US Airways 2005 Annual Report Download - page 57

Table of Contents
realize annual cost synergies of approximately $250 million by reducing administrative overhead, consolidating our information technology systems and
combining facilities. Cost synergies are currently tracking ahead of targets as overhead reductions are substantially in place, our facilities are largely
consolidated, systems integration is progressing and we are exceeding our original estimates in areas such as insurance and vendor contract negotiations.
Lastly, by becoming one nationwide, low-cost carrier with a global reach that provides more choice for consumers and an improved ability to connect, we
expect to realize approximately $175 million in additional annual revenue. While we are optimistic about our programs thus far, we cannot assure you that we
will be able to achieve these revenue, operating and cost synergies or that they can be achieved in a timely manner.
US Airways Group and its subsidiaries currently employ approximately 36,600 people on a full time equivalent basis. Of this total, US Airways currently
employs approximately 20,100 people while AWA currently employs approximately 12,100 people. After seniority lists have been integrated for each of the
combined airline's unionized labor groups, we anticipate that a single labor contract will be applied to each of those groups.
In connection with the merger, US Airways Group negotiated planned reductions to its existing fleet so that the fleet of the combined company better
matches aircraft size with consumer demand. As a result of the integration of US Airways and AWA, US Airways Group is expected to operate a mainline
fleet of approximately 354 aircraft at the end of 2006 (supported by approximately 240 regional jets and approximately 103 turboprops that provide passenger
feed into the mainline system), down from a total of 411 mainline aircraft operated by the airline prior to the merger. During 2006, US Airways Group
projects removing 22 aircraft and adding five aircraft to the mainline fleet. In February 2006, US Airways Group took delivery of two A319 aircraft
previously ordered by AWA. Airbus has also agreed to reschedule 30 narrow-body A320-family aircraft deliveries from the 2006 to 2010 period to the 2009
to 2010 period, which represented the combined commitment of AWA and US Airways prior to the merger. To modernize its international product and
improve the efficiency of its international network, the Company will begin accepting deliveries of A350 aircraft in 2011.
We believe the merger created one of the industry's most financially stable airlines with approximately $1.7 billion in new liquidity coming from
investments, the offering of US Airways Group common stock, new cash infusions from commercial partners, asset sales and the release of currently
restricted cash.
As of December 31, 2005, US Airways Group unrestricted and restricted cash, cash equivalents and short-term investments totaled $2.38 billion, of which
$1.58 billion was unrestricted.
Integration Update
Since the effective date of the merger on September 27, 2005, our operational accomplishments include the following:
• We achieved the top ranking in on-time performance among all major airlines as reported by the DOT for the fourth quarter of 2005.
• We consolidated operations at 30 overlap airports, with seven airports remaining to be integrated.
• We signed an amended agreement with Embraer for 25 firm order and 32 additional firm order Embraer 170/190 family aircraft, with an option for up
to an additional 50 aircraft.
• We achieved ETOPS (extended-range twin-engine operations) certification for Boeing 757 aircraft in long-range over-water service, which allowed the
airline to begin new service to Hawaii.
• We added 52 new pieces of ground equipment and additional personnel at our Philadelphia hub, which helped the airline run a much improved 2005
holiday operation as compared to 2004. 51