US Airways 2006 Annual Report Download - page 123

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
$15.00 per share. Mr. Bartlett is also a greater than 10% owner of Air Wisconsin. US Airways and Air Wisconsin also entered into a
regional jet services agreement under which Air Wisconsin may, but is not required to, provide regional jet service under a US Airways
Express code share arrangement. On April 8, 2005, Air Wisconsin notified US Airways Group of its intention to deploy 70 regional jets,
the maximum number provided for in the agreement, into the US Airways Express network. The amount paid to Air Wisconsin in 2006
was approximately $336 million.
Robert A. Milton, a member of the board of directors of US Airways Group until April 19, 2006, is the Chairman, 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 for various services including maintenance and airport handling. The amount paid in 2005 for these commercial
agreements was approximately $2 million.
Edward L. Shapiro, a member of the board of directors of US Airways Group, is a Vice President and partner of PAR Capital
Management, the general partner of PAR. PAR received 10,768,485 shares of US Airways Group common 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 stockholder of America West Holdings prior to the completion of the merger. An affiliate of
Texas Pacific Group received $6.4 million as an advisory fee for providing financial advisory services in 2005, in connection with the
merger and in contribution for and reimbursement for certain expenses incurred by Texas Pacific Group and its affiliates in connection
with the merger.
14. Merger Accounting and Pro Forma Information
(a) Purchase Price Allocation
The 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 was operating under bankruptcy protection prior to the merger. The outstanding shares in America West
Holdings at September 27, 2005 were valued at $4.82 per share, resulting in an aggregate value assigned to the shares of $175 million.
The $4.82 per share value was based on the five-day average share price of America West Holdings, with May 19, 2005, the merger
announcement date, as the midpoint. The outstanding shares of America West Holdings Class A and Class B common stock were
converted into shares of US Airways Group common stock at a conversion rate of 0.5362 and 0.4125, respectively. Certain unsecured
creditors of US Airways Group have been or will be issued an aggregate of approximately 8.2 million shares of US Airways Group
common stock in settlement of their claims, including stock issued to the PBGC and ALPA. The fair value of that common stock valued
at an equivalent price based on the $4.82 value of the America West Holdings stock is $96 million. America West Holdings incurred
$21 million of direct acquisition costs in connection with the merger. The following table summarizes the components of purchase price
(in millions):
Fair value of common shares issued to US Airways Group's unsecured creditors $ 96
Estimated merger costs 21
Total purchase price $ 117
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