US Airways 2008 Annual Report Download - page 66

Table of Contents
Prior to the second anniversary of the date of the amendment, the $200 million cap on Barclays' pre-purchase obligation may be
reduced if certain conditions are not met. Commencing on that second anniversary, the $200 million cap will be reduced over a period of
approximately two years until such time as no pre-purchased miles remain; however, the time of reduction of the cap may be accelerated
if certain conditions are not met. We may repurchase any or all of the pre-purchased miles at any time, from time to time, without
penalty.
Pursuant to the amendment to the co-branded credit card agreement, the expiration date of the agreement was extended to 2017.
On October 20, 2008, US Airways and Airbus entered into amendments to the A320 Family Aircraft Purchase Agreement, the A330
Aircraft Purchase Agreement, and the A350 XWB Purchase Agreement. In exchange for US Airways' agreement to enter into these
amendments, Airbus advanced US Airways $200 million in consideration of aircraft deliveries under the various related purchase
agreements. Under the terms of each of the amendments, US Airways has agreed to maintain a level of unrestricted cash in the same
amount required by the Citicorp credit facility.
On October 20, 2008, US Airways entered into a $270 million spare parts loan agreement and a $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 previously discussed.
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.
On January 16, 2009, US Airways exercised its right to obtain new loan commitments and incur additional loans under the spare
parts loan agreement. In connection with the exercise of that right, Airbus Financial Services funded $50 million in satisfaction of a
previous commitment. This loan will mature on October 20, 2014, will bear interest at a rate of LIBOR plus a margin and will be secured
by the collateral securing loans under the spare parts loan agreement. In addition, in connection with the incurrence of this loan, US
Airways and Airbus entered into amendments to the A320 Family Aircraft Purchase Agreement, the A330 Aircraft Purchase Agreement
and the A350 XWB Purchase Agreement. Pursuant to these amendments, the existing cross-default provisions of the applicable aircraft
purchase agreements were amended and restated to, among other things, specify the circumstances under which a default under the loan
would constitute a default under the applicable aircraft purchase agreement.
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