US Airways 2006 Annual Report Download - page 104

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
(a) On March 31, 2006, US Airways Group entered into a loan agreement with General Electric Capital Corporation ("GECC") and a
syndicate of lenders pursuant to which the Company borrowed an aggregate principal amount of $1.1 billion. On April 7, 2006,
US Airways Group entered into an amended and restated loan agreement, which increased the principal amount of the loan to
$1.25 billion (as amended and restated, the "GE Loan"). US Airways, America West Holdings, AWA, Piedmont, PSA and MSC
are all guarantors of the GE Loan.
The GE Loan bears interest at an index rate plus an applicable index margin or, at the Company's option, LIBOR plus an
applicable LIBOR margin for interest periods of one, two, three or six months. The applicable index margin, subject to adjustment,
is 1.50%, 2.00%, 2.25%, or 2.50% if the adjusted loan balance is respectively less than $600 million, between $600 million and
$750 million, between $750 million and $900 million, or between $900 million and $1.25 billion. The applicable LIBOR margin,
subject to adjustment, is 2.50%, 3.00%, 3.25%, or 3.50% if the adjusted loan balance is respectively less than $600 million,
between $600 million and $750 million, between $750 million and $900 million, or between $900 million and $1.25 billion. In
addition, interest on the GE Loan may be adjusted based on the credit rating for the GE Loan as follows: (i) subject to clause (ii)
below, if the credit rating for the GE Loan is B1 or better from Moody's and B+ or better from Standard & Poor ("S&P") as of the
last day of the most recently ended fiscal quarter, then (A) the applicable LIBOR margin will be the lower of 3.25% and the rate
otherwise applicable based upon the adjusted GE Loan balance and (B) the applicable index margin will be the lower of 2.25%
and the rate otherwise applicable based upon the adjusted GE Loan balance, and (ii) if the credit rating for the Loan is Ba3 or
better from Moody's and BB- or better from S&P as of the last day of the most recently ended fiscal quarter, then the applicable
LIBOR margin will be 2.50% and the applicable index margin will be 1.50%. The GE Loan matures on March 31, 2011, and no
principal payments are scheduled until maturity.
In addition, the GE Loan requires certain mandatory prepayments upon certain events, establishes certain financial covenants,
including minimum cash requirements and maintenance of certain minimum ratios, contains customary affirmative covenants and
negative covenants, and contains customary events of default. Under the GE Loan, US Airways Group is required to maintain
consolidated unrestricted cash and cash equivalents of not less than $750 million, subject to partial reductions upon specified
reductions in the outstanding principal amount of the GE Loan.
(b) On March 31, 2006, proceeds of the GE Loan were used, in part, to repay in full the following indebtedness:
• The amended and restated US Airways and AWA loans entered into on September 27, 2005 that had previously been
guaranteed by the Air Transportation Stabilization Board ("ATSB"). On October 19, 2005, $777 million of the loans, of which
$752 million had been guaranteed by the ATSB, was sold by the lenders by order of the ATSB to 13 fixed income investors, for
which Citibank, N.A served as agent, removing the ATSB guarantee (the "Citibank Loans"). At the time of repayment of these
loans on March 31, 2006, the total outstanding balance of the loans was $801 million, of which $551 million was outstanding
under the US Airways loan and $250 million was outstanding under the AWA loan. Proceeds were also used to pay $15 million
of accrued interest and fees on the US Airways loan, and $8 million of accrued interest and $5 million of prepayment penalty on
the AWA loan.
• The $161 million loan entered into as of September 27, 2005 between US Airways and AWA and Airbus Financial Services, for
which US Airways Group was the guarantor. At the time of repayment on March 31, 2006, the outstanding balance of the loan
was $161 million. US Airways and AWA also had an $89 million loan from Airbus Financial Services entered into as of
September 27, 2005. In accordance with the terms of the loan agreements, the outstanding principal amount of the $89 million
loan was to be forgiven on the earlier of December 31, 2010 or the date that the outstanding principal amount of, accrued
interest on, and all other amounts due under the Airbus $161 million loan were paid in full, provided that the Company
complied with the delivery schedule for certain Airbus aircraft. As a result of the prepayment of the $161 million loan
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