<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 25, 1999
REGISTRATION NO. 333-71615
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
COMMISSION FILE NUMBER 1-10140
AMERICA WEST AIRLINES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 86-0418245
(STATE OR OTHER JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER IDENTIFICATION NO.)
ORGANIZATION) (602) 693-0800
4000 E. SKY HARBOR BOULEVARD (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA
PHOENIX, ARIZONA 85034-3899 CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
</TABLE>
------------------------
4512
(PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE NUMBER)
------------------------
STEPHEN L. JOHNSON
SENIOR VICE PRESIDENT -- CORPORATE AFFAIRS
AMERICA WEST AIRLINES, INC.
4000 E. SKY HARBOR BOULEVARD
PHOENIX, ARIZONA 85034-3899
(602) 693-0800
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES OF CORRESPONDENCE TO:
SAMUEL M. LIVERMORE
COOLEY GODWARD, LLP
ONE MARITIME PLAZA
SAN FRANCISCO, CA 94111
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) CERTIFICATE(2) PRICE(2) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pass Through Certificates,
Series 1998-1A................... $131,670,000 100% $131,670,000 $36,605
Pass Through Certificates,
Series 1998-1B................... $41,154,000 100% $41,154,000 $11,441
Pass Through Certificates,
Series 1998-1C................... $17,705,000 100% $17,705,000 $4,922
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Equals the aggregate principal amount of the securities being registered.
(2) Pursuant to Rule 457(f)(2), the registration fee has been calculated using
the book value of the securities being registered.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO
SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
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.
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 18 IN THIS PROSPECTUS.
The Certificates will represent interests in trusts only and will not
represent interests in or obligations of America West or any America West
affiliate.
America West is relying on the position of the SEC staff in certain
interpretive letters to third parties to remove the transfer restrictions on
the New Certificates.
SUBJECT TO COMPLETION DATED MARCH 25, 1999
PROSPECTUS
AMERICA WEST AIRLINES, INC.
EXCHANGE OFFER
PASS THROUGH CERTIFICATES, SERIES 1998-1
THE EXCHANGE OFFER --
The New Certificates are being registered with the
Securities and Exchange Commission (the "SEC") and are
being offered in exchange for the Old Certificates
that were previously issued pursuant to an offering
exempt from the SEC's registration requirements. The
terms and conditions of the Exchange Offer are
summarized below and more fully described in this
Prospectus.
EXPIRATION DATE 5:00 p.m. (New York
City time)
April 26, 1999
WITHDRAWAL RIGHTS Expire before 5:00
p.m. (New York City
time) on Expiration
Date
INTEGRAL MULTIPLES Old Certificates
may only be
tendered in
integral multiples
of $1,000
EXPENSES Paid for by America
West
NEW CERTIFICATES --
The New Certificates will represent the same
fractional undivided interest in the trusts as the Old
Certificates they are replacing. The New Certificates
will have the same material financial terms as the Old
Certificates, which are summarized below and described
more fully in this Prospectus. The New Certificates
will not contain terms with respect to transfer
restrictions or interest rate increases and will only
be available in book-entry form.
<TABLE>
<CAPTION>
CLASS A CERTIFICATES CLASS B CERTIFICATES CLASS C CERTIFICATES
<S> <C> <C> <C>
PRINCIPAL AMOUNT $131,670,000 $41,154,000 $17,705,000
INTEREST RATE 6.87% 7.12% 7.84%
FIRST DISTRIBUTION DATE January 2, 1999 January 2, 1999 January 2, 1999
REGULAR DISTRIBUTION DATES January 2 & July 2 January 2 & July 2 January 2 & July 2
FINAL DISTRIBUTION DATE
- Expected January 2, 2017 January 2, 2017 July 2, 2010
- Legal July 2, 2018 July 2, 2018 January 2, 2012
</TABLE>
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THESE
CERTIFICATES OR DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 3
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
You should rely only on the information provided in this Prospectus
including the information incorporated by reference. We have not authorized
anyone to provide you with different information. We are not offering the
Certificates in any state where the offer is not permitted. We do not claim the
accuracy of the information in this Prospectus as of any date other than the
date stated on the cover.
We include cross-references in this Prospectus to captions within where you
can find further related discussions. The following Table of Contents provides
the pages on which these captions are located. You can find a listing of the
pages where capitalized terms used in this Prospectus are defined under the
caption "Index of Terms" in Appendix I of this Prospectus.
AVAILABLE INFORMATION
America West is filing with the SEC a Registration Statement on Form S-4
relating to the New Certificates. This Prospectus is a part of the Registration
Statement, but the Registration Statement includes additional information and
also attaches exhibits that are referenced in this Prospectus. You can review a
copy of the Registration Statement through the SEC's "EDGAR" System (Electronic
Data Gathering, Analysis and Retrieval) that is available on the SEC's web site
(http://www.sec.gov).
America West is required to file publicly certain information under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). All of America
West's public filings are also available on EDGAR, including reports, proxy
statements and other information. You may also read and copy all of the
Company's public filings at the SEC's public reference room in Washington, D.C.
or in their facilities in New York and Chicago. Please call the SEC at (800)
SEC-0330 for further information on the operation of the public reference rooms.
All such information is also available at the offices of the New York Stock
Exchange.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" information we file with
the SEC, which means that we can disclose information to you by referring you to
those documents. The information incorporated by reference is considered to be
part of this Prospectus, and information that we later file with the SEC will
automatically update the information in this Prospectus.
We incorporate by reference all annual, quarterly and current reports filed
by the Company during 1998. These include the Annual Report on Form 10-K for the
year ended December 31, 1997, the Quarterly Reports on Forms 10-Q filed for the
quarters ended March 31, 1998, June 30, 1998 and September 30, 1998, and the
Current Report on Form 8-K filed on September 24, 1998. We also incorporate by
reference the portions of the Proxy Statement for the annual stockholder meeting
held on May 22, 1998, that were incorporated by reference in the Form 10-K. Any
future annual, quarterly or current reports and proxy materials filed prior to
the end of the Exchange Offer is incorporated by reference.
As a recipient of this Prospectus, you may request a copy of any document
we incorporate by reference, except exhibits to the documents (unless the
exhibits are specifically incorporated by reference), at no cost, by writing or
call us at: Corporate Secretary, America West Airlines, Inc., 51 W. Third
Street, Tempe, Arizona 85281; (602) 693-0800. In order to ensure timely delivery
of the documents, please make any such request no later than five business days
prior to the Expiration Date.
2
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
PROSPECTUS SUMMARY.................. 5
EXCHANGE OFFER...................... 5
THE TRUSTS.......................... 7
THE CERTIFICATES.................... 7
THE EQUIPMENT NOTES................. 9
LIQUIDITY FACILITIES................ 11
INTERCREDITOR AGREEMENT............. 11
ERISA CONSIDERATIONS................ 12
USE OF PROCEEDS..................... 12
RATIO OF EARNINGS TO FIXED
CHARGES........................... 13
THE COMPANY......................... 14
QUESTIONS OR REQUESTS FOR
ASSISTANCE........................ 15
CASH FLOW STRUCTURE................. 16
Selected Financial Data............. 17
RISK FACTORS........................ 18
Risk Factors Relating to the
Certificates and the Exchange
Offer............................. 18
Consequences of Failure to Exchange
Old Certificates.................. 18
Possible Effects if Aircraft
Appraisals do not Correspond to
the Realizable Value of
Aircraft.......................... 18
Effect of Subordination on
Subordinated Certificateholders... 18
Control Over the Collateral and
Potential Sale of the
Collateral........................ 19
Possible Changes to Agreements
Described in this Prospectus Post-
Exchange Offer.................... 19
Possible Effects of Appointing Owner
Participants...................... 20
Possible Effects from Unused
Deposits.......................... 20
Effects of Withholding Tax on
Foreign Investors................. 21
Limited Ability to Resell
Certificates...................... 21
Risk Factors Relating to the Company
and the Airline Industry.......... 21
Competition and Industry
Conditions........................ 21
The Company's Ability to Borrow
Funds in the Future............... 22
Labor Relations..................... 22
Control by Certain Principal
Stockholders...................... 22
</TABLE>
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Fluctuations in Fuel Costs.......... 23
Aviation Ticket Taxes............... 23
Security and Safety Measures........ 23
Other Regulatory Matters............ 23
Substantial Restrictions Imposed and
Promises Made in connection with
Current Loan Agreements and Debt
Instruments....................... 24
Year 2000 Compliance Program and
Risks............................. 24
THE EXCHANGE OFFER.................. 26
General............................. 26
The Exchange Offer.................. 26
Tendering Old Certificates in the
Exchange Offer.................... 27
Book-Entry Transfer................. 29
Guaranteed Delivery Procedures...... 29
Withdrawal of Tenders............... 30
Conditions.......................... 30
Exchange Agent...................... 30
Transferability of New
Certificates...................... 31
Alternative Use of Shelf
Registration Statement............ 31
Fees and Expenses................... 32
DESCRIPTION OF THE NEW
CERTIFICATES...................... 33
General............................. 33
Subordination....................... 34
Payments And Distributions.......... 34
Pool Factors........................ 37
Reports To Certificateholders....... 39
Indenture Defaults and Certain
Rights Upon An Indenture
Default........................... 40
Purchase Rights of
Certificateholders................ 42
PTC Event of Default................ 42
Merger, Consolidation And Transfer
Of Assets......................... 43
Modifications of the Pass Through
Trust Agreements and Certain Other
Agreements........................ 43
Obligation to Purchase Equipment
Notes............................. 46
Possible Issuance of Class D
Certificates...................... 48
Liquidation of Original Trusts...... 48
</TABLE>
3
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Termination of the Trusts........... 49
The Trustees........................ 49
Book-Entry; Delivery And Form....... 50
DESCRIPTION OF THE DEPOSIT
AGREEMENTS........................ 51
General............................. 51
Unused Deposits..................... 51
Distribution Upon Occurrence of
Triggering Event.................. 52
Depositary.......................... 53
DESCRIPTION OF THE ESCROW
AGREEMENTS........................ 53
DESCRIPTION OF THE LIQUIDITY
FACILITIES........................ 54
General............................. 54
Drawings............................ 54
Reimbursement of Drawings........... 57
Liquidity Events of Default......... 58
Liquidity Provider.................. 59
DESCRIPTION OF THE INTERCREDITOR
AGREEMENT......................... 59
Intercreditor Rights................ 59
Priority of Distributions........... 61
Voting of Equipment Notes........... 64
Addition of Trustee for Class D
Certificates...................... 65
The Subordination Agent............. 65
DESCRIPTION OF THE AIRCRAFT AND THE
APPRAISALS........................ 65
The Aircraft........................ 65
The Appraisals...................... 66
</TABLE>
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Deliveries of Aircraft.............. 66
Substitute Aircraft................. 67
Bridge Financing.................... 67
DESCRIPTION OF THE EQUIPMENT
NOTES............................. 67
General............................. 68
Subordination....................... 69
Principal and Interest Payments..... 69
Redemption.......................... 69
Security............................ 72
Equipment Notes and the Aircraft.... 73
Loan to Value Ratios of Equipment
Notes............................. 73
Limitation of Liability............. 74
Indenture Defaults, Notice and
Waiver............................ 75
Remedies............................ 76
Modification of Indentures and
Leases............................ 79
Indemnification..................... 79
The Leases and Certain Provisions of
the Owned Aircraft Indentures..... 80
CERTAIN U.S. FEDERAL INCOME TAX
CONSEQUENCES...................... 88
ERISA CONSIDERATIONS................ 88
PLAN OF DISTRIBUTION................ 90
LEGAL MATTERS....................... 91
EXPERTS............................. 91
APPENDIX I -- INDEX OF TERMS........ A-I-1
APPENDIX II -- APPRAISAL LETTERS.... A-II-1
</TABLE>
4
<PAGE> 6
PROSPECTUS SUMMARY
- - THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROSPECTUS AND DOES NOT
CONTAIN ALL OF THE INFORMATION THAT YOU NEED TO CONSIDER IN MAKING YOUR
INVESTMENT DECISION. TO UNDERSTAND ALL OF THE TERMS OF THE NEW CERTIFICATES,
READ THE ENTIRE PROSPECTUS AND THE EXHIBITS TO THE REGISTRATION STATEMENT OF
WHICH THIS PROSPECTUS IS A PART.
- - THIS SUMMARY PROVIDES AN OVERVIEW OF CERTAIN FINANCIAL AND OTHER INFORMATION
AND IS QUALIFIED BY THE FULL DESCRIPTION OF THIS FINANCIAL AND OTHER
INFORMATION ELSEWHERE IN THIS PROSPECTUS.
EXCHANGE OFFER
HISTORY
In order to finance the purchase of aircraft, America West Airlines, Inc.
("America West" or the "Company") established three America West Airlines 1998-1
Pass Through Trusts (the "Trusts"). The three Trusts are referred to as the
"Class A Trust", the "Class B Trust" and the "Class C Trust".
The "Certificates" (which refers to both the Old Certificates and the New
Certificates) represent a fractional undivided interest in one of such Trusts.
The Class A Trust issued "Class A Certificates", the Class B Trust issued "Class
B Certificates" and the Class C Trust issued "Class C Certificates".
The Old Certificates were sold in October 1998 pursuant to exemptions from the
SEC registration requirements. The "Initial Purchasers" of the Old Certificates
were Morgan Stanley & Co. Incorporated, Donaldson, Lufkin & Jenrette Securities
Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Salomon
Smith Barney Inc. The Initial Purchasers then placed the Old Certificates with
institutional investors. The Old Certificates have not been registered with the
SEC and therefore are not freely tradable.
The Exchange Offer allows holders of the Old Certificates to exchange their
Certificates for New Certificates. The terms of the New Certificates are
identical in all material respects to the Old Certificates except that the New
Certificates do not have transfer restrictions or interest rate increases and
are available only in book-entry form. See "The Exchange
Offer -- Transferability of New Certificates".
The New Certificates are being registered with the SEC pursuant to a
Registration Statement, of which this Prospectus is a part.
The New Certificates are being offered in exchange for Old Certificates with the
same principal value. As of the date of this Prospectus, the aggregate principal
amount of Old Certificates outstanding is $190,501,644.22.
PROCEDURES
Please refer to "The Exchange Offer -- Tendering Old Certificates in the
Exchange Offer".
To participate in the Exchange Offer, holders of Certificates
("Certificateholders") must deliver their Old Certificates for exchange no later
than 5:00 p.m., New York time, on April 26, 1999 (the "Expiration Date"). The
Expiration Date may be extended under certain circumstances.
Certificateholders must also deliver a completed and signed letter of
transmittal with tender of the Old Certificates (the "Letter of Transmittal"). A
Letter of Transmittal has been sent to Certificateholders and a form can be
found as an exhibit to the Registration Statement.
Certificateholders should deliver the Old Certificates and the Letter of
Transmittal to Wilmington Trust Company (the "Exchange Agent") as follows:
<TABLE>
<S> <C>
Fax: (302) 651-1079
Mail or Wilmington Trust Company
1100 North Market Street, 1st Fl.
Overnight Wilmington, DE 19890-0001
Attn: Kristin Long
Delivery:
By Hand: Wilmington Trust Company
1105 North Market Street, 1st Fl.
Wilmington, DE 19890
Attn: Corporate Trust Operations
</TABLE>
See "The Exchange Offer -- Tendering Old Certificates in the Exchange Offer" and
"-- Exchange Agent".
Certificateholders may also tender their Old Certificates through a book-entry
transfer or by complying with certain guaranteed delivery procedures. In either
case, however, a completed Letter
5
<PAGE> 7
of Transmittal must still be delivered to the Exchange Agent before the
Expiration Date. See "The Exchange Offer -- Tendering Old Certificates in the
Exchange Offer", "-- Book-Entry Transfer" and "-- Guaranteed Delivery
Procedures".
DENOMINATIONS
Certificateholders may only tender Old Certificates in integral multiples of
$1,000. Similarly, the New Certificates will only be issued in integral
multiples of $1,000.
REPRESENTATIONS MADE BY TENDERING CERTIFICATEHOLDERS
To participate in the Exchange Offer, each Certificateholder will be required to
make the following representations in the Letter of Transmittal:
1. The Certificateholder is not an affiliate of the Company nor a broker-dealer
tendering Old Certificates acquired for its own account (an "affiliate" is
defined as a person who controls, is controlled by or is under common control
with the Company);
2. the Certificateholder is acquiring the New Certificates in the ordinary
course of its business; and
3. the Certificateholder is not acquiring the New Certificates with an intent to
distribute them.
RESALE OF NEW CERTIFICATES
In connection with the Exchange Offer, the Company is registering the New
Certificates with the SEC in order to remove the transfer restrictions
applicable to the Old Certificates.
Certificateholders who make the representations listed above will be able to
freely resell the New Certificates.
Certificateholders who are broker-dealers and who acquire New Certificates
directly from the Trustee with an intent to resell them, must deliver a
Prospectus in connection with any resale of New Certificates. The Company will
make this Prospectus available to broker-dealers to use in connection with any
resale of New Certificates for six months following the Expiration Date.
For more information on the resale of New Certificates see "The Exchange
Offer -- Transferability of New Certificates".
WITHDRAWAL RIGHTS
Certificateholders who have tendered Old Certificates may withdraw such
certificates at any time before 5:00 p.m., New York City time, on the Expiration
Date. To withdraw a tender of Old Certificates, Certificateholders must submit a
written notice requesting such withdrawal to the Exchange Agent. See "Exchange
Offer -- Withdrawal of Tenders".
REGISTRATION, CLEARANCE AND SETTLEMENT
The New Certificates will be represented by one or more permanent global
certificates, which will be registered in the name of Cede & Co. ("Cede"), as
the nominee of The Depository Trust Company ("DTC"). The global certificates
(the "Global Certificates") will be deposited with the Trustee as custodian for
DTC.
See "Description of the New Certificates -- Book Entry; Delivery and Form".
DELIVERY OF NEW CERTIFICATES
The Exchange Agent will deliver New Certificates for all Old Certificates
promptly following the expiration of the Exchange Offer.
TAX CONSEQUENCES
The exchange of New Certificates for Old Certificates will not be considered a
sale, exchange or other type of taxable transaction for Federal income tax
purposes. See "Certain Federal Income Tax Considerations".
FEES AND EXPENSES
The Company will pay for all expenses that arise in connection with the Exchange
Offer.
FAILURE TO EXCHANGE OLD CERTIFICATES
With some exceptions, Certificateholders who do not exchange their Old
Certificates before the Expiration Date will no longer be entitled to
registration rights. In addition, these Certificateholders will not be able to
offer or sell the Old Certificates unless the Old Certificates are registered
with the SEC or such a sale is exempt from applicable federal and state
securities laws.
6
<PAGE> 8
THE TRUSTS
The three Trusts are as follows:
- - America West Airlines 1998-1A Pass Through Trust;
- - America West Airlines 1998-1B Pass Through Trust; and
- - America West Airlines 1998-1C Pass Through Trust.
The Trusts were formed pursuant to one of three separate pass through trust
agreements (the "Pass Through Trust Agreements") entered into between the
Company and Wilmington Trust Company, as "Trustee" of the Trusts.
In purchasing the Old Certificates, Certificateholders acquired a fractional
undivided interest in the Trust corresponding with the class of Certificates
purchased. The proceeds from the sale of the Certificates will be used by the
Trustee to purchase equipment notes (the "Equipment Notes") that are expected to
be (or have been) issued in connection with the financing of six Airbus A319-132
aircraft and two Airbus A320-232 aircraft (collectively, the "Aircraft"). "See
Description of the Equipment Notes" and "-- Obligation to Purchase Equipment
Notes".
TRUST PROPERTY
The property of each Trust (the "Trust Property") consists of the following:
1. Equipment Notes issued in connection with the delivery of each Aircraft;
2. rights to acquire Equipment Notes pursuant to a "Note Purchase Agreement"
among America West and Wilmington Trust Company, as Trustee, subordination
agent (the "Subordination Agent"), escrow agent (the "Escrow Agent") and
paying agent (the "Paying Agent");
3. rights under an Escrow and Paying Agent Agreement (the "Escrow Agreement")
among the Initial Purchasers and the Escrow Agent, the Trustee and the
Paying Agent (entered into to protect funds in the Deposits (defined below)
for the benefit of the Certificateholders);
4. rights under an "Intercreditor Agreement" among the Trustee, the
Subordination Agent and the Liquidity Provider (defined below) (entered into
to govern the relationships among the different series of
Certificateholders, the Liquidity Provider and the Subordination Agent);
5. all money to be received under the Liquidity Facility (defined below) for
such Trust; and
6. funds that may be deposited with the Trustee in accounts relating to such
Trust.
ORIGINAL TRUSTS AND SUCCESSOR TRUSTS
The Trusts that were formed in connection with the sale of the Old Certificates
are referred to as the "Original Trusts". On the Transfer Date (defined below),
the Original Trusts will transfer and assign all of their assets and rights to
three substantially identical "Successor Trusts." The difference between these
Trusts is that the Successor Trusts will be governed by New York law (whereas
the Original Trusts are governed by Delaware law) and they will not have the
right to purchase new Equipment Notes.
Wilmington Trust Company is Trustee of both the Original Trusts (in such
capacity, the "Original Trustee") and of the Successor Trusts (in such capacity,
the "Successor Trustee").
The "Transfer Date" refers to the earlier of (i) the first Business Day after
November 30, 1999, or, if later, the fifth Business Day after the Delivery
Period Termination Date (defined below) and (ii) the fifth Business Day after
the occurrence of a Triggering Event (defined below).
THE CERTIFICATES
Certificates represent a fractional undivided interest in one of the three
Trusts established by the Company, and are referred to as the "Class A
Certificates", "Class B Certificates" and "Class C Certificates" depending on
which Trust issued them.
7
<PAGE> 9
SUMMARY OF TERMS OF CERTIFICATES
The chart below contains information about each Class of Certificates.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
CERTIFICATES CERTIFICATES CERTIFICATES
------------ ------------ ------------
<S> <C> <C> <C>
Aggregate Fact Amount.. $131,670,000 $41,154,000 $17,705,000
Ratings:
Moody's............... A2 Baa1 Baa3
Standard & Poor's..... AA- A- BBB
Initial Loan to
Aircraft Value
(cumulative)(1)....... 42.0% 55.3% 60.4%
Expected Principal
Distribution Window
(in years)............ 0.7-18.2 1.2-18.2 0.2-11.7
Initial Average Life
(in years)............ 12.7 11.2 7.3
Regular Distribution Jan. 2 and Jan. 2 and Jan. 2 and
Dates................. July 2 July 2 July 2
Final Expected Regular
Distribution Date..... Jan. 2, 2017 Jan. 2, 2017 July 2, 2010
Final Legal
Distribution Date..... July 2, 2018 July 2, 2018 Jan. 2, 2012
Minimum Denomination... $100,000 $100,000 $100,000
Section 1110 Protec-
tion(2)............... Yes Yes Yes
3 semiannual 3 semiannual 3 semiannual
Liquidity Facility interest interest interest
Coverage(3)........... payments payments payments
Liquidity Facility
Amount at Jan. 2,
2000(3)............... $14,212,058 $4,642,845 $1,977,379
</TABLE>
- -------------------------
(1) The initial loan to aircraft values for each Class of Certificates were
determined as of January 2, 2000 and were based on the following
assumptions:
- all Aircraft will be delivered prior to January 2, 2000;
- the Company will issue the maximum principal amount of Equipment Notes
with respect to all Aircraft; and
- the aggregate appraised value of all Aircraft will be $306,113,800
(this value is an estimate and reflects certain assumptions).
See "Description of the Aircraft and the Appraisals -- The Appraisals".
The Company has agreed that all agreements to finance the lease or
purchase of any Aircraft will have a term requiring that, as of the date
that an Aircraft is delivered, the initial loan to aircraft value for
that Aircraft will be no more than the percentages set forth below:
<TABLE>
<CAPTION>
AIRCRAFT FINANCED MAXIMUM INITIAL LOAN
WITH RESPECT TO: TO AIRCRAFT VALUE
----------------- --------------------
<S> <C>
Series A Equipment Notes 43%
Series B Equipment Notes 57%
Series C Equipment Notes 71%
</TABLE>
(2) After each Aircraft is delivered, the Loan Trustee (defined below) with
respect to such Aircraft will have the benefit of Section 1110 of the
U.S. Bankruptcy Code with respect to such Aircraft, which will enable
such Loan Trustee to take possession of such Aircraft within 60 days of
the Company's being a debtor under Chapter 11 of the U.S. Bankruptcy
Code, unless the Company affirms the related Lease or Mortgage financing
and cures all non-bankruptcy defaults. See "Description of Equipment
Notes -- Remedies".
(3) If the Company is unable to make regular payments of interest on the
Equipment Notes, then ABN AMRO Bank N.V., acting through its Chicago
Branch (the "Liquidity Provider"), will provide for the interest portion
of such payments for up to three consecutive Scheduled Payments (defined
below). See "Description of the Certificates -- Payments and
Distributions".
INTEREST
Each class of Certificates accrues interest at a different rate set forth below.
<TABLE>
<CAPTION>
INTEREST RATE
-------------
<S> <C>
Class A Certificates 6.87%
Class B Certificates 7.12%
Class C Certificates 7.84%
</TABLE>
SCHEDULED PAYMENTS
Certificateholders will receive Scheduled Payments of interest on each January 2
and July 2, beginning on January 2, 1999. Certificateholders will also receive
Scheduled Payments of principal on each January 2 and July 2 in certain years,
beginning on January 2, 1999. These "Scheduled Payments" will be funded by (1)
interest payments due on the same dates for both the Equipment Notes and the
Deposits (defined below) and (2) principal payments due on the same dates for
the Equipment Notes.
If the Company does not make its regular payments of interest on the Equipment
Notes, ABN AMRO Bank N.V., acting through its Chicago branch (the "Liquidity
Provider"), will provide for the interest portion of such payments for up to
three consecutive Scheduled Payments. The "Final Legal Distribution Date" for
each Class of Certificates is the Final Expected Regular Distribution Date for
such Class of Certificates plus eighteen months (being the maximum period
8
<PAGE> 10
the Liquidity Provider will service interest payments) and is set forth below.
<TABLE>
<CAPTION>
FINAL LEGAL
DISTRIBUTION DATE
-----------------
<S> <C>
Class A Certificates July 2, 2018
Class B Certificates July 2, 2018
Class C Certificates January 2, 2012
</TABLE>
See "Description of the Liquidity Facilities -- Drawings".
SPECIAL PAYMENTS
Certificateholders may also receive Special Payments if the Company redeems, or
the Trustee purchases, the Equipment Notes from any of the Trusts. Special
Payments, if due, would be made within 20 days of the date that
Certificateholders receive notice that they are entitled to such a payment.
These "Special Payments" will be made up of the principal, interest and, in some
instances, a premium payable by the Company. See "Description of the
Certificates -- Payments and Distributions".
METHOD OF DISTRIBUTION
Distributions with respect to New Certificates will be made to DTC, who will in
turn distribute the funds to participants in DTC who are credited with ownership
of the New Certificates ("DTC Participants") according to their respective share
of beneficial interests in the New Certificates. The DTC Participants will then
be responsible for distributing all payments to beneficial owners of New
Certificates. See "Description of the New Certificates -- Book-Entry; Delivery
and Form".
DEPOSITS
The cash proceeds from the sale of the Old Certificates were deposited with ABN
AMRO Bank N.V., acting through its Chicago branch (the "Depositary") and placed
in one of three accounts corresponding to the Trusts that issued the Old
Certificates (such funds being referred to as the "Deposits"). This arrangement
was made pursuant to three separate deposit agreements entered into between the
Depositary and the Escrow Agent (the "Deposit Agreements").
When an Aircraft is delivered to the Company during the Delivery Period (defined
below), the Trustee will withdraw funds from the Deposits of the appropriate
Trust to purchase the Equipment Notes of the appropriate series issued with
respect to such Aircraft. The "Delivery Period" runs from October 1998 through
August 1999, with the final delivery for purposes of purchase by the Trusts no
later than November 30, 1999, subject to extension through January 31, 2000
under certain circumstances.
Each Deposit accrues interest at an annual rate equal to the annual interest
rate of the Certificates issued by the Trust associated with such Deposit.
Interest accrued on the Deposits will be distributed to Certificateholders on
January 2 and July 2 of each year, beginning on January 2, 1999 and ending when
funds from a Deposit have been fully withdrawn.
If any funds remain as Deposits after the Aircraft are financed, such funds will
be distributed to the Certificateholders along with accrued and unpaid interest
and, if applicable, a premium payable by the Company. See "Description of the
Deposit Agreements".
PURCHASE RIGHTS OF CERTIFICATEHOLDERS
Upon the occurrence of a Triggering Event (defined below), the holders of Class
B Certificates will have a right to purchase all, but not less than all, of the
Class A Certificates; the holders of Class C Certificates will have a right to
purchase all, but not less than all, of the Class A and Class B Certificates;
and, if Class D Certificates are issued, the holders of Class D Certificates
will have a right to purchase all, but not less than all, of the Class A, Class
B and Class C Certificates. "Triggering Event" means (i) the occurrence of an
Indenture Default under all Indentures resulting in a PTC Event of Default
(defined below) with respect to the most senior Class of Certificates, (ii) the
acceleration of all of the outstanding Equipment Notes (provided that during the
Delivery Period the aggregate principal amount exceeds $125,000,000) or (iii)
certain bankruptcy or insolvency events involving the Company. See "Description
of the New Certificates -- Purchase Rights of Certificateholders".
THE EQUIPMENT NOTES
Equipment Notes will be issued with respect to each financed Aircraft in three
series corresponding to the Trusts that will purchase them. These are referred
to as the "Series A Equipment Notes", the "Series B Equipment Notes" and the
9
<PAGE> 11
"Series C Equipment Notes". A Trust will purchase the series of Equipment Notes
that has an interest rate equal to the interest rate of the Certificates issued
by that Trust. See "Description of the Equipment Notes".
ISSUANCE OF EQUIPMENT NOTES
America West can elect to either purchase or lease an Aircraft, and the
structure of each such financial arrangement is as follows:
- - If America West chooses to purchase an Aircraft (an "Owned Aircraft"), then
America West will issue the Equipment Notes for such Aircraft on a recourse
basis in connection with a separate secured loan transaction. The Equipment
Notes will be issued pursuant to an indenture (the "Owned Aircraft Indenture")
between America West and the indenture trustee thereunder (the "Owned Aircraft
Trustee").
- - If America West chooses to lease an Aircraft (a "Leased Aircraft"), then the
trustee of a separate owner trust (an "Owner Trustee") established for the
benefit of an equity investor selected by the Company (the "Owner
Participant") in a leveraged lease transaction will issue the Equipment Notes
for such Aircraft on a non-recourse basis in connection with a separate
leveraged lease transaction for such Aircraft. The Equipment Notes will be
issued pursuant to an indenture (the "Leased Aircraft Indenture") between the
applicable Owner Trustee and the indenture trustee thereunder (the "Leased
Aircraft Trustee").
The Leased Aircraft Trustee and Owned Aircraft Trustee are collectively referred
to as the "Loan Trustees". The Leased Aircraft Indentures and the Owned Aircraft
Indentures are collectively referred to as the "Indentures."
INTEREST PAYMENTS
The Equipment Notes will accrue interest at a rate equal to the annual interest
rate of the Certificates issued by the Trust that purchases them. Interest on
Equipment Notes is payable on January 2 and July 2 of each year, beginning on
January 2, 1999.
PRINCIPAL PAYMENTS
The Company must also make scheduled principal payments on the Equipment Notes
on January 2 and July 2 of certain years, beginning on January 2, 1999. See
"Description of New Certificates -- Payments and Distributions".
MATURITY DATE
Equipment Notes will mature on or before the expected final distribution date
for the Certificates issued by the Trusts that own them.
REDEMPTION AND PURCHASE
If normal use of an Aircraft is disrupted under certain circumstances (see "The
Equipment Notes -- The Leases and Certain Provision of the Owned Aircraft
Indentures" for the definition of an "Event of Loss"), America West must either
replace such Aircraft or redeem the Equipment Notes issued with respect to such
Aircraft. The redemption price in such a case would be equal to the aggregate
unpaid principal amount of such Equipment Notes, together with accrued interest
but without a premium. Under certain other circumstances, America West has the
right to redeem all of the Equipment Notes at a price equal to the aggregate
unpaid principal amount of such notes, together with accrued interest and a
premium (referred to as a "Make-Whole Premium"). Additionally, the Owner Trustee
or an affiliated entity may purchase all of the Equipment Notes issued with
respect to a Leased Aircraft under certain circumstances, including a default by
America West of its lease obligations. See "The Equipment Notes -- Redemption".
SECURITY
Equipment Notes issued with respect to each Aircraft will be secured by a
security interest in such Aircraft. In the case of a Leased Aircraft, the
corresponding Equipment Notes will also be secured by an assignment of certain
rights under the lease relating to such Aircraft (a "Lease"), including the
right to receive rental payments. In the case of an Owned Aircraft, the
corresponding Equipment Notes will be secured by the mortgage of such Aircraft
and an assignment of certain of America West's rights under its purchase
agreement with the manufacturer of such Aircraft. Each Equipment Note will only
be secured by the Aircraft financed by that Equipment Note and, if
10
<PAGE> 12
the Aircraft is leased, by the lease related to that Aircraft, but not by any
other Aircraft or the lease related to any other Aircraft. In addition, any
default that occurs with respect to any Indenture or Lease (with respect to a
Leased Aircraft) will only affect that Indenture or Lease and will not affect
any other Indenture or Lease. See "Description of the Equipment
Notes -- Security".
SUBORDINATION
The Series C Equipment Notes are subordinate to the Series B Equipment Notes,
which in turn are subordinate to the Series A Equipment Notes. In effect, this
means that on each distribution date the Company must pay interest and principal
due on Series A Equipment Notes before similar payments are made on Series B
Equipment Notes, and the Company must make such payments on Series B Equipment
Notes before similar payments are made on Series C Equipment Notes.
If the Company issues Series D Equipment Notes ("Series D Equipment Notes"),
these Notes will be subordinate to the Series C Equipment Notes and the holders
of the Series D Equipment Notes may not receive interest and principal on the
Series D Equipment Notes until such payments on the other three series of notes
are received.
POSSIBLE ISSUANCE OF CLASS D EQUIPMENT NOTES
The Company may elect to issue Series D Equipment Notes in order to finance the
lease or purchase of additional aircraft. If the Company does so, neither the
Class A, Class B or Class C Trusts would purchase Series D Equipment. The
Company may choose to fund the Series D Equipment Notes through the sale of Pass
Through Certificates (the "Class D Certificates") issued by a Class D America
West Airlines 1998-1 Pass Through Trust (the "Class D Trust").
LIQUIDITY FACILITIES
The Liquidity Provider will enter into a separate revolving credit agreement (a
"Liquidity Facility") with the Subordination Agent with respect to each class of
Certificates. Under each Liquidity Facility the Liquidity Provider will advance
funds to the Subordination Agent ("Interest Drawings") to be used to pay
interest that is due with respect to Scheduled Payments (described above) on
Certificates if the Company does not meet its payment obligations on the
Equipment Notes.
The Liquidity Facilities are intended to enhance the likelihood that
Certificateholders will receive the interest payable on the Certificates in a
timely manner. Interest Drawings may only fund the interest portion of a maximum
of three consecutive Scheduled Payments and may not be used to fund interest
payments on the Deposits, nor principal or premium payments due with respect to
the Certificates.
When an Interest Drawing is made under any Liquidity Facility, the Subordination
Agent is obligated to reimburse the Liquidity Provider ahead of the
Certificateholders for the full amount of such drawing (and any other Liquidity
Obligations (as defined below)), to the extent funds are available.
"Liquidity Obligations" with respect to each Liquidity Facility include amounts
owed to the Liquidity Provider under that Liquidity Facility and any other
agreements to which the Liquidity Provider is a party, including reimbursements
for any Interest Drawings made under that Liquidity Facility.
For more information regarding the Liquidity Facilities, see "Description of the
Liquidity Facilities".
INTERCREDITOR AGREEMENT
PAYMENT RANKINGS
Pursuant to the Intercreditor Agreement between the Trustees, the Subordination
Agent and the Liquidity Provider, in general the Subordination Agent will
distribute regularly scheduled payments received with respect to the Equipment
Notes in the following order:
1. Liquidity Obligations to the Liquidity Provider;
2. distributions due to Class A Certificateholders;
3. distributions due to Class B Certificateholders;
4. distributions due to Class C Certificateholders;
5. distributions due to Class D Certificateholders (if any exist); and
11
<PAGE> 13
6. certain fees and expenses to the Subordination Agent and the Trustees.
If a Triggering Event occurs, the Intercreditor Agreement provides that the
Subordination Agent will distribute payments received with respect to the
Equipment Notes in the following order:
1. administrative expenses to the Subordination Agent, the Trustees and
certain other parties and payment of Liquidity Obligations to the
Liquidity Provider;
2. certain fees, taxes, charges and other amounts payable to the
Subordination Agent, the Trustees and each Certificateholder;
3. distributions due to holders of Class A Certificates;
4. distributions due to holders of Class B Certificates;
5. distributions due to holders of Class C Certificates; and
6. distributions due to holders of Class D Certificates (if any).
See "Description of the Intercreditor Agreement -- Priority of Distributions."
Payments made with respect to the Deposits are not subject to the subordination
provisions of the Intercreditor Agreement.
INTERCREDITOR RIGHTS
In general, holders of a majority of the outstanding principal of Equipment
Notes issued pursuant to a particular Indenture will direct the applicable Loan
Trustee as to whether or not to take certain actions in connection with that
Indenture.
If an Indenture Default occurs, until such default is corrected and subject to
certain exceptions, the Controlling Party (defined below) of that Indenture may
accelerate and sell all (but not less than all) of the Equipment Notes issued by
that Indenture.
The "Controlling Party" of an Indenture shall mean:
(A) the Class A Trustee;
(B) upon payment of the Final Distributions to the Class A
Certificateholders, the Class B Trustee; and
(C) upon payment of the Final Distributions to the Class B
Certificateholders, the Class C Trustee.
If, however, there comes a time when either (1) the entire amount available
under any Liquidity Facility has been withdrawn and has not been reimbursed or
(2) all of the Equipment Notes with respect to any one Indenture have been
accelerated, then 18 months after the earlier of either of the above occurs, the
Liquidity Providers with the highest outstanding amount of Liquidity Obligations
shall have the right to become the Controlling Party with respect to such
Indenture. If such a situation arises, the Trustees and the Certificateholders
are bound to vote as directed by the Controlling Party.
Possible actions that the Controlling Party could take include accelerating the
Equipment Notes, foreclosing a lien on the Aircraft securing such Equipment
Notes or, in certain circumstances, selling the Equipment Notes.
Because the Equipment Notes are not cross-collateralized, proceeds from the sale
of an Aircraft in excess of the amounts due on Equipment Notes related to such
Aircraft will not be available to cover losses, if any, on any other Equipment
Notes.
See "Description of the Intercreditor Agreement -- Intercreditor
Rights -- Controlling Party".
ERISA CONSIDERATIONS
Subject to important considerations described under "ERISA Considerations" in
this Prospectus, the Class A Certificates are eligible for purchase by persons
investing assets of employee benefit plans or individual retirement accounts and
the Class B Certificates and Class C Certificates are not so eligible.
USE OF PROCEEDS
There will be no cash proceeds payable to America West as a result of the
issuance of New Certificates pursuant to the Exchange Offer. Proceeds from the
sale of the Old Certificates were deposited with the Depositary for the benefit
of the Certificateholders of the Trusts. These proceeds will be used to purchase
Equipment Notes. See "Use of Proceeds".
12
<PAGE> 14
RATIO OF EARNINGS TO FIXED CHARGES
The following information for the year ended December 31, 1993 and for the
period from January 1, 1994 through August 25, 1994 relates to America West's
predecessor. Information for the period August 26, 1994 through December 31,
1994, for the years ended December 31, 1995, 1996 and 1997 and for the nine
months ended September 30, 1997 and 1998 relates to America West. The
information as to America West has not been prepared on a consistent basis of
accounting with the information as to the predecessor due to America West's
adoption in August 1994 of fresh start reporting in accordance with the American
Institute of Certified Public Accountants' Statement of Position 90-7 --
"Financial Reporting by Entities in Reorganization Under the Bankruptcy Code
("SOP 90-7").
For the year ended December 31, 1993, the ratio of earnings to fixed charges was
1.28. For the period from January 1, 1994 through August 25, 1994, $201.2
million would have been required to achieve a ratio of earnings to fixed charges
of 1.0. The ratio of earnings to fixed charges for the period August 26, 1994 to
December 31, 1994, and for the years ended December 31, 1995, 1996 and 1997, was
1.38, 1.73, 1.24 and 1.98, respectively. The ratio of earnings to fixed charges
for the nine months ended September 30, 1997 and September 30, 1998 was 1.98 and
2.35, respectively.
For the purpose of computing the ratio of earnings to fixed charges, "earnings"
consist of income (loss) before income taxes and extraordinary item plus fixed
charges less capitalized interest. "Fixed charges" consist of interest expense
including amortization of debt expense, one-third of rent expense, which is
deemed to be representative of an interest factor, and capitalized interest.
13
<PAGE> 15
THE COMPANY
We are the ninth largest commercial airline carrier in the United States,
operating through our principal hubs located in Phoenix, Arizona and Las Vegas,
Nevada, and a mini-hub located in Columbus, Ohio. We are the lowest cost major
airline in the United States. At the end of 1997, we served 60 destinations,
including six destinations in Mexico and one in Canada, with a fleet of 102
aircraft. We offered service to an additional 32 destinations through alliance
arrangements with other airlines.
We seek to maximize our market share by operating primarily through our hub
airports. We are the leading airline serving Phoenix, Las Vegas and Columbus,
based on available seat miles. We believe that the success of our operations in
Phoenix and Las Vegas is in part due to those cities' airports being among the
world's largest 25 in passenger numbers and those cities being among the fastest
growing in the nation. In addition, we believe that our hubs are well positioned
for continued growth due to their geographically favorable locations with
strategic access to key Southwest and West Coast markets, relatively low
operating costs, year-round fair weather and modern, uncongested facilities.
We are committed to maintaining the airline's reliability and providing quality
customer service. During 1997, we initiated a Pride in All We Do campaign aimed
at improving our baggage handling, on-time performance and all other aspects of
our customer service. As a result of initiatives developed by this program, our
mishandled baggage rate during 1997, as recorded by the Department of
Transportation, was the best in the industry. In addition, we were ranked No. 1
in customer satisfaction among the major United States airlines for short-haul
flights in both the 1997 and the 1998 Airline Customer Satisfaction -- U.S.
Flights studies, which was conducted by Frequent Flyer Magazine and J.D. Power &
Associates.
BUSINESS STRATEGY
Our strategy is to maximize profitability and cash flow by capitalizing on our
key competitive strengths while maintaining financial flexibility. The principal
elements of our strategy are to expand our existing lines of business, to
maintain our strategic cost advantage and to ensure financial flexibility.
Grow the Company's Existing Lines of Business
We intend to expand our airline operation by continuing to add service to new
destinations and increasing the frequency of flights to existing destinations
from Phoenix and Las Vegas. The Phoenix and Las Vegas markets are among the
fastest growing in the United States, and we believe that our Phoenix hub is
undersized relative to its potential. During 1996 and 1997 we added eight new
cities to our route network and increased the frequency of flights to our key
business markets.
We have also expanded our reach outside of our core markets through alliances
with other airlines. We have codesharing arrangements with Continental Airlines,
Northwest Airlines and British Airways as well as a commuter agreement with
Mesa. These alliances have allowed us to expand our passenger base without
experiencing significant increases in capital or operating expenses, and in some
cases it has allowed us to achieve cost savings by reducing redundant labor and
facilities. We believe that these alliances are an efficient means of developing
new markets and increasing travel opportunities for our customers and we plan to
continue to pursue such relationships with both domestic and international
carriers.
Maintain its Strategic Cost Advantage
We are committed to maintaining our low cost structure, which offers us a
significant competitive advantage over other major airlines. We have achieved
this low cost structure primarily through employee productivity, favorable labor
costs per available seat mile and industry-leading aircraft utilization.
Ensure Financial Flexibility
The airline and travel industries are cyclical in nature. Because of this, an
important element of our strategy is to maintain financial flexibility as
protection against a downturn in the business cycle. A key component of this
strategy is our aircraft leasing plan. As of the end of 1997, leases for 24
aircraft are scheduled to expire at the end of 2001. As a result, if economic
conditions worsen during that period, we will be able to delay
14
<PAGE> 16
our fleet and aircraft-related financial obligations by electing not to renew
these aircraft leases or otherwise replace these aircraft. Another component of
this strategy is our compensation system, which gives us the flexibility to vary
what we pay employees depending on our overall performance. In December 1997, we
further enhanced our financial flexibility by establishing a $100 million senior
secured revolving credit facility with certain financial institutions.
America West is a Delaware corporation. Our executive offices are located at 51
W. Third Street, Tempe, Arizona 85281, and our telephone number is (602)
693-0800.
America West Holdings Corporation ("Holdings") is a Delaware corporation that
became the holding company for America West effective midnight December 31,
1996. The only material assets of Holdings are the capital stock of America West
and the capital stock of The Leisure Company ("LeisureCo."), a travel and
leisure subsidiary.
RECENT DEVELOPMENTS
On January 20, 1999, Holdings reported record earnings for the fourth quarter
and full year 1998. Excluding non-recurring charges of $3.7 million, Holdings'
fourth quarter net income was $22.4 million -- 11 percent above the previous
record of $20.1 million in 1997. America West reported fourth quarter pre-tax
earnings of $30.7 million and record 1998 pre-tax income of $184.6 million, up
44.2 percent over 1997.
Holdings, its directors and certain of its stockholders have been named as
defendants in lawsuits filed on behalf of Holdings' stockholders alleging
various breaches of fiduciary duties in connection with the Board of Directors'
response to unsolicited expressions of interest proposing potential acquisition
of Holdings or similar transactions. In addition, the Company, Holdings and
certain of Holdings' stockholders, executive officers and directors have been
named as defendants in lawsuits alleging violations of the Securities Exchange
Act of 1934, as amended, in connection with Holdings' public disclosures and
certain activity in Holdings' stock during 1997 and 1998. Holdings and the
Company deny and are vigorously defending the claims set forth in these
complaints. While the outcome of such lawsuits cannot be predicted with
certainty, management currently expects that any liability arising from such
matters, to the extent not provided for through insurance or otherwise, will not
have a material adverse effect on the Company's business, financial condition
and results of operation.
On March 20, the Company reported that it had reached a tentative agreement with
the Association of Flight Attendants on a five-year collective bargaining
agreement. The agreement is subject to membership approval and will be voted on
by union members as soon as practicable. The Company expects to continue to
operate its full schedule without interruption.
QUESTIONS OR REQUESTS FOR ASSISTANCE
If you have questions or would like to request assistance with the mechanics of
exchanging your Old Certificates in the Exchange Offer, please direct them to
Wilmington Trust Company as indicated below. In addition to the other positions
described in this Prospectus Summary, Wilmington Trust Company has been
appointed to act as the Exchange Agent of the Exchange Offer.
By Mail or Overnight Delivery:
Wilmington Trust Company
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Kristin Long
By Hand:
Wilmington Trust Company
1105 North Market Street, 1st Floor
Wilmington, Delaware 19890
Attention: Corporate Trust Operations
By Facsimile Transmission*:
(302) 651-1079
*Confirm successful delivery by telephone at (302) 651-1562
15
<PAGE> 17
CASH FLOW STRUCTURE
Set forth below is a diagram illustrating the structure for the Certificates and
certain cash flows.
[CASH FLOW STRUCTURE CHART]
(1) Each Leased Aircraft will be subject to a separate Lease and the related
Indenture; each owned Aircraft will be subject to a separate Indenture.
(2) Funds held as Deposits relating to each Trust will be withdrawn to purchase
Equipment Notes on behalf of such Trust during the Delivery Period. If any
funds remain as Deposits with respect to any Trust at the end of such
period, such funds will be withdrawn by the Escrow Agent and distributed to
the holders of the Certificates issued by such Trust, together with accrued
and unpaid interest thereon and a premium, if applicable. No interest will
accrue with respect to the Deposits after they have been fully withdrawn.
(3) The initial amount of the Liquidity Facility for each Trust will cover three
consecutive semiannual interest payments with respect to such Trust, except
that the Liquidity Facility for any Trust will not cover interest payable by
the Depositary on the Deposits relating to such Trust. The scheduled
payments of interest on the Equipment Notes and on the Deposits relating to
a Trust, taken together, will be sufficient to pay an amount equal to
accrued interest on the outstanding Certificates issued by such Trust at the
rate per annum applicable thereto.
16
<PAGE> 18
SELECTED FINANCIAL DATA
The following selected financial data as of and for the years ended
December 31, 1997, 1996 and 1995, the period August 26 through December 31,
1994, and the period January 1 through August 25, 1994 and the year ended
December 31, 1993 are derived from the financial statements of the Company which
have been audited by KPMG LLP, independent certified public accountants. The
selected financial data should be read in conjunction with the financial
statements for the respective periods, the related notes and the independent
auditors' reports incorporated by reference into this Prospectus. The financial
data of the Company for the nine months ended September 30, 1998 and 1997 is
derived from its unaudited financial statements incorporated by reference in
this Prospectus.
<TABLE>
<CAPTION>
REORGANIZED COMPANY
----------------------------------------------------------------------------------
NINE MONTHS
ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31, PERIOD FROM
----------------------- ------------------------------------ AUGUST 26 TO
1998 1997 1997 1996 1995 DECEMBER 31, 1994
---------- ---------- ---------- ---------- ---------- -----------------
(UNAUDITED) (DOLLARS IN THOUSANDS EXCEPT OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Operating revenues... $1,475,866 $1,402,065 $1,874,956 $1,739,526 $1,550,642 $ 469,766
Operating income..... 163,062 121,030 162,573 68,666(1) 154,732(2) 38,871
Income before income
taxes and
extraordinary
items.............. 153,873 104,286 140,673 34,493 108,378 19,736
Income before
extraordinary
items.............. 83,874 54,855 75,330 9,610 54,770 7,846
Extraordinary
items(3)........... -- -- -- (1,105) (984) --
Net income........... 83,874 54,855 75,330 8,505 53,786 7,846
BALANCE SHEET DATA
(AT END OF PERIOD):
Working capital
deficiency......... $ (149,230) $ (160,909) $ (161,456) $ (170,907) $ (70,416) $ (47,927)
Total assets......... 1,622,212 1,540,204 1,547,331 1,597,677 1,588,709 1,545,092
Long-term debt, less
current
maturities......... 214,933 271,266 272,760 330,148 373,964 465,598
Total stockholders'
equity............. 753,675 664,293 684,768 622,780 649,472 595,446
OPERATING DATA
(UNAUDITED):
Available seat miles
(in millions)...... 18,070 17,618 23,568 21,625 19,421 6,424
Revenue passenger
miles (in
millions).......... 12,340 12,339 16,204 15,321 13,313 3,972
Passenger load factor
(%)................ 68.3 70.0 68.8 70.9 68.5 61.8
Yield per revenue
passenger mile
(cents)............ 11.30 10.70 10.89 10.69 10.91 11.02
Passenger revenue per
available seat mile
(cents)............ 7.72 7.49 7.49 7.57 7.48 6.81
Operating cost per
available seat mile
(cents)............ 7.27 7.32(4) 7.27 7.73(1) 7.19(2) 6.71
Fulltime equivalent
employees (at end
of period)......... 9,881 9,521 9,615 9,652 8,712 10,715
<CAPTION>
PREDECESSOR COMPANY
------------------------------
PERIOD FROM YEAR ENDED
JANUARY 1 TO DECEMBER 31,
AUGUST 25, 1994 1993
--------------- ------------
<S> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Operating revenues... $939,028 $1,325,364
Operating income..... 107,506 121,054
Income before income
taxes and
extraordinary
items.............. (201,209) 37,924
Income before
extraordinary
items.............. (203,268) 37,165
Extraordinary
items(3)........... 257,660 --
Net income........... 54,392 37,165
BALANCE SHEET DATA
(AT END OF PERIOD):
Working capital
deficiency......... $ -- $ (124,375)
Total assets......... -- 1,016,743
Long-term debt, less
current
maturities......... -- 620,992
Total stockholders'
equity............. -- (254,262)
OPERATING DATA
(UNAUDITED):
Available seat miles
(in millions)...... 11,636 17,190
Revenue passenger
miles (in
millions).......... 8,261 11,221
Passenger load factor
(%)................ 71.0 65.3
Yield per revenue
passenger mile
(cents)............ 10.68 11.11
Passenger revenue per
available seat mile
(cents)............ 7.58 7.25
Operating cost per
available seat mile
(cents)............ 7.15 7.01
Fulltime equivalent
employees (at end
of period)......... 10,849 10,544
</TABLE>
- -------------------------
(1) Reflects a $65.1 million nonrecurring special charge relating to America
West's renegotiation of its AVSA S.A.R.L., an affiliate of Airbus Industries
("AVSA") aircraft purchase agreement and writedown of certain aircraft
related inventory and equipment and underutilized facilities as well as
certain other adjustments. The special charge increased cost per available
seat mile by .30 cents for the year ended December 31, 1996.
(2) Costs associated with America West's outsourcing of its heavy aircraft
maintenance resulted in a pretax restructuring charge of approximately $10.5
million and an increase in cost per available seat mile of .05 cents for the
year ended December 31, 1995.
(3) Includes (i) an extraordinary loss of $1.1 million in 1996 relating to
prepayment of the 10 3/4% Notes, (ii) an extraordinary loss of $984,000 in
1995 resulting from the exchange of debt by America West and (iii) $257.7
million in 1994 resulting from the discharge of indebtedness pursuant to the
consummation of the plan of reorganization.
(4) Operating cost per seat mile for the nine months ended September 30, 1997 is
based on pro forma numbers.
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RISK FACTORS
RISK FACTORS RELATING TO THE CERTIFICATES AND THE EXCHANGE OFFER
CONSEQUENCES OF
FAILURE TO EXCHANGE
OLD CERTIFICATES If you do not exchange Old Certificates for New
Certificates in this Exchange Offer, you will be
restricted from transferring Old Certificates in the
future. In general, outside of this Exchange Offer, you
may not offer or sell Old Certificates unless they have
been registered under the federal and state securities
laws or you offer or sell them in a transaction that is
exempt from such laws. The Company is not planning to
register the Old Certificates under the federal
securities laws.
POSSIBLE EFFECTS IF
AIRCRAFT APPRAISALS
DO NOT CORRESPOND
TO THE REALIZABLE
VALUE OF AIRCRAFT Aviation Solutions, Inc. ("AvSolutions"), AVITAS, Inc.
("AVITAS") and BK Associates, Inc. ("BK") (collectively,
the "Appraisers") have appraised the Aircraft being
acquired by the Company. These appraisals were based on
various assumptions and methodologies, which differed
among the Appraisers.
In general, the appraised value of each Aircraft was
calculated using the average or median value of an
Aircraft, whichever was lower, and then that value was
projected for the month in which the Aircraft is
scheduled to be delivered. In addition, the Appraisers
assumed depreciation of approximately 3% for Aircraft
delivered more than one year before the Delivery Period
Termination Date.
An appraisal is only an estimate of value and is not
necessarily an accurate indication of how much the
Company will pay to purchase an Aircraft. Appraisals
based on different assumptions and methodologies than
those used by the Appraisers may produce very different
values for the Aircraft. In addition, the realizable
value of the Aircraft following the exercise of remedies
will depend on several factors including:
- supply of other aircraft
- quality of other aircraft available
- supply of buyers
- general economic conditions
- condition of the Aircraft
Accordingly, you should not rely on the appraisal values
as an indicator of the value that would be realized if
the Aircraft are sold. Based on the above, we cannot
assure you that the proceeds from a sale or other means
of disposal of an Aircraft will be sufficient to fully
fund payments due to Certificateholders.
See "Description of the Aircraft and the
Appraisals -- The Appraisals".
EFFECT OF
SUBORDINATION ON
SUBORDINATED
CERTIFICATEHOLDERS Payments on the subordinated classes of Certificates will
not be made until the senior classes are paid those
amounts due to them. In addition, in certain
circumstances, if the Company has defaulted on a series
of Equipment Notes, the Subordination Agent may be
required to distribute payments received with respect to
a more junior series of Equipment Notes to those
Certificateholders that were due to receive payments with
respect to the Equipment Notes on which the default
occurred. In such a situation the remaining junior series
of Equipment Notes may not earn enough interest to fully
fund distributions due to the holders of the
corresponding Certificates. Accordingly, if the Company
defaults on Equipment Notes, the holders of one or more
junior Classes of Certificates may not receive the full
amount of payments that they are due to receive, even if
the Company eventually pays the Equipment Notes due in
full.
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Payment with respect to the Deposits are not subject to
the subordination provisions of the Intercreditor
Agreement.
CONTROL OVER THE
COLLATERAL AND
POTENTIAL SALE OF THE
COLLATERAL The "Controlling Party" of an Indenture shall mean:
(a) the Class A Trustee;
(b) upon payment of the Final Distributions to the
Class A Certificateholders, the Class B Trustee;
and
(c) upon payment of the Final Distributions to the
Class B Certificateholders, the Class C Trustee.
If there comes a time when either (1) the entire amount
available under any Liquidity Facility has been withdrawn
and has not been reimbursed or (2) all of the Equipment
Notes with respect to any one Indenture have been
accelerated, then 18 months after the earlier of either
of the above occurs, the Liquidity Provider with the
highest outstanding amount of Liquidity Obligations shall
have the right to become the Controlling Party with
respect to such Indenture. If such a situation arises,
the Trustees and the Certificateholders are bound to vote
as directed by the Controlling Party.
Possible actions that the Controlling Party could take
include accelerating the Equipment Notes, foreclosing a
lien on the Aircraft securing such Equipment Notes or, in
certain circumstances, selling the Equipment Notes.
Because the Equipment Notes are not cross-collateralized,
proceeds from the sale of an Aircraft in excess of the
amounts due on Equipment Notes related to such Aircraft
will not be available to cover losses, if any, on any
other Equipment Notes.
From time to time, the market for Equipment Notes may be
very limited and there can be no assurance that the
proceeds from such an acceleration or sale will be
sufficient to cover the distributions payable to
Certificateholders. If proceeds from a sale are
insufficient to cover distributions due to be paid,
Certificateholders will not have any claim for the
shortfall against the Company, any Owner Trustee, Owner
Participant or any Trustee.
For a description of the restrictions on the right of the
Controlling Party to sell the Equipment Notes see
"Description of the New Certificates -- Indenture
Defaults and Certain Rights Upon and Indenture Default".
POSSIBLE CHANGES TO
AGREEMENTS
DESCRIBED IN THIS
PROSPECTUS POST-
EXCHANGE OFFER
Listed below are certain situations that, should they
occur, could lead to revisions of certain agreements
described in this Prospectus, such that those agreements
would differ from their descriptions in this Prospectus.
Leveraged Lease Financing of an Aircraft
If an Aircraft is to be financed using a leveraged lease,
the Company must select an Owner Participant for such
Aircraft. Such Owner Participant will have the right to
request that revisions be made to the following
documents:
- Participation Agreement;
- Lease; and
- Leased Aircraft Indenture.
Issuance of Series D Equipment Notes
If the Company issues Series D Equipment Notes and funds
the sale of such notes by selling Class D Certificates,
the parties that purchase Class D
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Certificates will have the right to request that
revisions be made to the following documents:
- Leased Aircraft Documents;
- Form of the Participation Agreement; and
- Form of Owned Aircraft Indenture.
Regardless of the revisions requested, certain terms of
the documents are subject to the following restrictions:
- Mandatory Documents Terms must be included; and
- Mandatory Economic Terms may not be revised.
In addition, if any revisions are requested, the Company
must do the following:
1. Certify to the Trustees that any revisions made to
documents do not materially and adversely affect
the Certificateholders; and
2. In case of any material revisions, obtain written
confirmation from each of Moody's Investors
Service, Inc. ("Moody's") and Standard & Poor's
Ratings Services ("Standard & Poor's", and together
with Moody's, the "Rating Agencies") that the
revisions made to documents will not cause the
withdrawal, suspension or downgrading of the rating
of any Class of Certificates.
See "Description of the Certificates -- Obligation to
Purchase Equipment Notes".
POSSIBLE EFFECTS OF
APPOINTING OWNER
PARTICIPANTS
As stated above, if an Aircraft is to be financed
utilizing a leveraged lease, the Company must select an
Owner Participant with respect to such Aircraft. In
addition to having the right to request that revisions be
made to certain documents, prior to an Indenture Default
an Owner Participant will have the right to approve the
selection of counsel that, pursuant to the documentation,
will furnish legal opinions, and any appraisers or the
accountants required by the documentation. This right is
to the exclusion of the related Loan Trustee.
An Owner Participant will also have the right to approve
the sublease of an Aircraft and to approve of the bill of
sale used if an Aircraft is ever substituted after an
event of loss.
Finally, an Owner Participant will have the right to
sell, assign or otherwise transfer its interest in any
leverage lease, subject to the relevant Participation
Agreement and related documents.
POSSIBLE EFFECTS
FROM UNUSED
DEPOSITS
There is no guarantee that the Trustees will have an
opportunity to use all of the funds in the Deposits to
purchase Equipment Notes. The Trustees will not be
obligated to purchase Equipment Notes if certain
conditions are not satisfied when an Aircraft is
delivered. See "Description of the New
Certificates -- Obligation to Purchase Equipment Notes".
In addition the Company may not issue enough Equipment
Notes to use up the funds in the Deposits.
The Trustees will withdraw all funds that remain as
Deposits at the Delivery Period Termination Date and
distribute them with accrued and unpaid interest. In
certain circumstances, but not all, the Company will also
be required to pay a premium designed to "make-whole" the
Certificateholders receiving such Deposits. Since the
maximum principal amount of Equipment Notes may not be
issued with respect to an Aircraft and, in any such case,
the
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<PAGE> 22
Series C Equipment Notes are more likely not to be issued
in the maximum principal amount as compared to the other
Equipment Notes, it is more likely that a distribution of
unused Deposits will be made with respect to the Class C
Certificates as compared to the other Certificates. See
"Description of the Deposit Agreements -- Unused
Deposits".
EFFECTS OF
WITHHOLDING TAX ON
FOREIGN INVESTORS
Taxes will be withheld from distributions made with
respect to Original Trusts and Deposits that are made to
foreigners that have beneficial ownership of
Certificates. Such taxes will be withheld because of the
possibility that the Original Trusts may be treated as
partnerships engaged in U.S. trades or businesses for
U.S. federal income tax purposes.
By accepting an interest in a Certificate, foreign
investors must agree to indemnify the Original Trustee,
the Original Trust and the Paying Agent against liability
for improperly failing to withhold tax.
Foreign investors may file a U.S. federal income tax
return to request refunds for any amounts withheld, but
there is no assurance that they will receive such a
refund or that such refunds will be received in a timely
manner.
LIMITED ABILITY TO
RESELL CERTIFICATES
Prior to the Exchange Offer, there was no public market
for the Certificates. Certain Initial Purchasers
previously made a market in the Old Certificates and have
indicated that they intend to make a market in the New
Certificates, but they are not required to do so.
Accordingly, a secondary market for the Certificates may
not develop and even if one does, it might not continue
or it might not be sufficiently liquid to allow you to
resell any of your Certificates.
RISK FACTORS RELATING TO THE COMPANY AND THE AIRLINE INDUSTRY
Below we have listed certain risks that we face as a business in general. If any
of these risks actually have a material adverse effect on our business,
financial condition or operating results, we may not be able to satisfy some or
all or our obligations under the Leases (in the case of Leased Aircraft) or the
Equipment Notes (in the case of Owned Aircraft). Depending on the extent to
which we are unable to satisfy these obligations, you may not realize the
expected return on your investment in the Certificates, and in the worst case,
you may not get back the full amount of your initial investment in the
Certificates.
COMPETITION AND
INDUSTRY CONDITIONS
The airline industry is highly competitive and industry
earnings are typically volatile. From 1990 to 1992, the
airline industry experienced unprecedented losses due to
high fuel costs, general economic conditions, intense
price competition and other factors. Airlines compete on
the basis of pricing, scheduling (frequency and flight
times), on-time performance, frequent flyer programs and
other services.
The airline industry is susceptible to price discounting,
which occurs when a carrier offers discounts or
promotional fares to passengers. Discounted fares offered
by one carrier are normally matched by competing
carriers, which may have the effect of lowering the
profit per passenger but not necessarily increase the
number of passengers who fly. In addition, in recent
years several new carriers have entered the airline
industry, and many of them have low-cost structures. In
some cases, these new carriers have initiated or
triggered price discounting. The entry of additional new
carriers in many of our markets, as well as increased
competition from or the introduction of new services by
existing carriers, could have a material adverse effect
on our business, financial condition and operating
results.
Most of the markets we serve are highly competitive and
are served by larger carriers with substantially greater
financial resources than we have available.
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<PAGE> 23
At our Phoenix and Las Vegas hubs, our principal
competitor is Southwest Airlines. A number of our larger
competitors have proprietary reservation systems, which
gives them certain competitive advantages.
The air travel business historically fluctuates in
response to general economic conditions. The airline
industry is sensitive to changes in economic conditions
that affect business and leisure travel and is highly
susceptible to unforeseen events that result in declines
in air travel, including:
- political instability
- regional hostilities
- recession
- fuel price escalation
- inflation
- adverse weather conditions
If the rates of travel on the routes that we serve
decrease or if competition increases between carriers,
our business, financial condition and operating results
could be materially adversely affected.
THE COMPANY'S
ABILITY TO BORROW
FUNDS IN THE FUTURE
As of September 30, 1998, we owed approximately $215
million of long-term debts (less current maturities).
Much of this debt is secured by a large portion of our
assets, leaving us with a limited number of assets to use
to obtain additional financing which we may need if we
encounter adverse industry conditions or a prolonged
economic recession in the future.
In addition, as of September 30, 1998, we had firm
commitments to AVSA to purchase a total of 29 Airbus
aircraft with three to be delivered in the fourth quarter
of 1998 and had an option to purchase 52 more Airbus
aircraft. The aggregate net cost of firm commitments
remaining under the purchase order is approximately $1.0
billion, based on a 3.5 percent annual price escalation.
We have arranged for financing from AVSA for more than
two-thirds of these commitments, but we will have to look
to outside sources to finance the remaining commitments.
We cannot guarantee that we will be able to obtain enough
capital to finance the remainder of the aircraft, and if
we default on our commitments to purchase aircraft, our
business, financial condition and operating results could
be materially adversely affected.
LABOR RELATIONS
In the recent past, labor unions have made several
attempts to organize our employees, and we expect that
these efforts will continue. Certain groups of our
employees have chosen to be represented by a union and we
are currently negotiating initial collective bargaining
agreements with some of these groups. We cannot predict
which, if any, other groups of employees may seek union
representation or the outcome of collective bargaining
agreements that we may be forced to negotiate in the
future. If we are unable to negotiate acceptable
collective bargaining agreements, we might have to wait
through "cooling off" periods, which could be followed by
union-initiated work actions, including strikes.
Depending on the type and duration of work action we
endure, our business, financial condition and operating
results could be materially adversely affected.
CONTROL BY CERTAIN
PRINCIPAL
STOCKHOLDERS
As of December 31, 1998, four stockholders collectively
control approximately 55% of the total voting power of
America West Holdings Corporation, our parent corporation
("Holdings"). These stockholders are TPG Partners, L.P.,
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TPG Parallel I, L.P., Air Partners II, L.P. and
Continental Airlines, Inc. TPG, TPG Parallel and Air
Partners are all controlled by the same company, TPG
Advisors, Inc. We cannot guarantee that the controlling
stockholders identified above will not try to influence
Holding's business in a way that would favor their own
personal interests to the detriment of our interests.
FLUCTUATIONS IN FUEL
COSTS
Fuel is an important raw material used in our business,
accounting for approximately 11% of our total operating
expenses in 1998. With our current level of fuel
consumption, if jet fuel prices increase by one cent per
gallon, our annual operating results will decrease by
$4.4 million for 1999. Among the unpredictable events
whose occurrence could effect the price and supply of jet
fuel in the future are:
- geopolitical developments
- regional production patterns
- environmental concerns
In 1996, we implemented a fuel "hedging" program to
manage the possible effect that fluctuating jet fuel
prices could have on our business. The program primarily
addresses our exposure to fuel requirements on the East
Coast. West Coast jet fuel prices, however, tend to be
more volatile than jet fuel prices in other areas of the
United States and because we primarily serve the Western
United States, we purchase a substantially larger portion
of our jet fuel requirements on the West Coast compared
to our larger competitors.
Accordingly, if the price of jet fuel goes up
substantially or the supply of jet fuel is inadequate in
the future and we have not implemented adequate
protection measures, our business, financial condition
and operating results could be materially adversely
affected.
AVIATION TICKET
TAXES
On August 5, 1997 President Clinton signed a new aviation
ticket tax into law that is scheduled to stay in effect
though September 30, 2007. As a result of the competitive
environment in the passenger airline industry, we have
been limited in our ability to pass on the additional
costs of these taxes to passengers through fare
increases.
SECURITY AND SAFETY
MEASURES
Congress has adopted increased safety measures designed
to increase airline passenger security and protect
against terrorist acts. Implementing these measures has
increased operating costs for the airline industry as a
whole. A report from Congress' Aviation Safety Commission
recommends that airlines implement additional measures to
improve the safety and security of air travel. We cannot
predict which additional measures Congress will impose or
the impact that implementing those measures will have on
our revenue, but it is possible that the impact could be
significant.
OTHER REGULATORY
MATTERS
The airline industry in heavily regulated. Both federal
and state governments from time to time propose laws and
regulations that would impose additional requirements and
restrictions on airline operations. Depending on which
and how many of these laws and regulations are enacted,
the cost of operating an airline could increase
significantly. We cannot predict what laws and
regulations will be adopted or the changes and increased
expense that they could cause. Accordingly, future
legislative and regulatory acts could have a materially
adverse effect on our business, financial conditions or
operating results.
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SUBSTANTIAL
RESTRICTIONS
IMPOSED AND
PROMISES MADE IN
CONNECTION WITH
CURRENT LOAN
AGREEMENTS AND
DEBT INSTRUMENTS
We have borrowed money pursuant to certain loan
agreements and debt instruments with significant
operating and financial restrictions. These agreements
and instruments contain terms that may significantly
restrict or prohibit our ability to take certain actions,
including our ability:
- to repay certain debts before they come due
- to sell assets
- to participate in certain mergers and acquisitions
- to conduct future financings
- to make needed capital expenditures
- to implement certain measures that would better
enable us to withstand future downturns in the
airline industry or the economy in general
In addition, several of these borrowing arrangements
require us to satisfy certain benchmarks in respect of
our financial position.
We are currently in compliance with the restrictions and
requirements referred to above, but any default would
allow our lenders to require us to repay the full amount
of money that we have borrowed, plus accrued and unpaid
interest. If this were to occur, we cannot guarantee that
we would have or be able to raise the funds needed to pay
off these debts.
Finally, we may be obligated to offer to purchase certain
amounts of the debts referred to above. Such obligations
would arise if certain changes occur with respect to who
controls us or Holdings, our parent company, or if we
dispose of certain assets.
YEAR 2000
COMPLIANCE
PROGRAM AND RISKS
The Year 2000 issue results from computer programs being
written using two digits rather than four to define the
applicable year. As a consequence, time-sensitive
computer equipment and software may recognize a date
using "00" as the year 1900 rather than the year 2000.
Many of the Company's systems, including information and
computer systems and automated equipment, will be
affected by the Year 2000 issue. The Company is also
heavily reliant on the FAA's management of the nation's
air traffic control system, local authorities' management
of the airports at which AWA operates, and vendors to
provide goods (fuel, catering, etc.), services
(telecommunications, data networks, satellites, etc.) and
data (frequent flyer partnerships, alliances, etc.).
The Company has underway a Year 2000 Project (the
"Project" or "Year 2000 Project") to identify the
programs and infrastructure that could be affected by the
Year 2000 issue and is implementing a plan to resolve the
problems identified on a timely basis. The Project
requires the Company to devote a considerable amount of
internal resources and hire substantial external
resources to assist with the implementation and
monitoring of the Project, and will require the
replacement of certain equipment and modification of
certain software.
The Company believes that its Year 2000 Project will be
completed prior to any currently anticipated significant
impact on the Company arising from the Year 2000 issue.
The Project is divided into three main sections,
including information technology ("IT") systems, embedded
systems and third party compliance. The five phases of
the IT and embedded systems sections include inventory,
assessment, renovation, user testing and implementation.
The inventory and assessment phases of the IT systems are
substantially completed and the remaining phases of the
IT systems are expected to be completed in the first and
second quarters of 1999. The inventory phase of the
embedded
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systems is substantially completed and the remaining
phases are underway and are expected to be completed
during the first, second and third quarters of 1999.
The Company currently estimates that the total cost of
its Year 2000 Project will be approximately $40 million,
which will be funded from operating cash flows. These
costs exclude approximately $7 million of normal system
software and equipment upgrades and replacements which
the Company anticipated incurring in the ordinary course
regardless of the Year 2000 issue. As of December 31,
1998, the Company had incurred approximately $13 million
of non-capital expenditures in connection with the Year
2000 Project. The Company expects that approximately $30
million of the costs have been or will be expensed as
incurred and the Company has had or will have
approximately $10 million of capital expenditures.
The costs and expected completion date of the Company's
Year 2000 Project are based on management's best
estimates, and reflect assumptions regarding the
availability and cost of personnel trained in this area,
the compliance plans of third parties and similar
uncertainties. However, due to the complexity and
pervasiveness of the Year 2000 issue and in particular
the uncertainty regarding the compliance programs of
third parties, no assurance can be given that these
estimates will be achieved, and actual results could
differ materially from those anticipated. If the
Company's plan to address the Year 2000 issue is not
successfully or timely implemented, the Company may need
to devote more resources to the process and additional
costs may be incurred, which could have a material
adverse effect on the Company's financial condition and
results of operations.
The failure to correct a material Year 2000 problem could
result in an interruption in, or failure of, certain
normal business activities or operations. While difficult
to predict, the Company speculates that the most
reasonably likely worst case Year 2000 scenario will
result from the failure of third parties, including
operators of airports and air traffic control systems, to
resolve their Year 2000 compliance issue. The Company has
initiated communications with such parties and its
significant suppliers and vendors with which its systems
interface and upon which the Company's business depends
in an effort to reduce the adverse impact of the Year
2000 issue. There can be no assurance, however, that the
systems of such third parties will be modified on a
timely basis and such failure may have a material adverse
effect on the Company's financial condition and results
of operations.
As a component of its Year 2000 Project, the Company is
developing a comprehensive analysis of the operational
problems and costs (including loss of revenues) that
would be reasonably likely to result from the failure by
the Company and certain third parties to complete efforts
necessary to achieve Year 2000 compliance on a timely
basis. The Company is developing contingency plans
designed to enable it to continue operations, consistent
with the highest standards of safety, in the event of
such third party failures.
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THE EXCHANGE OFFER
This section summarizes key provisions of the Exchange and Registration
Rights Agreement among America West, the Trustees and the Initial Purchasers
(the "Registration Rights Agreement"), which has been filed as an exhibit to the
Registration Statement and is available as set forth under the heading
"Available Information".
GENERAL
Pursuant to the Registration Rights Agreement, America West agreed, at no
cost to the holders of the Certificates, to register the Certificates with the
SEC to allow holders to trade the Certificates. Such a registration (a
"Registration Event") would take one of two forms set forth below:
Registration Event
(1) Exchange Offer Registration Statement. An Exchange Offer under the
Securities Act of 1933, as amended (the "Securities Act") would allow
holders to exchange the Old Certificates for New Certificates, which
will have terms identical in all material respects to the Old
Certificates (except that the New Certificates will not contain terms
with respect to transfer restrictions or interest rate increases as
described below and the New Certificates will be available only in
book-entry form).
(2) Shelf Registration Statement. Alternatively, in the event that any
changes in law or applicable interpretations of the staff of the SEC
would not permit America West to effect the Exchange Offer, or the
Exchange Offer is not consummated within 210 days after the initial
issuance date of the Certificates, which was October 6, 1998 (the
"Issuance Date"), holders who are not eligible to participate in the
Exchange Offer could request that the Company register the Old
Certificates for resale under the Securities Act through a shelf
registration statement (the "Shelf Registration Statement").
If the Company is unable to consummate the Exchange Offer or,
alternatively, to have a Shelf Registration Statement declared effective within
210 calendar days of October 6, 1998, the interest rate per annum on the
Equipment Notes and Deposits will be increased by 0.50% from the 210th day until
either the Exchange Offer is consummated, a shelf registration statement is
declared effective or the date on which all of the outstanding Certificates are
transferable by holders (other than affiliates or former affiliates of America
West) without further registration under the Securities Act.
If during any 12-month period the shelf registration statement ceases to be
effective for more than 60 days, whether or not consecutive, the interest rate
per annum on the Equipment Notes and the Deposits will be increased by 0.50%
from the 61st day the shelf registration statement ceases to be effective until
the shelf registration statement again becomes effective.
THE EXCHANGE OFFER
In the Registration Rights Agreement the Company agreed to register New
Certificates with the SEC to allow holders of all outstanding Old Certificates
to exchange their Old Certificates for the New Certificates. The New
Certificates will have the same material financial terms as the Old
Certificates. The difference between the Certificates is that the New
Certificates will not contain terms with respect to transfer restrictions or
interest rate increases and the New Certificates will be available only in
book-entry form. This Prospectus, together with the Letter of Transmittal, is
being sent to all registered holders of Old Certificates as of March 19, 1999,
for the purpose of allowing holders to exchange their Old Certificates.
Obligations of the Company to Effect an Exchange Offer
(1) File a registration statement to register the New Certificates by
February 3, 1999.
(2) Cause the registration statement to become effective by April 4, 1999.
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<PAGE> 28
(3) Keep the registration statement effective while the Exchange Offer is
open, which must be no fewer than 30 days.
(4) Complete the Exchange Offer by May 4, 1999.
The Exchange Offer will commence upon effectiveness of the registration and
terminate 30 calendar days after the Exchange Offer commences, unless extended.
The Company has the sole discretion to extend the Exchange Offer by notifying
the Exchange Agent and mailing an announcement of the extension to the holders
of Old Certificates. However, if the Exchange Offer is not consummated by May 4,
1999, the interest rate on the Equipment Notes and Deposits is subject to
increase. See "-- General".
The Company has the right to delay acceptance of any Old Certificates in
the Exchange Offer, to extend the Exchange Offer or to terminate the Exchange
Offer and not permit acceptance of Old Certificates not previously accepted if
any of the conditions set forth herein under "-- Conditions" occur. The Company
can also amend the terms of the Exchange Offer in any manner it deems
advantageous to the holders of the Old Certificates. The Company will notify the
Exchange Agent as promptly as practicable in the event of any delay in
acceptance, extension, termination or amendment. If the Exchange Offer is
amended in a manner determined by the Company to constitute a material change,
the Company will promptly disclose such amendment in a manner reasonably
calculated to inform the holders of the Old Certificates of such amendment. The
Company has no obligation to publish, advertise, or otherwise communicate any
such public announcement, other than by making a timely release to an
appropriate news agency.
With some exceptions, holders of Old Certificates who do not exchange their
Old Certificates for New Certificates in the Exchange Offer will no longer be
entitled to registration rights and will not be able to offer or sell their Old
Certificates, unless such Old Certificates are subsequently registered under the
Securities Act or pursuant to a transaction exempt from the Securities Act and
applicable state securities laws. After the Exchange Offer is consummated, with
some limited exceptions, the Company will not be required to subsequently
register the Old Certificates.
TENDERING OLD CERTIFICATES IN THE EXCHANGE OFFER
Only a holder of Old Certificates may tender such Old Certificates in the
Exchange Offer. The term "holder" with respect to the Exchange Offer means any
person in whose name Old Certificates are registered on the books of the Company
or any other person who has obtained a properly completed bond power from the
registered holder. Any beneficial owner of Old Certificates registered in the
name of a broker, dealer, commercial bank, trust company or other nominee who
wishes to tender should contact such registered holder promptly and instruct
such registered holder to tender on his behalf. If a beneficial owner wants to
tender on his own behalf, he must, prior to completing and executing the Letter
of Transmittal and delivering his Old Certificates, either make appropriate
arrangements to register ownership of the Old Certificates in his name or obtain
a properly completed bond power from the registered holder. The transfer of
registered ownership may take considerable time.
Subject to certain conditions (set forth under "-- Conditions"), the
Company will accept for exchange all Old Certificates validly tendered and not
withdrawn prior to 5:00 p.m., New York City time, on the date the exchange offer
expires. Old Certificates may be tendered only in integral multiples of $1,000.
There is no minimum principal amount of Old Certificates that must be tendered
in order for the Exchange Offer to take place. The tender by a holder of Old
Certificates will constitute an agreement between the holder and the Company in
accordance with the Letter of Transmittal.
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
all Old Certificates properly tendered will be accepted and the New Certificates
will be issued promptly after acceptance of the Old Certificates. The Exchange
Agent will act as agent for the tendering holders of Old Certificates for the
purposes of receiving the New Certificates and delivering New Certificates to
such holders. Any such New Certificates issued will be of the same class and for
an equal face amount as the Old
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Certificates tendered. For purposes of the Exchange Offer, Old Certificates will
be deemed to have been accepted for exchange when, as and if the Company has
given oral or written notice thereof to the Exchange Agent.
Requirements for Tendering Old Certificates in the Exchange Offer
(1) Complete, sign and date the Letter of Transmittal or a facsimile
thereof.
(a) Guaranteed Signatures May Be Required. Signatures on a Letter of
Transmittal or a notice of withdrawal, as the case may be, must be
guaranteed by any member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office or correspondent
in the United States or an "eligible guarantor" institution within
the meaning of Rule 17Ad-15 under the Exchange Act unless the Old
Certificates are tendered by a registered holder who has not
completed the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal or for
the account of an Eligible Institution.
(b) Bond Powers May be Required. If the Letter of Transmittal is signed
by a person other than the registered holder of any Old Certificates
listed therein, such Old Certificates must be endorsed or
accompanied by bond powers and a proxy which authorizes such person
to tender the Old Certificates on behalf of the registered holder,
in each case as the name of the registered holder or holders appears
on the Old Certificates.
(c) Fiduciaries Should Identify Themselves. If the Letter of Transmittal
or any Old Certificates or bond powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and unless
waived by the Company, evidence satisfactory to the Company of their
authority to so act must be submitted with the Letter of
Transmittal.
(2) Mail or otherwise deliver the completed Letter of Transmittal, and any
other items noted below, to the Exchange Agent by 5:00 p.m., New York
City time, on or before the date the Exchange Offer expires. No items
should be sent to the Company. See "-- Exchange Agent" below.
(3) Any of the three methods discussed below can be used to deliver the
certificates representing the Old Certificates to the Exchange Agent on
or before the date the Exchange Offer expires. The method of delivery
is up to the holder, who bears the risk of non-delivery.
(a) Send the actual certificates representing the Old Certificates to
the Exchange Agent with the Letter of Transmittal. If delivery is by
mail, insured registered mail is recommended.
(b) If available, make a book-entry delivery of the Old Certificates
into the Exchange Agent's account at DTC. See "-- Book-Entry
Transfer" below. Certain brokers, dealers, commercial banks, trust
companies and other nominees who hold Old Certificates through DTC
must tender their certificates in this way. Beneficial owners of Old
Certificates registered in the name of a broker, dealer, commercial
bank, trust company or other nominee are urged to contact such
person promptly if they wish to tender Old Certificates pursuant to
the Exchange Offer.
(c) Holders who cannot deliver their Old Certificates or who cannot
complete the procedures for delivery by book-entry transfer of the
Old Certificates on or before the date the Exchange Offer expires,
must, in order to participate in the Exchange Offer, tender their
Old Certificates according to the guaranteed delivery procedures set
forth below under "-- Guaranteed Delivery Procedures".
All questions as to the validity, form, eligibility (including time of
receipt) and withdrawal of the tendered Old Certificates will be determined by
the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Old
Certificates if they are not properly tendered or are unlawful in the opinion of
counsel for the Company. Unless waived
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<PAGE> 30
by the Company, any defects or irregularities in connection with tenders of Old
Certificates must be cured within such time as the Company determines. The
Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties.
Neither the Company, the Exchange Agent nor any other person is under any
duty to notify holders of Old Certificates of defects or irregularities
regarding tenders of Old Certificates, nor shall any of them be liable for
failure to give such notification. Tenders of Old Certificates will not be
deemed to have been made until such irregularities have been cured or waived.
Any Old Certificates received by the Exchange Agent that are not properly
tendered or cured of defects or irregularities will be returned to the holder by
the Exchange Agent, without cost to the holder, as soon as practicable following
the Expiration Date.
In addition, subject to some limitations, the Company reserves the right to
purchase or make offers for any Old Certificates that remain outstanding after
the Exchange Offer expires, to terminate the Exchange Offer, and to purchase Old
Certificates in the open market to the extent permitted by applicable law. The
terms of any such purchases or offers could differ from the terms of the
Exchange Offer.
BOOK-ENTRY TRANSFER
For purposes of the Exchange Offer, the Exchange Agent will establish an
account with respect to the Old Certificates at DTC within two Business Days
after the date of this Prospectus. Any tendering financial institution that is a
participant in DTC's book-entry transfer facility system must make a book-entry
delivery of the Old Certificates by causing DTC to transfer such Old
Certificates into the Exchange Agent's account in accordance with DTC's
Automated Tender Offer Program ("ATOP") procedures for transfers. Such holder of
Old Certificates using ATOP should transmit its acceptance to DTC on or prior to
the Expiration Date (or comply with the guaranteed delivery procedures set forth
below). DTC will verify such acceptance, execute a book-entry transfer of the
tendered Old Certificates into the Exchange Agent's account at DTC and then send
to the Exchange Agent confirmation of such book-entry transfer, including an
agent's message confirming that DTC has received an express acknowledgment from
such holder that such holder has received and agrees to be bound by the Letter
of Transmittal and that the Trust and America West may enforce the Letter of
Transmittal against such holder.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old Certificates desires to tender such Old
Certificates, and the Old Certificates are not immediately available, or time
will not permit such holder's Old Certificates or other required documents to
reach the Exchange Agent before the Expiration Date, or the procedures for book
entry transfer cannot be completed on a timely basis, a tender may be effected
under the procedures set forth here. This procedure can only be handled by a
member firm of a registered national securities exchange or of the National
Association of Securities Dealers, Inc., a commercial bank or trust company
having an office or correspondent in the United States or an "eligible
guarantor" institution within the meaning of Rule 17Ad-15 under the Exchange Act
(each an "Eligible Institution"). Prior to the expiration of the Exchange Offer,
the Company must receive from an Eligible Institution a properly completed and
duly executed Letter of Transmittal (or a facsimile thereof) and a Notice of
Guaranteed Delivery, substantially in the form provided by the Company (by
facsimile transmission, mail or hand delivery). The Notice of Guaranteed
Delivery must set forth the name and address of the holder of Old Certificates,
the amount of Old Certificates tendered and a statement guaranteeing that within
three trading days of the execution of the notice the certificates for all
tendered Old Certificates (or a book-entry confirmation) will be deposited by
the Eligible Institution with the Exchange Agent. Actual delivery of such Old
Certificates (or a book-entry confirmation) within such three day period is
required.
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WITHDRAWAL OF TENDERS
Tenders of Old Certificates may be withdrawn by a holder at any time prior
to 5:00 p.m., New York City time on the date the Exchange Offer expires by
notifying the Exchange Agent in writing. A notice of withdrawal must specify the
name of the person having tendered the Old Certificates to be withdrawn,
identify the Old Certificates to be withdrawn (including the principal amount of
such Old Certificates) and if the certificates for Old Certificates were
transmitted, specify the name in which such Old Certificates are registered, if
different from that of the withdrawing holder. If certificates for Old
Certificates were delivered to the Exchange Agent, then, prior to the release of
such certificates, the withdrawing holder must also submit the serial numbers of
the particular certificates to be withdrawn and a signed notice of withdrawal.
The signatures on the notice of withdrawal must be guaranteed by an Eligible
Institution unless such holder is an Eligible Institution. If Old Certificates
were tendered pursuant to the procedure for book-entry transfer, any notice of
withdrawal must specify the name and number of the account at the book-entry
transfer facility to be credited with the withdrawn Old Certificates and
otherwise comply with the procedures of such facility.
The Company will have final and binding authority to determine all
questions as to the validity, form and eligibility (including time of receipt)
of notices of withdrawal. Any Old Certificates so withdrawn will be deemed not
to have been validly tendered for exchange for purposes of the Exchange Offer.
Any Old Certificates which were tendered for exchange but which were not
exchanged for any reason will be returned to the holder thereof without cost to
such holder as soon as practicable after withdrawal. Old Certificates which were
tendered by book-entry transfer into the Exchange Agent's account at the book-
entry transfer facility will be credited to an account maintained with the
book-entry transfer facility for the Old Certificates as soon as practicable
after withdrawal. Properly withdrawn Old Certificates may be retendered
following the procedures described above at any time on or prior to the date the
Exchange Offer expires.
CONDITIONS
The Company will not be required to accept any Old Certificates for
exchange and the Company may terminate or amend the Exchange Offer before the
acceptance of Old Certificates, if the Company determines that it is not
permitted to effect the Exchange Offer because of any change in law or
applicable interpretations thereof by the SEC. In addition, the Company will
have no obligation to, and will not knowingly, accept tenders of Old
Certificates from affiliates of the Company (within the meaning of Rule 405
under the Securities Act) or from any other holder who is not eligible to
participate in the Exchange Offer under applicable law or interpretations
thereof by the SEC, or if the New Certificates to be received by such holder in
the Exchange Offer would not be tradable by such holder without restriction
under the Securities Act and the Exchange Act and without material restrictions
under the "blue sky" or securities laws of substantially all of the states of
the United States.
EXCHANGE AGENT
Wilmington Trust Company has been appointed as Exchange Agent for the
Exchange Offer. Questions and requests for assistance and requests for
additional copies of this Prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent addressed as follows:
<TABLE>
<S> <C>
By Mail or Overnight Delivery: By Hand:
Wilmington Trust Company Wilmington Trust Company
1100 North Market Street 1105 North Market Street, 1st Floor
Wilmington, Delaware 19890-0001 Wilmington, Delaware 19890
Attention: Kristin Long Attention: Corporate Trust Operations
Facsimile Transmission:
(302) 651-1079
Confirm by Telephone:
(302) 651-1562
</TABLE>
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TRANSFERABILITY OF NEW CERTIFICATES
Based on interpretations by the staff of the SEC (noted below), the Company
believes that most holders of New Certificates will be able to offer for resale,
re-sell or otherwise transfer the New Certificates issued without compliance
with the registration and prospectus delivery requirements of the Securities
Act, provided that the New Certificates are acquired in the ordinary course of
such holders' business and such holders are not engaged in, and do not intend to
engage in, a distribution of such New Certificates and have no arrangement with
any person to participate in a distribution of the New Certificates.
Broker-dealers who acquired Old Certificates directly from the Trustee for
resale under an exemption under the Securities Act, or any holder that is an
"affiliate" of the Company (as defined in Rule 405 of the Securities Act) must
comply with the registration and prospectus delivery requirements of the
Securities Act.
The SEC staff interpretations relied on are set forth in no-action letters
issued to third parties, including Exxon Capital Holdings Corporation, SEC
No-Action Letter (available April 13, 1989), Morgan Stanley & Co., Incorporated,
SEC No-Action Letter (available June 5, 1991) and Shearman & Sterling, SEC
No-Action Letter (available July 2, 1993).
Other than broker-dealers and affiliates, holders who wish to tender their
Old Certificates in the Exchange Offer will be required to make certain
representations to the Company in the Letter of Transmittal.
Representations Required by Holders to Tender Old Certificates in Exchange
Offer
(1) Such holder is not an affiliate of the Company (as defined under Rule
405 of the Securities Act) nor a broker-dealer tendering Old
Certificates acquired directly from the Company for its own account.
(2) The holder will acquire the New Certificates in the ordinary course of
its business.
(3) The holder is not engaged in, and does not intend to engage in, a
distribution of the New Certificates and has no arrangement or
understanding to participate in a distribution of the New Certificates.
Each broker-dealer that receives New Certificates for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Certificates. By so
acknowledging and by delivering a prospectus, the broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act. This Prospectus, as it may be amended or supplemented from time to time,
may be used by a broker-dealer in connection with resales of New Certificates
where the broker-dealer acquired the exchanged Old Certificates as a result of
market-making activities or other trading activities. The Company agrees to make
copies of this Prospectus available to such broker-dealers for 180 days after
the Exchange Offer expires. See "Plan of Distribution."
ALTERNATIVE USE OF SHELF REGISTRATION STATEMENT
If changes in the law or other circumstances do not allow America West to
effect the Exchange Offer, America West will, upon request of a holder not
eligible to participate in the Exchange Offer or under certain other
circumstances described in the Registration Rights Agreement, file a shelf
registration statement to allow resales of the Old Certificates.
Obligations of the Company if the Shelf Registration Statement Alternative
is Pursued
(1) File with the SEC as soon as practicable a shelf registration statement
covering resales of the Old Certificates.
(2) Use its best efforts to have the shelf registration statement declared
effective within 180 calendar days of October 6, 1998.
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<PAGE> 33
(3) Use its best efforts to keep the shelf registration statement effective
for two years after it is declared effective (or a such shorter period
if all of the Old Certificates covered by the shelf registration
statement have been sold or are freely transferable under Rule 144 of
the Securities Act).
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by the Company. The principal solicitation for tenders is being made by
mail; however, additional solicitations may be made by telegraph, telephone,
telecopy, electronic mail or in person by officers and regular employees of the
Company. Other expenses incurred in connection with the Exchange Offer will be
paid by the Company, including fees and expenses of the Exchange Agent and
Trustee and accounting, legal, printing and related fees and expenses.
The Company will not make any payments to brokers, dealers or other persons
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
the Exchange Agent for its reasonable out-of-pocket expenses in connection
therewith. The Company may also pay brokerage houses and other custodians,
nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them
in forwarding copies of the Prospectus and related documents to the beneficial
owners of the Old Certificates, and in handling or forwarding tenders for
exchange.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Old Certificates pursuant to the Exchange Offer. Certain other transfer taxes
may be imposed on the tendering holder unless satisfactory evidence of payment
of such taxes or exemption therefrom is not submitted with the Letter of
Transmittal.
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DESCRIPTION OF THE NEW CERTIFICATES
The New Certificates will be issued pursuant to three separate Pass Through
Trust Agreements. The following summary describes certain of the Certificates,
the Deposits and the Pass Through Trust Agreements but does not purport to be
complete. Reference is made to all of the provisions of the Pass Through Trust
Agreements, the Deposit Agreements, the Escrow Agreements and the Intercreditor
Agreement, which have been filed as exhibits to the Registration Statement and
which are available as set forth under the heading "Available Information".
Except as otherwise indicated, the following summary relates to each of the
Trusts and the Certificates issued by each Trust. The terms and conditions
governing each of the Trusts are substantially the same, except as described
under "-- Subordination" below and except that the principal amount and
scheduled principal repayments of the Equipment Notes held by each Trust and the
interest rate and maturity date of the Equipment Notes held by each of the Class
A Trust, the Class B Trust and the Class C Trusts will differ.
The references to Sections in parentheses in the following summary are to
the relevant Sections of the Pass Through Trust Agreements unless otherwise
indicated.
GENERAL
The New Certificates of each Trust will be issued in fully registered form
only and will be subject to the provisions described below under "-- Book Entry;
Delivery and Form". (Section 3.01) Each New Certificate will represent a
fractional undivided interest in the Trust created by the Pass Through Trust
Agreement pursuant to which such Certificate is issued. (Section 3.01) The Trust
Property of each Trust consists of the items listed below:
Trust Property for Each Trust
(1) Equipment Notes acquired under the Note Purchase Agreement and issued,
at America West's election in connection with the delivery of each
Aircraft during the Delivery Period, either (a) on a non-recourse basis
by an Owner Trustee in each separate leveraged lease transaction with
respect to each Leased Aircraft to finance the purchase of such Leased
Aircraft by the Owner Trustee, in which case the applicable Leased
Aircraft will be leased to America West, or (b) on a recourse basis by
America West in connection with each separate secured loan transaction
with respect to each Owned Aircraft to finance the purchase of such
Owned Aircraft by America West.
(2) The rights of such Trust to acquire Equipment Notes under the Note
Purchase Agreement.
(3) The rights of such Trust under the applicable Escrow Agreement
(including the right to request the Escrow Agent to withdraw from the
Depositary funds sufficient to enable such Trust to purchase Equipment
Notes on the delivery of each Aircraft during the Delivery Period).
(4) The rights of such Trust under the Intercreditor Agreement (including
all monies receivable in respect of such rights).
(5) All monies receivable under the Liquidity Facility for such Trust.
(6) Funds from time to time deposited with the Trustee in accounts relating
to such Trust. The New Certificates represent pro rata shares of the
Equipment Notes and other property held in the related Trust and will
be issued only in minimum denominations of $1,000 and integral
multiples thereof. (Section 3.01(a) and 3.01(b)).
On the Transfer Date, each of the Original Trusts will transfer and assign
all of its assets and rights to a substantially identical Successor Trust, and
the Successor Trustee will assume the obligations of the related Original
Trustee under each transaction document to which such Original Trustee was a
party. Upon the effectiveness of such transfer, assignment and assumption, each
of the Original Trusts will be liquidated and each of the Certificates will
represent the same interest in the Successor Trust as it
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<PAGE> 35
represented in the Original Trust immediately prior to such transfer, assignment
and assumption. Unless the context otherwise requires, all references in this
Prospectus to the Trusts, the Trustees, the Pass Through Trust Agreements and
similar terms shall be applicable to the Original Trusts until the effectiveness
of such transfer, assignment and assumption and thereafter shall be applicable
with respect to the Successor Trusts. See "-- Liquidation of Original Trusts".
The Certificates represent interests in the respective Trusts, and all
payments and distributions thereon will be made only from the Trust Property of
the related Trust. (Section 3.11) The Certificates do not represent an interest
in or obligation of America West, the Trustees, any of the Loan Trustees or
Owner Trustees in their individual capacities, any Owner Participant, or any
affiliate of any thereof.
Pursuant to the Escrow Agreement applicable to each Trust, the
Certificateholders of such Trust as holders of the Escrow Receipts affixed to
each Certificate are entitled to certain rights with respect to the Deposits
relating to such Trust. Accordingly, any transfer of a Certificate will have the
effect of transferring the corresponding rights with respect to the Deposits,
and rights with respect to the Deposits may not be separately transferred by
Certificateholders. Rights with respect to the Deposits and the Escrow Agreement
relating to a Trust, except for the right to request withdrawals for the
purchase of Equipment Notes, do not constitute Trust Property of such Trust.
SUBORDINATION
Pursuant to the Intercreditor Agreement to which the Trustees, the
Subordination Agent and the Liquidity Provider are parties, on each Distribution
Date, so long as no Triggering Event shall have occurred (whether or not
continuing), all payments received by the Subordination Agent in respect of
Equipment Notes and certain other payments will be distributed in the order set
forth in "Description of the Intercreditor Agreement -- Priority of
Distributions -- Priority of Distributions in the Absence of a Triggering
Event." In addition, upon the occurrence of a Triggering Event and at all times
thereafter, all payments received by the Subordination Agent in respect of the
Equipment Notes and certain other payments will be distributed under the
Intercreditor Agreement in the order set forth in "Description of the
Intercreditor Agreement -- Priority of Distributions -- Priority of
Distributions in the Event of a Triggering Event."
The priority of distributions after a Triggering Event will have the effect
in certain circumstances of requiring the distribution to more senior Classes of
Certificates of payments received in respect of one or more junior series of
Equipment Notes. If this should occur, the interest accruing on the remaining
Equipment Notes would in the aggregate be less than the interest accruing on the
remaining Certificates because such Certificates include a relatively greater
proportion of junior Classes with relatively higher interest rates. As a result
of such possible interest shortfalls, the holders of one or more junior Classes
of Certificates may not receive the full amount due them after a Triggering
Event even if all Equipment Notes are eventually paid in full.
Payments in respect of the Deposits relating to a Trust will not be subject
to the subordination provisions of the Intercreditor Agreement.
PAYMENTS AND DISTRIBUTIONS
Payments of interest on the Deposits with respect to each Trust and
payments of principal, premium (if any) and interest on the Equipment Notes or
with respect to other Trust Property held in each Trust will be distributed by
the Paying Agent (in the case of the Deposits) or by the Trustee (in the case of
Trust Property of such Trust) to Certificateholders of such Trust on the date
receipt of such payment is confirmed, except in the case of certain types of
Special Payments. Scheduled payments of interest on the Deposits and of interest
or principal on the Equipment Notes are herein referred to as "Scheduled
Payments", and January 2 and July 2 of each year are herein referred to as
"Regular Distribution Dates". Regular Distribution Dates and Special
Distribution Dates are collectively referred to as "Distribution Dates". See
"Description of the Equipment Notes -- Principal and Interest Payments".
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<PAGE> 36
Payments of Interest
The Deposits held with respect to each Trust and the Equipment Notes held
in each Trust will accrue interest at the applicable rate per annum for
Certificates to be issued by such Trust set forth on the cover page of this
Prospectus, payable on January 2 and July 2 of each year, commencing on January
2, 1999 (or, in the case of Equipment Notes issued after such date, commencing
with the first such date to occur after initial issuance thereof). Such interest
payments will be distributed to Certificateholders of such Trust on each such
date until the final Distribution Date for such Trust, subject in the case of
payments on the Equipment Notes to the Intercreditor Agreement. Interest is
calculated on the basis of a 360-day year consisting of twelve 30-day months.
The interest rates for the Deposits and the Equipment Notes are subject to
change under certain circumstances. See "The Exchange Offer -- General".
Payments of interest applicable to the Certificates issued by each of the
Trusts is supported by a Liquidity Facility provided by the Liquidity Provider
for the benefit of the holders of such Certificates in an aggregate amount
sufficient to pay interest thereon at the Stated Interest Rate for such Trust on
up to three successive Regular Distribution Dates (without regard to any future
payments of principal on such Certificates), except that the Liquidity Facility
with respect to such Trust does not cover interest payable by the Depositary on
the Deposits relating to such Trust. The Liquidity Facility for any Class of
Certificates does not provide for drawings thereunder to pay for principal of or
premium on the Certificates of such Class, any interest on the Certificates of
such Class in excess of the Stated Interest Rates, or, notwithstanding the
subordination provisions of the Intercreditor Agreement, principal of or
interest or premium on the Certificates of any other Class. Therefore, only the
holders of the Certificates to be issued by a particular Trust will be entitled
to receive and retain the proceeds of drawings under the Liquidity Facility for
such Trust. See "Description of the Liquidity Facilities".
Payments of Principal
Payments of principal of the Equipment Notes held in each Trust are
scheduled to be received by the Trustee on January 2 and July 2 in certain years
depending upon the terms of the Equipment Notes held in such Trust, commencing
January 2, 1999. The "Final Legal Distribution Date" for the Class A
Certificates is July 2, 2018, for the Class B Certificates is July 2, 2018 and
for the Class C Certificates is January 2, 2012.
Distribution of Scheduled Payments
The Paying Agent with respect to each Escrow Agreement will distribute on
each Regular Distribution Date to the Certificateholders of the Trust to which
such Escrow Agreement relates all Scheduled Payments received in respect of the
related Deposits, the receipt of which is confirmed by the Paying Agent on such
Regular Distribution Date. The Trustee of each Trust will distribute, subject to
the Intercreditor Agreement, on each Regular Distribution Date to the
Certificateholders of such Trust all Scheduled Payments received in respect of
Equipment Notes held on behalf of such Trust, the receipt of which is confirmed
by the Trustee on such Regular Distribution Date. Each Certificateholder of each
Trust will be entitled to receive a pro rata share of any distribution in
respect of Scheduled Payments of interest on the Deposits relating to such Trust
and, subject to the Intercreditor Agreement, of principal or interest on
Equipment Notes held on behalf of such Trust. Each such distribution of
Scheduled Payments will be made by the applicable Paying Agent or Trustee to the
Certificateholders of record of the relevant Trust on the Record Date applicable
to such Scheduled Payment subject to certain exceptions. (Sections 4.01, 4.02,
and Section 2.03 of the Escrow Agreement) If a Scheduled Payment is not received
by the applicable Paying Agent or Trustee on a Regular Distribution Date but is
received within five days thereafter, it will be distributed to such holders of
record on the date received. If it is received after such five-day period, it
will be treated as a Special Payment and distributed as described below.
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Distribution of Special Payments
Any payment in respect of, or any proceeds of, any Equipment Note or the
Trust Indenture Estate under (and as defined in) each Indenture other than a
Scheduled Payment (each, a "Special Payment") will be distributed on, in the
case of an early redemption or a purchase of the Equipment Notes relating to one
or more Aircraft, the date of such early redemption or purchase (which shall be
a Business Day), and otherwise on the Business Day specified for distribution of
such Special Payment pursuant to a notice delivered by each Trustee as soon as
practicable after the Trustee has received funds for such Special Payment (each
a "Special Distribution Date"), subject to the Intercreditor Agreement. Any
unused Deposits to be distributed after the Delivery Period Termination Date or
the occurrence of a Triggering Event, together with accrued and unpaid interest
thereon and the premium payable by America West (each, also a "Special
Payment"), will be scheduled to be distributed on a date 35 days after the
Paying Agent has received notice of the event requiring such distribution (also
a "Special Distribution Date") unless such date is within ten days before or
after a Regular Distribution Date, in which case such Special Payment shall be
made on such Regular Distribution Date.
Each Paying Agent, in the case of the Deposits, and each Trustee, in the
case of Trust Property or the premium payable by America West in connection with
certain distributions of unused Deposits, will mail a notice to the
Certificateholders of the applicable Trust stating the scheduled Special
Distribution Date, the related Record Date, the amount of the Special Payment
and the reason for the Special Payment. In the case of a redemption or purchase
of the Equipment Notes held in the related Trust or any distribution of unused
Deposits after the Delivery Period Termination Date or the occurrence of a
Triggering Event, such notice will be mailed not less than 20 days prior to the
date such Special Payment is scheduled to be distributed, and in the case of any
other Special Payment, such notice will be mailed as soon as practicable after
the Trustee has confirmed that it has received funds for such Special Payment.
(Section 4.02(c); Section 1.02 of the Escrow Agreement) Each distribution of a
Special Payment, other than a final distribution, on a Special Distribution Date
for any Trust will be made by the Paying Agent or the Trustee, as applicable, to
the Certificateholders of record of such Trust on the Record Date applicable to
such Special Payment. (Section 4.02(b); Section 1.02 of the Escrow Agreement)
See " -- Indenture Defaults and Certain Rights Upon an Indenture Default" and
"Description of the Equipment Notes -- Redemption".
Maintenance of Accounts
Each Pass Through Trust Agreement requires that the Trustee establish and
maintain, for the related Trust and for the benefit of the Certificateholders of
such Trust, one or more accounts (the "Certificate Account") for the deposit of
payments representing Scheduled Payments received by such Trustee, which shall
be one or more non-interest bearing accounts. Each Pass Through Trust Agreement
also requires that the Trustee establish and maintain, for the related Trust and
for the benefit of the Certificateholders of such Trust, one or more accounts
(the "Special Payments Account") for the deposit of payments representing
Special Payments received by such Trustee, which shall be non-interest bearing
except in certain circumstances where the Trustee may invest amounts in such
account in certain permitted investments. Pursuant to the terms of each Pass
Through Trust Agreement, the Trustee is required to deposit any Scheduled
Payments relating to the applicable Trust received by it in the Certificate
Account of such Trust and to deposit any Special Payments so received by it in
the Special Payments Account of such Trust. (Section 4.01) All amounts so
deposited will be distributed by the Trustee on a Regular Distribution Date or a
Special Distribution Date, as appropriate. (Section 4.02)
Each Escrow Agreement requires that the Paying Agent establish and
maintain, for the benefit of the Receiptholders, one or more accounts (the
"Paying Agent Account"), which shall be non-interest bearing. Pursuant to the
terms of the Escrow Agreement, the Paying Agent is required to deposit interest
on Deposits relating to such Trust and any unused Deposits withdrawn by the
Escrow Agent in the Paying Agent Account. All amounts so deposited will be
distributed by the Paying Agent on a Regular Distribution Date or Special
Distribution Date, as appropriate.
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<PAGE> 38
Final Distribution
The final distribution for each Trust will be made only upon presentation
and surrender of the Certificates for such Trust at the office or agency of the
Trustee specified in the notice given by the Trustee of such final distribution.
The Trustee will mail such notice of the final distribution to the
Certificateholders of such Trust, specifying the date set for such final
distribution and the amount of such distribution. (Section 11.01) See
"-- Termination of the Trusts" below. Distributions in respect of Certificates
issued in global form will be made as described in "-- Book Entry; Delivery and
Form" below.
Weekend or Holiday Distribution Date
If any Regular Distribution Date or Special Distribution Date is a
Saturday, Sunday or other day on which commercial banks are authorized or
required to close in New York, New York, Phoenix, Arizona, Wilmington, Delaware,
or Hartford, Connecticut (any other day being a "Business Day"), distributions
scheduled to be made on such Regular Distribution Date or Special Distribution
Date will be made on the next succeeding Business Day without additional
interest.
POOL FACTORS
Pool Balance
The "Pool Balance" for each Trust or for the Certificates issued by any
Trust indicates, as of any date, the original aggregate face amount of the
Certificates of such Trust less the aggregate amount of all payments made in
respect of the Certificates of such Trust or in respect of Deposits relating to
such Trust other than payments made in respect of interest or premium thereon or
reimbursement of any costs and expenses in connection therewith. The Pool
Balance for each Trust or for the Certificates issued by any Trust as of any
Regular Distribution Date or Special Distribution Date will be computed after
giving effect to the payment of principal, if any, on the Equipment Notes or
other Trust Property held in such Trust and the distribution thereof to be made
on such date and the distribution of unused Deposits of such Trust to be made on
such date. (Section 1.01)
Pool Factor
The "Pool Factor" for each Trust as of any Regular Distribution Date or
Special Distribution Date is the quotient (rounded to the seventh decimal place)
computed by dividing the Pool Balance by the original aggregate face amount of
the Certificates of such Trust. The Pool Factor for each Trust or for the
Certificates issued by any Trust as of any Regular Distribution Date or Special
Distribution Date shall be computed after giving effect to any special
distribution with respect to unused Deposits, payment of principal of the
Equipment Notes or payment with respect to other Trust Property held in such
Trust and the distribution thereof to be made on that date. (Section 1.01) The
Pool Factor for each Trust was 1.0000000 on the Issuance Date, and will decline
as described herein to reflect reductions in the Pool Balance of such Trust. The
amount of a Certificateholder's pro rata share of the Pool Balance of a Trust
can be determined by multiplying the par value of the holder's Certificate of
such Trust by the Pool Factor for such Trust as of the applicable Regular
Distribution Date or Special Distribution Date. Notice of the Pool Factor and
the Pool Balance for each Trust will be mailed to Certificateholders of such
Trust on each Regular Distribution Date and Special Distribution Date. (Section
4.03)
Aggregate Principal Amortization Schedule
The following table sets forth an illustrative aggregate principal
amortization schedule for the Equipment Notes held in each Trust (the "Assumed
Amortization Schedule") and resulting Pool Factors with respect to such Trust.
The actual aggregate principal amortization schedule applicable to a Trust and
the resulting Pool Factors with respect to such Trust may differ from those set
forth below, since the amortization schedule for the Equipment Notes issued with
respect to an Aircraft may vary from such illustrative amortization schedule so
long as it complies with the Mandatory Economic Terms. In addition, the table
set forth below assumes that each Aircraft is delivered in the month scheduled
for its delivery
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<PAGE> 39
(see "Description of the Aircraft and the Appraisals -- The Appraisals" for the
delivery schedule), that Equipment Notes in the maximum principal amount in
respect of all of the Aircraft are purchased by the Trusts and that no early
redemption or purchase, or default in the payment of principal, in respect of
any Equipment Notes occurs. Actual circumstances may vary from these
assumptions, which would result in differences in the aggregate principal
amortization schedule applicable to a Trust and in the resulting Pool Factors.
<TABLE>
<CAPTION>
1998-1A TRUST 1998-1B TRUST 1998-1C TRUST
EQUIPMENT NOTES EQUIPMENT 1998-1B EQUIPMENT 1998-1C
SCHEDULED 1998-1A TRUST NOTES SCHEDULED TRUST NOTES SCHEDULED TRUST
PAYMENTS OF EXPECTED POOL PAYMENTS OF EXPECTED POOL PAYMENTS OF EXPECTED
DATE PRINCIPAL FACTOR PRINCIPAL FACTOR PRINCIPAL POOL FACTOR
---- --------------- ------------- --------------- ------------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
January 2, 1999...... $ 0.00 1.0000000 $ 0.00 1.0000000 $ 216,502.98 0.9877716
July 2, 1999......... 552,699.82 0.9958024 0.00 1.0000000 368,788.25 0.9669420
January 2, 2000...... 2,559,564.33 0.9763631 534,181.37 0.9870199 1,313,325.82 0.8927638
July 2, 2000......... 3,299,135.85 0.9513071 150,745.48 0.9833570 0.00 0.8927638
January 2, 2001...... 1,407,400.00 0.9406182 567,699.58 0.9695625 310,000.00 0.8752546
July 2, 2001......... 3,405,000.00 0.9147581 437,300.42 0.9589365 0.00 0.8752546
January 2, 2002...... 1,135,000.00 0.9061381 375,000.00 0.9498244 250,000.00 0.8611343
July 2, 2002......... 2,996,400.00 0.8833812 659,073.17 0.9338096 0.00 0.8611343
January 2, 2003...... 1,089,600.00 0.8751059 360,000.00 0.9250620 1,034,739.47 0.8026910
July 2, 2003......... 2,633,200.00 0.8551075 870,000.00 0.9039219 0.00 0.8026910
January 2, 2004...... 953,400.00 0.8478666 315,000.00 0.8962677 2,494,089.96 0.6618217
July 2, 2004......... 2,378,518.00 0.8298024 909,498.00 0.8741678 0.00 0.6618217
January 2, 2005...... 908,000.00 0.8229064 300,000.00 0.8668781 1,750,706.30 0.5629397
July 2, 2005......... 2,564,378.00 0.8034306 902,244.00 0.8449545 0.00 0.5629397
January 2, 2006...... 862,600.00 0.7968793 285,000.00 0.8380293 1,900,936.61 0.4555725
July 2, 2006......... 2,498,366.00 0.7779049 818,668.00 0.8181365 0.00 0.4555725
January 2, 2007...... 951,741.21 0.7706767 1,060,617.00 0.7923646 1,275,529.64 0.3835290
July 2, 2007......... 2,545,424.79 0.7513448 695,872.00 0.7754556 0.00 0.3835290
January 2, 2008...... 1,830,291.82 0.7374442 737,770.29 0.7575286 1,139,132.14 0.3191894
July 2, 2008......... 2,096,378.66 0.7215228 315,964.71 0.7498509 0.00 0.3191894
January 2, 2009...... 2,727,243.30 0.7008100 1,116,493.47 0.7227213 1,514,243.39 0.2336631
July 2, 2009......... 1,452,341.22 0.6897799 305,872.00 0.7152889 0.00 0.2336631
January 2, 2010...... 1,805,227.46 0.6760696 4,029,795.10 0.6173690 2,890,744.42 0.0703903
July 2, 2010......... 1,601,138.54 0.6639094 0.00 0.6173690 1,246,261.02 0.0000000
January 2, 2011...... 4,059,262.00 0.6330803 7,756,277.01 0.4288995 0.00 0.0000000
January 2, 2012...... 4,324,765.76 0.6002349 9,072,304.39 0.2084518 0.00 0.0000000
January 2, 2013...... 8,169,347.26 0.5381907 7,771,113.49 0.0196217 0.00 0.0000000
January 2, 2014...... 17,024,961.32 0.4088905 50,271.98 0.0184001 0.00 0.0000000
January 2, 2015...... 18,273,854.60 0.2701053 0.00 0.0184001 0.00 0.0000000
January 2, 2016...... 26,855,479.16 0.0661448 0.00 0.0184001 0.00 0.0000000
January 2, 2017...... 8,709,280.90 0.0000000 757,238.54 0.0000000 0.00 0.0000000
</TABLE>
The actual schedule of principal payments and the resulting schedule of
Pool Balances and Pool Factors may change from that set forth above if, among
other things, the aggregate principal amount of the Equipment Notes acquired by
the Trusts is less than the maximum permitted by the Mandatory Economic Terms,
Equipment Notes with respect to any Aircraft are purchased by the Trusts in
other than the month currently scheduled for delivery of such Aircraft or
Equipment Notes as to which the projected loan to Aircraft value ratios ("LTVs")
are lower than other Equipment Notes are not acquired by the Trusts.
In addition, the Pool Factor and Pool Balance of each Trust will be
recomputed if there has been an early redemption, purchase, or a default in the
payment of principal or interest in respect of one or more
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<PAGE> 40
issues of the Equipment Notes held in a Trust, as described in "-- Indenture
Defaults and Certain Rights Upon an Indenture Default" and "Description of the
Equipment Notes -- Redemption", or a special distribution attributable to unused
Deposits after the Delivery Period Termination Date or the occurrence of a
Triggering Event, as described in "Description of the Deposit Agreements". In
the event of (i) any such change in the scheduled repayments or (ii) any such
redemption, purchase, default or special distribution, the Pool Factors and the
Pool Balances of each Trust so affected will be recomputed after giving effect
thereto and notice thereof will be mailed to the Certificateholders of such
Trust promptly after the Delivery Period Termination Date in the case of clause
(i) and promptly after the occurrence of any event described in clause (ii).
REPORTS TO CERTIFICATEHOLDERS
On each Distribution Date, the applicable Paying Agent and Trustee will
include with each distribution of a Scheduled Payment or Special Payment to
Certificateholders of the related Trust a statement, giving effect to such
distribution to be made on such Distribution Date, setting forth the following
information (per $1,000 aggregate principal amount of Certificate for such
Trust, as to (2), (3), (4) and (5) below):
(1) The aggregate amount of such funds distributed on such Distribution
Date under the Pass Through Trust Agreement and the Escrow Agreement,
indicating the amount allocable to each source.
(2) The amount of such distribution under the Pass Through Trust Agreement
allocable to principal and the amount allocable to premium (including
any premium paid by America West with respect to unused Deposits), if
any.
(3) The amount of such distribution under the Pass Through Trust Agreement
allocable to interest.
(4) The amount of such distribution under the Escrow Agreement allocable to
interest.
(5) The amount of such distribution under the Escrow Agreement allocable to
unused Deposits (if any).
(6) The Pool Balance and the Pool Factor for such Trust. (Section 4.03)
With respect to the Certificates registered in the name of DTC or its
nominee, on the Record Date prior to each Distribution Date, the applicable
Trustee will request from DTC a securities position listing setting forth the
names of all DTC Participants reflected on DTC's books as holding interests in
the Certificates on such record date. On each Distribution Date, the applicable
Paying Agent and Trustee will mail to each such DTC Participant the statement
described above and will make available additional copies as requested by such
DTC Participant for forwarding to holders of Certificates. (Section 4.03(a);
Section 2.03 of the Escrow Agreement)
In addition, after the end of each calendar year, the applicable Trustee
and Paying Agent will furnish to each Certificateholder of each Trust at any
time during the preceding calendar year a report containing the sum of the
amounts determined pursuant to clauses (1), (2), (3), (4) and (5) above with
respect to the Trust for such calendar year or, in the event such person was a
Certificateholder during only a portion of such calendar year, for the
applicable portion of such calendar year, and such other items as are readily
available to such Trustee and which a Certificateholder shall reasonably request
as necessary for the purpose of such Certificateholder's preparation of its U.S.
federal income tax returns. (Section 4.03(b)) With respect to Certificates
registered in the name of DTC's nominee, such report and such other items shall
be prepared on the basis of information supplied to the applicable Trustee by
the DTC Participants and shall be delivered by such Trustee to such DTC
Participants to be available for forwarding by such DTC Participants to owners
of beneficial interests in the Certificates ("Certificate Owners") in the manner
described above. (Section 4.03(b))
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<PAGE> 41
With respect to the Certificates issued in definitive form, the applicable
Paying Agent and Trustee will prepare and deliver the information described
above to each Certificateholder of record of each Trust as the name of such
Certificateholder appears on the records of the registrar of the Certificates.
INDENTURE DEFAULTS AND CERTAIN RIGHTS UPON AN INDENTURE DEFAULT
A list of Indenture Defaults can be found under "Description of Equipment
Notes -- Indenture Defaults; Notice and Waiver." An Indenture Default will, with
respect to the Leased Aircraft Indentures, include an event of default under the
related Lease (a "Lease Event of Default"). Since the Equipment Notes issued
under an Indenture may be held in more than one Trust, a continuing Indenture
Default under such Indenture would affect the Equipment Notes held by each such
Trust. There are no cross-default provisions in the Indentures or in the Leases
(unless, in the case of a Lease, otherwise agreed between an Owner Participant
and America West). Consequently, events resulting in an Indenture Default under
any particular Indenture may or may not result in an Indenture Default under any
other Indenture, and a Lease Event of Default under any particular Lease may or
may not constitute a Lease Event of Default under any other Lease. If an
Indenture Default occurs in fewer than all of the Indentures, notwithstanding
the treatment of Equipment Notes issued under any Indenture under which an
Indenture Default has occurred, payments of principal and interest on the
Equipment Notes issued pursuant to Indentures with respect to which an Indenture
Default has not occurred will continue to be distributed to the holders of the
Certificates as originally scheduled, subject to the Intercreditor Agreement.
See "Description of the Intercreditor Agreement -- Priority of Distributions".
Right to Cure
With respect to each Leased Aircraft, the applicable Owner Trustee and
Owner Participant will, under the related Leased Aircraft Indenture, have the
right under certain circumstances to cure Indenture Defaults that result from
the occurrence of a Lease Event of Default under the related Lease. If the Owner
Trustee or the Owner Participant exercises any such cure right, the Indenture
Default will be deemed to have been cured.
Resignation of Trustee In the Event of a Conflict of Interest
In the event that the same institution acts as Trustee of multiple Trusts,
in the absence of instructions from the Certificateholders of any such Trust,
such Trustee could be faced with a potential conflict of interest upon an
Indenture Default. In such event, each Trustee has indicated that it would
resign as Trustee of one or all such Trusts, and a successor trustee would be
appointed in accordance with the terms of the applicable Pass Through Trust
Agreement. Wilmington Trust Company is the initial Trustee under each Trust.
Consequence of Continuing Indenture Default
Upon the occurrence and continuation of any Indenture Default under any
Indenture, the Controlling Party will direct the Indenture Trustee under such
Indenture in the exercise of remedies thereunder and may accelerate and sell all
(but not less than all) of the Equipment Notes issued under such Indenture to
any person, subject to certain limitations. See "Description of Intercreditor
Agreement -- Intercreditor Rights -- Sale of Equipment Notes and Aircraft". The
proceeds of such sale will be distributed pursuant to the provisions of the
Intercreditor Agreement. Any such proceeds so distributed to any Trustee upon
any such sale shall be deposited in the applicable Special Payments Account and
shall be distributed to the holders of the applicable Trust on a Special
Distribution Date. (Sections 4.01 and 4.02) The market for Equipment Notes at
the time of the existence of any Indenture Default may be very limited and there
can be no assurance as to the price at which they could be sold. If any such
Equipment Notes are sold for less than their outstanding principal amount,
certain Certificateholders will receive a smaller amount of principal
distributions than anticipated and will not have any claim for the shortfall
against America West, any Liquidity Provider, any Owner Trustee, any Owner
Participant or any Trustee.
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<PAGE> 42
Any amount, other than Scheduled Payments received on a Regular
Distribution Date, distributed to the Trustee of any Trust by the Subordination
Agent on account of any Equipment Note or Trust Indenture Estate (as defined in
each Indenture) held in such Trust following an Indenture Default under any
Indenture will be deposited in the Special Payments Account for such Trust and
will be distributed to the Certificateholders of such Trust on a Special
Distribution Date. (Sections 4.01 and 4.02) In addition, if, following an
Indenture Default under any Leased Aircraft Indenture relating to a Leased
Aircraft, the applicable Owner Participant or Owner Trustee exercises its option
to redeem or purchase the outstanding Equipment Notes issued under such Leased
Aircraft Indenture, the price paid by such Owner Participant or Owner Trustee
for the Equipment Notes issued under such Leased Aircraft Indenture and
distributed to such Trust by the Subordination Agent will be deposited in the
Special Payments Account for such Trust and will be distributed to the
Certificateholders of such Trust on a Special Distribution Date. (Sections 4.01
and 4.02)
Any funds representing payments received with respect to any defaulted
Equipment Notes, or the proceeds from the sale of any Equipment Notes, held by
the Trustee in the Special Payments Account for such Trust will, to the extent
practicable, be invested and reinvested by such Trustee in certain permitted
investments pending the distribution of such funds on a Special Distribution
Date. (Section 4.04) Such permitted investments are defined as obligations of
the United States or agencies or instrumentalities thereof for the payment of
which the full faith and credit of the United States is pledged and which mature
in not more than 60 days or such lesser time as is required for the distribution
of any such funds on a Special Distribution Date. (Section 1.01)
Notice to Certificateholders of Default
Each Pass Through Trust Agreement provides that the Trustee of the related
Trust will, within 90 days after the occurrence of any default, give to the
Certificateholders of such Trust notice, transmitted by mail, of all uncured or
unwaived defaults with respect to such Trust known to it, provided that, except
in the case of default in a payment of principal, premium, if any, or interest
on any of the Equipment Notes held in such Trust, the applicable Trustee will be
protected in withholding such notice if it in good faith determines that the
withholding of such notice is in the interests of such Certificateholders.
(Section 7.02) The term "default" as used in this paragraph only with respect to
any Trust means the occurrence of an Indenture Default under any Indenture
pursuant to which Equipment Notes held by such Trust were issued, as described
above, except that in determining whether any such Indenture Default has
occurred, any grace period or notice in connection therewith will be
disregarded.
Trustee Entitled to Security or Indemnity
Each Pass Through Trust Agreement contains a provision entitling the
Trustee of the related Trust, subject to the duty of such Trustee during a
default to act with the required standard of care, to be offered reasonable
security or indemnity by the holders of the Certificates of such Trust before
proceeding to exercise any right or power under such Pass Through Trust
Agreement at the request of such Certificateholders. (Section 7.03(e))
Rights of Certificateholders
Subject to certain qualifications set forth in the Pass Through Trust
Agreements and to the Intercreditor Agreement, the Certificateholders of each
Trust holding Certificates evidencing fractional undivided interests aggregating
not less than a majority in interest in such Trust shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee with respect to such Trust or pursuant to the terms of
the Intercreditor Agreement, or exercising any trust or power conferred on such
Trustee under such Pass Through Trust Agreement or the Intercreditor Agreement,
including any right of such Trustee as Controlling Party under the Intercreditor
Agreement or as holder of the Equipment Note. (Section 6.04)
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<PAGE> 43
In certain cases, the holders of the Certificates of a Trust evidencing
fractional undivided interests aggregating not less than a majority in interest
of such Trust may on behalf of the holders of all the Certificates of such Trust
waive any past Indenture Default under any Indenture pursuant to which Equipment
Notes held by such Trust were issued or, if the Trustee of such Trust is the
Controlling Party, may direct the Trustee to instruct the applicable Loan
Trustee to waive any past Indenture Default and thereby annul any direction
given by such holders or Trustee to such Loan Trustee with respect thereto,
except certain defaults.
Defaults That May Not Be Waived
(1) A default in the deposit of any Scheduled Payment or Special Payment or
in the distribution thereof.
(2) A default in payment of the principal, premium, if any, or interest
with respect to any of the Equipment Notes.
(3) A default in respect of any covenant or provision of the related Pass
Through Trust Agreement that cannot be modified or amended without the
consent of each Certificateholder of such Trust affected thereby.
(Section 6.05)
Each Indenture provides that, with certain exceptions, the holders of the
majority in aggregate unpaid principal amount of the Equipment Notes issued
thereunder may on behalf of all such holders waive any past default or Indenture
Default thereunder. Notwithstanding such provisions of the Indentures, pursuant
to the Intercreditor Agreement only the Controlling Party will be entitled to
waive any such past default or Indenture Default.
PURCHASE RIGHTS OF CERTIFICATEHOLDERS
Upon the occurrence and during the continuation of a Triggering Event, with
ten days' written notice to the Trustee and each Certificateholder of the same
Class, Certificateholders of a junior class will have the right to purchase
Certificates ranking in senior priority. Consequently, the Class B
Certificateholders will have the right to purchase all, but not less than all,
of the Class A Certificates and the Class C Certificateholders will have the
right to purchase all, but not less than all, of the Class A Certificates and
the Class B Certificates. Additionally, if the Class D Certificates are issued,
the Class D Certificateholders will have the right to purchase all, but not less
than all, of the Class A Certificates, the Class B Certificates and the Class C
Certificates. In each such case, the purchase price of Certificates will equal
the Pool Balance of the relevant Class or Classes of Certificates plus accrued
and unpaid interest thereon to the date of purchase without premium but
including any other amounts due to the Certificateholders of such Class or
Classes. In each case, if prior to the end of the ten-day period, any other
Certificateholder of the same Class notifies the purchasing Certificateholder
that the other Certificateholder wants to participate in such purchase, then
such other Certificateholder may join with the purchasing Certificateholder to
purchase the Certificates pro rata based on the interest in the Trust held by
each Certificateholder. (Section 6.01(b))
PTC EVENT OF DEFAULT
A "PTC Event of Default" is defined under each Pass Through Trust Agreement
as the failure to pay within ten Business Days of the due date thereof either
the outstanding Pool Balance of the applicable Class of Certificates on the
Final Legal Distribution Date for such Class or the interest due on such Class
of Certificates on any Distribution Date (unless, in the case of the Class A, B,
or C Certificates, the Subordination Agent shall have made Interest Drawings, or
a withdrawal from the Cash Collateral Account for such Class of Certificates,
with respect thereto in an aggregate amount sufficient to pay such interest and
shall have distributed such amount to the Trustee entitled thereto). Any failure
to make expected principal distributions on any Class of Certificates on any
Regular Distribution Date (other than the Final Maturity Date) will not
constitute a PTC Event of Default with respect to such Certificates. A
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<PAGE> 44
PTC Event of Default with respect to the most senior outstanding Class of
Certificates resulting from an Indenture Default under all Indentures will
constitute a Triggering Event.
MERGER, CONSOLIDATION AND TRANSFER OF ASSETS
America West is prohibited from consolidating with or merging into any
other corporation or transferring substantially all of its assets as an entirety
to any other corporation unless it meets all the requirements noted below.
Requirements for Consolidation, Merger or Transfer of Assets
(1) The surviving successor or transferee corporation shall be a "citizen
of the United States" as defined in Title 49 of the United States Code,
as amended, relating to aviation (the "Transportation Code").
(2) The surviving successor or transferee corporation shall be a United
States certificated air carrier.
(3) The surviving successor or transferee corporation shall expressly
assume all of the obligations of America West contained in the Pass
Through Trust Agreements, the Note Purchase Agreement, the Indentures,
the Participation Agreements and the Leases.
(4) America West shall have delivered a certificate indicating that such
transaction complies with such conditions. (Section 5.02)
(5) Additionally, after giving effect to such transaction, no Lease Event
of Default, in the case of a Leased Aircraft, or Indenture Event of
Default, in the case of an Owned Aircraft, shall have occurred and be
continuing. (Leases, Section 13.2; Owned Aircraft Indenture, Section
4.07)
The Pass Through Trust Agreements, the Note Purchase Agreement, the
Indentures, the Participation Agreements and the Leases do not contain any
covenants or provisions which may afford the applicable Trustee or
Certificateholders protection in the event of a highly leveraged transaction,
including transactions effected by management or affiliates, which may or may
not result in a change in control of America West.
MODIFICATIONS OF THE PASS THROUGH TRUST AGREEMENTS AND CERTAIN OTHER AGREEMENTS
Each Pass Through Trust Agreement contains provisions permitting, at the
request of the Company, the execution of amendments or supplements to such Pass
Through Trust Agreement or, if applicable, to the Deposit Agreements, the Escrow
Agreements, the Intercreditor Agreement, the Note Purchase Agreement, the
Registration Rights Agreement or any Liquidity Facility, without the consent of
the holders of any of the Certificates of such Trust for certain reasons set
forth below.
Basis for Amendments or Supplements to Pass Through Trust Agreements
(1) To evidence the succession of another corporation to America West and
the assumption by such corporation of America West's covenants
contained in such Pass Through Trust Agreement, and its obligations
under the Note Purchase Agreement, the Registration Rights Agreement or
any Liquidity Facility.
(2) To add to the covenants of America West for the benefit of holders of
such Certificates or to surrender any right or power conferred upon
America West in such Pass Through Trust Agreement, the Note Purchase
Agreement, the Registration Rights Agreement or any Liquidity Facility.
(3) To correct or supplement any provision of such Pass Through Trust
Agreement, the Deposit Agreements, the Escrow Agreements, the
Intercreditor Agreement, the Note Purchase Agreement, the Registration
Rights Agreement or any Liquidity Facility which may be defective or
inconsistent with any other provision in such Pass Through Trust
Agreement, the Deposit
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<PAGE> 45
Agreements, the Escrow Agreements, the Intercreditor Agreement, the
Note Purchase Agreement, the Registration Rights Agreement or any
Liquidity Facility, as applicable, or to cure any ambiguity, correct
any mistake or to modify any other provisions with respect to matters
or questions arising under such Pass Through Trust Agreement, the
Deposit Agreements, the Escrow Agreements, the Intercreditor Agreement,
the Note Purchase Agreement, the Registration Rights Agreement or any
Liquidity Facility, provided such action shall not materially adversely
affect the interests of the holders of such Certificates.
(4) To comply with any requirement of the SEC, any applicable law, rules or
regulations of any exchange or quotation system on which the
Certificates are listed, any regulatory body or the Registration Rights
Agreement to effectuate the Exchange Offer.
(5) To modify, eliminate or add to the provision of such Pass Through Trust
Agreement to the extent necessary to continue qualification thereof
under the Trust Indenture Act and to add to such Pass Through Trust
Agreement such other provisions as may be expressly permitted by the
Trust Indenture Act.
(6) To provide for a successor Trustee or to add to or change any provision
of such Pass Through Trust Agreement as shall be necessary to
facilitate the administration of the Trust thereunder by more than one
Trustee.
(7) To provide certain information required under such Pass Through Trust
Agreement as to the Trustee.
(8) To modify or eliminate provisions relating to the transfer or exchange
of Exchange Certificates or the Initial Certificates upon consummation
of the Exchange Offer (as defined in the Registration Rights Agreement)
or effectiveness of the Shelf Registration Statement or the Exchange
Offer Registration Statement.
Any such amendment or supplement listed above may be made only if it does not
adversely affect the status of the Trust as a grantor trust under Subpart E,
Part I of Subchapter J of Chapter 1 of Subtitle A of the Code for U.S. federal
income tax purposes. (Section 9.01)
Each Pass Through Trust Agreement also contains provisions permitting the
execution, with the consent of the holders of the Certificates of the related
Trust evidencing fractional undivided interests aggregating not less than a
majority in interest of such Trust, and with the consent of the applicable Owner
Trustee (such consent not to be unreasonably withheld), of amendments or
supplements for the purposes of adding any provisions to or changing or
eliminating any of the provisions of such Pass Through Trust Agreement, the
Deposit Agreements, the Escrow Agreements, the Intercreditor Agreement, the Note
Purchase Agreement, the Registration Rights Agreement or any Liquidity Facility
or of modifying the rights and obligations of the Certificateholders, except
that no such amendment or supplement may, without the consent of the holder of
each Certificate so affected thereby, have any of the effects set forth below.
Amendments or Supplements That Require Consent of the Affected Holder
(1) Reduce in any manner the amount of, or delay the timing of, any receipt
by the Trustee (or, with respect to the Deposits, the
Certificateholders) of payments with respect to the Deposits, the
Equipment Notes or other Trust Property held in such Trust or
distributions in respect of any Certificate related to such Trust, or
change the date or place of any payment in respect of any Certificate,
or make distributions payable in coin or currency other than that
provided for in such Certificates, or impair the right of any
Certificateholder of such Trust to institute suit for the enforcement
of any such payment when due.
(2) Permit the disposition of any Equipment Note held in such Trust, except
as provided in such Pass Through Trust Agreement, or otherwise deprive
any Certificateholder of the benefit of the ownership of the applicable
Equipment Notes.
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(3) Alter the priority of distributions specified in the Intercreditor
Agreement in a manner adverse to the Certificateholders.
(4) Reduce the percentage of the aggregate fractional undivided interests
of the Trust provided for in such Pass Through Trust Agreement, the
consent of the holders of which is required for any such supplemental
trust agreement or for any waiver provided for in such Pass Through
Trust Agreement.
(5) 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.
(6) Adversely affect the status of the Trust as a grantor trust under
Subpart E, Part I of Subchapter J of Chapter 1 of Subtitle A of the
Code for U.S. federal income tax purposes. (Section 9.02)
Actions by Trustee Upon Receipt of Consent to Amend or Supplement any
Agreement
In the event that a Trustee, as holder (or beneficial owner through the
Subordination Agent) of any Equipment Note in trust for the benefit of the
Certificateholders of the relevant Trust or as Controlling Party under the
Intercreditor Agreement, receives (directly or indirectly through the
Subordination Agent) a request for a consent to any amendment, modification,
waiver or supplement under any Indenture, any Participation Agreement, any
Lease, any Equipment Note or any other related document, the Trustee shall
forthwith send a notice of such proposed amendment, modification, waiver or
supplement to each Certificateholder of the relevant Trust as of the date of
such notice. Such notice shall request direction from the Certificateholders
regarding certain matters, as set forth below.
Information Requested by Trustee from Certificateholders
(1) Whether or not to take or refrain from taking (or direct the
Subordination Agent to take or refrain from taking) any action which a
holder of such Equipment Note or the Controlling Party has the option
to take.
(2) Whether or not to give or execute (or direct the Subordination Agent to
give or execute) any waivers, consents, amendments, modifications or
supplements as a holder of such Equipment Note or as Controlling Party.
(3) How to vote (or direct the Subordination Agent to vote) any Equipment
Note if a vote has been called for with respect thereto.
Provided such a request for Certificateholder direction shall have been
made, in directing any action or casting any vote or giving any consent as the
holder of any Equipment Note (or in directing the Subordination Agent in any of
the foregoing), the Trustee shall act as follows: (1) if the Trustee is acting
in a capacity other than as Controlling Party, the Trustee shall vote for or
give consent to any such action with respect to such Equipment Note in the same
proportion as that of (x) the aggregate face amounts of all Certificates
actually voted in favor of or for giving consent to such action by such
direction of Certificateholders to (y) the aggregate face amount of all
outstanding Certificates of the relevant Trust; and (2) if the Trustee is acting
in its capacity as the Controlling Party, the Trustee shall vote as directed in
such Certificateholder direction by the Certificateholders evidencing fractional
undivided interests aggregating not less than a majority in interest in the
relevant Trust. For purposes of the immediately preceding sentence, a
Certificate shall have been "actually voted" if the Holder of such Certificate
has delivered to the Trustee an instrument evidencing such Holder's consent to
such direction prior to two Business Days before the Trustee directs such action
or casts such vote or gives such consent. Notwithstanding the foregoing, but
subject to certain rights of the Certificateholders under the relevant Pass
Through Trust Agreement and subject to the Intercreditor Agreement, the Trustee
may, in its own discretion and at its own direction, consent and notify the
relevant Loan Trustee of such consent (or direct the Subordination Agent to
consent and notify the relevant Loan Trustee of such consent) to any amendment,
modification, waiver or supplement under the relevant Indenture, Participation
Agreement or Lease, any relevant Equipment Note or any other related document,
if an Indenture Default under any
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Indenture shall have occurred and be continuing, or if such amendment,
modification, waiver or supplement will not materially adversely affect the
interests of the Certificateholders. (Section 10.01)
OBLIGATION TO PURCHASE EQUIPMENT NOTES
The Trustees are obligated to purchase the Equipment Notes issued with
respect to the Aircraft during the Delivery Period, subject to the terms and
conditions of the Note Purchase Agreement. Under the Note Purchase Agreement,
America West agrees to finance each Aircraft in the manner provided therein and
in connection therewith will have the option of entering into a leverage lease
financing or a secured debt financing with respect to each Aircraft. The Note
Purchase Agreement provides for the relevant parties to enter into, with respect
to each Leased Aircraft, a participation agreement, a Lease and a Leased
Aircraft Indenture relating to the financing of such Leased Aircraft. The Note
Purchase Agreement also provides for the relevant parties to enter into, with
respect to each Owned Aircraft, a participation agreement (any such
participation agreement, whether for a Leased Aircraft or an Owned Aircraft,
being herein referred to as a "Participation Agreement") and an Owned Aircraft
Indenture relating to the financing of such Owned Aircraft. The description of
such agreements in this Prospectus is based on the forms of such agreements
contemplated by the Note Purchase Agreement. The terms of the agreements
actually entered into may differ from the forms of such agreements and,
consequently, may differ from the description of such agreements contained in
this Prospectus. See "Risk Factors -- Risk Factors Relating to the Certificates
and the Offering -- Owner Participant; Series D Certificateholders; Revisions to
Agreements".
Under the Note Purchase Agreement, the terms of such agreements are
required to contain the Mandatory Document Terms and not vary the Mandatory
Economic Terms. In addition, America West is obligated to certify to the
Trustees that any such modifications do not materially and adversely affect the
Certificateholders and to obtain written confirmation from each Rating Agency
that the use of versions of such agreements modified in any material respect
will not result in a withdrawal, suspension or downgrading of the rating of any
Class of Certificates. Further, under the Note Purchase Agreement, it is a
condition precedent to the obligation of each Trustee to purchase the Equipment
Notes related to the financing of an Aircraft that no Triggering Event shall
have occurred. The Trustees will have no right or obligation to purchase
Equipment Notes after the Delivery Period Termination Date. The "Mandatory
Economic Terms", as defined in the Note Purchase Agreement, require, among other
things, compliance with the items noted below.
Requirements of the Mandatory Economic Terms
(1) The maximum principal amount of all the Equipment Notes issued with
respect to an Aircraft not exceed the maximum principal amount of
Equipment Notes indicated for each such Aircraft as set forth in
"Description of the Equipment Notes -- Equipment Notes and the
Aircraft" under the column "Maximum Principal Amount of Equipment
Notes".
(2) The average life per aircraft of the Series A Equipment Notes shall
not be less than 9.0 years or extend beyond 13.5 years, of the Series
B Equipment Notes shall not be less than 8.0 years or extend beyond
12.7 years, and of the Series C Equipment Notes shall not be less than
4.0 years or extend beyond 8.5 years, in each case from the Issuance
Date.
(3) As of the first Regular Distribution Date following the delivery of
the last Aircraft to be delivered, the average life of the Class A
Certificates, the Class B Certificates and the Class C Certificates
shall not be less than, respectively, 11.0 years, 10.0 years and 6.0
years nor shall extend beyond, respectively, 12.9 years, 11.4 years
and 7.5 years from the Issuance Date.
(4) The loan to aircraft value ratio at the time of issuance of the
Equipment Notes and on any Regular Distribution Date thereafter shall
not exceed 43% in the case of the Series A Equipment Notes, 57% in the
case of the Series B Equipment Notes and 71% in the case of the Series
C Equipment Notes (in each case computed on the basis of an assumed
value of such
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Aircraft no greater than the value for such Aircraft set forth under
"Description of the Equipment Notes -- Equipment Notes and the
Aircraft" under the column "Appraised Value" and the Depreciation
Assumption defined under "Description of the Equipment Notes -- Loan
to Value Ratios of Equipment Notes").
(5) The final maturity date of the Series A Equipment Notes not be
extended beyond January 2, 2017, the Series B Equipment Notes not be
extended beyond January 2, 2017 and the Series C Equipment Notes not
be extended beyond July 2, 2010.
(6) The original aggregate principal amount of all of the Equipment Notes
of each Series shall not exceed the original aggregate face amount of
the Certificates issued by the corresponding Trust.
(7) The interest rate applicable to each Series of Equipment Notes must be
equal to the rate applicable to the Certificates issued by the
corresponding Trust.
(8) The payment dates for the Equipment Notes and basic rent under the
Leases must be January 2 and July 2.
(9) Basic rent, stipulated loss values, early buy-out amount and
termination values under the Leases must be sufficient to pay amounts
due with respect to the related Equipment Notes.
(10) The amounts payable under the all-risk aircraft hull insurance
maintained with respect to each Aircraft must be sufficient to pay the
applicable stipulated loss value, subject to certain rights of
self-insurance.
(11) The following shall be provided as set forth in the form of
Participation Agreements, Lease and Indentures (collectively, the
"Aircraft Operative Agreements"):
(a) The past due rate in the Indentures and the Leases.
(b) The Make-Whole Premium payable under the Indentures.
(c) The provisions relating to the redemption and purchase of Equipment
Notes in the Indentures.
(d) The minimum liability insurance amount on Aircraft in the Leases.
(e) The interest rate payable with respect to stipulated loss value in
the Leases.
(f) The indemnification of the Loan Trustees, Subordination Agent,
Liquidity Provider, Trustees and Escrow Agents with respect to
certain taxes and expenses.
The "Mandatory Document Terms" prohibit modifications in any material
adverse respect to certain specified provisions of the Aircraft Operative
Agreements contemplated by the Note Purchase Agreement.
Prohibited Modifications Under the Mandatory Document Terms
(1) In the case of the Indentures, the following modifications are
prohibited:
(a) To the Granting Clause of the Indentures so as to deprive the Note
Holders of a security interest in the Aircraft, certain of America
West's rights under its purchase agreement with the Aircraft
manufacturer and, in the case of a Leased Aircraft, the Lease or to
eliminate any of the "Secured Obligations" as defined therein.
(b) To certain provisions relating to the issuance, redemption,
purchase, payments, and ranking of the Equipment Notes (including
the obligation to pay the Make-Whole Premium in certain
circumstances).
(c) To certain provisions regarding Indenture Defaults, remedies
relating thereto and rights of the Owner Trustee and Owner
Participant in such circumstances.
(d) To certain provisions relating to any replaced airframe or engines
with respect to an Aircraft.
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(e) To the provision that New York law will govern the Indentures.
(2) In the case of the Leases, modifications are prohibited to certain
provisions regarding the obligations of America West, including:
(a) To pay basic rent, stipulated loss value, early buy-out amount and
termination value to the Leased Aircraft Trustee.
(b) To record the Leased Aircraft Indenture with the Federal Aviation
Administration and to maintain such Indenture as a first-priority
perfected mortgage on the related Aircraft.
(c) To furnish certain opinions with respect to a replacement airframe.
(d) To consent to the assignment of the Lease by the Owner Trustee as
collateral under the Leased Aircraft Indenture, as well as
modifications which would either alter the provision that New York
law will govern the Lease or would deprive the Loan Trustee of
rights expressly granted to it under the Leases.
(3) In the case of the Participation Agreements, the following
modifications are prohibited:
(a) To certain conditions to the obligations of the Trustees to
purchase the Equipment Notes issued with respect to an Aircraft
involving good title to such Aircraft, obtaining a certificate of
airworthiness with respect to such Aircraft, entitlement to the
benefits of Section 1110 with respect to such Aircraft and filings
of certain documents with the Federal Aviation Administration.
(b) To the provisions restricting the Note Holder's ability to transfer
such Equipment Notes.
(c) To certain provisions so as to deprive the Note Holders of a first
priority security interest in the Aircraft.
(d) To certain provisions requiring the delivery of legal opinions.
(e) To the provision that New York law will govern the Participation
Agreements.
In the case of all of the Aircraft Operative Agreements, modifications are
prohibited in any material adverse respect as regards the interest of the Note
Holders, the Subordination Agent, the Liquidity Provider or the Loan Trustee in
the definition of "Make-Whole Premium". Notwithstanding the foregoing, any such
Mandatory Document Term may be modified to correct or supplement any such
provision which may be defective or to cure any ambiguity or correct any
mistake, provided that any such action shall not materially adversely affect the
interests of the Note Holders, the Subordination Agent, the Liquidity Provider,
the Loan Trustee or the Certificateholders.
POSSIBLE ISSUANCE OF CLASS D CERTIFICATES
America West may elect to issue Series D Equipment Notes, which will be
funded from sources other than this Offering. America West may elect to fund the
sale of the Series D Equipment Notes through the sale of Class D Certificates.
America West will not issue any Series D Equipment Notes at any time prior to
the consummation of this Offering. The Note Purchase Agreement provides that
America West's ability to issue any Series D Equipment Notes is contingent upon
its obtaining written confirmation from each Rating Agency that the issuance of
such Series D Equipment Notes will not result in a withdrawal or downgrading of
the rating of any Class of Certificates. If the Class D Certificates are issued,
the Trustee with respect to such Certificates will become a party to the
Intercreditor Agreement. See "Description of the Intercreditor Agreement".
LIQUIDATION OF ORIGINAL TRUSTS
At the Transfer Date, each of the Original Trusts will transfer and assign
all of its assets and rights to a Successor Trust with substantially identical
terms, except that the Successor Trusts will not have the right to purchase new
Equipment Notes and Delaware law governs the Original Trusts and New York
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law will govern the Successor Trusts. The Trustee of each of the Original Trusts
will also act as Trustee of the corresponding Successor Trust, and each
Successor Trustee will assume the obligations of the Original Trustee under each
transaction document to which such Original Trustee was a party. Upon
effectiveness of such transfer, assignment and assumption, each of the Original
Trusts will be liquidated and each of the Certificates will represent the same
interest in the Successor Trust as it represented in the Original Trust
immediately prior to such transfer and assignment. Unless the context otherwise
requires, all references in this Prospectus to the Trusts, the Trustees, the
Pass Through Trust Agreements and similar terms shall be applicable with respect
to the Original Trusts until the effectiveness of such transfer, assignment and
assumption and thereafter shall be applicable with respect to the Successor
Trusts. If for any reason such transfer, assignment and assumption cannot be
effected to any Successor Trust, the related Original Trust will continue in
existence until it is effected.
TERMINATION OF THE TRUSTS
The obligations of America West and the applicable Trustee with respect to
a Trust will terminate upon the distribution to Certificateholders of such Trust
of all amounts required to be distributed to them pursuant to the applicable
Pass Through Trust Agreement and the disposition of all property held in such
Trust. The applicable Trustee will send to each Certificateholder of such Trust
notice of the termination of such Trust, the amount of the proposed final
payment and the proposed date for the distribution of such final payment for
such Trust. The final distribution to any Certificateholder of such Trust will
be made only upon surrender of such Certificateholder's Certificates at the
office or agency of the applicable Trustee specified in such notice of
termination. (Section 11.01)
THE TRUSTEES
The Trustee for each Trust is Wilmington Trust Company.
With certain exceptions, the Trustees make no representations as to the
validity or sufficiency of the Pass Through Trust Agreements, the Certificates,
the Intercreditor Agreement, the Equipment Notes, the Deposit Agreements, the
Escrow Agreements, the Indentures, the Participation Agreements, the Leases or
other related documents. (Sections 7.04 and 7.15) The Trustee of any Trust shall
not be liable, with respect to the Certificates of such Trust, for any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the holders of Certificates of such Trust evidencing fractional
undivided interests aggregating not less than a majority in interest of such
Trust. Subject to certain provisions, the Trustees shall be under no obligation
to exercise any of their rights or powers under any Pass Through Trust Agreement
at the request of any holders of Certificates issued thereunder unless there
shall have been offered to the Trustees reasonable security and Indemnity.
(Section 7.03(e)) Each Pass Through Trust Agreement provides that the Trustees
in their individual or any other capacity may acquire and hold Certificates
issued thereunder and, subject to certain conditions, may otherwise deal with
America West, with any Owner Trustee or with any Loan Trustee with the same
rights they would have if they were not the Trustees. (Section 7.05)
Any Trustee may resign with respect to any or all of the Trusts of which it
is the Trustee at any time, in which event America West will be obligated to
appoint a successor trustee. If any Trustee ceases to be eligible to continue as
Trustee with respect to a Trust or becomes incapable of acting as Trustee or
becomes insolvent, America West may remove such Trustee, or any holder of the
Certificates of such Trust for at least six months may, on behalf of such holder
and all others similarly situated, petition any court of competent jurisdiction
for the removal of such Trustee and the appointment of a successor trustee. Any
resignation or removal of the Trustee with respect to a Trust and appointment of
a successor trustee for such Trust does not become effective until acceptance of
the appointment by the successor trustee. (Sections 7.09 and 7.10) Pursuant to
such resignation and successor trustee provisions, it is possible that a
different trustee could be appointed to act as the successor trustee with
respect to each Trust. All references in this Prospectus to the Trustee should
be read to take into account the possibility that the Trusts could have
different successor trustees in the event of such a resignation or removal.
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Each Pass Through Trust Agreement provides that America West will pay or
cause to be paid the applicable Trustee's fees and expenses. (Section 7.07)
BOOK-ENTRY; DELIVERY AND FORM
The New Certificates of each Trust will be represented by one or more
permanent global Certificates, in definitive, fully registered form without
interest coupons (the "Global Certificates"), to be deposited with the Trustee
as custodian for The Depository Trust Company ("DTC") and registered in the name
DTC or its nominee.
The Depository Trust Company
DTC has advised America West as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a "banking
organization" within the meaning of the New York Banking law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participants and facilitate the clearance and settlement of
securities transactions between participants through electronic book-entry
changes in accounts of its participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and certain other
organizations. Indirect access to the DTC system is available to others such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly
("Indirect Participants").
Neither America West nor the Trustee has any responsibility for the
performance by DTC or its participants or indirect participants of their
respective obligations under the rules and procedures governing their
operations.
If DTC is at any time unwilling or unable to continue as a depositary for
the Global Certificates and a successor depositary is not appointed by within 90
days, the Trusts will issue certificates in definitive, fully registered form in
exchange for the Global Certificates.
Ownership of Global Certificates
Ownership of beneficial interests in Global Certificates is limited to
persons who have accounts with DTC ("DTC Participants") or persons who hold
interests through DTC Participants. Ownership of beneficial interests in the
Global Certificates is shown on, and the transfer of that ownership is effected
only through, records maintained by DTC or its nominee (with respect to
interests of DTC Participants) and the records of DTC Participants (with respect
to interests of persons other than participants). The laws of some states
require that certain purchasers of securities take physical delivery of such
securities. Such limits and such laws may limit the market for beneficial
interests in the Global Certificates.
So long as DTC or its nominee is the registered owner or holder of the
Global Certificates, DTC or such nominee, as the case may be, will be considered
the sole record owner or holder of the Certificates represented by such Global
Certificates for all purposes under the related Pass Through Trust Agreements.
No beneficial owners of an interest in the Global Certificates will be able to
transfer that interest except in accordance with DTC's applicable procedures, in
addition to those provided for under the Pass Through Trust Agreements and, if
applicable, the Euroclear System or Cedel Bank Societe Anonyme.
Payments of Principal and Interest on the Global Certificates
Payments of the principal of, premium, if any, and interest on the Global
Certificates will be made to DTC or its nominee, as the case may be, as the
registered owner thereof. Neither America West, the Trustee, nor any paying
agent will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in the
Global Certificates or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
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America West expects that DTC or its nominee, upon receipt of any payment
of principal, premium, if any, or interest in respect of the Global Certificates
will credit DTC Participants' accounts with payments in amounts proportionate to
their respective beneficial ownership interests in the principal amount of such
Global Certificates, as shown on the records of DTC or its nominee. America West
also expects that payments by participants to owners of beneficial interests in
such Global Certificates held through such participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in the names of
nominees for such customers. Such payments will be the responsibility of such
participants.
DESCRIPTION OF THE DEPOSIT AGREEMENTS
The following summary describes certain terms of the Deposit Agreements.
The summary does not purport to be complete and is qualified in its entirety by
reference to all of the provisions of the Deposit Agreements, which have been
filed as exhibits to the Registration Statement. The provisions of the Deposit
Agreements are substantially identical except as otherwise indicated. Upon
request, copies of such documents will be furnished to any holder of the
Certificates. Requests for such documents should be addressed to the Trustees.
GENERAL
Under the Escrow Agreements, the Escrow Agent with respect to each Trust
has entered into a separate Deposit Agreement with the Depositary pursuant to
which the Depositary has established separate accounts into which the proceeds
of the initial sale of the Old Certificates of such Trust were deposited on
behalf of such Escrow Agent, from which the Escrow Agent, upon request from the
Trustee of such Trust, will make withdrawals and into which such Trustee will
make re-deposits during the Delivery Period. Pursuant to the Deposit Agreement
with respect to each Trust, on each Regular Distribution Date the Depositary
will pay to the Paying Agent on behalf of the applicable Escrow Agent, for
distribution to the Certificateholders of such Trust, an amount equal to
interest accrued on the Deposits relating to such Trust during the relevant
interest period at a rate per annum equal to the interest rate applicable to the
Certificates issued by such Trust.
The interest rates payable on the Deposits are subject to change under
certain circumstances described in "The Exchange Offer -- General". Upon each
delivery of an Aircraft during the Delivery Period, the Trustees for the Class A
Trust, the Class B Trust and the Class C Trust will request the Escrow Agent
relating to such Trust to withdraw from the applicable Deposits funds sufficient
to enable the Trustee of such Trust to purchase the Equipment Note of the series
applicable to such Trust issued with respect to such Aircraft. Accrued but
unpaid interest on all such Deposits withdrawn will be paid on the next Regular
Distribution Date. Any portion of any Deposit withdrawn which is not used to
purchase such Equipment Note will be re-deposited by each Trustee into an
account relating to the applicable Trust. The Deposits relating to each Trust
and interest paid thereon are not subject to the subordination provisions of the
Intercreditor Agreement and will not be available to pay any other amount in
respect to the Certificates.
UNUSED DEPOSITS
The Trustees' obligations to purchase the Equipment Notes issued with
respect to each Aircraft are subject to satisfaction of certain conditions at
the time of delivery, as set forth in the Note Purchase Agreement. See
"Description of the New Certificates -- Obligation to Purchase Equipment Notes".
Since the Aircraft are scheduled for delivery from time to time during the
Delivery Period, no assurance can be given that all such conditions will be
satisfied at the time of delivery for each Aircraft. Moreover, since the
Aircraft will be newly or recently manufactured, their delivery as scheduled is
subject to delays in the manufacturing process and to the manufacturer's right
to postpone deliveries under its agreement with America West. See "Description
of the Aircraft and Appraisals -- Deliveries of Aircraft".
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Depending on the circumstances of the financing of each Aircraft, the
maximum aggregate principal amount of Equipment Notes may not be issued. In
addition, if any funds remain as Deposits with respect to any Trust at the
Delivery Period Termination Date, they will be withdrawn by the Escrow Agent and
distributed, with accrued and unpaid interest thereon to the Certificateholders
of such Trust after at least 15 days' prior written notice. In addition, such
distribution will include a premium payable by America West equal to the Deposit
Make-Whole Premium with respect to the remaining Deposits applicable to each
Trust, except that with respect to the Class C Trust, the Deposit Make-Whole
Premium in respect of the remaining Deposits applicable to such Trust will be
payable only to the extent such remaining Deposits exceed the $5,000,000 (the
"Par Redemption Amount").
Since the maximum principal amount of Equipment Notes may not be issued
with respect to an Aircraft and, in each such case, the Series C Equipment Notes
are more likely not to be issued in the maximum principal amount as compared to
the other Equipment Notes, it is more likely that a distribution of unused
Deposits will be made with respect to the Class C Certificates as compared to
the other Certificates. In addition, notwithstanding the Par Redemption Amount
limitation, if any Aircraft is not delivered by the manufacturer on or prior to
the Delivery Period Termination Date due to any reason not occasioned by America
West's fault or negligence and no Substitute Aircraft is provided in lieu of
such Aircraft, no Deposit Make-Whole Premium will be paid with respect to the
unused Deposits to be distributed as a result of such failure to deliver in an
amount (the "Non-Premium Amount") equal to the maximum principal amount of
Equipment Notes that could have been issued and acquired by such Trust with
respect to such Aircraft in accordance with the Mandatory Economic Terms and
such unused Deposits shall not be included in the calculation of the Par
Redemption Amount.
"Deposit Make-Whole Premium" means, with respect to the distribution of
unused Deposits to holders of any Class of Certificates, as of any date of
determination, an amount, if any, determined pursuant to the following formula
(any negative amount being deemed equal to zero):
Formula for Deposit Make-Whole Premium
(1) The present value of the excess of
(a) the scheduled payment of principal and interest to maturity of the
Equipment Notes, assuming the maximum principal amount thereof (the
"Maximum Amount") minus any Non-Premium Amount and, in the case of
Class C Certificates only, the Par Redemption Amount (without
duplication) were issued, on each remaining Regular Distribution
Date for such Class under the Assumed Amortization Schedule, over
(b) the scheduled payment of principal and interest to maturity of the
Equipment Notes actually acquired by the Trustee for such Class on
each such Regular Distribution Date, such present value computed by
discounting such excess on a semiannual basis on each Regular
Distribution Date (assuming a 360-day year of twelve 30-day months)
using a discount rate equal to the Treasury Yield plus 225 basis
points in the case of the Class A Certificates, 250 basis points in
the case of the Class B Certificates and 325 basis points in the
case of the Class C Certificates, over
(2) the amount of such unused Deposits to be distributed to the holders of
such Certificates, minus any Non-Premium Amount and, in the case of
Class C Certificates only, the Par Redemption Amount (without
duplication), plus accrued and unpaid interest on such net amount to
but excluding the date of determination from and including the
preceding Regular Distribution Date (or if such date of determination
precedes the first Regular Distribution Date, the date of issuance of
the Old Certificates).
DISTRIBUTION UPON OCCURRENCE OF TRIGGERING EVENT
If a Triggering Event shall occur prior to the Delivery Period Termination
Date, the Escrow Agent for each Trust will withdraw any funds then held as
Deposits with respect to such Trust and cause such funds, with accrued and
unpaid interest thereon but without any premium, to be distributed to the
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Certificateholders of such Trust by the Paying Agent on behalf of the Escrow
Agent, after at least 20 days' prior written notice. Accordingly, if a
Triggering Event occurs prior to the Delivery Period Termination Date, the
Trusts will not acquire Equipment Notes issued with respect to Aircraft
delivered after the occurrence of such Triggering Event.
DEPOSITARY
ABN AMRO Bank N.V., acting through its Chicago branch, will act as
Depositary.
ABN AMRO Bank N.V. is a direct subsidiary of ABN AMRO Holding N.V., an
international multi-bank holding company. At December 31, 1997, ABN AMRO Holding
N.V. reported consolidated assets amounting to approximately $414 billion (based
on the exchange rate at March 31, 1998 of U.S. $1.00 to NLG 2.08). The
accounting principles applied in the preparation of the financial statements of
ABN AMRO Bank N.V. may not conform to U.S. generally accepted accounting
principles.
ABN AMRO Bank N.V. has long-term unsecured debt ratings of Aa1 from Moody's
and AA from Standard & Poor's and short-term unsecured debt ratings of P-1 from
Moody's and A-I+ from Standard & Poor's.
ABN AMRO Bank N.V.'s Chicago branch was initially licensed by the
Commissioner of Banks and Real Estate for the State of Illinois on October 1,
1973. The Chicago branch is an unincorporated branch of ABN AMRO Bank N.V. and
is not a separate subsidiary. The branch is located at 135 South LaSalle Street,
Chicago, Illinois 60674-9135.
DESCRIPTION OF THE ESCROW AGREEMENTS
The following summary describes certain material terms of the Escrow
Agreements. The summary does not purport to be complete and is qualified in its
entirety by reference to the provisions of the Escrow Agreements which have been
filed as exhibits to the Registration Statement. Upon request, copies of such
documents will be furnished to any holder of Certificates. Requests for such
documents should be addressed to the Trustees.
Each Escrow Agent, each Paying Agent, each Trustee and the Initial
Purchasers have entered into a separate Escrow Agreement for the benefit of the
Certificateholders of each Trust as holders of the escrow receipts ("Escrow
Receipts") affixed thereto (in such capacity, a "Receiptholder"). The cash
proceeds of the initial sale of Old Certificates of each Trust have been
deposited on behalf of the Escrow Agent (for the benefit of Receiptholders) with
the Depositary as Deposits relating to such Trust. The Escrow Agent of each
Trust has been given irrevocable instructions to permit the Trustee of such
Trust to cause funds to be withdrawn from such Deposits on or prior to the
Delivery Period Termination Date for the purpose of enabling such Trustee to
purchase Equipment Notes on and subject to the terms and conditions of the Note
Purchase Agreement and to direct the Depositary to pay interest on the Deposits
accrued in accordance with the Deposit Agreement to the Paying Agent for
distribution to the Receiptholders.
Each Escrow Agreement requires that the Paying Agent establish and
maintain, for the benefit of the related Receiptholders, one or more Paying
Agent Account(s), which shall be non-interest-bearing. Pursuant to the terms of
the Escrow Agreement, the Paying Agent is required to deposit interest on
Deposits relating to each Trust and any unused Deposits withdrawn by the Escrow
Agent in the Paying Agent Account. All amounts so deposited will be distributed
by the Paying Agent on a Regular Distribution Date or Special Distribution Date,
as appropriate.
Upon receipt by the Depositary on behalf of the Escrow Agent of the cash
proceeds from the Old Certificates as described above, the Escrow Agent issued
Escrow Receipts which were affixed by the relevant Trustee to each Old
Certificate. Each Escrow Receipt evidences a fractional undivided interest in
amounts from time to time deposited into the Paying Agent Account and is limited
in recourse to amounts deposited into such Account. An Escrow Receipt may not be
assigned or transferred except in connection with the assignment or transfer of
the Certificate to which it is affixed. Each Escrow Receipt will be
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registered by the Escrow Agent in the same name and manner as the Certificate to
which it is affixed. Escrow Receipts will be affixed to New Certificates issued
pursuant to the Exchange Offer.
DESCRIPTION OF THE LIQUIDITY FACILITIES
The following summary describes certain terms of the Liquidity Facilities
and certain provisions of the Intercreditor Agreement relating to the Liquidity
Facilities. The summary does not purport to be complete and is qualified in its
entirety by reference to the provisions of the Liquidity Facilities and such
provisions of the Intercreditor Agreement. The provisions of the Liquidity
Facilities are substantially identical except as otherwise indicated. Upon
request, copies of such documents will be furnished to any prospective investor
in the Certificates. Requests for such documents should be addressed to the
Trustees.
GENERAL
The Liquidity Provider has entered into a separate revolving credit
agreement (each, a "Liquidity Facility") with the Subordination Agent with
respect to the Certificates of each of the Trusts. Under the Liquidity Facility
with respect to any Trust, the Liquidity Provider will, if necessary, make
advances ("Interest Drawings") in an amount (the "Required Amount") sufficient
to pay interest on the Certificates of such Trust on up to three successive
semi-annual Regular Distribution Dates (without regard to any future payments of
principal on such Certificates) at the respective interest rates shown on the
cover page of this Prospectus (plus an additional margin specified by the
Registration Rights Agreement, if applicable) for such Certificates (the "Stated
Interest Rates"), except that the Liquidity Facility with respect to each Trust
will not cover interest payable by the Depositary on the Deposits relating to
such Trust.
The Liquidity Facility for each Trust is intended to enhance the likelihood
of timely receipt by the Certificateholders of such Trust of the interest
payable on the Certificates of such Trust at the Stated Interest Rate therefor
on up to three consecutive semiannual Regular Distribution Dates. If interest
payment defaults occur which exceed the amount covered by or available under the
Liquidity Facilities for any Trust, the Certificateholders of such Trust will
bear their allocable share of the deficiencies to the extent that there are no
other sources of funds. Although ABN AMRO Bank N.V., acting through its Chicago
branch, is the initial Liquidity Provider for each of the Trusts, ABN AMRO Bank
N.V., acting through its Chicago branch, may be replaced by one or more other
entities with respect to the Trusts under certain circumstances. Therefore, the
Liquidity Provider for each Trust may differ.
DRAWINGS
The initial amount available under the Liquidity Facilities for the Class A
Trust, the Class B Trust and the Class C Trust at January 2, 2000, the first
Regular Distribution Date after the scheduled Delivery Period Termination Date,
assuming that Equipment Notes in the maximum principal amount with respect to
all Aircraft are acquired by the Trusts and that all interest and principal due
on or prior to January 2, 2000 is paid, will be $14,212,058, $4,642,845, and
$1,977,379, respectively.
Except as otherwise provided below, the Liquidity Facility for each Trust
will enable the Subordination Agent to make Interest Drawings thereunder on any
Regular Distribution Date to pay interest then due and payable on the
Certificates of such Trust at the Stated Interest Rate for such Trust to the
extent that the amount, if any, available to the Subordination Agent on such
Regular Distribution Date is not sufficient to pay such interest; provided,
however, that the maximum amount available to be drawn under the Liquidity
Facility with respect to any Trust on any Regular Distribution Date to fund any
shortfall of interest on Certificates of such Trust will not exceed the then
Required Amount of such Liquidity Facility less the aggregate amount of each
Interest Drawing outstanding under such Liquidity Facility at such time (the
"Maximum Available Commitment").
The Liquidity Facility for any Trust does not provide for drawings
thereunder to pay for principal of or premium on the Certificates of such Trust
or any interest on the Certificates of such Trust in excess of
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the Stated Interest Rate for such Trust or more than three semiannual
installments of interest thereon or principal of or interest or premium on the
Certificates of any other Trust. (Liquidity Facilities, Section 2.02;
Intercreditor Agreement, Section 3.6)
Upon each Interest Drawing under any Liquidity Facility, the Subordination
Agent will be obligated to reimburse (to the extent that the Subordination Agent
has available funds therefor) the Liquidity Provider for the amount of such
drawing. Such reimbursement obligation and any other amounts owing to the
Liquidity Provider under each Liquidity Facility or certain other agreements
(the "Liquidity Obligations") will rank pari passu with the Liquidity
Obligations relating to all other Liquidity Facilities and will rank senior to
the Certificates in right of payment. With respect to any Interest Drawings
under the Liquidity Facility for any Trust, upon reimbursement of the Liquidity
Provider in full for the amount of such Interest Drawings plus interest thereon,
the Maximum Available Commitment under such Liquidity Facility in respect of
interest on the Certificates of such Trust will be reinstated to an amount not
to exceed the then Required Amount of such Liquidity Facility; provided,
however, that such Liquidity Facility will not be so reinstated at any time
after a Liquidity Event of Default shall have occurred and be continuing and
less than 65% of the then aggregate outstanding principal amount of all
Equipment Notes are Performing Equipment Notes.
"Performing Equipment Note" means an Equipment Note with respect to which
no payment default has occurred and is continuing (without giving effect to any
acceleration); provided that in the event of a bankruptcy proceeding involving
America West under the U.S. Bankruptcy Code, the following items will not be
taken into consideration:
(1) any payment default existing during the 60-day period under Section
1110(a)(1)(A) of the U.S. Bankruptcy Code (or such longer period as
may apply under Section 1110(b) of the U.S. Bankruptcy Code) (the
"Section 1110 Period"), unless during the Section 1110 Period the
trustee in such proceeding or America West refuses to assume or
agree to perform its obligations under the Lease relating to such
Equipment Note (in the case of a Leased Aircraft) or under the Owned
Aircraft Indenture related to such Equipment Note (in the case of an
Owned Aircraft; and
(2) any payment default occurring after the date of the order of
relief in such proceeding, if such payment default is cured under
Section 1110(a)(1)(B) of the U.S. Bankruptcy Code before the later
of 30 days after the date of such default or the expiration of the
Section 1110 Period.
A "Non-Performing Equipment Note" refers to any Equipment Notes other than
the Performing Equipment Notes.
With respect to any other drawings under such Liquidity Facility, amounts
available to be drawn thereunder are not subject to reinstatement. The Required
Amount of the Liquidity Facility for any Trust will be automatically increased
or reduced from time to time to an amount equal to the next three successive
interest payments due on the Certificates of such Trust (without regard to
expected future payment of principal of such Certificates) at the Stated
Interest Rate for such Trust, but excluding interest payable by the Depositary
as described above. (Liquidity Facilities, Section 2.04(a); Intercreditor
Agreement, Section 3.6(g))
Possible Replacement of the Liquidity Facility
If at any time the short-term unsecured debt rating of the Liquidity
Provider for any Trust then issued by either Rating Agency is lower than the
Threshold Rating, the Liquidity Facility provided by such Liquidity Provider for
the related Class of Certificates will be required to be replaced. In the event
that such Liquidity Facility is not replaced within ten days after notice of the
downgrading and as otherwise provided in the Intercreditor Agreement, such
Liquidity Facility will be drawn in full up to the Maximum Available Commitment
thereunder (the "Downgrade Drawing") and the proceeds will be deposited into a
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cash collateral account (the "Cash Collateral Account") for the related Class of
Certificates and subject to the same conditions as cash payments of Interest
Drawings under such Liquidity Facility would be used. (Liquidity Facilities,
Section 2.02(c); Intercreditor Agreement, Section 3.6(c))
Definitions of Replacement Facility and Threshold Rating
A "Replacement Facility" for any Liquidity Facility means an irrevocable
liquidity facility in substantially the form of the replaced Liquidity Facility,
including reinstatement provisions, or in such other form (which may include a
letter of credit) as shall permit the Rating Agencies to confirm in writing
their respective ratings then in effect for the Certificates (before the
downgrading of such ratings, if any, as a result of the downgrading of the
Liquidity Provider), in a face amount equal to the amount of interest payable on
the Certificates of such Trust (at the Stated Interest Rate for such Trust, and
without regard to expected future principal payments) on the three Regular
Distribution Dates following the date of replacement of such Liquidity Facility
(which will not cover scheduled interest payments with respect to the Deposits
relating to such Trust) and issued by a Person having unsecured short-term debt
ratings issued by both Rating Agencies which are equal to or higher than the
Threshold Rating. (Intercreditor Agreement, Section 1.1)
"Threshold Rating" means the short-term unsecured debt rating of P-1 by
Moody's and A-1+ by Standard & Poor's in the case of the Class A Liquidity
Facility, and the short-term unsecured debt rating of P-1 by Moody's and A-1 by
Standard & Poor's in the case of the Class B Liquidity Facility and the Class C
Liquidity Facility.
Expiration of Liquidity Provider's Obligations
The Liquidity Facility for each Trust provides that the relevant Liquidity
Provider's obligations thereunder will expire on the earliest of the following:
(1) 364 days after the Issuance Date.
(2) The date on which the Subordination Agent delivers to such Liquidity
Provider a certification that all of the Certificates of such Trust
have been paid in full.
(3) The date on which the Subordination Agent delivers to such Liquidity
Provider a certification that a Replacement Facility has been
substituted for such Liquidity Facility.
(4) The fifth Business Day following receipt by the Subordination Agent of
a Termination Notice from such Liquidity Provider (see "-- Liquidity
Events of Default").
(5) The date on which no amount is or may (by reason of reinstatement)
become available for drawing under such Liquidity Facility.
Each Liquidity Facility provides that the scheduled expiration date thereof
may be extended for additional 364-day periods by mutual agreement.
Replacement of any Liquidity Facility
The Intercreditor Agreement will provide for the replacement of any
Liquidity Facility for any Trust (other than a Liquidity Facility which expires
no earlier than 15 days later than the Final Legal Distribution Date for the
related Class) in the event that such Liquidity Facility is not extended at
least 25 days prior to its then scheduled expiration date. In the event such
Liquidity Facility is not so extended or replaced by the 25th day prior to its
then scheduled expiration date, such Liquidity Facility will be drawn in full up
to the then Maximum Available Commitment (the "Non-Extension Drawing") and the
proceeds will be deposited in the Cash Collateral Account for the related Class
of Certificates and used for the same purposes and under the same circumstances,
and subject to the same conditions, as cash payments of Interest Drawings under
such Liquidity Facility would be used. (Liquidity Facilities, Section 2.02(b))
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America West may, at its option, arrange for a Replacement Facility at any
time to replace the Liquidity Facility for any Trust (including without
limitation any Replacement Facility described in the following sentence). In
addition, if any Liquidity Provider shall determine not to extend its Liquidity
Facility, then such Liquidity Provider may, at its option, arrange for a
Replacement Facility to replace such Liquidity Facility during the period no
earlier than 40 days and no later than 25 days prior to the then scheduled
expiration date of such Liquidity Facility. If any Replacement Facility is
provided at any time after a Downgrade Drawing or a Non-Extension Drawing under
any Liquidity Facility, the funds with respect to such Liquidity Facility on
deposit in the Cash Collateral Account for such Trust will be returned to the
Liquidity Provider being replaced. (Intercreditor Agreement, Section 3.6(e))
Final Drawing Upon Termination of any Liquidity Facility
The Intercreditor Agreement provides that, upon receipt by the
Subordination Agent of a Termination Notice with respect to any Liquidity
Facility from the Liquidity Provider (given as described in "-- Liquidity Events
of Default"), the Subordination Agent will request a final drawing (the "Final
Drawing") under such Liquidity Facility in an amount equal to the then Maximum
Available Commitment thereunder and will hold the proceeds thereof in the Cash
Collateral Account for the related Trust as cash collateral to be used for the
same purposes and under the same circumstances, and subject to the same
conditions, as cash payments of Interest Drawings under such Liquidity Facility
would be used. (Liquidity Facilities, Section 2.02(d); Intercreditor Agreement,
Section 3.6(i))
Mechanics of Drawings
Drawings under any Liquidity Facility will be made by delivery by the
Subordination Agent of a certificate in the form required by such Liquidity
Facility. Upon receipt of such a certificate, the Liquidity Provider is
obligated to make payment of the drawing requested thereby in immediately
available funds. Upon payment by any Liquidity Provider of the amount specified
in any drawing under any Liquidity Facility, such Liquidity Provider will be
fully discharged of its obligations under such Liquidity Facility with respect
to such drawing and will not thereafter be obligated to make any further
payments under such Liquidity Facility in respect of such drawing to the
Subordination Agent or any other person.
REIMBURSEMENT OF DRAWINGS
Amounts drawn under any Liquidity Facility by reason of an Interest Drawing
or the Final Drawing will be immediately due and payable, together with interest
on the amount of such drawing, with respect to the period from the date of its
borrowing to (but excluding) the third business day following the applicable
Liquidity Provider's receipt of the notice of such Interest Drawing, at the Base
Rate plus 1% per annum, and thereafter, at LIBOR for the applicable Interest
Period plus 1.75% per annum, provided that the Subordination Agent will be
obligated to reimburse such amounts only to the extent that the Subordination
Agent has funds available therefor.
Definitions of LIBOR and Base Rate
"LIBOR" means, with respect to any interest period, the rate per annum
appearing on Page 3750 of the Dow Jones Markets Service (or any successor or
substitute page of such service, or any successor to or substitute for such
service, providing rate quotations comparable to those currently provided on
such page applicable to deposits in dollars in the London interbank market) at
approximately 11:00 a.m. (London time) two Business Days before the first day of
such interest period for a period of time comparable to such interest period. In
the event that such rate is not available at such time for any reason, then
LIBOR with respect to any interest period shall be the rate per annum at which
deposits in dollars are offered to major banks in the London interbank market at
approximately 11:00 a.m. (London time) two Business Days before the first day of
such interest period for a period of time comparable to such interest period.
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"Base Rate" means a fluctuating interest rate per annum in effect from time
to time, which rate per annum shall at all times be determined by the
calculation set forth below:
Calculation of Base Rate
(1) The weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published for such day (or, if such day is
not a business day, the next preceding business day) by the Federal
Reserve Bank of New York, or if such rate is not so published for
any day that is a business day, the average of the quotations for
such day for such transactions received by the Liquidity Provider
from three Federal funds brokers of recognized standing selected by
it, plus
(2) One-quarter of one percent ( 1/4 of 1%).
Downgrade Drawing or Non-Extension Drawing
The amount drawn under the Liquidity Facility for any Trust by reason of a
Downgrade Drawing or a Non-Extension Drawing will be treated as set forth below:
Treatment of Amount Drawn Under a Liquidity Facility
(1) Such amount will be released on any Distribution Date to the
Liquidity Provider to the extent that such amount exceeds the
Required Amount.
(2) Any portion of such amount withdrawn from the Cash Collateral
Account for such Certificates to pay interest on such Certificates
will be treated in the same way as Interest Drawings.
(3) The balance of such amount will be invested in Eligible Investments.
The Downgrade Drawing or Non-Extension Drawing under any Liquidity Facility
(other than any portion thereof applied to the payment of interest on the
Certificates) will bear interest with respect to the period from the date of
borrowing to (but excluding) the third Business Day following the Liquidity
Provider's receipt of the notice of such Downgrade Drawing or Non-Extension
Drawing, at the Base Rate, and thereafter at LIBOR for the applicable interest
period plus 0.35% per annum; provided that the Subordination Agent will be
obligated to pay such amount only to the extent that the Subordination Agent has
funds available therefor. (Liquidity Facilities, Section 2.06)
LIQUIDITY EVENTS OF DEFAULT
Events of Default under each Liquidity Facility (each, a "Liquidity Event
of Default") will consist of the acceleration of all the Equipment Notes
(provided, that during the Delivery Period the aggregate principal amount
thereof exceeds $125 million) and (ii) certain bankruptcy or similar events
involving America West. (Liquidity Facilities, Section 1.01)
If any Liquidity Event of Default under any Liquidity Facility has occurred
and is continuing and less than 65% of the aggregate outstanding principal
amount of all Equipment Notes are Performing Equipment Notes, the applicable
Liquidity Provider may, in its discretion, give a notice of termination of the
related Liquidity Facility (a "Termination Notice") the effect of which will be
as follows:
Effect of Notice of Termination Due to Liquidity Event of Default
(1) Such Liquidity Facility will expire on the fifth Business Day after
the date on which such Termination Notice is received by the
Subordination Agent.
(2) The Subordination Agent will promptly request, and the Liquidity
Provider will make, a Final Drawing thereunder in an amount equal to
the then Maximum Available Commitment thereunder.
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(3) Any Drawing remaining unreimbursed as of the date of termination
will be automatically converted into a Final Drawing under such
Liquidity Facility.
(4) All amounts owing to such Liquidity Provider will automatically
become accelerated.
Notwithstanding the foregoing, the Subordination Agent will be obligated to pay
amounts owing to the Liquidity Provider only to the extent of funds available
therefor after giving effect to the payments in accordance with the provisions
set forth under "Description of the Intercreditor Agreement -- Priority of
Distributions". (Liquidity Facilities, Section 6.01) Upon the circumstances
described below under "Description of the Intercreditor
Agreement -- Intercreditor Rights", a Liquidity Provider may become the
Controlling Party with respect to the exercise of remedies under the Indentures.
(Intercreditor Agreement, Section 2.6(c))
LIQUIDITY PROVIDER
The initial Liquidity Provider for each Trust will be ABN AMRO Bank N.V., a
Dutch bank acting through its Chicago branch. ABN AMRO Bank N.V. has short term
debt ratings of P-1 from Moody's and A-1+ from Standard & Poor's.
DESCRIPTION OF THE INTERCREDITOR AGREEMENT
The following summary describes certain provisions of the Intercreditor
Agreement. The summary does not purport to be complete and is qualified in its
entirety by reference to the provisions of the Intercreditor Agreement. Upon
request, copies of the Intercreditor Agreement will be furnished to any
prospective investor in the Certificates. Requests for such document should be
addressed to the Trustees.
INTERCREDITOR RIGHTS
Controlling Party
Pursuant to the Intercreditor Agreement, the Trustees and the Liquidity
Provider will agree that, with respect to any Indenture at any given time, the
Loan Trustee will be directed in taking, or refraining from taking, any action
thereunder or with respect to the Equipment Notes issued thereunder, by the
holders of at least a majority of the outstanding principal amount of the
Equipment Notes issued thereunder (provided that, for so long as the
Subordination Agent is the registered holder of the Equipment Notes, the
Subordination Agent will act in accordance with the directions of the Trustees
(in the case of each such Trustee, with respect to the Equipment Notes issued
under such Indenture and held as Trust Property of such Trust) constituting, in
the aggregate, directions with respect to such principal amount of Equipment
Notes), so long as no Indenture Default (which, with respect to Leased Aircraft,
has not been cured by the applicable Owner Trustee or Owner Participant) shall
have occurred and be continuing thereunder. Additionally, the Loan Trustee will
be directed after the occurrence and during the continuance of an Indenture
Default thereunder (which, with respect to Leased Aircraft, has not been cured
by the applicable Owner Trustee or Owner Participant), in taking, or refraining
from taking, any action thereunder or with respect to the Equipment Notes issued
thereunder, including exercising remedies thereunder or with respect to such
Equipment Notes (including acceleration of such Equipment Notes or foreclosing
the lien on the Aircraft securing such Equipment Notes), by the Controlling
Party, subject to the limitations described below. See "Description of the
Certificates -- Indenture Defaults and Certain Rights Upon an Indenture Default"
for a description of the rights of the Certificateholders of each Trust to
direct the respective Trustees.
"Controlling Party" with respect to any Indenture means the Class A
Trustee, the Class B Trustee (upon payment of Final Distributions to the holders
of Class A Certificates) and the Class C Trustee (upon payment of Final
Distributions to the holders of Class B Certificates). Notwithstanding the
foregoing, at any time after 18 months from the earliest to occur of certain
events set forth below, the Liquidity Provider with the highest outstanding
amount of unreimbursed Liquidity Obligations will have the right to elect to
become the Controlling Party with respect to any Indenture.
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Events Precedent to Liquidity Provider Electing to Become Controlling
Party
(1) The date on which the entire available amount under any Liquidity
Facility shall have been drawn (for any reason other than a
Downgrade Drawing or a Non-Extension Drawing) and remain
unreimbursed.
(2) The entire amount of any Downgrade Drawing or Non-Extension
Drawing shall have been withdrawn from the relevant Cash
Collateral Account to pay interest on the relevant Class of
Certificates and remain unreimbursed.
(3) The date on which all Equipment Notes shall have been accelerated
(provided, that prior to the Delivery Period Termination Date the
aggregate outstanding principal amount thereof exceeds $125
million).
For purposes of giving effect to the foregoing, the Trustees (other than the
Controlling Party) have irrevocably agreed, and the Certificateholders (other
than the Certificateholders represented by the Controlling Party) will be deemed
to agree by virtue of their purchase of Certificates, that the Subordination
Agent, as record holder of the Equipment Notes, shall exercise its voting rights
in respect of the Equipment Notes as directed by the Controlling Party.
(Intercreditor Agreement, Section 2.6) For a description of certain limitations
on the Controlling Party's rights to exercise remedies, see "Description of the
Equipment Notes -- Remedies".
"Final Distributions," with respect to the Certificates of any Trust on any
Distribution Date, shall be calculated under the following formula:
Calculation of Final Distributions
(1) The aggregate amount of all accrued and unpaid interest on such
Certificates (excluding interest payable on the Deposits relating
to such Trust), plus
(2) the Pool Balance of such Certificates as of the immediately
preceding Distribution Date (less the amount of the Deposits for
such Class of Certificates as of such preceding Distribution Date
other than any portion of such Deposits thereafter used to acquire
Equipment Notes pursuant to the Note Purchase Agreement).
For purposes of calculating Final Distributions with respect to the Certificates
of any Trust, any premium paid on the Equipment Notes held in such Trust which
has not been distributed to the Certificateholders of such Trust (other than
such premium or a portion thereof applied to the payment of interest on the
Certificates of such Trust or the reduction of the Pool Balance of such Trust)
shall be added to the amount of such Final Distributions.
(1) Upon the occurrence and during the continuation of any Indenture
Default under any Indenture, the Controlling Party may accelerate
and sell all (but not less than all) of the Equipment Notes issued
under such Indenture to any person, subject to the provisions of
paragraph (2) below. The proceeds of such sale will be distributed
pursuant to the provisions of the Intercreditor Agreement.
(2) So long as any Certificates are outstanding, during nine months
after the earlier of the acceleration of the Equipment Notes under
any Indenture or the bankruptcy or insolvency of America West,
without the consent of each Trustee, (a) no Aircraft subject to the
lien of such Indenture or such Equipment Notes may be sold, if the
net proceeds from such sale would be less than the Minimum Sale
Price for such Aircraft or such Equipment Notes, and (b) with
respect to any Leased Aircraft, the amount and payment dates of
rentals payable by America West under the Lease for such Leased
Aircraft may not be adjusted, if, as a result of such adjustment,
the discounted present value of all such rentals would be less than
75% of the discounted present value of the rentals payable by
America West under such Lease before giving effect to such
adjustment, in each case, using the weighted average interest rate
of the Equipment Notes issued under such Indenture as the discount
rate.
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Sale of Equipment Notes or Aircraft
Upon the occurrence and during the continuation of any Indenture Default
under any Indenture, the Controlling Party may accelerate and, subject to the
provisions of the immediately following sentence, sell all (but not less than
all) of the Equipment Notes issued under such Indenture to any person. So long
as any Certificates are outstanding, during nine months after the earlier of the
acceleration of the Equipment Notes under any Indenture and the bankruptcy or
insolvency of America West, without the consent of each Trustee, no Aircraft
subject to the lien of such Indenture or such Equipment Notes may be sold, if
the net proceeds from such sale would be less than the Minimum Sale Price for
such Aircraft or such Equipment Notes, and with respect to any Leased Aircraft,
the amount and payment dates of rentals payable by America West under the Lease
for such Leased Aircraft may not be adjusted, if, as a result of such
adjustment, the discounted present value of all such rentals would be less than
75% of the discounted present value of the rentals payable by America West under
such Lease before giving effect to such adjustment, in each case, using the
weighted average interest rate of the Equipment Notes issued under such
Indenture as the discount rate. (Intercreditor Agreement, Section 4.1(a))
"Minimum Sale Price" means, with respect to any Aircraft or the Equipment
Notes issued in respect of such Aircraft, at any time, the lesser of 75% of the
Appraised Current Market Value of such Aircraft and the aggregate outstanding
principal amount of such Equipment Notes, plus accrued and unpaid interest
thereon.
The Subordination Agent may from time to time during the continuance of an
Indenture Default (and before the occurrence of a Triggering Event) commission
LTV Appraisals with respect to an Aircraft at the request of the Controlling
Party. (Intercreditor Agreement, Section 4.1(a) (iii))
PRIORITY OF DISTRIBUTIONS
Priority of Distributions in the Absence of a Triggering Event
So long as no Triggering Event shall have occurred, the payments in respect
of the Equipment Notes and certain other payments received on any Distribution
Date will be promptly distributed by the Subordination Agent on such
Distribution Date in the following order of priority:
Priority of Distributions
(1) To pay the Liquidity Obligations (other than any interest accrued
thereon or the principal amount of any Drawing) (the "Liquidity
Expenses") to the Liquidity Provider.
(2) To pay interest accrued on the Liquidity Obligations to the Liquidity
Provider.
(3) To pay or reimburse the Liquidity Provider for the Liquidity
Obligations (other than amounts payable pursuant to clauses (1) and (2)
above) and/or, if applicable, to replenish each Cash Collateral Account
up to the applicable Required Amount.
(4) To pay Expected Distributions on the Class A Certificates to the
holders of Class A Certificates.
(5) To pay Expected Distributions on the Class B Certificates to the
holders of Class B Certificates.
(6) To pay Expected Distributions on the Class C Certificates to the
holders of Class C Certificates.
(7) If Class D Certificates have been issued, to pay "Expected
Distributions" (to be defined in a manner equivalent to the definition
below for other Classes of Certificates) on the Class D Certificates to
the holders of Class D Certificates.
(8) To pay certain fees and expenses of the Subordination Agent and the
Trustees.
Priority of Distributions In the Event of a Triggering Event
Subject to the terms of the Intercreditor Agreement, upon the occurrence of
a Triggering Event and at all times thereafter, all funds received by the
Subordination Agent in respect of the Equipment Notes
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and certain other payments will be promptly distributed by the Subordination
Agent in the following order of priority:
Priority of Distributions
(1) To pay certain out-of-pocket costs and expenses actually incurred by
the Subordination Agent or any Trustee or to reimburse any
Certificateholder or the Liquidity Provider in respect of payments made
to the Subordination Agent or any Trustee in connection with the
protection or realization of the value of the Equipment Notes or any
Trust Indenture Estate (the "Administration Expenses").
(2) To the Liquidity Provider, to pay the Liquidity Expenses.
(3) To the Liquidity Provider, to pay interest accrued on the Liquidity
Obligations.
(4) To the Liquidity Provider, to pay the outstanding amount of all
Liquidity Obligations and/or, if applicable, with respect to any
particular Liquidity Facility, unless (a) less than 65% of the
aggregate outstanding principal amount of all Equipment Notes are
Performing Equipment Notes and a Liquidity Event of Default shall have
occurred and be continuing under such Liquidity Facility or (b) a Final
Drawing shall have occurred under such Liquidity Facility, to replenish
the Cash Collateral Account with respect to such Liquidity Facility up
to the Required Amount for the related Class of Certificates (less the
amount of any repayments of Interest Drawings under such Liquidity
Facility while sub-clause (a) is applicable).
(5) To pay certain fees, taxes, charges and other amounts payable to the
Subordination Agent, any Trustee or any Certificateholder.
(6) To pay Adjusted Expected Distributions on the Class A Certificates to
the holders of Class A Certificates.
(7) To pay Adjusted Expected Distributions on the Class B Certificates to
the holders of Class B Certificates.
(8) To pay Adjusted Expected Distributions on the Class C Certificates to
the holders of Class C Certificates.
(9) If Class D Certificates have been issued, to pay "Adjusted Expected
Distributions" (to be defined in a manner equivalent to the definition
below for other Classes of Certificates) on the Class D Certificates to
the holders of Class D Certificates.
Definitions of Expected Distributions and Adjusted Expected Distributions
"Expected Distributions" means, with respect to the Certificates of any
Trust on any on any Distribution Date (the "Current Distribution Date"), shall
be determined by the following formula:
Calculation of Expected Distributions
(1) Accrued and unpaid interest on such Certificates (excluding
interest, if any, payable with respect to the Deposits relating to
such Trust), plus
(2) The difference between
(a) the Pool Balance of such Certificates as of the immediately
preceding Distribution Date (or, if the Current Distribution
Date is the first Distribution Date, the original aggregate
face amount of the Certificates of such Trust) and
(b) the Pool Balance of such Certificates as of the Current
Distribution Date calculated on the basis that (i) the
principal of the Equipment Notes held in such Trust has been
paid when due (whether at stated maturity, upon redemption,
prepayment, purchase or acceleration or otherwise) and such
payments have been distributed to the holders of such
Certificates and (ii) the principal of any Equipment Notes
formerly held in such
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Trust that have been sold pursuant to the Intercreditor Agreement
has been paid in full and such payments have been distributed to
the holders of such Certificates, but without giving effect to
any reduction in the Pool Balance as a result of any distribution
attributable to Deposits occurring after the immediately
preceding Distribution Date (or, if the Current Distribution Date
is the first Distribution Date, occurring after the initial
issuance of the Certificates of such Trust).
For purposes of determining the priority of distributions on account of the
redemption, purchase or prepayment of all of the Equipment Notes issued pursuant
to an Indenture, clause (1) of the definition of Expected Distributions shall be
deemed to read as follows: "(1) Accrued, due and unpaid interest on such
Certificates (excluding interest, if any, payable with respect to the Deposits
relating to such Trust) together with (without duplication) accrued and unpaid
interest on a portion of such Certificates equal to the outstanding principal
amount of the Equipment Notes being redeemed, purchased or prepaid (immediately
prior to such redemption, purchase or prepayment)."
"Adjusted Expected Distributions" means, with respect to the Certificates
of any Trust on any Current Distribution Date, shall be determined by the
following formula:
Calculation of Adjusted Expected Distributions
(1) Accrued and unpaid interest on such Certificates (excluding
interest, if any, payable with respect to the Deposits relating to
such Trust), plus
(2) The greater of:
(a) the difference between
(x) the Pool Balance of such Certificates as of the immediately
preceding Distribution Date (or, if the Current Distribution
Date is the first Distribution Date, the original aggregate
face amount of the Certificates of such Trust) and
(y) the Pool Balance of such Certificates as of the Current
Distribution Date calculated on the basis that (i) the
principal of the Non-Performing Equipment Notes held in such
Trust has been paid in full and such payments have been
distributed to the holders of such Certificates, (ii) the
principal of the Performing Equipment Notes held in such
Trust has been paid when due (but without giving effect to
any acceleration of Performing Equipment Notes) and such
payments have been distributed to the holders of such
Certificates and (iii) the principal of any Equipment Notes
formerly held in such Trust that have been sold pursuant to
the Intercreditor Agreement has been paid in full and such
payment has been distributed to the holders of such
Certificates, but without giving effect to any reduction in
the Pool Balance as a result of any distribution
attributable to Deposits occurring after the immediately
preceding Distribution Date (or, if the Current Distribution
Date is the first Distribution Date, occurring after the
initial issuance of the Certificates of such Trust); and
(b) the amount of the excess, if any, of (i) the Pool Balance of
such Class of Certificates as of the immediately preceding
Distribution Date (or, if the Current Distribution Date is the
first Distribution Date, the original aggregate face amount of
the Certificates of such Trust) (less the amount of the
Deposits for such Class of Certificates as of such preceding
Distribution Date (or, if the Current Distribution Date is the
first Distribution Date, the original aggregate amount of the
Deposits for such Class of Certificates) other than any portion
of such Deposits thereafter used to acquire Equipment Notes
pursuant to the Note Purchase Agreement), over (ii) the
Aggregate LTV Collateral Amount for such Class of Certificates
for the Current Distribution Date; provided that, until the
date of the initial LTV Appraisals, this clause (B) shall not
apply.
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For purposes of calculating Expected Distributions or Adjusted Expected
Distributions with respect to the Certificates of any Trust, any premium paid on
the Equipment Notes held in such Trust that has not been distributed to the
Certificateholders of such Trust (other than such premium or a portion thereof
applied to the payment of interest on the Certificates of such Trust or the
reduction of the Pool Balance of such Trust) shall be added to the amount of
Expected Distributions or Adjusted Expected Distributions.
Other Definitions
"Aggregate LTV Collateral Amount" for any Class of Certificates for any
Distribution Date means the sum of the applicable LTV Collateral Amounts for
each Aircraft, minus the Pool Balance for each Class of Certificates, if any,
senior to such Class, after giving effect to any distribution of principal on
such Distribution Date with respect to such senior Class or Classes.
"LTV Collateral Amount" of any Aircraft for any Class of Certificates
means, as of any Distribution Date, the lesser of (a) the LTV Ratio for such
Class of Certificates multiplied by the Appraised Current Market Value of such
Aircraft (or with respect to any such Aircraft which has suffered an Event of
Loss under and as defined in the relevant Lease, in the case of a Leased
Aircraft, or Indenture, in the case of an Owned Aircraft, the amount of the
insurance proceeds paid to the related Loan Trustee in respect thereof to the
extent then held by such Loan Trustee (and/or on deposit in the Special Payments
Account) or payable to such Loan Trustee in respect thereof) and (b) the
outstanding principal amount of the Equipment Notes secured by such Aircraft
after giving effect to any principal payments of such Equipment Notes on or
before such Distribution Date.
"LTV Ratio" means, for the Class A Certificates, 43%, for the Class B
Certificates, 57% and for the Class C Certificates, 71%.
"Appraised Current Market Value" of any Aircraft means the lower of the
average and the median of the most recent three LTV Appraisals of such Aircraft.
After a Triggering Event occurs and any Equipment Note becomes a Non-Performing
Equipment Note, the Subordination Agent shall obtain LTV Appraisals for all of
the Aircraft as soon as practicable and additional LTV Appraisals on or prior to
each anniversary of the date of such initial LTV Appraisals; provided that if
the Controlling Party reasonably objects to the appraised value of the Aircraft
shown in such LTV Appraisals, the Controlling Party shall have the right to
obtain or cause to be obtained substitute LTV Appraisals (including LTV
Appraisals based upon physical inspection of such Aircraft).
"LTV Appraisal" means a fair market value appraisal (which may be a
"desktop" appraisal) performed by any Appraiser or any other nationally
recognized appraiser on the basis of an arm's-length transaction between an
informed and willing purchaser under no compulsion to buy and an informed and
willing seller under no compulsion to sell and both having knowledge of all
relevant facts.
Miscellaneous
Interest Drawings under the Liquidity Facility and withdrawals from the
Cash Collateral Account, in each case in respect of interest on the Certificates
of any Trust, will be distributed to the Trustee for such Trust, notwithstanding
the priority of distributions set forth in the Intercreditor Agreement and
otherwise described herein.
All amounts on deposit in the Cash Collateral Account for any Trust that
are in excess of the Required Amount will be paid to the applicable Liquidity
Provider.
VOTING OF EQUIPMENT NOTES
In the event that the Subordination Agent, as the registered holder of any
Equipment Note, receives a request for its consent to any amendment,
modification, consent or waiver under such Equipment Note or the related
Indenture (or, if applicable, the Lease, the Participation Agreement or other
related document), the Subordination Agent shall take certain actions depending
on whether an Indenture Default shall have occurred and be continuing. If no
Indenture Default shall have occurred and be continuing with
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respect to such Indenture, the Subordination Agent shall request direction with
respect to each such Series of Equipment Notes from the Trustee of the Trust
which holds such Equipment Notes and shall vote or consent in accordance with
the directions of such Trustee. If any Indenture Default shall have occurred and
be continuing with respect to such Indenture, the Subordination Agent will
exercise its voting rights as directed by the Controlling Party, subject to
certain limitations; provided that no such amendment, modification, consent or
waiver shall, without the consent of the Liquidity Provider, reduce the amount
of rent, supplemental rent or stipulated loss values payable by America West
under any Lease or reduce the amount of principal or interest payable by America
West under any Equipment Note issued under any Owned Aircraft Indenture.
(Intercreditor Agreement, Section 9.1)
ADDITION OF TRUSTEE FOR CLASS D CERTIFICATES
If the Class D Certificates are issued, the Class D Trustee will become a
party to the Intercreditor Agreement. (Intercreditor Agreement, Section 9.1(c))
THE SUBORDINATION AGENT
Wilmington Trust Company will be the Subordination Agent under the
Intercreditor Agreement. America West and its affiliates may from time to time
enter into banking and trustee relationships with the Subordination Agent and
its affiliates. The Subordination Agent's address is Rodney Square North, 1100
North Market Street, Wilmington, Delaware, Attention: Corporate Trust
Administration.
The Subordination Agent may resign at any time, in which event a successor
Subordination Agent will be appointed as provided in the Intercreditor
Agreement. The Controlling Party may remove the Subordination Agent for cause as
provided in the Intercreditor Agreement. In such circumstances, a successor
Subordination Agent will be appointed as provided in the Intercreditor
Agreement. Any resignation or removal of the Subordination Agent and appointment
of a successor Subordination Agent does not become effective until acceptance of
the appointment and assumption of its obligations by the successor Subordination
Agent. (Intercreditor Agreement, Section 8.1)
DESCRIPTION OF THE AIRCRAFT AND THE APPRAISALS
THE AIRCRAFT
The Aircraft consist of six Airbus A319-132 aircraft and two Airbus
A320-232 aircraft, all of which will be newly or recently delivered by the
manufacturer at the time that the Equipment Notes relating thereto are issued.
The Aircraft have been designed to be in compliance with Stage III noise level
standards, which are the most restrictive regulatory standards currently in
effect in the United States for aircraft noise abatement.
The Airbus A319-100 aircraft is a medium range aircraft with a seating
capacity of approximately 124 passengers. The engine type utilized on America
West's A319-132 aircraft is expected to be International Aero Engines V2524-A5
engines.
The Airbus A320-200 aircraft is a medium range aircraft with a seating
capacity of approximately 150 passengers. The engine type utilized on American
West's A320-232 aircraft is expected to be International Aero Engines V2527-A5
engines.
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THE APPRAISALS
The table below sets forth the appraised values and certain additional
information regarding the Aircraft.
<TABLE>
<CAPTION>
EXPECTED EXPECTED APPRAISED VALUE
REGISTRATION MANUFACTURER'S ------------------------------------------
AIRCRAFT TYPE NUMBER SERIAL NUMBER DELIVERY MONTH* AVITAS AVSOLUTIONS BK
- ------------- ------------ -------------- --------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Airbus A319-132 N801AW 889 October 1998 $ 38,000,000 $ 38,140,000 $ 33,000,000
Airbus A319-132 N802AW 924 December 1998 38,000,000 38,140,000 33,100,000
Airbus A319-132 N803AW 931 December 1998 38,000,000 38,140,000 33,100,000
Airbus A319-132 N804AW 1049 July 1999 40,600,000 39,280,000 33,500,000
Airbus A319-132 N805AW 1056 July 1999 40,600,000 39,280,000 33,500,000
Airbus A319-132 N806AW 1071 August 1999 40,600,000 39,280,000 33,600,000
Airbus A320-232 N652AW 953 February 1999 45,500,000 44,390,000 39,700,000
Airbus A320-232 N653AW 1003 May 1999 46,200,000 44,720,000 39,800,000
------------ ------------ ------------
$327,500,000 $321,370,000 $279,300,000
============ ============ ============
</TABLE>
- -------------------------
* Reflects the originally scheduled delivery month under America West's purchase
agreement with the manufacturer. The actual delivery date for any Aircraft may
be subject to change. The delivery month for Aircraft N806AW has been changed
to July 1999. See "-- Deliveries of Aircraft".
The appraised values set forth in the foregoing chart were determined by
the following three independent aircraft appraisal and consulting firms:
AvSolutions, AVITAS and BK. Each Appraiser was asked to provide its opinion as
to the appraised value of each Aircraft as of September 24, 1998, and projected
as of the scheduled delivery month of each such Aircraft. As part of this
process, all three Appraisers performed "desk-top" appraisals without any
physical inspection of the Aircraft. The appraisals are based on various
assumptions and methodologies, which vary among the appraisals. The Appraisers
have delivered letters summarizing their respective appraisals, copies of which
are annexed to this Prospectus as Appendix II. For a discussion of the
assumptions and methodologies used in each of the appraisals, reference is
hereby made to such summaries.
An appraisal is only an estimate of value, is not indicative of the price
at which an aircraft may be purchased from the manufacturer and should not be
relied upon as a measure of realizable value; the proceeds realized upon a sale
of any Aircraft may be less than the appraised value thereof. The value of the
Aircraft in the event of the exercise of remedies under the applicable Indenture
will depend on market and economic conditions, the availability of buyers, the
condition of the Aircraft and other similar factors. Accordingly, there can be
no assurance that the proceeds realized upon any such exercise with respect to
the Equipment Notes and the Aircraft pursuant to the applicable Indenture would
be as appraised or sufficient to satisfy in full payments due on the Equipment
Notes issued thereunder or the Certificates.
DELIVERIES OF AIRCRAFT
The Aircraft were originally scheduled for delivery under America West's
purchase agreement with AVSA from October 1998 to August 1999. See the table
under "-- The Appraisals" for the scheduled month of delivery of each Aircraft.
Under such purchase agreement, delivery of an Aircraft may be delayed due to
excusable delay, which is defined to include, among other things, acts of God,
governmental acts or failures to act, strikes or other labor troubles, inability
to procure materials, or any other cause beyond AVSA's control or not occasioned
by AVSA's fault or negligence.
The Note Purchase Agreement provides that the Delivery Period will expire
on November 30, 1999, subject to extension, in the event that the Equipment
Notes relating to all of the Aircraft (or Substitute Aircraft in lieu thereof)
have not been purchased by the Trustees on or prior to such date due to any
reason beyond the control of America West and not occasioned by America West's
fault or negligence, to
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the earlier of the purchase by the trustees of Equipment Notes relating to the
last Aircraft (or a Substitute Aircraft in lieu thereof) and January 31, 2000.
If delivery of any Aircraft is delayed by more than 30 days after the month
scheduled for delivery, America West has the right to replace such Aircraft with
a Substitute Aircraft, subject to certain conditions. See "-- Substitute
Aircraft". If delivery of any Aircraft is delayed beyond the Delivery Period
Termination Date and America West does not exercise its right to replace such
Aircraft with a Substitute Aircraft, there will be unused Deposits that will be
distributed to Certificateholders together with accrued and unpaid interest
thereon and a premium, if applicable. See "Description of the Deposit
Agreements -- Unused Deposits".
SUBSTITUTE AIRCRAFT
If the delivery date for any Aircraft is delayed more than 30 days after
the month scheduled for delivery, America West may identify for delivery a
Substitute Aircraft therefor meeting the following conditions:
Conditions Required of a Substitute Aircraft
(1) A Substitute Aircraft must be an Airbus A319-100 or A320-200
aircraft manufactured after the Issuance Date.
(2) One or more Substitute Aircraft of the same or different types may
be substituted for one or more Aircraft of the same or different
types so long as after giving effect thereto such substitution does
not vary the Mandatory Economic Terms in respect of the replaced
Aircraft.
(3) America West will be obligated to obtain written confirmation from
each Rating Agency that substituting such Substitute Aircraft for
the replaced Aircraft will not result in a withdrawal, suspension or
downgrading of the ratings of any Class of Certificates.
BRIDGE FINANCING
America West may, pursuant to the Note Purchase Agreement, initially take
delivery of an Aircraft using bridge financing. Such bridge financing would be
utilized, for example, if America West has not finalized arrangements with an
Owner Participant in connection with a leveraged lease financing. Such bridge
financing would be paid, and any lien on the bridge financed Aircraft
extinguished, within 90 days of delivery of such Aircraft and prior to the
financing of such Aircraft pursuant to the Note Purchase Agreement.
DESCRIPTION OF THE EQUIPMENT NOTES
The statements under this caption are summaries and do not purport to be
complete. The summaries make use of terms defined in and are qualified in their
entirety by reference to all of the provisions of the Equipment Notes, the
Indentures, the Leases, the Participation Agreements, the Trust Agreements and
the Note Purchase Agreement. Except as otherwise indicated, the following
summaries relate to the Equipment Notes, the Indenture, the Lease, the
Participation Agreement, and the Trust Agreement that may be applicable to each
Aircraft, forms of which are filed as exhibits to the Registration Statement and
are available as set forth under the heading "Available Information".
Under the Note Purchase Agreement, America West will have the option of
entering into a leveraged lease financing or a debt financing with respect to
each Aircraft. The Note Purchase Agreement provides for the relevant parties to
enter into, with respect to each Leased Aircraft, a Participation Agreement, a
Lease and an Indenture (among other documents) relating to the financing of such
Aircraft or, with respect to each Owned Aircraft, a Participation Agreement and
an Owned Aircraft Indenture relating to the financing of such Owned Aircraft.
The description of such agreements in this Prospectus is based on
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the forms of such agreements annexed to the Note Purchase Agreement. Requests
for the Note Purchase Agreement, including the forms of such agreements annexed
thereto, should be addressed to the Trustees.
In the case of any leveraged lease financing of any Aircraft, America West
will select an Owner Participant for such Aircraft. Such Owner Participant may
request revisions to the forms of the Participation Agreement, the Lease and the
Leased Aircraft Indenture that are contemplated by the Note Purchase Agreement,
so that the terms of such agreements applicable to any particular Leased
Aircraft may differ from the description of such agreements contained in this
Prospectus. In the case of the financing of Aircraft where America West has
elected to issue Series D Equipment Notes and to fund the sale of such Series D
Equipment Notes through the sale of Series D Certificates, America West may
select purchasers of Series D Certificates. Such Class D Certificate purchasers
may request revisions to the Leased Aircraft Documents, in the case of a Leased
Aircraft, or to the forms of Participation Agreement and Owned Aircraft
Indenture, in the case of an Owned Aircraft, that are, in either case,
contemplated by the Note Purchase Agreement, so that the terms of such
agreements applicable to any particular Leased Aircraft or Owned Aircraft, as
the case may be, may differ from the description of such agreements contained in
this Prospectus. However, under the Note Purchase Agreement, the terms of such
agreements are required to contain the Mandatory Documents Terms and not vary
the Mandatory Economic Terms. In addition, America West is obligated to certify
to the Trustees that any such modifications do not materially and adversely
affect the Certificateholders and to obtain written confirmation from each
Rating Agency that the use of versions of such agreements modified in any
material respect would not result in a withdrawal, suspension or downgrading of
the ratings of any Class of Certificates. See "Description of the New
Certificates -- Obligation to Purchase Equipment Notes".
GENERAL
The Equipment Notes will be issued in three series with respect to each
Aircraft (or, in certain circumstances for any Aircraft, four series for such
Aircraft). The Equipment Notes with respect to each Leased Aircraft will be
issued under a separate Leased Aircraft Indenture between State Street Bank and
Trust Company of Connecticut, N.A., as Owner Trustee of a trust for the benefit
of the Owner Participant who will be the beneficial owner of such Aircraft, and
Wilmington Trust Company, as Leased Aircraft Trustee. The Equipment Notes with
respect to each Owned Aircraft will be issued under a separate Owned Aircraft
Indenture between America West and Wilmington Trust Company, as Owned Aircraft
Trustee.
In the case of any Leased Aircraft, the related Owner Trustee will lease
such Leased Aircraft to America West pursuant to a separate Lease between such
Owner Trustee and America West with respect to such Leased Aircraft. Under each
Lease, America West will be obligated to make or cause to be made rental and
other payments to the related Leased Aircraft Trustee on behalf of the related
Owner Trustee, which rental and other payments will be at least sufficient to
pay in full when due all payments required to be made on the Equipment Notes
issued with respect to such Leased Aircraft. The Equipment Notes issued with
respect to the Leased Aircraft are not, however, direct obligations of, or
guaranteed by, America West. America West's rental obligations under each Lease
and America West's obligations under the Equipment Notes issued with respect to
each Owned Aircraft will be general obligations of America West.
In certain circumstances described below in "-- The Leases and Certain
Provisions of the Owned Aircraft Indentures -- Renewal and Purchase Options",
America West will have the right to purchase an Owner Trustee's right, title and
interest in and to the related Aircraft and to assume the related Leased
Aircraft Equipment Notes on a full recourse basis, subject to certain
conditions, which would reflect a financing contemplated by an Owned Aircraft
Indenture. In the event of such an assumption, America West will either furnish
an opinion to the relevant Leased Aircraft Trustee that such assumption does not
result in a taxable gain or loss for the Certificateholder for U.S. federal tax
purposes or an indemnity for the benefit of the Certificateholders in form and
substance reasonably satisfactory to the relevant Leased Aircraft Trustee.
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SUBORDINATION
Series B Equipment Notes issued in respect of any Aircraft will be
subordinated in right of payment to Series A Equipment Notes issued in respect
of such Aircraft; Series C Equipment Notes issued in respect of such Aircraft
will be subordinated in right of payment to such Series B Equipment Notes; and,
if America West elects to issue Series D Equipment Notes, they will be
subordinated in right of payment to the Series C Equipment Notes issued with
respect to such Aircraft. On each Equipment Note payment date, payments of
interest and principal due on Series A Equipment Notes issued in respect of any
Aircraft will be made prior to payments of interest and principal due on Series
B Equipment Notes issued in respect of such Aircraft; payments of interest and
principal due on Series B Equipment Notes issued in respect of any Aircraft will
be made prior to payments of interest and principal due on Series C Equipment
Notes issued in respect of such Aircraft; and if America West elects to issue
Series D Equipment Notes, payments of interest and principal due on such Series
C Equipment Notes will be made prior to payments of interest and principal due
on Series D Equipment Notes issued in respect of such Aircraft.
PRINCIPAL AND INTEREST PAYMENTS
Subject to the provisions of the Intercreditor Agreement, interest paid on
the Equipment Notes held in each Trust will be passed through to the
Certificateholders of such Trust on the dates and at the rate per annum set
forth on the cover page of this Prospectus with respect to Certificates issued
by such Trust (subject to change as provided in the Registration Rights
Agreement) until the final expected Regular Distribution Date for such Trust.
Subject to the provisions of the Intercreditor Agreement, principal paid on the
Equipment Notes held in each Trust will be passed through to the
Certificateholders of such Trust in scheduled amounts on the dates set forth
herein until the final expected Regular Distribution Date for such Trust.
Interest is payable on the unpaid principal amount of each Equipment Note
at the rate applicable to such Equipment Note on January 2 and July 2 in each
year, commencing on January 2, 1999, or, if later, the first such date to occur
after initial issuance thereof. Such interest is computed on the basis of a 360-
day year of twelve 30-day months. Under certain circumstances described in "The
Exchange Offer -- General", the interest rates for the Equipment Notes may be
increased to the extent described therein.
Scheduled principal payments on the Equipment Notes will be made on January
2 and July 2 in certain years, commencing January 2, 1999. See "Description of
the New Certificates -- Pool Factors" for a discussion of the scheduled payments
of principal of the Equipment Notes and possible revisions thereto.
If any date scheduled for any payment of principal, premium (if any) or
interest with respect to the Equipment Notes is not a Business Day, such payment
will be made on the next succeeding Business Day without any additional
interest.
REDEMPTION
Event of Loss
If an Event of Loss occurs with respect to any Aircraft and such Aircraft
is not replaced by America West under the related Lease (in the case of a Leased
Aircraft) or under the related Owned Aircraft Indenture (in the case of an Owned
Aircraft), the Equipment Notes issued with respect to such Aircraft will be
redeemed, in whole, in each case at a price equal to the aggregate unpaid
principal amount thereof, together with accrued interest thereon to, but not
including, the date of redemption, but without premium, on a Special
Distribution Date. (Indentures, Section 2.10(a))
America West Optional Redemptions
If America West exercises its right to terminate a Lease under Section 9 of
such Lease because the related Aircraft has become obsolete or surplus to the
Company's needs, the Equipment Notes relating to such Aircraft will be redeemed,
in whole, on a Special Distribution Date at a price equal to the aggregate
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unpaid principal amount thereof, together with accrued interest thereon to, but
not including, the date of redemption, plus a Make-Whole Premium. (Leased
Aircraft Indentures, Section 2.10(b)). See "-- The Leases and Certain Provisions
of the Owned Aircraft Indentures -- Lease Termination".
All of the Equipment Notes issued with respect to a Leased Aircraft may be
redeemed prior to maturity as part of a refunding or refinancing thereof under
Section 11 of the applicable Participation Agreement, and all of the Equipment
Notes issued with respect to the Owned Aircraft may be redeemed prior to
maturity at any time at the option of America West, in each case at a price
equal to the aggregate unpaid principal thereof, together with accrued interest
thereon to, but not including, the date of redemption, plus, in the case of any
series of Equipment Notes, a Make-Whole Premium. (Indentures, Section 2.11) If
notice of such a redemption shall have been given in connection with a
refinancing of Equipment Notes with respect to a Leased Aircraft, such notice
may be revoked not later than three days prior to the proposed redemption date.
(Leased Aircraft Indentures, Section 2.12)
In addition, under certain Leases all of the Equipment Notes issued with
respect to such Leases may be redeemed prior to maturity with a Make-Whole
Premium on a Special Distribution Date in connection with America West's
exercise of certain options or elections relating to the purchase of the
Aircraft subject to such Leases under certain circumstances. See "-- The Leases
and Certain Provisions of the Owned Aircraft Indentures -- Renewal and Purchase
Options".
Redemption Right in Favor of Owner Trustees or Owner Participant
If, with respect to a Leased Aircraft, certain events listed below occur,
then, in each case all, but not less than all, of the Equipment Notes issued
with respect to such Leased Aircraft may be purchased by the Owner Trustee or
Owner Participant on the applicable purchase date at a price equal to the
aggregate unpaid principal thereof, together with accrued and unpaid interest
thereon to, but not including, the date of purchase, but without any premium
(provided that a Make-Whole Premium shall be payable if such Equipment Notes are
to be purchased pursuant to clause (1) below when a Lease Event of Default shall
have occurred and been continuing for fewer than 180 days). (Leased Aircraft
Indentures, Section 2.13)
Events Triggering Right to Redemption
(1) One or more Lease Events of Default shall have occurred and be
continuing.
(2) In the event of a bankruptcy proceeding involving America West (a)
during the Section 1110 Period, the trustee in such proceeding or
America West does not agree to perform its obligations under the
related Lease or (b) at any time after agreeing to perform such
obligations, such trustee or America West ceases to perform such
obligations such that the stay period applicable under the U.S.
Bankruptcy Code comes to an end.
(3) The Equipment Notes with respect to such Aircraft have been
accelerated or the Leased Aircraft Trustee with respect to such
Equipment Notes takes action or notifies the applicable Owner
Trustee that it intends to take action to foreclose the lien of the
related Leased Aircraft Indenture or otherwise commence the exercise
of any significant remedy under such Indenture or the related Lease.
America West as owner of the Owned Aircraft has no comparable right under
the Owned Aircraft Indentures to purchase the Equipment Notes under such
circumstances.
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Certain Definitions
"Make-Whole Premium" means, with respect to any Equipment Note, an amount
(as determined by an independent investment banker of national standing selected
by America West) equal to the excess, if any, determined under the following
calculation:
Calculation of Make-Whole Premium
(1) The present value of the remaining scheduled payments of principal
and interest to maturity of such Equipment Note computed by
discounting such payments on a semiannual basis on each Payment Date
(assuming a 360-day year of twelve 30-day months) using a discount
rate equal to the Treasury Yield, minus
(2) the outstanding principal amount of such Equipment Note plus accrued
interest to the date of determination.
For purposes of determining the Make-Whole Premium, "Treasury Yield" means,
at the date of determination with respect to any Equipment Note, the interest
rate (expressed as a decimal and, in the case of United States Treasury bills,
converted to a bond equivalent yield) determined to be the per annum rate equal
to the semiannual yield to maturity for United States Treasury securities
maturing on the Average Life Date of such Equipment Note and trading in the
public securities markets either as determined by interpolation between the most
recent weekly average yield to maturity for two series of United States Treasury
securities trading in the public securities markets, (i) one maturing as close
as possible to, but earlier than, the Average Life Date of such Equipment Note
and (ii) the other maturing as close as possible to, but later than, the Average
Life Date of such Equipment Note, in each case as published in the most recent
H.15(519) or, if a weekly average yield to maturity for United States Treasury
securities maturing on the Average Life Date of such Equipment Note is reported
in the most recent H.15(519), such weekly average yield to maturity as published
in such H.15(519). "H.15(519)" means the weekly statistical release designated
as such, or any successor publication, published by the Board of Governors of
the Federal Reserve System. The date of determination of a Make-Whole Premium
shall be the third Business Day prior to the applicable payment or redemption
date and the "most recent H.15(519)" means the H.15(519) published prior to the
close of business on the third Business Day prior to the applicable payment or
redemption date.
"Average Life Date" for any Equipment Note shall be the date which follows
the time of determination by a period equal to the Remaining Weighted Average
Life of such Equipment Note. "Remaining Weighted Average Life" on a given date
with respect to any Equipment Note shall be the number of days equal to the
quotient obtained under the following calculation:
Calculation of Remaining Weighted Average Life
(1) Divide the sum of each of the products obtained by multiplying
(a) the amount of each then remaining scheduled payment of principal
of such Equipment Note, by
(b) the number of days from and including such determination date to
but excluding the date on which such payment of principal is
scheduled to be made, by
(2) the then outstanding principal amount of such Equipment Note.
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SECURITY
The Equipment Notes issued with respect to each Leased Aircraft will be
secured by all of the following items:
Security for the Equipment Notes
(1) An assignment by the related Owner Trustee to the related Leased
Aircraft Trustee of such Owner Trustee's rights, except for certain
limited rights, under the Lease with respect to the related
Aircraft, including the right to receive payments of rent
thereunder.
(2) A mortgage to such Leased Aircraft Trustee of such Aircraft, subject
to the rights of America West under such Lease.
(3) An assignment to such Leased Aircraft Trustee of certain of such
Owner Trustee's rights under the purchase agreement between America
West and the related manufacturer.
Prior to an Indenture Default, the Owner Participant in respect of any
Leased Aircraft will have the right, to the exclusion of the related Loan
Trustee, to approve as satisfactory counsel furnishing legal opinions,
appraisers and accountants. Also, such Owner Participant will have the right, to
the exclusion of the related Loan Trustee, to approve the identity of permitted
sublessees (not otherwise permitted by the related Lease), and to approve the
form of the bill of sale required for the substitution of Aircraft following an
event of loss thereof.
Unless and until the related Leased Aircraft Trustee has foreclosed upon
the Lien of the related Leased Aircraft Indenture, the Leased Aircraft Trustee
may not exercise the balance of the rights of the Owner Trustee under the
related Lease (such as the amendment or modification of such Lease) without the
concurrence of such Owner Trustee. However, in all instances, the right of the
Leased Aircraft Trustee to exercise remedies under Section 15 of the related
Lease are rights exclusive to the Leased Aircraft Trustee. The assignment by the
Owner Trustee to the Leased Aircraft Trustee of its rights under the related
Lease will also exclude certain rights of such Owner Trustee and the related
Owner Participant to receive indemnification by America West for certain
matters, insurance proceeds payable to such Owner Trustee in its individual
capacity or to such Owner Participant under public liability insurance
maintained by America West under such Lease or by such Owner Trustee or such
Owner Participant, insurance proceeds payable to such Owner Trustee in its
individual capacity or to such Owner Participant under certain casualty
insurance maintained by such Owner Trustee or such Owner Participant under such
Lease and certain reimbursement payments made by America West to such Owner
Trustee. (Leased Aircraft Indenture, Granting Clause and Section 5.02) The
Equipment Notes are not cross-collateralized, and, consequently, the Equipment
Notes issued in respect of any one Aircraft are not secured by any of the other
Aircraft or replacement aircraft therefor (as described in "-- The Leases and
Certain Provisions of the Owned Aircraft Indentures -- Events of Loss") or the
Leases related thereto.
The Equipment Notes issued with respect to each Owned Aircraft are secured
by a mortgage to the Owned Aircraft Trustee of such Aircraft and an assignment
to the Owned Aircraft Trustee of certain of America West's rights under its
purchase agreement with the related manufacturer.
Funds, if any, held from time to time by the Loan Trustee with respect to
any Aircraft, including funds held as the result of an Event of Loss to such
Aircraft or, in the case of a Leased Aircraft, termination of the Lease, if any,
relating thereto, will be invested and reinvested by such Loan Trustee, at the
direction of America West (except in the case of certain Indenture Defaults), in
investments described in the related Indenture. (Indentures, Section 5.09)
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EQUIPMENT NOTES AND THE AIRCRAFT
Set forth below is certain information about the Equipment Notes expected
to be held in the Trusts and the Aircraft expected to secure such Equipment
Notes:
<TABLE>
<CAPTION>
MAXIMUM
PRINCIPAL
EXPECTED EXPECTED AMOUNT OF
REGISTRATION MANUFACTURER'S AIRCRAFT DELIVERY EQUIPMENT APPRAISED
AIRCRAFT TYPE NUMBER SERIAL NUMBER MONTH(1) NOTES(2) VALUE(3)
- --------------------- ------------ -------------- ----------------- ---------------- -----------
<S> <C> <C> <C> <C> <C>
Airbus A319-132 N801AW 889 October 1998 $22,064,000 $36,380,000
Airbus A319-132 N802AW 924 December 1998 22,064,000 36,413,333
Airbus A319-132 N803AW 931 December 1998 22,064,000 36,413,333
Airbus A319-132 N804AW 1049 July 1999 22,064,000 37,793,333
Airbus A319-132 N805AW 1056 July 1999 22,064,000 37,793,333
Airbus A319-132 N806AW 1071 August 1999 22,064,000 37,826,667
Airbus A320-232 N652AW 953 February 1999 28,717,800 43,196,667
Airbus A320-232 N653AW 1003 May 1999 29,427,200 43,573,333
</TABLE>
- -------------------------
(1) Reflects the originally scheduled delivery months under America West's
purchase agreement with the manufacturer. The actual delivery date for
any Aircraft may be subject to change. The delivery month for Aircraft
N806AW has been changed to July 1999. See "Description of the Aircraft
and the Appraisals -- Deliveries of Aircraft". America West has the
option to substitute other Airbus A319-100 or A320-200 aircraft in the
event that the delivery of any Aircraft is expected to be delayed for
more than 30 days after the month scheduled for delivery or beyond the
Delivery Period Termination Date. See "Description of the Aircraft and
the Appraisals -- Substitute Aircraft". Aircraft N801AW, N802AW and
N803AW were delivered by the manufacturer on October 8, 1998, December
10, 1998 and December 17, 1998, respectively and subject to a leveraged
lease financing utilizing Equipment Notes on November 20, 1998,
December 15, 1998 and December 22, 1998, respectively.
(2) Reflects the initial maximum principal amount as of the date of
original issuance, which principal amount may be less with respect to
an Aircraft depending on the circumstances of the financing of such
Aircraft. The aggregate principal amount of all of the Equipment Notes
will not exceed the aggregate face amount of the Certificates. The
aggregate principal amount of Equipment Notes utilized for Aircraft
N801AW, N802AW and N803AW were $21,531,592.07, $21,627,551.78 and
$21,640,169.05, respectively.
(3) The appraised value of each Aircraft set forth above is based upon
varying assumptions and methodologies and reflects the lesser of the
average and median values of such aircraft as appraised by the
Appraisers, determined as of September 24, 1998, and projected as of
the scheduled delivery month of each Aircraft. An appraisal is only an
estimate of value and should not be relied upon as a measure of
realizable value. The proceeds realized upon a sale of any Aircraft may
be less than the appraised value thereof. In addition, the value of the
Aircraft in the event of the exercise of remedies under the applicable
Indenture will depend on market and economic conditions, the
availability of buyers, the condition of the Aircraft, whether the
Aircraft are sold separately or as a block and other factors.
Accordingly, there can be no assurance that the proceeds realized upon
any such exercise with respect to the Equipment Notes and the Aircraft
pursuant to the applicable Indenture would be sufficient to satisfy in
full payments due on the Equipment Notes issued thereunder or the
Certificates. See "Risk Factors -- Risk Factors Relating to the
Certificates and the Offering -- Appraisals and Realizable Value of
Aircraft" and "Description of the Aircraft and the Appraisals".
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<PAGE> 75
LOAN TO VALUE RATIOS OF EQUIPMENT NOTES
The following tables set forth examples of loan to Aircraft value ratios
for the Equipment Notes issued in respect of Aircraft as of the Regular
Distribution Dates that occur after the scheduled date of original issuance of
such Equipment Notes. These examples were utilized by America West in preparing
the Assumed Amortization Schedule, although such schedule may not be applicable
in the case of any particular Aircraft. See "Description of the New
Certificates -- Pool Factors". The LTV was obtained by dividing the outstanding
balance (assuming no payment default) of such Equipment Notes determined
immediately after giving effect to the payments scheduled to be made on each
such Regular Distribution Date by the assumed value (the "Assumed Aircraft
Value") of the Aircraft securing such Equipment Notes.
The following tables are based on the assumption (the "Depreciation
Assumption") that the value of each Aircraft set forth opposite the initial
Regular Distribution Date included in each table depreciates by approximately 3%
of the initial appraised value per year until the 15th year after the year of
delivery of such Aircraft and by approximately 4% of the initial appraised value
per year thereafter. Other rates or methods of depreciation would result in
materially different loan to Aircraft value ratios, and no assurance can be
given that the depreciation rates and method assumed for the purposes of the
tables are the ones most likely to occur or as to the actual future value of any
Aircraft. Thus the tables should not be considered a forecast or prediction of
expected or likely loan to Aircraft value ratios, but simply a mathematical
calculation based on one set of assumptions.
<TABLE>
<CAPTION>
AIRBUS A319-132 AIRBUS A320-232
--------------------------------------- ---------------------------------------
EQUIPMENT EQUIPMENT
NOTE ASSUMED NOTE ASSUMED
OUTSTANDING AIRCRAFT LOAN TO OUTSTANDING AIRCRAFT LOAN TO
DATE BALANCE VALUE VALUE RATIO BALANCE VALUE VALUE RATIO
- ---- ----------- -------- ------------ ----------- -------- -----------
(MILLIONS) (MILLIONS) (MILLIONS) (MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
January 2, 2000........... $21.82 $37.70 57.9% $27.74 $43.57 63.7%
January 2, 2001........... 21.29 36.66 58.1 26.61 42.27 63.0
January 2, 2002........... 20.70 35.53 58.3 25.70 40.96 62.7
January 2, 2003........... 19.97 34.39 58.1 24.85 39.65 62.7
January 2, 2004........... 18.71 33.26 56.3 23.83 38.34 62.1
January 2, 2005........... 18.17 32.12 56.5 22.73 37.04 61.4
January 2, 2006........... 17.62 30.99 56.9 21.50 35.73 60.2
January 2, 2007........... 17.14 29.86 57.4 20.23 34.42 58.8
January 2, 2008........... 16.37 28.72 57.0 19.23 33.12 58.1
January 2, 2009........... 15.48 27.59 56.1 18.22 31.81 57.3
January 2, 2010........... 14.12 26.46 53.4 16.64 30.50 54.6
January 2, 2011........... 11.53 25.32 45.6 15.19 29.19 52.0
January 2, 2012........... 9.80 24.19 40.5 13.57 27.89 48.7
January 2, 2013........... 7.95 23.05 34.5 11.07 26.58 41.7
January 2, 2014........... 5.96 21.92 27.2 8.39 25.27 33.2
January 2, 2015........... 3.83 20.79 18.4 5.53 23.97 23.1
January 2, 2016........... 1.55 19.27 8.1 2.46 22.22 11.1
January 2, 2017........... 0.00 0.00 NA 0.00 0.00 NA
</TABLE>
LIMITATION OF LIABILITY
The Equipment Notes issued with respect to the Leased Aircraft are not
direct obligations of, or guaranteed by, America West, any Owner Participant or
any Owner Trustee in its individual capacity. None of the Owner Trustees, the
Owner Participants or the Leased Aircraft Trustees, or any affiliates thereof,
will be personally liable to any holder of an Equipment Note or, in the case of
the Owner Trustees and the Owner Participants, to the Leased Aircraft Trustees
for any amounts payable under the
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Equipment Notes or, except as provided in each Leased Aircraft Indenture, for
any liability under such Leased Aircraft Indenture. All payments of principal
of, premium, if any, and interest on the Equipment Notes issued with respect to
any Leased Aircraft (other than payments made in connection with an optional
redemption or purchase of Equipment Notes issued with respect to a Leased
Aircraft by the related Owner Trustee or the related Owner Participant or the
election by an Owner Trustee to retain title to an Aircraft subject to a
termination for obsolescence) will be made only from the assets subject to the
lien of the Indenture with respect to such Leased Aircraft or the income and
proceeds received by the related Leased Aircraft Trustee therefrom (including
rent payable by America West under the Lease with respect to such Leased
Aircraft).
The Equipment Notes issued with respect to the Owned Aircraft will be
direct obligations of America West.
Except as otherwise provided in the Indentures, each Owner Trustee and each
Loan Trustee, in its individual capacity, will not be answerable or accountable
under the Indentures or under the Equipment Notes under any circumstances except
for its own willful misconduct or gross negligence. None of the Owner
Participants will have any duty or responsibility under any of the Leased
Aircraft Indentures or the Equipment Notes to the Leased Aircraft Trustees or to
any holder of any Equipment Note.
INDENTURE DEFAULTS, NOTICE AND WAIVER
A list of Indenture Defaults is set forth below:
Indenture Defaults
(1) In the case of a Leased Aircraft Indenture, the occurrence of any
Lease Event of Default under the related Lease.
(2) The failure by the related Owner Trustee (other than as a result of
a Lease Default or Lease Event of Default), in the case of a Leased
Aircraft Indenture, or America West, in the case of an Owned
Aircraft Indenture, to pay any interest or principal or premium, if
any, when due, under such Indenture or under any Equipment Note
issued thereunder that continues for more than ten Business Days, in
the case of principal, interest or Make-Whole Premium, and, in all
other cases, 30 days after the relevant Owner Trustee or Owner
Participant, or America West, receives written demand from the
related Loan Trustee or holder of an Equipment Note.
(3) The failure by the related Owner Participant or the related Owner
Trustee (in its individual capacity), in the case of a Leased
Aircraft Indenture, or America West, in the case of an Owned
Aircraft Indenture, to discharge certain liens that continues after
notice and specified cure periods.
(4) Any representation or warranty made by the related Owner Trustee or
Owner Participant in the related Operative Agreements, or certain
related documents furnished to the Loan Trustee pursuant thereto
being false or incorrect in any material respect when made that
continues to be material and adverse to the interests of the Loan
Trustee or Note Holders and remains unremedied after notice and
specified cure periods.
(5) Failure by America West or the related Owner Trustee or Owner
Participant to perform or observe any covenant or obligation for the
benefit of the Loan Trustee or holders of Equipment Notes under such
Indenture or certain related documents that continues after notice
and specified cure periods.
(6) The registration of the related Aircraft ceasing to be effective as
a result of the Owner Participant (in the case of a Leased Aircraft)
or America West (in the case of an Owned Aircraft) not being a
citizen of the United States, as defined in the Transportation Code
(subject to a cure period).
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<PAGE> 77
(7) With respect to the Owned Aircraft, the lapse or cancellation of
insurance required under the Owned Aircraft Indenture.
(8) The occurrence of certain events of bankruptcy, reorganization or
insolvency of the related Owner Trustee or Owner Participant (in the
case of a Leased Aircraft) or America West (in the case of the Owned
Aircraft). (Leased Aircraft Indentures, Section 4.02; Owned Aircraft
Indentures, Section 5.01)
There will not be cross-default provisions in the Indentures or in the Leases
(unless, in the case of a Lease, otherwise agreed between an Owner Participant
and America West). Consequently, events resulting in an Indenture Default under
any particular Indenture may or may not result in an Indenture Default occurring
under any other Indenture, and a Lease Event of Default under any particular
Lease may or may not constitute a Lease Event of Default under any other Lease.
Equity Cure Rights
If America West fails to make any semiannual basic rental payment due under
any Lease, within a specified period after such failure the applicable Owner
Trustee may furnish to the Leased Aircraft Trustee the amount due on the
Equipment Notes issued with respect to the related Leased Aircraft, together
with any interest thereon on account of the delayed payment thereof, in which
event the Leased Aircraft Trustee and the holders of outstanding Equipment Notes
issued under such Indenture may not exercise any remedies otherwise available
under such Indenture or such Lease as the result of such failure to make such
rental payment, unless such Owner Trustee has previously cured three or more
immediately preceding semiannual basic rental payment defaults or, in total, six
or more previous semiannual basic rental payment defaults. The applicable Owner
Trustee also may cure any other default by America West in the performance of
its obligations under any Lease that can be cured with the payment of money.
(Leased Aircraft Indentures, Section 4.03)
The holders of a majority in principal amount of the outstanding Equipment
Notes issued with respect to any Aircraft, by notice to the Loan Trustee, may on
behalf of all the holders waive any existing default and its consequences under
the Indenture with respect to such Aircraft, except a default in the payment of
the principal of, or premium or interest on any such Equipment Notes or a
default in respect of any covenant or provision of such Indenture that cannot be
modified or amended without the consent of each holder of Equipment Notes
affected thereby. (Leased Aircraft Indentures, Section 4.08; Owned Aircraft
Indentures, Section 5.06)
REMEDIES
If an Indenture Default occurs and is continuing under an Indenture, the
related Loan Trustee or the holders of a majority in principal amount of the
Equipment Notes outstanding under such Indenture may, subject to the applicable
Owner Participant's or Owner Trustee's right to cure, as discussed above,
declare the principal of all such Equipment Notes issued thereunder immediately
due and payable, together with all accrued but unpaid interest thereon, provided
that in the event of a reorganization proceeding involving America West
instituted under Chapter 11 of the U.S. Bankruptcy Code, if no other Lease Event
of Default and no other Indenture Default (other than the failure to pay the
outstanding amount of the Equipment Notes which by such declaration shall have
become payable) exists at any time after the consummation of such proceeding,
such declaration will be automatically rescinded without any further action on
the part of any holder of Equipment Notes. The holders of a majority in
principal amount of Equipment Notes outstanding under such Indenture may rescind
any such declaration at any time before the judgment or decree for the payment
of the money so due shall be entered if there has been paid to the related Loan
Trustee an amount sufficient to pay all principal, interest, and premium, if
any, on any such Equipment Notes, to the extent such amounts have become due
otherwise than by such declaration of acceleration and all other Indenture
Defaults and incipient Indenture Defaults under such Indenture have been cured.
(Leased Aircraft Indentures, Section 4.04(b); Owned Aircraft Indentures, Section
5.02(b))
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<PAGE> 78
Each Indenture provides that if an Indenture Default under such Indenture
has occurred and is continuing, the related Loan Trustee may exercise certain
rights or remedies available to it under such Indenture or under applicable law,
including, in the case of a Leased Aircraft, if the corresponding Lease has been
declared in default, one or more of the remedies under such Lease with respect
to the Aircraft subject to such Lease. In the case of a Leased Aircraft, if an
Indenture Default arises solely by reason of one or more events or circumstances
which constitute a Lease Event of Default, the related Leased Aircraft Trustee's
right to exercise remedies under a Leased Aircraft Indenture is subject, with
certain exceptions, to its having proceeded to exercise one or more of the
dispossessory remedies under the Lease with respect to such Leased Aircraft;
provided that the requirement to exercise one or more of such remedies under
such Lease shall not apply in circumstances where such exercise has been
involuntarily stayed or prohibited by applicable law or court order for a
continuous period in excess of 60 days or such other period as may be specified
in Section 1110(a)(1)(A) of the U.S. Bankruptcy Code (plus an additional period,
if any, resulting from (i) the trustee or debtor-in-possession in such
proceeding agreeing to perform its obligations under such Lease with the
approval of the applicable court and its continuous performance of such Lease
under Section 1110(a)(1)(A-B) of the U.S. Bankruptcy Code or such Leased
Aircraft Trustee' consent to an extension of such period, (ii) such Leased
Aircraft Trustee's failure to give any requisite notice, or (iii) America West's
assumption of such Lease with the approval of the relevant court and its
continuous performance of the Lease so assumed). See "-- The Leases and Certain
Provisions of the Owned Aircraft Indentures -- Events of Default Under the
Leases". Such remedies may be exercised by the related Leased Aircraft Trustee
to the exclusion of the related Owner Trustee, subject to certain conditions
specified in such Indenture, and of America West, subject to the terms of such
Lease. Any Aircraft sold in the exercise of such remedies will be free and clear
of any rights of those parties, including the rights of America West under the
Lease with respect to such Aircraft; provided that no exercise of any remedies
by the related Leased Aircraft Trustee may affect the rights of America West
under any Lease unless a Lease Event of Default has occurred and is continuing.
(Leased Aircraft Indentures, Section 4.04; Leases, Section 15) The Owned
Aircraft Indentures will not contain such limitations on the Owned Aircraft
Trustee's ability to exercise remedies upon an Indenture Default under an Owned
Aircraft Indenture.
If the Equipment Notes issued in respect of one Aircraft are in default,
the Equipment Notes issued in respect of the other Aircraft may not be in
default, and, if not, no remedies will be exercisable under the applicable
Indentures with respect to such other Aircraft.
Section 1110 of the U.S. Bankruptcy Code
Section 1110 of the U.S. Bankruptcy Code provides that 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) 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 the following events:
Events That Do Not Affects Rights with Respect to Equipment
(1) The automatic stay provision of the U.S. Bankruptcy Code, which
provision enjoins repossessions by creditors for the duration of the
reorganization period.
(2) The provision of the U.S. Bankruptcy Code allowing the trustee in
reorganization to use property of the debtor during the
reorganization period.
(3) Section 1129 of the U.S. Bankruptcy Code (which governs the
confirmation of plans of reorganization in Chapter 11 cases).
(4) Any power of the bankruptcy court to enjoin a repossession.
Section 1110 provides, however, that the right of a lessor, conditional vendor
or holder of a security interest to take possession of an aircraft in the event
of 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
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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".
Opinion of America West Counsel
It is a condition to the Trustee's obligation to purchase Equipment Notes
with respect to each Aircraft that outside counsel to America West, which is
expected to be Vedder, Price, Kaufman & Kammholz provide its opinion to the
Trustees that (1) if such Aircraft is a Leased Aircraft, the Owner Trustee, as
lessor under the Lease for such Aircraft, and the Leased Aircraft Trustee, as
assignee of such Owner Trustee's rights under such Lease pursuant to the related
Leased Aircraft Indenture, will be entitled to the benefits of Section 1110 of
the U.S. Bankruptcy Code with respect to the airframe and engines comprising
such Aircraft or (2) if such Aircraft is an Owned Aircraft, the Owned Aircraft
Trustee will be entitled to the benefits of Section 1110 with respect to the
airframe and engines comprising such Owned Aircraft, in each case so long as
America West continues 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. For a description of certain
limitations on the Loan Trustee's exercise of rights contained in the Indenture,
see "-- Indenture Defaults, Notice and Waiver".
The opinion of Vedder, Price, Kaufman & Kammholz will not address the
possible replacement of an Aircraft after an Event of Loss in the future, the
consummation of which is conditioned upon the contemporaneous delivery of an
opinion of counsel to the effect that the related Loan Trustee will be entitled
to Section 1110 benefits with respect to such replacement unless there was,
subsequent to the delivery of such Aircraft, a change in law or court
interpretation that results in Section 1110 not being available. See "-- The
Leases -- Events of Loss". The opinion of Vedder, Price, Kaufman & Kammholz will
also not address the availability of Section 1110 with respect to any possible
sublessee of a Leased Aircraft subleased by America West or to any possible
lessee of an Owned Aircraft if it is leased by America West.
A recent decision by the U.S. District Court for the District of Colorado
arising from the bankruptcy proceedings of Western Pacific Airlines, Inc. (Civil
Action No. 98-K-358) held that, once an airline debtor reaffirms its obligations
and cures its defaults under an aircraft lease within the prescribed period in
accordance with Section 1110 of the U.S. Bankruptcy Code, the lessor under such
lease is not entitled to repossess the aircraft under Section 1110 if the
airline subsequently defaults under such lease. The opinion of Vedder, Price,
Kaufman & Kammholz states that, in the firm's opinion, the District Court
holding is erroneous because it is inconsistent with the overriding purpose of
Section 1110 to protect lessors of, and creditors served by, qualifying aircraft
against being stayed from exercising their rights while defaults under their
leases or financing agreements remain uncured. Certain parties in the Western
Pacific case have appealed such decision.
Reimbursement of Loan Trustee Expenses
If an Indenture Default under any Indenture occurs and is continuing, any
sums held or received by the related Loan Trustee, subject to certain limited
exceptions, may be applied to reimburse such Loan Trustee for any tax, expense
or other loss incurred by it and to pay any other amounts due to such Loan
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Trustee prior to any payments to holders of the Equipment Notes issued under
such Indenture. (Indentures, Sections 3.03 and 3.04)
Bankruptcy or Like Proceedings of an Owner Participant
In the event of bankruptcy, insolvency, receivership or like proceedings
involving an Owner Participant, it is possible that, notwithstanding that the
applicable Leased Aircraft is owned by the related Owner Trustee in trust, such
Leased Aircraft and the related Lease and Equipment Notes might become part of
such proceeding. In such event, payments under such Lease or on such Equipment
Notes might be interrupted and the ability of the related Leased Aircraft
Trustee to exercise its remedies under the related Leased Aircraft Indenture
might be restricted, although such Leased Aircraft Trustee would retain its
status as a secured creditor in respect of the related Lease and the related
Leased Aircraft.
MODIFICATION OF INDENTURES AND LEASES
Without the consent of holders of a majority in principal amount of the
Equipment Notes outstanding under any Indenture, the provisions of such
Indenture and any related Lease, Participation Agreement or Trust Agreement may
not be amended or modified, except to the extent indicated below.
Subject to certain limitations, certain provisions of any Leased Aircraft
Indenture, and of the Lease, the Participation Agreement, and the Trust
Agreement related thereto, may be amended or modified by the parties thereto
without the consent of any holders of the Equipment Notes outstanding under such
Indenture. In the case of each Lease, such provisions include, among others,
provisions relating to the return to the related Owner Trustee of the related
Leased Aircraft at the end of the term of such Lease (except to the extent that
such amendment would affect the rights or exercise of remedies under the Lease)
and the renewal of such Lease and the option of America West at the end of the
term of such Lease to purchase the related Leased Aircraft so long as the same
would not adversely affect the Note Holders. (Leased Aircraft Indentures,
Section 9.01(a)) In addition, any Indenture may be amended without the consent
of the holders of Equipment Notes to, among other things, cure any defect or
inconsistency in such Indenture or the Equipment Notes issued thereunder,
provided that such change does not adversely affect the interests of any such
holder. (Leased Aircraft Indentures, Section 9.01(c); Owned Aircraft Indentures,
Section 10.01)
Without the consent of the holder of each Equipment Note outstanding under
any Indenture affected thereby, no amendment or modification of such Indenture
may among other things have the effect noted below:
Amendments or Modifications of an Indenture Requiring Consent of Each
Holder of Equipment Notes
(1) Reduce the principal amount of, or premium, if any, or interest
payable on, any Equipment Notes issued under such Indenture or
change the date on which any principal or premium, if any, or
interest is due and payable.
(2) Permit the creation of any security interest with respect to the
property subject to the lien of such Indenture, except as provided
in such Indenture, or deprive any holder of an Equipment Note issued
under such Indenture of the benefit of the lien of such Indenture
upon the property subject thereto.
(3) Reduce the percentage in principal amount of outstanding Equipment
Notes issued under such Indenture necessary to modify or amend any
provision of such Indenture or to waive compliance therewith.
(Leased Aircraft Indentures, Section 9.01(b); Owned Aircraft
Indentures, Section 10.01(a))
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INDEMNIFICATION
America West will be required to indemnify each Loan Trustee, each Owner
Participant, each Owner Trustee, the Liquidity Provider, the Subordination
Agent, the Escrow Agent and each Trustee, but not the holders of Certificates,
for certain losses, claims and other matters. America West will be required
under certain circumstances to indemnify each Owner Participant against the loss
of depreciation deductions and certain other benefits allowable for certain
income tax purposes with respect to the related Leased Aircraft. Each Owner
Participant will be required to indemnify the related Loan Trustee and the
holders of the Equipment Notes issued with respect to the Leased Aircraft in
which such Owner Participant has an interest for certain losses that may be
suffered as a result of the failure of such Owner Participant to discharge
certain liens or claims on or against the assets subject to the lien of the
related Indenture.
THE LEASES AND CERTAIN PROVISIONS OF THE OWNED AIRCRAFT INDENTURES
Each Leased Aircraft will be leased to America West by the relevant Owner
Trustee under the relevant lease agreement. Each Owned Aircraft will be owned by
America West.
Lease Term Rentals and Payments
Each Leased Aircraft will be leased separately by the relevant Owner
Trustee to America West for a term commencing on the date on which the Aircraft
is acquired by the Owner Trustee and expiring on a date not earlier than the
latest maturity date of the relevant Equipment Notes, unless terminated prior to
the originally scheduled expiration date as permitted by the applicable Lease.
The semiannual basic rent payment under each Lease is payable by America West on
each related Lease Payment Date (or, if such day is not a Business Day, on the
next Business Day), and will be assigned by the Owner Trustee under the
corresponding Leased Aircraft Indenture to provide the funds necessary to make
scheduled payments of principal and interest due from the Owner Trustee on the
Equipment Notes issued under such Indenture. In certain cases, the semiannual
basic rent payments under the Leases may be adjusted, but each Lease provides
that under no circumstances will rent payments by America West be less than the
scheduled payments on the related Equipment Notes. In addition, the amount of
basic rent will be increased in an amount necessary to pay additional interest
due on the Equipment Notes on the relevant Lease Payment Date as a result of any
increase in the rate of interest on the Equipment Notes as required by the terms
of the Registration Rights Agreement. Any balance of each such semiannual basic
rent payment under each Lease, after payment of amounts due on the Equipment
Notes issued under the Indenture corresponding to such Lease, will be paid over
to the Owner Trustee. (Leases, Section 3; Leased Aircraft Indentures, Section
3.01)
"Lease Payment Date" means, with respect to each Lease, January 2 or July 2
during the term of such Lease.
Semiannual payments of interest on the Equipment Notes issued by America
West under an Owned Aircraft Indenture are payable each January 2 and July 2
commencing on January 2, 1999 or, if later, the first such date after issuance
thereof. Semiannual payments of principal under the Equipment Notes issued by
America West under an Owned Aircraft Indenture are payable on January 2 and July
2 in certain years commencing on January 2, 1999. The amount of a semiannual
payment of interest or principal will be increased in an amount equal to any
increase in the amount of interest due on such Equipment Notes on the relevant
payment date as a result of any increase in the rate of interest on such
Equipment Notes as required by the terms of the Registration Rights Agreement.
Net Lease; Maintenance
America West is obligated under each Lease, among other things and at its
expense, to keep each Aircraft duly registered and insured, to pay all costs of
operating the Aircraft and to maintain, service, repair and overhaul the
Aircraft so as to keep it in as good an operating condition as when delivered to
America West, ordinary wear and tear excepted and without taking into
consideration hours and cycles, and in such condition as required to maintain
the airworthiness certificate for the Aircraft in good standing
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at all times, subject to certain limited exceptions, including temporary storage
or maintenance periods and the grounding of similar aircraft by the applicable
aviation authority. (Leases, Sections 7.1 and 8.1 and Annexes C and D) The Owned
Aircraft Indenture imposes comparable maintenance, service and repair
obligations on America West with respect to the Owned Aircraft. (Owned Aircraft
Indentures, Section 4.02)
Possession, Sublease and Transfer
Each Aircraft may be operated by America West or, subject to certain
restrictions, by certain other persons. Normal interchange and pooling
agreements with respect to any Engine are permitted. Subleases, in the case of
Leased Aircraft, and leases, in the case of Owned Aircraft, are also permitted
to U.S. air carriers and foreign air carriers that have their principal
executive office in certain specified countries or, in the case of the Special
Agreements, that are listed in the applicable Lease, subject to a reasonably
satisfactory legal opinion that, among other things, such country would
recognize (in the case of the Leased Aircraft) Owner Trustee's title to, and the
Loan Trustee's lien in respect of, the applicable Aircraft. In addition, a
sublessee or lessee may not be subject to insolvency or similar proceedings at
the commencement of such sublease or lease. (Leases, Section 7, Owned Aircraft
Indentures, Section 4.02) Permitted foreign air carriers are not limited to
those based in a country that is a party to the Convention on the International
Recognition of Rights in Aircraft (Geneva 1948) (the "Convention"). It is
uncertain to what extent the relevant Loan Trustee's security interest would be
recognized if an Aircraft is registered or located in a jurisdiction not a party
to the Convention. Moreover, in the case of an Indenture Event of Default, 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 were registered or located outside the United States.
Registration
Subject to the next paragraph, America West is required to keep each
Aircraft duly registered under the Transportation Code with the FAA, except (in
the case of a Leased Aircraft) if the relevant Owner Trustee or the relevant
Owner Participant fails to meet the applicable citizenship requirements, and to
record each Lease (in the case of a Leased Aircraft, but subject to such
citizenship requirements) and Indenture and certain other documents under the
Transportation Code. (Leases, Section 7; Owned Aircraft Indentures, Section
4.02(e)) Such recordation of the Indenture and other documents with respect to
each Aircraft is intended to give the relevant Loan Trustee a first priority
perfected security interest in such Aircraft whenever it is located in the
United States or any of its territories and possessions. The Convention provides
that such security interest will also be recognized, with certain limited
exceptions, in those jurisdictions that have ratified or adhere to the
Convention.
So long as no Lease Event of Default exists, America West has the right to
register the Leased Aircraft subject to any Lease in a country other than the
United States at its own expense in connection with a permitted sublease of such
Aircraft to a permitted foreign air carrier, subject to certain conditions set
forth in the related Participation Agreement. These conditions include a
requirement that the lien of the applicable Indenture continue as a first
priority security interest in the applicable Aircraft. (Leases, Section 7.1.2;
Participation Agreements, Section 7.6.11) The Owned Aircraft Indentures contain
comparable provisions with respect to registration of the Owned Aircraft outside
of the United States in connection with a permitted lease of the Owned Aircraft.
(Owned Aircraft Indentures, Section 4.02(e))
Liens
America West is required to maintain each Aircraft free of any liens, other
than the rights of the relevant Loan Trustee, the holders of the related
Equipment Notes, America West and, with respect to a Leased Aircraft, the Owner
Participant and Owner Trustee arising under the applicable Indenture, the Lease
(in the case of a Leased Aircraft) or the other operative documents related
thereto, and other than certain limited liens permitted under such documents,
including but not limited those listed below; provided that in the case of each
of the liens described below in clauses (1), (2) and (3), such liens and
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proceedings do not involve any material risk of the sale, forfeiture or loss of
such Aircraft or the interest of any Participant therein or impair the lien of
the relevant Indenture. (Leases, Section 6; Owned Aircraft Indentures, Section
4.01)
Additional Permitted Liens
(1) Liens for taxes either not yet due or being contested in good faith by
appropriate proceedings.
(2) Materialmen's, mechanics' and other similar liens arising in the
ordinary course of business and securing obligations that either are
not yet delinquent or are being contested in good faith by appropriate
proceedings.
(3) Judgment liens so long as such judgment is discharged or vacated within
60 days or the execution of such judgment is stayed pending appeal and
discharged, vacated or reversed within 60 days after expiration of such
stay.
(4) Insurers' salvage rights.
(5) Any other lien as to which America West has provided a bond or other
security adequate in the reasonable opinion of the related Owner
Trustee or Loan Trustee, as the case may be.
Replacement of Parts; Alterations
America West is obligated to replace all parts at its expense that may from
time to time be incorporated or installed in or attached to any Aircraft and
that may become lost, damaged beyond repair, worn out, stolen, seized,
confiscated or rendered permanently unfit for use. America West or any permitted
sublessee has the right, at its own expense, to make such alterations,
modifications and additions with respect to each Aircraft as it deems desirable
in the proper conduct of its business and to remove parts which it deems to be
obsolete or no longer suitable or appropriate for use, so long as such
alteration, modification, addition or removal does not materially diminish the
fair market value, utility, or remaining useful life of the related Aircraft,
airframe or engine or invalidate the Aircraft's airworthiness certificate.
(Leases, Section 8.1 and Annex C; Owned Aircraft Indentures, Section 4.04(d))
Insurance
America West is required to maintain, at its expense (or at the expense of
a permitted lessee, in the case of the Owned Aircraft, or a permitted sublessee,
in the case of a Leased Aircraft), all-risk aircraft hull insurance covering
each Aircraft, at all times in an amount not less than the stipulated loss value
of the Aircraft (which exceeds the aggregate outstanding principal amount of the
Equipment Notes related to such Aircraft, together with accrued interest
thereon) or, in the case of any Owned Aircraft, the aggregate outstanding
principal amount of the Equipment Notes relating to such Aircraft together with
six months of interest accrued thereon. However, after giving effect to
self-insurance permitted as described below, the amount payable under such
insurance may be less than such amounts payable with respect to the Equipment
Notes. In the event of a loss involving insurance proceeds in excess of
$5,000,000 per occurrence, if the insurers make payment to other than the
repairer of such loss, such proceeds up to the stipulated loss value of the
relevant Aircraft will be payable to the applicable Loan Trustee, for so long as
the relevant Indenture shall be in effect. In the event of a loss involving
insurance proceeds of up to $5,000,000 such proceeds will be payable directly to
America West so long as an Indenture Event of Default does not exist with
respect to the Owned Aircraft Indentures or (in the case of a Leased Aircraft)
the Owner Trustee has not notified the insurance underwriters that a Lease Event
of Default exists. So long as the loss does not constitute an Event of Loss,
insurance proceeds will be applied to repair or replace the property. (Leases,
Section 11 and Annex D; Owned Aircraft Indentures, Section 4.06)
In addition, America West is obligated to maintain comprehensive airline
liability insurance at its expense (or at the expense of a permitted lessee, in
the case of an Owned Aircraft, or a permitted sublessee, in the case of a Leased
Aircraft), including, without limitation, passenger legal liability, bodily
injury liability, property damage liability and contractual liability (exclusive
of manufacturer's product
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liability insurance) insurance with respect to each Aircraft. Insurers of
recognized responsibility must underwrite such liability insurance. The amount
of such liability insurance coverage per occurrence may not be less than the
amount of comprehensive airline liability insurance from time to time applicable
to aircraft owned or leased and operated by America West of the same type and
operating on similar routes as such Aircraft. (Leases, Section 11.1 and Annex D;
Owned Aircraft Indentures, Section 4.06)
America West is also required to maintain war-risk, hijacking or allied
perils insurance if it (or any permitted sublessee or lessee) operates any
Aircraft, airframe or engine in any area of recognized hostilities (unless
governmental indemnity in lieu thereof is obtained) or if America West (or any
permitted sublessee or lessee) maintains such insurance with respect to other
aircraft operated on the same routes on which the Aircraft is operated. (Leases,
Annex D; Owned Aircraft Indentures, Section 4.06)
America West may self-insure under a program applicable to all aircraft in
its fleet, but the amount of such self-insurance in the aggregate may not exceed
50% of the largest replacement value of any single aircraft in America West's
fleet or 1.5% of the average aggregate insurable value (during the preceding
calendar year) of all aircraft on which America West carries insurance,
whichever is less, unless an insurance broker of national standing shall certify
that the standard among all other major U.S. airlines is a higher level of
self-insurance, in which case America West may self-insure the Aircraft to such
higher level. In addition, America West may self-insure to the extent of any
applicable deductible per Aircraft that does not exceed industry standards for
major U.S. airlines. (Leases, Section 11.1 and Annex D; Owned Aircraft
Indentures, Section 4.06(d))
In respect of each Aircraft, America West is required to name as additional
insured parties the relevant Loan Trustee and holders of the Equipment Notes and
(in the case of the Leased Aircraft) the relevant Owner Participant and Owner
Trustee, in its individual capacity and as owner of such Aircraft, and in some
cases certain other parties under all liability, hull and property and war risk,
hijacking and allied perils insurance policies required with respect to such
Aircraft. In addition, the insurance policies maintained under the Leases and
the Owned Aircraft Indenture will be required to provide that, in respect of the
interests of such additional insured persons, the insurance shall not be
invalidated or impaired by any act or omission of America West or any other
person and to insure the respective interests of such additional insured
persons, regardless of any breach or violation of any representation, warranty,
declaration, term or condition contained in such policies by America West, any
permitted sublessee or any other person. (Leases, Annex D; Owned Aircraft
Indentures, Section 4.06)
Lease Termination
Unless a Lease Event of Default shall have occurred and be continuing,
America West may terminate any Lease on any Lease Payment Date occurring after
the fifth anniversary of the date on which such Lease commenced, if it makes a
good faith determination that the Leased Aircraft subject to such Lease is
economically obsolete or surplus to its requirements. America West is required
to give notice of its intention to exercise its right of termination described
in this paragraph at least 90 days prior to the proposed date of termination,
which notice may be withdrawn up to ten Business Days prior to such proposed
date; provided that America West may give only five such termination notices. In
such a situation, unless the Owner Trustee elects to retain title to such
Aircraft, America West is required to use commercially reasonable efforts to
sell such Aircraft as an agent for such Owner Trustee, and Owner Trustee will
sell such Aircraft on the date of termination to the highest cash bidder. If
such sale occurs, the Equipment Notes related thereto are required to be
prepaid. If the net proceeds to be received from such sale are less than the
termination value for such Aircraft (which is set forth in a schedule to each
Lease), America West is required to pay to the applicable Owner Trustee an
amount equal to the excess, if any, of the applicable termination value for such
Aircraft over such net proceeds. Upon payment of termination value for such
Aircraft and an amount equal to the Make-Whole Premium, if any, payable on such
date of payment, together with certain additional amounts, the lien of the
relevant Indenture will be released, the relevant Lease will terminate, and the
obligation of America West thereafter to make scheduled rent payments under such
Lease will cease. (Leases, Section 9; Leased Aircraft Indentures, Sections
2.10(b) and 10.01)
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The Owner Trustee under any Lease has the option to retain title to the
Leased Aircraft subject thereto if America West has given a notice of
termination under such Lease. In such event, such Owner Trustee will pay to the
applicable Loan Trustee an amount sufficient to prepay the outstanding principal
of and interest on the Equipment Notes issued with respect to such Aircraft (but
America West will be obligated to pay the Make-Whole Premium in respect
thereof), in which case the lien of the relevant Indenture will be released, the
relevant Lease will terminate and the obligation of America West thereafter to
make scheduled rent payments under such Lease will cease. (Leases, Section 9;
Leased Aircraft Indentures, Sections 2.10(b) and 10.01)
Events of Loss
If an Event of Loss occurs with respect to the airframe or the airframe and
engines of an Aircraft, America West must elect within 45 days after such
occurrence either to make payment with respect to such Event of Loss or to
replace such airframe and any such engines. Not later than the first Business
Day following the earliest of the 120th day following the date of occurrence of
such Event of Loss and the fourth Business Day following the receipt of the
insurance proceeds in respect of such Event of Loss, America West must take
either of the steps noted below:
Alternative Steps Required Upon an Event of Loss
(1) Pay to the applicable Owner Trustee (in the case of a Leased
Aircraft) or to the Owned Aircraft Trustee (in the case of the Owned
Aircraft) the stipulated loss value of such Aircraft (in the case of
a Leased Aircraft) or the outstanding principal amount of the
Equipment Notes (in the case of an Owned Aircraft), together with
certain additional amounts, but, in any case, without any Make-Whole
Premium.
(2) Unless any Lease Event of Default or failure to pay basic rent under
the relevant Lease (in the case of a Leased Aircraft), an Indenture
Event of Default or failure to pay principal or interest under the
Owned Aircraft Indenture (in the case of the Owned Aircraft) or
certain bankruptcy defaults shall have occurred and be continuing,
substitute an airframe (or airframe and one or more engines, as the
case may be) for the airframe, or airframe and engine(s), that
suffered such Event of Loss. (Leases, Sections 10.1.1, 10.1.2 and
10.1.3; Leased Aircraft Indentures, Section 2.10(a); Owned Aircraft
Indentures, Sections 2.10 and 4.05(a))
If America West elects to replace an airframe (or airframe and one or more
engines, as the case may be) that suffered such Event of Loss, it shall, in the
case of a Leased Aircraft, convey to the related Owner Trustee title to an
airframe (or airframe and one or more engines, as the case may be), and such
replacement airframe or airframe and engines must be the same model as the
airframe or airframe and engines to be replaced or an improved model, with a
value, utility and remaining useful life (without regard to hours or cycles
remaining until the next regular maintenance check) at least equal to the
airframe or airframe and engines to be replaced, assuming that such airframe and
such engines had been maintained in accordance with the related Lease. America
West is also required to provide to the relevant Loan Trustee and (in the case
of a Leased Aircraft) the relevant Owner Trustee and Owner Participant
reasonably acceptable opinions of counsel to the effect, among other things,
that certain specified documents have been duly filed under the Transportation
Code (or other relevant jurisdiction of registration) and such Owner Trustee and
Leased Aircraft Trustee (as assignee of lessor's rights and interests under the
Lease), in the case of a Leased Aircraft, or the Owned Aircraft Trustee, in the
case of an Owned Aircraft, will be entitled to receive the benefits of Section
1110 of the U.S. Bankruptcy Code with respect to any such replacement airframe
(unless, as a result of a change in law or court interpretation, such benefits
are not then available). (Leases, Sections 10.1.3 and 10.3; Owned Aircraft
Indentures, Section 4.05(c))
If America West elects not to replace such airframe, or airframe and
engine(s), then upon payment of the outstanding principal amount of the
Equipment Notes issued with respect to such Aircraft (in the case of an Owned
Aircraft) or the stipulated loss value for such Aircraft (in the case of a
Leased
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Aircraft), together with all additional amounts then due and unpaid with respect
to such Aircraft, which must be at least sufficient to pay in full as of the
date of payment thereof the aggregate unpaid principal amount under such
Equipment Notes together with accrued but unpaid interest thereon and all other
amounts due and owing in respect of such Equipment Notes, the lien of the
Indenture and (in the case of a Leased Aircraft) the Lease relating to such
Aircraft shall terminate with respect to such Aircraft, the obligation of
America West thereafter to make the scheduled rent payments (in the case of a
Leased Aircraft) or interest and principal payments (in the case of an Owned
Aircraft) with respect thereto shall cease. Additionally, in the case of a
Leased Aircraft the related Owner Trustee shall transfer all of its right, title
and interest in and to the related Aircraft to America West (or, if directed by
America West, the Aircraft insurers). The stipulated loss value and/or other
payments made under the Leases or the Owned Aircraft Indentures, as the case may
be, by America West shall be deposited with the applicable Loan Trustee. Amounts
in excess of the amounts due and owing under the Equipment Notes issued with
respect to such Aircraft will be distributed by such Loan Trustee to the
applicable Owner Trustee or to America West, as the case may be. (Leases,
Section 10.1.2; Leased Aircraft Indentures, Sections 3.02 and 10.01; Owned
Aircraft Indentures, Sections 2.10 and 4.05(a)(ii))
If an Event of Loss occurs with respect to engines alone, America West will
be required to replace such engines within 60 days after the occurrence of such
Event of Loss with another engine, free and clear of all liens (other than
certain permitted liens). Such replacement engine shall be the same make and
model as the engines to be replaced, or an improved model, suitable for
installation and use on the Airframe, and having a value, utility and remaining
useful life (without regard to hours or cycles remaining until overhaul) at
least equal to the engines to be replaced, assuming that such engines had been
maintained in accordance with the relevant Lease or the Owned Aircraft
Indentures, as the case may be, immediately prior to the occurrence of the Event
of Loss. (Leases, Section 10.2; Owned Aircraft Indentures, Section 4.05(a)(i))
America West may, whether or not an Event of Loss shall have occurred with
respect to any engines, replace such engines with a replacement engine
satisfying the same conditions for a replacement engine following an Event of
Loss. (Leases, Section 10.2.3; Owned Aircraft Indentures, Section 4.04(e))
An "Event of Loss" with respect to an Aircraft, airframe or any engines
means any of the events noted below:
Events of Loss With Respect to an Aircraft, Airframe or any Engine
(1) The destruction of such property, damage to such property beyond
economic repair or rendition of such property permanently unfit for
normal use.
(2) The actual or constructive total loss of such property or any damage
to such property or requisition of title or use of such property
which results in an insurance settlement with respect to such
property on the basis of a total loss or a constructive or
compromised total loss.
(3) Any theft, hijacking or disappearance of such property for a period
of 180 days or more or, if earlier, the first to occur of the last
day of the term of the related Lease (if such property is subject to
a Lease) or the date on which America West has confirmed in writing
that it cannot recover such property.
(4) Any seizure, condemnation, confiscation, taking or requisition of
title to such property by any non-U.S. governmental entity or
purported non-U.S. governmental entity (other than the country of
registration of the relevant Aircraft) for a period exceeding 180
days (exceeding 90 days in the case of a requisition of title) or,
if earlier, at the end of the term of such Lease (in the case of a
Leased Aircraft).
(5) In the case of any Leased Aircraft, any seizure, condemnation,
confiscation, taking or requisition of use of such property by any
U.S. government entity that continues until the 30th day after the
last day of the term of the relevant Lease (unless the Owner Trustee
shall have elected not to treat such event as an Event of Loss).
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(6) As a result of any law, rule, regulation, order or other action by
the FAA or any governmental entity, the use of such property in the
normal course of America West's business of passenger air
transportation is prohibited for 180 days, unless America West,
prior to the expiration of such 180 day period, shall have
undertaken and shall be diligently carrying forward steps which are
necessary or desirable to permit the normal use of such property by
America West, but in any event if such use shall have been
prohibited for a period of two consecutive years; provided that no
Event of Loss shall be deemed to have occurred if such prohibition
has been applicable to America West's entire U.S. registered fleet
of similar property and America West, prior to the expiration of
such two-year period, shall have conformed at least one unit of such
property in its fleet to the requirements of any such law, rule,
regulation, order or other action and commenced regular commercial
use of the same and shall be diligently carrying forward, in a
manner which does not discriminate against applicable property in so
conforming such property, steps which are necessary or desirable to
permit the normal use of such property by America West, but in any
event if such use shall have been prohibited for a period of three
years or, in the case of the Leased Aircraft, such use shall be
prohibited at the expiration of the term of the relevant Lease.
(Leases, Annex A; Owned Aircraft Indentures, Annex A)
Renewal and Purchase Options
With respect to any Leased Aircraft, America West will have the option to
purchase such Aircraft and terminate the related Lease prior to the end of the
term of such Lease either on the Lease Payment Date, if any, agreed to by the
Owner Participant for such Aircraft in connection with such purchase option or
under certain circumstances, on any Lease Payment Date, if America West would be
required to make certain indemnity payments with respect to such Aircraft in
excess of a certain designated amount, which indemnity payments could be avoided
through a purchase by America West of such Aircraft (each an "Early Purchase
Option"). In connection with the exercise of any Early Purchase Option, America
West is required with respect to the Equipment Notes relating to the Aircraft
being purchased either (x) to pay to the related Owner Trustee funds at least
sufficient to pay any principal of and interest and Make-Whole Premium, if any,
on such Equipment Notes or (y) to assume on a full recourse basis the
obligations of the related Owner Trustee under such Equipment Notes, the related
Indenture and the related Participation Agreement. (Leases, Section 17.3; Leased
Aircraft Indentures, Sections 2.10 and 2.15)
If America West elects to purchase and pay the amount described in clause
(x) above, then upon payment to the related Owner Trustee of the full purchase
price for such Aircraft determined in accordance with such Lease and all other
amounts owing to the parties to the related Participation Agreement, such Owner
Trustee will transfer all of its right, title and interest in and to such
Aircraft to America West and the related Lease and the Lien of the related
Indenture will terminate. If America West elects to purchase the Aircraft and
assume the obligations of such Owner Trustee described in clause (y) above, then
the related operative agreements will be amended to provide for the assumption
of such obligations on a full recourse basis by America West, maintaining for
the benefit of the holders of such Equipment Notes the security interest in such
Aircraft created by the related Indenture. In the event of such an assumption,
America West will either furnish an opinion to the relevant Leased Aircraft
Trustee that such assumption does not result in a taxable gain or loss for the
Certificateholder for U.S. federal tax purposes or an indemnity for the benefit
of the Certificateholders in form and substance reasonably satisfactory to the
relevant Leased Aircraft Trustee. See "Certain U.S. Federal Income Tax
Consequences -- Taxation of Certificateholders Generally." (Leases, Section
17.3; Leased Aircraft Indentures, Sections 2.10 and 2.15)
At the end of the term of each Lease after final maturity of the related
Equipment Notes and subject to certain conditions, America West will have
certain options to renew such Lease for additional limited periods. In addition,
America West may have the right at the end of the term of each Lease to purchase
the Aircraft subject thereto for an amount to be calculated in accordance with
the terms of such Lease. (Leases, Section 17)
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Events of Default under the Leases
Lease Events of Default under each Lease include, among other things, the
items listed below:
Lease Events of Default
(1) Failure by America West to make any payment of basic rent,
stipulated loss value or termination value under such Lease within
ten Business Days after the same shall have become due, or failure
by America West to pay any other amount due under such Lease or
under any other related operative document within 30 days from and
after the date of any written demand therefor from the Owner
Trustee.
(2) Failure by America West to make any excluded payment (as defined in
the Leases) within 30 days after written notice that such failure
constitutes a Lease Event of Default is given by the relevant Owner
Participant to America West and the relevant Loan Trustee.
(3) Failure by America West to carry and maintain insurance on and in
respect of the Aircraft, airframe and engines, in accordance with
the provisions of such Lease.
(4) Failure by America West to perform or observe any other covenant or
agreement to be performed or observed by it under such Lease or the
related Participation Agreement or any other related operative
document (other than the related tax indemnity agreement between
America West and the Owner Participant), and such failure shall
continue unremedied for a period of 30 days after written notice of
such failure by the applicable Owner Trustee or Loan Trustee unless
such failure is capable of being corrected and America West shall be
diligently proceeding to correct such failure, in which case there
shall be no Lease Event of Default unless and until such failure
shall continue unremedied for a period of 180 days after receipt of
such notice.
(5) Any representation or warranty made by America West in such Lease or
the related Participation Agreement or in any other related
operative document (other than in the related tax indemnity
agreement between America West and the Owner Participant) shall
prove to have been untrue or inaccurate in any material respect at
the time made, such representation or warranty is material at the
time in question and the same shall remain uncured (to the extent of
the adverse impact thereof) for more than 30 days after the date of
written notice thereof to America West.
(6) The occurrence of certain voluntary events of bankruptcy,
reorganization or insolvency of America West or the occurrence of
involuntary events of bankruptcy, reorganization or insolvency which
shall continue undismissed, unvacated or unstayed for a period of 90
days. (Leases, Section 14)
Indenture Events of Default under the Owned Aircraft Indenture are
discussed above under "-- Indenture Defaults, Notice and Waiver".
Remedies Exercisable upon Events of Default under the Lease
If a Lease Event of Default has occurred and is continuing, the applicable
Owner Trustee may (or, so long as the Indenture shall be in effect, the
applicable Loan Trustee may, subject to the terms of the Indenture) exercise one
or more of the remedies provided in such Lease with respect to the related
Aircraft. These remedies include the right to repossess and use or operate such
Aircraft, to rescind or terminate such Lease, to sell or re-lease such Aircraft
free and clear of America West's rights, except as set forth in the Lease, and
retain the proceeds, and to require America West to pay, as liquidated
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damages, any due and unpaid basic rent plus an amount, at such Owner Trustee's
(or, subject to the terms of the relevant Leased Aircraft Indenture, the Leased
Aircraft Trustee's) option, set forth below:
Alternative Amount of Payment Amount upon a Lease Event of Default
(1) The excess of the present value of all unpaid rent during the
remainder of the term of such Lease over the present value of the
fair market rental value of such Aircraft for the remainder of the
term of such Lease; or
(2) The excess of the stipulated loss value of such Aircraft over the
fair market sales value of such Aircraft or, if such Aircraft has
been sold, the net sales proceeds from the sale of such Aircraft.
(Leases, Section 15; Leased Aircraft Indentures, Section 4.04)
Remedies under the Owned Aircraft Indentures are discussed above under
"-- Remedies".
Transfer of Owner Participant Interests
Subject to certain restrictions, each Owner Participant may transfer all or
any part of its interest in the related Leased Aircraft. (Participation
Agreements, Section 10.1.1)
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
EXCHANGE OF OLD CERTIFICATES FOR NEW CERTIFICATES
The following summary describes all principal U.S. federal income tax
consequences to Certificateholders of the exchange of Old Certificates for New
Certificates. This summary is addressed to the 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, trusts the income of which is subject
to U.S. federal income taxation regardless of its source or trusts if a court in
the United States is able to exercise primary supervision over the
administration of the trust and one or more U.S. fiduciaries have authority to
control substantial decisions of the trust, that will hold the Certificates as
capital assets.
The exchange of Old Certificates for New Certificates (the "Exchange")
pursuant to the Exchange Offer will not be a taxable event for U.S. federal
income tax purposes. The receipt of Certificates in the Exchange will be treated
as a continuation of the original investment in the Certificates. As a result, a
holder of an Old Certificate whose Old Certificate is accepted in an Exchange
Offer will not recognize gain or loss on the Exchange. A tendering holder's tax
basis in the New Certificates will be the same as such holder's tax basis in its
Old Certificates. A tendering holder's holding period for the New Certificates
received pursuant to the Exchange Offer will include its holding period for the
Old Certificates surrendered therefor.
THE FOREGOING SUMMARY OF U.S. FEDERAL INCOME TAX CONSEQUENCES IS FOR
GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY, ALL HOLDERS OF OLD
CERTIFICATES ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE U.S.
FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF THE EXCHANGE OF OLD CERTIFICATES
FOR NEW CERTIFICATES AND OF THE OWNERSHIP AND DISPOSITION OF NEW CERTIFICATES
RECEIVED IN THE EXCHANGE OFFER IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES.
ERISA CONSIDERATIONS
In general, employee benefit plans subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or Section 4975 of
the Internal Revenue Code of 1986, as amended (the "Code") or entities which may
be deemed to hold the assets of any such plan (each, an "ERISA Plan") will be
eligible to purchase the Certificates, subject to certain conditions and the
circumstances applicable to such ERISA Plans.
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A fiduciary of an employee benefit plan subject to ERISA should consider
fiduciary standards under ERISA in the context of the particular circumstances
of such plan before authorizing an investment in the Certificates. Such
fiduciaries should determine whether the investment satisfies ERISA's
diversification and prudence requirements and whether the investment is in
accordance with the documents and instruments governing the plan. In addition,
ERISA and the Code prohibit a wide range of transactions ("Prohibited
Transactions") involving an ERISA Plan and persons who have certain specified
relationships to the ERISA Plan ("parties in interest", within the meaning of
ERISA and "disqualified persons", within the meaning of the Code). Such
transactions may require "correction" and may cause an ERISA Plan fiduciary to
incur certain liabilities and the parties in interest or disqualified persons to
be subject to excise taxes.
Each of the Owner Participants, the manufacturers of the Aircraft, the
holders of the Equipment Notes, the Initial Purchasers, the Company, the Escrow
Agent, the Depositary and the Liquidity Provider may be a party in interest or a
disqualified person with respect to an ERISA Plan purchasing the Certificates;
therefore, the purchase by an ERISA Plan of the Certificates may give rise to a
direct or indirect Prohibited Transaction. Any person who is, or who in
acquiring the Certificates is or may be using the assets of, an ERISA Plan may
purchase the Certificates, if such person determines that a statutory or an
administrative exemption from the Prohibited Transaction rules discussed below
or otherwise available is applicable to such person's purchase and holding of
the Certificates (or a participation interest therein).
Certain statutory or administrative exemptions from the Prohibited
Transaction rules under ERISA and the Code may be available to an ERISA Plan
which is purchasing the Certificates. Included among these exemptions are: PTCE
90-1, regarding investments by insurance company pooled separate accounts; PTCE
91-38, regarding investments by bank collective investment funds; PTCE 84-14,
regarding transactions effected by a qualified professional asset manager; PTCE
95-60, regarding investments by insurance company general accounts or PTCE
96-23, regarding investments by an in-house professional asset manager. Certain
of the exemptions, however, do not afford relief from the Prohibited Transaction
rules under Section 406(b) of ERISA and Section 4975(c)(1)(E)-(F) of the Code.
In addition, there can be no assurance that any of these administrative
exemptions will be available with respect to any particular transactions
involving the Certificates.
The U.S. Department of Labor ("DOL") has issued individual administrative
exemptions to certain of the underwriters which are substantially the same as
the administrative exemption issued to Morgan Stanley & Co. Incorporated
(Prohibited Transaction Exemption 90-24 et al., Exemption Application NO. D-8019
et al, 55 Fed. Reg. 20,548 (1990) (the "Underwriter Exemption")) which generally
exempts from certain of the Prohibited Transaction rules the initial purchase,
the holding and the subsequent resale by an ERISA Plan of certificates in
certain pass through trusts, the assets of which pass through trust consist of
secured credit instruments that bear interest or are purchased at a discount in
transaction by or between business entities (including qualified equipment
trusts certificates secured by leases). The limited relief provided by the DOL
in the Underwriter Exemption is subject to several other conditions, including a
requirement that certificates acquired by an ERISA Plan under the Underwriter
Exemption have received a rating at the time of acquisition by the ERISA Plan
that is in one of the three highest categories from either Standard & Poor's or
Moody's. Under the Underwriting Exemption, an equipment trust certificate
secured by a lease will be considered qualified only under certain
circumstances. The Underwriter Exemption also requires that the acquisition of
certificates by an ERISA Plan be on terms (including the price for the
certificate) that are at least as favorable to an ERISA Plan as they would be in
an arm's-length transaction with an unrelated party, and that the rights and
interests evidenced by the certificates must not be subordinated to the rights
and interests evidenced by other certificates of the same trust estate.
With respect to the investment restrictions set forth in the Underwriter
Exemption, an investment in a Certificate will evidence both an interest in the
respective Original Trust as well as an interest in the Deposits held in escrow
by an Escrow Agent for the benefit of the Certificateholder. Under the terms of
the Escrow Agreement, the proceeds from the Offering of the Certificates of each
Class will be paid over by the Initial Purchasers to the Depositary on behalf of
the Escrow Agreement (for the benefit of such
89
<PAGE> 91
Certificateholders as the holders of the Escrow Receipts) and will not
constitute property of the Original Trusts. Under the terms of each Escrow
Agreement, the Escrow Agent will be irrevocably instructed to enter into the
Deposit Agreement with the Depositary and to effect withdrawals upon the receipt
of appropriate notice from the relevant Trustee so as to enable such Trustee to
purchase the identified Equipment Notes on the terms and conditions set forth in
the Note Purchase Agreement. Interests on the Deposits relating to each Trust
will be paid to the Certificateholders of such Trust as Receiptholders through a
Paying Agent appointed by the Escrow Agent. Pending satisfaction of such
conditions and withdrawal of such Deposits, the Escrow Agent's rights with
respect to the Deposits will remain plan assets subject to the fiduciary
responsibility provisions of ERISA and the Prohibited Transaction rules.
The DOL has issued an amendment to the Underwriter Exemption, 62 FR 39,021
(July 21, 1997), which allows the assets of a pass through trust to include a
prefunding account under certain circumstances. The relief provided by this
amendment is subject to several conditions, including a requirement that the
prefunding period end no later than the earliest to occur of the date the amount
on deposit in the prefunding account is less than the minimum dollar amount
specified in the pooling and servicing agreement, the date on which an event of
default occurs under the pooling and servicing agreement, or the date which is
the later of three months or 90 days after the closing date. However, there can
be no assurance that the DOL would agree that the prefunding restrictions would
not apply in these circumstances. Moreover, even if such restrictions would not
apply, no monitoring or other measures will be taken to ensure that all of the
conditions of the Underwriter Exemption, as amended, will be satisfied.
If an ERISA Plan acquires a Certificate, the ERISA Plan's assets may
include both the Certificate acquired and an undivided interest in the
underlying assets of the Trust, unless the actual investment by "benefit plan
investors" in the Certificates is not "significant" within the meaning of the
DOL plan assets regulations. Consequently, the Trust assets could be deemed to
be "plan assets" of such ERISA Plan for purposes of the fiduciary responsibility
provisions of ERISA and the Prohibited Transaction rules. Any person who
exercises any authority or control with respect to the management or disposition
of the assets of an ERISA Plan is considered to be a fiduciary of such ERISA
Plan. The Trustee could, therefore, become a fiduciary of ERISA Plans that have
invested in the Certificates and be subject to general fiduciary requirements of
ERISA in exercising its authority with respect to the management of the assets
of the Trust. If the Trustee becomes a fiduciary with respect to the ERISA Plans
purchasing the Certificates, there may be an improper delegation by such ERISA
Plans of the responsibility to manage plan assets. In order to avoid such
prohibited transactions, each investing ERISA Plan, by purchasing the
Certificates, will be deemed to have directed the Trust to invest in the assets
held in such trust. Any ERISA Plan purchasing the Certificates must ensure that
any statutory or administrative exemption from the Prohibited Transaction rules
on which such ERISA Plan relies with respect to its purchase or holding of the
Pass Through Certificates also applies to such ERISA Plan's indirect holding of
the assets of the Trust.
Governmental plans and certain church plans (each as defined under ERISA)
are not subject to the Prohibited Transaction rules. Such plans may, however, be
subject to federal, state or local laws or regulations which may affect their
investment in the Certificates. Any fiduciary of such a governmental or church
plan considering a purchase of the Certificates must determine the need for, and
the availability, if necessary, of any exemptive relief under any such laws or
regulations.
The foregoing discussion is general in nature and is not intended to be all
inclusive. Any fiduciary of an ERISA Plan, governmental plan or church plan
considering the purchase and holding of the Certificates should consult with its
legal advisors regarding the consequences of such purchase and holding. By its
purchase and acceptance of a Certificate, each Certificateholder will be deemed
to have represented and warranted either no ERISA plan assets have been used to
purchase such Certificate or one or more prohibited transaction statutory or
administrative exemptions applies such that the use of such ERISA Plan assets to
purchase and hold such Certificate will not constitute a non-exempt Prohibited
Transaction.
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EACH ERISA PLAN FIDUCIARY (AND EACH FIDUCIARY FOR A GOVERNMENTAL OR CHURCH
PLAN SUBJECT TO RULES SIMILAR TO THOSE IMPOSED ON ERISA PLANS UNDER ERISA)
SHOULD CONSULT WITH ITS LEGAL ADVISOR CONCERNING AN INVESTMENT IN ANY OF THE
CERTIFICATES.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Certificates for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Certificates. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of New Certificates received in
exchange for Old Certificates where such Old Certificates were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that, starting on the Expiration Date and ending on the close of business
180 days after the Expiration Date, it will make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale. In addition, until such date all broker-dealers effecting transactions
in the New Certificates may be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of New Certificates
by broker-dealers. New Certificates received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Certificates or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Certificates. Any
broker-dealer that resells New Certificates that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such New Certificates may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit of any
such resale of New Certificates and any commissions or concessions received by
any such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
Starting on the Expiration Date, the Company will promptly send additional
copies of this Prospectus and any amendment or supplement to this Prospectus to
any broker-dealer that requests such documents in the Letter of Transmittal. The
Company has agreed to pay all expenses incident to the Exchange Offer other than
commissions or concessions of any brokers or dealers, fees of counsel to the
Holders and certain transfer taxes, and will indemnify the Holders of the New
Certificates (including any broker-dealers) against certain liabilities,
including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the New Certificates is being passed upon for America West
by Morris, James, Hitchens & Williams, Wilmington, Delaware, counsel for
Wilmington Trust Company.
EXPERTS
The financial statements and financial statement schedule of America West
Airlines, Inc. as of December 31, 1997 and 1996, and for each of the years in
the three-year period ended December 31, 1997, have been incorporated by
reference herein and in the registration statement in reliance upon the report
of KPMG LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
The references to AvSolutions, AVITAS and BK, and to their respective
appraisal reports, dated as of September 24, 1998, are included herein in
reliance upon the authority of each such firm as an expert with respect to the
matters contained in its appraisal report.
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APPENDIX I -- INDEX OF TERMS
<TABLE>
<CAPTION>
DEFINITION PAGE
<S> <C>
Adjusted Expected Distributions..... 62, 63
Administration Expenses............. 62
affiliate........................... 6
Aggregate LTV Collateral Amount..... 64
Aircraft............................ 7
Aircraft Operative Agreements....... 47
America West........................ 5
Appraised Current Market Value...... 64
Appraisers.......................... 18
Assumed Aircraft Value.............. 74
Assumed Amortization Schedule....... 37
Average Life Date................... 71
AVITAS.............................. 18
AVSA................................ 17
AvSolutions......................... 18
Base Rate........................... 58
BK.................................. 18
Business Day........................ 36
Cash Collateral Account............. 56
Cede................................ 6
Certificate Account................. 36
Certificate Owners.................. 39
Certificateholders.................. 5
Certificates........................ 5
Class A Certificates................ 7
Class A Trust....................... 5
Class B Certificates................ 7
Class B Trust....................... 5
Class C Certificates................ 7
Class C Trust....................... 5
Class D Certificates................ 11
Class D Trust....................... 11
Code................................ 88
Company............................. 5
Controlling Party................... 59
Convention.......................... 81
Delivery Period..................... 9
Deposit Agreements.................. 9
Deposit Make-Whole Premium.......... 52
Depositary.......................... 9
Deposits............................ 9
Depreciation Assumption............. 74
Distribution Dates.................. 34
DOL................................. 89
Downgrade Drawing................... 55
DTC................................. 6, 50
</TABLE>
<TABLE>
<CAPTION>
DEFINITION PAGE
<S> <C>
DTC Participants.................... 9
Early Purchase Option............... 86
Eligible Institution................ 29
Equipment........................... 77
Equipment Notes..................... 7
ERISA............................... 88
ERISA Plan.......................... 88
Escrow Agent........................ 7
Escrow Agreement.................... 7
Escrow Receipts..................... 53
Event of Loss....................... 85
Exchange............................ 88
Exchange Act........................ 2
Exchange Agent...................... 5
Exchange Offer...................... 26
Expected Distributions.............. 61
Expiration Date..................... 5
Final Distributions................. 60
Final Drawing....................... 57
Final Legal Distribution Date....... 8, 35
Global Certificates................. 6, 50
H.15(519)........................... 71
Holdings............................ 15
Indentures.......................... 10
Indirect Participants............... 50
Initial Purchasers.................. 5
Intercreditor Agreement............. 7
Interest Drawings................... 11, 54
Issuance Date....................... 26
Lease............................... 10
Lease Event of Default.............. 40
Lease Payment Date.................. 80
Leased Aircraft..................... 10
Leased Aircraft Indenture........... 10
Leased Aircraft Trustee............. 10
LeisureCo. ......................... 15
Letter of Transmittal............... 5
LIBOR............................... 57
Liquidity Event of Default.......... 58
Liquidity Expenses.................. 61
Liquidity Facility.................. 11, 54
Liquidity Obligations............... 11
Liquidity Provider.................. 8
Loan Trustees....................... 10
LTV Appraisal....................... 64
LTV Collateral Amount............... 64
</TABLE>
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<PAGE> 94
<TABLE>
<CAPTION>
DEFINITION PAGE
<S> <C>
LTV Ratio........................... 64
LTVs................................ 38
Make-Whole Premium.................. 71
Mandatory Document Terms............ 47
Mandatory Economic Terms............ 46
Maximum Amount...................... 52
Maximum Available Commitment........ 54
Minimum Sale Price.................. 61
Moody's............................. 20
New Certificates.................... 1
Non-Extension Drawing............... 56
Non-Performing Equipment Note....... 55
Non-Premium Amount.................. 52
Note Purchase Agreement............. 7
Original Trustee.................... 7
Original Trusts..................... 7
Owned Aircraft...................... 10
Owned Aircraft Indenture............ 10
Owned Aircraft Trustee.............. 10
Owner Participant................... 10
Owner Trustee....................... 10
Par Redemption Amount............... 52
Participation Agreement............. 46
Pass Through Trust Agreements....... 7
Paying Agent........................ 7
Paying Agent Account................ 36
Performance Equipment Note.......... 55
Pool Balance........................ 37
Pool Factor......................... 37
Prohibited Transactions............. 88
PTC Event of Default................ 42
Rating Agencies..................... 20
Receiptholder....................... 53
Registration Event.................. 26
</TABLE>
<TABLE>
<CAPTION>
DEFINITION PAGE
<S> <C>
Registration Rights Agreement....... 26
Regular Distribution Dates.......... 34
Remaining Weighted Average Life..... 71
Replacement Facility................ 56
Required Amount..................... 54
Scheduled Payments.................. 8, 34
SEC................................. 1
Section 1110 Period................. 55
Securities Act...................... 26
Series A Equipment Notes............ 9
Series B Equipment Notes............ 9
Series C Equipment Notes............ 10
Series D Equipment Notes............ 11
Shelf Registration Statement........ 26
Special Distribution Date........... 36
Special Payment..................... 36
Special Payments.................... 9
Special Payments Account............ 36
Standard & Poor's................... 20
Stated Interest Rates............... 54
Subordination Agent................. 7
Successor Trustee................... 7
Successor Trusts.................... 7
Termination Notice.................. 58
Threshold Rating.................... 56
Transfer Date....................... 7
Transportation Code................. 43
Treasury Yield...................... 71
Triggering Event.................... 9
Trust Property...................... 7
Trustee............................. 7
Trusts.............................. 5
Underwriter Exemption............... 89
</TABLE>
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APPENDIX II -- APPRAISAL LETTERS
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[AVITAS LOGO]
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AMERICA WEST AIRLINES SEPTEMBER 24, 1998
INTRODUCTION
AVITAS, Inc. has been retained by America West Airlines (the "Client") to
provide its opinion as to the Base Value at date of delivery for six Airbus
A319-100 aircraft and two A320-200 aircraft. The subject aircraft are identified
and their values are set forth in Figure 1 on page 2.
The values presented in this report assume that the aircraft will be in
new, "flyaway" condition and fully certificated for commercial operations. We
have further assumed that the subject aircraft will be operated under the air
transport regulations of a major nation.
DEFINITIONS
AVITAS's value definitions, set forth in full in the appendix at the end of
this report, conform to those of the International Society of Transport Aircraft
Trading ("ISTAT") adopted in January 1994, and are summarized as follows:
- BASE VALUE is the appraiser's opinion of the underlying economic value of
an aircraft in an open, unrestricted, stable market environment with a
reasonable balance of supply and demand, and assumes full consideration
of its "highest and best use." An aircraft's Base Value is founded in the
historical trend of values and in the projection of value trends and
presumes an arm's-length, cash transaction between willing and
knowledgeable parties, acting prudently, with an absence of duress and
with a reasonable period of time for marketing. Base Value typically
assumes that an aircraft's physical condition is average for an aircraft
of its type and age, and its maintenance time status is at mid-life,
mid-time (or benefiting from an above-average maintenance status if it is
new or nearly new).
WORLD HEADQUARTERS: 1835 Alexander Bell Drive,
Reston, VA 22091 USA - Telephone 703/476-2300
FAX: 703/860-5855
AVITAS EUROPE: Palace House, 3 Cathedral St.
London SE1 9DE - Telephone 0171/716-6621
FAX: 0171/357-6873
AVITAS ENGINEERING: 815 N.W. 57th Avenue, Suite 203
Miami, FL 33126 - Telephone 305/267-7332
FAX: 305/267-7365
A DET NORSKE VERITAS COMPANY
AIRCRAFT VALUE
AVITAS's opinion as to the value of the subject aircraft is presented below
in millions of U.S. dollars. Base Values are in then-current dollars using a
3.0% inflation rate compounded annually.
The Base Value of a new aircraft is the modal price paid by an average
operator in a single unit or small lot sale. Actual transaction prices may be
either above or below that level due to a number of factors. For example, a
launch order or a large fleet order may result in discounts, whereas a single
unit sale to a small operator who needs a substantial amount of support may be
at or above the list price.
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[AVITAS LOGO]
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AMERICA WEST AIRLINES SEPTEMBER 24, 1998
Furthermore, implicit in these values is AVITAS's assumption that the new
aircraft will remain with the original operator for at least two years. If a
newly delivered aircraft comes onto the market, the seller is at an immediate
disadvantage as he is likely to be in competition with the manufacturer who can
offer training and support.
FIGURE 1
<TABLE>
<CAPTION>
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AMERICA WEST AIRLINES
SUMMARY OF AIRCRAFT AND SPARE ENGINE VALUES
(US$ MILLIONS)
---------------------------------------------------
NO. TYPE ENGINES DELIV. DATE BV
---------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 A319-100 V2524-A5 Oct-98 38.0
---------------------------------------------------
2 A319-100 V2524-A5 Dec-98 38.0
---------------------------------------------------
3 A319-100 V2524-A5 Dec-98 38.0
---------------------------------------------------
4 A319-100 V2524-A5 Jul-99 40.6
---------------------------------------------------
5 A319-100 V2524-A5 Jul-99 40.6
---------------------------------------------------
6 A319-100 V2524-A5 Aug-99 40.6
---------------------------------------------------
7 A320-200 V2527-A5 Feb-99 45.5
---------------------------------------------------
8 A320-200 V2527-A5 May-99 46.2
---------------------------------------------------
</TABLE>
GENERAL MARKET OVERVIEW
For the third consecutive year, orders surpassed deliveries. There were a
record number of gross jet aircraft orders in 1997 as 1,392 aircraft were put on
firm order against 652 deliveries. Orders outpaced deliveries across almost all
seat classifications and deliveries for 1997 outpaced 1996 deliveries by almost
a third. Operators are continuing the trend of increasing their order books to
ensure future delivery positions in an expanding market. The order backlog for
jet aircraft at the end of 1997 is close to 3,100 aircraft. With the record
setting backlogs, Boeing and Airbus, notwithstanding their competitive slugfest,
may soon see some ability to raise prices as new customers for aircraft may have
to pay a premium to obtain aircraft positions in the manufacturers' busy
production lines.
The strong aircraft order activity is in line with robust traffic and solid
economic growth and prosperity that began in earnest in 1993. The world's
airlines are now in their fifth consecutive year of positive earnings as a
result of increased traffic. While passenger yields have continued to decline
somewhat, strong traffic coupled with relatively flat unit costs and low
capacity increases have produced solid profitability. Load factors for the
industry are now at all time high levels.
Aircraft order and the resultant delivery activity correlate well with
overall economic activity and the business cycle. The extended period of
economic growth that occurred in the late 1980s led to rising traffic
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[AVITAS LOGO]
- --------------------------------------------------------------------------------
AMERICA WEST AIRLINES SEPTEMBER 24, 1998
demand, which was met by the airlines through a record number of aircraft orders
at favorable financing terms. The order book backlog peaked at 2,900 jetliners
in 1990, triple the previous peak that occurred in 1979.
By late 1990, however, it was obvious that a mismatch between unit revenue
and unit costs was occurring. Unit costs in 1990 exceeded 1989 levels by almost
10% while yields increased by less than 5%. Adding to this situation was the
fact that several regional economies were falling into recession and the Gulf
War had broken out causing fuel prices to spike. Demand for air travel fell just
as the world's airlines began taking delivery of the record number of aircraft
that were ordered in the previous two to three years. The downward spiral had
begun and between 1990 and 1993, the world's airlines lost over $20 billion. The
Figure below summarizes the order and delivery pattern of aircraft over the last
25 years.
FIGURE 2
COMMERCIAL JET
NEW ORDERS, DELIVERIES AND BACKLOG
1970 TO 1997
<TABLE>
<CAPTION>
DELIVERIES NEW ORDERS BACKLOG
<S> <C> <C> <C>
1970 318 204 463
1971 233 136 366
1972 215 275 426
1973 283 257 400
1974 317 273 356
1975 285 173 244
1976 234 242 252
1977 191 328 389
1978 259 684 814
1979 399 544 959
1980 433 359 885
1981 426 274 733
1982 284 197 646
1983 311 224 559
1984 263 357 653
1985 343 624 934
1986 395 666 1205
1987 414 597 1388
1988 508 1031 1911
1989 564 1280 2627
1990 665 911 2873
1991 835 448 2486
1992 785 407 2108
1993 641 341 1808
1994 517 426 1717
1995 473 736 1980
1996 495 1208 2520
1997 631 1053 2970
</TABLE>
Source: Back Aviation Services and Avitas calculations
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AVITAS's view today is that the economic equation surrounding the supply of
seats vs. the demand for travel as well as the relationship between unit revenue
and unit costs is in better balance. This "economic balance" has produced
sustained profitability over the last four years. World passenger traffic for
1997 was up more than 30% over the level experienced in 1993. At the same time,
seat capacities have grown roughly 20%, raising load factors in the process to
record levels. Moreover, unit costs have remained flat reducing passenger
breakeven load factors. Cargo movements have also increased contributing to
overall airline profitability.
Air passenger and air freight growth are positively correlated with general
economic activity as measured by Gross National Product and are a multiple of
real GNP growth rate changes. Sustained increases in traffic translate into new
aircraft order activity to meet passenger and cargo demands. For example, the
U.S. economy has grown at an annual rate of 2.6% between 1992 and 1997 while
passenger traffic has increased at a yearly rate of 5.2%. For that period, the
U.S. major carriers have produced operating profits of over $13 billion. With
the economy forecast to grow at an annual rate of approximately 2.5% over the
next several years, we envision traffic and thus aircraft orders to continue at
a steady pace to meet growth and fleet renewal plans. Figure 3 indicates the
relationship between changes in the U.S. GNP and changes in revenue passenger
miles over the last 16 years.
While the U.S. economy has produced steady growth over the last several
years, other regional economies are having some difficulties. Asia is currently
in the news with reports of economic retrenchment and currency devaluation.
Given the seriousness of the current situation and the importance of that region
for future aircraft deliveries and values, please see a separate section on the
Asian Crisis for a fuller discussion.
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FIGURE 3
GNP AND U.S. AIRLINE RPMS GRAPH
<TABLE>
<CAPTION>
REAL GNP U.S. RPMS
<S> <C> <C>
1980 -0.2 -3.9
1981 1.8 -2.9
1982 -2.1 4.8
1983 4 8
1984 7 8.5
1985 3.6 9.9
1986 3.1 7.9
1987 2.9 10.3
1988 3.8 4.7
1989 3.4 2.2
1990 1.2 5.5
1991 -0.9 -1.9
1992 2.7 6.6
1993 2.3 2.5
1994 3.5 6.2
1995 2 4
1996 2.4 6.6
1997E 3.7 5.3
</TABLE>
Source: Airline Monitor, AVITAS estimates
In September 1997, Boeing gained approval from the European Commission for
its merger with McDonnell Douglas by dropping exclusivity contracts with
American Airlines, Delta Air Lines, and Continental Airlines. Airbus has also
been active in gaining market share by achieving large orders with US Airways
and Northwest Airlines. In any consolidating industry, questions about higher
prices are always prevalent. Indeed, many observers are trying to determine what
will happen to aircraft pricing with one less major supplier. From the airlines'
view however, they benefit from operating a "family" of aircraft where they
achieve larger pricing discounts from the manufacturers. They also obtain cost
savings through aircraft commonality, particularly in crew training and
maintenance.
Boeing has had difficulty in ramping up to an aggressive production level
and consequently, in delivering new aircraft on schedule. This has been a result
of supply chain problems and shortages in capacity from vendor related parts.
These difficulties may not be resolved until the middle of 1998. To
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help unravel these issues, Boeing closed the production lines for the B747 and
B737 for a month. As a result of the delivery delays, Boeing has taken a charge
of $1.6 billion (pretax) that resulted in a net loss of $696 million for the 3rd
quarter of 1997. The B747 models may see lingering delivery delays that may last
into 1999.
Boeing has decided to end production of the Douglas inherited MD-80 and
MD-90 aircraft when commitments end in 1999 and recently announced plans to end
production of the MD-11 in 2000. It plans to keep the MD-95 program (now renamed
the Boeing 717) and build the fifty B717 aircraft ordered by AirTran Airlines
but the aircraft will likely be reduced in size in the future to between 80 and
100 seats so that Boeing can better compete in that seat category. Figure 4
represents the order and delivery activity that has taken place through 1997 by
seat classification.
FIGURE 4
AIRCRAFT ORDERS AND DELIVERIES
<TABLE>
<CAPTION>
ORDERED DELIVERED
<S> <C> <C>
50-70 SEATS 224 55
100 SEATS 38 21
150 SEATS 381 169
200 SEATS 69 60
250 SEATS 72 34
300 SEATS 83 90
400 SEATS 24 37
</TABLE>
Source: Airline Monitor, Boeing, Airbus, AVITAS estimates
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50-70 seats (Regional jets)
The regional jet has become one of the hottest selling aircraft the
industry has seen in some time. These 50-seat small jets are changing the
competitive landscape in the regional industry. They have the ability to perform
hub-raiding missions into thin markets and capture traffic from competitors'
formerly captive markets. American Eagle placed orders for 42 Embraer 145s in
June. This order, coupled with Continental's take-up of 25 options on top of
their original order of 25 aircraft, has allowed Embraer to challenge the
Canadair RJ and become a viable competitor in this sector. The CRJ now has over
300 firm orders while the EMB-145 has close to 200. The backlogs for both of
these aircraft are strong with a total of 255 yet to be delivered. The emergence
of the EMB-145 will hold regional jet prices at a competitive level and further
stimulate regional jet sales. The CRJ-700, a seventy-seat stretched version of
the CRJ, was launched with an order from American Eagle for 25 aircraft. Smaller
regional jets are also on the horizon as both Fairchild Dornier and Embraer will
be producing 32 and 37 seat jets respectively. Each of these products will be
attempting to capitalize on the U.S. regional industry's strong desire for jet
aircraft. The activity on the regional jet front has produced some fallout,
however, as the AIR organization announced that it has cancelled its yet to be
launched AIRJet program, which included the 58-seat AIR-58, the 70-seat AIR-70,
and the 84-seat AIR-80.
100 Seats
In this sector, the demand for aircraft is strong and most aircraft seem to
be trading above the intrinsic or Base Values. In particular, DC-9-30 and B737
aircraft are experiencing very firm market conditions. New orders in this seat
segment are showing some relative weakness, however, as the backlog has fallen.
Most airlines are watching developments at Boeing and its plans for the B717 as
well as Airbus and its development with its Chinese aerospace partners on the
AE-316/317. The B737-600 series has recorded 40 orders through 1997.
150 Seats
This has been the most active segment for new aircraft orders.
Consequently, the backlog has grown considerably as Boeing and Airbus virtually
split the 592 orders that have occurred in 1997 for the Airbus 319/320 and the
Boeing 737-300/400/700/800 series. With 203 deliveries in 1997, the backlog grew
by 389 aircraft. This segment is most active as a result of operators
positioning themselves for new aircraft as they formulate plans to retire some
of the older 727 aircraft in service. Still, many operators are committed to
their 727 fleets.
200 Seats
While this segment pales in comparison to the activity as registered at 150
seats, it had solid growth in both new orders and deliveries. The B757-200 and
the A321 dominate activity gaining 95 new orders in 1997. Boeing has launched a
stretch of the B757 line with the B757-300 with an initial order of 12 aircraft
from charter operator Condor Flugdienst. Since that order, however, only 2
additional orders for the -300 model aircraft have materialized in 1997.
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250 Seats
For some aircraft types, such as the DC-10, the market has improved as both
United and American have committed their DC-10-10s to FedEx. However, any stored
L-1011s are unlikely to return to service. We do see more freighter conversion
of A300s, which should further improve the supply situation for freighters. With
the launch of the Airbus A330-200, the dominance of the Boeing 767 is being
contested. To that end, the A330-200 in 1997 had slightly more orders than the
perennial favorite 767-300 aircraft. Both the A300 and A310 have weak backlogs
putting the future of those programs in question as Airbus turns up its
marketing efforts on the A330 series.
300 Seats
Boeing launched the 767-400ERX aircraft which has the same range as the
767-300 but with about 15% more capacity. First deliveries are scheduled in
early 2000. Older Boeing 747s are being retired and the market continues to be
strong as Boeing 777s and Airbus A340s replace them. Recently Boeing announced
plans to discontinue production of the MD-11 in year 2000 because of
insufficient demand for the wide-body aircraft. Delta Airlines' and Continental
Airlines' orders for B767-400s impedes Airbus's efforts to penetrate the U.S.
market with the A330.
400 Seats
Airbus announced a $2.9 billion development effort on the A340 program to
launch new models of the series: the -500 and -600 models. The new models are to
compete with Boeing who has long dominated the high capacity end of the market.
The A340-600 will have a seating capacity of 380 compared with 295 on the
current largest Airbus model. The longer range A340-500 will have 313 passengers
and will have a range of 8,500 nautical miles. Deliveries would start in early
2002. Airbus is still looking for launch customers for the A3XX super-jumbo
aircraft but nevertheless is still hopeful for a launch decision by the end of
1998. For its part, Boeing has slowed design work for longer-range versions of
its 777 series as a result of lack of orders. Boeing has seen its backlog stay
virtually even on the 747-400 aircraft as it delivered 39 aircraft in 1997
against 37 orders. Moreover, the 747-400 line has been affected by the
previously mentioned supply chain difficulties, which could trail into 1999.
THE ASIAN CRISIS
The economic difficulty following currency devaluations in Asia has brought
about serious implications for aircraft values likely to last through the
changeover to the next millennium. However, the economies of the United States
and the rest of the world are strong and AVITAS believes that the Asian crisis
will certainly reduce the world rate of economic growth, but it will not
precipitate a global recession. Aircraft values are likely to suffer during this
crisis, the most concern is for widebody passenger aircraft values. Narrowbody
values are better protected because Asia is not a large center of demand.
Thirty-two percent of the world's widebody aircraft are in the possession of
Asian carriers, and Asian carriers have 29% of the world's firm orders for
widebodies. Many of these carriers, particularly in Indonesia are suffering
severe revenue losses from reduced traffic levels and civil strife.
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Thailand, Malaysia, South Korea and Indonesia have had their currencies
devalue over 40% against the U.S. dollar. Indonesia's rupiah has lost up to 70%
of its value compared to the US dollar and the crisis is expected to worsen.
Indonesia in a "best-case" scenario will experience a 15% drop-off in economic
activity. South Korea's problems are considerably less explosive, yet the
expectation is that the country will experience economic decline of about 4%.
Malaysia's economy has historically been more resilient to economic corrections;
however, MAS, the country's premier carrier has experienced a severe shortage of
capital. MAS has deferred deliveries of 747-400s and the carrier is unable to
finance its Boeing 777 deliveries. A recent attempt to sell its four 777
deliveries to Delta Air Lines has failed at the deal table. Thai International
announced a $578 million loss for the Fourth Quarter of 1997. The massive loss
was considered to be entirely due to foreign currency provisions.
Making predictions for the Asia-Pacific region will be difficult in the
coming months as the situation remains volatile. AVITAS believes that
expectations hinge on Japan and China's actions. In comparison of the region,
Japan's GDP far exceeds those of the other Asian countries. Japan is the
region's largest trading partner and provider of investment funds. Japan's
extensive inter-relation with the other economies of the region has only served
to worsen the problem. The yen recently fell to an eight-year low against the
U.S. dollar, driving down the prices of stocks and currencies. Japanese outbound
leisure travel has sharply declined, further affecting other economies in the
region that depend heavily on Japanese tourism dollars, especially Hong Kong and
Singapore. The Federal Reserve has intervened to keep the dollar between 130 and
140 yen. The expectation is that if the yen were to fall more and head toward
150 to the dollar, the Chinese would devalue the yuan, setting off another chain
reaction of devaluation for the other Asian countries.
Officials from China have stated that they forecast a growth in their
economy of 8% for 1998. AVITAS is of the opinion that 5% is even too optimistic.
In addition to poor operating performance for Chinese airlines, debt levels are
at a critically high level. At present, only six of China's airlines are even
capable of showing a profit. They are the six largest: Air China, China
Southern, China Eastern, China Northern, China Southwest, and China Northwest.
Whether they will show a profit for 1998 still remains to be seen, but at
present is probably unlikely. Airlines that have practiced price-cutting to fill
seats have experienced heavy losses. These airlines already had much more
capacity than what was required for their expected growth. China Eastern, which
showed a profit in 1997, has shown a First Quarter 1998 loss of 240 million yuan
(about $29 million U.S. dollars). Air China and China Southern were even deeper
in the red for the First Quarter at an estimated loss of 600 million yuan (about
$72 million U.S. dollars). All of China's principal airlines are currently
exploring sale-leasebacks to raise much needed capital; however, the majority of
China's new aircraft are already heavily financed, and getting an advantageous
deal for an older aircraft may be extremely difficult as the credit ratings of
the Chinese carriers fall. Lessors will only consider sale-leaseback
arrangements with Chinese carriers that are acknowledged to be long-term players
with Chinese government protection.
The picture is not as bleak for other carriers in the region. Qantas
Airways expects that revenues will continue to hold up despite the downturn in
traffic for the region. The Australian airline should have enough resources to
meet the debt repayment and capital expenditure requirements of their new
deliveries. A wide spread of international routes and substantial internal cash
reserves should generate the necessary
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cash flow to see them through the decline in Asian traffic. Qantas' Asian routes
make up only 20% of total revenue passenger kilometers (excluding Japan). By
implementing rapid changes in their scheduling, Qantas has been able to keep
their load factors from deteriorating. Flights from Japan were withdrawn while
simultaneously increasing flights to the Philippines to take advantage of PAL's
worsening situation.
The strike-ravaged Philippine Airlines have been frantically attempting to
dispose of aircraft to stave-off closure. As of June 1998, PAL is in default for
deferring the delivery of three 747-400 aircraft and they are expected to have
to defer the other three that they have on order as well. Also in June of 1998,
Qantas is expected to take delivery of two 767-300ER aircraft, which will be
purchased using cash reserves. It is expected that they will be able to obtain a
lease-structured financing for the aircraft. Qantas is expected to take delivery
of three 747-400 aircraft in October 1999 and April 2000.
Deferrals by the Asian carriers have global implications for aircraft
values. A potential buildup of undelivered aircraft will soften aircraft values.
There will be an opportunity for carriers from other regions to snatch up
aircraft at reduced prices, but the ability of the market to absorb large
numbers of high-valued widebody aircraft will be challenged in some aircraft
markets. Under the fairly firm market conditions that exist in the United
States, the remarketing period for a widebody commercial aircraft is about six
months, but under glut market conditions remarketing time would be lengthened
considerably, and would result in many aircraft being parked.
AVITAS believes that conditions so far indicate that the recession in Asia
will last for about two years and will have a negative affect on widebody
aircraft values during this period, but we are not likely to experience the
severity of conditions seen in the 1990 recession. The economies of the rest of
the world are strong, and a worldwide recession is an unlikely scenario. Europe
and Latin America are experiencing solid economic growth and are expected to
remain stable as long as the United States avoids a recession. From a world
economic viewpoint, the Asian crisis is reducing the rate of growth for the
world economy and consequently aircraft demand forecasts will need to be
moderately adjusted.
BACKGROUND AIRBUS A319
The A319 Program was launched in June, 1993 and the first aircraft of the
type was certificated in April 1996. The aircraft seats 124 passengers in a
typical two-class configuration or 154 in a maximum configuration. It has a
basic range of 2,000 nautical miles with a MTOW of 141,100 lb and an optional
range of 3,000 nautical miles with a MTOW of 149,900 lbs. The A319 has a 12-feet
shorter fuselage than the A320 accomplished by removing two fuselage plugs.
The design of this new aircraft is focused on maintaining a high degree of
commonality with the A320 and the A321 so that an existing A319 operator could
easily transition to its larger versions, where almost all of the major systems
of the A319 are exactly the same.
The A319 is available with either CFM56-5A or IAE V2500-A5 engine and meets
the noise abatement requirements outlined in U.S. FAR Part 36, Stage 3, and ICAO
Annex 16, Chapter 3 regulations.
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CURRENT MARKET -- AIRBUS A319
Current Market
AVITAS believes that A319 current market is firm as is the narrowbody
market as a whole. With a backlog of 371 firm orders and acceptance in the North
American market, the A319 values should remain firm for the foreseeable future.
Historic Market Development
The development of the A319, A320, and A321 characterizes the market
strategy of Airbus to build an entire family of aircraft capable of
accommodating a wide range of travel demands while maintaining a high degree of
commonality. Operators that have a mixed fleet of A319, A320s and A321s will a
have greater ability to match capacity to demand, reduce operating cost,
increase crew productivity and simplify ground handling. This is shown by the
fact that the majority of all current operators of A319 aircraft or with A319
aircraft on order are present A320 customers.
The Operating Lease Market
AVITAS is aware of lease rates for 1996 year of manufacture A319-100s for
$310,000 per month per aircraft on 10-year operating leases with lessor's cost
of $34.5 million per aircraft.
Availability
AVITAS is not aware of any used aircraft available. This is in line with
expectations for such a new aircraft program.
Recent Transactions
With the recent introduction of the A319, a secondary market has yet to
develop for this aircraft.
Engine Choices
The current A319 fleet is powered by CFM56-5A/-5B engines (86%) and IAE
V2500-A5 (14%). However, in the broader scope of the A320 family, 63% are
operated with CFM engines and 37% with IAE engines.
Recent Fleet Developments
Air France announced in June, 1998 that it has placed orders for 16 A319
aircraft, with deliveries beginning in 2002. In March, 1998, the three Latin
American carriers TAM of Brazil, TACA Group and LanChile combined to order 90
A319 and A320 aircraft with options for an additional 89 aircraft. Breakdown of
the order between A319 and A320 aircraft was not announced, however the aircraft
will be powered by IAE V2500 engines. Also in March, United Airlines signed a
firm contract to purchase 10 A319 aircraft, for delivery in 2000 and 2001.
Spanish flag carrier Iberia signed a MOU with Airbus in February, 1998 for
orders and options of up to nine A319 aircraft as part of a larger deal
involving the firm
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order of 50 A319/A320/A321 aircraft and options for 26 additional aircraft.
Northwest has announced an order for 50 firm and 100 option A319 aircraft to be
delivered between 1999 and 2003. In November last year, US Airways affirmed its
order for 400 A319/A320/A321 aircraft. The carrier plans to take delivery of 234
aircraft in 1998. The Airbus fleet is to replace the carriers DC-9-30s,
B737-200s and MD-80s.
Tunis Air recently announced an order for three A319s and Finnair is
replacing its DC-9-50 fleet with five A319s, three A320s and four A321s.
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Current Operator Base and Backlog
Presented below is the current fleet and backlog for the A319-100 by
operator. Also presented are the A319 by engine type and a presentation of the
A319/A320/A321 family current fleet and backlog.
FIGURE 5
A319 FLEET DATA
AS OF JUNE 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
OPERATOR IN SERVICE ORDERS OPTIONS TOTAL
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIR CANADA 33 -- -- 33
- -----------------------------------------------------------------------------------------------------------------
LUFTHANSA 17 2 20 39
- -----------------------------------------------------------------------------------------------------------------
AIRBUS INDUSTRIE 10 -- -- 10
- -----------------------------------------------------------------------------------------------------------------
AIR FRANCE 9 4 8 21
- -----------------------------------------------------------------------------------------------------------------
UNITED AIR LINES 9 25 -- 34
- -----------------------------------------------------------------------------------------------------------------
SWISSAIR 8 -- -- 8
- -----------------------------------------------------------------------------------------------------------------
TAP AIR PORTUGAL 4 12 -- 16
- -----------------------------------------------------------------------------------------------------------------
EUROWINGS 3 1 2 6
- -----------------------------------------------------------------------------------------------------------------
CROATIA AIRLINES 1 4 6 11
- -----------------------------------------------------------------------------------------------------------------
AMERICA WEST AIRLINES -- 22 20 42
- -----------------------------------------------------------------------------------------------------------------
FINNAIR -- 5 5 10
- -----------------------------------------------------------------------------------------------------------------
GE CAPITAL AVIATION SERVICES INC. -- 2 4 6
- -----------------------------------------------------------------------------------------------------------------
IBERIA -- -- 9 9
- -----------------------------------------------------------------------------------------------------------------
ILFC -- 42 -- 42
- -----------------------------------------------------------------------------------------------------------------
LAN CHILE -- 11 9 20
- -----------------------------------------------------------------------------------------------------------------
NORTHWEST AIRLINES -- 50 100 150
- -----------------------------------------------------------------------------------------------------------------
SABENA -- 26 -- 26
- -----------------------------------------------------------------------------------------------------------------
SILKAIR -- 3 -- 3
- -----------------------------------------------------------------------------------------------------------------
TACA INTERNATIONAL AIRLINES -- 21 18 39
- -----------------------------------------------------------------------------------------------------------------
TAM TRANSPORTES AEREOS REGIONAIS -- 25 25 50
- -----------------------------------------------------------------------------------------------------------------
TUNIS AIR -- 3 -- 3
- -----------------------------------------------------------------------------------------------------------------
UNKNOWN OPERATOR -- 4 -- 4
- -----------------------------------------------------------------------------------------------------------------
US AIRWAYS -- 109 276 385
- -----------------------------------------------------------------------------------------------------------------
GRAND TOTAL 94 371 502 967
</TABLE>
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Source: BACK Information Services
FIGURE 6
<TABLE>
<CAPTION>
A319-100 AIRCRAFT BY ENGINE MANUFACTURER
AS OF JUNE 1998
- ----------------------------------------------------------------------------------------------------------
ENGINE IN SERVICE ORDERS OPTIONS TOTAL
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CFM 56 81 222 430 733
- ----------------------------------------------------------------------------------------------------------
V2500 13 116 72 201
- ----------------------------------------------------------------------------------------------------------
Undecided -- 33 -- 33
- ----------------------------------------------------------------------------------------------------------
GRAND TOTAL 94 371 502 967
</TABLE>
Source: BACK Information Services
FIGURE 7
<TABLE>
<CAPTION>
A319/A320/A321 SERIES CURRENT FLEET AND BACKLOG
AS OF JUNE 1998
- ---------------------------------------------------------------------------------------------------------
MODEL IN SERVICE ORDERS OPTIONS TOTAL
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
A319-100 94 371 502 967
- ---------------------------------------------------------------------------------------------------------
A320-100 18 -- -- 18
- ---------------------------------------------------------------------------------------------------------
A320-200 631 344 136 1,111
- ---------------------------------------------------------------------------------------------------------
A321-100 74 34 64 172
- ---------------------------------------------------------------------------------------------------------
A321-200 28 87 34 149
- ---------------------------------------------------------------------------------------------------------
GRAND TOTAL 845 836 736 2,417
</TABLE>
Source: BACK Information Services
Outlook and Future Asset Risk Analysis
The A319 competes with the Boeing 737-500 and -600 which currently have
combined 368 aircraft in service and 154 on order.
It is AVITAS's opinion that expansion of the A319's operator base will
primarily come from existing A320 operators. Of minor concern is that 12% of the
current backlog is held by GE Capital Aviation Services (GECAS) and
International Lease Finance Corporation (ILFC) who have likely ordered the
aircraft with the flexibility to convert to A320 or A321 aircraft.
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BACKGROUND -- AIRBUS A320 SERIES
The A320, a stage 3 compliant short to medium range twin-engine jetliner
was launched in 1984 with certification in 1988. The original was the A320-100,
of which there are only 18 in service among three operators. The -- 100
aircraft have no wing center tank which limits the range and payload.
The A320-200 was first flown and delivered in 1988 to Air France and
British Caledonian Airways. Its typical configuration includes a two-person
cockpit crew with capacity for 150 passengers with high density seating of 179.
The A320 has a range of 3,000 nautical miles with 150 passengers and is powered
by CFM56-5A1/-5A3, V2500-A1/A5 and V2527-A5 engines, with thrust ranging from
25,000 lbs to 26,500 lbs. The maximum takeoff weight (MTOW) ranges from 162,000
lbs to 169,750 lbs. A technically advanced aircraft, the A320 includes such
design concepts as fly-by-wire flight controls, centralized maintenance
reporting system, side stick controllers in the cockpit and the use of composite
materials in the major elements of primary structures including the horizontal
and vertical stabilizers.
The A320 has a common type rating with the A319 and the A321, which means
that they can be operated as one aircraft type and with identical maintenance
procedures.
CURRENT MARKET -- AIRBUS A320-200
Current Market
AVITAS is of the opinion that the current market for the Airbus A320 series
aircraft is firm. This is evidenced by a low level of availability and high
demand for the type, which AVITAS attributes to a general resurgence in the
Stage III narrowbody aircraft market.
Historic Market Development
The A320 market had been very soft during the early 1990s with an excess
supply of new aircraft being delivered into a depressed market. This was caused
not only by bankruptcies of several carriers with A320s on order, but also by
the speculative buying of A320s by leasing companies. During 1994 and 1995, the
market for the aircraft firmed substantially. Only four A320 aircraft were
reported as available for sale or lease in October 1997, compared to between 14
and 17 during 1994 and 1995.
The Operating Lease Market
During the late 1980s, operating lessors, primarily GPA, GATX, ILFC,
Kawasaki and Orix placed orders for a significant amount of A320 aircraft for
early 1990 deliveries. Unfortunately, the aircraft were delivered during the
soft market of the early 1990s and were placed at lease rates that were at times
less than $200,000 per month. During the last couple of years, the excess A320
capacity had been placed with riskier credits such as the U.S. start-up Midway
Airlines at rates in the $235,000 per month range. Lately, the A320 lease market
has strengthened resulting in rentals at the $300,000 per month level or above.
AVITAS is aware of several new aircraft leases in the $330,000 range and one
1992 vintage aircraft being negotiated at just below $300,000 per month.
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Availability
As of June 1998, twelve A320-200s are advertised as available for sale or
lease. ORIX Aviation Systems is offering five 1992/1993 vintage aircraft for
sale or lease. Transaer International Airways has four available for 6-12 month
ACMI leases. Onur Air and Caledonian Airways have aircraft available for wet
lease.
Recent Transactions
Oasis International Leasing recently acquired six A320s operated by Gulf
Air in a sale-leaseback transaction. The six aircraft are 1992-1993 vintages and
were purchased for an average price of $32.5M each. TACA recently took delivery
of two new A320-200 aircraft in a sale and leaseback transaction in which the
lessor paid $41.14 million for each aircraft. Debis Airfinance has been active
in this market in late 1997 purchasing a 1992 vintage A320 from ILFC. Most of
the transactions that have been occurring over the past year have been leases or
sales with leases attached.
Operator Base and Backlog
As of June 1998, there are 631 aircraft in service among 74 operators and
344 on firm order. Displayed below are the ten largest operators and ten largest
orderholders for the A320-200.
FIGURE 8
A320-200 TEN LARGEST OPERATORS
AS OF JUNE 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AIRCRAFT IN
OPERATORS SERVICE
- --------------------------------------------------------------------------------
<S> <C>
NORTHWEST AIRLINES 56
- --------------------------------------------------------------------------------
AIR FRANCE 45
- --------------------------------------------------------------------------------
UNITED AIR LINES 44
- --------------------------------------------------------------------------------
AIR CANADA 34
- --------------------------------------------------------------------------------
LUFTHANSA 33
- --------------------------------------------------------------------------------
AMERICA WEST AIRLINES 30
- --------------------------------------------------------------------------------
INDIAN AIRLINES CORPORATION 30
- --------------------------------------------------------------------------------
IBERIA 22
- --------------------------------------------------------------------------------
ALL NIPPON AIRWAYS 21
- --------------------------------------------------------------------------------
ANSETT AIRLINES 20
</TABLE>
Source: BACK Information Services
A-II-17
<PAGE> 112
[AVITAS LOGO]
- --------------------------------------------------------------------------------
AMERICA WEST AIRLINES SEPTEMBER 24, 1998
FIGURE 9
A320-200 TEN LARGEST ORDERHOLDERS
AS OF JUNE 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AIRCRAFT IN
OPERATORS SERVICE
- --------------------------------------------------------------------------------
<S> <C>
IBERIA 31
- --------------------------------------------------------------------------------
INTERNATIONAL LEASE FINANCE CORP. 28
- --------------------------------------------------------------------------------
GE CAPITAL AVIATION SERVICES INC. 25
- --------------------------------------------------------------------------------
UNITED AIR LINES 25
- --------------------------------------------------------------------------------
AMERICA WEST AIRLINES 24
- --------------------------------------------------------------------------------
ALITALIA 19
- --------------------------------------------------------------------------------
TACA INTERNATIONAL AIRLINES 16
- --------------------------------------------------------------------------------
US AIRWAYS 15
- --------------------------------------------------------------------------------
TAM TRANSPORTES AEREOS REGIONAIS 13
- --------------------------------------------------------------------------------
NORTHWEST AIRLINES 12
</TABLE>
Source: BACK Information Services
Presented below is the A320 current fleet and backlog by engine type.
FIGURE 10
A320-200 CURRENT FLEET & BACKLOG BY ENGINE TYPE
AS OF JUNE 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
ENGINE TYPE IN SERVICE ORDERS OPTIONS TOTAL
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CFM56-5 384 178 39 601
- ------------------------------------------------------------------------------------------------------------------
V2500 247 139 95 481
- ------------------------------------------------------------------------------------------------------------------
Unknown 27 2 29
- ------------------------------------------------------------------------------------------------------------------
GRAND TOTAL 631 344 136 1,111
</TABLE>
Source: BACK Information Services
Additionally, combined with the other members of the Airbus narrowbody
family, the A319 and A321, the current fleet for the A320 family amounts to 845
aircraft and 836 firm orders.
A-II-18
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[AVITAS LOGO]
- --------------------------------------------------------------------------------
AMERICA WEST AIRLINES SEPTEMBER 24, 1998
Recent Fleet Developments
In March this year, the second largest order ever for Airbus was placed
jointly by LanChile, the TACA Group and TAM for 90 firm orders and 89 options of
the A320 and the A319 aircraft.
Iberia of Spain announced earlier this year an order for 50 firm and 26
options from the Airbus family, specifically 36 A320s, 31 A321s and 9 A319s. The
order is part of Iberia's fleet standardization program.
In November 1997, US Airways affirmed its order for 400 A319/A320/A321
aircraft. The carrier plans to take delivery of 234 aircraft in 1998. The Airbus
fleet is to replace the carriers DC-9-30s, B737-200s and MD-80s.
Outlook and Future Asset Risk Analysis
AVITAS believes that the A320 will continue to be a significant competitor
in the 150-seat market well into the future with competition from the Boeing
737-400 and the 737-800 with 30 and 384 firm orders, respectively. The A320 has
more range than the 737-400 and slightly higher seat capacity, the 737-800
however, fares better than the -400 with a range capacity of 2,900 nautical
miles and increased seat capacity by 17 seats.
With a well established population of 631 A320-200 aircraft currently in
service among 74 operators, and 344 on firm order scheduled for delivery
throughout the year 2005, the future market base for the type is due to expand
significantly with residual values developing positively.
COVENANTS
Unless otherwise noted, the values presented in this report assume an
arm's-length, free market transaction for cash between informed, willing and
able parties free of any duress to complete the transaction. If a distress sale
becomes necessary, a substantial discount may be required to quickly dispose of
the equipment.
AVITAS does not have, and does not intend to have, any financial or other
interest in the subject aircraft. Further, this report is prepared for the
exclusive use of the Client and shall not be provided to other parties without
the express consent of the Client.
This report represents the opinion of AVITAS and is intended to be advisory
only in nature. Therefore, AVITAS assumes no responsibility or legal liability
for any action taken, or not taken, by the Client or any other party, with
regard to this equipment. By accepting this report, all parties agree that
AVITAS shall bear no such responsibility or legal liability including liability
for special or consequential damage.
A-II-19
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[AVITAS LOGO]
- --------------------------------------------------------------------------------
AMERICA WEST AIRLINES SEPTEMBER 24, 1998
STATEMENT OF INDEPENDENCE
AVITAS hereby states that this valuation report has been independently
prepared and fairly represents AVITAS's opinion of the subject aircraft's value.
/s/ Noel Petrie
- ------------------------------------------------
Noel Petrie
Manager -- Asset Valuation
A-II-20
<PAGE> 115
[AVITAS LOGO]
- --------------------------------------------------------------------------------
APPENDIX A -- AVISTAS VALUE DEFINITIONS
- BASE VALUE is the appraiser's opinion of the underlying economic value of
an aircraft in an open, unrestricted, stable market environment with a
reasonable balance of supply and demand and assumes full consideration of
its "highest and best use." An aircraft's Base Value is founded in the
historical trend of values and in the projection of value trends and
presumes an arm's-length, cash transaction between willing and
knowledgeable parties, acting prudently, with an absence of duress and
with a reasonable period of time for marketing. Base Value typically
assumes that an aircraft's physical condition is average for an aircraft
of its type and age, and its maintenance time status is at mid-life,
mid-time (or benefiting from an above-average maintenance status if it is
new or nearly new).
- MARKET VALUE (or CURRENT MARKET VALUE if the value pertains to the time
of the analysis) is the appraiser's opinion of the most likely trading
price that may be generated for an aircraft under the market conditions
that are perceived to exist at the time in question. Market Value assumes
that the aircraft is valued for its highest, best use, that the parties
to the hypothetical transaction are willing, able, prudent and
knowledgeable, and under no unusual pressure for a prompt sale, and that
the transaction would be negotiated in an open and unrestricted market on
an arm's-length basis, for cash or equivalent consideration, and given an
adequate amount of time for effective exposure to prospective buyers.
Market Value assumes that an aircraft's physical condition is average for
an aircraft of its type and age, and its maintenance time status is at
mid-life, mid-time (or benefitting from an above-average maintenance
status if it is new or nearly new). Market Value is synonymous with Fair
Market Value in that both reflect the state of supply and demand in the
market that exists at the time.
- ADJUSTED (CURRENT) MARKET VALUE indicates the Market Value of the
aircraft adjusted for the actual technical status and maintenance
condition of the aircraft, but still assuming the same market conditions
and transaction circumstances as described above.
- DISTRESS VALUE is the appraiser's opinion of the price at which an
aircraft could be sold under abnormal conditions, such as an artificially
limited marketing time period, the perception of the seller being under
duress to sell, an auction, a liquidation, commercial restrictions, legal
complications or other such factors that significantly reduce the
bargaining leverage of the seller and give the buyer a significant
advantage that can translate into heavily discounted actual trading
prices. Apart from the fact that the seller is uncommonly motivated, the
parties to the transaction are otherwise assumed to be willing, able,
prudent and knowledgeable, negotiating under the market conditions that
are perceived to exist at the time, not in an idealized balanced market.
While Distress Value normally implies that the seller is under some
duress, there are occasions when buyers, not sellers, are distressed and,
therefore, willing to pay a premium price.
- FUTURE BASE VALUE is the appraiser's forecast of future aircraft value(s)
setting forth Base Value(s) as defined above.
A-II-21
<PAGE> 116
[AVITAS LOGO]
- --------------------------------------------------------------------------------
APPENDIX A -- AVISTAS VALUE DEFINITIONS
- SECURITIZED VALUE or LEASE-ENCUMBERED VALUE is the appraiser's opinion of
the value of an aircraft under lease, given a specified lease payment
stream (rents and term), an estimated future residual value at lease
termination and an appropriate discount rate. The Securitized Value or
Lease-Encumbered Value may be more or less than the appraiser's opinion
of Market Value. The appraiser may not be fully aware of the credit risks
associated with the parties involved, nor the time-value of money to
those parties, nor with possible tax consequences pertaining to the
parties involved, nor with all of the provisions of the lease that may
pertain to items such as security deposits, purchase options at various
dates, term extensions, sub-lease rights, repossession rights, reserve
payments and return conditions.
A-II-22
<PAGE> 117
[AVITAS LOGO]
- --------------------------------------------------------------------------------
APPENDIX B -- AVITAS APPRAISAL METHODOLOGY
At AVITAS, we undertake formal periodic value reviews of the approximately
ten dozen aircraft types that we regularly track as well as value updates as
market events and movements require. The primary value opinions we develop are
Market Value, Base Value and Future Base Value. An aircraft's Market Value is
the price at which you could sell the aircraft under the market conditions
prevailing at the time in question and its Base Value is the theoretical value
of the aircraft assuming a balanced market in terms of supply and demand. In
reaching our value opinions, we use data on actual market transactions, various
analytical techniques, a proprietary forecasting model and our own extensive
industry experience. And while Market Value and Base Value embody different
value concepts, we are continually cross checking their relationships to
determine if our value opinions are reasonable given existing market conditions.
Our broad aviation industry backgrounds are critically important; they add
a diversity of viewpoints and a high degree of realism to our value opinions.
Our backgrounds include: aircraft design, performance analysis, traffic and
yield forecasting, fleet forecasting, aircraft finance, the negotiation of
aircraft loans, finance leases and operating leases, problem deal workouts,
repossessions, aircraft sales, jetliner manufacturing, maintenance and overhaul
activities, econometric modeling and forecasting, market research, and database
development.
- MARKET VALUE In determining Current Market Values, we use a blend of
techniques and tools. First, through various services and our extensive
personal contacts, we collect as much actual transaction data as possible
on aircraft sales, leases, financings and scrappings. Our published
values assume airframes, engines and landing gear to be halfway through
their various overhaul and/or life cycles. Because sales of half-life
aircraft rarely occur, and because sales can include spare engines,
parts, attached lease streams, tax considerations and other factors,
judgment and experience are important in adjusting actual transaction
data to represent clean, half-life Market Values. In addition, because
over the last several years there have been a large number of aircraft
leases, our experience and knowledge of the market is used to make value
inferences from lease rentals and terms.
As a supplement to transaction data, and in some cases in the absence of
actual market activity, we also use other methods to assist in framing Market
Value opinions. We use several analytical tools because we do not believe that
there is any one technique which always results in the "right" number.
Replacement cost analysis can simply be the cost of a new airplane of the same
model or it can be used where it is possible to reproduce an aircraft. It is
often helpful in framing the upper limit of an aircraft's value, particularly
for modified or upgraded aircraft. Examples would be a passenger aircraft such
as the 747-100 which can be converted into freighter configuration or a Stage 2
airplane which can be hushkitted to Stage 3 compliance. Value in use or income
analysis is another technique in which an aircraft's earning capacity over time
is determined and the present value of those earnings is calculated. Because
different operators have different costs, yields and hurdle rates of return,
this technique can yield a range of values. Therefore, the appraiser must use
his judgment to determine what value in that range represents a Market Value
representative of the overall marketplace. Another powerful tool which we use is
should-cost analysis, which is a blend of replacement cost and value in use
analysis. This technique is used when there is little or no market data on a
particular airplane type but there is on similar or competing types. By
A-II-23
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[AVITAS LOGO]
- --------------------------------------------------------------------------------
APPENDIX B -- AVITAS APPRAISAL METHODOLOGY
analyzing the economic and operational profiles of competing aircraft, the
appraiser is able to impute what the aircraft in question should cost to
position it competitively.
Once we have formulated our own internal Market Value opinions, we present
them to a small, select group of outside aviation experts -- individuals in the
fields of aircraft manufacturing, sales, remarketing, financing and forecasting
who we know well and regard very highly -- for their review and frank comments.
We consider this "reality check," which often results in further value
refinements, to be a critical part of our value process in that it helps us
combat "ivory tower syndrome."
- BASE VALUE The determination of Base Value, an aircraft's balanced
market, long term value, is a highly subjective matter, one in which even
the most skilled appraisers may have widely divergent views. We use 3
main tools in developing Base Values. First, we use our own research,
judgment and perceptions of each aircraft type's long term competitive
strengths and weaknesses vis-a-vis both competing aircraft types and the
marketplace as a whole. Second, we utilize a transaction-based computer
forecasting model developed by a former AVITAS director and refined over
the years. Based on thousands of actual market transactions, the model
sets forth a series of value curves which describe the value behaviors of
aircraft under different circumstances. Third, we do a final reality
check by comparing our opinion of an aircraft's Base Value to our opinion
of its Current Market Value and current marketplace conditions.
We analyze each aircraft model to determine its historic, current and
projected competitive position with respect to similar aircraft types in terms
of mission capability (i.e., what are the aircraft's capabilities and to what
extent does the market require those capabilities), economic profile and market
penetration. As a result of weighing those factors, we assign a numerical
"strength" to each aircraft for each year of its economic life, where Strength
10 represents the strongest value performance and Strength 1 the weakest. The
model then takes those strength factors and translates them into the aircraft's
Base and Future Base Values based on its actual replacement cost (or theoretical
replacement cost if it is no longer in production). After Base Values have been
calculated, we compare them to our Current Market Value opinions as a
calibration check of the computer model. In the infrequent case where the
marketplace for that aircraft is in balance, Base Value and Current Market Value
should be the same. In most cases, though, we must subjectively compare Base
Value with Current Market Value to see if we believe the relationship is
reasonable. This may highlight where Base Value inputs require further
refinements. Because of the dynamics of the aircraft marketplace and our
continuing recalibration, Base Value opinions are not static.
A-II-24
<PAGE> 119
[AvSolutions Logo]
September 24, 1998
Mr. Jacques Lazard
Vice President and Treasurer
America West Airlines
4000 East Sky Harbor Boulevard
Phoenix, Arizona 85034
Dear Mr. Lazard:
AvSOLUTIONS is pleased to provide this opinion on the base value, as of
September 1998, of six Airbus Industrie A319 aircraft and two Airbus Industrie
A320 aircraft (the aircraft). The Airbus A319 aircraft are powered by IAE
V2524-A5 engines. The Airbus A320 aircraft are powered by IAE V2527-A5 engines.
The total of eight aircraft will be delivered new to America West Airlines
between the fourth quarter of 1998 and the third quarter of 1999. A listing of
the A319 and A320 aircraft is provided as attachment 1 of this document.
Set forth below is a summary of the methodology, considerations and
assumptions utilized in this appraisal.
BASE VALUE
Base value is the appraiser's opinion of the underlying economic value of
an aircraft in an open, unrestricted, stable market environment with a
reasonable balance of supply and demand, and assumes full consideration of its
"highest and best use". An aircraft's base value is founded in the historical
trend of values and in the projection of future value trends and presumes an
arm's length, cash transaction between willing, able and knowledgeable parties,
acting prudently, with an absence of duress and with a reasonable period of time
available for marketing.
CURRENT FAIR MARKET VALUE
According to the International Society of Transport Aircraft Trading's
(ISTAT) definition of Fair Market Value (FMV), to which AvSOLUTIONS subscribes,
the quoted FMV is the appraiser's opinion of the most likely trading price that
may be generated for an aircraft under the market circumstances that are
perceived to exist at the time in question. The fair market value assumes that
the aircraft is valued for its highest and best use, that the parties to the
hypothetical sales transaction are willing, able, prudent and knowledgeable, and
under no unusual pressure for a prompt sale, and that the transaction would be
negotiated in an open and unrestricted market on an arm's length basis, for cash
equivalent consideration, and given an adequate amount of time for effective
market exposure to perspective buyers, which AvSOLUTIONS considers to be ten to
twenty months.
7518 - B Diplomat Drive, Manassas, Virginia 20109
Telephone 703-330-0461 Fax 703-330-0581
A-II-25
<PAGE> 120
[AvSolutions Logo]
- --------------------------------------------------------------------------------
Page 2
America West Airlines
APPRAISAL METHODOLOGY
The method employed by AvSOLUTIONS to appraise the current and future
values of aircraft and the associated equipment addresses the factors that
influence the market value of an aircraft, such as its age, condition,
configuration, the population of similar aircraft, similar aircraft on the
market, operating costs, cost to acquire a new aircraft, and the state of demand
for transportation services.
To achieve this objective, cross-sectional data concerning the values of
aircraft in each of several general categories is collected and analyzed.
Cross-sectional data is then postulated and compared with reported market values
at a specified point in time. Such data reflects the effect of deterioration in
aircraft performance due to usage and exposure to the elements, as well as the
effect of obsolescence due to the evolutionary development and implementation of
new designs and materials.
The product of the analysis identifies the relationship between the value
of each aircraft and its characteristics, such as age, model designation,
service configuration and engine type. Once the relationship is identified, one
can then postulate the effects of the difference between the economic
circumstances at the time when the cross-sectional data were collected and the
current situation. Therefore, if one can determine the current value of an
aircraft in one category, it is possible to estimate the current values of all
aircraft in that category.
The manufacturer and size of the aircraft usually determine the specific
category to which it is assigned. Segregating the world airplane fleet in this
manner accommodates the potential effects of different size and different design
philosophies.
The variability of the data used by AvSOLUTIONS to determine the current
and future market values implies that the actual value realized will fall within
a range of values. Therefore, if a contemplated value falls within the specified
confidence range, AvSOLUTIONS cannot reject the hypothesis that it is a
reasonable representation of the current market situation.
LIMITING CONDITIONS AND ASSUMPTIONS
In order to conduct this valuation, AvSOLUTIONS is solely relying on
information as supplied by America West Airlines or Morgan Stanley, and from
data within AvSOLUTIONS' own database. In determining the base value of the
subject Airbus A319 and Airbus A320 aircraft, the following assumptions have
been researched and determined:
1. AvSOLUTIONS has not inspected these aircraft or their maintenance records;
accordingly, AvSOLUTIONS cannot attest to their specific location or condition.
2. The aircraft will be delivered new to America West Airlines between the
fourth quarter of 1998 and the third quarter of 1999.
3. The aircraft will be certified, maintained and operated under United States
Federal Aviation Regulation (FAR) part 121.
4. All mandatory inspections and Airworthiness Directives have been complied
with.
5. The aircraft have no damage history.
6. The aircraft are in good condition.
A-II-26
<PAGE> 121
[AvSolutions Logo]
- --------------------------------------------------------------------------------
Page 3
America West Airlines
7. AvSOLUTIONS considers the economic useful life of these aircraft to be at
least 32 years.
Based upon the above methodology, considerations and assumptions, it is
AvSOLUTIONS' opinion that the base values of each aircraft are as listed in
attachment 1.
A-II-27
<PAGE> 122
[AvSolutions Logo]
- --------------------------------------------------------------------------------
Page 4
America West Airlines
STATEMENT OF INDEPENDENCE
This appraisal report represents the opinion of AvSOLUTIONS, and is
intended to be advisory in nature. Therefore, AvSOLUTIONS assumes no
responsibility or legal liability for actions taken or not taken by the Client
or any other party with regard to the subject aircraft. By accepting this
report, the Client agrees that AvSOLUTIONS shall bear no responsibility or legal
liability regarding this report. Further, this report is prepared for the
exclusive use of the Client and shall not be provided to other parties without
the Client's express consent.
Aviation Solutions Inc. (AvSOLUTIONS) hereby states that this valuation
report has been independently prepared and fairly represents the subject
aircraft and AvSOLUTIONS' opinion of their values. Aviation Solutions Inc.
(AvSOLUTIONS) further states that it has no present or contemplated future
interest or association with the subject aircraft.
Signed,
/s/ Bryant Lynch
- -----------------------------------
Bryant Lynch
Manager, Commercial Appraisals
A-II-28
<PAGE> 123
[AvSolutions Logo]
- --------------------------------------------------------------------------------
ATTACHMENT 1
EETC COLLATERAL SUMMARY
<TABLE>
<CAPTION>
AIRCRAFT DELIVERY
NO. AIRCRAFT DATE ENGINES MGTOW BASE VALUE
(MILLIONS OF
DOLLARS)
<C> <S> <C> <C> <C> <C>
1 Airbus A319 Oct 1998 V2524-A5 38.14
166,447
2 Airbus A319 Dec 1998 V2524-A5 38.14
166,447
3 Airbus A319 Dec 1998 V2524-A5 38.14
166,447
4 Airbus A319 Jul 1999 V2524-A5 39.28
166,447
5 Airbus A319 Jul 1999 V2524-A5 39.28
166,447
6 Airbus A319 Aug 1999 V2524-A5 39.28
166,447
AIRCRAFT NO. AIRCRAFT DELIVERY DATE ENGINES MGTOW BASE VALUE
(MILLIONS OF DOLLARS)
7 Airbus A320 Feb 1999 V2527-A5 44.39
169,754
8 Airbus A320 May 1999 V2527-A5 44.72
169,754
</TABLE>
A-II-29
<PAGE> 124
[BK ASSOCIATES, INC. LOGO]
1295 Northern Boulevard
Manhasset, New York 11030
(516) 365-6272 - Fax (516) 365-6287
September 24, 1998
Mr. Jacques Lazard
Vice President & Treasurer
AMERICA WEST AIRLINES
4000 E. Sky Harbor Boulevard
Phoenix, AZ 85034
Dear Mr. Lazard:
In response to your request, BK Associates, Inc. is pleased to provide this
opinion on the current Base Value as of the respective delivery date on each of
six Airbus Industrie A319-132 aircraft, powered by International Aero Engines
V2524-A5 engines and two A320-232 aircraft, powered by International Aero
Engines V2527-A5 engines (Aircraft). The Aircraft, scheduled to be delivered to
America West Airlines between October 1998 and August 1999, are further
identified in the conclusions of this letter by scheduled delivery date, engine
type and maximum takeoff weight.
Set forth below is a summary of the methodology, considerations and assumptions
utilized in this appraisal.
CURRENT FAIR MARKET VALUE
According to the International Society of Transport Aircraft Trading's (ISTAT)
definition of FMV, to which BK Associates subscribes, the quoted FMV is the
Appraiser's opinion of the most likely trading price that may be generated for
an aircraft under the market circumstances that are perceived to exist at the
time in question. The FMV assumes that the aircraft is valued for its highest
and best use, that the parties to the hypothetical sale transaction are willing,
able, prudent and knowledgeable, and under no unusual pressure for a prompt
sale, and that the transaction would be negotiated in an open and unrestricted
market on an arm's length basis, for cash or equivalent consideration, and given
an adequate amount of time for effective exposure to prospective buyers, which
BK Associates considers to be 12 to 18 months.
BASE VALUE
Base value is the Appraiser's opinion of the underlying economic value of an
aircraft in an open, unrestricted, stable market environment with a reasonable
balance of supply and demand, and assumes full consideration of its "highest and
best use". An aircraft's base value is founded in the historical trend of values
and in the projection of future value trends and presumes an arm's length, cash
transaction between willing, able and knowledgeable parties, acting prudently,
with an absence of duress and with a reasonable period of time available for
marketing.
VALUE METHODOLOGY
Fair market valuations are determined based upon one of three methods:
comparable recent sales, replacement cost or rate of return to investor. In this
appraisal, BK used the comparable sales method, which is the most common method,
in determining the base values of the Aircraft. This method uses industry data
to ascertain the prices realized in recent sales of comparable models. The fair
market value of the base Aircraft is based on BK's familiarity with the aircraft
type, its earnings potential in commercial service, its knowledge of its
capabilities and the uses to which it will be put worldwide, its knowledge of
A-II-30
<PAGE> 125
[BK ASSOCIATES, INC. LOGO]
Mr. Jacques Lazard
September 24, 1998
Page 2
the marketing of used aircraft, and the factors affecting the fair market value
of such aircraft, and on its knowledge of the asking, offered and transaction
prices for similar competitive, and alternative equipment, as well as
transactions and negotiations involving basically identical aircraft. These
realizations, however, which reflect the market supply and demand at the time of
sale, are subject to minor adjustments for other conditions existing at the time
of the appraisal.
LIMITING CONDITIONS AND ASSUMPTIONS
BK has neither inspected the Aircraft nor their maintenance records but relied
upon information supplied by you and from BK's own database. In determining the
base value of an aircraft, the following assumptions apply to the aircraft:
1. Unless it is new, the aircraft has half-time remaining to its next major
overhauls or scheduled shop visit on its airframe, engines, landing gear and
auxiliary power unit.
2. The aircraft is in compliance under a Federal Aviation Administration
approved airline maintenance program, with all airworthiness directives,
mandatory modifications and applicable service bulletins currently up to
industry standard.
3. The interior of the aircraft is in a standard configuration for its specific
type, with the buyer furnished equipment and options of the types and models
generally accepted and utilized in the industry.
4. The aircraft is in current flight operations.
5. The aircraft is sold for cash without seller financing.
6. The Aircraft is in average or better condition.
7. There is no accident damage.
CONCLUSIONS
Based on the above methodology, considerations and assumptions, and since the
Aircraft are all new and not yet in service, it is our opinion that the current
base value of each aircraft as of its scheduled delivery date is as follows:
<TABLE>
<CAPTION>
Maximum Scheduled Current
Aircraft Aircraft Takeoff Delivery Base Value
Number Model Weight Date ($Mil)
- -------- -------- ------- --------- ----------
<S> <C> <C> <C> <C>
1 A319 166,447 10/98 33.00
2 A319 166,447 12/98 33.10
3 A319 166,447 12/98 33.10
4 A319 166,447 07/99 33.50
5 A319 166,447 07/99 33.50
6 A319 166,447 08/99 33.60
7 A320 169,754 02/99 39.70
8 A320 169,754 05/99 39.80
</TABLE>
A-II-31
<PAGE> 126
[BK ASSOCIATES, INC. LOGO]
Mr. Jacques Lazard
September 24, 1998
Page 3
BK Associates, Inc. has no present or contemplated future interest in the
Aircraft, nor any interest that would preclude our making a fair and unbiased
estimate. This appraisal represents the opinion of BK Associates, Inc. and
reflects our best judgment based on the information available to us at the time
of preparation and the time and budget constraints imposed by the client. It is
not given as a recommendation, or as an inducement, for any financial
transaction and further, BK Associates, Inc. assumes no responsibility or legal
liability for any action taken or not taken by the addressee, or any other
party, with regard to the appraised equipment. By accepting this appraisal, the
addressee agrees that BK Associates, Inc. shall bear no such responsibility or
legal liability. This appraisal is prepared for the use of the addressee and
shall not be provided to other parties without the express consent of the
addressee.
Sincerely yours,
BK ASSOCIATES, INC.
/s/ R. L. Britton
----------------------------------------------------------------------
R. L. Britton
Vice President
ISTAT Certified Appraiser
RLB/kf
A-II-32
<PAGE> 127
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Company's Restated Certificate of Incorporation and Restated Bylaws
provide that the Company will indemnify each of its directors and officers to
the full extent permitted by the laws of the State of Delaware and may indemnify
certain other persons as authorized by the Delaware General Corporation Law (the
"GCL").
Section 145 of the GCL 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 he 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 him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he 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 his 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 he 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 his 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 he 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 him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he 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 director, officer, employee or agent 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, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him 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 director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b). Such
determination shall be made (1) by a majority vote of the board of directors who
are not parties to such action, suit or proceeding, even though less than a
quorum, or (2) if there are no such directors, or if such directors so direct,
by independent legal counsel in a written opinion, or (3) 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
II-1
<PAGE> 128
advance of the final disposition of such action, suit or proceeding upon receipt
of undertaking by or on behalf of such director or officer to repay such amount
if it shall ultimately be determined that he is not entitled to be indemnified
by the corporation as authorized in this section. Such expenses (including
attorneys' fees) incurred by other employees and agents may be so paid upon such
terms and conditions, if any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or granted
pursuant to, the other subsections of this section shall 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 his 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 him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him 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 for 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, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he 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 an 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 he
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 Restated Certificate of Incorporation and Restated Bylaws also limit
the personal liability of directors to the Company and its stockholders for
monetary damages resulting from certain breaches of the directors' fiduciary
duties. The Restated Certificate of Incorporation of the Company provides as
follows:
"A person who is or was a Director of the Corporation shall not be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a Director, except for liability (i) for any
breach of the Director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL or
(iv) for any transaction from which the Director derived any
II-2
<PAGE> 129
improper personal benefit. If the DGCL is amended to authorize corporate action
further eliminating or limiting the personal liability of Directors, then the
liability of Directors of the Corporation shall be eliminated or limited to the
full extent permitted by the DGCL, as so amended. The elimination and limitation
of liability provided herein shall continue after a Director has ceased to
occupy such position as to acts or omissions occurring during such Director's
term or terms of office, and no amendment or repeal of this Section 12 shall
apply to or have any effect on the liability or alleged liability of any
Director of the Corporation for or with respect to any acts or omissions of such
Director occurring prior to such amendment or repeal."
The Company maintains directors' and officers' liability insurance.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
4.1 Form of 6.87% America West Airlines Pass Through Certificate
Series 1998-1A-O (included in Exhibit 4.4)*
4.2 Form of 7.12% America West Airlines Pass Through Certificate
Series 1998-1B-O (included in Exhibit 4.6)*
4.3 Form of 7.84% America West Airlines Pass Through Certificate
Series 1998-1C-O (included in Exhibit 4.8)*
4.4 Pass Through Trust Agreement, dated as of October 6, 1998,
between America West Airlines, Inc., and Wilmington Trust
Company, as Trustee, made with respect to the formation of
America West Airlines Pass Through Trust, Series 1998-1A-0
and the issuance of 6.87% Initial Pass Through Certificates,
Series 1998-1A-O and 6.87% Exchange Pass Through
Certificates, Series 1998-1A-O*
4.5 Pass Through Trust Agreement, dated as of October 6, 1998,
between America West Airlines, Inc., and Wilmington Trust
Company, as Trustee, made with respect to the formation of
America West Airlines Pass Through Trust, Series 1998-1A-S
and the issuance of 6.87% Initial Pass Through Certificates,
Series 1998-1A-S and 6.87% Exchange Pass Through
Certificates, Series 1998-1A-S*
4.6 Pass Through Trust Agreement, dated as of October 6, 1998,
between America West Airlines, Inc., and Wilmington Trust
Company, as Trustee, made with respect to the formation of
America West Airlines Pass Through Trust, Series 1998-1B-0
and the issuance of 7.12% Initial Pass Through Certificates,
Series 1998-1B-O and 7.12% Exchange Pass Through
Certificates, Series 1998-1B-O*
4.7 Pass Through Trust Agreement, dated as of October 6, 1998,
between America West Airlines, Inc., and Wilmington Trust
Company, as Trustee, made with respect to the formation of
America West Airlines Pass Through Trust, Series 1998-1B-S
and the issuance of 7.12% Initial Pass Through Certificates,
Series 1998-1B-S and 7.12% Exchange Pass Through
Certificates, Series 1998-1B-S*
4.8 Pass Through Trust Agreement, dated as of October 6, 1998,
between America West Airlines, Inc., and Wilmington Trust
Company, as Trustee, made with respect to the formation of
America West Airlines Pass Through Trust, Series 1998-1C-O
and the issuance of 7.84% Initial Pass Through Certificates,
Series 1998-1C-O and 7.84% Exchange Pass Through
Certificates, Series 1998-1C-O*
4.9 Pass Through Trust Agreement, dated as of October 6, 1998,
between America West Airlines, Inc., and Wilmington Trust
Company, as Trustee, made with respect to the formation of
America West Airlines Pass Through Trust, Series 1998-1C-S
and the issuance of 7.84% Initial Pass Through Certificates,
Series 1998-1C-S and 7.84% Exchange Pass Through
Certificates, Series 1998-1C-S*
</TABLE>
II-3
<PAGE> 130
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
4.10 Revolving Credit Agreement, dated October 6, 1998, between
Wilmington Trust Company, as Subordination Agent, as agent
and trustee for the America West Airlines Pass Through Trust
1998-1A, as Borrower; and ABN AMRO Bank N.V., Chicago
Branch, as Liquidity Provider*
4.11 Revolving Credit Agreement, dated October 6, 1998, between
Wilmington Trust Company, as Subordination Agent, as agent
and trustee for the America West Airlines Pass Through Trust
1998-1B, as Borrower; and ABN AMRO Bank N.V., Chicago
Branch, as Liquidity Provider*
4.12 Revolving Credit Agreement, dated October 6, 1998, between
Wilmington Trust Company, as Subordination Agent, as agent
and trustee for the America West Airlines Pass Through Trust
1998-1C, as Borrower; and ABN AMRO Bank N.V., Chicago
Branch, as Liquidity Provider*
4.13 Intercreditor Agreement, dated as of October 6, 1998, among
Wilmington Trust Company, as Trustee under the America West
Airlines Pass Through Trust 1998-1A, America West Airlines
Pass Through Trust 1998-1B and America West Airlines Pass
Through Trust 1998-1C and ABN AMRO Bank N.V., Chicago
Branch, as Class A Liquidity Provider, Class B Liquidity
Provider and Class C Liquidity Provider, and Wilmington
Trust Company, as Subordination Agent and Trustee*
4.14 Exchange and Registration Rights Agreement, dated as of
October 6, 1998, among America West Airlines, Inc.;
Wilmington Trust Company, as Trustee under America West
Airlines Pass Through Trust, Series 1998-1A-O, America West
Airlines Pass Through Trust, Series 1998-1B-O and America
West Airlines Pass Through Trust, Series 1998-1C-O; and
Morgan Stanley & Co. Incorporated, Donaldson, Lufkin &
Jenrette Securities Corporation, Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Salomon Smith Barney Inc.*
4.15 Deposit Agreement (Class A), dated as of October 6, 1998,
between Wilmington Trust Company, as Escrow Agent under the
Escrow and Paying Agent Agreement, and ABN AMRO Bank N.V.,
Chicago Branch, as Depositary*
4.16 Deposit Agreement (Class B), dated as of October 6, 1998,
between Wilmington Trust Company, as Escrow Agent under the
Escrow and Paying Agent Agreement, and ABN AMRO Bank N.V.,
Chicago Branch, as Depositary*
4.17 Deposit Agreement (Class C), dated as of October 6, 1998,
between Wilmington Trust Company as Escrow Agent under the
Escrow and Paying Agent Agreement, and ABN AMRO Bank N.V.,
Chicago Branch, as Depositary*
4.18 Escrow and Paying Agent Agreement (Class A), dated as of
October 6, 1998, among Wilmington Trust Company, as Escrow
Agent; Morgan Stanley & Co. Incorporated, Donaldson, Lufkin
& Jenrette Securities Corporation, Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Salomon Smith Barney Inc.,
as Initial Purchasers; Wilmington Trust Company, as Pass
Through Trustee for and on behalf of America West Airlines
Pass Through Trust 1998-1A-0; and Wilmington Trust Company
as Paying Agent*
4.19 Escrow and Paying Agent Agreement (Class B), dated as of
October 6, 1998, among Wilmington Trust Company, as Escrow
Agent; Morgan Stanley & Co. Incorporated, Donaldson, Lufkin
& Jenrette Securities Corporation, Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Salomon Smith Barney Inc.,
as Initial Purchasers; Wilmington Trust Company, as Pass
Through Trustee for and on behalf of America West Airlines
Pass Through Trust 1998-1B-0; and Wilmington Trust Company
as Paying Agent*
4.20 Escrow and Paying Agent Agreement (Class C), dated as of
October 6, 1998, among Wilmington Trust Company, as Escrow
Agent; Morgan Stanley & Co. Incorporated, Donaldson, Lufkin
& Jenrette Securities Corporation, Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Salomon Smith Barney Inc.,
as Initial Purchasers; Wilmington Trust Company, as Pass
Through Trustee for and on behalf of America West Airlines
Pass Through Trust 1998-1C-0; and Wilmington Trust Company
as Paying Agent*
</TABLE>
II-4
<PAGE> 131
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
4.21 Note Purchase Agreement dated as of October 6, 1998, among
America West Airlines, Inc., Wilmington Trust Company as
Pass Through Trustee under each of the Pass Through Trust
Agreements, and Wilmington Trust Company, as Subordination
Agent, Escrow Agent and Paying Agent*
5.1 Opinion of Morris, James, Hitchens & Williams as to the
legality of the New Certificates being registered hereby*
12.1 Computation of ratio of earnings to fixed charges*
23.1 Consent of Morris, James, Hitchens & Williams (included in
Exhibit 5.1)*
23.2 Consent of KPMG Peat Marwick LLP
23.3 Consent of AVITAS, Inc.*
23.4 Consent of AvSolutions*
23.5 Consent of BK Associates, Inc.*
24.1 Power of Attorney (see signature page in Part II of
Registration Statement)
25.1 Statement of Eligibility of Wilmington Trust Company for the
1998-1A Pass Through Certificates, on Form T-1*
25.2 Statement of Eligibility of Wilmington Trust Company for the
1998-1B Pass Through Certificates, on Form T-1*
25.3 Statement of Eligibility of Wilmington Trust Company for the
1998-1C Pass Through Certificates, on Form T-1*
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
99.4 Form of Letter to Clients
</TABLE>
- ---------------
* previously filed
ITEM 22. 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 (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 and of the estimated maximum offering range may be
reflected in the form of prospectus filed with the SEC 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;
(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 paragraphs (a)(1)(i) and (a)(1)(ii) shall not apply
if the information required to be included in a post-effective amendment by
those paragraphs is contained in
II-5
<PAGE> 132
periodic reports filed by the registrant pursuant to section 13 or section
15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall 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
plans annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall 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.
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 Securities Act
of 1933 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 any 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 of whether or not
such indemnification is against public policy as expressed in the Securities Act
of 1933 and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-6
<PAGE> 133
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Amendment No. 1 to Registration Statement No.
333-71615 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Tempe, State of Arizona, on the 19th day of March,
1999.
America West Airlines, Inc.
By: /s/ W. DOUGLAS PARKER*
------------------------------------
W. Douglas Parker
Senior Vice President and Chief
Financial Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints, jointly and severally, William A.
Franke, W. Douglas Parker, Stephen L. Johnson, and each of them acting
individually, as his attorney-in-fact, each with full power of substitution, for
him in any and all capacities, including as an individual or as an officer or
director authorized to act on behalf of an entity, to sign any and all
amendments to this Registration Statement, and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming our signatures as they may
be signed by our said attorney to any and all amendments to said Registration
Statement.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ WILLIAM A. FRANKE* Chairman of the Board of March 19, 1999
- ------------------------------------------ Directors and Director
William A. Franke
/s/ RICHARD R. GOODMANSON* President, Chief Executive Officer and March 19, 1999
- ------------------------------------------ Director (Principal Executive Officer)
Richard R. Goodmanson
/s/ W. DOUGLAS PARKER* Senior Vice President and Chief March 19, 1999
- ------------------------------------------ Financial Officer (Principal Financial
W. Douglas Parker Officer)
/s/ MICHAEL R. CARREON* Vice President and Controller March 19, 1999
- ------------------------------------------ (Principal Accounting Officer)
Michael R. Carreon
/s/ FREDERICK W. BRADLEY* Director March 19, 1999
- ------------------------------------------
Frederick W. Bradley
Director
- ------------------------------------------
James G. Coulter
/s/ JOHN L. GOOLSBY* Director March 19, 1999
- ------------------------------------------
John L. Goolsby
</TABLE>
II-7
<PAGE> 134
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ WALTER T. KLENZ* Director March 19, 1999
- ------------------------------------------
Walter T. Klenz
/s/ RICHARD C. KRAEMER* Director March 19, 1999
- ------------------------------------------
Richard C. Kraemer
/s/ DENISE M. O'LEARY* Director March 19, 1999
- ------------------------------------------
Denise M. O'Leary
/s/ RICHARD P. SCHIFTER* Director March 19, 1999
- ------------------------------------------
Richard P. Schifter
/s/ JOHN F. TIERNEY* Director March 19, 1999
- ------------------------------------------
John F. Tierney
* /s/ STEPHEN L. JOHNSON
- ------------------------------------------
Stephen L. Johnson
Attorney-in-Fact
(Signing under the authority of a Power of
Attorney previously filed with the
Securities and Exchange Commission)
</TABLE>
II-8
<PAGE> 135
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <S>
4.1 Form of 6.87% America West Airlines Pass Through Certificate
Series 1998-1A-O (included in Exhibit 4.4)*
4.2 Form of 7.12% America West Airlines Pass Through Certificate
Series 1998-1B-O (included in Exhibit 4.6)*
4.3 Form of 7.84% America West Airlines Pass Through Certificate
Series 1998-1C-O (included in Exhibit 4.8)*
4.4 Pass Through Trust Agreement, dated as of October 6, 1998,
between America West Airlines, Inc., and Wilmington Trust
Company, as Trustee, made with respect to the formation of
America West Airlines Pass Through Trust, Series 1998-1A-0
and the issuance of 6.87% Initial Pass Through Certificates,
Series 1998-1A-O and 6.87% Exchange Pass Through
Certificates, Series 1998-1A-O*
4.5 Pass Through Trust Agreement, dated as of October 6, 1998,
between America West Airlines, Inc., and Wilmington Trust
Company, as Trustee, made with respect to the formation of
America West Airlines Pass Through Trust, Series 1998-1A-S
and the issuance of 6.87% Initial Pass Through Certificates,
Series 1998-1A-S and 6.87% Exchange Pass Through
Certificates, Series 1998-1A-S*
4.6 Pass Through Trust Agreement, dated as of October 6, 1998,
between America West Airlines, Inc., and Wilmington Trust
Company, as Trustee, made with respect to the formation of
America West Airlines Pass Through Trust, Series 1998-1B-0
and the issuance of 7.12% Initial Pass Through Certificates,
Series 1998-1B-O and 7.12% Exchange Pass Through
Certificates, Series 1998-1B-O*
4.7 Pass Through Trust Agreement, dated as of October 6, 1998,
between America West Airlines, Inc., and Wilmington Trust
Company, as Trustee, made with respect to the formation of
America West Airlines Pass Through Trust, Series 1998-1B-S
and the issuance of 7.12% Initial Pass Through Certificates,
Series 1998-1B-S and 7.12% Exchange Pass Through
Certificates, Series 1998-1B-S*
4.8 Pass Through Trust Agreement, dated as of October 6, 1998,
between America West Airlines, Inc., and Wilmington Trust
Company, as Trustee, made with respect to the formation of
America West Airlines Pass Through Trust, Series 1998-1C-O
and the issuance of 7.84% Initial Pass Through Certificates,
Series 1998-1C-O and 7.84% Exchange Pass Through
Certificates, Series 1998-1C-O*
4.9 Pass Through Trust Agreement, dated as of October 6, 1998,
between America West Airlines, Inc., and Wilmington Trust
Company, as Trustee, made with respect to the formation of
America West Airlines Pass Through Trust, Series 1998-1C-S
and the issuance of 7.84% Initial Pass Through Certificates,
Series 1998-1C-S and 7.84% Exchange Pass Through
Certificates, Series 1998-1C-S*
4.10 Revolving Credit Agreement, dated October 6, 1998, between
Wilmington Trust Company, as Subordination Agent, as agent
and trustee for the America West Airlines Pass Through Trust
1998-1A, as Borrower; and ABN AMRO Bank N.V., Chicago
Branch, as Liquidity Provider*
4.11 Revolving Credit Agreement, dated October 6, 1998, between
Wilmington Trust Company, as Subordination Agent, as agent
and trustee for the America West Airlines Pass Through Trust
1998-1B, as Borrower; and ABN AMRO Bank N.V., Chicago
Branch, as Liquidity Provider*
4.12 Revolving Credit Agreement, dated October 6, 1998, between
Wilmington Trust Company, as Subordination Agent, as agent
and trustee for the America West Airlines Pass Through Trust
1998-1C, as Borrower; and ABN AMRO Bank N.V., Chicago
Branch, as Liquidity Provider*
</TABLE>
<PAGE> 136
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <S>
4.13 Intercreditor Agreement, dated as of October 6, 1998, among
Wilmington Trust Company, as Trustee under the America West
Airlines Pass Through Trust 1998-1A, America West Airlines
Pass Through Trust 1998-1B and America West Airlines Pass
Through Trust 1998-1C and ABN AMRO Bank N.V., Chicago
Branch, as Class A Liquidity Provider, Class B Liquidity
Provider and Class C Liquidity Provider, and Wilmington
Trust Company, as Subordination Agent and Trustee*
4.14 Exchange and Registration Rights Agreement, dated as of
October 6, 1998, among America West Airlines, Inc.;
Wilmington Trust Company, as Trustee under America West
Airlines Pass Through Trust, Series 1998-1A-O, America West
Airlines Pass Through Trust, Series 1998-1B-O and
AmericaWest Airlines Pass Through Trust, Series 1998-1C-O;
and Morgan Stanley & Co. Incorporated, Donaldson, Lufkin &
Jenrette Securities Corporation, Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Salomon Smith Barney Inc.*
4.15 Deposit Agreement (Class A), dated as of October 6, 1998,
between Wilmington Trust Company, as Escrow Agent under the
Escrow and Paying Agent Agreement, and ABN AMRO Bank N.V.,
Chicago Branch, as Depositary*
4.16 Deposit Agreement (Class B), dated as of October 6, 1998,
between Wilmington Trust Company, as Escrow Agent under the
Escrow and Paying Agent Agreement, and ABN AMRO Bank N.V.,
Chicago Branch, as Depositary*
4.17 Deposit Agreement (Class C), dated as of October 6, 1998,
between Wilmington Trust Company as Escrow Agent under the
Escrow and Paying Agent Agreement, and ABN AMRO Bank N.V.,
Chicago Branch, as Depositary*
4.18 Escrow and Paying Agent Agreement (Class A), dated as of
October 6, 1998, among Wilmington Trust Company, as Escrow
Agent; Morgan Stanley & Co. Incorporated, Donaldson, Lufkin
& Jenrette Securities Corporation, Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Salomon Smith Barney Inc.,
as Initial Purchasers; Wilmington Trust Company, as Pass
Through Trustee for and on behalf of America West Airlines
Pass Through Trust 1998-1A-0; and Wilmington Trust Company
as Paying Agent*
4.19 Escrow and Paying Agent Agreement (Class B), dated as of
October 6, 1998, among Wilmington Trust Company, as Escrow
Agent; Morgan Stanley & Co. Incorporated, Donaldson, Lufkin
& Jenrette Securities Corporation, Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Salomon Smith Barney Inc.,
as Initial Purchasers; Wilmington Trust Company, as Pass
Through Trustee for and on behalf of America West Airlines
Pass Through Trust 1998-1B-0; and Wilmington Trust Company
as Paying Agent*
4.20 Escrow and Paying Agent Agreement (Class C), dated as of
October 6, 1998, among Wilmington Trust Company, as Escrow
Agent; Morgan Stanley & Co. Incorporated, Donaldson, Lufkin
& Jenrette Securities Corporation, Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Salomon Smith Barney Inc.,
as Initial Purchasers; Wilmington Trust Company, as Pass
Through Trustee for and on behalf of America West Airlines
Pass Through Trust 1998-1C-0; and Wilmington Trust Company
as Paying Agent*
4.21 Note Purchase Agreement dated as of October 6, 1998, among
America West Airlines, Inc., Wilmington Trust Company as
Pass Through Trustee under each of the Pass Through Trust
Agreements, and Wilmington Trust Company, as Subordination
Agent, Escrow Agent and Paying Agent*
5.1 Opinion of Morris, James, Hitchens & Williams as to the
legality of the New Certificates being registered hereby*
12.1 Computation of ratio of earnings to fixed charges*
23.1 Consent of Morris, James, Hitchens & Williams (included in
Exhibit 5.1)*
23.2 Consent of KPMG Peat Marwick LLP
23.3 Consent of AVITAS, Inc.*
23.4 Consent of AvSolutions*
23.5 Consent of BK Associates, Inc.*
</TABLE>
<PAGE> 137
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <S>
24.1 Power of Attorney (see signature page in Part II of
Registration Statement)
25.1 Statement of Eligibility of Wilmington Trust Company for the
1998-1A Pass Through Certificates, on Form T-1*
25.2 Statement of Eligibility of Wilmington Trust Company for the
1998-1B Pass Through Certificates, on Form T-1*
25.3 Statement of Eligibility of Wilmington Trust Company for the
1998-1C Pass Through Certificates, on Form T-1*
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
99.4 Form of Letter to Clients
</TABLE>
- ---------------
* previously filed
<PAGE> 1
EXHIBIT 23.2
The Board of Directors
America West Airlines, Inc.:
We consent to the use of our reports incorporated herein by reference and to the
references to our firm under the headings "Selected Financial Data" and
"Experts" in the prospectus.
KPMG LLP
Phoenix, AZ
March 25, 1999
<PAGE> 1
EXHIBIT 99.1
LETTER OF TRANSMITTAL
AMERICA WEST AIRLINES, INC.
OFFER TO EXCHANGE
PASS THROUGH CERTIFICATES, SERIES 1998-1,
WHICH HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OUTSTANDING
PASS THROUGH CERTIFICATES, SERIES 1998-1
PURSUANT TO THE PROSPECTUS, DATED MARCH 25, 1999.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON APRIL 26,
1999, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN PRIOR TO
5:00 P.M., NEW YORK CITY TIME, ON APRIL 26, 1999.
WILMINGTON TRUST COMPANY
EXCHANGE AGENT
<TABLE>
<S> <C>
By Mail or Overnight Delivery: By Hand:
Wilmington Trust Company Wilmington Trust Company
1100 North Market Street 1105 North Market Street, 1st Floor
Wilmington, Delaware 19890-0001 Wilmington, Delaware 19890
Attention: Kristin Long Attention: Corporate Trust Operations
</TABLE>
Facsimile Transmission:
(302) 651-1079
Confirm by Telephone:
(302) 651-1562
Kristin Long
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
The undersigned acknowledges receipt of the Prospectus, dated (the
"Prospectus"), of America West Airlines, Inc., a Delaware corporation (the
"Company" or "America West"), and this Letter of Transmittal (this "Letter"),
which together constitute the offer (the "Exchange Offer") to exchange an
aggregate principal amount of up to $190,529,000 of Pass Through Certificates,
Series 1998-1, which have been registered under the Securities Act of 1933, as
amended (the "New Certificates"), for an equal principal amount of the
outstanding Pass Through Certificates, Series 1998-1 (the "Old Certificates").
The Exchange Offer is being made in order to satisfy certain obligations of the
Company contained in the Exchange and Registration Rights Agreement, dated as of
October 6, 1998, between the Company and the Initial Purchasers named therein
(the "Registration Rights Agreement").
<PAGE> 2
For each Old Certificate accepted for exchange, the holder of such Old
Certificate (the "Holder") will receive a New Certificate having a principal
amount equal to that of the surrendered Old Certificate. New Certificates will
accrue interest at the applicable per annum rate for such New Certificates as
set forth on the cover page of the Prospectus, from the date on which the Old
Certificates surrendered in exchange therefor were originally issued (the
"Issuance Date"). Interest on the New Certificates is payable on January 2 and
July 2 of each year, commencing January 2, 1999, subject to the terms of the
Intercreditor Agreement (as defined in the Prospectus).
In the event that neither the consummation of the Exchange Offer nor the
declaration by the Securities and Exchange Commission of a Shelf Registration
Statement relating to the sale of the Old Certificates to be effective (each a
"Registration Event") occurs on or prior to the 210th calendar day after the
Issuance Date, the interest rate per annum passed through to holders of Old
Certificates shall be increased by 0.50% from and including such 210th day to
but excluding the earlier of (i) the date on which a Registration Event occurs
and (ii) the date on which all of the Old Certificates otherwise become
transferable by Certificateholders (other than affiliates or former affiliates
of America West) without further registration under the Securities Act. In the
event that such Shelf Registration Statement ceases to be effective at any time
during the period specified by the Registration Rights Agreement for more than
60 days, whether or not consecutive, during any 12-month period, the interest
rate per annum passed through to the holders of Old Certificates shall be
increased by 0.50% from the 61st day of the applicable 12-month period such
Shelf Registration Statement ceases to be effective until such time as such
Shelf Registration Statement again becomes effective (or, if earlier, the end of
such period specified by the Registration Rights Agreement).
The Company reserves the right, at any time or from time to time, to extend
the Exchange Offer at its discretion, in which event the term "Expiration Date"
shall mean the latest time and date to which the Exchange Offer is extended. The
Company shall notify the holders of the Old Certificates of any extension by
means of a press release or other public announcement prior to 9:00 A.M., New
York City time, on the next business day after the previously scheduled
Expiration Date.
This Letter is to be completed by a holder of Old Certificates if Old
Certificates are to be forwarded herewith or if a tender of Old Certificates is
to be made by book-entry transfer through the Automated Tender Offer Program
("ATOP") at The Depository Trust Company (the "DTC") pursuant to the procedure
set forth in "The Exchange Offer -- Book-Entry Transfer" section of the
Prospectus.
Holders who are participants in DTC ("DTC Participants") tendering by
book-entry transfer must execute such tender through ATOP on or prior to the
Expiration Date. DTC will verify such acceptance, execute a book-entry transfer
of the tendered Old Certificates into the Exchange Agent's account at DTC and
then send to the Exchange Agent confirmation of such book-entry transfer
("Book-Entry Confirmation") including an agent's message ("Agent's Message")
confirming that DTC has received an express acknowledgment from such Holder that
such Holder has received and agrees to be bound by this Letter of Transmittal
and that the Trust and the Company may enforce this Letter of Transmittal
against such Holder. The book-entry confirmation must be received by the
Exchange Agent in order for the tender relating thereto to be effective.
Book-entry transfer to DTC in accordance with DTC's procedures does not
constitute delivery of the book-entry confirmation to the Exchange Agent.
If the tender is not made through ATOP, Old Certificates, as well as this
Letter of Transmittal (or facsimile hereof), properly completed and duly
executed, with any required signature guarantees, and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
at its address set forth herein on or prior to the Expiration Date in order for
such tender to be effective.
Holders of Old Certificates whose certificates are not immediately
available, or who are unable to deliver their certificates or confirmation of
the book-entry tender of their Old Certificates and all other documents required
by this Letter to the Exchange Agent on or prior to the Expiration Date, must
tender their Old Certificates according to the guaranteed delivery procedures
set forth in "The Exchange Offer -- Guaranteed Delivery Procedures" section of
the Prospectus. See Instruction 1.
2
<PAGE> 3
THE METHOD OF DELIVERY OF THE BOOK-ENTRY CONFIRMATION OR OLD CERTIFICATES,
THIS TRANSMITTAL LETTER, AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND
SOLE RISK OF THE TENDERING HOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY
WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, OR OVERNIGHT DELIVERY
SERVICE IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
The undersigned has completed the appropriate boxes below and signed this
Letter to indicate the action the undersigned desires to take with respect to
the Exchange Offer.
List below the Old Certificates to which this Letter relates. If the space
provided below is inadequate, the certificate numbers and principal amount of
Old Certificates should be listed on a separate signed schedule affixed hereto.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD CERTIFICATES
- --------------------------------------------------------------------------------------------------------------------------
(1) (2) (3)
NAME(S) AND ADDRESS(ES) AGGREGATE
OF REGISTERED HOLDER(S) CERTIFICATE PRINCIPAL AMOUNT PRINCIPAL
(PLEASE FILL IN, IF BLANK) NUMBERS* OF OLD CERTIFICATES AMOUNT TENDERED**
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------
-------------------------------------------------------------------
-------------------------------------------------------------------
-------------------------------------------------------------------
Total:
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by Holders of Notes being tendered by book-entry
transfer (see below).
** Unless otherwise indicated, it will be assumed that all Notes represented
by certificates delivered to the Depositary are being tendered. See
Instruction 1.
- --------------------------------------------------------------------------------
3
<PAGE> 4
[ ] CHECK HERE IF TENDERED OLD CERTIFICATES ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT
WITH THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
------------------------------------------------------------------------
Account Number:
--------------------------------------------------------------------------
Transaction Code Number:
----------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED OLD CERTIFICATES ARE BEING DELIVERED PURSUANT TO
A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT
AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):
-------------------------------------------------------------------
Window Ticket Number (if any):
---------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
------------------------------------------------
Name of Institution which guaranteed delivery:
------------------------------------------------------
If Delivered by Book-Entry Transfer, Complete the Following:
Account Number:
--------------------------------------------------------------------------
Transaction Code Number:
----------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:
--------------------------------------------------------------------------
Address:
--------------------------------------------------------------------------
--------------------------------------------------------------------------
4
<PAGE> 5
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of Old
Certificates indicated above. Subject to, and effective upon, the acceptance for
exchange of the Old Certificates tendered hereby, the undersigned hereby sells,
assigns and transfers to, or upon the order of, the Company all right, title and
interest in and to such Old Certificates as are being tendered hereby.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Old
Certificates tendered hereby and that the Company will acquire good and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances and not subject to any adverse claim when the same are accepted
by the Company. The undersigned hereby further represents that any New
Certificates acquired in exchange for Old Certificates tendered hereby will have
been acquired in the ordinary course of business of the person receiving such
New Certificates, whether or not such person is the undersigned, that neither
the holder of such Old Certificates nor any such other person is engaged in, or
intends to engage in a distribution of such New Certificates, or has an
arrangement or understanding with any person to participate in the distribution
of such New Certificates, and that neither the holder of such Old Certificates
nor any such other person is an "affiliate," as defined in Rule 405 under the
Securities Act of 1933, as amended (the "Securities Act"), of the Company.
The undersigned also acknowledges that this Exchange Offer is being made
based upon the Company's understanding of an interpretation by the staff of the
Securities and Exchange Commission (the "Commission") as set forth in no-action
letters issued to third parties, including Exxon Capital Holdings Corporation,
SEC No-Action Letter (available May 13, 1988) (the "Exxon Capital Letter"),
Morgan Stanley & Co. Incorporated, SEC No-Action Letter (available June 5, 1991)
(the "Morgan Stanley Letter") and Shearman & Sterling, SEC No-Action Letter
(available July 2, 1993) (the "Shearman & Sterling Letter"), that the New
Certificates issued in exchange for the Old Certificates pursuant to the
Exchange Offer may be offered for resale, resold and otherwise transferred by
holders thereof (other than a broker-dealer who acquires such New Certificates
directly from the Company for resale pursuant to Rule 144A under the Securities
Act or any other available exemption under the Securities Act or any such holder
that is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act), without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such New Certificates
are acquired in the ordinary course of such holders' business and such holders
are not engaged in, and do not intend to engage in, a distribution of such New
Certificates and have no arrangement with any person to participate in the
distribution of such New Certificates.
If a holder of Old Certificates is engaged in or intends to engage in a
distribution of the New Certificates or has any arrangement or understanding
with respect to the distribution of the New Certificates to be acquired pursuant
to the Exchange Offer, such holder could not rely on the applicable
interpretations of the staff of the Commission and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any secondary resale transaction. If the undersigned is a
broker-dealer that will receive New Certificates for its own account in exchange
for Old Certificates, it represents that the Old Certificates to be exchanged
for the New Certificates were acquired by it as a result of market-making
activities or other trading activities and acknowledges that it will deliver a
prospectus in connection with any resale of such New Certificates; however, by
so acknowledging and by delivering a prospectus, the undersigned will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Old Certificates tendered hereby. All
authority conferred or agreed to be conferred in this Letter and every
obligation of
5
<PAGE> 6
the undersigned hereunder shall be binding upon the successors, assigns, heirs,
executors, administrators, trustees in bankruptcy and legal representatives of
the undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. This tender may be withdrawn only in accordance
with the procedures set forth in "The Exchange Offer -- Withdrawal of Tenders"
section of the Prospectus.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please deliver the New Certificates (and, if applicable,
substitute certificates representing Old Certificates for any Old Certificates
not exchanged) in the name of the undersigned or, in the case of a book-entry
delivery of Old Certificates, please credit the account indicated above
maintained at the Book-Entry Transfer Facility. Similarly, unless otherwise
indicated under the box entitled "Special Delivery Instructions" below, please
send the New Certificates (and, if applicable, substitute certificates
representing Old Certificates for any Old Certificates not exchanged) to the
undersigned at the address shown above in the box entitled "Description of Old
Certificates."
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD
CERTIFICATES" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE
OLD CERTIFICATES AS SET FORTH IN SUCH BOX ABOVE.
6
<PAGE> 7
- ------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
- ------------------------------------------------------
To be completed ONLY if certificates for Old Certificates not exchanged
and/or New Certificates are to be issued in the name of and sent to someone
other than the person(s) whose signature(s) appear(s) on this Letter below, or
if Old Certificates delivered by book-entry transfer which are not accepted
for exchange are to be returned by credit to an account maintained at the
Book-Entry Transfer Facility other than the account indicated above.
Issue: New Certificates and/or Old Certificates to:
Name(s):
-----------------------------------------
(PLEASE TYPE OR PRINT)
-----------------------------------------------------
Address(es):
--------------------------------------
-----------------------------------------------------
(INCLUDING ZIP CODE)
-----------------------------------------------------
(SOCIAL SECURITY OR EMPLOYER IDENTIFICATION NUMBER)
[ ] Credit unexchanged Old Certificates delivered by book-entry transfer to
the Book-Entry Transfer Facility account set forth below.
-----------------------------------------------------
(BOOK-ENTRY TRANSFER FACILITY
ACCOUNT NUMBER, IF APPLICABLE)
- ------------------------------------------------------
- ------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
- ------------------------------------------------------
To be completed ONLY if certificates for Old Certificates not exchanged
and/or New Certificates are to be sent to someone other than the person(s)
whose signature(s) appear(s) on this letter below, or to the undersigned at an
address other than shown in the box entitled "Description of Old Certificates"
on this Letter above.
Mail: New Certificates and/or Old Certificates to:
Name(s):
-----------------------------------------
(PLEASE TYPE OR PRINT)
-----------------------------------------------------
Address:
-------------------------------------------
-----------------------------------------------------
(INCLUDING ZIP CODE)
- ------------------------------------------------------
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE CERTIFICATES
FOR OLD CERTIFICATES OR A BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED
DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY) MUST BE RECEIVED BY THE EXCHANGE
AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THIS LETTER OF TRANSMITTAL CAREFULLY
BEFORE COMPLETING ANY BOX ABOVE.
7
<PAGE> 8
<TABLE>
<S> <C>
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9)
- --------------------------------------------------- ---------------------------------------------------
(SIGNATURE(S) OF OWNER(S))
Date: -------------------------------------------- Date: --------------------------------------------
Area Code and Telephone Number:
- -------------------------------------------------------------------------------------------------------------
</TABLE>
If a holder is tendering any Old Certificates, this Letter must be signed
by the registered holder(s) as the name(s) appear(s) on the certificate(s) for
the Old Certificates or by any person(s) authorized to become registered
holder(s) by endorsements and documents transmitted herewith. If signature is by
a trustee, executor, administrator, guardian, officer or other person acting in
a fiduciary or representative capacity, please set forth full title. See
Instruction 3.
Name(s):
- --------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Capacity:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDING ZIP CODE)
SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 3)
Authorized Signature:
- --------------------------------------------------------------------------------
Title:
- --------------------------------------------------------------------------------
Name and Firm:
- --------------------------------------------------------------------------------
Dated:
- --------------------------------------------------------------------------------
8
<PAGE> 9
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer to Exchange Pass
Through Certificates, Series 1998-1, which have been registered under the
Securities Act of 1933, as amended, for any and all outstanding Pass Through
Certificates, Series 1998-1.
1. DELIVERY OF THIS LETTER AND OLD CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES.
This Letter is to be completed by holders of Old Certificates if
certificates are to be forwarded herewith or if tenders are to be made pursuant
to the procedures for delivery by book-entry transfer set forth in "The Exchange
Offer -- Book-Entry Transfer" section of the Prospectus. Certificates for all
physically tendered Old Certificates, or Book-Entry Confirmation, as the case
may be, as well as a properly completed and duly executed Letter of Transmittal
(or facsimile thereof) and any other documents required by this Letter, must be
received by the Exchange Agent at the address set forth herein on or prior to
the Expiration Date, or the tendering holder must comply with the guaranteed
delivery procedures set forth below. Old Certificates tendered hereby must be in
denominations of $1,000 and any integral multiple thereof.
Holders who are DTC Participants tendering by book-entry transfer must
execute such tender through DTC's ATOP system. A Holder using ATOP should
transmit its acceptance to DTC on or prior to the Expiration Date. DTC will
verify such acceptance, execute a book-entry transfer of the tendered Old
Certificates into the Exchange Agent's account at DTC and then send to the
Exchange Agent a Book-Entry Confirmation, including an Agent's Message
confirming that DTC has received an express acknowledgment from such Holder that
such Holder has received and agrees to be bound by this Letter of Transmittal
and that the Trust and the Company may enforce this Letter of Transmittal
against such Holder. The Book-Entry Confirmation must be received by the
Exchange Agent in order for the tender relating thereto to be effective.
Book-entry transfer to DTC in accordance with DTC's procedure does not
constitute delivery of the Book-Entry Confirmation to the Exchange Agent.
Holders of Old Certificates whose certificates for Old Certificates are not
immediately available or who cannot deliver their certificates and all other
required documents to the Exchange Agent on or prior to the Expiration Date, or
who cannot complete the procedure for book-entry transfer on a timely basis, may
tender their Old Certificates pursuant to the guaranteed delivery procedures set
forth in "The Exchange Offer -- Guaranteed Delivery Procedures" section of the
Prospectus. Pursuant to such procedures, (i) such tender must be made through an
Eligible Institution (as defined below), (ii) prior to the Expiration Date, the
Exchange Agent must receive from such Eligible Institution a properly completed
and duly executed Letter of Transmittal (or facsimile thereof) and Notice of
Guaranteed Delivery, substantially in the form provided by the Company (by
facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of Old Certificates and the amount of Old Certificates
tendered, stating that the tender is being made thereby and guaranteeing that
within three New York Stock Exchange ("NYSE") trading days after the date of
execution of the Notice of Guaranteed Delivery, the certificates for all
physically tendered Old Certificates, or a Book-Entry Confirmation, as the case
may be, and any other documents required by this Letter will be deposited by the
Eligible Institution with the Exchange Agent, and (iii) the certificates for all
physically tendered Old Certificates, in proper form for transfer, or Book-Entry
Confirmation, as the case may be, and all other documents required by this
Letter, are received by the Exchange Agent within three NYSE trading days after
the date of execution of the Notice of Guaranteed Delivery.
A Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile or mail to the Exchange Agent, and must include a guarantee by an
Eligible Institution in the form set forth in such Notice. For Old Certificates
to be properly tendered pursuant to the guaranteed delivery procedure, the
Exchange Agent must receive a Notice of Guaranteed Delivery on or prior to the
Expiration Date.
As used herein and in the Prospectus, "Eligible Institution" means a firm
or other entity identified in Rule 17Ad-15 under the Exchange Act as "an
eligible guarantor institution," including (as such terms are
9
<PAGE> 10
defined therein) (i) a bank, (ii) a broker, dealer, municipal securities broker
or dealer or government securities broker or dealer, (iii) a credit union, (iv)
a national securities exchange, registered securities association or clearing
agency, or (iv) a savings association that is a participant in a Securities
Transfer Association.
THE METHOD OF DELIVERY OF THIS LETTER, THE OLD CERTIFICATES AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING HOLDERS, BUT THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE
EXCHANGE AGENT. IF OLD CERTIFICATES ARE SENT BY MAIL, IT IS SUGGESTED THAT THE
MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO PERMIT
DELIVERY TO THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE
EXPIRATION DATE.
See "The Exchange Offer" section of the Prospectus.
2. PARTIAL TENDERS (NOT APPLICABLE TO HOLDERS OF OLD CERTIFICATES WHO TENDER BY
BOOK-ENTRY TRANSFER).
If less than all of the Old Certificates evidenced by a submitted
certificate are to be tendered, the tendering holder(s) should fill in the
aggregate principal amount of Old Certificates to be tendered in the box above
entitled "Description of Old Certificates -- Principal Amount Tendered." A
reissued certificate representing the balance of nontendered Old Certificates
will be sent to such tendering holder, unless otherwise provided in the
appropriate box on this Letter, promptly after the Expiration Date. All of the
Old Certificates delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated.
3. SIGNATURES OF THIS LETTER; BOND POWERS AND ENDORSEMENTS; GUARANTEE OF
SIGNATURES.
If this Letter is signed by the registered holder of the Old Certificates
tendered hereby, the signature must correspond exactly with the name as written
on the face of the certificates without any change whatsoever.
If any tendered Old Certificates are owned of record by two or more joint
owners, all such owners must sign this Letter.
If any tendered Old Certificates are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate copies of this Letter as there are different registrations of
certificates.
When this Letter is signed by the registered holder of the Old Certificates
specified herein and tendered hereby, no endorsements of certificates or
separate bond powers are required. If, however, the New Certificates are to be
issued, or any untendered Old Certificates are to be reissued, to a person other
than the registered holder, then endorsements of any certificates transmitted
hereby or separate bond powers are required. Signatures on such certificates
must be guaranteed by an Eligible Institution.
If this Letter is signed by a person other than the registered holder of
any certificates specified herein, such certificates must be endorsed or
accompanied by appropriate bond powers, in either case signed exactly as the
name of the registered holder appears on the certificates and the signatures on
such certificates must be guaranteed by an Eligible Institution.
If this Letter or any certificates or bond powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted.
Endorsements on certificates for Old Certificates or signatures on bond
powers required by this Instruction 3 must be guaranteed by an Eligible
Institution.
10
<PAGE> 11
Signatures on this Letter need not be guaranteed by an Eligible
Institution, provided the Old Certificates are tendered: (i) by a registered
holder of Old Certificates (which term, for purposes of the Exchange Offer,
includes any participant in the Book-Entry Transfer Facility system whose name
appears on a security position listing as the holder of such Old Certificates)
tendered who has not completed the box entitled "Special Issuance Instructions"
or "Special Delivery Instructions" on this Letter, or (ii) for the account of an
Eligible Institution.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.
Tendering holders of Old Certificates should indicate in the applicable box
the name and address to which New Certificates issued pursuant to the Exchange
Offer and/or substitute certificates evidencing Old Certificates not exchanged
are to be issued or sent, if different from the name or address of the person
signing this Letter. In the case of issuance in a different name, the employer
identification or social security number of the person named must also be
indicated. A holder of Old Certificates tendering Old Certificates by book-entry
transfer may request that Old Certificates not exchanged be credited to such
account maintained at the Book-Entry Transfer Facility as such holder of Old
Certificates may designate hereon. If no such instructions are given, such Old
Certificates not exchanged will be returned to the name or address of the person
signing this Letter.
5. TAX IDENTIFICATION NUMBER.
Federal income tax law generally requires that a tendering holder whose Old
Certificates are accepted for exchange must provide the Exchange Agent with such
Holder's correct Taxpayer Identification Number ("TIN") on Substitute Form W-9
below, which, in the case of a tendering holder who is an individual, is his or
her social security number. If a tendering holder does not provide the Exchange
Agent with its current TIN or an adequate basis for an exemption, such tendering
holder may be subject to backup withholding in an amount equal to 31% of all
reportable payments made after the exchange. If withholding results in an
overpayment of taxes, a refund may be obtained.
Exempt holders of Old Certificates (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. See the enclosed Guidelines of
Certification of Taxpayer Identification Number on Substitute Form W-9 (the "W-9
Guidelines") for additional instructions.
To prevent backup withholding, each tendering holder of Old Certificates
must provide its correct TIN by completing the "Substitute Form W-9" set forth
below, certifying that the TIN provided is correct (or that such holder is
awaiting a TIN) and that (i) the holder is exempt from backup withholding, (ii)
the holder has not been notified by the Internal Revenue Service that such
holder is subject to a backup withholding as a result of a failure to report all
interest or dividends or (iii) the Internal Revenue Service has notified the
holder that such holder is no longer subject to backup withholding. If the
tendering holder of Old Certificates is a nonresident alien or foreign entity
not subject to backup withholding, such holder must give the Exchange Agent a
completed Form W-8, Certificate of Foreign Status. These forms may be obtained
from the Exchange Agent. If the Old Certificates are in more than one name or
are not in the name of the actual owner, such holder should consult the W-9
Guidelines for information on which TIN to report. If such holder does not have
a TIN, such holder should consult the W-9 Guidelines for instructions on
applying for a TIN, check the box in Part 2 of the Substitute Form W-9 and write
"applied for" in lieu of its TIN. Note: checking this box and writing "applied
for" on the form means that such holder has already applied for a TIN or that
such holder intends to apply for one in the near future. If such holder does not
provide its TIN to the Exchange Agent within 60 days, backup withholding will
begin and continue until such holder furnishes its TIN to the Exchange Agent.
6. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable to the transfer
of Old Certificates to it or its order pursuant to the Exchange Offer. If,
however, New Certificates and/or substitute Old Certificates
11
<PAGE> 12
not exchanged are to be delivered to, or are to be registered or issued in the
name of, any person other than the registered holder of the Old Certificates
tendered hereby, or if tendered Old Certificates are registered in the name of
any person other than the person signing this Letter, or if a transfer tax is
imposed for any reason other than the transfer of Old Certificates to the
Company or its order pursuant to the Exchange Offer, the amount of any such
transfer taxes (whether imposed on the registered holder or any other persons)
will be payable by the tendering holder. If satisfactory evidence of payment of
such taxes or exemption therefrom is not submitted herewith, the amount of such
transfer taxes will be billed directly to such tendering holder.
Except as provided in this Instruction 6, it is not necessary for transfer
tax stamps to be affixed to the Old Certificates specified in this Letter.
7. WAIVER OF CONDITIONS.
The Company reserves the absolute right to waive satisfaction of any or all
conditions enumerated in the Prospectus.
8. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Old Certificates, by execution of this
Letter, shall waive any right to receive notice of the acceptance of their Old
Certificates for exchange. Neither the Company, the Exchange Agent nor any other
person is obligated to give notice of any defect or irregularity with respect to
any tender of Old Certificates nor shall any of them incur any liability for
failure to give any such notice.
9. MUTILATED, LOST, STOLEN OR DESTROYED OLD CERTIFICATES.
Any holder whose Old Certificates have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated above for
further instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter, may be directed to the
Exchange Agent, at the address and telephone number indicated above.
12
<PAGE> 13
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 5)
GIVE FORM TO THE REQUESTER. DO NOT SEND TO THE IRS
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------
SUBSTITUTE PART I -- TAXPAYER IDENTIFICATION NUMBER (TIN)
FORM W-9
---------------------------------- ----------------------------------
LIST ACCOUNT NUMBERS HERE
(OPTIONAL)
----------------------------------
PART II -- FOR PAYEE EXEMPT FROM BACKUP WITHHOLDING
(SEE THE W-9 GUIDELINES)
Social Security Number
---------------------------------------------
Or Employer Identification Number
---------------------------------------------
Enter your TIN in the appropriate box. For individuals, this is your
social security number (SSN). For sole proprietors or resident aliens,
see the W-9 Guidelines. For other entities, it is your employer
identification number (EIN). If you do not have a number, see the W-9
Guidelines. NOTE: If the account is in more than one name, see the
chart in the W-9 Guidelines for guidance on whose number to enter.
Please Print or Type
------------------------------------------------------------------------
NAME (IF A JOINT ACCOUNT OR YOU CHANGED YOUR NAME, SEE THE W-9
GUIDELINES)
------------------------------------------------------------------------
BUSINESS NAME, IF DIFFERENT FROM ABOVE. (SEE THE W-9 GUIDELINES.)
Please check the appropriate box: [ ] Individual/Sole Proprietor
[ ] Corporation
[ ] Partnership
[ ] Other
-----------------------------------------------------------------------
-----------------------------------------------------------------------
ADDRESS (NUMBER, STREET, APT. OR SUITE NO.).
REQUESTER'S NAME AND ADDRESS (OPTIONAL)
------------------------------------------------------------------------
CITY, STATE AND ZIP CODE
----------------------------------------------------------------------------------------------------------
PART III -- CERTIFICATION
Under penalties of perjury, I certify that;
1. The number shown on this form is my correct taxpayer identification
(or I am waiting for a number to be issued to me), and
2. I am not subject to backup withholding because: (a) I am exempt
from backup withholding, or (b) I have not been notified by the
Internal Revenue Service that I am subject to backup withholding as a
result of a failure to report all interest or dividends, or (c) the IRS
has notified me that I am no longer subject to backup withholding.
------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS. You must cross out item 2 above if you have
(REV. DECEMBER 1996) been notified by the IRS that you are currently subject to backup
DEPARTMENT OF THE TREASURY withholding because you have failed to report all interest or dividends
INTERNAL REVENUE SERVICE on your tax return. For real estate transactions, item 2 does not
REQUEST FOR TAXPAYER apply. For mortgage interest paid, the acquisition or abandonment of
IDENTIFICATION NUMBER secured property, cancellation of debt, contributions to an individual
AND CERTIFICATION retirement arrangement (IRA), and generally payments other than
interest and dividends, you are not required to sign the Certification,
but you must provide your correct TIN. (Also, see the W-9 Guidelines.)
SIGN HERE:
------------------------------------------------------------------------
SIGNATURE DATE
----------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 1
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FOR
AMERICA WEST AIRLINES, INC.
PASS THROUGH CERTIFICATES, SERIES 1998-1
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of America West Airlines, Inc. (the "Company") made pursuant to
the Prospectus, dated March 26, 1999 (the "Prospectus"), and the enclosed Letter
of Transmittal (the "Letter of Transmittal") if certificates for Old
Certificates are not immediately available or if the procedure for book-entry
transfer cannot be completed on a timely basis or time will not permit all
required documents to reach Wilmington Trust Company (the "Exchange Agent")
prior to 5:00 P.M., New York City time, on the Expiration Date of the Exchange
Offer. Such form may be delivered or transmitted by facsimile transmission, mail
or hand delivery to the Exchange Agent as set forth below. In addition, in order
to utilize the guaranteed delivery procedure to tender Old Certificates pursuant
to the Exchange Offer, a completed, signed and dated Letter of Transmittal (or
facsimile thereof) must also be received by the Exchange Agent prior to 5:00
P.M., New York City time, on the Expiration Date. Capitalized terms not defined
herein are defined in the Prospectus.
DELIVERY TO: WILMINGTON TRUST COMPANY, EXCHANGE AGENT
<TABLE>
<S> <C>
By Mail or Overnight Delivery: By Hand:
Wilmington Trust Company Wilmington Trust Company
1100 North Market Street 1105 North Market Street, 1st Floor
Wilmington, Delaware 19890-0001 Wilmington, Delaware 19890
Attention: Kristin Long Attention: Corporate Trust Operations
</TABLE>
Facsimile Transmission:
(302) 651-1079
Confirm by Telephone:
(302) 651-1562
Kristin Long
Delivery of this instrument to an address other than as set forth above, or
transmission of instructions via facsimile other than as set forth above, will
not constitute a valid delivery.
<PAGE> 2
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the principal amount of Old Certificates set forth below, pursuant to
the guaranteed delivery procedure described in "The Exchange Offer -- Guaranteed
Delivery Procedures" section of the Prospectus.
------------------------------------------------------
Principal Amount of Old Certificates Tendered:
$
----------------------------------------------------
Certificate Nos. (if available):
------------------------------------------------------
------------------------------------------------------
If Old Certificates will be delivered by book-entry transfer to The
Depository Trust Company, provide account number.
The Depository Trust Company
Account No.
- ------------------------------------------------------
------------------------------------------------------
Name(s) of Record Holder(s):
------------------------------------------------------
------------------------------------------------------
PLEASE PRINT OR TYPE
Address(es):
------------------------------------------------------
------------------------------------------------------
Area Code and Telephone Number(s):
------------------------------------------------------
Signature(s):
------------------------------------------------------
------------------------------------------------------
Dated:
- ------------------------------------------------------
THE ACCOMPANYING GUARANTEE MUST BE COMPLETED.
2
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office or correspondent in the
United States or any "eligible guarantor" institution within the meaning of Rule
17Ad-15 of the Securities Exchange Act of 1934, as amended, hereby guarantees to
deliver to the Exchange Agent, at one of its addresses set forth above, the
certificates representing all tendered Old Certificates, in proper form for
transfer, or a Book-Entry Confirmation, together with a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, and any other documents required by the Letter of
Transmittal within three New York Stock Exchange, Inc. trading days after the
date of execution of this Notice of Guaranteed Delivery.
THE UNDERSIGNED ACKNOWLEDGES THAT IT MUST DELIVER THE LETTER OF TRANSMITTAL
TO THE EXCHANGE AGENT WITHIN THE TIME PERIOD SET FORTH THEREIN AND THAT FAILURE
TO DO SO COULD RESULT IN FINANCIAL LOSS TO THE UNDERSIGNED.
<TABLE>
<S> <C>
Name of Firm ----------------------------------
---------------------------------------------------
AUTHORIZED SIGNATURE
Address: ----------------------------------------- Name: -------------------------------------------
(PLEASE TYPE OR PRINT)
Title: --------------------------------------------
- ---------------------------------------------------
Area Code and
Telephone Number: ----------------------------- Date: --------------------------------------------
</TABLE>
3
<PAGE> 1
EXHIBIT 99.3
AMERICA WEST AIRLINES, INC.
OFFER TO EXCHANGE
PASS THROUGH CERTIFICATES, SERIES 1998-1,
WHICH HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OUTSTANDING
PASS THROUGH CERTIFICATES, SERIES 1998-1
To: Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
Upon and subject to the terms and conditions set forth in the Prospectus,
dated March 26, 1999 (the "Prospectus"), and the enclosed Letter of Transmittal
(the "Letter of Transmittal"), an offer to exchange (the "Exchange Offer") the
registered Pass Through Certificates, Series 1998-1 (the "New Certificates") for
any and all outstanding Pass Through Certificates, Series 1998-1 (the "Old
Certificates") is being made pursuant to such Prospectus. The Exchange Offer is
being made in order to satisfy certain obligations of America West Airlines,
Inc. (the "Company") contained in the Exchange and Registration Rights Agreement
dated as of October 6, 1998, between the Company and the Initial Purchasers.
The CUSIP numbers for the Old Certificates are as follows: Class A (023654
AK 2), Class B (023654 AL O), and Class C (023654 AM 8).
We are requesting that you contact your clients for whom you hold Old
Certificates regarding the Exchange Offer. For your information and for
forwarding to your clients for whom you hold Old Certificates registered in your
name or in the name of your nominee, or who hold Old Certificates registered in
their own names, we are enclosing the following documents:
1. Prospectus dated March 25, 1999;
2. The Letter of Transmittal for your use and for the information of
your clients;
3. A Notice of Guaranteed Delivery to be used to accept the Exchange
Offer if certificates for Old Certificates are not immediately available or
time will not permit all required documents to reach the Exchange Agent
prior to the Expiration Date (as defined below) or if the procedure for
book-entry transfer cannot be completed on a timely basis; and
4. A form of letter which may be sent to your clients for whose
account you hold Old Certificates registered in your name or the name of
your nominee, with space provided for obtaining such clients' instructions
with regard to the Exchange Offer.
Your prompt action is requested. The Exchange Offer will expire at 5:00
p.m., New York City time, on April 26, 1999 (the "Expiration Date") (30 calendar
days following the commencement of the Exchange Offer), unless extended by the
Company. The Old Certificates tendered pursuant to the Exchange Offer may be
withdrawn at any time before the Expiration Date.
To participate in the Exchange Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees and any other required documents, should be sent to the
Exchange Agent and certificates representing the Old Certificates should be
delivered to the Exchange Agent, all in accordance with the instructions set
forth in the Letter of Transmittal and the Prospectus.
<PAGE> 2
Please note that brokers, dealers, commercial banks, trust companies and
other nominees who hold Old Certificates through The Depository Trust Company
("DTC") must effect tenders by book-entry transfer through DTC's Automated
Tender Offer Program ("ATOP").
If holders of Old Certificates wish to tender, but it is impracticable for
them to forward their certificates for Old Certificates prior to the expiration
of the Exchange Offer or to comply with the book-entry transfer procedures on a
timely basis, a tender may be effected by following the guaranteed delivery
procedures described in the Prospectus under "The Exchange Offer -- Guaranteed
Delivery Procedures".
Additional copies of the enclosed material may be obtained from Wilmington
Trust Company, the Exchange Agent, at 1100 North Market Street, Wilmington,
Delaware 19890-0001, Attention: Kristin Long, phone (302) 651-1562 and facsimile
(302) 651-1079.
AMERICA WEST AIRLINES,
INC.
2
<PAGE> 1
EXHIBIT 99.4
AMERICA WEST AIRLINES, INC.
OFFER TO EXCHANGE
PASS THROUGH CERTIFICATES, SERIES 1998-1,
WHICH HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OUTSTANDING
PASS THROUGH CERTIFICATES, SERIES 1998-1
To Our Clients:
Enclosed for your consideration is a Prospectus of America West Airlines,
Inc., a Delaware corporation (the "Company" or "America West"), dated March 26,
1999 (the "Prospectus"), and the enclosed Letter of Transmittal (the "Letter of
Transmittal") relating to the offer to exchange (the "Exchange Offer") the
registered Pass Through Certificates, Series 1998-1 (the "New Certificates") for
any and all outstanding Pass Through Certificates, Series 1998-1 (the "Old
Certificates"), upon the terms and subject to the conditions described in the
Prospectus. The Exchange Offer is being made in order to satisfy certain
obligations of Continental contained in the Exchange and Registration Rights
Agreement dated as of October 6, 1998, between the Company and the Initial
Purchasers.
The CUSIP numbers for the Old Certificates are as follows: Class A (023654
AK 2), Class B (023654 AL O), and Class C (023654 AM 8).
This material is being forwarded to you as the beneficial owner of the Old
Certificates carried by us in your account but not registered in your name. A
tender of such Old Certificates may only be made by us as the holder of record
and pursuant to your instructions.
Accordingly, we request instructions as to whether you wish us to tender on
your behalf the Old Certificates held by us for your account, pursuant to the
terms and conditions set forth in the enclosed Prospectus and Letter of
Transmittal.
Your instructions should be forwarded to us as promptly as possible in
order to permit us to tender the Old Certificates on your behalf in accordance
with the provisions of the Exchange Offer. The Exchange Offer will expire at
5:00 p.m., New York City time, on April 26, 1999 (the "Expiration Date") (30
calendar days following the commencement of the Exchange Offer), unless extended
by the Company. Any Old Certificates tendered pursuant to the Exchange Offer may
be withdrawn at any time before 5:00 p.m., New York City time on the Expiration
Date.
Your attention is directed to the following:
1. The Exchange Offer is for any and all Old Certificates.
2. The Exchange Offer is subject to certain conditions set forth in
the Prospectus in the section captioned "The Exchange Offer -- Conditions".
3. Any transfer taxes incident to the transfer of Old Certificates
from the holder to the Company will be paid by the Company, except as
otherwise provided in the Instructions in the Letter of Transmittal.
4. The Exchange Offer expires at 5:00 p.m., New York City time, on
the Expiration Date unless extended by the Company.
<PAGE> 2
If you wish to have us tender your Old Certificates, please so instruct us
by executing and returning to us the instruction form set forth below. The
Letter of Transmittal is furnished to you for information only and may not be
used directly by you to tender Old Certificates.
INSTRUCTIONS WITH RESPECT TO THE EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your letter enclosing the
Prospectus, dated , 1998, of America West Airlines, Inc., a Delaware
corporation, and the related specimen Letter of Transmittal.
- --------------------------------------------------------------------------------
This will instruct you to tender the number of Old Certificates indicated
below held by you for the account of the undersigned, pursuant to the terms and
conditions set forth in the Prospectus and the related Letter of Transmittal.
(Check one).
<TABLE>
<S> <C> <C>
Box 1 [ ] Please tender my Old Certificates held by you for my
account. If I do not wish to tender all of the Old
Certificates held by you, I have identified on a signed
schedule attached hereto the number of Old Certificates I do
not wish tendered.
Box 2 [ ] Please do not tender any Old Certificates held by you for my
account.
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Date , 199 -----------------------------------------------------
SIGNATURE(S)
-----------------------------------------------------
-----------------------------------------------------
PLEASE PRINT NAME(S) HERE
-----------------------------------------------------
AREA CODE AND TELEPHONE NO.
</TABLE>
UNLESS A SPECIFIC CONTRARY INSTRUCTION IS GIVEN IN THE SPACE PROVIDED, YOUR
SIGNATURE(S)
HEREON SHALL CONSTITUTE AN INSTRUCTION TO US TO TENDER ALL OLD CERTIFICATES.
2
