US Airways 2007 Annual Report Download - page 93

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
respectively. The applicable LIBOR margin, subject to adjustment, is 2.00%, 2.25% or 2.50% if the adjusted loan balance is less
than $600 million, between $600 million and $1 billion, or between $1 billion and $1.6 billion, respectively. In addition, interest
on the Citicorp credit facility may be adjusted based on the credit rating for the Citicorp credit facility as follows: (i) if the credit
ratings of the Citicorp credit facility by Moody's and S&P in effect as of the last day of the most recently ended fiscal quarter are
both at least one subgrade better than the credit ratings in effect on March 23, 2007, then (A) the applicable LIBOR margin will be
the lower of 2.25% and the rate otherwise applicable based upon the adjusted Citicorp credit facility balance and (B) the applicable
index margin will be the lower of 1.25% and the rate otherwise applicable based upon the Citicorp credit facility principal balance,
and (ii) if the credit ratings of the Citicorp credit facility by Moody's and S&P in effect as of the last day of the most recently
ended fiscal quarter are both at least two subgrades better than the credit ratings in effect on March 23, 2007, then (A) the
applicable LIBOR margin will be 2.00% and (B) the applicable index margin will be 1.00%. As of December 31, 2007, the interest
rate on the Citicorp credit facility was 7.28% based on a 2.50% LIBOR margin.
The Citicorp credit facility matures on March 23, 2014, and is repayable in seven annual installments, with each of the first six
installments to be paid on each anniversary of the closing date in an amount equal to 1% of the initial aggregate principal amount
of the loan and the final installment to be paid on the maturity date in the amount of the full remaining balance of the loan.
In addition, the Citicorp credit facility requires certain mandatory prepayments upon the occurrence of certain events, establishes
certain financial covenants, including minimum cash requirements and maintenance of certain minimum ratios, contains
customary affirmative covenants and negative covenants and contains customary events of default. The Citicorp credit facility
requires US Airways Group to maintain consolidated unrestricted cash and cash equivalents of not less than $1.25 billion, with not
less than $750 million (subject to partial reductions upon certain reductions in the outstanding principal amount of the loan) of that
amount held in accounts subject to control agreements, which would become restricted for use by the Company if certain adverse
events occur per the terms of the agreement. The Company capitalized $4 million of debt issuance costs consisting principally of
Citicorp credit facility arrangement fees which will be amortized over the life of the loan. The Company recorded a nonoperating
expense of $18 million related to the write-off of unamortized debt issuance costs for the $1.25 billion GECC loan.
(b) The proceeds of the Citicorp credit facility were used to repay in full the following indebtedness:
• The amended and restated loan agreement, dated April 7, 2006, entered into by US Airways Group with General Electric
Capital Corporation ("GECC") and a syndicate of lenders. At the time of the repayment, the total outstanding balance of the
loan was $1.25 billion.
• The Barclays prepaid miles issued on October 3, 2005 in connection with the amended co-branded credit card agreement dated
August 8, 2005 between pre-merger US Airways Group, AWA and Juniper Bank, a subsidiary of Barclays PLC that has since
been renamed Barclays Bank Delaware ("Barclays"). At the time of the repayment, the total outstanding balance was
$325 million.
• The credit facility with GECC, amended in July 2005, with an original balance of $28 million. At the time of the repayment,
the total outstanding balance of the loan was $19 million.
(c) In September 2005, US Airways entered into an agreement with Republic to sell and leaseback certain of its commuter slots at
Ronald Reagan Washington National Airport and New York LaGuardia Airport. US Airways continues to hold the right to
repurchase the slots anytime after the second anniversary of the slot sale-leaseback transaction. These transactions were accounted
for as secured financings. Installments are due monthly through 2015. In December 2006, Republic and US Airways modified
terms of the agreement to conform to subsequent regulatory changes at LaGuardia, and the slots were returned to US Airways. The
need for a subsequent modification was fully contemplated in the original agreement.
(d) Capital lease obligations consist principally of certain airport maintenance and facility leases which expire in 2018 and 2021.
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