US Airways 2009 Annual Report Download - page 93

Table of Contents
The following table details interest expense recognized related to the 7.25% notes (in millions):
December 31,
2009
Contractual coupon interest $ 8
Amortization of discount 6
Total interest expense $ 14
At December 31, 2009, the if-converted value of the 7.25% notes exceeded the principal amount by $10 million.
(k) In December 2004, deferred charges under US Airways' maintenance agreements with GE Engine Services, Inc. were converted
into an unsecured term note. Interest on the note accrues at LIBOR plus 4%, and became payable beginning in January 2008, with
principal and interest payments due in 48 monthly installments through 2011. The outstanding balance on the note at December 31,
2009 was $26 million at an interest rate of 4.5%.
In October 2008, US Airways entered into a promissory note with GE Engine Services, Inc. pursuant to which maintenance
payments of up to $40 million due from October 2008 through March 2009 under US Airways' Engine Service Agreement were
deferred. Interest on the note accrues at 14%, and the first of 12 monthly principal and interest payments commenced in April 2009.
The outstanding balance on the note at December 31, 2009 was $10 million.
(l) The industrial development revenue bonds are due April 2023. Interest at 6.3% is payable semiannually on April 1 and October 1.
The bonds are subject to optional redemption prior to the maturity date on or after April 1, 2008, in whole or in part, on any interest
payment date at the following redemption prices: 102% on April 1 or October 1, 2008; 101% on April 1 or October 1, 2009; and
100% on April 1, 2010 and thereafter.
(m) In connection with US Airways Group's emergence from bankruptcy in September 2005, it reached a settlement with the Pension
Benefit Guaranty Corporation ("PBGC") related to the termination of three of its defined benefit pension plans. The settlement
included the issuance of a $10 million note which matures in 2012 and bears interest at 6% payable annually in arrears.
Secured financings are collateralized by assets, primarily aircraft, engines, simulators, rotable aircraft parts and hangar and
maintenance facilities. At December 31, 2009, the estimated maturities of long-term debt and capital leases are as follows (in millions):
2010 $ 511
2011 350
2012 421
2013 371
2014 1,541
Thereafter 1,599
$ 4,793
Certain of the Company's long-term debt agreements contain significant minimum cash balance requirements and other covenants with
which the Company was in compliance at December 31, 2009. Certain of the Company's long-term debt agreements contain cross-default
provisions, which may be triggered by defaults by US Airways or US Airways Group under other agreements relating to indebtedness.
5. Income Taxes
The Company accounts for income taxes using the asset and liability method. The Company files a consolidated federal income tax
return with its wholly owned subsidiaries. The Company and its wholly owned subsidiaries allocate tax and tax items, such as net
operating losses ("NOLs") and net tax credits, between members of the group based on their proportion of taxable income and other
items. Accordingly, the Company's tax expense is based on taxable income, taking into consideration allocated tax loss carryforwards/
carrybacks and tax credit carryforwards.
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