US Airways 2006 Annual Report Download - page 66

Table of Contents
and seven A319 aircraft to an order of eight A321 aircraft. Deliveries of the 15 new A321 aircraft will begin in 2008 and run through
2010. The new A321s will be configured to accommodate up to 187 passengers in two classes of service and will be used for replacement
purposes or modest expansion should market conditions warrant.
To modernize our international product and improve the efficiency of our international network, we were scheduled to begin
accepting deliveries of A350 aircraft in 2011 pursuant to an Airbus A350 Purchase Agreement that US Airways Group, US Airways and
AWA entered into in September 2005 with Airbus. US Airways Group has been notified that the A350 will be undergoing significant
design changes and will be delivered several years beyond the originally scheduled delivery dates. We are currently evaluating the
revised technical and commercial aspects of the A350 program.
In September 2005, we amended our A330/340 Purchase Agreement dated as of November 24, 1998 between US Airways Group
and Airbus to reschedule our order for ten A330-200 aircraft for delivery during the period 2009 and 2010. We have the right to cancel
these A330 orders in the event that US Airways makes certain predelivery payments under the A350 Purchase Agreement.
AWA has an agreement with International Aero Engines which provides for the purchase by AWA of five new V2500-A5 spare
engines scheduled for delivery through 2010 for use on certain of the Airbus A320 fleet.
Covenants and Credit Rating
In addition to the minimum cash balance requirements, our long-term debt agreements contain various negative covenants that
restrict or limit our actions, including our ability to pay dividends or make other restricted payments. Certain long-term debt agreements
also contain cross-default provisions, which may be triggered by defaults by US Airways Group under other agreements relating to
indebtedness. See "Risk Factors Relating to the Company and Industry Related Risks — Our high level of fixed obligations limits our
ability to fund general corporate requirements and obtain additional financing, limits our flexibility in responding to competitive
developments and increases our vulnerability to adverse economic and industry conditions" in Item 1A, "Risk Factors". As of
December 31, 2006, US Airways Group and its subsidiaries were in compliance with the covenants in their long-term debt agreements.
US Airways Group's credit ratings, like those of most airlines, are relatively low, with S&P's assessment of the issuer credit rating
for US Airways Group and US Airways at B− and senior unsecured debt rating at CCC for US Airways Group. Fitch's ratings for
US Airways Group's long-term debt and senior unsecured debt are CCC and CC, respectively. Moody's has rated US Airways Group's
long-term corporate family rating at B3. AWA is no longer rated separately. A decrease in our credit ratings could cause our borrowing
costs to increase, which would increase our interest expense and could affect our net income, and our credit ratings could adversely affect
our ability to obtain additional financing. If our financial performance or industry conditions do not improve, we may face future
downgrades, which could further negatively impact our borrowing costs and the prices of our equity or debt securities. In addition, any
downgrade of our credit ratings may indicate a decline in our business and in our ability to satisfy our obligations under our indebtedness.
US Airways Group's Emergence from Bankruptcy
In accordance with the Bankruptcy Code, the plan of reorganization classified claims into classes according to their relative priority
and other criteria and provided for the treatment for each class of claims. Pursuant to the bankruptcy process, the Reorganized Debtors'
claims agent received timely-filed proofs of claims totaling approximately $26.4 billion in the aggregate, exclusive of approximately
$13.6 billion in claims by governmental entities. The Reorganized Debtors continue to be responsible for administering and resolving
claims related to the bankruptcy process. The administrative claims objection deadline passed on September 15, 2006. As of
December 31, 2006, there were approximately $472 million of unresolved claims. The ultimate resolution of certain of the claims
asserted against the Reorganized Debtors in the Chapter 11 cases will be subject to negotiations, elections and Bankruptcy Court
procedures. The recovery to individual creditors ultimately distributed to any particular general unsecured creditor under the plan of
reorganization will depend on a number of variables, including the agreed value of any general unsecured claims filed by that creditor,
the aggregate value of all resolved general unsecured claims and the value of shares of the new common stock of US Airways Group in
the
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