US Airways 2006 Annual Report Download - page 211

Table of Contents
US Airways, Inc.
Notes to the Financial Statements — (Continued)
US Airways purchases all of the capacity (ASMs) generated by US Airways Group's wholly owned regional airline subsidiaries at a
rate per ASM that is periodically determined by US Airways and, concurrently, recognizes revenues that result primarily from passengers
being carried by these affiliated companies. The rate per ASM that US Airways pays is based on estimates of the costs incurred to supply
the capacity. US Airways recognized US Airways Express capacity purchase expense of $433 million for the year ended December 31,
2006, $96 million for the three months ended December 31, 2005, $306 million for the nine months ended September 30, 2005, and
$472 million for the year ended December 31, 2004, related to this program.
US Airways provides various services to these regional airlines including passenger handling, maintenance and catering.
US Airways recognized other operating revenues of $96 million for the year ended December 31, 2006, $22 million for the three months
ended December 31, 2005, $64 million for the nine months ended September 30, 2005, and $71 million for the year ended December 31,
2004 related to these services. These regional airlines also perform passenger and ground handling for US Airways at certain airports for
which US Airways recognized other operating expenses of $145 million for the year ended December 31, 2006, $32 million for the three
months ended December 31, 2005, $100 million for the nine months ended September 30, 2005, and $126 million for the year ended
December 31, 2004, related to these expenses. US Airways also leases or subleases certain aircraft to these regional airline subsidiaries.
US Airways recognized other operating revenues related to these arrangements of $80 million for the year ended December 31, 2006,
$21 million for the three months ended December 31, 2005, $65 million for the nine months ended September 30, 2005, and $55 million
for the year ended December 31, 2004.
US Airways purchases a portion of its aviation fuel from US Airways Group's wholly owned subsidiary, MSC, which acts as a fuel
wholesaler to US Airways in certain circumstances. US Airways' aviation fuel purchases from MSC were $680 for the year ended
December 31, 2006, $120 million for the three months ended December 31, 2005, $191 million for the nine months ended September 30,
2005, and $34 million for the year ended December 31, 2004. Effective July 1, 2000, the activities of a certain division of MSC were
transferred into US Airways and MSC began receiving a portion of its fuel inventory from US Airways.
US Airways' net payable to other US Airways Group wholly owned subsidiaries of $76 million consists of a net receivable from
America West Holdings of $1 million and net payables to Piedmont of $24 million, PSA of $12 million, and MSC of $41 million,
respectively, at December 31, 2006. At December 31, 2005 the net payable to Piedmont, PSA and MSC was $19 million, $12 million,
and $16 million, respectively.
(c) RSA
As of March 31, 2003, at the time of emergence from US Airways' first bankruptcy, Retirement Systems of Alabama Holdings LLC
("RSA") held approximately 36.2%, on a fully-diluted basis, of US Airways Group's equity, had a voting interest of approximately 71.6%
and was entitled to designate and vote to elect eight of 15 directors to US Airways Group's board of directors. Total amounts due to RSA
at December 31, 2004 and 2003 included $54 million and $73 million, respectively, of the initial $100 million at-risk amounts under the
ATSB loan. Interest expense and interest payments on RSA's portion of the ATSB Loan was $4 million for the nine months ended
September 30, 2005. Interest expense on RSA's portion of the ATSB Loan was $5 million with interest 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 Airways Group's board of directors.
(d) Shared Operating Expenses
The operating expenses of US Airways reflect expenses for certain services shared with AWA, 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 US Airways' and AWA's respective revenue passenger
miles ("RPMs"). The operating expenses of
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