US Airways 2005 Annual Report Download - page 82

Table of Contents
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 in order of maturity, and any such
asset sales proceeds in excess of $275 million are to be applied 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.
In October 2005, US Airways Group repurchased all of the warrants it had issued to the ATSB in exchange for warrants previously issued by America
West Holdings in connection with the AWA loan. The Company repurchased approximately 7.7 million warrants to purchase shares of common stock that
had an exercise price of $7.27 per share. The total purchase price for the warrants was $116 million, the fair value of such warrants on the repurchase date.
Exchange of Common Stock for AWA's 7.25 Percent Senior Exchangeable Notes
In July and August of 2003, AWA completed a private placement of approximately $87 million issue price of 7.25% Senior Exchangeable Notes due
2023. The notes bore cash interest at a rate of 2.49% per year, and were redeemable or exchangeable under certain conditions. Completion of the merger
between US Airways Group and America West Holdings on September 27, 2005 constituted a "change of control" under these notes and required AWA to
make an offer to holders to purchase those notes within 30 business days after the effective time of the merger at a purchase price of $343.61 per $1,000
principal amount at maturity. Under the terms of the notes and the related Guarantee and Exchange Agreement, dated as of July 30, 2003, between America
West Holdings and U.S. Bank National Association, as Trustee, as supplemented by the Guarantee and Exchange Agreement Supplement No. 1 among
America West Holdings, US Airways Group and the Trustee, dated as of September 27, 2005, AWA's obligation to purchase the notes was satisfied at
US Airways Group's election by delivery of shares of US Airways Group common stock having a "fair market value" of not less than $343.61 per $1,000
principal amount at maturity. For this purpose, "fair market value" means 95% of the market price of US Airways Group common stock calculated as the
average closing prices over the five business days ending on and including the third business day before the purchase date.
On October 24, 2005, US Airways Group issued a total of 4,156,411 shares of its common stock in exchange for approximately $250 million in principal
amount at maturity of AWA's Senior Exchangeable Notes due 2023, which notes were fully and unconditionally guaranteed by US Airways Group. The
shares were exchanged at a rate of 16.6 shares of US Airways Group common stock per $1,000 principal amount at maturity, in full satisfaction of the
purchase price of the notes. The amount of notes exchanged represented approximately 99% of the outstanding principal amount, and approximately
$2 million in principal amount at maturity of the notes remained outstanding after the exchange. On November 30, 2005, US Airways Group issued a total of
38,864 shares of its common stock to repurchase the remaining outstanding principal amount of the notes.
Restructuring of Affinity Credit Card Partner Agreement
In connection with the merger, AWA, pre-merger US Airways Group and Juniper Bank, a subsidiary of Barclays PLC, entered into an amended credit
card agreement on August 8, 2005. Pursuant to the amended credit card agreement, Juniper agreed to offer and market an airline mileage award credit card
program to the general public to participate in US Airways Group's Dividend Miles program through the use of a co-branded credit card.
US Airways Group's credit card program is currently administered by Bank of America, N.A. (USA). On December 28, 2005, US Airways issued a notice
of termination under its agreement with Bank of America, and that notice will become effective on December 28, 2007. Pending termination of the Bank of
America agreement, both Juniper and Bank of America will run separate credit card programs for US Airways Group. The amended credit card agreement is
the subject of pending litigation filed by Bank 76