US Airways 2006 Annual Report Download - page 50

Table of Contents
• Salaries and related costs per ASM increased 5.8% primarily due to a $23 million increase in benefit related expenses, including
$13 million in defined contribution plan payments that our pilots became eligible for beginning on January 1, 2005, a $5 million
increase related to self-funded disability requirements and higher medical insurance costs of $4 million. A $9 million accrual for
employee performance bonuses also contributed to the increase.
• Aircraft rent expense per ASM increased 6.3% due principally to aircraft mix, as previously owned and leased Boeing 737-200
aircraft were retired or returned to aircraft lessors and replaced with leased Airbus A320 and A319 aircraft at higher monthly
lease rates.
• Aircraft maintenance materials and repair expense per ASM increased 24.5% due principally to the change in AWA's accounting
policy for certain maintenance costs in 2005 discussed above. See Note 2, "Change in Accounting Policy for Maintenance
Costs," to AWA's consolidated financial statements in Item 8B of this report.
Express expenses increased 45.7% in 2005 to $545 million from $374 million in 2004 due to increased flying by Mesa under the
alliance agreement with AWA. Aircraft operating expense for 2005 was $211 million, which accounted for $56 million of the
year-over-year increase in Express operating expenses. Aircraft fuel expense was $182 million in 2005, which accounted for $80 million
of the year-over-year increase.
Nonoperating Income (Expense):
Percent
2005 2004 Change
(In millions)
Nonoperating income (expense)
Interest income $ 25 $ 14 78.6
Interest expense, net (94) (86) 9.3
Other, net (6) 3 nm
Total nonoperating income (expense) $ (75) $ (69) 8.7
AWA had net nonoperating expenses of $75 million in 2005 as compared to $69 million in 2004. Interest income increased
$11 million to $25 million in 2005 due to higher average cash balances and higher average rates of return on investments. Interest
expense increased $8 million or 9.3% to $94 million primarily due to higher average outstanding debt, due in part to the merger and
higher interest rates.
The 2005 period includes nonoperating expenses of $8 million related to the write-off of the unamortized value of the ATSB
warrants upon their repurchase in October 2005 and an aggregate $2 million write-off of debt issuance costs associated with the exchange
of the 7.25% Senior Exchangeable Notes due 2023 and retirement of a portion of the loan formerly guaranteed by the ATSB. The 2004
period includes a $1 million gain on the disposition of property and equipment due principally to the sale of two Boeing 737-200 aircraft
and a $1 million charge for the write-off of debt issuance costs in connection with the refinancing of the Mizuho Corporate Bank term
loan.
US Airways' Results of Operations
In connection with emergence from bankruptcy in September 2005, US Airways adopted fresh-start reporting in accordance with
AICPA Statement of Position 90-7, "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code." As a result of the
application of fresh-start reporting, the financial statements prior to September 30, 2005 are not comparable with the financial statements
for the periods after September 30, 2005. However, for purposes of discussion of the results of operations, the combined results of
operations of the Successor Company and Predecessor Company for 2005 have been compared to 2006 and 2004. While the effective
date of the plan of reorganization and the merger was September 27, 2005, the results of operations for US Airways during the four day
period from September 27 through September 30, 2005 are not material to the financial statement presentation. References to "Successor
Company" refer to US Airways on or after September 30, 2005, after giving effect to the application of fresh- start reporting for
bankruptcy. References to "Predecessor Company" refer to US Airways prior to September 30, 2005.
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