<PAGE>                                              Exhibit 10.12
 
                             EMPLOYMENT AGREEMENT
      Agreement dated as of February 19, 1996, between USAir, Inc.,
a Delaware corporation, having a place of business at Crystal Park
Four, 2345 Crystal Drive, Arlington, VA 22227 (the "Company") and
Rakesh Gangwal, residing at 74 Watergate, South Barrington,
Illinois 60010 (the "Executive").
                                 WITNESSETH
      WHEREAS, the Executive has assumed the duties of the President
and Chief Operating Officer to the benefit of the Company and to
the satisfaction of its Board of Directors (the "Board"); 
      WHEREAS, the Board believes it to be in the best interests of
the Company to enter into this Agreement to assure Executive's
continuing services to the Company including, but not limited to,
under circumstances in which there is a possible, threatened or
actual Change of Control (as defined below) of the Company; and
      WHEREAS, the Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change
of Control and to encourage the Executive's full attention and
dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide the
Executive with compensation and benefits arrangements upon a Change
of Control which ensure that the compensation and benefits 




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expectations of the Executive will be satisfied and which are
competitive with those of other corporations.  Therefore, in order
to accomplish all the above objectives, the Board has caused the
Company to enter into this Agreement.
      NOW, THEREFORE, in consideration of the mutual promises herein
contained, the Company and the Executive hereby agree as follows:
      1.  Certain Definitions.
      (a)  The "Effective Date" shall mean the date hereof. 
      (b) The "Change of Control Date" shall mean the first date
during the Employment Period (as defined in Section 1(c)) on which
a Change of Control (as defined in Section 2) occurs.  Anything in
this Agreement to the contrary notwithstanding, if a Change of
Control occurs and if the Executive's employment with the Company
is terminated or the Executive ceases to be President and Chief
Operating Officer of the Company prior to the date on which the
Change of Control occurs, and if it is reasonably demonstrated by
the Executive that such termination of employment or cessation of
status as an officer (i) was at the request of a third party who
has taken steps reasonably calculated to effect the Change of
Control or (ii) otherwise arose in connection with or anticipation
of the Change of Control, then for all purposes of this Agreement
the "Change of Control Date" shall mean the date immediately prior
to the date of such termination of employment or cessation of
status as President and Chief Operating Officer.


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      (c)  The "Employment Period" shall mean the period commencing
on the Effective Date and ending on the earlier to occur of (i) the
third anniversary of such date or (ii) the first day of the month
next following the Executive's 65th birthday ("Normal Retirement
Date"); provided, however, that commencing on the date one year
after the Effective Date, and on each annual anniversary of such
date (such date and each annual anniversary thereof shall be
hereinafter referred to as the "Renewal Date"), the Employment
Period shall be automatically extended so as to terminate on the
earlier of (x) three years from such Renewal Date or (y) the
Executive's Normal Retirement Date, unless at least 30 days prior
to the Renewal Date the Company shall give notice to the Executive
that the Employment Period shall not be so extended; and provided,
further, that upon the occurrence of a Change of Control Date, the
Employment Period shall automatically be extended so as to
terminate on the earlier to occur of (1) the third anniversary of
such date or (2) the Executive's Normal Retirement Date.  
      2.  Change of Control.  For the purpose of this Agreement, a
"Change in Control" shall mean:
      (a)  The acquisition by an individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (i) the then
outstanding shares of common stock of the Company's parent, USAir 


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Group, Inc. ("Group") (the "Outstanding Group Common Stock") or
(ii) the combined voting power of the then outstanding voting
securities of Group entitled to vote generally in the election of
directors (the "Outstanding Group Voting Securities"); provided,
however, that the following acquisitions shall not constitute a
Change of Control: (w) any acquisition directly from Group, (x) any
acquisition by Group or any of its subsidiaries, (y) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by Group or any of its subsidiaries or (z)
any acquisition by any corporation with respect to which, following
such acquisition, more than 85% of, respectively, the then
outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of
such corporation entitled to vote generally in the election of
directors, is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were
beneficial owners, respectively of the Outstanding Group Common
Stock and Outstanding Group Voting Securities in substantially the
same proportions as their ownership, immediately prior to such
acquisition, of the Outstanding Group Common Stock and Outstanding
Group Voting Securities, as the case may be; or 
      (b)  Individuals who, as of the date hereof, constitute
Group's Board of Directors (the "Incumbent Board") cease for any 



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reason to constitute at least a majority of the Group Board of
Directors; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or
nomination for election by Group's shareholders, was approved by a
vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were
a member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act) or other actual or threatened solicitation of
proxies or consents; or 
      (c)  Approval by the shareholders of Group of a
reorganization, merger or consolidation, in each case, with respect
to which all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding
Group Common Stock and Outstanding Group Voting Securities
immediately prior to such reorganization, merger or consolidation,
beneficially own, directly or indirectly, less than 85% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such reorganization,
merger or consolidation in substantially the same proportions as 



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their ownership, immediately prior to such reorganization, merger
or consolidation of the Outstanding Group Common Stock and the
Outstanding Group Voting Securities, as the case may be; or
      (d)  Approval by the shareholders of Group of (i) a complete
liquidation or dissolution of Group or (ii) the sale or other
disposition of all or substantially all of the assets of Group,
other than to a corporation, with respect to which following such
sale or other disposition, more than 85% of, respectively, the then
outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of
such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Group
Common Stock and Outstanding Group Voting Securities immediately
prior to such sale or other disposition in substantially the same
proportion as their ownership, immediately prior to such sale or
other disposition, of the Outstanding Group Common Stock and
Outstanding Group Voting Securities, as the case may be; or
      (e)  The acquisition by an individual, entity or group of
beneficial ownership of 20% or more of the then outstanding
securities of Group, including both voting and non-voting
securities, provided, however, that such acquisition shall only
constitute a Change of Control in the event that such individual, 



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entity or group also obtains the power to elect by class vote,
cumulative voting or otherwise to appoint, 20% or more of the total
number of directors to the Board of Directors of Group.
      3.  Employment Period.  The Company hereby agrees to continue
the Executive in its employ, and the Executive hereby agrees to
remain in the employ of the Company, during the Employment Period
under the terms and conditions provided herein.  
      4.  Terms of Employment.
      (a)  Position and Duties.
      (i)  During the Employment Period and prior to a Change of
Control Date, (A) if the Board determines that the Executive has
been performing his duties in accordance with Section 4(a)(iii)
hereof, it shall re-elect the Executive to the position of
President and Chief Operating Officer with substantially similar
duties to those performed by the Executive on the Effective Date,
(B) the Executive's services shall be performed at the Executive's
location on the Effective Date, the Company's headquarters, or a
location where a substantial activity for which the Executive has
responsibility is located; provided, however, that in the event of
the departure of the Chief Executive Officer of the Company
incumbent in that position on the Effective Date the Executive's
services shall be performed at the Executive's location on the
Effective Date, unless the Executive agrees in writing to a
different location.  



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      (ii)  During the Employment Period and on and following a
Change of Control Date, (A) the Executive's position (including
status, offices, titles and reporting relationships), authority,
duties and responsibilities shall be at least commensurate in all
material respects with the most significant of those held,
exercised and assigned at any time during the 90-day period
immediately preceding the Change of Control Date and (B) the
Executive's services shall be performed at the location where the
Executive was employed immediately preceding the Change of Control
Date or any office or location less than thirty-five (35) miles
from such location.
      (iii)  During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during
normal business hours to the business and affairs of the Company
and, to the extent necessary to discharge the responsibilities
assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently such
responsibilities.  During the Employment Period it shall not be a
violation of this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such
activities do not significantly interfere with the performance of 



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the Executive's responsibilities as an employee of the Company in
accordance with this Agreement.  It is also expressly understood
and agreed that to the extent that such activities have been
conducted by the Executive prior to the Effective Date, the
continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the
performance of the Executive's responsibilities to the Company.
      (b)  Compensation.
      (i)  Base Salary.  During the Employment Period, the Company
shall pay the Executive a base salary (x) for the first 12 months
of the term hereof at a rate not less than his base salary in
effect on the Effective Date of this Agreement, and (y) during each
succeeding 12 months of the term hereof at a rate not less than his
base salary in effect on the last day of the preceding 12-month
period.  During the Employment Period, base salary shall be
reviewed at least annually and shall be increased at any time and
from time to time as shall be substantially consistent with
increases in base salary awarded in the ordinary course of business
to other key employees of the Company and its subsidiaries.  Any
increase in base salary shall not serve to limit or reduce any
other obligation to the Executive under this Agreement.  Base
salary shall not be reduced after any such increase.  Base salary
under Section 4(b)(i) shall hereinafter be referred to as the "Base
Salary".

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      (ii)  Annual Bonus.  In addition to Base Salary, the Executive
shall be awarded, for each fiscal year during the Employment
Period, an annual bonus as shall be determined by the Board or its
Compensation and Benefits Committee in accordance with the
executive incentive compensation plan of Group approved on November
9, 1995 by the Group Board of Directors ("Incentive Plan") or
otherwise.  The Executive's target percentage under the Incentive
Plan each year shall be no less than 50% of his Base Salary (as in
effect on the first day of the year) and his maximum bonus
opportunity each year shall be no less than 100% of such Base
Salary.  The annual bonus under Section 4(b)(ii) shall hereinafter
be referred to as the "Annual Bonus".
      (iii)  Incentive, Savings and Retirement Plans.  In addition
to Base Salary and Annual Bonus payable as hereinabove provided,
the Employee shall be entitled to participate during the Employment
Period in all incentive, savings and retirement plans, practices,
policies and programs applicable on or after the Effective Date to
other key employees of the Company and its subsidiaries (including
but not limited to the employee benefit plans listed on Exhibit A
hereto), in each case providing benefits which are the economic
equivalent to those in effect on the Effective Date or as
subsequently amended.  




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      (iv)  Welfare Benefit Plans.  During the Employment Period,
the Executive and/or the Executive's family, as the case may be,
shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and
programs provided by the Company and its subsidiaries (including,
without limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental death and
travel accident insurance plans and programs) applicable on or
after the Effective Date to other key employees of the Company and
its subsidiaries, in each case providing benefits which are the
economic equivalent to those in effect on the Effective Date or as
subsequently amended.  
      (v)  Expenses.  During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with
the most favorable policies, practices and procedures of the
Company and its subsidiaries applicable at any time on or after the
Effective Date to other key employees of the Company and its
subsidiaries.  
(vi)  Fringe Benefits.  During the Employment Period, the Executive
shall be entitled to fringe benefits, including but not limited to
pass privileges for non-revenue transportation, in accordance with
the most favorable plans, practices, programs and policies of the 




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Company and its subsidiaries applicable at any time on or after the
Effective Date to other key employees of the Company and its
subsidiaries.  
      (vii)  Office and Support Staff.  During the Employment
Period, the Executive shall be entitled to an appropriate office or
offices of a size and with furnishings and other appointments, and
to secretarial and other assistance, as provided to other key
employees of the Company and its subsidiaries.
      (viii)  Vacation.  During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the most
favorable plans, policies, programs and practices of the Company
and its subsidiaries as in effect on or after the Effective Date
with respect to other key employees of the Company and its
subsidiaries.
      5.  Termination.  
      (a)  Mutual Agreement.  During the Employment Period, the
Executive's employment hereunder may be terminated at any time by
mutual agreement on terms to be negotiated at the time of such
termination.  
      (b)  Death or Disability.  This Agreement shall terminate
automatically upon the Executive's death.  If the Company
determines in good faith that the Disability of the Executive has
occurred (pursuant to the definition of "Disability" set forth
below), it may give to the Executive written notice of its 



<PAGE>

intention to terminate the Executive's employment.  In such event,
the Executive's employment with the Company shall terminate
effective on the 90th day after receipt by the Executive of such
notice given at any time after a period of six consecutive months
of Disability and while such Disability is continuing (the
"Disability Effective Date"), provided that, within the 90 days
after such receipt, the Executive shall not have returned to full-
time performance of the Executive's duties.  For purposes of this
Agreement, "Disability" means disability which, at least six months
after its commencement, is determined to be total and permanent by
a physician selected by the Company or its insurers and acceptable
to the Executive or the Executive's legal representative (such
agreement as to acceptability not to be withheld unreasonably). 
During such six month period and until the Disability Effective
Date, Executive shall be entitled to all compensation provided for
under Section 4 hereof.
      (c)  Cause.  During the Employment Period, the Company may
terminate the Executive's employment for "Cause."  For purposes of
this Agreement, "Cause" means (i) an act or acts of personal
dishonesty taken by the Executive and intended to result in
substantial personal enrichment of the Executive at the expense of
the Company, (ii) repeated violations by the Executive of the
Executive's obligations under Section 4(a) of this Agreement which 



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are demonstrably willful and deliberate on the Executive's part and
which are not remedied in a reasonable period of time after receipt
of written notice from the Company or (iii) the conviction of the
Executive of a felony.
      (d)  Good Reason.  During the Employment Period, the
Executive's employment hereunder may be terminated by the Executive
for Good Reason.  For purposes of this Agreement, "Good Reason"
means:
      (i)  the assignment to the Executive of any duties
inconsistent in any respect with Executive's position (including
status, offices, titles and reporting relationships), authority,
duties or responsibilities as contemplated by Section 4(a)(i) or
(ii) of this Agreement, or any other action by the Company which
results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
      (ii)  the failure by Group to elect the Executive to the
position of President and Chief Operating Officer of Group or any
other action by Group which results in the diminution of the
Executive's position, authority, duties, or responsibilities,
excluding an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by Group promptly after
receipt of notice thereof is given by the Executive;

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      (iii)  (x) any failure by the Company to comply with any of
the provisions of Section 4(b) of this Agreement, other than an
isolated, insubstantial and inadvertent failure not occurring in
bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive or (y) after the
Change of Control Date, any failure of the Company to pay Base
Salary or Annual Bonus in accordance with Sections 4(b)(i) and
(ii), respectively, and any failure by the Company to maintain or
provide the plans, programs, policies and practices, and benefits
described in Sections 4(b)(iii) - (viii) on the most favorable
basis such plans programs, policies and practices were maintained
and benefits provided during the 90-day period immediately
preceding the Change of Control Date, or if more favorable to the
Executive and/or the Executive's family, as in effect at any time
thereafter with respect to other key employees of the Company and
its subsidiaries;
      (iv) the Company's requiring the Executive to be based at any
office or location other than that described in Sections 4(a)(i)(B)
or 4(a)(ii)(B) hereof, except for travel reasonably required in the
performance of the Executive's 
responsibilities;
      (v) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by
this Agreement; or


<PAGE>

      (vi)  any failure by the Company to comply with and satisfy
Section 11(c) of this Agreement.  For purposes of this Section
5(d), any good faith determination of "Good Reason" made by the
Executive on or after the Change of Control Date shall be
conclusive.  Anything in this Agreement to the contrary
notwithstanding, a termination by the Executive for any reason
during the 30-day period immediately following the first
anniversary of the Change of Control Date shall be deemed to be a
termination for Good Reason for all purposes of this Agreement.
      (e)  Notice of Termination.  Any termination by the Company
for Cause or by the Executive for Good Reason shall be communicated
by Notice of Termination to the other party hereto given in
accordance with Section 12(b) of this Agreement.  For purposes of
this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination
of the Executive's employment under the provision so indicated and
(iii) if the Date of Termination (as defined below) is other that
the date of receipt of such notice, specifies the termination date
(which date shall be not more than fifteen (15) days after the
giving of such notice).  The failure by the Executive to set forth
in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason shall not waive any right 


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of the Executive hereunder or preclude the Executive from asserting
such fact or circumstance in enforcing his rights hereunder.
      (f)  Date of Termination.  "Date of Termination" means the
date of receipt of the Notice of Termination or any later date
specified therein, as the case may be; provided, however, that (i)
if the Executive's employment is terminated by the Company other
than for Cause or Disability, the Date of Termination shall be the
date on which the Company notifies the Executive of such
termination and (ii) if the Executive's employment is terminated by
reason of death or Disability, the Date of Termination shall be the
date of death of the Executive or the Disability Effective Date, as
the case may be.
      6.  Obligations of the Company upon Termination.
      (a)  Death.  If the Executive's employment is terminated by
reason of the Executive's death, this Agreement shall terminate
without further obligations to the Executive's legal
representatives under this Agreement, other than those obligations
accrued or earned and vested (if applicable) by the Executive as of
the Date of Termination, including, for this purpose (i) the
Executive's full Base Salary through the Date of Termination at the
rate in effect on the Date of Termination, disregarding any
reduction in Base Salary in violation of this Agreement (the
"Highest Base Salary"), (ii) the product of the Annual Bonus paid
to the Executive for the last full fiscal year and a fraction, the 



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numerator of which is the number of days in the current fiscal year
through the Date of Termination, and the denominator of which is
365 and (iii) any compensation previously deferred by the Executive
(together with any accrued interest thereon) and not yet paid by
the Company and any accrued vacation pay not yet paid by the
Company (such amounts specified in clauses (i), (ii) and (iii) are
hereinafter referred to as "Accrued Obligations") and any
obligations as provided in the letter agreements entered into as of
February 19, 1996 between the Executive and the Company with
respect to supplemental retirement benefits and with respect to
certain employment matters.  All such Accrued Obligations shall be
paid to the Executive's estate or beneficiary, as applicable, in a
lump sum in cash within 5 days of the Date of Termination, or in
such other form as may be provided for pursuant to such agreements. 
Anything in this Agreement to the contrary notwithstanding, the
Executive's family shall be entitled to receive benefits at least
equal to the most favorable benefits provided by the Company and
any of its subsidiaries to surviving families of employees of the
Company and such subsidiaries under such plans, programs, practices
and policies relating to family death benefits, if any, in
accordance with the most favorable plans, programs, practices and
policies of the Company and its subsidiaries in effect on or after
the Effective Date or, if more favorable to the Executive  and/or
the Executive's family, as in effect on the date of the Executive's
death with respect to other key employees of the Company and its
subsidiaries and their families.

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      (b)   Disability.  If the Executive's employment is terminated
by reason of the Executive's Disability, this Agreement shall
terminate without further obligations to the Executive, other than
those obligations accrued or earned and vested (if applicable) by
the Executive as of the Date of Termination, including for this
purpose, all Accrued Obligations and any obligations as provided in
the letter agreements entered into as of February 19, 1996 between
the Executive and the Company with respect to supplemental
retirement benefits and with respect to certain employment
matters..  All such Accrued Obligations shall be paid to the
Employee in a lump sum in cash within 5 days of the Date of
Termination, or in such other form as may be provided for pursuant
to such agreements.  Anything in this Agreement to the contrary
notwithstanding, the Employee shall be entitled after the
Disability Effective Date to receive disability and other benefits
at least equal to the most favorable of those provided by the
Company and its subsidiaries to disabled employees and/or their
families in accordance with such plans, programs, practices and
policies relating to disability, if any, in accordance with the
most favorable plans, programs, practices and policies of the
Company and its subsidiaries in effect on or after the Effective
Date or, if more favorable to the Executive and /or the Executive's
family, as in effect at any time thereafter with respect to other
key employees of the Company and its subsidiaries and their
families.

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      (c)   Cause; Other than for Good Reason.  If the Executive's
employment shall be terminated for Cause, this Agreement shall
terminate without further obligations to the Executive other than
the obligation to pay to the Executive the Highest Base Salary
through the Date of Termination plus the amount of any 
accrued vacation pay not yet paid by the Company and any
compensation previously deferred by the Executive (together with
accrued interest thereon), plus any obligations as provided in the
letter agreements entered into as of February 19, 1996 between the
Executive and the Company with respect to supplemental retirement
benefits and with respect to certain employment matters.  If the
Executive terminates employment other than for Good Reason, this
Agreement shall terminate without further obligations to the
Executive, other than those obligations accrued or earned and
vested (if applicable) by the Executive through the Date of
Termination, including for this purpose, all Accrued Obligations
and any obligations provided for in an agreement, if any, between
the Company and the Executive pursuant to Section 5(a) or as
provided in the letter agreements entered into as of February 19,
1996 between the Executive and the Company with respect to
supplemental retirement benefits and with respect to certain
employment matters.  All such Accrued Obligations shall be paid to
the Executive in a lump sum in cash within 5 days of the Date of
Termination, or in such other form as may be provided for pursuant
to such agreements.

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      (d)  Good Reason; Other Than for Cause or Disability.                   
      (1)  If, during the Employment Period and prior to a Change of
Control, the Company shall terminate the Executive's employment
other than for Cause, Disability or death or if the Executive shall
terminate his employment for Good Reason:  
      (i)  the Company shall pay to the Executive in a lump sum in
cash within 5 days after the Date of Termination the aggregate of
the following amounts:
      A.  to the extent not theretofore paid, the Executive's
Highest Base Salary through the Date of Termination; and
      B.  the product of three and the Executive's Highest Base
Salary; and
      C.  in the case of compensation previously deferred by the
Executive, all amounts previously deferred (together with any
accrued interest thereon) and not yet paid by the Company, and any
accrued vacation pay not yet paid by the Company; and
      D.  the Executive shall be entitled to receive a retirement
benefit in accordance with the terms of the letter agreement dated
February 19, 1996 between the Executive and the Company with 
respect to supplemental retirement benefits; and 






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      (ii)  The Company shall:
      A.  for a period of three years after the Date of Termination,
or such longer period as any plan, program, practice or policy may
provide, the Company shall continue benefits to the Executive
and/or the Executive's family at least equal to those which would
have been provided to them in accordance with the plans, programs,
practices and policies described in Section 4(b)(iv) and (vi) of
this Agreement if the Executive's employment had not been
terminated, including health insurance and life insurance, in
accordance with the most favorable plans, practices, programs or
policies of the Company and its subsidiaries in effect on or after
the Effective Date, or if more favorable to the Executive, as in
effect at any time thereafter with respect to other key employees
and their families; and
      B.  at the expiration of the three-year period, continue to
provide the Executive with health insurance and on-line travel
privileges in accordance with the terms of the letter agreement
dated February 19, 1996 between the Executive and the Company with
respect to certain employment matters.
      (2)  If, during the Employment Period and on and after a
Change of Control Date, the Company shall terminate the Employee's
employment other than for Cause, Disability, or death or if the
Executive shall terminate his employment for Good Reason:




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      (i)  the Company shall pay to the Executive in a lump sum in
cash within 5 days after the Date of Termination the aggregate of
the following amounts:
      A.  to the extent not theretofore paid, the Executive's
Highest Base Salary through the Date of Termination; and
      B.  the product of (x) the Annual Bonus paid to the Executive
for the last full fiscal year ending during the Employment Period
or, if higher, the Annual Bonus paid to the Executive during the
last full fiscal year ending during the Employment Period or, if
higher, a constructive annual bonus calculated to be equal to the
bonus that would have been payable to the Executive from the
Company for the last full fiscal year ending prior to the Date of
Termination (regardless of whether the Executive was employed in an
officer position for all or any part of such fiscal year) as if
Group had achieved the "target level of performance" under the
Incentive Plan set at the level for the fiscal year immediately
preceding the Change of Control Date and assuming the Executive's
"target percentage" under the Incentive Plan equals such target
percentage assigned to the Executive immediately preceding the
Change of Control Date (the highest Annual Bonus determined under
this clause (x) shall hereinafter be called the "Recent Bonus") and
(y) a fraction, the numerator of which is the number of days in the
current fiscal year through the Date of Termination and the
denominator of which is 365; and
      C.  the product of (x) three and (y) the sum of (i) the
Highest Base Salary and (ii) the Recent Bonus; and

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      D.  in the case of compensation previously deferred by the
Executive, all amounts previously deferred (together with any
accrued interest thereon) and not yet paid by the Company, and any
accrued vacation pay not yet paid by the Company; and
      E.  the Executive shall be entitled to receive a retirement
benefit in accordance with the terms of the letter agreement dated
February 19, 1996 between the Executive and the Company with
respect to supplemental retirement benefits. 
      (ii)  The Company shall:
      A. for a period of three years after the Date of Termination
or such longer period as any plan, program, practice or policy may
provide, continue benefits to the Executive and/or the Executive's
family at least equal to those which would have been provided to
them in accordance with the plans, programs, practices and policies
described in Sections 4(b)(iii)(with respect to any retirement
plans), (iv) and (vi) of this Agreement if the Executive's
employment had not been terminated, including health insurance and
life insurance, in accordance with the most favorable plans,
practices, programs or policies of the Company and its subsidiaries
in effect on or after the Effective Date or, if more favorable to
the Executive, as in effect at any time thereafter with respect to
other key employees and their families and for purposes of
eligibility for retiree benefits pursuant to such plans, practices,



<PAGE>

programs and policies, the Executive shall be considered to have
remained employed until the end of the Employment Period and to
have retired on the last day of such period; and
      B.  at the expiration of the three-year period, continue to
provide the Executive with health insurance and on-line travel
privileges in accordance with the terms of the letter agreement
dated February 19, 1996 between the Executive and the Company with
respect to certain employment matters.
      7.  Non-exclusivity of Rights.  Nothing in this Agreement
shall prevent or limit the Executive's continuing or future
participation in any benefit, bonus, incentive or other plans,
programs, policies or practices, provided by Group, the Company or
any of its subsidiaries and for which the Executive may qualify,
nor shall anything herein limit or otherwise affect such rights as
the Executive may have under any stock option, restricted stock or
other agreements with Group, the Company or any of its
subsidiaries.  Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy,
practice or program of Group, the Company or any of its
subsidiaries at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy practice or program.





<PAGE>
      8.  Full Settlement.  The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform
its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defence or other claim, right or action
which the Company may have against the Executive or others.  In no
event shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement. 
The Company agrees to pay, to the full extent permitted by law, all
legal fees and expenses, as incurred by the Company, the Executive
and others, which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company or
others of the validity or enforceability of, or liability under,
any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive
about the amount of any payment pursuant of Section 9 of this
Agreement), plus in each case interest at the applicable Federal
rate provided for in Section 7872(f)(2) of the Internal Revenue
Code of 1986, as amended (the "Code").
      9.  Certain Additional Payments by the Company.
      (a)  Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any
payment or distribution by the Company to or for the benefit of the
Executive (whether paid or payable or distributed or distributable 



<PAGE>

pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under
this Section 9, including, but not limited to, any amounts in
respect of (i) options to acquire shares of Group common stock,
(ii) restricted shares of Group common stock, (iii) the letter
agreement entered into as of February 19, 1996 between the
Executive and the Company with respect to supplemental retirement
benefits, and (iv) the letter agreement entered into as of February
19, 1996 between the Executive and the Company with respect to
certain employment matters (a "Payment"), would be subject to the
excise tax imposed by Section 4999 of the Code or any interest or
penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of
all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes
(and any interest and penalties imposed with respect thereto) and
Excise Tax, imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon Payments.




<PAGE>
      (b)  Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, including
whether a Gross-Up Payment is required and the amount of such
Gross-Up Payment, shall be made by the firm of independent public
accountants selected by Group to audit its financial statements
(the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within 5
business days of the Date of Termination, or such earlier time as
is requested by the Company.  In the event that the Accounting Firm
is serving as accountant or auditor for the individual, entity or
group  effecting the Change of Control, the Executive shall appoint
another nationally recognized accounting firm to make the
determinations required hereunder (which accounting firm shall then
be referred to as the Accounting Firm hereunder).  All fees and
expenses of the Accounting Firm shall be borne solely by the
Company.  Any Gross-Up Payment, as determined pursuant to this
Section 9, shall be paid to the Executive upon the receipt of the
Accounting Firm's determination.  If the Accounting Firm determines
that no Excise Tax is payable by the Executive, it shall furnish
the Executive with a written opinion that failure to report the
Excise Tax on the Executive's applicable federal income tax return
would not result in the imposition of a negligence or a similar
penalty.  Any determination by the Accounting Firm shall be binding
upon the Company and the Executive.  As a result of the uncertainty
in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is 

<PAGE>
possible that Gross-up Payments which will not have been made by
the Company should have been made ("Underpayment"), consistent with
the calculations required to be made hereunder.  In the event that
the Company exhausts its remedies pursuant to Section 9(c) and the
Executive thereafter is required to make a payment of any Excise
Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the
Executive.
      (c)  The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment.  Such
notification shall be given as soon as practicable but no later
than ten business days after the Executive knows of such claim and
shall apprise the Company of the nature of such claim and the date
on which such claim is requested to be paid.  The Executive shall
not pay such claim prior to the expiration of the thirty-day period
following the date on which it gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes
with respect to such claim is due).  If the Company notifies the
Executive in writing prior to the expiration of such period that it
desires to contest such claim, the Employee shall:
      (i)   give the Company any information reasonably requested by
the Company relating to such claim,



<PAGE>
      (ii)  take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time
to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney reasonably
selected by the Company,
      (iii)  cooperate with the Company in good faith in order
effectively to contest such claim,
      (iv)  permit the Company to participate in any proceedings
relating to such claim; provided, however, that the Company shall
bear and pay directly all costs and expenses (including additional
interest and penalties) incurred in connection with such contest
and shall indemnify and hold the Executive harmless, on an after-
tax basis, for any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses.  Without
limitation on the foregoing provisions of this Section 9(c), the
Company shall control all proceedings taken in connection with such
contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with
the taxing authority in respect of such claim and may, at its sole
option, either direct the Executive to pay the tax claimed and sue
for a refund or contest the claim in any permissible manner, and
the Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company 


<PAGE>

shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall
advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income tax,
including interest or penalties with respect thereto, imposed with
respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of
the statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested
amount.  Furthermore, the Company's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
      (d)  If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(c), the Executive
becomes entitled to receive any refund with respect to such claim,
the Executive shall (subject to the Company's complying with the
requirements of Section 9(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto).  If, after the receipt by
the Executive of an amount advanced by the Company pursuant to 


<PAGE>

Section 9(c), a determination is made that the Executive shall not
be entitled to any refund with respect to such claim and the
Company does not notify the Executive in writing of its intent to
contest such denial of refund prior to the expiration of thirty
days after such determination, then such advance shall be forgiven
and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.
      10.  Confidential Information.  The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to Group, the
Company or any of their subsidiaries, and their respective
businesses, which shall have been obtained by the Executive's
employment by the Company or any of its subsidiaries and which
shall not be or become public knowledge (other than by acts by
Executive or his representatives in violation of this Agreement). 
After termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the
Company, communicate or divulge any such information, knowledge or
data to anyone other than the Company and those designated by it. 
In no event shall an asserted violation of the provisions of this
Section 10 constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement.



<PAGE>
      11.  Successors.
      (a)  This Agreement is personal to the Executive and without
the prior written consent of the Company shall not be assignable by
the Executive otherwise than by will or the laws of descent and
distribution.   This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
      (b)  This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
      (c)  The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the Company
to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to
perform it if no such succession had taken place.  As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined
and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law,
or otherwise.
      12.  Miscellaneous.
      (a)  This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws.  The captions of this
Agreement are not part of the provisions hereof and shall have no
force or effect.  This Agreement may not be amended or modified 



<PAGE>
otherwise than by a written agreement executed by the parties
hereto or their respective successors and legal representatives.
      (b)  All notices and other communications hereunder shall be
in writing and shall be given by hand delivery to the other party
or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
      If to the Executive:           If to the Company: 
      Rakesh Gangwal                 USAir, Inc.
      74 Watergate                   2345 Crystal Drive
      South Barrington, IL 60010     Arlington, VA 22227                
                                     Attention:  General Counsel

or to such other address as either party shall have furnished to
the other in writing in accordance herewith.  Notice and
communications shall be effective when actually received by the
addressee.
      (c)  The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
      (d)  The Company may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or
regulation.
      (e)  The Executive's failure to insist upon strict compliance
with any provision hereof shall not be deemed to be a waiver of
such provision or any other provision thereof.

<PAGE>

      (f)  Words or terms used in this Agreement which connote the
masculine gender are deemed to apply equally to female executives.
      (g)  This Agreement supersedes any prior employment agreement
between the Company and the Executive and, together with the two
letter agreements, each dated February 19, 1996, between the
Executive and the Company related to supplemental retirement
benefits and certain employment matters, contains the entire
understanding of the Company and the Executive with respect to the
subject matter hereof.

















<PAGE>
      IN WITNESS WHEREOF, the Executive has hereunto set his hand
and, pursuant to the authorization from its Board of Directors, the
Company has caused these presents to be executed in its name on its
behalf, all as of the day and year first above written.


                              EXECUTIVE

                              /s/Rakesh Gangwal
                              ____________________________
                              Rakesh Gangwal
                              President and Chief Operating Officer


                              USAIR, INC.

                              /s/Michelle V. Bryan
                              ________________________________
                              Michelle V. Bryan
                              Vice President and Deputy General 
                                  Counsel and Secretary



























<PAGE>

                            EXHIBIT A



USAir, Inc. Employee Savings Plan

USAir, Inc. Employee Pension Plan

USAir, Inc. Supplementary Retirement Benefit Plan

1988 Stock Incentive Plan of USAir Group, Inc.

1996 Stock Incentive Plan of USAir Group, Inc.

Executive Incentive Compensation Plan of USAir Group, Inc.

Individual Supplemental Retirement Agreements in effect with
certain officers of USAir, Inc.

Restricted Stock Agreements with certain senior officers of USAir,
Inc.