US Airways 2006 Annual Report Download - page 209

Table of Contents
US Airways, Inc.
Notes to the Financial Statements — (Continued)
(e) Guarantees and Indemnifications
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,
2006, the principal amount outstanding on these bonds was $74 million. Remaining lease payments guaranteeing the principal and
interest on these bonds will be $124 million.
US Airways enters into real estate leases in substantially all cities that it serves. It is common in such commercial lease transactions
for US Airways as the lessee to agree to indemnify the lessor and other related third parties for tort liabilities that arise out of or relate to
the use or occupancy of the leased premises. In some cases, this indemnity extends to related liabilities arising from the negligence of the
indemnified parties, but usually excludes any liabilities caused by their gross negligence or willful misconduct. Additionally, US Airways
typically indemnifies such parties for any environmental liability that arises out of or relates to its use or occupancy of the leased
premises.
In aircraft financing agreements, US Airways typically indemnifies the financing parties, trustees acting on their behalf and other
related parties against liabilities that arise from the manufacture, design, ownership, financing, use, operation and maintenance of the
aircraft and for tort liability, whether or not these liabilities arise out of or relate to the negligence of these indemnified parties, except for
their gross negligence or willful misconduct. In aircraft financing transactions structured as leveraged leases, US Airways typically
indemnifies the lessor with respect to adverse changes in U.S. tax laws.
US Airways reviewed its long-term operating leases at a number of airports, including leases where US Airways is also the
guarantor of the underlying debt. Such 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).
US Airways, America West Holdings, AWA, and other subsidiaries of US Airways Group are all guarantors of the $1.25 billion GE
Loan.
US Airways Group's 7% Senior Convertible Notes are fully and unconditionally guaranteed, jointly and severally and on a senior
unsecured basis, by US Airways and AWA.
(f) Concentration of Credit Risk
US Airways invests available cash in money market securities of various banks, commercial paper and asset-backed securities of
various financial institutions, other companies with high credit ratings and securities backed by the U.S. government.
As of December 31, 2006, most of US Airways' receivables related to tickets sold to individual passengers through the use of major
credit cards or to tickets sold by other airlines and used by passengers on US Airways or its regional airline affiliates. These receivables
are short-term, mostly being settled within seven days after sale. Bad debt losses, which have been minimal in the past, have been
considered in establishing allowances for doubtful accounts. US Airways does not believe it is subject to any significant concentration of
credit risk.
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