<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 31, 2000
REGISTRATION NO. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
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 (I.R.S. EMPLOYER IDENTIFICATION NO.)
OF INCORPORATION OR ORGANIZATION)
4000 E. SKY HARBOR BOULEVARD (602) 693-0800
PHOENIX, ARIZONA 85034-3899 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) CODE)
</TABLE>
------------------------
4512
(PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE NUMBER)
------------------------
STEPHEN L. JOHNSON
SENIOR VICE PRESIDENT -- CHIEF ADMINISTRATIVE OFFICER AND ASSISTANT CORPORATE
GROUP MANAGER
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 2000-1G.............. $232,898,000 100% $232,898,000 $61,485
------------------------------------------------------------------------------------------------------------------------------
Pass Through Certificates,
Series 2000-1C.............. $20,429,000 100% $20,429,000 $5,393
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
</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
SUBJECT TO COMPLETION DATED AUGUST 31, 2000
PROSPECTUS
$253,327,000
AMERICA WEST AIRLINES, INC.
PASS THROUGH CERTIFICATES, SERIES 2000-1
This prospectus relates to new pass through certificates to be issued by
two separate pass through trusts. Each certificate represents an ownership
interest in the property held by the trust that issued the certificate. The
proceeds of this financing will be used to finance ten aircraft for use in our
current operations as a commercial airline. The certificates do not represent
interests in or obligations of America West or any of our affiliates.
The new certificates will be offered in exchange for outstanding
certificates previously issued in July 2000 pursuant to an offering exempt from
the SEC's registration requirements. The new certificates will have the same
material financial terms and will represent the same fractional undivided
interest in the trusts as the outstanding certificates they are replacing.
Certificateholders will receive scheduled payments of interest on each
January 2 and July 2, beginning January 2, 2001. Certificateholders will also
receive scheduled payments of principal on each January 2 and July 2 in
scheduled years, beginning on or after January 2, 2001.
The Class G certificates will rank senior to the Class C certificates.
Citibank, N.A. will provide a liquidity facility for each class of
certificates in an amount sufficient to make three semiannual interest payments.
Ambac Assurance Corporation has issued an insurance policy to support the
payment of interest on the Class G certificates when due and the payment of
principal no later than the final legal distribution date.
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 10 OF THIS
PROSPECTUS.
<TABLE>
<CAPTION>
FINAL EXPECTED
PASS THROUGH CERTIFICATES FACE AMOUNT INTEREST RATE DISTRIBUTION DATE PRICE TO PUBLIC
------------------------- ------------ ------------- ----------------- ---------------
<S> <C> <C> <C> <C>
2000-1G............................ $232,898,000 8.057% July 2, 2020 100%
2000-1C............................ 20,429,000 9.244 July 2, 2006 100
</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 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 glossary of terms
where capitalized terms used in this prospectus are defined under the caption
"Glossary" in Appendix I of this prospectus.
AVAILABLE INFORMATION
We are 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).
We are required to file publicly certain information under the Securities
Exchange Act of 1934. All of our public filings are also available on EDGAR,
including reports, proxy statements and other information. You may also read and
copy all of our 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 filings by our parent corporation, America West Holding Corporation,
are also available at the offices of the New York Stock Exchange.
INCORPORATION OF 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 we
filed during 2000. These include the annual report on Form 10-K for the year
ended December 31, 1999, the quarterly reports on Forms 10-Q filed for the
quarters ended March 31, 2000 and June 30, 2000. We also incorporate by
reference the portions of the proxy statement for the annual stockholder meeting
held on May 25, 2000, 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 are 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., 4000 E. Sky Harbor
Blvd., Phoenix, Arizona 85034; (480) 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 of the exchange offer.
i
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
IMPORTANT NOTICE ABOUT INFORMATION
PRESENTED IN THIS PROSPECTUS...... i
AVAILABLE INFORMATION............... i
INCORPORATION OF DOCUMENTS BY
REFERENCE......................... i
PROSPECTUS SUMMARY.................. 1
FINANCING THE ACQUISITION OF
AIRCRAFT.......................... 1
THE CERTIFICATES.................... 2
CASH FLOW STRUCTURE................. 4
THE EQUIPMENT NOTES................. 6
EXCHANGE OFFER...................... 7
ERISA CONSIDERATIONS................ 7
USE OF PROCEEDS..................... 8
AMERICA WEST........................ 8
RATIO OF EARNINGS TO FIXED
CHARGES........................... 8
SELECTED FINANCIAL DATA............. 9
RISK FACTORS........................ 10
Risk Factors Relating to the Policy
Provider.......................... 10
If the financial condition of the
policy provider declines, the
rating on the Class G certificates
may decline....................... 10
Policy protection may be delayed
because the policy will generally
cover principal payments only on
the Final Legal Distribution Date
for the Class G certificates...... 10
There is no policy protecting
payments relating to the Class C
certificates...................... 10
If the policy provider is the
Controlling Party, it may take
actions that are beneficial to the
policy provider and the holders of
the Class G certificates but
detrimental to the holders of the
Class C certificates.............. 10
Risk Factors Relating to the Company
and Industry Related Risks........ 10
The airline industry and the markets
we serve are highly competitive
and we may be unable to compete
effectively against carriers with
substantially greater resources or
low-cost structures............... 10
Our high leverage may limit our
ability to fund general corporate
requirements, limit our
flexibility in responding to
competitive developments and
increase our vulnerability to
adverse economic and industry
conditions. Most of this leverage
stems from our significant off
balance sheet obligations......... 11
</TABLE>
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Efforts by labor unions to organize
our employees have occurred in the
past and we expect will occur in
the future, which could divert
management attention and increase
our operating expenses............ 11
The stockholders who effectively
control the voting power of our
parent company could take actions
that would favor their own
personal interests to the
detriment of our interests........ 11
Any fluctuations in fuel costs could
affect our operating expenses and
results........................... 12
Our operating costs could increase
as a result of past, current or
new regulations that impose
additional requirements and
restrictions on airline
operations........................ 12
Risk Factors Relating to the
Certificates and the Offering..... 12
Because the appraisal values may not
reflect the realizable value of
the Aircraft, the proceeds from
the sale of the Aircraft may not
be sufficient to pay all of the
certificateholders................ 12
The holders of Class C certificates
may not receive the full amount of
payments that they are due to
receive because their right to
payments on the related series of
equipment notes is subordinate to
the Class G certificates.......... 13
If an Indenture Default occurs and
is continuing, the Controlling
Party may not protect or maximize
the financial interests of
certificateholders................ 13
Owner participants could control
aircraft-related matters to the
exclusion of the Loan Trustees.... 13
The ratings of the certificates may
be lowered or withdrawn by the
rating agencies................... 13
If not all of the funds held in
escrow as deposits are used to
purchase equipment notes, unused
deposits will be distributed to
the certificateholders of the
applicable trust.................. 14
If a secondary market for the
certificates does not develop, you
may not be able to resell any of
your certificates................. 14
THE EXCHANGE OFFER.................. 15
General............................. 15
The Exchange Offer.................. 15
Tendering Outstanding Certificates
in the Exchange Offer............. 16
Book-Entry Transfer................. 18
Guaranteed Delivery Procedures...... 18
</TABLE>
ii
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Withdrawal of Tenders............... 19
Conditions.......................... 19
Exchange Agent...................... 19
Transferability of New
Certificates...................... 19
Alternative Use of Shelf
Registration Statement............ 20
Fees and Expenses................... 20
REMAINING PROSPECTUS DISCLOSURE..... 22
THE PARTIES......................... 22
THE MATERIAL AGREEMENTS............. 22
DESCRIPTION OF THE NEW
CERTIFICATES...................... 24
General............................. 24
Certificates Represent an Ownership
Interest in the Corresponding
Trust............................. 24
Subordination....................... 25
Payments and Distributions.......... 25
Pool Factors........................ 27
Reports To Certificateholders....... 29
Indenture Defaults and Certain
Rights Upon An Indenture
Default........................... 30
Purchase Rights of
Certificateholders................ 33
PTC Event of Default................ 33
Merger, Consolidation And Transfer
Of Assets......................... 33
Modifications of the Pass Through
Trust Agreements and Certain Other
Agreements........................ 34
Obligation to Purchase Equipment
Notes............................. 36
Mandatory Terms..................... 36
Possible Issuance of Class D
Certificates...................... 39
Liquidation of Original Trusts...... 39
Termination of the Trusts........... 39
The Trustees........................ 39
Book-Entry; Delivery and Form....... 40
DESCRIPTION OF THE DEPOSIT
AGREEMENTS........................ 42
General............................. 42
Unused Deposits..................... 42
Distribution Upon Occurrence Of
Triggering Event.................. 43
Depositary.......................... 43
Replacement of Depositary........... 43
DESCRIPTION OF THE ESCROW
AGREEMENTS........................ 43
DESCRIPTION OF THE LIQUIDITY
FACILITIES........................ 44
General............................. 44
Drawings............................ 44
Reimbursement of Drawings........... 46
Liquidity Events of Default......... 47
</TABLE>
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Liquidity Provider.................. 48
DESCRIPTION OF THE POLICY AND THE
POLICY PROVIDER AGREEMENT......... 49
The Policy.......................... 49
General............................. 51
The Policy Provider Agreement....... 52
DESCRIPTION OF THE INTERCREDITOR
AGREEMENT......................... 52
Intercreditor Rights................ 52
Priority of Distributions........... 53
Priority of Distributions if a
Triggering Event Has Occurred..... 53
Voting of Equipment Notes........... 55
Addition of Trustee for Class D
Certificates...................... 55
The Subordination Agent............. 56
DESCRIPTION OF THE AIRCRAFT AND THE
APPRAISALS........................ 57
The Aircraft........................ 57
The Appraisals...................... 57
Deliveries of Aircraft.............. 58
Substitute Aircraft................. 58
Bridge Financing.................... 58
Conversion Option................... 59
DESCRIPTION OF THE EQUIPMENT
NOTES............................. 60
General............................. 60
Subordination....................... 61
Principal And Interest Payments..... 61
Redemption.......................... 62
Security............................ 63
Loan To Value Ratios Of Equipment
Notes............................. 64
Limitation of Liability............. 65
Indenture Defaults, Notice And
Waiver............................ 65
Remedies............................ 66
Modification of Indentures and
Leases............................ 68
Indemnification..................... 69
The Leases and Certain Provisions of
the Owned Aircraft Indentures..... 69
CERTAIN U.S. FEDERAL INCOME TAX
CONSEQUENCES...................... 77
ERISA CONSIDERATIONS................ 77
PLAN OF DISTRIBUTION................ 79
LEGAL MATTERS....................... 80
EXPERTS............................. 80
APPENDIX I -- GLOSSARY.............. A-I-1
APPENDIX II -- APPRAISAL LETTERS.... A-II-1
</TABLE>
iii
<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.
- THROUGHOUT THIS PROSPECTUS, "WE", "US", "AMERICA WEST" AND THE "COMPANY"
REFER TO AMERICA WEST AIRLINES, INC. AND "HOLDINGS" REFERS TO AMERICA
WEST HOLDINGS CORPORATION, OUR PARENT COMPANY.
- PLEASE REFER TO THE SECTIONS ENTITLED "THE PARTIES" AND "THE MATERIAL
AGREEMENTS" FOR A SUMMARY OF THE MAIN PARTIES AND MATERIAL AGREEMENTS
DISCUSSED IN THIS PROSPECTUS.
FINANCING THE ACQUISITION OF AIRCRAFT
In July, 2000, the Class G trust sold Class G certificates in the face
amount of $232,898,000 and the Class C trust sold Class C certificates in the
face amount of $20,429,000. The proceeds from the sale of the certificates will
finance ten aircraft delivered or to be delivered to America West between
August, 2000 and March, 2001. Citibank, N.A., as depositary, took deposit of the
proceeds from the sale of the certificates. The deposits will then be
subsequently withdrawn in connection with the delivery and financing of each
aircraft. The certificates represent an ownership interest in the trust property
of the trust that issued that particular class of certificates. A
certificateholder's interest in a trust is equal to the pro rata interest in the
property of that trust equal to the ratio of the face amount of certificates
owned by the holder to the aggregate face amount of all of the certificates
issued by that trust.
The primary assets of each trust will be the equipment notes of the related
series issued in connection with separate aircraft financing transactions for
each of the ten aircraft. For a more complete description of the trust property,
see "Description of the Certificates -- General". If we lease an aircraft, the
equipment notes to be issued for that aircraft will be secured by a security
interest in that aircraft and by an assignment of rights under the lease of that
aircraft to America West, including the right to receive the rental payments
under that lease that serve to pay the scheduled interest and principal on those
equipment notes. If we elect to purchase an aircraft, the equipment notes to be
issued for that aircraft will be secured by a security interest in that
aircraft. The trust "passes through" to the holders of the certificates of that
trust all payments of interest and principal paid on the equipment notes held in
the trust. The two series of equipment notes reflect different interest rates
and priority of payment. Each trust will hold the equipment notes of a single
series. The 8.057% interest rate relating to the Class G certificates and the
9.244% interest rate relating to the Class C certificates corresponds with the
interest rate that will accrue on the series of equipment notes to be held by
the related trust. In effect, the certificateholders will hold interests in
trusts that will own equipment notes secured by each of the aircraft as well as
the leases and rentals payable on these aircraft where America West is the
lessee.
The equipment notes issued for each of the aircraft will be issued as part
of either a separate mortgage financing or a separate leveraged lease financing
for each of the aircraft. In each mortgage financing, we will issue the related
equipment notes. In each leveraged lease financing a grantor trust, commonly
known as an owner trust, acting on behalf of an equity investor will be formed
to acquire an aircraft, and that owner trust will lease that aircraft to us. A
grantor trust, as used in these lease financings, is a trust established by the
equity investor, as grantor, and a bank or trust company, as an owner trustee,
where the grantor is treated as the owner of the property in the trust for
income tax purposes. The issuance by the owner trust of Series C and Series G
equipment notes will help finance a portion of an owner trust's acquisition cost
of its aircraft. Under this arrangement, the related trust will use the proceeds
from the sale of each class of certificates to purchase the related series of
equipment notes. For a more detailed description of the mortgage structure and
leveraged lease structure, see "Description of the Equipment Notes".
1
<PAGE> 7
THE CERTIFICATES
The chart below contains summary information about each class of
certificates.
<TABLE>
<CAPTION>
CLASS G CERTIFICATES CLASS C CERTIFICATES
-------------------- --------------------
<S> <C> <C>
Aggregate Face Amount............................. $232,898,000 $20,429,000
Interest Rate..................................... 8.057% 9.244%
Ratings:
Moody's......................................... Aaa Baa3
Standard & Poor's............................... AAA BBB+
Initial Loan to Value (cumulative)(1)............. 56.7% 59.0%
Expected Principal Distribution Window (in
years).......................................... 0.5-20.0 0.5-6.0
Initial Average Life (in years from the Issuance
Date)(2)........................................ 11.5 1.9
Regular Distribution Dates........................ January 2 and July 2 January 2 and July 2
Final Expected Regular Distribution Date(2)....... July 2, 2020 July 2, 2006
Final Legal Distribution Date(3).................. January 2, 2022 January 2, 2008
Minimum Denomination.............................. $100,000 $100,000
Section 1110 Protection(4)........................ Yes Yes
Liquidity Facility Coverage(5).................... 3 semiannual 3 semiannual
interest payments interest payments
Policy Provider Coverage(6)....................... Yes No
</TABLE>
---------------
(1) As in any secured financing, an important consideration for the lender is
the amount of its loan relative to the value of the asset being financed.
The greater the difference between the value and the loan amount, the more
secure the lender will be because it can better suffer asset depreciation or
distress sales if it must foreclose on the lien of its security. The initial
loan to aircraft values measure the ratio of (a) in the case of the Class G
certificates, the aggregate principal amount of Series G equipment notes
relating to all aircraft, and in the case of the Class C certificates the
aggregate principal amount of equipment notes with respect to all aircraft
to (b) the aggregate appraised base value of all aircraft (determined based
upon appraisals as of May 17, 2000, June 20, 2000 and June 21, 2000). These
values are calculated as of July 2, 2001, the first regular distribution
date after all aircraft are scheduled to have been delivered. In making such
calculations, we have assumed that all aircraft are delivered prior to such
date, the maximum principal amount of equipment notes is issued and the
aggregate appraised base value of all aircraft will be $404,867,533.
(2) Equipment notes will mature on or before the final expected regular
distribution date for the certificates issued by the trusts that own them.
(3) The final legal distribution date for each class of certificates is the
final expected regular distribution date for that class of certificates plus
eighteen months, which represents the maximum period the liquidity provider
will service interest payments. The eighteen month liquidity period is the
period required by the rating agencies for transactions of this type, which
period reflects the expected maximum time it should take to repossess and
liquidate the aircraft collateral.
(4) A loan trustee with respect to each aircraft has the benefit of Section 1110
of the U.S. Bankruptcy Code with respect to that aircraft, which will enable
the loan trustee to take possession of that aircraft within 60 days of
America West being a debtor under Chapter 11 of the U.S. Bankruptcy Code,
unless we agree to perform all of our obligations under the related
financing and cure all defaults other than those relating to our bankruptcy
or financial condition.
(5) If certificateholders do not receive regular payments of interest on the
equipment notes, then Citibank, N.A., as liquidity provider, will provide
for the interest portion of those payments for up to three consecutive
scheduled payments.
2
<PAGE> 8
(6) If Class G certificateholders do not receive payments of principal or
interest relating to the Class G certificates, then Ambac Assurance
Corporation, as policy provider, will pay to the Class G certificateholders
the interest on each regular distribution date and the related outstanding
pool balance no later than the Class G certificates' final legal
distribution date.
3
<PAGE> 9
CASH FLOW STRUCTURE
Set forth below is a diagram illustrating the structure for the offering of
the certificates and certain cash flows.
Cash flow Diagram
---------------
(1) Each leased aircraft will be subject to a separate lease and a related
indenture and each owned aircraft will be subject to a separate indenture.
(2) The proceeds of the offering of each class of certificates will initially be
held in escrow and deposited with the depositary. The depositary will hold
such funds as interest-bearing deposits. Each trust will withdraw funds from
the deposits relating to such trust to purchase equipment notes from time to
time as each aircraft is financed. The scheduled payments of interest on the
equipment notes and on the deposits relating to a trust, taken together,
will be sufficient to pay accrued interest on the outstanding certificates
of that trust. The liquidity facility will not cover interest on the
deposits. If any funds remain as deposits with respect to any trust at the
Delivery Period Termination Date, those funds will be withdrawn by the
Escrow Agent and distributed to the holders of the certificates issued by
that trust, together with accrued and unpaid interest on the certificates
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, taken together,
will cover three consecutive semiannual interest payments with respect to
each trust, except that the liquidity facility for any trust will not cover
interest payable by the depositary on the deposits relating to such trust.
4
<PAGE> 10
(4) The policy covers regular interest distributions and outstanding principal
on the final legal distribution date or earlier under some circumstances
relating to the Class G certificates but does not cover any premiums,
default interest, withholding taxes or any other amounts payable in respect
of the Class G certificates. The policy does not cover amounts payable in
respect of the Class C certificates.
SCHEDULED PAYMENTS AND SPECIAL PAYMENTS
Scheduled payments on January 2 and July 2 will be funded by interest
payments due on the same dates for both the equipment notes and the deposits and
principal payments due on the same dates for the equipment notes. In addition to
scheduled payments, certificateholders may also receive special payments if,
prior to scheduled maturity, we redeem, or the trustee purchases, the equipment
notes from any of the trusts. Special payments, if due, would be made from the
proceeds of redemptions and purchases of equipment notes within 20 days of the
date that certificateholders receive notice that they are entitled to the
payment. These special payments will be made up of the principal, interest and,
in some instances, a premium payable by us.
PAYMENT RANKINGS
Under the intercreditor agreement, Wilmington Trust Company, as
subordination agent, will generally distribute regularly scheduled payments
received on the equipment notes in the following order:
(1) to Citibank, N.A., the liquidity provider, to cover any obligations to
reimburse or pay all amounts owing to it under each liquidity facility;
(2) distributions due to Class G certificateholders;
(3) certain obligations owing to the policy provider;
(4) distributions due to Class C certificateholders; and
(5) fees and expenses to the subordination agent and the trustees.
If a Triggering Event occurs, the subordination agent will not distribute
payments received on the equipment notes to the holders of Class G or Class C
certificates until prior obligations are paid, including administrative expenses
and obligations to the liquidity provider and policy provider. Payments made by
the liquidity provider and the policy provider are not subject to the
subordination provisions of the intercreditor agreement.
For a more detailed description of the distribution of payments received
with respect to the equipment notes, see "Description of the Intercreditor
Agreement -- Priority of Distributions".
LIQUIDITY FACILITIES FOR UP TO THREE CONSECUTIVE SCHEDULED PAYMENTS
A liquidity facility for each class of certificates is intended to enhance
the likelihood that certificateholders will receive the interest payable on the
certificates. Citibank, N.A. will be the liquidity provider of the liquidity
facilities. If certificateholders do not receive regular payments of interest on
the equipment notes, the liquidity provider will provide for the interest
portion of the payments for up to three consecutive scheduled payments.
We refer to the funds that the liquidity provider advances to Wilmington
Trust Company, as subordination agent, to make these payments as "interest
drawings." These interest drawings cannot be used to fund any principal or
premium payments relating to the certificates. Additionally, when the liquidity
provider makes an interest drawing, the subordination agent is obligated to
reimburse the liquidity provider for the full amount of the interest drawing
plus interest ahead of the certificateholders, to the extent funds are
available.
5
<PAGE> 11
POLICY COVERAGE ON THE CLASS G CERTIFICATES
Ambac Assurance Corporation, the policy provider, will issue an insurance
policy to support the payment of interest relating to the Class G certificates
on each regular distribution date and the payment of principal on the final
legal distribution date of January 2, 2022 (or earlier under some
circumstances). The policy does not cover any amounts payable on the Class C
certificates. The policy provider may be in a position to take actions that are
detrimental to the holders of the Class C certificates. The policy does not
cover any of the following:
(1) shortfalls attributable to the liability for withholding taxes;
(2) any premiums or prepayment or other acceleration payment payable in
respect of the Class G certificates; nor
(3) any failure of the subordination agent or the Class G trustee to make
any payment due to the holders of the Class G certificates from the
funds received.
For a more detailed description of the policy and the limitations of its
coverage, see "Description of the Policy and the Policy Provider Agreement" and
"Risk Factors -- Risk Factors Relating to the Policy Provider".
PURCHASE RIGHT
If we are in bankruptcy or certain other specified events have occurred,
the Class C certificateholders will have the right, within 180 days, to purchase
all of the Class G certificates, and whether or not such right is exercised, the
policy provider shall after that have the right to purchase all of the Class G
certificates. The purchase price will be the outstanding balance of the
applicable Class of Certificates plus accrued and unpaid interest.
THE EQUIPMENT NOTES
Each trust will withdraw funds from the escrow relating to that trust to
acquire equipment notes to finance the acquisition of aircraft. These are
referred to as the Series G equipment notes and the Series C equipment notes.
Each trust will purchase the series of equipment notes that have identical
interest rates.
WE CAN ELECT TO EITHER PURCHASE OR LEASE EACH AIRCRAFT
We can elect to either purchase or lease each aircraft. If we elect to
purchase an aircraft, we will issue the equipment notes used to fund that owned
aircraft. If we elect to lease an aircraft, an owner trust will issue the
equipment notes which will be secured by an aircraft owned by that trust and
leased to us.
REDEMPTION AND PURCHASE
If an aircraft is destroyed or its normal use is otherwise significantly
disrupted, we may cause that aircraft to be replaced or we may redeem, or cause
to be redeemed, the equipment notes issued for that aircraft. The redemption
price in this case would be equal to the aggregate unpaid principal amount of
the applicable equipment notes, together with accrued interest but without a
premium. The issuer of equipment notes, in connection with a prepayment,
refinancing or, in the case of a leased aircraft, termination for obsolescence,
may also redeem at any time the equipment notes at a price equal to the
aggregate unpaid principal amount of those notes, together with accrued interest
and a premium. Additionally, in the case of a leased aircraft, an owner trustee
or an affiliated entity may purchase all of the equipment notes issued for an
aircraft if we default on our lease obligations. The purchase price if we
default would be equal to the aggregate unpaid principal amount of these notes,
together with accrued interest and, in limited circumstances, a premium. Any
redemption would result in a special payment to the certificateholders.
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<PAGE> 12
SECURITY
Each equipment note will be secured by the aircraft financed by that
equipment note and, in the case of a leased aircraft, 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 under any indenture or lease will
only affect that indenture or lease and will not affect any other indenture or
lease. An indenture is the agreement governing the issuance of the equipment
notes and which grants the security in an aircraft.
SUBORDINATION
The Series C equipment notes will be subordinate to the Series G equipment
notes. In effect, this means that on each payment date under an indenture the
principal of and interest on Series G equipment notes will be made before
similar payments are made on Series C equipment notes. Additionally, as
described in "Risk Factors Relating to the Certificates and the Offering", if
there is a default on the equipment notes, the holders of Class C certificates
may not receive the full amount of payments that they are due to receive.
INTERCREDITOR RIGHTS
In general, holders of a majority of the outstanding principal of equipment
notes issued under a particular indenture will direct the applicable loan
trustee as to whether or not to take any actions in connection with that
indenture. If an event of default under an indenture occurs, until the default
is cured, the Controlling Party under the intercreditor agreement will direct
the applicable loan trustee as to the taking of any action under that indenture.
These actions may include accelerating and selling all but not less than all of
the equipment notes issued by that indenture.
For a more detailed discussion of the selection and powers of the
Controlling Party, see "Description of the Intercreditor
Agreement -- Intercreditor Rights -- Controlling Party" and for the related
risks, see "Risk Factors Relating to the Certificates -- If an Indenture Default
occurs and is continuing, the Controlling Party may not protect and/or maximize
the financial interests of certificateholders".
EXCHANGE OFFER
The July 2000 sale by the pass through trusts of the outstanding
certificates to Morgan Stanley & Co. Incorporated, Salomon Smith Barney Inc.,
Deutsche Bank Securities Inc., Donaldson, Lufkin & Jenrette Securities
Corporation and Merrill Lynch, Pierce, Fenner & Smith Incorporated, and the
resale by these initial purchasers of the outstanding certificates with
institutional investors, were exempt from registration requirements of the SEC
but, as a result, the outstanding certificates are not freely tradable. By
registering the new certificates with the SEC certificateholders can exchange
their outstanding certificates for new certificates that have the same financial
terms as the outstanding certificates and in an equal principal amount. The main
difference is that the new certificates, by being registered with the SEC, will
be free of the transfer restrictions currently imposed on the outstanding
certificates.
To participate in the exchange offer, certificateholders must deliver their
outstanding certificates for exchange no later than 5:00 p.m., New York time, on
[ ], 2000. This expiration date may be extended under some
circumstances. Certificateholders must also deliver a completed and signed
letter of transmittal with tender of their outstanding certificates. A letter of
transmittal has been sent to certificateholders and a form can be found as an
exhibit to the registration statement filed with the SEC. For a more complete
description of the procedures for participating in the exchange offer, see "The
Exchange Offer."
ERISA CONSIDERATIONS
If you acquire a certificate, you will be deemed to have represented that
either (1) you have not used assets of an employee benefit plan or an individual
retirement account to purchase that certificate or (2) your purchase and holding
of that certificate are exempt from the prohibited transaction restrictions of
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<PAGE> 13
the Employee Retirement Income Security Act of 1974, as amended, and/or the
Internal Revenue Code of 1986, as amended. For a more complete description of
ERISA matters, see "ERISA Considerations".
USE OF PROCEEDS
Proceeds from the sale of the certificates will fund equipment notes used
to finance the acquisition of 10 new aircraft delivered between August 2000 and
March 2001.
AMERICA WEST
We are the ninth largest commercial airline carrier and our unit cost is
the lowest of all full-service domestic airlines in the United States. We
reported approximately $2.1 billion in revenues in 1999, an increase in annual
revenues of 9.1% over revenues reported in 1998 and 38% over those reported in
1995. America West operates through its principal hubs located in Phoenix,
Arizona and Las Vegas, Nevada, and a mini-hub located in Columbus, Ohio. At the
end of 1999 America West operated a fleet of 123 aircraft flying approximately
604 flights each day and served 59 destinations directly and offered service to
another 84 destinations through alliance arrangements with other carriers.
We seek to maximize our market share and profitability by operating the
airline through a hub and spoke network, the strategy employed by all but one of
the major airlines in the United States. We are the leading airline serving
Phoenix based on available seat miles and takeoffs and landings and the leading
airline serving Las Vegas based on available seat miles. Available seat miles is
an airline industry measurement of production. It represents one seat flown one
mile. 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 a Delaware corporation. Our executive offices are located at 4000 E.
Sky Harbor Blvd., Phoenix, AZ 85034, and our telephone number is (480)693-0800.
See "Business" for a more complete description of our business and operations.
RECENT DEVELOPMENTS
Following discussions with the Federal Aviation Administration (FAA)
concerning the recently completed review of the airline's maintenance and
supporting programs, the FAA advised of concerns about certain of the airline's
maintenance records and reliability programs and with the manner in which the
airline analyzes and surveys those records and programs. We have agreed on
certain actions to address those concerns. The FAA stated that the requested
actions were intended to help ensure the continuation of the airline's solid
safety record and advised us that we had successfully completed all other
aspects of the FAA's review. We have completed an audit requested by the FAA and
are satisfied that all of the airworthiness directives have been complied with
and are properly documented. We will submit by late September a comprehensive
plan to improve the airline's continuous analysis and surveillance (CASS)
programs and a plan to review and update our maintenance programs. We have had a
project to restructure both our CASS and maintenance programs underway for some
time. The FAA indicated that it would provide special oversight of our
maintenance operations during the time necessary for the completion and
implementation of these plans.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for the years ended December 31,
1995, 1996, 1997, 1998 and 1999, was 1.73, 1.24, 1.98, 2.20 and 2.23,
respectively. The ratio of earnings to fixed charges for the six months ended
June 30, 1999 and June 30, 2000 was 1.91 and 1.53, respectively. For purposes of
calculating this ratio, earnings consist of earnings before taxes, minority
interest and extraordinary items plus interest expense (net of capitalized
interest), the portion of rental expense deemed representative of the interest
expense and amortization of previously capitalized interest. Fixed charges
consist of interest expense and the portion of rental expense representative of
interest expense.
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<PAGE> 14
SELECTED FINANCIAL DATA
The selected data presented below under the captions "Statement of
Operations Data" and "Balance Sheet Data" as of and for (i) the years ended
December 31, 1999, 1998, 1997, 1996 and 1995, are derived from the financial
statements of America West, which financial statements have been audited by KPMG
LLP, independent certified public accountants and (ii) the six month periods
ended June 30, 2000 and 1999 are derived from the unaudited condensed financial
statements of America West. In the opinion of management, the unaudited
condensed financial statements reflect all adjustments, which are of a normal
recurring nature, necessary for a fair presentation. The financial statements as
of December 31, 1999 and 1998 and for each of the years in the three-year period
ended December 31, 1999, and the report thereon, are incorporated by reference
in this prospectus. The information presented below under the caption "Operating
Data" is unaudited.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
----------------------- --------------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS EXCEPT OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating revenues............ $1,149,698 $1,060,655 $2,146,955 $1,968,714 $1,874,956 $1,739,526 $1,550,642
Operating income.............. 61,130 122,948 197,901 197,846 162,573 68,666(1) 154,732
Income before income taxes and
extraordinary items......... 76,284 118,686 200,974 184,557 140,673 34,493 108,378
Income before extraordinary
items....................... 43,785 66,450 116,622 103,016 75,330 9,610 54,770
Extraordinary items(2)........ -- -- -- -- -- 1,105 984
Net income.................... 43,785 66,450 116,622 103,016 75,330 8,505 53,786
BALANCE SHEET DATA (AT END OF
PERIOD):
Working capital
(deficiency)................ $ 64,039 $ (60,165) $ 64,826 $ (104,356) $ (161,456) $ (170,907) $ (70,416)
Total assets.................. 1,827,682 1,728,773 1,663,495 1,594,644 1,547,331 1,597,677 1,588,709
Long-term debt, less current
maturities.................. 150,240 198,003 155,168 207,906 272,760 330,148 373,964
Total stockholder's equity.... 926,254 832,299 882,469 769,225 684,768 622,780 649,472
OPERATING DATA:
Available seat miles (in
millions)................... 13,313 12,789 25,912 24,307 23,568 21,625 19,421
Revenue passenger miles (in
millions)................... 9,355 8,507 17,711 16,374 16,204 15,321 13,313
Passenger load factor (%)..... 70.3 66.5 68.4 67.4 68.8 70.9 68.5
Yield per revenue passenger
mile (cents)................ 11.66 11.79 11.45 11.35 10.89 10.69 10.91
Passenger revenue per
available seat mile
(cents)..................... 8.19 7.84 7.83 7.65 7.49 7.57 7.48
Operating cost per available
seat mile (cents)........... 8.18 7.33 7.52 7.29 7.27 7.73(1) 7.19
Full-time equivalent employees
(at end of period).......... 12,158 11,181 11,536 10,759 9,615 9,652 8,712
</TABLE>
---------------
(1) Reflects a $65.1 million nonrecurring charge relating to America West's
negotiation of its AVSA S.A.R.L. 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) Includes (i) an extraordinary loss of $1.1 million in 1996 relating to
prepayment of the 10 3/4% Notes and (ii) an extraordinary loss of $984,000
in 1995 resulting from the exchange of debt by America West.
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<PAGE> 15
RISK FACTORS
RISK FACTORS RELATING TO THE POLICY PROVIDER
IF THE FINANCIAL CONDITION OF THE POLICY PROVIDER DECLINES, THE RATING ON THE
CLASS G CERTIFICATES MAY DECLINE.
The expected "AAA" rating by Standard & Poor's and the "Aaa" rating by
Moody's of the Class G certificates will be based, primarily, on the existence
of an insurance policy that will insure the complete and timely payment of
interest relating to the Class G certificates on each regular distribution date
and the payment of outstanding principal on or in some cases before the Final
Legal Distribution Date. Ambac Assurance Corporation, the policy provider, will
issue the policy. If the policy provider's financial condition declines or if it
becomes insolvent, the subordination agent may be unable to recover the full
amount due under the policy. Additionally, a decline or insolvency could lead
Standard & Poor's or Moody's to downgrade the ratings of the Class G
certificates because of a concern that the policy provider may be unable to make
payments to the holders of the Class G certificates under the policy. For
information on the financial information generally available relating to the
policy provider, see "Description of the Policy and the Policy Provider
Agreement -- The Policy".
POLICY PROTECTION MAY BE DELAYED BECAUSE THE POLICY WILL GENERALLY COVER
PRINCIPAL PAYMENTS ONLY ON THE FINAL LEGAL DISTRIBUTION DATE FOR THE CLASS G
CERTIFICATES.
Although the subordination agent may make drawings under the policy for
interest payments on each regular distribution date, the subordination agent
generally may not make drawings for principal payments until the final legal
distribution date for the Class G certificates except in certain limited
circumstances. This may delay the protection afforded to holders of Class G
certificates under the policy.
THERE IS NO POLICY PROTECTING PAYMENTS RELATING TO THE CLASS C CERTIFICATES.
The policy will provide no coverage for the Class C certificates. The
policy's support on interest payments and principal payments will be limited to
the Class G certificates and, as a result, the policy will only run to the
benefit of the holders of the Class G certificates.
IF THE POLICY PROVIDER IS THE CONTROLLING PARTY, IT MAY TAKE ACTIONS THAT ARE
BENEFICIAL TO THE POLICY PROVIDER AND THE HOLDERS OF THE CLASS G CERTIFICATES
BUT DETRIMENTAL TO THE HOLDERS OF THE CLASS C CERTIFICATES.
If an Indenture Default occurs and is continuing and the policy provider is
the Controlling Party, the policy provider will generally be able to direct the
exercise of all remedies. The policy provider will be the Controlling Party
unless the policy provider defaults or the liquidity provider has the right to
become the Controlling Party. As the Controlling Party, the policy provider will
be in a position to take actions that are beneficial to the policy provider and
the holders of the Class G certificates but detrimental to the holders of the
Class C certificates.
RISK FACTORS RELATING TO THE COMPANY AND INDUSTRY RELATED RISKS
THE AIRLINE INDUSTRY AND THE MARKETS WE SERVE ARE HIGHLY COMPETITIVE AND WE MAY
BE UNABLE TO COMPETE EFFECTIVELY AGAINST CARRIERS WITH SUBSTANTIALLY GREATER
RESOURCES OR LOW-COST STRUCTURES.
The airline industry is highly competitive and industry earnings are
typically volatile. We compete with other airlines on the basis of pricing,
scheduling (frequency and flight times), on-time performance, frequent flyer
programs and other services. We compete against both larger carriers with
substantially greater resources than we have available as well as smaller
carriers with low-cost structures. Many of our larger competitors have
proprietary reservation systems and more expansive marketing and advertising
programs than we do and smaller carriers may be able to offer prices at
discounts lower than we are able to offer. We may be unable to compete
effectively against carriers with substantially greater resources or low-cost
structures.
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<PAGE> 16
Most of the markets we serve are highly competitive. The markets we serve
are frequently high volume vacation destinations, most of which are likely to
experience discounted fares because ticket prices are a leading consideration
among leisure travel consumers. At our Phoenix and Las Vegas hubs, our principal
competitor is Southwest Airlines. However, we also compete against new carriers
that enter the airline industry, many of which have low-cost structures and
initiate price discounting. Price discounting occurs when a carrier offers
discounts or promotional fares to passengers. 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 reduce the numbers of
tickets we sell and therefore affect our operating results.
If the rates of travel on the routes that we serve decrease or if
competition increases between carriers, we may not be able to compete
effectively and our operating results could decline both in absolute terms and
in relation to the operating results of our competitors.
OUR HIGH LEVERAGE MAY LIMIT OUR ABILITY TO FUND GENERAL CORPORATE REQUIREMENTS,
LIMIT OUR FLEXIBILITY IN RESPONDING TO COMPETITIVE DEVELOPMENTS AND INCREASE OUR
VULNERABILITY TO ADVERSE ECONOMIC AND INDUSTRY CONDITIONS. MOST OF THIS LEVERAGE
STEMS FROM OUR SIGNIFICANT OFF BALANCE SHEET OBLIGATIONS.
As of June 30, 2000, we owed approximately $150.2 million of long-term debt
(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. Our high level of
debt and the financial and other covenants in our debt instruments may also
limit our ability to fund general corporate requirements, including working
capital and capital expenditures, limit our flexibility in responding to
competitive developments and increase our vulnerability to adverse economic and
industry conditions.
We have outstanding orders to purchase aircraft as well as option rights to
purchase additional aircraft. We have arranged for financing for a portion of
our outstanding orders to purchase the aircraft, but we will have to look to
outside sources to finance the remaining aircraft. 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 ability to
execute our business strategy could be materially impaired.
EFFORTS BY LABOR UNIONS TO ORGANIZE OUR EMPLOYEES HAVE OCCURRED IN THE PAST AND
WE EXPECT WILL OCCUR IN THE FUTURE, WHICH COULD DIVERT MANAGEMENT ATTENTION AND
INCREASE OUR OPERATING EXPENSES.
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 unions and we are currently
negotiating collective bargaining agreements with some of these groups. For
example, we have begun negotiations with the Air Line Pilots Association on a
new contract for the airline's pilots. The existing contract with ALPA became
amendable in May 2000. 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. The negotiation of
these agreements could divert management attention and result in increased
operating expenses and lower net revenues. If we are unable to negotiate
acceptable collective bargaining agreements, we might have to wait through
"cooling off" periods, which are often followed by union-initiated work actions,
including strikes. Depending on the type and duration of work action we endure,
our operating expenses could increase significantly.
THE STOCKHOLDERS WHO EFFECTIVELY CONTROL THE VOTING POWER OF OUR PARENT COMPANY
COULD TAKE ACTIONS THAT WOULD FAVOR THEIR OWN PERSONAL INTERESTS TO THE
DETRIMENT OF OUR INTERESTS.
Currently, three stockholders collectively control approximately 50% of the
total voting power of Holdings, our parent corporation. These stockholders, TPG
Partners, L.P., TPG Parallel I, L.P. and Air Partners II, L.P. are all
controlled by the same company, TPG Advisors, Inc. Since TPG Advisors, Inc. is
an investment firm, its strategic objectives may be different than both the
short-term or long-term objectives of our board of directors and management. We
cannot guarantee that the controlling
11
<PAGE> 17
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. Because Holdings owns all of our outstanding shares, these three
stockholders effectively may also be able to control our airline activities,
including our obligations in this offering.
ANY FLUCTUATIONS IN FUEL COSTS COULD AFFECT OUR OPERATING EXPENSES AND RESULTS.
The price and supply of jet fuel is unpredictable and fluctuates based on
events outside our control, including geopolitical developments, regional
production patterns and environmental concerns. Since fuel is the principal raw
material used in our business, accounting for approximately 11% of our total
operating expenses in 1999, price escalations or reductions in the supply of jet
fuel will increase our operating expenses and cause our operating results to
decline. For example, with our current level of fuel consumption, a one cent per
gallon increase in jet fuel prices will cause our annual operating results to
decline by $4.6 million. We have implemented a "fuel hedging" program to manage
the risk and effect of fluctuating jet fuel prices on our business. Our hedging
program tries to offset increases in jet fuel costs by acquiring derivative
instruments keyed to the future price of heating oil, effectively resulting in a
lower net cost of jet fuel. Despite this program, we may not be adequately
protected against jet fuel costs. As of June 30, 2000, our hedging program
covers only approximately 17% of projected fuel volumes in the third quarter of
2000 and 5% of projected fuel volumes in the fourth quarter of 2000. In
addition, our program primarily addresses our exposure to fuel requirements on
the East Coast as opposed to the more volatile West Coast jet fuel prices, even
though we primarily serve the Western United States and purchase a substantially
larger portion of our jet fuel requirements on the West Coast compared to our
larger competitors. For these reasons, the protective measures we have adopted
to protect against increases in jet fuel costs may be inadequate and our
operating results are susceptible to decline.
OUR OPERATING COSTS COULD INCREASE AS A RESULT OF PAST, CURRENT OR NEW
REGULATIONS THAT IMPOSE ADDITIONAL REQUIREMENTS AND RESTRICTIONS ON AIRLINE
OPERATIONS.
The airline industry is heavily regulated. Both federal and state
governments from time to time propose laws and regulations that impose
additional requirements and restrictions on airline operations. Implementing
these measures, such as recently enacted aviation ticket taxes and passenger
safety measures, has increased operating costs for America West and the airline
industry as a whole. Depending on the implementation of these and other laws,
our operating costs could increase significantly. We cannot predict which laws
and regulations will be adopted or the changes and increased expense that they
could cause. Accordingly, we cannot guarantee that future legislative and
regulatory acts will not have a material impact on our operating results.
RISK FACTORS RELATING TO THE CERTIFICATES AND THE OFFERING
BECAUSE THE APPRAISAL VALUES MAY NOT REFLECT THE REALIZABLE VALUE OF THE
AIRCRAFT, THE PROCEEDS FROM THE SALE OF THE AIRCRAFT MAY NOT BE SUFFICIENT TO
PAY ALL OF THE CERTIFICATEHOLDERS.
You should not rely on the appraisal values as an indicator of the value
that will be realized if the aircraft are sold. 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. The assumptions and
methodologies used by the three independent aircraft appraisal companies
described in the appraisals annexed at Appendix II of this prospectus may differ
from the assumptions and methodologies of other appraisal companies, which could
produce very different values for the aircraft. An appraisal is only an estimate
of value and is not necessarily an accurate indication of how much we will pay
to purchase an aircraft. In addition, the realizable value of the aircraft if
any remedies are pursued under the indenture used to acquire that aircraft
following an event of default may depend on the supply and condition of other
available aircraft, the supply of buyers and general economic conditions.
12
<PAGE> 18
THE HOLDERS OF CLASS C CERTIFICATES MAY NOT RECEIVE THE FULL AMOUNT OF PAYMENTS
THAT THEY ARE DUE TO RECEIVE BECAUSE THEIR RIGHT TO PAYMENTS ON THE RELATED
SERIES OF EQUIPMENT NOTES IS SUBORDINATE TO THE CLASS G CERTIFICATES.
Holders of Class C certificates will not receive payments on the Class C
certificates until holders of the Class G certificates receive the amounts due
to them. In addition, upon a default on a series of equipment notes, the
subordination agent may be required to distribute payments received on the
Series C equipment notes to the holders of Class G certificates scheduled to
receive payments on the equipment notes on which the default occurred. In this
situation the remaining Series C equipment notes may not earn enough interest to
fully fund distributions due to the holders of the corresponding class of
certificates. Accordingly, if there is a default on equipment notes, the holders
of Class C certificates may not receive the full amount of payments that they
are due to receive, even if the equipment notes are eventually paid in full.
IF AN INDENTURE DEFAULT OCCURS AND IS CONTINUING, THE CONTROLLING PARTY MAY NOT
PROTECT OR MAXIMIZE THE FINANCIAL INTERESTS OF CERTIFICATEHOLDERS.
The Controlling Party refers to the party that can control decisions
regarding the exercise of remedies if an Indenture Default occurs and is
continuing. During a continuing Indenture Default, the Controlling Party can
direct the subordination agent to sell any or all of the equipment notes,
instruct the loan trustee under the applicable indenture to accelerate the
equipment notes issued under that indenture and direct the foreclosure of the
lien created under the indenture. The actions taken by the Controlling Party in
these circumstances may not protect or maximize the financial interests of the
holders of one or more classes of certificates. For example, if the Controlling
Party directs the sale of the equipment notes, the proceeds from the sale may
not be sufficient to cover expected distributions on the certificates. This is
because the market for equipment notes may be limited at any given time and the
Controlling Party may not obtain prices necessary to cover the expected
distribution on the certificates. If proceeds from a sale, or acceleration of
equipment notes, are insufficient to cover expected distributions,
certificateholders will not have any claim for the shortfall against us.
Additionally, 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 that aircraft will not be available to cover losses, if any, on any
other equipment notes.
OWNER PARTICIPANTS COULD CONTROL AIRCRAFT-RELATED MATTERS TO THE EXCLUSION OF
THE LOAN TRUSTEES.
Owner participants acting as the grantor in the grantor trusts that own the
aircraft financed as leveraged leases have the right to request that revisions
be made to transaction documents. Additionally, prior to a default under the
applicable indenture, the owner participant will be able to approve the
selection of counsel that will furnish legal opinions and any appraisers or
accountants. The owner participants can take these actions even if the actions
run counter to the loan trustee's or the certificateholders' interests. An owner
participant also will have the right to approve the sublease of an aircraft to
sublessees not otherwise permitted by the related lease and to approve the bill
of sale used if any aircraft is ever substituted after an event of loss.
THE RATINGS OF THE CERTIFICATES MAY BE LOWERED OR WITHDRAWN BY THE RATING
AGENCIES.
It is a condition to the issuance of the certificates that the Class G
certificates be rated Aaa by Moody's and AAA by Standard & Poor's and the Class
C certificates be rated Baa3 by Moody's and BBB+ by Standard & Poor's. A rating
is not a recommendation to purchase, hold or sell certificates, inasmuch as such
rating does not address market price or suitability for a particular investor. A
rating may not remain for any given period of time and may be lowered or
withdrawn entirely by a rating agency if in its judgment circumstances in the
future so warrant, including the downgrading of America West, the depositary,
the policy provider (in the case of the Class G certificates) or the liquidity
provider.
The rating of the certificates is based primarily on the default risk of
the equipment notes, the policy provider (in the case of the Class G
certificates) and the depositary, the availability of (1) the liquidity
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<PAGE> 19
facility for the benefit of holders of the certificates and (2) the policy for
the benefit of holders of the Class G certificates, the collateral value
provided by the Aircraft relating to the equipment notes and the subordination
provisions applicable to the certificates. Standard & Poor's has indicated that
its rating applies to a unit consisting of certificates representing the Trust
Property and escrow receipts initially representing undivided interests in
certain rights to $253,327,000 of deposits. Amounts deposited under the escrow
agreements are not property of America West and are not entitled to the benefits
of Section 1110 of the U.S. Bankruptcy Code. Neither the certificates nor the
escrow receipts may be separately assigned or transferred.
IF NOT ALL OF THE FUNDS HELD IN ESCROW AS DEPOSITS ARE USED TO PURCHASE
EQUIPMENT NOTES, UNUSED DEPOSITS WILL BE DISTRIBUTED TO THE CERTIFICATEHOLDERS
OF THE APPLICABLE TRUST.
Under certain circumstances, less than all of the funds held in escrow as
deposits may be used to purchase equipment notes by the deadline established for
purposes of this offering. See "Description of the Deposit Agreements -- Unused
Deposits". If any funds remain as deposits with respect to any trust after such
deadline, they will be withdrawn by the escrow agent for such trust and
distributed, with accrued and unpaid interest, with premium in certain cases, to
the certificateholders of such trust. Since the maximum principal amount of
equipment notes may not be issued with respect to an Aircraft and, in any 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 Class G certificates. See "Description
of the Deposit Agreements -- Unused Deposits".
IF A SECONDARY MARKET FOR THE CERTIFICATES DOES NOT DEVELOP, YOU MAY NOT BE ABLE
TO RESELL ANY OF YOUR CERTIFICATES.
Prior to the exchange offer, there was no public market for the
certificates. 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.
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<PAGE> 20
THE EXCHANGE OFFER
This section summarizes key provisions of the exchange and registration
rights agreement we entered into with the trustees and the initial purchasers of
the outstanding certificates, which we filed as an exhibit to the registration
statement of which this prospectus is a part.
GENERAL
Under the registration rights agreement, we agreed, at no cost to the
certificateholders, to register certificates with the SEC to allow holders to
trade the certificates. This registration event would take one of two forms set
forth below:
Registration Event
(1) Exchange Offer Registration Statement. An exchange offer would allow
holders to exchange the outstanding certificates for new certificates,
which will have terms identical in all material respects to the
outstanding certificates, except that the new certificates will not
contain 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, we agreed to register the
outstanding certificates for resale through a shelf registration
statement if:
(a) any changes in law or applicable interpretations of the staff of
the SEC would not permit us to effect the exchange offer,
(b) the exchange offer is not completed within 210 days after we issued
the outstanding certificates, which was July 7, 2000 or
(c) holders who are not eligible to participate in the exchange offer
request that we do so.
If we fail to complete the exchange offer or, alternatively, to have a
shelf registration statement declared effective within 210 calendar days of July
7, 2000, the annual interest rate on the equipment notes and deposits will be
increased by 0.50% from the 210th day until either the exchange offer is
completed, 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.
If during any 12-month period the shelf registration statement ceases to be
effective for more than 60 days, whether or not consecutive, the annual interest
rate on the equipment notes and, if applicable, the deposits will be increased
by 0.50% from the 61st day after the shelf registration statement ceases to be
effective until the shelf registration statement again becomes effective.
THE EXCHANGE OFFER
We agreed to register new certificates with the SEC to allow holders of all
outstanding certificates to exchange their certificates for the new
certificates. This prospectus, together with a letter of transmittal, is being
sent to all registered holders of outstanding certificates as of [ ],
to allow holders to exchange their outstanding certificates.
Our Obligations to Effect an Exchange Offer
(1) File a registration statement to register the new certificates by
November 5, 2000;
(2) cause the registration statement to become effective by January 4,
2001;
(3) keep the registration statement effective while the exchange offer is
open, which must be no fewer than 30 days; and
(4) complete the exchange offer by February 3, 2001.
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<PAGE> 21
The exchange offer will commence upon effectiveness of the registration and
terminate 30 calendar days after the exchange offer commences, unless extended.
We have the sole discretion to extend the exchange offer by notifying the
exchange agent and mailing an announcement of the extension to the holders of
outstanding certificates. However, if the exchange offer is not completed by
February 3, 2001, the interest rate on the equipment notes and deposits is
subject to increase.
We have the right to delay acceptance of any outstanding certificates in
the exchange offer, to extend the exchange offer or to terminate the exchange
offer and not permit acceptance of outstanding certificates not previously
accepted if any of the conditions set forth under "-- Conditions" occur. We can
also amend the terms of the exchange offer in any manner we deem advantageous to
the holders of the outstanding certificates. We 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 we
determine is a material change, we will promptly disclose the amendment in a
manner reasonably calculated to inform the holders of the outstanding
certificates of the amendment. We have 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 outstanding certificates who do not
exchange their outstanding certificates for new certificates in the exchange
offer will no longer be entitled to registration rights. They will also not be
able to offer or sell their outstanding certificates unless the outstanding
certificates are subsequently registered with the SEC or traded in a transaction
exempt from the Securities Act of 1933 and applicable state securities laws.
After the exchange offer is completed, we will not generally be required to
subsequently register the outstanding certificates.
TENDERING OUTSTANDING CERTIFICATES IN THE EXCHANGE OFFER
Only a holder of outstanding certificates may tender certificates in the
exchange offer. The term "holder" here refers to any person in whose name
outstanding 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 outstanding certificates registered in the name
of a broker, dealer, commercial bank, trust company or other nominee who wishes
to tender should contact the registered holder promptly and instruct the
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 a letter of
transmittal and delivering his outstanding certificates, either make appropriate
arrangements to register ownership of the outstanding 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 the conditions set forth under "-- Conditions", we will accept
for exchange all outstanding certificates validly tendered and not withdrawn
prior to 5:00 p.m., New York City time, on the date the exchange offer expires.
Outstanding certificates may be tendered only in integral multiples of $1,000.
There is no minimum principal amount of outstanding certificates that must be
tendered in order for the exchange offer to take place. The tender by a holder
of outstanding 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 outstanding certificates properly tendered will be accepted and the new
certificates will be issued promptly after acceptance of the outstanding
certificates. The exchange agent will act as agent for the tendering holders of
outstanding certificates for the purposes of receiving the new certificates and
delivering new certificates to such holders. Any new certificates issued will be
of the same class and for an equal face amount as the outstanding certificates
tendered. For purposes of the exchange offer, outstanding certificates will be
deemed to have been accepted for exchange when, as and if we have given oral or
written notice thereof to the exchange agent.
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<PAGE> 22
Requirements for Tendering Outstanding Certificates in the Exchange Offer
(1) Complete, sign and date the letter of transmittal or a facsimile
thereof. The letter of transmittal will be mailed to registered holders
with a copy of this prospectus.
(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 Securities Exchange Act of 1934
unless the outstanding 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 guarantor institution.
(b) Bond Powers May be Required. If the letter of transmittal is signed
by a person other than the registered holder of any outstanding
certificates, the outstanding certificates must be endorsed or
accompanied by bond powers and a proxy which authorizes such person
to tender the outstanding certificates on behalf of the registered
holder, in each case as the name of the registered holder or holders
appears on the outstanding certificates.
(c) Fiduciaries Should Identify Themselves. If the letter of transmittal
or any outstanding 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 us, evidence satisfactory to us, 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 us.
(3) Any of the three methods discussed below can be used to deliver the
certificates representing the outstanding 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 outstanding
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 outstanding
certificates into the exchange agent's account at The Depository
Trust Company, or DTC. Certain brokers, dealers, commercial banks,
trust companies and other nominees who hold outstanding certificates
through DTC must tender their certificates in this way. Beneficial
owners of outstanding 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
outstanding certificates in the exchange offer.
(c) Holders who cannot deliver their outstanding certificates or who
cannot complete the procedures for delivery by book-entry transfer of
the outstanding certificates on or before the date the exchange offer
expires, must, in order to participate in the exchange offer, tender
their outstanding certificates according to the guaranteed delivery
procedures set forth below under "-- Guaranteed Delivery Procedures".
All questions as to the validity, form, eligibility and withdrawal of the
tendered outstanding certificates will be determined by us in our sole
discretion, which determination will be final and binding. We reserve the
absolute right to reject any and all outstanding certificates if they are not
properly tendered or are unlawful in the opinion of our counsel. Unless waived
by us, any defects or irregularities in connection with tenders of outstanding
certificates must be cured within such time as we determine. Our
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<PAGE> 23
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 America West, the exchange agent nor any other person is under any
duty to notify holders of outstanding certificates of defects or irregularities
regarding tenders of outstanding certificates, nor shall any of them be liable
for failure to give such notification. Tenders of outstanding certificates will
not be deemed to have been made until irregularities have been cured or waived.
Any outstanding 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 of the exchange offer.
In addition, we reserve the right to purchase or make offers for any
outstanding certificates that remain outstanding after the exchange offer
expires, to terminate the exchange offer, and to purchase outstanding
certificates in the open market if permitted by applicable law. The terms of any
purchase or offer by us 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 relating to the outstanding 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 outstanding certificates by causing DTC to transfer such
certificates into the exchange agent's account in accordance with DTC's
Automated Tender Offer Program, or ATOP, procedures for transfers. Any holder of
outstanding certificates using ATOP should transmit its acceptance to DTC on or
prior to the expiration of the exchange offer or comply with the guaranteed
delivery procedures described below. DTC will verify the acceptance of
outstanding certificates, execute a book-entry transfer of the tendered
outstanding certificates into the exchange agent's account at DTC and then send
to the exchange agent confirmation of the book-entry transfer, including an
agent's message confirming that DTC has received an express acknowledgment from
the holder that the 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
A registered holder may use the procedures described below if:
- the holder desires to tender certificates but the certificates are not
immediately available;
- the holder's outstanding certificates will not reach the exchange agent
before the expiration of the exchange offer; or
- the procedures for book entry transfer cannot be completed on a timely
basis.
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 Securities Exchange Act of 1934. Prior to
the expiration of the exchange offer, we must receive from one of these eligible
institutions 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 facsimile transmission, mail or hand delivery. The Notice of
Guaranteed Delivery must identify the name and address of the holder of
outstanding certificates, the amount of certificates tendered and a statement
guaranteeing that within three trading days of the execution of the notice the
certificates for all tendered outstanding certificates or a book-entry
confirmation will be deposited by the eligible institution with the exchange
agent. Actual delivery of the outstanding certificates or a book-entry
confirmation within the three day period is required.
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<PAGE> 24
WITHDRAWAL OF TENDERS
Tenders of outstanding 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 outstanding certificates to
be withdrawn, identify the certificates to be withdrawn including the principal
amount of the certificates, and if the certificates were transmitted, specify
the name in which the outstanding certificates are registered, if different from
that of the withdrawing holder. If 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 the holder is an
eligible institution. If outstanding 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 certificates and otherwise comply with the
procedures of such facility.
We 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 outstanding certificates so withdrawn will be deemed not to have
been validly tendered for exchange. Any outstanding certificates tendered for
exchange but which were not exchanged for any reason will be returned to the
holder without cost to the holder as soon as practicable after withdrawal.
Outstanding 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 outstanding
certificates as soon as practicable after withdrawal. Properly withdrawn
certificates may be retendered following the procedures described above at any
time on or prior to the date the exchange offer expires.
CONDITIONS
We may terminate or amend the exchange offer before the acceptance of
outstanding certificates if we determine that we are not permitted to effect the
exchange offer because of any change in law or applicable interpretations
thereof by the SEC. In addition, we will not knowingly accept tenders of
outstanding certificates from "affiliates" of America West within the meaning of
Rule 405 under the Securities Act of 1933 or from any other holder who is not
eligible to participate in the exchange offer under applicable law or
interpretations by the SEC. We will also not accept tenders if the new
certificates to be received by the holder in the exchange offer would not be
tradable by the holder without restriction under the Securities Act of 1933 and
the Securities Exchange Act of 1934 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 is the 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: By Hand or Overnight Delivery:
Wilmington Trust Company Wilmington Trust Company
P.O. Box 8861 1105 North Market Street, 1st Floor
Corporate Trust Operations Wilmington, Delaware 19890
Wilmington, Delaware 19899-8861 Attention: Corporate Trust Operations
Attention: Aubrey Rosa Facsimile Transmission: (302) 651-1079
Confirm by Telephone: (302) 651-1562
</TABLE>
TRANSFERABILITY OF NEW CERTIFICATES
Based on interpretations by the staff of the SEC, we believe that most
holders of new certificates will be able to transfer the new certificates
without compliance with the registration and prospectus delivery
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requirements of the Securities Act of 1933. We expect this to be the case as
long as the new certificates are acquired in the ordinary course of the holders'
business and the holders are not engaged in, and do not intend to engage in, a
distribution of the new certificates and have no arrangement with any person to
participate in a distribution of the new certificates. Broker-dealers who
acquired outstanding certificates directly from the trustee for resale under an
exemption under the Securities Act of 1933, or any holder that is an "affiliate"
of America West as defined in Rule 405 of the Securities Act of 1933 must comply
with the registration and prospectus delivery requirements of the Securities Act
of 1933.
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
outstanding certificates in the exchange offer will be required to the following
representations to us in the letter of transmittal.
Representations Required by Holders to Tender Outstanding Certificates in
Exchange Offer
(1) The holder is not an affiliate of America West nor a broker-dealer
tendering outstanding certificates acquired directly from us for its
own account;
(2) the holder will acquire the new certificates in the ordinary course of
its business; and
(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 in
the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of the 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 of 1933. 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 certificates as a result of market-making
activities or other trading activities. We agree to make copies of this
prospectus available to broker-dealers for 180 days after the exchange offer
expires.
ALTERNATIVE USE OF SHELF REGISTRATION STATEMENT
If changes in the law or other circumstances do not allow us to effect the
exchange offer, we will file a shelf registration statement to allow resales of
the outstanding certificates.
Our Obligations 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 outstanding certificates;
(2) use our best efforts to have the shelf registration statement declared
effective within 180 calendar days of July 7, 2000; and
(3) use our best efforts to keep the shelf registration statement effective
for two years after it is declared effective, or a shorter period if
all of the outstanding certificates covered by the shelf registration
statement have been sold or are freely transferable under Rule 144 of
the Securities Act of 1933.
FEES AND EXPENSES
We will pay the expenses of soliciting tenders in the exchange offer. The
principal solicitation for tenders is being made by mail; however, additional
solicitations may be made by telegraph, telephone,
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<PAGE> 26
telecopy, electronic mail or in person by officers and regular employees of
ours. We will pay other expenses incurred in connection with the exchange offer,
including fees and expenses of the exchange agent and trustee and accounting,
legal, printing and related fees and expenses.
We will not make any payments to brokers, dealers or other persons
soliciting acceptances of the exchange offer. However, we 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. We 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 outstanding certificates,
and in handling or forwarding tenders for exchange.
We will pay all transfer taxes, if any, applicable to the exchange of
outstanding certificates in 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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<PAGE> 27
REMAINING PROSPECTUS DISCLOSURE
The remaining sections of this prospectus identify in greater detail the
material terms of the agreements that apply to the pass through certificates and
our acquisition of ten aircraft with the proceeds from the sale of the
certificates. The following sections are summaries only and may not contain all
of the information you may consider important in deciding whether to exchange,
acquire or transfer certificates.
The references to section numbers in parentheses in the following sections
refer you to the relevant section of the agreement governing the terms
described. This will help you to locate the precise legal language governing the
terms we describe. Unless otherwise noted, the section references are to the
pass through trust agreements.
We have minimized the use of defined terms in the remainder of this
prospectus. However, in order to ensure the accuracy of our disclosure, some
terms remain capitalized or are referenced in quotes. You can find a definition
of these terms in the "Glossary" in Appendix I of this prospectus.
THE PARTIES
Initial Purchasers............ Morgan Stanley & Co., Incorporated, Salomon
Smith Barney Inc., Deutsche Bank Securities
Inc., Donaldson, Lufkin & Jenrette Securities
Corporation and Merrill Lynch, Pierce, Fenner
& Smith Incorporated
Exchange Agent
Trustee
Subordination Agent
Paying Agent
Loan Trustee.................. Wilmington Trust Company
Depositary.................... Citibank, N.A.
Liquidity Provider............ Citibank, N.A.
Policy Provider............... Ambac Assurance Corporation
Appraisal Firms............... Aircraft Information Services, Inc.,
AvSolutions, Inc. and Morten Beyer and Agnew,
Inc.
THE MATERIAL AGREEMENTS
Every material agreement summarized in this prospectus was filed as an
exhibit to the registration statement of which this prospectus is a part. Below
is a list of each material agreement and a brief description of the purpose of
the agreement in the transaction described in this prospectus. You should read
these agreements to get a complete understanding of the transaction. Upon
request, copies of these agreements will be furnished to any prospective
investor in the certificates. Requests for such agreements should be addressed
to Wilmington Trust Company, as trustee. See also "Available Information" at the
front of this prospectus to find other ways you can obtain copies of these
agreements.
Pass Through Trust
Agreements.................... These agreements between America West and
Wilmington Trust Company, as trustee, relate
to the formation of the pass through trusts
that issue the certificates and that hold the
equipment notes that generate the cash flow to
make payments on the certificates. Separate
agreements exist for the Class G trust and the
Class C trust.
Revolving Credit Agreements... These agreements govern the liquidity
facilities provided by Citibank, N.A., as
liquidity provider, to cover up to three
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<PAGE> 28
semiannual interest payments. Separate
agreements exist for the Class G and Class C
certificates.
Intercreditor Agreement....... This agreement governs the priority of
distribution of payments to certificateholders
and the rights of the various parties to
control remedies and alterations to the
financing agreements.
Exchange and Registration
Rights Agreement.............. This agreement governs our obligation to
register the outstanding certificates either
by completing an exchange offer or,
alternatively, filing a shelf registration
statement.
Deposit Agreements............ These agreements govern the deposit of the
proceeds from the sale of the outstanding
certificates and the management of the funds
deposited prior to the application of the
proceeds to finance the aircraft. Separate
agreements exist for the deposits made from
the sale of Class G and Class C certificates.
Escrow and Paying Agent
Agreements.................... These agreements govern the holding of the
deposit proceeds under the deposit agreements
for the benefit of the certificateholders and
the ability of the trustee of each pass
through trust to withdraw these deposits to
purchase equipment notes. Separate agreements
exist for the Class G trust and the Class C
trust.
Insurance and Indemnity
Agreement..................... This agreement governs the certificate
guaranty insurance policy provided by Ambac
Assurance Corporation, the policy provider, to
support the payments on the Class G
certificates.
Note Purchase Agreement....... This agreement governs the terms of the
purchase of equipment notes by the trustees to
finance each aircraft.
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<PAGE> 29
DESCRIPTION OF THE NEW CERTIFICATES
GENERAL
Once registered with the SEC, new Class G certificates will be issued by
the Class G trust and new Class C certificates will be issued by the Class C
trust. A separate pass through trust agreement governs the issuance of each
class of new certificates. Holders of outstanding certificates will then be able
to exchange their outstanding certificates for these new certificates until the
expiration of the exchange offer. The terms governing both the Class G trust and
the Class C trust 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 trust will differ.
However, the financial terms of the new Class G certificates will be the same as
the outstanding Class G certificates and the financial terms of the new Class C
certificates will be the same as the outstanding Class C certificates.
CERTIFICATES REPRESENT AN OWNERSHIP INTEREST IN THE CORRESPONDING TRUST
Each new certificate will represent a fractional undivided interest in the
trust property of the trust that issued that class of certificates. (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 our election in connection with the financing 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 that leased aircraft
by the owner trustee, in which case the applicable leased aircraft will
be leased to us, or (b) on a recourse basis by us in connection with
each separate secured loan transaction with respect to each owned
aircraft to finance the purchase of that owned aircraft by us;
(2) the rights of that trust to acquire equipment notes of the series
relating to that trust under the note purchase agreement;
(3) the rights of that trust under the applicable escrow agreement,
including the right to request the escrow agent to withdraw from the
depositary funds sufficient to enable that trust to purchase equipment
notes on the delivery of each aircraft during the delivery period;
(4) the rights of that trust under the intercreditor agreement, including
any funds received under the intercreditor agreement for the benefit of
that trust;
(5) all funds received under the liquidity facility for that trust;
(6) with respect to the Class G trust, all funds received under the
certificate guaranty insurance policy; and
(7) funds from time to time deposited with the trustee in accounts relating
to that trust.
All payments and distributions made relating to a certificate will be made
only from the trust property of the trust that issued the certificate. (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 or any owner participant. Accordingly, the holders of the
certificates must look to the trust property of the trust that issued to it its
certificates for receipt of expected cash flows which, generally speaking on an
ongoing basis, means the payments of principal of and interest on the equipment
notes of that trust.
Certificateholders of a trust have rights relating to any deposits made
from the proceeds of the sale of the certificates issued by that trust. These
rights stem from escrow receipts that are affixed to each
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<PAGE> 30
certificate. When certificates are transferred, the rights relating to the
deposits are transferred to the new holder. A certificateholder's rights under
the escrow receipts are not trust property of each trust.
SUBORDINATION
The intercreditor agreement sets forth terms and conditions of the
distribution of payments, including payments received by the subordination agent
in respect of equipment notes. Distributions on the Class G certificates will be
made prior to distributions on the Class C certificates. Distributions on all
classes of certificates may be subordinate to other payment obligations,
including payments to the liquidity provider and policy provider. For a more
detailed description of the priority of payments, see "Description of the
Intercreditor Agreement -- Priority of Distributions".
PAYMENTS AND DISTRIBUTIONS
The following description of distributions on the certificates should be
read together with the description of the intercreditor agreement because the
intercreditor agreement may change the effect of the following provisions in the
event of a default.
Scheduled payments of interest on the deposits and of interest or principal
on the equipment notes will be paid to certificateholders on regular
distribution dates. The holders of the Class G certificates will receive
interest accruing on both the deposits corresponding to the Class G trust and
any Series G equipment notes purchased by the Class G trust at an annual rate of
8.057%. The holders of the Class C certificates will receive interest accruing
on both the deposits corresponding to the Class C trust and any Series C
equipment notes purchased by the Class C trust at an annual rate of 9.244%. The
certificates are referred to as pass through certificates because the payments
on the deposits and equipment notes are "passed through" to the
certificateholders.
Payments of Interest
The deposits held relating 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 the trust shown on the cover page of this
prospectus. Interest will be payable on January 2 and July 2 of each year,
commencing on January 2, 2001 (or, in the case of equipment notes issued after
that date, commencing on or after the first such date to occur after initial
issuance of the equipment notes). The interest payments will be distributed to
certificateholders of a trust on each such date until the final distribution
date for that trust, except that payments on the equipment notes may be changed
as provided in 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 some circumstances.
See "The Exchange Offer".
Citibank, N.A., the liquidity provider, is providing a separate liquidity
facility for each class of certificates in an aggregate amount sufficient to pay
interest on the certificates at the applicable interest rate for up to three
successive regular distribution dates. A separate liquidity facility was entered
into with the Class G trust and the Class C trust. Holders of Class G
certificates will only receive drawings under the liquidity facility for the
Class G trust and holders of Class C certificates will only receive drawings
under the liquidity facility for the Class C trust. For a more detailed
description of the terms and limitations of the liquidity facilities, see
"Description of the Liquidity Facilities".
Payments of interest on the Class G certificates are also supported by a
certificate guaranty insurance policy issued by Ambac Assurance Corporation, the
policy provider. The payments under the policy will be made only after use of
any available funds under the liquidity facility for the Class G trust and any
funds in a cash collateral account previously funded from that liquidity
facility. For a more detailed description of the terms and limitations of the
policy, see "Description of the Policy and the Policy Provider Agreement".
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Payments of Principal
Payments of principal of the equipment notes held in a 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 the trust, commencing on or after
January 2, 2001.
Payment of principal of the Class G certificates on the final legal
distribution date and, in some limited circumstances earlier, will be supported
by the policy provided by the policy provider. See "Description of the Policy
and the Policy Provider Agreement -- The Policy".
Distribution of Scheduled Payments
On each regular distribution date, the paying agent distributes to
certificateholders any payments of interest on the deposits relating to the
applicable trust. Also on each regular distribution date, the trustee
distributes to certificateholders any payments of principal and interest on the
equipment notes or relating to other trust property held in each trust. Each
certificateholder of each trust will be entitled to receive its proportionate
share of any distribution of scheduled payments of interest on the deposits
relating to that trust and, subject to the intercreditor agreement, of principal
or interest on equipment notes held on behalf of that trust. Each distribution
of scheduled payments will generally be made by the applicable paying agent or
trustee to the certificateholders of record of the relevant trust on the record
date applicable to that scheduled payment. (Sections 4.01 and 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 of the regular distribution date, it will be
distributed to the holders of record on the date received. If it is received
after the five-day period, it will be treated as a special payment and
distributed as described below.
Distribution of Special Payments and Certain Policy Drawings
A trustee may receive from time to time payments of principal of, and
interest and premium on, the equipment notes on dates other than scheduled
payment dates. These special payments may occur if the equipment notes owned by
the trust are sold or redeemed early, in which case the payments will be
distributed on the date of the early redemption or purchase, or if scheduled
payments are more than five days late. The term "special payment" also refers to
any unused deposits distributed after the delivery period termination date or
the occurrence of a Triggering Event, together with accrued and unpaid interest
and a premium that we pay. These unused deposits will be distributed 35 days
after the paying agent receives notice of the event requiring the distribution.
This special payment will be scheduled to be distributed on a date 35 days after
the paying agent has received notice of the event requiring the distribution
unless that date is within ten days before or after a regular distribution date,
in which case the special payment will be made on that regular distribution
date.
Each trustee will mail a notice to the certificateholders of the applicable
trust to inform them of the scheduled special distribution date, the related
record date, the amount of the special payment and the reason for the special
payment. This notice will be mailed at least 20 days before the scheduled
distribution of the special payment in the case of a redemption or purchase of
the equipment notes held in the related trust or the occurrence of a Triggering
Event. In the case of any other special payment, the notice will be mailed as
soon as practicable after the trustee has confirmed that it has received funds
for the special payment. (Section 4.02(c)) Each distribution of a special
payment, other than a final distribution, will be made by the trustee to the
certificateholders of record of the applicable trust on the record date for that
special payment. (Section 4.02(b)) See "-- Indenture Defaults and Certain Rights
Upon an Indenture Default" and "Description of the Equipment
Notes -- Redemption" for a description of the effect of an Indenture Default or
redemption on these payments.
In the case of the distribution of proceeds from any "No Proceeds Drawing"
or "Avoidance Drawing" as described in "Description of the Policy and the Policy
Provider Agreement -- The Policy", the Class G trustee will mail a notice to the
certificateholders of the Class G trust stating the scheduled special
distribution date, the related record date, the amount of the distribution and
the reason for the distribution.
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This notice will be mailed at least 20 days before the date these proceeds are
scheduled to be distributed. Each such distribution will be made by the Class G
trustee to the certificateholders of record of the Class G trust on the record
date applicable to that distribution. (Section 4.02(c))
Maintenance of Accounts
Each pass through trust agreement requires that the trustee establish and
maintain, for the benefit of the certificateholders of the related trust, one or
more non-interest bearing accounts into which the trustee is to deposit payments
representing scheduled payments received by the trustee. The trustee is also
required to establish and maintain, for the benefit of the certificateholders of
the related trust, one or more accounts for the deposit of payments representing
special payments received by the trustee. These special payment accounts will be
non-interest bearing except the trustee will be required to invest amounts in
the account in permitted investments to the extent practicable. The trustee is
required to deposit any payments it receives in the appropriate account.
(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 holders of receipts relating to the deposits,
one or more non-interest bearing accounts. The paying agent is required to
deposit interest on the deposits in the appropriate account. All amounts so
deposited will be distributed by the paying agent on a regular distribution date
or special distribution date, as appropriate.
Final Distribution
The final distribution for each trust will be made only upon presentation
and surrender of the certificates for that trust at the office or agency of the
trustee specified in the notice given by the trustee of the final distribution.
The trustee will mail notice of the final distribution to the certificateholders
of that trust, specifying the date for the final distribution and the amount of
the distribution. (Section 11.01) See "Termination of the Trusts" below for a
more detailed description. Distributions relating to 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 distributions scheduled to be made on that 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" as of any distribution date represents the portion of
the original aggregate face amount of the certificates issued by a particular
trust that has not been distributed to certificateholders of that trust. It will
be computed after giving effect to any distribution to applicable
certificateholders to be made on that date. (Section 1.01)
Pool Factor
The "pool factor" represents the percentage of the original amount of
certificates issued by a trust that remains undistributed. The pool factor as of
any distribution date will be computed after giving effect to any special
distribution of unused deposits, payment of principal of the equipment notes or
payment of other trust property held in that trust to be made on that date.
(Section 1.01) The pool factor for each trust was 1.0000000 when the outstanding
certificates were initially issued and will decline as the pool balance of that
trust is reduced. The amount of a certificateholder's proportionate share of the
pool balance of a trust can be determined by multiplying the par value of the
holder's certificate of that trust by the
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<PAGE> 33
pool factor for that trust as of the applicable distribution date. Notice of the
pool factor and the pool balance for each trust will be mailed to
certificateholders of that trust on each distribution date. (Section 4.03)
Aggregate Principal Amortization Schedule
The following table shows an assumed amortization schedule for the
equipment notes held in each trust and resulting pool factors for that trust.
The actual aggregate principal amortization schedule applicable to a trust and
the resulting pool factors may differ from those set forth below. As these
amortization schedules are subject to change if the assumptions do not hold
true, we are not contractually obligated to comply with them. However, the
amortization schedule for the equipment notes issued relating to an aircraft
must comply with the mandatory economic terms for the financing of an aircraft.
The following table assumes the following:
- that each aircraft will be delivered in the scheduled month;
- that the trusts purchase equipment notes in the maximum principal amount
for all aircraft;
- that no early redemption or purchase of equipment notes occurs;
- that no default occurs in the payment of principal or interest on the
equipment notes;
- that no Triggering Event occurs; and
- that there is no drawing under the certificate guaranty insurance policy,
other than in respect of interest on the certificates.
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<PAGE> 34
If any of these assumptions do not occur, the assumed amortization schedule
below will differ.
<TABLE>
<CAPTION>
2000-1G TRUST 2000-1C TRUST
EQUIPMENT NOTES 2000-1G TRUST EQUIPMENT NOTES 2000-1C TRUST
SCHEDULED PAYMENTS EXPECTED POOL SCHEDULED PAYMENTS EXPECTED POOL
REGULAR DISTRIBUTION DATE OF PRINCIPAL FACTOR OR PRINCIPAL FACTOR
------------------------- ------------------ ------------- ------------------ -------------
<S> <C> <C> <C> <C>
January 2, 2001.............. $ 972,612.72 0.9958239 $10,432,986.55 0.4893051
July 2, 2001................. 2,528,818.86 0.9849658 447,984.20 0.4673762
January 2, 2002.............. 10,994,858.35 0.9377569 854,780.73 0.4255347
July 2, 2002................. 0.00 0.9377569 1,016,345.13 0.3757846
January 2, 2003.............. 8,878,112.27 0.8996367 1,698,263.93 0.2926545
July 2, 2003................. 0.00 0.8996367 1,195,700.13 0.2341250
January 2, 2004.............. 9,390,659.25 0.8593158 1,742,224.19 0.1488431
July 2, 2004................. 0.00 0.8593158 927,815.35 0.1034265
January 2, 2005.............. 10,537,302.52 0.8140716 0.00 0.1034265
July 2, 2005................. 0.00 0.8140716 458,599.85 0.0809780
January 2, 2006.............. 11,184,423.20 0.7660487 0.00 0.0809780
July 2, 2006................. 0.00 0.7660487 1,654,299.94 0.0000000
January 2, 2007.............. 11,885,870.94 0.7150140 0.00 0.0000000
January 2, 2008.............. 2,829,081.00 0.7028668 0.00 0.0000000
July 2, 2008................. 8,028,496.07 0.6683946 0.00 0.0000000
January 2, 2009.............. 2,829,081.00 0.6562473 0.00 0.0000000
July 2, 2009................. 5,155,271.83 0.6341120 0.00 0.0000000
January 2, 2010.............. 8,108,742.03 0.5992953 0.00 0.0000000
July 2, 2010................. 4,208,027.89 0.5812272 0.00 0.0000000
January 2, 2011.............. 4,686,298.80 0.5611055 0.00 0.0000000
July 2, 2011................. 4,114,669.89 0.5434382 0.00 0.0000000
January 2, 2012.............. 5,133,205.24 0.5213976 0.00 0.0000000
July 2, 2012................. 4,303,035.81 0.5029216 0.00 0.0000000
January 2, 2013.............. 6,885,347.27 0.4733578 0.00 0.0000000
July 2, 2013................. 5,396,695.74 0.4501859 0.00 0.0000000
January 2, 2014.............. 7,633,903.32 0.4174080 0.00 0.0000000
July 2, 2014................. 8,425,230.03 0.3812324 0.00 0.0000000
January 2, 2015.............. 6,986,542.86 0.3512341 0.00 0.0000000
July 2, 2015................. 22,831,109.22 0.2532036 0.00 0.0000000
July 2, 2016................. 2,413,540.65 0.2428405 0.00 0.0000000
January 2, 2017.............. 5,120,956.11 0.2208525 0.00 0.0000000
January 2, 2018.............. 8,002,991.70 0.1864899 0.00 0.0000000
January 2, 2019.............. 6,699,888.48 0.1577224 0.00 0.0000000
July 2, 2020................. 36,733,226.95 0.0000000 0.00 0.0000000
</TABLE>
If there occurs (1) any change in the scheduled repayments or (2) any
redemption, purchase, default or special distribution, the pool factors and pool
balances of each trust so affected will be recomputed and certificateholders of
the affected trust will be notified promptly after the delivery period
termination date in the case of clause (1) and promptly after the occurrence of
any event described in clause (2).
REPORTS TO CERTIFICATEHOLDERS
On each distribution date, the applicable paying agent and trustee will
include a report with each distribution of a scheduled payment or special
payment to certificateholders. The report will set forth the
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<PAGE> 35
following information (per $1,000 aggregate principal amount of certificates for
each trust, as to (2), (3), (4) and (5) below):
(1) the aggregate amount of funds distributed on that distribution date,
indicating the amount allocable to each source including any portion
paid by the liquidity provider and/or the policy provider;
(2) the amount of the distribution allocable to principal and the amount
allocable to premium (including any premium we pay with respect to
unused deposits), if any;
(3) the amount of the distribution under the pass through trust agreement
allocable to interest;
(4) the amount of the distribution under the escrow agreement allocable to
interest;
(5) the amount of the distribution under the escrow agreement allocable to
unused deposits, if any; and
(6) the pool balance and pool factor for the trust. (Section 4.03)
As long as the certificates are 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 containing the names
of all DTC participants reflected on DTC's books as holding interests in the
certificates on that record date. On each distribution date, the applicable
paying agent and trustee will mail to each such DTC participant the statement
described above and will make available additional copies as requested by the
DTC participant for forwarding to certificateholders. (Section 4.03(a); Section
2.03 of the Escrow Agreement)
After the end of each calendar year, the applicable trustee and paying
agent will prepare a report for each holder of certificates at any time during
the preceding calendar year containing the sum of the amounts of distributions
listed in clauses (1), (2), (3), (4) and (5) above relating to the trust for
that calendar year. If that person was a certificateholder during only a portion
of that calendar year, the report may contain information for only the
applicable portion of that calendar year. The trustee will also prepare any
other items that are readily available to the trustee and which a
certificateholder may reasonably request to prepare its U.S. federal income tax
returns. (Section 4.03(b)) The reports and other items described in this section
will be prepared based on information supplied to the trustee by DTC
participants and will be delivered by the trustee to DTC participants to be
available for forwarding by DTC participants to certificateholders in the manner
described above. (Section 4.03(b))
If the certificates are issued in the form of physical certificates, the
applicable paying agent and trustee will prepare and deliver the information
described above to each record holder of a certificate issued by that trust as
the name appears on the records of the registrar of the certificates.
INDENTURE DEFAULTS AND CERTAIN RIGHTS UPON AN INDENTURE DEFAULT
An Indenture Default under an indenture could result in certificateholders
receiving less than the full expected distribution of principal of and interest
on the equipment notes held by the pass through trust that issued the
certificates they own. An Indenture Default for an aircraft we lease will
include an event of default under the related lease. Since the equipment notes
issued under an indenture may be held in more than one trust, a continuing
Indenture Default under that indenture would affect the equipment notes issued
under that indenture held by each such trust. There are no cross-default
provisions in the indentures or in the leases. This means that 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, remedies may be exercised only against the aircraft subject to the
Indenture Default while payments of principal and interest on the equipment
notes issued under indentures for which a default has not occurred will continue
to be made as originally scheduled. This lack of a cross-default could therefore
result in partial redemptions of the certificates and could exacerbate the risks
to the holders of the Class C certificates described in "Risk Factors Relating
to
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<PAGE> 36
the Certificates -- The holders of Class C certificates may not receive the full
amount of payments that they are due to receive because their right to payments
on the related series of equipment notes is subordinate to the Class G
certificates".
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
If the equipment notes outstanding under an indenture are held by more than
one trust, then each trust will hold equipment notes with different terms than
the notes held in other trusts. In these circumstances, the holders of
certificates issued by different trusts may have diverging or conflicting
interests. If the same institution acts as trustee of multiple trusts, the
trustee could be faced with a potential conflict of interest upon an Indenture
Default. In this event, each trustee faced with a conflict will resign as
trustee of one or all such trusts, and one or more successor trustees would be
appointed as replacements. Wilmington Trust Company is the initial trustee under
each trust.
CONSEQUENCE OF CONTINUING INDENTURE DEFAULT
If any Indenture Default under any indenture occurs and is continuing, the
Controlling Party may direct the loan trustee to accelerate the equipment notes
issued under that indenture and thereafter direct the loan trustee in the
exercising of remedies under that indenture and may direct the holder of the
equipment notes to sell the equipment notes issued under that indenture. The
holder of the equipment notes is the subordination agent, acting on behalf of
the respective trusts; the equipment notes are issued in the name of the
subordination agent in order to effect properly the subordination provisions of
the intercreditor agreement. See "Description of Intercreditor
Agreement -- Intercreditor Rights -- Sale of Equipment Notes and Aircraft" for a
more detailed description of the Controlling Party and its rights.
The proceeds of the sale of equipment notes will be distributed pursuant to
the provisions of the intercreditor agreement. Any such proceeds will be
deposited in the applicable special payments account and distributed to the
holders of the applicable trust on a special distribution date. (Sections 4.01
and 4.02) The market for equipment notes when an Indenture Default exists may be
very limited and the price is uncertain. If the equipment notes are sold for
less than their outstanding principal amount, the Class C 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, the policy provider, any owner trustee, any owner participant or any
trustee.
Following an Indenture Default, all payments received by the trustee or
with respect to equipment notes issued under the applicable indenture, other
than scheduled payments received on a regular distribution date, will be treated
as special payments and deposited in a special payments account. All amounts
deposited in the special payments and deposited in a special payments account
will be distributed to the certificateholders on a special distribution date. In
addition, if the applicable owner participant or owner trustee exercises its
option to redeem or purchase the outstanding equipment notes issued under the
applicable indenture, the proceeds from that redemption or purchase will be
deposited in the special payments account for the applicable trust. These
amounts will then be distributed to the certificateholders on a special
distribution date. (Sections 4.01 and 4.02).
Any funds held in the special payments account for a trust will, to the
extent practicable, be invested and reinvested by the trustee of that trust in
permitted investments pending the distribution of those funds on a special
distribution date. (Section 4.04) These permitted investments include
obligations of the United States or its agencies or instrumentalities in which
the full faith and credit of the United States is
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<PAGE> 37
pledged and which mature in not more than 60 days or a lesser time as may be
required for the distribution of the 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 notice to
the certificateholders of that trust of all uncured or unwaived defaults known
to it relating to that trust. However, in the case of default in a payment of
principal, premium, if any, or interest on any of the equipment notes held in a
trust, the applicable trustee will be protected in withholding a notice of
default if it in good faith determines that withholding the notice is in the
interests of the certificateholders. (Section 7.02) The term "default" as used
in this paragraph only means the occurrence of an Indenture Default relating to
equipment notes held by the trust as described above, except that in determining
whether any Indenture Default has occurred, any related grace period or notice
will be disregarded.
Trustee Entitled to Security or Indemnity
Each pass through trust agreement requires the trustee to act with a
specified standard of care while an Indenture Default is continuing. In
addition, each pass through trust agreement contains a provision entitling the
trustee to be offered reasonable security or indemnity by the certificateholders
of that trust against costs, expenses and liabilities before proceeding to
exercise any right or power under the pass through trust agreement at the
request of those certificateholders. (Section 7.03(e)) While the type of
security or indemnity will depend upon the nature of the certificateholders'
request, the trustee is likely to seek an explicit agreement of the
certificateholders to indemnify it for the specified actions requested to be
taken and payment of the various fees and expenses it may incur in complying
with the request.
Rights of Certificateholders
Subject to qualifications in the pass through trust agreements and the
applicable intercreditor agreement, the certificateholders of each trust holding
certificates evidencing fractional undivided interests aggregating not less than
a majority in interest in that trust will have certain rights. These rights
include the ability to direct the time, method and place of conducting any
proceeding for any remedy available to the applicable trustee or exercising any
trust or power conferred on the trustee, including any right of the trustee as
Controlling Party under the intercreditor agreement or as holder of the
equipment notes. (Section 6.04)
In some cases, the holders of the certificates of a trust evidencing
fractional undivided interests aggregating not less than a majority in interest
of that trust may waive any past "event of default" under that trust, including
an Indenture Default, or may direct the trustee or loan trustee to waive any
past Indenture Default and its consequences. Some defaults, however, may not be
waived. Defaults that may not be waived are as follows:
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; and
(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 the trust affected thereby.
(Section 6.05)
Each indenture will provide that, with some exceptions, the holders of the
majority in aggregate unpaid principal amount of the equipment notes issued
under that indenture may on behalf of all holders waive any past default or
Indenture Default. Notwithstanding these provisions of the indentures, under the
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<PAGE> 38
intercreditor agreement only the Controlling Party will be entitled to waive any
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 to each certificateholder of the
same class, the holders of Class C certificates will have the right within 180
days to purchase all, but not less than all, of the Class G certificates, and,
whether or not this right is exercised, the policy provider will thereafter have
the right to purchase all, but not less than all, of the Class G certificates.
In each case, the purchase price will equal the pool balance of the
relevant class or classes of certificates plus accrued and unpaid interest on
the pool balance 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 the purchase, then the other
certificateholder may join with the purchasing certificateholder to purchase the
certificates proportionately based on the interest in the trust held by each
certificateholder. (Section 6.01(b))
PTC EVENT OF DEFAULT
Any failure to make expected principal distributions on any class of
certificates on any regular distribution date other than the final legal
distribution date will not constitute a PTC Event of Default for those
certificates. A PTC Event of Default for the most senior outstanding class of
certificates resulting from an Indenture Default under all indentures will
constitute a Triggering Event. See "Description of the Intercreditor
Agreement -- Priority of Distributions" for a discussion of the consequences of
a Triggering Event.
MERGER, CONSOLIDATION AND TRANSFER OF ASSETS
We are prohibited from consolidating with or merging into any other
corporation or transferring substantially all of our assets as an entirety to
any other corporation unless all the requirements noted below are satisfied:
Requirements for Consolidation, Merger or Transfer of Assets
(1) the surviving successor or transferee corporation is a citizen of the
United States as defined in Title 49 of the United States Code relating
to aviation;
(2) the surviving successor or transferee corporation is a United States
certificated air carrier;
(3) the surviving successor or transferee corporation expressly assumes all
of our obligations in the pass through trust agreements, the note
purchase agreement, the indentures, the participation agreements and
the leases;
(4) we have delivered a certificate indicating that the transaction
complies with these conditions (Section 5.02); and
(5) additionally, after giving effect to the transaction, no Lease Event of
Default has occurred and is 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 and will not
contain any covenants or provisions that would give any 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.
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MODIFICATIONS OF THE PASS THROUGH TRUST AGREEMENTS AND CERTAIN OTHER AGREEMENTS
Each pass through trust agreement contains provisions permitting us to
amend or supplement the pass through trust agreement or the other material
agreements without the consent of the holders of any of the certificates of a
trust for the reasons listed below:
Basis for Amendments or Supplements to Pass Through Trust Agreements
(1) to reflect that another corporation is the successor to America West
and has assumed our covenants under the agreements;
(2) to add to our covenants for the benefit of holders of certificates or
to surrender any right or power conferred upon us under the agreements;
(3) to cure any ambiguity or correct or supplement any defective or
inconsistent provision of the pass through trust agreement or the other
agreements, or to cure any ambiguity, correct any mistake or modify any
other provisions with respect to matters or questions arising under
those agreements;
(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 may be listed, any regulatory body or the registration
rights agreement to effect the exchange offer;
(5) to modify, eliminate or add to the provision of the pass through trust
agreement to the extent necessary to continue qualification under the
Trust Indenture Act of 1939 and to add to the pass through trust
agreement other provisions as may be expressly permitted by the Trust
Indenture Act;
(6) to provide for a successor trustee or to add to or change any provision
of the pass through trust agreement as to the trustee as necessary to
facilitate the administration of the trust created under that agreement
by more than one trustee;
(7) to provide certain information to the trustee as required under the
pass through trust agreement; or
(8) to modify or eliminate provisions relating to the transfer or exchange
of new certificates or the certificates upon completion of the exchange
offer or effectiveness of the shelf registration statement.
Any 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 Internal Revenue Code
for U.S. federal income tax purposes. (Section 9.01)
Each pass through trust agreement also contains provisions permitting us,
with the consent of a majority in interest of the certificateholders of the
related trust and with the consent of the applicable owner trustee, which
consent cannot be unreasonably withheld, to execute amendments or supplements to
add any provisions to, or change or eliminate any of the provisions of, the pass
through trust agreement or the various agreements or to modify the rights and
obligations of the certificateholders. No amendment or supplement may, without
the consent of each affected certificateholder, have any of the effects
identified 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 on the deposits, the equipment notes or
other trust property held in the applicable trust or distributions for
any certificate related to that trust, or change the date or place of
any payment relating to any certificate, or make distributions payable
in coin or currency other than that provided for in the certificates,
or impair
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the right of any certificateholder to institute suit for the
enforcement of any such payment when due;
(2) permit the disposition of any equipment note held in the trust, except
as provided in the pass through trust agreement, or otherwise deprive
any certificateholder of the benefit of the ownership of the applicable
equipment notes;
(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 the pass through trust agreement that is
required in order to obtain the consent of the holders for that
supplement or for any waiver provided for in the 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; or
(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
Internal Revenue 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 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 will promptly send a notice of the proposed amendment, modification,
waiver or supplement to each certificateholder of the relevant trust as of the
date of the notice. The notice will request direction from the
certificateholders regarding the matters 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 that 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 that equipment note or as Controlling Party;
and
(3) how to vote, or direct the subordination agent to vote, any equipment
note if a vote has been called for with respect to the amendment,
modification, waiver or supplement.
Provided a request for certificateholder direction is 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 will:
(1) if the trustee is acting other than as Controlling Party, vote for or
give consent to any such action with respect to the 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 the
action by direction of certificateholders to (y) the aggregate face
amount of all outstanding certificates of the relevant trust; and
(2) if the trustee is acting as the Controlling Party, vote as directed in
the direction by the certificateholders evidencing fractional undivided
interests aggregating not less than a majority in interest in the
relevant trust.
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For purposes of the direction just described, a certificate is deemed
"actually voted" if the certificateholder has delivered to the trustee an
instrument evidencing consent to the direction prior to two business days before
the trustee directs the action or casts the vote or gives the 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 the consent,
or direct the subordination agent to consent and notify the relevant loan
trustee of the consent, to any amendment, modification, waiver or supplement
under the relevant document, if an indenture default has occurred and is
continuing, or if the 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. We agree to finance each aircraft in
the manner provided in the note purchase agreement. We have the option of
entering into a leveraged lease financing or a secured debt financing relating
to each aircraft. In addition, we may, subject to some conditions, elect to
convert a secured debt financing to a leveraged lease financing by entering into
a sale-leaseback transaction. We will only be permitted to convert an owned
aircraft into a leased aircraft if we (1) furnish to the relevant owned aircraft
trustee an opinion that the trusts will not be subject to U.S. federal income
tax as a result of such assumption and (2) furnish to the relevant owned
aircraft trustee either (A) an opinion that the certificateholders will not
recognize gain or loss for U.S. federal income tax purposes in connection with
such assumption and will be subject to U.S. federal income tax on the same
amounts and in the same manner and at the same time as would have been the case
if such assumption had not occurred or (B) furnish to the relevant leased
aircraft trustee both an opinion that the certificateholders should not
recognize gain or loss for U.S. federal income tax purposes in connection with
such assumption and will be subject to U.S. federal income tax on the same
amount and in the same manner and at the same time as would have been the case
if such assumption had not occurred and an indemnity in favor of the
certificateholders in form and substance reasonably satisfactory to the relevant
owned aircraft trustee. In addition, the note purchase agreement will provide
for the relevant parties to enter into, relating to each leased aircraft, a
participation agreement, a lease and a leased aircraft indenture relating to the
financing of that leased aircraft. The note purchase agreement also will provide
for the relevant parties to enter into, relating to each owned aircraft, a
participation agreement and an owned aircraft indenture relating to the
financing of that owned aircraft.
MANDATORY TERMS
The description of these agreements in this prospectus is based on the
forms of agreements contemplated by the note purchase agreement. The terms of
the agreements actually entered into may differ from the forms of the agreements
and, consequently, may differ from the description of the agreements contained
in this prospectus.
However, under the note purchase agreement, the terms of these agreements
are required (a) to contain the Mandatory Document Terms and (b) not to vary the
Mandatory Economic Terms. In addition, we must certify to the trustees that any
modifications do not materially and adversely affect the certificateholders or
the policy provider. We also must obtain written confirmation from each rating
agency that the use of modified agreements 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 has occurred. The trustees will have no right
or obligation to purchase equipment notes after the delivery period termination
date.
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The Mandatory Economic Terms, as defined in the note purchase agreement,
require, among other things, compliance with the items below:
Requirements of the Mandatory Economic Terms
(1) the maximum principal amount of all the equipment notes issued
relating to an aircraft cannot exceed the maximum principal amount of
equipment notes indicated for each aircraft as set forth in
"Description of the Aircraft and the Appraisals -- The Appraisals"
under the column "Maximum Principal Amount of Equipment Notes";
(2) the average life of the equipment notes related to each aircraft may
not be less than 10.5 years nor more than 13.0 years in the case of
the Series G equipment notes and not to be more than 4.0 years in the
case of the Series C equipment notes, in each case from July 7, 2000;
(3) as of the first regular distribution date following the delivery of
the last aircraft to be delivered, the average life cannot be less
than 11.0 nor more than 11.7 years in the case of Class G certificates
and cannot be less than 1.8 nor more than 2.2 years in the case of
Class C certificates, in each case from July 7, 2000;
(4) the loan to aircraft value ratio relating to each aircraft at the time
the related equipment notes are issued and on any subsequent regular
distribution date cannot exceed 57.0% in the case of the Series G
equipment notes and 62.0% in the case of the Series C equipment notes,
in each case computed on the basis of an assumed value of that
aircraft no greater than the value for the aircraft under "Description
of the Aircraft and the Appraisals -- The Appraisals" under the column
"Appraised Value" and the depreciation assumption defined in the third
paragraph under "Description of the Equipment Notes -- Loan to Value
Ratios of Equipment Notes";
(5) the final maturity date of the Series G equipment notes cannot extend
beyond July 2, 2020 and the Series C equipment notes cannot extend
beyond July 2, 2006;
(6) at the delivery period termination date, the aggregate principal
amount of all Series G equipment notes must be equal to the aggregate
face amount of the Class G certificates and the aggregate principal
amount of all Series C equipment notes cannot exceed, but may be less
than, the original aggregate face amount of the Class C certificates,
it being understood that the pool balance of the Class C certificates
will be reduced to the extent it exceeds the aggregate principal
amount of all Series C equipment notes;
(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 for each aircraft must be sufficient to pay the applicable
stipulated loss value, subject to certain rights of self-insurance;
and
(11) the following must be provided as set forth in the form of
participation agreements, lease and indentures:
(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;
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(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; and
(f) the indemnification of the loan trustees, subordination agent,
liquidity provider, the policy provider, trustees and escrow agents
with respect to taxes and expenses.
The Mandatory Document Terms prohibit modifications in any material adverse
respect to specified provisions of the participation agreements, lease and
indentures contemplated by the note purchase agreement. Prohibited modifications
to the Mandatory Document Terms are identified below:
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 (1) to deprive the
registered holders of the equipment notes of a security interest in
the aircraft, some of our rights under the purchase agreement with
the aircraft manufacturer and any of the leases or (2) to eliminate
the obligations intended to be secured by the indenture;
(b) to provisions relating to the issuance, redemption, purchase,
payments, and ranking of the equipment notes, including the
obligation to pay a premium;
(c) to provisions regarding indenture defaults, remedies relating to
indenture defaults and rights of the owner trustee and owner
participant in such circumstances;
(d) to provisions relating to any replaced airframe or engines with
respect to an aircraft; and
(e) to the provision that New York law will govern the indentures.
(2) In the case of the leases, modifications are prohibited to certain of
our obligations, including:
(a) to pay basic rent, stipulated loss value, early buy-out amount and
termination value to the trustee of a leased aircraft;
(b) to record the leased aircraft indenture with the Federal Aviation
Administration and to maintain that indenture as a first-priority
perfected mortgage on the related aircraft;
(c) to furnish opinions relating to a replacement airframe; and
(d) to consent to the assignment of the lease by the owner trustee as
collateral under the indenture, as well as modifications which would
either alter the provision that New York law will govern the leases
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 conditions to the obligations of the trustees to purchase the
equipment notes issued relating to an aircraft involving good title
to that aircraft, obtaining a certificate of airworthiness for that
aircraft, entitlement to the benefits of Section 1110 of the
Bankruptcy Code relating to that aircraft and filings of documents
with the Federal Aviation Administration;
(b) to the provisions restricting the ability of a registered holder of
equipment notes to transfer those notes;
(c) to provisions so as to deprive the registered holders of equipment
notes of a first priority security interest in the aircraft;
(d) to provisions requiring the delivery of legal opinions; and
(e) to the provision that New York law will govern the participation
agreements.
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Notwithstanding the foregoing, any Mandatory Document Term may be modified
to correct or supplement any provision which may be defective or to cure any
ambiguity or correct any mistake, provided that such action does not materially
adversely affect the interests of the registered holders of equipment notes, the
subordination agent, the liquidity provider, the policy provider, the loan
trustee or the certificateholders.
POSSIBLE ISSUANCE OF CLASS D CERTIFICATES
We may elect to issue Series D equipment notes, which will be funded from
sources other than this offering. We may elect to fund the sale of the Series D
equipment notes through the sale of Class D certificates. We will not issue any
Series D equipment notes at any time prior to the consummation of this offering.
The note purchase agreement provides that our ability to issue any Series D
equipment notes is contingent upon our obtaining written confirmation from each
rating agency that the issuance of the Series D equipment notes will not result
in a withdrawal or downgrading of the rating of any class of certificates,
without regard to the policy. If the Class D certificates are issued, the
trustee relating to those certificates will become a party to the intercreditor
agreement. See "Description of the Intercreditor Agreement".
LIQUIDATION OF ORIGINAL TRUSTS
Each of the trusts established at the time of the original issuance of the
certificates will transfer and assign all of its assets and rights to a
newly-created successor trust. This transfer will occur on the earlier of (1)
the first business day after June 30, 2001 or, if later, the fifth business day
after the delivery period termination date or (2) the fifth business day after a
Triggering Event.
The successor trusts will have substantially identical terms as the
original trusts except that the successor trusts will not have the right to
purchase new equipment notes and Delaware law will govern the original trusts
and New York 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 new trustee will assume the obligations of the original trustee. The
purpose of each successor trust is the same as each original trust, namely to
hold the trust property that is used to make distributions from the trust. Each
of the certificates will represent the same interest in the successor trust as
it represented in the original trust immediately prior to their transfer and
assignment. Unless the context otherwise requires, all references in this
prospectus applicable to the original trusts will apply to the successor trusts
after the transfer. The original trust will continue until the transfer is
effected. The original trusts may be treated as partnerships for United States
federal income tax purposes but the successor trust will, in the opinion of tax
counsel, be treated as grantor trusts. The purpose of using both original and
successor trusts in this transaction is intended to limit the risk of
partnership tax characterization to the original trusts.
TERMINATION OF THE TRUSTS
The obligations of America West and the applicable trustee relating to a
trust will terminate upon the distribution of all amounts required to be
distributed to the certificateholders of that trust and the disposition of all
property held in that trust. The applicable trustee will send to each
certificateholder of that trust notice of the termination of that trust, the
amount of the proposed final payment and the proposed date for the distribution
of the final payment for that trust. The final distribution to any
certificateholder of that trust will be made only upon surrender of the
certificateholder's certificates at the office or agency of the applicable
trustee specified in the notice of termination. (Section 11.01)
THE TRUSTEES
The trustee for each trust is Wilmington Trust Company.
Except in limited circumstances, 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
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other related documents. (Sections 7.04 and 7.15) The trustee of any trust is
not liable for any action by it in good faith under the direction of the holders
of a majority in interest of the certificates of such trust. In general, the
trustees are under no obligation to exercise any of their rights or powers at
the request of any holders of certificates issued thereunder unless the trustees
are offered reasonable security and indemnity. (Section 7.03(e)) 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 loan trustee with the same rights they would
have if they were not the trustees. (Section 7.05)
Any trustee may resign at any time, in which case we will appoint a
successor trustee. If any trustee is no longer eligible to continue as trustee,
becomes incapable of acting as trustee or becomes insolvent, we may remove the
trustee. Additionally, the policy provider 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 to remove such
trustee and the appointment of a successor trustee. The resignation or removal
of the trustee does not become effective until the successor trustee accepts the
appointment. (Sections 7.09 and 7.10) It is possible that a different trustee
could be appointed to act as the successor trustee for each trust. All
references in this prospectus to the trustee should be read to consider the
possibility that the trusts could have different successor trustees in the event
of a resignation or removal.
We 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 will be deposited with the trustee as
custodian for The Depository Trust Company, or DTC, and registered in the name
DTC or its nominee.
The Depository Trust Company
DTC has advised us that it 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 under the provisions of Section 17A of the
Securities Exchange Act of 1934. 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. DTC 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 other indirect participants
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly.
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 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 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
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interests of persons other than participants. The laws of some states require
that certain purchasers of securities take physical delivery of such securities.
These 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 its nominee, as the case may be, will be considered
the sole record owner or holder of the certificates represented by those global
certificates. 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 procedures 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 is responsible or liable for the records relating to or payments made on
account of beneficial ownership interests in the global certificates.
We expect 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 the accounts of DTC participants in amounts proportionate to their
respective beneficial ownership interest in the global certificates. We also
expect that payments by participants to owners of beneficial interests in the
global certificates will be governed by standing instructions and customary
practices. Those payments will be the responsibility of those participants.
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DESCRIPTION OF THE DEPOSIT AGREEMENTS
GENERAL
Under the escrow agreements, the escrow agent relating to each trust has
entered into a separate deposit agreement with the depositary. Under the deposit
agreement, the depositary established separate accounts and the proceeds from
the sale of the outstanding certificates were deposited in these accounts on
behalf of the escrow agent. Upon request from the trustee of a trust, the escrow
agent will make withdrawals from and re-deposits into the accounts during the
delivery period. 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 the related trust, an amount equal to interest accrued
on the deposits relating to that trust during the relevant interest period at a
rate per annum equal to the interest rate applicable to the certificates issued
by that trust.
The interest rates payable on the deposits are subject to change under the
circumstances described in "The Exchange Offer". Upon each delivery of an
aircraft during the delivery period, the trustees for the Class G trust and the
Class C trust will request the escrow agent relating to that trust to withdraw
from the deposits relating to that trust enough funds to enable the trustee of
that trust to purchase the equipment note of the series applicable to that trust
relating to that 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 equipment notes will be
re-deposited by each trustee into an account relating to the applicable trust.
The deposits relating to each trust and interest paid on the deposits will not
be subject to the subordination provisions of the intercreditor agreement and
will not be available to pay any other amount relating to the certificates.
UNUSED DEPOSITS
The trustees' obligations to purchase the equipment notes issued for each
aircraft are subject to satisfaction of some 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, all these
conditions may not 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 us. See
"Description of the Aircraft and Appraisals -- Deliveries of Aircraft".
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 relating to any trust on the
earlier of (1) June 30, 2001, or, if the equipment notes relating to all of the
aircraft have not been purchased by the trustees on or prior to that date due to
any reason beyond our control and not resulting from our fault or negligence,
September 30, 2001, and (2) the date on which the equipment notes issues
relating to all of the aircraft have been purchased by the trustees under the
note purchase agreement, the escrow agent will withdraw the funds and distribute
them, with accrued and unpaid interest, to the certificateholders of that trust
after at least 15 days' prior written notice. In addition, these distributions
will include a premium payable by us 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 relating to
the remaining deposits applicable to that trust will be payable only to the
extent the remaining deposits exceed $4 million. The policy does not cover the
Deposit Make-Whole Premium. Since the maximum principal amount of equipment
notes may not be issued for 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 for the Class C certificates as compared to the
other certificates. In addition, notwithstanding the $4 million 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 our fault or
negligence and no substitute aircraft is provided in lieu of that aircraft, no
Deposit Make-Whole Premium will be paid on the unused deposits to be distributed
as a result
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of that 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 that trust relating to that aircraft in accordance with the
Mandatory Economic Terms and these unused deposits will not be included in the
calculation of the $4 million.
DISTRIBUTION UPON OCCURRENCE OF TRIGGERING EVENT
If a Triggering Event occurs prior to the delivery period termination date,
the escrow agent for each trust will withdraw any funds then held as deposits
relating to that trust and cause those funds, with accrued and unpaid interest
but without any premium, to be distributed to the certificateholders of that
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 relating to aircraft delivered after the occurrence of the Triggering
Event.
DEPOSITARY
Citibank, N.A. will act as Depositary.
Citibank has short term unsecured debt ratings of P-1 from Moody's and A-1+
from Standard & Poor's.
Citibank is a wholly-owned subsidiary of Citicorp, a Delaware corporation,
and is Citicorp's principal subsidiary. Citicorp has been a wholly-owned
subsidiary of Citigroup Inc., a Delaware holding company formerly known as
Travelers Group Inc., since October 8, 1998, when Citicorp merged with and into
a wholly-owned subsidiary of Travelers Group Inc. As of March 31, 2000, the
total assets of Citibank and its consolidated subsidiaries represented more than
80% of the total assets of Citicorp and its consolidated subsidiaries.
The Consolidated Balance Sheets of Citibank as of December 31, 1999 and as
of December 31, 1998 are set forth in the Annual Report on Form 10-K of Citicorp
and its subsidiaries for the year ended December 31, 1999 and as of March 31,
2000 are set forth in the Form 10-Q of Citicorp and its subsidiaries for the
quarter ended March 31, 2000. Copies of such reports are available upon request,
without charge, by writing or calling Citigroup Document Services, 140 58th
Street, Brooklyn, New York 11220, (718) 765-6460.
This information concerning Citibank was provided by Citibank. Citibank has
not been involved in the preparation of, nor does it accept responsibility for,
this prospectus. Citibank will also act as an initial liquidity provider for
each of the Class G Trust and the Class C Trust. Salomon Smith Barney Inc., an
affiliate of Citibank, was an initial purchaser of the certificates.
REPLACEMENT OF DEPOSITARY
If the depositary's short-term unsecured debt rating falls below A-1+ from
Standard & Poor's or P-1 from Moody's then we must, within 45 days of that event
occurring, replace the depositary with a new depositary bank that has short-term
unsecured debt ratings of at least A-1+ from Standard & Poor's and P-1 from
Moody's. We can select a replacement depositary with lower ratings if we have
obtained (1) written confirmation from each rating agency that the replacement
will not cause a reduction of any rating then in effect for any class of
certificates by that rating agency without regard to any downgrading of any
rating of the depositary being replaced and without regard to the policy and (2)
the prior written consent of the policy provider.
DESCRIPTION OF THE ESCROW AGREEMENTS
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 affixed on
the certificates. The cash proceeds of the initial sale of the certificates of
each trust
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have been deposited on behalf of the escrow agent (for the benefit of
receiptholders) with the depositary as deposits relating to that trust. The
escrow agent of each trust has been given irrevocable instructions (1) to permit
the trustee of that trust to cause funds to be drawn from the deposits on or
prior to the delivery period termination date to enable the trustee to purchase
equipment notes on and subject to the terms and conditions of the note purchase
agreement and (2) 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 accounts, which will be non-interest-bearing. Under 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 certificates as described above, the escrow agent will issue
one or more escrow receipts which will be affixed by the relevant trustee to
each 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 that 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
registered by the escrow agent in the same name and manner as the certificate to
which it is affixed.
DESCRIPTION OF THE LIQUIDITY FACILITIES
GENERAL
Citibank, N.A., the liquidity provider, has entered into a separate
revolving credit agreement, or liquidity facility, with the subordination agent
relating to the certificates of each of the trusts. Under the liquidity
facility, the liquidity provider will, if necessary, make one or more Interest
Drawings at the Required Amount sufficient to pay interest relating to the
certificates of that trust on up to three successive semi-annual regular
distribution dates without regard to any future payments of principal on the
certificates. The amount of these advances will be based on the interest rates
shown on the cover page of this prospectus for those certificates. The liquidity
facility relating to each trust will not cover interest payable by the
depository on the deposits relating to that trust.
The liquidity facility for each trust is intended to enhance the likelihood
of timely receipt by the certificateholders of that trust of the interest
payable in respect of the certificates of that trust 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 facility for any
trust, the certificateholders of that trust will bear their allocable share of
the deficiencies to the extent that there are no other sources of funds,
including, in the case of the Class G trust, funds from the certificate guaranty
insurance policy. Although Citibank, N.A. is the initial liquidity provider for
each of the trusts, it may be replaced by one or more other entities with
respect to the trusts. Therefore, the liquidity provider for each trust may
differ.
DRAWINGS
The initial amount available under the liquidity facilities for the Class G
trust and the Class C trust at July 2, 2001, the first regular distribution date
after the scheduled delivery period termination date will be $27,723,722 and
$1,323,930, respectively. This assumes that equipment notes in the maximum
principal amount relating to all aircraft are acquired by the trusts and that
all interest and principal due on or prior to July 2, 2001 is paid.
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The maximum amount available to be drawn under the liquidity facility
relating to any trust on any regular distribution date to fund any shortfall of
interest for certificates of that trust will not exceed the Maximum Available
Commitment.
The liquidity facility for any trust does not allow drawings to pay for
principal of or premium relating to the certificates of that trust or any
interest relating to the certificates of that trust in excess of the interest
rate on those certificates for that trust or more than three semiannual
installments of interest or principal of or interest or premium relating to the
certificates of any other trust. (Liquidity Facilities, Section 2.02;
Intercreditor Agreement, Section 3.6)
Each payment by the liquidity provider under each liquidity facility
reduces the Maximum Available Commitment under that liquidity facility by the
amount of that payment, subject to reinstatement as described below.
With respect to any drawings under the liquidity facility for any trust,
upon reimbursement of the liquidity provider in full for the amount of those
drawings plus interest thereon, the Maximum Available Commitment under that
liquidity facility in respect of interest on the certificates of that trust will
be reinstated to an amount not to exceed the then Required Amount of that
liquidity facility. However, the liquidity facility will not be reinstated at
any time after (1) a Liquidity Event of Default has occurred and is continuing
and (2) less than 65% of the then aggregate outstanding principal amount of all
equipment notes are Performing Equipment Notes. With respect to any other
drawings under that liquidity facility, amounts available to be drawn under the
facility are not subject to reinstatement. The Required Amount of the liquidity
facility for any trust will be automatically reduced from time to time to an
amount equal to the next three successive interest payments due on the
certificates of that trust, without regard to expected future payment of
principal of those certificates, at the interest rate for that trust. (Liquidity
Facilities, Section 2.04(a); Intercreditor Agreement, Section 3.6(j))
Possible Replacement of the Liquidity Facility
If at any time (1) the short-term unsecured debt rating of any liquidity
provider for any trust or, if applicable, of any guarantor of the obligations of
that liquidity provider, then issued by either rating agency is lower than the
Threshold Rating or (2) any guarantee of a liquidity provider's obligations
under the relevant liquidity facilities ceases to be in full force and effect or
becomes invalid or unenforceable or the guarantor denies its liability
thereunder, the liquidity facility provided by the liquidity provider for the
related class of certificates may be replaced by a replacement facility. In the
event that a liquidity facility is not replaced within 30 days, or ten days if
the liquidity provider is rated lower than P-3 by Moody's or A-3 by Standard &
Poor's, after notice of the downgrading and as otherwise provided in the
intercreditor agreement, the subordination agent will request the Downgrade
Drawing in an amount equal to the then Maximum Available Commitment thereunder
and will hold the proceeds in a cash collateral account for that trust as cash
collateral to be used for the same purposes and under the same circumstances as
cash payments of interest drawings under the liquidity facility would be used.
(Liquidity Facilities, Section 2.02(c); Intercreditor Agreement, Section 3.6(c))
Expiration of Liquidity Provider's Obligations
The liquidity facility for each trust provides that the relevant liquidity
provider's obligations will expire on the earliest of the following:
(1) 364 days after the initial issuance date of the certificates;
(2) the date on which the subordination agent delivers to the liquidity
provider a certification that all of the certificates of that trust
have been paid in full;
(3) the date on which the subordination agent delivers to the liquidity
provider a certification that a replacement facility has been
substituted for that liquidity facility;
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(4) the fifth business day following receipt by the subordination agent of
a notice of termination of a liquidity facility from that liquidity
provider (see "-- Liquidity Events of Default"); or
(5) the date on which no amount is or may, by reason of reinstatement,
become available for drawing under that liquidity facility.
Each liquidity facility provides that its scheduled expiration date may be
extended for additional 364-day periods.
Replacement of any Liquidity Facility
The intercreditor agreement provides 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 that liquidity facility is not extended at least 25 days prior
to its then scheduled expiration date. In the event that liquidity facility is
not so extended or replaced by the 25th day prior to its then scheduled
expiration date, the subordination agent will request a Non-Extension Drawing in
an amount equal to the then Maximum Available Commitment under the liquidity
facility and hold the proceeds in the cash collateral account for that 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 drawings
under that liquidity facility would be used. (Liquidity Facilities, Section
2.02(b))
We may, at our option, with or without cause, arrange for a replacement
facility at any time to replace the liquidity facility for any trust, including
any replacement facility described in the following sentence. In general, we may
not replace the initial liquidity provider prior to the fifth anniversary of the
date the outstanding certificates were issued. In addition, if any liquidity
provider determines not to extend its liquidity facility, then that liquidity
provider may, at its option, arrange for a replacement facility to replace that
liquidity facility during the period no earlier than 40 days and no later than
25 days prior to the then scheduled expiration date of that 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
that liquidity facility on deposit in the cash collateral account for that 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 notice of termination with respect to any liquidity
facility from the liquidity provider, the subordination agent will request a
Final Drawing under that liquidity facility in an amount equal to the then
Maximum Available Commitment under the liquidity facility and will hold the
proceeds in the cash collateral account for the related trust as cash collateral
to be used for the same purposes and under the same circumstances as cash
payments of drawings under that 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 that liquidity
facility. Upon receipt of that 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, the liquidity provider will be fully discharged of
its obligations under that liquidity facility relating to the drawing and will
not thereafter be obligated to make any further payments under that liquidity
facility in respect of the drawing to the subordination agent or any other
person. (Liquidity Facility, Section 2.2(f))
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 that drawing, with respect to
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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 the
Interest Drawing, at the Base Rate plus 2.0% per annum, and thereafter, at LIBOR
for the applicable interest period plus 2.0% per annum. The subordination agent
will be obligated to reimburse amounts only if the subordination agent has funds
available.
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) the amount will be released on any distribution date to the relevant
liquidity provider to the extent that the amount exceeds the Required
Amount;
(2) any portion of the amount withdrawn from the cash collateral account
for those certificates to pay interest on the certificates will be
treated in the same way as Interest Drawings; and
(3) the balance of the amount will be invested.
The Downgrade Drawing or Non-Extension Drawing under any liquidity
facility, other than any portion 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 the Downgrade Drawing or Non-Extension
Drawing, at the Base Rate plus 0.35% per annum, and thereafter at LIBOR for the
applicable interest period plus 0.35% per annum. The subordination agent will be
obligated to pay that interest only if it has funds available. (Liquidity
Facilities, Section 2.06)
LIQUIDITY EVENTS OF DEFAULT
If (1) any Liquidity Event of Default under any liquidity facility has
occurred and is continuing and (2) 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 the effect of which will be as
follows:
Effect of Notice of Termination Due to Liquidity Event of Default
(1) that liquidity facility will expire on the fifth business day after the
date on which the termination notice is received by the subordination
agent;
(2) the subordination agent will promptly request, and the liquidity
provider to make, a Final Drawing under that liquidity facility in an
amount equal to the then Maximum Available Commitment under that
liquidity facility;
(3) any drawing remaining unreimbursed as of the date of termination will
be automatically converted into a Final Drawing under that liquidity
facility and
(4) all amounts owing to the 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 available
funds after giving effect to the payments in accordance with the provisions
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-Controlling
Party", a liquidity provider may become the Controlling Party relating to the
exercise of remedies under the indentures. (Intercreditor Agreement, Section
2.6(c))
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LIQUIDITY PROVIDER
The initial liquidity provider for the Class G Trust and the Class C Trust
will be Citibank, N.A. For a description of Citibank, see "Description of the
Deposit Agreements -- Depositary".
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DESCRIPTION OF THE POLICY AND
THE POLICY PROVIDER AGREEMENT
THE POLICY
Ambac Assurance Corporation, the policy provider, has issued its insurance
policy in favor of the subordination agent for the benefit of the Class G
trustee and holders of the Class G certificates (and the holders of the escrow
receipts attached to those certificates in respect of interest only). The
intercreditor agreement directs the subordination agent to make a drawing under
the policy under the following five circumstances:
Interest Drawings
If on any regular distribution date, other than the final legal
distribution date, after giving effect to the subordination provisions of the
intercreditor agreement and any amounts received by the escrow agent in an
account for the paying agent of the Class G certificates in respect of accrued
interest on the Class G deposits, any drawing paid under the Class G liquidity
facility in respect of interest due on the Class G certificates on the
distribution date and any withdrawal of funds from the Class G cash collateral
account in respect of such interest, the subordination agent does not then have
sufficient funds available for the payment of all amounts due and owing in
respect of accrued interest on the pool balance of the Class G certificates at
the interest rate for Class G certificates and accrued and unpaid interest on
any deposit relating to the escrow receipts attached to those certificates, the
subordination agent is to request a policy drawing under the policy in an amount
sufficient to enable the subordination agent to pay the accrued interest on the
Class G certificates.
Proceeds Deficiency Drawing
If on any special distribution date, other than an Election Distribution
Date, established by the subordination agent by reason of its receipt of a
special payment constituting the proceeds of any Series G equipment note or the
related Trust Indenture Estate or Collateral, as the case may be, after giving
effect to the subordination provisions of the intercreditor agreement and to the
application of any amounts received by the escrow agent in the Class G paying
agent account in respect of accrued interest on the Class G deposits, any
drawing paid under the Class G liquidity facility in respect of interest due on
the Class G certificates on such distribution date and any withdrawal of funds
in the Class G cash collateral account in respect of such interest, the
subordination agent does not then have sufficient funds available for a
reduction in the outstanding pool balance of the Class G certificates by an
amount equal to the outstanding principal amount of such equipment note,
determined immediately prior to the receipt of such proceeds, plus accrued and
unpaid interest on the amount of such reduction at the interest rate for the
period from the immediately preceding regular distribution date to such special
distribution date, the subordination agent is to request a policy drawing under
the policy in an amount sufficient to enable the subordination agent to pay the
amount of such reduction plus such accrued interest.
No Proceeds Drawing
On the first business day that is 24 months after the last date on which
any payment was made in full on any Series G equipment note as to which there
has subsequently been a failure to pay principal or that has subsequently been
accelerated, if the subordination agent has not received a special payment
constituting proceeds from the disposition of that equipment note, the
subordination agent is to request a policy drawing under the policy in an amount
equal to the then outstanding principal amount of that equipment note plus
accrued and unpaid interest thereon at the interest rate relating to the Class G
certificates from the immediately preceding regular distribution date to that
special distribution date. The subordination agent will give prompt notice to
the Class G trustee and the policy provider setting forth the non-receipt of any
such special payment and which notice is to be given not less than 25 days prior
to that special distribution date. After the payment by the policy provider in
full of the amount of principal and accrued interest for the policy drawing, the
subordination agent will have no right to make any further
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policy drawing in respect of any subsequent sale or other disposition of the
defaulted Series G equipment note, except for Preference Amounts.
Notwithstanding the foregoing, under a Policy Provider Election the policy
provider has the right at the end of any such 24-month period, so long as no
Policy Provider Default has occurred and is continuing, to elect instead:
(1) to pay on that special distribution date an amount equal to any
shortfall in the scheduled principal and interest that came due on that
equipment note, without regard to the acceleration thereof, during that
24-month period, after giving effect to the application of funds
received from the Class G liquidity facility or the Class G cash
collateral account, in each case, attributable to such interest;
(2) on each regular distribution date that occurs after that special
distribution date, to permit drawings under the policy for an amount
equal to the scheduled principal and interest that were to become due
on that equipment note on the related payment date, without regard to
any acceleration thereof until the establishment of an Election
Distribution Date or such special distribution date elected by the
policy provider upon 20 days' notice; and
(3) on any Election Distribution Date or such special distribution date
elected by the policy provider upon 20 days' notice, the subordination
agent shall be required, in each case, to make a policy drawing for an
amount equal to the then outstanding principal balance of such
equipment note and accrued interest thereon at the interest rate for
the Class G certificates from the immediately preceding regular
distribution date to the Election Distribution Date or that special
distribution date, after giving effect to the application of funds, if
any, received from the Class G liquidity facility and the Class G cash
collateral account attributable to that interest, less any policy
drawings previously paid by the policy provider in respect of principal
on that equipment note, without derogation of the policy provider's
continuing obligations for all previous Policy Drawings that remain
unpaid in respect of such equipment note.
The intercreditor agreement instructs the subordination agent to make each
drawing under the policy.
In addition, regardless of whether or not the policy provider makes a
Policy Provider Election, the policy provider will honor drawings under the
policy by any liquidity provider, including any liquidity provider providing a
replacement facility, to cover the payment to that liquidity provider, including
any liquidity provider providing a replacement facility, of interest accruing on
the outstanding drawings under the Class G and Class C liquidity facilities from
and after the end of that 24-month period as and when that interest becomes due
in accordance with that liquidity facility.
Final Policy Drawing
If on the final legal distribution date of the Class G certificates after
giving effect to the subordination provisions of the intercreditor agreement and
to the application of any amounts received by the escrow agent in the Class G
paying agent account in respect of accrued interest on the Class G deposits, any
drawing paid under the Class G liquidity facility in respect of interest
included in the final distributions and any withdrawal of funds in the Class G
cash collateral account in respect of interest included in the final
distributions, the subordination agent does not then have sufficient funds
available for the payment in full of the final distributions, calculated as at
such date but excluding any accrued and unpaid premium, on the Class G
certificates, the subordination agent is to request a policy drawing under the
policy in an amount sufficient to enable the subordination agent to pay the
final distributions, calculated as at such date but excluding any accrued and
unpaid premium, on the Class G certificates.
Avoidance Drawing
If at any time the subordination agent has actual knowledge of the issuance
of any Order, the subordination agent is to give prompt notice to each trustee,
each liquidity provider and the policy provider of that order and prior to the
expiration of the policy, to request a policy drawing for the relevant
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Preference Amount and to deliver to the policy provider a copy of the
documentation required by the policy with respect to that Order. To the extent
that any portion of the Preference Amount is to be paid to the subordination
agent and not to any receiver, conservator, debtor-in-possession or trustee in
bankruptcy as provided in the policy, the subordination agent will establish as
a special distribution date the date that is the earlier of three business days
after January 3, 2023 and the business day that immediately follows the 25th day
after that notice for distribution of that portion of the proceeds of the policy
drawing. With respect to that special distribution date, the subordination agent
is to request a policy drawing for the relevant Preference Amount and to deliver
to the policy provider a copy of the documentation required by the policy with
respect to that Order.
GENERAL
All requests by the subordination agent for a policy drawing are to be made
by it no later than 1:00 p.m. New York City time on the applicable distribution
date and in the form required by the policy and delivered to the policy provider
in accordance with the policy. All proceeds of any policy drawing are to be
deposited by the subordination agent in the Policy Account and from there paid
to the Class G trustee or the escrow agent, as the case may be, for distribution
to the holders of the Class G certificates or the escrow receipts attached to
such certificates, as the case may be, without regard to the subordination
provisions of the intercreditor agreement. In the case of any Preference
Amounts, however, all or part of the policy drawing will be paid directly to the
bankruptcy receiver, conservator debtor-in-possession or trustee to the extent
such amounts have not been paid by the certificateholders. If any request for a
policy drawing is rejected as not meeting the requirements of the policy, the
subordination agent is to resubmit that request so as to meet those
requirements.
The policy provides that if a request for a policy drawing is properly
submitted or resubmitted it will pay to the subordination agent for deposit in
the Policy Account the applicable payment under the policy no later than 4:00
p.m. on the later of the relevant distribution date and the date the request is
received by the policy provider if the request is received by 1:00 p.m. on that
date or the next Policy Business Day if the request is received after that time.
Once any payment under the policy is paid to the subordination agent or, in
the case of payments made in respect of escrow receipts, the applicable paying
agent, the policy provider will have no further obligation in respect of those
payments. THE POLICY PROVIDER WILL NOT BE REQUIRED TO MAKE ANY PAYMENT EXCEPT AT
THE TIMES AND IN THE AMOUNTS AND UNDER THE CIRCUMSTANCES EXPRESSLY SET FORTH IN
THE POLICY.
The policy does not cover:
(1) shortfalls, if any, attributable to the liability of the Class G trust,
the Class G trustee or the subordination agent for withholding taxes,
if any (including interest and penalties in respect of that liability);
(2) any premiums or prepayment or other acceleration payment payable with
respect to the Class G certificates; or
(3) any failure of the subordination agent or the Class G trustee to make
any payment due to the holders of the Class G certificates from funds
received.
The policy provider's obligation under the policy will be discharged to the
extent that funds are received by the subordination agent or the Class G paying
agent for distribution to the Class G trustee and the holders of Class G
certificates or escrow receipts attached to those certificates, whether or not
the funds are properly distributed by the subordination agent or the Class G
trustee or the Class G paying agent.
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The policy is noncancellable. The policy expires and terminates without any
action on the part of the policy provider or any other person on the earlier of:
(1) January 3, 2023 and
(2) the date that is one year and one day following the date on which the
pool balance of the Class G certificates and all interest at the
interest rate for the Class G certificates has been paid in full,
unless a request for a policy drawing has been made prior thereto, in
which case upon payment by the policy provider of amounts due under the
policy pursuant to such request.
No portion of the premium under the policy is refundable for any reason
including payment or provision being made for payment.
The policy is issued under and pursuant to and will be construed under, the
laws of the State of New York.
THE POLICY PROVIDER AGREEMENT
America West, the subordination agent and the policy provider have entered
into an insurance and indemnity agreement pursuant to which we agreed to
reimburse the policy provider for amounts paid pursuant to claims made under the
policy. Under the agreement, we agree to pay the policy provider a premium for
the policy based on the pool balance of the Class G certificates and a fee in
connection with any prepayment of the certificates, including by reason of an
acceleration of the underlying equipment notes, but excluding a prepayment
associated with an event of loss of an aircraft, and to reimburse the policy
provider for expenses.
DESCRIPTION OF THE INTERCREDITOR AGREEMENT
INTERCREDITOR RIGHTS
Controlling Party
Under any indenture at any time after an Indenture Default has occurred and
is continuing thereunder, the loan trustee will be directed in taking, or
refraining from taking, any action under that indenture or relating to the
equipment notes issued under that indenture by the Controlling Party, including
acceleration of the equipment notes and foreclosing the lien on the aircraft
securing the equipment notes, in each case, in accordance with their terms. See
"Description of the Certificates -- Indenture Defaults and Certain Rights Upon
an Indenture Default" and below at "-- Voting of Equipment Notes" for a
description of the rights of the certificateholders of each trust to direct the
respective trustees.
For purposes of giving effect to the rights of the Controlling Party, the
trustees other than the Controlling Party will irrevocably agree, 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, will 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" and to exercise
certain other voting rights, see below at "-- Voting of Equipment Notes".
Sale of Equipment Notes or Aircraft
Following the occurrence and during the continuation of an indenture
default, the Controlling Party will be entitled to accelerate, and, subject to
the provisions of the immediately following sentence, may direct the
subordination agent, as the registered holder of the equipment notes, to sell
all (but not less
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than all) of the equipment notes issued under that indenture to any person. So
long as any certificates are outstanding, during nine months after the earlier
of:
(1) the acceleration of the equipment notes under any indenture; and
(2) our bankruptcy or insolvency, without the consent of each trustee, no
aircraft subject to the lien of the indenture relating to the defaulted
equipment notes, or the defaulted equipment notes, may be sold if the
net proceeds from the sale would be less than the Minimum Sale Price
for the aircraft or those equipment notes.
In addition, the amount and payment dates of rentals payable by us under
the lease for a leased aircraft may not be adjusted, if, as a result of the
adjustment, the discounted present value of all rentals would be less than 75%
of the discounted present value of the rentals payable by us under the lease
before giving effect to the adjustment, in each case, using the weighted average
interest rate of the equipment notes issued under that indenture as the discount
rate. (Intercreditor Agreement, Section 4.1(a))
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 relating to an aircraft at the request of the Controlling Party.
(Intercreditor Agreement, Section 4.1(a)(iii))
PRIORITY OF DISTRIBUTIONS
So long as no Triggering Event has occurred, payments relating to the
equipment notes and other payments received on any distribution date will be
promptly distributed by the subordination agent on that distribution date in the
following order of priority:
Priority of Distributions if No Triggering Event Has Occurred
(1) to pay all accrued and unpaid Liquidity Expenses to the liquidity
provider and all accrued and unpaid Policy Expenses to the policy
provider;
(2) to pay interest accrued on the Liquidity Obligations, as determined
after giving effect to payments by the policy provider to the liquidity
provider, to the liquidity provider and interest accrued on Policy
Provider Obligations to the policy provider and, if the policy provider
has elected to pay to the liquidity provider all outstanding drawings
and interest thereon owing to the liquidity provider under the
liquidity facilities, to reimburse the policy provider for the amount
of such payment made to the liquidity provider attributable to
interested accrued on such drawings, proportionately;
(3) to pay or reimburse the liquidity provider for the Liquidity
Obligations, other than amounts payable pursuant to clauses (1) and (2)
above and as determined after giving effect to payments by the policy
provider to the liquidity provider, and/or, if applicable, to replenish
each cash collateral account up to the applicable Required Amount and,
if the policy provider has elected to pay to the liquidity provider all
outstanding drawings and interest thereon owing to the liquidity
provider under the liquidity facilities, to reimburse the policy
provider for the amount of such payment made to the liquidity provider
in respect of principal drawings under the liquidity facilities,
proportionately;
(4) to pay or reimburse the policy provider for any Policy Provider
Obligations, other than amounts payable pursuant to clauses (1) and (2)
above and any Excess Reimbursement Obligations;
(5) to pay Expected Distributions on the Class C certificates to the
holders of Class C certificates;
(6) to pay any Excess Reimbursement Obligations to the policy provider;
(7) if Class D certificates have been issued, to pay "Expected
Distributions" -- to be defined in a manner equivalent to the
definition for other classes of certificates -- on the Class D
certificates to the holders of the Class D certificates; and
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(8) to pay fees and expenses of the subordination agent and the trustees.
(Intercreditor Agreement, Sections 2.4 and 3.2)
PRIORITY OF DISTRIBUTIONS IF A TRIGGERING EVENT HAS OCCURRED
Upon the occurrence of a Triggering Event and at all times after the
Triggering Event, all funds received by the subordination agent in respect of
the equipment notes and certain other payments will be promptly distributed by
the subordination agent in the following order of priority:
(1) to pay Administrative Expenses;
(2) to the liquidity provider to pay the Liquidity Expenses and to the
policy provider to pay the Policy Expenses;
(3) to the liquidity provider, to pay interest accrued on the Liquidity
Obligations, as determined after giving effect to certain payments by
the policy provider to the liquidity provider, and to the policy
provider to pay interest accrued on certain Policy Provider
Obligations and, if the policy provider has elected to pay to the
liquidity provider all outstanding drawings and interest thereon owing
to the liquidity provider under the liquidity facilities, to reimburse
the policy provider for the amount of such payment made to the
liquidity provider attributable to interest accrued on such drawings,
proportionately;
(4) to the liquidity provider, to pay the outstanding amount of all
remaining Liquidity Obligations as determined after giving effect to
certain payments by the policy provider to the liquidity provider
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 has occurred and is continuing under
that liquidity facility or (b) a Final Drawing has occurred under that
liquidity facility, to replenish the cash collateral account with
respect to that liquidity facility up to the Required Amount for the
related class of certificates less the amount of any repayments of
Interest Drawings under that liquidity facility while subclause (a) is
applicable and, if the policy provider has elected to pay to the
liquidity provider all outstanding drawings and interest thereon owing
to the liquidity provider under the liquidity facilities, to reimburse
the policy provider for the amount of such payment made to the
liquidity provider in respect of principal drawings under the
liquidity facilities, proportionately;
(5) to pay 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 G certificates to
the holders of Class G certificates;
(7) to the policy provider, to pay the Policy Provider Obligations, other
than amounts payable pursuant to clauses (1), (2), (3) and (4) above
and any Excess Reimbursement Obligations;
(8) to pay Adjusted Expected Distributions on the Class C certificates to
the holders of Class C certificates;
(9) to pay any Excess Reimbursement Obligations to the policy providers;
and
(10) if Class D certificates have been issued, to pay "Adjusted Expected
Distributions" -- to be defined in a manner equivalent to the
definition for other classes of certificates -- on the Class D
certificates to the holders of Class D certificates.
(Intercreditor Agreement, Section 3.3)
The priority of distributions after a Triggering Event will have the effect
of requiring the distribution to the holders of Class G certificates of payments
received relating to the series of equipment notes
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applicable to the Class C certificates. If this should occur, the interest
accruing on the equipment notes would in the aggregate be less than the interest
accruing on the remaining certificates because those certificates include a
relatively greater proportion of Class or Classes with relatively higher
interest rates. As a result of these possible interest shortfalls, the holders
of Class C certificates may not receive the full amount due to 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.
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 that trust and drawings
under the policy will be distributed by the Class G trustee, notwithstanding the
priority of distributions set forth in the intercreditor agreement and otherwise
described in this prospectus. 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 in accordance with the provisions of the
intercreditor agreement.
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 that trust that has not been distributed to the
certificateholders of that trust, other than such premium or a portion thereof
applied to the payment of interest on the certificates of that trust or the
reduction of the pool balance of that trust, will be added to the amount of
Expected Distributions or Adjusted Expected Distributions.
After a Triggering Event occurs and any equipment note becomes a
Non-Performing Equipment Note, the subordination agent will obtain LTV
Appraisals for the aircraft as soon as practicable and additional LTV Appraisals
on or prior to each anniversary of the date of the initial LTV Appraisals.
However, if the Controlling Party reasonably objects to the appraised value of
the aircraft shown in the LTV Appraisals, the Controlling Party will have the
right to obtain or cause to be obtained substitute LTV Appraisals including LTV
Appraisals based upon physical inspection of the aircraft.
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 that equipment note, the related
indenture, lease, participation agreement or other related document:
(1) if no indenture default has occurred and is continuing with respect to
that indenture, the subordination agent will request direction from the
trustee of the trust which holds each series of those equipment notes
and vote or consent in accordance with the directions of the trustee.
So long as the final distribution on the Class G certificates has not
been made or any Policy Provider Obligations remain outstanding and no
Policy Provider Default has occurred and is continuing, the
subordination agent will request directions from the policy provider
rather than the Class G trustee with respect to the Series G equipment
notes held in the Class G trust; and
(2) if any indenture default has occurred and is continuing with respect to
that indenture, the subordination agent will exercise its voting rights
as directed by the Controlling Party, subject to certain limitations.
However, no such amendment, modification, consent or waiver will, without
the consent of the liquidity provider and the policy provider, reduce the amount
of rent, supplemental rent or stipulated loss values payable by us under any
lease or reduce the amount of principal or interest payable by us under any
equipment note issued under any owned aircraft indenture. (Intercreditor
Agreement, Section 9.1(b))
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))
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THE SUBORDINATION AGENT
Wilmington Trust Company is the subordination agent under the intercreditor
agreement. We and our 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 these circumstances, a successor
subordination agent will be appointed. Any resignation or removal of the
subordination agent and appointment of a successor subordination agent does not
become effective until acceptance or the appointment and assumption of its
obligations by the successor subordination agent. (Intercreditor Agreement,
Section 8.1)
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DESCRIPTION OF THE AIRCRAFT AND THE APPRAISALS
THE AIRCRAFT
The aircraft consist of eight 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 related equipment notes are issued. The
aircraft have been designed to be in compliance with Stage 3 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 series 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 series aircraft is a medium range aircraft with a
seating capacity of approximately 150 passengers. The engine type utilized on
America West's A320-232 aircraft is expected to be International Aero Engines
V2527-A5 engines.
THE APPRAISALS
The table below sets forth the appraised values and certain additional
information regarding the aircraft.
<TABLE>
<CAPTION>
EXPECTED EXPECTED EXPECTED APPRAISED VALUE
REGISTRATION MANUFACTURER'S DELIVERY ---------------------------------------
AIRCRAFT TYPE NUMBER SERIAL NO. MONTH1 AISI AVSOLUTIONS MBA
------------- ------------ -------------- -------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Airbus A319-132 N815AW 1323 September 2000 $40,740,000 $39,990,000 $37,570,000
Airbus A319-132 N816AW 1350 October 2000 40,840,000 40,240,000 37,650,000
Airbus A319-132 N817AW 1373 November 2000 40,930,000 40,240,000 37,730,000
Airbus A319-132 N818AW 1375 November 2000 40,930,000 40,240,000 37,730,000
Airbus A319-132 N819AW 1395 December 2000 41,030,000 40,240,000 37,800,000
Airbus A319-132 N820AW 1397 January 2001 41,120,000 40,570,000 37,880,000
Airbus A319-132 N821AW 1406 January 2001 41,120,000 40,570,000 37,880,000
Airbus A319-132 N822AW 1410 January 2001 41,120,000 40,570,000 37,880,000
Airbus A320-232 N662AW 1274 August 2000 45,880,000 46,090,000 43,580,000
Airbus A320-232 N663AW 1419 March 2001 46,630,000 46,780,000 44,210,000
</TABLE>
---------------
(1) Reflects the scheduled delivery month under America West's purchase
agreement with AVSA. The actual delivery date for any Aircraft may be
subject to change. 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:
Aircraft Information Services, Inc., AvSolutions, Inc. and Morten Beyer and
Agnew, Inc. Each appraiser was asked to provide its opinion as to the appraised
value of each Aircraft projected as of the scheduled delivery month of each
aircraft, and the opinions were furnished as of June 21, 2000, May 17, 2000 and
June 20, 2000, respectively. 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.
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Accordingly, there can be no assurance that the proceeds realized upon any
exercise relating 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 are scheduled for delivery under our purchase agreement with
AVSA from August 2000 to March 2001. See the table under "The Appraisals" for
the scheduled month of delivery of each aircraft. Under the 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 June 30, 2001, 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 our control and not occasioned by our fault or negligence, to the earlier
of (1) the purchase by the trustees of equipment notes relating to the last
aircraft (or a substitute aircraft in lieu thereof) and (2) September 30, 2001.
If delivery of any aircraft is delayed by more than 30 days after the month
scheduled for delivery, we have the right to replace that aircraft with a
substitute aircraft, subject to some conditions identified below under
"-- Substitute Aircraft". If delivery of any aircraft is delayed beyond the
delivery period termination date and we do not exercise our right to replace
that aircraft with a substitute aircraft, there will be unused deposits that
will be distributed to certificateholders together with accrued and unpaid
interest thereon and, under certain circumstances, a premium. 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, we may identify for delivery a substitute
aircraft 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 the maximum principal amount of
equipment notes of each series issued in respect of the substitute
aircraft under the Mandatory Economic Terms would not exceed the
maximum principal amount of the equipment notes of each series that
could have been issued under the Mandatory Economic Terms in respect of
the replaced aircraft; and
(3) we will be obligated to obtain written confirmation from each rating
agency that substituting the substitute aircraft for the replaced
aircraft will not result in a withdrawal, suspension or downgrading of
the ratings of any class of certificates (without regard to the
policy).
BRIDGE FINANCING
Under the note purchase agreement, we may initially take delivery of an
aircraft using bridge financing. This bridge financing would be utilized, for
example, if we have not finalized arrangements with an owner participant in
connection with a leveraged lease financing. The bridge financing would be paid,
and any lien on the bridge financed aircraft extinguished, within 90 days of
delivery of the aircraft and prior to the financing of the aircraft under the
note purchase agreement.
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CONVERSION OPTION
Under the note purchase agreement, we may initially finance an aircraft as
an owned aircraft and subsequently convert the aircraft into a leased aircraft
(subject to written confirmation from each rating agency that the conversion
will not result in a withdrawal, suspension or downgrading of the ratings of any
class of certificates (without regard to the policy)). This conversion option
would be utilized, for example, if we have not finalized arrangements with an
owner participant in connection with a leveraged lease financing. If the
conversion occurs on or prior to the delivery period termination date, we will
have the ability to have the applicable owner trustee issue reoptimized
equipment notes under a leased aircraft indenture (subject to the Mandatory
Economic Terms and written confirmation from each rating agency that the
reoptimization will not result in a withdrawal, suspension or downgrading of the
ratings of any class of certificates (without regard to the policy)) in
replacement for the equipment notes issued under the applicable owned aircraft
indenture.
We will only be permitted to convert an owned aircraft into a leased
aircraft if we
(1) provide the owned aircraft trustee with an opinion of counsel (both
counsel and opinion satisfactory to the owned aircraft trustee) that
the trusts will not be subject to U.S. federal income tax as a result
of such assumption; and
(2) furnish to the relevant owned aircraft trustee either
(A) an opinion that the certificateholders will not recognize gain or
loss for U.S. federal income tax purposes and will be subject to
U.S. federal income tax on the same amount and in the same manner
and at the same time as would have been the case if such conversion
had not occurred or
(B) both an opinion of counsel (both counsel and opinion satisfactory
to the relevant owned aircraft trustee) that the certificateholders
should not recognize gain or loss for U.S. federal income tax
purposes in connection with such conversion and will be subject to
U.S. federal income tax on the same amount and in the same manner
and at the same time as would have been the case if such conversion
had not occurred and an indemnity in favor of the
certificateholders in form and substance reasonably satisfactory to
the relevant owned aircraft trustee.
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DESCRIPTION OF THE EQUIPMENT NOTES
Under the note purchase agreement, we will have the option of entering into
a leveraged lease financing or a debt financing with respect to each aircraft.
In addition, we may, subject to some conditions, elect to convert a secured debt
financing to a leveraged lease financing by entering into a sale-leaseback
transaction.
The note purchase agreement provides for the relevant parties to enter into
either:
(1) for each leased aircraft, a participation agreement, a lease and an
indenture (among other documents) relating to the financing of that
aircraft and
(2) for each owned aircraft, a participation agreement and an owned
aircraft indenture relating to the financing of that owned aircraft.
The description of these agreements in this prospectus is based on the
forms of the agreements annexed to the note purchase agreement.
In the case of any leveraged lease financing of an aircraft, we will select
an owner participant that will be the beneficial owner of that aircraft. That
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 those agreements applicable to
any particular leased aircraft may differ from the description of those
agreements contained in this prospectus.
In the case of the financing of an aircraft where we have elected to issue
Series D equipment notes and to fund the sale of the Series D equipment notes
through the sale of Class D certificates, we may select purchasers of Class D
certificates. The 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 those agreements applicable to any particular leased
aircraft or owned aircraft, as the case may be, may differ from the description
of those agreements contained in this prospectus. Although these changes are
permitted, under the note purchase agreement, the terms of those agreements are
in all cases required to (1) contain the Mandatory Document Terms and (2) not
vary the Mandatory Economic Terms. In addition, we are obligated to certify to
the trustees that any modifications do not materially and adversely affect the
certificateholders or the policy provider. We must also obtain written
confirmation from each rating agency that the use of versions of the agreements
modified in any material respect will not result in a withdrawal, suspension or
downgrading of the rating of any class of certificates (without regard to the
policy). See "Description of the New Certificates -- Obligation to Purchase
Equipment Notes".
GENERAL
The equipment notes will be issued in two series with respect to each
aircraft, Series G equipment notes and Series C equipment notes. We may elect to
issue a third series of equipment notes, Series D equipment notes, with respect
to an aircraft, which will be funded from sources other than the proceeds of the
certificates. See "Description of the New Certificates -- Possible Issuance of
Class D Certificates". The equipment notes relating 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 that
aircraft, and Wilmington Trust Company, as leased aircraft trustee under the
indenture. The equipment notes relating to each owned aircraft will be issued
under a separate owned aircraft indenture between America West and Wilmington
Trust Company, as the owned aircraft trustee under the indenture. We sometimes
refer to the owned aircraft trustees and the leased aircraft trustees
collectively as loan trustees.
In the case of any leased aircraft, the related owner trustee will lease
that leased aircraft to us pursuant to a separate lease we enter into with that
owner trustee. Under each lease, we will be obligated to make or cause to be
made rental and other payments to the related leased aircraft trustee on behalf
of
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the related owner trustee, which rental and other payments will be at least
sufficient to pay in full when due all payments of principal and interest
required to be made on the equipment notes issued with respect to that leased
aircraft. The equipment notes issued with respect to the leased aircraft are
not, however, direct obligations of, or guaranteed by, America West. Our rental
obligations under each lease and our obligations under the equipment notes
issued with respect to each owned aircraft will be general obligations of ours.
In some circumstances described below in "-- The Leases and Certain
Provisions of the Owned Aircraft Indentures -- Renewal and Purchase Options", we
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 some conditions, which would reflect
a financing contemplated by an owned aircraft indenture. These conditions
include:
(1) the delivery by us of an assumption agreement giving effect to that
assumption;
(2) a written confirmation from each rating agency that the assumption
would not result in a reduction, withdrawal or suspension of the rating
of any class of certificates; and
(3) the receipt by the related leased aircraft trustee of
(a) an opinion that the trusts will not be subject to U.S. federal
income tax as a result of the assumption and
(b) either (A) an opinion of counsel, both counsel and opinion
satisfactory to the leased aircraft trustee, to the effect that no
holder of the certificates will be required to recognize gain or
loss for U.S. federal income tax purposes in connection with the
assumption and will be subject to U.S. federal income tax on the
same amount and in the same manner and at the same time as would
have been the case if the conversion had not occurred or (B) both
an opinion of counsel, both counsel and opinion satisfactory to the
relevant leased aircraft trustee, that the certificateholders
should not recognize gain or loss for U.S. federal income tax
purposes in connection with the assumption and will be subject to
U.S. federal income tax on the same amount and in the same manner
and at the same time as would have been the case if the assumption
had not occurred and we provide an indemnity in favor of the
certificateholders in form and substance reasonably satisfactory to
the relevant leased aircraft trustee.
SUBORDINATION
Series C equipment notes issued in respect of any aircraft will be
subordinated in right of payment to Series G equipment notes issued in respect
of that aircraft. If we elect to issue Series D equipment notes, they will be
subordinated in right of payment to the Series G equipment notes and the Series
C equipment notes issued with respect to that aircraft. On each equipment note
payment date, (1) payments of interest and principal due on Series G 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 that
aircraft; and (2) if we elect to issue Series D equipment notes, payments of
interest and principal due on the Series C equipment notes will be made prior to
payments of interest and principal due on Series D equipment notes issued in
respect of that 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 that 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 that trust (subject to change as provided in the registration rights
agreement) until the final expected regular distribution date for that 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 that trust in
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scheduled amounts on the dates set forth in this prospectus until the final
expected regular distribution date for that trust.
Interest will be payable on the unpaid principal amount of each equipment
note at the rate applicable to that equipment note on January 2 and July 2 in
each year, commencing on the first such date to occur after initial issuance of
the equipment note. Interest will be computed on the basis of a 360-day year of
twelve 30-day months. Under some circumstances described in "The Exchange
Offer", the interest rates for the equipment notes will be increased, or
following any such increase, decreased.
Scheduled principal payments on the equipment notes will be made on January
2 and July 2 in certain years, commencing on or after January 2, 2001. See
"Description of the New Certificates -- Pool Factors" for a discussion of the
scheduled payments of principal of the equipment notes and possible revisions to
the scheduled payments.
If any date scheduled for any payment of principal, premium, if any, or
interest relating to the equipment notes is not a business day, that 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 the aircraft is
not replaced by us, the equipment notes issued relating to that aircraft will be
redeemed, in whole, in each case at a price equal to the aggregate unpaid
principal amount of the equipment notes issued relating to that aircraft,
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 we exercise our right to terminate a lease because the related aircraft
has become obsolete or surplus to our needs, the equipment notes relating to
that aircraft will be redeemed, in whole, on a special distribution date at a
price equal to the aggregate unpaid principal amount of the equipment notes
issued with respect to that aircraft, together with accrued interest to, but not
including, the date of redemption, plus a Make-Whole Premium. (Indentures,
Section 2.10(b)).
All of the equipment notes issued relating to an aircraft may be redeemed
prior to maturity as part of a refunding or refinancing of the equipment notes
under the applicable participation agreement at a price equal to the aggregate
unpaid principal of the equipment notes issued relating to that aircraft,
together with accrued interest to, but not including, the date of redemption,
plus a Make-Whole Premium. (Indentures, Section 2.11) If notice of a redemption
has been given in connection with a refinancing of equipment notes, the notice
may be revoked not later than three days prior to the proposed redemption date.
(Indentures, Section 2.12)
In addition, all of the equipment notes issued with respect to any lease
may be redeemed prior to maturity with a Make-Whole Premium on a special
distribution date in connection with our exercise of options or elections
relating to the purchase of the aircraft subject to that lease.
If any of the events listed below occur, then, in each case all, but not
less than all, of the equipment notes issued with respect to the related
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 to, but not including, the
date of purchase, but without any premium; provided that a Make-Whole Premium
will be payable if the equipment notes are to be purchased pursuant to clause
(1) below when a Lease Event of Default has occurred and continued for fewer
than 180 days. (Indentures, Section 2.13)
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Events Triggering Right to Redemption
(1) One or more Lease Events of Default has occurred and is continuing.
(2) In the event of a bankruptcy proceeding involving us, (a) during the
period in which Section 1110 of the U.S. Bankruptcy Court applies, the
trustee in the proceeding or America West does not agree to perform its
obligations under the related lease or (b) at any time after agreeing
to perform the obligations, the trustee or America West ceases to
perform the obligations such that the stay period applicable under the
U.S. Bankruptcy Code comes to an end.
(3) The equipment notes relating to that aircraft have been accelerated or
the leased aircraft trustee with respect to the related 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 that indenture or the related lease.
As owner of the owned aircraft, we have no comparable right under the owned
aircraft indentures to purchase the equipment notes under such circumstances.
SECURITY
The equipment notes issued relating to each aircraft subject to a lease
will be secured by all of the following items:
Security for Equipment Notes
(1) an assignment by the related owner trustee to the related loan trustee
of that owner trustee's rights under the lease with respect to the
related aircraft leased by us, including the right to receive payments
under the applicable lease;
(2) a mortgage to the related loan trustee of that aircraft, subject to our
rights under the lease; and
(3) an assignment to the related loan trustee of some of the owner
trustee's rights under the purchase agreement we entered into with the
related manufacturer.
Prior to an indenture default, the owner participant relating to any
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, the 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 forms of certain
documentation required for the substitution of aircraft following an event of
loss.
Unless and until the related loan trustee has foreclosed upon the lien of
the related indenture, the loan trustee may not exercise the balance of the
rights of the owner trustee under the related lease, such as the amendment or
modification of the lease, without the concurrence of the owner trustee.
However, in all instances, the right of the loan trustee to exercise remedies
under the related lease are rights exclusive to the loan trustee. The assignment
by the owner trustee to the loan trustee of its rights under the related lease
will also exclude certain rights of the owner trustee and the related owner
participant to receive the following:
- indemnification by us for certain matters;
- insurance proceeds payable to the owner trustee in its individual
capacity or to the owner participant under public liability insurance
maintained by us under the lease or by the owner trustee or owner
participant;
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- insurance proceeds payable to the owner trustee in its individual
capacity or to the owner participant under certain casualty insurance
maintained by the owner trustee or owner participant under the lease; and
- certain reimbursement payments made by us to the owner trustee.
(Indentures, 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 will not be secured by any
of the other aircraft or replacement aircraft or the leases related thereto.
The equipment notes issued relating to each owned aircraft will be secured
by (1) a mortgage to the owned aircraft trustee of that aircraft and (2) an
assignment to the owned aircraft trustee of some of our rights under the
purchase agreement we enter into 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 that
aircraft or termination of the lease relating thereto, will be invested and
reinvested by the loan trustee, at our direction (except in the case of certain
indenture defaults), in investments described in the related indenture.
(Indentures, Section 5.09)
LOAN TO VALUE RATIOS OF EQUIPMENT NOTES
The following tables show examples of loan to aircraft value ratios, or
LTVs, for the equipment notes issued relating to aircraft as of the regular
distribution dates that occur after the scheduled date of original issuance of
those equipment notes, assuming that the equipment notes in the maximum
principal amount are issued for each aircraft. We used these examples to prepare
the assumed amortization schedule, although the amortization schedule for the
equipment notes issued for an aircraft may vary from the assumed amortization
schedule so long as it complies with the Mandatory Economic Terms. This means
that the tables below may not apply in the case of any particular aircraft.
The LTV was obtained by dividing (1) the outstanding balance, assuming no
payment default, of the equipment notes determined immediately after giving
effect to the payments scheduled to be made on each such regular distribution
date by (2) the assumed value of the aircraft securing the equipment notes.
The following tables assume that the value of each aircraft depreciates by
approximately 3% of the initial appraised value per year for the first 15 years
after delivery of that aircraft and by approximately 4% of the initial appraised
value per year thereafter. Other rates or methods of depreciation would result
in materially different LTVs, and we cannot assure you (1) that the depreciation
rates and method assumed for the purposes of the tables are the ones most likely
to occur or (2) as to the actual future value of any aircraft. The tables should
not be considered a forecast or prediction of expected or likely LTVs, but
simply a mathematical calculation based on one set of assumptions.
<TABLE>
<CAPTION>
A319-132 A320-232
--------------------------------------------- ---------------------------------------------
EQUIPMENT NOTE EQUIPMENT NOTE
OUTSTANDING ASSUMED LOAN TO OUTSTANDING ASSUMED LOAN TO
DATE BALANCE AIRCRAFT VALUE VALUE RATIO BALANCE AIRCRAFT VALUE VALUE RATIO
---- -------------- -------------- ----------- -------------- -------------- -----------
(MILLIONS) (MILLIONS) (MILLIONS) (MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
July 2, 2001......... $21.58 $38.25 56.4% $26.43 $43.83 60.3%
July 2, 2002......... 20.60 37.07 55.6 25.26 42.47 59.5
July 2, 2003......... 19.53 35.88 54.4 23.98 41.12 58.3
July 2, 2004......... 18.38 34.70 53.0 22.59 39.76 56.8
July 2, 2005......... 17.13 33.52 51.1 21.09 38.41 54.9
July 2, 2006......... 15.77 32.34 48.8 19.45 37.05 52.5
July 2, 2007......... 14.30 31.15 45.9 17.68 35.69 49.5
July 2, 2008......... 13.01 29.97 43.4 16.10 34.34 46.9
July 2, 2009......... 12.12 28.79 42.1 15.03 32.98 45.6
July 2, 2010......... 11.67 27.60 42.3 14.20 31.63 44.9
</TABLE>
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<PAGE> 70
<TABLE>
<CAPTION>
A319-132 A320-232
--------------------------------------------- ---------------------------------------------
EQUIPMENT NOTE EQUIPMENT NOTE
OUTSTANDING ASSUMED LOAN TO OUTSTANDING ASSUMED LOAN TO
DATE BALANCE AIRCRAFT VALUE VALUE RATIO BALANCE AIRCRAFT VALUE VALUE RATIO
---- -------------- -------------- ----------- -------------- -------------- -----------
(MILLIONS) (MILLIONS) (MILLIONS) (MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
July 2, 2011......... 10.73 26.42 40.6 13.51 30.27 44.6
July 2, 2012......... 10.02 25.24 39.7 12.77 28.92 44.2
July 2, 2013......... 9.17 24.05 38.1 11.52 27.56 41.8
July 2, 2014......... 8.20 22.87 35.9 10.34 26.21 39.5
July 2, 2015......... 6.11 21.69 28.2 7.82 24.85 31.5
July 2, 2016......... 6.11 20.11 30.4 6.88 23.04 29.8
July 2, 2017......... 6.11 18.53 33.0 6.88 21.24 32.4
July 2, 2018......... 6.11 16.96 36.0 6.88 19.43 35.4
July 2, 2019......... 6.11 15.38 39.7 6.88 17.62 39.0
July 2, 2020......... 0.00 NA NA 0.00 NA NA
</TABLE>
LIMITATION OF LIABILITY
The equipment notes relating to the leased aircraft are not direct
obligations of, or guaranteed by, us, any owner participant or any owner trustee
in its individual capacity. None of the owner trustees, the owner participants
or the loan trustees, or any of their affiliates, 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 loan trustees for any amounts payable under the
equipment notes or, except as provided in each indenture, for any liability
under that indenture. All payments of principal of, premium, if any, and
interest on the equipment notes issued relating to any aircraft, other than
payments made in connection with (x) 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 (y) 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
that aircraft or the income and proceeds received by the related loan trustee
from those assets, including rent payable by us under the lease with respect to
that aircraft.
The equipment notes issued relating to the owned aircraft will be our
direct obligations.
Except as otherwise provided in the indentures, no owner trustee or loan
trustee, in its individual capacity, will 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 loan trustees or to any holder of any equipment note.
INDENTURE DEFAULTS, NOTICE AND WAIVER
There are no cross-default provisions in the indentures or in the leases.
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 we fail to make any semiannual basic rental payment due under any lease,
within a specified period after that failure the applicable owner trustee may
furnish to the loan trustee the amount due on the equipment notes issued with
respect to the related leased aircraft, together with any interest on account of
the delayed payment. In that case, the loan trustee and the holders of
outstanding equipment notes issued under that indenture may not exercise any
remedies otherwise available under that indenture or lease as the result of the
failure to make the rental payment, unless the related owner trustee has
previously cured three or more immediately preceding semiannual basic rental
payment defaults or, in total, six or more
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<PAGE> 71
previous semiannual basic rental payment defaults. The applicable owner trustee
also may cure other defaults by us in the performance of its obligations under
any lease that can be cured with the payment of money. (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 that 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 the indenture that cannot be
modified or amended without the consent of each holder of equipment notes.
(Indentures, Section 4.08)
REMEDIES
If an Indenture Default occurs and is continuing, the related loan trustee
or the holders of a majority in principal amount of the equipment notes
outstanding under the related indenture may, subject to the applicable owner
participant's or owner trustee's right to cure, declare the principal of all
equipment notes issued under the indenture immediately due and payable, together
with all accrued but unpaid interest. In the event of a reorganization
proceeding involving us as a debtor that is 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 the 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 an indenture may rescind any declaration at any time before
the judgment or decree for the payment of the money so due is entered if (1)
there has been paid to the related loan trustee an amount sufficient to pay all
principal, interest, and premium, if any, on any the equipment notes, to the
extent the amounts have become due otherwise than by such declaration of
acceleration and (2) all other indenture defaults and events which with the
passing of time would become indenture defaults have been cured. (Indentures,
Section 4.04(b))
Each indenture provides that if an Indenture Default has occurred and is
continuing, the related loan trustee may exercise certain rights or remedies
available to it under the indenture or under applicable law, including, if the
corresponding lease has been declared in default, one or more of the remedies
under that lease with respect to the aircraft subject to that lease. If an
Indenture Default arises solely by reason of one or more events or circumstances
which constitute a Lease Event of Default, the related loan trustee's right to
exercise remedies under an 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 the leased aircraft. The requirement to exercise one or
more of these remedies under the lease will not apply in circumstances where the
exercise has been involuntarily stayed or prohibited by applicable law or court
order for a continuous period in excess of 60 days subsequent to the entry of an
order for relief; provided, however, that the requirement to exercise one or
more of such remedies under such lease shall nonetheless be applicable during a
period subsequent to the expiration of the 60-day period to the extent that the
continuation of such period subsequent to the expiration of the 60-day period
results from an agreement by the trustee or the debtor-in-possession in such
proceeding during the 60-day period with the approval of the relevant court to
perform such lease in accordance with Section 1110(a)(2)(A) of the U.S.
Bankruptcy Code and continues to perform as required by Section 1110(a)(2) of
the U.S. Bankruptcy Code and cures any default (other than a default of a kind
specified in Section 365(b)(2) of the U.S. Bankruptcy Code; (2) is an extension
of the 60-day period with the consent of such leased aircraft trustee pursuant
to Section 1110(b) of the U.S. Bankruptcy Code; or (3) is the consequence of
such leased aircraft trustee's own failure to give any requisite notice to any
person. See "-- The Leases -- Events of Default under the Leases".
These remedies may be exercised by the related loan trustee to the
exclusion of the related owner trustee, subject to certain conditions specified
in the indenture, and to our exclusion, subject to the terms of the lease. Any
aircraft sold in the exercise of such remedies will be free and clear of any
rights of those parties, including our rights under the lease with respect to
the aircraft. No exercise of any remedies by
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<PAGE> 72
the related loan trustee may affect our rights under any lease unless a Lease
Event of Default has occurred and is continuing. (Indentures, Section 4.04;
Leases, Section 15) The owned aircraft indentures will not contain these
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 those 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 the equipment in compliance with the provisions of a lease,
conditional sale contract or security agreement, as the case may be, is not
affected by any of the following events:
Events That Do Not Affect Rights with Respect to Equipment
(1) any other provision of the U.S. Bankruptcy Code; or
(2) any power of the bankruptcy court.
Section 1110 provides, however, that the right to take possession of an
aircraft may not be exercised for 60 days following the date of commencement of
the reorganization proceedings and may not be exercised at all if, within the
60-day period or a 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 that 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 our outside counsel, which is expected to be
Vedder, Price, Kaufman & Kammholz, provide its opinion to the trustees that the
owner trustee, as lessor under the lease for that aircraft, and the loan
trustee, as assignee of the owner trustee's rights under the lease pursuant to
the related indenture, will be entitled to the benefits of Section 1110 of the
U.S. Bankruptcy Code with respect to the airframe and engines comprising the
aircraft. For a description of limitations on the loan trustee's exercise of
rights contained in the indentures, 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 the replacement unless there was,
subsequent to the delivery of the aircraft, a change in law or court
interpretation that results in Section 1110 benefits not being available. The
opinion of Vedder, Price, Kaufman & Kammholz will also not address the
availability of Section 1110 with respect to any possible sublessee of an
aircraft subleased by us or to any possible lessee of an owned aircraft if it is
leased by us.
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<PAGE> 73
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 limited
exceptions, may be applied to reimburse the loan trustee for any tax, expense or
other loss incurred by it and to pay any other amounts due to the loan trustee
prior to any payments to holders of the equipment notes issued under that
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, the
leased aircraft and the related lease and equipment notes might become part of
the proceeding. In this event, payments under that lease or on such equipment
notes might be interrupted and the ability of the related loan trustee to
exercise its remedies under the related indenture might be restricted, although
the loan 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 the indenture
and any related lease, participation agreement or trust agreement may not be
amended or modified, except to the extent indicated below.
Some provisions of any indenture, lease, participation agreement and trust
agreement, may be amended or modified by the contracting parties without the
consent of any holders of the equipment notes outstanding under the indenture.
In the case of each lease, these provisions include, among others, provisions
relating to (1) the return to the related owner trustee of the related leased
aircraft at the end of the term of the applicable lease, except to the extent
that such amendment would affect the rights or exercise of remedies under the
applicable lease, and (2) the renewal of the applicable lease and the option to
purchase the related leased aircraft so long as the same would not adversely
affect the holders of any equipment notes. (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 under that indenture, provided that the
change does not adversely affect the interests of any holder. (Indentures,
Section 9.01(c))
Without the consent of the holder of each equipment note outstanding under
any indenture affected thereby, no amendment or modification of that 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 the 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 that indenture, except as provided in
that indenture, or deprive any holder of an equipment note issued under
that indenture of the benefit of the lien of the indenture upon the
property subject to that indenture; or
(3) reduce the percentage in principal amount of outstanding equipment
notes issued under that indenture necessary to modify or amend any
provision of that indenture or to waive compliance with that indenture.
(Indentures, Section 9.01(b))
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INDEMNIFICATION
We are required to indemnify each loan trustee, each owner participant,
each owner trustee, each liquidity provider, the policy provider, the
subordination agent, the escrow agent and each trustee, but not the holders of
certificates, for certain losses, claims and other matters. We are required
under certain circumstances to indemnify each owner participant against the loss
of depreciation deductions and 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 that owner
participant has an interest for certain losses that may be suffered as a result
of the failure of such owner participant to discharge 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 us by the relevant owner trustee
under the relevant lease agreement. Each owned aircraft will be owned by us.
Lease Term Rentals and Payments
Each leased aircraft is leased separately by the relevant owner trustee to
us 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 us on January 2 or July 2
during the term of that lease, and will be assigned by the owner trustee under
the corresponding 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 that indenture.
In certain cases, the semiannual basic rent payments under the leases may
be adjusted, but each lease provides that under no circumstances will scheduled
rent payments by us be less than the scheduled payments on the related equipment
notes. Any balance of each semiannual basic rent payment under each lease, after
payment of amounts due on the equipment notes issued under the indenture
corresponding to the lease, will be paid over to the related owner trustee.
(Leases, Section 3; Indentures, Section 3.01)
Semiannual payments of interest on the equipment notes issued by us under
an owned aircraft indenture are payable each January 2 and July 2 commencing on
the first such date after issuance of the equipment notes. Semiannual payments
of principal under the equipment notes issued by us under an owned aircraft
indenture are payable on January 2 and July 2 in certain years commencing on or
after January 2, 2001. 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 those equipment notes on the relevant payment date as a result
of any increase in the rate of interest on those equipment notes as required by
the terms of the registration rights agreement.
Net Lease; Maintenance
We are obligated under each lease, among other things and at our 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 us, 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 at all times, including temporary storage or
maintenance periods and the grounding of similar aircraft by the applicable
aviation authority. (Leases, Sections 7.1, 8.1 and Annexes C and D) The owned
aircraft indenture imposes comparable registration, insurance, maintenance,
service and repair obligations on America West with respect to the owned
aircraft. (Owned Aircraft Indentures, Section 4.02)
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<PAGE> 75
Possession, Sublease and Transfer
We may operate an aircraft or we may be able to permit other persons to
operate an aircraft. 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 countries
that are listed in the applicable indenture, subject to a reasonably
satisfactory legal opinion that, among other things, that country would
recognize (in the case of the leased aircraft) owner trustee's title to, and the
loan trustee's security interest in respect of, the applicable aircraft. In
addition, a sublessee may not be subject to insolvency or similar proceedings at
the commencement of that sublease. (Leases, Section 7) 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).
It is uncertain to what extent the relevant loan trustee's security interest
would be recognized if an aircraft were registered or located in a jurisdiction
not a party to the convention. Moreover, in the case of an Indenture 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 the
aircraft were registered or located outside the United States.
Registration
Subject to the next paragraph, we are required to keep each aircraft duly
registered with the Federal Aviation Administration, except (in the case of a
leased aircraft) if the relevant owner trustee or owner participant fails to
meet the applicable citizenship requirements, and to record each lease (in the
case of a leased aircraft, but subject to those citizenship requirements) and
indenture and certain other documents under Title 49 of the U.S. Code relating
to aviation. (Leases, Section 7; Owned Aircraft Indentures, Section 4.02(e)) The
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 the aircraft whenever it is located in the United States or
any of its territories and possessions. The Convention on the International
Recognition of Rights in Aircraft provides that the security interest will also
generally be recognized in those jurisdictions that have ratified or adhere to
the convention.
So long as no Lease Event of Default exists, we have the right to register
an aircraft in a country other than the United States at our own expense in
connection with a permitted sublease of that aircraft to a permitted foreign air
carrier, subject to some conditions 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
We are 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 to the lease, and
other than limited liens permitted under the documents, including but not
limited to those listed below; provided that in the case of the liens described
in clauses (1), (2) and (3) below, the liens and proceedings do not involve any
material risk of the sale, forfeiture or loss of the aircraft or the interest of
any participant in the aircraft or
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<PAGE> 76
impair the lien of the relevant indenture. (Leases, Section 6; Owned Aircraft
Indentures, Section 4.01) The following liens are permitted:
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 for more than 60 days 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 the judgment is stayed pending appeal and
discharged, vacated or reversed within 60 days after expiration of such
stay;
(4) insurers' salvage rights; and
(5) any other lien as to which we have 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
We are obligated to replace all parts at our 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. We or any permitted sublessee have the
right, at our own expense, to make alterations, modifications and additions with
respect to each aircraft as we deem desirable in the proper conduct of our
business and to remove parts which we deem to be obsolete or no longer suitable
or appropriate for use, so long as the alteration, modification, addition or
removal does not impair the condition or airworthiness and does not materially
diminish the fair market value, utility, or remaining useful life of the related
aircraft, airframe or engine. (Leases, Section 8.1 and Annex C)
Insurance
We are required to maintain, at our 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 that aircraft. The amount of this insurance is required to be at least equal
to the aggregate outstanding principal amount of the equipment notes related to
the aircraft. However, after giving effect to self-insurance permitted as
described below, the amount payable under the insurance for any aircraft may be
less than the amounts payable with respect to the equipment notes issued with
respect to that aircraft. 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 the loss, the 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 is in effect. In the event of a loss involving insurance
proceeds of up to $5,000,000 the proceeds will be payable directly to us 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, we are obligated to maintain comprehensive airline liability
insurance relating to each aircraft at our 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 liability insurance. Insurers of
recognized responsibility must underwrite the liability insurance. The amount of
the 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
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operated by us of the same type and operating on similar routes as the aircraft.
(Leases, Section 11.1 and Annex D; Owned Aircraft Indentures, Section 4.06)
We are also required to maintain war-risk, hijacking or allied perils
insurance if we (or any permitted sublessee or lessee) operate any aircraft or
any related airframe or engine in any area of recognized hostilities, unless
governmental indemnity is obtained in its place, or if we (or any permitted
sublessee or lessee) maintain the insurance relating to other aircraft operated
by us (or any permitted sublessee or lessee) on the same routes on which the
aircraft is operated. (Leases, Section 7.1.5 and Annex D; Owned Aircraft
Indentures, Section 4.06)
We may self-insure under a program applicable to all aircraft in our fleet,
but the amount of the self-insurance in the aggregate may not exceed 50% of the
largest replacement value of any single aircraft in our fleet or 1.5% of the
average aggregate insurable value during the preceding calendar year of all
aircraft on which we carry insurance, whichever is less, unless an insurance
broker of national standing certifies that the standard among all other major
U.S. airlines is a higher level of self-insurance, in which case we may
self-insure the aircraft to such higher level. In addition, we 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, we are 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 that 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 the
aircraft. In addition, the insurance policies maintained under the leases and
the owned aircraft indentures will be required to provide that, in respect of
the interests of only additional insured persons, the insurance will not be
invalidated or impaired by any act or omission of ours or any other person and
to insure the respective interests of the additional insured persons, regardless
of any breach or violation of any representation, warranty, declaration, term or
condition contained in the policies by us, any permitted sublessee or any other
person. (Leases, Annex D; Owned Aircraft Indentures, Section 4.06)
Lease Termination
Unless a Lease Event of Default has occurred and is continuing, we may
terminate any lease on any payment date occurring on or after the fifth
anniversary of the date on which that lease commenced, if we make a good faith
determination that the leased aircraft subject to that lease is economically
obsolete or surplus to our requirements. We are required to give notice of our
intention to exercise our 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 the proposed date; provided that we
may give only five such termination notices. In this situation, unless the owner
trustee elects to retain title to that aircraft, we are required to use
commercially reasonable efforts to sell such aircraft as an agent for the owner
trustee, and the owner trustee will sell the aircraft on the date of termination
to the highest cash bidder. If the sale occurs, the equipment notes related to
the sale are required to be prepaid. If the net proceeds to be received from the
sale are less than the termination value for that aircraft, which is expressed
always to be sufficient to pay the aggregate outstanding principal amount of the
equipment notes related to the aircraft, together with accrued interest, we are
required to pay to the applicable owner trustee an amount equal to the excess,
if any, of the applicable termination value for that aircraft over such net
proceeds. Upon payment of termination value for that aircraft and an amount
equal to the Make-Whole Premium, if any, payable on the date of payment,
together with certain additional amounts, the lien of the relevant indenture
will be released, the relevant lease will terminate, and our obligation to make
scheduled rent payments under the related lease will cease. (Leases, Section 9;
Indentures, Sections 2.10(b) and 10.01)
The owner trustee under any lease has the option to retain title to the
aircraft subject to that lease if we have given a notice of termination under
that lease. The owner trustee will then pay to the applicable
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loan trustee an amount sufficient to prepay the outstanding principal of and
interest on the equipment notes issued relating to that aircraft but we 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 our obligation to make scheduled rent payments under that lease
will cease. (Leases, Section 9; 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, we must elect within 45 days after the occurrence either
to make payment with respect to that Event of Loss or to replace the airframe
and any engines. Not later than the first business day following the earliest of
(1) the 120th day following the date of occurrence of the Event of Loss, and (2)
the fourth business day following the receipt of the insurance proceeds in
respect of the Event of Loss, we 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 an owned aircraft) the
stipulated loss value of the aircraft (in the case of a leased
aircraft) or the outstanding principal amount and accrued interest on
the equipment notes (in the case of an owned aircraft), together with
some 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
Default or failure to pay principal or interest under the owned
aircraft indenture (in the case of an owned aircraft) or bankruptcy
defaults have occurred and are 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 the Event of Loss. (Leases,
Sections 10.1.1, 10.1.2 and 10.1.3; Indentures, Section 2.10(a); Owned
Aircraft Indentures, Sections 2.10 and 4.05(a))
If we elect to replace an airframe, or airframe and one or more engines, as
the case may be, that suffered the Event of Loss, we will convey to the related
owner trustee title to an airframe, or airframe and one or more engines, as the
case may be, and the 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. The airframe, or airframe and one or more engines, as the case may be,
must also have 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 the
airframe and engines had been maintained in accordance with the related lease.
We are 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 (1)
specified documents have been duly filed under Title 49 of the U.S. Code
relating to aviation or comparable applicable law of the relevant jurisdiction
of registration and (2) the owner trustee and loan 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 the benefits of Section 1110 of the U.S. Bankruptcy Code with
respect to any replacement airframe unless, as a result of a change in law or
court interpretation, the benefits are not then available. (Leases, Sections
10.1.3 and 10.3; Owned Aircraft Indentures, Section 4.05(c))
If we elect not to replace the airframe, or airframe and engine(s), then
upon payment of the outstanding principal amount of the equipment notes issued
with respect to that aircraft (in the case of an owned aircraft) or the
stipulated loss value for that aircraft (in the case of a leased aircraft),
together with all additional amounts then due and unpaid with respect to that
aircraft, which must be at least sufficient to pay in full as of the date of
payment thereof the aggregate unpaid principal amount under those equipment
notes together with accrued but unpaid interest thereon and all other amounts
due and owing in
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respect of those equipment notes, the lien of the indenture and (in the case of
a leased aircraft) the lease relating to that aircraft will terminate with
respect to that aircraft, our obligation 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) will cease and (in the case of a leased aircraft) the
related owner trustee will transfer all of its right, title and interest in and
to the related aircraft to us (or, if directed by us, the aircraft insurers).
The stipulated loss value and other payments made under the leases or the owned
aircraft indentures, as the case may be, by us will be deposited with the
applicable loan trustee. Amounts in excess of the amounts due and owing under
the equipment notes issued with respect to that aircraft will be distributed by
the loan trustee to the applicable owner trustee or to us, as the case may be.
(Leases, Section 10.1.2; 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 an engine alone, we will be
required to replace the engine within 60 days after the occurrence of the Event
of Loss with another engine, free and clear of all liens other than permitted
liens. The replacement engine will be the same make and model as the engine 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 engine to be
replaced, assuming that the replaced engine 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)) We may, whether or not an Event
of Loss has occurred with respect to any engine, replace that engine 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 4.4(e))
Renewal and Purchase Options
In connection with the exercise of an Early Purchase Option, we are
required with respect to the equipment notes relating to the aircraft being
purchased either (1) 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 the equipment notes or (2) to assume on a full recourse basis the obligations
of the related owner trustee under the equipment notes, the related indenture
and the related participation agreement. (Leases, Section 17.3; Leased Aircraft
Indentures, Sections 2.10 and 2.15)
If we elect to purchase an aircraft and pay the amount described in clause
(1) above, then upon payment to the related owner trustee of the full purchase
price for that aircraft determined in accordance with the related lease and all
other amounts owing to the parties to the related participation agreement, the
owner trustee will transfer all of its right, title and interest in and to an
aircraft to us and the related lease and the lien of the related indenture will
terminate. If we elect to purchase the aircraft and assume the obligations of
the owner trustee described in clause (2) above, then the related operative
agreements will be amended to provide for the assumption of the obligations on a
full recourse basis by us, maintaining for the benefit of the holders of the
equipment notes the security interest in that aircraft created by the related
indenture. In the event of an assumption, we will (1) furnish to the relevant
leased aircraft trustee an opinion that the trusts will not be subject to U.S.
federal income tax as a result of such assumption and (2) furnish to the
relevant leased aircraft trustee either (A) an opinion that the
certificateholders will not recognize gain or loss for U.S. federal income tax
purposes in connection with such assumption and will be subject to U.S. federal
income tax on the same amounts and in the same manner and at the same time as
would have been the case if such assumption had not occurred or (B) furnish to
the relevant leased aircraft trustee both an opinion that the certificateholders
should not recognize gain or loss for U.S. federal income tax purposes in
connection with such assumption and will be subject to U.S. federal income tax
on the same amount and in the same manner and at the same time as would have
been the case if such assumption had not occurred and an indemnity in favor of
the certificateholders in form and substance reasonably satisfactory to the
relevant leased aircraft trustee. (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 some conditions, we will have certain options to
renew the lease for additional limited periods. In addition,
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we may have the right at the end of the term of each lease to purchase the
aircraft subject to that lease for an amount to be calculated in accordance with
the terms of that lease. (Leases, Section 17)
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) our failure to make any payment of basic rent, stipulated loss value or
termination value under the lease within ten business days after it
becomes due, or failure by us to pay any other amount due under the
lease or under any other related operative document within 30 days from
and after the date of any written demand from the owner trustee;
(2) our failure to make any excluded payment within 30 days after written
notice that the failure constitutes a Lease Event of Default is given
by the relevant owner participant to us and the relevant loan trustee;
(3) our failure to carry and maintain insurance on and in respect of the
aircraft, airframe and engines, in accordance with the provisions of
that lease;
(4) our failure to perform or observe in any material respect any other
covenant or agreement to be performed or observed by us under that
lease or the related participation agreement or any other related
operative document, other than the related tax indemnity agreement
between us and the owner participant, and the failure continues
unremedied for a period of 30 days after written notice of the failure
by the applicable owner trustee or loan trustee unless the failure is
capable of being corrected and we are diligently proceeding to correct
the failure, in which case there will be no Lease Event of Default
unless and until the failure continues unremedied for a period of 180
days after receipt of the notice;
(5) any representation or warranty made by us in that lease or the related
participation agreement or in any other related operative document,
other than in the related tax indemnity agreement between us and the
related owner participant, proves to have been untrue or inaccurate in
any material respect at the time made, the representation or warranty
is material at the time in question and remains uncured to the extent
of the adverse impact thereof for more than 30 days after the date of
written notice to us; and
(6) the occurrence of voluntary events of bankruptcy, reorganization or
insolvency of America West or the occurrence of involuntary events of
bankruptcy, reorganization or insolvency which continue undismissed,
unvacated or unstayed for a period of 90 days. (Leases, Section 14)
Indenture Events of Default under the owned aircraft indentures 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 is in effect, the applicable
loan trustee may, subject to the terms of the indenture, exercise one or more of
the remedies provided in the lease with respect to the related aircraft. These
remedies include the right to repossess and use or operate that aircraft, to
rescind or terminate that lease, to sell or re-lease that aircraft free and
clear of our rights, except as set forth in that lease, and retain the proceeds,
and to require us to pay, as liquidated damages, any due and unpaid basic rent
plus an amount,
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at the owner trustee's or, subject to the terms of the relevant indenture, the
loan 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 the related lease over the present value of the fair
market rental value of the aircraft for the remainder of the term of
the related lease; or
(2) the excess of the stipulated loss value of the aircraft subject to that
lease over the fair market sales value of that aircraft or, if that
aircraft has been sold, the net sales proceeds from the sale of that
aircraft. (Leases, Section 15; Indentures, Section 4.04)
Remedies under the owned aircraft indentures are discussed above under
"-- Remedies".
Transfer of Owner Participant Interests
Subject to some restrictions, each owner participant may transfer all or
any part of its interest in the related leased aircraft. (Participation
Agreements, Section 10.1.1)
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CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following summary describes the material U.S. federal income tax
consequences to certificateholders of the exchange of outstanding certificates
for new certificates. This summary is addressed to 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, estates the income of which is subject to
U.S. federal income taxation regardless of its source, and trusts that meet the
following two tests: (1) a court in the United States is able to exercise
primary supervision over the administration of the trust and (2) one or more
U.S. persons have authority to control all substantial decisions of the trust,
that will hold the certificates as capital assets.
The exchange of outstanding certificates for new certificates in the
exchange offer will not be a taxable event for U.S. federal income tax purposes.
The receipt of certificates in the exchange offer will be treated as a
continuation of the original investment in the certificates. As a result, a
holder whose outstanding certificate is accepted in the 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 the holder's tax basis in its outstanding
certificates. A tendering holder's holding period for the new certificates
received in the exchange offer will include its holding period for the
outstanding certificates surrendered.
THE FOREGOING SUMMARY OF U.S. FEDERAL INCOME TAX CONSEQUENCES OF AN
EXCHANGE OF OUTSTANDING CERTIFICATES FOR NEW CERTIFICATES IS ADDRESSED TO
BENEFICIAL OWNERS OF CERTIFICATES WHO ARE U.S. PERSONS THAT WILL HOLD
CERTIFICATES AS CAPITAL ASSETS. IT IS NOT INTENDED TO BE INDIVIDUAL TAX ADVICE.
ACCORDINGLY, ALL HOLDERS OF OUTSTANDING CERTIFICATES ARE ADVISED TO CONSULT
THEIR OWN TAX ADVISORS REGARDING THE U.S. FEDERAL, STATE AND LOCAL TAX
CONSEQUENCES OF THE EXCHANGE OF OUTSTANDING CERTIFICATES FOR NEW CERTIFICATES
AND OF THE OWNERSHIP AND DISPOSITION OF NEW CERTIFICATES RECEIVED IN THE
EXCHANGE OFFER IN LIGHT OF THEIR OWN INDIVIDUAL AND PARTICULAR CIRCUMSTANCES.
ERISA CONSIDERATIONS
In general, employee benefit plans subject to Title I of the Employee
Retirement Income Security Act of 1974, or ERISA, or Section 4975 of the
Internal Revenue Code of 1986 or entities which may be deemed to hold the assets
of any ERISA plan will not be eligible to purchase the certificates, unless
certain conditions apply and subject to the circumstances applicable to those
ERISA plans.
A fiduciary of an employee benefit plan subject to ERISA should consider
fiduciary standards under ERISA in the context of the particular circumstances
of that plan before authorizing an investment in the certificates. The fiduciary
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
Internal Revenue Code prohibit a wide range of transactions involving an
employee benefit plan subject to ERISA and/or Section 4975 of the Internal
Revenue Code and persons who have specified relationships to the ERISA Plan.
These are referred to as "parties in interest" within the meaning of ERISA and
"disqualified persons" within the meaning of the Internal Revenue Code. These
prohibited transactions may require "correction" and may cause an ERISA plan
fiduciary to incur 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 of the outstanding
certificates, the escrow agent, the depositary, the liquidity provider, the
policy provider and America West 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 that person determines that a statutory or an administrative
exemption from the prohibited transaction rules discussed below or otherwise
available is applicable to their purchase and holding of the certificates (or a
participation interest therein).
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Some statutory or administrative exemptions from the prohibited transaction
rules under ERISA and the Internal Revenue 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)(I)(E)-(F) of
the Internal Revenue Code. In addition, there can be no assurance that any of
these administrative exemptions will be available with respect to any particular
transaction involving the certificates.
The Department of Labor has issued individual administrative exemptions to
certain 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). This underwriter exemption generally exempts from 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 transactions by or between business
entities (including qualified equipment trust certificates secured by leases).
The limited relief provided by the Department of Labor 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 rating categories from either Standard & Poor's or Moody's.
Under the underwriter 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 of the outstanding
certificates to the depositary on behalf of the escrow agent (for the benefit of
such 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 agreements with the depositary and to effect withdrawals upon the
receipt of appropriate notice from the relevant trustee so as to enable the
trustee to purchase the identified equipment notes on the terms and conditions
set forth in the note purchase agreement. Interest on the deposits relating to
each trust will be paid to the certificateholders of that trust as holders of
escrow receipts through a paying agent appointed by the escrow agent. Pending
satisfaction of the conditions and withdrawal of these deposits, the escrow
agent's rights with respect to the deposits will remain plan assets subject to
the fiduciary responsibility and prohibited transaction provisions of ERISA and
the prohibited transaction rules.
The Department of Labor 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: (1) the date the amount on deposit in the prefunding account is less than
the minimum dollar amount specified in the pooling and servicing agreement; (2)
the date on which an event of default occurs under the pooling and servicing
agreement; or (3) the date which is the later of three months or 90 days after
the closing date. Such restrictions on prefunding accounts may not be applicable
in certain circumstances where, although certain of the equipment securing
equipment trust certificates held by the trust have not been delivered on the
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date of the issuance of such equipment trust certificates, such equipment trust
certificates otherwise constitute, at the time an ERISA plan acquires the pass
through certificates, secured credit instruments that bear interest. However,
there can be no assurance that the Department of Labor would agree that the
prefunding restrictions would not apply in such a case. 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.
It is clear that the underwriter exemption will not apply to subordinated
classes of certificates, such as the Class C certificates. It also appears that
the underwriter exemption will not apply to the purchase by Class C
certificateholders of Class G certificates in connection with the exercise of
their rights upon the occurrence and during the continuance of a Triggering
Event. In addition, for the reasons noted above, no assurance can be given that
the underwriter exemption will otherwise apply with respect to any particular
transaction involving the Class G certificates or the assets of the Class G
trust.
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
Department of Labor 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 that 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 that 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 the ERISA plan relies with respect to its
purchase or holding of the certificates also applies to the 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. These plans may, however,
be subject to federal, state or local laws or regulations which may affect their
investment in the certificates. Any fiduciary of 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 that either (1) no ERISA plan assets have been
used to purchase the certificate, or (2) one or more prohibited transaction
statutory or administrative exemptions applies such that the use of such ERISA
plan assets to purchase and hold the certificate will not constitute a
non-exempt prohibited transaction.
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 in
the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of the new certificates. This prospectus, as it may
be amended or supplemented from time to time, may be used by a broker-dealer in
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connection with resales of new certificates received in exchange for outstanding
certificates where the outstanding certificates were acquired as a result of
market-making activities or other trading activities. We have agreed that we
will make this prospectus, as amended or supplemented, available to any broker-
dealer for use in connection with any such resale. In addition, until that date
all broker-dealers effecting transactions in the new certificates may be
required to deliver a prospectus.
We will not receive any proceeds from any sale of new certificates by
broker-dealers. New certificates received by broker-dealers for their own
account in 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 in 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 of 1933. Any profit of any 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 of 1933.
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 of 1933.
Starting on the date the exchange offer expires, we 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. We have 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. We will indemnify the holders of the
new certificates (including any broker-dealers) against certain liabilities,
including liabilities under the Securities Act of 1933.
LEGAL MATTERS
The validity of the new certificates is being passed upon for America West
by Vedder, Price, Kaufman & Kammholz, special counsel for America West.
EXPERTS
The financial statements and financial statement schedule of America West
Airlines, Inc. as of December 31, 1999 and 1998, and for each of the years in
the three-year period ended December 31, 1999, 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 Aircraft Information Services, Inc., AvSolutions, and
MBA, and to their respective appraisal reports, dated as of June 21, 2000, May
17, 2000, and June 20, 2000, respectively, are included in reliance upon the
authority of each firm as an expert with respect to the matters contained in its
appraisal report.
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APPENDIX I -- GLOSSARY
"Adjusted Expected Distributions" means, with respect to the certificates of any
trust on any Current Distribution Date, the sum of (x) accrued and unpaid
interest on the certificates (excluding interest, if any, payable with respect
to the deposits relating to the trust) and (y) the greater of:
(A) the difference between (x) the pool balance of the 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 that trust) and (y) the
pool balance of the certificates as of the Current Distribution Date
calculated on the basis that (1) the principal of the Non-Performing
Equipment Notes held in that trust has been paid in full and the
payments have been distributed to the holders of the certificates, (2)
the principal of the Performing Equipment Notes held in that trust has
been paid when due (but without giving effect to any acceleration of
Performing Equipment Notes) and the payments have been distributed to
the holders of the certificates and (iii) the principal of any
equipment notes formerly held in that trust that have been sold has
been paid in full and such payment has been distributed to the holders
of the 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 that trust); and
(B) the amount of the excess, if any, of (1) the pool balance of that 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 that trust), less
the amount of the deposits for that class of certificates as of the
preceding distribution date (or, if the Current Distribution Date is
the first distribution date, the original aggregate amount of the
deposits for that class of certificates) other than any portion of the
deposits thereafter used to acquire equipment notes pursuant to the
note purchase agreement, over (2) the Aggregate LTV Collateral Amount
for that class of certificates for the Current Distribution Date;
provided that, until the date of the initial LTV Appraisals, clause (B)
will not apply.
"Administrative Expenses" means out-of-pocket expenses actually incurred by the
subordination agent, the liquidity provider, the policy provider or any trustee
or to reimburse any certificateholder, the liquidity provider or the policy
provider for payments made to the subordination agent or any trustee to protect
or realize the value of the equipment notes or any collateral or any Trust
Indenture Estate.
"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 that class, after giving effect to any distribution of principal on
that distribution date with respect to the senior class or classes.
"Appraised Current Market Value" of any aircraft means the lower of the average
and the median of the most recent three LTV Appraisals of that aircraft.
"Average Life Date" for any equipment note will be the date which follows the
time of determination by a period equal to the Remaining Weighted Average Life
of that equipment note.
"Base Rate" means a fluctuating interest rate per annum in effect from time to
time, which rate per annum will at all times be determined by the calculation
below:
(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 that day (or, if it is not a
business day, the next preceding business day) by the Federal Reserve
Bank of New York, or if the rate is not so published for any day that
is a business day, the average of the quotations for the day for such
transactions received by the liquidity provider from three Federal
funds brokers of recognized standing selected by it, plus
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(2) one-quarter of one percent ( 1/4 of 1%).
"Controlling Party" of an indenture means the policy provider until payment of
final distributions to the holders of the Class G certificates and no
obligations owing to the policy provider remain outstanding or, if a Policy
Provider Default has occurred and is continuing, the Class G trustee until
payment of final distributions to the holders of the Class G certificates; and
thereafter, the Class C trustee; provided, that, if the policy provider makes a
Policy Drawing in respect of a Preference Amount after the payment of final
distributions to the holders of the Class G certificates, so long as no Policy
Provider Default has occurred and is continuing, the Policy Provider will be the
Controlling Party until no Policy Provider Obligations remain outstanding, and
thereafter, the Class C trustee.
Notwithstanding the foregoing, at any time after 18 months from the
earliest to occur of the events set forth below, the liquidity provider with the
highest outstanding amount of unreimbursed Liquidity Obligations (so long as the
liquidity provider has not defaulted in its obligation to make any advance under
any liquidity facility) will have the right to elect to become the Controlling
Party with respect to any indenture as follows:
Time at Which Liquidity Provider May Elect to Become Controlling Party
(1) the date on which the entire available amount under any liquidity
facility has been drawn (for any reason other than a Downgrade Drawing
or a Non-Extension Drawing) and remain unreimbursed;
(2) the date on which the entire amount of any Downgrade Drawing or
Non-Extension Drawing has been withdrawn from the relevant cash
collateral account to pay interest on the relevant class of
certificates and remain unreimbursed; or
(3) the date on which all equipment notes have been accelerated (provided,
that prior to the delivery period termination date the aggregate
outstanding principal amount thereof exceeds $100 million).
Notwithstanding the foregoing, the policy provider will remain the
Controlling Party so long as no Policy Provider Default has occurred and is
continuing and the policy provider pays to the liquidity provider all
outstanding drawings and interest owing to the liquidity provider under the
Class G and Class C liquidity facilities including all interest accrued thereon
to such date.
"Current Distribution Date" means any applicable distribution date.
"delivery period termination date" refers to the earlier of the end of the
delivery period or the acquisition by the trusts of the equipment notes for all
aircraft.
"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 equal to the excess, if any, of (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 minus any
Non-Premium Amount applicable such Class of certificates and, in the case of
Class C certificates only, $4 million, were issued, on each remaining regular
distribution date for such Class under the assumed aggregate principal
amortization schedule for the equipment notes held in each trust, 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 197
basis points in the case of the Class C certificates and 275 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
applicable to such Class of certificates and, in the case of Class C
certificates only, of $4 million, plus accrued and unpaid interest on such net
amount to but excluding the date of determination from and including the
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preceding regular distribution date (or if such date of determination precedes
the first regular distribution date, the date of issuance of the certificates).
"Downgrade Drawing" means a drawing by the subordination agent of the Maximum
Available Commitment under a liquidity facility.
"Early Purchase Option" means our option to elect to purchase an aircraft and
terminate the related lease prior to the end of the term of that lease (1) on
the lease payment date, if any, agreed by the owner participant for that
aircraft in connection with an early buy-out option or (2) under some
circumstances, on any lease payment date, if we would be required to make
indemnity payments with respect to that aircraft in excess of a certain
designated amount, which indemnity payments could be avoided through a purchase
by us of that aircraft.
"Election Distribution Date" means any special distribution date specified by
the subordination agent upon 20 days' notice, by reason of (1) the occurrence
and continuation of a Policy Provider Default occurring after a Policy Provider
Election or (2) the receipt of a special payment constituting the proceeds of a
disposition relating to any Series G equipment note as to which a Policy
Provider Election has been given.
"Event of Loss" with respect to an aircraft, airframe or any engine means any of
the events noted below:
(1) the destruction, damage beyond practical or economic repair or
rendition of that property permanently unfit for normal use;
(2) the actual or constructive total loss or any damage or requisition of
title or use of that property which results in an insurance settlement
on the basis of a total loss or a constructive or compromised total
loss;
(3) any theft, hijacking or disappearance of that 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 that property is subject to a lease)
or the date on which we have confirmed in writing that we cannot
recover that property;
(4) any seizure, condemnation, confiscation, taking or requisition of title
to that property by any governmental entity or purported governmental
entity (other than the U.S. government) 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 the related 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 that 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 has elected
not to treat the event as an Event of Loss); and
(6) as a result of any law, rule, regulation, order or other action by the
Federal Aviation Administration or any governmental entity, the use of
that property in the normal course of our business of passenger air
transportation is prohibited for 180 days.
The event described in paragraph (6) above will be an Event of Loss unless we,
prior to the expiration of the 180-day period, have undertaken and will be
diligently carrying forward steps which are necessary or desirable to permit the
normal use of the property, but in any event if the use has been prohibited for
a period of two consecutive years; provided that no Event of Loss will be deemed
to have occurred if the prohibition has been applicable to our entire U.S. fleet
of similar property and we, prior to the expiration of the two-year period, have
conformed at least one unit of property in our fleet to the requirements of any
law, rule, regulation, order or other action and commenced regular commercial
use of the same and will be diligently carrying forward, in a manner which does
not discriminate against applicable property in so conforming the property,
steps which are necessary or desirable to permit the normal use of the property
by us, but in any event if the use has been prohibited for a period of three
years or, in the case of the leased aircraft, the use will be prohibited at the
expiration of the term of the relevant lease. (Leases, Annex A)
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"Excess Reimbursement Obligations" means, (1) in the event of any Policy
Provider Election, the portion of the Policy Provider Obligations that
represents, when added to that portion of any Liquidity Obligations that
represents, interest on the Series G equipment note in respect of which the
Policy Provider Election has been made in excess of 24 months of interest at the
interest rate applicable to that equipment note and (2) any interest on the
Liquidity Obligations in respect of the Class G and Class C liquidity facilities
paid by the policy provider to the liquidity provider from and after the end of
the 24-month period referred to under the caption "Description of the Policy and
the Policy Provider Agreement -- The Policy -- No Proceeds Drawing".
"Expected Distributions" means, with respect to the certificates of any trust on
any Current Distribution Date, the sum of (x) accrued and unpaid interest on
those certificates (excluding interest, if any, payable with respect to the
deposits relating to that trust) and (y) the difference between (A) the pool
balance of those 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 that trust) and (B) the
pool balance of those certificates as of the Current Distribution Date
calculated on the basis that (1) the principal of the equipment notes held in
that trust has been paid when due (whether at stated maturity, upon redemption,
prepayment, purchase or acceleration or otherwise) and these payments have been
distributed to the holders of those certificates and (2) the principal of any
equipment notes formerly held in that trust that have been sold has been paid in
full and these payments have been distributed to the holders of those
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 that trust). For purposes of calculating Expected Distributions
with respect to the certificates of any trust, any premium paid on the equipment
notes held in that trust which has not been distributed to the
certificateholders of that trust (other than a premium or a portion thereof
applied to the payment of interest on the certificates of that trust or the
reduction of the pool balance of that trust) will be added to the amount of the
Expected Distributions. For purposes of determining the priority of
distributions on account of the redemption, purchase or prepayment of all of the
equipment notes issued under an indenture, clause (x) of the definition of
Expected Distributions will be deemed to read as follows: "(x) accrued, due and
unpaid interest on those certificates together with (without duplication)
accrued and unpaid interest on a portion of the certificates equal to the
outstanding principal amount of the equipment notes held in trust and being
redeemed, purchased or prepaid (immediately prior to such redemption, purchase
or prepayment), in each case excluding interest, if any, payable with respect to
the deposits related to that trust."
"Final Distributions" means, with respect to the certificates of any trust on
any distribution date, will be calculated under the following formula:
Calculation of Distributions
(1) the aggregate amount of all accrued and unpaid interest on those
certificates (excluding interest, if any, payable on the deposits
relating to the trust), plus
(2) the pool balance of those certificates as of the immediately preceding
distribution date (less the amount of the deposits for that class of
certificates as of the preceding distribution date other than any
portion of the 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 that trust which
has not been distributed to the certificateholders of that trust (other than the
premium or a portion thereof applied as the payment of interest on the
certificates of that trust on the reduction of the pool balance of that trust)
will be added to the amount of the Final Distributions.
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"Final Drawing" means a drawing by the subordination agent under a liquidity
facility in an amount equal to the Maximum Available Commitment under that
liquidity facility at the time of the drawing as a result of the termination of
the liquidity facility by the applicable liquidity provider.
"final legal distribution date" for the Class G certificates is January 2, 2022
and for the Class C certificates is January 2, 2008.
"Indenture Default" means an event of default under any indenture, including:
(1) 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) to pay any interest or
principal or premium, if any, when due, under that indenture or under
any equipment note issued under that indenture 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 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) to discharge certain liens that
continue after notice and specified cure periods;
(4) any representation or warranty made by the related owner trustee or
owner participant in the related agreements, or certain related
documents furnished to the loan trustee pursuant to those agreements,
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 registered holders of equipment notes and remains unremedied
after notice and specified cure periods;
(5) failure by the related owner trustee or owner participant to perform or
observe in any material respect any covenant or obligation for the
benefit of the loan trustee or holders of equipment notes under the
related 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 not being a citizen of the United
States, as defined in Title 49 of the United States Code relating to
aviation (subject to a cure period); and
(7) the occurrence of certain events of bankruptcy, reorganization or
insolvency of the related owner trustee or owner participant
(Indentures, Section 4.02).
"Interest Drawings" means a drawing made by the subordination under the
liquidity facility on any distribution date to pay interest then due and payable
on the certificates of the applicable pass through trust at the Stated Interest
Rate for that pass through trust.
"Lease Event of Default" means an event of default under any lease, as described
in "Description of the Equipment Notes -- The Leases -- Events of Default under
the Leases."
"LIBOR" means, with respect to any interest period, the rate per annum appearing
on Page 3750 (British Bankers Association-LIBOR) of the Dow Jones Markets
Service (or any successor or substitute page of the service, or any successor to
or substitute for the 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 that interest period, at the rate for dollar deposits
with a maturity comparable to that interest period. In the event that the rate
is not available for any reason, then LIBOR with respect to any interest period
will be the average rate per annum (rounded upwards if necessary to the next
1/16 of 1%) at which deposits in dollars are offered for the relevant interest
period by three banks of recognized standing selected by the liquidity provider
in the London interbank market at approximately 11:00 a.m. (London time) two
business days before the first day of such interest period in an amount
approximately equal to the principal amount of the advance to which such
interest period is to apply and for a period of time comparable to that interest
period.
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"Liquidity Event of Default" means an event of default under each liquidity
facility, including (1) the acceleration of all the equipment notes and (2) some
bankruptcy or similar events involving America West. (Liquidity Facilities,
Section 1.01)
"Liquidity Expenses" means all amounts owing to the liquidity provider under
each liquidity facility or other agreements other than any interest accrued on
the liquidity facility or the amount of any drawing under a liquidity facility.
"Liquidity Obligations" means the obligations to reimburse or to pay the
liquidity provider all principal, interest, fees and other amounts owing to it
under its liquidity facility or certain other agreements.
"LTV Appraisal" means a fair market value appraisal, which may be a "desktop"
appraisal, performed by any appraiser or any other nationally recognized
aircraft 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.
"LTV Collateral Amount" of any aircraft for any class of certificates means, as
of any distribution date, the lesser of (1) the LTV Ratio for that class of
certificates multiplied by the appraised current market value of such aircraft
(or with respect to any 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 that loan trustee (and/or on deposit in an account for special payments)
or payable to that loan trustee in respect thereof) and (2) the outstanding
principal amount of the equipment notes secured by that aircraft after giving
effect to any principal payments of the equipment notes on or before that
distribution date.
"LTV Ratio" means 57.0% for the Class G certificates and 62.0% for the Class C
certificates.
"Make-Whole Premium" means, with respect to any equipment note, an amount (as
determined by an independent investment banker of national standing selected by
us) 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 that equipment note computed by discounting the
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 that equipment note plus accrued
interest to the date of determination.
"Mandatory Document Terms" means the Mandatory Document Terms described under
"Description of the New Certificates -- Mandatory Terms".
"Mandatory Economic Terms" means the Mandatory Economic Terms described under
"Description of the New Certificates -- Mandatory Terms".
"Maximum Principal Amount of Equipment Notes" means the Maximum Principal Amount
of Equipment Notes described under "Description of the Aircraft and the
Appraisals -- The Appraisals".
"Maximum Available Commitment" means an amount equal to the then Required Amount
of that liquidity facility less the aggregate amount of each advance outstanding
under that liquidity facility at that time.
"Minimum Sale Price" means, with respect to any aircraft or the equipment notes
issued in respect of that aircraft, at any time, the lesser of (1) 75% of the
appraised current market value of that aircraft and (2) the aggregate
outstanding principal amount of those equipment notes, plus accrued and unpaid
interest thereon.
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"Non-Extension Drawing" means a drawing by the subordination agent of the
Maximum Available Commitment under a liquidity facility at the time of the
drawing, as a result of the liquidity facility not being extended or replaced by
the 25th day prior to its then scheduled expiration date.
"Non-Performing Equipment Note" means an equipment note that is not a Performing
Equipment Note.
"Order" means the order referred to in the definition of the term "Preference
Amount" below.
"owner participant" means the owner of the beneficial interest of an owner trust
in a leverage lease transaction.
"Performing Equipment Note" means an equipment note issued under an indenture
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 Title 11 of the United States Code, the
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)(2)(A) of the Bankruptcy Code (or such longer period as may
apply under Section 1110(b) of the Bankruptcy Code), unless during this
Section 1110 period the trustee in the proceeding or America West fails
to agree to perform its obligations under the lease or the indenture
related to that equipment note; or
(2) any payment default occurring after the date of the order of relief in
the proceeding, if such payment default is cured under Section
1110(a)(2)(B) of the Bankruptcy Code before the expiration of the
period applicable thereto as specified in Section 1110(a)(2)(B) of the
Bankruptcy Code. (Intercreditor Agreement, Section 1.1)
"Policy Business Day" for the purposes of the "Description of the Policy and the
Policy Provider Agreement", means any day that is not a Saturday, a Sunday or
other day on which banking institutions in New York City or in the city in which
the Corporate Trust Office of the subordination agent or the office of the
policy provider is located are authorized or obligated by law or executive order
to close.
"Policy Drawing" means any payment of a claim under the policy.
"Policy Expenses" means all amounts (including amounts in respect of expenses or
indemnities) owing to the policy provider under the insurance indemnity
agreement or other agreements other than (1) the amount of any Excess
Reimbursement Obligations, (2) any Policy Drawing, (3) any interested accrued on
any Policy Provider Obligations, (4) reimbursement of and interest on the
Liquidity Obligations in respect of the liquidity facilities paid by the policy
provider to the liquidity provider; provided that if, at the time of
determination, a Policy Provider Default exists, Policy Expenses shall not
include any indemnity payments owed to the policy provider.
"Policy Provider Default" means the occurrence of any of the following events:
(1) the policy provider fails to make a payment required under the policy
and this failure remains unremedied for two business days following the
delivery of written notice of the failure to the policy provider;
(2) the policy provider (a) files any petition or commences any case or
proceeding under any provisions of any federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation or reorganization,
(b) makes a general assignment for the benefit of its creditors or (c)
has an order for relief entered against it under any federal or state
law relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization that is final and nonappealable; or
(3) a court of competent jurisdiction, the Wisconsin Department of
Insurance or another competent regulatory authority enters a final and
nonappealable order, judgment or decree (a) appointing a custodian,
trustee, agent or receiver for the policy provider or for all or any
material portion of its property or (b) authorizing the taking of
possession by a custodian, trustee, agent or receiver of
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the policy provider (or taking of possession of all or any material
portion of the policy provider's property).
"Policy Provider Election" means the Policy Provider Election described under
"Description of the Policy and the Policy Provider Agreement -- The Policy -- No
Proceeds Drawing".
"Policy Provider Obligations" means all reimbursement and other amounts,
including fees and indemnities (to the extent not included in Policy Expenses),
due to the policy provider under the insurance indemnity agreement but does not
include any interest on Policy Drawings except, if the Class G liquidity
provider has failed to honor any Interest Drawing, interest on any Policy
Drawing made to cover the shortfall attributable to that failure by the Class G
liquidity provider in an amount equal to the amount of interest that would have
accrued on the Interest Drawing if the Interest Drawing had been made at the
interest rate applicable to the Interest Drawing until the Policy Drawing has
been repaid in full, up to a maximum of three Policy Drawings. For the avoidance
of doubt, Policy Provider Obligations include reimbursement of, and interest on,
the Liquidity Obligations in respect of the Class G and Class C liquidity
facilities paid by the policy provider to the liquidity provider.
"pool balance" for each trust or for the certificates issued by any trust
indicates, as of any date, represents the portion of the original aggregate face
amount of the certificates issued by that trust that has not been distributed to
certificateholders.
"pool factor" for each trust as of any 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 that trust.
"Preference Amount" means any payment of principal or interest at the interest
rate on the Series G equipment notes made to the trustee or the subordination
agent or (without duplication) any payment of the pool balance of or interest at
the interest rate on the Class G certificates or any payment of the proceeds of
any drawing under the Class G liquidity facility made to a holder which has
become recoverable or been recovered from the trustee, the subordination agent
or the holders of the Class G certificates (as the case may be) as a result of
such payment being determined or deemed a preferential transfer pursuant to the
United States Bankruptcy Code or otherwise rescinded or requested to be returned
in accordance with a final, nonappealable order of a court of competent
jurisdiction.
"PTC Event of Default" under each pass through trust agreement means the failure
to pay within ten business days of the due date either: the outstanding pool
balance of the applicable class of certificates on the final legal distribution
date for that class or the interest due on that class of certificates on any
distribution date (unless the subordination agent has made Interest Drawings, a
withdrawal from the Cash Collateral Account for that class of certificates, or,
in the case of the Class G trust agreement, a drawing under the policy, in an
aggregate amount sufficient to pay the interest and has distributed that amount
to the relevant trustee).
"Remaining Weighted Average Life" on a given date with respect to any equipment
note is 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
that equipment note, by
(b) the number of days from and including that determination date to but
excluding the date on which the payment of principal is scheduled to
be made, by
(2) the then outstanding principal amount of that equipment note.
"replacement facility" for any liquidity facility will mean an irrevocable
revolving credit agreement in substantially the form of the replaced liquidity
facility, including reinstatement provisions, or in such other
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form (which may include a letter of credit) as will 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 result of the
downgrading of the liquidity provider (without regard to the policy) and in the
case of the Class G liquidity facility only, be consented to by the policy
provider, which consent may not be unreasonably withheld or delayed, in a face
amount (or in an aggregate face amount) equal to the amount of interest
distributable on the certificates of that trust (at the interest rate for that
trust, and without regard to expected future principal payments) on the three
regular distribution dates following the date of replacement of that liquidity
facility 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)
"Required Amount" means, for any day and with respect to either trust, the sum
of the aggregate amount of interest, calculated at the interest rate applicable
to the certificates issued by that trust, that would be payable in respect of
the certificates on each of the three successive semiannual regular distribution
dates immediately following that day or, if that day is a regular distribution
date, on that day and the succeeding two regular distribution dates, in each
case calculated based on the pool balance for the certificates of that trust on
that day and without regard to expected future payments of principal on the
certificates. (Liquidity Facilities, Section 1.1) The pool balance for purposes
of the definition of Required Amount with respect to the Class G liquidity
facility will, in the event of any Policy Provider Election, be deemed to be
reduced by the amount (if positive) by which (a) the then outstanding principal
balance of each Series G equipment note in respect of which that Policy Provider
Election has been made shall exceed (b) the amount of any policy drawings
previously paid by the policy provider in respect of principal on that Series G
equipment note. In addition, the liquidity facility with respect to each trust
will not cover interest payable by the depositary on the deposits relating to
that trust.
"Threshold Rating" means the short-term unsecured debt rating of P-1 by Moody's
Investor Service, Inc. and A-1 by Standard & Poor's Ratings Service for either
liquidity facility.
"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 annual rate equal to the semiannual yield to maturity for United
States Treasury securities maturing on the Average Life Date of that 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, (1) one maturing as close as possible to, but earlier than, the Average
Life Date of that equipment note and (2) the other maturing as close as possible
to, but later than, the Average Life Date of that 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 that equipment note is reported in the most recent H.15(519), the weekly
average yield to maturity as published in such H.15(519). As used in the
definition of Treasury Yield, "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 is 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.
"Triggering Event" refers to (1) defaults under all indentures that result in an
event of default on the most senior class of certificates, (2) the acceleration
of all of the outstanding equipment notes or (3) some bankruptcy or insolvency
events involving America West.
A-I-9
<PAGE> 95
APPENDIX II -- APPRAISAL LETTERS
A-II-1
<PAGE> 96
(THIS PAGE INTENTIONALLY LEFT BLANK)
A-II-2
<PAGE> 97
[AISI LOGO]
21 June 2000
Mr. Tom Weir
America West Airlines
4000 E. Sky Harbor Blvd.
Phoenix, AZ 85034
Subject: AISI Report No.: A0S036BVO
AISI Sight Unseen New Base Value Appraisal
Eight A319-100 and Two A320-200 America West Airlines Aircraft
Reference: (a) Data Email messages 15 May 2000 and 20 June 2000
Dear Mr. Weir:
Aircraft Information Services, Inc. (AISI) is pleased to offer America West
Airlines our opinion of the sight unseen new base value of eight A319-100 and
two A320-200 aircraft scheduled to be delivered from the manufacturer to America
West Airlines between August 2000 and March 2001 as listed and defined in the
above reference (a) message and in Table I of this report.
1. METHODOLOGY AND DEFINITIONS
The standard terms of reference for commercial aircraft value are 'half-life
base market value' and 'half-life current market value' of an 'average'
aircraft. Base value is a theoretical value that assumes a balanced market while
current market value is the value in the real market; both assume a hypothetical
average aircraft condition. AISI value definitions are consistent with the
current definitions of the International Society of Transport Aircraft Trading
(ISTAT), those of 01 January 1994. AISI is a member of that organization and
employs an ISTAT Certified and Senior Certified Aircraft Appraiser.
AISI defines a 'base value' as that of a transaction between equally willing and
informed buyer and seller, neither under compulsion to buy or sell, for a single
unit cash transaction with no hidden value or liability, and with supply and
demand of the sale item roughly in balance. Base values are typically given for
aircraft in 'new' condition, 'average half-life' condition, or in a specifically
described condition unique to a single aircraft at a specific time. An 'average'
aircraft is an operable airworthy aircraft in average physical condition and
with average accumulated flight hours and cycles, with clear title and standard
unrestricted certificate of airworthiness, and registered in an authority which
does not represent a penalty to aircraft value or liquidity, with no damage
history and with inventory configuration and level of modification which is
normal for its intended use and age. AISI assumes average condition unless
otherwise
HEADQUARTERS, 26072 MERIT CIRCLE, SUITE 123, LAGUNA HILLS, CA 92653
TEL: 949-582-8888 FAX: 949-582-8887 E-MAIL: [email protected]
A-II-3
<PAGE> 98
21 June 2000 [AISI LOGO]
AISI File No. A0S036BVO
Page -2-
specified in this report. 'Half-life' condition assumes that every component or
maintenance service which has a prescribed interval that determines its service
life, overhaul interval or interval between maintenance services, is at a
condition which is one-half of the total interval. It should be noted that AISI
and ISTAT value definitions apply to a transaction involving a single aircraft,
and that transactions involving more than one aircraft are often executed at
considerable and highly variable discounts to a single aircraft price, for a
variety of reasons relating to an individual buyer or seller.
AISI defines a 'current market value', which is synonymous with the older term
'fair market value' as that value which reflects the real market conditions,
whether at, above or below the base value conditions. Assumption of a single
unit sale and definitions of aircraft condition, buyer/seller qualifications and
type of transaction remain unchanged from that of base value. Current market
value takes into consideration the status of the economy in which the aircraft
is used, the status of supply and demand for the particular aircraft type, the
value of recent transactions and the opinions of informed buyers and sellers.
Current market value assumes that there is no short term time constraint to buy
or sell.
AISI encourages the use of base values to consider historical trends, to
establish a consistent baseline for long term value comparisons and future value
considerations, or to consider how actual market values vary from theoretical
base values. Base values are less volatile than current market values and tend
to diminish regularly with time. Base values are normally inappropriate to
determine near term values. AISI encourages the use of current market values to
consider the probable near term value of an aircraft.
2. VALUATION
Following is AISI's opinion of the base market value for the subject aircraft on
their respective scheduled delivery dates in current US Dollars. Valuations are
presented in Table I subject to the assumptions, definitions and disclaimers
herein.
A-II-4
<PAGE> 99
21 June 2000 [AISI LOGO]
AISI File No. A0S036BVO
Page -3-
TABLE I
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
Aircraft Model Expected New Delivery
Registration Base Value
Serial Number Number Delivery Date Engine MTOW (Lbs.) Current USDollars
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
A320-200 1274 N/A Aug-00 V2527-A5 162,000 $45,880,000
------------------------
A320-200 N/A N/A Mar-01 V2527-A5 162,000 $46,630,000
------------------------
------------------------
A319-100 1323 N/A Sep-00 V2524-A5 141,000 $40,740,000
------------------------
A319-100 1350 N/A Oct-00 V2524-A5 141,000 $40,840,000
------------------------
A319-100 1373 N/A Nov-00 V2524-A5 141,000 $40,930,000
------------------------
A319-100 1375 N/A Nov-00 V2524-A5 141,000 $40,930,000
------------------------
A319-100 1395 N/A Dec-00 V2524-A5 141,000 $41,030,000
------------------------
A319-100 N/A N/A Jan-01 V2524-A5 141,000 $41,120,000
------------------------
A319-100 N/A N/A Jan-01 V2524-A5 141,000 $41,120,000
------------------------
A319-100 N/A N/A Jan-01 V2524-A5 141,000 $41,120,000
------------------------
------------------------
Totals $420,340,000
------------------------
</TABLE>
A-II-5
<PAGE> 100
21 June 2000 [AISI LOGO]
AISI File No. A0S036BVO
Page -4-
Unless otherwise agreed by Aircraft Information Services, Inc. (AISI) in
writing, this report shall be for the sole use of the client/addressee. This
report is offered as a fair and unbiased assessment of the subject aircraft.
AISI has no past, present, or anticipated future interest in the subject
aircraft. The conclusions and opinions expressed in this report are based on
published information, information provided by others, reasonable
interpretations and calculations thereof and are given in good faith. Such
conclusions and opinions are judgments that reflect conditions and values which
are current at the time of this report. The values and conditions reported upon
are subject to any subsequent change. AISI shall not be liable to any party for
damages arising out of reliance or alleged reliance on this report, or for any
parties action or failure to act as a result of reliance or alleged reliance on
this report.
Sincerely,
AIRCRAFT INFORMATION SERVICES, INC.
/s/ Fred Bearden
----------------
FRED BEARDEN
President
A-II-6
<PAGE> 101
[Aviation Solutions LETTERHEAD]
May 17, 2000
Mr. Thomas Weir
America West Airlines
4000 East Sky Harbor Boulevard
Phoenix, Arizona 85034
Dear Mr. Weir:
AvSOLUTIONS is pleased to provide this opinion on the base value, as of May
2000, of eight Airbus Industrie A319-100 aircraft and two Airbus Industrie
A320-200 aircraft (the aircraft). The Airbus A319-100 aircraft are powered by
International Aero Engines V2524-A5 engines. The Airbus A320-200 aircraft are
powered by International Aero Engines V2527-A5 engines. The total of ten
aircraft will be delivered to America West Airlines between the third quarter of
2000 and the first quarter of 2001. A listing of the A319-100 and A320-200
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.
A-II-7
<PAGE> 102
[Aviation Solutions LETTERHEAD]
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, and from data within
AvSOLUTIONS' own database. In determining the base value of the subject Airbus
A319-100 and Airbus A320-200 aircraft, the following assumptions have been
researched and determined:
A-II-8
<PAGE> 103
[Aviation Solutions LETTERHEAD]
Page 3
America West Airlines
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 to America West Airlines between the third
quarter of 2000 and the first quarter of 2001.
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.
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-9
<PAGE> 104
[Aviation Solutions LETTERHEAD]
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-10
<PAGE> 105
ATTACHMENT 1
EETC COLLATERAL SUMMARY
<TABLE>
<CAPTION>
ESTIMATED
AIRCRAFT TAIL DELIVERY ASSUMED SERIAL
NUMBER AIRCRAFT NUMBER MO/YR ENGINE NUMBER BASE VALUE
TYPE
<C> <S> <C> <C> <C> <C> <C>
1 Airbus A319-100 TBD Sep-00 V2524-A5 1323 $39,990,000
2 Airbus A319-100 TBD Oct-00 V2524-A5 1350 $40,240,000
3 Airbus A319-100 TBD Nov-00 V2524-A5 1373 $40,240,000
4 Airbus A319-100 TBD Nov-00 V2524-A5 1375 $40,240,000
5 Airbus A319-100 TBD Dec-00 V2524-A5 1395 $40,240,000
6 Airbus A319-100 TBD Jan-01 V2524-A5 Unknown $40,570,000
7 Airbus A319-100 TBD Jan-01 V2524-A5 Unknown $40,570,000
8 Airbus A319-100 TBD Jan-01 V2524-A5 Unknown $40,570,000
</TABLE>
<TABLE>
<CAPTION>
ESTIMATED
AIRCRAFT TAIL DELIVERY ASSUMED SERIAL
NUMBER AIRCRAFT NUMBER MO/YR ENGINE NUMBER BASE VALUE
TYPE
<C> <S> <C> <C> <C> <C> <C>
9 Airbus A320-200 TBD Aug-00 V2527-A5 1274 $46,090,000
10 Airbus A320-200 TBD Mar-01 V2527-A5 Unknown $46,780,000
</TABLE>
A-II-11
<PAGE> 106
(This page intentionally left blank)
A-II-12
<PAGE> 107
MORTEN BEYER & AGNEW
--------------------------------------------------------------------------------
AVIATION CONSULTING FIRM
Appraisal of Eight Airbus A319-100 and
Two Airbus A320-200 Aircraft
PREPARED FOR:
America West Airlines
JUNE 20, 2000
Washington, D.C.
2107 Wilson Boulevard
Suite 750
Arlington, Virginia 22201
Phone +703 276 3200
Fax +703 276 3201
London
Lahinch 62, Lashmere
Copthorne
West Sussex
Phone +44 1342 716248
Fax +44 1342 718967
A-II-13
<PAGE> 108
(This page intentionally left blank)
A-II-14
<PAGE> 109
I. INTRODUCTION AND EXECUTIVE SUMMARY
MORTEN BEYER & AGNEW (MBA) has been retained by America West Airlines to
determine the Base Values of eight A319-132 and two Airbus A320-232 passenger
aircraft. The aircraft are further identified in Section II of this report.
Based on the information set forth in this report, it is our opinion that the
aggregate Base Value of the aircraft in this portfolio is $389,910,000 with
their respective individual values noted in Section II.
MBA uses the definition of certain terms, such as Current Market Value and Base
Value, as promulgated by the Appraisal Program of International Society of
Transport Aircraft Trading (ISTAT), a non-profit association of management
personnel from banks, leasing companies, airlines, manufacturers, brokers, and
others who have a vested interest in the commercial aviation industry and
established a technical and ethical recognition as expert appraisers.
ISTAT defines Current Market Value (CMV) as the appraisers opinion of the most
likely trading price that may be generated for an aircraft under market
conditions that are perceived to exist at the time in question. Market Value
(MV) assumes that the aircraft is valued for its highest, best use; that the
parties to the hypothetical sale transaction are willing, able, prudent and
knowledgeable and under no unusual pressure for a prompt sale; and that the
transaction would be negotiated in an open and unrestricted market on an
arm's-length basis, for cash or equivalent consideration, and given an adequate
amount of time for effective exposure to prospective buyers.
The ISTAT definition of Base Value (BV) states that market circumstances are
assumed to be in a reasonable state of equilibrium. Thus, BV pertains to an
idealized aircraft and market combination and will not necessarily reflect the
actual Current Market Value of the aircraft in question. BV is founded in the
historical trend of values and is generally used to analyze historical values or
to project future values.
A-II-15
<PAGE> 110
II. AIRCRAFT & BASE VALUES
<TABLE>
<CAPTION>
A319 & A320 AIRCRAFT
Serial Number Delivery Date Engine Type Base Values ($)
<S> <C> <C> <C> <C>
A319-100
-------------------------------------------------------------------------------------------------------------
1323 Sep 2000 V2524 37,570,000
-------------------------------------------------------------------------------------------------------------
1350 Oct 2000 V2524 37,650,000
-------------------------------------------------------------------------------------------------------------
1373 Nov 2000 V2524 37,730,000
-------------------------------------------------------------------------------------------------------------
1375 Nov 2000 V2524 37,730,000
-------------------------------------------------------------------------------------------------------------
1395 Dec 2000 V2524 37,800,000
-------------------------------------------------------------------------------------------------------------
TBD Jan 2001 V2524 37,880,000
-------------------------------------------------------------------------------------------------------------
TBD Jan 2001 V2524 37,880,000
-------------------------------------------------------------------------------------------------------------
TBD Jan 2001 V2524 37,880,000
-------------------------------------------------------------------------------------------------------------
A320-200
-------------------------------------------------------------------------------------------------------------
1274 Aug 2000 V2527 43,580,000
-------------------------------------------------------------------------------------------------------------
TBD Mar 2001 V2527 44,210,000
-------------------------------------------------------------------------------------------------------------
Total $389,910,000
-------------------------------------------------------------------------------------------------------------
</TABLE>
A-II-16
<PAGE> 111
III. CURRENT MARKET CONDITIONS
[AIRBUS A320 SERIES PHOTO]
AIRBUS A320 SERIES
The A320 was Airbus' first all new design since the launch of the original A300
in 1971. The program was initiated in 1983 and logged almost 400 orders prior to
first delivery in 1988. The A320s are now offered with both the CFM-56 and the
IAE V-2500 engine. At 5/31/00, 813 A320s had been delivered and 571 were are on
order. There were 176 outstanding orders (35.56 percent of the A320 total) and
numerous options held by nine leasing companies. The A320 has achieved a wide
market base on all continents, with a total of 79 current operators.
The A319 is the truncated version of the A320. The program was officially
launched with a modest six-aircraft order by leasing giant ILFC in late 1992.
Prospects were not encouraging as more than one year went by before subsequent
orders were placed. However, Air Canada provided a major boost to Airbus with an
order of 34 A319s in April 1994 (all now delivered). Ironically, the carrier had
reportedly decided against ordering new aircraft to replace its aging DC-9 fleet
when Fokker Aircraft convinced the carrier to re-examine the benefits of new
airframes. ACA Chairman Hollis Harris agreed, but Fokker lost the battle to its
European competitor. As of the end of May 2000, 664 A319s had been ordered, 233
delivered, and there were 429 outstanding orders.
The Northwest and Air Canada situations are significant due to the Airbus family
concept factor, (common type ratings and minimal differences training for pilots
of the A318 through A340 aircraft), which is the core of the manufacturers goal
to develop entire fleets with major carriers. Air Canada, which operates A320s
already, chose this Airbus concept with both the A319 order and an 13-plane A340
order as well. Northwest Airlines, which operates 70 A320s (and has 12 on order)
ordered 68 A319s and switched their A340 order for 16 A330s for delivery beyond
2000.
Other carriers, including Air France Groupe and Lufthansa, have each ordered six
types of Airbuses, and currently operate 116 and 114 Airbus aircraft
respectively, and other major European operators are Swissair (54) and Iberia
(46). However, the European influence might tilt decision-makers at airlines
such as these. Airbus believes its concept will give its new designs significant
advantages over Boeing aircraft, and the 1999 order books indicate it is doing
just that. MBA believes the combination of extremely efficient designs and the
inherent savings in training and other costs make the Airbus family an
attractive avenue for an entire fleet refurbishment, as US Airways' commitment
for 400-some aircraft (including options) appears to justify.
A-II-17
<PAGE> 112
The A320 family incorporates an increased amount of composites in its secondary
structure compared to older jets, a complete fly-by-wire control system, and a
computerized flight management system which, when engaged, virtually precludes
putting the aircraft into stalls or other extreme conditions. In general, all
these components have held up well in service, and the reliability of the
aircraft has been excellent.
United's 1994 order for 50 A320s plus options (subsequently increased to 86) was
announced as a B-727 replacement, of which United operated 75 in late 1999.
United has 30 A320s and 19 A319s on order. It is obvious that other airlines
will use their large orders to surplus older aircraft as well. Alitalia, with 22
A321s in service and three on order, is replacing its stable of MD-82s. As
mentioned, Air Canada's commitments for the A319 are rapidly replacing its fleet
of DC-9s. Thus the advent of the A320 family is hastening the retirement of
older, far less efficient jets. The A320s currently in service are operating at
seat mile costs as low as half of that for older aircraft. The combination of
all the above factors leads us to believe the A320 family will enjoy a long
production run and in-service useful life, with strong residual values.
The A320 also offers the advantage of being able to carry seven LD-3 cargo
containers--a feat not even the B-767 can perform. The fuselage is approximately
10 inches wider than that of the B-727/B-737/B-757 series, offering wider aisles
and roomier seats--a feature much appreciated by passengers. There are no cargo
or Combi models currently offered by Airbus, although such a configuration is
obviously possible. The exception is the A300 'Beluga' outsized special cargo
aircraft, which is already being leased for commercial applications but is
primarily in service for Airbus.
ECONOMICS
The A320/321 vies with the B-757 for top honors as the most efficient aircraft
in service. Great fuel efficiency, new technology design and low operating cost
parameters all combine to give these aircraft among the lowest seat mile costs
of any being built or in service. The MBA Model indicates that both will produce
very satisfactory operating and net ratios well into the next century.
TOTAL NUMBER OF A319S ON MARKET, MAY 2000: 0
TOTAL NUMBER OF A320S ON MARKET, MAY 2000: 8
A-II-18
<PAGE> 113
IV. A319 PROFILE
<TABLE>
<CAPTION>
A319 FLEET STATISTICS
As of May 2000
<S> <C>
Number of Ordered Aircraft 664
-------------------------------------------------------------------------------------------------
Number of Delivered Aircraft 233
-------------------------------------------------------------------------------------------------
Number of Cancelled Aircraft 81
-------------------------------------------------------------------------------------------------
Backlog 350
-------------------------------------------------------------------------------------------------
Options 429
-------------------------------------------------------------------------------------------------
Delivered in the last 12 months 94
-------------------------------------------------------------------------------------------------
Number of Destroyed Aircraft 0
-------------------------------------------------------------------------------------------------
Number of Retired Aircraft 0
-------------------------------------------------------------------------------------------------
Number of Parked Aircraft 0
-------------------------------------------------------------------------------------------------
Number of Aircraft in Operation 233
-------------------------------------------------------------------------------------------------
Number of Operators 24
-------------------------------------------------------------------------------------------------
Number of Leased Aircraft 92
-------------------------------------------------------------------------------------------------
Number of Owned Aircraft 1
-------------------------------------------------------------------------------------------------
</TABLE>
A-II-19
<PAGE> 114
Geographic dispersion of the A319 operator base was as follows:
[A319 OPERATORS/AIRCRAFT WORLD MAP]
A-II-20
<PAGE> 115
V. A320 PROFILE
<TABLE>
<CAPTION>
A320 FLEET STATISTICS
As of May 2000
<S> <C>
Number of Ordered Aircraft 1527
-------------------------------------------------------------------------------------------------
Number of Delivered Aircraft 816
-------------------------------------------------------------------------------------------------
Number of Cancelled Aircraft 140
-------------------------------------------------------------------------------------------------
Backlog 871
-------------------------------------------------------------------------------------------------
Options 155
-------------------------------------------------------------------------------------------------
Delivered in the last 12 months 84
-------------------------------------------------------------------------------------------------
Number of Destroyed Aircraft 6
-------------------------------------------------------------------------------------------------
Number of Retired Aircraft 0
-------------------------------------------------------------------------------------------------
Number of Parked Aircraft 2
-------------------------------------------------------------------------------------------------
Number of Aircraft in Operation 813
-------------------------------------------------------------------------------------------------
Number of Operators 84
-------------------------------------------------------------------------------------------------
Number of Leased Aircraft 479
-------------------------------------------------------------------------------------------------
Number of Owned Aircraft 334
-------------------------------------------------------------------------------------------------
</TABLE>
A-II-21
<PAGE> 116
Geographic dispersion of the A320 operator base was as follows:
[A320 OPERATORS/AIRCRAFT WORLD MAP]
A-II-22
<PAGE> 117
VI. COVENANTS
This report has been prepared for the exclusive use of America West Airlines and
shall not be provided to other parties by MBA without the express consent of
America West Airlines.
MBA certifies that this report has been independently prepared and that it fully
and accurately reflects MBAs opinion as to the Base Value. MBA further certifies
that it does not have, and does not expect to have, any financial or other
interest in the subject or similar aircraft.
This report represents the opinion of MBA as to the Base Value of the subject
aircraft and is intended to be advisory only, in nature. Therefore, MBA assumes
no responsibility or legal liability for any actions taken, or not taken, by
America West Airlines or any other party with regard to the subject aircraft. By
accepting this report, all parties agree that MBA shall bear no such
responsibility or legal liability.
PREPARED BY:
/s/ BRYSON P. MONTELEONE
BRYSON P. MONTELEONE
DIRECTOR OF OPERATIONS
REVIEWED BY:
/s/ MORTEN S. BEYER
MORTEN S. BEYER, APPRAISER FELLOW
CHAIRMAN & CEO
ISTAT CERTIFIED SENIOR APPRAISER
#00207
June 20, 2000
A-II-23
<PAGE> 118
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
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<PAGE> 119
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).
(l) 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
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<PAGE> 120
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 9.244% America West Airlines Pass Through
Certificate Series 2000-1C-O (included in Exhibit 4.3)
4.2 Form of 8.057% America West Airlines Pass Through
Certificate Series 2000-1G-O (included in Exhibit 4.5)
4.3 Pass Through Trust Agreement, dated as of July 7, 2000,
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 2000-1C-0
and the issuance of 9.244% Initial Pass Through
Certificates, Series 2000-1C-O and 9.244% Exchange Pass
Through Certificates, Series 2000-1C-O
4.4 Pass Through Trust Agreement, dated as of July 7, 2000,
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 2000-1C-S
and the issuance of 9.244% Initial Pass Through
Certificates, Series 2000-1C-S and 9.244% Exchange Pass
Through Certificates, Series 2000-1C-S
4.5 Pass Through Trust Agreement, dated as of July 7, 2000,
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 2000-1G-0
and the issuance of 8.057% Initial Pass Through
Certificates, Series 2000-1G-O and 8.057% Exchange Pass
Through Certificates, Series 2000-1G-O
4.6 Pass Through Trust Agreement, dated as of July 7, 2000,
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 2000-1G-S
and the issuance of 8.057% Initial Pass Through
Certificates, Series 2000-1G-S and 8.057% Exchange Pass
Through Certificates, Series 2000-1G-S
4.7 Revolving Credit Agreement, dated July 7, 2000, between
Wilmington Trust Company, as Subordination Agent, as agent
and trustee for the America West Airlines Pass Through Trust
2000-1C, as Borrower; and Citibank, N.A., as Liquidity
Provider
4.8 Revolving Credit Agreement, dated July 7, 2000, between
Wilmington Trust Company, as Subordination Agent, as agent
and trustee for the America West Airlines Pass Through Trust
2000-1G, as Borrower; and Citibank, N.A., as Liquidity
Provider
4.9 Intercreditor Agreement, dated as of July 7, 2000, among
Wilmington Trust Company, as Trustee under the America West
Airlines Pass Through Trust 2000-1C and America West
Airlines Pass Through Trust 2000-1G and Citibank, N.A., as
Class C Liquidity Provider and Class G Liquidity Provider
and Wilmington Trust Company, as Subordination Agent and
Trustee
</TABLE>
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<PAGE> 121
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<S> <C>
4.10 Exchange and Registration Rights Agreement, dated as of July
7, 2000, among America West Airlines, Inc.; Wilmington Trust
Company, as Trustee under America West Airlines Pass Through
Trust, Series 2000-1C-O and America West Airlines Pass
Through Trust, Series 2000-1G-O; and Morgan Stanley & Co.
Incorporated, Salomon Smith Barney Inc., Deutsche Bank
Securities Inc., Donaldson, Lufkin & Jenrette Securities
Corporation and Merrill Lynch, Pierce, Fenner & Smith
Incorporated
4.11 Deposit Agreement (Class C), dated as of July 7, 2000,
between Wilmington Trust Company, as Escrow Agent under the
Escrow and Paying Agent Agreement, and Citibank, N.A., as
Depositary
4.12 Deposit Agreement (Class G), dated as of July 7, 2000,
between Wilmington Trust Company, as Escrow Agent under the
Escrow and Paying Agent Agreement, and Citibank, N.A., as
Depositary
4.13 Escrow and Paying Agent Agreement (Class C), dated as of
July 7, 2000, among Wilmington Trust Company, as Escrow
Agent; Morgan Stanley & Co. Incorporated, Salomon Smith
Barney Inc., Deutsche Bank Securities Inc., Donaldson,
Lufkin & Jenrette Securities Corporation and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, as Initial Purchasers;
Wilmington Trust Company, as Pass Through Trustee for and on
behalf of America West Airlines Pass Through Trust
2000-1C-0; and Wilmington Trust Company as Paying Agent
4.14 Escrow and Paying Agent Agreement (Class G), dated as of
July 7, 2000, among Wilmington Trust Company, as Escrow
Agent; Morgan Stanley & Co. Incorporated, Salomon Smith
Barney Inc., Deutsche Bank Securities Inc., Donaldson,
Lufkin & Jenrette Securities Corporation and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, as Initial Purchasers;
Wilmington Trust Company, as Pass Through Trustee for and on
behalf of America West Airlines Pass Through Trust
2000-1G-0; and Wilmington Trust Company as Paying Agent
4.15 Insurance and Indemnity Agreement, dated as of July 7, 2000,
among America West Airlines, Inc., Ambac Assurance
Corporation as Policy Provider and Wilmington Trust company
as Subordination Agent and Trustee under the Pass Through
Trust 2000-1G.
4.16 Note Purchase Agreement dated as of July 7, 2000, 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 Vedder, Price, Kaufman & Kammholz 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 Vedder, Price, Kaufman & Kammholz (included in
Exhibit 5.1)
23.2 Consent of KPMG LLP
23.3 Consent of Aircraft Information Services, Inc.
23.4 Consent of AvSolutions
23.5 Consent of Morten Beyer & Agnew
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
2000-1C Pass Through Certificates, on Form T-1
25.2 Statement of Eligibility of Wilmington Trust Company for the
2000-1G 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>
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<PAGE> 122
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 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 of 1933, 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
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<PAGE> 123
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.
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<PAGE> 124
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Tempe,
State of Arizona, on the 31st day of August, 2000.
AMERICA WEST AIRLINES, INC.
By: /s/ W. DOUGLAS PARKER
------------------------------------
W. Douglas Parker
President
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
--------- ----- ----
<C> <S> <C>
/s/ WILLIAM A. FRANKE Chairman of the Board of August 31, 2000
--------------------------------------------------- Directors and Director,
William A. Franke President and Chief Executive
Officer (Principal Executive
Officer)
/s/ W. DOUGLAS PARKER August 31, 2000
--------------------------------------------------- President (Principal Financial
W. Douglas Parker Officer)
/s/ MICHAEL R. CARREON August 31, 2000
--------------------------------------------------- Vice President and Controller
Michael R. Carreon (Principal Accounting Officer)
/s/ JOHN L. GOOLSBY August 31, 2000
---------------------------------------------------
John L. Goolsby Director
/s/ WALTER T. KLENZ August 31, 2000
---------------------------------------------------
Walter T. Klenz Director
/s/ MARIE L. KNOWLES August 31, 2000
---------------------------------------------------
Marie L. Knowles Director
</TABLE>
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<PAGE> 125
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ RICHARD C. KRAEMER August 31, 2000
---------------------------------------------------
Richard C. Kraemer Director
/s/ ROBERT J. MILLER August 31, 2000
---------------------------------------------------
Robert J. Miller Director
/s/ DENISE M. O'LEARY August 31, 2000
---------------------------------------------------
Denise M. O'Leary Director
/s/ RICHARD P. SCHIFTER August 31, 2000
---------------------------------------------------
Richard P. Schifter Director
/s/ JEFFREY A. SHAW August 31, 2000
---------------------------------------------------
Jeffrey A. Shaw Director
/s/ JOHN F. TIERNEY August 31, 2000
---------------------------------------------------
John F. Tierney Director
/s/ GILBERT D. MOOK August 31, 2000
---------------------------------------------------
Gilbert D. Mook Director
</TABLE>
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<PAGE> 126
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<S> <C>
4.1 Form of 9.244% America West Airlines Pass Through
Certificate Series 2000-1C-O (included in Exhibit 4.3)
4.2 Form of 8.057% America West Airlines Pass Through
Certificate Series 2000-1G-O (included in Exhibit 4.5)
4.3 Pass Through Trust Agreement, dated as of July 7, 2000,
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 2000-1C-0
and the issuance of 9.244% Initial Pass Through
Certificates, Series 2000-1C-O and 9.244% Exchange Pass
Through Certificates, Series 2000-1C-O
4.4 Pass Through Trust Agreement, dated as of July 7, 2000,
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 2000-1C-S
and the issuance of 9.244% Initial Pass Through
Certificates, Series 2000-1C-S and 9.244% Exchange Pass
Through Certificates, Series 2000-1C-S
4.5 Pass Through Trust Agreement, dated as of July 7, 2000,
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 2000-1G-0
and the issuance of 8.057% Initial Pass Through
Certificates, Series 2000-1G-O and 8.057% Exchange Pass
Through Certificates, Series 2000-1G-O
4.6 Pass Through Trust Agreement, dated as of July 7, 2000,
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 2000-1G-S
and the issuance of 8.057% Initial Pass Through
Certificates, Series 2000-1G-S and 8.057% Exchange Pass
Through Certificates, Series 2000-1G-S
4.7 Revolving Credit Agreement, dated July 7, 2000, between
Wilmington Trust Company, as Subordination Agent, as agent
and trustee for the America West Airlines Pass Through Trust
2000-1C, as Borrower; and Citibank, N.A., as Liquidity
Provider
4.8 Revolving Credit Agreement, dated July 7, 2000, between
Wilmington Trust Company, as Subordination Agent, as agent
and trustee for the America West Airlines Pass Through Trust
2000-1G, as Borrower; and Citibank, N.A., as Liquidity
Provider
4.9 Intercreditor Agreement, dated as of July 7, 2000, among
Wilmington Trust Company, as Trustee under the America West
Airlines Pass Through Trust 2000-1C and America West
Airlines Pass Through Trust 2000-1G and Citibank, N.A., as
Class C Liquidity Provider and Class G Liquidity Provider
and Wilmington Trust Company, as Subordination Agent and
Trustee
4.10 Exchange and Registration Rights Agreement, dated as of July
7, 2000, among America West Airlines, Inc.; Wilmington Trust
Company, as Trustee under America West Airlines Pass Through
Trust, Series 2000-1C-O and America West Airlines Pass
Through Trust, Series 2000-1G-O; and Morgan Stanley & Co.
Incorporated, Salomon Smith Barney Inc., Deutsche Bank
Securities Inc., Donaldson, Lufkin & Jenrette Securities
Corporation and Merrill Lynch, Pierce, Fenner & Smith
Incorporated
4.11 Deposit Agreement (Class C), dated as of July 7, 2000,
between Wilmington Trust Company, as Escrow Agent under the
Escrow and Paying Agent Agreement, and Citibank, N.A., as
Depositary
4.12 Deposit Agreement (Class G), dated as of July 7, 2000,
between Wilmington Trust Company, as Escrow Agent under the
Escrow and Paying Agent Agreement, and Citibank, N.A., as
Depositary
4.13 Escrow and Paying Agent Agreement (Class C), dated as of
July 7, 2000, among Wilmington Trust Company, as Escrow
Agent; Morgan Stanley & Co. Incorporated, Salomon Smith
Barney Inc., Deutsche Bank Securities Inc., Donaldson,
Lufkin & Jenrette Securities Corporation and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, as Initial Purchasers;
Wilmington Trust Company, as Pass Through Trustee for and on
behalf of America West Airlines Pass Through Trust
2000-1C-0; and Wilmington Trust Company as Paying Agent
</TABLE>
<PAGE> 127
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<S> <C>
4.14 Escrow and Paying Agent Agreement (Class G), dated as of
July 7, 2000, among Wilmington Trust Company, as Escrow
Agent; Morgan Stanley & Co. Incorporated, Salomon Smith
Barney Inc., Deutsche Bank Securities Inc., Donaldson,
Lufkin & Jenrette Securities Corporation and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, as Initial Purchasers;
Wilmington Trust Company, as Pass Through Trustee for and on
behalf of America West Airlines Pass Through Trust
2000-1G-0; and Wilmington Trust Company as Paying Agent
4.15 Insurance and Indemnity Agreement, dated as of July 7, 2000,
among America West Airlines, Inc., Ambac Assurance
Corporation as Policy Provider and Wilmington Trust company
as Subordination Agent and Trustee under the Pass Through
Trust 2000-1G.
4.16 Note Purchase Agreement dated as of July 7, 2000, 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 Vedder, Price, Kaufman & Kammholz 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 Vedder, Price, Kaufman & Kammholz (included in
Exhibit 5.1)
23.2 Consent of KPMG LLP
23.3 Consent of Aircraft Information Services, Inc.
23.4 Consent of AvSolutions
23.5 Consent of Morten Beyer & Agnew
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
2000-1C Pass Through Certificates, on Form T-1
25.2 Statement of Eligibility of Wilmington Trust Company for the
2000-1G 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>
