US Airways 2009 Annual Report Download - page 128

Table of Contents
US Airways borrowed an additional $120 million in 2009 under its spare parts loan agreement. The spare parts loan agreement
bears interest at a rate of LIBOR plus a margin per annum and is secured by a first priority security interest in substantially all of US
Airways' rotable, repairable and expendable aircraft spare parts. The spare parts loan agreement matures on October 20, 2014.
In 2009, US Airways sold 10 of its Embraer 190 aircraft to Republic. In connection with this transaction, Republic assumed
$216 million of debt outstanding on the 10 Embraer 190 aircraft and US Airways was released from its obligations associated with
the debt assumed.
(b) The equipment notes underlying these EETCs are the direct obligations of US Airways and cover the financing of 19 aircraft. See
Note 8(c) for further discussion.
(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 LaGuardia 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.
(e) On December 27, 2004, AWA raised additional capital by financing its Phoenix maintenance facility and flight training center. The
flight training center was previously unencumbered, and the maintenance facility became unencumbered earlier in 2004 when AWA
refinanced its term loan. Using its leasehold interest in these two facilities as collateral, AWA, through a wholly owned subsidiary
named FTCHP LLC, raised $31 million through the issuance of senior secured discount notes. The notes were issued by FTCHP at
a discount pursuant to the terms of a senior secured term loan agreement among AWA, FTCHP, Heritage Bank SSB, as
administrative agent, Citibank, N.A., as the initial lender, and the other lenders from time to time party thereto. Citibank, N.A.
subsequently assigned all of its interests in the notes to third-party lenders.
AWA fully and unconditionally guaranteed the payment and performance of FTCHP's obligations under the notes and the loan
agreement. The notes require aggregate principal payments of $36 million with principal payments of $2 million due on each of the
first two anniversary dates and the remaining principal amount due on the fifth anniversary date. The notes may be prepaid in full at
any time (subject to customary LIBOR breakage costs) and in partial amounts of $2 million on the third and fourth anniversary
dates. The unpaid principal amount of the notes bears interest based on LIBOR plus a margin subject to adjustment based on a loan
to collateral value ratio.
The loan agreement contains customary covenants applicable to loans of this type, including obligations relating to the preservation
of the collateral and restrictions on the activities of FTCHP. In addition, the loan agreement contains events of default, including
payment defaults, cross-defaults to other debt of FTCHP, if any, breach of covenants, bankruptcy and insolvency defaults and
judgment defaults.
In connection with this financing, AWA sold all of its leasehold interests in the maintenance facility and flight training center to
FTCHP and entered into subleases for the facilities with FTCHP at lease rates expected to approximate the interest payments due
under the notes. In addition, AWA agreed to make future capital contributions to FTCHP in amounts sufficient to cover principal
payments and other amounts owing pursuant to the notes and the loan agreement. As part of the transfer of substantially all of
AWA's assets and liabilities to US Airways in connection with the combination of all mainline airline operations under one FAA
operating certificate on September 26, 2007, AWA assigned its subleases for the facilities with FTCHP to US Airways. In addition,
US Airways assumed all of the obligations of AWA in connection with the financing and joined the guarantee of the payment and
performance of FTCHP's obligations under the notes and the loan agreement. In 2009, the maturity date of the loan agreement was
extended to March 31, 2010.
(f) 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
126