US Airways 2006 Annual Report Download - page 175

Table of Contents
US Airways, Inc.
Notes to the Financial Statements
1. Basis of Presentation and Summary of Significant Accounting Policies
(a) Nature of Operations and Operating Environment
US Airways, Inc. ("US Airways"), a Delaware corporation, is a certificated air carrier engaged primarily in the business of
transporting passengers, property and mail. US Airways enplaned approximately 36 million passengers in 2006. As of December 31,
2006, US Airways operated 226 jet aircraft. During 2006, US Airways, along with US Airways Express, provided regularly scheduled
service or seasonal service at 178 airports in the continental United States, Canada, Latin America, the Caribbean and Europe.
Most of US Airways' operations are in competitive markets. Competitors include other air carriers along with other modes of
transportation. Although a competitive strength in some regards, the concentration of significant operations in the eastern U.S. results in
US Airways being susceptible to changes in certain regional conditions that may have an adverse effect on US Airways' financial
condition and results of operations.
As of December 31, 2006, US Airways employed approximately 19,400 full-time equivalent employees. Approximately 85% of
US Airways' active employees are covered by collective 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 a voluntary petition for relief under
Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Eastern District
of Virginia, Alexandria Division (the "Bankruptcy Court") (Case Nos. 04-13819-SSM through 04-13823-SSM). On the same day,
US Airways Group and three of its other subsidiaries (collectively with US Airways, the "Reorganized Debtors") also filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code. On May 19, 2005, US Airways Group signed a merger agreement with
America West Holdings Corporation ("America West Holdings") pursuant to which America West Holdings merged with a wholly
owned subsidiary of US Airways Group upon US Airways Group's emergence from bankruptcy on September 27, 2005. The
Reorganized Debtors' plan of reorganization was confirmed by the Bankruptcy Court on September 16, 2005 and became effective on
September 27, 2005, the same day that the merger with America West Holdings became effective. While the merger was structured such
that US Airways Group was the legal acquirer, the merger has been accounted for as a reverse acquisition such that America West
Holdings was treated as the accounting acquirer.
US Airways Group has the ability to move funds freely between its operating subsidiaries, including its other principal operating
subsidiary, America West Airlines, Inc. ("AWA"), to support operations. These transfers are recognized as intercompany transactions. In
the accompanying statements of cash flows, these intercompany transactions are designated as payable to affiliate and are classified as
financing activities as US Airways Group has no plans to settle these transactions in the near term. As discussed further in Note 10,
US Airways' financial results are significantly influenced by related party transactions. Certain prior year amounts have been reclassified
to conform with the 2006 presentation. Among these reclassifications, passenger revenue associated with US Airways' former
MidAtlantic division and US Airways Group's wholly owned regional airlines and affiliate regional airlines operating as US Airways
Express have been reclassified as "Express passenger." Expenses associated with US Airways' former MidAtlantic division, US Airways
Group's wholly owned regional airlines and affiliate regional airlines operating as US Airways Express have been reclassified under the
"Express expenses" caption. See Note 1(q) for additional information related to Express expenses.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
172