US Airways 2006 Annual Report Download - page 78

Table of Contents
Interest Rate Risk
Our exposure to interest rate risk relates primarily to our cash equivalents and short-term investments portfolios and variable rate
debt obligations. At December 31, 2006, our variable-rate long-term debt obligations of approximately $1.94 billion represented
approximately 62% of our total long-term debt. A hypothetical 10% increase in interest rates in 2007 would result in a $17 million
increase in interest expense. This increase in interest rates would be largely offset by additional interest income on our more than
$3 billion in cash, cash equivalents, short-term investments and restricted cash. Additional information regarding our debt obligations as
of December 31, 2006 is as follows (dollars in millions):
Expected Maturity Date
2007 2008 2009 2010 2011 Thereafter Total
Fixed-rate debt $ 62 $ 58 $ 59 $ 62 $ 72 $ 880 $ 1,193
Weighted avg. interest rate 7.3% 7.3% 7.2% 7.2% 7.2% 7.2%
Variable-rate debt $ 33 $ 151 $ 167 $ 138 $ 1,283 $ 170 $ 1,942
Weighted avg. interest rate 8.9% 8.9% 8.8% 8.7% 7.7% 7.7%
US Airways Group, US Airways and AWA have total future aircraft purchase commitments of approximately $4 billion. We expect
to finance such commitments either by entering into leases or debt agreements. Changes in interest rates will impact the cost of such
financings.
Equity Price Risk
We hold options to purchase common stock in Sabre Holdings Corporation that are recorded in other assets with a fair value of
$21 million as of December 31, 2006. Fair value is computed using the Black-Scholes stock option pricing model. A hypothetical 10%
decrease in the December 31, 2006 value of the Sabre stock price would decrease the fair value of the stock options by $2 million.
On December 12, 2006, Sabre announced that it had agreed to be acquired by several private equity groups for $32.75 per share in
cash. We anticipate exercising the options and converting the related shares to cash in connection with the Sabre acquisition.
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