US Airways 2008 Annual Report Download - page 139

Table of Contents
US Airways, Inc.
Notes to Consolidated Financial Statements — (Continued)
$24 million in 2009, $24 million in year 2010, $21 million in year 2011, $20 million in year 2012, $20 million in year 2013 and
$314 million thereafter related to these intangible assets.
Under SFAS No. 142, indefinite lived assets are not amortized but instead are reviewed for impairment annually and more
frequently if events or circumstances indicate that the asset may be impaired. As of December 31, 2008 and 2007, US Airways had
$55 million of international route authorities and $30 million of trademarks on its balance sheets, which are classified as indefinite lived
assets.
In connection with completing step two of US Airways' goodwill impairment analysis in the second quarter of 2008, US Airways
assessed the fair values of its significant intangible assets. US Airways considered the potential impairment of these other intangible
assets in accordance with SFAS No. 142 and SFAS No. 144, as applicable. The fair values of airport take-off and landing slots and
international route authorities were assessed using the market approach. The market approach took into consideration relevant supply and
demand factors at the related airport locations as well as available market sale and lease data. For trademarks, US Airways utilized a form
of the income approach known as the relief-from-royalty method. As a result of these assessments, no impairment was indicated.
In addition, US Airways performed the annual impairment test on its international route authorities and trademarks during the fourth
quarter of 2008, at which time it concluded that no impairment exists. US Airways will perform its next annual impairment test on
October 1, 2009.
(j) Other Assets, Net
Other assets, net consists of the following as of December 31, 2008 and 2007 (in millions):
2008 2007
Deposits $ 40 $ 46
Debt issuance costs, net 19 7
Long term investments 11 12
Deferred rent 46 48
Aircraft leasehold interest, net 83 89
Total other assets, net $ 199 $ 202
In connection with fresh-start reporting for US Airways following its emergence from bankruptcy in September 2005, aircraft
operating leases were adjusted to fair value and $101 million of assets were established for leasehold interests in aircraft for aircraft
leases with rental rates deemed to be below market rates. These leasehold interests are amortized on a straight-line basis as an increase to
aircraft rent expense over the applicable remaining lease periods. US Airways expects to amortize $6 million per year in 2009-2013 and
$53 million thereafter to aircraft rent expense related to these leasehold interests.
(k) Frequent Traveler Program
Members of the Dividend Miles program, the US Airways frequent traveler program, can redeem miles on US Airways or other
members of the Star Alliance. The estimated cost of providing the travel award, using the incremental cost method as adjusted for
estimated redemption rates, is recognized as a liability and charged to operations as program members accumulate mileage. For travel
awards on partner airlines, the liability is based on the average contractual amount to be paid to the other airline per redemption. As of
December 31, 2008, Dividend Miles members had accumulated mileage credits for approximately 2.6 million awards. The liability for
the future travel awards accrued on US Airways' consolidated balance sheets within other accrued expenses was $151 million and
$161 million as of December 31, 2008 and 2007, respectively.
US Airways sells mileage credits to participating airline and non-airline business partners. Revenue earned from selling mileage
credits to other companies is recognized in two components. A portion of the revenue from
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