According to the Form 10-K for the fiscal year ended December 31, 2004, America West Holding recorded $15 million for the settlement fund. The lawsuit was fully insured, but AWA contributed $5.1 million to the settlement due to the insolvency of one of its insurers.
On March 10, 2005, the Court entered the Revised Order by U.S. District Judge Owen M. Panner granting the motion For Final Approval of Class Action Settlement and Plan of Allocation of Settlement Proceeds. the Plan of Allocation recognizes that on 9/13/04 and 11/3/04, the Court dismissed with prejudice all claims relating to statements made by defendants prior to 5/13/1998. As a result of these rulings by the Court, if a Settlement Class Member purchased America West Holdings Corporation Class B common stock only between 11/19/1997 through 5/12/1998, that Settlement Class Member will not recover any money as a result of this settlement. The Court further entered the Order by Judge Owen M. Panner granting motion for Award of Attorneys' Fees and Reimbursement of Expenses. The Court finds that the award is fair and reasonable under the "percentage-of-recovery" method. The awarded attorneys' fees and expenses, and interest earned thereon, shall be paid to Lead Counsel from the Settlement Fund. Finally, the Court entered the Revised Final Judgment and Order of Dismissal With Prejudice by Judge Owen M. Panner granting the stipulation and agreement of settlement. The Action and all claims contained therein as well as all of the Released Claims were dismissed with prejudice in their entirety, and without costs.
The original complaint charges America West and certain of its officers, directors and its controlling shareholders with violations of the Securities Exchange Act of 1934. The complaint alleges that by issuing false statements about America West's supposed competitive advantages due to its exceptionally low operating costs, industry-leading aircraft utilization rates, cost-savings outsourced aircraft maintenance procedures, improving financial results, record earnings per share ("EPS") and prospects for continued EPS growth, and using $99 million of America West's cash to repurchase 4.8 million shares of the Company's stock
on the open market, defendants artificially inflated America West's stock to a
Class Period and all-time high of $31-5/16 on 4/21/98. This enabled America
West's insiders to sell 2.4 million shares of their publicly traded America
West stock, 97% of the publicly traded stock they owned, in just 90 days, i.e., between 4/23/98 and 7/24/98, for $67.8 million in proceeds.