US Airways 2005 Annual Report Download - page 188

Table of Contents
America West Airlines, Inc.
Notes to Consolidated Financial Statements — (Continued)
held-to-maturity securities mature in one year or less. Contractual maturities for available-for-sale securities are greater than 10 years with a reset date
approximately every 28 days.
AWA had no long-term investments in debt securities as of December 31, 2005 and $30 million as of December 31, 2004. At December 31, 2004, long-
term investments consist of cash invested in certain debt securities with maturities greater than one year. The debt securities are classified as held to maturity
and are carried at amortized cost that approximates fair value.
Long-term Debt
At December 31, 2005 and 2004, the fair value of long-term debt was approximately $1.04 billion and $722 million, respectively. AWA's variable rate
long-term debt with a carrying value of $911 million and $546 million at December 31, 2005 and 2004, respectively, approximates fair value because these
borrowings have variable interest rate terms that approximate market interest rates for similar debt instruments. The fair value of AWA's other long-term debt
is 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, AWA may enter into certain hedging transactions with approved counterparties for a period generally not exceeding
12 months. As of December 31, 2005, AWA had entered into costless collar transactions hedging approximately 20% of US Airways Group's or 68% of
AWA's projected 2006 fuel requirements. The fair value of AWA's financial derivative instruments was a net asset of approximately $4 million and
$0.2 million at December 31, 2005 and 2004, respectively.
AWA is exposed to credit risks in the event any counterparty to a hedge transaction fails to meet its obligations. AWA does not anticipate such non-
performance as counterparties are selected based on credit ratings and exposure to any one counterparty is closely monitored.
8. Debt, Including Capital Lease Obligations
Long-term debt at December 31, 2005 and December 31, 2004 consists of the following (variable interest rates listed are the rates as of December 31,
2005 unless noted) (in millions):
December 31, December 31,
2005 2004
Secured
AWA Citibank Loan (formerly ATSB loan), variable interest rate of 12.27%, installments due 2005 through 2008(a) $ 250 $ —
Equipment notes payable, notes retired September 2005 — 39
Capital lease obligations — 8
GECC term loan, variable interest rate of 8.43%, quarterly installments beginning 2006 through 2010(b) 111 111
Senior secured discount notes, variable interest rate of 7.91%, installments due 2005 through 2009(c) 34 36
Airbus Loans, variable interest rate of 9.96%, quarterly installments beginning 2008 through 2010(d) 186 —
581 194
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