US Airways 2007 Annual Report Download - page 33

Table of Contents
retirement age for pilots from 60 to 65 and $5 million in charges for certain separation packages and lease termination costs related
to the announced plans to reduce flying from Pittsburgh. These charges were offset by $7 million in tax credits due to an IRS rule
change allowing the Company to recover tax amounts for years 2003-2006 for certain fuel usage, $9 million of insurance
settlement proceeds related to business interruption and property damages incurred as a result of Hurricane Katrina and a
$5 million Piedmont pilot pension curtailment gain related to the FAA mandated retirement age change discussed above.
The 2006 period includes $131 million of merger related transition expenses, offset by a $90 million gain associated with the
return of equipment deposits upon forgiveness of a loan and $14 million of gains associated with the settlement of bankruptcy
claims.
The 2005 period includes $28 million of merger related transition expenses, a $27 million loss on the sale-leaseback of six Boeing
737-300 aircraft and two Boeing 757 aircraft, $7 million of power by the hour program penalties associated with the return of
certain leased aircraft, $1 million of severance for terminated employees resulting from the merger, a $1 million charge related to
aircraft removed from service and a $50 million charge related to an amended Airbus purchase agreement, along with the write off
of $7 million in capitalized interest. The $50 million charge was paid by means of set-off against existing equipment purchase
deposits held by Airbus.
The 2004 period includes a $16 million net credit associated with the termination of the rate per engine hour agreement with
General Electric Engine Services for overhaul maintenance services on V2500-A1 engines. This credit was partially offset by
$2 million of net charges related to the return of certain Boeing 737-200 aircraft, which includes termination payments of
$2 million, the write-down of leasehold improvements and deferred rent of $3 million, offset by the net reversal of maintenance
reserves of $3 million related to the returned aircraft.
The 2003 period includes $11 million of expenses resulting from the elimination of AWA's hub operations in Columbus, Ohio,
$2 million in charges related to the reduction-in-force of certain management, professional and administrative employees and
$3 million in impairment charges on certain owned Boeing 737-200 aircraft that were grounded, which was offset by a $1 million
reduction due to a revision of the estimated costs related to the early termination of certain aircraft leases and a $1 million
reduction related to the revision of estimated costs associated with the sale and leaseback of certain aircraft.
(b) The 2007 period includes a non-cash expense for income taxes of $7 million related to the utilization of NOL acquired from US
Airways. The valuation allowance associated with these acquired NOL was recognized as a reduction of goodwill rather than a
reduction in tax expense. In addition, the period also includes an $18 million write-off of debt issuance costs in connection with
the refinancing of the $1.25 billion senior secured credit facility with General Electric Capital Corporation ("GECC"), referred to
as the GE Loan, in March 2007 and $10 million in impairment losses on certain available for sale auction rate securities
considered to be other than temporary, offset by a $17 million gain recognized on the sale of stock in ARINC Incorporated.
The 2006 period includes a non-cash expense for income taxes of $85 million related to the utilization of NOL acquired from US
Airways. In addition, the period includes $6 million of prepayment penalties and $5 million in accelerated amortization of debt
issuance costs in connection with the refinancing of the loan previously guaranteed by the Air Transportation Stabilization Board
("ATSB") and two loans previously provided to AWA by GECC, $17 million in payments in connection with the inducement to
convert $70 million of US Airways Group's 7% Senior Convertible Notes to common stock and a $2 million write-off of debt
issuance costs associated with those converted notes, offset by $8 million of interest income earned by AWA on certain prior year
Federal income tax refunds.
The 2005 period includes an $8 million charge related to the write-off of the unamortized value of the ATSB warrants upon their
repurchase in October 2005 and an aggregate $2 million write-off of debt issuance costs associated with the exchange of AWA's
7.25% Senior Exchangeable Notes due 2023 and retirement of a portion of the loan formerly guaranteed by the ATSB. In the
fourth quarter 2005 period, which was subsequent to the effective date of the merger, US Airways recorded $4 million of
mark-to-market gains attributable to stock options in Sabre Inc. ("Sabre") and warrants in a number of e-commerce companies.
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