US Airways 2009 Annual Report Download - page 41

Table of Contents
DOT's proposed order to determine next steps. However, we expect that if this order is implemented as proposed the transaction will not
go forward.
Operational Realignment
In October 2009, we announced the realignment of our operations to focus on our core network strengths, which include our hubs in
Charlotte, Philadelphia and Phoenix and our focus city at Washington National Airport. These four cities, as well as our popular hourly
Shuttle service between LaGuardia, Boston and Washington National airports, will serve as the cornerstone of our network and by the
end of 2010 are expected to represent 99% of our ASMs versus approximately 93% in 2009. Changes to facilitate this strategy include
reducing daily departures from Las Vegas, closing stations in Colorado Springs and Wichita, redeploying our E190 fleet to routes
between Boston and Philadelphia and the Boston-LaGuardia leg of the Shuttle, suspending five European destinations, returning our
Philadelphia-Beijing route authority, rightsizing our crew bases at our hubs and focus city and closing crew bases in Boston, LaGuardia
and Las Vegas. In connection with the realignment of our operations, we will reduce staffing by approximately 1,000 positions across our
system during the first half of 2010. These reductions include approximately 600 airport passenger and ramp service positions,
approximately 200 pilot positions and approximately 150 flight attendant positions. We believe that by concentrating on our strengths and
eliminating unprofitable flying we will be better positioned to return US Airways to profitability.
2010 Outlook
As we begin 2010, it is difficult to predict the ongoing effects of the global economic recession. We have taken numerous actions to
strengthen our current and future liquidity position. We have significantly reduced our required capital expenditures for 2010 through
2012 and eliminated our need to access aircraft finance markets in 2010. We believe that these actions coupled with our operational
realignment have well positioned us as the economy recovers.
US Airways Group's Results of Operations
In 2009, we realized operating income of $118 million and a loss before income taxes of $243 million. We experienced significant
declines in revenues as a result of the global economic recession, which more than offset the benefits of reduced fuel costs during 2009.
Our 2009 results were also impacted by recognition of the following items:
• $382 million of net realized losses on settled fuel hedging instruments, offset by $375 million of net unrealized gains resulting
from the application of mark-to-market accounting for changes in the fair value of fuel hedging instruments. In mark-to-market
accounting, the unrealized losses recognized in prior periods are reversed as hedge transactions are settled in the current period.
We were required to use mark-to-market accounting as our fuel hedging instruments did not meet the requirements for hedge
accounting. If these instruments had qualified for hedge accounting treatment, any unrealized gains or losses would have been
recorded in other comprehensive income, a component of stockholders' equity;
• $55 million of net special charges consisting of $22 million in aircraft costs as a result of our previously announced capacity
reductions, $16 million in non-cash impairment charges due to the decline in fair value of certain indefinite lived intangible assets
associated with our international routes, $11 million in severance and other charges and $6 million in costs incurred related to our
liquidity improvement program;
• $3 million in non-cash charges related to the decline in fair value of certain Express spare parts; and
• $49 million in non-cash charges associated with the sale of 10 Embraer 190 aircraft and write off of related debt discount and
issuance costs, $10 million in other-than-temporary non-cash impairment charges for our investments in auction rate securities and
a $2 million non-cash asset impairment charge, all included in nonoperating expense, net.
In 2008, we realized an operating loss of $1.8 billion and a loss before income taxes of $2.22 billion. The 2008 loss was driven by an
average mainline and Express price per gallon of fuel of $3.18 as well as a $622 million non-
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