US Airways 2006 Annual Report Download - page 19

Table of Contents
private-label basis. In 2006, approximately 71% of USV's total bookings were made electronically, compared to 61% in 2005.
USV competes in a fragmented travel industry that is highly competitive, price-sensitive and has relatively low barriers to entry.
USV competes for customers with other wholesale travel companies, consolidators and e-travel companies through national mass media,
preferred supplier agreements and Internet distribution agreements.
During 2006, USV operated co-branded websites for 11 partner companies, including Costco Travel, Vegas.com, BestFares.com,
MandalayBay.com, and Aladdin.com. These co-branded sites provide a retail presence via distribution channels such as Costco wholesale
warehouses and other company websites where we and USV may not otherwise be a part of the consumer's consideration set. USV
intends to continue to add new co-branded websites as opportunities present 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 for relief under the Bankruptcy Code in
the United States Bankruptcy Court for the Eastern District of Virginia, Alexandria Division. On September 16, 2005, the Bankruptcy
Court issued an order confirming the Reorganized Debtors' plan of reorganization. The plan of reorganization, which was based upon the
completion of the merger, among other things, set forth a revised capital structure and established the corporate governance for
US Airways Group following the merger and subsequent to emergence from bankruptcy. Under the plan of reorganization, the
Reorganized Debtors' general unsecured creditors received 8.2 million shares of the new common stock of US Airways Group, which
represented approximately 10% of our common stock outstanding as of the completion of the merger. The holders of US Airways Group
common stock outstanding prior to the merger received no distribution on account of their interests, and their existing stock was
cancelled.
In accordance with the Bankruptcy Code, the plan of reorganization classified claims into classes according to their relative priority
and other criteria and provided for the treatment of each class of claims. Pursuant to the bankruptcy process, the Reorganized Debtors'
claims agent received timely-filed proofs of claims totaling approximately $26.4 billion in the aggregate, exclusive of approximately
$13.6 billion in claims by governmental entities. The Reorganized Debtors continue to be responsible for administering and resolving
claims related to the bankruptcy process. The administrative claims objection deadline passed on September 15, 2006. As of
December 31, 2006, there were approximately $472 million of unresolved claims. The ultimate resolution of certain of the claims
asserted against the Reorganized Debtors in the Chapter 11 cases will be subject to negotiations, elections and Bankruptcy Court
procedures. The recovery ultimately distributed to any particular general unsecured creditor under the plan of reorganization will depend
on a number of variables, including the agreed value of any general unsecured claims filed by that creditor, the aggregate value of all
resolved general unsecured claims and the value of shares of the new common stock of US Airways Group in the marketplace at the time
of distribution. The effects of these distributions were reflected in US Airways' financial statements upon emergence and will not have
any further impact on the results of operations.
While a significant amount of the Reorganized Debtors' liabilities were extinguished as a result of the discharge granted upon
confirmation of the plan of reorganization, not all of the Reorganized Debtors' liabilities were subject to discharge. The types of
obligations that the Reorganized Debtors remain responsible for include those relating to their secured financings, aircraft financings,
certain environmental liabilities, the continuing obligations arising under contracts and leases assumed by the Reorganized Debtors and
certain grievances with our labor unions, as well as allowed administrative claims. Allowed administrative claims consist primarily of the
costs and expenses of administration of 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. Included in these claims, however, are claims for amounts arising
in the ordinary course that have either already been paid, or that are included in the Reorganized Debtors' business plan and are expected
to be paid in the ordinary course. Also included are claims that are duplicative, claims for which the Reorganized Debtors believe there is
no legal merit for a claim of any status, and claims that the Reorganized Debtors believe may be valid as unsecured
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