US Airways 2006 Annual Report Download - page 61

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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 asset sales, including sale-leasebacks, subject to US Airways Group's right
to reinvest net sales proceeds in qualified assets;
• provides for mandatory prepayments upon a change in control or collateral value deficiencies;
• establishes certain financial covenants, subject to adjustment, including minimum cash requirements (as described in more detail
below), minimum ratios of earnings before interest, taxes, depreciation, amortization and aircraft rent to fixed charges (except
during a covenant suspension period), and minimum ratios of collateral value to outstanding principal;
• contains customary affirmative covenants and negative covenants (some of which are eased during a covenant suspension
period), including restrictions on liens, investments, restricted payments, asset sales, acquisitions, changes in fiscal year, sale and
leasebacks, transactions with affiliates, conduct of business, mergers or consolidations, and amendments to other indebtedness
and certain other documents; and
• contains customary events of default, including payment defaults, cross-defaults, breach of covenants, bankruptcy and insolvency
defaults, judgment defaults and business discontinuations (i.e., voluntary suspension of substantially all flights for two days).
The GE loan requires US Airways Group 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.
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 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, removing the ATSB guarantee. 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.
• 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 in writing 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 we complied
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. 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.
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