Alaska Airlines and Horizon Air 2009 Annual Report Download - page 172

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 a specified margin. The agreement
provides that any borrowings will be secured by
either aircraft or cash collateral. The facility
expires on March 31, 2010. The facility has a
requirement to maintain a minimum unrestricted
cash and marketable securities balance of $500
million. The Company is in compliance with this
covenant at December 31, 2009. As of
December 31, 2009, there were no borrowings
outstanding under this credit facility.
Management is currently in the process of
renewing this facility and believes it will be able
to do so at terms that are acceptable to the
Company.
NOTE 7. COMMITMENTS
Lease Commitments
At December 31, 2009, the Company had lease
contracts for 88 aircraft, 21 of which are
non-operating aircraft, which have remaining
noncancelable lease terms of less than one year
to over eleven years. The majority of airport and
terminal facilities are also leased. Total rent
expense was $303.1 million, $313.5 million,
and $333.5 million, in 2009, 2008, and 2007,
respectively.
Future minimum lease payments with
noncancelable terms in excess of one year as of
December 31, 2009 are shown below (in
millions):
Operating Leases
Aircraft Facilities
2010 ......................... 172.7 61.5
2011 ......................... 154.2 46.7
2012 ......................... 157.4 42.5
2013 ......................... 147.3 9.3
2014 ......................... 133.5 5.8
Thereafter ..................... 331.0 94.4
Total lease payments ............ $1,096.1 $260.2
Aircraft Commitments
In 2005, Alaska entered into an aircraft
purchase agreement to acquire B737-800
aircraft with deliveries beginning in January 2006
and continuing through April 2011. In April 2009,
Alaska entered into an agreement with Boeing to
defer the delivery of a number of B737-800
aircraft and committed to purchase an additional
four aircraft to be delivered in 2014 and 2015.
As of December 31, 2009, Alaska was
committed to purchasing 15 B737-800 aircraft,
four of which will be delivered in 2010. The
company also has options to purchase an
additional 40 B737-800 aircraft.
Horizon entered into an aircraft purchase
agreement in 2007 for 15 Q400 aircraft. Horizon
entered into an agreement with Bombardier in
2009 to defer 2010 and 2011 deliveries into
2012 and 2013. As a result, Horizon does not
expect any aircraft deliveries in each of the next
two years. As of December 31, 2009, Horizon
was committed to purchasing eight Q400s with
deliveries in 2012 and 2013. Horizon has
options to purchase an additional ten Q400
aircraft.
At December 31, 2009, the Company had firm
purchase commitments for 23 total aircraft
requiring remaining aggregate payments of
approximately $588.8 million.
The Company expects to pay for the 2010
deliveries with cash on hand. Alaska and Horizon
expect to pay for firm orders beyond 2010 and
the option aircraft, if exercised, through internally
generated cash, long-term debt, or operating
lease arrangements.
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