US Airways 2011 Annual Report Download - page 96

Table of Contents
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of December 31, 2011 and 2010
are as follows (in millions):
2011 2010
Deferred tax assets:
Net operating loss carryforwards $ 708 $ 701
Property, plant and equipment 42 38
Investments 3 (3)
Financing transactions 37 27
Employee benefits 319 322
Dividend Miles awards 132 120
AMT credit carryforward 23 25
Other deferred tax assets 114 71
Valuation allowance (408) (430)
Net deferred tax assets 970 871
Deferred tax liabilities:
Depreciation and amortization 764 642
Sale and leaseback transactions and deferred rent 106 127
Leasing transactions 62 59
Long-lived intangibles 25 25
Other deferred tax liabilities 27 33
Total deferred tax liabilities 984 886
Net deferred tax liabilities 14 15
Less: current deferred tax liabilities — —
Non-current deferred tax liabilities $ 14 $ 15
The reason for significant differences between taxable and pre-tax book income primarily relates to depreciation on fixed assets, employee pension and
postretirement benefit costs, employee-related accruals and leasing transactions.
The Company files tax returns in the U.S. federal jurisdiction, and in various states and foreign jurisdictions. All federal and state tax filings for US
Airways Group and its subsidiaries for fiscal years through December 31, 2010 have been timely filed. There are currently no federal audits and three state
audits in process. The Company's federal income tax year 2007 was closed by operation of the statute of limitations expiring, and there were no extensions
filed. The Company files tax returns in 44 states, and its major state tax jurisdictions are Arizona, California, Pennsylvania and North Carolina. Tax years up
to 2006 for these state tax jurisdictions are closed by operation of the statute of limitations expiring. Extensions for two states have been filed.
The Company believes that its income tax filing positions and deductions related to tax periods subject to examination will be sustained upon audit and
does not anticipate any adjustments that will result in a material adverse effect on the Company's financial condition, results of operations, or cash flow.
Therefore, no accruals for uncertain income tax positions have been recorded.
6. Risk Management and Financial Instruments
The Company's economic prospects are heavily dependent upon two variables it cannot control: the health of the economy and the price of fuel. Due to
the discretionary nature of business and leisure travel spending, airline industry revenues are heavily influenced by the condition of the U.S. economy and
economies in other regions of the world. Unfavorable conditions in these broader economies have resulted, and may result in the future, in decreased
passenger demand for air travel and changes in booking practices, both of which in turn have had, and may have in the future, a strong negative effect on the
Company's revenues. Similarly, significant uncertainty continues to exist regarding the economic conditions driving passenger demand and whether airlines
will have the ability to maintain or increase fares at levels sufficient to absorb high fuel prices. These factors could impact the Company's results of
operations, financial performance and liquidity.
(a) Fuel Price Risk
Since the third quarter of 2008, the Company has not entered into any new transactions to hedge its fuel consumption, and the Company has not had
any fuel hedging contracts outstanding since the third quarter of 2009.
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