US Airways 2007 Annual Report Download - page 18

Table of Contents
Pre-merger US Airways Group's Chapter 11 Bankruptcy Proceedings
On September 12, 2004, US Airways Group and its domestic subsidiaries, US Airways, Piedmont, PSA and MSC, which at the time
accounted for substantially all of the operations of US Airways Group, filed voluntary petitions for relief under the Bankruptcy Code in
the United States Bankruptcy Court for the Eastern District of Virginia, Alexandria Division. On September 16, 2005, the Bankruptcy
Court issued an order confirming the Debtors' plan of reorganization. The plan of reorganization, which was based upon the completion
of the merger, among other things, set forth a revised capital structure and established the corporate governance for US Airways Group
following the merger and subsequent to emergence from bankruptcy. Under the plan of reorganization, the Debtors' general unsecured
creditors received 8.2 million shares of the new common stock of US Airways Group, which represented approximately 10% of our
common stock outstanding as of the completion of the merger. The holders of US Airways Group common stock outstanding prior to the
merger received no distribution on account of their interests, and their existing stock was canceled.
In accordance with the Bankruptcy Code, the plan of reorganization classified claims into classes according to their relative priority
and other criteria and provided for the treatment of each class of claims. Pursuant to the bankruptcy process, the Debtors' claims agent
received timely-filed proofs of claims totaling approximately $26.4 billion in the aggregate, exclusive of approximately $13.6 billion in
claims by governmental entities. The Debtors continue to be responsible for administering and resolving claims related to the bankruptcy
process. The administrative claims objection deadline passed on September 15, 2006. As of December 31, 2007, there were
approximately $267 million of unresolved claims. The ultimate resolution of certain of the claims asserted against the Debtors in the
Chapter 11 cases will be subject to negotiations, elections and Bankruptcy Court procedures. The recovery to individual creditors
ultimately distributed to any particular general unsecured creditor under the plan of reorganization will depend on a number of variables,
including the agreed value of any general unsecured claims filed by that creditor, the aggregate value of all resolved general unsecured
claims and the value of shares of the new common stock of US Airways Group in the marketplace at the time of distribution. The effects
of these distributions were reflected in US Airways' financial statements upon emergence and will not have any further impact on the
results of operations.
Item 1A. Risk Factors
Below are a series of risk factors that may affect our results of operations or financial performance. We caution the reader that these
risk factors may not be exhaustive. We operate in a continually changing business environment, and new risk factors emerge from time to
time. Management cannot predict such new risk factors, nor can it assess the impact, if any, of these risk factors on our business or the
extent to which any factor or combination of factors may impact our business.
Risk Factors Relating to the Company and Industry Related Risks
Our business is dependent on the price and availability of aircraft fuel. Continued periods of historically high fuel costs, significant
disruptions in the supply of aircraft fuel or further increases in fuel costs could have a significant negative impact on our operating
results.
Our operating results are significantly impacted by changes in the availability or price of aircraft fuel, which in turn are often
affected by global events. Fuel prices have increased substantially over the past several years and sharply in the last quarter of 2007.
Because of the amount of fuel needed to operate the airline, even a relatively small increase in the price of fuel can have a significant
aggregate effect on our costs. Due to the competitive nature of the airline industry and market forces, we can offer no assurance that we
may be able to increase our fares or otherwise increase revenues sufficiently to offset fuel prices. Although we are currently able to obtain
adequate supplies of aircraft fuel, we cannot predict the future availability or price of aircraft fuel. In addition, from time to time we enter
into hedging arrangements to protect against rising fuel costs. Our ability to hedge in the future, however, may be limited. See also the
discussion in Part II, Item 7A. "Quantitative and Qualitative Disclosures About Market Risk."
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