US Airways 2008 Annual Report Download - page 100

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
plus an applicable margin and is amortized over ten years. The proceeds of the loan were used to repay $97 million of the
equipment notes previously secured by the six Bombardier CRJ-700 aircraft and three Boeing 757 aircraft.
On February 29, 2008, US Airways entered into a credit facility agreement for $88 million to finance certain pre-delivery payments
required by US Airways' purchase agreements with Airbus. As of December 31, 2008, the outstanding balance of this credit facility
agreement is $73 million. The remaining amounts under this facility will be drawn as pre-delivery payments come due. The loan
bears interest at a rate of LIBOR plus an applicable margin and is repaid as the related aircraft are delivered with a final maturity
date of the loan in November 2010.
In the second quarter of 2008, US Airways entered into facility agreements with three lenders in the amounts of $199 million,
$198 million, and $119 million to finance the acquisition of certain Airbus A320 family aircraft deliveries starting in the second half
of 2008. The loans bear interest at a rate of LIBOR plus an applicable margin, contain default and other covenants that are typical in
the industry for similar financings, and are amortized over twelve years with balloon payments at maturity.
On October 20, 2008, US Airways entered into a $270 million spare parts loan agreement and an $85 million engines loan
agreement. The proceeds of the term loans made under these loan agreements were used to repay a portion of the outstanding
indebtedness pursuant to the Citicorp credit facility amendment discussed in (a) above.
US Airways' obligations under the spare parts loan agreement are secured by a first priority security interest in substantially all of
US Airways' rotable, repairable and expendable aircraft spare parts. The obligations under the engines loan agreement are secured
by a first priority security interest in 36 of US Airways' aircraft engines. US Airways has also agreed that other obligations owed by
it or its affiliates to the administrative agent for the loan agreements or its affiliates (including the loans under these loan agreements
held by such administrative agent or its affiliates) will be secured on a second priority basis by the collateral for both loan
agreements and certain other engines and aircraft.
The term loans under these loan agreements will bear interest at a rate equal to LIBOR plus a margin per annum, subject to
adjustment in certain circumstances.
These loan agreements contain customary representations and warranties, events of default and covenants for financings of this
nature, including obligations to maintain compliance with covenants tied to the appraised value of US Airways' spare parts and the
appraised value and maintenance condition of US Airways' engines, respectively.
The spare parts loan agreement matures on the sixth anniversary of the closing date, and is subject to quarterly amortization in
amounts ranging from $8 million to $15 million. The spare parts loan agreement may not be voluntarily prepaid during the first
three years of the term; however, the loan agreement provided that in certain circumstances US Airways could prepay $100 million
of the loans under the agreement. The engines loan agreement, which may not be voluntarily prepaid prior to the third anniversary
of the closing date, matures on the sixth anniversary of the closing date, and is subject to amortization in 24 equal quarterly
installments.
On December 5, 2008, US Airways prepaid $100 million of principal outstanding under the spare parts loan agreement. In
connection with this prepayment and pursuant to an amendment to the spare parts loan agreement, subject to certain conditions, US
Airways obtained the right to incur up to $100 million in new loans. The right to incur new loans expires on April 1, 2009.
(c) The equipment notes underlying the EETCs are the direct obligations of US Airways and cover the financing of 19 aircraft. See
Note 9(c) for further discussion.
(d) 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
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