US Airways 2008 Annual Report Download - page 117

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
(e) Legal Proceedings
On September 12, 2004, US Airways Group and its domestic subsidiaries (collectively, the "Reorganized Debtors") filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Virginia,
Alexandria Division (Case Nos. 04-13819-SSM through 03-13823-SSM) (the "2004 Bankruptcy"). On September 16, 2005, the
Bankruptcy Court issued an order confirming the plan of reorganization submitted by the Reorganized Debtors and on September 27,
2005, the Reorganized Debtors emerged from the 2004 Bankruptcy. The Bankruptcy Court's order confirming the plan included a
provision called the plan injunction, which forever bars other parties from pursuing most claims against the Reorganized Debtors that
arose prior to September 27, 2005 in any forum other than the Bankruptcy Court. The great majority of these claims are pre-petition
claims that, if paid out at all, will be paid out in common stock of the post-bankruptcy US Airways Group at a fraction of the actual claim
amount.
(f) Guarantees and Indemnifications
US Airways guarantees the payment of principal and interest on certain special facility revenue bonds issued by municipalities to
build or improve certain airport and maintenance facilities which are leased to US Airways. Under such leases, US Airways is required to
make rental payments through 2023, sufficient to pay maturing principal and interest payments on the related bonds. As of December 31,
2008, the principal amount outstanding on these bonds was $90 million. Remaining lease payments guaranteeing the principal and
interest on these bonds are $145 million.
The Company enters into real estate leases in substantially all cities that it serves. It is common in such commercial lease
transactions for the Company as the lessee to agree to indemnify the lessor and other related third parties for tort liabilities that arise out
of or relate to the use or occupancy of the leased premises. In some cases, this indemnity extends to related liabilities arising from the
negligence of the indemnified parties, but usually excludes any liabilities caused by their gross negligence or willful misconduct. With
respect to certain special facility bonds, the Company agreed to indemnify the municipalities for any claims arising out of the issuance
and sale of the bonds and use or occupancy of the concourses financed by these bonds. Additionally, the Company typically indemnifies
such parties for any environmental liability that arises out of or relates to its use or occupancy of the leased premises.
The Company is the lessee under many aircraft financing agreements (including leveraged lease financings of aircraft under pass
through trusts). It is common in such transactions for the Company as the lessee to agree to indemnify the lessor and other related third
parties for the manufacture, design, ownership, financing, use, operation and maintenance of the aircraft, and for tort liabilities that arise
out of or relate to the Company's use or occupancy of the leased asset. In some cases, this indemnity extends to related liabilities arising
from the negligence of the indemnified parties, but usually excludes any liabilities caused by their gross negligence or willful misconduct.
In aircraft financing agreements structured as leverage leases, the Company typically indemnifies the lessor with respect to adverse
changes in U.S. tax laws.
US Airways has long-term operating leases at a number of airports, including leases where US Airways is also the guarantor of the
underlying debt. Such leases are typically with municipalities or other governmental entities. The arrangements are not required to be
consolidated based on the provisions of FIN No. 46(R).
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