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                                 EXHIBIT 10.23
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                              EMPLOYMENT AGREEMENT


                This Employment Agreement ("Agreement"), dated as of February
15, 1997, by and among AMERICA WEST HOLDINGS CORPORATION, a Delaware corporation
("Holdings"), AMERICA WEST AIRLINES, INC., a Delaware corporation and a
wholly-owned subsidiary of Holdings ("AWA" and, together with Holdings,
"Employers"), and WILLIAM A. FRANKE ("Franke").

                WHEREAS, Employers desire to employ Franke in an executive
capacity and Franke desires to serve in such capacity, all on the terms and
conditions, and for the consideration, set forth in this Agreement.

                NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and for other valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto agree as
follows:

                                    ARTICLE I

                         Definitions and Interpretations

1.1.   Definitions

                For purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, the following terms shall
have the following respective meanings:

                "AmWest Registration Agreement" shall have the meaning specified
       in Section 6.1.

                "Base Salary" shall have the meaning specified in Section
       3.1(a).

                "Board" shall mean the Board of Directors of Holdings.

                "CEO" shall mean, when used with reference to any Constituent
       Company, the chief executive officer of such Constituent Company.

                "Chairman" shall mean, when used with reference to any
       Constituent Company, the Chairman of the Board of such Constituent
       Company.

                "Change in Control" shall occur if, after the date hereof:

                         (i) the individuals who, as of the date hereof,
                constitute the Board (the "Incumbent Board"), cease for any
                reason to constitute at least a majority of the Board; provided,
                however, that any individual becoming a director subsequent to
                the date
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                hereof whose election, or nomination for election by Holdings'
                stockholders, was approved by a vote of at least two-thirds of
                the directors then comprising the Incumbent Board shall be
                considered as though such individual were a member of the
                Incumbent Board; or

                         (ii) any individual, entity or group (within the
                meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act)
                acquires (directly or indirectly) the beneficial ownership
                (within the meaning of Rule 13d-3 promulgated under the Exchange
                Act) of more than 50% of the combined voting power of the then
                outstanding voting securities of Holdings entitled to vote
                generally in the election of directors ("Voting Power"); or

                         (iii) any shares of Class B Common Stock or other
                voting securities of Holdings shall be purchased pursuant to a
                tender or exchange offer (other than a tender or exchange offer
                made by Holdings); or

                         (iv) Holdings' stockholders shall approve a merger or
                consolidation involving Holdings other than (A) a merger or
                consolidation in which the voting securities of Holdings
                outstanding immediately prior thereto will become (by operation
                of law), or are to be converted into, voting securities of the
                surviving corporation or its parent corporation immediately
                after such merger or consolidation that are owned by the same
                person or entity or persons or entities as immediately prior
                thereto and possess at least 75% of the Voting Power held by the
                voting securities of the surviving corporation or its parent
                corporation, (B) a merger or consolidation effected to implement
                a recapitalization of Holdings (or similar transaction) in which
                no person acquires more than 50% of the Voting Power or (C) a
                merger or consolidation in which Holdings is the surviving
                corporation and such transaction was determined not to be a
                Change in Control, which transaction and determination was
                approved by a majority of the Board in actions taken prior to,
                and with respect to, such transaction; or

                         (v) Holdings' stockholders shall approve a merger,
                consolidation, reorganization, disposition of assets,
                liquidation or other transaction (or series of related
                transactions) in which Holdings will not survive as a
                publicly-owned corporation.

                "Code" shall mean the Internal Revenue Code of 1986, as in
       effect from time to time.

                "Confidential Information" shall have the meaning specified in
       Section 5.1(a).

                "Constituent Companies" shall mean, collectively, Holdings, AWA
       and all other direct or indirect subsidiaries of Holdings.

                "Disability" shall mean a physical or mental condition of Franke
       that, in the good faith judgment of not less than a majority of the
       entire membership of the Board, based upon


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       certification by a licensed physician reasonably acceptable to Franke and
       the Board, (i) prevents Franke from being able to perform the services
       required under this Agreement, (ii) has continued for a period of at
       least six months during any period of twelve consecutive months and (iii)
       is expected to continue.

                "Dispute" shall have the meaning specified in Article VII.

                "Employment Period" shall mean that the period commencing on the
       date hereof and ending on the Expiration Date; provided, however, that if
       either Holdings or Franke gives a Notice of Termination pursuant to
       Section 4.1 or 4.2, then the Employment Period shall not extend beyond
       the relevant Termination Date.

                "Exchange Act" shall mean the Securities and Exchange Act of
       1934, as amended.

                "Expiration Date" shall mean December 31, 1998.

                "Good Reason" shall mean any of the following actions or
       failures to act, but in each case only if it occurs during the Employment
       Period and then only if it is not consented to by Franke:

                         (1) a material alteration by either Employer in the
                nature or status of Franke's applicable positions, functions,
                duties or responsibilities described in Section 2.2, including
                any change which would (i) alter Franke's reporting
                responsibilities described in Section 2.2 or (ii) cause Franke's
                positions with Employers to become of less dignity or importance
                than the applicable positions described in paragraphs (a) and
                (b) of Section 2.2; provided, however, that each such alteration
                shall cease to be a Good Reason on the date which is 90 days
                after the occurrence of such alteration unless, prior to such
                date, Franke gives a Notice of Termination pursuant to Section
                4.1 on account of such alteration;

                         (2) the failure of either Employer to perform any of
                its obligations under this Agreement in any material regard, but
                only if such failure shall continue unremedied for more than 15
                days after written notice thereof is given by Franke to
                Holdings;

                         (3) the relocation of the principal executive offices
                of either Employer outside the greater Phoenix, Arizona
                metropolitan area or either Employer's requiring Franke to be
                based other than at such principal executive offices; provided,
                however, that such relocation shall cease to be a Good Reason on
                the date which is 90 days after the occurrence of such
                relocation unless, prior to such date, Franke gives a Notice of
                Termination pursuant to Section 4.1 on account of such
                relocation;




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                         (4) the failure either Employer to elect or re-elect,
                or to appoint or re-appoint, Franke to the applicable offices
                described in paragraphs (a) and (b) of Section 2.2;

                         (5) any purported termination by either Employer of
                Franke's employment not in accordance with the provisions of
                this Agreement;

                         (6) the failure of either Employer to obtain any
                assumption agreement required by Section 9.5(a); or

                         (7) the failure of Franke to be elected or appointed,
                or to be re-elected or re-appointed, as a director of either
                Employer as contemplated by Section 2.2(f).

                "Holders" shall have the meaning specified in Section 6.1.

                "Incentive Plan" shall mean the America West 1994 Incentive
       Equity Plan, as amended from time to time.

                "Market Value per Share" means, at any date, the closing price
       per share of Class B Common Stock of Holdings on that date (or, if there
       are no sales on that date, the last preceding date on which there was
       sale) in the principal market in which such shares are traded.

                "Misconduct" shall mean one or more of the following:

                         (i) the willful and continued failure by Franke to
                perform his duties described in Section 2.2 (other than any such
                failure resulting from Franke's incapacity due to physical or
                mental illness) after written notice of such failure has been
                given to Franke by Holdings and Franke has had a reasonable
                period after receipt of such notice to correct such failure;

                         (ii) the willful commission by Franke of acts that are
                both dishonest and demonstrably injurious to any Constituent
                Company (monetarily or otherwise) in any material respect,
                provided that no act taken by Franke shall be deemed to
                constitute Misconduct if such act was taken by Franke in good
                faith and in the reasonable belief that such act was in the best
                interests of the Constituent Companies or in furtherance of
                Franke's duties and responsibilities described in Section 2.2;

                         (iii) the conviction of Franke for a felony offense
                involving moral turpitude; or




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                         (iv) a material breach by Franke of any of the
                covenants set forth in this Agreement (other than Section 2.2),
                but only if such breach shall continue unremedied for more than
                15 days after written notice thereof is given to Franke by
                Holdings.

                "Notice of Termination" shall mean a notice purporting to
       terminate Franke's employment in accordance with Section 4.1 or 4.2,
       which notice shall set forth in reasonable detail the reason for such
       termination and the facts and circumstances claimed to provide a basis
       for such termination.

                "Person" shall mean and include an individual, a partnership, a
       joint venture, a corporation, a trust and an unincorporated organization.

                "Piggyback Registration Notice" shall have the meaning specified
       in Section 6.2(a).

                "Registrable Securities" shall have the meaning specified in
       Section 6.1.

                "Restricted Period" shall have the meaning specified in Section
       5.2(a).

                "SEC" shall mean the Securities and Exchange Commission.

                "Securities Act" shall mean the Securities Act of 1933, as
       amended.

                "Stockholder Approval" shall have the meaning specified in
       Section 3.2(a).

                "Termination Date" shall mean the termination date specified in
       a Notice of Termination delivered in accordance with Article IV, provided
       that in no event shall such termination date be less than 30 nor more
       than 60 days after the date such Notice of Termination is given.

                "1995 Agreement" shall mean the Employment Agreement between
       Franke and AWA dated as of November 9, 1995.

                "1996 Stock Option" shall have the meaning specified in Section
       3.2.

1.2.   Interpretations

                (a) In this Agreement, unless a clear contrary intention
appears, (i) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision, (ii) reference to any Article or Section,
means such Article or Section hereof, (iii) the words "including" (and with
correlative meaning "include") means including, without limiting the generality
of any description preceding such term, and (iv) where any provision of this
Agreement refers to action to be taken by any party,



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or which such party is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such party.

                (b) The Article and Section headings herein are for convenience
only and shall not affect the construction hereof.

                (c) No provision of this Agreement shall be interpreted or
construed against any party solely because that party or its legal
representative drafted such provision.


                                   ARTICLE II

                     Employment; Term; Positions and Duties

2.1.   Employment; Term

                Each Employer hereby employs Franke in an executive capacity and
Franke hereby accepts employment by each Employer, in each case on the terms and
conditions, and for the consideration, set forth in this Agreement. Franke's
employment hereunder shall commence on the date hereof and shall terminate on
the Expiration Date, unless earlier terminated as provided in Article IV.

2.2.   Positions and Duties

                (a) While employed hereunder, Franke shall serve as Chairman and
CEO of Holdings and shall have and may exercise all of the powers, functions,
duties and responsibilities normally attributable to such positions, including
(without limitation) such duties and responsibilities as are set forth with
respect to such positions in the certificate of incorporation and bylaws (as
from time to time in effect) of Holdings.

                (b) While employed hereunder, Franke shall serve as Chairman of
AWA and shall have and may exercise all of the powers, functions, duties and
responsibilities normally attributable to such position, including (without
limitation) such duties and responsibilities as are set forth with respect to
such position in the certificate of incorporation and bylaws (as from time to
time in effect) of AWA.

                (c) Franke shall have such additional duties and
responsibilities commensurate with the positions referred to above as from time
to time may be reasonably assigned to him by the Board.

                (d) While employed hereunder, Franke shall report directly and
exclusively to the Board and shall observe and comply with all lawful policies,
directions and instructions of the Board which are consistent with paragraphs
(a), (b) and (c) above.



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                (e) During the Employment Period, (i) the President of Holdings
and the President and CEO of AWA shall report directly to Franke, (ii) the chief
operating officer, the chief financial officer, the chief legal officer and the
chief public affairs officer of Holdings shall, unless otherwise directed by the
Board, report directly to Franke and (iii) the chief operating officer, the
chief financial officer, the chief legal officer and the chief public affairs
officer of AWA shall, unless other directed by Franke or the Board, report
jointly to Franke and the CEO of AWA.

                (f) Employers agree to use their reasonable best efforts to
cause Franke to be elected or appointed, or re-elected or re-appointed, as
director of each Employer at all times during the Employment Period.

                (g) While employed hereunder, Franke agrees to devote a
reasonable portion (which need not constitute a substantial portion) of his
business time, attention, skill and efforts to the faithful and efficient
performance of his duties hereunder as Chairman and CEO of Holdings and as
Chairman of AWA; provided, however, that Franke may engage in the following
activities so long as they do not interfere in any material respect with the
performance of Franke's duties and responsibilities hereunder: (i) serve on
corporate, civic or charitable boards or committees, (ii) deliver lectures,
fulfill speaking engagements or teach on a part-time basis at educational
institutions, (iii) manage his personal investments, (iv) serve as a managing
partner of Newbridge Latin American Fund and (v) render consultation and
financial advisory services to third parties. Employers acknowledge that Franke
is the principal owner of Franke & Company, Inc. through which Franke owns and
oversees equity interests in several enterprises and provides consultation and
financial advisory services to third parties.

2.3.   Place of Employment

                Franke's place of employment hereunder shall be at Holdings'
principal executive offices in the greater Phoenix, Arizona metropolitan area.


                                   ARTICLE III

                            Compensation and Benefits

3.1.   Base Salary

                (a) For services rendered by Franke under this Agreement,
Employers shall pay to Franke an annual cash base salary ("Base Salary") in the
amount (subject to adjustment as provided in paragraph (b) below) of (i)
$500,000 for the period ending June 30, 1997 and (ii) $250,000 for the remainder
of his employment hereunder. The Base Salary shall be payable semi-monthly as
earned during the Employment Period.




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                (b) The Base Salary may be increased by the Board at any time or
from time to time as the Board may deem appropriate. The Board may decrease the
Base Salary at any time or from time to time after September 30, 1997 as the
Board may deem appropriate; provided that in no event may the Base Salary be
decreased below $100,000 without the prior written consent of Franke.

3.2.   1996 Stock Option

                Franke has heretofore been granted several options to purchase
shares of Class B Common Stock of Holdings, the latest being an option purchase
71,000 shares of Class B Common Stock of Holdings for $12 per share (the "1996
Stock Option"). The following provisions of this Section 3.2 constitute the
agreement required with respect to the 1996 Stock Option under Paragraph 4(i) of
the Incentive Plan:

                (a) Subject to the approval by Holdings' stockholders of an
       appropriate increase in the number of shares covered by the Incentive
       Plan ("Stockholder Approval"), the 1996 Option shall become exercisable
       as to 10% of the shares covered thereby on October 28, 1997, as to 30% of
       the shares covered thereby on October 28, 1998 and as to 60% of the
       shares covered thereby on December 31, 1998, so that the 1996 Stock
       Option will be exercisable in full on December 31, 1998.

                (b) Upon the exercise of the 1996 Stock Option, the Person
       exercising the 1996 Stock Option shall pay to Holdings an amount equal to
       the exercise price, such amount to be paid (i) in cash, (ii) by
       delivering to Holdings issued and outstanding shares of Holdings' Class B
       Common Stock which have an aggregate Market Value per Share at the date
       of exercise equal to the exercise price, (iii) by directing Holdings to
       sell a sufficient number of shares to be acquired on exercise of the 1996
       Stock Option through a broker approved by Holdings, in which event the
       proceeds of such sale shall be applied by Holdings to the payment of the
       exercise price, with any surplus then remaining to be paid to the Person
       exercising the 1996 Stock Option or its designee or (iv) by any
       combination of the foregoing.

                (c) Upon the occurrence of a Change in Control, the 1996 Stock
       Option shall become automatically vested in full and may be exercised at
       any time thereafter; provided, however, in no event shall the 1996 Stock
       Option be exercisable before Stockholder Approval or after October 28,
       2006.

                (d) In the event Franke's employment is terminated by Franke
       pursuant to Section 4.1 other than for Good Reason or on account of
       Disability or by Holdings pursuant to Section 4.2 for Misconduct, the
       1996 Stock Option, to the extent then vested, may be exercised at any
       time within six months following the Termination Date, but not
       thereafter; provided, however, in no event shall the 1996 Stock Option be
       exercisable before Stockholder Approval or after October 28, 2006. To the
       extent the 1996 Stock Option is not vested on such Termination Date, the
       1996 Stock Option (or the portion thereof that is not vested on such
       Termination Date) shall automatically lapse and be canceled unexercised
       as of such Termination Date.


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                (e) The 1996 Stock Option shall become automatically vested in
       full on the date of Franke's death and may be exercised at any time
       within the one-year period beginning on the date of Franke's death, but
       not thereafter; provided, however, in no event shall the 1996 Stock
       Option be exercisable before Stockholder Approval or after October 28,
       2006.

                (f) In the event Franke's employment is terminated by reason of
       Disability, the 1996 Stock Option shall become automatically vested in
       full on the date of such Disability and may be exercised at any time
       within the 36-month period beginning on the date of such Disability, but
       not thereafter; provided, however, in no event shall the 1996 Stock
       Option be exercisable before Stockholder Approval or after October 28,
       2006.

                (g) Except as otherwise provided herein, the 1996 Stock Option
       may be exercised in whole or in part or in two or more successive parts.

                (h) The 1996 Stock Option shall not be transferrable by Franke
       except for transfers permitted by the Incentive Plan and except for
       transfers by will or by laws of descent and distribution. During the
       lifetime of Franke, the 1996 Stock Option may not be exercised by anyone
       other than Franke or the Person to whom the 1996 Stock Option has been
       transferred in accordance with the Incentive Plan.

                (i) The 1996 Stock Option may be exercised from time to time by
       a notice in writing which identifies the 1996 Stock Option and specifies
       the number of shares in respect of which it is being exercised. Such
       notice shall be delivered to the Secretary of Holdings or addressed to
       the Secretary of Holdings at its principal corporate offices. The date of
       exercise of the 1996 Stock Option shall be the date the exercise notice
       is hand delivered or mailed to the Secretary of Holdings, whichever is
       applicable. An election to exercise the 1996 Stock Option shall be
       irrevocable.

                (j) The 1996 Stock Option is not intended to qualify as an
       incentive stock option under Section 422 of the Code.

                (k) The provisions of this Section 3.2 shall survive the
termination of Franke's employment hereunder.

3.3.   Life Insurance

                During the Employment Period, Employers agree to maintain, at
all times and without cost to Franke, a term life insurance policy on the life
of Franke in the amount of $2 million, the proceeds of which, in the event of
Franke's death, shall be payable to one or more beneficiaries designated by
Franke or, in the absence of any such designation, to his estate. Such policy
shall be issued by a solvent insurance company reasonably acceptable to Franke.




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3.4.   Annual Administrative Expense Allowance

                (a) During the Employment Period, Employers shall to pay to
Franke or his designee, in accordance with past practices, an annual allowance
of $51,125 (subject to adjustment as provided in paragraph (b) below) for
administrative expenses incurred by Franke in connection with the performance of
his duties and responsibilities and the exercise of his powers and authority
under this Agreement. Each such annual allowance shall be paid to Franke in
twelve equal monthly installments. So long as Employers are not in default under
this Section 3.4, Franke shall be responsible for providing, in accordance with
past practices, at least one administrative assistant/secretary.

                (b) The amount of the annual allowance referred to in paragraph
(a) above shall be adjusted upwards or downwards, as the case may be, for each
calendar year commencing on or after January 1, 1997 by the amount of the
change, if any, in the Cost of Living during the prior calendar year based on
the Consumer Price Index - All Urban Consumers - All Items Less Shelter - West A
Region (1982-84=100) as published by the Bureau of Labor Statistics for the
United States Department of Labor; provided, however, than in no event shall the
amount of any such annual adjustment exceed 6%. If such Index is discontinued or
revised in any material respect, the parties shall mutually agree upon a
substitute index which shall thereafter be used in order to obtain substantially
the same result as would have been obtained had such Index had not been so
discontinued or revised.

3.5.   Business Expenses

                Each Employer shall, in accordance with the rules and policies
that it may establish from time to time for senior executives, reimburse Franke
(without duplication) for business expenses reasonably incurred in the
performance of Franke's duties hereunder. It is understood that Franke is
authorized to incur reasonable business expenses for promoting the businesses
and reputations of the Constituent Companies, including reasonable expenditures
for travel, lodging, meals and client and/or business associate entertainment.
Requests for reimbursement for such expenses must be accompanied by appropriate
documentation.

3.6.   Other Benefits

                Franke shall be entitled to receive all fringe benefits and
other perquisites that may be offered by the Employers to their senior
executives as a group or to any of its senior executives individually or to the
members of the Board, including, without limitation, (i) participation in the
various employee benefit plans or programs provided to senior executives of
Employers in general (including split-dollar life insurance and disability
insurance programs), subject to meeting the eligibility requirements with
respect to each of such benefit plans or programs, (ii) tax/financial planning
assistance, (iii) automobile allowances, (iv) club memberships, (v) on-line and
interline, positive space travel privileges, (vi) participation in Employers'
severance payment policies on plans for executives in general and (vii)
participation in Employers' retiree medical insurance programs, subject to
meeting the eligibility requirements of such programs other than the

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requirement relating to five years service with Employers, which requirement is
hereby waived. However, nothing in this Section 3.6 shall be deemed to prohibit
Employers from making any changes in any of the plans, programs or benefits
described herein, provided the change similarly affects all senior executives of
Employers or all members of the Board, as the case may be, similarly situated.
Notwithstanding the foregoing, Franke shall not be entitled to participate in
any incentive plans offered to key employees of either Employer other than the
Incentive Plan.

3.7.   No Director Fees

                In no event shall Franke be entitled to receive any additional
compensation for serving as a director of any Constituent Company during the
Employment Period.


                                   ARTICLE IV

                            Termination of Employment

4.1.   Termination by Franke

                Franke may, at any time prior to the Expiration Date, terminate
his employment hereunder for any reason by delivering a Notice of Termination to
the Board.

4.2.   Termination by Holdings

                Holdings may, at any time prior to the Expiration Date,
terminate Franke's employment hereunder for any reason by delivering a Notice of
Termination to Franke; provided, however, that in no event shall Holdings be
entitled to terminate Franke's employment hereunder prior to the Expiration Date
unless the Board shall duly adopt, by the affirmative vote of at least a
majority of the entire membership of the Board, a resolution authorizing such
termination and stating that, in the opinion of the Board, sufficient reason
exists therefor.

4.3.   Payment of Accrued Base Salary, Vacation Pay, etc.

                (a) Promptly upon the termination of Franke's employment
hereunder for any reason, Employers shall pay to Franke a lump sum amount for
(i) any unpaid Base Salary earned hereunder prior to the termination date, (ii)
all unused vacation time accrued by Franke as of the termination date in
accordance with Employers' vacation policies for senior executives, (iii) all
unpaid benefits earned by Franke as of the termination date under any and all
incentive compensation plans or programs of Employers, (iv) all amounts owing to
Franke under Sections 3.4


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and 3.5 and (v) any additional amounts or benefits which may be required to be
paid in a lump sum by applicable law.

                (b) A termination of Franke's employment in accordance with this
Agreement shall not alter or impair (i) any of Franke's rights or benefits under
or with respect to the 1996 Stock Option except as expressly provided in Section
3.2, (ii) any of Franke's rights or benefits under any prior employment
agreement relating to stock options or stock grants previously awarded to
Franke, (iii) any of Franke's rights or benefits under any other agreement with
either Employer or (iv) any of Franke's rights or benefits, if any, under
employee benefit plans or programs maintained by either Employer.

4.4.   Other Termination Benefits and Privileges

                The following provisions shall apply if Franke terminates his
employment hereunder for Good Reason or if Holdings terminates Franke's
employment hereunder for any reason other than Misconduct or Disability:

                (a) Severance Payment. Employers shall promptly pay to Franke a
       severance payment (in cash or other immediately available funds) in the
       amount of (i) $1.5 million if the Termination Date is on or before June
       30, 1997 and (ii) $1.0 million if the Termination Date is after June 30,
       1997; provided, however, that such severance payment shall be reduced to
       the extent necessary so that no portion of such payment (or of any other
       payment or benefit which constitutes a "parachute payment" within the
       meaning of Section 280G of the Code and which Franke has received or is
       entitled to receive shall be subject to the excise tax imposed by Section
       4999 of the Code, but only if, by reason of such reduction, Franke's net
       after tax benefit shall exceed the net after tax benefit if such
       reduction were not made. In the event Franke shall become entitled to
       receive a severance payment pursuant to this paragraph (a) under
       circumstances which entitle him to receive a severance payment under any
       severance policy or plan of either Employer, then the severance payment
       due to Franke pursuant to such policy or plan shall be automatically
       reduced by the amount of the severance payment due to him pursuant to
       this paragraph (a).

                (b) Medical Insurance. During the 24-month period following the
       Termination Date, each Employer, at its cost, shall maintain in full
       force and effect for the continued benefit of Franke and Franke's
       dependents all benefits available to Franke and Franke's dependents under
       all medical plans and programs of such Employer, provided that (i)
       Franke's continued participation is possible under the terms and
       provisions of such plans and programs and (ii) Franke pays the regular
       employee premium, if any, required by such plans and programs. In the
       event that participation by Franke (or his dependents) in any such plan



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       or program after the Termination Date is barred pursuant to the terms
       thereof, or in the event either Employer shall terminate any such plan or
       program, such Employer shall obtain for Franke (and/or his dependents)
       comparable coverage under individual policies.

                (c) Life Insurance. During the 12-month period following the
       Termination Date, each Employer, at its cost, shall continue to provide
       Franke all life insurance coverages (and in the same amounts) provided to
       him by either Employer immediately prior to the date on which the
       relevant Notice of Termination is given in accordance with this Article
       IV.

                (d) Travel Privileges. Each Employer shall provide Franke (and
       his wife and dependents) lifetime on-line and interline, positive space
       travel privileges in accordance with the terms of its non-revenue travel
       policy as in effect on the date hereof; provided, however, that the
       travel privileges to be provided to Franke (and his wife and dependents)
       by each Employer under this clause (d) shall be at least as favorable to
       Franke (and his wife and dependents) as the travel privileges generally
       provided to the senior executives of such Employer from time to time.

4.5.   Payment of Benefits During Pendency of Dispute

                Holdings may, within 10 days after its receipt of a Notice of
Termination given by Franke, provide notice to Franke that a dispute exists
concerning the termination, in which event such dispute shall be resolved in
accordance with Article VII. Franke may, within 10 days after his receipt of a
Notice of Termination given by Holdings, provide notice to Holdings that a
dispute exists concerning the termination, in which event such dispute shall be
resolved in accordance with Article VII. Notwithstanding the pendency of any
such dispute and notwithstanding any provision herein to the contrary, Employers
will (i) continue to pay Franke the Base Salary in effect when the notice giving
rise to the dispute was given and (ii) continue Franke as a participant in all
compensation and benefit plans in which Franke was participating when the notice
giving rise to the dispute was given, until the dispute is finally resolved or,
with respect to a Notice of Termination given by Franke, the date of termination
specified in such notice, if earlier, but, in each case, not past the Expiration
Date. If (i) Holdings gives a Notice of Termination to Franke, (ii) Franke
disputes the termination as contemplated by this Section 4.5 and (iii) such
dispute is finally resolved in favor of Employers in accordance with Article
VII, then Franke shall be required to refund to Employers any amounts paid to
Franke under this Section 4.5 but only if, and then only to the extent, Franke
is not otherwise entitled to receive such amounts under this Agreement.




                                      -13-
<PAGE>   15
4.6.   Resignation as a Director

                In the event Franke's employment under this Agreement is
terminated for any reason, Franke agrees, if requested by the Board, to resign
as a director of all Constituent Companies of which he is a director, such
resignation to be effective immediately or at such later time as the Board shall
request.



                                    ARTICLE V

                  Confidential Information and Non-Competition

5.1.   Confidential Information

                (a) Franke recognizes that the services to be performed by him
hereunder are special, unique and extraordinary and that, by reason of his
employment with Employers and the positions described in paragraphs (a) and (b)
of Section 2.2, he may acquire Confidential Information (defined below)
concerning one or more of the Constituent Companies, the use or disclosure of
which would cause the Constituent Companies substantial loss and damages which
could not be readily calculated and for which no remedy at law would be
adequate. Accordingly, Franke agrees that he will not (directly or indirectly)
at any time, whether during or after his employment hereunder, disclose any such
Confidential Information to any Person except (i) in the performance of his
obligations to the Constituent Companies hereunder, (ii) as required by
applicable law, (iii) in connection with the enforcement of his rights under
this Agreement, the 1995 Agreement or any other agreement, (iv) in connection
with any disagreement, dispute or litigation (pending or threatened) between
Franke and one or more of the Constituent Companies or (v) with the prior
written consent of the Board. As used herein, "Confidential Information"
includes information with respect to the services, strategies, facilities and
methods, research and development, trade secrets and other intellectual
property, pricing and revenue management systems, patents and patent
applications, procedures, manuals, confidential reports, financial information,
business plans, prospects or opportunities of any Constituent Company; provided,
however, that such term shall not include any information that (x) is or becomes
generally known or available other than as a result of a disclosure by Franke or
(y) is or becomes known or available to Franke on a nonconfidential basis from a
source (other than Employers) which, to Franke's knowledge, is not prohibited
from disclosing such information to Franke by a legal, contractual, fiduciary or
other obligation to any Constituent Company.

                (b) Franke confirms that all Confidential Information is the
exclusive property of the relevant Constituent Company. All business records,
papers and documents kept or made by


                                      -14-
<PAGE>   16
Franke (whether electronically or otherwise) while employed by any Constituent
Company relating to the business of any Constituent Company shall be and remain
the property of such Constituent Company at all times. Upon the request of
Holdings at any time, Franke shall promptly deliver to Holdings, and shall
retain no copies of, any electronic media or written materials, records and
documents made by Franke or coming into his possession while employed by any
Constituent Company concerning the business or affairs of any Constituent
Company other than personal materials, records and documents (including notes
and correspondence) of Franke not containing proprietary information relating to
such business or affairs. Notwithstanding the foregoing, Franke shall be
permitted to retain copies of, or have access to, all such materials, records
and documents relating to any disagreement, dispute or litigation (pending or
threatened) between Franke and any Constituent Company.

5.2.   Non-Competition

                (a) While employed hereunder and for a period of 18 months
thereafter (the "Restricted Period"), Franke shall not, unless he receives the
prior written consent of the Board, own an interest in, manage, operate, join,
control, lend money or render financial or other assistance to or participate in
or be connected with, as an officer, employee, partner, stockholder, consultant
or otherwise, any Person which competes with either Employer in the United
States other than Alaska Airlines, American Airlines, Continental Airlines,
Delta Airlines, Northwest Airlines, TWA, United Airlines, USAir and ValueJet;
provided, however, that the foregoing restriction shall not apply at any time if
Franke's employment is terminated by Franke for Good Reason or by Holdings for
any reason other than Misconduct.

                (b) Franke has carefully read and considered the provisions of
this Section 5.2 and, having done so, agrees that the restrictions set forth in
this Section 5.2 (including the Restricted Period, scope of activity to be
restrained and the geographical scope) are fair and reasonable and are
reasonably required for the protection of the interests of each Employer, its
officers, directors, employees, creditors and shareholders. Franke understands
that the restrictions contained in this Section 5.2 may limit his ability to
engage in a business similar to that of any Constituent Company, but
acknowledges that he will receive sufficiently high remuneration and other
benefits hereunder to justify such restrictions.

                (c) During the Restricted Period, Franke shall not, whether for
his own account or for the account of any other Person (excluding Holdings),
intentionally (i) solicit, endeavor to entice or induce any employee of any
Constituent Company to terminate his employment with such Constituent Company or
accept employment with anyone else or (ii) interfere in a similar manner with
the business of any Constituent Company.



                                      -15-
<PAGE>   17
                (d) In the event that any provision of this Section 5.2 relating
to the Restricted Period and/or the areas of restriction shall be declared by a
court of competent jurisdiction to exceed the maximum time period or areas such
court deems reasonable and enforceable, the Restricted Period and/or areas of
restriction deemed reasonable and enforceable by the court shall become and
thereafter be the maximum time period and/or areas.

5.3.   Stock Ownership

                Nothing in this Agreement shall prohibit Franke from acquiring
or holding any issue of stock or securities of any Person that has any
securities registered under Section 12 of the Exchange Act, listed on a national
securities exchange or quoted on The Nasdaq Stock Market so long as (i) Franke
is not deemed to be an "affiliate" of such Person as such term is used in
paragraphs (c) and (d) of Rule 145 under the Securities Act and (ii) Franke and
members of his immediate family do not own or hold more than 5% of any voting
securities of any such Person.

5.4.   Injunctive Relief

                Franke acknowledges that a breach of any of the covenants
contained in this Article V may result in material irreparable injury to the
Constituent Companies for which there is no adequate remedy at law, that it will
not be possible to measure damages for such injuries precisely and that, in the
event of such a breach, any payments remaining under the terms of this Agreement
shall cease and the Constituent Companies (or any of them) shall be entitled to
obtain a temporary restraining order and/or a preliminary or permanent
injunction restraining Franke from engaging in activities prohibited by this
Article V or such other relief as may required to specifically enforce any of
the covenants contained in this Article V. Franke agrees to and hereby does
submit to in personam jurisdiction before each and every such court for that
purpose.


                                   ARTICLE VI

                          Piggyback Registration Rights

6.1.   Definitions

                Capitalized terms used herein and in Exhibit A hereto that are
not otherwise defined herein shall have the meanings ascribed to them in that
certain Registration Rights Agreement dated August 25, 1994 among AWA, AmWest
Partners, L.P., Lehman Brothers Inc., Belmont Capital Partners II, L.P., Belmont
Fund, L.P. and Fidelity Copernicus Fund, L.P. and in that certain Assumption of
Certain Rights Under Registration Rights Agreement executed by Holdings


                                      -16-
<PAGE>   18
(collectively, "AmWest Registration Rights Agreement"), to which agreements
reference is made for such definitions and for all purposes. In addition, the
following terms, as used in this Article VI, have the following meanings:

                "Holders" shall mean (i) Franke, his heirs and personal
       representatives (ii) any other Person to whom Holdings has granted the
       right to have Registrable Securities held by such Person included in a
       registration statement filed by Holdings covering the offer and sale of
       its securities and (iii) any direct or indirect transferee of Registrable
       Securities.

                "Registrable Securities" means:

                (1)      all equity securities of Holdings acquired by Franke as
                         compensation for serving as an officer of either
                         Employer, including, without limitation, (a) stock
                         options, (b) any shares issued on exercise of stock
                         options and (c) any securities issued or issuable with
                         respect to any such securities by way of stock dividend
                         or stock split or in connection with a combination of
                         shares, recapitalization, merger, consolidation or
                         other reorganization or otherwise,

                (2)      Registrable Securities as such term is defined in the
                         AmWest Registration Rights Agreement, and

                (3)      equity securities of Holdings held by any other Person
                         to whom Holdings has granted the right to have such
                         equity securities included in a registration statement
                         filed by Holdings covering the offer and sale of its
                         securities.

       As to any particular Registrable Securities, once issued such securities
       shall cease to be Registrable Securities when (i) a registration
       statement with respect to the sale of such securities shall have become
       effective under the Securities Act and such securities shall have been
       disposed of in accordance with the plan of distribution set forth in such
       registration statement, (ii) such securities shall have been distributed
       in accordance with Rule 144, (iii) Holdings has caused to be delivered an
       opinion of counsel in accordance with Section 6.2(c) that such securities
       are distributable in accordance with Rule 144 or (iv) such securities
       shall have been otherwise transferred, new certificates therefor not
       bearing a legend restricting further transfer shall have been delivered
       in exchange therefor by Holdings and subsequent disposition of such
       securities shall not require registration or qualification under the
       Securities Act or any similar state law then in force.




                                      -17-
<PAGE>   19
                "Requisite Holders" means any Holder or Holders of a majority in
       interest of the Registrable Securities included or to be included in a
       registration or other relevant action, as the case may be.

6.2.   Piggyback Registration

                (a) Right to Include Registrable Securities. If Holdings at any
time proposes to register any of its equity securities under the Securities Act
(other than by a registration (i) on Form S-4 or Form S-8, or any successor or
similar form then in effect or (ii) pursuant to Section 2.1 of the AmWest
Registration Rights Agreement) in a form and in a manner that would permit
registration of the Registrable Securities, whether or not for sale for its own
account, it will give prompt (but in no event less than 30 days prior to the
proposed date of filing the registration statement relating to such
registration) notice to all Holders of Registrable Securities of Holdings'
intention to do so and of such Holders' rights under this Section 6.2. Upon the
request of any such Holder made within 20 days after the receipt by such Holder
of any such notice (which request shall specify the Registrable Securities
intended to be disposed of by such Holder and the intended method or methods of
disposition thereof) (the "Piggyback Registration Notice"), Holdings will use
Commercially Reasonable Efforts to effect the registration under the Securities
Act of all Registrable Securities which Holdings has been so requested to
register by the Holders thereof, to the extent required to permit the
disposition (in accordance with the intended method or methods thereof as
aforesaid) of the Registrable Securities so to be registered, provided that if,
at any time after giving notice of its intention to register any equity
securities and prior to the effective date of the registration statement filed
in connection with such registration, Holdings shall determine for any reason
not to register or to delay registration of such equity securities, Holdings
may, at its election, give notice of such determination to each such Holder and,
thereupon, (i) in the case of a determination not to register, shall be relieved
of its obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay all Registration Expenses in
connection therewith) and (ii) in the case of a determination to delay
registering, shall be permitted to delay registering any Registrable Securities
for the same period as the delay in registering such other equity securities.

                (b) Priority in Piggyback Registration. If (i) a registration
pursuant to this Section 6.2 involves an underwritten offering of the securities
being registered, whether or not for sale for the account of Holdings, to be
distributed (on a firm commitment basis) by or through one or more underwriters
of recognized standing under underwriting terms appropriate for such a
transaction and (ii) the managing underwriter of such underwritten offering
shall inform Holdings and the Holders requesting such registration by letter of
its belief that the amount of securities requested to be included in such
registration exceeds the amount which can be sold in (or during the time of)
such offering within a price range acceptable to Holdings, then Holdings will
include in such registration



                                      -18-
<PAGE>   20
such amount of securities which Holdings is so advised can be sold in (or during
the time of) such offering as follows: first, all securities proposed by
Holdings to be sold for its own account; second, such securities of Holdings
requested to be included in such registration pursuant to the terms of the
AmWest Registration Rights Agreement; third, such Registrable Securities
requested to be included in such registration by all other Holders pro rata on
the basis of the amount of such securities so proposed to be sold and so
requested to be included by such Holders; and fourth, all other securities of
Holdings requested to be included in such registration pro rata on the basis of
the amount of such securities so proposed to be sold and so requested to be
included.

                (c) The Holders shall be entitled to exercise their registration
rights pursuant to this Section 6.2 at any time or times until all of the
Registrable Securities have been sold pursuant to an effective registration
statement under the Securities Act, or until Holdings shall have obtained an
opinion of counsel reasonably acceptable to Holdings and Holders that such
Registrable Securities may be sold without registration pursuant to available
exemptions under Rule 144 without limitation on amount.

6.3.   Registration Procedures

                Each registration pursuant to Section 6.2 shall be effected in
accordance with the procedures, and subject to the indemnification and other
provisions, set forth in Exhibit A hereto.


                                   ARTICLE VII

                               Dispute Resolution

                (a) In the event a dispute shall arise between Franke, on the
one hand, and Holdings or AWA, on the other hand, as to whether the provisions
of this Agreement have been complied with (a "Dispute"), the parties agree to
resolve such Dispute in accordance with the following procedure:

                (1) A meeting shall be held promptly between Franke and
       Holdings, attended (in the case of Holdings) by one or more individuals
       with decision-making authority regarding the Dispute, to attempt in good
       faith to negotiate a resolution of the Dispute.

                (2) If, within 10 days after such meeting, Franke and Holdings
       have not succeeded in negotiating a resolution of the Dispute, the
       Dispute shall be submitted to mediation in accordance with the Commercial
       Mediation Rules of the American Arbitration Association.




                                      -19-
<PAGE>   21
                (3) Franke and Holdings will jointly appoint a mutually
       acceptable mediator, seeking assistance in such regard from the American
       Arbitration Association if they have been unable to agree upon such
       appointment within 10 days following the 10-day period referred to in
       clause (2) above.

                (4) Upon appointment of the mediator, Franke and Holdings agree
       to participate in good faith in the mediation and negotiations relating
       thereto for 15 days.

                (5) If Franke and Holdings are not successful in resolving the
       Dispute through mediation within such 15-day period, the Dispute shall be
       settled by arbitration in accordance with the Expedited Procedures of the
       Commercial Arbitration Rules of the American Arbitration Association.

                (6) The fees and expenses of the mediator/arbitrators shall be
       borne solely by the non-prevailing party or, in the event there is no
       clear prevailing party, as the mediator/arbitrators deem appropriate.

                (7) If any dispute shall arise under this Agreement involving
       termination of Franke's employment with Employers or involving the
       failure or refusal of Employers to fully perform in accordance with the
       terms hereof, Employers shall reimburse Franke (without duplication), on
       a current basis, for all legal fees and expenses, if any, incurred by
       Franke in connection with such dispute, together with interest thereon at
       the rate of 8% per annum, such interest to accrue from the date Holdings
       receives Franke's statement for such fees and expenses through the date
       of payment thereof; provided, however, that in the event the resolution
       of such dispute in accordance with this Article VII includes a finding
       denying, in all material respects, Franke's claims in such dispute,
       Franke shall be required to reimburse Employers, over a period not to
       exceed 12 months from the date of such resolution, for all sums advanced
       to Franke with respect to such dispute pursuant to this paragraph (7).

                (8) Except as provided above, each of Franke and Holdings shall
       pay its own costs and expenses (including, without limitation, attorneys'
       fees) relating to any mediation/arbitration proceeding conducted under
       this Article VII.

                (9) All mediation/arbitration conferences and hearings will be
       held in Maricopa County, Arizona.

                (b) In the event there is any disputed question of law involved
in any arbitration proceeding, such as the proper legal interpretation of any
provision of this Agreement, the arbitrators shall make separate and distinct
findings of all facts material to the disputed question of


                                      -20-
<PAGE>   22
law to be decided and, on the basis of the facts so found, express their
conclusion of the question of law. The facts so found shall be conclusive and
binding on the parties, but any legal conclusion reached by the arbitrators from
such facts may be submitted by either Franke or Holdings to a court of law for
final determination by initiation of a civil action in the manner provided by
law. Such action, to be valid, must be commenced within 20 days after receipt of
the arbitrators' decision. If no such civil action is commenced within such
20-day period, the legal conclusion reached by the arbitrators shall be
conclusive and binding on the parties. Any such civil action shall be submitted,
heard and determined solely on the basis of the facts found by the arbitrators.
Neither Franke or Holdings shall, or shall be entitled to, submit any additional
or different facts for consideration by the court. In the event any civil action
is commenced under this paragraph (b) and if Franke is the party who prevails or
substantially prevails (as determined by the court) in such civil action, Franke
shall be entitled to recover from Employers all costs, expenses and reasonable
attorneys' fees incurred by Franke in connection with such action and on appeal.
In the event any civil action is commenced under this paragraph (b) and if
Holdings is the party who prevails or substantially prevails (as determined by
the court) in such civil action, Holdings shall be entitled to recover from
Franke all costs, expenses and reasonable attorneys' fees incurred by Employers
in connection with such action and on appeal.

                (c) Except as limited by paragraph (b) above, the parties agree
that judgment upon the award rendered by the arbitrators may be entered in any
court of competent jurisdiction. In the event legal proceedings are commenced to
enforce the rights awarded in an arbitration proceeding and if Franke is the
party who prevails or substantially prevails in such legal proceeding, Franke
shall be entitled to recover from Employers all costs, expenses and reasonable
attorneys' fees incurred by Franke in connection with such legal proceeding and
on appeal. In the event any civil action is commenced to enforce the rights
awarded in an arbitration proceeding and if Holdings is the party who prevails
or substantially prevails (as determined by the court) in such civil action,
Holdings shall be entitled to recover from Franke all costs, expenses and
reasonable attorneys' fees incurred by Employers in connection with such action
and on appeal.

                (d) Except as provided above, (i) no legal action may be brought
by any party with respect to any Dispute and (ii) all Disputes shall be
determined only in accordance with the procedures set forth above.




                                      -21-
<PAGE>   23
                                  ARTICLE VIII

                Antidilution Provisions and Reservation of Shares

8.1.   Antidilution

                (a) In the event of any change after the date hereof in the
number of issued shares of common stock (or any class thereof) of Holdings by
reason of any stock dividend, split-up, recapitalization, merger, combination,
conversion, exchange of shares or other change in the corporate or capital
structure of Holdings, then there shall be appropriate and equitable adjustments
made (with adjustments being cumulative if more than one of such events shall
have occurred) in the number and kind of shares of stock or other securities of
Holdings thereafter issued to Franke upon exercise of the 1996 Stock Option and
any other stock options heretofore or hereafter granted to Franke under the
Incentive Plan. Whenever an adjustment is made as required or permitted by the
provisions of this paragraph (a), Holdings shall promptly deliver to Franke
written notice thereof setting forth a brief statement of the facts requiring
such adjustment and the computation thereof.

                (b) In case of any liquidation, dissolution or winding up of the
affairs of Holdings, Holdings shall make prompt, proportionate, equitable,
lawful and adequate provision as part of the terms of such dissolution,
liquidation or winding up such that Franke may thereafter receive, in lieu of
each share which Franke would have been entitled to receive upon exercise of the
1996 Stock Option or any other option to purchase shares of Class B Common Stock
of Holdings, the same kind and amount of any stock, securities or assets as may
be issuable, distributable or payable on any such dissolution, liquidation or
winding up with respect to each outstanding share of Class B Common Stock of
Holdings.

8.2.   Covenant to Reserve Shares for Issuance

                Holdings covenants that it will at all times reserve and keep
available (free of preemptive rights) out of its authorized and unissued shares
of Class B Common Stock, solely for the purpose of issuance upon exercise of
options granted to Franke to purchase shares of Class B Common Stock of
Holdings, the full number of shares of Class B Common Stock of Holdings, if any,
then issuable upon exercise of such options. Holdings further covenants that all
shares of Class B Common Stock which shall be so issuable shall be duly and
validly issued and fully paid and non-assessable.




                                      -22-
<PAGE>   24
                                   ARTICLE IX

                                  Miscellaneous

9.1.   No Mitigation or Set Off

                The provisions of this Agreement are not intended to, nor shall
they be construed to, require that Franke mitigate the amount of any payment
provided for in this Agreement by seeking or accepting other employment, nor
shall the amount of any payment provided for in this Agreement be reduced by any
compensation earned by Franke as the result of employment by another employer or
otherwise. Without limitation of the foregoing, Employers' obligations to make
the payments to Franke required under this Agreement and otherwise to perform
their obligations hereunder shall not be affected by any set off, counterclaim,
recoupment, defense or other claim, right or action that either Employer may
have against Franke.

9.2.   Assignability

                The obligations of Franke hereunder are personal and may not be
assigned or delegated by Franke or transferred in any manner whatsoever, nor are
such obligations subject to involuntary alienation, assignment or transfer. Each
Employer shall have the right to assign this Agreement and to delegate all its
rights, duties and obligations hereunder as provided in Section 9.5.

9.3.   Notices

                All notices and all other communications provided for in the
Agreement shall be in writing and shall be sent, delivered or mailed, addressed
as follows: (i) if to Employers (or either of them), at Holdings principal
office address or such other address as Holdings may have designated by written
notice to Franke for purposes hereof, directed to the attention of the Board
with a copy to the Secretary of Holdings and (ii) if to Franke, at his residence
address on the records of Holdings or to such other address as he may have
designated to Holdings in writing for purposes hereof. Each such notice or other
communication shall be deemed to have been duly given when delivered or mailed
by United States registered mail, return receipt requested, postage prepaid,
except that any notice of change of address shall be effective only upon
receipt.

9.4.   Severability

                The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.



                                      -23-
<PAGE>   25
9.5.   Successors; Binding Agreement

                (a) Each Employer 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 such Employer, by agreement
in form and substance reasonably acceptable to Franke, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
such Employer would be required to perform it if no such succession had taken
place. Failure of such Employer to obtain such agreement prior to the
effectiveness of any such succession shall be a material breach of this
Agreement. As used herein, (i) the term "Holdings" shall include any successor
to its business and/or assets as aforesaid which executes and delivers the
Agreement provided for in this Section 9.5 or which otherwise becomes bound by
all terms and provisions of this Agreement by operation of law and (ii) the term
"AWA" shall include any successor to its business and/or assets as aforesaid
which executes and delivers the Agreement provided for in this Section 9.5 or
which otherwise becomes bound by all terms and provisions of this Agreement by
operation of law.

                (b) This Agreement and all rights of Franke hereunder shall
inure to the benefit of and be enforceable by Franke's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Franke should die while any amounts would be payable
to him hereunder if he had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
Franke's devisee, legatee, or other designee or, if there be no such designee,
to Franke's estate.

                (c) This Agreement and all rights of the Constituent Companies
hereunder shall inure to the benefit of an be enforceable by the Constituent
Companies and their respective successors and assigns.

9.6.   Tax Withholdings

                Each Employer shall withhold from all payments hereunder all
applicable taxes (federal, state or other) which it is required to withhold
therefrom unless Franke has otherwise paid to such Employer the amount of such
taxes.

9.7.   Amendments and Waivers

                No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by Franke and such member of the Board as may be specifically
authorized by the Board. No waiver by any party hereto at any time of any breach
by any other party hereto of, or in compliance with, any condition or provision


                                      -24-
<PAGE>   26
of this Agreement to be performed by such other party shall be deemed a waiver
of similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.

9.8.   Entire Agreement; Termination of Employment under 1995 Agreement

                (a) The parties acknowledge, confirm and agree that Franke's
employment under the 1995 Agreement shall automatically terminate on the date
hereof, the same as if the Expiration Date (as defined in the 1995 Agreement)
occurred on the date hereof.

                (b) This Agreement is an integration of the parties agreement
and no agreement or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by any party which are not
set forth expressly in this Agreement.

9.9.   Governing Law

                THE VALIDITY, INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF ARIZONA WITHOUT
REGARD TO ITS CONFLICT OF LAWS PROVISION.

9.10.  Counterparts

                This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

9.11.  Indemnification

                Without Franke's prior written consent, neither Employer not
amend, modify or repeal any provision of its certificate of incorporation or
bylaws if such amendment, modification or repeal would materially adversely
affect Franke's rights to indemnification by such Employer.

9.12.  Remedies Cumulative

                No right, power or remedy granted under this Agreement is
intended to be exclusive, but each shall be cumulative and in addition to any
other rights, powers or remedies referred to in this Agreement or otherwise
available at law or in equity.

9.13.  Joint and Several Liability

                The obligations of Employers hereunder shall be joint and
several.



                                      -25-
<PAGE>   27
                IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.

                                     AMERICA WEST HOLDINGS CORPORATION



                                     By:    /s/  Richard C. Kraemer
                                        ----------------------------------------
                                         Richard C. Kraemer
                                         Chairman, Compensation/Human
                                         Resources Committee

                                     AMERICA WEST AIRLINES, INC.



                                     By:   /s/  Stephen L. Johnson
                                        ----------------------------------------
                                           Stephen L. Johnson
                                           Senior Vice President - Legal Affairs




                                           /s/  William A. Franke
                                     -------------------------------------------
                                     William A. Franke




                                      -26-