US Airways 2005 Annual Report Download - page 257

Table of Contents
US Airways, Inc.
Notes to the Financial Statements — (Continued)
also authorized the assumption of the purchase agreement, as amended by the term sheet, and a related maintenance agreement, and disallowed certain proofs
of claim filed by Embraer in the bankruptcy proceedings related to these agreements. The purchase agreement, as amended by the term sheet, provides that
Embraer will retain and apply approximately $18 million in non-refundable progress and deposit payments ("PDPs") previously paid by US Airways Group.
US Airways Group has agreed to place an initial firm order for 25 Embraer 190 aircraft and an additional firm order for 32 Embraer 190 aircraft. The
outstanding PDPs will be applied to these orders in accordance with the terms of the amended purchase agreement. In addition, upon assumption of the
amended purchase agreement, Embraer granted US Airways Group the right to purchase up to 50 additional Embraer 190 aircraft in accordance with the term
sheet. The term sheet also provides that US Airways Group 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 or through October 2009.
(b) Leases
US Airways leases certain aircraft engines and ground equipment, in addition to the majority of its ground facilities. 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. US Airways subleases to related
parties certain leased aircraft and ground facilities under noncancelable operating leases expiring in various years through the year 2022 (see Note 11(b)).
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