US Airways 2008 Annual Report Download - page 99

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
principal amount of $1.6 billion. US Airways, AWA and certain other subsidiaries of the Company are guarantors of the Citicorp
credit facility.
The Citicorp credit facility bears interest at an index rate plus an applicable index margin or, at the Company's option, LIBOR plus
an applicable LIBOR margin for interest periods of one, two, three or six months. The applicable index margin, subject to
adjustment, is 1.00%, 1.25% or 1.50% 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. 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, 2008, the interest rate on the Citicorp credit facility was 2.97% 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. Prior to the amendment discussed below,
the Citicorp credit facility required the Company 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.
On October 20, 2008, US Airways Group entered into an amendment to the Citicorp credit facility. Pursuant to the amendment, the
Company repaid $400 million of indebtedness under the credit facility, reducing the principal amount outstanding under the credit
facility to approximately $1.18 billion as of December 31, 2008. The Citicorp credit facility amendment also provides for a
reduction in the amount of unrestricted cash required to be held by the Company from $1.25 billion to $850 million, and the
Company may, prior to September 30, 2009, further reduce that minimum requirement to a minimum of $750 million on a dollar-
for-dollar basis for any additional repayments of up to $100 million of indebtedness under the credit facility. The Citicorp credit
facility amendment also provides that the Company may sell, finance or otherwise pledge assets that were pledged as collateral
under the credit facility, so long as the Company prepays the indebtedness under the credit facility in an amount equal to 75% of the
appraised value of the collateral sold or financed or assigned or 75% of the collateral value of eligible accounts (determined in
accordance with the credit facility) sold or financed in such transaction. In addition, the Citicorp credit facility amendment provides
that the Company may issue debt in the future with a silent second lien on the assets pledged as collateral under the Citicorp credit
facility.
(b) The following are the significant secured financing agreements entered into in 2008:
On February 1, 2008, US Airways entered into a loan agreement for $145 million, secured by six Bombardier CRJ-700 aircraft,
three Boeing 757 aircraft and one spare engine. The loan bears interest at a rate of LIBOR
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