##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q


(Mark One)

|  |  |                                                                                        
|- |  | ---------------------------------------------------------------------------------------
|þ |  | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|  |  | For the quarterly period ended September 30, 2003                                      

or

|  |  |                                                                                         
|- |  | ----------------------------------------------------------------------------------------
|o |  | Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
|  |  | For the transition period from to                                                       

Commission file number 1-12649

AMERICA WEST HOLDINGS CORPORATION

(Exact name of registrant as specified in its charter)


|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|DELAWARE                                                       |  | 86-0847214                          
|                                                               |  |                                     
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

|                                            |  |           
|------------------------------------------- |  | ----------
|111 WEST RIO SALADO PARKWAY, TEMPE, ARIZONA |  | 85281     
|                                            |  |           
|(Address of principal executive offices)    |  | (Zip Code)

(480) 693-0800




(Registrants telephone number, including area code)


N/A




(Former name, former address and former fiscal year, if changed since last report)


Commission file number 0-12337

AMERICA WEST AIRLINES, INC.

(Exact name of registrant as specified in its charter)


|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|DELAWARE                                                       |  | 86-0418245                          
|                                                               |  |                                     
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

|                                            |  |           
|------------------------------------------- |  | ----------
|4000 EAST SKY HARBOR BLVD, PHOENIX, ARIZONA |  | 85034     
|                                            |  |           
|(Address of principal executive offices)    |  | (Zip Code)

(480) 693-0800




(Registrants telephone number, including area code)


N/A




(Former name, former address and former fiscal year, if changed since last report)


Indicate by check mark whether each registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2).

Yes

þ No
o


As of October 21, 2003, America West Holdings Corporation has 941,431 shares of
class A common stock and 34,616,013 shares of class B common stock outstanding.
As of October 21, 2003, America West Airlines, Inc. has 1,000 shares of class
B common stock outstanding, all of which are held by America West Holdings
Corporation.





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TABLE OF CONTENTS



|                                                     |                                                                                                |  |  |  |  |  |  | 
|---------------------------------------------------- | ---------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION                      
|                                                     | ITEM 1A. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  AMERICA WEST HOLDINGS CORPORATION.     
|Condensed Consolidated Balance Sheets               
|Condensed Consolidated Statements of Operations     
|Condensed Consolidated Statements of Cash Flows     
|Notes To Condensed Consolidated Financial Statements
|                                                     | ITEM 1B. CONDENSED FINANCIAL STATEMENTS  AMERICA WEST AIRLINES, INC.                         
|Condensed Balance Sheets                            
|Condensed Balance Sheets                            
|Condensed Statements of Operations                  
|Condensed Statements of Cash Flows                  
|Notes to Condensed Financial Statements             
|                                                     | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|LIQUIDITY AND CAPITAL RESOURCES                     
|OTHER INFORMATION                                   
|                                                     | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.                           
|                                                     | ITEM 4. CONTROLS AND PROCEDURES.                                                              
|PART II  OTHER INFORMATION                         
|                                                     | ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.                                            
|                                                     | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.                                  
|                                                     | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.                                                     
|SIGNATURE                                           
|EXHIBIT INDEX                                       
|EX-4.1                                              
|EX-4.2                                              
|EX-4.3                                              
|EX-4.4                                              
|EX-10.1                                             
|EX-10.2                                             
|EX-10.3                                             
|EX-31.1                                             
|EX-31.2                                             
|EX-31.3                                             
|EX-31.4                                             
|EX-32.1                                             
|EX-32.2                                             



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##### Table of Contents






PART I - FINANCIAL INFORMATION

America West Holding Corporation (Holdings or the Company) is the
holding company that owns all of the stock of America West Airlines, Inc.
(AWA). AWA, the eighth largest passenger airline in the United States,
accounted for most of Holdings revenues and expenses in 2003. In
addition, Holdings owns all of the outstanding stock of The Leisure Company
(TLC), which sells individual and group travel packages. This combined
Form 10-Q is filed by both Holdings and AWA and includes the financial
statements of each company in Item 1A and Item 1B, respectively.




|         |  |                                                                                 
|-------- |  | --------------------------------------------------------------------------------
|ITEM 1A. |  | CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  AMERICA WEST HOLDINGS
CORPORATION.

AMERICA WEST HOLDINGS CORPORATION
Condensed Consolidated Balance Sheets
(in thousands except share data)

|                        |                                                |                            |           |               |         |              |           |         |         | 
|----------------------- | ---------------------------------------------- | -------------------------- | --------- | ------------- | ------- | ------------ | --------- | ------- | ------- | 
|                        |                                                |                            |           | September 30, |         | December 31,
|                        |                                                | 2003                       |           | 2002         
|                        |                                                |                            |           |              
|                        |                                                | (unaudited)                |           |               |         |             
|Assets                  |                                               
|Current assets:         |                                                |                            |           |               |         |              |           |        
|                        | Cash and cash equivalents                      |                            | $         | 386,316       |         |              | $         | 335,750 |        
|                        | Short-term investments                         |                            |           | 40,185        |         |              |           | 24,738  |        
|                        | Restricted cash                                |                            |           | 43,876        |         |              |           |        |        
|                        | Accounts receivable, net                       |                            |           | 125,233       |         |              |           | 82,197  |        
|                        | Expendable spare parts and supplies, net       |                            |           | 58,192        |         |              |           | 55,894  |        
|                        | Prepaid expenses                               |                            |           | 152,128       |         |              |           | 110,337 |        
|                        |                                                |                            |           |               |         |              |           |        
|                        |                                                | Total current assets       |           |               | 805,930 |              |           |         | 608,916 | 
|                        |                                                |                            |           |               |         |              |           |        
|Property and equipment: |                                                |                            |           |               |         |              |           |        
|                        | Flight equipment                               |                            |           | 885,684       |         |              |           | 880,446 |        
|                        | Other property and equipment                   |                            |           | 273,641       |         |              |           | 274,329 |        
|                        | Equipment purchase deposits                    |                            |           | 39,050        |         |              |           | 46,050  |        
|                        |                                                |                            |           |               |         |              |           |        
|                        |                                                |                            | 1,198,375 |               |         |              | 1,200,825 |        
|                        | Less accumulated depreciation and amortization |                            |           | 592,350       |         |              |           | 551,065 |        
|                        |                                                |                            |           |               |         |              |           |        
|                        |                                                | Net property and equipment |           |               | 606,025 |              |           |         | 649,760 | 
|                        |                                                |                            |           |               |         |              |           |        
|Other assets:           |                                                |                            |           |               |         |              |           |        
|                        | Investments in debt securities                 |                            |           | 44,688        |         |              |           |        |        
|                        | Restricted cash                                |                            |           | 69,433        |         |              |           | 45,968  |        
|                        | Other assets, net                              |                            |           | 136,965       |         |              |           | 134,309 |        
|                        |                                                |                            |           |               |         |              |           |        
|                        |                                                | Total other assets         |           |               | 251,086 |              |           |         | 180,277 | 
|                        |                                                |                            |           |               |         |              |           |        
|                        |                                                | $                          | 1,663,041 |               |         | $            | 1,438,953 |        
|                        |                                                |                            |           |               |         |              |           |         |        

See accompanying notes to condensed consolidated financial statements.

2



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##### Table of Contents






AMERICA WEST HOLDINGS CORPORATION
Condensed Consolidated Balance Sheets
(in thousands except share data)

|                                         |                                                                                                                                                                                |                            |           |               |         |              |           |          |         | 
|---------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------- | --------- | ------------- | ------- | ------------ | --------- | -------- | ------- | 
|                                         |                                                                                                                                                                                |                            |           | September 30, |         | December 31,
|                                         |                                                                                                                                                                                | 2003                       |           | 2002         
|                                         |                                                                                                                                                                                |                            |           |              
|                                         |                                                                                                                                                                                | (unaudited)                |           |               |         |             
|Liabilities and Stockholders Equity     |                                                                                                                                                                               
|Current liabilities:                     |                                                                                                                                                                                |                            |           |               |         |              |           |         
|                                         | Current maturities of long-term debt                                                                                                                                           |                            | $         | 94,789        |         |              | $         | 19,116   |        
|                                         | Current obligations under capital leases                                                                                                                                       |                            |           | 3,441         |         |              |           | 3,122    |        
|                                         | Accounts payable                                                                                                                                                               |                            |           | 183,198       |         |              |           | 183,304  |        
|                                         | Air traffic liability                                                                                                                                                          |                            |           | 263,118       |         |              |           | 192,450  |        
|                                         | Accrued compensation and vacation benefits                                                                                                                                     |                            |           | 52,645        |         |              |           | 39,076   |        
|                                         | Accrued taxes                                                                                                                                                                  |                            |           | 47,562        |         |              |           | 35,159   |        
|                                         | Other accrued liabilities                                                                                                                                                      |                            |           | 39,279        |         |              |           | 38,607   |        
|                                         |                                                                                                                                                                                |                            |           |               |         |              |           |         
|                                         |                                                                                                                                                                                | Total current liabilities  |           |               | 684,032 |              |           |          | 510,834 | 
|                                         |                                                                                                                                                                                |                            |           |               |         |              |           |         
|Long-term debt, less current maturities  |                                                                                                                                                                                |                            | 700,191   |               |         |              | 700,983   |         
|Capital leases, less current obligations |                                                                                                                                                                                |                            | 8,545     |               |         |              | 11,999    |         
|Deferred credits and other liabilities   |                                                                                                                                                                                |                            | 142,791   |               |         |              | 146,959   |         
|Commitments and contingencies            |                                                                                                                                                                                |                            |           |               |         |              |           |         
|Stockholders equity:                    |                                                                                                                                                                                |                            |           |               |         |              |           |         
|                                         | Preferred stock, $.01 par value. Authorized 48,800,000
shares; no shares issued                                                                                                |                            |           |              |         |              |           |         |        
|                                         | Class A common stock, $.01 par value. Authorized
1,200,000 shares; issued and outstanding 941,431 shares at
September 30, 2003 and December 31, 2002                           |                            |           | 9             |         |              |           | 9        |        
|                                         | Class B common stock, $.01 par value. Authorized 100,000,000
shares; issued and outstanding 50,869,908 shares at September 30, 2003
and 49,055,180 shares at December 31, 2002 |                            |           | 509           |         |              |           | 491      |        
|                                         | Additional paid-in capital                                                                                                                                                     |                            |           | 629,575       |         |              |           | 628,868  |        
|                                         | Accumulated deficit                                                                                                                                                            |                            |           | (206,406      | )       |              |           | (257,014 | )      
|                                         | Accumulated other comprehensive income                                                                                                                                         |                            |           | 10,001        |         |              |           | 2,030    |        
|                                         |                                                                                                                                                                                |                            |           |               |         |              |           |         
|                                         |                                                                                                                                                                                |                            | 433,688   |               |         |              | 374,384   |         
|                                         | Less: Cost of class B common stock in treasury, 16,283,895
shares at September 30, 2003 and December 31, 2002                                                                  |                            |           | (306,206      | )       |              |           | (306,206 | )      
|                                         |                                                                                                                                                                                |                            |           |               |         |              |           |         
|                                         |                                                                                                                                                                                | Total stockholders equity |           |               | 127,482 |              |           |          | 68,178  | 
|                                         |                                                                                                                                                                                |                            |           |               |         |              |           |         
|                                         |                                                                                                                                                                                | $                          | 1,663,041 |               |         | $            | 1,438,953 |         
|                                         |                                                                                                                                                                                |                            |           |               |         |              |           |          |        

See accompanying notes to condensed consolidated financial statements.

3



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AMERICA WEST HOLDINGS CORPORATION
Condensed Consolidated Statements of Operations
(in thousands except per share data)
(unaudited)

|                                                                                                |                                                                          |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |           |           |  
|----------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------ | ----------------------------------------- | ------ | ------------------ | ------- | ----------------- | ------- | ------------- | ------- | ---- | ------ | --------- | --------- | ------------- | -------- | --------- | --------- | -
|                                                                                                |                                                                          |                                           |        | Three Months Ended |         | Nine Months Ended
|                                                                                                |                                                                          |                                           |        | September 30,      |         | September 30,    
|                                                                                                |                                                                          |                                           |        | 2003               |         | 2002              |         | 2003          |         | 2002
|                                                                                                |                                                                          |                                           |        |                    |         |                   |         |               |         |     
|                                                                                                |                                                                          |                                           |        |                    |         |                   |         | (as restated) |         |      |        |           |           | (as restated)
|Operating revenues:                                                                             |                                                                          |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |          
|                                                                                                | Passenger                                                                |                                           | $      | 552,564            |         |                   | $       | 489,327       |         |      | $      | 1,591,496 |           |               | $        | 1,433,611 |          
|                                                                                                | Cargo                                                                    |                                           |        | 6,201              |         |                   |         | 6,045         |         |      |        | 21,101    |           |               |          | 20,620    |          
|                                                                                                | Other                                                                    |                                           |        | 33,537             |         |                   |         | 24,979        |         |      |        | 78,709    |           |               |          | 70,557    |          
|                                                                                                |                                                                          |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |          
|                                                                                                |                                                                          | Total operating revenues                  |        |                    | 592,302 |                   |         |               | 520,351 |      |        |           | 1,691,306 |               |          |           | 1,524,788 |  
|                                                                                                |                                                                          |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |          
|Operating expenses:                                                                             |                                                                          |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |          
|                                                                                                | Salaries and related costs                                               |                                           |        | 156,623            |         |                   |         | 155,100       |         |      |        | 472,765   |           |               |          | 443,669   |          
|                                                                                                | Aircraft rents                                                           |                                           |        | 74,417             |         |                   |         | 76,548        |         |      |        | 221,862   |           |               |          | 220,057   |          
|                                                                                                | Other rents and landing fees                                             |                                           |        | 38,210             |         |                   |         | 39,904        |         |      |        | 115,475   |           |               |          | 119,716   |          
|                                                                                                | Aircraft fuel                                                            |                                           |        | 91,595             |         |                   |         | 81,673        |         |      |        | 271,481   |           |               |          | 213,209   |          
|                                                                                                | Agency commissions                                                       |                                           |        | 5,589              |         |                   |         | 8,357         |         |      |        | 18,072    |           |               |          | 33,114    |          
|                                                                                                | Aircraft maintenance materials and repairs                               |                                           |        | 50,854             |         |                   |         | 57,726        |         |      |        | 173,572   |           |               |          | 186,521   |          
|                                                                                                | Depreciation and amortization                                            |                                           |        | 16,407             |         |                   |         | 18,946        |         |      |        | 51,036    |           |               |          | 53,331    |          
|                                                                                                | Special charges, net                                                     |                                           |        |                   |         |                   |         | (2,000        | )       |      |        | 14,370    |           |               |          | 19,030    |          
|                                                                                                | Other                                                                    |                                           |        | 108,472            |         |                   |         | 124,264       |         |      |        | 332,373   |           |               |          | 358,353   |          
|                                                                                                |                                                                          |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |          
|                                                                                                |                                                                          | Total operating expenses                  |        |                    | 542,167 |                   |         |               | 560,518 |      |        |           | 1,671,006 |               |          |           | 1,647,000 |  
|                                                                                                |                                                                          |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |          
|Operating income (loss)                                                                         |                                                                          |                                           | 50,135 |                    |         |                   | (40,167 | )             |         |      | 20,300 |           |           |               | (122,212 | )        
|                                                                                                |                                                                          |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |          
|Nonoperating income (expenses):                                                                 |                                                                          |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |          
|                                                                                                | Interest income                                                          |                                           |        | 1,666              |         |                   |         | 2,427         |         |      |        | 4,231     |           |               |          | 8,468     |          
|                                                                                                | Interest expense, net                                                    |                                           |        | (19,484            | )       |                   |         | (17,887       | )       |      |        | (57,504   | )         |               |          | (55,018   | )        
|                                                                                                | Federal government assistance                                            |                                           |        |                   |         |                   |         | 6,202         |         |      |        | 81,255    |           |               |          | 8,466     |          
|                                                                                                | Other, net                                                               |                                           |        | 625                |         |                   |         | (157          | )       |      |        | 2,326     |           |               |          | (2,449    | )        
|                                                                                                |                                                                          |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |          
|                                                                                                |                                                                          | Total nonoperating income (expenses), net |        |                    | (17,193 | )                 |         |               | (9,415  | )    |        |           | 30,308    |               |          |           | (40,533   | )
|                                                                                                |                                                                          |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |          
|Income (loss) before income tax benefit and
cumulative effect
of change in accounting principle |                                                                          |                                           | 32,942 |                    |         |                   | (49,582 | )             |         |      | 50,608 |           |           |               | (162,745 | )        
|                                                                                                |                                                                          |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |          
|Income tax benefit                                                                              |                                                                          |                                           |       |                    |         |                   |        |               |         |      |       |           |           |               | (35,071  | )        
|                                                                                                |                                                                          |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |          
|Income (loss) before cumulative effect of change in
accounting principle                        |                                                                          |                                           | 32,942 |                    |         |                   | (49,582 | )             |         |      | 50,608 |           |           |               | (127,674 | )        
|                                                                                                |                                                                          |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |          
|Cumulative effect of change in accounting principle                                             |                                                                          |                                           |       |                    |         |                   |        |               |         |      |       |           |           |               | (208,223 | )        
|                                                                                                |                                                                          |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |          
|Net income (loss)                                                                               |                                                                          | $                                         | 32,942 |                    |         | $                 | (49,582 | )             |         | $    | 50,608 |           |           | $             | (335,897 | )        
|                                                                                                |                                                                          |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |           |          
|Basic income (loss) per share:                                                                  |                                                                          |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |          
|                                                                                                | Income (loss) before cumulative effect of change in
accounting principle |                                           | $      | 0.94               |         |                   | $       | (1.47         | )       |      | $      | 1.48      |           |               | $        | (3.79     | )        
|                                                                                                | Cumulative effect of change in accounting principle                      |                                           |        |                   |         |                   |         |              |         |      |        |          |           |               |          | (6.17     | )        
|                                                                                                |                                                                          |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |          
|                                                                                                | Basic income (loss) per share                                            |                                           | $      | 0.94               |         |                   | $       | (1.47         | )       |      | $      | 1.48      |           |               | $        | (9.96     | )        
|                                                                                                |                                                                          |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |           |          
|Diluted income (loss) per share:                                                                |                                                                          |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |          
|                                                                                                | Income (loss) before cumulative effect of change in
accounting principle |                                           | $      | 0.60               |         |                   | $       | (1.47         | )       |      | $      | 1.18      |           |               | $        | (3.79     | )        
|                                                                                                | Cumulative effect of change in accounting principle                      |                                           |        |                   |         |                   |         |              |         |      |        |          |           |               |          | (6.17     | )        
|                                                                                                |                                                                          |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |          
|                                                                                                | Diluted income (loss) per share                                          |                                           | $      | 0.60               |         |                   | $       | (1.47         | )       |      | $      | 1.18      |           |               | $        | (9.96     | )        
|                                                                                                |                                                                          |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |           |          
|Shares used for computation:                                                                    |                                                                          |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |          
|                                                                                                | Basic                                                                    |                                           |        | 35,037             |         |                   |         | 33,723        |         |      |        | 34,161    |           |               |          | 33,726    |          
|                                                                                                |                                                                          |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |          
|                                                                                                | Diluted                                                                  |                                           |        | 59,285             |         |                   |         | 33,723        |         |      |        | 49,507    |           |               |          | 33,726    |          
|                                                                                                |                                                                          |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |          

See accompanying notes to condensed consolidated financial statements.

4



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##### Table of Contents






AMERICA WEST HOLDINGS CORPORATION
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |               |         | 
|-------------------------------------------------------------------------------------------------- | ------------------------------------------------------------ | --------------------------------------------------- | ------- | ----------------- | -------- | ---- | ------- | ------------- | ------- | 
|                                                                                                   |                                                              |                                                     |         | Nine Months Ended
|                                                                                                   |                                                              |                                                     |         | September 30,    
|                                                                                                   |                                                              |                                                     |         | 2003              |          | 2002
|                                                                                                   |                                                              |                                                     |         |                   |          |     
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         | (as restated)
|Net cash provided by (used in) operating activities                                                |                                                              | $                                                   | 159,350 |                   |          | $    | (24,876 | )            
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |              
|Cash flows from investing activities:                                                              |                                                              |                                                     |         |                   |          |      |         |              
|                                                                                                   | Purchases of property and equipment                          |                                                     |         | (119,196          | )        |      |         | (117,816      | )      
|                                                                                                   | Purchases of short-term investments                          |                                                     |         | (51,186           | )        |      |         | (69,838       | )      
|                                                                                                   | Sales of short-term investments                              |                                                     |         | 35,739            |          |      |         | 29,815        |        
|                                                                                                   | Purchases of investments in debt securities                  |                                                     |         | (46,189           | )        |      |         |              |        
|                                                                                                   | Sales of investments in debt securities                      |                                                     |         | 1,501             |          |      |         |              |        
|                                                                                                   | (Increase) decrease in restricted cash                       |                                                     |         | (23,465           | )        |      |         | 1,349         |        
|                                                                                                   | Proceeds from disposition of assets                          |                                                     |         | 24,283            |          |      |         | 90            |        
|                                                                                                   | Proceeds from sale and leaseback of aircraft                 |                                                     |         |                  |          |      |         | 175,478       |        
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |              
|                                                                                                   |                                                              | Net cash provided by (used in) investing activities |         |                   | (178,513 | )    |         |               | 19,078  | 
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |              
|Cash flows from financing activities:                                                              |                                                              |                                                     |         |                   |          |      |         |              
|                                                                                                   | Repayment of debt                                            |                                                     |         | (14,719           | )        |      |         | (191,702      | )      
|                                                                                                   | Proceeds from issuance of debt                               |                                                     |         | 86,828            |          |      |         | 435,386       |        
|                                                                                                   | Payment of debt issue costs                                  |                                                     |         | (3,105            | )        |      |         | (12,667       | )      
|                                                                                                   | Other                                                        |                                                     |         | 725               |          |      |         | (149          | )      
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |              
|                                                                                                   |                                                              | Net cash provided by financing activities           |         |                   | 69,729   |      |         |               | 230,868 | 
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |              
|Net increase in cash and cash equivalents                                                          |                                                              |                                                     | 50,566  |                   |          |      | 225,070 |              
|Cash and cash equivalents at beginning of period                                                   |                                                              |                                                     | 335,750 |                   |          |      | 156,865 |              
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |              
|Cash and cash equivalents at end of period                                                         |                                                              | $                                                   | 386,316 |                   |          | $    | 381,935 |              
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |              
|Cash, cash equivalents and short-term investments at end of period                                 |                                                              | $                                                   | 426,501 |                   |          | $    | 421,958 |              
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |              
|Cash, cash equivalents, short-term investments and investments in debt
securities at end of period |                                                              | $                                                   | 471,189 |                   |          | $    | 421,958 |              
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |              
|Cash paid (refunded) for:                                                                          |                                                              |                                                     |         |                   |          |      |         |              
|                                                                                                   | Interest, net of amounts capitalized                         |                                                     | $       | 14,304            |          |      | $       | 20,005        |        
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |              
|                                                                                                   | Income taxes refunded                                        |                                                     | $       | (438              | )        |      | $       | (63,269       | )      
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |              
|Non-cash investing and financing activities:                                                       |                                                              |                                                     |         |                   |          |      |         |              
|                                                                                                   | Notes payable canceled under the aircraft purchase agreement |                                                     | $       | (7,000            | )        |      | $       | (10,500       | )      
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |              
|                                                                                                   | Notes payable issued under the aircraft purchase agreement   |                                                     | $       |                  |          |      | $       | 10,500        |        
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |              
|                                                                                                   | Payment in kind notes issued, net of returns                 |                                                     | $       | 4,813             |          |      | $       | 3,810         |        
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |              
|                                                                                                   | Issuance of convertible notes                                |                                                     | $       |                  |          |      | $       | 67,902        |        
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |              
|                                                                                                   | Cancellation of convertible notes                            |                                                     | $       | (660              | )        |      | $       | (7,716        | )      
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |              
|                                                                                                   | Issuance of warrants                                         |                                                     | $       |                  |          |      | $       | 35,383        |        
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |              
|                                                                                                   | Exercise of warrants                                         |                                                     | $       | (17               | )        |      | $       |              |        
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |              
|                                                                                                   | Equipment acquired through capital lease                     |                                                     | $       |                  |          |      | $       | 16,878        |        
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |              
|                                                                                                   | Equipment acquired with issuance of notes payable            |                                                     | $       |                  |          |      | $       | 64,163        |        
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |              

See accompanying notes to condensed consolidated financial statements.

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AMERICA WEST HOLDINGS CORPORATION
Notes To Condensed Consolidated Financial Statements
September 30, 2003

1. BASIS OF PRESENTATION

The unaudited condensed consolidated financial statements include the
accounts of Holdings and its wholly owned subsidiaries, AWA and TLC. These
statements have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission and, in accordance with those rules and
regulations, certain information and footnotes required by generally accepted
accounting principles have been omitted. In the opinion of management, the
condensed consolidated financial statements reflect all adjustments, which are
of a normal recurring nature, necessary for a fair presentation. Certain prior
year amounts have been reclassified to conform with current year presentation.
The accompanying condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and related notes
thereto included in the Companys Annual Report on Form 10-K (Form 10-K) for
the year ended December 31, 2002.

2. RESTATEMENT OF PREVIOUSLY REPORTED AMOUNTS

As disclosed in our Form 10-K for the year ended December 31, 2002, the
Company has restated its financial statements for the fiscal year ended
December 31, 2001 and its unaudited financial statements for the first, second
and third quarters of fiscal year ended December 31, 2002. The changes
include:



| |  |  | a change in the timing from the first quarter of 2002 back to the
fourth quarter of 2001 of the non-cash impairment charge of
approximately $39.2 million recorded to adjust the carrying value of
owned aircraft to market value and the related non-cash impairment
charge of approximately $64.1 million recorded to write off
reorganization value in excess of amounts allocable to identifiable
assets (ERV) that arose in connection with the Companys plan of
reorganization from bankruptcy in 1994, both of which charges were
previously recorded in the first quarter of 2002; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the recognition of a full valuation allowance relating to the
Companys net deferred tax assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

Impairment Charges

Statement of Financial Accounting Standards (SFAS) No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Ofrequires that an impairment analysis be performed whenever
circumstances indicate that the carrying amount of an asset that an entity
expects to hold and use may not be recoverable.

As a result of the adverse impacts on Holdings, AWA and the airline
industry as a whole resulting from the terrorist events of September 11, 2001
and their aftermath, AWA performed an assessment of impairment of its owned
aircraft during 2001 and again in connection with the preparation of the
interim financial statements for the first quarter of 2002.

As a result of AWAs assessments, no impairment adjustment was recorded in
the financial statements initially issued for 2001. The Company recorded an
impairment charge of approximately $39.2 million in the first quarter of 2002
to adjust the carrying value of AWAs owned aircraft to reflect market values
at that time. Such accounting treatment was considered appropriate at the time
of the issuance of the applicable financial statements. In connection with the
preparation of the financial statements and the related audit for the fiscal
year ended December 31, 2002, the Company determined that the more appropriate
recognition of the impairment charge of approximately $39.2 million was in the
fourth quarter of 2001 rather than in the first quarter of 2002.

In addition, SFAS No. 121 requires that goodwill that arose in a purchase
business combination be allocated, and included as part of the asset base, in
determining recoverability and measuring impairment. The Company did not have
goodwill at December 31, 2001, but did have a significant amount of unamortized
ERV. The Company has determined that a portion of the unamortized ERV balance
should have been allocated to AWAs owned aircraft in the impairment analysis
performed for the year ended December 31, 2001. The remaining unamortized
balance of ERV was written off in the first quarter of 2002 as a cumulative
effect of a change in accounting principle, upon adoption of SFAS No. 142,
Goodwill and Other Intangible Assets.

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AMERICA WEST HOLDINGS CORPORATION
Notes To Condensed Consolidated Financial Statements
September 30, 2003

The impact of the above described matters is to change the period of
recognition for these non-cash costs between late 2001 and early 2002.

Deferred Income Taxes

SFAS No. 109, Accounting for Income Taxesrequires that a valuation
allowance be established when it is more likely than not that all or a
portion of deferred tax assets will not be realized. A review of all available
positive and negative evidence needs to be considered, including the companys
performance, the market environment in which the company operates, forecasts of
future profitability, the utilization of past tax credits, length of
carryforward periods and similar factors. SFAS No. 109 further states that it
is difficult to conclude that a valuation allowance is not needed when there is
negative evidence such as cumulative losses in recent years. Therefore,
cumulative losses weigh heavily in the overall assessment.

The Company had originally reported a net deferred tax liability at
December 31, 2001. After consideration of the restatement discussed above, the
Company had a net deferred tax asset and was in a cumulative loss position for
the three years ended December 31, 2001. A full valuation allowance has been
established relating to the Companys net deferred tax assets at December 31,
2001, and relating to net deferred tax assets generated by losses in 2002. We
expect to continue to record a full valuation allowance on future tax benefits
until we have achieved several quarters of consecutive profitable results
coupled with an expectation of continued profitability.

As a result of the adjustments discussed above, the Companys financial
statements for the third quarter and the nine months ended September 30, 2002
have been restated from amounts previously reported. The principal effects of
these adjustments on the accompanying financial statements are set forth below:

|                                                                                       |  |                                      |         |                           |  |          |         |               |  |             |         |          |  |   |          |   |  |  |        |   |  |   |          |  
|-------------------------------------------------------------------------------------- |  | ------------------------------------ | ------- | ------------------------- |  | -------- | ------- | ------------- |  | ----------- | ------- | -------- |  | - | -------- | - |  |  | ------ | - |  | - | -------- | -
|                                                                                       |  | For the Three Months Ended           |         | For the Nine Months Ended
|                                                                                       |  | September 30, 2002                   |         | September 30, 2002       
|                                                                                       |  |                                      |         |                          
|                                                                                       |  | (in thousands except per share data)
|                                                                                       |  | As Previously                        |         | Restatement               |  | As       |         | As Previously |  | Restatement |         | As      
|                                                                                       |  | Reported                             |         | Adjustments               |  | Restated |         | Reported      |  | Adjustments |         | Restated
|                                                                                       |  |                                      |         |                           |  |          |         |               |  |             |         |         
|Operating loss                                                                         |  | $                                    | (40,167 | )                         |  |          |        |               |  | $           | (40,167 | )        |  | $ | (161,437 | ) |  |  | 39,225 |   |  | $ | (122,212 | )
|                                                                                       |  |                                      |         |                           |  |          |         |               |  |             |         |          |  |   |          |   |  |  |        |   |  |   |          |  
|Loss before income tax benefit and
cumulative
effect of change in accounting principle |  |                                      | (49,582 | )                         |  |          |        |               |  |             | (49,582 | )        |  |   | (201,970 | ) |  |  | 39,225 |   |  |   | (162,745 | )
|Income tax benefit                                                                     |  |                                      | (18,592 | )                         |  |          | 18,592  |               |  |             |        |          |  |   | (76,505  | ) |  |  | 41,434 |   |  |   | (35,071  | )
|Loss before cumulative effect of change in
accounting principle                        |  |                                      | (30,990 | )                         |  |          | (18,592 | )             |  |             | (49,582 | )        |  |   | (125,465 | ) |  |  | (2,209 | ) |  |   | (127,674 | )
|Cumulative effect of change in accounting
principle                                    |  |                                      |        |                           |  |          |        |               |  |             |        |          |  |   | (272,284 | ) |  |  | 64,061 |   |  |   | (208,223 | )
|Net loss                                                                               |  | $                                    | (30,990 | )                         |  |          | (18,592 | )             |  | $           | (49,582 | )        |  | $ | (397,749 | ) |  |  | 61,852 |   |  | $ | (335,897 | )
|                                                                                       |  |                                      |         |                           |  |          |         |               |  |             |         |          |  |   |          |   |  |  |        |   |  |   |          |  
|Basic and diluted loss per share:                                                      |  |                                      |         |                           |  |          |         |               |  |             |         |          |  |   |          |   |  |  |        |   |  |   |          |  
|Loss before cumulative effect of change in
accounting principle                        |  | $                                    | (0.92   | )                         |  |          | (0.55   | )             |  | $           | (1.47   | )        |  | $ | (3.72    | ) |  |  | (0.07  | ) |  | $ | (3.79    | )
|Cumulative effect of change in accounting
principle                                    |  |                                      |        |                           |  |          |        |               |  |             |        |          |  |   | (8.07    | ) |  |  | 1.90   |   |  |   | (6.17    | )
|                                                                                       |  |                                      |         |                           |  |          |         |               |  |             |         |          |  |   |          |   |  |  |        |   |  |   |          |  
|Net loss per share                                                                     |  | $                                    | (0.92   | )                         |  |          | (0.55   | )             |  | $           | (1.47   | )        |  | $ | (11.79   | ) |  |  | 1.83   |   |  | $ | (9.96    | )
|                                                                                       |  |                                      |         |                           |  |          |         |               |  |             |         |          |  |   |          |   |  |  |        |   |  |   |          |  

3. STOCK OPTIONS

The Company accounts for its stock option plans in accordance with the
provisions of Accounting Principles Board (APB) Opinion No. 25, Accounting
for Stock Issued to Employees,and related interpretations. As such,
compensation expense would be recorded on the date of grant only if the current
market price of the underlying stock exceeded the exercise price. Accordingly,
no compensation cost has been recognized for stock options in the accompanying
condensed consolidated financial statements. Had the Company determined
compensation cost based on the fair value at the grant date for its stock
options under SFAS No. 123, Accounting for Stock-Based Compensation,the
Companys net income (loss) and income (loss) per share would have been reduced
to the pro forma amounts indicated below:

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AMERICA WEST HOLDINGS CORPORATION
Notes To Condensed Consolidated Financial Statements
September 30, 2003

|                                 |  |                                      |               |                   |  |               |         |      |  |   |        |   |  |   |          |  
|-------------------------------- |  | ------------------------------------ | ------------- | ----------------- |  | ------------- | ------- | ---- |  | - | ------ | - |  | - | -------- | -
|                                 |  | Three Months Ended                   |               | Nine Months Ended
|                                 |  | September 30,                        |               | September 30,    
|                                 |  | 2003                                 |               | 2002              |  | 2003          |         | 2002
|                                 |  |                                      |               |                   |  |               |         |     
|                                 |  |                                      | (as restated) |                   |  | (as restated)
|                                 |  | (in thousands except per share data)
|Net income (loss), as reported   |  | $                                    | 32,942        |                   |  | $             | (49,582 | )    |  | $ | 50,608 |   |  | $ | (335,897 | )
|Stock-based compensation expense |  |                                      | (1,063        | )                 |  |               | (1,706  | )    |  |   | (3,274 | ) |  |   | (4,701   | )
|                                 |  |                                      |               |                   |  |               |         |      |  |   |        |   |  |   |          |  
|Pro forma net income (loss)      |  | $                                    | 31,879        |                   |  | $             | (51,288 | )    |  | $ | 47,334 |   |  | $ | (340,598 | )
|                                 |  |                                      |               |                   |  |               |         |      |  |   |        |   |  |   |          |  
|Income (loss) per share:         |  |                                      |               |                   |  |               |         |      |  |   |        |   |  |   |          |  
|Basic - as reported              |  | $                                    | 0.94          |                   |  | $             | (1.47   | )    |  | $ | 1.48   |   |  | $ | (9.96    | )
|                                 |  |                                      |               |                   |  |               |         |      |  |   |        |   |  |   |          |  
|Basic - pro forma                |  | $                                    | 0.91          |                   |  | $             | (1.52   | )    |  | $ | 1.39   |   |  | $ | (10.10   | )
|                                 |  |                                      |               |                   |  |               |         |      |  |   |        |   |  |   |          |  
|Diluted - as reported            |  | $                                    | 0.60          |                   |  | $             | (1.47   | )    |  | $ | 1.18   |   |  | $ | (9.96    | )
|                                 |  |                                      |               |                   |  |               |         |      |  |   |        |   |  |   |          |  
|Diluted - pro forma              |  | $                                    | 0.54          |                   |  | $             | (1.52   | )    |  | $ | 0.96   |   |  | $ | (10.10   | )
|                                 |  |                                      |               |                   |  |               |         |      |  |   |        |   |  |   |          |  

4. FLIGHT EQUIPMENT

In September 2003, the Company entered into an operating lease for one new
Airbus A320 aircraft with a lease term of 20 years.

In April 2003, the Company revised the estimated useful life for
capitalized maintenance on certain of its engines driven by a new maintenance
agreement that guarantees minimum cycles on engine overhauls. The net impact
of this change in estimate was an increase in net income for the three and nine
months ended September 30, 2003 of $4.8 million and $7.3 million, respectively.
As a result, basic and diluted income per share increased by $0.14 and $0.08,
respectively, for the three months ended September 30, 2003 and $0.21 and $0.15
for the nine months ended September 30, 2003, respectively.

5. ISSUANCE OF SENIOR EXCHANGEABLE NOTES

In July 2003, AWA completed a private placement of $75 million issue price
of Senior Exchangeable Notes due 2023. The notes bear cash interest until July
30, 2008. Thereafter, the notes will cease bearing cash interest and begin
accruing original issue discount at a rate of 7.25% until maturity. Each note
was issued at a price of $343.61 and is exchangeable for class B common stock
of Holdings at an exchange ratio of 32.038 shares per $1,000 principal amount
at maturity of the notes (subject to adjustment in certain circumstances).
This represents an equivalent conversion price of approximately $10.73 per
share. The aggregate amount due at maturity, including accrued original issue
discount from July 31, 2008, will be $218,271,000. The notes are
unconditionally guaranteed by Holdings.

Holders may exchange their notes for the shares of class B common stock of
Holdings in any fiscal quarter commencing after September 30, 2003, if, as of
the last day of the preceding fiscal quarter, the closing sale price of the
class B common stock for at least 20 trading days in a period of 30 consecutive
trading days ending on the last trading day of such preceding fiscal quarter is
more than 110% of the accreted exchange price per share of Class B common stock
on the last day of such preceding fiscal quarter. If the foregoing condition is
satisfied, then the notes will be exchangeable at any time at the option of the
holder through maturity. The accreted exchange price per share as of any day
will equal the issue price of a note plus accrued original issue discount to
that day divided by 32.038, subject to any adjustments to the exchange rate
through that day.

On or before July 30, 2018, a holder also may exchange its notes for
shares of the Class B common stock at any time after a 10 consecutive
trading-day period in which the average of the trading prices for the notes for
that 10 trading-day period was less than 103% of the average exchange value for
the notes during that period. Exchange value is equal to the product of the
closing sale price for the shares of Class B common stock on a given day
multiplied by the then current exchange rate, which is the number of shares of
Class B common stock for which each note is then exchangeable.

In addition, the holders may exchange the notes if the notes have been
called for redemption or if certain specified corporate transactions have
occurred.

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AMERICA WEST HOLDINGS CORPORATION
Notes To Condensed Consolidated Financial Statements
September 30, 2003

Holders of the notes may require AWA to repurchase the notes at a price
equal to the original issue price plus accrued cash interest and original issue
discount, if any, on July 30, 2008, 2013 and 2018. The purchase price of such
notes may be paid in cash or class B common stock of Holdings, subject to
certain restrictions. In addition, each holder may require AWA to purchase all
or a portion of such holders notes upon the occurrence of certain change of
control events concerning AWA or Holdings. AWA may redeem the notes, in whole
or in part, on or after July 30, 2008 at a price equal to the original issue
price plus accrued cash interest and original issue discount, if any.

In connection with the offering AWA placed $42.9 million of the net
proceeds in a cash collateral account to secure the scheduled principal and
interest payments on certain of its indebtedness through September 30, 2004.
This amount has been recorded as restricted cash in the accompanying condensed
consolidated balance sheet.

In August 2003, the initial purchasers of the Senior Exchangeable Notes
discussed above exercised their overallotment option and purchased an
additional $11.8 million issue price amount of such notes. The aggregate
amount due at maturity, including accrued original issue discount from July 31,
2008, for these additional notes will be $34,424,000.

6. COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) includes changes in the fair value of
derivative financial instruments that qualify for hedge accounting. For the
three and nine months ended September 30, 2003, the Company recorded total
comprehensive income of $32.2 million and $58.6 million, respectively. For the
three and nine months ended September 30, 2002, the Company recorded a total
comprehensive loss of $45.6 million and $333.8 million, respectively. The
difference between net income (loss) and comprehensive income (loss) for the
three and nine months ended September 30, 2003 and 2002 is detailed in the
following table:

|                            |                                                                                                                             |   |                    |               |                   |   |               |       |      |   |        |        |   |   |          |        |  
|--------------------------- | --------------------------------------------------------------------------------------------------------------------------- | - | ------------------ | ------------- | ----------------- | - | ------------- | ----- | ---- | - | ------ | ------ | - | - | -------- | ------ | -
|                            |                                                                                                                             |   | Three Months Ended |               | Nine Months Ended
|                            |                                                                                                                             |   | September 30,      |               | September 30,    
|                            |                                                                                                                             |   | 2003               |               | 2002              |   | 2003          |       | 2002
|                            |                                                                                                                             |   |                    |               |                   |   |               |       |     
|                            |                                                                                                                             |   |                    | (as restated) |                   |   | (as restated)
|                            |                                                                                                                             |   | (in thousands)    
|Net income (loss)           |                                                                                                                             | $ | 32,942             |               |                   | $ | (49,582       | )     |      | $ | 50,608 |        |   | $ | (335,897 | )     
|                            |                                                                                                                             |   |                    |               |                   |   |               |       |      |   |        |        |   |   |          |       
|                            | Unrealized gains (losses) on derivative instruments                                                                         |   |                    | (793          | )                 |   |               | 3,940 |      |   |        | 17,097 |   |   |          | 3,459  |  
|                            | Reclassification adjustment to net income (loss)
of previously reported unrealized gains (losses)
on derivative instruments |   |                    | 84            |                   |   |               |      |      |   |        | (9,126 | ) |   |          | (1,390 | )
|                            |                                                                                                                             |   |                    |               |                   |   |               |       |      |   |        |        |   |   |          |       
|                            | Total other comprehensive income (loss)                                                                                     |   |                    | (709          | )                 |   |               | 3,940 |      |   |        | 7,971  |   |   |          | 2,069  |  
|                            |                                                                                                                             |   |                    |               |                   |   |               |       |      |   |        |        |   |   |          |       
|Comprehensive income (loss) |                                                                                                                             | $ | 32,233             |               |                   | $ | (45,642       | )     |      | $ | 58,579 |        |   | $ | (333,828 | )     
|                            |                                                                                                                             |   |                    |               |                   |   |               |       |      |   |        |        |   |   |          |       

7. SPECIAL CHARGES

In February 2003, AWA announced the elimination of its hub operations in
Columbus, Ohio. As a result, 12 regional jets, all of which were operated by
Chautauqua Airlines under the America West Express banner, have been phased out
of the fleet. In addition, the hub has been downsized from 49 daily departures
to 15 destinations to four flights per day to Phoenix and Las Vegas. Service
to New York City La Guardia Airport was also eliminated because perimeter rules
at the airport prohibit flights beyond 1,500 miles, precluding service from
AWAs hubs in Phoenix and Las Vegas. In the first and second quarters of 2003,
the Company recorded special charges of $1.0 million and $9.6 million,
respectively, related to the costs associated with the termination of certain
aircraft and facility contracts, employee transfer and severance expenses and
the write-off of leasehold improvements in Columbus, Ohio.

In the first quarter of 2003, the Company recorded a $1.1 million
reduction in special charges related to the earlier-than-planned return of
certain leased aircraft in 2001 and 2002, as all payments related to these
aircraft returns have been made.

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AMERICA WEST HOLDINGS CORPORATION
Notes To Condensed Consolidated Financial Statements
September 30, 2003

In April 2003, as part of a cost reduction program, the Company
implemented a plan to reduce management, professional and administrative
payroll costs which resulted in 179 fewer employees within these workgroups.
As a result, the Company recorded a special charge of $2.3 million related to
this reduction-in-force.

In June 2003, the Company recorded an impairment loss of $2.6 million
related to three owned Boeing 737-200 aircraft that have been or will be
grounded.

In the third quarter of 2003, the Company recorded an additional $0.5
million of special charges associated with the elimination of our hub
operations in Columbus, Ohio. These special charges were offset by a $0.5
million reduction in special charges related to the revision of estimated costs
associated with the sale and leaseback of certain aircraft.

The following table presents the payments and other settlements made
during the nine months ended September 30, 2003 related to the special charge
accruals:

|                                                                |  |                |       |               |  |             |        |              |  |       |        |   |  |          |        |   |  |   |        |  
|--------------------------------------------------------------- |  | -------------- | ----- | ------------- |  | ----------- | ------ | ------------ |  | ----- | ------ | - |  | -------- | ------ | - |  | - | ------ | -
|                                                                |  |                |       |               |  |             |        |              |  |       |        |   |  | Contract |        |   |  |  
|                                                                |  | Sale-          |       | Fleet         |  | Reductions- |        | Termination/ |  |       |        |  
|                                                                |  | Leaseback      |       | Restructuring |  | in-force    |        | Other Costs  |  | Total
|                                                                |  |                |       |               |  |             |        |              |  |      
|                                                                |  | (in thousands)
|Balance at December 31, 2002                                    |  | $              | 2,476 |               |  | $           | 3,357  |              |  | $     |       |   |  | $        |       |   |  | $ | 5,833  |  
|                                                                |  |                |       |               |  |             |        |              |  |       |        |   |  |          |        |   |  |   |        |  
|Special charges                                                 |  |                |      |               |  |             | (1,072 | )            |  |       | 470    |   |  |          | 500    |   |  |   | (102   | )
|Payments                                                        |  |                |      |               |  |             | (271   | )            |  |       |       |   |  |          |       |   |  |   | (271   | )
|Loss on sale-leasebacks                                         |  |                | (6    | )             |  |             |       |              |  |       |       |   |  |          |       |   |  |   | (6     | )
|                                                                |  |                |       |               |  |             |        |              |  |       |        |   |  |          |        |   |  |   |        |  
|Balance at March 31, 2003                                       |  | $              | 2,470 |               |  | $           | 2,014  |              |  | $     | 470    |   |  | $        | 500    |   |  | $ | 5,454  |  
|                                                                |  |                |       |               |  |             |        |              |  |       |        |   |  |          |        |   |  |   |        |  
|Special charges                                                 |  |                |      |               |  |             | 2,617  |              |  |       | 2,231  |   |  |          | 9,624  |   |  |   | 14,472 |  
|Payments                                                        |  |                |      |               |  |             | (182   | )            |  |       | (1,159 | ) |  |          | (6,000 | ) |  |   | (7,341 | )
|Loss on sale-leasebacks                                         |  |                | (647  | )             |  |             |       |              |  |       |       |   |  |          |       |   |  |   | (647   | )
|Write-off of leasehold improvements
due to Columbus hub closure |  |                |      |               |  |             |       |              |  |       |       |   |  |          | (539   | ) |  |   | (539   | )
|Impairment loss                                                 |  |                |      |               |  |             | (2,617 | )            |  |       |       |   |  |          |       |   |  |   | (2,617 | )
|                                                                |  |                |       |               |  |             |        |              |  |       |        |   |  |          |        |   |  |   |        |  
|Balance at June 30, 2003                                        |  | $              | 1,823 |               |  | $           | 1,832  |              |  | $     | 1,542  |   |  | $        | 3,585  |   |  | $ | 8,782  |  
|                                                                |  |                |       |               |  |             |        |              |  |       |        |   |  |          |        |   |  |   |        |  
|Special charges                                                 |  |                | (510  | )             |  |             |       |              |  |       |       |   |  |          | 510    |   |  |   |       |  
|Payments                                                        |  |                |      |               |  |             | (258   | )            |  |       | (987   | ) |  |          | (1,009 | ) |  |   | (2,254 | )
|Loss on sale-leasebacks                                         |  |                | (682  | )             |  |             |       |              |  |       |       |   |  |          |       |   |  |   | (682   | )
|                                                                |  |                |       |               |  |             |        |              |  |       |        |   |  |          |        |   |  |   |        |  
|Balance at September 30, 2003                                   |  | $              | 631   |               |  | $           | 1,574  |              |  | $     | 555    |   |  | $        | 3,086  |   |  | $ | 5,846  |  
|                                                                |  |                |       |               |  |             |        |              |  |       |        |   |  |          |        |   |  |   |        |  

The Company expects to make payments related to these special charges
through the fourth quarter of 2005.

8. INCOME TAXES

The Company was in a cumulative loss position for the three years ended
December 31, 2002. In accordance with SFAS No. 109, Accounting for Income
Taxes,a full valuation allowance had been established relating to the
Companys net deferred tax asset, principally net operating loss (NOL), at
that date.

With its third quarter financial performance, the Company is in a position
to realize a profit for the full year 2003 and utilize NOL to reduce its income
tax obligation. The Companys net deferred tax asset, which includes the NOL,
was subject to a full valuation allowance. Utilization of this NOL results in
a corresponding decrease in the valuation allowance, which offsets the
Companys tax provision. Accordingly, no income tax expense has been recorded
in the accompanying condensed consolidated income statements.

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AMERICA WEST HOLDINGS CORPORATION
Notes To Condensed Consolidated Financial Statements
September 30, 2003

9. EARNINGS PER SHARE (EPS)

The following table presents the computation of basic and diluted EPS.

|                                                                                                         |  |                                             |            |                   |  |               |            |      |  |   |            |               |  |   |            |  
|-------------------------------------------------------------------------------------------------------- |  | ------------------------------------------- | ---------- | ----------------- |  | ------------- | ---------- | ---- |  | - | ---------- | ------------- |  | - | ---------- | -
|                                                                                                         |  | Three Months Ended                          |            | Nine Months Ended
|                                                                                                         |  | September 30,                               |            | September 30,    
|                                                                                                         |  | 2003                                        |            | 2002              |  | 2003          |            | 2002
|                                                                                                         |  |                                             |            |                   |  |               |            |     
|                                                                                                         |  |                                             |            |                   |  | (as restated) |            |      |  |   |            | (as restated)
|                                                                                                         |  | (in thousands of dollars except share data)
|BASIC INCOME (LOSS) PER SHARE                                                                            |  |                                             |            |                   |  |               |            |      |  |   |            |               |  |   |            |  
|Income (loss) before cumulative effect of change in
accounting
principle                                 |  | $                                           | 32,942     |                   |  | $             | (49,582    | )    |  | $ | 50,608     |               |  | $ | (127,674   | )
|Cumulative effect of change in accounting principle                                                      |  |                                             |           |                   |  |               |           |      |  |   |           |               |  |   | (208,223   | )
|                                                                                                         |  |                                             |            |                   |  |               |            |      |  |   |            |               |  |   |            |  
|Net income (loss)                                                                                        |  | $                                           | 32,942     |                   |  | $             | (49,582    | )    |  | $ | 50,608     |               |  | $ | (335,897   | )
|                                                                                                         |  |                                             |            |                   |  |               |            |      |  |   |            |               |  |   |            |  
|Weighted average common shares outstanding                                                               |  |                                             | 35,036,616 |                   |  |               | 33,723,382 |      |  |   | 34,161,024 |               |  |   | 33,725,904 |  
|                                                                                                         |  |                                             |            |                   |  |               |            |      |  |   |            |               |  |   |            |  
|Basic income (loss) per share:                                                                           |  |                                             |            |                   |  |               |            |      |  |   |            |               |  |   |            |  
|Income (loss) before cumulative effect of change in
accounting
principle                                 |  | $                                           | 0.94       |                   |  | $             | (1.47      | )    |  | $ | 1.48       |               |  | $ | (3.79      | )
|Cumulative effect of change in accounting principle                                                      |  |                                             |           |                   |  |               |           |      |  |   |           |               |  |   | (6.17      | )
|                                                                                                         |  |                                             |            |                   |  |               |            |      |  |   |            |               |  |   |            |  
|Net income (loss)                                                                                        |  | $                                           | 0.94       |                   |  | $             | (1.47      | )    |  | $ | 1.48       |               |  | $ | (9.96      | )
|                                                                                                         |  |                                             |            |                   |  |               |            |      |  |   |            |               |  |   |            |  
|DILUTED INCOME (LOSS) PER SHARE                                                                          |  |                                             |            |                   |  |               |            |      |  |   |            |               |  |   |            |  
|Income (loss) before cumulative effect of change in
accounting
principle                                 |  | $                                           | 32,942     |                   |  | $             | (49,582    | )    |  | $ | 50,608     |               |  | $ | (127,674   | )
|Cumulative effect of change in accounting principle                                                      |  |                                             |           |                   |  |               |           |      |  |   |           |               |  |   | (208,223   | )
|                                                                                                         |  |                                             |            |                   |  |               |            |      |  |   |            |               |  |   |            |  
|Net income (loss)                                                                                        |  |                                             | 32,942     |                   |  |               | (49,582    | )    |  |   | 50,608     |               |  |   | (335,897   | )
|Interest expense on 7.5% convertible senior notes                                                        |  |                                             | 2,680      |                   |  |               |           |      |  |   | 7,879      |               |  |   |           |  
|                                                                                                         |  |                                             |            |                   |  |               |            |      |  |   |            |               |  |   |            |  
|Income (loss) for purposes of computing diluted net
income (loss) per share                              |  | $                                           | 35,622     |                   |  | $             | (49,582    | )    |  | $ | 58,487     |               |  | $ | (335,897   | )
|                                                                                                         |  |                                             |            |                   |  |               |            |      |  |   |            |               |  |   |            |  
|Share computation:                                                                                       |  |                                             |            |                   |  |               |            |      |  |   |            |               |  |   |            |  
|Weighted average common shares outstanding                                                               |  |                                             | 35,036,616 |                   |  |               | 33,723,382 |      |  |   | 34,161,024 |               |  |   | 33,725,904 |  
|Assumed exercise of stock options and warrants                                                           |  |                                             | 15,784,790 |                   |  |               |           |      |  |   | 7,187,737  |               |  |   |           |  
|Assumed conversion of 7.5% convertible senior notes                                                      |  |                                             | 8,463,758  |                   |  |               |           |      |  |   | 8,157,839  |               |  |   |           |  
|                                                                                                         |  |                                             |            |                   |  |               |            |      |  |   |            |               |  |   |            |  
|Weighted average common shares outstanding for purposes
of computing diluted net income (loss) per share |  |                                             | 59,285,164 |                   |  |               | 33,723,382 |      |  |   | 49,506,600 |               |  |   | 33,725,904 |  
|                                                                                                         |  |                                             |            |                   |  |               |            |      |  |   |            |               |  |   |            |  
|Diluted income (loss) per share:                                                                         |  |                                             |            |                   |  |               |            |      |  |   |            |               |  |   |            |  
|Income (loss) before cumulative effect of change in
accounting
principle                                 |  | $                                           | 0.60       |                   |  | $             | (1.47      | )    |  | $ | 1.18       |               |  | $ | (3.79      | )
|Cumulative effect of change in accounting principle                                                      |  |                                             |           |                   |  |               |           |      |  |   |           |               |  |   | (6.17      | )
|                                                                                                         |  |                                             |            |                   |  |               |            |      |  |   |            |               |  |   |            |  
|Net income (loss)                                                                                        |  | $                                           | 0.60       |                   |  | $             | (1.47      | )    |  | $ | 1.18       |               |  | $ | (9.96      | )
|                                                                                                         |  |                                             |            |                   |  |               |            |      |  |   |            |               |  |   |            |  

For the three months ended September 30, 2003, 4,453,537 stock options are
not included in the computation of diluted EPS because the option exercise
prices were greater than the average market price of common stock for the
period. The shares issuable upon conversion of the 7.25% Senior Exchangeable
Notes due 2023 were not included in the computation of diluted earnings per
share since the conditions for conversion have not been met. See Note 5,
Issuance of Senior Exchangeable Notesin Notes to Condensed Consolidated
Financial Statements.

For the three months ended September 30, 2002, 8,033,918 stock options and
22,537,000 warrants issued in conjunction with the government guaranteed loan
and related transactions are not included in the computation of diluted EPS
because the option and warrant exercise prices were greater than the average
market price of common stock for the period.

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AMERICA WEST HOLDINGS CORPORATION
Notes To Condensed Consolidated Financial Statements
September 30, 2003

For the nine months ended September 30, 2003, 6,200,354 stock options are
not included in the computation of diluted EPS because the option exercise
prices were greater than the average market price of common stock for the
period. The shares issuable upon conversion of the 7.25% Senior Exchangeable
Notes due 2023 were not included in the computation of diluted earnings per
share since the conditions for conversion have not been met. See Note 5,
Issuance of Senior Exchangeable Notesin Notes to Condensed Consolidated
Financial Statements.

For the nine months ended September 30, 2002, 29,432 incremental shares
from assumed exercise of stock options and 3,725,865 incremental shares from
assumed exercise of warrants issued in conjunction with the government
guaranteed loan and related transactions are not included in the computation of
diluted EPS because of the antidilutive effect on EPS. In addition, 7,075,527
stock options and 18,811,135 warrants are not included in the computation of
diluted EPS because the option and warrant exercise prices were greater than
the average market price of common stock for the period.

10. SEGMENT DISCLOSURES

Holdings is one reportable operating segment. Accordingly, the segment
reporting financial data required by SFAS No. 131, Disclosures About Segments
of an Enterprise and Related Informationis included in the accompanying
condensed consolidated balance sheets and statements of operations.

11. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In January 2003, the Financial Accounting Standards Board (FASB) issued
FASB Interpretation Number (FIN) 46, Consolidation of Variable Interest
Entities.FIN 46 requires that companies that control another entity through
interests other than voting interests should consolidate the controlled entity.
FIN 46 is effective for variable interest entities created after January 31,
2003 and to any variable interest entities in which the company obtains an
interest after that date. FIN 46 was originally effective for the quarter
ending September 30, 2003 for variable interest entities in which the company
held a variable interest that it acquired before February 1, 2003. However, in
October 2003, the FASB deferred the effective date for implementation of FIN 46
until December 31, 2003. As discussed in Managements Discussion and Analysis
of Financial Condition and Results of Operations  Liquidity and Capital
Resources, Pass Through Trusts,the Company is the lessee in a series of
leveraged lease financings covering 54 leased aircraft. The Company does not
provide residual value guarantees under these lease arrangements. Each lease
does have a purchase option that allows the Company to purchase the aircraft at
a fixed price, which approximates the aircrafts expected fair market value at
the option date, near the end of the lease term. In addition, the Company is
also the lessee under certain long-term leases at various airports. At certain
of these airports, municipalities have issued revenue bonds to improve airport
facilities that are leased by the Company and accounted for as operating
leases. The Company does not guarantee the underlying debt related to these
operating leases. The Company currently believes it is not the primary
beneficiary, as defined by FIN 46, under these arrangements. However, we will
continue to evaluate the provisions of FIN 46, including any modifications that
may result from the FASBs deferral of the effective date to determine its
impact, if any, on the financial condition and results of operations of the
Company.

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133
on Derivative Instruments and Hedging Activities. SFAS No. 149 amends and
clarifies certain derivative instruments embedded in other contracts, and for
hedging activities under SFAS No. 133. SFAS No. 149 was effective for certain
contracts entered into or modified by the company after June 30, 2003. The
Company adopted SFAS No. 149 effective July 1, 2003 with no material impact on
its financial condition or results of operations.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity.
SFAS No. 150 specifies that freestanding financial instruments within its scope
constitute obligations of the issuer and that, therefore, the issuer must
classify them as liabilities. Such freestanding financial instruments include
mandatorily redeemable financial instruments, obligations to repurchase the
issuers equity shares by transferring assets and certain obligations to issue
a variable number of shares. SFAS No. 150 was effective immediately for all
financial instruments entered into or modified after May 31, 2003. For all
other instruments, SFAS No. 150 was effective at the beginning of the third
quarter of 2003. The Company adopted SFAS No. 150 effective July 1, 2003 with
no material impact on its financial condition or results of operations.

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AMERICA WEST HOLDINGS CORPORATION
Notes To Condensed Consolidated Financial Statements
September 30, 2003

12. SUBSEQUENT EVENT

Sale of Investment in Hotwire.com

In September 2003, IAC/InterActiveCorp announced that it had entered into
an agreement to acquire Hotwire.com, a discount travel website for $665 million
in cash plus the assumption of approximately $20 million of options and
warrants. Hotwire was founded by the Texas Pacific Group, American Airlines,
Continental Airlines, Northwest Airlines, United Airlines, US Airways and AWA
in October 2000. AWA has an ownership interest of approximately 1.5% in
Hotwire.com and expects to realize a gain in the range of $7 million to $9
million upon completion of the transaction. The transaction is expected to
close in the quarter ended December 31, 2003.

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ITEM 1B. CONDENSED FINANCIAL STATEMENTS  AMERICA WEST AIRLINES, INC.

The unaudited condensed balance sheets of AWA, a wholly-owned subsidiary
of Holdings, as of September 30, 2003 and December 31, 2002, the condensed
statements of operations for the three and nine months ended September 30, 2003
and 2002 and the condensed statements of cash flows for the nine months ended
September 30, 2003 and 2002, together with the related notes, are set forth on
the following pages.




AMERICA WEST AIRLINES, INC.
Condensed Balance Sheets
(in thousands except share data)

|                        |                                                |                            |           |               |         |              |           |         |         | 
|----------------------- | ---------------------------------------------- | -------------------------- | --------- | ------------- | ------- | ------------ | --------- | ------- | ------- | 
|                        |                                                |                            |           | September 30, |         | December 31,
|                        |                                                |                            |           | 2003          |         | 2002        
|                        |                                                |                            |           |               |         |             
|                        |                                                | (unaudited)                |           |               |         |             
|Assets                  |                                                |                            |           |               |         |              |           |        
|Current assets:         |                                                |                            |           |               |         |              |           |        
|                        | Cash and cash equivalents                      |                            | $         | 379,235       |         |              | $         | 326,612 |        
|                        | Short-term investments                         |                            |           | 40,185        |         |              |           | 24,738  |        
|                        | Restricted cash                                |                            |           | 43,876        |         |              |           |        |        
|                        | Accounts receivable, net                       |                            |           | 119,099       |         |              |           | 72,667  |        
|                        | Expendable spare parts and supplies, net       |                            |           | 58,192        |         |              |           | 55,894  |        
|                        | Prepaid expenses                               |                            |           | 150,318       |         |              |           | 107,587 |        
|                        |                                                |                            |           |               |         |              |           |         |        
|                        |                                                | Total current assets       |           |               | 790,905 |              |           |         | 587,498 | 
|                        |                                                |                            |           |               |         |              |           |         |        
|Property and equipment: |                                                |                            |           |               |         |              |           |        
|                        | Flight equipment                               |                            |           | 885,684       |         |              |           | 880,446 |        
|                        | Other property and equipment                   |                            |           | 265,389       |         |              |           | 266,060 |        
|                        | Equipment purchase deposits                    |                            |           | 39,050        |         |              |           | 46,050  |        
|                        |                                                |                            |           |               |         |              |           |         |        
|                        |                                                |                            | 1,190,123 |               |         |              | 1,192,556 |        
|                        | Less accumulated depreciation and amortization |                            |           | 585,689       |         |              |           | 544,821 |        
|                        |                                                |                            |           |               |         |              |           |         |        
|                        |                                                | Net property and equipment |           |               | 604,434 |              |           |         | 647,735 | 
|                        |                                                |                            |           |               |         |              |           |         |        
|Other assets:           |                                                |                            |           |               |         |              |           |        
|                        | Investments in debt securities                 |                            |           | 44,688        |         |              |           |        |        
|                        | Restricted cash                                |                            |           | 69,433        |         |              |           | 45,968  |        
|                        | Advances to parent company, net                |                            |           | 223,695       |         |              |           | 223,695 |        
|                        | Other assets, net                              |                            |           | 143,503       |         |              |           | 140,119 |        
|                        |                                                |                            |           |               |         |              |           |         |        
|                        |                                                | Total other assets         |           |               | 481,319 |              |           |         | 409,782 | 
|                        |                                                |                            |           |               |         |              |           |         |        
|                        |                                                | $                          | 1,876,658 |               |         | $            | 1,645,015 |        
|                        |                                                |                            |           |               |         |              |           |         |        

See accompanying notes to condensed financial statements.

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AMERICA WEST AIRLINES, INC.
Condensed Balance Sheets
(in thousands except share data)

|                                        |                                                                               |                            |           |               |         |              |           |          |         | 
|--------------------------------------- | ----------------------------------------------------------------------------- | -------------------------- | --------- | ------------- | ------- | ------------ | --------- | -------- | ------- | 
|                                        |                                                                               |                            |           | September 30, |         | December 31,
|                                        |                                                                               |                            |           | 2003          |         | 2002        
|                                        |                                                                               |                            |           |               |         |             
|                                        |                                                                               | (unaudited)                |           |               |         |             
|Liabilities
and Stockholders Equity    |                                                                               |                            |           |               |         |             
|Current liabilities:                    |                                                                               |                            |           |               |         |              |           |         
|                                        | Current maturities of long-term debt                                          |                            | $         | 94,789        |         |              | $         | 19,116   |        
|                                        | Current obligations of capital leases                                         |                            |           | 3,441         |         |              |           | 3,122    |        
|                                        | Accounts payable                                                              |                            |           | 175,133       |         |              |           | 176,903  |        
|                                        | Payable to affiliate, net                                                     |                            |           | 34,490        |         |              |           | 12,175   |        
|                                        | Air traffic liability                                                         |                            |           | 234,971       |         |              |           | 170,091  |        
|                                        | Accrued compensation and vacation benefits                                    |                            |           | 52,415        |         |              |           | 39,007   |        
|                                        | Accrued taxes                                                                 |                            |           | 41,243        |         |              |           | 28,809   |        
|                                        | Other accrued liabilities                                                     |                            |           | 39,047        |         |              |           | 38,450   |        
|                                        |                                                                               |                            |           |               |         |              |           |          |        
|                                        |                                                                               | Total current liabilities  |           |               | 675,529 |              |           |          | 487,673 | 
|                                        |                                                                               |                            |           |               |         |              |           |          |        
|Long-term debt, less current maturities |                                                                               |                            | 700,191   |               |         |              | 700,983   |         
|Capital leases, less current maturities |                                                                               |                            | 8,545     |               |         |              | 11,999    |         
|Deferred credits and other liabilities  |                                                                               |                            | 140,977   |               |         |              | 145,145   |         
|Commitments and contingencies           |                                                                               |                            |           |               |         |              |           |         
|Stockholders equity:                   |                                                                               |                            |           |               |         |              |           |         
|                                        | Common Stock $.01 par value. Authorized, issued and
outstanding; 1,000 shares |                            |           |              |         |              |           |         |        
|                                        | Additional paid-in capital                                                    |                            |           | 555,115       |         |              |           | 555,132  |        
|                                        | Accumulated deficit                                                           |                            |           | (213,700      | )       |              |           | (257,947 | )      
|                                        | Accumulated other comprehensive income                                        |                            |           | 10,001        |         |              |           | 2,030    |        
|                                        |                                                                               |                            |           |               |         |              |           |          |        
|                                        |                                                                               | Total stockholders equity |           |               | 351,416 |              |           |          | 299,215 | 
|                                        |                                                                               |                            |           |               |         |              |           |          |        
|                                        |                                                                               | $                          | 1,876,658 |               |         | $            | 1,645,015 |         
|                                        |                                                                               |                            |           |               |         |              |           |          |        

See accompanying notes to condensed financial statements.

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AMERICA WEST AIRLINES, INC.
Condensed Statements of Operations
(in thousands)
(unaudited)

|                                                                                                |                                            |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |           |           |  
|----------------------------------------------------------------------------------------------- | ------------------------------------------ | ----------------------------------------- | ------ | ------------------ | ------- | ----------------- | ------- | ------------- | ------- | ---- | ------ | --------- | --------- | ------------- | -------- | --------- | --------- | -
|                                                                                                |                                            |                                           |        | Three Months Ended |         | Nine Months Ended
|                                                                                                |                                            |                                           |        | September 30,      |         | September 30,    
|                                                                                                |                                            |                                           |        | 2003               |         | 2002              |         | 2003          |         | 2002
|                                                                                                |                                            |                                           |        |                    |         |                   |         |               |         |     
|                                                                                                |                                            |                                           |        |                    |         |                   |         | (as restated) |         |      |        |           |           | (as restated)
|Operating revenues:                                                                             |                                            |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |          
|                                                                                                | Passenger                                  |                                           | $      | 552,564            |         |                   | $       | 489,327       |         |      | $      | 1,591,496 |           |               | $        | 1,433,611 |          
|                                                                                                | Cargo                                      |                                           |        | 6,201              |         |                   |         | 6,045         |         |      |        | 21,101    |           |               |          | 20,620    |          
|                                                                                                | Other                                      |                                           |        | 22,847             |         |                   |         | 14,678        |         |      |        | 48,476    |           |               |          | 42,562    |          
|                                                                                                |                                            |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |           |          
|                                                                                                |                                            | Total operating revenues                  |        |                    | 581,612 |                   |         |               | 510,050 |      |        |           | 1,661,073 |               |          |           | 1,496,793 |  
|                                                                                                |                                            |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |           |          
|Operating expenses:                                                                             |                                            |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |          
|                                                                                                | Salaries and related costs                 |                                           |        | 156,059            |         |                   |         | 154,636       |         |      |        | 470,992   |           |               |          | 442,319   |          
|                                                                                                | Aircraft rents                             |                                           |        | 74,417             |         |                   |         | 76,548        |         |      |        | 221,862   |           |               |          | 220,057   |          
|                                                                                                | Other rents and landing fees               |                                           |        | 38,210             |         |                   |         | 39,904        |         |      |        | 115,475   |           |               |          | 119,716   |          
|                                                                                                | Aircraft fuel                              |                                           |        | 91,595             |         |                   |         | 81,673        |         |      |        | 271,481   |           |               |          | 213,209   |          
|                                                                                                | Agency commissions                         |                                           |        | 5,589              |         |                   |         | 8,357         |         |      |        | 18,072    |           |               |          | 33,114    |          
|                                                                                                | Aircraft maintenance materials and repairs |                                           |        | 50,854             |         |                   |         | 57,726        |         |      |        | 173,572   |           |               |          | 186,521   |          
|                                                                                                | Depreciation and amortization              |                                           |        | 16,407             |         |                   |         | 18,946        |         |      |        | 51,036    |           |               |          | 53,331    |          
|                                                                                                | Special charges, net                       |                                           |        |                   |         |                   |         | (2,000        | )       |      |        | 13,979    |           |               |          | 19,030    |          
|                                                                                                | Other                                      |                                           |        | 101,541            |         |                   |         | 116,492       |         |      |        | 310,380   |           |               |          | 335,111   |          
|                                                                                                |                                            |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |           |          
|                                                                                                |                                            | Total operating expenses                  |        |                    | 534,672 |                   |         |               | 552,282 |      |        |           | 1,646,849 |               |          |           | 1,622,408 |  
|                                                                                                |                                            |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |           |          
|Operating income (loss)                                                                         |                                            |                                           | 46,940 |                    |         |                   | (42,232 | )             |         |      | 14,224 |           |           |               | (125,615 | )        
|                                                                                                |                                            |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |           |          
|Nonoperating income (expenses):                                                                 |                                            |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |          
|                                                                                                | Interest income                            |                                           |        | 3,361              |         |                   |         | 4,080         |         |      |        | 9,247     |           |               |          | 13,469    |          
|                                                                                                | Interest expense, net                      |                                           |        | (21,276            | )       |                   |         | (19,664       | )       |      |        | (62,805   | )         |               |          | (60,289   | )        
|                                                                                                | Federal government assistance              |                                           |        |                   |         |                   |         | 6,202         |         |      |        | 81,255    |           |               |          | 8,466     |          
|                                                                                                | Other, net                                 |                                           |        | 625                |         |                   |         | (157          | )       |      |        | 2,326     |           |               |          | (2,449    | )        
|                                                                                                |                                            |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |           |          
|                                                                                                |                                            | Total nonoperating income (expenses), net |        |                    | (17,290 | )                 |         |               | (9,539  | )    |        |           | 30,023    |               |          |           | (40,803   | )
|                                                                                                |                                            |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |           |          
|Income (loss) before income tax benefit and
cumulative effect of change in accounting principle |                                            |                                           | 29,650 |                    |         |                   | (51,771 | )             |         |      | 44,247 |           |           |               | (166,418 | )        
|                                                                                                |                                            |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |           |          
|Income tax benefit                                                                              |                                            |                                           |       |                    |         |                   |        |               |         |      |       |           |           |               | (30,484  | )        
|                                                                                                |                                            |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |           |          
|Income (loss) before cumulative effect of change in
accounting principle                        |                                            |                                           | 29,650 |                    |         |                   | (51,771 | )             |         |      | 44,247 |           |           |               | (135,934 | )        
|                                                                                                |                                            |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |           |          
|Cumulative effect of change in accounting principle                                             |                                            |                                           |       |                    |         |                   |        |               |         |      |       |           |           |               | (187,949 | )        
|                                                                                                |                                            |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |           |          
|Net income (loss)                                                                               |                                            | $                                         | 29,650 |                    |         | $                 | (51,771 | )             |         | $    | 44,247 |           |           | $             | (323,883 | )        
|                                                                                                |                                            |                                           |        |                    |         |                   |         |               |         |      |        |           |           |               |          |           |          

See accompanying notes to condensed financial statements.

16



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##### Table of Contents






AMERICA WEST AIRLINES, INC.
Condensed Statements of Cash Flows
(in thousands)
(unaudited)

|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |               |         | 
|-------------------------------------------------------------------------------------------------- | ------------------------------------------------------------ | --------------------------------------------------- | ------- | ----------------- | -------- | ---- | ------- | ------------- | ------- | 
|                                                                                                   |                                                              |                                                     |         | Nine Months Ended
|                                                                                                   |                                                              |                                                     |         | September 30,    
|                                                                                                   |                                                              |                                                     |         | 2003              |          | 2002
|                                                                                                   |                                                              |                                                     |         |                   |          |     
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         | (as restated)
|Net cash provided by (used in) operating activities                                                |                                                              | $                                                   | 162,039 |                   |          | $    | (21,281 | )            
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |               |         | 
|Cash flows from investing activities:                                                              |                                                              |                                                     |         |                   |          |      |         |              
|                                                                                                   | Purchases of property and equipment                          |                                                     |         | (119,103          | )        |      |         | (117,514      | )      
|                                                                                                   | Purchases of short-term investments                          |                                                     |         | (51,186           | )        |      |         | (69,838       | )      
|                                                                                                   | Sales of short-term investments                              |                                                     |         | 35,739            |          |      |         | 29,815        |        
|                                                                                                   | Purchases of investments in debt securities                  |                                                     |         | (46,189           | )        |      |         |              |        
|                                                                                                   | Sales of investments in debt securities                      |                                                     |         | 1,501             |          |      |         |              |        
|                                                                                                   | Increase in restricted cash                                  |                                                     |         | (23,465           | )        |      |         | (2,339        | )      
|                                                                                                   | Proceeds from disposition of assets                          |                                                     |         | 24,283            |          |      |         | 89            |        
|                                                                                                   | Proceeds from sale and leaseback of aircraft                 |                                                     |         |                  |          |      |         | 175,478       |        
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |              
|                                                                                                   |                                                              | Net cash provided by (used in) investing activities |         |                   | (178,420 | )    |         |               | 15,691  | 
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |              
|Cash flows from financing activities:                                                              |                                                              |                                                     |         |                   |          |      |         |              
|                                                                                                   | Repayment of debt                                            |                                                     |         | (14,719           | )        |      |         | (191,702      | )      
|                                                                                                   | Proceeds from issuance of debt                               |                                                     |         | 86,828            |          |      |         | 435,386       |        
|                                                                                                   | Payment of debt issue costs                                  |                                                     |         | (3,105            | )        |      |         | (12,667       | )      
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |              
|                                                                                                   |                                                              | Net cash provided by financing activities           |         |                   | 69,004   |      |         |               | 231,017 | 
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |              
|Net increase in cash and cash equivalents                                                          |                                                              |                                                     | 52,623  |                   |          |      | 225,427 |              
|Cash and cash equivalents at beginning of period                                                   |                                                              |                                                     | 326,612 |                   |          |      | 148,520 |              
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |              
|Cash and cash equivalents at end of period                                                         |                                                              | $                                                   | 379,235 |                   |          | $    | 373,947 |              
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |               |         | 
|Cash, cash equivalents and short-term investments at end of period                                 |                                                              | $                                                   | 419,420 |                   |          | $    | 413,970 |              
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |               |         | 
|Cash, cash equivalents, short-term investments and investments in
debt securities at end of period |                                                              | $                                                   | 464,108 |                   |          | $    | 413,970 |              
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |               |         | 
|Cash paid (refunded) for:                                                                          |                                                              |                                                     |         |                   |          |      |         |              
|                                                                                                   | Interest, net of amounts capitalized                         |                                                     | $       | 14,304            |          |      | $       | 20,005        |        
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |               |         | 
|                                                                                                   | Income taxes refunded                                        |                                                     | $       | (561              | )        |      | $       | (63,391       | )      
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |               |         | 
|Non-cash investing and financing activities:                                                       |                                                              |                                                     |         |                   |          |      |         |              
|                                                                                                   | Notes payable canceled under the aircraft purchase agreement |                                                     | $       | (7,000            | )        |      | $       | (10,500       | )      
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |               |         | 
|                                                                                                   | Notes payable issued under the aircraft purchase agreement   |                                                     | $       |                  |          |      | $       | 10,500        |        
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |               |         | 
|                                                                                                   | Payment in kind notes issued, net of returns                 |                                                     | $       | 4,813             |          |      | $       | 3,810         |        
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |               |         | 
|                                                                                                   | Reclassification of advances to parent company, net          |                                                     | $       |                  |          |      | $       | 257,771       |        
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |               |         | 
|                                                                                                   | Issuance of convertible notes                                |                                                     | $       |                  |          |      | $       | 67,902        |        
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |               |         | 
|                                                                                                   | Cancellation of convertible notes                            |                                                     | $       | (660              | )        |      | $       | (7,716        | )      
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |               |         | 
|                                                                                                   | Issuance of warrants                                         |                                                     | $       |                  |          |      | $       | 35,383        |        
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |               |         | 
|                                                                                                   | Exercise of warrants                                         |                                                     | $       | (17               | )        |      | $       |              |        
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |               |         | 
|                                                                                                   | Equipment acquired through capital lease                     |                                                     | $       |                  |          |      | $       | 16,878        |        
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |               |         | 
|                                                                                                   | Equipment acquired with issuance of notes payable            |                                                     | $       |                  |          |      | $       | 64,163        |        
|                                                                                                   |                                                              |                                                     |         |                   |          |      |         |               |         | 

See accompanying notes to condensed financial statements.

17



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##### Table of Contents






AMERICA WEST AIRLINES, INC.Notes
to Condensed Financial StatementsSeptember 30, 2003



|1. |  | BASIS OF PRESENTATION
|-- |  | ---------------------

The unaudited condensed financial statements included herein have been
prepared by AWA, a wholly owned subsidiary of Holdings, pursuant to the rules
and regulations of the Securities and Exchange Commission and, in accordance
with those rules and regulations, certain information and footnotes required by
generally accepted accounting principles have been omitted. In the opinion of
management, the condensed financial statements reflect all adjustments, which
are of a normal recurring nature, necessary for a fair presentation. Certain
prior year amounts have been reclassified to conform with current year
presentation. The accompanying condensed financial statements should be read
in conjunction with the financial statements and related notes thereto included
in AWAs Annual Report on Form 10-K for the year ended December 31, 2002.



|2. |  | RESTATEMENT OF PREVIOUSLY REPORTED AMOUNTS
|-- |  | ------------------------------------------

As disclosed in our Form 10-K for the year ended December 31, 2002, AWA
has restated its financial statements for the fiscal year ended December 31,
2001 and its unaudited financial statements for the first, second and third
quarters of fiscal year ended December 31, 2002. The changes include:



| |  |  | a change in the timing from the first quarter of 2002 back to the
fourth quarter of 2001 of the non-cash impairment charge of
approximately $39.2 million recorded to adjust the carrying value of
owned aircraft to market value and the related non-cash impairment
charge of approximately $64.1 million recorded to write off ERV that
arose in connection with the Companys plan of reorganization from
bankruptcy in 1994, both of which charges were previously recorded in
the first quarter of 2002; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the recognition of a full valuation allowance relating to AWAs net
deferred tax assets.                                                                                                                                                                                                                                                                                                                                                                                                                          

Impairment Charges

SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Ofrequires that an impairment analysis be
performed whenever circumstances indicate that the carrying amount of an asset
that an entity expects to hold and use may not be recoverable.

As a result of the adverse impacts on AWA and the airline industry as a
whole resulting from the terrorist events of September 11, 2001 and their
aftermath, AWA performed an assessment of impairment of its owned aircraft
during 2001 and again in connection with the preparation of the interim
financial statements for the first quarter of 2002.

As a result of AWAs assessments, no impairment adjustment was recorded in
the financial statements initially issued for 2001. AWA recorded an impairment
charge of approximately $39.2 million in the first quarter of 2002 to adjust
the carrying value of AWAs owned aircraft to reflect market values at that
time. Such accounting treatment was considered appropriate at the time of the
issuance of the applicable financial statements. In connection with the
preparation of the financial statements and the related audit for the fiscal
year ended December 31, 2002, AWA determined that the more appropriate
recognition of the impairment charge of approximately $39.2 million was in the
fourth quarter of 2001 rather than in the first quarter of 2002.

In addition, SFAS No. 121 requires that goodwill that arose in a purchase
business combination be allocated, and included as part of the asset base, in
determining recoverability and measuring impairment. AWA did not have goodwill
at December 31, 2001, but did have a significant amount of unamortized ERV.
AWA has determined that a portion of the unamortized ERV balance should have
been allocated to AWAs owned aircraft in the impairment analysis performed for
the year ended December 31, 2001. The remaining unamortized balance of ERV was
written off in the first quarter of 2002 as a cumulative effect of a change in
accounting principle, upon adoption of SFAS No. 142, Goodwill and Other
Intangible Assets.

The impact of the above described matters is to change the period of
recognition for these non-cash costs between late 2001 and early 2002.

18



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##### Table of Contents



AMERICA WEST AIRLINES, INC.Notes
to Condensed Financial StatementsSeptember 30, 2003

Deferred Income Taxes

SFAS No. 109, Accounting for Income Taxesrequires that a valuation
allowance be established when it is more likely than not that all or a
portion of deferred tax assets will not be realized. A review of all available
positive and negative evidence needs to be considered, including the companys
performance, the market environment in which the company operates, forecasts of
future profitability, the utilization of past tax credits, length of
carryforward periods and similar factors. SFAS No. 109 further states that it
is difficult to conclude that a valuation allowance is not needed when there is
negative evidence such as cumulative losses in recent years. Therefore,
cumulative losses weigh heavily in the overall assessment.

AWA had originally reported a net deferred tax liability at December 31,
2001. After consideration of the restatement discussed above, AWA had a net
deferred tax asset and was in a cumulative loss position for the three years
ended December 31, 2001. A full valuation allowance has been established
relating to AWAs net deferred tax assets at December 31, 2001, and relating to
net deferred tax assets generated by losses in 2002. We expect to continue to
record a full valuation allowance on future tax benefits until we have achieved
several quarters of consecutive profitable results coupled with an expectation
of continued profitability.

As a result of the adjustments discussed above, AWAs financial statements
for the third quarter and the nine months ended September 30, 2002 have been
restated from amounts previously reported. The principal effects of these
adjustments on the accompanying financial statements are set forth below:

|                                                                                       |  |                            |         |                           |  |          |         |               |  |                |         |          |  |   |          |   |  |   |        |   |  |   |          |  
|-------------------------------------------------------------------------------------- |  | -------------------------- | ------- | ------------------------- |  | -------- | ------- | ------------- |  | -------------- | ------- | -------- |  | - | -------- | - |  | - | ------ | - |  | - | -------- | -
|                                                                                       |  | For the Three Months Ended |         | For the Nine Months Ended
|                                                                                       |  | September 30, 2002         |         | September 30, 2002       
|                                                                                       |  |                            |         |                          
|                                                                                       |  |                            |         |                           |  |          |         |               |  | (in thousands) |         |          |  |   |          |   |  |  
|                                                                                       |  | As Previously              |         | Restatement               |  | As       |         | As Previously |  | Restatement    |         | As      
|                                                                                       |  | Reported                   |         | Adjustments               |  | Restated |         | Reported      |  | Adjustments    |         | Restated
|                                                                                       |  |                            |         |                           |  |          |         |               |  |                |         |         
|Operating loss                                                                         |  | $                          | (42,232 | )                         |  | $        |        |               |  | $              | (42,232 | )        |  | $ | (164,840 | ) |  | $ | 39,225 |   |  | $ | (125,615 | )
|                                                                                       |  |                            |         |                           |  |          |         |               |  |                |         |          |  |   |          |   |  |   |        |   |  |   |          |  
|Loss before income tax benefit and
cumulative
effect of change in accounting principle |  |                            | (51,771 | )                         |  |          |        |               |  |                | (51,771 | )        |  |   | (205,643 | ) |  |   | 39,225 |   |  |   | (166,418 | )
|Income tax benefit                                                                     |  |                            | (19,444 | )                         |  |          | 19,444  |               |  |                |        |          |  |   | (77,936  | ) |  |   | 47,452 |   |  |   | (30,484  | )
|Loss before cumulative effect of change in
accounting principle                        |  |                            | (32,327 | )                         |  |          | (19,444 | )             |  |                | (51,771 | )        |  |   | (127,707 | ) |  |   | (8,227 | ) |  |   | (135,934 | )
|Cumulative effect of change in accounting
principle                                    |  |                            |        |                           |  |          |        |               |  |                |        |          |  |   | (252,010 | ) |  |   | 64,061 |   |  |   | (187,949 | )
|Net loss                                                                               |  | $                          | (32,327 | )                         |  | $        | (19,444 | )             |  | $              | (51,771 | )        |  | $ | (379,717 | ) |  | $ | 55,834 |   |  | $ | (323,883 | )
|                                                                                       |  |                            |         |                           |  |          |         |               |  |                |         |          |  |   |          |   |  |   |        |   |  |   |          |  



|3. |  | ADVANCES TO PARENT COMPANY AND AFFILIATE
|-- |  | ----------------------------------------

As of September 30, 2003, AWA had net advances to Holdings of $223.7
million, which were classified in Other Assetson AWAs condensed balance
sheet due to certain restrictions related to the timing of repayment under the
$429 million government guaranteed loan and the $73.2 million term loan. In
addition, AWA had a net payable of $34.5 million due principally to TLC, a
wholly owned subsidiary of Holdings. This payable, which is primarily related
to credit card receipts collected by AWA for vacation packages sold by TLC, was
classified in AWAs condensed balance sheet as a current liability.



|4. |  | STOCK OPTIONS
|-- |  | -------------

Certain of AWAs employees are eligible to participate in the stock option
plans of Holdings. Holdings accounts for its stock option plans in accordance
with the provisions of APB Opinion No. 25, Accounting for Stock Issued to
Employees,and related interpretations. As such, compensation expense would
be recorded on the date of grant only if the current market price of the
underlying stock exceeded the exercise price. Accordingly, no compensation
cost has been recognized for stock options in Holdings condensed consolidated
financial statements. Had Holdings determined compensation cost based on the
fair value at the grant date for its stock options under SFAS No. 123,
Accounting for Stock-Based Compensation,and allocated the compensation
expense to AWA for its employees participating in the stock option plans, AWAs
net income (loss) would have been reduced to the pro forma amounts indicated
below:

19



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##### Table of Contents



AMERICA WEST AIRLINES, INC.Notes
to Condensed Financial StatementsSeptember 30, 2003

|                                 |  |                    |        |                   |  |                |         |      |  |   |        |               |  |   |          |  
|-------------------------------- |  | ------------------ | ------ | ----------------- |  | -------------- | ------- | ---- |  | - | ------ | ------------- |  | - | -------- | -
|                                 |  | Three Months Ended |        | Nine Months Ended
|                                 |  | September 30,      |        | September 30,    
|                                 |  | 2003               |        | 2002              |  | 2003           |         | 2002
|                                 |  |                    |        |                   |  |                |         |     
|                                 |  |                    |        |                   |  | (as restated)  |         |      |  |   |        | (as restated)
|                                 |  |                    |        |                   |  | (in thousands) |         |      |  |  
|Net income (loss), as reported   |  | $                  | 29,650 |                   |  | $              | (51,771 | )    |  | $ | 44,247 |               |  | $ | (323,883 | )
|Stock-based compensation expense |  |                    | (1,051 | )                 |  |                | (1,671  | )    |  |   | (3,214 | )             |  |   | (4,546   | )
|                                 |  |                    |        |                   |  |                |         |      |  |   |        |               |  |   |          |  
|Pro forma net income (loss)      |  | $                  | 28,599 |                   |  | $              | (53,442 | )    |  | $ | 41,033 |               |  | $ | (328,429 | )
|                                 |  |                    |        |                   |  |                |         |      |  |   |        |               |  |   |          |  



|5. |  | FLIGHT EQUIPMENT
|-- |  | ----------------

In September 2003, AWA entered into an operating lease for one new Airbus
A320 aircraft with a lease term of 20 years.

In April 2003, the Company revised the estimated useful life for
capitalized maintenance on certain of its engines driven by a new maintenance
agreement that guarantees minimum cycles on engine overhauls. The net impact
of this change in estimate was an increase in net income for the three and nine
months ended September 30, 2003 by $4.8 million and $7.3 million, respectively.



|6. |  | ISSUANCE OF SENIOR EXCHANGEABLE NOTES
|-- |  | -------------------------------------

In July 2003, AWA completed a private placement of $75 million issue price
of Senior Exchangeable Notes due 2023. The notes bear cash interest until July
30, 2008. Thereafter, the notes will cease bearing cash interest and begin
accruing original issue discount at a rate of 7.25% until maturity. Each note
was issued at a price of $343.61 and is exchangeable for class B common stock
of Holdings at an exchange ratio of 32.038 shares per $1,000 principal amount
at maturity of the notes (subject to adjustment in certain circumstances).
This represents an equivalent conversion price of approximately $10.73 per
share. The aggregate amount due at maturity, including accrued original issue
discount from July 31, 2008, will be $218,271,000. The notes are
unconditionally guaranteed by Holdings.

Holders may exchange their notes for the shares of class B common stock of
Holdings in any fiscal quarter commencing after September 30, 2003, if, as of
the last day of the preceding fiscal quarter, the closing sale price of the
class B common stock for at least 20 trading days in a period of 30 consecutive
trading days ending on the last trading day of such preceding fiscal quarter is
more than 110% of the accreted exchange price per share of Class B common stock
on the last day of such preceding fiscal quarter. If the foregoing condition is
satisfied, then the notes will be exchangeable at any time at the option of the
holder through maturity. The accreted exchange price per share as of any day
will equal the issue price of a note plus accrued original issue discount to
that day divided by 32.038, subject to any adjustments to the exchange rate
through that day.

On or before July 30, 2018, a holder also may exchange its notes for
shares of the Class B common stock at any time after a 10 consecutive
trading-day period in which the average of the trading prices for the notes for
that 10 trading-day period was less than 103% of the average exchange value for
the notes during that period. Exchange value is equal to the product of the
closing sale price for the shares of Class B common stock on a given day
multiplied by the then current exchange rate, which is the number of shares of
Class B common stock for which each note is then exchangeable.

In addition, the holders may exchange the notes if the notes have been
called for redemption or if certain specified corporate transactions have
occurred.

Holders of the notes may require AWA to repurchase the notes at a price
equal to the original issue price plus accrued cash interest and original issue
discount, if any, on July 30, 2008, 2013 and 2018. The purchase price of such
notes may be paid in cash or class B common stock of Holdings, subject to
certain restrictions. In addition, each holder may require AWA to purchase all
or a portion of such holders notes upon the occurrence of certain change of
control events concerning AWA or Holdings. AWA may redeem the notes, in whole
or in part, on or after July 30, 2008 at a price equal to the original issue
price plus accrued cash interest and original issue discount, if any.

20



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AMERICA WEST AIRLINES, INC.Notes
to Condensed Financial StatementsSeptember 30, 2003

In connection with the offering AWA placed $42.9 million of the net
proceeds in a cash collateral account to secure the scheduled principal and
interest payments on certain of its indebtedness through September 30, 2004.
This amount has been recorded as restricted cash in the accompanying condensed
consolidated balance sheet.

In August 2003, the initial purchasers of the Senior Exchangeable Notes
discussed above exercised their overallotment option and purchased an
additional $11.8 million issue price amount of such notes. The aggregate
amount due at maturity, including accrued original issue discount from July 31,
2008, for these additional notes will be $34,424,000.



|7. |  | COMPREHENSIVE INCOME (LOSS)
|-- |  | ---------------------------

Comprehensive income (loss) includes changes in the fair value of
derivative financial instruments that qualify for hedge accounting. For the
three and nine months ended September 30, 2003, AWA recorded total
comprehensive income of $28.9 million and $52.2 million, respectively. For the
three and nine months ended September 30, 2002, AWA recorded a total
comprehensive loss of $47.8 million and $321.8 million, respectively. The
difference between net income (loss) and comprehensive income (loss) for the
three and nine months ended September 30, 2003 and 2002 is detailed in the
following table:

|                            |                                                                                                                     |   |                    |      |                   |   |                |       |      |   |        |        |               |   |          |        |  
|--------------------------- | ------------------------------------------------------------------------------------------------------------------- | - | ------------------ | ---- | ----------------- | - | -------------- | ----- | ---- | - | ------ | ------ | ------------- | - | -------- | ------ | -
|                            |                                                                                                                     |   | Three Months Ended |      | Nine Months Ended
|                            |                                                                                                                     |   | September 30,      |      | September 30,    
|                            |                                                                                                                     |   | 2003               |      | 2002              |   | 2003           |       | 2002
|                            |                                                                                                                     |   |                    |      |                   |   |                |       |     
|                            |                                                                                                                     |   |                    |      |                   |   | (as restated)  |       |      |   |        |        | (as restated)
|                            |                                                                                                                     |   |                    |      |                   |   | (in thousands) |       |      |   |       
|Net income (loss)           |                                                                                                                     | $ | 29,650             |      |                   | $ | (51,771        | )     |      | $ | 44,247 |        |               | $ | (323,883 | )     
|                            |                                                                                                                     |   |                    |      |                   |   |                |       |      |   |        |        |               |   |          |       
|                            | Unrealized gains (losses) on derivative instruments                                                                 |   |                    | (793 | )                 |   |                | 3,940 |      |   |        | 17,097 |               |   |          | 3,459  |  
|                            | Reclassification adjustment to net income (loss) of
previously reported unrealized losses on
derivative instruments |   |                    | 84   |                   |   |                |      |      |   |        | (9,126 | )             |   |          | (1,390 | )
|                            |                                                                                                                     |   |                    |      |                   |   |                |       |      |   |        |        |               |   |          |       
|                            | Total other comprehensive income (loss)                                                                             |   |                    | (709 | )                 |   |                | 3,940 |      |   |        | 7,971  |               |   |          | 2,069  |  
|                            |                                                                                                                     |   |                    |      |                   |   |                |       |      |   |        |        |               |   |          |       
|Comprehensive income (loss) |                                                                                                                     | $ | 28,941             |      |                   | $ | (47,831        | )     |      | $ | 52,218 |        |               | $ | (321,814 | )     
|                            |                                                                                                                     |   |                    |      |                   |   |                |       |      |   |        |        |               |   |          |       



|8. |  | SPECIAL CHARGES
|-- |  | ---------------

In February 2003, AWA announced the elimination of its hub operations in
Columbus, Ohio. As a result, 12 regional jets, all of which were operated by
Chautauqua Airlines under the America West Express banner, have been phased out
of the fleet. In addition, the hub has been downsized from 49 daily departures
to 15 destinations to four flights per day to Phoenix and Las Vegas. Service
to New York City La Guardia Airport was also eliminated because perimeter rules
at the airport prohibit flights beyond 1,500 miles, precluding service from
AWAs hubs in Phoenix and Las Vegas. In the first and second quarters of 2003,
AWA recorded special charges of $1.0 million and $9.6 million, respectively,
related to the costs associated with the termination of certain aircraft and
facility contracts, employee transfer and severance expenses and the write-off
of leasehold improvements in Columbus, Ohio.

In the first quarter of 2003, AWA recorded a $1.1 million reduction in
special charges related to the earlier-than-planned return of certain leased
aircraft in 2001 and 2002, as all payments related to these aircraft returns
have been made.

In April 2003, as part of a cost reduction program, AWA implemented a plan
to reduce management, professional and administrative payroll costs which
resulted in 161 fewer employees within these workgroups. As a result, AWA
recorded a special charge of $1.8 million related to this reduction-in-force.

In June 2003, AWA recorded an impairment loss of $2.6 million related to
three owned Boeing 737-200 aircraft that have been or will be grounded.

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AMERICA WEST AIRLINES, INC.
Notes to Condensed Financial Statements
September 30, 2003

In the third quarter of 2003, AWA recorded an additional $0.5 million of
special charges associated with the elimination of our hub operations in
Columbus, Ohio. These special charges were offset by a $0.5 million reduction
in special charges related to the revision of estimated costs associated with
the sale and leaseback of certain aircraft.

The following table presents the payments and other settlements made
during the nine months ended September 30, 2003 related to the special charge
accruals:

|                                                                |  |                |       |               |  |             |        |              |  |       |       |   |  |          |        |   |  |   |        |  
|--------------------------------------------------------------- |  | -------------- | ----- | ------------- |  | ----------- | ------ | ------------ |  | ----- | ----- | - |  | -------- | ------ | - |  | - | ------ | -
|                                                                |  |                |       |               |  |             |        |              |  |       |       |   |  | Contract |        |   |  |  
|                                                                |  | Sale-          |       | Fleet         |  | Reductions- |        | Termination/ |  |       |       |  
|                                                                |  | Leaseback      |       | Restructuring |  | in-force    |        | Other Costs  |  | Total
|                                                                |  |                |       |               |  |             |        |              |  |      
|                                                                |  | (in thousands)
|Balance at December 31, 2002                                    |  | $              | 2,476 |               |  | $           | 3,357  |              |  | $     |      |   |  | $        |       |   |  | $ | 5,833  |  
|                                                                |  |                |       |               |  |             |        |              |  |       |       |   |  |          |        |   |  |   |        |  
|Special charges                                                 |  |                |      |               |  |             | (1,072 | )            |  |       | 470   |   |  |          | 500    |   |  |   | (102   | )
|Payments                                                        |  |                |      |               |  |             | (271   | )            |  |       |      |   |  |          |       |   |  |   | (271   | )
|Loss on sale-leasebacks                                         |  |                | (6    | )             |  |             |       |              |  |       |      |   |  |          |       |   |  |   | (6     | )
|                                                                |  |                |       |               |  |             |        |              |  |       |       |   |  |          |        |   |  |   |        |  
|Balance at March 31, 2003                                       |  | $              | 2,470 |               |  | $           | 2,014  |              |  | $     | 470   |   |  | $        | 500    |   |  | $ | 5,454  |  
|                                                                |  |                |       |               |  |             |        |              |  |       |       |   |  |          |        |   |  |   |        |  
|Special charges                                                 |  |                |      |               |  |             | 2,617  |              |  |       | 1,840 |   |  |          | 9,624  |   |  |   | 14,081 |  
|Payments                                                        |  |                |      |               |  |             | (182   | )            |  |       | (894  | ) |  |          | (6,000 | ) |  |   | (7,076 | )
|Loss on sale-leasebacks                                         |  |                | (647  | )             |  |             |       |              |  |       |      |   |  |          |       |   |  |   | (647   | )
|Write-off of leasehold improvements
Due to Columbus hub closure |  |                |      |               |  |             |       |              |  |       |      |   |  |          | (539   | ) |  |   | (539   | )
|Impairment loss                                                 |  |                |      |               |  |             | (2,617 | )            |  |       |      |   |  |          |       |   |  |   | (2,617 | )
|                                                                |  |                |       |               |  |             |        |              |  |       |       |   |  |          |        |   |  |   |        |  
|Balance at June 30, 2003                                        |  | $              | 1,823 |               |  | $           | 1,832  |              |  | $     | 1,416 |   |  | $        | 3,585  |   |  | $ | 8,656  |  
|                                                                |  |                |       |               |  |             |        |              |  |       |       |   |  |          |        |   |  |   |        |  
|Special charges                                                 |  |                | (510  | )             |  |             |       |              |  |       |      |   |  |          | 510    |   |  |   |       |  
|Payments                                                        |  |                |      |               |  |             | (258   | )            |  |       | (966  | ) |  |          | (1,009 | ) |  |   | (2,233 | )
|Loss on sale-leasebacks                                         |  |                | (682  | )             |  |             |       |              |  |       |      |   |  |          |       |   |  |   | (682   | )
|                                                                |  |                |       |               |  |             |        |              |  |       |       |   |  |          |        |   |  |   |        |  
|Balance at September 30, 2003                                   |  | $              | 631   |               |  | $           | 1,574  |              |  | $     | 450   |   |  | $        | 3,086  |   |  | $ | 5,741  |  
|                                                                |  |                |       |               |  |             |        |              |  |       |       |   |  |          |        |   |  |   |        |  

AWA expects to make payments related to these special charges through the
fourth quarter of 2005.



|9. |  | INCOME TAXES
|-- |  | ------------

AWA was in a cumulative loss position for the three years ended December
31, 2002. In accordance with SFAS No. 109, Accounting for Income Taxes,a
full valuation allowance had been established relating to AWAs net deferred
tax asset, principally net operating loss (NOL), at that date.

With its third quarter financial performance, AWA is in a position to
realize a profit for the full year 2003 and utilize NOL to reduce its income
tax obligation. AWAs net deferred tax asset, which includes the NOL, was
subject to a full valuation allowance. Utilization of this NOL results in a
corresponding decrease in the valuation allowance, which offsets AWAs tax
provision. Accordingly, no income tax expense has been recorded in the
accompanying condensed income statements.



|10. |  | SEGMENT DISCLOSURES
|--- |  | -------------------

AWA is one reportable operating segment. Accordingly, the segment
reporting financial data required by SFAS No. 131,Disclosures About Segments
of an Enterprise and Related Informationis included in the accompanying
condensed balance sheets and statements of operations.



|11. |  | RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
|--- |  | -----------------------------------------

In January 2003, the FASB issued FIN 46, Consolidation of Variable
Interest Entities.FIN 46 requires that companies that control another entity
through interests other than voting interests should consolidate the controlled
entity. FIN 46 is effective for variable interest entities created after
January 31, 2003 and to any variable interest entities in which the company
obtains an interest after that date. FIN 46 was originally effective for the
quarter ending September 30, 2003 for variable interest entities in which the
company held a variable interest that it acquired before
February 1, 2003. However, in October 2003, the FASB deferred the
effective date for implementation of FIN 46 until December 31, 2003. As
discussed in Managements Discussion and Analysis of Financial Condition and

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AMERICA WEST AIRLINES, INC.
Notes to Condensed Financial Statements
September 30, 2003

Results of Operations  Liquidity and Capital Resources, Pass Through Trusts,
AWA is the lessee in a series of leveraged lease financings covering 54 leased
aircraft. AWA does not provide residual value guarantees under these lease
arrangements. Each lease does have a purchase option that allows AWA to
purchase the aircraft at a fixed price, which approximates the aircrafts
expected fair market value at the option date, near the end of the lease term.
In addition, AWA is also the lessee under certain long-term leases at various
airports. At certain of these airports, municipalities have issued revenue
bonds to improve airport facilities that are leased by AWA and accounted for as
operating leases. AWA does not guarantee the underlying debt related to these
operating leases. AWA currently believes it is not the primary beneficiary, as
defined by FIN 46, under these arrangements. However, we will continue to
evaluate the provisions of FIN 46, including any modifications that may result
from the FASBs deferral of the effective date to determine its impact, if any,
on the financial condition and results of operations of AWA.

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133
on Derivative Instruments and Hedging Activities. SFAS No. 149 amends and
clarifies certain derivative instruments embedded in other contracts, and for
hedging activities under SFAS No. 133. SFAS No. 149 was effective for certain
contracts entered into or modified by the company after June 30, 2003. AWA
adopted SFAS No. 149 effective July 1, 2003 with no material impact on its
financial condition or results of operations.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity.
SFAS No. 150 specifies that freestanding financial instruments within its scope
constitute obligations of the issuer and that, therefore, the issuer must
classify them as liabilities. Such freestanding financial instruments include
mandatorily redeemable financial instruments, obligations to repurchase the
issuers equity shares by transferring assets and certain obligations to issue
a variable number of shares. SFAS No. 150 was effective immediately for all
financial instruments entered into or modified after May 31, 2003. For all
other instruments, SFAS No. 150 was effective at the beginning of the third
quarter of 2003. AWA adopted SFAS No. 150 effective July 1, 2003 with no
material impact on its financial condition or results of operations.



|12. |  | SUBSEQUENT EVENT
|--- |  | ----------------

Sale of Investment in Hotwire.com

In September 2003, IAC/InterActiveCorp announced that it had entered into
an agreement to acquire Hotwire.com, a discount travel website for $665 million
in cash plus the assumption of approximately $20 million of options and
warrants. Hotwire was founded by the Texas Pacific Group, American Airlines,
Continental Airlines, Northwest Airlines, United Airlines, US Airways and AWA
in October 2000. AWA has an ownership interest of approximately 1.5% in
Hotwire.com and expects to realize a gain in the range of $7 million to $9
million upon completion of the transaction. The transaction is expected to
close in the quarter ended December 31, 2003.

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##### Table of Contents



AMERICA WEST HOLDINGS CORPORATION
AND
AMERICA WEST AIRLINES INC.
September 30, 2003




ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Holdings is the parent company of AWA and TLC. AWA is the eighth largest
commercial airline carrier in the United States operating through its principal
hubs located in Phoenix, Arizona and Las Vegas, Nevada. As of September 30,
2003, AWA served 59 destinations in North America, including six destinations
in Mexico and three in Canada. TLC arranges and sells vacation packages
primarily to Las Vegas that may include airfare, hotel accommodations and
ground transportation. Holdings primary business activity is ownership of
all the capital stock of AWA and TLC.

Restatement Of Previously Reported Amounts

As disclosed in our Form 10-K for the year ended December 31, 2002,
Holdings and AWA have restated their financial statements for the fiscal year
ended December 31, 2001 and their unaudited financial statements for the first,
second and third quarters of fiscal year ended December 31, 2002. The changes
include:



| |  |  | a change in the timing from the first quarter of 2002 back to the
fourth quarter of 2001 of the non-cash impairment charge of
approximately $39.2 million recorded to adjust the carrying value of
owned aircraft to market value and the related non-cash impairment
charge of approximately $64.1 million recorded to write off ERV that
arose in connection with the Companys plan of reorganization from
bankruptcy in 1994, both of which charges were previously recorded in
the first quarter of 2002; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the recognition of full valuation allowances relating to Holdings
and AWAs net deferred tax assets.                                                                                                                                                                                                                                                                                                                                                                                                             

See Note 2, Restatement of Previously Reported Amountsin both Notes to
Condensed Consolidated Financial Statements of Holdings and Notes to Condensed
Financial Statements of AWA.

Impairment Charges

SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Ofrequires that an impairment analysis be
performed whenever circumstances indicate that the carrying amount of an asset
that an entity expects to hold and use may not be recoverable.

As a result of the adverse impacts on Holdings and AWA and the airline
industry as a whole resulting from the terrorist events of September 11, 2001
and their aftermath, AWA performed an assessment of impairment of its owned
aircraft during 2001 and again in connection with the preparation of the
interim financial statements for the first quarter of 2002.

As a result of AWAs assessments, no impairment adjustment was recorded in
the financial statements initially issued for 2001. The Company recorded an
impairment charge of approximately $39.2 million in the first quarter of 2002
to adjust the carrying value of AWAs owned aircraft to reflect market values
at that time. Such accounting treatment was considered appropriate at the time
of the issuance of the applicable financial statements. In connection with the
preparation of the financial statements and the related audit for the fiscal
year ended December 31, 2002, the Company determined that the more appropriate
recognition of the impairment charge of approximately $39.2 million was in the
fourth quarter of 2001 rather than in the first quarter of 2002.

In addition, SFAS No. 121 requires that goodwill that arose in a purchase
business combination be allocated, and included as part of the asset base, in
determining recoverability and measuring impairment. The Company did not have
goodwill at December 31, 2001, but did have a significant amount of unamortized
ERV. The Company has determined that a portion of the unamortized ERV balance
should have been allocated to AWAs owned aircraft in the impairment analysis
performed for the year ended December 31, 2001. The remaining unamortized
balance of ERV was written off in the first quarter of 2002 as a cumulative
effect of a change in accounting principle, upon adoption of SFAS No. 142,
Goodwill and Other Intangible Assets.

The impact of the above described matters is to change the period of
recognition for these non-cash costs between late 2001 and early 2002.

24



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##### Table of Contents



AMERICA WEST HOLDINGS CORPORATION
AND
AMERICA WEST AIRLINES, INC.
September 30, 2003

Deferred Income Taxes

SFAS No. 109, Accounting for Income Taxesrequires that a valuation
allowance be established when it is more likely than not that all or a
portion of deferred tax assets will not be realized. A review of all available
positive and negative evidence needs to be considered, including the companys
performance, the market environment in which the company operates, forecasts of
future profitability, the utilization of past tax credits, length of
carryforward periods and similar factors. SFAS No. 109 further states that it
is difficult to conclude that a valuation allowance is not needed when there is
negative evidence such as cumulative losses in recent years. Therefore,
cumulative losses weigh heavily in the overall assessment.

Holdings and AWA had originally reported net deferred tax liabilities at
December 31, 2001. After consideration of the restatement discussed above,
Holdings and AWA each had net deferred tax assets and were in a cumulative loss
position for the three years ended December 31, 2001. Full valuation
allowances have been established relating to Holdings and AWAs net deferred
tax assets at December 31, 2001, and relating to net deferred tax assets
generated by losses in 2002. We expect to continue to record a full valuation
allowance on future tax benefits until we have achieved several quarters of
consecutive profitable results coupled with an expectation of continued
profitability.

Overview

In the third quarter of 2003, Holdings realized an operating profit of
$50.1 million and a pretax and net profit of $32.9 million, or $0.60 per
diluted share. During the third quarter, we benefited from the following:



| |  |  | More rational capacity in markets served by AWA as a result of
industry capacity declines over the past year.                                                                                                                                                                                                                                                                                      
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Aggressive yield management during the peak summer travel period
and continued favorable consumer response to our business-friendly fare
structure, which was implemented in March 2002. Passenger revenue per
available seat mile (RASM) improved 14.3% from 6.84 cents in the third
quarter of 2002 to 7.82 cents in the third quarter of 2003, due to
improvement in both load factor and yield.
|
| |  |  | Operating cost per available seat mile (CASM) decreased 2.1% to
7.57 cents, despite an increase in the average fuel price per gallon
excluding tax of 13.1% from 74.8 cents in the third quarter of 2002 to
84.6 cents per gallon in the third quarter of 2003.                                                                                                                                    
|
| |  |  | Continued strong operational performance, despite record load
factors in the quarter.                                                                                                                                                                                                                                                                                                              

As a result of our financial results in the third quarter, the benefit of
$81.3 million of federal government assistance in the second quarter and
improving operating performance, we now expect to break even or realize a small
profit for the full year 2003. However, our results of operations in the
fourth quarter may be negatively impacted by the continued soft economic
conditions, decline in business traffic, rising fuel prices and increased
competition in the markets we serve.

As of September 30, 2003, Holdings unrestricted and restricted cash, cash
equivalents, short-term investments and investments in debt securities totaled
$584.5 million. This included the proceeds from a private placement of
approximately $86.8 million of Senior Exchangeable Notes in the third quarter
of 2003. As part of this transaction, AWA placed $42.9 million of the net
proceeds in a cash collateral account to secure principal and interest payments
on certain of its indebtedness through September 30, 2004. See Note 5,
Issuance of Senior Exchangeable Notesin Notes to Condensed Consolidated
Financial Statements.

Although there can be no assurances, we believe that cash flow from
operating activities and proceeds from the issuance of the senior exchangeable
notes, coupled with existing cash balances and financing commitments, will be
adequate to fund our operating and capital needs as well as enable us to
maintain compliance with our various debt agreements through at least December
31, 2004.

25



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##### Table of Contents



AMERICA WEST HOLDINGS CORPORATION
AND
AMERICA WEST AIRLINES, INC.
September 30, 2003

Airline Operations Update

AWA has made significant strides in improving its operating performance
over the last three years since initiating comprehensive customer service
initiatives in July 2000. Overall, in the third quarter of 2003, we continued
to see positive trends in our key statistics.

AWA reported the following operating statistics to the U.S. Department of
Transportation (DOT) for the third quarters of 2003, 2002 and 2001:

|                        |  |      |      |      |  |      |      |             |  |             |      |     |  |     |      |     |  |     |      |     |  |  |      |  |  |                |       |                |  |  |       |   |  |  |       |   |  |  |       |  
|----------------------- |  | ---- | ---- | ---- |  | ---- | ---- | ----------- |  | ----------- | ---- | --- |  | --- | ---- | --- |  | --- | ---- | --- |  |  | ---- |  |  | -------------- | ----- | -------------- |  |  | ----- | - |  |  | ----- | - |  |  | ----- | -
|                        |  |      |      |      |  |      |      |             |  |             |      |     |  |     |      |     |  |     |      |     |  |  |      |  |  | Percent Change |       | Percent Change
|                        |  | 2003 |      | 2002 |  | 2001 |      | 2003  2002 |  | 2003 - 2001
|                        |  |      |      |      |  |      |      |             |  |            
|                        |  | Jul  |      | Aug  |  | Jul  |      | Aug         |  | Jul         |      | Aug |  | Jul |      | Aug |  | Jul |      | Aug
|                        |  |      |      |      |  |      |      |             |  |             |      |     |  |     |      |     |  |     |      |    
|On-time performance (a) |  |      | 82.0 |      |  |      | 80.8 |             |  |             | 78.7 |     |  |     | 82.7 |     |  |     | 74.3 |     |  |  | 70.6 |  |  |                | 4.2   |                |  |  | (2.3  | ) |  |  | 10.4  |   |  |  | 14.4  |  
|Completion factor (b)   |  |      | 99.2 |      |  |      | 99.3 |             |  |             | 98.4 |     |  |     | 98.4 |     |  |     | 98.1 |     |  |  | 97.9 |  |  |                | 0.8   |                |  |  | 0.9   |   |  |  | 1.1   |   |  |  | 1.4   |  
|Mishandled baggage (c)  |  |      | 3.44 |      |  |      | 3.59 |             |  |             | 4.04 |     |  |     | 3.74 |     |  |     | 4.17 |     |  |  | 4.15 |  |  |                | (14.9 | )              |  |  | (4.0  | ) |  |  | (17.5 | ) |  |  | (13.5 | )
|Customer complaints (d) |  |      | 0.63 |      |  |      | 0.75 |             |  |             | 2.09 |     |  |     | 1.31 |     |  |     | 4.83 |     |  |  | 3.85 |  |  |                | (69.9 | )              |  |  | (42.7 | ) |  |  | (87.0 | ) |  |  | (80.5 | )



| | (a) |  | Percentage of reported flight operations arriving on time.            
| | --- |  | ----------------------------------------------------------------------
|
| | (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.

The positive operating trends reflected in the above table resulted in AWA
being ranked in the top three major airlines for all operating statistics for
June, July and August 2003 as reported in the DOT Air Travel Consumer
Report. As a result, all
12,000 AWA employees received a $50 bonus payment for meeting established
operating goals for each of the three consecutive months totaling $1.8 million.
In addition, June 2003 on-time performance was the best June performance since
1993 and June
2003 customer complaints were the lowest since June 1996.

Summary of Holdings Financial Results

Holdings recorded consolidated net income of $32.9 million in the third
quarter of 2003, or $0.60 per diluted share. This compares to a consolidated
net loss of $49.6 million, or $1.47 per diluted share, in the third quarter of
2002. The 2002 results included a nonoperating gain of $6.2 million related to
the federal government assistance received under the Air Transportation Safety
and System Stabilization Act and a $2.0 million reduction in special charges
due to a revision of the estimated costs related to the early termination of
certain aircraft leases. The Company did not record income tax expense in the
third quarter of 2003 as it currently expects to use net operating losses
generated in prior years to offset any profits expected to be realized for the
full year 2003. As discussed above under Restatement of Previously Reported
Amounts  Deferred Income Taxes,the Company recorded a full valuation
allowance relating to net deferred tax assets generated by losses in 2002.

Holdings recorded consolidated net income of $50.6 million in the first
nine months of 2003, or $1.18 per diluted share. This compares to a
consolidated loss before the cumulative effect of a change in accounting
principle of $127.7 million, or $3.79 per diluted share, in the first nine
months of 2002. Including the cumulative effect of a change in accounting
principle related to the Companys adoption of SFAS No. 142, Goodwill and
Other Intangible Assetson January 1, 2002, Holdings net loss for the first
nine months of 2002 was $335.9 million, or $9.96 per diluted share. The 2003
results include $81.3 million related to the federal government assistance
received under the Emergency Wartime Supplemental Appropriations Act, an
operating gain of $4.4 million related to the purchase and subsequent exchange
of an A320 airframe in the first quarter of 2003 and an operating gain of $1.1
million due to a revision of the estimated costs related to the early
termination of certain aircraft leases. These gains were offset in part by
special charges of $15.5 million resulting from the elimination of AWAs hub
operations in Columbus, Ohio ($11.1 million), the reduction-in-force of certain
management, professional and administrative employees ($2.3 million), the
impairment of certain owned Boeing 737-200 aircraft that have been or will be
grounded in 2003 ($2.6 million) and a

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2003

$0.5 million reduction related to the revision of estimated costs
associated with the sale and leaseback of certain aircraft. See Note 6,
Special Chargesin Notes to Condensed Consolidated Financial Statements. The
2002 results include special charges of $19.0 million primarily related to the
financial restructuring completed on January 18, 2002, a nonoperating charge of
$2.8 million related to the write-off of the Companys investment in an
e-commerce entity and a nonoperating gain of $8.5 million related to the
federal government assistance received under the Air Transportation Safety and
System Stabilization Act. As discussed above, the Company did not record
income tax expense in the first nine months of 2003. The Company recorded an
income tax benefit of $35.1 million in the first nine months of 2002 on a
pretax loss of $162.7 million. The 2002 income tax benefit resulted from
Holdings 2001 consolidated income tax return, which included a claim to
carryback losses incurred in 2001 to the tax years 1996 through 2000 due to a
change in United States income tax law. As discussed above under Restatement
of Previously Reported Amounts  Deferred Income Taxes,the Company recorded a
full valuation allowance relating to net deferred tax assets generated by
losses in 2002.

RESULTS OF OPERATIONS

The following discussion provides an analysis of AWAs results of
operations for the three and nine months ended September 30, 2003 and material
changes compared to the three and nine months ended September 30, 2002.

The table below sets forth selected operating data for AWA.

|                                                 |                      |  |                    |      |         |  |                   |      |         |  |      |      |           |  |         |      |               |  |         |      |  |  |      |     | 
|------------------------------------------------ | -------------------- |  | ------------------ | ---- | ------- |  | ----------------- | ---- | ------- |  | ---- | ---- | --------- |  | ------- | ---- | ------------- |  | ------- | ---- |  |  | ---- | --- | 
|                                                 |                      |  | Three Months Ended |      | Percent |  | Nine Months Ended |      | Percent
|                                                 |                      |  | September 30,      |      | Change  |  | September 30,     |      | Change 
|                                                 |                      |  | 2003               |      | 2002    |  | 2003-2002         |      | 2003    |  | 2002 |      | 2003-2002
|                                                 |                      |  |                    |      |         |  |                   |      |         |  |      |      |          
|                                                 |                      |  |                    |      |         |  | (as restated)     |      |         |  |      |      |           |  |         |      | (as restated) |  |         |      | 
|Aircraft (end of period)                         |                      |  | 140                |      |         |  | 142               |      |         |  | (1.4 | )    |           |  | 140     |      |               |  | 142     |      |  |  | (1.4 | )  
|Average daily aircraft utilization (hours)(a)    |                      |  | 10.1               |      |         |  | 10.1              |      |         |  |     |      |           |  | 10.1    |      |               |  | 9.6     |      |  |  | 5.2  |    
|Available seat miles (in millions)(b)            |                      |  | 7,062              |      |         |  | 7,149             |      |         |  | (1.2 | )    |           |  | 20,887  |      |               |  | 20,076  |      |  |  | 4.0  |    
|Block hours(c)                                   |                      |  | 129,830            |      |         |  | 132,789           |      |         |  | (2.2 | )    |           |  | 389,509 |      |               |  | 374,366 |      |  |  | 4.0  |    
|Average stage length (miles)(d)                  |                      |  | 1,006              |      |         |  | 958               |      |         |  | 5.0  |      |           |  | 995     |      |               |  | 943     |      |  |  | 5.5  |    
|Average passenger journey (miles)(e)             |                      |  | 1,593              |      |         |  | 1,482             |      |         |  | 7.5  |      |           |  | 1,539   |      |               |  | 1,432   |      |  |  | 7.5  |    
|Revenue passenger miles (in millions)(f)         |                      |  | 5,635              |      |         |  | 5,356             |      |         |  | 5.2  |      |           |  | 16,009  |      |               |  | 14,807  |      |  |  | 8.1  |    
|Load factor (percent)(g)                         |                      |  | 79.8               |      |         |  | 74.9              |      |         |  | 4.9  | pts  |           |  | 76.6    |      |               |  | 73.8    |      |  |  | 2.8  | pts
|Passenger enplanements (in thousands)(h)         |                      |  | 5,322              |      |         |  | 5,165             |      |         |  | 3.0  |      |           |  | 15,162  |      |               |  | 14,547  |      |  |  | 4.2  |    
|Yield per revenue passenger mile (cents)(i)      |                      |  | 9.81               |      |         |  | 9.14              |      |         |  | 7.3  |      |           |  | 9.94    |      |               |  | 9.68    |      |  |  | 2.7  |    
|Revenue per available seat mile:                 |                      |  |                    |      |         |  |                   |      |         |  |      |      |           |  |         |      |               |  |         |      |  |  |      |    
|                                                 | Passenger (cents)(j) |  |                    | 7.82 |         |  |                   | 6.84 |         |  |      | 14.3 |           |  |         | 7.62 |               |  |         | 7.14 |  |  |      | 6.7 | 
|                                                 | Total (cents)(k)     |  |                    | 8.24 |         |  |                   | 7.13 |         |  |      | 15.6 |           |  |         | 7.95 |               |  |         | 7.46 |  |  |      | 6.6 | 
|Fuel consumption (gallons in millions)           |                      |  | 108.3              |      |         |  | 109.2             |      |         |  | (0.8 | )    |           |  | 317.9   |      |               |  | 305.3   |      |  |  | 4.1  |    
|Average fuel price (cents per gallon)            |                      |  | 84.6               |      |         |  | 74.8              |      |         |  | 13.1 |      |           |  | 85.4    |      |               |  | 69.8    |      |  |  | 22.3 |    
|Average number of full-time equivalent
employees |                      |  | 11,175             |      |         |  | 12,320            |      |         |  | (9.3 | )    |           |  | 11,518  |      |               |  | 11,957  |      |  |  | (3.7 | )  



|(a) |  | Average daily aircraft utilization  The average number of block
hours per day for all aircraft in service.                                                                                                                        
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Available seat mile (ASM)  A basic measure of production. It is
one seat flown one mile.                                                                                                                                        
|   
|(c) |  | 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.
|   
|(d) |  | Average stage length  The average of the distances flown on each
segment of every route.                                                                                                                                          
|   
|(e) |  | Average passenger journey  The average one-way trip measured in
miles for one passenger origination.                                                                                                                              
|   
|(f) |  | Revenue passenger mile (RPM)  A basic measure of sales volume. It
is one passenger flown one mile.                                                                                                                              
|   
|(g) |  | Load factor  The percentage of available seats that are filled with
revenue passengers.                                                                                                                                           
|   
|(h) |  | Passenger enplanements  The number of passengers on board an
aircraft including local, connecting and through passengers.                                                                                                         

27



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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2003



|(i) |  | Yield  A measure of airline revenue derived by dividing passenger
revenue by revenue passenger miles and expressed in cents per mile.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------
|   
|(j) |  | Passenger revenue per available seat mile (RASM)  Total passenger
revenues divided by total available seat miles.                  
|   
|(k) |  | Total revenue per available seat mile  Total operating revenues
divided by total available seat miles.                               

The table below sets forth the major components of operating cost per
available seat mile (CASM) for AWA.

|                                           |  |                    |      |         |  |                   |       |         |  |      |       |           |  |  |      |               |  |  |      |  |  |  |       |  
|------------------------------------------ |  | ------------------ | ---- | ------- |  | ----------------- | ----- | ------- |  | ---- | ----- | --------- |  |  | ---- | ------------- |  |  | ---- |  |  |  | ----- | -
|                                           |  | Three Months Ended |      | Percent |  | Nine Months Ended |       | Percent
|                                           |  | September 30,      |      | Change  |  | September 30,     |       | Change 
|                                           |  | 2003               |      | 2002    |  | 2003-2002         |       | 2003    |  | 2002 |       | 2003-2002
|                                           |  |                    |      |         |  |                   |       |         |  |      |       |          
|(in cents)                                 |  |                    |      |         |  | (as restated)     |       |         |  |      |       |           |  |  |      | (as restated) |  |  |      | 
|Salaries and related costs                 |  |                    | 2.21 |         |  |                   | 2.16  |         |  |      | 2.2   |           |  |  | 2.25 |               |  |  | 2.20 |  |  |  | 2.3   |  
|Aircraft rents                             |  |                    | 1.05 |         |  |                   | 1.07  |         |  |      | (1.6  | )         |  |  | 1.06 |               |  |  | 1.10 |  |  |  | (3.1  | )
|Other rents and landing fees               |  |                    | 0.54 |         |  |                   | 0.56  |         |  |      | (3.1  | )         |  |  | 0.55 |               |  |  | 0.60 |  |  |  | (7.3  | )
|Aircraft fuel                              |  |                    | 1.30 |         |  |                   | 1.14  |         |  |      | 13.5  |           |  |  | 1.30 |               |  |  | 1.06 |  |  |  | 22.4  |  
|Agency commissions                         |  |                    | 0.08 |         |  |                   | 0.12  |         |  |      | (32.3 | )         |  |  | 0.09 |               |  |  | 0.16 |  |  |  | (47.5 | )
|Aircraft maintenance materials and repairs |  |                    | 0.72 |         |  |                   | 0.81  |         |  |      | (10.8 | )         |  |  | 0.83 |               |  |  | 0.93 |  |  |  | (10.6 | )
|Depreciation and amortization              |  |                    | 0.23 |         |  |                   | 0.27  |         |  |      | (12.3 | )         |  |  | 0.24 |               |  |  | 0.27 |  |  |  | (8.0  | )
|Special charges                            |  |                    |     |         |  |                   | (0.03 | )       |  |      |      |           |  |  | 0.07 |               |  |  | 0.09 |  |  |  | (29.4 | )
|Other                                      |  |                    | 1.44 |         |  |                   | 1.63  |         |  |      | (11.8 | )         |  |  | 1.49 |               |  |  | 1.67 |  |  |  | (10.8 | )
|                                           |  |                    |      |         |  |                   |       |         |  |      |       |           |  |  |      |               |  |  |      |  |  |  |       |  
|                                           |  |                    | 7.57 |         |  |                   | 7.73  |         |  |      | (2.1  | )         |  |  | 7.88 |               |  |  | 8.08 |  |  |  | (2.5  | )
|                                           |  |                    |      |         |  |                   |       |         |  |      |       |           |  |  |      |               |  |  |      |  |  |  |       |  

Three Months Ended September 30, 2003 and 2002

For the three months ended September 30, 2003, AWA realized operating
income of $46.9 million compared to an operating loss of $42.2 million in last
years third quarter. Income before income tax benefit for the three-month
period in 2003 was $29.6 million compared to a loss before income tax benefit
of $51.8 million in 2002.

Total operating revenues for the third quarter of 2003 were $581.6
million. Passenger revenues were $552.6 million for the three months ended
September 30, 2003, an increase of $63.2 million or 12.9% from the 2002
quarter. A 5.2% increase in RPMs was offset in part by a 1.2% decrease in
ASMs, resulting in a 4.9 point increase in load factor, while yield increased
7.3%. As a result, RASM increased 14.3% to 7.82 cents in 2003 from 6.84 cents
in 2002. The increase in passenger revenues and traffic statistics for the
third quarter of 2003 as compared to the third quarter of 2002 is primarily due
to a decrease in industry capacity beginning in the second quarter of 2002 and
aggressive yield management by AWA during the peak summer travel period. The
implementation of a revised fare structure in March 2002, which has increased
AWAs share in key business markets, also contributed to the increases. Cargo
revenues increased 2.6% to $6.2 million in the third quarter of 2003 due to
increased freight and mail volumes. Other revenues increased 55.7% to $22.8
million in the third quarter of 2003 due to increased net revenues from AWAs
code sharing agreement with Mesa Airlines, higher excess baggage revenue and
higher ticket refund and reissuance fees for ticketing changes.

Operating expenses in the third quarter of 2003 decreased $17.6 million or
3.2% as compared to the third quarter of 2002. ASMs decreased 1.2% primarily
due to a reduction in aircraft from 142 at the end of September 2002 to 140 on
September 30, 2003. As a result, CASM decreased 2.1% to 7.57 cents in the
third quarter of 2003 from 7.73 cents for the third quarter of 2002.
Significant changes in the components of CASM are explained as follows:



| |  |  | Salaries and related costs per ASM increased 2.2% due to an 11.3%
increase in average salaries and related costs per full-time equivalent
employee (FTE) and an increase in the accrual for employee performance
bonuses, including AWArd Pay, ($5.0 million) and DOT on-time performance
bonuses ($1.8 million), offset by a true-up reducing vacation accrual
($1.5 million). These increases were offset by a 9.3% decrease in
average FTEs in the third quarter of 2003 as compared to the third
quarter of 2002, driven by the Companys decision to eliminate its
Columbus hub operations and the reduction-in-force of management,
administrative and professional employees.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Aircraft rent expense per ASM decreased 1.6% primarily due to rent
reductions related to lease extensions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

28



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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2003



| |  |  | Other rents and landing fees expense per ASM decreased 3.1% in the
third quarter of 2003 primarily due to decreases in airport rents ($0.8
million), other space rentals ($0.4 million), borrowed parts ($0.3
million) and landing fees ($0.2 million).                                                                                                                                                                                                                                                                                                                                                                               
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Aircraft fuel expense per ASM increased 13.5% primarily due to a
13.1% increase in the average price per gallon of fuel to 84.6 cents in
the 2003 quarter from 74.8 cents in the third quarter of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  |  | Agency commissions expense per ASM decreased 32.3% primarily due to
the elimination of base commission for travel agency tickets issued in
the United States effective March 21, 2002, subsequent reductions in
various travel agency incentive programs and lower override commissions.                                                                                                                                                                                                                                                                                                                                              
|
| |  |  | Aircraft maintenance materials and repairs expense per ASM decreased
10.8% primarily due to decreases in aircraft C-Check ($3.1 million),
airframe maintenance ($0.9 million) and engine overhaul ($0.3 million)
expenses. In addition, a change in the estimated useful life of certain
aircraft engine overhaul costs, effective April 1, 2003 and driven by a
new maintenance agreement that guarantees minimum cycles on engine
overhauls, resulted in a $3.4 million reduction in capitalized
maintenance amortization expense offset by a $0.9 million penalty for
the return of two spare engines in the third quarter of 2003.
|
| |  |  | Depreciation and amortization expense per ASM decreased 12.3% due
primarily to lower amortization expense related to aircraft leasehold
improvements ($1.1 million), computer hardware and software ($1.6
million) and reduced capital expenditures as a result of the Companys
cash conservation program.                                                                                                                                                                                                                                                                                                                           
|
| |  |  | Other operating expenses per ASM decreased 11.8% due primarily to
decreases in traffic liability insurance ($3.7 million), security
services ($3.5 million), computer reservations system booking fees ($1.9
million), bad debt expense ($1.4 million) and hull insurance ($1.1
million).                                                                                                                                                                                                                                                                                                                                             

AWA had net nonoperating expenses of $17.3 million in the third quarter of
2003 compared to $9.5 million of net nonoperating expenses in the third quarter
of 2002. The 2002 period included $6.2 million of federal government
assistance received under the Air Transportation Safety and System
Stabilization Act. Interest income remained relatively flat. Interest expense
increased $1.6 million due to higher average debt.

Nine Months Ended September 30, 2003 and 2002

For the nine months ended September 30, 2003, AWA realized operating
income of $14.2 million compared to an operating loss of $125.6 million in the
first nine months of 2002. Income before income tax benefit and the cumulative
effect of a change in accounting principle for the nine-month period in 2003
was $44.2 million compared to a loss before income tax benefit and the
cumulative effect of a change in accounting principle of $166.4 million in
2002.

Total operating revenues for the nine months ended September 30, 2003 were
$1.7 billion. Passenger revenues were $1.6 billion, an increase of $157.9
million or 11.0% from the 2002 nine-month period. An 8.1% increase in RPMs
exceeded a 4.0% increase in ASMs, resulting in a 2.8 point increase in load
factor, while yield increased 2.7%. As a result, RASM increased 6.7% to 7.62
cents in 2003 from 7.14 cents in 2002. The increase in passenger revenues and
traffic statistics for the first nine months of 2003 as compared to the
comparable 2002 period is primarily due to a decrease in industry capacity
beginning in the second quarter of 2002 and aggressive yield management by AWA
during the peak summer travel period. The implementation of a revised fare
structure in March 2002, which has increased AWAs share in key business
markets, also contributed to the increases. Cargo revenues were relatively
flat period-over-period while other revenues increased 13.9% to $48.5 million
for the nine months ended September 30, 2003 due to increased net revenues from
AWAs code sharing agreement with Mesa Airlines, higher excess baggage revenue
and higher ticket refund and reissuance fees for ticketing changes.

Operating expenses in the first nine months of 2003 increased $24.4
million or 1.5% as compared to the first nine months of 2002, while ASMs
increased 4.0%. As a result, CASM decreased 2.5% to 7.88 cents for the first
nine months of 2003 from 8.08 cents for the first nine months of 2002 despite a
22.3% increase in average fuel price per gallon. Operating expenses in the
first nine months of 2003 and 2002 included special charges of $14.0 million
and $19.0 million, respectively. Significant changes in the components of CASM
are explained as follows:

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2003



| |  |  | Salaries and related costs per ASM increased 2.3% primarily due to a
10.5% increase in average salaries and related costs per FTE. This
increase was driven primarily by higher medical insurance costs ($8.3
million), pilot payroll expense due to the recall of pilots furloughed
following the terrorist attacks of September 11, 2001 ($3.5 million),
flight attendant payroll expense due to salary increases in accordance
with the labor agreement with the Association of Flight Attendants
(AFA) ($2.9 million), an accrual for vacation expense ($1.8 million)
and an increase in the accrual for employee performance bonuses,
including AWArd Pay, ($9.0
million) and DOT on-time performance bonuses ($1.8 million). The vacation
accrual for administrative employees is an intra-period accrual, which will
reverse by December 31, 2003. These increases were offset in part by a
3.7% decline in FTEs driven by the Companys decision to eliminate its
Columbus hub operations and the reduction-in-force of management,
administrative and professional employees and the 4.0% increase in ASMs.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Aircraft rent expense per ASM decreased 3.1% primarily due to the
4.0% increase in ASMs. This decrease was offset in part by an increase
in aircraft rent expense primarily due to the sale and leaseback of five
previously owned aircraft in June 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  |  | Other rents and landing fees expense per ASM decreased 7.3% in the
first nine months of 2003 primarily due to lower costs for borrowed
parts ($4.7 million). This decrease was offset in part by higher
landing fees ($1.0 million) and airport rents ($0.4 million).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  |  | Aircraft fuel expense per ASM increased 22.4% due to a 22.3% increase
in the average price per gallon of fuel to 85.4 cents in the first nine
months of 2003 from 69.8 cents in the first nine months of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  |  | Agency commissions expense per ASM decreased 47.5% primarily due to
the elimination of base commission for travel agency tickets issued in
the United States effective March 21, 2002, subsequent reductions in
various travel agency incentive programs and lower override commissions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  |  | Aircraft maintenance materials and repairs expense per ASM decreased
10.6% primarily due to lower engine overhaul ($2.0 million), aircraft
C-Check ($4.1 million) and airframe maintenance ($1.3 million) expenses
and the 4.0% increase in ASMs. In addition, a change in the estimated
useful life of certain aircraft engine overhaul costs, effective April
1, 2003 and driven by a new maintenance agreement that guarantees
minimum cycles on engine overhauls, resulted in a $5.9 million reduction
in capitalized maintenance amortization expense offset by a $0.9 million
penalty for the return of two spare engines in the first nine months
of 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  |  | Depreciation and amortization expense per ASM decreased 8.0% due
primarily to the 4.0% increase in ASMs and reduced capital expenditures
as a result of the Companys cash conservation program. Decreases in
depreciation expense for owned aircraft ($1.8 million) and aircraft
leasehold improvement amortization expense ($1.7 million) were offset by
an increase in depreciation expense for depreciation for rotable
aircraft parts ($0.7 million).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  |  | Other operating expenses per ASM decreased 10.8% due primarily to
decreases in traffic liability insurance ($8.6 million), bad debt
expense ($4.0 million), computer reservations booking fees ($5.1
million), hull insurance ($3.3 million) and the 4.0% increase in ASMs.
In addition, the 2003 period includes a $4.4 million gain related to the
purchase and subsequent exchange of an A320 airframe.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

AWA had net nonoperating income of $30.0 million in the first nine months
of 2003 compared to $40.8 million of net nonoperating expenses in the first
nine months of 2002. The 2003 period benefited from $81.3 million of federal
government assistance received under the Emergency Wartime Supplemental
Appropriations Act. Interest income decreased $4.2 million due to lower
average cash and short-term investment balances and lower interest rates in the
2003 period. The 2002 period included $8.5 million of federal government
assistance received under the Air Transportation Safety and System
Stabilization Act and a $2.8 million charge related to the write-off of AWAs
investment in an e-commerce entity. Interest expense increased $2.5 million
due to higher average debt.

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2003

LIQUIDITY AND CAPITAL RESOURCES

Sources and Uses of Cash

At September 30, 2003, Holdings and AWAs total cash, cash equivalents,
short-term investments, investments in debt securities and restricted cash was
$584.5 million and $577.4 million, respectively. Net cash provided by
operating activities for Holdings and AWA was $159.4 million and
$162.0
million, respectively, in the first nine months of 2003. This compares to net
cash used in operating activities of $24.9 million and $21.3 million for
Holdings and AWA, respectively, in the first nine months of 2002. The
year-over-year increase in net cash provided by operating activities
of $184.3
million and $183.3 million for Holdings and AWA, respectively, was due
to the placement of $42.9 million of cash proceeds from the
Senior Exchangeable Notes Offering to secure the scheduled principal
and interest payments on certain indebtedness. (See Note 5,
Issuance of Exchangeable Senior Notes in Notes to
Condensed Consolidated Financial Statements), the receipt of $81.3 million in connection with the Emergency
Wartime Supplemental Appropriations Act in the 2003 period, the payment in 2002
of amounts due vendors and aircraft lessors that had been subject to the
Companys cash conservation program prior to the closing of the government
guaranteed loan in January 2002 and the payment in 2002 of $58.1 million of
transportation taxes to the Internal Revenue Service that had been deferred
from 2001, as allowed under the Air Transportation Safety and System
Stabilization Act.

In the first nine months of 2003, net cash used in investing activities
was $178.5 million and $178.4 million for Holdings and AWA, respectively. This
compares to net cash provided by investing activities of $19.1 million and
$15.7 million for Holdings and AWA, respectively, in the first nine months of
2002. Principal investing activities during the first nine months of 2003
included purchases of property and equipment totaling $119.2 million, including
$12.0 million related to the purchase of an A320 airframe that was used to
replace an airframe that was damaged in an accident in August 2002, net
purchases of short-term investments and investments in debt securities totaling
$60.1 million. Restricted cash increased by $23.5 million during the period
primarily due to an increase
in cash reserves required under an agreement executed in May 2003 for the
processing of our Visa and MasterCard credit card transactions. The 2003
period also included proceeds from the disposition of assets totaling $24.3
million, including $12.6 million of insurance proceeds and $3.6 million of
scrap proceeds, both associated with the replaced A320 airframe discussed
above, and $6.9 million related to the sale and leaseback of 29 jet bridges at
Phoenix Sky Harbor International Airport. The 2002 period included purchases
of property and equipment totaling $117.8 million for Holdings and $117.5
million for AWA, including $64.2 million related to the purchase of two new
A320 aircraft, and net purchases of short-term investments totaling $40.0
million for both Holdings and AWA. In addition, the Company received $175.5
million of proceeds from the sale and leaseback of the two A320 aircraft
discussed above and one A319 aircraft and two additional A320 aircraft that had
been purchased in the fourth quarter of 2001.

In the first nine months of 2003, net cash provided by financing
activities was $69.7 million and $69.0 million for Holdings and AWA,
respectively. The 2003 period includes $86.8 million from the issuance of the
Senior Exchangeable Notes discussed above, debt repayments of $14.7 million and
payments of debt issue costs totaling $3.1 million for both Holdings and AWA.
This compares to net cash provided by financing activities of $230.9 million
and $231.0 million for Holdings and AWA, respectively, in the first nine months
of 2002. The 2002 period included proceeds from the issuance of debt totaling
$435.4 million, primarily related to the government guaranteed loan, payments
of debt issue costs totaling $12.7 million and debt repayments of $191.7
million, primarily related to the sale and leaseback of the five aircraft
discussed above.

Capital expenditures for the nine months ended September 30, 2003 were
approximately $119.1 million for both Holdings and AWA. Capital expenditures
for the nine months ended September 30, 2002 were approximately $181.7 million
for Holdings and AWA. Included in these amounts are capital expenditures for
capitalized maintenance of approximately $91.8 million and $85.5 million for
both Holdings and AWA for the nine months ended September 30, 2003 and 2002,
respectively.

In April 2003, we implemented a plan to reduce management, professional
and administrative payroll costs which resulted in fewer employees within these
workgroups. See Note 7, Special Chargesin Notes to Condensed Consolidated
Financial Statements. In addition, our business partners and vendors have been
asked to reduce their fees in order to further reduce costs.

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2003

In April 2003, we executed an agreement with a third party vendor for the
processing of our Visa and MasterCard credit card transactions. Upon
implementation of the agreement in May 2003, we were required to establish net
additional cash reserves of $25.0 million as collateral for the transactions
processed. This amount was funded from credit card receipts over a 30-day
period and recorded as restricted cash. Under certain circumstances, including
a change in our financial position, the amount of the cash reserve requirement
could increase or decrease.

Pass Through Trusts

Since AWAs restructuring in 1994, AWA has set up 19 pass through trusts,
which have issued over $1.4 billion of pass through trust certificates (also
known as Enhanced Equipment Trust Certificatesor
EETC) covering the financing of 54 aircraft. These trusts are
off-balance sheet entities, the primary purpose of which is to finance the
acquisition of aircraft. Rather than finance
each aircraft separately when such aircraft is purchased or delivered,
these trusts allow the Company to raise the financing for several aircraft at
one time and place such funds in escrow pending the purchase or delivery of the
relevant aircraft.

Each trust covered a set amount of aircraft scheduled to be delivered
within a specific period of time. At the time of each covered aircraft
financing, the relevant trust used the funds in escrow to purchase equipment
notes relating to the financed aircraft. The equipment notes were issued, at
AWAs election, either by AWA in connection with a mortgage financing of the
aircraft or by a separate owner trust in connection with a leveraged lease
financing of the aircraft. In the case of a leveraged lease financing, the
owner trust then leased the aircraft to AWA. In both cases, the equipment
notes are secured by a security interest in the aircraft. The pass through
trust certificates are not direct obligations of, nor guaranteed by, Holdings
or AWA. However, in the case of mortgage financings, the equipment notes
issued to the trusts are direct obligations of AWA and in the case of leveraged
lease financings, the leases are direct obligations of AWA. In addition,
neither Holdings nor AWA guarantee or participate in any way in the residual
value of the leased aircraft. All aircraft financed by these trusts are
currently structured as leveraged lease financings, which are not reflected as
debt on the balance sheets of either AWA or Holdings.

AWAs 2001-1 Pass Through Trusts provided for the financing of nine Airbus
A319 aircraft and five Airbus A320 aircraft, all of which were delivered in
2001 and 2002. No additional EETC financing is anticipated in 2003.

Commitments

As of September 30, 2003, we had $795.0 million of long-term debt
(including current maturities). This amount consisted primarily of the $429
million government guaranteed loan, a $73.2 million secured term loan with a
group of financial institutions, $90.7 million principal amount of 7.5%
convertible senior notes, $86.8 million issue price of 7.25% senior
exchangeable notes and $50.0 million principal amount of 103/4% senior
unsecured notes.

Government Guaranteed Loan

In January 2002, AWA closed a $429 million loan supported by a $380
million guarantee provided by the Air Transportation Stabilization Board (the
ATSB). Certain third-party counter-guarantors have fully and unconditionally
guaranteed the payment of an aggregate of $45 million of the outstanding
principal amount under the government guaranteed loan plus accrued and unpaid
interest thereon. In addition, Holdings has fully and unconditionally
guaranteed the payment of all principal, premium, interest and other
obligations outstanding under the government guaranteed loan and has pledged
the stock of AWA to secure its obligations under such guarantee. Principal
amounts under this loan become due in ten installments of $42.9 million on each
March 31 and September 30, commencing on March 31, 2004 and ending on September
30, 2008. Principal amounts outstanding under the government guaranteed loan
bear interest at a rate per annum equal to LIBOR plus 40 basis points.

Subject to certain exceptions, we are required to prepay the government
guaranteed loan with:



| |  |  | the net proceeds of all issuances of debt or equity by either
Holdings or AWA after January 2002;                                                                  
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | proceeds from asset sales in excess of $20 million in any fiscal
year to the extent such proceeds are not applied to redeem AWAs
103/4% senior notes due 2005; and

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2003



| |  |  | insurance proceeds in excess of $2 million to the extent such
proceeds are not used to restore or replace the assets from which such
proceeds are derived.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------

In addition, we are required to prepay the government guaranteed loan upon
a change in control. We may, at our option, prepay the government guaranteed
loan without premium or penalty, subject to reimbursement of the lenders
breakage costs in the case of prepayment of LIBOR loans.

The government guaranteed loan requires that AWA maintain a minimum cash
balance of $100 million. In addition, the government loan contains customary
affirmative covenants and the following negative covenants: restrictions on
liens, investments, restricted payments, fundamental changes, asset sales and
acquisitions, the creation of new subsidiaries, sale and leasebacks,
transactions with affiliates, the conduct of business, mergers or
consolidations, issuances and dispositions of capital stock of subsidiaries,
and amendments to other indebtedness. The government guaranteed loan contains
customary events of default, including payment defaults, cross-defaults, breach
of covenants, bankruptcy and insolvency defaults and judgment defaults.

Term Loan

In connection with the closing of the government guaranteed loan and the
related transactions, AWA converted its existing revolving credit facility into
a term loan with the Mizuho Corporate Bank, Ltd., as successor by merger to the
Industrial Bank of Japan, Limited, and certain other lenders. As of September
30, 2003, $73.2 million remains outstanding under the term loan. Principal
amounts under the term loan become due in two installments of $30 million on
December 31, 2005 and December 31, 2006 with the remaining amounts becoming due
and payable in full on December 31, 2007. Principal amounts outstanding under
the term loan bear interest at a rate per annum equal to, at our option, either
the Base Rate or the Eurodollar Rate (which is based on LIBOR), in each case
plus an applicable margin. The applicable margin adjusts based on the length
of time the term loan has been outstanding. The term Base Rate has a meaning
customary and appropriate for financings of this type. In addition, principal
amounts outstanding under the term loan bear interest in kind at a rate of 2%
through December 31, 2004.

The prepayment requirements and covenants of the term loan are
substantially similar to those of the government guaranteed loan. We may, at
our option, prepay the term loan without premium or penalty, subject to
reimbursement of the lenders breakage costs in the case of prepayment of loans
bearing the Eurodollar Rate. The term loan is secured by a first priority
perfected security interest in certain of our aircraft, spare engines, rotable
aircraft parts inventory and a maintenance facility. The term loan contains
customary events of default, including payment defaults, cross-defaults, breach
of covenants, bankruptcy and insolvency defaults and judgment defaults.

103⁄4% Senior Notes due 2005

In August 1995, AWA issued $75.0 million principal amount of 103⁄4%
senior notes due 2005 of which $50.0 million remained outstanding at September
30, 2003. Interest on the 103⁄4% senior notes is payable semi annually in
arrears on March 1 and September 1 of each year.

We may redeem the 103⁄4% senior notes, in whole or in part, at any time
after September 1, 2003 at a redemption price of 100%.

If AWA undergoes a change of control, it may be required to repurchase the
103⁄4% senior notes at a price equal to 101% of the principal amount thereof,
plus accrued and unpaid interest, if any, to the date of repurchase. If AWA
sells certain assets, it may be required to use the net cash proceeds to
repurchase the 103⁄4% senior notes at 100% of the principal amount, plus
accrued and unpaid interest, to the date of purchase.

The indenture governing the 103⁄4% senior notes contains certain
covenants that, among other things, limit our ability to pay dividends or make
distributions to our stockholders, repurchase or redeem capital stock, make
investments or other restricted payments, enter into transactions with our
stockholders and affiliates, sell assets (including the stock of our
subsidiaries) and merge or consolidate with other companies. The indenture
governing the 103⁄4% senior notes also contains customary events of default,
including payment defaults, cross-defaults, breach of covenants, bankruptcy and
insolvency defaults and judgment defaults.

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2003

7.5% Convertible Senior Notes due 2009

In connection with the closing of the government guaranteed loan and the
related transactions, Holdings issued $104.5 million of 7.5% convertible senior
notes due 2009, of which approximately $100.5 million remained outstanding at
September 30, 2003 (including interest paid through June 1, 2003 as a deemed
loan added to the initial principal thereof). Beginning January 18, 2005,
these notes are convertible into shares of class B common stock, at the option
of the holders, at an initial conversion price of $12.00 per share or a
conversion ratio of approximately 83.333 shares per $1,000 principal amount of
such notes, subject to standard anti-dilution adjustments. Interest on the
7.5% convertible senior notes is payable semi annually in arrears on June 1 and
December 1 of each year. At Holdings option, the first six interest payments
may be paid in the form of a deemed loan added to the principal amount of these
notes. The 7.5% convertible senior notes will mature on January 18, 2009
unless earlier converted or redeemed. The payment of principal, premium and
interest on the 7.5% convertible senior notes is fully and unconditionally
guaranteed by AWA.

Holdings may redeem some or all of the 7.5% convertible senior notes at
any time before January 18, 2005, at a redemption price equal to $1,000 per
note to be redeemed if (A) the closing price of the class B common stock has
exceeded 120% of the conversion price then in effect for at least 20 trading
days within a period of 30 consecutive trading days ending on the trading day
before the date of the mailing of the redemption notice, and (B) a shelf
registration statement covering resales of the notes and the class B common
stock issuable upon conversion thereof is effective and available for use and
is expected to remain effective and available for use for the 30 days following
the redemption date, unless registration is no longer required. Holdings may
redeem the 7.5% convertible senior notes, in whole or in part, on or after
January 18, 2005 at the following redemption prices (expressed as percentages
of the principal amount thereof), if redeemed during the twelve-month period
commencing on January 18 of the years set forth below, plus, in each case,
accrued and unpaid interest, if any, to the date of redemption:

|                    |  |                  |        |  
|------------------- |  | ---------------- | ------ | -
|Year                |  | Redemption Price
|                    |  |                 
|2005                |  |                  | 103.75 | %
|2006                |  |                  | 102.50 | %
|2007                |  |                  | 101.25 | %
|2008 and thereafter |  |                  | 100.00 | %

7.25% Senior Exchangeable Notes due 2023

In July 2003, AWA completed a private placement of $75 million issue price
of Senior Exchangeable Notes due 2023. The notes bear cash interest until July
30, 2008. Thereafter, the notes will cease bearing cash interest and begin
accruing original issue discount daily at a rate of 7.25% per year until maturity. Each note
was issued at a price of $343.61 and is exchangeable for class B common stock
of Holdings at an exchange ratio of 32.038 shares per $1,000 principal amount
at maturity of the notes (subject to adjustment in certain circumstances).
This represents an equivalent conversion price of approximately $10.73 per
share. The notes are
unconditionally guaranteed on a senior unsecured basis by Holdings.

Holders may exchange their notes for the shares of class B common stock of
Holdings in any fiscal quarter commencing after September 30, 2003, if, as of
the last day of the preceding fiscal quarter, the closing sale price of the
class B common stock for at least 20 trading days in a period of 30 consecutive
trading days ending on the last trading day of such preceding fiscal quarter is
more than 110% of the accreted exchange price per share of Class B common stock
on the last day of such preceding fiscal quarter. If the foregoing condition is
satisfied, then the notes will be exchangeable at any time at the option of the
holder through maturity. The accreted exchange price per share as of any day
will equal the issue price of a note plus accrued original issue discount to
that day divided by 32.038, subject to any adjustments to the exchange rate
through that day.

On or before July 30, 2018, a holder also may exchange its notes for
shares of the Class B common stock at any time after a 10 consecutive
trading-day period in which the average of the trading prices for the notes for
that 10 trading-day period was less than 103% of the average exchange value for
the notes during that period. Exchange value is equal to the product of the
closing sale price for the shares of Class B common stock on a given day
multiplied by the then current exchange rate, which is the number of shares of
Class B common stock for which each note is then exchangeable.

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2003

In addition, the holders may exchange the notes if the notes have been
called for redemption or if certain specified corporate transactions have
occurred.

Holders of the notes may require AWA to repurchase the notes at a price
equal to the original issue price plus accrued cash interest and original issue
discount, if any, on July 30, 2008, 2013 and 2018. The purchase price of such
notes may be paid in cash or class B common stock of Holdings, subject to
certain restrictions. In addition, each holder may require AWA to purchase all
or a portion of such holders notes upon the occurrence of certain change of
control events concerning AWA or Holdings. AWA may redeem the notes, in whole
or in part, on or after July 30, 2008 at a price equal to the original issue
price plus accrued cash interest and original issue discount, if any.

In connection with the offering AWA placed $42.9 million of the net
proceeds in a cash collateral account to secure the scheduled principal and
interest payments on certain of its indebtedness through September 30, 2004.
This amount has been recorded as restricted cash in the accompanying condensed
consolidated balance sheet.

In August 2003, the initial purchasers of the Senior Exchangeable Notes
discussed above exercised their overallotment option and purchased an
additional $11.8 million issue price amount of such notes. The aggregate
amount due at maturity, including accrued original issue discount from July 31,
2008, for these additional notes will be $34,424,000.

Other Indebtedness and Obligations

In addition to the above described indebtedness, we had $49.0 million of
secured equipment notes and $30.8 million of other unsecured indebtedness,
including $29.3 million of industrial revenue bonds.

The following table sets forth our cash obligations as of September 30,
2003.

|                                                             |                                            |   |        |       |      |   |         |        |      |   |         |        |      |   |                |        |  |   |         |        |  |   |           |         |  |   |           |         | 
|------------------------------------------------------------ | ------------------------------------------ | - | ------ | ----- | ---- | - | ------- | ------ | ---- | - | ------- | ------ | ---- | - | -------------- | ------ |  | - | ------- | ------ |  | - | --------- | ------- |  | - | --------- | ------- | 
|                                                             |                                            |   |        |       |      |   |         |        |      |   |         |        |      |   |                |        |  |   |         |        |  |   | Beyond    |         |  |   |          
|                                                             |                                            |   | 2003   |       | 2004 |   | 2005    |        | 2006 |   | 2007    |        | 2007 |   | Total         
|                                                             |                                            |   |        |       |      |   |         |        |      |   |         |        |      |   |               
|                                                             |                                            |   |        |       |      |   |         |        |      |   |         |        |      |   | (in thousands) |        |  |   |         |        |  |   |          
|Long-term debt:                                              |                                            |   |        |       |      |   |         |        |      |   |         |        |      |   |                |        |  |   |         |        |  |   |           |         |  |   |           |        
|                                                             | Equipment notes - Non EETC (1)             |   | $      | 533   |      |   | $       | 8,989  |      |   | $       | 8,305  |      |   | $              | 8,305  |  |   | $       | 7,772  |  |   | $         | 15,083  |  |   | $         | 48,987  | 
|                                                             | Term loan(2)                               |   |        | 1,505 |      |   |         | 2,729  |      |   |         | 30,000 |      |   |                | 30,000 |  |   |         | 11,665 |  |   |           |        |  |   |           | 75,899  | 
|                                                             | 7.5% convertible senior notes due
2009 (3) |   |        |      |      |   |         |       |      |   |         |       |      |   |                |       |  |   |         |       |  |   |           | 100,549 |  |   |           | 100,549 | 
|                                                             | Government guaranteed loan (4)             |   |        |      |      |   |         | 85,800 |      |   |         | 85,800 |      |   |                | 85,800 |  |   |         | 85,800 |  |   |           | 85,800  |  |   |           | 429,000 | 
|                                                             | State loan(5)                              |   |        |      |      |   |         | 750    |      |   |         | 250    |      |   |                | 250    |  |   |         | 250    |  |   |           |        |  |   |           | 1,500   | 
|                                                             | 103⁄4% senior unsecured notes due
2005       |   |        |      |      |   |         |       |      |   |         | 49,998 |      |   |                |       |  |   |         |       |  |   |           |        |  |   |           | 49,998  | 
|                                                             | Industrial development bonds(6)            |   |        |      |      |   |         |       |      |   |         |       |      |   |                |       |  |   |         |       |  |   |           | 29,300  |  |   |           | 29,300  | 
|                                                             | 7.25% senior exchangeable notes(7)         |   |        |      |      |   |         |       |      |   |         |       |      |   |                |       |  |   |         |       |  |   |           | 252,695 |  |   |           | 252,695 | 
|                                                             |                                            |   |        |       |      |   |         |        |      |   |         |        |      |   |                |        |  |   |         |        |  |   |           |         |  |   |           |         | 
|                                                             |                                            |   | 2,038  |       |      |   | 98,268  |        |      |   | 174,353 |        |      |   | 124,355        |        |  |   | 105,487 |        |  |   | 483,427   |         |  |   | 987,928   |        
|Cash aircraft rental payments (8)                            |                                            |   | 50,377 |       |      |   | 318,033 |        |      |   | 298,246 |        |      |   | 275,030        |        |  |   | 260,630 |        |  |   | 2,054,328 |         |  |   | 3,256,644 |        
|Lease payments on equipment and
facility operating leases(9) |                                            |   | 4,275  |       |      |   | 19,054  |        |      |   | 18,158  |        |      |   | 16,189         |        |  |   | 14,378  |        |  |   | 79,954    |         |  |   | 152,008   |        
|Capital lease obligations                                    |                                            |   | 108    |       |      |   | 4,278   |        |      |   | 4,298   |        |      |   | 4,655          |        |  |   | 1,685   |        |  |   |          |         |  |   | 15,024    |        
|Special facility revenue bonds (10)                          |                                            |   | 681    |       |      |   | 1,362   |        |      |   | 1,362   |        |      |   | 1,362          |        |  |   | 1,362   |        |  |   | 37,469    |         |  |   | 43,598    |        
|Aircraft purchase commitments (11)                           |                                            |   |       |       |      |   | 86,838  |        |      |   | 85,441  |        |      |   | 225,141        |        |  |   | 266,071 |        |  |   |          |         |  |   | 663,491   |        
|Engine maintenance commitments(12)                           |                                            |   | 7,500  |       |      |   | 26,000  |        |      |   | 24,000  |        |      |   | 12,000         |        |  |   | 6,000   |        |  |   | 2,000     |         |  |   | 77,500    |        
|                                                             |                                            |   |        |       |      |   |         |        |      |   |         |        |      |   |                |        |  |   |         |        |  |   |           |         |  |   |           |        
|Total                                                        |                                            | $ | 64,979 |       |      | $ | 553,833 |        |      | $ | 605,858 |        |      | $ | 658,732        |        |  | $ | 655,613 |        |  | $ | 2,657,178 |         |  | $ | 5,196,193 |        
|                                                             |                                            |   |        |       |      |   |         |        |      |   |         |        |      |   |                |        |  |   |         |        |  |   |           |         |  |   |           |         | 



|(1) |  | Includes approximately $49.0 million of equipment notes with variable
interest rates of 2.13% to 2.63%, averaging 2.21%, installments due 2003
through 2008.                                                                                                                                                                                                                                                                                                                                                                        
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Includes a $73.2 million secured term loan maturing at year-end 2007 with
a variable interest rate of 3.38% and $2.7 million of interest payable in
kind through September 30, 2003 at a fixed rate of 2%. Excludes $1.9
million of interest payable in kind through December 2004.                                                                                                                                                                                                                                                 
|   
|(3) |  | Includes $90.7 million principal amount of 7.5% convertible senior notes,
due 2009, and $9.8 million of interest payable in kind through September
30, 2003. Excludes $11.7 million of interest payable in kind through
December 2004. For financial reporting purposes, we recorded the
convertible senior notes at their fair market value on the date of
issuance. As of September 30, 2003, the balance of the convertible senior
notes in the accompanying condensed consolidated balance sheet is
approximately $64.0 million.

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2003



|(4)  |  | Government guaranteed loan includes $429.0 million due September 2008
with a variable interest rate of 1.5%. Guarantee fees of approximately
8.0% of the outstanding guaranteed principal balance in 2003 through 2008
are payable to the U.S. Treasury Department and other loan participants.                                                                                                                                                                
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(5)  |  | Includes Arizona State loan of $1.5 million due December 2007 with a
variable interest rate of 4.69%.                                                                                                                                                                                                                                                                                                                                                          
|    
|(6)  |  | Includes $29.3 million of 6.3% industrial development bonds due April
2023.                                                                                                                                                                                                                                                                                                                                                                                    
|    
|(7)  |  | Includes $252.7 million principal amount of 7.25% senior exchangeable
notes due July 2023 with cash interest payable through July 2008 at a rate
of 2.49% on the principal amount at maturity. Thereafter, the notes will
cease bearing cash interest and begin accruing original issue discount at
a rate of 7.25% until maturity. The aggregate amount due at maturity,
including accrued original issue discount from July 31, 2008, will be
$252.7 million.
|    
|(8)  |  | Includes non-cancelable operating leases for 131 aircraft with remaining
terms ranging from four months to approximately 21 years. Management
estimates the debt equivalent value of these operating leases approximates
$2 billion using an interest rate of 10%.                                                                                                                                                                                             
|    
|(9)  |  | Includes leases for terminal space, ground facilities, the flight
training center and computer and other equipment under non-cancelable
operating leases.                                                                                                                                                                                                                                                                                                      
|    
|(10) |  | Includes Series 1999 Terminal 4 Improvements Bonds due 2019.                                                                                                                                                                                                                                                                                                                                                                                                   
|    
|(11) |  | Includes commitments to purchase a total of 19 Airbus aircraft and spare
engines for delivery in 2003 through 2007.                                                                                                                                                                                                                                                                                                                                            
|    
|(12) |  | Includes minimum commitments under AWAs rate per engine hour agreement
with General Electric Engine Services for overhaul maintenance services on
V2500-A1 and CFM56-3B engines through April 2008. Minimum commitment
amounts: for the period through and including April 2004 - $2,500,000, for
the period from May 2004 through and including April 2006 - $2,000,000,
for the period May 2006 through and including April 2008 - $500,000.                

We expect to fund these cash obligations from funds provided by
operations, the $200 million of financing commitments for Airbus aircraft
obtained in connection with the government loan, and future financings, if
necessary. The cash available to us from these sources, however, may not be
sufficient to cover these cash obligations because economic factors outside our
control may reduce the amount of cash generated by operations or increase our
costs. For instance, a further economic downturn or other events, including
future hostilities and terrorist attacks or infectious disease outbreaks, such
as severe acute respiratory syndrome (SARS), could reduce the demand for air
travel, which would reduce the amount of cash generated by operations. An
increase in our costs, either due to an increase in borrowing costs caused by a
reduction in our credit rating or a general increase in interest rates or due
to an increase in the cost of fuel, maintenance, aircraft and aircraft engines
and parts, could decrease the amount of cash available to cover the cash
obligations. In addition, we may be required to prepay portions of the
government guaranteed loan if our employee compensation costs exceed a certain
threshold; we may be required to prepay portions of the term loan to the extent
the value of the collateral securing the term loan decreases; and we may fail
to meet the minimum liquidity threshold required to obtain the entire amount of
financing commitment for two of the Airbus aircraft. In any of these cases,
our liquidity may be adversely affected and we may not have sufficient cash to
prepay the government loan and meet our other obligations. Moreover, certain
of our long-term debt agreements contain a $100 million minimum cash balance
requirement. As a result, we cannot use all of our available cash to fund
operations, capital expenditures and cash obligations without violating this
requirement.

Although there can be no assurances, we believe that cash flow from
operating activities and proceeds from the issuance of the senior exchangeable
note, coupled with existing cash balances and financing commitments, will be
adequate to fund our operating and capital needs as well as enable us to
maintain compliance with our various debt agreements through at least December
31, 2004.

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2003

Financial Covenants and Credit Rating

In addition to the minimum cash balance requirements, our long-term debt
agreements contain various negative covenants that restrict our actions,
including our ability to pay dividends, together with any other restricted
payments. Moreover, under the terms of the government guaranteed loan, we are
prohibited from paying cash dividends prior to repayment of the loan in full.
Finally, our long-term debt agreements contain cross-default provisions, which
may be triggered by defaults by us under other agreements relating to
indebtedness. See Risk Factors Relating to America West and Industry Related
Risks - Our high level of indebtedness and fixed costs 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.As of September
30, 2003, Holdings and AWA were in compliance with the covenants in their
long-term debt agreements.

Our credit ratings are relatively low, with Moodys assessment of AWAs
senior implied rating and senior unsecured debt rating at Caa1 and Caa3,
respectively, and Standard & Poors corporate credit
ratings at B- for AWA and Holdings and senior unsecured rating
at CCC for
AWAs unsecured debt. On March 18, 2003, Standard & Poors placed AWA on
credit watch and on September 4, 2003, the ratings on various pass-through
trust certificates were lowered. Standard & Poors outlook for AWA and the
industry continues to be negative. Our relatively low credit ratings may
impair our ability to incur additional indebtedness. The rating agencies base
their ratings on our financial performance and operations, our cash flow and
liquidity, the level of our debt and industry conditions in general. If our
financial performance or industry conditions do not improve, we may face future
downgrades, which could further negatively impact our borrowing costs and the
prices of our equity or debt securities. See Risk Factors Relating to America
West and Industry Related Risks - Because of our relatively low credit ratings,
our borrowing costs may be high and our ability to incur additional debt may be
impaired.




OTHER INFORMATION

Labor Relations

On December 23, 2002, the Company announced that it had reached a
tentative agreement with the Air Line Pilots Association (ALPA) on a new
contract for AWAs pilots. The tentative agreement was subject to a membership
ratification vote in March 2003. On March 18, 2003, ALPA informed the Company
that a majority of AWAs pilots voted against ratification of the tentative
agreement. The Company resumed negotiations with ALPA in August 2003. In
addition, the Company has been negotiating with the Transport Workers Union
(TWU) for a second collective bargaining agreement covering AWAs
dispatchers. On September 17, 2003, TWU filed a petition for mediation with
the National Mediation Board. Finally, negotiations with the International
Brotherhood of Teamsters (IBT) for a second collective bargaining agreement
covering AWAs mechanics commenced on October 9, 2003. The Company cannot
predict the outcome of those discussions.

Application of Critical Accounting Policies

The preparation of our consolidated financial statements in accordance
with generally accepted accounting principles requires that we make certain
estimates and assumptions that affect the reported amount of assets and
liabilities, revenues and expenses, and the disclosure of contingent assets and
liabilities at the date of our financial statements. We believe our estimates
and assumptions are reasonable; however, actual results could differ from those
estimates. We have identified the following critical accounting policies that
require the use of significant judgments and estimates relating to matters that
are inherently uncertain and may result in materially different results under
different assumptions and conditions.



| |  |  | Passenger Revenue - Passenger revenue is recognized when
transportation is provided. Ticket sales for transportation that has
not yet been provided are recorded as air traffic liability. Passenger
traffic commissions and related fees are expensed when the related
revenue is recognized. Passenger traffic commissions and related fees
not yet recognized are included as a prepaid expense. Due to complex
pricing structures, refund and exchange policies, and interline
agreements with other airlines, certain amounts are recognized in
revenue using estimates regarding both the timing of the revenue
recognition and the amount of revenue to be recognized. These estimates
are generally based on the statistical analysis of our historical data.
Any adjustments resulting from periodic evaluations of the estimated air
traffic liability are included in results
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2003



| |   |  | of operations during the
period in which the evaluations are completed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Accounting For Long-Lived Assets - Owned property and equipment are
recorded at cost and depreciated to residual values over the estimated
useful lives using the straight-line method. Leasehold improvements
relating to flight equipment and other property on operating leases are
amortized over the life of the lease, or the life of the asset,
whichever is shorter. Interest on advance payments for aircraft
acquisitions and on expenditures for aircraft improvements is capitalized and added to the
cost of the asset. The estimated useful lives of our owned aircraft, jet
engines, flight equipment and rotable parts range from five to 30 years.
The estimated useful lives of our technical support facility and flight
training center in Phoenix, Arizona are 22 years and 30 years,
respectively. The estimated useful lives of our ground property and
equipment range from three to 12 years. We test for impairment losses on
long-lived assets used in operations when events and circumstances
indicate that the assets might be impaired as defined by SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets.An
impairment loss is recognized if the carrying amount of the asset is not
recoverable from its undiscounted cash flows and is measured as the
difference between the carrying amount and fair value of the asset.
|
| |  |  | Frequent Flyer Accounting - We maintain a frequent travel award
program known as FlightFund that provides a variety of awards to
program members based on accumulated mileage. The estimated cost of
providing the free travel is recognized as a liability and charged to
operations as program members accumulate mileage. Travel awards are
valued at the incremental cost of carrying one passenger, based on
expected redemptions. Incremental costs are based on expectations of
expenses to be incurred on a per passenger basis and include fuel,
liability insurance, food, beverages, supplies and ticketing costs. We
also sell mileage credits to companies participating in our FlightFund
program, such as hotels, car rental agencies and credit card companies.
Transportation-related revenue from the sale of mileage credits is
deferred and recognized when transportation is provided. A change to
the estimated cost per mile, minimum award level, percentage of revenue
to be deferred or deferred recognition period could have a significant
impact on our revenues or mileage liability accrual in the year of the
change as well as future years.                                                                                                                                                                                                       
|
| |  |  | Long-Term Maintenance Reserve  We record an accrual for the
estimated cost of scheduled airframe and engine overhauls required to be
performed on leased aircraft upon their return to the lessors. These
estimates are based on historical costs and our assumptions regarding
the renewal of aircraft leases. A significant change to AWAs fleet
plan could have a material impact on our reserve requirements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

Related Party Transactions

As part of our reorganization in 1994, Continental Airlines and AWA
entered into an alliance agreement which included code sharing arrangements,
reciprocal frequent flyer programs and ground handling operations. In March
2002, AWA received notice from Continental of its intention to terminate the
code sharing and frequent flyer agreements between the two airlines, effective
April 26, 2002. Two of Continentals directors are managing partners of Texas
Pacific Group, which, through TPG Advisors, Inc., effectively controls the
voting power of Holdings. See Risk Factors Relating to America West and
Industry Related Risks - The stockholders who effectively control the voting
power of Holdings could take actions that would favor their own personal
interests to the detriment of our interests.In the third quarter of 2003,
AWA paid Continental approximately $4.2 million and also received approximately
$1.1 million from Continental pursuant to these agreements. In the third
quarter of 2002, the amount paid to and received from Continental pursuant to
these agreements was $6.4 million and $4.1 million, respectively.

Recently Issued Accounting Pronouncements

In January 2003, the FASB issued FIN 46, Consolidation of Variable
Interest Entities.FIN 46 requires that companies that control another entity
through interests other than voting interests should consolidate the controlled
entity. FIN 46 is effective for variable interest entities created after
January 31, 2003 and to any variable interest entities in which the company
obtains an interest after that date. FIN 46 was originally effective for the
quarter ending September 30, 2003 for variable interest entities in which the
company held a variable interest that it acquired before February 1, 2003.
However, in October 2003, the FASB deferred the effective date for
implementation of FIN 46 until December 31, 2003. As discussed in
Managements Discussion and Analysis of Financial Condition and Results of
Operations  Liquidity and Capital Resources, Pass Through Trusts,the
Company is the lessee in a series

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2003

of leveraged lease financings covering 54
leased aircraft. The Company does not provide residual value guarantees under
these lease arrangements. Each lease does have a purchase option that allows
the Company to purchase the aircraft at a fixed price, which approximates the
aircrafts expected fair market value at the option date, near the end of the
lease term. In addition, the Company is also the lessee under certain
long-term leases at various airports. At certain of these airports,
municipalities have issued revenue bonds to improve airport facilities that are
leased by the Company and accounted for as operating leases. The Company does
not guarantee the underlying debt related to these operating leases. The Company currently believes it is not the
primary beneficiary, as defined by FIN 46, under these arrangements. However,
we will continue to evaluate the provisions of FIN 46, including any
modifications that may result from the FASBs deferral of the effective date to
determine its impact, if any, on the financial condition and results of
operations of the Company.

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133
on Derivative Instruments and Hedging Activities. SFAS No. 149 amends and
clarifies certain derivative instruments embedded in other contracts, and for
hedging activities under SFAS No. 133. SFAS No. 149 was effective for certain
contracts entered into or modified by the company after June 30, 2003. The
Company adopted SFAS No. 149 effective July 1, 2003 with no material impact on
its financial condition or results of operations.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity.
SFAS No. 150 specifies that freestanding financial instruments within its scope
constitute obligations of the issuer and that, therefore, the issuer must
classify them as liabilities. Such freestanding financial instruments include
mandatorily redeemable financial instruments, obligations to repurchase the
issuers equity shares by transferring assets and certain obligations to issue
a variable number of shares. SFAS No. 150 was effective immediately for all
financial instruments entered into or modified after May 31, 2003. For all
other instruments, SFAS No. 150 was effective at the beginning of the third
quarter of 2003. The Company adopted SFAS No. 150 effective July 1, 2003 with
no material impact on its financial condition or results of operations.

Forward-Looking Information

This quarterly report on Form 10-Q contains various forward-looking
statements within the meaning of Section 21E of the Exchange Act. These
statements are based on managements beliefs as well as assumptions made by and
information currently available to management. When used in this document, the
words anticipate, estimate, project, expect and similar expressions are
intended to identify forward-looking statements. Such statements are subject
to certain risks, uncertainties and assumptions. Should one or more of these
risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those anticipated,
estimated, projected or expected. Among the key factors that may have a direct
bearing on AWAs or the Holdings results are:



| |  |  | the duration and extent of the current soft economic conditions;                                                                                                                                                                                                                                                   
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the impact of global instability, including the continuing impact
of the continued 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,
such as SARS, or other global events;
|
| |  |  | limitations on Holdings or AWAs ability to obtain additional
financing due to high levels of debt and the financial and other
covenants in its debt instruments;                                                                                                                                                 
|
| |  |  | changes in federal and state laws and regulations;                                                                                                                                                                                                                                                                 
|
| |  |  | changes in prevailing interest rates and the availability of and terms of financing to fund our business;                                                                                                                                                                                                          
|
| |  |  | the ability to attract and retain qualified personnel;                                                                                                                                                                                                                                                             
|
| |  |  | the cyclical nature of the airline industry;                                                                                                                                                                                                                                                                       
|
| |  |  | competitive practices in the airline industry;                                                                                                                                                                                                                                                                     

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2003



| |  |  | the impact of changes in fuel prices;                                                                                                                                          
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | relations with unionized employees generally and the impact and outcome of labor negotiations; and                                                                             
|
| |  |  | other factors referenced in this quarterly report on Form 10-Q,
including those set forth under the caption Risk Factors Relating to
America West and Industry Related Risks.

All of the forward-looking statements are qualified in their entirety by
reference to the factors discussed under the caption Risk Factors Relating to
America West and Industry Related Risks.

We caution the reader that these risk factors may not be exhaustive. We
operate in a continually changing business environment, and new risk factors
emerge from time to time. Management cannot predict such new risk factors, nor
can it assess the impact, if any, of such new risk factors on our businesses or
the extent to which any factor or combination of factors, may cause actual
results to differ materially from those projected in any forward-looking
statements. In light of these risks, uncertainties and assumptions, the
forward-looking events discussed in this quarterly report on Form 10-Q might
not occur.

Risk Factors Relating to America West and Industry Related Risks

In the recent past, we sustained significant operating losses and we may
sustain significant losses in the future.

The soft economic conditions, coupled with the impact of the terrorist
attacks of September 11, 2001 and the continued military presence in Iraq and
Afghanistan, have had a substantial negative impact on our revenues and costs.
For the years ended December 31, 2002 and 2001, we incurred operating losses
of $160.1 million and $417.9 million, respectively. Our revenues for 2002
declined 1% as compared to 2001 and 13% compared to 2000. In addition, we have
experienced an increase in costs related to enhanced security measures,
aviation insurance and airport rents and landing fees. We do not expect our
revenues to increase significantly until general economic conditions improve
and we expect the threat of further terrorist attacks and continued instability
in the Middle East to continue to negatively impact our revenues and costs in
the near-term. We may not be able to effectively counteract decreasing
revenues and increasing costs through our cost reduction initiatives, customer
service initiatives and revised pricing structures. Moreover, our liquidity
and borrowing options are limited and we may not be able to survive a prolonged
economic downturn, further decreases in demand for air travel or substantial
increases in fuel costs. The inability to sustain profitability may hinder our
ability to satisfy our obligations as they become due, obtain future equity or
debt financing or to do so on economical terms and to sustain or expand our
business.

The terrorist attacks of September 11, 2001 and government responses have
had, and continue to have, a material adverse effect on our financial
condition, operations and prospects.

The terrorist attacks of September 11, 2001 have had, and continue to
have, a wide-ranging impact on our financial condition, operations and
prospects. The immediate impact of the terrorist attacks included a severe
strain on our liquidity as the government temporarily suspended all flights, as
passenger demand dropped precipitously after the attacks and as our credit
ratings were downgraded by both Moodys and Standard and Poors. Since then,
although passenger demand has recovered, we continue to experience reduced
demand compared to prior years, especially in discretionary business travel,
and our costs relating to enhanced security measures, aviation insurance,
airport rents and landing fees have increased, in some cases significantly.
The continued impact of the terrorist attacks on our operations, and the
sufficiency of our financial resources to absorb this impact, will depend on:



| |  |  | our ability to reduce our operating costs, to conserve
financial resources and to continue implementing our restructuring
plan;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | general economic conditions and the extent to which the current soft economic conditions improve;                              
|
| |  |  | competition in the airline industry;                                                                                           
|
| |  |  | our ability to manage fuel and labor costs; and                                                                                

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2003



| |  |  | the other risks discussed in this quarterly report on Form 10-Q.
| | - |  | ----------------------------------------------------------------

Moreover, continued global instability (including fuel price
fluctuations), soft economic conditions and future terrorist attacks could further reduce demand for air travel, increase our
fuel, insurance and other costs and generally impact our liquidity or financial
condition. Our ability to obtain additional financing to absorb the impact of
these type of events is limited by the constraints imposed by our existing
indebtedness, reductions in the value of our aircraft (as a result of the
terrorist attacks) and our relatively low credit ratings.

Increased insurance costs due to the terrorist attacks of September 11,
2001 may adversely impact our operations and financial results.

The terrorist attacks of September 11, 2001 resulted in staggering losses
to the insurance industry. These losses led to a significant increase in our
insurance premiums and could lead to future increases in our insurance
premiums. These increases have and could continue to negatively impact our
financial results. In addition, the resulting general instability in the
insurance industry could adversely affect some of our existing insurance
carriers or our ability to obtain future insurance coverage. To the extent
that our existing insurance carriers are unable or unwilling to provide us with
insurance coverage, our insurance costs could further increase.

Moreover, since September 11, 2001, AWA and other airlines have been
unable to obtain third party war risk (terrorism) insurance at reasonable rates
from the commercial insurance market and have been obtaining this insurance
through a special program administered by the Federal Aviation Administration,
or FAA. The Emergency Wartime Supplemental Appropriations Act extended this
insurance protection until August 2004. If the Federal insurance program
terminates, we would likely face a material increase in the cost of terrorism
insurance, but because of competitive pressures in our industry, our ability to
pass this additional cost to passengers would be limited.

Our high level of indebtedness and fixed costs 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.

We have a significant amount of indebtedness. In addition, we have
incurred significant capitalized and operating lease obligations in connection
with the financing of aircraft and the lease of airport and other facilities.
As of September 30, 2003, we had approximately $795.0 million of indebtedness
outstanding, of which $124.9 million was secured by substantially all of our
owned aircraft, spare engines and rotable aircraft parts inventory and a
maintenance facility. In addition, we had $12.0 million of capital lease
obligations. We also have fixed costs associated with our regional alliance
with Mesa Airlines. Due to our high fixed costs, including aircraft lease
obligations and debt service, a decrease in revenues results in a
disproportionately greater percentage decrease in earnings. In addition, as a
result of our significant indebtedness and fixed costs:



| |  |  | Our ability to satisfy our debt and lease obligations may be
impaired;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | we have only a limited ability to obtain additional financing, if
needed. Our existing indebtedness is secured by a substantial portion
of our assets, leaving us with limited assets to use to obtain
additional financing. In addition, the terms of both the $429 million
government guaranteed loan and the $73.2 million term loan restrict our
and AWAs ability to incur additional indebtedness or issue equity
unless we use the proceeds of those transactions to prepay or redeem
certain of our existing indebtedness;                                                                                                                                                                                                                                                                              
|
| |  |  | our ability to fund general corporate requirements, including
capital expenditures, may be impaired. We have substantial obligations
to pay principal and interest on our indebtedness and other recurring
fixed costs. Further, we may be required to prepay portions of the
government guaranteed loan if our employee compensation costs exceed a
certain threshold. Accordingly, we may have to use our working capital
to fund such payments and costs instead of funding general corporate
requirements. In addition, because under the terms of certain of AWAs
indebtedness it must maintain a minimum cash balance of $100 million,
we cannot use all of our available cash to fund operations, capital
expenditures and cash obligations without violating this minimum cash
balance requirement; and

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2003



| |  |  | our ability to respond to competitive developments and adverse
economic conditions may be limited. Without the ability to obtain
additional financing and with substantial fixed costs, we may not be
able to fund the capital expenditures, including the purchase of new aircraft,
required to keep us competitive or to withstand prolonged adverse
economic conditions.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Moreover, our flexibility is limited because many of the agreements
governing our indebtedness, including the indenture governing the
103⁄4%
senior notes due 2005, and the agreements governing the government guaranteed
loan and the term loan contain negative covenants that restrict our ability to
take certain actions as well as the minimum cash balance requirement discussed
above. As a result of these restrictive covenants, we may be limited in how we
conduct our business, and may be unable to raise additional debt or equity
financing to operate during general economic or business downturns, to compete
effectively, or to take advantage of new business opportunities. This may
affect our ability to generate revenues and make profits. Without sufficient
revenues, we may not be able to pay interest and principal on outstanding
indebtedness. A breach of these covenants or a failure to make any required
payments under our indebtedness or certain of our aircraft leases could result
in the acceleration of a substantial portion of our indebtedness. In the event
of a breach of these covenants, a failure to make required payments or an
acceleration of our indebtedness, it is likely that credit card companies would
begin to withhold proceeds due to us from the sale of our tickets and our
lessors may attempt to exercise remedies under their respective leases. In
such a situation, it is unlikely we would be able to fulfill our obligations
under or otherwise repay the accelerated indebtedness or make required lease
payments.

Fluctuations in fuel costs could adversely affect our operating expenses
and results.

The price and supply of jet fuel are unpredictable and fluctuate based on
events outside our control, including geopolitical developments, regional
production patterns and environmental concerns. Since fuel is the principal
raw material consumed by our business, accounting for 14% of our total
operating expenses in 2002, price escalations or reductions in the supply of
jet fuel will increase our operating expenses and cause our operating results
and net income to decline. For example, with our current level of fuel
consumption, a one-cent per gallon increase in jet fuel prices will cause our
annual operating expense to increase by $4.4 million.

We have implemented a fuel-hedging program to manage the risk and effect
of fluctuating jet fuel prices on our business. Our hedging program is
intended to offset increases in jet fuel costs by using derivative instruments
keyed to the future price of heating oil, which is highly correlated to the
price of jet fuel delivered on the East Coast. Our hedging program does not
fully protect us against increasing jet fuel costs because our hedging program
does not cover all of our projected fuel volumes for 2003. Hedging
transactions are in place with respect to approximately 56% of remaining
projected 2003 fuel requirements. In order to execute additional hedging
transactions, we anticipate that we will have to provide cash collateral or
other credit support, which we may not be able to provide in a cost-effective
manner. Furthermore, our ability to effectively hedge fuel prices is limited
because we purchase a substantially larger portion of our jet fuel requirements
on the West Coast than our large competitors and West Coast fuel prices are
less correlated to heating oil prices and other viable petroleum derivatives
than East Coast fuel prices and, therefore, more difficult to hedge. The
effectiveness of our fuel-hedging program may also be negatively impacted by
continued instability in the Middle East and Venezuela and terrorist activity,
including the aftermath of the terrorist attacks of September 11, 2001 and the
resulting government responses.

Because of our relatively low credit ratings, our borrowing costs may be
high and our ability to incur additional debt may be impaired.

Our credit ratings are relatively low, with Moodys assessment of AWAs
senior implied rating and senior unsecured debt rating at Caa1 and Caa3,
respectively, and Standard & Poors corporate credit
ratings at B- for AWA and Holdings and senior unsecured rating
at CCC for
AWAs unsecured debt. On March 18, 2003, Standard & Poors placed AWA on
credit watch and on September 4, 2003, the ratings on various pass-through
trust certificates were lowered. Standard & Poors outlook for AWA and the
industry continues to be negative. Low credit ratings could cause our
borrowing costs to increase, which would increase our interest expense and
could affect our net income. In addition, our credit ratings could adversely
affect our ability to obtain additional financing. The rating agencies base
their ratings on our financial performance and operations, our cash flow and
liquidity, the level of our indebtedness and industry conditions in general.
If our financial performance or industry conditions do not improve, we may face
future downgrades, which could further negatively impact our borrowing costs
and the prices of our equity or debt securities. In addition, any downgrade of

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2003

our credit ratings may indicate a decline in our business and in our ability to
satisfy our obligations under our indebtedness.

Negotiations with labor unions could divert management attention and
disrupt operations and new collective bargaining agreements or amendments to
existing collective bargaining agreements could increase our labor costs and
operating expenses.

Some of our employees are represented by unions and other groups of our
employees may seek union representation in the future. Since February 2000, we
have been negotiating a collective bargaining agreement with ALPA which
represents all of our approximately 1,600 pilots. We had reached a tentative
agreement with ALPA in December 2002 on a new contract for AWAs pilots.
However, in March 2003, ALPA informed us that a majority of AWAs pilots had
voted against ratification of the tentative agreement. We resumed negotiations
with ALPA in August 2003. In addition, since April 2003 we have been
negotiating with the TWU for a second collective bargaining agreement covering
AWAs dispatchers. On September 17, 2003, TWU filed a petition for mediation
with the National Mediation Board. Finally, negotiations with the
International Brotherhood of Teamsters for a second collective bargaining
agreement covering the Airlines mechanics commenced on October 9, 2003.

We cannot predict the outcome of the negotiations with ALPA, TWU or IBT or
any future negotiations relating to union representation or collective
bargaining agreements. Agreements reached in collective bargaining may
increase operating expenses and lower operating results and net income. This
is particularly significant because our current employee costs contribute
substantially to the low cost structure that we believe is one of our
competitive strengths and because we are required to repay a portion of the
government guaranteed loan if our labor costs exceed a certain threshold. In
addition, negotiations with unions could divert management attention and
disrupt operations, which may result in increased operating expenses and lower
net income. If we are unable to negotiate acceptable collective bargaining
agreements, we might have to address the threat of, or wait through cooling
off periods, which could be followed by union-initiated work actions,
including strikes. Depending on the nature of the threat or the type and
duration of any work action, these actions could disrupt our operations and, as
a result, have a significant adverse affect on our operating results.

Fluctuations in interest rates could adversely affect our liquidity,
operating expenses and results.

Our indebtedness under both the government guaranteed loan and the term
loan bears interest at fluctuating interest rates based on the London interbank
offered rate for deposits of U.S. dollars, or LIBOR. LIBOR tends to fluctuate
based on general economic conditions, general interest rates, including the
prime rate, and the supply of and demand for credit in the London interbank
market. We have not hedged our interest rate exposure and, accordingly, our
interest expense for any particular period may fluctuate based on LIBOR. To
the extent LIBOR increases, our interest expense will increase, in which event,
we may have difficulties making interest payments and funding our other fixed
costs and our available cash flow for general corporate requirements may be
adversely affected.

Our operating costs could increase as a result of past, current or new
regulations that impose additional requirements and restrictions on airline
operations.

The airline industry is heavily regulated. Both federal and state
governments from time to time propose laws and regulations that impose
additional requirements and restrictions on airline operations. Implementing
these measures, such as aviation ticket taxes and passenger safety measures,
has increased operating costs for us and the airline industry as a whole. In
addition, new security measures imposed by the Aviation and Transportation
Security Act or otherwise by the FAA as a result of the recent terrorist
attacks are expected to continue to increase costs for us and the airline
industry as a whole. Depending on the implementation of these laws and other
measures, our operating costs could increase significantly. Certain
governmental agencies, such as the DOT and the FAA, have the authority to
impose mandatory orders, such as Airworthiness Directives in connection with
our aircraft, and civil penalties for violations of applicable laws and
regulations, each of which can result in material costs and adverse publicity.
We cannot predict which laws and regulations will be adopted or what other
action regulators might take. Accordingly, we cannot guarantee that future
legislative and regulatory acts will not have a material impact on our
operating results.

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2003

The airline industry and the markets we serve are highly competitive and
we may be unable to compete effectively against carriers with substantially
greater resources or lower cost structures.

The airline industry and most of the markets we serve are highly
competitive. We compete with other airlines on the basis of pricing,
scheduling (frequency and flight times), on-time performance, frequent flyer
programs and other services. Certain airlines have in the past engaged in retaliatory
activities, including steep pricing discounts in certain markets and
termination of alliance agreements, in response to changes in our pricing
structure. Our principal competitor is Southwest Airlines, which has a lower
operating cost structure than we do. We also compete against other existing
carriers, many of which offer more extensive routes, frequencies and customer
loyalty, marketing and advertising programs than we do. From time to time, we
also compete with new carriers that enter the airline industry, which typically
have low operating cost structures. We may be unable to compete effectively
against carriers with substantially greater resources or lower cost structures.
The entry of additional new carriers in our markets, the consolidation of
existing carriers or increased competition from existing carriers, could
adversely affect our operating results.

The terrorist attacks of September 11, 2001 and the current soft economic
conditions have led to the airline industrys significant losses since 2001.
Largely as a result of these losses, both U.S. Airways and United Airlines
filed for bankruptcy protection in 2001. Because bankruptcy protection may
allow for greater flexibility in reducing costs by voiding contracts and
renegotiating existing business obligations, current and future airline
bankruptcies could have a substantial impact on industry competition.
Continued weakness in the airline industry may also result in additional
industry consolidation, greater reliance on industry alliances and increased
price competition among the existing airlines, each of which could dramatically
alter competitive environments in the markets we serve. These circumstances
could also make it more difficult and costly to obtain additional financing on
reasonable terms, if at all.

Our business is sensitive to general economic conditions, unforeseen
events and seasonal fluctuations. As a result, our prior performance is not
necessarily indicative of our future results.

The air travel business historically fluctuates on a seasonal basis and in
response to general economic conditions. Due to the greater demand for air and
leisure travel during the summer months, revenues in the airline industry in
the second and third quarters of the year tend to be greater than revenues in
the first and fourth quarters of the year. In addition, the airline industry
is highly susceptible to unforeseen events that result in declines in revenues
or increased costs, such as political instability, regional hostilities,
terrorist attacks, recession, fuel price escalation, inflation, adverse weather
conditions, consumer preferences, labor instability or regulatory oversight.
Also, our results of operations for interim periods are not necessarily
indicative of those for an entire year and our prior results are not
necessarily indicative of our future results.

We depend on the expertise of our management team. If key individuals
leave unexpectedly, our business and operations could suffer.

Many of our executive officers are key to the management of our business
and operations. Our future success depends on our ability to retain these
officers and other capable managers. Although we believe we could replace key
personnel given adequate prior notice, the unexpected departure of key
executive officers could cause substantial disruption to our business and
operations. In addition, we may not be able to retain and recruit talented
personnel without incurring substantial costs. Moreover, we must repay a
portion of the government guaranteed loan if our labor costs exceed a certain
threshold. As a result, our ability to spend additional amounts to retain and
recruit talented personnel is limited.

The stockholders who effectively control the voting power of Holdings
could take actions that would favor their own personal interests to the
detriment of our interests.

Currently, three stockholders collectively control more than 50% of the
total voting power of Holdings. These stockholders, TPG Partners, L.P., TPG
Parallel I, L.P. and Air Partners II, L.P. (collectively, the TPG
Stockholders) are all controlled by the same company, TPG Advisors, Inc.
Since TPG Advisors, Inc. is an investment firm, its strategic objectives may be
different than both the short-term or long-term objectives of our board of
directors and management. We cannot guarantee that the TPG Stockholders will
not try to influence Holdings business in a way that would favor their own
personal interests to the detriment of our interests.

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2003

We are at risk of losses and adverse publicity stemming from any accident
involving any of our aircraft.

If one of our aircraft were to crash or be involved in an accident, we
could be exposed to significant tort liability. There can be no assurance that
the insurance we carry to cover damages arising from any future accidents will
be adequate. In the event that our insurance is not adequate, we may be forced
to bear substantial losses from an accident. Claims resulting from an accident
in excess of our insurance coverage would harm our business and results of operations.
Accidents could also result in unforeseen mechanical and
maintenance costs. In addition, any accident involving an aircraft that we
operate could create a public perception that our aircraft are not safe or
reliable, which could harm our reputation, result in air travelers being
reluctant to fly on our aircraft and harm our business.

Our operations are often affected by factors beyond our control, including
traffic congestion at airports, weather conditions and increased security
measures, any of which could harm our financial condition and results of
operations.

Like other airlines, our operations are subject to delays caused by
factors beyond our control, including air traffic congestion at airports,
adverse weather conditions and increased security measures such as those
required to be implemented under the Aviation and Transportation Security Act.
During periods of fog, snow, rain, storms or other adverse weather conditions,
flights may be cancelled or significantly delayed. Cancellations and delays
frustrate passengers, reduce aircraft utilization and increase costs, all of
which in turn affect profitability. As a result, cancellations or delays could
harm our financial condition and results of operations.

Shares of class B common stock issuable upon exercise or conversion of
outstanding securities could adversely affect our stock price and dilute the
ownership interests of existing stockholders.

Sales and potential sales of substantial amounts of our class B common
stock or securities exercisable for or into our class B common stock in the
public market, or the perception that these sales could occur, could adversely
affect the market price of the class B common stock. A substantial number of
additional shares of class B common stock are issuable upon the conversion or
exercise of outstanding securities. As of September 30, 2003, the outstanding
shares of class B common stock were subject to dilution by:



| |  |  | 19,912,000 shares of class B common stock that are issuable upon
the exercise, at an exercise price of $3.00 per share, of certain
warrants issued in connection with the government guaranteed loan,
including 18,754,000 shares of class B common stock issuable upon
exercise of a warrant issued to the ATSB; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | 8,148,298 shares of class B common stock that are issuable upon the
exercise of outstanding options.                                                                                                                                                                                                                 

In addition, 941,431 shares of class B common stock are issuable upon
conversion of the outstanding shares of Holdings class A common stock held by
the TPG Stockholders (but subject to certain contractual restrictions on
transfer), up to approximately 8,100,000 shares of Holdings class B common
stock will be issuable upon the exchange of AWAs senior exchangeable notes due
2023 (which exchange may not occur until the trading price of Holdings class B
common stock reaches certain thresholds), and up to approximately 9,400,000
shares of Holdings class B common stock will be issuable after January 18,
2005 upon conversion of Holdings 7.5% convertible senior notes due 2009.
Holdings has registered either the issuance or resale of all of these shares,
meaning that upon exercise, exchange or conversion, as applicable, such shares
could be sold in the public market at any time.

The conversion or exercise of some or all of these notes, warrants and
options will dilute the ownership interests of existing stockholders and any
sales in the public market of the class B common stock issuable upon such
conversion or exercise could adversely affect prevailing market prices of the
class B common stock. In addition, the existence of the notes, warrants and
options may encourage short selling by market participants because conversion
or exercise of the notes or warrants could depress the price of the class B
common stock.

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2003

Provisions in our charter documents might deter acquisition bids for us.

Holdings Certificate of Incorporation and Restated Bylaws contain
provisions that, among other things:



| |  |  | authorize Holdings board of directors to issue preferred stock
ranking senior to the class B common stock without any action on the
part of the stockholders;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | establish advance notice procedures for stockholder proposals,
including nominations of directors, to be considered at stockholders
meetings;                
|
| |  |  | authorize Holdings board of directors to fill vacancies on the
board resulting from an increase in the authorized number of directors
or any other cause; and
|
| |  |  | restrict the ability of stockholders to call special meetings of
stockholders.                                                                                

These provisions might make it more difficult for a third party to acquire
us, even if doing so would benefit the stockholders.

Our stock price may continue to be volatile and could decline
substantially.

The stock market has, from time to time, experienced extreme price and
volume fluctuations. Many factors may cause the market price for the class B
common stock to decline including:



| |  |  | our operating results failing to meet the expectations of securities analysts or investors in any quarter;
| | - |  | ----------------------------------------------------------------------------------------------------------
|
| |  |  | downward revisions in securities analysts estimates;                                                     
|
| |  |  | material announcements by us or our competitors;                                                          
|
| |  |  | public sales of a substantial number of shares of the class B common stock;                               
|
| |  |  | governmental regulatory action; and                                                                       
|
| |  |  | adverse changes in general market conditions or economic trends.                                          

46



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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2003




ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Market Risk Sensitive Instruments

(a) Commodity Price Risk

As of September 30, 2003, the Company had entered into costless collar
transactions which establish an upper and lower limit on heating oil futures prices. These transactions are in
place with respect to approximately 56% of remaining projected 2003 fuel
requirements.

The use of such transactions in the Companys fuel hedging program could
result in the Company not benefiting from certain declines in heating oil
futures prices. At September 30, 2003, the Company estimates that a 10%
increase in heating oil futures prices would increase the fair value of the
costless collar transactions by approximately
$0.8 million. The Company estimates that a 10% decrease in heating oil
futures prices would decrease the fair value of the costless collar
transactions by approximately $2.0 million.

As of October 21, 2003, approximately 56% of AWAs remaining 2003 fuel
requirements are hedged.

(b) Interest Rate Risk

The Companys exposure to interest rate risk relates primarily to its
variable-rate long-term debt obligations. At September 30, 2003, the Companys
variable-rate long-term debt obligations of approximately $552.7 million
represented approximately 70% of its total long-term debt. If interest rates
increased 10% in 2003, the impact on the Companys results of operations would
not be material.




ITEM 4. CONTROLS AND PROCEDURES.

An evaluation was performed under the supervision and with the
participation of the Companys management, including the Chief Executive
Officer (the CEO) and Chief Financial Officer (the CFO), of the
effectiveness of the design and operation of the Companys disclosure controls
and procedures (as defined in the rules promulgated under the Securities and
Exchange Act of 1934, as amended) as of September 30, 2003. Based on that
evaluation, the Companys management, including the CEO and CFO, concluded that
the Companys disclosure controls and procedures were effective as of September
30, 2003. There were no significant changes in the Companys internal control
over financial reporting during the period covered by this report reasonably
likely to materially affect our internal control over financial reporting.

We believe that a controls system, no matter how well designed and
operated, cannot provide absolute assurance that the objectives of the controls
system are met and no evaluation of controls can provide absolute assurance
that all control issues and instances of fraud, if any, within a company have
been detected. Our disclosure controls and procedures are designed to provide
reasonable assurance of achieving their objectives, and the CEO and CFO have
concluded that these controls and procedures are effective at the reasonable
assurance level.

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2003




PART II - OTHER INFORMATION




ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.

In July
and August of 2003, AWA sold $86 million issue price, or $252.7 principal amount at
maturity of senior exchangeable notes due 2023 to Merrill Lynch, Pierce, Fenner
& Smith Incorporated and Citigroup Global Markets, Inc. pursuant to Section
4(2) the Securities Act of 1933, as amended, for approximately $84.2 million in
net cash proceeds to AWA, after payment of underwriting discounts and
commissions to the initial purchasers of approximately $2.6 million The
initial purchasers subsequently resold the Notes to entities reasonably
believed by the initial purchasers to be qualified institutional buyers
pursuant to Rule 144 under the Securities Act of 1933, as amended.

The notes bear cash interest until July 30, 2008. Thereafter, the notes
will cease bearing cash interest and begin accruing original issue
discount daily at
a rate of 7.25% per year until maturity. Each note was issued at a price of $343.61 and
is exchangeable for class B common stock of Holdings at an exchange ratio of
32.038 shares per $1,000 principal amount at maturity of the notes (subject to
adjustment in certain circumstances). This represents an equivalent conversion
price of approximately $10.73 per share. The notes are
unconditionally guaranteed on a senior unsecured basis by Holdings.

Holders may exchange their notes for the shares of class B common stock of
Holdings in any fiscal quarter commencing after September 30, 2003, if, as of
the last day of the preceding fiscal quarter, the closing sale price of the
class B common stock for at least 20 trading days in a period of 30 consecutive
trading days ending on the last trading day of such preceding fiscal quarter is
more than 110% of the accreted exchange price per share of Class B common stock
on the last day of such preceding fiscal quarter. If the foregoing condition is
satisfied, then the notes will be exchangeable at any time at the option of the
holder through maturity. The accreted exchange price per share as of any day
will equal the issue price of a note plus accrued original issue discount to
that day divided by 32.038, subject to any adjustments to the exchange rate
through that day.

On or before July 30, 2018, a holder also may exchange its notes for
shares of the Class B common stock at any time after a 10 consecutive
trading-day period in which the average of the trading prices for the notes for
that 10 trading-day period was less than 103% of the average exchange value for
the notes during that period. Exchange value is equal to the product of the
closing sale price for the shares of Class B common stock on a given day
multiplied by the then current exchange rate, which is the number of shares of
Class B common stock for which each note is then exchangeable.

In addition, the holders may exchange the notes if the notes have been
called for redemption or if certain specified corporate transactions have
occurred.

Holders of the notes may require AWA to repurchase the notes at a price
equal to the original issue price plus accrued cash interest and original issue
discount, if any, on July 30, 2008, 2013 and 2018. The purchase price of such
notes may be paid in cash or class B common stock of Holdings, subject to
certain restrictions. In addition, each holder may require AWA to purchase all
or a portion of such holders notes upon the occurrence of certain change of
control events concerning AWA or Holdings. AWA may redeem the notes, in whole
or in part, on or after July 30, 2008 at a price equal to the original issue
price plus accrued cash interest and original issue discount, if any.

The notes are senior unsecured obligations and rank equally with AWAs
existing and future senior unsecured indebtedness. Holdings guaranteed the
notes on a senior unsecured basis.

In connection with the offering AWA placed $42.9 million of the net
proceeds in a cash collateral account to secure the scheduled principal and
interest payments on certain of its indebtedness through September 30, 2004.
We plan to use the balance of the net proceeds of the offering for working
capital and general corporate purposes.

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2003




ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.




ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.



| | a. |  | Exhibits
| | -- |  | --------

|        |  |                                                                                                                                                                                                                                                                                 
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT |  |                                                                                                                                                                                                                                                                                 
|NUMBER  |  | DESCRIPTION AND METHOD OF FILING                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                 
|4.1     |  | Indenture, dated as of July 30, 2003, between America West Airlines
Inc. and U.S. Bank National Association, as trustee and not in its
individual capacity, for America West Airlines Inc. Senior
Exchangeable Notes due 2023.                                                  
|        |  |                                                                                                                                                                                                                                                                                 
|4.2     |  | Form of America West Airlines, Inc. Senior Exchangeable Note due 2023.                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                 
|4.3     |  | Registration Rights Agreement, dated as of July 30, 2003, with
respect to shares of Class B Common Stock underlying the America West
Airlines Inc. Senior Exchangeable Notes due 2023.                                                                                          
|        |  |                                                                                                                                                                                                                                                                                 
|4.4     |  | Guarantee and Exchange Agreement, dated as of July 30, 2003, between
America West Holdings Corporation and U.S. Bank, National
Association, as exchange agent and trustee and not in its individual
capacity, for America West Airlines Inc. Senior Exchangeable Notes
due 2023.
|        |  |                                                                                                                                                                                                                                                                                 
|10.1    |  | Third Amendment to Code Share and Revenue Sharing Agreement dated as
of January 29, 2003 among AWA, Mesa Airlines, Inc. and Freedom
Airlines, Inc.                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                 
|10.2(1) |  | Fourth Amendment to Code Share and Revenue Sharing Agreement and
Release dated as of September 5, 2003 among AWA, Mesa Airlines, Inc.,
Air Midwest, Inc. and Freedom Airlines, Inc.                                                                                             
|        |  |                                                                                                                                                                                                                                                                                 
|10.3    |  | Purchase Agreement dated July 24, 2003 by and among America West
Holdings Corporation, America West Airlines, Inc., Merrill Lynch &
Co. and Merrill Lynch, Pierce, Fenner & Smith, Incorporated.                                                                                
|        |  |                                                                                                                                                                                                                                                                                 
|31.1    |  | Certification of Holdings Chief Executive Officer pursuant to
Rule 13a-14(a) under the Securities Exchange Act of 1934, as
amended.                                                                                                                                            
|        |  |                                                                                                                                                                                                                                                                                 
|31.2    |  | Certification of Holdings Chief Financial Officer pursuant to Rule
13a-14(a) under the Securities Exchange Act of 1934, as amended.                                                                                                                                            
|        |  |                                                                                                                                                                                                                                                                                 
|31.3    |  | Certification of AWAs Chief Executive Officer pursuant to Rule
13a-14(a) under the Securities Exchange Act of 1934, as amended.                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                 
|31.4    |  | Certification of AWAs Chief Financial Officer pursuant to Rule
13a-14(a) under the Securities Exchange Act of 1934, as amended.                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                 
|32.1    |  | Certification of Holdings Chief Executive Officer and Chief
Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                 
|32.2    |  | Certification of AWAs Chief Executive Officer and Chief Financial
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                           

(1) The Company has sought confidential treatment for portions of the
referenced exhibit.

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2003



| | b. |  | Reports on Form 8-K
| | -- |  | -------------------



| |  |  | Holdings and AWA filed a report on Form 8-K dated July 2, 2003,
furnishing under Item 9 a press release dated July 2, 2003 announcing
certain traffic statistics for June 2003.                                                                                   
| |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Holdings and AWA filed a report on Form 8-K dated July 22, 2003,
furnishing under Item 9 a press release dated July 22, 2003 announcing
the Companys results for the second quarter ended June 30, 2003.                                                         
|
| |  |  | Holdings and AWA filed a report on Form 8-K dated July 24, 2003, filing
under Item 5 a press release dated July 23, 2003 announcing AWAs
intention to sell its senior exchangeable notes due 2023.                                                               
|
| |  |  | Holdings and AWA filed a report on Form 8-K dated July 25, 2003, filing
under Item 5 a press release dated July 24, 2003 announcing the pricing
of AWAs offering of its senior exchangeable notes due 2023.                                                      
|
| |  |  | Holdings and AWA filed a report on Form 8-K dated August 1, 2003, filing
under Item 5 a press release dated August 1, 2003 announcing that AWA had
completed the offering of its senior exchangeable notes due 2023.                                              
|
| |  |  | Holdings and AWA filed a report on Form 8-K dated August 5, 2003,
furnishing under Item 9 a press release dated August 5, 2003 announcing
certain traffic statistics for July 2003.                                                                               
|
| |  |  | Holdings and AWA filed a report on Form 8-K dated August 27, 2003, filing
under Item 4 information related to dismissal of PricewaterhouseCoopers
LLP as the Companys independent auditors and the appointment of KPMG LLP
as the Companys independent auditors.
|
| |  |  | Holdings and AWA filed a report on Form 8-K dated September 4, 2003,
furnishing under Item 12 a press release dated September 4, 2003
announcing certain traffic statistics for August 2003.                                                                      
|
| |  |  | Holdings and AWA filed a report on Form 8-K dated September 11, 2003,
furnishing under Item 9 a press release dated September 10, 2003
announcing certain growth plans for 2004.                                                                                  

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AMERICA WEST HOLDINGS CORPORATION
September 30, 2003

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.

| |  |                                   |  |                                                  
| |  | --------------------------------- |  | -------------------------------------------------
| |  | AMERICA WEST HOLDINGS CORPORATION
| |  |                                   |  |                                                  
| |  | By                                |  | /s/ Derek J. Kerr                                
| |  |                                   |  |                                                  
| |  |                                   |  |                                                  
| |  |                                   |  | Derek J. Kerr                                    
| |  |                                   |  | Senior Vice President and Chief Financial Officer

DATED: October 21, 2003

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AMERICA WEST AIRLINES, INC.
September 30, 2003

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.

| |  |                             |  |                                                  
| |  | --------------------------- |  | -------------------------------------------------
| |  | AMERICA WEST AIRLINES, INC.
| |  |                             |  |                                                  
| |  | By                          |  | /s/ Derek J. Kerr                                
| |  |                             |  |                                                  
| |  |                             |  |                                                  
| |  |                             |  | Derek J. Kerr                                    
| |  |                             |  | Senior Vice President and Chief Financial Officer

DATED: October 21, 2003

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EXHIBIT INDEX

|        |  |                                                                                                                                                                                                                                                                                 
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT |  |                                                                                                                                                                                                                                                                                 
|NUMBER  |  | DESCRIPTION AND METHOD OF FILING                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                 
|4.1     |  | Indenture, dated as of July 30, 2003, between America West Airlines
Inc. and U.S. Bank National Association, as trustee and not in its
individual capacity, for America West Airlines Inc. Senior
Exchangeable Notes due 2023.                                                  
|        |  |                                                                                                                                                                                                                                                                                 
|4.2     |  | Form of America West Airlines, Inc. Senior Exchangeable Note due 2023.                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                 
|4.3     |  | Registration Rights Agreement, dated as of July 30, 2003, with
respect to shares of Class B Common Stock underlying the America West
Airlines Inc. Senior Exchangeable Notes due 2023.                                                                                          
|        |  |                                                                                                                                                                                                                                                                                 
|4.4     |  | Guarantee and Exchange Agreement, dated as of July 30, 2003, between
America West Holdings Corporation and U.S. Bank, National
Association, as exchange agent and trustee and not in its individual
capacity, for America West Airlines Inc. Senior Exchangeable Notes
due 2023.
|        |  |                                                                                                                                                                                                                                                                                 
|10.1    |  | Third Amendment to Code Share and Revenue Sharing Agreement dated as
of January 29, 2003 among AWA, Mesa Airlines, Inc. and Freedom
Airlines, Inc.                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                 
|10.2(1) |  | Fourth Amendment to Code Share and Revenue Sharing Agreement and
Release dated as of September 5, 2003 among AWA, Mesa Airlines, Inc.,
Air Midwest, Inc. and Freedom Airlines, Inc.                                                                                             
|        |  |                                                                                                                                                                                                                                                                                 
|10.3    |  | Purchase Agreement dated July 24, 2003 by and among America West
Holdings Corporation, America West Airlines, Inc., Merrill Lynch &
Co. and Merrill Lynch, Pierce, Fenner & Smith, Incorporated.                                                                                
|        |  |                                                                                                                                                                                                                                                                                 
|31.1    |  | Certification of Holdings Chief Executive Officer pursuant to
Rule 13a-14(a) under the Securities Exchange Act of 1934, as
amended.                                                                                                                                            
|        |  |                                                                                                                                                                                                                                                                                 
|31.2    |  | Certification of Holdings Chief Financial Officer pursuant to Rule
13a-14(a) under the Securities Exchange Act of 1934, as amended.                                                                                                                                            
|        |  |                                                                                                                                                                                                                                                                                 
|31.3    |  | Certification of AWAs Chief Executive Officer pursuant to Rule
13a-14(a) under the Securities Exchange Act of 1934, as amended.                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                 
|31.4    |  | Certification of AWAs Chief Financial Officer pursuant to Rule
13a-14(a) under the Securities Exchange Act of 1934, as amended.                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                 
|32.1    |  | Certification of Holdings Chief Executive Officer and Chief
Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                 
|32.2    |  | Certification of AWAs Chief Executive Officer and Chief Financial
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                           

(1) The Company has sought confidential treatment for portions of the
referenced exhibit.