US Airways 2007 Annual Report Download - page 99

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
In connection with its first reorganization under Chapter 11 of the Bankruptcy Code, US Airways terminated the Retirement Income
Plan for Pilots of US Airways, Inc. and the related nonqualified pilot plan effective March 31, 2003. The Company implemented a
qualified and nonqualified defined contribution plan for pilots effective April 1, 2003. The defined contribution amount was individually
determined based on a target normal retirement date balance of approximately $1 million for a career US Airways pilot. The target
balance included the estimated value of other retirement benefits including, but not limited to, the estimated benefit pilots are expected to
receive from the PBGC, the trustee for the terminated pilot defined benefit plan. Effective October 15, 2004, each pilot's contribution rate
became the lesser of the original rate or 10% of eligible compensation. Expenses for this plan were $31 million, $42 million and
$16 million for the years ended December 31, 2007, 2006 and 2005, respectively, and are included in the Company's consolidated
financial results.
Effective January 1, 2005, America West Holdings amended its defined contribution plan, requiring AWA to make a non-elective
discretionary employer contribution equal to 7% of the annual compensation for each pilot covered under the collective bargaining
agreement between AWA and the Air Line Pilots Association (as defined in the plan and subject to statutory annual maximums).
Effective January 1, 2006, the non-elective discretionary employer contribution was increased to 10% of each pilot's annual
compensation. These non-elective discretionary employer contributions replace the existing AWA company match under the 401(k)
defined contribution plan for pilots. The AWA company match continues for all other eligible covered employees under the plan. AWA's
contribution expense to this plan totaled $19 million, $19 million and $13 million for 2007, 2006, and 2005 respectively.
(c) Postemployment Benefits
The Company provides certain postemployment benefits to its employees. These benefits include disability-related and workers'
compensation benefits for certain employees. The Company accrues for the cost of such benefit expenses once an appropriate triggering
event has occurred. In 2007, the Company recorded a $99 million charge to increase long-term disability obligations for US Airways'
pilots as a result of a change in the FAA mandated retirement age for pilots from 60 to 65.
(d) Profit Sharing Plans
Most non-executive employees of US Airways Group are eligible to participate in the 2005 Profit Sharing Plan, an annual bonus
program, which was established subsequent to the merger. Annual bonus awards are paid from a profit-sharing pool equal to (i) ten
percent of the annual profits of US Airways Group (excluding unusual items) for pre-tax profit margins up to ten percent, plus (ii) 15% of
the annual profits of US Airways Group (excluding unusual items) for pre-tax profit margins greater than ten percent. Awards are paid as
a lump sum no later than March 15 after the end of each fiscal year. The profit-sharing pool is shared among eligible employee groups in
proportion to each group's share of overall cost savings achieved through US Airways' 2005 transformation plan; however, the
represented pilots' and flight attendants' portions of the pool will not be less than 36% and 14.5%, respectively. An employee's share of
the pool is based on the ratio that the employee's compensation bears to the respective employee group's aggregate compensation. The
Company recorded $49 million and $59 million for profit sharing in 2007 and 2006, respectively, which is recorded in salaries and
related costs.
9. Income taxes
The Company accounts for income taxes according to the provisions in SFAS No. 109, "Accounting for Income Taxes." The
Company files a consolidated federal income tax return with its wholly owned subsidiaries. The Company and its wholly owned
subsidiaries allocate tax and tax items, such as net operating losses ("NOL") and net tax credits, between members of the group based on
their proportion of taxable income and other items. Accordingly, the Company's tax expense is based on taxable income, taking into
consideration allocated tax loss carryforwards/carrybacks and tax credit carryforwards.
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