Airtran 2009 Annual Report Download - page 83

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74
commitment for two aircraft, we have not yet arranged for aircraft financing for any of the other firm aircraft
deliveries.
There are multiple variables including capital market conditions, asset valuations, and our own operating
performance that could affect the availability of satisfactory financing for our future B737 aircraft deliveries.
While there was limited availability of satisfactory aircraft financing in early 2009, it is our view that the
aircraft financing market has improved. While we cannot provide assurance that sufficient financing will be
available, we expect to be able to obtain acceptable financing for future deliveries. Our view is based upon our
discussions with prospective lenders and lessors, the consummation of aircraft financing transactions by other
airlines, our own improved operating performance in 2009, and our recent ability to refinance certain B737
aircraft.
Our B737 contract with Boeing requires us to make pre-delivery deposits to Boeing. Although we typically
have financed a significant portion of our pre-delivery deposit requirements with debt from banks or other
financial institutions, we currently have no such financing in place for future deliveries.
In October 2008, as part of our agreement to defer certain aircraft deliveries and obtain financing for 2009
aircraft deliveries, we granted an affiliate of Boeing the right to require us to lease, for a period not to exceed
ten years, up to five additional B717 aircraft. If such affiliate of Boeing exercises its right to require us to lease
any B717 aircraft, we have the option to cancel a like number of B737 aircraft we have on firm order for each
such B717 aircraft. In September 2009, we granted Boeing the right to terminate the leases of up to two of our
B717 aircraft before the scheduled lease expiration. To date, Boeing has not yet elected to require us to lease
additional aircraft or terminate any B717 aircraft leases.
Credit Card Processing Arrangements
We have agreements with organizations that process credit card transactions arising from purchases of air travel
by customers of Airways. Each of our agreements with our credit card processors allows, under specified
conditions, the processor to retain cash related to future travel that such processor otherwise would remit to us
(i.e., a “holdback”). Holdbacks are classified as restricted cash on our consolidated balance sheets. Our
exposure to credit card holdbacks consists of advanced ticket sales that customers purchase with credit cards.
Once the customer travels, any related holdback is remitted to us.
Each agreement with our two largest credit card processors (based on volumes processed for us) was amended
in 2009 resulting in changes to contractual terms generally favorable to us. Our agreement with our largest
credit card processor now expires December 31, 2010. Each agreement with our two largest credit card
processors provides that a processor may holdback amounts that would otherwise be remitted to us in the event
that a processor reasonably determines that there has been a material adverse occurrence or certain other events
occur. Our agreement with our largest credit card processor also provides that the processor may holdback
amounts that would otherwise be remitted to us in the event that our aggregate unrestricted cash and
investments (as defined) falls below agreed upon levels. Should the processor be entitled in the future to
withhold amounts that would otherwise be remitted to us, we retain the contractual right to eliminate or reduce
the amounts withheld by achieving specified aggregate unrestricted cash and investment levels and / or by
providing the processor with letters of credit. As of December, 2009, a $50 million letter of credit had been
issued under our letter of credit facility for the benefit of our largest credit card processor.
As of December 31, 2009, we had advance ticket sales of approximately $212.3 million related to all credit card
sales, we were in compliance with our credit card processing agreements, and our two largest processors were
holding back no cash remittances from us. Our maximum potential exposure to cash holdbacks by our two
largest credit card processors, based upon advance ticket sales as of December 31, 2009, was $149.1 million