US Airways 2011 Annual Report Download - page 76

Table of Contents
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk Sensitive Instruments
Our primary market risk exposures include commodity price risk (i.e., the price paid to obtain aviation fuel) and interest rate risk. The potential impact
of adverse increases in these risks is discussed below. The following sensitivity analyses do not consider the effects that an adverse change may have on the
overall economy nor do they consider additional actions we may take to mitigate our exposure to these changes. Actual results of changes in prices or rates
may differ materially from the following hypothetical results.
Commodity Price Risk
Fuel prices have fluctuated substantially over the past several years. We cannot predict the future availability, price volatility or cost of aircraft fuel.
Natural disasters, political disruptions or wars involving oil-producing countries, changes in fuel-related governmental policy, the strength of the U.S. dollar
against foreign currencies, speculation in the energy futures markets, changes in aircraft fuel production capacity, environmental concerns and other
unpredictable events may result in fuel supply shortages, additional fuel price volatility and cost increases in the future. See Part I, Item 1A, Risk Factors —
"Our business is dependent on the price and availability of aircraft fuel. Continued periods of high volatility in fuel costs, increased fuel prices and significant
disruptions in the supply of aircraft fuel could have a significant negative impact on our operating results and liquidity."
Our 2012 forecasted mainline and Express fuel consumption is presently approximately 1.45 billion gallons, and based on this forecast, a one cent per
gallon increase in aviation fuel price results in a $15 million increase in annual expense. Since the third quarter of 2008, we have not entered into any new
transactions to hedge our fuel consumption, and we have not had any fuel hedging contracts outstanding since the third quarter of 2009.
Interest Rate Risk
Our exposure to interest rate risk relates primarily to our variable-rate debt obligations. At December 31, 2011, our variable-rate long-term debt
obligations of approximately $2.77 billion represented approximately 59% of our total long-term debt. If interest rates increased 10% in 2011, the impact on
our results of operations would have been approximately $10 million of additional interest expense. Additional information regarding our debt obligations as
of December 31, 2011 is as follows (dollars in millions):
Expected Maturity Date
2012 2013 2014 2015 2016 Thereafter Total
Fixed-rate debt $ 239 $ 162 $ 384 $ 156 $ 149 $ 875 $ 1,965
Weighted avg. interest rate 8.3% 8.1% 8.1% 7.9% 7.7% 7.5%
Variable-rate debt $ 197 $ 218 $ 1,377 $ 220 $ 126 $ 629 $ 2,767
Weighted avg. interest rate 3.5% 3.4% 3.3% 3.3% 3.2% 3.1%
US Airways Group and US Airways have total future aircraft and spare engine purchase commitments of approximately $5.38 billion. We expect to
finance such commitments either by entering into leases or debt agreements. Changes in interest rates will impact the cost of such financings.
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