US Airways 2006 Annual Report Download - page 86

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements
1. Basis of presentation and summary of significant accounting policies
(a) Nature of Operations and Operating Environment
US Airways Group, Inc.'s ("US Airways Group" or the "Company") primary business activity is the operation of a major network
air carrier through its ownership of the common stock of US Airways, Inc. ("US Airways"), America West Holdings Corporation
("America West Holdings"), Piedmont Airlines, Inc. ("Piedmont"), PSA Airlines, Inc. ("PSA"), Material Services Company, Inc.
("MSC") and Airways Assurance Limited, LLC ("AAL").
On September 12, 2004, US Airways Group and its domestic subsidiaries, US Airways, Piedmont, PSA and MSC (collectively
referred to as the "Reorganized Debtors"), which accounted for substantially all of the operations of US Airways Group, filed voluntary
petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States bankruptcy court for the Eastern District
of Virginia, Alexandria Division (the "Bankruptcy Court"). On May 19, 2005, US Airways Group signed a merger agreement with
America West Holdings pursuant to which America West Holdings merged with a wholly owned subsidiary of US Airways Group upon
US Airways Group's emergence from bankruptcy. The Reorganized Debtors' plan of reorganization was confirmed by the bankruptcy
court on September 16, 2005 and became effective on September 27, 2005, the same day that the merger with America West Holdings
became effective.
US Airways and America West Airlines, Inc ("AWA"), a wholly owned subsidiary of America West Holdings, are the Company's
principal operating subsidiaries. US Airways and AWA are both certificated air carriers engaged primarily in the business of transporting
passengers, property and mail. US Airways and AWA enplaned approximately 36 million and 21 million passengers, respectively, in
2006. Combined, US Airways and America West Airlines are the fifth largest U.S. air carrier, as ranked by domestic revenue passenger
miles ("RPMs") and domestic available seat miles ("ASMs"). As of December 31, 2006, US Airways operated 226 jet aircraft and 104
regional jet aircraft and AWA operated 133 jet aircraft. During 2006, US Airways, along with US Airways Express, provided regularly
scheduled service or seasonal service at 178 airports in the continental United States, Canada, Latin America, the Caribbean and Europe,
and AWA, along with AWA Express, provided regularly scheduled service at 98 airports in the continental United States, Alaska,
Hawaii, Canada and Latin America.
Most of the airline operations are in competitive markets. Competitors include other air carriers along with other modes of
transportation. As of December 31, 2006, US Airways Group employed approximately 37,000 active full-time equivalent employees.
Approximately 81% of US Airways Group's employees are covered by collective bargaining agreements with various labor unions.
(b) Basis of Presentation
The merger has been accounted for as a reverse acquisition using the purchase method of accounting. Although the merger was
structured such that America West Holdings became a wholly owned subsidiary of US Airways Group, America West Holdings has been
treated as the acquiring company for accounting purposes under Statement of Financial Accounting Standards ("SFAS") No. 141
"Business Combinations," due to the following factors: (1) America West Holdings' stockholders received the larger share of the
Company's common stock in the merger in comparison to the unsecured creditors of US Airways; (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 statement of operations presented herein includes the results of America West Holdings for the period from January 1, 2005 through
September 26, 2005 and consolidated results of US Airways Group for the period from September 27, 2005 through December 31, 2005.
The financial information reflected in the financial statements for 2004 is comprised of the accounts and activities of America West
Holdings.
The accompanying consolidated financial statements include the accounts of US Airways Group and its wholly owned subsidiaries.
US Airways Group has the ability to move funds freely between its operating
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