US Airways 2006 Annual Report Download - page 166

Table of Contents
America West Airlines, Inc.
Notes to Consolidated Financial Statements — (Continued)
amounts payable to US Airways Group related to the conversion of the 7.25% notes, net of cash retained by US Airways Group. The net
payable to US Airways Group increased by $634 million during 2006. The majority of the increase relates to debt previously recorded at
AWA that was refinanced with the proceeds from the GE Loan and the allocation of the forgiveness of the Airbus loans.
The net receivable from US Airways consists of amounts due to and from US Airways relating to items such as debt
extinguishment, merger related payments and receipts, and various other transactions that occur in the normal course of business that one
airline settles on behalf of the other.
During 2006, AWA started to purchase a portion of its aviation fuel from US Airways Group's wholly owned subsidiary, Material
Services Company, Inc. ("MSC"), which acts as a fuel wholesaler to AWA in certain circumstances. AWA's aviation fuel purchases from
MSC were $8 million for the year ended December 31, 2006.
In January 2002, AWA closed a $429 million loan supported by a $380 million government loan guarantee. AWA's net advances to
America West Holdings as a result of this transaction have been classified in other assets on AWA's balance sheet. As of December 31,
2006 and 2005, AWA had net advances to parent company of $261 million.
(b) Shared Operating Expenses
The operating expenses of AWA reflect expenses for certain services shared with US Airways, including technology and data
processing services, corporate functions such as tax, legal, compliance, finance and operations, and the costs of the combined Dividend
Miles frequent traveler program. These shared costs have been allocated based on AWA's and US Airways' respective revenue passenger
miles ("RPMs"). The operating expenses of AWA also reflect shared expenses incurred at more than 30 overlap airports where the
operations of AWA and US Airways have been consolidated. These shared costs have been allocated based on AWA's and US Airways'
respective departures at those airports. Management believes that the methodologies underlying the allocation of these shared costs are
reasonable. The following details the total corporate shared expenses and airport shared expenses allocated to AWA and US Airways that
are included in operating expenses for the year ended December 31, 2006 (in millions):
Year Ended December 31, 2006
AWA US Airways Total
Corporate expenses $ 167 $ 266 $ 433
Airport expenses 112 197 309
Total allocated expenses $ 279 $ 463 $ 742
(c) Other
Robert A. Milton, a member of the board of directors of US Airways Group until April 19, 2006, was 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.
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 million as an advisory fee for providing financial advisory services rendered 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.
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