US Airways 2011 Annual Report Download - page 45

Table of Contents
US Airways Group's Results of Operations
In 2011, we realized operating income of $426 million and income before income taxes of $90 million. We experienced higher revenues in 2011 due to
the strong pricing environment resulting from ongoing industry capacity discipline and robust consumer demand for air travel, which substantially offset a
significant increase in fuel costs. Our 2011 results were also impacted by recognition of $19 million in net special charges.
In 2010, we realized operating income of $781 million and income before income taxes of $502 million. We experienced growth in revenues in 2010
driven by higher yields as a result of the improved economy and industry capacity discipline. Our 2010 results were also impacted by recognition of
$55 million in net special credits.
In 2009, we realized operating income of $118 million and a loss before income taxes of $243 million. We experienced significant declines in revenues
in 2009 as a result of the global economic recession. Our 2009 results were also impacted by recognition of $256 million in net special credits.
The table below presents our pre-tax special charges (credits) (in millions):
Year Ended December 31,
2011 2010 2009
Mainline operating special items, net (a) $ 24 $ 5 $ 55
Express operating special items, net 2 (1) 3
Unrealized mark-to-market gain on fuel hedging instruments, net — — (375)
Nonoperating special items, net (b) (7) (59) 61
Total $ 19 $ (55) $ (256)
(a) The 2011 period consisted of $21 million in legal costs incurred in connection with the Delta Slot transaction and auction rate securities arbitration as
well as $3 million in severance costs.
The 2010 period consisted of $6 million in non-cash charge related to the decline in value of certain spare parts, $5 million in aircraft costs related to
capacity reductions and other net special charges of $10 million, which included a settlement and corporate transaction costs. These costs were offset in
part by a $16 million refund of ASIF previously paid to the TSA during the years 2005 to 2009.
The 2009 period consisted of $22 million in aircraft costs as a result of capacity reductions, $16 million in non-cash impairment charges due to the
decline in fair value of certain indefinite lived intangible assets associated with international routes, $11 million in severance and other charges and
$6 million in costs incurred related to the 2009 liquidity improvement program.
(b) The 2011 period consisted of a $15 million credit in connection with an award received in an arbitration involving investments in auction rate
securities, offset in part by $6 million in debt prepayment penalties and non-cash write offs of certain debt issuance costs as well as $2 million of losses
related to investments in auction rate securities.
The 2010 period consisted of $53 million of net realized gains related to the sale of certain investments in auction rate securities as well as an
$11 million settlement gain, offset in part by $5 million in non-cash charges related to the write off of debt issuance costs.
The 2009 period consisted of $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 investments in auction rate securities and a $2 million non-
cash asset impairment charge.
At December 31, 2011, we had approximately $1.95 billion of gross NOLs to reduce future federal taxable income. All of our NOLs are expected to be
available to reduce federal taxable income in the calendar year 2012. The NOLs expire during the years 2024 through 2031. Our net deferred tax assets, which
include $1.87 billion of the NOLs, are subject to a full valuation allowance. We also had approximately $82 million of tax-effected state NOLs at
December 31, 2011. At December 31, 2011, the federal and state valuation allowances were $347 million and $61 million, respectively. In accordance with
generally accepted accounting principles, utilization of the NOLs will result in a corresponding decrease in the valuation allowance and offset our tax
provision dollar for dollar.
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