US Airways 2006 Annual Report Download - page 38

Table of Contents
(d) Includes debt, capital leases, postretirement benefits other than pensions (noncurrent) and employee benefit and other liabilities.
Also includes liabilities subject to compromise at December 31, 2004 and December 31, 2002.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Background
US Airways Group is a holding company whose primary business activity is the operation of a major network air carrier, through its
ownership of the common stock of America West Holdings and its wholly owned subsidiary AWA, US Airways, Piedmont, PSA, MSC
and Airways Assurance Limited. On September 12, 2004, US Airways Group and its domestic subsidiaries, US Airways, Piedmont, PSA
and MSC (collectively, the "Reorganized Debtors"), which at the time accounted for substantially all of the operations of US Airways
Group, filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the
Eastern District of Virginia, Alexandria Division. On May 19, 2005, US Airways Group signed a merger agreement, subsequently
amended on July 7, 2005, with America West Holdings pursuant to which America West Holdings merged with a wholly owned
subsidiary of US Airways Group. The plan of reorganization of US Airways Group and its domestic subsidiaries was confirmed by the
Bankruptcy Court on September 16, 2005. The merger became effective upon US Airways Group's emergence from bankruptcy on
September 27, 2005. Following the merger, America West Holdings continued as a wholly owned subsidiary of US Airways Group.
Following the merger, US Airways Group has been moving toward operating under the single brand name of "US Airways" through
its two principal subsidiaries: US Airways and AWA. We expect to complete the integration of our two principal subsidiaries into one
operation during 2007. As a result of the merger, through our two principal operating subsidiaries, we operate the fifth largest airline in
the United States as measured by domestic RPMs and ASMs. We have primary hubs in Charlotte, Philadelphia and Phoenix and
secondary hubs/focus cities in Pittsburgh, Las Vegas, New York, Washington, D.C. and Boston. We are a low-cost carrier offering
scheduled passenger service on approximately 4,000 flights daily to 240 communities in the U.S., Canada, the Caribbean, Latin America
and Europe, making us the only U.S. based low-cost carrier with a significant international route presence. We are also the only low-cost
carrier with an established East Coast route network, including the US Airways Shuttle service, with substantial presence at capacity
constrained airports including New York's LaGuardia Airport and the Washington, D.C. area's Ronald Reagan Washington National
Airport. As of December 31, 2006, our two principal subsidiaries operate 359 mainline jets and are supported by our regional airline
subsidiaries and affiliates operating as US Airways Express, which operate approximately 240 regional jets and 104 turboprops. In 2006,
we generated passenger revenues of $10.71 billion.
The merger has been accounted for as a reverse acquisition using the purchase method of accounting. As a result, although the
merger was structured such that America West Holdings became a wholly owned subsidiary of US Airways Group, America West
Holdings was treated as the acquiring company for accounting purposes due to the following factors: (1) America West Holdings'
stockholders received the largest share of US Airways Group's common stock in the merger in comparison to unsecured creditors of
US Airways Group; (2) America West Holdings received a larger number of designees to the board of directors; and (3) America West
Holdings' Chairman and Chief Executive Officer prior to the merger became the Chairman and Chief Executive Officer of the combined
company. As a result of the reverse acquisition, the 2005 consolidated statement of operations for the new US Airways Group presented
in this report is comprised of the results of America West Holdings for the 269 days through September 27, 2005 and consolidated results
of US Airways Group for the 96 days from September 27, 2005 through December 31, 2005. The results of operations for fiscal years
2004 and 2003 are those of America West Holdings.
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