US Airways 2008 Annual Report Download - page 18

Table of Contents
In an effort to further reduce distribution costs through internal channels, we have instituted service fees for customer interaction,
which were increased in 2008, in the following internal distribution channels: reservation call centers ($25 per domestic ticket, $35 per
international ticket), airport ticket offices ($35 per domestic ticket, $45 per international ticket) and city ticket offices ($35 per domestic
ticket, $45 per international ticket). Other services provided through these channels remain available with no extra fees. The goals of
these service fees are to reduce the cost to us of providing customer service as required by the traveler and to promote the continued goal
of shifting customers to our lowest cost distribution channel, www.usairways.com. Other airlines have instituted similar fee structures.
Internal channels of distribution account for 33% of our sales.
US Airways Vacations
Through US Airways Vacations ("USV"), we sell individual and group travel packages including air transportation on US Airways,
US Airways Express and all US Airways codeshare partners, hotel accommodations, car rentals and other travel products. USV packages
are marketed directly to consumers and through retail travel agencies in several countries and include travel to destinations throughout the
U.S., Latin America, the Caribbean and Europe.
USV is focused on high-volume leisure travel products that have traditionally provided high profit margins. USV has negotiated
several strategic partnerships with hotels, internet travel sites and media companies to capitalize on the continued growth in online travel
sales. USV sells vacation packages and hotel rooms through its call center; via the internet and its websites,
www.usairwaysvacations.com and www.usvtravelagents.com; through global distribution systems Sabre Vacations, Amadeus AgentNet
and VAX; and through third-party websites on a co-branded or private-label basis. In 2008, approximately 84% of USV's total bookings
were made electronically, compared to 78% in 2007.
During 2008, USV operated co-branded websites for nine partner companies, including Costco Travel, Vegas.com, LasVegas.com
and BestFares.com. These co-branded sites provide a retail presence via distribution channels such as Costco wholesale warehouses and
other company websites where we and USV may not otherwise be a part of the consumer's consideration set. USV intends to continue to
add new co-branded websites as opportunities present themselves.
Pre-merger US Airways Group's Chapter 11 Bankruptcy Proceedings
On September 12, 2004, US Airways Group and its domestic subsidiaries, US Airways, Piedmont, PSA and MSC (collectively, the
"Debtors"), which at the time accounted for substantially all of the operations of US Airways Group, filed voluntary petitions for relief
under Chapter 11 of the U.S. Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Eastern District of
Virginia, Alexandria Division (the "Bankruptcy Court"). On September 16, 2005, the Bankruptcy Court issued an order confirming the
Debtors' plan of reorganization. The plan of reorganization, which was based upon the completion of the merger, among other things, set
forth a revised capital structure and established the corporate governance for US Airways Group following the merger and subsequent to
emergence from bankruptcy. Under the plan of reorganization, the Debtors' general unsecured creditors received 8.2 million shares of the
new common stock of US Airways Group, which represented approximately 10% of our common stock outstanding as of the completion
of the merger. The holders of US Airways Group common stock outstanding prior to the merger received no distribution on account of
their interests, and their existing stock was canceled.
In accordance with the Bankruptcy Code, the plan of reorganization classified claims into classes according to their relative priority
and other criteria and provided for the treatment of each class of claims. Pursuant to the bankruptcy process, the Debtors' claims agent
received timely-filed proofs of claims totaling approximately $26.4 billion in the aggregate, exclusive of approximately $13.6 billion in
claims filed by governmental entities. The Debtors continue to be responsible for administering and resolving claims related to the
bankruptcy process. The administrative claims objection deadline passed on September 15, 2006. As of December 31, 2008, there were
approximately $157 million of unresolved claims. The ultimate resolution of certain of the claims asserted against the Debtors in the
Chapter 11 cases will be subject to negotiations, elections and Bankruptcy Court procedures. The recovery to individual creditors
ultimately distributed to any particular general unsecured creditor under the plan of reorganization will depend on a number of variables,
including the agreed value of any general unsecured claims filed by that creditor, the aggregate value of all resolved general unsecured
claims and the value of shares of the new common stock of US Airways Group in
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