US Airways 2007 Annual Report Download - page 53

Table of Contents
Description of Reorganization Items
Reorganization items, net represent amounts incurred as a direct result of US Airways' Chapter 11 filings and are presented
separately in the statements of operations. Such items consist of the following (in millions):
Predecessor Company
Nine Months Ended
September 30, 2005
Curtailment of postretirement benefits(a) $ 1,420
Termination of pension plans(b) 801
Discharge of liabilities(c) 75
Aircraft order cancellation penalties & reversals(d) 30
Interest income on accumulated cash 7
Damage and deficiency claims(e) 2
Revaluation of assets and liabilities(f) (1,498)
Severance including benefits(g) (96)
Professional fees (57)
Airbus equipment deposits and credits, net(h) (35)
Restructured aircraft financings(i) (5)
Write-off of deferred compensation (4)
Other (4)
$ 636
(a) In January 2005, the Bankruptcy Court approved settlement agreements between US Airways and representatives of its retirees,
including the IAM, TWU and a court-appointed Section 1114 Committee, to begin the significant curtailment of postretirement
medical benefits. US Airways recognized a gain of $183 million in connection with this curtailment in the first quarter of 2005.
Upon the emergence from bankruptcy and effectiveness of the plan of reorganization, an additional gain of $1.24 billion was
recognized when the liability associated with the postretirement medical benefits was reduced to fair market value. See also
Note 6(a) to US Airways' consolidated financial statements included in Item 8B of this report.
(b) Also in January 2005, US Airways terminated three defined benefit plans related to the flight attendants, mechanics and certain
other employees (see Note 6(a) to US Airways' consolidated financial statements included in Item 8B of this report). PBGC was
appointed trustee of the plans upon termination. US Airways recognized a curtailment gain of $24 million and a $91 million
minimum pension liability adjustment in connection with the terminations in the first quarter of 2005. Upon the effective date of
the plan of reorganization and in connection with the settlement with the PBGC, the remaining liabilities associated with these
plans were written off, net of settlement amounts.
(c) Reflects the discharge of trade accounts payable and other liabilities upon emergence from bankruptcy. Most of these obligations
were only entitled to receive such distributions of cash and common stock as provided for under the plan of reorganization in each
of the bankruptcies. A portion of the liabilities subject to compromise in the bankruptcies were restructured and continued, as
restructured, to be liabilities of the Successor Company.
(d) As a result of US Airways' bankruptcy filing in September 2004, US Airways was not able to secure the financing necessary to
take on-time delivery of three scheduled regional jet aircraft and therefore accrued penalties of $3 million until delivery of these
aircraft was made to a US Airways Express affiliate in August 2005. Offsetting these penalties is the reversal of $33 million in
penalties recorded by US Airways in the nine months ended December 31, 2003 due to its intention not to take delivery of certain
aircraft scheduled for future delivery. In connection with the Airbus Memorandum of Understanding ("MOU"), the accrual for
these penalties was reversed.
(e) Damage and deficiency claims are largely a result of US Airways' election to either restructure, abandon or reject aircraft debt and
leases during the bankruptcy proceedings. As a result of the confirmation of the plan of reorganization and the effectiveness of the
merger, these claims were withdrawn and the accruals reversed.
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