Income Taxes

12 Months Ended

Dec. 31, 2011

Income Taxes

Income Taxes

(6) Income Taxes

        The provision for income taxes includes the following components (in thousands):

	Year ended December 31,
	2011			2010			2009
Current tax provision (benefit):
Federal	$	—		$	(1,600	)	$	(11,309	)
State		396			451			110
		396			(1,149	)		(11,199	)
Deferred tax provision (benefit):
Federal		(21,533	)		46,994			54,942
State		(1,698	)		3,706			4,332
		(23,231	)		50,700			59,274
Provision (benefit) for income taxes		(22,835	)		49,551		$	48,075

        The following is a reconciliation between the statutory Federal income tax rate of 35% and the effective rate which is derived by dividing the provision (benefit) for income taxes by income (loss) before for income taxes (in thousands):

	Year ended December 31,
	2011			2010			2009
Computed "expected" provision (benefit) for income taxes at the statutory rates	$	(14,683	)	$	52,888		$	45,884
Increase (decrease) in income taxes resulting from:
Purchase accounting gain		1,999			(5,455	)		—
State income tax provision (benefit), net of Federal income tax benefit		(1,810	)		3,485			3,741
Other, net		(8,341	)		(1,367	)		(1,550	)
Provision (benefit) for income taxes		(22,835	)		49,551		$	48,075

        For the year ended December 31, 2011, "Other, net" includes $7.2 million of benefit determined in connection with the preparation of the Company's 2010 tax return that resulted in an increase in the ExpressJet deferred tax assets.

        The significant components of the net deferred tax assets and liabilities are as follows (in thousands):

	As of December 31,
	2011			2010
Deferred tax assets:
Intangible Asset	$	37,404		$	37,779
Accrued benefits		35,460			30,316
Net operating loss carryforward		128,134			70,861
AMT credit carryforward		15,882			15,882
Deferred aircraft credits		49,867			42,282
Accrued reserves and other		24,538			22,707
Total deferred tax assets		291,285			219,827
Deferred tax liabilities:
Accelerated depreciation		(789,641	)		(733,572	)
Total deferred tax liabilities		(789,641	)		(733,572	)
Net deferred tax liability	$	(498,356	)	$	(513,745	)

        The Company's deferred tax liabilities were primarily generated through an accelerated bonus depreciation on newly purchased aircraft and support equipment in accordance with IRS Section 168(k) in combination with shorter depreciable tax lives.

        At December 31, 2011, the Company had federal net operating losses of approximately $300.2 million and state net operating losses of approximately $858.6 million, which will start to expire in 2026 and 2016, respectively. As of December 31, 2011, the Company also had an alternative minimum tax credit of approximately $15.9 million which does not expire.

        In conjunction with the ExpressJet Merger, the Company acquired non-amortizable intangible tax assets and other tax assets that are not anticipated to provide a tax benefit until 2025 or later due to statutory limitations. Because of the uncertainty associated with the realization of those tax assets, the Company recorded a full valuation allowance of approximately $73.0 million on such tax assets as of December 31, 2011 and 2010. The Company also recorded a valuation allowance against deferred tax assets of approximately $1 million for net operating losses in states with short carry-forward periods. The deferred tax assets in the table above are shown net of the recorded valuation allowance.