US Airways 2007 Annual Report Download - page 45

Table of Contents
Nonoperating Income (Expense):
Percent
2007 2006 Change
(In millions)
Nonoperating income (expense):
Interest income $ 172 $ 153 12.5
Interest expense, net (273) (295) (7.5)
Other, net 2 (12) nm
Total nonoperating expense, net $ (99) $ (154) (35.7)
We had net nonoperating expense of $99 million in 2007 as compared to $154 million in 2006. Interest income increased
$19 million to $172 million in 2007 due to higher average cash balances and higher average rates of return on investments. Interest
expense decreased $22 million to $273 million due to the full year effect in 2007 of refinancing the loan formerly guaranteed by the
ATSB at lower average interest rates in March 2006, as well as the refinancing of the GE loan at lower average interest rates and the
repayment of the Barclays Bank of Delaware prepaid miles loan in March 2007.
The 2007 period includes other nonoperating income of $2 million primarily related to the $18 million write off of debt issuance
costs in connection with the refinancing of the GE loan in March 2007 as well as a $10 million impairment on auction rate securities
considered to be other than temporary, offset by a $17 million gain on the sale of stock in ARINC Incorporated and $7 million in foreign
currency gains related to sales transactions denominated in foreign currencies. The 2006 period includes $6 million of nonoperating
expense related to prepayment penalties and $5 million in accelerated amortization of debt issuance costs in connection with the
refinancing of the loan formerly guaranteed by the ATSB and two loans previously provided to AWA by GECC as well as $17 million in
payments in connection with the inducement to convert $70 million of the 7% Senior Convertible Notes to common stock and a
$2 million write off of debt issuance costs associated with those converted notes, offset by $11 million of derivative gains attributable to
stock options in Sabre and warrants in a number of companies.
2006 Compared With 2005
As discussed above, the full year 2006 includes the consolidated results of US Airways Group and its subsidiaries, including US
Airways, America West Holdings and AWA. The 2005 statement of operations presented includes the consolidated results of America
West Holdings for the 269 days through September 27, 2005, the effective date of the merger, and the consolidated results of the new US
Airways Group for the 96 days from September 27, 2005 to December 31, 2005. The table below shows the consolidated results (in
millions):
2006 2005
Consolidated Consolidated America
US Airways US Airways 96 Days West
Group Group US Airways(1) Holdings
Operating revenues $ 11,557 $ 5,069 $ 1,805 $ 3,264
Operating expenses 10,999 5,286 1,897 3,389
Operating income (loss) 558 (217) (92) (125)
Nonoperating expense, net (154) (118) (44) (74)
Income tax provision 101 — — —
Income (loss) before cumulative effect of a change in accounting principle $ 303 $ (335) $ (136) $ (199)
Diluted earnings (loss) per common share before cumulative effect of a change in
accounting principle $ 3.32 $ (10.65) $ n/a $ n/a
(1) Includes US Airways and US Airways Group's wholly owned subsidiaries, PSA, Piedmont and MSC.
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