US Airways 2006 Annual Report Download - page 93

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
Had US Airways Group determined compensation cost based on the fair value at the grant date for its stock options, stock
appreciation rights and restricted stock units under SFAS 123 for the years ended December 31, 2005 and 2004, the Company's net loss
and loss per share would have been adjusted as indicated below (in million, except per share data):
2005 2004
Net loss, as reported $ (537) $ (89)
Add: Stock-based compensation included in reported net loss 4 —
Deduct: Stock-based compensation determined under the fair value based method (12) (6)
Pro forma net loss $ (545) $ (95)
Loss per share:
Basic — as reported $ (17.06) $ (5.99)
Basic — pro forma $ (17.30) $ (6.39)
Diluted — as reported $ (17.06) $ (5.99)
Diluted — pro forma $ (17.30) $ (6.39)
(o) Maintenance and Repair Costs
Maintenance and repair costs for owned and leased flight equipment are charged to operating expense as incurred. AWA
historically recorded the cost of major scheduled airframe, engine and certain component overhauls as capitalized assets that were
subsequently amortized over the periods benefited, referred to as the deferral method. US Airways Group historically charged
maintenance and repair costs for owned and leased flight equipment to operating expense as incurred (direct expense method). In 2005,
AWA changed its accounting policy from the deferral method to the direct expense method. While the deferral method is permitted under
accounting principles generally accepted in the United States of America, US Airways Group and AWA believe that the direct expense
method is preferable and the predominant method used in the airline industry. The effect of this change in accounting for aircraft
maintenance and repairs is recorded as a cumulative effect of a change in accounting principle (see also Note 3).
(p) Selling Expenses
Selling expenses include commissions, credit card fees, computerized reservations systems fees, advertising and promotional
expenses. Advertising and promotional expenses are expensed when incurred. Advertising and promotional expenses for the years ended
December 31, 2006, 2005 and 2004 were $16 million, $13 million and $10 million, respectively.
(q) Express Expenses
Expenses associated with US Airways' former MidAtlantic division, US Airways Group's wholly owned regional airlines PSA and
Piedmont, and affiliate regional airlines operating as US Airways Express and expenses associated with AWA's regional alliance
agreement with Mesa are classified as Express expenses on the statements of operations. Effective May 27, 2006, the transfer of certain
MidAtlantic assets to Republic was completed, and
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