US Airways 2007 Annual Report Download - page 37

Table of Contents
All off-balance sheet commitments of AWA were also transferred to US Airways. This transaction constituted a transfer of assets
between entities under common control and was accounted for at historical cost. The contribution had no effect on the US Airways Group
consolidated financial statements. Pilots, flight attendants, and ground and maintenance employees continue to work under the terms of
their respective collective bargaining agreements, including, in some cases, transition agreements reached in connection with the merger.
As part of the transfer of assets and liabilities to US Airways, all of AWA's obligations with respect to certain pass through trusts
and the leases of related aircraft and engines were transferred to US Airways. The pass through trusts had issued pass through trust
certificates (also known as "Enhanced Equipment Trust Certificates" or "EETCs"), of which AWA was the deemed issuer for SEC
reporting purposes. Because US Airways has assumed all of AWA's obligations with respect to the pass through trusts, US Airways is
now the deemed issuer of these EETCs. As a result, AWA no longer has an obligation to file separate financial statements or reports with
the SEC and has filed a Form 15 with the SEC terminating its reporting obligations.
2007 Overview
Solid Financial Results
In 2007, we earned net income of $427 million, the second profitable year since our merger in 2005 and the fourth highest level of
annual earnings in our combined history. Diluted earnings per share for the year was $4.52, compared to $3.33 in 2006. These financial
results were achieved during a year that saw record fuel prices and higher costs driven by implementation of our operational improvement
plan to increase reliability as well as the rationalization of our capacity.
Merger Integration Update
For 2007, our operational accomplishments included the following:
• Merged two reservations systems onto one platform, which provides a single system for reservation and airport customer service
agents that enables us to simplify ticketing processes, remove redundant systems and provide a consistent product to our
passengers.
• Marked a significant milestone by moving all of our mainline operations to a single operating certificate from the FAA, as
described above. The single certificate allows us to operate as one US Airways with one set of policies, procedures, computer
systems, maintenance and flight control systems.
• Broke ground for our new 72,000 square foot state-of-the-art operations control center near Pittsburgh International Airport. The
new facility will house 600 employees, with completion slated for early 2009.
• Completed the consolidation of operations at Chicago O'Hare, the last of 38 cities where both US Airways and AWA had
operated at the time of the merger.
• Reached final single labor agreements covering the flight crew training instructors and the flight simulator engineers, each
represented by the Transport Workers Union ("TWU"). Additionally, we are continuing to negotiate with the pilot, flight
attendant, fleet service and mechanic labor groups in hopes of reaching final agreements with these unions.
Maintained Liquidity Position and Reduced Near-term Debt Amortizations
As of December 31, 2007, we had cash, cash equivalents and investments totaling $3 billion, of which $2.53 billion was
unrestricted. Investments include $353 million of auction rate securities that are classified as noncurrent assets on our balance sheet.
In March 2007, we completed a $1.6 billion debt refinancing, which we used to extinguish three separate debt obligations: a
$1.25 billion senior secured credit facility, $325 million of unsecured debt in the form of pre-paid miles and a $19 million secured credit
facility. The refinancing improves liquidity by reducing debt amortization payments until 2014 and lowering near-term interest expense.
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