##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-K
 (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2006oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to  US Airways Group,
    Inc.
 (Exact name of registrant as
    specified in its charter)
  (Commission File
    No. 1-8444)
 Delaware

54-1194634(State or other Jurisdiction
    of
    Incorporation or Organization)

(IRS Employer
    Identification No.)    111 West Rio Salado Parkway, Tempe, Arizona 85281 (Address of principal
    executive offices, including zip code)
   (480) 693-0800 (Registrants telephone
    number, including area code)
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $0.01 par value

New York Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act: None
 America West Airlines,
    Inc.
 (Exact name of registrant as
    specified in its charter)
  (Commission File
    No. 0-12337)
 Delaware

86-0418245(State or other Jurisdiction
    of
    Incorporation or Organization)

(IRS Employer
    Identification No.)   4000 East Sky Harbor Blvd., Phoenix, Arizona 85034 (Address of principal
    executive offices, including zip code)
   (480) 693-0800 (Registrants telephone
    number, including area code)
  Securities registered pursuant to Section 12(b) of the
    Act: None
  Securities registered pursuant to Section 12(g) of the
    Act: None
 US Airways, Inc.
 (Exact name of registrant as
    specified in its charter)
  (Commission File
    No. 1-8442)
 Delaware

53-0218143(State or other Jurisdiction
    of
    Incorporation or Organization)

(IRS Employer
    Identification No.)    111 West Rio Salado Parkway, Tempe, Arizona 85281 (Address of principal
    executive offices, including zip code)
   (480) 693-0800 (Registrants telephone
    number, including area code)
  Securities registered pursuant to Section 12(b) of the
    Act: None
  Securities registered pursuant to Section 12(g) of the
    Act: None
  DOCUMENTS INCORPORATED BY REFERENCE
  Form 10-K.
   (Continued on following
    page)




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##### Table of Contents



(Continued from previous
    page)
    US Airways Group, Inc.

Yes þ

No oAmerica West Airlines, Inc.

Yes o

No þUS Airways, Inc.

Yes o

No þ     US Airways Group, Inc.

Yes o

No þAmerica West Airlines, Inc.

Yes o

No þUS Airways, Inc.

Yes o

No þ   þ o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  US Airways Group, Inc.

Large accelerated filer
    þ

Accelerated filer
    o

Non-accelerated filer
    oAmerica West Airlines, Inc.

Large accelerated filer
    o

Accelerated filer
    o

Non-accelerated filer
    þUS Airways, Inc.

Large accelerated filer
    o

Accelerated filer
    o

Non-accelerated filer
    þ   Rule 12b-2
  US Airways Group, Inc.

Yes o

No þAmerica West Airlines, Inc.

Yes o

No þUS Airways, Inc.

Yes o

No þ       US Airways Group, Inc.

Yes þ

No oUS Airways, Inc.

Yes þ

No o




---



##### 



US Airways
    Group, Inc.
    America West Airlines, Inc.
    US Airways, Inc.Form 10-K
    Year Ended December 31, 2006
    Table of Contents
  PagePART IItem 1.


Business


4Item 1A.


Risk
    Factors


17Item 1B.


Unresolved Staff
    Comments


24Item 2.


Properties


24Item 3.


Legal
    Proceedings


28Item 4.


Submission of
    Matters to a Vote of Security Holders


30PART IIItem 5.


Market for
    US Airways Groups Common Equity, Related Stockholder
    Matters and Issuer Purchases of Equity Securities


30Item 6.


Selected Financial
    Data


31Item 7.


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


35Item 7A.


Quantitative and
    Qualitative Disclosures About Market Risk


73Item 8A.


Consolidated
    Financial Statements and Supplementary Data of US Airways
    Group, Inc.


76Item 8B.


Consolidated
    Financial Statements and Supplementary Data of America West
    Airlines, Inc.


131Item 8C.


Financial
    Statements and Supplementary Data of US Airways,
    Inc.


165Item 9.


Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


219Item 9A.


Controls and
    Procedures


219Item 9B.


Other
    Information


219PART IIIItem 10.


Directors,
    Executive Officers and Corporate Governance


220Item 11.


Executive
    Compensation


220Item 12.


Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters


220Item 13.


Certain
    Relationships and Related Transactions and Director
    Independence


220Item 14.


Principal
    Accountant Fees and Services


220PART IVItem 15.


Exhibits and
    Financial Statement Schedules


221SIGNATURES


235EX-10.46EX-10.128EX-23.1EX-31.1EX-31.2EX-31.3EX-31.4EX-31.5EX-31.6EX-32.1EX-32.2EX-32.3   1




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##### Table of Contents



Form 10-K Form 10-K
  Note Concerning
    Forward-Looking Statements
    
    the impact of high fuel costs, significant disruptions in the
    supply of aircraft fuel and further significant increases to
    fuel prices;
    our high level of fixed obligations and our ability to obtain
    and maintain financing for operations and other purposes;
    our ability to achieve the synergies anticipated as a result of
    the merger and to achieve those synergies in a timely manner;
    our ability to integrate the management, operations and labor
    groups of US Airways Group and America West Holdings;
    labor costs and relations with unionized employees generally and
    the impact and outcome of labor negotiations;
    the impact of global instability, including the current
    instability in the Middle East, the continuing impact of the
    military presence in Iraq and Afghanistan, the terrorist attacks
    of September 11, 2001 and the potential impact of future
    hostilities, terrorist attacks, infectious disease outbreaks or
    other global events that affect travel behavior;
    reliance on automated systems and the impact of any failure or
    disruption of these systems;
    the impact of future significant operating losses;
    changes in prevailing interest rates;
    our ability to obtain and maintain commercially reasonable terms
    with vendors and service providers and our reliance on those
    vendors and service providers;
    security-related and insurance costs;
    changes in government legislation and regulation;
    our ability to use pre-merger NOLs and certain other tax
    attributes;
    competitive practices in the industry, including significant
    fare restructuring activities, capacity reductions and in court
    or out of court restructuring by major airlines;
    continued existence of prepetition liabilities;
    interruptions or disruptions in service at one or more of our
    hub airports; 2




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##### Table of Contents




    weather conditions;
    our ability to maintain adequate liquidity;
    our ability to maintain contracts that are critical to our
    operations;
    our ability to operate pursuant to the terms of our financing
    facilities (particularly the financial covenants);
    our ability to attract and retain customers;
    the cyclical nature of the airline industry;
    our ability to attract and retain qualified personnel;
    economic conditions; and
    other risks and uncertainties listed from time to time in our
    reports to the Securities and Exchange Commission.  Form 10-K.
 3




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##### Table of Contents



PART I  Item 1.
    Business  Overview
  (480) 693-0800, www.usairways.com.
       4




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##### Table of Contents



Form 10-K.
      1-800-SEC-0330. Form 10-K, Form 10-K, Form 10-Q, Form 8-K www.usairways.com www.sec.gov
  Airline
    Industry
          Airline
    Operations
  hub-and-spoke
  extended-over-water-equipped
 5




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##### Table of Contents



Express
    Operations
  US Airways
    Express Network
    agreed-upon
 6




---



##### Table of Contents



Number/TypeCarrier

Agreement Type


of AircraftPSA(1)


Capacity Purchase



49 regional jetsPiedmont(1)


Capacity Purchase



55 turbopropsChautauqua Airlines, Inc.


Capacity Purchase



30 regional jetsAir Wisconsin Airlines Corporation


Capacity Purchase



70 regional jetsRepublic


Capacity Purchase



28 regional jetsColgan Airlines, Inc.


Prorate



29 turbopropsAir Midwest, Inc.


Prorate



14 turbopropsTrans States Airlines, Inc.


Prorate



7 regional jets     (1)
    
    PSA and Piedmont are wholly owned subsidiaries of
    US Airways Group.    America
    West Express
    Marketing
    and Alliance Agreements with Other Airlines
   7




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##### Table of Contents



AWA
      US Airways
      Competition
    in the Airline Industry
  market-by-market
     8




---



##### Table of Contents



Industry
    Regulation and Airport Access
             9




---



##### Table of Contents



10




---



##### Table of Contents



Employees
    and Labor Relations
        ContractUnion

Class or Craft


Employees(1)


AmendableAWA:Air Line Pilots Association
    (ALPA)


Pilots



1,700



12/30/2006
(2)Association of Flight
    Attendants-CWA (AFA)


Flight Attendants



2,500



05/04/2004
(3)International Association of
    Machinists & Aerospace Workers (IAM)


Mechanic and Related



700



10/07/2003
(4)IAM


Fleet Service



2,000



06/12/2005
(5)Transport Workers Union
    (TWU)


Dispatch



40



04/01/2008
(6)Airline Customer Service Employee
    Association  IBT and CWA (the Association)


Passenger Service



2,600



12/31/2011
(7)IAM


Stock Clerks



60



04/04/2008
(4)US Airways:ALPA


Pilots



2,600



12/31/2009
(2)AFA


Flight Attendants



4,600



12/31/2011
(3)IAM


Mechanic and Related



2,600



12/31/2009IAM


Fleet Service



3,700



12/31/2009IAM


Maintenance Training Specialists



10



12/31/2009The Association


Passenger Service



2,800



12/31/2011TWU


Dispatch



100



12/31/2009TWU


Flight Simulator Engineers



30



12/31/2011TWU


Flight Crew Training Instructors



50



12/31/2011  11




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##### Table of Contents



(1)
    
    Approximate number of active full-time equivalent employees
    covered by the contract as of December 31, 2006.(2)
    
    In negotiations for a single labor agreement applicable to both
    AWA and US Airways.(3)
    
    In negotiations for a single labor agreement applicable to both
    AWA and US Airways. On December 15, 2005, the National
    Mediation Board recessed AFAs separate contract
    negotiations with AWA indefinitely.(4)
    
    In negotiations to transition to the US Airways-IAM
    mechanic and related labor agreement.(5)
    
    In negotiations to transition to the US Airways-IAM fleet
    service labor agreement.(6)
    
    In December 2006, US Airways, AWA and TWU reached a
    transition agreement to transition the AWA dispatchers to the
    US Airways-TWU dispatcher labor agreement.(7)
    
    On June 1, 2006, US Airways, AWA and the Association
    reached a final transition agreement to transition the AWA
    passenger service employees to the US Airways passenger
    service labor agreement.  Union disputes, employee strikes
    and other labor-related disruptions may adversely affect our
    operations.
  Aviation
    Fuel
        Average Price


Aircraft Fuel


Percentage of TotalYear

Gallons


per Gallon(1)


Expense(1)


Operating Expenses2006


775


$
2.07


$
1,607



21.5%2005


842



1.77



1,486



20.0%2004


884



1.12



991



13.4%     (1)
    
    Includes fuel taxes. US Airways had no fuel hedges in 2006 and
    2005 and the impact has been excluded for 2004.   12




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##### Table of Contents



Average Price


Aircraft Fuel


Percentage of TotalYear

Gallons


per Gallon(1)


Expense(1)


Operating Expenses2006


435


$
2.09


$
911



24.8%2005


449



1.80



812



24.0%2004


450



1.31



590



21.3%     (1)
    
    Includes fuel taxes and excludes the impact of fuel hedges,
    which is described in Item 7 under AWAs Results
    of Operations.      
    the impact of global political instability on crude production;
    unexpected changes to the availability of petroleum products due
    to disruptions in distribution systems or refineries, as
    evidenced in the third quarter of 2005 when Hurricane Katrina
    and Hurricane Rita caused widespread disruption to oil
    production, refinery operations and pipeline capacity along
    certain portions of the U.S. Gulf Coast. As a result of
    these disruptions, the price of jet fuel increased significantly
    and the availability of jet fuel supplies was diminished;
    unpredictable increases to oil demand due to weather or the pace
    of economic growth;
    inventory levels of crude, refined products and natural
    gas; and
    other factors, such as the relative fluctuation between the
    U.S. dollar and other major currencies and the influence of
    speculative positions on the futures exchanges.  Insurance
    
    liability for injury to members of the public, including
    passengers;
    damage to property of US Airways Group, its subsidiaries
    and others;
    loss of or damage to flight equipment, whether on the ground or
    in flight;
    fire and extended coverage;
    directors and officers liability;
    travel agents errors and omissions;
    advertiser and media liability;
    fiduciary; and
    workers compensation and employers liability.   13




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##### Table of Contents



Customer
    Service
    Full Year2006


2005


2004On-time performance(a)


76.9



77.8



78.1Completion factor(b)


98.9



98.2



98.4Mishandled baggage(c)


7.82



7.68



4.85Customer complaints(d)


1.35



1.55



1.14     (a)
    
    Percentage of reported flight operations arriving on time as
    defined by the DOT.(b)
    
    Percentage of scheduled flight operations completed.(c)
    
    Rate of mishandled baggage reports per 1,000 passengers.(d)
    
    Rate of customer complaints filed with the DOT per 100,000
    passengers.  year-over-year,
  Frequent
    Traveler Program
       14




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Ticket
    Distribution
    www.usairways.com www.usairways.com
    www.usairways.com.
    www.usairwaysvacations.com www.usvtravelagents.com
 15




---



##### Table of Contents



e-travel
    Pre-merger
    US Airways Groups Chapter 11 Bankruptcy
    Proceedings
       16




---



##### Table of Contents



Item 1A.
    Risk
    Factors    Risk
    Factors Relating to the Company and Industry Related
    Risks
  Our
    business is dependent on the price and availability of aircraft
    fuel. Continued periods of historically high fuel costs,
    significant disruptions in the supply of aircraft fuel or
    significant further increases in fuel costs could have a
    significant negative impact on our operating
    results.
    Our
    high level of fixed obligations limits our ability to fund
    general corporate requirements and obtain additional financing,
    limits our flexibility in responding to competitive developments
    and increases our vulnerability to adverse economic and industry
    conditions.
    
    A decrease in revenues results in a disproportionately greater
    percentage decrease in earnings.
    We may not have sufficient liquidity to fund all of these fixed
    costs if our revenues decline or costs increase.
    We may have to use our working capital to fund these fixed costs
    instead of funding general corporate requirements, including
    capital expenditures.
    We may not have sufficient liquidity to respond to competitive
    developments and adverse economic conditions.   17




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##### Table of Contents



Union
    disputes, employee strikes and other labor-related disruptions
    may adversely affect our operations.
      We
    rely heavily on automated systems to operate our business and
    any failure of these systems, or the failure to integrate them
    successfully following the merger, could harm our
    business.
      We
    might not be able to fully realize the synergies generated by
    the merger.
   18




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##### Table of Contents



The
    integration of US Airways Group and America West Holdings
    following the merger continues to present significant
    challenges.
    The
    inability to maintain labor costs at competitive levels could
    harm our financial performance.
      Our
    future growth is dependent on obtaining adequate operating
    facilities at airports throughout our network.
    The
    travel industry continues to face ongoing security
    concerns.
    Delays
    in scheduled aircraft deliveries or other loss of anticipated
    fleet capacity may adversely impact our operations and financial
    results.
   19




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##### Table of Contents



Fluctuations
    in interest rates could adversely affect our liquidity,
    operating expenses and results.
    If we
    incur problems with any of our third party service providers,
    our operations could be adversely affected by a resulting
    decline in revenue or negative public perception about our
    services.
    Increases
    in insurance costs or reductions in insurance coverage may
    adversely impact our operations and financial
    results.
    Changes
    in government regulation could increase our operating costs and
    limit our ability to conduct our business.
   20




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##### Table of Contents



Ongoing
    data security compliance requirements could increase our costs
    and any significant data breach could harm our business,
    financial condition or results of operations.
    The
    airline industry is intensely competitive.
      The
    loss of key personnel upon whom we depend to operate our
    business or the inability to attract additional qualified
    personnel could adversely affect the results of our operations
    or our financial performance.
   21




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##### Table of Contents



Interruptions
    or disruptions in service at one of our hub airports could have
    a material adverse impact on our operations.
    We are
    at risk of losses and adverse publicity stemming from any
    accident involving any of our aircraft.
    Our
    business is subject to weather factors and seasonal variations
    in airline travel, which cause our results to
    fluctuate.
    The
    use of America West Holdings and US Airways Groups
    respective pre-merger NOLs and certain other tax attributes
    could be limited in the future.
    Employee
    benefit plans represent significant continuing costs to the
    sponsoring employers.
   22




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##### Table of Contents



US Airways
    Group could experience significant operating losses in the
    future.
      Risks
    Related to Our Common Stock
  Our
    common stock has limited trading history and its market price
    may be volatile.
    
    our operating results failing to meet the expectations of
    securities analysts or investors;
    changes in financial estimates or recommendations by securities
    analysts;
    material announcements by us or our competitors;
    movements in fuel prices;
    new regulatory pronouncements and changes in regulatory
    guidelines;
    general and industry-specific economic conditions;
    public sales of a substantial number of shares of our common
    stock; and
    general market conditions.  Conversion
    of our convertible notes will dilute the ownership interest of
    existing stockholders and could adversely affect the market
    price of our common stock.
    A
    small number of stockholders beneficially own a substantial
    amount of our common stock.
   23




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##### Table of Contents



Certain
    provisions of the amended and restated certificate of
    incorporation and amended and restated bylaws of US Airways
    Group make it difficult for stockholders to change the
    composition of our board of directors and may discourage
    takeover attempts that some of our stockholders might consider
    beneficial.
    
    a classified board of directors with three-year staggered terms;
    advance notice procedures for stockholder proposals to be
    considered at stockholders meetings;
    the ability of US Airways Groups board of directors
    to fill vacancies on the board;
    a prohibition against stockholders taking action by written
    consent;
    a prohibition against stockholders calling special meetings of
    stockholders;
    a requirement that holders of at least 80% of the voting power
    of the shares entitled to vote in the election of directors
    approve amendment of the amended and restated bylaws; and
    super-majority voting requirements to modify or amend specified
    provisions of US Airways Groups amended and restated
    certificate of incorporation.    Our
    charter documents include provisions limiting voting and
    ownership by foreign owners.
  non-U.S. citizen
  Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties  Flight
    Equipment
    737-300, 757-200, 737-300 757-200
 24




---



##### Table of Contents



737-300 757-200
    AWA
  Owned/Aircraft Type

Avg. Seats


Mortgaged(1)


Leased(2)


Total


Avg. AgeA319


124







39



39



5.5A320


150







55



55



9.4B737-300


134







27



27



18.4B757-200


190







12



12



20.3Total


143







133



133



11.1   US Airways
  Owned/Aircraft Type

Avg. Seats


Mortgaged(1)


Leased(2)


Total


Avg. AgeA330-300


266



4



5



9



6.3A321


169



15



13



28



5.5A320


147



8



12



20



6.9A319


124



3



51



54



6.8B767-200


203







10



10



17.4B757-200


193



3



31



34



15.3B737-400


144







40



40



16.8B737-300


126







29



29



18.9ERJ 190


99



2







2



0.0Total


155



35



191



226



11.7     (1)
    
    All owned aircraft are pledged as collateral for various secured
    financing agreements.(2)
    
    The terms of the leases expire between 2007 and 2024.    Average Seat











AverageAircraft Type

Capacity


Owned


Leased(1)


Total


Age (years)CRJ-700


70



7



7



14



2.3CRJ-200


50



12



23



35



2.8De Havilland Dash
    8-300


50







11



11



15.3De Havilland Dash
    8-100


37



33



11



44



16.2Total


47



52



52



104



9.8  25




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##### Table of Contents



(1)
    
    The terms of the leases expire between 2007 and 2022.        2007


2008


2009


2010


2011


ThereafterAWAFirm orders remaining






5



20



12







Lessor put options


1



















Lease terminations:






















Scheduled expirations


5



14



9



25



5



75Lessor call options


7



















US AirwaysFirm orders remaining


9



14











2



18Lease terminations:Scheduled expirations


22



44



20



7



5



93       Average











Leased/Type

Age (years)


Owned


Leased


Total


SubleasedDe Havilland Dash 8


16.7



1







1



     Ground
    Facilities
    
    executive and administrative offices in Tempe, Arizona;
    its principal operating, overhaul and maintenance bases at the
    Pittsburgh International, Charlotte/Douglas International and
    Phoenix Sky Harbor International Airports;
    training facilities in Phoenix and Charlotte;
    central reservations offices in Winston-Salem, North Carolina,
    Tempe, Arizona and Reno, Nevada; and
    line maintenance bases and local ticket, cargo and
    administrative offices throughout its system. 26




---



##### Table of Contents



ApproximateInternal FloorPrincipal Properties

Description

Area (sq. ft.)

Nature of OwnershipTempe, AZ Headquarters

Nine story complex housing
    headquarters for US Airways Group

225,000

Lease expires April 2014.Tempe, AZ

Administrative office complex

148,000

Lease expires May 2013.Philadelphia International Airport

68 exclusive gates, ticket counter
    space and concourse areas

545,000

Lease expired June 2006. Gate use
    governed by
    month-to-month
    rates and charges program.Charlotte/Douglas International
    Airport

36 exclusive gates, ticket counter
    space and concourse areas

226,000

Lease expires June 2016.Phoenix Sky Harbor International
    Airport

42 exclusive gates, ticket counter
    space and administrative offices

330,000

Airport Use Agreement expires June
    2016. Gate use governed by month-to-month rates and charges
    program.Pittsburgh International Airport

10 exclusive gates, ticket counter
    space and concourse areas

122,000

Lease expires May 2018.Las Vegas McCarran International
    Airport

17 exclusive gates, ticket counter
    space and concourse areas

115,000

Lease expires June 2008.Reagan National

15 gates, ticket counter space and
    concourse areas

80,000

Lease expires September 2014.Maintenance facility 
    Charlotte, NC

Hangar bays, hangar shops, ground
    service equipment shops, cargo, catering and warehouse

847,000

Facilities and land leased from the
    City of Charlotte. Lease expires June 2017.Maintenance facility 
    Pittsburgh, PA

Hangar bays, hangar shops, ground
    service equipment shops, cargo, catering and warehouse

649,000

Facilities and land leased from
    Allegheny County Airport Authority. Lease expires December 2010.Maintenance and technical support
    facility at Phoenix Sky Harbor International Airport

Four hangar bays, hangar shops,
    office space, warehouse and commissary facilities

375,000

Facilities and land leased from the
    City of Phoenix. Lease expires September 2019.Training facility 
    Charlotte, NC

Classroom training facilities and
    ten full flight simulator bays

159,000

Facilities and land leased from the
    City of Charlotte. Lease expires June 2017.Flight Training and Systems
    Operations Control Center, Phoenix, AZ

Complex accommodates training
    facilities, systems operation control and crew scheduling
    functions

164,000

Facilities and land leased from the
    City of Phoenix. Lease expires February 2031.Operations Control
    Center  Pittsburgh, PA

Complex accommodates systems
    operation control and crew scheduling functions

61,000

Lease expires March 2009.    27




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Terminal
    Construction Projects
    Item 3.
    Legal
    Proceedings  04-13819-SSM 03-13823-SSM)
     28




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29




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Item 4.
    Submission
    of Matters to a Vote of Security Holders   PART II  Item 5.
    Market
    for US Airways Groups Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity Securities
  Stock
    Exchange Listing
    over-the-counter
  Market
    Prices of Common Stock
  over-the-counter
  Year EndedDecember 31


Period

High


Low2006


Fourth Quarter

$
63.27


$
43.81Third Quarter


56.41



36.80Second Quarter


52.18



36.19First Quarter


40.60



28.302005


Fourth Quarter

$
38.80


$
20.85Third Quarter (from
    September 27, 2005 to September 30, 2005)


21.40



19.29Third Quarter (from July 1,
    2005 to September 26, 2005)(1)


0.77



0.15Second Quarter


1.49



0.62First Quarter


1.31



0.69     (1)
    
    As described above, the Class A common stock of pre-merger
    US Airways Group was cancelled upon the effectiveness of
    the plan of reorganization on September 27, 2005. 30




---



##### Table of Contents



Foreign
    Ownership Restrictions
  non-U.S. citizens
 Item 6.  Selected
    Financial Data  Selected
    Consolidated Financial Data of US Airways Group
    Year Ended December 31,2006


2005


2004


2003


2002(In millions except share data)Consolidated statements of
    operations data:Operating revenues

$
11,557


$
5,069


$
2,757


$
2,572


$
2,337Operating expenses(a)


10,999



5,286



2,777



2,539



2,497Operating income (loss)(a)


558



(217
)


(20
)


33



(160
)Income (loss) before cumulative
    effect of change in accounting principle(b)


303



(335
)


(89
)


57



(180
)Cumulative effect of accounting
    change(c)


1



(202
)










(208
)Net income (loss)


304



(537
)


(89
)


57



(388
)Earnings (loss) per share before
    cumulative effect of change in accounting principle:Basic


3.50



(10.65
)


(5.99
)


4.03



(12.92
)Diluted


3.32



(10.65
)


(5.99
)


3.07



(12.92
) 31




---



##### Table of Contents



Year Ended December 31,2006


2005


2004


2003


2002(In millions except share data)Cumulative effect of change in
    accounting principleBasic


0.01



(6.41
)










(14.97
)Diluted


0.01



(6.41
)










(14.97
)Earnings (loss) per share:Basic


3.51



(17.06
)


(5.99
)


4.03



(27.89
)Diluted


3.33



(17.06
)


(5.99
)


3.07



(27.89
)Unaudited pro forma net income
    (loss) (assuming change in method of maintenance accounting was
    applied retroactively)


303



(335
)


(142
)


52



(386
)Unaudited pro forma earnings
    (loss) per shareBasic


3.50



(10.65
)


(9.53
)


3.71



(27.76
)Diluted


3.32



(10.65
)


(9.53
)


2.87



(27.76
)Shares used for computation (in
    thousands):Basic


86,447



31,488



14,861



14,252



13,911Diluted


93,821



31,488



14,861



23,147



13,911Consolidated balance sheet data
    (at end of period):Total assets

$
7,576


$
6,964


$
1,475


$
1,614


$
1,439Long-term obligations, less
    current maturities(d)


3,689



3,631



640



697



713Total stockholders equity


970



420



36



126



68     (a)
    
    The 2006 results include $131 million of merger related
    transition expenses, offset by a $90 million gain
    associated with the return of equipment deposits upon
    forgiveness of a loan and $14 million of gains associated
    with the settlement of bankruptcy claims.The 2005 results include $121 million of special charges,
    including $28 million of merger related transition
    expenses, a $27 million loss on the sale and leaseback of
    six Boeing
    737-300
    aircraft and two Boeing 757 aircraft, $7 million of power
    by the hour program penalties associated with the return of
    certain leased aircraft and a $50 million charge related to
    an amended Airbus purchase agreement, along with the write off
    of $7 million in capitalized interest. The Airbus
    restructuring fee was paid by means of set-off against existing
    equipment purchase deposits held by Airbus.AWAs 2004 results include a $16 million net credit
    associated with the termination of the rate per engine hour
    agreement with General Electric Engine Services for overhaul
    maintenance services on V2500-A1 engines. This credit was
    partially offset by $2 million of net charges related to
    the return of certain Boeing
    737-200
    aircraft, which includes termination payments of
    $2 million, the write-down of leasehold improvements and
    deferred rent of $3 million, offset by the net reversal of
    maintenance reserves of $3 million related to the returned
    aircraft.AWAs 2003 results include $16 million of charges
    resulting from the elimination of AWAs hub operations in
    Columbus, Ohio ($11 million), the
    reduction-in-force
    of certain management, professional and administrative employees
    ($2 million) and the impairment of certain owned Boeing
    737-200
    aircraft that were grounded ($3 million), offset by a
    $1 million reduction due to a revision of the estimated
    costs related to the early termination of certain aircraft
    leases and a $1 million reduction related to the revision
    of estimated costs associated with the sale and leaseback of
    certain aircraft. 32




---



##### Table of Contents



The 2002 period includes $19 million of charges primarily
    related to the restructuring completed on January 18, 2002,
    resulting from the events of September 11, 2001.(b)
    
    The 2006 period includes a non-cash expense for income taxes of
    $85 million related to the utilization of NOL acquired from
    US Airways. The valuation allowance associated with these
    acquired NOL was recognized as a reduction of goodwill rather
    than a reduction in tax expense. In addition, the period
    includes $6 million of prepayment penalties and a
    $5 million write-off of debt issuance costs in connection
    with the $1.25 billion debt refinancing in the first
    quarter of 2006, $17 million in payments in connection with
    the inducement to convert $70 million of the 7% Senior
    Convertible Notes to common stock and a $2 million
    write-off of debt issuance costs associated with those converted
    notes, all of which was offset by $8 million of interest
    income earned by AWA on certain prior year Federal income tax
    refunds.Nonoperating income (expense) in the 2005 period includes an
    $8 million charge related to the write-off of the
    unamortized value of the Air Transportation Stabilization Board
    (ATSB) warrants upon their repurchase in October
    2005 and an aggregate $2 million write-off of debt issuance
    costs associated with the exchange of the 7.25% Senior
    Exchangeable Notes due 2023 and retirement of a portion of the
    loan formerly guaranteed by the ATSB. In the fourth quarter 2005
    period, US Airways recorded $4 million of
    mark-to-market
    gains attributable to stock options in Sabre and warrants in a
    number of
    e-commerce
    companies.The 2004 period includes a $1 million gain at AWA on the
    disposition of property and equipment due principally to the
    sale of one Boeing
    737-200
    aircraft and a $1 million charge for the write-off of debt
    issuance costs in connection with the refinancing of the term
    loan.The 2003 period includes federal government assistance of
    $81 million recognized as nonoperating income under the
    Emergency Wartime Supplemental Appropriations Act and
    $9 million in 2002 as nonoperating income under the Air
    Transportation Safety and System Stabilization Act.(c)
    
    The 2006 period includes a $1 million benefit which
    represents the cumulative effect on the accumulated deficit of
    the adoption of Statement of Financial Accounting Standards
    (SFAS) No. 123R. The adjustment reflects the
    impact of estimating future forfeitures for previously
    recognized compensation expense.The 2005 period includes a $202 million adjustment which
    represents the cumulative effect on the accumulated deficit of
    the adoption of the direct expense method of accounting for
    major scheduled airframe, engine and certain component overhaul
    costs as of January 1, 2005. (See Part II,
    Item 8A, Note 3 Change in Accounting Policy for
    Maintenance Costs).The 2002 period includes a $208 million adjustment which
    represents the cumulative effect on retained earnings of the
    adoption of SFAS No. 142, Goodwill and Other
    Intangible Assets which was issued by the FASB in June
    2001. SFAS No. 142 primarily addresses the accounting
    for goodwill and intangible assets subsequent to their
    acquisition. Under SFAS No. 142, Enterprise
    Reorganizational Value is reported as goodwill and accounted for
    in the same manner as goodwill. SFAS No. 142 was
    effective for fiscal years beginning after December 15,
    2001.(d)
    
    Includes debt, capital leases, postretirement benefits other
    than pensions (noncurrent) and employee benefit and other
    liabilities.  Selected
    Financial Data of US Airways, Inc.    Successor Company(a)



Predecessor Company(a)Three Months



Nine Months





Nine Months


Three MonthsYear Ended


Ended



Ended


Year Ended


Ended


Ended


Year EndedDecember 31,


December 31,



September 30,


December 31,


December 31,


March 31,


December 31,2006


2005



2005


2004


2003


2003


2002Operating revenues

$
8,056


$
1,755



$
5,452


$
7,068


$
5,250


$
1,512


$
6,915Operating expenses(b)


7,464



1,826




5,594



7,416



5,292



1,714



8,236Operating income (loss)(b)

$
592


$
(71
)


$
(142
)

$
(348
)

$
(42
)

$
(202
)

$
(1,321
)Net income (loss)(c)

$
345


$
(120
)


$
280


$
(578
)

$
(160
)

$
1,613


$
(1,659
)  33




---



##### Table of Contents



SuccessorCompany(a)



Predecessor Company(a)December 31,2006


2005



2004


2003


2002Total assets

$
5,123


$
4,808



$
8,250


$
8,349


$
6,464Long-term obligations(d)


1,787



2,493




4,815



4,591



5,009Total stockholders equity
    (deficit)


212



(133
)



(501
)


89



(4,956
)     (a)
    
    In connection with emergence from the first bankruptcy in March
    2003 and the second bankruptcy in September 2005,
    US Airways adopted fresh-start reporting in accordance with
    AICPA Statement of
    Position 90-7,
    Financial Reporting by Entities in Reorganization Under
    the Bankruptcy Code. As a result of the application of
    fresh-start reporting, the financial statements prior to
    March 31, 2003 are not comparable with the financial
    statements for the period April 1, 2003 to
    September 27, 2005, nor is either period comparable to
    periods after September 27, 2005. References to
    Successor Company refer to US Airways on and
    after September 27, 2005, after the application of
    fresh-start reporting for the second bankruptcy.(b)
    
    The 2006 results include $64 million of merger related
    transition expenses, offset by a $40 million gain
    associated with the return of equipment deposits upon
    forgiveness of a loan and $3 million of gains
    associated with the settlement of bankruptcy claims.The operating results for the three months ended
    December 31, 2005 include $15 million in
    merger-related transition costs.The operating results for the nine months ended
    December 31, 2003 include $212 million, net of amounts
    due to certain affiliates, reduction in operating expenses in
    connection with the reimbursement for certain aviation-related
    security expenses in connection with the Emergency Wartime
    Supplemental Appropriations Act and a $35 million charge in
    connection with US Airways intention not to take
    delivery of certain aircraft scheduled for future delivery.The results for the year ended December 31, 2002 include a
    $392 million charge as a result of an impairment analysis
    conducted on the B737-300, B737-400, B757-200 and B767-200
    aircraft fleets as a result of changes to the aircrafts
    recoverability periods, the planned conversion of owned aircraft
    to leased aircraft and indications of possible material changes
    to the market values of these aircraft. The analysis revealed
    that estimated undiscounted future cash flows generated by these
    aircraft were less than their carrying values for four
    B737-300s, 15 B737-400s, 21 B757-200s and three B767-200s. In
    accordance with SFAS No. 144, Accounting for the
    Impairment or Disposal of Long-Lived Assets, the carrying
    values were reduced to fair market value. The 2002 results also
    include a curtailment credit of $120 million related to
    certain postretirement benefit plans, a $30 million
    curtailment charge related to certain defined benefit pension
    plans and an impairment charge of $21 million related to
    capitalized gates at certain airports in accordance with
    SFAS No. 142, Goodwill and Other Intangible
    Assets. The carrying values of the affected gates were
    reduced to fair value based on a third-party appraisal.(c)
    
    In addition to the items discussed in note (b) above, net
    income (loss) reflects the following items for the periods
    indicated. The year ended December 31, 2006 includes a
    non-cash expense for income taxes of $85 million related to
    the utilization of $85 million of NOL acquired from
    US Airways. The release of the valuation allowance
    associated with these acquired NOL was recognized as a reduction
    of goodwill rather than a reduction in tax expense.The nine months ended September 30, 2005 and the year ended
    December 31, 2004 include reorganization items which
    amounted to a $636 million net gain and a $32 million
    expense, respectively. The nine months ended December 31,
    2003 include a $30 million gain on the sale of
    US Airways investment in Hotwire, Inc. In connection
    with US Airways first bankruptcy, a
    $1.89 billion gain and charges of $294 million
    attributable to reorganization items, net are included
    for the three months ended March 31, 2003 and the year
    ended December 31, 2002, respectively. 34




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##### Table of Contents



(d)
    
    Includes debt, capital leases, postretirement benefits other
    than pensions (noncurrent) and employee benefit and other
    liabilities. Also includes liabilities subject to compromise at
    December 31, 2004 and December 31, 2002.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Background
       35




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##### Table of Contents



2006
    Overview
  Merger
    Integration Update    
    Optimized our fleet mix to better match aircraft size with
    passenger demand. As a result, we expect to end 2007 with 359
    mainline aircraft (supported by approximately 229 regional jets
    and approximately 104 turboprops that provide passenger
    feed into the mainline system);
    Completed the consolidation of operations at 37 of 38 overlap
    cities by the end of 2006. The last remaining overlap city was
    completed in January 2007;
    Completed over 60% of the transition plan to move to one FAA
    operating certificate, which we anticipate completing during
    2007;
    Painted over 90 aircraft (69%) of the former America West
    mainline fleet in the new US Airways livery;
    Restructured and increased our Airbus order to 15 A321 aircraft,
    which includes seven additional A321 aircraft and converts
    prior commitments for seven A319 and one A320 aircraft to eight
    A321 aircraft;
    Amended an agreement with Republic, which will result in adding
    30 86-seat EMB 175 aircraft to the US Airways Express fleet
    in 2007 and 2008 that will be operated by Republic. These
    aircraft will offset a reduction of 50-seat EMB 145 aircraft
    operated by Chautauqua Airlines;
    Deployed over 6,000 new desktops throughout our airport network
    and the reservation centers in preparation for the cutover to
    one reservations system, which is scheduled to be completed by
    the end of the first quarter of 2007;
    Added $6.5 million of new ground equipment, 57 new managers
    and over 200 new full-time ramp employees at our Philadelphia
    hub to enhance the operational performance of this hub;
    Launched new international service to Lisbon, Stockholm and
    Milan and announced new international service to Zurich, Athens
    and Brussels to begin during June 2007;
    Achieved ETOPS (extended-range twin-engine operations)
    certification for Boeing 757 aircraft in long-range over-water
    service, which allowed us to begin new service to Hawaii; and
    Ranked second in 2006 among the major US airlines in on-time
    performance.    
    Completed a $1.25 billion refinancing, which was used to
    replace approximately $1.1 billion of outstanding debt at
    lower interest rates and with an extended amortization period;
    Redeemed approximately $112 million in principal amount of
    America West Holding Corporations 7.5 percent
    convertible senior notes due 2009 for approximately
    3.9 million shares of common stock, which lowered our
    annual interest expense by $8.4 million;
    Redeemed approximately $70 million in principal amount of
    our 7 percent senior convertible notes due in 2020 for
    approximately 2.9 million shares of common stock and a
    $17 million premium payment;
    Ended 2006 with unrestricted and restricted cash, cash
    equivalents and short-term investments totaling $3 billion,
    of which $2.4 billion was unrestricted;
    Completed the migration of myriad of back office systems
    including general ledger, accounts payable and revenue
    accounting, among others; and
    Migrated all employees to one healthcare provider, which is
    expected to result in annual savings of over $5 million. 36




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##### Table of Contents




    Launched the combined airlines new website,
    usairways.com. The new site integrated the former
    americawest.com and increases overall functionality. Bookings on
    the new website have exceeded the combined revenues from the two
    standalone sites;
    Merged the former AWA frequent flyer program, FlightFund, into
    US Airways frequent flyer program, Dividend Miles, to
    create one consolidated program that allows customers to more
    easily earn and redeem miles across our network and Star
    Alliance;
    Realigned the combined airlines fare class structure to
    simplify and establish an identical fare hierarchy across all
    US Airways and AWA operated flights;
    Released the new US Airways Vacation web site with improved
    functionality and eliminated the America West Vacations
    brand; and
    Developed and launched the new airline brand Fly with
    US and the new employee brand I make US fly.    
    Reached transition agreements with US Airways and
    AWAs pilots, flight attendants and fleet service personnel;
    Received single carrier certification by the National Mediation
    Board, which will further the process of getting to single
    representation for US Airways and AWAs
    mechanics and fleet service workers;
    Reached a final agreement with the Airline Customer Service
    Employee Association, an alliance between the Communication
    Workers of America (CWA) and the International Brotherhood of
    Teamsters (IBT), the two unions that represent the
    airlines 7,700 passenger service employees and
    reservations agents;
    Reached a final agreement with the Transport Workers Union
    (TWU), the union that represents flight dispatchers, on a single
    contract that transitions former AWA dispatchers to the labor
    agreement covering pre-merger US Airways dispatchers;
    Recalled 100 furloughed US Airways pilots and 200
    furloughed US Airways flight attendants, due to increased
    operations since the merger; and
    Increased hiring in the Winston-Salem, North Carolina and Reno,
    Nevada reservation centers to bring some of the currently
    outsourced reservations work back in-house.    
    Migration to a single reservation system by the end of the first
    quarter of 2007; and
    Completion of the transition plan to merge the airlines into one
    FAA operating certificate during 2007.    Cost
    Control   37




---



##### Table of Contents



Revenue
    Pricing Environment  year-over-year
  Customer
    Service    Full Year2006


2005


2004On-time performance(a)


76.9



77.8



78.1Completion factor(b)


98.9



98.2



98.4Mishandled baggage(c)


7.82



7.68



4.85Customer complaints(d)


1.35



1.55



1.14     (a)
    
    Percentage of reported flight operations arriving on time as
    defined by the DOT.(b)
    
    Percentage of scheduled flight operations completed.(c)
    
    Rate of mishandled baggage reports per 1,000 passengers.(d)
    
    Rate of customer complaints filed with the DOT per 100,000
    passengers.  year-over-year,
  US Airways
    Groups Results of Operations   38




---



##### Table of Contents



2006


2005


2004Consolidated


Consolidated





America


AmericaUS Airways


US Airways


96 Days


West


WestGroup


Group


US Airways(1)


Holdings


HoldingsOperating revenues

$
11,557


$
5,069


$
1,805


$
3,264


$
2,757Operating expenses


10,999



5,286



1,897



3,389



2,777Operating income (loss)


558



(217
)


(92
)


(125
)


(20
)Nonoperating expense, net


(154
)


(118
)


(44
)


(74
)


(69
)Income (loss) before cumulative
    effect of a change in accounting principle

$
303


$
(335
)

$
(136
)

$
(199
)

$
(89
)Diluted earnings (loss) per common
    share before cumulative effect of a change in accounting
    principle

$
3.32


$
(10.65
)

$
n/a


$
n/a


$
(5.99
)     (1)
    
    Includes US Airways and US Airways Groups wholly
    owned subsidiaries, PSA, Piedmont and MSC.  mark-to-market mark-to-market
    quarter-over-quarter
  
    A $28 million decrease in fuel expense as the average cost
    per gallon of fuel decreased 7.2%, representing a decrease in
    CASM of 0.17 cents, and
    A $26 million decrease in net special items, due to a
    decrease in the merger and transition related expenses,
    representing a decrease in CASM of 0.14 cents, partially offset
    by
    A $20 million increase in expense related to our profit
    sharing and other employee bonus programs, which are included in
    salaries and related costs on our consolidated statements of
    operations, representing an increase in CASM of 0.10 cents.   39




---



##### Table of Contents



mark-to-market
  737-300
  737-200
  mark-to-market
 40




---



##### Table of Contents



AWAs
    Results of Operations
  mark-to-market
      mark-to-market
  737-300
  737-200
  mark-to-market
 41




---



##### Table of Contents



Percent


PercentYear Ended December 31,


Change


Change2006


2005


2004


2006-2005


2005-2004Revenue passenger miles (in
    millions)(a)


23,559



24,260



23,333



(2.9
)


4.0Available seat miles (in
    millions)(b)


29,555



30,503



30,153



(3.1
)


1.2Load factor (percent)(c)


79.7



79.5



77.4



0.2 pts



2.1 ptsYield (cents)(d)


11.72



10.39



9.44



12.8



10.1Passenger revenue per available
    seat mile (cents)(e)


9.34



8.27



7.31



12.9



13.1Passenger enplanements (in
    thousands)(f)


21,260



22,130



21,132



(3.9
)


4.7Aircraft (end of period)


133



141



138



(5.7
)


2.2Block hours (in thousands)(g)


547



564



557



(3.0
)


1.3Average stage length (miles)(h)


1,026



1,028



1,052



(0.2
)


(2.3
)Average passenger journey
    (miles)(i)


1,576



1,659



1,686



(5.0
)


(1.6
)Fuel consumption (gallons in
    millions)


435



449



450



(3.1
)


(0.2
)Average fuel price including tax
    (dollars per gallon)


2.09



1.80



1.31



16.5



37.4Full-time equivalent employees
    (end of period)


13,038



12,100



11,893



7.8



1.7     (a)
    
    Revenue passenger mile (RPM)  A basic
    measure of sales volume. It is one passenger flown one mile.(b)
    
    Available seat mile (ASM)  A basic
    measure of production. It is one seat flown one statute mile.(c)
    
    Load factor  The percentage of available seats that
    are filled with revenue passengers.(d)
    
    Yield  A measure of airline revenue derived by
    dividing passenger revenue by revenue passenger miles and
    expressed in cents per mile.(e)
    
    Passenger revenue per available seat mile
    (PRASM)  Total passenger revenues divided
    by total available seat miles.(f)
    
    Passenger enplanements  The number of passengers on
    board an aircraft including local, connecting and through
    passengers.(g)
    
    Block hours  The hours measured from the moment an
    aircraft first moves under its own power, including taxi time,
    for the purposes of flight until the aircraft is docked at the
    next point of landing and its power is shut down.(h)
    
    Average stage length  The average of the distances
    flown on each segment of every route.(i)
    
    Average passenger journey  The average one-way trip
    measured in statute miles for one passenger origination. 42




---



##### Table of Contents



2006
    Compared With 2005
  Revenues:
  Percent2006


2005


Change(In millions)Operating revenues:Mainline passenger

$
2,761


$
2,521



9.5Express passenger


660



512



28.9Cargo


31



33



(6.1
)Other


184



197



(6.6
)Total operating revenues

$
3,636


$
3,263



11.4         Operating
    Expenses:
  Percent2006


2005


Change(In millions)Operating expenses:Aircraft fuel and related taxes

$
911


$
812



12.2Loss (gain) on fuel hedging
    instruments, net


79



(75
)


nmSalaries and related costs


735



701



4.9Aircraft rent


339



327



3.7Aircraft maintenance


242



259



(6.6
)Other rent and landing fees


175



176



(0.6
)Selling expenses


162



161



0.6Special items, net


17



106



(84.0
)Depreciation and amortization


46



53



(13.2
)Other


354



318



11.3Total mainline operating expenses


3,060



2,838



7.8Express expenses


611



545



12.1Total operating expenses

$
3,671


$
3,383



8.5    43




---



##### Table of Contents



year-over-year
    Year Ended December 31,


Percent2006


2005


Change(In cents)Mainline:Aircraft fuel and related taxes


3.08



2.66



15.8Loss (gain) on fuel hedging
    instruments, net


0.27



(0.25
)


nmSalaries and related costs


2.49



2.30



8.3Aircraft rent


1.15



1.07



6.9Aircraft maintenance


0.82



0.85



(3.6
)Other rent and landing fees


0.59



0.58



2.9Selling expenses


0.55



0.53



4.0Special items, net


0.06



0.35



(83.6
)Depreciation and amortization


0.15



0.17



(11.1
)Other


1.19



1.04



14.410.35



9.30



11.3     
    Aircraft fuel and related tax expense per ASM increased 15.8%
    due primarily to a 16.5% increase in the average price per
    gallon of fuel to $2.09 in 2006 from $1.80 in 2005.
    Salaries and related costs per ASM increased 8.3% primarily due
    to higher costs associated with employee incentive plans,
    including $23 million recorded for the US Airways
    Group profit sharing plan.
    Aircraft rent expense per ASM increased 6.9% due principally to
    aircraft mix, as previously owned and leased Boeing
    737-200 and
    737-300
    aircraft were retired, returned to aircraft lessors or sold and
    leased back in 2005 and 2006 and replaced with leased Airbus
    A320 and A319 aircraft at higher monthly lease rates.
    Depreciation and amortization expense per ASM decreased 11.1%
    due to a decrease in the number of owned aircraft in 2006 as a
    result of sale-leaseback transactions completed in 2005.
    Other operating expenses per ASM increased 14.4% in 2006
    primarily due to the transition from the FlightFund frequent
    flyer program to the Dividend Miles program, which results in
    higher costs due to the Dividend Miles program allowing members
    to redeem awards on Star Alliance partner airlines.  year-over-year
 44




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##### Table of Contents



Nonoperating
    Income (Expense):
  Percent2006


2005


Change(In millions)Nonoperating income (expense)Interest income

$
68


$
25



nmInterest expense, net


(57
)


(94
)


(39.4
)Other, net


(9
)


(6
)


50.0Total nonoperating income (expense)

$
2


$
(75
)


nm       2005
    Compared with 2004
  Revenues:
  Percent2005


2004


Change(In millions)Operating revenues:Mainline passenger

$
2,521


$
2,203



14.4Express passenger


512



353



45.0Cargo


33



28



17.9Other


197



172



14.5Total operating revenues

$
3,263


$
2,756



18.4        45




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##### Table of Contents



Operating
    Expenses:
  Percent2005


2004


Change(In millions)Operating expenses:Aircraft fuel and related taxes

$
812


$
590



37.6Loss (gain) on fuel hedging
    instruments, net


(75
)


(24
)


nmSalaries and related costs


701



655



7.0Aircraft rent


327



304



7.6Aircraft maintenance


259



206



25.7Other rent and landing fees


176



168



4.8Selling expenses


161



153



5.2Special items, net


106



(16
)


nmDepreciation and amortization


53



54



(1.9
)Other


318



308



3.3Total mainline operating expenses


2,838



2,398



18.4Express expenses


545



374



45.7Total operating expenses

$
3,383


$
2,772



22.0       Year Ended December 31,


Percent2005


2004


Change(In cents)Mainline:Aircraft fuel and related taxes


2.66



1.95



36.0Loss (gain) on fuel hedging
    instruments, net


(0.25
)


(0.08
)


nmSalaries and related costs


2.30



2.17



5.8Aircraft rent


1.07



1.01



6.3Aircraft maintenance


0.85



0.68



24.5Other rent and landing fees


0.58



0.56



3.8Selling expenses


0.53



0.51



4.2Special items, net


0.35



(0.05
)


nmDepreciation and amortization


0.17



0.18



(3.6
)Other


1.04



1.02



2.09.30



7.95



17.0     
    Aircraft fuel and related tax expense per ASM increased 36.0%
    due primarily to a 37.4% increase in the average price per
    gallon of fuel to $1.80 in 2005 from $1.31 in 2004. 46




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##### Table of Contents




    Salaries and related costs per ASM increased 5.8% primarily due
    to a $23 million increase in benefit related expenses,
    including $13 million in defined contribution plan payments
    that our pilots became eligible for beginning on January 1,
    2005, a $5 million increase related to self-funded
    disability requirements and higher medical insurance costs of
    $4 million. A $9 million accrual for employee
    performance bonuses also contributed to the increase.
    Aircraft rent expense per ASM increased 6.3% due principally to
    aircraft mix, as previously owned and leased Boeing
    737-200
    aircraft were retired or returned to aircraft lessors and
    replaced with leased Airbus A320 and A319 aircraft at higher
    monthly lease rates.
    Aircraft maintenance materials and repair expense per ASM
    increased 24.5% due principally to the change in AWAs
    accounting policy for certain maintenance costs in 2005
    discussed above. See Note 2, Change in Accounting
    Policy for Maintenance Costs, to AWAs consolidated
    financial statements in Item 8B of this report.  year-over-year year-over-year
  Nonoperating
    Income (Expense):
  Percent2005


2004


Change(In millions)Nonoperating income (expense)Interest income

$
25


$
14



78.6Interest expense, net


(94
)


(86
)


9.3Other, net


(6
)


3



nmTotal nonoperating income (expense)

$
(75
)

$
(69
)


8.7     737-200
  US Airways
    Results of Operations
  90-7,
 47




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##### Table of Contents



Percent


PercentYear Ended December 31,


Change


Change2006


2005


2004


2006-2005


2005-2004Mainline:Revenue passenger miles (in
    millions)(a)


37,130



38,895



39,970



(4.5
)


(2.7
)Available seat miles (in
    millions)(b)


47,428



51,518



53,229



(7.9
)


(3.2
)Load factor (percent)(c)


78.3



75.5



75.1



2.8 pts



0.4 ptsYield (cents)(d)


14.02



12.50



12.43



12.2



0.6Passenger revenue per available
    seat mile (cents)(e)


10.97



9.44



9.33



16.3



1.2Passenger enplanements (in
    thousands)(f)


36,085



39,977



41,518



(9.7
)


(3.7
)Aircraft (end of period)


226



232



281



(2.6
)


(17.4
)Block hours (in thousands)(g)


818



928



961



(11.9
)


(3.4
)Average stage length (miles)(h)


869



791



792



9.8



(0.1
)Average passenger journey
    (miles)(i)


1,029



973



963



5.8



1.0Fuel consumption (gallons in
    millions)


775



842



884



(8.0
)


(4.8
)Average fuel price including tax
    (dollars per gallon)


2.07



1.77



1.12



16.8



58.0Full-time equivalent employees
    (end of period)


19,421



20,110



26,670



(3.4
)


(24.6
)     (a)
    
    Revenue passenger mile (RPM)  A basic
    measure of sales volume. It is one passenger flown one mile.(b)
    
    Available seat mile (ASM)  A basic
    measure of production. It is one seat flown one statute mile.(c)
    
    Load factor  The percentage of available seats that
    are filled with revenue passengers.(d)
    
    Yield  A measure of airline revenue derived by
    dividing passenger revenue by revenue passenger miles and
    expressed in cents per mile.(e)
    
    Passenger revenue per available seat mile
    (PRASM)  Total passenger revenues divided
    by total available seat miles.(f)
    
    Passenger enplanements  The number of passengers on
    board an aircraft including local, connecting and through
    passengers.(g)
    
    Block hours  The hours measured from the moment an
    aircraft first moves under its own power, including taxi time,
    for the purposes of flight until the aircraft is docked at the
    next point of landing and its power is shut down.(h)
    
    Average stage length  The average of the distances
    flown on each segment of every route.(i)
    
    Average passenger journey  The average one-way trip
    measured in statute miles for one passenger origination. 48




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##### Table of Contents



2006
    Compared With 2005
  Revenues:
  Percent2006


2005


Change(In millions)Operating revenues:Mainline passenger

$
5,205


$
4,861



7.1Express passenger


2,084



1,620



28.6Cargo


122



96



27.1Other


645



630



2.4Total operating revenues

$
8,056


$
7,207



11.8         Operating
    Expenses:
  Percent2006


2005


Change(In millions)Operating expenses:Aircraft fuel and related taxes

$
1,607


$
1,486



8.1Salaries and related costs


1,354



1,403



(3.5
)Aircraft rent


393



391



0.5Aircraft maintenance


340



339



0.3Other rent and landing fees


393



420



(6.4
)Selling expenses


284



326



(12.9
)Special items, net


21



15



40.0Depreciation and amortization


138



189



(27.0
)Other


874



989



(11.6
)Total mainline operating expenses


5,404



5,558



(2.8
)Express expenses


2,060



1,862



10.6Total operating expenses

$
7,464


$
7,420



0.6    49




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##### Table of Contents



Year Ended December 31,


Percent2006


2005


Change(In cents)Mainline:Aircraft fuel and related taxes


3.39



2.88



17.4Salaries and related costs


2.86



2.72



4.9Aircraft rent


0.83



0.76



9.1Aircraft maintenance


0.72



0.66



9.0Other rent and landing fees


0.83



0.82



1.6Selling expenses


0.60



0.63



(5.4
)Depreciation and amortization


0.29



0.37



(20.7
)Special items, net


0.04



0.03



49.3Other


1.83



1.92



(3.9
)11.39



10.79



5.6     
    Aircraft fuel and related tax expense per ASM increased 17.4%
    primarily due to a 16.8% increase in the average price per
    gallon of fuel from $1.77 in 2005 to $2.07 in 2006.
    Salaries and related costs per ASM increased 4.9% primarily due
    to costs associated with employee incentive plans in 2006,
    including $36 million recorded for the US Airways
    Group profit sharing plan and that the 2005 period included a
    reduction of expenses of $71 million for amortization of
    prior service benefit associated with the curtailment of
    postretirement benefits.
    Aircraft rent expense per ASM increased 9.1% reflecting an
    increase in the mix of leased to owned aircraft in 2006 as a
    result of sale-leaseback transactions completed in 2005.
    Aircraft maintenance per ASM increased 9.0% reflecting an
    increase in rates on the renewal of certain power by the hour
    maintenance agreements and the timing of certain engine
    maintenance cycles.
    Selling expenses per ASM decreased 5.4% primarily due to
    reduction in travel agent commissions and booking fees as a
    result of lower rates renegotiated subsequent to the merger.
    Depreciation and amortization decreased 20.7% per ASM as a
    result of fewer owned aircraft in the operating fleet as a
    result of sale lease back transactions completed in 2005.   50




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##### Table of Contents



Nonoperating
    Income (Expense):
  Percent2006


2005


Change(In millions)Nonoperating income (expense)Interest income

$
84


$
26



nmInterest expense, net


(215
)


(287
)


(25.1
)Reorganization items, net






636



nmOther, net


13



(4
)


nmTotal nonoperating income (expense)

$
(118
)

$
371



nm     2005
    Compared With 2004
  Revenues:
  Percent2005


2004


Change(In millions)Operating revenues:Mainline passenger

$
4,861


$
4,969



(2.2
)Express passenger


1,620



1,378



17.6Cargo


96



132



(27.3
)Other


630



589



7.0Total operating revenues

$
7,207


$
7,068



2.0        51




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##### Table of Contents



Operating
    Expenses:
  Percent2005


2004


Change(In millions)Operating expenses:Aircraft fuel and related taxes

$
1,486



991



50.0Salaries and related costs


1,403



2,177



(35.6
)Aircraft rent


391



399



(2.0
)Aircraft maintenance


339



303



11.9Other rent and landing fees


420



445



(5.6
)Selling expenses


326



362



(9.9
)Special items, net


15







nmDepreciation and amortization


189



220



(14.1
)Other


989



947



4.4Total mainline operating expenses


5,558



5,844



(4.9
)Express expenses


1,862



1,572



18.5Total operating expenses

$
7,420


$
7,416



0.1       Year Ended December 31,


Percent2005


2004


Change(In cents)Mainline:Aircraft fuel and related taxes


2.88



1.86



54.8Salaries and related costs


2.72



4.09



(33.5
)Aircraft rent


0.76



0.75



1.3Aircraft maintenance


0.66



0.57



15.8Other rent and landing fees


0.82



0.84



(2.4
)Selling expenses


0.63



0.68



(7.4
)Depreciation and amortization


0.37



0.41



(9.8
)Special items, net


0.03







nmOther


1.92



1.78



7.910.79



10.98



(1.7
)     
    Aircraft fuel and related tax expense per ASM increased 54.8%
    primarily due to a 58.0% increase in the average price per
    gallon of fuel from $1.12 in 2004 to $1.77 in 2005, partially
    offset by a 4.8% decrease in consumption. 52




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##### Table of Contents




    Salaries and related costs per ASM decreased 33.5% primarily due
    to lower wage and benefits rates as a result of the cost-savings
    agreements achieved with each of the collective bargaining
    groups, including the termination of defined benefit pension
    plans and the curtailment of postretirement benefits, as well as
    lower headcount as compared to the same period in 2004.
    Aircraft maintenance per ASM increased 15.8% reflecting the
    shift to outside vendors to perform scheduled maintenance,
    partially offsetting the decrease in salaries and related costs
    described above.
    Selling expenses per ASM decreased 7.4% primarily due to
    reduction in travel agent commissions, the termination of
    certain marketing contracts and reductions in advertising
    programs as a result of the bankruptcy.
    Depreciation and amortization per ASM decreased 9.8% as a result
    of fewer owned aircraft in the operating fleet and lower book
    values on the continuing fleet as a result of fresh-start
    reporting.
    Other operating expenses per ASM increased 7.9% primarily as a
    result of increases associated with the redemption of Dividend
    Miles on partner airlines and future travel on US Airways
    as well as with outsourced aircraft cleaning services. These
    increases were partially offset by decreases in insurance
    expense, outsourced technology services and schedule-related
    costs including passenger food expenses.    Nonoperating
    Income (Expense):
  Percent2005


2004


Change(In millions)Nonoperating income (expense)Interest income

$
26


$
12



nmInterest expense, net


(287
)


(236
)


21.6Reorganization items, net


636



(32
)


nmOther, net


(4
)


19



nmTotal nonoperating income (expense)

$
371


$
(237
)


nm   mark-to-market
 53




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##### Table of Contents



Description
    of Reorganization Items
    Predecessor CompanyNine MonthsEnded


Year EndedSeptember 30,


December 31,2005


2004Curtailment of postretirement
    benefits(a)

$
1,420


$
Termination of pension plans(b)


801



Discharge of liabilities(c)


75



Aircraft order cancellation
    penalties & reversals(d)


30



(7
)Interest income on accumulated cash


7



4Damage and deficiency claims(e)


2



(2
)Revaluation of assets and
    liabilities(f)


(1,498
)


Severance including benefits(g)


(96
)


Professional fees


(57
)


(27
)Airbus equipment deposits and
    credits, net(h)


(35
)


Restructured aircraft financings(i)


(5
)


Write-off of deferred compensation


(4
)


Other


(4
)


$
636


$
(32
)     (a)
    
    In January 2005, the Bankruptcy Court approved settlement
    agreements between US Airways and its unions and the
    court-appointed Section 1114 Committee, representing
    retirees other than those represented by the IAM and TWU, to
    begin the significant curtailment of postretirement medical
    benefits. US Airways recognized a gain of $183 million
    in connection with this curtailment in the first quarter of
    2005. Upon the emergence from bankruptcy and effectiveness of
    the plan of reorganization, an additional gain of
    $1.24 billion was recognized when the liability associated
    with the postretirement medical benefits was reduced to fair
    market value. See also Note 6 to US Airways
    financial statements included in Item 8C of this report.(b)
    
    Also in January 2005, US Airways terminated three defined
    benefit plans related to the flight attendants, mechanics and
    certain other employees (see Note 6 to
    US Airways financial statements included in
    Item 8C of this report). The Pension Benefit Guaranty
    Corporation (PBGC) was appointed trustee of the
    plans upon termination. US Airways recognized a curtailment
    gain of $24 million and a $91 million minimum pension
    liability adjustment in connection with the terminations in the
    first quarter of 2005. Upon the effective date of the plan of
    reorganization and in connection with the settlement with the
    PBGC, the remaining liabilities associated with these plans were
    written off, net of settlement amounts.(c)
    
    Reflects the discharge of trade accounts payable and other
    liabilities upon emergence from bankruptcy. Most of these
    obligations were only entitled to receive such distributions of
    cash and common stock as provided for under the plan of
    reorganization in each of the bankruptcies. A portion of the
    liabilities subject to compromise in the bankruptcies were
    restructured and continued, as restructured, to be liabilities
    of the Successor Company.(d)
    
    As a result of US Airways bankruptcy filing in
    September 2004, US Airways was not able to secure the
    financing necessary to take on-time delivery of three scheduled
    regional jet aircraft and therefore accrued penalties of
    $3 million until delivery of these aircraft was made to a
    US Airways Express affiliate in August 2005. Offsetting
    these penalties is the reversal of $33 million in penalties
    recorded by US Airways in the nine months ended
    December 31, 2003 due to its intention not to take delivery
    of certain aircraft scheduled for future delivery. In connection
    with the Airbus Memorandum of Understanding (MOU),
    the accrual for these penalties was reversed. 54




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##### Table of Contents



As the result of US Airways bankruptcy filing in
    September 2004, it failed to meet the conditions precedent for
    continued financing of regional jets and was not able to take
    delivery of scheduled aircraft and therefore incurred penalties
    of $7 million in the fourth quarter of 2004.(e)
    
    Damage and deficiency claims are largely a result of
    US Airways election to either restructure, abandon or
    reject aircraft debt and leases during the bankruptcy
    proceedings. As a result of the confirmation of the plan of
    reorganization and the effectiveness of the merger, these claims
    were withdrawn and the accruals reversed.(f)
    
    As of September 30, 2005, US Airways recorded
    $1.5 billion of adjustments to reflect assets and
    liabilities at fair value, including an initial net write-down
    of goodwill of $1.82 billion. Goodwill of $584 million
    was recorded to reflect the excess of the estimated fair value
    of liabilities and equity over identifiable assets. Subsequent
    to September 30, 2005, US Airways recorded an
    additional $148 million of goodwill to reflect adjustments
    to the estimated fair values of certain assets and liabilities.(g)
    
    In connection with filing for bankruptcy on September 12,
    2004, US Airways achieved cost-savings agreements with its
    principal collective bargaining groups. In connection with the
    new labor agreements, approximately 5,000 employees across
    several of US Airways labor groups were involuntarily
    terminated or participated in voluntary furlough and termination
    programs.(h)
    
    In connection with the Airbus MOU, US Airways was required
    to pay a restructuring fee of $39 million, which was paid
    by means of offset against existing equipment deposits held by
    Airbus. US Airways also received credits from Airbus
    totaling $4 million in 2005, primarily related to equipment
    deposits. See also Note 3 to US Airways
    financial statements included in Item 8C of this report.(i)
    
    The GE Merger MOU provided for the continued use of certain
    leased Airbus, Boeing and regional jet aircraft, the
    modification of monthly lease rates and the return of certain
    other leased Airbus and Boeing aircraft. The GE Merger MOU also
    provided for the sale-leaseback of assets securing various GE
    obligations. In connection with these transactions,
    US Airways recorded a net loss of $5 million.  Liquidity
    and Capital Resources
  Sources
    and Uses of Cash
  US Airways
    Group
    year-over-year
  757-200 737-300, 757-200,
 55




---



##### Table of Contents



757-200
  AWA
  year-over-year
  Boeing 737-300 757-200
   56




---



##### Table of Contents



US Airways
      757-200
  Boeing 757-200 debtor-in-possession
  Commitments
    Refinancing
    Transactions
     57




---



##### Table of Contents




    requires certain mandatory prepayments upon certain asset sales,
    including sale-leasebacks, subject to US Airways
    Groups right to reinvest net sales proceeds in qualified
    assets;
    provides for mandatory prepayments upon a change in control or
    collateral value deficiencies;
    establishes certain financial covenants, subject to adjustment,
    including minimum cash requirements (as described in more detail
    below), minimum ratios of earnings before interest, taxes,
    depreciation, amortization and aircraft rent to fixed charges
    (except during a covenant suspension period), and minimum ratios
    of collateral value to outstanding principal;
    contains customary affirmative covenants and negative covenants
    (some of which are eased during a covenant suspension period),
    including restrictions on liens, investments, restricted
    payments, asset sales, acquisitions, changes in fiscal year,
    sale and leasebacks, transactions with affiliates, conduct of
    business, mergers or consolidations, and amendments to other
    indebtedness and certain other documents; and
    contains customary events of default, including payment
    defaults, cross-defaults, breach of covenants, bankruptcy and
    insolvency defaults, judgment defaults and business
    discontinuations (i.e., voluntary suspension of substantially
    all flights for two days).      
    The amended and restated US Airways and AWA loans entered
    into on September 27, 2005 that had previously been
    guaranteed by the ATSB. On October 19, 2005,
    $777 million of the loans, of which $752 million had
    been guaranteed by the ATSB, was sold by the lenders by order of
    the ATSB to 13 fixed income investors, removing the ATSB
    guarantee. At the time of repayment of these loans on
    March 31, 2006, the total outstanding balance of the loans
    was $801 million, of which $551 million was
    outstanding under the US Airways loan and $250 million
    was outstanding under the AWA loan.
    The $161 million loan entered into as of September 27,
    2005 between US Airways and AWA and Airbus Financial
    Services, for which US Airways Group was the guarantor. At
    the time of repayment on March 31, 2006, the outstanding
    balance of the loan was $161 million. US Airways and
    AWA also had an $89 million loan from Airbus Financial
    Services entered into as of September 27, 2005. In
    accordance with the terms of the loan agreements, the
    outstanding principal amount of the $89 million loan was to
    be forgiven in writing on the earlier of December 31, 2010
    or the date that the outstanding principal amount of, accrued
    interest on, and all other amounts due under the Airbus
    $161 million loan were paid in full, provided that we
    complied with the delivery schedule for certain Airbus aircraft.
    As a result of the prepayment of the $161 million loan on
    March 31, 2006, the $89 million loan agreement was
    terminated and the outstanding balance of $89 million was
    forgiven.
    Two loans provided by GECC to AWA pursuant to loan agreements
    entered into as of September 3, 2004 referred to as the
    Spare Parts Facility and the Engines Facility. At the time of
    repayment, the principal amounts outstanding under the Spare
    Parts Facility and the Engines Facility were $76 million
    and $34 million, respectively. 58




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##### Table of Contents



Conversion
    of 7.5% Convertible Senior Notes due 2009
      7% Senior
    Convertible Notes
       59




---



##### Table of Contents



General
    Electric
    Restructuring
    of Affinity Credit Card Partner Agreement
         60




---



##### Table of Contents



Restructuring
    of Credit Card Processing Agreement
  successor-in-interest
       61




---



##### Table of Contents



Asset
    Based Financings
      Embraer
    Purchase Commitments
    Bombardier
    Purchase Commitments
    Airbus
    Purchase Commitments
  A320/A319
 62




---



##### Table of Contents



A330/340
    Covenants
    and Credit Rating
      US Airways
    Groups Emergence from Bankruptcy
   63




---



##### Table of Contents



Off-Balance
    Sheet Arrangements
      AWA
  Pass Through Trusts
   64




---



##### Table of Contents



Special Facility Revenue Bonds No. 97-10,
      US Airways
  Pass Through Trusts
  Special Facility Revenue Bonds
  Jet Service Agreements
 65




---



##### Table of Contents



Other
    Indebtedness and Obligations
    Payments Due by Period2007


2008


2009


2010


2011


Thereafter


TotalUS Airways Group(1)Debt(2)

$



$



$



$



$
1,250


$
74


$
1,324Aircraft related and other
    commitments


302



442



40



48



239



1,429



2,500US Airways(3)Debt and capital lease obligations


93



98



87



92



105



947



1,422Aircraft purchase and operating
    lease commitments


625



598



530



488



471



3,067



5,779Regional capacity purchase
    agreements(5)


1,031



1,194



1,248



1,273



1,298



7,277



13,321AWA(3)Debt and capital lease obligations


2



111



139



108







29



389Aircraft purchase and operating
    lease commitments


483



686



1,126



770



250



1,637



4,952Regional capacity purchase
    agreements(5)


538



530



541



552



563



287



3,011Other US Airways Group
    subsidiaries(4)


11



10



4



1



1



2



29Total

$
3,085


$
3,669


$
3,715


$
3,332


$
4,177


$
14,749


$
32,727     (1)
    
    These commitments represent those specifically entered into by
    US Airways Group or joint commitments entered into by
    US Airways Group, AWA and US Airways under which each
    entity is jointly and severally liable.(2)
    
    Includes $74 million aggregate principal amount of
    7% Senior Convertible Notes due 2020 issued by
    US Airways Group and the $1.25 billion GE loan
    due March 31, 2011(3)
    
    Commitments listed separately under US  Airways or AWA
    represent commitments under agreements entered into separately
    by those companies.(4)
    
    Represents operating lease commitments entered into by
    US Airways Groups other airline subsidiaries Piedmont
    and PSA.(5)
    
    Represents minimum payments under capacity purchase agreements
    with third-party express carriers.   66




---



##### Table of Contents



Other
    Information
  Income
    Taxes
    
    AWA has available NOL carryforwards and tax credit carryforwards
    for federal income tax purposes of approximately
    $400 million and $7 million, respectively. The NOL
    expires during the years 2022 through 2025.
    US Airways has available NOL carryforwards and tax credit
    carryforwards for federal income tax purposes of approximately
    $580 million and $30 million respectively. The NOL
    expires during the years 2024 and 2025.    Related
    Party Transactions
    Critical
    Accounting Policies and Estimates
  Form 10-K
 67




---



##### Table of Contents



Passenger
    Revenue
    December 31, 2006


December 31, 2005US Airways Group

$
847


$
788AWA


359



218US Airways


487



570       Impairment
    of Goodwill
    and/or
    Impairment
    of Long-lived Assets and Intangible Assets
   68




---



##### Table of Contents



Frequent
    Traveler Programs
           69




---



##### Table of Contents



Fresh-start
    Reporting and Purchase Accounting
  SOP 90-7. five-day
  Form 10-K
  Deferred
    Tax Asset Valuation Allowance
   70




---



##### Table of Contents



Pensions
    and Other Postretirement Benefits
      US Airways pension plan
    terminations:
  US Airways postretirement benefit
    obligations: SOP 90-7,
  FAS 106-2,
   71




---



##### Table of Contents



Recent
    Accounting and Reporting Developments
  No. 06-3 06-3), 06-3 EITF 06-3 06-3
        Prior to Adoption


Effect of Adopting


As Reported atof SFAS No. 158


SFAS No. 158


Dec. 31, 2006Pension liabilities

$
16


$
(2
)

$
14Postretirement benefits other than
    pensions


216



(1
)


215Total liabilities


232



(3
)


229Accumulated other comprehensive
    income






3



3Total Stockholders equity


967



3



970      72




---



##### Table of Contents



No. FAS 123R-3,
  with-and-without with-and-without paid-in-capital
  Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk  Market
    Risk Sensitive Instruments
   73




---



##### Table of Contents



Commodity
    Price Risk
    
    the impact of global political instability on crude production;
    unexpected changes to the availability of petroleum products due
    to disruptions in distribution systems or refineries as
    evidenced in the third quarter of 2005 when Hurricane Katrina
    and Hurricane Rita caused widespread disruption to oil
    production, refinery operations and pipeline capacity along
    certain portions of the U.S. Gulf Coast. As a result of
    these disruptions, the price of jet fuel increased significantly
    and the availability of jet fuel supplies was diminished;
    unpredicted increases to oil demand due to weather or the pace
    of economic growth;
    inventory levels of crude, refined products and natural
    gas; and
    other factors, such as the relative fluctuation between the
    U.S. dollar and other major currencies and influence of
    speculative positions on the futures exchanges.         74




---



##### Table of Contents



Interest
    Rate Risk
    Expected Maturity Date2007


2008


2009


2010


2011


Thereafter


TotalFixed-rate debt

$
62


$
58


$
59


$
62


$
72


$
880


$
1,193Weighted avg. interest rate


7.3
%


7.3
%


7.2
%


7.2
%


7.2
%


7.2
%Variable-rate debt

$
33


$
151


$
167


$
138


$
1,283


$
170


$
1,942Weighted avg. interest rate


8.9
%


8.9
%


8.8
%


8.7
%


7.7
%


7.7
%     Equity
    Price Risk
     75




---



##### Table of Contents



Item 8A.
    Consolidated
    Financial Statements and Supplementary Data of US Airways
    Group, Inc.    Managements
    Annual Report on Internal Control over Financial
    Reporting
  Rules 13a-15(f) 15d-15(f)
  
    pertain to the maintenance of records that, in reasonable
    detail, accurately and fairly reflect the transactions and
    dispositions of the assets of US Airways Group;
    provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with generally accepted accounting principles, and
    that receipts and expenditures of US Airways Group are
    being made only in accordance with authorizations of management
    and directors of US Airways Group; and
    provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of
    US Airways Groups assets that could have a material
    effect on the financial statements.         76




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
     Internal Control  Integrated Framework
        Internal
    Control  Integrated Framework Internal Control  Integrated
    Framework .
    
    77




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
           Employers
    Accounting for Defined Benefit Pension and Other Postretirement
    Plans, an amendment of FASB Statements No. 87, 88, 106 and
    132(R) Share Based
    Payment,
  Internal Control-Integrated
    Framework
  
    78




---



##### Table of Contents



US Airways
    Group, Inc.
  Consolidated Statements of Operations
    For the Years Ended December 31, 2006, 2005 and 2004
  2006


2005


2004(In millions, except share andper share amounts)Operating revenues:Mainline passenger

$
7,966


$
3,695


$
2,203Express passenger


2,744



976



353Cargo


153



58



28Other


694



340



173Total operating revenues


11,557



5,069



2,757Operating expenses:Aircraft fuel and related taxes


2,518



1,214



590Loss (gain) on fuel hedging
    instruments, net


79



(75
)


(24
)Salaries and related costs


2,090



1,046



657Express expenses


2,559



1,073



374Aircraft rent


732



429



304Aircraft maintenance


582



349



206Other rent and landing fees


568



281



168Selling expenses


446



232



153Special items, net


27



121



(16
)Depreciation and amortization


175



88



54Other


1,223



528



311Total operating expenses


10,999



5,286



2,777Operating income (loss)


558



(217
)


(20
)Nonoperating income (expense):Interest income


153



30



8Interest expense, net


(295
)


(147
)


(80
)Other, net


(12
)


(1
)


3Total nonoperating expense, net


(154
)


(118
)


(69
)Income (loss) before income taxes
    and cumulative effect of change in accounting principle


404



(335
)


(89
)Income tax provision


101







Income (loss) before cumulative
    effect of change in accounting principle


303



(335
)


(89
)Cumulative effect of change in
    accounting principle (Note 3)


1



(202
)


Net income (loss)

$
304


$
(537
)

$
(89
)Unaudited pro forma net income
    (loss) (assuming change in method of accounting for maintenance
    costs was applied retroactively) (Note 3)

$
303


$
(335
)

$
(142
)Earnings (loss) per common share:Basic:Before cumulative effect of change
    in accounting principle

$
3.50


$
(10.65
)

$
(5.99
)Cumulative effect of change in
    accounting principle


0.01



(6.41
)


Earnings (loss) per share

$
3.51


$
(17.06
)

$
(5.99
)Diluted:Before cumulative effect of change
    in accounting principle

$
3.32


$
(10.65
)

$
(5.99
)Cumulative effect of change in
    accounting principle


0.01



(6.41
)


Earnings (loss) per share

$
3.33


$
(17.06
)

$
(5.99
)Shares used for computation (in
    thousands):Basic


86,447



31,488



14,861Diluted


93,821



31,488



14,861    79




---



##### Table of Contents



US Airways
    Group, Inc.
  Consolidated Balance Sheets
    December 31, 2006 and 2005
  2006


2005(In millions,except share andper share amounts)ASSETSCurrent assetsCash and cash equivalents

$
1,116


$
1,125Short-term investments


1,249



452Restricted cash


1



8Accounts receivable, net


388



353Materials and supplies, net


223



229Prepaid expenses and other


377



392Total current assets


3,354



2,559Property and equipmentFlight equipment


2,051



1,920Ground property and equipment


598



532Less accumulated depreciation and
    amortization


(583
)


(431
)2,066



2,021Equipment purchase deposits


48



43Total property and equipment


2,114



2,064Other assetsGoodwill


629



732Other intangibles, net


554



583Restricted cash


666



792Other assets, net


259



234Total other assets


2,108



2,341Total assets

$
7,576


$
6,964LIABILITIES &
    STOCKHOLDERS EQUITYCurrent liabilitiesCurrent maturities of debt and
    capital leases

$
95


$
211Accounts payable


454



457Air traffic liability


847



788Accrued compensation and vacation


262



210Accrued taxes


181



146Other accrued expenses


873



847Total current liabilities


2,712



2,659Noncurrent liabilities and deferred
    creditsLong-term debt and capital leases,
    net of current maturities


2,907



2,794Deferred gains and credits, net


205



254Postretirement benefits other than
    pensions


187



193Employee benefit liabilities and
    other


595



644Total noncurrent liabilities and
    deferred credits


3,894



3,885Commitments and contingencies
    (Note 10)Stockholders equityCommon stock, $0.01 par value;
    200,000,000 shares authorized, 91,283,903 shares
    outstanding at December 31, 2006; 81,668,989 shares
    outstanding at December 31, 2005


1



1Additional paid-in capital


1,501



1,258Accumulated deficit


(522
)


(826
)Accumulated other comprehensive
    income


3



Treasury stock, common stock at
    cost, 413,993 shares at December 31, 2006 and
    December 31, 2005


(13
)


(13
)Total stockholders equity


970



420Total liabilities and
    stockholders equity

$
7,576


$
6,964    80




---



##### Table of Contents



US Airways
    Group, Inc.
  Consolidated Statements of Cash Flows
    For the Years Ended December 31, 2006, 2005 and 2004
  2006


2005


2004(In millions)Cash flows from operating
    activities:Net income (loss)

$
304


$
(537
)

$
(89
)Adjustments to reconcile net income
    (loss) to net cash provided by operating activities:Cumulative effect of change in
    accounting principle


(1
)


202



Depreciation and amortization


198



88



54Gain on forgiveness of debt


(90
)






Non cash special charges (credits),
    net






86



(15
)Utilization of acquired net
    operating loss carryforwards


85







Change in fair value of fuel
    hedging instruments, net


70



(4
)


2Amortization of capitalized
    maintenance










86Amortization of deferred credits


(43
)


(23
)


(8
)Amortization of deferred rent


5



5



6Amortization of warrants






12



7Amortization of debt issuance costs
    and guarantee fees


9



30



36Amortization of debt discount


12



11



4Amortization of investment discount
    and premium, net






9



1Stock-based compensation


34



5



Premium paid in conversion of
    7% senior convertible notes


17







Other


(1
)


(18
)


28Changes in operating assets and
    liabilities:Decrease in restricted cash


6



120



2Decrease (increase) in accounts
    receivable, net


(35
)


55



(13
)Decrease (increase) in expendable
    spare parts and supplies, net


(25
)


(8
)


1Decrease (increase) in prepaid
    expenses


22



(63
)


(49
)Decrease (increase) in other
    assets, net


(14
)


13



Decrease in accounts payable


(2
)


(45
)


(35
)Increase (decrease) in air traffic
    liability


59



(54
)


20Increase (decrease) in accrued
    compensation and vacation benefits


56



(1
)


(18
)Increase (decrease) in accrued taxes


38



(5
)


(4
)Increase (decrease) in other
    accrued liabilities


(88
)


(18
)


4Increase in other liabilities


2



186



1Net cash provided by operating
    activities


618



46



21Cash flows from investing
    activities:Purchases of property and equipment


(232
)


(44
)


(219
)Purchases of short-term investments


(2,583
)


(711
)


(488
)Proceeds from sales of short-term
    investments


1,785



416



708Cash acquired as part of acquisition






279



Costs incurred as part of
    acquisition






(21
)


Purchases of investments in debt
    securities










(35
)Sales of investments in debt
    securities










20Decrease (increase) in long-term
    restricted cash


128



(112
)


(2
)Increase in equipment purchase
    deposits


(8
)






Proceeds from sales of property and
    equipment and sale-leaseback transactions


7



592



32Net cash provided by (used in)
    investing activities


(903
)


399



16Cash flows from financing
    activities:Proceeds from issuance of debt


1,419



655



142Repayment of debt


(1,187
)


(741
)


(176
)Issuance of common stock


44



732



Acquisition of warrants






(116
)


Other






1



(7
)Net cash provided by (used in)
    financing activities


276



531



(41
)Net increase (decrease) in cash and
    cash equivalents


(9
)


976



(4
)Cash and cash equivalents at
    beginning of year


1,125



149



153Cash and cash equivalents at end of
    year

$
1,116


$
1,125


$
149    81




---



##### Table of Contents



US Airways
    Group, Inc.
  Consolidated Statements of Stockholders Equity and
    Comprehensive Income
    For the Years Ended December 31, 2006, 2005 and 2004
  Retained


AccumulatedClass B


Additional


Earnings/


Other





Class BCommon


Common


Paid-In


(Accumulated


Comprehensive


Treasury


Treasury





ComprehensiveStock


Stock


Capital


Deficit)


Income


Stock


Stock


Total


Income (Loss)(In millions, except share amounts)Balance at December 31,
    2003

$



$
1


$
631


$
(200
)

$



$



$
(306
)

$
126Net loss














(89
)














(89
)

$
(89
)Acquisition of 63,393 shares
    of Class B treasury stock due to default on loan


























(2
)


(2
)Issuance of 71,917 shares of
    Class B common stock pursuant to the exercise of stock
    options










1



















1Total comprehensive loss

































$
(89
)Balance at December 31,
    2004






1



632



(289
)










(308
)


36Net loss














(537
)














(537
)

$
(537
)Issuance of 36,465,445 shares
    of common stock


1







564



















565Issuance of 7,533,334 shares
    of common stock pursuant to the exercise of stock options by
    investors, net of issuance costs










113



















113Issuance of 9,775,000 shares
    of common stock pursuant to a public stock offering, net of
    issuance costs










180



















180Issuance of 8,212,119 shares
    of common stock to unsecured creditors










96



















96Withholding of 418,977 shares
    from the issuance of stock to unsecured creditors to cover tax
    obligations






















(13
)






(13
)Issuance of 792,475 shares of
    common stock pursuant to the exercise of stock options










12



















12Cancellation of
    6,781,470 shares of Class B Treasury Stock due to the
    merger


























308



308Conversion of
    21,430,147 shares of Class B common stock to
    US Airways Group common stock






(1
)


(315
)


















(316
)Issuance of 4,195,275 shares
    of common stock pursuant to the conversion of the
    7.25% notes










87



















87Repurchase of 7,735,770 warrants
    held by the ATSB










(116
)


















(116
)Stock compensation for stock
    appreciation rights and restricted stock units that will be
    ultimately settled in shares of common stock










5



















5Total comprehensive loss

































$
(537
)Balance at December 31,
    2005


1







1,258



(826
)






(13
)






420Net income














304















304


$
304Issuance of 3,860,358 shares
    of common stock pursuant to the conversion of the 7.5% notes










95



















95Issuance of 2,909,636 shares
    of common stock pursuant to the conversion of the 7.0% notes










70



















70Issuance of 386,925 shares of
    common stock pursuant to the exercise of warrants










3



















3Issuance of 2,019,305 shares
    of common stock pursuant to the exercise of stock based
    compensation plans










41



















41Stock-based compensation expense










34



















34Adjustment to initially apply FASB
    Statement No. 158, net of tax


















3











3Total comprehensive income

































$
304Balance at December 31,
    2006

$
1


$



$
1,501


$
(522
)

$
3


$
(13
)

$



$
970    82




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial Statements
   1.
    Basis of
    presentation and summary of significant accounting
    policies  (a)
    Nature
    of Operations and Operating Environment          (b)
    Basis
    of Presentation     83




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
         (c)
    Cash
    Equivalents and Short-term Investments    held-to-maturity Held-to-maturity
  (d)
    Restricted
    Cash    (e)
    Materials
    and Supplies, Net    (f)
    Property
    and Equipment   84




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        (g)
    Income
    Taxes    (h)
    Goodwill
    and Other Intangibles, Net     85




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
       2006


2005Airport take-off and landing slots

$
453


$
453Airport gate leasehold rights


52



52Accumulated amortization


(36
)


(8
)Total

$
469


$
497     (i)
    Other
    Assets, Net    2006


2005Deposits

$
49


$
73Debt issuance costs


29



11Long term investments


38



22Deferred rent


49



24Aircraft leasehold interest


101



101Other


4



3Subtotal


270



234Less: accumulated amortization


(11
)


Total other assets, net

$
259


$
234     (j)
    Frequent
    Traveler Program   86




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
         (k)
    Derivative
    Instruments      Put Option


Call OptionHeating oil ($/gallon)

$
1.86


$
2.06Estimated Crude Oil Equivalent
    ($/barrel)

$
68.78


$
77.18      87




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
       (l)
    Deferred
    Gains and Credits, Net        (m)
    Revenue
    Recognition  Passenger
    revenue
     88




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
          Cargo
    Revenue
    Other
    Revenue
    (n)
    Stock-based
    Compensation   89




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      2005


2004Net loss, as reported

$
(537
)

$
(89
)Add: Stock-based compensation
    included in reported net loss


4



Deduct: Stock-based compensation
    determined under the fair value based method


(12
)


(6
)Pro forma net loss

$
(545
)

$
(95
)Loss per share:Basic  as reported

$
(17.06
)

$
(5.99
)Basic  pro forma

$
(17.30
)

$
(6.39
)Diluted  as reported

$
(17.06
)

$
(5.99
)Diluted  pro forma

$
(17.30
)

$
(6.39
)   (o)
    Maintenance
    and Repair Costs    (p)
    Selling
    Expenses    (q)
    Express
    Expenses   90




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
     Year Ended


Year Ended


Year EndedDecember 31, 2006


December 31, 2005


December 31, 2004Aircraft fuel and related taxes

$
764


$
327


$
102Salaries and related costs


172



40



Capacity purchases


786



484



238Other rent and landing fees


160



42



8Aircraft rent


18



21



Selling expenses


148



57



23Aircraft maintenance


71



3



Depreciation and amortization


24



18



Other expenses


416



81



3Express expenses

$
2,559


$
1,073


$
374   (r)
    Variable
    Interest Entities    (s)
    Recent
    Accounting Pronouncements  No. 06-3 06-3), 06-3 06-3 EITF 06-3
   91




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        Prior to Adoption


Effect of Adopting


As Reported atof SFAS No. 158


SFAS No. 158


December 31, 2006Pension liabilities

$
16


$
(2
)

$
14Postretirement benefits other than
    pensions


216



(1
)


215Total liabilities


232



(3
)


229Accumulated other comprehensive
    income






3



3Total stockholders equity


967



3



970        92




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
         No. FAS 123R-3,
  with-and-without with-and-without paid-in-capital
  2.
    New
    equity structure and conversion  non-U.S. citizens non-U.S. persons
   93




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
       3.
    Change in
    accounting policy for maintenance costs      2004Loss per shareBasic  As Reported
    before cumulative effect of change in accounting principle

$
(5.99
)Basic  Pro Forma


(9.53
)Diluted  As Reported
    before cumulative effect of change in accounting principle

$
(5.99
)Diluted  Pro Forma


(9.53
)  94




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##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   4.
    Earning/loss
    per common share  in-the-money
  Year Ended December 31,2006


2005


2004Basic earnings (loss) per share:Income (loss) before cumulative
    effect of change in accounting principle

$
303


$
(335
)

$
(89
)Cumulative effect of change in
    accounting principle


1



(202
)


Net income (loss)

$
304


$
(537
)

$
(89
)Weighted average common shares
    outstanding


86,446,638



31,487,574



14,860,922Basic earnings (loss) per share:Income (loss) before cumulative
    effect of change in accounting principle

$
3.50


$
(10.65
)

$
(5.99
)Cumulative effect of change in
    accounting principle


0.01



(6.41
)


Net earnings (loss) per share

$
3.51


$
(17.06
)

$
(5.99
)Diluted earnings (loss) per share:Income (loss) before cumulative
    effect of change in accounting principle

$
303


$
(335
)

$
(89
)Cumulative effect of change in
    accounting principle


1



(202
)


Net income (loss)


304



(537
)


(89
)Interest expense on
    7.0% senior convertible notes


9







Income (loss) for purposes of
    computing diluted net income (loss) per share

$
313


$
(537
)

$
(89
)Share computation:Weighted average common shares
    outstanding


86,446,638



31,487,574



14,860,922Assumed exercise of stock options
    and warrants


2,058,814







Assumed conversion of
    7.0% senior convertible notes


5,316,296







Weighted average common shares
    outstanding as adjusted


93,821,748



31,487,574



14,860,922Diluted earnings (loss) per share:Earnings (loss) before cumulative
    effect of change in accounting principle

$
3.32


$
(10.65
)

$
(5.99
)Cumulative effect of change in
    accounting principle


0.01



(6.41
)


Net earnings (loss) per share

$
3.33


$
(17.06
)

$
(5.99
)  95




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##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
         5.
    Special
    items, net    Year Ended December 31,2006


2005


2004Airbus restructuring

$
(90
)(a)

$
57
(a)

$
Merger related transition expenses


131
(b)


28
(b)


Sale leaseback transactions






27
(c)


(1
)(g)Power by the hour program penalties






7
(d)


Severance due to change in control






2
(e)


Aircraft returns






1
(f)


2
(f)Termination of V2500 power by the
    hour agreement










(16
)(h)Settlement of bankruptcy claims


(14
)(i)






Other






(1
)


(1
)Total

$
27


$
121


$
(16
)     (a)
    
    In the third quarter of 2005, in connection with the merger and
    a Memorandum of Understanding (the Airbus MOU)
    executed between AVSA S.A.R.L., an affiliate of Airbus S.A.S.
    (Airbus), US Airways Group, US Airways and
    AWA, certain aircraft firm orders were restructured. In
    connection with that restructuring, US Airways Group and
    America West Holdings were required to pay non-refundable
    restructuring fees totaling $89 million by means of set-off
    against existing equipment deposits of US Airways and AWA
    held by Airbus of $39 million and $50 million
    respectively. In 2005, AWAs restructuring fee of
    $50 million has been classified as a special charge, along
    with $7 million in associated capitalized interest. Also in
    connection with the Airbus MOU, US Airways and AWA entered
    into two loan agreements with aggregate commitments of up to 96




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##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   $161 million and $89 million. As described in further
    detail in Note 7, on March 31, 2006, the outstanding
    principal and accrued interest on the $89 million loan was
    forgiven upon repayment in full of the $161 million loan in
    accordance with terms of the Airbus loans. As a result, in 2006
    the Company recognized a gain associated with the return of
    these equipment deposits upon forgiveness of the loan totaling
    $90 million, consisting of the $89 million in
    equipment deposits and accrued interest of $1 million.(b)
    
    In 2006, the Company incurred $131 million of merger
    related transition costs. These items include $41 million
    of personnel costs for severance, retention payments and stock
    awards; $38 million of professional and technical fees;
    $17 million of aircraft livery costs; $2 million in
    merger related aircraft lease return expenses; $6 million
    of training and related costs; $7 million of employee
    moving expenses; $11 million of costs associated with the
    integration of the AWA FlightFund and US Airways Dividend
    Miles frequent traveler programs; and $9 million of other
    expenses.In 2005, the Company incurred $28 million of merger related
    transition costs in the fourth quarter of 2005 related to
    transitioning the employees, systems and facilities of AWA and
    US Airways into one consolidated company. These items
    include insurance premiums of $11 million related to
    policies for former officers and directors, compensation expense
    of $8 million for severance and special stock awards
    granted under a program designed to retain key employees through
    the integration period, professional and technical fees of
    $3 million, sales and marketing program expenses of
    $2 million related to notifying frequent traveler program
    members about the merger, $1 million of aircraft livery
    costs, $1 million of programming service expense and
    $2 million in other expenses.    Year Ended December 31,2006


2005Balance beginning of year

$
9


$
Amount recorded by US Airways
    in purchase accounting






24Severance expense


14



2Payments


(23
)


(17
)Balance end of year

$



$
9   Due to the requirements for continued service, severance expense
    is recorded over the remaining service period. The Company
    expects to record severance expense and make remaining
    termination and benefit payments of $1 million during 2007.(c)
    
    In the third quarter of 2005, a $27 million loss was
    incurred related to the sale-leaseback of six Boeing
    737-200
    aircraft and two Boeing 757 aircraft.(d)
    
    In the fourth quarter of 2005, in connection with the return of
    certain leased aircraft, AWA incurred expenses of
    $7 million related to penalties incurred under an
    outsourced maintenance arrangement.(e)
    
    In the third and fourth quarter of 2005, AWA recorded severance
    expense totaling approximately $2 million for terminated
    employees resulting from the merger.(f)
    
    In August 2004, AWA entered into definitive agreements with two
    lessors to return six Boeing
    737-200
    aircraft. Three of these aircraft were returned to the lessors
    in the third quarter of 2004, two were returned in the fourth
    quarter of 2004 and one was returned in January 2005. In
    connection with the return of the aircraft, AWA recorded
    $2 million of special charges in 2004, which included lease
    termination payments of $2 million and the write-down of
    leasehold improvements and aircraft rent balances of
    $3 million, offset by the net reversal of lease return
    provisions of $3 million. In the first quarter of 2005, AWA
    recorded $1 million in special charges related to the final
    Boeing
    737-200
    aircraft, which was removed from service in January 2005. 97




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##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    (g)
    
    In the first quarter of 2004, AWA recorded a $1 million
    reduction in special charges related to the revision of
    estimated costs associated with the sale and leaseback of
    certain aircraft.(h)
    
    In December 2004, AWA and General Electric (GE)
    mutually agreed to terminate the V2500
    A-1 power by
    hour (PBH) agreement effective January 1, 2005.
    This agreement was entered into March 1998 with an original term
    of ten years. For terminating the agreement early, AWA received
    a $20 million credit to be applied to amounts due for other
    engines under the 1998 agreement. AWA had capitalized PBH
    payments for V2500
    A-1 engines
    in excess of the unamortized cost of the overhauls performed by
    GE of approximately $4 million. With the termination of
    this agreement, these payments were not realizable and as a
    result, AWA wrote off this amount against the $20 million
    credit referred to above, resulting in a $16 million net
    gain.(i)
    
    In the fourth quarter of 2006, the Company recognized
    $14 million in gains in connection with the settlement of
    bankruptcy claims, which includes $11 million related to
    the Bombardier settlement, see Note 10(a).  6.
    Financial
    instruments  (a)
    General    (b)
    Fuel
    Price Risk Management     98




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##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    (c)
    Fair
    values of financial instruments  Cash
    Equivalents and Short-term Investments
    2006


2005Cash and cash
    equivalents:Corporate notes

$
731


$
497Cash and money market funds


385



628Total cash and cash equivalents

$
1,116


$
1,125Short-term
    investments:Held-to-maturity
    securities:Corporate notes

$



$
56Available-for-sale
    securities:Auction rate securities


1,249



396Total short-term investments

$
1,249


$
452   held-to-maturity available-for-sale available-for-sale available-for-sale
    Long-term
    Debt
   99




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##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    7.
    Debt,
    including capital lease obligations    December 31,


December 31,2006


2005SecuredGeneral Electric Capital
    Corporation loan, variable interest rate of 8.87%, interest only
    payments until due on March 31, 2011(a)

$
1,250


$
AWA Citibank Loan (formerly AWA
    ATSB Loan)(b)






250GECC term loan(b)






111Senior secured discount notes,
    variable interest rate of 8.75%, installments due 2005 through
    2009(c)


33



34Airbus Loans(b)






186Equipment notes payable, variable
    interest rates of 6.89% to 9.82%, averaging 8.14% as of
    December 31, 2006


1,258



1,240US Airways Citibank Loan
    (formerly US Airways ATSB Loan)(b)






551Slot Financing, interest rate of
    8%, installments due through 2015(d)


47



50Airport facility lease
    obligations, interest rate of 8%, installments due through
    2021(e)


41



46GE Credit Facility, variable
    interest rate of 9.62%, installments due 2006 to 2008(f)


21



28Capital lease obligations


2



2,652



2,496Unsecured7% senior convertible notes,
    interest only payments until due in 2020(g)


74



1447.5% convertible senior
    notes, interest only payments until due in 2009(h)






112GE Engine Maintenance Term Note,
    variable interest of 9.38%, installments due 2008 through 2011(i)


45



45Equipment notes payable






4Industrial development bonds,
    fixed interest rate of 6.3% due 2023(j)


29



29State loan






1Juniper prepaid miles, variable
    interest rate of 10.10%, interest only payments until due in
    2010(k)


325



325Note payable to PBGC, interest
    rate of 6%, interest only payments until due 2012(l)


10



10483



670Total long-term debt and capital
    lease obligations


3,135



3,166Less: Unamortized discount on debt


(133
)


(161
)Current maturities


(95
)


(211
)Long-term debt and capital lease
    obligations, net of current maturities

$
2,907


$
2,794  100




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
     (a)
    
    On March 31, 2006, US Airways Group entered into a
    loan agreement with General Electric Capital Corporation
    (GECC) and a syndicate of lenders pursuant to which
    the Company borrowed an aggregate principal amount of
    $1.1 billion. On April 7, 2006, US Airways Group
    entered into an amended and restated loan agreement, which
    increased the principal amount of the loan to $1.25 billion
    (as amended and restated, the GE Loan).
    US Airways, America West Holdings, AWA, Piedmont, PSA and
    MSC are all guarantors of the GE Loan.The GE Loan bears interest at an index rate plus an applicable
    index margin or, at the Companys option, LIBOR plus an
    applicable LIBOR margin for interest periods of one, two, three
    or six months. The applicable index margin, subject to
    adjustment, is 1.50%, 2.00%, 2.25%, or 2.50% if the adjusted
    loan balance is respectively less than $600 million,
    between $600 million and $750 million, between
    $750 million and $900 million, or between
    $900 million and $1.25 billion. The applicable LIBOR
    margin, subject to adjustment, is 2.50%, 3.00%, 3.25%, or 3.50%
    if the adjusted loan balance is respectively less than
    $600 million, between $600 million and
    $750 million, between $750 million and
    $900 million, or between $900 million and
    $1.25 billion. In addition, interest on the GE Loan may be
    adjusted based on the credit rating for the GE Loan as follows:
    (i) subject to clause (ii) below, if the credit rating
    for the GE Loan is B1 or better from Moodys and B+ or
    better from Standard & Poor (S&P) as of
    the last day of the most recently ended fiscal quarter, then
    (A) the applicable LIBOR margin will be the lower of 3.25%
    and the rate otherwise applicable based upon the adjusted GE
    Loan balance and (B) the applicable index margin will be
    the lower of 2.25% and the rate otherwise applicable based upon
    the adjusted GE Loan balance, and (ii) if the credit rating
    for the Loan is Ba3 or better from Moodys and BB- or
    better from S&P as of the last day of the most recently
    ended fiscal quarter, then the applicable LIBOR margin will be
    2.50% and the applicable index margin will be 1.50%. The GE Loan
    matures on March 31, 2011, and no principal payments are
    scheduled until maturity.In addition, the GE Loan requires certain mandatory prepayments
    upon certain events, establishes certain financial covenants,
    including minimum cash requirements and maintenance of certain
    minimum ratios, contains customary affirmative covenants and
    negative covenants, and contains customary events of default.
    Under the GE Loan, US Airways Group is required to maintain
    consolidated unrestricted cash and cash equivalents of not less
    than $750 million, subject to partial reductions upon
    specified reductions in the outstanding principal amount of the
    GE Loan.(b)
    
    On March 31, 2006, proceeds of the GE Loan were used, in
    part, to repay in full the following indebtedness:  
    The amended and restated US Airways and AWA loans entered
    into on September 27, 2005 that had previously been
    guaranteed by the Air Transportation Stabilization Board
    (ATSB). On October 19, 2005, $777 million
    of the loans, of which $752 million had been guaranteed by
    the ATSB, was sold by the lenders by order of the ATSB to 13
    fixed income investors, for which Citibank, N.A served as agent,
    removing the ATSB guarantee (the Citibank Loans). At
    the time of repayment of these loans on March 31, 2006, the
    total outstanding balance of the loans was $801 million, of
    which $551 million was outstanding under the
    US Airways loan and $250 million was outstanding under
    the AWA loan. Proceeds were also used to pay $15 million of
    accrued interest and fees on the US Airways loan, and
    $8 million of accrued interest and $5 million of
    prepayment penalty on the AWA loan.
    The $161 million loan entered into as of September 27,
    2005 between US Airways and AWA and Airbus Financial
    Services, for which US Airways Group was the guarantor. At
    the time of repayment on March 31, 2006, the outstanding
    balance of the loan was $161 million. US Airways and
    AWA also had an $89 million loan from Airbus Financial
    Services entered into as of September 27, 2005. In
    accordance with the terms of the loan agreements, the
    outstanding principal amount of the $89 million loan was to
    be forgiven on the earlier of December 31, 2010 or the date
    that the outstanding principal amount of, accrued interest on,
    and all other amounts due under the Airbus $161 million
    loan were paid in full, provided that the Company complied with
    the delivery schedule for certain Airbus aircraft. As a result
    of the prepayment of the $161 million loan 101




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##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   on March 31, 2006, the $89 million loan agreement was
    terminated and the outstanding balance of $89 million was
    forgiven along with $1 million in accrued interest.  
    Two loans provided by GECC to AWA pursuant to loan agreements
    entered into as of September 3, 2004 referred to as the
    Spare Parts Facility and the Engines Facility (collectively, the
    GECC term loan). At the time of repayment, the
    principal amounts outstanding under the Spare Parts Facility and
    the Engines Facility were $76 million and $34 million,
    respectively. Proceeds were also used to pay $1 million of
    accrued interest and $1 million of prepayment penalties on
    these two GECC loans.  (c)
    
    On December 27, 2004, AWA raised additional capital by
    financing its Phoenix maintenance facility and flight training
    center. The flight training center was previously unencumbered,
    and the maintenance facility became unencumbered earlier in 2004
    when AWA refinanced its term loan. Using its leasehold interest
    in these two facilities as collateral, AWA, through a wholly
    owned subsidiary named FTCHP LLC, raised $31 million
    through the issuance of senior secured discount notes. The notes
    were issued by FTCHP at a discount pursuant to the terms of a
    senior secured term loan agreement among the Company, FTCHP,
    Heritage Bank SSB, as administrative agent, Citibank, N.A., as
    the initial lender, and the other lenders from time to time
    party thereto. Citibank, N.A. subsequently assigned all of its
    interests in the notes to third party lenders.AWA has fully and unconditionally guaranteed the payment and
    performance of FTCHPs obligations under the notes and the
    loan agreement. The notes require aggregate principal payments
    of $36 million with principal payments of $2 million
    due on each of the first two anniversary dates and the remaining
    principal amount due on the fifth anniversary date. The notes
    may be prepaid in full at any time (subject to customary LIBOR
    breakage costs) and in partial amounts of $2 million on the
    third and fourth anniversary dates. The unpaid principal amount
    of the notes bears interest based on LIBOR plus a margin subject
    to adjustment based on a loan to collateral value ratio.The loan agreement contains customary covenants applicable to
    loans of this type, including obligations relating to the
    preservation of the collateral and restrictions on the
    activities of FTCHP. In addition, the loan agreement contains
    events of default, including payment defaults, cross-defaults to
    other debt of FTCHP, if any, breach of covenants, bankruptcy and
    insolvency defaults and judgment defaults.In connection with this financing, AWA sold all of its leasehold
    interests in the maintenance facility and flight training center
    to FTCHP and entered into subleases for the facilities with
    FTCHP at lease rates expected to approximate the interest
    payments due under the notes. In addition, AWA agreed to make
    future capital contributions to FTCHP in amounts sufficient to
    cover principal payments and other amounts owing pursuant to the
    notes and the loan agreement.The proceeds from this financing, together with $11 million
    from operating cash flow, were irrevocably deposited with the
    trustee for AWAs
    103/4% senior
    unsecured notes due 2005, and the notes were subsequently
    redeemed on January 26, 2005.(d)
    
    In September 2005, US Airways entered into an agreement to
    sell and leaseback certain of its commuter slots at Ronald
    Reagan Washington National Airport and New York LaGuardia
    Airport. US Airways continues to hold the right to
    repurchase the slots anytime after the second anniversary of the
    slot sale-leaseback transaction. These transactions were
    accounted for as secured financings. Installments are due
    monthly through 2015. In December 2006, Republic and
    US Airways modified terms of the agreement to conform to
    subsequent regulatory changes at LaGuardia, and the slots were
    returned to US Airways. The need for a subsequent
    modification was fully contemplated in the original agreement.(e)
    
    Capital lease obligations consist principally of certain airport
    maintenance and facility leases which expire in 2018 and 2021.(f)
    
    GE, together with its affiliates, is US Airways
    Groups largest aircraft creditor, having financed or
    leased a substantial portion of its aircraft prior to the most
    recent Chapter 11 filing. In June 2005, GE purchased the
    assets securing the credit facility obtained from GE in 2001
    (the GE Credit Facility) in a sale-leaseback 102




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##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   transaction. The sale proceeds realized from the sale-leaseback
    transaction were applied to repay the liquidity facility
    obtained from GE in 2003 in connection with the Companys
    emergence from its first bankruptcy (the 2003 GE Liquidity
    Facility), the mortgage financing associated with the CRJ
    aircraft and a portion of the 2001 GE Credit Facility. The
    balance of the GECC Credit Facility was amended to allow
    additional borrowings of $21 million in July 2005, which
    resulted in a total principal balance outstanding thereunder of
    $28 million. The operating leases are cross-defaulted with
    all other GE obligations, other than excepted obligations, and
    are subject to agreed upon return conditions. On March 31,
    2006, the agreement was amended to change the maturity date from
    September 30, 2010 to December 31, 2008 and required
    the Company to make equal quarterly principal payments through
    maturity beginning March 31, 2006.(g)
    
    On September 30, 2005, US Airways Group issued
    $144 million aggregate principal amount of 7% Senior
    Convertible Notes due 2020 (the 7% Senior Convertible
    Notes) for proceeds, net of expenses, of approximately
    $139 million. The 7% Senior Convertible Notes are
    US Airways Groups senior unsecured obligations and
    rank equally in right of payment to its other senior unsecured
    and unsubordinated indebtedness and are effectively subordinated
    to its secured indebtedness to the extent of the value of assets
    securing such indebtedness. The 7% Senior Convertible Notes
    are fully and unconditionally guaranteed, jointly and severally
    and on a senior unsecured basis, by US Airways Groups
    two major operating subsidiaries, US Airways and AWA. The
    guarantees are the guarantors unsecured obligations and
    rank equally in right of payment to the other senior unsecured
    and unsubordinated indebtedness of the guarantors and are
    effectively subordinated to the guarantors secured
    indebtedness to the extent of the value of assets securing such
    indebtedness.The 7% Senior Convertible Notes bear interest at the rate
    of 7% per year payable in cash semiannually in arrears on
    March 30 and September 30 of each year, beginning
    March 30, 2006. The 7% Senior Convertible Notes mature
    on September 30, 2020.Holders may convert, at any time on or prior to maturity or
    redemption, any outstanding notes (or portions thereof) into
    shares of US Airways Groups common stock, initially
    at a conversion rate of 41.4508 shares of US Airways
    Groups common stock per $1,000 principal amount of notes
    (equivalent to an initial conversion price of approximately
    $24.12 per share of US Airways Groups common stock).
    If a holder elects to convert its notes in connection with
    certain specified fundamental changes that occur prior to
    October 5, 2015, the holder will be entitled to receive
    additional shares of US Airways Groups common stock
    as a make whole premium upon conversion. In lieu of delivery of
    shares of US Airways Groups common stock upon
    conversion of all or any portion of the notes, US Airways
    Group may elect to pay holders surrendering notes for conversion
    cash or a combination of shares and cash.Holders may require US Airways Group to purchase for cash
    or shares or a combination thereof, at US Airways
    Groups election, all or a portion of their 7% Senior
    Convertible Notes on September 30, 2010 and
    September 30, 2015 at a purchase price equal to 100% of the
    principal amount of the 7% Senior Convertible Notes to be
    repurchased plus accrued and unpaid interest, if any, to the
    purchase date. In addition, if US Airways Group experiences
    a specified fundamental change, holders may require
    US Airways Group to purchase for cash, shares or a
    combination thereof, at its election, all or a portion of their
    7% Senior Convertible Notes, subject to specified
    exceptions, at a price equal to 100% of the principal amount of
    the 7% Senior Convertible Notes plus accrued and unpaid
    interest, if any, to the purchase date. Prior to October 5,
    2010, the 7% Senior Convertible Notes will not be
    redeemable at US Airways Groups option.
    US Airways Group may redeem all or a portion of the
    7% Senior Convertible Notes at any time on or after
    October 5, 2010, at a price equal to 100% of the principal
    amount of the 7% Senior Convertible Notes plus accrued and
    unpaid interest, if any, to the redemption date if the closing
    price of US Airways Groups common stock has exceeded
    115% of the conversion price for at least 20 trading days in the
    30 consecutive trading day period ending on the trading day
    before the date on which US Airways Group mails the
    optional redemption notice. 103




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##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   In 2006, $70 million of the $144 million outstanding
    principal amount was converted into 2,909,636 shares of
    common stock. In connection with the conversion, the Company
    paid a premium of $17 million to the holders of the
    converted notes, which was recorded in other nonoperating
    expenses.(h)
    
    In January 2002, in connection with the closing of the original
    AWA ATSB loan and the related transactions, America West
    Holdings issued $105 million of 7.5% Convertible
    Senior Notes due 2009, of which approximately $112 million
    remained outstanding at December 31, 2005 (including
    $22 million of interest paid through December 31, 2004
    as a deemed loan added to the initial principal thereof).
    Beginning January 18, 2005, these notes were convertible
    into shares of common stock of US Airways Group, at the
    option of the holders, at an initial conversion price of
    $29.09 per share or a conversion ratio of approximately
    34.376 shares per $1,000 principal amount of such notes,
    subject to standard anti-dilution adjustments. The payment of
    principal, premium and interest on the 7.5% convertible
    senior notes was fully and unconditionally guaranteed by AWA and
    US Airways Group. For financial reporting purposes, America
    West Holdings recorded the convertible senior notes at their
    fair market value on the date of issuance. The balance at
    December 31, 2005 was net of an unamortized discount of
    $18 million.On March 24, 2006, America West Holdings gave notice to the
    holders of the 7.5% convertible senior notes that it was
    redeeming the notes in full, at a redemption price of 102.50% of
    the principal amount of the notes, as required under the terms
    of the indenture, plus accrued and unpaid interest up to, but
    not including, the date of redemption. The redemption price,
    plus the relevant interest, was $1,052.50 per $1,000
    principal amount of the notes, and the redemption date was
    April 13, 2006. Holders had the right, at any time at or
    prior to the close of business on April 11, 2006, to
    convert the notes into shares of common stock of US Airways
    Group at a price of $29.09 per share, or 34.376 shares
    per $1,000 principal amount. Holders who converted also received
    interest up to the date of conversion. A total of
    $112 million in principal amount of the notes was converted
    into shares of common stock prior to the redemption date,
    resulting in the issuance of 3,860,358 shares of common
    stock. In connection with the conversion of the notes into
    common stock, the associated unamortized discount of
    $17 million was recorded as a reduction in the amount of
    paid in capital for the conversion.(i)
    
    In December 2004, deferred charges under US Airways
    maintenance agreements with GE Engine Systems, Inc. were
    converted into a $54 million unsecured term note. The
    original note balance of $54 million was reduced by a
    credit of $9.4 million as a result of the merger. Interest
    on the note accrues at LIBOR plus 4%, and becomes payable
    beginning in January 2008, at which time principal and interest
    payments are due in 48 monthly installments.(j)
    
    The industrial development revenue bonds are due April 2023.
    Interest at 6.3% is payable semiannually on April 1 and
    October 1. The bonds are subject to optional redemption
    prior to the maturity date on or after April 1, 2008, in
    whole or in part, on any interest payment date at the following
    redemption prices: 102% on April 1 or October 1, 2008;
    101% on April 1 or October 1, 2009; and 100% on
    April 1, 2010 and thereafter.(k)
    
    In connection with the merger, AWA, US Airways Group and
    Juniper Bank, a subsidiary of Barclays PLC
    (Juniper), entered into an agreement on
    August 8, 2005 amending AWAs co-branded credit card
    agreement with Juniper, dated January 25, 2005. Pursuant to
    the amended credit card agreement, Juniper agreed to offer and
    market an airline mileage award credit card program to the
    general public to participate in US Airways Groups
    Dividend Miles program through the use of a co-branded credit
    card.US Airways Groups credit card program was also
    administered by Bank of America, N.A. (USA) prior to the merger.
    On December 28, 2005, US Airways issued a notice of
    termination under its agreement with Bank of America and that
    notice will become effective on December 28, 2007. Pending
    termination of the Bank of America agreement, both Juniper and
    Bank of America will run separate credit card programs for
    US Airways Group. The amended credit card agreement is the
    subject of pending litigation filed by Bank of America against
    US Airways Group, US Airways and AWA (See
    Note 10(d)).The amended credit card agreement took effect at the effective
    time of the merger. The credit card services provided by Juniper
    under the amended credit card agreement began in January 2006,
    and will continue until 104




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##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   the expiration date, which is the later of December 31,
    2012 or seven years from the date on which Juniper commences
    marketing to the general public.Under the amended credit card agreement, Juniper will pay to
    US Airways Group fees for each mile awarded to each credit
    card account administered by Juniper, subject to certain
    exceptions. Pursuant to the original credit card agreement,
    Juniper paid to AWA a bonus of $20 million. Juniper also
    agreed to pay a one-time bonus payment of $130 million,
    following the effectiveness of the merger, subject to certain
    conditions. The $130 million bonus payment was made to AWA
    on October 3, 2005. The entire $150 million balance
    for bonus payments are included in Deferred gains and
    other liabilities in the accompanying consolidated balance
    sheets as of December 31, 2006 and 2005. US Airways
    Group will not recognize any revenue from the bonus payments
    until the dual branding period has expired, approximately
    February 2008. At that time the Company expects to begin
    recognizing revenue from the bonus payments on a straight-line
    basis through December 2012, the expiration date of the Juniper
    agreement. Further, if Juniper is not granted exclusivity to
    offer a co-branded credit card after the dual branding period,
    US Airways Group must repay the bonus payments and
    repurchase unused pre-paid miles with interest, plus a
    $50 million penalty. Juniper will pay an annual bonus of
    $5 million to US Airways Group, subject to certain
    exceptions, for each year after Juniper becomes the exclusive
    issuer of the co-branded credit card.On October 3, 2005, Juniper pre-paid for miles from
    US Airways Group totaling $325 million, subject to the
    same conditions as apply to the $130 million bonus payment.
    To the extent that these miles are not used by Juniper as
    allowed under the co-branded credit card program in certain
    circumstances, US Airways Group will repurchase these miles
    in 12 equal quarterly installments beginning on the fifth year
    prior to the expiration date of the co-branded credit card
    agreement with Juniper until paid in full. US Airways Group
    makes monthly interest payments at LIBOR plus 4.75% to Juniper,
    beginning on November 1, 2005, based on the amount of
    pre-purchased miles that have not been used by Juniper in
    connection with the co-branded credit card program and have not
    been repurchased by US Airways Group. US Airways Group
    will be required to repurchase pre-purchased miles under certain
    reductions in the collateral held under the credit card
    processing agreement with JP Morgan Chase Bank, N.A.
    Accordingly, the prepayment has been recorded as additional
    indebtedness.Juniper requires US Airways Group to maintain an average
    quarterly balance of cash, cash equivalents and short-term
    investments of at least $1 billion for the entirety of the
    agreement. Further, the agreement requires US Airways Group
    to maintain certain financial ratios beginning January 1,
    2006. Juniper may, at its option, terminate the amended credit
    card agreement, make payments to US Airways Group under the
    amended credit card agreement in the form of pre-purchased miles
    rather than cash, or require US Airways Group to repurchase
    the pre-purchased miles before the fifth year prior to the
    expiration date of the co-branded credit card agreement with
    Juniper in the event that US Airways Group breaches its
    obligations under the amended credit card agreement, or upon the
    occurrence of certain events.(l)
    
    In connection with US Airways Groups emergence from
    bankruptcy in September 2005, it reached a settlement with the
    PBGC related to the termination of three of its defined benefit
    pension plans. The settlement included the issuance of a
    $10 million note which matures in 2012 and bears interest
    at 6% payable annually in arrears. 105




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##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
     2007

$
952008


2092009


2262010


2002011


1,355Thereafter


1,050$
3,135       8.
    Employee
    pension and benefit plans    (a)
    Defined
    Benefit and Other Postretirement Benefit Plans   106




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##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
     Defined Benefit Pension Plans(1)


Other Postretirement BenefitsYear Ended


Year Ended


Year Ended


Year EndedDecember 31,


December 31,


December 31,


December 31,2006


2005


2006


2005Fair value of plan assets at
    beginning of period

$
37


$
37


$



$
Actual return on plan assets


5



1







Employer contributions


5







31



Plan participants
    contributions










30



Gross benefits paid


(2
)


(1
)


(61
)


Fair value of plan assets at end
    of period


45



37







Benefit obligation at beginning of
    period


60



64



234



233Service cost


2







3



1Interest cost


3



1



12



3Plan participants
    contributions










30



Actuarial (gain) loss


(4
)


(4
)


2



(3
)Gross benefits paid


(2
)


(1
)


(61
)


Benefit obligation at end of period


59



60



220



234Funded status of the plan


(14
)


(23
)


(220
)


(234
)Unrecognized actuarial (gain)/loss






(4
)






(3
)Contributions for October to
    December










5



9Net liability recognized

$
(14
)

$
(27
)

$
(215
)

$
(228
)     (1)
    
    For plans with accumulated benefit obligations in excess of plan
    assets, the aggregate accumulated benefit obligations, projected
    benefit obligations and plan assets were $57 million,
    $59 million and $45 million, as of December 31,
    2006 and $56 million, $60 million and
    $37 million, as of December 31, 2005, respectively.    Defined Benefit Pension Plans


Other Postretirement BenefitsYear Ended


Year Ended


Year Ended


Year EndedDecember 31,


December 31,


December 31,


December 31,2006


2005


2006


2005Discount rate


5.75
%


5.75
%


5.67
%


5.3
%Rate of compensation increase


4
%


4
%






        107




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##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
     1% Increase


1% DecreaseEffect on total service and
    interest costs

$



$
Effect on postretirement benefit
    obligation


13



(11
)     Defined Benefit Pension Plans


Other Postretirement BenefitsYear Ended


Year Ended


Year Ended


Year EndedDecember 31,


December 31,


December 31,


December 31,2006


2005


2006


2005Discount rate


5.75
%


5.75
%


5.67
%


5.3
%Expected return on plan assets


8
%


8
%






Rate of compensation increase


4
%


4
%






     Defined Benefit Pension Plans


Other Postretirement BenefitsYear Ended


Year Ended


Year Ended


Year EndedDecember 31,


December 31,


December 31,


December 31,2006


2005


2006


2005Service cost

$
2


$



$
4


$
1Interest cost


3



1



12



3Expected return on plan assets


(3
)


(1
)






Total periodic costs


2







16



4     OtherPostretirementDefined Benefit


Benefits beforePension Plans


Medicare Subsidy


Medicare Subsidy2007

$
2


$
29


$
2008


2



27



2009


2



23



2010


2



21



2011


2



18



2012 to 2015


17



63



2    108




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##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      2006


2005Equity securities


70
%


68
%Debt securities


25



27Other


5



5Total


100
%


100
%     (b)
    Defined
    Contribution Plans        (c)
    Postemployment
    Benefits   109




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    (d)
    Profit
    Sharing Plans    9.
    Income
    Taxes             110




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Year EndedDecember 31,2006Current provision:Federal

$
10State


2Total current


12Deferred provision:Federal


77State


12Total deferred


89Provision for income taxes

$
101     Year Ended December 31,2006


2005


2004Income tax expense (benefit) at
    the federal statutory income tax rate

$
142


$
(188
)

$
(31
)State income tax expense
    (benefit), net of federal income tax expense (benefit)


10







(3
)Change in state deferred tax items






(15
)


Change in valuation allowance


(67
)


218



32Book expense not deductible for tax


(4
)


(4
)


Indefinite lived asset






(13
)


AMT provision


10







Other, net


10



2



2Total

$
101


$



$
Effective tax rate


24.9
%






  111




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
     2006


2005Deferred tax assets:Net operating loss carryforwards

$
364


$
570Property, plant and equipment


21



30Employee benefits


297



301Dividend Miles awards


205



135AMT credit carryforward


37



25Other deferred tax assets


65



57Valuation allowance


(263
)


(446
)Net deferred tax assets


726



672Deferred tax liabilities:Depreciation and amortization


502



455Sale and leaseback transactions
    and deferred rent


123



118Leasing transactions


20



21Financing transactions


42



44Long-lived intangibles


31



31Other deferred tax liabilities


30



34Total deferred tax liabilities


748



703Net deferred tax liabilities


22



31Less: current deferred tax
    liabilities






Non-current deferred tax
    liabilities

$
22


$
31         10.
    Commitments
    and Contingencies  (a)
    Commitments
    to Purchase Flight Equipment and Maintenance
    Services  Airbus
    Purchase Commitments
  A320/A319
 112




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      A330/340
    Embraer
    Purchase Commitments
    Bombardier
    Purchase Commitments
   113




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Engine
    Maintenance Commitments
    (b)
    Leases      2007

$
1,0772008


9952009


8742010


7872011


722Thereafter


4,706Total minimum lease payments

$
9,161          114




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
       (c)
    Regional
    Jet Capacity Purchase Agreements      (d)
    Legal
    Proceedings  04-13819-SSM 03-13823-SSM)
 115




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
         116




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
          117




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    (e)
    Guarantees
    and Indemnifications          (f)
    Concentration
    of Credit Risks      11.
    Nonoperating
    Income (Expense)  Other, Net     118




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
             12.
    Supplemental
    Cash Flow Information    Year Ended December 31,2006


2005


2004Non-cash transactions:Reclassification of investments in
    debt securities to short-term

$



$
30


$
26Fair value of assets acquired in
    business combination






5,568



Liabilities assumed in business
    combination, net of cash acquired






5,451



Conversion of 7% convertible
    notes into common stock of US Airways Group


70







Conversion of
    7.5% convertible senior notes, net of discount of
    $17 million to common stock


95







Notes payable issued for equipment
    purchase deposits






9



17Notes payable canceled under the
    aircraft purchase agreement


4



21



7Payment in kind notes issued, net
    of returns










9Equipment purchases financed by
    capital lease


3







Acquisition of shares due to loan
    default










2Cash transactions:Interest paid, net of amounts
    capitalized


264



88



24Income taxes paid


12







1   13.
    Related
    Party Transactions  debtor-in-possession
 119




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
           14.
    Merger
    Accounting and Pro Forma Information  (a)
    Purchase
    Price Allocation  five-day
  Fair value of common shares issued
    to US Airways Groups unsecured creditors

$
96Estimated merger costs


21Total purchase price

$
117  120




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
     Current assets

$
1,098Property and equipment


2,367Other intangible assets


592Other assets


779Goodwill


732Liabilities assumed


(5,451
)Total purchase price

$
117         Goodwill reported as of
    December 31, 2005

$
732Utilization of pre-merger NOL


(85
)Materials and supplies, net


40Accounts receivable


(22
)Other assets


(22
)Other accrued expenses


(12
)Property and equipment


6Long-term debt


(6
)Accrued compensation and vacation


(4
)Non current employee benefits and
    other


4Accrued taxes


(2
)Accounts payable


(1
)Other intangibles, net


1Goodwill reported as of
    December 31, 2006

$
629    121




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
     (b)
    Pro
    Forma Information    Year Ended


Year EndedDecember 31, 2005


December 31, 2004Operating revenues

$
10,440


$
9,456Operating expenses


10,799



9,858Operating loss


(359
)


(402
)Net loss

$
(891
)

$
(652
)Basic and fully diluted loss per
    share

$
(12.59
)

$
(10.93
)Basic and diluted shares (in
    thousands)


70,689



59,654   15.
    Operating
    segments and related disclosures   122




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Year Ended


Year Ended


Year EndedDecember 31, 2006


December 31, 2005


December 31, 2004United States

$
9,397


$
4,567


$
2,581Foreign


2,160



502



176Total

$
11,557


$
5,069


$
2,757     16.
    Stockholders
    Equity  (a)
    Common
    Stock  non-U.S. citizens non-U.S. persons
    (b)
    Warrants     123




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      17.
    Stock-based
    compensation           124




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   i.e
    Restricted Stock Unit Awards
    WeightedNumber of


Average Grant-2005 Equity Incentive Plan

Shares


Date Fair ValueNonvested balance at
    December 31, 2004





$
Granted


696



26.15Vested and released






Forfeited


(9
)


24.68Nonvested balances at
    December 31, 2005


687


$
26.17Granted


254



38.55Vested and released


(75
)


42.38Forfeited


(52
)


24.85Nonvested balance at
    December 31, 2006


814


$
28.63    125




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Stock Options and Stock Appreciation Rights
    WeightedAverageStock


Weighted


Remaining


AggregateOptions


Average


Contractual Term


Intrinsic Valueand SARs


Exercise Price


(years)


(in millions)1994 Incentive Equity
    PlanBalance at December 31, 2003


1,893


$
34.19Granted






Exercised


(10
)


9.21Forfeited


(5
)


9.21Expired


(206
)


24.32Balance at December 31, 2004


1,672


$
35.63Granted






Exercised


(167
)


18.28Forfeited






Expired


(238
)


33.74Balance at December 31, 2005


1,267


$
38.28Granted






Exercised


(455
)


23.64Forfeited






Expired


(62
)


50.93Balance at December 31, 2006


750


$
46.10



2.44


$
7Vested or expected to vest at
    December 31, 2006


750


$
46.10



2.44


$
7Exercisable at December 31,
    2006


750


$
46.10



2.44


$
72002 Incentive Equity
    PlanBalance at December 31, 2003


1,404


$
10.51Granted


814



24.49Exercised


(62
)


8.79Forfeited


(58
)


17.20Expired


(4
)


11.78 126




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   WeightedAverageStock


Weighted


Remaining


AggregateOptions


Average


Contractual Term


Intrinsic Valueand SARs


Exercise Price


(years)


(in millions)Balance at December 31, 2004


2,094


$
15.80Granted


806



14.52Exercised


(786
)


11.37Forfeited


(56
)


15.71Expired


(10
)


19.85Balance at December 31, 2005


2,048


$
16.98Granted






Exercised


(1,250
)


16.12Forfeited






Expired






Balance at December 31, 2006


798


$
18.33



6.96


$
28Vested or expected to vest at
    December 31, 2006


776


$
18.25



6.73


$
28Exercisable at December 31,
    2006


592


$
17.40



6.39


$
222005 Equity Incentive
    PlanBalance at December 31, 2004






Granted


2,034


$
23.08Exercised






Forfeited


(61
)


20.64Expired






Balance at December 31, 2005


1,973


$
23.15Granted


1,310



40.30Exercised


(701
)


24.49Forfeited


(87
)


30.34Expired






Balance at December 31, 2006


2,495


$
31.53



9.09


$
56Vested or expected to vest at
    December 31, 2006


2,254


$
31.53



9.05


$
50Exercisable at December 31,
    2006


164


$
32.79



8.99


$
3    127




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Year EndedDecember 31,


December 31,


December 31,2006


2005


2004Weighted average fair value

$
16.77


$
8.50


$
10.90Risk free interest rate


4.8
%


3.4
%


3.4
%Expected dividend yield










Expected life


2.9 years



4.0 years



4.8 yearsVolatility


57
%


54
%


54
%       Agreements with ALPA
    Risk free interest rate


4.4%Expected dividend yield


%Contractual term


5.0 yearsVolatility


69.8%    128




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    18.
    Valuation
    and Qualifying Accounts (in millions)  Balance at








BalanceBeginning








at EndDescription

of Period


Additions


Deductions


of PeriodAllowance for doubtful receivables:Year ended December 31, 2006

$
10


$
7


$
9


$
8Year ended December 31, 2005

$
1


$
12
(a)

$
3


$
10Year ended December 31, 2004

$
6


$
1


$
6


$
1Allowance for inventory
    obsolescence:Year ended December 31, 2006

$
24


$
10


$
4


$
30Year ended December 31, 2005

$
15


$
9


$



$
24Year ended December 31, 2004

$
12


$
3


$



$
15Valuation allowance on deferred
    tax asset, net:Year ended December 31, 2006

$
446


$



$
183


$
263Year ended December 31, 2005

$
127


$
976


$
657


$
446Year ended December 31, 2004

$
96


$
55


$
24


$
127     (a)
    
    Allowance for doubtful receivables additions in the 2005 period
    include $8 million from the opening balance sheet of
    US Airways at September 27, 2005.  19.
    Selected
    quarterly financial information (unaudited)    2006

1st Quarter


2nd Quarter


3rd Quarter


4th QuarterOperating revenues

$
2,632


$
3,171


$
2,968


$
2,786Operating expenses


2,507



2,829



2,952



2,711Operating income


125



342



16



75Nonoperating expenses, net


(61
)


(30
)


(33
)


(30
)Income tax provision






7



61



33Income (loss) before cumulative
    effect of change in accounting principle


64



305



(78
)


12Earnings (loss) per common share
    before cumulative effect of change in accounting principle:Basic:

$
0.79


$
3.55


$
(0.88
)

$
0.13Diluted:

$
0.75


$
3.25


$
(0.88
)

$
0.13Shares used for computation (in
    thousands):Basic


81,679



85,886



88,212



89,892Diluted


93,362



94,673



88,212



91,872   129




---



##### Table of Contents



US Airways
    Group, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   2005

1st Quarter


2nd Quarter


3rd Quarter


4th QuarterOperating revenues

$
734


$
845


$
929


$
2,561Operating expenses


689



832



1,012



2,753Operating income (loss)


45



13



(83
)


(192
)Nonoperating expenses, net


(17
)


(16
)


(16
)


(69
)Income tax provision














Income (loss) before cumulative
    effect of change in accounting principle


28



(3
)


(99
)


(261
)Earnings (loss) per common share
    before cumulative effect of change in accounting principle:Basic:

$
1.90


$
(0.20
)

$
(5.74
)

$
(3.27
)Diluted:

$
1.29


$
(0.20
)

$
(5.74
)

$
(3.27
)Shares used for computation (in
    thousands):Basic


14,849



14,863



17,262



80,145Diluted


25,666



14,863



17,262



80,145  130




---



##### Table of Contents



Item 8B.
    Consolidated
    Financial Statements and Supplementary Data of America West
    Airlines, Inc.  Report of
    Independent Registered Public Accounting Firm
           Share Based Payment
   
    131




---



##### Table of Contents



America
    West Airlines, Inc.
  Consolidated
    Statements of Operations
 For the
    Years Ended December 31, 2006, 2005 and 2004
  2006


2005


2004(In millions)Operating revenues:Mainline passenger

$
2,761


$
2,521


$
2,203Express passenger


660



512



353Cargo


31



33



28Other


184



197



172Total operating revenues


3,636



3,263



2,756Operating expenses:Aircraft fuel and related taxes


911



812



590Loss (gain) on fuel hedging
    instruments, net


79



(75
)


(24
)Salaries and related costs


735



701



655Express expenses


611



545



374Aircraft rent


339



327



304Aircraft maintenance


242



259



206Other rent and landing fees


175



176



168Selling expenses


162



161



153Special items, net


17



106



(16
)Depreciation and amortization


46



53



54Other


354



318



308Total operating expenses


3,671



3,383



2,772Operating loss


(35
)


(120
)


(16
)Nonoperating income (expense):Interest income


68



25



14Interest expense, net


(57
)


(94
)


(86
)Other, net


(9
)


(6
)


3Total nonoperating income
    (expense), net


2



(75
)


(69
)Loss before income taxes and
    cumulative effect of change in accounting principle


(33
)


(195
)


(85
)Income tax provision


5







Loss before cumulative effect of
    change in accounting principle


(38
)


(195
)


(85
)Cumulative effect of change in
    accounting principle (Note 2)


1



(202
)


Net loss

$
(37
)

$
(397
)

$
(85
)Unaudited pro forma net loss
    (assuming change in method of accounting for maintenance costs
    was applied retroactively) (Note 2)

$
(38
)

$
(195
)

$
(138
)    132




---



##### Table of Contents



America
    West Airlines, Inc.
  Consolidated
    Balance Sheets
 December 31,
    2006 and 2005
  2006


2005(In millions, except share amounts)ASSETSCurrent assetsCash and cash equivalents

$
620


$
632Short-term investments


506



319Accounts receivable, net


181



119Materials and supplies, net


76



87Prepaid expenses and other


234



169Total current assets


1,617



1,326Property and equipmentFlight equipment


343



348Ground property and equipment


372



309Less accumulated depreciation and
    amortization


(426
)


(399
)289



258Equipment purchase deposits


16



11Total property and equipment


305



269Other assetsRestricted cash


211



229Advances to parent company


261



261Other assets, net


70



107Total other assets


542



597Total assets

$
2,464


$
2,192LIABILITIES &
    STOCKHOLDERS DEFICITCurrent liabilitiesCurrent maturities of long-term
    debt and capital leases

$
2


$
94Accounts payable


224



146Payable to related parties, net


981



443Air traffic liability


359



218Accrued compensation and vacation


144



59Accrued taxes


80



25Other accrued expenses


195



129Total current liabilities


1,985



1,114Noncurrent liabilities and deferred
    creditsLong-term debt and capital leases,
    net of current maturities


384



936Deferred credits


32



39Employee benefit liabilities and
    other


210



213Total noncurrent liabilities and
    deferred credits


626



1,188Commitments and contingencies
    (Note 7)Stockholders deficitCommon stock, $0.01 par,
    1,000 shares authorized, issued and outstanding






Additional paid-in capital


555



555Accumulated deficit


(702
)


(665
)Total stockholders deficit


(147
)


(110
)Total liabilities and
    stockholders deficit

$
2,464


$
2,192    133




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##### Table of Contents



America
    West Airlines, Inc.
  Consolidated
    Statements of Cash Flows
 For the
    Years Ended December 31, 2006, 2005 and 2004
  2006


2005


2004(In millions)Cash flows from operating
    activities:Net loss

$
(37
)

$
(397
)

$
(85
)Adjustments to reconcile net loss
    to net cash provided by (used in) operating activities:Cumulative effect of change in
    accounting principle


(1
)


202



Depreciation and amortization


46



53



54Gain on forgiveness of debt


(51
)






Non-cash special charges (credits),
    net






86



(15
)Change in fair values of fuel
    hedging instrument, net


70



(4
)


2Amortization of capitalized
    maintenance










86Amortization of deferred credits


(13
)


(8
)


(8
)Amortization of deferred rent


4



5



6Amortization of warrants






12



7Amortization of debt issuance costs
    and guarantee fees


6



30



36Amortization of debt discount


2



5



4Amortization of investment discount
    and premium, net










1Gain on sale of investments


1







Other


1



(18
)


28Changes in operating assets and
    liabilities:Decrease in restricted cash






41



1Increase in accounts receivable, net


(62
)


(10
)


(13
)Decrease (increase) in expendable
    spare parts and supplies, net


11



(3
)


1Increase in prepaid expenses


(65
)


(49
)


(49
)Decrease (increase) in other
    assets, net


25



(37
)


(3
)Increase (decrease) in accounts
    payable


78



(7
)


(37
)Increase in air traffic liability


141



23



20Increase (decrease) in accrued
    compensation and vacation benefits


84



12



(18
)Increase (decrease) in accrued taxes


55



4



(3
)Increase (decrease) in other
    accrued liabilities


(4
)


13



4Increase in other liabilities


2



23



1Net cash provided by (used in)
    operating activities


293



(24
)


20Cash flows from investing
    activities:Purchases of property and equipment


(76
)


(37
)


(219
)Purchases of short-term investments


(887
)


(579
)


(488
)Sales of short-term investments


701



416



708Purchases of investments in debt
    securities










(35
)Sales of investments in debt
    securities










20Decrease (increase) in long-term
    restricted cash


18



(157
)


(2
)Proceeds from sales of property and
    equipment and sale-leaseback transactions


2



74



32Increase in equipment purchase
    deposits


(7
)






Net cash provided by (used in)
    investing activities


(249
)


(283
)


16Cash flows from financing activitiesProceeds from issuance of debt










142Repayment of debt


(4
)


(183
)


(176
)Payment of debt issuance costs










(1
)Increase (decrease) in payable to
    affiliates, net


(52
)


998



Other






(4
)


(7
)Net cash provided by (used in)
    financing activities


(56
)


811



(42
)Net increase (decrease) in cash and
    cash equivalents


(12
)


504



(6
)Cash and cash equivalents at
    beginning of year


632



128



134Cash and cash equivalents at end of
    year

$
620


$
632


$
128    134




---



##### Table of Contents



America
    West Airlines, Inc.
  Consolidated
    Statements of Stockholders Deficit
 For the
    Years Ended December 31, 2006, 2005 and 2004
  AdditionalCommon


Paid-In


AccumulatedStock


Capital


Deficit


Total(In millions)Balance at December 31, 2003

$



$
555


$
(183
)

$
372Net loss










(85
)


(85
)Balance at December 31, 2004

$



$
555


$
(268
)

$
287Net loss










(397
)


(397
)Balance at December 31, 2005

$



$
555


$
(665
)

$
(110
)Net loss










(37
)


(37
)Balance at December 31, 2006

$



$
555


$
(702
)

$
(147
)    135




---



##### Table of Contents



America
    West Airlines, Inc.
  Notes to
    Consolidated Financial Statements
  1.
    Basis of
    Presentation and Summary of Significant Accounting
    Policies  (a)
    Nature
    of Operations and Operating Environment        (b)
    Basis
    of Presentation            (c)
    Cash
    Equivalents and Short-term Investments   136




---



##### Table of Contents



America
    West Airlines, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    held-to-maturity Held-to-maturity
  (d)
    Restricted
    Cash    (e)
    Materials
    and Supplies, Net    (f)
    Property
    and Equipment        (g)
    Income
    Taxes   137




---



##### Table of Contents



America
    West Airlines, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    (h)
    Other
    Assets, Net    2006


2005Deposits

$
42


$
64Debt issuance costs


1



7Long term investments


8



12Deferred rent


19



24Total other assets, net

$
70


$
107   (i)
    Frequent
    Traveler Program        (j)
    Derivative
    Instruments   138




---



##### Table of Contents



America
    West Airlines, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Put Option


Call OptionHeating oil ($/gallon)

$
1.86


$
2.06Estimated Crude Oil Equivalent
    ($/barrel)

$
68.78


$
77.18       (k)
    Deferred
    Credits      (l)
    Revenue
    Recognition  Passenger
    Revenue
   139




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##### Table of Contents



America
    West Airlines, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
          Cargo
    Revenue
    Other
    Revenue
    (m)
    Stock-based
    Compensation      2005


2004Net loss, as reported

$
(397
)

$
(85
)Add: Stock-based compensation
    included in reported net loss


3



Deduct: Stock-based compensation
    determined under the fair value based method


(11
)


(6
)Pro forma net loss

$
(405
)

$
(91
)   (n)
    Maintenance
    and Repair Costs   140




---



##### Table of Contents



America
    West Airlines, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    (o)
    Selling
    Expenses    (p)
    Express
    Expenses    Year Ended


Year Ended


Year EndedDecember 31,


December 31,


December 31,2006


2005


2004Aircraft fuel and related taxes

$
210


$
182


$
102Capacity purchases


347



317



238Other rent and landing fees


12



11



8Selling expenses


39



32



23Other expenses


3



3



3Express expenses

$
611


$
545


$
374   (q)
    Recent
    Accounting Pronouncements  No. 06-3 06-3), 06-3 06-3 06-3
   141




---



##### Table of Contents



America
    West Airlines, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
          No. FAS 123R-3,
  with-and-without with-and-without paid-in-capital
  2.
    Change in
    Accounting Policy for Maintenance Costs   142




---



##### Table of Contents



America
    West Airlines, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    3.
    Special
    Charges    Year Ended December 31,2006


2005


2004Airbus restructuring

$
(51
)(a)

$
57
(a)

$
Sale leaseback transactions






27
(b)


(1
)(g)Merger related transition expenses


68
(c)


13
(c)


Power by the hour program penalties






7
(d)


Severance due to change in control






2
(e)


Aircraft returns






1
(f)


2
(f)Termination of V2500 power by the
    hour agreement










(16
)(h)Other






(1
)


(1
)Total

$
17


$
106


$
(16
)     (a)
    
    In the third quarter of 2005, in connection with the merger and
    a memorandum of understanding (the Airbus MOU)
    executed between AVSA S.A.R.L., an affiliate of Airbus S.A.S.
    (Airbus), US Airways Group, US Airways and
    AWA, certain aircraft firm orders were restructured. In
    connection with that restructuring, US Airways Group and
    America West Holdings were required to pay non-refundable
    restructuring fees totaling $89 million by means of set-off
    against existing equipment deposits of US Airways and AWA
    held by Airbus of $39 million and $50 million
    respectively. AWAs restructuring fee of $50 million
    has been classified as a special charge, along with
    $7 million in associated capitalized interest. Also in
    connection with the Airbus MOU, US Airways and AWA entered
    into two loan agreements with aggregate commitments of up to
    $161 million and $89 million. As described in further
    detail in Note 6, on March 31, 2006, the outstanding
    principal and accrued interest on the $89 million loan was
    forgiven upon repayment in full of the $161 million loan in
    accordance with terms of the Airbus loans. As a result, AWA
    recognized a gain associated with the return of these equipment
    deposits upon forgiveness of the loan totaling $51 million,
    consisting of the $50 million in equipment deposits and
    accrued interest of $1 million.(b)
    
    In the third quarter of 2005, a $27 million loss was
    incurred related to the sale-leaseback of six
    737-300
    aircraft and two 757 aircraft.(c)
    
    In 2006, AWA incurred $68 million of transition and merger
    integration costs. These items included $16 million in
    personnel costs for severance, retention payments and stock
    awards; $12 of costs associated with the integration of the AWA
    FlightFund and US Airways Dividend Miles frequent traveler
    programs; $1 million in merger related aircraft lease
    return expenses; $15 million of aircraft livery costs;
    $15 million in professional and technical fees;
    $3 million of training related expenses; and
    $6 million of other expenses.In the fourth quarter of 2005, AWA recorded $13 million of
    merger related expenses related to transitioning the employees,
    systems and facilities of AWA and US Airways into one
    consolidated company. The $13 million includes insurance
    premiums of $4 million related to policies for former
    officers and directors, compensation expense of $3 million
    for special stock awards, granted under a program designed to
    retain key employees through the integration period,
    professional and technical fees of $3 million and sales and
    marketing program expenses of $2 million related to
    notifying frequent traveler program members about the merger.(d)
    
    In the fourth quarter of 2005, in connection with the return of
    certain leased aircraft, AWA incurred expenses of
    $7 million related to penalties incurred under the
    outsourced maintenance arrangement. 143




---



##### Table of Contents



America
    West Airlines, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   (e)
    
    In the third and fourth quarter of 2005, AWA recorded severance
    expense totaling approximately $2 million for terminated
    employees resulting from the merger.(f)
    
    In August 2004, AWA entered into definitive agreements with two
    lessors to return six Boeing
    737-200
    aircraft. Three of these aircraft were returned to the lessors
    in the third quarter of 2004, two were returned in the fourth
    quarter of 2004 and one was returned in January 2005. In
    connection with the return of the aircraft, AWA recorded
    $2 million of special charges in 2004, which include lease
    termination payments of $2 million and the write-down of
    leasehold improvements and aircraft rent balances of
    $3 million, offset by the net reversal of lease return
    provisions of $3 million. In the first quarter of 2005, AWA
    recorded $1 million in special charges related to the final
    Boeing
    737-200
    aircraft which was removed from service in January 2005.(g)
    
    In the first quarter of 2004, AWA recorded a $1 million
    reduction in special charges related to the revision of
    estimated costs associated with the sale and leaseback of
    certain aircraft.(h)
    
    In December 2004, AWA and GE mutually agreed to terminate the
    V2500 A-1
    power by hour (PBH) agreement effective
    January 1, 2005. This agreement was entered into March 1998
    with an original term of ten years. For terminating the
    agreement early, AWA received a $20 million credit to be
    applied to amounts due for other engines under the 1998
    agreement. AWA had capitalized PBH payments for V2500
    A-1 engines
    in excess of the unamortized cost of the overhauls performed by
    GE of approximately $4 million. With the termination of
    this agreement, these payments were not realizable and as a
    result, AWA wrote off this amount against the $20 million
    credit referred to above, resulting in a $16 million net
    gain.  4.
    Stock-based
    Compensation       144




---



##### Table of Contents



America
    West Airlines, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
         Restricted Stock Unit Awards
 145




---



##### Table of Contents



America
    West Airlines, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
     WeightedNumber of


Average Grant-2005 Equity Incentive Plan

Shares


Date Fair ValueNonvested balance at
    December 31, 2004






Granted


696


$
26.15Vested and released






Forfeited


(9
)


24.68Nonvested balances at
    December 31, 2005


687


$
26.17Granted


254



38.55Vested and released


(75
)


42.38Forfeited


(52
)


24.85Nonvested balance at
    December 31, 2006


814


$
28.63     Stock Options and Stock Appreciation Rights
 146




---



##### Table of Contents



America
    West Airlines, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    WeightedAverageStock


Weighted


Remaining


AggregateOptions


Average


Contractual Term


Intrinsic Valueand SARs


Exercise Price


(Years)


(In millions)1994 Incentive Equity
    PlanBalance at December 31, 2003


1,893


$
34.19Granted






Exercised


(10
)


9.21Forfeited


(5
)


9.21Expired


(206
)


24.32Balance at December 31, 2004


1,672


$
35.63Granted






Exercised


(167
)


18.28Forfeited






Expired


(238
)


33.74Balance at December 31, 2005


1,267


$
38.28Granted






Exercised


(455
)


23.64Forfeited






Expired


(62
)


50.93Balance at December 31, 2006


750


$
46.10



2.44


$
7Vested or expected to vest at
    December 31, 2006


750


$
46.10



2.44


$
7Exercisable at December 31,
    2006


750


$
46.10



2.44


$
72002 Incentive Equity
    PlanBalance at December 31, 2003


1,404


$
10.51Granted


814



24.49Exercised


(62
)


8.79Forfeited


(58
)


17.20Expired


(4
)


11.78Balance at December 31, 2004


2,094


$
15.80Granted


806



14.52Exercised


(786
)


11.37Forfeited


(56
)


15.71Expired


(10
)


19.85Balance at December 31, 2005


2,048


$
16.98Granted






Exercised


(1,250
)


16.12Forfeited






Expired






Balance at December 31, 2006


798


$
18.33



6.96


$
28Vested or expected to vest at
    December 31, 2006


776


$
18.25



6.73


$
28 147




---



##### Table of Contents



America
    West Airlines, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  WeightedAverageStock


Weighted


Remaining


AggregateOptions


Average


Contractual Term


Intrinsic Valueand SARs


Exercise Price


(Years)


(In millions)Exercisable at December 31,
    2006


592


$
17.40



6.39


$
222005 Equity Incentive
    PlanBalance at December 31, 2004






Granted


2,034


$
23.08Exercised






Forfeited


(61
)


20.64Expired






Balance at December 31, 2005


1,973


$
23.15Granted


1,310



40.30Exercised


(701
)


24.49Forfeited


(87
)


30.34Expired






Balance at December 31, 2006


2,495


$
31.53



9.09


$
56Vested or expected to vest at
    December 31, 2006


2,254


$
31.53



9.05


$
50Exercisable at December 31,
    2006


164


$
32.79



8.99


$
3       Year EndedDecember 31,


December 31,


December 31,2006


2005


2004Weighted average fair value

$
16.77


$
8.50


$
10.90Risk free interest rate


4.8
%


3.4
%


3.4
%Expected dividend yield










Expected life


2.9 years



4.0 years



4.8 yearsVolatility


57
%


54
%


54
%      148




---



##### Table of Contents



America
    West Airlines, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   5.
    Financial
    Instruments  (a)
    Fair
    Value of Financial Instruments  Cash
    Equivalents and Short-term Investments
    2006


2005Cash and cash
    equivalents:Corporate notes

$
401


$
318Cash and money market funds


219



314Total cash and cash equivalents

$
620


$
632Short-term
    investments:Held-to-maturity
    securities:Corporate notes

$



$
56Available-for-sale
    securities:Auction rate securities


506



263Total short-term investments

$
506


$
319   held-to-maturity available-for-sale available-for-sale available-for-sale
    Long-term
    Debt
    (b)
    Fuel
    Price Risk Management   149




---



##### Table of Contents



America
    West Airlines, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
     6.
    Debt,
    Including Capital Lease Obligations    December 31, 2006


December 31, 2005SecuredAWA Citibank Loan (formerly ATSB
    loan)(a)

$



$
250GECC term loan(a)






111Senior secured discount notes,
    variable interest rate of 8.75%, installments due 2005 through
    2009(b)


33



34Airbus Loans(a)






186Capital lease obligations


2



35



581Unsecured7.5% convertible senior
    notes(c)






112Equipment notes payable, interest
    rates of
    90-day LIBOR
    +1.25%, averaging 5.5%, installments due through 2006






4Industrial development bonds,
    fixed interest rate of 6.3% due 2023(d)


29



29State loan






1Juniper prepaid miles, variable
    interest rate of 10.10%, interest only payments until due in
    2010(e)


325



325354



471Total long-term debt and capital
    lease obligations


389



1,052Less: Unamortized discount on debt


(3
)


(22
)Current maturities


(2
)


(94
)Long-term debt and capital lease
    obligations, net of current maturities

$
384


$
936     (a)
    
    On March 31, 2006, US Airways Group entered into a
    loan agreement with General Electric Capital Corporation
    (GECC) and a syndicate of lenders pursuant to which
    the Company borrowed an aggregate principal amount of
    $1.1 billion. On April 7, 2006, US Airways Group
    entered into an amended and restated loan agreement, which
    increased the principal amount of the loan to $1.25 billion
    (as amended and restated, the GE Loan).
    US Airways, America West Holdings, AWA and other
    subsidiaries of US Airways Group are all guarantors of the
    GE Loan.On March 31, 2006, proceeds of the GE Loan were used, in
    part, to repay in full the following indebtedness of AWA:  
    The amended and restated AWA loans entered into on
    September 27, 2005 that had previously been guaranteed by
    the ATSB. On October 19, 2005, $238 million of the
    loans, of which $228 million had been guaranteed by the
    ATSB, was sold by the lenders by order of the ATSB to 13 fixed
    income investors, for which Citibank, N.A served as agent,
    removing the ATSB guarantee (the Citibank Loans). As
    a result of the sale of the loan, the AWA ATSB Loan is now
    called the AWA Citibank Loan. At the time of repayment of these
    loans on March 31, 2006, the total outstanding balance of
    the loan was $250 million. 150




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##### Table of Contents



America
    West Airlines, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   
    The $161 million loan entered into as of September 27,
    2005 between US Airways and AWA and Airbus Financial
    Services, for which US Airways Group was the guarantor. At
    the time of repayment on March 31, 2006, the outstanding
    balance of the loan was $161 million. US Airways and
    AWA also had an $89 million loan from Airbus Financial
    Services entered into as of September 27, 2005. In
    accordance with the terms of the loan agreements, the
    outstanding principal amount of the $89 million loan was to
    be forgiven on the earlier of December 31, 2010 or the date
    that the outstanding principal amount of, accrued interest on,
    and all other amounts due under the Airbus $161 million
    loan were paid in full, provided that US Airways Group
    complies with the delivery schedule for certain Airbus aircraft.
    As a result of the prepayment of the $161 million loan on
    March 31, 2006, the $89 million loan agreement was
    terminated and the outstanding balance of $89 million was
    forgiven.
    Two loans provided by GECC to AWA pursuant to loan agreements
    entered into as of September 3, 2004 referred to as the
    Spare Parts Facility and the Engines Facility (collectively, the
    GECC term loan). At the time of repayment, the
    principal amounts outstanding under the Spare Parts Facility and
    the Engines Facility were $76 million and $34 million,
    respectively.  (b)
    
    On December 27, 2004, AWA raised additional capital by
    financing its Phoenix maintenance facility and flight training
    center. The flight training center was previously unencumbered,
    and the maintenance facility became unencumbered in 2004 when
    AWA refinanced its term loan. Using its leasehold interest in
    these two facilities as collateral, AWA, through a wholly owned
    subsidiary named FTCHP LLC, raised $31 million through the
    issuance of senior secured discount notes. The notes were issued
    by FTCHP at a discount pursuant to the terms of a senior secured
    term loan agreement among AWA, FTCHP, Heritage Bank SSB, as
    administrative agent, Citibank, N.A., as the initial lender, and
    the other lenders from time to time party thereto. Citibank,
    N.A. subsequently assigned all of its interests in the notes to
    third party lenders.AWA has fully and unconditionally guaranteed the payment and
    performance of FTCHPs obligations under the notes and the
    loan agreement. The notes require aggregate principal payments
    of $36 million with principal payments of $2 million
    due on each of the first two anniversary dates and the remaining
    principal amount due on the fifth anniversary date. The notes
    may be prepaid in full at any time (subject to customary LIBOR
    breakage costs) and in partial amounts of $2 million on the
    third and fourth anniversary dates. The unpaid principal amount
    of the notes bears interest based on LIBOR plus a margin subject
    to adjustment based on a loan to collateral value ratio.The loan agreement contains customary covenants applicable to
    loans of this type, including obligations relating to the
    preservation of the collateral and restrictions on the
    activities of FTCHP. In addition, the loan agreement contains
    events of default, including payment defaults, cross-defaults to
    other debt of FTCHP, if any, breach of covenants, bankruptcy and
    insolvency defaults and judgment defaults.In connection with this financing, AWA sold all of its leasehold
    interests in the maintenance facility and flight training center
    to FTCHP and entered into subleases for the facilities with
    FTCHP at lease rates expected to approximate the interest
    payments due under the notes. In addition, AWA agreed to make
    future capital contributions to FTCHP in amounts sufficient to
    cover principal payments and other amounts owing pursuant to the
    notes and the loan agreement.(c)
    
    In January 2002, in connection with the closing of the original
    AWA ATSB loan and the related transactions, America West
    Holdings issued $105 million of 7.5% convertible
    senior notes due 2009, of which approximately $112 million
    remained outstanding at December 31, 2005 (including
    $22 million of interest paid through December 31, 2004
    as a deemed loan added to the initial principal thereof).
    Beginning January 18, 2005, these notes became convertible
    into shares of common stock, at the option of the holders, at an
    initial conversion price of $29.09 per share or a
    conversion ratio of approximately 34.376 shares per $1,000
    principal amount of such notes, subject to standard
    anti-dilution adjustments. Interest on the 7.5% convertible
    senior notes was payable semiannually in arrears on June 1
    and December 1 of each year. At America West Holdings
    option, the first six interest payments were payable in the form
    of a deemed loan added to the principal amount of these notes.
    The 7.5% convertible senior notes were scheduled to mature
    on January 18, 2009 unless earlier 151




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##### Table of Contents



America
    West Airlines, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  converted or redeemed. The payment of principal, premium and
    interest on the 7.5% convertible senior notes was fully and
    unconditionally guaranteed by AWA and US Airways Group.On March 24, 2006, America West Holdings gave notice to the
    holders of the 7.5% convertible senior notes that it was
    redeeming the notes in full, at a redemption price of 102.50% of
    the principal amount of the notes, as required under the terms
    of the indenture, plus accrued and unpaid interest up to, but
    not including, the date of redemption. The redemption price,
    plus the relevant interest, was $1,052.50 per $1,000
    principal amount of the notes, and the redemption date was
    April 13, 2006. Holders had the right, at any time at or
    prior to the close of business on April 11, 2006, to
    convert the notes into shares of common stock of US Airways
    Group at a price of $29.09 per share, or 34.376 shares
    per $1,000 principal amount. Holders who converted also received
    interest up to the date of conversion. A total of
    $112 million in principal amount of the notes was converted
    into shares of common stock prior to the redemption date,
    resulting in the issuance of 3,860,358 shares of common
    stock.(d)
    
    The industrial development revenue bonds are due April 2023.
    Interest at 6.3% is payable semiannually on April 1 and
    October 1. The bonds are subject to optional redemption
    prior to the maturity date on or after April 1, 2008, in
    whole or in part, on any interest payment date at the following
    redemption prices: 102% on April 1 or October 1, 2008;
    101% on April 1 or October 1, 2009; and 100% on
    April 1, 2010 and thereafter.(e)
    
    In connection with the merger, AWA, US Airways Group and
    Juniper Bank, a subsidiary of Barclays PLC
    (Juniper), entered into an agreement on
    August 8, 2005 amending AWAs co-branded credit card
    agreement with Juniper, dated January 25, 2005. Pursuant to
    the amended credit card agreement, Juniper agreed to offer and
    market an airline mileage award credit card program to the
    general public to participate in US Airways Groups
    Dividend Miles program through the use of a co-branded credit
    card.US Airways Groups credit card program was also
    administered by Bank of America, N.A. (USA) prior to the merger.
    On December 28, 2005, US Airways issued a notice of
    termination under its agreement with Bank of America and that
    notice will become effective on December 28, 2007. Pending
    termination of the Bank of America agreement, both Juniper and
    Bank of America will run separate credit card programs for
    US Airways Group. The amended credit card agreement is the
    subject of pending litigation filed by Bank of America against
    US Airways Group, US Airways and AWA (See
    Note 7(d)).The amended credit card agreement took effect at the effective
    time of the merger. The credit card services provided by Juniper
    under the amended credit card agreement began in January 2006,
    and will continue until the expiration date, which is the later
    of December 31, 2012 or seven years from the date on which
    Juniper commences marketing to the general public.Under the amended credit card agreement, Juniper will pay to
    US Airways Group fees for each mile awarded to each credit
    card account administered by Juniper, subject to certain
    exceptions. Pursuant to the original credit card agreement,
    Juniper paid to AWA a bonus of $20 million. Juniper also
    agreed to pay a one-time bonus payment of $130 million,
    following the effectiveness of the merger, subject to certain
    conditions. The $130 million bonus payment was made to AWA
    on October 3, 2005. The entire $150 million balance
    for bonus payments are included in Deferred gains and
    other liabilities in the accompanying consolidated balance
    sheet as of December 31, 2005. US Airways Group will
    not recognize any revenue from the bonus payments until the dual
    branding period has expired in approximately February 2008. At
    that time AWA expects to begin recognizing revenue from the
    bonus payments on a straight-line basis through December 2012,
    the expiration date of the Juniper agreement. Further, if
    Juniper is not granted exclusivity to offer a co-branded credit
    card after the dual branding period, US Airways Group must
    repay the bonus payments and repurchase unused pre-paid miles
    with interest, plus a $50 million penalty. Juniper will pay
    an annual bonus of $5 million to US Airways Group,
    subject to certain exceptions, for each year after Juniper
    becomes the exclusive issuer of the co-branded credit card.On October 3, 2005, Juniper pre-paid for miles from
    US Airways Group totaling $325 million, subject to the
    same conditions that apply to the $130 million bonus
    payment. To the extent that these miles are not used by Juniper
    as allowed under the co-branded credit card program in certain
    circumstances, US Airways Group will repurchase these miles
    in 12 equal quarterly installments beginning on the fifth year
    prior to the expiration date 152




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##### Table of Contents



America
    West Airlines, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  of the co-branded credit card agreement with Juniper, until paid
    in full. US Airways Group makes monthly interest payments
    at LIBOR plus 4.75% to Juniper, beginning on November 1,
    2005, based on the amount of pre-purchased miles that have not
    been used by Juniper in connection with the co-branded credit
    card program and have not been repurchased by US Airways
    Group. US Airways Group will be required to repurchase
    pre-purchased miles under certain reductions in the collateral
    held under the credit card processing agreement with JP Morgan
    Chase Bank, N.A. Accordingly, the prepayment has been recorded
    as additional indebtedness.Juniper requires US Airways Group to maintain an average
    quarterly balance of cash, cash equivalents and short-term
    investments of at least $1 billion for the entirety of the
    agreement. Further, the agreement requires US Airways Group
    to maintain certain financial ratios beginning January 1,
    2006. Juniper may, at its option, terminate the amended credit
    card agreement, make payments to US Airways Group under the
    amended credit card agreement in the form of pre-purchased miles
    rather than cash, or require US Airways Group to repurchase
    the pre-purchased miles before the fifth year prior to the
    expiration date of the co-branded credit card agreement with
    Juniper in the event that US Airways Group breaches its
    obligations under the amended credit card agreement, or upon the
    occurrence of certain events.    2007

$
22008


1112009


1392010


1082011


Thereafter


29$
389       7.
    Commitments
    and Contingencies  (a)
    Commitments
    to Purchase Flight Equipment and Maintenance
    Services  Airbus
    Purchase Commitments
  A320/A319
   153




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##### Table of Contents



America
    West Airlines, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Engine
    Purchase Commitments
  V2500-A5
  Engine
    Maintenance Commitments
    (b)
    Leases      2007

$
4412008


3872009


3402010


2982011


250Thereafter


1,637Total minimum lease payments

$
3,353        154




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##### Table of Contents



America
    West Airlines, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
          (c)
    Regional
    Jet Capacity Purchase Agreements    (d)
    Legal
    Proceedings   155




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##### Table of Contents



America
    West Airlines, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      (e)
    Guarantees
    and Indemnifications  No. 97-10,
   156




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##### Table of Contents



America
    West Airlines, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
           (f)
    Concentration
    of Credit Risk      8.
    Income
    Taxes       157




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##### Table of Contents



America
    West Airlines, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
     pre-1994
      Year EndedDecember 31, 2006Current provision:Federal

$
5State


Total current


5Deferred provision:Federal


State


Total deferred


Provision (credit) for income taxes

$
5  158




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##### Table of Contents



America
    West Airlines, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Year Ended December 31,2006


2005


2004Income tax expense (benefit) at
    the federal statutory income tax rate

$
(11
)

$
(139
)

$
(30
)State income tax expense
    (benefit), net of federal income tax expense (benefit)


(1
)






(3
)Change in state deferred tax items


1



(15
)


Change in valuation allowance


7



156



31Book expense not deductible for tax


3







AMT provision


5







Other, net


1



(2
)


2Total

$
5


$



$
Effective tax rate


(16.2
)%






     2006


2005Deferred tax assets:Net operating loss carryforwards

$
128


$
236Property, plant and equipment


9



9Employee benefits


27



20Dividend miles awards


67



4AMT credit carryforward


7



1Other deferred tax assets


41



16Valuation allowance


(270
)


(285
)Net deferred tax assets


9



1Deferred tax liabilities:Depreciation and amortization


27



23Sale and leaseback transactions
    and deferred rent


(19
)


(23
)Other deferred tax liabilities


1



1Total deferred tax liabilities


9



1Net deferred tax liabilities

$



$
     9.
    Employee
    Benefit Plans  (a)
    Defined
    Contribution Plan   159




---



##### Table of Contents



America
    West Airlines, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      (b)
    Profit
    Sharing Plans    10.
    Stockholders
    Equity  (a)
    Common
    Stock    (b)
    Warrants     160




---



##### Table of Contents



America
    West Airlines, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    11.
    Nonoperating
    Income (Expenses)  Other, Net         161




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##### Table of Contents



America
    West Airlines, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   12.
    Supplemental
    Information to Statements of Cash Flows    Year Ended December 31,2006


2005


2004Non-cash transactions:Reclassification of investments in
    debt securities to short-term

$



$
30


$
26Prepurchase of miles from affinity
    card provider to US Airways for which AWA has liability
    (Note 6)






325



One-time payment from affinity
    card provider paid to US Airways (Note 6)






130



Loan from Airbus to
    US Airways Group for which AWA has joint and severable
    liability (Note 6)






186



Conversion of 7.25% notes
    into common stock of US Airways Group






87



Conversion of
    7.5% convertible senior notes, net of discount of
    $17 million into common stock of US Airways Group


95







Equipment purchases financed by
    capital leases


3







Receivable from US Airways
    Group for repayment of ATSB, Airbus, and GECC loans


520







Forgiveness of Airbus loan and
    interest


39







Notes payable issued for equipment
    purchase deposits






9



17Notes payable canceled under the
    aircraft purchase agreement


4



21



7Loan proceeds received by
    US Airways Group


64







Payment in kind notes issued, net
    of returns










9Cash transactions:Interest paid, net of amounts
    capitalized


41



48



24Income taxes paid


7







   13.
    Related
    Party Transactions  (a)
    Payables
    to Related Parties, Net    December 31,2006


2005US Airways Group

$
(1,099
)

$
(465
)US Airways


92



20America West Holdings


9



(1
)Other US Airways Group wholly
    owned subsidiaries


17



3Total

$
(981
)

$
(443
)    162




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##### Table of Contents



America
    West Airlines, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
          (b)
    Shared
    Operating Expenses    Year Ended December 31, 2006AWA


US Airways


TotalCorporate expenses

$
167


$
266


$
433Airport expenses


112



197



309Total allocated expenses

$
279


$
463


$
742   (c)
    Other     163




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##### Table of Contents



America
    West Airlines, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   14.
    Valuation
    and Qualifying Accounts  Balance at








BalanceBeginning








at EndDescription

of Period


Additions


Deduction


of Period(in millions)Allowance for doubtful receivables:Year ended December 31, 2006

$
2


$
2


$
2


$
2Year ended December 31, 2005

$
1


$
2


$
1


$
2Year ended December 31, 2004

$
6


$
1


$
6


$
1Allowance for inventory
    obsolescence:Year ended December 31, 2006

$
23


$
4


$
1


$
26Year ended December 31, 2005

$
15


$
8


$



$
23Year ended December 31, 2004

$
12


$
3


$



$
15Valuation allowance on deferred
    tax asset, net:Year ended December 31, 2006

$
284


$



$
14


$
270Year ended December 31, 2005

$
127


$
157


$



$
284Year ended December 31, 2004

$
96


$
55


$
24


$
127   15.
    Selected
    Quarterly Financial Information    1st Quarter


2nd Quarter


3rd Quarter


4th Quarter(unaudited)2006Operating revenues

$
861


$
981


$
922


$
872Operating expenses


779



920



1,028



944Operating income (loss)


82



61



(106
)


(72
)Nonoperating expenses, net


(25
)


11



7



9Income tax expense






4



1



Income (loss) before cumulative
    effect of change in accounting principle


57



68



(100
)


(63
)   1st Quarter


2nd Quarter


3rd Quarter


4th Quarter2005Operating revenues

$
734


$
845


$
849


$
835Operating expenses


686



832



919



946Operating income (loss)


48



13



(70
)


(111
)Nonoperating expenses, net


(18
)


(16
)


(13
)


(28
)Income tax expense














Income (loss) before cumulative
    effect of change in accounting principle


30



(3
)


(83
)


(139
)  164




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##### Table of Contents



Item 8C.
    Financial
    Statements and Supplementary Data of US Airways,
    Inc.  Managements
    Annual Report on Internal Control over Financial
    Reporting
  Rules 13a-15(f) 15d-15(f)
  
    pertain to the maintenance of records that, in reasonable
    detail, accurately and fairly reflect the transactions and
    dispositions of the assets of US Airways;
    provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with generally accepted accounting principles, and
    that receipts and expenditures of US Airways are being made
    only in accordance with authorizations of management and
    directors of US Airways; and
    provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of
    US Airways assets that could have a material effect
    on the financial statements.         165




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
             Internal Control  Integrated Framework Internal Control 
    Integrated Framework
     
   
 166




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
           90-7,
  Employers Accounting for Defined Benefit Pension and Other
    Postretirement Plans, an amendment of FASB Statements
    No. 87,88,106,and 132(R) Shared Based Payment
  Internal Control-Integrated
    Framework
   
   
 167




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##### Table of Contents



US Airways,
    Inc.
  Statements of Operations
 (In millions)
  Successor Company



Predecessor CompanyThree Months



Nine MonthsYear Ended


Ended



Ended


Year EndedDecember 31,


December 31,



September 30,


December 31,2006


2005



2005


2004Operating revenuesMainline passenger

$
5,205


$
1,123



$
3,738


$
4,969Express passenger


2,084



442




1,178



1,378Cargo


122



25




71



132Other


645



165




465



589Total operating revenues


8,056



1,755




5,452



7,068Operating expensesAircraft fuel and related taxes


1,607



375




1,111



991Salaries and related costs


1,354



330




1,073



2,177Express expenses


2,060



490




1,372



1,572Aircraft rent


393



98




293



399Aircraft maintenance


340



86




253



303Other rent and landing fees


393



101




319



445Selling expenses


284



68




258



362Special items, net


21



15








Depreciation and amortization


138



37




152



220Other


874



226




763



947Total operating expenses


7,464



1,826




5,594



7,416Operating income (loss)


592



(71
)



(142
)


(348
)Nonoperating income (expense)Interest income


84



11




15



12Interest expense, net


(215
)


(65
)



(222
)


(236
)Reorganization items, net











636



(32
)Other, net


13



5




(9
)


19Nonoperating income (expense), net


(118
)


(49
)



420



(237
)Income (loss) before income taxes


474



(120
)



278



(585
)Income tax provision (benefit)


129








(2
)


(7
)Net income (loss)

$
345


$
(120
)


$
280


$
(578
)    168




---



##### Table of Contents



US Airways,
    Inc.
  Balance Sheets
    December 31, 2006 and 2005
    (In millions, except share and per share amounts)
  2006


2005ASSETSCurrent assetsCash and cash equivalents

$
467


$
462Short-term investments


744



132Restricted cash


1



8Accounts receivable, net


201



227Materials and supplies, net


112



109Prepaid expenses and other


117



213Total current assets


1,642



1,151Property and equipmentFlight equipment


1,623



1,492Ground property and equipment


205



205Less accumulated depreciation and
    amortization


(141
)


(28
)1,687



1,669Equipment purchase deposits


32



32Total property and equipment


1,719



1,701Other assetsGoodwill


629



732Other intangibles, net


513



541Restricted cash


456



563Other assets, net


164



120Total other assets


1,762



1,956Total assets

$
5,123


$
4,808LIABILITIES AND
    STOCKHOLDERS EQUITY (DEFICIT)Current liabilitiesCurrent maturities of debt and
    capital leases

$
93


$
117Accounts payable


212



273Payables to related parties, net


1,298



336Air traffic liability


487



570Accrued compensation and vacation


105



145Accrued taxes


100



108Other accrued expenses


656



684Total current liabilities


2,951



2,233Noncurrent liabilities and deferred
    creditsLong-term debt and capital leases,
    net of current maturities


1,200



1,900Deferred gains and credits


173



215Postretirement benefits other than
    pensions


183



189Employee benefit liabilities and
    other


404



404Total noncurrent liabilities and
    deferred credits


1,960



2,708Commitments and contingenciesStockholders deficitCommon stock, $1 par,
    1,000 shares issued and outstanding






Additional paid-in capital


1



1Accumulated deficit


211



(134
)Total stockholders equity
    (deficit)


212



(133
)Total liabilities and
    stockholders equity (deficit)

$
5,123


$
4,808    169




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##### Table of Contents



US Airways,
    Inc.
  Statements of Cash Flows
    (In millions)
  Successor Company



Predecessor CompanyThree Months



Nine MonthsYear Ended


Ended



Ended


Year EndedDecember 31,


December 31,



September 30,


December 31,2006


2005



2005


2004Cash flows from operating activitiesNet income (loss)

$
345


$
(120
)


$
280


$
(578
)Adjustments to reconcile net income
    (loss) to net cash provided by (used in) operating activitiesbefore reorganization items, net:Fresh-start adjustments











(697
)


17Depreciation and amortization


137



37




158



223Gains on curtailments of
    postretirement benefits other than pensions











(255
)


(Gains) losses on dispositions of
    property


(2
)


1




(2
)


Gain on forgiveness of debt


(39
)











Amortization of deferred gains and
    credits


(30
)


(14
)



(66
)


(79
)Amortization of debt discount


10



13








Utilization of acquired net
    operations loss carryforwards


85












Stock-based compensation











10



50Other


(1
)


(7
)



(8
)


3Changes in operating assets and
    liabilities:Decrease in restricted cash


6



79




12



52Decrease (increase) in accounts
    receivables, net


26



65




(42
)


(5
)Decrease (increase) in materials
    and supplies, prepaid expenses, and other assets


55



(1
)



(25
)


(42
)Increase (decrease) in air traffic
    liability


(82
)


(77
)



175



(15
)Increase (decrease) in accounts
    payable and accrued expenses


(139
)


(15
)



89



287Increase (decrease) in
    postretirement benefits other than pensions, employee benefit
    liabilities and other


(6
)


(10
)



8



44Net cash provided by (used for)
    operating activities before reorganization items


365



(49
)



(363
)


(43
)Reorganization items, net






(33
)



(92
)


(11
)Net cash provided by (used in)
    operating activities


365



(82
)



(455
)


(54
)Cash flows from investing activitiesPurchases of property and equipment


(146
)


(5
)



(136
)


(198
)Proceeds from sales of property and
    sale-leaseback transactions


5



539




211



18Purchases of short-term investments


(1,696
)


(132
)







Sales of short-term investments


1,084












358Decrease (increase) in long-term
    restricted cash


109



46




(81
)


(128
)Net cash provided by (used in)
    investing activities


(644
)


448




(6
)


50Cash flows from financing activitiesProceeds from issuance of debt


92








140



240Proceeds from issuance of
    debtor-in-possession
    financings











125



Increase in payables to affiliates,
    net


288



154




53



Repayments of debt and capital
    lease obligations


(96
)


(434
)



(215
)


(425
)Net cash provided by (used in)
    financing activities


284



(280
)



103



(185
)Net increase (decrease) in cash and
    cash equivalents


5



86




(358
)


(189
)Cash and cash equivalents at
    beginning of period


462



376




734



923Cash and cash equivalents at end of
    period

$
467


$
462



$
376


$
734    170




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##### Table of Contents



US Airways,
    Inc.
  Statements of Stockholders Equity (Deficit) and
    Comprehensive Income
    Three Years Ended December 31, 2006
    (In millions)
  Accumulated OtherComprehensiveIncome (Loss), Net





ComprehensiveCommon


Paid-in


Accumulated


Deferred


of Income Tax





IncomeStock


Capital


Deficit


Compensation


Effect


Total


(Loss)Predecessor Company:Balance as of December 31, 2003

$



$
349


$
(160
)

$
(45
)

$
(55
)

$
89Amortization of deferred
    compensation














31







31Unrealized loss on fuel cash flow
    hedges, net


















(9
)


(9
)

$
(9
)Minimum pension liability change


















(34
)


(34
)


(34
)Net loss










(578
)










(578
)


(578
)Total comprehensive loss

























$
(621
)Balance as of December 31, 2004

$



$
349


$
(738
)

$
(14
)

$
(98
)

$
(501
)Amortization of deferred
    compensation














10







10Unrealized loss on fuel cash flow
    hedges, net


















(17
)


(17
)

$
(17
)Minimum pension liability change


















29



29



29Net income










280











280



280Fresh-start adjustments:Adjustments to stockholders
    deficit in connection with fresh-start






(348
)


444



4



86



186



86Total comprehensive income

























$
378Successor Company:Balance as of September 30,
    2005

$



$
1


$
(14
)

$



$



$
(13
)Net loss










(120
)










(120
)


(120
)Total comprehensive loss

























$
(120
)Balance as of December 31, 2005

$



$
1


$
(134
)

$



$



$
(133
)Net income










345











345



345Total comprehensive income

























$
345Balance as of December 31, 2006

$



$
1


$
211


$



$



$
212    171




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial Statements
  1.
    Basis of
    Presentation and Summary of Significant Accounting
    Policies  (a)
    Nature
    of Operations and Operating Environment        (b)
    Basis
    of Presentation and Use of Estimates  04-13819-SSM 04-13823-SSM).
     172




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##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
    90-7, (SOP 90-7).
  SOP 90-7
  (c)
    Cash
    Equivalents and Short-term Investments    held-to-maturity Held-to-maturity
  (d)
    Restricted
    Cash    (e)
    Materials
    and Supplies, Net   173




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
   (f)
    Property
    and Equipment        (g)
    Income
    Taxes    (h)
    Goodwill
    and Other Intangibles, Net   174




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
        2006


2005Airport take-off and landing slots

$
411


$
411Airport gate leasehold rights


52



52Accumulated amortization


(35
)


(8
)Total

$
428


$
455     (i)
    Other
    Assets, Net    2006


2005Deposits

$
7


$
9Debt issuance costs


3



Long term investments


30



10Deferred rent


30



Aircraft leasehold interest, net


101



101Subtotal


171



120Less: accumulated amortization


(7
)


Total other assets, net

$
164


$
120  175




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
    (j)
    Frequent
    Traveler Program        (k)
    Derivative
    Instruments       176




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
    (l)
    Deferred
    Gains and Credits, Net      (m)
    Revenue
    Recognition  Passenger
    Revenue
           177




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
   Cargo
    Revenue
    Other
    Revenue
    (n)
    Stock-based
    Compensation        (o)
    Maintenance
    and Repair Costs    (p)
    Selling
    expenses    (q)
    Express
    Expenses   178




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
    Successor Company


Predecessor CompanyThree Months


Nine MonthsYear Ended


Ended


Ended


Year EndedDecember 31,


December 31,


September 30,


December 31,2006


2005


2005


2004Aircraft fuel and related taxes

$
554


$
140


$
328


$
206Salaries and related costs


50



18



63



37Capacity purchases


1,018



222



659



908Other rent and landing fees


128



30



88



28Aircraft rent


12



10



21



15Selling expenses


109



24



66



72Aircraft maintenance


2



3



9



1Depreciation and amortization










7



3Other expenses


187



43



131



302Express expenses

$
2,060


$
490


$
1,372


$
1,572   (r)
    Variable
    Interest Entities    (s)
    Recent
    Accounting Pronouncements  No. 06-3 06-3), 06-3 06-3 06-3
     179




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
              No. FAS 123R-3,
 180




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
   with-and-without with-and-without paid-in-capital
  2.
    Emergence
    from Bankruptcy  (a)
    Emergence
    and Claims Resolution  Debtors-in-Possession
      PBGC Claim
 181




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
    Agreements with ALPA
   182




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
    (b)
    Fresh-start
    Reporting and Purchase Accounting  SOP 90-7. five-day
  Fair value of common shares issued
    to US Airways Groups unsecured creditors

$
96Estimated merger costs


21Total purchase price

$
117      183




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
    Current assets

$
922Property and equipment


2,271Other intangible assets


548Other assets


778Goodwill


732Liabilities assumed


(5,250
)$
1    184




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
    Predecessor


Debt


Fresh-start


Purchase


SuccessorCompany


Discharge(a)


Adjustments(b)


Accounting(c)


CompanyASSETSCurrent assetsCash and cash equivalents

$
276


$



$



$



$
276Restricted cash


87















87Receivables, net


288







4







292Materials and supplies, net


156







(50
)






106Prepaid expenses and other


158







4



(1
)


161Total current assets


965







(42
)


(1
)


922Property and equipment, net


2,425







(154
)






2,271Other assetsGoodwill


2,490







(1,680
)


(78
)


732Other intangibles, net


473







75







548Restricted cash


608















608Other assets, net


82







88







170Total other assets


3,653







(1,517
)


(78
)


2,058$
7,043


$



$
(1,713
)

$
(79
)

$
5,251LIABILITIES AND
    STOCKHOLDERS EQUITY (DEFICIT)Current liabilitiesCurrent maturities of debt and
    capital leases

$
914


$
(79
)

$
(567
)

$



$
268Accounts payable


261



58



(7
)






312Payable (receivable) to related
    parties, net


(225
)


250



(2
)






23Air traffic liability


790







(20
)


(124
)


646Accrued compensation and wages


136



1







20



157Accrued taxes


158











(14
)


144Other accrued expenses


551



177



65



3



796Total current liabilities


2,585



407



(531
)


(115
)


2,346Noncurrent liabilities and deferred
    creditsLong-term debt and capital leases,
    net of current maturities


49



1,489



532







2,070Deferred gains and credits


150



255



(176
)






229Postretirement benefits other than
    pensions






1,446



(1,247
)






199Employee benefit liabilities and
    other


224



192



(45
)


35



406Total noncurrent liabilities and
    deferred credits


423



3,382



(936
)


35



2,904Liabilities subject to compromise


4,826



(4,826
)










Stockholders equity (deficit)Common stock


















Additional paid- in capital


348



96



(443
)






1Accumulated deficit


(1,141
)


941



199



1



Deferred compensation


(4
)






4







Accumulated other comprehensive
    income (loss)


6







(6
)






Total stockholders equity
    (deficit)


(791
)


1,037



(246
)


1



1$
7,043


$



$
(1,713
)

$
(79
)

$
5,251  185




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
    (a)
    
    Reflects the discharge or reclassification of estimated
    liabilities subject to compromise. Most of these obligations are
    only entitled to receive such distributions of cash and common
    stock as provided for under the Plan of Reorganization. A
    portion of the estimated liabilities subject to compromise was
    restructured and will continue, as restructured, to be
    liabilities of the Successor Company.(b)
    
    Includes adjustments to reflect assets and liabilities at fair
    value and the write-off of the Predecessor Companys equity
    accounts.(c)
    
    In conjunction with the merger and application of purchase
    accounting, US Airways adjusted certain balances to conform
    its accounting policies to those of America West Holdings.      Goodwill reported as of
    September 30, 2006

$
732Utilization of pre-merger NOL


(85
)Materials and supplies, net


32Accounts receivable


(22
)Other assets


(22
)Noncurrent employee benefits and
    other


12Related party payables


(9
)Property and equipment


6Long-term debt


(6
)Accrued compensation and vacation


(4
)Other accrued expenses


(3
)Accrued taxes


(2
)Accounts payable


(1
)Other intangibles, net


1Goodwill reported as of
    December 31, 2006

$
629     (c)
    Reorganization
    Items, Net  SOP 90-7
 186




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
    Predecessor CompanyNine MonthsEnded


Year EndedSeptember 30,


December 31,2005


2004Curtailment of postretirement
    benefits(a)

$
1,420


$
Termination of pension plans(b)


801



Discharge of liabilities(c)


75



Aircraft order cancellation
    penalties & reversals(d)


30



(7
)Interest income on accumulated cash


7



4Damage and deficiency claims(e)


2



(2
)Revaluation of assets and
    liabilities(f)


(1,498
)


Severance including benefits(g)


(96
)


Professional fees


(57
)


(27
)Airbus equipment deposits and
    credits, net(h)


(35
)


Restructured aircraft financings(i)


(5
)


Write-off of deferred compensation


(4
)


Other


(4
)


$
636


$
(32
)     (a)
    
    In January 2005, the Bankruptcy Court approved settlement
    agreements between US Airways and its unions and the
    court-appointed Section 1114 Committee, representing
    retirees other than those represented by the IAM and TWU, to
    begin the significant curtailment of postretirement medical
    benefits. US Airways recognized a gain of $183 million
    in connection with this curtailment in the first quarter of
    2005. Upon the emergence from bankruptcy and effectiveness of
    the Plan of Reorganization, an additional gain of
    $1.24 billion was recognized as the liability associated
    with the postretirement medical benefits was reduced to fair
    market value. See also Note 6.(b)
    
    Also in January 2005, US Airways terminated three defined
    benefit plans related to the flight attendants, mechanics and
    certain other employees (see Note 6). The PBGC was
    appointed trustee of the plans upon termination. US Airways
    recognized a curtailment gain of $24 million and a
    $91 million minimum pension liability adjustment in
    connection with the terminations in the first quarter of 2005.
    Upon the effective date of the Plan of Reorganization and in
    connection with the settlement with the PBGC, the remaining
    liabilities associated with these plans were written off, net of
    settlement amounts.(c)
    
    Reflects the discharge of trade accounts payable and other
    liabilities upon emergence from bankruptcy. Most of these
    obligations were only entitled to receive such distributions of
    cash and common stock as provided for under the plan of
    reorganization in each of the bankruptcies. A portion of the
    liabilities subject to compromise in the bankruptcies were
    restructured and continued, as restructured, to be liabilities
    of the Successor Company.(d)
    
    As a result of US Airways bankruptcy filing in
    September 2004, US Airways was not able to secure the
    financing necessary to take on-time delivery of three scheduled
    regional jet aircraft and therefore accrued penalties of
    $3 million until delivery of these aircraft was made to a
    US Airways Express affiliate in August 2005. Offsetting
    these penalties is the reversal of $33 million in penalties
    recorded by US Airways in the nine months ended
    December 31, 2003 due to its intention not to take delivery
    of certain aircraft scheduled for future delivery. In connection
    with the Airbus Memorandum of Understanding (MOU),
    the accrual for these penalties was reversed (see also
    Note 3). 187




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
   As the result of US Airways bankruptcy filing in
    September 2004, it failed to meet the conditions precedent for
    continued financing of regional jets and was not able to take
    delivery of scheduled aircraft and therefore incurred penalties
    of $7 million in the fourth quarter of 2004.(e)
    
    Damage and deficiency claims are largely a result of
    US Airways election to either restructure, abandon or
    reject aircraft debt and leases during the bankruptcy
    proceedings. As a result of the confirmation of the Plan of
    Reorganization and the effectiveness of the merger, these claims
    were withdrawn and the accruals reversed.(f)
    
    As of September 30, 2005, US Airways recorded
    $1.5 billion of adjustments to reflect assets and
    liabilities at fair value, including an initial net write-down
    of goodwill of $1.82 billion. Goodwill of $584 million
    was recorded to reflect the excess of the estimated fair value
    of liabilities and equity over identifiable assets. Subsequent
    to September 30, 2005, US Airways reduced goodwill by
    $103 million to reflect adjustments to the fair value of
    certain assets and liabilities. See Note 2(b) for a description
    of changes in goodwill subsequent to September 30, 2005.(g)
    
    In connection with filing for bankruptcy on September 12,
    2004, US Airways achieved cost-savings agreements with its
    principal collective bargaining groups. In connection with the
    new labor agreements, approximately 5,000 employees across
    several of US Airways labor groups were involuntarily
    terminated or participated in voluntary furlough and termination
    programs.(h)
    
    In connection with the Airbus MOU, US Airways was required
    to pay a restructuring fee of $39 million, which was paid
    by means of offset against existing equipment deposits held by
    Airbus. US Airways also received credits from Airbus
    totaling $4 million in 2005, primarily related to equipment
    deposits. See also Note 3.(i)
    
    The GE Merger MOU provided for the continued use of certain
    leased Airbus, Boeing and regional jet aircraft, the
    modification of monthly lease rates and the return of certain
    other leased Airbus and Boeing aircraft. The GE Merger MOU also
    provided for the sale-leaseback of assets securing various GE
    obligations. In connection with these transactions,
    US Airways recorded a net loss of $5 million.  3.
    Special
    Items, Net    Successor CompanyYear Ended


Three Months EndedDecember 31,


December 31,2006


2005Transition and merger integration

$
64
(b)

$
15
(a)Airbus restructuring


(40
)(c)


Settlement of bankruptcy claims


(3
)(d)


$
21


$
15     (a)
    
    In connection with the merger with America West Holdings,
    US Airways incurred $15 million of transition and
    merger integration costs in the fourth quarter of 2005. These
    items included $7 million in insurance premiums related to
    policies for former officers and directors; $5 million for
    severance, retention payments and stock awards; $1 million
    of aircraft livery costs; $1 million of programming service
    expense; and $1 million in other expenses.(b)
    
    In connection with the merger, US Airways incurred
    $64 million of transition and merger integration costs in
    2006. These items included $25 million in personnel costs
    for severance, retention payments and stock awards;
    $2 million of aircraft livery costs; $23 million in
    professional and technical fees; $3 million in training
    related expenses; $7 million in employee moving expenses;
    $4 million of other expenses; $1 million of aircraft
    lease 188




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
  returns; and a $1 million credit associated with reduced
    costs in connection with the integration of the AWA FlightFund
    and US Airways Dividend Miles frequent traveler programs.    Year ended December 31,2006


2005Balance beginning of year

$
7


$
Amount recorded by US Airways
    in purchase accounting






24Severance expense


11



Payments


(18
)


(17
)Balance end of year

$



$
7   Due to the requirements for continued service, severance expense
    is recorded over the remaining service period. The Company
    expects to record severance expense and make remaining
    termination and benefit payments of $1 million during 2007.(c)
    
    In connection with the merger and the Airbus MOU executed
    between AVSA S.A.R.L, an affiliate of Airbus S.A.S.
    (Airbus), US Airways Group, US Airways and
    AWA, certain aircraft firm orders were restructured. In
    connection with that restructuring, US Airways Group and
    America West Holdings were required to pay restructuring fees
    totaling $89 million by means of set-off against existing
    equipment deposits of US Airways and AWA held by Airbus of
    $39 million and $50 million, respectively. Also in
    connection with the Airbus MOU, US Airways and AWA entered
    into two loan agreements with aggregate commitments of up to
    $161 million and $89 million. As described in further
    detail in Note 5, on March 31, 2006, the outstanding
    principal and accrued interest on the $89 million loan was
    forgiven upon repayment in full of the $161 million loan in
    accordance with terms of the Airbus loans. As a result,
    US Airways recognized a gain associated with the return of
    these equipment deposits upon forgiveness of the loan totaling
    $40 million, consisting of the $39 million in
    equipment deposits and accrued interest of $1 million.(d)
    
    In the fourth quarter of 2006, US Airways recognized a
    $3 million gain in connection with the settlement of a
    property tax bankruptcy claim.  4.
    Financial
    Instruments  (a)
    General   189




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
      (b)
    Fair
    Value of Financial Instruments  Cash
    Equivalents and Short-term Investments
    2006


2005Cash and cash
    equivalents:Corporate notes

$
330


$
179Cash and money market funds


137



283Total cash and cash equivalents

$
467


$
462   2006


2005Short-term
    investments:Available-for-sale
    securities:Auction rate securities

$
744



132Total
    available-for-sale
    securities

$
744


$
132   available-for-sale available-for-sale
    Long-term
    Debt
     190




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
   5.
    Debt,
    Including Capital Lease Obligations    December 31,


December 31,2006


2005SecuredEquipment notes payable, variable
    interest rates of 6.89% to 9.82%, averaging 8.14% as of
    December 31, 2006

$
1,258


$
1,240US Airways East Citibank Loan
    (formerly ATSB loan)(a)






551Slot financing, interest rate of
    8%, installments due through 2015(b)


47



50Airport facility lease
    obligations, interest rate of 8%, installments due through
    2021(c)


41



46GE Credit Facility, variable
    interest rate of 9.62%, installments due 2006 to 2008(d)


21



28Airbus Loans(a)






1861,367



2,101UnsecuredGE Engine Maintenance Term Note,
    variable interest of 9.38%, installments due 2008 through 2011(e)


45



45Note payable to PBGC, interest
    rate of 6%, interest only payments until due 2012(f)


10



1055



55Total long-term debt and capital
    lease obligations


1,422



2,156Less: Unamortized discount on debt


(129
)


(139
)Current maturities


(93
)


(117
)Long-term debt and capital lease
    obligations, net of current maturities

$
1,200


$
1,900     (a)
    
    On March 31, 2006, US Airways Group entered into a
    loan agreement with General Electric Capital Corporation
    (GECC) and a syndicate of lenders pursuant to which
    the Company borrowed an aggregate principal amount of
    $1.1 billion. On April 7, 2006, US Airways Group
    entered into an amended and restated loan agreement, which
    increased the principal amount of the loan to $1.25 billion
    (as amended and restated, the GE Loan).
    US Airways, America West Holdings, AWA, and other
    subsidiaries of US Airways Group are all guarantors of the
    GE Loan.On March 31, 2006, proceeds of the GE Loan were used, in
    part, to repay in full the following indebtedness of
    US Airways:  
    The amended and restated US Airways loans entered into on
    September 27, 2005 that had previously been guaranteed by
    the Air Transportation Stabilization Board (the
    ATSB). On October 19, 2005, $539 million
    of the loans, of which $525 million had been guaranteed by
    the ATSB, was sold by the lenders by order of the ATSB to 13
    fixed income investors, for which Citibank, N.A. served as
    agent, removing the ATSB guarantee (the Citibank
    Loans). As a result of the sale of the loan, the
    US Airways ATSB Loan is now called the US Airways East
    Citibank Loan. At the time of repayment of these loans on
    March 31, 2006, the total outstanding balance of the loan
    was $551 million.
    The $161 million loan entered into as of September 27,
    2005 between US Airways and AWA and Airbus Financial
    Services, for which US Airways Group was the guarantor. At
    the time of repayment on March 31, 191




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
  2006, the outstanding balance of the loan was $161 million.
    US Airways and AWA also had an $89 million loan from
    Airbus Financial Services entered into as of September 27,
    2005. In accordance with the terms of the loan agreements, the
    outstanding principal amount of the $89 million loan was to
    be forgiven on the earlier of December 31, 2010 or the date
    that the outstanding principal amount of, accrued interest on,
    and all other amounts due under the Airbus $161 million
    loan were paid in full, provided that the US Airways Group
    complies with the delivery schedule for certain Airbus aircraft.
    As a result of the prepayment of the $161 million loan on
    March 31, 2006, the $89 million loan agreement was
    terminated and the outstanding balance of $89 million was
    forgiven.  (b)
    
    In September 2005, US Airways entered into an agreement to
    sell and leaseback certain of its commuter slots at Ronald
    Reagan Washington National Airport and New York LaGuardia
    Airport. US Airways continues to hold the right to
    repurchase the slots anytime after the second anniversary of the
    slot sale-leaseback transaction. These transactions were
    accounted for as secured financings. Installments are due
    monthly through 2015 at a rate of 8%. In December 2006, Republic
    and US Airways modified terms of the agreement to conform
    with subsequent regulatory changes at LaGuardia, and the slots
    were returned to US Airways. The need for a subsequent
    modification was fully contemplated in the original agreement.(c)
    
    Capital lease obligations consist principally of certain airport
    maintenance and facility leases which expire in 2018 and 2021.(d)
    
    General Electric, together with its affiliates (GE),
    is US Airways Groups largest aircraft creditor,
    having financed or leased a substantial portion of its aircraft
    prior to the most recent Chapter 11 filing. In June 2005, GE
    purchased the assets securing the credit facility obtained from
    GE in 2001 (the GE Credit Facility) in a
    sale-leaseback transaction. The sale proceeds realized from the
    sale-leaseback transaction were applied to repay the liquidity
    facility obtained from GE in 2003 in connection with
    US Airways emergence from its first bankruptcy (the
    2003 GE Liquidity Facility), the mortgage financing
    associated with the CRJ aircraft and a portion of the 2001 GE
    Credit Facility. The balance of the GECC Credit Facility was
    amended to allow additional borrowings of $21 million in
    July 2005, which resulted in a total principal balance
    outstanding thereunder of $28 million. The operating leases
    are cross-defaulted with all other GE obligations, other than
    excepted obligations, and are subject to agreed upon return
    conditions. On March 31, 2006, the agreement was amended to
    change the maturity date from September 30, 2010 to
    December 31, 2008 and required US Airways to make
    equal quarterly principal payments through maturity beginning
    March 31, 2006.(e)
    
    In December 2004, deferred charges under US Airways
    maintenance agreements with GE Engine Systems, Inc. were
    converted into a $54 million unsecured term note. The
    original note balance of $54 million was reduced by a
    credit of $9.4 million as a result of the merger. Interest
    on the note accrues at LIBOR plus 4%, and becomes payable
    beginning in January 2008, at which time principal and interest
    payments are due in 48 monthly installments.(f)
    
    In connection with US Airways Groups emergence from
    bankruptcy in September 2005, it reached a settlement with the
    PBGC related to the termination of three of its defined benefit
    pension plans, which included the issuance of a $10 million
    note that matures in 2012 and bears interest at 6% payable
    annually in arrears. 192




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
     2007

$
932008


982009


872010


922011


105Thereafter


947$
1,422       6.
    Employee
    Pension and Benefit Plans    (a)
    Defined
    Benefit and Other Postretirement Benefit Plans     193




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
   SOP 90-7,
  FAS 106-2,
     194




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
     Defined BenefitPensions(1)


Other Post Retirement BenefitsPredecessor Company


Successor Company


Predecessor CompanyNine Months





Three Months


Nine MonthsEnded


Year Ended


Ended


EndedSeptember 30,


December 31,


December 31,


September 30,2005


2006


2005


2005Fair value of plan assets at the
    beginning of the period

$
1,706


$



$



$
Actual return on plan assets


98











Employer contributions


1



31







51Plan participants
    contributions






30







23Gross benefits paid


(44
)


(61
)






(74
)Assets transferred to the PBGC


(1,761
)










Fair value of plan assets at end
    of period














Benefit obligation at the
    beginning of the period


2,690



229



229



1,367Service cost


1



3



1



8Interest cost


6



12



3



22Plan participants
    contributions






30







23Plan amendments














(1,089
)Actuarial (gain) loss


59



4



(4
)


(16
)Curtailment/settlement gains(2)


(2,712
)










(12
)Gross benefits paid


(44
)


(61
)






(74
)Benefit obligation at end of the
    period






217



229



229Funded status of the plan






(217
)


(229
)


(229
)Unrecognized actuarial (gain)/ loss










(4
)


Contributions for October to
    December






5



10



Net liability recognized

$



$
(212
)

$
(223
)

$
(229
)     (1)
    
    The accumulated benefit obligation for defined benefit pension
    plans was zero as of September 30, 2005 and
    December 31, 2005.(2)
    
    In 2005, US Airways recognized curtailments and settlements
    related to the termination of its remaining material defined
    benefit pension plans. These curtailments and settlements were
    recognized in accordance with SFAS No. 88,
    Employers Accounting for Settlements and
    Curtailments of Defined Benefit Pension Plans and for
    Termination Benefits. In 2005, US Airways recognized
    curtailments related to the significant redesign of the other
    postretirement benefit plans (primarily medical and dental
    benefits). These curtailments were recognized in accordance with
    SFAS No. 106, Employers Accounting for
    Postretirement Benefits Other Than Pensions. 195




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
       1% Increase


1% DecreaseEffect on postretirement benefit
    obligation

$
13


$
(11
)     Defined Benefit Pension Plans


Other Postretirement BenefitsPredecessor Company


Successor Company


Predecessor CompanyNine Months








Three Months


Nine MonthsEnded


Year Ended


Year Ended


Ended


Ended


Year EndedSeptember 30,


December 31,


December 31,


December 31,


September 30,


December 31,2005


2004


2006


2005


2005


2004Discount rate


6.00
%


6.00
%


5.67
%


5.30
%


5.80
%


6.19
%Expected return on
    plan assets


7.33
%


8.00
%














Rate of compensation increase


3.73
%


3.73
%














     Predecessor CompanyNine MonthsEnded


Year EndedSeptember 30,


December 31,2005


2004Service cost

$
1


$
40Interest cost


6



152Expected return on plan assets


(5
)


(128
)Amortization of:Prior service cost






Actuarial loss






Net periodic cost


2



64Curtailment/settlement gains


(801
)


Fresh-start loss






Total periodic cost

$
(799
)

$
64  196




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
    Successor Company


Predecessor CompanyYear


Three Months


Nine MonthsEnded


Ended


Ended


Year EndedDecember 31,


December 31,


September 30,


December 31,2006


2005


2005


2004Service cost

$
3


$
1


$
8


$
39Interest cost


12



3



22



88Amortization of:Prior service cost










(76
)


(13
)Actuarial (gain)/loss










(11
)


(9
)Net periodic cost


15



4



(57
)


105Curtailment/settlement gains










(183
)


Fresh-start (gain) loss










(1,247
)


Total periodic cost

$
15


$
4


$
(1,487
)

$
105       Other PostretirementBenefits beforeMedicare Subsidy


Medicare Subsidy2007

$
29


$
2008


27



2009


23



2010


21



2011


18



2012 to 2016


61



2   (b)
    Defined
    Contribution Plans     197




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
    (c)
    Postemployment
    Benefits    (d)
    Profit
    Sharing Plans    7.
    Income
    Taxes           198




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
        Successor Company


Predecessor CompanyThree Months


Nine MonthsYear Ended


Ended


Ended


Year EndedDecember 31,


December 31,


September 30,


December 31,2006


2005


2005


2004Current provision:Federal

$
5


$



$



$
(3
)State


1







(2
)


(3
)Total current


6







(2
)


(6
)Deferred provision:Federal


114











(1
)State


9











Total deferred


123











(1
)Provision (credit) for income taxes

$
129


$



$
(2
)

$
(7
)     Successor Company


Predecessor CompanyThree Months


Nine MonthsYear Ended


Ended


Ended


Year EndedDecember 31,


December 31,


September 30,


December 31,2006


2005


2005


2004Tax provision (credit) computed at
    federal statutory rate

$
166


$
(42
)

$
97


$
(205
)Book expenses not deductible for
    tax purposes


(8
)


(3
)


615



1State income tax provision, net of
    federal benefit


13







(1
)


(2
)Increase (decrease) in the federal
    valuation allowance


(50
)


45



(753
)


181Reduction in net operating losses
    from discharge of indebtedness










40



Expiration of investment and
    foreign tax credits














5Other


8











13Provision (credit) for income taxes

$
129


$



$
(2
)

$
(7
)Effective tax rate


27.2
%



%


(1
)%


1
%  199




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
    2006


2005Deferred tax assets:Net operating loss carryforwards

$
206


$
314Property, plant and equipment


7



15Employee benefits


257



268Dividend miles awards


138



131AMT credit carryforward


30



24Other deferred tax assets


20



39Valuation allowance


(23
)


(159
)Net deferred tax assets


635



632Deferred tax liabilities:Depreciation and amortization


430



390Sale and leaseback transactions
    and deferred rent


145



144Leasing transactions


21



22Financing transactions


41



44Long-lived intangibles


31



31Other deferred tax liabilities


25



32Total deferred tax liabilities


693



663Net deferred tax liabilities


58



31Less: current deferred tax
    liabilities






Non-current deferred tax
    liabilities

$
58


$
31         8.
    Commitments
    and contingencies  (a)
    Commitments
    to Purchase Flight Equipment and Maintenance
    Services  Airbus
    Purchase Commitments
   200




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
   A330/340
    Embraer
    Purchase Commitments
    Bombardier
    Purchase Commitments
    Engine
    Maintenance Commitments
   201




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
   (b)
    Leases      2007

$
6252008


5982009


5302010


4882011


471Thereafter


3,067Total minimum lease payments


5,779Less sublease rental receipts


(1,006
)Total minimum lease payments

$
4,773       2006


2005Flight equipment

$
283


$
283Less accumulated amortization


(12
)


(3
)$
271


$
280      202




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
        (c)
    Regional
    Jet Capacity Purchase Agreements      (d)
    Legal
    Proceedings  04-13819-SSM 03-13823-SSM)
 203




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
        204




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
         205




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
   (e)
    Guarantees
    and Indemnifications              (f)
    Concentration
    of Credit Risk     206




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
   9.  Accumulated
    other comprehensive income (loss), net
    Predecessor CompanyNine MonthsEnded


Year EndedSeptember 30, 2005


December 31, 2004Fuel cash flow hedges:Reclassification adjustment for
    gains included in net income (loss) during the period

$
(17
)

$
(75
)Change in fair value of hedges






66Unrealized gain (loss), net of
    reclassification adjustment


(17
)


(9
)Minimum pension liability
    adjustment


29



(34
)Adjustments in connection with
    reorganization


86



Other comprehensive income (loss)

$
98


$
(43
)     10.
    Related
    party transactions    December 31,2006


2005US Airways Group

$
(1,130
)

$
(269
)AWA


(92
)


(20
)Other US Airways Group wholly
    owned subsidiaries


(76
)


(47
)Total

$
(1,298
)

$
(336
)   (a)
    Parent
    Company      (b)
    Subsidiaries
    of US Airways Group   207




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
           (c)
    RSA    (d)
    Shared
    Operating Expenses   208




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
    Year EndedDecember 31, 2006AWA


US Airways


TotalCorporate Expenses

$
167


$
266


$
433Airport Expenses


112



197



309Total Allocated Expenses

$
279


$
463


$
742   11.
    Stockholders
    Equity and Dividend Restrictions      12.
    Nonoperating
    Income (Expenses)  Other, Net    13.
    Operating
    Segments and Related Disclosures      Successor Company


Predecessor CompanyThree Months


Nine MonthsYear Ended


Ended


Ended


Year EndedDecember 31, 2006


December 31, 2005


September 30, 2005


December 31, 2004United States

$
6.232


$
1,501


$
4,508


$
5,220Foreign


1.824



254



944



1,848Total

$
8.056


$
1,755


$
5,452


$
7,068  209




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
    14.
    Stock-based
    Compensation    (a)
    Predecessor
    Company    Class A-1 Class A-1
  Weighted





WeightedStock


Avg.





Avg.Options


Exercise Price


Warrants


Exercise PriceBalance at
    12/31/03










2,216,526



7.42Granted


466,640



1.53



49,200



7.42Canceled


(109,250
)


1.51



(147,236
)


7.42Balance at
    12/31/04


357,390



1.54



2,118,490



7.42Granted














Canceled


(357,390
)


1.57



(2,118,490
)


7.42Balance at
    9/27/05





$







$
      210




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
     Predecessor CompanyYear EndedDecember 31, 2004Stock volatility


65
%Risk free interest rate


2.9
%Expected life


4 YearsDividend yield


     (b)
    Successor
    Company         211




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
   i.e
    Restricted Stock Unit Awards
 212




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
     WeightedNumber of


Average Grant-2005 Equity Incentive Plan

Shares


Date Fair ValueNonvested balance at
    December 31, 2004






Granted


696


$
26.15Vested and released






Forfeited


(9
)


24.68Nonvested balance at
    December 31, 2005


687


$
26.17Granted


254



38.55Vested and released


(75
)


42.38Forfeited


(52
)


24.85Nonvested balance at
    December 31, 2006


814


$
28.63     Stock Options and Stock Appreciation Rights
 213




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
    WeightedAverageStock


Weighted


Remaining


AggregateOptions


Average


Contractual Term


Intrinsic Valueand SARs


Exercise Price


(Years)


(In millions)1994 Incentive Equity
    PlanBalance at December 31, 2003


1,893


$
34.19Granted






Exercised


(10
)


9.21Forfeited


(5
)


9.21Expired


(206
)


24.32Balance at December 31, 2004


1,672


$
35.63Granted






Exercised


(167
)


18.28Forfeited






Expired


(238
)


33.74Balance at December 31, 2005


1,267


$
38.28Granted






Exercised


(455
)


23.64Forfeited






Expired


(62
)


50.93Balance at December 31, 2006


750


$
46.10



2.44


$
7Vested or expected to vest at
    December 31, 2006


750


$
46.10



2.44


$
7Exercisable at December 31,
    2006


750


$
46.10



2.44


$
72002 Incentive Equity
    PlanBalance at December 31, 2003


1,404


$
10.51Granted


814



24.49Exercised


(62
)


8.79Forfeited


(58
)


17.20Expired


(4
)


11.78Balance at December 31, 2004


2,094


$
15.80Granted


806



14.52Exercised


(786
)


11.37Forfeited


(56
)


15.71Expired


(10
)


19.85Balance at December 31, 2005


2,048


$
16.98Granted






Exercised


(1,250
)


16.12Forfeited






Expired






 214




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
  WeightedAverageStock


Weighted


Remaining


AggregateOptions


Average


Contractual Term


Intrinsic Valueand SARs


Exercise Price


(Years)


(In millions)Balance at December 31, 2006


798


$
18.33



6.96


$
28Vested or expected to vest at
    December 31, 2006


776


$
18.25



6.73


$
28Exercisable at December 31,
    2006


592


$
17.40



6.39


$
222005 Equity Incentive
    PlanBalance at December 31, 2004






Granted


2,034


$
23.08Exercised






Forfeited


(61
)


20.64Expired






Balance at December 31, 2005


1,973


$
23.15Granted


1,310



40.30Exercised


(701
)


24.49Forfeited


(87
)


30.34Expired






Balance at December 31, 2006


2,495


$
31.53



9.09


$
56Vested or expected to vest at
    December 31, 2006


2,254


$
31.53



9.05


$
50Exercisable at December 31,
    2006


164


$
32.79



8.99


$
3       Year EndedDecember 31, 2006

December 31, 2005

December 31, 2004Weighted average fair value


$16.77



$8.50



$10.90Risk free interest rate


4.8%



3.4%



3.4%Expected dividend yield










Expected life


2.9 years



4.0 years



4.8 yearsVolatility


57%



54%



54%    215




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
     Agreements with ALPA
    Risk free interest rate

4.4%Expected dividend yield

%Contractual term

5.0 yearsVolatility

69.8%    216




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
   15.
    Supplemental
    Information to Statement of Cash Flows    Three Months


Nine MonthsYear Ended


Ended


Ended


Year EndedDecember 31,


December 31,


September 30,


December 31,2006


2005


2005


2004Noncash transactions:Equipment acquired through
    issuance of debt

$



$



$
99


$
345Proceeds from sale leaseback
    transaction used to repay debt










633



Debt assumed by purchaser in sale
    of flight equipment










167



Equipment deposits used to repay
    debt and penalties










22



Receivable from US Airways
    Group for Airbus loans


65



186







Repayment of ATSB and Airbus loans
    by US Airways Group


712











Forgiveness of Airbus loan and
    interest


51











Supplemental information:Interest paid during the period

$
129


$
40


$
200


$
160Income taxes refunded (paid)
    during the period


5











12   16.
    Valuation
    and Qualifying Accounts and Reserves (in millions)  Balance at








BalanceBeginning








at EndDescription

of Period


Additions


Deductions


of PeriodAllowance for doubtful receivables:Year ended December 31, 2006

$
8



5



7


$
6Three months ended
    December 31, 2005

$
8



2



2


$
8Nine months ended
    September 30, 2005

$
22



5



19


$
8Year ended December 31, 2004

$
17



7



2


$
22Allowance for inventory
    obsolescence:Year ended December 31, 2006

$
1



5



3


$
3Three months ended
    December 31, 2005

$




1






$
1Nine months ended
    September 30, 2005

$
13



5



18
(a)

$
Year ended December 31, 2004

$
5



8






$
13Valuation allowance on deferred
    tax asset, net:Year ended December 31, 2006

$
156







133


$
23Year ended December 31, 2005

$
822







666


$
156Year ended December 31, 2004

$
617



205






$
822     (a)
    
    Allowance for obsolescence of inventories eliminated upon
    adoption of fresh-start reporting. See Note 2(b). 217




---



##### Table of Contents



US Airways,
    Inc.
  Notes to the Financial
    Statements  (Continued)
   17.
    Selected
    Quarterly Financial Information (unaudited)    Successor CompanyFirst


Second


Third


FourthQuarter


Quarter


Quarter


Quarter2006Operating revenues

$
1,802


$
2,226


$
2,084


$
1,944Operating expenses


1,759



1,946



1,960



1,799Operating income


43



280



124



145Nonoperating expenses, net


(43
)


(33
)


(26
)


(16
)Income tax expense






1



60



68Net income






246



38



61   SuccessorPredecessor Company


CompanyFirst


Second


Third


FourthQuarter


Quarter


Quarter


Quarter2005Operating revenues

$
1,620


$
1,951


$
1,881


$
1,755Operating expenses


1,802



1,892



1,900



1,826Operating income (loss)


(182
)


59



(19
)


(71
)Nonoperating income (expense), net


(78
)


(105
)


603



(49
)Income tax expense






2







Net income (loss)


(260
)


(44
)


584



(120
)    218




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Form 10-K
  Disclosure
    Controls and Procedures
    Changes
    in Internal Control over Financial Reporting
    Limitation
    on the Effectiveness of Controls
    Item 9B.
    Other
    Information   PART III  Form 10-K, Form 10-K,
 219




---



##### Table of Contents



Item 10.
    Directors,
    Executive Officers and Corporate Governance  Form 10-K.
  Regulation S-K. www.usairways.com. Form 8-K Form 10-K
    Item 11.
    Executive
    Compensation  Form 10-K.
  Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters  Form 10-K.
  Item 13.
    Certain
    Relationships and Related Transactions and Director
    Independence  Form 10-K.
  Item 14.
    Principal
    Accountant Fees and Services  Form 10-K.
 220




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##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules  Consolidated
    Financial Statements
    
    Consolidated Statements of Operations for the years ended
    December 31, 2006, 2005 and 2004
    Consolidated Balance Sheets as of December 31, 2006 and 2005
    Consolidated Statements of Cash Flows for the years ended
    December 31, 2006, 2005 and 2004
    Consolidated Statements of Stockholders Equity (Deficit)
    for the years ended December 31, 2006, 2005 and 2004
    Notes to Consolidated Financial Statements    
    Consolidated Statements of Operations for the years ended
    December 31, 2006, 2005 and 2004
    Consolidated Balance Sheets as of December 31, 2006 and 2005
    Consolidated Statements of Cash Flows for the years ended
    December 31, 2006, 2005 and 2004
    Consolidated Statements of Stockholders Equity (Deficit)
    for the years ended December 31, 2006, 2005 and 2004
    Notes to Consolidated Financial Statements    
    Statements of Operations for the year ended December 31,
    2006, the three months ended December 31, 2005 (Successor
    Company), the nine months ended September 30, 2005, and the
    year ended December 31, 2004 (Predecessor Company)
    Balance Sheets as of December 31, 2006 (Successor Company)
    and December 31, 2005 (Predecessor Company)
    Statements of Cash Flows for the year ended December 31,
    2006, the three months ended December 31, 2005 (Successor
    Company), the nine months ended September 30, 2005, and the
    year ended December 31, 2004 (Predecessor Company)
    Statements of Stockholders Equity (Deficit) for the three
    years ended December 31, 2006, 2005 and 2004
    Notes to Financial Statements  Consolidated
    Financial Statement Schedules
    Exhibits
  Regulation S-K. Regulation S-K,
  221




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##### Table of Contents



ExhibitNumber

Description2
.1

Agreement and Plan of Merger,
    dated May 19, 2005, by and among US Airways Group and
    America West Holdings Corporation (incorporated by reference to
    Exhibit 2.1 to US Airways Groups Registration
    Statement on
    Form S-4
    filed on June 28, 2005) (Pursuant to item 601(b)(2) of
    Regulation S-K
    promulgated by the SEC, the exhibits and schedules to the
    Agreement and Plan of Merger have been omitted. Such exhibits
    and schedules are described in the Agreement and Plan of Merger.
    US Airways Group hereby agrees to furnish to the SEC, upon
    its request, any or all of such omitted exhibits or schedules)
    (Registration
    No. 333-126162).2
.2

Letter Agreement, dated
    July 7, 2005 by and among US Airways Group, America
    West Holdings Corporation, Barbell Acquisition Corp., ACE
    Aviation America West Holdings, Inc., Eastshore Aviation, LLC,
    Par Investment Partners, L.P., Peninsula Investment Partners,
    L.P. and Wellington Management Company, LLP (incorporated by
    reference to Exhibit 2.2 to Amendment No. 1 to
    US Airways Groups Registration Statement on
    Form S-4
    filed on August 8, 2005) (Registration
    No. 333-126162).2
.3

Joint Plan of Reorganization of
    US Airways, Inc. and Its Affiliated Debtors and
    Debtors-in-Possession
    (incorporated by reference to Exhibit 2.1 to
    US Airways Groups Current Report on
    Form 8-K
    filed on September 22, 2005).2
.4

Findings of Fact, Conclusions of
    Law and Order Under 11 USC Sections 1129(a) and (b) of
    Fed. R. Bankr. P. 3020 Confirming the Joint Plan of
    Reorganization of US Airways, Inc. and Its Affiliated
    Debtors and
    Debtors-in-Possession
    (incorporated by reference to Exhibit 2.2 to
    US Airways Groups Current Report on
    Form 8-K
    filed on September 22, 2005).2
.5

Agreement and Plan of Merger,
    dated as of December 19, 1996, by and among America West
    Holdings Corporation (America West Holdings), AWA
    (AWA) and AWA Merger, Inc., with an effective date
    and time as of midnight on December 31, 1996 (incorporated
    by reference to Exhibit 2.1 to America West Holdings
    Registration Statement on
    Form 8-B
    filed on January 13, 1997) (Registration
    No. 001-12649).3
.1

Amended and Restated Certificate
    of Incorporation of US Airways Group, effective as of
    September 27, 2005 (incorporated by reference to
    Exhibit 3.1 to US Airways Groups Current Report
    on
    Form 8-K
    filed on October 3, 2005).3
.2

Amended and Restated Bylaws of
    US Airways Group, effective as of September 27, 2005
    (incorporated by reference to Exhibit 3.2 to
    US Airways Groups Current Report on
    Form 8-K
    filed on October 3, 2005).3
.3

Restated Certificate of
    Incorporation of AWA (incorporated by reference to
    Exhibit 3.3 to America West Holdings Registration
    Statement on
    Form 8-B
    filed on January 13, 1997) (Registration
    No. 001-12649).3
.4

Bylaws of AWA (incorporated by
    reference to Exhibit 3.2 to AWAs Annual Report on
    Form 10-K
    for the year ended December 31, 2004).3
.5

Certificate of Incorporation of
    America West Holdings (incorporated by reference to
    Exhibit 3.1 to America West Holdings Registration
    Statement on
    Form 8-B
    filed on January 13, 1997) (Registration
    No. 001-12649).3
.6

Bylaws of America West Holdings
    (incorporated by reference to Exhibit 3.2 to America West
    Holdings Registration Statement on
    Form 8-B
    filed on January 13, 1997) (Registration
    No. 001-12649).3
.7

Amended and Restated Certificate
    of Incorporation of US Airways, effective as of
    March 31, 2003 (incorporated by reference to Plan
    Exhibit C-2
    to the First Amended Joint Plan of Reorganization of
    US Airways Group and Its Affiliated Debtors and
    Debtors-in-Possession,
    As Modified (incorporated by reference to Exhibit 2.1 to
    US Airways Current Report on
    Form 8-K
    dated March 18, 2003).3
.8

Amended and Restated By-Laws of
    US Airways, effective as of March 31, 2003
    (incorporated by reference to Exhibit 3.1 to
    US Airways Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2003).4
.1

Stock Option Agreement, dated as
    of December 31, 1996, between America West Holdings and AWA
    (incorporated by reference to Exhibit 4.5 to America West
    Holdings Registration Statement on
    Form 8-B
    filed on January 13, 1997) (Registration
    No. 001-12649).4
.2

Form of Pass Through
    Trust Agreement, dated as of November 26, 1996,
    between AWA and Fleet National Bank, as Trustee (incorporated by
    reference to Exhibit 4.1 to AWAs Current Report on
    Form 8-K
    filed on December 11, 1996). 222




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##### Table of Contents



ExhibitNumber

Description4
.3

Form of Pass Through
    Trust Agreement, dated as of June 17, 1997, between
    AWA and Fleet National Bank, as Trustee (incorporated by
    reference to Exhibit 4.5 to Amendment No. 1 to
    AWAs Registration Statement on
    Form S-3
    dated June 4, 1997) (Registration
    No. 333-27351).4
.4

Forms of Pass Through
    Trust Agreements, dated as of October 6, 1998, between
    AWA and Wilmington Trust Company, as Trustee (incorporated by
    reference to Exhibits 4.4, 4.5, 4.6, 4.7, 4.8 and 4.9 to
    AWAs Amendment No. 1 to Registration Statement on
    Form S-4
    dated March 25, 1999) (Registration
    No. 333-71615).4
.5

Pass Through
    Trust Agreements, dated as of September 21, 1999,
    between AWA and Wilmington Trust Company, as Trustee, made with
    respect to the formation of AWA Pass Through Trusts,
    Series 1999-1G-S,
    1999-1G-O,
    1999-1C-S
    and
    1999-1C-O
    and the issuance of 7.93% Initial Pass Through Certificates
    Series 1999-1G-S
    and
    1999-1G-O,
    the issuance of 8.54% Initial Pass Through Certificates,
    Series 1999-1C-S
    and
    1999-1C-O,
    the issuance of 7.93% Exchange Pass Through Certificates,
    Series 1999-1G-S
    and 1999 1G-O, and the issuance of 8.54% Exchange Pass Through
    Certificates,
    Series 1999-1C-S
    and
    1999-1C-O
    (incorporated by reference to Exhibit 4.14 to AWAs
    Quarterly Report on
    Form 10-Q
    for the period ended September 30, 1999).4
.6

Insurance and Indemnity Agreement,
    dated as of September 21, 1999, among AWA, Ambac Assurance
    Corporation as Policy Provider and Wilmington Trust Company as
    Subordination Agent and Trustee under the Pass Through
    Trust 1999-1G-O
    (incorporated by reference to Exhibits 4.15 to AWAs
    Amendment No. 3 to Registration Statement on
    Form S-4
    dated March 16, 2000) (Registration
    No. 333-93393).4
.7

Pass Through Trust Agreement,
    dated as of July 7, 2000, between AWA, and Wilmington Trust
    Company, as Trustee, made with respect to the formation of AWA
    Pass Through Trust,
    Series 2000-1G-0,
    2000-1G-S,
    2000-1C-O
    and
    2000-1C-S,
    the issuance of 8.057% Initial Pass Through Certificates,
    Series 2000-1G-O
    and
    2000-1G-S,
    the issuance of 9.244% Initial Pass Through Certificates,
    Series 2000-1C-O
    and
    2000-1C-S,
    the issuance of 8.057% Exchange Pass Through Certificates,
    Series 2000-1G-O
    and
    2000-1G-S
    and the issuance of 9.244% Exchange Pass Through Certificates,
    Series 2000-1C-O
    and
    2000-1C-S
    (incorporated by reference to Exhibits 4.3, 4.4, 4.5 and
    4.6 to AWAs Amendment No. 1 to Registration Statement
    on
    Form S-4
    dated September 12, 2000) (Registration
    No. 333-44930).4
.8

Insurance and Indemnity Agreement,
    dated as of July 7, 2000, among AWA, Ambac Assurance
    Corporation as Policy Provider and Wilmington Trust Company as
    Subordination Agent and Trustee under the Pass Through
    Trust 2000-1G
    (incorporated by reference to Exhibits 4.15 to Amendment
    No. 1 to AWAs Registration Statement on
    Form S-4
    dated September 12, 2000) (Registration
    No. 333-44930).4
.9

Insurance and Indemnity Agreement
    (Series G), dated as of May 17, 2001, among AWA, Ambac
    Assurance Corporation as Policy Provider and Wilmington Trust
    Company as Subordination Agent (incorporated by reference to
    Exhibit 4.20 to Amendment No. 1 to AWAs
    Registration Statement on
    Form S-4
    dated February 14, 2002) (Registration
    No. 333-69356).4
.10

Indenture, dated as of
    January 18, 2002, between America West Holdings Corporation
    and Wilmington Trust Company, as Trustee and not in its
    individual capacity, for America West Holdings Corporation
    7.5% Convertible Senior Notes due 2009 (incorporated by
    reference to Exhibit 4.15 to America West Holdings
    and AWAs Current Report on
    Form 8-K
    dated January 31, 2002).4
.11

Supplemental Indenture No. 1,
    dated as of September 27, 2005, among America West Holdings
    Corporation, US Airways Group, Inc. and Wilmington Trust
    Company (incorporated by reference to Exhibit 10.1 to
    US Airways Groups Current Report on
    Form 8-K
    filed on October 3, 2005).4
.12

Form of America West Holdings
    Corporation 7.5% Convertible Senior Notes due 2009
    (incorporated by reference to Exhibit 4.16 to America West
    Holdings and AWAs Current Report on
    Form 8-K
    dated January 31, 2002).4
.13

Registration Rights Agreement,
    dated January 18, 2002, with respect to shares of
    Class B Common Stock underlying the America West Holdings
    Corporation 7.5% Convertible Senior Notes due 2009
    (incorporated by reference to Exhibit 4.17 to America West
    Holdings and AWAs Current Report on
    Form 8-K
    dated January 31, 2002). 223




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##### Table of Contents



ExhibitNumber

Description4
.14

Guaranty, dated as of
    January 18, 2002, by AWA, in favor of the Holders and the
    Trustee under the Indenture dated January 18, 2002
    (incorporated by reference to Exhibit 4.18 to America West
    Holdings and AWAs Current Report on
    Form 8-K
    dated January 31, 2002).4
.15

Indenture, dated as of
    September 30, 2005, between US Airways Group, the
    guarantors listed therein and U.S. Bank National
    Association, as trustee (incorporated by reference to
    Exhibit 4.1 to US Airways Groups Current Report
    on
    Form 8-K
    filed on October 3, 2005).4
.16

Registration Rights Agreement,
    dated as of September 30, 2005, between US Airways
    Group, AWA and US Airways, as guarantors, and the initial
    purchaser named therein (incorporated by reference to
    Exhibit 4.2 to US Airways Groups Current Report
    on
    Form 8-K
    filed on October 3, 2005).4
.17

US Airways Group Warrant to
    Purchase Common Stock, dated September 27, 2005, issued to
    AFS Cayman Limited (incorporated by reference to
    Exhibit 10.2 to US Airways Groups Current Report
    on
    Form 8-K
    filed on October 3, 2005).10
.1

Master Memorandum of
    Understanding, dated as of November 24, 2004, among
    US Airways Group, US Airways, and General Electric
    Capital Corporation acting through its agent GE Capital Aviation
    Services, Inc. and General Electric Company, GE Transportation
    Component (incorporated by reference to Exhibit 10.9 to
    US Airways Groups Annual Report on
    Form 10-K/A
    for the year ended December 31, 2004).*10
.2

Master Merger Memorandum of
    Understanding, dated as of June 13, 2005, among
    US Airways, US Airways Group, America West Holdings
    Corporation, AWA, General Electric Capital Corporation, acting
    through its agent GE Commercial Aviation Services LLC, GE Engine
    Services, Inc., GE Engine Services  Dallas, LP and
    General Electric Company, GE Transportation Component
    (incorporated by reference to Exhibit 10.9 to
    US Airways Groups Quarterly Report on
    Form 10-Q/A
    for the quarter ended June 30, 2005).*10
.3

A319/A320/A321
    Purchase Agreement dated as of October 31, 1997 between
    US Airways Group and AVSA, S.A.R.L., an affiliate of
    aircraft manufacturer Airbus Industrie G.I.E. (incorporated by
    reference to Exhibit 10.1 to US Airways Groups
    Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 1997).*10
.4

Amendment No. 1 dated as of
    June 10, 1998 to
    A319/A320/A321
    Purchase Agreement dated October 31, 1997 between
    US Airways Group and AVSA, S.A.R.L. (incorporated by
    reference to Exhibit 10.2 to US Airways Groups
    Annual Report on
    Form 10-K
    for the year ended December 31, 1998).*10
.5

Amendment No. 2 dated as of
    January 19, 1999 to
    A319/A320/A321
    Purchase Agreement dated October 31, 1997 between
    US Airways Group and AVSA, S.A.R.L. (incorporated by
    reference to Exhibit 10.3 to US Airways Groups
    Annual Report on
    Form 10-K
    for the year ended December 31, 1998).*10
.6

Amendment No. 3 dated as of
    March 31, 1999 to
    A319/A320/A321
    Purchase Agreement dated October 31, 1997 between
    US Airways Group and AVSA, S.A.R.L. (incorporated by
    reference to Exhibit 10.1 to US Airways Groups
    Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 1999).*10
.7

Amendment No. 4 dated as of
    August 31, 1999 to
    A319/A320/A321
    Purchase Agreement dated October 31, 1997 between
    US Airways Group and AVSA, S.A.R.L. (incorporated by
    reference to Exhibit 10.2 to US Airways Groups
    Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 1999).*10
.8

Amendment No. 5 dated as of
    October 29, 1999 to
    A319/A320/A321
    Purchase Agreement dated October 31, 1997 between
    US Airways Group and AVSA, S.A.R.L. (incorporated by
    reference to Exhibit 10.6 to US Airways Groups
    Annual Report on
    Form 10-K
    for the year ended December 31, 1999).*10
.9

Amendment No. 6 dated as of
    April 19, 2000 to
    A319/A320/A321
    Purchase Agreement dated October 31, 1997 between
    US Airways Group and AVSA, S.A.R.L. (incorporated by
    reference to Exhibit 10.1 to US Airways Groups
    Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2000).*10
.10

Amendment No. 7 dated as of
    June 29, 2000 to
    A319/A320/A321
    Purchase Agreement dated October 31, 1997 between
    US Airways Group and AVSA, S.A.R.L. (incorporated by
    reference to Exhibit 10.1 to US Airways Groups
    Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2000).* 224




---



##### Table of Contents



ExhibitNumber

Description10
.11

Amendment No. 8 dated as of
    November 27, 2000 to
    A319/A320/A321
    Purchase Agreement dated October 31, 1997 between
    US Airways Group and AVSA, S.A.R.L. (incorporated by
    reference to Exhibit 10.9 to US Airways Groups
    Annual Report on
    Form 10-K
    for the year ended December 31, 2000).*10
.12

Amendment No. 9 dated as of
    December 29, 2000 to
    A319/A320/A321
    Purchase Agreement dated October 31, 1997 between
    US Airways Group and AVSA, S.A.R.L. (incorporated by
    reference to Exhibit 10.10 to US Airways Groups
    Annual Report on
    Form 10-K
    for the year ended December 31, 2000).*10
.13

Amendment No. 10 dated as of
    April 9, 2001 to
    A319/A320/A321
    Purchase Agreement dated October 31, 1997 between
    US Airways Group and AVSA, S.A.R.L. (incorporated by
    reference to Exhibit 10.1 to US Airways Groups
    Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2001).*10
.14

Amendment No. 11 dated as of
    July 17, 2002 to
    A319/A320/A321
    Purchase Agreement dated October 31, 1997 between
    US Airways Group and AVSA, S.A.R.L. (incorporated by
    reference to Exhibit 10.1 to US Airways Groups
    Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2002).*10
.15

Amendment No. 12 dated as of
    March 29, 2003 to
    A319/A320/A321
    Purchase Agreement dated October 31, 1997 between
    US Airways Group and AVSA, S.A.R.L. (incorporated by
    reference to Exhibit 10.1 to US Airways Groups
    Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2003).*10
.16

Amendment No. 13 dated
    August 30, 2004 to the Airbus
    A319/A320/A321
    Purchase Agreement dated October 31, 1997 between
    US Airways Group and AVSA, S.A.R.L. (incorporated by
    reference to Exhibit 10.2 to US Airways
    Quarterly Report on
    Form 10-Q/A
    for the quarter ended September 30, 2004).*10
.17

Amendment No. 14 dated
    December 22, 2004 to the Airbus
    A319/A320/A321
    Purchase Agreement dated October 31, 1997 between
    US Airways Group and AVSA, S.A.R.L. (incorporated by
    reference to Exhibit 10.4 to US Airways Groups
    Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2005).*10
.18

Amendment No. 15 dated
    January 17, 2005 to the Airbus
    A319/A320/A321
    Purchase Agreement dated October 31, 1997 between
    US Airways Group and AVSA, S.A.R.L. (incorporated by
    reference to Exhibit 10.5 to US Airways Groups
    Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2005).*10
.19

A330/A340
    Purchase Agreement dated as of November 24, 1998 between
    US Airways Group and AVSA, S.A.R.L. (incorporated by
    reference to Exhibit 10.4 to US Airways Groups
    Annual Report on
    Form 10-K
    for the year ended December 31, 1998).*10
.20

Amendment No. 1 dated as of
    March 23, 2000 to
    A330/A340
    Purchase Agreement dated November 24, 1998 between
    US Airways Group and AVSA, S.A.R.L. (incorporated by
    reference to Exhibit 10.2 to US Airways Groups
    Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2000).*10
.21

Amendment No. 2 dated as of
    June 29, 2000 to
    A330/A340
    Purchase Agreement dated November 24, 1998 between
    US Airways Group and AVSA, S.A.R.L. (incorporated by
    reference to Exhibit 10.2 to US Airways Groups
    Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2000).*10
.22

Amendment No. 3 dated as of
    November 27, 2000 to
    A330/A340
    Purchase Agreement dated November 24, 1998 between
    US Airways Group and AVSA, S.A.R.L. (incorporated by
    reference to Exhibit 10.14 to US Airways Groups
    Annual Report on
    Form 10-K
    for the year ended December 31, 2000).*10
.23

Amendment No. 4 dated as of
    September 20, 2001 to
    A330/A340
    Purchase Agreement dated November 24, 1998 between
    US Airways Group and AVSA, S.A.R.L. (incorporated by
    reference to Exhibit 10.16 to US Airways Groups
    Annual Report on
    Form 10-K
    for the year ended December 31, 2001).*10
.24

Amendment No. 5 dated as of
    July 17, 2002 to
    A330/A340
    Purchase Agreement dated November 24, 1998 between
    US Airways Group and AVSA, S.A.R.L. (incorporated by
    reference to Exhibit 10.2 to US Airways Groups
    Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2002).* 225




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##### Table of Contents



ExhibitNumber

Description10
.25

Amendment No. 6 dated as of
    March 29, 2003 to
    A330/A340
    Purchase Agreement dated November 24, 1998 between
    US Airways Group and AVSA, S.A.R.L. (incorporated by
    reference to Exhibit 10.2 to US Airways Groups
    Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2003).*10
.26

Amendment No. 7 dated
    August 30, 2004 to the Airbus
    A330/A340
    Purchase Agreement dated November 24, 1998 between
    US Airways Group and AVSA, S.A.R.L. (incorporated by
    reference to Exhibit 10.3 to US Airways
    Quarterly Report on
    Form 10-Q/A
    for the quarter ended September 30, 2004).*10
.27

Amendment No. 8 dated
    December 22, 2004 to the Airbus
    A330/A340
    Purchase Agreement dated as of November 24, 1998 between
    US Airways Group and AVSA, S.A.R.L. (incorporated by
    reference to Exhibit 10.6 to US Airways Groups
    Quarterly Report on
    Form 10-Q/A
    for the quarter ended March 31, 2005).*10
.28

Amendment No. 9 dated January
    2005 to the Airbus
    A330/A340
    Purchase Agreement dated November 24, 1998 between
    US Airways Group and AVSA, S.A.R.L. (incorporated by
    reference to Exhibit 10.7 to US Airways Groups
    Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2005).*10
.29

Letter Agreement dated
    December 17, 2004 between US Airways Group and
    US Airways and Airbus North America Sales Inc.
    (incorporated by reference to Exhibit 99.1 to
    US Airways Groups Current Report on
    Form 8-K
    filed on February 9, 2005).10
.30

Form of Airbus A350 Purchase
    Agreement, dated as of September 27, 2005, among AVSA,
    S.A.R.L. and US Airways, AWA and US Airways Group
    (incorporated by reference to Exhibit 10.165 to
    US Airways Groups Registration Statement on
    Form S-1/A
    filed on September 27, 2005) (Registration
    No. 333-126226).10
.31

Embraer Aircraft Purchase
    Agreement dated as of May 9, 2003 between US Airways
    Group and Embraer-Empresa Brasileira de Aeronautica S.A.
    (incorporated by reference to Exhibit 10.1 to
    US Airways Groups Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2003).*10
.32

Amendment No. 1 dated as of
    November 4, 2003 to Embraer Aircraft Purchase Agreement
    dated as of May 9, 2003 between US Airways Group and
    Embraer-Empresa Brasileira de Aeronautica S.A. (incorporated by
    reference to Exhibit 10.22 to US Airways Groups
    Annual Report on
    Form 10-K
    for the year ended December 31, 2003).*10
.33

Amendment No. 2 dated as of
    November 21, 2003 to Embraer Aircraft Purchase Agreement
    dated as of May 9, 2003 between US Airways Group and
    Embraer-Empresa Brasileira de Aeronautica S.A. (incorporated by
    reference to Exhibit 10.23 to US Airways Groups
    Annual Report on
    Form 10-K
    for the year ended December 31, 2003).*10
.34

Amendment No. 3 dated as of
    February 9, 2004 to Embraer Aircraft Purchase Agreement
    dated as of May 9, 2003 between US Airways Group and
    Embraer-Empresa Brasileira de Aeronautica S.A. (incorporated by
    reference to Exhibit 10.4 to US Airways Groups
    Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2004).*10
.35

Amendment No. 4 dated as of
    August 2, 2004 to Embraer Aircraft Purchase Agreement dated
    as of May 9, 2003 between US Airways Group and
    Embraer-Empresa Brasileira de Aeronautica S.A. (incorporated by
    reference to Exhibit 10.4 to US Airways Groups
    Quarterly Report on
    Form 10-Q/A
    for the quarter ended September 30, 2004).*10
.36

Amendment No. 5 dated as of
    September 3, 2004 to Embraer Aircraft Purchase Agreement
    dated as of May 9, 2003 between US Airways Group and
    Embraer-Empresa Brasileira de Aeronautica S.A. (incorporated by
    reference to Exhibit 10.5 to US Airways Groups
    Quarterly Report on
    Form 10-Q/A
    for the quarter ended September 30, 2004).*10
.37

Amendment No. 6 dated as of
    January 24, 2005 to Embraer Aircraft Purchase Agreement
    dated as of May 9, 2003 between US Airways Group and
    Embraer-Empresa Brasileira de Aeronautica S.A. (incorporated by
    reference to Exhibit 10.9 to US Airways Groups
    Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2005).*10
.38

Amendment No. 1 dated
    December 22, 2003 to the Letter Agreement
    DCT-022/03
    dated May 9, 2003 between US Airways Group and
    Embraer-Empresa Brasileira de Aeronautica S.A. (incorporated by
    reference to Exhibit 10.5 to US Airways Groups
    Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2004).* 226




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##### Table of Contents



ExhibitNumber

Description10
.39

Post-Petition Purchase Agreement
    Modification and Aircraft Financing Term Sheet between
    US Airways, Embraer-Empresa Brasileira de Aeronautica S.A.,
    dated December 16, 2004 (incorporated by reference to
    Exhibit 10.8 of US Airways Groups Quarterly
    Report on
    Form 10-Q
    for the quarter ended March 31, 2005).10
.40

Settlement and Assumption Term
    Sheet, dated February 9, 2006, between US Airways
    Group and Embraer-Empresa Brasileira de Aeronautica S.A.
    (incorporated by reference to Exhibit 10.5 to
    US Airways Groups Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2006).*10
.41

Amended and Restated Embraer
    Aircraft Purchase Agreement dated as of June 13, 2006
    between US Airways Group, Inc. and Embraer 
    Empresa Brasileira de Aeronautica S.A. (incorporated by
    reference to Exhibit 10.3 to US Airways Groups
    Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2006).10
.42

Bombardier CRJ Aircraft Master
    Purchase Agreement dated as of May 9, 2003 between
    US Airways Group and Bombardier, Inc. (incorporated by
    reference to Exhibit 10.2 to US Airways Groups
    Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2003).*10
.43

Contract Change Order 1 dated
    January 27, 2004 to Bombardier CRJ Aircraft Master Purchase
    Agreement dated as of May 9, 2003 between US Airways
    Group and Bombardier, Inc. (incorporated by reference to
    Exhibit 10.6 to US Airways Groups Quarterly
    Report on
    Form 10-Q
    for the quarter ended March 31, 2004).*10
.44

Contract Change Order 2 dated
    February 9, 2004 to Bombardier CRJ Aircraft Master Purchase
    Agreement dated as of May 9, 2003 between US Airways
    Group and Bombardier, Inc. (incorporated by reference to
    Exhibit 10.7 to US Airways Groups Quarterly
    Report on
    Form 10-Q
    for the quarter ended March 31, 2004).*10
.45

Contract Change Order 3 dated
    February 26, 2004 to Bombardier CRJ Aircraft Master
    Purchase Agreement dated as of May 9, 2003 between
    US Airways Group and Bombardier, Inc. (incorporated by
    reference to Exhibit 10.8 to US Airways Groups
    Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2004).*10
.46

Global Settlement Letter, dated
    November 10, 2006, among US Airways Group and
    Bombardier Inc.*10
.47

Investment Agreement, dated as of
    May 19, 2005, by and among Peninsula Investment Partners,
    L.P., US Airways, US Airways Group, Inc. and its
    successors and America West Holdings Corporation (incorporated
    by reference to Exhibit 10.4 to the Current Report on
    Form 8-K
    filed by America West Holdings Corporation on May 25, 2005).10
.48

Investment Agreement, dated as of
    May 19, 2005, by and among ACE Aviation Holdings Inc.,
    US Airways Group and its successors and America West
    Holdings Corporation (incorporated by reference to
    Exhibit 10.5 to the Current Report on
    Form 8-K
    filed by America West Holdings Corporation on May 25, 2005).10
.49

Investment Agreement, dated as of
    May 19, 2005, by and among Par Investment Partners, L.P.,
    US Airways, US Airways Group, Inc. and its successors
    and America West Holdings Corporation (incorporated by reference
    to Exhibit 10.3 to the Current Report on
    Form 8-K
    filed by America West Holdings Corporation on May 25, 2005).10
.50

Investment Agreement, dated as of
    May 19, 2005, by and among Eastshore Aviation, LLC,
    US Airways, US Airways Group, Inc. and its successors
    and America West Holdings Corporation (incorporated by reference
    to Exhibit 10.2 to the Current Report on
    Form 8-K
    filed by America West Holdings Corporation on May 25, 2005).10
.51

Investment Agreement, dated
    May 27, 2005, by and among Wellington Investment Management
    Company, LLP, America West Holdings Corporation and
    US Airways Group (incorporated by reference to
    Exhibit 10.1 to the Current Report on
    Form 8-K
    filed by America West Holdings Corporation on June 2, 2005).10
.52

Investment Agreement, dated
    July 7, 2005, among Tudor Proprietary Trading, L.L.C. and
    certain investors listed on Schedule 1 thereto for which
    Tudor Investment Corp. acts as investment advisor,
    US Airways Group and America West Holdings Corporation
    (incorporated by reference to Exhibit 10.1 to the Current
    Report on
    Form 8-K
    filed by US Airways Group on July 13, 2005). 227




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##### Table of Contents



ExhibitNumber

Description10
.53

Letter Agreement dated
    September 16, 2005 by and among US Airways Group,
    America West Holdings Corporation, Barbell Acquisition Corp.,
    ACE Aviation America West Holdings, Inc., Eastshore Aviation,
    LLC, Par Investment Partners, L.P., Peninsula Investment
    Partners, L.P. and Wellington Management Company, LLP
    (incorporated by reference to Exhibit 10.11 to
    US Airways Groups Quarterly Report on From
    10-Q for the
    quarter ended September 30, 2005).10
.54

Junior Secured
    Debtor-in-Possession
    Credit Facility Agreement dated as of February 18, 2005
    among US Airways, as Debtor and
    Debtor-in-Possession
    under Chapter 11 of the Bankruptcy Code as Borrower,
    US Airways Group, PSA Airlines, Inc., and Material
    Services, Inc., Debtors and
    Debtors-in-Possession
    under Chapter 11 of the Bankruptcy Code as Guarantors, and
    Eastshore Aviation, LLC, as Lender (incorporated by reference to
    Exhibit 99 to US Airways Groups Current Report
    on
    Form 8-K
    filed on March 2, 2005).10
.55

Amendment No. 1 dated as of
    May 19, 2005 to Junior Secured
    Debtor-in-Possession
    Credit Facility Agreement dated as of February 18, 2005
    among US Airways, as Debtor and
    Debtor-in-
    Possession under Chapter 11 of the Bankruptcy Code as
    Borrower, US Airways Group, PSA Airlines, Inc., and
    Material Services, Inc., Debtors and
    Debtors-in-Possession
    under Chapter 11 of the Bankruptcy Code as Guarantors, and
    Eastshore Aviation, LLC, as Lender (incorporated by reference to
    Exhibit 10.105 to US Airways Groups Registration
    Statement on
    Form S-4
    filed with the SEC on June 28, 2005) (Registration
    No. 333-126162).10
.56

Amended and Restated Participation
    Agreement, dated as of July 7, 2005, between America West
    Holdings Corporation and Par Investment Partners, L.P.
    (incorporated by reference to Exhibit 10.3 to the Current
    Report on
    Form 8-K
    filed by America West Holdings Corporation on July 13,
    2005).10
.57

Amended and Restated Participation
    Agreement, dated as of July 7, 2005, between America West
    Holdings Corporation and Peninsula Investment Partners, L.P.
    (incorporated by reference to Exhibit 10.4 to the Current
    Report on
    Form 8-K
    filed by America West Holdings Corporation on July 13,
    2005).10
.58

Assignment and First Amendment to
    America West Co-Branded Card Agreement, dated as of
    August 8, 2005, between AWA, US Airways Group and
    Juniper Bank. (incorporated by reference to Exhibit 10.110
    to Amendment No. 2 to the Registration Statement on
    Form S-4
    filed by US Airways Group on August 11, 2005)
    (Registration
    No. 333-126162).*10
.59

First Amendment to Merchant
    Services Bankcard Agreement, dated as of August 8, 2005,
    among AWA, JPMorgan Chase Bank, N.A., and Chase Merchant
    Services, L.L.C. (incorporated by reference to
    Exhibit 10.111 to Amendment No. 2 to the Registration
    Statement on
    Form S-4
    filed by US Airways Group on August 11, 2005)
    (Registration
    No. 333-126162).*10
.60

America West Co-Branded Card
    Agreement, dated as of January 25, 2005, between AWA and
    Juniper Bank. (incorporated by reference to Exhibit 10.112
    to Amendment No. 2 to the Registration Statement on
    Form S-4
    filed by US Airways Group on August 11, 2005)
    (Registration
    No. 333-126162).*10
.61

Merchant Services Bankcard
    Agreement, dated as of April 16, 2003, between AWA, The
    Leisure Company, JPMorgan Chase Bank, and Chase Merchant
    Services L.L.C. (incorporated by reference to
    Exhibit 10.113 to Amendment No. 2 to the Registration
    Statement on
    Form S-4
    filed by US Airways Group on August 11, 2005)
    (Registration
    No. 333-126162).*10
.62

Airport Use Agreement, dated as of
    July 1, 1989, among the City of Phoenix, The Industrial
    Development Authority of the City of Phoenix, Arizona and AWA
    (Airport Use Agreement). (incorporated by reference
    to
    Exhibit 10-(D)(9)
    to AWAs Annual Report on
    Form 10-K
    for the year ended December 31, 1989).10
.63

First Amendment to Airport Use
    Agreement, dated as of August 1, 1990 (incorporated by
    reference to
    Exhibit 10-(D)(9)
    to AWAs Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 1990).10
.64

Management Rights Agreement, dated
    as of August 25, 1994, between TPG Partners L.P., TPG
    Genpar, L.P. and AWA (incorporated by reference to
    Exhibit 10.47 to AWAs Registration Statement on
    Form S-1
    dated August 23, 1994, as amended) (Registration
    No. 333-54243).10
.65

Financing Agreement, dated as of
    April 1, 1998, between the Industrial Development Authority
    of the City of Phoenix, Arizona and AWA (incorporated by
    reference to Exhibit 10.29 to America West Holdings
    Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 1998). 228




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##### Table of Contents



ExhibitNumber

Description10
.66

Indenture of Trust, dated as of
    April 1, 1998, from the Industrial Development Authority of
    the City of Phoenix, Arizona to Norwest Bank, Arizona N.A.
    (incorporated by reference to Exhibit 10.30 to America West
    Holdings Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 1998).10
.67

Second Amendment to Airport Use
    Agreement, dated as of August 25, 1995 (incorporated by
    reference to Exhibit 10.34 to AWAs Annual Report on
    Form 10-K
    for the year ended December 31, 1998).10
.68

Indenture of Trust, dated as of
    June 1, 1999, from The Industrial Development Authority of
    the City of Phoenix, Arizona to Bank One Arizona, N.A.
    (incorporated by reference to Exhibit 10.35 to AWAs
    Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 1999).10
.69

Airbus
    A320/A319
    Purchase Agreement, dated as of September 12, 1997, between
    AVSA S.A.R.L and AWA, including Letter Agreements Nos. 1-10
    (incorporated by reference to Exhibit 10.25 to America West
    Holdings Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 1997).*10
.70

Amendment No. 1, dated as of
    March 31, 1998, to the Airbus
    A320/A319
    Purchase Agreement, dated as of September 12, 1997, between
    AVSA S.A.R.L. and AWA (incorporated by reference to
    Exhibit 10.28 to America West Holdings Quarterly
    Report on
    Form 10-Q
    for the quarter ended June 30, 1998).*10
.71

Amendment No. 2, dated as of
    December 9, 1998, to the Airbus
    A320/A319
    Purchase Agreement, dated as of September 12, 1997, between
    AVSA S.A.R.L. and AWA (incorporated by reference to
    Exhibit 10.32 to AWAs Annual Report on
    Form 10-K
    for the year ended December 31, 1998).*10
.72

Amendment No. 3, dated as of
    October 14, 1999, to the Airbus
    A320/319
    Purchase Agreement, dated as of September 12, 1997, between
    AVSA, S.A.R.L. and AWA, including Letter Agreement Nos. 1-8
    thereto (incorporated by reference to Exhibit 10.36 to
    America West Holdings and AWAs Annual Report on
    Form 10-K
    for the year ended December 31, 1999).*10
.73

Amendment No. 4, dated as of
    July 1, 2000, to the Airbus
    A320/319
    Purchase Agreement, dated as of September 12, 1997, between
    AVSA S.A.R.L. and AWA (incorporated by reference to
    Exhibit 10.38 to AWAs Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2000).*10
.74

Amendment No. 5, dated as of
    October 12, 2000, to the Airbus
    A320/319
    Purchase Agreement, dated as of September 12, 1997, between
    AVSA S.A.R.L. and AWA (incorporated by reference to
    Exhibit 10.39 to AWAs Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2000).*10
.75

Amendment No. 7, dated
    July 30, 2004, to the
    A319/A320
    Purchase Agreement dated September 12, 1997, between AVSA,
    S.A.R.L. and AWA and Letter Agreement Nos. 2-8 (incorporated by
    reference to Exhibit 10.15 to America West Holdings
    and AWAs Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2004).*10
.76

Amendment No. 9, dated as of
    September 27, 2005, to the Airbus
    A320/319
    Purchase Agreement, dated as of September 12, 1997, between
    AWA and AVSA S.A.R.L (incorporated by reference to
    Exhibit 10.8 to US Airways Groups Quarterly
    Report on
    Form 10-Q
    for the quarter ended September 30, 2005).*10
.77

Amendment No. 10, dated as of
    September 27, 2005, to the Airbus
    A320/319
    Purchase Agreement, dated as of September 12, 1997, between
    AWA and AVSA S.A.R.L. (incorporated by reference to
    Exhibit 10.9 to US Airways Groups Quarterly
    Report on
    Form 10-Q
    for the quarter ended September 30, 2005).*10
.78

Amendment No. 14, dated as of
    August 24, 2006, to the Airbus
    A319/A320
    Purchase Agreement, dated as of September 12, 1997, between
    AVSA, S.A.R.L. and America West Airlines, Inc. (incorporated by
    reference to Exhibit 10.1 to US Airways Groups
    Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2006)*10
.79

Amendment No. 15, dated as of
    August 24, 2006, to the Airbus
    A319/A320
    Purchase Agreement, dated as of September 12, 1997, between
    AVSA, S.A.R.L. and America West Airlines, Inc. (incorporated by
    reference to Exhibit 10.2 to US Airways Groups
    Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2006)*10
.80

Amendment No. 16, dated as of
    August 24, 2006, to the Airbus
    A319/A320
    Purchase Agreement, dated as of September 12, 1997, between
    AVSA, S.A.R.L. and America West Airlines, Inc., including Letter
    Agreement No. 3A thereto. (incorporated by reference to
    Exhibit 10.3 to US Airways Groups Quarterly
    Report on
    Form 10-Q
    for the quarter ended September 30, 2006)* 229




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##### Table of Contents



ExhibitNumber

Description10
.81

Amendment No. 17, dated as of
    August 24, 2006, to the
    A319/A320/A321
    Purchase Agreement, dated as of October 31, 1997, between
    US Airways Group, Inc. and AVSA, S.A.R.L. (incorporated by
    reference to Exhibit 10.4 to US Airways Groups
    Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2006)*10
.82

Amended and Restated V2500 Support
    Contract, dated as of October 7, 1998, between AWA and IAE
    International Aero Engines AG and Side Letters Nos. 1 and 2
    thereto (incorporated by reference to Exhibit 10.20 to
    America West Holdings and AWAs Annual Report on
    Form 10-K
    for the year ended December 31, 1998).*10
.83

Side Letter No. 15, dated
    May 26, 2004, to the Amended and Restated V2500 Support
    Contract, dated October 7, 1998, between AWA and IAE
    International Aero Engines AG (incorporated by reference to
    Exhibit 10.16 to America West Holdings and AWAs
    Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2004).*10
.84

Purchase Agreement, dated as of
    December 27, 2000, between America West Holdings, AWA and
    Continental Airlines, Inc., including Letter Agreement
    (incorporated by reference to Exhibit 10.40 to America West
    Holdings and AWAs Annual Report on
    Form 10-K
    for the year ended December 31, 2000).10
.85

Priority Distribution Agreement,
    dated as of August 25, 1994, between TPG Partners, L.P.,
    TPG Parallel I, L.P., Air Partners II, L.P., and
    Continental Airlines, Inc. (incorporated by reference to
    Exhibit 3 to Schedule 13D filed by TPG Partners, L.P.
    on September 6, 1994).10
.86

Disposition and Redevelopment
    Agreement, dated as of February 5, 2001, between AWA and
    the City of Phoenix, AZ (incorporated by reference to
    Exhibit 10.44 to AWAs Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2001).10
.87

Unsubordinated Ground Lease, dated
    as of February 5, 2001, between AWA and the City of
    Phoenix, AZ (incorporated by reference to Exhibit 10.45 to
    AWAs Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2001).*10
.88

Code Share and Revenue Sharing
    Agreement, dated as of March 20, 2001, between AWA and Mesa
    Airlines, Inc. (incorporated by reference to Exhibit 10.46
    to AWAs Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2001).*10
.89

Second Amendment to Code Share and
    Revenue Sharing Agreement, as amended, dated as of
    October 24, 2002, by and among AWA, Mesa Airlines, Inc.,
    Freedom Airlines, Inc. and Air Midwest, Inc. (incorporated by
    reference to Exhibit 10.56 of America West Holdings
    and AWAs Annual Report on
    Form 10-K
    for the year ended December 31, 2002).10
.90

Third Amendment to Code Share and
    Revenue Sharing Agreement dated as of January 29, 2003
    among AWA, Mesa Airlines, Inc. and Freedom Airlines, Inc.
    (incorporated by reference to Exhibit 10.1 to America West
    Holdings and AWAs Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2003).10
.91

Fourth Amendment to Code Share and
    Revenue Sharing Agreement and Release dated as of
    September 5, 2003 among AWA, Mesa Airlines, Inc., Air
    Midwest, Inc. and Freedom Airlines, Inc. (incorporated by
    reference to Exhibit 10.2 to America West Holdings
    and AWAs Amendment No. 1 to Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2003).*10
.92

Loan Agreement [Engines], dated as
    of September 3, 2004, among AWA, GECC, as administrative
    agent, original Series A lender and original Series B
    lender, Wells Fargo Bank Northwest, National Association
    (Wells Fargo), as security trustee and the lenders
    from time to time party thereto (incorporated by reference to
    Exhibit 10.1 to America West Holdings and AWAs
    Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2004).10
.93

Engine Mortgage and Security
    Agreement, dated as of September 3, 2004, between AWA and
    Wells Fargo (incorporated by reference to Exhibit 10.2 to
    America West Holdings and AWAs Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2004).10
.94

Mortgage and Security Agreement
    Supplement No. 1, dated September 10, 2004, of AWA
    (incorporated by reference to Exhibit 10.3 to America West
    Holdings and AWAs Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2004). 230




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##### Table of Contents



ExhibitNumber

Description10
.95

Subordinated Engine Mortgage and
    Security Agreement, dated as of September 3, 2004, between
    AWA and Wells Fargo (incorporated by reference to
    Exhibit 10.4 to America West Holdings and AWAs
    Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2004).10
.96

Subordinated Mortgage and Security
    Agreement Supplement No. 1, dated September 10, 2004,
    of AWA (incorporated by reference to Exhibit 10.5 to
    America West Holdings and AWAs Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2004).10
.97

Security Trustee Agreement
    [Engines], dated as of September 3, 2004, among Wells
    Fargo, as security trustee and the beneficiaries named therein
    (incorporated by reference to Exhibit 10.6 to America West
    Holdings and AWAs Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2004).10
.98

Payment and Indemnity Agreement
    [Engines], dated as of September 3, 2004, among AWA,
    certain beneficiaries listed on Schedule 1 and Wells Fargo
    (incorporated by reference to Exhibit 10.7 to America West
    Holdings and AWAs Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2004).10
.99

Restructure Letter Agreement
    [Engines], dated as of September 3, 2004, among AWA and
    GECC (incorporated by reference to Exhibit 10.8 to America
    West Holdings and AWAs Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2004).10
.100

Loan Agreement [Spare Parts],
    dated as of September 3, 2004, among AWA, GECC, as
    administrative agent, original Series A lender and original
    Series B lender, Wells Fargo, as security trustee and the
    lenders from time to time party thereto (incorporated by
    reference to Exhibit 10.9 to America West Holdings
    and AWAs Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2004).10
.101

Spare Parts Mortgage and Security
    Agreement, dated as of September 3, 2004, between AWA and
    Wells Fargo (incorporated by reference to Exhibit 10.10 to
    America West Holdings and AWAs Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2004).10
.102

Subordinated Spare Parts Mortgage
    and Security Agreement, dated as of September 3, 2004,
    between AWA and Wells Fargo (incorporated by reference to
    Exhibit 10.11 to America West Holdings and AWAs
    Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2004).10
.103

Security Trustee Agreement [Spare
    Parts], dated as of September 3, 2004, among Wells Fargo,
    as security trustee and the beneficiaries named therein
    (incorporated by reference to Exhibit 10.12 to America West
    Holdings and AWAs Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2004).10
.104

Payment and Indemnity Agreement
    [Spare Parts], dated as of September 3, 2004, among AWA,
    certain beneficiaries listed on Schedule 1 and Wells Fargo
    (incorporated by reference to Exhibit 10.13 to America West
    Holdings and AWAs Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2004).10
.105

Restructure Letter Agreement
    [Spare Parts], dated as of September 3, 2004, among AWA and
    GECC (incorporated by reference to Exhibit 10.14 to America
    West Holdings and AWAs Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2004).10
.106

$30,790,000 Senior Secured Term
    Loan Agreement, dated December 23, 2004, among FTCHP LLC,
    as Borrower, AWA, as Guarantor, Heritage Bank, SSB, as
    Administrative Agent and Citibank, N.A. (and other lenders named
    therein) as Lenders (incorporated by reference to
    Exhibit 10.41 to America West Holdings and AWAs
    Annual Report on
    Form 10-K
    for the year ended December 31, 2004).10
.107

Senior Secured Discount Note,
    dated December 23, 2004, issued by FTCHP LLC (incorporated
    by reference to Exhibit 10.42 to America West
    Holdings and AWAs Annual Report on
    Form 10-K
    for the year ended December 31, 2004).10
.108

Unconditional Guaranty Agreement,
    dated December 23, 2004, by AWA in favor of Citibank, N.A.
    (incorporated by reference to Exhibit 10.43 to America West
    Holdings and AWAs Annual Report on
    Form 10-K
    for the year ended December 31, 2004).10
.109

Amended and Restated Loan
    Agreement, dated as of September 27, 2005, by and among
    US Airways, US Airways Group, the affiliates of
    US Airways party thereto, the lenders from time to time
    party thereto, Citibank, N.A., as Agent, Citicorp North America,
    Inc., as Govco Administrative Agent, Wilmington Trust Company,
    as Collateral Agent, and the Air Transportation Stabilization
    Board (incorporated by reference to Exhibit 10.1 to
    US Airways Groups Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2005). 231




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##### Table of Contents



ExhibitNumber

Description10
.110

Amended and Restated Loan
    Agreement, dated as of September 27, 2005, by and among
    AWA, US Airways Group, the other affiliates of AWA party
    thereto, the several lenders from time to time party thereto,
    Citibank, N.A., as Agent, Wilmington Trust Company, as
    Collateral Agent, and the Air Transportation Stabilization Board
    (incorporated by reference to Exhibit 10.2 to
    US Airways Groups Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2005).10
.111

Loan Agreement, dated as of
    September 27, 2005, by and among US Airways, AWA,
    US Airways Group, as guarantor, Airbus Financial Services,
    as Initial Lender and Loan Agent, and Wells Fargo Bank
    Northwest, National Association, as Collateral Agent, with
    commitments in an initial aggregate amount of $161,000,000
    (incorporated by reference to Exhibit 10.3 to
    US Airways Groups Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2005).10
.112

Loan Agreement, dated as of
    September 27, 2005, by and among US Airways, AWA,
    US Airways Group, as guarantor, Airbus Financial Services,
    as Initial Lender and Loan Agent, and Wells Fargo Bank
    Northwest, National Association, as Collateral Agent, with
    commitments in an initial aggregate amount of $89,000,000
    (incorporated by reference to Exhibit 10.4 to
    US Airways Groups Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2005).10
.113

Amended and Restated Loan
    Agreement, dated as of April 7, 2006, among US Airways
    Group, Inc., General Electric Capital Corporation, as
    Administrative Agent, the lenders party to the agreement from
    time to time, and certain subsidiaries of US Airways Group
    party to the agreement from time to time (incorporated by
    reference to Exhibit 4.1 to US Airways Groups
    Current Report on
    Form 8-K
    dated April 7, 2006, filed on April 10, 2006).10
.114

Stockholders Agreement,
    dated as of September 27, 2005, among US Airways Group
    and ACE Aviation America West Holdings Inc. (incorporated by
    reference to Exhibit 10.1 to US Airways Groups
    Current Report on
    Form 8-K
    filed on October 3, 2005).10
.115

Stockholders Agreement,
    dated as of September 27, 2005, among US Airways Group
    and Eastshore Aviation LLC (incorporated by reference to
    Exhibit 10.2 to US Airways Groups Current Report
    on
    Form 8-K
    filed on October 3, 2005).10
.116

Stockholders Agreement,
    dated as of September 27, 2005, among US Airways Group
    and Par Investment Partners, L.P. (incorporated by reference to
    Exhibit 10.3 to US Airways Groups Current Report
    on
    Form 8-K
    filed on October 3, 2005).10
.117

Stockholders Agreement,
    dated as of September 27, 2005, among US Airways Group
    and Peninsula Investment Partners, L.P. (incorporated by
    reference to Exhibit 10.4 to US Airways Groups
    Current Report on
    Form 8-K
    filed on October 3, 2005).10
.118

Stockholders Agreement,
    dated as of September 27, 2005, among US Airways Group
    and the group of investors named therein under the management of
    Wellington Management Company, LLP (incorporated by reference to
    Exhibit 10.5 to US Airways Groups Current Report
    on
    Form 8-K
    filed on October 3, 2005).10
.119

Stockholders Agreement,
    dated as of September 27, 2005, among US Airways
    Group, Tudor Proprietary Trading L.L.C. and the group of
    investors named therein for which Tudor Investment Corp. acts as
    investment advisor (incorporated by reference to
    Exhibit 10.6 to US Airways Groups Current Report
    on
    Form 8-K
    filed on October 3, 2005).10
.120

US Airways Funded Executive
    Defined Contribution Plan (incorporated by reference to
    Exhibit 10.1 to US Airways Annual Report on
    Form 10-K
    for the year ended December 31, 2003).10
.121

First Amendment to the
    US Airways Funded Executive Defined Contribution Plan dated
    January 26, 2004 (incorporated by reference to
    Exhibit 10.4 to US Airways Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2004).10
.122

Second Amendment to the
    US Airways Funded Executive Defined Contribution Plan dated
    May 20, 2004 (incorporated by reference to
    Exhibit 10.5 to US Airways Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2004).10
.123

Third Amendment to the
    US Airways Funded Executive Defined Contribution Plan dated
    June 24, 2004 (incorporated by reference to
    Exhibit 10.6 to US Airways Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2004). 232




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##### Table of Contents



ExhibitNumber

Description10
.124

US Airways Unfunded Executive
    Defined Contribution Plan (incorporated by reference to
    Exhibit 10.2 to US Airways Annual Report on
    Form 10-K
    for the year ended December 31, 2003).10
.125

First Amendment to the
    US Airways Unfunded Executive Defined Contribution Plan
    dated January 26, 2004 (incorporated by reference to
    Exhibit 10.7 to US Airways Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2004).10
.126

Second Amendment to the
    US Airways Unfunded Executive Defined Contribution Plan
    dated May 20, 2004 (incorporated by reference to
    Exhibit 10.8 to US Airways Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2004).10
.127

Third Amendment to the
    US Airways Unfunded Executive Defined Contribution Plan
    dated June 24, 2004 (incorporated by reference to
    Exhibit 10.9 to US Airways Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2004).10
.128

Employment Agreement, dated as of
    September 27, 2005, between US Airways Group and Alan
    W. Crellin 10
.129

Amendment dated as of
    April 4, 2006 to Employment Agreement, dated as of
    September 27, 2005, between US Airways Group, Inc. and
    Alan W. Crellin (incorporated by reference to Exhibit 10.2
    to US Airways Groups Current Report on
    Form 8-K
    dated April 4, 2006, filed on April 10, 2006).10
.130

US Airways Group 2005 Equity
    Incentive Plan (incorporated by reference to Exhibit 10.1
    to US Airways Groups Current Report on
    Form 8-K
    filed on October 3, 2005).10
.131

Stock Unit Award Agreement, dated
    as of September 27, 2005, between US Airways Group and
    W. Douglas Parker (incorporated by reference to
    Exhibit 10.6 to US Airways Groups Current Report
    on
    Form 8-K
    filed on October 3, 2005).10
.132

Form of Stock Unit Agreement under
    US Airways Groups 2005 Equity Incentive Plan
    (incorporated by reference to Exhibit 10.74 to
    US Airways Groups Annual Report on
    Form 10-K
    for the year ended December 31, 2005).10
.133

Form of Stock Appreciation Rights
    Award Agreement under US Airways Groups 2005 Equity
    Incentive Plan (incorporated by reference to Exhibit 10.75
    to US Airways Groups Annual Report on
    Form 10-K
    for the year ended December 31, 2005).10
.134

Form of Nonstatutory Stock Option
    Award Agreement under US Airways Groups 2005 Equity
    Incentive Plan (incorporated by reference to Exhibit 10.5
    to US Airways Groups Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2006). 10
.135

Form of Indemnity Agreement
    (incorporated by reference to Exhibit 10.1 to
    US Airways Groups Current Report on
    Form 8-K
    filed on October 6, 2005).10
.136

Amended and Restated America West
    1994 Incentive Equity Plan (incorporated by reference to
    Exhibit 10.21 to AWAs Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2001).10
.137

America West Holdings 2002
    Incentive Equity Plan as amended through May 23, 2002
    (incorporated by reference to Exhibit 10.1 to
    US Airways Groups Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2006).10
.138

Performance-Based Award Plan (as
    Amended and Restated effective November 2, 2005)
    (incorporated by reference to Exhibit 10.79 to
    US Airways Groups Annual Report on
    Form 10-K
    for the year ended December 31, 2005).10
.139

Form of Offer Letter (incorporated
    by reference to Exhibit 10.47 to America West
    Holdings and AWAs Annual Report on
    Form 10-K
    for the year ended December 31, 2004).10
.140

Form of Change of Control and
    Severance Benefit Agreement for Vice Presidents (incorporated by
    reference to Exhibit 10.48 to America West Holdings
    and AWAs Annual Report on
    Form 10-K
    for the year ended December 31, 2004).10
.141

Form of Change of Control and
    Severance Benefit Agreement for Senior Vice Presidents
    (incorporated by reference to Exhibit 10.49 to America West
    Holdings and America West Airlines, Inc.s Annual
    Report on
    Form 10-K
    for the year ended December 31, 2004).10
.142

Summary of Director Compensation
    and Benefits (incorporated by reference to Exhibit 10.83 to
    US Airways Groups Annual Report on
    Form 10-K
    for the year ended December 31, 2005). 233




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##### Table of Contents



ExhibitNumber

Description10
.143

Form of Letter Agreement for
    Directors Travel (incorporated by reference to
    Exhibit 10.32 to America West America West Holdings
    and AWAs Annual Report on
    Form 10-K
    for the period ended December 31, 2003).10
.144

Employment Agreement, dated
    February 24, 2004, by and among America West Holdings
    Corporation, AWA and W. Douglas Parker (incorporated by
    reference to Exhibit 10.53 to America West Holdings
    and America West Airlines, Inc.s Annual Report on
    Form 10-K
    for the year ended December 31, 2004).10
.145

Annual Incentive Bonus Plan
    (incorporated by reference to Exhibit 10.1 to America West
    Holdings and America West Airlines, Inc.s Quarterly
    Report for the quarter ending March 31, 2005).10
.146

US Airways Group, Inc.
    Incentive Compensation Plan (incorporated by reference to
    Exhibit 10.1 to US Airways Groups Current Report
    on
    Form 8-K
    filed on January 23, 2006).21
.1

Subsidiaries of US Airways
    Group (incorporated by reference to Exhibit 21.1 to
    US Airways Groups Registration Statement on
    Form S-1/A
    filed on September 27, 2005) (Registration
    No. 333-126226).23
.1

Consents of KPMG LLP, Independent
    Registered Public Accounting Firm of US Airways Group.24
.1

Powers of Attorney, pursuant to
    which amendments to this Annual Report on
    Form 10-K
    may be filed, is included on the signature pages of this Annual
    Report on
    Form 10-K31
.1

Certification of US Airways
    Groups Chief Executive Officer pursuant to
    Rule 13a-14(a)
    under the Securities Exchange Act of 1934, as amended.31
.2

Certification of US Airways
    Groups Chief Financial Officer pursuant to
    Rule 13a-14(a)
    under the Securities Exchange Act of 1934, as amended.31
.3

Certification of AWAs Chief
    Executive Officer pursuant to
    Rule 13a-14(a)
    under the Securities Exchange Act of 1934, as amended.31
.4

Certification of AWAs Chief
    Financial Officer pursuant to
    Rule 13a-14(a)
    under the Securities Exchange Act of 1934, as amended.31
.5

Certification of
    US Airways Chief Executive Officer pursuant to
    Rule 13a-14(a)
    under the Securities Exchange Act of 1934, as amended.31
.6

Certification of
    US Airways Chief Financial Officer pursuant to
    Rule 13a-14(a)
    under the Securities Exchange Act of 1934, as amended.32
.1

Certification of US Airways
    Groups Chief Executive Officer and Chief Financial Officer
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32
.2

Certification of AWAs Chief
    Executive Officer and Chief Financial Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.32
.3

Certification of
    US Airways Chief Executive Officer and Chief
    Financial Officer pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.     *
    
    Portions of this exhibit have been omitted under a request for
    confidential treatment and filed separately with the United
    States Securities and Exchange Commission.
    
    Management contract or compensatory plan or arrangement. 234




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##### Table of Contents



SIGNATURES    US Airways GROUP, INC.
  By:
    /s/  W.
    Douglas Parker       AMERCA WEST AIRLINES, INC.
  By:
    /s/  W.
    Douglas Parker       US Airways, INC.
  By:
    /s/  W.
    Douglas Parker       Form 10-K
 235




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##### Table of Contents



Signature

Title

Date/s/  W.
    Douglas ParkerW.
    Douglas Parker

Chairman and Chief Executive
    Officer (Principal Executive Officer)

February 28, 2007/s/  Derek
    J. KerDerek
    J. Kerr

Senior Vice President and Chief
    Financial Officer (Principal Financial and Accounting Officer)

February 28, 2007/s/  Bruce
    R. LakefieldBruce
    R. Lakefield

Director

February 28, 2007/s/  Richard
    BartlettRichard
    Bartlett

Director

February 28, 2007/s/  Herbert
    M. BaumHerbert
    M. Baum

Director

February 28, 2007/s/  Matthew
    J. HartMatthew
    J. Hart

Director

February 28, 2007/s/  Richard
    C. KraemerRichard
    C. Kraemer

Director

February 28, 2007/s/  Cheryl
    G. KrongardCheryl
    G. Krongard

Director

February 28, 2007/s/  Denise
    M. OLearyDenise
    M. OLeary

Director

February 28, 2007/s/  George
    M. PhilipGeorge
    M. Philip

Director

February 28, 2007/s/  Edward
    L. ShapiroEdward
    L. Shapiro

Director

February 28, 2007/s/  J.
    Steven WhislerJ.
    Steven Whisler

Director

February 28, 2007  236




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber

Description10
.46

Global Settlement Letter, dated
    November 10, 2006, among US Airways Group and
    Bombardier Inc.*10
.128

Employment Agreement, dated as of
    September 27, 2005, between US Airways Group and Alan
    W. Crellin23
.1

Consents of KPMG LLP, Independent
    Registered Public Accounting Firm of US Airways Group.31
.1

Certification of US Airways
    Groups Chief Executive Officer pursuant to
    Rule 13a-14(a)
    under the Securities Exchange Act of 1934, as amended.31
.2

Certification of US Airways
    Groups Chief Financial Officer pursuant to
    Rule 13a-14(a)
    under the Securities Exchange Act of 1934, as amended.31
.3

Certification of AWAs Chief
    Executive Officer pursuant to
    Rule 13a-14(a)
    under the Securities Exchange Act of 1934, as amended.31
.4

Certification of AWAs Chief
    Financial Officer pursuant to
    Rule 13a-14(a)
    under the Securities Exchange Act of 1934, as amended.31
.5

Certification of
    US Airways Chief Executive Officer pursuant to
    Rule 13a-14(a)
    under the Securities Exchange Act of 1934, as amended.31
.6

Certification of
    US Airways Chief Financial Officer pursuant to
    Rule 13a-14(a)
    under the Securities Exchange Act of 1934, as amended.32
.1

Certification of US Airways
    Groups Chief Executive Officer and Chief Financial Officer
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32
.2

Certification of AWAs Chief
    Executive Officer and Chief Financial Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.32
.3

Certification of
    US Airways Chief Executive Officer and Chief
    Financial Officer pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.     *
    
    Portions of this exhibit have been omitted under a request for
    confidential treatment and filed separately with the United
    States Securities and Exchange Commission.
    
    Management contract or compensatory plan or arrangement.