursement was
$212 million, net of amounts due to certain 233