Alaska Airlines and Horizon Air 2007 Annual Report Download - page 179

At December 31, 2007, long-term debt principal
payments for the next five years are as follows
(in millions):
PDP
Facility Other Total
2008 ............... $85.8 $ 90.1 $ 175.9
2009 ............... — 94.8 94.8
2010 ............... — 100.3 100.3
2011 ............... — 133.3 133.3
2012 ............... — 175.5 175.5
Thereafter ........... — 620.7 620.7
Total principal
payments .......... $85.8 $1,214.7 $1,300.5
During 2007, Alaska borrowed $196.1 million
using fixed-rate and variable-rate debt secured by
flight equipment and had gross borrowings on its
pre-delivery payment facility of $85.8 million. The
increase in debt from borrowings was offset by
normal debt payments of $93.0 million and
$39.2 million of payments on the pre-delivery
payment facility.
Bank Line of Credit
The Company has a $185 million credit facility
with a syndicate of financial institutions. The
interest rate on the credit facility varies
depending on certain financial ratios specified in
the agreement with a minimum interest rate of
LIBOR plus 2%. The agreement provides that any
borrowings will be secured by either aircraft or
cash collateral. This credit facility contains
contractual restrictions and requires
maintenance of specific levels of net worth,
maintenance of certain debt and leases to net
worth, leverage and fixed-charge coverage ratios,
and limits on liens, asset dispositions,
dividends, and certain other expenditures. Such
provisions restrict Alaska Airlines from
distributing any funds to Alaska Air Group in the
form of dividends and limit the amount of funds
Alaska Airlines can loan to its affiliates. In April
2007, the Company entered into the Second
Amendment of the facility. The Second
Amendment: (i) increased the size of the facility
from $160 million to $185 million; (ii) improved
the collateral advance rates for certain aircraft;
(iii) extended the agreement by two years with a
maturity date of March 31, 2010; and
(iv) repriced the credit facility to reflect current
market rates. The Company currently has no
immediate plans to borrow using this credit
facility. In July 2007, the Company executed the
Third Amendment to the credit facility, which
increased the amount of allowed borrowings
between Alaska Airlines and its affiliates from
$300 million to $500 million. As of
December 31, 2007, there were no outstanding
borrowings on this credit facility.
Certain Alaska loan agreements contain
provisions that require maintenance of specified
financial covenants. At December 31, 2007, the
Company was in compliance with all financial
covenants.
Subsequent Event
In January 2008, Horizon executed a fixed-rate
debt arrangement to finance 13 of its recently
delivered Q400 aircraft. Total proceeds from the
debt were $193 million.
NOTE 6. COMMITMENTS
Lease Commitments
At December 31, 2007, the Company had lease
contracts for 101 aircraft that have remaining
noncancelable lease terms of less than one year
to 12 years. The majority of airport and terminal
facilities are also leased. Total rent expense was
$333.5 million, $320.6 million, and $324.8
million, in 2007, 2006, and 2005, respectively.
Future minimum lease payments with
noncancelable terms in excess of one year as of
December 31, 2007 are shown below (in millions):
Operating Leases
Aircraft Facilities
2008 ...................... $ 193.4 $ 62.8
2009 ...................... 171.8 59.7
2010 ...................... 169.7 46.9
2011 ...................... 145.5 32.0
2012 ...................... 149.5 28.7
Thereafter ................... 412.1 114.1
Total lease payments .......... $1,242.0 $344.2
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ŠForm 10-K