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Exhibit
10.1.1
FIRST AMENDMENT
TO
CREDIT
AGREEMENT
THIS FIRST AMENDMENT TO
CREDIT AGREEMENT (this “ Amendment ”) is entered
into on September 29, 2005 by and among ALASKA AIRLINES, INC.,
an Alaska corporation (the “ Borrower ”), each
lender identified on the signature page hereof (collectively,
(“ Lenders ”), and BANK OF AMERICA, N.A., as
agent for Lenders (“ Agent ”).
RECITALS
A. Borrower, Agent and
Lenders are parties to that certain Credit Agreement dated as of
March 25, 2005 (the “ Credit Agreement ”),
pursuant to which Lenders established a revolving line of credit to
Borrower; and
B. Borrower and Lenders wish
to amend the Credit Agreement: (i) to exclude Permitted
Progress Payment Loans (as defined below) from the calculation of
the Fixed Charge Coverage Ratio; (ii) to permit certain Liens
securing such Permitted Progress Payment Loans; and (iii) to
change the Collateral Review Date, in each case, as set forth
herein;
NOW, THEREFORE, the parties
agree as follows:
AGREEMENT
1. Definitions.
Capitalized terms used herein and not otherwise defined shall have
the meaning given in the Credit Agreement and shall be construed in
accordance with the rules of construction set forth
therein.
2. Amendments to
Section 1.01. In Section 1.01 of the Credit
Agreement, the following definitions are amended and restated to
read as follows:
“ Fixed Charge
Coverage Ratio ” means, for the four quarters preceding
the applicable date of calculation, the ratio of (a) to
(b) where (a) equals the sum of (i) Borrower’s
and its Subsidiaries’ consolidated earnings before interest
expense (net of capitalized interest) and taxes during such period,
plus, to the extent such amounts are deducted when determining
consolidated earnings, (ii) consolidated depreciation and
amortization expense (other than airframe and engine overhaul
amortization) during such period, plus (iii) Consolidated
Lease Expense during such period, plus (iv) amounts related to
Permitted Asset Adjustments, plus (v) non-cash asset
impairment charges incurred prior to December 31, 2004 related
to the 737-200 fleet, plus (vi) 100% of Government
Compensation in the quarter in which it was received with such
amount decreasing by 25% per quarter in subsequent calculation
periods until decreased to 0%, excluding (x) unusual, non-cash
special charges and credits (excluding Permitted Asset
Adjustments), and (y) the marked-to-market Swap Termination
value for Swap Contracts that have not been closed out, and
(b) equals the sum of (1) Consolidated Lease Expense
during such period, plus (2) consolidated interest expense
(net of capitalized interest) during such period in respect of
Consolidated Funded Debt and Leases, plus (3) the principal
amount of the scheduled current portion of all Consolidated Funded
Debt and
Leases excluding any Loans,
or short-term borrowings or debt outstanding between Borrower and
its Affiliates, or any Permitted Progress Payment Loans, each
without duplication and determined in accordance with
GAAP.
3. New Definitions in
Section 1.01. The following new definitions are added to
Section 1.01 of the Credit Agreement:
“ Permitted Progress
Payment Loans ” means loans to Borrower from lenders
(which may or may not be Lenders hereunder) in an outstanding
principal amount not to exceed at any one time One Hundred
Seventy-two Million ($172,000,000) to finance Borrower’s
progress payments for aircraft purchases from The Boeing Company.
Any such progress payment loan shall constitute a “Permitted
Progress Payment Loan” only if it is due on or before the
first day of the calendar month during which the related aircraft
is scheduled and available for delivery (provided that if the
aircraft is scheduled but not available for delivery, a delay in
payment will not cause such loans to cease to be Permitted Progress
Payment Loans so long as such delay is acceptable to the progress
payment lenders).
4. Amendment to
Section 6.15(c). Clause (iii) of Section 6.15(c)
is restated to read:
(iii) the Added Engine is a
Stage 3 Engine of the same or improved make and model as the
Removed Engine, provided that a JT8D-217C and a JT8D-219 shall be
considered to be interchangeable.
5. Amendment to
Section 7.01. The following is added as a new
Section 7.01(k):
(k) Liens on Borrower’s
rights under an aircraft purchase agreement with respect to an
aircraft securing any Permitted Progress Payment Loan made with
respect to such aircraft.
Section 7.01(k) is renumbered as
Section 7.01(l) and the reference to “clauses
(a) – (j)” is changed to “clauses
(a) – (k).”
6. Amendment to
Section 6.15(a). Section 6.15(a) is amended and
restated to read as follows:
Collateral Review Date
. On or before the last Business Day of each July and January (each
a “ Collateral Review Date ”), Borrower shall
provide to the Administrative Agent (which shall provide to each
Lender) a Qualified Appraisal showing the Current Market Value of
each Pledged Aircraft as of a Valuation Date that is no earlier
than 30 days prior to the applicable Collateral Review
Date.
7. Conditions to
Effectiveness. This Amendment shall be effective upon the
Agent’s receipt of counterparts of this Amendment, duly
executed and delivered by Borrower, Agent and Lenders constituting
the Requisite Lenders, sufficient in number for distribution to
Agent, Lenders and Borrower.
2
8. Representations and
Warranties. Borrower hereby represents and warrants to Agent
and each Lender that: (i) each of the representations and
warranties set forth in Article V of the Credit Agreement is
true and correct in each case as if made on and as of the date of
this Amendment or, if any such representation or warranty is stated
to
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