US Airways 2010 Annual Report Download - page 81

Table of Contents
based on subsequent activity to validate the accuracy of the Company's estimates. Any adjustments resulting from periodic evaluations of
the estimated air traffic liability are included in results of operations during the period in which the evaluations are completed.
Passenger traffic commissions and related fees are expensed when the related revenue is recognized. Passenger traffic commissions
and related fees not yet recognized are included as a prepaid expense.
The Company purchases capacity, or ASMs, generated by the Company's wholly owned regional air carriers and the capacity of Air
Wisconsin Airlines Corporation ("Air Wisconsin"), Republic Airline Inc. ("Republic"), Mesa Airlines, Inc. ("Mesa") and Chautauqua
Airlines, Inc. ("Chautauqua") in certain markets. The Company's wholly owned regional air carriers, Air Wisconsin, Republic, Mesa and
Chautauqua operate regional jet aircraft in these markets as part of US Airways Express. The Company classifies revenues generated
from transportation on these carriers as Express passenger revenues. Liabilities related to tickets sold by the Company for travel on these
air carriers are also included in the Company's air traffic liability and are subsequently relieved in the same manner as described above.
The Company collects various taxes and fees on its ticket sales. These taxes and fees are remitted to governmental authorities and are
accounted for on a net basis.
Cargo Revenue
Cargo revenue is recognized when shipping services for mail and other cargo are provided.
Other Revenue
Other revenue includes checked and excess baggage charges, beverage sales, ticket change and service fees, commissions earned on
tickets sold for flights on other airlines and sales of tour packages by the US Airways Vacations division, which are recognized when the
services are provided. Other revenues also include processing fees for travel awards issued through the Dividend Miles frequent traveler
program and the marketing component earned from selling mileage credits to partners, as discussed in Note 1(k).
(o) Maintenance and Repair Costs
Maintenance and repair costs for owned and leased flight equipment are charged to operating expense as incurred.
(p) Selling Expenses
Selling expenses include commissions, credit card fees, computerized reservations systems fees, advertising and promotional expenses.
Advertising and promotional expenses are expensed when incurred. Advertising and promotional expenses for the years ended
December 31, 2010, 2009 and 2008 were $10 million, $11 million and $10 million, respectively.
(q) Stock-based Compensation
The Company accounts for its stock-based compensation expense based on the fair value of the stock award at the time of grant, which
is recognized ratably over the vesting period of the stock award. The fair value of stock options and stock appreciation rights is estimated
using a Black-Scholes option pricing model. The fair value of restricted stock units is based on the market price of the underlying shares
of common stock on the date of grant. See Note 15 for further discussion of stock-based compensation.
(r) Foreign Currency Gains and Losses
Foreign currency gains and losses are recorded as part of other nonoperating expense, net in the Company's consolidated statements of
operations. Foreign currency losses for the years ended December 31, 2010, 2009 and 2008 were $17 million, $3 million and $25 million,
respectively.
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