US Airways 2006 Annual Report Download - page 94

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
Republic assumed the operations of the aircraft as a US Airways affiliate Express carrier. Express expenses on the statements of
operations consist of the following (in millions):
Year Ended Year Ended Year Ended
December 31, 2006 December 31, 2005 December 31, 2004
Aircraft fuel and related taxes $ 764 $ 327 $ 102
Salaries and related costs 172 40 —
Capacity purchases 786 484 238
Other rent and landing fees 160 42 8
Aircraft rent 18 21 —
Selling expenses 148 57 23
Aircraft maintenance 71 3 —
Depreciation and amortization 24 18 —
Other expenses 416 81 3
Express expenses $ 2,559 $ 1,073 $ 374
(r) Variable Interest Entities
The Company determined that certain entities with which the Company has capacity purchase agreements are considered variable
interest entities under Financial Accounting Standards Board ("FASB") Interpretation No. 46 "Consolidation of Variable Interest
Entities," as revised ("FIN 46(R)"). The Company has determined that it is not the primary beneficiary of any of these variable interest
entities, and accordingly, does not consolidate any of the entities with which it has jet service agreements. (See also Note 10(c))
(s) Recent Accounting Pronouncements
In June 2006, the FASB ratified Emerging Issues Task Force Issue No. 06-3 ("EITF 06-3"), "How Taxes Collected from Customers
and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross versus Net Presentation)." The
scope of EITF 06-3 includes any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction
between a seller and a customer. This issue provides that a company may adopt a policy of presenting taxes either gross within revenue or
net. If taxes subject to this issue are significant, a company is required to disclose its accounting policy for presenting taxes and the
amount of such taxes that are recognized on a gross basis. This statement is effective for financial reports for interim and annual reporting
periods beginning after December 15, 2006. The Company adopted EITF 06-3 on January 1, 2007. The Company collects various excise
taxes on its ticket sales, which are accounted for on a net basis. The adoption of EITF 06-3 will not have a material impact on the
Company's consolidated financial statements.
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements." This standard defines fair value, establishes a
framework for measuring fair value in accounting principles generally accepted in the United States of America, and expands disclosure
about fair value measurements. This pronouncement applies to other accounting standards that require or permit fair value measurements.
Accordingly, this statement does not require any new fair value measurement. This statement is effective for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. US Airways Group will be required to adopt SFAS No. 157 in the first
quarter of fiscal year 2008. Management is currently evaluating the requirements of SFAS No. 157 and has not yet determined the impact
on US Airways Group's consolidated financial statements.
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