US Airways 2005 Annual Report Download - page 61

Table of Contents
7.25% Senior Exchangeable Notes due 2023 and retirement of a portion of the loan formerly guaranteed by the ATSB.
US Airways Group did not record an income tax benefit for the years ended December 31, 2005, 2004 and 2003 as it currently expects to continue to
record a full valuation allowance on any future tax benefits until it has achieved several consecutive quarters of profitable results coupled with an expectation
of continued profitability.
The 2004 results include a $16 million net credit associated with the termination of the rate per engine hour agreement with General Electric Engine
Services for overhaul maintenance services on V2500-A1 engines. This credit was partially offset by $2 million of net charges related to the return of certain
Boeing 737-200 aircraft which includes termination payments of $2 million, the write-down of leasehold improvements and deferred rent of $3 million, offset
by the net reversal of maintenance reserves of $3 million related to the returned aircraft.
The 2004 results also include a $24 million net gain on derivative instruments associated with AWA's fuel hedging program. This amount includes
$26 million of realized gains on settled hedge transactions and $2 million of unrealized losses resulting from mark-to-market accounting for changes in the
fair value of AWA's fuel hedging instruments. A $6 million charge arising from the resolution of pending litigation, a $5 million loss on the sale and
leaseback of two new Airbus aircraft and a $1 million charge for the write-off of debt issue costs in connection with the refinancing of the term loan were also
recognized in 2004.
The 2003 results include a nonoperating gain of $81 million related to the federal government assistance received under the Emergency Wartime
Supplemental Appropriations Act and an $11 million net gain on derivative instruments associated with AWA's fuel hedging program. This amount includes
$10 million of realized gains on settled hedge transactions and $1 million of unrealized gains resulting from mark-to-market accounting for changes in the fair
value of AWA's fuel hedging instruments. The 2003 results also include a $10 million nonoperating gain on sale of America West Holdings' investment in
Hotwire.com, a $3 million nonoperating gain on sale of America West Holdings' investment in National Leisure Group (see note 13, "Nonoperating income
(expenses) — other, net" in US Airways Group's notes to consolidated financial statements), an operating gain of $4 million related to the purchase and
subsequent exchange of an A320 airframe and a $3 million operating gain related to the settlement of disputed billings under AWA's frequent flyer program.
These gains were offset in part by $20 million of charges related to the execution of a new labor agreement with ALPA, net charges of $14 million resulting
from the elimination of AWA's hub operations in Columbus, Ohio ($11 million), the reduction-in-force of certain management, professional and
administrative employees ($2 million) and the impairment of certain owned Boeing 737-200 aircraft that have been grounded ($3 million), offset by a
$1 million reduction due to a revision of the estimated costs related to the early termination of certain aircraft leases and a $1 million reduction related to the
revision of estimated costs associated with the sale and leaseback of certain aircraft. See note 7, "Special charges (credits), net" in US Airways Group's notes
to consolidated financial statements.
AWA's Results of Operations
The following discussion provides an analysis of AWA's results of operations and reasons for material changes therein for the years ended December 31,
2005, 2004 and 2003. 55