US Airways 2005 Annual Report Download - page 89

Table of Contents
claims arising out of the issuance and sale of the bonds and the use and occupancy of the concourses financed by these bonds and the Old Bonds. At
December 31, 2005, the outstanding principal amount of the bonds was $22 million. AWA estimates its remaining payments to cover the principal and
interest of these bonds will be approximately $40 million.
AWA is also the lessee under certain long-term leases at various airports. At certain of these airports, municipalities have issued revenue bonds to improve
airport facilities that are leased by AWA and accounted for as operating leases. AWA does not guarantee the underlying debt related to these operating leases.
US Airways
Pass Through Trusts — US Airways has also set up pass through trusts established specifically to purchase, finance and lease aircraft for which
US Airways is the lessee and the pass-through trust serves as lessor. These trusts issue EETC's, allowing US Airways to raise the financing for several aircraft
at one time and place such funds in escrow pending the purchase or delivery of the relevant aircraft. The trusts are also structured to provide for certain credit
enhancements, such as liquidity facilities to cover certain interest payments, that reduce the risks to the purchasers of the trust certificates, and as a result,
reduce the cost of aircraft financing to US Airways. US Airways reviewed 62 aircraft operating leases financed through EETCs, each of which contains a
fixed-price purchase option that allows US Airways to purchase the aircraft at predetermined prices on specified dates during the latter part of the lease term.
However, US Airways does not guarantee the residual value of the aircraft. US Airways does not believe it is the primary beneficiary under these lease
arrangements based upon its cash flow analysis.
Special Facility Revenue Bonds — US Airways guarantees the payment of principal and interest on certain special facility revenue bonds issued by
municipalities to build or improve certain airport and maintenance facilities which are leased to US Airways. Under such leases, US Airways is required to
make rental payments through 2023, sufficient to pay maturing principal and interest payments on the related bonds. As of December 31, 2005, the principal
amount outstanding of these bonds was $77 million. Remaining lease payments guaranteeing the principal and interest on these bonds will be $131 million.
US Airways also reviewed long-term operating leases at a number of airports, including leases where US Airways is also the guarantor of the underlying debt.
These leases are typically with municipalities or other governmental entities. The arrangements are not required to be consolidated based on the provisions of
FIN 46(R).
Jet Service Agreements — Certain entities with which the Company has capacity purchase agreements are considered variable interest entities under
FIN 46(R). In connection with its restructuring and emergence from bankruptcy, US Airways contracted with Air Wisconsin, a related party, and Republic to
purchase a significant portion of these companies' regional jet capacity for a period of ten years. The Company has determined that it is not the primary
beneficiary of these variable interest entities, based on cash flow analyses. Additionally, US Airways has analyzed the arrangements with other carriers with
which US Airways has long-term capacity purchase agreements and concluded that it is not required to consolidate any of the entities.
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