US Airways 2008 Annual Report Download - page 94

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
Republic was complete, and Republic assumed the operations of the aircraft as a US Airways affiliate Express carrier. Express expenses
consist of the following (in millions):
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
2008 2007 2006
Aircraft fuel and related taxes $ 1,137 $ 765 $ 764
Salaries and related costs 244 245 266
Capacity purchases 1,049 987 972
Aircraft rent 51 51 59
Aircraft maintenance 74 76 71
Other rent and landing fees 115 112 117
Selling expenses 163 157 148
Depreciation and amortization 25 23 24
Other expenses 191 178 138
Express expenses $ 3,049 $ 2,594 $ 2,559
(s) Variable Interest Entities
The Company determined that certain entities with which the Company has capacity purchase agreements are considered variable
interest entities under Financial Accounting Standards Board ("FASB") Interpretation ("FIN") No. 46(R), "Consolidation of Variable
Interest Entities — An Interpretation of ARB No. 51." The Company has determined that it is not the primary beneficiary of any of these
variable interest entities and, accordingly, does not consolidate any of the entities with which it has jet service agreements. See Note 9(d)
for further discussion.
(t) Recent Accounting Pronouncements
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements." This standard defines fair value, establishes a
framework for measuring fair value in accounting principles generally accepted in the United States of America, and expands disclosure
about fair value measurements. This pronouncement applies to other accounting standards that require or permit fair value measurements.
Accordingly, this statement does not require any new fair value measurement. This statement is effective for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. In December 2007, the FASB agreed to a one year deferral of
SFAS No. 157's fair value measurement requirements for nonfinancial assets and liabilities that are not required or permitted to be
measured at fair value on a recurring basis. As such, the Company did not apply the fair value measurement requirements of
SFAS No. 157 for nonfinancial assets and liabilities when performing its goodwill and other assets impairment test as discussed in
Note 1(i). The Company adopted SFAS No. 157 on January 1, 2008, which had no effect on the Company's consolidated financial
statements. Refer to Note 7 for additional information related to the adoption of SFAS No. 157.
In December 2007, the FASB issued SFAS No. 141 (Revised 2007), "Business Combinations." SFAS No. 141R is effective for
fiscal years beginning after December 15, 2008 and adjusts certain guidance related to recording nearly all transactions where one
company gains control of another. The statement revises the measurement principle to require fair value measurements on the acquisition
date for recording acquired assets and liabilities. It also changes the requirements for recording acquisition-related costs and liabilities.
Additionally, the statement revises the treatment of valuation allowance adjustments related to income tax benefits in existence prior to a
business combination. The current standard, SFAS No. 141, requires that adjustments to these valuation allowances be recorded as
adjustments to goodwill or intangible assets if no goodwill exists, while the new standard will require companies to adjust current income
tax expense. Effective January 1, 2009, the Company adopted the provisions of SFAS No. 141R and all future decreases in the valuation
allowance established in purchase accounting as a result of the merger will be recognized as a reduction to income tax expense.
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