US Airways 2009 Annual Report Download - page 90

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(e) Capital lease obligations consist principally of certain airport maintenance and facility leases which expire in 2018 and 2021.
(f) 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 Federal
Aviation Administration ("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.
(g) US Airways Group is a party to a co-branded credit card agreement with Barclays Bank Delaware. The co-branded credit card
agreement provides for, among other things, the pre-purchase of frequent flyer miles in the aggregate amount of $200 million,
which amount was paid by Barclays in October 2008. The Company pays interest to Barclays on the outstanding dollar amount of
the pre-purchased miles at the rate of LIBOR plus a margin. This transaction was treated as a financing transaction for accounting
purposes using an effective interest rate commensurate with the Company's credit rating.
Barclays has agreed that for each month that specified conditions are met it will pre-purchase additional miles on a monthly basis in
an amount equal to the difference between $200 million and the amount of unused miles then outstanding. Commencing in January
2012, the $200 million will be reduced over a period of up to approximately two years. Among the conditions to this monthly
purchase of miles is a requirement that US Airways Group maintain an unrestricted cash balance, as defined in the agreement, of at
least $1.35 billion for the months of March through November and $1.25 billion for the months of January, February and December.
The Company may repurchase any or all of the pre-purchased miles at any time, from time to time, without penalty. The agreement
expires in 2017.
(h) 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
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