US Airways 2007 Annual Report Download - page 169

Table of Contents
US Airways, Inc.
Notes to Consolidated Financial Statements — (Continued)
these variable interest entities, based on cash flow analyses. Additionally, US Airways has analyzed the arrangements with other carriers
with which US Airways has long-term capacity purchase agreements and has concluded it is not required to consolidate any of these
entities.
(e) Legal Proceedings
On September 12, 2004, US Airways Group and its domestic subsidiaries (collectively, the "Reorganized Debtors") filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Virginia,
Alexandria Division (Case Nos. 04-13819-SSM through 03-13823-SSM) (the "2004 Bankruptcy"). On September 16, 2005, the
Bankruptcy Court issued an order confirming the plan of reorganization submitted by the Reorganized Debtors and on September 27,
2005, the Reorganized Debtors emerged from the 2004 Bankruptcy. The Bankruptcy Court's order confirming the plan included a
provision called the plan injunction, which forever bars other parties from pursuing most claims against the Reorganized Debtors that
arose prior to September 27, 2005 in any forum other than the Bankruptcy Court. The great majority of these claims are pre-petition
claims that, if paid out at all, will be paid out in common stock of the post-bankruptcy US Airways Group at a fraction of the actual claim
amount.
On February 9, 2007, passengers Daphne Renard and Todd Robins filed a class action suit against US Airways in San Francisco
Superior Court. The complaint, which was later amended to include only Robins as a lead plaintiff, alleges that US Airways breached its
contract of carriage by charging additional fares and fees, after the purchase of tickets on the usairways.com website, for passengers
under two years of age who travel as "lap children," meaning 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. US
Airways 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
US Airways 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.
US Airways enters into real estate leases in substantially all cities that it serves. It is common in such commercial lease transactions
for US Airways 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, US Airways 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, US Airways typically indemnifies such parties for any
environmental liability that arises out of or relates to its use or occupancy of the leased premises.
US Airways 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 US Airways 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
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