Debt

9 Months Ended

Sep. 30, 2011

4. Debt

The following table details the Company’s debt (in millions). Variable interest rates listed are the rates as of September 30, 2011.


	September 30,			December 31,
	2011			2010
Secured
Citicorp North America loan, variable interest rate of 2.74%, installments due through 2014	$	1,136		$	1,152
Equipment loans and other notes payable, fixed and variable interest rates ranging from 1.62% to 10.30%, maturing from 2012 to 2029		1,609			1,920
Aircraft enhanced equipment trust certificates (“EETCs”), fixed interest rates ranging from 6.25% to 11%, maturing from 2014 to 2023		1,245			809
Other secured obligations, fixed interest rate of 8%, maturing from 2015 to 2021		77			85

		4,067			3,966
Unsecured
Barclays prepaid miles, variable interest rate of 4.99%, interest only payments		200			200
Airbus advance, repayments through 2018		165			222
7.25% convertible senior notes, interest only payments until due in 2014		172			172
7% senior convertible notes, interest only payments until due in 2020		5			5
Industrial development bonds, fixed interest rate of 6.30%, interest only payments until due in 2023		29			29
Other unsecured obligations, maturing from 2011 to 2012		13			23

		584			651

Total long-term debt and capital lease obligations		4,651			4,617
Less: Total unamortized discount on debt		(180	)		(217	)
Current maturities		(484	)		(397	)

Long-term debt and capital lease obligations, net of current maturities	$	3,987		$	4,003


		The Company was in compliance with the covenants in its debt agreements at September 30, 2011.

2011 EETC Transactions

In June 2011, US Airways created three pass-through trusts which issued approximately $471 million aggregate face amount of Series 2011-1 Class A, Class B and Class C Enhanced Equipment Trust Certificates in connection with the refinancing of five Airbus aircraft owned by US Airways and the financing of four Airbus aircraft scheduled to be delivered from September to October 2011 (the “2011 EETCs”). The 2011 EETCs represent fractional undivided interests in the respective pass-through trusts and are not obligations of US Airways. Proceeds received from the sale of EETCs are initially held by a depository in escrow for the benefit of the certificate holders until US Airways issues equipment notes to the trust, which purchases the notes with a portion of the escrowed funds. These escrowed funds are not guaranteed by US Airways and are not reported as debt on US Airways’ condensed consolidated balance sheet because the proceeds held by the depositary are not US Airways’ assets.

As of September 30, 2011, $425 million of the escrowed proceeds from the 2011 EETCs have been used to purchase equipment notes issued by US Airways in three series: Series A equipment notes in an aggregate principal amount of $265 million bearing interest at 7.125% per annum, Series B equipment notes in an aggregate principal amount of $85 million bearing interest at 9.75% per annum and Series C equipment notes in an aggregate principal amount of $75 million bearing interest at 10.875% per annum. Interest on the equipment notes is payable semiannually in April and October of each year, beginning in October 2011. Principal payments on the equipment notes are scheduled to begin in April 2012. The final payments on the Series A equipment notes, Series B equipment notes and Series C equipment notes will be due in October 2023, October 2018 and October 2014, respectively. US Airways’ payment obligations under the equipment notes are fully and unconditionally guaranteed by US Airways Group. The net proceeds from the issuance of these equipment notes were used to repay the existing debt associated with the five Airbus aircraft and to finance three Airbus aircraft delivered in September 2011, with the balance used for general corporate purposes. The equipment notes are secured by liens on aircraft. The remaining $46 million of escrowed proceeds will be used to purchase equipment notes as the new aircraft are delivered.

Series 2010-1 EETC Offering

In July 2011, US Airways completed an offering of Class C certificates in the aggregate principal amount of $53 million under its Series 2010-1 EETCs. The 2010-1 Class A and B certificates originally closed in December 2010 in connection with the refinancing of owned Airbus aircraft. Also in July 2011, US Airways issued $53 million in additional equipment notes bearing interest at 11% per annum. The net proceeds from the offering will be used for general corporate purposes.

Fair Value of Debt

The fair value of the Company’s long-term debt and capital lease obligations was approximately $3.99 billion and $4.37 billion at September 30, 2011 and December 31, 2010, respectively. The fair values were estimated using quoted market prices where available. For long-term debt not actively traded, fair values were estimated using a discounted cash flow analysis, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements.

US Airways, Inc. [Member]

Debt

3. Debt

The following table details US Airways’ debt (in millions). Variable interest rates listed are the rates as of September 30, 2011.


	September 30,			December 31,
	2011			2010
Secured
Equipment loans and other notes payable, fixed and variable interest rates ranging from 1.62% to 10.30%, maturing from 2012 to 2021	$	1,579		$	1,890
Aircraft enhanced equipment trust certificates (“EETCs”), fixed interest rates ranging from 6.25% to 11%, maturing from 2014 to 2023		1,245			809
Other secured obligations, fixed interest rate of 8%, maturing from 2015 to 2021		77			85

		2,901			2,784
Unsecured
Airbus advance, repayments through 2018		165			222
Industrial development bonds, fixed interest rate of 6.30%, interest only payments until due in 2023		29			29
Other unsecured obligations, maturing from 2011 to 2012		13			23

		207			274

Total long-term debt and capital lease obligations		3,108			3,058
Less: Total unamortized discount on debt		(74	)		(81	)
Current maturities		(393	)		(381	)

Long-term debt and capital lease obligations, net of current maturities	$	2,641		$	2,596


		US Airways was in compliance with the covenants in its debt agreements at September 30, 2011.

2011 EETC Transactions

Series 2010-1 EETC Offering

Fair Value of Debt

The fair value of US Airways’ long-term debt and capital lease obligations was approximately $2.71 billion and $2.85 billion at September 30, 2011 and December 31, 2010, respectively. The fair values were estimated using quoted market prices where available. For long-term debt not actively traded, fair values were estimated using a discounted cash flow analysis, based on US Airways’ current incremental borrowing rates for similar types of borrowing arrangements.