US Airways 2008 Annual Report Download - page 53

Table of Contents
loans previously provided to AWA by GECC, offset by $8 million of interest income earned by AWA on certain prior year
federal income tax refunds, all included in nonoperating expense.
US Airways reported a loss in 2008, which increased its NOL, and has not recorded a tax provision for 2008. As of December 31,
2008, US Airways has approximately $1.41 billion of gross NOL to reduce future federal taxable income. Of this amount, approximately
$1.37 billion is available to reduce federal taxable income in the calendar year 2009. The NOL expires during the years 2022 through
2028. US Airways' deferred tax asset, which includes $1.33 billion of the NOL discussed above, has been subject to a full valuation
allowance. US Airways also has approximately $72 million of tax-effected state NOL at December 31, 2008.
At December 31, 2008, the federal valuation allowance is $563 million, all of which will reduce future tax expense when
recognized. The state valuation allowance is $80 million, of which $56 million was established through the recognition of tax expense.
The remaining $24 million was established in purchase accounting. Effective January 1, 2009, US Airways adopted SFAS No. 141R,
"Business Combinations." In accordance with SFAS No. 141R, all future decreases in the valuation allowance established in purchase
accounting will be recognized as a reduction in tax expense. In addition, US Airways has $28 million and $2 million, respectively, of
unrealized federal and state tax benefit related to amounts recorded in other comprehensive income.
For the year ended December 31, 2007, US Airways utilized NOL to reduce its income tax obligation. Utilization of this NOL
results in a corresponding decrease in the valuation allowance. As this valuation allowance was established through the recognition of tax
expense, the decrease in valuation allowance offsets the tax provision dollar for dollar. US Airways recognized $7 million of non-cash
state income tax expense for the year ended December 31, 2007, as it utilized NOL that was generated prior to the merger. As this was
acquired NOL, the decrease in the valuation allowance associated with this NOL reduced goodwill instead of the provision for income
taxes.
For the year ended December 31, 2006, US Airways recognized $85 million of non-cash income tax expense, as it utilized NOL that
was generated prior to the merger. US Airways also recorded AMT tax expense of $10 million. In most cases, the recognition of AMT
does not result in tax expense. However, as discussed above, since US Airways' NOL was subject to a full valuation allowance, any
liability for AMT is recorded as tax expense. US Airways also recorded $2 million of state income tax provision in 2006 related to certain
states where NOL was not available to be used.
The table below sets forth US Airways' selected mainline operating data:
Percent Percent
Year Ended December 31, Change Change
2008 2007 2006 2008-2007 2007-2006
Revenue passenger miles (millions)(a) 60,570 61,262 60,689 (1.1) 0.9
Available seat miles (millions)(b) 74,151 75,842 76,983 (2.2) (1.5)
Passenger load factor (percent)(c) 81.7 80.8 78.8 0.9 pts 2.0 pts
Yield (cents)(d) 13.51 13.28 13.13 1.7 1.2
Passenger revenue per available seat mile (cents)(e) 11.04 10.73 10.35 2.9 3.7
Aircraft at end of period 354 356 359 (0.6) (0.8)
(a) Revenue passenger mile ("RPM") — A basic measure of sales volume. A RPM represents one passenger flown one mile.
(b) Available seat mile ("ASM") — A basic measure of production. An ASM represents one seat flown one mile.
(c) Passenger load factor — The percentage of available seats that are filled with revenue passengers.
(d) Yield — A measure of airline revenue derived by dividing passenger revenue by revenue passenger miles and expressed in cents per
mile.
(e) Passenger revenue per available seat mile ("PRASM") — Total passenger revenues divided by total available seat miles.
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