Indebtedness and Leases | 12 Months Ended |
Dec. 31, 2013 |
Debt Instrument [Line Items] | ' |
Indebtedness | ' |
Indebtedness and Leases |
Long-term debt and capital lease obligations included in the Consolidated Balance Sheets consisted of (in millions): |
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| 31-Dec-13 | | 31-Dec-12 | | | | | | | | | | | | | | | | | | | | | |
Secured | | | | | | | | | | | | | | | | | | | | | | | | |
American | | | | | | | | | | | | | | | | | | | | | | | | |
Secured variable and fixed rate indebtedness due through 2023 (effective rates from 1.00%-9.00% at December 31, 2013) | $ | 2,111 | | | $ | 3,297 | | | | | | | | | | | | | | | | | | | | | | |
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Enhanced equipment trust certificates (EETCs) due through 2025 (fixed rates from 4.00%-7.00% at December 31, 2013) | 3,516 | | | 1,741 | | | | | | | | | | | | | | | | | | | | | | |
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7.00%-8.50% special facility revenue bonds due through 2031 | 1,282 | | | 1,313 | | | | | | | | | | | | | | | | | | | | | | |
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Senior secured credit facility due 2019 (rate of 3.75% at December 31, 2013) | 1,882 | | | — | | | | | | | | | | | | | | | | | | | | | | |
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7.50% senior secured notes due 2016 | 1,000 | | | 1,000 | | | | | | | | | | | | | | | | | | | | | | |
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AAdvantage Miles advance purchase (net of discount of $40 million) (effective rate 8.30%) | 611 | | | 772 | | | | | | | | | | | | | | | | | | | | | | |
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Other secured obligations, fixed interest rates ranging from 5.20% to 12.20%, maturing from 2014 - 2035 | 380 | | | 412 | | | | | | | | | | | | | | | | | | | | | | |
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Total American secured debt | 10,782 | | | 8,535 | | | | | | | | | | | | | | | | | | | | | | |
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US Airways Group (Assumed) | | | | | | | | | | | | | | | | | | | | | | | | |
2013 Citicorp Credit Facility tranche B-1, variable interest rate of 4.00%, installments through 2019 | 1,000 | | | — | | | | | | | | | | | | | | | | | | | | | | |
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2013 Citicorp Credit Facility tranche B-2, variable interest rate of 3.25%, installments through 2016 | 600 | | | — | | | | | | | | | | | | | | | | | | | | | | |
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Equipment loans and other notes payable, fixed and variable interest rates ranging from 1.56% to 8.48%, maturing from 2013 to 2029 | 1,330 | | | — | | | | | | | | | | | | | | | | | | | | | | |
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Aircraft enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 3.95% to 11.00%, maturing from 2014 to 2025 | 2,515 | | | — | | | | | | | | | | | | | | | | | | | | | | |
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Other secured obligations, fixed interest rates ranging from 5.20% to 8.00%, maturing from 2015 to 2021 | 47 | | | — | | | | | | | | | | | | | | | | | | | | | | |
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Total US Airways Group secured debt | 5,492 | | | — | | | | | | | | | | | | | | | | | | | | | | |
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Total AAG secured debt | 16,274 | | | 8,535 | | | | | | | | | | | | | | | | | | | | | | |
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Unsecured | | | | | | | | | | | | | | | | | | | | | | | | |
US Airways Group (Assumed) | | | | | | | | | | | | | | | | | | | | | | | | |
6.125% senior notes, interest only payments until due in 2018 | 500 | | | — | | | | | | | | | | | | | | | | | | | | | | |
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7.25% convertible senior notes, interest only payments until due in 2014 | 22 | | | — | | | | | | | | | | | | | | | | | | | | | | |
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Industrial development bonds, fixed interest rate of 6.30%, interest only payments until due in 2023 | 29 | | | — | | | | | | | | | | | | | | | | | | | | | | |
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Total US Airways Group unsecured debt | 551 | | | — | | | | | | | | | | | | | | | | | | | | | | |
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Total AAG unsecured debt | 551 | | | — | | | | | | | | | | | | | | | | | | | | | | |
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Total long-term debt and capital lease obligations | 16,825 | | | 8,535 | | | | | | | | | | | | | | | | | | | | | | |
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Less: total unamortized debt discount | 26 | | | — | | | | | | | | | | | | | | | | | | | | | | |
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Less: current maturities | 1,446 | | | 1,419 | | | | | | | | | | | | | | | | | | | | | | |
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Long-term debt and capital lease obligations, less current maturities | $ | 15,353 | | | $ | 7,116 | | | | | | | | | | | | | | | | | | | | | | |
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For information regarding the liabilities subject to compromise as of December 31, 2012, see Note 2 to AAG's Consolidated Financial Statements. |
Indebtedness |
Secured financings are collateralized by assets, primarily aircraft, engines, simulators, rotable aircraft parts, hangar and maintenance facilities, route authorities and airport Slots. At December 31, 2013, the maturities of long-term debt and capital leases are as follows (in millions): |
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| | 2014 | | 2015 | | 2016 | | 2017 | | 2018 | | 2019 and Thereafter | | Total |
Total Principal Amount | | $ | 1,446 | | | $ | 1,325 | | | $ | 2,733 | | | $ | 1,223 | | | $ | 1,756 | | | $ | 8,412 | | | $ | 16,895 | |
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At December 31, 2013, the Company was operating 28 jet aircraft under capital leases. Leases can generally be renewed at rates based on fair market value at the end of the lease term for a number of additional years. |
As of December 31, 2013, AAG had issued guarantees covering approximately $1.3 billion of American's tax-exempt bond debt (and interest thereon) and $4.7 billion of American's secured debt (and interest thereon). |
In connection with the Merger and pursuant to the Plan on December 9, 2013, (i) the Company and American entered into a joinder to loan agreement and became co-obligors of US Airways Group's $1.6 billion 2013 Citicorp Credit Facility, (ii) the Company and American entered into a second supplemental indenture that guarantee the payment obligations associated with the US Airways Group's 6.125% Notes, due in 2018 (the 6.125% senior notes) and (iii) the Company entered into a second supplemental indenture which allows for the conversion into AAG Common Stock the US Airways Group's 7.25% Convertible Notes, due in 2014 (the 7.25% notes). |
2013-1 EETCs (American) |
On March 12, 2013, American closed its private offering of two tranches of enhanced equipment trust certificates (the Series 2013-1A/B EETCs) in the aggregate face amount of $664 million. The Series 2013-1A/B EETCs are comprised of a senior tranche of Class A Certificates with an interest rate of 4.00% per annum and a final expected distribution date of July 15, 2025, and a junior tranche of Class B Certificates with an interest rate of 5.625% per annum and a final expected distribution date of January 15, 2021. The Series 2013-1A/B EETCs represent an interest in the assets of two separate pass through trusts, each of which hold equipment notes issued by American. Interest on the issued and outstanding equipment notes will be payable semiannually on January 15 and July 15 of each year, commencing on July 15, 2013, and principal on such equipment notes is scheduled for payment on January 15 and July 15 of certain years, commencing on January 15, 2014. As of December 31, 2013, the equipment notes are secured by eight currently owned Boeing 737-823 aircraft, one currently owned Boeing 777-223ER aircraft, and four currently owned Boeing 777-323ER aircraft. The certificates were offered in the U.S. to qualified institutional buyers, as defined in, and in reliance on, Rule 144A under the Securities Act of 1933, as amended (the Securities Act). |
On June 5, 2013, American closed its private offering of Class C enhanced equipment trust certificates (the Series 2013-1C EETCs) in the aggregate face amount of $120 million. The Series 2013-1C EETCs rank junior to the Series 2013-1A/B EETCs. The Series 2013-1C EETCs were issued with an interest rate of 6.125% per annum and a final expected distribution date of July 15, 2018. The 2013-1C EETCs represent an interest in the assets of a separate pass through trust, which will hold certain equipment notes issued by American. The Series 2013-1C EETCs are secured by the same aircraft securing the Series 2013-1A/B EETCs. The certificates were offered in the U.S. to qualified institutional buyers, as defined in, and in reliance on, Rule 144A under the Securities Act. |
2013-2 EETCs (American) |
The Company filed a motion with the Bankruptcy Court on October 9, 2012 requesting entry of an order authorizing American to, among other things: (i) obtain post-petition financing in an amount of up to $1.5 billion secured on a first priority basis by, among other things, up to 41 Boeing 737-823 aircraft, 14 Boeing 757-223 aircraft, one Boeing 767-323ER aircraft and 19 Boeing 777-223ER aircraft as part of a new enhanced equipment trust certificate (EETC) financing (the Refinancing EETC) to be offered pursuant to Rule 144A under the Securities Act, and (ii) use cash on hand (including proceeds of the Refinancing EETC) to indefeasibly repay the existing pre-petition obligations secured by such aircraft, as applicable, which are currently financed through, as the case may be, an EETC financing entered into by American in July 2009 (the Series 2009-1 Pass Through Certificates), a secured notes financing entered into by American in July 2009 (the 2009-2 Senior Secured Notes) and an EETC financing entered into by American in October 2011 (the Series 2011-2 Pass Through Certificates and, together with the Series 2009-1 Pass Through Certificates and the 2009-2 Senior Secured Notes, the Existing Financings), in each case without the payment of any make-whole amount or other premium or prepayment penalty. |
The Bankruptcy Court approved the motion on January 17, 2013 and entered an order (the EETC Order) to such effect on February 1, 2013. The trustees for the Existing Financings appealed the EETC Order and judgments rendered in certain related adversary proceedings. The appeals (the Appeals) were briefed and oral argument before the United States Court of Appeals for the Second Circuit (the Second Circuit) was heard on June 20, 2013. On September 12, 2013, the Second Circuit fully affirmed the Company's right to repay the Existing Financings without the payment of any make-whole amount or other premium or prepayment penalty. On September 26, 2013, the trustees for the Existing Financings filed a petition for an en banc rehearing of the Appeals by the Second Circuit. On November 18, 2013, the Second Circuit denied such request for rehearing. On February 12, 2014, the trustees for the Existing Financings filed a petition for certiorari to the Supreme Court. American intends to continue to assert vigorously its right to repay the Existing Financings without the payment of any make-whole amounts or other premium or prepayment penalty. |
On July 31, 2013, the Company closed its private offering of the Refinancing EETC (the Series 2013-2A EETC) in the aggregate face amount of $1.4 billion with an interest rate of 4.95% per annum and a final expected distribution date of January 15, 2023. In September 2013, American repaid the Existing Financings, including securities tendered to the Company under a tender offer for the Existing Financings that commenced on June 27, 2013, and received the proceeds from the Series 2013-2A EETC. In conjunction with the repayment of the Existing Financings, the Company incurred cash charges of $19 million, included in Interest expense, net of capitalized interest and a charge of $54 million, included in Miscellaneous, net, of which $21 million is cash, related to the premium on tender for the Existing Financings, and $33 million is non-cash, related to the write-off of unamortized issuance costs. The 2013-2A EETC represents an interest in the assets of a separate pass through trust, which will hold certain equipment notes issued by American. The Series 2013-2A EETC is secured by the same aircraft previously used to secure the Existing Financings. The certificates were offered in the U.S. to qualified institutional buyers, as defined in, and in reliance on, Rule 144A under the Securities Act. |
On November 27, 2013, American closed its private offering of Class B enhanced equipment trust certificates (the Series 2013-2B EETCs) in the aggregate face amount of $512 million. The Series 2013-2B EETCs rank junior to the Series 2013-2A EETCs. The Series 2013-2B EETCs were issued with an interest rate of 5.60% per annum and a final expected distribution date of July 15, 2020. The 2013-2B EETCs represent an interest in the assets of a separate pass through trust, which will hold certain equipment notes issued by American. The Series 2013-2B EETCs are secured by the same aircraft securing the Series 2013-2A EETCs. The certificates were offered in the U.S. to qualified institutional buyers, as defined in, and in reliance on, Rule 144A under the Securities Act. |
On December 20, 2013, American closed its private offering of Class C enhanced equipment trust certificates (the Series 2013-2C EETCs) in the aggregate face amount of $256 million. The Series 2013-2C EETCs generally rank junior to the Series 2013-2A and 2B EETCs. The Series 2013-2C EETCs were issued with an interest rate of 6.00% per annum and a final expected distribution date of January 15, 2017. The 2013-2C EETCs represent an interest in the assets of a separate pass through trust, which will hold certain equipment notes issued by American. The Series 2013-2C EETCs are secured by the same aircraft securing the Series 2013-2A and 2B EETCs. The certificates were offered in the U.S. to qualified institutional buyers, as defined in, and in reliance on, Rule 144A under the Securities Act. |
Credit Facilities (American) |
On June 27, 2013, American and AAG entered into a Credit and Guaranty Agreement (as amended, the Credit Agreement) with certain lenders. The Credit Agreement provides for a $1.9 billion term loan facility (the Term Loan Facility) and a $1.0 billion revolving credit facility (the Revolving Facility and, together with the Term Loan Facility, the Credit Facilities). As of December 31, 2013, American had borrowed $1.9 billion under the Term Loan Facility. The Credit Facilities are secured obligations of American and guaranteed by AAG. The Revolving Facility provides that American may from time to time borrow, repay and reborrow loans thereunder and have letters of credit issued thereunder in an aggregate amount outstanding at any time of up to $1.0 billion. As of December 31, 2013, there were no borrowings outstanding under the Revolving Facility. |
Upon consummation of the Merger, US Airways Group and US Airways joined the Credit Facilities as guarantors. Following the joinder, certain minimum dollar-thresholds under the negative and financial covenants in the Credit Facilities were automatically increased. The Term Loan Facility and Revolving Facility mature on June 27, 2019 and June 27, 2018, respectively, unless otherwise extended by the applicable parties. The Term Loan Facility is repayable in quarterly installments in an amount equal to 0.25% of the original principal amount thereof with any unpaid balance due on the maturity date of the Term Loan Facility. |
Voluntary prepayments may be made by American at any time, with a premium of 1.00% applicable to certain prepayments made prior to the date that is six months following December 27, 2013. Mandatory prepayments at par of term loans and revolving loans are required to the extent necessary to comply with American's covenants regarding the collateral coverage ratio and certain dispositions of collateral. In addition, if a "change of control" (as defined in the Credit Agreement) occurs, American will, absent an amendment or waiver, be required to repay at par the loans outstanding under the Credit Facilities and terminate the Revolving Facility. |
The Credit Facilities bear interest at an index rate plus an applicable index margin or, at American's option, LIBOR (subject to a floor of 0.75% with respect to the Term Loan) plus an applicable LIBOR margin. The applicable LIBOR margin is 3.00% for borrowings under both the Term Loan Facility and the Revolving Facility. Subject to certain limitations and exceptions, the Credit Facilities are secured by certain collateral, including liens on certain route authorities to operate between certain specified cities, certain take-off and landing rights at certain airports and American is required to maintain a certain minimum ratio of appraised value of the collateral to the outstanding loans under the Credit Facilities as more fully described below in "Collateral Related Covenants". |
The Credit Facilities contain events of default customary for similar financings, including cross-acceleration to other material indebtedness. Upon the occurrence of an event of default, the outstanding obligations under the Credit Facilities may be accelerated and become due and payable immediately. The Credit Facilities also include covenants that, among other things, require AAG and its restricted subsidiaries to maintain a minimum aggregate liquidity (as defined in the Credit Agreement) of not less than $2.0 billion and limit the ability of AAG and its restricted subsidiaries to pay dividends and make certain other payments, make certain investments, incur additional indebtedness, incur liens on the collateral, dispose of the collateral, enter into certain affiliate transactions and engage in certain business activities, in each case subject to certain exceptions. |
Senior Secured Notes (American) |
In March 2011, American issued $1.0 billion aggregate principal amount of senior secured notes due 2016 (the Senior Secured Notes) guaranteed on an unsecured basis by AAG. In connection with the closing of the Merger, US Airways and US Airways Group entered into a First Supplemental Indenture, dated as of December 9, 2013, pursuant to which US Airways and US Airways Group became guarantors. The Senior Secured Notes bear interest at a rate of 7.50% per annum, payable semi-annually on March 15 and September 15 of each year, beginning September 15, 2011. As is customary for financings of this nature, the indebtedness evidenced by the Senior Secured Notes may be accelerated upon the occurrence of events of default under the related indenture. Subject to certain limitations and exceptions, the Senior Secured Notes are secured by certain route authorities, airport landing and takeoff slots, and rights to use or occupy space in airport terminals, in each case that American uses to operate non-stop services between certain airports and American is required maintain a certain minimum ratio of appraised value of the collateral to the outstanding amounts under the Senior Secured Notes as more fully described below in "Collateral Related Covenants." |
American, at its option, may redeem some or all of the Senior Secured Notes at any time on or after March 15, 2013, at specified redemption prices, plus accrued and unpaid interest, if any. In addition, at any time prior to March 15, 2013, American, at its option, may redeem some or all of the Senior Secured Notes at a redemption price equal to 100% of their principal amount plus a "make-whole" premium and accrued and unpaid interest, if any. In addition, at any time prior to March 15, 2014, American, at its option, may redeem (1) up to 35% of the aggregate principal amount of the Senior Secured Notes with the proceeds of certain equity offerings at a redemption price of 107.5% of their principal amount, plus accrued and unpaid interest, if any, and (2) during any 12-month period, up to 10% of the original aggregate principal amount of the Senior Secured Notes at a redemption price of 103% of their principal amount, plus accrued and unpaid interest, if any. If American sells certain assets or if a "change of control" (as defined in the indenture) occurs, American must offer to repurchase the Senior Secured Notes at prices specified in the indenture. |
The indenture for the Senior Secured Notes includes covenants that, among other things, limit the ability of the Company and its subsidiaries to merge, consolidate, sell assets, incur additional indebtedness, issue preferred stock, make investments and pay dividends. The indenture for the Senior Secured Notes also contains events of default customary for similar financings, including cross-default to certain material indebtedness of American. Upon the occurrence of certain events of default, the Senior Secured Notes may be accelerated and become due and payable. |
Senior Convertible Notes (AMR Corporation) |
On November 29, 2013, the substantially all holders of AMR Corporation's 6.25% senior convertible notes elected to convert their notes into shares of AMR common stock (as an allowed AMR equity interest). Notes for which conversion was not elected prior to the deadline of November 29, 2013 remain in the pool of general unsecured claims to be settled pursuant to the Plan. |
Other Financing Transactions (American) |
In June 2013, American remarketed approximately $216 million of Tulsa Municipal Airport Revenue Refunding Bonds Trust Series 2000B, 2001A, and 2001B due June 1, 2035 (Series 2000B) and December 1, 2035 (Series 2001 A&B). |
Citibank Advanced Purchase Agreement (American) |
In 2009, American entered into an arrangement under which Citibank paid to American $1.0 billion in order to pre-purchase AAdvantage Miles (the Pre-Purchase Miles) under American's AAdvantage frequent flier loyalty program (the Pre-Purchase). Approximately $890 million of the Pre-Purchase proceeds was accounted for as a loan from Citibank with the remaining $110 million recorded as Deferred Revenue in Other liabilities and deferred credits. |
To effect the Pre-Purchase, American and Citibank entered into an Amended and Restated AAdvantage Participation Agreement (as so amended and restated, the Amended Participation Agreement). Under the Amended Participation Agreement, American agreed that it would apply in equal monthly installments, over a five year period beginning on January 1, 2012, the Pre-Purchase Miles to Citibank cardholders' AAdvantage accounts. |
Pursuant to the Pre-Purchase, Citibank has been granted a first-priority lien on certain of American's AAdvantage program assets. Commencing on December 31, 2011, American has the right to repay in cash, without premium or penalty, any or all of the amounts owed to Citibank that have not already been satisfied by the award of Pre-Purchase Miles to Citibank cardholders' accounts. American is also obligated, in certain circumstances (including certain specified termination events under the Amended Participation Agreement, certain cross defaults and cross acceleration events, and if any Pre-Purchase Miles remain at the end of the term) to repay in cash all outstanding amounts owed Citibank. |
The Amended Participation Agreement includes provisions that grant Citibank the right to use Pre-Purchase Miles on an accelerated basis under specified circumstances. |
2013 Citicorp Credit Facility (US Airways) |
US Airways Group and certain other subsidiaries of US Airways Group are guarantors of the 2013 Citicorp Credit Facility agreement dated as of May 23, 2013. In connection with the closing of the Merger, AAG and American entered into a joinder to the 2013 Citicorp Credit Facility loan agreement pursuant to which AAG and American became guarantors under such agreement. |
The 2013 Citicorp Credit Facility consists of $1.0 billion of tranche B-1 term loans (Tranche B-1) and $600 million of tranche B-2 term loans (Tranche B-2). Voluntary prepayments may be made by US Airways Group at any time, with a premium of 1.00% applicable to certain prepayments made prior to the date that is six months following January 16, 2014. Mandatory prepayments of the term loans are required to the extent necessary to comply with US Airways Group’s covenants regarding the collateral coverage ratio and certain dispositions of collateral. In addition, under the 2013 Citicorp Credit Facility agreement, if a "change of control" (as defined in the 2013 Citicorp Credit Facility agreement) occurs, US Airways will (absent an amendment or waiver) be required to repay the outstanding loans in full together with accrued interest thereon to the date of such prepayment. |
The 2013 Citicorp Credit Facility agreement bears interest at an index rate plus an applicable index margin or, at US Airways' option, LIBOR (subject to an original floor of 1.00%) plus an applicable LIBOR margin. As of December 31, 2013, the interest rate was 4.00% based on a 3.00% LIBOR margin for Tranche B-1 and 3.25% based on a 2.25% LIBOR margin for Tranche B-2. |
In January 2014, US Airways amended the 2013 Citicorp Credit Facility agreement to lower the applicable LIBOR margin from 3.00% to 2.75% for Tranche B-1. In addition, the LIBOR floor was reduced from 1.00% to 0.75% on both Tranche B-1 and Tranche B-2. |
Tranche B-1 and Tranche B-2 mature on May 23, 2019 and November 23, 2016, respectively (unless otherwise extended by the applicable parties), and each is repayable in annual installments to be paid on each anniversary of the closing date in an amount equal to 1.00% of the initial aggregate principal amount of the loans with any unpaid balance due on the maturity date of the respective tranche. |
The obligations of US Airways under the 2013 Citicorp Credit Facility are secured by liens on certain route authorities, certain take-off and landing rights at certain airports and certain other assets of US Airways. US Airways is required to maintain a certain minimum ratio of appraised value of the collateral to the outstanding loans under the 2013 Citicorp Credit Facility agreement as more fully described below in "Collateral Related Covenants". |
The 2013 Citicorp Credit Facility agreement includes affirmative, negative and financial covenants that, among other things, (a) require AAG and its restricted subsidiaries to maintain unrestricted liquidity of not less than $2.0 billion, with not less than $750 million held in accounts subject to control agreements, and (b) restrict the ability of US Airways Group, its subsidiaries party to the 2013 Citicorp Credit Facility, AAG and American to make certain investments, pay dividends and make certain other payments, make certain acquisitions, incur liens on the collateral, dispose of collateral, enter into certain affiliate transactions, enter into certain hedging transactions, and engage in certain business activities, in each case subject to certain exceptions. The 2013 Citicorp Credit Facility agreement contains events of default customary for similar financings, including a cross default provision to certain other material indebtedness of US Airways and certain of its affiliates. Upon the occurrence of an event of default, the outstanding obligations under the 2013 Citicorp Credit Facility may be accelerated and become due and payable immediately. |
2013-1 EETCs (US Airways) |
In April 2013, US Airways created two pass-through trusts which issued approximately $820 million aggregate face amount of Series 2013-1 Class A and Class B EETCs in connection with the financing of 18 Airbus aircraft scheduled to be delivered from September 2013 to June 2014. The 2013-1 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 balance sheet because the proceeds held by the depository are not US Airways' assets. |
As of December 31, 2013, $261 million of the escrowed proceeds from the 2013-1 EETCs have been used to purchase equipment notes issued by US Airways in two series: Series A equipment notes in the amount of $198 million bearing interest at 3.95% per annum and Series B equipment notes in the amount of $63 million bearing interest at 5.375% per annum. Interest on the equipment notes is payable semiannually in May and November of each year, and began in November 2013. Principal payments on the equipment notes are scheduled to begin in November 2014. The final payments on the Series A and Series B equipment notes will be due in November 2025 and November 2021, 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 finance six Airbus aircraft delivered in 2013. The equipment notes are secured by liens on aircraft. The remaining $559 million of escrowed proceeds will be used to purchase equipment notes as new aircraft are delivered. |
2012-2 EETCs (US Airways) |
The net proceeds from the issuance of the 2012-2 EETCs were used to purchase equipment notes issued by US Airways in three series: Series A equipment notes in the amount of $418 million bearing interest at 4.625% per annum, Series B equipment notes in the amount of $128 million bearing interest at 6.75% per annum and Series C equipment notes in the amount of $100 million bearing interest at 5.45% per annum. Interest on the equipment notes is payable semiannually in June and December of each year and began in June 2013 for Series A and Series B, and December 2013 for Series C. Principal payments on the Series A and Series B equipment notes began in December 2013. The final payments on the Series A equipment notes, Series B equipment notes and Series C equipment notes will be due in June 2025, June 2021 and June 2018, respectively. US Airways' payment obligations under the equipment notes are fully and unconditionally guaranteed by US Airways Group. The only principal payments due on the Series C equipment notes are the principal payments that will be due on the final payment date. The net proceeds from the issuance of these equipment notes were used to finance 11 Airbus aircraft delivered from May 2013 through October 2013. The equipment notes are secured by liens on aircraft. |
2012-1 EETCs (US Airways) |
In the first quarter of 2013, US Airways issued $183 million of equipment notes in three series under its 2012-1 EETCs completed in May 2012: Series A equipment notes in the amount of $111 million bearing interest at 5.90% per annum, Series B equipment notes in the amount of $37 million bearing interest at 8% per annum and Series C equipment notes in the amount of $35 million bearing interest at 9.125% per annum. The equipment notes are secured by liens on aircraft. |
Industrial Development Revenue Bonds (US Airways) |
The industrial development revenue bonds are due April 2023. Interest at 6.30% is payable semiannually on April 1 and October 1. The bonds are subject to optional redemption prior to the maturity date, in whole or in part, on any interest payment date at a redemption price of 100%. |
6.125% Senior Notes (US Airways) |
The 6.125% Senior Notes bear interest at a rate of 6.125% per annum, which is payable semi-annually on each June 1 and December 1 and began December 1, 2013. The 6.125% senior notes mature on June 1, 2018 and are fully and unconditionally guaranteed by US Airways. In connection with the closing of the Merger, AAG and American provided a full and unconditional guarantee of the payment obligations of US Airways Group under the 6.125% senior notes. The 6.125% senior notes are general unsecured senior obligations of the Company. |
7.25% Convertible Notes (US Airways) |
The 7.25% notes bear interest at a rate of 7.25% per annum, which shall be payable semi-annually in arrears on each May 15 and November 15. The 7.25% notes mature on May 15, 2014. |
In connection with the closing of the Merger the 7.25% notes have become convertible into cash, shares of AAG Common Stock or a combination thereof at the Company's election. AAG fully and unconditionally guaranteed all of the payment obligations of US Airways Group under the 7.25% notes. |
Holders may convert their 7.25% notes at their option at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date for the 7.25% notes. The initial conversion rate for the 7.25% notes is 218.8184 shares of common stock per $1,000 principal amount of notes (equivalent to an initial conversion price of $4.57 per share). Such conversion rate is subject to adjustment in certain events. |
As the 7.25% notes can be settled in cash upon conversion, for accounting purposes, the 7.25% notes were bifurcated into a debt component that was initially recorded at fair value and an equity component. The following table details the debt and equity components recognized related to the 7.25% notes (in millions): |
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| December 31, 2013 | | | | | | | | | | | | | | | | | | | | | | | | | |
Principal amount of 7.25% convertible senior notes | $ | 22 | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Unamortized discount on debt | — | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net carrying amount of 7.25% convertible senior notes | 22 | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Additional paid-in capital | $ | 88 | | | | | | | | | | | | | | | | | | | | | | | | | | |
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At December 31, 2013, the remaining period over which the unamortized discount will be recognized is 0.4 years. |
At December 31, 2013, the if-converted value of the 7.25% notes exceeded the principal amount by $101 million. |
Collateral Related Covenants |
Certain of American's and US Airways’ debt financing agreements contain loan to value ratio covenants and require American and US Airways under their respective financing agreements to periodically appraise the collateral. Pursuant to such agreements, if the loan to value ratio exceeds a specified threshold, American or US Airways is required, as applicable, to subject additional qualifying collateral (which in some cases may include cash collateral), or pay down such financing, in whole or in part, with premium (if any), or pay additional interest on the related indebtedness, as described below. |
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Specifically, American is required to meet certain collateral coverage tests on a periodic basis on two financing transactions: (1) the Senior Secured Notes and (2) the Credit Facilities, and US Airways is required to meet a collateral coverage test on a periodic basis on the 2013 Citicorp Credit Facility, in each case as described below: |
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| Senior Secured Notes | Credit Facilities | 2013 Citicorp Credit Facility | | | | | | | | | | | | | | | | | | | | | | | | | |
Frequency of Appraisals of Appraised Collateral | Semi-Annual | Semi-Annual | Once per Fiscal Year 1 | | | | | | | | | | | | | | | | | | | | | | | | | |
(June and December) | (June and December) | | | | | | | | | | | | | | | | | | | | | | | | | |
LTV Requirement | 1.5x Collateral valuation to | 1.6x Collateral valuation to | 1.5x Collateral valuation to | | | | | | | | | | | | | | | | | | | | | | | | | |
amount of debt outstanding (equivalent to maximum LTV of 67%); failure to meet collateral test results in American paying 2% additional interest until the ratio is at least 1.5x; additional collateral can be posted, or debt repaid, to meet this test | amount of debt outstanding | amount of debt outstanding (equivalent to maximum LTV of 67%); if collateral test is not met, US Airways must deposit additional unrestricted cash, post additional collateral, repay debt or any combination of the foregoing until the test is met | | | | | | | | | | | | | | | | | | | | | | | | | |
| (equivalent to maximum LTV of 62.5%); if collateral test is not met, American must post additional collateral and/or repay debt until the test is met | | | | | | | | | | | | | | | | | | | | | | | | | | |
LTV as of Last Measurement Date | 38.80% | 33.80% | 60.70% | | | | | | | | | | | | | | | | | | | | | | | | | |
Collateral Description | Generally, certain route authorities, Slots, and rights to airport facilities used by American to operate certain services between the U.S. and London Heathrow, Tokyo Narita/Haneda, and China | Generally, certain route authorities, Slots, and rights to airport facilities used by American to operate all services between the U.S. and South America | Generally, certain route authorities, certain Slots (e.g., Washington Reagan, LaGuardia and London), accounts receivable, certain engines, certain spare parts and ground service equipment, certain simulators, certain leasehold real estate assets and cash | | | | | | | | | | | | | | | | | | | | | | | | | |
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-1 | With respect to spare parts, one physical appraisal and one desktop appraisal are required in each fiscal year. | | | | | | | | | | | | | | | | | | | | | | | | | | | |
At December 31, 2013, the Company was in compliance with the most recently completed collateral coverage tests for the Senior Secured Notes, the Credit Facilities and the 2013 Citicorp Credit Facility. |
Cash payments for interest, net of capitalized interest, were $713 million, $485 million and $747 million for 2013, 2012 and 2011, respectively. |
AA [Member] | ' |
Debt Instrument [Line Items] | ' |
Indebtedness | ' |
Indebtedness and Leases |
Long-term debt and capital lease obligations included in the Consolidated Balance Sheets consisted of (in millions): |
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| 31-Dec-13 | | 31-Dec-12 | | | | | | | | | | | | | | | | | | | | | |
Secured | | | | | | | | | | | | | | | | | | | | | | | | |
Secured variable and fixed rate indebtedness due through 2023 (effective rates from 1.00%-9.00% at December 31, 2013) | $ | 2,111 | | | $ | 3,297 | | | | | | | | | | | | | | | | | | | | | | |
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Enhanced equipment trust certificates (EETCs) due through 2025 (fixed rates from 4.00%-7.00% at December 31, 2013) | 3,516 | | | 1,741 | | | | | | | | | | | | | | | | | | | | | | |
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7.00%-8.50% special facility revenue bonds due through 2031 | 1,282 | | | 1,313 | | | | | | | | | | | | | | | | | | | | | | |
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Senior secured credit facility due 2019 (rate of 3.75% at December 31, 2013) | 1,882 | | | — | | | | | | | | | | | | | | | | | | | | | | |
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7.50% senior secured notes due 2016 | 1,000 | | | 1,000 | | | | | | | | | | | | | | | | | | | | | | |
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AAdvantage Miles advance purchase (net of discount of $40 million) (effective rate 8.30%) | 611 | | | 772 | | | | | | | | | | | | | | | | | | | | | | |
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Other secured obligations, fixed interest rates ranging from 5.20% to 12.20%, maturing from 2014 - 2035 | 380 | | | 412 | | | | | | | | | | | | | | | | | | | | | | |
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| 10,782 | | | 8,535 | | | | | | | | | | | | | | | | | | | | | | |
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Unsecured | | | | | | | | | | | | | | | | | | | | | | | | |
Affiliate unsecured obligations | 27 | | | 27 | | | | | | | | | | | | | | | | | | | | | | |
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| 27 | | | 27 | | | | | | | | | | | | | | | | | | | | | | |
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Total long-term debt and capital lease obligations | 10,809 | | | 8,562 | | | | | | | | | | | | | | | | | | | | | | |
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Less current maturities | 957 | | | 1,419 | | | | | | | | | | | | | | | | | | | | | | |
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Long-term debt and capital lease obligations, less current maturities | $ | 9,852 | | | $ | 7,143 | | | | | | | | | | | | | | | | | | | | | | |
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For information regarding the liabilities subject to compromise as of December 31, 2012, see Note 2 to American's Consolidated Financial Statements. |
Indebtedness |
Secured financings are collateralized by assets, primarily aircraft, engines, simulators, hangar and maintenance facilities, route authorities and airport Slots. At December 31, 2013, the maturities of long-term debt and capital leases are as follows (in millions): |
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| | 2014 | | 2015 | | 2016 | | 2017 | | 2018 | | 2019 and Thereafter | | Total |
Total Principal Amount | | $ | 957 | | | $ | 880 | | | $ | 1,801 | | | $ | 846 | | | $ | 722 | | | $ | 5,646 | | | $ | 10,852 | |
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At December 31, 2013, the Company was operating 28 jet aircraft under capital leases. Leases can generally be renewed at rates based on fair market value at the end of the lease term for a number of additional years. |
As of December 31, 2013, AAG had issued guarantees covering approximately $1.3 billion of American's tax-exempt bond debt (and interest thereon) and $4.7 billion of American's secured debt (and interest thereon). |
In connection with the Merger and pursuant to the Plan on December 9, 2013, (i) American entered into a joinder to loan agreement and became an obligor of US Airways Group's $1.6 billion 2013 Citicorp credit facilities and (ii) American entered into a second supplemental indenture that guaranteed the payment obligations associated with the US Airways Group's 6.125% Notes, due in 2018. |
2013-1 EETCs |
On March 12, 2013, American closed its private offering of two tranches of enhanced equipment trust certificates (the Series 2013-1A/B EETCs) in the aggregate face amount of $664 million. The Series 2013-1A/B EETCs are comprised of a senior tranche of Class A Certificates with an interest rate of 4.00% per annum and a final expected distribution date of July 15, 2025, and a junior tranche of Class B Certificates with an interest rate of 5.625% per annum and a final expected distribution date of January 15, 2021. The Series 2013-1A/B EETCs represent an interest in the assets of two separate pass through trusts, each of which hold equipment notes issued by American. Interest on the issued and outstanding equipment notes will be payable semiannually on January 15 and July 15 of each year, commencing on July 15, 2013, and principal on such equipment notes is scheduled for payment on January 15 and July 15 of certain years, commencing on January 15, 2014. As of December 31, 2013, the equipment notes are secured by eight currently owned Boeing 737-823 aircraft, one currently owned Boeing 777-223ER aircraft, and four currently owned Boeing 777-323ER aircraft. The certificates were offered in the U.S. to qualified institutional buyers, as defined in, and in reliance on, Rule 144A under the Securities Act of 1933, as amended (the Securities Act). |
On June 5, 2013, American closed its private offering of Class C enhanced equipment trust certificates (the Series 2013-1C EETCs) in the aggregate face amount of $120 million. The Series 2013-1C EETCs rank junior to the Series 2013-1A/B EETCs. The Series 2013-1C EETCs were issued with an interest rate of 6.125% per annum and a final expected distribution date of July 15, 2018. The 2013-1C EETCs represent an interest in the assets of a separate pass through trust, which will hold certain equipment notes issued by American. The Series 2013-1C EETCs are secured by the same aircraft securing the Series 2013-1A/B EETCs. The certificates were offered in the U.S. to qualified institutional buyers, as defined in, and in reliance on, Rule 144A under the Securities Act. |
2013-2 EETCs |
American filed a motion with the Bankruptcy Court on October 9, 2012, requesting entry of an order authorizing American to, among other things: (i) obtain post-petition financing in an amount of up to $1.5 billion secured on a first priority basis by, among other things, up to 41 Boeing 737-823 aircraft, 14 Boeing 757-223 aircraft, one Boeing 767-323ER aircraft and 19 Boeing 777-223ER aircraft as part of a new enhanced equipment trust certificate (EETC) financing (the Refinancing EETC) to be offered pursuant to Rule 144A under the Securities Act, and (ii) use cash on hand (including proceeds of the Refinancing EETC) to indefeasibly repay the existing pre-petition obligations secured by such aircraft, as applicable, which are currently financed through, as the case may be, an EETC financing entered into by American in July 2009 (the Series 2009-1 Pass Through Certificates), a secured notes financing entered into by American in July 2009 (the 2009-2 Senior Secured Notes) and an EETC financing entered into by American in October 2011 (the Series 2011-2 Pass Through Certificates and, together with the Series 2009-1 Pass Through Certificates and the 2009-2 Senior Secured Notes, the Existing Financings), in each case without the payment of any make-whole amount or other premium or prepayment penalty. |
The Bankruptcy Court approved the motion on January 17, 2013 and entered an order (the EETC Order) to such effect on February 1, 2013. The trustees for the Existing Financings appealed the EETC Order and judgments rendered in certain related adversary proceedings. The appeals (the Appeals) were briefed and oral argument before the United States Court of Appeals for the Second Circuit (the Second Circuit) was heard on June 20, 2013. On September 12, 2013, the Second Circuit fully affirmed the Company's right to repay the Existing Financings without the payment of any make-whole amount or other premium or prepayment penalty. On September 26, 2013, the trustees for the Existing Financings filed a petition for an en banc rehearing of the Appeals by the Second Circuit. On November 18, 2013, the Second Circuit denied such request for rehearing. On February 12, 2014, the trustees for the Existing Financings filed a petition for certiorari to the Supreme Court. American intends to continue to assert vigorously its right to repay the Existing Financings without the payment of any make-whole amounts or other premium or prepayment penalty. |
On July 31, 2013, American closed its private offering of the Refinancing EETC (the Series 2013-2A EETC) in the aggregate face amount of $1.4 billion with an interest rate of 4.95% per annum and a final expected distribution date of January 15, 2023. In September 2013, American repaid the Existing Financings, including securities tendered to the Company under a tender offer for the Existing Financings that commenced on June 27, 2013, and received the proceeds from the Series 2013-2A EETC. In conjunction with the repayment of the Existing Financings, American incurred cash charges of $19 million, included in Interest expense, net of capitalized interest and a charge of $54 million, included in Miscellaneous, net, of which $21 million is cash, related to the premium on tender for the Existing Financings, and $33 million is non-cash, related to the write-off of unamortized issuance costs. The 2013-2A EETC represents an interest in the assets of a separate pass through trust, which will hold certain equipment notes issued by American. The Series 2013-2A EETC is secured by the same aircraft previously used to secure the Existing Financings. The certificates were offered in the U.S. to qualified institutional buyers, as defined in, and in reliance on, Rule 144A under the Securities Act. |
On November 27, 2013, American closed its private offering of Class B enhanced equipment trust certificates (the Series 2013-2B EETCs) in the aggregate face amount of $512 million. The Series 2013-2B EETCs rank junior to the Series 2013-2A EETCs. The Series 2013-2B EETCs were issued with an interest rate of 5.60% per annum and a final expected distribution date of July 15, 2020. The 2013-2C EETCs represent an interest in the assets of a separate pass through trust, which will hold certain equipment notes issued by American. The Series 2013-2B EETCs are secured by the same aircraft securing the Series 2013-2A EETCs. The certificates were offered in the U.S. to qualified institutional buyers, as defined in, and in reliance on, Rule 144A under the Securities Act. |
On December 20, 2013, American closed its private offering of Class C enhanced equipment trust certificates (the Series 2013-2C EETCs) in the aggregate face amount of $256 million. The Series 2013-2C EETCs generally rank junior to the Series 2013-2A and 2B EETCs. The Series 2013-2C EETCs were issued with an interest rate of 6.00% per annum and a final expected distribution date of January 15, 2017. The 2013-2C EETCs represent an interest in the assets of a separate pass through trust, which will hold certain equipment notes issued by American. The Series 2013-2C EETCs are secured by the same aircraft securing the Series 2013-2A and 2B EETCs. The certificates were offered in the U.S. to qualified institutional buyers, as defined in, and in reliance on, Rule 144A under the Securities Act. |
Credit Facilities |
On June 27, 2013, American and AAG entered into a Credit and Guaranty Agreement (as amended, the Credit Agreement) with certain lenders. The Credit Agreement provides for a $1.9 billion term loan facility (the Term Loan Facility) and a $1.0 billion revolving credit facility (the Revolving Facility and, together with the Term Loan Facility, the Credit Facilities). As of December 31, 2013, American had borrowed $1.9 billion under the Term Loan Facility. The Credit Facilities are secured obligations of American and guaranteed by AAG. The Revolving Facility provides that American may from time to time borrow, repay and reborrow loans thereunder and have letters of credit issued thereunder in an aggregate amount outstanding at any time of up to $1.0 billion. As of December 31, 2013, there were no borrowings outstanding under the Revolving Facility. |
Upon consummation of the Merger, US Airways Group and US Airways joined the Credit Facilities as guarantors. Following the joinder, certain minimum dollar-thresholds under the negative and financial covenants in the Credit Facilities were automatically increased. The Term Loan Facility and Revolving Facility mature on June 27, 2019 and June 27, 2018, respectively, unless otherwise extended by the applicable parties. The Term Loan Facility is repayable in quarterly installments in an amount equal to 0.25% of the original principal amount thereof with any unpaid balance due on the maturity date of the Term Loan Facility. |
Voluntary prepayments may be made by American at any time, with a premium of 1.00% applicable to certain prepayments made prior to the date that is six months following December 27, 2013. Mandatory prepayments at par of term loans and revolving loans are required to the extent necessary to comply with American's covenants regarding the collateral coverage ratio and certain dispositions of collateral. In addition, if a "change of control" (as defined in the Credit Agreement) occurs, American will, absent an amendment or waiver, be required to repay at par the loans outstanding under the Credit Facilities and terminate the Revolving Facility. |
The Credit Facilities bear interest at an index rate plus an applicable index margin or, at American's option, LIBOR (subject to a floor of 0.75% with respect to the Term Loan) plus an applicable LIBOR margin. The applicable LIBOR margin is 3.00% for borrowings under both the Term Loan Facility and the Revolving Facility. Subject to certain limitations and exceptions, the Credit Facilities are secured by certain collateral, including liens on certain route authorities to operate between certain specified cities, certain take-off and landing rights at certain airports and American is required to maintain a certain minimum ratio of appraised value of the collateral to the outstanding loans under the Credit Facilities as more fully described below in "Collateral Related Covenants". |
The Credit Facilities contain events of default customary for similar financings, including cross-acceleration to other material indebtedness. Upon the occurrence of an event of default, the outstanding obligations under the Credit Facilities may be accelerated and become due and payable immediately. The Credit Facilities also include affirmative, negative, and financial covenants that, among other things, require AAG and its restricted subsidiaries to maintain a minimum aggregate liquidity (as defined in the Credit Agreement) of not less than $2.0 billion and limit the ability of AAG and its restricted subsidiaries, including American, to pay dividends and make certain other payments, make certain investments, incur additional indebtedness, incur liens on the collateral, dispose of the collateral, enter into certain affiliate transactions and engage in certain business activities, in each case subject to certain exceptions. |
Senior Secured Notes |
In March 2011, American issued $1.0 billion aggregate principal amount of senior secured notes due 2016 (the Senior Secured Notes) guaranteed on an unsecured basis by AAG. In connection with the closing of the Merger, US Airways and US Airways Group entered into a First Supplemental Indenture, dated as of December 9, 2013, pursuant to which US Airways and US Airways Group became guarantors. The Senior Secured Notes bear interest at a rate of 7.50% per annum, payable semi-annually on March 15 and September 15 of each year, beginning September 15, 2011. As is customary for financings of this nature, the indebtedness evidenced by the Senior Secured Notes may be accelerated upon the occurrence of events of default under the related indenture. Subject to certain limitations and exceptions, the Senior Secured Notes are secured by certain route authorities, airport landing and takeoff slots, and rights to use or occupy space in airport terminals, in each case that American uses to operate non-stop services between certain airports and American is required maintain a certain minimum ratio of appraised value of the collateral to the outstanding amounts under the Senior Secured Notes as more fully described above in "Collateral Related Covenants." |
American, at its option, may redeem some or all of the Senior Secured Notes at any time on or after March 15, 2013, at specified redemption prices, plus accrued and unpaid interest, if any. In addition, at any time prior to March 15, 2013, American, at its option, may redeem some or all of the Senior Secured Notes at a redemption price equal to 100% of their principal amount plus a "make-whole" premium and accrued and unpaid interest, if any. In addition, at any time prior to March 15, 2014, American, at its option, may redeem (1) up to 35% of the aggregate principal amount of the Senior Secured Notes with the proceeds of certain equity offerings at a redemption price of 107.5% of their principal amount, plus accrued and unpaid interest, if any, and (2) during any 12-month period, up to 10% of the original aggregate principal amount of the Senior Secured Notes at a redemption price of 103% of their principal amount, plus accrued and unpaid interest, if any. If American sells certain assets or if a "change of control" (as defined in the indenture) occurs, American must offer to repurchase the Senior Secured Notes at prices specified in the indenture. |
The indenture for the Senior Secured Notes includes covenants that, among other things, limit the ability of the Company and its subsidiaries to merge, consolidate, sell assets, incur additional indebtedness, issue preferred stock, make investments and pay dividends. The indenture for the Senior Secured Notes also contains events of default customary for similar financings, including cross-default to certain material indebtedness of American. Upon the occurrence of certain events of default, the Senior Secured Notes may be accelerated and become due and payable. |
Other Financing Transactions |
In June 2013, American also remarketed approximately $216 million of Tulsa Municipal Airport Revenue Refunding Bonds Trust Series 2000B, 2001A, and 2001B due June 1, 2035 (Series 2000B) and December 1, 2035 (Series 2001 A&B). |
Citibank Advanced Purchase Agreement |
In 2009, American entered into an arrangement under which Citibank paid to American $1.0 billion in order to pre-purchase AAdvantage Miles (the Pre-Purchase Miles) under American's AAdvantage frequent flier loyalty program (the Pre-Purchase). Approximately $890 million of the Pre-Purchase proceeds was accounted for as a loan from Citibank with the remaining $110 million recorded as Deferred Revenue in Other liabilities and deferred credits. |
To effect the Pre-Purchase, American and Citibank entered into an Amended and Restated AAdvantage Participation Agreement (as so amended and restated, the Amended Participation Agreement). Under the Amended Participation Agreement, American agreed that it would apply in equal monthly installments, over a five year period beginning on January 1, 2012, the Pre-Purchase Miles to Citibank cardholders' AAdvantage accounts. |
Pursuant to the Pre-Purchase, Citibank has been granted a first-priority lien on certain of American's AAdvantage program assets. Commencing on December 31, 2011, American has the right to repay in cash, without premium or penalty, any or all of the amounts owed to Citibank that have not already been satisfied by the award of Pre-Purchase Miles to Citibank cardholders' accounts. American is also obligated, in certain circumstances (including certain specified termination events under the Amended Participation Agreement, certain cross defaults and cross acceleration events, and if any Pre-Purchase Miles remain at the end of the term) to repay in cash all outstanding amounts owed Citibank. |
The Amended Participation Agreement includes provisions that grant Citibank the right to use Pre-Purchase Miles on an accelerated basis under specified circumstances. |
Collateral Related Covenants |
Certain of American's debt financing agreements contain loan to value ratio covenants and require American to periodically appraise the collateral. Pursuant to such agreements, if the loan to value ratio exceeds a specified threshold, American is required, as applicable, to subject additional qualifying collateral (which in some cases may include cash collateral), or pay down such financing, in whole or in part, with premium (if any), or pay additional interest on the related indebtedness, as described below. |
Specifically, American is required to meet certain collateral coverage tests on a periodic basis on two financing transactions: (1) the Senior Secured Notes and (2) Credit Facilities, as described below: |
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| Senior Secured Notes | Credit Facilities | | | | | | | | | | | | | | | | | | | | | | | | | | |
Frequency of Appraisals of Appraised Collateral | Semi-Annual | Semi-Annual | | | | | | | | | | | | | | | | | | | | | | | | | | |
(June and December) | (June and December) | | | | | | | | | | | | | | | | | | | | | | | | | | |
LTV Requirement | 1.5x Collateral valuation to | 1.6x Collateral valuation to | | | | | | | | | | | | | | | | | | | | | | | | | | |
amount of debt outstanding (equivalent to maximum LTV of 67%); failure to meet collateral test results in American paying 2% additional interest until the ratio is at least 1.5x; additional collateral can be posted, or debt repaid, to meet this test | amount of debt outstanding | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (equivalent to maximum LTV of 62.5%); if collateral test is not met, American must post additional collateral and/or repay debt until the test is met | | | | | | | | | | | | | | | | | | | | | | | | | | |
LTV as of Last Measurement Date | 38.80% | 33.80% | | | | | | | | | | | | | | | | | | | | | | | | | | |
Collateral Description | Generally, certain route authorities, Slots, and rights to airport facilities used by American to operate certain services between the U.S. and London Heathrow, Tokyo Narita/Haneda, and China | Generally, certain route authorities, Slots, and rights to airport facilities used by American to operate all services between the U.S. and South America | | | | | | | | | | | | | | | | | | | | | | | | | | |
At December 31, 2013, American was in compliance with the most recently completed collateral coverage tests for the Senior Secured Notes and Credit Facilities. |
Cash payments for interest, net of capitalized interest, were $706 million, $498 million and $628 million for 2013, 2012 and 2011, respectively. |