US Airways 2005 Annual Report Download - page 146

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
addition, upon assumption of the amended purchase agreement, Embraer granted the Company the right to purchase up to 50 additional Embraer 190 aircraft
in accordance with the term sheet. The term sheet also provides that the Company will be allowed to convert certain of the Embraer 190 aircraft to Embraer
170, Embraer 175 or Embraer 195 aircraft, subject to availability and upon agreed notice. Embraer has agreed to provide financing for certain of the aircraft
scheduled for delivery under the amended purchase agreement, under the terms of the amended and restated financing letter.
Bombardier Purchase Commitments
Under its agreement with Bombardier, US Airways Group acquired three new CRJ-700 aircraft in January 2005. The purchase was financed through the
application of $28 million of existing purchase deposits held by Bombardier, $2 million in cash and a financed lease facility with DVB Bank AG.
Additionally, $7 million of purchase deposits held by Bombardier were used to satisfy existing defaults, cure payments and liquidated damages. While
US Airways Group continued to operate under the protection of Chapter 11 in compliance with the Bankruptcy Code and until a decision is reached to assume
or reject the Bombardier regional jet purchase agreement, no obligations arise on the part of US Airways Group or Bombardier with respect to the purchase
and delivery of any aircraft.
Engine Maintenance Commitments
In connection with the merger, US Airways and AWA restructured their rate per engine hour agreements with General Electric Engine Services for
overhaul maintenance services. Under the restructured agreements, the minimum monthly payment on account of accrued engine flight hours for both the
US Airways and AWA agreements together will equal $3 million as long as both agreements remain in effect through October 2009.
(b) Leases
The Company leases certain aircraft, engines, and ground equipment, in addition to the majority of its ground facilities. As of December 31, 2005, the
Company had 426 aircraft under operating leases, excluding two aircraft that will be delivered in 2006, with remaining terms ranging from one month to
approximately 19 years. Ground facilities include executive offices, maintenance facilities and ticket and administrative offices. Public airports are utilized for
flight operations under lease arrangements with the municipalities or agencies owning or controlling such airports. Substantially all leases provide that the
lessee must pay taxes, maintenance, insurance and certain other operating expenses applicable to the leased property. Some leases also include renewal and
purchase options. 140