US Airways 2010 Annual Report Download - page 133

Table of Contents
Court. The remaining 13 aircraft were not extended. On January 20, 2011, the U.S. Bankruptcy Court approved the bankruptcy plan of
Mesa Air Group, Inc., who is expected to emerge from bankruptcy on or about February 28, 2011.
(e) Legal Proceedings
On September 12, 2004, US Airways Group and its domestic subsidiaries (collectively, the "Reorganized Debtors") filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Virginia,
Alexandria Division (Case Nos. 04-13819-SSM through 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 US Airways'
consolidated financial statements upon emergence from bankruptcy and will not have any further impact on its financial position or
results of operations. US Airways presently expects the bankruptcy case to be closed during 2011.
US Airways is party to an arbitration proceeding relating to a grievance brought by their 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 US Airways' pilots and a material back payment to make the wage increase retroactive to
January 1, 2010. US Airways believes that the union's position is without merit and that the possibility of an adverse outcome is remote.
US Airways is a defendant in various pending lawsuits and proceedings, and from time to time is 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 US Airways, 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.
US Airways enters into real estate leases in substantially all cities that it serves. It is common in such commercial lease transactions for
US Airways 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, US Airways 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, US Airways typically indemnifies such parties for any
environmental liability that arises out of or relates to its use or occupancy of the leased premises.
US Airways 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 US Airways 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 US Airways' 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
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