<PAGE>
                SECURITIES AND EXCHANGE COMMISSION
                      Washington, D. C. 20549


                            FORM 10-K


                FOR ANNUAL AND TRANSITION REPORTS
             PURSUANT TO SECTIONS 13 OR 15 (d) OF THE
                   SECURITY EXCHANGE ACT OF 1934

      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
          SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
            For the fiscal year ended December 31, 1995
 
                    _________________________


                         USAir Group, Inc.
                 (Commission file number:  1-8444)

                               and

                           USAir, Inc.
                 (Commission file number:  1-8442)
    (Exact names of registrants as specified in their charters)



      Delaware                      USAir Group, Inc.  54-1194634
(State of incorporation             USAir, Inc.        53-0218143
  of both registrants)      (I.R.S. Employer Identification Nos.)


                        USAir Group, Inc.
          2345 Crystal Drive, Arlington, Virginia 22227
            (Address of principal executive offices)
                         (703) 418-5306
                  (Registrant's telephone number)


                           USAir, Inc.
          2345 Crystal Drive, Arlington, Virginia 22227
            (Address of principal executive offices)
                         (703) 418-7000
                  (Registrant's telephone number)

<PAGE>
	Securities registered pursuant to Section 12(b) of the Act:

                                           Name of each exchange
Registrant         Title of each class      on which registered
----------         -------------------    ----------------------
USAir Group, Inc.  Common Stock, par      New York Stock Exchange
                     value $1.00 per
                     share

                   Preferred Share        New York Stock Exchange
                     Purchase Rights
                     expiring 1996

                   Depositary Shares,     New York Stock Exchange
                     each representing
                     1/100 of a share
                     of $437.50 Series
                     B Cumulative Con-
                     vertible Preferred
                     Stock


	Indicate by check mark whether the registrants (1) have filed 
all reports required to be filed by Section 13 or 15(d) of the 
Securities Exchange Act of 1934 during the preceding 12 months and 
(2) have been subject to such filing requirements for the past 90 
days.
         Yes        x                     No
              -------------                  -------------

	Indicate by check mark if disclosure of delinquent filers 
pursuant to Item 405 of Regulation S-K is not contained in this 
Form 10-K, and will not be contained, to the best of the regis-
trants' knowledge, in definitive proxy or information statements 
incorporated by reference in Part III of this Form 10-K or any 
amendment to this Form 10-K.  [x]

	The aggregate market value of the voting stock of USAir Group, 
Inc. held by non-affiliates on February 29, 1996 was approximately 
$1,667,450,000. On February 29, 1996, there were outstanding 
approximately 63,460,000 shares of Common Stock of USAir Group, 
Inc. and 1,000 shares of Common Stock of USAir, Inc.

	The registrant USAir, Inc. meets the conditions set forth in 
General Instructions J(1)(a) and (b) of Form 10-K and is therefore 
participating in the filing of this form in the reduced disclosure 
format permitted by such Instructions.


<PAGE>
Item                               Document Incorporated
of Form 10-K:                           By Reference
-----------------------       ----------------------------------

Part III, Items 10, 11,
  12 and 13				Proxy Statement* (excluding there-
from the subsections entitled "Re-
port of the Compensation and Bene-
fits Committee of the Board of Di-
rectors" and "Performance Graph")


-------------------------------
  Refers to the definitive Proxy Statement of USAir Group, Inc., 
to be filed pursuant to Regulation 14A, relating to the Annual 
Meeting of Stockholders of USAir Group, Inc. to be held on 
May 22, 1996.


<PAGE>
                        USAir Group, Inc.
                               and
                           USAir, Inc.
                           Form  10-K
                   Year Ended December 31, 1995

                        TABLE OF CONTENTS


Part I                                                       Page

  Item 1.     Business                                          1

     Strategy                                                   2
     Capacity and Route Rationalization                         3
     Enhanced Customer Service, Performance and Reliability     4
     Cost Reductions                                            5
     General Industry Conditions                                7
     Significant Impact of Low Cost, Low Fare Competition       8
     Industry Restructuring and Cost-Cutting                    9 
     Deferral of Dividends by USAir Group                      11
     Likelihood of No Future Investments by British Airways    12
     Executive Officers                                        13
     Employees                                                 15
     Historical Cost Reduction Programs                        17
     ALPA Contract:  Effects of a Change of Control of USAir
        Group or USAir                                         19
     Unionizing Efforts                                        20
     Status of USAir's Labor Agreements                        21
     Frequent Traveler Program                                 21
     Computerized Reservation Systems                          22
     Maintenance Marketing Joint Venture with BA               22
     Jet Fuel                                                  22
     Insurance                                                 23
     Industry Regulation and Airport Access                    24
     British Airways Investment Agreement                      26
     Terms of the Series F Preferred Stock                     26
     DOT Order Regarding BA's Investment in USAir Group        27
     Board Representation                                      28
     U.S.-U.K. Routes                                          28
     Code Sharing                                              29
     Provisions Regarding Additional BA Investments; BA
        Announcement Regarding No Additional Investment 
        in USAir Group                                         30
     Terms of the Series C Preferred Stock and Series E 
        Preferred Stock                                        31
     Terms of BA Common Stock                                  31
     Certain Governance Matters                                32
     Miscellaneous                                             34
     Operating Statistics                                      35


                                 i
<PAGE>
                        TABLE OF CONTENTS 
                           (Continued)





Part I (continued)                                           Page
                                                     
  Item 2.     Properties                                       36

     Flight Equipment                                          36
     Ground Facilities                                         38
     Terminal Construction Projects                            38

  Item 3.     Legal Proceedings                                40

  Item 4.     Submission of Matters to a Vote                    
                   of Security Holders                         44


Part II

  Item 5A.    Market for USAir Group's Common Equity
                 and Related Stockholder Matters               45

  Item 5B.    Market for USAir's Common Equity and
                 Related Stockholder Matters                   46

  Item 6.     Selected Financial Data                          47


  Item 7.     Management's Discussion and Analysis
                 of Financial Condition and Results
                 of Operations                                 49
 
  Item 8A.    Financial Statements and Supplementary
                 Information - USAir Group, Inc.               76

  Item 8B.    Financial Statements and Supplementary
                 Information - USAir, Inc.                    125

  Item 9.     Changes In and Disagreements with
                 Accountants on Accounting and
                 Financial Disclosure                         162


                                 ii
<PAGE>
                        TABLE OF CONTENTS 
                           (Continued)






Part III                                                     Page

  Item 10.    Directors and Executive Officers of
                 USAir Group, Inc.                            162

  Item 11.    Executive Compensation                          162

  Item 12.    Security Ownership of Certain Beneficial
                 Owners and Management                        162

  Item 13.    Certain Relationships and Related
                 Transactions                                 162


Part IV

  Item 14.    Exhibits, Financial Statement Schedules
                 and Reports on Form 8-K                      163
              Financial Statements - USAir Group, Inc.        163
              Financial Statements - USAir, Inc.              163
              Financial Statement Schedules                   163 
              Reports on Form 8-K                             164
              Exhibits                                        164


Signatures

              USAir Group, Inc.                               170
              USAir, Inc.                                     173


                                 iii
<PAGE>
                               Part I

Item 1.	Business

	USAir Group, Inc. ("USAir Group" or the "Company") is a 
corporation organized under the laws of the State of Delaware.  The 
Company's executive offices are located at 2345 Crystal Drive, 
Arlington, Virginia 22227 (telephone number (703) 418-5306).  USAir 
Group's primary business activity is ownership of all the common 
stock of USAir, Inc. ("USAir"), Allegheny Airlines, Inc. (formerly 
Pennsylvania Commuter Airlines, Inc.) ("Allegheny"), Piedmont 
Airlines, Inc. ("Piedmont") (formerly Henson Aviation, Inc.), PSA 
Airlines, Inc. ("PSA") (formerly Jetstream International Airlines, 
Inc.), USAir Fuel Corporation ("USAir Fuel"), USAir Leasing and 
Services, Inc. ("USAir Leasing and Services") and Material Services 
Company, Inc.  In May 1987, the Company acquired Pacific Southwest 
Airlines, which merged into USAir on April 9, 1988.  In November 
1987, the Company completed its acquisition of Piedmont Aviation, 
Inc., which merged into USAir on August 5, 1989.  

	USAir, a certificated air carrier engaged primarily in the 
business of transporting passengers, property and mail, is the 
Company's principal operating subsidiary, and accounted for 
approximately 93% of USAir Group's operating revenues for the 
fiscal year ended December 31, 1995.  USAir enplaned more than 57 
million passengers in 1995 and is the fifth largest United States 
air carrier ranked by revenue passenger miles ("RPMs") flown.  As 
of December 31, 1995, USAir provided regularly scheduled jet 
service through 108 airports to approximately 143 cities in the 
continental United States, Canada, Mexico, France, Germany, and the 
Caribbean.  USAir's executive offices are located at 2345 Crystal 
Drive, Arlington, Virginia 22227 (telephone number (703) 418-7000), 
and its primary connecting hubs are located at the Pittsburgh, 
Charlotte/Douglas, Philadelphia and Baltimore/Washington Interna-
tional ("BWI") Airports.  As discussed below in "Significant Impact 
of Low Cost, Low Fare Competition," a substantial portion of 
USAir's RPMs are flown within or to and from the eastern United 
States.  USAir also maintains significant operations at major 
airports in the large east coast population centers of Boston, New 
York City (LaGuardia Airport ("LaGuardia") and Washington, D.C. 
National Airport ("Washington National").  When measured by 
departures, USAir is the largest or second largest airline at each 
of the foregoing airports and is the predominant air carrier in 
many smaller eastern cities, such as Albany, Buffalo, Hartford, 
Providence, Richmond, Rochester and Syracuse.  In addition, USAir 
is the leading airline from the Northeast to Florida.  For fiscal 
year 1995, approximately 36% of all scheduled flights on the east 
coast of the United States were USAir flights.  Approximately 64% 
of USAir's flights and 44% of its available seat miles ("ASMs") are 
represented by intra-east coast flying. 

	USAir has an important international alliance with British 
Airways plc ("BA"), a major investor in USAir Group. As of 
December 31, 1995, the two air carriers had implemented code 
sharing from 70 of the 138 airports currently authorized by the 
United States Department of Transportation ("DOT").  The USAir/BA 
alliance also extends to the sharing of ground services at certain


                                 1
<PAGE>
 airports and joint cooperation in areas such as product branding, 
cargo services, jet fuel purchasing, frequent traveler programs and 
maintenance services.  

	USAir also code shares with eleven regional airline affiliates 
operating under the "USAir Express" trade name. USAir Group owns 
three of the USAir Express carriers-Piedmont, Allegheny, and PSA. 
Through its service agreements, USAir provides reservations and, at 
certain stations, ground support services, in return for service 
fees.  The USAir Express network feeds traffic into USAir's route 
system at several points, including its major hub operations at 
Pittsburgh, Charlotte, Philadelphia and BWI.  At December 31, 1995, 
USAir Express carriers served 176 airports in the United States, 
Canada and the Bahamas, including 76 also served by USAir. During 
1995, USAir Express' combined operations enplaned approximately 9.6 
million passengers, over half of whom connected to USAir flights. 
USAir also has a management agreement and code shares with Shuttle, 
Inc. operating under the name "USAir Shuttle."  The USAir Shuttle 
operates frequent service between LaGuardia and Boston and between 
LaGuardia and Washington National. 

	In January 1996, Stephen M. Wolf was appointed Chairman and 
Chief Executive Officer of USAir and of USAir Group.  Mr. Wolf 
succeeds Seth E. Schofield, who retired after 38 years with USAir. 
Mr. Wolf has been a senior executive at United Airlines, Inc. 
("United"), The Flying Tiger Line Inc. ("Flying Tigers"), Republic 
Airlines, Inc., Continental Airlines, Inc. ("Continental"), Pan 
American World Airways and American Airlines, Inc. ("American"). In 
addition, in February 1996, USAir announced the executive 
appointments of Rakesh Gangwal as President and Chief Operating 
Officer of USAir and USAir Group and Lawrence M. Nagin as Executive 
Vice President - Corporate Affairs and General Counsel of USAir and 
USAir Group.  Mr. Gangwal has been a senior officer at Air France 
and United and Mr. Nagin has held senior positions at United and 
Flying Tigers.  

Strategy   

	USAir Group recorded net income of $119.3 million in 1995, its 
first profitable year since 1988.  From 1989 through 1994, USAir 
Group incurred substantial losses.  Its results of operations have 
been adversely affected by, among other factors, the growth of low 
cost, low fare competition, particularly in 1994, and its unit 
costs, which are among the highest of United States air carriers. 
USAir Group is striving to improve its profitability and respond to 
the competitive environment that characterizes the United States 
airline industry by:  

	-	Rationalizing the level and geographic distribution of 
USAir's capacity;

	- 	Improving USAir's product and delivery; and
 
	- 	Reducing capital requirements and operating costs.



                                 2
<PAGE>
Capacity and Route Rationalization
 
  	Beginning in the spring of 1995, USAir instituted a signifi-
cant rationalization of its capacity and routes with the goal of 
reducing less profitable non-hub (point-to-point) flying, emphasiz-
ing the quality of departures versus the quantity of flights, 
reducing excess capacity in strong markets and replacing low demand 
jet service with modern turboprop aircraft operated by USAir 
Express.  The effect of USAir's rightsizing plan has been a reduc- 
tion in the number of USAir's departures and its capacity. In the 
second half of 1995, departures decreased by 17% and capacity (as 
measured by ASMs) decreased 10.8% compared to the second half of 
1994. Although USAir's traffic also declined as a result of this 
plan, USAir was successful in retaining a significant portion of 
the revenue and traffic from eliminated flights.  In the second 
half of 1995, USAir achieved a record load factor of 66.2%. For the 
full year 1995, USAir's load factor also set a record at 64.7%. For 
fiscal year 1995, USAir's departures, capacity and traffic were 
down by 10%, 4.7% and 0.9%, respectively.  In addition, by 
December 31, 1995, USAir non-hub flying represented less than 10% 
of its total flying, compared to approximately 18% at December 31, 
1994.  

	USAir has been seeking to broaden its route portfolio by 
leveraging its strong east coast franchise into expanded transcon-
tinental and international service from the eastern United States. 
By diversifying its route structure in this way, USAir can enhance 
its long-haul service and increase its average length of haul. 
Increasing its average length of haul will enable USAir to increase 
the average value of tickets sold and reduce the unit cost of 
serving each passenger.  In 1995, USAir's average length of haul 
increased 4.1% to 664 miles from 638 miles in 1994. Domestically, 
USAir has added more flights to the west coast from its hubs. In 
1995, USAir retired, sold, returned or otherwise disposed of 37 
operating aircraft while adding seven Boeing 757-200s - an aircraft 
more suitable for transcontinental operations. At December 31, 
1995, USAir operated 34 Boeing 757-200 aircraft and had orders for 
eight additional 757-200 aircraft to be delivered in 1998.  

	Internationally, USAir has expanded service to the Caribbean 
and has re-aligned its international routes in an effort to further 
develop Philadelphia and Boston as transatlantic gateways.  In this 
regard, the DOT recently granted USAir a two-year exemption 
authority to operate to Madrid, Spain from both Philadelphia and 
Boston.  USAir intends to begin service to Madrid from Philadelphia 
on June 15, 1996.  In addition, USAir recently re-aligned its 
Frankfurt service.  It increased the number of weekly flights from 
the East Coast from 14 to 21 in June 1995 for the summer season and 
introduced non-stop service from Philadelphia and Boston.  In 
February 1996, USAir received final approval from the DOT to serve 
Munich, Germany from Philadelphia. USAir will inaugurate its 
service to Munich on May 23, 1996. The number of weekly USAir 
flights to Germany will increase to 28 by mid-1996.  In February 
1996, the DOT issued a show cause order granting USAir authority to


                                 3
<PAGE>
 institute service to Rome, Italy from Philadelphia with through 
service from Los Angeles.  Pending final approval, USAir intends to 
inaugurate its service to Rome on June 1, 1996.  USAir estimates 
that its transatlantic capacity in 1996 (as measured by ASMs) will 
increase by approximately 54% compared to 1995.  USAir believes 
that the further development of international service from 
Philadelphia and Boston will enable it to achieve a competitive 
advantage by leveraging USAir's existing domestic network with the 
strong local transatlantic demand and the favorable geographic 
position of these cities.

	USAir has begun to phase out the "wet lease" arrangements with 
BA. One of the three wet leased Boeing 767-200ER aircraft was 
returned to USAir in December 1995 and a second was returned in 
February 1996.  The remaining aircraft will be returned to USAir in 
May 1996.  Under the wet lease arrangements, USAir leased three 
Boeing 767-200ER aircraft, along with cockpit and cabin crews, to 
BA in order to serve three routes between the U.S. and London. Upon 
termination of the wet lease arrangements, USAir plans to utilize 
the returned aircraft as part of USAir's planned expansion of 
international service, as discussed above.  BA did not exercise its 
right on January 21, 1996 to purchase additional preferred stock in 
USAir Group, as discussed below in "British Airways Investment 
Agreement Provisions Regarding Additional BA Investments, BA 
Announcements Regarding No Additional Investment in USAir Group." 

	USAir's reduction in jet aircraft and its continuing efforts 
to reduce costs and enhance revenue by eliminating less profitable 
routes have resulted in the cessation of or reduction in jet flying 
between certain city pairs. In some cases, existing or former jet 
routes have been turned over to USAir Express with the goal of 
maintaining portions of the revenue base (particularly the hub 
connecting traffic) with lower cost operations.  

	In 1992, USAir reached an agreement with the creditors of the 
Trump Shuttle to manage and operate the Trump Shuttle under the 
name "USAir Shuttle" for a period of up to ten years. Under the 
agreement, USAir Group has an option to purchase the shuttle 
operation on or after October 10, 1996 with an exclusive right to 
do so until April 10, 1997.  USAir believes that the USAir Shuttle 
fosters traveler loyalty towards USAir because of the USAir 
Shuttle's participation in USAir's Frequent Traveler Program 
("FTP"). 

Enhanced Customer Service, Performance and Reliability

	USAir has undertaken a number of initiatives to build brand 
loyalty among its customers with the goal of maintaining and 
enhancing its traditional unit revenue premiums over its competi-
tors.  USAir also hopes to increase its market share of business 
travelers and long-haul customers. The initiatives include:

	Focus on Business Traveler - USAir is expanding the first- 
class cabins on long-range Boeing 737-Series and 757-200 aircraft,


                                 4
<PAGE>
 expanding "business centers" in certain airports, upgrading 
certain USAir Club facilities and replacing USAir's on-board phone 
system to improve service.  USAir also improved business passenger 
accessibility to the First Class cabin through expansion of a 
program which lets a passenger sit in First Class for the price of 
a full fare coach ticket.  This product is now in most transconti-
nental markets that USAir serves.  USAir also believes that the 
introduction of its personal travel software, "Priority Travel-
Works", will appeal to many high-volume business travelers by 
providing users with more information and greater control over 
their travel arrangements. 
 
	Technology and New Facilities - In addition to "Priority 
TravelWorks," USAir is investing in technology to positively affect 
its marketing, operational performance and customer services. USAir 
plans to commence "ticketless travel" (i.e., electronic ticketing) 
in 1996 in order to cut distribution costs and increase travelers' 
convenience. In addition, USAir is exploring self-ticketing 
machines which, if expanded from the test phase, could further 
reduce distribution costs and save time for USAir's customers. 
USAir has also implemented a new inventory management system that 
allows it to better allocate seats within fare levels to maximize 
revenues.  USAir has created a state-of-the-art operations control 
center in Pittsburgh.  The center improves operational decision-
making by more closely coordinating all flight-related functions 
such as dispatching, aircraft routing, maintenance and technical 
support, crew scheduling and passenger services. 
 
	Improved Service Levels - USAir has improved both its 
operational performance and attention to customer services.  In 
1994, USAir ranked ninth in on-time performance among the ten major 
United States airlines.  USAir improved its on-time performance to 
place among the top three airlines in each of the first three 
quarters of 1995.  USAir is also implementing customer service 
enhancements in its international operations and is investing in 
the training and development of its customer service employees 
through a "Core Curriculum Training Program." 

	Safety - USAir recently implemented several additional safety 
initiatives.  In November 1994, USAir created a new position of 
Vice President-Corporate Safety and Regulatory Compliance.  In 
1995, USAir established a committee of its board of directors, the 
Safety Committee, which has oversight of all corporate safety 
matters.  In addition, USAir retained an aviation consulting firm, 
to conduct a full audit of USAir's safety operations.  The audit 
was completed in early 1995.  In the opinion of the safety 
auditors, USAir was being operated safely in compliance with 
Federal Aviation Administration ("FAA") regulations.  

Cost Reductions

	Although USAir has recently demonstrated significantly 
improved financial performance, USAir believes that it must 
continue to lower its costs (including personnel costs) in order to


                                 5
<PAGE>
 compete effectively in a low fare environment.  

  	Operating Costs - USAir, whose operating costs are the highest 
among the major U.S. airlines, is actively pursuing several 
initiatives in an effort to reduce these costs significantly. USAir 
is working to achieve or has already achieved substantial cost 
savings through a combination of organizational and structural 
changes, reengineering and other initiatives including: centraliza-
tion of its purchasing functions; realignment of customer services; 
improvements in operations performance to increase crew productivi-
ty; outsourcing of cargo and communications; and reengineering of 
its maintenance operations, finance, reservations, purchasing, 
accounts payable, payroll and human resources functions. 
 
	USAir has also taken other cost-cutting actions. In October 
1995, USAir closed its Reno, Nevada reservations office as part of 
its long-term strategy to reduce costs and improve productivity. 
The closing affected approximately 260 employees.  USAir believes 
that the reservations office in San Diego is adequate to handle 
west coast customers as well as overflow calls from the East during 
irregular operations.  USAir reduced the number of daily departures 
at Newark International Airport from 51 as of December 31, 1994 to 
14 by December 1995.  The changes have resulted in lower staffing 
levels in customer service and maintenance. 

	In February 1995, USAir and several other major U.S. carriers, 
including Delta Airlines, Inc. ("Delta"), American, Northwest 
Airlines, Inc. ("Northwest") and United, imposed limits on the base 
commissions they pay travel agents for domestic air fares. See 
"Industry Restructuring and Cost-Cutting."  The new limits on 
commissions are designed to reduce one of the airlines' largest 
expenses.  USAir has experienced cost savings due to the new 
commission limits.

	In March 1994, in an attempt to reduce its annual labor 
personnel costs by approximately $500 million through concession 
agreements involving wage and benefit reductions, improved 
productivity and other cost savings, USAir Group began negotiating 
with the unions that represent certain of USAir's employees. 
USAir's wages and benefits are the largest single component of its 
operating costs (approximately 41% for 1995).  In late July 1995, 
USAir Group announced that it was ending discussions with the 
unions on a wage concession and restructuring package and that it 
would concentrate on reducing USAir's labor costs through tradi-
tional collective bargaining. See "Employees" USAir remains 
committed to obtaining labor cost reductions.

	Aircraft Commitments - In an attempt to reduce aircraft 
ownership costs, facilitate its capacity rationalization plan and 
reduce its fleet size and number of fleet types, USAir has deferred 
certain new aircraft deliveries, pursued the sale or lease of 
certain jet aircraft and declined to renew leases for certain other 
aircraft upon lease expiry.  In 1995, USAir sold, leased, retired 
or disposed of 37 operating aircraft (including the sale of


                                 6
<PAGE>
 thirteen Boeing 737-300 aircraft) and eliminated all Boeing 727-
200s from its operating fleet.  USAir recorded a small financial 
statement gain from the sales of the above-described 737-300 
aircraft to leasing companies.  USAir intends to retire or return 
to the lessors additional Fokker F28-4000s and Douglas DC-9-30s in 
1996 and 1997.

	USAir's fleet rationalization plan has complemented its goals 
to reduce commitments for new jet aircraft.  USAir has no current 
plans to add new aircraft to its fleet until January 1998.  In May 
1994, USAir reached an agreement with The Boeing Company ("Boe-
ing"), to reschedule the delivery of 40 737-Series aircraft from 
the 1997 through 2000 time period to the years 2003 through 2005. 
As part of the same agreement, USAir relinquished all of its 
options to purchase 737-Series, 757-Series and 767-Series aircraft 
during the 1996 through 2000 time period.  In June 1995, USAir 
reached agreements with Boeing and Rolls Royce plc ("Rolls Royce") 
to reschedule the delivery dates for eight 757-200 aircraft from 
1996 to 1998.  As a result, USAir's capital commitments have been 
substantially reduced for the 1996 to 2000 time period. In 
addition, with application of the proceeds from the sale of 
Enhanced Equipment Notes in early 1996 (See Item 7. "Management's 
Discussion and Analysis of Financial Condition and Results of 
Operations"), USAir has committed financing for a substantial 
portion of the purchase price for each of the scheduled 1998 
deliveries. 

	In May 1991, USAir ceased operating its fleet of British 
Aerospace BAe-146 ("BAe-146") aircraft and USAir has not resumed 
operation of these aircraft.  USAir owns one and leases 17 BAe-146 
aircraft.  Recently, USAir has increased its efforts to remarket 
the BAe-146 aircraft.  USAir has subleased one BAe-146 aircraft to 
a European airline and has entered into sublease agreements with 
domestic and foreign airlines for four BAe-146s to be delivered in 
the first and second quarters of 1996.  USAir also has preliminary 
agreements to sublease five additional BAe-146s to a European 
airline.  USAir has continued to pay rent, insure (or cause to be 
insured) the aircraft and perform its other obligations under the 
BAe-146 leases, except that, for those BAe-146s that remain in 
storage, USAir has not performed mandatory airworthiness directives 
on some of those aircraft as required by such leases.  The stored 
BAe-146s are being preserved in accordance with FAA-approved 
procedures and manufacturer guidelines.  In the fourth quarter of 
1994, USAir recorded a non-recurring charge of approximately $132.8 
million for the BAe-146 aircraft.  As a result of USAir's ability 
to sublease some of the grounded aircraft, USAir reversed $4.1 
million of the 1994 charge of $132.8 million for BAe-146s during 
the fourth quarter of 1995. USAir may make additional reversals if 
it sells or leases additional BAe-146 aircraft. 

General Industry Conditions

	Demand for air transportation historically has tended to 
mirror general economic conditions. During the most recent economic


                                 7
<PAGE>
 recession in the United States, the change in industry capacity 
failed to mirror the reduction in demand for domestic air transpor-
tation due primarily to continued delivery of new aircraft and, 
secondarily, to the operation of certain major U.S. carriers under 
the protection of Chapter 11 of the Bankruptcy Code for extended 
periods. While industry capacity has leveled off and the general 
economy has improved, USAir expects that the airline industry will 
remain extremely competitive for the foreseeable future, primarily 
due to the dramatic change which has occurred in industry pricing 
and which has resulted in generally lower fares.  See "Significant 
Impact of Low Cost, Low Fare Competition."  

	In 1995, the U.S. airline industry had its best year since the 
recession began in July 1990, with several airlines posting 
profits, although many of the major carriers continue to be 
burdened with large amounts of debt.  Unlike the results of some of 
its competitors, USAir's results did not improve in 1994.  USAir 
experienced a pre-tax loss of $716.2 million in 1994.  The entire 
airline industry experienced further improved results in 1995. 
USAir's results improved in 1995 as well.  Nonetheless, USAir 
believes that for the foreseeable future, while the demand for 
higher yield "business fares" will remain essentially flat and 
relatively inelastic, the lower yield "leisure" market, which is 
affected by the general economy, will remain highly price sensi-
tive.  This trend will make it more difficult for the domestic 
airlines, including USAir, to sustain meaningful yield increases in 
the long run.  Therefore, USAir believes it must reduce its cost 
structure substantially in order to ensure its long-term financial 
stability. 

Significant Impact of Low Cost, Low Fare Competition

	Most of USAir's operations are in competitive markets.  USAir 
experiences competition of varying degrees with other air carriers 
and with all forms of surface transportation.  USAir competes with 
at least one major airline on most of its routes between major 
cities.  Vigorous price competition exists in the airline industry, 
and competitors have frequently offered sharply reduced discount 
fares in many of these markets.  Airlines, including USAir, use 
discount fares and other promotions to stimulate traffic during 
normally slack travel periods, to generate cash flow and to 
increase relative market share in selected markets.  Discount and 
promotional fares are often subject to various restrictions such as 
minimum stay requirements, advance ticketing, limited seating and 
refund penalties.  USAir has often elected to match discount or 
promotional fares in certain markets in order to compete vigorously 
in those discounted markets. 

	The dramatic expansion of low fare competitive service in many 
of USAir's markets in the eastern United States during 1994 and 
USAir's competitive response of reducing its fares up to 70% in 
certain affected primary and secondary markets in order to preserve 
its market share contributed to large losses in 1994.  In particu-
lar, Continental Airlines, Inc. ("Continental") created a high


                                 8
<PAGE>
 frequency, low fare product called "Continental Lite."  By late 
1994, USAir competed with Continental in primary and secondary 
markets from which USAir then generated 46% of its passenger 
revenue with fare reductions of up to 70% in certain markets.  As 
discussed below, in 1995 the airline industry did not generally 
experience the deep level of fare discounting prevalent during the 
last several years. Continental abandoned its Continental Lite 
strategy in 1995 and fare levels have somewhat recovered. 
Nonetheless, USAir does not believe that there has been a reduction 
in the public demand for generally lower air fares.  The growth of 
the operations of low cost, low fare carriers in USAir's markets in 
domestic markets represents an intense competitive challenge for 
USAir, which has higher operating costs and fewer financial 
resources than many of its competitors.  For example, the expansion 
of Southwest Airlines, Inc. ("Southwest") into BWI, and in early 
1996, Florida, and the growth of ValuJet Airlines, Inc. ("ValuJet") 
at Washington, Dulles and other eastern markets (including 
ValuJet's recent expansion into the Pittsburgh and Charlotte 
markets) pose a competitive challenge for USAir. USAir currently 
has low cost, low fare competition affecting over 45% of its 
traffic base. Southwest and ValuJet both have a significant cost 
advantage over USAir. USAir believes that it must reduce its 
operating costs substantially if it is to ensure its long-term 
financial stability and that low-cost incursions into markets 
served by USAir could have a material and adverse affect on USAir's 
financial condition and results of operations. 

	In addition, other low cost carriers may enter other USAir 
markets. For example, America West Airlines, Inc. commenced service 
in April 1994 between Columbus, Ohio, where it operates a hub, and 
Philadelphia, where USAir has a hub operation.  Other carriers, 
including some of the larger carriers, have also developed or 
indicated their intent to develop similar low fare short-haul 
service, such as United's low cost, low fare operation in the 
western United States discussed below.  Delta is negotiating for 
concessions from its organized labor groups and has reportedly 
reached a tentative agreement with its pilots union that would 
enable Delta to start a low cost, short-haul service perhaps as 
early as spring 1996 to compete with airlines such as Southwest and 
ValuJet.  It is possible that this service might be introduced in 
markets that USAir serves, which may result in greater competition 
and lower fares in those markets.  USAir has stated that it will be 
competitive on routes that are important to USAir and has under-
scored the necessity of cutting costs to remain competitive with 
insurgents on these routes. 

Industry Restructuring and Cost-Cutting

	Major carriers that compete with USAir have implemented, or 
are in the process of implementing, measures to reduce their 
operating costs.  For example, United has substantially reduced its 
personnel costs as part of a recapitalization transaction completed 
in July 1994.  United initiated its low cost, low fare operation in 
the western U.S. in October 1994.  Delta is currently in discus


                                 9
<PAGE>
sions with certain of its employees regarding concessions and has 
announced progress in these talks.  Delta has also recently turned 
over several of its former routes to Delta Connection code-share 
carriers that have lower cost structures. American announced a 
restructuring of its non-union workforce and is still seeking 
substantial concessions and productivity gains from its pilot 
group.  Trans World Airlines, Inc. ("TWA") has negotiated produc-
tivity improvements with its unionized employees and has recently 
emerged from bankruptcy for the second time in less than two years 
pursuant to a "pre-packaged" reorganization plan approved by a 
bankruptcy court which reduces the carrier's debt by approximately 
30%.  Continental has reduced capacity and returned non-productive 
aircraft to lessors.  In early 1995, Southwest announced that its 
pilots had ratified a 10-year labor contract that provides for no 
wage increases in the first five years, providing for grants of 
stock options to the pilots instead.  USAir expects that the 
implementation of this labor contract will further enhance 
Southwest's low cost advantage over USAir and other carriers. These 
actions by certain of USAir's competitors illustrate the trend 
among the major U.S. airlines to restructure in order to reduce 
their operating costs and enable them to compete in a low fare 
environment.  See "Strategy" and "Capacity and Route Rational-
ization" above for a discussion of USAir's cost reduction initia-
tives. 

	There are recent examples of companies in the airline industry 
which have obtained employee concessions in agreements that 
provided for the recapitalization of the companies, including 
employee ownership stakes and employee participation in corporate 
governance. Most recently, in July 1994, UAL Corporation, parent of 
United, consummated the recapitalization noted above which resulted 
in majority ownership and board membership for certain employee 
groups in exchange for concessions.  In other cases, airlines have 
filed for bankruptcy protection under Chapter 11 of the Bankruptcy 
Code, and some airlines have ceased operation altogether when their 
operating costs remained excessive in relation to their revenues, 
and their liquidity became insufficient to sustain their 
operations. 

	In 1995, various carriers, including USAir, implemented 
cutbacks in service in the eastern U.S.  The "intra-east coast" 
area represents approximately 64% of USAir's departures and 
approximately 44% of its ASMs.  USAir has implemented a plan to cut 
capacity throughout its system and to emphasize the strength of its 
hubs in Pittsburgh, Charlotte, Philadelphia and Baltimore, as well 
as other major east coast urban centers.  See "Strategy" and 
"Capacity and Route Rationalization" above. The major carriers 
decreased service in the East by approximately 9.8% year-over-year. 
However, several smaller carriers increased the number of depar-
tures in this region during the same time period or have announced 
plans to introduce or increase service in this region.  The net 
result was a decrease in jet capacity in the intra-east coast 
region of approximately 3.5% for the full year 1995 from 1994 
levels.


                                 10
<PAGE>
	The trend toward globalization of the airline industry has 
accelerated in recent years as certain U.S. carriers, including 
USAir, have formed marketing and strategic alliances with foreign 
carriers.  Certain foreign carriers have made substantial invest-
ments in U.S. carriers which have frequently been tied to marketing 
alliances or, less frequently, reciprocal investments by the U.S. 
carrier in its foreign partner.  Foreign investment in U.S. air 
carriers is restricted by statute and may be subject to review by 
the DOT and, on antitrust grounds, by the U.S. Department of 
Justice (the "DOJ"). 

	In February 1995, several major U.S. carriers, including 
Delta, American, Northwest, United and USAir, imposed limits on the 
base commissions they pay travel agents for domestic air fares. 
Formerly, most major airlines paid a fixed base commission of 
approximately 10% on the price of a ticket for the distribution of 
all domestic tickets. The new cap limits base commission payments 
to $50 for a round-trip domestic ticket with a base fare above $500 
and $25 for a one-way domestic ticket with a base fare above $250. 
The new limits on commissions are designed to reduce one of the 
airlines' largest expenses.  USAir has experienced cost savings 
through its implementation of a limit on the commissions it pays 
travel agents for domestic air fares.  As a result of the new 
limits on commissions, some travel agents have filed lawsuits 
against the airlines that imposed commission caps, including USAir, 
claiming that the airlines violated antitrust laws.  See Part 1, 
Item 3. "Legal Proceedings." 

Deferral of Dividends by USAir Group

	On September 29, 1994, USAir Group announced that it was 
deferring the quarterly dividend payment due September 30, 1994 on 
the 358,000 outstanding shares of its 9 1/4% Series A Cumulative 
Convertible Preferred Stock ("Series A Preferred Stock"). The 
Series A Preferred Stock is owned by affiliates of Berkshire 
Hathaway Inc. ("Berkshire").  USAir Group has also deferred 
quarterly dividend payments on all of its other outstanding series 
of preferred stock, including the Series F Cumulative Convertible 
Senior Preferred Stock (the "Series F Preferred Stock"), the Series 
T-1 Cumulative Convertible Exchangeable Senior Preferred Stock (the 
"Series T-1 Preferred Stock"), the Series T-2 Cumulative 
Convertible Exchangeable Senior Preferred Stock ("Series T-2 
Preferred Stock") (the Series T-1 and Series T-2 Preferred Stock 
are collectively referred to as the "Series T Preferred Stock"), 
all three of which are owned by an affiliate of BA, as well as on 
the publicly held $437.50 Series B Cumulative Convertible Preferred 
Stock (the "Series B Preferred Stock"). On March 13, 1995, 
Berkshire announced that it had recorded a pre-tax charge of $268.5 
million to recognize a decline in the value of its investment in 
the Series A Preferred Stock that had an original cost of $358 
million. On May 22, 1995, BA announced that it had made a $200 
million provision against its $400 million investment in preferred 
stock of USAir Group. USAir Group has not paid a dividend on its


                                 11
<PAGE>
 common stock, par value $1.00 per share (the "Common Stock"), 
since the second quarter of 1990. As of March 28, 1996, the board 
of directors of USAir Group had not authorized the resumption of 
any dividends on USAir Group's preferred stock or Common Stock and 
there can be no assurance when or if such dividend payments will 
resume.  See Part 1, Item 5A. "Market for USAir Group's Common 
Equity and Related Stockholder Matters."

	Under the terms of the Series A Preferred Stock, Berkshire has 
the right to elect two additional directors to the board of 
directors of USAir Group after a scheduled dividend payment has not 
been paid for thirty days.  Berkshire has informed USAir Group that 
it does not intend to exercise this right at this time. Berkshire's 
Chairman Warren E. Buffett and Vice Chairman Charles T. Munger 
served as directors on USAir Group's and USAir's boards of 
directors until November 1995. They did not stand for re-election 
as directors in November 1995. Under the terms of the Series B 
Preferred Stock, the holders of that security have the right to 
elect two additional directors to the board of directors of USAir 
Group if six quarterly dividends are not paid.  That right became 
effective on February 15, 1996.  In March 1996, certain Series B 
Preferred Stockholders informed the Company that they would be 
pursuing the right to elect two additional directors to the 
Company's board of directors.  If Berkshire were to exercise its 
right to elect directors and the holders of the Series B Preferred 
Stock were to exercise their right to elect directors, BA would 
have the right to designate an additional nominee for election as 
director to the board of directors of USAir Group pursuant to the 
January 21, 1993 Investment Agreement between USAir Group and BA 
(as amended, the "Investment Agreement"). 

Likelihood of No Future Investments by British Airways
 
	As described in greater detail in "British Airways Investment 
Agreement" below, on January 21, 1993, USAir Group and BA entered 
into the Investment Agreement. BA invested approximately $400 
million in certain preferred stock of USAir Group in accordance 
with the Investment Agreement.  The deadline for BA's election to 
purchase a certain series of preferred stock of USAir Group and 
therefore, to elect to make any further investment in USAir Group 
pursuant to the Investment Agreement, was January 21, 1996 (except 
that, if the DOT shall approve all of the transactions contemplated 
by the Investment Agreement on or before January 21, 1998, BA may 
make additional investments in USAir Group under certain circum-
stances). BA declined to make any further investment on or before 
the January 21, 1996 deadline. BA stated publicly that it was 
precluded from making additional investments under existing DOT 
policy and that it did not expect DOT approval to be forthcoming. 
See "Provisions Regarding Additional BA Investments; BA Announce-
ment Regarding No Additional Investment in USAir Group" below.


                                 12
<PAGE>
Executive Officers

	The executive officers of USAir Group and USAir as of 
March 28, 1996 are as follows:

      Name               Age                Position
      ----               ---                --------
Bruce R. Aubin.........   65    Senior Vice President-Maintenance
                                   Operations, USAir

Robert L. Fornaro......   43    Senior Vice President-Planning,
                                   USAir

John P. Frestel, Jr....   56    Senior Vice President-Human
                                   Resources, USAir

Rakesh Gangwal.........   42    President and Chief Operating
                                   Officer, USAir Group and USAir

John W. Harper.........   55    Senior Vice President-Finance and
                                   Chief Financial Officer, USAir
                                   Group and USAir

W. Thomas Lagow........   54    Executive Vice President-
                                   Marketing, USAir

John R. Long, III......   47    Executive Vice President-Customer
                                   Services, USAir

Lawrence M. Nagin......   55    Executive Vice President-
                                   Corporate Affairs and
                                   General Counsel, USAir
                                   Group and USAir

Robert C. Oaks.........	 59    Senior Vice President-Operations,
                                   USAir

Nancy R. Rohrbach......   49    Vice President-Public & Community 
                                   Relations, USAir Group, Senior
                                   Vice President-Public and
                                   Community Relations, USAir

Stephen M. Wolf........	 54    Chairman of the Board and Chief
                                   Executive Officer, USAir Group
                                   and USAir

	There are no family relationships among any of the officers 
listed above.  No officer was selected pursuant to any arrangement 
between him or her and any other person.  Officers are elected 
annually to serve for the following year or until the election and 
qualification of their successors.  Messrs. Frestel and Long have 
been actively engaged in the business and affairs of the Company 
and USAir during the past five years.  The business experience of 
the officers listed above since at least January 1, 1991 is as


                                 13
<PAGE>
 follows:

	Mr. Aubin was Executive Advisor to the Vice Chairman, 
President and Chief Executive Officer of Air Canada prior to 
joining USAir and, prior to that position, he served as Senior Vice 
President Technical Operations and Chief Technical Officer of Air 
Canada. He was elected Senior Vice President-Maintenance Operations 
of USAir in January 1994. 

	Mr. Fornaro was Vice President-Research of Jesup & Lamont 
Securities until February 1988, when he became Senior Vice 
President-Marketing of Braniff, Inc.  In August 1988, Mr. Fornaro 
became Senior Vice President-Market Planning of Northwest, the 
position he held until February 1992.  He was elected Senior Vice 
President-Planning of USAir in March 1992. 

	Mr. Frestel was associated with The Atchison, Topeka & Santa 
Fe Railway for 22 years, most recently as Vice President-Personnel 
and Labor Relations, and was a Director of that company from June 
1988 until his election as Senior Vice President-Human Resources of 
USAir in January 1989. 

	Mr. Gangwal's appointment with USAir Group and USAir as 
President and Chief Operating Officer became effective as of 
February 19, 1996.  Mr. Gangwal came to USAir from Air France where 
he had been Executive Vice President-Planning and Development since 
November 1994.  Mr. Gangwal previously served in a variety of 
management roles at United over an eleven-year period, culminating 
in the role of Senior Vice President-Planning. 

	Mr. Harper was Senior Vice President-Marketing and Information 
Systems at Axe-Houghton Management (investment management) until 
his election as Vice President and Controller of USAir in December 
1991.  He was elected Senior Vice President-Information Systems of 
USAir in October 1992 and Senior Vice President-Finance and Chief 
Financial Officer of USAir Group and USAir in 1994. 

	Mr. Lagow was Senior Vice President-Market Planning of 
Northwest until February 1988, when he became Senior Vice Presi-
dent-Planning of United.  Mr. Lagow held that position until he was 
elected Executive Vice President-Marketing of USAir in February 
1992. 

	Mr. Long served as Senior Vice President-Administration of 
USAir until his election as Senior Vice President-Customer 
Operations of USAir in June 1989.  He was elected Senior Vice 
President-Customer Services in March 1991 and Executive Vice 
President-Customer Services in May 1992. 

	Mr. Nagin practiced law with Skadden, Arps, Slate, Meagher & 
Flom from August 1994 until he joined USAir Group and USAir in 
February 1996.  He previously served in several executive positions 
at UAL and United from September 1988 to July 1994, culminating in 
the role of Executive Vice President-Corporate Affairs and General


                                 14
<PAGE>
 Counsel of UAL and United.  From 1980-1988, Mr. Nagin was Senior 
Vice President and General Counsel of Flying Tigers. 

	General Oaks is a retired United States Air Force General. He 
was commander of the Air Training Command, the service's organiza-
tion responsible for all initial training, including flight 
training, prior to his last post in his 35-year career with the Air 
Force, as commander of U.S. Air Forces in Europe.  He retired from 
the Air Force in 1994 and joined USAir in December 1994 as its Vice 
President-Corporate Safety and Regulatory Compliance.  He was 
elected to his present position in February 1995.

	Ms. Rohrbach served as a member of the White House legislative 
liaison team (1981 to 1986) and as Assistant to the President and 
Secretary to the Cabinet (1987 to 1988).  In 1989 and 1990, she was 
a resident fellow at Harvard University's Institute of Politics and 
a consultant to the Department of Energy.  She was Assistant 
Secretary of Labor for Policy during 1991 and 1992 and a public 
policy and communications consultant during 1993.  Ms. Rohrbach was 
elected Vice President-Public and Community Relations of USAir 
Group and Senior Vice President-Public and Community Relations of 
USAir in January 1994. 
 
	Mr. Wolf is Chairman of the Board of Directors and Chief 
Executive Officer of USAir Group and USAir and was elected to those 
positions in January 1996.  Immediately prior to joining USAir, Mr. 
Wolf was a senior advisor to the investment bank Lazard Freres & 
Co.  From 1987 to July 1994, Mr. Wolf was chief executive officer 
of UAL and United and became Chairman of each in 1988.  From 1986 
to 1987, Mr. Wolf was Chief Executive Officer of Tiger Internation-
al, Inc. and Flying Tigers.  From 1984 to 1986, Mr. Wolf was 
President and Chief Executive Officer of Republic Airlines. Prior 
to that time Mr. Wolf held senior management positions at Continen-
tal, Pan American World Airways and American.  Mr. Wolf is a 
Director of Philip Morris Companies, R.R. Donnelley & Sons Co. and 
the Alzheimer's Disease and Related Disorders Association. He is 
also a trustee of Northwestern University and Rush-Presbyterian-St. 
Luke's Medical Center.

Employees

	At December 31, 1995, USAir Group's various subsidiaries 
employed approximately 43,100 full-time equivalent employees. USAir 
employed approximately 4,900 pilots, 9,200 maintenance and related 
personnel, 10,000 station personnel, 3,900 reservations personnel, 
7,700 flight attendants and 4,200 personnel in other administrative 
and miscellaneous job categories, while the regional and other 
subsidiaries employed approximately 800 pilots, 700 maintenance and 
related personnel, 900 station personnel, 400 flight attendants and 
400 personnel in other administrative and miscellaneous job 
categories.  Approximately 28,100, or 65%, of the employees of 
USAir Group's subsidiaries are covered by collective bargaining 
agreements with various labor unions, or will be covered by a 
collective bargaining agreement for which initial negotiations are


                                 15
<PAGE>
 in progress.  

	After negotiating with the leaders of its labor groups since 
March 1994 in an attempt to reduce its annual personnel costs by 
approximately $500 million, USAir Group had reached an agreement in 
principle on March 29, 1995 with the negotiating committee of the 
Airline Pilots Association ("ALPA"), which represents USAir's 
pilots.  During the second quarter of 1995, USAir Group reached 
agreements in principle with the International Association of 
Machinists and Aerospace Workers ("IAM"), the Association of Flight 
Attendants ("AFA") and the Transport Workers Union (the "TWU"). The 
agreements in principle provided for wage and other concessions in 
exchange for equity participation in USAir Group and representation 
on USAir Group's board of directors for USAir's employees.  The IAM 
represents USAir's mechanical and related employees and USAir's 
fleet service employees. The AFA represents USAir's flight 
attendants.  The TWU represents USAir's flight crew training 
instructors, flight simulator engineers and dispatch employees. The 
tentative agreement with the TWU was with respect to only the 
flight crew training instructors.  Each of the tentative agreements 
was subject to many significant conditions, including union 
ratification, negotiation and ratification of acceptable agreements 
between USAir and its other labor groups, the restructuring of 
holdings by other parties and approval of the boards of directors 
of USAir Group and USAir and the stockholders of USAir Group.  In 
July 1995, the members of the AFA voted against ratification of 
their agreement in principle.  ALPA made significant additional 
demands which were unacceptable and negotiations were thereafter 
terminated by the Company.

	USAir continues to believe that its long-term future depends 
on reduced costs of operation, including especially lower personnel 
costs. USAir remains committed to obtaining labor cost reductions. 
The contract with the IAM covering USAir's mechanical and fleet 
service employees is now open for negotiation.  USAir and the IAM 
have begun the bargaining process.  ALPA's contract will become 
open for negotiation in May 1996.  The contract of the AFA will 
become amendable on January 1, 1997. It is not possible to predict 
whether USAir will be successful in achieving its desired personnel 
cost savings.  It is also not possible at this time to predict how 
long it will take to conclude collective bargaining negotiations, 
which are subject to procedures mandated by the Railway Labor Act, 
although these negotiations traditionally take one or more years 
from the date a contract becomes amendable. 

	Under the Railway Labor Act, a labor contract does not 
"expire," but rather becomes amendable on a certain date.  Thirty 
days prior to that date, either party to the contract may give 
notice to the other of its intention to amend the contract, at 
which point the collective bargaining process begins.  If, after a 
period of negotiations, the parties cannot reach an agreement, a 
federal mediator from the National Mediation Board ("NMB") is 
brought in to assist.  The process of mediation continues until the 
NMB determines, at its sole discretion, that the parties have


                                 16
<PAGE>
 reached an impasse.  At that point, the parties enter a thirty-day 
"cooling-off" period before either party may employ so-called 
"self-help" (e.g., the imposition of contract changes or a lockout 
by the company or a strike by the union).  While in negotiations 
and mediation, both parties must observe the status quo. 

Historical Cost Reduction Programs

	In 1994, USAir implemented measures announced in September 
1993 to reduce projected operating costs.  These measures included 
a workforce reduction of approximately 2,500 full time positions. 
However, USAir's ability to implement additional workforce 
reductions is currently limited by its existing labor contracts. 
Due to the inclusion of "no furlough" provisions in its current 
labor agreements with ALPA and the AFA, USAir may not furlough 
employees covered by those agreements for specified periods of 
time. 

	In 1992 and 1993, USAir reached agreement on new contracts 
with ALPA with respect to USAir's pilot employees, the IAM with 
respect to USAir's mechanics and related employees, the AFA with 
respect to its flight attendant employees, and the TWU with respect 
to 170 flight dispatch employees and approximately 60 USAir flight 
simulator engineers.  Each contract (except the contract covering 
the flight dispatch employees) provided for wage reductions and 
suspension of longevity/step increases for a twelve-month period 
beginning shortly after the effective date of the contract. The 
wages of each such group of employees reverted to pre-reduction 
levels at the expiration of the relevant twelve-month period and 
were subsequently increased in accordance with the relevant 
contract.  Pursuant to their contracts, the pilots, the IAM-repres-
ented employees, the flight attendants and the flight simulator 
engineers also agreed to participate in contributory managed care 
medical and dental programs.  The flight dispatch employees also 
participated in wage reductions, suspensions of longevity/step 
increases and contributory managed care medical and dental programs 
because of their non-contract status when those measures were 
implemented for non-contract employees, as described in the 
following paragraph.  

	As of January 31, 1996, none of the above groups of employees, 
other than a small group of flight simulator engineers, is 
scheduled to receive further wage increases under the terms of its 
contract.  However, members of all such groups, including the 
mechanics and related employees and the flight dispatch employees, 
are entitled to wage increases based on longevity. Each contract 
provides for productivity improvements. The defined benefit pension 
plans for the flight dispatch employees and the flight simulator 
engineers have been frozen. 

	In accordance with its previously announced policy, when ALPA 
agreed to the cost reduction program described above, USAir 
implemented wage reductions and suspension of longevity/step 
increases on its non-contract employees for the twelve-month period


                                 17
<PAGE>
 commencing in June 1992.  Earlier in 1992, USAir had implemented 
the contributory managed care medical and dental programs for 
non-contract employees.  Prior to January 1, 1992, USAir exclusive-
ly paid contributions to the basic defined benefit pension plan for 
its non-contract employees. USAir froze this pension plan at the 
end of 1991, which resulted in a one-time book gain of approximate-
ly $107 million for 1991.  USAir implemented a defined contribution 
pension plan for these employees on January 1, 1993, which is 
composed of three components: contributions by USAir based on age 
and a percentage of salary, a partial match by USAir of employee 
contributions to a savings plan and a profit sharing plan. 

	Taken together, the above measures provided for temporary wage 
reductions and suspension of longevity/step increases in wages that 
USAir estimates saved approximately $120 million during the period 
June 1992 through March 1994.  These concessions provided for 
productivity improvements which saved USAir approximately $55 
million during the same period.  All employees affected by these 
changes also agreed to participate in contributory managed care 
medical and dental programs which result in savings for USAir.  In 
exchange for the concessions agreed upon by its unionized employ-
ees, USAir included "no furlough" provisions in each of the new 
labor agreements with ALPA, the IAM and the AFA, which prohibit (or 
prohibited) USAir from furloughing employees hired on or before the 
effective date of the agreements through September 30, 1995 in the 
case of the agreement with the IAM for mechanics and related 
employees, through December 31, 1996 in the case of the agreement 
with the AFA, and through June 30, 1997 in the case of the 
agreement with ALPA. 

	USAir recorded a non-recurring charge of approximately $36.8 
million in the fourth quarter of 1993 based on a projection of the 
repayment of the amount of the temporary wage and salary reductions 
discussed above in the event that the employees who sustained the 
pay cuts leave the employ of USAir.  USAir has adjusted and will 
adjust this accounting charge in subsequent periods to reflect the 
change in the present value of the liability and changes in 
actuarial assumptions including, among other things, actual 
experience with the rate of attrition for these employees and 
whether such employees have received payments under the profit 
sharing program discussed in the next paragraph. 

	In exchange for the temporary wage and salary reductions and 
other concessions during a twelve month period in 1992 and 1993 
described above, including the freeze of the defined benefit plan 
for non-contract employees, affected employees participate in a 
profit sharing program and have been granted options to purchase 
USAir Group Common Stock.  The profit sharing program is designed 
to recompense those employees whose pay has been reduced in an 
amount equal to (i) two times salary foregone plus; (ii) one times 
salary foregone (subject to a minimum of $1,000) for the freeze of 
the pension plans described above.  Estimated savings of approxi-
mately $23 million attributable to the suspension of longevity/step 
increases will not be subject to repayment through the profit


                                 18
<PAGE>
 sharing program. Until the maximum payout has been made, annual 
pre-tax profits, as defined in the program, of USAir Group would be 
distributed to participating employees as follows: 

	25% of the first $100 million in pre-tax profits;
	35% of the next $100 million in pre-tax profits; and
	40% of the pre-tax profits exceeding $200 million.

	Calculation of profits under the profit sharing plan excludes 
charges for postretirement benefit expenses other than for pensions 
(approximately $78.6 million for 1995) and certain unusual items. 
This program will be in effect until USAir employees are recom-
pensed for two times salary foregone or three times for employees 
who also had pension benefits foregone. The plan is independent of 
the profit sharing plan which is an element of the new defined 
contribution pension plan for non-contract employees discussed 
above. Based on USAir Group's 1995 results and the provisions of 
the profit sharing plan, USAir recognized charges of approximately 
$49.7 million under this plan in 1995. Since certain amounts have 
been expensed in prior years, even though 1995 was USAir's first 
profitable year since the inception of the plan, the cash payout 
for 1995 will be approximately $73.7 million and will be made to 
employees covered by the provisions of this plan in the first 
quarter of 1996.  See also Note 12 to the Company's consolidated 
financial statements contained in Part II, Item 8A.

	Under the stock option program, employees whose pay was 
reduced received options to purchase 50 shares of USAir Group 
Common Stock at $15 per share for each $1,000 of salary reduction. 
The options became exercisable following the twelve-month period of 
the salary reduction program for each group of employees. 
Generally, participating employees have five years from the grant 
date to exercise such options. As of December 31, 1995, USAir Group 
had granted options to purchase approximately five million shares 
of Common Stock to USAir employees under the program. 

ALPA Contract: Effects of a Change of Control of USAir Group or 
USAir
 
	USAir's current labor contract with ALPA provides that in the 
event of a "change of control" of USAir Group or USAir, ALPA will 
have the right to extend the duration of the contract for one, two 
or three years at its option beyond the amendable date of the 
agreement with across-the-board wage increases of 4.5% on April 30, 
1996 and on each anniversary thereof for the following three years. 
A "change of control" is defined as a single transaction or 
multi-step related transactions through which (i) securities which 
constitute and/or are then currently exchangeable into, exercisable 
for or convertible into 50% or more of the outstanding Common Stock 
(and Common Stock then currently issuable upon the exchange, 
exercise or conversion of securities) and/or (ii) 50% or more of 
the value of the assets of USAir Group or USAir, are acquired or 
held by a single purchaser or a group of purchasers acting in 
concert.


                                 19
<PAGE>
Unionizing Efforts

	During 1994, certain unions engaged in efforts to unionize 
USAir's fleet service employees.  The Railway Labor Act governs, 
and the NMB has jurisdiction over, campaigns to unionize workers. 
After the IAM won a runoff election, on July 22, 1994 the NMB 
certified the IAM to represent the fleet service class or craft. 
Under the Railway Labor Act, which governs labor relations in the 
airline industry, USAir is obligated to negotiate a collective 
bargaining agreement with the IAM governing the terms and condi-
tions of employment for the fleet service employees.  This 
obligation does not require USAir to agree to any particular term 
or condition sought by the IAM. 

	On June 3, 1994, after determining that the United Steel 
Workers of America ("USWA") had submitted a sufficient number of 
authorization cards, the NMB ordered an election among USAir's 
passenger service employees, a class or craft of approximately 
10,000 workers consisting primarily of USAir's ticket counter/gate 
agents and reservations agents, to determine whether the USWA or 
other union would represent these employees.  The NMB mailed 
ballots to eligible passenger service employees on July 19, 1994 
and tabulated the ballots on August 18, 1994.  Less than a majority 
of the eligible passenger service employees voted in favor of 
representation and, as a result, no union represents the passenger 
service employees at this time. 

	USAir cannot predict whether any union might submit authoriza-
tion cards to the NMB sufficient to obtain an election among any 
unrepresented class or craft of employees. 












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                                 20
<PAGE>
Status of USAir's Labor Agreements

	The following table presents the status of USAir's labor 
agreements as of December 31, 1995:
                                                     Expiration
                            Approximate     Date       Date of
                             Number of    Contract  "No-Furlough"
Union    Class or Craft      Employees    Amendable     Clause
-----  -----------------    -----------   ---------  -----------

AFA    flight attendants        7,700        1/97      12/31/96 

ALPA   pilots                   4,900        5/96       6/30/97 

IAM    mechanics and
         related employees      7,800       10/95 (2)   9/30/95 

IAM    fleet service
         employees              5,400 (1)         (3)         - 

TWU    flight crew training
         instructors, flight
         simulator engineers 
         and dispatch employees   270     8/96-8/97 (4)       - 

(1)	Estimated number of employees who will be covered under this 
new contract.
(2)	Currently in negotiations.
(3)	Initial contract in negotiation.
(4)	Separate contracts cover the flight crew training instructors, 
the flight simulator engineers and the dispatch employees. 

Frequent Traveler Program

	Each major airline, including USAir, has developed a frequent 
traveler program that offers its passengers incentives to maximize 
travel on that particular carrier.  Participants in such programs 
typically earn "mileage credits" for every trip they fly that can 
be redeemed for airline travel or, in some cases, for other 
benefits. 

	USAir accounts for its FTP under the incremental cost method, 
whereby travel awards are valued at the incremental cost of 
carrying one additional passenger.  Such costs are accrued when FTP 
participants accumulate sufficient miles to be entitled to claim 
award certificates.  Incremental costs include unit costs for 
passenger food, beverages and supplies, fuel, reservations, 
communications, liability insurance and denied boarding compensa-
tion expenses expected to be incurred on a per passenger basis.  No 
profit or overhead margin is included in the accrual for incremen-
tal costs. No liability is recorded for airline, hotel or car 
rental award certificates that are to be honored by other parties 
because there is no cost to USAir for these awards.


                                 21
<PAGE>
	See Part II, Item 7. "Management's Discussion and Analysis of 
Financial Condition and Results of Operations". 

Computerized Reservation Systems

	At December 31, 1992, USAM Corp. ("USAM"), a subsidiary of 
USAir, owned 11% of the Covia Partnership ("Covia") which owned and 
operated a computerized reservation system ("CRS").  In September 
1993, Covia purchased the assets of the corporation that owned and 
operated the Galileo CRS which provided CRS services to travel 
agent subscribers in Europe.  Covia was then separated into three 
entities.  As a result, at December 31, 1995, USAM owned 11% of the 
Galileo International Partnership, approximately 11% of the Galileo 
Japan Partnership and approximately 21% of the Apollo Travel 
Services Partnership.   

	The Galileo International Partnership owns and operates the 
Galileo CRS.  Galileo Japan Partnership markets CRS services in 
Japan.  Apollo Travel Services markets CRS services in the U.S. and 
Mexico.  Galileo CRS is the second largest of the four CRS systems 
in the U.S. based on revenues generated by travel agency subscrib-
ers.  A subsidiary of United controls 38% of the partnership, and 
the other partners exclusive of USAir's interest are subsidiaries 
of BA, Swissair, KLM Royal Dutch Airlines, Alitalia, Air Canada, 
Olympic Airways, Austrian Airlines, Aer Lingus and TAP Air 
Portugal. 

	CRSs play a significant role in the marketing and distribution 
of airline tickets.  Travel agents issue tickets which generate the 
majority of USAir's passenger revenues.  Most travel agencies use 
one or more CRSs to obtain information about airline schedules and 
fares and to book their clients' travel.

Maintenance Marketing Joint Venture with BA

	USAir and an affiliate of BA jointly organized Airline 
Technical Services, LLC on October 12, 1995.  The goal of this 
venture is the joint marketing in North America, Central America 
and South America of contract maintenance, engineering and 
technical services for USAir and BA.  USAir hopes to enhance the 
utilization of maintenance personnel by taking on outside mainte-
nance work, generating revenues associated with its excess 
maintenance capacity and BA's experience with contract maintenance. 
USAir also hopes that exposure to the competitive marketplace will 
lead to productivity improvements by its own maintenance personnel. 

Jet Fuel

	All petroleum product prices continue to be subject to 
unpredictable economic, political and market factors. Also, the 
balance among supply, demand and price has become more reactive to 
world market conditions.  Accordingly, the price and availability 
of jet fuel, as well as other petroleum products, continues to be 
unpredictable.  Because fuel costs constitute a major expenditure


                                 22
<PAGE>
 for USAir (approximately 9% of its operating costs for fiscal year 
1995), significant increases in fuel costs could materially and 
adversely affect USAir's results of operations. 

	USAir continues to adjust its jet fuel purchasing strategy to 
take advantage of the best available prices while attempting to 
ensure that supplies are secure.  In addition, USAir has entered 
into agreements to hedge the price of a portion of its jet fuel 
needs, which may have the net effect of increasing or decreasing 
USAir's fuel expense.  See Note 2. to the Company's consolidated 
financial statements contained in Part II, Item 8A. 

	In August 1993, the United States increased taxes on domestic 
fuel, including aircraft fuel used on domestic routes, by 4.3 cents 
per gallon.  Airlines were exempt from the tax increase until 
October 1, 1995, and pending legislation in Congress would 
reinstate the exemption through September 30, 1997, subject to 
termination of the exemption on September 30, 1996 if certain 
aviation trust funds are not extended.  These aviation trust funds 
expired on December 31, 1995 and have not, as of March 28, 1996, 
been extended.  There can be no assurance that the fuel tax 
exemption will be reinstated, or if reinstated, the terms on which 
and the period for which the exemption will be effective.  The 
additional fuel tax is currently being paid.  Non-reinstatement of 
the fuel tax exemption would increase the annual operating expenses 
of USAir by approximately $47 million based on projected domestic 
fuel consumption for 1996. 

	The following table sets forth statistics about USAir's jet 
fuel consumption and cost for each of the last four fiscal years: 

            Gallons                                Percentage of 
 Fiscal    Consumed    Total Cost    Average Cost    Operating 
  Year    (Millions)  (Millions)(1)  Per Gallon(1)  Expenses(2)
 ------    --------    -----------   -----------   -----------
  1995      1,137        $605.0          $0.53          9.0%
  1994      1,205        $642.3          $0.53          9.4%
  1993      1,161        $677.9          $0.58         10.2% 
  1992      1,183        $720.6          $0.61         11.1% 

(1)	Cost includes the base cost of fuel and transportation 
charges.
(2)	Operating expenses have been adjusted to exclude non-recurring 
and unusual items and expenses generated under the BA wet 
lease arrangements. 

Insurance

	USAir Group and its subsidiaries maintain insurance of the 
types and in amounts deemed adequate to protect themselves and 
their property. Principal coverage includes liability for bodily 
injury to or death of members of the public, including passengers; 
damage to property of USAir Group, USAir and others; loss of or 
damage to flight equipment, whether on the ground or in flight;


                                 23
<PAGE>
 fire and extended coverage; and workers' compensation and 
employer's liability.  Coverage for environmental liabilities is 
expressly excluded from USAir Group's and USAir's insurance 
policies.  In the third quarter of 1995, USAir Group's and its 
subsidiaries' liability insurance was renewed.  Rates increased due 
to a number of factors, including the two aircraft accidents in 
1994. 

Industry Regulation and Airport Access

	USAir operates under a certificate of public convenience and 
necessity issued by the DOT.  Such certificate may be altered, 
amended, modified or suspended by the DOT if the public convenience 
and necessity so require, or may be revoked for intentional failure 
to comply with the terms and conditions of a certificate.  The 
airlines are also regulated by the FAA, a division of the DOT, 
under Subtitle VII of 49 U.S.C. 40101 et seq. (the "Act"), 
primarily in the areas of flight operations, maintenance, ground 
facilities and other technical matters.  Pursuant to these 
regulations, USAir has established, and the FAA has approved, a 
maintenance program for each type of aircraft operated by USAir 
that provides for the ongoing maintenance of such aircraft, ranging 
from frequent routine inspections to major overhauls.

	Recently adopted regulations require phase-out of certain 
aircraft and aging aircraft modifications. Such types of 
regulations can significantly increase costs and affect an 
airline's ability to compete. 

	The DOT allows local airport authorities to implement 
procedures designed to abate special noise problems, provided such 
procedures do not unreasonably interfere with interstate or foreign 
commerce or the national transportation system.  Certain airports, 
including the major airports at Boston, Washington, D.C., Chicago, 
Los Angeles, San Diego and San Francisco, have established airport 
restrictions to limit noise, including restrictions on aircraft 
types to be used and limits on the number of hourly or daily 
operations or the time of such operations.  In some instances these 
restrictions have caused curtailments in services or increases in 
operating costs and such restrictions could limit the ability of 
USAir to expand its operations at the affected airports. Local 
authorities at other airports are considering adopting similar 
noise regulations. 

	In the last several years, the FAA has issued a number of 
maintenance directives and other regulations relating to, among 
other things, retirement of older aircraft, collision avoidance 
systems, airborne windshear avoidance systems, noise abatement and 
increased inspections and maintenance procedures to be conducted on 
older aircraft. 

	Several airports have recently sought to increase substantial-
ly the rates charged to airlines, and the ability of airlines to 
contest such increases has been restricted by federal legislation,


                                 24
<PAGE>
 DOT regulations and judicial decisions.  In addition, legislation 
which became effective June 1, 1992 allows public airports to 
impose passenger facility charges of up to $3 per departing or 
connecting passenger at such airports.  With certain exceptions, 
these charges are passed on to the airlines' passengers. 

	The FAA has designated John F. Kennedy, LaGuardia, O'Hare and 
Washington National airports as "high density traffic airports" and 
has limited the number of departure and arrival slots at those 
airports.  Currently, slots at the high density traffic airports 
may be voluntarily sold or transferred between carriers.  The DOT 
has in the past reallocated slots to other carriers and reserves 
the right to withdraw slots.  Various amendments to the slot 
system, proposed from time to time by the FAA, members of Congress 
and others, could, if adopted, significantly affect operations at 
the high density traffic airports or expand slot controls to other 
airports.  Certain of such proposals could restrict the number of 
flights, limit the ownership transferability of slots, increase the 
risk of slot withdrawal, or otherwise decrease the value of USAir 
slots.  USAir holds a substantial number of slots at LaGuardia and 
Washington National.  These slots are valuable assets and important 
in USAir's overall business strategy.  USAir cannot predict whether 
any of these proposals will be adopted. 

	The availability of international routes to United States 
carriers is regulated by agreements between the United States and 
foreign governments.  The United States has in the past generally 
followed the practice of encouraging foreign governments to accept 
multiple carrier designation on foreign routes, although certain 
countries have sought to limit the number of carriers.  Foreign 
route authorities may become less valuable to the extent that the 
United States and other countries adopt "open skies" policies 
liberalizing entry on international routes.  In February 1995, the 
United States and Canada reached a formal agreement which deregu-
lates airline services between Canada and the United States and 
provides that Canadian airlines have immediate "open skies" access 
to the United States and that U.S. airlines will have limited new 
route rights to Vancouver and Montreal for two years and to Toronto 
for three years and open skies thereafter.  This agreement is 
expected to result in significant increased traffic between the 
United States and Canada.  The agreement provides for two new 
Toronto designations in the first year.  In October 1995, the DOT 
granted to USAir route authority for non-stop service between 
Pittsburgh and Toronto.  USAir had previously operated this route 
under temporary exemption authority.  On May 1, 1995, the DOT 
granted to USAir the temporary exemption authority to begin 
twice-daily roundtrip nonstop service between Washington National 
and Toronto once a Canadian carrier entered that market. Air Canada 
initiated service on that route beginning in June 1995.  In 
February 1996, the DOT issued a show cause order awarding USAir 
final certification to serve the Washington National to Toronto 
route.  USAir's authority will be effective pending the DOT's 
determination as to which U.S. carrier will receive the final 
certification to operate the route.  The route will be open to all


                                 25
<PAGE>
 carriers in 1997.  In addition, in October 1995, the DOT granted 
USAir a two-year exemption route authority to operate between 
Madrid, Spain and both Philadelphia and Boston.  USAir plans to 
commence service from Philadelphia to Madrid on June 15, 1996.  In 
February 1996, the DOT issued a show cause order awarding USAir 
authority to institute service to Rome, Italy from Philadelphia 
with through service from Los Angeles.  Pending final approval, 
USAir intends to inaugurate its service to Rome on June 1, 1996. In 
February 1996, USAir received final approval from the DOT to 
institute service to Munich, Germany from Philadelphia.  USAir will 
inaugurate its Munich service on May 23, 1996. 

	Many aspects of USAir's operations are subject to increasingly 
stringent federal, state and local laws protecting the environment. 
Future regulatory developments could affect operations and increase 
operating costs in the airline industry, including for USAir. 

	Additional laws and regulations have been proposed or are 
contemplated that could significantly affect the cost of airline 
operations by, for example, raising fuel taxes, imposing additional 
requirements or restrictions on operations or impairing access to 
capital markets.  For example, proposals are being considered that 
would provide that a portion of the appropriations for the FAA and 
other aviation governmental functions be funded pursuant to 
additional taxes on ticket and cargo revenue or fees for use of the 
air traffic control system.  USAir cannot predict what laws and 
regulations may be adopted or their impact, but the impact could be 
significant.  Certain regulatory changes, if proposed and adopted, 
could materially adversely affect USAir and could require charges 
to USAir's financial statements. 

British Airways Investment Agreement

	The following summary of certain terms of the Investment 
Agreement is subject to, and is qualified in its entirety by, the 
Investment Agreement and the exhibits thereto, which have previous-
ly been filed with the U.S. Securities and Exchange Commission.  BA 
has invested approximately $400 million in USAir Group preferred 
stock in accordance with the Investment Agreement.  On March 7, 
1994, BA announced it would make no additional investments in USAir 
Group until the outcome of measures by USAir Group to reduce costs 
and improve its financial results was known.  On January 19, 1996, 
BA announced that it would not exercise its option to make any 
further investment in USAir prior to the January 21, 1996 deadline 
provided in the Investment Agreement. See "Provisions Regarding 
Additional BA Investments; BA Announcement Regarding No Additional 
Investment in USAir Group."  As of December 31, 1995, BA owned 
preferred stock in USAir Group constituting approximately 21.0% of 
the total voting interest in USAir Group. 

Terms of the Series F Preferred Stock

	On January 21, 1993, USAir Group sold, pursuant to the 
Investment Agreement, 30,000 shares of USAir Group's Series F


                                 26
<PAGE>
 Preferred Stock to BA for an aggregate purchase price of $300 
million.  The Series F Preferred Stock is convertible into shares 
of Common Stock at a conversion price of $19.41 and has a 
liquidation preference of $10,000 per share plus an amount equal to 
accrued dividends.  See "Miscellaneous" for a discussion of an 
antidilution adjustment to the conversion price of the Series F 
Preferred Stock.  The Series F Preferred Stock may be converted at 
the option of USAir Group at any time after January 21, 1998 if the 
average composite closing market price of Common Stock during any 
30-day calendar period is at least 133% of the conversion price. 
The Series F Preferred Stock is entitled to cumulative quarterly 
dividends of 7% per annum when and if declared and to share in 
certain other distributions.  

	USAir Group has deferred quarterly dividend payments on all 
its preferred stock beginning with payments due September 30, 1994. 
See "Deferral of Dividends by USAir Group."  The Series F Preferred 
Stock must be redeemed by USAir Group on January  15, 2008.  Each 
share of the Series F Preferred Stock is entitled to a number of 
votes equal to the number of shares of Common Stock into which it 
is convertible and votes with the Common Stock and USAir Group's 
Series A Preferred Stock and any other capital stock with general 
voting rights for the election of directors, as a single class. 
Subject to adjustment, 515.2950 shares of Common Stock are issuable 
on conversion per share of Series F Preferred Stock (determined by 
dividing the $10,000 liquidation preference per share of Series F 
Preferred Stock by the $19.41 conversion price), and 15,458,851 
shares of Common Stock would be issuable on conversion of all 
Series F Preferred Stock.  However, under the terms of any USAir 
Group preferred stock that is or will be held by BA ("BA Preferred 
Stock"), conversion rights (and as a result voting rights) may not 
be exercised to the extent that doing so would result in a loss of 
USAir Group's or any of its subsidiaries' operating certificates 
and authorities under Foreign Ownership Restrictions, as defined 
under "Board Representation" below, and it is assumed for this 
purpose that Series F Preferred Stock will be fully converted 
before any other BA Preferred Stock.  Under Foreign Ownership 
Restrictions, no more than 25% of USAir Group's voting interest may 
be held by persons other than U.S. citizens, including BA.  With 
respect to dividend rights and rights on liquidation, dissolution 
and winding up, the Series F Preferred Stock ranks senior to USAir 
Group's Series B Preferred Stock, Junior Participating Preferred 
Stock, Series D, no par value, and Common Stock, and pari passu 
with BA Preferred Stock and Series A Preferred Stock. See 
"Miscellaneous" for information regarding BA's purchase of two 
additional series of preferred stock from USAir Group pursuant to 
its exercise of optional and preemptive purchase rights under the 
Investment Agreement. 

DOT Order Regarding BA's Investment in USAir Group

	On March 15, 1993, the DOT issued an order (the "DOT Order") 
finding, among other things, that "BA's initial investment of $300 
million does not impair USAir's citizenship" under Foreign


                                 27
<PAGE>
 Ownership Restrictions as defined under "Board Representation" 
below.  However, the DOT instituted a proceeding to consider 
whether USAir will remain a U.S. citizen if the transactions and 
acts contemplated by the Investment Agreement, including the 
transactions discussed under "Provisions Regarding Additional BA 
Investments; BA Announcement Regarding No Additional Investment in 
USAir Group" and "Certain Governance Matters" below, are consummat-
ed.  The DOT has suspended indefinitely the period for comments 
from interested parties to the proceeding pending its resolution of 
requests by other airlines for production of additional documents 
from USAir.  The DOT Order states that the DOT expects and advises 
USAir Group and BA not to proceed with the Second Purchase and 
Final Purchase, as such terms are defined under "Provisions 
Regarding Additional BA Investments; BA Announcement Regarding No 
Additional Investment in USAir Group," until the DOT has completed 
its review of USAir's citizenship. In any event, on March 7, 1994, 
BA announced that it would make no additional investments in USAir 
Group until the outcome of measures by USAir Group to reduce its 
costs and improve its financial results was known and on Janu-
ary 19, 1996, BA announced that it would not proceed with the 
Second Purchase. 

Board Representation

	USAir Group increased the size of its board of directors by 
three on January 21, 1993 and the board filled the newly created 
directorships with designees of BA (the size of the board of 
directors was subsequently decreased to 15 in 1995).  Under the 
terms of the Investment Agreement, USAir Group must use its best 
efforts to cause BA to be proportionally represented on the board 
of directors (on the basis of its voting interest), up to a maximum 
representation of 25% of the total number of authorized directors 
("Entire Board"), assuming that such proportional representation is 
permitted by then applicable U.S. statutory and DOT regulatory or 
interpretative foreign ownership restrictions ("Foreign Ownership 
Restrictions"), until the later of the closing of the Second 
Purchase, as defined under "Provisions Regarding Additional BA 
Investments; BA Announcement Regarding No Additional Investment in 
USAir Group" below, and the date on which BA may exercise under 
Foreign Ownership Restrictions the rights described under "Certain 
Governance Matters" below. 

U.S.-U.K. Routes

	Under the Investment Agreement, USAir Group agreed that as 
promptly as commercially practicable it would divest or, if 
divestiture were not possible, relinquish, all licenses, certifi-
cates and authorities for each of its routes between the U.S. and 
the U.K. (the "U.K. Routes") at such time as BA and USAir imple-
mented the code sharing arrangement contemplated by the Investment 
Agreement discussed below.  USAir Group and BA have agreed that 
they should attempt to mitigate any negative impact on USAir 
employees or communities served by the U.K. Routes and to share any 
losses suffered as a result of such divestiture or relinquishment


                                 28
<PAGE>
 with due regard to their respective interests.  Accordingly, BA 
has been operating and marketing certain routes formerly operated 
by USAir under a "wet lease."  Under the wet lease arrangements, 
USAir has leased three Boeing 767-200ER aircraft, along with 
cockpit and cabin crews, to BA in order to serve three routes 
between the U.S. and London.  USAir has begun to phase out the wet 
lease arrangements with BA.  One of the three 767-200ER aircraft 
was returned in December 1995 and a second was returned in February 
1996.  The third aircraft will be returned during May 1996.  USAir 
plans to utilize the returned aircraft as part of its planned 1996 
expansion of international service (See "Capacity and Route 
Rationalization" above).  In conjunction with the termination of 
the wet lease arrangements and related to USAir's relinquishment or 
divestiture of the U.K. Routes, BA has agreed to pay USAir a total 
of $47 million in the form of periodic payments commencing with the 
termination of the three wet leases and continuing annually for 
nine years.  The first periodic payment was received by USAir in 
December 1995.  The route authorities which USAir was required to 
sell or relinquish were the Philadelphia-London and BWI-London 
route authorities purchased by USAir from TWA in April 1992 for $50 
million, and its route authority between Charlotte and London. 
Assets related to the U.K. Routes were carried on USAir's books at 
approximately $45 million at December 31, 1995. 

Code Sharing

	BA and USAir Group entered into a code share agreement on 
January 21, 1993 (the "Code Share Agreement") pursuant to which 
certain USAir flights carry the airline designator code of both BA 
and USAir.  Code sharing is a common practice in the airline 
industry whereby one carrier places its designator code and sells 
tickets on the flights of another carrier (its code sharing 
partner).  These flights are intended by USAir Group and BA 
eventually to include all routes provided for under the bilateral 
air services agreement between the U.S. and the U.K. to the extent 
possible, consistent with commercial viability and technical 
feasibility. 

	The DOT initially granted approval of the code sharing 
agreement between USAir and BA on March 17, 1993 for a period of 
one year.  The authorizations to USAir and BA were expanded by a 
supplemental DOT order on November 12, 1993 to permit code sharing 
on flights serving an additional number of U.S. points through 
additional U.S. gateways for BA's transatlantic flights.  In June 
1995, the DOT renewed its approval of USAir's and BA's authority to 
operate code share service on flights serving 66 U.S. cities and 
Mexico City.  USAir has ceased serving Mexico City.  In addition, 
the DOT approved an expansion of the USAir/BA code share authority 
to 65 new U.S. cities, Bermuda, Nassau and five Canadian cities. 
The approval is valid for two years.  As of December 31, 1995, 
USAir and BA had implemented code sharing to 70 of the 138 airports 
authorized by the DOT.  BA has publicly stated that its relation-
ship with USAir has contributed over $100 million in annual 
additional revenues and cost savings.  USAir believes that the code


                                 29
<PAGE>
 share arrangements have also brought benefits to USAir through 
domestic feed from international BA flights.  The code share 
arrangements with BA are an important part of USAir's strategic and 
long-term objectives. 

	USAir believes that (i) the code share cities in the U.S. 
receive greater access to international markets; (ii) it has 
greater access to international traffic; and (iii) BA's and its 
customers benefit from better on-line connections as well as 
coordinated check-in and baggage checking procedures. USAir 
believes that the code sharing arrangements will generate increased 
revenues.  The DOT may continue to link further renewals of the 
code share authorization to the U.K.'s liberalization of U.S. air 
carrier access to the U.K.; however, the code sharing arrangements 
contemplated by the Code Share Agreement are expressly permitted 
under the bilateral air services agreement between the U.S. and 
U.K. Accordingly, USAir expects that the existing code share 
authorization will continue to be renewed; however, there can be no 
assurance that this will occur.  USAir does not believe that the 
DOT's failure to renew further the authorization would result in a 
material adverse change in its financial condition. 

Provisions Regarding Additional BA Investments; BA Announcement 
Regarding No Additional Investment in USAir Group 

	On March 7, 1994, BA announced that it would not make any 
additional investments in USAir Group until the outcome of measures 
by USAir Group to reduce costs and improve its financial results 
was known.  Under the terms of the Investment Agreement, assuming 
the Series F Preferred Stock or any shares issued upon conversion 
thereof were outstanding and BA had not sold any shares of 
preferred stock issued to it by USAir Group or any Common Stock or 
other securities received upon conversion or exchange of the 
preferred stock, BA had been entitled at its option to elect to 
purchase from USAir Group, on or prior to January 21, 1996, 50,000 
shares of Series C Cumulative Convertible Senior Preferred Stock, 
without par value ("Series C Preferred Stock"), at a purchase price 
of $10,000 per share, to be paid by BA's surrender of the Series F 
Preferred Stock and a payment of $200 million (the "Second 
Purchase").  BA did not exercise that option.  

	The Investment Agreement provides that, on or prior to 
January 21, 1998, assuming that BA had purchased (or was purchasing 
simultaneously in accordance with the terms of the Investment 
Agreement) Series C Preferred Stock, BA would have the option to 
purchase 25,000 (or more in certain circumstances) shares of Series 
E Cumulative Convertible Exchangeable Senior Preferred Stock, 
without par value ("Series E Preferred Stock"), at a purchase price 
of $10,000 per share (the "Final Purchase").  Series E Preferred 
Stock is exchangeable under certain circumstances at the option of 
USAir Group into certain USAir Group debt securities ("BA Notes"). 
Because BA did not elect prior to January 21, 1996, to make the 
Second Purchase, it cannot make the Final Purchase, except that if 
the DOT approves all the transactions and acts contemplated by the


                                 30
<PAGE>
 Investment Agreement on or prior to January 21, 1998, at the 
election of either BA or USAir Group, BA's purchase of the Series C 
Preferred Stock and the Series E Preferred Stock would be 
consummated under certain circumstances.  Because BA did not elect 
to purchase the Series C Preferred Stock by January 21, 1996, USAir 
Group may at its option redeem, in whole or in part, Series F 
Preferred Stock and a like percentage of Series T Preferred Stock 
held by BA at the higher of market value or the price of $10,000 
per share, plus accrued dividends.  Under Delaware law, USAir Group 
may be subject to certain legal prohibitions on its ability to 
repurchase or redeem its own shares of capital stock for cash or 
other property.  The Company cannot predict whether or when the 
Second Purchase and Final Purchase will be consummated or whether 
or when it will repurchase or redeem its shares of capital stock. 

Terms of the Series C Preferred Stock and Series E Preferred Stock

	The Series C Preferred Stock and Series E Preferred Stock are 
substantially similar to Series F Preferred Stock, except as 
follows. Series C Preferred Stock will be convertible into shares 
of Class B Common Stock or Non-Voting Class C Stock (as such terms 
are defined under "Terms of BA Common Stock" below) at an initial 
conversion price of approximately $19.79, subject to Foreign 
Ownership Restrictions.  Each share of Series C Preferred Stock 
will be entitled to a number of votes equal to the number of shares 
of Class B Common Stock into which it is convertible, subject to 
Foreign Ownership Restrictions.  If shares of Series C Preferred 
Stock are transferred to a third party, they convert automatically 
at the seller's option into either shares of Common Stock or a like 
number of shares of Series G Cumulative Convertible Senior 
Preferred Stock.  Series E Preferred Stock will be convertible into 
shares of Common Stock or Non-Voting Class ET Stock (as defined 
under "Terms of BA Common Stock" below) at an initial conversion 
price of approximately $21.74, subject to increase if the Series E 
Preferred Stock is originally issued on or after January 21, 1997, 
subject to Foreign Ownership Restrictions.  Each share of Series E 
Preferred Stock will be entitled to a number of votes equal to the 
number of shares of Common Stock into which it is convertible, 
subject to Foreign Ownership Restrictions. 

Terms of BA Common Stock

	To the extent permitted by Foreign Ownership Restrictions, an 
amendment to USAir Group's charter, which would be filed with the 
Delaware Secretary of State immediately prior to the Second 
Purchase, which BA has announced it will not complete, would create 
three new classes of common stock: Class B Common Stock, par value 
$1.00 per share ("Class B Common Stock"), Non-Voting Class C Common 
Stock, par value $1.00 per share ("Non-Voting Class C Stock"), and 
Non-Voting Class ET Common Stock, par value $1.00 per share 
("Non-Voting Class ET Common Stock," collectively with Class B 
Common Stock and Non-Voting Class C Common Stock, "BA Common 
Stock"), all of which may be held only by BA or one of its 
wholly-owned subsidiaries.  Except with respect to voting and


                                 31
<PAGE>
 conversion rights, the BA Common Stock would be substantially 
identical to the Common Stock.  Shares of BA Common Stock would 
convert automatically to shares of Common Stock upon their transfer 
to a third party.  Subject to Foreign Ownership Restrictions, Class 
B Common Stock would be entitled to one vote per share. After the 
effectiveness of the above charter amendment, to the extent 
permitted by Foreign Ownership Restrictions, Class B Common Stock 
would vote as a single class with Series C Preferred Stock on the 
election of one-fourth of the directors and the approval of the 
holders of Class B Common Stock and Series C Preferred Stock voting 
as a single class would be required for certain matters. 

Certain Governance Matters

	Following the Second Purchase, which BA has announced it will 
not complete, and assuming these changes are permitted under 
Foreign Ownership Restrictions, the above charter amendment would 
fix the size of USAir Group's board of directors at 16, one-fourth 
of whom would be elected by BA.  In addition, the vote of 80% of 
the Entire Board of USAir Group would be required for approval of 
the following (with certain limited exceptions): (i) any agreement 
with the DOT regarding citizenship and fitness matters; (ii) any 
annual operating or capital budgets or financing plans; (iii) 
incurring capital expenditures not provided for in a budget 
approved by the vote of 80% of the Entire Board in excess of $10 
million in the aggregate during any fiscal year; (iv) declaring and 
paying dividends on any capital stock of USAir Group or any of its 
subsidiaries (other than dividends paid only to USAir Group or any 
wholly-owned subsidiary of USAir Group and any dividends on 
preferred stock); (v) making investments in other entities not 
provided for in approved budgets in excess of $10 million in the 
aggregate during any fiscal year; (vi) incurring additional debt 
(other than certain debt specified in the Investment Agreement) not 
in an approved financing plan in excess of $450 million in the 
aggregate during any fiscal year; (vii) incurring off-balance sheet 
liabilities (e.g., operating leases) not in an approved financing 
plan in excess of $50 million in the aggregate during any fiscal 
year; (viii) appointment, compensation and  dismissal of certain 
senior executives; (ix) acquisition, sale, transfer or relinquish-
ment of route authorities or operating rights; (x) entering into 
material commercial or marketing agreements or joint ventures; (xi) 
issuance of capital stock (or debt or other securities convertible 
into or exchangeable for capital stock), other than (A) the stock 
options granted to employees in return for pay reductions under the 
USAir Group 1992 Stock Option Plan, as described under "-Employees" 
above, (B) to USAir Group or any direct or indirect wholly owned 
subsidiary of USAir Group, (C) pursuant to the terms of USAir Group 
securities outstanding when a certain amendment to USAir Group's 
charter required in connection with consummation of the Second 
Purchase becomes effective, or (D) pursuant to the terms of 
securities the issuance of which was previously approved by the 
vote of 80% of the Entire Board; (xii) acquisition of its own 
equity securities other than from USAir Group or its subsidiaries, 
or pursuant to sinking funds or an approved financing plan; and


                                 32
<PAGE>
 (xiii) establishment of a board committee with power to approve 
any of the foregoing.  This supermajority vote requirement would 
allow four directors, including those elected by BA, to withhold 
approval of the actions described above if they believe them to be 
contrary to the best interests of USAir.  The supermajority vote 
would not be required with regard to the foregoing actions to the 
extent they involve the enforcement by USAir Group of its rights 
under the Investment Agreement. 

	Following the Second Purchase, which BA has indicated it will 
not complete, to the extent permitted under Foreign Ownership 
Restrictions, USAir Group and BA would integrate certain of their 
respective business operations pursuant to certain "Integration 
Principles" included in the Investment Agreement.  In addition, to 
the extent permitted by Foreign Ownership Restrictions or pursuant 
to specific DOT approval, an "Integration Committee," headed by the 
chief executive officers of USAir Group and BA and by an Executive 
Vice President-Integration of USAir Group, would oversee the 
integration subject to the ultimate discretion of USAir Group's 
board of directors.  As of the Final Purchase, which BA has 
indicated it will not complete, to the extent permitted by Foreign 
Ownership Restrictions, the Investment Agreement provides for the 
establishment of a committee ("Appointments Committee") of the 
board of directors of USAir Group, composed of USAir Group's chief 
executive officer, BA's chief executive officer and another 
director serving on both USAir Group's and BA's board of directors, 
to handle all employment matters relating to managers at the level 
of vice president and above, except for certain senior executives. 
 
	BA's governance rights after the Second Purchase and the Final 
Purchase, which BA has indicated it will not complete, would be 
subject to reduction if BA reduced its holding in USAir Group under 
the following circumstances.  If BA sold or transferred, in one or 
more transactions, BA Preferred Stock, Common Stock or BA Common 
Stock (collectively, Common Stock and BA Common Stock are 
hereinafter referred to as "Non-Preferred Stock") issued directly 
or indirectly upon the conversion thereof such that the aggregate 
purchase price of the BA Preferred Stock, BA Notes, Non-Preferred 
Stock or other equity securities of USAir Group held by BA and its 
directly or indirectly wholly owned subsidiaries following such 
sale or transfer (the "BA Holding") was less than both two-thirds 
of the aggregate purchase price of all BA Preferred Stock, BA 
Notes, Non-Preferred Stock or other equity securities of USAir 
Group acquired by BA and its subsidiaries following January 21, 
1993 and $750 million (or $500 million if the Final Purchase had 
not occurred), then (i) the number of directors elected by the 
Class B Common Stock and the Series C Preferred Stock, voting 
together as a single class, would be limited to two; (ii) the 
directors elected by the Common Stock, Series A Preferred Stock, 
Series E Preferred Stock, Series T Preferred Stock, as defined 
under "Miscellaneous" below, and other capital stock with voting 
rights would no longer be required to include two directors 
selected from among the outside directors on the board of directors 
of BA; (iii) special class voting rights applicable to the Class B


                                 33
<PAGE>
 Common Stock and Series C Preferred Stock would no longer apply; 
and (iv) BA would no longer participate in the Appointments 
Committee. In addition, if the BA Holding became less than both 
one-third of the aggregate purchase price of all BA Preferred 
Stock, BA Notes, Non-Preferred Stock or other equity securities of 
USAir Group acquired by BA and its subsidiaries following Janu-
ary 21, 1993 and $375 million (or $250 million if the Final 
Purchase had not occurred), then the number of directors elected by 
the Class B Common Stock and the Series C Preferred Stock, voting 
together as a single class, would be reduced to one.  If the BA 
Holding became less than $100 million, then the Class B Common 
Stock and the Series C Preferred Stock would no longer vote 
together as a single class with respect to the election of any 
directors of USAir Group, but would vote together with the Common 
Stock, the Series A Preferred Stock and any other class or series 
of capital stock with voting rights with respect to the election of 
directors of USAir Group. 

Miscellaneous

	Under the terms of the Investment Agreement, BA has the right 
to maintain its proportionate ownership of USAir Group's securities 
under certain circumstances by purchasing shares of certain series 
of Series T Preferred Stock, Common Stock or BA Common Stock. 
Pursuant to these provisions, on June 10, 1993, BA purchased (i) 
152.1 shares of Series T-1 Preferred Stock for approximately $1.5 
million as a result of certain issuances during the period 
January 21 through March 31, 1993 of Common Stock in connection 
with the exercise of certain employee stock options and to certain 
defined contribution retirement plans; and (ii) 9,919.8 shares of 
Series T-2 Preferred Stock for approximately $99.2 million as a 
result of USAir Group's issuance on May 4, 1993 of 11,500,000 
shares of Common Stock for net proceeds of approximately $231 
million pursuant to a public underwritten offering.  Because BA 
partially exercised its preemptive right in connection with the 
Common Stock offering and the offering price was below a certain 
level, the conversion price of the Series F Preferred Stock was 
antidilutively adjusted on June 10, 1993 from $19.50 to $19.41 per 
share. As a result, the Series F Preferred stock is convertible 
into 15,458,851 shares of Common Stock or Non-Voting Class ET 
Common Stock.  BA advised USAir Group that it would not exercise 
its optional purchase rights under the Investment Agreement to buy 
additional series of Series T Preferred Stock triggered by 
issuances of Common Stock of USAir Group pursuant to certain USAir 
Group benefit plans during 1994 and 1995. 

	The Investment Agreement also imposes certain restrictions on 
BA's right to acquire additional voting securities, participate in 
solicitations with respect to USAir Group securities or otherwise 
propose or discuss extraordinary transactions concerning USAir 
Group.  These restrictions remain in effect as long as BA or any of 
its affiliates or associates beneficially owns any BA Preferred 
Stock, BA Notes or BA Common Stock, and for two years thereafter. 
In addition, the Investment Agreement restricts BA's right to


                                 34
<PAGE>
 transfer certain securities and requires that prior to 
transferring such securities, BA must, in most cases, first offer 
to sell the securities to USAir Group.  BA has certain rights to 
require USAir Group to register for sale USAir Group securities 
sold to it pursuant to the Investment Agreement. 

Operating Statistics

	USAir's operating statistics during the years 1991 through 
1995 are set forth in the following table (1): 

Years Ended December 31, 1995    1994     1993     1992     1991
-----------------------------------------------------------------
Revenue Passengers                                      
   (Thousands)*        56,674   59,495   53,678   54,655   55,600
Average Passenger
   Journey (Miles)*     663.7    637.7    656.2    642.2    613.7
Revenue Passenger
   Miles ("RPMs")
   (Millions)*         37,618   37,941   35,221   35,097   34,120
Total Available
   Seat Miles**        58,678   61,540   59,841   60,052   58,574
Available Seat Miles
   (Millions)*         58,163   61,027   59,485   59,667   58,261
Passenger Load 
   Factor (2)*          64.7%    62.2%    59.2%    58.8%    58.6%
Break Even Load
   Factor (3)(5)**      64.9%    67.3%    61.7%    63.2%    62.7%
Passenger Revenue
   Per ASM*            10.78c    9.70c   10.22c    9.70c    9.76c
Total Revenue Per
   ASM (4)(5)**        11.80c   10.59c   11.04c   10.38c   10.33c
Cost per ASM (4)(5)    11.40c   11.02c   11.12c   10.85c   10.80c
   (6)**
Yield (Revenue Per
   RPM)*               16.66c   15.61c   17.27c   16.49c   16.67c

*    Scheduled service only (excludes charter flights).
**   All service.
c    = cents
(1)	Statistics include free frequent travelers and the related 
miles flown.  
(2)	Passenger load factor is the percentage of aircraft seating 
capacity that is actually utilized (RPMs/ASMs). 
(3)	Break even load factor represents the percentage of aircraft 
seating capacity that must be utilized, based on fares in 
effect during the period, for USAir to break even at the pre-
tax income level, adjusted to exclude non-recurring and 
unusual items.
(4)	Adjusted to exclude non-recurring and unusual items.
(5)	Financial statistics for 1995, 1994 and 1993 exclude revenue 
and expense generated under the BA wet lease arrangement.
(6)	Certain statistics have been recalculated to reflect expense 
reclassifications.


                                 35
<PAGE>
Item 2.	Properties

Flight Equipment

	At December 31, 1995, USAir operated the following jet 
aircraft:
                   Passenger  Avg. Age   Owned    Leased
     Type           Capacity   (Years)    (1)       (2)     Total
     ----          ---------  --------   -----    ------    -----

Boeing 767-200ER(3)   214        7.1        4         5        9
Boeing 757-200        182        5.3       23        11       34
Boeing 737-400        146        6.1       19        35       54
McDonnell Douglas
  MD-80               141       13.9       15        16       31
Boeing 737-300        127        8.8       11        74       85
Boeing 737-200        109       13.7       48        16       64
Douglas DC-9-30       101       22.2       48        14       62
Fokker 100             98        5.1       36         4       40
Fokker F28-4000        68       11.2        1        14       15
                                ----      ---       ---      ---
                                11.1      205       189      394
                                ====      ===       ===      ===

(1)	Of the owned aircraft, 123 were pledged as collateral for 
various secured financing obligations aggregating $2.3 billion 
at December 31, 1995. 
(2)	The terms of the leases expire between 1996 and 2015. 
(3)	The above table excludes one owned and one leased 767-200ER 
aircraft which USAir leased to BA under a wet lease arrange-
ment at December 31, 1995.

	At December 31, 1995, USAir Group's three regional airline 
subsidiaries operated the following turboprop aircraft:

                   Passenger  Avg. Age     Owned    Leased
     Type           Capacity   (Years)      (1)       (2)   Total
     ----          ---------  --------     -----    ------  -----

de Havilland Dash 7    50       14.4         2(3)      2       4
de Havilland Dash 8    37        6.5        29        50      79
Dornier 328-100        32         .5         -        20      20
British Aerospace
  Jetstream 31         19        8.7         -        11(4)   11
                                ----       ---       ---     ---
                                 5.9        31        83     114
                                ====       ===       ===     ===

(1)	Of the owned aircraft, 11 were pledged as collateral for 
various secured financing obligations aggregating $45.9 
million at December 31, 1995.  One turboprop aircraft was 
owned by USAir.
(2)	The terms of the leases expire between 1996 and 2011.


                                 36
<PAGE>
(3)	One of the Company's regional airline subsidiaries is party to 
an agreement under which a third party will purchase one of 
the two owned Dash 7 aircraft on March 31, 1996.  The regional 
subsidiary has the option to require such third party to 
purchase the second owned aircraft beginning in March 1997 and 
extending 22 months.
(4)	Two of the 11 leased Jetstream 31 aircraft were returned to 
the lessor in January 1996.  The remaining 9 leased Jetstream 
31 aircraft were all leased to a third party and removed from 
the operating fleet of one of the Company's regional airline 
subsidiaries by March 25, 1996.

	USAir is a party to purchase agreements with Boeing and Rolls 
Royce that provide for the future acquisition of new jet aircraft 
and jet engines. At December 31, 1995, USAir Group's regional 
airline subsidiaries, collectively, were party to agreements or 
agreements in principle related to the acquisition by lease of up 
to thirty additional turboprop aircraft. Subsequent to December 31, 
1995, one of these subsidiaries exercised its option to acquire 5 
additional turboprop aircraft; a second subsidiary took delivery of 
three turboprop aircraft during February 1996. See Note 4.(d) to 
the Company's consolidated financial statements contained in Part 
II, Item 8A. for additional information regarding outstanding 
commitments and options for the purchase of flight equipment. The 
Company's airline subsidiaries maintain inventories of spare 
engines, spare parts, accessories and other maintenance supplies 
sufficient to meet their operating requirements.

	USAir owned or leased the following aircraft as of Decem-
ber 31, 1995, which were parked in storage facilities and not 
included in the operating fleet table presented above.

                              Avg. Age           
        Type                   (Years)   Owned    Leased  Total
        ----                  --------   -----    ------  -----
British Aerospace
   BAe-146-200                  10.8        1       14      15
Boeing 727-200                  17.1        -        6       6
Boeing 737-200                  27.0        4        -       4
Boeing 767-200ER (1)             5.7        -        1       1
Douglas DC-9-30                 27.3       10        -      10
Fokker F28-1000                 24.0        1        -       1
Fokker F28-4000                 12.1        1        1       2
                                ----       --       --      --
                                17.9       17       22      39
                                ====       ==       ==      ==

(1)	The 767-200ER aircraft presented in the above table was 
returned  to USAir by BA during December 1995 in connection 
with the phase-out of the wet lease arrangements with BA (See 
Item 7.  "Management's Discussion and Analysis of Financial 
Condition and Results of Operations").  The aircraft was 
returned to USAir's operating fleet in January 1996.


                                 37
<PAGE>
	In addition, as of December 31, 1995, certain subsidiaries of 
USAir Group leased or subleased 16 owned F28-1000 aircraft; two 
leased Embraer EMB-120 aircraft; ten owned 737-200 aircraft; one 
owned and one leased 767-200ER; eight leased Jetstream 31 aircraft; 
two owned F28-4000 aircraft, and; three leased BAe-146-200 ("BAe-
146") aircraft to third parties (See Note 4.(b) to the Company's 
consolidated financial statements contained in Part II, Item 8A. 
for additional information related to third party lease arrange-
ments).  

	USAir recorded substantial charges in 1994 associated with 
repair parts, inventory and future lease payments for certain 
parked aircraft (See Part II, Item 7. "Management's Discussion and 
Analysis of Financial Condition and Results of Operations").

	USAir is a participant in the Civil Reserve Air Fleet 
("CRAF"), a voluntary program administered by the Air Mobility 
Command (the "AMC").  The General Services Administration of the 
United States government also requires that airlines participate in 
CRAF in order to receive United States government business.  The 
United States government is the largest customer of USAir.  USAir's 
commitment under CRAF is to provide three 767-200ER aircraft in 
support of military operations, probably for aeromedical missions, 
as specified by the AMC.  To date, the AMC has not requested USAir 
to activate any of its aircraft under CRAF.

Ground Facilities

	USAir leases the majority of its ground facilities, including 
executive and administrative offices in Arlington, Virginia 
adjacent to Washington National; its principal operating, overhaul 
and maintenance bases at the Pittsburgh and Charlotte/Douglas 
International Airports; major training facilities in Pittsburgh and 
Charlotte; central reservations offices in several cities; and line 
maintenance bases and local ticket, cargo and administrative 
offices throughout its system.  USAir owns a building and vacant 
land in Fairfax, Virginia, a training facility in Winston-Salem, 
North Carolina and reservations facilities in San Diego, California 
and Orlando, Florida.  USAir's building in Fairfax, Virginia, which 
is leased to the U.S. government, and the vacant land are currently 
for sale. 

Terminal Construction Projects
 
	USAir Group's airline subsidiaries utilize public airports for 
their flight operations under lease arrangements with the govern-
ment entities that own or control these airports.  Airport 
authorities frequently require airlines to execute long-term leases 
to assist in obtaining financing for terminal and facility 
construction.  Any future requirements for new or improved airport 
facilities and passenger terminals are likely to require additional 
expenditures and long-term commitments.  Several significant 
projects which affect large airports on USAir's route system are


                                 38
<PAGE>
 discussed below. 

	The new terminal at Pittsburgh International Airport commenced 
operation in October 1992.  The construction cost of the new 
terminal, approximately $800 million, was financed largely through 
the issuance of airport revenue bonds.  As the principal tenant of 
the new facility, USAir pays a substantial portion of the cost of 
the new terminal through rents and other charges pursuant to a use 
agreement which expires in 2018.  USAir's terminal rental expense 
at Pittsburgh was approximately $44 million annually in 1995.  The 
new facility has provided additional gate capacity for USAir and 
has enhanced the efficiency and quality of its hub services at 
Pittsburgh. In addition to the annual terminal rental expense, 
USAir is recognizing approximately $13 million in annual rental 
expense for property and equipment typically owned by USAir at 
other airports.  The annual terminal rental expense is subject to 
adjustment, depending on the actual airport operating costs, among 
other factors.  These rents are reflected in Note 4(b) to the 
Company's consolidated financial statements contained in Part II, 
Item 8A. 

	The East End Terminal at LaGuardia, which cost approximately 
$173 million to construct, opened in the third quarter of 1992. 
USAir, USAir Express and the USAir Shuttle operations at LaGuardia 
are conducted from this terminal and the adjoining USAir Shuttle 
terminal.  The East End Terminal has 12 jet gates.  USAir recogniz-
es approximately $31 million in annual rental expense for this 
terminal and is responsible for all maintenance and operating 
costs. 
 
	In 1993, USAir and the City of Philadelphia reached an 
agreement to proceed with certain capital improvements at Philadel-
phia International Airport, where USAir has its third largest hub. 
 The improvements include approximately $109 million in various 
terminal renovations and a new $220 million commuter airline runway 
expansion project, exclusive of financing costs.  Depending on the 
timing of certain federal environmental reviews, USAir expects 
construction on the terminal project will be completed in 1998. The 
runway expansion project is not expected to be completed until 
2000. USAir expects that its annual costs of operations at 
Philadelphia International Airport will increase by approximately 
$14 million once construction is complete, representing more than a 
40% increase. 
 
	The Washington National Airport Authority is currently 
undertaking a $1 billion capital development project at Washington 
National, which includes construction of a new terminal currently 
expected to commence operation in the second quarter of 1997. Based 
on current projections, USAir estimates that its annual operating 
expenses at Washington National will increase by approximately $10 
million to $12 million.


                                 39
<PAGE>
Item 3.	Legal Proceedings

	USAir is involved in legal proceedings arising out of its two 
aircraft accidents that occurred in July and September 1994 near 
Charlotte, North Carolina and Pittsburgh, Pennsylvania, respective-
ly. The National Transportation Safety Board ("NTSB") held hearings 
beginning in September 1994 relating to the July accident and 
January 1995 relating to the September accident.  In April 1995, 
the NTSB issued its finding of probable causes with respect to the 
accident near Charlotte. It assigned as probable causes the failure 
of air traffic control to convey weather and windshear hazard 
information and flight crew errors. The NTSB has not yet issued its 
final accident investigation report for the accident near 
Pittsburgh.  The NTSB, Boeing, the FAA and USAir jointly conducted 
flight tests in October 1995 as part of the ongoing investigation 
into the cause of this accident.  In this regard, USAir provided a 
737-300 aircraft in the collective effort to simulate the 
conditions at the time of the accident.  More public hearings were 
conducted in November 1995. The NTSB has indicated that a 
determination of the cause of the accident is not likely until 
sometime in 1996. USAir expects that it will be at least two to 
three years before the accident litigation and related settlements 
will be concluded.  USAir believes that it is fully insured with 
respect to this litigation.  Therefore, the Company believes that 
the litigation will not have a material adverse effect on the 
Company's financial condition or results of operations, although 
any finding of fault on USAir's part could create negative 
publicity and could tarnish USAir's image. 

	In December 1995, USAir received a Civil Investigative Demand 
("CID") from the DOJ relating to USAir's compliance with the terms 
of a consent decree entered into in December 1992, as amended in 
September 1994.  The consent decree was entered into to resolve 
litigation concerning USAir's methods of disseminating fare data to 
the Airline Tariff Publishing Company.  A CID is a request for 
information in the course of an antitrust investigation and does 
not constitute the institution of a civil or criminal action.  The 
CID issued in December 1995 seeks information concerning USAir's 
use of travel dates in its fare filings, among other things.

	On March 19, 1993, the U.S. District Court in Atlanta, Georgia 
entered a settlement involving USAir and five other U.S. air 
carrier defendants in the Domestic Air Transportation Antitrust 
Litigation class action lawsuit. The class action suit, which was 
filed in July 1990, alleged that the airlines used ATPCo to signal 
and communicate carrier pricing intentions and otherwise limit 
price competition for travel to and from numerous hub airports. 
Under the terms of the settlement, the six air carriers paid $45 
million in cash and issued $396.5 million in certificates valid for 
purchase of domestic air travel on any of the six airlines. USAir's 
share of the cash portion of the settlement, $5 million, was 
recorded in results of operations for the second quarter of 1992. 
The certificates, mailed to approximately 4.1 million claimants 
between December 15 and 31, 1994, provide a dollar-for-dollar


                                 40
<PAGE>
 discount against the cost of a ticket generally of up to a maximum 
of 10% per ticket, depending on the cost of the ticket.  It is 
possible that this settlement could have a dilutive effect on 
USAir's passenger transportation revenue and associated cash flow. 
However, due to the interchangeability of the certificates among 
the six carriers involved in the settlement, the possibility that 
carriers not party to the settlement will honor the certificates, 
and the potential stimulative effect on travel created by the 
certificates, USAir cannot reasonably estimate the impact of this 
settlement on further passenger revenue and cash flows. USAir has 
employed the incremental cost method to estimate a range of costs 
attributable to the exercise of the certificates, based on the 
assumption that the estimated maximum number of certificates to be 
redeemed for travel on USAir will be related to USAir's market 
share relative to the total market share of the six carriers 
involved in the settlement.  USAir's estimated percentage of such 
market share is less than 9%. Incremental costs include unit costs 
for passenger food, beverages and supplies, fuel, reservations, 
communications, liability insurance, and denied boarding compensa-
tion expenses expected to be incurred on a per passenger basis. 
USAir has estimated that its incremental cost will not be material 
based on the equivalent free trips associated with the settlement. 

	On October 11, 1994, USAir and seven other carriers entered 
into a settlement agreement with a group of State Attorneys General 
resolving similar issues with the states. The settlement entitles 
passengers traveling within the United States on state government 
business to a 10% discount off the published fares of each of the 
settling carriers and will be available for 18 months from 
August 16, 1995, or until the combined discount amount reaches $40 
million, whichever first occurs.  On May 10, 1995, a U.S. federal 
district court judge approved the settlement.  The Company does not 
expect that this settlement will have a material adverse effect on 
its financial condition or results of operations.  As was the case 
with the settlement of the private antitrust litigation, it is 
difficult to predict the amount of discounted state travel that 
will occur on USAir.  Thus, a dollar impact of the settlement 
cannot be estimated. 

	In February and March 1995, several class action lawsuits were 
filed in various federal district courts by travel agencies and a 
travel agency trade association alleging that most of the major 
U.S. airlines, including USAir, violated the antitrust laws when 
they individually capped travel agent base commissions at $50 for 
round-trip domestic tickets with base fares above $500 and at $25 
for one-way domestic tickets with base fares above $250. The 
lawsuits have been consolidated in the federal district of 
Minnesota.  The plaintiffs are seeking unspecified treble damages 
for restraint of trade.  The case is expected to go to a jury trial 
in 1996.  While USAir believes that its actions in establishing a 
commission cap were in full compliance with the antitrust laws, the 
Company is unable to predict at this time the ultimate resolution 
of the litigation or the potential impact on its financial 
condition and results of operations.


                                 41
<PAGE>
	In October 1995, USAir terminated for cause an agreement with 
In-Flight Phone Corporation ("IFPC"). IFPC was USAir's provider of 
on-board telephone and interactive data systems (the "IFPC 
System").  The agreement contemplated the eventual installation of 
the IFPC System on substantially all of USAir's aircraft.  The IFPC 
System had been installed on approximately 80 aircraft prior to the 
date of termination of the agreement.  On December 6, 1995, IFPC 
filed suit against USAir seeking equitable relief and damages in 
excess of $186 million. USAir believes that its termination of its 
agreement with IFPC was appropriate and that it is owed in excess 
of $5 million by IFPC.  On December 7, 1995, USAir successfully 
defended IFPC's emergency motion for a temporary restraining order. 
On December 13, 1995, IFPC's motion for a preliminary injunction 
was denied and IFPC has relinquished its right to appeal that 
decision.  IFPC's claim for damages remains pending and USAir is 
presently preparing a counterclaim for amounts it is owed by IFPC. 
The Company is unable to predict at this time the ultimate 
resolution or potential financial impact on the Company's financial 
condition and results of operations of this lawsuit. USAir is 
presently in negotiations with other vendors of on-board telephone 
systems and currently expects to finalize an agreement in the first 
quarter of 1996. 

	During 1995, four members of USAir's Frequent Traveler Program 
("FTP") filed class action lawsuits against USAir in Illinois, 
Pennsylvania, California and New Jersey state courts, alleging 
breach of contract relating to changes made to USAir's FTP 
effective December 31, 1989 and/or January 1, 1995.  A similar 
lawsuit has been pending in California state court since 1989.  The 
lawsuits seek unspecified damages and an injunction against the 
allegedly objectionable changes to USAir's FTP and any subsequent 
retroactive changes to the FTP.  USAir denies the allegations made 
in the lawsuits and intends to vigorously defend itself. The 
ultimate resolution of these lawsuits and their potential impact on 
the Company's financial condition or results of operations cannot 
be predicted at this time. 

	In May 1995, USAir Group, USAir and the Retirement Income Plan 
for Pilots of USAir, Inc. (the "Pilots' Pension Plan") were sued in 
federal district court for the District of Columbia by 469 active 
and retired USAir pilots. The lawsuit alleges that USAir has 
breached its fiduciary duty under the Employee Retirement Income 
Security Act ("ERISA") and otherwise violated ERISA by erroneously 
calculating benefits under the Pilots' Pension Plan. The plaintiffs 
seek, among other things, an injunction restraining USAir and the 
Pilots' Pension Plan from allegedly improperly calculating benefits 
under the Pilots' Pension Plan and payments to plaintiffs of 
benefits allegedly improperly withheld in an amount alleged to be 
equal to approximately $70 million, plus interest.  USAir believes 
that it has properly calculated benefits under the Pilots' Pension 
Plan and intends to vigorously defend itself against the allega-
tions made in the lawsuit.  Because this lawsuit is in an early 
stage of litigation, the Company is unable to predict at this time


                                 42
<PAGE>
 its ultimate resolution or potential impact on USAir Group's 
pension liability or future funding requirements. 

	The Company and several of its subsidiaries have received 
notices from the U.S. Environmental Protection Agency and various 
state agencies that they are potentially responsible parties with 
respect to the remediation of existing sites of environmental 
concern.  Only two of these sites have been included on the 
Superfund National Priorities List.  The Company continues to 
negotiate with various governmental agencies concerning known and 
possible cleanup sites.  USAir has made financial contributions for 
the performance of remedial investigations and feasibility studies 
at sites in Moira, New York; Escondido, California; and Elkton, 
Maryland. 

	Also, USAir has been identified as a potentially responsible 
party ("PRP") for environmental contamination at Boston Logan 
Airport.  There are a number of other PRPs at the site. The Company 
is presently unable to assess its proportionate share of contribu-
tion, but does not expect any such contribution to have a material 
adverse effect on its financial condition or results of operations.

	Because of changing environmental laws and regulations, the 
large number of other potentially responsible parties and certain 
pending legal proceedings, it is not possible to reasonably 
estimate the amount or timing of future expenditures related to 
environmental matters.  The Company provides for costs related to 
environmental contingencies when a loss is probable and the amount 
is reasonably estimable.  Although management believes adequate 
reserves have been provided for all known contingencies, it is 
possible that additional reserves could be required in the future 
which could have a material effect on results of operations. 
However, the Company believes that the ultimate resolution of known 
environmental contingencies should not have a material adverse 
effect on its financial position or results of operations based on 
its experience with similar environmental sites. 

	The Equal Employment Opportunity Commission and various state 
and local fair employment practices agencies are investigating 
charges by certain job applicants, employees and former employees 
of the Company's subsidiaries involving allegations of employment 
discrimination in violation of Federal and state laws.  The 
plaintiffs in these cases generally seek declaratory and injunctive 
relief and monetary damages, including back pay.  In some instances 
they also seek classification adjustment, compensatory damages and 
punitive damages.  Such proceedings are in various stages of 
litigation and investigation, and the outcome of these proceedings 
is difficult to predict.  In the Company's opinion, however, the 
disposition of these matters is not likely to have a material 
adverse effect on its financial condition or results of operations.


                                 43
<PAGE>
Item 4.	Submission of Matters to a Vote of Security Holders

	USAir Group's annual meeting of stockholders was held on 
November 28, 1995.  Proxies for the meeting were solicited by USAir 
Group pursuant to Regulation 14A under the Securities Exchange Act 
of 1934.

     All of management's nominees for the election to the Board of 
Directors as listed in USAir Group's Proxy Statement for the 
meeting were elected without solicitation in opposition. In 
addition, the holders of voting securities also voted on the 
following proposals with the following results:

1.	Management's proposal regarding ratification of the selection 
of auditors of the Company for fiscal year 1995.

     For  80,778,504     Against     633,027     Abstain    372,316
     Broker Non-Votes    None

2.	Stockholder proposal concerning confidential voting.

     For  23,276,514     Against  39,514,871     Abstain  1,725,816
     Broker Non-Votes    17,266,646

3.	Stockholder proposal relating to compensation contingent on a 
change of control.
 	
     For  19,210,421     Against  43,115,575     Abstain  2,191,205
     Broker Non-Votes    17,266,646

4.	Stockholder proposal relating to directors' retirement 
benefits.

     For  20,273,111     Against  42,601,126     Abstain  1,642,964
     Broker Non-Votes    17,266,646

5.	Stockholder proposal relating to "High-Performance Workplace".

     For  5,951,165      Against  54,478,682     Abstain  4,087,354
     Broker Non-Votes    17,266,646

6.	Stockholder proposal relating to political contributions.

     For  4,962,028      Against  56,447,309     Abstain  3,107,864
     Broker Non-Votes    17,266,646







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                                 44
<PAGE>
                           Part II

Item 5A.	Market for USAir Group's Common Equity and Related 
Stockholder Matters

Stock Exchange Listings

	The Common Stock of the Company is traded on the New York 
Stock Exchange (Symbol U).  On February 29, 1996, there were 
approximately 63,460,000 shares of Common Stock of the Company 
outstanding.  The stock was held by 34,375 stockholders of record 
at that date.  The holders reside throughout the United States and 
abroad.

Market Prices of Common Stock

	Presented below are the high and low sale prices of the Common 
Stock of the Company as reported on the New York Stock Exchange 
Composite Tape during 1995 and 1994:

         Period                   High               Low
         ------                   ----               ---
          1995
     First Quarter                6 5/8             4 1/4
     Second Quarter              14                 5 5/8
     Third Quarter               12 5/8             8
     Fourth Quarter              15 7/8            10 3/8
  
          1994
     First Quarter               15 1/8             8
     Second Quarter               8 1/8             6 1/4
     Third Quarter                7 1/2             4
     Fourth Quarter               5 3/8             4

	Holders of the Common Stock are entitled to receive such 
dividends as may be lawfully declared by the Board of Directors of 
the Company.  A Common Stock dividend of $.03 per share was paid in 
every quarter from the second quarter of 1980 through the second 
quarter of 1990. In September 1990, however, the Company suspended 
the payment of dividends on Common Stock for an indefinite period. 

	As of March 28, 1996, the Company's board of directors had not 
authorized the resumption of dividends on the Company's Common 
Stock and there can be no assurance when or if such dividend 
payments will resume. In addition, the Company, organized under the 
Laws of the State of Delaware, may be subject to certain legal 
prohibitions on its ability to pay dividends on or repurchase or 
redeem its own shares of capital stock for cash or other property. 
At December 31, 1995, the Company believes that it was legally 
prohibited from paying dividends on or repurchasing or redeeming 
its capital stock due to the provisions of Section 170 of the 
Delaware General Corporation Law ("Delaware Law"), which require a 
company to maintain a capital surplus in order to pay dividends on 
or repurchase or redeem its capital stock.  In addition, as of


                                 45
<PAGE>
 December 31, 1995, the Company does not believe that it can comply 
with certain provisions of Delaware Law which permit a company with 
a capital deficit to pay dividends on its capital stock under 
special circumstances.  See Note 8.(d) to the Company's consolidat-
ed financial statements contained in Part II, Item 8A. of this 
report, and Part II, Item 7. "Management's Discussion and Analysis 
of Financial Condition and Results of Operations", also contained 
in this report, for additional information.

Foreign Ownership Restrictions

	In connection with BA's 1993 investment in the Company, the 
Company's stockholders approved an amendment to its restated 
certificate of incorporation ("Charter") at the 1993 annual meeting 
that is designed to prevent the loss of USAir's operating certifi-
cates due to foreign ownership or control of the Company's voting 
securities exceeding the level permitted by relevant Federal law.  
Under current law, foreign citizens cannot own or control more than 
25% of the Company's voting securities.

	The Charter provides that:  (i) transfers of the Company's 
voting securities to non-U.S. citizens ("Aliens") on or after 
May 27, 1993 are prohibited; (ii) Aliens that acquire beneficial 
ownership of the Company's voting securities on or after May 27, 
1993 have no voting rights; (iii) the Company can compel these 
Aliens to sell their securities to U.S. citizens; (iv) the Company 
can redeem or exchange the voting securities beneficially owned by 
these Aliens; and (v) the independent directors of the Company, who 
are those directors other than those employed by or affiliated with 
BA or the Company, have broad powers to construe and apply these 
provisions of the Charter, including the determination as to 
whether Aliens have become the beneficial owners of the Company's 
voting securities.

Item 5B.	Market for USAir's Common Equity and Related Stockholder 
Matters

	There is no established public trading market for USAir's 
Common Stock, which is all owned by USAir Group.  

	USAir's board of directors has not authorized the payment of 
dividends to USAir Group since 1988.  In addition, USAir, organized 
under the Laws of the State of Delaware, may be subject to certain 
legal prohibitions on its ability to pay dividends on or repurchase 
or redeem its own shares of capital stock for cash or other 
property.  At December 31, 1995, USAir believes that it was legally 
prohibited from paying dividends on or repurchasing or redeeming 
its capital stock due to the provisions of Section 170 of the 
Delaware General Corporation Law ("Delaware Law"), which require a 
company to maintain a capital surplus in order to pay dividends on 
or repurchase or redeem its capital stock. In addition, as of 
December 31, 1995, USAir does not believe that it can comply with 
certain provisions of Delaware Law which permit a company with a 
capital deficit to pay dividends on its capital stock under special


                                 46
<PAGE>
 circumstances.  See Note 7. to USAir's consolidated financial 
statements contained in Part II, Item 8B. of this report, and Part 
II, Item 7. "Management's Discussion and Analysis of Financial 
Condition and Results of Operations", also contained in this 
report, for additional information.

	Covenants related to USAir's 10% and 9 5/8% senior unsecured 
notes currently do not permit the payment of dividends by USAir to 
USAir Group.  However, these covenants do not restrict USAir from 
loaning or advancing funds to USAir Group.


Item 6.  Selected Financial Data

	Selected financial data for USAir Group is presented below:

   <TABLE>
<CAPTIONS> 
                                            1995         1994         1993          1992        1991
                                             ----         ----         ----          ----        ----
                                                         (in millions except per share amounts)
<S>                                       <C>          <C>          <C>          <C>          <C>
Consolidated Statements of Operations
Operating Revenues                        $ 7,474      $ 6,997      $ 7,083      $ 6,686      $ 6,514
Operating Expenses                        $ 7,153      $ 7,489      $ 7,179      $ 7,033      $ 6,698
Operating Income (Loss)                   $   322      $  (491)     $   (96)     $  (347)     $  (184)
Income (Loss) Before Accounting Change    $   119      $  (685)     $  (349)     $  (601)     $  (305)
Accounting Change  (1)                          -            -          (44)        (628)           -
                                           ------       ------       ------       ------       ------
Net Income (Loss)                         $   119      $  (685)     $  (393)     $(1,229)     $  (305)

Net Income (Loss) Applicable to Common
   Stockholders                           $    34      $  (763)     $  (467)     $(1,281)     $  (350)

Income (Loss) Per Share:
   Before Accounting Change               $   .55      $(12.73)     $ (7.68)     $(13.88)     $ (7.62)
   Effect of Accounting Change                  -            -         (.80)      (13.35)           -
                                           ------       ------       ------       ------       ------
   Income (Loss) Per Share                $   .55      $(12.73)     $ (8.48)     $(27.23)     $ (7.62)

Dividends Per Common Share                $     -      $     -      $     -      $     -      $     -

Consolidated Balance Sheets
Total Assets                              $ 6,955      $ 6,808      $ 6,878      $ 6,595      $ 6,450
Long-Term Obligations and Redeemable
   Preferred Stock (2) (3)                $ 4,572      $ 4,699      $ 4,198      $ 3,714      $ 2,577
Series B Preferred Stock  (3)                 213          213          213          213          213
Common Stockholders' Equity (Deficit) (3)  (1,049)      (1,110)        (426)        (169)       1,105
                                           ------       ------       ------       ------       ------
Total Stockholders' Equity (Deficit) (3)  $  (836)     $  (897)     $  (213)     $    44      $ 1,318

Shares of Common Stock Outstanding           63.4         61.1         59.2         47.2         46.6
Book Value Per Share (4)                  $(18.39)     $(18.71)     $ (7.19)     $ (3.58)     $ 23.69



                                 47
<PAGE>
(1)	Cumulative effect of change in method of accounting for 
postemployment benefits in 1993 and postretirement benefits 
other than pensions (net of income tax benefit of $117.6) in 
1992.  See Note 11. to USAir Group's consolidated financial 
statements contained in Part II, Item 8A. for more 
information.

(2)	Long-term obligations include long-term debt, capital leases 
and postretirement benefits other than pensions, non-current.

(3)	1995 and 1994 do not include deferred dividends on preferred 
stock.  See Note 8.(d) to USAir Group's consolidated 
financial statements contained in Part II, Item 8A.

(4)	Based on Common Stockholders' Equity (Deficit), which is 
adjusted to reflect deferred dividends on preferred stock as 
though they had been declared.  See Note 8.(d) to USAir 
Group's consolidated financial statements contained in Part 
II, Item 8A.

Note: Numbers may not add or calculate due to rounding.
</TABLE>












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                                 48
<PAGE>
Item 7.	Management's Discussion and Analysis of Financial Condi-
tion and Results of Operations

	The following discussion relates to the financial results and 
condition of USAir Group, Inc. ("USAir Group" or the "Company").  
USAir, Inc. ("USAir") is the Company's principal subsidiary and 
accounted for approximately 93% of its operating revenues for 
fiscal year 1995.  USAir is a major United States air carrier whose 
primary business is transporting passengers, property and mail.  
USAir enplaned more than 57 million passengers during 1995 and is 
currently the fifth largest domestic air carrier, as measured by 
revenue passenger miles ("RPMs"). Except where noted, the following 
discussion is based primarily upon USAir's financial condition, 
results of operations and future prospects.

	USAir Group recorded net income of $60.3 million for the 
fourth quarter of 1995 and net income of $119.3 million for all of 
1995.  USAir Group's earnings per common share was $0.61 for the 
fourth quarter of 1995 and $0.55 for all of 1995.  USAir, whose 
results include USAir's wholly-owned subsidiary USAM Corp. 
("USAM"), recorded net income of $33.6 million for the fourth 
quarter of 1995 and net income of $33.0 million for all of 1995.  
The fourth quarter and full-year 1995 results for both USAir Group 
and USAir represent significant improvements over the results for 
the comparable periods in 1994.    

	The Company's and USAir's improved 1995 results are mainly 
attributable to a stable domestic economic climate, favorable 
capacity trends in USAir's markets, less fare discounting and low 
fare competition and the positive influence of USAir's cost-
reduction and revenue enhancement initiatives.  The entire domestic 
airline industry has benefited from stable domestic economic and 
overall favorable capacity and fare pricing factors.  However, the 
Company's financial condition, results of operations and future 
prospects are more susceptible to an economic downturn and 
competitive influences than most of its major competitors due to 
USAir's high cost structure amid the growing low cost, low fare 
environment of the domestic airline industry. 

Factors Contributing to Improved 1995 Financial Results

	The Company's airline subsidiaries realized stronger than 
anticipated yields (Passenger Transportation revenue per RPM) in 
1995 due in part to a decrease in industry capacity in the eastern 
United States and less intense low fare competition and fare 
discounting than in recent years.  The eastern U.S. is the primary 
operating region for USAir and its regional airline affiliates.  In 
1995, several major air carriers, including USAir, implemented 
reductions in capacity (as measured by available seat miles or 
"ASMs") in the eastern U.S. (see discussion of USAir's capacity 
reductions below in "Cost-Reduction and Revenue Enhancement 
Initiatives").  Most notably, Continental Airlines, Inc. ("Conti-
nental") eliminated its low fare, "no frills" pricing and marketing 
strategy, "Continental Lite," in early 1995.  Continental Lite was


                                 49
<PAGE>
 launched in October of 1993 on certain routes in the eastern U.S. 
also served by USAir and was substantially expanded during 1994 
into additional markets also served by USAir.  In an effort to 
maintain market share, USAir responded to Continental Lite's 
competitive threat by selectively lowering its fares by as much as 
70% compared to the fares in effect prior to Continental Lite's 
incursion.  These fare reductions affected markets where USAir had 
previously generated approximately 46% of its Passenger Transporta-
tion revenues.  In addition to Continental's capacity reductions, 
American Airlines, Inc. ("American") and United Air Lines, Inc. 
("United") also reduced service in the intra-east coast region 
during 1995.  Overall, during 1995, the mature, established air 
carriers decreased capacity in the intra-east coast region by 
approximately 9.8% versus 1994 levels.  However, other air carriers 
with low costs of operations and low fare structures ("low cost, 
low fare" air carriers) increased capacity in this region during 
the same period (see further discussion below in "Current Industry 
Conditions - Continued Growth of Low Cost, Low Fare Competition"). 
The net result was that capacity in the intra-east coast region 
decreased by approximately 3.5% year-over-year.  

	As discussed in further detail below, USAir's recent cost-
reduction and revenue enhancement initiatives contributed positive-
ly to the Company's improved 1995 results.  The Company stated in 
1994 and early 1995 that it sought to reduce its annual operating 
costs by $1 billion through a combination of labor-related and 
other cost reductions. During 1995, the Company achieved its goal 
of reducing annual non-labor operating expenses by approximately 
$500 million from otherwise expected levels.  The Company believes 
that these savings will approach $600 million in 1996 from 
otherwise expected levels.  The anticipated savings in the labor-
related areas, the other half of the targeted annual reduction in 
operating costs, have not been realized.  In conjunction with its 
cost-reduction and revenue enhancement initiatives, the Company 
announced its goal to achieve a pre-tax margin of 3.0% in the next 
one to two years and a 7.5% pre-tax margin longer term.  The 
Company's pre-tax margin was approximately 1.7% for 1995.  The 
Company's 1995 financial results represent a significant improve-
ment over 1994 levels, but the Company believes that it will not be 
able to achieve either its short-term or long-term pre-tax margin 
goals without achieving significant reductions in USAir's personnel 
costs.

         Current Industry Conditions - Continued Growth 
               of Low Cost, Low Fare Competition

	Demand for air transportation has historically mirrored 
general economic conditions.  During the most recent economic 
recession in the United States, the domestic airline industry 
experienced a reduction in demand for air transportation without a 
corresponding decrease in capacity.  The disparity between demand 
and capacity was exacerbated by the continued delivery of new 
aircraft to domestic air carriers and the operation of certain 
major air carriers under the protection of Chapter 11 of the


                                 50
<PAGE>
 Bankruptcy Code for extended periods.

	The years 1993 through 1995 included the entry and growth of 
low cost, low fare air carriers into markets served by USAir and 
its regional airline affiliates.  Intra-east coast operations 
currently represent approximately 64% of USAir's departures and 
approximately 44% of its capacity (ASMs).  Southwest Airlines, Inc. 
("Southwest"), a low cost, low fare air carrier which had not 
previously provided service to or within the eastern U.S., 
inaugurated service from Baltimore/Washington International Airport 
("BWI") in September of 1993 at fares substantially below those 
previously in place.  BWI is one of USAir's hub airports.  
Southwest expanded operations from BWI during 1994 and 1995 and 
initiated service to Florida from BWI, among other locations, in 
early 1996.  Southwest also launched intra-Florida service during 
early 1996.  Southwest, which has a considerable cost advantage 
over USAir, particularly with regards to personnel costs, could 
continue to expand in markets served by USAir or its regional 
airline affiliates. 
   
	ValuJet Airlines, Inc. ("ValuJet"), another low cost, low fare 
air carrier, commenced operations in October of 1993 by offering 
service within the intra-east coast region.  By September 30, 1995, 
ValuJet had 32 aircraft in its operating fleet and in late 1995 
announced that it had signed an agreement with the McDonnell 
Douglas Corporation ("McDonnell Douglas") for the purchase of 50 
MD-95 aircraft with options for an additional 50 MD-95 aircraft.  
Deliveries are scheduled to begin in mid-1999.  ValuJet has 
announced that it plans to increase its operating fleet to 60 
aircraft by the end of 1996 and its target for the year 2000 is 143 
aircraft.  ValuJet initiated service at Boston in 1995 and has 
recently inaugurated service at Pittsburgh and Charlotte.  USAir 
and its regional affiliates have significant operations at these 
locations.  The major airports at Pittsburgh and Charlotte are 
USAir's largest hubs.  The short-term effect of ValuJet's expansion 
into these markets on the Company's financial condition and future 
prospects is expected to be minimal considering the frequency of 
service ValuJet currently offers.  

	In addition to Southwest and ValuJet, other air carriers with 
a low cost, low fare strategy have also initiated or announced 
intentions to offer or expand service in the intra-east coast 
region.  USAir currently has low cost, low fare competition 
affecting over 45% of its traffic base. In an effort to preserve 
market share, USAir has typically responded to the entry of a low 
cost, low fare competitor into its markets by matching fares and 
increasing the frequency of service in related markets, generally 
with the result of diluting USAir's yield in these markets.  In 
some cases USAir has responded by reducing service in affected 
markets.

	Besides the competitive threat posed by low cost, low fare air 
carriers, several of the larger, mature air carriers have developed 
or indicated their intention to develop similar low cost, low fare


                                 51
<PAGE>
 service. Current industry conditions have forced the larger, 
mature air carriers to seek significant cost reductions in order to 
remain competitive and financially viable.  For example, during 
1994, United completed a transaction which traded significant 
employee wage concessions and productivity improvements for a 
majority ownership stake in the company and seats on its board of 
directors. The agreement also allowed United to establish a low 
cost, low fare operation labeled "Shuttle by United". The primary 
function of this operation is to compete successfully with low 
cost, low fare air carriers in mainly secondary or short-haul 
markets.  During 1993, Continental, Trans World Airlines, Inc. 
("TWA") and Northwest Airlines, Inc., were able to obtain signifi-
cant wage concessions and productivity improvements from unionized 
employees.  The employee concessions achieved by Continental and 
TWA were obtained in the course of bankruptcy proceedings of those 
companies.  

	In 1994, Delta Airlines, Inc. ("Delta") launched a program 
designed to reduce its unit operating costs (operating costs per 
ASM) from approximately 9.30 cents at that time to 7.50 cents by June 1997.  
Delta announced in early 1996 that this program to date had helped 
to reduce unit costs to 8.61 cents for its fiscal quarter ended 
December  31, 1995.  Delta's cost reduction program has included 
significant workforce reductions. USAir's unit costs were 11.40 cents 
for 1995.  In addition, Delta has recently announced an agreement 
in principle with its pilots, its only unionized employee group, 
that would include the establishment of a new low cost, low fare 
operation centered on markets serviced by jet aircraft with 100 
seats or less.  The stated objective of this new operation, 
prospectively called "Delta Express," is to compete effectively 
with Southwest and ValuJet.  A stated goal of Delta Express would 
be wage levels approximately 10% lower than those of Southwest, 
which has one of the lowest cost structures in the airline 
industry.  Further, a Delta spokesperson has stated that Delta 
would also deploy the new operation to compete against USAir in 
certain markets.  The ultimate outcome of Delta's agreement in 
principle with its pilot's union or its impact on USAir's ability 
to obtain similar labor cost reductions is not known at this time.

	The continued growth of Southwest, ValuJet and other low cost, 
low fare air carriers in markets served by USAir and its regional 
affiliates and the ability of certain other air carriers to lower 
their costs of operations continue to pose a growing competitive 
threat to USAir. Incursions by low cost, low fare air carriers in 
markets served by the Company's airline affiliates are expected to 
continue to have an adverse effect on the Company's results of 
operations and future prospects and further emphasize the need for 
the Company to achieve a significant reduction in USAir's personnel 
costs.

       Cost-Reduction and Revenue Enhancement Initiatives

	As mentioned above, the Company realized significant savings 
in non-labor costs during 1995.  These savings involved various 
organizational and structural changes, re-engineering, capacity


                                 52
<PAGE>
 reductions and other initiatives in support of its three core 
business strategies: (1) rationalize the level and geographic 
distribution of USAir's capacity; (2) improve USAir's product and 
delivery, and; (3) reduce capital requirements and operating costs.

	USAir initiated its "right-sizing" strategy in the Spring of 
1995 with the goal of reducing annual system capacity by five 
percent and emphasizing the strengths of its hubs at the major 
airports in Pittsburgh, Charlotte, Philadelphia and Baltimore, as 
well as its operations at other major east coast urban centers.  
The capacity reductions focused on either eliminating redundant or 
unprofitable routes or replacing jet service on those routes with 
service provided by USAir's regional affiliates using turboprop 
aircraft.  USAir's capacity (ASMs) for 1995 was 4.7% lower than for 
1994.  Capacity (ASMs) for the second half of 1995, reflecting the 
full impact of right-sizing, was 10.8% lower than the comparable 
period in 1994.  The strengthening of hub operations was achieved 
by reducing point-to-point flights (flights between cities that are 
not USAir hubs) thereby increasing the utilization of equipment and 
personnel at hub locations.  The percentage of point-to-point 
flights in USAir's schedule was reduced from approximately 18% at 
the end of 1994 to about 10% by the end of 1995.
    
	USAir also shifted its focus for transatlantic operations from 
Charlotte and Pittsburgh to Boston and Philadelphia to take 
advantage of better connecting traffic and the larger population 
bases in those cities.  Load factors (the percentage of available 
seats filled by revenue passengers) for USAir's transatlantic 
flights reached historical highs during the second half of 1995.  
USAir increased capacity in select transatlantic and transcontinen-
tal markets during 1995 as part of its right-sizing efforts.  USAir 
plans to begin service to both Munich, Germany and to Madrid, Spain 
from Philadelphia in mid-1996.  USAir also plans to institute 
service to Rome, Italy from Philadelphia in mid-1996.  

	The Company believes that USAir's right-sizing initiatives 
have produced substantial financial benefits during 1995 and that 
those financial benefits will continue.

	USAir has also implemented several programs intended to 
enhance its product and level of service.  By the end of December 
1995, USAir had expanded its code share arrangement with British 
Airways plc ("BA") to include 70 of the 138 airports currently 
authorized by the U.S. Department of Transportation ("DOT").  USAir 
believes that its code sharing arrangement with BA has produced  
financial benefits as well as enhanced USAir's image in the 
marketplace.  BA has publicly stated that its relationship with 
USAir has contributed over $100 million in additional revenues and 
cost savings.  The code sharing arrangement provides USAir with 
greater access to international traffic and allows better on-line 
connections and coordinated check-in and baggage checking proce-
dures for its customers.


                                 53
<PAGE>	
USAir has increased its level of on-time performance among the 
major air carriers and has consistently ranked among the top three 
air carriers during the second half of 1995, despite the fact that 
USAir carried record numbers of passengers during that time period. 
In October of 1995, USAir introduced, in conjunction with BA, 
personal computer software called "Priority TravelWorks" and 
"Executive TravelWorks" that will enable certain high-volume 
customers to engage in self-service travel booking through on-line 
computer services.  USAir is also developing a "ticketless" travel 
option for customers and plans to offer this product in early 1996. 
Besides offering convenience to its customers, USAir believes that 
ticketless travel will help reduce distribution costs which 
currently account for approximately $1 billion of USAir's annual 
operating expenses.

	The Company reached an agreement with The Boeing Company 
("Boeing") in 1994 which enabled USAir to reschedule the delivery 
of 40 Boeing 737-Series aircraft from the 1997-2000 time period to 
the years 2003-2005. In addition, as part of the same agreement, 
USAir relinquished all of its options to purchase Boeing aircraft 
during the 1996-2000 time period.  During 1995, the Company reached 
agreements with Boeing and Rolls Royce plc ("Rolls Royce") 
regarding the deferral of eight Boeing 757-200 aircraft deliveries 
from 1996 to 1998.  As part of the latter agreements, the delivery 
dates for progress payments associated with the previously 
scheduled 1996 deliveries were likewise rescheduled.  These 
agreements with Boeing and Rolls Royce have resulted in a substan-
tial reduction in USAir's expected capital expenditures for the 
years 1996 through 2000 (see additional information regarding the 
Boeing and Rolls Royce agreements and scheduled aircraft commit-
ments in Note 4.(d) to the Company's consolidated financial 
statements contained in Part II, Item 8A.).  USAir has also pursued 
the sale or lease of certain jet aircraft and declined to renew 
leases for certain other aircraft upon expiry.  In 1995, USAir 
added seven 757-200 aircraft to its operating fleet but eliminated 
37 other jet aircraft, including all of its Boeing 727-200 
aircraft.  USAir sold thirteen Boeing 737-300 aircraft during 1995. 
 
	The other component of the targeted billion dollar reduction 
in annual operating costs referred to previously is a significant 
reduction in personnel costs.  Accordingly, the Company began 
negotiating with USAir's organized labor groups in March 1994 with 
the goal of reducing annual personnel costs by approximately $500 
million through voluntary concession agreements involving wage and 
benefit reductions, improved productivity and other cost savings.  
During the Spring of 1995, the Company reached agreements in 
principle with each of USAir's major unions, but those tentative 
agreements were conditioned on, among other things, ratification by 
the members of each labor group and the approval of USAir Group's 
stockholders and USAir Group's and USAir's boards of directors.  
These agreements in principle provided for wage and other conces-
sions in exchange for equity participation in USAir Group, profit 
sharing and representation on USAir Group's board of directors for 
USAir's labor groups.  In July 1995, the membership of the


                                 54
<PAGE>
 Association of Flight Attendants (the "AFA"), which represents 
USAir's flight attendants, voted not to ratify its agreement in 
principle.  The Airline Pilots Association ("ALPA"), which 
represents USAir's pilots, made significant additional demands 
which were unacceptable and negotiations were thereafter terminated 
by the Company.

	USAir's contract with the employees represented by the 
International Association of Machinists and Aerospace Workers (the 
"IAM") became open for negotiations on October 1, 1995.  USAir and 
the IAM have begun the collective bargaining process.  ALPA's 
contract will become open for negotiation in May 1996.  The 
contract with the AFA becomes amendable on January 1, 1997. At this 
early stage in negotiations, it is not possible to predict how long 
it will take to conclude collective bargaining negotiations 
although these negotiations traditionally take one or more years 
from the time a contract becomes amendable, as described in the 
following paragraph.  

	Under the Railway Labor Act, a labor contract does not 
"expire," but rather becomes amendable on a certain date.  Thirty 
days prior to that date, either party to the contract may give 
notice to the other of its intention to amend the contract, at 
which point the collective bargaining process begins.  If after a 
period of negotiations, the parties cannot reach an agreement, a 
federal mediator from the National Mediation Board is brought in to 
assist.  The process of mediation continues until the National 
Mediation Board determines, at its sole discretion, that the 
parties have reached an impasse.  At that point, the parties enter 
a thirty-day "cooling off" period before either party may employ 
so-called self-help (e.g., the imposition of contract changes or a 
lockout by the company or a strike by the union). While in 
negotiations and mediation, both parties are bound by the contrac-
tual terms that were in effect prior to the commencement of the 
collective bargaining process.

 	Personnel costs accounted for approximately 41% of USAir's 
operating costs for 1995.  USAir currently has the highest unit 
labor costs in the domestic airline industry.  The Company 
continues to believe that USAir's long-term future depends on its 
success in further reducing its cost of operations, including 
personnel costs.  The Company remains committed to obtaining a 
significant reduction in USAir's unit labor costs.  The Company is 
also unable to predict at this time the outcome of its discussions 
with USAir's unionized employee groups or the form of any potential 
wage concessions and productivity improvements.  As mentioned 
above, the Company offered an ownership stake and seats on its 
board of directors in its prior negotiations with USAir's unions.  
There are recent examples of companies in the airline industry 
which have obtained employee concessions in agreements that also 
resulted in the recapitalization of the companies, including 
employee ownership stakes and employee participation in corporate 
governance.  In other cases, airlines have filed for bankruptcy 
protection under Chapter 11 of the Bankruptcy Code, and some


                                 55
<PAGE>
 airlines have ceased operations altogether when their operating 
costs remained excessive in relation to their revenues, and their 
liquidity became insufficient to sustain their operations.  
Further, the Company's improved financial performance in 1995 may 
hinder its efforts to negotiate meaningful wage and benefit 
concessions and productivity improvements from USAir's unionized 
employee groups.

	CEO Succession and Senior Management Changes

	In early 1996, the Company's and USAir's boards of directors 
elected Stephen M. Wolf as Chairman of the Board and Chief 
Executive Officer of both companies.  Mr. Wolf succeeded Seth E. 
Schofield in these capacities.  During February 1996, Rakesh 
Gangwal was appointed President and Chief Operating Officer of 
USAir Group and USAir and Lawrence M. Nagin was appointed Executive 
Vice President of Corporate Affairs and General Counsel of both 
companies.  The new senior executive management team has yet to 
state whether and if so, to what extent, there will be changes in 
USAir's policies or strategies.

	Discussions With UAL and AMR Corporations

	The Company announced in early October 1995 that it was 
engaged in preliminary discussions with both AMR Corporation 
("AMR"), parent company of American, and UAL Corporation ("UAL"), 
parent company of United, concerning possible strategic relation-
ships, up to and including acquisition of USAir or USAir Group.  
UAL announced in November 1995 that it would not pursue the discus-
sions.  AMR, which had previously announced that it would likely 
not pursue the matter if UAL chose not to do so, likewise declined 
to continue the discussions with the Company.  

	Deferral of Dividends

	The Company announced in September 1994 that it had elected to 
defer quarterly dividend payments on all outstanding series of its 
preferred stock.  The Company has not paid dividends on its Common 
Stock since the second quarter of 1990.  As of March 28, 1996, the 
Company's board of directors had not authorized the resumption of 
any dividends on the Company's preferred stock or Common Stock and 
there can be no assurance when or if such dividend payments will 
resume.  The Company, organized under Delaware law, may also be 
subject to certain legal prohibitions on its ability to pay 
dividends or repurchase or redeem its own shares of capital stock 
for cash or other property.  Capital surplus, under Delaware Law, 
is calculated as (i) net assets (total assets minus total liabili-
ties), less (ii) total capital (that amount of preferred and common 
equity designated as capital by a company's board of directors). At 
December 31, 1995, based on the Company's consolidated balance 
sheet as of that date, the Company had a capital deficit of 
approximately $140.5 million.  The Company's net assets were in a 
deficit position of approximately $77.1 million and its total 
capital was approximately $63.4 million (all attributable to the


                                 56
<PAGE>
 Company's outstanding Common Stock; capital for the Company's 
outstanding preferred stock issuances is a nominal amount of one 
cent per share).  In addition, as of December 31, 1995, the Company 
does not believe that it can comply with certain provisions of 
Delaware Law which permit a company with a capital deficit to pay 
dividends on its capital stock under special circumstances.

	Under the terms of the Company's 9 1/4 % Series A Cumulative 
Convertible Redeemable Preferred Stock ("Series A Preferred 
Stock"), without par value, its holders, currently affiliates of 
Berkshire Hathaway, Inc. ("Berkshire"), have the right to elect two 
additional directors to USAir Group's board of directors after a 
scheduled dividend payment has not been made for thirty days.  
Berkshire has informed the Company that it does not intend to 
exercise its right at this time. Under the terms of the publicly-
held Series B Cumulative Convertible Preferred Stock ("Series B 
Preferred Stock"), its holders have the right to elect two 
additional directors to USAir Group's board of directors if six 
quarterly dividend payments are not paid.  That right became 
effective on February 15, 1996.  In March 1996, certain Series B 
Preferred Stock holders informed the Company that they would be 
pursuing the right to elect two additional directors to the 
Company's board of directors.  The holder of the Series F Cumula-
tive Convertible Senior Preferred Stock, without par value ("Series 
F Preferred Stock"), the Series T-1 Cumulative Convertible 
Exchangeable Senior Preferred Stock, without par value ("Series T-1 
Preferred Stock"), and the Series T-2 Cumulative Convertible 
Exchangeable Senior Preferred Stock, without par value ("Series T-2 
Preferred Stock")(the Series T-1 and Series T-2 Preferred Stock are 
collectively referred to as the "Series T Preferred Stock"), an 
affiliate of BA, would have the right to nominate an additional 
director to the Company's board of directors pursuant to its 
Investment Agreement with the Company if Berkshire and the holders 
of the Series B Preferred Stock were to exercise their respective 
rights to elect additional directors to the Company's board of 
directors.

	Industry Globalization and Regulation

	The trend toward globalization of the airline industry has 
accelerated in recent years as certain U.S. and foreign air 
carriers have formed marketing alliances.  Certain foreign air 
carriers have made substantial investments in U.S. air carriers 
which have frequently been tied to marketing alliances or, less 
frequently, reciprocal investments by the U.S. air carrier in its 
foreign partner.  Foreign investment in U.S. air carriers is 
restricted by statute and may be subject to review by the DOT and, 
on antitrust grounds, by the U.S. Department of Justice.

	On January 21, 1993, USAir Group and BA entered into an 
Investment Agreement ("Investment Agreement") under which a wholly-
owned subsidiary of BA has to date purchased certain preferred 
stock of the Company for $400.7 million.  Under the Investment 
Agreement, USAir and BA have entered into a code sharing arrange


                                 57
<PAGE>
ment under which certain domestic USAir flights, connecting to 
certain BA transatlantic flights, may be listed on computerized 
reservation systems either under USAir's or BA's two letter 
designation code, subject to authorization by the DOT.  

	The deadline for BA's election to purchase 50,000 shares of 
Series C Cumulative Convertible Senior Preferred Stock, without par 
value (the "Series C Preferred Stock"), and therefore, subject to 
the conditions specified below, to elect to make any further 
investment in USAir Group pursuant to the Investment Agreement, was 
January 21, 1996.  Prior to this deadline BA informed the Company 
that it would not exercise its right to purchase the Series C 
Preferred Stock.  Because BA did not elect to purchase the Series C 
Preferred Stock, the Company currently has the option to redeem in 
whole or in part, the Series F Preferred Stock and a like 
percentage of the Series T Preferred Stock at the higher of market 
value or the price of $10,000 per share, plus accrued dividends.  
As mentioned above in "Deferral of Dividends", the Company elected 
in late September 1994 to defer dividends on its preferred stock 
and, as of March 28, 1996, the Company's board of directors had not 
authorized the resumption of any dividend payments on the Company's 
capital stock.  If the DOT approves all the transactions as 
contemplated by the Investment Agreement on or prior to January 21, 
1998, BA's purchase of the Series C Preferred Stock may be 
accomplished under certain circumstances.  The DOT has not yet 
approved all the provisions of the Investment Agreement.  The 
Company cannot predict whether or when the purchase of the Series C 
Preferred Stock will occur or if BA will make any additional 
investment in the Company.

	In June 1995, the DOT renewed its approval of the Company's 
and BA's authority to operate code share service on flights serving 
66 U.S. cities.  In addition, the DOT approved an expansion of the 
USAir code share authority to 65 new U.S. cities, Bermuda, Nassau 
and five Canadian cities.  The approval is valid for two years.  As 
of December 31, 1995, USAir and BA offered code share service to 
and from 70 of the 138 airports authorized by the DOT.  The DOT may 
continue to link further renewals of the code share authorization 
to the United Kingdom's ("U.K.") liberalization of U.S. air carrier 
access to the U.K. markets. However, the code sharing arrangement 
is expressly permitted under the existing bilateral air services 
agreement between the U.S. and U.K. USAir expects that the 
authorization will be renewed in the future; however, there can be 
no assurance that this will occur.

	During 1995, the DOT completed its comprehensive examination 
of the "high density rule" which limits airline operations at 
Chicago O'Hare, New York's LaGuardia ("LaGuardia") and John F. 
Kennedy International, and Washington National ("National") 
Airports by restricting the number of takeoff and landing slots.  
The DOT has indicated that it intends to maintain the operating 
limitations imposed by the rule.  USAir holds a substantial number 
of slots at LaGuardia and National.


                                 58
<PAGE>
	Other

	USAir has announced that it will phase out the "wet lease" 
arrangements with BA by the end of June 1996.  Under the wet lease 
arrangements, USAir leases Boeing 767-200ER aircraft, along with 
cockpit and cabin crews, to BA in order for BA to serve three 
routes between the U.S. and London.  In conjunction with the 
termination of the wet lease arrangements and related to USAir's 
relinquishment or divestiture of certain routes to the U.K., BA 
agreed to pay USAir a total of $47 million in periodic payments 
commencing with the termination of the first of the three wet 
leases and continuing annually for nine years. USAir currently 
intends to utilize the aircraft returned from BA as part of its 
planned 1996 expansion of international service (see "Cost-
Reduction and Revenue Enhancement Initiatives" above).  The first 
wet lease ended in late December 1995 and, concurrently, BA 
remitted the first payment to USAir (See Note 13. to the Company's 
consolidated financial statements contained in Part II, Item 8A).  
A second aircraft was returned to USAir in February 1996.  

	In March 1996, Fokker Aircraft N.V. ("Fokker"), a Dutch 
aircraft manufacturer, was declared bankrupt under the laws of The 
Netherlands. As of December 31, 1995, USAir operated 55 Fokker 
aircraft.  Although USAir had no outstanding aircraft purchase 
orders with Fokker, Fokker had certain warranty obligations to 
USAir under purchase agreements and also supplied aircraft parts 
and components to USAir.  Although USAir has been advised that 
successor entities will supply parts and technical services to 
Fokker's airline customers, a disruption in the supply of parts or 
components could adversely impact USAir's operations.  Moreover, an 
adverse market perception of Fokker products could adversely affect 
market values of USAir's owned Fokker aircraft or the ability of 
USAir to sell or lease retired Fokker products.  As of March 28, 
1996, USAir owned 57 Fokker aircraft (19 of which are operated by 
lessees of USAir). See Part I, Item 2. "Properties" for additional 
information. 

	Frequent Traveler Program

	Under USAir's Frequent Traveler Program ("FTP"), participants 
generally receive mileage credits equal to the greater of actual 
miles flown or 500 miles, effective May 1, 1995 (750 miles before 
May 1, 1995), for each paid flight segment on USAir or USAir 
Express, or actual miles flown on one of USAir's FTP airline 
partners.  Participants generally receive a minimum of 500 mileage 
credits, effective May 1, 1995, for each paid flight on USAir 
Shuttle (1,000 miles prior to May 1, 1995).  Participants flying on 
first or business class tickets generally receive additional 
credits.  Participants may also earn mileage credits by utilizing 
certain credit cards, staying at participating hotels or by renting 
cars from participating car rental companies.  Mileage credits 
earned by FTP participants, which do not expire under current 
program guidelines, can be redeemed for various travel awards, 
including fare discounts, first class upgrades and tickets on USAir


                                 59
<PAGE>
 or other airlines participating in USAir's FTP.  Certain awards 
also include hotel and car rental awards.  Awards may not be 
brokered, bartered or sold, and have no cash value.  

	USAir and its airline partners limit the number of seats 
allocated per flight for award recipients through inventory 
management techniques. The number of seats available for frequent 
travelers varies depending upon flight, day, season and destina-
tion.  Award travel for all but USAir's most frequent travelers 
generally is not permitted on blackout dates, which correspond to 
certain holiday periods in the United States or peak travel dates 
to foreign destinations.  USAir reserves the right to terminate the 
FTP or portions of the program at any time, and the FTP's rules, 
partners, special offers, blackout dates, awards and mileage levels 
are subject to change without prior notice.

	USAir accounts for its FTP under the incremental cost method, 
whereby estimated future travel awards are valued at the estimated 
average incremental cost of carrying one additional passenger. 
Incremental costs include unit costs for passenger food, beverages 
and supplies, fuel, reservations, communications, liability 
insurance and denied boarding compensation expenses.  No profit or 
overhead margin is included in the accrual for incremental costs.  
The Company periodically reviews the assumptions made to calculate 
its FTP liability for reasonableness and makes adjustments to these 
assumptions as necessary. No liability is recorded for airline, 
hotel or car rental award certificates that are to be honored by 
other parties because there is no cost to USAir for such awards. 

	Effective January 1, 1995, USAir increased the minimum mileage 
level required for a free domestic flight from 20,000 to 25,000.  
FTP participants had accumulated mileage credits for approximately 
3,350,000 awards and 3,697,000 awards at December 31, 1995 and 
1994, respectively, at the 25,000 mile level required to earn an 
award.  Because USAir expects that some potential awards will never 
be redeemed, the calculations of the accrued liability for 
incremental costs at December 31, 1995 and 1994 were based on 
approximately 87% and 86%, respectively, of the accumulated 
credits.  Mileage for FTP participants who have accumulated less 
than the minimum number of mileage credits necessary to claim an 
award is excluded from the calculation of the accrual.  Incremental 
changes in FTP liability resulting from redeemed or additional 
mileage credits are recorded as part of the regular review process.

	USAir's customers redeemed approximately 1,160,000, 927,000 
and 841,000 awards for free travel on USAir in 1995, 1994 and 1993, 
respectively, representing approximately 9.0%, 7.0% and 8.0% of 
USAir's revenue passenger miles ("RPMs") in those years, respec-
tively.  USAir does not believe that usage of FTP awards results in 
any significant displacement of revenue passengers. USAir's 
exposure to the displacement of revenue passengers is not signifi-
cant, as the number of USAir flights that depart 100% full is 
minimal.  In the second quarter of 1995, the quarter when the 
highest number of free frequent traveler trips were flown for the


                                 60
<PAGE>
 year, for example, fewer than 6.5% of USAir's flights departed 
100% full.  During this same quarterly period, approximately 5.2% 
of USAir's flights departed 100% full and also had one or more 
passengers on board who were traveling on FTP award tickets.

	During 1995, four members of USAir's FTP filed class action 
lawsuits against USAir in Illinois, Pennsylvania, California and 
New Jersey state courts, alleging breach of contract relating to 
changes made to USAir's FTP effective December 31, 1989 and/or 
January 1, 1995. A similar lawsuit has been pending in California 
state court since 1989. The lawsuits seek unspecified damages and 
an injunction against allegedly objectionable changes to USAir's 
FTP and any subsequent retroactive changes to the FTP.  See Part I, 
Item 3. "Legal Proceedings."  USAir denies the allegations made in 
the lawsuits and intends to vigorously defend itself.  In addition, 
the DOT has expressed concern about potential consumer fraud 
relating to frequent traveler programs and their restrictions on 
the use of awards.  It is uncertain whether USAir will be named 
party in any further litigation or if the DOT will take any action 
with respect to frequent traveler programs. The ultimate resolution 
of these lawsuits or potential lawsuits or possible DOT actions and 
the potential impact on the Company's results of operations and 
financial condition cannot be predicted at this time.

Results of Operations

	1995 Compared with 1994

	USAir Group recorded net income of $119.3 million for 1995 
compared with a net loss of $684.9 million for 1994.  USAir 
recorded net income of $33.0 million for 1995 which represents an 
improvement of $749.2 million over its 1994 results. 
    
	The Company's year-over-year improvement in net income 
reflects a $477.2 million (6.8%) revenue increase coupled with a 
decrease in operating expenses of approximately $335.9 million 
(4.5%).  Excluding the unusual items recognized during 1994 and 
1995, as discussed further below, the Company's operating costs 
decreased approximately 1.1% year-over-year.

	USAir's yield was 16.66 cents for 1995, a 6.7% improvement versus 
1994. The stronger than anticipated increase in yield primarily 
resulted from the effects of the factors discussed in "Factors 
Contributing to Improved 1995 Results" above.  USAir's capacity 
(ASMs) for 1995 decreased by approximately 4.7%.  RPMs, however, 
decreased less than 1% and USAir's load factor was 64.7% for 1995, 
a historical high.  USAir's unit costs increased to 11.40 cents from 
1994's 11.02 cents primarily due to the capacity reductions that 
occurred in 1995.  USAir's capacity (ASMs) for 1996 is expected to 
be approximately 3% less than for 1995 reflecting the full-year 
effects of USAir's right-sizing initiatives.  USAir's unit costs 
are expected to increase for 1996 mainly due to higher Personnel 
Costs and Aviation Fuel expenses, partially offset by decreases in 
certain capacity-related expenses, applied over less capacity on a


                                 61
<PAGE>
 year-over-year basis.  USAir's pilot and flight attendant 
employees received contractual wage increases in early 1996 and 
certain USAir non-contract employees received salary increases 
effective January 1, 1996. 

	The Company believes that for the foreseeable future, while 
demand for higher yield "business fares" will remain essentially 
flat and relatively inelastic, the lower yield "leisure" market 
will remain highly price sensitive.  The leisure market, which is 
affected by general economic conditions, is also the primary target 
market for low cost, low fare carriers.  The Company expects that 
low fares offered by its airline affiliates in response to low 
cost, low fare competition in their markets will increase during 
1996 and such competitive actions may have an adverse effect on the 
Company's results of operations, liquidity and financial condition.

	The Company has stated that its January 1996 revenues were 
adversely affected by the severe winter weather along the eastern 
seaboard and the effects of the partial United States government 
shutdown by approximately $30 million and $10 million, respective-
ly.  In addition, the Company estimates that the weather and 
government shutdown adversely affected operating expenses by 
approximately $2 million. Although a competitive strength, 
concentration of significant operations in the eastern U.S. leaves 
the Company's airline subsidiaries susceptible to certain regional 
conditions that may have an adverse affect on the Company's results 
of operations and financial condition.

	In August 1993, the United States increased taxes on domestic 
fuels, including aircraft fuel used on domestic routes, by 4.3 cents per 
gallon.  Airlines were exempt from the tax increase until Octo-
ber 1, 1995.  Pending legislation in Congress would reinstate the 
exemption through September 30, 1997, subject to termination of the 
exemption on September 30, 1996 if excise taxes relating to certain 
aviation trust funds are not extended.  These excise taxes expired 
on December 31, 1995 and have not, as of March 28, 1996, been 
extended.  There can be no assurance that an airline jet fuel tax 
exemption will be reinstated, or if reinstated, the terms under and 
the period for which the exemption will be effective.  The 
additional fuel tax is currently being collected.  USAir's 1995 
results include expenses related to this tax of approximately $11.9 
million, recognized as an operating expense, in Other Expense, Net. 
The lack of an airline jet fuel tax exemption would increase 
USAir's annual operating expenses by approximately $47 million 
based on projected domestic fuel consumption for 1996.

	The financial results for 1994 include: (i) a $172.9 million 
charge related to USAir's grounded BAe-146 fleet (see below for 
additional information related to the reserve for the BAe-146 
fleet) and to USAir's decision to cease operations of its remaining 
Boeing 727-200 aircraft in 1995 (the last operational 727-200 
aircraft was retired from service in September 1995); (ii) a $54.0 
million charge for obsolete inventory and rotables to reflect 
market values; (iii) a $25.9 million charge related to USAir's


                                 62
<PAGE>
 decision to reduce substantially service between Los Angeles and 
San Francisco in November 1994; (iv) a $28.3 million gain resulting 
from the sale of certain aircraft and assets to Mesa Air Group, 
Inc. (formerly Mesa Airlines, Inc.) ("Mesa") and the accounting 
treatment of the hull insurance recovery on the aircraft lost in 
the September 1994 accident; and (v) a $1.7 million charge related 
to the sale of certain assets to Mesa.  The following table 
indicates where these items appear in the Company's consolidated 
statement of operations which is found in Part II, Item 8A. of this 
report ($ millions, brackets denote expense):
<TABLE>
<CAPTION>                                                        
                                       California      Other Asset
      Line Item                 Aircraft       Inventory      Reduction      Dispositions       Total
      ---------                 --------       ---------      ---------     ------------        -----
<S>                             <C>             <C>            <C>             <C>            <C>
Personnel Costs                 $     -         $    -         $ (0.3)         $    -         $  (0.3)
Aircraft Rent                    (115.5)             -              -               -          (115.5)
Aircraft Maintenance                3.4              -              -               -             3.4 
Depreciation and Amortization     (21.7)         (18.0)         (18.2)              -           (57.9)
Other Operating Expenses          (39.1)         (36.0)          (7.4)           (1.7)          (84.2)
                                 ------          -----          -----           -----          ------ 
  Total Operating               $(172.9)        $(54.0)        $(25.9)         $ (1.7)        $(254.5)
                                 ======          =====          =====           =====          ======
Other Non-Operating             $     -         $    -         $    -          $ 28.3         $  28.3
                                 ======          =====          =====           =====          ======
</TABLE>
	In addition to the above charges, USAir recorded a $50 million 
addition to Passenger Transportation revenue in the fourth quarter 
of 1994 to adjust estimates made during the first three quarters of 
1994.

	The Company recognized a $4.1 million unusual item during the 
fourth quarter of 1995.  This amount, a reduction of Aircraft Rent 
expense, reflects a partial reversal of the unusual item recorded 
in the fourth quarter of 1994 related to USAir's grounded BAe-146 
fleet (see discussion of 1994 unusual items above).  The $4.1 
million reflects USAir's success subleasing three leased BAe-146 
aircraft during the fourth quarter of 1995.  The Company expects to 
reverse additional amounts previously accrued for dependent on 
USAir's success remarketing these aircraft.   

	Operating Revenues - The Company's Passenger Transportation 
revenues increased $391.0 million (6.2%), $345.5 million of which 
is attributable to USAir and the remainder to the Company's wholly-
owned regional airlines.  The Company estimates that its Passenger 
Transportation revenues were adversely affected during 1994 by 
approximately $50 million due to unfavorable weather during the 
first quarter and approximately $150 million as the result of the 
two accidents that occurred during the third quarter.  By early 
1995, USAir's traffic had recovered from the effects of the 
accidents and approached a level more normally associated with 
USAir's capacity in the marketplace.  USAir's 6.7% yield improve-
ment was sufficient to offset the effects on revenues of a 4.7% 
decrease in both revenue passengers and capacity (see related  
discussion in "Factors Contributing to Improved 1995 Results"


                                 63
<PAGE>
 above).

	In March 1993, the U.S. District Court in Atlanta, Georgia 
entered a settlement involving USAir and five other U.S. air 
carrier defendants in the Domestic Air Transportation Antitrust 
Litigation class action lawsuit.  The class action suit, which was 
filed in July 1990, alleged that the airlines used the Airline 
Tariff Publishing Company to signal and communicate air carrier 
pricing intentions and otherwise limit price competition for travel 
to and from numerous hub airports.  Under the terms of the  
settlement, the six air carriers paid $45 million in cash and 
issued $396.5 million in certificates valid for purchase of 
domestic air travel on any of the six airlines.  USAir's share of 
the cash portion of the settlement, $5 million, was recorded in the 
results of operations in the second quarter of 1992.  Incremental 
cost associated with the settlement will not be material based on 
the nominal equivalent free trips associated with the settlement.  
The travel certificates may be applied towards travel purchased 
between January 1995 and December 1998.

	On October 11, 1994, USAir and seven other air carriers 
entered into a settlement agreement with a group of State Attorneys 
General resolving similar issues with the states.  The settlement 
entitles passengers traveling within the United States on state 
government business to a 10% discount off the published fares of 
each of the settling air carriers and will be available for 18 
months from August 16, 1995, or until the combined discount amount 
reaches $40 million,  whichever first occurs.  On May 10, 1995, a 
U.S. federal district court judge approved this settlement.  USAir 
does not expect that this settlement will have a material adverse 
effect on its financial condition or results of operations.

	The Company's Cargo and Freight revenue decreased $6.3 million 
(3.9%) primarily due to USAir's $6.7 million (4.2%) decrease.  The 
U.S. Postal Service's increased emphasis on truck movement of mail 
in the Northeastern U.S. has resulted in lower mail volumes and 
yields.  The $92.5 million (19.4%) increase in the Company's Other 
Revenue ($67.5 million or 13.6% increase for USAir) is mainly 
attributed to an increase in fees received from participants in 
USAir's frequent traveler program and increased revenues from 
higher volumes and rates for cancellation and rebooking fees.  
Revenues from third party aircraft lease and sublease arrangements 
also increased during 1995.  Overall, increases in the Other 
Revenue category were largely offset by increases in related 
expenses recognized as Other Expenses, Net (see below).  Revenues 
associated with USAir's wet lease arrangements with BA, recognized 
as Other Revenue, are expected to decrease in 1996 in conjunction 
with the phase-out of the wet lease program (see "Wet Lease 
Arrangements" above). USAir's results include certain transactions 
that are eliminated at the USAir Group level.  See additional 
information related to the Company's third party lease and sublease 
arrangements in Note 4(b) to the Company's consolidated financial 
statements contained in Part II, Item 8A. of this report.


                                 64
<PAGE>
	Operating Expenses - The Company's and USAir's Personnel Costs 
were relatively unchanged.  USAir recognized approximately $49.7 
million of expense in 1995 associated with the profit share 
component of the 1992 Salary Reduction Program (see further 
discussion of this profit share plan in "Liquidity and Capital 
Resources" below).  Profit share expense during 1994 was approxi-
mately $4.1 million, resulting from employees receiving certain 
guaranteed profit share payments upon termination. Overall, profit 
share expense and the contractual wage increases that USAir's 
pilots, flight attendants and mechanics received during 1995 were 
offset by lower personnel levels.  USAir's workforce had approxi-
mately 2,500 fewer employees at December 31, 1995 than at Decem-
ber 31, 1994.  Aviation Fuel expense decreased $37.6 million 
(5.6%), primarily due to USAir's $37.3 million (5.8%) decrease.  
Year-over-year, the average cost of fuel per gallon was relatively 
unchanged but USAir's capacity (ASMs) decreased approximately 4.7%. 
The decreased capacity contributed to a 5.6% reduction in fuel 
consumption. Jet fuel prices have increased during the first 
quarter of 1996.  The cost of jet fuel per gallon is expected to be 
higher during 1996 than 1995, however, the price of jet fuel is 
dependent on market factors generally outside of the Company's 
control.  See discussion above related to jet fuel tax legislation. 
The Company's Commissions expense decreased $20.1 million (3.5%) 
and $22.1 million (4.0%) at USAir despite an increase in Passenger 
Transportation revenues primarily due to the effects of a change in 
the rate structure for travel agency commissions that went into 
effect during early 1995.  See Note 4.(b) to the Company's consoli-
dated financial statements contained in Part II, Item 8A. for 
information regarding litigation involving travel agency commis-
sions. The Company's Aircraft Rent decreased $125.9 million (22.3%) 
primarily due to USAir's $123.3 million (23.7%) decrease.  
Excluding the unusual items recognized during 1994 and 1995, as 
discussed above, USAir's Aircraft Rent decreased $3.7 million 
(0.9%) mainly due to fewer leased aircraft year-over-year.  The 
Company's Other Rent and Landing Fees expense decreased $32.4 
million (7.4%) and $33.3 million (7.9%) at USAir primarily due to 
USAir's capacity reductions and credits totaling approximately $6.0 
million received from various airport authorities during 1995 
related to 1994 activity.  The Company's Aircraft Maintenance 
decreased $45.3 million (11.6%) primarily due to USAir's $40.2 
million (12.0%) decrease which resulted from fewer operating 
aircraft year-over-year and the positive impact of USAir's re-
engineering efforts in the maintenance areas.  Excluding the 
effects of the unusual items recognized during 1994, as discussed 
above, USAir's Depreciation and Amortization expense increased $7.8 
million (2.4%) in 1995 compared with 1994.  Excluding the effect of 
the unusual items recognized in 1994, as discussed above, the 
Company's Other Expenses, Net increased approximately $68.5 million 
(4.7%) largely due to increases in expenses associated with 
increased sales activity and increased taxes on jet fuel (see 
discussion above related to jet fuel tax legislation).  Increased 
third party lease and sublease arrangements have also contributed 
to the increase in this expense category (see related discussion 
above in "Other Revenues").  Decreases in certain capacity-related


                                 65
<PAGE>
 expenses partially offset increases in other components of the 
Other Expense, Net.  Expenses associated with USAir's wet lease of 
aircraft to BA, recognized as Other Expenses, Net, are expected to 
decrease in 1996 in conjunction with the phase-out of the wet lease 
program (see "Wet Lease Arrangements" above).  USAir's results 
include certain transactions that are eliminated at the USAir Group 
level.

	Other Income (Expense) - The Company's Interest Income 
improved by $24.5 million (90.6%) mainly as a result of signifi-
cantly higher cash levels during 1995.  The Company's Interest 
Expense increased $18.6 million (6.5%) primarily as a result of 
interest incurred on debt associated with new aircraft deliveries 
during 1994 and 1995.  Interest Capitalized decreased $5.0 million 
(36.2%) mainly due to USAir's agreement with Boeing to defer the 
delivery of certain 757-200 aircraft from 1996 to 1998 (see Note 
4.(d) to the Company's consolidated financial statements contained 
in Part II, Item 8A.).  Other, Net was relatively unchanged as the 
effects of the $28.3 million gain recognized in 1994 (discussed 
above) was offset by USAir's improved equity results in USAM and 
gains of approximately $10.7 million associated with the sale of 13 
737-300 aircraft during 1995.  USAM owns 11% of the Galileo 
International Partnership, which owns and operates the Galileo 
Computerized Reservation System ("CRS"), and 21% of the Apollo 
Travel Services Partnership, which markets the Galileo CRS in the 
U.S. and Mexico.  On a consolidated basis, USAM recorded pre-tax 
income of $34.5 million for 1995.

	Income Tax Provision (Credit) - The Company was subject to 
Federal alternative minimum tax for 1995 as well as income taxes in 
certain states.  The Company was not subject to regular Federal 
income tax for 1995 as the result of using Federal net operating 
loss carryforwards. The results for 1994 do not include any income 
tax credit due to Statement of Financial Accounting Standards No. 
109, "Accounting for Income Taxes" ("FAS 109") limitations in 
recognizing a current benefit for net operating losses.  See Note 
6. to the Company's consolidated financial statements contained in 
Part II, Item 8A. for additional information.
  
	The Company implemented Statement of Financial Accounting 
Standards No. 121, "Accounting for the Impairment of Long-Lived 
Assets and Long-Lived Assets to Be Disposed Of" as of January 1, 
1995.  The effects, which were negligible, are included in the 
Company's results of operations for 1995.  In October 1995, the 
Financial Accounting Standards Board adopted Statement No. 123 
"Accounting for Stock-Based Compensation" ("FAS 123").  This 
statement establishes the fair value based method of accounting for 
stock compensation.  The Company has elected to continue using the 
intrinsic value based method of accounting prescribed in Accounting 
Principles Board Opinion No. 25, "Accounting for Stock Issued to 
Employees."


                                 66
<PAGE>
1994 Compared with 1993

	Adverse weather during the first quarter, the two aircraft 
accidents which occurred during the third quarter, the intense 
competitive environment characterized by the growth of low cost, 
low fare airlines in USAir's markets, widespread industry fare 
discounting, and USAir's cost structure were factors that had a 
negative effect on the Company's results of operations during 1994. 
 
	The Company recorded a net loss of $684.9 million on revenue 
of $7.0 billion for 1994, compared with a net loss of $393.1 
million on revenue of $7.1 billion for 1993.  The Company estimates 
that severe winter weather in the first quarter of 1994 negatively 
affected its results of operations by approximately $50 million and 
that the effect of the two aircraft accidents during the third 
quarter of 1994 produced a revenue shortfall of approximately $150 
million from forecast amounts.

	The Company's 1994 financial results contain the $226.2 
million of unusual items discussed in "1995 compared with 1994" 
above.  The Company's 1993 financial results contain $153.2 million 
of unusual items, including (i) a $43.7 million charge for the 
cumulative effect of an accounting change, as required by Statement 
of Financial Accounting Standards No. 112, "Employers' Accounting 
for Post-employment Benefits;" (ii) a $68.8 million charge for 
severance, early retirement, and other personnel-related expenses 
for a workforce reduction of approximately 2,500 full-time 
positions; (iii) a $36.8 million charge based on  a projection of 
the repayment of certain employee pay reductions; (iv) a $13.5 
million charge for certain airport facilities at locations where 
USAir has, among other things, discontinued or reduced its service; 
(v) $8.8 million for a loss on USAir's investment in the Galileo 
International Partnership, which operates a computerized reserva-
tions system; and (vi) an $18.4 million credit related to non-
operating aircraft.  The following table indicates where these 
items (excluding the accounting change) appear in the Company's 
statement of operations which is found in Part II, Item 8A. of this 
report ($ millions, brackets denote expense):

<TABLE>
<CAPTION>
                                   Workforce      Employee       Aircraft/           
      Line Item                    Reduction      Payback       Facilities      Galileo        Total
      ---------                    ---------      --------      ----------      -------        -----
<S>                                <C>            <C>            <C>           <C>           <C>  
Personnel Costs                    $(65.6)        $(36.8)        $    -        $    -        $(102.4)
Aircraft Maintenance                    -              -           18.4             -           18.4 
Depreciation and Amortization           -              -          (13.5)            -          (13.5)
Other Operating Expenses             (3.2)             -              -             -           (3.2)
                                    -----          -----          -----         -----         ------
  Total Operating                  $(68.8)        $(36.8)        $  4.9        $    -        $(100.7)
                                    =====          =====          =====         =====         ======
Other Non-Operating                $    -         $    -         $    -        $ (8.8)       $  (8.8)
                                    =====          =====          =====         =====         ======

	
</TABLE>
                                 67
<PAGE>
Operating Revenues - The Company's Passenger Transportation 
revenues decreased $197.4 million (3.0%), $159.6 million of which 
is attributable to USAir and the remainder to the Company's wholly-
owned regional airlines.  Despite the negative effect of the 
adverse weather during the first quarter and the two accidents 
during the third quarter, USAir's scheduled traffic, as measured by 
RPMs, increased by 7.7% during 1994 on 2.6% additional capacity 
(ASMs), resulting in a 3.0 percentage point increase in passenger 
load factor, a measure of capacity utilization.  However, USAir's 
yield decreased by 9.6% due to several factors including lower 
fares resulting from increased competition from low cost, low fare 
air carriers in USAir's markets and industry fare discounting 
promotions.  

	The Company's Cargo and Freight revenue decreased $10.2 
million (5.9%) due to USAir's $10.1 million (5.9%) decrease caused 
by overall lower volumes and lower mail yields during 1994.  The 
$121.6 million (34.3%) increase in the Company's Other Revenue 
($125.2 million or 33.8% for USAir) is the result of several 
factors including the wet lease arrangement between USAir and BA, 
increased volume and rate for cancellation and rebooking fees, and 
fees from companies which participate in USAir's frequent traveler 
program.  These increases are largely offset by increases in other 
operating expenses.

	Operating Expenses - The Company's Personnel Costs increased 
$48.4 million (1.7%) primarily due to USAir's $55.2 million (2.0%) 
increase. Excluding the effect of the unusual charges discussed and 
presented in the tables above, USAir's personnel costs increased 
$157.3 million (6.1%) in 1994 compared with 1993 due to the 
expiration during 1993 of employee wage reductions, subsequent 
contractual and general salary increases, and a lower discount rate 
used during 1994 in the calculation of pension and postretirement 
benefit expense.  These increases more than offset any expense 
reductions realized as a result of the workforce reduction during 
1994.  Aviation Fuel expense decreased $38.2 million (5.4%), 
primarily because of USAir's $35.6 million (5.2%) decrease, which 
is the result of an 8.8% reduction in the cost of fuel partially 
offset by a 3.8% increase in consumption compared with 1993.  The 
Company's Commissions expense decreased $13.6 million (2.3%) and 
$10.6 million (1.9%) at USAir as a result of decreased passenger 
revenue.  The Company's Other Rent and Landing Fees expense 
decreased $9.3 million (2.1%) and $9.4 million (2.2%) at USAir 
primarily due to lower operating costs at certain airport facili-
ties.  The Company's Aircraft Rent increased $91.0 million (19.2%) 
primarily due to USAir's $89.8 million (20.8%) increase.  Excluding 
the effect of the unusual charges discussed and presented in the 
tables above, USAir's aircraft rent decreased $25.7 million (6.0%) 
due to the expiration or renegotiation of several aircraft leases 
and additional wet lease service over 1993 levels.  The Company's 
Aircraft Maintenance increased $18.1 million (4.8%) primarily 
because of USAir's $26.9 million (8.7%) increase which resulted 
from the $18.4 million credit in 1993 (see above table) and initial 
repairs on certain of USAir's newer aircraft in 1994.  The


                                 68
<PAGE>
 Company's Depreciation and Amortization expense increased $56.1 
million (15.9%) due to USAir's $62.0 million (19.1%) increase.  
Excluding the effect of the unusual charges discussed and presented 
in the tables above, USAir's depreciation and amortization expense 
increased $17.6 million (5.6%) in 1994 compared with 1993 primarily 
due to the delivery of new Boeing 757-200 aircraft.  The $157.0 
million (11.3%) increase in the Company's Other Expenses, Net is 
due to USAir's $145.1 million (10.8%) increase. Excluding the 
effect of the unusual charges discussed and presented in the tables 
above, USAir's other expenses, net increased $65.8 million (4.9%) 
largely due to increases in several passenger volume-related 
expense categories and expenses related to the increase in USAir's 
other revenue category discussed above.

	Other Income (Expense) - The Company's Interest Income 
improved by $14.5 million as a result of higher cash levels and 
more favorable interest rates in 1994.  USAir's results include 
intercompany transactions which are eliminated from the Company's 
results. The Company's Interest Expense increased $34.1 million 
(13.7%) primarily as a result of interest incurred on certain 
aircraft-secured and unsecured financings completed during 1993 and 
1994.  Interest Capitalized decreased $4.0 million (22.5%) because 
average deposits for future aircraft deliveries were lower during 
1994 compared with 1993.  Other, Net reflects an $83.7 million 
improvement primarily due to the $28.3 million gain discussed above 
and USAir's improved equity results in USAM.

	Effective January 1, 1993, the Company adopted FAS 109. The 
adoption of FAS 109 resulted in no cumulative adjustment.  Results 
for 1994 and 1993 do not include any income tax credit due to the 
FAS 109 limitations in recognizing a current benefit for net 
operating losses. See Note 6. to the Company's consolidated 
financial statements contained in Part II, Item 8A. for additional 
information.

                  Inflation and Changing Prices

	Inflation and changing prices do not have a significant effect 
on the Company's operating revenues and expenses (other than 
depreciation and amortization) because such revenues and expenses  
generally reflect current price levels.

	Depreciation and amortization expense is based on historical 
cost.  For assets acquired through the purchase of Pacific 
Southwest Airlines, USAir's historical cost is based on the fair 
market value of the assets on May 29, 1987.  In the case of 
Piedmont Aviation, Inc., USAir's historical cost is based on the 
fair market value of the assets on November 5, 1987, reduced by the 
tax effect of that portion of fair market value not deductible for 
tax purposes in the form of depreciation and amortization.  
Therefore, aggregate depreciation and amortization is lower than if 
this expense reflected today's replacement costs for existing 
productive assets.  In evaluating how inflation would increase 
depreciation expense, however, consideration should also be given


                                 69
<PAGE>
 to the reduction in other operating expenses, such as aircraft 
maintenance and aviation fuel, that would be achieved from the 
operating efficiencies of newer, more technologically advanced 
productive assets.

Liquidity and Capital Resources

	Cash provided by operations was approximately $576.6 million 
in 1995.  Cash provided by (used for) operations totaled approxi-
mately $1.1 million and ($2.6) million for 1994 and 1993, respec-
tively. The significant improvement in cash flows from operating 
activities during 1995 was driven by the same factors that 
contributed to the Company's improved 1995 financial results (see 
"Factors Contributing to Improved 1995 Financial Results" above).  
At December 31, 1995, cash and cash equivalents and short-term 
investments totaled approximately $901.7 million.
  
	During December 1995, USAir completed a transaction which 
enabled it to substitute previously unencumbered aircraft in-lieu 
of cash deposits as collateral for certain workers' compensation 
liabilities. As a result of the arrangement, approximately $67.2 
million of previously restricted cash and security deposits were 
returned to USAir.  The Company's cash and cash equivalents and 
short-term investments balance of $901.7 million as of December 31, 
1995, excludes approximately $100.0 million which was deposited in 
trust accounts to collateralize certain other workers' compensation 
liabilities and letters of credit which are classified as "Other 
Assets" on the Company's consolidated balance sheet at that date.  
See also Note 1(f) to the Company's consolidated financial 
statements contained in Part II, Item 8A.   

	Investing activities during 1995 included cash inflows from 
asset sales of approximately $222.3 million (primarily from the 
sale of 13 737-300 aircraft) offset by a $146.7 million cash 
outflow for the acquisition of assets ($61.7 million cash payments 
related to new 757-200 aircraft and $85.0 million cash payments 
related to the purchase of aircraft rotables, hush kits, computer 
equipment and various ground support equipment).  Net cash provided 
by investing activities for 1995 was $148.9 million.  

    Financing activities during 1995 included $283.2 million of 
debt payments, including the redemption of USAir's remaining 
outstanding 12 7/8% Unsecured Senior Notes ("12 7/8% Notes"), 
partially offset by $8.7 million in cash proceeds from the sale of 
the Company's stock to an employee benefit plan stock fund and new 
debt of $1.2 million incurred at one of the Company's regional 
airline subsidiaries.  In addition, the Company incurred debt of 
$169.7 million associated with the delivery of seven new 757-200 
aircraft and scheduled progress payments for the future aircraft 
deliveries during 1995.  In connection with the deferral of eight 
757-200 deliveries to 1998, USAir rescheduled the due date of $70.8 
million of previously satisfied aircraft purchase deposits into the 
future resulting in a reduction of both debt and equipment deposits 
(see Note 4.(d) to the Company's consolidated financial statements


                                 70
<PAGE>
 contained in Part II, Item 8A.).  The $169.7 million and $70.8 
million are reflected as non-cash activity in the Company's 
Consolidated Statements of Cash Flows found in Part II, Item 8A. of 
this report because USAir experienced an increase or decrease in 
fixed assets or equipment deposits concurrently with the increase 
or decrease in debt. USAir made early debt payments, including the 
redemption of the 12 7/8% Notes, totaling approximately $202.1 
million during 1995.  Further steps by USAir to prepay debt and 
lease obligations are possible.

	Certain USAir employees whose wages and/or benefits were 
temporarily reduced during 1992 and 1993 currently participate in a 
profit sharing plan (a component of the 1992 Salary Reduction 
Program) designed to recompense them for the concessions made 
during that time period.  The plan will cease to exist after these 
employees have been recompensed to the extent permitted under the 
provisions of the plan. Estimated savings of approximately $23 
million attributable to the suspension of longevity/step increases 
will not be subject to repayment through the profit-sharing 
program.  This profit sharing plan is distinct from two other 
profit sharing plans that USAir currently offers in conjunction 
with certain of its defined contribution plans and its Employee 
Stock Ownership Plan.  Additional information related to this plan 
can be found in Note 12 to the Company's consolidated financial 
statements contained in Part II, Item 8A.  Payouts are determined 
based on USAir Group's pre-tax results for a year, less charges 
associated with postretirement benefit expenses other than for 
pensions.  Certain unusual items are also excluded from the 
calculation.  Based on USAir Group's 1995 results and the provi-
sions of the profit sharing plan, USAir recognized charges of 
approximately $49.7 million for this plan in 1995.  USAir made a 
cash payment of approximately $73.7 million to plan participants in 
March 1996 for 1995 activity.  The maximum remaining pay-out under 
this plan after the March 1996 payment, the timing of which is 
dependent on USAir Group's future profitability, among other 
factors, is currently estimated to be no more than $134.3 million. 
 
	As discussed above in "Deferral of Dividends", the Company  
has deferred dividend payments on all series of its outstanding 
preferred stock.  The aggregate annual dividend requirements 
related to the Company's outstanding preferred stock issuances, 
each of which has a cumulative dividend feature, currently amount 
to approximately $79.2 million.  Accordingly, aggregate dividends-
in-arrears as of December 31, 1995, including additional dividends 
(interest) on deferred dividends, of approximately $117.7 million 
represent a future obligation of the Company. In addition, the 
Company's Series A Preferred Stock is mandatorily redeemable on 
August 7, 1999 at $1,000 per share plus accrued dividends (inter-
est).  The Series F Preferred Stock and Series T Preferred Stock 
are mandatorily redeemable in the year 2008.  As of December 31, 
1995, the redemption values of the Series A Preferred Stock, 
Series F Preferred Stock and Series T Preferred Stock were 
approximately $412.1 million, $329.1 million, and $109.6 million, 
respectively.


                                 71
<PAGE>
	The Company and USAir are party to certain financial contracts 
to reduce exposure to fluctuations in the price of jet fuel and 
changes in the U.S. dollar to Japanese Yen conversion rate.  Under 
the jet fuel arrangements, USAir pays a fixed rate per notional 
gallon of fuel and receives in return a floating rate per notional 
gallon based on the market rate during the month of settlement.  
Decreases in the market cost of jet fuel below the rates specified 
in the contracts require the Company and USAir to make cash 
payments.  The Company and USAir believe these contracts do not 
present a material risk to the Company's financial position or 
liquidity due to the relatively simple terms of the agreements, 
their purpose, and their short duration.  The Company and USAir 
have reviewed the financial condition of each of the counterparties 
to these financial contracts and believe that the potential for 
default by any of the current counterparties is negligible.  In 
prior years, USAir participated in contracts to reduce its exposure 
to interest rate changes but these contracts expired during 1995 
and were not renewed.  See Note 2. to the Company's consolidated 
financial statements contained in Part II, Item 8A. for additional 
information.

	USAir and certain of the Company's other subsidiaries have 
received notices from the U.S. Environmental Protection Agency and 
various state agencies that they are potentially responsible 
parties with respect to the remediation of existing sites of 
environmental concern. Negotiations with various governmental 
agencies continue concerning known and possible cleanup sites.  
USAir has made financial contributions for the performance of 
remedial investigations and feasibility studies at sites in Moira, 
New York; Escondido, California; and Elkton, Maryland.  The 
contributions totaled approximately $200 thousand for 1995, 1994 
and 1993 combined.  The Company believes that the ultimate 
resolution of known environmental contingencies should not have a 
material adverse effect on its results of operations and financial 
condition based on the Company's experience with similar environ-
mental sites.

	Also, USAir has been identified as a potentially responsible 
party ("PRP") for environmental contamination at Boston Logan 
Airport.  There are a number of other PRPs at the site.  The 
Company is presently unable to assess its proportionate share of 
contribution, but does not expect any such contribution to have a 
material adverse effect on its financial condition or results of 
operations.

	The Company terminated its revolving credit facility with a 
group of banks during 1994.  The Company had historically utilized 
such a facility to supplement its liquidity from time to time.  In 
addition, USAir's revolving accounts receivable sale program 
expired in December 1994.  USAir was unable to sell receivables 
under the agreement during 1994 because of failure to comply with 
certain financial covenants required to be maintained in connection 
with that agreement.  USAir had engaged in discussions with respect


                                 72
<PAGE>
 to a replacement receivables sale facility but has elected not to 
pursue such a financing at this time.

     The Company's liquidity and capital resources improved 
considerably during 1995.  However, the Company and USAir are 
highly leveraged and in order to meet debt service, lease and other 
obligations and to finance daily operations, the Company and USAir 
require substantial liquidity and working capital.  Developments 
may occur that are beyond the control of the Company and USAir 
which could have a material adverse effect on the Company's future 
prospects, liquidity and financial condition, including a downturn 
in the economy, intensified fare pricing wars, adverse regulatory 
changes, substantial increases in jet fuel prices or fuel taxes, 
adverse weather conditions, negative public perception regarding 
safety, and the further growth and expansion of low cost, low fare 
air carriers into markets served by USAir and its regional 
affiliates.

	The Company anticipates that its 1996 capital expenditures, 
primarily related to USAir's operations, will be approximately $257 
million.  Of this amount, approximately $67 million relates to 
progress payments for future aircraft deliveries and $35 million 
relates to the purchase of hush kits for certain aircraft in order 
to comply with federal noise and pollution mandates.  The Company 
expects that it will satisfy its liquidity requirements for 1996 
through a combination of cash flow from operations and cash on 
hand.  As a result of the recent aircraft delivery deferral 
agreements with Boeing, the Company's capital commitments have been 
substantially reduced for the 1996-2000 time period (see "Cost-
Reduction and Revenue Enhancement Initiatives" above). USAir 
currently has committed financing for a significant portion of the 
purchase price for each of the scheduled 1998 deliveries.

	Except for the Enhanced Equipment Notes ("Enhanced Notes") 
sold in 1996 (see below), the Company's and USAir's debt and equity 
securities are presently rated below investment grade by Standard 
and Poor's Corporation ("S&P") and Moody's Investors Service, Inc. 
("Moody's"). The ratings of the Company's and USAir's debt and 
equity securities make it more difficult and costly for the Company 
and USAir to effect additional financing, particularly unsecured 
debt financing.

	In February 1996, USAir sold $263 million principal amount of 
Enhanced Notes through a private placement offering under Securi-
ties and Exchange Commission Regulation 144A.  The offering netted 
proceeds of approximately $259 million which were used as part of 
the funds necessary to repay in full the indebtedness incurred in 
connection with certain 757-200 aircraft delivered to USAir in 1994 
and 1995. The Enhanced Notes are secured by nine 757-200 aircraft. 
 
	During 1994, the Company's investment in new aircraft acquisi-
tions and purchase deposits totaled $270.6 million (which includes 
$224.6 million presented as non-cash on the Company's consolidated 
statement of cash flows since debt was incurred upon delivery of


                                 73
<PAGE>
 aircraft or to satisfy equipment deposit progress payments).  
USAir took delivery of five new Boeing 757-200 aircraft during 
1994. The Company invested $134.1 million in non-aircraft property 
during 1994 (e.g., ground support equipment, computer equipment, 
software, aircraft rotables and hush kits, and take-off and landing 
slots), partly offset by $75.1 million in proceeds from disposition 
of assets which includes the sale of certain aircraft and assets to 
Mesa and insurance proceeds related to the jet aircraft involved in 
the September 1994 accident.  Net cash provided by financing 
activities was $183.4 million, which includes (i) $172.2 million 
net proceeds received by USAir upon the sale of $175 million 
principal amount of 9 5/8% Senior Notes due 2001 through an 
underwritten public offering and (ii) $136.7 million of new debt 
issued which is secured by aircraft delivered before 1994, offset 
by $87.1 million of scheduled debt payments and $49.7 million of 
preferred dividend payments.  In addition, as discussed above, the 
Company incurred $270.6 million of debt upon delivery of five 757-
200 aircraft and to satisfy equipment deposit progress payments.  

	During 1993, the Company's investment in new aircraft 
acquisitions and purchase deposits totaled $545.3 million (which 
includes $343.2 million presented as non-cash on the Company's 
consolidated statement of cash flows since debt was incurred upon 
delivery of aircraft or to satisfy equipment deposit progress 
payments).  USAir took delivery of 11 Boeing 757-200, one Boeing 
767-200ER and six McDonnell Douglas MD-82 aircraft during the year. 
The MD-82s were immediately sold to a third party.  In addition, 
USAir sold two other MD-82 aircraft which had been delivered in the 
fourth quarter of 1992.  Proceeds from the sale of the MD-82s 
approximated $168 million. The Company completed financing 
arrangements for, including the $337.7 million issue of Pass 
Through Certificates which USAir sold through an underwritten 
public offering on November 1, 1993, or internally funded, all of 
its 1993 aircraft expenditures.  The Company invested $159.0 
million in non-aircraft property during 1993 (e.g., ground support 
equipment, computer equipment, software, aircraft rotables and hush 
kits, take-off and landing slots).

	On January 21, 1993, a wholly-owned subsidiary of BA purchased 
30,000 shares of the Series F Preferred Stock for $300 million. 
Substantially all of the $300 million received by the Company from 
the sale of the Series F Preferred Stock was used to pay down debt 
under the Company's Credit Agreement. 

	On May 4, 1993, the Company sold 11.5 million shares of $1 par 
value Common Stock at $20.75 per share which netted proceeds of 
approximately $231 million.  BA partially exercised its preemptive 
right to maintain its proportionate ownership percentage by 
purchasing, on June 10, 1993, 9,919.8 shares of Series T-2 
Preferred Stock for approximately $99.2 million and exercised its 
optional purchase right by purchasing 152.1 shares of T-1 Preferred 
Stock for approximately $1.5 million.


                                 74
<PAGE>
	On July 8, 1993, USAir sold $300 million principal amount of 
10% Senior Notes due 2003 ("10% Notes") through an underwritten 
public offering.  The offering netted proceeds of approximately 
$294 million. The 10% Notes are unconditionally guaranteed by the 
Company.

	All net proceeds received by USAir or the Company from the 
Common Stock offering, the sale to BA of the Series T-1 and Series 
T-2 Preferred Stock and the sale of the 10% Notes and 9 5/8% Notes 
were added to the working capital of the Company for general 
corporate purposes.

	At December 31, 1995, USAir Group's ratio of current assets to 
current liabilities was .64 to 1 and the debt component of USAir 
Group's capitalization structure was greater than 100% (also 
greater than 100% if the Company's three series of redeemable 
preferred stock are considered to be debt) due to the existence of 
a net capital deficiency.


















	(this space intentionally left blank)


                                 75
<PAGE>
Item 8A.	Financial Statements and Supplementary Information
		USAir Group, Inc.




	Independent Auditors' Report




The Stockholders and Board of Directors
USAir Group, Inc.:

We have audited the consolidated balance sheets of USAir Group, 
Inc. and subsidiaries ("USAir Group") as of December 31, 1995 and 
1994, and the related consolidated statements of operations, cash 
flows, and changes in stockholders' equity (deficit) for each of 
the years in the three-year period ended December 31, 1995. These 
consolidated financial statements are the responsibility of USAir 
Group's management. Our responsibility is to express an opinion on 
these consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted 
auditing standards.  Those standards require that we plan and 
perform the audit to obtain reasonable assurance about whether the 
financial statements are free of material misstatement.  An audit 
includes examining, on a test basis, evidence supporting the 
amounts and disclosures in the financial statements.  An audit also 
includes assessing the accounting principles used and significant 
estimates made by management, as well as evaluating the overall 
financial statement presentation.  We believe that our audits 
provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to 
above present fairly, in all material respects, the financial 
position of USAir Group, Inc. and subsidiaries as of December 31, 
1995 and 1994, and the results of their operations and their cash 
flows for the three-year period ended December 31, 1995 in 
conformity with generally accepted accounting principles.

As discussed in Note 11 to the consolidated financial statements, 
effective January 1, 1993, USAir Group changed its method of 
accounting for postemployment benefits.




                                            KPMG Peat Marwick LLP

Washington, D. C.
February 28, 1996


                                 76
<PAGE>

<TABLE>
USAir Group, Inc.
Consolidated Statements of Operations
Years Ended December 31,                                      (in thousands except per share amounts)
=====================================================================================================
<CAPTION>
                                                            1995             1994             1993
                                                            ----             ----            ----
<S>                                                      <C>              <C>             <C>
Operating Revenues
  Passenger transportation                               $6,748,564       $6,357,547      $ 6,554,926
  Cargo and freight                                         157,262          163,598          173,824
  Other                                                     568,522          476,049          354,458
                                                          ---------        ---------       ----------
    Total operating revenues                              7,474,348        6,997,194        7,083,208

Operating Expenses
  Personnel costs                                         2,887,115        2,889,764        2,841,344
  Aviation fuel                                             634,320          671,926          710,109
  Commissions                                               563,037          583,158          596,779
  Other rent and landing fees                               404,158          436,540          445,797
  Aircraft rent                                             437,649          563,572          472,622
  Aircraft maintenance                                      346,854          392,181          374,084
  Depreciation and amortization                             352,447          408,587          352,467
  Other, net                                              1,527,081        1,542,822        1,385,798
                                                          ---------        ---------       ----------
    Total operating expenses                              7,152,661        7,488,550        7,179,000
                                                          ---------        ---------       ----------
    Operating income (loss)                                 321,687         (491,356)         (95,792)

Other Income (Expense)
  Interest income                                            51,624           27,088           12,632
  Interest expense                                         (302,593)        (284,034)        (249,916)
  Interest capitalized                                        8,781           13,760           17,763
  Other, net                                                 48,773           49,619          (34,054)
                                                          ---------        ---------       ----------
    Other income (expense), net                            (193,415)        (193,567)        (253,575)
                                                          ---------        ---------       ----------
Income (loss) before taxes and cumulative  
   effect of accounting change                              128,272         (684,923)        (349,367)

Income tax provision (credit)                                 8,985                -                -
                                                          ---------        ---------       ----------
Income (loss) before cumulative effect of 
   accounting change                                        119,287         (684,923)        (349,367)

Cumulative effect of change in method of
  accounting for postemployment benefits
  in 1993                                                         -                -          (43,749)
                                                          ---------        ---------       ----------
    Net income (loss)                                       119,287         (684,923)        (393,116)

Preferred dividend requirement                              (84,904)         (78,036)         (73,651)
                                                          ---------        ---------       ----------
Net income (loss) applicable to common
  stockholders                                           $   34,383       $ (762,959)     $  (466,767)
                                                          =========        =========       ==========

Income (loss) per common share
  Before accounting change                               $     0.55       $   (12.73)     $     (7.68)
  Effect of accounting change                                     -                -            (0.80)
                                                          ---------        ---------       ----------
    Income (loss) per common share                       $     0.55       $   (12.73)     $     (8.48)
                                                          =========        =========       ==========

Shares used for computation (000)                            62,430           59,915           55,070




See accompanying Notes to consolidated financial statements.


                                 77
<PAGE>
USAir Group, Inc. 
Consolidated Balance Sheets
December 31,                                          (dollars in thousands except per share amounts) 
=====================================================================================================
<CAPTION>
                                                                          1995                 1994
                          ASSETS                                          ----                 ----
<S>                                                                  <C>                  <C>    
Current Assets
  Cash and cash equivalents                                          $   881,854          $   429,538
  Short-term investments                                                  19,831               22,133
  Receivables, net                                                       322,122              324,539
  Materials and supplies, net                                            248,144              258,664
  Prepaid expenses and other                                             111,131               81,642
                                                                       ---------            ---------
   Total current assets                                                1,583,082            1,116,516
Property and Equipment
  Flight equipment                                                     5,251,742            5,162,599
  Ground property and equipment                                        1,073,720            1,059,027
  Less accumulated depreciation and amortization                      (2,301,059)          (2,085,499)
                                                                       ---------            ---------
                                                                       4,024,403            4,136,127
  Purchase deposits                                                       17,026              195,701
                                                                       ---------            ---------
   Property and equipment, net                                         4,041,429            4,331,828
Other Assets
  Goodwill, net                                                          510,562              526,615
  Other intangibles, net                                                 312,786              319,711
  Other assets, net                                                      507,149              513,372
                                                                       ---------            ---------
   Total other assets                                                  1,330,497            1,359,698
                                                                       ---------            ---------
                                                                      $6,955,008           $6,808,042
                                                                       =========            ========= 

       LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities
  Current maturities of long-term debt                                $   80,721           $   85,538
  Accounts payable                                                       325,330              275,847
  Traffic balances payable and unused tickets                            607,170              568,215
  Accrued expenses                                                     1,471,475            1,330,453
                                                                       ---------            ---------
   Total current liabilities                                           2,484,696            2,260,053

Long-Term Debt, Net of Current Maturities                              2,717,085            2,895,378
Deferred Credits and Other Liabilities
  Deferred gains, net                                                    386,947              413,961
  Postretirement benefits other than pensions, non-current             1,015,623              958,956
  Non-current employee benefit liabilities and other                     427,726              417,878
                                                                       ---------            ---------
   Total deferred credits and other liabilities                        1,830,296            1,790,795

Commitments and Contingencies 
Redeemable Cumulative Convertible Preferred Stock
  Series A, 358,000 shares issued, no par value                          358,000              358,000
    (redemption value of $412,124 at December 31, 1995)
  Series F, 30,000 shares issued, no par value                           300,000              300,000
    (redemption value of $329,094 at December 31, 1995)      
  Series T, 10,000 shares issued, no par value                           100,719              100,719
    (redemption value of $109,550 at December 31, 1995) 
Stockholders' Equity (Deficit)
  Series B cumulative convertible preferred stock, no par
    value, 4,263,000 depositary shares issued                            213,153              213,153
    (liquidation preference of $238,798 at December 31, 1995)  
 Common stock, par value $1 per share, authorized 
    150,000,000 shares, issued and outstanding
    63,449,000 and 61,088,000 shares, respectively                        63,449               61,088
  Paid-in capital                                                      1,362,756            1,344,336
  Retained earnings (deficit)                                         (2,298,211)          (2,417,498)
  Common stock held in treasury                                                -                    -
  Deferred compensation                                                  (98,847)             (90,965)
  Adjustment for minimum pension liability                               (78,088)              (7,017)
                                                                       ---------            ---------
   Total stockholders' equity (deficit)                                 (835,788)            (896,903)
                                                                       ---------            ---------
                                                                      $6,955,008           $6,808,042
                                                                       =========            =========
See accompanying Notes to consolidated financial statements.


                                 78
<PAGE>
USAir Group, Inc.
Consolidated Statements of Cash Flows
Years Ended December 31,                                                               (in thousands)
=====================================================================================================
 <CAPTION>
                                                                  1995         1994         1993
                                                                   ----         ----         ----
<S>                                                            <C>          <C>           <C>  
Cash and cash equivalents beginning of year                    $ 429,538    $ 368,347     $ 296,038
Cash flows from operating activities
  Net income (loss)                                              119,287     (684,923)     (393,116)
  Adjustments to reconcile net income (loss) to cash
  provided by (used for) operating activities
    Depreciation and amortization                                352,447      408,587       352,467
    Loss (gain) on disposition of property                       (17,043)     (24,099)       10,328
    Amortization of deferred gains and credits                   (27,817)     (27,396)      (27,309)
    Other                                                          6,294      (11,605)       24,635
    Changes in certain assets and liabilities 
      Decrease (increase) in receivables                           2,417       41,101      (180,152)
      Decrease (increase) in materials, supplies,
        prepaid expenses and intangible pension assets           (74,980)      74,663        24,234
      Increase (decrease) in traffic balances payable
        and unused tickets                                        38,955      (61,932)       35,517
      Increase (decrease) in accounts payable and
        accrued expenses                                         120,422      235,105        84,787
      Increase (decrease) in postretirement benefits
        other than pensions, non-current                          56,667       51,613        65,967
                                                                 -------      -------       -------
         Net cash provided by (used for) operating
           activities                                            576,649        1,114        (2,642)
Cash flows from investing activities
  Aircraft acquisitions and purchase deposits, net               (61,689)     (46,022)     (202,085)
  Additions to other property                                    (84,980)    (134,086)     (159,031)
  Proceeds from disposition of property                          222,325       75,075       178,387 
  Change in short-term investments                                 2,430      (21,994)            - 
  Change in restricted cash and investments                       71,980        2,578       (14,221)
  Other                                                           (1,134)       1,110        (4,378)
                                                                 -------      -------       ------- 
         Net cash provided by (used for) investing
           activities                                            148,932     (123,339)     (201,328)

Cash flows from financing activities
  Issuance of debt                                                 1,162      308,856       597,834
  Reduction of debt                                             (283,160)     (87,073)     (889,872)
  Issuance of common stock                                         8,733           52       230,891
  Issuance of preferred stock                                          -            -       400,719
  Sale of treasury stock                                               -       11,244         8,273
  Dividends paid                                                       -      (49,663)      (71,566)
                                                                 -------      -------       -------
         Net cash provided by (used for) financing
           activities                                           (273,265)     183,416       276,279
                                                                 -------      -------       -------
Net increase (decrease) in cash and cash equivalents             452,316       61,191        72,309
                                                                 -------      -------       -------
Cash and cash equivalents end of year                          $ 881,854    $ 429,538     $ 368,347
                                                                 =======      =======       =======
Noncash investing and financing activities
  Issuance of debt for aircraft acquisitions, net              $ 169,725    $ 224,614     $ 343,188
  Issuance of debt for additions to other property             $       -    $       -     $     669
  Reduction of debt - aircraft purchase deposits               $  70,837    $       -     $       -
  Reduction of debt - aircraft related                         $       -    $       -     $  47,685

Supplemental Information
  Cash paid during the year for interest, net of
    amounts capitalized                                        $ 299,871    $ 251,943     $ 236,122
                                                                 =======      =======       =======
  Net cash received (paid) during the year for
    income taxes                                               $  (6,637)   $     317     $    (967)
                                                                 =======      =======       =======

See accompanying Notes to consolidated financial statements.


                                 79
<PAGE> 


USAir Group, Inc.
Consolidated Statements of Changes in Stockholders' Equity (Deficit)
Three Years Ended December 31, 1995                                (dollars in thousands except per share amounts)
=====================================================================================================================
<CAPTION>
                                                                                                Adjustments
                                                             Retained                 Deferred  For Minimum
                          Preferred   Common    Paid In      Earnings     Treasury     Compen-    Pension
                           Stock B    Stock     Capital     (Deficit)      Stock       sation    Liability    Total
                           -------    ------   ---------    ---------      -------     ------     ------     -------
<S>                       <C>        <C>      <C>         <C>            <C>         <C>        <C>        <C>
Balance December 31, 1992 $213,153   $49,581  $1,211,765  $(1,218,230)   $(106,376)  $(99,010)  $ (6,820)  $  44,063

Reversion of 1,600 shares
 of restricted stock
 previously granted              -        (1)        (19)           -            -         31          -          11

Sale of 11,500,000 shares
 of common stock                 -    11,500     219,391            -            -          -          -     230,891

Exercise of 33,500 options       -         -        (929)           -        1,506          -          -         577

Sale of 466,400 shares of
 treasury stock                  -         -     (13,283)           -       20,979          -          -       7,696

Dividends declared
 (preferred stock):
  Series A-$92.50 per share      -         -           -      (33,115)           -          -          -     (33,115)
  Series B-$4.375 per 
   depositary share              -         -           -      (18,651)           -          -          -     (18,651)
  Series F-$700 per share        -         -           -      (17,967)           -          -          -     (17,967)
  Series T-Variable dividend
   rate - See Note 8.            -         -           -       (1,833)           -          -          -      (1,833)

Amortization of deferred
 compensation                    -         -         421            -            -      4,022          -       4,443

Equity reduction for minimum
 pension liability               -         -           -            -            -          -    (35,575)    (35,575)

Net income (loss)                -         -           -     (393,116)           -          -          -    (393,116)
                           -------    ------   ---------    ---------      -------     ------     ------     -------
Balance December 31,1993   213,153    61,080   1,417,346   (1,682,912)     (83,891)   (94,957)   (42,395)   (212,576)

Reversion of 4,000 shares
 of restricted stock 
 previously granted              -        (4)        (28)           -            -         58          -          26

Sale of 12,400 shares
 of common stock                 -        12          40            -            -          -          -          52

Exercise of 5,000 options        -         -        (177)           -          225          -          -          48

Sale of 1,859,000 shares of
 treasury stock                  -         -     (72,470)           -       83,666          -          -      11,196

Dividends declared (preferred
 stock):
  Series A-$92.50 per share      -         -           -      (16,557)           -          -          -     (16,557)
  Series B-$4.375 per
   depositary share              -         -           -      (13,988)           -          -          -     (13,988)
  Series F-$700 per share        -         -           -      (15,750)           -          -          -     (15,750)
  Series T-Variable dividend
   rate - see Note 8.            -         -           -       (3,368)           -          -          -      (3,368)

Amortization of deferred
 compensation                    -         -        (375)           -            -      3,934          -       3,559

Equity reduction for minimum
 pension liability               -         -           -            -            -          -     35,378      35,378

Net income (loss)                -         -           -     (684,923)           -          -          -    (684,923)
                           -------    ------   ---------    ---------      -------     ------     ------     -------
Balance December 31, 1994  213,153    61,088   1,344,336   (2,417,498)           -    (90,965)    (7,017)   (896,903)
                                                





 (Continued on next page)


                                 80
<PAGE>
USAir Group, Inc.
Consolidated Statements of Changes in Stockholders' Equity (Deficit)
Three Years Ended December 31, 1995                                   (dollars in thousands except per share amounts)
=====================================================================================================================
<CAPTION> 
                                                                                               Adjustments
                                                             Retained                 Deferred  For Minimum
                           Preferred  Common    Paid-In      Earnings      Treasury    Compen-    Pension
                            Stock B    Stock    Capital      (Deficit)      Stock      sation    Liability     Total
                           -------    ------   ---------    ----------     -------     ------     ------     --------
<S>                        <C>        <C>      <C>          <C>             <C>       <C>         <C>        <C> 
Balance December 31, 1994  213,153    61,088   1,344,336    (2,417,498)         -     (90,965)    (7,017)    (896,903)

Sale of 1,384,000 shares
 of common stock                 -     1,384       6,929             -          -           -          -        8,313

Exercise of 42,775 options       -        43         377             -          -           -          -          420

Grant of 934,600 shares of
 restricted stock                -       934      10,982             -          -     (11,916)         -            -

Amortization of deferred
 compensation                    -         -         132             -          -       4,034          -        4,166

Equity reduction for minimum
 pension liability               -         -           -             -          -           -    (71,071)     (71,071)

Net income (loss)                -         -           -       119,287          -           -          -      119,287
                           -------   -------   ---------    ----------   --------      ------     ------     --------
Balance December 31, 1995 $213,153   $63,449  $1,362,756   $(2,298,211) $       -    $(98,847)  $(78,088)  $ (835,788)
                           =======   =======   =========     =========   ========      ======     ======      ======= 
  







See accompanying Notes to consolidated financial statements.


                                 81
</TABLE>

<PAGE>   
                     USAir Group, Inc.
           Notes to Consolidated Financial Statements



1.	Summary of Significant Accounting Policies

	(a)  Basis of Presentation and Nature of Operations

	The accompanying consolidated financial statements include the 
accounts of USAir Group, Inc. ("USAir Group" or the "Company") and 
its wholly-owned subsidiaries USAir, Inc. ("USAir"), Piedmont 
Airlines, Inc. ("Piedmont"), PSA Airlines, Inc. ("PSA") (formerly 
Jetstream International Airlines, Inc.), Allegheny Airlines, Inc. 
("Allegheny") (formerly Pennsylvania Commuter Airlines, Inc. 
("PCA")), USAir Leasing and Services, Inc. ("Leasing"), USAir Fuel 
Corporation ("Fuel Corp.") and Material Services Company, Inc. 
("MSC"). All significant intercompany accounts and transactions 
have been eliminated.

	USAir is the Company's principal subsidiary and accounted for 
approximately 93% of its operating revenues in 1995.  USAir's 
results include the results of its subsidiary USAM Corp. ("USAM"). 
USAir is a major U.S. air carrier whose primary business is trans- 
porting passengers, property and mail.  USAir enplaned more than 57 
million passengers during 1995 and is currently the fifth largest 
domestic air carrier, as measured by revenue passenger miles 
("RPMs").  USAir operates predominantly in the eastern United 
States with primary hubs at the major airports in Pittsburgh, 
Pennsylvania, Charlotte, North Carolina, Philadelphia, Pennsylvania 
and at Baltimore/Washington International Airport.  USAir also 
maintains significant operations at the major airports in Boston, 
Massachusetts, New York, New York and Washington, D.C.  

	Piedmont, PSA and Allegheny are regional air carriers that, 
along with eight non-affiliated regional airline franchisees, form 
"USAir Express".  USAir Express also has a majority of its 
operations in the eastern U.S.  USAir Express air carriers enplaned 
approximately 9.6 million passengers in 1995 (approximately 5.3 
million passengers enplaned by Piedmont, PSA, and Allegheny), over 
half of whom connected to USAir flights.  

	Fuel Corp. was established in 1987 primarily to serve as a 
fuel wholesaler to USAir, in certain circumstances.  MSC performs a 
function similar to Fuel Corp., selling aviation fuel to USAir 
Express carriers and also assisting the USAir Express carriers with 
major maintenance and procurement contracts.  Leasing's main 
function is remarketing USAir's surplus or inactive aircraft.

	In the fourth quarter of 1995, USAir and a subsidiary of 
British Airways plc ("BA") formed Airline Technical Services, LLC 
("ATS"), a Delaware limited liability company, offering joint 
aviation maintenance, and technical and engineering expertise in 
the Americas.  ATS will receive a commission on the contracts it


                                 82
<PAGE>
 brokers for USAir and BA.  USAir accounts for ATS using the equity 
method because it is owned equally by each parent company.  No 
material activity occurred in 1995.

	At December 31, 1992, USAM, a subsidiary of USAir, owned 11% 
of the Covia Partnership ("Covia") which owned and operated a 
computerized reservation system ("CRS").  In September 1993, Covia 
purchased the assets of the corporation that owned and operated the 
Galileo CRS which provided CRS services to travel agent subscribers 
in Europe.  Covia was immediately separated into three new entities 
and, as a result, USAM owns 11% of the Galileo International 
Partnership which owns and operates the Galileo CRS, approximately 
11% of the Galileo Japan Partnership which markets the Galileo CRS 
in Japan, and approximately 21% of the Apollo Travel Services 
Partnership which markets the Galileo CRS in the U.S. and Mexico. 
USAM accounts for these investments using the equity method because 
it is represented on the board of directors of each of the 
partnerships and therefore participates in policy making processes.

	The preparation of financial statements in conformity with 
generally accepted accounting principles requires management to 
make estimates and assumptions that affect the reported amounts of 
assets and liabilities and disclosure of contingent assets and 
liabilities at the date of the financial statements and the 
reported amounts of revenues and expenses during the reporting 
period.  Actual results could differ from those estimates.
	
	USAir Group's principal operating subsidiary, USAir, and the 
three regional airline subsidiaries, Piedmont, PSA and Allegheny, 
operate within one industry (air transportation); therefore, no 
segment information is provided.

	Certain 1994 and 1993 amounts have been reclassified to 
conform with 1995 classifications.

	(b)  Cash and Cash Equivalents and Short-Term Investments 

	For financial statement purposes, the Company considers all 
highly liquid investments purchased within three months of maturity 
to be cash equivalents.  Cash and cash equivalents are stated at 
cost, which approximates market value.  Short-term investments 
consist of certificates of deposit and commercial paper purchased 
with maturities greater than three months but less than one year. 
Short-term investments are stated at cost plus accrued interest, 
which approximates market value.  

	(c)  Materials and Supplies

	Inventories of materials and supplies are valued at average 
cost and are charged to operations as consumed.  An allowance for 
obsolescence is provided for flight equipment expendable and 
repairable parts.


                                 83
<PAGE>
	(d)  Property and Equipment

	Property and equipment is stated at cost or, if acquired under 
capital leases, at the lower of the present value of minimum lease 
payments or fair market value at the inception of the lease. 
Maintenance and repairs, including the overhaul of aircraft 
components, are charged to operating expense as incurred and costs 
of major improvements are capitalized for both owned and leased 
assets.  Interest related to deposits on aircraft purchase 
contracts and facility and equipment construction projects is 
capitalized as additional cost of the asset or as leasehold 
improvement if the asset is leased.  Depreciation and amortization 
for principal asset classifications is provided on a straight-line 
basis to estimated residual values over estimated depreciable 
lives. Estimated depreciable lives and residual values are 
periodically reviewed for reasonableness and estimates are revised, 
if necessary.

                                    Depreciable
          Assets                       Lives      Residual Values
          ------                    -----------   ---------------
                                      (years)       (in millions)
Aircraft
  Boeing 767-200ER                       20            $14.0
  Boeing 757-200                         20              8.0
  Boeing 737-300/400                     20              7.5
  Boeing 737-200                        5-17           0.6-5.0
  McDonnell Douglas MD-80                20              7.5
  Douglas DC-9-30                        17              3.0
  Fokker 100                             20              5.0
  Fokker F28-4000                         8              2.0  
  Fokker F28-1000                         6              1.0
  Turboprop aircraft                   11-17           1.2-1.5
  Improvements to leased aircraft  life of lease          -

Ground property, equipment and        1-10 or
  leasehold improvements           life of lease          -

Buildings                              25-30              -

	Property acquired under capital lease is amortized on a 
straight-line basis over the term of the lease and charged to 
Depreciation and Amortization Expense.  When property and equipment 
is sold or retired, the cost and accumulated depreciation is 
removed from the accounts and any gain or loss recognized as Other 
Income (Expense).

     (e) Goodwill and Other Intangibles  

	Goodwill, the cost in excess of fair value of identified net 
assets acquired, is being amortized on a straight-line basis over 
40 years.  The $629 million goodwill resulting from the acquisition 
of Pacific Southwest Airlines ("Pacific Southwest") and Piedmont 
Aviation, Inc. ("Piedmont Aviation"), both in 1987, is being


                                 84
<PAGE>
 amortized as Depreciation and Amortization Expense.  Accumulated 
amortization at December 31, 1995 and 1994 related to the Pacific 
Southwest and Piedmont Aviation acquisitions was $128 million and 
$113 million, respectively.  The $11 million goodwill resulting 
from USAM's CRS investments is being amortized as other non-
operating expense, consistent with the classification of income or 
loss on the investments.  USAM's related accumulated amortization 
at December 31, 1995 and 1994 was approximately $2 million.  USAir 
evaluates whether or not goodwill is impaired by comparing the 
goodwill balances with estimated future undiscounted cash flows 
which, in USAir's judgment, are attributable to the goodwill.  This 
analysis is performed separately for the goodwill which resulted 
from each acquisition.  

	Intangible assets consist mainly of purchased operating rights 
at various airports, purchased route authorities, capitalized 
software costs and the intangible assets associated with the 
underfunded amounts of certain pension plans. The operating rights, 
valued at purchase cost or appraised value if acquired from Pacific 
Southwest or Piedmont Aviation, are being amortized over periods 
ranging from ten to 25 years as Depreciation and Amortization 
Expense.  The purchased route authorities are being amortized over 
25 years as Depreciation and Amortization Expense.  Capitalized 
software costs are being amortized as Depreciation and Amortization 
Expense over five years, the expected period of benefit. 
Accumulated amortization related to intangible assets at 
December 31, 1995 and 1994 was $105 million and $81 million, 
respectively.

	Based on the most recent analyses, USAir believes that 
goodwill and other intangible assets were not impaired at Decem-
ber 31, 1995.

	(f)  Other Assets, net

	Other Assets, net consists primarily of non-current pension 
assets, restricted cash and investments and a long-term receivable 
from BA.  Restricted cash and investments are deposits in trust 
accounts to collateralize letters of credit and workers' compensa-
tion policies and the long-term receivable from BA resulted from 
the relinquishment by USAir of two U.S. to London routes.  

	In November 1995, USAir entered into a five-year transaction 
with a third party pursuant to which USAir agreed to pledge to such 
third party from time to time certain flight equipment and 
simulators as collateral for up to $70 million aggregate principal 
amount of letters of credit to be issued by the third party with 
respect to certain workers' compensation obligations of USAir.  On 
December 15, 1995, USAir pledged ten aircraft to the third party, 
resulting in the release of $67.2 million in cash and securities 
that had been previously pledged by USAir to letter of credit 
providers.


                                 85
<PAGE>
	(g)  Deferred Gains on Sale and Leaseback Transactions

	Gains on aircraft sale and leaseback transactions are deferred 
and amortized over the term of the leases as a reduction of rental 
expense.

	(h)  Passenger Revenue Recognition

	Passenger ticket sales are recognized as revenue when the 
transportation service is rendered or the ticket otherwise expires. 
At the time of sale, a liability is established (Traffic Balances 
Payable and Unused Tickets) and subsequently eliminated either 
through carriage of the passenger, through billing from another 
carrier which renders the service or by refund to the passenger.

	(i)  Frequent Traveler Awards

	USAir accrues the estimated incremental cost of providing 
outstanding travel awards earned by participants in its Frequent 
Traveler Program ("FTP") when participants accumulate sufficient 
miles to be entitled to claim award certificates for travel.

	(j)  Investment Tax Credit

	Investment tax credit benefits have been recorded using the 
"flow-through" method as a reduction of the Federal income tax 
provision.

	(k)  Advertising Costs

	Advertising costs are expensed when incurred as other operat-
ing expense.  Advertising expense for 1995, 1994 and 1993 was $67 
million, $63 million and $59 million, respectively.

	(l)  Income (Loss) Per Common Share

	Income (loss) per common share is computed by dividing net 
income or loss, after deducting preferred stock dividend require-
ments, by the weighted average number of shares of USAir Group, 
Inc. Common Stock ("Common Stock") outstanding, net of treasury 
stock.  The Company has deferred quarterly dividend payments on all 
series of its preferred stock beginning September 30, 1994. 
However, dividends continue to be deducted from net income or loss 
in order to calculate income (loss) per common share (see Note 8. -
Redeemable Preferred Stock and Deferral of Dividends and Note 9. -
Stockholders' Equity). The 1995 and 1994 preferred dividend 
requirements include dividends deferred (including interest) of 
$84.9 million or $1.36 per common share and $32.8 million, or $0.55 
per common share, respectively. Stock option common stock 
equivalents were anti-dilutive for the years ended 1994 and 1993, 
but are dilutive for the year ended 1995.  Therefore, stock option 
common stock equivalents were added to the weighted average common 
shares outstanding in the 1995 income (loss) per common share 
calculation.  None of the Company's outstanding preferred stock


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<PAGE>
 issuances, all of which are convertible under certain conditions 
into Common Stock, are considered common stock equivalents; 
therefore, they are excluded from the Company's primary income 
(loss) per common share calculation for each year presented.  For 
the years ended 1995, 1994 and 1993, fully diluted income (loss) 
per common share is not presented since the effect of assuming 
conversion of each of the outstanding preferred stock issuances 
would be antidilutive.  See Note 10. regarding the Common Stock 
held in a trust for USAir's Employee Stock Ownership Plan.

2.	Financial Instruments

	(a)  Terms of Certain Financial Instruments

	USAir has entered into hedging arrangements designed to reduce 
its exposure to fluctuations in the price of jet fuel. Net 
settlements are recorded as adjustments to Aviation Fuel expense. 
The total notional number of gallons under these arrangements was 
38 million and 86 million at December 31, 1995 and 1994, respec-
tively.  Under these arrangements, the Company will pay $0.499 to 
$0.548 per notional gallon in 1996 and receive a floating rate per 
notional gallon based on current market prices.  In 1995, the 
Company paid $0.496 to $0.521 per notional gallon and received a 
floating rate per notional gallon based on current market prices. 
Decreases in the market price of fuel to levels below the fixed 
prices require cash payments by the Company and cause an increase 
in the Company's Aviation Fuel expense.  The hedging arrangements 
represented approximately 8% of USAir's actual 1995 fuel consump-
tion.  USAir is party to such hedging arrangements with several 
entities.  Although the agreements, which expire in 1996, expose 
the Company to credit loss in the event of non-performance by the 
other parties to the agreements, the Company does not anticipate 
such non-performance because of the favorable creditworthiness 
status of the other parties.  The Company may continue to enter 
into such arrangements, depending on market conditions.

	In August 1995, the Company's interest rate swap agreements 
expired and as of December 31, 1995 there were no such agreements 
in effect.  The Company had entered into interest rate swap 
transactions to manage interest rate exposure.  Net settlements 
were recorded as adjustments to interest expense.  The Company was 
party to such agreements with banks and other financial institu-
tions.  The notional principal amount of these agreements was $150 
million at December 31, 1994.  Under the agreements, the Company 
paid interest at fixed rates averaging 9.8% at December 31, 1994, 
and received floating rate interest payments based on three-month 
LIBOR.

	An aggregate of $32 million of future principal payments of 
USAir's long-term debt due 1998 through 2000 is payable in Japanese 
Yen.  This foreign currency exposure has been hedged to maturity by 
USAir's participation in foreign currency contracts.  Net settle-
ments will be recorded as adjustments to interest expense. Although 
the Company is exposed to credit loss in the event of non-


                                 87
<PAGE>
performance by the counterparty to the contracts, the Company does 
not anticipate such non-performance because of the favorable 
creditworthiness status of the other party.

	(b)  Fair Value of Financial Instruments

	Unless a quoted market price indicates otherwise, the fair 
values of cash and cash equivalents, short-term investments and 
other investments generally approximates carrying values because of 
the short maturity of these instruments.  The Company has estimated 
the fair value of long-term debt based on quoted market prices for 
the same or similar issues or on the current rates offered to the 
Company for debt of similar remaining maturities.  The estimated 
fair values of the Company's outstanding redeemable preferred stock 
issuances (See Note 8. - Redeemable Preferred Stock and Deferral of 
Dividends and Note 9. - Stockholders' Equity for information 
regarding the Company's outstanding preferred stock issuances) are 
obtained by consulting with an independent external valuation 
source.  The fair values of interest rate swap agreements, energy 
swap agreements and foreign currency contracts are obtained from 
dealer quotes whereby these values represent the estimated amount 
the Company would receive or pay to terminate such agreements.

	The estimated fair values of the Company's financial instru-
ments, none of which are held for trading purposes, are summarized 
as follows (brackets denote a liability):

                                    December 31,
                   --------------------------------------------
                           1995                   1994
                   ---------------------   --------------------
                    Carrying   Estimated   Carrying   Estimated
                     Amount   Fair Value    Amount   Fair Value  
                    --------  ----------   --------  -----------
                                    (in thousands)
Cash and cash
  equivalents     $  881,854  $  881,854  $  429,538  $  429,538
Short-term
  investments         19,831      19,822      22,133      22,078
Restricted cash
  and investments*    98,742      98,539     170,686     170,581
Long-term note
  receivable*         45,433      33,277      47,000      31,537
Other long-term
  investments*         4,607       4,008       1,633       1,144
Long-term debt (ex-
  cludes capital
  lease obliga-
  tions)          (2,732,310) (2,543,340) (2,898,203) (2,484,390)
Redeemable pre-
  ferred stock      (758,719)   (604,478)   (758,719)   (242,341)


(table continued on next page)


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<PAGE>
Interest rate swap
agreements:
  In a net payable
  position                 -           -           -      (3,221)
Energy swap agree-
ments:
  In a net receivable
  position                 -       1,845           -         259
Foreign currency
contracts:
  In a net receivable
  position                 -       4,050           -       5,352

*  Amounts included in Other Assets on the Company's consolidated 
balance sheets.

3.	Long-Term Debt

	Details of long-term debt are as follows:
                                                December 31,
                                          ----------------------
                                             1995        1994
                                             ----        ----
                                               (in thousands)
Senior Debt:
  12 7/8% Senior Debentures due 2000      $        -  $   77,000
  10% Senior Notes due 2003                  300,000     300,000
  9 5/8% Senior Notes due 2001               175,000     175,000 
  12.15% to 15.23% U.S. Government
    Guaranteed Obligations                         -       3,090
  5.7% to 12% Equipment Financing
    Agreements, Installments due 1996
    to 2016                                2,226,318   2,140,387
  8.6% Airport Facility Revenue Bond
    due 2022                                  27,620      27,620
  4.0% to 7.1% Aircraft Purchase 
    Deposit Financing                              -     172,301
  Other                                        3,372       2,805
                                           ---------   ---------
                                           2,732,310   2,898,203
Capital Lease Obligations                     65,496      82,713
                                           ---------   ---------
   Total                                   2,797,806   2,980,916
Less Current Maturities                       80,721      85,538
                                           ---------   ---------
                                          $2,717,085  $2,895,378
                                           =========   =========






(this space intentionally left blank)


                                 89
<PAGE>
	Maturities of long-term debt and debt under capital leases for 
the next five years are as follows:

                                     (in thousands)

                    1996               $   80,721
                    1997                   91,903
                    1998                  160,979
                    1999                   84,907
                    2000                  130,540
                    Thereafter          2,248,756

	Interest rates on $537 million principal amount of long-term 
debt at December 31, 1995 are subject to adjustment to reflect 
prime rate and other rate changes.

	On April 26, 1994, the Company terminated its credit agreement 
dated March 30, 1987, as amended, with a group of banks ("Credit 
Agreement").  During 1994, there were no borrowings under the 
Credit Agreement.  As a result of the termination, 66 jet and 
turboprop aircraft and certain spare engines with a net book value 
of approximately $260 million at that time were released from a 
mortgage related to the Credit Agreement.  The Company had been in 
violation of certain covenants at March 31, 1994.  The Credit 
Agreement was scheduled by its terms to expire on September 30, 
1994. 

	During 1993, the maximum amount of Credit Agreement borrowings 
outstanding at any month end was $250 million.  All outstanding 
Credit Agreement borrowings were paid off in May 1993 and no other 
funds were borrowed during the remainder of 1993.  The average 
amount of Credit Agreement borrowings outstanding and the weighted 
average interest rate for 1993 were $37 million and 5.8%, respec-
tively.  

	Equipment financings totaling $2.3 billion were collateralized 
by aircraft and engines with a net book value of approximately $2.4 
billion at December 31, 1995.

	In February 1996, USAir sold $263 million principal amount of 
Enhanced Equipment Notes ("Enhanced Notes") through a private 
placement offering under Securities and Exchange Commission 
Regulation 144A.  The Enhanced Notes are secured by nine 757-200 
aircraft.  The Enhanced Notes are not reflected in the above table 
because they were sold after December 31, 1995.

4.	Commitments and Contingencies

	(a)  Operating Environment

	The Company's financial results for 1995 represent a signifi-
cant improvement over 1994 results.  The improvement is mainly 
attributable to a stable domestic economic climate, favorable 
capacity trends in USAir's markets, less fare discounting and low


                                 90
<PAGE>
 fare competition and the positive influence of USAir's cost-
reduction efforts.  However, the Company's financial condition, 
results of operations and future prospects are more susceptible to 
an economic downturn and competitive influences than most of its 
major competitors due to USAir's high cost structure amid the low 
cost, low fare environment which characterizes the domestic airline 
industry.  

	Most of the Company's airline subsidiaries operate in 
competitive markets, predominantly in the Eastern United States. In 
recent years, air carriers with low costs of operations and fare 
structures have initiated and or expanded into markets served by 
the Company's airline subsidiaries.  In addition, several of the 
larger, mature air carriers have developed or indicated their 
intention to develop similar low cost, low fare service.  In an 
effort to preserve market share, USAir has typically responded to 
the entry of a low cost, low fare competitor into its markets by 
matching fares and increasing the frequency of service in related 
markets, generally with the result of diluting USAir's yield in 
these markets.  USAir currently has the highest operating costs 
among the major domestic air carriers and the growth and expansion 
of low cost, low fare carriers in USAir's markets has put consider-
able pressure on USAir to reduce operating costs in order to 
maintain competitiveness.  

	USAir was able to reduce certain non-labor related operating 
costs during 1995 through re-engineering efforts, structural 
changes and reducing or eliminating capacity in unprofitable 
markets, however, USAir has not been successful to date in 
achieving meaningful reductions in personnel costs.  The Company 
believes that USAir's long-term future depends on its success in 
further reducing its cost of operations, including personnel costs.
 
	At December 31, 1995, USAir Group's various subsidiaries 
employed approximately 43,100 full-time equivalent employees. 
Approximately 28,100, or 65%, of the employees of USAir Group's 
subsidiaries are covered by collective bargaining agreements with 
various unions, or will be covered by collective bargaining 
agreements for which initial negotiations are in progress.  USAir's 
contract with the International Association of Machinists and 
Aerospace Workers ("IAM"), which represents USAir's machinists 
group, is currently open for negotiation and USAir and the IAM have 
commenced the collective bargaining process.  USAir's contract with 
the unions which represent its pilot's and flight attendant's 
groups become open for negotiations within the next year.  The 
Company cannot predict the ultimate outcome of USAir's negotiations 
with the IAM or if USAir will be successful in achieving meaningful 
wage and benefit concessions from the IAM and its other organized 
labor groups.      

  	Although a competitive strength, the concentration of 
significant operations in the eastern U.S. leaves the Company's 
airline subsidiaries susceptible to certain regional conditions 
that may have an adverse affect on the Company's results of


                                 91
<PAGE>
 operations and financial condition.  For example, geographically 
isolated inclement weather and the recent partial Federal govern-
ment shutdowns adversely effected operating revenues and expenses 
to a greater degree than some of the Company's competitors.

	The nature of operations of the Company's airline subsidiaries 
results in reliance on the availability of aviation fuel.  The 
availability and price of aviation fuel is largely dependent on the 
actions of the countries which compose the Oil Producing and 
Exporting Countries ("OPEC") cartel. OPEC, which currently controls 
a significant amount of the world's known crude oil reserves, can 
effect the availability and price of jet fuel through its 
production and price-targeting actions. In addition, jet fuel 
prices are affected by political events seasonal factors and other 
factors generally outside of the Company's control.  USAir has a 
diversified fuel supplier network and participates in fuel hedging 
transactions (see Note 2. - Fair Value of Financial Instruments for 
additional information related to USAir's participation in fuel 
hedging contracts) in order to ensure fuel availability and 
partially protect USAir from temporary jet fuel price fluctuations. 
 
	(b)  Leases

	The Company's airline subsidiaries lease certain aircraft, 
engines, computer and ground equipment, in addition to the majority 
of their ground facilities.  Ground facilities include executive 
offices, overhaul and maintenance bases and ticket and administra-
tive offices.  Public airports are utilized for flight operations 
under lease arrangements with the municipalities or agencies owning 
or controlling such airports.  Substantially all leases provide 
that the lessee shall pay taxes, maintenance, insurance and certain 
other operating expenses applicable to the leased property.  Some 
leases also include renewal and purchase options.  

	In addition, the Company subleases certain leased aircraft and 
ground facilities under noncancelable operating leases expiring in 
various years through 2021.

	The following amounts applicable to capital leases are 
included in property and equipment:
                                                 December 31,
                                            ---------------------
                                              1995         1994
                                              ----         ----
                                                (in thousands)

Flight equipment                            $192,775     $218,881
Ground property and equipment                  4,767       10,961
                                             -------      -------
                                             197,542      229,842
Less accumulated amortization                140,212      153,341
                                             -------      -------
                                            $ 57,330     $ 76,501
                                             =======      =======


                                 92
<PAGE>
	At December 31, 1995, obligations under capital and noncancel-
able operating leases for future minimum lease payments were as 
follows:

                                           Capital      Operating
                                           Leases         Leases
                                           -------      ---------
                                              (in thousands)

1996                                      $ 21,886    $   761,281
1997                                        21,697        770,230
1998                                        10,687        735,035
1999                                        10,687        694,591
2000                                         7,586        666,841
Thereafter                                  20,094      6,651,858
                                           -------     ----------
   Total minimum lease payments             92,637     10,279,836

   Less sublease rental receipts                 -         90,133
                                                       ----------
   Total minimum operating lease
    payments                                          $10,189,703
                                                       ==========
   Less amount representing interest        27,141
                                           -------
   Present value of future minimum
    capital lease payments                  65,496

   Less current obligations under
    capital leases                          14,085
                                           -------
   Long-term obligations under 
    capital leases                        $ 51,411
                                           =======

	One of USAir Group's regional airline subsidiaries entered 
into an agreement subsequent to December 31, 1995 to lease five 
additional turboprop aircraft beginning in 1996.  The payments 
under this agreement are (in millions):  $1.4, $3.3, $3.3, $3.3, 
$3.3 and $8.6 for the years 1996, 1997, 1998, 1999, 2000 and 
thereafter, respectively.

	Rental expense under operating leases for 1995, 1994 and 1993 
was $726 million, $748 million and $781 million, respectively.  The 
$726 million rental expense for 1995 excludes a credit of $4.1 
million related to the leasing of three of USAir's parked BAe-146 
aircraft, recorded in the fourth quarter of 1995.  The $748 million 
rental expense for 1994 excludes charges of $103 million related to 
USAir's grounded BAe-146 fleet and $13 million primarily related to 
USAir's decision to cease operations of its remaining Boeing 727-
200 aircraft in 1995.  See Note 16. - Non-Recurring and Unusual 
Items.


                                 93
<PAGE>
	The Company's airline subsidiaries also lease certain owned 
aircraft under noncancelable operating leases which expire in 
various years through the year 2000.  The minimum future rentals to 
be received by the Company on these leases are:  $13.0 million - 
1996; $9.4 million - 1997; $3.6 million - 1998; $1.9 million - 
1999; and $1.1 million - 2000.  The following amounts are applica-
ble to aircraft leased under such agreements as reflected in flight 
equipment:
                                             December 31,
                                         ---------------------
                                         1995             1994
                                         ----             ----
                                            (in thousands)

Flight equipment                       $192,198         $152,956
Less accumulated depreciation            75,089           43,283
                                        -------          -------
                                       $117,109         $109,673
                                        =======          =======

	(c)  Legal Proceedings  

	USAir is involved in legal proceedings arising out of its two 
aircraft accidents that occurred in July and September 1994 near 
Charlotte, North Carolina and Pittsburgh, Pennsylvania, respective-
ly. The National Transportation Safety Board ("NTSB") held hearings 
beginning in September 1994 relating to the July accident and 
January 1995 relating to the September accident.  In April 1995, 
the NTSB issued its finding of probable causes with respect to the 
accident near Charlotte. It assigned as probable causes the failure 
of air traffic control to convey weather and windshear hazard 
information and flight crew errors. The NTSB has not yet issued its 
final accident investigation report for the accident near 
Pittsburgh.  The NTSB, The Boeing Company ("Boeing"), the Federal 
Aviation Administration ("FAA") and USAir jointly conducted flight 
tests in October 1995 as part of the ongoing investigation into the 
cause of this accident.  In this regard, USAir provided a 737-300 
aircraft in the collective effort to simulate the conditions at the 
time of the accident.  More public hearings were conducted in 
November 1995.  The NTSB has indicated that a determination of the 
cause of the accident is not likely until sometime in 1996. USAir 
expects that it will be at least two to three years before the 
accident litigation and related settlements will be concluded. 
USAir believes that it is fully insured with respect to this 
litigation.  Therefore, USAir believes that the litigation will not 
have a material adverse effect on USAir's financial condition or 
results of operations, although any finding of fault on USAir's 
part could create negative publicity and could tarnish USAir's 
image. 

	In 1989 and 1990, a number of U.S. air carriers, including 
USAir, received two Civil Investigative Demands ("CIDs") from the 
Department of Justice ("DOJ") related to investigations of price


                                 94
<PAGE>
 fixing in the domestic airline industry.  A CID is a request for 
information in the course of an antitrust investigation and does 
not constitute the institution of a civil or criminal action. 

	The investigations by the DOJ culminated in the filing of a 
lawsuit against Airline Tariff Publishing Company ("ATPCo") and 
eight major air carriers, including USAir, alleging that the 
defendants had agreed to fix prices in violation of Section 1 of 
the Sherman Act through the methods used to disseminate fare data 
to ATPCo, an airline-owned fare publishing service.  To avoid the 
costs associated with protracted litigation and an uncertain 
outcome, USAir and another carrier decided to settle the lawsuit by 
entering into a consent decree to modify their fare-filing 
practices in certain respects and to implement compliance programs 
that would include education of employees regarding the carrier's 
responsibilities under the consent decree. Accordingly, the consent 
decree and the U.S. government's complaint were filed contemporane-
ously in the United States District Court for the District of 
Columbia in December 1992. On November 1, 1993, after it had 
reviewed comments filed regarding the consent decree, the court 
entered the decree.  In March 1994, the remaining six air carrier 
defendants agreed to the entry of a separate consent decree to 
settle the lawsuit.  USAir petitioned the Court to have its consent 
decree amended to conform with the other settlement and the Court 
entered an amended consent decree on September 21, 1994.  USAir has 
recently received a CID from the DOJ relating to USAir's compliance 
with the terms of the consent decree. 

	On March 19, 1993, the U.S. District Court in Atlanta, Georgia 
entered a settlement involving USAir and five other U.S. air 
carrier defendants in the Domestic Air Transportation Antitrust 
Litigation class action lawsuit. The class action suit, which was 
filed in July 1990, alleged that the airlines used ATPCo to signal 
and communicate carrier pricing intentions and otherwise limit 
price competition for travel to and from numerous hub airports. 
Under the terms of the settlement, the six air carriers paid $45 
million in cash and issued $396.5 million in certificates valid for 
purchase of domestic air travel on any of the six airlines. USAir's 
share of the cash portion of the settlement, $5 million, was 
recorded in results of operations for the second quarter of 1992. 
The certificates, mailed to approximately 4.1 million claimants 
between December 15 and 31, 1994, provide a dollar-fordollar 
discount against the cost of a ticket generally of up to a maximum 
of 10% per ticket, depending on the cost of the ticket.  It is 
possible that this settlement could have a dilutive effect on 
USAir's passenger transportation revenue and associated cash flow. 
However, due to the interchangeability of the certificates among 
the six carriers involved in the settlement, the possibility that 
carriers not party to the settlement will honor the certificates, 
and the potential stimulative effect on travel created by the 
certificates, USAir cannot reasonably estimate the impact of this 
settlement on further passenger revenue and cash flows. USAir has 
employed the incremental cost method to estimate a range of costs 
attributable to the exercise of the certificates, based on the


                                 95
<PAGE>
 assumption that the estimated maximum number of certificates to be 
redeemed for travel on USAir will be related to USAir's market 
share relative to the total market share of the six carriers 
involved in the settlement.  USAir's estimated percentage of such 
market share is less than 9%. Incremental costs include unit costs 
for passenger food, beverages and supplies, fuel, reservations, 
communications, liability insurance, and denied boarding compensa-
tion expenses expected to be incurred on a per passenger basis. 
USAir has estimated that its incremental cost will not be material 
based on the equivalent free trips associated with the settlement. 

	On October 11, 1994, USAir and seven other carriers entered 
into a settlement agreement with a group of State Attorneys General 
resolving similar issues with the states. The settlement entitles 
passengers traveling within the United States on state government 
business to a 10% discount off the published fares of each of the 
settling carriers and will be available for 18 months from 
August 16, 1995, or until the combined discount amount reaches $40 
million, whichever first occurs.  On May 10, 1995, a U.S. federal 
district court judge approved the settlement.  USAir does not 
expect that this settlement will have a material adverse effect on 
its financial condition or results of operations.  As was the case 
with the settlement of the private antitrust litigation, it is 
difficult to predict the amount of discounted state travel that 
will occur on USAir. Thus, a dollar impact of the settlement cannot 
be estimated. 

	In February and March 1995, several class action lawsuits were 
filed in various federal district courts by travel agencies and a 
travel agency trade association alleging that most of the major 
U.S. airlines, including USAir, violated the antitrust laws when 
they individually capped travel agent base commissions at $50 for 
round-trip domestic tickets with base fares above $500 and at $25 
for one-way domestic tickets with base fares above $250. The 
lawsuits have been consolidated in the federal district of 
Minnesota.  The plaintiffs are seeking unspecified treble damages 
for restraint of trade.  The case is expected to go to a jury trial 
in 1996.  While USAir believes that its actions in establishing a 
commission cap were in full compliance with the antitrust laws, 
USAir is unable to predict at this time the ultimate resolution of 
the litigation or the potential impact on USAir's financial 
condition and results of operations. 

	In March 1995, a number of U.S. carriers, including USAir, 
received CIDs from the DOJ related to an investigation of incen-
tives paid to travel agents over and above the base commission 
payments.  USAir responded to an earlier CID on this topic during 
1994.  USAir has complied with the requirements of the CID by 
producing documents and responding to interrogatories.  Because 
this matter is in the investigatory stage, USAir is unable to 
predict at this time its ultimate resolution or potential impact on 
USAir's financial condition or results of operations.


                                 96
<PAGE>
	In May 1995, a number of U.S. air carriers, including USAir, 
received CIDs from the DOJ relating to its investigation of 
incentive payments to travel agencies and a possible agreement 
among these carriers to implement a cap on travel agent base 
commissions, which is the subject matter of the suits recently 
brought by travel agencies, as discussed above.  One of the CIDs 
received by USAir sought the production of transcripts of deposi-
tions of any USAir employees taken in connection with the private 
litigation relating to the commission caps, together with annexed 
exhibits.  USAir has complied with the requirements of the CIDs. 
USAir does not expect these investigations to have a material 
impact on its financial condition and results of operations.  

	In October 1995, USAir terminated for cause an agreement with 
In-Flight Phone Corporation ("IFPC"). IFPC was USAir's provider of 
on-board telephone and interactive data systems (the "IFPC 
System").  The agreement contemplated the eventual installation of 
the IFPC System on substantially all of USAir's aircraft.  The IFPC 
System had been installed on approximately 80 aircraft prior to the 
date of termination of the agreement.  On December 6, 1995, IFPC 
filed suit against USAir seeking equitable relief and damages in 
excess of $186 million.  USAir believes that its termination of its 
agreement with IFPC was appropriate and that it is owed in excess 
of $5 million by IFPC.  On December 7, 1995, USAir successfully 
defended IFPC's emergency motion for a temporary restraining order. 
On December 13, 1995, IFPC's motion for a preliminary injunction 
was denied and IFPC has relinquished its right to appeal that 
decision. IFPC's claim for damages remains pending and USAir is 
presently preparing a counterclaim for amounts it is owed by IFPC. 
USAir is unable to predict at this time the ultimate resolution or 
potential financial impact on USAir's financial condition and 
results of operations of this lawsuit.  USAir is presently in 
negotiations with other vendors of on-board telephone systems and 
currently expects to finalize an agreement in the first quarter of 
1996. 

	During 1995, four members of USAir's FTP filed class action 
lawsuits against USAir in Illinois, Pennsylvania, California and 
New Jersey state courts, alleging breach of contract relating to 
changes made to USAir's FTP effective December 31, 1989 and/or 
January 1, 1995.  A similar lawsuit has been pending in California 
state court since 1989.  The lawsuits seek unspecified damages and 
an injunction against the allegedly objectionable changes to 
USAir's FTP and any subsequent retroactive changes to the FTP. 
USAir denies the allegations made in the lawsuits and intends to 
vigorously defend itself.  The ultimate resolution of these 
lawsuits and their potential impact on USAir's financial condition 
or results of operations cannot be predicted at this time. 

	In May 1995, USAir Group, USAir and the Retirement Income Plan 
for Pilots of USAir, Inc. (the "Pilots' Pension Plan") were sued in 
federal district court for the District of Columbia by 469 active 
and retired USAir pilots.  The lawsuit alleges that USAir has


                                 97
<PAGE>
 breached its fiduciary duty under the Employee Retirement Income 
Security Act ("ERISA") and otherwise violated ERISA by erroneously 
calculating benefits under the Pilots' Pension Plan. The plaintiffs 
seek, among other things, an injunction restraining USAir and the 
Pilots' Pension Plan from allegedly improperly calculating benefits 
under the Pilots' Pension Plan and payments to plaintiffs of 
benefits allegedly improperly withheld in an amount alleged to be 
equal to approximately $70 million, plus interest.  USAir believes 
that it has properly calculated benefits under the Pilots' Pension 
Plan and intends to vigorously defend itself against the allega-
tions made in the lawsuit.  Because this lawsuit is in an early 
stage of litigation, USAir is unable to predict at this time its 
ultimate resolution or potential impact on USAir Group's pension 
liability or future funding requirements. 

	The Company and various subsidiaries have received notices 
from the U.S. Environmental Protection Agency and various state 
agencies that they are potentially responsible parties with respect 
to the remediation of existing sites of environmental concern. Only 
two of these sites have been included on the Superfund National 
Priorities List.  The Company continues to negotiate with various 
governmental agencies concerning known and possible cleanup sites. 
USAir has made financial contributions for the performance of 
remedial investigations and feasibility studies at sites in Moira, 
New York; Escondido, California; and Elkton, Maryland. 

	Also, USAir has been identified as a potentially responsible 
party ("PRP") for environmental contamination at Boston Logan 
Airport.  There are a number of other PRPs at the site.  The 
Company is presently unable to assess its proportionate share of 
contribution, but do not expect any such contribution to have a 
material adverse effect on its financial condition or results of 
operations.

	Because of changing environmental laws and regulations, the 
large number of other potentially responsible parties and certain 
pending legal proceedings, it is not possible to reasonably 
estimate the amount or timing of future expenditures related to 
environmental matters.  The Company provides for costs related to 
environmental contingencies when a loss is probable and the amount 
is reasonably estimable.  Although management believes adequate 
reserves have been provided for all known contingencies, it is 
possible that additional reserves could be required in the future 
which could have a material effect on results of operations. 
However, the Company believes that the ultimate resolution of known 
environmental contingencies should not have a material adverse 
effect on its financial position or results of operations based on 
its experience with similar environmental sites. 

	The Equal Employment Opportunity Commission and various state 
and local fair employment practices agencies are investigating 
charges by certain job applicants, employees and former employees 
of the Company's subsidiaries involving allegations of employment 
discrimination in violation of Federal and state laws. The


                                 98
<PAGE>
 plaintiffs in these cases generally seek declaratory and 
injunctive relief and monetary damages, including back pay.  In 
some instances they also seek classification adjustment, 
compensatory damages and punitive damages.  Such proceedings are in 
various stages of litigation and investigation, and the outcome of 
these proceedings is difficult to predict.  In the Company's 
opinion, however, the disposition of these matters is not likely to 
have a material adverse effect on its financial condition or 
results of operations.

	(d)  Aircraft Commitments

	 In June 1995, USAir entered into agreements with Boeing and 
Rolls Royce plc ("Rolls Royce") deferring the delivery of eight 
757-200 aircraft from 1996 to 1998.  As part of the agreements, the 
due dates for progress payments associated with the 1996 deliveries 
were likewise rescheduled.  Accordingly, approximately $71 million 
of progress payments that had been paid by USAir were refunded to 
USAir in the third quarter of 1995.  The related long-term debt 
which financed the deposits was dissolved.

	The following schedule of USAir's new aircraft deliveries and 
scheduled payments at December 31, 1995 (including progress 
payments, payments at delivery, buyer furnished equipment, spares, 
and capitalized interest) reflects USAir's agreements with Boeing 
and Rolls Royce discussed above: 

                            Delivery Period - Firm Orders
                     --------------------------------------------
                                                    There-
                     1996  1997  1998  1999  2000   after   Total
                     ----  ----  ----  ----  ----  ------   -----
Boeing
  757-200               -     -     8     -     -       -       8
  737-Series            -     -     -     -     -      40      40
                      ---   ---   ---   ---   ---   -----   -----
     Total              -     -     8     -     -      40      48
                      ===   ===   ===   ===   ===   =====   =====

Payments
 (millions)          $ 63  $ 74  $254  $  -  $  -  $1,855  $2,246
                      ===   ===   ===   ===   ===   =====   =====

	In addition, USAir has a commitment to purchase hush kits for 
certain of its McDonnell Douglas DC-9-30 aircraft and a substantial 
portion of its Boeing 737-200 aircraft.  The installation of these 
hush kits will bring the aircraft into compliance with FAA Stage 3 
noise level requirements.  The projected payments associated with 
the purchase of the hush kits are:  $43 million - 1996; $30 million 
- 1997; $30 million - 1998; and $17.0 million - 1999.

	USAir has the option of purchasing any other Boeing commercial 
aircraft type in satisfaction of its obligation to purchase forty 
737-Series aircraft.  Such satisfaction would be accomplished on an 
"equivalent-seat" basis.


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<PAGE>
	(e)  Concentration of Credit Risk

	The Company invests available cash in money market securities 
of various banks, commercial paper of financial institutions and 
other companies with high credit ratings and securities backed by 
the United States government.

	At December 31, 1995, most of the Company's receivables 
related to tickets sold to individual passengers through the use of 
major credit cards (44%) or to tickets sold by other airlines (16%) 
and used by passengers on USAir or the Company's regional airline 
subsidiaries.  These receivables are short-term, generally being 
settled within 14 days after sale.  Bad debt losses, which have 
been minimal in the past, have been considered in establishing 
allowances for doubtful accounts.  The Company does not believe it 
is subject to any significant concentration of credit risk.

5.	Sale of Receivables

	The revolving receivables sales facility ("Receivables 
Agreement") to which USAir had been a party expired on December 21, 
1994.  USAir was unable to sell receivables under the Receivables 
Agreement during 1994 because it was in violation of certain 
financial covenants.  USAir had no outstanding amounts due under 
the Receivables Agreement at expiry.  The average dollar amount of 
outstanding sales during 1993 was approximately $100 million. USAir 
has engaged in discussions to arrange a replacement facility but 
has elected not to pursue such a financing at this time.

6.  Income Taxes

	Effective January 1, 1993, the Company adopted Statement of 
Financial Accounting Standards No. 109, "Accounting for Income 
Taxes" ("FAS 109").  FAS 109 required a change from the deferred 
method under Accounting Principles Board Opinion No. 11 to the 
asset and liability method of accounting for income taxes.  No 
cumulative adjustment at January 1, 1993, and no income tax credit 
for the years ended December 31, 1994 and 1993, were recognized due 
to the FAS 109 limitation in recognizing benefits for net operating 
losses.

	The Company files a consolidated Federal income tax return 
with its wholly-owned subsidiaries.







(this space intentionally left blank)


                                 100
<PAGE>
	The components of the provision for income taxes are as 
follows:

                                     1995        1994      1993
                                     ----        ----      ----
                                           (in thousands)
Current provision: 
  Federal                            $6,081      $  -      $  -
  State                                 831         -         -
                                      -----       ---       ---
  Total current provision             6,912         0         0
                                      -----       ---       ---
Deferred provision:
  Federal                                 -         -         -
  State                               2,073         -         -
                                      -----       ---       ---
  Total deferred provision            2,073         0         0
                                      -----       ---       ---
Provision for income taxes           $8,985      $  0      $  0
                                      =====       ===       ===

	In 1995, the Company was not subject to regular Federal income 
tax as a result of using $109 million in Federal net operating loss 
carryforwards. However, the Company was subject to Federal 
alternative minimum tax ("AMT") and environmental tax.  Approxi-
mately $171 million in AMT net operating loss carryforwards and 
approximately $56 million in state net operating loss carryforwards 
were utilized to reduce the Federal and state liabilities.

	The significant components of deferred income tax expense 
(benefit) for the years ended December 31, 1995, 1994 and 1993, are 
as follows:
                                  1995        1994        1993
                                  ----        ----        ----
                                         (in thousands)
Deferred tax expense (benefits)
  (exclusive of the other
  components listed below)      $ 51,511   $(240,336)  $(136,191)
Adjustments to deferred tax
  assets and liabilities for
  enacted changes in tax laws
  and rates                            -           -      (8,880)
Increase (decrease) for the
  year in the valuation
  allowance for deferred tax
  assets                         (49,438)    240,336     145,071
                                 -------    --------     -------
  Total                         $  2,073   $       0    $      0 
                                 =======    ========     =======

	A reconciliation of taxes computed at the statutory Federal 
tax rate on earnings before income taxes to the provision for 
income taxes is as follows:


                                 101
<PAGE>
                                 1995        1994         1993
                                 ----        ----         ----
                                        (in thousands)
Tax provision (credit)
  computed at Federal
  statutory rate               $ 44,895   $(239,723)   $(137,591)
Book expenses not deduct-
  ible for tax purposes          16,064      17,257       10,390
Limitation in recognizing
  unused net operating
  loss/credits                        -     222,466      136,081
Utilization of Federal Net
  Operating Loss which
  reduced valuation
  allowance                     (38,177)          -            -
State income tax provision,
  net                             1,888           -            -
Adjustments to deferred tax
  assets and liabilities
  for enacted changes in
  tax laws and rates                  -           -       (8,880)
Current year temporary
  differences which
  reduced valuation
  allowance                     (22,492)          -            -
Alternative minimum tax
  which increased
  valuation allowance             3,794           -            -
Other                             3,013           -            -
                                -------     -------      -------
Provision for income taxes     $  8,985    $      0    $       0
                                =======     =======     ========
Effective tax rate                    7%          0%           0%
                                =======     =======     ========

	The tax effects of temporary differences that give rise to 
significant portions of the deferred tax assets and liabilities at 
December 31, 1995, 1994 and 1993 are presented below:

                               1995         1994         1993
                               ----         ----         ----
                                       (in thousands)
Deferred tax assets:
  Leasing transactions      $  169,840   $  167,772   $  132,551
  Tax benefits purchased
    /sold                       55,284       63,557       79,434
  Gain on sale and lease-
    back transactions          147,930      156,127      164,613
  Employee benefits            489,405      487,236      430,257
  Net operating loss carry-
    forwards                   685,597      723,275      557,494

(table continued on next page)


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<PAGE>
  Alternative minimum tax
    credit carryforwards        24,940       21,146       21,146
  Investment tax credit 
    carryforwards               49,802       49,802       49,802
  Other deferred tax assets     84,754       82,081       62,615
                             ---------    ---------    ---------
    Total gross deferred
      tax assets             1,707,552    1,750,996    1,497,912
  Less valuation allowance    (755,766)    (805,204)    (564,838)
                             ---------    ---------    ---------
    Net deferred tax assets    951,786      945,792      933,074

Deferred tax liabilities:
  Equipment depreciation 
    and amortization           908,917      909,353      874,640 
  Other deferred tax 
    liabilities                 44,942       36,439       58,434 
                             ---------    ---------    ---------
    Total deferred tax     
      liabilities              953,859      945,792      933,074 
                             ---------    ---------    ---------
    Net deferred
      tax liabilities       $    2,073   $        0   $        0
                             =========    =========    =========

	The valuation allowance for deferred tax assets as of 
January 1, 1993, was $420 million.  The valuation allowance 
increased $145 million in 1993 and $240 million in 1994, and 
decreased $49 million in 1995.

	At December 31, 1995, the Company had unused net operating 
losses of $1.8 billion for Federal tax purposes, which expire in 
the years 2005 to 2009.  The Company also has available, to reduce 
future taxes payable, $644 million alternative minimum tax net 
operating losses expiring in 2007 to 2009, $50 million of invest-
ment tax credits expiring in 2002 to 2003, and $25 million of 
alternative minimum tax credits which do not expire.  The Federal 
income tax returns of the Company through 1986 have been examined 
and settled with the Internal Revenue Service.

7.	British Airways plc Investment

	On January 21, 1993, USAir Group and BA entered into an 
investment agreement (the "Investment Agreement") under which a 
wholly-owned subsidiary of BA purchased certain series of redeem-
able convertible preferred stock during 1993 (see Note 8. - 
Redeemable Preferred Stock and Deferral of  Dividends) and BA 
entered into code sharing and wet lease arrangements with USAir 
contemplated by the Investment Agreement.  

	At December 31, 1995, the preferred stock held by BA con-
stituted approximately 21.0% of the total voting interest in the 
Company.  To the extent permitted by foreign ownership restrictions 
which are applicable by statute regulations or interpretation by


                                 103
<PAGE>
 regulatory authorities, including the U.S. Department of Transpor-
tation ("DOT") ("Foreign Ownership Restrictions"), the preferred 
stock owned by BA votes on all matters presented to the Company's 
stockholders for a vote and has voting power equal to the underly-
ing shares of Common Stock.  Pursuant to the Investment Agreement, 
on January 21, 1993, BA designated three of its officers to serve 
on the Company's and USAir's boards of directors.  

	On March 15, 1993, the DOT issued an order ("DOT Order") 
stating, among other things, that BA's initial investment of $300 
million does not impair USAir's citizenship under current U.S. 
Foreign Ownership Restrictions.  However, the DOT instituted a 
proceeding to consider whether USAir will remain a U.S. citizen if 
the transactions and acts contemplated by the Investment Agreement, 
including the possible sale of Series C Cumulative Convertible 
Senior Preferred Stock, without par value ("Series C Preferred 
Stock"), and Series E Cumulative Convertible Exchangeable Preferred 
Stock, without par value ("Series E Preferred Stock") to BA, are 
consummated.  The DOT has indefinitely suspended the period for 
comments from interested parties pending its resolution of requests 
by other airlines for production of additional documents from 
USAir.  The DOT Order states that the DOT expects and advises USAir 
and BA not to proceed with the closing of the purchase of the 
Series C Preferred Stock or the Series E Preferred Stock until the 
DOT has completed its review of USAir's citizenship.  

	On March 7, 1994, BA announced it would not make any addition-
al investments in the Company until the outcome of measures by the 
Company to reduce costs and improve financial results was known. 
Under the terms of the Investment Agreement, BA was entitled to 
purchase, on or prior to January 21, 1996, 50,000 shares of Series 
C Preferred Stock at a purchase price of $10,000 per share, to be 
paid by BA's surrender of the Series F Preferred Stock and payment 
of $200 million.  BA did not exercise this option.  The Investment 
Agreement provides that, on or prior to January 21, 1998, assuming 
that BA had purchased (or was purchasing simultaneously in accor-
dance with the terms of the Investment Agreement) Series C 
Preferred Stock, BA would have the option to purchase 25,000 shares 
of Series E Preferred Stock, at a purchase price of $10,000 per 
share.  Because BA did not elect prior to January 21, 1996, to 
purchase the Series C Preferred Stock, BA cannot purchase the 
Series E Preferred Stock, except that if the DOT approves all the 
transactions and acts contemplated by the Investment Agreement, at 
the election of either BA or the Company on or prior to January 21, 
1998, BA's purchase of the Series C Preferred Stock and Series E 
Preferred Stock must be consummated under certain circumstances. 
Because BA did not elect to purchase the Series C Preferred Stock 
by January 21, 1996, the Company may at its option redeem, in whole 
or in part, Series F Preferred Stock and a like percentage of 
Series T Preferred Stock (both held by BA) at the higher of market 
value or the price of $10,000 per share, plus accrued dividends. 
Under Delaware law, the Company may be subject to certain legal 
prohibitions on its ability to repurchase or redeem its own shares 
of capital stock for cash or other property.  The Company cannot


                                 104
<PAGE>
 predict the outcome of the proceedings, if further transactions 
contemplated under the Investment Agreement, including the sale of 
Series C and Series E Preferred Stock to BA, will be consummated, 
or whether or when the Company will repurchase or redeem its own 
shares of capital stock.  

	The sale of additional preferred stock to BA on June 10, 1993 
(see Note 8.(c) below) did not result in BA's ownership of voting 
stock in the Company exceeding applicable Foreign Ownership 
Restrictions and therefore does not affect the Company's U.S. 
citizenship under those restrictions.

	See also Notes 8.(b), 8.(c) and 8.(d).

8.	Redeemable Preferred Stock and Deferral of Dividends 

	(a)  Series A Preferred Stock

	At December 31, 1995, the Company had 358,000 shares of its 
9 1/4% Series A Cumulative Convertible Redeemable Preferred Stock 
("Series A Preferred Stock"), without par value, outstanding which 
were convertible into 9,239,944 shares of the Company's Common 
Stock at a conversion price of approximately $38.74 per share.  The 
Series A Preferred Stock ranks pari passu with the Series F 
Cumulative Convertible Senior Preferred Stock ("Series F Preferred 
Stock"), without par value, the Series T-1 Cumulative Convertible 
Exchangeable Senior Preferred Stock ("Series T-1 Preferred Stock"), 
without par value, the Series T-2 Cumulative Convertible Exchange-
able Senior Preferred Stock ("Series T-2 Preferred Stock"), without 
par value (the Series T-1 and Series T-2 Preferred Stock are 
collectively referred to as the "Series T Preferred Stock"), and 
senior to the Series B Cumulative Convertible Preferred Stock 
("Series B Preferred Stock"), without par value, Junior Participat-
ing Preferred Stock, Series D ("Series D Preferred Stock"), without 
par value, and the Common Stock, with respect to dividend payments 
and the distribution of assets.  At December 31, 1995, the Series A 
Preferred Stock is entitled to approximately 25.8099 votes per 
share, or a total of 9,239,944 votes, and votes together with the 
Series F Preferred Stock, the Series T Preferred Stock and the 
Common Stock, on all matters submitted to a vote of stockholders of 
the Company. 

	The Series A Preferred Stock is mandatorily redeemable on 
August 7, 1999 at $1,000 per share, plus accrued dividends.  The 
Company has the right to redeem the stock at a 10% premium until 
that time.  The agreement relating to the sale of the Series A 
Preferred Stock imposes certain restrictions on the purchaser's 
ability to increase its ownership of, and to transfer, its stock in 
USAir Group.  The Series A Preferred Stock is owned by affiliates 
of Berkshire Hathaway Inc. ("Berkshire").  There have been no 
changes in the balance sheet value of the Series A Preferred Stock 
since its issuance in 1989.


                                 105
<PAGE>
	The Company has deferred quarterly dividend payments on all 
outstanding series of preferred stock beginning with payments due 
September 30, 1994.  The annual dividends on the Series A Preferred 
Stock amount to approximately $33.1 million.  So long as preferred 
dividends are deferred, the Series A Preferred Stock will continue 
to cumulate dividends at its stated dividend rate of 9.25% plus 
additional dividends (interest) on the balance of the deferred 
dividends at the higher of the stated dividend rate or the prime 
rate plus five percentage points.  Accordingly, the redemption 
value of the Series A Preferred Stock at December 31, 1995 is 
$412.1 million (the face amount of the issuance of $358.0 million 
plus unpaid dividends and interest of $54.1 million). 

	Under the terms of the Series A Preferred Stock, Berkshire has 
the exclusive right to elect two additional directors to the 
Company's board of directors after a scheduled dividend payment has 
not been paid for thirty days.  Berkshire has informed the Company 
that it does not intend to exercise this right at this time. 
Further, Berkshire's Chairman Warren E. Buffet and Vice Chairman 
Charles T. Munger did not stand for re-election to the Company's 
and USAir's boards of directors in 1995. 

	See further discussion of deferred dividends in Note 8.(d).

	(b)  Series F Preferred Stock

	 At December 31, 1995, the Company had outstanding 30,000 
shares of its 7% Series F Preferred Stock which was convertible 
into 15,458,851 shares of the Company's Common Stock at a conver-
sion price of approximately $19.41 per share.  The Series F 
Preferred Stock ranks pari passu with the Series A Preferred Stock 
and Series T Preferred Stock and senior to the Series B Preferred 
Stock, Series D Preferred Stock, and the Common Stock, with respect 
to dividend payments and the distribution of assets.  At Decem-
ber 31, 1995, each share of Series F Preferred Stock was entitled 
to 515.295 votes per share to the extent permitted by the existing 
Foreign Ownership Restrictions and votes with the Company's Series 
A Preferred Stock, the Series T Preferred Stock and the Company's 
Common Stock as a single class.  Under Foreign Ownership Restric-
tions, no more than 25% of the Company's voting interest may be 
held by persons other than U.S. citizens.  In accordance with the 
terms of any preferred stock held by BA, conversion rights and 
voting rights may not be exercised to the extent that doing so 
would result in a loss of the Company's or any of its airline 
subsidiaries' operating certificates and authorities under Foreign 
Ownership Restrictions, and it is assumed for this purpose that 
Series F Preferred Stock will be fully converted before any other 
preferred stock held by BA.

	The Series F Preferred Stock is convertible at any time on or 
after January 21, 1997 to the extent that such conversion would not 
violate U.S. Foreign Ownership Restrictions.  Series F Preferred 
Stock may be converted at the option of the Company at any time 
after January 21, 1998 if the average composite closing market


                                 106
<PAGE>
 price of Common Stock during any 30-day calendar period is at 
least 133% of the conversion price.  The Series F Preferred Stock 
is mandatorily redeemable on January 21, 2008 at $10,000 per share, 
plus accrued dividends.  The deadline for BA's election to purchase 
the Series C Preferred Stock and therefore, to elect to make any 
further investment in the Company pursuant to the investment 
agreement, was January 21, 1996.  BA declined to make any further 
investment on or before January 21, 1996.  Because BA declined to 
exercise its right to purchase the Series C Preferred Stock before 
this date, the Company may at its option redeem, in whole or in 
part, the Series F Preferred Stock and a like percentage of Series 
T Preferred Stock at the higher of market value or the price of 
$10,000 per share, plus accrued dividends.  There have been no 
changes in the balance sheet value of the Series F Preferred Stock 
since its issuance in 1993.

	The Company deferred quarterly dividend payments on all 
outstanding series of preferred stock beginning with payments due 
September 30, 1994.  The annual dividends on the Series F Preferred 
Stock amount to approximately $21.0 million.  So long as preferred 
dividends are deferred, the Series F Preferred Stock will continue 
to cumulate dividends at its stated dividend rate of 7.0% plus 
additional dividends (interest) on the balance of the deferred 
dividends at the stated dividend rate.  Accordingly, the redemption 
value of the Series F Preferred Stock at December 31, 1995 was 
$329.1 million (the face amount of the issuance of $300.0 million 
plus unpaid dividends and interest of $29.1 million).  

	See Note 7. for additional information related to BA's 
investment in USAir Group and Note 8.(d) for further discussion of 
deferred dividends.

	(c)  Series T Preferred Stock

	Under the Investment Agreement, BA has preemptive and optional 
purchase rights to maintain its proportionate ownership of the 
Company's Common Stock and convertible securities, measured in 
terms of the BA percentage ("BA Percentage") which approximates 
BA's fully diluted ownership percentage based on BA's current and 
potential holdings in the Company.  The BA Percentage is calculated 
without regard to Foreign Ownership Restrictions at the time of the 
calculation.  BA may exercise such preemptive or optional purchase 
rights by purchasing, from time to time, a series of Series T 
Preferred Stock. 

	At December 31, 1995, the Company had two series of the 
Series T Preferred Stock outstanding.  On June 10, 1993, BA 
exercised its preemptive purchase right by purchasing 9,919.8 
shares of Series T-2 Preferred Stock for approximately $99.2 
million and exercised its optional purchase right by purchasing 
152.1 shares of a series of Series T-1 Preferred Stock for approxi-
mately $1.5 million.  BA's preemptive right was triggered by the 
issuance of Common Stock, as described in Note 9. - Stockholders' 
Equity, and BA's optional purchase rights were triggered by the


                                 107
<PAGE>
 Company's issuance of additional shares of Common Stock through 
the exercise of options under various employee stock option plans 
and through the sale of shares to certain defined contribution 
plans during the period from January 21, 1993 to March 31, 1993.  
BA has advised the Company that it will not exercise its optional 
purchase rights to buy additional series of Series T-1 Preferred 
Stock triggered by the Company's issuance of Common Stock pursuant 
to certain employee benefit plans and the exercise of options and 
grant of restricted Common Stock under various employee stock 
option and incentive plans that have occurred between March 31, 
1993 and December 31, 1995.

	There have been no changes in the balance sheet value of the 
Series T-1 Preferred Stock and Series T-2 Preferred Stock since 
their issuance in 1993.

	The terms of both series of the Series T Preferred Stock are 
substantially similar to those of the Series F Preferred Stock 
except as noted.  Each share of Series T-2 Preferred Stock carries 
a conversion price of $26.40 and is convertible into approximately 
378.7879 shares of Common Stock or Non-Voting Class ET stock.  Each 
share of Series T-1 Preferred Stock has a conversion price of 
$20.50 and is convertible into approximately 487.8049 shares of 
Common Stock or Non-Voting Class ET stock.  Both series of the 
Series T Preferred Stock are mandatorily redeemable on June 10, 
2008 at $10,000 per share, plus accrued dividends.  With respect to 
the Series T Preferred Stock, dividends are payable quarterly in 
arrears, at 50 basis points over the three month LIBOR rate.  Any 
shares of the Series T Preferred Stock held by any person other 
than BA or its subsidiaries may be redeemed for cash at any time at 
the option of the Company at $10,000 plus accrued dividends plus a 
redemption premium equal to $700 from the date of issue until the 
first anniversary thereof and reduced by $46.67 on each anniversary 
thereafter.

	The Series T Preferred Stock is exchangeable, at the option of 
the Company, for that principal amount of floating rate convertible 
subordinated notes of the Company (the "T Notes") equal to the 
liquidation preference of the shares to be exchanged and bearing 
interest at the dividend rate.  Any accrued dividends on the Series 
T Preferred Stock to be exchanged will be treated as accrued 
interest on the T Notes.  Each $10,000 aggregate principal amount 
of such T Notes will be entitled to a number of votes equal to the 
number of votes to which each share of Series T Preferred Stock was 
entitled at the time of its exchange for T Notes, subject to 
adjustment. If issued, T Notes will have terms otherwise consistent 
with the terms of the Series T Preferred Stock.

	The Company has deferred quarterly dividend payments on all 
outstanding series of preferred stock beginning with payments due 
September 30, 1994.  The annual dividends on the Series T Preferred 
Stock amount to approximately $6.4 million.  So long as preferred 
dividends are deferred, the Series T Preferred Stock will continue 
to cumulate dividends at its dividend rate of the three-month LIBOR


                                 108
<PAGE>
 rate plus one-half of a percentage point plus additional dividends 
(interest) on the balance of the deferred dividends at the dividend 
rate.  Accordingly, the redemption value of the Series T Preferred 
Stock at December 31, 1995 was $109.6 million (the face amount of 
the issuance of $100.7 million plus unpaid dividends and interest 
of $8.9 million).  

See Note 7. for additional information related to BA's investment 
in USAir Group and Note 8.(d) for further discussion of deferred 
dividends.

	(d)  Deferral of Dividends

	On September 29, 1994, the Company announced that it was 
deferring the quarterly dividend payment due September 30, 1994 to 
Berkshire related to the Company's Series A Preferred Stock.  The 
Company also deferred quarterly dividend payments on all its other 
outstanding series of preferred stock, including the Series F and 
Series T Preferred Stock owned by BA and the publicly-held Series B 
Preferred Stock.  USAir Group has not paid a dividend on its Common 
Stock since the second quarter of 1990.  As of February 28, 1996, 
the Company's board of directors had not authorized the resumption 
of dividends on the Company's preferred stock or Common Stock and 
there can be no assurance when or if such dividend payments will 
resume.  In addition, the Company, organized under the Laws of the 
State of Delaware, may be subject to certain legal prohibitions on 
its ability to pay dividends on or repurchase or redeem its own 
shares of capital stock for cash or other property. 

	At December 31, 1995, the Company believes that it was legally 
prohibited from paying dividends on or repurchasing or redeeming 
its capital stock due to the provisions of Section 170 of the 
Delaware General Corporation Law ("Delaware Law"), which require a 
company to maintain a capital surplus in order to pay dividends on 
or repurchase or redeem its capital stock.  In addition, as of 
December 31, 1995, the Company does not believe that it can comply 
with certain provisions of Delaware Law which permit a company with 
a capital deficit to pay dividends on its capital stock under 
special circumstances.  In order for the Company to return to a 
capital surplus position it must realize substantial profits or 
increase its equity through other measures such as the sale of 
additional common or preferred stock.  

	So long as preferred dividends are deferred, the Series A, 
Series F, Series T and Series B Preferred Stock will each cumulate 
dividends at their stated rate.  In addition, the Series A, Series 
F and Series T Preferred Stock cumulate additional dividends 
(interest) on the balance of deferred dividends.  See Notes 8.(a), 
8.(b) and 8.(c).
 
	Under the terms of the Series A Preferred Stock, Berkshire has 
the exclusive right to elect two additional directors to the 
Company's board of directors after a scheduled dividend payment has 
not been paid for thirty days.  Berkshire has informed the Company


                                 109
<PAGE>
 that it does not intend to exercise this right at this time. 
Berkshire's Chairman Warren E. Buffet and Vice Chairman Charles T. 
Munger served as directors on the Company's and USAir's boards of 
directors until November 1995.  They did not stand for re-election 
as Directors in November 1995.  Under the terms of the Series B 
Preferred Stock, the holders of that security have the exclusive 
right to elect two additional directors to the Company's board of 
directors if six quarterly dividends were not paid.  That right 
became effective on February 15, 1996.  In March 1996, certain 
holders of the Series B Preferred Stock informed the Company that 
they intend to exercise this right.  If Berkshire were to exercise 
its right and the holders of the Series B Preferred Stock were to 
exercise their right to elect additional directors, BA would have 
the right to nominate an additional director to the Company's board 
of directors pursuant to its Investment Agreement with the Company.

9.	Stockholders' Equity

	(a)  Common Stock

	The Company had 150,000,000 authorized shares of Common Stock, 
par value $1, at December 31, 1995 and 1994.  If BA purchases the 
Series C Preferred Stock (see Note 7. - British Airways plc 
Investment), the number of authorized shares of various classes of 
Common Stock will increase to 300,000,000.  BA has indicated, 
however, that it will not make any additional investments in the 
Company under current circumstances. At December 31, 1995, 
approximately 49,423,000 shares were reserved for issuance upon the 
conversion of preferred stock and for offerings under employee 
stock purchase, stock option, stock incentive and retirement plans. 
The Company has deferred the dividend payments on all series of its 
preferred stock and has not paid dividends on its Common Stock 
since the second quarter of 1990.  There can be no assurance when 
or if dividend payments will resume. See discussion of deferred 
dividends above in Note 8.(d).

	(b)  Preferred Stock and Senior Preferred Stock

	At December 31, 1995, the Company had 5,000,000 authorized 
shares of preferred stock, without nominal or par value, of which 
358,000 shares were issued as Series A Preferred Stock, approxi-
mately 43,000 shares were issued as Series B Preferred Stock and 
1,035,000 shares were reserved as Series D Preferred Stock.  Also, 
at December 31, 1995, the Company had 3,000,000 authorized shares 
of Senior Preferred Stock, without nominal or par value, of which 
30,000 shares were issued as Series F Preferred Stock and approxi-
mately 10,000 shares were issued as Series T Preferred Stock. 

	The Company has deferred dividends on all its preferred stock. 
There can be no assurance when or if preferred dividend payments 
will resume.  See discussion of deferred dividends above in Note 
8.(d).


                                 110
<PAGE>
	(c)  Series B Preferred Stock

	At December 31, 1995, the Company had 4,263,050 Depositary 
Shares, representing 42,630.5 shares of its $437.50 Series B 
Preferred Stock outstanding.  Each Depositary Share represents 
1/100 of a share of the Series B Preferred Stock.  The Series B 
Preferred Stock is convertible at any time, at the option of the 
holder, at the rate of 249.25 shares of Common Stock of the Company 
per preferred share, or 2.4925 shares of Common Stock per Deposi-
tary  Share.  The Series B Preferred Stock ranks junior to the 
Company's Series A Preferred Stock, the Series F Preferred Stock 
and the Series T Preferred Stock and senior to the Series D 
Preferred Stock and the Common Stock with respect to dividend 
payments and the distribution of assets, whether upon liquidation 
or otherwise.  Except under certain circumstances, the holders of 
Series B Preferred Stock have no voting rights.

	The Series B Preferred Stock is redeemable, at the option of 
the Company and with consent of the holders of Series F Preferred 
Stock, (i) in whole but not in part, only in certain circumstances, 
for so long as any shares of Series A Preferred Stock are outstand-
ing; and (ii) in whole or in part if no shares of Series A 
Preferred Stock are outstanding, in each case at a redemption price 
currently equal to approximately $52.63 per 1/100 of a Depositary 
Share and thereafter at prices declining to $50.00 per 1/100 of a 
Depositary Share (equivalent to $5,000 per share of Series B 
Preferred Stock) on or after May 15, 2001, plus dividends accrued 
and accumulated but unpaid to the redemption date.

	The Company has deferred quarterly dividend payments on all 
outstanding series of preferred stock beginning with payments due 
September 30, 1994.  The annual dividends on the Series B Preferred 
Stock amount to approximately $18.7 million.  So long as preferred 
dividends are deferred, the Series B Preferred Stock will continue 
to cumulate dividends at its stated dividend rate of 8.75% but is 
not subject to additional dividends (interest) on the balance of 
the deferred dividends.  Accordingly, the liquidation preference of 
the Series B Preferred Stock at December 31, 1995 is $238.8 million 
(the face amount of the issuance of $213.2 million plus unpaid 
dividends of $25.6 million).  Under the terms of the Series B 
Preferred Stock, the holders of that security have the exclusive 
right to elect two additional directors to the board of directors 
of the Company if six quarterly dividend payments are not paid. 
That right became effective on February 15, 1996.  Certain holders 
of the Series B Preferred Stock have informed the Company that they 
would be pursuing this right.    

	As of February 28, 1996, the Company's board of directors had 
not authorized the resumption of any dividends on the Company's 
preferred stock and there can be no assurance when or if dividend 
payments will resume.  Under Delaware law, the Company may be 
subject to certain legal prohibitions on its ability to repurchase


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<PAGE>
 or redeem its own shares of capital stock for cash or other 
property.  See further discussion of deferred dividends above in 
Note 8.(d).

	(d)  Preferred Stock Purchase Rights

	Each outstanding share of Common Stock is accompanied by one 
Preferred Share Purchase Right ("Right") and each outstanding share 
of Series A Preferred Stock, Series F Preferred Stock and  Series T 
Preferred Stock is accompanied by a Right for each share into which 
it is convertible.  Each Right entitles the holder to buy 1/100th 
of a share of Series D Preferred Stock at an exercise price of $175 
per Right.  The Rights expire on June 29, 1996.  As long as the 
Rights remain outstanding, the Company will issue one Right with 
each new share of Common Stock issued upon the conversion of any 
preferred stock into, or the exercise of any options for, Common 
Stock, as long as such preferred stock or options were outstanding 
prior to the Rights becoming exercisable.

	Generally, the Rights become exercisable only if a party other 
than, under certain circumstances, BA acquires 20% or more of the 
Company's Common Stock or announces a tender offer for 20% or more 
of the Common Stock.  The Rights are redeemable at $.03 per Right 
at any time before 20% or more of the Company's Common Stock has 
been acquired.  If at any time after the Rights become exercisable 
and before they have been redeemed the Company is involved in a 
merger or other business combination transaction, the Rights will 
automatically entitle a holder, other than a holder of 20% or more 
of the Company's Common Stock, to receive, upon exercise of each 
Right, a number of shares of Common Stock, or a number of common 
shares of the acquiring company, as the case may be, having a 
market value of two times the exercise price of each Right.  In 
addition, at any time after the acquisition of 30% or more of the 
Common Stock by any person and prior to the acquisition by such 
person of 50% or more of the Common Stock, the Board of the Company 
may exchange the Rights (other than Rights owned by such person 
which have become void), in whole or in part, at an exchange ratio 
of one share of Common Stock, or 1/100th of a share of Series D 
Preferred Stock, per Right.

	Until the first to occur of the redemption or expiration of 
the Rights, the Company will issue one Right with each new share of 
Common Stock issued upon the conversion of any securities into, or 
the exercise of any options or warrants for, Common Stock if such 
securities, options or warrants were outstanding prior to when 
Rights became exercisable.

	(e)  Treasury Stock

	In 1989, the Company's board of directors authorized the 
repurchase from time to time of up to 9.4 million shares of its 
Common Stock in open market transactions.  In 1989, approximately 
2.1 million shares were repurchased in addition to 635,000 that it 
held in treasury prior to that time.  The Company sold approximate


                                 112
<PAGE>
ly 1,864,000 and 500,000 treasury shares during 1994 and 1993, 
respectively, and had expended its treasury stock balance prior to 
December 31, 1994.  The Company has not repurchased shares of its 
Common Stock since 1989 and may be subject to certain legal 
prohibitions on its ability to repurchase its Common Stock under 
Delaware law.

	(f)  Employee Stock Option and Purchase Plans

	At December 31, 1995, approximately 5.0 million shares of 
Common Stock were reserved for the possible exercise of options 
under the 1992 Stock Option Plan ("1992 Plan").  Under the 1992 
Plan, employees whose pay was reduced, generally during a 12 month 
period in 1992 and 1993, received options to purchase 50 shares of 
Common Stock at a price of $15 per share for each $1,000 of salary 
reduction.  Participating employees have five years from the grant 
date to exercise such options.  All outstanding options under the 
1992 plan were fully vested at December 31, 1995.

	 At December 31, 1995, 4.4 million shares of Common Stock were 
reserved for the granting of stock options or restricted stock 
under the Company's 1984 Stock Option and Stock Appreciation Rights 
("SARs") Plan and 1988 Stock Incentive Plan.  These plans provide 
that options may be granted as either nonqualified or incentive 
stock options.  Options awarded under the two plans prior to 1992, 
except for those that reverted, have vested.  Options awarded 
during 1993, 1994 and 1995 become exercisable generally within 
three years from date of grant.  Optionees may also receive SARs 
which permit them to receive, in lieu of the right to exercise the 
stock option, an amount equivalent to the difference between the 
stock option price and the fair market value of the Common Stock on 
the date of exercising the right.  This amount may be paid in 
stock, in cash, or in any combination of the two.  Also, restricted 
stock award grants for 934,600 shares and 15,800 shares were 
outstanding at December 31, 1995 and 1994, respectively.  Deferred 
compensation related to the restricted stock, which vests over 
periods of up to three years, amounted to approximately $11.6 
million and $16 thousand as of December 31, 1995 and 1994, 
respectively.

	As of December 31, 1995, options to acquire approximately 8.5 
million shares under all three plans, including 48,600 options with 
tandem SARs, were outstanding at a weighted average exercise price 
of $17.52.  The exercise prices for these options range from $4.25 
to $46.38.  Of those outstanding, approximately 8.1 million options 
were exercisable at December 31, 1995.  Options were exercised to 
purchase 42,775 shares and 5,000 shares of Common Stock at average 
exercise prices of $9.82 and $9.63 during 1995 and 1994, respec-
tively. 

	In October 1995, the Financial Accounting Standards Board 
adopted Statement No. 123 "Accounting for Stock-Based Compensation" 
("FAS 123").  This statement establishes the fair value based 
method of accounting for stock-based compensation.  The Company has


                                 113
<PAGE>
 elected to continue using the intrinsic value based method of 
accounting prescribed in Accounting Principles Board Opinion No. 
25, "Accounting for Stock Issued to Employees," as permitted by FAS 
123.

	(g)  Adjustment for Minimum Pension Liability

	The provisions of Statement of Accounting Standards No. 87, 
"Employers' Accounting for Pensions," require the recognition of an 
additional minimum liability for each defined benefit plan for 
which the accumulated benefit obligation exceeds plan assets.  This 
amount has been recognized by the Company as a long-term liability 
with an offsetting intangible asset (see Note 1.(e)).  Because the 
intangible asset recognized may not exceed the amount of unrecog-
nized prior service cost on an individual plan basis, the balance 
is reported as a separate reduction of Stockholders' Equity 
(Deficit) at December 31, 1995 and 1994.  See also Note 11.(a).

10.	Employee Stock Ownership Plan

	In August 1989, USAir established an Employee Stock Ownership 
Plan ("ESOP").  USAir Group sold 2,200,000 shares of its Common 
Stock to an Employee Stock Ownership Trust (the "Trust") to hold on 
behalf of USAir's employees, exclusive of officers, in accordance 
with the terms of the Trust and the ESOP.  The trustee placed those 
shares in a suspense account pending their release and allocation 
to employees.  USAir provided financing to the Trust in the form of 
a 9 3/4% loan for $111.4 million for its purchase of shares and 
USAir contributed an additional $2.2 million to the Trust.  USAir 
makes a yearly contribution to the Trust sufficient to cover the 
Trust's debt service requirement.  The contributions are made in 
amounts equal to the periodic loan payments as they come due, less 
dividends available for loan payment.  Since the Company did not 
pay dividends on any shares held by the Trust for the years ended 
December 31, 1995, 1994 and 1993, the Trust did not utilize 
dividends to service its debt during those periods.  The initial 
maturity of the loan is 30 years.  As the loan is repaid over time, 
the trustee systematically releases shares of the common stock from 
the suspense account and allocates them to participating employees. 
Each participant's allocation is based on the participant's 
compensation, the total compensation of all ESOP participants and 
the total number of shares being released.  For each year after 
1989, a minimum of 71,933 shares are released from the suspense 
account and allocated to participant accounts.  If USAir's return 
on sales equals or exceeds four percent in a given year, more 
shares are released and repayment of the loan is accelerated. 
Annual contributions made by USAir, and therefore loan repayments 
made by the Trust, were $11.4 million in each of 1995, 1994 and 
1993.  The interest portion of these contributions was $10.4 
million in 1995, $10.5 million in 1994 and $10.5 million in 1993. 
Approximately 510,000 shares of Common Stock have been released or 
committed to be released as of December 31, 1995.  USAir recognized 
approximately $4 million of compensation expense related to the 
ESOP in each of 1995, 1994 and 1993 based on shares allocated to


                                 114
<PAGE>
 employees (the "shares allocated" method).  Deferred compensation 
related to the ESOP amounted to approximately $87 million, $91 
million and $95 million at December 31, 1995, 1994 and 1993, 
respectively.  All shares of Common Stock sold to the Trust are 
considered issued and outstanding for computing the weighted 
average common shares outstanding for the income (loss) per common 
share calculation.

	See also Note 9.(f) regarding the Company's accounting 
treatment for stock-based compensation. 

11.	Employee Benefit Plans

	(a)  Pension Plans

	The Company's subsidiaries have several pension plans in 
effect covering substantially all employees.  One qualified defined 
benefit plan covers USAir maintenance employees and provides 
benefits of specified amounts based on periods of service. 
Qualified defined benefit plans for substantially all other 
employees provide benefits based on years of service and compensa-
tion.  The qualified defined benefit plans are funded, on a current 
basis, to meet the minimum funding requirements of the Employee 
Retirement Income Security Act of 1974.  

	The defined benefit pension plan for USAir non-contract 
employees was frozen at the end of 1991 for all non-contract 
participants, resulting in a one-time book gain of approximately 
$107 million in 1991.  All non-contract plan participants became 
100% vested at the time of the freeze.  As a result of this plan 
curtailment, the accrual of service costs related to defined 
benefits for USAir non-contract and certain other employees ceased 
at the end of 1991.  USAir implemented a defined contribution 
pension plan for non-contract employees in January 1993.

	The funded status of the qualified defined benefit plans at 
December 31, 1995 and 1994 was as follows:

                                  1995               1994
                              Plans in Which     Plans in Which
                             ----------------- -----------------
                               Plan   Accumu-    Plan   Accumu-
                              Assets   lated    Assets   lated
                              Exceed  Benefits  Exceed  Benefits
                              Accumu-  Exceed   Accumu-  Exceed
                              lated     Plan    lated     Plan
                             Benefits  Assets  Benefits  Assets
                             --------  ------  --------  ------
                                        (in millions)

Fair value of plan assets     $1,009   $1,419   $1,703   $  183 

(table continued on next page)


                                 115
<PAGE>
Actuarial present value of:
  Vested benefit obligation      940    1,603    1,521      242
  Nonvested benefit obliga-
    tion                          30       22       28       17
                               -----    -----    -----    -----
    Accumulated benefits
      based on salaries to
      date                       970    1,625    1,549      259
    Additional benefits
      based on estimated
      future salary levels       143      598      477        -
                               -----    -----    -----    -----
      Projected benefit
        obligation             1,113    2,223    2,026      259
                               -----    -----    -----    -----
Projected benefit obligation
   in excess of fair value 
   of plan assets               (104)    (804)    (323)     (76)

Unrecognized net transition
   asset                          (2)     (34)     (29)     (12)
	
Unrecognized prior service
   cost                            2       66      (14)      69
Unrecognized net loss            317      571      358       15
                               -----    -----    -----    -----
  Pension (liability) prepaid
    before adjustment            213     (201)      (8)      (4)

Adjustment to recognize
  minimum liability*               -     (149)       -      (72)
                               -----    -----    -----    -----
  Pension (liability) prepaid
    as adjusted and recognized
    in consolidated balance
    sheets                    $  213   $ (350)  $   (8)  $  (76)
                               =====    =====    =====    ======
* See Note 9.(g)

	The weighted average discount rate used to determine the 
actuarial present value of the projected benefit obligation was 
7.25% and 9.00% as of December 31, 1995 and 1994, respectively. The 
expected long-term rate of return on plan assets used in 1995 was 
9.0% to 9.5% and 9.5% in 1994.  Rates of 3% to 6% were used to 
estimate future salary levels.  As of December 31, 1995, plan 
assets consisted of approximately 7% in cash equivalents and short-
term debt investments, 26% in equity investments, and 67% in fixed 
income and other investments.  As of December 31, 1994, plan assets 
consisted of approximately 10% in cash equivalents and short-term 
debt investments, 27% in equity investments, and 63% in fixed 
income and other investments.  Plan assets as of December 31, 1995 
included 205 shares of USAir Group Common Stock.  Plan assets as of 
December 31, 1994 did not include shares of USAir Group Common 
Stock.


                                 116
<PAGE> 
	The following items are the components of the net periodic 
pension cost for the qualified defined benefit plans:

                                   1995        1994         1993
                                   ----        ----         ----
                                          (in millions)
Service cost (benefits
  earned during the period)       $  94       $ 127        $  93
Interest cost on projected
  benefit obligation                218         217          189
Actual return on plan assets       (541)         48         (226)
Net amortization and deferral       371        (254)          40 
                                   ----        ----         ----
Net periodic pension cost         $ 142       $ 138        $  96
                                   ====        ====         ====

	Net pension cost for 1993 presented above excludes a settle-
ment charge of approximately $33.9 million, related to "early-out" 
incentive programs offered to a limited number of USAir employees 
during the years.  No such charges were incurred in 1995 or 1994.

	Non-qualified supplemental pension plans are established for 
certain employee groups, which provide incremental pension payments 
from the Company's funds so that total pension payments equal 
amounts that would have been payable from the Company's principal 
pension plans if it were not for limitations imposed by Federal 
income tax regulations.

	The following table sets forth the non-qualified plans' status 
at December 31, 1995 and 1994:

                                             1995          1994
                                             ----          ----
                                               (in millions)

Fair value of plan assets                   $    -        $    - 
Actuarial present value of:
  Vested benefit obligation                     33            32
  Nonvested benefit obligation                   2             2
                                             -----         -----
    Accumulated benefit obligation
      based on salaries to date                 35            34
    Additional benefits based on 
      estimated future salary levels             2             2
                                              ----          ----
   Projected benefit obligation                 37            36
                                              ----          ----
Projected benefit obligation in excess
   of fair value of plan assets                (37)          (36)




(table continued on next page)


                                 117
<PAGE>
Unrecognized net transition asset                -             -
Unrecognized prior service cost                  3             1
Unrecognized net loss                            9             3 
                                              ----          ----
Pension (liability) prepaid before
   adjustment                                  (25)          (32)
Adjustment to recognize minimum liability*     (11)           (5)
                                              ----          ----
Unfunded accrued supplementary costs
  as adjusted and recognized in
  consolidated balance sheets                $ (36)        $ (37)
                                              ====          ====
* See Note 9.(g)

	Net periodic supplementary pension cost for the non-qualified 
supplemental pension plans included the following components:

                                        1995      1994     1993
                                        ----      ----     ----
                                             (in millions)
Service cost (benefits
  earned during the period)            $   -     $   -     $   -
Interest cost on projected
  benefit obligation                       2         3         2
Actual return on plan assets               -         -         -
Net amortization and deferral             (1)       21        12
                                         ---       ---       ---
Net periodic supplementary
  pension cost                          $  1      $ 24      $ 14
                                         ===       ===       ===

	The discount rate used to determine the actuarial present 
value of the projected benefit obligation was 7.25% and 9.00% as of 
December 31, 1995 and 1994, respectively.  Rates of 3% to 5% were 
used to estimate future salary levels.

	In addition to the qualified and non-qualified defined benefit 
plans described above, USAir also contributes to certain defined 
contribution plans.  Company contributions are based on a formula 
which considers the age and pre-tax earnings of each employee and 
the amount of employee contributions.  In addition, certain 
qualified defined contribution plans contain a component for profit 
sharing contributions if USAir Group achieves certain pre-tax 
margin levels.  The  Company's expense related to the defined 
contribution plans, excluding expense for the ESOP plan, was $64 
million, $43 million and $42 million for 1995, 1994 and 1993, 
respectively.  The 1995 contribution expense reflects a new 
employer match contribution for certain collective bargaining 
groups.  The Company made no contributions to its defined contribu-
tion plans related to profit sharing in 1995, 1994 and 1993 since 
the Company did not achieve the prescribed pre-tax margin level.


                                 118
<PAGE>
	(b)  Postretirement Benefits Other Than Pensions

	USAir offers medical and life insurance benefits to employees 
hired prior to March 29, 1993 who retire from USAir and their 
eligible dependents.  The medical benefits provided by USAir are 
coordinated with Medicare benefits.  Retirees generally contribute 
amounts towards the cost of their medical expenses based on years 
of service with the Company.  USAir provides uninsured death 
benefit payments to survivors of retired employees for stated 
dollar amounts, or in the case of retired pilot employees, death 
benefit payments determined by age and level of pension benefit. 
The plans for postretirement medical and death benefits are funded 
on the pay-as-you-go basis.

	The following table sets forth the financial status of the 
plans as of December 31, 1995 and 1994:
                                                 1995       1994
                                                 ----       ----
                                                  (in millions)
Accumulated Postretirement Benefit
 Obligation (APBO):
   Retirees                                    $  338      $ 245
   Fully eligible active plan participants        176        144
   Other plan participants                        482        306
                                                -----       ----
     Total APBO                                   996        695
	
   Unrecognized prior service credit              155        167
   Unrecognized net gain (loss)                  (112)       123 
                                                -----       ----
Accrued postretirement benefit cost            $1,039      $ 985
                                                =====       ====

	The components of net periodic postretirement benefit cost are 
as follows:
                                            1995    1994    1993
                                            ----    ----    ----
                                               (in millions)
Service cost (benefits attributed to
  employee service during the period)       $ 29    $ 36    $ 31
Interest cost on APBO                         65      60      56
Net amortization and deferral                (15)    (12)    (12)
                                             ---     ---     ---
  Net periodic postretirement
    benefit cost                            $ 79    $ 84    $ 75
                                             ===     ===     ===

	The postretirement benefit expense for 1993 presented above 
excludes a charge of approximately $15.5 million related to "early-
out" programs offered to a limited number of employees during the 
year.  No such charges were incurred in 1995 or 1994.


                                 119
<PAGE>
	The discount rate used to determine the APBO was 7.25%, 9.00% 
and 7.75% at December 31, 1995, 1994 and 1993, respectively.  The 
average rates of annual compensation increase used to calculate the 
APBO ranged from 3% to 6% at December 31, 1995, 1994 and 1993.  The 
assumed health care cost trend rate used in measuring the APBO was 
8.5% in 1995, declining by 1% per year after 1995 to an ultimate 
rate of 4.5%.  If the assumed health care cost trend rates were 
increased by one percentage point, the APBO at December 31, 1995 
would be increased by 10% and 1995 periodic postretirement benefit 
costs would increase 13%.

	(c)  Postemployment Benefits

	USAir adopted Statement of Financial Accounting Standards No. 
112, "Employer's Accounting for Postemployment Benefits" ("FAS 
112"), during 1993.  FAS 112 requires the use of an accrual method 
to recognize postemployment benefits such as disability-related 
benefits.  The cumulative effect at January 1, 1993 of adopting FAS 
112 was $43.7 million.

12.	Profit Sharing

	In exchange for temporary wage and salary reductions and other 
concessions during a twelve month period in 1992 and 1993, 
including certain ongoing work rule and medical benefits conces-
sions and the freeze of the defined benefit plan for non-contract 
employees, certain USAir employees participate in a profit sharing 
program and have been granted options to purchase USAir Group 
common stock.  The profit sharing program is designed to recompense 
those USAir employees whose pay had been reduced in an amount equal 
to (i) two times salary forgone plus (ii) one time salary forgone 
(subject to a minimum of $1,000) for the freeze of the pension 
plans for non-contract employees. Until the maximum payout has been 
made, annual pre-tax profits, as defined in the program, of USAir 
Group will be distributed to participating employees as follows: 
25% of the first $100 million in pre-tax profits; 35% of the next 
$100 million in pre-tax profits; and 40% of the pre-tax profits 
exceeding $200 million.

	The calculation of pre-tax profits under the profit sharing 
plan excludes FAS 106 charges (approximately $78.6 million for 
1995) and certain unusual items.  This program will be in effect 
until affected employees are recompensed for salary and pension 
benefits foregone.  Because USAir Group recorded a pre-tax profit 
for 1995, USAir recognized charges of approximately $49.7 million 
under this plan in 1995 (certain amounts have been expensed in 
prior years even though 1995 was USAir's first profitable year 
since inception of the plan).  Under the terms of the plan, the 
cash payout for 1995 of approximately $73.7 million was made to 
employees covered by the provision of this plan in the first 
quarter of 1996.


                                 120
<PAGE>
	USAir's ESOP and Defined Contribution Retirement Program each 
have profit sharing components.  Under the ESOP, each eligible 
USAir employee receives a certain number of USAir Group Common 
Stock shares based on each participant's compensation relative to 
the total compensation of all participants and the number of USAir 
Group Common Stock shares in the allocation pool.  When USAir's 
return on sales equals or exceeds certain prescribed levels, USAir 
increases its contribution, which effectively increases the number 
of USAir Group Common Stock shares in the allocation pool (see Note 
10. - Employee Stock Ownership Plan).  Under the Defined Contribu-
tion Retirement Program, USAir makes additional contributions to a 
participant's account when USAir Group achieves certain prescribed 
pre-tax margin levels (see Note 11. - Employee Benefit Plans). 
USAir did not make any profit sharing contributions in connection 
with the profit sharing components of the ESOP or the Defined 
Contribution Retirement Program in 1995, 1994 or 1993.

13.	Related Party Transactions

	USAir wet leases 767-200ER aircraft, including cockpit and 
cabin crews, to BA in order to serve three routes between the U.S. 
and London.  The wet lease arrangements are scheduled to end by May 
31, 1996 (the first of the three wet lease arrangements ended in 
December 1995 and a second arrangement ended in February 1996). 
USAir recognized other operating revenues of approximately $63.6 
million, $60.7 million and $17.1 million for the years 1995, 1994, 
and 1993, respectively, related to the wet lease arrangements. 
These revenues were offset by an equal amount of other operating 
expense.  

	USAir also has various agreements with BA for ground handling 
at certain airports, contract training and other services.  USAir 
recognized other operating revenues of approximately $4.9 million, 
$6.4 million and $2.4 million for the years 1995, 1994 and 1993, 
respectively, related to the services USAir performed for BA.

	USAir's current receivables from and payables to BA were 
approximately $11.5 million and $5.3 million, respectively, at 
December 31, 1995 and $11.0 million and $4.5 million, respectively, 
at December 31, 1994.

	USAir also had a long-term receivable from BA related to two 
U.S. to London routes that USAir relinquished at the time of 
implementation of a code sharing arrangement with BA.  The balance 
of the receivable was approximately $45.4 million and $47.0 million 
at December 31, 1995 and 1994, respectively.  Payments began in 
December 1995 in conjunction with the termination of the first wet 
lease arrangement and continue annually for nine years.  

	See also Note 7. - British Airways plc Investment and Note 8. 
- Redeemable Preferred Stock and Deferral of Dividends.


                                 121
<PAGE> 
14.	Selected Quarterly Financial Data (Unaudited)

	The following table presents selected quarterly financial data 
for 1995 and 1994:
                             First    Second     Third    Fourth
                            Quarter   Quarter   Quarter   Quarter
                            -------   -------   -------   -------

                           (in millions except per share amounts)

1995
Operating revenues          $1,763    $1,983    $1,873    $1,855
Operating income (loss)     $  (42)   $  163    $   93    $  108
Net income (loss)           $  (97)   $  113    $   43    $   60 
                             =====     =====     =====     =====
Net income (loss)
  applicable to
  common stockholders       $ (117)   $   92    $   22    $   38 
Income (loss) per common
  share
    Primary                 $(1.91)   $ 1.47    $  .35    $  .61 
    Fully Diluted           $(1.91)   $ 1.11    $  .35    $  .54

1994
Operating revenues          $1,686    $1,880    $1,751    $1,681
Operating income (loss)     $ (140)   $   74    $ (155)   $ (270)
Net income (loss)           $ (197)   $   14    $ (180)   $ (322)
                             =====     =====     =====     =====
Net income (loss)
  applicable to
  common stockholders       $ (216)   $   (6)   $ (200)   $ (342)
Income (loss) per common
  share                     $(3.64)   $ (.09)   $(3.32)   $(5.63)

See Note 16. - Non-Recurring and Unusual Items.

Note:
	Fully Diluted Income (loss) per common share is not presented 
for any period in 1994 because the calculations were antidilu-
tive in each of those periods.

	The sum of the four quarters may not equal yearly totals due 
to rounding of quarterly results.










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                                 122
<PAGE>
15.	Supplemental Balance Sheet Information

	The components of certain accounts in the accompanying balance 
sheets are as follows:
                                                 December 31,
                                              -----------------
                                              1995         1994
                                              ----         ----
                                                (in thousands)
(a)  Cash and cash equivalents:
       Cash                                 $ 13,539     $ 17,559
       Cash equivalents, at cost which
         approximates market                 868,315      411,979
                                             -------      -------
                                            $881,854     $429,538
                                             =======      =======
(b)  Receivables, net:
       Accounts receivable                  $334,462     $334,010
       Less allowance for doubtful
         accounts                             12,340        9,471
                                            --------     --------
                                            $322,122     $324,539
                                             =======      =======
(c)  Materials and supplies, net:
       Materials and supplies               $412,230     $431,455
       Less allowance for obsolescence       164,086      172,791
                                             -------      -------
                                            $248,144     $258,664
                                             =======      =======
(d)  Accrued expenses:
       Salaries and wages                 $  345,710   $  262,326
       Rents                                 495,611      494,202
       All other                             630,154      573,925
                                           ---------    ---------
                                          $1,471,475   $1,330,453
                                           =========    =========
Note: 
	Certain 1994 amounts have been reclassified to conform with 
1995 classifications.

16.	Non-Recurring and Unusual Items

	(a)  1995

	In the fourth quarter of 1995, USAir reversed $4.1 million of 
the $132.8 million non-recurring charge related to its grounded 
BAe-146 fleet that was recorded in the fourth quarter of 1994 (see 
Note 16.(b) below).  The reversal reflects the successful re-
marketing by USAir of three of these aircraft.  USAir will reverse 
additional amounts related to the 1994 non-recurring charge in 
future periods dependent upon its success and the terms at which 
the remaining 15 grounded BAe-146 aircraft are subleased or 
otherwise disposed.


                                 123
<PAGE>
	(b)  1994

	The Company's results for 1994 include (i) a $132.8 million 
charge related to USAir's grounded BAe-146 fleet, recorded in the 
fourth quarter of 1994; (ii) a $54.0 million charge for obsolete 
inventory and rotables to reflect market value, recorded in the 
fourth quarter of 1994; (iii) a $50 million addition to Passenger 
Transportation revenue in the fourth quarter of 1994 to adjust 
estimates made during the first three quarters of 1994; (iv) a 
$40.1 million charge primarily related to USAir's decision to cease 
operations of its remaining Boeing 727-200 aircraft in 1995, 
recorded in the third quarter of 1994; (v) a $25.9 million charge 
related to USAir's decision to substantially reduce service between 
Los Angeles and San Francisco and close its San Francisco crew 
base, recorded in the third quarter of 1994; (vi) a $28.3 million 
gain resulting from the sale of certain aircraft and assets to Mesa 
Air Group, Inc. (formerly Mesa Airlines, Inc.) ("Mesa") and the 
accounting treatment of the hull insurance recovery on the aircraft 
lost in the September accident, recorded in the third quarter of 
1994; and (vii) a $1.7 million charge related to the sale of assets 
to Mesa, recorded in the third quarter of 1994.

	(c)  1993

	The Company's results for 1993 include non-recurring charges 
of (i) $43.7 million for the cumulative effect of an accounting 
change, as required by FAS 112 which was adopted during the third 
quarter of 1993, retroactive to January 1, 1993; (ii) $68.8 million 
for severance, early retirement and other personnel-related 
expenses recorded primarily during the third quarter of 1993 in 
connection with a workforce reduction of approximately 2,500 full-
time positions between November 1993 and the first quarter of 1994; 
(iii) $36.8 million based on a projection of the repayment of 
certain employee pay reductions, recorded in the fourth quarter of 
1993; (iv) $13.5 million for certain airport facilities at 
locations where USAir has, among other things, discontinued or 
reduced its service, recorded in the fourth quarter of 1993; (v) 
$8.8 million for a loss on USAir's investment in the Galileo 
International Partnership which operates a computerized reserva-
tions system, recorded in the fourth quarter of 1993; and (vi) 
$18.4 million credit related to non-operating aircraft recorded in 
the second quarter of 1993.







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                                 124
<PAGE>
Item 8B.	Financial Statements and Supplementary Information
		USAir, Inc.




                  Independent Auditors' Report



The Stockholder and Board of Directors
USAir, Inc.:

We have audited the consolidated balance sheets of USAir, Inc. and 
subsidiary ("USAir") as of December 31, 1995 and 1994, and the 
related consolidated statements of operations, cash flows, and 
changes in stockholder's equity (deficit) for each of the years in 
the three-year period ended December 31, 1995.  These consolidated 
financial statements are the responsibility of USAir's management. 
Our responsibility is to express an opinion on these consolidated 
financial statements based on our audits.

We conducted our audits in accordance with generally accepted 
auditing standards.  Those standards require that we plan and 
perform the audit to obtain reasonable assurance about whether the 
financial statements are free of material misstatement.  An audit 
includes examining, on a test basis, evidence supporting the 
amounts and disclosures in the financial statements.  An audit also 
includes assessing the accounting principles used and significant 
estimates made by management, as well as evaluating the overall 
financial statement presentation.  We believe that our audits 
provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to 
above present fairly, in all material respects, the financial 
position of USAir, Inc. and subsidiary as of December 31, 1995 and 
1994, and the results of their operations and their cash flows for 
the three-year period ended December 31, 1995 in conformity with 
generally accepted accounting principles.

As discussed in Note 9 to the consolidated financial statements, 
effective January 1, 1993, USAir changed its method of accounting 
for postemployment benefits.



                                            KPMG Peat Marwick LLP

Washington, D. C.
February 28, 1996


                                 125
<PAGE>

<TABLE>
USAir, Inc.
Consolidated Statements of Operations
Years Ended December 31,                                                              (in thousands)
====================================================================================================
<CAPTION>

                                                          1995             1994             1993
                                                          ----             ----             ----
<S>                                                    <C>              <C>             <C>
Operating Revenues
  Passenger transportation                             $6,267,762       $5,922,223      $ 6,081,788
  Cargo and freight                                       153,651          160,364          170,500
  Other                                                   563,463          496,006          370,760
                                                        ---------        ---------       ----------
    Total operating revenues                            6,984,876        6,578,593        6,623,048

Operating Expenses
  Personnel costs                                       2,751,437        2,753,269        2,698,039
  Aviation fuel                                           605,027          642,305          677,859
  Commissions                                             527,058          549,192          559,793
  Aircraft rent                                           398,063          521,395          431,616
  Other rent and landing fees                             388,866          422,190          431,591
  Aircraft maintenance                                    295,594          335,791          308,890
  Depreciation and amortization                           337,066          387,211          325,214
  Other, net                                            1,447,114        1,484,212        1,339,152
                                                        ---------        ---------       ----------
    Total operating expenses                            6,750,225        7,095,565        6,772,154
                                                        ---------        ---------       ----------
    Operating income (loss)                               234,651         (516,972)        (149,106)

Other Income (Expense)
  Interest income                                          51,122           28,044           24,794
  Interest expense                                       (301,923)        (285,846)        (238,628)
  Interest capitalized                                      8,781           13,760           17,754
  Other, net                                               44,767           44,831          (29,862)
                                                        ---------        ---------       ---------- 
    Other income (expense), net                          (197,253)        (199,211)        (225,942)
                                                        ---------        ---------       ---------- 
Income (loss) before taxes and cumulative
   effect of accounting changes                            37,398         (716,183)        (375,048)

Income tax provision (credit)                               4,408                -                -
                                                         ---------        ---------       ----------
Income (loss) before cumulative effect
   of accounting changes                                   32,990         (716,183)        (375,048)

Cumulative effect of change in method of
  accounting for postemployment benefits
  in 1993                                                       -                -          (43,749)
                                                        ---------        ---------        ----------
    Net income (loss)                                  $   32,990       $ (716,183)      $ (418,797)
                                                        =========        =========       ==========

See accompanying Notes to consolidated financial statements.


                                 126
<PAGE>
USAir, Inc.
Consolidated Balance Sheets
December 31,                                          (dollars in thousands except per share amount)
====================================================================================================
<CAPTION>
                                                                       1995                 1994
                                                                       ----                 ----
                  ASSETS
<S>                                                                 <C>                 <C>
Current Assets 
  Cash and cash equivalents                                         $  879,613          $   428,925
  Short-term investments                                                19,831               22,133
  Receivables, net                                                     321,755              326,012
  Materials and supplies, net                                          222,245              238,481
  Prepaid expenses and other                                            97,922               77,111
                                                                     ---------           ----------
    Total current assets                                             1,541,366            1,092,662
Property and Equipment
  Flight equipment                                                   5,021,520            4,914,776
  Ground property and equipment                                      1,052,706            1,040,329
  Less accumulated depreciation and amortization                    (2,222,814)          (2,006,041)
                                                                     ---------            ---------
                                                                     3,851,412            3,949,064
    Purchase deposits                                                   17,026              195,701
                                                                     ---------            ---------
    Property and equipment, net                                      3,868,438            4,144,765
Other Assets
  Goodwill, net                                                        510,562              526,615
  Other intangibles, net                                               312,539              319,229
  Other assets, net                                                    590,622              592,689
                                                                     ---------            ---------
    Total other assets                                               1,413,723            1,438,533
                                                                     ---------            ---------
                                                                    $6,823,527           $6,675,960
                                                                     =========            =========
        LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current Liabilities
  Current maturities of long-term debt                              $   77,496           $   80,714
  Accounts payable                                                     325,079              263,243
  Payable to parent company                                            100,344               85,175
  Traffic balances payable and unused tickets                          638,019              591,154
  Accrued expenses                                                   1,435,194            1,297,574
                                                                     ---------            ---------
    Total current liabilities                                        2,576,132            2,317,860
Long-Term Debt, Net of Current Maturities
  Long-term debt                                                     2,674,376            2,849,488
  Note payable - parent company                                         67,556                    -
                                                                     ---------            ---------
    Total long-term debt, net of current maturities                  2,741,932            2,849,488
Deferred Credits and Other Liabilities
  Deferred gains, net                                                  382,995              409,091
  Postretirement benefits other than pensions, non-current           1,015,373              958,706
  Non-current employee benefit liabilities and other                   418,268              414,000
                                                                     ---------            ---------
    Total deferred credits and other liabilities                     1,816,636            1,781,797
                                                                       
Stockholder's Equity (Deficit)
Common stock, par value $1 per share, authorized
    1,000 shares, issued and outstanding 1,000 shares                        1                    1
  Paid-in capital                                                    2,416,131            2,416,131
  Retained earnings (deficit)                                       (2,649,310)          (2,682,300)
  Adjustment for minimum pension liability                             (77,995)              (7,017)
                                                                     ---------            ---------
    Total stockholder's equity (deficit)                              (311,173)            (273,185)
                                                                     ---------            ---------
                                                                    $6,823,527           $6,675,960
                                                                     =========            =========
See accompanying Notes to consolidated financial statements.


                                 127
<PAGE>
USAir, Inc.
Consolidated Statements of Cash Flows
Years Ended December 31,                                                             (in thousands)
===================================================================================================
<CAPTION>
                                                                 1995         1994           1993
                                                                 ----         ----           ----
<S>                                                           <C>            <C>          <C>
Cash and cash equivalents beginning of year                   $ 428,925      $ 367,835    $ 295,432
Cash flows from operating activities
  Net income (loss)                                              32,990       (716,183)    (418,797)
  Adjustments to reconcile net income (loss) to cash
  provided by (used for) operating activities
    Depreciation and amortization                               337,066        387,211      325,214
    Loss (gain) on disposition of property                      (16,654)       (16,671)      10,405
    Amortization of deferred gains and credits                  (26,411)       (26,382)     (26,439)
    Other                                                        (2,787)        (8,080)      26,052
    Changes in certain assets and liabilities 
      Decrease (increase) in receivables                          4,257        127,902      (59,916)
      Decrease (increase) in materials, supplies,
       prepaid expenses and intangible pension assets           (68,415)        70,750       32,069
      Increase (decrease) in traffic balances payable
       and unused tickets                                        46,865        (68,452)      37,178
      Increase (decrease) in accounts payable and
       accrued expenses                                         214,707        326,855       80,838
      Increase (decrease) in postretirement benefits
       other than pensions, non-current                          56,667         51,613       65,833
                                                               --------       --------     --------
       Net cash provided by (used for) operating activities     578,285        128,563       72,437
Cash flows from investing activities
  Aircraft acquisitions and purchase deposits, net              (61,689)       (46,022)    (125,981)
  Additions to other property                                   (80,644)      (128,874)    (150,793)
  Proceeds from disposition of property                         219,762         55,540      176,019
  Change in short-term investments                                2,430        (21,994)           -
  Change in restricted cash and investments                      71,980          2,578      (14,221)
  Other                                                          (1,134)         1,110       (4,378)
                                                               --------        --------     --------
       Net cash provided by (used for) investing
          activities                                            150,705       (137,662)    (119,354)
Cash flows from financing activities
  Issuance of debt                                                    -        172,156      329,556
  Reduction of debt                                            (278,302)      (101,967)    (210,236)
                                                               --------       --------     --------
       Net cash provided by (used for) financing
          activities                                           (278,302)        70,189      119,320
                                                               --------       --------     --------
Net increase (decrease) in cash and cash equivalents            450,688         61,090       72,403
                                                               --------       --------     --------
Cash and cash equivalents end of year                         $ 879,613      $ 428,925    $ 367,835
                                                               ========       ========     ========
Noncash investing and financing activities
  Issuance of debt for aircraft acquisitions, net             $ 169,725      $ 224,614    $ 343,188
  Issuance of parent company debt for aircraft acquisitions   $  68,640      $       -    $  76,094
  Issuance of debt for other property acquisitions            $       -      $       -    $     669
  Reduction of debt-aircraft purchase deposits                $  70,837      $       -    $       -
  Reduction of debt-aircraft related                          $       -      $       -    $  47,685
  Reduction of parent company debt applied to inter-
    company receivable                                        $       -      $       -    $  79,539
  Aircraft acquisitions-transfer from affiliated company      $       -      $   3,569    $  70,700
  Other property acquisitions-transfer from affiliated                                             
    company                                                   $       -      $   7,925    $       -
  Aircraft dispositions - transfer to affiliated company      $       -      $  81,913    $       -

Supplemental Information
  Cash paid during the year for interest, net of amounts
    capitalized                                               $ 290,560      $ 254,199    $ 221,811
                                                               ========       ========     ========
  Cash received during the year for income tax refunds,
    net of taxes paid                                         $  (6,329)     $       -    $       -
                                                               ========       ========     ========
See accompanying Notes to consolidated financial statements.


                                 128
<PAGE>
USAir, Inc.
Consolidated Statements of Changes in Stockholder's Equity (Deficit)
Three Years Ended December 31, 1995                                                   (in thousands)
====================================================================================================
<CAPTION>
                                                                          Adjustment
                                                                             For
                                                           Retained        Minimum
                               Common      Paid-In         Earnings        Pension
                                Stock       Capital        (Deficit)      Liability         Total
                               ------      --------        ---------     ----------        -------
<S>                            <C>        <C>            <C>              <C>            <C>
Balance December 31, 1992      $   1      $2,416,131     $(1,547,320)     $ (6,820)      $ 861,992

Net income (loss)                  -               -        (418,797)            -        (418,797)

Adjustment for minimum
  pension liability                -               -               -       (35,144)        (35,144)
                                 ---       ---------      ----------       -------         -------

Balance December 31, 1993          1       2,416,131      (1,966,117)      (41,964)        408,051

Net income (loss)                  -               -        (716,183)            -        (716,183)

Adjustment for minimum
  pension liability                -               -               -        34,947          34,947
                                 ---       ---------      ----------       -------         -------

Balance December 31, 1994          1       2,416,131      (2,682,300)       (7,017)       (273,185)

Net income (loss)                  -               -          32,990             -          32,990

Adjustment for minimum
  pension liability                -               -               -       (70,978)        (70,978)
                                 ---       ---------      ----------       -------         -------

Balance December 31, 1995       $  1      $2,416,131     $(2,649,310)     $(77,995)      $(311,173)
                                 ===       =========       =========        ======         =======








See accompanying Notes to consolidated financial statements.

</TABLE>
                                 129
<PAGE>
                           USAir, Inc.
           Notes to Consolidated Financial Statements





1.	Summary of Significant Accounting Policies

	(a)  Basis of Presentation and Nature of Operations

	The accompanying consolidated financial statements include the 
accounts of USAir, Inc. ("USAir") and its wholly-owned subsidiary 
USAM Corp. ("USAM").  USAir is a wholly-owned subsidiary of USAir 
Group, Inc. ("USAir Group" or the "Company").  All significant 
intercompany accounts and transactions have been eliminated.

	USAir is a major United States air carrier whose primary 
business is transporting passengers, property and mail.  USAir 
operates predominantly in the eastern United States with primary 
hubs at the major airports in Pittsburgh, Pennsylvania, Charlotte, 
North Carolina, Philadelphia, Pennsylvania and at Baltimore/-
Washington International Airport.  USAir also maintains significant 
operations at the major airports in Boston, Massachusetts, New 
York, New York and Washington, D.C.  USAir enplaned more than 57 
million passengers during 1995 and is currently the fifth largest 
domestic air carrier, as measured by revenue passenger miles 
("RPMs").

	In the fourth quarter of 1995, USAir and a subsidiary of 
British Airways plc ("BA") formed Airline Technical Services, LLC 
("ATS"), a Delaware limited liability company, offering joint 
aviation maintenance, and technical and engineering expertise in 
the Americas.  ATS will receive a commission on the contracts it 
brokers for USAir and BA.  USAir accounts for ATS using the equity 
method because it is owned equally by each parent company.  No 
material activity occurred in 1995.
	
	At December 31, 1992, USAM owned 11% of the Covia Partnership 
("Covia") which owned and operated a computerized reservation 
system ("CRS").  In September 1993, Covia purchased the assets of 
the corporation that owned and operated the Galileo CRS which 
provided services to travel agent subscribers in Europe.  Covia was 
immediately separated into three new entities and, as a result, 
USAM owns 11% of the Galileo International Partnership which owns 
and operates the Galileo CRS, approximately 11% of the Galileo 
Japan Partnership which markets the Galileo CRS in Japan and 
approximately 21% of the Apollo Travel Services Partnership which 
markets the Galileo CRS in the U.S. and Mexico.  USAM accounts for 
these investments using the equity method because it is represented 
on the board of directors of each of the partnerships and therefore 
participates in policy making processes.


                                 130
<PAGE>
	The preparation of financial statements in conformity with 
generally accepted accounting principles requires management to 
make estimates and assumptions that affect the reported amounts of 
assets and liabilities and disclosure of contingent assets and 
liabilities at the date of the financial statements and the 
reported amounts of revenues and expenses during the reporting 
period.  Actual results could differ from those estimates.

	Certain 1994 and 1993 amounts have been reclassified to 
conform with 1995 classifications.

	(b)  Cash and Cash Equivalents and Short-Term Investments

	For financial statement purposes, USAir considers all highly 
liquid investments purchased within three months of maturity to be 
cash equivalents.  Cash and cash equivalents are stated at cost, 
which approximates market value.  Short-term investments consist of 
certificates of deposit and commercial paper purchased with 
maturities greater than three months but less than one year. Short-
term investments are stated at cost plus accrued interest, which 
approximates market value.  

	(c)  Materials and Supplies

	Inventories of materials and supplies are valued at average 
cost and are charged to operations as consumed.  An allowance for 
obsolescence is provided for flight equipment expendable and 
repairable parts. 

	(d)  Property and Equipment
	
	Property and equipment is stated at cost or, if acquired under 
capital leases, at the lower of the present value of minimum lease 
payments or fair market value at the inception of the lease. 
Maintenance and repairs, including the overhaul of aircraft 
components, are charged to operating expense as incurred and costs 
of major improvements are capitalized for both owned and leased 
assets. Interest related to deposits on aircraft purchase contracts 
and facility and equipment construction projects is capitalized as 
additional cost of the asset or as leasehold improvement if the 
asset is leased.  Depreciation and amortization for principal asset 
classifications is provided on a straight-line basis to estimated 
residual values over estimated depreciable lives. USAir 
periodically reviews estimated depreciable lives and residual 
values for reasonableness and revises its estimates, if necessary.



           

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                                 131
<PAGE>
                                    Depreciable
         Assets                        Lives      Residual Values
         ------                     -----------   ---------------
                                      (years)      (in millions)
Aircraft
  Boeing 767-200ER                      20             $14.0
  Boeing 757-200                        20               8.0
  Boeing 737-300/400                    20               7.5
  Boeing 737-200                       5-17            0.6-5.0
  McDonnell Douglas MD-80               20               7.5
  Douglas DC-9-30                       17               3.0
  Fokker 100                            20               5.0
  Fokker F28-4000                        8               2.0
  Fokker F28-1000                        6               1.0
  Turboprop aircraft                    15               1.5
  Improvements to leased aircraft  life of lease           -

Ground property, equipment and        1-10 or
  leasehold improvements           life of lease           -
 
Buildings                               30                 -

	Property acquired under capital lease is amortized on a 
straight-line basis over the term of the lease and charged to 
Depreciation and Amortization Expense.  When property and equipment 
is sold or retired, the cost and accumulated depreciation is 
removed from the accounts and any gain or loss recognized as Other 
Income (Expense).

	(e)  Goodwill and Other Intangibles 

	Goodwill, the cost in excess of fair value of identified net 
assets acquired, is being amortized on a straight-line basis over 
40 years.  The $629 million goodwill resulting from the acquisition 
of Pacific Southwest Airlines ("Pacific Southwest") and Piedmont 
Aviation, Inc. ("Piedmont Aviation"), both in 1987, is being 
amortized as Depreciation and Amortization Expense.  Accumulated 
amortization at December 31, 1995 and 1994 related to the Pacific 
Southwest and Piedmont Aviation acquisitions was $128 million and 
$113 million, respectively.  The $11 million goodwill resulting 
from USAM's CRS investments is being amortized as other non-
operating expense, consistent with the classification of income or 
loss on the investments.  USAM's related accumulated amortization 
at December 31, 1995 and 1994 was approximately $2 million.  USAir 
evaluates whether or not goodwill is impaired by comparing the 
goodwill balances with estimated future undiscounted cash flows 
which, in USAir's judgment, are attributable to the goodwill.  This 
analysis is performed separately for the goodwill which resulted 
from each acquisition.

	Intangible assets consist mainly of purchased operating rights 
at various airports, purchased route authorities, capitalized 
software costs and the intangible assets associated with the 
underfunded amounts of certain pension plans.  The operating


                                 132
<PAGE>
 rights, valued at purchase cost or appraised value if acquired 
from Pacific Southwest or Piedmont Aviation, are being amortized 
over periods ranging from ten to 25 years as Depreciation and 
Amortization Expense.  The purchased route authorities are being 
amortized over 25 years as Depreciation and Amortization Expense.  
Capitalized software costs are being amortized as Depreciation and 
Amortization Expense over five years, the expected period of 
benefit.  Accumulated amortization related to intangible assets at 
December 31, 1995 and 1994 was $104 million and $80 million, 
respectively.

	Based on the most recent analyses, USAir believes that 
goodwill and other intangible assets were not impaired at Decem-
ber 31, 1995.

	(f)  Other Assets, net

	Other Assets, net consists primarily of non-current pension 
assets, the unamortized balance of deferred compensation, restrict-
ed cash and investments and a long-term receivable from BA. 
Deferred compensation resulted mainly from USAir's establishment of 
an Employee Stock Ownership Plan in 1989 (see Note 8.).  Restricted 
cash and investments are deposits in trust accounts to collateral-
ize letters of credit and workers' compensation policies and the 
long-term receivable from BA resulted from the relinquishment by 
USAir of two U.S. to London routes.  

	In November 1995, USAir entered into a five-year transaction 
with a third party pursuant to which USAir agreed to pledge to such 
third party from time to time certain flight equipment and 
simulators as collateral for up to $70 million aggregate principal 
amount of letters of credit to be issued by the third party with 
respect to certain workers' compensation obligations of USAir.  On 
December 15, 1995, USAir pledged ten aircraft to the third party, 
resulting in the release of $67.2 million in cash and securities 
that had been previously pledged by USAir to letter of credit 
providers.  

	(g)  Deferred Gains on Sale and Leaseback Transactions

	Gains on aircraft sale and leaseback transactions are deferred 
and amortized over the term of the leases as a reduction of rental 
expense.

	(h)  Passenger Revenue Recognition

	Passenger ticket sales are recognized as revenue when the 
transportation service is rendered or the ticket otherwise expires. 
At the time of sale, a liability is established (Traffic Balances 
Payable and Unused Tickets) and subsequently eliminated either 
through carriage of the passenger, through billing from another 
carrier which renders the service or by refund to the passenger. 
Approximately $31 million and $23 million of amounts owed to 
wholly-owned subsidiaries of USAir Group for passenger transporta


                                 133
<PAGE>
tion revenue are included in Traffic Balances Payable and Unused 
Tickets at December 31, 1995 and 1994, respectively.

	(i)  Frequent Traveler Awards

	USAir accrues the estimated incremental cost of providing 
outstanding travel awards earned by participants in its Frequent 
Traveler Program ("FTP") when participants accumulate sufficient 
miles to be entitled to claim award certificates for travel.

	(j)  Investment Tax Credit 

	Investment tax credit benefits have been recorded using the 
"flow-through" method as a reduction of the Federal income tax 
provision.

	(k)  Advertising Costs

	Advertising costs are expensed when incurred as other 
operating expense.  Advertising expense for 1995, 1994 and 1993 was 
$67 million, $63 million and $59 million, respectively.

2.	Financial Instruments

	(a)  Terms of Certain Financial Instruments

	USAir has entered into hedging arrangements designed to reduce 
its exposure to fluctuations in the price of jet fuel.  Net 
settlements are recorded as adjustments to Aviation Fuel expense. 
The total notional number of gallons under these agreements was 38 
million and 86 million at December 31, 1995 and 1994, respectively. 
Under these arrangements, USAir will pay $0.499 to $0.548 per 
notional gallon in 1996 and receive a floating rate per notional 
gallon based on current market prices.  In 1995 USAir paid $0.496 
to $0.521 per notional gallon and received a floating rate per 
notional gallon based on current market prices.  Decreases in the 
market price of fuel to levels below the fixed prices require cash 
payments by USAir and cause an increase in USAir's Aviation Fuel 
expense.  The hedging arrangements represented approximately 8% of 
USAir's actual 1995 fuel consumption.  USAir is party to such 
hedging arrangements with several entities.  Although the agree-
ments, which expire in 1996, expose USAir to credit loss in the 
event of non-performance by the other parties to the agreements, 
USAir does not anticipate such non-performance because of the 
favorable creditworthiness status of the other parties.  USAir may 
continue to enter into such arrangements, depending on market 
conditions.

	An aggregate of $32 million of future principal payments of 
the Equipment Financing Agreements due 1998 through 2000 are 
payable in Japanese Yen.  This foreign currency exposure has been 
hedged to maturity by participation in foreign currency contracts. 
Net settlements will be recorded as adjustments to interest 
expense. Although USAir is exposed to credit loss in the event of


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 non-performance by the counterparty to the contracts, USAir does 
not anticipate such non-performance because of the favorable 
creditworthiness status of the other party.

	(b)  Fair Value of Financial Instruments

	Unless a quoted market price indicates otherwise, the fair 
values of cash and cash equivalents, short-term investments and 
other investments generally approximates carrying values because of 
the short maturity of these instruments.  USAir has estimated the 
fair value of long-term debt based on quoted market prices for the 
same or similar issues or on the current rates offered to the 
Company for debt of similar remaining maturities.  The fair values 
of energy swap agreements and foreign currency contracts are 
obtained from dealer quotes whereby these values represent the 
estimated amount USAir would receive or pay to terminate such 
agreements.

	The estimated fair values of USAir's financial instruments, 
none of which are held for trading purposes, are summarized as 
follows (brackets denote a liability):

                                    December 31,
                     -------------------------------------------
                             1995                  1994
                     --------------------   --------------------
                    Carrying   Estimated   Carrying   Estimated
                     Amount    Fair Value   Amount    Fair Value
                    --------   ----------  --------   ----------
                                    (in thousands)
Cash and cash
  equivalents     $  879,613  $  879,613  $  428,925  $  428,925
Short-term
  investments         19,831      19,822      22,133      22,078
Restricted cash
  and investments*    98,742      98,539     170,686     170,581
Long-term note
  receivable*         45,433      33,277      47,000      31,537
Other long-term
  investments*         4,607       4,008       1,633       1,144
Long-term debt
  (excludes
  capital lease
  obligations)    (2,753,932) (2,564,514) (2,847,878) (2,435,786)
Energy swap agree-
ments:
  In a net receiv-
  able position            -       1,845           -         259
Foreign currency
contracts:
  In a net receiv-
  able position            -       4,050           -       5,352
*  Amounts are included in Other Assets on USAir's consolidated  
balance sheets.


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<PAGE>
3.  Long-Term Debt

	Details of long-term debt are as follows:

                                                December 31,
                                          ----------------------
                                             1995         1994
                                             ----         ----
                                               (in thousands)
Senior Debt:
  12 7/8% Senior Debentures due 2000      $        -   $   77,000
  10% Senior Notes due 2003                  300,000      300,000
  9 5/8% Senior Notes due 2001               175,000      175,000
  12.15% to 15.23% U.S. Government
    Guaranteed Obligations                         -        3,090
  5.7% to 12% Equipment Financing
    Agreements, Installments due
    1996 to 2016                           2,180,430    2,090,064

  8.4% Intercompany Aircraft Loan with
    USAir Group due 1996 to 2014              68,640            -
  8.6% Airport Facility Revenue Bond
    due 2022                                  27,620       27,620
  4.0% to 7.1% Aircraft Purchase 
    Deposit Financing                              -      172,301
  Other                                        2,242        2,803
                                           ---------    ---------
                                           2,753,932    2,847,878
Capital Lease Obligations                     65,496       82,324
                                           ---------    ---------
   Total                                   2,819,428    2,930,202
Less Current Maturities                       77,496       80,714
                                           ---------    ---------
                                          $2,741,932   $2,849,488
                                           =========    =========

	Maturities of long-term debt and debt under capital leases for 
the next five years are as follows:
                                     (in thousands)

                    1996               $   77,496
                    1997                   88,637
                    1998                  157,287
                    1999                   80,732
                    2000                  125,820
                    Thereafter          2,289,456

	Interest rates on $492 million principal amount of long-term 
debt at December 31, 1995 are subject to adjustment to reflect 
prime rate and other rate changes.

	Equipment financings totaling $2.3 billion were collateralized 
by aircraft and engines with a net book value of approximately $2.4


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<PAGE>
 billion at December 31, 1995.  

	In February 1996, USAir sold $263 million principal amount of 
Enhanced Equipment Notes ("Enhanced Notes") through a private 
placement offering under Securities and Exchange Commission 
Regulation 144A.  The Enhanced Notes are secured by nine 757-200 
aircraft.  The Enhanced Notes are not reflected in the above table 
because they were sold after December 31, 1995.

4.	Commitments and Contingencies  

	(a)  Operating Environment 

	USAir's financial results for 1995 represent a significant 
improvement over 1994 results.  The improvement is mainly attribut-
able to a stable domestic economic climate, favorable capacity 
trends in USAir's markets, less fare discounting and low fare 
competition and the positive influence of USAir's cost-reduction 
efforts.  However, USAir's financial condition, results of 
operations and future prospects are more susceptible to an economic 
downturn and competitive influences than most of its major 
competitors due to USAir's high cost structure amid the low cost, 
low fare environment which characterizes the domestic airline 
industry.  

	Most of USAir's operations are in competitive markets, 
predominately in the Eastern United States.  In recent years, air 
carriers with low costs of operations and fare structures have 
initiated and or expanded into markets served by USAir.  In 
addition, several of the larger, mature air carriers have developed 
or indicated their intention to develop similar low cost, low fare 
service.  In an effort to preserve market share, USAir has 
typically responded to the entry of a low cost, low fare competitor 
into its markets by matching fares and increasing the frequency of 
service in related markets, generally with the result of diluting 
USAir's yield in these markets.  USAir currently has the highest 
operating costs among the major domestic air carriers and the 
growth and expansion of low cost, low fare carriers in USAir's 
markets has put considerable pressure on USAir to reduce operating 
costs in order to maintain competitiveness.  

	USAir was able to significantly reduce certain non-labor 
related operating costs during 1995 through re-engineering efforts, 
structural changes and reducing or eliminating capacity in 
unprofitable markets, however, USAir has not been successful to 
date in achieving meaningful reductions in personnel costs.  USAir 
believes that its long-term future depends on its success in 
further reducing its cost of operations, including personnel costs. 

	At December 31, 1995, USAir employed approximately 39,900 
full-time equivalent employees. Approximately 65% of USAir's 
workforce is covered by collective bargaining agreements with 
various unions, or will be covered by collective bargaining 
agreements for which initial negotiations are in progress. USAir's


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<PAGE>
 contract with the International Association of Machinists and 
Aerospace Workers ("IAM"), which represents USAir's machinists 
group, is currently open for negotiation and USAir and the IAM have 
commenced the collective bargaining process.  USAir's contract with 
the unions which represent its pilot's and flight attendant's 
groups become open for negotiations within the next year.  USAir 
cannot predict the ultimate outcome of its negotiations with the 
IAM or if it will be successful in achieving meaningful wage and 
benefit concessions from the IAM and its other organized labor 
groups.
      
  	Although a competitive strength, the concentration of 
significant operations in the eastern U.S. leaves USAir susceptible 
to certain regional conditions that may have an adverse affect on 
the USAir's results of operations and financial condition.  For 
example, geographically isolated inclement weather and the recent 
partial Federal government shutdowns adversely effected operating 
revenues and expenses to a greater degree than some of USAir's 
competitors. 

	The nature of USAir's operations results in reliance on the 
availability of aviation fuel. The availability and price of 
aviation fuel is largely dependent on the actions of the countries 
which compose the Oil Producing and Exporting Countries ("OPEC") 
cartel.  OPEC, which currently controls a significant amount of the 
world's known crude oil reserves, can effect the availability and 
price of jet fuel through its production and price-targeting 
actions. In addition, jet fuel prices are affected by political 
events, seasonal factors and other factors that are generally 
outside of USAir's control. USAir has a diversified fuel supplier 
network and participates in fuel hedging transactions (see Note 2. 
Fair Value of Financial Instruments for additional information 
related to USAir's participation in fuel hedging contracts) in 
order to ensure fuel availability and partially protect USAir from 
temporary jet fuel price fluctuations. 

	(b)  Leases

	USAir leases certain aircraft, engines, computer and ground 
equipment, in addition to the majority of its ground facilities. 
Ground facilities include executive offices, overhaul and mainte-
nance bases and ticket and administrative offices.  Public airports 
are utilized for flight operations under lease arrangements with 
the municipalities or agencies owning or controlling such airports. 
Substantially all leases provide that the lessee shall pay taxes, 
maintenance, insurance and certain other operating expenses 
applicable to the leased property.  Some leases also include 
renewal and purchase options.

	In addition, USAir subleases certain leased aircraft and 
ground facilities under noncancelable operating leases expiring in 
various years through 2021.


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<PAGE>
	The following amounts applicable to capital leases are 
included in property and equipment:
                                                 December 31,
                                            ---------------------
                                              1995         1994
                                              ----         ----
                                                (in thousands)

Flight equipment                            $192,775     $216,600
Ground property and equipment                  4,767       10,961
                                             -------      -------
                                             197,542      227,561
Less accumulated amortization                140,212      151,217
                                             -------      -------
                                            $ 57,330     $ 76,344
                                             =======      =======

	At December 31, 1995, obligations under capital and noncancel-
able operating leases for future minimum lease payments were as 
follows:
                                          Capital      Operating
                                          Leases         Leases
                                          -------      ---------
                                              (in thousands)

1996                                      $ 21,886    $   712,087
1997                                        21,697        724,473
1998                                        10,687        689,645
1999                                        10,687        655,665
2000                                         7,586        645,943
Thereafter                                  20,094      6,621,172
                                           -------     ----------
   Total minimum lease payments             92,637     10,048,985

   Less sublease rental receipts                 -        178,901
                                                       ----------
   Total minimum operating lease
    payments                                           $9,870,084
                                                       ==========
   Less amount representing interest        27,141
                                           -------
   Present value of future minimum
    capital lease payments                  65,496
   Less current obligations under
    capital leases                          14,085
                                           -------
   Long-term obligations under
    capital leases                        $ 51,411
                                           =======

	Rental expense under operating leases for 1995, 1994 and 1993 
was $680 million, $703 million and $739 million, respectively.  The 
$680 million rental expense for 1995 excludes a credit of $4.1 
million related to the leasing of three of USAir's parked BAe-146


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<PAGE>
 aircraft, recorded in the fourth quarter of 1995.  The $703 
million rental expense for 1994 excludes charges of $103 million 
related to USAir's grounded BAe-146 fleet and $13 million primarily 
related to USAir's decision to cease operations of its remaining 
Boeing 727-200 aircraft in 1995.  See Note 14. - Non-Recurring and 
Unusual Items.

	USAir also leases certain owned aircraft under noncancelable 
operating leases which expire in various years through 2002 to both 
third and related parties, primarily subsidiaries of USAir Group. 
See Note 11. - Related Party Transactions.  The minimum future 
rentals to be received by USAir on these leases are:  $24.4 million 
- 1996; $16.1 million - 1997; $8.0 million - 1998; $6.2 million - 
1999; $5.4 million - 2000; and $6.0 million - thereafter.  The 
following amounts are applicable to aircraft leased under such 
agreements as reflected in flight equipment:

                                             December 31,
                                       -------------------------
                                         1995             1994
                                         ----             ----
                                            (in thousands)

Flight equipment                       $192,198         $152,956
Less accumulated depreciation            75,089           43,283
                                        -------          -------
                                       $117,109         $109,673
                                        =======          =======
	(c)  Legal Proceedings  

	USAir is involved in legal proceedings arising out of its two 
aircraft accidents that occurred in July and September 1994 near 
Charlotte, North Carolina and Pittsburgh, Pennsylvania, respective-
ly. The National Transportation Safety Board ("NTSB") held hearings 
beginning in September 1994 relating to the July accident and 
January 1995 relating to the September accident.  In April 1995, 
the NTSB issued its finding of probable causes with respect to the 
accident near Charlotte. It assigned as probable causes the failure 
of air traffic control to convey weather and windshear hazard 
information and flight crew errors. The NTSB has not yet issued its 
final accident investigation report for the accident near 
Pittsburgh.  The NTSB, The Boeing Company ("Boeing"), the Federal 
Aviation Administration ("FAA") and USAir jointly conducted flight 
tests in October 1995 as part of the ongoing investigation into the 
cause of this accident.  In this regard, USAir provided a 737-300 
aircraft in the collective effort to simulate the conditions at the 
time of the accident.  More public hearings were conducted in 
November 1995.  The NTSB has indicated that a determination of the 
cause of the accident is not likely until sometime in 1996. USAir 
expects that it will be at least two to three years before the 
accident litigation and related settlements will be concluded. 
USAir believes that it is fully insured with respect to this 
litigation.  Therefore, USAir believes that the litigation will not 
have a material adverse effect on USAir's financial condition or


                                 140
<PAGE>
 results of operations, although any finding of fault on USAir's 
part could create negative publicity and could tarnish USAir's 
image. 

	In 1989 and 1990, a number of U.S. air carriers, including 
USAir, received two Civil Investigative Demands ("CIDs") from the 
Department of Justice ("DOJ") related to investigations of price 
fixing in the domestic airline industry.  A CID is a request for 
information in the course of an antitrust investigation and does 
not constitute the institution of a civil or criminal action. 

	The investigations by the DOJ culminated in the filing of a 
lawsuit against Airline Tariff Publishing Company ("ATPCo") and 
eight major air carriers, including USAir, alleging that the 
defendants had agreed to fix prices in violation of Section 1 of 
the Sherman Act through the methods used to disseminate fare data 
to ATPCo, an airline-owned fare publishing service.  To avoid the 
costs associated with protracted litigation and an uncertain 
outcome, USAir and another carrier decided to settle the lawsuit by 
entering into a consent decree to modify their fare-filing 
practices in certain respects and to implement compliance programs 
that would include education of employees regarding the carrier's 
responsibilities under the consent decree. Accordingly, the consent 
decree and the U.S. government's complaint were filed contemporane-
ously in the United States District Court for the District of 
Columbia in December 1992.  On November 1, 1993, after it had 
reviewed comments filed regarding the consent decree, the court 
entered the decree.  In March 1994, the remaining six air carrier 
defendants agreed to the entry of a separate consent decree to 
settle the lawsuit.  USAir petitioned the Court to have its consent 
decree amended to conform with the other settlement and the Court 
entered an amended consent decree on September 21, 1994.  USAir has 
recently received a CID from the DOJ relating to USAir's compliance 
with the terms of the consent decree. 

	On March 19, 1993, the U.S. District Court in Atlanta, Georgia 
entered a settlement involving USAir and five other U.S. air 
carrier defendants in the Domestic Air Transportation Antitrust 
Litigation class action lawsuit.  The class action suit, which was 
filed in July 1990, alleged that the airlines used ATPCo to signal 
and communicate carrier pricing intentions and otherwise limit 
price competition for travel to and from numerous hub airports. 
Under the terms of the settlement, the six air carriers paid $45 
million in cash and issued $396.5 million in certificates valid for 
purchase of domestic air travel on any of the six airlines. USAir's 
share of the cash portion of the settlement, $5 million, was 
recorded in results of operations for the second quarter of 1992. 
The certificates, mailed to approximately 4.1 million claimants 
between December 15 and 31, 1994, provide a dollar-for-dollar 
discount against the cost of a ticket generally of up to a maximum 
of 10% per ticket, depending on the cost of the ticket.  It is 
possible that this settlement could have a dilutive effect on 
USAir's passenger transportation revenue and associated cash flow. 
However, due to the interchangeability of the certificates among


                                 141
<PAGE>
 the six carriers involved in the settlement, the possibility that 
carriers not party to the settlement will honor the certificates, 
and the potential stimulative effect on travel created by the 
certificates, USAir cannot reasonably estimate the impact of this 
settlement on further passenger revenue and cash flows.  USAir has 
employed the incremental cost method to estimate a range of costs 
attributable to the exercise of the certificates, based on the 
assumption that the estimated maximum number of certificates to be 
redeemed for travel on USAir will be related to USAir's market 
share relative to the total market share of the six carriers 
involved in the settlement.  USAir's estimated percentage of such 
market share is less than 9%. Incremental costs include unit costs 
for passenger food, beverages and supplies, fuel, reservations, 
communications, liability insurance, and denied boarding compensa-
tion expenses expected to be incurred on a per passenger basis. 
USAir has estimated that its incremental cost will not be material 
based on the equivalent free trips associated with the settlement. 

	On October 11, 1994, USAir and seven other carriers entered 
into a settlement agreement with a group of State Attorneys General 
resolving similar issues with the states. The settlement entitles 
passengers traveling within the United States on state government 
business to a 10% discount off the published fares of each of the 
settling carriers and will be available for 18 months from 
August 16, 1995, or until the combined discount amount reaches $40 
million, whichever first occurs.  On May 10, 1995, a U.S. federal 
district court judge approved the settlement.  USAir does not 
expect that this settlement will have a material adverse effect on 
its financial condition or results of operations.  As was the case 
with the settlement of the private antitrust litigation, it is 
difficult to predict the amount of discounted state travel that 
will occur on USAir.  Thus, a dollar impact of the settlement 
cannot be estimated. 

	In February and March 1995, several class action lawsuits were 
filed in various federal district courts by travel agencies and a 
travel agency trade association alleging that most of the major 
U.S. airlines, including USAir, violated the antitrust laws when 
they individually capped travel agent base commissions at $50 for 
round-trip domestic tickets with base fares above $500 and at $25 
for one-way domestic tickets with base fares above $250.  The 
lawsuits have been consolidated in the federal district of 
Minnesota.  The plaintiffs are seeking unspecified treble damages 
for restraint of trade.  The case is expected to go to a jury trial 
in 1996.  While USAir believes that its actions in establishing a 
commission cap were in full compliance with the antitrust laws, 
USAir is unable to predict at this time the ultimate resolution of 
the litigation or the potential impact on USAir's financial 
condition and results of operations. 

	In March 1995, a number of U.S. carriers, including USAir, 
received CIDs from the DOJ related to an investigation of incen-
tives paid to travel agents over and above the base commission 
payments.  USAir responded to an earlier CID on this topic during


                                 142
<PAGE>
 1994.  USAir has complied with the requirements of the CID by 
producing documents and responding to interrogatories.  Because 
this matter is in the investigatory stage, USAir is unable to 
predict at this time its ultimate resolution or potential impact on 
USAir's financial condition or results of operations. 

	In May 1995, a number of U.S. air carriers, including USAir, 
received CIDs from the DOJ relating to its investigation of 
incentive payments to travel agencies and a possible agreement 
among these carriers to implement a cap on travel agent base 
commissions, which is the subject matter of the suits recently 
brought by travel agencies, as discussed above.  One of the CIDs 
received by USAir sought the production of transcripts of deposi-
tions of any USAir employees taken in connection with the private 
litigation relating to the commission caps, together with annexed 
exhibits.  USAir has complied with the requirements of the CIDs. 
USAir does not expect these investigations to have a material 
effect on its financial condition and results of operations. 
	
	In October 1995, USAir terminated for cause an agreement with 
In-Flight Phone Corporation ("IFPC"). IFPC was USAir's provider of 
on-board telephone and interactive data systems (the "IFPC 
System").  The agreement contemplated the eventual installation of 
the IFPC System on substantially all of USAir's aircraft.  The IFPC 
System had been installed on approximately 80 aircraft prior to the 
date of termination of the agreement.  On December 6, 1995, IFPC 
filed suit against USAir seeking equitable relief and damages in 
excess of $186 million. USAir believes that its termination of its 
agreement with IFPC was appropriate and that it is owed in excess 
of $5 million by IFPC.  On December 7, 1995, USAir successfully 
defended IFPC's emergency motion for a temporary restraining order. 
On December 13, 1995, IFPC's motion for a preliminary injunction 
was denied and IFPC has relinquished its right to appeal that 
decision.  IFPC's claim for damages remains pending and USAir is 
presently preparing a counterclaim for amounts it is owed by IFPC. 
USAir is unable to predict at this time the ultimate resolution or 
potential financial impact on USAir's financial condition and 
results of operations of this lawsuit.  USAir is presently in 
negotiations with other vendors of on-board telephone systems and 
currently expects to finalize an agreement in the first quarter of 
1996. 

	During 1995, four members of USAir's FTP filed class action 
lawsuits against USAir in Illinois, Pennsylvania, California and 
New Jersey state courts, alleging breach of contract relating to 
changes made to USAir's FTP effective December 31, 1989 and/or 
January 1, 1995.  A similar lawsuit has been pending in California 
state court since 1989.  The lawsuits seek unspecified damages and 
an injunction against the allegedly objectionable changes to 
USAir's FTP and any subsequent retroactive changes to the FTP. 
USAir denies the allegations made in the lawsuits and intends to 
vigorously defend itself.  The ultimate resolution of these 
lawsuits and their potential impact on USAir's financial condition 
and results of operations cannot be predicted at this time.


                                 143
<PAGE>
	In May 1995, USAir Group, USAir and the Retirement Income Plan 
for Pilots of USAir, Inc. (the "Pilots' Pension Plan") were sued in 
federal district court for the District of Columbia by 469 active 
and retired USAir pilots.  The lawsuit alleges that USAir has 
breached its fiduciary duty under the Employee Retirement Income 
Security Act ("ERISA") and otherwise violated ERISA by erroneously 
calculating benefits under the Pilots' Pension Plan. The plaintiffs 
seek, among other things, an injunction restraining USAir and the 
Pilots' Pension Plan from allegedly improperly calculating benefits 
under the Pilots' Pension Plan and payments to plaintiffs of 
benefits allegedly improperly withheld in an amount alleged to be 
equal to approximately $70 million, plus interest.  USAir believes 
that it has properly calculated benefits under the Pilots' Pension 
Plan and intends to vigorously defend itself against the allega-
tions made in the lawsuit.  Because this lawsuit is in an early 
stage of litigation, USAir is unable to predict at this time its 
ultimate resolution or potential impact on USAir Group's pension 
liability or future funding requirements. 

	USAir has received notices from the U.S. Environmental 
Protection Agency and various state agencies that it is a poten-
tially responsible party with respect to the remediation of 
existing sites of environmental concern.  Only two of these sites 
have been included on the Superfund National Priorities List. USAir 
continues to negotiate with various governmental agencies 
concerning known and possible cleanup sites. USAir has made 
financial contributions for the performance of remedial investiga-
tions and feasibility studies at sites in Moira, New York; 
Escondido, California; and Elkton, Maryland. 

	Also, USAir has been identified as a potentially responsible 
party ("PRP") for environmental contamination at Boston Logan 
Airport.  There are a number of other PRPs at the site.  USAir is 
presently unable to assess its proportionate share of contribution, 
but do not expect any such contribution to have a material adverse 
effect on its financial condition or results of operations.

	Because of changing environmental laws and regulations, the 
large number of other potentially responsible parties and certain 
pending legal proceedings, it is not possible to reasonably 
estimate the amount or timing of future expenditures related to 
environmental matters. USAir provides for costs related to 
environmental contingencies when a loss is probable and the amount 
is reasonably estimable. Although management believes adequate 
reserves have been provided for all known contingencies, it is 
possible that additional reserves could be required in the future 
which could have a material effect on results of operations. 
However, USAir believes that the ultimate resolution of known 
environmental contingencies should not have a material adverse 
effect on USAir's financial position or results of operations based 
on USAir's experience with similar environmental sites.


                                 144
<PAGE>
	The Equal Employment Opportunity Commission and various state 
and local fair employment practices agencies are investigating 
charges by certain job applicants, employees and former employees 
of the Company's subsidiaries involving allegations of employment 
discrimination in violation of Federal and state laws.  The 
plaintiffs in these cases generally seek declaratory and injunctive 
relief and monetary damages, including back pay.  In some instances 
they also seek classification adjustment, compensatory damages and 
punitive damages.  Such proceedings are in various stages of 
litigation and investigation, and the outcome of these proceedings 
is difficult to predict.  In the Company's opinion, however, the 
disposition of these matters is not likely to have a material 
adverse effect on its financial condition or results of operations.

	(d)  Aircraft Commitments

	 In June 1995, USAir entered into agreements with Boeing and 
Rolls Royce plc ("Rolls Royce") deferring the delivery of eight 
757-200 aircraft from 1996 to 1998.  As part of these agreements, 
the due dates for progress payments associated with the 1996 
deliveries were likewise rescheduled.  Accordingly, approximately 
$71 million of progress payments that had been paid by USAir were 
refunded to USAir in the third quarter of 1995.  The related long-
term debt which financed the deposits was dissolved.

	The following schedule of USAir's new aircraft deliveries and 
scheduled payments at December 31, 1995 (including progress 
payments, payments at delivery, buyer furnished equipment, spares, 
and capitalized interest) reflects USAir's agreements with Boeing 
and Rolls Royce discussed above: 

                            Delivery Period - Firm Orders
                     --------------------------------------------
                                                   There-
                     1996  1997  1998  1999  2000   after   Total
                     ----  ----  ----  ----  ----  ------   -----
Boeing
  757-200               -     -     8     -     -       -       8
  737-Series            -     -     -     -     -      40      40
                      ---   ---   ---   ---   ---   -----   -----
     Total              -     -     8     -     -      40      48
                      ===   ===   ===   ===   ===   =====   =====
Payments          
 (millions)          $ 63  $ 74  $254  $  -  $  -  $1,855  $2,246
                      ===   ===   ===   ===   ===   =====   =====

	In addition, USAir has a commitment to purchase hush kits for 
certain of its DC-9-30 aircraft and a substantial portion of its 
737-200 aircraft.  The installation of these hush kits will bring 
the aircraft into compliance with FAA Stage 3 noise level require-
ments.  The projected payments associated with the purchase of the 
hush kits are:  $43 million - 1996; $30 million - 1997; $30 million 
- 1998; and $17.0 million - 1999.


                                 145
<PAGE>
	USAir has the option of purchasing any other Boeing commercial 
aircraft type in satisfaction of its obligation to purchase forty 
737-Series aircraft.  Such satisfaction would be accomplished on an 
"equivalent-seat" basis.

	(e)  Concentration of Credit Risk

	USAir invests available cash in money market securities of 
various banks, commercial paper of financial institutions and other 
companies with high credit ratings and securities backed by the 
United States government.

	At December 31, 1995, most of USAir's receivables related to 
tickets sold to individual passengers through the use of major 
credit cards (44%) or to tickets sold by other airlines (16%) and 
used by passengers on USAir or its regional airline affiliates. 
These receivables are short-term, generally being settled within 14 
days after sale.  Bad debt losses, which have been minimal in the 
past, have been considered in establishing allowances for doubtful 
accounts.  USAir does not believe it is subject to any significant 
concentration of credit risk.

	(f)  Guarantees

	At December 31, 1995, USAir guaranteed payments of debt and 
lease obligations of Piedmont Airlines, Inc. and PSA Airlines, 
Inc., wholly-owned subsidiaries of USAir Group, amounting to $103 
million.   

5.	Sale of Receivables

	The revolving receivables sales facility ("Receivables 
Agreement") to which USAir had been a party, expired on Decem-
ber 21, 1994.  USAir was unable to sell receivables under the 
Receivables Agreement during 1994 because it was in violation of 
certain financial covenants.  USAir had no outstanding amounts due 
under the Receivables Agreement at expiry.  The average dollar 
amount of outstanding receivable sales during 1993 was approximate-
ly $100 million.  USAir has engaged in discussions to arrange a 
replacement facility but has elected not to pursue such a financing 
at this time.

6.	Income Taxes

	Effective January 1, 1993, USAir adopted Statement of 
Financial Accounting Standards No. 109, "Accounting for Income 
Taxes" ("FAS 109").  FAS 109 required a change from the deferred 
method under Accounting Principles Board Opinion No. 11 to the 
asset and liability method of accounting for income taxes.  No 
cumulative adjustment at January 1, 1993, and no income tax credit 
for the years ended December 31, 1994 and 1993, were recognized due 
to the FAS 109 limitation in recognizing benefits for net operating


                                 146
<PAGE>
 losses.  USAir files a consolidated Federal income tax return with 
its parent USAir Group.  USAir Group and its wholly-owned subsid-
iaries have executed a tax sharing agreement which allocates tax 
and tax items, such as net operating losses and tax credits between 
members of the group based on their proportion of taxable income 
and other items.  This tax sharing and allocation impacts the 
deferred tax assets and liabilities reported by each corporation on 
a separate company basis.  Accordingly, USAir's tax expense is 
based on its taxable income (loss), taking into consideration its 
allocated tax loss carryforwards and tax credit carryforwards.

	The components of the provision for income taxes are as 
follows:
                                      1995        1994       1993
                                      ----        ----       ----
                                             (in thousands)
Current provision: 
  Federal                            $4,107       $  -       $  -
  State                                 301          -          -
                                      -----        ---        ---
  Total current provision             4,408          0          0
                                      -----        ---        ---
Deferred provision:
  Federal                                 -          -          -
  State                                   -          -          -
                                      -----        ---        ---
  Total deferred provision                0          0          0
                                      -----        ---        ---
Provision for income taxes           $4,408       $  0       $  0
                                      =====        ===        ===

	In 1995, USAir was not subject to regular Federal income tax 
as a result of using $22 million in Federal net operating loss 
carryforwards.  However, USAir was subject to Federal alternative 
minimum tax ("AMT") and environmental tax.  Approximately $88 
million in AMT net operating loss carryforwards and approximately 
$17 million in state net operating loss carryforwards were utilized 
to reduce the Federal and state tax liabilities.

	The significant components of deferred income tax expense 
(benefit) for the years ended December 31, 1995, 1994, and 1993, 
are as follows:

                                  1995        1994        1993
                                  ----        ----        ----
                                         (in thousands)
Deferred tax expense (benefit)
  (exclusive of the other
   components listed below)     $ 17,779   $(234,269)  $(121,847)
Adjustments to deferred tax
  assets and liabilities for
  enacted changes in tax laws
  and rates                            -           -      (9,429)
(table continued on next page)


                                 147
<PAGE>
Increase (decrease) for the
  year in the valuation
  allowance for deferred 
  tax assets                     (17,779)    234,269     131,276
                                 -------    --------     -------
  Total                         $      0   $       0    $      0 
                                 =======    ========     =======

	A reconciliation of taxes computed at the statutory Federal 
tax rate on earnings before income taxes to the provision (cred-
it) for income taxes is as follows:

                                 1995        1994         1993
                                 ----        ----         ----
Tax provision (credit)                  (in thousands)
  computed at Federal
  statutory rate               $ 13,089   $(250,664)   $(146,579)
State income tax expense,
  net of Federal tax benefit        196           -            -
Book expenses not deductible
  for tax purposes               15,088      15,691        9,348
Limitation in recognizing 
  tax benefit of net operating
  loss/credits                        -     234,973      146,660
Utilization of Federal Net   
  Operating Loss which reduced
  valuation allowance            (7,778)          -            - 
Adjustments to deferred tax
  assets and liabilities
  for enacted changes in
  tax laws and rates                  -           -       (9,429)
Current year temporary differ-
  ences which reduced 
  valuation allowance           (20,293)          -            -
Alternative Minimum tax which
  increased valuation allowance   3,384           -            -
Other                               722           -            -
                                -------     -------     --------
Provision for Income Taxes     $  4,408    $      0    $       0
                                =======     =======     ========
Effective Tax Rate                   12%          0%           0%
                                =======     =======     ========








(this space intentionally left blank)


                                 148
<PAGE>
	The tax effects of temporary differences that give rise to 
significant portions of the deferred tax assets and deferred tax 
liabilities at December 31, 1995, 1994 and 1993 are presented 
below:
                              1995         1994         1993
                              ----         ----         ----
                                      (in thousands)
Deferred tax assets:
  Leasing transactions     $  168,813   $  164,513   $  129,276
  Tax benefits purchased
    /sold                      67,348       76,784       79,434
  Gain on sale and lease-
    back transactions         146,387      154,246      162,400
  Employee benefits           487,050      484,347      429,312
  Net operating loss carry-
    forwards                  627,357      657,870      508,240
  Alternative minimum tax
    credit carryforwards       25,819       20,881       20,881
  Investment tax credit 
    carryforwards              48,720       47,880       47,880
  Other deferred tax assets   118,521       99,368       61,210
                            ---------    ---------    ---------
    Total gross deferred
      tax assets            1,690,015    1,705,889    1,438,633
  Less valuation allowance   (785,306)    (803,085)    (568,816)
                            ---------    ---------    ---------
    Net deferred tax assets   904,709      902,804      869,817
	
Deferred tax liabilities:
  Equipment depreciation 
    and amortization          871,056      866,356      840,584 
  Other deferred tax 
    liabilities                33,653       36,448       29,233 
                            ---------    ---------    ---------
    Total deferred tax    
      liabilities             904,709      902,804      869,817 
                            ---------    ---------    ---------
    Net deferred tax  
     liabilities           $        0   $        0   $        0
                            =========    =========    =========

	Included in "Other Deferred Tax Assets" above for 1995, 1994 
and 1993 are approximately $22 million, $16 million and $0, 
respectively, of tax assets which originate from subsidiaries of 
USAir Group in accordance with USAir's Tax Sharing Agreement.
	
	The valuation allowance for deferred tax assets as of 
January 1, 1993, was $438 million.  The valuation allowance 
increased $131 million in 1993, $234 million in 1994 and decreased 
$18 million in 1995.

	At December 31, 1995, USAir had unused net operating losses of 
$1.6 billion for Federal tax purposes, which expire in the years 
2005 to 2009.  USAir also has available, to reduce future taxes


                                 149
<PAGE>
 payable, $653 million alternative minimum tax net operating losses 
expiring in the years 2007 to 2009, $49 million of investment tax 
credits expiring in the years 2002 to 2003, and $26 million of 
alternative minimum tax credits which do not expire.  The Federal 
income tax returns of USAir through 1986 have been examined and 
settled with the Internal Revenue Service.

7.	Stockholder's Equity and Dividend Restrictions

	USAir Group owns all of the outstanding common stock of USAir. 
 USAir's board of directors has not authorized the payment of 
dividends to USAir Group since 1988.  In addition, USAir, organized 
under the Laws of the State of Delaware, may be subject to certain 
legal prohibitions on the payment of dividends on its capital 
stock.  At December 31, 1995, USAir believes that it was legally 
prohibited from paying dividends to USAir Group due to the 
provisions of Section 170 of Delaware General Corporation Law 
("Delaware Law"), which require a company to maintain a capital 
surplus in order to pay dividends on its capital stock.  In 
addition, as of December 31, 1995, USAir does not believe that it 
can comply with certain provisions of Delaware Law which permit a 
company with a capital deficit to pay dividends under special 
circumstances.  In order to for USAir to return to a capital 
surplus position it must realize substantial profits or increase 
its equity through other measures such as the sale of addition 
common stock.

	Covenants related to USAir's 10% and 9 5/8% Senior Unsecured 
Notes currently do not permit the payment of dividends by USAir to 
USAir Group.  However, these covenants do not restrict USAir from 
loaning or advancing funds to USAir Group.

	The provisions of Statement of Accounting Standards No. 87, 
"Employers' Accounting for Pensions," require the recognition of an 
additional minimum liability for each defined benefit plan for 
which the accumulated benefit obligation exceeds plan assets.  This 
amount has been recognized by USAir as a long-term liability with 
an offsetting intangible asset (see Note 1.(e)).  Because the 
intangible asset recognized may not exceed the amount of unrecog-
nized prior service cost on an individual plan basis, the balance 
is reported as a separate reduction of Stockholder's Equity 
(Deficit) at December 31, 1995 and 1994.  See also Note 9.

8.	Employee Stock Ownership Plan

	In August 1989, USAir established an Employee Stock Ownership 
Plan ("ESOP").  USAir Group sold 2,200,000 shares of its Common 
Stock to an Employee Stock Ownership Trust (the "Trust") to hold on 
behalf of USAir's employees, exclusive of officers, in accordance 
with the terms of the Trust and the ESOP.  The trustee placed those 
shares in a suspense account pending their release and allocation 
to employees.   USAir provided financing to the Trust in the form 
of a 9 3/4% loan for $111.4 million for its purchase of shares and 
USAir contributed an additional $2.2 million to the Trust.  USAir


                                 150
<PAGE>
 makes a yearly contribution to the Trust sufficient to cover the 
Trust's debt service requirement.  The contributions are made in 
amounts equal to the periodic loan payments as they come due, less 
dividends available for loan payment.  Since the Company did not 
pay dividends on any shares held by the Trust for the years ended 
December 31, 1995, 1994 and 1993, the Trust did not utilize 
dividends to service its debt during those periods.  The initial 
maturity of the loan is 30 years.  As the loan is repaid over time, 
the trustee systematically releases shares of the common stock from 
the suspense account and allocates them to participating employees. 
Each participant's allocation is based on the participant's 
compensation, the total compensation of all ESOP participants and 
the total number of shares being released.  For each year after 
1989, a minimum of 71,933 shares are released from the suspense 
account and allocated to participant accounts.  If USAir's return 
on sales equals or exceeds four percent in a given year, more 
shares are released and repayment of the loan is accelerated. 
Annual contributions made by USAir, and therefore loan repayments 
made by the Trust, were $11.4 million in each of 1995, 1994 and 
1993.  The interest portion of these contributions was $10.4 
million in 1995, $10.5 million in 1994 and $10.5 million in 1993. 
Approximately 510,000 shares of Common Stock have been released or 
committed to be released as of December 31, 1995.  USAir recognized 
approximately $4 million of compensation expense related to the 
ESOP in each of 1995, 1994 and 1993 based on shares allocated to 
employees (the "shares allocated" method).  Deferred compensation 
related to the ESOP amounted to approximately $87 million, $91 
million and $95 million at December 31, 1995, 1994 and 1993, 
respectively.

	In October 1995, the Financial Accounting Standards Board 
adopted Statement No. 123 "Accounting for Stock-Based Compensation" 
("FAS 123").  This statement establishes the fair value based 
method of accounting for stock-based compensation.  USAir has 
elected to continue using the intrinsic value based method of 
accounting prescribed in Accounting Principles Board opinion 
No. 25, "Accounting for Stock Issued to Employees", as permitted by 
FAS 123.

9.	Employee Benefit Plans 

	(a)  Pension Plans

	USAir has several pension plans in effect covering substan-
tially all employees.  One qualified defined benefit plan covers 
USAir maintenance employees and provides benefits of specified 
amounts based on periods of service.  Qualified defined benefit 
plans for substantially all other employees provide benefits based 
on years of service and compensation.  The qualified defined 
benefit plans are funded, on a current basis, to meet the minimum 
funding requirements of the Employee Retirement Income Security Act 
of 1974. 


                                 151
<PAGE>
	The defined benefit pension plan for USAir non-contract 
employees was frozen at the end of 1991 for all non-contract 
participants, resulting in a one-time book gain of approximately 
$107 million in 1991.  All non-contract plan participants became 
100% vested at the time of the freeze.  As a result of this plan 
curtailment, the accrual of service costs related to defined 
benefits for USAir non-contract and certain other employees ceased 
at the end of 1991.  USAir implemented a defined contribution 
pension plan for non-contract employees in January 1993.

	The funded status of the qualified defined benefit plans at 
December 31, 1995 and 1994 was as follows:

                                  1995               1994
                              Plans in Which     Plans in Which
                             ----------------- -----------------
                               Plan   Accumu-    Plan   Accumu-
                              Assets   lated    Assets   lated
                              Exceed  Benefits  Exceed  Benefits
                              Accumu-  Exceed   Accumu-  Exceed
                              lated     Plan    lated     Plan
                             Benefits  Assets  Benefits  Assets
                             --------  ------  --------  ------
                                        (in millions)
Fair value of plan assets     $  993   $1,419   $1,690   $  183 
Actuarial present value of:
  Vested benefit obligation      929    1,603    1,513      242
  Nonvested benefit obliga-
    tion                          29       22       27       17
                               -----    -----    -----    -----
    Accumulated benefit
      obligation based
      on salaries to date        958    1,625    1,540      259

    Additional benefits
      based on estimated
      future salary levels       130      598      470        -
                               -----    -----    -----    -----
      Projected benefit
        obligation             1,088    2,223    2,010      259
                               -----    -----    -----    -----
Projected benefit obliga-
   tion in excess of fair
   value of plan assets          (95)    (804)    (320)     (76)

Unrecognized net transition
   asset                          (2)     (34)     (29)     (12)
Unrecognized prior service
   cost                            -       66      (15)      69
Unrecognized net loss            312      571      358       15
                               -----    -----    -----    -----


(table continued on next page)


                                 152
<PAGE>
  Pension (liability) pre-
    paid before adjustment       215     (201)      (6)      (4)
Adjustment to recognize
  minimum liability*               -     (149)       -      (72)
                               -----    -----    -----    -----
  Pension (liability) pre-
    paid as adjusted and 
    recognized in consoli-
    dated balance sheets      $  215   $ (350)  $   (6)  $  (76)
                               =====    =====    =====    =====
* See Note 7.


	The weighted average discount rate used to determine the 
actuarial present value of the projected benefit obligation was 
7.25% and 9.00% as of December 31, 1995 and 1994, respectively. The 
expected long-term rate of return on plan assets used in 1995 was 
9.0% to 9.5% and 9.5% in 1994.  Rates of 3% to 6% were used to 
estimate future salary levels.  As of December 31, 1995, plan 
assets consisted of approximately 7% in cash equivalents and short-
term debt investments, 26% in equity investments, and 67% in fixed 
income and other investments.  As of December 31, 1994, plan assets 
consisted of approximately 10% in cash equivalents and short-term 
debt investments, 27% in equity investments, and 63% in fixed 
income and other investments.  Plan assets as of December  31, 1995 
included 205 shares of USAir Group Common Stock.  Plan assets as of 
December 31, 1994 did not include shares of USAir Group Common 
Stock.

	The following items are the components of the net periodic 
pension cost for the qualified defined benefit plans:

                                    1995       1994       1993
                                    ----       ----       ----
                                          (in millions)
Service cost (benefits
  earned during the period)        $  92      $ 124      $  90
Interest cost on projected
  benefit obligation                 216        216        188
Actual return on plan assets        (539)        48       (224)
Net amortization and deferral        371       (254)        40 
                                    ----       ----       ----
Net periodic pension cost          $ 140      $ 134      $  94
                                    ====       ====       ====

	Net pension cost for 1993 presented above excludes a charge of 
approximately $33.9 million related to "early-out" incentive 
programs offered to a limited number of USAir employees during the 
years.  No such charges were incurred in 1995 or 1994.

	Non-qualified supplemental pension plans are established for 
certain employee groups, which provide incremental pension payments 
from USAir's funds so that total pension payments equal amounts 
that would have been payable from USAir's principal pension plans


                                 153
<PAGE>
 if it were not for limitations imposed by Federal income tax 
regulations.

	The following table sets forth the non-qualified plans' status 
at December 31, 1995 and 1994:
                                             1995          1994
                                             ----          ----
                                               (in millions)
Fair value of plan assets                   $   -         $   - 
Actuarial present value of:
    Vested benefit obligation                  30            30
    Nonvested benefit obligation                2             2
                                              ---           ---
    Accumulated benefits based on 
      salaries to date                         32            32

    Additional benefits based on 
      estimated future salary levels            2             1
                                             ----          ----
    Projected benefit obligation               34            33
                                             ----          ----
Projected benefit obligation in
  excess of fair value of plan assets         (34)          (33)
Unrecognized prior service cost                 3             1
Unrecognized net loss                           8             2
                                             ----          ----
  Pension (liability) prepaid
    before adjustment                         (23)          (30)

Adjustment to recognize minimum
  liability*                                  (11)           (5)
                                             ----          ----
Unfunded accrued supplementary costs
  as adjusted and recognized in
  consolidated balance sheets               $ (34)        $ (35)
                                             ====          ====
* See Note 7.

	Net periodic supplementary pension cost for the non-qualified 
supplemental pension plans included the following components:

                                         1995      1994      1993
                                         ----      ----      ----
                                              (in millions)
Service cost (benefits earned
  during the period)                     $  -      $  -      $  -
Interest cost on projected benefit
  obligation                                2         2         2
Actual return on plan assets                -         -         -
Net amortization and deferral              (1)       21        12
                                          ---       ---       ---
Net periodic supplementary pension
 cost                                    $  1      $ 23      $ 14
                                          ===       ===       ===


                                 154
<PAGE>
	The discount rate used to determine the actuarial present 
value of the projected benefit obligation was 7.25% and 9.00% as of 
December 31, 1995 and 1994, respectively.  A rate of 3% was used to 
estimate future salary levels.

	In addition to the qualified and non-qualified defined benefit 
plans described above, USAir also contributes to certain defined 
contribution plans.  USAir contributions are based on a formula 
which considers the age and pre-tax earnings of each employee and 
the amount of employee contributions.  In addition, certain 
qualified defined contribution plans contain a component for profit 
sharing contributions if USAir Group achieves certain pre-tax 
margin levels.  USAir's expense related to the defined contribution 
plans, excluding expense for the ESOP Plan, was $64 million, $43 
million and $42 million for 1995, 1994 and 1993, respectively.  The 
1995 contribution expense reflects a new employer match contribu-
tion for certain collective bargaining groups.  USAir made no 
contributions to its defined contribution plans related to profit 
sharing in 1995, 1994 or 1993, since USAir Group did not achieve 
the prescribed pre-tax margin level.

	(b)  Postretirement Benefits Other Than Pensions

	USAir offers medical and life insurance benefits to employees 
hired prior to March  29, 1993 who retire from the Company and 
their eligible dependents.  The medical benefits provided by USAir 
are coordinated with Medicare benefits.  Retirees generally 
contribute amounts towards the cost of their medical expenses based 
on years of service with USAir.  USAir provides uninsured death 
benefit payments to survivors of retired employees for stated 
dollar amounts, or in the case of retired pilot employees, death 
benefit payments determined by age and level of pension benefit. 
The plans for postretirement medical and death benefits are funded 
on the pay-as-you-go basis.

	The following table sets forth the financial status of the 
plans as of December 31, 1995 and 1994:

                                                 1995      1994
                                                 ----      ----
                                                  (in millions)
Accumulated Postretirement Benefit
 Obligation (APBO):
   Retirees                                     $  338     $ 245
   Fully eligible active plan participants         176       144
   Other plan participants                         482       306
                                                 -----      ----
     Total APBO                                    996       695
   Unrecognized prior service credit               155       167
   Unrecognized net gain (loss)                   (112)      123 
                                                 -----      ----
Accrued postretirement benefit cost             $1,039     $ 985
                                                 =====      ====


                                 155
<PAGE>
	The components of net periodic postretirement benefit cost are 
as follows:
                                          1995     1994     1993
                                          ----     ----     ----
                                              (in millions)
Service cost (benefits attributed to
  employee service during the period)     $ 29     $ 36     $ 31
Interest cost on APBO                       65       60       56
Net amortization and deferral              (15)     (12)     (12)
                                           ---      ---      ---
  Net periodic postretirement benefit
    cost                                  $ 79     $ 84     $ 75
                                           ===      ===      ===

	The postretirement benefit expense for 1993 presented above 
excludes a charge of approximately $15.5 million related to "early-
out" programs offered to a limited number of employees during the 
year.  No such charges were incurred in 1995 or 1994.

	The discount rate used to determine the APBO was 7.25%, 9.00% 
and 7.75% at December 31, 1995, 1994 and 1993, respectively.  The 
average rates of annual compensation increase used to calculate the 
APBO ranged from 3% to 6% at December 31, 1995, 1994 and 1993.  The 
assumed health care cost trend rate used in measuring the APBO was 
8.5% in 1995, declining by 1% per year after 1995 to an ultimate 
rate of 4.5%.  If the assumed health care cost trend rates were 
increased by 1 percentage point, the APBO at December 31, 1995 
would be increased by 10% and 1995 periodic postretirement benefit 
costs would increase 13%.

	(c)  Postemployment Benefits

	USAir adopted Statement of Financial Accounting Standards No. 
112, "Employers' Accounting for Postemployment Benefits" ("FAS 
112"), during 1993.  FAS 112 requires the use of an accrual method 
to recognize postemployment benefits such as disability-related 
benefits.  The cumulative effect at January 1, 1993 of adopting FAS 
112 was $43.7 million. 

10.	Profit Sharing

	In exchange for temporary wage and salary reductions and other 
concessions during a twelve month period in 1992 and 1993, 
including certain ongoing work rule and medical benefits conces-
sions and the freeze of the defined benefit plan for non-contract 
employees, certain USAir employees participate in a profit sharing 
program and have been granted options to purchase USAir Group 
common stock.  The profit sharing program is designed to recompense 
those USAir employees whose pay had been reduced in an amount equal 
to (i) two times salary forgone plus (ii) one time salary forgone 
(subject to a minimum of $1,000) for the freeze of the pension 
plans for non-contract employees. Until the maximum payout has been 
made, annual pre-tax profits, as defined in the program, of USAir 
Group will be distributed to participating employees as follows:


                                 156
<PAGE>
 25% of the first $100 million in pre-tax profits; 35% of the next 
$100 million in pre-tax profits; and 40% of the pre-tax profits 
exceeding $200 million.

	The calculation of pre-tax profits under the profit sharing 
plan excludes FAS 106 charges (approximately $78.6 million for 
1995) and certain unusual items.  This program will be in effect 
until USAir employees are recompensed for salary and pension 
benefits foregone.  Because USAir Group recorded a pre-tax profit 
for 1995, USAir recognized charges of approximately $49.7 million 
under this plan in 1995 (certain amounts have been expensed in 
prior years even though 1995 was USAir's first profitable year 
since inception of the plan).  Under the terms of the plan, the 
cash payout for 1995 of approximately $73.7 million was made to 
employees covered by the provision of this plan in the first 
quarter of 1996.

	USAir's ESOP and Defined Contribution Retirement Program each 
have profit sharing components.  Under the ESOP, each eligible 
USAir employee receives a certain number of USAir Group Common 
Stock shares based on each participant's compensation relative to 
the total compensation of all participants and the number of USAir 
Group Common Stock shares in the allocation pool.  When USAir's 
return on sales equals or exceeds certain prescribed levels, USAir 
increases its contribution, which effectively increases the number 
of USAir Group Common Stock shares in the allocation pool (see Note 
8. - Employee Stock Ownership Plan).  Under the Defined Contribu-
tion Retirement Program, USAir makes additional contributions to a 
participant's account when USAir Group achieves certain prescribed 
pre-tax margin levels (see Note 9. - Employee Benefit Plans). USAir 
did not make any profit sharing contributions in connection with 
the profit sharing components of the ESOP or the Defined 
Contribution Retirement Program in 1995, 1994 or 1993.

11.	Related Party Transactions

	(a) Parent Company

	As of December 31, 1995, USAir had a $68.6 million 8.4% note 
payable to USAir Group related to USAir Group's purchase of 
aircraft-secured debt obligations of USAir.  USAir repaid the note 
in February 1996.  During 1994, USAir Group financed three aircraft 
for USAir.  USAir repaid this obligation, including interest, in 
December 1994.

	USAir's balance sheet line item, Payable to Parent Company, 
includes intercompany loans from USAir Group which arise in the 
normal course of business.  These loans bear interest at market 
rates which are reset quarterly.

	Net interest expense related to the notes payable and 
intercompany loans was $7.8 million, $11.3 million and $1.3 million 
for the years 1995, 1994 and 1993, respectively.


                                 157
<PAGE>
	(b) Regional Airline Subsidiaries of USAir Group

	USAir engages in certain transactions with Allegheny Airlines, 
Inc. ("Allegheny"), Piedmont Airlines, Inc., and PSA Airlines, 
Inc., wholly-owned regional airline subsidiaries of USAir Group. 
USAir provides various services to these entities including 
passenger handling, contract training and catering.  USAir 
recognized other operating revenues of approximately $46.5 million, 
$43.5 million and $50.3 million related to these services for the 
years 1995, 1994 and 1993, respectively.  These regional airlines 
also perform passenger and ground handling for USAir at certain 
airports for which USAir recognized other operating expenses of 
approximately $21.0 million and $15.3 million for the years 1995 
and 1994, respectively.

	USAir leases or subleases certain turboprop aircraft to these 
entities.  USAir recognized other operating revenues related to 
these arrangements of approximately $18.7 million, $22.0 million 
and $14.1 million for the years 1995, 1994 and 1993, respectively. 
USAir entered into a sale-leaseback arrangement with Allegheny 
during 1994 involving certain turboprop aircraft (in return, USAir 
subleases these same aircraft back to Allegheny).  USAir recognized 
other operating expenses related to the lease of these aircraft 
from Allegheny of approximately $9.8 million and $3.1 million for 
1995 and 1994, respectively.
 
	USAir's receivables from and payables to these regional 
airlines were approximately $9.6 million and $1.6 million, 
respectively, at December 31, 1995 and $8.7 million and $1.3 
million, respectively, at December  31, 1994.  USAir's Traffic 
Balances Payable liability included $30.8 million and $22.9 million 
at December 31, 1995 and 1994, respectively, representing passen-
gers flown by the regional subsidiaries on behalf of USAir during 
the month of December in each of those years.

	(c) Other USAir Group Subsidiaries

	USAir leases certain aircraft to USAir Group's wholly-owned 
subsidiary USAir Leasing and Services, Inc. ("Leasing").  Leasing 
subleases these aircraft to third parties.  USAir recognized other 
operating revenues related to these arrangements of approximately 
$4.6 million, $2.2 million and $0.7 million for the years 1995, 
1994 and 1993, respectively.  

	USAir purchases a portion of its aviation fuel from USAir 
Group's wholly-owned subsidiary USAir Fuel Corporation ("Fuel 
Corp."), which acts as a fuel wholesaler to USAir in certain 
circumstances.  USAir's aviation fuel purchases were approximately 
$104.9 million, $57.8 million and $9.7 million for the years 1995, 
1994 and 1993, respectively.  USAir's accounts payable to Fuel 
Corp. was $20.7 million and $5.6 million at December 31, 1995 and 
1994, respectively.


                                 158
<PAGE>
	(d) British Airways plc

	On January  21, 1993, USAir Group and BA entered into an 
Investment Agreement under which a wholly-owned subsidiary of BA 
purchased certain series of convertible preferred stock and BA 
entered into code sharing and wet lease arrangements with USAir. At 
December 31, 1995, BA's total voting interest in USAir Group was 
approximately 21.0%.

	USAir wet leases 767-200ER aircraft, including cockpit and 
cabin crews, to BA in order to serve three routes between the U.S. 
and London.  The wet lease arrangements are scheduled to end by 
May 31, 1996 (the first of the three wet lease arrangements ended 
in December 1995 and a second wet lease ended in February 1996). 
USAir recognized other operating revenues of approximately $63.6 
million, $60.7 million and $17.1 million for the years 1995, 1994, 
and 1993, respectively, related to the wet lease arrangements. 
These revenues were offset by an equal amount of other operating 
expense.  

	USAir also has various agreements with BA for ground handling 
at certain airports, contract training and other services.  USAir 
recognized other operating revenues of approximately $4.9 million, 
$6.4 million and $2.4 million for the years 1995, 1994 and 1993, 
respectively, related to the services USAir performed for BA.

	USAir's current receivables from and payables to BA were 
approximately $11.5 million and $5.3 million, respectively, at 
December 31, 1995 and $11.0 million and $4.5 million, respectively, 
at December 31, 1994.

	USAir also had a long-term receivable from BA related to two 
U.S. to London routes that USAir relinquished at the time of 
implementation of a code sharing arrangement with BA.  The balance 
of the receivable was approximately $45.4 million and $47.0 million 
at December 31, 1995 and 1994, respectively.  Payments began in 
December 1995 in conjunction with the termination of the first wet 
lease arrangement and continue annually for nine years.  

12.	Selected Quarterly Financial Data (Unaudited)

	The following table presents selected quarterly financial data 
for 1995 and 1994:

                             First    Second    Third     Fourth
                            Quarter   Quarter   Quarter   Quarter
                            -------   -------   -------   -------
                                        (in millions)
1995                  
Operating revenues          $1,664    $1,852    $1,743    $1,725
Operating income (loss)     $  (50)   $  135    $   66    $   84
Net income (loss)           $ (102)   $   85    $   17    $   34
                             =====     =====     =====     =====


                                 159
<PAGE>
1994                  
Operating revenues          $1,589    $1,763    $1,642    $1,584
Operating income (loss)     $ (135)   $   60    $ (164)   $ (278)
Net income (loss)           $ (190)   $    1    $ (196)   $ (332)
                             =====     =====     =====     =====
See Note 14. - Non-Recurring and Unusual Items.

Note:
	The sum of the four quarters may not equal yearly totals due 
to rounding of quarterly results.

(13)  Supplemental Balance Sheet Information

	The components of certain accounts in the accompanying balance 
sheets are as follows:
                                                  December 31,
                                               -----------------
                                               1995         1994
                                               ----         ----
                                               (in thousands)    
(a)  Cash and cash equivalents:
       Cash                                 $ 11,298     $ 16,946
       Cash equivalents, at cost which
         approximates market                 868,315      411,979
                                             -------      -------
                                            $879,613     $428,925
                                             =======      =======
(b)  Receivables, net:
       Accounts receivable                  $333,859     $335,234
       Less allowance for doubtful
         accounts                             12,104        9,222
                                             -------      -------
                                            $321,755     $326,012
                                             =======      =======
(c)  Materials and supplies, net:
       Materials and supplies               $383,910     $408,308
       Less allowance for obsolescence       161,665      169,827
                                             -------      -------
                                            $222,245     $238,481
                                             =======      =======
(d)  Accrued expenses:
       Salaries and wages                 $  342,391   $  258,426
       Rents                                 479,749      477,972
       All other                             613,054      561,176
                                           ---------    ---------
                                          $1,435,194   $1,297,574
                                           =========    =========
Note:
   Certain 1994 amounts have been reclassified to conform with 1995 
   classifications.


                                 160
<PAGE>
14.	Non-Recurring and Unusual Items

	(a)  1995

	In the fourth quarter of 1995, USAir reversed $4.1 million of 
the $132.8 million non-recurring charge related to its grounded 
BAe-146 fleet that was recorded in the fourth quarter of 1994 (see 
Note 14.(b) below).  The reversal reflects the successful re-
marketing by USAir of three of these aircraft.  USAir will reverse 
additional amounts related to the 1994 non-recurring charge in 
future periods dependent upon its success and the terms at which 
the remaining 15 grounded BAe-146 aircraft are subleased or 
otherwise disposed.

	(b)  1994

	USAir's results for 1994 include (i) a $132.8 million charge 
related to its grounded BAe-146 fleet, recorded in the fourth 
quarter of 1994; (ii) a $54.0 million charge for obsolete inventory 
and rotables to reflect market value, recorded in the fourth 
quarter of 1994; (iii) a $50 million addition to Passenger 
Transportation revenue in the fourth quarter of 1994 to adjust 
estimates made during the first three quarters of 1994; (iv) a 
$40.1 million charge primarily related to USAir's decision to cease 
operations of its remaining Boeing 727-200 aircraft in 1995, 
recorded in the third quarter of 1994; (v) a $25.9 million charge 
related to USAir's decision to substantially reduce service between 
Los Angeles and San Francisco and close its San Francisco crew 
base, recorded in the third quarter of 1994; and (vi) an $18.6 
million gain resulting from the accounting treatment of the hull 
insurance recovery on the aircraft lost in the September accident, 
recorded in the third quarter of 1994.

	(c)  1993

	USAir's results for 1993 include non-recurring charges of (i) 
$43.7 million for the cumulative effect of an accounting change, as 
required by FAS 112 which was adopted during the third quarter of 
1993, retroactive to January 1, 1993; (ii) $68.8 million for 
severance, early retirement and other personnel-related expenses 
recorded primarily during the third quarter of 1993 in connection 
with a workforce reduction of approximately 2,500 full-time 
positions between November 1993 and the first quarter of 1994; 
(iii) $36.8 million based on a projection of the repayment of 
certain employee pay reductions, recorded in the fourth quarter of 
1993; (iv) $13.5 million for certain airport facilities at 
locations where USAir has, among other things, discontinued or 
reduced its service, recorded in the fourth quarter of 1993; (v) 
$8.8 million for a loss on USAir's investment in the Galileo 
International Partnership, which operates a computerized reserva-
tion system, recorded in the fourth quarter of 1993; and (vi) $18.4 
million credit related to non-operating aircraft, recorded in the 
second quarter of 1993.


                                 161
<PAGE>
Item 9.	Changes in and Disagreements with Accountants on Account-
ing and Financial Disclosure

			None.




                           Part III



Item 10.	Directors and Executive Officers of the Company.

	Information regarding this item appears in the Company's 
definitive Proxy Statement to be filed pursuant to Regulation 14A 
relating to the Company's Annual Meeting of Stockholders on May 22, 
1996 and is incorporated herein by reference.  Information 
concerning executive officers of the Company is set forth in Item 1 
of the Report under the caption "Executive Officers" in reliance on 
General Instruction G to Form 10-K.

Item 11.	Executive Compensation.

	Information regarding this item appears in the Company's 
definitive Proxy Statement to be filed pursuant to Regulation 14A 
relating to the Company's Annual Meeting of Stockholders on May 22, 
1996 and is incorporated herein by reference.

Item 12.	Security Ownership of Certain Beneficial Owners and  
Management

	Information regarding this item appears in the Company's 
definitive Proxy Statement to be filed pursuant to Regulation 14A 
relating to the Company's Annual Meeting of Stockholders on May 22, 
1996 and is incorporated herein by reference.

Item 13.	 Certain Relationships and Related Transactions.

	Information regarding this item appears in the Company's 
definitive Proxy Statement to be filed pursuant to Regulation 14A 
relating to the Company's Annual Meeting of Stockholders on May 22, 
1996 and is incorporated herein by reference.







            (this space intentionally left blank)


                                 162
<PAGE>
                            Part IV



Item 14.	Exhibits, Financial Statement Schedules and Reports on 
Form 8-K


	(a)	The following documents are filed as part of this 
report:

		1.	Financial Statements

		(i)	The following consolidated financial statements of 
USAir Group are included in Part II, Item 8A. of this 
report:

		-	Consolidated Statements of Operations for each of 
the Three Years Ended December 31, 1995
		-	Consolidated Balance Sheets as of December 31, 1995 
and 1994
		-	Consolidated Statements of Cash Flows for each of 
the Three Years Ended December 31, 1995
		-	Consolidated Statements of Changes in Stockholders' 
Equity (Deficit) for each of the Three Years Ended 
December 31, 1995
		-	Notes to Consolidated Financial Statements

		(ii)	The following consolidated financial statements of 
USAir are included in Part II, Item 8B. of this report:

		-	Consolidated Statements of Operations for each of 
the Three Years Ended December 31, 1995
		-	Consolidated Balance Sheets as of December 31, 1995 
and 1994
		-	Consolidated Statements of Cash Flows for each of 
the Three Years Ended December 31, 1995
		-	Consolidated Statements of Changes in Stockholder's 
Equity (Deficit) for each of the Three Years Ended 
December 31, 1995
		-	Notes to Consolidated Financial Statements

		2.	Financial Statement Schedules

		(i)  Independent Auditors' Report on the Consolidated 
Financial Statement Schedule of USAir Group.

		-	Consolidated Financial Statement Schedule - Three 
Years Ended December 31, 1995:

			VIII	-  Valuation and Qualifying Accounts and Re-
serves


                                 163
<PAGE>
		(ii)	Independent Auditors' Report on the Consolidated 
Financial Statement Schedule of USAir.

		-	Consolidated Financial Statement Schedule - Three 
Years Ended December 31, 1995:

			VIII	-  Valuation and Qualifying Accounts and Re-
serves

	All other schedules are omitted because they are not appli-
cable or not required, or because the required information is 
either incorporated herein by reference or included in the 
financial statements or notes thereto included in this report.

	(b)	Reports on Form 8-K

	During the quarter ended December 31, 1995, the Company and 
USAir filed Current Reports on Form 8-K dated October 3, 1995 
regarding the news release dated October 2, 1995 of USAir Group, 
announcing that it has had preliminary conversations with both 
American Airlines, Inc. and United Air Lines, Inc. concerning 
possible strategic relationships, up to and including acquisition 
of USAir; dated October 18, 1995 regarding the news release dated 
October 18, 1995 of USAir Group and USAir, with consolidated 
statements of operations for each company for the three months and 
nine months ended September 30, 1995 and 1994 and a supplemental 
schedule for each company; dated November 14, 1995 regarding the 
news release dated November 13, 1995 of USAir Group, related to UAL 
Corp.'s announcement that it has decided not to pursue further 
talks with USAir Group with respect to possible acquisition of 
USAir; dated January 17, 1996 regarding the news release dated 
January 16, 1996 of USAir Group and USAir, announcing the election 
of Stephen M. Wolf as the Chairman and Chief Executive Officer of 
USAir Group and USAir; dated January 22, 1996 regarding the news 
release dated January 22, 1996 of USAir Group and USAir, with 
consolidated statements of operations and a supplemental schedule 
for each company; and dated February 15, 1996 regarding the news 
release dated February 15, 1996 announcing that USAir Group did not 
pay the dividend due on its Series B Cumulative Convertible 
Preferred Stock.

		3.	Exhibits

Designation                     Description

	3.1	Restated Certificate of Incorporation of USAir Group 
(incorporated by reference to Exhibit 3.1 to USAir 
Group's Registration Statement on Form 8-B dated Janu-
ary 27, 1983), including the Certificate of Amendment 
dated May 13, 1987 (incorporated by reference to 
Exhibit 3.1 to USAir Group's and USAir's Quarterly 
Report on Form 10-Q for the quarter ended March 31, 
1987), the Certificate of Increase dated June 30, 1987 
(incorporated by reference to Exhibit 3 to USAir  


                                 164
<PAGE>
     	Group's and USAir's Quarterly Report on Form 10-Q for 
the quarter ended June 30, 1987), the Certificate of 
Increase dated October 16, 1987 (incorporated by 
reference to Exhibit 3.1 to USAir Group's and USAir's 
Quarterly Report on Form 10-Q for the quarter ended 
September 30, 1987), the Certificate of Increase dated 
August 7, 1989 (incorporated by reference to Exhibit 
3.1 to USAir Group's Annual Report on Form 10-K for 
the year ended December 31, 1989),  the Certificate of 
Increase dated April 9, 1992 (incorporated by 
reference to Exhibit 3.1 to USAir Group's and USAir's 
Annual Report on Form 10-K for the year ended 
December 31, 1992), the Certificate of Increase dated 
January 21, 1993 (incorporated by reference to USAir 
Group's and USAir's Annual Report on Form 10-K for the 
year ended December 31, 1992), and the Certificate of 
Amendment dated May 26, 1993 (incorporated by 
reference to Appendix II to USAir Group's Proxy 
Statement dated April 26, 1993).

	
	3.2	By-Laws of USAir Group.

	3.3	Rights Agreement, dated as of July 29, 1989, as 
amended and restated as of January 21, 1993, between 
USAir Group and Chemical Bank, as Rights Agent 
(incorporated by reference to Exhibit 28.4 to USAir 
Group's Current Report on Form 8-K dated January 21, 
1993).

	3.4	Restated Certificate of Incorporation of USAir (in-
corporated by reference to Exhibit 3.1 to USAir's 
Registration Statement on Form 8-B dated January 27, 
1983).

	3.5	By-Laws of USAir.

	4.1	Amended Certificate of Designation, Preferences, and 
Rights of the Series D of Junior Preferred Stock of 
USAir Group (incorporated by reference to Exhibit 4(c) 
to USAir Group's Current Report on Form 8-K dated 
August 11, 1989).

	4.2	Certificate of Designation of Series A Cumulative 
Convertible Preferred Stock of USAir Group (incorpo-
rated by reference to Exhibit 4(b) to USAir Group's 
Current Report on Form 8-K dated August 11, 1989).

	4.3	Certificate of Designation of Series B Cumulative 
Convertible Preferred Stock of USAir Group (incorpo-
rated by reference to Exhibit 3.3 to Amendment No. 4 
to USAir Group's Registration Statement on Form S-3 
(Registration No. 33-39540) dated May 17, 1991).


                                 165
<PAGE>
	4.4	Agreement between USAir Group and Berkshire Hathaway 
Inc. dated August 7, 1989 (incorporated by reference 
to Exhibit 4(a) to USAir Group's Current Report on 
Form 8-K dated August 11, 1989).

	4.5	Certificate of Designation of Series F Cumulative 
Convertible Senior Preferred Stock of USAir Group 
(incorporated by reference to Exhibit 28.2 to USAir 
Group's Current Report on Form 8-K dated January 21, 
1993).

	4.6	Form of Certificate of Designation of Series T 
Cumulative Exchangeable Convertible Senior Preferred 
Stock of USAir Group (incorporated by reference to 
Appendix VII to USAir Group's Proxy Statement dated 
April 26, 1993). Neither USAir Group nor USAir is 
filing any instrument (with the exception of holders 
of exhibits  10.1(a-c)) defining the rights of holders 
of long-term debt because the total amount of 
securities authorized under each such instrument does 
not exceed ten percent of the total assets of USAir. 
Copies of such instruments will be furnished to the 
Securities and Exchange Commission upon request.

  10.1(a)	Supplemental Agreement No. 16, dated July 19, 1990, to 
Purchase Agreement No. 1102 between USAir and The 
Boeing Company (incorporated by reference to Exhibit 
10.2(a) to USAir Group's Annual Report on Form 10-K 
for the year ended December 31, 1990).

  10.1(b)	Supplemental Agreement No. 17, dated November 28, 
1990, to Purchase Agreement No. 1102 between USAir and 
The Boeing Company (incorporated by reference to 
Exhibit 10.2(b) to USAir Group's Annual Report on Form 
10-K for the year ended December 31, 1990).

  10.1(c)	Supplemental Agreement No. 18, dated December 23, 
1991, to Purchase Agreement No. 1102 between USAir and 
The Boeing Company (incorporated by reference to 
Exhibit 10.2(c) to USAir Group's Annual Report on Form 
10-K for the year ended December 31, 1991).

  10.2	Purchase Agreement No. 1725 dated December 23, 1991 
between USAir and The Boeing Company (incorporated by 
reference to Exhibit 10.3 to USAir Group's and USAir's 
Annual Report on Form 10-K for the year ended Decem-
ber 31, 1991).

  10.3	Executive Incentive Compensation Plan of USAir Group, 
Inc. as amended and restated December 1, 1995.

  10.4	USAir, Inc. Officers' Supplemental Benefit Plan 
(incorporated by reference to Exhibit 10.5 to USAir's 
Annual Report on Form 10-K for the year ended 


                                 166
<PAGE>  
             December 31, 1980).

  10.5	USAir, Inc. Supplementary Retirement Benefit Plan 
(incorporated by reference to Exhibit 10.5 to USAir 
Group's Annual Report on Form 10-K for the year ended 
December 31, 1989).

  10.6	USAir, Inc. Supplemental Executive Defined 
Contribution Plan (incorporated by reference to 
Exhibit 10.6 to USAir Group's Annual Report on Form 
10-K for the year ended December 31, 1994). 

  10.7	USAir Group's 1984 Stock Option and Stock Appreciation 
Rights Plan (incorporated by reference to Exhibit A to 
USAir Group's Proxy Statement dated March 30, 1984).

  10.8	USAir Group's 1988 Stock Incentive Plan (incorporated 
by reference to Exhibit 10.15 to USAir Group's Annual 
Report on Form 10-K for the year ended December 31, 
1987).

  10.9	USAir Group's 1992 Stock Option Plan (incorporated by 
reference to Exhibit A to USAir Group's Proxy 
Statement dated March 30, 1992).

  10.10	USAir Group's 1996 Stock Incentive Plan (incorporated 
by reference to Exhibit A to USAir Group's Proxy 
Statement dated April 15, 1996).

  10.11	Employment Agreement between USAir and its Chief 
Executive Officer.

  10.12	Employment Agreement between USAir and its President 
and Chief Operating Officer.

  10.13	Employment Agreement between USAir and its Executive 
Vice President-Corporate Affairs and General Counsel.

  10.14	Agreement between USAir and its Chief Executive 
Officer with respect to certain employment 
arrangements.

  10.15	Agreement between USAir and its President and Chief 
Operating Officer with respect to certain employment 
arrangements.

  10.16	Agreement between USAir and its Executive Vice 
President-Corporate Affairs and General Counsel with 
respect to certain employment arrangements.

  10.17	Employment Agreement between USAir and its former 
Chief Executive Officer, as amended by a severance 
agreement.


                                 167
<PAGE>
  10.18	Employment Agreement between USAir and its former 
President and Chief Operating Officer, as amended by a 
severance agreement.

  10.19	Employment Agreement between USAir and its former 
Executive Vice President, General Counsel and 
Secretary, as amended by a severance agreement.

  10.20	Employment Agreement between USAir and its Executive 
Vice President-Marketing.

  10.21	Trust Agreement dated as of April 1, 1992 between 
USAir and Wachovia Bank of North Carolina, N.A. 
providing for certain compensation arrangements for 
the Executive Vice President-Marketing.

  10.22	Employment Agreement between USAir and its Executive 
Vice President-Customer Services.

  10.23	Agreement between USAir and its Chief Executive 
Officer providing supplemental retirement benefits.

  10.24	Agreement between USAir and its President and Chief 
Operating Officer providing supplemental retirement 
benefits. 

  10.25	Agreement between USAir and its Executive Vice 
President-Corporate Affairs and General Counsel 
providing supplemental retirement benefits.

  10.26	Agreement between USAir and its former Chief Executive 
Officer providing supplemental retirement benefits.

  10.27	Agreement between USAir and its former President and 
Chief Operating Officer providing supplemental 
retirement benefits.

  10.28	Agreement between USAir and its former Executive Vice 
President, General Counsel and Secretary providing 
supplemental retirement benefits.

  10.29	Agreement between USAir and its Executive Vice 
President-Marketing providing supplemental retirement 
benefits.

  10.30	Employment Agreement between USAir and its Executive 
Vice President-Customer Services providing retirement 
benefits.

  11	Computation of primary and fully diluted earnings per 
share of USAir Group for the five years ended Decem-
ber 31, 1994.

  21	Subsidiaries of USAir Group and USAir.


                                 168
<PAGE>
  23.1	Consent of the Auditors of USAir Group to the incorpo-
ration of their report concerning certain financial 
statements contained in this report in certain regis-
tration statements.

  23.2	Consent of the Auditors of USAir to the incorporation 
of their report concerning certain financial 
statements contained in this report in certain 
registration statements.

  24.1	Powers of Attorney signed by the directors of USAir 
Group, authorizing their signatures on this report.

  24.2	Powers of Attorney signed by the directors of USAir, 
authorizing their signatures on this report.

  27.1	Financial Data Schedule - USAir Group, Inc.

  27.2	Financial Data Schedule - USAir, Inc.


                                 169
<PAGE>
	Signatures


	Pursuant to the requirements of Section 13 of 15(d) of the 
Securities Exchange Act of 1934, USAir Group, Inc. has duly caused 
this report to be signed on its behalf by the undersigned, 
thereunto duly authorized.

                            USAir Group, Inc.


                            By:      /s/Stephen M. Wolf
                                ---------------------------------
                                        Stephen M. Wolf
                                        Chairman and Chief
                                        Executive Officer
                                  (Principal Executive Officer)

                            Date:  March 28, 1996


	Pursuant to the requirements of the Securities Exchange Act 
of 1934, this report has been signed below by the following 
persons on behalf of USAir Group, Inc. and in the capacities and 
on the dates indicated.


March 28, 1996              By:       /s/Stephen M. Wolf
                                ---------------------------------
                                         Stephen M. Wolf
                                        Chairman and Chief
                                        Executive Officer
                                   (Principal Executive Officer)

March 28, 1996              By:        /s/John W. Harper
                                ---------------------------------
                                          John W. Harper
                                   Senior Vice President-Finance
                                   (Principal Financial Officer)

March 28, 1996              By:       /s/James A. Hultquist
                                ---------------------------------
                                         James A. Hultquist
                                             Controller          
                                   (Principal Accounting Officer)


March 28, 1996              By:                 *
                                ---------------------------------
                                           Robert Ayling
                                             Director            
  

                                 170
<PAGE>
March 28, 1996              By:                 *
                                ---------------------------------
                                          Robert W. Bogle
                                             Director            
    
March 28, 1996              By:                 *
                                ---------------------------------
                                         Edwin I. Colodny
                                             Director    

March 28, 1996              By:                 *
                                ---------------------------------
                                         Mathias J. DeVito
                                             Director            
    
March 28, 1996              By:                 *
                                ---------------------------------
                                          Rakesh Gangwal
                                             Director    

March 28, 1996              By:                 *
                                ---------------------------------
                                       George J. W. Goodman
                                             Director    

March 28, 1996              By:                 *
                                ---------------------------------
                                          John W. Harris
                                             Director    

March 28, 1996              By:                 *
                                ---------------------------------
                                      Edward A. Horrigan, Jr.
                                            Director             
   
March 28, 1996              By:                 *
                                ---------------------------------
                                          Robert LeBuhn
                                             Director    

March 28, 1996              By:                 *
                                ---------------------------------
                                        Roger P. Maynard
                                            Director             
  
March 28, 1996              By:                 *
                                ---------------------------------
                                        John G. Medlin, Jr.      
                                             Director    
 

                                 171
<PAGE>
March 28, 1996              By:                 *
                                ---------------------------------
                                         Hanne M. Merriman       
                                             Director    
 
March 28, 1996              By:                 *
                                ---------------------------------
                                         Raymond W. Smith
                                             Director    

March 28, 1996              By:                 *
                                ---------------------------------
                                         Derek M. Stevens
                                             Director            
    



By:      /s/John W. Harper
   ---------------------------------
            John W. Harper
           Attorney-In-Fact













               (this space intentionally left blank)


                                 172
<PAGE>
	Signatures


	Pursuant to the requirements of Section 13 of 15(d) of the 
Securities Exchange Act of 1934, USAir, Inc. has duly caused this 
report to be signed on its behalf by the undersigned, thereunto 
duly authorized.

                            USAir, Inc.


                            By:      /s/Stephen M. Wolf
                                ---------------------------------
                                        Stephen M. Wolf
                                        Chairman and Chief
                                        Executive Officer
                                  (Principal Executive Officer)

                            Date:  March 28, 1996


	Pursuant to the requirements of the Securities Exchange Act 
of 1934, this report has been signed below by the following 
persons on behalf of USAir, Inc. and in the capacities and on the 
dates indicated.


March 28, 1996              By:       /s/Stephen M. Wolf
                                ---------------------------------
                                         Stephen M. Wolf
                                        Chairman and Chief
                                        Executive Officer
                                   (Principal Executive Officer)

March 28, 1996              By:        /s/John W. Harper
                                ---------------------------------
                                          John W. Harper
                                   Senior Vice President-Finance
                                   (Principal Financial Officer)

March 28, 1996              By:       /s/James A. Hultquist
                                ---------------------------------
                                         James A. Hultquist
                                             Controller          
                                   (Principal Accounting Officer)


March 28, 1996              By:                 *
                                ---------------------------------
                                           Robert Ayling
                                             Director            
    

      
                                 173
<PAGE>
March 28, 1996              By:                 *
                                ---------------------------------
                                          Robert W. Bogle
                                             Director            
    
March 28, 1996              By:                 *
                                ---------------------------------
                                         Edwin I. Colodny
                                             Director    

March 28, 1996              By:                 *
                                ---------------------------------
                                         Mathias J. DeVito
                                             Director            
  

March 28, 1996              By:                 *
                                ---------------------------------
                                          Rakesh Gangwal
                                             Director    
  
March 28, 1996              By:                 *
                                ---------------------------------
                                       George J. W. Goodman
                                             Director    

March 28, 1996              By:                 *
                                ---------------------------------
                                          John W. Harris
                                             Director    

March 28, 1996              By:                 *
                                ---------------------------------
                                       Edward A. Horrigan, Jr.
                                             Director            
    
March 28, 1996              By:                 *
                                ---------------------------------
                                          Robert LeBuhn
                                             Director    

March 28, 1996              By:                 *
                                ---------------------------------
                                         Roger P. Maynard
                                             Director            
   
March 28, 1996              By:                 *
                                ---------------------------------
                                        John G. Medlin, Jr.      
                                             Director    
 


                                 174
<PAGE>
March 28, 1996              By:                 *
                                ---------------------------------
                                         Hanne M. Merriman       
                                             Director    

March 28, 1996              By:                 *
                                ---------------------------------
                                         Raymond W. Smith
                                             Director    

March 28, 1996              By:                 *
                                ---------------------------------
                                         Derek M. Stevens
                                             Director            
    



By:      /s/John W. Harper
   ---------------------------------
            John W. Harper
           Attorney-In-Fact












              (this space intentionally left blank)


                                 175
<PAGE>
	Independent Auditors' Report
	On Consolidated Financial Statement Schedule - USAir Group, Inc.









The Stockholders and Board of Directors
USAir Group, Inc.

Under date of February 28, 1996, we reported on the consolidated 
balance sheets of USAir Group, Inc. and subsidiaries ("USAir 
Group") as of December 31, 1995 and 1994, and the related 
consolidated statements of operations, cash flows, and changes in 
stockholders' equity (deficit) for each of the years in the 
three-year period ended December 31, 1995, included in Item 
14(a)1(i) in this annual report on Form 10-K for the year 1995. 
In connection with our audits of the aforementioned consolidated 
financial statements, we also audited the consolidated financial 
statement schedule as listed in Item 14(a)2(i). This consolidated 
financial statement schedule is the responsibility of USAir 
Group's management.  Our responsibility is to express an opinion 
on the consolidated financial statement schedule based on our 
audits.

In our opinion, this consolidated financial statement schedule, 
when considered in relation to the basic consolidated financial 
statements taken as a whole, presents fairly, in all material 
respects, the information set forth therein.




                                            KPMG Peat Marwick LLP

Washington, D. C.
February 28, 1996


                                 176
<PAGE>
	USAir Group, Inc.
	Schedule II
	Valuation and Qualifying Accounts and Reserves

	(in thousands)


                                     Allowance For
                                     Uncollectible     Inventory
                                       Accounts      Obsolescence
                                     -------------   ------------

Balance December 31, 1992               $ 11,668       $ 85,678

   Additions charged to income            12,064         12,136

   Amounts charged to reserve            (12,914)        (2,643)
                                         -------        -------
Balance December 31, 1993                 10,818         95,171

   Additions charged to income (1)        11,763         86,775

   Amounts charged to reserve            (13,110)        (9,155)
                                         -------        -------
Balance December 31, 1994                  9,471        172,791
                                                                
   Additions charged to income            12,046         12,146

   Amounts charged to reserve             (9,177)       (20,851)
                                         -------        -------
Balance December 31, 1995               $ 12,340      $ 164,086 
                                         =======        =======


(1)	1994 additions to inventory obsolescence include charges of 
$75 million to reflect market value of parts related to 
certain aircraft which have been or will be withdrawn from 
service and inventory parts which have been identified for 
sale.


                                 177
<PAGE>
	Independent Auditors' Report
	On Consolidated Financial Statement Schedule - USAir, Inc.









The Stockholder and Board of Directors
USAir, Inc.

Under date of February 28, 1996, we reported on the consolidated 
balance sheets of USAir, Inc. and subsidiary ("USAir") as of 
December 31, 1995 and 1994, and the related consolidated statements 
of operations, cash flows, and changes in stockholder's equity 
(deficit) for each of the years in the three-year period ended 
December 31, 1995, included in Item 14(a)1(ii) in this annual 
report on Form 10-K for the year 1995.  In connection with our 
audits of the aforementioned consolidated financial statements, we 
also audited the consolidated financial statement schedule as 
listed in Item 14(a)2(ii).  This consolidated financial statement 
schedule is the responsibility of USAir's management. Our responsi-
bility is to express an opinion on the consolidated financial 
statement schedule based on our audits.

In our opinion, this consolidated financial statement schedule, 
when considered in relation to the basic consolidated financial 
statements taken as a whole, presents fairly, in all material 
respects, the information set forth therein.





                                             KPMG Peat Marwick LLP

Washington, D. C.
February 28, 1996


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	USAir, Inc.
	Schedule II
	Valuation and Qualifying Accounts and Reserves

	(in thousands)



                                     Allowance for
                                     Uncollectible    Inventory
                                        Accounts     Obsolescence
                                     -------------   ------------

Balance December 31, 1992               $ 11,408       $ 83,575

   Additions charged to income            11,990         11,103

   Amounts charged to reserve            (12,803)        (2,086)
                                         -------        -------
Balance December 31, 1993                 10,595         92,592

   Additions charged to income (1)        11,600         85,633

   Amounts charged to reserve            (12,973)        (8,398)
                                         -------        -------
Balance December 31, 1994                  9,222        169,827
	                                     
   Additions charged to income            12,000          9,667

   Amounts charged to reserve             (9,118)       (17,829)
                                         -------        -------
Balance December 31, 1995               $ 12,104      $ 161,665
                                         =======        ======= 

(1)   1994 additions to inventory obsolescence include charges of 
$75 million to reflect market value of parts related to certain 
aircraft which have been or will be withdrawn from service and 
inventory parts which have been identified for sale.


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