US Airways 2005 Annual Report Download - page 80

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purchase by GE of 21 aircraft and 28 engines with a simultaneous lease back of the equipment to US Airways at market rates, (3) allow US Airways Group to
draw additional amounts under an existing credit facility, which resulted in a total principal outstanding balance under that facility of approximately
$28 million, (4) restructure lease obligations of US Airways relating to 59 aircraft at market rates, (5) provide financing for current and additional aircraft,
(6) grant concessions regarding return condition obligations with respect to the return of aircraft and engines, (7) waive penalties for the removal of engines
currently under GE engine maintenance agreements, and (8) reduce outstanding balances for deferred charges under its rate per hour engine agreements,
which resulted in a remaining balance due of $54 million.
Airbus Term Loans
On September 27, 2005, US Airways and AWA entered into two loan agreements with Airbus Financial Services ("AFS"), an affiliate of Airbus, with
commitments in initial aggregate amounts of up to $161 million and up to $89 million. The Airbus loans bear interest at a rate of LIBOR plus a margin,
subject to adjustment during the term of the loans under certain conditions. In each of the separate financial statements of US Airways and AWA, the Airbus
loan has also been presented as a liability, as each entity is jointly and severally liable for this obligation. Amounts drawn upon the Airbus loans are drawn
first upon the Airbus $161 million loan until it has been drawn in its full amount, in which event the remaining portion of the $250 million total commitment
is drawn upon the Airbus $89 million loan.
On September 27, 2005, all of the Airbus $161 million loan and $14 million of the Airbus $89 million loan were drawn and are available for use for
general corporate purposes. At December 31, 2005, a total of $186 million was drawn under the Airbus loans. The remaining portion of the Airbus loans is
payable in multiple draws upon the occurrence of certain conditions, including the taking of delivery of certain aircraft, on the due dates for certain amounts
owing to AFS or its affiliates to refinance such amounts, after payment of certain invoices for goods and services provided by AFS or its affiliates, or upon
receipt by AFS of certain amounts payable in respect of existing aircraft financing transactions. The full amount of the Airbus loans is expected to be
available by the end of 2006.
The amortization payments under the Airbus $161 million loan will become due in equal quarterly installments of $13 million beginning on March 31,
2008, with the final installment due on December 31, 2010. The outstanding principal amount of Airbus $89 million loan will be forgiven in writing
December 31, 2010, or an earlier date, if on that date the outstanding principal amount of, accrued interest on, and all other amounts due under the Airbus
$161 million loan have been paid in full and the Company complies with the delivery schedule.
ATSB Loans
US Airways and AWA each had outstanding loans that were guaranteed by the ATSB under the Air Transportation Safety and System Stabilization Act.
In connection with the consummation of the merger, on September 27, 2005, US Airways, as borrower, entered into an Amended and Restated Loan
Agreement with the ATSB. Also on September 27, 2005, AWA, as borrower, entered into an Amended and Restated Loan Agreement. The new loans
amended and restated the previously outstanding loans of both US Airways and AWA, each guaranteed in substantial part by the ATSB.
On October 19, 2005, $777 million of the loans, of which $752 million was guaranteed by the ATSB, was sold by the lenders by order of the ATSB to 13
fixed income investors. The sale of the debt removed the ATSB guarantee. The total outstanding balance of the loans as of December 31, 2005 was
$801 million, of which $551 million is outstanding under the US Airways loan and $250 million is outstanding under the AWA loan. Terms associated with
these loans remain unchanged, with the AWA loan terminating in 2008 and the US Airways loan terminating in 2010. As a result of that sale, the ATSB no
longer has an interest in any of the Company's debt. 74