US Airways 2005 Annual Report Download - page 173

Table of Contents
America West Airlines, Inc.
Notes to Consolidated Financial Statements
1. Merger Agreement between US Airways Group and America West Holdings
On May 19, 2005, US Airways Group signed a merger agreement with America West Holdings pursuant to which America West Holdings merged with a
wholly owned subsidiary of US Airways Group upon US Airways Group's emergence from bankruptcy on September 27, 2005. The Debtors' plan of
reorganization was confirmed by the Bankruptcy Court on September 16, 2005 and became effective on September 27, 2005, the same day that the merger
with America West Holdings became effective.
Critical to US Airways' emergence from bankruptcy and the merger with America West Holdings was additional financing and liquidity to fund
operations. The financing and liquidity was provided through a combination of new equity investments in US Airways Group, new and restructured debt
instruments and agreements with significant stakeholders as described below.
New equity investments — On September 27, 2005, US Airways Group received new equity investments of $565 million in the aggregate from ACE
Aviation Holdings Inc. ("ACE"); Par Investment Partners, L.P. ("Par"); Peninsula Investment Partners, L.P. ("Peninsula"); a group of investors under the
management of Wellington Management Company, LLP ("Wellington"); Tudor Proprietary Trading, L.L.C. and certain investors advised by Tudor
Investment Corp. ("Tudor"); and Eastshore Aviation, LLC ("Eastshore"). In addition, the equity investors were granted options to acquire 7,533,334
additional shares of US Airways Group common stock at $15 per share. All such options were exercised in 2005 for proceeds of $113 million. Proceeds from
these new equity investments totaled approximately $678 million.
Public stock offering — On September 30, 2005, US Airways Group completed a public offering of common stock in which it issued 9,775,000 shares of
its common stock at a price of $19.30 per share. The Company received net proceeds of $180 million from the offering.
GE Merger MOU — US Airways Group and America West Holdings reached a comprehensive agreement with General Electric Capital Corporation
("GECC"), and its affiliates as described in the Master Merger Memorandum of Understanding ("GE Merger MOU"). The key aspects of the GE Merger
MOU as it related to AWA are as follows:
• GE agreed to the early return to GECC of ten leased aircraft including six Boeing 737-300 and four Airbus A320-200 aircraft. Five of these aircraft,
including one Boeing 737-300s and four Airbus A320-200s were already returned and the remaining aircraft are scheduled for return by the fourth
quarter of 2006.
• GE also agreed to waive certain return conditions, as provided in the underlying lease agreements, related to the early return aircraft described above.
Airbus MOU — In connection with the merger, a Memorandum of Understanding was executed between AVSA S.A.R.L., an affiliate of Airbus S.A.S.
("Airbus"), US Airways Group, US Airways and AWA. The key aspects of the Airbus Memorandum of Understanding as it relates to AWA are as follows:
• On September 27, 2005, US Airways and AWA entered into two loan agreements with Airbus Financial Services, as Initial Lender and Loan Agent,
Wells Fargo Bank Northwest, National Association, as Collateral Agent, and US Airways Group, as guarantor, with commitments in initial aggregate
amounts of up to $161 million and up to $89 million. The Airbus loans bear interest at a rate of LIBOR plus a margin, subject to adjustment, and have
been recorded as an obligation of US Airways Group.
• AVSA and AWA agreed to reschedule the delivery dates of 11 aircraft to be purchased under an existing amended agreement, including three
A319-100 and eight A320-200 aircraft. All of the A320-200 aircraft and two of the A319-100 aircraft were originally scheduled for delivery in 2006
167