US Airways 2007 Annual Report Download - page 107

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
that the child does not occupy his or her own seat but travels instead on the lap of an accompanying adult. The named plaintiffs allege
that he and his wife purchased international tickets through the website for themselves and a lap child. Plaintiffs allege that after initially
receiving an electronic confirmation that there would be no charge for the lap child, they were later charged an additional $242.50. The
complaint alleges a class period from February 9, 2002 to the present. The Company was served with an amended complaint in early
March 2007 that continued the same allegations, but dropped plaintiff's wife as a class representative. On May 1, 2007, US Airways filed
an Answer to the complaint and also asked the court for a "complex case" designation, which the court granted on May 11, 2007. On
September 25, 2007, the parties reached a settlement for an immaterial amount. That agreement must be approved by the court in order to
become final.
(f) Guarantees and Indemnifications
The Company guarantees the payment of principal and interest on certain special facility revenue bonds issued by municipalities to
build or improve certain airport and maintenance facilities which are leased to US Airways. Under such leases, US Airways is required to
make rental payments through 2023, sufficient to pay maturing principal and interest payments on the related bonds. As of December 31,
2007, the principal amount outstanding on these bonds was $93 million. Remaining lease payments guaranteeing the principal and
interest on these bonds will be $154 million.
The Company enters into real estate leases in substantially all cities that it serves. It is common in such commercial lease
transactions for the Company as the lessee to agree to indemnify the lessor and other related third parties for tort liabilities that arise out
of or relate to the use or occupancy of the leased premises. In some cases, this indemnity extends to related liabilities arising from the
negligence of the indemnified parties, but usually excludes any liabilities caused by their gross negligence or willful misconduct. With
respect to certain special facility bonds, the Company agreed to indemnify the municipalities for any claims arising out of the issuance
and sale of the bonds and use or occupancy of the concourses financed by these bonds. Additionally, the Company typically indemnifies
such parties for any environmental liability that arises out of or relates to its use or occupancy of the leased premises.
The Company is the lessee under many aircraft financing agreements (including leveraged lease financings of aircraft under pass
through trusts) and real estate leases. It is common in such transactions for the Company as the lessee to agree to indemnify the lessor and
other related third parties for the manufacture, design, ownership, financing, use, operation and maintenance of the aircraft, and for tort
liabilities that arise out of or relate to the Company's use or occupancy of the leased asset. In some cases, this indemnity extends to
related liabilities arising from the negligence of the indemnified parties, but usually excludes any liabilities caused by their gross
negligence or willful misconduct. In aircraft financing agreements structured as leverage leases, the Company typically indemnifies the
lessor with respect to adverse changes in U.S. tax laws.
The Company reviewed its long-term operating leases at a number of airports, including leases where the Company is also the
guarantor of the underlying debt. Such leases are typically with municipalities or other governmental entities. The arrangements are not
required to be consolidated based on the provisions of FIN 46(R).
(g) Concentration of Credit Risks
The Company invests available cash in money market securities of various banks, commercial paper and asset-backed securities of
various financial institutions, other companies with high credit ratings and securities backed by the U.S. government.
As of December 31, 2007, most of the Company's receivables related to tickets sold to individual passengers through the use of
major credit cards or to tickets sold by other airlines and used by passengers on US Airways or its regional airline affiliates. These
receivables are short-term, mostly being settled within seven days after sale. Bad debt losses, which have been minimal in the past, have
been considered in establishing allowances for doubtful accounts. The Company does not believe it is subject to any significant
concentration of credit risk.
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