##### 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 September 30, 2009
 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.
  (Commission File No. 1-8444)
54-1194634 (IRS Employer Identification No.)
 
 US Airways, Inc.
  (Commission File No. 1-8442)
53-0218143 (IRS Employer Identification No.)
 
 
 
 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 September 30, 2009
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
    
    
    17Condensed Consolidated Balance Sheets
    
    
    18Condensed Consolidated Statements of Cash Flows
    
    
    19Notes to the Condensed Consolidated Financial Statements
    
    
    20Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    28Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    60Item 4. Controls and Procedures
    
    
    61Part II. Other InformationItem 1. Legal Proceedings
    
    
    62Item 1A. Risk Factors
    
    
    62Item 6. Exhibits
    
    
    71Signatures
    
    
    72Exhibit 2.1Exhibit 3.1Exhibit 10.1Exhibit 10.2Exhibit 10.3Exhibit 10.4Exhibit 10.5Exhibit 31.1Exhibit 31.2Exhibit 31.3Exhibit 31.4Exhibit 32.1Exhibit 32.2
   2




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##### Table of Contents



Note Concerning Forward-Looking Statements
  
    
    the impact of future significant operating losses;
 
    
    economic conditions and their impact on passenger demand and related revenues;
 
    
    a reduction in the availability of financing and changes in prevailing interest rates
that result in increased costs of financing;
 
    
    our high level of fixed obligations and our ability to obtain and maintain financing for
operations and other purposes and operate pursuant to the terms of our financing facilities
(particularly the financial covenants);
 
    
    the impact of fuel price volatility, significant disruptions in the supply of aircraft
fuel and further significant increases to fuel prices;
 
    
    our ability to maintain adequate liquidity;
 
    
    labor costs and relations with unionized employees generally and the impact and outcome
of labor negotiations, including our ability to complete the integration of the labor groups
of US Airways Group and America West Holdings;
 
    
    our reliance on vendors and service providers and our ability to obtain and maintain
commercially reasonable terms with those vendors and service providers;
 
    
    our reliance on automated systems and the impact of any failure or disruption of these
systems;
 
    
    the impact of the integration of our business units;
 
    
    the impact of changes in our business model;
 
    
    competitive practices in the industry, including significant fare restructuring
activities, capacity reductions and in court or out of court restructuring by major
airlines;
 
    
    the impact of industry consolidation;
 
    
    our ability to attract and retain qualified personnel;
 
    
    the impact of global instability, including the current instability in the Middle East,
the continuing impact of the military presence in Iraq and Afghanistan and 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;
 
    
    changes in government legislation and regulation;
 
    
    our ability to obtain and maintain adequate facilities and infrastructure to operate and
grow our route network;
 
    
    the impact of environmental laws and regulations;
  3




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##### Table of Contents




    
    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;
 
    
    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 foreign currency exchange rate fluctuations;
 
    
    our ability to use NOLs and certain other tax attributes;
 
    
    our ability to maintain contracts that are critical to our operations;
 
    
    our ability to attract and retain customers; 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
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Operating revenues:Mainline passenger
    
    $
    1,757
    
    
    $
    2,197
    
    
    $
    5,092
    
    
    $
    6,364Express passenger
    
    
    662
    
    
    
    771
    
    
    
    1,856
    
    
    
    2,230Cargo
    
    
    23
    
    
    
    37
    
    
    
    67
    
    
    
    111Other
    
    
    277
    
    
    
    256
    
    
    
    817
    
    
    
    652Total operating revenues
    
    
    2,719
    
    
    
    3,261
    
    
    
    7,832
    
    
    
    9,357Operating expenses:Aircraft fuel and related taxes
    
    
    534
    
    
    
    1,110
    
    
    
    1,353
    
    
    
    3,018Loss (gain) on fuel hedging instruments, net
    
    
    2
    
    
    
    420
    
    
    
    7
    
    
    
    (80
    )Salaries and related costs
    
    
    553
    
    
    
    567
    
    
    
    1,653
    
    
    
    1,701Express expenses
    
    
    654
    
    
    
    844
    
    
    
    1,882
    
    
    
    2,400Aircraft rent
    
    
    171
    
    
    
    183
    
    
    
    523
    
    
    
    544Aircraft maintenance
    
    
    174
    
    
    
    188
    
    
    
    532
    
    
    
    601Other rent and landing fees
    
    
    148
    
    
    
    137
    
    
    
    422
    
    
    
    424Selling expenses
    
    
    99
    
    
    
    120
    
    
    
    291
    
    
    
    340Special items, net
    
    
    15
    
    
    
    8
    
    
    
    22
    
    
    
    67Depreciation and amortization
    
    
    63
    
    
    
    52
    
    
    
    185
    
    
    
    159Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    622Other
    
    
    300
    
    
    
    321
    
    
    
    859
    
    
    
    982Total operating expenses
    
    
    2,713
    
    
    
    3,950
    
    
    
    7,729
    
    
    
    10,778Operating income (loss)
    
    
    6
    
    
    
    (689
    )
    
    
    103
    
    
    
    (1,421
    )Nonoperating income (expense):Interest income
    
    
    5
    
    
    
    19
    
    
    
    17
    
    
    
    69Interest expense, net
    
    
    (81
    )
    
    
    (58
    )
    
    
    (229
    )
    
    
    (176
    )Other, net
    
    
    (10
    )
    
    
    (135
    )
    
    
    (16
    )
    
    
    (140
    )Total nonoperating expense, net
    
    
    (86
    )
    
    
    (174
    )
    
    
    (228
    )
    
    
    (247
    )Loss before income taxes
    
    
    (80
    )
    
    
    (863
    )
    
    
    (125
    )
    
    
    (1,668
    )Income tax provision
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    3Net loss
    
    $
    (80
    )
    
    $
    (866
    )
    
    $
    (125
    )
    
    $
    (1,671
    )Loss per common share:Basic loss per common share
    
    $
    (0.60
    )
    
    $
    (8.46
    )
    
    $
    (1.01
    )
    
    $
    (17.50
    )Diluted loss per common share
    
    $
    (0.60
    )
    
    $
    (8.46
    )
    
    $
    (1.01
    )
    
    $
    (17.50
    )Shares used for computation (in thousands):Basic
    
    
    132,985
    
    
    
    102,406
    
    
    
    123,632
    
    
    
    95,522Diluted
    
    
    132,985
    
    
    
    102,406
    
    
    
    123,632
    
    
    
    95,522
   5




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US Airways Group, Inc.
 
 Condensed Consolidated Balance Sheets
 (In millions, except share and per share amounts)
 (Unaudited)
 September 30,
    
    
    December 31,2009
    
    
    2008ASSETSCurrent assetsCash and cash equivalents
    
    $
    1,242
    
    
    $
    1,034Investments in marketable securities
    
    
    
    
    
    
    20Restricted cash
    
    
    
    
    
    
    186Accounts receivable, net
    
    
    341
    
    
    
    293Materials and supplies, net
    
    
    237
    
    
    
    201Prepaid expenses and other
    
    
    485
    
    
    
    684Total current assets
    
    
    2,305
    
    
    
    2,418Property and equipmentFlight equipment
    
    
    3,820
    
    
    
    3,157Ground property and equipment
    
    
    887
    
    
    
    816Less accumulated depreciation and amortization
    
    
    (1,109
    )
    
    
    (954
    )3,598
    
    
    
    3,019Equipment purchase deposits
    
    
    322
    
    
    
    267Total property and equipment
    
    
    3,920
    
    
    
    3,286Other assetsOther intangibles, net of accumulated amortization of $107 million and $87 million, respectively
    
    
    525
    
    
    
    545Restricted cash
    
    
    530
    
    
    
    540Investments in marketable securities
    
    
    228
    
    
    
    187Other assets
    
    
    236
    
    
    
    238Total other assets
    
    
    1,519
    
    
    
    1,510Total assets
    
    $
    7,744
    
    
    $
    7,214LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilitiesCurrent maturities of debt and capital leases
    
    $
    491
    
    
    $
    362Accounts payable
    
    
    347
    
    
    
    797Air traffic liability
    
    
    852
    
    
    
    698Accrued compensation and vacation
    
    
    193
    
    
    
    158Accrued taxes
    
    
    138
    
    
    
    142Other accrued expenses
    
    
    836
    
    
    
    887Total current liabilities
    
    
    2,857
    
    
    
    3,044Noncurrent liabilities and deferred creditsLong-term debt and capital leases, net of current maturities
    
    
    4,135
    
    
    
    3,623Deferred gains and credits, net
    
    
    360
    
    
    
    383Postretirement benefits other than pensions
    
    
    103
    
    
    
    108Employee benefit liabilities and other
    
    
    549
    
    
    
    550Total noncurrent liabilities and deferred credits
    
    
    5,147
    
    
    
    4,664Commitments and contingenciesStockholders deficitCommon stock, $0.01 par value; 400,000,000 shares authorized, 161,518,096 and 161,102,048
shares issued and outstanding at September 30, 2009; 114,527,377 and 114,113,384 shares issued
and outstanding at December 31, 2008
    
    
    2
    
    
    
    1Additional paid-in capital
    
    
    2,103
    
    
    
    1,789Accumulated other comprehensive income
    
    
    109
    
    
    
    65Accumulated deficit
    
    
    (2,461
    )
    
    
    (2,336
    )Treasury stock, common stock, 416,048 and 413,993 shares at September 30, 2009 and December 31,
2008
    
    
    (13
    )
    
    
    (13
    )Total stockholders deficit
    
    
    (260
    )
    
    
    (494
    )Total liabilities and stockholders deficit
    
    $
    7,744
    
    
    $
    7,214
   6




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##### Table of Contents



US Airways Group, Inc.
 
 Condensed Consolidated Statements of Cash Flows
 (In millions)
 (Unaudited)
 Nine Months Ended September 30,2009
    
    
    2008Net cash provided by (used in) operating activities
    
    $
    130
    
    
    $
    (583
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    (676
    )
    
    
    (755
    )Purchases of marketable securities
    
    
    
    
    
    
    (299
    )Sales of marketable securities
    
    
    20
    
    
    
    416Proceeds from sale of other investments
    
    
    
    
    
    
    3Decrease (increase) in long-term restricted cash
    
    
    10
    
    
    
    (117
    )Proceeds from dispositions of property and equipment
    
    
    55
    
    
    
    17Increase in equipment purchase deposits
    
    
    (55
    )
    
    
    (97
    )Net cash used in investing activities
    
    
    (646
    )
    
    
    (832
    )Cash flows from financing activities:Repayments of debt and capital lease obligations
    
    
    (271
    )
    
    
    (205
    )Proceeds from issuance of debt
    
    
    803
    
    
    
    669Deferred financing costs
    
    
    (11
    )
    
    
    (8
    )Proceeds from issuance of common stock, net
    
    
    203
    
    
    
    179Net cash provided by financing activities
    
    
    724
    
    
    
    635Net increase (decrease) in cash and cash equivalents
    
    
    208
    
    
    
    (780
    )Cash and cash equivalents at beginning of period
    
    
    1,034
    
    
    
    1,948Cash and cash equivalents at end of period
    
    $
    1,242
    
    
    $
    1,168Non-cash investing and financing activities:Note payables issued for aircraft purchases
    
    $
    136
    
    
    $
    Interest payable converted to debt
    
    
    29
    
    
    
    Maintenance payable converted to debt
    
    
    13
    
    
    
    Net unrealized gain on available for sale securities
    
    
    (51
    )
    
    
    Supplemental information:Interest paid
    
    $
    165
    
    
    $
    173Income taxes paid
    
    
    
    
    
    
    
   7




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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



December 31, 2008As Adjusted
    
    
    As ReportedLong-term debt and capital leases, net of current maturities
    
    $
    3,623
    
    
    $
    3,634Additional paid-in capital
    
    
    1,789
    
    
    
    1,749Accumulated deficit
    
    
    (2,336
    )
    
    
    (2,307
    )
      9




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##### Table of Contents



2. Special Items, Net
  Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Aircraft costs (a)
    
    $
    10
    
    
    $
    
    
    
    $
    16
    
    
    $
    6Severance and other charges (b)
    
    
    5
    
    
    
    8
    
    
    
    6
    
    
    
    8Merger related transition expenses (c)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35Asset impairment charges (d)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18Special items, net
    
    $
    15
    
    
    $
    8
    
    
    $
    22
    
    
    $
    67
 
 (a)
    
    In connection with previously announced capacity reductions, the Company recorded $10 million
and $16 million in the three and nine months ended September 30, 2009, respectively, in
charges for aircraft costs. The Company also recognized $6 million in aircraft costs in the
nine months ended September 30, 2008.(b)
    
    The Company recorded $5 million and $6 million in severance and other charges in the three
and nine months ended September 30, 2009, respectively. The Company also recognized $8 million
in severance charges related to capacity reductions in the third quarter of 2008.(c)
    
    In connection with the effort to consolidate functions and integrate organizations,
procedures and operations, the Company incurred $35 million of merger related transition
expenses in the first nine months of 2008. These expenses included $12 million in uniform
costs to transition employees to the new US Airways uniforms; $5 million in applicable
employment tax expenses related to contractual benefits granted to certain current and former
employees as a result of the merger; $6 million in compensation expenses for equity awards
granted in connection with the merger to retain key employees through the integration period;
$5 million of aircraft livery costs; $4 million in professional and technical fees related to
the integration of airline operations systems; and $3 million in other expenses.(d)
    
    In the nine months ended September 30, 2008, the Company recorded $18 million in non-cash
impairment charges related to the decline in the fair value of certain spare parts associated
with the Companys Boeing 737 aircraft fleet.  10




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##### Table of Contents



3. Loss Per Common Share
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Basic and diluted loss per share:Net loss
    
    $
    (80
    )
    
    $
    (866
    )
    
    $
    (125
    )
    
    $
    (1,671
    )Weighted average common shares outstanding 
(in thousands)
    
    
    132,985
    
    
    
    102,406
    
    
    
    123,632
    
    
    
    95,522Basic and diluted loss per share
    
    $
    (0.60
    )
    
    $
    (8.46
    )
    
    $
    (1.01
    )
    
    $
    (17.50
    )
    11




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##### Table of Contents



4. Debt
  September 30,
    
    
    December 31,2009
    
    
    2008SecuredCiticorp North America loan, variable interest rate of 2.75%, installments due through 2014
    
    $
    1,168
    
    
    $
    1,184Equipment loans, aircraft pre-delivery payment financings and other notes payable, fixed and
variable interest rates ranging from 1.64% to 10.51%, averaging 4.32%, maturing from 2010 to 2021
    
    
    2,226
    
    
    
    1,674Aircraft enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 7.08%
to 9.01%, averaging 7.79%, maturing from 2015 to 2022
    
    
    505
    
    
    
    540Slot financing, fixed interest rate of 8.08%, interest only payments until due in 2015
    
    
    47
    
    
    
    47Capital lease obligations, interest rate of 8%, installments due through 2021
    
    
    37
    
    
    
    39Senior secured discount notes, variable interest rate of 5.39%, due in 2009
    
    
    32
    
    
    
    324,015
    
    
    
    3,516UnsecuredBarclays prepaid miles, variable interest rate of 5%, interest only payments
    
    
    200
    
    
    
    200Airbus advance, repayments beginning in 2010 through 2018
    
    
    237
    
    
    
    2077% senior convertible notes, interest only payments until due in 2020
    
    
    74
    
    
    
    747.25% convertible senior notes, interest only payments until due in 2014
    
    
    172
    
    
    
    Engine maintenance notes
    
    
    54
    
    
    
    72Industrial development bonds, fixed interest rate of 6.3%, interest only payments until due in 2023
    
    
    29
    
    
    
    29Note payable to Pension Benefit Guaranty Corporation, fixed interest rate of 6%, interest only
payments until due in 2012
    
    
    10
    
    
    
    10Other notes payable, due in 2009 to 2011
    
    
    70
    
    
    
    45846
    
    
    
    637Total long-term debt and capital lease obligations
    
    
    4,861
    
    
    
    4,153Less: Total unamortized discount on debt
    
    
    (235
    )
    
    
    (168
    )Current maturities, less $1 million and $10 million of unamortized discount on debt at September
30, 2009 and December 31, 2008, respectively
    
    
    (491
    )
    
    
    (362
    )Long-term debt and capital lease obligations, net of current maturities
    
    $
    4,135
    
    
    $
    3,623
  7.25% Convertible Senior Notes
      12




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##### Table of Contents



Other 2009 Financing Transactions
      Fair Value of Debt
  5. Income Taxes
      13




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##### Table of Contents



6. Express Expenses
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Aircraft fuel and related taxes
    
    $
    171
    
    
    $
    349
    
    
    $
    438
    
    
    $
    938Salaries and related costs
    
    
    63
    
    
    
    62
    
    
    
    187
    
    
    
    189Capacity purchases
    
    
    271
    
    
    
    269
    
    
    
    802
    
    
    
    798Aircraft rent
    
    
    13
    
    
    
    13
    
    
    
    39
    
    
    
    38Aircraft maintenance
    
    
    19
    
    
    
    20
    
    
    
    62
    
    
    
    59Other rent and landing fees
    
    
    30
    
    
    
    35
    
    
    
    91
    
    
    
    89Selling expenses
    
    
    41
    
    
    
    45
    
    
    
    115
    
    
    
    127Depreciation and amortization
    
    
    6
    
    
    
    6
    
    
    
    18
    
    
    
    18Other expenses
    
    
    40
    
    
    
    45
    
    
    
    130
    
    
    
    144Express expenses
    
    $
    654
    
    
    $
    844
    
    
    $
    1,882
    
    
    $
    2,400
 7. Derivative Instruments
   Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Realized loss (gain)
    
    $
    50
    
    
    $
    (68
    )
    
    $
    382
    
    
    $
    (342
    )Unrealized loss (gain)
    
    
    (48
    )
    
    
    488
    
    
    
    (375
    )
    
    
    262Loss (gain) on fuel hedging instruments, net
    
    $
    2
    
    
    $
    420
    
    
    $
    7
    
    
    $
    (80
    )
  8. Investments in Marketable Securities (Noncurrent)
    14




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##### Table of Contents



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 September 30, 2009Investments in marketable securities (noncurrent)
    
    $
    228
    
    
    $
    
    
    
    $
    
    
    
    $
    228
    
    
    
    (1
    )At December 31, 2008Investments in marketable securities (noncurrent)
    
    $
    187
    
    
    $
    
    
    
    $
    
    
    
    $
    187
    
    
    
    (1
    )Fuel hedging derivatives
    
    
    (375
    )
    
    
    
    
    
    
    (375
    )
    
    
    
    
    
    
    (2
    )
 (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.(2)
    
    As the Companys fuel hedging derivative instruments were not traded on a market exchange,
the fair values were determined using valuation models which included assumptions about
commodity prices based on those observed in the underlying markets. The fair value of fuel
hedging derivatives is recorded in accounts payable on the consolidated balance sheets. Refer
to Note 7 for further discussion of the Companys fuel hedging derivatives.  Investments inMarketableSecurities(Noncurrent)Balance at December 31, 2008
    
    $
    187Unrealized gains recorded to other comprehensive income
    
    
    51Impairment losses included in other nonoperating expense, net
    
    
    (10
    )Balance at September 30, 2009
    
    $
    228
 10. Other Comprehensive Income (Loss)
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net loss
    
    $
    (80
    )
    
    $
    (866
    )
    
    $
    (125
    )
    
    $
    (1,671
    )Unrealized gains on available for sale securities
    
    
    17
    
    
    
    
    
    
    
    51
    
    
    
    Recognition of previous unrealized losses now deemed other-than-temporary
    
    
    
    
    
    
    103
    
    
    
    
    
    
    
    48Pension and other postretirement benefits
    
    
    (2
    )
    
    
    
    
    
    
    (7
    )
    
    
    (3
    )Total comprehensive loss
    
    $
    (65
    )
    
    $
    (763
    )
    
    $
    (81
    )
    
    $
    (1,626
    )
  15




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##### Table of Contents



September 30,
    
    
    December 31,2009
    
    
    2008Pension and other postretirement benefits
    
    $
    58
    
    
    $
    65Accumulated net unrealized gains on available for sale securities
    
    
    51
    
    
    
    Accumulated other comprehensive income
    
    $
    109
    
    
    $
    65
 11. Flight 1549
   12. Stockholders Equity
   13. Slot Exchange
  14. Subsequent Event
   16




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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
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Operating revenues:Mainline passenger
    
    $
    1,757
    
    
    $
    2,197
    
    
    $
    5,092
    
    
    $
    6,364Express passenger
    
    
    662
    
    
    
    771
    
    
    
    1,856
    
    
    
    2,230Cargo
    
    
    23
    
    
    
    37
    
    
    
    67
    
    
    
    111Other
    
    
    316
    
    
    
    288
    
    
    
    930
    
    
    
    742Total operating revenues
    
    
    2,758
    
    
    
    3,293
    
    
    
    7,945
    
    
    
    9,447Operating expenses:Aircraft fuel and related taxes
    
    
    534
    
    
    
    1,110
    
    
    
    1,353
    
    
    
    3,018Loss (gain) on fuel hedging instruments, net
    
    
    2
    
    
    
    420
    
    
    
    7
    
    
    
    (80
    )Salaries and related costs
    
    
    553
    
    
    
    567
    
    
    
    1,653
    
    
    
    1,701Express expenses
    
    
    689
    
    
    
    872
    
    
    
    1,975
    
    
    
    2,485Aircraft rent
    
    
    171
    
    
    
    183
    
    
    
    523
    
    
    
    544Aircraft maintenance
    
    
    174
    
    
    
    188
    
    
    
    532
    
    
    
    601Other rent and landing fees
    
    
    148
    
    
    
    137
    
    
    
    422
    
    
    
    424Selling expenses
    
    
    99
    
    
    
    120
    
    
    
    291
    
    
    
    340Special items, net
    
    
    15
    
    
    
    8
    
    
    
    22
    
    
    
    67Depreciation and amortization
    
    
    65
    
    
    
    55
    
    
    
    192
    
    
    
    166Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    622Other
    
    
    307
    
    
    
    321
    
    
    
    879
    
    
    
    977Total operating expenses
    
    
    2,757
    
    
    
    3,981
    
    
    
    7,849
    
    
    
    10,865Operating income (loss)
    
    
    1
    
    
    
    (688
    )
    
    
    96
    
    
    
    (1,418
    )Nonoperating income (expense):Interest income
    
    
    5
    
    
    
    19
    
    
    
    17
    
    
    
    68Interest expense, net
    
    
    (64
    )
    
    
    (48
    )
    
    
    (189
    )
    
    
    (146
    )Other, net
    
    
    (10
    )
    
    
    (135
    )
    
    
    (18
    )
    
    
    (140
    )Total nonoperating expense, net
    
    
    (69
    )
    
    
    (164
    )
    
    
    (190
    )
    
    
    (218
    )Loss before income taxes
    
    
    (68
    )
    
    
    (852
    )
    
    
    (94
    )
    
    
    (1,636
    )Income tax provision
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    3Net loss
    
    $
    (68
    )
    
    $
    (855
    )
    
    $
    (94
    )
    
    $
    (1,639
    )
   17




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##### Table of Contents



US Airways, Inc.
 
 Condensed Consolidated Balance Sheets
 (In millions, except share and per share amounts)
 (Unaudited)
 September 30,
    
    
    December 31,2009
    
    
    2008ASSETSCurrent assetsCash and cash equivalents
    
    $
    965
    
    
    $
    1,026Investments in marketable securities
    
    
    
    
    
    
    20Restricted cash
    
    
    
    
    
    
    186Accounts receivable, net
    
    
    338
    
    
    
    291Materials and supplies, net
    
    
    199
    
    
    
    163Prepaid expenses and other
    
    
    473
    
    
    
    673Total current assets
    
    
    1,975
    
    
    
    2,359Property and equipmentFlight equipment
    
    
    3,679
    
    
    
    3,017Ground property and equipment
    
    
    860
    
    
    
    791Less accumulated depreciation and amortization
    
    
    (1,059
    )
    
    
    (914
    )3,480
    
    
    
    2,894Equipment purchase deposits
    
    
    322
    
    
    
    267Total property and equipment
    
    
    3,802
    
    
    
    3,161Other assetsOther intangibles, net of accumulated amortization of $100 million and $81 million, respectively
    
    
    489
    
    
    
    508Restricted cash
    
    
    530
    
    
    
    540Investments in marketable securities
    
    
    228
    
    
    
    187Other assets
    
    
    199
    
    
    
    199Total other assets
    
    
    1,446
    
    
    
    1,434Total assets
    
    $
    7,223
    
    
    $
    6,954LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)Current liabilitiesCurrent maturities of debt and capital leases
    
    $
    475
    
    
    $
    346Accounts payable
    
    
    329
    
    
    
    781Payables to related parties, net
    
    
    478
    
    
    
    985Air traffic liability
    
    
    852
    
    
    
    698Accrued compensation and vacation
    
    
    184
    
    
    
    147Accrued taxes
    
    
    139
    
    
    
    142Other accrued expenses
    
    
    807
    
    
    
    867Total current liabilities
    
    
    3,264
    
    
    
    3,966Noncurrent liabilities and deferred creditsLong-term debt and capital leases, net of current maturities
    
    
    2,673
    
    
    
    2,236Deferred gains and credits, net
    
    
    334
    
    
    
    342Postretirement benefits other than pensions
    
    
    102
    
    
    
    107Employee benefit liabilities and other
    
    
    521
    
    
    
    524Total noncurrent liabilities and deferred credits
    
    
    3,630
    
    
    
    3,209Commitments and contingenciesStockholders equity (deficit)Common stock, $1 par value, 1,000 shares issued and outstanding
    
    
    
    
    
    
    Additional paid-in capital
    
    
    2,445
    
    
    
    1,845Accumulated other comprehensive income
    
    
    122
    
    
    
    78Accumulated deficit
    
    
    (2,238
    )
    
    
    (2,144
    )Total stockholders equity (deficit)
    
    
    329
    
    
    
    (221
    )Total liabilities and stockholders equity (deficit)
    
    $
    7,223
    
    
    $
    6,954
   18




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##### Table of Contents



US Airways, Inc.
 
 Condensed Consolidated Statements of Cash Flows
 (In millions)
 (Unaudited)
 Nine Months Ended September 30,2009
    
    
    2008Net cash provided by (used in) operating activities
    
    $
    211
    
    
    $
    (438
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    (672
    )
    
    
    (734
    )Purchases of marketable securities
    
    
    
    
    
    
    (299
    )Sales of marketable securities
    
    
    20
    
    
    
    416Proceeds from sale of other investments
    
    
    
    
    
    
    3Decrease (increase) in long-term restricted cash
    
    
    10
    
    
    
    (117
    )Proceeds from dispositions of property and equipment
    
    
    55
    
    
    
    17Increase in equipment purchase deposits
    
    
    (55
    )
    
    
    (97
    )Net cash used in investing activities
    
    
    (642
    )
    
    
    (811
    )Cash flows from financing activities:Repayments of debt and capital lease obligations
    
    
    (255
    )
    
    
    (189
    )Proceeds from issuance of debt
    
    
    631
    
    
    
    669Deferred financing costs
    
    
    (6
    )
    
    
    (8
    )Net cash provided by financing activities
    
    
    370
    
    
    
    472Net decrease in cash and cash equivalents
    
    
    (61
    )
    
    
    (777
    )Cash and cash equivalents at beginning of period
    
    
    1,026
    
    
    
    1,940Cash and cash equivalents at end of period
    
    $
    965
    
    
    $
    1,163Non-cash investing and financing activities:Forgiveness of intercompany payable to US Airways Group
    
    $
    600
    
    
    $
    Note payables issued for aircraft purchases
    
    
    136
    
    
    
    Interest payable converted to debt
    
    
    29
    
    
    
    Maintenance payable converted to debt
    
    
    13
    
    
    
    Net unrealized gain on available for sale securities
    
    
    (51
    )
    
    
    Supplemental information:Interest paid
    
    $
    126
    
    
    $
    101Income taxes paid
    
    
    
    
    
    
    
   19




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##### Table of Contents



US Airways, Inc.
 
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 1. Basis of Presentation
   Recent Accounting Pronouncements
     20




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##### Table of Contents



21




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##### Table of Contents



2. Special Items, Net
  Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Aircraft costs (a)
    
    $
    10
    
    
    $
    
    
    
    $
    16
    
    
    $
    6Severance and other charges (b)
    
    
    5
    
    
    
    8
    
    
    
    6
    
    
    
    8Merger related transition expenses (c)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35Asset impairment charges (d)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18Special items, net
    
    $
    15
    
    
    $
    8
    
    
    $
    22
    
    
    $
    67
 
 (a)
    
    In connection with previously announced capacity reductions, US Airways recorded $10 million
and $16 million in the three and nine months ended September 30, 2009, respectively, in
charges for aircraft costs. US Airways also recognized $6 million in aircraft costs in the
nine months ended September 30, 2008.(b)
    
    US Airways recorded $5 million and $6 million in severance and other charges in the three and
nine months ended September 30, 2009, respectively. US Airways also recognized $8 million in
severance charges related to capacity reductions in the third quarter of 2008.(c)
    
    In connection with the effort to consolidate functions and integrate organizations,
procedures and operations, US Airways incurred $35 million of merger related transition
expenses in the first nine months of 2008. These expenses included $12 million in uniform
costs to transition employees to the new US Airways uniforms; $5 million in applicable
employment tax expenses related to contractual benefits granted to certain current and former
employees as a result of the merger; $6 million in compensation expenses for equity awards
granted in connection with the merger to retain key employees through the integration period;
$5 million of aircraft livery costs; $4 million in professional and technical fees related to
the integration of airline operations systems; and $3 million in other expenses.(d)
    
    In the nine months ended September 30, 2008, US Airways recorded $18 million in non-cash
impairment charges related to the decline in the fair value of certain spare parts associated
with its Boeing 737 aircraft fleet.  22




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##### Table of Contents



3. Debt
  September 30,
    
    
    December 31,2009
    
    
    2008SecuredEquipment loans, aircraft pre-delivery payment financings and other notes payable, fixed and
variable interest rates ranging from 1.64% to 10.51%, averaging 4.32%, maturing from 2010 to 2021
    
    $
    2,226
    
    
    $
    1,674Aircraft enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 7.08%
to 9.01%, averaging 7.79%, maturing from 2015 to 2022
    
    
    505
    
    
    
    540Slot financing, fixed interest rate of 8.08%, interest only payments until due in 2015
    
    
    47
    
    
    
    47Capital lease obligations, interest rate of 8%, installments due through 2021
    
    
    37
    
    
    
    39Senior secured discount notes, variable interest rate of 5.39%, due in 2009
    
    
    32
    
    
    
    322,847
    
    
    
    2,332UnsecuredAirbus advance, repayments beginning in 2010 through 2018
    
    
    237
    
    
    
    207Engine maintenance notes
    
    
    54
    
    
    
    72Industrial development bonds, fixed interest rate of 6.3%, interest only payments until due in 2023
    
    
    29
    
    
    
    29Note payable to Pension Benefit Guaranty Corporation, fixed interest rate of 6%, interest only
payments until due in 2012
    
    
    10
    
    
    
    10Other notes payable, due in 2009 to 2011
    
    
    70
    
    
    
    45400
    
    
    
    363Total long-term debt and capital lease obligations
    
    
    3,247
    
    
    
    2,695Less: Total unamortized discount on debt
    
    
    (99
    )
    
    
    (113
    )Current maturities, less $1 million and $10 million of unamortized discount on debt at September
30, 2009 and December 31, 2008, respectively
    
    
    (475
    )
    
    
    (346
    )Long-term debt and capital lease obligations, net of current maturities
    
    $
    2,673
    
    
    $
    2,236
  2009 Financing Transactions
     Fair Value of Debt
   23




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##### Table of Contents



4. Related Party Transactions
  September 30, 2009
    
    
    December 31, 2008US Airways Group
    
    $
    439
    
    
    $
    949US Airways Groups wholly owned subsidiaries
    
    
    39
    
    
    
    36$
    478
    
    
    $
    985
   5. Income Taxes
      6. Express Expenses
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Aircraft fuel and related taxes
    
    $
    171
    
    
    $
    349
    
    
    $
    438
    
    
    $
    938Salaries and related costs
    
    
    6
    
    
    
    5
    
    
    
    18
    
    
    
    16Capacity purchases
    
    
    425
    
    
    
    419
    
    
    
    1,261
    
    
    
    1,255Other rent and landing fees
    
    
    24
    
    
    
    30
    
    
    
    75
    
    
    
    74Selling expenses
    
    
    41
    
    
    
    45
    
    
    
    115
    
    
    
    127Other expenses
    
    
    22
    
    
    
    24
    
    
    
    68
    
    
    
    75Express expenses
    
    $
    689
    
    
    $
    872
    
    
    $
    1,975
    
    
    $
    2,485
  24




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##### Table of Contents



7. Derivative Instruments
   Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Realized loss (gain)
    
    $
    50
    
    
    $
    (68
    )
    
    $
    382
    
    
    $
    (342
    )Unrealized loss (gain)
    
    
    (48
    )
    
    
    488
    
    
    
    (375
    )
    
    
    262Loss (gain) on fuel hedging instruments, net
    
    $
    2
    
    
    $
    420
    
    
    $
    7
    
    
    $
    (80
    )
  8. Investments in Marketable Securities (Noncurrent)
      25




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##### Table of Contents



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 September 30, 2009Investments in marketable securities (noncurrent)
    
    $
    228
    
    
    $
    
    
    
    $
    
    
    
    $
    228
    
    
    
    (1
    )At December 31, 2008Investments in marketable securities (noncurrent)
    
    $
    187
    
    
    $
    
    
    
    $
    
    
    
    $
    187
    
    
    
    (1
    )Fuel hedging derivatives
    
    
    (375
    )
    
    
    
    
    
    
    (375
    )
    
    
    
    
    
    
    (2
    )
 (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.(2)
    
    As US Airways fuel hedging derivative instruments were not traded on a market exchange, the
fair values were determined using valuation models which included assumptions about commodity
prices based on those observed in the underlying markets. The fair value of fuel hedging
derivatives is recorded in accounts payable on the consolidated balance sheets. Refer to Note
7 for further discussion of US Airways fuel hedging derivatives.  Investments inMarketableSecurities(Noncurrent)Balance at December 31, 2008
    
    $
    187Unrealized gains recorded to other comprehensive income
    
    
    51Impairment losses included in other nonoperating expense, net
    
    
    (10
    )Balance at September 30, 2009
    
    $
    228
 10. Other Comprehensive Income (Loss)
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net loss
    
    $
    (68
    )
    
    $
    (855
    )
    
    $
    (94
    )
    
    $
    (1,639
    )Unrealized gains on available for sale securities
    
    
    17
    
    
    
    
    
    
    
    51
    
    
    
    Recognition of previous unrealized losses now deemed other-than-temporary
    
    
    
    
    
    
    103
    
    
    
    
    
    
    
    48Other postretirement benefits
    
    
    (2
    )
    
    
    
    
    
    
    (7
    )
    
    
    (2
    )Total comprehensive loss
    
    $
    (53
    )
    
    $
    (752
    )
    
    $
    (50
    )
    
    $
    (1,593
    )
  September 30,
    
    
    December 31,2009
    
    
    2008Other postretirement benefits
    
    $
    71
    
    
    $
    78Accumulated net unrealized gains on available for sale securities
    
    
    51
    
    
    
    Accumulated other comprehensive income
    
    $
    122
    
    
    $
    78
  26




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##### Table of Contents



11. Flight 1549
   12. Slot Exchange
  13. Subsequent Event
   27




---



##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
  Background
   U.S. Airline Industry Environment
       28




---



##### Table of Contents



US Airways
    Capacity and Fleet Reductions
   Cost Control
   29




---



##### Table of Contents



Liquidity
  September 30,
    
    
    December 31,2009
    
    
    2008(In millions)Cash, cash equivalents and short-term investments in marketable securities
    
    $
    1,242
    
    
    $
    1,054Short and long-term restricted cash
    
    
    530
    
    
    
    726Long-term investments in marketable securities
    
    
    228
    
    
    
    187Total cash, cash equivalents, investments in marketable securities and restricted cash
    
    $
    2,000
    
    
    $
    1,967
   Current Financial Results and Outlook
      30




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##### Table of Contents



Customer Service
    2009
    
    
    2008
    
    
    Percent Change 2009-2008July
    
    
    August
    
    
    September (e)
    
    
    July
    
    
    August
    
    
    September
    
    
    July
    
    
    August
    
    
    SeptemberOn-time performance (a)
    
    
    80.6
    
    
    
    81.4
    
    
    
    87.9
    
    
    
    78.3
    
    
    
    80.8
    
    
    
    84.1
    
    
    
    2.9
    
    
    
    0.7
    
    
    
    4.5Completion factor (b)
    
    
    98.9
    
    
    
    99.0
    
    
    
    99.5
    
    
    
    98.3
    
    
    
    98.2
    
    
    
    98.8
    
    
    
    0.6
    
    
    
    0.8
    
    
    
    0.7Mishandled baggage (c)
    
    
    2.75
    
    
    
    2.90
    
    
    
    2.14
    
    
    
    4.22
    
    
    
    4.09
    
    
    
    3.09
    
    
    
    (34.8
    )
    
    
    (29.1
    )
    
    
    (30.7
    )Customer complaints (d)
    
    
    1.18
    
    
    
    1.10
    
    
    
    0.99
    
    
    
    2.16
    
    
    
    2.45
    
    
    
    1.90
    
    
    
    (45.4
    )
    
    
    (55.1
    )
    
    
    (47.9
    )
 
 (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)
    
    September 2009 operating statistics are preliminary as the DOT has not issued its September
2009 Air Travel Consumer Report as of the date of this filing.  31




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##### Table of Contents



US Airways Groups Results of Operations
  
    
    $50 million of net realized losses on settled fuel hedging instruments, offset
by $48 million of net unrealized gains resulting from the application of mark-to-market
accounting for changes in the fair value of fuel hedging instruments. In mark-to-market
accounting, the unrealized losses recognized in prior periods are reversed as hedge
transactions are settled in the current period. We were required to use mark-to-market
accounting as our fuel hedging instruments did not meet the requirements for hedge
accounting. If these instruments had qualified for hedge accounting treatment, any unrealized
gains or losses would have been recorded in other comprehensive income, a component of
stockholders equity;
 
    
    $15 million of net special charges consisting of $10 million in aircraft costs
as a result of our previously announced capacity reductions and $5 million in severance and
other charges; and
 
    
    $3 million in other-than-temporary non-cash impairment charges included in
nonoperating expense, net for our investments in auction rate securities.
  
    
    $488 million of net unrealized losses resulting from the application of
mark-to-market accounting for changes in the fair value of fuel hedging instruments, offset
by $68 million of net realized gains on settled fuel hedging instruments;
 
    
    $8 million of net special charges for severance costs as a result of our
capacity reductions; and
 
    
    $127 million in other-than-temporary non-cash impairment charges included in
nonoperating expense, net for our investments in auction rate securities.
  
    
    $382 million of net realized losses on settled fuel hedging instruments, offset
by $375 million of net unrealized gains resulting from the application of mark-to-market
accounting for changes in the fair value of fuel hedging instruments;
 
    
    $22 million of net special charges consisting of $16 million in aircraft costs
as a result of our previously announced capacity reductions and $6 million in severance and
other charges; and
 
    
    $10 million in other-than-temporary non-cash impairment charges for our
investments in auction rate securities as well as a $2 million non-cash asset impairment
charge, all included in nonoperating expense, net.
  
    
    $342 million of net realized gains on settled fuel hedging instruments, offset
by $262 million of net unrealized losses resulting from the application of mark-to-market
accounting for changes in the fair value of fuel hedging instruments;
  32




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##### Table of Contents




    
    $67 million of net special charges consisting of $35 million of merger related
transition expenses, $18 million in non-cash charges related to the decline in the fair value
of certain spare parts associated with our Boeing 737 aircraft fleet, and as a result of our
capacity reductions, $8 million in severance charges and $6 million in aircraft costs; and
 
    
    $140 million in other-than-temporary non-cash impairment charges for our
investments in auction rate securities, a $2 million write off of debt discount and debt
issuance costs in connection with the refinancing of certain aircraft equipment notes, offset
by $8 million in gains on forgiveness of debt, all included in nonoperating expense, net.
     33




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##### Table of Contents



Three Months Ended
    
    
    Percent
    
    
    Nine Months Ended
    
    
    PercentSeptember 30,
    
    
    Change
    
    
    September 30,
    
    
    Change2009
    
    
    2008
    
    
    2009-2008
    
    
    2009
    
    
    2008
    
    
    2009-2008MainlineRevenue passenger miles (millions) (a)
    
    
    15,719
    
    
    
    16,270
    
    
    
    (3.4
    )
    
    
    44,553
    
    
    
    46,952
    
    
    
    (5.1
    )Available seat miles (millions) (b)
    
    
    18,718
    
    
    
    19,402
    
    
    
    (3.5
    )
    
    
    54,007
    
    
    
    57,124
    
    
    
    (5.5
    )Passenger load factor (percent) (c)
    
    
    84.0
    
    
    
    83.9
    
    

    0.1
    pts
    

    82.5
    
    
    
    82.2
    
    

    0.3
ptsYield (cents) (d)
    
    
    11.18
    
    
    
    13.50
    
    
    
    (17.2
    )
    
    
    11.43
    
    
    
    13.56
    
    
    
    (15.7
    )Passenger revenue per available seat mile (cents) (e)
    
    
    9.39
    
    
    
    11.32
    
    
    
    (17.1
    )
    
    
    9.43
    
    
    
    11.14
    
    
    
    (15.4
    )Operating cost per available seat mile (cents) (f)
    
    
    11.00
    
    
    
    16.01
    
    
    
    (31.3
    )
    
    
    10.82
    
    
    
    14.67
    
    
    
    (26.2
    )Passenger enplanements (thousands) (g)
    
    
    13,049
    
    
    
    14,068
    
    
    
    (7.2
    )
    
    
    38,899
    
    
    
    42,014
    
    
    
    (7.4
    )Departures (thousands)
    
    
    115
    
    
    
    125
    
    
    
    (7.5
    )
    
    
    350
    
    
    
    378
    
    
    
    (7.2
    )Aircraft at end of period
    
    
    348
    
    
    
    358
    
    
    
    (2.8
    )
    
    
    348
    
    
    
    358
    
    
    
    (2.8
    )Block hours (thousands) (h)
    
    
    313
    
    
    
    332
    
    
    
    (5.6
    )
    
    
    934
    
    
    
    996
    
    
    
    (6.2
    )Average stage length (miles) (i)
    
    
    1,013
    
    
    
    986
    
    
    
    2.7
    
    
    
    977
    
    
    
    965
    
    
    
    1.3Average passenger journey (miles) (j)
    
    
    1,766
    
    
    
    1,645
    
    
    
    7.4
    
    
    
    1,650
    
    
    
    1,583
    
    
    
    4.3Fuel consumption (gallons in millions)
    
    
    282
    
    
    
    297
    
    
    
    (5.0
    )
    
    
    818
    
    
    
    882
    
    
    
    (7.2
    )Average aircraft fuel price including related taxes
(dollars per gallon)
    
    
    1.89
    
    
    
    3.73
    
    
    
    (49.4
    )
    
    
    1.65
    
    
    
    3.42
    
    
    
    (51.7
    )Full time equivalent employees at end of period
    
    
    31,592
    
    
    
    32,779
    
    
    
    (3.6
    )
    
    
    31,592
    
    
    
    32,779
    
    
    
    (3.6
    )Express (k)Revenue passenger miles (millions) (a)
    
    
    2,873
    
    
    
    2,942
    
    
    
    (2.4
    )
    
    
    8,055
    
    
    
    8,333
    
    
    
    (3.3
    )Available seat miles (millions) (b)
    
    
    3,785
    
    
    
    3,943
    
    
    
    (4.0
    )
    
    
    10,917
    
    
    
    11,434
    
    
    
    (4.5
    )Passenger load factor (percent) (c)
    
    
    75.9
    
    
    
    74.6
    
    

    1.3
    pts
    

    73.8
    
    
    
    72.9
    
    

    0.9
ptsYield (cents) (d)
    
    
    23.06
    
    
    
    26.20
    
    
    
    (12.0
    )
    
    
    23.04
    
    
    
    26.76
    
    
    
    (13.9
    )Passenger revenue per available seat mile (cents) (e)
    
    
    17.50
    
    
    
    19.55
    
    
    
    (10.5
    )
    
    
    17.00
    
    
    
    19.50
    
    
    
    (12.8
    )Operating cost per available seat mile (cents) (f)
    
    
    17.27
    
    
    
    21.40
    
    
    
    (19.3
    )
    
    
    17.24
    
    
    
    20.98
    
    
    
    (17.8
    )Passenger enplanements (thousands) (g)
    
    
    7,235
    
    
    
    7,117
    
    
    
    1.7
    
    
    
    20,264
    
    
    
    20,382
    
    
    
    (0.6
    )Aircraft at end of period
    
    
    288
    
    
    
    296
    
    
    
    (2.7
    )
    
    
    288
    
    
    
    296
    
    
    
    (2.7
    )Fuel consumption (gallons in millions)
    
    
    89
    
    
    
    92
    
    
    
    (3.6
    )
    
    
    256
    
    
    
    269
    
    
    
    (4.7
    )Average aircraft fuel price including related taxes
(dollars per gallon)
    
    
    1.93
    
    
    
    3.80
    
    
    
    (49.3
    )
    
    
    1.71
    
    
    
    3.49
    
    
    
    (51.0
    )Total Mainline and ExpressRevenue passenger miles (millions) (a)
    
    
    18,592
    
    
    
    19,212
    
    
    
    (3.2
    )
    
    
    52,608
    
    
    
    55,285
    
    
    
    (4.8
    )Available seat miles (millions) (b)
    
    
    22,503
    
    
    
    23,345
    
    
    
    (3.6
    )
    
    
    64,924
    
    
    
    68,558
    
    
    
    (5.3
    )Passenger load factor (percent) (c)
    
    
    82.6
    
    
    
    82.3
    
    

    0.3
pts
    
    
    81.0
    
    
    
    80.6
    
    

    0.4
ptsYield (cents) (d)
    
    
    13.01
    
    
    
    15.45
    
    
    
    (15.8
    )
    
    
    13.21
    
    
    
    15.55
    
    
    
    (15.0
    )Passenger revenue per available seat mile (cents) (e)
    
    
    10.75
    
    
    
    12.71
    
    
    
    (15.4
    )
    
    
    10.70
    
    
    
    12.54
    
    
    
    (14.6
    )Total revenue per available seat mile (cents) (l)
    
    
    12.08
    
    
    
    13.97
    
    
    
    (13.5
    )
    
    
    12.06
    
    
    
    13.65
    
    
    
    (11.6
    )Passenger enplanements (thousands) (g)
    
    
    20,284
    
    
    
    21,185
    
    
    
    (4.2
    )
    
    
    59,163
    
    
    
    62,396
    
    
    
    (5.2
    )Aircraft at end of period
    
    
    636
    
    
    
    654
    
    
    
    (2.8
    )
    
    
    636
    
    
    
    654
    
    
    
    (2.8
    )Fuel consumption (gallons in millions)
    
    
    371
    
    
    
    389
    
    
    
    (4.7
    )
    
    
    1,074
    
    
    
    1,151
    
    
    
    (6.6
    )Average aircraft fuel price including related taxes
(dollars per gallon)
    
    
    1.90
    
    
    
    3.75
    
    
    
    (49.3
    )
    
    
    1.67
    
    
    
    3.44
    
    
    
    (51.5
    )
 
 (a)
    
    Revenue passenger mile (RPM)  A basic measure of sales volume. A RPM represents one
passenger flown one mile.(b)
    
    Available seat mile (ASM)  A basic measure of production. An 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 revenue
passenger miles and expressed in cents per mile.(e)
    
    Passenger revenue per available seat mile (PRASM)  Passenger revenues divided by available
seat miles.(f)
    
    Operating cost per available seat mile (CASM)  Operating expenses divided by available
seat miles.(g)
    
    Passenger enplanements  The number of passengers on board an aircraft including local,
connecting and through passengers.  34




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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 available seat miles. Three Months Ended September 30, 2009
Compared with the
Three Months Ended September 30, 2008
 Operating Revenues:
 Percent2009
    
    
    2008
    
    
    Change(In millions)Operating revenues:Mainline passenger
    
    $
    1,757
    
    
    $
    2,197
    
    
    
    (20.0
    )Express passenger
    
    
    662
    
    
    
    771
    
    
    
    (14.1
    )Cargo
    
    
    23
    
    
    
    37
    
    
    
    (36.5
    )Other
    
    
    277
    
    
    
    256
    
    
    
    8.0Total operating revenues
    
    $
    2,719
    
    
    $
    3,261
    
    
    
    (16.6
    )
  
    
    Mainline passenger revenues were $1.76 billion in the third quarter of 2009 as
compared to $2.2 billion for the 2008 period. Mainline RPMs decreased 3.4% as mainline
capacity, as measured by ASMs, decreased 3.5%, resulting in a 0.1 point increase in load
factor to 84%. Mainline passenger yield decreased 17.2% to 11.18 cents in the third quarter
of 2009 from 13.5 cents in the 2008 period. Mainline PRASM decreased 17.1% to 9.39 cents in
the third quarter of 2009 from 11.32 cents in the 2008 period. Mainline yield and PRASM
decreased in the third quarter of 2009 due principally to the decline in passenger demand and
weak pricing environment driven by the global economic recession.
 
    
    Express passenger revenues were $662 million in the third quarter of 2009, a
decrease of $109 million from the 2008 period. Express RPMs decreased by 2.4% as Express
capacity, as measured by ASMs, decreased 4%, resulting in a 1.3 point increase in load factor
to 75.9%. Express passenger yield decreased by 12% to 23.06 cents in the third quarter of
2009 from 26.2 cents in the 2008 period. Express PRASM decreased 10.5% to 17.5 cents in the
third quarter of 2009 from 19.55 cents in the 2008 period. The decreases in Express yield and
PRASM were the result of the same passenger demand declines and weak pricing environment
discussed in mainline passenger revenues above.
 
    
    Cargo revenues were $23 million in the third quarter of 2009, a decrease of $14
million or 36.5% from the 2008 period. The decrease in cargo revenues was driven by declines
in freight volumes as a result of the contraction of business spending in the current
economic environment as well as a decrease in fuel surcharges in 2009 as compared to the 2008
period.
 
    
    Other revenues were $277 million in the third quarter of 2009, an increase of
$21 million or 8% from the 2008 period primarily due to an increase of $46 million generated
by our first checked bag fees, which were implemented in the third quarter of 2008. This
increase was offset in part by declines in fuel sales to our pro-rate carriers through our
MSC subsidiary driven by lower fuel prices in the 2009 period. A decline in the volume of
passenger ticketing change fees also contributed to this decrease.
  35




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##### Table of Contents



Operating Expenses:
 Percent2009
    
    
    2008
    
    
    Change(In millions)Operating expenses:Aircraft fuel and related taxes
    
    $
    534
    
    
    $
    1,110
    
    
    
    (51.9
    )Loss (gain) on fuel hedging instruments, net:Realized
    
    
    50
    
    
    
    (68
    )
    
    nmUnrealized
    
    
    (48
    )
    
    
    488
    
    
    nmSalaries and related costs
    
    
    553
    
    
    
    567
    
    
    
    (2.5
    )Aircraft rent
    
    
    171
    
    
    
    183
    
    
    
    (6.4
    )Aircraft maintenance
    
    
    174
    
    
    
    188
    
    
    
    (7.5
    )Other rent and landing fees
    
    
    148
    
    
    
    137
    
    
    
    8.2Selling expenses
    
    
    99
    
    
    
    120
    
    
    
    (17.3
    )Special items, net
    
    
    15
    
    
    
    8
    
    
    
    81.6Depreciation and amortization
    
    
    63
    
    
    
    52
    
    
    
    20.2Other
    
    
    300
    
    
    
    321
    
    
    
    (6.4
    )Total mainline operating expenses
    
    
    2,059
    
    
    
    3,106
    
    
    
    (33.7
    )Express expenses:Fuel
    
    
    171
    
    
    
    349
    
    
    
    (51.1
    )Other
    
    
    483
    
    
    
    495
    
    
    
    (2.3
    )Total Express expenses
    
    
    654
    
    
    
    844
    
    
    
    (22.5
    )Total operating expenses
    
    $
    2,713
    
    
    $
    3,950
    
    
    
    (31.3
    )
     Percent2009
    
    
    2008
    
    
    Change(In cents)Mainline CASM:Aircraft fuel and related taxes
    
    
    2.85
    
    
    
    5.72
    
    
    
    (50.2
    )Loss on fuel hedging instruments, net
    
    
    0.01
    
    
    
    2.17
    
    
    
    (99.5
    )Salaries and related costs
    
    
    2.96
    
    
    
    2.92
    
    
    
    1.1Aircraft rent
    
    
    0.91
    
    
    
    0.94
    
    
    
    (2.9
    )Aircraft maintenance
    
    
    0.93
    
    
    
    0.97
    
    
    
    (4.1
    )Other rent and landing fees
    
    
    0.79
    
    
    
    0.71
    
    
    
    12.1Selling expenses
    
    
    0.53
    
    
    
    0.62
    
    
    
    (14.2
    )Special items, net
    
    
    0.08
    
    
    
    0.04
    
    
    
    88.2Depreciation and amortization
    
    
    0.34
    
    
    
    0.27
    
    
    
    24.6Other
    
    
    1.60
    
    
    
    1.65
    
    
    
    (3.0
    )Total mainline CASM
    
    
    11.00
    
    
    
    16.01
    
    
    
    (31.3
    )
  36




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##### Table of Contents




    
    Aircraft fuel and related taxes per ASM decreased 50.2% primarily due to a 49.4% decrease
in the average price per gallon of fuel to $1.89 in the third quarter of 2009 from $3.73 in
the 2008 period. A 5% decrease in gallons of fuel consumed in the 2009 period on 3.5% lower
capacity also contributed to the decrease.
 
    
    Loss on fuel hedging instruments, net per ASM was a loss of 0.01 cent in the
third quarter of 2009 as compared to a loss of 2.17 cents in the third quarter of 2008.
Since the third quarter of 2008, we have not entered into any new transactions as part of
our fuel hedging program and as of September 30, 2009, there were no remaining outstanding
fuel hedging contracts. The net loss in the 2009 period included realized losses of $50
million on settled fuel hedging instruments, offset by net unrealized gains of $48 million.
The unrealized gains are the result of the application of mark-to-market accounting in which
unrealized losses recognized in prior periods are reversed as hedge transactions are settled
in the current period. We recognized net losses from our fuel hedging program in the third
quarter of 2008 due to the significant decline in the price of oil in September 2008, which
generated unrealized losses on certain open fuel hedging instruments as the price of heating
oil fell below the lower limit of those collar transactions.
 
    
    Other rent and landing fees per ASM increased 12.1% despite a decrease in ASMs of 3.5%
over the 2008 period due to rate increases in landing fees and space rent at certain airport
locations as well as the fixed nature of space rent.
 
    
    Selling expenses per ASM decreased 14.2% due to lower credit card fees, booking fees and
commissions paid as a result of a decline in the number and value of tickets sold resulting
from the weakened demand and pricing caused by the economic recession.
 
    
    Depreciation and amortization expense per ASM increased 24.6% due to an increase in the
average number of owned aircraft to 75 in the 2009 period from 57 in the 2008 period, which
increased depreciation expense. The increase in the average number of owned aircraft
included 13 Airbus 320 family, three Embraer 190 and two Airbus 330 aircraft.
  Nonoperating Income (Expense):
 Percent2009
    
    
    2008
    
    
    Change(In millions)Nonoperating income (expense):Interest income
    
    $
    5
    
    
    $
    19
    
    
    
    (75.1
    )Interest expense, net
    
    
    (81
    )
    
    
    (58
    )
    
    
    40.3Other, net
    
    
    (10
    )
    
    
    (135
    )
    
    
    (93.0
    )Total nonoperating expense, net
    
    $
    (86
    )
    
    $
    (174
    )
    
    
    (50.5
    )
    37




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##### Table of Contents



Nine Months Ended September 30, 2009
Compared with the
Nine Months Ended September 30, 2008
 Operating Revenues:
 Percent2009
    
    
    2008
    
    
    Change(In millions)Operating revenues:Mainline passenger
    
    $
    5,092
    
    
    $
    6,364
    
    
    
    (20.0
    )Express passenger
    
    
    1,856
    
    
    
    2,230
    
    
    
    (16.8
    )Cargo
    
    
    67
    
    
    
    111
    
    
    
    (39.3
    )Other
    
    
    817
    
    
    
    652
    
    
    
    25.3Total operating revenues
    
    $
    7,832
    
    
    $
    9,357
    
    
    
    (16.3
    )
  
    
    Mainline passenger revenues were $5.09 billion for the nine months ended
September 30, 2009 as compared to $6.36 billion for the 2008 period. Mainline RPMs decreased
5.1% as mainline capacity, as measured by ASMs, decreased 5.5%, resulting in a 0.3 point
increase in load factor to 82.5%. Mainline passenger yield decreased 15.7% to 11.43 cents in
the first nine months of 2009 from 13.56 cents in the 2008 period. Mainline PRASM decreased
15.4% to 9.43 cents in the first nine months of 2009 from 11.14 cents in the 2008 period.
Mainline yield and PRASM decreased in the first nine months of 2009 due principally to the
decline in passenger demand and weak pricing environment driven by the global economic
recession.
 
    
    Express passenger revenues were $1.86 billion for the nine months ended
September 30, 2009, a decrease of $374 million from the 2008 period. Express RPMs decreased
by 3.3% as Express capacity, as measured by ASMs, decreased 4.5%, resulting in a 0.9 point
increase in load factor to 73.8%. Express passenger yield decreased by 13.9% to 23.04 cents
in the first nine months of 2009 from 26.76 cents in the 2008 period. Express PRASM decreased
12.8% to 17 cents in the first nine months of 2009 from 19.5 cents in the 2008 period. The
decreases in Express yield and PRASM were the result of the same passenger demand declines
and weak pricing environment discussed in mainline passenger revenues above.
 
    
    Cargo revenues were $67 million for the nine months ended September 30, 2009, a
decrease of $44 million or 39.3% from the 2008 period. The decrease in cargo revenues was
driven by declines in freight volumes as a result of the contraction of business spending in
the current economic environment as well as a decrease in fuel surcharges in 2009 as compared
to the 2008 period.
 
    
    Other revenues were $817 million for the nine months ended September 30, 2009,
an increase of $165 million or 25.3% from the 2008 period. The increase was primarily due to
an increase of $221 million generated by our first and second checked bag fees, which were
implemented in the second and third quarters of 2008. This increase was offset in part by
declines in fuel sales to our pro-rate carriers through our MSC subsidiary driven by lower
fuel prices in the 2009 period. A decline in the volume of passenger ticketing change fees
also contributed to this decrease.
  38




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Operating Expenses:
 Percent2009
    
    
    2008
    
    
    Change(In millions)Operating expenses:Aircraft fuel and related taxes
    
    $
    1,353
    
    
    $
    3,018
    
    
    
    (55.2
    )Loss (gain) on fuel hedging instruments, net:Realized
    
    
    382
    
    
    
    (342
    )
    
    nmUnrealized
    
    
    (375
    )
    
    
    262
    
    
    nmSalaries and related costs
    
    
    1,653
    
    
    
    1,701
    
    
    
    (2.8
    )Aircraft rent
    
    
    523
    
    
    
    544
    
    
    
    (3.9
    )Aircraft maintenance
    
    
    532
    
    
    
    601
    
    
    
    (11.4
    )Other rent and landing fees
    
    
    422
    
    
    
    424
    
    
    
    (0.6
    )Selling expenses
    
    
    291
    
    
    
    340
    
    
    
    (14.5
    )Special items, net
    
    
    22
    
    
    
    67
    
    
    
    (67.7
    )Depreciation and amortization
    
    
    185
    
    
    
    159
    
    
    
    16.0Goodwill impairment
    
    
    
    
    
    
    622
    
    
    nmOther
    
    
    859
    
    
    
    982
    
    
    
    (12.5
    )Total mainline operating expenses
    
    
    5,847
    
    
    
    8,378
    
    
    
    (30.2
    )Express expenses:Fuel
    
    
    438
    
    
    
    938
    
    
    
    (53.3
    )Other
    
    
    1,444
    
    
    
    1,462
    
    
    
    (1.2
    )Total Express expenses
    
    
    1,882
    
    
    
    2,400
    
    
    
    (21.6
    )Total operating expenses
    
    $
    7,729
    
    
    $
    10,778
    
    
    
    (28.3
    )
     Percent2009
    
    
    2008
    
    
    Change(In cents)Mainline CASM:Aircraft fuel and related taxes
    
    
    2.50
    
    
    
    5.28
    
    
    
    (52.6
    )Loss (gain) on fuel hedging instruments, net
    
    
    0.01
    
    
    
    (0.14
    )
    
    nmSalaries and related costs
    
    
    3.06
    
    
    
    2.98
    
    
    
    2.8Aircraft rent
    
    
    0.97
    
    
    
    0.95
    
    
    
    1.6Aircraft maintenance
    
    
    0.99
    
    
    
    1.05
    
    
    
    (6.3
    )Other rent and landing fees
    
    
    0.78
    
    
    
    0.74
    
    
    
    5.1Selling expenses
    
    
    0.54
    
    
    
    0.60
    
    
    
    (9.6
    )Special items, net
    
    
    0.04
    
    
    
    0.12
    
    
    
    (65.9
    )Depreciation and amortization
    
    
    0.34
    
    
    
    0.28
    
    
    
    22.7Goodwill impairment
    
    
    
    
    
    
    1.09
    
    
    nmOther
    
    
    1.59
    
    
    
    1.72
    
    
    
    (7.5
    )Total mainline CASM
    
    
    10.82
    
    
    
    14.67
    
    
    
    (26.2
    )
  39




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##### Table of Contents




    
    Aircraft fuel and related taxes per ASM decreased 52.6% primarily due to a 51.7% decrease
in the average price per gallon of fuel to $1.65 in the first nine months of 2009 from $3.42
in the 2008 period. A 7.2% decrease in gallons of fuel consumed in the 2009 period on 5.5%
lower capacity also contributed to the decrease.
 
    
    Loss (gain) on fuel hedging instruments, net per ASM fluctuated to a loss of
0.01 cent in the first nine months of 2009 from a gain of 0.14 cents in the first nine
months of 2008. Since the third quarter of 2008, we have not entered into any new
transactions as part of our fuel hedging program and as of September 30, 2009, there were no
remaining outstanding fuel hedging contracts. The net loss in the 2009 period included
realized losses of $382 million on settled fuel hedging instruments, offset by $375 million
of net unrealized gains. The unrealized gains are the result of the application of
mark-to-market accounting in which unrealized losses recognized in prior periods are
reversed as hedge transactions are settled in the current period. We recognized net gains
from our fuel hedging program in the first nine months of 2008 as the price of heating oil
exceeded the upper limit on certain of our collar transactions.
 
    
    Aircraft maintenance expense per ASM decreased 6.3% due principally to
decreases in the number of engine and landing gear overhauls performed in the 2009 period as
compared to the 2008 period as a result of the timing of maintenance cycles.
 
    
    Other rent and landing fees per ASM increased 5.1% despite a decrease in ASMs of 5.5%
over the 2008 period due to the fixed nature of space rent as well as rate increases in
landing fees and space rent at certain airport locations.
 
    
    Selling expenses per ASM decreased 9.6% due to lower credit card fees, booking fees and
commissions paid as a result of a decline in the number and value of tickets sold resulting
from the weakened demand and pricing caused by the economic recession.
 
    
    Depreciation and amortization expense per ASM increased 22.7% due to an increase in the
average number of owned aircraft to 69 in the 2009 period from 51 in the 2008 period, which
increased depreciation expense. The increase in the average number of owned aircraft
included nine Airbus 320 family, eight Embraer 190 and one Airbus 330 aircraft.
 
    
    Other expense per ASM decreased 7.5% due to a decrease in the incremental cost of travel
awards associated with our frequent traveler program, principally as a result of lower fuel
costs and the decline in the cost of fuel associated with sales to pro-rate carriers through
MSC driven by lower fuel prices in the 2009 period. Our continued focus on overall cost
control also contributed to the decrease.
  Nonoperating Income (Expense):
 Percent2009
    
    
    2008
    
    
    Change(In millions)Nonoperating income (expense):Interest income
    
    $
    17
    
    
    $
    69
    
    
    
    (74.6
    )Interest expense, net
    
    
    (229
    )
    
    
    (176
    )
    
    
    29.8Other, net
    
    
    (16
    )
    
    
    (140
    )
    
    
    (88.2
    )Total nonoperating expense, net
    
    $
    (228
    )
    
    $
    (247
    )
    
    
    (7.8
    )
  40




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41




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##### Table of Contents



US Airways Results of Operations
  
    
    $50 million of net realized losses on settled fuel hedging instruments, offset
by $48 million of net unrealized gains resulting from the application of mark-to-market
accounting for changes in the fair value of fuel hedging instruments. In mark-to-market
accounting, the unrealized losses recognized in prior periods are reversed as hedge
transactions are settled in the current period. US Airways was required to use mark-to-market
accounting as its fuel hedging instruments did not meet the requirements for hedge
accounting. If these instruments had qualified for hedge accounting treatment, any unrealized
gains or losses would have been recorded in other comprehensive income, a component of
stockholders equity;
 
    
    $15 million of net special charges consisting of $10 million in aircraft costs
as a result of US Airways previously announced capacity reductions and $5 million in
severance and other charges; and
 
    
    $3 million in other-than-temporary non-cash impairment charges included in
nonoperating expense, net for US Airways investments in auction rate securities.
  
    
    $488 million of net unrealized losses resulting from the application of
mark-to-market accounting for changes in the fair value of fuel hedging instruments, offset
by $68 million of net realized gains on settled fuel hedging instruments;
 
    
    $8 million of net special charges for severance costs as a result of US Airways
capacity reductions; and
 
    
    $127 million in other-than-temporary non-cash impairment charges included in
nonoperating expense, net for US Airways investments in auction rate securities.
  
    
    $382 million of net realized losses on settled fuel hedging instruments, offset
by $375 million of net unrealized gains resulting from the application of mark-to-market
accounting for changes in the fair value of fuel hedging instruments;
 
    
    $22 million of net special charges consisting of $16 million in aircraft costs
as a result of US Airways previously announced capacity reductions and $6 million in
severance and other charges; and
 
    
    $10 million in other-than-temporary non-cash impairment charges for US Airways
investments in auction rate securities as well as a $2 million non-cash asset impairment
charge, all included in nonoperating expense, net.
  42




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##### Table of Contents




    
    $342 million of net realized gains on settled fuel hedging instruments, offset
by $262 million of net unrealized losses resulting from the application of mark-to-market
accounting for changes in the fair value of fuel hedging instruments;
 
    
    $67 million of net special charges consisting of $35 million of merger related
transition expenses, $18 million in non-cash charges related to the decline in the fair value
of certain spare parts associated with US Airways Boeing 737 aircraft fleet, and as a result
of US Airways capacity reductions, $8 million in severance charges and $6 million in
aircraft costs; and
 
    
    $140 million in other-than-temporary non-cash impairment charges for US Airways
investments in auction rate securities, a $2 million write off of debt discount and debt
issuance costs in connection with the refinancing of certain aircraft equipment notes, offset
by $8 million in gains on forgiveness of debt, all included in nonoperating expense, net.
     43




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Three Months Ended
    
    
    Percent
    
    
    Nine Months Ended
    
    
    PercentSeptember 30,
    
    
    Change
    
    
    September 30,
    
    
    Change2009
    
    
    2008
    
    
    2009-2008
    
    
    2009
    
    
    2008
    
    
    2009-2008MainlineRevenue passenger miles (millions) (a)
    
    
    15,719
    
    
    
    16,270
    
    
    
    (3.4
    )
    
    
    44,553
    
    
    
    46,952
    
    
    
    (5.1
    )Available seat miles (millions) (b)
    
    
    18,718
    
    
    
    19,402
    
    
    
    (3.5
    )
    
    
    54,007
    
    
    
    57,124
    
    
    
    (5.5
    )Passenger load factor (percent) (c)
    
    
    84.0
    
    
    
    83.9
    
    

    0.1
pts
    
    
    82.5
    
    
    
    82.2
    
    

    0.3
ptsYield (cents) (d)
    
    
    11.18
    
    
    
    13.50
    
    
    
    (17.2
    )
    
    
    11.43
    
    
    
    13.56
    
    
    
    (15.7
    )Passenger revenue per available seat mile (cents) (e)
    
    
    9.39
    
    
    
    11.32
    
    
    
    (17.1
    )
    
    
    9.43
    
    
    
    11.14
    
    
    
    (15.4
    )Aircraft at end of period
    
    
    348
    
    
    
    358
    
    
    
    (2.8
    )
    
    
    348
    
    
    
    358
    
    
    
    (2.8
    )Fuel consumption (gallons in millions)
    
    
    282
    
    
    
    297
    
    
    
    (5.0
    )
    
    
    818
    
    
    
    882
    
    
    
    (7.2
    )Average aircraft fuel price including related taxes
(dollars per gallon)
    
    
    1.89
    
    
    
    3.73
    
    
    
    (49.4
    )
    
    
    1.65
    
    
    
    3.42
    
    
    
    (51.7
    )Express (f)Revenue passenger miles (millions) (a)
    
    
    2,873
    
    
    
    2,942
    
    
    
    (2.4
    )
    
    
    8,055
    
    
    
    8,333
    
    
    
    (3.3
    )Available seat miles (millions) (b)
    
    
    3,785
    
    
    
    3,943
    
    
    
    (4.0
    )
    
    
    10,917
    
    
    
    11,434
    
    
    
    (4.5
    )Passenger load factor (percent) (c)
    
    
    75.9
    
    
    
    74.6
    
    

    1.3
pts
    
    
    73.8
    
    
    
    72.9
    
    

    0.9
ptsYield (cents) (d)
    
    
    23.06
    
    
    
    26.20
    
    
    
    (12.0
    )
    
    
    23.04
    
    
    
    26.76
    
    
    
    (13.9
    )Passenger revenue per available seat mile (cents) (e)
    
    
    17.50
    
    
    
    19.55
    
    
    
    (10.5
    )
    
    
    17.00
    
    
    
    19.50
    
    
    
    (12.8
    )Aircraft at end of period
    
    
    288
    
    
    
    296
    
    
    
    (2.7
    )
    
    
    288
    
    
    
    296
    
    
    
    (2.7
    )Fuel consumption (gallons in millions)
    
    
    89
    
    
    
    92
    
    
    
    (3.6
    )
    
    
    256
    
    
    
    269
    
    
    
    (4.7
    )Average aircraft fuel price including related taxes
(dollars per gallon)
    
    
    1.93
    
    
    
    3.80
    
    
    
    (49.3
    )
    
    
    1.71
    
    
    
    3.49
    
    
    
    (51.0
    )Total Mainline and ExpressRevenue passenger miles (millions) (a)
    
    
    18,592
    
    
    
    19,212
    
    
    
    (3.2
    )
    
    
    52,608
    
    
    
    55,285
    
    
    
    (4.8
    )Available seat miles (millions) (b)
    
    
    22,503
    
    
    
    23,345
    
    
    
    (3.6
    )
    
    
    64,924
    
    
    
    68,558
    
    
    
    (5.3
    )Passenger load factor (percent) (c)
    
    
    82.6
    
    
    
    82.3
    
    

    0.3
pts
    
    
    81.0
    
    
    
    80.6
    
    

    0.4
ptsYield (cents) (d)
    
    
    13.01
    
    
    
    15.45
    
    
    
    (15.8
    )
    
    
    13.21
    
    
    
    15.55
    
    
    
    (15.0
    )Passenger revenue per available seat mile (cents) (e)
    
    
    10.75
    
    
    
    12.71
    
    
    
    (15.4
    )
    
    
    10.70
    
    
    
    12.54
    
    
    
    (14.6
    )Total revenue per available seat mile (cents) (g)
    
    
    12.26
    
    
    
    14.11
    
    
    
    (13.1
    )
    
    
    12.24
    
    
    
    13.78
    
    
    
    (11.2
    )Aircraft at end of period
    
    
    636
    
    
    
    654
    
    
    
    (2.8
    )
    
    
    636
    
    
    
    654
    
    
    
    (2.8
    )Fuel consumption (gallons in millions)
    
    
    371
    
    
    
    389
    
    
    
    (4.7
    )
    
    
    1,074
    
    
    
    1,151
    
    
    
    (6.6
    )Average aircraft fuel price including related taxes
(dollars per gallon)
    
    
    1.90
    
    
    
    3.75
    
    
    
    (49.3
    )
    
    
    1.67
    
    
    
    3.44
    
    
    
    (51.5
    )
 
 (a)
    
    Revenue passenger mile (RPM)  A basic measure of sales volume. A RPM represents one
passenger flown one mile.(b)
    
    Available seat mile (ASM)  A basic measure of production. An 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 revenue
passenger miles and expressed in cents per mile.(e)
    
    Passenger revenue per available seat mile (PRASM)  Passenger revenues divided by available
seat miles.(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 available seat miles.  44




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##### Table of Contents



Three Months Ended September 30, 2009
Compared with the
Three Months Ended September 30, 2008
 Operating Revenues:
 Percent2009
    
    
    2008
    
    
    Change(In millions)Operating revenues:Mainline passenger
    
    $
    1,757
    
    
    $
    2,197
    
    
    
    (20.0
    )Express passenger
    
    
    662
    
    
    
    771
    
    
    
    (14.1
    )Cargo
    
    
    23
    
    
    
    37
    
    
    
    (36.5
    )Other
    
    
    316
    
    
    
    288
    
    
    
    9.5Total operating revenues
    
    $
    2,758
    
    
    $
    3,293
    
    
    
    (16.2
    )
  
    
    Mainline passenger revenues were $1.76 billion in the third quarter of 2009 as
compared to $2.2 billion for the 2008 period. Mainline RPMs decreased 3.4% as mainline
capacity, as measured by ASMs, decreased 3.5%, resulting in a 0.1 point increase in load
factor to 84%. Mainline passenger yield decreased 17.2% to 11.18 cents in the third quarter
of 2009 from 13.5 cents in the 2008 period. Mainline PRASM decreased 17.1% to 9.39 cents in
the third quarter of 2009 from 11.32 cents in the 2008 period. Mainline yield and PRASM
decreased in the third quarter of 2009 due principally to the decline in passenger demand and
weak pricing environment driven by the global economic recession.
 
    
    Express passenger revenues were $662 million in the third quarter of 2009, a
decrease of $109 million from the 2008 period. Express RPMs decreased by 2.4% as Express
capacity, as measured by ASMs, decreased 4%, resulting in a 1.3 point increase in load factor
to 75.9%. Express passenger yield decreased by 12% to 23.06 cents in the third quarter of
2009 from 26.2 cents in the 2008 period. Express PRASM decreased 10.5% to 17.5 cents in the
third quarter of 2009 from 19.55 cents in the 2008 period. The decreases in Express yield and
PRASM were the result of the same passenger demand declines and weak pricing environment
discussed in mainline passenger revenues above.
 
    
    Cargo revenues were $23 million in the third quarter of 2009, a decrease of $14
million or 36.5% from the 2008 period. The decrease in cargo revenues was driven by declines
in freight volumes as a result of the contraction of business spending in the current
economic environment as well as a decrease in fuel surcharges in 2009 as compared to the 2008
period.
 
    
    Other revenues were $316 million in the third quarter of 2009, an increase of
$28 million or 9.5% from the 2008 period primarily due to an increase of $46 million
generated by US Airways first checked bag fees, which were implemented in the third quarter
of 2008. This increase was offset in part by a decline in the volume of passenger ticketing
change fees.
  45




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##### Table of Contents



Operating Expenses:
 Percent2009
    
    
    2008
    
    
    Change(In millions)Operating expenses:Aircraft fuel and related taxes
    
    $
    534
    
    
    $
    1,110
    
    
    
    (51.9
    )Loss (gain) on fuel hedging instruments, net:Realized
    
    
    50
    
    
    
    (68
    )
    
    nmUnrealized
    
    
    (48
    )
    
    
    488
    
    
    nmSalaries and related costs
    
    
    553
    
    
    
    567
    
    
    
    (2.5
    )Aircraft rent
    
    
    171
    
    
    
    183
    
    
    
    (6.4
    )Aircraft maintenance
    
    
    174
    
    
    
    188
    
    
    
    (7.5
    )Other rent and landing fees
    
    
    148
    
    
    
    137
    
    
    
    8.2Selling expenses
    
    
    99
    
    
    
    120
    
    
    
    (17.3
    )Special items, net
    
    
    15
    
    
    
    8
    
    
    
    81.6Depreciation and amortization
    
    
    65
    
    
    
    55
    
    
    
    19.3Other
    
    
    307
    
    
    
    321
    
    
    
    (4.4
    )Total mainline operating expenses
    
    
    2,068
    
    
    
    3,109
    
    
    
    (33.5
    )Express expenses:Fuel
    
    
    171
    
    
    
    349
    
    
    
    (51.1
    )Other
    
    
    518
    
    
    
    523
    
    
    
    (1.1
    )Total Express expenses
    
    
    689
    
    
    
    872
    
    
    
    (21.1
    )Total operating expenses
    
    $
    2,757
    
    
    $
    3,981
    
    
    
    (30.8
    )
    
    
    Aircraft fuel and related taxes decreased 51.9% primarily due to a 49.4% decrease in the
average price per gallon of fuel to $1.89 in the third quarter of 2009 from $3.73 in the
2008 period. A 5% decrease in gallons of fuel consumed in the 2009 period on 3.5% lower
capacity also contributed to the decrease.
 
    
    Loss on fuel hedging instruments, net was a loss of $2 million in the third quarter of
2009 as compared to a loss of $420 million in the third quarter of 2008. Since the third
quarter of 2008, US Airways has not entered into any new transactions as part of its fuel
hedging program and as of September 30, 2009, there were no remaining outstanding fuel
hedging contracts. The net loss in the 2009 period included realized losses of $50 million
on settled fuel hedging instruments, offset by net unrealized gains of $48 million. The
unrealized gains are the result of the application of mark-to-market accounting in which
unrealized losses recognized in prior periods are reversed as hedge transactions are settled
in the current period. US Airways recognized net losses from its fuel hedging program in the
third quarter of 2008 due to the significant decline in the price of oil in September 2008,
which generated unrealized losses on certain open fuel hedging instruments as the price of
heating oil fell below the lower limit of those collar transactions.
 
    
    Other rent and landing fees increased 8.2% despite a 3.5% decrease in capacity over the
2008 period due to rate increases in landing fees and space rent at certain airport
locations as well as the fixed nature of space rent.
 
    
    Selling expenses decreased 17.3% due to lower credit card fees, booking fees and
commissions paid as a result of a decline in the number and value of tickets sold resulting
from the weakened demand and pricing caused by the economic recession.
 
    
    Depreciation and amortization expense increased 19.3% due to an increase in the average
number of owned aircraft to 75 in the 2009 period from 57 in the 2008 period, which
increased depreciation expense. The increase in the average number of owned aircraft
included 13 Airbus 320 family, three Embraer 190 and two Airbus 330 aircraft.
  46




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Nonoperating Income (Expense):
 Percent2009
    
    
    2008
    
    
    Change(In millions)Nonoperating income (expense):Interest income
    
    $
    5
    
    
    $
    19
    
    
    
    (75.1
    )Interest expense, net
    
    
    (64
    )
    
    
    (48
    )
    
    
    34.1Other, net
    
    
    (10
    )
    
    
    (135
    )
    
    
    (93.0
    )Total nonoperating expense, net
    
    $
    (69
    )
    
    $
    (164
    )
    
    
    (57.8
    )
    47




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##### Table of Contents



Nine Months Ended September 30, 2009
Compared with the
Nine Months Ended September 30, 2008
 Operating Revenues:
 Percent2009
    
    
    2008
    
    
    Change(In millions)Operating revenues:Mainline passenger
    
    $
    5,092
    
    
    $
    6,364
    
    
    
    (20.0
    )Express passenger
    
    
    1,856
    
    
    
    2,230
    
    
    
    (16.8
    )Cargo
    
    
    67
    
    
    
    111
    
    
    
    (39.3
    )Other
    
    
    930
    
    
    
    742
    
    
    
    25.4Total operating revenues
    
    $
    7,945
    
    
    $
    9,447
    
    
    
    (15.9
    )
  
    
    Mainline passenger revenues were $5.09 billion for the nine months ended
September 30, 2009 as compared to $6.36 billion for the 2008 period. Mainline RPMs decreased
5.1% as mainline capacity, as measured by ASMs, decreased 5.5%, resulting in a 0.3 point
increase in load factor to 82.5%. Mainline passenger yield decreased 15.7% to 11.43 cents in
the first nine months of 2009 from 13.56 cents in the 2008 period. Mainline PRASM decreased
15.4% to 9.43 cents in the first nine months of 2009 from 11.14 cents in the 2008 period.
Mainline yield and PRASM decreased in the first nine months of 2009 due principally to the
decline in passenger demand and weak pricing environment driven by the global economic
recession.
 
    
    Express passenger revenues were $1.86 billion for the nine months ended
September 30, 2009, a decrease of $374 million from the 2008 period. Express RPMs decreased
by 3.3% as Express capacity, as measured by ASMs, decreased 4.5%, resulting in a 0.9 point
increase in load factor to 73.8%. Express passenger yield decreased by 13.9% to 23.04 cents
in the first nine months of 2009 from 26.76 cents in the 2008 period. Express PRASM decreased
12.8% to 17 cents in the first nine months of 2009 from 19.5 cents in the 2008 period. The
decreases in Express yield and PRASM were the result of the same passenger demand declines
and weak pricing environment discussed in mainline passenger revenues above.
 
    
    Cargo revenues were $67 million for the nine months ended September 30, 2009, a
decrease of $44 million or 39.3% from the 2008 period. The decrease in cargo revenues was
driven by declines in freight volumes as a result of the contraction of business spending in
the current economic environment as well as a decrease in fuel surcharges in 2009 as compared
to the 2008 period.
 
    
    Other revenues were $930 million for the nine months ended September 30, 2009,
an increase of $188 million or 25.4% from the 2008 period. The increase was primarily due to
an increase of $221 million generated by US Airways first and second checked bag fees, which
were implemented in the second and third quarters of 2008. This increase was offset in part
by a decline in the volume of passenger ticketing change fees.
  48




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Operating Expenses:
 Percent2009
    
    
    2008
    
    
    Change(In millions)Operating expenses:Aircraft fuel and related taxes
    
    $
    1,353
    
    
    $
    3,018
    
    
    
    (55.2
    )Loss (gain) on fuel hedging instruments, net:Realized
    
    
    382
    
    
    
    (342
    )
    
    nmUnrealized
    
    
    (375
    )
    
    
    262
    
    
    nmSalaries and related costs
    
    
    1,653
    
    
    
    1,701
    
    
    
    (2.8
    )Aircraft rent
    
    
    523
    
    
    
    544
    
    
    
    (3.9
    )Aircraft maintenance
    
    
    532
    
    
    
    601
    
    
    
    (11.4
    )Other rent and landing fees
    
    
    422
    
    
    
    424
    
    
    
    (0.6
    )Selling expenses
    
    
    291
    
    
    
    340
    
    
    
    (14.5
    )Special items, net
    
    
    22
    
    
    
    67
    
    
    
    (67.7
    )Depreciation and amortization
    
    
    192
    
    
    
    166
    
    
    
    15.4Goodwill impairment
    
    
    
    
    
    
    622
    
    
    nmOther
    
    
    879
    
    
    
    977
    
    
    
    (9.8
    )Total mainline operating expenses
    
    
    5,874
    
    
    
    8,380
    
    
    
    (29.9
    )Express expenses:Fuel
    
    
    438
    
    
    
    938
    
    
    
    (53.3
    )Other
    
    
    1,537
    
    
    
    1,547
    
    
    
    (0.6
    )Total Express expenses
    
    
    1,975
    
    
    
    2,485
    
    
    
    (20.5
    )Total operating expenses
    
    $
    7,849
    
    
    $
    10,865
    
    
    
    (27.8
    )
    
    
    Aircraft fuel and related taxes decreased 55.2% primarily due to a 51.7% decrease in the
average price per gallon of fuel to $1.65 in the first nine months of 2009 from $3.42 in the
2008 period. A 7.2% decrease in gallons of fuel consumed in the 2009 period on 5.5% lower
capacity also contributed to the decrease.
 
    
    Loss (gain) on fuel hedging instruments, net fluctuated to a loss of $7 million
in the first nine months of 2009 from a gain of $80 million in the first nine months of
2008. Since the third quarter of 2008, US Airways has not entered into any new transactions
as part of its fuel hedging program and as of September 30, 2009, there were no remaining
outstanding fuel hedging contracts. The net loss in the 2009 period included realized losses
of $382 million on settled fuel hedging instruments, offset by $375 million of net
unrealized gains. The unrealized gains are the result of the application of mark-to-market
accounting in which unrealized losses recognized in prior periods are reversed as hedge
transactions are settled in the current period. US Airways recognized net gains from its
fuel hedging program in the first nine months of 2008 as the price of heating oil exceeded
the upper limit on certain of its collar transactions.
 
    
    Aircraft maintenance expense decreased 11.4% due principally to decreases in the number
of engine and landing gear overhauls performed in the 2009 period as compared to the 2008
period as a result of the timing of maintenance cycles.
 
    
    Selling expenses decreased 14.5% due to lower credit card fees, booking fees and
commissions paid as a result of a decline in the number and value of tickets sold resulting
from the weakened demand and pricing caused by the economic recession.
  49




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
    
    Depreciation and amortization expense increased 15.4% due to an increase in the average
number of owned aircraft to 69 in the 2009 period from 51 in the 2008 period, which
increased depreciation expense. The increase in the average number of owned aircraft
included nine Airbus 320 family, eight Embraer 190 and one Airbus 330 aircraft
 
    
    Other expense decreased 9.8% due to a decrease in the incremental cost of travel awards
associated with US Airways frequent traveler program, principally as a result of lower fuel
costs. US Airways continued focus on overall cost control also contributed to the decrease.
  Nonoperating Income (Expense):
 Percent2009
    
    
    2008
    
    
    Change(In millions)Nonoperating income (expense):Interest income
    
    $
    17
    
    
    $
    68
    
    
    
    (74.6
    )Interest expense, net
    
    
    (189
    )
    
    
    (146
    )
    
    
    29.0Other, net
    
    
    (18
    )
    
    
    (140
    )
    
    
    (87.1
    )Total nonoperating expense, net
    
    $
    (190
    )
    
    $
    (218
    )
    
    
    (13.0
    )
    50




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Liquidity and Capital Resources
  Investments in Marketable Securities
     Sources and Uses of Cash
 US Airways Group
     51




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US Airways
    Commitments
  Citicorp Credit Facility
    52




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7.25% Convertible Senior Notes
      Other 2009 Financing Transactions
   53




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Credit Card Processing Agreements
  Aircraft and Engine Purchase Commitments
     54




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Covenants and Credit Rating
   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.   55




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Off-Balance Sheet Arrangements
   Contractual Obligations
  Payments Due by Period2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    Thereafter
    
    
    TotalUS Airways Group (1)Debt (2)
    
    $
    
    
    
    $
    33
    
    
    $
    116
    
    
    $
    99
    
    
    $
    16
    
    
    $
    1,350
    
    
    $
    1,614Interest obligations (3)
    
    
    15
    
    
    
    59
    
    
    
    56
    
    
    
    51
    
    
    
    48
    
    
    
    55
    
    
    
    284US Airways (4)Debt and capital lease obligations (5) (6)
    
    
    148
    
    
    
    403
    
    
    
    335
    
    
    
    298
    
    
    
    248
    
    
    
    1,815
    
    
    
    3,247Interest obligations (3) (6)
    
    
    37
    
    
    
    138
    
    
    
    153
    
    
    
    135
    
    
    
    92
    
    
    
    431
    
    
    
    986Aircraft purchase and operating lease commitments (7)
    
    
    698
    
    
    
    2,394
    
    
    
    2,213
    
    
    
    1,610
    
    
    
    737
    
    
    
    5,869
    
    
    
    13,521Regional capacity purchase agreements (8)
    
    
    247
    
    
    
    1,030
    
    
    
    1,050
    
    
    
    915
    
    
    
    784
    
    
    
    2,812
    
    
    
    6,838Other US Airways Group subsidiaries (9)
    
    
    2
    
    
    
    2
    
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    7Total
    
    $
    1,147
    
    
    $
    4,059
    
    
    $
    3,924
    
    
    $
    3,109
    
    
    $
    1,926
    
    
    $
    12,332
    
    
    $
    26,497
 
 (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 $136 million of unamortized debt discount as of September 30, 2009.(3)
    
    For variable-rate debt, future interest obligations are shown above using interest rates in
effect as of September 30, 2009.(4)
    
    Commitments listed separately under US Airways and its wholly owned subsidiaries represent
commitments under agreements entered into separately by those companies.(5)
    
    Excludes $99 million of unamortized debt discount as of September 30, 2009.(6)
    
    Includes $505 million of future principal payments and $229 million of future interest
payments as of September 30, 2009, respectively, related to pass through trust certificates or
EETCs associated with mortgage financings for the purchase of certain aircraft.(7)
    
    Includes $3.27 billion of future minimum lease payments related to EETC leveraged leased
financings of certain aircraft as of September 30, 2009.(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.   56




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Critical Accounting Policies and Estimates
  Impairment of Intangible and Other Assets
   Recent Accounting Pronouncements
     57




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##### Table of Contents



December 31, 2008As Adjusted
    
    
    As ReportedLong-term debt and capital leases, net of current maturities
    
    $
    3,623
    
    
    $
    3,634Additional paid-in capital
    
    
    1,789
    
    
    
    1,749Accumulated deficit
    
    
    (2,336
    )
    
    
    (2,307
    )
     58




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59




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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
     60




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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.
   61




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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.
    62




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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.
    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.
   63




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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.
  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.
   64




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##### Table of Contents



We rely heavily on automated systems to operate our business and any failure or disruption of
these systems could harm our business.
  The integration of our business units following the merger continues to present significant
challenges.
  Changes to our business model that are designed to increase revenues may not be successful and may
cause operational difficulties or decreased demand.
  The airline industry is intensely competitive and dynamic.
   Industry consolidation could weaken our competitive position.
  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.
   65




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##### Table of Contents



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.
     The inability to maintain labor costs at competitive levels could harm our financial performance.
   66




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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.
        Ongoing data security compliance requirements could increase our costs, and any significant data
breach could harm our business, financial condition or results of operations.
    67




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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.
  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.
   68




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##### Table of Contents



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 NOLs and certain other tax attributes could be limited in the
future.
  Risks Relating 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.
   69




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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 of our equity interests,
which includes our common stock and our convertible notes, by foreign owners.
   70




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##### Table of Contents



Item 6.
    
    Exhibits
 Exhibit No.
    
    Description2.1
    
    
    Mutual Asset Purchase and Sale Agreement dated as of August 11, 2009 among Delta Air
Lines, Inc., US Airways, Inc. and US Airways Group, Inc.*3.1
    
    
    Certificate of Amendment to Amended and Restated Certificate of Incorporation of US
Airways Group, Inc., effective as of July 24, 2009.10.1
    
    
    Amendment No. 4 to the Amended and Restated Airbus A320 Family Aircraft Purchase
Agreement dated as of October 2, 2007 between Airbus S.A.S. and US Airways, Inc.*10.2
    
    
    Amendment No. 4 to the A330 Purchase Agreement dated as of October 2, 2007 between
Airbus S.A.S. and US Airways, Inc.*10.3
    
    
    Amendment No. 3 to the Amended and Restated Airbus A350 XWB Purchase Agreement dated as
of October 2, 2007 between Airbus S.A.S. and US Airways, Inc.*10.4
    
    
    Amendment No. 8 to America West Co-Branded Card Agreement dated September 17, 2009 by
and between US Airways Group, Inc. and Barclays Bank Delaware.*10.5
    
    
    Amendment No. 9 to America West Co-Branded Card Agreement dated September 21, 2009 by
and between US Airways Group, Inc. and Barclays Bank Delaware.*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.
 
 *
    
    Portions of this exhibit have been omitted under a request for confidential treatment and
filed separately with the United States Securities and Exchange Commission.  71




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##### Table of Contents



Signatures
  US Airways Group, Inc. (Registrant)Date: October 21, 2009
    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: October 21, 2009
    By:
    /s/ Derek J. KerrDerek J. KerrExecutive Vice President and
Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)  72




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Exhibit Index
 Exhibit No.
    
    Description2.1
    
    
    Mutual Asset Purchase and Sale Agreement dated as of August 11, 2009 among Delta Air
Lines, Inc., US Airways, Inc. and US Airways Group, Inc.*3.1
    
    
    Certificate of Amendment to Amended and Restated Certificate of Incorporation of US
Airways Group, Inc., effective as of July 24, 2009.10.1
    
    
    Amendment No. 4 to the Amended and Restated Airbus A320 Family Aircraft Purchase
Agreement dated as of October 2, 2007 between Airbus S.A.S. and US Airways, Inc.*10.2
    
    
    Amendment No. 4 to the A330 Purchase Agreement dated as of October 2, 2007 between
Airbus S.A.S. and US Airways, Inc.*10.3
    
    
    Amendment No. 3 to the Amended and Restated Airbus A350 XWB Purchase Agreement dated as
of October 2, 2007 between Airbus S.A.S. and US Airways, Inc.*10.4
    
    
    Amendment No. 8 to America West Co-Branded Card Agreement dated September 17, 2009 by
and between US Airways Group, Inc. and Barclays Bank Delaware.*10.5
    
    
    Amendment No. 9 to America West Co-Branded Card Agreement dated September 21, 2009 by
and between US Airways Group, Inc. and Barclays Bank Delaware.*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.
 
 *
    
    Portions of this exhibit have been omitted under a request for confidential treatment and
filed separately with the United States Securities and Exchange Commission.  73