US Airways 2007 Annual Report Download - page 151

Table of Contents
US Airways, Inc.
Notes to Consolidated Financial Statements — (Continued)
gain associated with the return of these equipment deposits upon forgiveness of the loan totaling $90 million, consisting of the
$89 million in equipment deposits and accrued interest of $1 million.
(b) In 2007, in connection with the continuing effort to consolidate functions and integrate organizations, procedures, and operations
with AWA, US Airways incurred $99 million of transition and merger integration costs. These items included $13 million of
training and related expenses; $19 million in compensation expenses for equity awards granted in connection with the merger to
retain key employees through the integration period; $20 million of aircraft livery costs; $37 million in professional and technical
fees related to the integration of airline operations systems; $1 million in employee moving expenses; $4 million related to
reservation system migration expenses and $5 million of other expenses.
In 2006, US Airways incurred $131 million of transition and merger integration costs. These items included $6 million of training
and related costs; $41 million in compensation expenses primarily for severance, retention payments and equity awards granted in
connection with the merger to retain key employees through the integration period; $17 million of aircraft livery costs; $38 million
in professional and technical fees, including continuing professional fees associated with US Airways' bankruptcy proceedings and
fees related to the integration of airline operations systems; $7 million of employee moving expenses; $11 million of net costs
associated with the integration of the AWA FlightFund and US Airways Dividend Miles frequent traveler programs; $2 million in
merger related aircraft lease return expenses and $9 million of other expenses.
In 2005, US Airways incurred $28 million of transition and merger integration costs in the fourth quarter of 2005. These items
included $8 million in compensation expenses primarily for severance and special stock awards granted under a program designed
to retain key employees through the integration period; $1 million of aircraft livery costs; $3 million in professional and technical
fees; $11 million in insurance premiums related to policies for former officers and directors; $2 million of sales and marketing
program expenses related to notifying frequent traveler program members about the merger; $1 million of programming service
expense and $2 million in other expenses.
Severance charges and payment activity related to the merger are as follows (in millions):
Year Ended
December 31,
2006 2005
Balance beginning of year $ 9 $ —
Amount recorded by US Airways in purchase accounting — 24
Severance expense 14 2
Payments (23) (17)
Balance end of year $ — $ 9
(c) In 2005, in connection with the return of certain leased aircraft, AWA incurred expenses of $7 million related to penalties incurred
under an outsourced maintenance arrangement.
(d) In 2005, AWA recorded severance expense totaling approximately $1 million for terminated employees resulting from the merger.
(e) In 2006, US Airways recognized $3 million in gains in connection with the settlement of bankruptcy claims.
4. Financial instruments
(a) General
On January 1, 1998, as part of a comprehensive information technology services agreement with Sabre, US Airways was granted
two tranches of stock options ("SHC Stock Options") to acquire up to 6,000,000 shares of Class A Common Stock, $0.01 par value, of
Sabre Holdings Corporation ("SHC Common Stock"), Sabre's parent
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