US Airways 2006 Annual Report Download - page 31

Table of Contents
Space for ticket counters, gates and back offices has been obtained at each of the other airports operated by AWA and US Airways,
either by lease from the airport operator or by sublease or handling agreement from another airline.
Terminal Construction Projects
US Airways Group uses public airports for its flight operations under lease arrangements with the government entities that own or
control these airports. Airport authorities frequently require airlines to execute long-term leases to assist in obtaining financing for
terminal and facility construction. Any future requirements for new or improved airport facilities and passenger terminals at airports in
which US Airways Group's airline subsidiaries operate could result in additional occupancy costs and long-term commitments.
Item 3. Legal Proceedings
On September 12, 2004, US Airways Group and its domestic subsidiaries filed voluntary petitions for relief under Chapter 11 of the
Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Virginia, Alexandria Division (Case Nos.
04-13819-SSM through 03-13823-SSM) (the "2004 Bankruptcy"). On September 16, 2005, the Bankruptcy Court issued an order
confirming the plan of reorganization submitted by the Reorganized Debtors and on September 27, 2005, the Reorganized Debtors
emerged from the 2004 Bankruptcy. The Bankruptcy Court's order confirming the plan included a provision called the plan injunction,
which forever bars other parties from pursuing most claims against the Reorganized Debtors that arose prior to September 27, 2005 in
any forum other than the Bankruptcy Court. The great majority of these claims are pre-petition claims that, if paid out at all, will be paid
out in common stock of the post-bankruptcy US Airways Group at a fraction of the actual claim amount.
On February 26, 2004, a company called I.A.P. Intermodal, LLC filed suit against US Airways Group and its wholly owned airline
subsidiaries in the United States District Court for the Eastern District of Texas alleging that the defendants' computer scheduling system
infringes upon three patents held by plaintiffs, all of which patents are entitled, "Method to Schedule a Vehicle in Real-Time to Transport
Freight and Passengers." Plaintiff seeks various injunctive relief as well as costs, fees and treble damages. US Airways Group and its
subsidiaries were formally served with the complaint on June 21, 2004. On the same date, the same plaintiff filed what US Airways
Group believes to be substantially similar cases against nine other major airlines, including British Airways, Northwest Airlines
Corporation, Korean Airlines Co., Ltd., Deutsche Lufthansa AG, Air France, Air Canada, Singapore Airlines Ltd., Delta Air Lines and
Continental Airlines, Inc., and had filed a suit against AMR Group, Inc., the parent company of American Airlines, along with its airline
subsidiaries, in December 2003. This action has been stayed as to US Airways Group and its wholly owned subsidiaries as a result of the
2004 Bankruptcy. In the meantime, several foreign airline defendants were dismissed from the case for reasons unique to their status as
foreign operators, and the remaining defendants in September 2005 obtained a ruling that there had been no infringement of any of
I.A.P.'s patents. In October 2005, I.A.P. entered into consent judgments with several defendants. I.A.P. appealed the judgment in favor of
Continental Airlines and the AMR Group defendants, but the trial court's ruling was affirmed on November 13, 2006. No further appeals
have been taken. I.A.P. did not file any claims against US Airways Group or any of its subsidiaries in the 2004 Bankruptcy.
On January 7, 2003, the Internal Revenue Service issued a notice of proposed adjustment to US Airways Group proposing to
disallow $573 million of capital losses that US Airways Group sustained in the tax year 1999 on the sale of stock of USLM Corporation
(the "USLM matter"). On February 5, 2003, the IRS filed a proof of claim with the Bankruptcy Court in connection with the bankruptcy
case filed on August 11, 2002 (the "2002 Bankruptcy") asserting the following claims against US Airways with respect to the USLM
matter: (1) secured claims for U.S. federal income tax and interest of $1 million; (2) unsecured priority claims for U.S. federal income tax
of $68 million and interest of $14 million; and (3) an unsecured general claim for penalties of $25 million. On May 8, 2003, US Airways
Group reached a tentative agreement with the IRS on the amount of U.S. federal income taxes, interest and penalties due subject to final
approval from the Joint Committee on Taxation. By letter dated September 11, 2003, US Airways Group was notified that the Joint
Committee on Taxation had accepted the tentative agreement with the IRS, including a settlement of all federal income taxes through the
end of 2002. Due to the 2004 Bankruptcy filing, which suspended payment of prepetition liabilities, final payment terms under the
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