Exhibit 10.1

CONFIDENTIAL

AMENDMENT NO. 3 TO LOAN AGREEMENT

     AMENDMENT NO. 3 (THIS "AMENDMENT"), TO LOAN AGREEMENT

, dated as of May 21, 2004, by and among US Airways, Inc. (the "Borrower"), US
Airways Group, Inc. ("Group"), the Subsidiary Guarantors party hereto (the
"Subsidiary Guarantors"), the several lenders from time to time party hereto
(the "Lenders"), Bank of America, N.A., as Agent for the Lenders (in such
capacity, together with its successors and permitted assigns, the "Agent"), Bank
of America, N.A., as YC SUSI Administrative Trustee (in such capacity, together
with its successors and permitted assigns, the "YC SUSI Administrative
Trustee"), Bank of America, N.A., as Collateral Agent (in such capacity,
together with its successors and permitted assigns, the "Collateral Agent," and
collectively with the Agent and the YC SUSI Administrative Trustee, the
"Agents") and the Air Transportation Stabilization Board (the "Board") created
pursuant to the Air Transportation Safety and System Stabilization Act (the
"Act"), P.L. 107-42 (2001), as the same may be amended from time to time.
Capitalized terms used in this Amendment but not otherwise defined herein have
the same meanings as specified therefore in the Loan Agreement (as such term is
defined herein).

WITNESSETH:

     WHEREAS,

the parties hereto, together with Phoenix American Financial Services Inc, as
Loan Administrator, have entered into a Loan Agreement, dated as of March 31,
2003 (as amended, supplemented or otherwise modified through the date hereof,
the "Loan Agreement");

     WHEREAS,

prior to the date hereof, YC SUSI Trust replaced Kitty Hawk Funding Corporation
as the Primary Tranche A Lender;

     WHEREAS,

the Borrower and Group have requested that the Board, the Agents, and the
Lenders agree to amend the Loan Agreement as hereinafter provided; and

     WHEREAS,

the Board, the Agents, and the Lenders are willing to amend the Loan Agreement
on the terms and conditions set forth herein.

     NOW, THEREFORE,

in consideration of the premises and the covenants and agreements contained
herein, the parties hereto agree as follows:

          

SECTION 1.     Optional Prepayment. On the Third Amendment Effective Date (as
defined below), the Borrower shall make an optional prepayment of the Loan in an
amount equal to $5,000,000 (the "Optional Prepayment"), together with accrued
and unpaid interest to the Third Amendment Effective Date on the amount so
repaid. Each of the Agents, the Board and the Lenders (a) hereby waives the
fifteen (15) days prior revocable notice requirement for optional prepayments
set forth in Section 2.5(a) of the Loan Agreement and agrees that such
prepayment may be made on the Third Amendment Effective Date regardless of
whether such notice has been given, and (b) hereby waives any requirement
pursuant to Section 2.9 of the Loan Agreement that the Borower make the Optional
Prepayment not later than 12:00 noon (New York City time) on the Third Amendment
Effective Date and agrees that, notwithstanding the provisions of such Section
2.9, the Optional Prepayment shall be deemed to be received on the Third
Amendment Effective Date regardless of what time such payment is received on
such date. Notwithstanding the provisions of Section 2.5(c) of the Loan
Agreement, the Optional Prepayment shall be applied to the then remaining
installments of the outstanding principal amount of the Loan ratably as to
Tranche A and Tranche B and pro rata against the originally scheduled principal
payments on the Loan (and not in the inverse order of maturity as otherwise
provided in Section 2.5(c) of the Loan Agreement).

          

SECTION 2.      Amendments to Loan Agreement. As of the Third Amendment
Effective Date (as defined below), the Loan Agreement is hereby amended as
follows:

               (a)     Definitions. (i) Section 1.1 of the Loan Agreement is
hereby amended by adding the following new definitions in proper alphabetical
order:

          "Third Amendment" means that certain Amendment No. 3 to Loan
Agreement, dated as of May 21, 2004, among the Borrower, Group, the Subsidiary
Guarantors party thereto, the Lenders, the Agent, the YC SUSI Administrative
Trustee, the Collateral Agent and the Board.

          "Third Amendment Effective Date" has the meaning specified in Section
2 of the Third Amendment.

           (ii) Section 1.1 of the Loan Agreement is hereby amended by amending
and restating in its entirety the definition of "Tranche B Applicable Interest
Rate" as follows:

"Tranche B Applicable Interest Rate" means a rate per annum equal to LIBOR plus
4.00% per annum, provided, that in the event the Guarantee Fee specified in
Schedule I to the Board Guaranty is increased pursuant to Section 1 of Amendment
No. 1 to Guarantee Agreement, dated as of May 21, 2004, by and among the Board,
the Agent, Primary Tranche A Lender, Tranche B Lender and, for certain limited
purposes, the Borrower, then such rate shall be increased to a rate per annum
equal to LIBOR plus 6.00% but only for such period commencing on the date the
Guarantee Fee is so increased and ending on the date the Guarantee Fee is
restored to the applicable percentage specified in Schedule I to the Board
Guaranty.

                (b)     Amendment to Section 2.6. Section 2.6(b) is hereby
amended by deleting the following sentence after the first sentence of such
section:

"Notwithstanding the foregoing provisions of this Section 2.6(b), the Borrower
shall only be required to prepay the Loan in an aggregate amount equal to
seventy-five percent (75%) of Net Cash Proceeds from any Asset Sale the
definitive documentation setting forth the terms of which is executed and
delivered during the period commencing on the Second Amendment Effective Date
and ending on February 28, 2005, provided, however, that (X) the aggregate
amount of Net Cash Proceeds retained by the Borrower pursuant to the application
of this sentence shall not exceed $125,000,000 and (Y) to the extent, if any,
that as of the end of any month in which the Obligors receive any Net Cash
Proceeds in respect of Asset Sales, Unrestricted Cash exceeds $1,350,000,000,
then (1) the Borrower shall prepay the Loan on the third Business Day of the
following month in an aggregate amount equal to the lesser of (A) the remaining
twenty-five percent (25%) of Net Cash Proceeds received during such month in
respect of such Asset Sales and not otherwise used to prepay the Loan and (B)
the amount of Unrestricted Cash in excess of $1,350,000,000 as of the end of
such month, and (2) the amount of Net Cash Proceeds paid pursuant to this
subclause (Y) shall not count toward the $125,000,000 limit on the retention of
Net Cash Proceeds by the Borrower pursuant to subclause (X) of this proviso."

                (c)     Amendment to Section 5.1. Section 5.1(b) is hereby
amended by adding the following clause (xxiii):

"(xxiii) Weekly Updates: weekly updates on the status and progress regarding the
development and implementation of the Borrower's plan to restructure both its
revenue and cost structure on or before September 30, 2004, and the Borrower
shall promptly provide any revised financial projections and monthly financial
and operating conditions, provided, that the Borrower shall only be required to
provide such weekly updates and revised projections and monthly financial and
operating conditions for so long as the Borrower is required to provide the same
to General Electric Capital Corporation under that certain RJ Lease Transaction
and Debt Financing Agreement, dated as of December 18, 2003, by and between
Borrower, Group and General Electric Capital Corporation, as amended, restated,
supplemented or otherwise modified as of the Third Amendment Effective Date."

                (d)     Amendment to Section 6.1(a)(ii). Section 6.1(a)(ii) is
hereby amended by inserting new clauses (C) and (D) set forth below, to follow
immediately after existing clause (B), with existing clauses (C), (D) and (E)
being re-lettered as clauses (E), (F) and (G), respectively:

     "(C) Liens on Aircraft Related Equipment created or incurred in connection
with debt financings of such Aircraft Related Equipment, as contemplated under
that certain RJ Lease Transaction and Debt Financing Agreement, dated as of
December 18, 2003, by and between Borrower, Group and General Electric Capital
Corporation, as amended, restated, supplemented or otherwise modified as of the
Third Amendment Effective Date."

 

     "(D) Leases and/or subleases of Aircraft Related Equipment to any Obligor
or any US Airways Express affiliate that is not an Obligor and operates such
Aircraft Related Equipment for the Borrower or another Obligor pursuant to a
services agreement with the Borrower or such Obligor, which lease or sublease is
entered into in connection with the debt financing or leasing of such Aircraft
Related Equipment, as applicable, and the assignment of any such lease or
sublease and the proceeds thereof, in the case of a lease, to any Person owed
Indebtedness used to acquire such Aircraft Related Equipment or, in the case of
a sublease, to any Person leasing such Aircraft Related Equipment to the
Borrower or such Obligor."

                (e)     Amendment to Section 6.4. Section 6.4(a) is hereby
amended and restated in its entirety as follows:

"(a)     (i) subject to clause (iii) of this Section 6.4(a) to the extent its
application would require a greater amount of Unrestricted Cash, at no time
during the Covenant Relief Period shall Group permit Unrestricted Cash to be
less than the lesser of (x) $500,000,000 plus the outstanding pool balance of US
Airways Pass Through Trust, Series 2000-1C, Trust Certificates held by the
Borrower from time to time pursuant to Section 6.2(xi) and (y) the outstanding
balance of the Loan (excluding accrued and unpaid interest thereon); (ii)
subject to clause (iii) of this Section 6.4(a) to the extent its application
would require a greater amount of Unrestricted Cash, at no time after the
Covenant Relief Period shall Group permit Unrestricted Cash to be less than
$375,787,687; and (iii) until such time as the Borrower delivers to the Agent,
the Lenders, the Loan Administrator and the Board an accountant's report
accompanying annual financial statements of Group and the Borrower for the
Fiscal Year ended December 31, 2003 or any subsequent fiscal year that does not
contain a going concern qualification, Group shall not permit Unrestricted Cash
to be less than (x) on the last day of each calendar month, the lesser of (A)
the aggregate principal amount of the Loan outstanding on such day and (B)
$725,000,000, and (y) as of the end of each day, the lesser of (A) the aggregate
principal amount of the Loan outstanding on such day and (B) $625,000,000. Group
and the Borrower may at any time request relief from the requirements of the
foregoing clause (iii) on grounds that the facts and circumstances on which the
qualification was based are no longer applicable, and the Board may consider
granting such relief in its sole discretion."

                (f)     Amendment Reflecting Replacement of Primary Tranche A
Lender. Each reference in the Loan Agreement and the other Loan Documents to
"KHFC Administrative Agent" is hereby amended to read "YC SUSI Administrative
Trustee". Each reference in the Loan Agreement and the other Loan Documents to
"Kitty Hawk Funding Corporation" is hereby amended to read "YC SUSI Trust".

          SECTION 3.     Conditions of Effectiveness. This Amendment shall
become effective on May 21, 2004 (the "Third Amendment Effective Date"), upon
the satisfaction of the condition precedent that each of the parties hereto
shall have received executed counterparts of (i) this Amendment duly delivered
by the parties hereto, (ii) Amendment No. 1 to Guarantee Agreement of even date
herewith among the Board, the Agent, the YC SUSI Trust, Bank of America, N.A.,
as Alternate Tranche A Lender, Bank of America, N.A., as a Tranche B Lender, the
Retirement Systems of Alabama Holdings LLC, as a Tranche B Lender, and for
certain limited purposes, the Borrower, duly delivered by the parties thereto,
(iii) the waiver by General Electric Capital Corporation, during the period of
April 30, 2004 through September 30, 2004, of the "Minimum Credit Rating" and
"Alternative Minimum Financial Tests" set forth in the Financial Conditions
Precedent of Part 5 of the seventh recital of that certain RJ Lease Transaction
and Debt Financing Agreement, dated as of December 18, 2003, by and between
Borrower, Group and General Electric Capital Corporation, as amended, restated,
supplemented or otherwise modified as of the Third Amendment Effective Date; and
(iv) the payment by Borrower of the Optional Prepayment described in Section 1
herein.

          SECTION 4.     Consent to Execution. By their respective signatures
hereto, each of the parties hereto consents to the execution of this Amendment.

          SECTION 5.     Representations and Warranties. Each of Group and the
Borrower represents and warrants to each other party hereto (excluding any other
Obligors) that: (a) it has all requisite corporate power and authority to enter
into this Amendment and to carry out the transactions contemplated hereby, (b)
it has duly authorized by all necessary corporate action the execution, delivery
and performance of this Amendment, (c) this Amendment and the Loan Agreement as
amended hereby are the valid and binding obligations of each of Group and the
Borrower, enforceable against it in accordance with its respective terms, except
as may be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other similar laws relating to or affecting the
enforcement of creditors' rights generally, including materiality,
reasonableness, good faith and fair dealing, and by general principles of equity
(regardless of whether considered in a proceeding in equity or at law), and (d)
after giving effect to this Third Amendment, no Default or Event of Default has
occurred and is continuing.

          SECTION 6.     Reference to and Effect on the Loan Documents.

               (a)     On and after the Third Amendment Effective Date, each
reference in the Loan Agreement to "this Agreement", "hereunder", "hereof" or
words of like import referring to the Loan Agreement, and each reference in the
other Loan Documents to "the Loan Agreement", "thereunder", "thereof" or words
of like import referring to the Loan Agreement, shall mean and be a reference to
the Loan Agreement as amended by this Amendment.

               (b)     Notwithstanding anything contained in this Amendment, the
terms of this Amendment are not intended to and do not serve to effect a
novation as to the Loan Agreement. The parties to this Agreement expressly do
not intend to extinguish the Loan Agreement. Instead, it is the express
intention of the parties to this Amendment to reaffirm the obligations created
under the Loan Agreement. Each of the Loan Agreement, as amended hereby, the
other Loan Documents and the Board Guaranty remains in full force and effect and
the terms and provisions of the Loan Agreement, as amended hereby, the other
Loan Documents and the Board Guaranty are hereby ratified and confirmed.

          SECTION 7.     Consent of Guarantor; Confirmation of Guaranty. Each of
Group and the Subsidiary Guarantors hereby consents to this Amendment and hereby
confirms and agrees that (a) notwithstanding the effectiveness of this
Amendment, the Guaranty is, and shall continue to be, in full force and effect
and is hereby ratified and confirmed in all respects, except that, on and after
the effectiveness of this Amendment, each reference in the Guaranty to the
"Agreement", "thereunder", "thereof" or words of like import referring to the
Loan Agreement shall mean and be a reference to the Loan Agreement as amended by
this Amendment, and (b) the Collateral Document to which it is a party and all
of the Collateral described therein do, and shall continue to, secure the
payment of all of the Secured Obligations (in each case, as defined therein).

          SECTION 8.     Costs; Expenses. The Borrower agrees to pay on demand
all reasonable costs and expenses of the Board, the Agents, and the Lenders in
connection with the preparation, execution, delivery and administration,
modification and amendment of this Amendment and the other instruments and
documents to be delivered hereunder (including, without limitation, the
reasonable fees and expenses of counsel for the Board, the Agents, and the
Lenders) in accordance with the terms of Section 11.3 of the Loan Agreement.

          SECTION 9.     Execution in Counterparts. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Amendment by telecopier shall be effective as delivery of a manually executed
counterpart of this Amendment.

          SECTION 10.     Governing Law. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK; PROVIDED, THAT IN THE EVENT
THE BOARD BECOMES A LENDER PURSUANT TO THE BOARD GUARANTY, THE RIGHTS AND
OBLIGATIONS OF THE BOARD HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE FEDERAL LAW OF THE UNITED STATES OF AMERICA, IF AND TO THE
EXTENT SUCH FEDERAL LAW IS APPLICABLE, AND OTHERWISE IN ACCORDANCE WITH THE LAW
OF THE STATE OF NEW YORK.

          SECTION 11.     Release. The Obligors further acknowledge and agree
that they have no claims, counterclaims, offsets or defenses to the Loan
Documents or any transaction related thereto or the performance of the Obligors'
obligations thereunder. To the extent the Obligors have any such claims,
counterclaims, offsets or defenses to the Loan Documents or any transaction
related thereto or the performance of the Obligors' obligations thereunder, the
same are hereby waived, relinquished and released in consideration of the
Board's, the Lender's and the Agents' execution and delivery of this Amendment.

[Signature Page Follows]

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.

US AIRWAYS, INC.

By: ________________________

Name:     

Title:     

 

US AIRWAYS GROUP, INC.

By: ________________________

Name:     

Title:     

 

 

MIDATLANTIC AIRWAYS, INC.

By: ___________________________

Name:     

Title:

 

ALLEGHENY AIRLINES, INC.

By: _________________________

Name:     

Title:     

 

US AIRWAYS LEASING AND SALES, INC.

By: ___________________________________

Name:     

Title:

 

MATERIAL SERVICES COMPANY, INC.

By: __________________________________

Name:     

Title:     

 

PSA AIRLINES, INC.

By: ________________________

Name:     

Title:     

 

PIEDMONT AIRLINES, INC.

By: ________________________

Name:     

Title:

 

YC SUSI TRUST,

as Primary Tranche A Lender

By: Bank of America, National Association,

as Administrative Trustee

By:_________________________

Name:

Title:

 

BANK OF AMERICA, N.A.,

as Alternate Tranche A Lender

By:_________________________

Name:

Title:

 

BANK OF AMERICA, N.A.,

as a Tranche B Lender

By:_________________________

Name:

Title:

 

BANK OF AMERICA, N.A.,

as Agent and Collateral Agent

By:____________________________

Name:

Title:

 

BANK OF AMERICA, N.A.,

as YC SUSI Administrative Trustee

By:_____________________________

Name:

Title:

 

RETIREMENT SYSTEMS OF

ALABAMA HOLDINGS LLC,

as a Tranche B Lender

By:_________________________

Name:

Title:

 

AIR TRANSPORTATION

STABILIZATION BOARD

By:____________________________

Name:

Title: