US Airways 2007 Annual Report Download - page 105

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
$3 million as long as both agreements remain in effect through October 2009. In September 2007, all engines covered under the AWA
agreement were transferred to the US Airways agreement, and the AWA agreement was terminated. The minimum monthly payment of
$3 million remains unchanged.
(b) Leases
The Company leases certain aircraft, engines, and ground equipment, in addition to the majority of its ground facilities and terminal
space. As of December 31, 2007, the Company had 364 aircraft under operating leases, with remaining terms ranging from two months to
approximately 16 years. Ground facilities include executive offices, maintenance facilities and ticket and administrative offices. Public
airports are utilized for flight operations under lease arrangements with the municipalities or agencies owning or controlling such airports.
Substantially all leases provide that the lessee must pay taxes, maintenance, insurance and certain other operating expenses applicable to
the leased property. Some leases also include renewal and purchase options.
As of December 31, 2007, obligations under noncancellable operating leases for future minimum lease payments were as follows
(in millions):
2008 $ 1,088
2009 997
2010 916
2011 827
2012 797
Thereafter 4,081
Total minimum lease payments $ 8,706
For the years ended December 31, 2007, 2006 and 2005, rental expense under operating leases, excluding landing fees, was
$1.26 billion, $1.24 billion and $632 million, respectively.
(c) Off-balance Sheet Arrangements
US Airways has obligations with respect to $1.85 billion in principal amount of pass through trust certificates, also known as
"Enhanced Equipment Trust Certificates" or EETCs, issued by pass through trusts to cover the financing of 19 owned aircraft, 116 leased
aircraft and three leased engines. These trusts are off-balance sheet entities, the primary purpose of which is to finance the acquisition of
aircraft. Rather than finance each aircraft separately when such aircraft is purchased or delivered, these trusts allowed the Company to
raise the financing for several aircraft at one time and place such funds in escrow pending the purchase or delivery of the relevant aircraft.
The trusts were also structured to provide for certain credit enhancements, such as liquidity facilities to cover certain interest payments,
that reduce the risks to the purchasers of the trust certificates and, as a result, reduce the cost of aircraft financing to the Company.
Each trust covered a set amount of aircraft scheduled to be delivered within a specific period of time. At the time of each covered
aircraft financing, the relevant trust used the funds in escrow to purchase equipment notes relating to the financed aircraft. The equipment
notes were issued, at US Airways' or AWA's election, either by US Airways or AWA in connection with a mortgage financing of the
aircraft or by a separate owner trust in connection with a leveraged lease financing of the aircraft. In the case of a leveraged lease
financing, the owner trust then leased the aircraft to US Airways or AWA. In both cases, the equipment notes are secured by a security
interest in the aircraft. As part of the transfer of substantially all of AWA's assets and liabilities to US Airways in connection with the
combination of all airline operations under one FAA operating certificate on September 26, 2007, all of AWA's obligations with respect
to the pass through trusts and the leases of related aircraft and engines were transferred to US Airways and are now direct obligations of
US Airways. The pass through trust certificates are not direct obligations of, nor are they guaranteed by, the Company, US Airways or
AWA. However, in the case of
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