US Airways 2008 Annual Report Download - page 93

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
Passenger traffic commissions and related fees are expensed when the related revenue is recognized. Passenger traffic commissions
and related fees not yet recognized are included as a prepaid expense.
The Company purchases capacity, or ASMs, generated by the Company's wholly owned regional air carriers and the capacity of Air
Wisconsin Airlines Corp. ("Air Wisconsin"), Republic Airways Holdings ("Republic"), Mesa Airlines, Inc. ("Mesa") and Chautauqua
Airlines, Inc. ("Chautauqua") in certain markets. Air Wisconsin, Republic, Mesa and Chautauqua operate regional jet aircraft in these
markets as part of US Airways Express. The Company classifies revenues related to capacity purchase arrangements as Express
passenger revenues. Liabilities related to tickets sold for travel on these air carriers are also included in the Company's air traffic liability
and are subsequently relieved in the same manner as described above.
The Company collects various excise taxes on its ticket sales, which are accounted for on a net basis.
Cargo Revenue
Cargo revenue is recognized when shipping services for mail and other cargo are provided.
Other Revenue
Other revenue includes checked and excess baggage charges, beverage sales, ticket change and service fees, commissions earned on
tickets sold for flights on other airlines and sales of tour packages by the US Airways Vacations division, which are recognized when the
services are provided. Other revenues also include processing fees for travel awards issued through the Dividend Miles frequent traveler
program and the marketing component earned from selling mileage credits to partners, as discussed in Note 1(k).
(o) Maintenance and Repair Costs
Maintenance and repair costs for owned and leased flight equipment are charged to operating expense as incurred.
(p) Selling Expenses
Selling expenses include commissions, credit card fees, computerized reservations systems fees, advertising and promotional
expenses. Advertising and promotional expenses are expensed when incurred. Advertising and promotional expenses for the years ended
December 31, 2008, 2007 and 2006 were $10 million, $16 million and $16 million, respectively.
(q) Stock-based Compensation
The Company accounts for its stock-based compensation plans in accordance with SFAS No. 123(R), "Share-Based Payment."
Compensation expense is based on the fair value of the stock award at the time of grant and is recognized ratably over the respective
vesting period of the stock award. The fair value of stock options and stock appreciation rights is estimated using a Black-Scholes option
pricing model. The fair value of restricted stock units is based on the market price of the underlying shares of common stock on the date
of grant. See Note 15 for further discussion of stock-based compensation.
(r) Express Expenses
Expenses associated with the Company's wholly owned regional airlines, affiliate regional airlines operating as US Airways Express
and US Airways' former MidAtlantic division are classified as Express expenses on the consolidated statements of operations. Effective
May 27, 2006, the transfer of certain MidAtlantic assets to
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