US Airways 2007 Annual Report Download - page 48

Table of Contents
Nonoperating expense in the 2005 period includes $8 million of expenses 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 the 7.25% Senior Exchangeable Notes due 2023.
As of December 31, 2007, US Airways has approximately $761 million of gross NOL to reduce future federal taxable income. Of
this amount, approximately $649 million is available to reduce federal taxable income in the calendar year 2008. US Airways' deferred
tax asset, which includes the $649 million of NOL discussed above, has been subject to a full valuation allowance.
For the year ended December 31, 2007, US Airways utilized NOL to reduce its income tax obligation. Utilization of this NOL
results in a corresponding decrease in the valuation allowance. In accordance with SFAS No. 109, as this valuation allowance was
established through the recognition of tax expense, the decrease in valuation allowance offsets the tax provision dollar for dollar. US
Airways recognized $7 million of non-cash state income tax expense for the year ended December 31, 2007, as it utilized NOL that was
generated prior to the merger. In accordance with SFAS No. 109, as this was acquired NOL, the decrease in the valuation allowance
associated with this NOL reduced goodwill instead of the provision for income taxes. At December 31, 2007, the remaining federal
valuation allowance is $40 million, all of which was established through the recognition of tax expense. In addition, US Airways has
$33 million and $3 million, respectively, of unrealized federal and state tax benefit related to amounts recorded in other comprehensive
income. At December 31, 2007, the remaining state valuation allowance is $43 million, of which $19 million was established through the
recognition of tax expense and $24 million is associated with acquired NOL.
For the year ended December 31, 2006, US Airways recognized $85 million of non-cash income tax expense, as it used NOL that
was generated prior to the merger. In accordance with SFAS No. 109, as this valuation allowance was established through the recognition
of tax expense, the decrease in valuation allowance offsets the tax provision dollar for dollar. US Airways also recorded AMT tax
expense of $10 million. In most cases, the recognition of AMT does not result in tax expense. However, as discussed above, since US
Airways' NOL was subject to a full valuation allowance, any liability for AMT is recorded as tax expense. US Airways also recorded
$2 million of state income tax provision in 2006 related to certain states where NOL was not available to be used.
For the year ended December 31, 2005, US Airways did not record an income tax benefit and recorded a full valuation allowance on
any future tax benefits generated during that period as we had yet to achieve several consecutive quarters of profitable results coupled
with an expectation of continued profitability.
The table below sets forth selected mainline operating data for US Airways. The 2005 full year operating statistics, which consist of
a full year of US Airways' results and AWA's results for the three months ended December 31, 2005, do not provide a meaningful
comparison and have been omitted.
Percent
Year Ended December 31, Change
2007 2006 2007-2006
Revenue passenger miles (millions)(a) 61,262 60,689 0.9
Available seat miles (millions)(b) 75,842 76,983 (1.5)
Load factor (percent)(c) 80.8 78.8 2.0 pts
Yield (cents)(d) 13.28 13.13 1.2
Passenger revenue per available seat mile (cents)(e) 10.73 10.35 3.7
Aircraft at end of period 356 359 (0.8)
(a) Revenue passenger mile ("RPM") — A basic measure of sales volume. A RPM represents one passenger flown one mile.
(b) Available seat mile ("ASM") — A basic measure of production. An ASM represents one seat flown one mile.
(c) Load factor — The percentage of available seats that are filled with revenue passengers.
(d) Yield — A measure of airline revenue derived by dividing passenger revenue by revenue passenger miles and expressed in cents
per mile.
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