US Airways 2009 Annual Report Download - page 61

Table of Contents
US Airways
2009 Compared to 2008
Net cash provided by operating activities was $326 million in 2009 as compared to net cash used in operating activities of $1.03 billion
in 2008, a period-over-period improvement of $1.35 billion. Operating cash flows significantly improved in 2009 due to the substantial
reduction in the cost of fuel offset by declines in revenues as a result of the global economic recession.. US Airways' mainline and
Express fuel expense was $2.28 billion, or 48%, lower in 2009 as compared to 2008 on 4.5% lower capacity. The weak demand
environment caused by the global economic recession resulted in a $1.64 billion, or 13.4%, decline in total operating revenues. In
addition, operating cash flows in 2009 improved by $321 million principally as a result of the wind down of US Airways' fuel hedging
program. In the latter part of 2008, US Airways recognized unrealized losses on certain open fuel hedge transactions as the price of
heating oil fell below the lower limit of US Airways' collar transactions and caused it to use cash from operations to collateralize our
counterparties. Since the third quarter of 2008, US Airways has not entered into any new fuel hedging transactions and, as of
December 31, 2009, US Airways had no remaining outstanding fuel hedging contracts. Accordingly, US Airways' 2009 operating cash
flows were not significantly impacted by fuel hedging transactions as any hedges settling in 2009 had been fully collateralized through
the cash deposits posted during 2008.
Net cash used in investing activities was $489 million and $889 million in 2009 and 2008, respectively. Principal investing activities in
2009 included expenditures for property and equipment totaling $677 million, primarily related to the purchase of Airbus aircraft. These
expenditures were offset by $76 million in proceeds from the disposition of property and equipment, a $60 million decrease in restricted
cash and $52 million of net proceeds from sales of investments in marketable securities. Proceeds from the disposition of property and
equipment are comprised of proceeds from the swap of one of US Airways' owned aircraft in exchange for the leased aircraft involved in
the Flight 1549 accident and sale-leaseback transactions involving four aircraft and five engines. Restricted cash decreased during 2009
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 2008 included expenditures for property and equipment totaling
$1.04 billion, including the purchase of 14 Embraer aircraft, five Airbus aircraft and a $139 million net increase in equipment purchase
deposits for aircraft on order, as well as a $74 million increase in restricted cash, all of which were offset in part by net sales of
investments in marketable securities of $206 million. The change in the 2008 restricted cash balance was due to changes in the amount of
holdback held by certain credit card processors.
Net cash provided by financing activities was $346 million and $1 billion for 2009 and 2008, respectively. Principal financing
activities in 2009 included proceeds from the issuance of debt of $747 million, which primarily included the financing associated with the
purchase of Airbus aircraft as well as additional loans under a spare parts loan agreement, a loan secured by certain airport landing slots
and an unsecured financing with one of US Airways' third-party Express carriers. Debt repayments totaled $391 million in 2009.
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, including the Airbus advance and spare parts and engine loans. Proceeds also
included the financing associated with the purchase of 14 Embraer aircraft and five Airbus 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' October 2008 financing transactions and $97 million related to the $145 million aircraft
equipment note refinancing discussed above.
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 was $1.36 billion higher in 2008 than in 2007 on slightly lower
capacity. Additionally, the 2008 period included operating cash outflows of $321 million related to fuel hedging transactions versus
operating cash flows inflows of $106 million related to fuel hedging transactions in the 2007 period. The substantial decrease in the fuel
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