US Airways 2005 Annual Report Download - page 35

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new A350 aircraft deliveries are currently scheduled to occur during the period 2011 through 2013. The Airbus MOU also modifies the cancellation rights on
US Airways Group's orders for the ten A330-200 aircraft provided that US Airways Group has met certain predelivery payment obligations under the A350
order. On September 27, 2005, upon emergence from bankruptcy and effective with the merger, US Airways Group, US Airways and AWA executed an
A350 Purchase Agreement with AVSA S.A.R.L. and executed amendments to its existing Airbus purchase agreements to support and finalize the transactions
called for in the Airbus MOU.
Pursuant to the regional jet leasing term sheet of the GE Master Memorandum of Understanding approved by the Bankruptcy Court on December 17,
2004, General Electric Capital Corporation ("GECC") or its affiliates agreed to provide lease financing for up to 31 regional jet aircraft, consisting of 70-to
100-seat regional jet aircraft manufactured by Bombardier and/or Embraer in a mix and subject to other terms to be agreed mutually by GECC and
US Airways. As provided for in the Master Memorandum of Understanding, GECC entered into short-term leases for six Bombardier CRJ-700s with
US Airways in the first quarter of 2005, which were converted, pursuant to the Merger Memorandum of Understanding, into long term leases. These long
term leases were deemed post-petition agreements during the Chapter 11 cases, subject to a limitation on administrative expense status to rent payable through
October 31, 2005 (or a later date agreed to by the parties) and return condition obligations. The Merger Memorandum of Understanding eliminated any further
obligation on GE to provide regional jet financing directly to US Airways Group, but GE agreed to provide single investor or operating leases to airlines that
are not owned by US Airways Group but that would operate the aircraft as part of the US Airway Express network provided that those airlines meet financial
tests and are otherwise acceptable to GE. The aircraft available for lease by these other airlines are ten EMB-170/190/195 aircraft to be delivered between
2007 and 2008, on a schedule and terms to be agreed on by the parties and subject to manufacturer support. GE also provided single investor or operating
lease financing to Republic for three EMB-170 aircraft that had been committed to be delivered to the Debtors, subject to manufacturer support and other
terms and conditions acceptable to GE. Finally, to facilitate a transaction agreed to between US Airways Group and Republic, GE consented to the assignment
to Republic of up to 15 EMB-170 leases, subject to manufacturer support and other conditions acceptable to GE.
In December 2004, pre-merger US Airways Group reached aircraft leasing and financing agreements with Embraer and Bombardier. These agreements
were approved by the Bankruptcy Court in January 2005. Pursuant to the agreement reached with Embraer, US Airways purchased and took delivery of three
EMB-170 aircraft in January 2005 and endeavored to purchase and take delivery of three additional EMB-170 aircraft by March 31, 2005. US Airways did
not take delivery of the additional aircraft in March 2005. As a result, damages at the rate of $162,795 per month per aircraft accrued from April 1, 2005 until
the delivery of the aircraft. US Airways Group secured GE's agreement to provide financing for those three additional aircraft under the Merger Memorandum
of Understanding, as discussed above. Under the terms of the Merger Memorandum of Understanding, US Airways Group assigned the delivery of the three
remaining aircraft deliveries to Republic with leases to be provided by GECC. US Airways Group agreed with Embraer to extend the deadline for delivery of
these aircraft, but incurred an additional penalty equal to one month of damages per aircraft in connection with this extension. On February 16, 2006, the
Bankruptcy Court approved the settlement and assumption term sheet executed by US Airways Group and Embraer on February 9, 2006. US Airways has
agreed to place an initial firm order for 25 EMB-190 aircraft during the period 2006 through 2008 for which Embraer has agreed to provide backstop
financing. An additional firm order for 32 EMB-190 aircraft, subject to reconfirmation by US Airways, may be delivered subsequently.
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
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