US Airways 2007 Annual Report Download - page 36

Table of Contents
The nine months ended September 30, 2005 and the year ended December 31, 2004 include reorganization items which amounted
to a $636 million net gain and a $32 million expense, respectively.
The nine months ended December 31, 2003 include a $30 million gain on the sale of US Airways' investment in Hotwire, Inc. In
connection with US Airways' first bankruptcy, a $1.89 billion gain is included for the three months ended March 31, 2003.
(d) The 2006 period includes a $1 million benefit which represents the cumulative effect on the accumulated deficit of the adoption of
SFAS No. 123R. The adjustment reflects the impact of estimating future forfeitures for previously recognized compensation
expense.
(e) Includes debt, capital leases, postretirement benefits other than pensions and employee benefit liabilities and other. Also includes
liabilities subject to compromise at December 31, 2004.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Background
US Airways Group is a holding company whose primary business activity is the operation of a major network air carrier, through its
wholly owned subsidiaries US Airways, Piedmont, PSA, MSC and Airways Assurance Limited. 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 Chapter 11 of the U.S. Bankruptcy Code in the United States
Bankruptcy Court for the Eastern District of Virginia, Alexandria Division. On May 19, 2005, US Airways Group signed a merger
agreement with America West Holdings pursuant to which America West Holdings merged with a wholly owned subsidiary of US
Airways Group. The merger agreement was amended by a letter of agreement on July 7, 2005. The merger became effective upon US
Airways Group's emergence from bankruptcy on September 27, 2005.
As a result of the merger, we operate the fifth largest airline in the United States as measured by domestic RPMs and ASMs. We
have primary hubs in Charlotte, Philadelphia and Phoenix and secondary hubs/focus cities in Las Vegas, New York, Washington, D.C.
and Boston. We are a low-cost carrier offering scheduled passenger service on approximately 3,800 flights daily to 230 communities in
the U.S., Canada, the Caribbean, Latin America and Europe, making us the only U.S. based low-cost carrier with a significant
international route presence. We are also the only low-cost carrier with an established East Coast route network, including the US
Airways Shuttle service, with substantial presence at capacity constrained airports including New York's LaGuardia Airport and the
Washington, D.C. area's Ronald Reagan Washington National Airport. As of December 31, 2007, we operated 356 mainline jets and are
supported by our regional airline subsidiaries and affiliates operating as US Airways Express, which operate approximately 232 regional
jets and 104 turboprops. In 2007, we generated passenger revenues of $10.83 billion.
The merger was accounted for as a reverse acquisition using the purchase method of accounting. As a result, although the merger
was structured such that America West Holdings became a wholly owned subsidiary of US Airways Group, America West Holdings was
treated as the acquiring company for accounting purposes due to the following factors: (1) America West Holdings' stockholders received
the largest share of US Airways Group's common stock in the merger in comparison to unsecured creditors of US Airways Group;
(2) America West Holdings received a larger number of designees to the board of directors; and (3) America West Holdings' Chairman
and Chief Executive Officer prior to the merger became the Chairman and Chief Executive Officer of the combined company. As a result
of the reverse acquisition, the 2005 consolidated statement of operations for the new US Airways Group presented in this report is
comprised of the results of America West Holdings for the 269 days through September 27, 2005 and consolidated results of US Airways
Group for the 96 days from September 27, 2005 through December 31, 2005.
On September 26, 2007, as part of the integration efforts following the merger, AWA surrendered its FAA operating certificate. As
a result, all mainline airline operations are now being conducted under US Airways' FAA operating certificate. In connection with the
combination of all mainline airline operations under one FAA operating certificate, US Airways Group contributed 100% of its equity
interest in America West Holdings, the parent company of AWA, to US Airways. As a result, America West Holdings and AWA are now
wholly owned subsidiaries of US Airways. In addition, AWA transferred substantially all of its assets and liabilities to US Airways.
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