US Airways 2008 Annual Report Download - page 68

Table of Contents
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, 2008, 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. The following table details our credit ratings as of December 31,
2008:
S&P Fitch Moody's
Local Issuer Issuer Default Corporate
credit rating credit rating Family rating
US Airways Group B- CCC Caa1
US Airways B- * *
(*) The credit agencies do not rate these categories for US Airways.
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 us, or that engages in leasing, hedging or research and development
arrangements with us.
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 9(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 obligations with respect to pass through trust certificates, also known as "Enhanced Equipment Trust Certificates"
or EETCs, issued by pass through trusts to cover the financing of 19 owned aircraft, 116 leased aircraft and three leased engines. 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 certain interest payments, that reduce the risks to the purchasers of the
trust certificates and, as a result, reduce the cost of aircraft financing to US Airways.
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