US Airways 2007 Annual Report Download - page 60

Table of Contents
Under all of the aircraft and engine purchase agreements discussed above, US Airways' total future commitments to Embraer,
Airbus and IAE are expected to be approximately $7.5 billion through 2017, which includes predelivery deposits and payments. US
Airways expects to fund these payments through future financings.
On October 18, 2006, US Airways entered into a facility agreement in the total aggregate amount of $242 million to finance the
acquisition of aircraft. As of December 31, 2007, the amount outstanding under that facility was $237 million. On November 2, 2007,
US Airways entered into another facility agreement in the total aggregate amount of $323 million to finance additional deliveries of
aircraft. As of December 31, 2007, US Airways has not borrowed against this facility. The financing facilities bear interest at a rate of
LIBOR plus a margin and contain default and other covenants that are typical in the industry for similar financings.
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 under other agreements relating to indebtedness. See
"Risk Factors — 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, 2007, we and our subsidiaries were in compliance with the
covenants in our long-term debt agreements.
Our credit ratings, like those of most airlines, are relatively low, with S&P's assessment of the issuer credit rating for us and US
Airways at B- and our senior unsecured debt rating at CCC. Fitch's ratings for our long-term debt and senior unsecured debt are B- and
CCC, respectively. Moody's has rated our long-term corporate family rating at B3. 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.
Off-Balance Sheet Arrangements
An off-balance sheet arrangement is any transaction, agreement or other contractual arrangement involving an unconsolidated entity
under which a company has (1) made guarantees, (2) a retained or a contingent interest in transferred assets, (3) an obligation under
derivative instruments classified as equity or (4) any obligation arising out of a material variable interest in an unconsolidated entity that
provides financing, liquidity, market risk or credit risk support to the company, or that engages in leasing, hedging or research and
development arrangements with the company.
We have no off-balance sheet arrangements of the types described in the first three categories above that we believe may have a
material current or future effect on financial condition, liquidity or results of operations. Certain guarantees that we do not expect to have
a material current or future effect on financial condition, liquidity or results of operations are disclosed in Note 10(f) to the consolidated
financial statements of US Airways Group included in Item 8A of this report and Note 8(f) to the consolidated financial statements of US
Airways included in Item 8B of this report.
Pass Through Trusts — US Airways has set up pass through trusts, which have issued pass through trust certificates or EETCs
covering the financing of 19 owned aircraft and 62 leased aircraft. 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 US Airways 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
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