US Airways 2005 Annual Report Download - page 133

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
US Airways and AWA are jointly and severally liable for the Airbus loans; accordingly, the full amount outstanding under the loans is reflected in the
financial statements of US Airways and AWA.
The amortization payments under the Airbus $161 million loan will become due in equal quarterly installments of $13 million beginning on March 31,
2008, with the final installment due on December 31, 2010. The outstanding principal amount of Airbus $89 million loan will be forgiven in writing on
December 31, 2010, or an earlier date, if on that date the outstanding principal amount of, accrued interest on, and all other amounts due under the
Airbus $161 million loan have been paid in full and US Airways and AWA comply with the aircraft delivery schedule.
(e) In connection with the consummation of the merger, on September 27, 2005, US Airways, as borrower, entered into the US Airways ATSB Loan with
the ATSB. Also on September 27, 2005, AWA entered into the Amended and Restated AWA Loan Agreement. The ATSB Loans amended and restated
the previously outstanding loans of both US Airways and AWA, each guaranteed in part by the ATSB. On October 19, 2005, $539 million of
US Airways ATSB Loan, of which $525 million was guaranteed by the ATSB, was sold by the lender by order of the ATSB to 13 fixed income
investors. Due to the sale on October 19, 2005, the ATSB no longer guarantees any portion of the loan and has no interest in any of US Airways' debt.
As a result of the sale of the loan, the principal amounts bear interest as a rate per annum equal to LIBOR plus 600 basis points, payable on a quarterly
basis, and are no longer subject to payment of the quarterly guarantee fee. All other terms associated with this loan remain unchanged. As a result of the
sale of the loan, the US Airways ATSB Loan is now referred to as the US Airways Citibank Loan, and had an outstanding balance of $551 million at
December 31, 2005.
Ninety percent of the US Airways Citibank Loan (Tranche A), the previously guaranteed portion of the loan, was originally funded through a
participating lender's commercial paper conduit program and bears interest at a rate equal to the conduit provider's weighted average cost related to the
issuance of certain commercial paper notes and other short term borrowings plus 0.30%, provided that portions of Tranche A that are held by the
US Airways Citibank Loan or by an assignee and no longer subject to such commercial paper conduit program bear interest at LIBOR plus 40 basis
points, and portions of Tranche A that are under certain circumstances assigned free of the ATSB guarantee bear interest at LIBOR plus 6.0%. Ten
percent of the US Airways Citibank Loan (Tranche B) bears interest at the greater of the Tranche A interest rate plus 6.0% and LIBOR plus 6.0%, as
compared with the previous rate of LIBOR plus 4.0%. The US Airways Citibank loan also reschedules amortization payments for US Airways with
semi-annual payments beginning on March 31, 2007 and continuing through September 30, 2010.
The US Airways Citibank Loan requires certain prepayments from the proceeds of specified asset sales by US Airways Group and the other loan
parties, and US Airways Group is required to maintain consolidated unrestricted cash and cash equivalents, less: (a) the amount of all outstanding
advances by credit card processors and clearing houses in excess of 20% of the air traffic liabilities; (b) $250 million presumed necessary to fund a
subsequent tax trust (to the extent not otherwise funded by US Airways Group); (c) $35 million presumed necessary to post collateral to clearing houses
(to the extent not posted); and (d) any unrestricted cash or cash equivalents held in unperfected accounts; in an amount (subject to partial reduction
under certain circumstances upon mandatory prepayments made with the net proceeds of future borrowings and issuances of capital stock) not less than:
• $525 million from September 27, 2005 through March 2006;
• $500 million through September 2006;
• $475 million through March 2007; 127