US Airways 2008 Annual Report Download - page 63

Table of Contents
and equipment. Debt repayments totaled $1.19 billion and, using the proceeds from the GE loan, included the repayment in full of the
balances outstanding on the ATSB loans of $801 million, Airbus loans of $161 million and two GECC term loans of $110 million. We
also made a $17 million payment in 2006 related to the partial conversion of the 7% Senior Convertible Notes.
US Airways
2008 Compared to 2007
Net cash used in operating activities was $1.03 billion in 2008 as compared to net cash provided by operating activities of
$433 million in 2007. The period over period decrease of $1.46 billion is due principally to US Airways' net loss for 2008, which was
driven by record high fuel prices. US Airways' mainline and Express fuel expense, net of realized gains on fuel hedging transactions, was
$1.28 billion higher in 2008 than in 2007 on slightly lower capacity. Additionally, the substantial decrease in the price of fuel in the latter
part of 2008, while a significant positive development, had the near term liquidity impact of reducing US Airways' operating cash flow by
$461 million as US Airways was required to post collateral in the form of cash deposits and letters of credit it issued in connection with
no premium collars entered into as part of its fuel hedging program. This compares to the same period in 2007 when US Airways
received the return of fuel hedging collateral of $48 million from its counterparties. The increase in fuel costs and fuel hedge collateral
was partially offset by an increase in revenue of $431 million due to a 3.1% increase in mainline and Express PRASM and US Airways'
new revenue initiatives that went into effect in 2008.
Net cash used in investing activities was $889 million in 2008 as compared to net cash provided by investing activities of
$306 million in 2007. Principal investing activities in 2008 included expenditures for property and equipment totaling $902 million,
including the purchase of 14 Embraer 190 aircraft and five Airbus A321 aircraft, a $139 million increase in equipment purchase deposits
for certain aircraft on order and a $74 million increase in restricted cash, offset in part by net sales of investments in marketable securities
of $206 million. The change in the restricted cash balance for the 2008 period was due to changes in the amount of holdback held by
certain credit card processors for advance ticket sales for which US Airways had not yet provided air transportation. Principal investing
activities in 2007 included net sales of investments in marketable securities of $612 million, a decrease in restricted cash of $200 million
and $56 million in proceeds from the sale of investments in ARINC and Sabre, offset in part by expenditures for property and equipment
totaling $486 million, including the purchase of nine Embraer 190 aircraft, and an increase in equipment purchase deposits of
$80 million. The net sales of investments in marketable securities in the 2007 period were primarily certain auction rate securities sold at
par value in the third quarter of 2007. The change in the restricted cash balances for the 2007 period was due to changes in the amounts of
holdback held by certain credit card processors.
Net cash provided by financing activities was $1 billion and $90 million in 2008 and 2007, respectively. Principal financing
activities in 2008 included proceeds from the issuance of debt of $1.39 billion, of which $600 million was from the series of financing
transactions completed in October 2008. See further discussion of these transactions under "Commitments." Proceeds also included
$521 million to finance the acquisition of 14 Embraer 190 aircraft and five Airbus A321 aircraft and $145 million in proceeds from the
refinancing of certain aircraft equipment notes. Debt repayments were $318 million, including a $100 million prepayment of certain
indebtedness incurred as part of US Airways' financing transactions completed in October 2008 and $97 million related to the
$145 million aircraft equipment note refinancing discussed above. Principal financing activities in 2007 included proceeds from the
issuance of debt of $198 million to finance the acquisition of property and equipment and total debt repayments of $105 million.
2007 Compared to 2006
Net cash provided by operating activities was $433 million and $652 million in 2007 and 2006, respectively, a decrease of
$219 million. The period over period decrease was due principally to higher expenses in 2007 compared to 2006 related to an increase in
salaries and benefits of $212 million, aircraft maintenance of $53 million and mainline and Express fuel costs, net of realized fuel
hedging gains and losses, of $46 million, offset by an increase in revenue of $121 million.
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