US Airways 2009 Annual Report Download - page 89

Table of Contents
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 greater than $1 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 greater
than $1 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, 2009, the interest rate on the Citicorp credit facility was 2.78% 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 specified 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. The Citicorp credit facility requires the
Company to maintain consolidated unrestricted cash and cash equivalents of not less than $850 million, 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. In addition, the Citicorp credit facility amendment provides that the Company may issue debt
in the future with a 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 2009:
US Airways borrowed $825 million in 2009 to finance Airbus aircraft deliveries through a combination of facility agreements and
manufacturer backstop financing. These financings bear interest at a rate of LIBOR plus an applicable margin and contain default
provisions and other covenants that are typical in the industry.
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.
(c) The equipment notes underlying these 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 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.
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