US Airways 2007 Annual Report Download - page 55

Table of Contents
additional declines in value are also temporary and are attributed to current credit market events and continued lack of market liquidity in
early 2008. Such temporary declines, if sustained, would be recognized in other comprehensive income in the first quarter of 2008. It is
possible that additional declines in fair value may occur. To the extent the fair market values of our auction rate securities were to
subsequently increase, such increase would reduce the unrealized loss recorded in other comprehensive income.
We continue to monitor the market for auction rate securities and consider its impact (if any) on the fair market value of our
investments. If the current market conditions deteriorate further, or the anticipated recovery in market values does not occur, we may be
required to record additional unrealized losses in other comprehensive income or impairment charges in 2008.
We intend and have the ability to hold these auction rate securities until the market recovers. We do not anticipate having to sell
these securities in order to operate our business. We believe that, based on our current unrestricted cash, cash equivalents and short-term
marketable securities balances of $2.17 billion at December 31, 2007, the current lack of liquidity in the credit and capital markets will
not have a material impact on our liquidity, cash flow or our ability to fund our operations.
Sources and Uses of Cash
US Airways Group
Net cash provided by operating activities was $442 million and $618 million in 2007 and 2006, respectively, a decrease of
$176 million. The decrease is a result of higher cash outflows in 2007 related to salaries and benefits, aircraft maintenance expense and
fuel costs. The increase in cash outflows was partially offset by an increase in cash receipts due to the better revenue environment in 2007
compared to 2006.
Net cash provided by investing activities in 2007 was $269 million compared to net cash used in investing activities of $903 million
in 2006. Principal investing activities in 2007 included purchases of property and equipment that totaled $523 million, including the
purchase of nine Embraer 190 aircraft, an $80 million increase in equipment purchase deposits, a decrease in restricted cash of
$200 million, and $56 million in proceeds from the sale of investments in ARINC and Sabre. We also had net proceeds from sales of
investments in marketable securities of $612 million, which was principally the result of sales of auction rate securities that were still
liquid at par value in the third quarter of 2007. The 2006 period included purchases of property and equipment totaling $232 million,
including the purchase of three Boeing 757-200 and two Embraer 190 aircraft, net purchases of investments in marketable securities of
$798 million and a decrease in restricted cash of $128 million. Changes in the restricted cash balances for the 2007 and 2006 periods are
due to changes in reserves required under agreements for processing credit card transactions.
Net cash provided by financing activities was $121 million and $276 million in 2007 and 2006, respectively. Principal financing
activities in 2007 included proceeds from the issuance of new debt including $1.6 billion of debt under the Citicorp credit facility and
$198 million of equipment notes issued to finance the acquisition of nine Embraer 190 aircraft. Debt repayments were $1.68 billion and,
using the proceeds from the Citicorp credit facility discussed above, included the repayment in full of the outstanding balance on the GE
loan of $1.25 billion, the prepayment of miles by Barclays Bank Delaware of $325 million and a GECC credit facility of $19 million.
Principal financing activities in 2006 included proceeds from the issuance of new debt totaling $1.42 billion, which included borrowings
of $1.25 billion under the GE loan, a $64 million draw on one of the Airbus loans and $92 million of equipment notes issued to finance
the acquisition of three Boeing 757-200 and two Embraer 190 aircraft. Debt repayments totaled $1.19 billion and, using the proceeds
from the GE loan, included the repayment in full of the balances outstanding on our ATSB loans of $801 million, Airbus loans of
$161 million, and two GECC term loans of $110 million. We also made a $17 million payment in 2006 related to the partial conversion
of the 7% Senior Convertible Notes.
US Airways
Net cash provided by operating activities was $430 million and $649 million in 2007 and 2006, respectively, a decrease of
$219 million. The decrease is a result of higher cash outflows in 2007 related to salaries and benefits,
53