US Airways 2007 Annual Report Download - page 52

Table of Contents
Holdings. The Predecessor Company statement of operations for US Airways for the nine month period ended September 30, 2005
remains unchanged. The table below shows the consolidated results (in millions):
Predecessor
Successor Company Company
Three Months Nine Months
Year Ended Ended Ended
December 31, December 31, September 30,
2006 2005 2005
Operating revenues $ 11,692 $ 2,589 $ 5,452
Operating expenses 11,135 2,772 5,594
Operating income (loss) 557 (183) (142)
Nonoperating income (expense), net (111) (73) 420
Income tax provision (benefit) 98 — (2)
Income (loss) before cumulative effect of a change in accounting principle $ 348 $ (256) $ 280
Total revenue in 2006 was $11.69 billion compared to $8.04 billion in 2005. The majority of the increase in revenue resulted from
the inclusion of the results of America West Holdings beginning in the fourth quarter of 2005. In addition, an increase of $849 million, or
11.8%, was driven by an increase in passenger yield of 12.2% due to improvements in the revenue environment from increased demand
and reductions in industry capacity.
Total operating expenses in 2006 were $11.14 billion compared to $8.37 billion, primarily reflecting the impact of the inclusion of
America West Holdings' results. The remaining increase in operating expense of $44 million or 0.6% was driven by the following factors:
• Aircraft fuel and related tax expense increased $121 million or 8.1% due primarily to a 16.8% increase in the average price per
gallon of fuel to $2.07 in 2006 from $1.77 in 2005.
• Selling expenses decreased $42 million or 12.9% primarily due to reduction in travel agent commissions and booking fees as a
result of lower rates renegotiated subsequent to the merger.
• Depreciation and amortization decreased $51 million or 27% as a result of fewer owned aircraft in the operating fleet as a result
of sale lease back transactions completed in 2005.
Total nonoperating expense (income) decreased from income of $347 million in 2005 to expense of $111 million in 2006, primarily
reflecting income from reorganization items in 2005 of $636 million and the results of the inclusion of America West Holdings. Interest
income increased $116 million to $153 million in 2006 due to higher average cash balances as a result of the merger and higher average
rates of return on investments. Interest expense decreased $44 million to $268 million as a result of reductions in the outstanding debt
subsequent to the sale-leaseback transactions completed in 2005 and the fact that interest expense in the first nine months of 2005
included penalty interest incurred as a result of the bankruptcy proceedings.
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