US Airways 2005 Annual Report Download - page 249

Table of Contents
US Airways, Inc.
Notes to the Financial Statements — (Continued)
The following table presents the weighted average assumptions used to determine benefit obligations:
Defined Benefit
Pension Plans Other Postretirement Benefits
Predecessor Successor Predecessor
Company Company Company
Dec. 31, 2004 Dec. 31, 2005 Dec. 31, 2004
Discount rate 6.00% 5.30% 6.00%
Rate of compensation increase 3.73% n.a. —
US Airways' September 30, 2005 assumed discount rate of 5.30% for measuring its other postretirement benefit obligations is based on a hypothetical
portfolio of high quality publicly traded U.S. bonds (Aa rated, non-callable or callable with make-whole provisions), for which the timing and cash outflows
approximate the estimated benefit payments of the other postretirement benefit plans. US Airways' discounted both its pension obligations and its other
postretirement benefit obligations using a rate of 6.00% at September 30, 2004, based the current rates earned on long-term bonds that received one of the two
highest ratings given by a recognized rating agency. The lower 2005 discount rate primarily reflects the shorter duration of future benefits due to the
significant reduction in post-age 65 benefits.
As of September 30, 2005, the assumed health care cost trend rates are 10% in 2006 and 9% in 2007, decreasing to 5% in 2011 and thereafter. As of
September 30, 2004, the assumed health care cost trend were 9% in 2005 and 9% in 2006, decreasing to 5% in 2010 and thereafter. The assumed health care
cost trend rates could have a significant effect on amounts reported for retiree health care plans. A one-percentage point change in the health care cost trend
rates would have the following effects on other postretirement benefits as of September 30, 2005 (in millions):
1% Increase 1% Decrease
Effect on total service and interest costs $ — $ —
Effect on postretirement benefit obligation $ 10 $ (8)
Weighted average assumptions used to determine net periodic benefit cost were as follows:
Defined Benefit Pension Plans Other Postretirement Benefits
Successor
Predecessor Company Company Predecessor Company
Nine Months Three Months Nine Months
Ended Year Ended Ended Ended Year Ended
Sept. 30, 2005 Dec. 31, 2004 Dec. 31, 2005 Sept. 30, 2005 Dec. 31, 2004
Discount rate 6.00% 6.00% 5.30% 5.80% 6.19%
Expected return on plan assets 7.33% 8.00% — — —
Rate of compensation increase 3.73% 3.73% — — —
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