US Airways 2010 Annual Report Download - page 100

Table of Contents
03-13823-SSM) (the "2004 Bankruptcy"). On September 16, 2005, the Bankruptcy Court issued an order confirming the plan of
reorganization submitted by the Reorganized Debtors and on September 27, 2005, the Reorganized Debtors emerged from the 2004
Bankruptcy. The Bankruptcy Court's order confirming the plan included a provision called the plan injunction, which forever bars other
parties from pursuing most claims against the Reorganized Debtors that arose prior to September 27, 2005 in any forum other than the
Bankruptcy Court. Substantially all of the claims in the 2004 Bankruptcy have been settled and the allowed claims have been paid out in
common stock of the post-bankruptcy US Airways Group at a small fraction of the actual claim amount. However, the effects of these
common stock distributions were already reflected in the Company's consolidated financial statements upon emergence from bankruptcy
and will not have any further impact on its financial position or results of operations. The Company presently expects the bankruptcy case
to be closed during 2011.
The Company is party to an arbitration proceeding relating to a grievance brought by its pilots union to the effect that, effective
January 1, 2010, this work group was entitled to a significant increase in wages by operation of the applicable collective bargaining
agreement. A hearing was conducted and the parties are awaiting the ruling of the arbitrator. An adverse ruling by the arbitrator could
require a material increase in the wages of the Company's pilots and a material back payment to make the wage increase retroactive to
January 1, 2010. The Company believes that the union's position is without merit and that the possibility of an adverse outcome is remote.
The Company and/or its subsidiaries are defendants in various pending lawsuits and proceedings, and from time to time are subject to
other claims arising in the normal course of its business, many of which are covered in whole or in part by insurance. The outcome of
those matters cannot be predicted with certainty at this time, but the Company, having consulted with outside counsel, believes that the
ultimate disposition of these contingencies will not materially affect its consolidated financial position or results of operations.
(f) Guarantees and Indemnifications
US Airways guarantees the payment of principal and interest on certain special facility revenue bonds issued by municipalities to build
or improve certain airport and maintenance facilities which are leased to US Airways. Under such leases, US Airways is required to make
rental payments through 2023, sufficient to pay maturing principal and interest payments on the related bonds. As of December 31, 2010,
the remaining lease payments guaranteeing the principal and interest on these bonds are $121 million, of which $30 million of these
obligations is accounted for as a capital lease and reflected as debt in the accompanying consolidated balance sheet.
The Company enters into real estate leases in substantially all cities that it serves. It is common in such commercial lease transactions
for the Company as the lessee to agree to indemnify the lessor and other related third parties for tort liabilities that arise out of or relate to
the use or occupancy of the leased premises. In some cases, this indemnity extends to related liabilities arising from the negligence of the
indemnified parties, but usually excludes any liabilities caused by their gross negligence or willful misconduct. With respect to certain
special facility bonds, the Company agreed to indemnify the municipalities for any claims arising out of the issuance and sale of the
bonds and use or occupancy of the concourses financed by these bonds. Additionally, the Company typically indemnifies such parties for
any environmental liability that arises out of or relates to its use or occupancy of the leased premises.
The Company is the lessee under many aircraft financing agreements (including leveraged lease financings of aircraft under pass
through trusts). It is common in such transactions for the Company as the lessee to agree to indemnify the lessor and other related third
parties for the manufacture, design, ownership, financing, use, operation and maintenance of the aircraft, and for tort liabilities that arise
out of or relate to the Company's use or occupancy of the leased asset. In some cases, this indemnity extends to related liabilities arising
from the negligence of the indemnified parties, but usually excludes any liabilities caused by their gross negligence or willful misconduct.
In aircraft financing agreements structured as leveraged leases, the Company typically indemnifies the lessor with respect to adverse
changes in U.S. tax laws.
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