US Airways 2006 Annual Report Download - page 105

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
on March 31, 2006, the $89 million loan agreement was terminated and the outstanding balance of $89 million was forgiven
along with $1 million in accrued interest.
• Two loans provided by GECC to AWA pursuant to loan agreements entered into as of September 3, 2004 referred to as the
Spare Parts Facility and the Engines Facility (collectively, the "GECC term loan"). At the time of repayment, the principal
amounts outstanding under the Spare Parts Facility and the Engines Facility were $76 million and $34 million, respectively.
Proceeds were also used to pay $1 million of accrued interest and $1 million of prepayment penalties on these two GECC loans.
(c) On December 27, 2004, AWA raised additional capital by financing its Phoenix maintenance facility and flight training center.
The flight training center was previously unencumbered, and the maintenance facility became unencumbered earlier in 2004 when
AWA refinanced its term loan. Using its leasehold interest in these two facilities as collateral, AWA, through a wholly owned
subsidiary named FTCHP LLC, raised $31 million through the issuance of senior secured discount notes. The notes were issued by
FTCHP at a discount pursuant to the terms of a senior secured term loan agreement among the Company, FTCHP, Heritage Bank
SSB, as administrative agent, Citibank, N.A., as the initial lender, and the other lenders from time to time party thereto. Citibank,
N.A. subsequently assigned all of its interests in the notes to third party lenders.
AWA has fully and unconditionally guaranteed the payment and performance of FTCHP's obligations under the notes and the loan
agreement. The notes require aggregate principal payments of $36 million with principal payments of $2 million due on each of
the first two anniversary dates and the remaining principal amount due on the fifth anniversary date. The notes may be prepaid in
full at any time (subject to customary LIBOR breakage costs) and in partial amounts of $2 million on the third and fourth
anniversary dates. The unpaid principal amount of the notes bears interest based on LIBOR plus a margin subject to adjustment
based on a loan to collateral value ratio.
The loan agreement contains customary covenants applicable to loans of this type, including obligations relating to the
preservation of the collateral and restrictions on the activities of FTCHP. In addition, the loan agreement contains events of
default, including payment defaults, cross-defaults to other debt of FTCHP, if any, breach of covenants, bankruptcy and
insolvency defaults and judgment defaults.
In connection with this financing, AWA sold all of its leasehold interests in the maintenance facility and flight training center to
FTCHP and entered into subleases for the facilities with FTCHP at lease rates expected to approximate the interest payments due
under the notes. In addition, AWA agreed to make future capital contributions to FTCHP in amounts sufficient to cover principal
payments and other amounts owing pursuant to the notes and the loan agreement.
The proceeds from this financing, together with $11 million from operating cash flow, were irrevocably deposited with the trustee
for AWA's 103/4% senior unsecured notes due 2005, and the notes were subsequently redeemed on January 26, 2005.
(d) In September 2005, US Airways entered into an agreement to sell and leaseback certain of its commuter slots at Ronald Reagan
Washington National Airport and New York LaGuardia Airport. US Airways continues to hold the right to repurchase the slots
anytime after the second anniversary of the slot sale-leaseback transaction. These transactions were accounted for as secured
financings. Installments are due monthly through 2015. In December 2006, Republic and US Airways modified terms of the
agreement to conform to subsequent regulatory changes at LaGuardia, and the slots were returned to US Airways. The need for a
subsequent modification was fully contemplated in the original agreement.
(e) Capital lease obligations consist principally of certain airport maintenance and facility leases which expire in 2018 and 2021.
(f) GE, together with its affiliates, is US Airways Group's largest aircraft creditor, having financed or leased a substantial portion of
its aircraft prior to the most recent Chapter 11 filing. In June 2005, GE purchased the assets securing the credit facility obtained
from GE in 2001 (the "GE Credit Facility") in a sale-leaseback
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