US Airways 2005 Annual Report Download - page 243

Table of Contents
US Airways, Inc.
Notes to the Financial Statements — (Continued)
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;
• $450 million through September 2007;
• $400 million through March 2008;
• $350 million through September 2008; and
• $300 million through September 2010.
US Airways was required to pay down the principal of its loan with the first $125 million of net proceeds from specified asset sales identified in
connection with its Chapter 11 proceedings, whether completed before or after emergence. US Airways then retains the next $83 million of net
proceeds from specified assets sales, and must prepay the principal of the loan with 60% of net proceeds in excess of an aggregate of $208 million from
specified asset sales. Any such asset sales proceeds up to $275 million are to be applied to the outstanding principal balance in order of maturity, and
any such asset sales proceeds in excess of $275 million are to be applied to the outstanding principal balance on a pro rata across all maturities in
accordance with the loan's early amortization provisions. As a result, semi-annual payments are now scheduled to begin on September 30, 2007, instead
of March 31, 2007, as originally scheduled in the loan agreement. US Airways made prepayments totaling $156 million in connection with these
specified asset sales completed during 2005.
(b) In September 2005, US Airways entered into an agreement to sell and leaseback certain of its commuter slots at Ronald Reagan Washington National
Airport and New York LaGuardia Airport. US Airways continues to hold the right to repurchase the slots anytime after the second anniversary of the
slot sale-leaseback transaction. These transactions were accounted for as secured financings. Installments are due monthly through 2015 at a rate of 8%.
(c) Capital lease obligations consist principally of certain airport maintenance and facility leases which expire in 2018 and 2021.
(d) General Electric together with its affiliates (collectively, "GE") finances or leases a substantial portion of US Airways' aircraft prior to the most recent
Chapter 11 filing. In addition, in November 2001, US Airways obtained a $404 million credit facility from GE (the "GE Credit Facility"), which was
secured by collateral including 11 A320-family aircraft and 28 spare engines. In connection with the first bankruptcy, US Airways reached a settlement
with GE that resolved substantially all aircraft, aircraft engine and loan-related issues, and provided US Airways with additional financing from GE in
the form of a liquidity facility of up to $360 million that bore interest at the rate of LIBOR plus 4.25% (the "GE Liquidity Facility"). Most obligations
to GE are cross-defaulted to the US Airways GE Liquidity Facility, GE regional jet leases and GE regional jet mortgage financings.
In November 2004, US Airways reached a comprehensive agreement with GE and its affiliates, as described in a Master Memorandum of
Understanding ("GE Master MOU"), that was approved by the Bankruptcy Court on December 16, 2004. The GE Master MOU, together with the
transactions contemplated by the term sheets attached to the GE Master MOU, provided short-term liquidity, reduced debt, lower aircraft ownership
costs, enhanced engine maintenance services and operating leases for new regional jets, while preserving the vast majority of US Airway's mainline
fleet owned or otherwise financed by GE. In connection with the merger, US Airways and America West Holdings renegotiated certain of their
respective existing agreements, and entered into new agreements, with GE. These agreements are set forth in a comprehensive agreement with GE and
certain of its affiliates in a Master Merger Memorandum of Understanding, referred to as the GE Merger MOU,
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