US Airways 2006 Annual Report Download - page 154

Table of Contents
America West Airlines, Inc.
Notes to Consolidated Financial Statements — (Continued)
• 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 US Airways Group complies
with the delivery schedule for certain Airbus aircraft. As a result of the prepayment of the $161 million loan on March 31, 2006,
the $89 million loan agreement was terminated and the outstanding balance of $89 million was forgiven.
• 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.
(b) 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 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 AWA, 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.
(c) In January 2002, in connection with the closing of the original AWA ATSB loan and the related transactions, America West
Holdings issued $105 million of 7.5% convertible senior notes due 2009, of which approximately $112 million remained
outstanding at December 31, 2005 (including $22 million of interest paid through December 31, 2004 as a deemed loan added to
the initial principal thereof). Beginning January 18, 2005, these notes became convertible into shares of common stock, at the
option of the holders, at an initial conversion price of $29.09 per share or a conversion ratio of approximately 34.376 shares per
$1,000 principal amount of such notes, subject to standard anti-dilution adjustments. Interest on the 7.5% convertible senior notes
was payable semiannually in arrears on June 1 and December 1 of each year. At America West Holdings' option, the first six
interest payments were payable in the form of a deemed loan added to the principal amount of these notes. The 7.5% convertible
senior notes were scheduled to mature on January 18, 2009 unless earlier
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