##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended March 31, 2010
 or
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 US Airways Group, Inc.
    
 US Airways, Inc.
    
 
 
 þ o
 Yes o No
o
  US Airways Group, Inc.
    
    Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company oUS Airways, Inc.
    
    Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o
  US Airways Group, 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




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##### 



US Airways Group, Inc.
US Airways, Inc.
Form 10-Q
Quarterly Period Ended March 31, 2010
Table of Contents
  
 PagePart I. Financial InformationItem 1A. Condensed Consolidated Financial Statements of US Airways Group, Inc.Condensed Consolidated Statements of Operations
    
    
    5Condensed Consolidated Balance Sheets
    
    
    6Condensed Consolidated Statements of Cash Flows
    
    
    7Notes to the Condensed Consolidated Financial Statements
    
    
    8Item 1B. Condensed Consolidated Financial Statements of US Airways, Inc.Condensed Consolidated Statements of Operations
    
    
    14Condensed Consolidated Balance Sheets
    
    
    15Condensed Consolidated Statements of Cash Flows
    
    
    16Notes to the Condensed Consolidated Financial Statements
    
    
    17Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    22Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    43Item 4. Controls and Procedures
    
    
    44Part II. Other InformationItem 1. Legal Proceedings
    
    
    45Item 1A. Risk Factors
    
    
    45Item 5. Exhibits
    
    
    55SignaturesExhibit 10.1Exhibit 10.2Exhibit 31.1Exhibit 31.2Exhibit 31.3Exhibit 31.4Exhibit 32.1Exhibit 32.2
   2




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Note Concerning Forward-Looking Statements
  
    
    the impact of significant operating losses in the future;
 
    
    downturns in economic conditions and their impact on passenger demand and related revenues;
 
    
    increased costs of financing, a reduction in the availability of financing and fluctuations
in interest rates;
 
    
    the impact of the price and availability of fuel and significant disruptions in the supply
of aircraft fuel;
 
    
    our high level of fixed obligations and our ability to fund general corporate requirements,
obtain additional financing and respond to competitive developments;
 
    
    any failure to comply with the liquidity covenants contained in our financing
arrangements;
 
    
    provisions in our credit card processing and other commercial agreements that
may affect our liquidity;
 
    
    the impact of union disputes, employee strikes and other labor-related disruptions;
 
    
    our inability to maintain labor costs at competitive levels;
 
    
    our reliance on third-party regional operators or third-party service providers;
 
    
    our reliance on automated systems and the impact of any failure or disruption of these
systems;
 
    
    the impact of changes to our business model;
 
    
    competitive practices in the industry, including the impact of industry consolidation;
 
    
    the loss of key personnel or our ability to attract and retain qualified personnel;
 
    
    the impact of conflicts overseas or terrorist attacks, and the impact of ongoing security
concerns;
 
    
    changes in government legislation and regulation;
 
    
    our ability to operate and grow our route network;
 
    
    the impact of environmental laws and regulations;
 
    
    costs of ongoing data security compliance requirements and the impact of any data security
breach;
 
    
    interruptions or disruptions in service at one or more of our hub airports;
 
    
    the impact of any accident involving our aircraft or the aircraft of our regional
operators;
  3




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##### Table of Contents




    
    delays in scheduled aircraft deliveries or other loss of anticipated fleet capacity;
 
    
    the impact of weather conditions and seasonality of airline travel;
 
    
    the cyclical nature of the airline industry;
 
    
    the impact of possible future increases in insurance costs and disruptions to insurance
markets;
 
    
    the impact of global events that affect travel behavior, such as an outbreak of
a contagious disease;
 
    
    the impact of foreign currency exchange rate fluctuations;
 
    
    our ability to use NOLs and certain other tax attributes; and
 
    
    other risks and uncertainties listed from time to time in our reports to and filings with
the Securities and Exchange Commission.
  
 Part I. Financial Information
   4




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##### Table of Contents



Item 1A.
    
    Condensed Consolidated Financial Statements of US Airways Group, Inc.
 US Airways Group, Inc.
 
 Condensed Consolidated Statements of Operations
 (In millions, except share and per share amounts)
 (Unaudited)
 Three Months EndedMarch 31,2010
    
    
    2009Operating revenues:Mainline passenger
    
    $
    1,698
    
    
    $
    1,611Express passenger
    
    
    601
    
    
    
    551Cargo
    
    
    33
    
    
    
    24Other
    
    
    319
    
    
    
    269Total operating revenues
    
    
    2,651
    
    
    
    2,455Operating expenses:Aircraft fuel and related taxes
    
    
    534
    
    
    
    378Loss on fuel hedging instruments, net
    
    
    
    
    
    
    27Salaries and related costs
    
    
    556
    
    
    
    551Express expenses
    
    
    650
    
    
    
    604Aircraft rent
    
    
    171
    
    
    
    178Aircraft maintenance
    
    
    157
    
    
    
    174Other rent and landing fees
    
    
    134
    
    
    
    131Selling expenses
    
    
    95
    
    
    
    92Special items, net
    
    
    5
    
    
    
    6Depreciation and amortization
    
    
    61
    
    
    
    60Other
    
    
    298
    
    
    
    279Total operating expenses
    
    
    2,661
    
    
    
    2,480Operating loss
    
    
    (10
    )
    
    
    (25
    )Nonoperating income (expense):Interest income
    
    
    5
    
    
    
    6Interest expense, net
    
    
    (82
    )
    
    
    (71
    )Other, net
    
    
    42
    
    
    
    (13
    )Total nonoperating expense, net
    
    
    (35
    )
    
    
    (78
    )Loss before income taxes
    
    
    (45
    )
    
    
    (103
    )Income tax provision
    
    
    
    
    
    
    Net loss
    
    $
    (45
    )
    
    $
    (103
    )Loss per common share:Basic loss per common share
    
    $
    (0.28
    )
    
    $
    (0.90
    )Diluted loss per common share
    
    $
    (0.28
    )
    
    $
    (0.90
    )Shares used for computation (in thousands):Basic
    
    
    161,115
    
    
    
    114,121Diluted
    
    
    161,115
    
    
    
    114,121
   5




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##### Table of Contents



US Airways Group, Inc.
 
 Condensed Consolidated Balance Sheets
 (In millions, except share and per share amounts)
 (Unaudited)
 March 31,
    
    
    December 31,2010
    
    
    2009ASSETSCurrent assetsCash and cash equivalents
    
    $
    1,532
    
    
    $
    1,299Accounts receivable, net
    
    
    416
    
    
    
    285Materials and supplies, net
    
    
    227
    
    
    
    227Prepaid expenses and other
    
    
    564
    
    
    
    520Total current assets
    
    
    2,739
    
    
    
    2,331Property and equipmentFlight equipment
    
    
    4,094
    
    
    
    3,852Ground property and equipment
    
    
    888
    
    
    
    883Less accumulated depreciation and amortization
    
    
    (1,206
    )
    
    
    (1,151
    )3,776
    
    
    
    3,584Equipment purchase deposits
    
    
    41
    
    
    
    112Total property and equipment
    
    
    3,817
    
    
    
    3,696Other assetsOther intangibles, net of accumulated amortization of $120 million and $113 million, respectively
    
    
    496
    
    
    
    503Restricted cash
    
    
    442
    
    
    
    480Investments in marketable securities
    
    
    70
    
    
    
    203Other assets
    
    
    244
    
    
    
    241Total other assets
    
    
    1,252
    
    
    
    1,427Total assets
    
    $
    7,808
    
    
    $
    7,454LIABILITIES & STOCKHOLDERS DEFICITCurrent liabilitiesCurrent maturities of debt and capital leases
    
    $
    481
    
    
    $
    502Accounts payable
    
    
    370
    
    
    
    337Air traffic liability
    
    
    1,110
    
    
    
    778Accrued compensation and vacation
    
    
    187
    
    
    
    178Accrued taxes
    
    
    209
    
    
    
    141Other accrued expenses
    
    
    827
    
    
    
    853Total current liabilities
    
    
    3,184
    
    
    
    2,789Noncurrent liabilities and deferred creditsLong-term debt and capital leases, net of current maturities
    
    
    4,125
    
    
    
    4,024Deferred gains and credits, net
    
    
    358
    
    
    
    377Postretirement benefits other than pensions
    
    
    129
    
    
    
    130Employee benefit liabilities and other
    
    
    459
    
    
    
    489Total noncurrent liabilities and deferred credits
    
    
    5,071
    
    
    
    5,020Commitments and contingenciesStockholders deficitCommon stock, $0.01 par value; 400,000,000 shares authorized, 161,536,675 and 161,119,051 shares
issued and outstanding at March 31, 2010; 161,520,457 and 161,102,833 shares issued and
outstanding at December 31, 2009
    
    
    2
    
    
    
    2Additional paid-in capital
    
    
    2,110
    
    
    
    2,107Accumulated other comprehensive income
    
    
    40
    
    
    
    90Accumulated deficit
    
    
    (2,586
    )
    
    
    (2,541
    )Treasury stock, common stock, 417,624 shares at March 31, 2010 and December 31, 2009
    
    
    (13
    )
    
    
    (13
    )Total stockholders deficit
    
    
    (447
    )
    
    
    (355
    )Total liabilities and stockholders deficit
    
    $
    7,808
    
    
    $
    7,454
   6




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##### Table of Contents



US Airways Group, Inc.
 
 Condensed Consolidated Statements of Cash Flows
 (In millions)
 (Unaudited)
 Three Months EndedMarch 31,2010
    
    
    2009Net cash provided by operating activities
    
    $
    199
    
    
    $
    187Cash flows from investing activities:Purchases of property and equipment
    
    
    (78
    )
    
    
    (183
    )Sales of marketable securities
    
    
    132
    
    
    
    20Decrease in long-term restricted cash
    
    
    38
    
    
    
    37Proceeds from sale-leaseback transactions and dispositions of property and equipment
    
    
    
    
    
    
    52Net cash provided by (used in) investing activities
    
    
    92
    
    
    
    (74
    )Cash flows from financing activities:Repayments of debt and capital lease obligations
    
    
    (135
    )
    
    
    (105
    )Proceeds from issuance of debt
    
    
    80
    
    
    
    221Deferred financing costs
    
    
    (3
    )
    
    
    (1
    )Net cash provided by (used in) financing activities
    
    
    (58
    )
    
    
    115Net increase in cash and cash equivalents
    
    
    233
    
    
    
    228Cash and cash equivalents at beginning of period
    
    
    1,299
    
    
    
    1,034Cash and cash equivalents at end of period
    
    $
    1,532
    
    
    $
    1,262Non-cash investing and financing activities:Note payables issued for aircraft purchases
    
    $
    111
    
    
    $
    32Interest payable converted to debt
    
    
    11
    
    
    
    9Net unrealized loss on available-for-sale securities
    
    
    1
    
    
    
    Maintenance payable converted to debt
    
    
    
    
    
    
    9Supplemental information:Interest paid, net of amounts capitalized
    
    $
    67
    
    
    $
    63Income taxes paid
    
    
    
    
    
    
    
   7




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##### Table of Contents



US Airways Group, Inc.
 
 Notes to Condensed Consolidated Financial Statements
(Unaudited)
 1. Basis of Presentation
   Recent Accounting Pronouncements
    8




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##### Table of Contents



2. Special Items, Net
  Three Months EndedMarch 31,2010
    
    
    2009Aircraft costs (a)
    
    $
    5
    
    
    $
    5Severance charges (b)
    
    
    
    
    
    
    1Special items, net
    
    $
    5
    
    
    $
    6
 
 (a)
    
    In the three months ended March 31, 2010 and 2009, the Company recorded $5 million for
aircraft costs in each period as a result of its previously announced capacity reductions.(b)
    
    In the three months ended March 31, 2009, the Company recorded $1 million in severance
charges as a result of capacity reductions. 3. Loss Per Common Share
  Three Months EndedMarch 31,
    
    
    March 31,2010
    
    
    2009Basic and diluted loss per share:Net loss
    
    $
    (45
    )
    
    $
    (103
    )Weighted average common shares outstanding (in thousands)
    
    
    116,115
    
    
    
    114,121Basic and diluted loss per share
    
    $
    (0.28
    )
    
    $
    (0.90
    )
   9




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##### Table of Contents



4. Debt
  March 31,
    
    
    December 31,2010
    
    
    2009SecuredCiticorp North America loan, variable interest rate of 2.75%, installments due through 2014
    
    $
    1,152
    
    
    $
    1,168Equipment loans and other notes payable, fixed and variable interest rates ranging from 1.63% to
10.25%, maturing from 2010 to 2021
    
    
    2,342
    
    
    
    2,201Aircraft enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 7.08%
to 9.01%, maturing from 2015 to 2022
    
    
    481
    
    
    
    505Other secured obligations, fixed interest rates ranging from 8% to 8.08%, maturing from 2015 to 2021
    
    
    83
    
    
    
    84Senior secured discount notes
    
    
    
    
    
    
    324,058
    
    
    
    3,990UnsecuredBarclays prepaid miles, variable interest rate of 5%, interest only payments
    
    
    200
    
    
    
    200Airbus advance, repayments beginning in 2010 through 2018
    
    
    259
    
    
    
    2477.25% convertible senior notes, interest only payments until due in 2014
    
    
    172
    
    
    
    1727% senior convertible notes, interest only payments until due in 2020
    
    
    74
    
    
    
    74Industrial development bonds, fixed interest rate of 6.3%, interest only payments until due in 2023
    
    
    29
    
    
    
    29Other unsecured obligations, maturing from 2010 to 2012
    
    
    68
    
    
    
    81802
    
    
    
    803Total long-term debt and capital lease obligations
    
    
    4,860
    
    
    
    4,793Less: Total unamortized discount on debt
    
    
    (254
    )
    
    
    (267
    )Current maturities, less $5 million and $9 million of unamortized discount on debt at March 31,
2010 and December 31, 2009, respectively
    
    
    (481
    )
    
    
    (502
    )Long-term debt and capital lease obligations, net of current maturities
    
    $
    4,125
    
    
    $
    4,024
  2010 Financing Transactions
  Fair Value of Debt
   10




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5. Income Taxes
    6. Express Expenses
  Three Months EndedMarch  31,2010
    
    
    2009Aircraft fuel and related taxes
    
    $
    170
    
    
    $
    123Salaries and related costs
    
    
    63
    
    
    
    63Capacity purchases
    
    
    264
    
    
    
    263Aircraft rent
    
    
    13
    
    
    
    13Aircraft maintenance
    
    
    19
    
    
    
    23Other rent and landing fees
    
    
    31
    
    
    
    31Selling expenses
    
    
    36
    
    
    
    34Depreciation and amortization
    
    
    6
    
    
    
    6Other expenses
    
    
    48
    
    
    
    48Express expenses
    
    $
    650
    
    
    $
    604
 7. Derivative Instruments
   11




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##### Table of Contents



8. Investments in Marketable Securities (Noncurrent)
     9. Fair Value Measurements
  Quoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets for
    
    
    Observable
    
    
    UnobservableIdentical Assets
    
    
    Inputs
    
    
    Inputs
    
    
    ValuationFair Value
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    TechniqueAt March 31, 2010Investments in marketable securities (noncurrent)
    
    $
    70
    
    
    $
    
    
    
    $
    
    
    
    $
    70
    
    
    
    (1
    )At December 31, 2009Investments in marketable securities (noncurrent)
    
    $
    203
    
    
    $
    
    
    
    $
    
    
    
    $
    203
    
    
    
    (1
    )
 (1)
    
    The Company estimated the fair value of its auction rate securities based on the following:
(i) the underlying structure of each security; (ii) the present value of future principal and
interest payments discounted at rates considered to reflect current market conditions;
(iii) consideration of the probabilities of default, passing a future auction, or repurchase
at par for each period; and (iv) estimates of the recovery rates in the event of default for
each security. These estimated fair values could change significantly based on future market
conditions. Refer to Note 8 for further discussion of the Companys investments in marketable
securities.  Investments inMarketableSecurities(Noncurrent)Balance at December 31, 2009
    
    $
    203Sales of marketable securities
    
    
    (132
    )Net unrealized losses recorded to other comprehensive income
    
    
    (1
    )Balance at March 31, 2010
    
    $
    70
  12




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##### Table of Contents



10. Other Comprehensive Income (Loss)
  Three Months EndedMarch 31,2010
    
    
    2009Net loss
    
    $
    (45
    )
    
    $
    (103
    )Recognition of net realized gains on sale of available-for-sale securities
    
    
    (48
    )
    
    
    Net unrealized losses on available-for-sale securities
    
    
    (1
    )
    
    
    Pension and other postretirement benefits
    
    
    (1
    )
    
    
    (4
    )Total comprehensive loss
    
    $
    (95
    )
    
    $
    (107
    )
  March 31,
    
    
    December 31,2010
    
    
    2009Pension and other postretirement benefits
    
    $
    54
    
    
    $
    55Available-for-sale securities
    
    
    (14
    )
    
    
    35Accumulated other comprehensive income
    
    $
    40
    
    
    $
    90
 11. Slot Exchange
     13




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##### Table of Contents



Item 1B.
    
    Condensed Consolidated Financial Statements of US Airways, Inc.
 US Airways, Inc.
 
 Condensed Consolidated Statements of Operations
 (In millions)
(Unaudited)
 Three Months EndedMarch 31,2010
    
    
    2009Operating revenues:Mainline passenger
    
    $
    1,698
    
    
    $
    1,611Express passenger
    
    
    601
    
    
    
    551Cargo
    
    
    33
    
    
    
    24Other
    
    
    353
    
    
    
    305Total operating revenues
    
    
    2,685
    
    
    
    2,491Operating expenses:Aircraft fuel and related taxes
    
    
    534
    
    
    
    378Loss on fuel hedging instruments, net
    
    
    
    
    
    
    27Salaries and related costs
    
    
    556
    
    
    
    551Express expenses
    
    
    675
    
    
    
    632Aircraft rent
    
    
    171
    
    
    
    178Aircraft maintenance
    
    
    157
    
    
    
    174Other rent and landing fees
    
    
    134
    
    
    
    131Selling expenses
    
    
    95
    
    
    
    92Special items, net
    
    
    5
    
    
    
    6Depreciation and amortization
    
    
    63
    
    
    
    62Other
    
    
    305
    
    
    
    286Total operating expenses
    
    
    2,695
    
    
    
    2,517Operating loss
    
    
    (10
    )
    
    
    (26
    )Nonoperating income (expense):Interest income
    
    
    5
    
    
    
    6Interest expense, net
    
    
    (59
    )
    
    
    (61
    )Other, net
    
    
    41
    
    
    
    (14
    )Total nonoperating expense, net
    
    
    (13
    )
    
    
    (69
    )Loss before income taxes
    
    
    (23
    )
    
    
    (95
    )Income tax provision
    
    
    
    
    
    
    Net loss
    
    $
    (23
    )
    
    $
    (95
    )
   14




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##### Table of Contents



US Airways, Inc.
 
 Condensed Consolidated Balance Sheets
 (In millions, except share and per share amounts)
(Unaudited)
 March 31,
    
    
    December 31,2010
    
    
    2009ASSETSCurrent assetsCash and cash equivalents
    
    $
    1,494
    
    
    $
    1,209Accounts receivable, net
    
    
    413
    
    
    
    282Materials and supplies, net
    
    
    192
    
    
    
    188Prepaid expenses and other
    
    
    551
    
    
    
    507Total current assets
    
    
    2,650
    
    
    
    2,186Property and equipmentFlight equipment
    
    
    3,948
    
    
    
    3,710Ground property and equipment
    
    
    860
    
    
    
    856Less accumulated depreciation and amortization
    
    
    (1,150
    )
    
    
    (1,098
    )3,658
    
    
    
    3,468Equipment purchase deposits
    
    
    41
    
    
    
    112Total property and equipment
    
    
    3,699
    
    
    
    3,580Other assetsOther intangibles, net of accumulated amortization of $112 million and $106 million, respectively
    
    
    461
    
    
    
    467Restricted cash
    
    
    442
    
    
    
    480Investments in marketable securities
    
    
    70
    
    
    
    203Other assets
    
    
    212
    
    
    
    207Total other assets
    
    
    1,185
    
    
    
    1,357Total assets
    
    $
    7,534
    
    
    $
    7,123LIABILITIES & STOCKHOLDERS EQUITYCurrent liabilitiesCurrent maturities of debt and capital leases
    
    $
    395
    
    
    $
    418Accounts payable
    
    
    358
    
    
    
    319Payables to related parties, net
    
    
    664
    
    
    
    642Air traffic liability
    
    
    1,110
    
    
    
    778Accrued compensation and vacation
    
    
    178
    
    
    
    171Accrued taxes
    
    
    210
    
    
    
    142Other accrued expenses
    
    
    789
    
    
    
    815Total current liabilities
    
    
    3,704
    
    
    
    3,285Noncurrent liabilities and deferred creditsLong-term debt and capital leases, net of current maturities
    
    
    2,777
    
    
    
    2,667Deferred gains and credits, net
    
    
    302
    
    
    
    317Postretirement benefits other than pensions
    
    
    129
    
    
    
    129Employee benefit liabilities and other
    
    
    440
    
    
    
    470Total noncurrent liabilities and deferred credits
    
    
    3,648
    
    
    
    3,583Commitments and contingenciesStockholders equityCommon stock, $1 par value, 1,000 shares issued and outstanding
    
    
    
    
    
    
    Additional paid-in capital
    
    
    2,445
    
    
    
    2,445Accumulated other comprehensive income
    
    
    44
    
    
    
    94Accumulated deficit
    
    
    (2,307
    )
    
    
    (2,284
    )Total stockholders equity
    
    
    182
    
    
    
    255Total liabilities and stockholders equity
    
    $
    7,534
    
    
    $
    7,123
   15




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##### Table of Contents



US Airways, Inc.
 
 Condensed Consolidated Statements of Cash Flows
 (In millions)
(Unaudited)
 Three Months EndedMarch 31,2010
    
    
    2009Net cash provided by operating activities
    
    $
    231
    
    
    $
    176Cash flows from investing activities:Purchases of property and equipment
    
    
    (74
    )
    
    
    (182
    )Sales of marketable securities
    
    
    132
    
    
    
    20Decrease in long-term restricted cash
    
    
    38
    
    
    
    37Proceeds from sale-leaseback transactions and dispositions of property and equipment
    
    
    
    
    
    
    52Net cash provide by (used in) investing activities
    
    
    96
    
    
    
    (73
    )Cash flows from financing activities:Repayments of debt and capital lease obligations
    
    
    (119
    )
    
    
    (89
    )Proceeds from issuance of debt
    
    
    80
    
    
    
    221Deferred financing costs
    
    
    (3
    )
    
    
    (1
    )Net cash provided by (used in) financing activities
    
    
    (42
    )
    
    
    131Net increase in cash and cash equivalents
    
    
    285
    
    
    
    234Cash and cash equivalents at beginning of period
    
    
    1,209
    
    
    
    1,026Cash and cash equivalents at end of period
    
    $
    1,494
    
    
    $
    1,260Non-cash investing and financing activities:Note payables issued for aircraft purchases
    
    $
    111
    
    
    $
    32Interest payable converted to debt
    
    
    11
    
    
    
    9Net unrealized loss on available-for-sale securities
    
    
    1
    
    
    
    Maintenance payable converted to debt
    
    
    
    
    
    
    9Supplemental information:Interest paid, net of amounts capitalized
    
    $
    49
    
    
    $
    50Income taxes paid
    
    
    
    
    
    
    
   16




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US Airways, Inc.
 
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 1. Basis of Presentation
   Recent Accounting Pronouncements
    17




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##### Table of Contents



2. Special Items, Net
  Three Months EndedMarch 31,2010
    
    
    2009Aircraft costs (a)
    
    $
    5
    
    
    $
    5Severance charges (b)
    
    
    
    
    
    
    1Special items, net
    
    $
    5
    
    
    $
    6
 
 (a)
    
    In the three months ended March 31, 2010 and 2009, US Airways recorded $5 million for
aircraft costs in each period as a result of its previously announced capacity reductions.(b)
    
    In the three months ended March 31, 2009, US Airways recorded $1 million in severance charges
as a result of capacity reductions. 3. Debt
  March 31,
    
    
    December 31,2010
    
    
    2009SecuredEquipment loans and other notes payable, fixed and variable interest rates ranging from 1.63% to
10.25%, maturing from 2010 to 2021
    
    
    2,342
    
    
    
    2,201Aircraft enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 7.08%
to 9.01%, maturing from 2015 to 2022
    
    
    481
    
    
    
    505Other secured obligations, fixed interest rates ranging from 8% to 8.08%, maturing from 2015 to 2021
    
    
    83
    
    
    
    84Senior secured discount notes
    
    
    
    
    
    
    322,906
    
    
    
    2,822UnsecuredAirbus advance, repayments beginning in 2010 through 2018
    
    
    259
    
    
    
    247Industrial development bonds, fixed interest rate of 6.3%, interest only payments until due in 2023
    
    
    29
    
    
    
    29Other unsecured obligations, maturing from 2010 to 2012
    
    
    68
    
    
    
    81356
    
    
    
    357Total long-term debt and capital lease obligations
    
    
    3,262
    
    
    
    3,179Less: Total unamortized discount on debt
    
    
    (90
    )
    
    
    (94
    )Current maturities, less $2 million and $4 million of unamortized discount on debt at March 31,
2010 and December 31, 2009, respectively
    
    
    (395
    )
    
    
    (418
    )Long-term debt and capital lease obligations, net of current maturities
    
    $
    2,777
    
    
    $
    2,667
  2010 Financing Transactions
  Fair Value of Debt
   18




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4. Related Party Transactions
  March 31,
    
    
    December 31,2010
    
    
    2009US Airways Group
    
    $
    618
    
    
    $
    607US Airways Groups wholly owned subsidiaries
    
    
    46
    
    
    
    35$
    664
    
    
    $
    642
   5. Income Taxes
     6. Express Expenses
  Three Months EndedMarch  31,2010
    
    
    2009Aircraft fuel and related taxes
    
    $
    170
    
    
    $
    123Salaries and related costs
    
    
    6
    
    
    
    6Capacity purchases
    
    
    412
    
    
    
    418Other rent and landing fees
    
    
    26
    
    
    
    26Selling expenses
    
    
    36
    
    
    
    34Other expenses
    
    
    25
    
    
    
    25Express expenses
    
    $
    675
    
    
    $
    632
  19




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7. Derivative Instruments
  8. Investments in Marketable Securities (Noncurrent)
     9. Fair Value Measurements
  Quoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets for
    
    
    Observable
    
    
    UnobservableIdentical Assets
    
    
    Inputs
    
    
    Inputs
    
    
    ValuationFair Value
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    TechniqueAt March 31, 2010Investments in marketable securities (noncurrent)
    
    $
    70
    
    
    $
    
    
    
    $
    
    
    
    $
    70
    
    
    
    (1
    )At December 31, 2009Investments in marketable securities (noncurrent)
    
    $
    203
    
    
    $
    
    
    
    $
    
    
    
    $
    203
    
    
    
    (1
    )
 (1)
    
    US Airways estimated the fair value of its auction rate securities based on the following:
(i) the underlying structure of each security; (ii) the present value of future principal and
interest payments discounted at rates considered to reflect current market conditions;
(iii) consideration of the probabilities of default, passing a future auction, or repurchase
at par for each period; and (iv) estimates of the recovery rates in the event of default for
each security. These estimated fair values could change significantly based on future market
conditions. Refer to Note 8 for further discussion of US Airways investments in marketable
securities.  20




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##### Table of Contents



Investments inMarketableSecurities(Noncurrent)Balance at December 31, 2009
    
    $
    203Sales of marketable securities
    
    
    (132
    )Net unrealized losses recorded to other comprehensive income
    
    
    (1
    )Balance at March 31, 2010
    
    $
    70
 10. Other Comprehensive Income (Loss)
  Three Months EndedMarch 31,2010
    
    
    2009Net loss
    
    $
    (23
    )
    
    $
    (95
    )Recognition of net realized gains on sale of available-for-sale securities
    
    
    (48
    )
    
    
    Net unrealized losses on available-for-sale securities
    
    
    (1
    )
    
    
    Other postretirement benefits
    
    
    (1
    )
    
    
    (4
    )Total comprehensive loss
    
    $
    (73
    )
    
    $
    (99
    )
  March 31,
    
    
    December 31,2010
    
    
    2009Other postretirement benefits
    
    $
    58
    
    
    $
    59Available-for-sale securities
    
    
    (14
    )
    
    
    35Accumulated other comprehensive income
    
    $
    44
    
    
    $
    94
 11. Slot Exchange
     21




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Background
   The U.S. Airline Industry
        22




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##### Table of Contents



US Airways
    Fuel
  Cost Control
   23




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##### Table of Contents



Percent2010
    
    
    2009
    
    
    Change(In cents)Mainline CASM excluding special items and fuel:Total mainline CASM
    
    
    12.13
    
    
    
    11.05
    
    
    
    9.8Special items, net
    
    
    (0.03
    )
    
    
    (0.04
    )
    
    
    (20.9
    )Aircraft fuel and related taxes
    
    
    (3.22
    )
    
    
    (2.23
    )
    
    
    44.7Loss on fuel hedging instruments, net
    
    
    
    
    
    
    (0.16
    )
    
    nmTotal mainline CASM excluding special items and fuel (1)
    
    
    8.88
    
    
    
    8.63
    
    
    
    2.9
 (1)
    
    We believe that the presentation of mainline CASM excluding fuel is useful to
investors as both the cost and availability of fuel are subject to many economic and
political factors beyond our control, and excluding special items provides investors the ability to measure financial
performance in a way that is more indicative of our ongoing performance and
is more comparable to measures reported by other major airlines.
Management uses mainline CASM excluding special items and fuel to
evaluate our operating performance. Amounts may not recalculate
due to rounding.  Customer Service
    2010
    
    
    2009
    
    
    Percent Better (Worse) 2010-2009January
    
    
    February
    
    
    March (e)
    
    
    January
    
    
    February
    
    
    March
    
    
    January
    
    
    February
    
    
    MarchOn-time performance (a)
    
    
    79.4
    
    
    
    75.3
    
    
    
    80.9
    
    
    
    77.3
    
    
    
    82.2
    
    
    
    79.6
    
    
    
    2.7
    
    
    
    (8.4
    )
    
    
    1.6Completion factor (b)
    
    
    97.0
    
    
    
    92.9
    
    
    
    98.6
    
    
    
    98.1
    
    
    
    99.0
    
    
    
    98.1
    
    
    
    (1.1
    )
    
    
    (6.2
    )
    
    
    0.5Mishandled baggage (c)
    
    
    3.45
    
    
    
    3.22
    
    
    
    2.92
    
    
    
    4.15
    
    
    
    3.08
    
    
    
    3.46
    
    
    
    16.9
    
    
    
    (4.5
    )
    
    
    15.6Customer complaints (d)
    
    
    2.03
    
    
    
    1.69
    
    
    
    1.78
    
    
    
    2.05
    
    
    
    1.64
    
    
    
    1.00
    
    
    
    1.0
    
    
    
    (3.0
    )
    
    
    (78.0
    )
 
 (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.(e)
    
    March 2010 operating statistics are preliminary as the DOT has not issued its March 2010 Air
Travel Consumer Report as of the date of this filing.  24




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Liquidity Position
  March 31,
    
    
    December 31,2010
    
    
    2009(In millions)Cash and cash equivalents
    
    $
    1,532
    
    
    $
    1,299Short and long-term restricted cash
    
    
    442
    
    
    
    480Long-term investments in marketable securities
    
    
    70
    
    
    
    203Total cash, cash equivalents, investments in marketable securities and restricted cash
    
    $
    2,044
    
    
    $
    1,982
  Status of Strategic Initiatives
 Delta Slot Transaction
    2010 Outlook
   25




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US Airways Groups Results of Operations
  
    
    $5 million of net special charges for aircraft costs as a result of our
previously announced capacity reductions; and
 
    
    $49 million of net realized gains related to sales of certain investments in
auction rate securities, included in nonoperating expense, net.
  
    
    $197 million of net realized losses on settled fuel hedging instruments, offset
by $170 million of net unrealized gains resulting from the application of mark-to-market
accounting for changes in the fair value of fuel hedging instruments. These unrealized gains
were due primarily to the reversal of unrealized losses recognized in prior periods as hedge
transactions settled in the 2009 period;
 
    
    $6 million of net special charges consisting of $5 million in aircraft costs and
$1 million in severance charges, both as a result of capacity reductions; and
 
    
    $7 million in other-than-temporary non-cash impairment charges for our
investments in auction rate securities, included in nonoperating expense, net.
    26




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Three Months Ended
    
    
    PercentMarch 31,
    
    
    Change2010
    
    
    2009
    
    
    2010-2009MainlineRevenue passenger miles (millions) (a)
    
    
    13,053
    
    
    
    13,309
    
    
    
    (1.9
    )Available seat miles (millions) (b)
    
    
    16,579
    
    
    
    16,979
    
    
    
    (2.4
    )Passenger load factor (percent) (c)
    
    
    78.7
    
    
    
    78.4
    
    
    0.3
    ptsYield (cents) (d)
    
    
    13.01
    
    
    
    12.10
    
    
    
    7.5Passenger revenue per available seat mile (cents) (e)
    
    
    10.24
    
    
    
    9.49
    
    
    
    8.0Operating cost per available seat mile (cents) (f)
    
    
    12.13
    
    
    
    11.05
    
    
    
    9.8Passenger enplanements (thousands) (g)
    
    
    11,985
    
    
    
    12,409
    
    
    
    (3.4
    )Departures (thousands)
    
    
    108
    
    
    
    117
    
    
    
    (7.5
    )Aircraft at end of period
    
    
    347
    
    
    
    347
    
    
    
    Block hours (thousands) (h)
    
    
    286
    
    
    
    304
    
    
    
    (5.9
    )Average stage length (miles) (i)
    
    
    959
    
    
    
    934
    
    
    
    2.6Average passenger journey (miles) (j)
    
    
    1,599
    
    
    
    1,527
    
    
    
    4.8Fuel consumption (gallons in millions)
    
    
    247
    
    
    
    258
    
    
    
    (4.3
    )Average aircraft fuel price including related taxes (dollars per gallon)
    
    
    2.17
    
    
    
    1.47
    
    
    
    47.6Full time equivalent employees at end of period
    
    
    30,439
    
    
    
    32,245
    
    
    
    (5.6
    )Express (k)Revenue passenger miles (millions) (a)
    
    
    2,270
    
    
    
    2,374
    
    
    
    (4.4
    )Available seat miles (millions) (b)
    
    
    3,279
    
    
    
    3,455
    
    
    
    (5.1
    )Passenger load factor (percent) (c)
    
    
    69.2
    
    
    
    68.7
    
    
    0.5
    ptsYield (cents) (d)
    
    
    26.49
    
    
    
    23.22
    
    
    
    14.1Passenger revenue per available seat mile (cents) (e)
    
    
    18.34
    
    
    
    15.95
    
    
    
    14.9Operating cost per available seat mile (cents) (f)
    
    
    19.80
    
    
    
    17.48
    
    
    
    13.3Passenger enplanements (thousands) (g)
    
    
    5,946
    
    
    
    5,978
    
    
    
    (0.5
    )Aircraft at end of period
    
    
    282
    
    
    
    293
    
    
    
    (3.8
    )Fuel consumption (gallons in millions)
    
    
    77
    
    
    
    81
    
    
    
    (4.9
    )Average aircraft fuel price including related taxes (dollars per gallon)
    
    
    2.20
    
    
    
    1.51
    
    
    
    45.7Total Mainline and ExpressRevenue passenger miles (millions) (a)
    
    
    15,323
    
    
    
    15,683
    
    
    
    (2.3
    )Available seat miles (millions) (b)
    
    
    19,858
    
    
    
    20,434
    
    
    
    (2.8
    )Passenger load factor (percent) (c)
    
    
    77.2
    
    
    
    76.7
    
    
    0.5
    ptsYield (cents) (d)
    
    
    15.01
    
    
    
    13.79
    
    
    
    8.9Passenger revenue per available seat mile (cents) (e)
    
    
    11.58
    
    
    
    10.58
    
    
    
    9.5Total revenue per available seat mile (cents) (l)
    
    
    13.35
    
    
    
    12.02
    
    
    
    11.1Passenger enplanements (thousands) (g)
    
    
    17,931
    
    
    
    18,387
    
    
    
    (2.5
    )Aircraft at end of period
    
    
    629
    
    
    
    640
    
    
    
    (1.7
    )Fuel consumption (gallons in millions)
    
    
    324
    
    
    
    339
    
    
    
    (4.5
    )Average aircraft fuel price including related taxes (dollars per gallon)
    
    
    2.18
    
    
    
    1.48
    
    
    
    47.1
 
 (a)
    
    Revenue passenger mile (RPM)  A basic measure of sales volume. One RPM represents one
passenger flown one mile.(b)
    
    Available seat mile (ASM)  A basic measure of production. One ASM represents one seat
flown one mile.(c)
    
    Passenger 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 RPMs and
expressed in cents per mile.(e)
    
    Passenger revenue per available seat mile (PRASM)  Passenger revenues divided by ASMs.(f)
    
    Operating cost per available seat mile (CASM)  Operating expenses divided by ASMs.(g)
    
    Passenger enplanements  The number of passengers on board an aircraft, including local,
connecting and through passengers.  27




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##### Table of Contents



(h)
    
    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.(i)
    
    Average stage length  The average of the distances flown on each segment of every route.(j)
    
    Average passenger journey  The average one-way trip measured in miles for one passenger
origination.(k)
    
    Express statistics include Piedmont and PSA, as well as operating and financial results from
capacity purchase agreements with Air Wisconsin Airlines Corporation, Republic Airways, Mesa
Airlines, Inc. and Chautauqua Airlines, Inc.(l)
    
    Total revenue per available seat mile (RASM)  Total revenues divided by total mainline
and Express ASMs.  28




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Three Months Ended March 31, 2010
Compared with the
Three Months Ended March 31, 2009
 Operating Revenues:
 Percent2010
    
    
    2009
    
    
    Change(In millions)Operating revenues:Mainline passenger
    
    $
    1,698
    
    
    $
    1,611
    
    
    
    5.4Express passenger
    
    
    601
    
    
    
    551
    
    
    
    9.1Cargo
    
    
    33
    
    
    
    24
    
    
    
    37.1Other
    
    
    319
    
    
    
    269
    
    
    
    18.0Total operating revenues
    
    $
    2,651
    
    
    $
    2,455
    
    
    
    7.9
  
    
    Mainline passenger revenues were $1.7 billion in the first quarter of 2010 as
compared to $1.61 billion in the 2009 period. Mainline RPMs decreased 1.9% as mainline
capacity, as measured by ASMs, decreased 2.4%, resulting in a 0.3 point increase in load
factor to 78.7%. Mainline passenger yield increased 7.5% to 13.01 cents in the first quarter
of 2010 from 12.1 cents in the 2009 period. Mainline PRASM increased 8% to 10.24 cents in the
first quarter of 2010 from 9.49 cents in the 2009 period. Mainline yield and PRASM increased
in the first quarter of 2010 due principally to the increase in passenger demand and
improving pricing environment driven by the recovering global economy.
 
    
    Express passenger revenues were $601 million in the first quarter of 2010, an
increase of $50 million from the 2009 period. Express RPMs decreased by 4.4% as Express
capacity, as measured by ASMs, decreased 5.1%, resulting in a 0.5 point increase in load
factor to 69.2%. Express passenger yield increased by 14.1% to 26.49 cents in the first
quarter of 2010 from 23.22 cents in the 2009 period. Express PRASM increased 14.9% to 18.34
cents in the first quarter of 2010 from 15.95 cents in the 2009 period. The increases in
Express yield and PRASM were the result of the same favorable passenger demand and improving
pricing environment discussed in mainline passenger revenues above.
 
    
    Cargo revenues were $33 million in the first quarter of 2010, an increase of $9
million or 37.1% from the 2009 period. The increase in cargo revenues was driven by an
increase in freight volume as a result of the recovering economic environment as compared to
the 2009 period.
 
    
    Other revenues were $319 million in the first quarter of 2010, an increase of
$50 million or 18% from the 2009 period, primarily due to an increase in revenue generated by
our checked bag fees as a result of increases in rates charged. An increase in revenues
associated with our frequent traveler program also contributed to the increase in other
revenues.
  29




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Operating Expenses:
 Percent2010
    
    
    2009
    
    
    Change(In millions)Operating expenses:Aircraft fuel and related taxes
    
    $
    534
    
    
    $
    378
    
    
    
    41.2Loss (gain) on fuel hedging instruments, net:Realized
    
    
    
    
    
    
    197
    
    
    nmUnrealized
    
    
    
    
    
    
    (170
    )
    
    nmSalaries and related costs
    
    
    556
    
    
    
    551
    
    
    
    0.9Aircraft rent
    
    
    171
    
    
    
    178
    
    
    
    (3.8
    )Aircraft maintenance
    
    
    157
    
    
    
    174
    
    
    
    (10.0
    )Other rent and landing fees
    
    
    134
    
    
    
    131
    
    
    
    2.8Selling expenses
    
    
    95
    
    
    
    92
    
    
    
    2.3Special items, net
    
    
    5
    
    
    
    6
    
    
    
    (22.8
    )Depreciation and amortization
    
    
    61
    
    
    
    60
    
    
    
    1.5Other
    
    
    298
    
    
    
    279
    
    
    
    6.9Total mainline operating expenses
    
    
    2,011
    
    
    
    1,876
    
    
    
    7.2Express expenses:Fuel
    
    
    170
    
    
    
    123
    
    
    
    38.5Other
    
    
    480
    
    
    
    481
    
    
    
    (0.4
    )Total Express expenses
    
    
    650
    
    
    
    604
    
    
    
    7.5Total operating expenses
    
    $
    2,661
    
    
    $
    2,480
    
    
    
    7.3
     Percent2010
    
    
    2009
    
    
    Change(In cents)Mainline CASM:Aircraft fuel and related taxes
    
    
    3.22
    
    
    
    2.23
    
    
    
    44.7Loss on fuel hedging instruments, net
    
    
    
    
    
    
    0.16
    
    
    nmSalaries and related costs
    
    
    3.35
    
    
    
    3.24
    
    
    
    3.3Aircraft rent
    
    
    1.03
    
    
    
    1.04
    
    
    
    (1.5
    )Aircraft maintenance
    
    
    0.95
    
    
    
    1.03
    
    
    
    (7.8
    )Other rent and landing fees
    
    
    0.81
    
    
    
    0.77
    
    
    
    5.3Selling expenses
    
    
    0.57
    
    
    
    0.54
    
    
    
    4.7Special items, net
    
    
    0.03
    
    
    
    0.04
    
    
    
    (20.9
    )Depreciation and amortization
    
    
    0.37
    
    
    
    0.35
    
    
    
    3.9Other
    
    
    1.80
    
    
    
    1.65
    
    
    
    9.5Total mainline CASM
    
    
    12.13
    
    
    
    11.05
    
    
    
    9.8Special items, net
    
    
    (0.03
    )
    
    
    (0.04
    )Aircraft fuel and related taxes
    
    
    (3.22
    )
    
    
    (2.23
    )Loss on fuel hedging instruments, net
    
    
    
    
    
    
    (0.16
    )Total mainline CASM excluding special items and fuel (1)
    
    
    8.88
    
    
    
    8.63
    
    
    
    2.9
 (1)
    
    We believe that the presentation of mainline CASM
excluding fuel is useful to investors
as both the cost and availability of fuel are subject to many economic and political factors
beyond our control, and excluding special items provides investors the ability to measure
financial performance in a way that is more indicative of our ongoing performance and is more comparable to
measures reported by other major airlines. Management uses mainline
CASM excluding special items and fuel to evaluate our operating
performance. Amounts may not recalculate due to rounding.  30




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##### Table of Contents




    
    Aircraft fuel and related taxes per ASM increased 44.7% primarily due to a 47.6% increase
in the average price per gallon of fuel to $2.17 in the first quarter of 2010 from $1.47 in
the 2009 period. A 4.3% decrease in gallons of fuel consumed in the 2010 period on 2.4%
lower capacity partially offset the increase.
    
    Since the third quarter of 2008, we have not entered into any new fuel hedging
transactions, and we have no fuel hedging contracts outstanding. We recognized a net loss of
$27 million in the first quarter of 2009 related to our fuel hedging instruments due to the
decline in the price of heating oil in the 2009 period.
    
    Aircraft maintenance expense per ASM decreased 7.8% due principally to a
decrease in the number of engine overhauls performed in the 2010 period as compared to 2009
period as a result of the timing of maintenance cycles.
    
    Other rent and landing fees per ASM increased 5.3% over the 2009 period due to the fixed
nature of space rent.
    
    Other expense per ASM increased 9.5% primarily due to the negative effects of the severe
weather on the East Coast of the United States in the first quarter of 2010. An increase in
the incremental cost of travel redemptions associated with our frequent traveler program,
principally as a result of higher fuel costs, also contributed to the increase in other
expenses.
  Nonoperating Income (Expense):
 Percent2010
    
    
    2009
    
    
    Change(In millions)Nonoperating income (expense):Interest income
    
    $
    5
    
    
    $
    6
    
    
    
    (14.2
    )Interest expense, net
    
    
    (82
    )
    
    
    (71
    )
    
    
    15.9Other, net
    
    
    42
    
    
    
    (13
    )
    
    nmTotal nonoperating expense, net
    
    $
    (35
    )
    
    $
    (78
    )
    
    
    (54.9
    )
    31




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##### Table of Contents



US Airways Results of Operations
  
    
    $5 million of net special charges for aircraft costs as a result of US Airways
previously announced capacity reductions; and
 
    
    $49 million of net realized gains related to sales of certain investments in
auction rate securities, included in nonoperating expense, net.
  
    
    $197 million of net realized losses on settled fuel hedging instruments, offset
by $170 million of net unrealized gains resulting from the application of mark-to-market
accounting for changes in the fair value of fuel hedging instruments. These unrealized gains
were due primarily to the reversal of unrealized losses recognized in prior periods as hedge
transactions settled in the 2009 period;
 
    
    $6 million of net special charges consisting of $5 million in aircraft costs and
$1 million in severance charges, both as a result of capacity reductions; and
 
    
    $7 million in other-than-temporary non-cash impairment charges for US Airways
investments in auction rate securities, included in nonoperating expense, net.
    32




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Three Months Ended
    
    
    PercentMarch 31,
    
    
    Change2010
    
    
    2009
    
    
    2010-2009MainlineRevenue passenger miles (millions) (a)
    
    
    13,053
    
    
    
    13,309
    
    
    
    (1.9
    )Available seat miles (millions) (b)
    
    
    16,579
    
    
    
    16,979
    
    
    
    (2.4
    )Passenger load factor (percent) (c)
    
    
    78.7
    
    
    
    78.4
    
    
    0.3
    ptsYield (cents) (d)
    
    
    13.01
    
    
    
    12.10
    
    
    
    7.5Passenger revenue per available seat mile (cents) (e)
    
    
    10.24
    
    
    
    9.49
    
    
    
    8.0Aircraft at end of period
    
    
    347
    
    
    
    347
    
    
    
    Fuel consumption (gallons in millions)
    
    
    247
    
    
    
    258
    
    
    
    (4.3
    )Average aircraft fuel price including related taxes (dollars per gallon)
    
    
    2.17
    
    
    
    1.47
    
    
    
    47.6Express (f)Revenue passenger miles (millions) (a)
    
    
    2,270
    
    
    
    2,374
    
    
    
    (4.4
    )Available seat miles (millions) (b)
    
    
    3,279
    
    
    
    3,455
    
    
    
    (5.1
    )Passenger load factor (percent) (c)
    
    
    69.2
    
    
    
    68.7
    
    
    0.5
    ptsYield (cents) (d)
    
    
    26.49
    
    
    
    23.22
    
    
    
    14.1Passenger revenue per available seat mile (cents) (e)
    
    
    18.34
    
    
    
    15.95
    
    
    
    14.9Aircraft at end of period
    
    
    282
    
    
    
    293
    
    
    
    (3.8
    )Fuel consumption (gallons in millions)
    
    
    77
    
    
    
    81
    
    
    
    (4.9
    )Average aircraft fuel price including related taxes (dollars per gallon)
    
    
    2.20
    
    
    
    1.51
    
    
    
    45.7Total Mainline and ExpressRevenue passenger miles (millions) (a)
    
    
    15,323
    
    
    
    15,683
    
    
    
    (2.3
    )Available seat miles (millions) (b)
    
    
    19,858
    
    
    
    20,434
    
    
    
    (2.8
    )Passenger load factor (percent) (c)
    
    
    77.2
    
    
    
    76.7
    
    
    0.5
    ptsYield (cents) (d)
    
    
    15.01
    
    
    
    13.79
    
    
    
    8.9Passenger revenue per available seat mile (cents) (e)
    
    
    11.58
    
    
    
    10.58
    
    
    
    9.5Total revenue per available seat mile (cents) (g)
    
    
    13.52
    
    
    
    12.19
    
    
    
    10.9Aircraft at end of period
    
    
    629
    
    
    
    640
    
    
    
    (1.7
    )Fuel consumption (gallons in millions)
    
    
    324
    
    
    
    339
    
    
    
    (4.5
    )Average aircraft fuel price including related taxes (dollars per gallon)
    
    
    2.18
    
    
    
    1.48
    
    
    
    47.1
 
 (a)
    
    Revenue passenger mile (RPM)  A basic measure of sales volume. One RPM represents one
passenger flown one mile.(b)
    
    Available seat mile (ASM)  A basic measure of production. One ASM represents one seat
flown one mile.(c)
    
    Passenger 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 RPMs and
expressed in cents per mile.(e)
    
    Passenger revenue per available seat mile (PRASM)  Passenger revenues divided by ASMs.(f)
    
    Express statistics include Piedmont and PSA, as well as operating and financial results from
capacity purchase agreements with Air Wisconsin Airlines Corporation, Republic Airways, Mesa
Airlines, Inc. and Chautauqua Airlines, Inc.(g)
    
    Total revenue per available seat mile (RASM)  Total revenues divided by total mainline and
Express ASMs.  33




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##### Table of Contents



Three Months Ended March 31, 2010
Compared with the
Three Months Ended March 31, 2009
 Operating Revenues:
 Percent2010
    
    
    2009
    
    
    Change(In millions)Operating revenues:Mainline passenger
    
    $
    1,698
    
    
    $
    1,611
    
    
    
    5.4Express passenger
    
    
    601
    
    
    
    551
    
    
    
    9.1Cargo
    
    
    33
    
    
    
    24
    
    
    
    37.1Other
    
    
    353
    
    
    
    305
    
    
    
    15.4Total operating revenues
    
    $
    2,685
    
    
    $
    2,491
    
    
    
    7.8
  
    
    Mainline passenger revenues were $1.7 billion in the first quarter of 2010 as
compared to $1.61 billion in the 2009 period. Mainline RPMs decreased 1.9% as mainline
capacity, as measured by ASMs, decreased 2.4%, resulting in a 0.3 point increase in load
factor to 78.7%. Mainline passenger yield increased 7.5% to 13.01 cents in the first quarter
of 2010 from 12.1 cents in the 2009 period. Mainline PRASM increased 8% to 10.24 cents in the
first quarter of 2010 from 9.49 cents in the 2009 period. Mainline yield and PRASM increased
in the first quarter of 2010 due principally to the increase in passenger demand and
improving pricing environment driven by the recovering global economy.
 
    
    Express passenger revenues were $601 million in the first quarter of 2010, an
increase of $50 million from the 2009 period. Express RPMs decreased by 4.4% as Express
capacity, as measured by ASMs, decreased 5.1%, resulting in a 0.5 point increase in load
factor to 69.2%. Express passenger yield increased by 14.1% to 26.49 cents in the first
quarter of 2010 from 23.22 cents in the 2009 period. Express PRASM increased 14.9% to 18.34
cents in the first quarter of 2010 from 15.95 cents in the 2009 period. The increases in
Express yield and PRASM were the result of the same favorable passenger demand and improving
pricing environment discussed in mainline passenger revenues above.
 
    
    Cargo revenues were $33 million in the first quarter of 2010, an increase of $9
million or 37.1% from the 2009 period. The increase in cargo revenues was driven by an
increase in freight volume as a result of the recovering economic environment as compared to
the 2009 period.
 
    
    Other revenues were $353 million in the first quarter of 2010, an increase of
$48 million or 15.4% from the 2009 period, primarily due to an increase in revenue generated
by US Airways checked bag fees as a result of increases in rates charged. An increase in
revenues associated with US Airways frequent traveler program also contributed to the
increase in other revenues.
  34




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##### Table of Contents



Operating Expenses:
 Percent2010
    
    
    2009
    
    
    Change(In millions)Operating expenses:Aircraft fuel and related taxes
    
    $
    534
    
    
    $
    378
    
    
    
    41.2Loss (gain) on fuel hedging instruments, net:Realized
    
    
    
    
    
    
    197
    
    
    nmUnrealized
    
    
    
    
    
    
    (170
    )
    
    nmSalaries and related costs
    
    
    556
    
    
    
    551
    
    
    
    0.9Aircraft rent
    
    
    171
    
    
    
    178
    
    
    
    (3.8
    )Aircraft maintenance
    
    
    157
    
    
    
    174
    
    
    
    (10.0
    )Other rent and landing fees
    
    
    134
    
    
    
    131
    
    
    
    2.8Selling expenses
    
    
    95
    
    
    
    92
    
    
    
    2.3Special items, net
    
    
    5
    
    
    
    6
    
    
    
    (22.8
    )Depreciation and amortization
    
    
    63
    
    
    
    62
    
    
    
    1.4Other
    
    
    305
    
    
    
    286
    
    
    
    6.6Total mainline operating expenses
    
    
    2,020
    
    
    
    1,885
    
    
    
    7.1Express expenses:Fuel
    
    
    170
    
    
    
    123
    
    
    
    38.5Other
    
    
    505
    
    
    
    509
    
    
    
    (0.8
    )Total Express expenses
    
    
    675
    
    
    
    632
    
    
    
    6.8Total operating expenses
    
    $
    2,695
    
    
    $
    2,517
    
    
    
    7.1
    
    
    Aircraft fuel and related taxes increased 41.2% primarily due to a 47.6% increase in the
average price per gallon of fuel to $2.17 in the first quarter of 2010 from $1.47 in the
2009 period. A 4.3% decrease in gallons of fuel consumed in the 2010 period on 2.4% lower
capacity partially offset the increase.
 
    
    Since the third quarter of 2008, US Airways has not entered into any new fuel
hedging transactions, and US Airways has no fuel hedging contracts outstanding. US Airways
recognized a net loss of $27 million in the first quarter of 2009 related to its fuel
hedging instruments due to the decline in the price of heating oil in the 2009 period.
 
    
    Aircraft maintenance expense decreased 10% due principally to a decrease in the
number of engine overhauls performed in the 2010 period as compared to 2009 period as a
result of the timing of maintenance cycles.
 
    
    Other expense increased 6.6% primarily due to the negative effects of the severe weather
on the East Coast of the United States in the first quarter of 2010. An increase in the
incremental cost of travel redemptions associated with US Airways frequent traveler
program, principally as a result of higher fuel costs, also contributed to the increase in
other expenses.
   35




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##### Table of Contents



Nonoperating Income (Expense):
 Percent2010
    
    
    2009
    
    
    Change(In millions)Nonoperating income (expense):Interest income
    
    $
    5
    
    
    $
    6
    
    
    
    (14.2
    )Interest expense, net
    
    
    (59
    )
    
    
    (61
    )
    
    
    (3.8
    )Other, net
    
    
    41
    
    
    
    (14
    )
    
    nmTotal nonoperating expense, net
    
    $
    (13
    )
    
    $
    (69
    )
    
    
    (82.2
    )
    36




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##### Table of Contents



Liquidity and Capital Resources
  Investments in Marketable Securities
     Sources and Uses of Cash
 US Airways Group
     37




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##### Table of Contents



US Airways
    Commitments
  Citicorp Credit Facility
     38




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##### Table of Contents



2010 Financing Transactions
  Credit Card Processing Agreements
  Aircraft and Engine Purchase Commitments
   Increased
costs of financing, a reduction in the availability of financing and fluctuations in interest rates
could adversely affect our liquidity, operating expenses and 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.
  39




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##### Table of Contents



Covenants and Credit Rating
 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 Any failure to comply with the liquidity covenants contained
in our financing arrangements would likely have a material adverse effect on our business,
financial condition and results of operations
  S&P
    
    Fitch
    
    MoodysLocal Issuer
    
    Issuer Default
    
    CorporateCredit Rating
    
    Credit Rating
    
    Family RatingUS Airways Group
    
    B-
    
    CCC
    
    Caa1US Airways
    
    B-
    
    *
    
    *
 (*)
    
    The credit agencies do not rate these categories for US Airways.  Off-Balance Sheet Arrangements
    40




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##### Table of Contents



Contractual Obligations
  Payments Due by Period2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    Thereafter
    
    
    TotalUS Airways Group (1)Debt (2)
    
    $
    74
    
    
    $
    16
    
    
    $
    116
    
    
    $
    116
    
    
    $
    1,276
    
    
    $
    
    
    
    $
    1,598Interest obligations (3)
    
    
    43
    
    
    
    54
    
    
    
    51
    
    
    
    46
    
    
    
    21
    
    
    
    
    
    
    
    215US Airways (4)Debt and capital lease obligations (5) (6)
    
    
    295
    
    
    
    387
    
    
    
    320
    
    
    
    271
    
    
    
    282
    
    
    
    1,707
    
    
    
    3,262Interest obligations (3) (6)
    
    
    120
    
    
    
    156
    
    
    
    157
    
    
    
    112
    
    
    
    96
    
    
    
    405
    
    
    
    1,046Aircraft purchase and operating lease commitments (7)
    
    
    806
    
    
    
    1,497
    
    
    
    1,441
    
    
    
    1,860
    
    
    
    1,573
    
    
    
    5,795
    
    
    
    12,972Regional capacity purchase agreements (8)
    
    
    765
    
    
    
    1,036
    
    
    
    903
    
    
    
    773
    
    
    
    772
    
    
    
    2,347
    
    
    
    6,596Other US Airways Group subsidiaries (9)
    
    
    9
    
    
    
    9
    
    
    
    9
    
    
    
    7
    
    
    
    6
    
    
    
    1
    
    
    
    41Total
    
    $
    2,112
    
    
    $
    3,155
    
    
    $
    2,997
    
    
    $
    3,185
    
    
    $
    4,026
    
    
    $
    10,255
    
    
    $
    25,730
 
 (1)
    
    These commitments represent those specifically entered into by US Airways Group or joint
commitments entered into by US Airways Group and US Airways under which each entity is jointly
and severally liable.(2)
    
    Excludes $164 million of unamortized debt discount as of March 31, 2010.(3)
    
    For variable-rate debt, future interest obligations are shown above using interest rates in
effect as of March 31, 2010.(4)
    
    Commitments listed separately under US Airways and its wholly owned subsidiaries represent
commitments under agreements entered into separately by those companies.(5)
    
    Excludes $90 million of unamortized debt discount as of March 31, 2010.(6)
    
    Includes $481 million of future principal payments and $209 million of future interest
payments as of March 31, 2010, respectively, related to pass through trust certificates or
EETCs associated with mortgage financings for the purchase of certain aircraft.(7)
    
    Includes $3.12 billion of future minimum lease payments related to EETC leveraged leased
financings of certain aircraft as of March 31, 2010.(8)
    
    Represents minimum payments under capacity purchase agreements with third-party Express
carriers.(9)
    
    Represents operating lease commitments entered into by US Airways Groups other airline
subsidiaries Piedmont and PSA.   41




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##### Table of Contents



Critical Accounting Policies and Estimates
  Recent Accounting Pronouncements
    42




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Market Risk Sensitive Instruments
  Commodity price risk
  Interest rate risk
     43




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##### Table of Contents



Item 4. Controls and Procedures
 Evaluation of disclosure controls and procedures.
  Changes in internal control over financial reporting.
  Limitation on the effectiveness of controls.
   44




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##### Table of Contents



Part II. Other Information
 
 Item 1. Legal Proceedings
   
 Item 1A.
    
    Risk Factors
  Risk Factors Relating to the Company and Industry Related Risks
 US Airways Group could experience significant operating losses in the future.
  Downturns in economic conditions adversely affect our business.
 The airline industry is intensely competitive and
dynamic
 Increased costs of financing, a reduction in the availability of financing and fluctuations in
interest rates could adversely affect our liquidity, operating expenses and results.
   45




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##### Table of Contents



Quantitative and Qualitative Disclosures About Market Risk
 Our business is dependent on the price and availability of aircraft fuel. Continued periods of
high volatility in fuel costs, increased fuel prices and significant disruptions in the supply of
aircraft fuel could have a significant negative impact on our operating results and liquidity.
    Quantitative and Qualitative Disclosures About Market
Risk
 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; and
 
    
    we may have to use our working capital to fund these fixed costs instead of funding
general corporate requirements, including capital expenditures.
  Any failure to comply with the liquidity covenants contained in our financing arrangements would
likely have a material adverse effect on our business, financial condition and results of
operations.
     46




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##### Table of Contents



If our financial condition worsens, provisions in our credit card processing and other commercial
agreements may adversely affect our liquidity.
  Union disputes, employee strikes and other labor-related disruptions may adversely affect our
operations.
     47




---



##### Table of Contents



The inability to maintain labor costs at competitive levels could harm our financial performance.
  If we incur problems with any of our third-party regional operators or third-party service
providers, our operations could be adversely affected by a resulting decline in revenue or
negative public perception about our services.
   We rely heavily on automated systems to operate our business and any failure or disruption of
these systems could harm our business.
  Changes to our business model that are designed to increase revenues may not be successful and may
cause operational difficulties or decreased demand.
   48




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##### Table of Contents



The airline industry is intensely competitive and dynamic.
    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.
  We may be adversely affected by conflicts overseas or terrorist attacks; the travel industry
continues to face ongoing security concerns.
  Changes in government regulation could increase our operating costs and limit our ability to
conduct our business.
   49




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##### Table of Contents



Our ability to operate and grow our route network in the future is dependent on the availability
of adequate facilities and infrastructure throughout our system.
  We are subject to many forms of environmental regulation and may incur substantial costs as a
result.
       50




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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.
    Interruptions or disruptions in service at one of our hub airports or our focus city 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 or the aircraft of our regional operators.
   51




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##### Table of Contents



Delays in scheduled aircraft deliveries or other loss of anticipated fleet capacity may adversely
impact our operations and financial results.
  Our business is subject to weather factors and seasonal variations in airline travel, which cause
our results to fluctuate.
  Increases in insurance costs or reductions in insurance coverage may adversely impact our
operations and financial results.
  We may be adversely affected by global events that affect travel behavior.
  We are exposed to foreign currency exchange rate fluctuations.
  The use of US Airways Groups net operating losses and certain other tax attributes could be
limited in the future.
   52




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##### Table of Contents



Risks Relating to Our Common Stock
 The price of our common stock has recently been and may in the future 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.
  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.
  53




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##### Table of Contents



Our charter documents include provisions limiting voting and ownership of our equity interests,
which includes our common stock and our convertible notes, by foreign owners.
   54




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Item 5. Exhibits
 Exhibit No.
    
    Description10.1
    
    
    2010 Annual Incentive Program Under 2008 Equity Incentive Plan.10.2
    
    
    2010 Long Term Incentive Performance Program Under 2008 Equity Incentive Plan.31.1
    
    
    Certification of US Airways Groups Chief Executive Officer pursuant to Rule
13a-14(a)/15d-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)/15d-14(a) under the Securities Exchange Act of 1934, as amended.31.3
    
    
    Certification of US Airways Chief Executive Officer pursuant to Rule
13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as amended.31.4
    
    
    Certification of US Airways Chief Financial Officer pursuant to Rule
13a-14(a)/15d-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 US Airways Chief Executive Officer and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
    
    Management contract or compensatory plan or arrangement.  55




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##### Table of Contents



Signatures
  US Airways Group, Inc. (Registrant)Date: April 26, 2010
    By:
    /s/ Derek J. KerrDerek J. KerrExecutive Vice President and
Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)US Airways, Inc. (Registrant)Date: April 26, 2010
    By:
    /s/ Derek J. KerrDerek J. KerrExecutive Vice President and 
Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)  56




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##### Table of Contents



Exhibit Index
 Exhibit No.
    
    Description10.1
    
    
    2010 Annual Incentive Program Under 2008 Equity Incentive Plan.10.2
    
    
    2010 Long Term Incentive Performance Program Under 2008 Equity Incentive Plan.31.1
    
    
    Certification of US Airways Groups Chief Executive Officer pursuant to Rule
13a-14(a)/15d-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)/15d-14(a) under the Securities Exchange Act of 1934, as amended.31.3
    
    
    Certification of US Airways Chief Executive Officer pursuant to Rule
13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as amended.31.4
    
    
    Certification of US Airways Chief Financial Officer pursuant to Rule
13a-14(a)/15d-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 US Airways Chief Executive Officer and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
    
    Management contract or compensatory plan or arrangement.  57