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Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Agreement"). For additional information about these bonds and the Reimbursement Agreement, see "Letter of Credit Enhanced Municipal
Bonds" in this Note.
• $50 million of our outstanding borrowings under our financing agreement with GE Commercial Finance ("GE Commercial Finance
Facility"). We believe we will be required to repay approximately $50 million in 2005 due to borrowing base limitations in the GE
Commercial Finance Facility, but that we will be able to re-borrow that amount later in 2005 under that facility. For additional information
regarding the GE Commercial Finance Facility, see "Financing Agreement with GE" in this Note.
Boston Airport Terminal Project
During 2001, we entered into lease and financing agreements with the Massachusetts Port Authority ("Massport") for the redevelopment and expansion of
Terminal A at Boston's Logan International Airport. The completion of this project will enable us to consolidate all of our domestic operations at that airport
into one location. Construction began in the June 2002 quarter and is expected to be completed in March 2005. Project costs are being funded with
$498 million in proceeds from Special Facilities Revenue Bonds issued by Massport on August 16, 2001. We agreed to pay the debt service on the bonds
under a long-term lease agreement with Massport and issued a guarantee to the bond trustee covering the payment of the debt service. For additional
information about these bonds, see the debt table above. Because we have issued a guarantee of the debt service on the bonds, we have included the bonds, as
well as the related bond proceeds, on our Consolidated Balance Sheets. The bonds are reflected in noncurrent liabilities and the related remaining proceeds,
which are held in a trust, are reflected as restricted investments in other assets on our Consolidated Balance Sheets.
Letter of Credit Enhanced Municipal Bonds
At December 31, 2004, there were outstanding $397 million aggregate principal amount of tax-exempt municipal bonds ("Bonds") enhanced by letters of
credit, including:
• $295 million principal amount of bonds issued by the Clayton Authority to refinance the construction cost of certain facilities leased to us at
Hartsfield-Jackson Atlanta International Airport. We pay debt service on these bonds pursuant to loan agreements between us and the
Clayton Authority.
• $102 million principal amount of bonds issued by other municipalities to refinance the construction cost of certain facilities leased to us at
Cincinnati/ Northern Kentucky International Airport, Salt Lake City International Airport and Tampa International Airport. We pay debt
service on these bonds pursuant to long-term lease agreements (see Note 7).
The Bonds (1) have scheduled maturities between 2029 and 2035; (2) currently bear interest at a variable rate that is determined weekly; and (3) may be
tendered for purchase by their holders on seven days notice. Tendered Bonds are remarketed at prevailing interest rates.
Principal and interest on the Bonds are currently paid through drawings on irrevocable, direct-pay letters of credit totaling $404 million issued by GECC
pursuant to the Reimbursement Agreement. In addition, the purchase price of tendered Bonds that cannot be remarketed are paid by drawings on these letters
of credit. The GECC letters of credit expire on May 20, 2008.
Pursuant to the Reimbursement Agreement, we are required to reimburse GECC for drawings on the letters of credit. Our reimbursement obligation to
GECC is secured by (1) nine B767-400 and three B777-200 aircraft ("LOC Aircraft Collateral"); (2) 93 spare Mainline aircraft engines; and (3) certain other
assets (see footnote 8 to the table above in this Note). This collateral also secures other obligations we have to GECC, as discussed in the footnotes to the table
above in this Note.
If a drawing under a letter of credit is made to pay the purchase price of Bonds tendered for purchase and not remarketed, our resulting reimbursement
obligation to GECC will bear interest at a base rate or three-month F-26