US Airways 2007 Annual Report Download - page 150

Table of Contents
US Airways, Inc.
Notes to Consolidated Financial Statements — (Continued)
(e) Damage and deficiency claims are largely a result of US Airways' election to either restructure, abandon or reject aircraft debt and
leases during the bankruptcy proceedings. As a result of the confirmation of the Plan of Reorganization and the effectiveness of
the merger, these claims were withdrawn and the accruals reversed.
(f) As of September 30, 2005, US Airways recorded $1.5 billion of adjustments to reflect assets and liabilities at fair value, including
an initial net write-down of goodwill of $1.82 billion. Goodwill of $584 million was recorded to reflect the excess of the estimated
fair value of liabilities and equity over identifiable assets. Subsequent to September 30, 2005, US Airways reduced goodwill by
$103 million to reflect adjustments to the fair value of certain assets and liabilities. See Note 2(b) for a description of changes in
goodwill subsequent to September 30, 2005.
(g) In connection with filing for bankruptcy on September 12, 2004, US Airways achieved cost-savings agreements with its principal
collective bargaining groups. In connection with the new labor agreements, approximately 5,000 employees across several of US
Airways' labor groups were involuntarily terminated or participated in voluntary furlough and termination programs.
(h) In connection with the Airbus Memorandum of Understanding (the "Airbus MOU") executed between AVSA S.A.R.L., an
affiliate of Airbus S.A.S. ("Airbus"), US Airways Group, US Airways and AWA, US Airways was required to pay a restructuring
fee of $39 million, which was paid by means of offset against existing equipment deposits held by Airbus. US Airways also
received credits from Airbus totaling $4 million in 2005, primarily related to equipment deposits. See also Note 3.
(i) The GE Merger MOU provided for the continued use of certain leased Airbus, Boeing and regional jet aircraft, the modification of
monthly lease rates and the return of certain other leased Airbus and Boeing aircraft. The GE Merger MOU also provided for the
sale-leaseback of assets securing various GE obligations. In connection with these transactions, US Airways recorded a net loss of
$5 million.
3. Special items, net
Special items, net as shown on the consolidated statements of operations include the following charges (credits) (in millions):
Successor Company
Years Ended 3 Months Ended
December 31, December 31,
2007 2006 2005
Airbus restructuring $ — $ (90)(a) $ —
Merger related transition expenses 99(b) 131(b) 28(b)
Power by the hour program penalties — — 7(c)
Severance due to change in control — — 1(d)
Settlement of bankruptcy claims — (3)(e) —
Total $ 99 $ 38 $ 36
(a) In connection with the merger and the Airbus MOU, certain aircraft firm orders were restructured. In connection with that
restructuring, US Airways Group and America West Holdings were required to pay non-refundable restructuring fees totaling
$89 million by means of set-off against existing equipment deposits of US Airways and AWA held by Airbus of $39 million and
$50 million respectively. In 2005, AWA's restructuring fee of $50 million has been classified as a special charge, along with
$7 million in associated capitalized interest. Also in connection with the Airbus MOU, US Airways and AWA entered into two
loan agreements with aggregate commitments of up to $161 million and $89 million. On March 31, 2006, the outstanding principal
and accrued interest on the $89 million loan was forgiven upon repayment in full of the $161 million loan in accordance with
terms of the Airbus loans. As a result, in 2006, US Airways recognized a
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