US Airways 2004 Annual Report Download - page 55

Table of Contents
AMERICA WEST HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
Long-term Debt
At December 31, 2004 and 2003, the fair value of long-term debt was approximately $721.5 million and $845.6 million, respectively. The Company's
variable rate long-term debt with a carrying value of $545.7 million and $555.9 million at December 31, 2004 and 2003, respectively, approximates fair value
because these borrowings have variable interest rate terms that approximate market interest rates for similar debt instruments. The fair values of the
Company's other long-term debt are determined based on quoted market prices if available or market prices for comparable debt instruments.
(b) Fuel Price Risk Management
Under its fuel hedging program, the Company may enter into certain hedging transactions with approved counterparties for a period generally not
exceeding 12 months. As of December 31, 2004, the Company had entered into costless collar and basis swap transactions hedging approximately 42% of its
projected 2005 fuel requirements. The fair value of the Company's financial derivative instruments was a net asset of approximately $0.2 million and
$2.7 million at December 31, 2004 and 2003, respectively. See Note 2, "Restatement of Previously Reported Amounts."
The Company is exposed to credit risks in the event any counterparty fails to meet its obligations. The Company does not anticipate such non-performance
as counterparties are selected based on credit ratings, exposure to any one counterparty is limited based on formal guidelines and the relative market positions
with such counterparties are closely monitored.
(c) Concentration of Credit Risk
The Company does not believe it is subject to any significant concentration of credit risk. Most of the Company's receivables result from tickets sold to
individual passengers through the use of major credit cards or from tickets sold by other airlines and used by passengers on AWA. These receivables are
short-term, generally being settled shortly after the sale.
5. Long-Term Debt
Long-term debt at December 31, 2004 and 2003 consists of the following:
2004 2003
(in thousands)
Secured
Equipment notes payable, variable interest rates of 2.88% to 3.37%, averaging 2.96%, installments due 2005 through 2008 $ 39,464 $ 48,454
GECC term loan, variable interest rate of 6.41%, quarterly installments beginning 2006 through 2010 (a) 110,564 —
Term loan, variable interest rate, paid off September 2004 (a) — 74,775
Senior secured discount notes, variable interest rate of 6.42%, installments due 2005 through 2009 (b) 35,988 —
186,016 123,229
Unsecured
Government guaranteed loan, variable interest rate of 2.38%, installments due 2005 through 2008 (c) 343,200 429,000
10 3/4% senior unsecured notes, interest only payments until due in 2005 (d) 39,548 39,548
7.5% convertible senior notes, interest only payments until due in 2009 (e) 112,299 104,328
7.25% senior exchangeable notes, due 2023 with cash interest at 2.49% payable through 2008 and original issue discount of 7.25%
thereafter (f) 252,695 252,695
Equipment notes payable, interest rates of 90-day LIBOR +1.25%, averaging 3.61%, installments due through 2005 15,750 5,250
Industrial development bonds, fixed interest rate of 6.3% due 2023 (g) 29,300 29,300
State loan, variable interest rate of 5.97%, installments due 2005 through 2007 750 1,500
793,542 861,621
Total long-term debt 979,558 984,850
Less: Unamortized discount on debt (193,246) (191,986)
Current maturities (151,183) (103,899)
$ 635,129 $ 688,965
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