US Airways 2007 Annual Report Download - page 68

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impact on our results of operations would be approximately $16 million of additional interest expense. This increase in interest rates
would be largely offset by additional interest income on our $3 billion in cash, cash equivalents, investments in marketable securities and
restricted cash. Additional information regarding our debt obligations as of December 31, 2007 is as follows (dollars in millions):
Expected Maturity Date
2008 2009 2010 2011 2012 Thereafter Total
Fixed-rate debt $ 56 $ 57 $ 61 $ 72 $ 89 $ 802 $ 1,137
Weighted avg. interest rate 7.6% 7.6% 7.6% 7.6% 7.6% 7.6%
Variable-rate debt $ 61 $ 88 $ 60 $ 62 $ 50 $ 1,811 $ 2,132
Weighted avg. interest rate 7.3% 7.3% 7.3% 7.3% 7.3% 7.3%
US Airways Group and US Airways have total future aircraft and spare engine purchase commitments of approximately
$7.53 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.
At December 31, 2007, included within our investment portfolio are $353 million of investments in auction rate securities. With the
liquidity issues experienced in the global credit and capital markets, our auction rate securities have experienced multiple failed auctions.
While we continue to earn interest on these investments at the maximum contractual rate, the estimated market values of these auction
rate securities no longer approximates par value. As of December 2007, we recorded an unrealized loss of $48 million in other
comprehensive income for auction rate securities with declines in value deemed to be temporary and a $10 million impairment charge
related to an auction rate security for which we deemed the decline in value to be other than temporary.
As of January 31, 2008, the commercial banks managing our investments provided us with estimated fair market values, which
indicated an additional decline in the aggregate fair market value of our auction rate securities of approximately $70 million (from
amounts provided at December 31, 2007). We believe that these additional declines in value are also temporary and are attributed to
current credit market events and continued lack of market liquidity in early 2008. Such temporary declines, if sustained, would be
recognized in the first quarter of 2008. It is possible that additional declines in fair value may occur. To the extent the fair market values
of our auction rate securities were to subsequently increase, such increase would reduce the unrealized loss recorded in other
comprehensive income.
We continue to monitor the market for auction rate securities and consider its impact (if any) on the fair market value of our
investments. If the current market conditions continue, or the anticipated recovery in market values does not occur, we may be required to
record additional unrealized losses or impairment charges in 2008.
We intend and have the ability to hold these auction rate securities until the market recovers. We do not anticipate having to sell
these securities in order to operate our business. We believe that, based on our current unrestricted cash, cash equivalents and short-term
marketable securities balances of $2.17 billion at December 31, 2007, the current lack of liquidity in the credit and capital markets will
not have a material impact on our liquidity, cash flow, or our ability to fund our operations. See Notes 6(c) and 4(c), "Fair Values of
Financial Instruments" in Items 8A and 8B, respectively, of this report for additional information.
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