SUBSEQUENT EVENTS

October 2012 Senior Secured Credit Facilities

In October 2012, we entered into senior secured credit facilities (the "Pacific Facilities") to borrow up to $2.0 billion. The Pacific Facilities consist of two first lien term loan facilities (the "Pacific Term Loans") and a $450 million revolving credit facility (the "Pacific Revolving Facility"). In connection with entering into the Pacific Facilities, we retired $1.2 billion principal amount of outstanding debt, including an existing term loan and senior secured and senior second lien notes, and terminated an existing undrawn $500 million revolving credit facility. These transactions are summarized in the table below:



				October 2012
	Final Maturity Date	Interest Rate(s) per Annum		Proceeds Received		Principal Retired
Entered into in October 2012
Pacific Term Loan B-1	October 2018	5.25%	variable⁽¹⁾⁽²⁾	$	1,100	$	—
Pacific Term Loan B-2	April 2016	4.25%	variable⁽¹⁾⁽²⁾	400		—
Pacific Revolving Facility ($450 million)	October 2017	undrawn	variable⁽³⁾	—		—
Retired/Terminated in October 2012
Pacific Routes Term Facility	March 2016	4.25%	variable⁽¹⁾⁽⁴⁾	—		246
Pacific Routes Revolving Facility ($500 million)	March 2013	undrawn	variable⁽¹⁾	—		—
Senior Secured Notes⁽⁵⁾	September 2014	9.5%	fixed	—		600
Senior Second Lien Notes⁽⁵⁾	March 2015	12.25%	fixed	—		306
Total				$	1,500	$	1,152

⁽¹⁾ Interest rate equal to LIBOR (subject to a floor) or another index rate, in each case plus a specified margin

⁽²⁾ Represents the rate as of October 26, 2012

⁽³⁾ Interest rate equal to LIBOR or another index rate, in each case plus a specified margin

⁽⁴⁾ Represents the rate as of September 30, 2012

⁽⁵⁾ Includes amounts that will be redeemed in November 2012 pursuant to an irrevocable notice of redemption

Borrowings under the Pacific Term Loans must be repaid annually in an amount equal to 1% per year of the original principal amount of the respective loans (to be paid in equal quarterly installments). The remaining unamortized principal amounts under the Pacific Term Loans are due on their final maturity dates. The Pacific Revolving Facility is currently undrawn.

Key Financial Covenants. Our obligations under the Pacific Facilities are guaranteed by substantially all of our domestic subsidiaries (the “Guarantors”) and secured by a first lien on our Pacific route authorities and certain related assets. Like our other secured debt instruments, the Pacific Facilities include affirmative, negative and financial covenants that restrict our ability to, among other things, make investments, sell or otherwise dispose of collateral if we are not in compliance with the collateral coverage ratio test described below, pay dividends or repurchase stock. The financial covenants require us to maintain the minimum levels shown in the table below:



Minimum Fixed Charge Coverage Ratio⁽¹⁾	1.20:1
Minimum Unrestricted Liquidity
Unrestricted cash, permitted investments, and undrawn revolving credit facilities	$2.0 billion
Minimum Collateral Coverage Ratio⁽²⁾	1.60:1


⁽¹⁾	Defined as the ratio of (a) earnings before interest, taxes, depreciation, amortization and aircraft rent, and other adjustments to net income to (b) the sum of gross cash interest expense (including the cash interest portion of our capitalized lease obligations) and cash aircraft rent expense, for the 12-month period ending as of the last day of each fiscal quarter.


⁽²⁾	Defined as the ratio of (a) the value of the collateral to (b) the sum of the aggregate outstanding obligations under the Pacific Facilities and certain other obligations.

Under the Pacific Facilities, if the Minimum Collateral Coverage Ratio is not maintained, we must either provide additional collateral to secure our obligations, or we must repay the loans under the facilities by an amount necessary to maintain compliance with the collateral coverage ratio. The value of the collateral that has been pledged may change over time, which may be reflected in appraisals of collateral required by the Pacific Facilities. These changes could result from factors that are not under our control. A decline in the value of collateral could result in a situation where we may not be able to maintain the collateral coverage ratio.