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US AIRWAYS GROUP INC
10-K
Annual report pursuant to section 13 and 15(d)
Filed on 02/28/2007
Filed Period 12/31/2006

Table of contents

  • Page 1
    US AIRWAYS GROUP INC 10-K Annual report pursuant to section 13 and 15(d) Filed on 02/28/2007 Filed Period 12/31/2006

  • Page 2
    ...of Stockholders, which proxy statement will be filed under the Securities Exchange Act of 1934 within 120 days of the end of US Airways Group, Inc.'s fiscal year ended December 31, 2006, are incorporated by reference into Part III of this Annual Report on Form 10-K. America West Airlines, Inc. meets...

  • Page 3
    ... Rule 12b-2 of the Exchange Act). US Airways Group, Inc. America West Airlines, Inc. US Airways, Inc. Yes o Yes o Yes o No þ No þ No þ The aggregate market value of common stock held by non-affiliates of US Airways Group, Inc. as of June 30, 2006 was approximately $3.3 billion. Indicate by check...

  • Page 4
    ...Airways Group, Inc. Consolidated Financial Statements and Supplementary Data of America West Item 8B. Airlines, Inc. Item 8C. Financial Statements and Supplementary Data of US Airways, Inc. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Item 9A. Controls...

  • Page 5
    ... benefits of the business combination transaction involving America West Holdings and US Airways Group, including future financial and operating results, our plans, objectives, expectations and intentions and other statements that are not historical facts. These statements are based upon the current...

  • Page 6
    ... financial covenants); • our ability to attract and retain customers; • the cyclical nature of the airline industry; • our ability to attract and retain qualified personnel; • economic conditions; and • other risks and uncertainties listed from time to time in our reports to the Securities...

  • Page 7
    ... Airways Group's primary business activity is the operation of a major network air carrier, through its ownership of the common stock of America West Holdings and its wholly owned subsidiary AWA; US Airways; Piedmont Airlines, Inc. ("Piedmont"); PSA Airlines, Inc. ("PSA"); Material Services Company...

  • Page 8
    ... in its Phoenix and Las Vegas hubs. US Airways' major connecting hubs prior to the merger were at airports in Charlotte and Philadelphia. US Airways also had substantial operations at Logan International Airport in Boston, New York's LaGuardia Airport, Pittsburgh International Airport, and Ronald...

  • Page 9
    ... costs, such as fuel and airport landing fees, will be reimbursed 100% by US Airways. US Airways controls marketing, scheduling, ticketing, pricing and seat inventories. Under the prorate agreements, the prorate carriers pay certain service fees to US Airways and receive a prorated share of ticket...

  • Page 10
    ... additional destinations to its customers under its flight designator code without materially increasing operating expenses and capital expenditures. Frequent flyer arrangements provide members with extended networks for earning and redeeming miles on partner carriers. Our US Airways Club members...

  • Page 11
    ... in the Star Alliance further enhances the value of US Airways' domestic and international route network by allowing customers wide access to the global marketplace. Expanded benefits for customers include network expansion through code share service, Dividend Miles benefits, airport lounge access...

  • Page 12
    ..., increased inspections and maintenance procedures to be conducted on certain aircraft, increased cockpit security, fuel tank flammability reductions and domestic reduced vertical separation. Regulations of this sort tend to enhance safety and increase operating costs. The DOT allows local airport...

  • Page 13
    ...O'Hare International Airport as a result of an agreement reached between the FAA and these airlines in August 2004. A final rule memorializing many of the terms of the August 2004 agreement was released in August 2006. The availability of international routes to domestic air carriers is regulated by...

  • Page 14
    ... airline subsidiaries. The status of AWA's and US Airways' labor agreements with their major domestic employee groups is as follows: Union Class or Craft Employees(1) Contract Amendable AWA: Air Line Pilots Association ("ALPA") Association of Flight Attendants-CWA ("AFA") International Association...

  • Page 15
    ... has been excluded for 2004. In addition, US Airways incurs fuel expense related to its US Airways Express operations. For the years ended December 31, 2006, 2005 and 2004, total fuel expense for MidAtlantic, US Airways Group's wholly owned subsidiaries and affiliate carriers was $554 million, $468...

  • Page 16
    ... "AWA's Results of Operations." In addition, AWA incurs fuel expense for its regional airline alliance with Mesa. For the years ended December 31, 2006, 2005 and 2004, total fuel expense for the Mesa alliance was $210 million, $182 million and $102 million, respectively. Prices and availability of...

  • Page 17
    ...merger of the plans, the accounts of members participating in both programs were merged into single accounts of the new program. The new Dividend Miles frequent flyer program allows participants to earn mileage credits for each paid flight segment on AWA, America West Express, US Airways, US Airways...

  • Page 18
    ... enhance customer service and control costs for ticketing services supported by the airline and distribution partners. The shift of consumer bookings that began several years ago from traditional travel agents, airline ticket offices and reservation centers to online travel agent sites (e.g., Orbitz...

  • Page 19
    ... themselves. Pre-merger US Airways Group's Chapter 11 Bankruptcy Proceedings On September 12, 2004, US Airways Group and its domestic subsidiaries, US Airways, Piedmont, PSA and MSC, which at the time accounted for substantially all of the operations of US Airways Group, filed voluntary petitions...

  • Page 20
    ... certain other actions, including mergers and acquisitions, investments and asset sales. Our affinity credit card partner agreement with Juniper Bank, a subsidiary of Barclays PLC, requires us to maintain an average quarterly balance of cash, cash equivalents and short-term investments of at least...

  • Page 21
    ... adverse effect on our business. We might not be able to fully realize the synergies generated by the merger. In deciding to enter into the merger agreement, US Airways Group and America West Holdings considered the long-term benefits of operating as a combined company, including, among others, an...

  • Page 22
    ... and markets, or start service to new destinations, we must be able to obtain adequate gates, ticketing facilities, operations areas, slots (where applicable) and office space. For example, at our largest hub airport, we are seeking to increase international service despite challenging airport space...

  • Page 23
    ...Transportation Security Administration and the Department of Homeland Security have issued a number of directives and other regulations. These requirements impose substantial costs on airlines. The FAA has proposed a far-reaching set of rules governing flight operations at New York LaGuardia Airport...

  • Page 24
    ... few years. These low-cost carriers are expected to continue to increase their market share through growth and could continue to have an impact on the overall performance of US Airways Group. There is ongoing speculation that some type of airline industry consolidation could occur in the near-term...

  • Page 25
    ... in service at one of our hub airports could have a material adverse impact on our operations. We operate principally through primary hubs in Charlotte, Philadelphia and Phoenix and secondary hubs/focus cities in Pittsburgh, Las Vegas, New York, Washington, D.C. and Boston. A majority of our flights...

  • Page 26
    ... our competitors; • movements in fuel prices; • new regulatory pronouncements and changes in regulatory guidelines; • general and industry-specific economic conditions; • public sales of a substantial number of shares of our common stock; and • general market conditions. Conversion of our...

  • Page 27
    ... Flight Equipment In connection with the merger, US Airways Group negotiated reductions to its existing fleet so that the fleet of the combined company better matches aircraft size with consumer demand. US Airways Group operated a mainline fleet of 359 aircraft at the end of 2006 (supported...

  • Page 28
    ...various secured financing agreements. (2) The terms of the leases expire between 2007 and 2024. As of December 31, 2006, US Airways Group's wholly owned regional airline subsidiaries operated the following turboprop and regional jet aircraft: Aircraft Type Average Seat Capacity Owned Leased(1) Total...

  • Page 29
    ... The terms of the leases expire between 2007 and 2022. As discussed in Item 1. "Business - US Airways Express Network", AWA and US Airways have code share agreements with certain regional jet affiliate operators. Collectively, wholly owned regional airline subsidiaries and affiliate operators flew...

  • Page 30
    ...and concourse areas Las Vegas McCarran 17 exclusive gates, ticket counter space and International Airport concourse areas Reagan National 15 gates, ticket counter space and concourse areas Maintenance facility - Hangar bays, hangar shops, ground service Charlotte, NC equipment shops, cargo, catering...

  • Page 31
    ... frequently require airlines to execute long-term leases to assist in obtaining financing for terminal and facility construction. Any future requirements for new or improved airport facilities and passenger terminals at airports in which US Airways Group's airline subsidiaries operate could result...

  • Page 32
    ... an order dismissing US Airways from the litigation. On October 12, 2005, Bank of America, N.A., which is one of the issuing banks of the US Airways frequent flyer program credit card and which also acts as the processing bank for most airline ticket purchases paid for with credit cards, filed suit...

  • Page 33
    ... filed a class action suit against US Airways in San Francisco Superior Court. The complaint alleges that US Airways breached its contract of carriage by charging additional fares and fees, after the purchase of tickets on the usairways.com website, for passengers under two years of age who travel...

  • Page 34
    ... of US Airways Group. The full year 2006 is comprised of the consolidated financial data of US Airways Group. The 2005 consolidated financial data presented includes the consolidated results of America West Holdings for the 269 days through September 27, 2005, the effective date of the merger, and...

  • Page 35
    ... change in method of maintenance accounting was applied retroactively) Unaudited pro forma earnings (loss) per share Basic Diluted Shares used for computation (in thousands): Basic Diluted Consolidated balance sheet data (at end of period): Total assets Long-term obligations, less current maturities...

  • Page 36
    ...(noncurrent) and employee benefit and other liabilities. Selected Financial Data of US Airways, Inc. Statements of Operations (in millions): Successor Company(a) Three Months Year Ended Ended December 31, December 31, 2006 2005 Nine Months Ended September 30, 2005 Predecessor Company(a) Nine Months...

  • Page 37
    ... accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," the carrying values were reduced to fair market value. The 2002 results also include a curtailment credit of $120 million related to certain postretirement benefit plans, a $30 million curtailment charge...

  • Page 38
    ... largest airline in the United States as measured by domestic RPMs and ASMs. We have primary hubs in Charlotte, Philadelphia and Phoenix and secondary hubs/focus cities in Pittsburgh, Las Vegas, New York, Washington, D.C. and Boston. We are a low-cost carrier offering scheduled passenger service on...

  • Page 39
    ... which is scheduled to be completed by the end of the first quarter of 2007; • Added $6.5 million of new ground equipment, 57 new managers and over 200 new full-time ramp employees at our Philadelphia hub to enhance the operational performance of this hub; • Launched new international service to...

  • Page 40
    ...the former AWA frequent flyer program, FlightFund, into US Airways' frequent flyer program, Dividend Miles, to create one consolidated program that allows customers to more easily earn and redeem miles across our network and Star Alliance; • Realigned the combined airline's fare class structure to...

  • Page 41
    ... our fare restructuring, the implementation of a code share agreement between AWA and US Airways that helped each airline sell more tickets, an improved and combined frequent flyer program and a rationalized route network that eliminated capacity on our weakest routes. Customer Service We are...

  • Page 42
    ... US Airways and US Airways Group's wholly owned subsidiaries, PSA, Piedmont and MSC. In 2006, we realized operating income of $558 million and income before cumulative effect of change in accounting principle of $303 million. These results include $79 million of net losses associated with AWA's fuel...

  • Page 43
    ... where NOL was not available to be used. In 2005, we realized operating losses of $217 million and a loss before cumulative effect of change in accounting principle of $335 million. In 2005, America West Holdings changed its accounting policy for certain maintenance costs from the deferral method...

  • Page 44
    ...from the application of mark-to-market accounting for changes in the fair value of fuel hedging instruments. The 2005 results include $106 million of special charges, including $13 million of merger related transition expenses, a $27 million loss on the sale and leaseback of six 737-300 aircraft and...

  • Page 45
    ... operating data for AWA. Year Ended December 31, 2006 2005 2004 Percent Change 2006-2005 Percent Change 2005-2004 Revenue passenger miles (in millions)(a) Available seat miles (in millions)(b) Load factor (percent)(c) Yield (cents)(d) Passenger revenue per available seat mile (cents)(e) Passenger...

  • Page 46
    ... US Airways Vacations division and a decrease in ticket change and service fees. Operating Expenses: 2006 (In millions) 2005 Percent Change Operating expenses: Aircraft fuel and related taxes Loss (gain) on fuel hedging instruments, net Salaries and related costs Aircraft rent Aircraft maintenance...

  • Page 47
    ... frequent flyer program to the Dividend Miles program, which results in higher costs due to the Dividend Miles program allowing members to redeem awards on Star Alliance partner airlines. Express expenses increased 12.1% in 2006 to $611 million from $545 million in 2005. Aircraft fuel expense...

  • Page 48
    ... Senior Exchangeable Notes due 2023 and retirement of a portion of the loan formerly guaranteed by the ATSB. 2005 Compared with 2004 Revenues: 2005 (In millions) 2004 Percent Change Operating revenues: Mainline passenger Express passenger Cargo Other Total operating revenues $ $ 2,521 512 33 197...

  • Page 49
    ... the years ended December 31, 2005 and 2004: Year Ended December 31, 2005 2004 (In cents) Percent Change Mainline: Aircraft fuel and related taxes Loss (gain) on fuel hedging instruments, net Salaries and related costs Aircraft rent Aircraft maintenance Other rent and landing fees Selling expenses...

  • Page 50
    ... 2, "Change in Accounting Policy for Maintenance Costs," to AWA's consolidated financial statements in Item 8B of this report. Express expenses increased 45.7% in 2005 to $545 million from $374 million in 2004 due to increased flying by Mesa under the alliance agreement with AWA. Aircraft operating...

  • Page 51
    ...2005 operating results also reflect the impact of the merger with America West Holdings. The table below sets forth selected operating data for US Airways' mainline operations. Year Ended December 31, 2006 2005 2004 Percent Change 2006-2005 Percent Change 2005-2004 Mainline: Revenue passenger miles...

  • Page 52
    ... Group's wholly owned regional airlines and affiliate regional airlines operating as US Airways Express. Express passenger revenues were $2.08 billion for 2006, an increase of $464 million from 2005. Express RPMs increased by 6.6% as Express capacity, as measured by ASMs, decreased 1.7%, resulting...

  • Page 53
    ... in the average price per gallon of fuel from $1.77 in 2005 to $2.07 in 2006. • Salaries and related costs per ASM increased 4.9% primarily due to costs associated with employee incentive plans in 2006, including $36 million recorded for the US Airways Group profit sharing plan and that the...

  • Page 54
    ... in 2005 primarily due to lower volume. Other revenues increased 7.0% in 2005 primarily due to revenue generated through airline partner travel after US Airways joined the Star Alliance in May 2004 and an increase in marketing revenue related to award miles sold to credit card and other partners. 51

  • Page 55
    ... mainline CASM for US Airways for the years ended December 31, 2005 and 2004: Year Ended December 31, 2005 (In cents) 2004 Percent Change Mainline: Aircraft fuel and related taxes Salaries and related costs Aircraft rent Aircraft maintenance Other rent and landing fees Selling expenses Depreciation...

  • Page 56
    ... fleet and lower book values on the continuing fleet as a result of fresh-start reporting. • Other operating expenses per ASM increased 7.9% primarily as a result of increases associated with the redemption of Dividend Miles on partner airlines and future travel on US Airways as well as with...

  • Page 57
    ... result of US Airways' Chapter 11 filings and are presented separately in the statements of operations. Such items consist of the following (in millions): Predecessor Company Nine Months Ended Year Ended September 30, December 31, 2005 2004 Curtailment of postretirement benefits(a) Termination...

  • Page 58
    ... decrease in cash reserves required under an agreement for processing credit card transactions. The 2005 period included the merger transaction, which included $258 million of net cash acquired. Other investing activities in 2005 included net purchases of short-term investments totaling $295 million...

  • Page 59
    ... air traffic liability by selling tickets for travel on US Airways. Net cash used in investing activities was $249 million and $283 million in 2006 and 2005, respectively. Principal investing activities during 2006 included net purchases of short-term investments totaling $186 million and purchases...

  • Page 60
    ...-leaseback of 44 aircraft and other asset sale transactions, net purchases of short-term investments of $132 million and an increase in restricted cash of $35 million, primarily consisting of reserves required under agreements for processing credit card transactions. Net cash provided by financing...

  • Page 61
    ...Airways Group was the guarantor. At the time of repayment on March 31, 2006, the outstanding balance of the loan was $161 million. US Airways and AWA also had an $89 million loan from Airbus Financial Services entered into as of September 27, 2005. In accordance with the terms of the loan agreements...

  • Page 62
    ... any time at or prior to the close of business on April 11, 2006, to convert the notes into shares of the common stock of US Airways Group at a price of $29.09 per share, or 34.376 shares per $1,000 principal amount. Holders who converted also received interest up to the date of conversion. A total...

  • Page 63
    ... market an airline mileage award credit card program to the general public to participate in US Airways Group's Dividend Miles program through the use of a co-branded credit card. The amended credit card agreement went into effect on January 1, 2006. Prior to that date, the AWA credit card program...

  • Page 64
    ...card processing agreement, AWA and US Airways will pay to Chase fees in connection with card processing services such as sales authorization, settlement services and customer service. AWA and US Airways will also be required to maintain a reserve account to secure Chase's exposure to outstanding air...

  • Page 65
    ... years and $1.5 million of the loan amortizing over three quarterly installments on the first three interest payment dates. The LBBW loan is secured by three Boeing 757 aircraft that we purchased in February 2006. On October 18, 2006, US Airways entered into a facility agreement with The Royal Bank...

  • Page 66
    ...an agreement with International Aero Engines which provides for the purchase by AWA of five new V2500-A5 spare engines scheduled for delivery through 2010 for use on certain of the Airbus A320 fleet. Covenants and Credit Rating In addition to the minimum cash balance requirements, our long-term debt...

  • Page 67
    ... the Chapter 11 cases, including the costs of operating the Reorganized Debtors' businesses since filing for bankruptcy. The Reorganized Debtors received a large number of timely filed administrative claims, as well as additional claims that were late filed without permission of the Bankruptcy Court...

  • Page 68
    ..., and as a result, reduce the cost of aircraft financing to US Airways. US Airways reviewed 62 aircraft operating leases financed through EETCs, each of which contains a fixed-price purchase option that allows US Airways to purchase the aircraft at predetermined prices on specified dates during the...

  • Page 69
    ... by those companies. (4) Represents operating lease commitments entered into by US Airways Group's other airline subsidiaries Piedmont and PSA. (5) Represents minimum payments under capacity purchase agreements with third-party express carriers. We expect to fund these cash obligations from...

  • Page 70
    ... and its issuance of new common stock. Internal Revenue Code Section 382 substantially limits the annual usage of remaining tax attributes that were generated prior to the change in ownership. In addition, as a result of America West Holdings' merger with US Airways Group, AWA also experienced an...

  • Page 71
    ... of tickets sold for past travel dates. The balance in the air traffic liability fluctuates throughout the year based on seasonal travel patterns and fare sale activity. The air traffic liability was as follows (in millions): December 31, 2006 December 31, 2005 US Airways Group AWA US Airways...

  • Page 72
    ...on AWA, America West Express, US Airways, US Airways Shuttle, US Airways Express, Star Alliance carriers and certain other airlines that participate in the program. We use the incremental cost method to account for the portion of its frequent flyer liability incurred when Dividend Miles members earn...

  • Page 73
    ...the purchase price to the assets and liabilities of US Airways Group and to its wholly owned subsidiaries including US Airways. The purchase price or value of the merger consideration was determined based upon America West Holdings' traded market price per share due to the fact that US Airways Group...

  • Page 74
    ... annual increases in the cost of medical and other health care costs in the case of other postretirement benefit obligations. These long-term assumptions are subject to revision based on changes in interest rates, financial market conditions, expected versus actual return on plan assets, participant...

  • Page 75
    ... effect on our consolidated statements of operations for the year ended December 31, 2006 or for any prior period presented. This statement also requires plan assets and obligations to be measured as of the employer's balance sheet date. The measurement provisions of this statement will be effective...

  • Page 76
    ... announcement are applicable for fiscal years beginning after December 15, 2006. US Airways Group currently uses the direct expense method of accounting for planned major maintenance, an acceptable method under generally accepted accounting principles in the United States of America. Therefore, the...

  • Page 77
    ... fuel requirements. The use of such hedging transactions in our fuel hedging program could result in us not fully benefiting from certain declines in heating oil futures prices below the put option price of the costless collar. Further, these instruments do not provide protection from the increases...

  • Page 78
    ...or debt agreements. Changes in interest rates will impact the cost of such financings. Equity Price Risk We hold options to purchase common stock in Sabre Holdings Corporation that are recorded in other assets with a fair value of $21 million as of December 31, 2006. Fair value is computed using the...

  • Page 79
    ... periods prior to the merger include the accounts and activities of America West Holdings. America West Holdings is the holding company that owns all of the stock of AWA. Management's Annual Report on Internal Control over Financial Reporting Management of US Airways Group, Inc. is responsible for...

  • Page 80
    ...Public Company Accounting Oversight Board (United States), the consolidated balance sheets of US Airways Group and subsidiaries as of December 31, 2006 and 2005, and the related consolidated statements of operations, stockholders' equity and comprehensive income, and cash flows for each of the years...

  • Page 81
    ... standards of the Public Company Accounting Oversight Board (United States), the effectiveness of US Airways Group, Inc.'s internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring...

  • Page 82
    Table of Contents US Airways Group, Inc. Consolidated Statements of Operations For the Years Ended December 31, 2006, 2005 and 2004 2006 2005 2004 (In millions, except share and per share amounts) Operating revenues: Mainline passenger $ 7,966 $ 3,695 $ 2,203 Express passenger 2,744 976 353 Cargo ...

  • Page 83
    Table of Contents US Airways Group, Inc. Consolidated Balance Sheets December 31, 2006 and 2005 2006 2005 (In millions, except share and per share amounts) ASSETS Current assets Cash and cash equivalents Short-term investments Restricted cash Accounts receivable, net Materials and supplies, net ...

  • Page 84
    ... equipment Purchases of short-term investments Proceeds from sales of short-term investments Cash acquired as part of acquisition Costs incurred as part of acquisition Purchases of investments in debt securities Sales of investments in debt securities Decrease (increase) in long-term restricted cash...

  • Page 85
    Table of Contents US Airways Group, Inc. Consolidated Statements of Stockholders' Equity and Comprehensive Income For the Years Ended December 31, 2006, 2005 and 2004 Retained Accumulated Class B Additional Earnings/ Other Class B Common Common Paid-In (Accumulated Comprehensive Treasury Treasury ...

  • Page 86
    ... business activity is the operation of a major network air carrier through its ownership of the common stock of US Airways, Inc. ("US Airways"), America West Holdings Corporation ("America West Holdings"), Piedmont Airlines, Inc. ("Piedmont"), PSA Airlines, Inc. ("PSA"), Material Services Company...

  • Page 87
    ... Note 13, the financial results of US Airways Group and its wholly owned subsidiaries include certain related party transactions. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates...

  • Page 88
    ... value of the reporting unit is based on the present value of estimated future cash flows. Other intangible assets consist primarily of trademarks, international route authorities and airport take-off and landing slots and airport gates acquired in connection with the merger. As of December 31, 2006...

  • Page 89
    ...US Airways Group's principal operating subsidiaries, AWA and US Airways maintained separate frequent travel award programs known as "Flight Fund" and "Dividend Miles," respectively. Following the merger, the two frequent flyer programs were modified to allow customers of each airline to earn and use...

  • Page 90
    ... free travel based on the terms of the new Dividend Miles program, due primarily to members of the former FlightFund program gaining access to international routes operated by US Airways and Star Alliance members, which carry higher costs. The estimated cost of providing the free travel, using...

  • Page 91
    ... in Sabre Holding Corporation ("Sabre") and warrants in a number of companies as a result of service agreements with them. On an ongoing basis, US Airways adjusts its balance sheets to reflect changes in the current fair market value of the stock options and warrants to other non-operating income...

  • Page 92
    ... change and service fees, commissions earned on tickets sold for flights on other airlines, sales of tour packages by the US Airways Vacations division and the marketing component earned from selling mileage credits to partners, as discussed in Note 1(j) "Frequent Traveler Program". (n) Stock-based...

  • Page 93
    ... Statements - (Continued) Had US Airways Group determined compensation cost based on the fair value at the grant date for its stock options, stock appreciation rights and restricted stock units under SFAS 123 for the years ended December 31, 2005 and 2004, the Company's net loss and loss per share...

  • Page 94
    ...a US Airways affiliate Express carrier. Express expenses on the statements of operations consist of the following (in millions): Year Ended December 31, 2006 Year Ended December 31, 2005 Year Ended December 31, 2004 Aircraft fuel and related taxes Salaries and related costs Capacity purchases Other...

  • Page 95
    ... effect on the Company's consolidated statements of operations for the year ended December 31, 2006 or for any prior period presented. This statement also requires plan assets and obligations to be measured as of the employer's balance sheet date. The measurement provisions of this statement will be...

  • Page 96
    ... expect it to have a material impact on US Airways Group's consolidated financial statements. On November 10, 2005, the FASB issued FASB Staff Position No. FAS 123R-3, "Transition Election Related to Accounting for Tax Effects of Share-Based Payment Awards." The Company elected to adopt the modified...

  • Page 97
    ...for each share of America West Holdings Class B common stock they owned, according to the terms specified in the merger agreement. On September 27, 2005, US Airways Group received new equity investments of $565 million in the aggregate from ACE Aviation Holdings Inc. ("ACE"); Par Investment Partners...

  • Page 98
    ... exercises were used to buy back shares of common stock at the average market price for the reporting period. The following table presents the computation of basic and diluted EPS (in millions, except share amounts): Year Ended December 31, 2005 2006 2004 Basic earnings (loss) per share: Income...

  • Page 99
    ... Year Ended December 31, 2005 2004 Airbus restructuring Merger related transition expenses Sale leaseback transactions Power by the hour program penalties Severance due to change in control Aircraft returns Termination of V2500 power by the hour agreement Settlement of bankruptcy claims Other Total...

  • Page 100
    ... aircraft livery costs, $1 million of programming service expense and $2 million in other expenses. Severance charges and payment activity related to the merger are as follows: Year Ended December 31, 2006 2005 Balance beginning of year Amount recorded by US Airways in purchase accounting Severance...

  • Page 101
    ... services agreement with Sabre, US Airways was granted two tranches of stock options ("SHC Stock Options") to acquire up to 6,000,000 shares of Class A Common Stock, $0.01 par value, of Sabre Holdings Corporation ("SHC Common Stock"), Sabre's parent company. Each tranche included 3,000,000 stock...

  • Page 102
    ...to the frequent resetting of interest rates on the auction rate securities. Gross proceeds from sales of available-for-sale securities for the years ended December 31, 2006, 2005 and 2004 were $749 million, $411 million and $589 million, respectively. The Company had no long-term investments in debt...

  • Page 103
    ... loan Juniper prepaid miles, variable interest rate of 10.10%, interest only payments until due in 2010(k) Note payable to PBGC, interest rate of 6%, interest only payments until due 2012(l) Total long-term debt and capital lease obligations Less: Unamortized discount on debt Current maturities Long...

  • Page 104
    ...Airways Group was the guarantor. At the time of repayment on March 31, 2006, the outstanding balance of the loan was $161 million. US Airways and AWA also had an $89 million loan from Airbus Financial Services entered into as of September 27, 2005. In accordance with the terms of the loan agreements...

  • Page 105
    ...Airport and New York LaGuardia Airport. US Airways continues to hold the right to repurchase the slots anytime after the second anniversary of the slot sale-leaseback transaction. These transactions were accounted for as secured financings. Installments are due monthly through 2015. In December 2006...

  • Page 106
    .... On March 31, 2006, the agreement was amended to change the maturity date from September 30, 2010 to December 31, 2008 and required the Company to make equal quarterly principal payments through maturity beginning March 31, 2006. On September 30, 2005, US Airways Group issued $144 million aggregate...

  • Page 107
    ... agreement, Juniper agreed to offer and market an airline mileage award credit card program to the general public to participate in US Airways Group's Dividend Miles program through the use of a co-branded credit card. US Airways Group's credit card program was also administered by Bank of America...

  • Page 108
    ... Financial Statements - (Continued) (l) the expiration date, which is the later of December 31, 2012 or seven years from the date on which Juniper commences marketing to the general public. Under the amended credit card agreement, Juniper will pay to US Airways Group fees for each mile awarded...

  • Page 109
    ...355 1,050 3,135 $ Certain of US Airways Group's long-term debt agreements contain minimum cash balance requirements and other covenants with which the Company was in compliance at December 31, 2006. Certain of US Airways Group's long-term debt agreements contain crossdefault provisions, which may...

  • Page 110
    ...Contents US Airways Group, Inc. Notes to Consolidated Financial Statements - (Continued) under SFAS No. 87, "Employers Accounting for Pensions" and SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions." Defined Benefit Pension Plans(1) Year Ended Year Ended December...

  • Page 111
    ... post retirement benefits (in millions): Defined Benefit Pension Plans Year Ended Year Ended December 31, December 31, 2006 2005 Other Postretirement Benefits Year Ended Year Ended December 31, December 31, 2006 2005 Service cost Interest cost Expected return on plan assets Total periodic costs...

  • Page 112
    ..., $16 million and $11 million for the years ended December 31, 2006, 2005 and 2004, respectively. In connection with its first reorganization under Chapter 11 of the Bankruptcy Code, US Airways terminated the Retirement Income Plan for Pilots of US Airways, Inc. and the related nonqualified pilot...

  • Page 113
    ... US Airways Group, Inc. Notes to Consolidated Financial Statements - (Continued) (d) Profit Sharing Plans Most non-executive employees of US Airways Group are eligible to participate in the 2005 Profit Sharing Plan, an annual bonus program, which was established subsequent to the merger. Annual...

  • Page 114
    ... US Airways Group, Inc. Notes to Consolidated Financial Statements - (Continued) The components of the provision for income taxes for the tax year ended December 31, 2006 are as follows (in millions). The tax expense for tax years 2005 and 2004 were insignificant to the financial statements: Year...

  • Page 115
    ...Company is not currently under examination. 10. (a) Commitments and Contingencies Commitments to Purchase Flight Equipment and Maintenance Services Airbus Purchase Commitments In August 2006, AWA amended its A320/A319 Purchase Agreement with Airbus to add seven new Airbus A321s to an existing order...

  • Page 116
    ...the period 2009 and 2010. The Company has the right to cancel these A330 orders in the event that US Airways makes certain predelivery payments under the A350 Purchase Agreement. The future commitments under the purchase agreements with Airbus and US Airways Group totals $3.27 billion as of December...

  • Page 117
    ... Company also has options to purchase certain of the aircraft at fair market values at the end of the lease terms. Certain of the agreements require security deposits, minimum return provisions and supplemental rent payments. AWA and US Airways have set up pass through trusts, which have issued pass...

  • Page 118
    ... provide that certain variable costs, such as fuel and airport landing fees, will be reimbursed 100% by the Company. The Company controls marketing, scheduling, ticketing, pricing and seat inventories. The regional jet capacity purchase agreements have expirations from 2012 to 2020 and provide...

  • Page 119
    ... Financial Statements - (Continued) On February 26, 2004, a company called I.A.P. Intermodal, LLC filed suit against US Airways Group and its wholly owned airline subsidiaries in the United States District Court for the Eastern District of Texas alleging that the defendants' computer scheduling...

  • Page 120
    ... an order dismissing US Airways from the litigation. On October 12, 2005, Bank of America, N.A., which is one of the issuing banks of the US Airways frequent flyer program credit card and which also acts as the processing bank for most airline ticket purchases paid for with credit cards, filed suit...

  • Page 121
    ... related to tickets sold to individual passengers through the use of major credit cards or to tickets sold by other airlines and used by passengers on US Airways and AWA or its regional airline affiliates. These receivables are short-term, mostly being settled within seven days after sale. Bad debt...

  • Page 122
    Table of Contents US Airways Group, Inc. Notes to Consolidated Financial Statements - (Continued) adjusts its balance sheet to reflect changes in the current fair market value of the stock options and warrants according to SFAS 133. In the first quarter of 2006, the Company recorded $6 million in ...

  • Page 123
    ... stock, including shares received pursuant to Participation Agreements with America West Holdings, for a total investment of $160 million. Richard P. Schifter, a member of the board of directors of US Airways Group until November 15, 2006, is a partner of Texas Pacific Group, which was a controlling...

  • Page 124
    ... Total purchase price $ 1,098 2,367 592 779 732 (5,451) 117 $ In connection with US Airways Group's emergence from bankruptcy, significant prepetition liabilities were discharged. The surviving liabilities and the assets acquired in the merger are shown at estimated fair value. The Company used...

  • Page 125
    ... transportation for passengers and cargo. This allows it to benefit from an integrated revenue pricing and route network that includes US Airways, AWA, Piedmont, PSA and third-party carriers that fly under capacity purchase agreements as part of the Company's Express operations. The flight equipment...

  • Page 126
    ...an agreement to repurchase all of the replacement warrants issued to the ATSB in connection with the merger with America West Holdings. US Airways Group repurchased approximately 7.7 million warrants to purchase shares of common stock that had an exercise price of $7.27 per share. The total purchase...

  • Page 127
    ... of America West Holdings and AWA employee stock options outstanding at the time of the merger were fully vested in accordance with the change of control provisions of America West Holdings' stock option plans and were converted into options of US Airways Group. Existing stock options of US Airways...

  • Page 128
    ... obtaining a combined operating certificate for AWA and US Airways). SFAS 123R requires that the grant-date fair value of RSUs be equal to the market price of the share on the date of grant if vesting is based on a service or a performance condition. The grant-date fair value of RSU awards that are...

  • Page 129
    Table of Contents US Airways Group, Inc. Notes to Consolidated Financial Statements - (Continued) Stock Options and Stock Appreciation Rights - Stock options and stock appreciation rights ("SARs") are granted with an exercise price equal to the common stock's fair market value at the date of each ...

  • Page 130
    ... yield is assumed to be zero since the Company does not pay dividends and has no current plans to do so in the future. The volatility is based on the historical volatility of US Airways Group common stock over a time period equal to the expected term of the stock option or SAR. The expected life of...

  • Page 131
    ...ALPA - US Airways Group and US Airways have a letter of agreement with the ALPA that provides that US Airways' pilots designated by ALPA receive stock options to purchase 1.1 million shares of the Company's common stock. At an exercise price equal to the average market price for the 20 business days...

  • Page 132
    ... US Airways Group, Inc. Notes to Consolidated Financial Statements - (Continued) 18. Valuation and Qualifying Accounts (in millions) Balance at Beginning of Period Balance at End of Period Description Additions Deductions Allowance for doubtful receivables: Year ended December 31, 2006 Year...

  • Page 133
    ... US Airways Group, Inc. Notes to Consolidated Financial Statements - (Continued) 2005 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Operating revenues Operating expenses Operating income (loss) Nonoperating expenses, net Income tax provision Income (loss) before cumulative effect of change...

  • Page 134
    ...'s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the...

  • Page 135
    Table of Contents America West Airlines, Inc. Consolidated Statements of Operations For the Years Ended December 31, 2006, 2005 and 2004 2006 2005 2004 (In millions) Operating revenues: Mainline passenger Express passenger Cargo Other Total operating revenues Operating expenses: Aircraft fuel and ...

  • Page 136
    ...America West Airlines, Inc. Consolidated Balance Sheets December 31, 2006 and 2005 2006 2005 (In millions, except share amounts) ASSETS Current assets Cash and cash equivalents Short-term investments Accounts receivable, net Materials and supplies, net Prepaid expenses and other Total current assets...

  • Page 137
    ... debt issuance costs and guarantee fees Amortization of debt discount Amortization of investment discount and premium, net Gain on sale of investments Other Changes in operating assets and liabilities: Decrease in restricted cash Increase in accounts receivable, net Decrease (increase) in expendable...

  • Page 138
    ... America West Airlines, Inc. Consolidated Statements of Stockholder's Deficit For the Years Ended December 31, 2006, 2005 and 2004 Additional Paid-In Capital (In millions) Common Stock Accumulated Deficit Total Balance at December 31, 2003 Net loss Balance at December 31, 2004 Net loss Balance...

  • Page 139
    ... passenger revenue recognition, impairment of long-lived assets and intangible assets, and accounting for the frequent traveler program. (c) Cash Equivalents and Short-term Investments Cash equivalents and short-term investments consist primarily of cash in money market securities of various banks...

  • Page 140
    ... at amortized cost. Investments in auction rate securities are classified as available for sale, as the terms of the securities exceed one year; however, the interest rates are generally reset every 28 days. (d) Restricted Cash Restricted cash includes cash deposits in trust accounts primarily to...

  • Page 141
    ... operating subsidiaries, AWA and US Airways, maintained separate frequent travel award programs known as "Flight Fund" and "Dividend Miles," respectively. Following the merger, the two frequent flyer programs were modified to allow customers of each airline to earn and use miles on the other airline...

  • Page 142
    ... America West Airlines, Inc. Notes to Consolidated Financial Statements - (Continued) increases. These instruments primarily consist of costless collars which hedge approximately 29% of US Airways Group's 2007 total anticipated jet fuel requirements as of December 31, 2006. AWA does not purchase...

  • Page 143
    ... change and service fees, commissions earned on tickets sold for flights on other airlines, sales of tour packages by the US Airways Vacations division and the marketing component earned from selling mileage credits to partners, as discussed in Note 1(i) "Frequent Traveler Program". (m) Stock-based...

  • Page 144
    ... regional alliance agreement with Mesa are classified as "Express expenses" on the statements of operations. Express expenses on the statements of operations consist of the following (in millions): Year Ended December 31, 2006 Year Ended December 31, 2005 Year Ended December 31, 2004 Aircraft fuel...

  • Page 145
    ...are applicable for fiscal years beginning after December 15, 2006. AWA currently uses the direct expense method of accounting for planned major maintenance, an acceptable method under generally accepted accounting principles in the United States of America. Therefore, the adoption of FSP No. AUG AIR...

  • Page 146
    ... millions): 2006 Year Ended December 31, 2005 2004 Airbus restructuring Sale leaseback transactions Merger related transition expenses Power by the hour program penalties Severance due to change in control Aircraft returns Termination of V2500 power by the hour agreement Other Total (a) $ $ (51...

  • Page 147
    ... of America West Holdings and AWA employee stock options outstanding at the time of the merger were fully vested in accordance with the change of control provisions of America West Holdings' stock option plans and were converted into options of US Airways Group. Existing stock options of US Airways...

  • Page 148
    ... appreciation right, and (ii) three shares for each share of stock issued pursuant to a stock purchase award, stock bonus award, stock unit award, and other full-value types of stock awards. Stock awards that are terminated, forfeited or repurchased will result in an increase in the share reserve of...

  • Page 149
    Table of Contents America West Airlines, Inc. Notes to Consolidated Financial Statements - (Continued) There were no RSUs granted during 2004. Restricted stock unit award activity for the years ending December 31, 2006 and 2005 is as follows (shares in thousands): Number of Shares Weighted Average ...

  • Page 150
    Table of Contents America West Airlines, Inc. Notes to Consolidated Financial Statements - (Continued) Stock option and SARs activity for the year ending December 31, 2006 is as follows (stock options and SARs in thousands) Weighted Average Remaining Contractual Term (Years) Stock Options and SARs...

  • Page 151
    ... requires several assumptions. The risk-free interest rate is based on the U.S. Treasury yield curve in effect for the expected term of the stock option or SAR at the time of grant. The dividend yield is assumed to be zero since US Airways Group does not pay dividends and has no current plans to...

  • Page 152
    ... securities are greater than ten years with a reset date approximately every 28 days. The carrying values of available-for-sale securities approximate fair value. There were no unrealized gains or losses on these investments for the years ended December 31, 2006, 2005 and 2004 due to the frequent...

  • Page 153
    ... loan agreement, which increased the principal amount of the loan to $1.25 billion (as amended and restated, the "GE Loan"). US Airways, America West Holdings, AWA and other subsidiaries of US Airways Group are all guarantors of the GE Loan. On March 31, 2006, proceeds of the GE Loan were used...

  • Page 154
    Table of Contents America West Airlines, Inc. Notes to Consolidated Financial Statements - (Continued) • The $161 million loan entered into as of September 27, 2005 between US Airways and AWA and Airbus Financial Services, for which US Airways Group was the guarantor. At the time of repayment on ...

  • Page 155
    ... agreement, Juniper agreed to offer and market an airline mileage award credit card program to the general public to participate in US Airways Group's Dividend Miles program through the use of a co-branded credit card. US Airways Group's credit card program was also administered by Bank of America...

  • Page 156
    ... held under the credit card processing agreement with JP Morgan Chase Bank, N.A. Accordingly, the prepayment has been recorded as additional indebtedness. Juniper requires US Airways Group to maintain an average quarterly balance of cash, cash equivalents and short-term investments of at least...

  • Page 157
    ... Financial Statements - (Continued) be delivered several years beyond the originally scheduled delivery dates. US Airways Group is currently evaluating the revised technical and commercial aspects of the A350 program. The future commitments under the purchase agreement with AWA and Airbus totals...

  • Page 158
    ...Bank of America, N.A., which is one of the issuing banks of the US Airways frequent flyer program credit card and which also acts as the processing bank for most airline ticket purchases paid for with credit cards, filed suit in the Delaware Chancery Court in New Castle County against US Airways, US...

  • Page 159
    ... case and has made counterclaims against Bank of America. Juniper seeks an order declaring the validity of its new agreement to issue a US Airways frequent flyer credit card. On November 3, 2005, Bank of America filed a motion for partial summary judgment on the breach of contract claim against US...

  • Page 160
    ... respectively. The NOL expires during the years 2022 through 2025. As a result of a statutory "ownership change" (as defined for purposes of Section 382 of the Internal Revenue Code) that occurred as a result of America West Holding's merger with US Airways Group on September 27, 2005, AWA's ability...

  • Page 161
    ...its plan of reorganization, including the merger transaction with America West Holdings. As a result of the merger, America West Holdings became a wholly owned subsidiary of US Airways Group. America West Holdings and AWA, as part of the merger, became members of the consolidated US Airways Group on...

  • Page 162
    ...): 2006 2005 Deferred tax assets: Net operating loss carryforwards Property, plant and equipment Employee benefits Dividend miles awards AMT credit carryforward Other deferred tax assets Valuation allowance Net deferred tax assets Deferred tax liabilities: Depreciation and amortization Sale and...

  • Page 163
    ...' Class B common stock. In the fourth quarter of 2005, US Airways Group announced an agreement to repurchase all of the replacement warrants issued to the ATSB in connection with the merger with America West Holdings. US Airways Group repurchased approximately 7.7 million warrants to purchase shares...

  • Page 164
    ... West Airlines, Inc. Notes to Consolidated Financial Statements - (Continued) $7.27 per share. The total purchase price for the warrants was $116 million, the estimated fair value of such warrants on the purchase date. In connection with this repurchase, AWA recorded $8 million of non operating...

  • Page 165
    ... Group for repayment of ATSB, Airbus, and GECC loans Forgiveness of Airbus loan and interest Notes payable issued for equipment purchase deposits Notes payable canceled under the aircraft purchase agreement Loan proceeds received by US Airways Group Payment in kind notes issued, net of returns Cash...

  • Page 166
    ..., President and Chief Executive Officer of ACE. ACE purchased 5,000,000 shares of US Airways Group common stock at a purchase price of $15.00 per share, for a total investment of $75 million. ACE or its subsidiaries entered into commercial agreements with US Airways Group and America West Holdings...

  • Page 167
    ... America West Airlines, Inc. Notes to Consolidated Financial Statements - (Continued) 14. Valuation and Qualifying Accounts Balance at Beginning of Period Balance at End of Period Description Additions Deduction (in millions) Allowance for doubtful receivables: Year ended December 31, 2006 Year...

  • Page 168
    ... and directors of US Airways; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of US Airways' assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over...

  • Page 169
    ... with the standards of the Public Company Accounting Oversight Board (United States), the balance sheets of US Airways as of December 31, 2006 and 2005, and the related statements of operations, stockholders' equity (deficit) and cash flows for the year ended December 31, 2006, and the three months...

  • Page 170
    ... Public Accounting Firm The Board of Directors and Stockholder US Airways, Inc.: We have audited the accompanying balance sheets of US Airways, Inc. (US Airways) as of December 31, 2006 and 2005, and the related statements of operations, stockholders' equity (deficit) and cash flows for year ended...

  • Page 171
    ...US Airways, Inc. Statements of Operations (In millions) Successor Company Three Months Year Ended Ended December 31, December 31, 2006 2005 Predecessor Company Nine Months Ended Year Ended September 30, December 31, 2005 2004 Operating revenues Mainline passenger Express passenger Cargo Other Total...

  • Page 172
    ...US Airways, Inc. Balance Sheets December 31, 2006 and 2005 (In millions, except share and per share amounts) 2006 2005 ASSETS Current assets Cash and cash equivalents Short-term investments Restricted cash Accounts receivable, net Materials and supplies, net Prepaid expenses and other Total current...

  • Page 173
    ..., employee benefit liabilities and other Net cash provided by (used for) operating activities before reorganization items Reorganization items, net Net cash provided by (used in) operating activities Cash flows from investing activities Purchases of property and equipment Proceeds from sales of...

  • Page 174
    ... loss on fuel cash flow hedges, net Minimum pension liability change Net income Fresh-start adjustments: Adjustments to stockholder's deficit in connection with fresh-start Total comprehensive income Successor Company: Balance as of September 30, 2005 Net loss Total comprehensive loss Balance as of...

  • Page 175
    ... bargaining agreements with various labor unions. (b) Basis of Presentation and Use of Estimates The accompanying financial statements include the accounts of US Airways. US Airways is a wholly owned subsidiary of US Airways Group, Inc. ("US Airways Group"). On September 12, 2004, US Airways filed...

  • Page 176
    ...-start reporting for the second bankruptcy and purchase accounting. References in the financial statements and the notes to the financial statements to "Predecessor Company" refer to US Airways prior to September 30, 2005. While the effective date of the plan of reorganization and the merger was...

  • Page 177
    ... 2006, goodwill represents the purchase price in excess of the net amount assigned to assets acquired and liabilities assumed by America West Holdings on September 27, 2005. Since that time, there have been no events or circumstances that would indicate an impairment to goodwill. US Airways performs...

  • Page 178
    ... value of the reporting unit is based on quoted market prices for US Airways Group common stock and the number of shares outstanding of US Airways Group common stock. Under the income approach, the fair value of the reporting unit is based on the present value of estimated future cash flows. Other...

  • Page 179
    ... operating subsidiaries, AWA and US Airways, maintained separate frequent travel award programs known as "Flight Fund" and "Dividend Miles," respectively. Following the merger, the two frequent flyer programs were modified to allow customers of each airline to earn and use miles on the other airline...

  • Page 180
    ... traffic liability to conform its accounting policies for recognizing revenue from forfeited tickets to those of America West Holdings. US Airways purchases capacity (available seat miles) generated by US Airways Group's wholly owned regional air carriers and the capacity of Air Wisconsin Airlines...

  • Page 181
    ... change and service fees, commissions earned on tickets sold for flights on other airlines, sales of tour packages by the US Airways Vacations division and the marketing component earned from selling mileage credits to partners, as discussed in Note 1(j) "Frequent Traveler Programs". (n) Stock-based...

  • Page 182
    ...the first quarter of fiscal year 2008. Management is currently evaluating the requirements of SFAS No. 157 and has not yet determined the impact on US Airways' financial statements. Effective December 31, 2006, US Airways adopted the recognition provisions of SFAS No. 158, "Employers' Accounting for...

  • Page 183
    ...had no effect on US Airways' statement of operations for the year ended December 31, 2006 or for any prior period presented. This statement also requires plan assets and obligations to be measured as of the employer's balance sheet date. The measurement provisions of this statement will be effective...

  • Page 184
    ... Third, unsecured creditors of the Reorganized Debtors have received or will receive distributions totaling 8.2 million shares of the new common stock of US Airways Group in satisfaction of allowed unsecured claims, including shares issued to the Pension Benefit Guaranty Corporation ("PBGC") and the...

  • Page 185
    ... be issued on January 31, 2008. The options will have a term of five years from date of issuance. The exercise price for each tranche of options is the average of the closing price per share of US Airways Group common stock as reflected on the New York Stock Exchange for the 20 business day period...

  • Page 186
    ... upon America West Holdings' traded market price per share due to the fact that US Airways Group was operating under bankruptcy protection. The $4.82 per share value was based on the five-day average share price of America West Holdings common stock, with May 19, 2005, the merger announcement date...

  • Page 187
    ... in purchase accounting $24 million of severance and benefits related to planned reductions in force for its non-union employees. US Airways Group incurred additional severance and benefits for reductions in force related to the merger; however, due to requirements for continued service during...

  • Page 188
    ... Statements - (Continued) The effects of the Plan of Reorganization, fresh-start reporting and purchase accounting through December 31, 2005 on the balance sheet as of September 27, 2005 are as follows (in millions): Predecessor Company ASSETS Current assets Cash and cash equivalents Restricted cash...

  • Page 189
    ... of pre-merger airport operating expense and rent credits and a fair market value adjustment to an investment and adjustments to employee benefits for refinements of estimated liabilities for US Airways' long term disability plans. (c) Reorganization Items, Net SOP 90-7 requires that the financial...

  • Page 190
    ...as restructured, to be liabilities of the Successor Company. 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...

  • Page 191
    ... 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...

  • Page 192
    ...) returns; and a $1 million credit associated with reduced costs in connection with the integration of the AWA FlightFund and US Airways Dividend Miles frequent traveler programs. Severance charges and payment activity related to the merger are as follows: Year ended December 31, 2006 2005 Balance...

  • Page 193
    ... and 2004 due to the frequent resetting of interest rates on the auction rate securities.. Gross proceeds from sales of available-for-sale securities for the years ended December 31, 2006, 2005 and 2004 were $189 million, $62 million and zero, respectively. US Airways had no long-term investments in...

  • Page 194
    ... loan agreement, which increased the principal amount of the loan to $1.25 billion (as amended and restated, the "GE Loan"). US Airways, America West Holdings, AWA, and other subsidiaries of US Airways Group are all guarantors of the GE Loan. On March 31, 2006, proceeds of the GE Loan were used...

  • Page 195
    ... 31, 2006, the agreement was amended to change the maturity date from September 30, 2010 to December 31, 2008 and required US Airways to make equal quarterly principal payments through maturity beginning March 31, 2006. In December 2004, deferred charges under US Airways' maintenance agreements with...

  • Page 196
    ... the statements of operations. Upon emergence from bankruptcy on September 27, 2005, the Bankruptcy Court approved a settlement agreement between US Airways and the PBGC which required the PBGC to release all claims against US Airways in return for US Airways issuing (i) a $13.5 million cash payment...

  • Page 197
    ... retirees not represented by the unions) to begin the significant curtailments of postretirement benefits. Effective March 1, 2005, those benefits were significantly reduced. US Airways re-measured its postretirement benefit obligation based on the new terms, which resulted in a reduction in the...

  • Page 198
    ... to the Financial Statements - (Continued) The following table sets forth changes in the fair value of plan assets, benefit obligations and the funded status of the plans as of the measurement date of September 30, 2006 and 2005, in addition to the amounts recognized in US Airways' balance sheets as...

  • Page 199
    ... pension benefits (in millions): Predecessor Company Nine Months Ended September 30, 2005 Year Ended December 31, 2004 Service cost Interest cost Expected return on plan assets Amortization of: Prior service cost Actuarial loss Net periodic cost Curtailment/settlement gains Fresh-start loss Total...

  • Page 200
    ... the year ended December 31, 2006, the three months ended December 31, 2005, the nine months ended September 30, 2005, and the year ended December 31, 2004, respectively. In connection with first reorganization under Chapter 11 of the Bankruptcy Code, US Airways terminated the Retirement Income Plan...

  • Page 201
    ... cost of these benefit expenses once an appropriate triggering event has occurred. (d) Profit Sharing Plans Most non-executive employees of US Airways Group are eligible to participate in the 2005 Profit Sharing Plan, an annual bonus program, which was established subsequent to the merger. Annual...

  • Page 202
    ... Airways, Inc. Notes to the Financial Statements - (Continued) the year ended December 31, 2006. US Airways also recorded $3 million of state income tax related to certain states where NOL was not available or limited, for the year ended December 31, 2006. US Airways is part of the US Airways Group...

  • Page 203
    ...): 2006 2005 Deferred tax assets: Net operating loss carryforwards Property, plant and equipment Employee benefits Dividend miles awards AMT credit carryforward Other deferred tax assets Valuation allowance Net deferred tax assets Deferred tax liabilities: Depreciation and amortization Sale and...

  • Page 204
    ... to the Financial Statements - (Continued) In September 2005, US Airways Group amended its A330/340 Purchase Agreement with Airbus dated as of November 24, 1998 to reschedule its order for ten A330-200 aircraft for delivery during the period 2009 and 2010. US Airways Group has the right to cancel...

  • Page 205
    .... As of December 31, 2006, US Airways had 221 aircraft under operating leases, with remaining terms ranging from one month to approximately 17 years. Ground facilities include maintenance facilities and ticket and administrative offices. Public airports are utilized for flight operations under lease...

  • Page 206
    ... with other carriers with which US Airways has long-term capacity purchase agreements and has concluded it is not required to consolidate any of the entities. (d) Legal Proceedings On September 12, 2004, US Airways Group and its domestic subsidiaries (the "Reorganized Debtors") filed voluntary...

  • Page 207
    ... the Financial Statements - (Continued) On February 26, 2004, a company called I.A.P. Intermodal, LLC filed suit against US Airways Group and its wholly owned airline subsidiaries in the United States District Court for the Eastern District of Texas alleging that the defendants' computer scheduling...

  • Page 208
    ... an order dismissing US Airways from the litigation. On October 12, 2005, Bank of America, N.A., which is one of the issuing banks of the US Airways frequent flyer program credit card and which also acts as the processing bank for most airline ticket purchases paid for with credit cards, filed suit...

  • Page 209
    ... related to tickets sold to individual passengers through the use of major credit cards or to tickets sold by other airlines and used by passengers on US Airways or its regional airline affiliates. These receivables are short-term, mostly being settled within seven days after sale. Bad debt...

  • Page 210
    ... and the year ended December 31, 2004. 10. Related party transactions The following represents net receivable (payable) balances with related parties as of December 31, 2006 and 2005 (in millions): December 31, 2006 2005 US Airways Group AWA Other US Airways Group wholly owned subsidiaries Total...

  • Page 211
    ... payments of $5 million for the year ended December 31, 2004. In connection with US Airways' emergence from bankruptcy and merger with America West Holdings on September 27, 2005, any stock held by RSA and their board seats were cancelled. RSA no longer has the right to elect directors to the US...

  • Page 212
    ... its balance sheet to reflect changes in the current fair market value of the stock options and warrants according to SFAS 133. 13. Operating Segments and Related Disclosures US Airways Group is managed as a single business unit that provides air transportation for passengers and cargo. This allows...

  • Page 213
    .... (a) Predecessor Company Upon confirmation of the Plan of Reorganization, existing shares of US Airways Group's common stock were cancelled. The Plan of Reorganization resulted in holders of US Airways Group's common stock and related equity securities receiving no distribution on account of their...

  • Page 214
    ... 1, 2006, US Airways Group adopted SFAS 123R, using the modified prospective transition method. Substantially all of America West Holdings' and AWA's employee stock options outstanding at the time of the merger were fully vested in accordance with the change of control provisions of America West...

  • Page 215
    ... obtaining a combined operating certificate for AWA and US Airways). SFAS 123R requires that the grant-date fair value of RSUs be equal to the market price of the share on the date of grant if vesting is based on a service or a performance condition. The grant-date fair value of RSU awards that are...

  • Page 216
    ... Financial Statements - (Continued) There were no RSUs granted during 2004. Restricted stock unit award activity for the years ending December 31, 2006 and 2005 is as follows (shares in thousands): Number of Shares Weighted Average GrantDate Fair Value 2005 Equity Incentive Plan Nonvested balance...

  • Page 217
    ... US Airways, Inc. Notes to the Financial Statements - (Continued) Stock option and SAR activity for the year ending December 31, 2006 is as follows (stock options and SARs in thousands): Weighted Average Remaining Contractual Term (Years) Stock Options and SARs Weighted Average Exercise Price...

  • Page 218
    ... requires several assumptions. The risk-free interest rate is based on the U.S. Treasury yield curve in effect for the expected term of the stock option or SAR at the time of grant. The dividend yield is assumed to be zero since US Airways Group does not pay dividends and has no current plans to...

  • Page 219
    ...letter of agreement with ALPA that provides that US Airways' pilots designated by ALPA receive stock options to purchase 1.1 million shares of US Airways Group's common stock at an exercise price equal to the average market price for the 20 business days preceding the option issuance date. The first...

  • Page 220
    ...Ended December 31, 2004 Noncash transactions: Equipment acquired through issuance of debt Proceeds from sale leaseback transaction used to repay debt Debt assumed by purchaser in sale of flight equipment Equipment deposits used to repay debt and penalties Receivable from US Airways Group for Airbus...

  • Page 221
    ... - 584 1,755 1,826 (71) (49) - (120) The comparability of quarterly results in 2005 was impacted by the emergence from bankruptcy and merger with America West Holdings in September 2005. See also Notes 2b and 3 for additional information related to the fresh-start reporting and special items. 218

  • Page 222
    ... quarter ended December 31, 2006 that has materially affected, or is reasonably likely to materially affect, US Airways Group's, AWA's or US Airways' internal control over financial reporting other than controls established to properly account for the merger and consolidation of acquired operations...

  • Page 223
    ... the Company's Corporate Secretary at US Airways, 111 West Rio Salado Parkway, Tempe, Arizona 85281. If US Airways Group makes substantive amendments to the Code or grants any waiver, including any implicit waiver, to its principal executive officer, principal financial officer, principal accounting...

  • Page 224
    ... in the financial statements or notes thereto included in this report. Exhibits Exhibits required to be filed by Item 601 of Regulation S-K. Where the amount of securities authorized to be issued under any of the Company's long-term debt agreements does not exceed 10 percent of the Company's assets...

  • Page 225
    ... 2.2 to US Airways Group's Current Report on Form 8-K filed on September 22, 2005). 2.5 Agreement and Plan of Merger, dated as of December 19, 1996, by and among America West Holdings Corporation ("America West Holdings"), AWA ("AWA") and AWA Merger, Inc., with an effective date and time as of...

  • Page 226
    ... No. 1, dated as of September 27, 2005, among America West Holdings Corporation, US Airways Group, Inc. and Wilmington Trust Company (incorporated by reference to Exhibit 10.1 to US Airways Group's Current Report on Form 8-K filed on October 3, 2005). Form of America West Holdings Corporation...

  • Page 227
    ... Company, GE Transportation Component (incorporated by reference to Exhibit 10.9 to US Airways Group's Annual Report on Form 10-K/A for the year ended December 31, 2004).* 10.2 Master Merger Memorandum of Understanding, dated as of June 13, 2005, among US Airways, US Airways Group, America West...

  • Page 228
    ...-Q/A for the quarter ended September 30, 2004).* 10.17 Amendment No. 14 dated December 22, 2004 to the Airbus A319/A320/A321 Purchase Agreement dated October 31, 1997 between US Airways Group and AVSA, S.A.R.L. (incorporated by reference to Exhibit 10.4 to US Airways Group's Quarterly Report on Form...

  • Page 229
    ...10.29 Letter Agreement dated December 17, 2004 between US Airways Group and US Airways and Airbus North America Sales Inc. (incorporated by reference to Exhibit 99.1 to US Airways Group's Current Report on Form 8-K filed on February 9, 2005). 10.30 Form of Airbus A350 Purchase Agreement, dated as of...

  • Page 230
    ...Exhibit 10.2 to the Current Report on Form 8-K filed by America West Holdings Corporation on May 25, 2005). 10.51 Investment Agreement, dated May 27, 2005, by and among Wellington Investment Management Company, LLP, America West Holdings Corporation and US Airways Group (incorporated by reference to...

  • Page 231
    ... quarter ended September 30, 2005). 10.54 Junior Secured Debtor-in-Possession Credit Facility Agreement dated as of February 18, 2005 among US Airways, as Debtor and Debtor-in-Possession under Chapter 11 of the Bankruptcy Code as Borrower, US Airways Group, PSA Airlines, Inc., and Material Services...

  • Page 232
    ... 10.1 to US Airways Group's Quarterly Report on Form 10-Q for the quarter ended September 30, 2006)* 10.79 Amendment No. 15, dated as of August 24, 2006, to the Airbus A319/A320 Purchase Agreement, dated as of September 12, 1997, between AVSA, S.A.R.L. and America West Airlines, Inc. (incorporated...

  • Page 233
    ...International Aero Engines AG (incorporated by reference to Exhibit 10.16 to America West Holdings' and AWA's Quarterly Report on Form 10-Q for the quarter ended September 30, 2004).* 10.84 Purchase Agreement, dated as of December 27, 2000, between America West Holdings, AWA and Continental Airlines...

  • Page 234
    ...to America West Holdings' and AWA's Annual Report on Form 10-K for the year ended December 31, 2004). 10.109 Amended and Restated Loan Agreement, dated as of September 27, 2005, by and among US Airways, US Airways Group, the affiliates of US Airways party thereto, the lenders from time to time party...

  • Page 235
    ... Trust Company, as Collateral Agent, and the Air Transportation Stabilization Board (incorporated by reference to Exhibit 10.2 to US Airways Group's Quarterly Report on Form 10-Q for the quarter ended September 30, 2005). 10.111 Loan Agreement, dated as of September 27, 2005, by and among US Airways...

  • Page 236
    ... Form of Change of Control and Severance Benefit Agreement for Senior Vice Presidents (incorporated by reference to Exhibit 10.49 to America West Holdings' and America West Airlines, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2004).†10.142 Summary of Director Compensation...

  • Page 237
    ...10.1 to America West Holdings' and America West Airlines, Inc.'s Quarterly Report for the quarter ending March 31, 2005).†10.146 US Airways Group, Inc. Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to US Airways Group's Current Report on Form 8-K filed on January 23, 2006...

  • Page 238
    ... amendments to the Registrants' Annual Report on Form 10-K for the fiscal year ended December 31, 2006, and to file the same with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys and agents, and each or...

  • Page 239
    ... 2007 Executive Officer (Principal Executive Officer) Senior Vice President February 28, 2007 and Chief Financial Officer (Principal Financial and Accounting Officer) Director February 28, 2007 Director February 28, 2007 Director February 28, 2007 Director February 28, 2007 Director February...

  • Page 240
    ... Employment Agreement, dated as of September 27, 2005, between US Airways Group and Alan W. Crellin†Consents of KPMG LLP, Independent Registered Public Accounting Firm of US Airways Group. Certification of US Airways Group's Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities...

  • Page 241
    ... US Airways MPA, as modified and amended by this Letter Agreement, and such assumption shall be deemed effective as of the effective date of the Plan of Reorganization of US Airways confirmed in the Chapter 11 Cases by Order entered therein on September 16, 2005. Provided that the Bombardier Claims...

  • Page 242
    ...") in the Chapter 11 Cases on account of Bombardier's timely filed proof of claim dated February 2, 2005 (Claim No. 4328), as more specifically provided for in Section 5.0 below. B. Purchase Right Aircraft The US Airways MPA will be amended to provide US Airways with new Purchase Right Aircraft as...

  • Page 243
    ...such aircraft, a "New Firm Aircraft") under the US Airways MPA, as modified and amended by this Letter Agreement, and, subject to Bombardier and US Airways reaching agreement on the pricing, optional features, pre-delivery deposits and all other terms and conditions incident to the purchase and sale...

  • Page 244
    ... as of the date hereof, under the US Airways MPA or the Amended and Restated MPA. 2.0 Predelivery Payments Within five (5) business days after entry of a final order of the Bankruptcy Court authorizing and approving the terms of this Letter Agreement, all predelivery payments currently held by...

  • Page 245
    ... and (iii) permit Bombardier to receive its distribution on account of the Allowed Claim Amount on the next scheduled Distribution Date, which is scheduled for January 2007. 6.0 Creditors' Committee Approval; Bankruptcy Court Approval The parties' agreements hereunder are subject to (i) the...

  • Page 246
    ... Sale of Goods and Services Agreement No. SOG-023 between Bombardier Inc., as represented by Bombardier Aerospace Regional Aircraft and Piedmont Airlines, Inc. Data License Agreement No. DAT-1146 between Bombardier Inc. represented by Bombardier Aerospace Regional Aircraft and US Airways Group, Inc...

  • Page 247
    ... Executive Vice President-Operations for the Company; and WHEREAS, the Board and the Human Resources Committee of the Board believe it to be in the best interests of the Company to enter into this Agreement to properly document the terms and conditions of the Executive's employment with the Company...

  • Page 248
    ... of Rule 13d-3 promulgated under the 1934 Act) of 30% or more of either (i) the then outstanding shares of common stock of the Company's parent, US Airways Group, Inc. ("Group")(the "Outstanding Group Common Stock") or (ii) the combined voting power of the then outstanding voting securities of Group...

  • Page 249
    ... required to or does so file, beneficial ownership of all of the Outstanding Group Common Stock and Outstanding Group Voting Securities beneficially owned by it on such date; or (b) Change of Majority of Board Members. Individuals who, as of the Effective Date of this Agreement, constitute the Board...

  • Page 250
    ...beginning on the Change of Control Date and ending on the day two (2) years thereafter. 1.10 Company shall mean US Airways, Inc., a Delaware corporation, and its Affiliates, including its successors and assigns. 1.11 Date of Termination means final date of the Executive's employment. 1.12 Disability...

  • Page 251
    ... written notice to correct any such failure and has not done so; (d) after a Change of Control Date, any failure of the Company (i) to pay Reduced Base Salary, (ii) to maintain the Executive's Annual Bonus and Long-Term Incentive Plan target percentages at the same level as immediately prior to the...

  • Page 252
    ... records, financial information relating to the business of Group and the Company, accounts, customers, vendors, employees and affairs of Group and the Company, and any information marked "confidential" by Group and/or the Company. 1.19 Reduced Base Salary shall mean the Executive's Base Salary as...

  • Page 253
    ... terminate on the close of business on the date two (2) years following the Change of Control Date, unless earlier terminated by the parties pursuant to the provisions hereof. ARTICLE IV COMPENSATION AND BENEFITS 4.1 Base Salary. The Company agrees that the Executive's annual Base Salary is $425,000...

  • Page 254
    ... Committee of the Board and may be increased from time to time based upon performance. 4.2 Emergence Cash Bonus. Upon the earlier of (a) the date of emergence of Group and the Company from protection of the U.S. Bankruptcy Court, or (b) December 31, 2005, if the Executive remains employed on such...

  • Page 255
    ... Key Employees from time to time. The Company reserves the right to amend or terminate any of its welfare and fringe benefit plans and policies (including but not limited to coverages and premium structures) at any time. 4.8 Business Expenses. During his employment with the Company, the Executive...

  • Page 256
    ... of Cause or Good Reason shall not waive any right of the Company or the Executive or preclude the Company or the Executive from asserting such fact or circumstance in enforcing the terms of this Agreement. ARTICLE VI OBLIGATIONS OF THE COMPANY UPON TERMINATION CRELLIN EMPLOYMENT AGREEMENT Page 10

  • Page 257
    ... of the amount of Annual Bonus that the Executive would have earned at the end of the year times a fraction, the numerator of which is the number of days in the current year through the Date of Termination and the denominator of which is 365, and (iv) disability and other benefits (to the extent...

  • Page 258
    ... on-line, first class, positive space travel privileges for business and pleasure for the Executive and his eligible family members, pursuant to the terms and conditions of the Company's travel policy for active Key Employees; provided that the Company shall not provide any gross-up payments to the...

  • Page 259
    ... that was paid to the Executive at the end of the year 2000 and the value that such accrued and unused vacation would have been if calculated at his current rate of Base Salary as of the Date of Termination. ARTICLE VII CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY 7.1 Gross-Up Payment. In the event it...

  • Page 260
    ...7.3 IRS Claims. The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after...

  • Page 261
    ... shall determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any...

  • Page 262
    ... own time, unless the invention relates directly to the business of Group, the Company or its Affiliates or to its or their actual or demonstrably anticipated research or development, or the invention results from any work performed by the Executive for the Company. CRELLIN EMPLOYMENT AGREEMENT Page...

  • Page 263
    ... necessary for Executive to perform his duties for the Company, Executive shall not, during his employment with the Company or following the Executive's Date of Termination, directly or indirectly, furnish or disclose to any person, or use in any way, for personal benefit or the benefit of others...

  • Page 264
    ...to protect the Proprietary Information, and to secure for the Company the exclusive benefits of the work performed on behalf of the Company by the Executive under this Agreement, and not to unreasonably limit his ability to engage in employment and consulting activities in noncompetitive areas which...

  • Page 265
    ...release of claims shall not include a release of (i) the right to payment of or provision of coverage under any vested, nonforfeitable benefits to which the Executive (or a beneficiary of the Executive) may be entitled under the terms and provisions of any employee benefit plan, program, practice or...

  • Page 266
    ... At Most Recent Address on File in Company Records If to the Company: US Airways, Inc. US Airways Group, Inc. 2345 Crystal Drive Arlington, Virginia 22227 Attention: Executive Vice President, General Counsel and Secretary America West Holdings Corporation 111 West Rio Salado Parkway Tempe, AZ 85281...

  • Page 267
    ... set his hand and, pursuant to the authorization from its Board of Directors, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written. EXECUTIVE: ALAN W. CRELLIN US AIRWAYS, INC. By: Title: CRELLIN EMPLOYMENT AGREEMENT Page 21

  • Page 268
    ... the payments and benefits provided to ALAN W. CRELLIN (the "Executive") by US AIRWAYS, INC., a Delaware corporation (the "Company") under the terms and conditions of that certain Employment Agreement dated the 27th day of September, 2005, upon the Executive's Date of Termination, and other good and...

  • Page 269
    ...Release shall not be effective until the date upon which the revocation period has expired, which shall be the eighth day after he executes this Release. Agreed to, acknowledged and executed by the Executive this 15th day of November, 2006. Signature of Executive CRELLIN EMPLOYMENT AGREEMENT Page 23

  • Page 270
    ... our reports dated February 27, 2007, with respect to the consolidated balance sheets of US Airways Group, Inc. and subsidiaries as of December 31, 2006 and 2005, and related consolidated statements of operations, cash flows and stockholders, equity and comprehensive income for each of the years in...

  • Page 271
    ... on Form S-8 of US Airways Group, Inc. of our report dated February 27, 2007, with respect to the consolidated balance sheets of America West Airlines, Inc. and subsidiary as of December 31, 2006 and 2005, and the related consolidated statements of operations, cash flows and stockholder's equity...

  • Page 272
    ... S-4 of US Airways, Inc. of our reports dated February 27, 2007, relating to the balance sheets of US Airways, Inc. ("US Airways") as of December 31, 2006 and 2005, and the related statements of operations, stockholders' equity (deficit), and cash flows for the year ended December 31, 2006, and the...

  • Page 273
    ... of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of...

  • Page 274
    ... of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of...

  • Page 275
    ... of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of...

  • Page 276
    ... of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of...

  • Page 277
    ... of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of...

  • Page 278
    ... of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of...

  • Page 279
    ... Annual Report on Form 10-K of US Airways Group, Inc. (the Company) for the year ended December 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the Report), W. Douglas Parker, as Chief Executive Officer of the Company, and Derek J. Kerr, as Chief Financial Officer...

  • Page 280
    ...-K of America West Airlines, Inc. (the Company) for the year ended December 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the Report), W. Douglas Parker, as Chief Executive Officer of the Company, and Derek J. Kerr, as Chief Financial Officer of the Company, each...

  • Page 281
    ... the Annual Report on Form 10-K of US Airways, Inc. (the Company) for the year ended December 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the Report), W. Douglas Parker, as Chief Executive Officer of the Company, and Derek J. Kerr, as Chief Financial Officer of...