Registration No. 333-79825
Filed with the Securities and Exchange Commission on July 14, 1999
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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US AIRWAYS, INC.
(Exact name of registrant as specified in its charter)
State of Incorporation: Delaware
2345 Crystal Drive, Arlington, Virginia 22227 (Address
of principal executive offices)
(703) 872-7000
(Registrant's telephone number, including area code)
(I.R.S. Employer Identification No.: 53-0218143)
US AIRWAYS GROUP, INC.
(Exact name of registrant as specified in its charter)
State of Incorporation: Delaware
2345 Crystal Drive, Arlington, Virginia 22227 (Address
of principal executive offices)
(703) 872-5306
(Registrant's telephone number, including area code)
(I.R.S. Employer Identification No.: 54-1194634)
Thomas A. Mutryn Copies to:
Senior Vice President - Finance and Lawrence M. Nagin
Chief Financial Officer Executive Vice President-
US Airways, Inc. Corporate Affairs
US Airways Group, Inc. and General Counsel
2345 Crystal Drive US Airways, Inc.
Arlington, Virginia 22227 2345 Crystal Drive
(703) 872-7000 Arlington, Virginia 22227
(Name, address, including zip code, and (703) 872-7000
telephone number, including area code,
of agent for service) Seth E. Jacobson
Skadden, Arps, Slate, Meagher
& Flom (Illinois)
333 W. Wacker Dr.
Chicago, Illinois 60606
(312) 407-0700
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From
time to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check
the following box. |_|
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. [x]
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to
Rule 434 under the Securities Act, please check the following box. |_|
Pursuant to Rule 429 under the Securities Act of 1933, the
prospectus set forth herein also relates to securities registered pursuant
to the prior registration statement.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANTS WILL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT
THIS REGISTRATION STATEMENT WILL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT WILL BECOME EFFECTIVE ON SUCH DATE AS THE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
[FLAG]
The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these securities and it is not soliciting an offer to buy
these securities in any state where the offer or sale is not
permitted.
Subject to Completion, dated July 14, 1999
PROSPECTUS
$1,500,000,000
US AIRWAYS, INC.
US AIRWAYS GROUP, INC.
PASS THROUGH CERTIFICATES
This prospectus relates to pass through certificates to be
issued by one or more trusts that we will form, as creator of each pass
through trust, and a national or state bank or trust company, as trustee.
The trustee will hold all property owned by a trust in trust for the
benefit of holders of pass through certificates issued by that trust. Each
pass through certificate issued by a trust will represent a beneficial
interest in all property held by that trust. We will describe the specific
terms of any offering of pass through certificates in a prospectus
supplement to this prospectus. You should read this prospectus and the
applicable prospectus supplement carefully before you invest.
----------------------------
This prospectus may not be used to consummate sales of pass
through certificates unless accompanied by a prospectus supplement.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or
passed upon the adequacy or accuracy of this prospectus. Any representation
to the contrary is a criminal offense.
The date of this prospectus is July __, 1999.
TABLE OF CONTENTS
Forward-Looking Statements ........................................... 1
Summary............................................................... 2
US Airways ........................................................... 6
Ratio of Earnings to Fixed Charges.................................... 7
Use of Proceeds ...................................................... 8
Description of the Certificates ...................................... 8
Description of the Secured Promissory Notes............................ 27
U.S. Income Tax Matters ............................................... 35
ERISA Considerations .................................................. 38
Plan of Distribution................................................... 38
Selling Certificateholders............................................. 40
Legal Opinions ........................................................ 41
Experts ............................................................... 41
Where You Can Find More Information ................................... 41
Incorporation of Certain Documents by Reference ....................... 42
FORWARD-LOOKING STATEMENTS
This prospectus, any prospectus supplement delivered with
this prospectus and the information incorporated by reference include
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. We prepare forward-looking statements using
estimates of future revenues, expenses, activity levels and economic and
market conditions, many of which are outside of our control. These
forward-looking statements involve risks, uncertainties and other factors
that may cause our actual results to differ materially from the results we
discuss in the forward-looking statements. These risks, uncertainties and
other factors include, but are not limited to:
o general economic and business conditions;
o labor costs;
o aviation fuel costs;
o competitive pressures on pricing -- particularly from
lower-cost competitors;
o weather conditions;
o governmental legislation;
o consumer perceptions of our products; and
o demand for air transportation in the markets in which
we operate.
The preparation of forward-looking statements also involves
other factors and assumptions not identified above. If the assumptions used
to prepare the forward-looking statements prove incorrect, the actual
results may differ materially from the results discussed.
SUMMARY
THE OFFERING
This prospectus and each supplement to this prospectus
describe US Airways' offering of pass through trust certificates to help
finance or refinance aircraft that we own or lease. Our parent, US Airways
Group may guarantee some of our obligations relating to the certificates.
For convenience, throughout this prospectus, the words we, us, ours or
similar words refer to US Airways and the words parent, parent guarantor or
other similar words refer to US Airways Group.
The remainder of this prospectus and the related prospectus
supplement will describe the offering of the pass through certificates in
more detail. We will begin by describing the pass through certificates and
the pass through trusts that issue the pass through certificates. We will
also describe the various agreements relating to the certificates. This
prospectus then describes the secured promissory notes that the pass
through trusts will acquire and, in the case of promissory notes secured by
aircraft leased to us, the owner trusts that issue those secured promissory
notes.
CERTIFICATES
We may offer and sell pass through certificates from time to
time by this prospectus. For convenience, we may:
o refer to "pass through certificates" as
"certificates;" and
o refer to the holder of a "pass through certificate"
as a "certificateholder."
Pass through certificates are securities that evidence an
ownership interest in a pass through trust. The holders of the certificates
issued by a pass through trust will be the beneficiaries of that trust. A
certificateholder's beneficial interest in a pass through trust will be a
pro rata interest in the property of that trust equal to the ratio of the
value of all of the certificates owned by the holder to the value of all of
the certificates issued by that trust. Each certificate will represent a
beneficial interest only in the property of the pass through trust that
issued the certificate. A certificate will not represent an interest in, or
rights to, the property of any pass through trust other than the pass
through trust that issued the certificate.
Multiple series of certificates may be issued. If more than
one series of certificates is issued, each series of certificates will be
issued by a separate pass through trust. The economic terms of any series
of certificates will be described in the prospectus supplement relating to
that series of certificates.
The prospectus supplement relating to a series of
certificates will be delivered with this prospectus. The prospectus
supplement will describe, among other things, the property that will be
held by each pass through trust. This property will include promissory
notes secured by aircraft we own or lease. Payments of principal and
interest on the secured promissory notes owned by a pass through trust will
be passed through to holders of certificates issued by that trust in
accordance with the terms of the pass through trust agreement pursuant to
which the trust was formed.
If certificates of any series are entitled to the benefits
of a liquidity facility or other form of credit enhancement, the prospectus
supplement relating to that series will describe the terms of the liquidity
facility or other form of credit enhancement. A liquidity facility is a
revolving credit agreement, letter of credit, bank guarantee, insurance
policy or other instrument or agreement that will increase the likelihood
that the certificateholders will receive timely payments of interest in
respect of the certificates. While a liquidity facility is designed to
increase the likelihood of the timely payment of interest, it is not a
guarantee of the timely or ultimate payment of principal.
We may offer and sell up to $1,500,000,000 of aggregate
initial offering price of certificates pursuant to this prospectus and
related prospectus supplements. The initial offering price may be
denominated in United States dollars or foreign currencies based on the
applicable exchange rate at the time of sale.
PASS THROUGH TRUSTS
We will form a separate pass through trust to issue each
series of certificates. Each pass through trust will be formed by us, as
creator of each pass through trust, and a national or state bank or trust
company, as trustee. Each pass through trust will be governed by a trust
instrument that creates the trust and sets forth the powers of the trustee
and the rights of the beneficiaries. The trust instrument for each pass
through trust will consist of a basic pass through trust agreement among
us, our parent and the pass through trustee and a supplement to the basic
pass through trust agreement. In the event our parent does not guarantee
any certificates, it may be released from the basic pass through trust
agreement.
Unless otherwise stated in a prospectus supplement, State
Street Bank and Trust Company of Connecticut, National Association will be
the trustee of each pass through trust. The performance and obligations of
State Street Bank and Trust Company of Connecticut, N.A., under the pass
through trust agreement will be guaranteed by its parent, State Street Bank
and Trust Company.
Each pass through trust will pass through to holders of its
certificates payments that it receives on the property that it owns. The
property of each pass through trust may consist of:
o secured promissory notes of one or more series; and
o other property described in the applicable prospectus
supplement.
SECURED PROMISSORY NOTES
The secured promissory notes owned by a pass through trust
may consist of any combination of:
o Promissory notes issued by an owner trust and secured
by an aircraft owned by that trust and leased to us.
We refer to these types of secured promissory notes
as leased aircraft notes.
o Promissory notes issued by us and secured by an
aircraft owned by us. We refer to these types of
secured promissory notes as owned aircraft notes.
Leased Aircraft Notes. Except as specified in a prospectus
supplement, leased aircraft notes will be issued by a bank, trust company,
financial institution or other entity solely in its capacity as owner
trustee in a leveraged lease transaction. In a leveraged lease transaction,
one or more persons will form an owner trust to acquire an aircraft and
then that owner trust will lease the aircraft to us. In the leasing
industry, the person that is the beneficiary of the owner trust is referred
to as an owner participant. The owner participant will contribute a portion
of the purchase price of the aircraft to the owner trust. The transaction
is called a "leveraged" lease because the remainder of the owner trust's
purchase price of the aircraft is financed through the issuance of
indebtedness in the form of leased aircraft notes. Leased aircraft notes
may also be issued to refinance an aircraft previously financed in a
leveraged lease transaction or otherwise.
These leased aircraft notes are issued pursuant to a
separate indenture and security agreement between the owner trustee and a
bank, trust company, financial institution or other entity, as loan
trustee. The loan trustee under a leased aircraft indenture will act as a
trustee for the holders of the leased aircraft notes issued under that
leased aircraft indenture.
In a leveraged lease transaction, we will pay or advance
rent and other amounts to the owner trustee in its capacity as lessor under
the lease. The owner trustee will use the payments and certain other
amounts received by it to make payments of principal and interest on the
leased aircraft notes. The owner trustee also will assign its rights to
receive basic rent and certain other payments to the loan trustee as
security for its obligations to pay principal of, premium, if any, and
interest on the secured promissory notes. Payments or advances made under a
lease and related agreements will at all times be sufficient to make
scheduled payments of principal of, and interest on, the leased aircraft
notes issued to finance the aircraft subject to that lease. Our obligations
under a lease and related agreements may be guaranteed by our parent. If
our parent guarantees our obligations under a lease or any related
agreement, the terms of the guarantee will be described in the applicable
prospectus supplement.
We will not have any obligation to pay principal of, or
interest on, the leased aircraft notes. Holders of leased aircraft notes
will not have recourse against us or our parent if it guarantees the
related lease or any other agreement, for the payment of principal of, or
interest on, the leased aircraft notes.
Owned Aircraft Notes. We may finance or refinance aircraft
that we own through the issuance of owned aircraft notes. Owned aircraft
notes relating to an owned aircraft will be issued under a separate
indenture and security agreement relating to that owned aircraft. Each
separate indenture and security agreement relating to owned aircraft notes
will be between us and a bank, trust company, financial institution or
other entity, as loan trustee. The indenture and security agreement entered
into in connection with the issuance of owned aircraft notes will be
referred to as an owned aircraft indenture. The loan trustee under an owned
aircraft indenture will act as a trustee for the holders of the owned
aircraft notes issued under that owned aircraft indenture. Our obligation
to pay principal of, and interest on, the owned aircraft notes may be
guaranteed by our parent. If our parent guarantees the payment of principal
of, and interest on, the owned aircraft notes, we will describe the terms
of the guarantee in the applicable prospectus supplement.
Holders of owned aircraft notes will have recourse against
us and, if it guarantees the lease, our parent, for payment of principal
of, and interest on, the owned aircraft notes.
Because we often refer to owned aircraft indentures and
leased aircraft indentures together, we sometimes refer to them
collectively as the indentures.
DELAYED FINANCING
If any portion of the proceeds of an offering of a series of
certificates is not used to purchase secured promissory notes on the date
the certificates are issued, those proceeds will be temporarily invested in
other property such as short-term securities or will be invested with a
depositary or held in an escrow arrangement pending the purchase of secured
promissory notes. These arrangements and this additional property will be
described in the prospectus supplement.
CASH FLOW STRUCTURE
Set forth below is a diagram illustrating the cash flows
relating to the certificates. This diagram assumes that the pass through
trustees enter into an intercreditor agreement, but does not include the
effect of any liquidity facility or similar credit enhancements or
prefunding arrangements, each of which will be described in the prospectus
supplement if they are applicable.
[Diagram omitted, which shows that we will pay to the loan
trustee for leased aircraft and owned aircraft (a) the lease rental
payments, which are assigned by the loan trustee, on leased aircraft and
(b) the mortgage payments on owned aircraft. From those lease rental
payments and mortgage payments, the loan trustee will make secured
promissory note payments on the Series A, the Series B and the Series C
secured promissory notes with respect to all aircraft to the subordination
agent. Excess rental payments will be paid by the loan trustee to the
lessors for leased aircraft. From those secured promissory note payments,
the subordination agent will pay principal, premium, if any, and interest
to the pass through trustee for the Class A trust, the pass through trustee
for the Class B trust and the pass through trustee for the Class C trust,
which in turn will pay this principal, premium, if any, and interest to the
holders of Class A certificates, the holders of Class B certificates and
the holders of Class C certificates, respectively. The diagram also shows
that, in the case of leased aircraft, our parent may guarantee our lease
rental payments and that, in the case of owned aircraft, our parent may
guarantee our owned aircraft payments.]
STRUCTURE FOR LEASED AIRCRAFT
Set forth below is a diagram illustrating cash flows that we
expect to occur on the closing date for a leveraged lease financing. We
anticipate that separate transactions similar to the transaction
illustrated in the diagram will occur for each leased aircraft financed
with the proceeds of the offering of the certificates. The structure
illustrated below may change, in which case a revised diagram will be
included in the prospectus supplement.
[Diagram omitted, which shows leased aircraft notes will be
issued by an owner trustee in a leveraged lease transaction. The diagram
shows that our parent may guarantee our obligation to make lease rental
payments. The diagram shows that we will sell the leased aircraft to an
owner trust that will, in turn, lease the aircraft back to us. The owner
participant is the beneficial owner of the owner trust and contributes a
portion of the purchase price of the aircraft. The owner trust will enter
into an indenture with the loan trustee providing for a security interest
in the leased aircraft, the assignment of the lease and the issuance of
secured promissory notes to finance the remaining portion of the purchase
price of the aircraft. The owner trustee will sell the Class A, Class B and
Class C secured promissory notes to the Class A, Class B and Class C pass
through trusts, respectively. The Class A, Class B and Class C pass through
trusts will sell certificates to Series A, Series B and Series C
certificateholders, respectively, for cash. The proceeds from the sale of
the certificates will be passed through from the Class A, Class B and Class
C pass through trusts to the loan trustee who in turn will forward the
proceeds to the owner trust as payment for the secured promissory notes.]
STRUCTURE FOR OWNED AIRCRAFT
Set forth below is a diagram illustrating cash flows that we
expect to occur on the closing date for an owned aircraft financing. We
anticipate that separate transactions similar to the transaction
illustrated in the diagram will occur for each owned aircraft financed with
the proceeds of the offering of the certificates. The structure illustrated
below may change, in which case a revised diagram will be included in the
prospectus supplement.
[Diagram omitted, which shows that we may finance or
refinance aircraft that we own through the issuance of owned aircraft
notes. The diagram shows that our parent may guarantee our obligation to
make owned aircraft payments. The diagram also shows that we will enter
into an indenture with the loan trustee providing for a security interest
in the owned aircraft and the issuance of secured promissory notes. We will
sell the Class A, Class B and Class C secured promissory notes to the Class
A, Class B and Class C pass through trusts, respectively. The Class A,
Class B and Class C pass through trusts will sell certificates to Series A,
Series B and Series C certificateholders, respectively, for cash. The
proceeds from the sale of the certificates will be passed through from the
Class A, Class B and Class C pass through trusts to the loan trustee who
will in turn forward the proceeds to us as payment for the secured
promissory notes. We will then purchase owned aircraft from those
proceeds.]
ADDITIONAL INFORMATION
We will describe the specific terms of each series of
certificates that we may offer and sell from time to time in a prospectus
supplement.
US AIRWAYS
We are a certificated air carrier engaged primarily in the
business of transporting passengers, property and mail. We are the
principal operating subsidiary of US Airways Group, accounting for
approximately 90% of US Airways Group's consolidated operating revenues for
the first three months of 1999.
We carried approximately 58 million passengers in 1998 and
currently rank as the sixth largest domestic air carrier, as ranked by
total revenue passenger miles, based on our review and analysis of our and
other airline press releases. Our mainline service includes our domestic
and international jet aircraft operations, including our low-cost product
MetroJet. Outside of our mainline service, our system includes our code
share partners US Airways Express and Shuttle, Inc. Under a code share
arrangement, one carrier places its designator code and sells tickets on
flights of another carrier. The combined US Airways system served 202
destinations worldwide as of March 1999. As of March 31, 1999, US Airways
had more than 38,000 full-time equivalent employees.
Our major connecting hubs are located at airports in
Charlotte, Philadelphia and Pittsburgh. We also have substantial operations
at the Baltimore-Washington International Airport, Boston's Logan
International Airport, New York's LaGuardia Airport and Washington's Ronald
Reagan Washington National Airport. As of March 1999, measured by
departures, we were the largest airline at each of these airports and are
the largest air carrier in many other smaller eastern cities such as
Albany, Buffalo, Hartford, Providence, Richmond, Rochester and Syracuse,
based on the OAG Desktop Guide published by OAG Worldwide, a division of
Reed Business Information. We also are the leading airline from the
Northeast United States to Florida, based on the OAG Desktop Guide. As of
March 1999, approximately 84% of our departures and approximately 56% of
our capacity, as determined by available seat miles, were deployed within
the United States east of the Mississippi River.
US Airways and US Airways Group both are Delaware
corporations, with executive offices located at 2345 Crystal Drive,
Arlington, Virginia 22227. Our telephone number is (703) 872-7000 and our
parent's telephone number is (703) 872-5306.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of earnings to
fixed charges for US Airways and US Airways Group and their consolidated
subsidiaries for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
US Airways 1.8 2.2 2.7 2.2 1.3 1.1 *
US Airways Group 1.5 2.1 2.5 2.1 1.5 1.2 **
</TABLE>
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* For the year ended December 31, 1994, US Airways' earnings were not
sufficient to cover its fixed charges. Additional earnings of $721
million would have been required to achieve a ratio of earnings to
fixed charges of 1.0.
** For the year ended December 31, 1994, US Airways Group's earnings
were not sufficient to cover its fixed charges. Additional earnings
of $690 million would have been required to achieve a ratio of
earnings to fixed charges of 1.0.
For purposes of calculating the ratios of earnings to fixed
charges, earnings consist of pretax income, fixed charges, capitalized
interest and amortization of previously capitalized interest. Fixed charges
consist of interest expense, amortization of debt issue expense and the
portion of rental expense representative of interest expense.
USE OF PROCEEDS
Except as set forth in the applicable prospectus supplement,
each pass through trustee will use the proceeds from the sale of
certificates issued by its pass through trust to purchase one or more
secured promissory notes.
If an owner trustee issues the secured promissory notes, the
owner trustee will use the proceeds of the sale of the secured promissory
notes to finance a portion of the purchase price of an aircraft or to
refinance indebtedness or equity interests previously issued in respect of
an aircraft. Upon the purchase of an aircraft by an owner trustee, the
aircraft will be leased by the owner trustee to us.
If we issue the secured promissory notes, we will use the
proceeds from the sale of the secured promissory notes to finance the
purchase of an aircraft which we will own or to refinance indebtedness or
equity interests previously issued in respect of an aircraft.
If a pass through trustee does not use all of the proceeds
of any offering of certificates to purchase secured promissory notes on the
date those certificates are issued, the proceeds of the offering not used
to purchase secured promissory notes will be held for the benefit of the
certificateholders under arrangements that we will describe in the
applicable prospectus supplement. If the pass through trustee does not use
a portion of the proceeds to purchase secured promissory notes by the date
specified in the applicable prospectus supplement, it will return the
unused portion of the proceeds to the certificateholders.
In addition, we may offer certificates subject to delayed
aircraft financing arrangements. For example, we may cause the proceeds
from the sale of certificates to be invested with a depositary or cause the
proceeds to be held in an escrow arrangement until they are used to
purchase secured promissory notes. In these circumstances, we will describe
in the applicable prospectus supplement how the proceeds of the
certificates will be held or applied during any delayed aircraft financing
period, including any depositary or escrow arrangement.
DESCRIPTION OF THE CERTIFICATES
The following description is a summary of the terms of the
certificates that we expect will be common to all series of certificates.
We will describe the financial terms and other specific terms of any series
of certificates in a prospectus supplement. Since the terms of a specific
series of certificates may differ from the general information provided
below, you should rely on the information in the prospectus supplement
instead of the information in this prospectus if the information in the
prospectus supplement is different from the information below. To the
extent that any provision in any prospectus supplement is inconsistent with
any provision in this summary, the provision of the prospectus supplement
will control.
Because the following description is a summary, it does not
describe every aspect of the certificates, and it is subject to and
qualified in its entirety by reference to all the provisions of the pass
through trust agreement and the applicable supplements to the pass through
trust agreement. For convenience, we will refer to the pass through trust
agreement among the pass through trustee, our parent guarantor and us as
the "Basic Agreement," and to the Basic Agreement as supplemented by the
applicable supplements as the pass through trust agreement. The form of
Basic Agreement has been filed as an exhibit to the registration statement
of which this prospectus is a part. The supplement to the Basic Agreement
relating to each series of certificates and the forms of the other
agreements described in this prospectus and the applicable prospectus
supplement will be filed as exhibits to a post-effective amendment to the
registration statement of which this prospectus is a part, a Current Report
on Form 8-K, a Quarterly Report on Form 10-Q or an Annual Report on Form
10-K, as applicable, filed by us or our parent guarantor with the SEC.
GENERAL
Except as amended by a supplement to the Basic Agreement,
the terms of the Basic Agreement generally will apply to all of the pass
through trusts that we form to issue certificates by this prospectus. We
will create a separate pass through trust for each series of certificates
by entering into a separate supplement to the Basic Agreement. Each
supplement to the Basic Agreement will contain the additional terms
governing the specific pass through trust to which it relates and, to the
extent inconsistent with the Basic Agreement, will supersede the Basic
Agreement.
Certificates will be issued pursuant to the pass through
trust agreement. Unless otherwise stated in the applicable prospectus
supplement, each pass through certificate will be issued in minimum
denominations of $1,000 or a multiple of $1,000.
Each certificate will represent a fractional undivided
interest in the property of the pass through trust that issued the pass
through certificate. All payments and distributions made on or with respect
to a pass through certificate will be made only from the property owned by
the pass through trust that issued the pass through certificate. The
certificates do not represent an interest in or obligation of US Airways,
US Airways Group, the pass through trustee, any of the owner trustees or
loan trustees, in their individual capacities, or any owner participant.
Each holder of a pass through certificate will be deemed to agree to look
solely to the income and proceeds from the property of the pass through
trust as provided in the pass through trust agreement.
The property of each pass through trust for which a series
of certificates will be issued will include:
o the secured promissory notes held in the pass through
trust;
o all monies at any time paid on or with respect to
secured promissory notes held by the pass through
trust;
o all monies due and to become due under the secured
promissory notes held by the pass through trust;
o if so specified in the relevant prospectus
supplement, rights under any escrow arrangement to
withdraw the proceeds from escrow either to purchase
secured promissory notes or to return unused proceeds
to the holders of that series of certificates;
o funds from time to time deposited with the pass
through trustee in accounts relating to that pass
through trust; and
o if so specified in the relevant prospectus
supplement, rights under intercreditor agreements
relating to cross-subordination arrangements and
monies receivable under a liquidity facility.
As described in more detail below, the rights of a pass
through trust to receive monies due or to become due under secured
promissory notes held by that pass through trust may be subject to the
effect of any cross-subordination provisions contained in an intercreditor
agreement described in the prospectus supplement for a series of
certificates.
An intercreditor agreement refers to an agreement among the
pass through trusts and, if applicable, a liquidity provider under a
liquidity facility, as creditors of the owner trusts that issued the
secured promissory notes owned by the pass through trusts. An intercreditor
agreement will set forth the terms and conditions upon which payments made
on or in respect of the secured promissory notes and payments made under
any liquidity facility will be received, shared and distributed among the
several pass through trusts and the liquidity provider. In addition, the
intercreditor agreement will set forth agreements among the pass through
trusts and the liquidity provider relating to the exercise of remedies
under the secured promissory notes and the indentures.
Cross-subordination refers to a concept where payments on a
junior class of secured promissory notes issued under one indenture are
distributed to a pass through trust that holds a senior class of promissory
notes issued under a different indenture. The effect of this distribution
mechanism is that holders of a junior class of promissory notes issued
under one indenture will not actually receive payments made on or with
respect to that junior class of promissory notes until the holders of
senior classes of promissory notes issued under other indentures have
received all scheduled payments on their notes.
Secured promissory notes owned by a pass through trust may
be leased aircraft notes, owned aircraft notes or a combination of leased
aircraft notes and owned aircraft notes.
Leased aircraft notes will be issued in connection with the
leveraged lease of an aircraft to us. Except as set forth in the applicable
prospectus supplement, each leased aircraft will be leased to us under a
lease between us, as lessee, and an owner trustee, as lessor. Each owner
trustee will issue leased aircraft notes on a non-recourse basis under a
separate leased aircraft indenture between it and the applicable loan
trustee. The owner trustee will use the proceeds of the sale of the leased
aircraft notes to finance or refinance a portion of the purchase price paid
or to be paid by the owner trustee for the applicable leased aircraft. The
owner trustee will obtain the remainder of the funding for the leased
aircraft from an equity contribution from the owner participant that is the
beneficiary of the owner trust and, to the extent set forth in the
applicable prospectus supplement, additional debt secured by the applicable
leased aircraft or other sources. A leased aircraft also may be subject to
other financing arrangements. Generally, neither the owner trustee nor the
owner participant will be personally liable for any principal or interest
payable under any leased aircraft indenture or any leased aircraft notes.
In some cases, an owner participant may be required to make payments to an
owner trustee that are to be used by the owner trustee to pay principal of,
and interest on, the secured promissory notes. If an owner participant is
required to make payments to be used by an owner trustee to pay principal
of, and interest on, the secured promissory notes and the owner participant
fails to make the payment, we will be required to provide the owner trustee
with funds sufficient to make the payment. We will make payments or
advances under a lease and the related documents sufficient to pay when due
all scheduled principal and interest payments on the leased aircraft notes
issued to finance the aircraft subject to that lease. Our parent may
guarantee our obligations under the leases and related agreements.
We will issue owned aircraft notes under separate owned
aircraft indentures. Owned aircraft notes will be issued in connection with
the financing or refinancing of an aircraft that we own. Owned aircraft
notes will be obligations that have recourse to us and the related
aircraft. Our parent may guarantee payments of principal of, and interest
on, owned aircraft notes. Any owned aircraft may secure additional debt or
be subject to other financing arrangements.
An indenture may provide for the issuance of multiple series
of secured promissory notes. If an indenture provides for multiple series
of secured promissory notes, it may also provide for differing priority of
payments among the different series. All secured promissory notes issued
under an indenture that are entitled to the same priority of payment will
be referred to as a "class." Secured promissory notes issued under an
indenture may be held in more than one pass through trust, and one pass
through trust may hold secured promissory notes issued under more than one
indenture. Unless otherwise provided in a prospectus supplement, only
secured promissory notes of a single class may be held in the same pass
through trust.
Except as set forth in the prospectus supplement for any
series of certificates, interest payments on the secured promissory notes
held by a pass through trust will be passed through to the registered
holders of certificates of that pass through trust at the annual rate shown
on the cover page of the prospectus supplement for the certificates issued
by that pass through trust. The certificateholders' right to receive
payments made in respect of the secured promissory notes is subject to the
effect of any cross-subordination provisions described in the prospectus
supplement for a series of certificates.
We refer you to the prospectus supplement that accompanies
this prospectus for a description of the specific series of certificates
being offered by this prospectus and the applicable prospectus supplement,
including:
o the specific designation, title and amount of the
certificates;
o the initial public offering price, amounts payable on
and distribution dates for the certificates;
o the currency or currencies (including currency units)
in which the certificates may be denominated;
o the specific form of the certificates, including
whether or not the certificates are to be issued in
accordance with a book-entry system;
o a description of the secured promissory notes to be
purchased by the pass through trust issuing that
series of certificates, including (a) the period or
periods within which, the price or prices at which,
and the terms and conditions upon which the secured
promissory notes may or must be redeemed or defeased
in whole or in part, by us or an owner trustee, (b)
the payment priority of the secured promissory notes
in relation to any other secured promissory notes
issued with respect to the related aircraft and (c)
any intercreditor or other rights or limitations
between or among the holders of secured promissory
notes of different priorities issued with respect to
the same aircraft;
o a description of the aircraft to be financed with the
proceeds of the issuance of the secured promissory
notes;
o a description of the note purchase agreement setting
forth the terms and conditions upon which that pass
through trust will purchase secured promissory notes;
o a description of the indentures under which the
secured promissory notes to be purchased by that pass
through trust will be issued;
o a description of the events of default, the remedies
exercisable upon the occurrence of such events of
default and any limitations on the exercise of such
remedies under the indentures pursuant to which the
secured promissory notes to be purchased by that pass
through trust will be issued;
o if the certificates relate to leased aircraft, a
description of the leases to be entered into by the
owner trustees and us, including (a) the names of the
owner trustees that will own the leased aircraft and
lease the leased aircraft to us and (b) a description
of the events of default under the leases and, the
remedies exercisable upon an event of default;
o if the certificates relate to leased aircraft, a
description of the provisions of the leased aircraft
indentures governing (a) the rights of the related
owner trustee and/or owner participant to cure our
failure to pay rent under the leases and (b) any
limitations on the exercise of remedies with respect
to the leased aircraft notes;
o if the certificates relate to leased aircraft, a
description of the participation agreements that will
set forth the terms and conditions upon which the
owner participant, the owner trustee, the pass
through trustees, the loan trustee and we agree to
enter into a leveraged lease transaction;
o if the certificates relate to an owned aircraft, a
description of the participation agreements that will
set forth the terms and conditions upon which the
applicable pass through trustees, the loan trustee
and we agree to enter into a financing transaction
for the owned aircraft;
o a description of the limitations, if any, on
amendments to leases, indentures, pass through trust
agreements, participation agreements and other
material agreements entered into in connection with
the issuance of secured promissory notes;
o a description of any cross-default provisions in the
indentures;
o a description of any agreement among the holders of
secured promissory notes and any liquidity provider
governing the receipt and distribution of monies with
respect to the secured promissory notes and the
enforcement of remedies under the indentures,
including a description of any applicable
intercreditor and cross- subordination arrangements;
o a description of any cross-collateralization
provisions in the indentures;
o a description of any liquidity facility or other
credit enhancement relating to the certificates;
o if the certificates relate to aircraft that have not
yet been delivered or financed, a description of any
deposit or escrow agreement or other arrangement
providing for the deposit and investment of funds
pending the purchase of secured promissory notes and
the financing of an owned aircraft or leased
aircraft;
o a description of any guarantee of our obligation to
make payments with respect to a leased aircraft or to
make principal and interest payments with respect to
owned aircraft notes;
o the names of the underwriters, dealers or agents, if
any, through or to which we will sell the
certificates, the compensation, if any, of
underwriters, dealers or agents and the net proceeds
from the offering of the certificates;
o the material United States federal income tax
considerations applicable to the certificates; and
o any other special terms pertaining to the certificates.
The concept of cross-default mentioned above refers to a
situation where a default under one indenture or lease automatically
triggers a default under other indentures or leases. We currently do not
expect any indentures or leases to contain cross-default provisions. The
concept of cross-collateralization mentioned above refers to the situation
where an aircraft mortgaged to secure obligations incurred under one
indenture also serves as collateral for obligations under one or more other
indentures. If the indentures that are cross-collateralized relate to
aircraft that we lease, the lease assigned to a loan trustee to secure
obligations under one indenture may also serve as collateral under one or
more other indentures. We currently do not expect any indentures to be
cross-collateralized.
If any certificates are denominated in one or more foreign
currencies or currency units, the restrictions, certain United States
federal income tax considerations, specific terms and other information
with respect to the certificates and the foreign currency or currency units
will be set forth in the applicable prospectus supplement.
PAYMENTS AND DISTRIBUTIONS
We will make rental and other payments and advances for a
leased aircraft under the lease and other documents relating to that leased
aircraft. In order to secure its obligations to pay the principal of, and
interest on, the leased aircraft notes issued to finance or refinance a
portion of the purchase price of a leased aircraft, the applicable owner
trustee will assign the scheduled rental payments under the lease and may
assign certain other payments or advances under other related documents to
the applicable loan trustee. As is customary in the leveraged leasing
industry, indemnities, insurance and similar payments due under a lease and
other documents may be excluded from any assignment. Pursuant to the terms
of the applicable indenture, the loan trustee will, on behalf of the
applicable owner trustee, apply the proceeds of the payments and advances
assigned to the loan trustee to make the corresponding scheduled payments
of principal of, and interest on, the leased aircraft notes issued under
that indenture. The loan trustee will distribute payments of principal of,
and interest on, the leased aircraft notes to the pass through trustee for
each pass through trust that holds those leased aircraft notes. After the
loan trustee has made all scheduled payments of principal of, and interest
on, the leased aircraft notes issued under the applicable indenture, the
loan trustee will, except under certain circumstances, pay the remaining
balance, if any, to the owner trustee for the benefit of the owner
participant. Distribution of payments by a loan trustee to a pass through
trustee may be affected by the terms of an intercreditor agreement.
We will make scheduled payments of principal of, and
interest on, the unpaid amount of the owned aircraft notes to the loan
trustee under the indenture pursuant to which those owned aircraft notes
were issued. The loan trustee will distribute payments of principal of, and
interest on, the owned aircraft notes to the pass through trustee for each
pass through trust that holds those owned aircraft notes.
Each certificateholder will be entitled to receive a pro
rata share of any distribution in respect of payments of principal of, and
interest on, the secured promissory notes held in the pass through trust
that issued its certificate. A pass through trustee's right to receive
payments distributed by a loan trustee may be affected by the terms of an
intercreditor agreement. The terms of any intercreditor agreement and any
cross-subordination will be in the prospectus supplement relating to a
series of certificates.
Each pass through trust will receive scheduled payments of
principal of, and interest on, the secured promissory notes held by it and
will, in turn, distribute those scheduled payments to its
certificateholders on the regular distribution dates and in the currencies
specified in the prospectus supplement relating to its certificates.
However, a pass through trust may not be able to distribute scheduled
payments of principal and interest to its certificateholders as scheduled
in the prospectus supplement if the secured promissory notes held by the
pass through trust are in default or if payments are diverted to other pass
through trusts in accordance with an intercreditor agreement. In addition
to distributions of scheduled payments of principal and interest on regular
distribution dates, if the applicable series of certificates is entitled to
the benefits of a liquidity facility, the pass through trustee will also
distribute on a regular distribution date payments received as a result of
a drawing or other payments made under a liquidity facility. The prospectus
supplement relating to the certificates will describe the terms of any
liquidity facility or other form of credit enhancement.
A pass through trustee may from time to time receive
payments of principal of, and interest on, secured promissory notes on
dates other than scheduled payment dates. These special payments may occur
if the secured promissory notes owned by the pass through trust are sold or
redeemed early, or if a scheduled payment is paid more than five days late.
Each pass through trustee will distribute special payments to its
certificateholders on dates determined as described in the applicable
prospectus supplement. In the event a special payment is received by a pass
through trustee, the pass through trustee will mail a notice to its
certificateholders of record stating the anticipated distribution date for
the payment. Scheduled payments that are not more than five days late will
be treated as regular payments and paid to certificateholders of record on
the regular distribution dates.
If any regular distribution date or special distribution
date is not a business day, distributions scheduled to be made on that date
may be made on the next succeeding business day without additional
interest.
POOL FACTORS
Unless otherwise described in the applicable prospectus
supplement, the "pool balance" for each pass through trust or for the
certificates issued by any pass through trust indicates, as of any date,
the portion of the original aggregate face amount of the certificates
issued by that pass through trust that has not been distributed to
certificateholders. The pool balance for each pass through trust as of any
distribution date will be computed after giving effect to any distribution
to certificateholders to be made on that date.
Unless otherwise described in the applicable prospectus
supplement, the "pool factor" for a pass through trust as of any
distribution date for that trust is the quotient (rounded to the seventh
decimal place) computed by dividing (a) the pool balance by (b) the
aggregate original face amount of the certificates issued by that pass
through trust. The pool factor for a pass through trust as of any
distribution date will be computed after giving effect to the payment of
principal, if any, on the secured promissory notes or other property of
that pass through trust and distribution to certificateholders of the
payment of principal to be made on that date. The pool factor for a pass
through trust initially will be 1.0000000. The pool factor for a pass
through trust will decline as described in this prospectus and the related
prospectus supplement to reflect reductions in the pool balance of that
pass through trust. As of any distribution date for a pass through trust,
certificateholder will have a pro rata share of the pool balance of that
pass through trust equal to the product obtained by multiplying the
original denomination of the holder's pass through certificate by the pool
factor for the pass through trust that issued that pass through
certificate.
Each pass through trust will have a separate pool factor. We
expect the pool factor for each pass through trust to decline in proportion
to the scheduled repayments of principal on the secured promissory notes
held by that pass through trust. However, the pool factor for a pass
through trust will not decline in proportion to scheduled repayments of
principal if there is an early redemption or purchase of secured promissory
notes held by a pass through trust or if a default occurs in the repayment
of secured promissory notes held by a pass through trust. In the event of a
redemption, purchase or default, the pool factor and the pool balance of
each pass through trust affected by the redemption, purchase or default
will be recomputed.
REPORTS TO CERTIFICATEHOLDERS
The pass through trustee will include with each distribution
to certificateholders a statement setting forth the following information:
o the amount of the distribution allocable to principal
and the amount allocable to premium, if any;
o the amount of the distribution allocable to interest;
o the pool balance and the pool factor for the pass
through trust after giving effect to the
distribution; and
o any additional or different information as may be
described in the applicable prospectus supplement.
As long as the certificates are registered in the name of
DTC or its nominee, on the record date prior to each distribution to
certificateholders, the pass through trustee will request from DTC a
securities position listing containing the names of all DTC participants
reflected on DTC's books as holding interests in the certificates on that
record date. On each distribution date, the applicable pass through trustee
will mail to each DTC participant holding certificates the statement
described above and will make available additional copies as requested by
the DTC participants for forwarding to certificateholders.
After the end of each calendar year, each pass through
trustee will prepare for each person that was a holder of one or more of
its pass through certificates at any time during the preceding calendar
year a report containing the sum of the amount of distributions allocable
to principal, premium and interest with respect to that pass through trust
for the preceding calendar year or, in the event the person was a holder of
a pass through certificate during only a portion of the preceding calendar
year, for the applicable portion of the preceding calendar year. In
addition, each pass through trustee will prepare for each person that was a
holder of one or more of its pass through certificates at any time during
the preceding calendar year any other items that are readily available to
the pass through trustee and which a certificateholder reasonably requests
as necessary for the purpose of preparing its federal income tax returns.
The reports and other items described in this section will be prepared on
the basis of information supplied to the pass through trustee by DTC
participants and will be delivered by the pass through trustee to DTC
participants to be available for forwarding by DTC participants to
certificateholders in the manner described above.
If the certificates are issued in the form of physical
certificates, the pass through trustee of that pass through trust will
prepare and deliver the information described above to each record holder
of a pass through certificate issued by that pass through trust as the name
and period of ownership of the holder appears on the records of the
registrar of the certificates.
VOTING OF SECURED PROMISSORY NOTES
A pass through trustee has the right to vote and give
consents and waivers with respect to the secured promissory notes held by
that pass through trust. However, the pass through trustee's right to vote
and give consents or waivers may be restricted or may be exercisable by
another person in accordance with the terms of an intercreditor agreement,
as described in the applicable prospectus supplement. The pass through
trust agreement will set forth:
o the circumstances in which a pass through trustee may
direct any action or cast any vote with respect to
the secured promissory notes held in its pass through
trust at its own discretion;
o the circumstances in which a pass through trustee
will seek instructions from its certificateholders;
and
o if applicable, the percentage of certificateholders
required to direct the pass through trustee to take
action.
If the holders of certificates are entitled to the benefits
of a liquidity facility, and the liquidity facility is used to make any
payments to certificateholders, the provider of the liquidity facility may
be entitled to exercise rights to vote or give consents and waivers with
respect to the secured promissory notes held by the pass through trust that
issued the certificates, as described in the applicable prospectus
supplement.
EVENTS OF DEFAULT AND CERTAIN RIGHTS UPON AN EVENT OF DEFAULT
The prospectus supplement will describe the events of
default that can occur under the pass through trust agreement and under the
indentures relating to the secured promissory notes held by the related
pass through trust.
Defaults under a leased aircraft indenture will include
events of default under the lease that we are a party to that is assigned
as security under that leased aircraft indenture. The owner trustee and the
owner participant may have rights to cure the defaults under a leased
aircraft indenture that result from a default under the lease. The
applicable prospectus supplement will describe these cure rights. Unless
otherwise provided in a prospectus supplement, with respect to any
certificates entitled to the benefits of a liquidity facility, a drawing
under that liquidity facility for the purpose of making a payment of
interest as a result of our failure to have made a corresponding payment
under the lease will not cure a default related to our failure to make the
payment.
Unless otherwise provided in a prospectus supplement, all of
the secured promissory notes issued under the same indenture will relate to
a specific aircraft and there will be no cross-collateralization or
cross-default provisions in the indentures. This means that events
resulting in a default under a particular indenture will not necessarily
result in a default under any other indenture. If a default occurs in fewer
than all of the indentures, payments of principal of, and interest on, the
secured promissory notes issued under indentures with respect to which a
default has not occurred will continue to be made as originally scheduled.
The pass through trustees, as holders of the secured
promissory notes, may enter into an intercreditor agreement that may have
the practical effect of subordinating a junior class of secured promissory
notes issued under one indenture to senior classes of secured promissory
notes under other indentures. This concept, referred to as
cross-subordination, is described above under "Description of the
Certificates--General" and, if applicable, will be described in the
applicable prospectus supplement.
If the secured promissory notes outstanding under an
indenture are held by more than one pass through trust, then the ability of
the holders of certificates issued by any one pass through trust to cause
the loan trustee to take actions under an indenture may be limited. In
particular, a pass through trustee's ability to direct a loan trustee to
take action under an indenture will depend, in part, on the proportion of
(a) the aggregate principal amount of the secured promissory notes
outstanding under the indenture that are held in that pass through trust to
(b) the aggregate principal amount of all secured promissory notes
outstanding under the indenture. This means that a pass through trustee may
not have the ability to direct a loan trustee to accelerate secured
promissory notes or exercise remedies under an indenture without the
concurrence of the other pass through trustees. In addition, the ability of
a pass through trustee to exercise remedies under an indenture may be
limited by the terms of an intercreditor agreement.
If the secured promissory notes outstanding under an
indenture are held by more than one pass through trust, then each pass
through trust will hold secured promissory notes with different terms than
the secured promissory notes held in the other pass through trusts. In
these circumstances, the holders of certificates issued by different pass
through trusts may have divergent or conflicting interests. As long as the
same institution acts as the pass through trustee of each pass through
trust, in the absence of instructions from the holders of certificates
issued by each pass through trust, the pass through trustee could for the
same reason be faced with a potential conflict of interest upon a default
under an indenture. If the pass through trustee is faced with a conflict of
interest because that pass through trustee acts as pass through trustee for
multiple trusts, the pass through trustee faced with the conflict will
resign as trustee of one or all the pass through trusts, and one or more
successor pass through trustees will be appointed in accordance with the
terms of each pass through trust agreement.
The prospectus supplement for a series of certificates will
describe whether and under what circumstances a pass through trustee may or
will sell all or part of the secured promissory notes held in the pass
through trust. A pass through trustee's right to sell secured promissory
notes may be restricted or may be exercisable by another person, if the
applicable series of certificates are subject to any intercreditor,
subordination or similar arrangements. If the certificates of any series
are subject to any intercreditor, subordination or similar arrangement, the
proceeds from the sale of the related secured promissory notes will be
distributed as contemplated by those arrangements. To the extent received
by any pass through trustee, proceeds from the sale of secured promissory
notes will be treated as special payments, deposited in a special payments
accounts and distributed to the certificateholders of the pass through
trust on a special distribution date.
The market for secured promissory notes in default may be
very limited, and neither we nor the pass through trustee can assure you
that they could be sold for a reasonable price. In addition, as long as
the same institution acts as pass through trustee of multiple pass through
trusts, it may be faced with a conflict in deciding which secured
promissory notes to sell to available buyers. If the pass through trustee
sells any secured promissory notes with respect to which a default under an
indenture exists for less than their outstanding principal amount, the
certificateholders of that pass through trust will receive a smaller amount
of principal distributions than anticipated and will not have any claim for
the shortfall against us, our parent, any owner trustee, any owner
participant or any pass through trustee. Neither a pass through trustee nor
the holders of certificates will be able to take any action with respect to
any secured promissory notes unless a default has occurred under the
indenture relating to those secured promissory notes.
Following a default under an indenture, all payments
received by a pass through trustee or with respect to secured promissory
notes issued under the indenture, other than scheduled payments received on
or within five days of the date the scheduled payments are due, will be
treated as special payments and deposited in a special payments account.
All amounts deposited in the special payments account will be distributed
to the certificateholders on a special distribution date. The rights of any
pass through trustee to receive payments made on or with respect to any
secured promissory note following a default under any indenture may be
limited by intercreditor, subordination or similar arrangements.
Any funds held in the special payments account for a pass
through trust will, to the extent practicable, be invested and reinvested
by the pass through trustee in permitted short-term investments pending the
distribution of those funds on a special distribution date. Permitted
investments will be specified in the related prospectus supplement.
The Basic Agreement provides that the pass through trustee
of each pass through trust will give to the certificateholders of that pass
through trust notice of all uncured or unwaived defaults known to it with
respect to that pass through trust. The Basic Agreement requires each pass
through trustee to provide the notice of default within 90 days after the
occurrence of the default. However, except in the case of default in the
payment of principal, premium, if any, or interest on any of the secured
promissory notes held in a pass through trust, the pass through trustee
will be protected in withholding a notice of default if it in good faith
determines that withholding the notice is in the interest of the
certificateholders. The term "default" as used in this paragraph means only
the occurrence of a default under an indenture with respect to secured
promissory notes held in a pass through trust as described above, except
that in determining whether any default under an indenture has occurred,
any related grace period or notice will be disregarded.
The Basic Agreement requires the pass through trustee to act
with a specified standard of care while a default is continuing under an
indenture. In addition, the Basic Agreement contains a provision entitling
the pass through trustee to be offered reasonable security or
indemnification by the certificateholders of the pass through trust before
proceeding to exercise any right or power under the Basic Agreement at the
request of those certificateholders.
The prospectus supplement for a series of certificates will
specify the percentage of certificateholders entitled to waive, or to
instruct the pass through trustee to waive, any past default with respect
to the related pass through trust. The prospectus supplement for a series
of certificates also will specify the percentage of certificateholders
entitled to waive, or to instruct the pass through trustee or the loan
trustee to waive, any past default, or rescind or annul any direction given
under any indenture.
MERGER, CONSOLIDATION AND TRANSFER OF ASSETS
We will be prohibited from consolidating with or merging
into any other corporation or transferring substantially all of our assets
as an entirety to any other corporation unless:
o the surviving, successor or transferee corporation:
o is validly existing under the laws of the United
States or any of its states;
o is a citizen of the United States (as defined in
Title 49 of the United States Code relating to
aviation (the "Transportation Code")) holding an air
carrier operating certificate issued by the Secretary
of Transportation pursuant to Chapter 447 of Title
49, United States Code, if, and so long as, such
status is a condition of entitlement to the benefits
of Section 1110 of the Bankruptcy Code relating to
the rights of creditors of an airline in the event of
the airline's bankruptcy; and
o expressly assumes all of our obligations contained in
the Basic Agreement and any supplement to the Basic
Agreement, the note purchase agreement, any
indentures, any participation agreements and, with
respect to aircraft leased by us, the applicable
leases; and
o we have delivered a certificate and an opinion or
opinions of counsel indicating that the transaction,
in effect, complies with these conditions.
MODIFICATIONS OF THE BASIC AGREEMENT
The Basic Agreement contains provisions permitting us, our
parent and the pass through trustee of each pass through trust to enter
into a supplement to the pass through trust agreement, without the consent
of the holders of any of the certificates issued by a pass through trust in
order to do the following, among others:
o to provide for the formation of a pass through trust
and the issuance of a series of certificates and to
set forth the terms of the certificates;
o to evidence the succession of another corporation or
entity to us or our parent and the assumption by that
corporation or entity of our or our parent's
obligations under the pass through trust agreement;
o to add to our or our parent's covenants for the
benefit of holders of certificates, or to surrender
any right or power in the pass through trust
agreement conferred upon us or our parent;
o to cure any ambiguity or correct or supplement any
defective or inconsistent provision of the pass
through trust agreement, so long as those changes
will not materially adversely affect the interests of
the holders of the certificates, or to cure any
ambiguity or correct any mistake or, to give effect
to or provide for replacement liquidity facilities,
if applicable, to the certificates;
o to comply with any requirement of the SEC, any
applicable law, rules or regulations of any exchange
or quotation system on which any certificates may be
listed or of any regulatory body;
o to modify, eliminate or add to the provisions of the
pass through trust agreement to the extent necessary
to continue the qualification of the pass through
trust agreement under the Trust Indenture Act of
1939, and to add to the pass through trust agreement
other provisions as may be expressly permitted by the
Trust Indenture Act excluding, however, the
provisions referred to in section 316(a)(2) of the
Trust Indenture Act as in effect at the date of the
Basic Agreement or any corresponding provision in any
similar Federal statute enacted after that date;
o to provide for a successor pass through trustee or to
add to or change any provision of the pass through
trust agreement as necessary to facilitate the
administration of the pass through trusts created
under the pass through trust agreement by more than
one pass through trustee;
o to provide certain information to the pass through
trustee as required in the pass through trust
agreement;
o to release our parent from the Basic Agreement, but
only if our parent has not executed a guarantee in
respect of any lease or secured promissory note; and
o to make any other amendments or modifications to the
Basic Agreement so long as those amendments or
modifications apply only to certificates of a series
issued after the date of the amendment or
modification.
No supplement to the pass through trust agreement may be made that will
adversely affect the status of any pass through trust as a grantor trust
for United States federal income tax purposes, without the consent of the
certificateholders.
The Basic Agreement also contains provisions permitting us,
our parent and the pass through trustee of each pass through trust, with
the consent of a majority in interest of the certificateholders of the pass
through trust and, with respect to any aircraft leased by us, with the
consent of the applicable owner trustee, which cannot be unreasonably
withheld, to execute a supplement to the pass through trust agreements
adding any provisions to or changing or eliminating any of the provisions
of the Basic Agreement, to the extent relating to that pass through trust,
and the applicable pass through trust supplement, or modifying the rights
of the certificateholders, except that no supplement may, without the
consent of each affected certificateholder:
o reduce in any manner the amount of, or delay the
timing of, any receipt by the pass through trustee of
payments on the secured promissory notes held in the
pass through trust or distributions in respect of any
pass through certificate issued by the pass through
trust, or change the date or place of any payment in
respect of any pass through certificate, or make
distributions payable in currency other than that
provided for in the certificates, or impair the right
of any certificateholder to institute suit for the
enforcement of any payment when due;
o permit the disposition of any secured promissory note
held in the pass through trust, except as provided in
the pass through trust agreement, or otherwise
deprive any certificateholder of the benefit of the
ownership of the applicable secured promissory notes;
o reduce the percentage of the aggregate fractional
undivided interests of the pass through trust
provided for in the applicable supplement to the
Basic Agreement that is required in order to obtain
the consent of the holders for that supplement or for
any waiver provided for in the Basic Agreement or the
supplement;
o modify any of the provisions relating to the rights
of the certificateholders in respect of the waiver of
events of default or receipt of payment except to
increase any such percentage or to provide that
certain other provisions of the Basic Agreement and
any applicable supplement cannot be waived or
modified without the consent of all applicable
certificateholders;
o alter the priority of distributions described in any
applicable intercreditor agreement, in a manner
materially adverse to the interests of the
certificateholders of the pass through trust; or
o adversely affect the status of any pass through trust
as a grantor trust for United States federal income
tax purposes.
MODIFICATION OF INDENTURE AND RELATED AGREEMENTS
The prospectus supplement will specify the pass through
trustee's obligations in the event that a pass through trustee, as the
holder of any secured promissory notes held in a pass through trust,
receives a request for its consent to any amendment, modification or waiver
under the indenture under which the secured promissory notes were issued,
under the lease relating to the aircraft leased by us that was financed
with the proceeds of the secured promissory notes, under any liquidity
facility or under other documents relating to the secured promissory notes.
CROSS-SUBORDINATION ISSUES
The secured promissory notes issued under an indenture may
be held in more than one pass through trust, and one pass through trust may
hold secured promissory notes issued under more than one indenture. Unless
otherwise provided in a prospectus supplement, only secured promissory
notes of the same class may be held in the same pass through trust. In this
event, payments made on account of a junior class of certificates issued
under a prospectus supplement may, under circumstances described in the
prospectus supplement, be subordinated to the prior payment of all amounts
owing to certificateholders of a pass through trust that holds a senior
class of secured promissory notes issued under any indenture. The
prospectus supplement related to an issuance of certificates will describe
any cross-subordination provisions and any related terms, including the
percentage of certificateholders under any pass through trust that is
permitted to:
o grant waivers of defaults under any indenture under
which secured promissory notes held by that pass
through trust were issued;
o consent to the amendment or modification of any
indenture under which secured promissory notes held
by that pass through trust were issued; or
o direct the exercise of remedial actions under any
indenture under which secured promissory notes held
by that pass through trust were issued.
TERMINATION OF THE PASS THROUGH TRUSTS
The obligations of the parties to each pass through trust
agreement will terminate upon the distribution to certificateholders of
that pass through trust of all amounts required to be distributed to them
under the pass through trust agreement. The pass through trustee will send
to each certificateholder of record of the pass through trust notice of the
termination of that pass through trust, the amount of the proposed final
payment and the proposed date for the distribution of the final payment for
that pass through trust. The final distribution to any certificateholder
will be made only upon surrender of the certificateholder's certificates at
the office or agency of the pass through trustee, paying agent or transfer
agent, as specified in the notice of termination.
DELAYED PURCHASE OF SECURED PROMISSORY NOTES
If all of the proceeds from the sale of the certificates are
not used on the date the certificates are issued to purchase the secured
promissory notes contemplated to be held in the pass through trust that
issued those certificates, the secured promissory notes may be purchased by
the pass through trustee at any time on or prior to the date specified in
the applicable prospectus supplement. In this event, the portion of the
proceeds from the sale of the certificates that are not used to purchase
secured promissory notes on the date the certificates are issued will be
held under an arrangement described in the applicable prospectus supplement
pending the purchase of the secured promissory notes. The arrangements with
respect to the payment of interest on funds held pending purchase of
secured promissory notes will also be described in the applicable
prospectus supplement. If any proceeds are not subsequently used to
purchase secured promissory notes by the final date for purchase of secured
promissory notes specified in the applicable prospectus supplement, the
proceeds will be returned to the holders of the certificates.
LIQUIDITY FACILITY AND OTHER CREDIT ENHANCEMENTS
A prospectus supplement may provide that one or more
payments of interest to be paid with respect to the certificates of one or
more series will be supported by a liquidity facility issued by an
institution identified in the related prospectus supplement. The provider
of a liquidity facility for the holders of a series of certificates may
have a claim on property of the pass through trust senior to the claims of
the holders of the certificates of that series as described in the related
prospectus supplement. The prospectus supplement will also specify the
circumstances under which a liquidity provider will be entitled to direct
the exercise of remedies under any indenture. The prospectus supplement
will also describe any other credit enhancements, if any, that may apply to
the certificates.
THE PASS THROUGH TRUSTEE
Unless otherwise provided in the prospectus supplement for
any series of certificates, the pass through trustee for each series of
certificates will be State Street Bank and Trust Company of Connecticut,
National Association. With certain exceptions as to itself in its
individual capacity, the pass through trustee makes no representations as
to the validity or sufficiency of the Basic Agreement, the pass through
trust supplements, the certificates, the secured promissory notes, the
indentures, the leases or other related documents. The pass through trustee
will not be liable with respect to any series of certificates for any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the holders of a majority in face amount of outstanding
certificates of that series issued under the Basic Agreement. Subject to
those provisions, the pass through trustee will be under no obligation to
exercise any of its rights or powers under the Basic Agreement at the
request of any holders of certificates issued under the Basic Agreement
unless they have offered to the pass through trustee indemnity satisfactory
to it. The Basic Agreement provides that the pass through trustee in its
individual or any other capacity may acquire and hold certificates issued
under the Basic Agreement and may, in accordance with the Basic Agreement,
otherwise deal with us and, with respect to the aircraft leased by us, any
owner trustee with the same rights it would have if it were not the pass
through trustee.
The pass through trustee may resign with respect to any or
all of the pass through trusts at any time, in which event we will be
obligated to appoint a successor pass through trustee. If the pass through
trustee ceases to be eligible to continue as pass through trustee with
respect to a pass through trust or becomes incapable of acting as pass
through trustee or becomes insolvent, we may remove that pass through
trustee, or any certificateholder of the applicable pass through trust for
at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of
the pass through trustee and the appointment of a successor pass through
trustee. Any resignation or removal of the pass through trustee with
respect to a pass through trust and appointment of a successor pass through
trustee for the pass through trust does not become effective until
acceptance of the appointment by the successor pass through trustee. Under
these resignation and successor pass through trustee provisions, it is
possible that a different pass through trustee could be appointed to act as
the successor pass through trustee with respect to each pass through trust.
All references in this prospectus to the pass through trustee should be
read to take into account the possibility that the pass through trusts
could have different successor pass through trustees in the event of a
resignation or removal.
The Basic Agreement provides that we will pay the pass
through trustee's fees and expenses and indemnify the pass through trustee
against certain liabilities.
BOOK-ENTRY REGISTRATION
General
Unless otherwise specified in the applicable prospectus
supplement, the certificates will be subject to the procedures and
provisions described below.
Upon issuance, each series of certificates will be
represented by one or more fully registered global certificates. This means
that one physical certificate or a number of physical certificates
representing all of the certificates will be registered with the Depository
Trust Company ("DTC"). Each global certificate will be deposited with, or
on behalf of, DTC and registered in the name of Cede & Co. ("Cede"), the
nominee of DTC. Certificateholders will not be entitled to receive a
physical certificate representing an interest in its certificates, except
as set forth below under "--Physical Certificates". Unless and until
physical certificates are issued under the limited circumstances described
below, all references in this prospectus and any prospectus supplement to
actions by certificateholders will refer to actions taken by DTC upon
instructions from DTC participants, and all references to distributions,
notices, reports and statements to certificateholders will refer, as the
case may be, to distributions, notices, reports and statements to DTC or
Cede, as the registered holder of the certificates, or to DTC participants
for distribution to certificateholders in accordance with DTC procedures.
DTC has advised us that DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
New York Uniform Commercial Code and "clearing agency" registered pursuant
to Section 17A of the Securities Exchange Act of 1934.
Under the New York Uniform Commercial Code, a "clearing
corporation" is defined as:
o a person that is registered as a "clearing agency"
under the federal securities laws;
o a federal reserve bank; or
o any other person that provides clearance or
settlement services with respect to financial assets
that would require it to register as a clearing
agency under the federal securities laws but for an
exclusion or exemption from the registration
requirement, if its activities as a clearing
corporation, including promulgation of rules, are
subject to regulation by a federal or state
governmental authority.
A "clearing agency" is an organization established for the
execution of trades by transferring funds, assigning deliveries and
guaranteeing the performance of the obligations of parties to trades.
DTC was created to hold securities for its participants and
to facilitate the clearance and settlement of securities transactions
between DTC participants through electronic book-entry changes in the
accounts of DTC participants. The ability to execute transactions through
book-entry changes in accounts eliminates the need for transfer of physical
certificates. DTC participants include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other
organizations. DTC is owned by a number of DTC participants and by the New
York Stock Exchange, the American Stock Exchange, and the National
Association of Securities Dealers. Banks, brokers, dealers, trust companies
and other entities that clear through or maintain a custodial relationship
with a DTC participant either directly or indirectly have indirect access
to the DTC system.
Under the rules, regulations and procedures creating and
affecting DTC and its operations, DTC is required to make book-entry
transfers of the certificates among DTC participants on whose behalf it
acts with respect to the certificates and to receive and transmit
distributions of principal, premium, if any, and interest with respect to
the certificates. DTC participants and indirect DTC participants with which
certificateholders have accounts similarly are required to make book-entry
transfers and receive and transmit such payments on behalf of their
respective customers. Certificateholders that are not DTC participants or
indirect DTC participants but desire to purchase, sell or otherwise
transfer ownership of, or other interests in, the certificates may do so
only through DTC participants and indirect DTC participants. In addition,
certificateholders will receive all distributions of principal, premium, if
any, and interest from the pass through trustee through DTC participants or
indirect DTC participants, as the case may be. Under a book-entry format,
certificateholders may experience some delay in their receipt of payments
because payments with respect to the certificates will be forwarded by the
pass through trustee to Cede, as nominee for DTC. We expect DTC to forward
payments in same-day funds to each DTC participant who is credited with
ownership of the certificates in an amount proportionate to the principal
amount of that DTC participant's holdings of beneficial interests in the
certificates, as shown on the records of DTC or its nominee. We also expect
that DTC participants will forward payments to indirect DTC participants or
certificateholders, as the case may be, in accordance with standing
instructions and customary industry practices. DTC participants will be
responsible for forwarding distributions to certificateholders.
Accordingly, although certificateholders will not possess physical
certificates, DTC's rules provide a mechanism by which certificateholders
will receive payments on the certificates and will be able to transfer
their interests.
Unless and until physical certificates are issued under the
limited circumstances described below, the only physical certificateholder
will be Cede, as nominee of DTC. Certificateholders will not be recognized
by the pass through trustee as registered owners of certificates under the
pass through trust agreement. Certificateholders will be permitted to
exercise the rights under the pass through trust agreement only indirectly
through DTC and DTC participants. DTC has advised us that it will take any
action permitted to be taken by a certificateholder under the pass through
trust agreement only at the direction of one or more DTC participants to
whose accounts with DTC the certificates are credited. Additionally, DTC
has advised us that in the event any action requires approval by
certificateholders of a certain percentage of the beneficial interests in a
pass through trust, DTC will take such action only at the direction of and
on behalf of DTC participants whose holdings include undivided interests
that satisfy any such percentage. DTC may take conflicting actions with
respect to other undivided interests to the extent that such actions are
taken on behalf of DTC participants whose holdings include those undivided
interests. DTC will convey notices and other communications to DTC
participants, and DTC participants will convey notices and other
communications to indirect DTC participants and to certificateholders in
accordance with arrangements among them. Arrangements among DTC and its
direct and indirect participants are subject to any statutory or regulatory
requirements as may be in effect from time to time. DTC's rules applicable
to itself and DTC participants are on file with the SEC.
A certificateholder's ability to pledge the certificates to
persons or entities that do not participate in the DTC system, or otherwise
to act with respect to such certificates may be limited due to the lack of
a physical certificate to evidence ownership of the certificates and
because DTC can only act on behalf of DTC participants, who in turn act on
behalf of indirect DTC participants.
None of us, our parent or the pass through trustees will
have any liability for any aspect of the records relating to or payments
made on account of beneficial ownership interests in the certificates held
by Cede, as nominee for DTC, for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests or for the
performance by DTC, any DTC participant or any indirect DTC participant of
their respective obligations under the rules and procedures governing their
obligations.
The applicable prospectus supplement will specify any
additional book-entry registration procedures applicable to certificates
denominated in a currency other than United States dollars.
The information contained in this prospectus concerning DTC
and its book entry system has been obtained from sources we believe to be
reliable, but we take no responsibility for the accuracy thereof.
Same-Day Settlement and Payment
As long as the certificates are registered in the name of
DTC or its nominee, we will make all payments under any lease or any owned
aircraft indenture in immediately available funds. The pass through
trustees will pass through to DTC all payments received from us, including
the final distribution of principal with respect to the certificates of any
pass through trust in immediately available funds.
Any certificates registered in the name of DTC or its
nominee will trade in DTC's Same-Day Funds Settlement System until
maturity. DTC will require secondary market trading activity in the
certificates to settle in immediately available funds. We cannot give any
assurance as to the effect, if any, of settlement in same-day funds on
trading activity in the certificates.
Physical Certificates
Physical certificates will be issued in paper form to
certificateholders or their nominees, rather than to DTC or its nominee,
only if:
o we advise a pass through trustee in writing that DTC
is no longer willing or able to discharge properly
its responsibilities as depository with respect to
the certificates and we or the pass through trustee
is unable to locate a qualified successor;
o we elect to terminate the book-entry system through
DTC; or
o after the occurrence of certain events of default or
other events specified in the related prospectus
supplement, certificateholders owning at least a
majority in interest in a pass through trust advise
the applicable pass through trustee, us and DTC
through DTC participants that the continuation of a
book-entry system through DTC participants is no
longer in the certificateholders' best interest.
If physical certificates are to be issued by a pass through trust, the
applicable pass through trustee will notify all certificateholders through
DTC of the availability of physical certificates. Upon surrender by DTC of
certificates representing the global physical certificates and receipt of
instructions for re-registration, the pass through trustee will reissue the
certificates as physical certificates to certificateholders.
After physical certificates are issued, the pass through
trustee or a paying agent will make distributions of principal, premium, if
any, and interest with respect to certificates directly to holders in whose
names the physical certificates were registered at the close of business on
the applicable record date. Except for the final payment to be made with
respect to a certificate, the pass through trustee or a paying agent will
make distributions by check mailed to the addresses of the registered
holders as they appear on the register maintained by the pass through
trustee. The pass through trustee or a paying agent will make the final
payment with respect to any pass through certificate only upon presentation
and surrender of the applicable pass through certificate at the office or
agency specified in the notice of final distribution to certificateholders.
Physical certificates will be freely transferable and
exchangeable at the office of the pass through trustee upon compliance with
the requirements set forth in the pass through trust agreement. Neither the
pass through trustee nor any transfer or exchange agent will impose a
service charge for any registration of transfer or exchange. However, the
pass through trustee or transfer or exchange agent will require payment of
a sum sufficient to cover any tax or other governmental charge.
DESCRIPTION OF THE SECURED PROMISSORY NOTES
The statements made under this caption are summaries of
terms that we expect will be common to all secured promissory notes. Where
no distinction is made between the leased aircraft notes and the owned
aircraft notes or between their respective indentures, the statements refer
to all secured promissory notes and all indentures. Most of the financial
and other specific terms of any series of secured promissory notes will be
described in a prospectus supplement to be attached to this prospectus.
Since the terms of the secured promissory notes may differ from the general
information provided below, you should rely on the information in the
prospectus supplement instead of the information in this prospectus if the
information in the prospectus supplement is different from the information
below.
The following information is a summary and does not describe
every aspect of the secured promissory notes. The summary is subject to all
the provisions of the applicable secured promissory notes, indentures,
leases, note purchase agreements, pass through trust agreements,
participation agreements, intercreditor and subordination agreements,
liquidity facilities and other agreements and arrangements relating to any
series of secured promissory notes.
Additional provisions with respect to the secured promissory
notes and the associated aircraft financing transactions will be described
in the applicable prospectus supplement. To the extent that any provision
in any prospectus supplement is inconsistent with any provisions in this
summary, the provision of the prospectus supplement will control.
GENERAL
The secured promissory notes will be issued under
indentures. Promissory notes secured by an aircraft that is leased to us
will be non-recourse and will be issued under an indenture between an owner
trustee and a loan trustee. Promissory notes secured by an aircraft that is
owned by us will be recourse to us and will be issued under an indenture
between a loan trustee and us.
The leased aircraft notes will be non-recourse obligations
of the applicable owner trustee. All of the leased aircraft notes issued
under the same indenture will relate to and will be secured by one or more
specific aircraft leased to us. Unless otherwise specified in the
applicable prospectus supplement, leased aircraft notes will not be secured
by any other aircraft.
We will be the issuer of owned aircraft notes. The owned
aircraft notes will be our direct recourse obligations. All of the owned
aircraft notes issued under the same indenture will relate to, and will be
secured by, one or more specific aircraft that we own. Unless otherwise
specified in the applicable prospectus supplement, the owned aircraft notes
will not be secured by any other aircraft.
If specified in a prospectus supplement, we will have the
right (a) to arrange a sale and leaseback of one or more aircraft that we
own referred to in the prospectus supplement and the assumption, on a
non-recourse basis, of the related owned aircraft notes by an owner trustee
or (b) to substitute other aircraft, cash or U.S. government securities or
a combination thereof in place of the aircraft that we own securing the
related owned aircraft notes. The terms and conditions of any sale and
leaseback or aircraft substitution will be described in the applicable
prospectus supplement.
If specified in a prospectus supplement, one of our
affiliates may act as an owner participant in a leveraged lease
transaction. If one of our affiliates acts as owner participant, it may
transfer its interest in the owner trust to a third party at any time
during the term of the lease. In connection with that transfer, the lease
and other documents may be amended and the secured promissory notes issued
under the applicable indenture may be amended or refinanced.
PRINCIPAL AND INTEREST PAYMENTS
The secured promissory notes will bear interest at the rates
set forth in the applicable indenture. We expect that the rates set forth
in the applicable indenture for each series of secured promissory notes
will be the same rate as the annual rate for the certificates issued by the
pass through trust that purchases that series of secured promissory notes.
Interest on the secured promissory notes will be payable by the issuer of
those secured promissory notes on each day that is a regular distribution
date for the certificates issued by the pass through trust that purchases
those secured promissory notes.
The issuer of any series of secured promissory notes will
repay principal in accordance with the schedule set forth in the applicable
prospectus supplement. The principal amortization schedule for each
individual aircraft financing will vary to reflect the economic terms of
the individual financing.
If any date scheduled for any payment of principal, premium,
if any, or interest with respect to a secured promissory note is not a
business day, the payment will be made on the next succeeding business day
without any additional interest, unless otherwise provided in the
applicable prospectus supplement.
REDEMPTION
The applicable prospectus supplement will describe the
circumstances under which the secured promissory notes may be redeemed or
purchased prior to their stated maturity date, in whole or in part. In
addition, the prospectus supplement will describe the premium, if any,
applicable upon redemptions or purchases and other terms applying to the
redemptions or purchases of the secured promissory notes.
SECURITY
The leased aircraft notes will be secured by:
o an assignment by the related owner trustee to the
related loan trustee of that owner trustee's rights,
except for certain rights described below, under the
lease or leases or other agreements with respect to
the related aircraft leased by us, including the
right to receive payments of rent under the
applicable lease; and
o a mortgage granted to the related loan trustee in the
aircraft financed by the issue of those leased
aircraft notes, subject to our rights under the lease
or leases relating to that aircraft and other
property rights, if any, described in the applicable
prospectus supplement.
With respect to the leased aircraft, the assignment by the
related owner trustee to the related loan trustee of its rights under the
related lease will exclude, among other things:
o rights of the owner trustee and the related owner
participant to indemnification by us for certain
matters;
o insurance proceeds payable to the owner trustee in
its individual capacity and to the owner participant
under liability insurance that we maintain pursuant
to the lease or that the owner trustee or the owner
participant maintains;
o insurance proceeds payable to the owner trustee or to
the owner participant under certain casualty
insurance maintained by the owner trustee or the
owner participant pursuant to the lease; and
o any rights of the owner participant or the owner
trustee to enforce payment of the foregoing amounts
and their respective rights to the proceeds of the
foregoing indemnification and insurance.
In addition, the assignment will be limited to provide that,
unless and until a default occurs and is continuing under an indenture with
respect to a leased aircraft, the related loan trustee may exercise only
limited rights of the related owner trustee under the related lease.
All of the leases will be net leases. Under a net lease, we
are obligated, among other things and at our expense, to cause each
aircraft leased by us to be duly registered, to pay all costs of operating
the aircraft and to maintain, service, repair and overhaul, or cause to be
maintained, serviced, repaired and overhauled, the aircraft.
Unless otherwise specified in the applicable prospectus
supplement, the secured promissory notes will not be cross-collateralized
and consequently the secured promissory notes issued in respect of any one
aircraft will not be secured by any other aircraft or, in the case of
leased aircraft notes, the lease related to any other aircraft.
The owned aircraft notes will be secured by a mortgage
granted to the related loan trustee of all of our right, title and interest
in and to the applicable aircraft owned by us. Under the terms of each
owned aircraft indenture, we will be obligated, among other things and at
our expense, to cause each owned aircraft to be duly registered, to pay all
costs of operating the aircraft and to maintain, service, repair and
overhaul, or cause to be maintained, serviced, repaired or overhaul, the
aircraft.
The prospectus supplement will describe the required
insurance coverage with respect to the aircraft financed with the proceeds
from the pass through certificates issued.
Except in certain circumstances, we will keep each aircraft
registered under the Transportation Code. In addition, we will record the
indentures, the leases and other documents necessary for a valid conveyance
of an interest in the aircraft under the Transportation Code. Each
indenture will be effective to create a valid security interest that is
subject to that indenture. When that indenture and other appropriate
documents are filed with the FAA in accordance with the Transportation Code
and uniform commercial code financing statements are filed in all
appropriate jurisdictions, the loan trustee will have a perfected security
interest in the related aircraft whenever it is located in the United
States or any of its territories and possessions.
The Convention on the International Recognition of Rights in
aircraft (the "Convention") provides that this security interest will also
be recognized, with certain limited exceptions, in those jurisdictions that
have ratified or adhere to the Convention. We will have the right, subject
to certain conditions, at our own expense to register each aircraft in
countries other than the United States. Each aircraft may also be operated
by us or under lease, sublease or interchange arrangements in countries
that are not parties to the Convention. The extent to which the related
loan trustee's security interest would be recognized in an aircraft located
in a country that is not a party to the Convention, and the extent to which
such security interest would be recognized in a jurisdiction adhering to
the Convention if the aircraft is registered in a jurisdiction not a party
to the Convention, is uncertain. Moreover, in the case of a default under
an indenture, the ability of the related loan trustee to realize upon its
security interest in an aircraft could be adversely affected as a legal or
practical matter if such aircraft is registered or located outside the
United States.
The loan trustee will invest and reinvest funds, if any,
held by it from time to time under an indenture. The loan trustee will, at
our direction, invest and reinvest funds, in certain investments described
in the applicable indenture. We will not be entitled to direct the loan
trustee to invest and reinvest funds with respect to a leased aircraft, in
the case of a default under the applicable lease or, with respect to an
owned aircraft, in the case of a default under the applicable indenture. We
will pay the net amount of any loss resulting from these investments.
Section 1110 of the U.S. Bankruptcy Code provides in
relevant part that, unless certain events occur after the commencement of a
Chapter 11 case, the right of lessors, conditional vendors and holders of
security interests with respect to equipment (as defined in Section 1110 of
the U.S. Bankruptcy Code and described below) to take possession of such
equipment in compliance with the provisions of a lease, conditional sale
contract or security agreement, as the case may be, is not affected by:
o the automatic stay provision of the U.S. Bankruptcy
Code, which provision prevents repossessions by
creditors for the duration of the reorganization
period;
o the provision of the U.S. Bankruptcy Code allowing
the trustee in reorganization to use property of the
debtor during the reorganization period;
o Section 1129 of the U.S. Bankruptcy Code (which
governs the confirmation of plans of reorganization
in Chapter 11 cases); or
o any power of the bankruptcy court to prevent a
repossession.
Specifically, Section 1110 provides in relevant part that
the right of a lessor, conditional vendor or holder of a security interest
to take possession of an aircraft upon an event of default may not be
exercised for 60 days following the date of commencement of the
reorganization proceedings (unless specifically permitted by the bankruptcy
court) and may not be exercised at all if, within such 60-day period (or
such longer period consented to by the lessor, conditional vendor or holder
of a security interest), the trustee in reorganization agrees to perform
the debtor's obligations that become due on or after such date and cures
all existing defaults (other than defaults resulting solely from the
financial condition, bankruptcy, insolvency or reorganization of the
debtor). "Equipment" is defined in Section 1110 of the U.S. Bankruptcy
Code, in part, as an aircraft, aircraft engine, propeller, appliance, or
spare part (as defined in Section 40102 of Title 49 of the U.S. Code) that
is subject to a security interest granted by, leased to, or conditionally
sold to a debtor that is a citizen of the United States (as defined in
Section 40102 of Title 49 of the U.S. Code) holding an air carrier
operating certificate issued by the Secretary of Transportation pursuant to
chapter 447 of Title 49 of the U.S. Code for aircraft capable of carrying
10 or more individuals or 6,000 pounds or more of cargo (subject to certain
limitations in the case of equipment first placed in service on or prior to
October 22, 1994).
It will be a condition to the pass through trustee's
obligation to purchase secured promissory notes with respect to each
aircraft that our outside counsel provide its opinion to the pass through
trustee that (a) if the aircraft is a leased aircraft, the owner trustee,
as lessor under the lease for that aircraft, and the loan trustee, as
assignee of such owner trustee's rights under the lease pursuant to the
applicable indenture, will be entitled to the benefits of Section 1110 of
the U.S. Bankruptcy Code with respect to the airframe and engines
comprising that aircraft or (b) if that aircraft is an owned aircraft, the
loan trustee will be entitled to the benefits of Section 1110 with respect
to the airframe and engines comprising such owned aircraft, in each case as
long as we continue to be a citizen of the United States as defined in
Section 40102 of Title 49 of the U.S. Code holding an air carrier operating
certificate issued by the Secretary of Transportation pursuant to Chapter
447 of Title 49 of the U.S. Code for aircraft capable of carrying 10 or
more individuals or 6,000 pounds or more of cargo. This Section 1110
opinion will not address the possible replacement of an aircraft after an
"Event of Loss", as defined in the applicable indenture, in the future.
RANKING OF SECURED PROMISSORY NOTES
Some of the secured promissory notes related to one or more
aircraft may be subordinated and junior in right of payment to other
secured promissory notes related to the same aircraft. The terms of any
subordination will be described in the related prospectus supplement.
PAYMENTS UNDER LEASES AND LIMITATION OF LIABILITY
We will lease each leased aircraft from an owner trustee for
a term commencing on the delivery date of the aircraft to the owner trustee
and expiring no earlier than the latest maturity date of the related leased
aircraft notes, unless previously terminated as permitted by the terms of
the related lease. We will make basic rent and other payments under each
lease and the related documents to an owner trustee, as lessor. The owner
trustee will assign all payments of basic rent and certain other payments
to the related loan trustee. The loan trustee will, on behalf of the owner
trustee, apply the funds assigned to it under the related indenture to pay
scheduled principal of, premium, if any, and interest due from such owner
trustee on the leased aircraft notes issued under the related indenture.
The balance of any basic rent or other assigned amount under each lease and
related documents, after payment of amounts due on the leased aircraft
notes issued under the related indenture, will be paid over to the
applicable owner trustee. In certain cases, the basic rent and other
payments under a lease may be adjusted, but each lease will provide that
under no circumstances will total payments by us be less than the scheduled
payments on the related leased aircraft notes. In some cases, an owner
participant may be required to make payments to an owner trustee that are
to be used by the owner trustee to pay principal of, and interest on, the
secured promissory notes. If an owner participant is required to make
payments to be used by an owner trustee to pay principal of, and interest
on, the secured promissory notes and the owner participant fails to make
the payment, we will be required to provide the owner trustee with funds
sufficient to make the payment. Our obligations to pay rent and to cause
other payments to be made under each lease and related documents will be
general unsecured obligations.
Except in circumstances in which we purchase a leased
aircraft and assume the related leased aircraft notes, the leased aircraft
notes will not be obligations of, or guaranteed by, us or our parent. None
of the owner trustees, the owner participants or the loan trustees will be
personally liable to any holder of leased aircraft notes for amounts
payable under the leased aircraft notes. Except as provided in the
indentures relating to the leased aircraft notes, no owner trustee or loan
trustee will be liable or incur any liability under the indentures. Except
when we have assumed any leased aircraft notes and except when an owner
participant provides funds to be used by an owner trustee to pay principal
of, or interest on, the secured promissory notes, all amounts payable under
any leased aircraft notes will be made only from:
o the assets subject to the lien of the applicable
indenture with respect to the aircraft or the income
and proceeds received by the related loan trustee
from that aircraft (including assigned rent payable
by us under the related lease);
o if so provided in the related prospectus supplement,
the applicable liquidity facility; or
o payments made in connection with optional redemptions
or purchases by the related owner trustee or the
related owner participant.
If an owner participant is required to make payments to be used by an owner
trustee to pay principal of, and interest on, the secured promissory notes
and the owner participant fails to make the payment, we will be required to
provide the owner trustee with funds sufficient to make the payment.
Except as otherwise provided in the applicable indenture, no
owner trustee will be personally liable for any amount payable or for any
statements, representations, warranties, agreements or obligations under
any indenture or under any leased aircraft notes except for its own willful
misconduct or gross negligence. In general, none of the owner participants
will have any duty or responsibility under the leased aircraft indentures
or under the leased aircraft notes.
Our obligations under each owned aircraft indenture and
under the owned aircraft notes will be secured obligations.
DEFEASANCE OF THE INDENTURES AND THE SECURED PROMISSORY NOTES IN CERTAIN
CIRCUMSTANCES
Unless otherwise specified in the applicable prospectus
supplement, an indenture may provide that the obligations of the related
loan trustee, the related owner trustee or us, as the case may be, under
that indenture will be deemed to have been discharged and paid in full on
the 91st day after the date that money or certain United States government
securities, in an aggregate amount sufficient to pay when due (including as
a consequence of redemption in respect of which notice is given on or prior
to the date of such deposit) principal, premium and interest with respect
to all secured promissory notes issued under that indenture, are
irrevocably deposited with the related loan trustee. The discharge may
occur only if, among other things, there has been published by the IRS a
ruling or regulation to the effect that holders of the secured promissory
notes will not recognize income, gain or loss for federal income tax
purposes as a result of the deposit, defeasance and discharge and will be
subject to federal income tax on the same amount and in the same manner and
at the same time as would have been the case if the deposit, defeasance and
discharge had not occurred. Certain obligations, including the obligations
to register the transfer or exchange of secured promissory notes, to
replace stolen, lost, destroyed or mutilated secured promissory notes and
to maintain paying agencies and hold money for payment in trust may not be
defeased.
Upon defeasance of the secured promissory notes, or upon
payment in full of the principal of, premium, if any, and interest on all
secured promissory notes issued under any indenture on the applicable
maturity date, or upon deposit with the applicable loan trustee of
sufficient money no earlier than one year prior to the date of such
maturity, the holders of the secured promissory notes will have no
beneficial interest in or other rights with respect to the related aircraft
or other assets subject to this lien of the indenture and the lien will
terminate.
ASSUMPTION OF OBLIGATIONS BY US AIRWAYS
Unless otherwise specified in the applicable prospectus
supplement, upon our purchase of any leased aircraft prior to the end of
the applicable term, we may assume on a full recourse basis all of the
obligations of the owner trustee, other than its obligations in its
individual capacity, under the indenture and the leased aircraft notes
relating to that lease. If we assume leased aircraft notes, provisions
relating to maintenance, possession and use of the related aircraft, liens
and insurance will be incorporated into the indenture. If we assume leased
aircraft notes in connection with our purchase of a leased aircraft, leased
aircraft notes issued under the indenture will not be redeemed and will
continue to be secured by the aircraft. We may not assume leased aircraft
notes unless, among other things, we have provided an opinion of counsel to
the effect that:
o the loan trustee will be entitled to the benefits of
Section 1110 of the U.S. Bankruptcy Code, except that
the opinion need only be given if, immediately prior
to the assumption, the owner trustee would have been
entitled to the benefits of Section 1110; and
o holders of the secured promissory notes being assumed
will not recognize income, gain or loss for federal
income tax purposes as a result of the assumption and
will be subject to federal income tax on the same
amount and in the same manner and at the same time as
would have been the case if the assumption had not
occurred.
PARENT GUARANTEE
Our parent may guarantee the full and prompt payment of any
or all amounts payable or provided by us under the leases and other
agreements related to a series of certificates and the full and prompt
payment by us of principal of, premium, if any, and interest on owned
aircraft notes related to a series of certificates. Any guarantee will be
described in the prospectus supplement relating to the series of
certificates issued by a pass through trust that owns the leased aircraft
notes or owned aircraft notes and will indirectly or directly benefit from
this guarantee. Unless otherwise stated in the applicable prospectus
supplement, we anticipate that this guarantee:
o will be unconditional;
o will be enforceable without any need first to enforce
any lease or owned aircraft note against us; and
o will be an unsecured obligation of our parent.
INTERCREDITOR ISSUES
Secured promissory notes may be issued in different classes,
which means that the secured promissory notes may have different payment
priorities even though they are issued by the same borrower, relate to the
same aircraft and are issued under the same indenture. If multiple classes
of secured promissory notes are issued, the related prospectus supplement
will describe the priority of distributions among the secured promissory
notes, the ability of any class to exercise and/or enforce any or all
remedies with respect to the related aircraft, and, if the secured
promissory notes are leased aircraft notes, the related lease, and other
intercreditor terms and provisions.
OWNER PARTICIPANT; REVISIONS TO AGREEMENTS
If specified in the applicable prospectus supplement, at the
time certificates are issued, we may still be seeking owner participants to
invest in certain leveraged lease transactions for the aircraft. The
prospective owner participants may request revisions to the forms of
participation agreement, lease, trust agreement and indenture so that the
terms of the agreements applicable to these aircraft may differ from the
description of the agreements contained in the applicable prospectus
supplement.
The terms of those agreements, however, will be required to:
o contain certain mandatory document terms; or
o not vary certain mandatory economic terms.
In addition, we will be obligated:
o to certify to the pass through trustee that the
modifications will not materially and adversely
affect the certificateholders; and
o if the forms of documents are modified in any
material respect that is adverse to the
certificateholders, to obtain written confirmation
from each rating agency that the use of modified
versions of such agreements will not result in a
withdrawal, suspension or downgrading of the rating
of any class of certificates.
U.S. INCOME TAX MATTERS
GENERAL
The following summary describes the material U.S. federal
income tax consequences to certificateholders of the purchase, ownership
and disposition of the certificates offered by this prospectus and in the
opinion of Skadden, Arps, Slate, Meagher & Flom LLP, tax counsel to US
Airways, is accurate in all material respects with respect to the matters
discussed in this prospectus. Except as otherwise specified, the summary is
addressed to the initial beneficial owners of certificates that are
citizens or residents of the United States, corporations, partnerships or
other entities created or organized in or under the laws of the United
States or any state therein, or estates, the income of which is subject to
U.S. federal income taxation regardless of its source, or trusts if a court
within the U.S. is able to exercise primary jurisdiction over the
administration of the trust and one or more U.S. persons have the authority
to control all substantial decisions of the trust that will hold the
certificates as capital assets. This summary does not address the tax
treatment of U.S. certificateholders that may be subject to special tax
rules, for example, banks or insurance companies, nor does it address the
tax treatment of U.S. certificateholders that do not acquire certificates
at the initial offering price as part of the initial offering. This summary
is not a comprehensive description of all of the tax considerations that
may be relevant to a decision to purchase certificates. It does not
describe any tax consequences arising under the laws of any state, locality
or taxing jurisdiction other than the United States.
The summary is based on laws, regulations, rulings and
decisions in effect on the date of this prospectus. Changes to existing law
could have a retroactive effect and could alter the tax consequences
discussed below. No rulings have been sought from the IRS with respect to
the federal income tax consequences, discussed below, and no assurances can
be given that the IRS will not take contrary positions. The pass through
trusts are not indemnified for any federal income taxes that may be imposed
upon them, and the imposition of those taxes on a pass through trust could
result in a reduction in the amounts available for distribution to the
certificateholders of that pass through trust. Prospective investors should
consult their own tax advisors with respect to the federal, state, local
and foreign tax consequences to them of the purchase, ownership and
disposition of the certificates.
TAX TREATMENT OF THE PASS THROUGH TRUSTS AND CERTIFICATEHOLDERS
Each pass through trust will not itself be subject to U.S.
federal income taxation. Each U.S. certificateholder will be required to
report on its federal income tax return its pro rata share of the entire
income from the secured promissory notes and any other property held in the
related pass through trust, in accordance with the U.S. certificateholder's
method of accounting. Accordingly, each U.S. certificateholder's share of
interest paid on the secured promissory notes will be taxable as ordinary
income, as it is paid or accrued, and a U.S. certificateholder's share of
any premium paid on redemption of a secured promissory note will be treated
as capital gain. If the proceeds from the sale of certificates are invested
with a depositary or held pursuant to an escrow arrangement prior to the
purchase of secured promissory notes by a pass through trust, the resulting
deposits may be subject to the original issue discount rules, with the
result that a U.S. certificateholder may be required to include interest
income from that deposit under the accrual method of accounting regardless
of its normal method. If certificates issued by a pass through trust are
supported by a liquidity facility, any amounts received by the pass through
trust under the liquidity facility for unpaid interest will be treated for
U.S. federal income tax purposes as having the same characteristics as the
payments they replace.
Each U.S. certificateholder will be entitled to deduct,
consistent with its method of accounting, its pro rata share of fees and
expenses paid or incurred by the corresponding pass through trust as
provided in Section 162 or 212 of the Internal Revenue Code of 1986,
referred to as the Code. Certain fees and expenses, including fees paid to
the pass through trustee and the provider of the liquidity facility, if
applicable, will be paid by parties other than the certificateholders.
These fees and expenses could be treated as constructively received by the
pass through trust, in which event a U.S. certificateholder could be
required to include in income and entitled to deduct its pro rata share of
the fees and expenses. If a U.S. certificateholder is an individual, estate
or trust, the deduction for the certificateholder's share of fees or
expenses will be allowed only to the extent that all of the
certificateholder's miscellaneous itemized deductions, including the
certificateholder's share of fees and expenses, exceed 2% of the
certificateholder's adjusted gross income. In addition, in the case of U.S.
certificateholders who are individuals, certain otherwise allowable
itemized deductions will be subject generally to additional limitations on
itemized deductions under applicable provisions of the Code.
EFFECT OF SUBORDINATION ON CERTIFICATEHOLDERS OF SUBORDINATED TRUSTS
In the event that any pass through trust is subordinated in
right of payment to any other pass through trust and the subordinated trust
receives less than the full amount of the interest, principal or premium
paid with respect to the secured promissory notes held by it because of the
subordination of the pass through trust, the certificateholders of the
subordinated trust would probably be treated for federal income tax
purposes as if they had (a) received as distributions their full share of
principal, interest, or premium, (b) paid over to a preferred class of
certificateholders an amount equal to their share of the amount of the
shortfall, and (c) retained the right to reimbursement of the amount of the
shortfall to the extent of future amounts payable to the certificateholders
of the subordinated trust on account of the shortfall.
Under this analysis, (a) subordinated certificateholders
incurring a shortfall would be required to include as current income any
interest or other income of the subordinated trust that was a component of
the shortfall, even though such amount was in fact paid to a preferred
class of certificateholders, (b) a loss would only be allowed to
subordinated certificateholders when their right to receive reimbursement
of the shortfall becomes worthless (i.e., when it becomes clear that funds
will not be available from any source to reimburse the shortfall), and (c)
reimbursement of the shortfall prior to a claim of worthlessness would not
be taxable income to certificateholders because the amount reimbursed would
have been included in income. These results should not significantly affect
the inclusion of income for certificateholders on the accrual method of
accounting, but could accelerate inclusion of income to certificateholders
on the cash method of accounting by, in effect, placing them on the accrual
method.
ORIGINAL ISSUE DISCOUNT
The secured promissory notes may be issued with original
issue discount ("OID"). The prospectus supplement will state whether any
secured promissory notes to be held by the related pass through trust will
be issued with OID. Generally, a holder of a debt instrument issued with
OID that is not negligible must include such OID in income for federal
income tax purposes as it accrues, in advance of the receipt of the cash
attributable to this income, under a method that takes into account the
compounding of interest.
SALE OR OTHER DISPOSITION OF THE CERTIFICATES
Upon the sale, exchange or other disposition of a
certificate, a U.S. certificateholder generally will recognize capital gain
or loss equal to the difference between the amount realized on the sale or
exchange (other than any amount attributable to accrued interest which will
be taxable as ordinary income) and the U.S. certificateholder's adjusted
tax basis in the secured promissory notes and other property held by the
corresponding pass through trust. Any gain or loss will be long-term
capital gain or loss to the extent attributable to property held by the
pass through trust for more than one year. In the case of individuals,
estates, and trusts, the maximum U.S. federal income tax rate on long-term
capital gains generally is 20%. In the event that the proceeds from the
sale of certificates are invested with a depositary or held pursuant to an
escrow arrangement prior to the purchase of secured promissory notes by a
pass through trust, any gain with respect to an interest in the resulting
deposits likely will be treated as ordinary income.
FOREIGN CERTIFICATEHOLDERS
Under present U.S. federal income tax law, assuming certain
certification requirements are satisfied (which include identification of
the beneficial owner of a certificate), and subject to the discussion of
backup withholding below:
o interest paid (including any OID) on a certificate
to, or on behalf of, any beneficial owner of a
certificate that is not a U.S. person will not be
subject to U.S. federal income tax or withholding tax
provided that (a) the non-U.S. certificateholder does
not actually or constructively own 10% or more of the
total combined voting power of all classes of stock
of an owner participant or us, (b) the non-U.S.
certificateholder is not (A) a bank receiving
interest pursuant to a loan agreement entered into in
the ordinary course of its trade or business, or (B)
a controlled foreign corporation for U.S. tax
purposes that is related to an owner participant or
us, and (c) the interest payments are not effectively
connected with the non-U.S. certficateholder's
conduct of a U.S. trade or business; and
o a non-U.S. certificateholder will not be subject to
U.S. federal income tax on any capital gain realized
on the sale, exchange or other disposition of a
certificate, unless (a) the non-U.S.
certificateholder is an individual who is present in
the United States for 183 days or more during the
taxable year of the sale or exchange and certain
other requirements are met or (b) the gain is
effectively connected with the non-U.S.
certificateholder's conduct of a U.S. trade or
business.
The certification referred to above may be made on an IRS
Form W-8 or substantially similar substitute form.
INFORMATION REPORTING AND BACKUP WITHHOLDING
In general, information reporting requirements will apply to
certain payments within the United States of principal, interest, OID and
premium on the certificates, and to payments of the proceeds of certain
sales of certificates made to U.S. certificateholders other than certain
exempt recipients (such as corporations). A 31% backup withholding tax may
apply to the payments if the holder fails or has failed to provide an
accurate taxpayer identification number or otherwise establish an exemption
or fails to report in full interest income. With respect to non-U.S.
certificateholders, payments made on a certificate and proceeds from the
sale of a certificate owned by a non-U.S. certificateholder will generally
not be subject to information reporting requirements or the backup
withholding tax if the non-U.S. certificateholder provides the required
certification of its non-U.S. status or otherwise establishes an exemption.
Backup withholding is not an additional tax. Any amounts
withheld under the backup withholding rules will be allowed as a refund or
credit against the certificateholder's U.S. federal income tax liability,
if any, provided the required information is furnished to the IRS.
The Treasury Department recently issued final regulations
governing backup withholding and information reporting requirements. The
regulations do not significantly alter the substantive withholding and
information reporting requirements discussed above; they unify current
certification procedures and forms and clarify reliance standards. The
regulations will generally become effective for payments made after
December 31, 2000.
ERISA CONSIDERATIONS
Unless otherwise indicated in the applicable prospectus
supplement, the certificates may, subject to certain legal restrictions, be
purchased and held by an employee benefit plan subject to Title I of the
Employee Retirement Income Security Act of 1974, referred to as ERISA, or
an individual retirement account or an employee benefit plan subject to
section 4975 of the Code. A fiduciary of an employee benefit plan must
determine that the purchase and holding of a certificate is consistent with
its fiduciary duties under ERISA and does not result in a non-exempt
prohibited transaction as defined in section 406 of ERISA or section 4975
of the Code. Employee benefit plans which are governmental plans, as
defined in section 3(32) of ERISA, and certain church plans, as defined in
section 3(33) of ERISA, are not subject to Title I of ERISA or section 4975
of the Code. The certificates may, subject to certain legal restrictions,
be purchased and held by such plans.
PLAN OF DISTRIBUTION
Certificates may be sold to one or more underwriters for
public offering and sale by them to investors or other persons directly or
through one or more dealers or agents. Any underwriter, dealer or agent
involved in the offer and sale of the certificates will be named in an
applicable prospectus supplement.
The certificates may be sold from time to time in one or
more transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, at prices based on the
prevailing market prices or at negotiated prices. Dealer trading may take
place in certain of the certificates, including certificates not listed on
any securities exchange. We do not intend to apply for listing of the
certificates on a national securities exchange. We also may, from time to
time, authorize underwriters acting as our agents to offer and sell the
certificates upon the terms and conditions as will be set forth in any
prospectus supplement. In connection with the sale of certificates,
underwriters may be deemed to have received compensation from us in the
form of underwriting discounts or commissions and may also receive
commissions from purchasers of certificates for whom they may act as agent.
Underwriters may sell certificates to or through dealers, and dealers may
receive compensation in the form of discounts, concessions or commissions
from the underwriters and/or commissions (which may be changed from time to
time) from the purchasers for whom they may act as agent.
If a dealer is used directly by us in the sale of
certificates in respect of which this prospectus is delivered, the
certificates will be sold to the dealer, as principal. The dealer may then
resell the certificates to the public at varying prices to be determined by
the dealer at the time of resale. Any dealer used directly by us and the
terms of any sale to that dealer will be set forth in the related
prospectus supplement.
Certificates may be offered and sold through agents
designated by us from time to time. Any agent involved in the offer or sale
of the certificates in respect of which this prospectus is delivered will
be named in, and any commissions payable by us to that agent will be set
forth in, the applicable prospectus supplement. Unless otherwise indicated
in the applicable prospectus supplement, that agent will be acting on a
best efforts basis for the period of its appointment.
We may directly solicit offers to purchase certificates and
sales under those offerings may be made by us directly to institutional
investors or others who may be deemed to be underwriters within the meaning
of the Securities Act of 1933 with respect to any resale of the
certificates. We will describe the terms of these sales will be described
in the prospectus supplement. Except as set forth in the applicable
prospectus supplement, none of our directors, officers or employees will
solicit or receive a commission in connection with our direct sales of the
certificates, although those persons may respond to inquiries by potential
purchasers and perform ministerial and clerical work in connection with any
direct sales.
Any underwriting compensation that we pay to underwriters,
dealers or agents in connection with the offering of certificates, and any
discounts, concessions or commissions that underwriters allow to
participating dealers, will be set forth in an applicable prospectus
supplement. Underwriters, dealers and agents participating in the
distribution of the certificates may be deemed to be underwriters, and any
discounts and commissions received by them and any profit realized by them
on resale of the certificates may be deemed to be underwriting discounts
and commissions under the Securities Act. We may indemnify underwriters,
dealers and agents against certain civil liabilities, including liabilities
under the Securities Act. We may reimburse underwriters, dealers and agents
for expenses incurred in connection with the offer or sale of certificates.
Underwriters, dealers and agents may engage in transactions
with, or perform services for, us, our parent and our subsidiaries and
affiliates in the ordinary course of business.
If so indicated in an applicable prospectus supplement and
subject to existing market conditions, we will authorize dealers acting as
our agents to solicit offers by certain institutions to purchase
certificates at the public offering price set forth in the prospectus
supplement pursuant to delayed delivery contracts providing for payment and
delivery on the date or dates stated in that prospectus supplement. Each
contract will be for an amount not less than, and the aggregate principal
amount of certificates sold pursuant to contracts will be equal to, the
respective amounts stated in that prospectus supplement. Institutions with
whom contracts, when authorized, may be made include commercial and savings
banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and other institutions, in all
cases be subject to our approval. Contracts will not be subject to any
conditions except that the purchase by an institution of the certificates
covered by its contracts will not at the time of delivery be prohibited
under the laws of any jurisdiction in the United States to which that
institution is subject. A commission indicated in the applicable prospectus
supplement will be granted to underwriters and agents soliciting purchases
of certificates pursuant to contracts accepted by us. Agents and
underwriters will have no responsibility in respect of the delivery or
performance of contracts.
If any underwriter is utilized in the sale of any
certificates, the applicable prospectus supplement will contain a statement
as to the intention, if any, of the underwriter at the date of the
prospectus supplement to make a market in the certificates. No assurances
can be given that there will be a market for the certificates.
The place and time of delivery for the certificates in
respect of which this prospectus is delivered will be set forth in the
applicable prospectus supplement.
SELLING CERTIFICATEHOLDERS
Certificates issued pursuant to this prospectus may be
reoffered pursuant to this prospectus by the holders of certificates, from
time to time, in transactions on the open market, in negotiated
transactions, through the writing of options on the certificates or through
a combination of these methods of sale, at negotiated prices, fixed prices
that may be changed, market prices prevailing at the time of sale or prices
relating to the prevailing market prices. The selling certificateholders
may effect these transactions by selling the certificates to or through
broker-dealers, and the broker-dealers may receive compensation in the form
of discounts, concessions or commissions from the selling
certificateholders, the purchasers of certificates for whom the
broker-dealer may act as agent or to whom they may sell as principal or
both. We will not receive any part of the proceeds from the resale by the
selling certificateholders of any certificates pursuant to this prospectus.
Unless otherwise provided in the applicable prospectus supplement, we will
bear all expenses, other than selling discounts and commissions and fees
and expenses of the selling certificateholders, in connection with the
registration of the certificates being reoffered by the selling
certificateholders.
The identity of the selling certificateholders, the number
of certificates sold by the selling certificateholders and the price per
certificate will be determined at the time of the consummation of the
particular transaction. Specific information regarding the transaction, the
identity of the selling certificateholders and the number of certificates
to be resold may be provided at the time of the applicable transaction by
means of a supplement or a post-effective amendment to this prospectus, as
applicable.
The selling certificateholders and any broker-dealers who
act in connection with the sale of those certificates may be deemed to be
an "underwriter" within the meaning of Section 2(11) of the Securities Act,
and any commissions received by them and profit on any resale of those
certificates as principal may be deemed to be underwriting discounts and
commissions under the Securities Act. We intend to make available public
information concerning ourself in compliance with the Securities Act and
the related regulations and, accordingly, Rule 144 or Rule 145 under the
Securities Act may be available for use by holders of certificates to
effect transfers of those securities, subject to compliance with the
remaining provisions of those rules.
LEGAL OPINIONS
Unless otherwise indicated in the applicable prospectus
supplement, Skadden, Arps, Slate, Meagher & Flom (Illinois) and its
affiliates will render an opinion with respect to the validity of the
securities being offered by this prospectus. Unless otherwise indicated in
the applicable prospectus supplement, Skadden, Arps, Slate, Meagher & Flom
(Illinois) and its affiliates will rely on the opinion of counsel for the
pass through trustee as to certain matters relating to the authorization,
execution and delivery of the certificates by, and the valid and binding
effect on, the pass through trustee.
EXPERTS
The consolidated financial statements of US Airways and its
subsidiary and US Airways Group and its subsidiaries as of December 31,
1998 and 1997, and for each of the years in the three-year period ended
December 31, 1998 that are included in US Airways' and US Airways Group's
combined Annual Report on Form 10-K for the year ended December 31, 1998,
have been incorporated by reference in the registration statement in
reliance upon the reports of KPMG LLP, independent certified public
accountants, incorporated by reference, and upon the authority of KPMG LLP
as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We and our parent file annual, quarterly and special
reports, proxy statements and other information with the SEC under the
Securities Exchange Act of 1934. You may read and copy this information at
the following locations of the SEC:
Judiciary Plaza, Seven World Trade Center, Citicorp Center
450 Fifth Street, N.W. Suite 1300 500 West Madison Street,
Washington, D.C. 2054 New York, NY 10048 Suite 1400
Chicago, IL 60661
You may also obtain copies of this information by mail from
the Public Reference Room of the SEC, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. You may obtain information on the
operation of the Public Reference Room by calling the SEC at (800)
SEC-0330.
The SEC also maintains an internet world wide web site that
contains reports, proxy statements and other information about issuers,
like us, who file electronically with the SEC. The address of that site is
http://www.sec.gov.
You may also inspect reports, proxy statements and other
information about us at the offices of the New York Stock Exchange, Inc.,
20 Broad Street, New York, New York 10005.
We and our parent have filed jointly with the SEC a
registration statement on Form S-3 that registers the securities and
guarantees we are offering. The registration statement, including the
attached exhibits and schedules, contains additional relevant information
about us, our parent and the securities offered. The rules and regulations
of the SEC allow us to omit certain information included in the
registration statement from this prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to incorporate by reference information
into this prospectus. This means that we can disclose important information
to you by referring you to another document filed separately with the SEC.
The information incorporated by reference is considered to be part of this
prospectus, except for any information that is superseded by information
that is included directly in this document.
This prospectus includes by reference the documents listed
below that we and our parent previously have filed with the SEC and that
are not included in or delivered with this document. They contain important
information about our company and its financial condition.
FILING PERIOD
- ------ ------
Annual Report on Form 10-K Year ended December 31, 1998
Quarterly Report on Form 10-Q Quarter ended March 31, 1999
Current Reports on Form 8-K Filed January 21, 1999
Filed March 5, 1999
Filed March 30, 1999
Filed April 9, 1999
Filed April 21, 1999
Filed May 18, 1999
Filed June 4, 1999
Filed June 8, 1999
We incorporate by reference additional documents that we and
our parent may file with the SEC between the date of this prospectus and
the date of the closing of each offering. These documents include periodic
reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q and Current Reports on Form 8-K, as well as proxy statements.
You may obtain any of these documents from us without
charge, excluding any exhibits to those documents unless the exhibit is
specifically incorporated by reference as an exhibit to this prospectus.
You may obtain documents incorporated by reference in this prospectus by
requesting them in writing or by telephone from us at the following
address:
Secretary
US Airways, Inc.
2345 Crystal Drive
Arlington, Virginia 22227
(703) 872-7000.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with this offering,
other than underwriting discounts and commissions, are:
Securities and Exchange Commission registration filing fee $ 263,480
Printing and engraving expenses 600,000*
Pass through trustee fees and expenses 60,000*
Accounting fees and expenses 225,000*
Rating Agency fees 750,000*
Legal fees and expenses 750,000*
------------
Total $ 2,648,480
============
* Estimates
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's and US Airways Group's respective Restated
Certificate of Incorporation and By-laws provide that the Company and US
Airways Group, will indemnify their respective directors, officers and
employees, and will have the power to indemnify their respective other
agents, to the full extent permitted by the General Corporation Law of the
State of Delaware (the "GCL"), as amended from time to time (but, in the
case of any such amendment, only to the extent that such amendment
permitted the Company and US Airways Group, respectively, to provide on
June 29, 1989). As of the date of the Prospectus, Section 145 of the GCL,
forming a part of this Registration Statement, provides as follows:
(a) A corporation shall have power to indemnify any person who was
or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the corporation) by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by the
person in connection with such action, suit or proceeding if the person
acted in good faith and in a manner the person reasonably believed to be in
or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe
the person's conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which
the person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that the person's conduct was
unlawful.
(b) A corporation shall have power to indemnify any person who was
or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation
to procure a judgment in its favor by reason of the fact that the person is
or was a director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise against expenses (including attorneys' fees) actually
and reasonably incurred by the person in connection with the defense or
settlement of such action or suit if the person acted in good faith and in
a manner the person reasonably believed to be in or not opposed to the best
interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the
extent that the Court of Chancery or the court in which such action or suit
was brought shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, such person
is fairly and reasonably entitled to indemnity for such expenses which the
Court of Chancery or such other court shall deem proper.
(c) To the extent that a present or former director or officer of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of
this section, or in defense of any claim, issue or matter therein, such
person shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this
section (unless ordered by a court) shall be made by the corporation only
as authorized in the specific case upon a determination that
indemnification of the present or former director, officer, employee or
agent is proper in the circumstances because the person has met the
applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made, with respect to a person who is
a director or officer at the time of such determination, (1) by a majority
vote of the directors who are not parties to such action, suit or
proceeding, even though less than a quorum, or (2) by a committee or such
directors designated by majority vote of such directors, even though less
than a quorum, or (3) if there are no such directors, or if such directors
so direct, by independent legal counsel in a written opinion, or (4) by the
stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative, or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that such person is not
entitled to be indemnified by the corporation as authorized in this
section. Such expenses (including attorneys' fees) incurred by former
directors and officers or other employees and agents may be so paid upon
such terms and conditions, if any, as the corporation deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section will not be
deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any bylaw, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action
in such person's official capacity and as to action in another capacity
while holding such office.
(g) A corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against such person and incurred by such person in
any such capacity, or arising out of such person's status as such, whether
or not the corporation would have the power to indemnify such person
against such liability under this section.
(h) For purposes of this section, references to the corporation
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, will stand in the same position under
this section with respect to the resulting or surviving corporation as such
person would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, references to other enterprises
shall include employee benefit plans; references to fines shall include any
excise taxes assessed on a person with respect to any employee benefit
plan; and references to serving at the request of the corporation shall
include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such
director, officer, employee, or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner such person reasonably believed to be in the interest
of the participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner not opposed to the best interests of the
corporation as referred to in this section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive
jurisdiction to hear and determine all actions for advancement of expenses
or indemnification brought under this section or under any bylaw,
agreement, vote of stockholders or disinterested directors, or otherwise.
The Court of Chancery may summarily determine a corporation's obligation to
advance expenses (including attorneys' fees).
The Company maintains directors' and officers' liability
insurance.
ITEM 16. EXHIBITS
Reference is made to the Exhibit Index which immediately
precedes the exhibits filed with this Registration Statement, which is
incorporated herein by reference.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the Calculation of Registration Fee table in
the effective registration statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
provided, however, that the undertakings made in paragraphs (i) and (ii)
above do not apply if the information required by those paragraphs to be
included in a post-effective amendment is contained in periodic reports
filed with or furnished to the Securities and Exchange Commission by the
registrants pursuant to Section 13 or Section 15 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933 each such post-effective amendment will be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933,
each filing of the registrant's annual report pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference in the
registration statement will be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time will be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized in the City of Arlington, State of Virginia, on
July 13, 1999.
US AIRWAYS GROUP, INC.
By: /s/ Rakesh Gangwal
----------------------
Rakesh Gangwal, Director, President and Chief
Executive Officer (Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed by the following persons in the
capacities indicated, on July 13, 1999.
By: /s/ Rakesh Gangwal
------------------------------------
Rakesh Gangwal, Director, President
and Chief Executive Officer
(Principal Executive Officer)
By: /s/ Thomas A. Mutryn
------------------------------------
Thomas A. Mutryn
Senior Vice President - Finance and
Chief Financial Officer (Principal Financial Officer)
By: /s/ Anita P. Beier
-----------------------------------
Anita P. Beier
Vice President and Controller
(Principal Accounting Officer)
By: /s/ Stephen M. Wolf
------------------------------------
Stephen M. Wolf, Director and Chairman
By: *
-------------------------------------
Mathias J. DeVito, Director
By: *
--------------------------------------
Peter M. George, Director
By: *
--------------------------------------
Robert L. Johnson, Director
By: *
-------------------------------------
Robert LeBuhn, Director
By: *
-------------------------------------
John G. Medlin, Jr., Director
By: *
-------------------------------------
Hanne M. Merriman, Director
By: *
-------------------------------------
Thomas H. O'Brien, Director
By: *
-------------------------------------
Hilda Ochoa-Brillembourg, Director
By: *
-------------------------------------
Richard B. Priory, Director
By: *
-------------------------------------
Raymond W. Smith, Director
- ---------------
By: /s/ Thomas A. Mutryn
-----------------------------------
Thomas A. Mutryn, Attorney-In-Fact
* Signed pursuant to power of attorney filed on June 2, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized in the City of Arlington, State of Virginia, on
July 13, 1999.
US AIRWAYS, INC.
By: /s/ Rakesh Gangwal
------------------------
Rakesh Gangwal, Director, President and Chief
Executive Officer (Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed by the following persons in the
capacities indicated, on July 13, 1999.
By: /s/ Rakesh Gangwal
------------------------------------
Rakesh Gangwal, Director, President
and Chief Executive Officer
(Principal Executive Officer)
By: /s/ Thomas A. Mutryn
-----------------------------------
Thomas A. Mutryn
Senior Vice President - Finance and
Chief Financial Officer (Principal Financial
Officer)
By: /s/ Anita P. Beier
----------------------------------
Anita P. Beier
Vice President and Controller
(Principal Accounting Officer)
By: /s/ Stephen M. Wolf
----------------------------------
Stephen M. Wolf, Director and Chairman
By: *
-----------------------------------
Mathias J. DeVito, Director
By: *
-----------------------------------
Peter M. George, Director
By: *
-----------------------------------
Robert L. Johnson, Director
By: *
-----------------------------------
Robert LeBuhn, Director
By: *
-----------------------------------
John G. Medlin, Jr., Director
By: *
------------------------------------
Hanne M. Merriman, Director
By: *
------------------------------------
Thomas H. O'Brien, Director
By: *
------------------------------------
Hilda Ochoa-Brillembourg, Director
By: *
------------------------------------
Richard B. Priory, Director
By: *
------------------------------------
Raymond W. Smith, Director
- ---------------
By: /s/ Thomas A. Mutryn
----------------------------------
Thomas A. Mutryn, Attorney-In-Fact
* Signed pursuant to power of attorney filed on June 2, 1999.
EXHIBIT INDEX
Exhibit No. Description of Exhibit
- ----------- ----------------------
4.1 Form of Pass Through Trust Agreement*
4.2 Form of Pass Through Certificate (included as
part of Exhibit 4.1)*
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom
(Illinois)**
5.2 Opinion of Skadden, Arps, Slate, Meagher & Flom
LLP**
12 Statements re: computations of ratios*
23.1 Consent of KPMG LLP**
23.2 Consent of Skadden, Arps, Slate, Meagher & Flom
(Illinois) (included in its opinion filed as
Exhibit 5.1)**
23.3 Consent of Skadden, Arps, Slate, Meagher & Flom
LLP*
23.4 Consent of Skadden, Arps, Slate, Meagher & Flom
LLP (included in its opinion filed as Exhibit
5.2)**
24 Powers of Attorney*
25 Form T-1 Statement of Eligibility of Trustee
under the Trust Indenture Act of Trustee*
* Previously filed.
** Filed herewith.
Exhibit 5.1
July 14, 1999
US Airways, Inc.
US Airways Group, Inc.
2345 Crystal Drive
Arlington, VA 22227
Re: US Airways, Inc. Pass Through Certificates
Ladies and Gentlemen:
We have acted as special counsel to US Airways Inc., a Delaware
corporation ("US Airways"), and US Airways Group, Inc., a Delaware
corporation ("US Airways Group"), in connection with the registration
statement on Form S-3, as amended (the "Registration Statement") filed by
US Airways and US Airways Group on June 2, 1999 under the Securities Act of
1933, as amended (the "Act"), relating to (i) pass through certificates
("Pass Through Certificates") to be issued by one or more trusts (each a
"Trust") to be formed by US Airways and (ii) guarantees (the "Guarantees")
of US Airways Group to be issued in connection with the Pass Through
Certificates.
The Trusts are expected to acquire certain equipment notes
relating to aircraft either owned or leased by US Airways. The Pass
Through Certificates and Guarantees are expected to be issued and sold by
US Airways and US Airways Group from time to time pursuant to Rule 415
under the Act for an aggregate initial offering price (together with the
aggregate initial offering price of securities previously registered under
US Airways' registration statement on Form S-3 (File No. 333-64425) which
have not yet been sold and which, pursuant to Rule 429 under the Act, are
being carried forward from US Airways' prior registration statement and
being sold under the Basic Prospectus (defined below) included in the
Registration Statement) not to exceed $1,500,000,000 or the equivalent
thereof in one or more foreign currencies or composite currencies. The
Pass Through Certificates and the Guarantees will be issued in one or more
series under a pass through trust agreement to be entered into by US
Airways, US Airways Group and State Street Bank and Trust Company of
Connecticut, National Association (the "Trustee"), a form of which has been
filed as an exhibit to the Registration Statement (the "Pass Through Trust
Agreement"), as the same may from time to time be supplemented (each a
"Pass Through Trust Supplement"). The Pass Through Certificates and the
Guarantees will be sold or delivered from time to time as set forth in the
Registration Statement, any amendment thereto, the prospectus with respect
to the Pass Through Certificates contained in the Registration Statement
(the "Basic Prospectus") or any supplements thereto (the "Prospectus
Supplements").
This opinion is delivered in accordance with the requirements of
Item 601(b)(5) of Regulation S-K under the Act.
We are admitted to the practice of law in the State of Illinois
and express no opinion herein concerning any law other than the laws of the
State of New York, the General Corporation Law of the State of Delaware and
the laws of the United States of America to the extent specifically
referred to herein. Insofar as the opinions expressed herein relate to or
are dependent upon matters governed by the laws of the State of New York,
we have relied upon the opinion of Skadden, Arps, Slate, Meagher & Flom
LLP.
In connection with this opinion, we have examined originals, or
copies certified or otherwise identified to our satisfaction, of (i) the
Registration Statement, (ii) the Basic Prospectus, (iii) a form of the Pass
Through Trust Agreement, (iv) a form of Pass Through Certificate and a
specimen thereof, (v) the Statement of Eligibility and Qualification under
the Trust Indenture Act of 1939, as amended (the "1939 Act"), on Form T-1
of the Trustee, (vi) the Amended and Restated Certificate of Incorporation
of each of US Airways and US Airways Group, as currently in effect, (vii)
the By-Laws of each of US Airways and US Airways Group, as currently in
effect, and (viii) resolutions adopted by the Board of Directors of each of
US Airways and US Airways Group on May 19, 1999 relating to the filing of
the Registration Statement. We also have examined originals or copies,
certified or otherwise identified to our satisfaction, of such records of
US Airways and US Airways Group and such agreements, certificates of public
officials, certificates of officers and other representatives of US Airways
and US Airways Group and others, and such other documents, certificates and
records as we have deemed necessary or appropriate as a basis for the
opinion set forth herein.
In our examination, we have assumed the legal capacity of natural
persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original
documents of all documents submitted to us as certified or photostatic
copies and the authenticity of originals of all such documents. In making
our examination of documents executed by parties other than US Airways and
US Airways Group, we have assumed that such parties (including the Trustee)
had the power, corporate or other, to enter into and perform all
obligations thereunder and have also assumed the due authorization by all
requisite action, corporate or other, and execution and delivery by such
parties of such documents, and the validity and binding effect thereof on
such parties; provided, however, that we have not assumed the validity and
binding effect thereof with respect to the Trustee. As to any facts
material to the opinion expressed herein which we did not independently
establish or verify, we have relied upon oral or written statements and
representations of officers and other representatives of US Airways and US
Airways Group and others, including a Certificate of the Associate General
Counsel of US Airways.
In addition, we have assumed that (i) the Registration Statement,
as finally amended (including all necessary post-effective amendments), has
become effective and a Prospectus Supplement supplementing the Basic
Prospectus will have been prepared and filed with the Securities and
Exchange Commission (the "Commission") describing the respective Pass
Through Certificates, (ii) the Pass Through Trust Agreement shall have been
qualified under the 1939 Act, (iii) all Pass Through Certificates issued
will be issued and sold in compliance with applicable federal and state
securities laws and solely in the manner stated in the Registration
Statement, the Basic Prospectus and the appropriate Prospectus Supplement
and (iv) a definitive purchase, underwriting or similar agreement with
respect to any Pass Through Certificates will have been duly authorized and
validly executed and delivered by one or both of US Airways or US Airways
Group and the other party thereto.
Based upon the foregoing and subject to the limitations,
qualifications, exceptions and assumptions set forth herein, we are of the
opinion that:
1. With respect to each series of Pass Through Certificates, when
(i) the Pass Through Trust Agreement and the Pass Through Trust Supplement
relating to such series has been duly authorized and validly executed and
delivered by US Airways and the Trustee, (ii) the Board of Directors of US
Airways has taken all necessary corporate action to approve the terms of
such series of Pass Through Certificates and related matters, (iii) the
Pass Through Certificates of such series have been duly executed,
authenticated, issued and delivered in accordance with provisions of the
Pass Through Trust Agreement and the related Pass Through Trust Supplement
and (iv) the applicable definitive purchase, underwriting or similar
agreement is approved by the Board of Directors of US Airways, is duly
executed and delivered by the parties thereto and payment of the
consideration provided for therein is made, such Pass Through Certificates
will be valid and legally binding obligations of the Trustee as trustee of
the Trust.
2. With respect to the Guarantees, when (i) the Pass Through Trust
Agreement and the Pass Through Trust Supplement relating to such series has
been duly authorized and validly executed and delivered by US Airways, US
Airways Group and the Trustee, (ii) the Board of Directors of US Airways
Group has taken all necessary corporate action to approve the terms of such
Guarantees and related matters, (iii) such Guarantees have been duly
executed, issued and delivered in accordance with the provisions of the
Pass Through Trust Agreement and the related Pass Through Trust Supplement
and the applicable definitive purchase, underwriting or similar agreement
is approved by the Board of Directors of US Airways Group, is duly executed
and delivered by the parties thereto and payment of the consideration
provided for therein is made and (iv) the events described in clauses (i)
through (iv) of paragraph 1 have occurred in respect of the Pass Through
Certificates to which such Guarantees relate, the Guarantees will be valid
and legally binding obligations of US Airways Group.
Our opinion set forth above is subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding
in equity or at law) and an implied covenant of good faith and fair
dealing.
We hereby consent to the filing of this opinion with the
Commission as an exhibit to the Registration Statement. We also consent to
the reference to our firm under the heading "Legal Opinions" in the
Registration Statement. In giving this consent, we do not thereby admit
that we are in the category of persons whose consent is required under
Section 7 of the Act or the rules and regulations of the Commission.
Very truly yours,
/s/ Skadden, Arps, Slate, Meagher
& Flom (Illinois)
EXHIBIT 5.2
July 14, 1999
Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive
Chicago, Illinois 60606
Re: US Airways, Inc. Pass Through Certificates
Ladies and Gentlemen:
We have acted as your special New York counsel in connection with
the registration statement on Form S-3, as amended (the "Registration
Statement") filed by US Airways, Inc., a Delaware corporation ("US
Airways"), and US Airways Group, Inc., a Delaware corporation ("US Airways
Group"), on June 2, 1999 under the Securities Act of 1933, as amended (the
"Act"), relating to (i) pass through certificates ("Pass Through
Certificates") to be issued by one or more trusts (each a "Trust") to be
formed by US Airways and (ii) guarantees (the "Guarantees") of US Airways
Group to be issued in connection with the Pass Through Certificates.
The Trusts are expected to acquire certain equipment notes
relating to aircraft either owned or leased by US Airways. The Pass
Through Certificates and Guarantees are expected to be issued and sold by
US Airways and US Airways Group from time to time pursuant to Rule 415
under the Act for an aggregate initial offering price (together with the
aggregate initial offering price of securities previously registered under
US Airways' registration statement on Form S-3 (File No. 333-64425) which
have not yet been sold and which pursuant to Rule 429 under the Act, are
being carried forward from US Airways' prior registration statement and
being sold under the Basic Prospectus (defined below) included in the
Registration Statement) not to exceed $1,500,000,000 or the equivalent
thereof in one or more foreign currencies or composite currencies. The
Pass Through Certificates and the Guarantees will be issued in one or more
series under a pass through trust agreement to be entered into by US
Airways, US Airways Group and State Street Bank and Trust Company of
Connecticut, National Association (the "Trustee"), a form of which has been
filed as an exhibit to the Registration Statement (the "Pass Through Trust
Agreement"), as the same may from time to time be supplemented (each a
"Pass Through Trust Supplement"). The Pass Through Certificates and the
Guarantees will be sold or delivered from time to time as set forth in the
Registration Statement, any amendment thereto, the prospectus with respect
to the Pass Through Certificates contained in the Registration Statement
(the "Basic Prospectus") or any supplements thereto (the "Prospectus
Supplements").
We are members of the Bar of the State of New York and we express
no opinion herein concerning any law other than the laws of the State of
New York.
In connection with this opinion, we have examined and relied on,
or have discussed with you to the extent we have considered necessary or
appropriate for the opinions expressed herein, originals or copies of (i)
the Registration Statement, (ii) the Basic Prospectus, (iii) a form of the
Pass Through Trust Agreement, (iv) a form of Pass Through Certificate and a
specimen thereof, (v) the Statement of Eligibility and Qualification under
the Trust Indenture Act of 1939, as amended (the "1939 Act"), on Form T-1
of the Trustee, (vi) the Amended and Restated Certificate of Incorporation
of each of US Airways and US Airways Group, as currently in effect, (vii)
the By-Laws of each of US Airways and US Airways Group, as currently in
effect, and (viii) resolutions adopted by the Board of Directors of each of
US Airways and US Airways Group on May 19, 1999 relating to the filing of
the Registration Statement. We also have examined and relied on, or have
discussed with you to the extent we have considered necessary or
appropriate for the opinions expressed herein, originals or copies of such
records of US Airways and US Airways Group and such agreements,
certificates of public officials, certificates of officers and other
representatives of US Airways and US Airways Group and others, and such
other documents, certificates and records as we have deemed necessary or
appropriate as a basis for the opinion set forth herein.
In our examination, we have assumed the legal capacity of natural
persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original
documents of all documents submitted to us as certified or photostatic
copies and the authenticity of originals of all such documents. In making
our examination of documents executed by parties other than US Airways and
US Airways Group, we have assumed that such parties (including the Trustee)
had the power, corporate or other, to enter into and perform all
obligations thereunder and have also assumed the due authorization by all
requisite action, corporate or other, and execution and delivery by such
parties of such documents, and the validity and binding effect thereof on
such parties; provided, however, that we have not assumed the validity and
binding effect thereof with respect to the Trustee. As to any facts
material to the opinion expressed herein which we did not independently
establish or verify, we have relied upon oral or written statements and
representations of officers and other representatives of US Airways and US
Airways Group and others, including a Certificate of the Associate General
Counsel of US Airways.
In addition, we have assumed that (i) the Registration Statement,
as finally amended (including all necessary post-effective amendments) has
become effective and a Prospectus Supplement supplementing the Basic
Prospectus will have been prepared and filed with the Securities and
Exchange Commission (the "Commission") describing the respective Pass
Through Certificates, (ii) the Pass Through Trust Agreement shall have been
qualified under the 1939 Act, (iii) all Pass Through Certificates issued
will be issued and sold in compliance with applicable federal and state
securities laws and solely in the manner stated in the Registration
Statement, the Basic Prospectus and the appropriate Prospectus Supplement
and (iv) a definitive purchase, underwriting or similar agreement with
respect to any Pass Through Certificates will have been duly authorized and
validly executed and delivered by one or both of US Airways or US Airways
Group and the other party thereto.
Based upon the foregoing and subject to the limitations,
qualifications, exceptions and assumptions set forth herein, we are of the
opinion that:
1. With respect to each series of Pass Through Certificates, when
(i) the Pass Through Trust Agreement and the Pass Through Trust Supplement
relating to such series has been duly authorized and validly executed and
delivered by US Airways and the Trustee, (ii) the Board of Directors of US
Airways has taken all necessary corporate action to approve the terms of
such series of Pass Through Certificates and related matters, (iii) the
Pass Through Certificates of such series have been duly executed,
authenticated, issued and delivered in accordance with provisions of the
Pass Through Trust Agreement and the related Pass Through Trust Supplement
and (iv) the applicable definitive purchase, underwriting or similar
agreement is approved by the Board of Directors of US Airways, is duly
executed and delivered by the parties thereto and payment of the
consideration provided for therein is made, such Pass Through Certificates
will be valid and legally binding obligations of the Trustee as trustee of
the Trust.
2. With respect to the Guarantees, when (i) the Pass Through Trust
Agreement and the Pass Through Trust Supplement relating to such series has
been duly authorized and validly executed and delivered by US Airways, US
Airways Group and the Trustee, (ii) the Board of Directors of US Airways
Group has taken all necessary corporate action to approve the terms of such
Guarantees and related matters, (iii) such Guarantees have been duly
executed, issued and delivered in accordance with the provisions of the
Pass Through Trust Agreement and the related Pass Through Trust Supplement
and the applicable definitive purchase, underwriting or similar agreement
is approved by the Board of Directors of US Airways Group, is duly executed
and delivered by the parties thereto and payment of the consideration
provided for therein is made and (iv) the events described in clauses (i)
through (iv) of paragraph 1 have occurred in respect of the Pass Through
Certificates to which such Guarantees relate, the Guarantees will be valid
and legally binding obligations of US Airways Group.
Our opinion set forth above is subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding
in equity or at law) and an implied covenant of good faith and fair
dealing.
We understand that you intend to rely on this opinion for
purposes of rendering your opinion pursuant to the requirements of Item
601(b)(5) of Regulation S-K under the Act, and we consent to your reliance
hereon for such purpose. This opinion is not to be used, circulated,
quoted or otherwise referred to for any other purposes or relied upon by
any other person without our express written consent.
Very truly yours,
/s/Skadden, Arps, Slate, Meagher & Flom,
LLP
EXHIBIT 23.1
Consent of Independent Auditors
The Board of Directors
US Airways Group, Inc.
US Airways, Inc.:
We consent to the use of our reports dated February 24, 1999 incorporated
herein by reference and to the reference to our firm under the heading
"Experts" in the prospectus.
/s/ KPMG LLP
Washington, DC
July 13, 1999
