US Airways 2005 Annual Report Download - page 196

Table of Contents
America West Airlines, Inc.
Notes to Consolidated Financial Statements — (Continued)
Collectively, the operating lease agreements require security deposits with lessors of $36 million, which have been classified as "Other Assets, Net" in the
accompanying balance sheets, and bank letters of credit of $33 million. The letters of credit are collateralized by $33 million of restricted cash.
(b) Revenue Bonds
In June 1999, Series 1999 special facility revenue bonds ("new bonds") were issued by a municipality to fund the retirement of the Series 1994A bonds
("old bonds") and the construction of a new concourse with 14 gates at Terminal 4 in Phoenix Sky Harbor International Airport in support of AWA's strategic
growth plan. The new bonds are due June 2019 with interest accruing at 6.25% per annum payable semiannually on June 1 and December 1, commencing on
December 1, 1999. The new bonds are subject to optional redemption prior to the maturity date on or after June 1, 2009 in whole or in part, on any interest
payment date at the following redemption prices: 101% on June 1 or December 1, 2009; 100.5% on June 1 or December 1, 2010; and 100% on June 1, 2011
and thereafter. In accordance with EITF Issue No. 97-10, "The Effect of Lessee Involvement in Asset Construction," AWA accounts for its payments under
this financing facility as an operating lease.
In connection with the new bonds, AWA entered into an Amended and Restated Airport Use Agreement, pursuant to which AWA agreed to make
sufficient payments to the Phoenix Industrial Development Authority ("IDA") to cover the principal and interest of the bonds and to indemnify the IDA for
any claims arising out of the issuance and sale of the bonds and the use and occupancy of the concourses financed by the new bonds and the old bonds. At
December 31, 2005, the outstanding principal amount of the bonds was $22 million. AWA estimates its remaining payments to cover the principal and
interest of these bonds will be approximately $40 million.
In addition, AWA is also the lessee under certain long-term leases at various airports. At certain of these airports, municipalities have issued revenue
bonds to improve airport facilities that are leased by AWA and accounted for as operating leases. AWA does not guarantee the underlying debt related to
these operating leases.
(c) Commitments to purchase flight equipment and maintenance services
Airbus Purchase Commitments
On September 27, 2005, US Airways Group, US Airways and AWA entered into an Airbus A350 Purchase Agreement with Airbus. This agreement
provides for the delivery of 20 A350 aircraft during the period 2011 through 2014. The agreement contains terms and conditions with respect to aircraft price,
escalation, payment terms and pre-delivery payments, inspection and certification, technical acceptance, excusable and inexcusable delays, warranties and
service life policy, patent and copyright indemnity, technical data and training aids, training, supplier product support, indemnities and insurance, assignments
and transfers, and termination events. Airbus also agreed to provide backstop financing with respect to a substantial number of these A350 aircraft.
On September 27, 2005, US Airways Group entered into Amendment 16 to the A319/ A320/ A321 Purchase Agreement dated as of October 31, 1997
among US Airways Group and AVSA, S.A.R.L. The amendment provides for the rescheduling of 19 firm order A320-family aircraft for delivery during the
period 2009 and 2010. The amendment also modifies other provisions of the Purchase Agreement relating to the deletion of certain aircraft cancellation rights
and the rescheduling of aircraft.
On September 27, 2005, US Airways Group entered into Amendment 10 to the A330/340 Purchase Agreement dated as of November 24, 1998 among
US Airways Group and AVSA, S.A.R.L. The amendment provides for the rescheduling of ten firm order A330-200 aircraft for delivery during the period
2009 and 2010 and allows for cancellation in the event that US Airways takes certain deliveries under the
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