LONG-TERM DEBT

Fair Value of Debt

Market risk associated with our fixed- and variable-rate long-term debt relates to the potential reduction in fair value and negative impact to future earnings, respectively, from an increase in interest rates. The fair value of debt, shown below, is based primarily on reported market values, recently completed market transactions and estimates based on interest rates, maturities, credit risk and underlying collateral. Long-term debt is principally classified as Level 2 within the fair value hierarchy.



(in millions)	September 30, 2015			December 31, 2014
Total debt at par value	$	8,474		$	9,469
Unamortized discount, net	(57		)	(90		)
Net carrying amount	$	8,417		$	9,379

Fair value	$	8,700		$	9,800

August 2015 Debt Refinancing Transaction

In connection with the retirement and termination of the outstanding loans under our existing $2.5 billion Senior Secured Credit Financing Facilities (due April 2016 and April 2017), we completed refinancing transactions in August 2015 with new debt consisting of the Senior Secured Credit Facilities, described below, and the 2015-1 pass through certificates ("2015-1 EETC").

Senior Secured Credit Facilities

In August 2015, we entered into the Senior Secured Credit Facilities to borrow up to $2.0 billion. The Senior Secured Credit Facilities consist of a $1.5 billion first-lien revolving credit facility (the “Revolving Credit Facility”) and a $500 million first-lien term loan facility (the “Term Loan Facility”). These transactions are summarized in the table below:



(in millions)	Final Maturity Date	Interest Rate(s) per Annum		Proceeds Received		Principal Retired
Entered into in August 2015
Term Loan Facility	August 2022	3.25%	variable⁽¹⁾⁽²⁾	$	500	$	—
Revolving Credit Facility ($1.5 billion)	August 2020	undrawn	variable⁽³⁾	—		—
Retired/Terminated in August 2015
Term Loan Facility	April 2017	3.25%	variable⁽¹⁾⁽⁴⁾	—		1,320
Revolving Credit Facility ($1.2 billion)	April 2016	undrawn	variable⁽¹⁾	—		—
Total				$	500	$	1,320


⁽¹⁾	Interest rate equal to LIBOR (subject to a floor) or another index rate, in each case plus a specified margin.


⁽²⁾	Represents the rate as of September 30, 2015.


⁽³⁾	Interest rate equal to LIBOR or another index rate, in each case plus a specified margin.


⁽⁴⁾	Represents the rate as of August 24, 2015.

An amount equal to 1% of the original principal amount of the loans under the Term Loan Facility must be repaid annually in equal quarterly installments. All remaining borrowings under the Term Loan Facility are due on the final maturity date of August 2022. There are no amounts outstanding under the Revolving Credit Facility as of September 30, 2015.

Collateral and Key Financial Covenants. Our obligations under the Senior Secured Credit Facilities are guaranteed by substantially all of our domestic subsidiaries (the “Guarantors”) and secured by liens on certain of our and the Guarantors’ assets, including accounts receivable, aircraft, spare engines, non-Pacific international routes, domestic slots and certain investment property (the “Collateral”). These assets also secure $100 million of certain fuel hedging obligations pari passu (i.e., on equal priority) with the Revolving Credit Facility and the Term Loan Facility. The Senior Secured Credit Facilities include affirmative, negative and financial covenants that may restrict our ability to, among other things, make investments, sell or otherwise dispose of assets if not in compliance with the collateral coverage ratio tests, pay dividends or repurchase stock. These covenants require us to maintain:



Minimum Unrestricted Liquidity
Unrestricted cash, permitted investments and undrawn revolving credit facilities (including the Revolving Credit Facility)	$2.0 billion
Minimum Collateral Coverage Ratio⁽¹⁾	1.60:1


⁽¹⁾	Defined as the ratio of (a) the value of the Collateral that meet specified eligibility standards to (b) the sum of the aggregate outstanding borrowings under the Senior Secured Credit Facilities and certain other obligations.

Under the Senior Secured Credit Facilities, if the Minimum Collateral Coverage Ratio is not maintained, we must either provide additional collateral to secure our obligations, or we must reduce the secured obligations under the facilities by an amount necessary to maintain compliance with the collateral coverage ratio. The Senior Secured Credit Facilities contain events of default customary for similar financings, including cross-defaults to other material indebtedness and certain change of control events. Upon the occurrence of an event of default, the outstanding obligations under the Senior Secured Credit Facilities may be accelerated and become due and payable immediately.

2015-1 EETC

The details of the 2015-1 EETC, which is secured by 15 aircraft, are shown in the table below:



(in millions)	Total Principal		Fixed Interest Rate	Issuance Date	Final Maturity Date
2015-1 Class AA Certificates	$	313	3.625%	August 2015	July 2027
2015-1 Class A Certificates	69		3.875%	August 2015	July 2027
2015-1 Class B Certificates	118		4.250%	August 2015	July 2023
Total	$	500

Covenants

We were in compliance with the covenants in our financing agreements at September 30, 2015.